Document:

INTERCREDITOR
      AGREEMENT

     

    This
      INTERCREDITOR AGREEMENT is dated as of August 20, 2007, and entered into among
      Aurora Oil & Gas Corporation, a Utah corporation (“Borrower”),
      the
      other parties hereto as Guarantors (together with the Borrower, the
“Obligors”),
      BNP
      Paribas, in its capacity as administrative agent for the Senior Indebtedness
      (including its successors and assigns from time to time, the “Senior
      Indebtedness Representative”),
      the
      Term Lenders party hereto, each acting in its individual capacity as a lender
      under the Second Lien Term Loan Agreement, and BNP Paribas, in its capacity
      as
      administrative agent for the Subordinated Obligations (including its successors
      and assigns from time to time, the “Term
      Administrative Agent”).

     

    RECITALS

     

    WHEREAS,
      the
      Borrower, the Senior Indebtedness Representative, as administrative agent,
      and
      the Senior Revolving Lenders, are entering into that certain Amended and
      Restated Credit Agreement dated as of even date herewith providing for a
      revolving credit facility of up to $100 million (as amended, restated,
      supplemented, modified or Refinanced from time to time in accordance with the
      terms of this Agreement, the “Senior
      Revolving Credit Agreement”);

     

    WHEREAS,
      the
      Borrower, the Term Administrative Agent, as administrative agent, and the Term
      Lenders, are entering into that certain Second Lien Term Loan Agreement dated
      as
      of even date herewith providing for a $50 million term loan (as amended,
      restated, supplemented, modified or Refinanced from time to time in accordance
      with the terms of this Agreement, the “Second
      Lien Term Loan Agreement”);

     

    WHEREAS,
      the
      obligations of the Borrower under the Senior Revolving Credit Agreement and
      any
      Eligible Swap Agreements will be secured by all of the equity interests in
      each
      Guarantor and substantially all the assets of the Borrower and each Guarantor,
      pursuant to the terms of the Senior Revolving Collateral Documents;

     

    WHEREAS,
      the
      obligations of the Borrower under the Second Lien Term Loan Agreement and the
      other Subordinated Obligations will be secured by all of the equity interests
      in
      each Guarantor and substantially all the assets of the Borrower and each
      Guarantor, pursuant to the terms of the Term Collateral Documents;

     

    WHEREAS,
      the
      Senior Revolving Credit Documents and the Term Credit Documents provide, among
      other things, that the parties thereto shall set forth in this Agreement their
      respective rights and remedies with respect to the Collateral; and

     

    WHEREAS,
      in
      order to induce the Senior Indebtedness Representative and the Senior Revolving
      Claimholders to consent to the incurring of the Subordinated Obligations and
      to
      induce the Senior Revolving Claimholders to extend credit and other financial
      accommodations and lend monies to or for the benefit of the Borrower, the Term
      Lenders party hereto, and the Term Administrative Agent on behalf of the Term
      Claimholders has agreed to the Lien subordination, intercreditor and other
      provisions set forth in this Agreement.

     

    NOW,
      THEREFORE,
      in
      consideration of the foregoing, the mutual covenants and obligations herein
      set
      forth and for other good and valuable consideration, the sufficiency and receipt
      of which are hereby acknowledged, the parties hereto, intending to be legally
      bound, hereby agree as follows:

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    ARTICLE
      I  

    DEFINITIONS

     

    Section
      1.1  Defined
      Terms.
      Terms
      defined above shall have the meaning ascribed them. Unless otherwise indicated,
      capitalized terms used but not defined herein shall have the meaning given
      such
      terms in the Senior Revolving Credit Agreement; if not defined therein, such
      terms shall have the meaning given such terms in the Second Lien Term Loan
      Agreement. As used in the Agreement, the following terms shall have the
      following meanings:

     

    “Agreement”
means
      this Agreement, as amended, renewed, extended, supplemented or otherwise
      modified from time to time in accordance with the terms hereof.

     

    “Bankruptcy
      Code”
means
      Title 11 of the United States Code entitled “Bankruptcy,” as now and hereafter
      in effect, or any successor statute.

     

    “Bankruptcy
      Law”
means
      the Bankruptcy Code and any similar federal, state or foreign law for the relief
      of debtors.

     

    “Business
      Day”
means
      any day excluding Saturday, Sunday and any day which is a legal holiday under
      the laws of the State of New York or the State of Texas or is a day on which
      banking institutions located in such state are authorized or required by law
      or
      other governmental action to close.

     

    “Collateral”
means
      all of the assets and property of any Obligor, whether real, personal or mixed,
      constituting both Senior Revolving Collateral and Term Collateral.

     

    “DIP
      Financing”
has
      the
      meaning ascribed such term in Section 6.1.

     

    “Discharge
      of Senior Indebtedness”
means
      (a) satisfaction by payment in full in cash or otherwise of the principal of
      and
      interest (including allowed interest accruing on or after the commencement
      of
      any Insolvency or Liquidation Proceeding), expenses (including, without
      limitation, all legal fees) and premium, if any, on all Indebtedness outstanding
      under the Senior Revolving Credit Documents and termination of the Commitments
      (as defined in the Senior Revolving Credit Agreement), (b) satisfaction by
      payment in full in cash or otherwise of all other Senior Indebtedness that
      is
      due and payable or otherwise accrued and owing at or prior to the time such
      principal and interest are paid and (c) termination or cash collateralization
      of
      letters of credit, or the issuance of back-to-back letters of credit from an
      issuing bank acceptable to the Senior Revolving Claimholders in their sole
      discretion, consistent with all other Loan Documents of all letters of credit
      issued and outstanding under the Senior Revolving Credit Documents.

     

    “Eligible
      Swap Agreement”
means
      any present or future Swap Agreement between the Borrower or any Subsidiary
      that
      is a Guarantor and any Senior Revolving Lender or any affiliate of any Senior
      Revolving Lender. For the avoidance of doubt, a Swap Agreement ceases to be
      an
      Eligible Swap Agreement if the Person that is the counterparty to the Borrower
      or one of its Subsidiaries that is a Guarantor under a Swap Agreement ceases
      to
      be a Senior Revolving Lender under the Senior Revolving Credit Agreement (or,
      in
      the case of an affiliate of a Senior Revolving Lender, either such Person ceases
      to be affiliated with a Senior Revolving Lender or its affiliated lender ceases
      to be a Senior Revolving Lender under the Senior Revolving Credit
      Agreement).

     

    
      
        
        

      

      
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    “Enforcement
      Action”
means,
      with respect to any Subordinated Obligations: (a) any action by any Person
      to
      foreclose on the Lien of such Person in any Collateral, (b) any action to take
      possession or control of, or sell or otherwise realize upon the Collateral
      (including, without limitation, the exercise of any right under any lockbox
      agreement, account control agreement, letter-in-lieu, bailee’s letter or similar
      agreement or arrangement to which the Term Administrative Agent or any Term
      Lender may be a party), or (c) the commencement of (or join with any other
      Person in commencing) any legal proceedings or actions against any Collateral
      to
      facilitate the actions described in clauses (a) and (b) above.

     

    “Exigent
      Circumstances”
means
      an event or circumstance that materially and imminently threatens the ability
      of
      Senior Indebtedness Representative to realize upon all or any material portion
      of the Collateral, such as, without limitation, fraudulent or intentional
      removal, concealment, or abscondment thereof, destruction or material waste
      thereof, any material misstatement by any Obligor or any of its representatives
      in writing regarding any calculation of the Borrowing Base under the Senior
      Revolving Credit Agreement or the diversion of funds in violation of the Senior
      Revolving Credit Documents.

     

    “Governmental
      Authority”
means
      any federal, state, municipal, national or other government, governmental
      department, commission, board, bureau, court, agency or instrumentality or
      political subdivision thereof or any entity or officer exercising executive,
      legislative, judicial, regulatory or administrative functions of or pertaining
      to any government or any court, in each case whether associated with a state
      of
      the United States, the United States, or a foreign entity or
      government.

     

    “Guarantors”
means
      each Subsidiary of the Borrower required to guarantee the Indebtedness under
      either the Senior Revolving Credit Agreement or the Second Lien Term Loan
      Agreement, as applicable.

     

    “Hedging
      Obligation”
means
      any obligation of the Borrower or any other Obligor pursuant to any Eligible
      Swap Agreements.

     

    “Indebtedness”
means
      and includes all Obligations that constitute “Indebtedness” within the meaning
      of the Senior Revolving Credit Agreement or the Second Lien Term Loan Agreement,
      as applicable, in each case as amended, restated, supplemented, modified or
      Refinanced from time to time as permitted pursuant to the terms of this
      Agreement.

     

    “Insolvency
      or Liquidation Proceeding”
means
      (a) any voluntary or involuntary case or proceeding under the Bankruptcy Code
      with respect to any Obligor, (b) any other voluntary or involuntary insolvency,
      reorganization or bankruptcy case or proceeding, or any receivership,
      liquidation, reorganization or other similar case or proceeding with respect
      to
      any Obligor or with respect to a material portion of their respective assets,
      (c) any liquidation, dissolution, reorganization or winding up of any Obligor
      whether voluntary or involuntary and whether or not involving insolvency or
      bankruptcy or (d) any assignment for the benefit of creditors or any other
      marshalling of assets and liabilities of any Obligor.

     

    
      
        
        

      

      
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    “Lenders”
means
      the Senior Revolving Lenders and the Term Lenders.

     

    “Lien”
means
      any interest in Property (as defined in the Senior Revolving Credit Agreement
      as
      in effect on the date hereof) 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,
      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.

     

    “Maximum
      Priority Senior Revolving Amount”
      means,
      as
      of any date of determination, the amount in respect of principal of the Senior
      Indebtedness not to exceed the sum of (a) the
      least
      of (i) the most recently established “Borrowing Base” under the Senior Revolving
      Credit Agreement, (ii) the Aggregate Maximum Credit Amounts less any reductions
      thereof, or (iii) $130,000,000 and (b) any of the following which is applicable
      (but without duplication) (i) the principal amount of any Borrowing Base
      Deficiency, or (ii) any outstanding principal under the Senior Revolving Credit
      Agreement not repaid in connection with a reduction of the Aggregate Maximum
      Credit Amounts which results in the Revolving Credit Exposures exceeding the
      Aggregate Maximum Credit Amounts;
      provided however, the amount set forth in clause (b) shall not include (A)
      any
      additional amounts in respect of principal to the extent such excess is the
      result of additional Loans advanced or letters of credit issued (other than
      renewal of outstanding letters of credit in amounts not exceeding the
      outstanding face amounts) while Borrowing Base Deficiency is in effect or (B)
      any Loans or letters of credit to the extent advancing such funds or issuing
      such letter of credit (other than renewal of outstanding letters of credit
      in
      amounts not exceeding the outstanding face amounts) would cause a Borrowing
      Base
      Deficiency, would exceed the Aggregate Maximum Credit Amounts then in effect.
      For the avoidance of doubt the calculation of “Maximum
      Priority Senior Revolving Amount”
refers
      only to the outstanding principal balance of Loans and the face amount of
      outstanding Letters of Credit under the Senior Revolving Credit Documents and
      does not include interest, fees, other amounts due under the Senior Revolving
      Credit Agreement and amounts due in respect of Eligible Swap
      Agreements.

     

    “Obligations”
means
      any and all obligations with respect to the payment of (a) any principal of
      or
      interest or premium on any Indebtedness, including any reimbursement obligation
      in respect of any letter of credit, or any other liability, including, without
      limitation, interest accruing after the filing of a petition initiating any
      proceeding under the Bankruptcy Code, (b) any fees, indemnification obligations,
      expense reimbursement obligations or other liabilities payable under the
      documentation governing any Indebtedness, (c) any obligation to post cash
      collateral in respect of letters of credit or any other obligations constituting
      Indebtedness and (d) any Hedging Obligations.

     

    “Obligors”
means
      has the meaning set forth in the preamble hereof. 

     

    
      
        
        

      

      
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    “Person”
means
      natural persons, corporations, limited partnerships, general partnerships,
      limited liability companies, limited liability partnerships, joint stock
      companies, joint ventures, associations, companies, trusts, banks, trust
      companies, land trusts, business trusts or other organizations, whether or
      not
      legal entities, and Governmental Authorities.

     

    “Pledged
      Collateral”
has
      the
      meaning set forth in Section 5.5 hereof.

     

    “Purchase
      Notice”
has
      the
      meaning set forth in Section 5.6(a) hereof.

     

    “Purchase
      Period”
has
      the
      meaning set forth in Section 5.6(b) hereof.

     

    “Recovery”
has
      the
      meaning set forth in Section 6.5 hereof.

     

    “Refinance”
means
      any refinancing of the outstanding Senior Indebtedness under the Senior
      Revolving Credit Documents provided that the financing documentation entered
      into by the Obligors in connection with such Refinancing constitute Refinancing
      Documents. “Refinanced”
and
      “Refinancing”
shall
      have correlative meanings.

     

    “Refinancing
      Documents”
means
      any financing documentation which amends, restates, supplements or otherwise
      replaces the Senior Revolving Credit Documents and pursuant to which the
      outstanding Senior Indebtedness (including continuing Liens to secure directly
      or indirectly Eligible Swap Agreements) under the Senior Revolving Credit
      Documents are refinanced in their entirety, as such financing documentation
      may
      be amended, supplemented, restated, refinanced or otherwise modified from time
      to time in compliance with this Agreement, but specifically excluding any such
      financing documentation to the extent that it contains, either initially or
      by
      amendment or other modification, any terms, conditions, covenants or defaults
      other than those which (a) then exist in the Senior Revolving Credit Documents
      or (b) could be included in the Senior Revolving Credit Documents by an
      amendment or other modification that would not be prohibited by the terms of
      this Agreement.

     

    “Second
      Lien Term Loan Agreement”
has
      the
      meaning set forth in the Recitals hereto.

     

    “Senior
      Indebtedness”
means
      all Obligations outstanding under the Senior Revolving Credit Agreement and
      the
      other Senior Revolving Credit Documents, including, without limitation, Eligible
      Swap Agreements. To the extent any payment with respect to the Senior
      Indebtedness (whether by or on behalf of any Obligor, as proceeds of security,
      enforcement of any right of set off or otherwise) is declared to be fraudulent
      or preferential in any respect, set aside or required to be paid to a debtor
      in
      possession, trustee, receiver or similar Person, then the Obligation or part
      thereof originally intended to be satisfied shall be deemed to be reinstated
      and
      outstanding as if such payment had not occurred. “Senior
      Indebtedness”
shall
      include all interest accrued or accruing (or which would, absent commencement
      of
      an Insolvency or Liquidation Proceeding, accrue) after commencement of an
      Insolvency or Liquidation Proceeding in accordance with the rate specified
      in
      the relevant Senior Revolving Credit Document whether or not the claim for
      such
      interest is allowed as a claim in such Insolvency or Liquidation
      Proceeding.

     

    “Senior
      Indebtedness Representative”
has
      the
      meaning set forth in the Recitals hereto.

     

    
      
        
        

      

      
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    “Senior
      Revolving Claimholders”
means,
      at any relevant time, the holders of Senior Indebtedness at such time, including
      without limitation the Senior Revolving Lenders and the agents under the Senior
      Revolving Credit Agreement.

     

    “Senior
      Revolving Collateral”
means
      all of the assets and property of any Obligor, whether real, personal or mixed,
      with respect to which a Lien is granted as security for any Senior
      Indebtedness.

     

    “Senior
      Revolving Collateral Documents”
means
      the Security Instruments (as defined in the Senior Revolving Credit Agreement
      as
      in effect on the date hereof) and any other agreement, document or instrument
      pursuant to which a Lien is granted securing any Senior Indebtedness or under
      which rights or remedies with respect to such Liens are governed.

     

    “Senior
      Revolving Credit Agreement”
has
      the
      meaning set forth in the Recitals hereto.

     

    “Senior
      Revolving Credit Documents”
means
      the Senior Revolving Credit Agreement and the Loan Documents (as defined in
      the
      Senior Revolving Credit Agreement as in effect on the date hereof) and each
      of
      the other agreements, documents and instruments providing for or evidencing
      any
      other Senior Indebtedness, and any other document or instrument executed or
      delivered at any time in connection with any Senior Indebtedness, including
      any
      intercreditor or joinder agreement among holders of Senior Indebtedness, to
      the
      extent such are effective at the relevant time, as each may be modified from
      time to time in accordance with the terms of this Agreement.

     

    “Senior
      Revolving Lenders”
means
      the “Lenders” under and as defined in the Senior Revolving Credit
      Agreement.

     

    “Senior
      Revolving Mortgages”
means
      a
      collective reference to each mortgage, deed of trust and any other document
      or
      instrument under which any Lien on real property owned by any Obligor is granted
      to secure any Senior Indebtedness or under which rights or remedies with respect
      to any such Liens are governed.

     

    “Standstill
      Period”
has
      the
      meaning set forth in Section 3.1 hereof.

     

    “Subordinated
      Obligations”
means
      all Obligations outstanding under the Second Lien Term Loan Agreement and the
      other Term Credit Documents. To the extent any payment with respect to the
      Subordinated Obligations (whether by or on behalf of any Obligor, as proceeds
      of
      security, enforcement of any right of set off or otherwise) is declared to
      be
      fraudulent or preferential in any respect, set aside or required to be paid
      to a
      debtor in possession, trustee, receiver or similar Person, then the Obligation
      or part thereof originally intended to be satisfied shall be deemed to be
      reinstated and outstanding as if such payment had not occurred. “Subordinated
      Obligations”
shall
      include all interest accrued or accruing (or which would, absent commencement
      of
      an Insolvency or Liquidation Proceeding, accrue) after commencement of an
      Insolvency or Liquidation Proceeding in accordance with the rate specified
      in
      the relevant Term Credit Document whether or not the claim for such interest
      is
      allowed as a claim in such Insolvency or Liquidation Proceeding.

     

    
      
        
        

      

      
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    “Subsidiary”
shall
      have the meaning assigned in the Senior Revolving Credit Agreement and Second
      Lien Term Loan Agreement as in effect on the date hereof.

     

    “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.

     

    “Term
      Administrative Agent”
has
      the
      meaning set forth in the preamble hereof.

     

    “Term
      Claimholders”
means,
      at any relevant time, the holders of Subordinated Obligations at such time,
      including without limitation the Term Lenders and the agents under the Second
      Lien Term Loan Agreement.

     

    “Term
      Collateral”
means
      all of the assets and property of any Obligor, whether real, personal or mixed,
      with respect to which a Lien is granted as security for any Subordinated
      Obligations.

     

    “Term
      Collateral Documents”
means
      the Security Instruments (as defined in the Second Lien Term Loan Agreement
      as
      in effect on the date hereof) and any other agreement, document or instrument
      pursuant to which a Lien is granted securing any Subordinated Obligations or
      under which rights or remedies with respect to such Liens are
      governed.

     

    “Term
      Credit Documents”
means
      the Second Lien Term Loan Agreement and the Loan Documents (as defined in the
      Second Lien Term Loan Agreement) and each of the other agreements, documents
      and
      instruments providing for or evidencing any other Subordinated Obligation,
      and
      any other document or instrument executed or delivered at any time in connection
      with any Subordinated Obligations, as the same may be modified from time to
      time
      in accordance with the terms of this Agreement.

     

    “Term
      Lenders”
means
      the “Lenders” under and as defined in the Second Lien Term Loan
      Agreement.

     

    “Term
      Mortgages”
means
      a
      collective reference to each mortgage, deed of trust and any other document
      or
      instrument, if any, under which any Lien on real property owned by any Obligor
      is granted to secure any Subordinated Obligations or under which rights or
      remedies with respect to any such Liens are governed.

     

    “Uniform
      Commercial Code”
or
      “UCC”
means
      the Uniform Commercial Code (or any similar or equivalent legislation) as in
      effect in any applicable jurisdiction.

     

    Section
      1.2  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, (b)
      any
      reference herein to any Person shall be construed to include such Person’s
      successors and assigns, (c)
      the
      words “herein”, “hereof” and “hereunder”, and words of similar import, shall be
      construed to refer to this Agreement in its entirety and not to any particular
      provision hereof, (d)
      all
      references herein to Sections shall be construed to refer to Sections of this
      Agreement and (e)
      the
      words “asset” and “property” shall be construed to have the same meaning and
      effect and to refer to any and all tangible and intangible assets and
      properties, including cash, securities, accounts and contract
      rights.

     

    
      
        
        

      

      
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    ARTICLE
      II  

    LIEN
      PRIORITIES

     

    Section
      2.1  Relative
      Priorities.
      Notwithstanding the date, manner or order of grant, attachment or perfection
      of
      any Liens securing the Subordinated Obligations granted on the Collateral or
      of
      any Liens securing the Senior Indebtedness granted on the Collateral and
      notwithstanding any provision of the UCC, or any applicable law or the Term
      Credit Documents or any other circumstance whatsoever, the Term Administrative
      Agent, on behalf of itself and the Term Claimholders, and the Senior
      Indebtedness Representative, on behalf of itself and the Senior Revolving
      Claimholders, hereby agree that: (a)
      any Lien
      on the Collateral securing any Senior Indebtedness (in the case of principal
      of
      Senior Indebtedness up to the Maximum Priority Senior Revolving Amount) now
      or
      hereafter held by or on behalf of the Senior Indebtedness Representative, any
      Senior Revolving Claimholders or any agent or trustee therefor, regardless
      of
      how acquired, whether by grant, possession, statute, operation of law,
      subrogation or otherwise, shall be senior in all respects and prior to any
      Lien
      on the Collateral securing any of the Subordinated Obligations; (b)
      any Lien
      on the Collateral now or hereafter held by or on behalf of the Term
      Administrative Agent, any Term Claimholders or any agent or trustee therefor
      regardless of how acquired, whether by grant, possession, statute, operation
      of
      law, subrogation or otherwise, shall be junior and subordinate in all respects
      to all Liens on the Collateral securing any Senior Indebtedness (but in the
      case
      of principal of Senior Indebtedness up to the Maximum Priority Senior Revolving
      Amount) and (c)
      any Lien
      on the Collateral now or hereafter held by or on behalf of the Senior
      Indebtedness Representative, any Senior Revolving Claimholders or any agent
      or
      trustee therefor regardless of how acquired, whether by grant, possession,
      statute, operation of law, subrogation or otherwise, that secures any portion
      of
      Senior Indebtedness representing principal in excess of the Maximum Priority
      Senior Revolving Amount shall be subordinate in all respects to all Liens on
      the
      Collateral securing the Subordinated Obligations. All Liens on the Collateral
      securing any Senior Indebtedness shall be and remain senior in all respects
      and
      prior to all Liens on the Collateral securing any Subordinated Obligations
      for
      all purposes, whether or not such Liens securing any Senior Indebtedness are
      subordinated to any Lien securing any other obligations of the Borrower, any
      other Obligor or any other Person. The foregoing provisions of this Section
      2.1
      and the other provisions of this Agreement shall not be interpreted or construed
      to suggest or imply any intent of any party or either the Senior Revolving
      Claimholders or the Term Claimholders to subordinate their Liens to any Liens
      other than as set forth in Section 2.1 (and nothing in this Agreement shall
      be
      construed to suggest or imply that the Subordinated Obligations themselves
      are
      subordinated to the Senior Indebtedness or vice
      versa).

     

    
      
        
        

      

      
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    Section
      2.2  Prohibition
      on Contesting Liens.
      Each of
      the Term Administrative Agent, for itself and on behalf of each Term
      Claimholder, and the Senior Indebtedness Representative, for itself and on
      behalf of each Senior Revolving Claimholder, agrees that it shall not (and
      hereby waives any right to) contest or support any other Person in contesting,
      in any proceeding (including any Insolvency or Liquidation Proceeding), the
      priority, validity or enforceability of a Lien held by or on behalf of any
      of
      the Senior Revolving Claimholders in the Senior Revolving Collateral or by
      or on
      behalf of any of the Term Claimholders in the Term Collateral, as the case
      may
      be; provided that
      nothing
      in this Agreement (a)
      shall be
      construed to prevent or impair the rights of the Senior Indebtedness
      Representative or any Senior Revolving Claimholder to enforce this Agreement,
      including the priority of the Liens securing the Senior Indebtedness as provided
      in Sections 2.1 and 3.1, or vote on a plan of reorganization in an Insolvency
      or
      Liquidation Proceeding; or (b)
      shall be
      construed to prevent or impair the rights of the Term Administrative Agent
      or
      any Term Claimholder to enforce this Agreement, including the priority of the
      Liens securing the Subordinated Obligations as provided in Sections 2.1 and
      3.1,
      or vote on a plan of reorganization in an Insolvency or Liquidation
      Proceeding.

     

    Section
      2.3  No
      New
      Liens.
      So long
      as the Discharge of Senior Indebtedness has not occurred, the parties hereto
      agree that the Borrower shall not, and shall not permit any Guarantor to,
(a)
      grant or
      permit any additional Liens on any asset or property to secure any Subordinated
      Obligation unless it has granted a senior Lien on such asset or property to
      secure the Senior Indebtedness, and (b)
      grant or
      permit any additional Liens on any asset or property to secure any Senior
      Indebtedness unless it has granted a junior Lien on such asset or property
      to
      secure the Subordinated Obligations and any such Lien referred to in this
      Section 2.3 shall be subject to the provisions of Section 2.1 and Section 3.1.
      To the extent that the foregoing provisions are not complied with for any
      reason, without limiting any other rights and remedies available to the Senior
      Indebtedness Representative and/or the Senior Revolving Claimholders, the Term
      Administrative Agent, on behalf of Term Claimholders, agrees that any amounts
      received by or distributed to any of them pursuant to or as a result of Liens
      granted in contravention of this Section 2.3 shall be subject to Section
      4.2.

     

    Section
      2.4  Similar
      Liens and Agreements.
      The
      parties hereto agree that it is their intention that the Senior Revolving
      Collateral and the Term Collateral be identical. To the extent that,
      notwithstanding this Section 2.4, the Senior Revolving Collateral and Term
      Collateral are not identical, the Term Administrative Agent, on behalf of Term
      Claimholders, agrees that any amounts received by or distributed to any of
      them
      after an Enforcement Action pursuant to or as a result of Liens on Term
      Collateral that is not Senior Revolving Collateral, shall be subject to Section
      4.2. In furtherance of the foregoing and of Section 8.9, the parties hereto
      agree, subject to the other provisions of this Agreement:

     

    (a)  upon
      request by the Senior Indebtedness Representative or the Term Administrative
      Agent, to cooperate in good faith (and to direct their counsel to cooperate
      in
      good faith) from time to time in order to determine the specific items included
      in the Senior Revolving Collateral and the Term Collateral and the steps taken
      to perfect their respective Liens thereon and the identity of the respective
      parties obligated under the Senior Revolving Credit Documents and the Term
      Credit Documents; and

     

    
      
        
        

      

      
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    (b)  that
      the
      documents and agreements creating or evidencing the Senior Revolving Collateral
      and the Term Collateral and guarantees for the Senior Indebtedness and the
      Subordinated Obligations shall be in all material respects the same forms of
      documents other than with respect to the first Lien and the second Lien nature
      of the Obligations and Collateral thereunder.

     

    ARTICLE
      III  

    ENFORCEMENT

     

    Section
      3.1  Exercise
      of Remedies.
      (a)
      So long
      as the Discharge of Senior Indebtedness has not occurred, whether or not any
      Insolvency or Liquidation Proceeding has been commenced by or against the
      Borrower or any other Obligor: 

     

    (i)  the
      Term
      Administrative Agent and the Term Claimholders:

     

    (x)
      will
      not exercise or seek to exercise any rights or remedies (including setoff)
      with
      respect to any Collateral (including, without limitation, the exercise of any
      right under any lockbox agreement, account control agreement, letter in-lieu,
      bailee’s letter or similar agreement or arrangement to which the Term
      Administrative Agent or any Term Claimholder is a party), or institute any
      action or proceeding with respect to such rights or remedies against the
      Collateral (including any action of foreclosure); provided,
      however,
      that
      the Term Administrative Agent may exercise any or all such rights and remedies
      after (1) the passage of a period of 179 days from the date of delivery of
      a
      notice in writing to the Senior Indebtedness Representative that an Event of
      Default (as defined in the Second Lien Term Loan Agreement) has occurred under
      the Term Credit Documents (with respect to each individual Event of Default,
      each a “Standstill
      Period”)
      which
      notice may only be delivered following the occurrence of and during the
      continuation of an Event of Default (as defined in the Second Lien Term Loan
      Agreement) under the Term Credit Documents or (2) upon payment in full in cash
      of all Senior Indebtedness (in the case of principal, up to the Maximum Senior
      Revolving Credit Amount); provided,
      further,
      however,
      notwithstanding anything herein to the contrary, in no event shall the Term
      Administrative Agent or any Term Claimholder exercise or continue to exercise
      any rights or remedies with respect to the Collateral if, notwithstanding the
      expiration of any outstanding Standstill Period, the Senior Indebtedness
      Representative or Senior Revolving Claimholders shall have commenced and are
      diligently pursuing the exercise of any of their rights or remedies with respect
      to all or any material portion of the Collateral (prompt notice of such exercise
      to be given to the Term Administrative Agent);

     

    (y)
      will
      not contest, protest or object to any foreclosure proceeding or action brought
      by the Senior Indebtedness Representative or any Senior Revolving Claimholder
      or
      any other exercise by the Senior Indebtedness Representative or any Senior
      Revolving Claimholder, of any rights and remedies relating to the Collateral
      under the Senior Revolving Credit Documents or otherwise; and 

     

    
      
        
        

      

      
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    (z)
      subject to its rights under clause (i)(x) above, will not object to the
      forbearance by the Senior Indebtedness Representative or the Senior Revolving
      Claimholders from bringing or pursuing any foreclosure proceeding or action
      or
      any other exercise of any rights or remedies relating to the Collateral, in
      each
      case so long as the respective interests of the Term Claimholders attach to
      the
      proceeds thereof subject to the relative priorities described in Section 2
      hereof; and 

     

    (ii)  the
      Senior Indebtedness Representative and the Senior Revolving Claimholders shall
      have the right to enforce rights, exercise remedies (including set off and
      the
      right to credit bid their debt) and make determinations regarding the release,
      disposition, or restrictions with respect to the Collateral as provided for
      under the Senior Revolving Credit Documents without any consultation with or
      the
      consent of the Term Administrative Agent or any Term Claimholder; 

     

    provided,
      that (A)
      in any
      Insolvency or Liquidation Proceeding commenced
      by or against the Borrower or any other Obligor,
      the
      Term Administrative Agent may file a claim or statement of interest with respect
      to the Subordinated Obligations, (B)
      the Term
      Administrative Agent may accelerate the Subordinated Obligations and take any
      action (not adverse to the prior Liens on the Collateral securing the Senior
      Indebtedness, or the rights of the Senior Indebtedness Representative or any
      Senior Revolving Claimholder to exercise remedies in respect thereof) in order
      to preserve or protect its Lien on the Collateral, (C)
      the Term
      Claimholders shall be entitled to file any necessary responsive or defensive
      pleadings in opposition to any motion, claim, adversary proceeding or other
      pleading made by any person objecting to or otherwise seeking the disallowance
      of the claims of the Term Claimholders, including without limitation any claims
      secured by the Collateral, if any, in each case in accordance with the terms
      of
      this Agreement, (D)
      the Term
      Claimholders shall be entitled to file any pleadings, objections, motions or
      agreements which assert rights or interests available to unsecured creditors
      of
      the Obligors arising under either the Bankruptcy Law or applicable
      non-bankruptcy law, in each case in accordance with the terms of this Agreement,
      (E)
      the Term
      Claimholders shall be entitled to file any proof of claim and other filings
      and
      make any arguments and motions that are, in each case, in accordance with the
      terms of this Agreement, with respect to the Subordinated Obligations and the
      Collateral, (F)
      the Term
      Administrative Agent or any Term Claimholder may exercise any of its rights
      or
      remedies with respect to the Collateral after the termination of each then
      outstanding Standstill Period to the extent permitted by clause (i)(x) above
      and
      (G) the Term Administrative Agent may charge default interest pursuant to the
      terms of the Second Lien Term Loan Agreement. In exercising rights and remedies
      with respect to the Collateral, the Senior Indebtedness Representative and
      the
      Senior Revolving Claimholders may enforce the provisions of the Senior Revolving
      Credit Documents, and the Term Administrative Agent and the Term Claimholders
      may enforce the provisions of the Term Credit Documents, in each case, as
      applicable, and exercise remedies thereunder, all in such order and in such
      manner as they may determine in the exercise of their sole discretion. Such
      exercise and enforcement shall include the rights of an agent appointed by
      them
      to sell or otherwise dispose of Collateral upon foreclosure, to incur reasonable
      expenses (including, without limitation, all reasonable legal fees) in
      connection with such sale or disposition, and to exercise all the rights and
      remedies of a secured creditor under the Uniform Commercial Code of any
      applicable jurisdiction and of a secured creditor under Bankruptcy Laws of
      any
      applicable jurisdiction. 

