Document:

<PAGE>

                                                                   Exhibit 10.45

                                      LEASE

LANDLORD: JLP-HARVARD PARK, LLC
          1798 FREBIS AVENUE
          COLUMBUS OH 43206-0410

TENANT:   DSW INC.
          4150 EAST FIFTH AVENUE
          COLUMBUS, OHIO 43219

PREMISES: Approximately 20,000 square feet at
          Chagrin Highlands, Warrensville, Ohio

<PAGE>

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                            Page
                                                                            ----
<S>                                                                         <C>
SECTION 1.  PREMISES.....................................................     3
SECTION 2.  LANDLORD'S AND TENANT'S WORK.................................     3
SECTION 3.  TERM.........................................................     5
SECTION 4.  MINIMUM RENT.................................................     6
SECTION 5.  PERCENTAGE RENT..............................................     7
SECTION 6.  TITLE ENCUMBRANCES; LANDLORD REPRESENATATIONS,
WARRANTIES AND COVENANTS.................................................     8
SECTION 7.  RIGHT TO REMODEL.............................................    10
SECTION 8.  UTILITIES....................................................    10
SECTION 9.  GLASS........................................................    11
SECTION 10. PERSONAL PROPERTY............................................    11
SECTION 11. RIGHT TO MORTGAGE............................................    11
SECTION 12. SUBLEASE OR ASSIGNMENT.......................................    11
SECTION 13. COMMON AREAS.................................................    12
SECTION 14. OPERATION OF COMMON AREAS....................................    12
SECTION 15. COMMON AREA MAINTENANCE, TENANT'S SHARE......................    13
SECTION 16. EMINENT DOMAIN...............................................    15
SECTION 17. TENANT'S TAXES...............................................    15
SECTION 18. RISK OF GOODS................................................    15
SECTION 19. USE AND OCCUPANCY............................................    15
SECTION 20. NUISANCES....................................................    18
SECTION 21. WASTE AND REFUSE REMOVAL.....................................    18
SECTION 22. DAMAGE AND DESTRUCTION OF PREMISES...........................    18
SECTION 23. LANDLORD REPAIRS.............................................    19
SECTION 24. TENANT'S REPAIRS.............................................    19
SECTION 25. COVENANT OF TITLE AND PEACEFUL POSSESSION....................    20
SECTION 26. TENANT'S AND LANDLORD'S INSURANCE; INDEMNITY.................    21
SECTION 27. REAL ESTATE TAXES............................................    23
SECTION 28. TENANT'S INSURANCE CONTRIBUTION..............................    24
SECTION 29. FIXTURES.....................................................    25
SECTION 30. SURRENDER....................................................    25
SECTION 31. HOLDING OVER.................................................    25
SECTION 32. NOTICE.......................................................    25
SECTION 33. DEFAULT......................................................    25
SECTION 34. WAIVER OF SUBROGATION........................................    28
SECTION 35. LIABILITY OF LANDLORD; EXCULPATION...........................    28
SECTION 36. RIGHTS CUMULATIVE............................................    28
SECTION 37. MITIGATION OF DAMAGES........................................    29
</TABLE>

                                        i

<PAGE>

<TABLE>
<S>                                                                          <C>
SECTION 38. SIGNS........................................................    29
SECTION 39. ENTIRE AGREEMENT.............................................    29
SECTION 40. TENANT'S PROPERTY............................................    29
SECTION 41. BINDING UPON SUCCESSORS......................................    30
SECTION 42. HAZARDOUS SUBSTANCES.........................................    30
SECTION 43. TRANSFER OF INTEREST.........................................    31
SECTION 44. ACCESS TO PREMISES...........................................    31
SECTION 45. HEADINGS.....................................................    31
SECTION 46. NON-WAIVER...................................................    31
SECTION 47. SHORT FORM LEASE.............................................    31
SECTION 48. ESTOPPEL CERTIFICATE.........................................    31
SECTION 49. TENANT'S REIMBURSEMENT.......................................    32
SECTION 50. TENANT'S TERMINATION RIGHT...................................    32
SECTION 51. NO BROKER....................................................    32
SECTION 52. UNAVOIDABLE DELAYS...........................................    32
SECTION 53. TIMELY EXECUTION OF LEASE....................................    33
SECTION 54. ACCORD AND SATISFACTION......................................    33
SECTION 55. WAIVER OF JURY TRIAL.........................................    33
SECTION 56. LEASEHOLD FINANCING..........................................    33
</TABLE>

LIST OF EXHIBITS:

EXHIBIT "A"   SITE PLAN
EXHIBIT "B"   LEGAL DESCRIPTION
EXHIBIT "C"   LANDLORD'S WORK
EXHIBIT "D"   TENANT'S WORK
EXHIBIT "E"   EXISTING USE EXCLUSIVES AND PROHIBITED USES
EXHIBIT "F"   SIGNAGE
EXHIBIT "G"   TENANT IMPROVEMENTS
EXHIBIT "H"   LANDLORD'S WAIVER
EXHIBIT "I"   RECOGNITION AND NON-DISTURBANCE AGREEMENT (FEE MORTGAGEE)

                                       ii
<PAGE>

                                     LEASE

     THIS AGREEMENT OF LEASE, made this 7th day of April, 2006, by and between
JLP-HARVARD PARK, LLC, an Ohio limited liability company (hereinafter referred
to as "Landlord"), with offices at 1798 Frebis Avenue, Columbus, Ohio
43206-3764, and DSW INC., an Ohio corporation (hereinafter referred to as
"Tenant") with offices at 4150 East Fifth Avenue, Columbus, Ohio 43219.

                                   WITNESSETH:

SECTION 1. PREMISES

     (a) Landlord, in consideration of the rents to be paid and covenants and
agreements to be performed by Tenant, does hereby lease unto Tenant premises
comprised of approximately 20,000 square feet of leasable space (the "Premises")
in the shopping center owned by Landlord containing approximately 230,000 square
feet of leasable space on approximately 25 acres and commonly known as Chagrin
Highlands, in the City of Cleveland, County of Cuyahoga and State of Ohio (the
"Center"). The location, size, and area of the Premises and of the Center as of
the Commencement Date (defined below) will be substantially as shown on Exhibit
"A" attached hereto and made a part hereof (the "Site Plan"). A legal
description of the Center is attached hereto as Exhibit "B" and made a part
hereof.

     (b) The square footage specified in Section 1(a) shall be certified to
Tenant by Landlord's architect prior to the Rent Commencement Date (defined in
Section 3(b) below). Tenant shall have ninety (90) days from the receipt of such
certification to verify or object to Landlord's measurement. If Tenant objects
to Landlord's measurement within said ninety (90) day period, the parties shall
work together in good faith to resolve the differing square footage
calculations. In computing the square footage of the Premises, the Premises
shall be measured from the exterior surface of exterior walls and the middle of
interior walls, excluding the square footage of any mechanical and utility
rooms, escalators, elevators, stairs and any other common area space located
within the Premises. If the square footage of the Premises as verified and
confirmed by Tenant pursuant to this Section 1(b) is less than the size
specified in Section 1(a), Base Rent (defined in Section 4(a) below) and other
charges shall be proportionately adjusted, but the foregoing shall not be
construed as permitting a material variance in dimensions or area.

     (c) Landlord covenants that the Center is or shall be developed in
accordance with the Site Plan and that it shall be used as a retail shopping
center throughout the term of this Lease. Landlord shall not take or consent to
any action which materially adversely affects access to, visibility of, parking
for or use of the Premises. Notwithstanding the foregoing, no modification or
replacement to the Center shall (i) reduce the ratio of parking spaces (for
standard size American cars) to gross leasable area of buildings in the Center
below five (5) spaces per 1,000 square feet of leasable space, (ii) alter or
make any changes, including any reduction or rearrangement of parking spaces, to
that portion of the Center indicated on the Site Plan as the "Protected Area",
(iii) interfere with truck access to the loading doors of the Premises, (iv)
materially adversely interfere with customer access to the Premises, (v)
materially adversely interfere with the visibility of the Premises from the
roads providing direct access to the Center, or (vi) result in the construction
of any buildings in the area designated "No Build Area" on the Site Plan. In
performing any construction work, repairs or maintenance in the Center permitted
under this Lease after Tenant has taken physical possession of the Leased
Premises, Landlord shall use good faith, commercially reasonable efforts to
prevent any interference with parking for, access to or visibility or use of the
Premises or the business of Tenant or any subtenant or licensee of Tenant.

SECTION 2. LANDLORD'S AND TENANT'S WORK

     (a) Prior to delivery of possession of the Premises to Tenant, Landlord
shall construct, at its expense, the improvements to the Premises described on
Exhibit "C" attached hereto and made a part hereof consistent with plans and
specifications approved by Tenant as set forth in Section 2(e) below (the
"Landlord's Work"). Landlord agrees to deliver the Premises to Tenant with
Landlord's Work substantially completed (as defined in Section 2(c)) between
July

<PAGE>

15, 2006 and September 15, 2006 (the "Delivery Period"). Landlord shall give
Tenant notice (the "Estimated Delivery Notice") no later than April 1, 2006 of
the status of Landlord's construction and the estimated date that Landlord shall
deliver the Premises to Tenant with Landlord's Work substantially completed (the
"Estimated Delivery Date"). Landlord may revise the Estimated Delivery Date any
time prior to May 1, 2006 (the "Final Delivery Notice Date"), by which time
Landlord shall have given Tenant a final notice (the "Final Delivery Notice") of
a firm delivery date (the "Final Delivery Date") upon which the Landlord's Work
shall be substantially completed and the Leased Premises delivered to Tenant.
Upon the sending of the Final Delivery Notice, Landlord shall have no further
right to modify the Final Delivery Date. Neither the Estimated Delivery Date nor
the Final Delivery Date shall be (y) earlier than (i) thirty (30) days after the
date Tenant receives the Estimated Delivery Notice or the Final Delivery Notice,
as applicable, or (ii) the first day of the Delivery Period or (z) later than
the last day of the Delivery Period. If Landlord does not provide a Final
Delivery Notice on or before the earlier of the Final Delivery Notice Date and
thirty (30) days prior to the Estimated Delivery Date or if the date provided
for in such Final Delivery Notice does not comply with the requirements of this
Section 2, the Estimated Delivery Date shall be deemed to be the Final Delivery
Date, provided such date complies with the requirements of this Section 2. If
Landlord does not provide an Estimated Delivery Date on or before the Final
Delivery Notice Date or if such date does not comply with the requirements of
this Section 2, then the Final Delivery Date shall be deemed to be the last day
of the Delivery Period.

     (b) In the event that the Premises and Landlord's Work are not
substantially completed and delivered to Tenant on or before the Final Delivery
Date, the Base Rent due hereunder shall be adjusted so that, after the Rent
Commencement Date, Tenant shall receive a credit against Base Rent thereafter
due Landlord equal to one (1) day of Base Rent for each day after the Final
Delivery Date until delivery of the Premises is made to Tenant consistent with
the terms of this Lease, including substantial completion of the Landlord's
Work. Tenant shall not be obligated to accept possession of the Premises prior
to the later of (a) substantial completion of Landlord's Work, (b) the first day
of the Delivery Period and (c) the Final Delivery Date. Time is of the essence
regarding all dates set forth in this Section 2.

     (c) For purposes of this Lease, the Landlord's Work shall be deemed
"substantially completed" when (i) all of the Landlord's Work has been completed
except for "punch list items" that do not affect the Tenant's use of or the
appearance of the Premises or Tenant's ability to perform Tenant's Work (as
defined in Section 2(f) below), (ii) Landlord has satisfied the requirements of
Section 2(g), and (iii) Tenant has been furnished with a fully executed
non-disturbance agreement from the holder(s) of any then existing Mortgages,
which agreement is consistent with Section 11 of this Lease. Landlord shall
complete the punch list items within thirty (30) days of the date Tenant
notifies Landlord of same. Upon performance of such punch list, Tenant shall
promptly acknowledge Landlord's completion thereof. Punch list items shall not
be deemed completed until an authorized representative of Tenant has provided
Landlord written acknowledgment of same. Landlord agrees that any and all work
performed by Landlord after delivery of the Leased Premises to Tenant shall not
unreasonably interfere with Tenant's performance of Tenant's Work, and Landlord
shall be responsible for any and all costs resulting from any such unreasonable
interference.

     (d) Actual possession of the Premises shall have been delivered to Tenant
water-tight, free of Hazardous Substances, in a good, structurally sound
condition, with all of Landlord's Work substantially completed, which
substantial completion shall be evidenced by Landlord's architect to Tenant.

     (e) The Landlord's Work and Tenant's Work shall be performed (i) in a good
and workmanlike manner and in accordance with plans and specifications approved
by the other party, which approval shall not be unreasonably withheld or delayed
and (ii) in compliance with all applicable governmental codes, laws, ordinances
and regulations.

     (f) Landlord and Tenant agree that they shall conduct a joint walk through
of the Premises approximately two (2) weeks prior to the Final Delivery Date to
ascertain the status of Landlord's construction. Tenant agrees to provide, at
its expense, upon delivery of the Premises to Tenant, the improvements to the
Premises described on Exhibit "D" attached hereto and made a part hereof (the
"Tenant's Work").

                                       4

<PAGE>

     (g) Completion of Construction of Leased Premises. Prior to the Final
Delivery Date, Landlord shall satisfy the following conditions:

          1. Landlord shall furnish Tenant with a temporary certificate of
          occupancy and other necessary approvals which must be issued by the
          appropriate governmental authorities prior to the commencement of
          Tenant's Work and the occupancy and use of the Premises as
          contemplated. Landlord agrees to provide a permanent certificate of
          occupancy prior to Tenant's merchandising and, if required by the
          issuing authority, the setting of fixtures for the Premises, and
          otherwise as soon as available in the ordinary course of the issuing
          authority's practice.

          2. The architect engaged by Landlord shall execute a certificate of
          completion that the Premises has been constructed in a good and
          workmanlike manner in accordance with the plans and specifications
          approved by Tenant and the other requirements for Landlord's Work
          hereunder.

          3. Tenant shall have been furnished with a fully executed original of
          a commercially reasonable non-disturbance and attornment agreement
          pursuant to Section 11 hereof.

          4. Tenant shall have been notified no later than sixty (60) days prior
          to the Final Delivery Date of all applicable local governmental
          authority code requirements, if any, for the installation of Tenant's
          fixtures at the Premises and for low voltage electrical work in
          connection with the installation of Tenant's music, telephone and
          security systems at the Premises.

          5. Tenant shall have been furnished with a list of all subcontractors
          who performed work on the Premises, along with direct contact
          information for, the work discipline of, and the work performed by
          each.

          6. Tenant shall have been furnished with two (2) copies of all
          contractors', subcontractors' and suppliers' warranties relating to
          the Premises.

          7. Tenant shall have been furnished with two (2) copies of all
          operations and maintenance manuals relating to materials and systems
          used or installed in the construction of the Premises.

          8. Tenant shall have been furnished with two (2) copies of the record
          drawings for the construction of the Premises, marked to reflect
          actual locations of all components of the Premises.

     (h) In addition to any guarantees provided to Tenant elsewhere in this
Lease, Landlord hereby unconditionally guarantees all of Landlord's Work against
defective workmanship and materials for one (1) year from the Commencement Date
(as defined in Section 3(a)).

     (i) Landlord shall perform any additional work not required to be performed
by Tenant under this Lease in order for Landlord to obtain a permanent
certificate of occupancy for the Premises, whether such work relates to the
Premises or other portions of the Center.

SECTION 3. TERM

     (a) The "Commencement Date" of this Lease shall be the later of (i) the
date actual, physical possession of the Premises is delivered to Tenant with the
Landlord's Work substantially completed and (ii) the Final Delivery Date.

     (b) The initial term (the "Initial Term") of the Lease shall commence on
the earlier of (i) the date on which the Tenant opens for business in the
Premises, and (ii) sixty (60) days after the Commencement Date (the "Rent
Commencement Date") and end on the last day of the fifteenth (15th) full Lease
Year. The term "Lease Year" shall mean a period of twelve (12) consecutive
calendar months. The first Lease Year during the term hereof shall commence on
the first day of the first February following the Rent Commencement Date. Each
subsequent

                                       5

<PAGE>

Lease Year shall begin on the anniversary of the first Lease Year. The period
from the Rent Commencement Date to the first day of the first February following
the Rent Commencement Date (the "Initial Period") shall be a partial Lease Year.

     (c) If the Commencement Date has not occurred on or before September 15,
2006, then unless Tenant otherwise elects, the Commencement Date shall not occur
and Tenant shall not be obligated to accept delivery of the Leased Premises
until January 2, 2007. If for any reason, the Commencement Date has not occurred
by March 1, 2007, Tenant shall have the right and option to either (i) terminate
this Lease or (ii) elect that the Commencement Date not occur, and, thereby
defer delivery of the Leased Premises, until June 15, 2007. The remedies set
forth in this paragraph shall be in addition to any and all other rights and
remedies provided for Tenant in the Lease or available to Tenant in law or at
equity.

     (d) Tenant shall have three (3) consecutive separate options to extend the
term of this Lease for successive renewal terms of five (5) Lease Years each.
Tenant may exercise each such renewal option by giving written notice to
Landlord at least one hundred eighty (180) days prior to the end of the then
current term or renewal term.

     (e) The Initial Term and any renewal terms are hereinafter collectively
referred to as the "term".

     (f) Beginning on the date of this Lease and ending on the Commencement
Date, Tenant, its employees and agents shall have the right to enter the
Premises or any part thereof at reasonable times during regular business hours
for the purpose of making such inspections as Tenant may deem reasonably
necessary. In consideration of Tenant's right to inspect the Premises, Tenant
agrees to indemnify, defend and hold Landlord harmless from any and all loss,
damage, claims, costs, demands or expenses (including reasonable attorney's
fees) resulting from such entry on the Premises by Tenant or its agents.

     (g) From the date upon which the Premises are delivered to Tenant for its
work until the Commencement Date of the lease term, Tenant shall observe and
perform all of its obligations under this Lease (except Tenant's obligation to
operate and pay Base Rent, percentage rent and Tenant's Proportionate Share
(defined in Section 15(c) below) of "Maintenance Costs" (defined and provided
for in Section 15(b) hereof Real Estate Taxes (defined and provided for in
Section 27(b) hereof) and insurance (provided for in Section 28 hereof). In the
event Tenant fails to open for business within one hundred twenty (120) days
after the date possession of the Premises has been delivered to Tenant,
Landlord, in addition to any and all other available remedies, may require
Tenant to pay to Landlord, in addition to all other rent and charges herein, as
liquidated damages and not as a penalty, an amount equal to one-three hundred
sixty five thousandths (1/365) of the annual Base Rent for each day such failure
to open continues.

SECTION 4. MINIMUM RENT

     (a) From and after the Rent Commencement Date, Tenant covenants and agrees
to pay on a monthly basis during the term "Base Rent" in the following amounts
to Landlord at the address listed above or such other place as Landlord may by
thirty (30) days' prior written notice to Tenant direct:

<TABLE>
<CAPTION>
                       ANNUAL RENT                           ANNUAL
   LEASE YEAR     (BASED ON 12 MONTHS)   MONTHLY RENT   PER SQUARE FOOT
   ----------     --------------------   ------------   ---------------
<S>               <C>                    <C>            <C>
1-5 (initial)            $18.00           $30,000.00      $360,000.00
6-10 (initial)           $19.80           $33,000.00      $396,000.00
11-15 (initial)          $21.78           $36,300.00      $435,600.00
16-20 (option)           $23.96           $39,933.33      $479,200.00
21-25 (option)           $26.35           $43,916.67      $527,000.00
26-30 (option)           $28.99           $48,316.67      $579,800.00
</TABLE>

                                       6

<PAGE>

The monthly installments of Base Rent payable under this Section 4 shall be paid
in advance on or before the first day of each calendar month from and after the
Rent Commencement Date during the term hereof without notice or demand therefor
and without any offsets or deductions whatsoever except as otherwise provided in
this Lease. Base Rent for any partial month shall be prorated based upon a
thirty (30) day month. Base Rent for any Initial Period shall be the same as the
Base Rent for the first Lease Year. As used in this Lease, "Rent" shall mean
Base Rent in addition to all other sums due and owing from Tenant to Landlord
under this Lease.

     (b) In the event any sums required under this Lease to be paid are not
received when due, then all such amounts shall bear interest from the due date
thereof until the date paid at the rate of interest equal to two percent (2%)
over the prime rate in effect from time to time as established by National City
Bank, Columbus, Ohio (the "Interest Rate"), and shall be due and payable by
Tenant without notice or demand, Tenant shall pay the foregoing interest thereon
in addition to all default remedies of Landlord pursuant to Section 33 below.

     (c) Notwithstanding anything herein contained to the contrary, Tenant shall
initially pay to Landlord as additional Rent, simultaneously with the payment of
Base Rent, payable in equal monthly installments, the estimated monthly amount
of Tenant's Proportionate Share of Maintenance Costs (provided for in Section 15
hereof), Real Estate Taxes (provided for in Section 27 hereof) and insurance
(provided for in Section 28 hereof).

SECTION 5. PERCENTAGE RENT

     (a) Beginning with the first Lease Year, Tenant shall pay to Landlord, in
addition to Base Rent, upon the conditions and at the times hereinafter set
forth, percentage rent equal to two percent (2%) of Tenant's gross sales (as
hereinafter defined) in excess of the number obtained by dividing (a) Base Rent
for the applicable lease year by (b) the number .04. The annual percentage rent
shall be paid by Tenant to Landlord within ninety (90) days after the end of
each Lease Year. Each such payment shall be accompanied by a statement signed by
an authorized representative of Tenant setting forth Tenant's gross sales for
such Lease Year. For purposes of permitting verification by Landlord of the
gross sales reported by Tenant, Landlord shall have the right, not more than one
(1) time per Lease Year, upon not less than five (5) business days notice to
Tenant, to audit during normal business hours in Tenant's corporate office,
Tenant's books and records relating to Tenant's gross sales for a period of two
(2) years after the end of each Lease Year. Landlord agrees that no contingency
fee auditor shall be employed by Landlord for the purpose of conducting any such
audit. If such an audit reveals that Tenant has understated its gross sales by
more than three percent (3%) for any Lease Year, Tenant, in addition to paying
the additional percentage rent due, shall pay the reasonable cost of the audit
within thirty (30) days of Tenant's receipt of Landlord's demand for the same
and copies of all bills or invoices on which such cost is based.

     (b) Each Lease Year shall constitute a separate accounting period, and the
computation of percentage rental due for any one period shall be based on the
gross sales for such Lease Year.

     (c) The term "gross sales" as used in this Lease is hereby defined to mean
the gross dollar aggregate of all sales or rental or manufacture or production
of merchandise and all services, income and other receipts whatsoever of all
business conducted in, at or from any part of the Premises, whether for cash,
credit, check, charge account, gift or merchandise certificate purchased or for
other disposition of value regardless of collection. Should any departments,
divisions or parts of Lessee's business be conducted by any subleases,
concessionaires, licensees, assignees or others, then there shall be included in
Lessee's gross sales, all "gross sales" of such department, division or part,
whether the receipts be obtained at the Premises or elsewhere in the same manner
as if such business had been conducted by Lessee. Gross sales shall exclude the
following: (i) all credit, refunds, and allowances granted to customers; (ii)
all excise taxes, sales taxes, and other taxes levied or imposed by any
governmental authority upon or in connection with such sales; (iii) bulk sales
of goods in connection with the sale of Tenant's business; (iv) sales of
fixtures, furniture, equipment and other items not made in the ordinary course
of business; (v) salvage sales of damaged merchandise; (vi) discount sales made
to employees of the Tenant and Tenant's subsidiaries and affiliated
corporations, if any; (vii) exchanges of merchandise between Tenant's warehouse
or other stores and other similar movements of

                                       7

<PAGE>

merchandise; (viii) returns to suppliers; (ix) the proceeds from vending
machines and coin operated telephones and commissions on such proceeds to the
extent such proceeds and commissions are less than five percent (5%) of Gross
Sales exclusive of such proceeds and commissions; (x) uncollectible customer
charges and bad checks; (xi) disallowed credit card amounts and credit card
service charges or fees retained by the credit card company; (xii) delivery
charges; and (xiii) customer credit insurance.

     (d) The percentage rental, if any, shall be paid within ninety (90) days
after the end of each lease year, accompanied by a statement in writing signed
by Tenant setting forth its gross sales from the sale of all items for such
lease year. Tenant shall keep at its principal executive offices, where now or
hereafter located, true and accurate accounts of all receipts from the Premises.
Landlord, its agents and accountants, shall have access to such records at any
and all times during regular business hours for the purpose of examining or
auditing the same. Tenant shall also furnish to Landlord any and all reasonable
supporting data relating to gross sales and any deductions therefrom as Landlord
may reasonably require. Landlord agrees to keep any information obtained
therefrom confidential, except as may be required for Landlord's tax returns, or
in the event of litigation or arbitration where such matters are material.

     (e) Tenant shall at all times maintain accurate records which shall be
available for Landlord's inspection at any reasonable time.

     (f) If Landlord, for any reason, questions or disputes any statement of
percentage rental prepared by Tenant, then Landlord, at its own expense, may
employ such non-contingency fee accountants as Landlord may select to audit and
determine the amount of gross sales for the period or periods covered by such
statements. If the report of the accountants employed by Landlord shall show any
additional percentage rental payable by Tenant, then Tenant shall pay to
Landlord such additional percentage rental plus interest at one (1) point over
the prime rate, commencing on the date such percentage rentals should have been
paid, within thirty (30) days after such report has been forwarded to Tenant,
unless Tenant shall, within said thirty (30) day period, notify Landlord that
Tenant questions or disputes the correctness of such report. In the event that
Tenant questions or disputes the correctness of such report, the accountants
employed by Tenant and the accountants employed by Landlord shall endeavor to
reconcile the question(s) or dispute(s) within thirty (30) days after the notice
from Tenant questioning or disputing the report of Landlord's accountants. In
the event that it is finally determined by the parties that Tenant has
understated percentage rent for any Lease year by three percent (3%) or more,
Tenant shall pay the cost of the audit. Furthermore, if Tenant's gross sales
cannot be verified due to the insufficiency or inadequacy of Tenant's records,
then Tenant shall pay the cost of the audit. The cost of any audit resulting
from failure to report percentage rent after written notification of default
shall be at the sole cost of Tenant.

SECTION 6. TITLE ENCUMBRANCES; LANDLORD REPRESENATATIONS, WARRANTIES AND
     COVENANTS

     (a) Tenant's rights under this Lease are subject and subordinate to those
title matters set forth in Landlord's owner's title policy issued by Chicago
Title Insurance Company, being Policy No. 24510646, dated September 15, 2005, a
copy of which has been provided to Tenant, specifically including but not
limited to the terms and conditions of a certain Declaration of Covenants,
Conditions and Restrictions for Chagrin Highlands, dated May 4, 1999, executed
by the City of Cleveland, Ohio, as Declarant and filed for record on May 5, 1999
and recorded as Cuyahoga County Recorder's AFN 19990551070, as subsequently
supplemented and amended (collectively, the "Declaration"). Tenant agrees that
it shall abide by the terms and conditions of the Declaration.

     (b) Landlord covenants, represents and warrants to Tenant that: (i) the
Declaration has not been modified, amended or terminated; (ii) the Declaration
is currently in full force and effect; (iii) to its actual knowledge as of the
date hereof, no default under the Declaration exists thereunder beyond any
applicable notice and cure period; and (iv) the Declaration is, and shall
remain, superior in lien to all mortgages and related liens affecting the Center
and all other land which is encumbered by the Declaration. Tenant shall comply
with the terms and conditions of the Declaration to the extent same affects the
Premises (it being agreed that Tenant shall not be obligated to expend any sums
in connection with such compliance).

                                       8

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     (c) Landlord shall, during the term: (i) perform and observe all of the
terms, covenants, provisions and conditions of the Declaration on Landlord's
part to be performed and observed; (ii) defend, indemnify and hold harmless
Tenant from and against and all claims, demands, causes of action, suits,
damages, liabilities and expenses of any nature arising out of or in connection
with the enforcement of, or a claimed breach by, Landlord of any covenant, term,
condition or provision of the Declaration; and (iii) diligently enforce, at its
sole expense, the covenants, agreements and obligations of the Declaration.
Tenant shall, during the term, defend, indemnify and hold harmless Landlord from
and against and all claims, demands, causes of action, suits, damages,
liabilities and expenses of any nature arising out of or in connection with the
enforcement of, or a claimed breach by, Tenant of any covenant, term, condition
or provision of the Declaration.

     (d) Whenever, pursuant to the Declaration, the consent or approval of
Landlord shall be required by or requested, and such consent or approval could
diminish the rights or increase the obligations of Tenant thereunder or under
this Lease, or could adversely affect Tenant's use or occupancy of the Premises,
or the conduct of Tenant's business therein, such consent or approval shall not
be granted without the prior written consent of Tenant, which consent may be
withheld in its sole and absolute discretion.

     (e) Landlord shall not amend, or modify the Declaration if such amendment
or modification could diminish the rights or increase the obligations of Tenant
thereunder of under this Lease, or could adversely affect Tenant's use or
occupancy of the Premises or the conduct of Tenant's business therein, nor shall
Landlord terminate the Declaration.

     (f) Landlord shall obtain any third-party approvals required under Article
VIII of the Declaration for the performance of Landlord's Work (including,
without limitation, Tenant's elevations and signage, as shown on Exhibit "F"
hereto), Tenant's Work and the operation of Tenant's business in the Premises.

     (g) Landlord further represents, warrants and/or covenants:

          1. That it has the right to enter into this Lease and that the
          person(s) signing this Lease on its behalf has authority to enter into
          this Lease and to bind Landlord to the terms, covenants and conditions
          contained herein.

          2. That it has good and marketable fee simple title to the Premises
          and the Center is free and clear of all easements, restrictions, liens
          and encumbrances except as described in Section 6(a) above.

          3. That the Premises, including without limitation, the roof and HVAC
          system, are or as of the Commencement Date shall be, in good condition
          and repair.

          4. That the Premises is, or as of the Commencement Date shall be,
          properly zoned for use by the Tenant as a retail footwear location and
          there are no restrictive covenants or other title encumbrances which
          restrict in any way the use of the Premises as a retail footwear
          location.

          5. That Landlord has, or as of the Commencement Date shall have,
          obtained all necessary approvals and permits from appropriate
          governmental authorities for the development of the Center in
          accordance with the Site Plan and for the construction and occupancy
          of the Premises by Tenant as a retail footwear location.

          6. That Landlord has not entered into, and shall not hereafter prior
          to the expiration or termination of this Lease enter into, any leases,
          agreements or restrictive covenants that would prohibit or interfere
          with the use of the Premises by the Tenant as a retail footwear
          location.

          7. In the event the legal description of the Center described on
          Exhibit "B" hereto indicates that the Center is composed of more than
          one (1) parcel or lot, there exists no strips or gores between such
          parcels or lots which are not owned by Landlord.

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          8. No third-party consents or approvals are required in order for
          Landlord to enter into this Lease, or for the performance of
          Landlord's Work.

          9. The Center now has, and on the Commencement Date shall have,
          access to and from Richmond Road and Harvard Road, as shown on the
          Site Plan, for the passage of vehicular traffic.

          10. As of the date of this Lease, there are no sign ordinances,
          restrictive covenants, uniform sign plans or other signage
          restrictions which would prevent the Premises from having the signage
          (including, without limitation, the square foot area and size of
          letters) as depicted on Exhibit "F" hereof.

SECTION 7. RIGHT TO REMODEL

     (a) Tenant may, at Tenant's expense, make repairs and alterations to the
interior non-structural portions of the Premises and remodel the interior of the
Premises, excepting structural and exterior changes, in such manner and to such
extent as may from time to time be deemed necessary by Tenant for adapting to
the Premises to the requirements and uses of Tenant and for the installation of
its fixtures, appliances and equipment. Any structural or exterior alteration
may only be made by Tenant with the prior written approval of Landlord, which
approval may be granted or withheld in Landlord's sole discretion. All plans for
any structural alterations shall be submitted to Landlord for endorsement of its
approval prior to commencement of work. Upon Landlord's request, Tenant shall be
obligated, if it remodels and/or alters the Premises, to restore the Premises
upon vacating the same. Tenant will indemnify and save harmless the Landlord
from and against all mechanics liens or claims by reason of repairs, alterations
or improvements which may be made by Tenant to the Premises. Inasmuch as any
such alterations, additions or other work in or to the Premises may constitute
or create a hazard, inconvenience or annoyance to the public and other tenants
in the Center, Tenant shall, if so directed in writing by Landlord, erect
barricades, temporarily close the Premises, or affected portion thereof, to the
public or take whatever measures are necessary to protect the building
containing the Premises, the public and the other tenants of the Center for the
duration of such alterations, additions or other work. If Landlord determines,
in its sole judgment, that Tenant has failed to take any of such necessary
protective measures, and Tenant fails to cure same within ten (10) days after
notice thereof, Landlord may do so and Tenant shall reimburse Landlord for the
cost thereof within ten (10) days after Landlord bills Tenant therefor.

     (b) All such work, including Tenant's Work pursuant to Exhibit "D" shall be
performed lien free by Tenant. In the event a mechanic's lien is filed against
the premises or the Center, Tenant shall discharge or bond off same within ten
(10) days from the filing thereof. If Tenant fails to discharge said lien,
Landlord may bond off or pay same without inquiring into the validity or merits
of such lien, and all sums so advanced shall be paid on demand by Tenant as
additional rent.

SECTION 8. UTILITIES

     (a) Prior to the Commencement Date, Landlord shall provide, at Landlord's
expense, by separate meter, electric, water, sewer, and other utilities to the
Premises sufficient to meet Tenant's requirements. Landlord shall further
provide, or cause to be provided, all such utility services to the Premises
during the term of this Lease. Tenant agrees to be responsible and pay for all
public utility services rendered or furnished to the Premises during the term
hereof, including, but not limited to, heat, water, gas, electric, steam,
telephone service and sewer services, together with all taxes, levies or other
charges on such utility services when the same become due and payable. Tenant
shall be responsible for all utility services and costs inside the premises.
Landlord shall not be liable for the quality or quantity of or interference
involving such utilities unless due directly to Landlord's negligence.

     (b) During the term hereof, whether the Premises are occupied or
unoccupied, Tenant agrees to maintain heat sufficient to heat the Premises so as
to avert any damage to the Premises on account of cold weather.

     (c) Tenant agrees to be responsible for its rubbish removal from the
Premises. Tenant shall be permitted to maintain and operate, at no extra charge:
(i) a trash compactor in the

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portion of the Common Areas designated on Site Plan as "Trash Compactor Pad";
and (ii) a trash container(s) in the portion(s) of the Common Areas designated
on Site Plan as "Trash Container Pad". Tenant, at its sole cost and expense,
shall keep the trash compactor and containers neat and clean and repair any
damage caused by use and storage of such compactor and containers.

SECTION 9. GLASS

     The Tenant shall maintain the glass part of the Premises, promptly
replacing any breakage and fully saving the Landlord harmless from any loss,
cost or damage resulting from such breakage or the replacement thereof.

SECTION 10. PERSONAL PROPERTY

     The Tenant further agrees that all personal property of every kind or
description that may at any time be in or on the Premises shall be at the
Tenant's sole risk, or at the risk of those claiming under the Tenant, and that
the Landlord shall not be liable for any damage to said property or loss
suffered by the business or occupation of the Tenant caused in any manner
whatsoever.

SECTION 11. RIGHT TO MORTGAGE

     (a) Landlord reserves the right to subject and subordinate this Lease at
all times to the lien of any deed of trust, mortgage or mortgages now or
hereafter placed upon Landlord's interest in the Premises; provided, however,
that no default by Landlord, under any deed of trust, mortgage or mortgages,
shall affect Tenant's rights under this Lease, so long as Tenant performs the
obligations imposed upon it hereunder and is not in default hereunder, and
Tenant attorns to the holder of such deed of trust or mortgage, its assignee or
the purchaser at any foreclosure sale. Any such subordination shall be
contingent upon Tenant receiving a commercially reasonable subordination,
non-disturbance and attornment agreement ("SNDA"). It is a condition, however,
to the subordination and lien provisions herein provided, that Landlord shall
procure from any such mortgagee an agreement in writing, which shall be
delivered to Tenant or contained in an SNDA, providing in substance that so long
as Tenant shall faithfully discharge the obligations on its part to be kept and
performed under the terms of this Lease and is not in default under the terms
hereof, its tenancy will not be disturbed nor this Lease affected by any default
under such mortgage. The parties acknowledge that the SNDA attached hereto as
Exhibit "I" is commercially reasonable. Landlord represents and warrants that,
as of the date of this Lease and the Commencement Date, there are no mortgages,
ground leases or other encumbrances that could dispossess Tenant's leasehold
interest hereunder (collectively, "Mortgages") on Landlord's fee title to the
Center. Landlord agrees that Tenant's obligations under this Lease shall be
contingent upon Tenant entering into an SNDA with the holder of such Mortgage on
or before the Commencement Date.

     (b) Wherever notice is required to be given to Landlord pursuant to the
terms of this Lease, Tenant will likewise give such notice to any mortgagee of
Landlord's interest in the Premises upon notice of such mortgagee's name and
address from Landlord. Furthermore, such mortgagee shall have the same rights to
cure any default on the part of Landlord that Landlord would have had.

SECTION 12. SUBLEASE OR ASSIGNMENT

     (a) Tenant may assign Tenant's interest in this Lease or sublet all or any
portion of the Premises to a nationally or regionally recognized retailer
without Landlord's consent. Any other assignment or subletting not specifically
provided for in this Section 12 shall be subject to Landlord's prior written
consent, which consent shall not be unreasonably withheld. Landlord's review of
the proposed assignee or subtenant shall be limited to business reputation,
business experience, a retail use compatible with then existing tenant mix of
the Center, and financial ability to perform its obligations under this Lease or
the proposed sublease, as the case may be. In any such event, Tenant shall
remain fully and primarily liable hereunder. Tenant's right to assign or sublet
shall be subject to any then existing exclusives or primary use exclusives for
tenants leasing more than 15,000 square feet of space in the Center.

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     Tenant may, without the consent of Landlord, (i) grant licenses and/or
concessions within the Premises or (ii) assign or sublet all or any portion of
the Premises to (a) any parent, affiliate or subsidiary corporation of Tenant;
(b) a transferee or successor by merger, consolidation or acquisition of Tenant
or its parent or subsidiary; or (c) a transferee with a good business reputation
who is acquiring all or substantially all of the stores of Tenant in the State
of Ohio or the assets of Tenant, its parent or subsidiary. Any such assignee or
sublessee shall be bound by the terms of this Lease. Tenant shall deliver to
Landlord in the ordinary course of its business an instrument whereby the
assignee or entity succeeding to Tenant's interest hereunder agrees to be bound
by the terms of this Lease.

     (b) Landlord may assign Landlord's interest in this Lease without the
consent of Tenant (a) to any entity to which Landlord transfers its fee interest
in the Premises provided such entity (i) agrees in writing to be bound by all
the terms of this Lease and (ii) such assignment is pursuant to a bona fide
arm's length transaction not designed to reduce Landlord's liability or to
otherwise exempt Landlord from any provision of this Lease or (b) subject to
Section 12, as security for any indebtedness undertaken by Landlord.

SECTION 13. COMMON AREAS

     Landlord grants to Tenant and its customers, agents, employees, licensees,
invitees and subtenants, a non-exclusive easement in common with the other
tenants of the Center for the use of all Common Areas. Landlord hereby covenants
and agrees that Landlord shall not grant any party other than tenants of the
Center and their customers, agents, employees, licensees, invitees and
subtenants a right to utilize the parking areas in the Center, and Landlord
shall use commercially reasonable efforts to restrict the use of the parking
areas to such parties. "Common Areas" means all areas and facilities in the
Center provided and so designated by Landlord and made available by Landlord in
the exercise of good business judgment for the common use and benefit of tenants
of the Center and their customers, employees and invitees. Common Areas shall
include (to the extent the same are constructed), but not be limited to, the
parking areas, sidewalks, landscaped areas, corridors, stairways, boundary walls
and fences, incinerators, truckways, service roads, and service areas not
reserved for the exclusive use of Tenant or other tenants.

SECTION 14. OPERATION OF COMMON AREAS

     (a) From and after the Commencement Date, Landlord, at its cost and
expense, shall operate the Center and maintain the Common Areas and the Center
in a clean and safe condition and repair so that Tenant and its customers,
guests, invitees, licensees, officers and employees can use and enjoy the same.
The obligations of Landlord pursuant hereto shall include, without limitation,
the maintenance of the Center and any pylon structure(s) (excluding therefrom
Tenant's advertising panels), regular cleaning of the Common Areas, removal of
trash and debris from the Common Areas, repairing the asphalt and concrete
portions of the Common Areas (including potholes, curbs and sidewalks),
repairing common utility lines and facilities, repairing storm drains, repairing
parking lot lights, maintaining the landscaped portion of the Common Areas
(including regular grass cutting), maintaining floodlights and other necessary
means of illumination sufficient to illuminate the Common Areas during twilight
and evening hours that Tenant's store is open for business and in operation,
prompt removal of snow and ice on every occasion where safety of the Common
Areas or access to the Premises is impeded, and periodic restriping of the
parking area. Landlord shall at all times have exclusive control of the Common
Areas and may at any time and from time to time: (i) promulgate, modify and
amend reasonable rules and regulations for the use of the Common Areas, which
rules and regulations shall be binding upon Tenant upon delivery of a copy
thereof to Tenant; (ii) temporarily close any part of the Common Areas,
including but not limited to closing the streets, sidewalks, road or other
facilities to the extent necessary to prevent a dedication thereof or the
accrual of rights of any person or of the public therein; (iii) exclude and
restrain anyone from the use or occupancy of the Common Areas or any part
thereof except bona fide customers and suppliers of the tenants of the Center
who use said areas in accordance with the rules and regulations established by
Landlord; and (iv) engage others to operate and maintain all or any part of the
Common Areas, on such terms and conditions as Landlord shall, in its sole
judgment, deem reasonable and proper; and (v) make such changes in the Common
Areas as in its opinion are in the best interest of the Center, including but
not limited to changing the location of walkways, service areas, driveways,

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entrances, existing automobile parking spaces and other facilities, changing the
direction and flow of traffic and establishing prohibited areas; provided,
however, that any such change shall be subject to the terms and conditions of
Section 1(c) of this Lease.

     (b) Tenant shall keep all Common Areas free of obstructions created or
permitted by Tenant. Tenant shall permit the use of the Common Areas only for
normal parking and ingress and egress by its customers and suppliers to and from
the Premises. If in Landlord's opinion unauthorized persons are using any of the
Common Areas by reason of Tenant's occupancy of the Premises, Landlord shall
have the right at any time to remove any such unauthorized persons from said
areas or to restrain unauthorized persons from said areas. Landlord, Tenant, and
others constructing improvements or making repairs or alterations in the Center
shall have the right to make reasonable use of portions of the Common Areas.

     (c) Throughout the term, Landlord shall keep the Common Areas fully lighted
and open to the customers of the Center seven (7) days a week from dusk until
11:00 p.m. Monday through Saturday and until 7:00 p.m. on Sunday ("Normal
Hours"). Upon request of Tenant, Landlord shall keep the Common Areas lighted
for as long as after Normal Hours as Tenant shall request, provided Tenant shall
pay for a share of the reasonable cost of said requested lighting, which share
shall be equal to the product of (i) such costs, and (ii) a fraction, the
numerator of which shall be the number of square feet of leasable space within
the Premises and the denominator of which shall be the aggregate number of
square feet of leasable space of all premises within the Center (including the
Premises) open later than Normal Hours (excluding, however, those tenants and
occupants who separately control and pay for their own Common Area lighting). In
addition to the foregoing, Landlord shall provide for low level security
lighting from one (1) hour after the close of business in the Premises until
dawn.

SECTION 15. COMMON AREA MAINTENANCE, TENANT'S SHARE

     (a) Tenant shall initially pay to Landlord as additional rental,
simultaneously with the payment of Base Rent called for under Section 4(a), the
estimated monthly amount of Tenant's Proportionate Share of the "Maintenance
Costs" (as defined in Section 15(c) below) for the operation and maintenance of
the Common Areas as set forth in Section 4(c), One and 10/100 Dollars ($1.10)
per square foot, payable in equal monthly installments of One Thousand Eight
Hundred Thirty-Three and 33/100 Dollars ($1,833.33) as the estimated monthly
amount of Tenant's Proportionate Share of the "Maintenance Costs" (as defined in
Section 15(b) below) for the operation and maintenance of the common areas.

     (b) The Maintenance Costs for the common areas shall be computed on an
accrual basis, under generally accepted accounting principles, and shall include
all costs of operating, maintaining, repairing and replacing the common areas,
including by way of example but not limitation: (i) cost of labor (including
worker's compensation insurance, employee benefits and payroll taxes); (ii)
materials, and supplies used or consumed in the maintenance or operation of the
common area; (iii) the cost of operating and repairing of the lighting; (iv)
cleaning, painting, removing of rubbish or debris, snow and ice, private
security services, and inspecting the common areas; (v) the cost of repairing
and/or replacing paving, curbs, walkways, markings, directional or other signs;
landscaping, and drainage and lighting facilities; (vi) rental paid for
maintenance of machinery and equipment; and (vii) a reasonable allowance to
Landlord for Landlord's supervision, which allowance shall not in an accounting
year exceed ten percent (10%) of the total of all Maintenance Costs (excluding
insurance costs) for such accounting year (all of the foregoing are collectively
referred to herein as "Maintenance Costs"). Notwithstanding the foregoing, the
following shall be excluded, deducted or credited from Maintenance Costs when
computing Tenant's Proportionate Share of same: (a) Net recoveries received by
Landlord from tenants as a result of any act, omission, default or negligence or
as the result of breaches by tenants of the provisions of their leases and/or
other amounts received by Landlord from third parties, which recoveries and/or
amounts reimburse Landlord for or reduce Maintenance Costs; (b) Gross revenues
from charges, if any, made for the use of the parking facilities and other
Common Areas or facilities of the Center (including, without limitation, the
sale or rental of advertising space); (c) The cost of the land underlying and
the construction of the Center, whether initially or in connection with any
replacement or expansion thereof and whether mandated by law or otherwise,
including, without limitation, costs of correcting (I) defective

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conditions in the Center resulting from defects in or inadequacy of the initial
design or construction of the same, or (II) code violations, including the
payment of fines or citations in connection therewith; (d) The depreciation or
amortization of the Center or any part thereof or any equipment or other
property used in connection therewith; (e) the initial cost of the installation
of the parking areas or facilities or the amortization or depreciation of such
initial cost; (f) The cost of providing or performing improvements, work or
repairs to or within (I) any portion of the premises of any other tenants or
occupants in the Center, (II) any other building which is not part of the Common
Areas or (III) any portion of the Center the use of which is not available to
Tenant; (g) Any reserves for future expenditures or liabilities which would be
incurred subsequent to the then current accounting year; (h) Any bad debt loss,
rent loss or reserves for bad debt or rent loss; (i) Legal fees, audit fees,
leasing commissions, advertising expenses and other costs incurred in connection
with (I) the original development or original leasing of the Center, (II) the
future re-leasing of the Center, (III) any advertising or promotion of the
Center or any part thereof, and (IV) disputes with other tenants or third
parties; (j) Costs of repairing or restoring any portion of the Center damaged
or destroyed by any casualty or peril whether insured, uninsured or uninsurable;
(k) Costs in connection with the cleanup or removal of hazardous materials; (l)
The cost of compliance with the Americans with Disabilities Act of 1990, as
amended, and all regulations promulgated pursuant thereto; (m) Net recoveries
from insurance policies taken out by Landlord to the extent that the proceeds
reimburse Landlord for expenses which have previously been included or which
would otherwise be included in Maintenance Costs; (n) Costs associated with
repairs or improvements the need for which arose prior to the date of this
Lease; (o) Costs of a capital nature, including all capital improvements,
alterations, repairs and/or replacements (for purposes of this Lease, "costs of
a capital nature" shall mean the cost of any item or service the useful life of
which exceeds 36 months); (p) Costs relating to the negligence of Landlord or
its contractors, agents or employees or the payment of any claims or damages
relating to the same; (r) Any insurance costs.

     (c) Landlord shall maintain accurate and detailed records of all
Maintenance Costs for the common areas in accordance with generally accepted
accounting principles. For purposes of this Lease, "Tenant's Proportionate
Share" shall be the product of the applicable cost or expense multiplied by a
fraction, the numerator of which shall be the gross leasable area (expressed in
square feet) of the Premises and the denominator of which shall be the gross
leasable area (expressed in square feet) of all leasable space in the Center.
Tenant's Proportionate Share of that portion of the Center owned by Landlord is
estimated to be 8.69%, during the first Lease Year.

     (d) The actual amount of Tenant's Proportionate Share of all Maintenance
Costs shall be computed by Landlord within one hundred eighty (180) days after
the end of each accounting year (which Landlord may change from time to time).
At this time Landlord shall furnish to Tenant a statement showing in reasonable
detail the actual Maintenance Costs incurred during such accounting year and
Tenant's Proportionate Share thereof (prorated for any partial Lease year, with
appropriate adjustments to reflect any change in the floor area of the premises
or the gross leasable area of a building occurring during such accounting year).
Any excess payments from Tenant shall be applied to the next installments of the
Maintenance Costs hereunder, or refunded by Landlord. Any underpayments by
Tenant shall be paid to Landlord within thirty (30) days after receipt of such
reconciliation statement. Tenant's estimated monthly Maintenance Cost hereunder
may be adjusted by written notice from Landlord. Notwithstanding anything
contained in this Section 15 to the contrary, Landlord and Tenant agree that the
actual amount of Tenant's Proportionate Share of Maintenance Costs, excluding
costs for snow and ice removal, shall not increase by more than five percent
(5%) in any lease year over the previous Lease Year, and that Tenant's
Proportionate Share of Maintenance Costs for the first lease year, excluding
costs for snow and ice removal and common area utilities, shall not exceed One
and 25/100 Dollars ($1.25) per square foot.

