Common use of Borrowing Base Clause in Contracts

Borrowing Base. (i) If the Leverage Ratio as of the end of a fiscal quarter for which the Borrower has or was required to deliver financial statements pursuant to Section 7.1 (the earliest of such dates, the “BB Compliance Date”) equals or exceeds 0.95 to 1.00, at any time on or after the BB Compliance Date through the immediately following BB Compliance Date, the Borrower will not permit the Borrowing Base (determined (A) as of the end of such fiscal quarter and set forth on the Inventory Summary Report required to be delivered for such fiscal quarter pursuant to Section 7.27.2 (ii) or (B) as of the end of any fiscal month and set forth on the Inventory Summary Report for such fiscal month delivered pursuant to the proviso of Section 7.27.2(ii)) to be less than the aggregate principal amount of Senior Indebtedness (excluding Permitted Nonrecourse Indebtedness and Permitted Purchase Money Loans) outstanding at any time during such period, it being understood that if as of the end of the immediately following fiscal quarter the Leverage Ratio is less than 0.95 to 1.00, this Section 7.27.2(i) shall no longer apply from and after the related BB Compliance Date until the immediately following BB Compliance Date (the “Borrowing Base Requirement”). (ii) Borrower shall deliver to the Administrative Agent an Inventory Summary Report in the form of Exhibit J and incorporated herein within fifty days after the last day of each fiscal quarter in which the Leverage Ratio exceeds 0.95 to 1:00 as of the last day of such fiscal quarter; provided that Borrower may, in its discretion, deliver an Inventory Summary Report as of the last day of any fiscal month. The Inventory Summary Report shall reflect Inventory that Borrower determines in good faith to designate as Loan Inventory. Upon Administrative Agent’s receipt of the Inventory Summary Report, Administrative Agent may conduct inspections or reviews of the subject Inventory that Administrative Agent deems appropriate, at the expense of the Borrower, subject to the reimbursement limitation set forth in Section 7.18.

Borrowing Base. (i) If At any time that the Leverage Ratio as of the end of a fiscal quarter for which the Borrower has or was required to deliver financial statements pursuant to Section 7.1 (the earliest of such dates, the “BB Compliance Date”) equals or exceeds 0.95 1.50 to 1.00, 1.00 and the Company does not have an Investment Grade Rating from at any time on or after the BB Compliance Date through the immediately following BB Compliance Date, the Borrower will not permit the Borrowing Base least two (2) Rating Agencies (in each case as determined (A) as of the end of such fiscal quarter and set forth on the Inventory Summary Report compliance certificate required to be delivered for such fiscal quarter pursuant to Section 7.27.2 7.1(iv)), the Company and the Borrower will not permit the Borrowing Base (ii) or (B) determined as of the end of any such fiscal month quarter and set forth on the Inventory Summary Report Borrowing Base Certificate required to be delivered for such fiscal month delivered quarter pursuant to the proviso of Section 7.27.2(ii7.1(viii)) to be less than the aggregate principal amount of Senior Indebtedness then outstanding (excluding Permitted Nonrecourse outstanding Alternative Letters of Credit and other Letters of Credit or similar arrangements included in Senior Indebtedness and Permitted Purchase Money Loans) outstanding at any time during such periodnot issued under this Agreement to the extent collateralized by cash, Marketable Securities or Cash Equivalents), it being understood that (i) if as any Permitted Purchase Money Loans or Permitted Recourse Indebtedness are secured by assets which have a book value at the time of the end calculation of the immediately following fiscal quarter the Leverage Ratio which is greater than or equal to the amount of Indebtedness outstanding in respect of such Permitted Purchase Money Loans or Permitted Recourse Indebtedness, as applicable, then the amount of such Indebtedness shall not be included in the foregoing calculation of Senior Indebtedness, (ii) if any Permitted Purchase Money Loans or Permitted Recourse Indebtedness are secured by assets which have a book value at the time of the calculation of the Leverage Ratio which is less than 0.95 the amount of Indebtedness in respect of such Permitted Purchase Money Loans or Permitted Recourse Indebtedness, as applicable, and such Permitted Purchase Money Loans or Permitted Recourse Indebtedness, as applicable, are recourse to 1.00any Loan Party (on a secured or unsecured basis) then only the difference between the outstanding principal amount of Indebtedness in respect of such Permitted Purchase Money Loans or Permitted Recourse Indebtedness, this Section 7.27.2(i) as applicable, and the book value of such assets securing such Permitted Purchase Money Loans or Permitted Recourse Indebtedness, as applicable, shall no longer apply from and after the related BB Compliance Date until the immediately following BB Compliance Date (the “Borrowing Base Requirement”). (ii) Borrower shall deliver to the Administrative Agent an Inventory Summary Report be included in the form foregoing calculation of Exhibit J Senior Indebtedness (but in no event in an amount greater than the amount of recourse to any Loan Party) and incorporated herein within fifty days after (iii) the last day amount of each fiscal quarter Indebtedness in which respect of Permitted Nonrecourse Indebtedness shall not be included in the Leverage Ratio exceeds 0.95 to 1:00 as foregoing calculation of the last day of such fiscal quarter; provided that Borrower may, in its discretion, deliver an Inventory Summary Report as of the last day of any fiscal month. The Inventory Summary Report shall reflect Inventory that Borrower determines in good faith to designate as Loan Inventory. Upon Administrative Agent’s receipt of the Inventory Summary Report, Administrative Agent may conduct inspections or reviews of the subject Inventory that Administrative Agent deems appropriate, at the expense of the Borrower, subject to the reimbursement limitation set forth in Section 7.18Senior Indebtedness.

Borrowing Base. (i) If The initial Borrowing Base available under the Leverage Ratio as of the end of a fiscal quarter for which the Borrower has or was required to deliver financial statements pursuant to Section 7.1 (the earliest of such datesRevolving Loan is $15,000,000. Thereafter, the “BB Compliance Date”) equals or exceeds 0.95 to 1.00, at any time on or after the BB Compliance Date through the immediately following BB Compliance Date, the Borrower Administrative Agent will not permit re-determine the Borrowing Base (determined (A) as of the end of such fiscal quarter and set forth on the Inventory Summary Report required to be delivered for such fiscal quarter pursuant to Section 7.27.2 (ii) or (B) as of the end of any fiscal month and set forth on the Inventory Summary Report for such fiscal month delivered pursuant to the proviso of Section 7.27.2(ii)) to be less than the aggregate principal amount of Senior Indebtedness (excluding Permitted Nonrecourse Indebtedness and Permitted Purchase Money Loans) outstanding at any time during such period, it being understood that if as of the end of the immediately following fiscal quarter the Leverage Ratio is less than 0.95 to 1.00, this Section 7.27.2(i) shall no longer apply from and after the related BB Compliance Date until the immediately following BB Compliance Date (the “Borrowing Base Requirement”1.2(b). (ii) Borrower shall deliver Commencing with the Reserve Report due on August 15, 2012, and subject to Section 1.2(e) below, the Administrative Agent an Inventory Summary will re-determine the Borrowing Base pursuant to this Section 1.2(b) not less than every six months based upon the most recent Reserve Report. However, if Borrower changes its fiscal year, then the next re-determination date shall be no later than 75 days following Borrower’s new fiscal year end date. On or before each, February 15 and August 15 until the Maturity Date, Borrower shall furnish to Administrative Agent a Reserve Report in the form (with “effective dates” of Exhibit J December 31, and incorporated herein within fifty days after the last day of each fiscal quarter in June 30, respectively), which the Leverage Ratio exceeds 0.95 to 1:00 shall set forth, as of the last day applicable effective date, the Proved Reserves attributable to the Properties. Each Reserve Report delivered each calendar year shall be a complete report prepared by Engineers. Each Reserve Report shall relate to the Proved Reserves attributable to the Properties in accordance with Section 4.5. For the avoidance of such fiscal quarter; provided that Borrower maydoubt, in its discretion, deliver an Inventory Summary Report as commencing with the delivery of the last day of any fiscal month. The Inventory Summary Reserve Report shall reflect Inventory that Borrower determines in good faith to designate as Loan Inventory. Upon Administrative Agent’s due on August 15, 2012, within 30 days following receipt of the Inventory Summary each such Reserve Report, Administrative Agent may conduct inspections or reviews shall, in its sole discretion, make a determination of the subject Inventory that Borrowing Base which shall become effective upon written notification from Administrative Agent deems appropriate, at to Borrower until the expense effective date of the Borrower, subject to the reimbursement limitation next redetermination as set forth in this Section 7.181.2(b). (iii) Administrative Agent is not required to consider any Proved Reserves attributable to the Properties for inclusion in the Borrowing Base if, in Administrative Agent’s reasonable opinion, Administrative Agent does not have a first priority security interest or mortgage Lien on such Properties. In no event will the Borrowing Base exceed the Revolving Loan Note Amount. (iv) Subject to Section 1.2(e) below, Administrative Agent shall determine the Borrowing Base in accordance with its customary lending practices based on the maximum Revolving Loan amount that may be supported by the Properties and Borrower acknowledges, for purposes of this Agreement, such determination by Administrative Agent as being the maximum Revolving Loan amount that may be supported by the Properties as of such date of determination. In making any redetermination of the Borrowing Base, Administrative Agent shall apply consistently the parameters and other credit factors then generally being utilized by Administrative Agent for Borrowing Base redeterminations for Administrative Agent’s similarly situated borrowers. Borrower and Administrative Agent acknowledge that (a) due to the uncertainties of the Hydrocarbon extraction process, the Properties are not subject to evaluation with a high degree of accuracy and are subject to potential rapid deterioration in value, and (b) for this reason and the difficulties and expenses involved in liquidating and collecting against the Properties, Administrative Agent’s determination of the maximum Revolving Loan amount that may be supported by the Properties contains an equity cushion, which equity cushion is acknowledged by Borrower as essential for the adequate protection of Lenders.

Borrowing Base. (i) If the Leverage Ratio as of the end of a fiscal quarter for which the Borrower has or was required to deliver financial statements Financials pursuant to Section 7.1 (the earliest of such dates, the “BB Compliance Date”) equals or exceeds 0.95 1.10 to 1.00, at any time on or after the BB Compliance Date through the immediately following BB Compliance Date, the Borrower will not permit the Borrowing Base (determined (A) as of the end of such fiscal quarter and set forth on the Inventory Summary Report required to be delivered for such fiscal quarter pursuant to Section 7.27.2 (ii) or (B) as of the end of any fiscal month and set forth on the Inventory Summary Report for such fiscal month delivered pursuant to the proviso of Section 7.27.2(ii)) to be less than the aggregate principal amount of Senior Indebtedness (excluding Permitted Nonrecourse Indebtedness and Permitted Purchase Money Loans) outstanding at any time during such period, it being understood that if as of the end of the immediately following fiscal quarter the Leverage Ratio is less than 0.95 1.10 to 1.00, this Section 7.27.2(i) shall no longer apply from and after the related BB Compliance Date until the immediately following BB Compliance Date (the “Borrowing Base Requirement”). (ii) Borrower shall deliver to the Administrative Agent an Inventory Summary Report in the form of Exhibit J and incorporated herein within fifty days after the last day of each fiscal quarter in which the Leverage Ratio exceeds 0.95 1.10 to 1:00 as of the last day of such fiscal quarter; provided that Borrower may, in its discretion, deliver an Inventory Summary Report as of the last day of any fiscal month. The Inventory Summary Report shall reflect Inventory that Borrower determines in good faith to designate as Loan Inventory. Upon Administrative Agent’s receipt of the Inventory Summary Report, Administrative Agent may conduct inspections or reviews of the subject Inventory that Administrative Agent deems appropriate, at the expense of the Borrower, subject to the reimbursement limitation set forth in Section 7.18.

Borrowing Base. (i) If At any time that the Leverage Ratio as of the end of a fiscal quarter for which the Borrower has or was required to deliver financial statements pursuant to Section 7.1 (the earliest of such dates, the “BB Compliance Date”) equals or exceeds 0.95 1.50 to 1.00, 1.00 and the Company does not have an Investment Grade Rating from at any time on or after the BB Compliance Date through the immediately following BB Compliance Date, the Borrower will not permit the Borrowing Base least two (2) Rating Agencies (in each case as determined (A) as of the end of such fiscal quarter and set forth on the Inventory Summary Report compliance certificate required to be delivered for such fiscal quarter pursuant to Section 7.27.2 7.1(iv)), the Company and the Borrower will not permit the Borrowing Base (ii) or (B) determined as of the end of any such fiscal month quarter and set forth on the Inventory Summary Report Borrowing Base Certificate required to be delivered for such fiscal month delivered quarter pursuant to the proviso of Section 7.27.2(ii7.1(viii)) to be less than the aggregate principal amount of Senior Indebtedness then outstanding (excluding Permitted Nonrecourse outstanding Alternative Letters of Credit and other Letters of Credit or similar arrangements included in Senior Indebtedness and Permitted Purchase Money Loans) outstanding at any time during such periodto the extent collateralized by cash, Marketable Securities or Cash Equivalents), it being understood that (i) if as any Permitted Purchase Money Loans or Permitted Recourse Indebtedness are secured by assets which have a book value at the time of the end calculation of the immediately following fiscal quarter the Leverage Ratio which is greater than or equal to the amount of Indebtedness outstanding in respect of such Permitted Purchase Money Loans or Permitted Recourse Indebtedness, as applicable, then the amount of such Indebtedness shall not be included in the foregoing calculation of Senior Indebtedness, (ii) if any Permitted Purchase Money Loans or Permitted Recourse Indebtedness are secured by assets which have a book value at the time of the calculation of the Leverage Ratio which is less than 0.95 the amount of Indebtedness in respect of such Permitted Purchase Money Loans or Permitted Recourse Indebtedness, as applicable, and such Permitted Purchase Money Loans or Permitted Recourse Indebtedness, as applicable, are recourse to 1.00any Loan Party (on a secured or unsecured basis) then only the difference between the outstanding principal amount of Indebtedness in respect of such Permitted Purchase Money Loans or Permitted Recourse Indebtedness, this Section 7.27.2(i) as applicable, and the book value of such assets securing such Permitted Purchase Money Loans or Permitted Recourse Indebtedness, as applicable, shall no longer apply from and after the related BB Compliance Date until the immediately following BB Compliance Date (the “Borrowing Base Requirement”). (ii) Borrower shall deliver to the Administrative Agent an Inventory Summary Report be included in the form foregoing calculation of Exhibit J Senior Indebtedness (but in no event in an amount greater than the amount of recourse to any Loan Party) and incorporated herein within fifty days after (iii) the last day amount of each fiscal quarter Indebtedness in which respect of Permitted Nonrecourse Indebtedness shall not be included in the Leverage Ratio exceeds 0.95 to 1:00 as foregoing calculation of the last day of such fiscal quarter; provided that Borrower may, in its discretion, deliver an Inventory Summary Report as of the last day of any fiscal month. The Inventory Summary Report shall reflect Inventory that Borrower determines in good faith to designate as Loan Inventory. Upon Administrative Agent’s receipt of the Inventory Summary Report, Administrative Agent may conduct inspections or reviews of the subject Inventory that Administrative Agent deems appropriate, at the expense of the Borrower, subject to the reimbursement limitation set forth in Section 7.18Senior Indebtedness.