     

    
      
        
        

      

      
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    (b)  The
      Term
      Administrative Agent, on behalf of itself and the Term Claimholders, agrees
      that, it will not take or receive any Collateral or any proceeds of Collateral
      in connection with an Enforcement Action, unless and until the Discharge of
      Senior Indebtedness has occurred, except as expressly provided in Section 3.1(a)
      of this Agreement. 

     

    (c)  Subject
      to Section 3.1(a) of this Agreement, (i)
      the Term
      Administrative Agent, for itself and on behalf of the Term Claimholders, agrees
      that the Term Administrative Agent and the Term Claimholders will not take
      any
      action that would hinder any exercise of remedies under the Senior Revolving
      Credit Documents or is otherwise prohibited hereunder, including any sale,
      lease, exchange, transfer or other disposition of the Collateral, whether by
      foreclosure or otherwise, and (ii)
      the Term
      Administrative Agent, for itself and on behalf of the Term Claimholders, hereby
      waives any and all rights it or the Term Claimholders may have as a junior
      lien
      creditor or otherwise to object to the manner in which the Senior Indebtedness
      Representative or the Senior Revolving Claimholders seek to enforce or collect
      the Senior Indebtedness or the Liens granted in any of the Senior Revolving
      Collateral, regardless of whether any action or failure to act by or on behalf
      of the Senior Indebtedness Representative or Senior Revolving Claimholders
      is
      adverse to the interest of the Term Administrative Agent or Term
      Claimholders.

     

    (d)  The
      Senior Indebtedness Representative shall provide at least ten (10) days’ notice
      to the Term Administrative Agent of its intent to exercise and enforce its
      rights and remedies with respect to the Collateral.

     

    (e)  Each
      Term
      Lender agrees that upon termination of a Standstill Period if any Term Lender
      or
      the Term Administrative Agent or other representative of such Term Lender
      intends to commence any Enforcement Action, then such Term Lender or the Term
      Administrative Agent or other representative shall first deliver notice thereof
      in writing to the Senior Indebtedness Representative both (i)
      not less
      than ten (10) days prior to taking any such Enforcement Action, and (ii)
      one (1)
      Business Day after such Enforcement Action is taken. Such notices may be given
      during a Standstill Period.

     

    Section
      3.2  Cooperation.
      Subject
      to its rights after the expiration of each outstanding Standstill Period and
      subject to Section 3.1(a) of this Agreement, the Term Administrative Agent,
      on
      behalf of itself and the Term Claimholders, agrees that, unless and until the
      Discharge of Senior Indebtedness has occurred, it will not commence, or join
      with any Person in commencing, any enforcement, collection, execution, levy
      or
      foreclosure action or proceeding (including, without limitation, any Insolvency
      or Liquidation Proceeding) with respect to any Lien held by it under the Term
      Collateral Documents or any other Term Credit Document or
      otherwise.

     

    Section
      3.3  Coordination
      of Enforcement Efforts.
      Without
      providing any rights or benefits to the Borrower or any Obligor, the Senior
      Indebtedness Representative, for itself and on behalf of the Senior Revolving
      Claimholders, and the Term Administrative Agent, for itself and on behalf of
      the
      Term Claimholders, agree that in the event enforcement proceedings are
      necessary, such parties shall reasonably discuss the possibility of undertaking
      a coordinated enforcement process, including an effort to attempt to sell the
      Collateral for fair market value as a going concern and to reasonably enter
      into
      arrangements between themselves so as to permit the ongoing operation of the
      business of the Borrower and the other Obligors. Failure to enter into such
      discussions shall in no way affect the rights and/or obligations of any party
      as
      set forth in this Agreement. In addition, the Term Administrative Agent and
      the
      Term Claimholders may join in (but not control) any judicial foreclosure
      proceeding or other judicial lien enforcement proceeding with respect to the
      Collateral initiated by the Senior Indebtedness Representative or any Senior
      Revolving Claimholder, to the extent that any such action could not reasonably
      be expected, in any material respect, to restrain, hinder, limit, delay for
      any
      material period or otherwise interfere with the exercise of such remedy or
      remedies by the Senior Indebtedness Representative or such Senior Revolving
      Claimholder. 

     

    
      
        
        

      

      
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    ARTICLE
      IV  

    PAYMENTS

     

    Section
      4.1  Application
      of Proceeds.
      So long
      as the Discharge of Senior Indebtedness has not occurred, any proceeds of
      Collateral received by the Senior Indebtedness Representative or any Senior
      Revolving Claimholders in connection with the sale or other disposition of,
      or
      collection on, such Collateral upon the exercise of remedies, shall be applied
      by the Senior Indebtedness Representative to the Senior Indebtedness in such
      order as specified in the Senior Revolving Credit Agreement up to, in the case
      of principal, the Maximum Priority Senior Revolving Amount. Upon the Discharge
      of the Senior Indebtedness (other than amounts in respect of principal in excess
      of the Maximum Priority Senior Revolving Amount), the Senior Indebtedness
      Representative shall deliver to the Term Administrative Agent any proceeds
      of
      Collateral held by it in the same form as received, with any necessary
      endorsements or as a court of competent jurisdiction may otherwise direct to
      be
      applied by the Term Administrative Agent to the Subordinated Obligations in
      such
      order as specified in the Term Collateral Documents. Upon the payment in full
      of
      the Subordinated Obligations, the Term Administrative Agent shall deliver to
      the
      Senior Indebtedness Representative any proceeds of Collateral held by it in
      the
      same form as received, with any necessary endorsements or as a court of
      competent jurisdiction may otherwise direct to be applied to any amounts owed
      in
      respect of amounts of principal in excess of the Maximum Priority Senior
      Revolving Amount.

     

    Section
      4.2  Payments
      Over.
      So long
      as the Discharge of Senior Indebtedness has not occurred, any Collateral or
      proceeds thereof (together with assets or proceeds subject to Liens referred
      to
      in the final sentence of Section 2.3) received by the Term Administrative Agent
      or any Term Claimholders in connection with the exercise of any right or remedy
      (including set off) with respect to the Collateral shall be segregated and
      held
      in trust and forthwith paid over to the Senior Indebtedness Representative
      for
      the benefit of the Senior Revolving Claimholders in the same form as received,
      with any necessary endorsements or as a court of competent jurisdiction may
      otherwise direct. The Senior Indebtedness Representative is hereby authorized
      to
      make any such endorsements as agent for the Term Administrative Agent or any
      such Term Claimholders. This authorization is limited to the specific matters
      described in the preceding sentence and is coupled with an interest and is
      irrevocable until such time as this Agreement is terminated in accordance with
      its terms.

     

    Section
      4.3  Scheduled
      Payments of Subordinated Obligations.
      The
      parties hereto agree that nothing in this Agreement or any Senior Revolving
      Credit Document shall be construed to prohibit, restrict or otherwise limit
      the
      ability of the Borrower or any Guarantor to pay, and the ability of the Term
      Lenders to receive, scheduled principal and interest payments in accordance
      with
      the Second Lien Term Loan Agreement and the other Term Credit
      Documents.

     

    
      
        
        

      

      
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    ARTICLE
      V  

    OTHER
      AGREEMENTS

     

    Section
      5.1  Releases.

     

    (a)  If,
      in
      connection with:

     

    (i)  any
      sale
      of any Collateral permitted under the Second Lien Term Loan Agreement to cure
      a
      Borrowing Base Deficiency under the Senior Revolving Credit Agreement;
      or

     

    (ii)  any
      sale,
      lease, exchange, transfer or other disposition of any Collateral permitted
      under
      the terms of both the Senior Revolving Credit Agreement and the Second Lien
      Term
      Loan Agreement,

     

    the
      Senior Indebtedness Representative, for itself or on behalf of any of the Senior
      Revolving Claimholders, releases any of its Liens on any part of the Collateral,
      or releases any Obligor from its obligations under its guaranty of the Senior
      Indebtedness, in each case other than in connection with the Discharge of Senior
      Indebtedness, then the Term Administrative Agent, for itself or for the benefit
      of the Term Claimholders, shall release the Liens (if any) of the Term
      Administrative Agent on such Collateral, and the obligations of such Obligor
      under its guaranty of the Subordinated Obligations, shall be automatically,
      unconditionally and simultaneously be released and the Term Administrative
      Agent, for itself or on behalf of any such Term Claimholders, promptly shall
      execute and deliver to the Senior Indebtedness Representative or such Obligor
      such termination statements, releases and other documents as may be reasonably
      necessary to effectively confirm such release.

     

    (b)  Until
      the
      Discharge of Senior Indebtedness occurs, the Term Administrative Agent, for
      itself and on behalf of the Term Claimholders, hereby irrevocably constitutes
      and appoints the Senior Indebtedness Representative and any officer or agent
      of
      the Senior Indebtedness Representative, with full power of substitution, as
      its
      true and lawful attorney in fact with full irrevocable power and authority
      in
      the place and stead of the Term Administrative Agent or such holder or in the
      Senior Indebtedness Representative’s own name, from time to time in the Senior
      Indebtedness Representative’s discretion, for the purpose of carrying out the
      terms of this Section 5.1, to take any and all appropriate action and to execute
      any and all documents and instruments which may be necessary to accomplish
      the
      purposes of this Section 5.1, including any endorsements or other instruments
      of
      transfer or release.

     

    (c)  Until
      the
      Discharge of Senior Indebtedness occurs, to the extent that the Senior Revolving
      Claimholders (i)
      have
      released any Lien on Collateral or any Obligor from its obligation under its
      guaranty and any such Liens or guaranty are later reinstated or (ii)
      obtain
      any new first priority Liens or additional guaranties from Obligors, then the
      Term Claimholders shall be immediately granted a second priority lien on any
      such Collateral and an additional guaranty, as the case may be.

     

    
      
        
        

      

      
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    Section
      5.2  Insurance.
      The
      Senior Indebtedness Representative and the Senior Revolving Claimholders shall
      have the sole and exclusive right, subject to the rights of the Obligors under
      the Senior Revolving Credit Documents, to adjust settlement for any insurance
      policy covering the Collateral in the event of any loss thereunder and to
      approve any award granted in any condemnation or similar proceeding (or any
      deed
      in lieu of condemnation) affecting the Collateral until the earliest to occur
      of
(a)
      a
      Discharge of Senior Indebtedness, (b)
      the
      Senior Indebtedness Representative, in a written instrument, waives or otherwise
      confers such right to the Term Administrative Agent or a Term Claimholder or
      (c)
      after
      the occurrence and during the continuation of an Event of Default which has
      resulted in a Standstill Period, such Standstill Period has elapsed. Unless
      and
      until the Discharge of Senior Indebtedness has occurred, and subject to the
      rights of the Obligors under the Senior Revolving Collateral Documents, all
      proceeds of any such policy and any such award (or any payments with respect
      to
      a deed in lieu of condemnation) if in respect to the Collateral shall be paid
      to
      the Senior Indebtedness Representative for the benefit of the Senior Revolving
      Claimholders pursuant to the terms of the Senior Revolving Credit Documents
      (including, without limitation, for purposes of cash collateralization of
      letters of credit and Eligible Swap Agreements) and thereafter, to the extent
      no
      Senior Indebtedness is outstanding, and subject to the rights of the Obligors
      under the Term Collateral Documents, to the Term Administrative Agent for the
      benefit of the Term Claimholders to the extent required under the Term
      Collateral Documents and then, to the extent no Subordinated Obligations are
      outstanding, to the owner of the subject property, such other Person as may
      be
      entitled thereto or as a court of competent jurisdiction may otherwise direct.
      Until the Discharge of Senior Indebtedness has occurred, if the Term
      Administrative Agent or any Term Claimholders shall, at any time, receive any
      proceeds of any such insurance policy or any such award or payment in
      contravention of this Agreement, it shall pay such proceeds over to the Senior
      Indebtedness Representative in accordance with the terms of Section 4.2 of
      this
      Agreement.

     

    Section
      5.3  Amendments
      to Credit Documents.

     

    (a)  Unless
      a
      similar amendment, supplement or modification to the applicable Senior Revolving
      Credit Document(s) has been, or is concurrently being, made, without the prior
      written consent of the Senior Indebtedness Representative, no Term Credit
      Document may be assigned, amended, supplemented or otherwise modified or entered
      into to the extent such assignment, amendment, supplement or modification,
      or
      the terms of any new Term Credit Document, if (i)
      the
      effect thereof would be to shorten the maturity of the Subordinated Obligations
      or shorten the average life or increase the amount of any payment of principal
      thereof or increase the interest rate or scheduled recurring fee or add call
      or
      pre-payment premiums or shorten any period for payment of interest thereon,
      (ii)
      such
      action requires the payment of a consent fee (howsoever described) in excess
      of
      two percent (2%) per annum, (iii)
      such
      action adds additional Property as collateral to secure the Subordinated
      Obligations unless the Borrower complies with Section 8.14(e) of the Senior
      Revolving Credit Agreement or (iv)
      such
      action adds any covenants or defaults without the Senior Revolving Credit
      Agreement being contemporaneously amended to add substantially similar covenants
      or defaults, provided that the foregoing shall not prohibit the execution of
      supplemental agreements to add guarantors if required by the terms thereof
      provided that any such guarantor also guarantees the Senior
      Indebtedness.

     

    
      
        
        

      

      
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    The
      Borrower agrees that each Term Collateral Document shall include the following
      language (or language to similar effect approved by the Senior Indebtedness
      Representative):

     

    “Notwithstanding
      anything herein to the contrary, the lien and security interest granted to
      the
      Term Administrative Agent pursuant to this Agreement and the exercise of any
      right or remedy by the Term Administrative Agent hereunder are subject to the
      provisions of the Intercreditor Agreement, dated as of August 20, 2007 as
      amended, restated, supplemented or otherwise modified from time to time, the
      “Intercreditor
      Agreement”),
      among
      Aurora Oil & Gas Corporation, BNP Paribas, as Senior Indebtedness
      Representative, BNP Paribas, as Term Administrative Agent, and certain other
      persons party or that may become party thereto from time to time.”

     

    (b) The
      Senior Revolving Credit Documents and any agreements relating to Eligible Swap
      Agreements constituting Senior Indebtedness may be assigned, amended,
      supplemented, waived or otherwise modified in accordance with their terms,
      and
      the Senior Revolving Credit Agreement may be Refinanced, in each case, without
      the consent of the Term Administrative Agent or the Term Lenders; provided,
      however,
      that
      any such assignment, amendment, supplement, waiver, modification or Refinancing
      shall not: (i)
      increase
      the principal amount of the Senior Revolving Credit Agreement to an amount
      in
      excess of the Maximum Priority Senior Revolving Amount; (ii) increase any
      applicable interest rate or scheduled recurring fees with respect to the Senior
      Indebtedness more than 200 basis points, except in connection with the
      imposition of a default rate of interest in accordance with the terms of the
      Senior Revolving Credit Documents (as in effect on the date hereof); (iii)
      require the payment of a consent fee (howsoever described) in excess of two
      percent (2%) per annum; (iv) modify the scheduled amortization of any portion
      of
      the principal amount of the Senior Indebtedness (as set forth in the Senior
      Revolving Credit Documents in effect on the date hereof); (v) add or make more
      restrictive any event of default or any covenant with respect to the Senior
      Indebtedness or make any change to any event of default or any covenant which
      would have the effect of making such event of default or covenant more
      restrictive, unless a corresponding amendment is offered to the Term Lenders;
      (vi) change any redemption, put or prepayment provisions of the Senior
      Indebtedness (other than in respect of Eligible Swap Agreements); (vii) directly
      prohibit or restrict the payment of principal of, interest on, or other amounts
      payable with respect to the Subordinated Obligations in a manner that is more
      restrictive than the prohibitions and restrictions currently contained in the
      Senior Revolving Credit Agreement; (viii) subordinate in right of payment any
      of
      the Senior Indebtedness, or subordinate the Lien on any of the Collateral
      securing the Senior Indebtedness; (ix) change the definitions of “Borrowing
      Base”, “Oil and Gas Properties”, or any of the component definitions thereof;
      (x) add additional Property as collateral to secure the Notes (as defined in
      the
      Senior Revolving Credit Agreement) unless the Borrower complies with Section
      8.14(d) of the Second Lien Term Loan Agreement; or (xi) extend the final
      scheduled maturity of the Senior Indebtedness (other than Eligible Swap
      Agreements) or any other scheduled payment date for principal, interest or
      any
      other amount in respect thereof; provided
      that the
      foregoing shall not prohibit the execution of supplemental agreements to add
      guarantors if required by the terms thereof provided that any such guarantor
      also guarantees the Subordinated Obligations.

     

    
      
        
        

      

      
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    Section
      5.4  Rights
      as an Unsecured Creditor.
      Notwithstanding anything to the contrary contained in this Agreement, the Term
      Administrative Agent and the Term Lenders may exercise all rights and remedies
      available to unsecured creditors in accordance with the terms of the Second
      Lien
      Term Loan Agreement, the Term Credit Documents and applicable law, and nothing
      in this Agreement shall prohibit the acceleration of the Subordinated
      Obligations or the receipt of the Term Administrative Agent or the Term Lenders
      of the required payments of principal and interest and other amounts, so long
      as
      such receipt is not the direct or indirect result of the exercise of the Term
      Administrative Agent or any Term Lenders of an Enforcement Action in
      contravention of this Agreement. Nothing in this Agreement impairs or otherwise
      adversely affects any rights or remedies the Senior Indebtedness Representative
      or the Senior Revolving Claimholders may have with respect to the Senior
      Revolving Collateral.

     

    Section
      5.5  Bailee
      for Perfection.

     

    (a)  The
      Senior Indebtedness Representative agrees to hold that part of the Collateral
      that is in its possession or control (or in the possession or control of its
      agents or bailees) to the extent that possession or control thereof is taken
      to
      perfect a Lien thereon under the Uniform Commercial Code (such Collateral being
      the “Pledged
      Collateral”)
      as
      collateral agent for the Senior Revolving Claimholders and as bailee for the
      Term Administrative Agent and any assignee solely for the purpose of perfecting
      the security interest granted under the Senior Revolving Credit Documents and
      the Term Credit Documents, respectively, subject to the terms and conditions
      of
      this Section 5.5.

     

    (b)  Subject
      to the terms of this Agreement, until the Discharge of Senior Indebtedness
      has
      occurred, the Senior Indebtedness Representative shall be entitled to deal
      with
      the Pledged Collateral in accordance with the terms of the Senior Revolving
      Credit Documents as if the Liens of the Term Administrative Agent under the
      Term
      Collateral Documents did not exist. The rights of the Term Administrative Agent
      shall at all times be subject to the terms of this Agreement.

     

    (c)  The
      Senior Indebtedness Representative shall have no obligation whatsoever to the
      Senior Revolving Claimholders and the Term Administrative Agent or any Term
      Claimholder to ensure that the Pledged Collateral is genuine or owned by any
      of
      the Obligors or to preserve rights or benefits of any Person except as expressly
      set forth in this Section 5.5. The duties or responsibilities of the Senior
      Indebtedness Representative under this Section 5.5 shall be limited solely
      to
      holding the Pledged Collateral as bailee in accordance with this Section
      5.5.

     

    (d)  The
      Senior Indebtedness Representative acting pursuant to this Section 5.5 shall
      not
      have by reason of the Senior Revolving Collateral Documents, the Term Collateral
      Documents, this Agreement or any other document a fiduciary relationship in
      respect of the Senior Revolving Claimholders, the Term Administrative Agent
      or
      any Term Claimholder.

     

    (e)  Upon
      the
      Discharge of the Senior Indebtedness under the Senior Revolving Credit Documents
      to which the Senior Indebtedness Representative is a party, the Senior
      Indebtedness Representative shall deliver the remaining Pledged Collateral
      (if
      any) together with any necessary endorsements, to the Term Administrative Agent
      to the extent Subordinated Obligations remain outstanding. The Senior
      Indebtedness Representative further agrees to take all other action reasonably
      requested by the Term Administrative Agent in connection with it obtaining
      a
      first priority interest in the Collateral.

     

    
      
        
        

      

      
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    Section
      5.6  Purchase
      Option.

     

    (a)  The
      Senior Indebtedness Representative, on behalf of itself and the holders of
      Senior Indebtedness, agrees that if (i) an Event of Default under the Senior
      Revolving Credit Documents has occurred and is continuing, and as a result
      of
      such Event of Default under the Senior Revolving Credit Documents (A) the Senior
      Indebtedness has been accelerated and/or (B) the Majority Lenders are pursuing
      remedies of foreclosure against the Collateral, (ii) an Insolvency or
      Liquidation Proceeding is commenced by or against the Borrower or any other
      Obligor or (iii) a Standstill Period is in effect (any of such events, a
“Trigger
      Event”),
      the
      Term Claimholders shall have the right and option to purchase the aggregate
      amount of outstanding Senior Indebtedness (including unfunded commitments)
      up
      to, in the case of principal, the Maximum Priority Senior Revolving Amount
      at a
      price of not less than par, plus all accrued and unpaid interest and fees,
      together with cash collateral for all outstanding letters of credit in an amount
      equal to 105% of the undrawn and available amount consistent with all other
      Senior Revolving Credit Documents of all letters of credit outstanding under
      the
      Senior Revolving Credit Documents, and a payment for all then outstanding
      Eligible Swap Agreements at a price equal to the sum of any unpaid amounts
      then
      due in respect of such Eligible Swap Agreements plus or minus a net amount
      quoted by the Senior Revolving Claimholder party to such Eligible Swap Agreement
      that would be paid to assign or novate each such Eligible Swap Agreement in
      the
      ordinary course of its business. Such sale shall be without warranty or
      representation or recourse other than as provided in standard LSTA documentation
      for par trades. To exercise the option following a Trigger Event, the Term
      Administrative Agent shall deliver a written notice to the Senior Indebtedness
      Representative and the Senior Revolving Lenders, which notice shall be deemed
      an
      irrevocable offer to the Senior Revolving Claimholders to purchase the Senior
      Indebtedness on the terms set forth in this Section (the “Purchase
      Notice”).
      

     

    (b)  Upon
      receipt of a Purchase Notice the parties shall endeavor to close within twenty
      (20) days after such acceptance (such entire period referred to as the
“Purchase
      Period”).
      Neither the Senior Indebtedness Representative nor the Senior Revolving
      Claimholders shall commence any Enforcement Action during the Purchase Period;
      provided,
      however,
      (i)
      if the
      holders of Subordinated Obligations reject such offer or do not timely accept
      such offer, or (ii)
      if, upon
      expiration of the Purchase Period, the parties have not closed the transaction,
      then the Senior Indebtedness Representative and the holders of Senior
      Indebtedness shall have no further obligations pursuant to this Section and
      may
      commence any Enforcement Action in their sole discretion in accordance with
      the
      Senior Revolving Credit Documents and this Agreement; provided that if during
      the Purchase Period, a Senior Revolving Claimholder determines Exigent
      Circumstances exist, (A)
      it may
      or may direct the Senior Indebtedness Representative to take appropriate
      Enforcement Actions to preserve the value of the Collateral or the amount which
      could reasonably be expect to be recovered thereon and (B)
      nothing
      shall prevent the early termination of a Swap Agreement and the netting of
      amounts due in respect thereof.

     

    
      
        
        

      

      
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    ARTICLE
      VI

    INSOLVENCY
      OR LIQUIDATION PROCEEDINGS

     

    Section
      6.1  Filing
      of Claims; Finance and Sale Issues.
      If no
      proof of claim is filed in any Insolvency or Liquidation Proceeding with respect
      to any Subordinated Obligations by the third (3rd) day prior to the bar date
      for
      any such proof of claim, the Senior Indebtedness Representative may, after
      notice to the Term Lenders or the Term Administrative Agent or other
      representative, file such a proof of claim on behalf of the Term Lenders, and
      each Term Lender hereby irrevocably appoints the Senior Indebtedness
      Representative as its agent and attorney-in-fact for such limited purpose;
      provided, that the foregoing shall not confer to the holder of any Senior
      Indebtedness the right to vote on behalf of the Term Lenders in any Insolvency
      or Liquidation Proceedings or any other right. Until the Discharge of Senior
      Indebtedness has occurred, if the Borrower or any other Obligor shall be subject
      to any Insolvency or Liquidation Proceeding and the Senior Indebtedness
      Representative shall desire to permit the use of cash collateral on which the
      Senior Indebtedness Representative or any other creditor has a Lien or to permit
      the Borrower or any other Obligor to obtain financing, whether from the Senior
      Revolving Claimholders under Section 363 or Section 364 of Title 11 of the
      United States Code or any similar Bankruptcy Law (each, a “DIP
      Financing”),
      then
      the Term Administrative Agent, on behalf of itself and the Term Claimholders,
      agrees that it will raise no objection to such use of cash collateral or DIP
      Financing and will not request adequate protection or any other relief in
      connection therewith (except as expressly agreed by the Senior Indebtedness
      Representative or to the extent permitted by Section 6.3) and, to the extent
      the
      Liens securing the Senior Indebtedness are subordinated or pari
      passu
      with
      such DIP Financing, the Term Administrative Agent will subordinate its Liens
      in
      the Collateral to the Liens securing such DIP Financing (and all Obligations
      relating thereto); provided,
      however,
      that
      the foregoing shall not prevent the Term Lenders from (a)
      objecting to any DIP Financing relating to any provision or content of a plan
      of
      reorganization or (b)
      proposing any other DIP Financing to the Borrower or the bankruptcy court,
      and
provided
      further
      that the
      sum of all outstanding principal of Loans and Letters of Credit under the Senior
      Revolving Credit Agreement and any DIP Financing provided by the Senior
      Revolving Lenders will not exceed the Maximum Priority Senior Revolving Amount.
      The Term Administrative Agent on behalf of the Term Claimholders, agrees that
      it
      will raise no objection or oppose a sale or other disposition of any Collateral
      free and clear of its Liens or other claims under Section 363 of the Bankruptcy
      Code if the Senior Revolving Claimholders have consented to such sale or
      disposition of such assets. 

     

    Section
      6.2  Relief
      from the Automatic Stay.
      Until
      the earlier of (a)
      a
      Discharge of Senior Indebtedness has occurred or (b)
      179 days
      after the commencement of an Insolvency or Liquidation Proceeding have elapsed,
      the Term Administrative Agent, on behalf of itself and the Term Claimholders,
      agrees that none of them shall seek relief from the automatic stay or any other
      stay in any Insolvency or Liquidation Proceeding in respect of the Collateral,
      without the prior written consent of the Senior Indebtedness Representative.
      If
      after the expiration of the foregoing period, the Term Administrative Agent
      or
      any Term Claimholder seek relief from the automatic stay or any other stay,
      the
      Term Administrative Agent will provide prompt written notice
      thereof.

     

    Section
      6.3  Adequate
      Protection.
      The
      Term Administrative Agent, on behalf of itself and the Term Claimholders, agrees
      that none of them shall contest (or support any other person contesting)
(a)
      any
      request by the Senior Indebtedness Representative or the Senior Revolving
      Claimholders for adequate protection or (b)
      any
      objection by the Senior Indebtedness Representative or the Senior Revolving
      Claimholders to any motion, relief, action or proceeding based on the Senior
      Indebtedness Representative or the Senior Revolving Claimholders claiming a
      lack
      of adequate protection. Notwithstanding the foregoing provisions in this Section
      6.3, in any Insolvency or Liquidation Proceeding, (i)
      if the
      Senior Revolving Claimholders (or any subset thereof) are granted adequate
      protection in the form of additional collateral in connection with any DIP
      Financing, then the Term Administrative Agent, on behalf of itself or any of
      the
      Term Claimholders, may seek or request adequate protection in the form of a
      Lien
      on such additional collateral, which Lien will be subordinated to the Liens
      securing the Senior Indebtedness and such DIP Financing (and all Obligations
      relating thereto) on the same basis as the other Liens securing the Subordinated
      Obligations are so subordinated to the Senior Indebtedness under this Agreement,
      and (ii)
      in the
      event the Term Administrative Agent, on behalf of itself and the Term
      Claimholders, seeks or requests adequate protection in respect of Subordinated
      Obligations and such adequate protection is granted in the form of additional
      collateral, then the Term Administrative Agent, on behalf of itself or any
      of
      the Term Claimholders, agrees that the Senior Indebtedness Representative shall
      also be granted a senior Lien on such additional collateral as security for
      the
      Senior Indebtedness and for any such DIP Financing provided by the Senior
      Revolving Claimholders and that any Lien on such additional collateral securing
      the Subordinated Obligations shall be subordinated to the Liens on such
      collateral securing the Senior Indebtedness and any such DIP Financing provided
      by the Senior Revolving Claimholders (and all Obligations relating thereto)
      and
      to any other Liens granted to the Senior Revolving Claimholders as adequate
      protection on the same basis as the other Liens securing the Subordinated
      Obligations are so subordinated to such Senior Indebtedness under this
      Agreement. Except as set forth above, the Term Administrative Agent shall not
      be
      limited from seeking adequate protection with respect to its rights in the
      Collateral in any Insolvency or Liquidation Proceeding (including, without
      limitation, adequate protection in the form of cash payments of interest or
      otherwise).