     (e) If Tenant, for any reason in the exercise of good business judgment,
questions or disputes any statement of Maintenance Costs prepared by Landlord,
then Tenant, at its own expense, may employ such accountants as Tenant may
select to review Landlord's books and records solely with respect to Maintenance
Costs during the prior two Lease years and to determine the amount of
Maintenance Costs for the period or periods covered by such statements. If the
report of the accountants employed by Tenant shall show any overcharge paid by
Tenant, then Tenant shall receive a credit from Landlord for such difference.
Any

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underpayment shall be paid by Tenant. Tenant agrees that no contingency fee
auditors shall be employed by Tenant for the purpose of conducting any such
audit. In the event that Landlord questions or disputes the correctness of such
report, the accountants employed by Tenant and the accountants employed by
Landlord shall endeavor to reconcile the question(s) or dispute(s) within thirty
(30) days after the notice from Tenant questioning or disputing the report of
Landlord's accountants. In the event that it is finally determined by the
parties that Landlord has overstated Maintenance Costs for any Lease year by
three percent (3%) or more, Landlord shall pay the reasonable cost of the audit.
Furthermore, if Landlord's Maintenance Costs cannot be verified due to the
insufficiency or inadequacy of Landlord's records, then Landlord shall pay the
cost of the audit.

SECTION 16. EMINENT DOMAIN

     (a) In the event the entire premises or any part thereof shall be taken or
condemned either permanently or temporarily for any public or quasi-public use
or purpose by any competent authority in appropriation proceedings or by any
right of eminent domain, the entire compensation or award therefore, including
leasehold, reversion and fee, shall belong to the Landlord and Tenant hereby
assigns to Landlord all of Tenant's right, title and interest in and to such
award.

     (b) In the event that only a portion of the Premises, not exceeding twenty
percent (20%) of same, shall be so taken or condemned, and the portion of the
Premises not taken can be repaired within ninety (90) days from the date of
which possession is taken for the public use so as to be commercially fit for
the operation of Tenant's business, the Landlord at its own expense shall so
repair the portion of the Premises not taken and there shall be an equitable
abatement of rent for the remainder of the term and/or extended terms. The
entire award paid on account thereof shall be paid to the Landlord. If the
portion of the Premises not taken cannot be repaired within ninety (90) days
from the date of which possession is taken so as to be commercially fit for the
operation of Tenant's business, then this Lease shall terminate and become null
and void from the time possession of the portion taken is required for public
use, and from that date on the parties hereto shall be released from all further
obligations hereunder except as herein stated and Tenant shall have no claim for
any compensation on account of its leasehold interest. No other taking,
appropriation or condemnation shall cause this Lease to be terminated. Any such
appropriation or condemnation proceedings shall not operate as or be deemed an
eviction of Tenant or a breach of Landlord's covenant of quiet enjoyment and
Tenant shall have no claim for any compensation on account of its leasehold
interest.

     (c) In the event that more than twenty percent (20%) of the Premises shall
at any time be taken by public or quasi-public use or condemned under eminent
domain, then at the option of the Landlord or Tenant upon the giving of thirty
(30) days written notice (after such taking or condemnation), this Lease shall
terminate and expire as of the date of such taking and any prepaid rental shall
be prorated as of the effective date of such termination.

SECTION 17. TENANT'S TAXES

     Tenant further covenants and agrees to pay promptly when due all taxes
assessed against Tenant's fixtures, furnishings, equipment and stock-in trade
placed in or on the Premises during the term of this Lease.

SECTION 18. RISK OF GOODS

     All personal property, goods, machinery, and merchandise in said Premises
shall be at Tenant's risk if damaged by water, fire, explosion, wind or accident
of any kind, and Landlord shall have no responsibility therefore or liability
for any of the foregoing and Tenant hereby releases Landlord from such
liability.

SECTION 19. USE AND OCCUPANCY

     (a) Tenant agrees to initially open and operate a DSW for the retail sales
of shoes and other footwear in the Premises, fully staffed and stocked and
equivalent to other DSW stores operated by Tenant in the State of Ohio. The
Premises during the term of this Lease shall be

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<PAGE>

occupied for the operating and conducting therein of a retail shoe store or any
other lawful retail purpose. Any use other than a retail shoe store shall be
consistent with the then existing character of the Center, and shall not violate
those exclusives and prohibited uses set forth on Exhibit "E" attached hereto
and made a part hereof, which are the exclusives and prohibited uses in effect
for the Center as of the date hereof, for so long as and to the extent said
exclusives and prohibited uses are still in full force and effect, as well as
exclusives and prohibited uses hereafter granted for (i) tenants leasing more
than 15,000 square feet of space elsewhere within the Center and (ii) Ulta(3)
Cosmetics, for so long as and to the extent said exclusives are still in full
force and effect.

     (b) For so long as Tenant is continuously and regularly operating its
business in the Premises, Landlord will not lease any space within the Center or
permit any space within the Center (to the extent Landlord has control) to be
used by any person, persons, partnership or entity who devotes five percent (5%)
or more of its selling area to the sale of footwear (the "Exclusive Use"). The
foregoing limitation shall not apply to typical shoe departments found in
department stores, junior department stores, general merchandise and discount
stores, and clothing retailers, such as Filene's Basement, Marshalls, TJ Maxx
and similar type stores so long as such shoe departments are consistent with the
typical shoe departments of each such retailer. Any portion of the Center which
is sold by Landlord during the term shall contain a deed restriction
incorporating the foregoing Exclusive Use.

     Landlord acknowledges that in the event of a breach or an attempted or
prospective breach of this Section 19(b), Tenant's remedies at law would be
inadequate. Therefore, in any such event, if such breach is not cured within
thirty (30) days after written notice from Tenant to Landlord, Tenant shall be
entitled, at its option and without limitation of any other remedy permitted by
law or equity or by this Lease, (i) to elect to pay in lieu of Base Rent and
percentage rent due under this Lease two percent (2%) of Tenant's gross sales
calculated according to Tenant's standard procedures in accordance with
generally accepted accounting principles, (ii) to cancel this Lease on one
hundred eighty (180) days written notice to Landlord, and/or (iii) to full and
adequate relief by temporary or permanent injunction. Notwithstanding the
foregoing, the remedy of lease cancellation shall not be applicable if the
violation of this Section 19(b) is due to the breach of another tenant's lease
and Landlord is, in Tenant's good faith judgment, diligently pursuing
appropriate legal proceedings to halt the violation and such violation is so
halted within sixty (60) days of Landlord's receipt of Tenant's notice.

     (c) Tenant shall at all times conduct its operations on the Premises in a
lawful manner and shall, at Tenant's expense, comply with all laws, rules,
orders, ordinances, directions, regulations, and requirements of all
governmental authorities, now in force or which may hereafter be in force, which
shall impose any duty upon Landlord or Tenant with respect to the business of
Tenant and the use, occupancy or alteration of the Premises. Tenant shall comply
with all requirements of the Americans with Disabilities Act, and shall be
solely responsible for all alterations within the Premises in connection
therewith. Tenant covenants and agrees that the Premises shall not be abandoned
or left vacant and that only minor portions of the Premises shall be used for
office or storage space in connection with Tenant's business conducted in the
Premises.

     Without being in default of this Lease, Tenant shall have the right to
cease operating (go dark) at any time and for whatever reason after the first
(1st) lease year. Notwithstanding the foregoing, Tenant's right to vacate (go
dark), shall not release or excuse the Tenant from any obligations or
liabilities, including the payment of minimum rent and additional rent and other
charges, under this Lease without the express written consent of Landlord. In
the event Tenant fails to (i) open and operate within ninety (90) days after
delivery of the Premises or (ii) operate for one hundred twenty (120) or more
consecutive days, Landlord shall have the right, effective upon thirty (30) days
prior written notice to Tenant, to terminate the Lease as Landlord's sole
remedy, provided that if Tenant recommences operating fully stocked in
substantially all of the premises within such thirty (30) days, Landlord's
termination shall be null and void. In the event Tenant fails to open and
operate as provided above or shall cease operating as provided above, Landlord's
sole remedy on account thereof shall be limited to the right to elect to
recapture the premises and terminate the Lease, whereupon there shall be no
further liability of the parties hereunder. Such termination shall be effective
upon written notice to Tenant any time prior to Tenant reopening for business in
the Premises. Provided, however, in the event Landlord has not

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so elected to recapture, Tenant shall have right to notify Landlord of Tenant's
intention to reopen for business in the Premises within sixty (60) days,
followed by Tenant's actually reopening for business fully stocked in
substantially all of the Premises within such sixty (60) day period, which
notice and actual reopening shall toll Landlord's right to recapture.

     (d) Landlord and Tenant agree that no space in the Center, including the
Premises, shall be used as a bowling alley, deep discount retailer, theater
showing either film, television or the like or live entertainment, health club,
games/amusement room, indoor playground, adult bookstore, flea market, bingo
parlor, bar, tavern or cocktail lounge (except if incidental to a restaurant as
permitted below), restaurant (except as permitted below), adult book or adult
video store (defined for the purposes hereof as a store devoting ten percent
(10%) or more of its floor space to offering books and/or video materials for
sale or for rent which are directed to or restricted to adult customers due to
sexually explicit subject matter or for any other reason making it inappropriate
for general use), adult theater or "strip-tease" establishment, automotive
maintenance or automotive repair facility, warehouse, car wash, pawn shop, check
cashing service, establishment selling second hand goods, flea market,
entertainment or recreational facility (as defined below), training or
educational facility (as defined below); the renting, leasing, selling or
displaying of any boat, motor vehicle or trailer; industrial or manufacturing
purposes; a carnival, circus or amusement park; a gas station, facility for the
sale of paraphernalia for use with illicit drugs, funeral home, blood bank or
mortuary, gambling establishment, banquet hall, auditorium or other place of
public assembly, second-hand or surplus store, gun range; the sale of fireworks;
a veterinary hospital or animal raising facility; the storage of goods not
intended to be sold from the Center; a video rental store (except as permitted
below), karate center, central laundry or dry cleaning plant, supermarket or any
facility which is illegal or dangerous, constitutes a nuisance, emits offensive
odors, fumes, dust or vapors or loud noise or sounds or is inconsistent with
community oriented shopping centers. For the purposes of this Section 19(d), the
phrase "entertainment or recreational facility" shall include, without
limitation, a movie or live theater or cinema, bowling alley, skating rink, gym,
health spa or studio, dance hall or night club, billiard or pool hall, massage
parlor, health club, game parlor or video arcade (which shall be defined as any
store containing more than five (5) electronic games) or any other facility
operated solely for entertainment purposes (such as a "laser tag" or "virtual
reality" theme operation), except for a "Curves" or similar operation provided
the same is not located immediately adjacent to the Premises. For the purposes
of this Section 19(d), the phrase "training or educational facility" shall
include, without limitation, a beauty school, nail salon, barber college,
reading room, place of instruction or any other operation catering primarily to
students or trainees as opposed to customers. Notwithstanding the foregoing,
Landlord may lease any premises in the Center for use as (i) a restaurant
located no closer than one hundred feet (100') from the exterior walls of the
Premises, (ii) a specialty grocery store or specialty supermarket (such as a
Wild Oats) located no closer than one hundred feet (100') from the exterior
walls of the Premises, and (iii) a national video rental store which has a
prohibition against the rental or sale of adult videos and which is located no
closer than one hundred feet (100') from the exterior walls of the Premises. The
total floor area of all restaurants and medical, dental, professional and
business offices located within the Center shall not exceed fifteen percent
(15%) of the gross leasable area of the Center. Any portion of the Center which
is sold by Landlord during the term shall contain a deed restriction
incorporating the foregoing restrictions.

     Landlord acknowledges that in the event of a breach or an attempted or
prospective breach of this Section 19(d), Tenant's remedies at law would be
inadequate. Therefore, in any such event, if such breach is not cured within
sixty (60) days after written notice from Tenant to Landlord, Tenant shall be
entitled, at its option and without limitation of any other remedy permitted by
law or equity or by this Lease, (i) to elect to pay in lieu of Base Rent and
percentage rent due under this Lease two percent (2%) of Tenant's gross sales
calculated according to Tenant's standard procedures in accordance with
generally accepted accounting principles, and/or (ii) to full and adequate
relief by temporary or permanent injunction. Notwithstanding the foregoing, the
remedy of lease cancellation shall not be applicable if the violation of this
Section 19(d) is due to the breach of another tenant's lease and Landlord is, in
Tenant's good faith judgment, diligently pursuing appropriate legal proceedings
to halt the violation and such violation is so halted within one hundred twenty
(120) days of Landlord's receipt of Tenant's notice.

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<PAGE>

     (e) Landlord and Tenant agree that (a) no auction, fire or
going-out-of-business sales shall be conducted in the Center except a
going-out-of-business sale conducted during the last thirty (30) days of an
existing retail operation, (b) no exterior identification signs attached to any
building in the Center shall be (i) flashing, moving or audible signs or (ii)
signs employing exposed neon tubes, exposed ballast boxes or exposed
transformers, and (c) no sidewalk sales shall be allowed in the Center.

SECTION 20. NUISANCES

     Tenant shall not perform any acts or carry on any practice which may injure
the Premises or be a nuisance or menace to other tenants in the Center.

SECTION 21. WASTE AND REFUSE REMOVAL

     Tenant covenants that it will use, maintain and occupy said Premises in a
careful, safe, lawful and proper manner and will not commit waste therein.
Landlord or its agent shall have access at all reasonable times to the Premises
for purposes of inspecting and examining the condition and maintenance of the
Premises. Tenant agrees to remove all refuse from the Premises in a timely,
clean and sanitary manner. Tenant shall provide a refuse collection container at
the rear of the Premises to accommodate Tenant's refuse and Tenant shall
routinely clean up around trash containers. Tenant shall contract with a
licensed and insured refuse collection contractor to timely remove refuse
therefrom and the location of the container shall be approved by Landlord.

SECTION 22. DAMAGE AND DESTRUCTION OF PREMISES

     (a) Landlord shall at all times during the term of this Lease carry
property insurance on the building containing the Premises, including the
"Structural Portions" (defined in Section 24(a) below) and common utility lines
up to the point they serve individual tenant's premises. Landlord shall be under
no obligation to maintain insurance on any improvements installed by or for the
benefit of Tenant's use of the premises or otherwise owned by Tenant. Landlord
may elect to self-insure its obligations hereunder and/or use whatever
deductibles as Landlord deems appropriate, in its sole discretion.

     (b) If the Premises shall be damaged, destroyed, or rendered untenantable,
in whole or in part, by or as the result or consequence of fire or other
casualty during the term hereof, Landlord shall repair and restore the same to a
good tenantable condition with reasonable dispatch. During such period of
repair, the rent herein provided for in this Lease shall abate (i) entirely in
case all of the Premises are untenantable; and (ii) proportionately if only a
portion of the Premises is untenantable and Tenant is able to economically
conduct its business from the undamaged portion of the Premises. The abatement
shall be based upon a fraction, the numerator of which shall be the square
footage of the damaged and unusable area of the Premises and the denominator
shall be the total square footage of the Premises. Said abatement shall cease at
such time as the Premises shall be restored to a tenantable condition.

     (c) In the event the Premises, because of such damage or destruction, are
not repaired and restored to a tenantable condition with reasonable dispatch
within one hundred fifty (150) days from the date of receipt of insurance
proceeds for such damage or destruction, Tenant or Landlord may, at their
option, terminate this Lease within sixty (60) days following such one hundred
fifty (150) day period but prior to the repair and restoration of same by giving
prior written notice to the other party and thereupon Landlord and Tenant shall
be released from all future liability and obligations under this Lease.

     (d) If one-third (1/3) or more of the ground floor area of the Premises are
damaged or destroyed during the last two (2) years of the original or any
extended term of this Lease, Landlord shall have the right to terminate this
Lease by written notice to Tenant within sixty (60) days following such damage
or destruction, unless Tenant shall, within thirty (30) days following receipt
of such notice, offer to extend the term of this Lease for an additional period
of five (5) years from the date such damage or destruction is repaired and
restored. If Tenant makes said offer to extend, Landlord and Tenant shall
determine the terms and conditions of said extension within thirty (30) days
thereafter or Tenant's offer shall not be deemed to prevent Landlord from

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<PAGE>

canceling this Lease. If such terms and conditions have been mutually agreed to
by the parties, then Landlord shall accept Tenant's offer and shall repair and
restore the Premises with reasonable dispatch thereafter.

     (e) If Landlord is required or elects to repair and restore the Premises as
herein provided, Tenant shall repair or replace its stock in trade, trade
fixtures, furniture, furnishings and equipment and other improvements including
floor coverings, and if Tenant has closed, Tenant shall promptly reopen for
business. Anything contained in this Section 22 to the contrary notwithstanding,
Landlord's restoration and repair obligations under Section 22 shall in no event
include restoration or repair of Tenant's Work or improvements.

SECTION 23. LANDLORD REPAIRS

     (a) Landlord shall keep in good order, condition, and repair, maintain and
replace, as necessary, the following: (i) structural portions of the Premises;
(ii) downspouts; (iii) gutters; (iv) the roof of the Building of which the
Premises forms a part; and (v) any utility and other systems or lines serving
the Premises but located outside of the Premises, except (as to all items) for
damage caused by any negligent act or omission of Tenant or its customers,
employees, agents, invitees, licensees or contractors, which shall be repaired
or replaced as necessary, at the sole cost and expense of Tenant. "Structural
Portions" shall mean only the following: (vi) foundations; (vii) exterior walls
except for interior faces); (viii) concrete slabs; (ix) the beams and columns
bearing the main load of the roof; and (x) the floors (but not floor coverings).

     (b) Notwithstanding the provisions of Section 23(a) above, Landlord shall
not be obligated to repair the following: (i) the exterior or interior of any
doors, windows, plate glass, or showcases surrounding the Premises or the store
front or (ii) damage to Tenant's improvements or personal property caused by any
casualty, burglary, break-in, vandalism, acts of terrorism, war or act of G-d.
Landlord shall, in any event, have ten (10) days after notice from Tenant
stating the need for repairs to complete same, or commence and proceed with due
diligence to complete same. Landlord shall be obligated to replace all HVAC
components as and when necessary so long as Tenant has fulfilled its obligations
under Section 24(a)(ii) below. Except as specifically set forth herein, Tenant
expressly hereby waives the provisions of any law permitting repairs by a tenant
at Landlord's expense.

     (c) The provisions of this Section 23 shall not apply in the case of damage
or destruction by fire or other casualty or a taking under the power of eminent
domain in which events the obligations of Landlord shall be controlled by
Section 22 and Section 16 respectively.

     (d) Landlord shall assign to Tenant all warranties covering all matters
required by the terms hereof to be repaired and maintained by Landlord.

     (e) If Landlord fails to make any of the repairs required to be made under
this Lease within thirty (30) days after written notice from Tenant, Tenant, in
addition to any other rights it may have hereunder or at law or in equity, shall
have the right to make said repairs on behalf of Landlord and to bill Landlord
for the reasonable cost thereof. Landlord shall have thirty (30) days to
reimburse Tenant. In the event of an emergency or if any such repairs are
immediately necessary for the proper use and enjoyment of the Premises, no prior
thirty (30) days notice shall be required, Tenant, after diligent effort to
first notify Landlord, forthwith make said repairs on behalf of Landlord and
bill Landlord for the reasonable cost thereof. Tenant has not received
reimbursement for any repairs permitted to be made under this Section 23(e)
within such thirty (30) day period, Tenant shall have the right to deduct the
cost of repairs from Rent otherwise due Landlord.

SECTION 24. TENANT'S REPAIRS

     (a) Tenant shall keep and maintain, at Tenant's expense, all and every
other part of the Premises in good order, condition and repair, including, by
way of example but not limitation: (i) all leasehold improvements; (ii) all HVAC
unit(s), equipment and systems (including all components thereof) serving the
Premises; (iii) interior plumbing and sewage facilities; (iv) all interior
lighting; (v) electric signs; (vi) all interior walls; (vii) floor coverings;
(viii) ceilings; (ix) appliances and equipment; (x) all doors, exterior
entrances, windows and

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<PAGE>

window moldings; (xi) plate glass; (xii) signs and showcases surrounding and
within the Premises; (xiii) the store front; (xiv) sprinkler systems including
supervisory alarm service in accordance with National Fire Protection
Association standards and current local and state fire protection standards to
ensure property operation.

     (b) Sprinkler systems, if any, located in Tenant's area shall be maintained
in accordance with National Fire Protection Association standards to ensure
proper operation. Sprinkler control valves (interior and exterior) located in
Tenant's area shall be monitored by supervisory alarm service. In the event
local or state codes do not require alarm systems, Tenant shall provide alarm
service on all sprinkler systems to detect water flow and tampering with
exterior and interior main control valves of the sprinkler system servicing
Tenant's premises. Moreover, it shall be Tenant's responsibility to contact
Chuck Seall, Commercial Property Manager at 1798 Frebis Avenue, Columbus, Ohio
43206-3764 at (614) 445-8461, in the event the sprinkler system in the Premises
is ever shut off for any reason, and advise same of any damage occasioned or
caused by the actions of Tenant, its agents, invitees, or employees, and/or as a
result of Tenant's repair obligations hereunder. In the event fifty percent
(50%) or more of the total number of sprinkler heads require replacement at any
one time as part of ordinary maintenance, but excluding repairs or replacements
that arise from (x) repairs, installations alterations, or improvements made by
or for Tenant or anyone claiming under Tenant, or (y) the fault or misuse of
Tenant or anyone claiming under Tenant, such cost shall be fifty percent (50%)
borne by Landlord and fifty percent (50%) borne by Tenant. Tenant, at Tenant's
sole cost and expense, shall replace all sprinkler heads due to repairs,
installations, alterations, or improvements made by or for Tenant or anyone
claiming under Tenant, the fault or misuse of Tenant or anyone claiming under
Tenant, painting or environmental exposure from Tenant's operations. All other
costs of maintaining the sprinkler system in the Premises shall be paid by
Tenant.

     (c) If Landlord deems any repair which Tenant is required to make hereunder
to be necessary, Landlord may demand that Tenant make such repair immediately.
If Tenant refuses or neglects to make such repair and to complete the same with
reasonable dispatch, Landlord may make such repair and Tenant shall, on demand,
immediately pay to Landlord the cost of said repair, together with annual
interest at the Interest Rate. Landlord shall not be liable to Tenant for any
loss or damage that may accrue to Tenant's stock or business by reason of such
work or its results.

     (d) Neither Tenant nor any of its contractors are permitted access to or
permitted to perform alterations of any kind to the roof of the Premises.

     (e) Tenant shall pay promptly when due the entire cost of work in the
Premises undertaken by Tenant under this Lease (including, but not limited to,
Tenant's Work and/or alterations permitted under Section 7 of this Lease) so
that the Premises and the Center shall at all times be free of liens for labor
and materials arising from such work; to procure all necessary permits before
undertaking any such work; to do all of such work in a good and workmanlike
manner, employing materials of good quality; to perform such work only with
contractors previously reasonably approved of in writing by Landlord; to comply
with all governmental requirements; and save Landlord and its agents, officers,
employees, contractors and invitees harmless and indemnified from all liability,
injury, loss, cost, damage and/or expense (including reasonable attorneys' fees
and expenses) in respect of any injury to, or death of, any person, and/or
damage to, or loss or destruction of, any property occasioned by or growing out
of any such work.

SECTION 25. COVENANT OF TITLE AND PEACEFUL POSSESSION

     Subject to the provisions of Section 11 hereof, Landlord shall, on or
before the date on which Tenant is permitted to install its merchandise and
fixtures in the Premises, have good and marketable title to the Premises in fee
simple and the right to make this Lease for the term aforesaid. At such time,
Landlord shall put Tenant into complete and exclusive possession of the
Premises, and if Tenant shall pay the rental and perform all the covenants and
provisions of this Lease to be performed by the Tenant, Tenant shall, during the
term hereby demised, freely, peaceably, and quietly enjoy and occupy the full
possession of the Premises and the common facilities of the Center, subject,
however, to the terms and conditions of this Lease.

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<PAGE>

SECTION 26. TENANT'S AND LANDLORD'S INSURANCE; INDEMNITY

     (a) Tenant's Commercial General Liability Insurance. Commencing as of the
Commencement Date, and thereafter throughout the term of this Lease, Tenant
shall, at Tenant's sole cost and expense, provide and maintain or cause to be
provided and maintained a commercial general liability policy (including
coverage for product and contractual liability), naming Tenant as an insured
(and naming Landlord as an additional insured, said additional insured's
coverage under Tenant's commercial general liability policy to be primary),
protecting Tenant, the business operated by Tenant, and any additional insureds
(including Landlord) against claims for bodily injury (including death) and
property damage occurring within the Premises. Such insurance shall afford
protection to the limits of not less than One Million Dollars ($1,000,000.00)
per occurrence and Five Hundred Thousand Dollars ($500,000.00) with respect to
property damage for fire legal liability. Tenant may use commercially reasonable
deductibles Tenant customarily carries in the conduct of its business; however,
Tenant shall be responsible for all such deductibles or self-insured retention
level. All liability policies shall be written on an occurrence form.

     (b) Worker's Compensation. Commencing as of the Commencement Date, and
thereafter throughout the term of this Lease, Tenant shall, at Tenant's sole
cost and expense, provide and maintain or cause to be provided and maintained
workers' compensation insurance (meeting the requirements of the state workers'
compensation laws) and employer liability insurance covering all of Tenant's
employees at the Premises. Tenant shall also use good faith efforts to ensure
all contractors, sub-contractors, vendors, leased employees, and temporary
employees are properly insured for workers' compensation.

     (c) Tenant's Umbrella. Commencing as of the Commencement Date, and
thereafter throughout the term of this Lease, Tenant shall, at Tenant's sole
cost and expense, provide and maintain or cause to be provided and maintained an
umbrella liability insurance policy with a Ten Million Dollar ($10,000,000.00)
policy limits, which umbrella policy (or policies) shall list the commercial
general liability, product liability, contractual liability and employer
liability policies required hereunder, and any other liability policy or
policies carried by, or for the benefit of, Tenant as underlying policies. Said
umbrella liability insurance policy shall also name Landlord as an additional
insured (said additional insured's coverage under Tenant's umbrella liability
policy to be primary). All liability policies shall be written on an occurrence
form.

     (d) Tenant's Property Insurance. Commencing as of the Commencement Date,
and thereafter throughout the term of this Lease, Tenant shall, at Tenant's sole
cost and expense, provide and maintain or cause to be provided and maintained a
property insurance policy insuring Tenant's contents, fixtures, equipment and
personal property located within the Premises and/or owned by Tenant for all the
hazards and perils normally covered by the Causes of Loss-Special Form. Said
property insurance policy shall include endorsements for coverage against: (i)
earthquake and flood (including, but not limited to, mud slide, flood hazard or
fault area(s), as designated on any map prepared or issued for such purpose by
any governmental authority); and (ii) increased costs of construction and
demolition due to law and ordinance. The foregoing property coverage shall be
provided in amounts sufficient to provide one hundred percent (100%) of the full
replacement cost of Tenant's contents, fixtures, equipment and personal property
located within the Premises and/or owned by Tenant. If for any reason the Causes
of Loss-Special Form is not customarily used in the insurance industry, then the
property insurance policy then in effect shall at least provide coverage for the
following perils: fire, lightning, windstorm and hail, explosion, smoke,
aircraft and vehicles, riot and civil commotion, vandalism and malicious
mischief, sprinkler leakage, sinkhole and collapse, volcanic action, earthquake
or earth movement, and flood, and increased costs of construction and demolition
due to law, ordinance and inflation. The property insurance policy required to
be maintained by Tenant under this Section 26(d) shall: (y) not provide coverage
for Tenant's Improvements (defined in Section 45 below), which Tenant's
Improvements shall be insured by Landlord as required under Section 26(a);

     (e) Landlord's Property Insurance. Commencing as of the Commencement Date,
and thereafter throughout the term of this Lease, Landlord shall, at Landlord's
sole cost and expense, provide and maintain or cause to be provided and
maintained a property insurance policy insuring all buildings (and building
additions) and other improvements in the Center, Tenant's

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<PAGE>

store building, and Tenant Improvements (but excluding those items insured by
Tenant as required under Section 26(d)) for all the hazards and perils normally
covered by the Causes of Loss-Special Form. Said property insurance policy shall
include endorsements for coverage against: (i) earthquake and flood (including,
but not limited to, mud slide, flood hazard or fault area(s), as designated on
any map prepared or issued for such purpose by any governmental authority); and
(ii) increased costs of construction and demolition due to law and ordinance.
The foregoing property coverage shall be provided in amounts sufficient to
provide one hundred percent (100%) of the full replacement cost of all buildings
(and building additions) and other improvements in the Center, Tenant's store
building, and Tenant Improvements (but excluding those items insured by Tenant
as required under Section 26(d)). If for any reason the Causes of Loss-Special
Form is not customarily used in the insurance industry, then the property
insurance policy then in effect shall at least provide coverage for the
following perils: fire, lightning, windstorm and hail, explosion, smoke,
aircraft and vehicles, riot and civil commotion, vandalism and malicious
mischief, sprinkler leakage, sinkhole and collapse, volcanic action, earthquake
or earth movement, and flood, and increased costs of construction and demolition
due to law, ordinance and inflation. Neither Tenant nor any of its affiliates or
subtenants shall be liable to Landlord for any loss or damage (including loss of
income), regardless of cause, resulting from fire, flood, act of G-d or other
casualty.

     (f) Landlord's Commercial General Liability Insurance. Commencing as of the
Commencement Date, and thereafter throughout the term of this Lease, Landlord
shall, at Landlord's sole cost and expense, provide and maintain or cause to be
provided and maintained a commercial general liability policy (including
coverage for contractual liability), naming Landlord as an insured (and naming
Tenant as an additional insured, said additional insured's coverage under
Landlord's commercial general liability policy to be primary), protecting
Landlord, the business operated by Landlord, and any additional insureds
(including Tenant) against claims for bodily injury (including death) and
property damage occurring upon, in or about the Center (other than the Premises
and those areas insured by other tenants at the Center), including Common Areas.
Such insurance shall afford protection to the limits of not less than One
Million Dollars ($1,000,000.00) per occurrence and Five Hundred Thousand Dollars
($500,000.00) with respect to property damage for fire legal liability. All
liability policies shall be written on an occurrence form. Landlord may use
commercially reasonable deductibles Landlord customarily carries in the conduct
of its business; however, Landlord shall be responsible for all such deductibles
or self-insured retention levels.

     (g) Landlord's Umbrella. Commencing as of the Commencement Date, and
thereafter throughout the term of this Lease, Landlord shall, at Landlord's sole
cost and expense, provide and maintain or cause to be provided and maintained an
umbrella liability insurance policy with a Ten Million Dollar ($10,000,000.00)
minimum annual aggregate, which umbrella policy (or policies) shall list
Landlord's commercial general liability and contractual liability policies
required hereunder, and any other liability policy or policies carried by, or
for the benefit of, Landlord as underlying policies. Said umbrella liability
policy shall also name Tenant as an additional insured (said additional
insured's coverage under Landlord's umbrella liability policy to be primary).
All liability policies shall be written on an occurrence form.

     (h) All insurance provided for in this Section 26 shall be effected under
standard form policies issued by insurers of recognized responsibility
authorized to do business in the state in which the Premises are located;
provided, however, that Landlord or Tenant may self-insure any of the amounts
herein stated pursuant to a bona fide self-insurance retention program so long
as the amounts so self-insured by such party do not exceed ten percent (10%) of
such party's net worth as computed in accordance with generally accepted
accounting principles consistently applied by such party.

     (i) Prior to the Commencement Date, and thereafter during the term hereof
within fifteen (15) days after request therefor by either party, and within
fifteen (15) days after each policy renewal date, Tenant and Landlord shall
furnish the other party with certificates of insurance evidencing all insurance
coverage required herein. All such certificates shall: (i) evidence the
continuous existence during the term hereof of the insurance required hereunder;
(ii) include attachment of an additional insured endorsement; (iii) name any and
all non-standard exclusions or limitations; and (iv) contain a provision that
the insurance carrier shall not cancel or modify the insurance coverage without
giving at least ten (10) days prior written notice thereof

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to both Landlord and Tenant at their last known address as provided for herein.
Current certificates of insurance shall be delivered to both Landlord and Tenant
in time sufficient to assure that both Landlord and Tenant shall always possess
certificates of insurance evidencing current insurance coverage. All insurance
carriers shall be licensed to do business in the state in which the Premises is
located and shall have a Best's Key Rating Guide rating of A- VIII.

     (j) Landlord and Tenant shall neither do nor suffer anything to be done
whereby any of the insurance required by the provisions of this Section 26 shall
or may be invalidated in whole or in part. Landlord shall not permit or suffer
to be done in any part of the Center any activities which shall increase the
rate of any insurance to be maintained by Tenant over that rate normal and
customary for Tenant's type of business or which shall increase the rate on any
insurance maintained by Landlord for which Tenant is required to reimburse
Landlord pursuant to Section 28 hereof. Should such occur, Landlord shall pay,
without reimbursement from Tenant, all costs and expenses of such insurance over
the base rate. Tenant shall not permit or suffer to be done in any part of the
Premises any activities which shall increase the rate of any insurance to be
maintained by Landlord over the base rate. Should such occur, Tenant shall pay
all costs and expenses of such insurance over the base rate.

     (k) Notwithstanding anything to the contrary hereinabove contained, Tenant
or Landlord, may, at its option, include any of the insurance coverage
hereinabove set forth in general or blanket policies of insurance. All insurance
required hereunder shall be consistent with sound insurance practices.

     (l) Tenant and Landlord shall cooperate with each other in connection with
the collection of any insurance monies that may be due in the event of loss and
Landlord shall execute and deliver to Tenant such proofs of loss and other
instruments which may be required for the purpose of obtaining the recovery of
any such insurance monies.

     (m) Tenant Indemnity. Subject to Section 34 of this Lease, Tenant shall
indemnify Landlord, Landlord's agents, employees, officers or directors, against
all damages, claims and liabilities arising from any alleged products liability
or from any accident or injury whatsoever caused to any person, firm or
corporation during the demised term in the Premises, unless such claim arises
from a breach or default in the performance by Landlord of any covenant or
agreement on its part to be performed under this Lease or, to the extent not
required to be insured hereunder, the negligence of Landlord. The
indemnification herein provided shall include all reasonable costs, counsel
fees, expenses and liabilities incurred in connection with any such claim or any
action or proceeding brought thereon.

     (n) Landlord Indemnity. Subject to Section 34 of this Lease, Landlord shall
indemnify Tenant, Tenant's officers, directors, employees and agents against all
damages, claims and liabilities arising from any accident or injury whatsoever
caused to any person, firm or corporation during the demised term in the Center
(excluding therefrom the Premises), unless such claim arises from a breach or
default in the performance by Tenant of any covenant or agreement on Tenant's
part to perform under this Lease or, to the extent not required to be insured
hereunder, the negligence of Tenant. The indemnification herein provided shall
include all reasonable costs, counsel fees, expenses and liabilities incurred in
connection with any such claim or any action or proceeding brought thereon.

SECTION 27. REAL ESTATE TAXES

     (a) Tenant shall pay Tenant's Proportionate Share (as defined in Section
15(c) above) of any "Real Estate Taxes" (defined in Section 27(b) below) imposed
upon the Center that become due and payable during each lease year included
within the period commencing with the Commencement Date and ending with the
expiration of the term of this Lease. Tenant shall initially pay to landlord as
additional rental, simultaneously with the payment of Base Rent called for under
Section 4(a), the estimated monthly amount of Tenant's Proportionate Share of
Real Estate Taxes as set forth in Section 4(c) of Two and 50/100 Dollars ($2.50)
per square foot, payable in equal monthly installments of Four Thousand One
Hundred Sixty-Six and 67/100 Dollars ($4,166.67) as the estimated amount of
Tenant's Proportionate Share of Real Estate Taxes. Within one hundred twenty
(120) days after the end of each accounting year (which Landlord may change from
time to time), Landlord shall provide Tenant with an annual

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reconciliation of Real Estate Taxes and a statement of the actual amount of
Tenant's Proportionate Share thereof. Any excess payments from Tenant shall be
applied to the next installments of Real Estate Taxes hereunder, or refunded by
Landlord. Any underpayments by Tenant shall be paid to Landlord within thirty
(30) days after receipt of such reconciliation statement. Tenant's estimated
monthly installment of Real Estate Taxes payable hereunder may be adjusted by
written notice from Landlord.

     (b) For the purpose of this Lease, the term "Real Estate Taxes" shall
include any special and general assessments, water and sewer rents and other
governmental impositions imposed upon or against the Center of every kind and
nature whatsoever, extraordinary as well as ordinary, foreseen and unforeseen
and each and every installment thereof, which shall or may during the lease term
be levied, assessed or imposed upon or against such Center and of all expenses,
including reasonable attorneys' fees, administrative hearing and court costs
incurred in contesting or negotiating the amount, assessment or rate of any such
real estate taxes, minus any refund received by Landlord.

     (c) Notwithstanding any provision of this Lease to the contrary, Tenant
shall not be obligated to pay for any assessment for special improvements
heretofore installed or in the process of installation in connection with the
initial development of the Center, and Landlord hereby agrees to pay for the
same.

     (d) The real estate taxes for any lease year shall be the real estate taxes
that become due and payable during such lease year. If any lease year shall be
greater than or less than twelve (12) months, or if the real estate tax year
shall be changed, an appropriate adjustment shall be made. If there shall be
more than one taxing authority, the real estate taxes for any period shall be
the sum of the real estate taxes for said period attributable to each taxing
authority. If, upon the assessment day for real estate taxes for any tax year
fully or partly included within the term of this Lease, a portion of such
assessment shall be attributable to buildings in the process of construction, a
fair and reasonable adjustment shall be made to carry out the intent of this
Section 27.

     (e) Upon request, Landlord shall submit to Tenant true copies of the real
estate tax bill for each tax year or portion of a tax year included within the
term of this Lease and shall bill Tenant for the amount to be paid by Tenant
hereunder. Said bill shall be accompanied by a computation of the amount payable
by Tenant and such amount shall be paid by Tenant within thirty (30) days after
receipt of said bill.

     (f) Should the State of Ohio or any political subdivision thereof or any
governmental authority having jurisdiction thereof, impose a tax and/or
assessment (other than an income or franchise tax) upon or against the rentals
payable hereunder, in lieu of or in addition to assessments levied or assessed
against the Premises, or Center, then such tax and/or assessment shall be deemed
to constitute a tax on real estate for the purpose of this Section 27.

SECTION 28. TENANT'S INSURANCE CONTRIBUTION

     Tenant shall pay as additional rent, Tenant's Proportionate Share (as
defined in Section 15(c) above) of the premiums for the insurance maintained by
Landlord on all buildings and improvements, as well as liability insurance, for
the Center, including the Common Areas, as set forth above in Section 28, for
each Lease Year during the term of this Lease. The premiums for the first and
last Lease Years shall be prorated. Tenant shall pay Tenant's Proportionate
Share of such premiums annually upon demand for such payment by Landlord.
Tenant's Proportionate Share thereof shall be paid by Tenant within thirty (30)
days after Landlord's demand therefore. Tenant shall initially pay to Landlord
as additional rental, simultaneously with the payment of Base Rent called for
under Section 4(a), the estimated monthly amount of Tenant's Proportionate Share
of such insurance premiums as set forth in Section 4(c), of 15/100 Dollars
($0.15) per square foot of space in the Premises, payable in equal monthly
installments of Two Hundred Fifty Dollars ($250.00) as the estimated amount of
Tenant's Proportionate Share of such insurance premiums. Within one hundred
twenty (120) days after the end of each accounting year (which Landlord may
change from time to time), Landlord shall provide Tenant with a reconciliation
of the premiums for the insurance maintained by Landlord hereunder and a
statement of the actual amount of Tenant's Proportionate Share thereof. Any
excess payments

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<PAGE>

from Tenant shall be applied to the next installments of insurance premiums
payable by Tenant hereunder, or refunded by Landlord. Any underpayments by
Tenant shall be paid to Landlord within thirty (30) days after receipt of such
reconciliation statement. Tenant's monthly installment of insurance premiums
payable hereunder may be adjusted by written notice from Landlord.

SECTION 29. FIXTURES

     Provided that Tenant shall repair any damage caused by removal of its
property and provided that the Tenant is not in default under this Lease, Tenant
shall have the right to remove from the Premises all of its signs, shelving,
electrical, and other fixtures and equipment, window reflectors and backgrounds
and any and all other trade fixtures which it has installed in and upon the
Premises.

SECTION 30. SURRENDER

     The Tenant covenants and agrees to deliver up and surrender to the Landlord
the physical possession of the Premises upon the expiration of this Lease or its
termination as herein provided in as good condition and repair as the same shall
be at the commencement of the initial term, loss by fire and/or ordinary wear
and tear excepted, and to deliver all of the keys to Landlord or Landlord's
agents.

SECTION 31. HOLDING OVER

     There shall be no privilege of renewal hereunder (except as specifically
set forth in this Lease) and any holding over after the expiration by the Tenant
shall be from day to day on the same terms and conditions (with the exception of
rental which shall be prorated on a daily basis at one hundred twenty-five
percent (125%) the daily rental rate of the most recent expired term) at
Landlord's option; and no acceptance of rent by or act or statement whatsoever
on the part of the Landlord or his duly authorized agent in the absence of a
written contract signed by Landlord shall be construed as an extension of the
term or as a consent for any further occupancy.

SECTION 32. NOTICE

     Any consent, waiver, notice, demand, request or response thereto or other
instrument required or permitted to be given under this Lease shall be given by
overnight courier or by certified United States mail, return receipt requested,
postage prepaid: (a) if to Landlord, at the address set forth in Section 1; and
(b) if to Tenant, at the address set forth in Section 1 with duplicate copies to
(i) General Counsel, 4150 E. Fifth Avenue, Columbus, Ohio 43219 and (ii) Randall
S. Arndt, Esq., Schottenstein Zox & Dunn, 250 West Street, Columbus, Ohio 43215.
Either party may change its address for notices by notice in the manner set
forth above, given at least thirty (30) days in advance. All such consents,
waivers, notices, demands, requests or other instruments shall be deemed given
upon receipt thereof or upon the refusal of the addressee to receive the same.

SECTION 33. DEFAULT

     (a) Elements of Default: The occurrence of any one or more of the following
events shall constitute a default of this Lease by Tenant:

          1. Tenant fails to pay any monthly installment of rent within ten (10)
     days after the same shall be due and payable, except for the first two (2)
     times in any consecutive twelve (12) month period, in which event Tenant
     shall have five (5) days after receipt of written notice of such failure to
     pay before such failure shall constitute a default;

          2. Tenant fails to perform or observe any term, condition, covenant or
     obligation required to be performed or observed by it under this Lease for
     a period of twenty (20) days after notice thereof from Landlord; provided,
     however, that if the term, condition, covenant or obligation to be
     performed by Tenant is of such nature that the same cannot reasonably be
     cured within twenty (20) days and if Tenant commences such performance or
     cure within said twenty (20) day period and thereafter diligently
     undertakes to complete the same, then such failure shall not be a default
     hereunder if it is cured within a

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<PAGE>

     reasonable time following Landlord's notice, but in no event later than
     forty-five (45) days after Landlord's notice.

          3. A trustee or receiver is appointed to take possession of
     substantially all of Tenant's assets in, on or about the Premises or of
     Tenant's interest in this Lease (and Tenant or any guarantor of Tenant's
     obligations under this Lease does not regain possession within sixty (60)
     days after such appointment); Tenant makes an assignment for the benefit of
     creditors; or substantially all of Tenant's assets in, on or about the
     Premises or Tenant's interest in this Lease are attached or levied upon
     under execution (and Tenant does not discharge the same within sixty (60)
     days thereafter).

          4. A petition in bankruptcy, insolvency, or for reorganization or
     arrangement is filed by or against Tenant or any guarantor of Tenant's
     obligations under this Lease pursuant to any Federal or state statute, and,
     with respect to any such petition filed against it, Tenant or such
     guarantor fails to secure a stay or discharge thereof within sixty (60)
     days after the filing of the same.

     (b) Landlord's Remedies: Upon the occurrence of any event of default,
Landlord shall have the following rights and remedies, any one or more of which
may be exercised without further notice to or demand upon Tenant:

          1. Landlord may re-enter the Premises and cure any default of Tenant,
     in which event Tenant shall reimburse Landlord for any reasonable
     out-of-pocket cost and expenses which Landlord may incur to cure such
     default; and Landlord shall not be liable to Tenant for any loss or damage
     which Tenant may sustain by reason of Landlord's action.

          2. Landlord may terminate this Lease or Tenant's right to possession
     under this Lease as of the date of such default, without terminating
     Tenant's obligation to pay rent due hereunder, in which event (A): neither
     Tenant nor any person claiming under or through Tenant shall thereafter be
     entitled to possession of the Premises, and Tenant shall immediately
     thereafter surrender the Premises to Landlord; (B) Landlord may re-enter
     the Premises and dispose Tenant or any other occupants of the Premises by
     force, summary proceedings, ejectment or otherwise, and may remove their
     effects, without prejudice to any other remedy which Landlord may have for
     possession or arrearages in rent; and (C) notwithstanding a termination of
     this Lease, Landlord shall use good faith efforts to re-let all or any part
     of the Premises for at least the balance of the term of this Lease for
     commercially reasonable rent, whereupon Tenant shall be obligated to pay to
     Landlord as liquidated damages the difference between the rent provided for
     herein and that provided for in any lease covering a subsequent re-letting
     of the Premises, such deficiency to be computed and paid monthly at the
     times that Rent is payable hereunder, together with all of Landlord's
     reasonable costs and expenses for preparing the Premises for re-letting,
     including all repairs which are Tenant's obligations hereunder, reasonable
     broker's and attorney's fees, and all loss or damage which Landlord may
     sustain by reason of such termination, re-entry and re-letting, it being
     expressly understood and agreed that the liabilities and remedies specified
     herein shall survive the termination of this Lease. Notwithstanding a
     termination of this Lease by Landlord, Tenant shall remain liable for
     payment of all rentals and other charges and costs imposed on Tenant
     herein, in the amounts, at the times and upon the conditions as herein
     provided. Landlord shall credit against such liability of the Tenant all
     amounts received by Landlord from such re-letting after first reimbursing
     itself for all reasonable costs incurred in curing Tenant's defaults and
     re-entering, preparing and refinishing the Premises for re-letting, and
     re-letting the Premises.

          3. Upon termination of this Lease pursuant to Section 33(b)2, Landlord
     may recover possession of the Premises under and by virtue of the
     provisions of the laws of the State of Ohio, or by such other proceedings,
     including reentry and possession, as may be applicable.

          4. If the Tenant shall not remove all of Tenant's property from said
     Premises as provided in this Lease, Landlord, at its option, may remove any
     or all of said property in any manner that Landlord shall choose and store
     same without liability for loss thereof,

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<PAGE>

     and Tenant will pay the Landlord, on demand, any and all reasonable
     expenses incurred in such removal and storage of said property for any
     length of time during which the same shall be in possession of Landlord or
     in storage, or Landlord may, upon thirty (30) days prior notice to Tenant,
     sell any or all of said property in such manner and for such price as the
     Landlord may reasonably deem best and apply the proceeds of such sale upon
     any amounts due under this Lease from the Tenant to the Landlord, including
     the reasonable expenses of removal and sale.

          5. Any damage or loss of rent sustained by Landlord may be recovered
     by Landlord, at Landlord's option, at the time of the reletting, or in
     separate actions, from time to time, as said damage shall have been made
     more easily ascertainable by successive relettings, or at Landlord's option
     in a single proceeding deferred until the expiration of the term of this
     Lease (in which event Tenant hereby agrees that the cause of action shall
     not be deemed to have accrued until the date of expiration of said term) or
     in a single proceeding prior to either the time of reletting or the
     expiration of the term of this Lease.

          6. In the event of a breach by Tenant of any of the covenants or
     provisions hereof, Landlord shall have the right of injunction and the
     right to invoke any remedy allowed at law or in equity as if reentry,
     summary proceedings, and other remedies were not provided for herein.
     Mention in this Lease of any particular remedy shall not preclude Landlord
     from any other remedy, in law or in equity. Tenant hereby expressly waives
     any and all rights of redemption granted by or under any present or future
     laws in the event of Tenant being evicted or dispossessed for any cause, or
     in the event of Landlord obtaining possession of the Premises by reason of
     the violation by Tenant of any of the covenants and conditions of this
     Lease or other use.

          7. Tenant hereby expressly waives any and all rights of redemption
     granted by or under any present or future laws, in the event of eviction or
     dispossession of Tenant by Landlord under any provision of this Lease. No
     receipt of monies by Landlord from or for the account of Tenant or from
     anyone in possession or occupancy of the Premises after the termination of
     this Lease or after the giving of any notice shall reinstate, continue or
     extend the term of this Lease or affect any notice given to the Tenant
     prior to the receipt of such money, it being agreed that after the service
     of notice or the commencement of a suit, or after final judgment for
     possession of said Premises, the Landlord may receive and collect any rent
     or other amounts due Landlord and such payment shall not waive or affect
     said notice, said suit or said judgment.

     (c) Additional Remedies and Waivers: The rights and remedies of Landlord
set forth herein shall be in addition to any other right and remedy now or
hereinafter provided by law and/or equity and all such rights and remedies shall
be cumulative and shall not be deemed inconsistent with each other, and any two
or more or all of said rights and remedies may be exercised at the same time or
at different times and from time to time without waiver thereof of any right or
remedy provided or reserved to Landlord. No action or inaction by Landlord shall
constitute a waiver of a default and no waiver of default shall be effective
unless it is in writing, signed by the Landlord.