Borrowing Base. (i) If At any time that the Leverage Ratio as of the end of a fiscal quarter for which the Borrower has or was required to deliver financial statements pursuant to Section 7.1 (the earliest of such dates, the “BB Compliance Date”) equals or exceeds 0.95 1.50 to 1.00, 1.00 and the Company does not have an Investment Grade Rating from at any time on or after the BB Compliance Date through the immediately following BB Compliance Date, the Borrower will not permit the Borrowing Base least two (2) Rating Agencies (in each case as determined (A) as of the end of such fiscal quarter and set forth on the Inventory Summary Report compliance certificate required to be delivered for such fiscal quarter pursuant to Section 7.27.2 7.1(iv)), the Company and the Borrower will not permit the Borrowing Base 77 (ii) or (B) determined as of the end of any such fiscal month quarter and set forth on the Inventory Summary Report Borrowing Base Certificate required to be delivered for such fiscal month delivered quarter pursuant to the proviso of Section 7.27.2(ii7.1(viii)) to be less than the aggregate principal amount of Senior Indebtedness then outstanding (excluding Permitted Nonrecourse outstanding Alternative Letters of Credit and other Letters of Credit or similar arrangements included in Senior Indebtedness and Permitted Purchase Money Loans) outstanding at any time during such periodto the extent collateralized by cash, Marketable Securities or Cash Equivalents), it being understood that (i) if as any Permitted Purchase Money Loans or Permitted Recourse Indebtedness are secured by assets which have a book value at the time of the end calculation of the immediately following fiscal quarter the Leverage Ratio which is greater than or equal to the amount of Indebtedness outstanding in respect of such Permitted Purchase Money Loans or Permitted Recourse Indebtedness, as applicable, then the amount of such Indebtedness shall not be included in the foregoing calculation of Senior Indebtedness, (ii) if any Permitted Purchase Money Loans or Permitted Recourse Indebtedness are secured by assets which have a book value at the time of the calculation of the Leverage Ratio which is less than 0.95 the amount of Indebtedness in respect of such Permitted Purchase Money Loans or Permitted Recourse Indebtedness, as applicable, and such Permitted Purchase Money Loans or Permitted Recourse Indebtedness, as applicable, are recourse to 1.00any Loan Party (on a secured or unsecured basis) then only the difference between the outstanding principal amount of Indebtedness in respect of such Permitted Purchase Money Loans or Permitted Recourse Indebtedness, this Section 7.27.2(i) as applicable, and the book value of such assets securing such Permitted Purchase Money Loans or Permitted Recourse Indebtedness, as applicable, shall no longer apply from and after the related BB Compliance Date until the immediately following BB Compliance Date (the “Borrowing Base Requirement”). (ii) Borrower shall deliver to the Administrative Agent an Inventory Summary Report be included in the form foregoing calculation of Exhibit J Senior Indebtedness (but in no event in an amount greater than the amount of recourse to any Loan Party) and incorporated herein within fifty days after (iii) the last day amount of each fiscal quarter Indebtedness in which respect of Permitted Nonrecourse Indebtedness shall not be included in the Leverage Ratio exceeds 0.95 to 1:00 as foregoing calculation of the last day of such fiscal quarter; provided that Borrower may, in its discretion, deliver an Inventory Summary Report as of the last day of any fiscal month. The Inventory Summary Report shall reflect Inventory that Borrower determines in good faith to designate as Loan Inventory. Upon Administrative Agent’s receipt of the Inventory Summary Report, Administrative Agent may conduct inspections or reviews of the subject Inventory that Administrative Agent deems appropriate, at the expense of the Borrower, subject to the reimbursement limitation set forth in Section 7.18Senior Indebtedness.

Borrowing Base. (i) If At any time that the Leverage Ratio as of the end of a fiscal quarter for which the Borrower has or was required to deliver financial statements pursuant to Section 7.1 (the earliest of such dates, the “BB Compliance Date”) equals or exceeds 0.95 1.50 to 1.00, at any time on or after 1.00,1.00 and the BB Compliance Date through the immediately following BB Compliance Date, the Borrower will Company does not permit the Borrowing Base have an Investment Grade Rating (in each case as determined (A) as of the end of such fiscal quarter and set forth on the Inventory Summary Report compliance certificate required to be delivered for such fiscal quarter pursuant to Section 7.27.2 7.1(iv)), the Company and the Borrower will not permit the Borrowing Base (ii) or (B) determined as of the end of any such fiscal month quarter and set forth on the Inventory Summary Report Borrowing Base Certificate required to be delivered for such fiscal month delivered quarter pursuant to the proviso of Section 7.27.2(ii7.1(viii)) to be less than the aggregate principal amount of Senior Indebtedness then outstanding (excluding Permitted Nonrecourse outstanding Alternative Letters of Credit and other Letters of Credit or similar arrangements included in Senior Indebtedness and Permitted Purchase Money Loans) outstanding at any time during such periodnot issued under the Existing Credit Agreement to the extent collateralized by cash, Marketable Securities or Cash Equivalents), it being understood that (i) if as any Permitted Purchase Money Loans or Permitted Recourse Indebtedness are secured by assets which have a book value at the time of the end calculation of the immediately following fiscal quarter the Leverage Ratio which is greater than or equal to the amount of Indebtedness outstanding in respect of such Permitted Purchase Money Loans or Permitted Recourse Indebtedness, as applicable, then the amount of such Indebtedness shall not be included in the foregoing calculation of Senior Indebtedness, (ii) if any Permitted Purchase Money Loans or Permitted Recourse Indebtedness are secured by assets which have a book value at the time of the calculation of the Leverage Ratio which is less than 0.95 the amount of Indebtedness in respect of such Permitted Purchase Money Loans or Permitted Recourse Indebtedness, as applicable, and such Permitted Purchase Money Loans or Permitted Recourse Indebtedness, as applicable, are recourse to 1.00any Loan Party (on a secured or unsecured basis) then only the difference between the outstanding principal amount of Indebtedness in respect of such Permitted Purchase Money Loans or Permitted Recourse Indebtedness, this Section 7.27.2(i) as applicable, and the book value of such assets securing such Permitted Purchase Money Loans or Permitted Recourse Indebtedness, as applicable, shall no longer apply from and after the related BB Compliance Date until the immediately following BB Compliance Date (the “Borrowing Base Requirement”). (ii) Borrower shall deliver to the Administrative Agent an Inventory Summary Report be included in the form foregoing calculation of Exhibit J Senior Indebtedness (but in no event in an amount greater than the amount of recourse to any Loan Party) and incorporated herein within fifty days after (iii) the last day amount of each fiscal quarter Indebtedness in which respect of Permitted Nonrecourse Indebtedness shall not be included in the Leverage Ratio exceeds 0.95 to 1:00 as foregoing calculation of the last day of such fiscal quarter; provided that Borrower may, in its discretion, deliver an Inventory Summary Report as of the last day of any fiscal month. The Inventory Summary Report shall reflect Inventory that Borrower determines in good faith to designate as Loan Inventory. Upon Administrative Agent’s receipt of the Inventory Summary Report, Administrative Agent may conduct inspections or reviews of the subject Inventory that Administrative Agent deems appropriate, at the expense of the Borrower, subject to the reimbursement limitation set forth in Section 7.18Senior Indebtedness.

Borrowing Base. (ia) If During the Leverage Ratio as of the end of a fiscal quarter for which the Borrower has or was required to deliver financial statements pursuant to Section 7.1 (the earliest of such dates, the “BB Compliance Date”) equals or exceeds 0.95 to 1.00, at any time on or after the BB Compliance Date through the immediately following BB Compliance Date, the Borrower will not permit the Borrowing Base (determined (A) as of the end of such fiscal quarter and set forth on the Inventory Summary Report required to be delivered for such fiscal quarter pursuant to Section 7.27.2 (ii) or (B) as of the end of any fiscal month and set forth on the Inventory Summary Report for such fiscal month delivered pursuant to the proviso of Section 7.27.2(ii)) to be less than the aggregate principal amount of Senior Indebtedness (excluding Permitted Nonrecourse Indebtedness and Permitted Purchase Money Loans) outstanding at any time during such period, it being understood that if as of the end of the immediately following fiscal quarter the Leverage Ratio is less than 0.95 to 1.00, this Section 7.27.2(i) shall no longer apply period from and after the related BB Compliance Closing Date until the immediately following BB Compliance Date (the “Borrowing Base Requirement”). (ii) Borrower is redetermined in accordance with this SECTION 2.11, the amount of the Borrowing Base shall deliver to the Administrative Agent an Inventory Summary Report in the form of Exhibit J and incorporated herein within fifty days after be $30,000,000. The Borrowing Base shall be reduced on the last day of each fiscal quarter in which calendar quarter, commencing March 31, 1999, and thereafter through the Leverage Ratio exceeds 0.95 to 1:00 as of Termination Date, by the amount (the "BB REDUCTION AMOUNT") set forth on SCHEDULE 2 (or any revised SCHEDULE 2 ever delivered by Agent under this SECTION 2.11(a)) corresponding with the last day of the applicable calendar quarter. In addition, the Borrowing Base and the BB Reduction Amounts shall be automatically reduced from time to time upon the disposition of any Collateral by the Borrowing Base value and the BB Reduction Amounts, if any, assigned to such fiscal quarter; provided that Borrower may, Collateral by Agent. The Borrowing Base and the BB Reduction Amount shall be determined in its discretion, deliver an Inventory Summary Report accordance with SECTION 2.11(b) by Agent and approved by Required Lenders as described below. The Borrowing Base and the BB Reduction Amounts are subject to redetermination in accordance with SECTION 2.11(d). Upon any redetermination of the last day Borrowing Base and the BB Reduction Amounts, such redetermination shall remain in effect until the next successive date that the Borrowing Base and BB Reduction Amounts are again redetermined and become effective under SECTION 2.11(d) and Agent shall promptly advise Borrower and each Lender of the redetermined Borrowing Base and circulate a revised SCHEDULE 2 reflecting such redetermined BB Reduction Amounts. So long as any fiscal month. The Inventory Summary Report part of the Total Commitment is in effect and until all of the Loans outstanding hereunder are paid in full, this Agreement shall reflect Inventory that Borrower determines in good faith to designate as Loan Inventory. Upon Administrative Agent’s be governed by the then effective Borrowing Base. (b) Agent will within thirty days of receipt of the Inventory Summary Reportmost recent Reserve Report delivered under SECTION 5.5, Administrative Agent may conduct inspections or reviews of and such other data and supplemental information as may, from time to time, be reasonably requested by Agent, redetermine the subject Inventory that Administrative Agent deems appropriate, at the expense of the Borrower, subject to the reimbursement limitation set forth in Section 7.18.Borrowing Base and BB Reduction Amounts based on such Reserve Report and propose such redetermined Borrowing Base and BB

Borrowing Base. 4.3.1. Notwithstanding anything to the contrary contained in this Agreement or in any other Transaction Document, the Loan Balance hereunder shall at no time exceed the lesser of (i) If the Leverage Ratio as Borrowing Base and (ii) the Maximum Loan Amount. The Borrower agrees that if at any time any such excess shall arise, it shall, without presentment, demand, protest or notice of any kind from the Lender, all of which it hereby expressly waives, immediately repay Loans in the amount necessary to eliminate such excess. 4.3.2. The Borrowing Base will be redetermined by the Lender once a month upon receipt of the end of a fiscal quarter for which the Borrower has or was required to deliver financial statements pursuant to Borrowing Base Certificates described in Section 7.1 (the earliest of such dates4.3.3. In addition, the “BB Compliance Date”) equals or exceeds 0.95 Lender may redetermine the Borrowing Base at other times in its discretion as necessary to 1.00reduce the Borrowing Base as a result of its reasonable determination that Accounts included therein are no longer Eligible Accounts. The Lender may in the exercise of its discretion in determining the Borrowing Base, at any time on or after and from time to time, increase the BB Compliance Date through the immediately following BB Compliance Date, the Borrower will not permit the Borrowing Base (determined (A) as of the end of such fiscal quarter and advance percentages to be applied to Eligible Accounts which are set forth in the definition of "Borrowing Base" in Section 1. 4.3.3. The Borrowers shall keep accurate and complete records of its Accounts and, as frequently as the Lender shall require, but not less frequently than once per month on the Inventory Summary Report required to be delivered for such fiscal quarter pursuant to Section 7.27.2 (ii) or (B) as of the end of any fiscal month and set forth on the Inventory Summary Report for such fiscal month delivered pursuant to the proviso of Section 7.27.2(ii)) to be less than the aggregate principal amount of Senior Indebtedness (excluding Permitted Nonrecourse Indebtedness and Permitted Purchase Money Loans) outstanding at any time during such period, it being understood that if as of the end of the immediately tenth Business Day following fiscal quarter the Leverage Ratio is less than 0.95 to 1.00, this Section 7.27.2(i) shall no longer apply from and after the related BB Compliance Date until the immediately following BB Compliance Date (the “Borrowing Base Requirement”). (ii) Borrower shall deliver to the Administrative Agent an Inventory Summary Report in the form of Exhibit J and incorporated herein within fifty days after the last day of each fiscal quarter in which month, the Leverage Ratio exceeds 0.95 Borrowers shall deliver to 1:00 as the Lender a Borrowing Base Certificate covering all of its Accounts, together with (if requested by the Lender) formal written assignments of such Accounts and copies of the last day of such fiscal quarter; provided that Borrower may, in its discretion, deliver an Inventory Summary Report as of the last day of any fiscal monthinvoices related thereto. The Inventory Summary Report Borrowers shall reflect Inventory that Borrower determines in good faith to designate as Loan Inventory. Upon Administrative Agent’s receipt of the Inventory Summary Report, Administrative Agent may conduct inspections or reviews of the subject Inventory that Administrative Agent deems appropriate, at the expense of the Borrower, subject also make available to the reimbursement limitation set forth Lender for its inspection, upon demand, the original copy of all documents (and will deliver any such original copy to the Lender if required by the Lender to enforce its rights and remedies hereunder), including, without limitation, repayment histories, present status reports and shipment reports, relating to the Accounts included in Section 7.18any Borrowing Base Certificate and such other matters and information relating to the status of then existing Accounts as the Lender shall reasonably request.