     

    
      
        
        

      

      
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    Section
      6.4  No
      Waiver.
      Subject
      to Section 3.1(a) of this Agreement and other actions expressly permitted
      hereunder, nothing contained herein shall prohibit or in any way limit the
      Senior Indebtedness Representative or any Senior Revolving Claimholder from
      objecting in any Insolvency or Liquidation Proceeding or otherwise to any action
      taken by the Term Administrative Agent or any of the Term Claimholders,
      including the seeking by the Term Administrative Agent or any Term Claimholders
      of adequate protection or the asserting by the Term Administrative Agent or
      any
      Term Claimholders of any of its rights and remedies under the Term Credit
      Documents or otherwise. If in any Insolvency or Liquidation Proceeding, the
      Term
      Administrative Agent or any Term Lender receives a secured claim in lieu of
      a
      set-off, then such Person shall, to the extent practicable, exercise its rights
      in respect of such secured claim in a manner consistent with this
      Agreement.

     

    Section
      6.5  Avoidance
      Issues.
      If any
      Senior Revolving Claimholder is required in any Insolvency or Liquidation
      Proceeding or otherwise to turn over or otherwise pay to the estate of the
      Borrower or any other Obligor any amount (a “Recovery”),
      then
      such Senior Revolving Claimholders shall be entitled to a reinstatement of
      Senior Indebtedness with respect to all such recovered amounts; provided that
      the terms of this Agreement as between the parties shall not apply to any such
      Liens as reinstated to the extent the court ordering such Recovery determines
      such Recovery is due as the result of fraud, bad faith or the intentional
      misconduct of such Senior Revolving Claimholder. If this Agreement shall have
      been terminated prior to such Recovery, this Agreement shall be reinstated
      in
      full force and effect, and such prior termination shall not diminish, release,
      discharge, impair or otherwise affect the obligations of the parties hereto
      from
      such date of reinstatement unless the court ordering such Recovery determines
      such Recovery is due as the result of fraud, bad faith or the intentional
      misconduct of such Senior Revolving Claimholder. 

     

    
      
        
        

      

      
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    Section
      6.6  Reorganization
      Securities.
      If, in
      any Insolvency or Liquidation Proceeding, debt obligations of the reorganized
      debtor secured by Liens upon any property of the reorganized debtor are
      distributed, pursuant to a plan of reorganization or similar dispositive
      restructuring plan, both on account of Senior Indebtedness and on account of
      Subordinated Obligations, then, to the extent the debt obligations distributed
      on account of the Senior Indebtedness and on account of the Subordinated
      Obligations are secured by Liens upon the same property, the provisions of
      this
      Agreement will survive the distribution of such debt obligations pursuant to
      such plan and will apply with like effect to the Liens securing such debt
      obligations.

     

    Section
      6.7  Post-Petition
      Interest.

     

    (a)  Neither
      the Term Administrative Agent nor any Term Claimholder shall oppose or seek
      to
      challenge any claim by the Senior Indebtedness Representative or any Senior
      Revolving Claimholder for allowance in any Insolvency or Liquidation Proceeding
      of Senior Indebtedness consisting of post-petition interest, fees or expenses
      to
      the extent of the value of the Senior Revolving Claimholder’s Lien, without
      regard to the existence of the Lien of the Term Administrative Agent on behalf
      of the Term Claimholders on the Collateral. 

     

    (b)  Neither
      the Senior Indebtedness Representative nor any other Senior Revolving
      Claimholder shall oppose or seek to challenge any claim by the Term
      Administrative Agent or any Term Claimholder for allowance in any Insolvency
      or
      Liquidation Proceeding of Subordinated Obligations consisting of post-petition
      interest, fees or expenses to the extent of the value of the Lien of the Term
      Administrative Agent on behalf of the Term Claimholders on the Collateral (after
      taking into account the Lien of the Senior Indebtedness Representative on behalf
      of the Senior Revolving Claimholders on the Collateral).

     

    Section
      6.8  Waiver.
      The
      Term Administrative Agent, for itself and on behalf of the Term Claimholders,
      waives any claim it may hereafter have against any Senior Revolving Claimholder
      arising out of the election of any Senior Revolving Claimholder of the
      application of Section 1111(b)(2) of the Bankruptcy Code, and/or out of any
      cash
      collateral or financing arrangement or out of any grant of a security interest
      in connection with the Collateral in any Insolvency or Liquidation Proceeding.
      The Senior Indebtedness Representative, for itself and on behalf of the Senior
      Revolving Claimholders, waives any claim it may hereafter have against any
      Term
      Claimholder arising out of the election of any Term Claimholder of the
      application of Section 1111(b)(2) of the Bankruptcy Code (which is not in
      contravention of this Agreement), and/or out of any cash collateral or financing
      arrangement (which is not in contravention of this Agreement) or out of any
      grant of a security interest of the appropriate priority (which is not in
      contravention of this Agreement) in connection with the Collateral in any
      Insolvency or Liquidation Proceeding.

     

    
      
        
        

      

      
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    Section
      6.9  Asset
      Dispositions in an Insolvency or Liquidation Proceeding.
      Neither
      the Term Administrative Agent nor any other Term Lender shall, in an Insolvency
      or Liquidation Proceeding or otherwise, oppose any sale or disposition of any
      assets of any Obligor under Section 363 of the Bankruptcy Code that is supported
      by the Senior Revolving Claimholders, and the Term Administrative Agent and
      each
      other Term Lender will be deemed to have consented under Section 363 of the
      Bankruptcy Code to any such sale supported by the Senior Revolving Claimholders;
      provided in any case, the cash proceeds of such sale are used to permanently
      repay Senior Indebtedness and/or other permitted senior claims (i.e. “Excepted
      Liens”) on the assets subject of such sale. Neither the Term Administrative
      Agent nor any other Term Lender shall, in an Insolvency or Liquidation
      Proceeding or otherwise, assert in connection with any sale or disposition
      of
      any assets of any Obligor under Section 363 of the Bankruptcy Code any rights
      under Section 363(k) of the Bankruptcy Code or otherwise credit bid any of
      the
      Subordinated Obligations unless such credit bid includes a cash portion for
      any
      amounts with respect to the Senior Indebtedness.

     

    Section
      6.10  Separate
      Grants of Security and Separate Classification.
      Each
      Term Lender acknowledges and agrees that (a)
      the
      grants of Liens pursuant to the Senior Revolving Credit Documents and the Term
      Credit Documents constitute two separate and distinct grants of Liens and
(b)
      because
      of, among other things, their differing rights in the Collateral, the
      Subordinated Obligations are fundamentally different from the Senior
      Indebtedness and must be separately classified in any plan of reorganization
      proposed or adopted in an Insolvency or Liquidation Proceeding. To further
      effectuate the intent of the parties as provided in the immediately preceding
      sentence, if it is held that the claims against the Senior Revolving
      Claimholders and Term Lenders in respect of the Collateral constitute only
      one
      secured claim (rather than separate classes of senior and junior secured
      claims), then the Term Lenders hereby acknowledge and agree that all
      distributions shall be made as if there were separate classes of senior and
      junior secured claims against the Borrower and/or other Obligors in respect
      of
      the Collateral with the effect being that (i)
      to the
      extent that the aggregate value of the Collateral is sufficient (for this
      purpose ignoring all claims held by the Term Lenders), the Senior Revolving
      Claimholders shall be entitled to receive, in addition to amounts distributed
      to
      them in respect of principal, pre-petition interest and other claims, all
      amounts owing in respect of post-petition interest before any distribution
      is
      made in respect of the claims held by the Term Lenders and (ii)
      the Term
      Lenders hereby acknowledge and agree to turn over to the Senior Revolving
      Claimholders amounts otherwise received or receivable by them to the extent
      necessary to effectuate the intent of this sentence, even if such turnover
      has
      the effect of reducing the claim or recovery of the Term Lenders.

     

    Section
      6.11  Effectiveness
      in Insolvency or Liquidation Proceedings.
      This
      Agreement shall be effective both before and after the commencement of an
      Insolvency or Liquidation Proceeding. All references in this Agreement to any
      Obligor shall include such Obligor as a debtor-in-possession and any receiver
      or
      trustee for such Obligor in any Insolvency or Liquidation
      Proceeding.

     

    
      
        
        

      

      
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    ARTICLE
      VII  

    RELIANCE;
      WAIVERS; ETC.

     

    Section
      7.1  Reliance.
      Other
      than any reliance on the terms of this Agreement, the Senior Indebtedness
      Representative, on behalf of itself and the Senior Revolving Claimholders under
      its Senior Revolving Credit Documents, acknowledges that it and such Senior
      Revolving Claimholders have, independently and without reliance on the Term
      Administrative Agent or any Term Claimholders, and based on documents and
      information deemed by them appropriate, made their own credit analysis and
      decision to enter into such Senior Revolving Credit Documents and be bound
      by
      the terms of this Agreement and they will continue to make their own credit
      decision in taking or not taking any action under the Senior Revolving Credit
      Documents or this Agreement. The Term Administrative Agent, on behalf of itself
      and the Term Claimholders under its Term Credit Documents, acknowledges that
      it
      and such Term Claimholders have, independently and without reliance on the
      Senior Indebtedness Representative or any Senior Revolving Claimholder, and
      based on documents and information deemed by them appropriate, made their own
      credit analysis and decision to enter into each of the Term Credit Documents
      and
      be bound by the terms of this Agreement and they will continue to make their
      own
      credit decision in taking or not taking any action under the Term Credit
      Documents or this Agreement.

     

    Section
      7.2  No
      Warranties or Liability.
      The
      Senior Indebtedness Representative, on behalf of itself and the Senior Revolving
      Claimholders under its Senior Revolving Credit Documents, acknowledges and
      agrees that each of the Term Administrative Agent and the Term Claimholders
      have
      made no express or implied representation or warranty, including with respect
      to
      the execution, validity, legality, completeness, collectibility or
      enforceability of any of the Term Credit Documents, the ownership of any
      Collateral or the perfection or priority of any Liens thereon. The Term
      Claimholders will be entitled to manage and supervise their respective loans
      and
      extensions of credit under the Term Credit Documents in accordance with law
      and
      as they may otherwise, in their sole discretion, deem appropriate. The Term
      Administrative Agent, on behalf of itself and the Term Claimholders under its
      Term Credit Documents, acknowledges and agrees that each of the Senior
      Indebtedness Representative and the Senior Revolving Claimholders have made
      no
      express or implied representation or warranty, including with respect to the
      execution, validity, legality, completeness, collectibility or enforceability
      of
      any of the Senior Revolving Credit Documents, the ownership of any Collateral
      or
      the perfection or priority of any Liens thereon. The Senior Revolving
      Claimholders will be entitled to manage and supervise their respective loans
      and
      extensions of credit under their respective Senior Revolving Credit Documents
      in
      accordance with law and as they may otherwise, in their sole discretion, deem
      appropriate. The Term Administrative Agent and the Term Claimholders shall
      have
      no duty to the Senior Indebtedness Representative or any of the Senior Revolving
      Claimholders, and the Senior Indebtedness Representative and the Senior
      Revolving Claimholders shall have no duty to the Term Administrative Agent
      or
      any of the Term Claimholders, to act or refrain from acting in a manner which
      allows, or results in, the occurrence or continuance of an event of default
      or
      default under any agreements with the Borrower or any other Obligor (including
      the Senior Revolving Credit Documents and the Term Credit Documents), regardless
      of any knowledge thereof which they may have or be charged with.

     

    
      
        
        

      

      
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    Section
      7.3  No
      Waiver of Lien Priorities.

     

    (a)  No
      right
      of the Senior Revolving Claimholders, the Senior Indebtedness Representative
      or
      any of them to enforce any provision of this Agreement or any Senior Revolving
      Credit Document shall at any time in any way be prejudiced or impaired by any
      act or failure to act on the part of the Borrower or any other Obligor or by
      any
      act or failure to act by any Senior Revolving Claimholder or the Senior
      Indebtedness Representative, or by any noncompliance by any Person with the
      terms, provisions and covenants of this Agreement, any of the Senior Revolving
      Credit Documents or any of the Term Credit Documents, regardless of any
      knowledge thereof which the Senior Indebtedness Representative or the Senior
      Revolving Claimholders, or any of them, may have or be otherwise charged
      with.

     

    (b)  Without
      in any way limiting the generality of the foregoing paragraph (but subject
      to
      the rights of the Borrower and the other Obligors under the Senior Revolving
      Credit Documents and subject to the provisions of Section 5.3(a), Section 5.3(b)
      and Section 8.4), the Senior Revolving Claimholders, the Senior Indebtedness
      Representative and any of them may, at any time and from time to time in
      accordance with the Senior Revolving Credit Documents and/or applicable law,
      without the consent of, or notice to, the Term Administrative Agent or any
      Term
      Claimholders, without incurring any liabilities to the Term Administrative
      Agent
      or any Term Claimholders and without impairing or releasing the Lien priorities
      and other benefits provided in this Agreement (even if any right of subrogation
      or other right or remedy of the Term Administrative Agent or any Term
      Claimholders is affected, impaired or extinguished thereby) do any one or more
      of the following:

     

    (i)  change
      the manner, place or terms of payment or change or extend the time of payment
      of, or amend, renew, exchange, increase or alter, the terms of any of the Senior
      Indebtedness or any Lien on any Senior Revolving Collateral or guaranty thereof
      or any liability of the Borrower or any other Obligor, or any liability incurred
      directly or indirectly in respect thereof (including any increase in or
      extension of the Senior Indebtedness, other than in the case of principal,
      an
      amount in excess of the Maximum Priority Senior Revolving Amount, without any
      restriction as to the amount, tenor or terms of any such increase or extension),
      or otherwise amend, renew, exchange, extend, modify or supplement in any manner
      any Liens held by the Senior Indebtedness Representative or any of the Senior
      Revolving Claimholders, the Senior Indebtedness or any of the Senior Revolving
      Credit Documents;

     

    (ii)  sell,
      exchange, release, surrender, realize upon, enforce or otherwise deal with
      in
      any manner and in any order any part of the Senior Revolving Collateral or
      any
      liability of the Borrower or any other Obligor to the Senior Revolving
      Claimholders or the Senior Indebtedness Representative, or any liability
      incurred directly or indirectly in respect thereof;

     

    (iii)  settle
      or
      compromise any Senior Indebtedness or any security therefor or any liability
      incurred directly or indirectly in respect thereof and apply any sums by
      whomsoever paid and however realized to payment of the Senior Indebtedness;
      and

     

    (iv)  exercise
      or delay in or refrain from exercising any right or remedy against the Borrower
      or any security or any other Obligor or any other Person, elect any remedy
      and
      otherwise deal freely with the Borrower, any other Obligor or any Senior
      Revolving Collateral and any security and any guarantor or any liability of
      the
      Borrower or any other Obligor to the Senior Revolving Claimholders or any
      liability incurred directly or indirectly in respect thereof.

     

    
      
        
        

      

      
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    (c)  The
      Term
      Administrative Agent, on behalf of itself and the Term Claimholders, also agrees
      that the Senior Revolving Claimholders and the Senior Indebtedness
      Representative shall have no liability to the Term Administrative Agent or
      any
      Term Claimholders for actions taken in compliance with the terms of this
      Agreement (excluding actions constituting the gross negligence or willful
      misconduct of the Senior Indebtedness Representative or any Senior Revolving
      Claimholder), and the Term Administrative Agent, on behalf of itself and the
      Term Claimholders, hereby waives any such claim against any Senior Revolving
      Claimholder or the Senior Indebtedness Representative, arising out of any and
      all actions which the Senior Revolving Claimholders or the Senior Indebtedness
      Representative may take or permit or omit to take in accordance with the terms
      of this Agreement (excluding actions or inactions constituting the gross
      negligence or willful misconduct of the Senior Indebtedness Representative
      or
      any Senior Revolving Claimholder) with respect to: (i)
      the
      Senior Revolving Credit Documents, (ii)
      the
      collection of the Senior Indebtedness or (iii)
      the
      foreclosure upon, or sale, liquidation or other disposition of, any Senior
      Revolving Collateral. The Term Administrative Agent, on behalf of itself and
      the
      Term Claimholders, agrees that the Senior Revolving Claimholders and the Senior
      Indebtedness Representative have no duty to them in respect of the maintenance
      or preservation of the Senior Revolving Collateral, the Senior Indebtedness
      or
      otherwise.

     

    (d)  The
      Senior Indebtedness Representative, on behalf of itself and the Senior Revolving
      Claimholders, also agrees that the Term Claimholders and the Term Administrative
      Agent shall have no liability to the Senior Indebtedness Representative or
      any
      Senior Revolving Claimholders for actions taken in compliance with the terms
      of
      this Agreement (excluding actions constituting the gross negligence or willful
      misconduct of the Term Administrative Agent or any Term Claimholder), and the
      Senior Indebtedness Representative, on behalf of itself and the Senior Revolving
      Claimholders, hereby waives any such claim against any Term Claimholder or
      the
      Term Administrative Agent, arising out of any and all actions which the Term
      Claimholders or the Term Administrative Agent may take or permit or omit to
      take
      in accordance with the terms of this Agreement (excluding actions or inactions
      constituting the gross negligence or willful misconduct of the Term
      Administrative Agent or any Term Claimholder) with respect to: (i)
      the Term
      Credit Documents, (ii)
      the
      collection of the Subordinated Obligations or (iii)
      the
      foreclosure upon, or sale, liquidation or other disposition of, any Term
      Collateral. Except as otherwise provided herein, the Senior Indebtedness
      Representative, on behalf of itself and the Senior Revolving Claimholders,
      agrees that the Term Claimholders and the Term Administrative Agent have no
      duty
      to them in respect of the maintenance or preservation of the Term Collateral,
      the Subordinated Obligations or otherwise.

     

    (e)  The
      Term
      Administrative Agent, on behalf of itself and the Term Claimholders, agrees
      not
      to assert and hereby waives, to the fullest extent permitted by law, any right
      to demand, request, plead or otherwise assert or otherwise claim the benefit
      of,
      any marshalling, appraisal, valuation or other similar right that may otherwise
      be available under applicable law with respect to the Collateral or any other
      similar rights a junior secured creditor may have under applicable
      law.

     

    
      
        
        

      

      
        25

        
          

        

      

      
        
        

      

    

     

    ARTICLE
      VIII

    MISCELLANEOUS

     

    Section
      8.1  Conflicts.
      With
      respect solely to the relative rights and obligations of the Senior Indebtedness
      Representative and the Senior Revolving Claimholders, on one hand, and the
      Term
      Administrative Agent and the Term Claimholders, on the other hand, and not
      with
      respect to any right or obligation of the Borrower or any Guarantor or Obligor
      under any Senior Revolving Credit Document or Term Credit Document, in the
      event
      of any conflict between the provisions of this Agreement and the provisions
      of
      the Senior Revolving Credit Documents or the Term Credit Documents, the
      provisions of this Agreement shall govern and control.

     

    Section
      8.2  Effectiveness;
      Continuing Nature of this Agreement; Severability.
      This
      Agreement shall become effective when executed and delivered by the parties
      hereto. Except as set forth herein, this is a continuing agreement of lien
      subordination and the Senior Revolving Claimholders may continue, at any time
      and without notice to the Term Administrative Agent or any Term Claimholder
      subject to the Term Credit Documents, to extend credit and other financial
      accommodations and lend monies to or for the benefit of the Borrower or any
      Obligor constituting Senior Indebtedness in reliance hereof. The Term
      Administrative Agent, on behalf of itself and the Term Claimholders, hereby
      waives any right it may have under applicable law to revoke this Agreement
      or
      any of the provisions of this Agreement absent fraud or material
      misrepresentation by any other party hereto with respect to the transactions
      contemplated hereby. The terms of this Agreement shall survive, and shall
      continue in full force and effect, in any Insolvency or Liquidation Proceeding.
      Any provision of this Agreement which is prohibited or unenforceable in any
      jurisdiction shall not invalidate the remaining provisions hereof, and any
      such
      prohibition or unenforceability in any jurisdiction shall not invalidate or
      render unenforceable such provision in any other jurisdiction. All references
      to
      the Borrower or any other Obligor shall include the Borrower or such Obligor
      as
      debtor and debtor in possession and any receiver or trustee for the Borrower
      or
      any other Obligor (as the case may be) in any Insolvency or Liquidation
      Proceeding. This Agreement shall terminate and be of no further force and
      effect, (a)
      with
      respect to the Term Administrative Agent, the Term Claimholders and the
      Subordinated Obligations, upon the later of (i)
      the date
      upon which the obligations under the Second Lien Term Loan Agreement terminate
      if there are no other Subordinated Obligations outstanding on such date and
      (ii)
      if there
      are other Subordinated Obligations outstanding on such date, the date upon
      which
      such Subordinated Obligations terminate and (b)
      with
      respect to the Senior Indebtedness Representative, the Senior Revolving
      Claimholders and the Senior Indebtedness, the date of Discharge of Senior
      Indebtedness, subject to the rights of the Senior Revolving Claimholders under
      Section 6.5.

     

    Section
      8.3  Amendments;
      Waivers.
      No
      amendment, modification, supplement or waiver of any provision of this Agreement
      by the Term Administrative Agent or the Senior Indebtedness Representative
      shall
      be deemed to be made unless the same shall be in writing signed on behalf of
      each party hereto or its authorized agent and each waiver, if any, shall be
      a
      waiver only with respect to the specific instance involved and shall in no
      way
      impair the rights of the parties making such waiver or the obligations of the
      other parties to such party in any other respect or at any other time.
      Notwithstanding the foregoing, no Obligor shall have any right to consent to
      or
      approve any amendment, modification or waiver of any provision of this Agreement
      except to the extent its rights are directly affected (which includes, but
      is
      not limited to any amendment to the Obligors’ ability to cause additional
      obligations to constitute Senior Indebtedness or Subordinated Obligations as
      the
      Borrower may designate).

     

    
      
        
        

      

      
        26

        
          

        

      

      
        
        

      

    

     

    Section
      8.4  Information
      Concerning Financial Condition of the Borrower and its
      Subsidiaries.
      The
      Senior Indebtedness Representative and the Senior Revolving Claimholders, on
      the
      one hand, and the Term Claimholders and the Term Administrative Agent, on the
      other hand, shall each be responsible for keeping themselves informed of
(a)
      the
      financial condition of the Borrower and its Subsidiaries and all endorsers
      and/or guarantors of the Senior Indebtedness or the Subordinated Obligations
      and
(b)
      all
      other circumstances bearing upon the risk of nonpayment of the Senior
      Indebtedness or the Subordinated Obligations. The Senior Indebtedness
      Representative and the Senior Revolving Claimholders shall have no duty to
      advise the Term Administrative Agent or any Term Claimholder of information
      known to it or them regarding such condition or any such circumstances or
      otherwise. In the event the Senior Indebtedness Representative or any of the
      Senior Revolving Claimholders, in its or their sole discretion, undertakes
      at
      any time or from time to time to provide any such information to the Term
      Administrative Agent or any Term Claimholder, it or they shall be under no
      obligation (w) to make, and the Senior Indebtedness Representative and the
      Senior Revolving Claimholders shall not make, any express or implied
      representation or warranty, including with respect to the accuracy,
      completeness, truthfulness or validity of any such information so provided,
      (x)
      to provide any additional information or to provide any such information on
      any
      subsequent occasion, (y) to undertake any investigation or (z) to disclose
      any
      information which, pursuant to accepted or reasonable commercial finance
      practices, such party wishes to maintain confidential or is otherwise required
      to maintain confidential. In addition, each of the Senior Indebtedness
      Representative and the Term Administrative Agent shall promptly provide the
      other with copies of any amendments or waivers to any of the Senior Revolving
      Credit Documents or Term Credit Documents, as applicable and, upon request,
      information regarding the amounts owing by the Borrower and the other Obligors
      thereunder, and the Borrower hereby consents to all such disclosures on behalf
      of itself and each other Obligor.

     

    Section
      8.5  Subrogation.
      The
      Term Administrative Agent, on behalf of itself and the Term Claimholders, hereby
      waives any rights of subrogation it may acquire as a result of any payment
      hereunder until the Discharge of Senior Indebtedness has occurred.

     

    Section
      8.6  SUBMISSION
      TO JURISDICTION; WAIVERS.

     

    (a)  ALL
      JUDICIAL PROCEEDINGS BROUGHT AGAINST ANY PARTY ARISING OUT OF OR RELATING HERETO
      MAY BE BROUGHT IN ANY STATE OR FEDERAL COURT OF COMPETENT JURISDICTION IN THE
      STATE, COUNTY AND CITY OF HOUSTON, TEXAS. BY EXECUTING AND DELIVERING THIS
      AGREEMENT, EACH PARTY, FOR ITSELF AND IN CONNECTION WITH ITS PROPERTIES,
      IRREVOCABLY (i)
      ACCEPTS GENERALLY AND UNCONDITIONALLY THE NONEXCLUSIVE JURISDICTION AND VENUE
      OF
      SUCH COURTS; (ii)
      WAIVES ANY DEFENSE OF FORUM NON CONVENIENS; (iii)
      AGREES THAT SERVICE OF ALL PROCESS IN ANY SUCH PROCEEDING IN ANY SUCH COURT
      MAY
      BE MADE BY REGISTERED OR CERTIFIED MAIL, RETURN RECEIPT REQUESTED, TO THE
      APPLICABLE PARTY AT ITS ADDRESS PROVIDED IN ACCORDANCE WITH SECTION 8.7; AND
      (iv)
      AGREES THAT SERVICE AS PROVIDED IN CLAUSE (iii) ABOVE IS SUFFICIENT TO CONFER
      PERSONAL JURISDICTION OVER THE APPLICABLE PARTY IN ANY SUCH PROCEEDING IN ANY
      SUCH COURT, AND OTHERWISE CONSTITUTES EFFECTIVE AND BINDING SERVICE IN EVERY
      RESPECT.

     

    
      
        
        

      

      
        27

        
          

        

      

      
        
        

      

    

     

    (b)  EACH
      OF THE PARTIES HERETO HEREBY AGREES TO WAIVE ITS RESPECTIVE RIGHTS TO A JURY
      TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING HEREUNDER. THE
      SCOPE
      OF THIS WAIVER IS INTENDED TO BE ALL ENCOMPASSING OF ANY AND ALL DISPUTES THAT
      MAY BE FILED IN ANY COURT AND THAT RELATE TO THE SUBJECT MATTER HEREOF,
      INCLUDING CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS AND ALL OTHER
      COMMON LAW AND STATUTORY CLAIMS. EACH PARTY HERETO ACKNOWLEDGES THAT THIS WAIVER
      IS A MATERIAL INDUCEMENT TO ENTER INTO A BUSINESS RELATIONSHIP, THAT EACH HAS
      ALREADY RELIED ON THIS WAIVER IN ENTERING INTO THIS AGREEMENT, AND THAT EACH
      WILL CONTINUE TO RELY ON THIS WAIVER IN ITS RELATED FUTURE DEALINGS. EACH PARTY
      HERETO FURTHER WARRANTS AND REPRESENTS THAT IT HAS REVIEWED THIS WAIVER WITH
      ITS
      LEGAL COUNSEL AND THAT IT KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS
      FOLLOWING CONSULTATION WITH LEGAL COUNSEL. THIS WAIVER IS IRREVOCABLE, MEANING
      THAT IT MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING (OTHER THAN BY A MUTUAL
      WRITTEN WAIVER SPECIFICALLY REFERRING TO THIS SECTION 8.6(b) AND EXECUTED BY
      EACH OF THE PARTIES HERETO), AND THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT
      AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS HERETO. IN THE EVENT OF
      LITIGATION, THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY
      THE
      COURT.

     

    Section
      8.7  Notices.
      All
      notices to the Term Claimholders and the Senior Revolving Claimholders permitted
      or required under this Agreement shall also be sent to the Term Administrative
      Agent and the Senior Indebtedness Representative, respectively. Unless otherwise
      specifically provided herein, any notice hereunder shall be in writing and
      may
      be personally served, telexed or sent by telefacsimile (and confirmed by
      telephone) or United States mail or courier service and shall be deemed to
      have
      been given when delivered in person or by courier service, upon receipt of
      telefacsimile (and confirmed by telephone) or telex, or three (3) Business
      Days
      after depositing it in the United States mail with postage prepaid and properly
      addressed. For the purposes hereof, the addresses of each party hereto shall
      be
      as set forth under such party’s name on the signature pages hereof, or, as to
      each party, at such other address as may be designated by such party in a
      written notice to all of the other parties.

     

    Section
      8.8  Identity
      of Term Lenders for Notice Purposes.

     

    (a)  For
      purposes of any notice required or permitted to be given hereunder by the
      holders of the Senior Indebtedness or the Senior Indebtedness Representative
      to
      the Term Lenders, or any of them, the holders of the Senior Indebtedness and
      the
      Senior Indebtedness Representative shall be entitled to rely, conclusively,
      on
      the identity and address of each Term Lender as set forth in the Second Lien
      Term Loan Agreement or as otherwise set forth in the most recent notice received
      by the Senior Indebtedness Representative from a Term Lender referring to the
      Second Lien Term Loan Agreement for purposes of providing the identity and
      address of each Term Lender. The Term Lenders agree that any notices required
      to
      be given to the Term Lenders shall be effective if such notice is given to
      the
      Term Administrative Agent or other representative of the Term Lenders. For
      so
      long as the Subordinated Obligations are outstanding, the Term Lenders agree
      to
      designate and maintain an agent or other representative for such
      purposes.