     (d) Default by Landlord. Any failure by Landlord to observe or perform any
provision, covenant or condition of this Lease to be observed or performed by
Landlord, if such failure continues for thirty (30) days after written notice
thereof from Tenant to Landlord, shall constitute a default by Landlord under
this Lease, provided, however, that if the nature of such default is such that
the same cannot reasonably be cured within a thirty (30) day period, Landlord
shall not be deemed to be in default if it shall commence such cure within such
thirty (30) day period and thereafter rectify and cure such default with due
diligence.

     (e) Interest on Past Due Obligations: All monetary amounts required to be
paid by Tenant or Landlord hereunder which are not paid on or before the due
date thereof shall, from and after such due date, bear interest at the Interest
Rate, and shall be due and payable by such party without notice or demand.

     (f) Tenant's Remedies. In the event of default by the Landlord with respect
to the Premises, Tenant shall have the option to cure said default. Landlord
shall reimburse Tenant for

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the reasonable costs incurred by Tenant in curing such default within thirty
(30) days after invoice thereof by Tenant, together with reasonable evidence
supporting such invoiced amount. Tenant shall also have any and all rights
available under the laws of the state in which the Premises are situated;
provided, however, that any right of offset available to Tenant shall be subject
to the provisions of Section 35 below.

SECTION 34. WAIVER OF SUBROGATION

     Landlord and Tenant, and all parties claiming under each of them, mutually
release and discharge each other from all claims and liabilities arising from or
caused by any casualty or hazard covered or required hereunder to be covered in
whole or in part by insurance coverage required to be maintained by the terms of
this Lease on the Premises or in connection with the Center or activities
conducted with the Premises, and waive any right of subrogation which might
otherwise exist in or accrue to any person on account thereof. All policies of
insurance required to be maintained by the parties hereunder shall contain
waiver of subrogation provisions so long as the same are available.

SECTION 35. LIABILITY OF LANDLORD; EXCULPATION

     (a) Except with respect to any damages resulting from the gross negligence
of Landlord, its agents, or employees, Landlord shall not be liable to Tenant,
its agents, employees, or customers for any damages, losses, compensation,
accidents, or claims whatsoever. The foregoing notwithstanding, it is expressly
understood and agreed that nothing in this Lease contained shall be construed as
creating any liability whatsoever against Landlord personally, and in particular
without limiting the generality of the foregoing, there shall be no personal
liability to pay any indebtedness accruing hereunder or to perform any covenant,
either express or implied, herein contained, or to keep, preserve or sequester
any property of Landlord and that all personal liability of Landlord to the
extent permitted by law, of every sort, if any, is hereby expressly waived by
Tenant, and by every person now or hereafter claiming any right or security
hereunder; and that so far as the parties hereto are concerned, the owner of any
indebtedness or liability accruing hereunder shall look solely to the Premises
and the Center for the payment thereof.

     (b) If the Tenant obtains a money judgment against Landlord, any of its
officers, directors, shareholders, partners, members or their successors or
assigns under any provisions of or with respect to this Lease or on account of
any matter, condition or circumstance arising out of the relationship of the
parties under this Lease, Tenant's occupancy of the building or Landlord's
ownership of the Center, Tenant shall be entitled to have execution upon any
such final, unappealable judgment only upon Landlord's fee simple or leasehold
estate in the Center (whichever is applicable) and not out of any other assets
of Landlord, or any of its officers, directors, shareholders, members or
partners, or their successor or assigns; and Landlord shall be entitled to have
any such judgment so qualified as to constitute a lien only on said fee simple
or leasehold estate.

     Notwithstanding the above, Tenant shall have the right to offset any final,
unappealable judgment against twenty five percent (25%) of all minimum rent and
all percentage rental (but no other additional rent components) if not paid to
Tenant by Landlord within thirty (30) days thereafter.

     (c) It is expressly agreed that nothing in this Lease shall be construed as
creating any personal liability of any kind against the assets of any of the
officers, directors, members, partners or shareholders of Tenant, or their
successors and assigns.

SECTION 36. RIGHTS CUMULATIVE

     Unless expressly provided to the contrary in this Lease, each and every one
of the rights, remedies and benefits provided by this Lease shall be cumulative
and shall not be exclusive of any other of such rights, remedies and benefits or
of any other rights, remedies and benefits allowed by law.

                                       28
<PAGE>

SECTION 37. MITIGATION OF DAMAGES

     Notwithstanding any of the terms and provisions herein contained to the
contrary, Landlord and Tenant shall each have the duty and obligation to
mitigate, in every reasonable manner, any and all damages that may or shall be
caused or suffered by virtue of defaults under or violation of any of the terms
and provisions of this Lease agreement committed by the other.

SECTION 38. SIGNS

     (a) Landlord shall, at its sole cost and expense, construct, erect and
maintain at the location(s) shown on the Site Plan, pylon sign(s) upon which
Tenant's advertising panel shall be installed, provided same are approved by the
applicable local governmental authority. Tenant's advertising panel shall be in
the position and shall otherwise be as shown on Exhibit "F" attached hereto and
made a part hereof. Landlord hereby approves Tenant's advertising panel for the
pylon sign(s) as shown on said Exhibit "F". Thereafter, throughout the term of
this Lease, Tenant shall have continuous representation on (a) such pylon
sign(s) and any replacement pylon sign(s) consistent with Exhibit "F" and (b)
any new pylon signs erected at the Center, and Tenant shall have no worse
representation on any such new pylon sign(s) than any other tenant of the Center
leasing the same or less square feet of leasable space as Tenant.

     (b) Tenant shall have the right to install its standard signs and awnings
on the exterior of the Leased Premises provided that the same are in compliance
with local code. Landlord agrees to provide an adequate building facia for
Tenant's signs. Tenant shall also have the right to place signs or banners in
the windows of the Premises provided the same have been professionally prepared.

     (c) Tenant shall have the right to alter its exterior and pylon signs with
Landlord's consent, which consent shall not be unreasonably withheld; provided,
however, Tenant shall have no obligation to obtain Landlord's consent to any
change in Tenant's signage if such signage is consistent with Tenant's then
prototypical signage.

SECTION 39. ENTIRE AGREEMENT

     This Lease shall constitute the entire agreement of the parties hereto; all
prior agreements between the parties, whether written or oral, are merged herein
and shall be of no force and effect. This Lease cannot be changed, modified, or
discharged orally but only by an agreement in writing signed by the party
against whom enforcement of the change, modification or discharge is sought.

SECTION 40. TENANT'S PROPERTY

     All equipment, inventory, trade fixtures and other property owned by the
Tenant and located in the Premises shall remain the personal property of the
Tenant and shall be exempt from the claims of the Landlord or any mortgagee or
lienholder of the Landlord without regard to the means by which they are
installed or attached specifically not including, however, the Tenant
Improvements (defined in Section 49(a) below) which throughout the term and upon
the expiration of this Lease shall be and remain the property of Landlord. The
Landlord expressly waives any statutory or common law landlord's lien and any
and all rights granted under any present or future laws to levy or distrain for
rent (whether in arrears or in advance) against the aforesaid property of the
Tenant on the Premises and further agrees to execute any reasonable instruments
evidencing such waiver, at any time or times hereafter upon the Tenant's request
including the "Landlord's Waiver" described in Section 56(c) hereof. The Tenant
shall have the right, at any time or from time to time, to remove such trade
fixtures or equipment. If such removal damages any part of the Premises, the
Tenant shall repair such damages. Tenant is expressly authorized to finance,
pledge, and encumber its own trade fixtures, equipment, and inventory for
purposes of financing such trade fixtures, equipment and inventory.

                                       29

<PAGE>

SECTION 41. BINDING UPON SUCCESSORS

     The covenants, conditions, and agreements made and entered into by the
parties hereto shall be binding upon and inure to the benefit of their
respective heirs, representatives, successor and assigns.

SECTION 42. HAZARDOUS SUBSTANCES

     (a) During the term of this Lease, Tenant shall not suffer, allow, permit
or cause the generation, accumulation, storage, possession, release or threat of
release of any hazardous substance or toxic material, as those terms are used in
the Comprehensive Environmental Response Compensation and Liability Act of 1980,
as amended, and any regulations promulgated thereunder, or any other present or
future federal, state or local laws, ordinances, rules, and regulations. Tenant
shall indemnify and hold Landlord harmless from any and all liabilities,
penalties, demands, actions, costs and expenses (including without limitation
reasonable attorney fees), remediation and response costs incurred or suffered
by Landlord directly or indirectly arising due to the breach of Tenant's
obligations set forth in this Section. Such indemnification shall survive
expiration or earlier termination of this Lease. At the expiration or sooner
termination hereof, Tenant shall return the Premises to Landlord in
substantially the same condition as existed on the date of commencement hereof
free of any hazardous substances in, on or from the Premises.

     (b) Landlord hereby represents and warrants that, except as set forth in
those certain Phase I Environmental Site Assessments dated March 22, 2004 and
September 14, 2004, respectively, prepared by R.E. Warner & Associates Inc.: (i)
it has not used, generated, discharged, released or stored any hazardous
substances on, in or under the Center and has received no notice and has no
knowledge of the presence in, on or under the Center of any such hazardous
substances; (ii) to Landlord's knowledge there have never been any underground
storage tanks at the Center, whether owned by the Landlord or its predecessors
in interest; (iii) to Landlord's knowledge there have never been accumulated
tires, spent batteries, mining spoil, debris or other solid waste (except for
rubbish and containers for normal scheduled disposal in compliance with all
applicable laws) in, on or under the Center; (iv) to Landlord's knowledge it has
not spilled, discharged or leaked petroleum products other than de minimis
quantities in connection with the operation of motor vehicles on the Center; (v)
to Landlord's knowledge there has been no graining, filling or modification of
wetlands (as defined by federal, state or local law, regulation or ordinance) at
the Center; and (vi) to Landlord's knowledge there is no asbestos or
asbestos-containing material in the Premises. The representations and warranties
set forth in this subparagraph shall apply to any contiguous or adjacent
property owed by the Landlord. Landlord hereby indemnifies Tenant for any and
all loss, cost, damage or expense to Tenant resulting from any misrepresentation
or breach of the foregoing representations and warranties.

     (c) If any such hazardous substances are discovered at the Center (unless
introduced by the Tenant, its agents or employees) or if any asbestos or
asbestos containing material is discovered in the Premises (unless introduced by
the Tenant, its agents or employees), and removal, encapsulation or other
remediation is required by applicable laws, the Landlord immediately and with
all due diligence and at no expense to the Tenant shall take all measures
necessary to comply with all applicable laws and to remove such hazardous
substances or asbestos from the Center and/or encapsulate or remediate such
hazardous substances or asbestos, which removal and/or encapsulation or
remediation shall be in compliance with all environmental laws and regulations,
and the Landlord shall repair and restore the Center at its expense. From the
date such encapsulation, remediation and restoration is complete, the rent due
hereunder shall be reduced by the same percentage as the percentage of the
Premises which, in the Tenant's reasonable judgment, cannot be safely,
economically or practically used for the operation of the Tenant's business.
Anything herein to the contrary notwithstanding, if in the Tenant's reasonable
judgment, such removal, encapsulation, remediation and restoration cannot be
completed within one hundred eighty (180) days or the same is not actually
completed by Landlord within such one hundred eighty (180) day period following
the date such hazardous substances or asbestos are discovered and such condition
materially adversely affects Tenant's ability to conduct normal business
operations in the premises, then the Tenant may terminate this Lease by written
notice to the Landlord within thirty (30) days after such 180 day period, which
notice shall be effective on Landlord's receipt thereof. Landlord shall comply
with OSHA 29

                                       30

<PAGE>

CFR 1910.1001 (j) to notify tenants, including Tenant, of asbestos related
activities in the Premises and the Center including, but not limited to,
selection of the certified/licensed asbestos abatement contractor, scope of the
abatement work, and final clearance testing procedures and results.

SECTION 43. TRANSFER OF INTEREST

     If Landlord should sell or otherwise transfer its interest in the Premises,
upon an undertaking by the purchaser or transferee to be responsible for all the
covenants and undertakings of Landlord accruing subsequent to the date of such
sale or transfer, Tenant agrees that Landlord shall thereafter have no liability
to Tenant under this Lease or any modifications or amendments thereof, or
extensions thereof, except for such liabilities which might have accrued prior
to the date of such sale or transfer of its interest by Landlord.

SECTION 44. ACCESS TO PREMISES

     Landlord and its representatives shall have free access to the Premises at
all reasonable times for the purpose of: (a) examining the same or to make any
alterations or repairs to the Premises that Landlord may deem necessary for its
safety or preservation; (b) exhibiting the Premises for sale or mortgage
financing; (c) during the last three (3) months of the term of this Lease, for
the purpose of exhibiting the Premises and putting up the usual notice "for
rent" which notice shall not be removed, obliterated or hidden by Tenant,
provided, however, that any such action by Landlord shall cause as little
inconvenience as reasonably practicable and such action shall not be deemed an
eviction or disturbance of Tenant nor shall Tenant be allowed any abatement of
rent, or damages for an injury or inconvenience occasioned thereby.

SECTION 45. HEADINGS

     The headings are inserted only as a matter of convenience and for reference
and in no way define, limit or describe the scope or intent of this Lease.

SECTION 46. NON-WAIVER

     No payment by Tenant or receipt by Landlord or its agents of a lesser
amount than the rent in this Lease stipulated shall be deemed to be other than
on account of the stipulated rent nor shall an endorsement or statement on any
check or any letter accompanying any check or payment of rent be deemed an
accord and satisfaction and Landlord or its agents may accept such check or
payment without prejudice to Landlord's right to recover the balance of such
rent or pursue any other remedy in this Lease provided.

SECTION 47. SHORT FORM LEASE

     This Lease shall not be recorded, but a short form lease, which describes
the property herein demised, gives the term of this Lease and refers to this
Lease, shall be executed by the parties hereto, upon demand of either party and
such short form lease may be recorded by Landlord or Tenant at any time either
deems it appropriate to do so. The cost and recording of such short form lease
shall belong to the requesting party.

SECTION 48. ESTOPPEL CERTIFICATE

     Each party agrees that at any time and from time to time on ten (10) days
prior written request by the other, it will execute, acknowledge and deliver to
the requesting party a statement in writing stating that this Lease is
unmodified and in full force and effect (or, if there have been modifications,
stating the modifications, and that the Lease as so modified is in full force
and effect, and the dates to which the rent and other charges hereunder have
been paid, and such other information as may reasonably re requested, it being
intended that any such statements delivered pursuant to this Section may be
relied upon by any current or prospective purchaser of or any prospective holder
of a mortgage or a deed of trust upon or any interest in the fee or any
leasehold or by the mortgagee, beneficiary or grantee of any security or
interest, or any assignee of any thereof or under any mortgage, deed of trust or
conveyance for security purposes now or hereafter done or made with respect to
the fee of or any leasehold interest in the Premises

                                       31

<PAGE>

SECTION 49. TENANT'S REIMBURSEMENT

     (a) Landlord shall pay Tenant Two Hundred Forty Thousand Dollars
($240,000.00) (the "Tenant Reimbursement"), as payment for all costs incurred on
behalf of Tenant for the purchase, erection, and installation of Tenant
Improvements on or within the Premises. "Tenant Improvements" shall consist of
the work described in the attached Exhibit "G". The Tenant Reimbursement shall
be paid by Landlord to Tenant within ten (10) days of the later of (i) Tenant
opening for business in the Premises and (ii) Tenant providing to Landlord a
lien waiver from Tenant's general contractor. In the event Landlord does not
timely pay the Tenant Reimbursement to Tenant, (a) Landlord shall pay to Tenant
interest on such unpaid amounts the Interest Rate and (b) Tenant shall have the
right to deduct any and all such amounts owed Tenant against payments of Rent
thereafter due Landlord until such time as Tenant has been credited the full
amount of the Tenant Reimbursement plus applicable interest.

     (b) Notwithstanding anything to the contrary contained in this Lease, the
Tenant Improvements shall, at all times during the term of this Lease and upon
the expiration or earlier termination of this Lease, be the property of
Landlord. Tenant shall not acquire any interest, equitable or otherwise, in any
Tenant Improvement.

SECTION 50. TENANT'S TERMINATION RIGHT

     In the event (i) that Tenant's gross sales (as defined in Section 5 of this
Lease) shall be less than Six Million Six Hundred Thousand Dollars
($6,600,000.00) in either of the eighth (8th) or ninth (9th) Lease Years of the
initial term hereof, and (ii) Tenant was open and operating for business for the
Permitted Use during the Center's standard business days and hours during the
eighth (8th) and ninth (9th) Lease Years (unless Tenant was not open and
operating on account of casualty or condemnation), Tenant shall have the right,
at Tenant's sole election, provided that Tenant is not then in default of the
terms of this Lease beyond any applicable notice and cure periods, on or before
the date (the "Last Termination Notice Date") which is thirty (30) days after
the end of the ninth (9th) Lease Year, to send to Landlord a notice terminating
this Lease as of the last day of the tenth (10th) Lease Year (the "Tenant's
Termination Date"). In the event that Tenant shall so terminate this Lease in
accordance with the provisions of this Section 50, then the term of this Lease
shall terminate and expire on Tenant's Termination Date with the same force and
effect as though said date was the scheduled expiration date of the term under
this Lease. Notwithstanding the giving of such termination notice and Tenant's
exercise of its termination right under this Section 50, Tenant shall perform
and observe all of Tenant's obligations under this Lease through and including
the Tenant's Termination Date and Tenant shall pay to Landlord, on or before the
Tenant's Termination Date, the sum of One Hundred Thousand Dollars
($100,000.00). In the event Tenant exercises the termination right provided for
in this Section 50, Landlord shall have the right, upon ten (10) days prior
written notice, at Tenant's corporate headquarters, to examine Tenant's books
and records relating to gross receipts at the Premises, provided such right
shall expire sixty (60) days after Tenant notifies Landlord of Tenant's exercise
of Tenant's election to terminate the Lease pursuant to the provisions of this
Section 50.

SECTION 51. NO BROKER

     Landlord and Tenant each represent to the other that they have not entered
into any agreement or incurred any obligation in connection with this
transaction which might result in the obligation to pay a brokerage commission
to any broker. Each party shall indemnify and hold the other party harmless from
and against any claim or demand by any broker or other person for bringing about
this Lease who claims to have dealt with such indemnifying party, including all
expenses incurred in defending any such claim or demand (including reasonable
attorney's fees).

SECTION 52. UNAVOIDABLE DELAYS

     In the event either party hereto (the "Delayed Party") shall be delayed or
hindered in or prevented from the performance of any act required under this
Lease by reason of strikes, lockouts, labor troubles, inability to procure
materials, failure of power, the unforeseen application of restrictive
governmental laws or regulations, riots, insurrection, war, acts of terrorism or
other reason of a like nature not the fault of the Delayed Party in performing
work or

                                       32

<PAGE>

doing acts required under the terms of this Lease, then performance of such act
shall be excused for the period of the delay, and the period for the performance
of any such act shall be extended for a period equivalent to the period of such
delay, provided that the Delayed Party notified the other party within fifteen
(15) days of the Delayed Party being informed of the occurrence of the event
causing such delay. The provisions of this Section 52 shall not operate to
excuse either party from the payment of any rental or other monetary sums due
under the terms of this Lease.

SECTION 53. TIMELY EXECUTION OF LEASE

     Landlord and Tenant agree that this Lease, and the parties' obligations
hereunder, shall automatically be null and void and this Lease shall terminate
automatically without further action of the parties if both parties do not
execute this Lease and both parties have not received an original thereof within
sixty (60) days after the date of execution hereof by the first party to execute
this Lease.

SECTION 54. ACCORD AND SATISFACTION

     No payment by Tenant or receipt by Landlord of a lesser amount than the
entire rent and all other additional rents and charges hereunder shall be deemed
to be other than payment on account of the earliest stipulated rent and other
additional rents and charges hereunder, nor shall any endorsement or statement
on any check or any letter accompanying any check or payment for rent or other
additional rent and charges be deemed an accord and satisfaction, and Landlord
may accept such check or payment without prejudice to Landlord's right to
recover the balance of such rent and other additional rents and charges or
pursue any other right or remedy available to the Landlord.

SECTION 55. WAIVER OF JURY TRIAL

     Landlord and Tenant do hereby knowingly, voluntarily and intentionally
waive the right to a trial by jury of any and all issues either now or
hereinafter provided by law in any action or proceeding between the parties
hereto, or their successors, arising directly or indirectly out of or in any way
connected with this Lease or any of its provisions, Tenant's use or occupancy of
said premises and/or any claim for personal injury or property damage including,
without limitation, any action to rescind or cancel this Lease, and any claim or
defense asserting that this Lease was fraudulently induced or is otherwise void
or voidable. It is intended that said waiver shall apply to any and all
defenses, rights and/or counterclaims in any action or proceeding at law or in
equity. This waiver is a material inducement for Landlord and Tenant to enter
into this Lease.

SECTION 56. LEASEHOLD FINANCING

     (a) Landlord acknowledges and agrees that Tenant may from time to time
during the term, without the consent of Landlord, mortgage or otherwise finance
and encumber, whether by leasehold deed of trust or mortgage, collateral
assignment of this Lease, lease/sublease-back, and/or assignment/leaseback, any
and/or all of its leasehold estate hereunder, and property and rights in and to
the Leased Premises granted to it under this Lease, as security for the payment
of an indebtedness (any and all of which are herein referred to as a "Leasehold
Mortgage" and the holder thereof is herein referred to as "Leasehold
Mortgagee"). Any such Leasehold Mortgage shall be a lien only upon Tenant's
leasehold estate hereunder and Tenant's interests in this Lease and shall not
encumber Landlord's fee simple title to the Center or the Leased Premises.
Pursuant to any such Leasehold Mortgage, the Leasehold Mortgagee or another
person or entity (a "Successor-Tenant") may acquire title to Tenant's interest
in the leasehold estate in the Leased Premises in any lawful way, including but
not limited to, through foreclosure, assignment in lieu of foreclosure, or
otherwise. In such event, the Successor-Tenant shall succeed to the rights of
Tenant under this Lease, including the right to possession of the Leased
Premises, in which event Landlord shall recognize the Successor-Tenant as the
tenant under this Lease, the same as if such Successor-Tenant were the original
tenant hereunder.

     (b) Tenant shall notify Landlord (and any Fee Mortgagee, as hereinafter
defined in Section 56(d) below), in the manner hereinafter provided for the
giving of notice, of the execution of such Leasehold Mortgage and the name and
place for service of notice upon Leasehold Mortgagee. Upon such notification of
Landlord that Tenant has entered into a

                                       33

<PAGE>

Leasehold Mortgage, Landlord hereby agrees for the benefit of such Leasehold
Mortgagee, and upon written request by Tenant, to execute and deliver to Tenant
and Leasehold Mortgagee a "Landlord's Agreement" whereby Landlord agrees to
recognize the interest of Leasehold Mortgagee and any Successor-Tenant
hereunder, on commercially reasonable terms and conditions acceptable to
Leasehold Mortgagee.

     (c) Landlord does hereby waive any statutory or other lien of the Landlord
in Tenant's present and after-acquired assets, including among other things,
Tenant's inventory and equipment. To evidence such waiver for the benefit of
Tenant's existing lender, Landlord shall, simultaneously with the execution and
delivery of this Lease, execute and deliver to Tenant the "Landlord's Waiver"
attached hereto and made a part hereof as Exhibit "H".

     (d) In the event that, at any time prior to the execution of this Lease and
the recordation of a memorandum of lease in accordance with Section 47 hereof,
Landlord has mortgaged or otherwise encumbered the fee simple title to the
Premises, Landlord shall deliver to Tenant a commercially reasonable SNDA (as
defined in Section 11) containing terms substantially similar to the terms of
the document so entitled attached hereto and made a part hereof as Exhibit "I",
duly executed by the holder of any such mortgage or encumbrance (the "Fee
Mortgagee"). Landlord agrees that Tenant's obligations hereunder shall be
contingent upon delivery by Landlord to Tenant of an SNDA executed by the Fee
Mortgagee on or before the Commencement Date, as more fully set forth in Section
11.

                                       34

<PAGE>

     IN WITNESS WHEREOF, the parties hereto have executed this Lease the day and
year first above written.

                                        LANDLORD:

                                        JLP-HARVARD PARK, LLC
                                        an Ohio limited liability company

                                        By: Jubilee Limited Partnership,
                                            an Ohio limited partnership
                                        Its: Sole Member

                                        By: Schottenstein Professional Asset
                                            Management Corporation, an Ohio
                                            corporation
                                        Its: General Partner

                                        By: /s/ Jay L. Schottenstien
                                            ------------------------------------
                                        Name: Jay L. Schottenstien
                                              ----------------------------------
                                        Title: Chairman
                                               ---------------------------------

                                        TENANT:

                                        DSW INC.,
                                        an Ohio corporation

                                        By: /s/ Bill Jordan
                                            ------------------------------------
                                        Name: Bill Jordan
                                        Title: Vice President - General Counsel

                                       35<PAGE>
                                                                    EXHIBIT 10.1

                      AMENDED AND RESTATED CREDIT AGREEMENT

                                   DATED AS OF
                                  APRIL 7, 2006

                                      AMONG

                                LINN ENERGY, LLC
                                  AS BORROWER,

                                  BNP PARIBAS,
                            AS ADMINISTRATIVE AGENT,

                   ROYAL BANK OF CANADA AND SOCIETE GENERALE,

                             AS SYNDICATION AGENTS,

                     BANK OF AMERICA, N.A. AND COMERICA BANK

                             AS DOCUMENTATION AGENTS

                                       AND

                            THE LENDERS PARTY HERETO

                   JOINT LEAD ARRANGERS AND JOINT BOOK RUNNERS

BNP PARIBAS                                                 RBC CAPITAL MARKETS

<PAGE>

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                                   PAGE
<S>               <C>                                                                             <C>
                                                ARTICLE I
                                   DEFINITIONS AND ACCOUNTING MATTERS

Section 1.01      Terms Defined Above.................................................................1
Section 1.02      Certain Defined Terms...............................................................1
Section 1.03      Types of Loans and Borrowings......................................................18
Section 1.04      Terms Generally....................................................................18
Section 1.05      Accounting Terms and Determinations; GAAP..........................................18

                                               ARTICLE II
                                               THE CREDITS

Section 2.01      Commitments........................................................................19
Section 2.02      Loans and Borrowings...............................................................19
Section 2.03      Requests for Borrowings............................................................20
Section 2.04      Interest Elections.................................................................21
Section 2.05      Funding of Borrowings..............................................................22
Section 2.06      Termination and Reduction of Aggregate Maximum Credit Amounts......................23
Section 2.07      Borrowing Base.....................................................................23
Section 2.08      Letters of Credit..................................................................25

                                               ARTICLE III
                          PAYMENTS OF PRINCIPAL AND INTEREST; PREPAYMENTS; FEES

Section 3.01      Repayment of Loans.................................................................30
Section 3.02      Interest...........................................................................30
Section 3.03      Alternate Rate of Interest.........................................................31
Section 3.04      Prepayments........................................................................31
Section 3.05      Fees...............................................................................33

                                               ARTICLE IV
                           PAYMENTS; PRO RATA TREATMENT; SHARING OF SET-OFFS.

Section 4.01      Payments Generally; Pro Rata Treatment; Sharing of Set-offs........................34
Section 4.02      Presumption of Payment by the Borrower.............................................35
Section 4.03      Certain Deductions by the Administrative Agent.....................................35

                                               ARTICLE V
                       INCREASED COSTS; BREAK FUNDING PAYMENTS; TAXES; ILLEGALITY

Section 5.01      Increased Costs....................................................................35
Section 5.02      Break Funding Payments.............................................................36
Section 5.03      Taxes..............................................................................37
Section 5.04      Designation of Different Lending Office............................................37
Section 5.05      Illegality.........................................................................38

                                               ARTICLE VI
                                          CONDITIONS PRECEDENT

Section 6.01      Effective Date.....................................................................38
</TABLE>

                                        i

                                CREDIT AGREEMENT

<PAGE>

<TABLE>
<S>               <C>                                                                             <C>
Section 6.02      Each Credit Event..................................................................40

                                               ARTICLE VII
                                     REPRESENTATIONS AND WARRANTIES

Section 7.01      Organization; Powers...............................................................41
Section 7.02      Authority; Enforceability..........................................................41
Section 7.03      Approvals; No Conflicts............................................................41
Section 7.04      Financial Position; No Material Adverse Change.....................................41
Section 7.05      Litigation.........................................................................42
Section 7.06      Environmental Matters..............................................................42
Section 7.07      Compliance with the Laws and Agreements; No Defaults...............................43
Section 7.08      Investment Company Act.............................................................43
Section 7.09      Taxes..............................................................................43
Section 7.10      ERISA..............................................................................44
Section 7.11      Disclosure; No Material Misstatements..............................................45
Section 7.12      Insurance..........................................................................45
Section 7.13      Restriction on Liens...............................................................45
Section 7.14      Subsidiaries.......................................................................45
Section 7.15      Location of Business and Offices...................................................45
Section 7.16      Properties; Titles, Etc............................................................46
Section 7.17      Maintenance of Properties..........................................................47
Section 7.18      Gas Imbalances, Prepayments........................................................47
Section 7.19      Marketing of Production............................................................47
Section 7.20      Swap Agreements....................................................................47
Section 7.21      Use of Loans and Letters of Credit.................................................48
Section 7.22      Solvency...........................................................................48

                                              ARTICLE VIII
                                          AFFIRMATIVE COVENANTS

Section 8.01      Financial Statements; Ratings Change; Other Information............................48
Section 8.02      Notices of Material Events.........................................................51
Section 8.03      Existence; Conduct of Business.....................................................51
Section 8.04      Payment of Obligations.............................................................52
Section 8.05      Performance of Obligations under Loan Documents....................................52
Section 8.06      Operation and Maintenance of Properties............................................52
Section 8.07      Insurance..........................................................................53
Section 8.08      Books and Records; Inspection Rights...............................................53
Section 8.09      Compliance with Laws...............................................................53
Section 8.10      Environmental Matters..............................................................53
Section 8.11      Further Assurances.................................................................54
Section 8.12      Reserve Reports....................................................................55
Section 8.13      Title Information..................................................................56
Section 8.14      Additional Collateral; Additional Guarantors.......................................56
Section 8.15      ERISA Compliance...................................................................57
Section 8.16      Marketing Activities...............................................................57

                                               ARTICLE IX
                                           NEGATIVE COVENANTS

Section 9.01      Financial Covenants................................................................58
</TABLE>

                                       ii

                                CREDIT AGREEMENT

<PAGE>

<TABLE>
<S>               <C>                                                                             <C>
Section 9.02      Debt...............................................................................58
Section 9.03      Liens..............................................................................59
Section 9.04      Dividends, Distributions and Redemptions...........................................59
Section 9.05      Investments, Loans and Advances....................................................60
Section 9.06      Nature of Business.................................................................61
Section 9.07      Limitation on Leases...............................................................61
Section 9.08      Proceeds of Notes..................................................................61
Section 9.09      ERISA Compliance...................................................................62
Section 9.10      Sale or Discount of Receivables....................................................63
Section 9.11      Mergers, Etc.......................................................................63
Section 9.12      Sale of Properties.................................................................63
Section 9.13      Environmental Matters..............................................................63
Section 9.14      Transactions with Affiliates.......................................................64
Section 9.15      Subsidiaries.......................................................................64
Section 9.16      Negative Pledge Agreements; Dividend Restrictions..................................64
Section 9.17      Gas Imbalances, Take-or-Pay or Other Prepayments...................................64
Section 9.18      Swap Agreements....................................................................64
Section 9.19      Tax Status as Partnership; Operating Agreements....................................65

                                                ARTICLE X
                                       EVENTS OF DEFAULT; REMEDIES

Section 10.01     Events of Default..................................................................65
Section 10.02     Remedies...........................................................................67
Section 10.03     Disposition of Proceeds............................................................67

                                               ARTICLE XI
                                        THE ADMINISTRATIVE AGENT

Section 11.01     Appointment; Powers................................................................68
Section 11.02     Duties and Obligations of Administrative Agent.....................................68
Section 11.03     Action by Agent....................................................................69
Section 11.04     Reliance by Agent..................................................................69
Section 11.05     Subagents..........................................................................70
Section 11.06     Resignation or Removal of Agents...................................................70
Section 11.07     Agents and Lenders.................................................................70
Section 11.08     No Reliance........................................................................70
Section 11.09     Administrative Agent May File Proofs of Claim......................................71
Section 11.10     Authority of Administrative Agent to Release Collateral and Liens..................71
Section 11.11     The Arrangers and the Syndication Agent............................................71

                                               ARTICLE XII
                                              MISCELLANEOUS

Section 12.01     Notices............................................................................72
Section 12.02     Waivers; Amendments................................................................73
Section 12.03     Expenses, Indemnity; Damage Waiver.................................................74
Section 12.04     Successors and Assigns.............................................................76
Section 12.05     Survival; Revival; Reinstatement...................................................79
Section 12.06     Counterparts; Integration; Effectiveness...........................................79
Section 12.07     Severability.......................................................................80
Section 12.08     Right of Setoff....................................................................80
</TABLE>

                                       iii

                                CREDIT AGREEMENT

<PAGE>

<TABLE>
<S>               <C>                                                                             <C>
Section 12.09     GOVERNING LAW; JURISDICTION; CONSENT TO SERVICE OF PROCESS.........................80
Section 12.10     Headings...........................................................................81
Section 12.11     Confidentiality....................................................................81
Section 12.12     Interest Rate Limitation...........................................................82
Section 12.13     EXCULPATION PROVISIONS.............................................................83
Section 12.14     Collateral Matters; Swap Agreements................................................83
Section 12.15     No Third Party Beneficiaries.......................................................83
Section 12.16     USA Patriot Act Notice.............................................................83
</TABLE>

                                       iv

                                CREDIT AGREEMENT

<PAGE>

Annex I           List of Maximum Credit Amounts

Exhibit A         Form of Note
Exhibit B         Form of Compliance Certificate
Exhibit C-1       Security Instruments
Exhibit C-2       Form of Guaranty and Pledge Agreement
Exhibit D         Form of Assignment and Assumption

Schedule 7.05     Litigation
Schedule 7.11     Material Agreements
Schedule 7.14     Subsidiaries and Partnerships
Schedule 7.18     Gas Imbalances
Schedule 7.19     Marketing Contracts
Schedule 7.20     Swap Agreements

                                        v

                                CREDIT AGREEMENT

<PAGE>

         THIS CREDIT AGREEMENT dated as of April 7, 2006, is among Linn Energy,
LLC, a limited liability company duly formed and existing under the laws of the
State of Delaware (the "Borrower"); each of the Lenders from time to time party
hereto; BNP PARIBAS (in its individual capacity, "BNP Paribas"), as
administrative agent for the Lenders (in such capacity, together with its
successors in such capacity, the "Administrative Agent"); RBC CAPITAL MARKETS
(in its individual capacity, "RBC") and Societe Generale, as syndication agents
for the Lenders (in such capacities, together with their successors in such
capacities, the "Syndication Agents"), and Bank of America, N.A. and Comerica
Bank, as documentation agents (in such capacities, together with their
successors in such capacities, the "Documentation Agents") for the Lenders

                                    RECITALS

         A. The Borrower, the Administrative Agent and other financial
institutions named and defined therein as lenders and agents, are parties to
that certain Credit Agreement dated as of April 13, 2005, as amended by the
First Amendment, dated May 3, 2005, the Second Amendment dated August 12, 2005,
the Third Amendment dated October 27, 2005 and the Fourth Amendment dated
December 19, 2005, pursuant to which such lenders provided certain loans to and
extensions of credit on behalf of the Borrower (as heretofore amended, modified
or supplemented, the "Existing Credit Agreement").

         B. The Borrower has requested the Lenders, and the Lenders have agreed,
to amend and restate the Existing Credit Agreement, subject to the terms and
conditions of this Agreement.

         C. Now, therefore, in consideration of the mutual covenants and
agreements herein contained and of the loans, extensions of credit and
commitments hereinafter referred to, the parties hereto agree as follows:

                                   ARTICLE I
                       DEFINITIONS AND ACCOUNTING MATTERS

         Section 1.01 Terms Defined Above. As used in this Agreement, each term
defined above has the meaning indicated above.

         Section 1.02 Certain Defined Terms. As used in this Agreement, the
following terms have the meanings specified below:

         "ABR", when used in reference to any Loan or Borrowing, refers to
whether such Loan, or the Loans comprising such Borrowing, are bearing interest
at a rate determined by reference to the Alternate Base Rate.

         "Administrative Questionnaire" means an Administrative Questionnaire in
a form supplied by the Administrative Agent.

         "Affected Loans" has the meaning assigned such term in Section 5.05.

         "Affiliate" means, with respect to a specified Person, another Person
that directly, or indirectly through one or more intermediaries, Controls or is
Controlled by or is under common Control with the Person specified.

                                CREDIT AGREEMENT

<PAGE>

         "Agent" means the Administrative Agent, the Syndication Agents, the
Documentation Agents or any combination of them as the context requires.

         "Aggregate Maximum Credit Amounts" at any time shall equal the sum of
the Maximum Credit Amounts, as the same may be reduced or terminated pursuant to
Section 2.06.

         "Agreement" means this Amended and Restated Credit Agreement, as the
same may from time to time be amended, modified, supplemented or restated.

         "Alternate Base Rate" means, for any day, a rate per annum equal to the
greatest of (a) the Prime Rate in effect on such day and (b) the Federal Funds
Effective Rate in effect on such day plus 1/2 of 1%. Any change in the Alternate
Base Rate due to a change in the Prime Rate or the Federal Funds Effective Rate
shall be effective from and including the effective date of such change in the
Prime Rate or the Federal Funds Effective Rate, respectively.

         "Applicable Margin" means, for any day, with respect to any ABR Loan or
Eurodollar Loan, as the case may be, the rate per annum set forth in the
Borrowing Base Utilization Grid below based upon the Borrowing Base Utilization
Percentage then in effect:

<TABLE>
<CAPTION>
   Borrowing Base Utilization Percentage          Eurodollar Loans             ABR Loans
   -------------------------------------          ----------------             ---------
<S>                                               <C>                          <C>
less than 33%                                          1.000%                   0.000%

greater than or equal to 33%, but less than            1.250%                   0.000%
66%

greater than or equal to 66%, but less than            1.500%                   0.125%
85%

greater than or equal to 85%                           1.750%                   0.250%
</TABLE>

         Each change in the Applicable Margin shall apply during the period
commencing on the effective date of such change and ending on the date
immediately preceding the effective date of the next such change, provided,
however, that if at any time the Borrower fails to deliver a Reserve Report
pursuant to Section 8.12(a), then the "Applicable Margin" means the rate per
annum set forth on the grid when the Borrowing Base Utilization Percentage is at
its highest level.

         "Applicable Percentage" means, with respect to any Lender, the
percentage of the Aggregate Maximum Credit Amounts represented by such Lender's
Maximum Credit Amount as such percentage is set forth on Annex I.

         "Approved Counterparty" means (a) any Lender or any Affiliate of a
Lender and (b) any other Person whose long term senior unsecured debt rating is
A/A2 by S&P or Moody's (or their equivalent) or higher.

                                       2

                                CREDIT AGREEMENT

<PAGE>

         "Arrangers" means BNP Paribas and RBC Capital Markets, in their
capacities as joint lead arrangers and joint book runners hereunder.

         "Assignment and Assumption" means an assignment and assumption entered
into by a Lender and an assignee (with the consent of any party whose consent is
required by Section 12.04(b)), and accepted by the Administrative Agent, in the
form of Exhibit D or any other form approved by the Administrative Agent.

         "Availability Period" means the period from and including the Effective
Date to but excluding the Termination Date.

         "Available Cash" means, with respect to any fiscal quarter ending prior
to the Termination Date:

         (a) the sum of (i) all cash and cash equivalents of the Borrower on
hand at the end of such fiscal quarter; and (ii) all additional cash and cash
equivalents of the Borrower on hand on the date of determination of Available
Cash with respect to such fiscal quarter resulting from working capital
borrowings made subsequent to the end of such fiscal quarter, less

         (b) the amount of any cash reserves established by the board of
directors of the Borrower to (i) provide for the proper conduct of the business
of the Borrower (including reserves for future capital expenditures including
drilling and acquisitions and for anticipated future credit needs of the
Borrower), (ii) comply with applicable law or any loan agreement, security
agreement, mortgage, debt instrument or other agreement or obligation to which
the Borrower or an Affiliate is a party or by which it is bound or its assets
are subject or (iii) provide funds for distributions with respect to any one or
more of the next four fiscal quarters.

         "Board" means the Board of Governors of the Federal Reserve System of
the United States of America or any successor Governmental Authority.

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

         "Borrowing Base" means at any time an amount equal to the amount
determined in accordance with Section 2.07, as the same may be adjusted from
time to time pursuant to Section 8.13(c), Section 9.02(e) or Section 9.12(d).

         "Borrowing Base Deficiency" occurs if at any time the total Revolving
Credit Exposures exceeds the Borrowing Base then in effect.

         "Borrowing Base Utilization Percentage" means, as of any day, the
fraction expressed as a percentage, the numerator of which is the sum of the
Revolving Credit Exposures of the Lenders on such day, and the denominator of
which is the Borrowing Base in effect on such day.

         "Borrowing Request" means a request by the Borrower for a Borrowing in
accordance with Section 2.03.

         "Business Day" means any day that is not a Saturday, Sunday or other
day on which commercial banks in New York City or Houston, Texas are authorized
or required by law to remain closed; and if such day relates to a Borrowing or
continuation of, a payment or prepayment of

                                       3

                                CREDIT AGREEMENT

<PAGE>

principal of or interest on, or a conversion of or into, or the Interest Period
for, a Eurodollar Loan or a notice by the Borrower with respect to any such
Borrowing or continuation, payment, prepayment, conversion or Interest Period,
any day which is also a day on which dealings in dollar deposits are carried out
in the London interbank market.

         "Capital Leases" means, in respect of any Person, all leases which
shall have been, or should have been, in accordance with GAAP, recorded as
capital leases on the balance sheet of the Person liable (whether contingent or
otherwise) for the payment of rent thereunder.

         "Casualty Event" means any loss, casualty or other insured damage to,
or any nationalization, taking under power of eminent domain or by condemnation
or similar proceeding of, any Property of the Borrower or any of its
Subsidiaries having a fair market value in excess of $100,000 in the aggregate
for any calendar year.

         "Change in Control" means the occurrence of any of the following
events: (a) both (i) the Permitted Holders shall be the legal or beneficial
owner (within the meaning of Rule 13d-3 under the Securities Exchange Act of
1934, as amended) of 25% or less of the combined voting power of the then total
membership interests (including all securities which are convertible into
membership interests) of the Borrower and (ii) any Person or group of Persons
acting in concert as a partnership or other group (a "Group of Persons"), other
than one or more of the Permitted Holders, shall be the legal or beneficial
owner (within the meaning of Rule 13d-3 under the Securities Exchange Act of
1934, as amended) of more than 35% of the combined voting power of the then
total membership interests (including all securities which are convertible into
membership interests) of the Borrower, provided, that a "Group of Persons" shall
not include the underwriter in any firm underwriting undertaken in connection
with any public offering of the Borrower, or (b) occupation of a majority of the
seats (other than vacant seats) on the board of directors (or board of managers)
of the Company by Persons who were neither (i) nominated by the board of
directors of the Borrower nor (ii) appointed by directors a majority of whom
were so nominated.

         "Change in Law" means (a) the adoption of any law, rule or regulation
after the date of this Agreement, (b) any change in any law, rule or regulation
or in the interpretation or application thereof by any Governmental Authority
after the date of this Agreement or (c) compliance by any Lender or any Issuing
Bank (or, for purposes of Section 5.01(b), by any lending office of such Lender
or by such Lender's or such Issuing Bank's holding company, if any) with any
request, guideline or directive (whether or not having the force of law) of any
Governmental Authority made or issued after the date of this Agreement.

         "Code" means the Internal Revenue Code of 1986, as amended from time to
time, and any successor statute.

         "Commitment" means, with respect to each Lender, the commitment of such
Lender to make Loans and to acquire participations in Letters of Credit
hereunder, expressed as an amount representing the maximum aggregate amount of
such Lender's Revolving Credit Exposure hereunder, as such commitment may be (a)
modified from time to time pursuant to Section 2.06 and (b) modified from time
to time pursuant to assignments by or to such Lender pursuant to Section
12.04(b). The amount representing each Lender's Commitment shall at any time be
the lesser of such Lender's Maximum Credit Amount and such Lender's Applicable
Percentage of the then effective Borrowing Base.

                                       4

                                CREDIT AGREEMENT

<PAGE>

         "Commitment Fee Rate" means, for any day, the rate per annum set forth
in the grid below based upon the Borrowing Base Utilization Percentage then in
effect

<TABLE>
<CAPTION>

Borrowing Base Utilization Percentage         Commitment Fee Rate
-------------------------------------         -------------------
<S>                                           <C>
less than 33%                                        0.375%

greater than or equal to 33%                         0.300%
</TABLE>

         Each change in the Commitment Fee Rate shall apply during the period
commencing on the effective date of such change and ending on the date
immediately preceding the effective date of the next such change, provided,
however, that if at any time the Borrower fails to deliver a Reserve Report
pursuant to Section 8.12(a), then the "Commitment Fee Rate" means the rate per
annum set forth on the grid when the Borrowing Base Utilization Percentage is at
its lower level.

         "Consolidated Net Income" means with respect to the Borrower and the
Consolidated Subsidiaries, for any period, the aggregate of the net income (or
loss) of the Borrower and the Consolidated Subsidiaries after allowances for
taxes for such period determined on a consolidated basis in accordance with
GAAP; provided that there shall be excluded from such net income (to the extent
otherwise included therein) the following: (a) the net income of any Person in
which the Borrower or a Consolidated Subsidiary has an interest (which interest
does not cause the net income of such other Person to be consolidated with the
net income of the Borrower and the Consolidated Subsidiaries in accordance with
GAAP), except to the extent of the amount of dividends or distributions actually
paid in cash during such period by such other Person to the Borrower or to a
Consolidated Subsidiary, as the case may be; (b) the net income (but not loss)
during such period of any Consolidated Subsidiary to the extent that the
declaration or payment of dividends or similar distributions or transfers or
loans by that Consolidated Subsidiary is not at the time permitted by operation
of the terms of its charter or any agreement, instrument or Governmental
Requirement applicable to such Consolidated Subsidiary or is otherwise
restricted or prohibited, in each case determined in accordance with GAAP; (c)
the net income (or loss) of any Person acquired in a pooling-of-interests
transaction for any period prior to the date of such transaction; (d) any
extraordinary gains or losses during such period; (e) non-cash gains, losses or
adjustments under FASB Statement No. 133 as a result of changes in the fair
market value of derivatives; (f) any gains or losses attributable to writeups or
writedowns of assets, including ceiling test writedowns; (g) the one-time
bonuses paid by the Borrower to employees in connection with its initial public
offering and (h) non-cash share-based payments under FASB Statement No. 123R;
and provided further that if the Borrower or any Consolidated Subsidiary shall
acquire or dispose of any Property during such period, then Consolidated Net
Income shall be calculated after giving pro forma effect to such acquisition or
disposition, as if such acquisition or disposition had occurred on the first day
of such period.

         "Consolidated Subsidiaries" means each Subsidiary of the Borrower
(whether now existing or hereafter created or acquired) the financial statements
of which shall be (or should have been) consolidated with the financial
statements of the Borrower in accordance with GAAP.

                                       5

                                CREDIT AGREEMENT

<PAGE>

         "Control" means the possession, directly or indirectly, of the power to
direct or cause the direction of the management or policies of a Person, whether
through the ability to exercise voting power, by contract or otherwise. For the
purposes of this definition, and without limiting the generality of the
foregoing, any Person that owns directly or indirectly 10% or more of the Equity
Interests having ordinary voting power for the election of the directors or
other governing body of a Person will be deemed to "control" such other Person.
"Controlling" and "Controlled" have meanings correlative thereto.

         "Debt" means, for any Person, the sum of the following (without
duplication): (a) all obligations of such Person for borrowed money or evidenced
by bonds, bankers' acceptances, debentures, notes or other similar instruments;
(b) all obligations of such Person (whether contingent or otherwise) in respect
of letters of credit, surety or other bonds and similar instruments; (c) all
accounts payable, accrued expenses, liabilities or other obligations of such
Person, in each such case to pay the deferred purchase price of Property or
services; (d) all obligations under Capital Leases; (e) all obligations under
Synthetic Leases; (f) all Debt (as defined in the other clauses of this
definition) of others secured by (or for which the holder of such Debt has an
existing right, contingent or otherwise, to be secured by) a Lien on any
Property of such Person, whether or not such Debt is assumed by such Person; (g)
all Debt (as defined in the other clauses of this definition) of others
guaranteed by such Person or in which such Person otherwise assures a creditor
against loss of the Debt (howsoever such assurance shall be made) to the extent
of the lesser of the amount of such Debt and the maximum stated amount of such
guarantee or assurance against loss; (h) all obligations or undertakings of such
Person to maintain or cause to be maintained the financial position or covenants
of others or to purchase the Debt or Property of others; (i) obligations to
deliver commodities, goods or services, including, without limitation,
Hydrocarbons, in consideration of one or more advance payments, other than gas
balancing arrangements in the ordinary course of business; (j) obligations to
pay for goods or services whether or not such goods or services are actually
received or utilized by such Person; (k) any Debt of a partnership for which
such Person is liable either by agreement, by operation of law or by a
Governmental Requirement but only to the extent of such liability; (l)
Disqualified Capital Stock; and (m) the undischarged balance of any production
payment created by such Person or for the creation of which such Person directly
or indirectly received payment. The Debt of any Person shall include all
obligations of such Person of the character described above to the extent such
Person remains legally liable in respect thereof notwithstanding that any such
obligation is not included as a liability of such Person under GAAP.