Borrowing Base. (ia) If The Borrowing Base in effect from time to time shall represent the Leverage Ratio as maximum amount (subject to the Total Commitment) of Loans that the Banks will make to the Borrower. During the period from and after the Effective Date until the Borrowing Base is redetermined in accordance with this Section, the amount of the end Borrowing Base shall be $50,000,000. The Borrowing Base shall be determined in accordance with SECTION 2.04(b) by the Agent and approved by all of the Banks or the Majority Banks, as applicable. The Borrowing Base is subject to redetermination in accordance with SECTION 2.04(d). Upon any redetermination of the Borrowing Base, such redetermination shall remain in effect until the next successive date that the redetermined Borrowing Base becomes effective subject to the notice requirements specified in SECTION 2.04(e) for both the scheduled redetermination and unscheduled redeterminations. So long as any part of the Commitments are in effect and until all of the Loans outstanding hereunder are paid in full, this Agreement shall be governed by the then effective Borrowing Base. (b) The Agent will within thirty (30) days after receipt of the most recent Reserve Report delivered to the Banks under SECTION 5.10, and such other data and supplemental information as may from time to time be reasonably requested by the Agent, but in no event later than March 15 and September 15 of each year commencing March 15, 1998, redetermine the Borrowing Base based on such Reserve Report. The Agent will redetermine the Borrowing Base in accordance with its normal and customary oil and gas lending criteria as such exist at that particular time taking into account all of the assets and liabilities of the Borrower and its Subsidiaries including, without limitation, liabilities arising under the Acquisition Credit Agreement. The Agent and each Bank, in their sole discretion, may make adjustments to the rates, volumes and prices and other assumptions set forth in the Reserve Reports and such other data and supplemental information. Each redetermination of the Borrowing Base which would increase the Borrowing Base must satisfy all of the conditions set forth in SECTION 2.04(f) and must be approved by all of the Banks, and each other redetermination of the Borrowing Base must be approved by the Majority Banks. Failure of a fiscal quarter for which the Borrower has or was required Bank to deliver financial statements pursuant object to Section 7.1 (the earliest a redetermination within 14 days after notice of such datesredetermination is given to such Bank by the Agent shall be deemed an approval of such redetermination by such Bank. (c) The Agent may exclude any Oil and Gas Property or a portion of production therefrom from the Borrowing Base, at any time, because the status of title to such Oil or Gas Property is not reasonably satisfactory to Agent or because such Oil and Gas Property is not subject to a first priority lien in favor of the Agent as security for the Obligations. (d) So long as any of the Commitments are in effect and until payment in full of all Loans hereunder, effective on or about March 15 and September 15 of each year commencing March 15, 1998 (each being a "SCHEDULED REDETERMINATION DATE"), the “BB Compliance Date”) equals Agent with the approval of all of the Banks or exceeds 0.95 to 1.00the Majority Banks, as applicable, shall redetermine the amount of the Borrowing Base in accordance with SECTION 2.04(b). In addition, at any time on or after the BB Compliance Date through the immediately following BB Compliance first scheduled Redetermination Date, (i) the Borrower will not permit may request a redetermination of the Borrowing Base on its own initiation at any time in connection with a proposed acquisition of Oil and Gas Properties with a fair market value in excess of $10,000,000 and at one additional time during any consecutive twelve (determined 12) month period (an "UNSCHEDULED REDETERMINATION"), and (ii) the Agent may initiate a redetermination of the Borrowing Base at any time as the Agent may so elect; provided, however, that the Agent may initiate only one such Unscheduled Redetermination during any consecutive twelve (12) month period (each being an "UNSCHEDULED REDETERMINATION DATE"). Any redetermination of the Borrowing Base on an Unscheduled Redetermination Date shall be in accordance with SECTION 2.04(b). (e) The Agent shall promptly notify in writing the Borrower and the Banks of the new Borrowing Base. Such redetermination of the Borrowing Base shall not be in effect until notice is sent to the Borrower. (f) Notwithstanding any other provision of this SECTION 2.04, no redetermination of the Borrowing Base which would increase the Borrowing Base shall be effective unless: (i) such increase in the Borrowing Base does not (A) constitute a breach of any provision contained in the Indenture, including, without limitation, as a result of increasing the end of such fiscal quarter and set forth on Obligations or the Inventory Summary Report required to be delivered for such fiscal quarter pursuant to Section 7.27.2 (ii) Total Commitment, or (B) as of require that the end of any fiscal month and set forth on the Inventory Summary Report for such fiscal month delivered Senior Unsecured Notes be secured pursuant to the proviso of Section 7.27.2(ii)) to be less than the aggregate principal amount of Senior Indebtedness (excluding Permitted Nonrecourse Indebtedness and Permitted Purchase Money Loans) outstanding at any time during such period, it being understood that if as terms of the end of the immediately following fiscal quarter the Leverage Ratio is less than 0.95 to 1.00, this Section 7.27.2(i) shall no longer apply from Indenture and after the related BB Compliance Date until the immediately following BB Compliance Date (the “Borrowing Base Requirement”). (ii) Borrower shall deliver to the Administrative Agent an Inventory Summary Report provisions of the Indenture do not prohibit any increase in the form of Exhibit J and incorporated herein within fifty days after Obligations resulting from such increase in the last day of each fiscal quarter in which Borrowing Base from being secured by the Leverage Ratio exceeds 0.95 to 1:00 as of Liens created under the last day of such fiscal quarter; provided that Borrower may, in its discretion, deliver an Inventory Summary Report as of the last day of any fiscal month. The Inventory Summary Report shall reflect Inventory that Borrower determines in good faith to designate as Loan Inventory. Upon Administrative Agent’s receipt of the Inventory Summary Report, Administrative Agent may conduct inspections or reviews of the subject Inventory that Administrative Agent deems appropriate, at the expense of the Borrower, subject to the reimbursement limitation set forth in Section 7.18Security Documents.

Borrowing Base. (ia) If The Borrowing Base shall be determined in accordance with Section 2.08(b) by the Leverage Ratio as Agent with the concurrence of the end Lenders and is subject to redetermination in accordance with Section 2.08(d). Upon any redetermination of a fiscal quarter for which the Borrower has Borrowing Base, such redetermination shall remain in effect until the next successive Redetermination Date. So long as any of the Commitments are in effect or was required to deliver financial statements any LC Exposure or Loans are outstanding hereunder, this facility shall be governed by the then effective Borrowing Base. During the period from and after the Closing Date until the first redetermination pursuant to Section 7.1 (the earliest of such dates2.08(d) or adjusted pursuant to Section 8.08(c), the “BB Compliance Date”) equals or exceeds 0.95 to 1.00, at any time on or after the BB Compliance Date through the immediately following BB Compliance Date, the Borrower will not permit amount of the Borrowing Base shall be $28,000,000. (determined (Ab) as Upon receipt of the end reports required by Section 8.07 and such other reports, data and supplemental information as may from time to time be reasonably requested by the Agent (the "Engineering Reports"), the Agent ------------------- will redetermine the Borrowing Base. Such redetermination will be in accordance with its normal and customary procedures for evaluating oil and gas reserves and other related assets as such exist at that particular time. The Agent, in its sole discretion, may make adjustments to the rates, volumes and prices and other assumptions set forth therein in accordance with its normal and customary procedures for evaluating oil and gas reserves and other related assets as such exist at that particular time. The Agent shall propose to the Lenders a new Borrowing Base within 14 days following receipt by the Agent and the Lenders of the Engineering Reports in a timely and complete manner. After having received notice of such fiscal quarter and set forth on proposal by the Inventory Summary Report required Agent, the Lenders shall have 14 days to be delivered for agree or disagree with such fiscal quarter pursuant to Section 7.27.2 (ii) or (B) as of the end of any fiscal month and set forth on the Inventory Summary Report for such fiscal month delivered pursuant to the proviso of Section 7.27.2(ii)) to be less than the aggregate principal amount of Senior Indebtedness (excluding Permitted Nonrecourse Indebtedness and Permitted Purchase Money Loans) outstanding proposal. If at any time during such period, it being understood that if as of the end of the immediately following fiscal quarter 14 days, the Leverage Ratio is less than 0.95 Lenders have not communicated their approval or disapproval, such silence shall be deemed to 1.00be an approval and the Agent's proposal shall be the new Borrowing Base. If however, this Section 7.27.2(i) shall no longer apply from the Lenders notify Agent within 14 days of their disapproval, the Lenders shall, within a reasonable period of time, agree on a new Borrowing Base. The Agent and after all of the related BB Compliance Date until the immediately following BB Compliance Date (the “Lenders must approve a new Borrowing Base Requirement”)Base. (c) The Agent may exclude any Oil and Gas Property or portion of production therefrom or any income from any other Property from the Borrowing Base, at any time, because title information is not reasonably satisfactory, such Property is not Mortgaged Property or such Property is not assignable. (d) So long as any of the Commitments are in effect and until payment in full of all Loans hereunder, on or around the first Business Day of each February and August, commencing August 1, 2000 (each being a "Scheduled --------- Redetermination Date"), the Lenders shall redetermine the amount of the -------------------- Borrowing Base in accordance with Section 2.08(b). In addition, (i) the Lenders may initiate a redetermination of the Borrowing Base at any other time as they so elect by specifying in writing to the Borrower the date on which the Borrower is to furnish, or cause to be furnished, a Reserve Report in accordance with Section 8.07(b) and the date on which such redetermination is to occur; provided, however, -------- ------- that the Lenders may initiate only one such unscheduled redetermination during any consecutive twelve (12) month period and (ii) Borrower shall deliver to the Administrative Agent an Inventory Summary Report in the form of Exhibit J and incorporated herein within fifty days after the last day of each fiscal quarter in which the Leverage Ratio exceeds 0.95 to 1:00 as of the last day of such fiscal quarter; provided that Borrower may, from time to time, initiate a redetermination of the Borrowing Base at any other time as it so elects by specifying in writing to the Agent (who will promptly notify the Lenders) the date on which the Borrower will furnish, or cause to be furnished, a Reserve Report in accordance with Section 8.07(b) and the date on which such redetermination is requested to occur. Any such unscheduled Borrowing Base redeterminations shall be made in accordance with the procedures described in Section 2.08(b). Further, if any Guarantor Transfers any Oil and Gas Properties to the extent allowed by Section 9.16, the Borrowing Base shall automatically be reduced upon execution of such Transfer by an amount equal to the Borrowing Base value (as determined by the Agent in its reasonable discretion) of such Oil and Gas Properties, deliver an Inventory Summary Report as attributed to such Oil and Gas Properties in the immediately preceding determination of the last day of any fiscal month. Borrowing Base. (e) The Inventory Summary Report Agent shall reflect Inventory that promptly notify in writing the Borrower determines in good faith to designate as Loan Inventory. Upon Administrative Agent’s receipt and the Lenders of the Inventory Summary Report, Administrative Agent may conduct inspections or reviews new Borrowing Base. Any redetermination of the subject Inventory that Administrative Agent deems appropriate, at the expense of Borrowing Base shall not be in effect until written notice is received by the Borrower, subject to the reimbursement limitation set forth in Section 7.18.