     

    
      
        
        

      

      
        28

        
          

        

      

      
        
        

      

    

     

    (b)  For
      purposes of any notice required or permitted to be given hereunder by the
      holders of the Subordinated Obligations or the Term Administrative Agent to
      the
      holders of the Senior Indebtedness or the Senior Indebtedness Representative,
      the Term Administrative Agent shall be entitled to rely, conclusively, on the
      identity and address of the Senior Indebtedness Representative as set forth
      in
      the Senior Revolving Credit Agreement or as otherwise set forth in the most
      recent notice received from the Senior Indebtedness Representative. The Senior
      Indebtedness Representative and the Senior Revolving Lenders agree that any
      notices required to be given to the Senior Revolving Lenders shall be effective
      if such notice is given to the Senior Indebtedness Representative or other
      representative of the Senior Revolving Lenders. 

     

    Section
      8.9  Further
      Assurances.
      The
      Senior Indebtedness Representative, on behalf of itself and the Senior Revolving
      Claimholders under its Senior Revolving Credit Documents, and the Term
      Administrative Agent, on behalf of itself and the Term Claimholders under its
      Term Credit Documents, and the Borrower, agrees that each of them shall take
      such further action and shall execute and deliver such additional documents
      and
      instruments (in recordable form, if requested) as the Senior Indebtedness
      Representative or the Term Administrative Agent may reasonably request to
      effectuate the terms of and the lien priorities contemplated by this
      Agreement.

     

    Section
      8.10  APPLICABLE
      LAW.
      THIS
      AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE
      GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS
      OF
      THE STATE OF TEXAS.

     

    Section
      8.11  Binding
      on Successors and Assigns.
      This
      Agreement shall be binding upon the Senior Indebtedness Representative, the
      Senior Revolving Claimholders, the Term Administrative Agent, the Term
      Claimholders, the Borrower, and their respective successors and
      assigns.

     

    Section
      8.12  Specific
      Performance.
      Each of
      the Senior Indebtedness Representative and the Term Administrative Agent may
      demand specific performance of this Agreement. The Senior Indebtedness
      Representative, on behalf of itself and the Senior Revolving Claimholders under
      its Senior Revolving Credit Documents, and the Term Administrative Agent, on
      behalf of itself and the Term Claimholders, hereby irrevocably waives any
      defense based on the adequacy of a remedy at law and any other defense which
      might be asserted to bar the remedy of specific performance in any action which
      may be brought by any Senior Indebtedness Representative or the Term
      Administrative Agent, as the case may be.

     

    
      
        
        

      

      
        29

        
          

        

      

      
        
        

      

    

     

    Section
      8.13  Headings.
      Section
      headings in this Agreement are included herein for convenience of reference
      only
      and shall not constitute a part hereof for any other purpose or be given any
      substantive effect.

     

    Section
      8.14  Counterparts;
      Effectiveness.
      This
      Agreement may be executed in any number of counterparts, each of which when
      so
      executed and delivered shall be deemed an original, but all such counterparts
      together shall constitute but one and the same instrument. This Agreement shall
      become effective upon the execution of a counterpart hereof by each of the
      parties hereto and receipt by the Borrower, the Senior Indebtedness
      Representative and the Term Administrative Agent of written or telephonic
      notification of such execution and authorization of delivery
      thereof.

     

    Section
      8.15  Authorization.
      By its
      signature, each Person executing this Agreement on behalf of a party hereto
      represents and warrants to the other parties hereto that it is duly authorized
      to execute this Agreement.

     

    Section
      8.16  No
      Third Party Beneficiaries.
      This
      Agreement and the rights and benefits hereof shall inure to the benefit of
      each
      of the parties hereto and its respective successors and assigns and shall inure
      to the benefit of each of the Senior Revolving Claimholders and the Term
      Claimholders. No other Person shall have or be entitled to assert rights or
      benefits hereunder.

     

    Section
      8.17  Provisions
      Solely to Define Relative Rights.
      The
      provisions of this Agreement are and are intended solely for the purpose of
      defining the relative rights of the Senior Revolving Claimholders on the one
      hand and the Term Claimholders on the other hand. None of the Borrower, any
      other Obligor or any other creditor thereof shall have any rights hereunder.
      

     

    
      
        
        

      

      
        30

        
          

        

      

      
        
        

      

    

    IN
      WITNESS WHEREOF, the parties hereto have executed this Intercreditor Agreement
      as of the date first written above.

     

    
      	 	 	 
	 	
              Senior
                Indebtedness Representative:

            
	 	 
	 	
              BNP
                PARIBAS,
                as Senior Indebtedness Representative

            
	 	 
	 	 
	 	By:  /s/ Betsy Jocher
	 	
              
                

              

              Name:
                Betsy Jocher

            
	 	Title: Director
	 	
               

            
	 	 
	 	
              By:
                /s/ Russell Otts

            
	 	
              
                

              

              Name:
                Russell Otts

            
	 	
              Title:
                Vice President

            
	 	 
	 	
              Notice
                Address:

            
	 	 
	 	
              1200
                Smith Street

            
	 	
              Suite
                3100

            
	 	
              Houston,
                Texas 77002

            
	 	
              Attention
                of Doug Liftman 

            
	 	
              Telephone:
                713.982.1154

            
	 	
              Facsimile:
                713.659.6915

            

    

     

    
      
        
        

      

      
        
        

        
          

        

      

       

    

     

    
      
        	 	 	 
	 	
                
                  Term
                    Administrative Agent:

                

              
	 	 
	 	
                
                  BNP
                    PARIBAS

                

              
	 	 
	 	 
	 	By:  /s/ Betsy Jocher
	 	
                
                  

                

                Name:
                  Betsy Jocher 

              
	 	Title: Director
	 	
                 

              
	 	 
	 	
                By:
                  /s/ Russell Otts

              
	 	
                
                  

                

                Name:
                  Russell Otts

              
	 	
                Title:
                  Vice President

              
	 	 
	 	
                Notice
                  Address:

              
	 	 
	 	
                1200
                  Smith Street

              
	 	
                Suite
                  3100

              
	 	
                Houston,
                  Texas 77002

              
	 	
                Attention
                  of Doug Liftman 

              
	 	
                Telephone:
                  713.982.1154

              
	 	
                Facsimile:
                  713.659.6915

              

      

    

     

    
      
        
        

      

      
        
        

        
          

        

      

       

    

     

    
      
        
          	 	 	 
	 	
                  
                    
                      The
                        Borrower

                    

                  

                
	 	 
	 	
                  
                    
                      AURORA
                        OIL & GAS CORPORATION,
                        as Borrower

                    

                  

                
	 	 
	 	 
	
                	By:  /s/
                  William W. Deneau
	 	
                  
                    

                  

                  
                    William
                      W. Deneau, Chief Executive Officer

                  

                
	 	 
	 	
                  Notice
                    Address:

                
	 	 
	 	
                  
                    4110
                      Copper Ridge, Suite 110

                  

                
	 	
                  
                    Traverse
                      City, MI 49684

                  

                
	 	
                  
                    Attention:
                      Chief Financial
                      Officer;Execution
          Version

         

        
          
            SECOND
              LIEN TERM LOAN AGREEMENT

             

          

        

        DATED
          AS OF

        AUGUST
          20, 2007

        

        AMONG

        

        AURORA
          OIL & GAS CORPORATION,

        AS
          BORROWER,

        

        BNP
          PARIBAS,

        AS
          ADMINISTRATIVE AGENT,

        

        AND

        

        THE
          LENDERS PARTY HERETO

         

        SOLE
          LEAD ARRANGER AND SOLE BOOKRUNNER

         

        BNP
          PARIBAS

         

        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

        

      

      TABLE
        OF CONTENTS

      

        
          	 	 	
                  Page

                
	
                  ARTICLE
                    I

                
	
                  DEFINITIONS
                    AND ACCOUNTING MATTERS

                
	 	 	 
	
                  Section
                    1.01 Terms Defined Above

                	 	
                  1

                
	
                  Section
                    1.02 Certain Defined Terms

                	 	
                  1

                
	
                  Section
                    1.03 Terms Generally; Rules of Construction

                	 	
                  19

                
	
                  Section
                    1.04 Accounting Terms and Determinations; GAAP

                	 	
                  20

                
	 	 	 
	
                  ARTICLE
                    II

                
	
                  THE
                    LOANS

                
	 	 	 
	
                  Section
                    2.01 Term Loans

                	 	
                  20

                
	
                  Section
                    2.02 Loans and Tranches

                	 	
                  20

                
	
                  Section
                    2.03 Requests for Loans

                	 	
                  21

                
	
                  Section
                    2.04 Interest Elections

                	 	
                  22

                
	
                  Section
                    2.05 Funding of Loan

                	 	
                  23

                
	
                  Section
                    2.06 Total Reserve Value

                	 	
                  23

                
	
                  Section
                    2.07 Optional Increase of Facility

                	 	
                  24

                
	 	 	 
	
                  ARTICLE
                    III

                
	
                  PAYMENTS
                    OF PRINCIPAL AND INTEREST; PREPAYMENTS; FEES

                
	 	 	 
	
                  Section
                    3.01 Repayment of Loans

                	 	
                  26

                
	
                  Section
                    3.02 Interest

                	 	
                  26

                
	
                  Section
                    3.03 Reserved

                	 	
                  27

                
	
                  Section
                    3.04 Prepayments

                	 	
                  27

                
	
                  Section
                    3.05 Mandatory Prepayments

                	 	
                  27

                
	
                  Section
                    3.06 Fees

                	 	
                  28

                
	 	 	 
	
                  ARTICLE
                    IV

                
	
                  PAYMENTS;
                    PRO RATA TREATMENT; SHARING OF SET-OFFS

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

                	 	
                  28

                
	
                  Section
                    4.02 Presumption of Payment by the Borrower

                	 	
                  29

                
	
                  Section
                    4.03 Certain Deductions by the Administrative
                    Agent

                	 	
                  29

                
	
                  Section
                    4.04 Disposition of Proceeds

                	 	
                  29

                
	 	 	 
	
                  ARTICLE
                    V

                
	
                  INCREASED
                    COSTS; BREAK FUNDING PAYMENTS; TAXES

                
	 	 	 
	
                  Section
                    5.01 Increased Costs

                	 	
                  30

                
	
                  Section
                    5.02 Break Funding Payments

                	 	
                  31

                
	
                  Section
                    5.03 Taxes.

                	 	
                  31

                
	
                  Section
                    5.04 Mitigation Obligations

                	 	
                  32

                
	 	 	 
	
                  ARTICLE
                    VI

                
	
                  CONDITIONS
                    PRECEDENT

                
	 	 	 
	
                  Section
                    6.01 Effective Date

                	 	
                  32

                
	
                  Section
                    6.02 Additional Conditions

                	 	
                  35

                

        

         

        
          
            
            

          

          
            i

            
              

            

          

          
            
            

          

        

         

        
          	
                  ARTICLE
                    VII

                
	
                  REPRESENTATIONS
                    AND WARRANTIES

                
	 	 	 
	
                  Section
                    7.01 Organization; Powers

                	 	
                  35

                
	
                  Section
                    7.02 Authority; Enforceability

                	 	
                  36

                
	
                  Section
                    7.03 Approvals; No Conflicts

                	 	
                  36

                
	
                  Section
                    7.04 Financial Condition; No Material Adverse
                    Change

                	 	
                  36

                
	
                  Section
                    7.05 Litigation

                	 	
                  37

                
	
                  Section
                    7.06 Environmental Matters

                	 	
                  37

                
	
                  Section
                    7.07 Compliance with the Laws and Agreements; No
                    Defaults

                	 	
                  38

                
	
                  Section
                    7.08 Investment Company Act

                	 	
                  38

                
	
                  Section
                    7.09 Taxes

                	 	
                  39

                
	
                  Section
                    7.10 ERISA

                	 	
                  39

                
	
                  Section
                    7.11 Disclosure; No Material Misstatements

                	 	
                  40

                
	
                  Section
                    7.12 Insurance

                	 	
                  40

                
	
                  Section
                    7.13 Restriction on Liens

                	 	
                  40

                
	
                  Section
                    7.14 Subsidiaries

                	 	
                  41

                
	
                  Section
                    7.15 Location of Business and Offices

                	 	
                  41

                
	
                  Section
                    7.16 Properties; Titles, Etc

                	 	
                  41

                
	
                  Section
                    7.17 Maintenance of Properties

                	 	
                  42

                
	
                  Section
                    7.18 Gas Imbalances, Prepayments

                	 	
                  42

                
	
                  Section
                    7.19 Marketing of Production

                	 	
                  43

                
	
                  Section
                    7.20 Swap Agreements

                	 	
                  43

                
	
                  Section
                    7.21 Use of Loans

                	 	
                  43

                
	
                  Section
                    7.22 Solvency

                	 	
                  43

                
	 	 	 
	
                  ARTICLE
                    VIII

                
	
                  AFFIRMATIVE
                    COVENANTS

                
	 	 	 
	
                  Section
                    8.01 Financial Statements; Other Information

                	 	
                  43

                
	
                  Section
                    8.02 Notices of Material Events

                	 	
                  46

                
	
                  Section
                    8.03 Existence; Conduct of Business

                	 	
                  47

                
	
                  Section
                    8.04 Payment of Obligations

                	 	
                  47

                
	
                  Section
                    8.05 Performance of Obligations under Loan
                    Documents

                	 	
                  47

                
	
                  Section
                    8.06 Operation and Maintenance of Properties

                	 	
                  47

                
	
                  Section
                    8.07 Insurance

                	 	
                  48

                
	
                  Section
                    8.08 Books and Records; Inspection Rights

                	 	
                  48

                
	
                  Section
                    8.09 Compliance with Laws

                	 	
                  48

                
	
                  Section
                    8.10 Environmental Matters

                	 	
                  48

                
	
                  Section
                    8.11 Further Assurances

                	 	
                  49

                
	
                  Section
                    8.12 Reserve Reports

                	 	
                  50

                
	
                  Section
                    8.13 Title Information

                	 	
                  51

                
	
                  Section
                    8.14 Additional
                    Collateral; Additional Guarantors

                	 	
                  52

                
	
                  Section
                    8.15 ERISA Compliance

                	 	
                  53

                
	
                  Section
                    8.16 Marketing Activities

                	 	
                  53

                
	
                  Section
                    8.17 Swap Agreements

                	 	
                  54

                
	
                  Section
                    8.18 Minimum Daily Production

                	 	
                  54

                

        

         

        
          
            
            

          

          
            ii

            
              

            

          

          
            
            

          

        

         

        
          	
                  ARTICLE
                    IX

                
	
                  NEGATIVE
                    COVENANTS

                
	 	 	 
	
                  Section
                    9.01 Financial Covenants

                	 	
                  54

                
	
                  Section
                    9.02 Debt

                	 	
                  54

                
	
                  Section
                    9.03 Liens

                	 	
                  55

                
	
                  Section
                    9.04 Dividends, Distributions and Redemptions

                	 	
                  56

                
	
                  Section
                    9.05 Investments, Loans and Advances

                	 	
                  56

                
	
                  Section
                    9.06 Nature of Business; International Operations

                	 	
                  58

                
	
                  Section
                    9.07 Limitation on Leases

                	 	
                  58

                
	
                  Section
                    9.08 Proceeds of Notes

                	 	
                  58

                
	
                  Section
                    9.09 ERISA Compliance

                	 	
                  58

                
	
                  Section
                    9.10 Sale or Discount of Receivables

                	 	
                  59

                
	
                  Section
                    9.11 Mergers, Etc

                	 	
                  59

                
	
                  Section
                    9.12 Sale of Properties

                	 	
                  60

                
	
                  Section
                    9.13 Environmental Matters

                	 	
                  61

                
	
                  Section
                    9.14 Transactions with Affiliates

                	 	
                  61

                
	
                  Section
                    9.15 Subsidiaries

                	 	
                  61

                
	
                  Section
                    9.16 Negative Pledge Agreements; Dividend
                    Restrictions

                	 	
                  61

                
	
                  Section
                    9.17 Gas Imbalances, Take-or-Pay or Other
                    Prepayments

                	 	
                  61

                
	
                  Section
                    9.18 Swap Agreements

                	 	
                  62

                
	
                  Section
                    9.19 Anti-Layering

                	 	
                  62

                
	 	 	
                   

                
	
                  ARTICLE
                    X

                
	
                  EVENTS
                    OF DEFAULT; REMEDIES

                
	 	 	 
	
                  Section
                    10.01 Events of Default

                	 	
                  62

                
	
                  Section
                    10.02 Remedies

                	 	
                  64

                
	 	 	 
	
                  ARTICLE
                    XI

                
	
                  THE
                    AGENTS

                
	 	 	 
	
                  Section
                    11.01 Appointment; Powers

                	 	
                  65

                
	
                  Section
                    11.02 Duties and Obligations of Administrative
                    Agent

                	 	
                  65

                
	
                  Section
                    11.03 Action by Administrative Agent

                	 	
                  66

                
	
                  Section
                    11.04 Reliance by Administrative Agent

                	 	
                  67

                
	
                  Section
                    11.05 Subagents

                	 	
                  67

                
	
                  Section
                    11.06 Resignation or Removal of Administrative
                    Agent

                	 	
                  67

                
	
                  Section
                    11.07 Agents as Lenders

                	 	
                  68

                
	
                  Section
                    11.08 No Reliance

                	 	
                  68

                
	
                  Section
                    11.09 Administrative Agent May File Proofs of
                    Claim

                	 	
                  69

                
	
                  Section
                    11.10 Authority
                    of Administrative Agent to Release Collateral and
                    Liens

                	 	
                  69

                
	
                  Section
                    11.11 The Arranger and other Agents

                	 	
                  70

                

        

         

        
          
            
            

          

          
            iii

            
              

            

          

          
            
            

          

        

         

        
          	
                  ARTICLE
                    XII

                
	
                  MISCELLANEOUS

                
	 	 	 
	
                  Section
                    12.01 Notices

                	 	
                  70

                
	
                  Section
                    12.02 Waivers; Amendments

                	 	
                  70

                
	
                  Section
                    12.03 Expenses, Indemnity; Damage Waiver.

                	 	
                  72

                
	
                  Section
                    12.04 Successors and Assigns

                	 	
                  74

                
	
                  Section
                    12.05 Survival; Revival; Reinstatement

                	 	
                  76

                
	
                  Section
                    12.06 Counterparts; Integration; Effectiveness

                	 	
                  77

                
	
                  Section
                    12.07 Severability

                	 	
                  78

                
	
                  Section
                    12.08 Right of Setoff

                	 	
                  78

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

                	 	
                  78

                
	
                  Section
                    12.10 Headings

                	 	
                  79

                
	
                  Section
                    12.11 Confidentiality

                	 	
                  79

                
	
                  Section
                    12.12 Interest Rate Limitation

                	 	
                  80

                
	
                  Section
                    12.13 EXCULPATION PROVISIONS

                	 	
                  81

                
	
                  Section
                    12.14 No Third Party Beneficiaries

                	 	
                  81

                
	
                  Section
                    12.15 USA Patriot Act Notice

                	 	
                  81

                

        

      

       

      
        
          
          

        

        
          iv

          
            

          

        

        
          
          

        

      

       

      ANNEXES,
        EXHIBITS AND SCHEDULES

      

        
          	
                  Annex
                    I

                	
                  List
                    of Commitments

                
	 	 
	
                  Exhibit
                    A

                	
                  Form
                    of Note

                
	
                  Exhibit
                    B

                	
                  Form
                    of Borrowing Request

                
	
                  Exhibit
                    C

                	
                  Form
                    of Interest Election Request

                
	
                  Exhibit
                    D

                	
                  Form
                    of Compliance Certificate

                
	
                  Exhibit
                    E-1

                	
                  Security
                    Instruments

                
	
                  Exhibit
                    E-2

                	
                  Form
                    of Guaranty and Collateral Agreement

                
	
                  Exhibit
                    F

                	
                  Form
                    of Assignment and Assumption

                
	
                  Exhibit
                    G-1

                	
                  Form
                    of Additional Loan Certificate

                
	
                  Exhibit
                    G-2

                	
                  Form
                    of Additional Lender Certificate

                
	 	 
	
                  Schedule
                    7.05

                	
                  Litigation

                
	
                  Schedule
                    7.14

                	
                  Subsidiaries
                    and Partnerships

                
	
                  Schedule
                    7.18

                	
                  Gas
                    Imbalances

                
	
                  Schedule
                    7.19

                	
                  Marketing
                    Contracts

                
	
                  Schedule
                    7.20

                	
                  Swap
                    Agreements

                
	
                  Schedule
                    9.05

                	
                  Investments

                
	
                  Schedule
                    9.12

                	
                  Other
                    Property

                

        

      

      

      
        
          
          

        

        
          v

          
            

          

        

        
          
          

        

      

      THIS
        SECOND LIEN TERM LOAN AGREEMENT
        dated as
        of August 20, 2007, is among: Aurora Oil & Gas Corporation, a corporation
        duly formed and existing under the laws of the State of Utah
        (the
        “Borrower”);
        each
        of the Lenders from time to time party hereto; and BNP Paribas, as
        administrative agent for the Lenders (in such capacity, together with its
        successors in such capacity, the “Administrative
        Agent”).

       

      RECITALS

       

      A. The
        Borrower has requested that the Lenders provide a $50,000,000 second lien
        term
        loan to the Borrower.

       

      B. Each
        Lender has severally agreed to make its ratable portion of such loan subject
        to
        the terms and conditions of this Agreement.

       

      C. In
        consideration of the mutual covenants and agreements herein contained and
        of the
        loans 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:
        

       

      “Additional
        Lender”
has
        the
        meaning assigned to such term in Section
        2.07(a).

       

      “Additional
        Lender Certificate”
has
        the
        meaning assigned to such term in Section
        2.07(b)(x).

       

      “Additional
        Loan Certificate”
has
        the
        meaning assigned to such term in Section
        2.07(b)(ix).

       

      “Adjusted
        LIBO Rate”
means,
        with respect to any Tranche for any Interest Period, an interest rate per
        annum
        (rounded upwards, if necessary, to the next 1/16 of 1%) equal to (a)
        the LIBO
        Rate for such Interest Period multiplied by (b)
        the
        Statutory Reserve Rate.

       

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

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      “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.

       

      “Agents”
means,
        collectively, the Administrative Agent and any syndication agent, documentation
        agent or similar agent that hereafter becomes a party hereto and “Agent” shall
        mean either the Administrative Agent or such other agent, as the context
        requires.

       

      “Agreement”
means
        this Second Lien Term Loan Agreement, as the same may from time to time be
        amended, modified, supplemented or restated.

       

      “Applicable
        Margin”
means,
        with respect to each Tranche, a rate per annum equal to 7.0%, provided that
        such
        amount shall decrease to 6.75% commencing on the date on which the Borrower’s
        delivery of a compliance certificate substantially in the form of Exhibit
        D
        hereto, demonstrating that the Borrower’s ratio of Total Debt to EBITDAX for the
        immediately preceding four fiscal quarters is lower than or equal to 4.0
        to 1.0.
        In the event any compliance certificate delivered pursuant to this definition
        is
        shown to be inaccurate (regardless of whether this Agreement are in effect
        when
        such inaccuracy is discovered), and such inaccuracy, if corrected, would
        have
        led to the application of a higher Applicable Margin for any period (an
“Applicable Period”) than the Applicable Margin applied for such Applicable
        Period, and only in such case, then the Borrower shall immediately (a) deliver
        to the Administrative Agent a corrected compliance certificate for such
        Applicable Period, (b) determine the Applicable Margin for such Applicable
        Period based upon the corrected compliance certificate and (c) immediately
        pay
        to the Administrative Agent the accrued additional interest owing as a result
        of
        such increased Applicable Margin for such Applicable Period, which payment
        shall
        be promptly applied by the Administrative Agent in accordance with Section
        3.02.
        This definition is in addition to the rights of the Administrative Agent
        and the
        Lenders with respect to Section
        3.02(c)
        and
Section
        10.01
        and
        other of their respective rights under this Agreement. 

       

      “Approved
        Counterparty”
has
        the
        meaning assigned to such term in the Senior Revolving Credit
        Agreement.

       

      “Approved
        Fund”
means
        any Person (other than a natural person) that is engaged in making, purchasing,
        holding or investing in bank loans and similar extensions of credit in the
        ordinary course of its business and that is administered or managed by (a)
        a
        Lender, (b) an Affiliate of a Lender or (c) an entity or an Affiliate of
        an
        entity that administers or manages a Lender.

       

      “Approved
        Petroleum Engineers”
means
        (a) Netherland, Sewell & Associates, Inc., (b) Ryder Scott Company Petroleum
        Consultants, L.P., (c) Schlumberger Holditch Reservoir Technology and (d)
        any
        other independent petroleum engineers reasonably acceptable to the
        Administrative Agent.

       

      “Arranger”
means
        BNP
        Paribas,
        in its
        capacities as the sole lead arranger and sole bookrunner 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 F or any other
        form
        approved by the Administrative Agent.

       

      
        
          
          

        

        
          2

          
            

          

        

        
          
          

        

      

       

      “Bach
        Services”
means
        Bach Services & Manufacturing Company, L.L.C., a Michigan limited liability
        company, a wholly-owned subsidiary of the Borrower.

       

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

       

      “Borrowing
        Request”
means
        a
        request by the Borrower for the Loans 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 Tranche or continuation of, a payment
        or
        prepayment of principal of or interest on, or the Interest Period for, a
        Tranche
        or a notice by the Borrower with respect to any such Tranche or continuation,
        payment, prepayment 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 $500,000.

       

      “Change
        in Control”
means
        the occurrence of any of the following events: (a) the acquisition of ownership,
        directly or indirectly, beneficially or of record, by any Person or group
        (within the meaning of the Securities Exchange Act of 1934 and the rules
        of the
        SEC thereunder as in effect on the date hereof), of Equity Interests
        representing more than 25%
        of the
        aggregate ordinary voting power represented by the issued and outstanding
        Equity
        Interests of the Borrower, or (b) occupation of a majority of the seats (other
        than vacant seats) on the board of directors of the Borrower by Persons who
        were
        neither (i) nominated by the board of directors of the Borrower nor (ii)
        appointed by directors 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, for purposes
        of
Section
        5.01(b)),
        by any
        lending office of such Lender or by such Lender’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.

       

      
        
          
          

        

        
          3

          
            

          

        

        
          
          

        

      

       

      “Commitment”
means,
        with respect to each Lender, the commitment of such Lender to make its Loan
        on
        the Effective Date, or, if the Commitments are increased pursuant to
Section
        2.07,
        then
        the date on which such additional Loans are made, and “Commitments” shall mean
        the aggregate amount of the Commitments of all Lenders. The amount of each
        Lender’s Commitment is set forth on Annex I and the aggregate Commitments on the
        Effective Date are $50,000,000.

       

      “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 any
        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 or losses under FAS 133 resulting
        from the net change in Borrower’s mark-to-market portfolio of commodity price
        risk management activities during that period; (f) any gains or losses
        attributable to writeups or writedowns of assets, including ceiling test
        writedowns and (g) non-cash stock-based compensation under FAS Statement
        No.
        123R; and provided further that if the Borrower or any Consolidated Subsidiary
        shall acquire or dispose of any Property with a fair market value of over
        $1,000,000 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.

       

      “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 (other than as a limited partner of such other Person) will be
        deemed to “control” such other Person. “Controlling”
and
        “Controlled”
have
        meanings correlative thereto.

       

      
        
          
          

        

        
          4

          
            

          

        

        
          
          

        

      

       

      “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
        and all accrued expenses, liabilities or other obligations of such Person
        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 even if
        such
        goods or services are not 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 or other obligations hereunder outstanding.

       

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

       

      “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.

       

      “EBITDAX”
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, income taxes, depreciation, depletion,
        amortization, exploration expenses and other similar noncash charges, minus
        all
        noncash income added to Consolidated Net Income.

       

      
        
          
          

        

        
          5

          
            

          

        

        
          
          

        

      

       

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

       

      “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 Subsidiary
        is
        conducting or at any time has conducted business, or where any Property of
        the
        Borrower or any Subsidiary 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
        mean those waste that are excluded from the definition of “hazardous
        waste”
        pursuant to 40 C.F.R. Section 261.4(b)(5) (“Section
        261.4(b)(5)”);
        provided, however, that (a) in the event either OPA, CERCLA, RCRA or Section
        261.4(b)(5) 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 Subsidiary 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
        261.4(b)(5), such broader meaning shall apply.

       

      “Environmental
        Permit”
means
        any permit, registration, license, approval, consent, exemption, variance,
        or
        other authorization required under or issued pursuant to applicable
        Environmental Laws.

       

      “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 a Subsidiary would be deemed to be a “single employer” within the
        meaning of section 4001(b)(1) of ERISA or subsections (b), (c), (m) or (o)
        of
        section 414 of the Code.

       

      
        
          
          

        

        
          6

          
            

          

        

        
          
          

        

      

       

      “ERISA
        Event”
means
        (a) a “Reportable Event” described in section 4043 of ERISA and the regulations
        issued thereunder, (b) the withdrawal of the Borrower, a Subsidiary or any
        ERISA
        Affiliate from a Plan during a plan year in which it was a “substantial
        employer” as defined in section 4001(a)(2) of ERISA, (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 Tranche, refers to whether Tranche is bearing interest
        at a rate determined by reference to the Adjusted 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 Subsidiary 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
        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
        Subsidiary 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 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 Subsidiary 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 priority of the 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.

       

      
        
          
          

        

        
          7

          
            

          

        

        
          
          

        

      

       

      “Excluded
        Taxes”
means,
        with respect to the Administrative Agent, any Lender 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
        Second Lien Agreement”
means
        that certain First Amended and Restated Note Purchase Agreement dated as
        of
        December 8, 2005 among Aurora Antrim North, L.L.C., as the borrower, Aurora
        Energy, Ltd. and the Borrower, as guarantors, TCW Asset Management Company,
        as
        administrative agent and in the other capacities described therein, and the
        other purchasers party thereto, as amended by that certain First Amendment
        to
        First Amended and Restated Note Purchase Agreement dated as January 31, 2006,
        and as from time to time renewed, extended, amended, supplemented, or
        restated.

       

      “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.

       

      
        
          
          

        

        
          8

          
            

          

        

        
          
          

        

      

       

      “Financial
        Officer”
means,
        for any Person, the chief financial officer, principal accounting officer,
        treasurer or controller of such Person. Unless otherwise specified, all
        references herein to a Financial Officer means 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 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
        1.04.