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

         "Disqualified Capital Stock" means any Equity Interest that, by its
terms (or by the terms of any security into which it is convertible or for which
it is exchangeable) or upon the happening of any event, matures or is
mandatorily redeemable for any consideration other than other Equity Interests
(which would not constitute Disqualified Capital Stock), pursuant to a sinking
fund obligation or otherwise, or is convertible or exchangeable for Debt or
redeemable for any consideration other than other Equity Interests (which would
not constitute Disqualified Capital Stock) at the option of the holder thereof,
in whole or in part, on or prior to the date that is one year after the earlier
of (a) the Maturity Date and (b) the date on which there are no Loans, LC
Exposure or other obligations hereunder outstanding and all of the Commitments
are terminated.

         "dollars" or "$" refers to lawful money of the United States of
America.

                                       6

                                CREDIT AGREEMENT

<PAGE>

         "Domestic Subsidiary" means any Subsidiary that is organized under the
laws of the United States of America or any state thereof or the District of
Columbia.

         "EBITDA" means, for any period, the sum of Consolidated Net Income for
such period plus the following expenses or charges to the extent deducted from
Consolidated Net Income in such period: Interest Expense, income taxes,
depreciation, depletion, amortization and other similar charges, minus all
noncash income added to Consolidated Net Income.

         "Effective Date" means the date on which the conditions specified in
Section 6.01 are satisfied (or waived in accordance with Section 12.02).

         "Engineering Reports" has the meaning assigned such term in Section
2.07(c)(i).

         "Environmental Laws" means any and all Governmental Requirements
pertaining in any way to health, safety the environment or the preservation or
reclamation of natural resources, in effect in any and all jurisdictions in
which the Borrower or any of its Subsidiaries is conducting or at any time has
conducted business, or where any Property of the Borrower or any of its
Subsidiaries is located, including without limitation, the Oil Pollution Act of
1990 ("OPA"), as amended, the Clean Air Act, as amended, the Comprehensive
Environmental, Response, Compensation, and Liability Act of 1980 ("CERCLA"), as
amended, the Federal Water Pollution Control Act, as amended, the Occupational
Safety and Health Act of 1970, as amended, the Resource Conservation and
Recovery Act of 1976 ("RCRA"), as amended, the Safe Drinking Water Act, as
amended, the Toxic Substances Control Act, as amended, the Superfund Amendments
and Reauthorization Act of 1986, as amended, the Hazardous Materials
Transportation Act, as amended, and other environmental conservation or
protection Governmental Requirements. The term "oil" shall have the meaning
specified in OPA, the terms "hazardous substance" and "release" (or "threatened
release") have the meanings specified in CERCLA, the terms "solid waste" and
"disposal" (or "disposed") have the meanings specified in RCRA and the term "oil
and gas waste" shall have the meaning specified in Section 91.1011 of the Texas
Natural Resources Code ("Section 91.1011"); provided, however, that (a) in the
event either OPA, CERCLA, RCRA or Section 91.1011 is amended so as to broaden
the meaning of any term defined thereby, such broader meaning shall apply
subsequent to the effective date of such amendment and (b) to the extent the
laws of the state or other jurisdiction in which any Property of the Borrower or
any of its Subsidiaries is located establish a meaning for "oil," "hazardous
substance," "release," "solid waste," "disposal" or "oil and gas waste" which is
broader than that specified in either OPA, CERCLA, RCRA or Section 91.1011, such
broader meaning shall apply.

         "Equity Interests" means shares of capital stock, partnership
interests, membership interests in a limited liability company, beneficial
interests in a trust or other equity ownership interests in a Person, and any
warrants, options or other rights entitling the holder thereof to purchase or
acquire any such Equity Interest.

         "ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, and any successor statute.

         "ERISA Affiliate" means each trade or business (whether or not
incorporated) which together with the Borrower or any of its Subsidiaries would
be deemed to be a "single employer" within the meaning of section 4001(b)(1) of
ERISA or subsections (b), (c), (m) or (o) of section 414 of the Code.

                                       7

                                CREDIT AGREEMENT

<PAGE>

         "ERISA Event" means (a) a "Reportable Event" described in section 4043
of ERISA and the regulations issued thereunder, (b) the withdrawal of the
Borrower or any of its Subsidiaries or any ERISA Affiliate from a Plan during a
plan year in which it was a "substantial employer" as defined in section
4001(a)(2) of ERISA, (c) the filing of a notice of intent to terminate a Plan or
the treatment of a Plan amendment as a termination under section 4041 of ERISA,
(d) the institution of proceedings to terminate a Plan by the PBGC, (e) receipt
of a notice of withdrawal liability pursuant to Section 4202 of ERISA or (f) any
other event or condition which might constitute grounds under section 4042 of
ERISA for the termination of, or the appointment of a trustee to administer, any
Plan.

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

         "Event of Default" has the meaning assigned such term in Section 10.01.

         "Excepted Liens" means: (a) Liens for Taxes, assessments or other
governmental charges or levies which are not delinquent or which are being
contested in good faith by appropriate action and for which adequate reserves
have been maintained in accordance with GAAP; (b) Liens in connection with
workers' compensation, unemployment insurance or other social security, old age
pension or public liability obligations which are not delinquent or which are
being contested in good faith by appropriate action and for which adequate
reserves have been maintained in accordance with GAAP; (c) statutory landlord's
liens, operators', vendors', carriers', warehousemen's, repairmen's, mechanics',
suppliers', workers', materialmen's, construction or other like Liens arising by
operation of law in the ordinary course of business or incident to the
exploration, development, operation and maintenance of Oil and Gas Properties
each of which is in respect of obligations that are not delinquent or which are
being contested in good faith by appropriate action and for which adequate
reserves have been maintained in accordance with GAAP; (d) contractual Liens
which arise in the ordinary course of business under operating agreements, joint
venture agreements, oil and gas partnership agreements, oil and gas leases,
farm-out agreements, division orders, contracts for the sale, transportation or
exchange of oil and natural gas, unitization and pooling declarations and
agreements, area of mutual interest agreements, overriding royalty agreements,
marketing agreements, processing agreements, net profits agreements, development
agreements, gas balancing or deferred production agreements, injection,
repressuring and recycling agreements, salt water or other disposal agreements,
seismic or other geophysical permits or agreements, and other agreements which
are usual and customary in the oil and gas business and are for claims which are
not delinquent or which are being contested in good faith by appropriate action
and for which adequate reserves have been maintained in accordance with GAAP,
provided that any such Lien referred to in this clause does not materially
impair the use of the Property covered by such Lien for the purposes for which
such Property is held by the Borrower or any of its Subsidiaries or materially
impair the value of such Property subject thereto; (e) Liens arising solely by
virtue of any statutory or common law provision relating to banker's liens,
rights of set-off or similar rights and remedies and burdening only deposit
accounts or other funds maintained with a creditor depository institution,
provided that no such deposit account is a dedicated cash collateral account or
is subject to restrictions against access by the depositor in excess of those
set forth by regulations promulgated by the Board and no such deposit account is
intended by the Borrower or any of its Subsidiaries to provide collateral to the
depository institution; (f) easements, restrictions, servitudes, permits,
conditions, covenants, exceptions or reservations in any Property of the
Borrower or any of its Subsidiaries for the purpose of roads, pipelines,
transmission lines, transportation lines, distribution lines for the removal of
gas, oil, coal or other minerals or timber, and other like purposes, or for the
joint or common use of real

                                       8

                                CREDIT AGREEMENT

<PAGE>

estate, rights of way, facilities and equipment, that do not secure any monetary
obligations and which in the aggregate do not materially impair the use of such
Property for the purposes of which such Property is held by the Borrower or any
of its Subsidiaries or materially impair the value of such Property subject
thereto; (g) Liens on cash or securities pledged to secure performance of
tenders, surety and appeal bonds, government contracts, performance and return
of money bonds, bids, trade contracts, leases, statutory obligations, regulatory
obligations and other obligations of a like nature incurred in the ordinary
course of business and (h) judgment and attachment Liens not giving rise to an
Event of Default, provided that any appropriate legal proceedings which may have
been duly initiated for the review of such judgment shall not have been finally
terminated or the period within which such proceeding may be initiated shall not
have expired and no action to enforce such Lien has been commenced; provided,
further that Liens described in clauses (a) through (e) shall remain "Excepted
Liens" only for so long as no action to enforce such Lien has been commenced and
no intention to subordinate the first priority Lien granted in favor of the
Administrative Agent and the Lenders is to be hereby implied or expressed by the
permitted existence of such Excepted Liens.

         "Excluded Taxes" means, with respect to the Administrative Agent, any
Lender, any Issuing Bank or any other recipient of any payment to be made by or
on account of any obligation of the Borrower or any Guarantor hereunder or under
any other Loan Document, (a) income or franchise taxes imposed on (or measured
by) its net income by the United States of America or such other jurisdiction
under the laws of which such recipient is organized or in which its principal
office is located or, in the case of any Lender, in which its applicable lending
office is located, (b) any branch profits taxes imposed by the United States of
America or any similar tax imposed by any other jurisdiction in which the
Borrower or any Guarantor is located and (c) in the case of a Foreign Lender any
withholding tax that is imposed on amounts payable to such Foreign Lender at the
time such Foreign Lender becomes a party to this Agreement (or designates a new
lending office) or is attributable to such Foreign Lender's failure to comply
with Section 5.03(e), except to the extent that such Foreign Lender (or its
assignor, if any) was entitled, at the time of designation of a new lending
office (or assignment), to receive additional amounts with respect to such
withholding tax pursuant to Section 5.03(a) or Section 5.03(c).

         "Existing Credit Agreement" has the meaning assigned to such term in
the recitals.

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

         "Financial Officer" means, for any Person, the chief financial officer,
principal accounting officer, treasurer or controller of such Person. Unless
otherwise specified, all references to a Financial Officer shall mean a
Financial Officer of the Borrower.

         "Financial Statements" means the financial statement or statements of
the Borrower and its Consolidated Subsidiaries referred to in Section 7.04(a).

         "Foreign Lender" means any Lender that is organized under the laws of a
jurisdiction other than that in which the Borrower is located. For purposes of
this definition, the United States of

                                       9

                                CREDIT AGREEMENT

<PAGE>

America, each State thereof and the District of Columbia shall be deemed to
constitute a single jurisdiction.

         "Foreign Subsidiary" means any Subsidiary that is not a Domestic
Subsidiary.

         "GAAP" means generally accepted accounting principles in the United
States of America as in effect from time to time subject to the terms and
conditions set forth in Section 1.05.

         "Governmental Authority" means the government of the United States of
America, any other nation or any political subdivision thereof, whether state or
local, and any agency, authority, instrumentality, regulatory body, court,
central bank or other entity exercising executive, legislative, judicial,
taxing, regulatory or administrative powers or functions of or pertaining to
government over the Borrower or any of its Subsidiaries, any of their
Properties, any Agent, any Issuing Bank or any Lender.

         "Governmental Requirement" means any law, statute, code, ordinance,
order, determination, rule, regulation, judgment, decree, injunction, franchise,
permit, certificate, license, authorization or other directive or requirement,
whether now or hereinafter in effect, including, without limitation,
Environmental Laws, energy regulations and occupational, safety and health
standards or controls, of any Governmental Authority.

         "Guarantors" means (a) Linn Energy Holdings, LLC, (b) Linn Operating,
Inc., (c) Mid Atlantic Well Services Inc., and (d) each other Material Domestic
Subsidiary or other Domestic Subsidiary that guarantees the Indebtedness
pursuant to Section 8.14(b).

         "Guaranty Agreement" means an agreement executed by the Guarantors in
form and substance reasonably satisfactory to the Administrative Agent
unconditionally guarantying on a joint and several basis, payment of the
Indebtedness, as the same may be amended, modified or supplemented from time to
time.

         "Highest Lawful Rate" means, with respect to each Lender, the maximum
nonusurious interest rate, if any, that at any time or from time to time may be
contracted for, taken, reserved, charged or received on the Notes or on other
Indebtedness under laws applicable to such Lender which are presently in effect
or, to the extent allowed by law, under such applicable laws which may hereafter
be in effect and which allow a higher maximum nonusurious interest rate than
applicable laws allow as of the date hereof.

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

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

         "Indebtedness" means any and all amounts owing or to be owing by the
Borrower, any of its Subsidiaries or any Guarantor (whether direct or indirect
(including those acquired by assumption), absolute or contingent, due or to
become due, now existing or hereafter arising): (a) to the Administrative Agent,
any Issuing Bank or any Lender under any Loan Document; (b) to any Lender

                                       10

                                CREDIT AGREEMENT

<PAGE>

or any Affiliate of a Lender under any Swap Agreements among such Person and the
Borrower or any Subsidiary or assigned to such Person while such Person (or in
the case of its Affiliate, the Lender affiliated therewith) is a Lender
hereunder and (c) all renewals, extensions and/or rearrangements of any of the
above.

         "Indemnified Taxes" means Taxes other than Excluded Taxes.

         "Interest Election Request" means a request by the Borrower to convert
or continue a Borrowing in accordance with Section 2.04.

         "Interest Expense" means, for any period, the sum (determined without
duplication) of the aggregate gross interest expense of the Borrower and the
Consolidated Subsidiaries for such period, including (a) to the extent included
in interest expense under GAAP: (i) amortization of debt discount, (ii)
capitalized interest and (iii) the portion of any payments or accruals under
Capital Leases allocable to interest expense, plus the portion of any payments
or accruals under Synthetic Leases allocable to interest expense whether or not
the same constitutes interest expense under GAAP and (b) cash dividend payments
by the Borrower in respect of any Disqualified Capital Stock; but excluding
non-cash gains, losses or adjustments under FASB Statement No. 133 as a result
of changes in the fair market value of derivatives.

         "Interest Period" means with respect to any Eurodollar Borrowing, the
period commencing on the date of such Borrowing and ending on the numerically
corresponding day in the calendar month that is one, two, three or six months
thereafter, as the Borrower may elect; provided, that (a) if any Interest Period
would end on a day other than a Business Day, such Interest Period shall be
extended to the next succeeding Business Day unless such next succeeding
Business Day would fall in the next calendar month, in which case such Interest
Period shall end on the next preceding Business Day and (b) any Interest Period
pertaining to a Eurodollar Borrowing that commences on the last Business Day of
a calendar month (or on a day for which there is no numerically corresponding
day in the last calendar month of such Interest Period) shall end on the last
Business Day of the last calendar month of such Interest Period. For purposes
hereof, the date of a Borrowing initially shall be the date on which such
Borrowing is made and thereafter shall be the effective date of the most recent
conversion or continuation of such Borrowing.

         "Interim Redetermination" has the meaning assigned such term in Section
2.07(b).

         "Investment" means, for any Person: (a) the acquisition (whether for
cash, Property, services or securities or otherwise) of Equity Interests of any
other Person or any agreement to make any such acquisition (including, without
limitation, any "short sale" or any sale of any securities at a time when such
securities are not owned by the Person entering into such short sale); (b) the
making of any deposit with, or advance, loan or capital contribution to,
assumption of Debt of, purchase or other acquisition of any other Debt or equity
participation or interest in, or other extension of credit to, any other Person
(including the purchase of Property from another Person subject to an
understanding or agreement, contingent or otherwise, to resell such Property to
such Person, but excluding any such advance, loan or extension of credit having
a term not exceeding ninety (90) days representing the purchase price of
inventory or supplies sold by such Person in the ordinary course of business);
(c) the purchase or acquisition (in one or a series of transactions) of Property
of another Person that constitutes a business unit or (d) the entering into of
any guarantee of, or other contingent obligation (including the deposit of any
Equity Interests to be sold) with respect to, Debt or other

                                       11

                                CREDIT AGREEMENT

<PAGE>

liability of any other Person and (without duplication) any amount committed to
be advanced, lent or extended to such Person.

         "Issuing Bank" means BNP Paribas, in its capacity as an issuer of
Letters of Credit hereunder, and its successors in such capacity as provided in
Section 2.08(i). Any Issuing Bank may, in its discretion, arrange for one or
more Letters of Credit to be issued by Affiliates of such Issuing Bank, in which
case the term "Issuing Bank" shall include any such Affiliate with respect to
Letters of Credit issued by such Affiliate.

         "LC Commitment" at any time means Twenty-five Million Dollars
($25,000,000).

         "LC Disbursement" means a payment made by any Issuing Bank pursuant to
a Letter of Credit issued by such Issuing Bank.

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

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

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

         "Letter of Credit Agreements" means all letter of credit applications
and other agreements (including any amendments, modifications or supplements
thereto) submitted by the Borrower, or entered into by the Borrower, with any
Issuing Bank relating to any Letter of Credit issued by such Issuing Bank.

         "LIBO Rate" means, with respect to any Eurodollar Borrowing for any
Interest Period, the rate appearing on Page BBAM of Bloomberg (or on any
successor or substitute page of such Service, or any successor to or substitute
for such Service, providing rate quotations comparable to those currently
provided on such page of such Service, as determined by the Administrative Agent
from time to time for purposes of providing quotations of interest rates
applicable to dollar deposits in the London interbank market) at approximately
11:00 a.m., London time, two Business Days prior to the commencement of such
Interest Period, as the rate for dollar deposits with a maturity comparable to
such Interest Period. In the event that such rate is not available at such time
for any reason, then the "LIBO Rate" with respect to such Eurodollar Borrowing
for such Interest Period shall be the rate (rounded upwards, if necessary, to
the next 1/16th of 1%) at which dollar deposits of $1,000,000 and for a maturity
comparable to such Interest Period are offered by the principal London office of
the Administrative Agent in immediately available funds in the London interbank
market at approximately 11:00 a.m., London time, two Business Days prior to the
commencement of such Interest Period.

         "Lien" means any interest in Property securing an obligation owed to,
or a claim by, a Person other than the owner of the Property, whether such
interest is based on the common law, statute or contract, and whether such
obligation or claim is fixed or contingent, and including but not limited to (a)
the lien or security interest arising from a mortgage, encumbrance, pledge,
security agreement,

                                       12

                                CREDIT AGREEMENT

<PAGE>

conditional sale or trust receipt or a lease, consignment or bailment for
security purposes or (b) production payments and the like payable out of Oil and
Gas Properties. The term "Lien" shall include easements, restrictions,
servitudes, permits, conditions, covenants, exceptions or reservations. For the
purposes of this Agreement, the Borrower and its Subsidiaries shall be deemed to
be the owner of any Property which they have acquired or hold subject to a
conditional sale agreement, or leases under a financing lease or other
arrangement pursuant to which title to the Property has been retained by or
vested in some other Person in a transaction intended to create a financing.

         "Loan Documents" means this Agreement, the Notes, the Letter of Credit
Agreements, the Letters of Credit and the Security Instruments.

         "Loans" means the loans made by the Lenders to the Borrower pursuant to
this Agreement.

         "Majority Lenders" means, at any time while no Loans or LC Exposure is
outstanding, Lenders having at least sixty-six and two-thirds percent (66-2/3%)
of the Aggregate Maximum Credit Amounts; and at any time while any Loans or LC
Exposure is outstanding, Lenders holding at least sixty-six and two-thirds
percent (66-2/3%) of the outstanding aggregate principal amount of the Loans or
participation interests in Letters of Credit (without regard to any sale by a
Lender of a participation in any Loan under Section 12.04(c)).

         "Managers" means the members of the Board of Managers or Board of
Directors (however designated from time to time) of the Borrower as constituted
from time to time.

         "Material Adverse Effect" means a material adverse change in, or
material adverse effect on (a) the business, operations, Property, liabilities
(actual or contingent) or condition (financial or otherwise) of the Borrower and
its Guarantors taken as a whole, (b) the ability of the Borrower, any of its
Subsidiaries or any Guarantor to perform any of its obligations under any Loan
Document to which it is a party, (c) the validity or enforceability of any Loan
Document or (d) the rights and remedies of or benefits available to the
Administrative Agent, any other Agent, any Issuing Bank or any Lender under any
Loan Document.

         "Material Domestic Subsidiary" means, as of any date, any Domestic
Subsidiary that (a) is a Wholly-Owned Subsidiary and (b) together with its
Subsidiaries, owns Property having a fair market value of $1,000,000 or more.

         "Material Indebtedness" means Debt (other than the Loans and Letters of
Credit), or obligations in respect of one or more Swap Agreements, of any one or
more of the Borrower and its Subsidiaries in an aggregate principal amount
exceeding $1,000,000. For purposes of determining Material Indebtedness, the
"principal amount" of the obligations of the Borrower or any of its Subsidiaries
in respect of any Swap Agreement at any time shall be the maximum aggregate
amount (giving effect to any netting agreements) that the Borrower or such
Subsidiary would be required to pay if such Swap Agreement were terminated at
such time.

         "Maturity Date" means April 13, 2009.

         "Maximum Credit Amount" means, as to each Lender, the amount set forth
opposite such Lender's name on Annex I under the caption "Maximum Credit
Amounts", as the same may be (a) reduced or terminated from time to time in
connection with a reduction or termination of the

                                       13

                                CREDIT AGREEMENT

<PAGE>

Aggregate Maximum Credit Amounts pursuant to Section 2.06(b) or (b) modified
from time to time pursuant to any assignment permitted by Section 12.04(b).

         "Moody's" means Moody's Investors Service, Inc. and any successor
thereto that is a nationally recognized rating agency.

         "Mortgaged Property" means any Property owned by the Borrower or any
Guarantor which is subject to the Liens existing and to exist under the terms of
the Security Instruments.

         "Multiemployer Plan" means a Plan which is a multiemployer plan as
defined in section 3(37) or 4001 (a)(3) of ERISA.

         "New Borrowing Base Notice" has the meaning assigned such term in
Section 2.07(d).

         "Notes" means the promissory notes of the Borrower described in Section
2.02(d) and being substantially in the form of Exhibit A, together with all
amendments, modifications, replacements, extensions and rearrangements thereof.

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

         "Other Taxes" means any and all present or future stamp or documentary
taxes or any other excise or Property taxes, charges or similar levies arising
from any payment made hereunder or from the execution, delivery or enforcement
of, or otherwise with respect to, this Agreement and any other Loan Document.

         "Participant" has the meaning set forth in Section 12.04(c)(i).

                                       14

                                CREDIT AGREEMENT

<PAGE>

         "PBGC" means the Pension Benefit Guaranty Corporation, or any successor
thereto.

         "Permitted Holders" means Quantum Energy Partners II, LP, a Delaware
limited partnership ("QEP II"), and Nemacolin Resources, LLC, a Delaware limited
liability company ("Nemacolin"), provided, that if QEP II or Nemacolin dissolve
or otherwise distribute their ownership interests in the Borrower to their
respective partners or members, the term Permitted Holders shall include each of
those partners or members of QEP II or Nemacolin who were partners or members,
or affiliates of such partners or members, of QEP II or Nemacolin, as the case
may be, on the date hereof.

         "Person" means any natural person, corporation, limited liability
company, trust, joint venture, association, company, partnership, Governmental
Authority or other entity.

         "Plan" means any employee pension benefit plan, as defined in section
3(2) of ERISA, which (a) is currently or hereafter sponsored, maintained or
contributed to by the Borrower, any of its Subsidiaries or an ERISA Affiliate or
(b) was at any time during the six calendar years preceding the date hereof,
sponsored, maintained or contributed to by the Borrower, any of its Subsidiaries
or an ERISA Affiliate.

         "Prime Rate" means the rate of interest per annum publicly announced
from time to time by BNP Paribas as its prime rate in effect at its principal
office in New York City; each change in the Prime Rate shall be effective from
and including the date such change is publicly announced as being effective.
Such rate is set by BNP Paribas as a general reference rate of interest, taking
into account such factors as BNP Paribas may deem appropriate; it being
understood that many of BNP Paribas's commercial or other loans are priced in
relation to such rate, that it is not necessarily the lowest or best rate
actually charged to any customer and that BNP Paribas may make various
commercial or other loans at rates of interest having no relationship to such
rate.

         "Property" means any interest in any kind of property or asset, whether
real, personal or mixed, or tangible or intangible, including, without
limitation, cash, securities, accounts and contract rights.

         "Proposed Borrowing Base" has the meaning assigned to such term in
Section 2.07(c)(i).

         "Proposed Borrowing Base Notice" has the meaning assigned to such term
in Section 2.07(c)(ii).

         "Proved Developed Producing Properties" means Oil and Gas Properties
which are categorized as "Proved Reserves" that are both "Developed" and
"Producing", as such terms are defined in the Definitions for Oil and Gas
Reserves as promulgated by the Society of Petroleum Engineers (or any generally
recognized successor) as in effect at the time in question.

         "Proved Properties" means Oil and Gas Properties which are identified
as "Proved Reserves" on the most recent Engineering Report.

         "Redemption" means with respect to any Debt, the repurchase,
redemption, prepayment, repayment or defeasance or any other acquisition or
retirement for value (or the segregation of funds with respect to any of the
foregoing) of any such Debt. "Redeem" has the correlative meaning thereto.

                                       15

                                CREDIT AGREEMENT

<PAGE>

         "Redetermination Date" means, with respect to any Scheduled
Redetermination or any Interim Redetermination, the date that the redetermined
Borrowing Base related thereto becomes effective pursuant to Section 2.07(d).

         "Register" has the meaning assigned such term in Section 12.04(b)(iv).

         "Related Parties" means, with respect to any specified Person, such
Person's Affiliates and the respective directors, officers, employees, agents
and advisors (including attorneys, accountants and experts) of such Person and
such Person's Affiliates.

         "Remedial Work" has the meaning assigned such term in Section 8.10(a).

         "Reserve Report" means a report, in form and substance reasonably
satisfactory to the Administrative Agent, setting forth, as of each January 1st
or July 1st (or such other date in the event of an Interim Redetermination) the
oil and gas reserves attributable to the Oil and Gas Properties of the Borrower
and its Subsidiaries, together with a projection of the rate of production and
future net income, taxes, operating expenses and capital expenditures with
respect thereto as of such date, based upon the economic assumptions consistent
with the Administrative Agent's lending requirements at the time.

         "Responsible Officer" means, as to any Person, the Chief Executive
Officer, the President, any Financial Officer or any Vice President of such
Person. Unless otherwise specified, all references to a Responsible Officer
herein shall mean a Responsible Officer of the Borrower.

         "Restricted Payment" means any dividend or other distribution (whether
in cash, securities or other Property) with respect to any Equity Interests in
the Borrower, or any payment (whether in cash, securities or other Property),
including any sinking fund or similar deposit, on account of the purchase,
redemption, retirement, acquisition, cancellation or termination of any such
Equity Interests in the Borrower or any option, warrant or other right to
acquire any such Equity Interests in the Borrower.

         "Revolving Credit Exposure" means, with respect to any Lender at any
time, the sum of the outstanding principal amount of such Lender's Loans and its
LC Exposure at such time.

         "Scheduled Redetermination" has the meaning assigned such term in
Section 2.07(b).

         "Scheduled Redetermination Date" means the date on which a Borrowing
Base that has been redetermined pursuant to a Scheduled Redetermination becomes
effective as provided in Section 2.07(d).

         "Security Instruments" means the Guaranty Agreement, if any, mortgages,
deeds of trust and other agreements, instruments or certificates described or
referred to in Exhibit C-1, and any and all other agreements, instruments,
consents or certificates now or hereafter executed and delivered by the Borrower
or any other Person (other than Swap Agreements with the Lenders or any
Affiliate of a Lender or participation or similar agreements between any Lender
and any other lender or creditor with respect to any Indebtedness pursuant to
this Agreement) in connection with, or as security for the payment or
performance of the Indebtedness, the Notes, this Agreement, or reimbursement
obligations under the Letters of Credit, as such agreements may be amended,
modified, supplemented or restated from time to time.

                                       16

                                CREDIT AGREEMENT

<PAGE>

         "S&P" means Standard & Poor's Ratings Group, a division of The
McGraw-Hill Companies, Inc., and any successor thereto that is a nationally
recognized rating agency.

         "Subsidiary" means: (a) any Person of which at least a majority of the
outstanding Equity Interests having by the terms thereof ordinary voting power
to elect a majority of the board of directors, manager or other governing body
of such Person (irrespective of whether or not at the time Equity Interests of
any other class or classes of such Person shall have or might have voting power
by reason of the happening of any contingency) is at the time directly or
indirectly owned or controlled by the Borrower or one or more of its
Subsidiaries or by the Borrower and one or more of its Subsidiaries and (b) any
partnership of which the Borrower or any of its Subsidiaries is a general
partner. Unless otherwise indicated herein, each reference to the term
"Subsidiary" shall mean a Subsidiary of the Borrower.

         "Swap Agreement" means any agreement with respect to any swap, forward,
future or derivative transaction or option or similar agreement, whether
exchange traded, "over-the-counter" or otherwise, involving, or settled by
reference to, one or more rates, currencies, commodities, equity or debt
instruments or securities, or economic, financial or pricing indices or measures
of economic, financial or pricing risk or value or any similar transaction or
any combination of these transactions; provided that no phantom stock or similar
plan providing for payments only on account of services provided by current or
former directors, officers, employees or consultants of the Borrower or any of
its Subsidiaries shall be a Swap Agreement.

         "Synthetic Leases" means, in respect of any Person, all leases which
shall have been, or should have been, in accordance with GAAP, treated as
operating leases on the financial statements of the Person liable (whether
contingently or otherwise) for the payment of rent thereunder and which were
properly treated as indebtedness for borrowed money for purposes of U.S. federal
income taxes, if the lessee in respect thereof is obligated to either purchase
for an amount in excess of, or pay upon early termination an amount in excess
of, 80% of the residual value of the Property subject to such operating lease
upon expiration or early termination of such lease.

         "Taxes" means any and all present or future taxes, levies, imposts,
duties, deductions, charges or withholdings imposed by any Governmental
Authority.

         "Termination Date" means the earlier of the Maturity Date and the date
of termination of the Commitments.

         "Transactions" means, with respect to (a) the Borrower, the execution,
delivery and performance by the Borrower of this Agreement, and each other Loan
Document to which it is a party, the borrowing of Loans, the use of the proceeds
thereof and the issuance of Letters of Credit hereunder, and the grant of Liens
by the Borrower on Mortgaged Properties and other Properties pursuant to the
Security Instruments and (b) any Guarantor, the execution, delivery and
performance by such Guarantor of each Loan Document to which it is a party, the
guaranteeing of the Indebtedness and the other obligations under the Guaranty
Agreement by such Guarantor and such Guarantor's grant of the security interests
and provision of collateral under the Security Instruments, and the grant of
Liens by such Guarantor on Mortgaged Properties and other Properties pursuant to
the Security Instruments.

                                       17

                                CREDIT AGREEMENT

<PAGE>

         "Type", when used in reference to any Loan or Borrowing, refers to
whether the rate of interest on such Loan, or on the Loans comprising such
Borrowing, is determined by reference to the Alternate Base Rate or the LIBO
Rate.

         "Wholly-Owned Subsidiary" means any Subsidiary of which all of the
outstanding Equity Interests (other than any directors' qualifying shares
mandated by applicable law), on a fully-diluted basis, are owned by the Borrower
or one or more of the Wholly-Owned Subsidiaries or are owned by the Borrower and
one or more of the Wholly-Owned Subsidiaries.

         Section 1.03 Types of Loans and Borrowings. For purposes of this
Agreement, Loans and Borrowings, respectively, may be classified and referred to
by Type (e.g., a "Eurodollar Loan" or a "Eurodollar Borrowing").

         Section 1.04 Terms Generally. The definitions of terms herein shall
apply equally to the singular and plural forms of the terms defined. Whenever
the context may require, any pronoun shall include the corresponding masculine,
feminine and neuter forms. The words "include", "includes" and "including" shall
be deemed to be followed by the phrase "without limitation". The word "will"
shall be construed to have the same meaning and effect as the word "shall".
Unless the context requires otherwise (a) any definition of or reference to any
agreement, instrument or other document herein shall be construed as referring
to such agreement, instrument or other document as from time to time amended,
supplemented or otherwise modified (subject to any restrictions on such
amendments, supplements or modifications set forth in the Loan Documents
herein), (b) any reference herein to any law shall be construed as referring to
such law as amended, modified, codified or reenacted, in whole or in part, and
in effect from time to time, (c) any reference herein to any Person shall be
construed to include such Person's successors and assigns (subject to the
restrictions contained in the Loan Documents herein), (d) the words "herein",
"hereof" and "hereunder", and words of similar import, shall be construed to
refer to this Agreement in its entirety and not to any particular provision
hereof, (e) with respect to the determination of any time period, the word
"from" means "from and including" and the word "to" means "to and including" and
(f) any reference herein to Articles, Sections, Annexes, Exhibits and Schedules
shall be construed to refer to Articles and Sections of, and Annexes, Exhibits
and Schedules to, this Agreement. No provision of this Agreement or any other
Loan Document shall be interpreted or construed against any Person solely
because such Person or its legal representative drafted such provision.

         Section 1.05 Accounting Terms and Determinations; GAAP. Unless
otherwise specified herein, all accounting terms used herein shall be
interpreted, all determinations with respect to accounting matters hereunder
shall be made, and all financial statements and certificates and reports as to
financial matters required to be furnished to the Administrative Agent or the
Lenders hereunder shall be prepared, in accordance with GAAP, applied on a basis
consistent with the Financial Statements except for changes in which the
Borrower's independent certified public accountants concur and which are
disclosed to Administrative Agent on the next date on which financial statements
are required to be delivered to the Lenders pursuant to Section 8.01(a);
provided that, unless the Borrower and the Majority Lenders shall otherwise
agree in writing, no such change shall modify or affect the manner in which
compliance with the covenants contained herein is computed such that all such
computations shall be conducted utilizing financial information presented
consistently with prior periods.

                                       18

                                CREDIT AGREEMENT

<PAGE>

                                   ARTICLE II
                                   THE CREDITS

         Section 2.01 Commitments. Subject to the terms and conditions set forth
herein, each Lender agrees to make Loans to the Borrower during the Availability
Period in an aggregate principal amount that will not result in (a) such
Lender's Revolving Credit Exposure exceeding such Lender's Commitment or (b) the
total Revolving Credit Exposures exceeding the total Commitments. Within the
foregoing limits and subject to the terms and conditions set forth herein, the
Borrower may borrow, repay and reborrow the Loans.

         Section 2.02 Loans and Borrowings.

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

               (b) Types of Loans. Subject to Section 3.03, each Borrowing shall
be comprised entirely of ABR Loans or Eurodollar Loans as the Borrower may
request in accordance herewith. Each Lender at its option may make any
Eurodollar Loan by causing any domestic or foreign branch or Affiliate of such
Lender to make such Loan; provided that any exercise of such option shall not
affect the obligation of the Borrower to repay such Loan in accordance with the
terms of this Agreement.

               (c) Minimum Amounts; Limitation on Number of Borrowings. At the
commencement of each Interest Period for any Eurodollar Borrowing, such
Borrowing shall be in an aggregate amount that is an integral multiple of
$500,000 and not less than $1,000,000. At the time that each ABR Borrowing is
made, such Borrowing shall be in an aggregate amount that is an integral
multiple of $250,000 and not less than $1,000,000; provided that an ABR
Borrowing may be in an aggregate amount that is equal to the entire unused
balance of the total Commitments or that is required to finance the
reimbursement of an LC Disbursement as contemplated by Section 2.08(e).
Borrowings of more than one Type may be outstanding at the same time; provided
that there shall not at any time be more than a total of twelve (12) Eurodollar
Borrowings outstanding. Notwithstanding any other provision of this Agreement,
the Borrower shall not be entitled to request, or to elect to convert or
continue, any Borrowing if the Interest Period requested with respect thereto
would end after the Maturity Date.

               (d) Notes. The Loans made by each Lender shall be evidenced by a
single promissory note of the Borrower in substantially the form of Exhibit A,
dated, in the case of (i) any Lender party hereto as of the date of this
Agreement, as of the date of this Agreement or (ii) any Lender that becomes a
party hereto pursuant to an Assignment and Assumption, as of the effective date
of the Assignment and Assumption, payable to the order of such Lender in a
principal amount equal to its Maximum Credit Amount as in effect on such date,
and otherwise duly completed. In the event that any Lender's Maximum Credit
Amount increases or decreases for any reason (whether pursuant to Section 2.06,
Section 12.04(b) or otherwise), the Borrower shall deliver or cause to be
delivered on the effective date of such increase or decrease, a new Note payable
to the order of such Lender in a principal amount equal to its Maximum Credit
Amount after giving effect to such increase or decrease, and otherwise duly
completed. The date, amount, Type, interest rate and, if

                                       19

                                CREDIT AGREEMENT

<PAGE>

applicable, Interest Period of each Loan made by each Lender, and all payments
made on account of the principal thereof, shall be recorded by such Lender on
its books for its Note, and, prior to any transfer, may be endorsed by such
Lender on a schedule attached to such Note or any continuation thereof or on any
separate record maintained by such Lender. Failure to make any such notation or
to attach a schedule shall not affect any Lender's or the Borrower's rights or
obligations in respect of such Loans or affect the validity of such transfer by
any Lender of its Note.

               (e) Loans and Borrowings under the Existing Credit Agreement. On
the Effective Date (or as soon as practicable with respect to (iii)):

                  (i) the Borrower shall pay all accrued and unpaid commitment
fees, break funding fees under Section 5.02 and all other fees that are
outstanding under the Existing Credit Agreement for the account of each "Lender"
under the Existing Credit Agreement;

                  (ii) each "ABR Loan" and "Eurodollar Loan" outstanding under
the Existing Credit Agreement shall be deemed to be repaid with the proceeds of
a new ABR Loan or Eurodollar Loan, as applicable, under this Agreement;

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

                  (iv) any letters of credit outstanding under the Existing
Credit Agreement shall be deemed issued under this Agreement; and

                  (v) the Existing Credit Agreement and the commitments
thereunder shall be superceded by this Agreement and such commitments shall
terminate.

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

         Section 2.03 Requests for Borrowings. To request a Borrowing, the
Borrower shall notify the Administrative Agent of such request by telephone (a)
in the case of a Eurodollar Borrowing, not later than 11:00 a.m., Houston time,
three Business Days before the date of the proposed Borrowing or (b) in the case
of an ABR Borrowing, not later than 12:00 noon, Houston time, on the date of the
proposed Borrowing; provided that no such notice shall be required for any
deemed request of an ABR Borrowing to finance the reimbursement of an LC
Disbursement as provided in Section 2.08(e). Each such telephonic Borrowing
Request shall be irrevocable and shall be confirmed promptly by hand delivery or
telecopy to the Administrative Agent of a written Borrowing Request in a form
approved by the Administrative Agent and signed by the Borrower. Each such
telephonic and written Borrowing Request shall specify the following information
in compliance with Section 2.02:

                  (i) the aggregate amount of the requested Borrowing;

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

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                                CREDIT AGREEMENT

<PAGE>

                  (iii) whether such Borrowing is to be an ABR Borrowing or a
Eurodollar Borrowing;

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

                  (v) the amount of the then effective Borrowing Base, the
current total Revolving Credit Exposures (without regard to the requested
Borrowing) and the pro forma total Revolving Credit Exposures (giving effect to
the requested Borrowing); and

                  (vi) the location and number of the Borrower's account to
which funds are to be disbursed, which shall comply with the requirements of
Section 2.05.

If no election as to the Type of Borrowing is specified, then the requested
Borrowing shall be a Eurodollar Loan having an Interest Period of one-month. If
no Interest Period is specified with respect to any requested Eurodollar
Borrowing, then the Borrower shall be deemed to have selected an Interest Period
of one month's duration. Each Borrowing Request shall constitute a
representation that the amount of the requested Borrowing shall not cause the
total Revolving Credit Exposures to exceed the total Commitments (i.e., the
lesser of the Aggregate Maximum Credit Amounts and the then effective Borrowing
Base).

Promptly following receipt of a Borrowing Request in accordance with this
Section 2.03, the Administrative Agent shall advise each Lender of the details
thereof and of the amount of such Lender's Loan to be made as part of the
requested Borrowing.

         Section 2.04 Interest Elections.

               (a) Conversion and Continuance. Each Borrowing initially shall be
of the Type specified in the applicable Borrowing Request and, in the case of a
Eurodollar Borrowing, shall have an initial Interest Period as specified in such
Borrowing Request. Thereafter, the Borrower may elect to convert such Borrowing
to a different Type or to continue such Borrowing and, in the case of a
Eurodollar Borrowing, may elect Interest Periods therefor, all as provided in
this Section 2.04. The Borrower may elect different options with respect to
different portions of the affected Borrowing, in which case each such portion
shall be allocated ratably among the Lenders holding the Loans comprising such
Borrowing, and the Loans comprising each such portion shall be considered a
separate Borrowing.

               (b) Interest Election Requests. To make an election pursuant to
this Section 2.04, the Borrower shall notify the Administrative Agent of such
election by telephone by the time that a Borrowing Request would be required
under Section 2.03 if the Borrower were requesting a Borrowing of the Type
resulting from such election to be made on the effective date of such election.
Each such telephonic Interest Election Request shall be irrevocable and shall be
confirmed promptly by hand delivery or telecopy to the Administrative Agent of a
written Interest Election Request in a form approved by the Administrative Agent
and signed by the Borrower.

               (c) Information in Interest Election Requests. Each telephonic
and written Interest Election Request shall specify the following information in
compliance with Section 2.02:

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                                CREDIT AGREEMENT

<PAGE>

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

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

                  (iii) whether the resulting Borrowing is to be an ABR
Borrowing or a Eurodollar Borrowing; and

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

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

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

               (e) Effect of Failure to Deliver Timely Interest Election Request
and Events of Default and Borrowing Base Deficiencies on Interest Election. If
the Borrower fails to deliver a timely Interest Election Request with respect to
a Eurodollar Borrowing prior to the end of the Interest Period applicable
thereto, then, unless such Borrowing is repaid as provided herein, at the end of
such Interest Period such Borrowing shall be continued as a Eurodollar Loan
having an Interest Period of one-month. Notwithstanding any contrary provision
hereof, if an Event of Default or a Borrowing Base Deficiency has occurred and
is continuing: (i) no outstanding Borrowing may be converted to or continued as
a Eurodollar Borrowing (and any Interest Election Request that requests the
conversion of any Borrowing to, or continuation of any Borrowing as, a
Eurodollar Borrowing shall be ineffective) and (ii) unless repaid, each
Eurodollar Borrowing shall be converted to an ABR Borrowing at the end of the
Interest Period applicable thereto.

         Section 2.05 Funding of Borrowings.

               (a) Funding by Lenders. Each Lender shall make each Loan to be
made by it hereunder on the proposed date thereof by wire transfer of
immediately available funds by 1:00 p.m., Houston time, to the account of the
Administrative Agent most recently designated by it for such purpose by notice
to the Lenders. The Administrative Agent will make such Loans available to the
Borrower by promptly crediting the amounts so received, in like funds, to an
account of the Borrower and designated by the Borrower in the applicable
Borrowing Request; provided that ABR Loans made to finance the reimbursement of
an LC Disbursement as provided in Section 2.08(e) shall be remitted by the
Administrative Agent to the Issuing Bank that made such LC Disbursement. Nothing
herein shall be deemed to obligate any Lender to obtain the funds for its Loan
in any particular place or manner or to constitute a representation by any
Lender that it has obtained or will obtain the funds for its Loan in any
particular place or manner.

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                                CREDIT AGREEMENT

<PAGE>

               (b) Presumption of Funding by the Lenders. Unless the
Administrative Agent shall have received notice from a Lender prior to the
proposed date of any Borrowing that such Lender will not make available to the
Administrative Agent such Lender's share of such Borrowing, the Administrative
Agent may assume that such Lender has made such share available on such date in
accordance with Section 2.05(a) and may, in reliance upon such assumption, make
available to the Borrower a corresponding amount. In such event, if a Lender has
not in fact made its share of the applicable Borrowing available to the
Administrative Agent, then the applicable Lender and the Borrower severally
agree to pay to the Administrative Agent forthwith on demand such corresponding
amount with interest thereon, for each day from and including the date such
amount is made available to the Borrower to but excluding the date of payment to
the Administrative Agent, at (i) in the case of such Lender, the greater of the
Federal Funds Effective Rate and a rate determined by the Administrative Agent
in accordance with banking industry rules on interbank compensation or (ii) in
the case of the Borrower, the interest rate applicable to ABR Loans. If such
Lender pays such amount to the Administrative Agent, then such amount shall
constitute such Lender's Loan included in such Borrowing.

         Section 2.06 Termination and Reduction of Aggregate Maximum Credit
Amounts.

               (a) Scheduled Termination of Commitments. Unless previously
terminated, the Commitments shall terminate on the Maturity Date. If at any time
the Aggregate Maximum Credit Amounts or the Borrowing Base is terminated or
reduced to zero, then the Commitments shall terminate on the effective date of
such termination or reduction.

               (b) Optional Termination and Reduction of Aggregate Credit
Amounts.

                  (i) The Borrower may at any time terminate, or from time to
time reduce, the Aggregate Maximum Credit Amounts; provided that (A) each
reduction of the Aggregate Maximum Credit Amounts shall be in an amount that is
an integral multiple of $500,000 and not less than $1,000,000 and (B) the
Borrower shall not terminate or reduce the Aggregate Maximum Credit Amounts if,
after giving effect to any concurrent prepayment of the Loans in accordance with
Section 3.04(c), the total Revolving Credit Exposures would exceed the total
Commitments.

                  (ii) The Borrower shall notify the Administrative Agent of any
election to terminate or reduce the Aggregate Maximum Credit Amounts under
Section 2.06(b)(i) at least three Business Days prior to the effective date of
such termination or reduction, specifying such election and the effective date
thereof. Promptly following receipt of any notice, the Administrative Agent
shall advise the Lenders of the contents thereof. Each notice delivered by the
Borrower pursuant to this Section 2.06(b)(ii) shall be irrevocable. Any
termination or reduction of the Aggregate Maximum Credit Amounts shall be
permanent and may not be reinstated. Each reduction of the Aggregate Maximum
Credit Amounts shall be made ratably among the Lenders in accordance with each
Lender's Applicable Percentage.

         Section 2.07 Borrowing Base.

               (a) Initial Borrowing Base. For the period from and including the
Effective Date to but excluding October 1st, 2006, the amount of the Borrowing
Base shall be $235,000,000. Notwithstanding the foregoing, the Borrowing Base
may be subject to further adjustments from time to time pursuant to Section
8.13(c), Section 9.02(e) or Section 9.12(d).

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                                CREDIT AGREEMENT

<PAGE>

               (b) Scheduled and Interim Redeterminations. Subject to Section
2.07(d), the Borrowing Base shall be redetermined (a "Scheduled
Redetermination") on April 1st and October 1st of each year, commencing October
1, 2006. In addition, either the Borrower or the Administrative Agent, at the
direction of the Majority Lenders, may once during each calendar year, each
elect to cause the Borrowing Base to be redetermined between Scheduled
Redeterminations (an "Interim Redetermination") in accordance with this Section
2.07. The Borrower shall have the right, once during each calendar year, to
initiate an Interim Redetermination in addition to the one otherwise provided in
this Section 2.07(b) upon the proposed acquisition of Proved Developed Producing
Properties whose purchase price is greater than 10% of the Borrowing Base,
provided such Interim Redetermination is in accordance with this Section 2.07.

               (c) Scheduled and Interim Redetermination Procedure.

                  (i) Each Scheduled Redetermination and each Interim
         Redetermination shall be effectuated as follows: Upon receipt by the
         Administrative Agent of (A) the Reserve Report and the certificate
         required to be delivered by the Borrower to the Administrative Agent,
         in the case of a Scheduled Redetermination, pursuant to Section 8.12(a)
         and (c), and, in the case of an Interim Redetermination, pursuant to
         Section 8.12(b) and (c), and (B) such other reports, data and
         supplemental information, including, without limitation, the
         information provided pursuant to Section 8.12(c), as may, from time to
         time, be reasonably requested by the Majority Lenders (the Reserve
         Report, such certificate and such other reports, data and supplemental
         information being the "Engineering Reports"), the Administrative Agent
         shall evaluate the information contained in the Engineering Reports and
         shall, in good faith, propose a new Borrowing Base (the "Proposed
         Borrowing Base") based upon such information and such other information
         (including, without limitation, the status of title information with
         respect to the Oil and Gas Properties as described in the Engineering
         Reports and the existence of any other Debt) as the Administrative
         Agent deems appropriate in its sole discretion and consistent with its
         normal oil and gas lending criteria as it exists at the particular
         time. In no event shall the Proposed Borrowing Base exceed the
         Aggregate Maximum Credit Amounts.

                  (ii) The Administrative Agent shall notify the Borrower and
         the Lenders of the Proposed Borrowing Base (the "Proposed Borrowing
         Base Notice"):

                     (A) in the case of a Scheduled Redetermination (1) if the
Administrative Agent shall have received the Engineering Reports required to be
delivered by the Borrower pursuant to Section 8.12(a) and (c) in a timely and
complete manner, then on or before the March 15th and September 15th of such
year following the date of delivery of such Engineering Report or (2) if the
Administrative Agent shall not have received the Engineering Reports required to
be delivered by the Borrower pursuant to Section 8.12(a) and (c) in a timely and
complete manner, then promptly after the Administrative Agent has received
complete Engineering Reports from the Borrower and has had a reasonable
opportunity to determine the Proposed Borrowing Base in accordance with Section
2.07(c)(i) and in any event, within fifteen (15) days after the Administrative
Agent has received the required Engineering Report; and

                     (B) in the case of an Interim Redetermination, promptly,
and in any event, within fifteen (15) days after the Administrative Agent has
received the required Engineering Reports.