Borrowing Base. (ia) If The Borrowing Base shall be cumulative of all other limitations contained in this Agreement and the Leverage Ratio other Loan Documents. The initial Borrowing Base shall be $130,000,000, and shall be redetermined as provided herein and in connection with any issuance of Subordinated Debt by the Borrower. In the event that the Borrower issues $125,000,000 of Subordinated Debt, the Borrowing Base shall be permanently reduced to $75,000,000; in the case of other issuances of Subordinated Debt by the Borrower, the Borrowing Base shall be redetermined, in the sole discretion of the Majority Banks, as provided herein. In addition, the Borrowing Base shall be redetermined semiannually on each Determination Date, commencing October 1, 1997. Upon delivery of the engineering reserve evaluation reports required by subsections 9.1(l) and (m) (collectively, the "Engineering Reports") and such other reports, data and supplemental information as may, from time to time, be reasonably requested by the Administrative Agent and the Banks, together with a certificate from the chief financial officer of Borrower that, to the best of such officer's knowledge, after making due inquiry (A) the factual information upon which such Engineering Reports are based is true and correct, (B) the certificate identifies the Properties covered by the Engineering Reports that have not been previously included in any prior Engineering Report, and (C) no Mortgaged Properties have been sold since the last Determination Date, on each Determination Date or on such other date as otherwise permitted hereunder, the Administrative Agent shall redetermine the Borrowing Base in accordance with its customary practices and standards for loans secured by similar types of property. Within 45 days of its receipt of the Engineering Reports, the Administrative Agent shall provide such redetermined Borrowing Base in writing to the Banks. Within ten days after their receipt of such information, the Banks shall give the Administrative Agent written notice of whether the Banks approve of the Administrative Agent's proposed Borrowing Base. If, for any reason, the Majority Banks do not approve of the proposed Borrowing Base, the Administrative Agent and the Majority Banks shall consult with one another to determine the Borrowing Base that will be approved by the Majority Banks. The Borrowing Base established pursuant to this subsection shall be effective as of the end of a fiscal quarter for which the Borrower has or was required to deliver financial statements ensuing Determination Date and shall remain in effect until it is subsequently redetermined pursuant to Section 7.1 (this subsection 2.8(a) or subsection 2.8(b). If a redetermination in 1997 results in an increase in the earliest of such dates, the “BB Compliance Date”) equals or exceeds 0.95 to 1.00, at any time on or after the BB Compliance Date through the immediately following BB Compliance DateBorrowing Base, the Borrower will not permit the Borrowing Base (determined (A) as of the end of such fiscal quarter and set forth on the Inventory Summary Report required to be delivered for such fiscal quarter pursuant to Section 7.27.2 (ii) or (B) as of the end of any fiscal month and set forth on the Inventory Summary Report for such fiscal month delivered pursuant to the proviso of Section 7.27.2(ii)) to be less than the aggregate principal amount of Senior Indebtedness (excluding Permitted Nonrecourse Indebtedness and Permitted Purchase Money Loans) outstanding at any time during such period, it being understood that if as of the end of the immediately following fiscal quarter the Leverage Ratio is less than 0.95 to 1.00, this Section 7.27.2(i) shall no longer apply from and after the related BB Compliance Date until the immediately following BB Compliance Date (the “Borrowing Base Requirement”). (ii) Borrower shall deliver pay to the Administrative Agent an Inventory Summary Report for the account of the Banks, a fee for such increase in the form amount of Exhibit J and incorporated herein within fifty days after the last day one-quarter of each fiscal quarter in which the Leverage Ratio exceeds 0.95 to 1:00 as one percent of the last day of such fiscal quarterincrease; provided that Borrower mayin all other cases, in its discretion, deliver an Inventory Summary Report as any increase shall be subject to agreement of the last day of any fiscal month. The Inventory Summary Report shall reflect Inventory that Borrower determines in good faith and the Banks with respect to designate as Loan Inventory. Upon Administrative Agent’s receipt a fee, if any, for such increase. (b) In addition to the determinations of the Inventory Summary ReportBorrowing Base required pursuant to subsection 2.8(a), Administrative Agent special determinations thereof may conduct inspections or reviews of the subject Inventory that Administrative Agent deems appropriate, be made for any reason (but not more than once between Determination Dates) at the expense option of either (i) the Borrower, subject to the reimbursement limitation set forth in Section 7.18.Borrower or (ii)

Borrowing Base. (i) If The initial Borrowing Base available under the Leverage Ratio as of the end of a fiscal quarter for which the Borrower has or was required to deliver financial statements pursuant to Section 7.1 (the earliest of such datesRevolving Loan is $12,000,000. Thereafter, the “BB Compliance Date”) equals or exceeds 0.95 to 1.00, at any time on or after the BB Compliance Date through the immediately following BB Compliance Date, the Borrower Administrative Agent will not permit re-determine the Borrowing Base (determined (A) as of the end of such fiscal quarter and set forth on the Inventory Summary Report required to be delivered for such fiscal quarter pursuant to Section 7.27.2 (ii) or (B) as of the end of any fiscal month and set forth on the Inventory Summary Report for such fiscal month delivered pursuant to the proviso of Section 7.27.2(ii)) to be less than the aggregate principal amount of Senior Indebtedness (excluding Permitted Nonrecourse Indebtedness and Permitted Purchase Money Loans) outstanding at any time during such period, it being understood that if as of the end of the immediately following fiscal quarter the Leverage Ratio is less than 0.95 to 1.00, this Section 7.27.2(i) shall no longer apply from and after the related BB Compliance Date until the immediately following BB Compliance Date (the “Borrowing Base Requirement”1.2(b). (ii) Borrower shall deliver Subject to Section 1.2(e) below, the Administrative Agent an Inventory Summary will re-determine the Borrowing Base pursuant to this Section 1.2(b) not less than every six months based upon the most recent Reserve Report. However, if Borrower changes its fiscal year, then the next re-determination date shall be no later than 75 days following Borrower’s new fiscal year end date. On or before each, February 15 and August 15 until the Maturity Date, Borrower shall furnish to Administrative Agent a Reserve Report in the form (with “effective dates” of Exhibit J December 31, and incorporated herein within fifty days after the last day of each fiscal quarter in June 30, respectively), which the Leverage Ratio exceeds 0.95 to 1:00 shall set forth, as of the last day of such fiscal quarter; provided that Borrower mayapplicable effective date, in its discretion, deliver an Inventory Summary the Proved Reserves attributable to the Properties. Each Reserve Report as of the last day of any fiscal monthdelivered each calendar year shall be a complete report prepared by Engineers. The Inventory Summary Each Reserve Report shall reflect Inventory that Borrower determines relate to the Proved Reserves attributable to the Properties in good faith to designate as Loan Inventoryaccordance with Section 4.5. Upon Administrative Agent’s For the avoidance of doubt, within 30 days following receipt of the Inventory Summary each such Reserve Report, Administrative Agent may conduct inspections or reviews shall, in its sole discretion, make a determination of the subject Inventory that Borrowing Base which shall become effective upon written notification from Administrative Agent deems appropriate, at to Borrower until the expense effective date of the Borrower, subject to the reimbursement limitation next redetermination as set forth in this Section 7.181.2(b). (iii) Administrative Agent is not required to consider any Proved Reserves attributable to the Properties for inclusion in the Borrowing Base if, in Administrative Agent’s reasonable opinion, Administrative Agent does not have a first priority security interest or mortgage Lien on such Properties. In no event will the Borrowing Base exceed the Revolving Loan Maximum Commitment. (iv) Subject to Section 1.2(e) below, Administrative Agent shall determine the Borrowing Base in accordance with its customary lending practices based on the maximum Revolving Loan amount that may be supported by the Properties and Borrower acknowledges, for purposes of this Agreement, such determination by Administrative Agent as being the maximum Revolving Loan amount that may be supported by the Properties as of such date of determination. In making any redetermination of the Borrowing Base, Administrative Agent shall apply consistently the parameters and other credit factors then generally being utilized by Administrative Agent for Borrowing Base redeterminations for Administrative Agent’s similarly situated borrowers. Borrower and Administrative Agent acknowledge that (a) due to the uncertainties of the Hydrocarbon extraction process, the Properties are not subject to evaluation with a high degree of accuracy and are subject to potential rapid deterioration in value, and (b) for this reason and the difficulties and expenses involved in liquidating and collecting against the Properties, Administrative Agent’s determination of the maximum Revolving Loan amount that may be supported by the Properties contains an equity cushion, which equity cushion is essential for the adequate protection of Lenders.

Borrowing Base. The Borrowing Base shall be determined as follows: (a) Initial Borrowing Base. The initial Borrowing Base shall be $14,654,940 during the period from the date hereof to the date on which the Borrower receives notice of the first redetermination of the Borrowing Base by the Lender pursuant to Section 2.3(b) and thereafter the amount of the Borrowing Base shall be the Borrowing Base most recently determined pursuant to Section 2.3(b). (b) Redeterminations of the Borrowing Base. (i) If No later than 45 days after the Leverage Ratio end of each month, the Borrower shall, at its own expense, furnish to the Bank a borrowing base report (the "Borrowing Base Report") in the form attached hereto as Exhibit D, which shall be dated as of the end of a fiscal quarter for which the Borrower has or was required to deliver financial statements pursuant to Section 7.1 (the earliest of each such dates, the “BB Compliance Date”) equals or exceeds 0.95 to 1.00, at any time on or after the BB Compliance Date through the immediately following BB Compliance Date, the Borrower will not permit the Borrowing Base (determined (A) as of the end of such fiscal quarter and set forth on the Inventory Summary Report required to be delivered for such fiscal quarter pursuant to Section 7.27.2 (ii) or (B) as of the end of any fiscal month and set forth on the Inventory Summary Report for such fiscal month delivered pursuant to the proviso of Section 7.27.2(ii)) to be less than the aggregate principal amount of Senior Indebtedness (excluding Permitted Nonrecourse Indebtedness and Permitted Purchase Money Loans) outstanding at any time during such period, it being understood that if as of the end of the immediately following fiscal quarter the Leverage Ratio is less than 0.95 to 1.00, this Section 7.27.2(i) shall no longer apply from and after the related BB Compliance Date until the immediately following BB Compliance Date (the “Borrowing Base Requirement”)month. (ii) Within 15 days after it receives each Borrowing Base Report, the Lender may in its sole discretion, but shall not be obligated to, redetermine the Borrowing Base, and shall notify the Borrower shall deliver of the new Borrowing Base, if any; provided, however, if the Lender does not so notify the Borrower of a new Borrowing Base within such 15-day period, then the Borrowing Base set forth in the Borrowing Base Report furnished to the Administrative Agent an Inventory Summary Report Lender by the Borrower pursuant to Section 2.3(b)(i) shall be deemed to be the redetermined Borrowing Base until a new Borrowing Base is redetermined by the Lender and notice of such new Borrowing Base is given by the Lender to the Borrower. Each redetermination of the Borrowing Base shall be made by the Lender in the form exercise of Exhibit J its sole discretion in accordance with the then current standards and incorporated herein within fifty days after the last day of each fiscal quarter in which the Leverage Ratio exceeds 0.95 to 1:00 as practices of the last day of Lender for similar loans, taking into account such fiscal quarter; provided that Borrower may, in its discretion, deliver an Inventory Summary Report factors as of the last day of any fiscal month. The Inventory Summary Report shall reflect Inventory that Borrower determines in good faith to designate as Loan Inventory. Upon Administrative Agent’s receipt of the Inventory Summary Report, Administrative Agent Lender may conduct inspections or reviews of the subject Inventory that Administrative Agent deems deem appropriate, at including, without limitation, the expense nature and extent of the Borrower, subject to 's interest in the reimbursement limitation accounts and leases receivable and inventory upon which the Borrowing Base is then redetermined. The Lender may in its sole discretion discount the value of any property included in the redetermination of the Borrowing Base as set forth in a Borrowing Base Report by the same factors utilized by it in discounting the value of comparable borrowing base assets in comparable transactions for comparable borrowers. (iii) Each delivery by the Borrower to the Lender of a Borrowing Base Report shall be deemed to constitute a representation and warranty by the Borrower to the Lender that the Borrower and its Subsidiaries have good and marketable title to the Collateral owned by each of them and described therein, and that such Collateral is not subject to any Lien other than Bank Liens and Liens permitted by Section 7.186.8.