       

      “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, any Subsidiary, any of their Properties, any Agent, 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) Aurora
        Energy, Ltd., a corporation duly formed and existing under the laws of the
        State
        of Nevada;

       

      (b) Aurora
        Antrim North, L.L.C., a limited liability company duly formed and existing
        under
        the laws of the State of Michigan;
        

       

      (c) Hudson
        Pipeline & Processing Co., LLC, a limited liability company duly formed and
        existing under the laws of the State of Michigan; and

       

      (d) each
        other Material Domestic Subsidiary or other Domestic Subsidiary that guarantees
        the Indebtedness pursuant to Section
        8.14(b),
        provided, that for as long as Bach Services has an outstanding line of credit
        pursuant to that certain Business Loan Agreement by and between Bach Services
        and Northwestern Bank, dated April 5, 2007 or any replacement (but not increase)
        or extension thereof, Bach Services and Kingsley Development Company, L.L.C.
        shall not be required to become Guarantors.

       

      
        
          
          

        

        
          9

          
            

          

        

        
          
          

        

      

      

      “Guaranty
        Agreement”
means
        an agreement executed by the Guarantors in substantially the form of Exhibit
        E-2
        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.

       

      “Hazardous
        Material”
means
        any substance regulated or as to which liability might arise under any
        applicable Environmental Law and including, without limitation: (a) any
        chemical, compound, material, product, byproduct, substance or waste defined
        as
        or included in the definition or meaning of “hazardous substance,” “hazardous
        material,” “hazardous waste,” “solid waste,” “toxic waste,” “extremely hazardous
        substance,” “toxic substance,” “contaminant,” “pollutant,” or words of similar
        meaning or import found in any applicable Environmental Law; (b) petroleum
        hydrocarbons, petroleum products, petroleum substances, natural gas, oil,
        oil
        and gas waste, crude oil, and any components, fractions, or derivatives thereof;
        and (c) radioactive materials, asbestos containing materials, polychlorinated
        biphenyls, or radon.

       

      “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 Subsidiary
        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): to the Administrative Agent or any Lender under any Loan Document
        and
        all renewals, extensions and/or rearrangements of any of the above.

       

      “Indemnified
        Taxes”
means
        Taxes other than Excluded Taxes.

       

      “Intercreditor
        Agreement”
        means
        that certain Intercreditor Agreement by and among the Borrower, the
        Administrative Agent and the lenders or agents party to the Senior Revolving
        Credit Documents, dated as of the date hereof, as the same may from time
        to time
        be amended, modified, supplemented or restated in accordance with the provisions
        thereof.

       

      
        
          
          

        

        
          10

          
            

          

        

        
          
          

        

      

       

      “Interest
        Election Request”
means
        a
        request by the Borrower to convert or continue a Tranche in accordance with
        Section
        2.04.

       

      “Interest
        Payment Date”
means,
        with respect to any Tranche, the last day of the Interest Period applicable
        to
        the Tranche of which such Loan is a part and, in the case of a Tranche with
        an
        Interest Period of more than three months’ duration, each day prior to the last
        day of such Interest Period that occurs at intervals of three months’ duration
        after the first day of such Interest Period.

       

      “Interest
        Period”
means
        with respect to any Tranche, the period commencing on the date of such Tranche
        and ending on the numerically corresponding day in the calendar month that
        is
        one, two, three or six months (or, with the consent of each Lender, nine
        or
        twelve 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 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 Tranche initially shall be the date on which the Loans comprising such
        Tranche are made and thereafter shall be the effective date of the most recent
        continuation of such Tranche.

       

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

       

      “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.

       

      
        
          
          

        

        
          11

          
            

          

        

        
          
          

        

      

       

      “LIBO
        Rate”
means,
        with respect to any Tranche for any Interest Period, the rate appearing on
        Reuters Screen LIBOR01 (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 Tranche for such Interest Period shall be the rate (rounded
        upwards, if necessary, to the next 1/16th of 1%) at which dollar deposits
        of
        $5,000,000 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,
        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 it
        has
        acquired or holds subject to a conditional sale agreement, or leases under
        a
        financing lease or other arrangement pursuant to which title to the Property
        has
        been retained by or vested in some other Person in a transaction intended
        to
        create a financing.

       

      “Loan
        Documents”
means
        this Agreement, the Notes, the Security Instruments and the Intercreditor
        Agreement.

       

      “Loan
        Parties”
means
        the Borrower and each Guarantor.

       

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

       

      “Majority
        Lenders”
means,
        at any time while no Loans are outstanding, Lenders having more than fifty
        percent (50%) of the Commitments; and at any time while any Loans are
        outstanding, Lenders holding more than fifty percent (50%) of the outstanding
        aggregate principal amount of the Loans (without regard to any sale by a
        Lender
        of a participation in any Loan under Section
        12.04(c)).

       

      “Material
        Adverse Effect”
means
        a
        material adverse change in, or material adverse effect on (a) the business,
        operations, Property, condition (financial or otherwise) or prospects of
        the
        Borrower and the Subsidiaries taken as a whole, (b) the ability of the Borrower,
        any Subsidiary or any Guarantor to perform any of its obligations under any
        Loan
        Document, (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 or any Lender under any Loan Document.

       

      
        
          
          

        

        
          12

          
            

          

        

        
          
          

        

      

       

      “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 $500,000
        or
        more.

       

      “Material
        Indebtedness”
means
        Debt (other than the Loans), 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 $500,000.
        For
        purposes of determining Material Indebtedness, the “principal amount” of the
        obligations of the Borrower or any Subsidiary in respect of any Swap Agreement
        at any time shall be the Swap Termination Value.

       

      “Maturity
        Date”
means
        August
        20, 2012.

       

      “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.

       

      “Net
        Cash Proceeds”
means
        in connection with any issuance or sale of assets, Equity Interests, Debt
        securities, Casualty Events or the incurrence of loans, the cash proceeds
        received from such disposition, issuance or incurrence, net of attorneys’ fees,
        investment banking fees, accountants’ fees, underwriting discounts and
        commissions and other customary fees and expenses actually incurred in
        connection therewith.

       

      “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.

       

      
        
          
          

        

        
          13

          
            

          

        

        
          
          

        

      

       

      “Organizational
        Documents”
means,
        (a) with respect to any corporation, the certificate or articles of
        incorporation and the bylaws (or equivalent or comparable constitutive documents
        with respect to any non-U.S. jurisdiction); (b) with respect to any limited
        liability company, the certificate or articles of formation or organization
        and
        operating agreement; and (c) with respect to any partnership, joint venture,
        trust or other form of business entity, the partnership, joint venture or
        other
        applicable agreement of formation or organization and any agreement, instrument,
        filing or notice with respect thereto filed in connection with its formation
        or
        organization with the applicable Governmental Authority in the jurisdiction
        of
        its formation or organization and, if applicable, any certificate or articles
        of
        formation or organization of such entity.

      

      “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).

       

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

       

      “Permitted
        Refinancing Debt”
means
        Debt (for purposes of this definition, “new
        Debt”)
        incurred in exchange for, or proceeds of which are used to refinance, all
        of any
        other Debt (the “Refinanced
        Debt”);
        provided that (a) such new Debt is in an aggregate principal amount not in
        excess of the sum of (i) the aggregate principal amount then outstanding of
        the Refinanced Debt (or, if the Refinanced Debt is exchanged or acquired
        for an
        amount less than the principal amount thereof to be due and payable upon
        a
        declaration of acceleration thereof, such lesser amount) and (ii) an amount
        necessary to pay any fees and expenses, including premiums, related to such
        exchange or refinancing; (b) such new Debt has a stated maturity no earlier
        than the stated maturity of the Refinanced Debt and an average life no shorter
        than the average life of the Refinanced Debt; (c) such new Debt does not
        have a stated interest rate in excess of the stated interest rate of the
        Refinanced Debt; (d) such new Debt does not contain any covenants which are
        materially more onerous to the Borrower and its Subsidiaries than those imposed
        by the Refinanced Debt and (e) such new Debt (and any guarantees thereof)
        is subordinated in right of payment to the Indebtedness (or, if applicable,
        the
        Guaranty Agreement) to at least the same extent as the Refinanced Debt and
        is
        otherwise subordinated on terms substantially reasonably satisfactory to
        the
        Administrative Agent.

       

      
        
          
          

        

        
          14

          
            

          

        

        
          
          

        

      

       

      “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, a Subsidiary 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 or a Subsidiary or an ERISA
        Affiliate.

       

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

       

      “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.

       

      “Proved
        Reserves”
means
        “Proved Reserves” as defined in the Definitions for Oil and Gas Reserves (in
        this paragraph, the “Definitions”) promulgated by the Society of Petroleum
        Engineers (or any generally recognized successor) as in effect at the time
        in
        question. “Proved
        Developed Producing Reserves”
means
        Proved Reserves which are categorized as both “Developed” and “Producing” in the
        Definitions, “Proved
        Developed Nonproducing Reserves”
means
        Proved Reserves which are categorized as both “Developed” and “Nonproducing” in
        the Definitions, “Proved
        Developed Reserves”
means
        Proved Reserves which are either Proved Developed Producing Reserves or Proved
        Developed Nonproducing Reserves, and “Proved
        Undeveloped Reserves”
means
        Proved Reserves which are categorized as “Undeveloped”
in
        the
        Definitions.

       

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

       

      “Refinanced
        Debt”
has
        the
        meaning assigned such term in the definition of “Permitted Refinancing
        Debt”.

       

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

       

      
        
          
          

        

        
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      “Regulation
        D”
means
        Regulation D of the Board, as the same may be amended, supplemented or replaced
        from time to time.

       

      “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.

       

      “Release”
means
        any depositing, spilling, leaking, pumping, pouring, placing, emitting,
        discarding, abandoning, emptying, discharging, migrating, injecting, escaping,
        leaching, dumping, or disposing.

       

      “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
        specified “as of” date contemplated by Section 2.07), the oil and gas reserves
        attributable to the Oil and Gas Properties of the Borrower and the 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 and reflecting (and
        conforming to the definition of) Total Reserve Value, provided that each
        such
        report hereafter delivered must (a) separately report on Proved Developed
        Reserves and Proved Undeveloped Reserves and separately calculate the Total
        Reserve Value of each such category of Proved Reserves for the Borrower’s and
        the its Subsidiaries’ interests, (b) take into account the Borrower’s actual
        experiences with leasehold operating expenses and other costs in determining
        projected leasehold operating expenses and other costs, (c) identify and
        take
        into account any “over-produced” or “under-produced” status under gas balancing
        arrangements, and (d) contain information and analysis comparable in scope
        to
        that contained in the Reserve Report most recently delivered to the
        Administrative Agent.

       

      “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 of
        its
        Subsidiaries, 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 of its Subsidiaries or any option,
        warrant or other right to acquire any such Equity Interests in the Borrower
        or
        any of its Subsidiaries.

       

      “SEC”
means
        the Securities and Exchange Commission or any successor Governmental
        Authority.

       

      “Security
        Instruments”
means
        the Guaranty Agreement, mortgages, deeds of trust and other agreements,
        instruments or certificates described or referred to in Exhibit E-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, as such agreements may be amended, modified, supplemented or restated
        from time to time.

       

      
        
          
          

        

        
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      “Senior
        Revolving Credit Agreement”
means
        that certain Amended and Restated Credit Agreement dated as of August 20,
        2007
        among the Borrower and Aurora Energy, Ltd. and Aurora Antrim North, L.L.C.
        (the
        original borrower), as guarantors, and BNP Paribas, as the administrative
        agent,
        and the other agents and lenders party thereto, together with all other
        amendments, modifications and supplements thereto permitted by the Intercreditor
        Agreement.

       

      “Senior
        Revolving Credit Documents”
means
        the Senior Revolving Credit Agreement, the Senior Revolving Credit Notes
        and any
“Loan Documents” (as defined therein), in each case, together with all
        amendments, modifications and supplements thereto.

       

      “Senior
        Revolving Credit Notes”
means
        the Notes from time to time issued pursuant to the Senior Revolving Credit
        Agreement. 

       

      “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.

       

      “Statutory
        Reserve Rate”
means
        a
        fraction (expressed as a decimal), the numerator of which is the number one
        and
        the denominator of which is the number one minus the aggregate of the maximum
        reserve percentages (including any marginal, special, emergency or supplemental
        reserves) expressed as a decimal established by the Board to which the
        Administrative Agent is subject with respect to the Adjusted LIBO Rate, for
        eurocurrency funding (currently referred to as “Eurocurrency Liabilities” in
        Regulation D of the Board). Such reserve percentages shall include those
        imposed
        pursuant to such Regulation D. Tranches shall be deemed to constitute
        eurocurrency funding and to be subject to such reserve requirements without
        benefit of or credit for proration, exemptions or offsets that may be available
        from time to time to any Lender under such Regulation D or any comparable
        regulation. The Statutory Reserve Rate shall be adjusted automatically on
        and as
        of the effective date of any change in any reserve percentage.

       

      “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. 

       

      
        
          
          

        

        
          17

          
            

          

        

        
          
          

        

      

       

      “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 interest 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 the
        Subsidiaries shall be a Swap Agreement.

       

      “Swap
        Termination Value”
means,
        in respect of any one or more Swap Agreements, after taking into account
        the
        effect of any legally enforceable netting agreement relating to such Swap
        Agreements, (a) for any date on or after the date such Swap Agreements have
        been
        closed out and termination value(s) determined in accordance therewith, such
        termination value(s) and (b) for any date prior to the date referenced in
        clause
        (a), the amount(s) determined as the mark-to-market value(s) for such Swap
        Agreements, as determined by the counterparties to such Swap
        Agreements.

       

      “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.

       

      “Total
        Debt”
means,
        at any date, all Debt of the Borrower and its Consolidated Subsidiaries on
        a
        consolidated basis, excluding (i) non-cash obligations under FAS 133 or 143
        and
        (ii) accounts payable and other accrued liabilities (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 sixty (60) 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.

       

      “Total
        Reserve Value”
means,
        with respect to any Proved Reserves expected to be produced from any Oil
        and Gas
        Properties, the net present value, discounted at 10% per annum, of the future
        net revenues expected to accrue to the Borrower’s and its Subsidiaries’
collective interests in such reserves during the remaining expected economic
        lives of such reserves. Each calculation of such expected future net revenues
        shall be made in accordance with the then existing standards of the Society
        of
        Petroleum Engineers, provided that in any event (a) appropriate deductions
        shall
        be made for severance and ad valorem taxes, and for operating, gathering,
        transportation and marketing costs required for the production and sale of
        such
        reserves, (b) appropriate adjustments shall be made for hedging operations,
        provided that Swap Agreements with non-investment grade counterparties shall
        not
        be taken into account to the extent that such Swap Agreements improve the
        position of or otherwise benefit the Borrower or any of its Subsidiaries,
        (c)
        the pricing assumptions used in determining Total Reserve Value for any
        particular reserves shall be based upon the following price decks: (i) for
        natural gas, the lesser of (A) the quotation for deliveries of natural gas
        for each such year from the New York Mercantile Exchange for Henry Hub and
        (B) $7.00/Mcf, and (ii) for crude oil, the lesser of (A) the quotation for
        deliveries of West Texas Intermediate crude oil for each such calendar year
        from
        the New York Mercantile Exchange for Cushing, Oklahoma, and (B) $60.00/Bbl
        and (d) the cash-flows derived from the pricing assumptions set forth in
        clause
        (c) above shall be further adjusted to account for the historical basis
        differentials for each month during the preceding 12-month period calculated
        by
        comparing realized crude oil and natural gas prices to Cushing, Oklahoma
        and
        Henry Hub NYMEX prices for each month during such period; provided
        that the
        Total Reserve Value shall be further adjusted, if necessary, to exclude a
        portion of reserves other than Proved Developed Reserves such that not less
        than
        60% of Total Reserve Value is attributable to Proved Developed
        Reserves.

       

      
        
          
          

        

        
          18

          
            

          

        

        
          
          

        

      

       

      “Tranche”
means
        a
        division or portion of the Loans.

       

      “Transactions”
means,
        with respect to (a) the Borrower, the execution, delivery and performance
        by the
        Borrower of this Agreement, each other Loan Document to which it is a party,
        the
        Tranche of Loans, the use of the proceeds thereof, and the grant of Liens
        by the
        Borrower on Mortgaged Properties and other Properties pursuant to the Security
        Instruments and (b) each 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.

       

      “Transferee”
means
        any Assignee or Participant.

       

      “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  Terms
        Generally;
        Rules of Construction.
        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), (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), (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.

       

      
        
          
          

        

        
          19

          
            

          

        

        
          
          

        

      

       

      Section
        1.04  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 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.

       

      ARTICLE
        II

      The
        Loans

       

      Section
        2.01  Term
        Loans.
        Subject
        to the terms and conditions set forth herein, each Lender agrees to make,
        on the
        Effective Date, a Loan to the Borrower in an aggregate principal amount equal
        to
        99% of such Lender’s Commitment. The foregoing represents an original issue
        discount of 1%. The Commitments are not revolving and amounts repaid or prepaid
        may not be reborrowed under any circumstance. Any portion of the Commitments
        not
        utilized by the Borrower on or before 3:00 p.m. New York City time on the
        Effective Date shall be permanently cancelled.

       

      Section
        2.02  Loans
        and Tranches.
        

       

      (a)  Loans;
        Several Obligations.
        Each
        Loan shall be made as part of a Tranche consisting of Loans made by the Lenders
        ratably in accordance with their respective Commitments. The failure of any
        Lender to fund its Loan 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 fund its Loan as
        required.

       

      (b)  Loans.
        Each
        Lender at its option may fund any Eurodollar Loan by causing any domestic
        or
        foreign branch or Affiliate of such Lender to fund 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.

       

      
        
          
          

        

        
          20

          
            

          

        

        
          
          

        

      

       

      (c)  Minimum
        Amounts.
        At the
        commencement of each Interest Period, each Tranche shall be in an aggregate
        amount that is an integral multiple of $100,000
        and not
        less than $1,000,000. There shall not at any time be more than a total of
        four
        (4)
        Tranches
        outstanding. Notwithstanding any other provision of this Agreement, the Borrower
        shall not be entitled to elect to continue any Tranche if the Interest Period
        requested with respect thereto would end after the Maturity Date.

       

      (d)  Notes.
        The
        Loan 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
        such Lender’s funded Loan as in effect on such date, and otherwise duly
        completed. The date, amount, Type, interest rate and, if applicable, Interest
        Period of each Tranche consisting of a portion of the 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 its Loan or affect the validity
        of such transfer by any Lender of its Note. 

       

      Section
        2.03  Requests
        for Loans.

       

      (a)  To
        request the Loan, the Borrower shall notify the Administrative Agent of its
        request by telephone not later than 11:00 a.m., Houston, Texas time, three
        Business Days before the date of the proposed Loan. 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 substantially the form of Exhibit B and signed by the Borrower. Each such
        telephonic and written Borrowing Request shall specify the following
        information:

       

      (i)  the
        aggregate amount of the requested Loans;

       

      (ii)  the
        date
        of the proposed funding, which shall be a Business Day;

       

      (iii)  the
        initial Interest Period to be applicable thereto, which shall be a period
        contemplated by the definition of the term “Interest Period”; and

       

      (iv)  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
        Interest Period is specified, then the Borrower shall be deemed to have selected
        an Interest Period of one month’s duration. 

       

      Promptly
        following receipt of the 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.

       

      
        
          
          

        

        
          21

          
            

          

        

        
          
          

        

      

       

      (b)  Notwithstanding
        anything to the contrary in this Agreement, the Borrower may request the
        Loan
        made on the Effective Date to be an Alternate Base Rate (as defined in the
        Senior Revolving Credit Agreement) Loan, so long as such request is made
        not
        later than 12:00 noon, Houston, Texas time, on the Effective Date. Such
        Alternate Base Rate Loan will bear interest at the Alternate Base Rate plus
        5.0%. Such Alternate Base Rate Loan shall only be available on the Effective
        Date and shall be converted to a Eurodollar Loan within three Business Days
        of
        the Effective Date.

       

      Section
        2.04  Interest
        Elections.

       

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

       

      (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
        not
        later than 12:00 noon, New York City time, three Business Days before the
        first
        day of the Interest Period related to such Tranche. 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
        substantially the form of Exhibit C and signed by the Borrower.

       

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

       

      (i)  the
        Tranche 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 Tranche (in which case
        the
        information to be specified pursuant to Section 2.04(c)(iii)
        shall be
        specified for each resulting Tranche);

       

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

       

      (iii)  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 Tranche 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 Tranche.

       

      
        
          
          

        

        
          22

          
            

          

        

        
          
          

        

      

       

      (e)  Effect
        of Failure to Deliver Timely Interest Election Request and Events of Default
        on
        Interest Election.
        If the
        Borrower fails to deliver a timely Interest Election Request with respect
        to a
        Tranche prior to the end of the Interest Period applicable thereto, then,
        unless
        such Tranche is repaid as provided herein, at the end of such Interest Period
        such the Interest Period for such Tranche shall be one month’s duration.

       

      Section
        2.05  Funding
        of Loan.

       

      (a)  Funding
        by Lenders.
        Each
        Lender shall make its Loan on the Effective Date by wire transfer of immediately
        available funds by 12:00 noon, Houston, Texas 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 Borrowing Request.
        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.

       

      (b)  Presumption
        of Funding by the Lenders.
        Unless
        the Administrative Agent shall have received notice from a Lender prior to
        the
        Effective Date that such Lender will not make available to the Administrative
        Agent such Lender’s Loan, the Administrative Agent may assume that such Lender
        has made its Loan 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 Loan 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 the Loans. If such
        Lender pays such amount to the Administrative Agent, then such amount shall
        constitute such Lender’s Loan.

       

      Section
        2.06  Total
        Reserve Value.
        The
        initial Total Reserve Value shall be $249,000,000.00. In connection with
        each
        semi-annual redetermination, the Borrower shall deliver to the Administrative
        Agent a certificate, in form reasonably satisfactory to the Administrative
        Agent, no later than March 1st and September 1st of each year, setting forth
        in
        sufficient detail Borrower’s calculation of Total Reserve Value as of the
        immediately preceding January 1 and July 1, commencing September 1, 2007.
        In
        addition, the Borrower may, by notifying the Administrative Agent thereof,
        and
        the Administrative Agent may, at the direction of the Majority Lenders, by
        notifying the Borrower thereof, each elect to require the Total Reserve Value
        to
        be determined one additional time on a specified “as of” date between such
        regular determinations (which shall be the first day of a calendar month
        following the date of such notice), in which event the Borrower shall deliver
        to
        the Administrative Agent a certificate, in form reasonably satisfactory to
        the
        Administrative Agent, no later than three months after such specified date
        reflecting the Total Reserve value as of such specified date. The Borrower
        shall
        calculate the Total Reserve Value based upon the applicable definitions of
        this
        Agreement, and provide with each such certificate the Reserve Report and
        other
        information used by the Borrower in calculating the Total Reserve Value.
        In
        addition to the foregoing, the Total Reserve Value shall be subject to further
        adjustment from time to time in accordance with Section
        8.13(c)
        and
Section
        9.12(d).

       

      
        
          
          

        

        
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      Upon
        receipt of such certificate, the Administrative Agent shall promptly review
        such
        certificate and, within ten (10) Business Days, confirm to the Borrower and
        the
        Lenders that (i) the calculations used to determine the Total Reserve Value
        were
        based upon the pricing and other requirements set forth in the definition
        of
        Total Reserve Value, (ii) no mathematical or other errors or omissions have
        been
        made in such calculation and (iii) the engineering analysis used to determine
        the Total Reserve Value was based upon estimated production, pricing and
        costs
        acceptable to Administrative Agent. If facts under (i), (ii) or (iii) are
        ascertained to exist, the Administrative Agent and the Borrower shall cooperate
        to promptly calculate the proper amount of the Total Reserve Value. Otherwise,
        upon confirmation of such amount as the Total Reserve Value, such amount
        will be
        the Total Reserve Value until next adjusted or redetermined in accordance
        with
        the terms of this Agreement.

       

      Section
        2.07  Optional
        Increase of
        Facility.

       

      (a)  Subject
        to the conditions set forth in Section
        2.07(b),
        the
        Borrower may opt to increase the size of this credit facility with the prior
        written consent of the Administrative Agent by causing an existing Lender
        to
        offer additional Loans or by causing a Person that at such time is not a
        Lender
        to become a Lender (an “Additional
        Lender”).

       

      (b)  Any
        additional Loans shall be subject to the following additional
        conditions:

       

      (i)  such
        Loans shall not be less than $5,000,000 unless the Administrative Agent
        otherwise consents, and no such increase shall be permitted if after giving
        effect thereto the aggregate amount of Loans made pursuant to this Section
        2.07
        would
        exceed $20,000,000 (so that, in the aggregate with Loans made on the Effective
        Date, the size of this facility would be no greater than
        $70,000,000);

       

      (ii)  no
        Default shall have occurred and be continuing at the effective date of such
        Loans or would result therefrom, including under the Senior Revolving Credit
        Agreement;

       

      (iii)  no
        Lender’s Commitment may be increased without the consent of such
        Lender;

       

      (iv)  any
        additional Loans shall require the prior written consent of the Majority
        Lenders;

       

      (v)  the
        representations and warranties of the Borrower contained in Article VII of
        this
        Agreement and in the Loan Documents and otherwise made in writing by or on
        behalf of the Borrower pursuant to this Agreement and the Loan Documents
        are
        true and correct in all material respects at and as of the date of such
        increase, 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;

       

      
        
          
          

        

        
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      (vi)  on
        the
        effective date of such increase, no Tranches shall be outstanding or if any
        Tranches are outstanding, then the effective date of such Loans shall be
        the
        last day of the Interest Period in respect of such Tranches unless the Borrower
        pays compensation required by Section
        5.02;

       

      (vii)  the
        procedure for funding the additional Loans shall follow the same procedures
        for
        the original Loan, as set forth in Section
        2.03
        and the
        conditions precedent set forth in Section
        6.02;

       

      (viii)  upon
        the
        later of (A) the applicable notice periods set forth in Section
        2.03
        and (B)
        the receipt of the Additional Loan Certificate or Additional Lender Certificate,
        as applicable, the Loans shall be advanced to the Borrower from the applicable
        Lender(s);

       

      (ix)  if
        the
        Borrower elects to cause existing Lenders to offer additional Loans, the
        Borrower and such Lender shall execute and deliver to the Administrative
        Agent a
        certificate substantially in the form of Exhibit G-1 (an “Additional
        Loan Certificate”),
        together with a processing and recordation fee of $3,500, and the Borrower
        shall
        deliver a new Note payable to the order of such Lender in a principal amount
        equal to the aggregate amount of Loans made by such Lender after giving effect
        to such additional Loans, and otherwise duly completed; and

       

      (x)  If
        the
        Borrower elects to cause an Additional Lender to become a party to this
        Agreement, then the Borrower and such Additional Lender shall execute and
        deliver to the Administrative Agent a certificate substantially in the form
        of
        Exhibit G-2 (an “Additional
        Lender Certificate”),
        together with an Administrative Questionnaire and a processing and recordation
        fee of $3,500, and the Borrower shall deliver a Note payable to the order
        of
        such Additional Lender in a principal amount equal to the amount of such
        additional Loan from such Additional Lender, and otherwise duly
        completed.

       

      (c)  Subject
        to acceptance and recording thereof pursuant to Section
        2.07(d),
        from
        and after the effective date specified in the Additional Loan Certificate
        or the
        Additional Lender Certificate (or if any Tranches are outstanding, then the
        last
        day of the Interest Period in respect of such Tranche, unless the Borrower
        has
        paid compensation required by Section
        5.02),
        in the
        case of an Additional Lender Certificate, any Additional Lender party thereto
        shall be a party to this Agreement and the other Loan Documents and have
        the
        rights and obligations of a Lender under this Agreement and the other Loan
        Documents. In addition, the Lender or the Additional Lender, as applicable,
        shall purchase a pro rata portion of the outstanding Loans of each of the
        other
        Lenders (and such Lenders hereby agree to sell and to take all such further
        action to effectuate such sale) such that each Lender (including any Additional
        Lender, if applicable) shall hold its ratable share of the outstanding Loans
        (and participation interests) after giving effect to the additional
        Loans.

       

      
        
          
          

        

        
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      (d)  Upon
        its
        receipt of a duly completed Additional Loan Certificate or an Additional
        Lender
        Certificate, executed by the Borrower and the Lender or the Borrower and
        the
        Additional Lender party thereto, as applicable, the processing and recording
        fee
        referred to in Section
        2.07(b),
        the
        Administrative Questionnaire referred to in Section
        2.07(b),
        if
        applicable, and the written consent of the Administrative Agent to such increase
        required by Section
        2.07(a),
        the
        Administrative Agent shall accept such Additional Loan Certificate or Additional
        Lender Certificate and record the information contained therein in the Register
        required to be maintained by the Administrative Agent. No additional Loans
        shall
        be effective for purposes of this Agreement unless it has been recorded in
        the
        Register as provided in this Section
        2.07(d).

       

      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 the Loans
        on the
        Maturity Date.

       

      Section
        3.02  Interest.

       

      (a)  [Reserved].
        

       

      (b)  Interest
        Rate.
        The
        portion of the Loans comprising each Tranche shall bear interest at the Adjusted
        LIBO Rate for the Interest Period in effect for such Tranche plus the Applicable
        Margin, but in no event to exceed the Highest Lawful Rate.

       

      (c)  Post-Default
        Rate.
        Notwithstanding
        the foregoing, 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, 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 a rate per annum equal to two percent (2%) plus
        the
        rate applicable to the Loans as provided in Section
        3.02(b),
        but in
        no event to exceed the Highest Lawful Rate. 

       

      (d)  Interest
        Payment Dates.
        Accrued
        interest on the principal amount of each Loan shall be payable in arrears
        on
        each Interest Payment Date for such Tranche and on the Maturity Date; provided
        that (i) interest accrued pursuant to Section
        3.02(c)
        shall be
        payable on demand and (ii) in the event of any prepayment or principal of
        any
        Loan, accrued interest on the principal amount prepaid shall be payable on
        the
        date of such prepayment.

       

      (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), and shall be payable for the actual number of days elapsed (including
        the
        first day but excluding the last day). The applicable Adjusted LIBO 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.

       

      
        
          
          

        

        
          26

          
            

          

        

        
          
          

        

      

       

      Section
        3.03  Reserved.

       

      Section
        3.04  Prepayments.