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                                CREDIT AGREEMENT

<PAGE>

                  (iii) Any Proposed Borrowing Base that would increase the
         Borrowing Base then in effect must be approved or deemed to have been
         approved by all of the Lenders as provided in this Section
         2.07(c)(iii); and any Proposed Borrowing Base that would decrease or
         maintain the Borrowing Base then in effect must be approved or be
         deemed to have been approved by the Majority Lenders as provided in
         this Section 2.07(c)(iii). Upon receipt of the Proposed Borrowing Base
         Notice, each Lender shall have fifteen (15) days to agree with the
         Proposed Borrowing Base or disagree with the Proposed Borrowing Base by
         proposing an alternate Borrowing Base. If at the end of such fifteen
         (15) days, any Lender has not communicated its approval or disapproval
         in writing to the Administrative Agent, such silence shall be deemed to
         be an approval of the Proposed Borrowing Base. If, at the end of such
         15-day period, all of the Lenders, in the case of a Proposed Borrowing
         Base that would increase the Borrowing Base then in effect, or the
         Majority Lenders, in the case of a Proposed Borrowing Base that would
         decrease or maintain the Borrowing Base then in effect, have approved
         or deemed to have approved, as aforesaid, then the Proposed Borrowing
         Base shall become the new Borrowing Base, effective on the date
         specified in Section 2.07(d). If, however, at the end of such 15-day
         period, all of the Lenders or the Majority Lenders, as applicable, have
         not approved or deemed to have approved, as aforesaid, then the
         Administrative Agent shall poll the Lenders to ascertain the highest
         Borrowing Base then acceptable to a number of Lenders sufficient to
         constitute the Majority Lenders and, so long as such amount does not
         increase the Borrowing Base then in effect, such amount shall become
         the new Borrowing Base, effective on the date specified in Section
         2.07(d).

               (d) Effectiveness of a Redetermined Borrowing Base. After a
redetermined Borrowing Base is approved or is deemed to have been approved by
all of the Lenders or the Majority Lenders, as applicable, pursuant to Section
2.07(c)(iii), the Administrative Agent shall notify the Borrower and the Lenders
of the amount of the redetermined Borrowing Base (the "New Borrowing Base
Notice"), and such amount shall become the new Borrowing Base, effective and
applicable to the Borrower, the Administrative Agent, each Issuing Bank and the
Lenders:

                     (i) in the case of a Scheduled Redetermination, (A) if the
Administrative Agent shall have received the Engineering Reports required to be
delivered by the Borrower pursuant to Section 8.12(a) and (c) in a timely and
complete manner, then on the April 1st or October 1st, as applicable, following
delivery of the New Borrowing Base Notice, or (B) if the Administrative Agent
shall not have received the Engineering Reports required to be delivered by the
Borrower pursuant to Section 8.12(a) and (c) in a timely and complete manner,
then on the Business Day next succeeding delivery of the New Borrowing Base
Notice; and

                     (ii) in the case of an Interim Redetermination, on the
Business Day next succeeding delivery of such notice.

         Such amount shall then become the Borrowing Base until the next
Scheduled Redetermination Date, the next Interim Redetermination date or the
next adjustment to the Borrowing Base under Section 8.13(c), Section 9.02(e) or
Section 9.12(d), whichever occurs first.

         Section 2.08 Letters of Credit.

               (a) General. Subject to the terms and conditions set forth
herein, the Borrower may request any Issuing Bank to issue Letters of Credit for
its own account or for the account of the

                                       25

                                CREDIT AGREEMENT

<PAGE>

Borrower or any of its Subsidiaries, in a form reasonably acceptable to the
Administrative Agent and such Issuing Bank, at any time and from time to time
during the Availability Period; provided that the Borrower may not request the
issuance, amendment, renewal or extension of Letters of Credit hereunder if a
Borrowing Base Deficiency exists at such time or would exist as a result
thereof. In the event of any inconsistency between the terms and conditions of
this Agreement and the terms and conditions of any form of letter of credit
application or other agreement submitted by the Borrower to, or entered into by
the Borrower with, an Issuing Bank relating to any Letter of Credit, the terms
and conditions of this Agreement shall control.

               (b) Notice of Issuance, Amendment, Renewal, Extension; Certain
Conditions. To request the issuance of a Letter of Credit (or the amendment,
renewal or extension of an outstanding Letter of Credit), the Borrower shall
deliver as permitted by Section 12.01(a) (or transmit by electronic
communication, if arrangements for doing so have been approved by the Issuing
Bank) to any Issuing Bank and the Administrative Agent (not less than five (5)
Business Days in advance of the requested date of issuance, amendment, renewal
or extension) a notice:

                  (i) requesting the issuance of a Letter of Credit or
identifying the Letter of Credit issued by such Issuing Bank to be amended,
renewed or extended;

                  (ii) specifying the date of issuance, amendment, renewal or
extension (which shall be a Business Day);

                  (iii) specifying the date on which such Letter of Credit is to
expire (which shall comply with Section 2.08(c));

                  (iv) specifying the amount of such Letter of Credit;

                  (v) specifying the name and address of the beneficiary thereof
and such other information as shall be necessary to prepare, amend, renew or
extend such Letter of Credit; and

                  (vi) specifying the amount of the then effective Borrowing
Base and whether a Borrowing Base Deficiency exists at such time, the current
total Revolving Credit Exposures (without regard to the requested Letter of
Credit or the requested amendment, renewal or extension of an outstanding Letter
of Credit) and the pro forma total Revolving Credit Exposures (giving effect to
the requested Letter of Credit or the requested amendment, renewal or extension
of an outstanding Letter of Credit).

Each notice shall constitute a representation that after giving effect to the
requested issuance, amendment, renewal or extension, as applicable, (i) the LC
Exposure shall not exceed the LC Commitment and (ii) the total Revolving Credit
Exposures shall not exceed the lesser of the Aggregate Maximum Credit Amounts
and the then effective Borrowing Base.

If requested by any Issuing Bank, the Borrower also shall submit a letter of
credit application on such Issuing Bank's standard form in connection with any
request for a Letter of Credit.

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

                                       26

                                CREDIT AGREEMENT

<PAGE>

               (d) Participations. By the issuance of a Letter of Credit (or an
amendment to a Letter of Credit increasing the amount thereof) and without any
further action on the part of the Issuing Bank that issues such Letter of Credit
or the Lenders, each Issuing Bank that issues a Letter of Credit hereunder
hereby grants to each Lender, and each Lender hereby acquires from such Issuing
Bank, a participation in such Letter of Credit equal to such Lender's Applicable
Percentage of the aggregate amount available to be drawn under such Letter of
Credit. In consideration and in furtherance of the foregoing, each Lender hereby
absolutely and unconditionally agrees to pay to the Administrative Agent, for
the account of any Issuing Bank that issues a Letter of Credit hereunder, such
Lender's Applicable Percentage of each LC Disbursement made by such Issuing Bank
and not reimbursed by the Borrower on the date due as provided in Section
2.08(e), or of any reimbursement payment required to be refunded to the Borrower
for any reason. Each Lender acknowledges and agrees that its obligation to
acquire participations pursuant to this Section 2.08(d) in respect of Letters of
Credit is absolute and unconditional and shall not be affected by any
circumstance whatsoever, including any amendment, renewal or extension of any
Letter of Credit or the occurrence and continuance of a Default, the existence
of a Borrowing Base Deficiency or reduction or termination of the Commitments,
and that each such payment shall be made without any offset, abatement,
withholding or reduction whatsoever.

               (e) Reimbursement. If any Issuing Bank shall make any LC
Disbursement in respect of a Letter of Credit issued by such Issuing Bank, the
Borrower shall reimburse such LC Disbursement by paying to the Administrative
Agent an amount equal to such LC Disbursement not later than 1:00 p.m., Houston
time, on the third day after such LC Disbursement is made, if the Borrower shall
have received notice of such LC Disbursement prior to 9:00 a.m., Houston time,
on such date, or, if such notice has not been received by the Borrower prior to
such time on such date, then not later than 1:00 p.m., Houston time, on (i) the
third day after the Borrower receives such notice, if such notice is received
prior to 9:00 a.m., Houston time, on the day of receipt, or (ii) the Business
Day immediately following the third day after the Borrower receives such notice,
if such notice is not received prior to such time on the day of receipt;
provided that if such LC Disbursement is not less than $1,000,000, the Borrower
shall, subject to the conditions to Borrowing set forth herein, be deemed to
have requested, and the Borrower does hereby request under such circumstances,
that such payment be financed with a Eurodollar Borrowing with an Interest
Period of one month in an equivalent amount and, to the extent so financed, the
Borrower's obligation to make such payment shall be discharged and replaced by
the resulting Eurodollar Borrowing. If the Borrower fails to make such payment
when due, the Administrative Agent shall notify each Lender of the applicable LC
Disbursement, the payment then due from the Borrower in respect thereof and such
Lender's Applicable Percentage thereof. Promptly following receipt of such
notice, each Lender shall pay to the Administrative Agent its Applicable
Percentage of the payment then due from the Borrower, in the same manner as
provided in Section 2.05 with respect to Loans made by such Lender (and Section
2.05 shall apply, mutatis mutandis, to the payment obligations of the Lenders),
and the Administrative Agent shall promptly pay to the Issuing Bank that issued
such Letter of Credit the amounts so received by it from the Lenders. Promptly
following receipt by the Administrative Agent of any payment from the Borrower
pursuant to this Section 2.08(e), the Administrative Agent shall distribute such
payment to the Issuing Bank that issued such Letter of Credit or, to the extent
that Lenders have made payments pursuant to this Section 2.08(e) to reimburse
such Issuing Bank, then to such Lenders and such Issuing Bank as their interests
may appear. Any payment made by a Lender pursuant to this Section 2.08(e) to
reimburse any Issuing Bank for any LC Disbursement (other than the funding of
ABR Loans as contemplated above) shall not constitute a Loan and shall not
relieve the Borrower of its obligation to reimburse such LC Disbursement. Any LC

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                                CREDIT AGREEMENT

<PAGE>

Disbursement not reimbursed by the Borrower or funded as a Loan prior to 1:00
p.m., Houston time, shall bear interest for such day at the ABR plus the
Applicable Margin.

               (f) Obligations Absolute. The Borrower's obligation to reimburse
LC Disbursements as provided in Section 2.08(e) shall be absolute, unconditional
and irrevocable, and shall be performed strictly in accordance with the terms of
this Agreement under any and all circumstances whatsoever and irrespective of
(i) any lack of validity or enforceability of any Letter of Credit, any Letter
of Credit Agreement or this Agreement, or any term or provision therein, (ii)
any draft or other document presented under a Letter of Credit proving to be
forged, fraudulent or invalid in any respect or any statement therein being
untrue or inaccurate in any respect, (iii) payment by any Issuing Bank under a
Letter of Credit issued by such Issuing Bank against presentation of a draft or
other document that does not comply with the terms of such Letter of Credit or
any Letter of Credit Agreement, or (iv) any other event or circumstance
whatsoever, whether or not similar to any of the foregoing, that might, but for
the provisions of this Section 2.08(f), constitute a legal or equitable
discharge of, or provide a right of setoff against, the Borrower's obligations
hereunder. Neither the Administrative Agent, the Lenders nor any Issuing Bank,
nor any of their Related Parties shall have any liability or responsibility by
reason of or in connection with the issuance or transfer of any Letter of Credit
or any payment or failure to make any payment thereunder (irrespective of any of
the circumstances referred to in the preceding sentence), or any error,
omission, interruption, loss or delay in transmission or delivery of any draft,
notice or other communication under or relating to any Letter of Credit
(including any document required to make a drawing thereunder), any error in
interpretation of technical terms or any consequence arising from causes beyond
the control of any Issuing Bank; provided that the foregoing shall not be
construed to excuse any Issuing Bank from liability to the Borrower to the
extent of any direct damages (as opposed to consequential damages, claims in
respect of which are hereby waived by the Borrower to the extent permitted by
applicable law) suffered by the Borrower that are caused by such Issuing Bank's
failure to exercise care when determining whether drafts and other documents
presented under a Letter of Credit comply with the terms thereof. The parties
hereto expressly agree that, in the absence of gross negligence or willful
misconduct on the part of any Issuing Bank (as finally determined by a court of
competent jurisdiction), such Issuing Bank shall be deemed to have exercised all
requisite care in each such determination. In furtherance of the foregoing and
without limiting the generality thereof, the parties agree that, with respect to
documents presented which appear on their face to be in substantial compliance
with the terms of a Letter of Credit, the Issuing Bank that issued such Letter
of Credit may, in its sole discretion, either accept and make payment upon such
documents without responsibility for further investigation, regardless of any
notice or information to the contrary, or refuse to accept and make payment upon
such documents if such documents are not in strict compliance with the terms of
such Letter of Credit.

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

               (h) Interim Interest. If any Issuing Bank shall make any LC
Disbursement, then, until the Borrower shall have reimbursed such Issuing Bank
for such LC Disbursement (either with its own funds or a Borrowing under Section
2.08(e)), the unpaid amount thereof shall bear interest,

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                                CREDIT AGREEMENT

<PAGE>

for each day from and including the date such LC Disbursement is made to but
excluding the date that the Borrower reimburses such LC Disbursement, at the
rate per annum then applicable to ABR Loans. Interest accrued pursuant to this
Section 2.08(h) shall be for the account of such Issuing Bank, except that
interest accrued on and after the date of payment by any Lender pursuant to
Section 2.08(e) to reimburse such Issuing Bank shall be for the account of such
Lender to the extent of such payment.

               (i) Replacement of an Issuing Bank. Any Issuing Bank may be
replaced or resign at any time by written agreement among the Borrower, the
Administrative Agent, such resigning or replaced Issuing Bank and, in the case
of a replacement, the successor Issuing Bank. The Administrative Agent shall
notify the Lenders of any such resignation or replacement of an Issuing Bank. At
the time any such resignation or replacement shall become effective, the
Borrower shall pay all unpaid fees accrued for the account of the resigning or
replaced Issuing Bank pursuant to Section 3.05(b). In the case of the
replacement of an Issuing Bank, from and after the effective date of such
replacement, (i) the successor Issuing Bank shall have all the rights and
obligations of the replaced Issuing Bank under this Agreement with respect to
Letters of Credit to be issued thereafter and (ii) references herein to "Issuing
Bank" shall be deemed to refer to such successor or to any previous Issuing
Bank, or to such successor and all previous Issuing Banks, as the context shall
require. After the resignation or replacement of an Issuing Bank hereunder, the
resigning or replaced Issuing Bank shall remain a party hereto and shall
continue to have all the rights and obligations of an Issuing Bank under this
Agreement with respect to Letters of Credit issued by it prior to such
resignation or replacement, but shall not be required to issue additional
Letters of Credit.

               (j) Cash Collateralization. If (i) any Event of Default shall
occur and be continuing and the Borrower receives notice from the Administrative
Agent or the Majority Lenders demanding the deposit of cash collateral pursuant
to this Section 2.08(j), or (ii) the Borrower is required to pay to the
Administrative Agent the excess attributable to an LC Exposure in connection
with any prepayment pursuant to Section 3.04(c), then the Borrower shall
deposit, in an account with the Administrative Agent, in the name of the
Administrative Agent and for the benefit of the Lenders, an amount in cash equal
to, in the case of an Event of Default, the LC Exposure, and in the case of a
payment required by Section 3.04(c), the amount of such excess as provided in
Section 3.04(c), as of such date plus any accrued and unpaid interest thereon;
provided that the obligation to deposit such cash collateral shall become
effective immediately, and such deposit shall become immediately due and
payable, without demand or other notice of any kind, upon the occurrence of any
Event of Default with respect to the Borrower or any of its Subsidiaries
described in Section 10.01(h) or Section 10.01(i). The Borrower hereby grants to
the Administrative Agent, for the benefit of each Issuing Bank and the Lenders,
an exclusive first priority and continuing perfected security interest in and
Lien on such account and all cash, checks, drafts, certificates and instruments,
if any, from time to time deposited or held in such account, all deposits or
wire transfers made thereto, any and all investments purchased with funds
deposited in such account, all interest, dividends, cash, instruments, financial
assets and other Property from time to time received, receivable or otherwise
payable in respect of, or in exchange for, any or all of the foregoing, and all
proceeds, products, accessions, rents, profits, income and benefits therefrom,
and any substitutions and replacements therefor. The Borrower's obligation to
deposit amounts pursuant to this Section 2.08(j) shall be absolute and
unconditional, without regard to whether any beneficiary of any such Letter of
Credit has attempted to draw down all or a portion of such amount under the
terms of a Letter of Credit, and, to the fullest extent permitted by applicable
law, shall not be subject to any defense or be affected by a right of set-off,
counterclaim or recoupment which the Borrower or any of its Subsidiaries may now
or hereafter have against any such beneficiary, any Issuing Bank, the

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                                CREDIT AGREEMENT

<PAGE>

Administrative Agent, the Lenders or any other Person for any reason whatsoever.
Such deposit shall be held as collateral securing the payment and performance of
the Borrower's and any Guarantor's obligations under this Agreement and the
other Loan Documents. The Administrative Agent shall have exclusive dominion and
control, including the exclusive right of withdrawal, over such account;
provided that investments of funds in such account in investments permitted by
Section 9.05(c) or (e) may be made at the option of the Borrower at its
direction, risk and expense. Interest or profits, if any, on such investments
shall accumulate in such account. Moneys in such account shall be applied by the
Administrative Agent to reimburse, on a pro rata basis, each Issuing Bank for LC
Disbursements for which it has not been reimbursed and, to the extent not so
applied, shall be held for the satisfaction of the reimbursement obligations of
the Borrower for the LC Exposure at such time or, if the maturity of the Loans
has been accelerated, be applied to satisfy other obligations of the Borrower
and the Guarantors, if any, under this Agreement or the other Loan Documents. If
the Borrower is required to provide an amount of cash collateral hereunder as a
result of the occurrence of an Event of Default, and the Borrower is not
otherwise required to pay to the Administrative Agent the excess attributable to
an LC Exposure in connection with any prepayment pursuant to Section 3.04(c),
then such amount (to the extent not applied as aforesaid) shall be returned to
the Borrower within three Business Days after all Events of Default have been
cured or waived.

                                  ARTICLE III
              PAYMENTS OF PRINCIPAL AND INTEREST; PREPAYMENTS; FEES

         Section 3.01 Repayment of Loans. The Borrower hereby unconditionally
promises to pay to the Administrative Agent for the account of each Lender the
then unpaid principal amount of each Loan on the Termination Date.

         Section 3.02 Interest.

               (a) ABR Loans. Each ABR Loan comprising an ABR Borrowing shall
bear interest at the Alternate Base Rate plus the Applicable Margin, but in no
event to exceed the Highest Lawful Rate.

               (b) Eurodollar Loans. Each Eurodollar Loan comprising a
Eurodollar Borrowing shall bear interest at the LIBO Rate for the Interest
Period in effect for such Eurodollar Loan plus the Applicable Margin, but in no
event to exceed the Highest Lawful Rate.

               (c) Post-Default and Borrowing Base Deficiency Rate.
Notwithstanding the foregoing, (i) if an Event of Default has occurred and is
continuing, or if any principal of or interest on any Loan or any fee or other
amount payable by the Borrower or any Guarantor hereunder or under any other
Loan Document is not paid when due, whether at stated maturity, upon
acceleration or otherwise, and including any payments in respect of a Borrowing
Base Deficiency under Section 3.04(c), then all Loans outstanding, in the case
of an Event of Default, and such overdue amount, in the case of a failure to pay
amounts when due, shall bear interest, after as well as before judgment, at the
Alternate Base Rate plus two percent (2%), but in no event to exceed the Highest
Lawful Rate, and (ii) during any Borrowing Base Deficiency, the amount of such
Borrowing Base Deficiency shall bear interest, after as well as before judgment,
at the rate then applicable to such Loans, plus the Applicable Margin, if any,
plus an additional two percent (2%), but in no event to exceed the Highest
Lawful Rate.

                                       30

                                CREDIT AGREEMENT

<PAGE>

               (d) Interest Payment Dates. Accrued interest on each Loan shall
be payable in arrears on: (i) with respect to any ABR Loan, the last day of each
March, June, September and December; (ii) with respect to any Eurodollar Loan,
the last day of the Interest Period applicable to the Borrowing of which such
Loan is a part and (iii) in any case, on the Termination Date; provided that (x)
interest accrued pursuant to Section 3.02(c)(i) shall be payable on demand, (y)
in the event of any repayment or prepayment of any Loan (other than an optional
prepayment of an ABR Loan prior to the Termination Date), accrued interest on
the principal amount repaid or prepaid shall be payable on the date of such
repayment or prepayment, and (z) in the event of any conversion of any
Eurodollar Loan prior to the end of the current Interest Period therefor,
accrued interest on such Loan shall be payable on the effective date of such
conversion.

               (e) Interest Rate Computations. All interest hereunder shall be
computed on the basis of a year of 360 days, unless such computation would
exceed the Highest Lawful Rate, in which case interest shall be computed on the
basis of a year of 365 days (or 366 days in a leap year), except that interest
computed by reference to the Alternate Base Rate shall be computed on the basis
of a year of 365 days (or 366 days in a leap year), and in each case shall be
payable for the actual number of days elapsed (including the first day but
excluding the last day). The applicable Alternate Base Rate or LIBO Rate shall
be determined by the Administrative Agent, and such determination shall be
conclusive absent manifest error, and be binding upon the parties hereto.

         Section 3.03 Alternate Rate of Interest. If prior to the commencement
of any Interest Period for a Eurodollar Borrowing:

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

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

then the Administrative Agent shall give notice thereof to the Borrower and the
Lenders by telephone or telecopy as promptly as practicable thereafter and,
until the Administrative Agent notifies the Borrower and the Lenders that the
circumstances giving rise to such notice no longer exist, (i) any Interest
Election Request that requests the conversion of any Borrowing to, or
continuation of any Borrowing as, a Eurodollar Borrowing shall be ineffective,
and (ii) if any Borrowing Request requests a Eurodollar Borrowing, such
Borrowing shall be made as an ABR Borrowing.

         Section 3.04 Prepayments.

               (a) Optional Prepayments. The Borrower shall have the right at
any time and from time to time to prepay any Borrowing in whole or in part,
subject to prior notice in accordance with Section 3.04(b).

               (b) Notice and Terms of Optional Prepayment. The Borrower shall
notify the Administrative Agent by telephone (confirmed by telecopy) of any
prepayment hereunder (i) in the case of prepayment of a Eurodollar Borrowing,
not later than 12:00 noon, Houston time, three Business Days before the date of
prepayment, or (ii) in the case of prepayment of an ABR

                                       31

                                CREDIT AGREEMENT

<PAGE>

Borrowing, not later than 12:00 noon, Houston time, one Business Day before the
date of prepayment. Each such notice shall be irrevocable and shall specify the
prepayment date and the principal amount of each Borrowing or portion thereof to
be prepaid. Promptly following receipt of any such notice relating to a
Borrowing, the Administrative Agent shall advise the Lenders of the contents
thereof. Each partial prepayment of any Borrowing shall be in an amount that
would be permitted in the case of an advance of a Borrowing of the same Type as
provided in Section 2.02. Each prepayment of a Borrowing shall be applied
ratably to the Loans included in the prepaid Borrowing. Prepayments shall be
accompanied by accrued interest to the extent required by Section 3.02.

               (c) Mandatory Prepayments.

                  (i) If, after giving effect to any termination or reduction of
the Aggregate Maximum Credit Amounts pursuant to Section 2.06(b), the total
Revolving Credit Exposures exceeds the total Commitments, then the Borrower
shall (A) prepay the Borrowings on the date of such termination or reduction in
an aggregate principal amount equal to such excess, and (B) if any excess
remains after prepaying all of the Borrowings as a result of an LC Exposure, pay
to the Administrative Agent on behalf of the Lenders an amount equal to such
excess to be held as cash collateral as provided in Section 2.08(j).

                  (ii) Upon any redetermination of or adjustment to the amount
of the Borrowing Base in accordance with Section 2.07 or Section 8.13(c), if the
total Revolving Credit Exposures exceeds the redetermined or adjusted Borrowing
Base, then the Borrower shall (A) prepay the Borrowings in an aggregate
principal amount equal to such excess, and (B) if any excess remains after
prepaying all of the Borrowings as a result of an LC Exposure, pay to the
Administrative Agent on behalf of the Lenders an amount equal to such excess to
be held as cash collateral as provided in Section 2.08(j). The Borrower shall be
obligated to make such prepayment and/or deposit of cash collateral within
ninety days (90) following the later of its receipt of the New Borrowing Base
Notice in accordance with Section 2.07(d) or the date the adjustment occurs;
provided that all payments required to be made pursuant to this Section
3.04(c)(ii) must be made on or prior to the Termination Date.

                  (iii) Upon any adjustments to the Borrowing Base pursuant to
Section 9.12(d), if the total Revolving Credit Exposures exceed the Borrowing
Base as adjusted, then the Borrower shall (A) prepay the Borrowings in an
aggregate principal amount equal to such excess, and (B) if any excess remains
after prepaying all of the Borrowings as a result of an LC Exposure, pay to the
Administrative Agent on behalf of the Lenders an amount equal to such excess to
be held as cash collateral as provided in Section 2.08(j). The Borrower shall be
obligated to make such prepayment and/or deposit of cash collateral on the date
it or any Subsidiary receives cash proceeds as a result of such disposition;
provided that all payments required to be made pursuant to this Section
3.04(c)(iii) must be made on or prior to the Termination Date.

                  (iv) Each prepayment of Borrowings pursuant to this Section
3.04(c) shall be applied, first, ratably to any ABR Borrowings then outstanding,
and, second, to any Eurodollar Borrowings then outstanding, and if more than one
Eurodollar Borrowing is then outstanding, to each such Eurodollar Borrowing in
order of priority beginning with the Eurodollar Borrowing with the least number
of days remaining in the Interest Period applicable thereto and ending with the
Eurodollar Borrowing with the most number of days remaining in the Interest
Period applicable thereto.

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                                CREDIT AGREEMENT

<PAGE>

                  (v) Each prepayment of Borrowings pursuant to this Section
3.04(c) shall be applied ratably to the Loans included in the prepaid
Borrowings. Prepayments pursuant to this Section 3.04(c) shall be accompanied by
accrued interest to the extent required by Section 3.02.

               (d) No Premium or Penalty. Prepayments permitted or required
under this Section 3.04 shall be without premium or penalty, except as required
under Section 5.02.

         Section 3.05 Fees.

               (a) Commitment Fees. The Borrower agrees to pay to the
Administrative Agent for the account of each Lender a commitment fee, which
shall accrue at a rate per annum equal to the Commitment Fee Rate on the average
daily amount of the unused amount of the Commitment of such Lender during the
period from and including the date of this Agreement to but excluding the
Termination Date. Accrued commitment fees shall be payable in arrears on the
last day of March, June, September and December of each year and on the
Termination Date, commencing on the first such date to occur after the date
hereof. All commitment fees shall be computed on the basis of a year of 360
days, unless such computation would exceed the Highest Lawful Rate, in which
case interest shall be computed on the basis of a year of 365 days (or 366 days
in a leap year), and shall be payable for the actual number of days elapsed
(including the first day but excluding the last day).

               (b) Letter of Credit Fees. The Borrower agrees to pay (i) to the
Administrative Agent for the account of each Lender a participation fee with
respect to its participations in Letters of Credit, which shall accrue at the
same Applicable Margin used to determine the interest rate applicable to
Eurodollar Loans on the average daily amount of such Lender's LC Exposure
(excluding any portion thereof attributable to unreimbursed LC Disbursements)
during the period from and including the date of this Agreement to but excluding
the later of the date on which such Lender's Commitment terminates and the date
on which such Lender ceases to have any LC Exposure, (ii) to each Issuing Bank a
fronting fee equal to 0.125% per annum on the face amount of each Letter of
Credit issued by such Issuing Bank hereunder, provided that in no event shall
such fee be less than $500 and (iii) to each Issuing Bank, for its own account,
its standard fees with respect to the amendment, renewal or extension of any
Letter of Credit issued by such Issuing Bank or processing of drawings
thereunder. Participation fees accrued through and including the last day of
March, June, September and December of each year shall be payable on the third
Business Day following such last day, commencing on the first such date to occur
after the date of this Agreement and fronting fees with respect to any Letter of
Credit shall be payable at the time of issuance of such Letter of Credit;
provided that all such fees shall be payable on the Termination Date and any
such fees accruing after the Termination Date shall be payable on demand. Any
other fees payable to an Issuing Bank pursuant to this Section 3.05(b) shall be
payable within 10 days after demand. All participation fees and fronting fees
shall be computed on the basis of a year of 360 days, unless such computation
would exceed the Highest Lawful Rate, in which case such fees shall be computed
on the basis of a year of 365 days (or 366 days in a leap year), and shall be
payable for the actual number of days elapsed (including the first day but
excluding the last day).

               (c) Administrative Agent Fees. The Borrower agrees to pay to the
Administrative Agent, for its own account, fees payable in the amounts and at
the times separately agreed upon between the Borrower and the Administrative
Agent.

               (d) Borrowing Base Increase Fees. The Borrower agrees to pay to
the Administrative Agent, for the account of each Lender then party to this
Agreement, ratably in

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                                CREDIT AGREEMENT

<PAGE>

accordance with its Applicable Percentage, a Borrowing Base increase fee equal
to 0.25% on the amount of any increase of the Borrowing Base over the highest
Borrowing Base previously in effect, payable on the day a New Borrowing Base
Notice is given.

                                   ARTICLE IV
               PAYMENTS; PRO RATA TREATMENT; SHARING OF SET-OFFS.

         Section 4.01 Payments Generally; Pro Rata Treatment; Sharing of
Set-offs.

               (a) Payments by the Borrower. The Borrower shall make each
payment required to be made by it hereunder (whether of principal, interest,
fees or reimbursement of LC Disbursements, or of amounts payable under Section
5.01, Section 5.02, Section 5.03 or otherwise) prior to 1:00 p.m., Houston time,
on the date when due, in immediately available funds, without defense,
deduction, recoupment, set-off or counterclaim. Fees, once paid, shall be fully
earned and shall not be refundable under any circumstances. Any amounts received
after such time on any date may, in the discretion of the Administrative Agent,
be deemed to have been received on the next succeeding Business Day for purposes
of calculating interest thereon. All such payments shall be made to the
Administrative Agent at its offices specified in Section 12.01, except payments
to be made directly to an Issuing Bank as expressly provided herein and except
that payments pursuant to Section 5.01, Section 5.02, Section 5.03 and Section
12.03 shall be made directly to the Persons entitled thereto. The Administrative
Agent shall distribute any such payments received by it for the account of any
other Person to the appropriate recipient promptly following receipt thereof. If
any payment hereunder shall be due on a day that is not a Business Day, the date
for payment shall be extended to the next succeeding Business Day, and, in the
case of any payment accruing interest, interest thereon shall be payable for the
period of such extension. All payments hereunder shall be made in dollars.

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

               (c) Sharing of Payments by Lenders. If any Lender shall, by
exercising any right of set-off or counterclaim or otherwise, obtain payment in
respect of any principal of or interest on any of its Loans or participations in
LC Disbursements resulting in such Lender receiving payment of a greater
proportion of the aggregate amount of its Loans and participations in LC
Disbursements and accrued interest thereon than the proportion received by any
other Lender, then the Lender receiving such greater proportion shall purchase
(for cash at face value) participations in the Loans and participations in LC
Disbursements of other Lenders to the extent necessary so that the benefit of
all such payments shall be shared by the Lenders ratably in accordance with the
aggregate amount of principal of and accrued interest on their respective Loans
and participations in LC Disbursements; provided that (i) if any such
participations are purchased and all or any portion of the payment giving rise
thereto is recovered, such participations shall be rescinded and the purchase
price restored to the extent of such recovery, without interest, and (ii) the
provisions of this Section 4.01(c) shall not be construed to apply to any
payment made by the Borrower pursuant to and in accordance with the

                                       34

                                CREDIT AGREEMENT

<PAGE>

express terms of this Agreement or any payment obtained by a Lender as
consideration for the assignment of or sale of a participation in any of its
Loans or participations in LC Disbursements to any assignee or participant,
other than to the Borrower or any Subsidiary or Affiliate thereof (as to which
the provisions of this Section 4.01(c) shall apply). The Borrower consents to
the foregoing and agrees, to the extent it may effectively do so under
applicable law, that any Lender acquiring a participation pursuant to the
foregoing arrangements may exercise against the Borrower rights of set-off and
counterclaim with respect to such participation as fully as if such Lender were
a direct creditor of the Borrower in the amount of such participation.

         Section 4.02 Presumption of Payment by the Borrower. Unless the
Administrative Agent shall have received notice from the Borrower prior to the
date on which any payment is due to the Administrative Agent for the account of
the Lenders or any Issuing Bank that the Borrower will not make such payment,
the Administrative Agent may assume that the Borrower has made such payment on
such date in accordance herewith and may, in reliance upon such assumption,
distribute to the Lenders or such Issuing Bank, as the case may be, the amount
due. In such event, if the Borrower has not in fact made such payment, then each
of the Lenders or such Issuing Bank, as the case may be, severally agrees to
repay to the Administrative Agent forthwith on demand the amount so distributed
to such Lender or such Issuing Bank with interest thereon, for each day from and
including the date such amount is distributed to it to but excluding the date of
payment to the Administrative Agent, at the greater of the Federal Funds
Effective Rate and a rate determined by the Administrative Agent in accordance
with banking industry rules on interbank compensation.

         Section 4.03 Certain Deductions by the Administrative Agent. If any
Lender shall fail to make any payment required to be made by it pursuant to
Section 2.05(b), Section 2.08(d), Section 2.08(e) or Section 4.02 then the
Administrative Agent may, in its discretion (notwithstanding any contrary
provision hereof), apply any amounts thereafter received by the Administrative
Agent for the account of such Lender to satisfy such Lender's obligations under
such Sections until all such unsatisfied obligations are fully paid.

                                   ARTICLE V
           INCREASED COSTS; BREAK FUNDING PAYMENTS; TAXES; ILLEGALITY

         Section 5.01 Increased Costs.

               (a) Eurodollar Changes in Law. If any Change in Law shall:

         impose, modify or deem applicable any reserve (including marginal,
         special, emergency or supplemental reserves), special deposit or
         similar requirement against assets of, deposits with or for the account
         of, or credit extended by, any Lender for Eurocurrency liabilities
         under Regulation D of the Board (as the same may be amended,
         supplemented or replaced from time to time) or otherwise; or

                  (i) impose on any Lender or the London interbank market any
other condition affecting this Agreement or Eurodollar Loans made by such
Lender;

and the result of any of the foregoing shall be to increase the cost to such
Lender of making or maintaining any Eurodollar Loan (or of maintaining its
obligation to make any such Loan) or to reduce the amount of any sum received or
receivable by such Lender (whether of principal, interest

                                       35

                                CREDIT AGREEMENT

<PAGE>

or otherwise), then the Borrower will pay to such Lender such additional amount
or amounts as will compensate such Lender for such additional costs incurred or
reduction suffered.

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

               (c) Certificates. A certificate of a Lender or any Issuing Bank
setting forth in reasonable detail the basis of its request and the amount or
amounts necessary to compensate such Lender or such Issuing Bank or its holding
company, as the case may be, as specified in Section 5.01(a) or (b) shall be
delivered to the Borrower and shall be conclusive absent manifest error. The
Borrower shall pay such Lender or such Issuing Bank, as the case may be, the
amount shown as due on any such certificate within 10 days after receipt
thereof.

               (d) Effect of Failure or Delay in Requesting Compensation.
Failure or delay on the part of any Lender or any Issuing Bank to demand
compensation pursuant to this Section 5.01 shall not constitute a waiver of such
Lender's or such Issuing Bank's right to demand such compensation, provided that
no Lender may make any such demand more than 180 days after the Termination
Date, nor for any amount which has accrued more than 270 days prior to such
Lender or Issuing Bank delivering the certificate required in Section 5.01(c).

         Section 5.02 Break Funding Payments. In the event of (a) the payment of
any principal of any Eurodollar Loan other than on the last day of an Interest
Period applicable thereto (including as a result of an Event of Default), (b)
the conversion of any Eurodollar Loan into an ABR Loan other than on the last
day of the Interest Period applicable thereto, or (c) the failure to borrow,
convert, continue or prepay any Eurodollar Loan on the date specified in any
notice delivered pursuant hereto, then, in any such event, the Borrower shall
compensate each Lender for the loss, cost and expense attributable to such
event. In the case of a Eurodollar Loan, such loss, cost or expense to any
Lender shall be deemed to include an amount determined by such Lender to be the
excess, if any, of (i) the amount of interest which would have accrued on the
principal amount of such Loan had such event not occurred, at the LIBO Rate that
would have been applicable to such Loan, for the period from the date of such
event to the last day of the then current Interest Period therefor (or, in the
case of a failure to borrow, convert or continue, for the period that would have
been the Interest Period for such Loan), over (ii) the amount of interest which
would accrue on such principal amount for such period at the interest rate which
such Lender would bid were it to bid, at the commencement of such period, for
dollar deposits of a comparable amount and period from other banks in the
eurodollar market.

A certificate of any Lender setting forth any amount or amounts that such Lender
is entitled to receive pursuant to this Section 5.02 shall be delivered to the
Borrower and shall be conclusive

                                       36

                                CREDIT AGREEMENT

<PAGE>

absent manifest error. The Borrower shall pay such Lender the amount shown as
due on any such certificate within 10 days after receipt thereof.

         Section 5.03 Taxes.

               (a) Payments Free of Taxes. Any and all payments by or on account
of any obligation of the Borrower or any Guarantor under any Loan Document shall
be made free and clear of and without deduction for any Indemnified Taxes or
Other Taxes; provided that if the Borrower or any Guarantor shall be required to
deduct any Indemnified Taxes or Other Taxes from such payments, then (i) the sum
payable shall be increased as necessary so that after making all required
deductions (including deductions applicable to additional sums payable under
this Section 5.03(a)), the Administrative Agent, Lender or Issuing Bank (as the
case may be) receives an amount equal to the sum it would have received had no
such deductions been made, (ii) the Borrower or such Guarantor shall make such
deductions and (iii) the Borrower or such Guarantor shall pay the full amount
deducted to the relevant Governmental Authority in accordance with applicable
law.

               (b) Payment of Other Taxes by the Borrower. The Borrower shall
pay any Other Taxes to the relevant Governmental Authority in accordance with
applicable law.

               (c) Indemnification by the Borrower. The Borrower shall indemnify
the Administrative Agent, each Lender and each Issuing Bank, within 10 days
after written demand therefor, for the full amount of any Indemnified Taxes or
Other Taxes paid by the Administrative Agent, such Lender or such Issuing Bank,
as the case may be, on or with respect to any payment by or on account of any
obligation of the Borrower hereunder (including Indemnified Taxes or Other Taxes
imposed or asserted on or attributable to amounts payable under this Section
5.03) and any penalties, interest and reasonable expenses arising therefrom or
with respect thereto, whether or not such Indemnified Taxes or Other Taxes were
correctly or legally imposed or asserted by the relevant Governmental Authority.
A certificate of the Administrative Agent, a Lender or an Issuing Bank as to the
basis of such Indemnified Taxes and Other Taxes and the amount of such payment
or liability under this Section 5.03 shall be delivered to the Borrower and
shall be conclusive absent manifest error.

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

               (e) Foreign Lenders. Any Foreign Lender that is entitled to an
exemption from or reduction of withholding tax under the law of the jurisdiction
in which the Borrower is located, or any treaty to which such jurisdiction is a
party, with respect to payments under this Agreement or any other Loan Document
shall deliver to the Borrower (with a copy to the Administrative Agent), at the
time or times prescribed by applicable law, such properly completed and executed
documentation prescribed by applicable law or reasonably requested by the
Borrower as will permit such payments to be made without withholding or at a
reduced rate.

         Section 5.04 Designation of Different Lending Office. If any Lender
requests compensation under Section 5.01, or if the Borrower is required to pay
any additional amount to any Lender or any Governmental Authority for the
account of any Lender pursuant to Section 5.03, then

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                                CREDIT AGREEMENT

<PAGE>

such Lender shall use reasonable efforts to designate a different lending office
for funding or booking its Loans hereunder or to assign its rights and
obligations hereunder to another of its offices, branches or affiliates, if, in
the judgment of such Lender, such designation or assignment (a) would eliminate
or reduce amounts payable pursuant to Section 5.01 or Section 5.03, as the case
may be, in the future and (b) would not subject such Lender to any unreimbursed
cost or expense and would not otherwise be disadvantageous to such Lender. The
Borrower hereby agrees to pay all reasonable costs and expenses incurred by any
Lender in connection with any such designation or assignment.

         Section 5.05 Illegality. Notwithstanding any other provision of this
Agreement, in the event that it becomes unlawful for any Lender or its
applicable lending office to honor its obligation to make or maintain Eurodollar
Loans either generally or having a particular Interest Period hereunder, then
(a) such Lender shall promptly notify the Borrower and the Administrative Agent
thereof and such Lender's obligation to make such Eurodollar Loans shall be
suspended (the "Affected Loans") until such time as such Lender may again make
and maintain such Eurodollar Loans and (b) all Affected Loans which would
otherwise be made by such Lender shall be made instead as ABR Loans (and, if
such Lender so requests by notice to the Borrower and the Administrative Agent,
all Affected Loans of such Lender then outstanding shall be automatically
converted into ABR Loans on the date specified by such Lender in such notice)
and, to the extent that Affected Loans are so made as (or converted into) ABR
Loans, all payments of principal which would otherwise be applied to such
Lender's Affected Loans shall be applied instead to its ABR Loans.

                                   ARTICLE VI
                              CONDITIONS PRECEDENT

         Section 6.01 Effective Date. The obligations of the Lenders to make
Loans and of any Issuing Bank to issue Letters of Credit hereunder shall not
become effective until the date on which each of the following conditions is
satisfied (or waived in accordance with Section 12.02):

               (a) The Arrangers, the Administrative Agent and the Lenders shall
have received all fees and other amounts due and payable on or prior to the
Effective Date, including, to the extent invoiced, reimbursement or payment of
all out-of-pocket expenses required to be reimbursed or paid by the Borrower
hereunder.

               (b) The Administrative Agent shall have received a certificate of
the Borrower and of each Guarantor setting forth (i) resolutions of the
Managers, board of directors or other managing body with respect to the
authorization of the Borrower or such Guarantor to execute and deliver the Loan
Documents to which it is a party and to enter into the transactions contemplated
in those documents, (ii) the individuals (y) who are authorized to sign the Loan
Documents to which the Borrower or such Guarantor is a party and (z) who will,
until replaced by another individual duly authorized for that purpose, act as
its representative for the purposes of signing documents and giving notices and
other communications in connection with this Agreement and the other Loan
Documents to which it is a party, (iii) specimen signatures of such authorized
individuals, and (iv) the articles or certificate of incorporation or formation
and bylaws, operating agreement or partnership agreement, as applicable, of the
Borrower and each Guarantor, in each case, certified as being true and complete.
The Administrative Agent and the Lenders may conclusively rely on such
certificate until the Administrative Agent receives notice in writing from the
Borrower to the contrary.

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                                CREDIT AGREEMENT

<PAGE>

               (c) The Administrative Agent shall have received certificates of
the appropriate State agencies with respect to the existence, qualification and
good standing of the Borrower and each Guarantor, if any.

               (d) The Administrative Agent shall have received a compliance
certificate which shall be substantially in the form of Exhibit B, duly and
properly executed by a Responsible Officer and dated as of the Effective Date.

               (e) The Administrative Agent shall have received from each party
hereto counterparts (in such number as may be requested by the Administrative
Agent) of this Agreement signed on behalf of such party.

               (f) The Administrative Agent shall have received duly executed
Notes payable to the order of each Lender in a principal amount equal to its
Maximum Credit Amount dated as of the date hereof.

               (g) The Administrative Agent shall have received from each party
thereto duly executed counterparts (in such number as may be requested by the
Administrative Agent) of the Security Instruments, including the Guaranty
Agreement and the other Security Instruments described on Exhibit C-1. In
connection with the execution and delivery of the Security Instruments, the
Administrative Agent shall be reasonably satisfied that the Security Instruments
create first priority, perfected Liens (subject only to Excepted Liens
identified in clauses (a) to (d) and (f) of the definition thereof, but subject
to the provisos at the end of such definition) on at least 80% of the total
value of the Oil and Gas Properties evaluated in the most recently delivered
Reserve Report.

               (h) The Administrative Agent shall have received an opinion of
Andrews Kurth, LLP, special counsel to the Borrower, in form and substance
satisfactory to the Administrative Agent, as to such matters incident to the
Transactions as the Administrative Agent may reasonably request.

               (i) The Administrative Agent shall have received a certificate of
insurance coverage of the Borrower evidencing that the Borrower is carrying
insurance in accordance with Section 7.12.

               (j) The Administrative Agent shall have received a certificate of
a Responsible Officer certifying that the Borrower has received all consents and
approvals required by Section 7.03.

               (k) The Administrative Agent shall have received the financial
statements referred to in Section 7.04(a).

               (l) The Administrative Agent shall have received appropriate UCC
search certificates reflecting no prior Liens encumbering the Properties the
Borrower, and its Subsidiaries for each of the following jurisdictions:
Pennsylvania, West Virginia, New York, Delaware and any other jurisdiction
requested by the Administrative Agent; other than those being assigned or
released on or prior to the Effective Date or Liens permitted by Section 9.03.

               (m) The Administrative Agent shall have received such other
documents as the Administrative Agent or special counsel to the Administrative
Agent may reasonably request.

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                                CREDIT AGREEMENT

<PAGE>

         The Administrative Agent shall notify the Borrower and the Lenders of
the Effective Date, and such notice shall be conclusive and binding.
Notwithstanding the foregoing, the obligations of the Lenders to make Loans and
of each Issuing Bank to issue Letters of Credit hereunder shall not become
effective unless each of the foregoing conditions is satisfied (or waived
pursuant to Section 12.02) at or prior to 1:00 p.m., Houston time, on April 15,
2006 (and, in the event such conditions are not so satisfied or waived, the
Commitments shall terminate at such time).

         Section 6.02 Each Credit Event. The obligation of each Lender to make a
Loan on the occasion of any Borrowing (including the initial funding), and of
each Issuing Bank to issue, amend, renew or extend any Letter of Credit, is
subject to the satisfaction of the following conditions:

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

               (b) At the time of and immediately after giving effect to such
Borrowing or the issuance, amendment, renewal or extension of such Letter of
Credit, as applicable, no Material Adverse Effect shall have occurred.

               (c) The representations and warranties of the Borrower and the
Guarantors, if any, set forth in this Agreement and in the other Loan Documents
shall be true and correct on and as of the date of such Borrowing or the date of
issuance, amendment, renewal or extension of such Letter of Credit, as
applicable, except to the extent any such representations and warranties are
expressly limited to an earlier date, in which case, on and as of the date of
such Borrowing or the date of issuance, amendment, renewal or extension of such
Letter of Credit, as applicable, such representations and warranties shall
continue to be true and correct as of such specified earlier date.

               (d) The making of such Loan or the issuance, amendment, renewal
or extension of such Letter of Credit, as applicable, would not conflict with,
or cause any Lender or any Issuing Bank to violate or exceed, any applicable
Governmental Requirement, and no Change in Law shall have occurred, and no
litigation shall be pending or threatened, which does or, with respect to any
threatened litigation, seeks to, enjoin, prohibit or restrain, the making or
repayment of any Loan, the issuance, amendment, renewal, extension or repayment
of any Letter of Credit or any participations therein or the consummation of the
transactions contemplated by this Agreement or any other Loan Document.

               (e) The receipt by the Administrative Agent of a Borrowing
Request in accordance with Section 2.03 or a request for a Letter of Credit in
accordance with Section 2.08(b), as applicable.

Each request for a Borrowing and each issuance, amendment, renewal or extension
of any Letter of Credit shall be deemed to constitute a representation and
warranty by the Borrower on the date thereof as to the matters specified in
Section 6.02(a) through (e).

                                  ARTICLE VII
                         REPRESENTATIONS AND WARRANTIES

         The Borrower represents and warrants to the Lenders that:

                                       40

                                CREDIT AGREEMENT

<PAGE>

         Section 7.01 Organization; Powers. Each of the Borrower and its
Subsidiaries is duly organized, validly existing and in good standing under the
laws of the jurisdiction of its organization, has all requisite power and
authority, and has all material governmental licenses, authorizations, consents
and approvals necessary, to own its assets and to carry on its business as now
conducted, and is qualified to do business in, and is in good standing in, every
jurisdiction where such qualification is required, except where failure to have
such power, authority, licenses, authorizations, consents, approvals and
qualifications could not reasonably be expected to have a Material Adverse
Effect.

         Section 7.02 Authority; Enforceability. The Transactions are within the
Borrower's and each Guarantor's corporate powers and have been duly authorized
by all necessary corporate and, if required, member action (including, without
limitation, any action required to be taken by any class of directors of the
Borrower or any other Person, whether interested or disinterested, in order to
ensure the due authorization of the Transactions). When executed and delivered,
each Loan Document to which the Borrower and any Guarantor is a party will have
been duly executed and delivered by the Borrower and such Guarantor and will
constitute a legal, valid and binding obligation of the Borrower and such
Guarantor, as applicable, enforceable in accordance with its terms, subject to
applicable bankruptcy, insolvency, reorganization, moratorium or other laws
affecting creditors' rights generally and subject to general principles of
equity, regardless of whether considered in a proceeding in equity or at law.

         Section 7.03 Approvals; No Conflicts. The Transactions (a) do not
require any consent or approval of, registration or filing with, or any other
action by, any Governmental Authority or any other third Person (including the
members or any class of directors of the Borrower or any other Person, whether
interested or disinterested), nor is any such consent, approval, registration,
filing or other action necessary for the validity or enforceability of any Loan
Document or the consummation of the transactions contemplated thereby, except
such as have been obtained or made and are in full force and effect, and except
for the filing and recording of Security Instruments to perfect the Liens
created hereby, (b) will not violate any applicable law or regulation or the
charter, by-laws or other organizational documents of the Borrower or any of its
Subsidiaries or any order of any Governmental Authority, (c) will not violate or
result in a default under any indenture, agreement or other instrument binding
upon the Borrower or any of its Subsidiaries or their Properties, or give rise
to a right thereunder to require any payment to be made by the Borrower or such
Subsidiary and (d) will not result in the creation or imposition of any Lien on
any Property of the Borrower or any of its Subsidiaries (other than the Liens
created by the Loan Documents).