Borrowing Base. (i) If the Leverage Ratio as of the end of a fiscal quarter for which the Borrower has or was required to deliver financial statements pursuant to Section 7.1 (the earliest of such dates, the “BB Compliance Date”) equals or exceeds 0.95 to 1.00, at any time on or after the BB Compliance Date through the immediately following BB Compliance Date, the Borrower will not permit the Borrowing Base (determined (A) as of the end of such fiscal quarter and set forth on the Inventory Summary Report required to be delivered for such fiscal quarter pursuant to Section 7.27.2 (ii) or (B) as of the end of any fiscal month and set forth on the Inventory Summary Report for such fiscal month delivered pursuant to the proviso of Section 7.27.2(ii)) to be less than the REQUIREMENT: - The aggregate principal amount of Senior Indebtedness (excluding Permitted Nonrecourse Indebtedness and Permitted Purchase Money Loans) Loans outstanding shall not at any time during exceed the Borrowing Base or the Aggregate Revolving Loan Commitment, whichever is less; provided, however, that this covenant shall not be deemed breached if, at the time such periodaggregate amount exceeds said level, it being understood within three Business Days after the earlier of the date AeroCentury first has knowledge of such excess or the date of the next Borrowing Base Certificate disclosing the existence of such excess, a prepayment of Loans shall be made in an amount sufficient to assure continued compliance with this covenant in the future. Collateral Loan Value Total Borrowing Base $ Maximum Loans Aggregate Revolving Loan Commitment $__,000,000 Credit Usage Aggregate Loan Balance (principal) at date of certificate $ Collateral Loan Value exceeds Credit Usage $ Collateral Loan Value is less than Credit Usage $ SCHEDULE 2 APPLICABLE MARGINS, COMMITMENT FEE Ratio of Funded Debt to Tangible Alternate Base LIBO Commitment Net Worth Rate Margin Rate Margin Fee I * > 3.00 150 bp 375 bp ▇▇ ▇▇ ▇▇ ▇.▇▇ - ▇.▇▇ 100 bp 325 bp ▇▇ ▇▇ ▇▇▇ < ▇.▇▇ 50 bp 275 bp ▇▇ ▇▇ * ▇▇▇▇▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇ower's ratio of Funded Debt to Tangible Net Worth, Tier I pricing shall be in effect through March 31, 2005. ANNEX A FORM OF OFFICER'S CERTIFICATE See attached. CERTIFICATE OF OFFICER OF AEROCENTURY CORP. The undersigned, [___________________], hereby certifies that if [he/she] is the duly elected and qualified [_______________] of AeroCentury Corp., a Delaware corporation, (the "Company") and that, as such, [he/she] is authorized to execute this certificate on behalf of the Company as required pursuant to that certain Ninth Amendment to Credit Agreement, dated as of the end date hereof, among the Company, the banks which are signatories thereto ("Banks") and National City Bank, as Agent for such Banks (the "Ninth Amendment"; unless otherwise defined herein, capitalized terms used herein shall have the meanings given to them in the Ninth Amendment), and further certifies that: (i) Except as pertaining to the Financial Covenants set forth in Section 7.2 EBITDA to Interest Ratio and Section 7.4 of the immediately following fiscal quarter Agreement regarding Absence of Net Loss, no Potential Default or Event of Default under the Leverage Ratio Agreement has occurred and is less than 0.95 to 1.00, this Section 7.27.2(i) shall no longer apply from and after the related BB Compliance Date until the immediately following BB Compliance Date (the “Borrowing Base Requirement”).continuing; and (ii) Borrower shall deliver to the Administrative Agent an Inventory Summary Report in the form of Exhibit J All representations and incorporated herein within fifty days after the last day of each fiscal quarter in which the Leverage Ratio exceeds 0.95 to 1:00 as of the last day of such fiscal quarter; provided that Borrower may, in its discretion, deliver an Inventory Summary Report as of the last day of any fiscal month. The Inventory Summary Report shall reflect Inventory that Borrower determines in good faith to designate as Loan Inventory. Upon Administrative Agent’s receipt of the Inventory Summary Report, Administrative Agent may conduct inspections or reviews of the subject Inventory that Administrative Agent deems appropriate, at the expense of the Borrower, subject to the reimbursement limitation warranties set forth in Section 7.183 of the Agreement (other than those which, by their terms, specifically are made as of a certain date prior to the date hereof) are true and correct in all material respects as of the date hereof.

Borrowing Base. (a) The Borrowing Base shall be determined in accordance with Section 2.08(b) by the Administrative Agent with the concurrence of the Tranche A Majority Lenders and is subject to redetermination in accordance with Section 2.08(d). Upon any redetermination of the Borrowing Base, such redetermination shall remain in effect until the next successive Redetermination Date. So long as any of the Commitments are in effect or any LC Exposure or Loans are outstanding hereunder, this facility shall be governed by the then effective Borrowing Base. During the period from and after the Closing Date until September 30, 2002, and thereafter until the first redetermination pursuant to Section 2.08(d) or the first adjustment pursuant to Section 8.08(c), the amount of the Borrowing Base shall be $75,000,000. The Tranche B Borrowing Base shall be $30,000,000 on the Closing Date and shall thereafter be the least of (i) If the Leverage Ratio as Borrowing Base, (ii) the Tranche B Aggregate Maximum Credit Amounts, and (iii) the unpaid principal balance of the end Tranche B Loans, all as determined at the time in question. The Tranche A Borrowing Base shall be the difference of a fiscal quarter for which the Borrower has or was required to deliver financial statements pursuant to Section 7.1 (the earliest of such dates, the “BB Compliance Date”) equals or exceeds 0.95 to 1.00, at any time on or after the BB Compliance Date through the immediately following BB Compliance Date, the Borrower will not permit the Borrowing Base minus the Tranche B Borrowing Base. The Availability under the Borrowing Base shall be limited by any principal amounts which have to be paid on the 2002 Subordinated Notes in September 2002 in accordance with Section 6.02(d). (determined (Ab) as Upon receipt of the end reports required by Section 8.07 and such other reports, data and supplemental information as may from time to time be reasonably requested by the Administrative Agent (the "Engineering Reports"), the Administrative Agent will redetermine the Borrowing Base. Except for redeterminations of the Borrowing Base as provided in Sections 2.07(a) and 9.16, which shall be redetermined in any amount at the sole and absolute discretion (and without having to follow normal and customary procedures of the Administrative Agent, any of the Lenders, or of the lending industry) of the Administrative Agent, such redetermination will be in accordance with its normal and customary procedures for evaluating oil and gas reserves and other related assets as such exist at that particular time, and the Administrative Agent, in its sole discretion, may make adjustments to the rates, volumes and prices and other assumptions set forth therein in accordance with its normal and customary procedures for evaluating oil and gas reserves and other related assets as such exist at that particular time. The Administrative Agent shall propose to the Tranche A Lenders a new Borrowing Base within 14 days following receipt by the Administrative Agent and the Tranche A Lenders of the Engineering Reports in a timely and complete manner. After having received notice of such fiscal quarter and set forth on proposal by the Inventory Summary Report required Administrative Agent, the Tranche A Lenders shall have 14 days to be delivered for agree or disagree with such fiscal quarter pursuant to Section 7.27.2 (ii) proposal. Any Tranche A Lenders that have not communicated their approval or (B) as of the end of any fiscal month and set forth on the Inventory Summary Report for such fiscal month delivered pursuant to the proviso of Section 7.27.2(ii)) to be less than the aggregate principal amount of Senior Indebtedness (excluding Permitted Nonrecourse Indebtedness and Permitted Purchase Money Loans) outstanding disapproval at any time during such period, it being understood that if as of the end of the immediately following fiscal quarter 14 days shall be deemed to have approved the Leverage Ratio is less than 0.95 to 1.00Administrative Agent's proposal of the redetermined Borrowing Base. To the extent that within such 14 days the Administrative Agent has not received the requisite number of approvals from the Tranche A Lenders of the redetermined Borrowing Base, this Section 7.27.2(i) shall no longer apply from and after the related BB Compliance Date until requisite number of Tranche A Lenders shall, within a reasonable period of time, agree on a new Borrowing Base. Any increase in the immediately following BB Compliance Date (the “Borrowing Base Requirement”)must be approved by the Administrative Agent and all of the Tranche A Lenders and any decrease in or reaffirmation of the existing Borrowing Base must be approved by the Tranche A Majority Lenders and, if the decrease of the existing Borrowing Base reduces the Borrowing Base below the Tranche B Aggregate Maximum Credit Amount, then such decrease must also be approved by the Tranche B Majority Lenders. (iic) The Administrative Agent may exclude any Oil and Gas Property or portion of production therefrom or any income from any other Property from the Borrowing Base, at any time, because title information is not reasonably satisfactory, such Property is not Collateral or such Property is not assignable. (d) So long as any of the Commitments are in effect and until payment in full of all Loans hereunder, on or around the first Business Day of each April and October, commencing October 1, 2002, (each being a "Scheduled Redetermination Date"), the Tranche A Lenders shall redetermine the amount of the Borrowing Base in accordance with Section 2.08(b). In addition, (i) the Borrower shall deliver may initiate a redetermination of the Borrowing Base at any other time as it so elects by specifying in writing to the Administrative Agent an Inventory Summary (who will promptly notify the Lenders) the date by which the Borrower will furnish to the Administrative Agent and all of the Lenders a Reserve Report in accordance with Section 8.07(b) and the form of Exhibit J and incorporated herein within fifty days date by which such redetermination is requested to occur; provided, however, that the Borrower may initiate only one such unscheduled redetermination between Scheduled Redetermination Dates during the first twelve (12) months after the last day Closing Date and thereafter, may initiate only one such unscheduled redetermination per year and (ii) the Tranche A Majority Lenders may initiate a redetermination of each fiscal quarter the Borrowing Base at any other time as they so elect by specifying in writing to the Borrower the date by which the Leverage Ratio exceeds 0.95 Borrower is to 1:00 furnish a Reserve Report in accordance with Section 8.07(b) and the date on which such redetermination is to occur; provided, however, that the Tranche A Majority Lenders may initiate only one such unscheduled redetermination between Scheduled Redetermination Dates during the first twelve (12) months after the Closing Date and thereafter, may initiate only one such unscheduled redetermination per year except as provided hereinbelow in this Section 2.08(d). No such unscheduled redetermination shall cause a reduction in the Borrowing Base on or before September 30, 2002. In addition, the Tranche A Majority Lenders, in their sole discretion, may redetermine the Borrowing Base as provided in Section 2.07(a) and Section 9.16. (e) The Administrative Agent shall promptly notify in writing the Borrower and the Lenders of the last day of such fiscal quarter; provided that Borrower may, in its discretion, deliver an Inventory Summary Report as new Borrowing Base. Any redetermination of the last day of any fiscal month. Borrowing Base shall not be in effect until written notice is received by the Borrower. (f) The Inventory Summary Report Tranche B Lenders shall reflect Inventory that Borrower determines in good faith be entitled to designate as Loan Inventory. Upon Administrative Agent’s receipt exercise all rights of the Inventory Summary Report, Administrative Agent may conduct inspections Tranche A Lenders under this Section 2.08 (and to redetermine the Borrowing Base pursuant to Section 9.16) whenever no Tranche A Loans or reviews Letters of the subject Inventory that Administrative Agent deems appropriate, at the expense of the Borrower, subject to the reimbursement limitation set forth in Section 7.18Credit remain outstanding and no Tranche A Commitments exist.

Borrowing Base. (ia) If the Leverage Ratio The Borrowing Base in effect as of the end of a fiscal quarter for which the Borrower has or was required to deliver financial statements pursuant to Section 7.1 Closing is $3,000,000 (the earliest of such datesas redetermined in accordance with this Agreement, the “BB Compliance Date”) equals or exceeds 0.95 to 1.00, at any time on or after the BB Compliance Date through the immediately following BB Compliance Date, the Borrower will not permit the Borrowing Base (determined (A) as of the end of such fiscal quarter and set forth on the Inventory Summary Report required to be delivered for such fiscal quarter pursuant to Section 7.27.2 (ii) or (B) as of the end of any fiscal month and set forth on the Inventory Summary Report for such fiscal month delivered pursuant to the proviso of Section 7.27.2(ii)) to be less than the aggregate principal amount of Senior Indebtedness (excluding Permitted Nonrecourse Indebtedness and Permitted Purchase Money Loans) outstanding at any time during such period, it being understood that if as of the end of the immediately following fiscal quarter the Leverage Ratio is less than 0.95 to 1.00, this Section 7.27.2(i) shall no longer apply from and after the related BB Compliance Date until the immediately following BB Compliance Date (the “Borrowing Base RequirementBase”). (iib) Borrower The Borrowing Base shall be redetermined from time to time a follows: (i) On or before each May 1 and November 1, the Borrowers shall deliver a Reserve Report to the Administrative Agent an Inventory Summary Report in the form of Exhibit J and incorporated herein within fifty Lender that complies with Section 5.6. Within thirty (30) days after the last day following receipt of each fiscal quarter in which the Leverage Ratio exceeds 0.95 to 1:00 as of the last day of such fiscal quarter; provided that Borrower mayReserve Report, Lender shall, in its Sole discretion, deliver an Inventory Summary Report as of determine (or redetermine) the last day of any fiscal month. The Inventory Summary Report shall reflect Inventory that Borrower determines in good faith Borrowing Base, effective upon notification from Lender to designate as Loan Inventory. Upon Administrative Agent’s receipt of the Inventory Summary ReportBorrowers, Administrative Agent may conduct inspections or reviews of the subject Inventory that Administrative Agent deems appropriate, at the expense of the Borrower, subject to the reimbursement limitation such other date set forth in Section 7.18such notice, in accordance with its normal and customary procedures for evaluating oil and gas reserves and other related assets as such exist at that particular time, and may also take into consideration the financial condition, debt, and business of the Borrowers, the Guarantors arid their respective Subsidiaries. (ii) Lender may redetermine the Borrowing Base one time between delivery of Reserve Reports, effective upon notification from Lender to Borrowers, or such other date set forth in such notice. Borrowers may request a redetermination one time between delivery of Reserve Reports. (iii) One time between the scheduled delivery of Reserve Reports, Lender may require in written notice that Borrowers deliver a Reserve Report having an effective date set forth in such notice, which must be delivered within 30 days of such notice. (iv) Borrowers and Lender acknowledge that due to the uncertainties of the Hydrocarbon extraction process, the Properties are not subject to evaluation with a high degree of accuracy and are subject to potential rapid deterioration in value, and for this reason and the difficulties and expenses involved in liquidating and collecting against the Properties, Lender’s determination of the Borrowing Base that may be supported by the Properties contains an equity cushion, which cushion is acknowledged by Borrowers as essential for the adequate protection of Lender. (c) The Borrowing Base shall automatically be reduced in equal amounts on a monthly basis on the Payment Date commencing with, unless the parties otherwise agree, the calendar month immediately following each Borrowing Base redetermination. Concurrent with each redetermination, Lender shall establish the amount of the monthly Borrowing Base reduction that shall apply until the next redetermination. The initial monthly Borrowing Base reduction amount shall be equal to zero dollars ($0.00).