       

      (a)  Optional
        Prepayments.
        Subject
        to any break funding costs payable pursuant to Section
        5.02,
        the
        Borrower shall have the right to prepay the Loans at any time, in whole or
        in
        part, as follows:

       

      (i)  at
        any
        time during the period commencing on the first Business Day after the Effective
        Date to and including the first anniversary of the Effective Date, with a
        premium equal to 3% of such amount prepaid;

       

      (ii)  at
        any
        time during the period commencing on the first Business Day after the first
        anniversary of the Effective Date to and including the second anniversary
        of the
        Effective Date, with a premium equal to 2% of such amount prepaid;

       

      (iii)  at
        any
        time during the period commencing after the second anniversary of the Effective
        Date, without premium or penalty;

       

      provided
        that,
        each
        prepayment is in an amount that is an integral multiple of $1,000,000 and
        not
        less than $1,000,000, or if such amount is less than $1,000,000, the outstanding
        principal amount of the Loans.

       

      (b)  Notice
        and Terms of Optional Prepayment.
        The
        Borrower shall notify the Administrative Agent by telephone (confirmed by
        telecopy) of any prepayment hereunder in the case of prepayment of a Tranche,
        not later than 12:00 noon, Houston, Texas time, three Business Days before
        the
        date of prepayment. Each such notice shall be irrevocable and shall specify
        the
        prepayment date and the principal amount of the Loans or portion thereof
        to be
        prepaid. Promptly following receipt of any such notice, the Administrative
        Agent
        shall advise the Lenders of the contents thereof. Each prepayment of a Loan
        shall be applied ratably to the Loans of all the Lenders. Prepayments shall
        be
        accompanied by accrued interest to the extent required by Section
        3.02. 

       

      Section
        3.05  Mandatory
        Prepayments

       

      (a)  The
        Borrower shall prepay the Notes in amounts equal to:

       

      (i)  If
        required pursuant to Section
        9.12,
        100% of
        the Net Cash Proceeds of any sale of any Property of the Borrower. Such
        prepayment shall be made no later than the next Business Day after the receipt
        of such proceeds.

       

      (ii)  100%
        of
        the Net Cash Proceeds of any Debt incurrence of the Borrower or any of its
        Subsidiaries or of the sale or issuance of any Equity Interests of the Borrower,
        excluding Debt permitted by Section
        9.02.
        Such
        prepayment shall be made no later than the next Business Day after the receipt
        of such proceeds.

       

      
        
          
          

        

        
          27

          
            

          

        

        
          
          

        

      

       

      (iii)  100%
        of
        the Net Cash Proceeds of any Casualty Event related to the Borrower or any
        of
        its Subsidiaries. Such prepayment shall be made no later than the next Business
        Day after the receipt of such proceeds.

       

      (b)  Notwithstanding
        anything herein to the contrary, if the amount of any Net Cash Proceeds referred
        to in Section 3.05(a)(i) through (iii) would otherwise be a required prepayment
        under the terms of the Senior Revolving Credit Agreement, then prepayment
        shall
        only be required to the extent any excess Net Cash Proceeds remain after
        making
        such prepayment, provided, however, that if such payment is waived, such
        amount
        shall be payable to the Borrower pursuant to this Section
        3.05.

       

      Section
        3.06  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.

       

      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 or fees, or of amounts payable under Section
        5.01,
        Section
        5.02,
        Section
        5.03
        or
        otherwise) prior to 12:00 noon, Houston, Texas 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
        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, 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 then due hereunder, ratably among
        the
        parties entitled thereto in accordance with the amounts of principal 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 its Loan resulting
        in such Lender receiving payment of a greater proportion of the aggregate
        amount
        of its Loan 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 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; 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 express terms of this Agreement or any payment obtained
        by a
        Lender as consideration for the assignment of or sale of a participation
        in its
        Loan 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.

       

      
        
          
          

        

        
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      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 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, 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 severally agrees
        to
        repay to the Administrative Agent forthwith on demand the amount so distributed
        to such Lender 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),
        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.

       

      Section
        4.04  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
        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, until the occurrence 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 such Subsidiaries.

       

      
        
          
          

        

        
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      ARTICLE
        V

      Increased
        Costs; Break Funding Payments; Taxes

       

      Section
        5.01  Increased
        Costs.

       

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

       

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

       

      (ii)  impose
        on
        any Lender or the London interbank market any other condition affecting this
        Agreement or any portion of the Loan of such Lender;

       

      and
        the
        result of any of the foregoing shall be to increase the cost to such Lender
        of
        making or maintaining any Tranche (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 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 determines in good faith that any Change in Law regarding capital
        requirements has or would have the effect of reducing the rate of return
        on such
        Lender’s capital or on the capital of such Lender’s holding company, if any, as
        a consequence of this Agreement or the Loan made by such Lender, to a level
        below that which such Lender or such Lender’s holding company could have
        achieved but for such Change in Law (taking into consideration such Lender’s
        policies and the policies of such Lender’s holding company with respect to
        capital adequacy), then from time to time the Borrower will pay to such Lender,
        as the case may be, such additional amount or amounts as will compensate
        such
        Lender or such Lender’s holding company for any such reduction
        suffered.

       

      (c)  Certificates.
        A
        certificate of a Lender setting forth in good faith the amount or amounts
        necessary to compensate such Lender 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 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 to demand compensation pursuant to this
        Section
        5.01
        shall
        not constitute a waiver of such Lender’s right to demand such compensation;
        provided that the Borrower shall not be required to compensate a Lender pursuant
        to this Section
        5.01
        for any
        increased costs or reductions incurred more than 365 days prior to the date
        that
        such Lender notifies the Borrower of the Change in Law giving rise to such
        increased costs or reductions and of such Lender’s intention to claim
        compensation therefor; provided further that, if the Change in Law giving
        rise
        to such increased costs or reductions is retroactive, then the 365-day period
        referred to above shall be extended to include the period of retroactive
        effect
        thereof.

       

      
        
          
          

        

        
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      Section
        5.02  Break
        Funding Payments.
        In the
        event of (a) the payment of any principal of any Tranche other than on the
        last
        day of an Interest Period applicable thereto (including as a result of an
        Event
        of Default), or (b) the failure to borrow, continue or prepay any Tranche
        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. 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 its Loan had such event not occurred, at the Adjusted 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 in good faith 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 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 or Lender (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 and each Lender, within
        10
        days after written demand therefor, for the full amount of any Indemnified
        Taxes
        or Other Taxes paid by the Administrative Agent or such Lender, 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 or a Lender as to the amount of such
        payment or liability under this Section
        5.03
        shall be
        delivered in good faith to the Borrower and shall be conclusive absent manifest
        error.

       

      
        
          
          

        

        
          31

          
            

          

        

        
          
          

        

      

       

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

       

      ARTICLE
        VI

      Conditions
        Precedent

       

      Section
        6.01  Effective
        Date.
        The
        obligations of the Lenders to make Loans 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
        Administrative Agent, the Arranger and the Lenders shall have received all
        facility and agency fees and all other fees and 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 (including, without limitation, the fees and expenses
        of
        Vinson & Elkins L.L.P., counsel to the administrative agent under the Senior
        Revolving Credit Agreement). 

       

      
        
          
          

        

        
          32

          
            

          

        

        
          
          

        

      

       

      (b)  The
        Administrative Agent shall have received a certificate of the Secretary or
        an
        Assistant Secretary of the Borrower and each Guarantor setting forth
(i)
        resolutions of its board of directors 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
        officers of the Borrower or such Guarantor (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 officer or officers duly authorized for that
        purpose, act as its representative for the purposes of signing documents
        and
        giving notices and other communications in connection with this Agreement
        and
        the transactions contemplated hereby, (iii)
        specimen
        signatures of such authorized officers, and (iv)
        the
        Organizational Documents of the Borrower and such Guarantors, 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.

       

      (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.

       

      (d)  The
        Administrative Agent shall have received a compliance certificate which shall
        be
        substantially in the form of Exhibit D, duly and properly executed by a
        Responsible Officer and dated as of the date of 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 Commitment 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 E-1. In connection with the execution
        and delivery of the Security Instruments, the Administrative Agent
        shall:

       

      (i)  be
        reasonably satisfied that the Security Instruments create second priority,
        perfected Liens (subject only to Liens created by Senior Revolving Credit
        Documents and 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 Reserve Report most recently delivered to the Administrative Agent, all
        of
        which presently secure the Senior Revolving Credit Agreement; and 

       

      (ii)  have
        received stock or membership interest certificates, together with undated,
        blank
        stock powers for each such certificate, representing all of the issued and
        outstanding Equity Interests of each Subsidiary.

       

      
        
          
          

        

        
          33

          
            

          

        

        
          
          

        

      

       

      (iii)  be
        reasonably satisfied that all Property constituting security for the Senior
        Revolving Credit Agreement is subject to a perfected Lien in favor of the
        Administrative Agent under the Security Instruments.

       

      (h)  The
        Administrative Agent shall have received an opinion of Fraser,
        Trebilcock, Davis & Dunlap, P.C.,
        special
        counsel to the Borrower, in form and substance acceptable to the Administrative
        Agent.

       

      (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 title information as the Administrative
        Agent may reasonably require satisfactory to the Administrative Agent setting
        forth the status of title to at least 80% of the total value of the Oil and
        Gas
        Properties evaluated in the Reserve Report most recently delivered to the
        Administrative Agent. 

       

      (k)  The
        Administrative Agent shall be reasonably satisfied with the environmental
        condition of the Oil and Gas Properties of the Borrower and its
        Subsidiaries.

       

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

       

      (m)  The
        Administrative Agent shall have received appropriate UCC search certificates
        reflecting no prior Liens encumbering the Properties of the Borrower and
        the
        Subsidiaries for each of the following jurisdictions: Utah, Nevada, Michigan 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.

       

      (n)  The
        Administrative Agent shall have received (i) a payoff letter evidencing of
        the
        payment in full of all amounts due under any the Existing Second Lien Loan
        Agreement, the termination of all commitments to lend thereunder and (ii)
        documents evidencing the release of all Liens securing the obligations under
        the
        Existing Second Lien Term Loan Agreement and any other obligations secured
        thereby.

       

      (o)  The
        Administrative Agent shall received a certificate of a Responsible Officer
        of
        the Borrower certifying that there is an unused availability under the Senior
        Revolving Credit Agreement of at least $20,000,000 as of the Effective Date
        after giving effect to the Loans to be made on such date and the concurrent
        application of proceeds to repay the Existing Second Lien Agreement on such
        date.

       

      (p)  The
        Intercreditor Agreement, in form and content satisfactory to the Administrative
        Agent, shall be in full force and effect.

       

      (q)  The
        Administrative Agent shall have received evidence that the Borrower has
        purchased one or more commodity price floors or collars (i)
        with one
        or more Approved Counterparties, (ii)
        which
        have prices and aggregate notional volumes satisfactory to the Administrative
        Agent for the period commencing with the Effective Date and ending on
September
        30, 2011. 

       

      
        
          
          

        

        
          34

          
            

          

        

        
          
          

        

      

       

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

       

      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 hereunder shall not
        become effective unless each of the foregoing conditions is satisfied (or
        waived
        pursuant to Section
        12.02)
        at or
        prior to 2:00 p.m., Houston, Texas time, on August 31,
        2007
        (and, in
        the event such conditions are not so satisfied or waived, the Commitments
        shall
        terminate at such time).

       

      Section
        6.02  Additional
        Conditions.
        The
        obligation of each Lender to fund its Loan is subject to the satisfaction
        of the
        following additional conditions:

       

      (a)  At
        the
        time of and immediately after giving effect to the funding of the Loans,
        no
        Default shall have occurred and be continuing.

       

      (b)  At
        the
        time of and immediately after giving effect to the funding of the Loans,
        no
        event, development or circumstance has occurred or shall then exist that
        has
        resulted in, or could reasonably be expected to have, a Material Adverse
        Effect.

       

      (c)  The
        representations and warranties of the Borrower and the Guarantors set forth
        in
        this Agreement and in the other Loan Documents shall be true and correct
        on and
        as of the Effective Date, 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 Loan, such representations and warranties shall continue
        to be
        true and correct as of such specified earlier date.

       

      (d)  The
        making of such Loan would not conflict with, or cause any Lender 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 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 the Borrowing Request in accordance
        with
Section
        2.03.

       

      ARTICLE
        VII

      Representations
        and Warranties

       

      The
        Borrower hereby represents and warrants to the Lenders that:

       

      Section
        7.01  Organization;
        Powers.
        Each
        Loan Party 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. 

       

      
        
          
          

        

        
          35

          
            

          

        

        
          
          

        

      

       

      Section
        7.02  Authority;
        Enforceability.
        The
        Transactions are within each Loan Party’s corporate powers and have been duly
        authorized by all necessary corporate and, if required, stockholder action
        (including, without limitation, any action required to be taken by any class
        of
        directors of such Loan Party or any other Person, whether interested or
        disinterested, in order to ensure the due authorization of the Transactions).
        Each Loan Document to which each Loan Party is a party has been duly executed
        and delivered by such Loan Party and constitutes a legal, valid and binding
        obligation of such Loan Party, 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
        shareholders or any class of directors, whether interested or disinterested,
        of
        any Loan Party or any other Person), 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 other than the recording and filing of the Security Instruments
        as required by this Agreement, (b)
        will not
        violate any applicable law or regulation or the Organizational Documents
        of any
        Loan Party or any Subsidiary 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 any Loan Party or any Subsidiary or its Properties,
        or
        give rise to a right thereunder to require any payment to be made by such
        Loan
        Party or such Subsidiary and (d)
        will not
        result in the creation or imposition of any Lien on any Property of any Loan
        Party or any Subsidiary (other than the Liens created by the Loan
        Documents).

       

      Section
        7.04  Financial
        Condition; No Material Adverse Change.

       

      (a)  The
        Loan
        Parties have heretofore furnished to the Lenders their consolidated balance
        sheet and statements of income, stockholders’ equity and cash flows (i)
        as of
        and for the fiscal year ended December
        31, 2006,
        reported on by independent public accountants, and (ii)
        as of
        and for the fiscal quarter and the portion of the fiscal year ended March
        31,
        2007,
        certified by its chief financial officer. 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 dates and for such periods in accordance with GAAP, subject to year-end
        audit adjustments and the absence of footnotes in the case of the unaudited
        quarterly financial statements.

       

      (b)  (i)
        Since
        December 31, 2006, 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.

       

      
        
          
          

        

        
          36

          
            

          

        

        
          
          

        

      

       

      (c)  Neither
        the Borrower nor any Subsidiary 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.
        

       

      (a)  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 Loan Parties, threatened against or
        affecting the Loan Parties or any Subsidiary (i)
        not
        fully covered by insurance (except for normal deductibles) 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 (ii)
        that
        involve any Loan Document or the Transactions.

       

      (b)  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
        for such matters as set forth on Schedule 7.06 or that, individually or in
        the
        aggregate, could not reasonably be expected to have a Material Adverse Effect
        on
        the Borrower:

       

      (a)  the
        Borrower and its Subsidiaries and each of their respective Properties and
        operations thereon are, and within all applicable statute of limitation periods
        have been, in compliance with all applicable Environmental Laws;

       

      (b)  the
        Borrower and its Subsidiaries have obtained all Environmental Permits required
        for their respective operations and each of their Properties, with all such
        Environmental Permits being currently in full force and effect, and none
        of
        Borrower or its Subsidiaries has received any written notice or otherwise
        has
        knowledge that any such existing Environmental Permit will be revoked or
        that
        any application for any new Environmental Permit or renewal of any existing
        Environmental Permit will be protested or denied;

       

      (c)  there
        are
        no claims, demands, suits, orders, inquiries, or proceedings concerning any
        violation of, or any liability (including as a potentially responsible party)
        under, any applicable Environmental Laws that is pending or threatened against
        the Borrower or its Subsidiaries or any of their respective Properties or
        as a
        result of any operations at the Properties;

       

      (d)  none
        of
        the Properties contain or have contained any: (i) underground storage tanks;
        (ii) asbestos-containing materials; or (iii) landfills or dumps; (iv) hazardous
        waste management units as defined pursuant to RCRA or any comparable state
        law;
        or (v) sites on or nominated for the National Priority List promulgated pursuant
        to CERCLA or any state remedial priority list promulgated or published pursuant
        to any comparable state law;

       

      (e)  there
        has
        been no Release or threatened Release, of Hazardous Materials at, on, under
        or
        from any of Borrower’s or its Subsidiaries’ Properties, there are no
        investigations, remediations, abatements, removals, or monitorings of Hazardous
        Materials required under applicable Environmental Laws at such Properties
        and
        none of such Properties are adversely affected by any Release or threatened
        Release of a Hazardous Material originating or emanating from any other real
        property,

       

      
        
          
          

        

        
          37

          
            

          

        

        
          
          

        

      

       

      (f)  neither
        the Borrower nor its Subsidiaries has received any written notice asserting
        an
        alleged liability or obligation under any applicable Environmental Laws with
        respect to the investigation, remediation, abatement, removal, or monitoring
        of
        any Hazardous Materials at, under, or Released or threatened to be Released
        from
        any real properties offsite the Borrower’s or its Subsidiaries’ Properties and
        there are no conditions or circumstances that would reasonably be expected
        to
        result in the receipt of such written notice.

       

      (g)  there
        has
        been no exposure of any Person or property to any Hazardous Materials as
        a
        result of or in connection with the operations and businesses of any of the
        Borrower’s or its Subsidiaries’ Properties that would reasonably be expected to
        form the basis for a claim for damages or compensation and there are no
        conditions or circumstances that would reasonably be expected to result in
        the
        receipt of notice regarding such exposure; and

       

      (h)  the
        Borrower and its Subsidiaries have provided to Lenders complete and correct
        copies of all environmental site assessment reports, investigations, studies,
        analyses, and correspondence on environmental matters (including matters
        relating to any alleged non-compliance with or liability under Environmental
        Laws) that are in any of the Borrower’s or its Subsidiaries’ possession or
        control and relating to their respective Properties or operations
        thereon.

       

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

       

      (a)  Each
        Loan
        Party 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 governmental authorizations necessary for the ownership of its
        Property and the 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)  No
        Loan
        Party 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 a Loan Party 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 a Loan Party or any of their Properties is
        bound.

       

      (c)  No
        Default has occurred and is continuing.

       

      Section
        7.08  Investment
        Company Act.
        No Loan
        Party 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.

       

      
        
          
          

        

        
          38

          
            

          

        

        
          
          

        

      

       

      Section
        7.09  Taxes.
        Each
        Loan Party 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 each Loan Party, 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
        Loan Parties in respect of Taxes and other governmental charges are, in the
        reasonable opinion of the Borrower, adequate. No Tax Lien has been filed
        and, to
        the knowledge of the Loan Parties, no claim is being asserted with respect
        to
        any such Tax or other such governmental charge.

       

      Section
        7.10  ERISA.
        

       

      (a)  The
        Loan
        Parties and each ERISA Affiliate have complied in all material respects with
        ERISA and, where applicable, the Code regarding each Plan.

       

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

       

      (c)  No
        act,
        omission or transaction has occurred which could result in imposition on
        any
        Loan Party 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
        any
        Loan Party or any ERISA Affiliate has been or is expected by any Loan Party
        or
        any ERISA Affiliate to be incurred with respect to any Plan. No ERISA Event
        with
        respect to any Plan has occurred.

       

      (e)  Full
        payment when due has been made of all amounts which any Loan Party or any
        ERISA
        Affiliate is required under the terms of each Plan 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 which
        is
        subject to Title IV of ERISA does not, as of the end of the most recently
        ended fiscal year of each Loan Party, 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
        any Loan Party 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, a
        Subsidiary or any ERISA Affiliate in its sole discretion at any time without
        any
        material liability.

       

      
        
          
          

        

        
          39

          
            

          

        

        
          
          

        

      

       

      (h)  Neither
        any Loan Party 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.

       

      (i)  Neither
        any Loan Party 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.
        The
        Loan Parties have disclosed to the Administrative Agent and the Lenders all
        agreements, instruments and corporate or other restrictions to which they
        or any
        of their Subsidiaries are subject, and all other matters known to them, that,
        individually or in the aggregate, could reasonably be expected to result
        in a
        Material Adverse Effect. None of the other reports, financial statements,
        certificates or other information furnished by or on behalf of the Loan Parties
        to the Administrative 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 Loan Parties which 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 or the Lenders by or on behalf of the Loan Parties
        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
        Loan Parties 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 Loan Parties. 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.
        No Loan
        Party is a party to any material agreement or arrangement (other than Capital
        Leases creating Liens permitted by Section
        9.03(c),
        but
        then only on the Property subject of such Capital Lease), 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.

       

      
        
          
          

        

        
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      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 and the Borrower
        has no Foreign Subsidiaries. Each Subsidiary on such schedule is a Wholly-Owned
        Subsidiary, unless otherwise noted therein. 

       

      Section
        7.15  Location
        of Business and Offices.
        The
        Borrower’s jurisdiction of organization is Utah;
        the
        name of the Borrower as listed in the public records of its jurisdiction
        of
        organization is Aurora
        Oil & Gas Corporation;
        and the
        organizational identification number of the Borrower in its jurisdiction
        of
        organization is 608892-0142
        (or, in each case, as set forth in a notice delivered to the Administrative
        Agent pursuant to Section
        8.01(n)
        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(n)
        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 are stated on Schedule 7.14 (or as set
        forth
        in a notice delivered pursuant to Section
        8.01(n)).

       

      Section
        7.16  Properties;
        Titles, Etc.
        

       

      (a)  Each
        of
        the Loan Parties has good and defensible title to the 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 Loan Parties 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 such
        Loan Party 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 such Loan Party’s net revenue interest in such Property.

       

      (b)  All
        material leases and agreements necessary for the conduct of the business
        of the
        Loan Parties 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 Loan Parties,
        including, without limitation, all easements and rights of way, include all
        rights and Properties necessary to permit the Loan Parties to conduct their
        business in all material respects in the same manner as its business has
        been
        conducted prior to the date hereof.

       

      
        
          
          

        

        
          41

          
            

          

        

        
          
          

        

      

       

    

     

    (d)  All
      of
      the Properties of the Loan Parties which are reasonably necessary for the
      operation of their businesses are in good working condition and are maintained
      in accordance with prudent business standards.

     

    (e)  Each
      Loan
      Party owns, or is licensed to use, all trademarks, tradenames, copyrights,
      patents and other intellectual Property material to its business, and the use
      thereof by such Loan Party 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 Loan Parties 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.

     

    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) of the Loan Parties have been maintained, operated and developed
      in a
      good and workmanlike manner and in conformity with all Governmental 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 of the Borrower and
      its
      Subsidiaries. Specifically in connection with the foregoing, except for those
      as
      could not be reasonably expected to have a Material Adverse Effect, (i)
      no Oil
      and Gas Property of any Loan Party 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 (ii)
      none of
      the wells comprising a part of the Oil and Gas Properties (or Properties
      unitized therewith) of the Loan Parties is deviated from the vertical more
      than
      the maximum permitted by Governmental 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) of such Loan Party. All pipelines, wells,
      gas processing plants, platforms and other material improvements, fixtures
      and
      equipment owned in whole or in part by any Loan Party 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 Loan Parties, in a manner consistent with the Loan Parties’ past
      practices (other than those the failure of which to maintain in accordance
      with
      this Section
      7.17
      could
      not reasonably be expected to have a Material Adverse Effect).

     

    Section
      7.18  Gas
      Imbalances,
      Prepayments.
      Except
      as set forth on Schedule 7.18 or on the most recent certificate delivered
      pursuant to Section
      8.12(b),
      on a
      net basis there are no gas imbalances, take or pay or other prepayments which
      would require any Loan Party to deliver Hydrocarbons produced from the Oil
      and
      Gas Properties at some future time without then or thereafter receiving full
      payment therefor exceeding 50,000 of gas (on an mcf equivalent basis) in the
      aggregate.

     

    
      
        
        

      

      
        42

        
          

        

      

      
        
        

      

    

     

    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 Loan Parties’
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 longer 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
      Subsidiary, the material terms thereof (including the type, term, effective
      date, termination date and notional amounts or volumes), the net mark to market
      value thereof, all credit support agreements relating thereto (including any
      margin required or supplied) and the counterparty to each such
      agreement.

     

    Section
      7.21  Use
      of
      Loans.
      The
      proceeds of the Loans shall be used to refinance the Existing Second Lien
      Agreement and for general corporate purposes. The Loan Parties 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 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 Loan Parties, taken as a whole, will exceed the
      aggregate Debt of the Loan Parties on a consolidated basis, as the Debt becomes
      absolute and matures, (b)
      each of
      the Loan Parties 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
      Loan Parties 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 Loan Parties 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
      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,
      the
      Borrower covenants and agrees with the Lenders that:

     

    Section
      8.01  Financial
      Statements; 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 in accordance with then applicable law and not
      later than 90 days after the end of each fiscal year of the Loan Parties, their
      audited consolidated balance sheet and related statements of operations,
      stockholders’ 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 (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 condition and results of operations of the
      Loan
      Parties on a consolidated basis in accordance with GAAP consistently
      applied.

     

    
      
        
        

      

      
        43

        
          

        

      

      
        
        

      

    

     

    (b)  Quarterly
      Financial Statements.
      As soon
      as available, but in any event in accordance with then applicable law and not
      later than 45 days after the end of each of the first three fiscal quarters
      of
      each fiscal year of the Loan Parties, their consolidated balance sheet and
      related statements of operations, consolidating financial statements for each
      of
      the Loan Parties, stockholders’ equity and cash flows as of the end of and for
      such fiscal 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 one of its Financial Officers as
      presenting fairly in all material respects the financial condition and results
      of operations of the Loan Parties 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 D 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
      8.13(b)
      and
Section
      9.01
      and
(iii)
      stating
      whether any change in GAAP or in the application thereof has occurred since
      the
      date of the audited financial statements referred to in Section
      7.04
      and, if
      any such change has occurred, specifying the effect of such change on the
      financial statements accompanying such certificate.

     

    (d)  [Reserved]

     

    (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 fiscal
      quarter or fiscal year, a true and complete list of all Swap Agreements of
      the
      Borrower and each Subsidiary, 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 7.19, any margin required or supplied under
      any
      credit support document, and the counterparty to each such
      agreement.

     

    
      
        
        

      

      
        44

        
          

        

      

      
        
        

      

    

     

    (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 any Loan Party by independent accountants in connection with any annual,
      interim or special audit made by them of the books of such Loan Party, and
      a
      copy of any response by such Loan Party, or the Board of Directors of such
      Loan
      Party, 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 materials filed by any Loan Party
      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 any Loan Party.

     

    (k)  Notice
      of Sales of Oil and Gas Properties.
      In the
      event any Loan Party intends to sell, transfer, assign or otherwise dispose
      of
      any Oil or Gas Properties or any Equity Interests in any Subsidiary in
      accordance with Section
      9.12,
      prior
      written notice of such disposition, the price thereof and 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)  Issuance
      of Permitted Refinancing Debt.
      In the
      event the Borrower intends to refinance any Debt with the proceeds of Permitted
      Refinancing Debt as contemplated by Section
      9.02(i),
      prior
      written notice of such intended offering therefor, the amount thereof and the
      anticipated date of closing and will furnish a copy of the preliminary offering
      memorandum (if any) and the final offering memorandum (if any).

     

    (n)  Information
      Regarding Borrower and Guarantors.
      Prompt
      written notice (and in any event within thirty (30) days prior thereto) of
      any
      change (i) any
      Loan Party’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 any Loan Party’s chief executive office or principal place of
      business, (iii) in
      any Loan Party’s identity or corporate structure or in the jurisdiction in which
      such Person is incorporated or formed, (iv)
      in any
      Loan Party’s jurisdiction of organization or such Person’s organizational
      identification number in such jurisdiction of organization, and (v) in
      any Loan Party’s federal taxpayer identification number.

     

    
      
        
        

      

      
        45

        
          

        

      

      
        
        

      

    

     

    (o)  Production
      Report and Lease Operating Statements.
      Within
      60 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.

     

    (p)  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 any preferred
      stock designation or any Organizational Document of any Loan Party.

     

    (q)  Certificate
      of Responsible Officer -- Total Debt.
      At the
      times specified in Section
      2.06
      and
      promptly following any change to Total Reserve Value pursuant to Section
      8.13(c),
      Section
      9.11
      or
Section
      9.12,
      the
      Borrower will deliver a certificate of a Responsible Officer of the Borrower
      setting forth the Total Reserve Value both prior to and after giving effect
      to
      such event.

     

    (r)  Other
      Requested Information.
      Promptly following any request therefor, such other information regarding the
      operations, business affairs and financial condition of any Loan Party
      (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 prompt 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,
      proceeding, investigation or arbitration by or before any arbitrator or
      Governmental Authority against or affecting any Loan Party thereof not
      previously disclosed in writing to the Lenders 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 $250,000,
      not fully covered by insurance, subject to normal deductibles;

     

    (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 Loan Parties 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.

     

    
      
        
        

      

      
        46

        
          

        

      

      
        
        

      

    

     

    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 Subsidiary 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 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
      9.11.

     

    Section
      8.04  Payment
      of Obligations.
      The
      Borrower will, and will cause each Subsidiary to, pay its obligations, including
      Tax liabilities of the Loan Parties 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 Loan
      Parties have 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 any Loan Party.

     

    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 will cause each Subsidiary 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, at its own expense, will, and will cause each Subsidiary
      to:

     

    (a)  operate
      their 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 pro
      ration 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 their 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 equipment, machinery and
      facilities.

     

    
      
        
        

      

      
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    (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 their 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, the obligations required by each and all
      of
      the assignments, deeds, leases, sub-leases, contracts and agreements affecting
      its interests in their Oil and Gas Properties and other material
      Properties.

     

    (e)  operate
      their Oil and Gas Properties and other material Properties or cause or make
      reasonable and customary efforts to cause such Oil and Gas Properties and other
      material Properties to be operated in accordance with the practices of the
      industry and in material compliance with all applicable contracts and agreements
      and in compliance in all material respects with all Governmental Requirements.
      

     

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

     

    Section
      8.07  Insurance.
      The
      Borrower will, and will cause each Subsidiary 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 endeavor to 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 Subsidiary 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 Subsidiary 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 Subsidiary 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
      at
      its sole expense: (i) comply, and shall cause its Properties and operations
      and
      each Subsidiary 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 Subsidiary 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
      Subsidiary 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 Subsidiary to establish and implement, such policies of environmental
      audit
      and compliance as may be necessary to continuously determine and assure that
      the
      Borrower’s and its 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.

     

    
      
        
        

      

      
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    (b)  The
      Borrower will promptly, but in no event later than five days of the occurrence
      of a triggering event, 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 Subsidiary to, provide environmental audits
      and tests in accordance with American Society of Testing Materials standards
      upon request by the Administrative Agent and the Lenders and no more than once
      per year in the absence of any Event of Default (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 Properties.