         Section 7.04 Financial Position; No Material Adverse Change.

               (a) The Borrower has heretofore furnished to the Lenders the
unaudited consolidated balance sheet of the Borrower and its consolidated
subsidiaries as of December 31, 2005, and related audited consolidated
statements of income, cash flows and changes in members' equity for the fiscal
year ending December 31, 2005. Such financial statements present fairly, in all
material respects, the financial position and results of operations and cash
flows of the Borrower and its consolidated subsidiaries as of such date and for
such period in accordance with GAAP.

               (b) Since December 31, 2005, (i) there has been no event,
development or circumstance that has had or could reasonably be expected to have
a Material Adverse Effect and (ii) the business of the Borrower and its
Subsidiaries has been conducted only in the ordinary course consistent with past
business practices.

                                       41

                                CREDIT AGREEMENT

<PAGE>

               (c) Neither the Borrower nor any of its Subsidiaries has on the
date hereof any material Debt (including Disqualified Capital Stock), or any
contingent liabilities, off-balance sheet liabilities or partnerships,
liabilities for taxes, unusual forward or long-term commitments or unrealized or
anticipated losses from any unfavorable commitments, except as referred to or
reflected or provided for in the Financial Statements.

         Section 7.05 Litigation. Except as set forth on Schedule 7.05, there
are no actions, suits, investigations or proceedings by or before any arbitrator
or Governmental Authority pending against or, to the knowledge of the Borrower,
threatened against or affecting the Borrower or any of its Subsidiaries (a) as
to which there is a reasonable possibility of an adverse determination that, if
adversely determined, could reasonably be expected, individually or in the
aggregate, to result in a Material Adverse Effect or (b) that involve any Loan
Document or the Transactions. Since the date of this Agreement, there has been
no change in the status of the matters disclosed in Schedule 7.05 that,
individually or in the aggregate, has resulted in, or materially increased the
likelihood of, a Material Adverse Effect.

         Section 7.06 Environmental Matters. Except as could not be reasonably
expected to have a Material Adverse Effect (or with respect to (c), (d) and (e)
below, where the failure to take such actions could not be reasonably expected
to have a Material Adverse Effect):

               (a) neither any Property of the Borrower or any of its
Subsidiaries nor the operations conducted thereon violate any order or
requirement of any court or Governmental Authority or any Environmental Laws.

               (b) no Property of the Borrower or any of its Subsidiaries nor
the operations currently conducted thereon or, to the knowledge of the Borrower,
by any prior owner or operator of such Property or operation, are in violation
of or subject to any existing, pending or threatened action, suit,
investigation, inquiry or proceeding by or before any court or Governmental
Authority or to any remedial obligations under Environmental Laws.

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

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

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                                CREDIT AGREEMENT

<PAGE>

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

               (f) to the extent applicable, all Property of the Borrower and
each of its Subsidiaries currently satisfies all design, operation, and
equipment requirements imposed by the OPA, and the Borrower does not have any
reason to believe that such Property, to the extent subject to the OPA, will not
be able to maintain compliance with the OPA requirements during the term of this
Agreement.

               (g) neither the Borrower nor any of its Subsidiaries has any
known contingent liability or Remedial Work in connection with any release or
threatened release of any oil, hazardous substance, solid waste or oil and gas
waste into the environment.

         Section 7.07 Compliance with the Laws and Agreements; No Defaults.

               (a) Each of the Borrower and its Subsidiaries is in compliance
with all Governmental Requirements applicable to it or its Property and all
agreements and other instruments binding upon it or its Property, and possesses
all licenses, permits, franchises, exemptions, approvals and other
authorizations granted by Governmental Authorities necessary for the ownership
of its Property and the present conduct of its business, except where the
failure to do so, individually or in the aggregate, could not reasonably be
expected to result in a Material Adverse Effect.

               (b) Neither the Borrower nor any of its Subsidiaries is in
default nor has any event or circumstance occurred which, but for the expiration
of any applicable grace period or the giving of notice, or both, would
constitute a default or would require the Borrower or any of its Subsidiaries to
Redeem or make any offer to Redeem all or any portion of any Debt outstanding
under any indenture, note, credit agreement or instrument pursuant to which any
Material Indebtedness is outstanding or by which the Borrower or any of its
Subsidiaries or any of their Properties is bound.

               (c) No Default has occurred and is continuing.

         Section 7.08 Investment Company Act. Neither the Borrower nor any of
its Subsidiaries is an "investment company" or a company "controlled" by an
"investment company," within the meaning of, or subject to regulation under, the
Investment Company Act of 1940, as amended.

         Section 7.09 Taxes. Each of the Borrower and its Subsidiaries has
timely filed or caused to be filed all Tax returns and reports required to have
been filed and has paid or caused to be paid all Taxes required to have been
paid by it, except (a) Taxes that are being contested in good faith by
appropriate proceedings and for which the Borrower or such Subsidiary, as
applicable, has set aside on its books adequate reserves in accordance with GAAP
or (b) to the extent that the failure to do so could not reasonably be expected
to result in a Material Adverse Effect. The charges, accruals and reserves on
the books of the Borrower and its Subsidiaries in respect of Taxes and other
governmental charges are, in the reasonable opinion of the Borrower, adequate.
No Tax Lien has

                                       43

                                CREDIT AGREEMENT

<PAGE>

been filed and, to the knowledge of the Borrower, no claim is being asserted
with respect to any such Tax or other such governmental charge.

         Section 7.10 ERISA.

               (a) The Borrower, its Subsidiaries and each ERISA Affiliate have
complied in all material respects with ERISA and, where applicable, the Code
regarding each Plan, if any.

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

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

               (d) No Plan (other than a defined contribution plan) or any trust
created under any such Plan has been terminated since September 2, 1974. No
liability to the PBGC (other than for the payment of current premiums which are
not past due) by the Borrower, any of its Subsidiaries or any ERISA Affiliate
has been or is expected by the Borrower, any of its Subsidiaries or any ERISA
Affiliate to be incurred with respect to any Plan. No ERISA Event with respect
to any Plan has occurred.

               (e) Full payment when due has been made of all amounts which the
Borrower, any of its Subsidiaries or any ERISA Affiliate is required under the
terms of each Plan, if any, or applicable law to have paid as contributions to
such Plan as of the date hereof, and no accumulated funding deficiency (as
defined in section 302 of ERISA and section 412 of the Code), whether or not
waived, exists with respect to any Plan.

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

               (g) Neither the Borrower, its Subsidiaries nor any ERISA
Affiliate sponsors, maintains, or contributes to an employee welfare benefit
plan, as defined in section 3(1) of ERISA, including, without limitation, any
such plan maintained to provide benefits to former employees of such entities,
that may not be terminated by the Borrower, any of its Subsidiaries or any ERISA
Affiliate in its sole discretion at any time without any material liability.

               (h) Neither the Borrower, its Subsidiaries nor any ERISA
Affiliate sponsors, maintains or contributes to, or has at any time in the
six-year period preceding the date hereof sponsored, maintained or contributed
to, any Multiemployer Plan.

                                       44

                                CREDIT AGREEMENT

<PAGE>

               (i) Neither the Borrower, its Subsidiaries nor any ERISA
Affiliate is required to provide security under section 401(a)(29) of the Code
due to a Plan amendment that results in an increase in current liability for the
Plan.

         Section 7.11 Disclosure; No Material Misstatements. As set forth on
Schedule 7.11, the Borrower has disclosed to the Lenders all agreements,
instruments and corporate or other restrictions to which it or any of its
Subsidiaries is subject, and all other matters known to it, that, individually
or in the aggregate, could reasonably be expected to result in a Material
Adverse Effect. None of the reports, financial statements, certificates or other
information furnished by or on behalf of the Borrower or any of its Subsidiaries
to the Administrative Agent, any other Agent or any Lender or any of their
Affiliates in connection with the negotiation of this Agreement or any other
Loan Document or delivered hereunder or under any other Loan Document (as
modified or supplemented by other information so furnished) contains any
material misstatement of fact or omits to state any material fact necessary to
make the statements therein, in the light of the circumstances under which they
were made, not misleading; provided that, with respect to projected financial
information, the Borrower represents only that such information was prepared in
good faith based upon assumptions believed to be reasonable at the time. There
is no fact peculiar to the Borrower or any of its Subsidiaries that could
reasonably be expected to have a Material Adverse Effect or in the future is
reasonably likely to have a Material Adverse Effect and which has not been set
forth in this Agreement or the Loan Documents or the other documents,
certificates and statements furnished to the Administrative Agent, any other
Agent or the Lenders by or on behalf of the Borrower or any of its Subsidiaries
prior to, or on, the date hereof in connection with the transactions
contemplated hereby. There are no statements or conclusions in any Reserve
Report which are based upon or include misleading information or fail to take
into account material information regarding the matters reported therein.

         Section 7.12 Insurance. The Borrower has, and has caused all of its
Subsidiaries to have, (a) all insurance policies sufficient for the compliance
by each of them with all material Governmental Requirements and all material
agreements and (b) insurance coverage in at least amounts and against such risk
(including, without limitation, public liability) that are usually insured
against by companies similarly situated and engaged in the same or a similar
business for the assets and operations of the Borrower and its Subsidiaries. The
Administrative Agent and the Lenders have been named as additional insureds in
respect of such liability insurance policies and the Administrative Agent has
been named as loss payee with respect to Property loss insurance.

         Section 7.13 Restriction on Liens. Neither the Borrower nor any of its
Subsidiaries is a party to any material agreement or arrangement, or subject to
any order, judgment, writ or decree, which either restricts or purports to
restrict its ability to grant Liens to the Administrative Agent and the Lenders
on or in respect of their Properties to secure the Indebtedness and the Loan
Documents.

         Section 7.14 Subsidiaries. Except as set forth on Schedule 7.14 or as
disclosed in writing to the Administrative Agent (which shall promptly furnish a
copy to the Lenders), which shall be a supplement to Schedule 7.14, the Borrower
has no Subsidiaries. The Borrower has no Foreign Subsidiaries.

         Section 7.15 Location of Business and Offices. The Borrower's
jurisdiction of organization is Delaware; the name of the Borrower as listed in
the public records of its jurisdiction of organization is Linn Energy, LLC, and
the organizational identification number of the Borrower in its jurisdiction of
organization is 3951040 (or, in each case, as set forth in a notice delivered to
the

                                       45

                                CREDIT AGREEMENT

<PAGE>

Administrative Agent pursuant to Section 8.01(m) in accordance with Section
12.01). The Borrower's principal place of business and chief executive offices
are located at the address specified in Section 12.01 (or as set forth in a
notice delivered pursuant to Section 8.01(m) and Section 12.01(c)). Each
Subsidiary's jurisdiction of organization, name as listed in the public records
of its jurisdiction of organization, organizational identification number in its
jurisdiction of organization, and the location of its principal place of
business and chief executive office is stated on Schedule 7.14 (or as set forth
in a notice delivered pursuant to Section 8.01(m)).

         Section 7.16 Properties; Titles, Etc.

               (a) Each of the Borrower and its Subsidiaries has good and
defensible title to its Oil and Gas Properties evaluated in the most recently
delivered Reserve Report and good title to all its personal Properties, in each
case, free and clear of all Liens except Liens permitted by Section 9.03. After
giving full effect to the Excepted Liens, the Borrower or any of its
Subsidiaries specified as the owner owns the net interests in production
attributable to the Hydrocarbon Interests as reflected in the most recently
delivered Reserve Report, and the ownership of such Properties shall not in any
material respect obligate the Borrower or any of its Subsidiaries to bear the
costs and expenses relating to the maintenance, development and operations of
each such Property in an amount in excess of the working interest of each
Property set forth in the most recently delivered Reserve Report that is not
offset by a corresponding proportionate increase in the Borrower's or any of its
Subsidiaries' net revenue interest in such Property.

               (b) All material leases and agreements necessary for the present
conduct of the business of the Borrower and its Subsidiaries are valid and
subsisting, in full force and effect, and there exists no default or event or
circumstance which with the giving of notice or the passage of time or both
would give rise to a default under any such lease or leases, which could
reasonably be expected to have a Material Adverse Effect.

               (c) The rights and Properties presently owned, leased or licensed
by the Borrower and its Subsidiaries including, without limitation, all
easements and rights of way, include all rights and Properties necessary to
permit the Borrower and its Subsidiaries to conduct their business in all
material respects as of the date hereof.

               (d) All of the material Properties of the Borrower and each of
its Subsidiaries that are reasonably necessary for the operation of their
businesses are in good working condition and are maintained in accordance with
prudent business standards.

               (e) The Borrower and each of its Subsidiaries owns, or is
licensed to use, all trademarks, tradenames, copyrights, patents and other
intellectual Property material to its business, and the use thereof by the
Borrower and such Subsidiary does not infringe upon the rights of any other
Person, except for any such infringements that, individually or in the
aggregate, could not reasonably be expected to result in a Material Adverse
Effect. The Borrower and its Subsidiaries either own or have valid licenses or
other rights to use all databases, geological data, geophysical data,
engineering data, seismic data, maps, interpretations and other technical
information used in their businesses as presently conducted, subject to the
limitations contained in the agreements governing the use of the same, which
limitations are customary for companies engaged in the business of the
exploration and production of Hydrocarbons, with such exceptions as could not
reasonably be expected to have a Material Adverse Effect.

                                       46

                                CREDIT AGREEMENT

<PAGE>

         Section 7.17 Maintenance of Properties. Except for such acts or
failures to act as could not be reasonably expected to have a Material Adverse
Effect, the Oil and Gas Properties (and Properties unitized therewith) have been
maintained, operated and developed in a good and workmanlike manner and in
conformity with all Government Requirements and in conformity with the
provisions of all leases, subleases or other contracts comprising a part of the
Hydrocarbon Interests and other contracts and agreements forming a part of the
Oil and Gas Properties. Specifically in connection with the foregoing, except as
could not reasonably be expected to have a Material Adverse Effect, (a) no Oil
and Gas Property is subject to having allowable production reduced below the
full and regular allowable (including the maximum permissible tolerance) because
of any overproduction (whether or not the same was permissible at the time) and
(b) none of the wells comprising a part of the Oil and Gas Properties (or
Properties unitized therewith) is deviated from the vertical more than the
maximum permitted by Government Requirements, and such wells are, in fact,
bottomed under and are producing from, and the well bores are wholly within, the
Oil and Gas Properties (or in the case of wells located on Properties unitized
therewith, such unitized Properties). All pipelines, wells, gas processing
plants, platforms and other material improvements, fixtures and equipment owned
in whole or in part by the Borrower or any of its Subsidiaries that are
necessary to conduct normal operations are being maintained in a state adequate
to conduct normal operations, and with respect to such of the foregoing which
are operated by the Borrower or any of its Subsidiaries, in a manner consistent
with the Borrower's or its Subsidiaries' past practices (other than those the
failure of which to maintain in accordance with this Section 7.17 could not
reasonably be expect to have a Material Adverse Effect).

         Section 7.18 Gas Imbalances, Prepayments. As of the date hereof, except
as set forth on Schedule 7.18 or on the most recent certificate delivered
pursuant to Section 8.12(c), on a net basis there are no gas imbalances, take or
pay or other prepayments which would require the Borrower or any of its
Subsidiaries to deliver, in the aggregate, two percent (2%) or more of the
monthly production from Hydrocarbons produced from the Oil and Gas Properties at
some future time without then or thereafter receiving full payment therefor.

         Section 7.19 Marketing of Production. Except for contracts listed and
in effect on the date hereof on Schedule 7.19, and thereafter either disclosed
in writing to the Administrative Agent or included in the most recently
delivered Reserve Report (with respect to all of which contracts the Borrower
represents that it or its Subsidiaries are receiving a price for all production
sold thereunder which is computed substantially in accordance with the terms of
the relevant contract and are not having deliveries curtailed substantially
below the subject Property's delivery capacity), no material agreements exist
which are not cancelable on 60 days notice or less without penalty or detriment
for the sale of production from the Borrower's or its Subsidiaries' Hydrocarbons
(including, without limitation, calls on or other rights to purchase,
production, whether or not the same are currently being exercised) that (a)
pertain to the sale of production at a fixed price and (b) have a maturity or
expiry date of more than six (6) months from the date hereof.

         Section 7.20 Swap Agreements. Schedule 7.20, as of the date hereof, and
after the date hereof, each report required to be delivered by the Borrower
pursuant to Section 8.01(e), sets forth, a true and complete list of all Swap
Agreements of the Borrower and each of its Subsidiaries, the material terms
thereof (including the type, term, effective date, termination date and notional
amounts or volumes), the net marked-to-market value thereof, all credit support
agreements relating thereto (including any margin required or supplied) and the
counterparty to each such agreement.

                                       47

                                CREDIT AGREEMENT

<PAGE>

         Section 7.21 Use of Loans and Letters of Credit. The proceeds of the
Loans and the Letters of Credit shall be used (a) to provide working capital,
(b) to refinance existing indebtedness (including the Existing Credit Agreement
and the Subordinated Debt), (c) for the acquisition, exploration and development
of oil and gas properties, (d) for the issuance of Letters of Credit, and (e)
for general corporate purposes, including Restricted Payments, provided that if
the Borrowing Base Utilization Percentage is equal to or exceeds 90% before or
after giving effect to the requested Loan or Letter of Credit, then no proceeds
of any Loan or any Letter of Credit may be used to fund Restricted Payments
under Section 9.04. The Borrower and its Subsidiaries are not engaged
principally, or as one of its or their important activities, in the business of
extending credit for the purpose, whether immediate, incidental or ultimate, of
buying or carrying margin stock (within the meaning of Regulation T, U or X of
the Board). No part of the proceeds of any Loan or Letter of Credit will be used
for any purpose which violates the provisions of Regulations T, U or X of the
Board.

         Section 7.22 Solvency. After giving effect to the transactions
contemplated hereby, (a) the aggregate assets (after giving effect to amounts
that could reasonably be received by reason of indemnity, offset, insurance or
any similar arrangement), at a fair valuation, of the Borrower and the
Guarantors, taken as a whole, will exceed the aggregate Debt of the Borrower and
the Guarantors on a consolidated basis, as the Debt becomes absolute and
matures, (b) each of the Borrower and the Guarantors will not have incurred or
intended to incur, and will not believe that it will incur, Debt beyond its
ability to pay such Debt (after taking into account the timing and amounts of
cash to be received by each of the Borrower and the Guarantors and the amounts
to be payable on or in respect of its liabilities, and giving effect to amounts
that could reasonably be received by reason of indemnity, offset, insurance or
any similar arrangement) as such Debt becomes absolute and matures and (c) each
of the Borrower and the Guarantors will not have (and will have no reason to
believe that it will have thereafter) unreasonably small capital for the conduct
of its business.

                                  ARTICLE VIII
                              AFFIRMATIVE COVENANTS

         Until the Commitments have expired or been terminated and the principal
of and interest on each Loan and all fees payable hereunder and all other
amounts payable under the Loan Documents shall have been paid in full and all
Letters of Credit shall have expired or terminated and all LC Disbursements
shall have been reimbursed, the Borrower covenants and agrees with the Lenders
that:

         Section 8.01 Financial Statements; Ratings Change; Other Information.
The Borrower will furnish to the Administrative Agent and each Lender:

               (a) Annual Financial Statements. As soon as available, but in any
event not later than 90 days after the end of each fiscal year, Borrower's
audited consolidated balance sheet and related statements of operations,
members' equity and cash flows as of the end of and for such year, setting forth
in each case in comparative form the figures for the previous fiscal year, all
reported on by independent public accountants of recognized national standing
and reasonably acceptable to the Administrative Agent (without a "going concern"
or like qualification or exception and without any qualification or exception as
to the scope of such audit) to the effect that such consolidated financial
statements present fairly in all material respects the financial position and
results of operations of the Borrower and its Consolidated Subsidiaries on a
consolidated basis in accordance with GAAP consistently applied, provided that
the audited consolidated financial statements for the fiscal year ended December
31, 2005 shall be due by May 31, 2006.

                                       48

                                CREDIT AGREEMENT

<PAGE>

               (b) Quarterly Financial Statements. As soon as available, but in
any event not later than 45 days after the end of each of the first three fiscal
quarters of each fiscal year of the Borrower, its consolidated balance sheet and
related statements of operations, members' equity and cash flows as of the end
of and for such quarter and the then elapsed portion of the fiscal year, setting
forth in each case in comparative form the figures for the corresponding period
or periods of (or, in the case of the balance sheet, as of the end of) the
previous fiscal year, all certified by a Financial Officer as presenting fairly
in all material respects the financial position and results of operations of the
Borrower and its Consolidated Subsidiaries on a consolidated basis in accordance
with GAAP consistently applied, subject to normal year-end audit adjustments and
the absence of footnotes.

               (c) Certificate of Financial Officer -- Compliance. Concurrently
with any delivery of financial statements under Section 8.01(a) or Section
8.01(b), a certificate of a Financial Officer in substantially the form of
Exhibit B hereto (i) certifying as to whether a Default has occurred and, if a
Default has occurred, specifying the details thereof and any action taken or
proposed to be taken with respect thereto, (ii) setting forth reasonably
detailed calculations demonstrating compliance with Section 9.01 and (iii)
stating whether any change in GAAP or in the application thereof has occurred
since the Effective Date and, if any such change has occurred, specifying the
effect of such change on the financial statements accompanying such certificate.

               (d) Certificate of Accounting Firm -- Defaults. Concurrently with
any delivery of financial statements under Section 8.01(a), a certificate of the
accounting firm that reported on such financial statements stating whether they
obtained knowledge during the course of their examination of such financial
statements of any Default (which certificate may be limited to the extent
required by accounting rules or guidelines).

               (e) Certificate of Financial Officer -- Swap Agreements.
Concurrently with any delivery of financial statements under Section 8.01(a) and
Section 8.01(b), a certificate of a Financial Officer, in form and substance
satisfactory to the Administrative Agent, setting forth as of the last Business
Day of such calendar month or fiscal year, a true and complete list of all Swap
Agreements of the Borrower and each of its Subsidiaries, the material terms
thereof (including the type, term, effective date, termination date and notional
amounts or volumes), the net mark-to-market value therefor, any new credit
support agreements relating thereto not listed on Schedule 7.20, any margin
required or supplied under any credit support document, and the counterparty to
each such agreement.

               (f) Certificate of Insurer -- Insurance Coverage. Concurrently
with any delivery of financial statements under Section 8.01(a), a certificate
of insurance coverage from each insurer with respect to the insurance required
by Section 8.07, in form and substance satisfactory to the Administrative Agent,
and, if requested by the Administrative Agent or any Lender, all copies of the
applicable policies.

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

               (h) SEC and Other Filings; Reports to shareholders. Promptly
after the same become publicly available, copies of all periodic and other
reports, proxy statements and other

                                       49

                                CREDIT AGREEMENT

<PAGE>

materials filed by the Borrower or any Subsidiary with the SEC, or with any
national securities exchange, or distributed by the Borrower to its shareholders
generally, as the case may be.

               (i) Notices Under Material Instruments. Promptly after the
furnishing thereof, copies of any financial statement, report or notice
furnished to or by any Person pursuant to the terms of any preferred stock
designation, indenture, loan or credit or other similar agreement, other than
this Agreement and not otherwise required to be furnished to the Lenders
pursuant to any other provision of this Section 8.01.

               (j) Lists of Purchasers. Concurrently with the delivery of any
Reserve Report to the Administrative Agent pursuant to Section 8.12, a list of
all Persons purchasing Hydrocarbons from the Borrower or any of its
Subsidiaries.

               (k) Notice of Sales of Oil and Gas Properties. In the event the
Borrower or any of its Subsidiaries intends to sell, transfer, assign or
otherwise dispose of any Oil or Gas Properties included in the most recently
delivered Reserve Report (or any Equity Interests in any Subsidiary owning
interests in such Oil and Gas Properties) during any period between two
successive Scheduled Redetermination Dates having a fair market value,
individually or in the aggregate, in excess of $250,000, prior written notice of
such disposition, the price thereof, the anticipated date of closing, and any
other details thereof requested by the Administrative Agent or any Lender.

               (l) Notice of Casualty Events. Prompt written notice, and in any
event within three Business Days, of the occurrence of any Casualty Event or the
commencement of any action or proceeding that could reasonably be expected to
result in a Casualty Event.

               (m) Information Regarding Borrower and Guarantors. Prompt written
notice (and in any event within thirty (30) days prior thereto) of any change
(i) in the Borrower or any Guarantor's corporate name or in any trade name used
to identify such Person in the conduct of its business or in the ownership of
its Properties, (ii) in the location of the Borrower or any Guarantor's chief
executive office or principal place of business, (iii) in the Borrower or any
Guarantor's identity or corporate structure or in the jurisdiction in which such
Person is incorporated or formed, (iv) in the Borrower or any Guarantor's
jurisdiction of organization or such Person's organizational identification
number in such jurisdiction of organization, and (v) in the Borrower or any
Guarantor's federal taxpayer identification number, if any.

               (n) Production Report and Lease Operating Statements. Within 45
days after the end of each fiscal quarter, a report setting forth, for each
calendar month during the then-current fiscal year to date, the volume of
production and sales attributable to production (and the prices at which such
sales were made and the revenues derived from such sales) for each such calendar
month from the Oil and Gas Properties, and setting forth the related ad valorem,
severance and production taxes and lease operating expenses attributable thereto
and incurred for each such calendar month.

               (o) Notices of Certain Changes. Promptly, but in any event within
five (5) Business Days after the execution thereof, copies of any amendment,
modification or supplement to the certificate or articles of incorporation,
by-laws, any preferred stock designation or any other organic document of the
Borrower or any of its Subsidiaries.

                                       50

                                CREDIT AGREEMENT
<PAGE>

            (p) Annual Budget. Promptly, but in any event within 90 days after
the end of each fiscal year, a budget for the then current fiscal year,
including a pro forma balance sheet and income and cash flow projections.

            (q) Subordinated Debt. Promptly, but in any event not less than
fifteen (15) Business Days prior to incurring any Debt pursuant to Section
9.02(e), written notice of its intent to incur such Debt, the amount thereof,
and the anticipated closing date, together with copies of drafts of the material
definitive documents therefor and, when completed, copies of the final versions
of such material definitive documents.

            (r) Other Requested Information. Promptly following any request
therefor, such other information regarding the operations, business affairs and
financial condition of the Borrower or any of its Subsidiaries (including,
without limitation, any Plan or Multiemployer Plan and any reports or other
information required to be filed under ERISA), or compliance with the terms of
this Agreement or any other Loan Document, as the Administrative Agent or any
Lender may reasonably request.

      Section 8.02 Notices of Material Events. The Borrower will furnish to the
Administrative Agent and each Lender, promptly after the Borrower obtains
knowledge thereof, written notice of the following:

            (a) the occurrence of any Default;

            (b) the filing or commencement of, or the threat in writing of, any
action, suit, investigation, arbitration or proceeding by or before any
arbitrator or Governmental Authority against or affecting the Borrower or any
Subsidiary thereof, or any material adverse development in any action, suit,
proceeding, investigation or arbitration (whether or not previously disclosed to
the Lenders), that, in either case, if adversely determined, could reasonably be
expected to result in liability in excess of $500,000;

            (c) the occurrence of any ERISA Event that, alone or together with
any other ERISA Events that have occurred, could reasonably be expected to
result in liability of the Borrower and its Subsidiaries in an aggregate amount
exceeding $500,000; and

            (d) any other development that results in, or could reasonably be
expected to result in, a Material Adverse Effect.

Each notice delivered under this Section 8.02 shall be accompanied by a
statement of a Responsible Officer setting forth the details of the event or
development requiring such notice and any action taken or proposed to be taken
with respect thereto.

      Section 8.03 Existence; Conduct of Business. The Borrower will, and will
cause each of its Subsidiaries to, do or cause to be done all things necessary
to preserve, renew and keep in full force and effect its legal existence and the
rights, licenses, permits, privileges and franchises material to the conduct of
its business and maintain, if necessary, its qualification to do business in
each other jurisdiction in which any of its Oil and Gas Properties is located or
the ownership of its Properties requires such qualification, except where the
failure to so qualify could not reasonably be expected to have a Material
Adverse Effect; provided that the foregoing shall not prohibit any merger,
consolidation, liquidation or dissolution permitted under Section 9.12.

                                CREDIT AGREEMENT

                                       51
<PAGE>

      Section 8.04 Payment of Obligations. The Borrower will, and will cause
each of its Subsidiaries to, pay its obligations, including Tax liabilities of
the Borrower and all of its Subsidiaries before the same shall become delinquent
or in default, except where (a) the validity or amount thereof is being
contested in good faith by appropriate proceedings, (b) the Borrower or such
Subsidiary has set aside on its books adequate reserves with respect thereto in
accordance with GAAP and (c) the failure to make payment pending such contest
could not reasonably be expected to result in a Material Adverse Effect or
result in the seizure or levy of any Property of the Borrower or any of its
Subsidiaries.

      Section 8.05 Performance of Obligations under Loan Documents. The Borrower
will pay the Notes according to the reading, tenor and effect thereof, and the
Borrower will, and the Borrower will cause each of its Subsidiaries to do and
perform every act and discharge all of the obligations to be performed and
discharged by them under the Loan Documents, including, without limitation, this
Agreement, at the time or times and in the manner specified.

      Section 8.06 Operation and Maintenance of Properties. The Borrower will,
and will cause each of its Subsidiaries to:

            (a) operate its Oil and Gas Properties and other material Properties
or cause such Oil and Gas Properties and other material Properties to be
operated in a careful and efficient manner in accordance with the practices of
the industry and in compliance with all applicable contracts and agreements and
in compliance with all Governmental Requirements, including, without limitation,
applicable proration requirements and Environmental Laws, and all applicable
laws, rules and regulations of every other Governmental Authority from time to
time constituted to regulate the development and operation of its Oil and Gas
Properties and the production and sale of Hydrocarbons and other minerals
therefrom, except, in each case, where the failure to comply could not
reasonably be expected to have a Material Adverse Effect.

            (b) keep and maintain all Property material to the conduct of its
business in good working order and condition, ordinary wear and tear excepted
preserve, maintain and keep in good repair, working order and efficiency
(ordinary wear and tear excepted) all of its material Oil and Gas Properties and
other material Properties, including, without limitation, all material
equipment, machinery and facilities.

            (c) promptly pay and discharge, or make reasonable and customary
efforts to cause to be paid and discharged, all delay rentals, royalties,
expenses and indebtedness accruing under the leases or other agreements
affecting or pertaining to its Oil and Gas Properties and will do all other
things necessary to keep unimpaired their rights with respect thereto and
prevent any forfeiture thereof or default thereunder.

            (d) promptly perform or make reasonable and customary efforts to
cause to be performed, in accordance with industry standards and in all material
respects, the obligations required by each and all of the assignments, deeds,
leases, sub-leases, contracts and agreements affecting its interests in its Oil
and Gas Properties and other material Properties.

            (e) to the extent the Borrower or one of its Subsidiaries is not the
operator of any Property, the Borrower shall use reasonable efforts to cause the
operator to comply with this Section 8.06.

                                CREDIT AGREEMENT

                                       52
<PAGE>

      Section 8.07 Insurance. The Borrower will, and will cause each of its
Subsidiaries to, maintain, with financially sound and reputable insurance
companies, insurance in such amounts and against such risks as are customarily
maintained by companies engaged in the same or similar businesses operating in
the same or similar locations. The loss payable clauses or provisions in said
insurance policy or policies insuring any of the collateral for the Loans shall
be endorsed in favor of and made payable to the Administrative Agent as its
interests may appear and such policies shall name the Administrative Agent and
the Lenders as "additional insureds" and provide that the insurer will give at
least 30 days prior notice of any cancellation to the Administrative Agent.

      Section 8.08 Books and Records; Inspection Rights. The Borrower will, and
will cause each of its Subsidiaries to, keep proper books of record and account
in which full, true and correct entries are made of all dealings and
transactions in relation to its business and activities. The Borrower will, and
will cause each of its Subsidiaries to, permit any representatives designated by
the Administrative Agent or any Lender, upon reasonable prior notice, to visit
and inspect its Properties, to examine and make extracts from its books and
records, and to discuss its affairs, finances and condition with its officers
and independent accountants, all at such reasonable times and as often as
reasonably requested.

      Section 8.09 Compliance with Laws. The Borrower will, and will cause each
of its Subsidiaries to, comply with all laws, rules, regulations and orders of
any Governmental Authority applicable to them or their Property, except where
the failure to do so, individually or in the aggregate, could not reasonably be
expected to result in a Material Adverse Effect.

      Section 8.10 Environmental Matters.

            (a) The Borrower shall, and shall cause each of its Subsidiaries to:
(i) comply, and shall cause its Properties and operations and each of its
Subsidiaries and each Subsidiary's Properties and operations to comply, with all
applicable Environmental Laws, the breach of which could be reasonably expected
to have a Material Adverse Effect; (ii) not dispose of or otherwise release, and
shall cause each Subsidiary not to dispose of or otherwise release, any oil, oil
and gas waste, hazardous substance, or solid waste on, under, about or from any
of the Borrower's or its Subsidiaries' Properties or any other Property to the
extent caused by the Borrower's or any of its Subsidiaries' operations except in
compliance with applicable Environmental Laws, the disposal or release of which
could reasonably be expected to have a Material Adverse Effect; (iii) timely
obtain or file, and shall cause each of its Subsidiaries to timely obtain or
file, all notices, permits, licenses, exemptions, approvals, registrations or
other authorizations, if any, required under applicable Environmental Laws to be
obtained or filed in connection with the operation or use of the Borrower's or
its Subsidiaries' Properties, which failure to obtain or file could reasonably
be expected to have a Material Adverse Effect; (iv) promptly commence and
diligently prosecute to completion, and shall cause each of its Subsidiaries to
promptly commence and diligently prosecute to completion, any assessment,
evaluation, investigation, monitoring, containment, cleanup, removal, repair,
restoration, remediation or other remedial obligations (collectively, the
"Remedial Work") in the event any Remedial Work is required or reasonably
necessary under applicable Environmental Laws because of or in connection with
the actual or suspected past, present or future disposal or other release of any
oil, oil and gas waste, hazardous substance or solid waste on, under, about or
from any of the Borrower's or its Subsidiaries' Properties, which failure to
commence and diligently prosecute to completion could reasonably be expected to
have a Material Adverse Effect; and (v) establish and implement, and shall cause
each of its Subsidiaries to establish and implement, such procedures as may be
reasonably necessary to continuously determine and assure that the Borrower's
and its

                                CREDIT AGREEMENT

                                       53
<PAGE>

Subsidiaries' obligations under this Section 8.10(a) are timely and fully
satisfied, which failure to establish and implement could reasonably be expected
to have a Material Adverse Effect.

            (b) The Borrower will promptly, but in no event later than five days
after the occurrence thereof, notify the Administrative Agent and the Lenders in
writing of any threatened action, investigation or inquiry by any Governmental
Authority or any threatened demand or lawsuit by any landowner or other third
party against the Borrower or its Subsidiaries or their Properties of which the
Borrower has knowledge in connection with any Environmental Laws (excluding
routine testing and corrective action) if the Borrower reasonably anticipates
that such action will result in liability (whether individually or in the
aggregate) in excess of $500,000, not fully covered by insurance, subject to
normal deductibles.

            (c) The Borrower will, and will cause each of its Subsidiaries to,
provide environmental audits and tests in accordance with American Society of
Testing Materials standards upon request by the Administrative Agent and the
Lenders (or as otherwise required to be obtained by the Administrative Agent or
the Lenders by any Governmental Authority), in connection with any future
acquisitions of Oil and Gas Properties or other material Properties.

      Section 8.11 Further Assurances.

            (a) The Borrower at its sole expense will, and will cause each of
its Subsidiaries to, promptly execute and deliver to the Administrative Agent
all such other documents, agreements and instruments reasonably requested by the
Administrative Agent to comply with, cure any defects or accomplish the
conditions precedent, covenants and agreements of the Borrower or any of its
Subsidiaries, as the case may be, in the Loan Documents, including the Notes, or
to further evidence and more fully describe the collateral intended as security
for the Indebtedness, or to correct any omissions in this Agreement or the
Security Instruments, or to state more fully the obligations secured therein, or
to perfect, protect or preserve any Liens created pursuant to this Agreement or
any of the Security Instruments or the priority thereof, or to make any
recordings, file any notices or obtain any consents, all as may be reasonably
necessary or appropriate, in the sole discretion of the Administrative Agent, in
connection therewith.

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

                                CREDIT AGREEMENT

                                       54
<PAGE>

      Section 8.12 Reserve Reports.

            (a) On or before March 1st and September 1st of each year,
commencing September 1st, 2006, the Borrower shall furnish to the Administrative
Agent and the Lenders a Reserve Report as of the immediately preceding January 1
or July 1, as applicable. The Reserve Report as of January 1 of each year shall
be prepared by one or more petroleum engineers reasonably acceptable to the
Administrative Agent and the July 1 Reserve Report of each year shall be
prepared by or under the supervision of the chief engineer of the Borrower who
shall certify such Reserve Report to be true and accurate and to have been
prepared in accordance with the procedures used in the immediately preceding
January 1 Reserve Report.

            (b) In the event of an Interim Redetermination, the Borrower shall
furnish to the Administrative Agent and the Lenders a Reserve Report prepared by
or under the supervision of the chief engineer of the Borrower who shall certify
such Reserve Report to be true and accurate and to have been prepared in
accordance with the procedures used in the immediately preceding January 1
Reserve Report. For any Interim Redetermination requested by the Administrative
Agent or the Borrower pursuant to Section 2.07(b), the Borrower shall provide
such Reserve Report with an "as of" date as required by the Administrative Agent
as soon as possible, but in any event no later than thirty (30) days following
the receipt of such request.

            (c) With the delivery of each Reserve Report, the Borrower shall
provide to the Administrative Agent and the Lenders a certificate from a
Responsible Officer certifying that in all material respects: (i) the
information contained in the Reserve Report and any other information delivered
in connection therewith is true and correct, (ii) the Borrower or its
Subsidiaries owns good and defensible title to the Oil and Gas Properties
evaluated in such Reserve Report and such Properties are free of all Liens
except for Liens permitted by Section 9.03, (iii) except as set forth on an
exhibit to the certificate, on a net basis there are no gas imbalances, take or
pay or other prepayments in excess of the volume specified in Section 7.18 with
respect to their Oil and Gas Properties evaluated in such Reserve Report that
would require the Borrower or any of its Subsidiaries to deliver Hydrocarbons
either generally or produced from such Oil and Gas Properties at some future
time without then or thereafter receiving full payment therefor, (iv) none of
their Oil and Gas Properties have been sold since the date of the last Borrowing
Base determination except as set forth on an exhibit to the certificate, which
certificate shall list all of its Oil and Gas Properties sold and in such detail
as reasonably required by the Administrative Agent, (v) attached to the
certificate is a list of all marketing agreements entered into subsequent to the
later of the date hereof or the most recently delivered Reserve Report that the
Borrower could reasonably be expected to have been obligated to list on Schedule
7.20 had such agreement been in effect on the date hereof and (vi) attached
thereto is a schedule of the Oil and Gas Properties evaluated by such Reserve
Report that are Mortgaged Properties and demonstrating the percentage of the
present value that such Mortgaged Properties represent.

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<PAGE>

      Section 8.13 Title Information.

            (a) On or before the delivery to the Administrative Agent and the
Lenders of each Reserve Report required by Section 8.12(a), to the extent
requested by the Administrative Agent, the Borrower will deliver title
information in form and substance acceptable to the Administrative Agent
covering enough of the Oil and Gas Properties evaluated by such Reserve Report
that were not included in the immediately preceding Reserve Report, so that the
Administrative Agent shall have received together with title information
previously delivered to the Administrative Agent, satisfactory title information
on at least 80% of the total value of the Oil and Gas Properties evaluated by
such Reserve Report.

            (b) If the Borrower has provided title information for additional
Properties under Section 8.13(a), the Borrower shall, within 60 days of notice
from the Administrative Agent that title defects or exceptions exist with
respect to such additional Properties, either (i) cure any such title defects or
exceptions (including defects or exceptions as to priority) which are not
permitted by Section 9.03 raised by such information, (ii) substitute acceptable
Mortgaged Properties with no title defects or exceptions except for Excepted
Liens (other than Excepted Liens described in clauses (e), (g) and (h) of such
definition) having an equivalent value or (iii) deliver title information in
form and substance reasonably acceptable to the Administrative Agent so that the
Administrative Agent shall have received, together with title information
previously delivered to the Administrative Agent, satisfactory title information
on at least 80% of the value of the Oil and Gas Properties evaluated by such
Reserve Report.

            (c) If the Borrower is unable to cure any title defect requested by
the Administrative Agent or the Lenders to be cured within the 60-day period or
the Borrower does not comply with the requirements to provide acceptable title
information covering 80% of the value of the Oil and Gas Properties evaluated in
the most recent Reserve Report, such default shall not be a Default, but instead
the Administrative Agent and/or the Majority Lenders shall have the right to
exercise the following remedy in their sole discretion from time to time, and
any failure to so exercise this remedy at any time shall not be a waiver as to
future exercise of the remedy by the Administrative Agent or the Lenders. To the
extent that the Administrative Agent or the Majority Lenders are not reasonably
satisfied with title to any Mortgaged Property after the 60-day period has
elapsed, such unacceptable Mortgaged Property shall not count towards the 80%
requirement, and the Administrative Agent may send a notice to the Borrower and
the Lenders that the then outstanding Borrowing Base shall be reduced by an
amount as determined by the Majority Lenders to cause the Borrower to be in
compliance with the requirement to provide acceptable title information on 80%
of the value of the Oil and Gas Properties. This new Borrowing Base shall become
effective immediately after receipt of such notice.

      Section 8.14 Additional Collateral; Additional Guarantors.

            (a) In connection with each redetermination of the Borrowing Base,
the Borrower shall review the Reserve Report and the list of current Mortgaged
Properties (as described in Section 8.12(c)(vi)) to ascertain whether the
Mortgaged Properties represent at least 80% of the total value of the Oil and
Gas Properties evaluated in the most recently completed Reserve Report after
giving effect to exploration and production activities, acquisitions,
dispositions and production. In the event that the Mortgaged Properties do not
represent at least 80% of such total value, then the Borrower shall, and shall
cause its Subsidiaries to, grant to the Administrative Agent or its designee as
security for the Indebtedness a first-priority Lien interest (provided the
Excepted Liens of the type described

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<PAGE>

in clauses (a) to (d) and (f) of the definition thereof may exist, but subject
to the provisos at the end of such definition) on additional Oil and Gas
Properties not already subject to a Lien of the Security Instruments such that
after giving effect thereto, the Mortgaged Properties will represent at least
80% of such total value. All such Liens will be created and perfected by and in
accordance with the provisions of deeds of trust, security agreements and
financing statements or other Security Instruments, all in form and substance
reasonably satisfactory to the Administrative Agent or its designee and in
sufficient executed (and acknowledged where necessary or appropriate)
counterparts for recording purposes. In order to comply with the foregoing, if
any Subsidiary places a Lien on its Oil and Gas Properties and such Subsidiary
is not a Guarantor, then it shall become a Guarantor and comply with Section
8.14(b).

            (b) In the event that (i) the Borrower determines that any
Subsidiary is a Material Domestic Subsidiary or (ii) any Domestic Subsidiary
incurs or guarantees any Debt, then the Borrower shall promptly cause such
Subsidiary to guarantee the Indebtedness pursuant to the Guaranty Agreement. In
connection with any such guaranty, the Borrower shall, or shall cause such
Subsidiary to, (A) execute and deliver a supplement to the Guaranty Agreement
executed by such Subsidiary, (B) pledge all of the Equity Interests of such
Subsidiary (including, without limitation, delivery of original stock
certificates evidencing the Equity Interests of such Subsidiary, together with
an appropriate undated stock powers for each certificate duly executed in blank
by the registered owner thereof) and (C) execute and deliver such other
additional closing documents, certificates and legal opinions as shall
reasonably be requested by the Administrative Agent or its designee.

      Section 8.15 ERISA Compliance. The Borrower will promptly furnish, and
will cause its Subsidiaries and any ERISA Affiliate to promptly furnish, to the
Administrative Agent (a) promptly after the filing thereof with the United
States Secretary of Labor, the Internal Revenue Service or the PBGC, copies of
each annual and other report with respect to each Plan, if any, or any trust
created thereunder, (b) immediately upon becoming aware of the occurrence of any
ERISA Event or of any "prohibited transaction," as described in section 406 of
ERISA or in section 4975 of the Code, in connection with any Plan or any trust
created thereunder, a written notice signed by the President or the principal
Financial Officer of the Borrower, its Subsidiaries or the ERISA Affiliate, as
the case may be, specifying the nature thereof, what action the Borrower, its
Subsidiaries or the ERISA Affiliate is taking or proposes to take with respect
thereto, and, when known, any action taken or proposed by the Internal Revenue
Service, the Department of Labor or the PBGC with respect thereto, and (c)
immediately upon receipt thereof, copies of any notice of the PBGC's intention
to terminate or to have a trustee appointed to administer any Plan. With respect
to each Plan, if any (other than a Multiemployer Plan), the Borrower will, and
the Borrower will cause each of its Subsidiaries and ERISA Affiliates to, (i)
satisfy in full and in a timely manner, without incurring any late payment or
underpayment charge or penalty and without giving rise to any lien, all of the
contribution and funding requirements of section 412 of the Code (determined
without regard to subsections (d), (e), (f) and (k) thereof) and of section 302
of ERISA (determined without regard to sections 303, 304 and 306 of ERISA), and
(ii) pay, or cause to be paid, to the PBGC in a timely manner, without incurring
any late payment or underpayment charge or penalty, all premiums required
pursuant to sections 4006 and 4007 of ERISA.

      Section 8.16 Marketing Activities. The Borrower will not, and will not
permit any of its Subsidiaries to, engage in marketing activities for any
Hydrocarbons or enter into any contracts related thereto other than (a)
contracts for the sale of Hydrocarbons scheduled or reasonably estimated to be
produced from their proved Oil and Gas Properties during the period of such
contract, (b) contracts for the sale of Hydrocarbons scheduled or reasonably
estimated to be produced from

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<PAGE>

proved Oil and Gas Properties of third parties during the period of such
contract associated with the Oil and Gas Properties of the Borrower and its
Subsidiaries that the Borrower or one of its Subsidiaries has the right to
market pursuant to joint operating agreements, unitization agreements or other
similar contracts that are usual and customary in the oil and gas business and
(c) other contracts for the purchase and/or sale of Hydrocarbons of third
parties (i) which have generally offsetting provisions (i.e. corresponding
pricing mechanics, delivery dates and points and volumes) such that no
"position" is taken and (ii) for which appropriate credit support has been taken
to alleviate the material credit risks of the counterparty thereto.

                                   ARTICLE IX
                               NEGATIVE COVENANTS

      Until the Commitments have expired or been terminated and the principal of
and interest on each Loan and all fees payable hereunder and all other amounts
payable under the Loan Documents have been paid in full and all Letters of
Credit have expired or terminated and all LC Disbursements shall have been
reimbursed, the Borrower covenants and agrees with the Lenders that:

      Section 9.01 Financial Covenants.

            (a) Ratio of EBITDA to Interest Expense. The Borrower will not, as
of the last day of any fiscal quarter commencing March 31, 2006, permit its
ratio of EBITDA for the fiscal quarter then ending to Interest Expense for such
fiscal quarter to be less than 2.5 to 1.0.

            (b) Current Ratio. The Borrower will not permit, as of the last day
of any fiscal quarter, its ratio of (i) consolidated current assets (including
the unused amount of the total Commitments, but excluding non-cash assets under
FAS 133) to (ii) consolidated current liabilities (excluding non-cash
obligations under FAS 133 and current maturities under this Agreement) to be
less than 1.0 to 1.0.

      Section 9.02 Debt. Neither the Borrower nor any of its Subsidiaries will
incur, create, assume or suffer to exist any Debt, except:

            (a) the Notes or other Indebtedness arising under the Loan Documents
or any guaranty of or suretyship arrangement for the Notes or other Indebtedness
arising under the Loan Documents.

            (b) accounts payable and other accrued expenses, liabilities or
other obligations to pay (for the deferred purchase price of Property or
services) from time to time incurred in the ordinary course of business which
are not greater than ninety (90) days past the date of invoice or delinquent or
which are being contested in good faith by appropriate action and for which
adequate reserves have been maintained in accordance with GAAP.

            (c) intercompany Debt between the Borrower and any of its
Subsidiaries or between Subsidiaries to the extent permitted by Section 9.05(g);
provided that such Debt is not held, assigned, transferred, negotiated or
pledged to any Person other than the Borrower or one of their Wholly-Owned
Subsidiaries, and, provided further, that any such Debt owed by either the
Borrower or a Guarantor shall be subordinated to the Indebtedness on terms set
forth in the Guaranty Agreement.

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<PAGE>

            (d) endorsements of negotiable instruments for collection in the
ordinary course of business.