Borrowing Base. (ia) On or prior to the Initial Funding Date, the Borrowers shall deliver to the Lender Agent and the Valuation Agent the Initial Collateral Value Report and the other components of the initial Monthly Collateral Report. (b) After the Initial Funding Date, the Borrowers shall deliver to the Lender Agent and the Valuation Agent an updated Monthly Collateral Report no less frequently than once per calendar month and no later than the tenth Business Day of each calendar month (commencing with June 2008). Each Collateral Value Report and each Collateral Value Certificate delivered by the Borrowers shall be effective (subject to Sections 2.04(c) and (d) below) until such time as the Borrowers shall deliver a subsequent Collateral Value Report and Collateral Value Certificate. For purposes of preparing each Collateral Value Report, the Borrowers shall calculate the Collateral Value of the Primary Collateral described in the related Electronic File in accordance with Schedule 2.04; provided that prior to the European Reporting Date, the Borrowers may use reasonable estimates, based on available data (including the amount of collections on European Reporting Assets held in European SPV Accounts) in determining the Collateral Value of European Reporting Assets for inclusion in any Collateral Value Report. (c) If requested to do so by the Leverage Ratio Lender Agent, within two Business Days after receipt of a Collateral Value Report and Collateral Value Certificate pursuant to Section 2.04(a) or (b), as the case may be, together with the related Electronic Files, the Valuation Agent shall, to the extent such Collateral Value calculation relies on market value rather than Carrying Value, verify the Collateral Value for the Primary Collateral and shall notify the Lender Agent and the Borrowers of the amount of such Collateral Value. (d) Within three Business Days after receipt of a Collateral Value Report and Collateral Value Certificate pursuant to Section 2.04(a) or (b), the Lender Agent shall determine (taking into account any information provided by the Valuation Agent pursuant to Section 2.04(c)) the Borrowing Base and notify the Lenders and the Borrowers of such determination. Such determination shall be effective as of the end of a fiscal quarter for which Business Day specified in such written notice from the Borrower has or was required to deliver financial statements pursuant to Section 7.1 Lender Agent (or, if no effective date is specified in such written notice, the earliest next Business Day following delivery of such dates, written notice) and such Borrowing Base shall remain in effect (as adjusted by any European Collateral Value Adjustment) until the “BB Compliance Date”) equals next determination or exceeds 0.95 to 1.00, at any time on or after the BB Compliance Date through the immediately following BB Compliance Date, the Borrower will not permit redetermination of the Borrowing Base in accordance with this Agreement. (determined (Ae) as Notwithstanding anything herein the contrary, in the event that the Borrowers fail to furnish any component of the end Monthly Collateral Report, any European Collateral Value Adjustment or any Interim Borrowing Base Report in accordance with this Section 2.04, the Lender Agent may designate the Borrowing Base from time to time thereafter at an amount as determined by the Lender Agent in its sole and absolute discretion until each of such fiscal quarter the Lender Agent and set forth on the Inventory Summary Report Valuation Agent shall have received all reports, certificates and files required to be delivered for such fiscal quarter by this Section 2.04, whereupon the Lender Agent shall designate a new Borrowing Base in accordance with the general procedures outlined in this Section 2.04. (f) The Borrowers shall deliver Interim Borrowing Base Reports as required pursuant to Section 7.27.2 (ii2.03(c) or (B) as of and the end of any fiscal month and set forth on Lender Agent shall calculate the Inventory Summary Report for such fiscal month delivered pursuant to the proviso of Section 7.27.2(ii)) to be less than the aggregate principal amount of Senior Indebtedness (excluding Permitted Nonrecourse Indebtedness and Permitted Purchase Money Loans) outstanding at any time during such period, it being understood that if as of the end of the immediately following fiscal quarter the Leverage Ratio is less than 0.95 to 1.00, this Section 7.27.2(i) shall no longer apply from and after the related BB Compliance Date until the immediately following BB Compliance Date (the “Adjusted Borrowing Base Requirement”)with respect to each Interim Borrowing Base Report. (iig) Borrower To the extent that the Borrowers estimate the Collateral Value of European Reporting Assets in any Collateral Value Report, the Borrowers shall deliver calculate the Collateral Value of such European Reporting Assets in accordance with Schedule 2.04 and furnish a supplemental Collateral Value Report as adjusted to the Administrative Agent an Inventory Summary Report in the form of Exhibit J and incorporated herein reflect such calculation (such adjustment, a “European Collateral Value Adjustment”) within fifty days after the last day of each fiscal quarter in which the Leverage Ratio exceeds 0.95 to 1:00 as 5 Business Days of the last day of such fiscal quarter; provided that Borrower may, in its discretion, deliver an Inventory Summary Report as delivery of the last day of any fiscal month. The Inventory Summary Report shall reflect Inventory that Borrower determines in good faith to designate as Loan Inventory. Upon Administrative Agent’s receipt of the Inventory Summary related Collateral Value Report, Administrative Agent may conduct inspections or reviews of the subject Inventory that Administrative Agent deems appropriate, at the expense of the Borrower, subject to the reimbursement limitation set forth in Section 7.18.

Borrowing Base. (a) The Borrowing Base will apply when a Collateral Trigger Period is in effect; provided that in the case of a Collateral Trigger Period that begins with a Collateral Trigger Date, the Borrowing Base shall not apply until such Borrowing Base becomes effective in accordance with Section 2.10(e) below. At the election of the Borrower, one or more sub-amounts corresponding to a specific Basin or Basins comprising all or a portion of the Borrowing Base may be designated (each sub-amount attributable to a specific Basin, the “Basin BB Amount”); provided that (i) If the Leverage Ratio as sum of all Basin BB Amounts at any time shall not exceed the Borrowing Base at such time, and (ii) to the extent that the Borrower elects for a Basin BB Amount to apply with respect to a particular Basin but a Basin BB Amount was not designated with respect to such Basin in connection with the most recent Redetermination, then a new Basin BB Amount shall be determined for such Basin in accordance with Section 2.10(b)(ii). For the period from and including the Closing Date to but excluding the first Redetermination Date, (A) the amount of the end of a fiscal quarter for which Borrowing Base shall be $1,025,000,000 and (B) the Basin BB Amounts shall be the Basin BB Amounts disclosed by the Administrative Agent to the Borrower has or was required and the Lenders prior to deliver financial statements the date hereof. The Borrowing Base and the Basin BB Amounts, if applicable, may be subject to further adjustments from time to time pursuant to Section 7.1 2.10(f), Section 2.10(g), Section 5.11(c) or any other applicable provision of this Agreement. (b) The Development Borrowing Base will apply at the earliest election of such dates, the “BB Compliance Date”) equals or exceeds 0.95 to 1.00, at any time on or after the BB Compliance Date through the immediately following BB Compliance Date, the Borrower will not permit the Borrowing Base (determined (A) as of the end of such fiscal quarter and set forth on the Inventory Summary Report required to be delivered for such fiscal quarter pursuant to Section 7.27.2 (ii) or (B) as of the end of any fiscal month and set forth on the Inventory Summary Report for such fiscal month delivered pursuant to the proviso of Section 7.27.2(ii)) to be less than the aggregate principal amount of Senior Indebtedness (excluding Permitted Nonrecourse Indebtedness and Permitted Purchase Money Loans) outstanding at any time during a Collateral Trigger Period; provided that in the case of a Collateral Trigger Period that begins with a Collateral Trigger Date, the Development Borrowing Base shall not apply until such periodDevelopment Borrowing Base becomes effective in accordance with Section 2.10(e) below. For the period from and including the Closing Date to but excluding the first Redetermination Date, it being understood the amount of the Development Borrowing Base shall be $0. Each subsequent Development Borrowing Base shall be determined in accordance with the following and shall become effective and applicable to the Borrower, the Administrative Agent and the Lenders in accordance with Section 2.10(e) (provided that the Development Borrowing Base may be subject to further adjustments from time to time pursuant to Section 2.04(d), Section 2.10(f), Section 2.10(g), Section 5.11(c) or any other applicable provision of this Agreement): (i) To the extent that the Borrower designates pursuant to Section 2.04 all of the Oil and Gas Properties of the Loan Parties set forth in a particular Basin or Basins as Oil and Gas Properties to be developed with the proceeds of Development Loans (except as provided in Section 2.04(b)(ii)(B)) and such Oil and Gas Properties constitute Development Mortgaged Properties in accordance with Section 2.04, the Development Borrowing Base shall equal the aggregate Basin BB Amount or Basin BB Amounts for such Basin or Basins, as applicable; provided that the Administrative Agent shall have received at least 10 days’ notice (or such lesser number of days as may be agreed by the Administrative Agent in its reasonable discretion) of such designation prior to the determination of such Development Borrowing Base if such designation includes one or more Basins in respect of which no Basin BB Amount is then designated; provided further, that if such designation includes one or more Basins for which no current Basin BB Amount exists as of the end of the immediately following fiscal quarter the Leverage Ratio is less than 0.95 described in Section 2.10(a), then such Basin BB Amount shall be determined pursuant to 1.00, Section 2.10(b)(ii) and not this Section 7.27.2(i) shall no longer apply from and after the related BB Compliance Date until the immediately following BB Compliance Date (the “Borrowing Base Requirement”2.10(b)(i). (ii) To the extent that the Borrower designates pursuant to Section 2.04 (A) less than all of the Oil and Gas Properties of the Loan Parties set forth in a particular Basin as Oil and Gas Properties to be developed with the proceeds of Development Loans and to constitute Development Mortgaged Properties in accordance with Section 2.04 or (B) all of the Oil and Gas Properties of the Loan Parties set forth in a particular Basin or Basins as Oil and Gas Properties to be developed with the proceeds of Development Loans, but no current Basin BB Amount exists for one or more of such Basins as described in Section 2.10(a), then in the case of clause (A) or (B), the Development Borrowing Base or applicable Basin BB Amount or Basin BB Amounts, respectively, shall deliver be determined in connection with a Redetermination in accordance with Section 2.10(c) and (d). (c) During the Collateral Trigger Period, the Borrowing Base (and, if applicable, the Development Borrowing Base and/or Basin BB Amounts) shall be redetermined semi-annually in accordance with this Section 2.10 (a “Scheduled Redetermination”), and subject to Section 2.10(e), such redetermined Borrowing Base (and, if applicable, Development Borrowing Base and/or Basin BB Amounts) shall become effective and applicable to the Borrower, the Administrative Agent, the Issuing Bank and the Lenders on April 1st and October 1st of each year (or, in each case, such date promptly thereafter as reasonably practicable), commencing on October 1, 2016. In addition, the Borrower may, by notifying the Administrative Agent thereof, and after April 1, 2017, the Administrative Agent may, at the direction of the Supermajority Lenders, by notifying the Borrower thereof, one time between Scheduled Redeterminations each elect to cause the Borrowing Base (and, if applicable, the Development Borrowing Base and/or Basin BB Amounts) to be redetermined between such redeterminations (an “Interim Redetermination”) in accordance with this Section 2.10. For the avoidance of doubt, the initial determination of the Borrowing Base (and, if applicable, the Basin BB Amounts) after a Collateral Trigger Date and/or the initial determination of the Development Borrowing Base after a Collateral Trigger Date shall not constitute an Interim Redetermination, but any request to redetermine the Borrowing Base, the Basin BB Amounts and/or the Development Borrowing Base (except pursuant to Section 2.10(b)(i)) shall constitute an Interim Redetermination. (i) Each Scheduled Redetermination, Interim Redetermination and CTD Redetermination (and, if applicable, the initial determination of the Borrowing Base (and, if applicable, the Basin BB Amounts) after a Collateral Trigger Date and/or the initial determination of the Development Borrowing Base after a Collateral Trigger Date) shall be effectuated as follows: upon receipt by the Administrative Agent of (A) the Reserve Report and the certificate required to be delivered by the Borrower to the Administrative Agent an Inventory Summary Report pursuant to Section 5.01(e) and (f) and (B) such other reports, data and supplemental information, including the information provided pursuant to Section 5.01(f), as may, from time to time, be reasonably requested by the Administrative Agent or the Required Lenders (the Reserve Report, such certificate and such other reports, data and supplemental information being the “Engineering Reports”), the Administrative Agent shall evaluate the information contained in the form of Exhibit J Engineering Reports and incorporated herein within fifty days after the last day of each fiscal quarter in which the Leverage Ratio exceeds 0.95 to 1:00 as of the last day of such fiscal quarter; provided that Borrower mayshall, in its discretiongood faith, deliver an Inventory Summary Report propose a new Borrowing Base (the “Proposed Borrowing Base”) (and, if applicable, a new Development Borrowing Base (the “Proposed Development Borrowing Base”) and/or a new Basin BB Amount for each Basin (collectively, the “Proposed Basin BB Amounts”)) based upon such information and such other information (including, without limitation, the status of title information with respect to the Oil and Gas Properties as of described in the last day Engineering Reports and the existence of any fiscal month. The Inventory Summary Report shall reflect Inventory that Borrower determines other Indebtedness, the Loan Parties’ other assets, liabilities, fixed charges, cash flow, business, properties, prospects, management and ownership, hedged and unhedged exposure to price, price and production scenarios, interest rate and operating cost changes) as the Administrative Agent deems appropriate in good faith and consistent with its normal oil and gas lending criteria as it exists at the particular time. In no event shall (x) the Proposed Borrowing Base exceed the Aggregate Commitments, (y) the Proposed Development Borrowing Base exceed the Proposed Borrowing Base or (z) the aggregate Proposed Basin BB Amounts exceed the Proposed Borrowing Base. (ii) The Administrative Agent shall notify the Borrower and the Lenders of the Proposed Borrowing Base (and, if applicable, the Proposed Development Borrowing Base and/or the Proposed Basin BB Amounts) (the “Proposed Borrowing Base Notice”) after the Administrative Agent has received complete Engineering Reports from the Borrower and has had a reasonable opportunity to designate determine the Proposed Borrowing Base in accordance with Section 2.10(d)(i). (iii) Any Proposed Borrowing Base that would increase the Borrowing Base then in effect or set the Borrowing Base in connection with the occurrence of a Collateral Trigger Date, (and, if applicable, any Proposed Development Borrowing Base that would increase the Development Borrowing Base then in effect (except pursuant to Section 2.10(b)(i)) or set the Development Borrowing Base in connection with the occurrence of a Collateral Trigger Date and/or any Proposed Basin BB Amount for any Basin that would increase the Basin BB Amount for such Basin or set the Basin BB Amount for such Basin), must be approved or deemed to be approved by all of the Lenders as Loan Inventoryprovided in this Section 2.10(d)(iii); and any Proposed Borrowing Base that would decrease or maintain the Borrowing Base then in effect (and, if applicable, any Proposed Development Borrowing Base that would decrease (except pursuant to Section 2.10(b)(i)) or maintain the Development Borrowing Base then in effect and/or any Proposed Basin BB Amount for any Basin that would decrease or maintain the Basin BB Amount for such Basin), must be approved or be deemed to have been approved by the Supermajority Lenders as provided in this Section 2.10(d)(iii). Upon Administrative Agent’s receipt of the Inventory Summary Reportapplicable Proposed Borrowing Base Notice, Administrative Agent may conduct inspections or reviews each Lender shall have fifteen (15) days to agree with any of the subject Inventory that Proposed Borrowing Base (and/or, if applicable, the Proposed Development Borrowing Base and/or and the Proposed Basin BB Amounts) or disagree with any of the Proposed Borrowing Base (and/or, if applicable, the Proposed Development Borrowing Base and/or and the Proposed Basin BB Amounts) by proposing an alternate Borrowing Base (and/or, if applicable, Development Borrowing Base and/or applicable Basin BB Amount(s)). If at the end of such fifteen (15) days, any Lender has not communicated its approval or disapproval in writing to the Administrative Agent deems appropriateAgent, such silence shall be deemed to be an approval of the Proposed Borrowing Base (and/or, if applicable, the Proposed Development Borrowing Base and/or each Proposed Basin BB Amount). If, at the expense end of such 15-day period, all of the Lenders, in the case of a Proposed Borrowing Base that would increase the Borrowing Base then in effect (and/or any Proposed Development Borrowing Base that would increase the Development Borrowing Base then in effect and/or a Proposed Basin BB Amount for any Basin that would increase the Basin BB Amount for such Basin), or the Supermajority Lenders, in the case of a Proposed Borrowing Base that would decrease or maintain the Borrowing Base then in effect (and/or any Proposed Development Borrowing Base that would decrease or maintain the Development Borrowing Base then in effect and/or a Proposed Basin BB Amount for any Basin that would decrease or maintain the Basin BB Amount for such Basin), have approved or deemed to have approved, as aforesaid, then the Proposed Borrowing Base shall become the new Borrowing Base (and/or, if applicable, the Proposed Development Borrowing Base shall become the new Development Borrowing Base and/or the Proposed Basin BB Amounts shall become the new Basin BB Amounts), effective on the date specified in Section 2.10(e). If, however, at the end of such 15-day period, all of the Lenders or the Supermajority Lenders, as applicable, have not approved or deemed to have approved, as aforesaid, then the Administrative Agent shall poll the Lenders to ascertain the highest Borrowing Base (and/or, if applicable, Development Borrowing Base and/or Basin BB Amount for each Basin) then acceptable to (x) in the case of a decrease or reaffirmation, a number of Lenders sufficient to constitute the Supermajority Lenders and (y) in the case of an increase, all of the Lenders, and such amounts shall become the new Borrowing Base (and/or, if applicable, Development Borrowing Base and/or Basin BB Amounts), effective on the date specified in Section 2.10(e). (e) After a redetermined Borrowing Base (and/or, if applicable, a redetermined Development Borrowing Base and/or and the redetermined Basin BB Amounts for each Basin) are approved or are deemed to have been approved by all of the Lenders or the Supermajority Lenders, as applicable, pursuant to Section 2.10(d)(iii), and after a Development Borrowing Base is determined pursuant to Section 2.10(b)(i), the Administrative Agent shall notify the Borrower and the Lenders of the amount of the redetermined Borrowing Base (and/or, if applicable, the Development Borrowing Base and/or the redetermined Basin BB Amounts for each Basin) (the “New Borrowing Base Notice”), and such amounts shall become the new Borrowing Base (and/or, if applicable, the Development Borrowing Base and/or and Basin BB Amounts), effective and applicable to the Borrower, subject the Administrative Agent, the Issuing Bank and the Lenders: (i) in the case of a Scheduled Redetermination, (A) if the Administrative Agent shall have received the Engineering Reports required to be delivered by the Borrower pursuant to Section 5.01(e)(i) and (f) in a timely and complete manner, then on the April 1st or October 1st (or, in each case, such date promptly thereafter as reasonably practicable), as applicable, following such New Borrowing Base Notice, or (B) if the Administrative Agent shall not have received the Engineering Reports required to be delivered by the Borrower pursuant to Section 5.01(e)(i) and (f) in a timely and complete manner, then on the Business Day next succeeding delivery of such New Borrowing Base Notice; (ii) in the case of an Interim Redetermination or a CTD Redetermination, on the Business Day next succeeding delivery of such New Borrowing Base Notice; (iii) in the case of a determination of the Borrowing Base, the Development Borrowing Base and/or any Basin BB Amount in connection with a Collateral Trigger Date, on the Business Day next succeeding delivery of such new Borrowing Base Notice; and (iv) in the case of any subsequent Development Borrowing Base and/or Basin BB Amount for any Basin determined pursuant to Section 2.10(b)(i), on the Business Day next succeeding delivery of such New Borrowing Base Notice. Such amount(s) shall then become the Borrowing Base (and, if applicable, the Development Borrowing Base and/or and the Basin BB Amounts) until the next Scheduled Redetermination Date, the next Interim Redetermination Date, the next CTD Redetermination Date or the next adjustment to the reimbursement limitation set forth Borrowing Base (and, if applicable, the Development Borrowing Base and/or and Basin BB Amounts) under Section 2.04(d), Section 2.10(b), Section 2.10(f), Section 2.10(g), Section 5.11(c) or any other applicable provision of this Agreement, whichever occurs first. Notwithstanding the foregoing, no Scheduled Redetermination, Interim Redetermination or CTD Redetermination (or Development Borrowing Base and/or Basin BB Amount for any Basin determined pursuant to Section 2.10(b)(i)) shall become effective until the New Borrowing Base Notice related thereto is received by the Borrower. (f) In addition to the other redeterminations of and adjustments to the Borrowing Base (and Development Borrowing Base and/or and Basin BB Amounts) provided for herein, if at any time the Borrowing Base Value of (i) Oil and Gas Properties (and/or Oil and Gas Properties attributable to the Development Borrowing Base) sold or disposed of (whether through a direct sale or disposition or through the sale or disposition of Equity Interests in Section 7.18.a Subsidiary that owns such Oil and Gas Properties, and including pursuant to a