     

    Section
      8.11  Further
      Assurances.

     

    (a)  The
      Borrower at its sole expense will, and will cause each Subsidiary 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 any Loan Party, 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.

     

    
      
        
        

      

      
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    (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. 

     

    Section
      8.12  Reserve
      Reports.

     

    (a)  On
      or
      before March 1st and September 1st of each year, commencing September
      1,
      2007,
      the
      Borrower shall furnish to the Administrative Agent and the Lenders a Reserve
      Report evaluating the Oil and Gas Properties of the Borrower and its
      Subsidiaries as of the immediately preceding January 1st and July 1st. The
      Reserve Report as of January 1 of each year shall be prepared by one or more
      Approved Petroleum Engineers, 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 any party elects a redetermination of the Total Reserve Value as of a
      specified date other than January 1 and July 1 pursuant to Section
      2.06,
      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. 

     

    (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 its Oil and Gas Properties evaluated in such Reserve Report which
      would require the Borrower or any Subsidiary 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 Total
      Reserve Value 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
      which the Borrower could reasonably be expected to have been obligated to list
      on Schedule 7.19 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
      Total Reserve Value that the value of such Mortgaged Properties represent in
      compliance with Section
      8.14(a).

     

    
      
        
        

      

      
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    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),
      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 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 satisfied
      in good faith 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 Total Reserve Value shall be reduced by an amount
      as
      determined by the Required 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 Total Reserve Value shall become
      effective immediately after receipt of such notice.

     

    
      
        
        

      

      
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    Section
      8.14  Additional
      Collateral; Additional Guarantors.

     

    (a)  In
      connection with each redetermination of the Total Reserve Value, 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, within thirty (30) days
      of
      delivery of the certificate required under Section
      8.12(b),
      to the
      Administrative Agent as security for the Indebtedness a second-priority Lien
      interest (subject only to a Lien under the Senior Revolving Credit Documents
      and
      provided that Excepted Liens of the type described 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 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, 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 Domestic Subsidiary to, promptly, but in any event no later than
      15
      days after the formation or acquisition (or similar event) of such Domestic
      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 new 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.

     

    (c)  The
      Borrower agree that they will not, and will not permit any Subsidiary to, grant
      a Lien on any Property to secure the Senior Revolving Credit Notes without
      first
(i)
      giving
      fifteen (15) days’ prior written notice to the Administrative Agent thereof and
      (ii) granting to the Administrative Agent to secure the Indebtedness a
      second-priority, perfected Lien (subject only to a Lien under the Senior
      Revolving Credit Documents) on this same Property pursuant to Security
      Instruments in form and substance satisfactory to the Administrative Agent.
      In
      connection therewith, the Borrower shall, or shall cause the Subsidiaries to,
      execute and deliver such other additional closing documents, certificates and
      legal opinions as shall reasonably be requested by the Administrative
      Agent.

     

    
      
        
        

      

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

     

    Section
      8.16  Marketing
      Activities.
      

     

    (a)  The
      Borrower will not, and will not permit any Subsidiary to, engage in marketing
      activities for any Hydrocarbons or enter into any contracts related thereto
      other than (i)
      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, (ii)
      contracts for the sale of Hydrocarbons scheduled or reasonably estimated to
      be
      produced from 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
(iii)
      other
      contracts for the purchase and/or sale of Hydrocarbons of third parties (A)
      which have generally offsetting provisions (i.e. corresponding pricing
      mechanics, delivery dates and points and volumes) such that no “position” is
      taken and (B) for which appropriate credit support has been taken to alleviate
      the material credit risks of the counterparty thereto. 

     

    (b)  The
      Borrower will not, and will not permit any Subsidiary to, amend in any material
      respect the written Hydrocarbon Marketing Policy delivered to the Lenders
      without the prior written consent of the Administrative Agent and the Required
      Lenders.

     

    
      
        
        

      

      
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    Section
      8.17  Swap
      Agreements.
      The
      Borrower shall maintain the hedge position established by the Swap Agreements
      required under Section
      6.01(q)
      during
      the period specified therein and shall neither assign, terminate or unwind
      any
      such Swap Agreements nor sell any Swap Agreements if the effect of such action
      (when taken together with any other Swap Agreements executed contemporaneously
      with the taking of such action) would have the effect of canceling its positions
      under such Swap Agreements required hereby.

     

    Section
      8.18  Minimum
      Daily Production.
      The
      Borrower shall achieve production of at least (a) 9.5 MMcfe/d as of June 30,
      2007, (b) 10.5 MMcfe/d as of September 30, 2007 and (c) 12 MMcfe/d as of
      December 31, 2007 and as of the last day of each quarter
      thereafter.

     

    ARTICLE
      IX

    Negative
      Covenants

     

    Until
      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, the
      Borrower covenants and agrees with the Lenders that:

     

    Section
      9.01  Financial
      Covenants.
      

     

    (a)  Total
      Reserve Value to Total Debt Ratio. The
      Borrower will not as of any date of determination permit its ratio of (i) Total
      Reserve Value as in effect on such date of determination to (ii) Total Debt
      as
      of such date of determination to be less than 1.5 to 1.0.

     

    (b)  Ratio
      of Total Debt to EBITDAX.
      The
      Borrower will not, beginning the fiscal quarter ending December 31, 2007, permit
      its ratio of Total Debt as of such time to EBITDAX (i) for each fiscal quarter
      ending on or before March 31, 2009, times four, (ii) for the two consecutive
      fiscal quarter period ending June 30, 2009, times two, (iii) for the three
      consecutive fiscal quarter period ending September 30, 2009, times 4/3 or (iv)
      for each four consecutive fiscal quarter period ending on December 31, 2009
      or
      thereafter (for the period immediately preceding the date of determination
      for
      which financial statements are available to the Borrower) to be greater than
      5.0
      to 1.0, provided,
      that for
      the period ending December 31, 2008 and thereafter, the maximum ratio shall
      be
      4.0 to 1.0.

     

    Section
      9.02  Debt.
      The
      Loan Parties will not, and will not permit any Subsidiary to, 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)  Debt
      of
      the Borrower and its Subsidiaries existing on the date hereof that is reflected
      in the Financial Statements, and any Permitted Refinancing Debt in respect
      thereof.

     

    (c)  accounts
      payable and accrued expenses, liabilities or other obligations to pay the
      deferred purchase price of Property or services, from time to time incurred
      in
      the ordinary course of business which are not greater than sixty (60) 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.

     

    
      
        
        

      

      
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    (d)  Debt
      under Capital Leases not to exceed $1,000,000.

     

    (e)  Debt
      associated with bonds or surety obligations required by Governmental
      Requirements in connection with the operation of the Oil and Gas
      Properties.

     

    (f)  intercompany
      Debt by and among the Borrower, any Guarantor or any Subsidiary (or between
      Guarantors or Subsidiaries) to the extent permitted by Section
      9.05(g);
      provided that such Debt (excluding any accounts payable to Bach Services) is
      not
      held, assigned, transferred, negotiated or pledged to any Person other than
      the
      Borrower or one of the Guarantors, 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.

     

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

     

    (h)  Debt
      of
      the Borrower under that certain promissory note dated October 15, 2006 with
      Northwestern Bank or any replacement (but not increase) or extension thereof,
      the principal amount of which Debt does not exceed $7,500,000.

     

    (i)  Debt
      now
      or hereafter outstanding under the Senior Revolving Credit Agreement (and any
      guaranties thereof by the Guarantors), provided that such
      Debt
      is subject to the Intercreditor Agreement
      and in
      no event shall the principal amount of such Debt exceed
      $130,000,000.

     

    (j)  Debt
      associated with the mortgage in Section
      9.03(e),
      which
      Debt shall not exceed $3,000,000, until the underlying property is sold pursuant
      to Section
      9.12(e).

     

    (k)  Debt
      not
      to exceed $1,000,000 incurred pursuant to that certain Business Loan Agreement
      made by Northwestern Bank to Bach Services, dated April 5, 2007, or any
      replacement (but not increase) or extension thereof, provided that such Debt
      is
      non-recourse to the Borrower or any of its Subsidiaries other than Bach Services
      and Kingsley Development Company, L.L.C.

     

    (l)  other
      Debt of the Borrower and its Subsidiaries not to exceed $5,000,000
      in the aggregate at any one time outstanding.

     

    Section
      9.03  Liens.
      The
      Borrower will not, and will not permit any Subsidiary to, 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.

     

    
      
        
        

      

      
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    (c)  Liens
      securing Capital Leases permitted by Section
      9.02(d)
      but only
      on the Property under lease.

     

    (d)  Liens
      securing any Permitted Refinancing Debt provided that any such Permitted
      Refinancing Debt is not secured by any additional or different Property not
      securing the Refinanced Debt.

     

    (e)  the
      Lien
      securing the mortgage dated September 19, 2005, filed for record in Grand
      Traverse County, Michigan on 9/23/05 and record number 2005R-21793, provided
      that such Lien shall not exceed $3,000,000,
      until
      the underlying property is sold pursuant to Section
      9.12(e).

     

    (f)  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(f)
      shall
      not exceed $500,000 at any time.

     

    (g)  Liens
      on
      Property securing obligations arising under the Senior Revolving Credit
      Agreement and any guaranties thereof; provided, however, that such Property
      is
      subject to a Lien in favor of the Administrative Agent which secures the
      Indebtedness, this Agreement and the other Loan Documents pursuant to Security
      Instruments satisfactory to the Administrative Agent.

     

    Section
      9.04  Dividends,
      Distributions and Redemptions.
      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 its Property
      to its Equity Interest holders, except (a) the Borrower may declare and pay
      dividends with respect to its Equity Interests payable solely in additional
      shares of its Equity Interests (other than Disqualified Capital Stock), (b)
      Subsidiaries may declare and pay dividends to the Borrower ratably with respect
      to their Equity Interests and (c) the Borrower may make Restricted Payments
      pursuant to and in accordance with stock option plans or other benefit plans
      for
      management or employees of the Borrower and its Subsidiaries.

     

    Section
      9.05  Investments,
      Loans and Advances.
      The
      Borrower will not, and will not permit any Subsidiary to, 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 or which are disclosed to the Lenders
      in
      Schedule 9.05.

     

    (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.

     

    
      
        
        

      

      
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    (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 $100,000,000 (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
      or, in
      the case of any Foreign Subsidiary, a bank organized in a jurisdiction in which
      the Foreign Subsidiary conducts operations having assets in excess of
      $500,000,000 (or its equivalent in another currency).

     

    (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 and (ii) made by any Subsidiary
      in or to the Borrower or any Guarantor.

     

    (h)  subject
      to the limits in Section
      9.06,
      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 a Subsidiary 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 $500,000.

     

    (i)  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 $100,000
      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 Subsidiary 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(k)
      exceeds
      $500,000.

     

    (l)  other
      Investments not to exceed $500,000
      in the
      aggregate at any time.

     

    
      
        
        

      

      
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    Section
      9.06  Nature
      of Business;
      International Operations.
      The
      Borrower will not, and will not permit any Subsidiary to, allow any material
      change to be made in the character of its business as an independent oil and
      gas
      exploration and production company. From and after the date hereof, the Borrower
      and its Domestic Subsidiaries will not acquire or make any other expenditure
      (whether such expenditure is capital, operating or otherwise) in or related
      to,
      any Oil and Gas Properties not located within the geographical boundaries of
      the
      United States. The Borrower shall not have any Foreign
      Subsidiaries.

     

    Section
      9.07  Limitation
      on Leases.
      The
      Borrower will not, and will not permit any Subsidiary to, 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 Capital Leases and leases
      of
      Hydrocarbon Interests), under leases or lease agreements which would cause
      the
      aggregate amount of all payments made by the Borrower and the Subsidiaries
      pursuant to all such leases or lease agreements, including, without limitation,
      any residual payments at the end of any lease, to exceed $1,000,000
      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.

     

    Section
      9.09  ERISA
      Compliance.
      The
      Borrower will not, and will not permit any Subsidiary to, at any
      time:

     

    (a)  engage
      in, or permit any ERISA Affiliate to engage in, any transaction in connection
      with which the Borrower, a Subsidiary 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, a Subsidiary 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, a Subsidiary or any ERISA Affiliate is required
      to pay as contributions thereto.

     

    
      
        
        

      

      
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    (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, a Subsidiary
      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 a
      Subsidiary or with respect to any ERISA Affiliate of the Borrower or a
      Subsidiary 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, (1)
      any
      Multiemployer Plan, or (2)
      any
      other Plan that is subject to Title IV of ERISA under which the actuarial
      present value of the benefit liabilities under such Plan exceeds the current
      value of the assets (computed on a plan termination basis in accordance with
      Title IV of ERISA) of such Plan allocable to such benefit
      liabilities.

     

    (h)  incur,
      or
      permit any 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.

     

    (j)  amend,
      or
      permit any ERISA Affiliate to amend, a Plan resulting in an increase in current
      liability such that the Borrower, a Subsidiary 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 Subsidiary 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, the Borrower will not, and
      will not permit any Subsidiary to, discount or sell (with or without recourse)
      any of its notes receivable or accounts receivable.

     

    Section
      9.11  Mergers,
      Etc.
      The
      Borrower will not, and will not permit any Subsidiary to, merge into or with
      or
      consolidate with any other Person, or permit any other Person to merge into
      or
      consolidate with it, or sell, transfer, 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 (whether now owned or hereafter acquired)
      (any
      such transaction, a “consolidation”), or liquidate or dissolve; provided
      that
      the
      Borrower or any Subsidiary may participate in a consolidation with any other
      Person; provided that: 

     

    (a)  (i)
      no
      Default is continuing, (ii)
      any such
      consolidation would not cause a Default hereunder, (iii)
      if the
      Borrower consolidates with any Person, the Borrower shall be the surviving
      Person, (iv)
      if any
      Subsidiary consolidates with any Person (other than the Borrower or a
      Subsidiary) and such Subsidiary is not the surviving Person, such surviving
      Person shall expressly assume in writing (in form and substance satisfactory
      to
      the Administrative Agent) all obligations of such Subsidiary under the Loan
      Documents and (v)
      the
      Total Reserve Value will be redetermined using the procedures set forth in
      Section
      2.06;
      and

     

    
      
        
        

      

      
        59

        
          

        

      

      
        
        

      

    

     

    (b)  any
      Subsidiary (including a Foreign Subsidiary) may participate in a consolidation
      with the Borrower (provided that the Borrower shall be the continuing or
      surviving corporation) or any other Subsidiary that is a Domestic Subsidiary
      (provided that if one of such parties to the consolidation is a Foreign
      Subsidiary, such Domestic Subsidiary shall be the continuing or surviving
      Person) and if one of such Subsidiaries is a Wholly-Owned Subsidiary, then
      the
      surviving Person shall be a Wholly-Owned Subsidiary.

     

    Section
      9.12  Sale
      of Properties.
      The
      Borrower will not, and will not permit any Subsidiary 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
      in the ordinary course of business of undeveloped acreage or undrilled depths
      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)
      the sale
      or other disposition (including Casualty Events) of any Oil and Gas Property
      or
      any interest therein or any Subsidiary owning Oil and Gas Properties; provided
      that (i)
      100% 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 determinations of Total Reserve Value has a fair market value
      in
      excess of 1% of the Total Reserve Value (as determined by the Administrative
      Agent), individually or in the aggregate, then the Total Reserve Value shall
      be
      reduced, effective immediately upon such sale or disposition, by an amount
      equal
      to the value, if any, assigned such Property in the Reserve Report used in
      the
      most recent determination of Total Reserve Value, (iv)
      an
      amount equal to 100% of the Net Cash Proceeds received from such sale, lease
      or
      other disposition shall be used within 90 days of such disposition: (1) to
      acquire Property, plant and equipment or any business entity used or useful
      in
      carrying on the business of the Borrower and its Subsidiaries and having a
      fair
      market value at least equal to the fair market value of the Properties sold,
      leased or otherwise disposed of or to improve or replace any existing Property
      of the Borrower and its Subsidiaries used or useful in carrying on the business
      of the Borrower and its Subsidiaries, (2) to repay Debt under the Senior
      Revolving Credit Agreement or (3) to prepay the Notes and (v)
      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, provided, that after giving effect to any disposition or sale
      pursuant to this Section
      9.12(d)
      and
      after making any necessary pro forma adjustments to the Total Reserve Value
      and
      Total Debt, the Borrower’s ratio of Total Reserve Value to Total Debt is no less
      than 1.75 to 1.0; (e)
      sale of
      the Borrower’s office suite at 4110 Copper Ridge, Traverse City, MI 49684;
(f)
      those
      properties listed on Schedule 9.12 and (g)
      sales
      and other dispositions of Properties not regulated by Section
      9.12(a)
      to
      (f) having a fair market value not to exceed $1,000,000 during any 6-month
      period.

     

    
      
        
        

      

      
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    Section
      9.13  Environmental
      Matters.
      The
      Borrower will not, and will not permit any Subsidiary to, cause or permit any
      of
      its Property to be in violation of, or do anything or permit anything to be
      done
      which will subject any such Property to any Remedial 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.

     

    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 will not, and will not permit any Subsidiary 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 Subsidiary to, sell, assign or
      otherwise dispose of any Equity Interests in any Subsidiary except in compliance
      with Section
      9.12(d).
      Neither
      the Borrower nor any Subsidiary shall have any Foreign
      Subsidiaries.

     

    Section
      9.16  Negative
      Pledge Agreements; Dividend Restrictions.
      The
      Borrower will not, and will not permit any Subsidiary to, create, incur, assume
      or suffer to exist any contract, agreement or understanding (other than this
      Agreement, the Security Instruments, the Second Lien Documents or Capital Leases
      creating Liens permitted by Section
      9.03(c))
      which
      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 Subsidiary to, allow gas imbalances,
      take-or-pay or other prepayments with respect to the Oil and Gas Properties
      of
      the Borrower or any Subsidiary that would require the Borrower or such
      Subsidiary to deliver Hydrocarbons at some future time without then or
      thereafter receiving full payment therefor to exceed one
      half
      bcf
      of gas
      (on an mcf equivalent basis) in the aggregate.

     

    
      
        
        

      

      
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    Section
      9.18  Swap
      Agreements.
      The
      Borrower will not, and will not permit any Subsidiary to, enter into any Swap
      Agreements with any Person other than (a)
      Swap
      Agreements in respect of commodities (i)
      with an
      Approved Counterparty and (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, developed, producing Oil and Gas 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, 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 85% of the then outstanding principal amount of the
      Borrower’s Debt for borrowed money which bears interest at a floating rate. Swap
      Agreements may contain contingent requirements, agreements or covenants for
      the
      Borrower or a Subsidiary to post collateral or margin to secure their
      obligations under such Swap Agreement or to cover market exposures, provided
      that the Borrower is in compliance with Section 9.03

     

    Section
      9.19  Anti-Layering.
      Notwithstanding the foregoing, the Borrower will not, and will not permit any
      Subsidiary to, incur, create, assume or suffer to exist any Debt if such Debt
      is
      subordinate or junior in ranking in right of payment to the Senior Revolving
      Credit Agreement, unless such Debt is non-recourse to the Borrower and the
      Guarantors or is expressly subordinated in right of payment to the obligations
      under this Agreement.

     

    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 when and as the same shall
      become due and payable, whether at the due date thereof or at a date fixed
      for
      prepayment thereof, by acceleration 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 five Business
      Days.

     

    (c)  any
      representation or warranty made or deemed made by or on behalf of any Loan
      Party
      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.

     

    
      
        
        

      

      
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    (d)  the
      Borrower or any Subsidiary shall fail to observe or perform any covenant,
      condition or agreement contained in Section
      8.01(i),
      Section
      8.01(n),
      Section
      8.02,
      Section
      8.03,
      Section
      8.15
      or in
ARTICLE
      IX.

     

    (e)  the
      Borrower or any Subsidiary 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 (A)
      notice
      thereof from the Administrative Agent to the Borrower (which notice will be
      given at the request of any Lender) or (B)
      a
      Responsible Officer of the Borrower or such Subsidiary otherwise becoming aware
      of such default.

     

    (f)  the
      Borrower or any Subsidiary 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.

     

    (g)  any
      event
      or condition occurs 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 Subsidiary 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 Subsidiary 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 Subsidiary 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 Subsidiary 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(g),
      (iii)
      apply for or consent to the appointment of a receiver, trustee, custodian,
      sequestrator, conservator or similar official for the Borrower or any Subsidiary
      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 stockholder of the
      Borrower shall make any request or take any action for the purpose of calling
      a
      meeting of the stockholders of the Borrower to consider a resolution to dissolve
      and wind-up the Borrower’s affairs.

     

    
      
        
        

      

      
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    (j)  the
      Borrower or any Subsidiary 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
      $500,000
      (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 Subsidiary 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
      Subsidiary 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 any of them, or cease to
      create a valid and perfected Lien of the priority required thereby on any of
      the
      collateral purported to be covered thereby, except to the extent permitted
      by
      the terms of this Agreement, or the Borrower or any Subsidiary or any of their
      Affiliates 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 (i)
      $250,000
      in any
      year or (ii)
      $500,000
      for all
      periods.

     

    (n)  the
      Intercreditor Agreement, 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 its terms against the
      Borrower or any party thereto or holder of the Debt subordinated thereby or
      shall be repudiated by any of them, or cause the payment of the obligations
      of
      the Second Lien Notes to be senior in right to the payment of obligations of
      this Agreement, or any payment by the Borrower or any Guarantor in violation
      of
      the terms of the Intercreditor Agreement.

     

    (o)  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(g),
      Section
      10.01(i)
      or
Section
      10.01(j),
      at any
      time thereafter during the continuance of such Event of Default, the
      Administrative Agent may, and at the request of the Majority Lenders, shall,
      by
      notice to the Borrower, 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, 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(g),
      Section
      10.01(i)
      or
Section
      10.01(j),
      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,
      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.

     

    
      
        
        

      

      
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    (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:

     

    (i)  first,
      to
      payment or reimbursement of that portion of the Indebtedness constituting fees,
      expenses and indemnities payable to the Administrative Agent in its capacity
      as
      such;

     

    (ii)  second,
      pro
      rata to payment or reimbursement of that portion of the Indebtedness
      constituting fees, expenses and indemnities payable to the Lenders;

     

    (iii)  third,
      pro
      rata to payment of accrued interest on the Loans;

     

    (iv)  fourth,
      pro
      rata to payment of principal outstanding on the Loans;

     

    (v)  fifth,
      pro
      rata
      to any other Indebtedness;

     

    (vi)  sixth,
      any
      excess, after all of the Indebtedness shall have been indefeasibly paid in
      full
      in cash, shall be paid to the Borrower or as otherwise required by any
      Governmental Requirement. 

     

    ARTICLE
      XI

    The
      Agents

     

    Section
      11.01  Appointment;
      Powers.
      Each of
      the Lenders 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 not have any 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 not have any
      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 or as to those conditions precedent
      expressly required to be to the Administrative Agent’s satisfaction,
(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 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.

     

    
      
        
        

      

      
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    Section
      11.03  Action
      by Administrative 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, no Agent other than the Administrative Agent
      shall have any obligation to perform any act in respect thereof. The
      Administrative Agent shall not 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.

     

    
      
        
        

      

      
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    Section
      11.04  Reliance
      by Administrative Agent.
      The
      Administrative 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. The Administrative 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 and the Lenders hereby waives the
      right
      to dispute the Administrative Agent’s record of such statement, except in the
      case of gross negligence or willful misconduct by the Administrative Agent.
      The
      Administrative 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 Administrative Agent
      may
      deem and treat the payee of any Note as the holder thereof for all purposes
      hereof unless and until a written notice of the assignment or transfer thereof
      permitted hereunder shall have been filed with the Administrative Agent.

     

    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 Administrative Agent.

     

    Section
      11.06  Resignation
      or Removal of Administrative Agent.
      Subject
      to the appointment and acceptance of a successor Administrative Agent as
      provided in this Section
      11.06,
      the
      Administrative Agent may resign at any time by notifying the Lenders and the
      Borrower, and the Administrative Agent may be removed at any time with or
      without cause by the Majority Lenders. Upon any such resignation or removal,
      the
      Majority Lenders shall have the right, 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, 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.

     

    
      
        
        

      

      
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    Section
      11.07  Agents
      as 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.
      

     

    (a)  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 or the 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 acting in
      this transaction as special counsel to the Arranger only in respect of the
      Senior Revolving Credit Agreement, 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.

     

    (b)  The
      Lenders acknowledge that the Administrative Agent and the Arranger are acting
      solely in administrative capacities with respect to the structuring and
      syndication of this facility and have no duties, responsibilities or liabilities
      under this Agreement and the other Loan Documents other than their
      administrative duties, responsibilities and liabilities specifically as set
      forth in the Loan Documents and in their capacity as Lenders hereunder. In
      structuring, arranging or syndicating this facility, each Lender acknowledges
      that the Administrative Agent and/or Arranger may be an agent or lender under
      these Notes, the Senior Revolving Credit Notes, other loans or other securities
      and waives any existing or future conflicts of interest associated with the
      their role in such other debt instruments. If in its administration of this
      facility or any other debt instrument, the Administrative Agent determines
      (or
      is given written notice by any Lender that a conflict exists), then it shall
      eliminate such conflict within 90 days or resign pursuant to Section
      11.06
      and
      shall have no liability for action taken or not taken while such conflict
      existed.

     

    
      
        
        

      

      
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    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 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 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.

     

    
      
        
        

      

      
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    Section
      11.11  The
      Arranger and other Agents.
      The
      Arranger and all other Agents other than the Administrative Agent shall have
      no
      duties, responsibilities or liabilities under this Agreement and the other
      Loan
      Documents other than their duties, responsibilities and liabilities in their
      capacity as Lenders hereunder.

     

    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 4110 Copper Ridge, Suite 110, Traverse City, MI 49684,
      Attention: Chief Financial Officer; 

     

    (ii)  if
      to the
      Administrative Agent, to it at 919 Third Avenue, New York, New York 10022,
      Attention: Dina Wilson, Loan Assistant (Telecopy No. (212) 841-2683), with
      a
      copy to 1200 Smith Street, Suite 3100, Houston, Texas 77002, Attention: Betsy
      Jocher (Telecopy No. (713) 659-6915);

     

    (iii)  if
      to any
      other Lender, to it at its address (or telecopy number) set forth in its
      Administrative Questionnaire.

     

    (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 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 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 shall not be construed as a waiver of any
      Default, regardless of whether the Administrative Agent, any other Agent or
      any
      Lender may have had notice or knowledge of such Default at the
      time.

     

    
      
        
        

      

      
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    (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 Commitment of any Lender without the written consent of such Lender, or
      modify the definition of “Total Reserve Value” without the consent of each
      Lender, (ii)
      reduce
      the principal amount of the Loans 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 consent of each Lender
      affected thereby, (iii)
      postpone
      the scheduled date of payment or prepayment of the principal amount of any
      Loan
      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 Maturity Date
      without the written consent of each Lender affected thereby, (iv)
      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, (v)
      waive or
      amend Section
      6.01,
      Section
      8.14
      or
Section
      10.02(c)
      or
      change the definition of the terms “Domestic Subsidiary”, “Foreign Subsidiary”,
“Material Domestic Subsidiary” or “Subsidiary”, without the written consent of
      each Lender, (vi)
      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
      11.10),
      or
      reduce the percentage set forth in Section
      8.14(a)
      to less
      than 80%, without the written consent of each Lender, or (vii)
      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 or any other
      Agent hereunder or under any other Loan Document without the prior written
      consent of the Administrative Agent or such other Agent, 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.

     

    
      
        
        

      

      
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    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 for the Administrative Agent, the reasonable travel,
      photocopy, mailing, courier, telephone and other similar expenses, including
      all
Intralinks
      expenses, and the cost of environmental audits and surveys and appraisals,
      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
      reasonable 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 any Agent or any Lender, including
      the reasonable fees, charges and disbursements of any counsel for any Agent
      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, including, without limitation, all such
      out-of-pocket expenses incurred during any workout, restructuring or
      negotiations in respect of such Loans.

     

    (b)  THE
      BORROWER SHALL INDEMNIFY EACH AGENT, THE ARRANGER AND EACH LENDER, AND EACH
      RELATED PARTY OF ANY OF THE FOREGOING PERSONS (EACH SUCH PERSON BEING CALLED
      AN
“INDEMNITEE”)
      AGAINST, AND HOLD EACH INDEMNITEE HARMLESS FROM, ANY AND ALL LOSSES, CLAIMS,
      DAMAGES, LIABILITIES AND RELATED EXPENSES, INCLUDING THE REASONABLE FEES,
      CHARGES AND DISBURSEMENTS OF ANY COUNSEL FOR ANY INDEMNITEE, INCURRED BY OR
      ASSERTED AGAINST ANY INDEMNITEE ARISING OUT 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 SUBSIDIARY 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 THE USE OF THE PROCEEDS THEREFROM, INCLUDING, WITHOUT LIMITATION,
(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 ANY SUBSIDIARY 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 SUBSIDIARY WITH ANY
      ENVIRONMENTAL LAW APPLICABLE TO THE BORROWER OR ANY SUBSIDIARY, (x)
      THE PAST
      OWNERSHIP BY THE BORROWER OR ANY SUBSIDIARY OF ANY OF THEIR PROPERTIES OR PAST
      ACTIVITY ON ANY OF THEIR PROPERTIES WHICH, THOUGH LAWFUL AND FULLY PERMISSIBLE
      AT THE TIME, COULD RESULT IN PRESENT LIABILITY, (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 SUBSIDIARY 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 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 WILFUL MISCONDUCT OF SUCH INDEMNITEE.

     

    
      
        
        

      

      
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    (c)  To
      the
      extent that the Borrower fails to pay any amount required to be paid by it
      to
      any Agent or the Arranger under Section
      12.03(a)
      or
(b),
      each
      Lender severally agrees to pay to such Agent or the Arranger, as the case may
      be, such Lender’s ratable share (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 the Arranger in its capacity as such.

     

    
      
        
        

      

      
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    (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 the use of the proceeds
      thereof.

     

    (e)  All
      amounts due under this Section
      12.03
      shall be
      payable promptly after 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,
      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, 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 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),
      any
      Lender may assign to one or more assignees all or a portion of its rights and
      obligations under this Agreement (including all or a portion of its Commitment
      and the Loans at the time owing to it) 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 if such
      assignment is to a Lender, an Affiliate of a Lender, an Approved Fund or, if
      an
      Event of Default has occurred and is continuing, 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 an Affiliate
      of
      such assignor 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
      or Loans, the amount of the Commitment or Loans of the assigning Lender subject
      to each such assignment (determined as of the date the Assignment and Assumption
      with respect to such assignment is delivered to the 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;

     

    
      
        
        

      

      
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    (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) 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 principal amount of the Loans owing to each Lender pursuant
      to
      the terms hereof from time to time (the “Register”).
      The
      entries in the Register shall be conclusive, and the Borrower, the
      Administrative Agent 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 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 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
      and, if required hereunder, applicable tax forms (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).