            (e) Debt and any guarantees thereof subordinated in right of payment
and liquidation to the Indebtedness and any guarantees thereof, provided that
(i) (A) at the time such Debt is incurred, no Default has occurred and is then
continuing and (B) no Default would result from the incurrence of such Debt
after giving effect to the incurrence of such Debt (and any concurrent repayment
of Debt with the proceeds of such incurrence), (ii) the incurrence of such Debt
(and any concurrent repayment of Debt with the proceeds of such incurrence)
would not result in the total Revolving Credit Exposure exceeding the Borrowing
Base as adjusted pursuant to Section 9.02(e)(vii), (iii) such Debt does not have
any scheduled amortization prior to four years after the Maturity Date, (iv)
such Debt does not mature sooner than four years after the Maturity Date; (v)
such Debt and any guarantees thereof are subordinated on terms satisfactory to
the Administrative Agent and the Majority Lenders, (vi) such Debt does not have
any mandatory prepayment or redemption provisions which would require a
mandatory prepayment or repurchase in priority to the Indebtedness and (vii)
prior to the incurrence of such Debt, the Majority Lenders shall have the right
to adjust the amount of the Borrowing Base to reflect the incurrence of such
Debt utilizing the most recently delivered Reserve Reports, and in no event
shall the Borrower incur such Debt until the Borrowing Base has been so adjusted
or the Borrower has received a written notice from the Administrative Agent
notifying the Borrower that the Majority Lenders have elected not to adjust the
Borrowing Base.

            (f) other Debt not to exceed $10,000,000 in the aggregate at any one
time outstanding.

      Section 9.03 Liens. Neither the Borrower nor any of its Subsidiaries will
create, incur, assume or permit to exist any Lien on any of its Properties (now
owned or hereafter acquired), except:

            (a) Liens securing the payment of any Indebtedness.

            (b) Excepted Liens.

            (c) Liens on Property not constituting collateral for the
Indebtedness and not otherwise permitted by the foregoing clauses of this
Section 9.03; provided that the aggregate principal or face amount of all Debt
secured under this Section 9.03(c) shall not exceed $100,000 at any time.

      Section 9.04 Dividends, Distributions and Redemptions.

            (a) Restricted Payments. The Borrower will not, and will not permit
any of its Subsidiaries to, declare or make, or agree to pay or make, directly
or indirectly, any Restricted Payment, return any capital to its stockholders or
make any distribution of their Property to their respective Equity Interest
holders, except (i) the Borrower may declare and pay dividends or distributions
with respect to its Equity Interests payable solely in additional shares of its
Equity Interests (other than Disqualified Capital Stock), (ii) Subsidiaries may
declare and pay dividends or distributions ratably with respect to their Equity
Interests and (iii) so long as no Borrowing Base Deficiency, Default or Event of
Default has occurred and is continuing or would result therefrom,

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<PAGE>

and subject to the proviso in Section 7.21(e), the Borrower may declare and pay
quarterly cash dividends to its members of Available Cash.

            (b) Subordinated Debt. The Borrower will not, and will not permit
any Subsidiary to, prior to the date that is four years after the Maturity Date:
(i) call, make or offer to make any optional or voluntary Redemption of or
otherwise optionally or voluntarily Redeem (whether in whole or in part) any
subordinated Debt permitted to be incurred hereunder; (ii) amend, modify, waive
or otherwise change, consent or agree to any amendment, modification, waiver or
other change to, any of the notes evidencing any subordinated Debt permitted
hereunder or any indenture, agreement, instrument, certificate or other document
relating to any subordinated Debt permitted hereunder; or (iii) designate any
Debt (other than obligations of the Borrower and the Subsidiaries pursuant to
the Loan Documents) as "Specified Senior Indebtedness" or "Specified Guarantor
Senior Indebtedness" or give any such other Debt any other similar designation
for the purposes of any indentures or other documents relating to any
subordinated Debt permitted hereunder.

      Section 9.05 Investments, Loans and Advances. Neither the Borrower nor any
of its Subsidiaries will make or permit to remain outstanding any Investments in
or to any Person, except that the foregoing restriction shall not apply to:

            (a) Investments reflected in the Financial Statements.

            (b) accounts receivable arising in the ordinary course of business.

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

            (d) commercial paper maturing within one year from the date of
creation thereof rated in the highest grade by S&P or Moody's.

            (e) deposits maturing within one year from the date of creation
thereof with, including certificates of deposit issued by, any Lender or any
office located in the United States of any other bank or trust company which is
organized under the laws of the United States or any state thereof, has capital,
surplus and undivided profits aggregating at least $250,000,000 (as of the date
of such bank or trust company's most recent financial reports) and has a short
term deposit rating of no lower than A2 or P2, as such rating is set forth from
time to time, by S&P or Moody's, respectively.

            (f) deposits in money market funds investing exclusively in
Investments described in Section 9.05(c), Section 9.05(d) or Section 9.05(e).

            (g) Investments (i) made by the Borrower in or to the Guarantors,
(ii) made by any Subsidiary in or to the Borrower or any Guarantor, and (iii)
made by the Borrower or any Guarantor in Subsidiaries that are not Guarantors,
provided that the aggregate of all Investments made by the Borrower and the
Guarantors in or to all Subsidiaries that are not Guarantors shall not exceed
$2,000,000 at any time.

            (h) Investments (including, without limitation, capital
contributions) in general or limited partnerships or other types of entities
(each a "venture") entered into by the Borrower or any

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<PAGE>

of its Subsidiaries with others in the ordinary course of business; provided
that (i) any such venture is engaged exclusively in oil and gas exploration,
development, production, processing and related activities, including
transportation, (ii) the interest in such venture is acquired in the ordinary
course of business and on fair and reasonable terms and (iii) such venture
interests acquired and capital contributions made (valued as of the date such
interest was acquired or the contribution made) do not exceed, in the aggregate
at any time outstanding an amount equal to $2,000,000.

            (i) subject to the limits in Section 9.06, Investments in direct
ownership interests in additional Oil and Gas Properties and gas gathering
systems related thereto or related to farm-out, farm-in, joint operating, joint
venture or area of mutual interest agreements, gathering systems, pipelines or
other similar arrangements which are usual and customary in the oil and gas
exploration and production business located within the geographic boundaries of
the United States of America.

            (j) loans or advances to employees, officers or directors in the
ordinary course of business of the Borrower or any of its Subsidiaries, in each
case only as permitted by applicable law, including Section 402 of the Sarbanes
Oxley Act of 2002, but in any event not to exceed $250,000 in the aggregate at
any time.

            (k) Investments in stock, obligations or securities received in
settlement of debts arising from Investments permitted under this Section 9.05
owing to the Borrower or any of its Subsidiaries as a result of a bankruptcy or
other insolvency proceeding of the obligor in respect of such debts or upon the
enforcement of any Lien in favor of the Borrower or any of its Subsidiaries;
provided that the Borrower shall give the Administrative Agent prompt written
notice in the event that the aggregate amount of all investments held at any one
time under this Section 9.05(i) exceeds $250,000.

      Section 9.06 Nature of Business. Neither the Borrower nor any of its
Subsidiaries will allow any material change to be made in the character of its
business as an independent oil and gas exploration and production company. The
Borrower will not, and will not permit any of its Subsidiaries to, operate its
business outside the geographical boundaries of the United States.

      Section 9.07 Limitation on Leases. Neither the Borrower nor any of its
Subsidiaries will create, incur, assume or suffer to exist any obligation for
the payment of rent or hire of Property of any kind whatsoever (real or personal
but excluding leases of Hydrocarbon Interests), under leases or lease agreements
which would cause the aggregate amount of all payments made by the Borrower and
its Subsidiaries pursuant to all such leases or lease agreements, including,
without limitation, any residual payments at the end of any lease, to exceed
$2,000,000 in any period of twelve consecutive calendar months during the life
of such leases.

      Section 9.08 Proceeds of Notes. The Borrower will not permit the proceeds
of the Notes to be used for any purpose other than those permitted by Section
7.21. Neither the Borrower nor any Person acting on behalf of the Borrower has
taken or will take any action which might cause any of the Loan Documents to
violate Regulations T, U or X or any other regulation of the Board or to violate
Section 7 of the Securities Exchange Act of 1934 or any rule or regulation
thereunder, in each case as now in effect or as the same may hereinafter be in
effect. If requested by the Administrative Agent, the Borrower will furnish to
the Administrative Agent and each Lender a statement to the foregoing effect in
conformity with the requirements of FR Form U-1 or such other form referred to
in Regulation U, Regulation T or Regulation X of the Board, as the case may be.

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<PAGE>

      Section 9.09 ERISA Compliance. The Borrower and its Subsidiaries will not
at any time:

            (a) engage in, or permit any ERISA Affiliate to engage in, any
transaction in connection with which the Borrower any of its Subsidiaries or any
ERISA Affiliate could be subjected to either a civil penalty assessed pursuant
to subsections (c), (i) or (l) of section 502 of ERISA or a tax imposed by
Chapter 43 of Subtitle D of the Code.

            (b) terminate, or permit any ERISA Affiliate to terminate, any Plan
in a manner, or take any other action with respect to any Plan, which could
result in any liability of the Borrower, any of its Subsidiaries or any ERISA
Affiliate to the PBGC.

            (c) fail to make, or permit any ERISA Affiliate to fail to make,
full payment when due of all amounts which, under the provisions of any Plan,
agreement relating thereto or applicable law, the Borrower, any of its
Subsidiaries or any ERISA Affiliate is required to pay as contributions thereto.

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

            (e) permit, or allow any ERISA Affiliate to permit, the actuarial
present value of the benefit liabilities under any Plan maintained by the
Borrower, any of its Subsidiaries or any ERISA Affiliate which is regulated
under Title IV of ERISA to exceed the current value of the assets (computed on a
plan termination basis in accordance with Title IV of ERISA) of such Plan
allocable to such benefit liabilities. The term "actuarial present value of the
benefit liabilities" shall have the meaning specified in section 4041 of ERISA.

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

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

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

            (i) contribute to or assume an obligation to contribute to, or
permit any ERISA Affiliate to contribute to or assume an obligation to
contribute to, any employee welfare benefit plan, as defined in section 3(1) of
ERISA, including, without limitation, any such plan maintained to provide
benefits to former employees of such entities, that may not be terminated by
such entities in their sole discretion at any time without any material
liability.

                                CREDIT AGREEMENT

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<PAGE>

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

      Section 9.10 Sale or Discount of Receivables. Except for receivables
obtained by the Borrower or any of its Subsidiaries out of the ordinary course
of business or the settlement of joint interest billing accounts in the ordinary
course of business or discounts granted to settle collection of accounts
receivable or the sale of defaulted accounts arising in the ordinary course of
business in connection with the compromise or collection thereof and not in
connection with any financing transaction, neither the Borrower nor any of its
Subsidiaries will discount or sell (with or without recourse) any of its notes
receivable or accounts receivable.

      Section 9.11 Mergers, Etc. Neither the Borrower nor any of its
Subsidiaries will merge into or with or consolidate with any other Person, or
sell, lease or otherwise dispose of (whether in one transaction or in a series
of transactions) all or substantially all of its Property to any other Person,
except that any Wholly-Owned Subsidiary may merge with any other Wholly-Owned
Subsidiary and that the Borrower may merge with any Wholly-Owned Subsidiary so
long as the Borrower is the survivor.

      Section 9.12 Sale of Properties. The Borrower will not, and will not
permit any of its Subsidiaries to, sell, assign, farm-out, convey or otherwise
transfer any Property except for: (a) the sale of Hydrocarbons in the ordinary
course of business; (b) farmouts of undeveloped acreage and assignments in
connection with such farmouts; (c) the sale or transfer of equipment that is no
longer necessary for the business of the Borrower or such Subsidiary or is
replaced by equipment of at least comparable value and use; (d) sales or other
dispositions (including Casualty Events) of Oil and Gas Properties or any
interest therein or Subsidiaries owning Oil and Gas Properties; provided that
(i) 100% of the consideration received in respect of such sale or other
disposition shall be cash, (ii) the consideration received in respect of such
sale or other disposition shall be equal to or greater than the fair market
value of the Oil and Gas Property, interest therein or Subsidiary subject of
such sale or other disposition (as reasonably determined by the board of
directors of the Borrower and, if requested by the Administrative Agent, the
Borrower shall deliver a certificate of a Responsible Officer of the Borrower
certifying to that effect), (iii) if such sale or other disposition of Oil and
Gas Property or Subsidiary owning Oil and Gas Properties included in the most
recently delivered Reserve Report during any period between two successive
Scheduled Redetermination Dates has a fair market value (as determined by the
Administrative Agent), individually or in the aggregate, in excess of
$5,000,000, the Borrowing Base shall be reduced, effective immediately upon such
sale or disposition, by an amount equal to the value, if any, assigned such
Property as determined by the Majority Lenders assigned such Property in the
most recently delivered Reserve Report and (iv) if any such sale or other
disposition is of a Subsidiary owning Oil and Gas Properties, such sale or other
disposition shall include all the Equity Interests of such Subsidiary; and (e)
sales and other dispositions of Properties not regulated by Section 9.12(a) to
(d) having a fair market value not to exceed $250,000 during any 12-month
period.

      Section 9.13 Environmental Matters. The Borrower will not, and will not
permit any Subsidiary to, violate or permit any of its Property to be in
violation of, or do anything or permit anything to be done which will subject
any such Property to any Remedial Work under any Environmental Laws, assuming
disclosure to the applicable Governmental Authority of all relevant facts,
conditions and circumstances, if any, pertaining to such Property where such
violations or remedial obligations could reasonably be expected to have a
Material Adverse Effect.

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<PAGE>

      Section 9.14 Transactions with Affiliates. The Borrower will not, and will
not permit any Subsidiary to, enter into any transaction, including, without
limitation, any purchase, sale, lease or exchange of Property or the rendering
of any service, with any Affiliate (other than the Guarantors and Wholly-Owned
Subsidiaries of the Borrower) unless such transactions are otherwise permitted
under this Agreement and are upon fair and reasonable terms no less favorable to
it than it would obtain in a comparable arm's length transaction with a Person
not an Affiliate.

      Section 9.15 Subsidiaries. The Borrower shall have no Subsidiaries other
than Wholly-Owned Subsidiaries. The Borrower shall not, and shall not permit its
Subsidiaries to, create or acquire any additional Subsidiary unless the Borrower
gives written notice to the Administrative Agent of such creation or acquisition
and complies with Section 8.14(b). The Borrower shall not, and shall not permit
any of its Subsidiaries to, sell, assign or otherwise dispose of any Equity
Interests in any of its Subsidiaries. The Borrower shall have no Foreign
Subsidiaries.

      Section 9.16 Negative Pledge Agreements; Dividend Restrictions. Neither
the Borrower nor any of its Subsidiaries will create, incur, assume or suffer to
exist any contract, agreement or understanding (other than this Agreement or the
Security Instruments) that in any way prohibits or restricts the granting,
conveying, creation or imposition of any Lien on any of its Property in favor of
the Administrative Agent and the Lenders or restricts any Subsidiary from paying
dividends or making distributions to the Borrower or any Guarantor, or which
requires the consent of or notice to other Persons in connection therewith.

      Section 9.17 Gas Imbalances, Take-or-Pay or Other Prepayments. The
Borrower will not, and will not permit any of its Subsidiaries to, allow gas
imbalances, take-or-pay or other prepayments with respect to the Oil and Gas
Properties of the Borrower or any of its Subsidiaries that would require the
Borrower or such Subsidiary to deliver, in the aggregate, two percent (2%) or
more of the monthly production of Hydrocarbons at some future time without then
or thereafter receiving full payment therefor.

      Section 9.18 Swap Agreements. Neither the Borrower nor any of its
Subsidiaries will enter into any Swap Agreements with any Person other than (a)
Swap Agreements in respect of commodities (i) with an Approved Counterparty,
(ii) the notional volumes for which (when aggregated with other commodity Swap
Agreements then in effect other than basis differential swaps on volumes already
hedged pursuant to other Swap Agreements) do not exceed, as of the date such
Swap Agreement is executed, 85% of the reasonably anticipated projected
production from Proved Properties for each month during the period during which
such Swap Agreement is in effect for each of crude oil and natural gas,
calculated separately, for each of the next twenty-four (24) months succeeding
the execution of such Swap Agreement and 70% of the reasonably anticipated
projected production from Proved Properties for each month during the period
during which such Swap Agreement is in effect for each of crude oil and natural
gas, calculated separately, for each month thereafter, and (iii) the notional
volumes for which do not exceed the current net monthly production (regardless
of projected production levels) at the time such Swap Agreement is executed,
calculated separately for each of crude oil and natural gas, and (b) Swap
Agreements in respect of interest rates with an Approved Counterparty, which
effectively convert interest rates from floating to fixed, the notional amounts
of which (when aggregated with all other Swap Agreements of the Borrower and its
Subsidiaries then in effect effectively converting interest rates from floating
to fixed) do not exceed 75% of the then outstanding principal amount of the
Borrower's Debt for borrowed money which bears interest at a floating rate. In
no event shall any Swap Agreement contain any

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<PAGE>

requirement, agreement or covenant for the Borrower or any of its Subsidiaries
to post collateral or margin to secure their obligations under such Swap
Agreement or to cover market exposures.

      Section 9.19 Tax Status as Partnership; Operating Agreements. The Borrower
shall not alter its status as a partnership for purposes of United States
Federal Income taxes. The Borrower shall not, and shall not permit any
Subsidiary to, amend or modify any provision of its articles, bylaws, or
partnership or limited liability company organization or operating documents or
agreements, or any agreements with Affiliates of the type referred to in Section
9.14, if such amendment or modification could reasonably be expected to have a
Material Adverse Effect.

                                   ARTICLE X
                           EVENTS OF DEFAULT; REMEDIES

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

            (a) the Borrower shall fail to pay any principal of any Loan or any
reimbursement obligation in respect of any LC Disbursement when and as the same
shall become due and payable, whether at the due date thereof or at a date fixed
for prepayment thereof or otherwise.

            (b) the Borrower shall fail to pay any interest on any Loan or any
fee or any other amount (other than an amount referred to in Section 10.01(a))
payable under any Loan Document, when and as the same shall become due and
payable, and such failure shall continue unremedied for a period of three
Business Days.

            (c) any representation or warranty made or deemed made by or on
behalf of the Borrower or any of its Subsidiaries in or in connection with any
Loan Document or any amendment or modification of any Loan Document or waiver
under such Loan Document, or in any report, certificate, financial statement or
other document furnished pursuant to or in connection with any Loan Document or
any amendment or modification thereof or waiver thereunder, shall prove to have
been incorrect when made or deemed made.

            (d) the Borrower or any of its Subsidiaries shall fail to observe or
perform any covenant, condition or agreement contained in, Section 8.01(m),
Section 8.01(n), Section 8.02, Section 8.03 or in ARTICLE IX.

            (e) the Borrower or any of its Subsidiaries shall fail to observe or
perform any covenant, condition or agreement contained in this Agreement (other
than those specified in Section 10.01(a), Section 10.01(b) or Section 10.01(d))
or any other Loan Document, and such failure shall continue unremedied for a
period of 30 days after the earlier to occur of (i) notice thereof from the
Administrative Agent to the Borrower (which notice will be given at the request
of any Lender) or (ii) a Responsible Officer of the Borrower or any of its
Subsidiaries otherwise becoming aware of such default.

            (f) the Borrower or any of its Subsidiaries shall fail to make any
payment (whether of principal or interest and regardless of amount) in respect
of any Material Indebtedness, when and as the same shall become due and payable
(after giving effect to any applicable notice and cure period).

                                CREDIT AGREEMENT

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<PAGE>

            (g) any event or condition occurs (after giving effect to any notice
or cure period) that results in any Material Indebtedness becoming due prior to
its scheduled maturity or that enables or permits (with or without the giving of
notice, the lapse of time or both) the holder or holders of any Material
Indebtedness or any trustee or agent on its or their behalf to cause any
Material Indebtedness to become due, or to require the Redemption thereof or any
offer to Redeem to be made in respect thereof, prior to its scheduled maturity
or require the Borrower or any of its Subsidiaries to make an offer in respect
thereof.

            (h) an involuntary proceeding shall be commenced or an involuntary
petition shall be filed seeking (i) liquidation, reorganization or other relief
in respect of the Borrower or any of its Subsidiaries or its debts, or of a
substantial part of its assets, under any Federal, state or foreign bankruptcy,
insolvency, receivership or similar law now or hereafter in effect or (ii) the
appointment of a receiver, trustee, custodian, sequestrator, conservator or
similar official for the Borrower or any of its Subsidiaries or for a
substantial part of its assets, and, in any such case, such proceeding or
petition shall continue undismissed for 60 days or an order or decree approving
or ordering any of the foregoing shall be entered.

            (i) the Borrower or any of its Subsidiaries shall (i) voluntarily
commence any proceeding or file any petition seeking liquidation, reorganization
or other relief under any Federal, state or foreign bankruptcy, insolvency,
receivership or similar law now or hereafter in effect, (ii) consent to the
institution of, or fail to contest in a timely and appropriate manner, any
proceeding or petition described in Section 10.01(h), (iii) apply for or consent
to the appointment of a receiver, trustee, custodian, sequestrator, conservator
or similar official for the Borrower or any of its Subsidiaries or for a
substantial part of its assets, (iv) file an answer admitting the material
allegations of a petition filed against it in any such proceeding, (v) make a
general assignment for the benefit of creditors or (vi) take any action for the
purpose of effecting any of the foregoing; or any member of the Borrower shall
make any request or take any action for the purpose of calling a meeting of the
members of the Borrower to consider a resolution to dissolve and wind-up the
Borrower's affairs.

            (j) the Borrower or any of its Subsidiaries shall become unable,
admit in writing its inability or fail generally to pay its debts as they become
due.

            (k) (i) one or more judgments for the payment of money in an
aggregate amount in excess of $1,000,000 (to the extent not covered by
independent third party insurance provided by insurers of the highest claims
paying rating or financial strength as to which the insurer does not dispute
coverage and is not subject to an insolvency proceeding) or (ii) any one or more
non monetary judgments that have, or could reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect, shall be rendered
against the Borrower, any of its Subsidiaries or any combination thereof and the
same shall remain undischarged for a period of 30 consecutive days during which
execution shall not be effectively stayed, or any action shall be legally taken
by a judgment creditor to attach or levy upon any assets of the Borrower or any
of its Subsidiaries to enforce any such judgment.

            (l) the Loan Documents after delivery thereof shall for any reason,
except to the extent permitted by the terms thereof, cease to be in full force
and effect and valid, binding and enforceable in accordance with their terms
against the Borrower or a Guarantor party thereto or shall be repudiated by
them, or cease to create a valid and perfected Lien of the priority required
thereby

                                CREDIT AGREEMENT

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<PAGE>

on any of the collateral purported to be covered thereby, except to the extent
permitted by the terms of this Agreement, or the Borrower or any of its
Subsidiaries shall so state in writing.

            (m) an ERISA Event shall have occurred that, in the opinion of the
Majority Lenders, when taken together with all other ERISA Events that have
occurred, could reasonably be expected to result in liability of the Borrower
and its Subsidiaries in an aggregate amount exceeding $1,000,000 in any year.

            (n) a Change in Control shall occur.

      Section 10.02 Remedies.

            (a) In the case of an Event of Default other than one described in
Section 10.01(h), Section 10.01(i) or Section 10.01(j), at any time thereafter
during the continuance of such Event of Default, the Administrative Agent, at
the request of the Majority Lenders, shall, by notice to the Borrower, take
either or both of the following actions, at the same or different times: (i)
terminate the Commitments, and thereupon the Commitments shall terminate
immediately, and (ii) declare the Notes and the Loans then outstanding to be due
and payable in whole (or in part, in which case any principal not so declared to
be due and payable may thereafter be declared to be due and payable), and
thereupon the principal of the Loans so declared to be due and payable, together
with accrued interest thereon and all fees and other obligations of the Borrower
and the Guarantors accrued hereunder and under the Notes and the other Loan
Documents (including, without limitation, the payment of cash collateral to
secure the LC Exposure as provided in Section 2.08(j)), shall become due and
payable immediately, without presentment, demand, protest, notice of intent to
accelerate, notice of acceleration or other notice of any kind, all of which are
hereby waived by the Borrower and each Guarantor; and in case of an Event of
Default described in Section 10.01(h), Section 10.01(i) or Section 10.01(j), the
Commitments shall automatically terminate and the Notes and the principal of the
Loans then outstanding, together with accrued interest thereon and all fees and
the other obligations of the Borrower and the Guarantors accrued hereunder and
under the Notes and the other Loan Documents (including, without limitation, the
payment of cash collateral to secure the LC Exposure as provided in Section
2.08(j)), shall automatically become due and payable, without presentment,
demand, protest or other notice of any kind, all of which are hereby waived by
the Borrower and each Guarantor.

            (b) In the case of the occurrence of an Event of Default, the
Administrative Agent and the Lenders will have all other rights and remedies
available at law and equity.

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

      Section 10.03 Disposition of Proceeds. The Security Instruments contain an
assignment by the Borrower and/or the Guarantors unto and in favor of the
Administrative Agent for the benefit of the Lenders of all of the Borrower's or
each Guarantor's interest in and to production and all

                                CREDIT AGREEMENT

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<PAGE>

proceeds attributable thereto which may be produced from or allocated to the
Mortgaged Property. The Security Instruments further provide in general for the
application of such proceeds to the satisfaction of the Indebtedness and other
obligations described therein and secured thereby. Notwithstanding the
assignment contained in such Security Instruments, except after the occurrence
and during the continuance of an Event of Default, (a) the Administrative Agent
and the Lenders agree that they will neither notify the purchaser or purchasers
of such production nor take any other action to cause such proceeds to be
remitted to the Administrative Agent or the Lenders, but the Lenders will
instead permit such proceeds to be paid to the Borrower and its Subsidiaries and
(b) the Lenders hereby authorize the Administrative Agent to take such actions
as may be necessary to cause such proceeds to be paid to the Borrower and/or its
Subsidiaries.

                                   ARTICLE XI
                            THE ADMINISTRATIVE AGENT

      Section 11.01 Appointment; Powers. Each of the Lenders and each Issuing
Bank hereby irrevocably appoints the Administrative Agent as its agent and
authorizes the Administrative Agent to take such actions on its behalf and to
exercise such powers as are delegated to the Administrative Agent by the terms
hereof and the other Loan Documents, together with such actions and powers as
are reasonably incidental thereto.

      Section 11.02 Duties and Obligations of Administrative Agent. The
Administrative Agent shall have no duties or obligations except those expressly
set forth in the Loan Documents. Without limiting the generality of the
foregoing, (a) the Administrative Agent shall not be subject to any fiduciary or
other implied duties, regardless of whether a Default has occurred and is
continuing (the use of the term "agent" herein and in the other Loan Documents
with reference to the Administrative Agent is not intended to connote any
fiduciary or other implied (or express) obligations arising under agency
doctrine of any applicable law; rather, such term is used merely as a matter of
market custom, and is intended to create or reflect only an administrative
relationship between independent contracting parties), (b) the Administrative
Agent shall have no duty to take any discretionary action or exercise any
discretionary powers, except as provided in Section 11.03, and (c) except as
expressly set forth herein, the Administrative Agent shall have no duty to
disclose, and shall not be liable for the failure to disclose, any information
relating to the Borrower or any of its Subsidiaries that is communicated to or
obtained by the bank serving as Administrative Agent or any of its Affiliates in
any capacity. The Administrative Agent shall be deemed not to have knowledge of
any Default unless and until written notice thereof is given to the
Administrative Agent by the Borrower or a Lender, and shall not be responsible
for or have any duty to ascertain or inquire into (i) any statement, warranty or
representation made in or in connection with this Agreement or any other Loan
Document, (ii) the contents of any certificate, report or other document
delivered hereunder or under any other Loan Document or in connection herewith
or therewith, (iii) the performance or observance of any of the covenants,
agreements or other terms or conditions set forth herein or in any other Loan
Document, (iv) the validity, enforceability, effectiveness or genuineness of
this Agreement, any other Loan Document or any other agreement, instrument or
document, (v) the satisfaction of any condition set forth in ARTICLE VI or
elsewhere herein, other than to confirm receipt of items expressly required to
be delivered to the Administrative Agent, (vi) the existence, value, perfection
or priority of any collateral security or the financial or other condition of
the Borrower and its Subsidiaries or any other obligor or guarantor, or (vii)
any failure by the Borrower or any other Person (other than itself) to perform
any of its obligations hereunder or under any other Loan Document or the
performance or observance of any covenants, agreements or other terms or
conditions set forth herein or therein. For purposes of determining compliance
with the conditions

                                CREDIT AGREEMENT

                                       68

<PAGE>

specified in ARTICLE VI, each Lender shall be deemed to have consented to,
approved or accepted or to be satisfied with, each document or other matter
required thereunder to be consented to or approved by or acceptable or
satisfactory to a Lender unless the Administrative Agent shall have received
written notice from such Lender prior to the proposed closing date specifying
its objection thereto.

      Section 11.03 Action by Agent. The Administrative Agent shall have no duty
to take any discretionary action or exercise any discretionary powers, except
discretionary rights and powers expressly contemplated hereby or by the other
Loan Documents that the Administrative Agent is required to exercise in writing
as directed by the Majority Lenders (or such other number or percentage of the
Lenders as shall be necessary under the circumstances as provided in Section
12.02) and in all cases the Administrative Agent shall be fully justified in
failing or refusing to act hereunder or under any other Loan Documents unless it
shall (a) receive written instructions from the Majority Lenders or the Lenders,
as applicable, (or such other number or percentage of the Lenders as shall be
necessary under the circumstances as provided in Section 12.02) specifying the
action to be taken and (b) be indemnified to its satisfaction by the Lenders
against any and all liability and expenses which may be incurred by it by reason
of taking or continuing to take any such action. The instructions as aforesaid
and any action taken or failure to act pursuant thereto by the Administrative
Agent shall be binding on all of the Lenders. If a Default has occurred and is
continuing, then the Administrative Agent shall take such action with respect to
such Default as shall be directed by the requisite Lenders in the written
instructions (with indemnities) described in this Section 11.03, provided that,
unless and until the Administrative Agent shall have received such directions,
the Administrative Agent may (but shall not be obligated to) take such action,
or refrain from taking such action, with respect to such Default as it shall
deem advisable in the best interests of the Lenders. In no event, however, shall
the Administrative Agent be required to take any action which exposes the
Administrative Agent to personal liability or which is contrary to this
Agreement, the Loan Documents or applicable law. If a Default has occurred and
is continuing, the Syndication Agent shall have no obligation to perform any act
in respect thereof. No Agent shall be liable for any action taken or not taken
by it with the consent or at the request of the Majority Lenders or the Lenders
(or such other number or percentage of the Lenders as shall be necessary under
the circumstances as provided in Section 12.02), and otherwise the
Administrative Agent shall not be liable for any action taken or not taken by it
hereunder or under any other Loan Document or under any other document or
instrument referred to or provided for herein or therein or in connection
herewith or therewith INCLUDING ITS OWN ORDINARY NEGLIGENCE, except for its own
gross negligence or willful misconduct.

      Section 11.04 Reliance by Agent. Each Agent shall be entitled to rely
upon, and shall not incur any liability for relying upon, any notice, request,
certificate, consent, statement, instrument, document or other writing believed
by it to be genuine and to have been signed or sent by the proper Person. Each
Agent also may rely upon any statement made to it orally or by telephone and
believed by it to be made by the proper Person, and shall not incur any
liability for relying thereon and each of the Borrower, the Lenders and each
Issuing Bank hereby waives the right to dispute such Agent's record of such
statement, except in the case of gross negligence or willful misconduct by such
Agent. Each Agent may consult with legal counsel (who may be counsel for the
Borrower), independent accountants and other experts selected by it, and shall
not be liable for any action taken or not taken by it in accordance with the
advice of any such counsel, accountants or experts. The Agents may deem and
treat the payee of any Note as the holder thereof for all purposes hereof unless
and until a written notice of the assignment or transfer thereof permitted
hereunder shall have been filed with the Administrative Agent.

                                CREDIT AGREEMENT

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<PAGE>

      Section 11.05 Subagents. The Administrative Agent may perform any and all
its duties and exercise its rights and powers by or through any one or more
sub-agents appointed by the Administrative Agent. The Administrative Agent and
any such sub-agent may perform any and all its duties and exercise its rights
and powers through their respective Related Parties. The exculpatory provisions
of the preceding Sections of this ARTICLE XI shall apply to any such sub-agent
and to the Related Parties of the Administrative Agent and any such sub-agent,
and shall apply to their respective activities in connection with the
syndication of the credit facilities provided for herein as well as activities
as Agent.

      Section 11.06 Resignation or Removal of Agents. Subject to the appointment
and acceptance of a successor Agent as provided in this Section 11.06, any Agent
may resign at any time by notifying the Lenders, each Issuing Bank and the
Borrower, and any Agent may be removed at any time with or without cause by the
Majority Lenders. Upon any such resignation or removal, the Majority Lenders
shall have the right, in consultation with the Borrower, to appoint a successor.
If no successor shall have been so appointed by the Majority Lenders and shall
have accepted such appointment within 30 days after the retiring Agent gives
notice of its resignation or removal of the retiring Agent, then the retiring
Agent may, on behalf of the Lenders and each Issuing Bank, appoint a successor
Agent. Upon the acceptance of its appointment as Agent hereunder by a successor,
such successor shall succeed to and become vested with all the rights, powers,
privileges and duties of the retiring Agent, and the retiring Agent shall be
discharged from its duties and obligations hereunder. The fees payable by the
Borrower to a successor Agent shall be the same as those payable to its
predecessor unless otherwise agreed between the Borrower and such successor.
After the Agent's resignation hereunder, the provisions of this ARTICLE XI and
Section 12.03 shall continue in effect for the benefit of such retiring Agent,
its sub-agents and their respective Related Parties in respect of any actions
taken or omitted to be taken by any of them while it was acting as Agent.

      Section 11.07 Agents and Lenders. Each bank serving as an Agent hereunder
shall have the same rights and powers in its capacity as a Lender as any other
Lender and may exercise the same as though it were not an Agent, and such bank
and its Affiliates may accept deposits from, lend money to and generally engage
in any kind of business with the Borrower or any Subsidiary or other Affiliate
thereof as if it were not an Agent hereunder.

      Section 11.08 No Reliance. Each Lender acknowledges that it has,
independently and without reliance upon the Administrative Agent, any other
Agent or any other Lender and based on such documents and information as it has
deemed appropriate, made its own credit analysis and decision to enter into this
Agreement and each other Loan Document to which it is a party. Each Lender also
acknowledges that it will, independently and without reliance upon the
Administrative Agent, any other Agent or any other Lender and based on such
documents and information as it shall from time to time deem appropriate,
continue to make its own decisions in taking or not taking action under or based
upon this Agreement, any other Loan Document, any related agreement or any
document furnished hereunder or thereunder. The Agents shall not be required to
keep themselves informed as to the performance or observance by the Borrower or
any of its Subsidiaries of this Agreement, the Loan Documents or any other
document referred to or provided for herein or to inspect the Properties or
books of the Borrower or its Subsidiaries. Except for notices, reports and other
documents and information expressly required to be furnished to the Lenders by
the Administrative Agent hereunder, no Agent and no Arranger shall have any duty
or responsibility to provide any Lender with any credit or other information
concerning the affairs, financial condition or business of the Borrower (or any
of its Affiliates) which may come into the possession of such Agent or any of
its Affiliates. In this regard, each Lender acknowledges that Vinson & Elkins
L.L.P. is

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<PAGE>

acting in this transaction as special counsel to the Administrative Agent only,
except to the extent otherwise expressly stated in any legal opinion or any Loan
Document. Each other party hereto will consult with its own legal counsel to the
extent that it deems necessary in connection with the Loan Documents and the
matters contemplated therein.

      Section 11.09 Administrative Agent May File Proofs of Claim. In case of
the pendency of any receivership, insolvency, liquidation, bankruptcy,
reorganization, arrangement, adjustment, composition or other judicial
proceeding relative to the Borrower or any of its Subsidiaries, the
Administrative Agent (irrespective of whether the principal of any Loan shall
then be due and payable as herein expressed or by declaration or otherwise and
irrespective of whether the Administrative Agent shall have made any demand on
the Borrower) shall be entitled and empowered, by intervention in such
proceeding or otherwise:

            (a) to file and prove a claim for the whole amount of the principal
and interest owing and unpaid in respect of the Loans and all other Indebtedness
that are owing and unpaid and to file such other documents as may be necessary
or advisable in order to have the claims of the Lenders and the Administrative
Agent (including any claim for the reasonable compensation, expenses,
disbursements and advances of the Lenders and the Administrative Agent and their
respective agents and counsel and all other amounts due the Lenders and the
Administrative Agent under Section 12.03) allowed in such judicial proceeding;
and

            (b) to collect and receive any monies or other property payable or
deliverable on any such claims and to distribute the same;

and any custodian, receiver, assignee, trustee, liquidator, sequestrator or
other similar official in any such judicial proceeding is hereby authorized by
each Lender to make such payments to the Administrative Agent and, in the event
that the Administrative Agent shall consent to the making of such payments
directly to the Lenders, to pay to the Administrative Agent any amount due for
the reasonable compensation, expenses, disbursements and advances of the
Administrative Agent and its agents and counsel, and any other amounts due the
Administrative Agent under Section 12.03.

Nothing contained herein shall be deemed to authorize the Administrative Agent
to authorize or consent to or accept or adopt on behalf of any Lender any plan
of reorganization, arrangement, adjustment or composition affecting the
Indebtedness or the rights of any Lender or to authorize the Administrative
Agent to vote in respect of the claim of any Lender in any such proceeding.

      Section 11.10 Authority of Administrative Agent to Release Collateral and
Liens. Each Lender and each Issuing Bank hereby authorizes the Administrative
Agent to release any collateral that is permitted to be sold or released
pursuant to the terms of the Loan Documents. Each Lender and each Issuing Bank
hereby authorizes the Administrative Agent to execute and deliver to the
Borrower, at the Borrower's sole cost and expense, any and all releases of
Liens, termination statements, assignments or other documents reasonably
requested by the Borrower in connection with any sale or other disposition of
Property to the extent such sale or other disposition is permitted by the terms
of Section 9.12 or is otherwise authorized by the terms of the Loan Documents.

      Section 11.11 The Arrangers and the Syndication Agent. The Arrangers and
the Syndication Agent shall have no duties, responsibilities or liabilities
under this Agreement and the other Loan Documents other than its duties,
responsibilities and liabilities in its capacity as a Lender hereunder to the
extent it is a party to this Agreement as a Lender.

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<PAGE>

                                  ARTICLE XII
                                  MISCELLANEOUS

      Section 12.01 Notices.

            (a) Except in the case of notices and other communications expressly
permitted to be given by telephone (and subject to Section 12.01(b)), all
notices and other communications provided for herein shall be in writing and
shall be delivered by hand or overnight courier service, mailed by certified or
registered mail or sent by telecopy, as follows:

                  (i)   if to the Borrower, to it at

                        Linn Energy, LLC
                        600 Travis Street, Suite 6910
                        Houston, TX 77002

                        Attention: Kolja Rockov
                        Telephone: 713-223-0880 x1101
                        Fax: 713-223-0888
                        E-Mail: kr@linnenergy.com

                        with a copy to:

                        Linn Energy, LLC
                        650 Washington Road, 8th Floor
                        Pittsburgh, Pennsylvania 15228

                        Attention:  Michael Linn/Chip Keddie
                        Telephone: 412-440-1400
                        Fax:  412-440-1499
                        E-mail: mcl@linnenergy.com; rpk@linnenergy.com

                  (ii) if to the Administrative Agent, to it at

                        919 Third Avenue
                        New York, New York 10022
                        Attention: Dina Wilson, Loan Assistant
                        Telecopy:  212-841-2683

                        with a copy to the Administrative Agent at:

                        1200 Smith Street, Suite 3100
                        Houston, Texas  77002
                        Attention:  Betsy Jocher
                        Telecopy: 713-659-6915

                  (iii) if to any other Lender, in its capacity as such, or any
other Lender in its capacity as an Issuing Bank, to it at its address (or
telecopy number) set forth in its Administrative Questionnaire.

                                CREDIT AGREEMENT

                                       72
<PAGE>

            (b) Notices and other communications to the Lenders hereunder may be
delivered or furnished by electronic communications pursuant to procedures
approved by the Administrative Agent; provided that the foregoing shall not
apply to notices pursuant to ARTICLE II, ARTICLE III, ARTICLE IV and ARTICLE V
unless otherwise agreed by the Administrative Agent and the applicable Lender.
The Administrative Agent or the Borrower may, in its discretion, agree to accept
notices and other communications to it hereunder by electronic communications
pursuant to procedures approved by it; provided that approval of such procedures
may be limited to particular notices or communications.

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

      Section 12.02 Waivers; Amendments

            (a) No failure on the part of the Administrative Agent, any other
Agent, any Issuing Bank or any Lender to exercise and no delay in exercising,
and no course of dealing with respect to, any right, power or privilege, or any
abandonment or discontinuance of steps to enforce such right, power or
privilege, under any of the Loan Documents shall operate as a waiver thereof,
nor shall any single or partial exercise of any right, power or privilege under
any of the Loan Documents preclude any other or further exercise thereof or the
exercise of any other right, power or privilege. The rights and remedies of the
Administrative Agent, any other Agent, each Issuing Bank and the Lenders
hereunder and under the other Loan Documents are cumulative and are not
exclusive of any rights or remedies that they would otherwise have. No waiver of
any provision of this Agreement or any other Loan Document or consent to any
departure by the Borrower therefrom shall in any event be effective unless the
same shall be permitted by Section 12.02(b), and then such waiver or consent
shall be effective only in the specific instance and for the purpose for which
given. Without limiting the generality of the foregoing, the making of a Loan or
issuance of a Letter of Credit shall not be construed as a waiver of any
Default, regardless of whether the Administrative Agent, any other Agent, any
Lender or any Issuing Bank may have had notice or knowledge of such Default at
the time.

            (b) Neither this Agreement nor any provision hereof nor any Security
Instrument nor any provision thereof may be waived, amended or modified except
pursuant to an agreement or agreements in writing entered into by the Borrower
and the Majority Lenders or by the Borrower and the Administrative Agent with
the consent of the Majority Lenders; provided that no such agreement shall (i)
increase the Maximum Credit Amount of any Lender without the written consent of
such Lender, (ii) increase the Borrowing Base without the written consent of
each Lender, decrease or maintain the Borrowing Base without the consent of the
Majority Lenders, or modify in any manner Section 2.07 without the consent of
each Lender, (iii) reduce the principal amount of any Loan or LC Disbursement or
reduce the rate of interest thereon, or reduce any fees payable hereunder, or
reduce any other Indebtedness hereunder or under any other Loan Document,
without the written

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<PAGE>

consent of each Lender affected thereby, (iv) postpone the scheduled date of
payment of the principal amount of any Loan or LC Disbursement, or any interest
thereon, or any fees payable hereunder, or any other Indebtedness hereunder or
under any other Loan Document, or reduce the amount of, waive or excuse any such
payment, or postpone or extend the Termination Date or the Maturity Date without
the written consent of each Lender affected thereby, (v) change Section 4.01(b)
or Section 4.01(c) in a manner that would alter the pro rata sharing of payments
required thereby, without the written consent of each Lender, (vi) waive or
amend Section 6.01, Section 10.02(c) or Section 8.14 or change the definition of
the terms "Domestic Subsidiary", "Foreign Subsidiary", "Material Domestic
Subsidiary" or "Subsidiary", without the written consent of each Lender, (vii)
release any Guarantor (except as set forth in the Guaranty Agreement), release
all or substantially all of the collateral (other than as provided in Section
11.09), or reduce the percentage set forth in Section 8.14(a) to less than 80%,
without the written consent of each Lender, or (viii) change any of the
provisions of this Section 12.02(b) or the definition of "Majority Lenders" or
any other provision hereof specifying the number or percentage of Lenders
required to waive, amend or modify any rights hereunder or under any other Loan
Documents or make any determination or grant any consent hereunder or any other
Loan Documents, without the written consent of each Lender; provided further
that no such agreement shall amend, modify or otherwise affect the rights or
duties of the Administrative Agent, any other Agent, or any Issuing Bank
hereunder or under any other Loan Document without the prior written consent of
the Administrative Agent, such other Agent or such Issuing Bank, as the case may
be. Notwithstanding the foregoing, any supplement to Schedule 7.14
(Subsidiaries) shall be effective simply by delivering to the Administrative
Agent a supplemental schedule clearly marked as such and, upon receipt, the
Administrative Agent will promptly deliver a copy thereof to the Lenders.

      Section 12.03 Expenses, Indemnity; Damage Waiver.

            (a) The Borrower shall pay (i) all reasonable out-of-pocket expenses
incurred by the Administrative Agent and its Affiliates, including, without
limitation, the reasonable fees, charges and disbursements of counsel and other
outside consultants for the Administrative Agent, the reasonable travel,
photocopy, mailing, courier, telephone and other similar expenses and, in
connection with the syndication of the credit facilities provided for herein,
the preparation, negotiation, execution, delivery and administration (both
before and after the execution hereof and including advice of counsel to the
Administrative Agent as to the rights and duties of the Administrative Agent and
the Lenders with respect thereto) of this Agreement and the other Loan Documents
and any amendments, modifications or waivers of or consents related to the
provisions hereof or thereof (whether or not the transactions contemplated
hereby or thereby shall be consummated), (ii) all out-of-pocket costs, expenses,
Taxes, assessments and other charges incurred by any Agent or any Lender in
connection with any filing, registration, recording or perfection of any
security interest contemplated by this Agreement or any Security Instrument or
any other document referred to therein, (iii) all reasonable out-of-pocket
expenses incurred by each Issuing Bank in connection with the issuance,
amendment, renewal or extension of any Letter of Credit issued by such Issuing
Bank or any demand for payment thereunder, (iv) all out-of-pocket expenses
incurred by any Agent, any Issuing Bank or any Lender, including the fees,
charges and disbursements of any counsel for any Agent, any Issuing Bank or any
Lender, in connection with the enforcement or protection of its rights in
connection with this Agreement or any other Loan Document, including its rights
under this Section 12.03, or in connection with the Loans made or Letters of
Credit issued hereunder, including, without limitation, all such out-of-pocket
expenses incurred during any workout, restructuring or negotiations in respect
of such Loans or Letters of Credit.

            (b) THE BORROWER SHALL INDEMNIFY EACH AGENT, THE ARRANGERS, EACH
ISSUING BANK AND EACH LENDER, AND EACH RELATED PARTY OF ANY OF THE FOREGOING
PERSONS (EACH SUCH PERSON BEING CALLED AN "INDEMNITEE") AGAINST, AND HOLD EACH
INDEMNITEE HARMLESS FROM, ANY AND ALL LOSSES, CLAIMS, DAMAGES, LIABILITIES AND
RELATED EXPENSES, INCLUDING THE FEES, CHARGES AND DISBURSEMENTS OF ANY COUNSEL
FOR ANY INDEMNITEE, INCURRED BY OR ASSERTED AGAINST ANY INDEMNITEE ARISING OUT

                                CREDIT AGREEMENT

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<PAGE>

OF, IN CONNECTION WITH, OR AS A RESULT OF (i) THE EXECUTION OR DELIVERY OF THIS
AGREEMENT OR ANY OTHER LOAN DOCUMENT OR ANY AGREEMENT OR INSTRUMENT CONTEMPLATED
HEREBY OR THEREBY, THE PERFORMANCE BY THE PARTIES HERETO OR THE PARTIES TO ANY
OTHER LOAN DOCUMENT OF THEIR RESPECTIVE OBLIGATIONS HEREUNDER OR THEREUNDER OR
THE CONSUMMATION OF THE TRANSACTIONS CONTEMPLATED HEREBY OR BY ANY OTHER LOAN
DOCUMENT, (ii) THE FAILURE OF THE BORROWER OR ANY OF ITS SUBSIDIARIES TO COMPLY
WITH THE TERMS OF ANY LOAN DOCUMENT, INCLUDING THIS AGREEMENT, OR WITH ANY
GOVERNMENTAL REQUIREMENT, (iii) ANY INACCURACY OF ANY REPRESENTATION OR ANY
BREACH OF ANY WARRANTY OR COVENANT OF THE BORROWER OR ANY GUARANTOR SET FORTH IN
ANY OF THE LOAN DOCUMENTS OR ANY INSTRUMENTS, DOCUMENTS OR CERTIFICATIONS
DELIVERED IN CONNECTION THEREWITH, (iv) ANY LOAN OR LETTER OF CREDIT OR THE USE
OF THE PROCEEDS THEREFROM, INCLUDING, WITHOUT LIMITATION, (A) ANY REFUSAL BY ANY
ISSUING BANK TO HONOR A DEMAND FOR PAYMENT UNDER A LETTER OF CREDIT ISSUED BY
SUCH ISSUING BANK IF THE DOCUMENTS PRESENTED IN CONNECTION WITH SUCH DEMAND DO
NOT STRICTLY COMPLY WITH THE TERMS OF SUCH LETTER OF CREDIT, OR (B) THE PAYMENT
OF A DRAWING UNDER ANY LETTER OF CREDIT NOTWITHSTANDING THE NON-COMPLIANCE,
NON-DELIVERY OR OTHER IMPROPER PRESENTATION OF THE DOCUMENTS PRESENTED IN
CONNECTION THEREWITH, (v) ANY OTHER ASPECT OF THE LOAN DOCUMENTS, (vi) THE
OPERATIONS OF THE BUSINESS OF THE BORROWER AND ITS SUBSIDIARIES BY THE BORROWER
AND ITS SUBSIDIARIES, (vii) ANY ASSERTION THAT THE LENDERS WERE NOT ENTITLED TO
RECEIVE THE PROCEEDS RECEIVED PURSUANT TO THE SECURITY INSTRUMENTS, (viii) ANY
ENVIRONMENTAL LAW APPLICABLE TO THE BORROWER OR ITS SUBSIDIARIES OR ANY OF THEIR
PROPERTIES, INCLUDING WITHOUT LIMITATION, THE PRESENCE, GENERATION, STORAGE,
RELEASE, THREATENED RELEASE, USE, TRANSPORT, DISPOSAL, ARRANGEMENT OF DISPOSAL
OR TREATMENT OF OIL, OIL AND GAS WASTES, SOLID WASTES OR HAZARDOUS SUBSTANCES ON
ANY OF THEIR PROPERTIES, (ix) THE BREACH OR NON-COMPLIANCE BY THE BORROWER OR
ANY OF ITS SUBSIDIARIES WITH ANY ENVIRONMENTAL LAW APPLICABLE TO THE BORROWER OR
ANY OF ITS SUBSIDIARIES, (x) THE PAST OWNERSHIP BY THE BORROWER OR ANY OF ITS
SUBSIDIARIES OF ANY OF THEIR PROPERTIES OR PAST ACTIVITY ON ANY OF THEIR
PROPERTIES WHICH, THOUGH LAWFUL AND FULLY PERMISSIBLE AT THE TIME, COULD RESULT
IN PRESENT LIABILITY, (xi) THE PRESENCE, USE, RELEASE, STORAGE, TREATMENT,
DISPOSAL, GENERATION, THREATENED RELEASE, TRANSPORT, ARRANGEMENT FOR TRANSPORT
OR ARRANGEMENT FOR DISPOSAL OF OIL, OIL AND GAS WASTES, SOLID WASTES OR
HAZARDOUS SUBSTANCES ON OR AT ANY OF THE PROPERTIES OWNED OR OPERATED BY THE
BORROWER OR ANY OF ITS SUBSIDIARIES OR ANY ACTUAL OR ALLEGED PRESENCE OR RELEASE
OF HAZARDOUS MATERIALS ON OR FROM ANY PROPERTY OWNED OR OPERATED BY THE BORROWER
OR ANY OF ITS SUBSIDIARIES, (xii) ANY ENVIRONMENTAL LIABILITY RELATED IN ANY WAY
TO THE BORROWER OR ANY OF ITS SUBSIDIARIES, OR (xiii) ANY OTHER ENVIRONMENTAL,
HEALTH OR SAFETY CONDITION IN CONNECTION WITH THE LOAN DOCUMENTS, OR (xiv) ANY
ACTUAL OR PROSPECTIVE CLAIM, LITIGATION, INVESTIGATION OR PROCEEDING RELATING TO
ANY OF THE FOREGOING, WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY AND
REGARDLESS OF WHETHER ANY INDEMNITEE IS A PARTY THERETO, AND SUCH

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<PAGE>

INDEMNITY SHALL EXTEND TO EACH INDEMNITEE NOTWITHSTANDING THE SOLE OR CONCURRENT
NEGLIGENCE OF EVERY KIND OR CHARACTER WHATSOEVER, WHETHER ACTIVE OR PASSIVE,
WHETHER AN AFFIRMATIVE ACT OR AN OMISSION, INCLUDING WITHOUT LIMITATION, ALL
TYPES OF NEGLIGENT CONDUCT IDENTIFIED IN THE RESTATEMENT (SECOND) OF TORTS OF
ONE OR MORE OF THE INDEMNITEES OR BY REASON OF STRICT LIABILITY IMPOSED WITHOUT
FAULT ON ANY ONE OR MORE OF THE INDEMNITEES; PROVIDED THAT SUCH INDEMNITY SHALL
NOT, AS TO ANY INDEMNITEE, BE AVAILABLE TO THE EXTENT THAT SUCH LOSSES, CLAIMS,
DAMAGES, LIABILITIES OR RELATED EXPENSES ARE DETERMINED BY A COURT OF COMPETENT
JURISDICTION BY FINAL AND NONAPPEALABLE JUDGMENT TO HAVE RESULTED FROM THE GROSS
NEGLIGENCE OR WILLFUL MISCONDUCT OF SUCH INDEMNITEE.