Borrowing Base. (a) During the period from the Amendment No. 4 Effective Date to the date of the next redetermination of the Borrowing Base pursuant to the provisions of this Section 2.9 [Borrowing Base], the amount of the Borrowing Base shall be $1,900,000,000. (b) Upon each delivery of a Reserve Report pursuant to Section 8.3.8 [Reserve Reports], together with such engineering and other data from the Borrower as is customarily provided, the Syndication Agent shall, within a reasonable period of time, make a good faith determination of the proposed Borrowing Base, and promptly thereafter the Administrative Agent will propose by notice in writing to the Lenders such Borrowing Base for acceptance by (i) the Required Borrowing Base Lenders with respect to any reaffirmations or reductions in the Borrowing Base and (ii) the Required Increasing Borrowing Base Lenders with respect to any increases in the Borrowing Base. If such Borrowing Base, as proposed by the Leverage Ratio Administrative Agent is accepted by the Applicable Borrowing Base Lenders, then such accepted Borrowing Base shall be communicated by the Administrative Agent to the Borrower on or about (i) with respect to any June 30 Reserve Report, (x) if the Administrative Agent shall have received the June 30 Reserve Report in a timely and complete manner, the immediately following October 15 and (y) if the Administrative Agent shall not have received the June 30 Reserve Report in a timely and complete manner, then fifteen (15) days after the Administrative Agent has received the complete June 30 Reserve Report from the Borrower and the Syndication Agent has had a reasonable opportunity to determine the proposed Borrowing Base or (ii) with respect to any December 31 Reserve Report, (x) if the Administrative Agent shall have received the December 31 Reserve Report in a timely and complete manner, the immediately following April 15 and (y) if the Administrative Agent shall not have received the December 31 Reserve Report in a timely and complete manner, then fifteen (15) days after the Administrative Agent has received the complete December 31 Reserve Report from the Borrower and the Syndication Agent has had a reasonable opportunity to determine the proposed Borrowing Base (the applicable date in any of the foregoing clauses (i)(x), (i)(y), (ii)(x) or (ii)(y), the “Applicable Date”); provided that if such proposed Borrowing Base is not approved by the Applicable Borrowing Base Lenders prior to the Applicable Date, then the Applicable Borrowing Base Lenders will establish and agree to a Borrowing Base established using criteria agreed upon by the Applicable Borrowing Base Lenders, and such amount will be communicated to the Borrower, within 30 days following the Applicable Date. Any Lender that shall fail to reject the proposed Borrowing Base within fifteen (15) days of notice of the proposed Borrowing Base shall be deemed to have approved the proposed amount of such Borrowing Base. The new Borrowing Base shall become effective as of the end date that the Borrower receives notification from the Administrative Agent of the new Borrowing Base, and until that time, the old Borrowing Base shall continue to be in effect. The Borrowing Base, as determined and established pursuant to this Section 2.9 [Borrowing Base] shall be subject, at all times, to the redetermination or adjustment of the then effective Borrowing Base as a result of a fiscal quarter for which redetermination of the Borrower has or was required to deliver financial statements Borrowing Base pursuant to Section 7.1 2.9(c) [Borrowing Base] or a reduction of the Borrowing Base pursuant to Section 2.9(e) [Borrowing Base] or Section 8.1.18(c) [Title Information]. (the earliest of such datesc) Not more than once in any fiscal year, the “BB Compliance Date”) equals or exceeds 0.95 to 1.00Administrative Agent upon the instruction of the Required Borrowing Base Lenders, at may request from the Borrower an Alternate Reserve Report for the purpose of redetermining the Borrowing Base, and not more than twice in any time on or after the BB Compliance Date through the immediately following BB Compliance Datefiscal year, the Borrower will not permit shall have the right to request a redetermination of the Borrowing Base (determined (A) as of the end of such fiscal quarter and set forth on the Inventory Summary Report required to be delivered for such fiscal quarter pursuant to Section 7.27.2 (ii) or (B) as of the end of any fiscal month and set forth on the Inventory Summary Report for such fiscal month delivered pursuant to the proviso of Section 7.27.2(ii)) to be less than the aggregate principal amount of Senior Indebtedness (excluding Permitted Nonrecourse Indebtedness and Permitted Purchase Money Loans) outstanding at any time during such period, it being understood that if as of the end of the immediately following fiscal quarter the Leverage Ratio is less than 0.95 to 1.00, this Section 7.27.2(i) shall no longer apply from and after the related BB Compliance Date until the immediately following BB Compliance Date (the “Borrowing Base Requirement”). (ii) Borrower shall deliver by sending a written notice to the Administrative Agent of such request along with an Inventory Summary Report in the form of Exhibit J and incorporated herein within fifty days after the last day of each fiscal quarter in which the Leverage Ratio exceeds 0.95 to 1:00 as Alternate Reserve Report. In connection with any redetermination of the last day Borrowing Base related to a delivery of an Alternate Reserve Report, the Syndication Agent shall make a good faith determination, in a reasonably prompt manner, of a new Borrowing Base, and the Administrative Agent shall propose by notice in writing, in a reasonably prompt manner, such new Borrowing Base to the Lenders, and the Applicable Borrowing Base Lenders shall agree to review in a reasonably prompt manner, and (if acceptable) approve a new Borrowing Base, which shall become effective upon receipt by the Borrower of notice of such fiscal quarternew Borrowing Base. Any Lender that shall fail to reject the proposed Borrowing Base within fifteen (15) days of notice of the proposed Borrowing Base shall be deemed to have approved the proposed amount of such Borrowing Base. In connection with any such redetermination of the Borrowing Base, the Borrower shall deliver promptly upon the request of the Administrative Agent an Alternate Reserve Report to the Administrative Agent; provided that the Borrower’s failure to deliver such Alternate Reserve Report shall not preclude or impact the making of such redetermination of the Borrowing Base by the Administrative Agent or the approval of such Borrowing Base by the Applicable Borrowing Base Lenders. (d) The Borrowing Base shall represent the good faith determination by the Administrative Agent and the Syndication Agent, of the loan value of the Borrowing Base Properties based upon, among other things, information contained in the Reserve Report and in accordance with the applicable definitions and provisions herein contained, the Syndication Agent’s standard policies regarding energy lending, industry lending practices, and consideration for the nature of the facilities established hereunder. The Borrower mayacknowledges that the determination of the Borrowing Base contains an equity cushion (market value in excess of the value of all Indebtedness of the Loan Parties), which is acknowledged by the Borrower to be essential for the adequate protection of the Administrative Agent and the Lenders. (e) Unless otherwise waived in writing by the Required Lenders, (i) in the event of the Disposition or other early monetization or early termination of one or more Swap Agreements that had been assigned aggregate Borrowing Base Value (since the last redetermination of the Borrowing Base) in excess of 5% of the Borrowing Base then in effect, the Borrowing Base shall be reduced (effective upon such Disposition, monetization or termination) by an amount equal to the Borrowing Base Value of such Swap Agreement(s); provided that in determining the 5% threshold, to the extent such Swap Agreement is replaced, in its discretionwhole or in part, deliver an Inventory Summary Report as in a substantially contemporaneous transaction, with one or more Swap Agreements otherwise permitted under this Agreement and covering Hydrocarbons of the last day of any fiscal month. The Inventory Summary Report shall reflect Inventory type that Borrower determines in good faith were hedged pursuant to designate as Loan Inventory. Upon Administrative Agent’s receipt of the Inventory Summary Reportsuch replaced Swap Agreement(s) and with notional volumes, Administrative Agent may conduct inspections or reviews of the subject Inventory that Administrative Agent deems appropriateprices, at the expense of the Borrower, subject tenors and economic effect during such tenors not less favorable to the reimbursement limitation Borrower and/or such Restricted Subsidiary than those set forth in such replaced Swap Agreement(s) and without payments by the Borrower and/or such Restricted Subsidiary in connection therewith, only the part of such Swap Agreement that is not so replaced shall be counted in such 5% and (ii) the Borrowing Base shall be reduced upon the circumstances set forth in, and in accordance with, Section 7.188.2.1(m)(x) [Indebtedness] and Section 8.2.13(f) [Sale of Proved Reserves; Pooling].