     

    
      
        
        

      

      
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    (c)  (i)
      Any
      Lender may, without the consent of the Borrower or the Administrative Agent,
      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 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 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, without limitation, any pledge or assignment to secure obligations
      to
      a Federal Reserve Bank or any other funding source of such Lender, and this
      Section
      12.04(d)
      shall
      not 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.

     

    (e)  Notwithstanding
      any other provisions of this Section
      12.04,
      no
      transfer or assignment of the interests or obligations of any Lender or any
      grant of participations therein shall be permitted if such transfer, assignment
      or grant would require the Borrower and the Guarantors to file a registration
      statement with the SEC or to qualify the Loans under the “Blue Sky” laws of any
      state.

     

    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, regardless
      of any investigation made by any such other party or on its behalf and
      notwithstanding that the Administrative Agent, any other Agent 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. 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 or the
      termination of this Agreement, any other Loan Document or any provision hereof
      or thereof.

     

    
      
        
        

      

      
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    (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. 

     

    (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.

     

    
      
        
        

      

      
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    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 Subsidiary against
      any of and all the obligations of the Borrower or any Subsidiary 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 INTERNAL 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 MAY 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, 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.

     

    
      
        
        

      

      
        78

        
          

        

      

      
        
        

      

    

     

    (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 OR COUNSEL FOR
      ANY PARTY HERETO HAS REPRESENTED, EXPRESSLY OR OTHERWISE, OR IMPLIED THAT SUCH
      PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING
      WAIVERS, AND (iv)
      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 Administrative Agent 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 to comply with the provisions of this Section, to any actual
      or
      prospective Transferee (or any professional advisor to such counterparty),
      (g)
      with the
      consent of the Borrower, (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 or any Lender on a nonconfidential basis
      from a source other than the Borrower, (i)
      to the
      National Association of Insurance Commissioners or any similar organization
      or
      any nationally recognized rating agency that requires access to information
      about a Lender’s investment portfolio in connection with ratings issued with
      respect to such Lender or (j) to any of its funding sources. For the purposes
      of
      this Section
      12.11,
      “Information”
means
      all information received from the Borrower or any Subsidiary relating to the
      Borrower or any Subsidiary and their businesses, other than any such information
      that is available to the Administrative Agent or any Lender on a nonconfidential
      basis prior to disclosure by the Borrower or a Subsidiary; provided that, in
      the
      case of information received from the Borrower or any Subsidiary 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.
      

     

    
      
        
        

      

      
        79

        
          

        

      

      
        
        

      

    

     

    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: (i)
      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 (ii)
      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 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.

     

    
      
        
        

      

      
        80

        
          

        

      

      
        
        

      

    

     

    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  No
      Third Party Beneficiaries.
      This
      Agreement, the other Loan Documents, and the agreement of the Lenders to make
      Loans 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 or any Lender for any reason
      whatsoever. There are no third party beneficiaries.

     

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

     

    
      
        
        

      

      
        81

        
          

        

      

      
        
        

      

    

     

    [SIGNATURES
      BEGIN NEXT PAGE]

     

    
      
        
        

      

      
        82

        
          

        

      

      
        
        

      

    

    

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

    
      	 	 	 
	BORROWER: 	AURORA OIL & GAS CORPORATION
	 
 	 
 	 
 
	
            	By:  	
              /s/
                William W. Deneau

            
	 	
              
William
              W. Deneau, Chief Executive
              Officer

    

     

    
      
        
        

      

      
        Signature
          Page- Second Lien Term Loan Agreement -1

        
          

        

      

      
        
        

      

    

    
      	 	 	
               

            
	ADMINISTRATIVE
              AGENT:	BNP PARIBAS,
	 
 	as
              Administrative
              Agent and Lender
  
 
	 	
              By:  /s/ Betsy Jocher

            
	 	
              
                

              

              Name:
                Betsy Jocher 

              Title:
                Director 

            

    

     

    
      	 	 	 
	 	
              By:  /s/ Russell Otts

            
	 	
              
                

              

              Name:
                Russell Otts

              Title:
                Vice President

            

    

     

    
      
        
        

      

      
        Signature Page-
          Second
          Lien Term Loan Agreement -2

        
          

        

      

      
        
        

        	LENDERS: 	LAMINAR
                DIRECT
                CAPITAL L.P.
	 	 
	 	
                 

              
	 	
                By:  /s/ Robert T. Ladd

              
	 	
                
                  

                

                Name:
                  Robert T. Ladd

                Title:
                  President

              

      

    

     

    
      
        
        

      

      
        Signature Page-
          Second
          Lien Term Loan Agreement -3

        
          

        

      

      
        
        

    

    
      	
            	CIT
              CAPITAL USA
              INC.
	 	 
	 	
               

            
	 	
              By:  /s/ George E. McKean

            
	 	
              
                

              

              Name:
                George E. McKean

              Title:
                Vice President

            

    

    
       

    

    
      
        
        

      

      
        Signature Page-
          Second
          Lien Term Loan Agreement -4

        
          

        

      

      
        
        

      

    

    
      	
            	ENERGY
              COMPONENTS
              SPC UP- AND MIDSTREAM SEGREGATED PORTFOLIO
	 	 
	 	

            
	 	
              By:  /s/
                Warren Keens 

            
	 	
              
                

              

              Name:
                Warren Keens

              Title:
                Director

            

    

    
       

      
        
          
          

        

        
          Signature
            Page- Second
            Lien Term Loan Agreement -5

          
            

          

        

        
          
          

        

      

    

    ANNEX
      I

    LIST
      OF
      COMMITMENTS

    

      
        	
                Name
                  of Lender

              	 	
                Percentage

              	 	
                Commitment
                  Amount

              	 
	
                Laminar
                  Direct Capital L.P.

              	 	 	
                60

              	
                %

              	
                $

              	
                30,000,000.00

              	 
	
                CIT
                  Capital USA Inc.

              	 	 	
                20

              	
                %

              	
                $

              	
                10,000,000.00

              	 
	
                Energy
                  Components SPC Up- and Midstream Segregated Portfolio 

              	 	 	
                10

              	
                %

              	
                $

              	
                5,000,000.00

              	 
	
                BNP
                  Paribas

              	 	 	
                10

              	
                %

              	
                $

              	
                5,000,000.00

              	 
	
                TOTAL

              	 	 	
                100

              	
                %

              	
                $

              	
                50,000,000.00

              	 

      

    

     

    
      
        
        

      

      
        ANNEX I

        
          

        

      

      
        
        

      

    

     

    EXHIBIT
      A

    FORM
      OF NOTE

     

    
      	$[          ] 	
              [          ],
                200[     ]

            

    

     

    FOR
      VALUE
      RECEIVED, Aurora
      Oil & Gas Corporation, a Utah corporation
      (the
“Borrower”)
      hereby
      promises to pay to the order of [          ]
      (the
“Lender”),
      at
      the principal office of BNP
      Paribas
      (the
“Administrative
      Agent”),
      the
      principal sum of [          ]
      Dollars
      ($[          ]),
      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 Loan 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 Loan Agreement.

     

    The
      date,
      amount, Type, interest rate, Interest Period and maturity of the 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 Loan or
      affect the validity of such transfer by any Lender of this Note.

     

    This
      Note
      is one of the Notes referred to in the Second Lien Term Loan Agreement dated
      as
      of August
      20, 2007
      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 Loan Agreement as the same may be amended, supplemented or
      restated from time to time, the “Loan
      Agreement”).
      Capitalized terms used in this Note have the respective meanings assigned to
      them in the Loan Agreement.

     

    This
      Note
      is issued pursuant to, and is subject to the terms and conditions set forth
      in,
      the Loan Agreement and is entitled to the benefits provided for in the Loan
      Agreement and the other Loan Documents. The Loan 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-1

        
          

        

      

      
        
        

      

    

     

    THIS
      NOTE
      SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE
      OF
      TEXAS.

     

    
      	
            	AURORA OIL & GAS
              CORPORATION
	 	 
	 	 
	 	
              By:  

               

            
	 	
              
                

              

              Name:

              Title:

            

    

     

    
      
        
        

      

      
        EXHIBIT
          A-2

        
          

        

      

      
        
        

      

    

     

    EXHIBIT
      B

    FORM
      OF BORROWING REQUEST

     

    [                   ],
      200[   ]

     

    Aurora
      Oil & Gas Corporation, a Utah corporation
      (the
“Borrower”),
      pursuant to Section 2.03 of the Second Lien Term Loan Agreement dated as of
      August 20, 2007 (together with all amendments, restatements, supplements or
      other modifications thereto, the “Loan
      Agreement”)
      among
      the Borrower, BNP Paribas, as Administrative Agent and the other agents and
      lenders (the “Lenders”)
      which
      are or become parties thereto (unless otherwise defined herein, each capitalized
      term used herein is defined in the Loan Agreement), hereby requests a Tranche
      as
      follows:

     

    (i) Aggregate
      amount of the requested Loan is
      $[                   ];

     

    (ii) Date
      of
      such Loan is
      [                   ],
      200[   ];

     

    (iii) The
      initial Interest Period applicable thereto is
      [                   ];

     

    (iv) 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 of the Loan Agreement, is
      as
      follows:

    

    [_________________]

    [_________________]

    [_________________]

    [_________________]

    

    The
      undersigned certifies that he/she is the
      [                ]
      of the Borrower, and that as such he/she is authorized to execute this
      certificate on behalf of the Borrower. The undersigned further certifies,
      represents and warrants on behalf of the Borrower that the Borrower is entitled
      to receive the requested Loan under the terms and conditions of the Loan
      Agreement.

     

    
      	
            	AURORA OIL & GAS
              CORPORATION
	 	 
	 	 
	 	
              By:  

               

            
	 	
              
                

              

              Name:

              Title:

            

    

     

    
      
        
        

      

      
        EXHIBIT
          B-1

        
          

        

      

      
        
        

      

    

     

    EXHIBIT
      C

    FORM
      OF INTEREST ELECTION REQUEST

     

    [                ],
      200[   ]

     

    Aurora
      Oil & Gas Corporation, a Utah corporation
      (the
“Borrower”),
      pursuant to Section 2.04 of the Second Lien Term Loan Agreement dated as of
      August 20, 2007 (together with all amendments, restatements, supplements or
      other modifications thereto, the “Loan
      Agreement”)
      among
      the Borrower, BNP Paribas, as Administrative Agent and the other agents and
      lenders (the “Lenders”)
      which
      are or become parties thereto (unless otherwise defined herein, each capitalized
      term used herein is defined in the Loan Agreement), hereby makes an Interest
      Election Request as follows:

     

    (i) The
      Tranche to which this 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 Tranche (in which case the
      information specified pursuant to (iii) and (iv) below shall be specified for
      each resulting Tranche) is
      [                ];

     

    (ii) The
      effective date of the election made pursuant to this Interest Election Request
      is
      [                ],
      200[   ]; [and]

     

    (iii) The
      Interest Period applicable to the resulting Tranche after giving effect to
      such
      election is
      [                ]].

     

    The
      undersigned certifies that he/she is the
      [                ]
      of the Borrower, and that as such he/she is authorized to execute this
      certificate on behalf of the Borrower. The undersigned further certifies,
      represents and warrants on behalf of the Borrower that the Borrower is entitled
      to receive the requested continuation under the terms and conditions of the
      Loan
      Agreement.

     

    
      	
            	AURORA OIL & GAS
              CORPORATION
	 	 
	 	 
	 	
              By:  

               

            
	 	
              
                

              

              Name:

              Title:

            

    

     

    
      
        
        

      

      
        EXHIBIT
          C-1

        
          

        

      

      
        
        

      

    

     

    EXHIBIT
      D

    FORM
      OF

    COMPLIANCE
      CERTIFICATE

     

    The
      undersigned hereby certifies that he/she is the [          ]
      of
Aurora
      Oil & Gas Corporation, a Utah corporation
      (the
“Borrower”),
      and
      that as such he/she is authorized to execute this certificate on behalf of
      the
      Borrower. With reference to the Second Lien Term Loan Agreement dated as of
      August 20, 2007 (together with all amendments, restatements, supplements or
      other modifications 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, 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
      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].

     

    (b) Since
      December 31, 2006, no change has occurred, either in any case or in the
      aggregate, in the condition, financial or otherwise, of the Borrower or any
      Subsidiary which could reasonably be expected to have a Material Adverse Effect
      [or specify event].

     

    (c) There
      exists no Default or Event of Default [or specify Default and
      describe].

     

    (d) 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][fiscal year] ending [          ].

     

    EXECUTED
      AND DELIVERED this [          ]
      day of
[          ].

     

    
      	
            	AURORA OIL & GAS
              CORPORATION
	 	 
	 	 
	 	
              By:  

               

            
	 	
              
                

              

              Name:

              Title:

            

    

     

    
      
        
        

      

      
        EXHIBIT
          D-1

        
          

        

      

      
        
        

      

    

     

    EXHIBIT
      E-1

    SECURITY
      INSTRUMENTS

     

    
      	
              1)

            	
              Second
                Lien Guaranty and Collateral Agreement dated as of August
                20, 2007
                by
                the Borrower and the Guarantors, in favor of the Administrative Agent
                and
                the Lenders.

            

    

     

    
      	2)	
              Financing
                Statements in respect of item 1, by

            

    

     

    
      	
            	a)	
              the
                Borrower

            

    

     

    
      	
            	b)	
              Aurora
                Energy, Ltd.

            

    

     

    
      	
            	c)	
              Aurora
                Antrim North, L.L.C.

            

    

     

    
      	
              3)

            	
              Second
                Lien Deed of Trust, Mortgage, Assignment of As-Extracted Collateral,
                Security Agreement and Financing Statement dated as of August
                20, 2007
                by
                Aurora Antrim North, L.L.C., as mortgagor, in favor of Betsy
                Jocher,
                as
                Trustee, for the benefit the Administrative Agent, the Lenders and
                others.

            

    

     

    
      	4)	
              Financing
                Statement in respect of item 3.

            

    

     

    
      	5)	
              Fee
                Letter with Administrative Agent

            

    

     

    
      
        
        

      

      
        EXHIBIT
          E-1-1

        
          

        

      

      
        
        

      

    

     

    EXHIBIT
      E-2

    FORM
      OF SECOND LIEN GUARANTY AND COLLATERAL AGREEMENT

     

    
      
        
        

      

      
        EXHIBIT
          E-2-1

        
          

        

      

      
        
        

      

    

     

    EXHIBIT
      F

    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 Loan Agreement identified below (as amended, the “Loan
      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.

    

    For
      an
      agreed consideration, the Assignor hereby irrevocably sells and assigns to
      the
      Assignee, and the Assignee hereby irrevocably purchases and assumes from the
      Assignor, subject to and in accordance with the Standard Terms and Conditions
      and the Loan Agreement, as of the Effective Date inserted by the Administrative
      Agent as contemplated below (i) all of the Assignor’s rights and obligations in
      its capacity as a Lender under the Loan Agreement and any other documents or
      instruments delivered pursuant thereto to the extent related to the amount
      and
      percentage interest identified below of all of such outstanding rights and
      obligations of the Assignor under the respective facilities identified below
      (including any guarantees included in such facilities) and (ii) to the extent
      permitted to be assigned under applicable law, all claims, suits, causes of
      action and any other right of the Assignor (in its capacity as a Lender) against
      any Person, whether known or unknown, arising under or in connection with the
      Loan Agreement, any other documents or instruments delivered pursuant thereto
      or
      the loan transactions governed thereby or in any way based on or related to
      any
      of the foregoing, including contract claims, tort claims, malpractice claims,
      statutory claims and all other claims at law or in equity related to the rights
      and obligations sold and assigned pursuant to clause (i) above (the rights
      and
      obligations sold and assigned pursuant to clauses (i) and (ii) above being
      referred to herein collectively as the “Assigned
      Interest”).
      Such
      sale and assignment is without recourse to the Assignor and, except as expressly
      provided in this Assignment and Assumption, without representation or warranty
      by the Assignor.

     

    
      
        	1. Assignor:	
                ______________________________

              	 
	 	 	 
	2. Assignee:	______________________________	 
	 	[and is an Affiliate/Approved Fund
                of [identify
                Lender]]	 
	 	 	 
	3. Borrower:	Aurora Oil & Gas Corporation	 
	 	 	 
	4. Administrative
                Agent:	BNP Paribas, as the administrative
                agent
                under the Loan Agreement	 
	 	 	 
	
                5. Loan
                  Agreement: 

              	The Second Lien Term Loan Agreement
                dated as
                of August 20, 2007 among Aurora
                Oil & Gas Corporation, the
                Lenders parties thereto, BNP Paribas, as Administrative Agent, and
                the
                other agents parties thereto	 

      

    

    
       

    

    
      
        
        

      

      
        EXHIBIT
          F-1

        
          

        

      

      
        
        

      

    

     

    6. 
      Assigned
      Interest:

     

    
      
        	
                Aggregate
                  Amount of Loans for all Lenders

              	 	
                Amount
                  of Loans Assigned

              	 	
                Percentage
                  Assigned of Loans

              
	
                $

              	 	
                $

              	 	
                %

              
	
                $

              	 	
                $

              	 	
                %

              
	
                $

              	 	
                $

              	 	
                %

              

      

    

     

    

    Effective
      Date: _____________ ___, 20___ [TO BE INSERTED BY ADMINISTRATIVE AGENT AND
      WHICH
      SHALL BE THE EFFECTIVE DATE OF RECORDATION OF TRANSFER IN THE REGISTER
      THEREFOR.]

    

    The
      terms
      set forth in this Assignment and Assumption are hereby agreed to:

     

    
      	
            	
              ASSIGNOR

            
	 	 
	 	
              [NAME
                OF ASSIGNOR]

            
	 	 
	 	 
	 	
              By:  

               

            
	 	
              
                

              

              Title:

            

    

     

    
      	
            	
              ASSIGNEE

            
	 	 
	 	
              [NAME
                OF ASSIGNEE]

            
	 	 
	 	 
	 	
              By:  

               

            
	 	
              
                

              

              Title:

            

    

     

    
      
        
        

      

      
        EXHIBIT
          F-2

        
          

        

      

      
        
        

      

    

     

    
      
        	Consented to and Accepted: [if
                required]	
              
	 	 
	
                BNP
                  Paribas, as 

                Administrative
                  Agent

              	
              
	 	 
	By:  	 
	
                
                  

                

                Title:

              	
                 

                 

              
	 	 
	By:  	 
	
                
                  

                

                Title:

              	 

      

       

       

      
        
          
            	Consented to: [if required]	
                  
	 	 
	AURORA OIL & GAS CORPORATION	
                  
	 	 
	 	 
	By:  	 
	
                    
                      

                    

                    Name:

                    Title:

                  	
                     

                     

                  

          

           

          
            
              
              

            

            
              EXHIBIT
                F-3

              
                

              

            

            
              
              

            

          

        

      

    

     

    ANNEX
      1

    

    AURORA
      OIL & GAS CORPORATION SECOND LIEN TERM LOAN 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 Loan 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 Loan Agreement, (ii) it satisfies the requirements, if any,
      specified in the Loan 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 Loan 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 Loan
      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 Loan 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
      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.

     

    
      
        
        

      

      
        EXHIBIT
          F-5

        
          

        

      

      
        
        

      

    

     

    EXHIBIT
      G-1

    FORM
      OF ADDITIONAL LOAN CERTIFICATE

    

    [          ],
      200[    ]

    

    To: BNP
      Paribas,

    as
      Administrative Agent

    

    The
      Borrower, the Administrative Agent and the other Agents and certain Lenders
      have
      heretofore entered into a Second Lien Term Loan Agreement, dated as of
August
      20, 2007,
      as
      amended from time to time (the “Loan
      Agreement”).
      Capitalized terms not otherwise defined herein shall have the meaning given
      to
      such terms in the Loan Agreement.

    

    This
      Additional Loan Certificate is being delivered pursuant to Section
      2.07(a)
      of the
      Loan Agreement.

    

    Please
      be
      advised that the undersigned has agreed (a) to make additional Loans under
      the
      Loan Agreement effective August
      20, 2007 in the aggregate amount of
      $[          ]
      and (b)
      that it shall continue to be a party in all respect to the Loan Agreement and
      the other Loan Documents.

    

    The
      [Borrower/Lender] shall pay the fee payable to the Administrative Agent pursuant
      to Section
      2.07(b)
      of the
      Loan Agreement.

    
       

      
        	
              	Very truly yours,
	 	 
	 	
                [     ]

              
	 	 
	 	 
	 	
                By:  

              
	 	
                
                  

                

                Name:
                  

                
                  

                

                Title:

                
                  

                

              

      

       

    

    
      
        
        

      

      
        EXHIBIT
          G-1-1

        
          

        

      

      
        
        

      

    

     

    
      
        
          
            	
                    Accepted
                      and Agreed:

                  	
                  
	 	 
	
                    BNP
                      PARIBAS,

                    as
                      Administrative Agent

                  	
                  
	 	 
	 	 
	By:  	 
	
                    
                      

                    

                    Name:

                    
                      

                    

                    Title:

                    
                      

                    

                  

          

        

      

    

     

    
       

      
        
          
            
              	By:  	 
	
                      
                        

                      

                      Name:

                      
                        

                      

                      Title:

                      
                        

                      

                    

            

          

        

      

       

      
        
          Accepted
            and Agreed:

           

          [    ]

           

          
            
              
                
                  	By:  	 
	
                          
                            

                          

                          Name:

                          
                            

                          

                          Title:

                          
                            

                          

                        

                

              

            

          

           

        

      

    

    
      
        
        

      

      
        EXHIBIT
          G-1-2

        
          

        

      

      
        
        

      

    

     

    EXHIBIT
      G-2

    FORM
      OF ADDITIONAL LENDER CERTIFICATE

    

    [          ],
      200[    ]

    

    To: BNP
      Paribas,

    as
      Administrative Agent

    

    The
      Borrower, the Administrative Agent and the other Agents and certain Lenders
      have
      heretofore entered into a Second Lien Term Loan Agreement, dated as of
August
      20, 2007,
      as
      amended from time to time (the “Loan
      Agreement”).
      Capitalized terms not otherwise defined herein shall have the meaning given
      to
      such terms in the Loan Agreement.

    

    This
      Additional Lender Certificate is being delivered pursuant to Section
      2.07(a)
      of the
      Loan Agreement.

    

    Please
      be
      advised that the undersigned has agreed (a) to become a Lender under the Loan
      Agreement effective August
      20, 2007
      and to
      make a Loan to the Borrower in the aggregate amount of $[          ]
      and (b)
      that it shall be a party in all respect to the Loan Agreement and the other
      Loan
      Documents.

    

    This
      Additional Lender Certificate is being delivered to the Administrative Agent
      together with (i) if the Additional Lender is a Foreign Lender, any
      documentation required to be delivered by such Additional Lender pursuant to
      Section
      5.03(e)
      of the
      Loan Agreement, duly completed and executed by the Additional Lender, and (ii)
      an Administrative Questionnaire in the form supplied by the Administrative
      Agent, duly completed by the Additional Lender. The [Borrower/Additional Lender]
      shall pay the fee payable to the Administrative Agent pursuant to Section
      2.07(b)
      of the
      Loan Agreement.

    
      
         

        
          	
                	Very truly yours,
	 	 
	 	
                  [     ]

                
	 	 
	 	 
	 	
                  By:  

                   

                
	 	
                  
                    

                  

                  Name:
                    

                  
                    

                  

                  Title:

                  
                    
 

                

        

         

        
          
            
            

          

          
            EXHIBIT
              G-2-1

            
              

            

          

          
            
            

          

        

      

    

     

    SCHEDULE
      7.05

    LITIGATION

     

    [None]

     

    
      
        
        

      

      
        
          SCHEDULE
            7.05-1

        

        
          

        

      

      
        
        

      

    

     

    SCHEDULE
      7.14

    SUBSIDIARIES
      AND PARTNERSHIPS

    

      
        	
                Name
                  of Subsidiary

              	 	
                Jurisdiction
                  and entity

              	 	
                Entity
                  number

              
	
                Aurora
                  Oil & Gas Corporation

              	 	
                Utah
                  Corporation

              	 	
                608892-0142

              
	 	 	 	 	 
	
                Aurora
                  Energy, Ltd.

              	 	
                Nevada
                  corporation

              	 	
                C7051-1991

              
	 	 	 	 	 
	
                Celebration
                  Mining Company

              	 	
                Washington
                  corporation

              	 	
                601525229

              
	 	 	 	 	 
	
                Bach
                  Services & Manufacturing Company, L.L.C.

              	 	
                Michigan
                  limited liability company

              	 	
                D0798X

              
	 	 	 	 	 
	
                Kingsley
                  Development Company, L.L.C.

              	 	
                Michigan
                  limited liability company

              	 	
                B81092

              
	 	 	 	 	 
	
                Aurora
                  Antrim North, L.L.C.

              	 	
                Michigan
                  limited liability company

              	 	
                B80030

              
	 	 	 	 	 
	
                Aurora
                  Operating, L.L.C.

              	 	
                Michigan
                  limited liability company

              	 	
                B71015

              
	 	 	 	 	 
	
                Hudson
                  Pipeline & Processing Co., LLC

                (Aurora
                  Antrim North, L.L.C. owns 93.6%)

              	 	
                Michigan
                  limited liability company

              	 	
                B0008T
                  

              
	 	 	 	 	 
	
                Indiana
                  Royalty Trustory, L.L.C.

                (Aurora
                  Energy, Ltd. owns 51%)

              	 	
                Michigan
                  limited liability company

              	 	
                B24031

              
	 	 	 	 	 
	
                Aurora
                  Holding, L.L.C.

              	 	
                Michigan
                  limited liability company

              	 	
                B83167

              
	 	 	 	 	 
	
                Consolidated
                  Exploration, L.L.C.

              	 	
                Michigan
                  limited liability company

              	 	
                LC1804

              
	 	 	 	 	 
	
                Indigas
                  Energy, L.L.C.

              	 	
                Indiana
                  limited liability company

              	 	
                1995111315

              
	 	 	 	 	 
	
                BFG
                  Holding, L.L.C.

              	 	
                Michigan
                  limited liability company

              	 	
                B0361G

              

      

    

     

    
      
        
        

      

      
        
          SCHEDULE
            7.14-1

        

        
          

        

      

      
        
        

      

    

     

    SCHEDULE
      7.18

    GAS
      IMBALANCES

     

    None

     

    
      
        
        

      

      
        
          SCHEDULE
            7.18-1

        

        
          

        

      

      
        
        

      

    

     

    SCHEDULE
      7.19

    MARKETING
      CONTRACTS

    

    None.

     

    
      
        
        

      

      
        
          SCHEDULE
            7.19-1

        

        
          

        

      

      
        
        

      

    

     

    SCHEDULE
      7.20

    SWAP
      AGREEMENTS

    

     

    
      	
              Period

            	 	
              Type
                of Contract

            	 	
              Natural
                Gas Volume per Day

            	 	
              Price
                per mmbtu

            	 
	
              April
                2007—December 2008

            	 	 	
              Swap

            	 	 	
              5,000
                mmbtu

            	 	
              $

            	
              9.00

            	 
	
              April
                2007—December 2008

            	 	 	
              
              

              Collar

            	 	 	
              
              

              2,000
                mmbtu

            	 	
              
              

              $

            	
              
              

              7.55/$9.00

            	 
	
               

              January
                2008—December 2008

            	 	 	
              
              

              Swap

            	 	 	
              
              

              2,000
                mmbtu

            	 	
              
              

              $

            	
              
              

              8.41

            	 
	
               

              January
                2009—December 2009

            	 	 	
              
              

              Swap

            	 	 	
              
              

              7,000
                mmbtu

            	 	
              
              

              $

            	
              
              

              8.72

            	 
	
               

              January
                2010—March 2011

            	 	 	
              
              

              Swap

            	 	 	
              
              

              7,000
                mmbtu

            	 	
              
              

              $

            	
              
              

              8.68

            	 
	
               

              April
                2011 -- September 2011

            	 	 	
              
              

              Swap

            	 	 	
              
              

              7,000
                mmbtu

            	 	
              
              

              $

            	
              
              

              7.62

            	 

    

     

    
      
        
        

      

      
        
          SCHEDULE
            7.20-1

        

        
          

        

      

      
        
        

      

    

     

    SCHEDULE
      9.05

    INVESTMENTS

     

    None

     

    
      
        
        

      

      
        
          
            SCHEDULE
              9.05-1

          

        

        
          

        

      

      
        
        

      

    

     

     

    
      SCHEDULE
        9.12
OTHER
      PROPERTY

     

    
      	 	
              PROJECT
                NAME

            	 	
              Type

            	 	
              Project
                Location

            
	 	 	 	 	 	 	
              (Parts
                of the Following
                Counties/States)

            

    

     

    
      	
              I.
                Oil and Gas Properties - Leasehold interests (not reflected in reserve
                report)

            
	 
	
              A.

            	
              Oak
                Tree Leasehold Interests/AOK Energy, LLC

            	 	 
	 	
              .

            	
              J.V.
                Partner/Project Financing

            	
              Other

            	 	
              Cleveland,
                Pottawatomie, McClain Counties, OK

            
	 	 	 	 	 	 
	
              B.

            	
              Rex
                - NAS Option Acreage

            	 	 	 
	 	
              1)

            	
              Lawrence
                Cty (30% pending)

            	
              New
                Albany 

            	 	
              Lawrence
                County, Indiana

            
	 	 	 	 	 	 
	
              C.

            	
              Geopetra
                Investment - Various Gulf of Mexico Projects

            	 	 
	 	
              1)

            	
              Mustang
                Island 

            	
              Other

            	 	
              Gulf
                of Mexico, Offshore, Texas

            
	 	
              2)

            	
              Bayou
                de Glaises

            	
              Other

            	 	
              St.
                Martin Parish, Louisiana

            
	 	 	 	 	 	 
	
              II.
                Other Oil and Gas related Property and Equipment

            	 	 
	 	 	 
	
              A.

            	
              CO2
                Plant

            	
              Michigan

            	 	
              Charlevoix
                County, Michigan

            

    

    

    
      
        
        

      

      
        
          SCHEDULE
            9.12-1

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