            (c) To the extent that the Borrower fails to pay any amount required
to be paid by it to such Agent or any Issuing Bank under Section 12.03(a) or
(b), each Lender severally agrees to pay to such Agent or such Issuing Bank, as
the case may be, such Lender's Applicable Percentage (determined as of the time
that the applicable unreimbursed expense or indemnity payment is sought) of such
unpaid amount; provided that the unreimbursed expense or indemnified loss,
claim, damage, liability or related expense, as the case may be, was incurred by
or asserted against such Agent or such Issuing Bank in its capacity as such.

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

            (e) All amounts due under this Section 12.03 shall be payable within
ten (10) Business Days of written demand therefor.

      Section 12.04 Successors and Assigns.

            (a) The provisions of this Agreement shall be binding upon and inure
to the benefit of the parties hereto and their respective successors and assigns
permitted hereby (including any Affiliate of any Issuing Bank that issues any
Letter of Credit), except that (i) the Borrower may not assign or otherwise
transfer any of its rights or obligations hereunder without the prior written
consent of each Lender (and any attempted assignment or transfer by the Borrower
without such consent shall be null and void) and (ii) no Lender may assign or
otherwise transfer its rights or obligations hereunder except in accordance with
this Section 12.04. Nothing in this Agreement, expressed or implied, shall be
construed to confer upon any Person (other than the parties hereto, their
respective successors and assigns permitted hereby (including any Affiliate of
any Issuing Bank that issues any Letter of Credit), Participants (to the extent
provided in Section 12.04(c)) and, to the extent expressly contemplated hereby,
the Related Parties of each of the Administrative Agent, each Issuing Bank and
the Lenders) any legal or equitable right, remedy or claim under or by reason of
this Agreement.

            (b) (i) Subject to the conditions set forth in Section 12.04(b)(ii),
any Lender may assign to one or more assignees all or a portion of its rights
and obligations under this Agreement

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<PAGE>

(including all or a portion of its Commitment and the Loans at the time owing to
it) with the prior written consent (such consent not to be unreasonably
withheld) of:

                        (A) the Borrower, provided that no consent of the
Borrower shall be required for an assignment to a Lender or an Affiliate of a
Lender or, if an Event of Default has occurred and is continuing, to any other
assignee; and

                        (B) the Administrative Agent, provided that no consent
of the Administrative Agent shall be required for an assignment to an assignee
that is a Lender or any Affiliate of a Lender, immediately prior to giving
effect to such assignment.

                  (ii) Assignments shall be subject to the following additional
conditions:

                        (A) except in the case of an assignment to a Lender or
an Affiliate of a Lender or an assignment of the entire remaining amount of the
assigning Lender's Commitment, the amount of the Commitment of the assigning
Lender subject to each such assignment (determined as of the date the Assignment
and Assumption with respect to such assignment is delivered to the
Administrative Agent) shall not be less than $5,000,000 unless each of the
Borrower and the Administrative Agent otherwise consent, provided that no such
consent of the Borrower shall be required if an Event of Default has occurred
and is continuing;

                        (B) each partial assignment shall be made as an
assignment of a proportionate part of all the assigning Lender's rights and
obligations under this Agreement;

                        (C) the parties to each assignment shall execute and
deliver to the Administrative Agent an Assignment and Assumption, together with
a processing and recordation fee of $3,500; and

                        (D) the assignee, if it shall not be a Lender, shall
deliver to the Administrative Agent an Administrative Questionnaire.

                  (iii) Subject to Section 12.04(b)(iv) and the acceptance and
recording thereof, from and after the effective date specified in each
Assignment and Assumption the assignee thereunder shall be a party hereto and,
to the extent of the interest assigned by such Assignment and Assumption, have
the rights and obligations of a Lender under this Agreement, and the assigning
Lender thereunder shall, to the extent of the interest assigned by such
Assignment and Assumption, be released from its obligations under this Agreement
(and, in the case of an Assignment and Assumption covering all of the assigning
Lender's rights and obligations under this Agreement, such Lender shall cease to
be a party hereto but shall continue to be entitled to the benefits of Section
5.01, Section 5.02, Section 5.03 and Section 12.03). Any assignment or transfer
by a Lender of rights or obligations under this Agreement that does not comply
with this Section 12.04 shall be treated for purposes of this Agreement as a
sale by such Lender of a participation in such rights and obligations in
accordance with Section 12.04(c).

                  (iv) The Administrative Agent, acting for this purpose as an
agent of the Borrower, shall maintain at one of its offices a copy of each
Assignment and Assumption delivered to it and a register for the recordation of
the names and addresses of the Lenders, and the Maximum Credit Amount of, and
principal amount of the Loans and LC Disbursements owing to, each Lender
pursuant to the terms hereof from time to time (the "Register"). The entries in
the Register shall be

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<PAGE>

conclusive, and the Borrower, the Administrative Agent, each Issuing Bank and
the Lenders may treat each Person whose name is recorded in the Register
pursuant to the terms hereof as a Lender hereunder for all purposes of this
Agreement, notwithstanding notice to the contrary. The Register shall be
available for inspection by the Borrower, any Issuing Bank and any Lender, at
any reasonable time and from time to time upon reasonable prior notice. In
connection with any changes to the Register, if necessary, the Administrative
Agent will reflect the revisions on Annex I and forward a copy of such revised
Annex I to the Borrower, each Issuing Bank and each Lender.

                  (v) Upon its receipt of a duly completed Assignment and
Assumption executed by an assigning Lender and an assignee, the assignee's
completed Administrative Questionnaire (unless the assignee shall already be a
Lender hereunder), the processing and recordation fee referred to in Section
12.04(b) and any written consent to such assignment required by Section
12.04(b), the Administrative Agent shall accept such Assignment and Assumption
and record the information contained therein in the Register. No assignment
shall be effective for purposes of this Agreement unless it has been recorded in
the Register as provided in this Section 12.04(b).

            (c) (i) Any Lender may, without the consent of the Borrower the
Administrative Agent or any Issuing Bank, sell participations to one or more
banks or other entities (a "Participant") in all or a portion of such Lender's
rights and obligations under this Agreement (including all or a portion of its
Commitment and the Loans owing to it); provided that (A) such Lender's
obligations under this Agreement shall remain unchanged, (B) such Lender shall
remain solely responsible to the other parties hereto for the performance of
such obligations and (C) the Borrower, the Administrative Agent, each Issuing
Bank and the other Lenders shall continue to deal solely and directly with such
Lender in connection with such Lender's rights and obligations under this
Agreement. Any agreement or instrument pursuant to which a Lender sells such a
participation shall provide that such Lender shall retain the sole right to
enforce this Agreement and to approve any amendment, modification or waiver of
any provision of this Agreement; provided that such agreement or instrument may
provide that such Lender will not, without the consent of the Participant, agree
to any amendment, modification or waiver described in the proviso to Section
12.02 that affects such Participant. In addition such agreement must provide
that the Participant be bound by the provisions of Section 12.03. Subject to
Section 12.04(c)(ii), the Borrower agrees that each Participant shall be
entitled to the benefits of Section 5.01, Section 5.02 and Section 5.03 to the
same extent as if it were a Lender and had acquired its interest by assignment
pursuant to Section 12.04(b). To the extent permitted by law, each Participant
also shall be entitled to the benefits of Section 12.08 as though it were a
Lender, provided such Participant agrees to be subject to Section 4.01(c) as
though it were a Lender.

                (ii) A Participant shall not be entitled to receive any greater
payment under Section 5.01 or Section 5.03 than the applicable Lender would have
been entitled to receive with respect to the participation sold to such
Participant, unless the sale of the participation to such Participant is made
with the Borrower's prior written consent. A Participant that would be a Foreign
Lender if it were a Lender shall not be entitled to the benefits of Section 5.03
unless the Borrower is notified of the participation sold to such Participant
and such Participant agrees, for the benefit of the Borrower, to comply with
Section 5.03(e) as though it were a Lender.

            (d) Any Lender may at any time pledge or assign a security interest
in all or any portion of its rights under this Agreement to secure obligations
of such Lender, including any pledge or assignment to secure obligations to a
Federal Reserve Bank, and this Section 12.04(d) shall not

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<PAGE>

apply to any such pledge or assignment of a security interest; provided that no
such pledge or assignment of a security interest shall release a Lender from any
of its obligations hereunder or substitute any such pledgee or assignee for such
Lender as a party hereto.

      Section 12.05 Survival; Revival; Reinstatement.

            (a) All covenants, agreements, representations and warranties made
by the Borrower herein and in the certificates or other instruments delivered in
connection with or pursuant to this Agreement or any other Loan Document shall
be considered to have been relied upon by the other parties hereto and shall
survive the execution and delivery of this Agreement and the making of any Loans
and issuance of any Letters of Credit, regardless of any investigation made by
any such other party or on its behalf and notwithstanding that the
Administrative Agent, any other Agent, any Issuing Bank or any Lender may have
had notice or knowledge of any Default or incorrect representation or warranty
at the time any credit is extended hereunder, and shall continue in full force
and effect as long as the principal of or any accrued interest on any Loan or
any fee or any other amount payable under this Agreement is outstanding and
unpaid or any Letter of Credit is outstanding and so long as the Commitments
have not expired or terminated. The provisions of Section 5.01, Section 5.02,
Section 5.03 and Section 12.03 and ARTICLE XI shall survive and remain in full
force and effect regardless of the consummation of the transactions contemplated
hereby, the repayment of the Loans, the expiration or termination of the Letters
of Credit and the Commitments or the termination of this Agreement, any other
Loan Document or any provision hereof or thereof.

            (b) To the extent that any payments on the Indebtedness or proceeds
of any collateral are subsequently invalidated, declared to be fraudulent or
preferential, set aside or required to be repaid to a trustee, debtor in
possession, receiver or other Person under any bankruptcy law, common law or
equitable cause, then to such extent, the Indebtedness so satisfied shall be
revived and continue as if such payment or proceeds had not been received and
the Administrative Agent's and the Lenders' Liens, security interests, rights,
powers and remedies under this Agreement and each Loan Document shall continue
in full force and effect. In such event, each Loan Document shall be
automatically reinstated and the Borrower shall take such action as may be
reasonably requested by the Administrative Agent and the Lenders to effect such
reinstatement.

      Section 12.06  Counterparts; Integration; Effectiveness.

            (a) This Agreement may be executed in counterparts (and by different
parties hereto on different counterparts), each of which shall constitute an
original, but all of which when taken together shall constitute a single
contract.

            (b) This Agreement, the other Loan Documents and any separate letter
agreements with respect to fees payable to the Administrative Agent constitute
the entire contract among the parties relating to the subject matter hereof and
thereof and supersede any and all previous agreements and understandings, oral
or written, relating to the subject matter hereof and thereof. THIS AGREEMENT
AND THE OTHER LOAN DOCUMENTS REPRESENT THE FINAL AGREEMENT AMONG THE PARTIES
HERETO AND THERETO AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO
UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.

                                CREDIT AGREEMENT

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<PAGE>

            (c) Except as provided in Section 6.01, this Agreement shall become
effective when it shall have been executed by the Administrative Agent and when
the Administrative Agent shall have received counterparts hereof which, when
taken together, bear the signatures of each of the other parties hereto, and
thereafter shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and assigns. Delivery of an executed counterpart
of a signature page of this Agreement by telecopy shall be effective as delivery
of a manually executed counterpart of this Agreement.

      Section 12.07 Severability. Any provision of this Agreement or any other
Loan Document held to be invalid, illegal or unenforceable in any jurisdiction
shall, as to such jurisdiction, be ineffective to the extent of such invalidity,
illegality or unenforceability without affecting the validity, legality and
enforceability of the remaining provisions hereof or thereof; and the invalidity
of a particular provision in a particular jurisdiction shall not invalidate such
provision in any other jurisdiction.

      Section 12.08 Right of Setoff. If an Event of Default shall have occurred
and be continuing, each Lender and each of its Affiliates is hereby authorized
at any time and from time to time, to the fullest extent permitted by law, to
set off and apply any and all deposits (general or special, time or demand,
provisional or final) at any time held and other obligations (of whatsoever
kind, including, without limitations obligations under Swap Agreements) at any
time owing by such Lender or Affiliate to or for the credit or the account of
the Borrower or any of its Subsidiaries against any of and all the obligations
of the Borrower or any of its Subsidiaries owed to such Lender now or hereafter
existing under this Agreement or any other Loan Document, irrespective of
whether or not such Lender shall have made any demand under this Agreement or
any other Loan Document and although such obligations may be unmatured. The
rights of each Lender under this Section 12.08 are in addition to other rights
and remedies (including other rights of setoff) which such Lender or its
Affiliates may have.

      Section 12.09 GOVERNING LAW; JURISDICTION; CONSENT TO SERVICE OF PROCESS.

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

            (b) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THE LOAN
DOCUMENTS SHALL BE BROUGHT IN THE COURTS OF THE STATE OF TEXAS OR OF THE UNITED
STATES OF AMERICA FOR THE SOUTHERN DISTRICT OF TEXAS, HOUSTON DIVISION, AND, BY
EXECUTION AND DELIVERY OF THIS AGREEMENT, EACH PARTY HEREBY ACCEPTS FOR ITSELF
AND (TO THE EXTENT PERMITTED BY LAW) IN RESPECT OF ITS PROPERTY, GENERALLY AND
UNCONDITIONALLY, THE JURISDICTION OF THE AFORESAID COURTS. EACH PARTY HEREBY
IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING, WITHOUT LIMITATION, ANY OBJECTION
TO THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS,

                                CREDIT AGREEMENT

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<PAGE>

WHICH IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY SUCH ACTION OR
PROCEEDING IN SUCH RESPECTIVE JURISDICTIONS. THIS SUBMISSION TO JURISDICTION IS
NON-EXCLUSIVE AND DOES NOT PRECLUDE A PARTY FROM OBTAINING JURISDICTION OVER
ANOTHER PARTY IN ANY COURT OTHERWISE HAVING JURISDICTION.

            (c) EACH PARTY IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS OF ANY
OF THE AFOREMENTIONED COURTS IN ANY SUCH ACTION OR PROCEEDING BY THE MAILING OF
COPIES THEREOF BY REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID, TO IT AT THE
ADDRESS SPECIFIED IN SECTION 12.01 OR SUCH OTHER ADDRESS AS IS SPECIFIED
PURSUANT TO SECTION 12.01 (OR ITS ASSIGNMENT AND ASSUMPTION), SUCH SERVICE TO
BECOME EFFECTIVE THIRTY (30) DAYS AFTER SUCH MAILING. NOTHING HEREIN SHALL
AFFECT THE RIGHT OF A PARTY OR ANY HOLDER OF A NOTE TO SERVE PROCESS IN ANY
OTHER MANNER PERMITTED BY LAW OR TO COMMENCE LEGAL PROCEEDINGS OR OTHERWISE
PROCEED AGAINST ANOTHER PARTY IN ANY OTHER JURISDICTION.

            (d) EACH PARTY HEREBY (i) IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO
THE FULLEST EXTENT PERMITTED BY LAW, TRIAL BY JURY IN ANY LEGAL ACTION OR
PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT AND FOR ANY
COUNTERCLAIM THEREIN; (ii) 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; (iii) CERTIFIES THAT NO PARTY
HERETO NOR ANY REPRESENTATIVE OR AGENT OF COUNSEL FOR ANY PARTY HERETO HAS
REPRESENTED, EXPRESSLY OR OTHERWISE, OR IMPLIED THAT SUCH PARTY WOULD NOT, IN
THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVERS, AND (iv)
ACKNOWLEDGES THAT IT HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT, THE LOAN
DOCUMENTS AND THE TRANSACTIONS CONTEMPLATED HEREBY AND THEREBY BY, AMONG OTHER
THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS CONTAINED IN THIS SECTION 12.09.

      Section 12.10 Headings. Article and Section headings and the Table of
Contents used herein are for convenience of reference only, are not part of this
Agreement and shall not affect the construction of, or be taken into
consideration in interpreting, this Agreement.

      Section 12.11 Confidentiality. Each of the Agents, each Issuing Bank and
the Lenders agrees to maintain the confidentiality of the Information (as
defined below), except that Information may be disclosed (a) to its and its
Affiliates' directors, officers, employees and agents, including accountants,
legal counsel and other advisors (it being understood that the Persons to whom
such disclosure is made will be informed of the confidential nature of such
Information and instructed to keep such Information confidential), (b) to the
extent requested by any regulatory authority, (c) to the extent required by
applicable laws or regulations or by any subpoena or similar legal process, (d)
to any other party to this Agreement or any other Loan Document, (e) in
connection with the exercise of any remedies hereunder or under any other Loan
Document or any suit, action or proceeding relating to this Agreement or any
other Loan Document or the enforcement of rights hereunder or thereunder, (f)
subject to an agreement containing provisions substantially the same as those of
this Section 12.11, to (i) any assignee of or Participant in, or any prospective
assignee of or Participant in, any of

                                CREDIT AGREEMENT

                                       81

<PAGE>

its rights or obligations under this Agreement or (ii) any actual or prospective
counterparty (or its advisors) to any Swap Agreement relating to the Borrower
and their obligations, (g) with the consent of the Borrower or (h) to the extent
such Information (i) becomes publicly available other than as a result of a
breach of this Section 12.11 or (ii) becomes available to the Administrative
Agent, any Issuing Bank or any Lender on a nonconfidential basis from a source
other than the Borrower. For the purposes of this Section 12.11, "Information"
means all information received from the Borrower or any of its Subsidiaries
relating to the Borrower or any of its Subsidiaries and their businesses, other
than any such information that is available to the Administrative Agent, any
Issuing Bank or any Lender on a nonconfidential basis prior to disclosure by the
Borrower or any of its Subsidiaries; provided that, in the case of information
received from the Borrower, or any of its Subsidiaries after the date hereof,
such information is clearly identified at the time of delivery as confidential.
Any Person required to maintain the confidentiality of Information as provided
in this Section 12.11 shall be considered to have complied with its obligation
to do so if such Person has exercised the same degree of care to maintain the
confidentiality of such Information as such Person would accord to its own
confidential information.

      Section 12.12 Interest Rate Limitation. It is the intention of the parties
hereto that each Lender shall conform strictly to usury laws applicable to it.
Accordingly, if the transactions contemplated hereby would be usurious as to any
Lender under laws applicable to it (including the laws of the United States of
America and the State of Texas or any other jurisdiction whose laws may be
mandatorily applicable to such Lender notwithstanding the other provisions of
this Agreement), then, in that event, notwithstanding anything to the contrary
in any of the Loan Documents or any agreement entered into in connection with or
as security for the Notes, it is agreed as follows: (a) the aggregate of all
consideration which constitutes interest under law applicable to any Lender that
is contracted for, taken, reserved, charged or received by such Lender under any
of the Loan Documents or agreements or otherwise in connection with the Notes
shall under no circumstances exceed the maximum amount allowed by such
applicable law, and any excess shall be canceled automatically and if
theretofore paid shall be credited by such Lender on the principal amount of the
Indebtedness (or, to the extent that the principal amount of the Indebtedness
shall have been or would thereby be paid in full, refunded by such Lender to the
Borrower); and (b) in the event that the maturity of the Notes is accelerated by
reason of an election of the holder thereof resulting from any Event of Default
under this Agreement or otherwise, or in the event of any required or permitted
prepayment, then such consideration that constitutes interest under law
applicable to any Lender may never include more than the maximum amount allowed
by such applicable law, and excess interest, if any, provided for in this
Agreement or otherwise shall be canceled automatically by such Lender as of the
date of such acceleration or prepayment and, if theretofore paid, shall be
credited by such Lender on the principal amount of the Indebtedness (or, to the
extent that the principal amount of the Indebtedness shall have been or would
thereby be paid in full, refunded by such Lender to the Borrower). All sums paid
or agreed to be paid to any Lender for the use, forbearance or detention of sums
due hereunder shall, to the extent permitted by law applicable to such Lender,
be amortized, prorated, allocated and spread throughout the stated term of the
Loans evidenced by the Notes until payment in full so that the rate or amount of
interest on account of any Loans hereunder does not exceed the maximum amount
allowed by such applicable law. If at any time and from time to time (i) the
amount of interest payable to any Lender on any date shall be computed at the
Highest Lawful Rate applicable to such Lender pursuant to this Section 12.12 and
(ii) in respect of any subsequent interest computation period the amount of
interest otherwise payable to such Lender would be less than the amount of
interest payable to such Lender computed at the Highest Lawful Rate applicable
to such Lender, then the amount of interest payable to such Lender in respect of
such subsequent interest computation period shall continue to be computed at the
Highest Lawful Rate applicable to

                                CREDIT AGREEMENT

                                       82
<PAGE>

such Lender until the total amount of interest payable to such Lender shall
equal the total amount of interest which would have been payable to such Lender
if the total amount of interest had been computed without giving effect to this
Section 12.12. To the extent that Chapter 303 of the Texas Finance Code is
relevant for the purpose of determining the Highest Lawful Rate applicable to a
Lender, such Lender elects to determine the applicable rate ceiling under such
Chapter by the weekly ceiling from time to time in effect. Chapter 346 of the
Texas Finance Code does not apply to the Borrower's obligations hereunder.

      Section 12.13 EXCULPATION PROVISIONS. EACH OF THE PARTIES HERETO
SPECIFICALLY AGREES THAT IT HAS A DUTY TO READ THIS AGREEMENT AND THE OTHER LOAN
DOCUMENTS AND AGREES THAT IT IS CHARGED WITH NOTICE AND KNOWLEDGE OF THE TERMS
OF THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS; THAT IT HAS IN FACT READ THIS
AGREEMENT AND IS FULLY INFORMED AND HAS FULL NOTICE AND KNOWLEDGE OF THE TERMS,
CONDITIONS AND EFFECTS OF THIS AGREEMENT; THAT IT HAS BEEN REPRESENTED BY
INDEPENDENT LEGAL COUNSEL OF ITS CHOICE THROUGHOUT THE NEGOTIATIONS PRECEDING
ITS EXECUTION OF THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS; AND HAS RECEIVED
THE ADVICE OF ITS ATTORNEY IN ENTERING INTO THIS AGREEMENT AND THE OTHER LOAN
DOCUMENTS; AND THAT IT RECOGNIZES THAT CERTAIN OF THE TERMS OF THIS AGREEMENT
AND THE OTHER LOAN DOCUMENTS RESULT IN ONE PARTY ASSUMING THE LIABILITY INHERENT
IN SOME ASPECTS OF THE TRANSACTION AND RELIEVING THE OTHER PARTY OF ITS
RESPONSIBILITY FOR SUCH LIABILITY. EACH PARTY HERETO AGREES AND COVENANTS THAT
IT WILL NOT CONTEST THE VALIDITY OR ENFORCEABILITY OF ANY EXCULPATORY PROVISION
OF THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS ON THE BASIS THAT THE PARTY HAD
NO NOTICE OR KNOWLEDGE OF SUCH PROVISION OR THAT THE PROVISION IS NOT
"CONSPICUOUS."

      Section 12.14 Collateral Matters; Swap Agreements. The benefit of the
Security Instruments and of the provisions of this Agreement relating to any
collateral securing the Indebtedness shall also extend to and be available to
those Lenders or their Affiliates which are counterparties to any Swap Agreement
with the Borrower or any of its Subsidiaries on a pro rata basis in respect of
any obligations of the Borrower or any of its Subsidiaries which arise under any
such Swap Agreement while such Person or its Affiliate is a Lender, but only
while such Person or its Affiliate is a Lender, including any Swap Agreements
between such Persons in existence prior to the date hereof. No Lender or any
Affiliate of a Lender shall have any voting rights under any Loan Document as a
result of the existence of obligations owed to it under any such Swap
Agreements.

      Section 12.15 No Third Party Beneficiaries. This Agreement, the other Loan
Documents, and the agreement of the Lenders to make Loans and the Issuing Bank
to issue, amend, renew or extend Letters of Credit hereunder are solely for the
benefit of the Borrower, and no other Person (including, without limitation, any
Subsidiary of the Borrower, any obligor, contractor, subcontractor, supplier or
materialsman) shall have any rights, claims, remedies or privileges hereunder or
under any other Loan Document against the Administrative Agent, any other Agent,
the Issuing Bank or any Lender for any reason whatsoever. There are no third
party beneficiaries.

      Section 12.16 USA Patriot Act Notice. Each Lender hereby notifies the
Borrower that pursuant to the requirements of the USA Patriot Act (Title III of
Pub. L. 107-56 (signed into law October 26, 2001)) (the "Act"), it is required
to obtain, verify and record information that identifies

                                CREDIT AGREEMENT

                                       83
<PAGE>

the Borrower, which information includes the name and address of the Borrower
and other information that will allow such Lender to identify the Borrower in
accordance with the Act.

                          [SIGNATURES BEGIN NEXT PAGE]

                                CREDIT AGREEMENT

                                       84
<PAGE>

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

BORROWER:                           LINN ENERGY, LLC

                                         By: /s/ Kolja Rockov
                                             -----------------------------------
                                             Kolja Rockov
                                             Executive Vice President and Chief
                                             Financial Officer

                                SIGNATURE PAGE 1
                                CREDIT AGREEMENT

<PAGE>

                                         BNP PARIBAS, as Administrative Agent
                                         and a Lender

                                         By: /s/ Douglas R. Liftman
                                             -----------------------------------
                                         Name:  Douglas R. Liftman
                                         Title: Managing Director

                                         By: /s/ Gabe Ellisor
                                             -----------------------------------
                                         Name:  Gabe Ellisor
                                         Title: Vice President

                                SIGNATURE PAGE 2
                                CREDIT AGREEMENT

<PAGE>

                                         ROYAL BANK OF CANADA, as a Syndication
                                         Agent and a Lender

                                         By: /s/ Don J. McKinnerney
                                             -----------------------------------
                                         Name:  Don J. McKinnerney
                                         Title: Authorized Signatory

                                SIGNATURE PAGE 3
                                CREDIT AGREEMENT

<PAGE>

                                         SOCIETE GENERALE, as a Syndication
                                         Agent and a Lender

                                         By: /s/ Graeme R. Bullen
                                             -----------------------------------
                                         Name:  Graeme R. Bullen
                                         Title: Director

                                SIGNATURE PAGE 4
                                CREDIT AGREEMENT

<PAGE>

                                         COMERICA BANK, as a Documentation
                                         Agent and a Lender

                                         By: /s/ Huma Vadgama
                                             ------------------------
                                         Name: Huma Vadgama
                                         Title: Vice President

                                SIGNATURE PAGE 5
                                CREDIT AGREEMENT

<PAGE>

                                       BANK OF AMERICA, N.A., as a Documentation
                                       Agent and a Lender

                                       By: /s/ Charles W. Patterson
                                           --------------------------------
                                       Name: Charles W. Patterson
                                       Title: Managing Director

                                SIGNATURE PAGE 6
                                CREDIT AGREEMENT

<PAGE>

                                         BANK OF SCOTLAND, as a Lender

                                         By: /s/ Karen Weich
                                             ---------------------------
                                         Name: Karen Weich
                                         Title: Assistant Vice President

                                SIGNATURE PAGE 7
                                CREDIT AGREEMENT

<PAGE>

                                         FORTIS CAPITAL CORP., as a Lender

                                         By: /s/ David Montgomery
                                             ---------------------------------
                                         Name: David Montgomery
                                         Title: Senior Vice President

                                         By: /s/ Darrell Holley
                                             ---------------------------------
                                         Name: Darrell Holley
                                         Title: Managing Director

                                SIGNATURE PAGE 8
                                CREDIT AGREEMENT

<PAGE>

                                         LEHMAN COMMERICAL PAPER INC., as a
                                         Lender

                                         By: /s/ Maria Lund
                                             -----------------------------------
                                         Name:  Maria Lund
                                         Title: Vice President

                                SIGNATURE PAGE 9
                                CREDIT AGREEMENT

<PAGE>

                                     ANNEX I
                         LIST OF MAXIMUM CREDIT AMOUNTS

                        AGGREGATE MAXIMUM CREDIT AMOUNTS

<TABLE>
<CAPTION>
       NAME OF LENDER            APPLICABLE PERCENTAGE     MAXIMUM CREDIT AMOUNT
---------------------------      ---------------------     ---------------------
<S>                              <C>                       <C>
BNP Paribas                                18%              $     72,000,000
Royal Bank of Canada                       18%              $     72,000,000
Societe Generale                           17%              $     68,000,000
Bank of America, N.A.                      15%              $     60,000,000
Comerica Bank                           11.75%              $     47,000,000
Bank of Scotland                         10.5%              $     42,000,000
Fortis Capital Corp.                      7.5%              $     30,000,000
Lehman Commerical Paper Inc.             2.25%              $      9,000,000
TOTAL                                     100%              $ 400,000,000.00
</TABLE>

                                   ANNEX I - 1
                                CREDIT AGREEMENT

<PAGE>

                                    EXHIBIT A
                                 [FORM OF] NOTE

$[   ]                                                         [   ], 200[    ]

      FOR VALUE RECEIVED, Linn Energy, LLC, a Delaware limited liability company
(the "Borrower"), hereby promises to pay to the order of [ ] (the "Lender"), at
the principal office of BNP Paribas, as administrative agent (the
"Administrative Agent"), the principal sum of [ ] Dollars ($[ ]) (or such lesser
amount as shall equal the aggregate unpaid principal amount of the Loans made by
the Lender to the Borrower under the Credit Agreement, as hereinafter defined),
in lawful money of the United States of America and in immediately available
funds, on the dates and in the principal amounts provided in the Credit
Agreement, and to pay interest on the unpaid principal amount of each such Loan,
at such office, in like money and funds, for the period commencing on the date
of such Loan until such Loan shall be paid in full, at the rates per annum and
on the dates provided in the Credit Agreement.

      The date, amount, Type, interest rate, Interest Period and maturity of
each Loan made by the Lender to the Borrower, and each payment made on account
of the principal thereof, shall be recorded by the Lender on its books and,
prior to any transfer of this Note, may be endorsed by the Lender on the
schedules attached hereto or any continuation thereof or on any separate record
maintained by the Lender. Failure to make any such notation or to attach a
schedule shall not affect any Lender's or the Borrower's rights or obligations
in respect of such Loans or affect the validity of such transfer by any Lender
of this Note.

      This Note is one of the Notes referred to in the Amended and Restated
Credit Agreement dated as of April 7, 2006 among the Borrower, the
Administrative Agent, and the other agents and lenders signatory thereto
(including the Lender), and evidences Loans made by the Lender thereunder (such
Credit Agreement as the same may be amended, supplemented or restated from time
to time, the "Credit Agreement"). Capitalized terms used in this Note have the
respective meanings assigned to them in the Credit Agreement.

      This Note is issued pursuant to, and is subject to the terms and
conditions set forth in, the Credit Agreement and is entitled to the benefits
provided for in the Credit Agreement and the other Loan Documents. The Credit
Agreement provides for the acceleration of the maturity of this Note upon the
occurrence of certain events, for prepayments of Loans upon the terms and
conditions specified therein and other provisions relevant to this Note.

                                    EXHIBIT A
                                CREDIT AGREEMENT

<PAGE>

      THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS
OF THE STATE OF TEXAS.

                                           LINN ENERGY, LLC

                                           By: ________________________________
                                           Name: ______________________________
                                           Title: _____________________________

                                    EXHIBIT A
                                CREDIT AGREEMENT
<PAGE>
                                    EXHIBIT B
                                    [FORM OF]
                             COMPLIANCE CERTIFICATE

      Each of the undersigned hereby certifies that he/she is the [ ] of Linn
Energy, LLC, a Delaware limited liability company (the "Borrower"), and that as
such he/she is authorized to execute this certificate on behalf of the Borrower.
With reference to the Credit Agreement dated as of April 7, 2006 (together with
all amendments, supplements or restatements thereto being the "Agreement") among
the Borrower, BNP Paribas, as Administrative Agent, and the other agents and
lenders (the "Lenders") which are or become a party thereto, and such Lenders,
each of the undersigned represents and warrants as follows (each capitalized
term used herein having the same meaning given to it in the Agreement unless
otherwise specified):

      (a) The representations and warranties of the Borrower contained in
Article VII of the Agreement and in the Loan Documents and otherwise made in
writing by or on behalf of the Borrower or any other Guarantor pursuant to the
Agreement and the Loan Documents were true and correct when made, and are
repeated at and as of the time of delivery hereof and are true and correct in
all material respects at and as of the time of delivery hereof, except to the
extent such representations and warranties are expressly limited to an earlier
date or the Majority Lenders have expressly consented in writing to the
contrary.

      (b) The Borrower has performed and complied with all agreements and
conditions contained in the Agreement and in the Loan Documents required to be
performed or complied with by it prior to or at the time of delivery hereof [or
specify default and describe].

      (c) Since December 31, 2005, no change has occurred, either in any case or
in the aggregate, in the condition, financial or otherwise, of the Borrower or
any of its Subsidiaries that could reasonably be expected to have a Material
Adverse Effect [or specify event].

      (d) There exists no Default or Event of Default [or specify Default and
describe].

      (e) Attached hereto are the detailed computations necessary to determine
whether the Borrower is in compliance with Section 9.01 and Section 8.14 as of
the end of the fiscal quarter ending [ ].

                                   EXHIBIT B
                                CREDIT AGREEMENT

<PAGE>

      EXECUTED AND DELIVERED this [ ] day of [ ].

                                  LINN ENERGY, LLC

                                  By:    ______________________________________
                                  Name:  ______________________________________
                                  Title: ______________________________________

                                   EXHIBIT B
                                CREDIT AGREEMENT

<PAGE>

                                   EXHIBIT C-1
                              SECURITY INSTRUMENTS

      1)    Amended and Restated Guaranty and Pledge Agreement among Linn
            Energy, LLC, the other Obligors and BNP Paribas.

      2)    Guaranty Agreement Financing Statements

            (a)   Linn Energy, LLC

            (b)   Linn Energy Holdings, LLC

            (c)   Linn Operating, Inc.

            (d)   Mid Atlantic Well Service, Inc.

      3)    Open-End Mortgage, Assignment of As-Extracted Collateral, Security
            Agreement, Fixture Filing and Financing Statement (Pennsylvania),
            dated April 13, 2005 by Linn Energy Holdings, LLC (formerly Linn
            Energy, L.L.C.) in favor of BNP Paribas, as Mortgagee and
            Administrative Agent

      4)    First Amendment to Open-End Mortgage, Assignment of As-Extracted
            Collateral, Security Agreement, Fixture Filing and Financing
            Statement (Pennsylvania), by Linn Energy Holdings, LLC in favor of
            BNP Paribas, as Mortgagee and Administrative Agent

      5)    Amended and Restated Mortgage, Deed of Trust, Credit Line Deed of
            Trust, Assignment of As-Extracted Collateral, Security Agreement,
            Fixture Filing and Financing Statement (West Virginia), dated
            October 27, 2005 by Linn Energy Holdings, LLC in favor of BNP
            Paribas, as Mortgagee and Administrative Agent.

      6)    First Amendment to Amended and Restated Mortgage, Deed of Trust,
            Credit Line Deed of Trust, Assignment of As-Extracted Collateral,
            Security Agreement, Fixture Filing and Financing Statement (West
            Virginia), by Linn Energy Holdings, LLC in favor of BNP Paribas, as
            Mortgagee and Administrative Agent.

      7)    Fee Letter with Administrative Agent referred to in Section 3.05(c).

                                   EXHIBIT C-1
                                CREDIT AGREEMENT

<PAGE>

                                   EXHIBIT C-2
                      FORM OF GUARANTY AND PLEDGE AGREEMENT

                                   EXHIBIT C-2
                                CREDIT AGREEMENT

<PAGE>

                                    EXHIBIT D
                       [FORM OF] ASSIGNMENT AND ASSUMPTION

      This Assignment and Assumption (the "Assignment and Assumption") is dated
as of the Effective Date set forth below and is entered into by and between
[Insert name of Assignor] (the "Assignor") and [Insert name of Assignee] (the
"Assignee"). Capitalized terms used but not defined herein shall have the
meanings given to them in the Credit Agreement identified below (as amended, the
"Credit Agreement"), receipt of a copy of which is hereby acknowledged by the
Assignee. The Standard Terms and Conditions set forth in Annex 1 attached hereto
are hereby agreed to and incorporated herein by reference and made a part of
this Assignment and Assumption as if set forth herein in full.

      The Assignor named on the reverse hereof hereby sells and assigns, without
recourse, to the Assignee named on the reverse hereof, and the Assignee hereby
purchases and assumes, without recourse, from the Assignor, effective as of the
Assignment Date set forth on the reverse hereof, the interests set forth on the
reverse hereof (the "Assigned Interest") in the Assignor's rights and
obligations under the Credit Agreement, including, without limitation, the
interests set forth on the reverse hereof in the Commitment of the Assignor on
the Assignment Date and Loans owing to the Assignor which are outstanding on the
Assignment Date, together with the participations in Letters of Credit and LC
Disbursements held by the Assignor on the Assignment Date, but excluding accrued
interest and fees to and excluding the Assignment Date. The Assignee hereby
acknowledges receipt of a copy of the Credit Agreement. From and after the
Assignment Date (i) the Assignee shall be a party to and be bound by the
provisions of the Credit Agreement and, to the extent of the Assigned Interest,
have the rights and obligations of a Lender thereunder and (ii) the Assignor
shall, to the extent of the Assigned Interest, relinquish its rights and be
released from its obligations under the Credit Agreement.

      This Assignment and Assumption is being delivered to the Administrative
Agent together with (i) if the Assignee is a Foreign Lender, any documentation
required to be delivered by the Assignee pursuant to Section 5.03(e) of the
Credit Agreement, duly completed and executed by the Assignee, and (ii) if the
Assignee is not already a Lender under the Credit Agreement, an Administrative
Questionnaire in the form supplied by the Administrative Agent, duly completed
by the Assignee. The [Assignee/Assignor] shall pay the fee payable to the
Administrative Agent pursuant to Section 12.04(b) of the Credit Agreement.

      This Assignment and Assumption shall be governed by and construed in
accordance with the laws of the State of Texas.

Date of Assignment:

Legal Name of Assignor:

Legal Name of Assignee:

Assignee's Address for Notices:

Effective Date of Assignment

                                   EXHIBIT D
                                CREDIT AGREEMENT

<PAGE>

("Assignment Date"):

Facility                Principal Amount Assigned    Percentage Assigned of
                                                     Facility/Commitment (set
                                                     forth, to at least 8
                                                     decimals, as a percentage
                                                     of the Facility and the
                                                     aggregate Commitments of
                                                     all Lenders thereunder)
Commitment Assigned:    $                                     %
Loans:

The terms set forth above and on the reverse side hereof are hereby agreed to:

                        [Name of Assignor], as Assignor

                        By: ______________________________
                        Name:
                        Title:

                        [Name of Assignee], as Assignee

                        By: ______________________________
                        Name:
                        Title:

The undersigned hereby consent to the within assignment:(1)

         Linn Energy, LLC                    BNP Paribas,
                                             as Administrative Agent,

         By: __________________________      By: _______________________________
         Name: ________________________      Name: _____________________________
         Title: _______________________      Title: ____________________________

--------
(1)   Consents to be included to the extent required by Section 12.04(b) of the
      Credit Agreement.

                                   EXHIBIT D
                                CREDIT AGREEMENT

<PAGE>

                                             By: _______________________________
                                             Name: _____________________________
                                             Title: ____________________________

                                   EXHIBIT D
                                CREDIT AGREEMENT

<PAGE>

                        LINN ENERGY, LLC CREDIT AGREEMENT

                        STANDARD TERMS AND CONDITIONS FOR
                            ASSIGNMENT AND ASSUMPTION

      1. Representations and Warranties.

      1.1 Assignor. The Assignor (a) represents and warrants that (i) it is the
legal and beneficial owner of the Assigned Interest, (ii) the Assigned Interest
is free and clear of any lien, encumbrance or other adverse claim and (iii) it
has full power and authority, and has taken all action necessary, to execute and
deliver this Assignment and Assumption and to consummate the transactions
contemplated hereby; and (b) assumes no responsibility with respect to (i) any
statements, warranties or representations made in or in connection with the
Credit Agreement or any other Loan Document, (ii) the execution, legality,
validity, enforceability, genuineness, sufficiency or value of the Loan
Documents or any collateral thereunder, (iii) the financial condition of the
Borrower, any of its Subsidiaries or Affiliates or any other Person obligated in
respect of any Loan Document or (iv) the performance or observance by the
Borrower, any of its Subsidiaries or Affiliates or any other Person of any of
their respective obligations under any Loan Document.

      1.2. Assignee. The Assignee (a) represents and warrants that (i) it has
full power and authority, and has taken all action necessary, to execute and
deliver this Assignment and Assumption and to consummate the transactions
contemplated hereby and to become a Lender under the Credit Agreement, (ii) it
satisfies the requirements, if any, specified in the Credit Agreement that are
required to be satisfied by it in order to acquire the Assigned Interest and
become a Lender, (iii) from and after the Effective Date, it shall be bound by
the provisions of the Credit Agreement as a Lender thereunder and, to the extent
of the Assigned Interest, shall have the obligations of a Lender thereunder,
(iv) it has received a copy of the Credit Agreement, together with copies of the
most recent financial statements delivered pursuant to Section 8.01 thereof, as
applicable, and such other documents and information as it has deemed
appropriate to make its own credit analysis and decision to enter into this
Assignment and Assumption and to purchase the Assigned Interest on the basis of
which it has made such analysis and decision independently and without reliance
on the Administrative Agent or any other Lender, and (v) if it is a Foreign
Lender, attached to the Assignment and Assumption is any documentation required
to be delivered by it pursuant to the terms of the Credit Agreement, duly
completed and executed by the Assignee; and (b) agrees that (i) it will,
independently and without reliance on the Administrative Agent, the Assignor or
any other Lender, and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit decisions in taking or
not taking action under the Loan Documents, and (ii) it will perform in
accordance with their terms all of the obligations which by the terms of the
Loan Documents are required to be performed by it as a Lender.

      2. Payments. From and after the Effective Date, the Administrative Agent
shall make all payments in respect of the Assigned Interest (including payments
of principal, interest, fees and other amounts) to the Assignor for amounts
which have accrued to but excluding the Effective Date and to the Assignee for
amounts which have accrued from and after the Effective Date.

      3. General Provisions. This Assignment and Assumption shall be binding
upon, and inure to the benefit of, the parties hereto and their respective
successors and assigns. This Assignment and Assumption may be executed in any
number of counterparts, which together shall constitute one instrument. Delivery
of an executed counterpart of a signature page of this Assignment and

                                        1
                                CREDIT AGREEMENT

<PAGE>

Assumption by telecopy shall be effective as delivery of a manually executed
counterpart of this Assignment and Assumption. This Assignment and Assumption
shall be governed by, and construed in accordance with, the law of the State of
Texas.

                                        2
                                CREDIT AGREEMENT

<PAGE>

                                  SCHEDULE 7.05
                                   LITIGATION

                                      None

                                SCHEDULE 7.05 - 1
                                CREDIT AGREEMENT

<PAGE>

                                  SCHEDULE 7.11
                               MATERIAL AGREEMENTS

                                      None

                                SCHEDULE 7.12 - 1
                                CREDIT AGREEMENT

<PAGE>

                                  SCHEDULE 7.14
                                  SUBSIDIARIES

Legal name:  Linn Energy Holdings, LLC

Address:  650 Washington Road, 8th Floor, Pittsburgh, Pennsylvania 15228
All names and trade names that Linn Energy Holdings, LLC has used in the last
five years:  Linn Energy, L.L.C.
Jurisdiction of organization over the last five years:  Delaware
Current jurisdiction of organization:  Delaware
Organizational number:  3629608

Legal name:  Linn Operating, Inc.
Address:  650 Washington Road, 8th Floor, Pittsburgh, Pennsylvania 15228
All names and trade names that Linn Operating, Inc. has used in the last five
years:  Linn Operating, LLC
Jurisdiction of organization over the last five years:  Delaware
Current jurisdiction of organization:  Delaware
Organizational number:  3696663

Legal name:  Mid Atlantic Well Service, Inc.
Address:  650 Washington Road, 8th Floor, Pittsburgh, Pennsylvania 15228
All names and trade names that Mid Atlantic Well Service, Inc. has used in the
last five years:  None
Jurisdiction of organization over the last five years:  Delaware
Current jurisdiction of organization:  Delaware
Organizational number:  4036953

Legal name:  Chipperco, LLC
Address:  650 Washington Road, 8th Floor, Pittsburgh, Pennsylvania 15228
All names and trade names that Chipperco, LLC has used in the last five years:
None
Jurisdiction of organization over the last five years:  Delaware
Current jurisdiction of organization:  Delaware
Organizational number:  3853949

                                SCHEDULE 7.15 - 1
                                CREDIT AGREEMENT

<PAGE>

                                  SCHEDULE 7.18
                                 GAS IMBALANCES

                                      None

                                SCHEDULE 7.19 - 1
                                CREDIT AGREEMENT

<PAGE>

                                  SCHEDULE 7.19
                               MARKETING CONTRACTS

      1.    GS 338, dated September 28, 1954, TW Phillips Gas & Oil Company,
            buyer, and Case-Pomeroy Oil Corporation, seller, life of well
            agreement covering the Lisowitz #1, Pine Township, Indiana County,
            PA.

      2.    GS 1111, dated April 29, 1999, TW Phillips Gas & Oil Company, buyer
            and Cabot Oil & Gas Corporation, seller, life of well agreement
            covering the McNutt #1, Brush Valley Township, Indiana County, PA.

      3.    P 2210, dated July 23, 1963, The Peoples Natural Gas company, buyer
            and William E. Snee and Orville Eberly, sellers, life of well
            agreement covering the Spurell, M. #1, Leonard, J.E. #1 and Abbey,
            E. #1 all located in Stewart Township, Fayette County, PA.

      4     NASB Base Contract for Sale and Purchase of Natural Gas, dated
            August 7, 2003, National Fuel Resources, Inc., as buyer and Linn
            Energy, LLC, as seller, ending August 31, 2006, covers all wells
            located in the towns of Villanova and Ellery, Chautauqua County, NY.

                                SCHEDULE 7.20 - 1
                                CREDIT AGREEMENT

<PAGE>

                                  SCHEDULE 7.20
                                 SWAP AGREEMENTS

                                SCHEDULE 7.21 - 1
                                CREDIT AGREEMENT

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