Borrowing Base. (a) The Borrowing Base will apply when a Collateral Trigger Period is in effect; provided that in the case of a Collateral Trigger Period that begins with a Collateral Trigger Date, the Borrowing Base shall not apply until such Borrowing Base becomes effective in accordance with Section 2.10(e) below. At the election of the Borrower, one or more sub-amounts corresponding to a specific Basin or Basins comprising all or a portion of the Borrowing Base may be designated (each sub-amount attributable to a specific Basin, the “Basin BB Amount”); provided that (i) If the Leverage Ratio as sum of all Basin BB Amounts at any time shall not exceed the Borrowing Base at such time, and (ii) to the extent that the Borrower elects for a Basin BB Amount to apply with respect to a particular Basin but a Basin BB Amount was not designated with respect to such Basin in connection with the most recent Redetermination, then a new Basin BB Amount shall be determined for such Basin in accordance with Section 2.10(b)(ii). As of the end Second Amendment Effective Date, (A) the amount of a fiscal quarter for which the Borrowing Base shall be $1,800,000,000 and (B) the Basin BB Amounts shall be the Basin BB Amounts disclosed by the Administrative Agent to the Borrower has and the Lenders on or was required prior to deliver financial statements the Second Amendment Effective Date. The Borrowing Base and the Basin BB Amounts, if applicable, may be subject to further adjustments from time to time pursuant to Section 7.1 2.10(f), Section 2.10(g), Section 5.11(c) or any other applicable provision of this Agreement. (b) The Development Borrowing Base will apply at the earliest election of such dates, the “BB Compliance Date”) equals or exceeds 0.95 to 1.00, at any time on or after the BB Compliance Date through the immediately following BB Compliance Date, the Borrower will not permit the Borrowing Base (determined (A) as of the end of such fiscal quarter and set forth on the Inventory Summary Report required to be delivered for such fiscal quarter pursuant to Section 7.27.2 (ii) or (B) as of the end of any fiscal month and set forth on the Inventory Summary Report for such fiscal month delivered pursuant to the proviso of Section 7.27.2(ii)) to be less than the aggregate principal amount of Senior Indebtedness (excluding Permitted Nonrecourse Indebtedness and Permitted Purchase Money Loans) outstanding at any time during a Collateral Trigger Period; provided that in the case of a Collateral Trigger Period that begins with a Collateral Trigger Date, the Development Borrowing Base shall not apply until such periodDevelopment Borrowing Base becomes effective in accordance with Section 2.10(e) below. As of the Second Amendment Effective Date, it being understood the amount of the Development Borrowing Base shall be $0. Each subsequent Development Borrowing Base shall be determined in accordance with the following and shall become effective and applicable to the Borrower, the Administrative Agent and the Lenders in accordance with Section 2.10(e) (provided that the Development Borrowing Base may be subject to further adjustments from time to time pursuant to Section 2.04(d), Section 2.10(f), Section 2.10(g), Section 5.11(c) or any other applicable provision of this Agreement): (i) To the extent that the Borrower designates pursuant to Section 2.04 all of the Oil and Gas Properties of the Loan Parties set forth in a particular Basin or Basins as Oil and Gas Properties to be developed with the proceeds of Development Loans (except as provided in Section 2.04(b)(ii)(B)) and such Oil and Gas Properties constitute Development Mortgaged Properties in accordance with Section 2.04, the Development Borrowing Base shall be determined to equal the aggregate Basin BB Amount or Basin BB Amounts for such Basin or Basins, as applicable; provided that the Administrative Agent shall have received at least 10 days’ notice (or such lesser number of days as may be agreed by the Administrative Agent in its reasonable discretion) of such designation prior to the determination of such Development Borrowing Base if such designation includes one or more Basins in respect of which no Basin BB Amount is then designated; provided further, that if such designation includes one or more Basins for which no current Basin BB Amount exists as of the end of the immediately following fiscal quarter the Leverage Ratio is less than 0.95 described in Section 2.10(a), then such Basin BB Amount shall be determined pursuant to 1.00, Section 2.10(b)(ii) and not this Section 7.27.2(i) shall no longer apply from and after the related BB Compliance Date until the immediately following BB Compliance Date (the “Borrowing Base Requirement”2.10(b)(i). (ii) To the extent that the Borrower shall deliver designates pursuant to the Administrative Agent an Inventory Summary Report in the form of Exhibit J and incorporated herein within fifty days after the last day of each fiscal quarter in which the Leverage Ratio exceeds 0.95 to 1:00 as Section 2.04 (A) less than all of the last day of such fiscal quarter; provided that Borrower may, in its discretion, deliver an Inventory Summary Report as Oil and Gas Properties of the last day of any fiscal month. The Inventory Summary Report shall reflect Inventory that Borrower determines in good faith to designate as Loan Inventory. Upon Administrative Agent’s receipt of the Inventory Summary Report, Administrative Agent may conduct inspections or reviews of the subject Inventory that Administrative Agent deems appropriate, at the expense of the Borrower, subject to the reimbursement limitation Parties set forth in a particular Basin as Oil and Gas Properties to be developed with the proceeds of Development Loans and to constitute Development Mortgaged Properties in accordance with Section 7.18.2.04 or (B) all of the Oil and Gas Properties of the Loan Parties set forth in a particular Basin or Basins as Oil and Gas Properties to be developed with the proceeds of Development Loans, but no current Basin BB Amount exists for one or more of such Basins as described in Section 2.10(a), then in the case of clause (A) or

Borrowing Base. (ia) If Not later than the Leverage Ratio as of the end of a fiscal quarter for which the Borrower has or was required to deliver financial statements pursuant to Section 7.1 (the earliest of such datesinitial Advance, the “BB Compliance Date”) equals or exceeds 0.95 to 1.00, at any time on or and thereafter not later than 45 days after the BB Compliance Date through the immediately following BB Compliance Dateconclusion of each Fiscal Quarter, the Borrower will not permit shall deliver to the Agent a Borrowing Base (determined (A) as Certificate, in the form of the end of such fiscal quarter and EXHIBIT B-4, duly executed by an Authorized Signatory, which Borrowing Base Certificate will set forth on the Inventory Summary Report required to be delivered for such fiscal quarter pursuant to Section 7.27.2 (ii) or (B) as of the end of any fiscal month and set forth on the Inventory Summary Report for such fiscal month delivered pursuant to the proviso of Section 7.27.2(ii)) to be less than the aggregate principal amount of Senior Indebtedness (excluding Permitted Nonrecourse Indebtedness and Permitted Purchase Money Loans) outstanding at any time during such period, it being understood that if information contained therein as of the end of the immediately following fiscal quarter preceding Fiscal Quarter. The Agent will have the Leverage Ratio right to request and the Borrower will promptly provide additional information concerning the information set forth in the Borrowing Base Certificate. Within five (5) days after receipt of the Borrowing Base Certificate, the amount set forth therein as the Borrowing Base shall become the Borrowing Base under this Agreement unless prior to the end of such period the Agent shall have given notice to the Borrower that a different amount is less than 0.95 to 1.00, this Section 7.27.2(i) effective as the Borrowing Base. The Borrowing Base so established shall no longer apply from and after the related BB Compliance Date remain effective until the immediately following BB Compliance Date (Required Banks elect to redetermine the “Borrowing Base, subject to the terms of this Agreement, whether based upon the next quarterly Borrowing Base Requirement”)Certificate submitted by the Borrower to the Agent, or at any other time, in the Required Banks sole discretion. (b) For purposes of determining the applicable Borrowing Base, (i) Eligible Accounts Receivable shall be valued at eighty percent (80%) of the amount thereof and (ii) Borrower Eligible Unbilled Accounts Receivable shall deliver be valued at fifty percent (50%) of the amount thereof, PROVIDED, HOWEVER, Eligible Unbilled Accounts Receivable shall not exceed $7,500,000 for purposes of determining the Borrowing Base. (23) A new EXHIBIT B-4, Form of Borrowing Base Certificate shall be added to the Administrative Agent an Inventory Summary Report Credit Agreement in the form of Exhibit J and incorporated herein within fifty days after the last day of each fiscal quarter in which the Leverage Ratio exceeds 0.95 to 1:00 as attached EXHIBIT A hereto. (24) SCHEDULE 2.1 of the last day of such fiscal quarter; provided that Borrower may, Credit Agreement is replaced in its discretion, deliver an Inventory Summary Report entirety with the form of SCHEDULE 2.1 that is attached as EXHIBIT B hereto. (25) SECTION 5.1(b) of the last day Credit Agreement is amended by the addition of any fiscal month. The Inventory Summary Report a new subsection (xvii) that shall reflect Inventory that Borrower determines in good faith to designate read as Loan Inventory. Upon Administrative Agent’s receipt of the Inventory Summary Report, Administrative Agent may conduct inspections or reviews of the subject Inventory that Administrative Agent deems appropriate, at the expense of the Borrower, subject to the reimbursement limitation set forth in Section 7.18.follows:

Borrowing Base. (a) During the period from the Closing Date to the date of the initial determination of the Borrowing Base pursuant to the provisions of this Section 2.9, the amount of the Borrowing Base shall be $2,000,000,000. (b) Upon each delivery of a Reserve Report pursuant to Section 8.3.8 [Reserve Reports], together with such engineering and other data from the Borrower as is customarily provided, the Syndication Agent shall, within a reasonable period of time, make a good faith determination of the proposed Borrowing Base, and promptly thereafter the Administrative Agent will propose by notice in writing to the Lenders such Borrowing Base for acceptance by (i) the Required Borrowing Base Lenders with respect to any reaffirmations or reductions in the Borrowing Base and (ii) the Required Increasing Borrowing Base Lenders with respect to any increases in the Borrowing Base. If such Borrowing Base, as proposed by the Leverage Ratio Administrative Agent is accepted by the Applicable Borrowing Base Lenders, then such accepted Borrowing Base shall be communicated by the Administrative Agent to the Borrower on or before 30 days following the date of delivery of such Reserve Report (the “Applicable Date”); provided that if such proposed Borrowing Base is not approved by the Applicable Borrowing Base Lenders prior to the Applicable Date, then the Applicable Borrowing Base Lenders will establish and agree to a Borrowing Base established using criteria agreed upon by the Applicable Borrowing Base Lenders, and such amount will be communicated to the Borrower, within 30 days following the Applicable Date. Any Lender that shall fail to reject the proposed Borrowing Base within fifteen (15) days of notice of the proposed Borrowing Base shall be deemed to have approved the proposed amount of such Borrowing Base. The new Borrowing Base shall become effective as of the end date that the Borrower receives notification from the Administrative Agent of the new Borrowing Base, and until that time, the old Borrowing Base shall continue to be in effect. The Borrowing Base, as determined and established pursuant to this Section 2.9 shall be subject, at all times, to the redetermination or adjustment of the then effective Borrowing Base as a result of a fiscal quarter for which redetermination of the Borrower has or was required to deliver financial statements Borrowing Base pursuant to Section 7.1 2.9(c) or 2.9(d) or an adjustment of the Borrowing Base pursuant to Section 8.2.13(e) [Sale of Proved Reserves; Pooling]. (the earliest of such datesc) Not more than once in any fiscal year, the “BB Compliance Date”) equals or exceeds 0.95 to 1.00Administrative Agent upon the instruction of the Required Borrowing Base Lenders, at may request from the Borrower an Alternate Reserve Report for the purpose of redetermining the Borrowing Base, and not more than twice in any time on or after the BB Compliance Date through the immediately following BB Compliance Datefiscal year, the Borrower will not permit shall have the right to request a redetermination of the Borrowing Base (determined (A) as of the end of such fiscal quarter and set forth on the Inventory Summary Report required to be delivered for such fiscal quarter pursuant to Section 7.27.2 (ii) or (B) as of the end of any fiscal month and set forth on the Inventory Summary Report for such fiscal month delivered pursuant to the proviso of Section 7.27.2(ii)) to be less than the aggregate principal amount of Senior Indebtedness (excluding Permitted Nonrecourse Indebtedness and Permitted Purchase Money Loans) outstanding at any time during such period, it being understood that if as of the end of the immediately following fiscal quarter the Leverage Ratio is less than 0.95 to 1.00, this Section 7.27.2(i) shall no longer apply from and after the related BB Compliance Date until the immediately following BB Compliance Date (the “Borrowing Base Requirement”). (ii) Borrower shall deliver by sending a written notice to the Administrative Agent of such request along with an Inventory Summary Report in the form of Exhibit J and incorporated herein within fifty days after the last day of each fiscal quarter in which the Leverage Ratio exceeds 0.95 to 1:00 as Alternate Reserve Report. In connection with any redetermination of the last day Borrowing Base related to a delivery of an Alternate Reserve Report, the Syndication Agent shall make a good faith determination, in a reasonably prompt manner, of a new Borrowing Base, and the Administrative Agent shall propose by notice in writing, in a reasonably prompt manner, such new Borrowing Base to the Lenders, and the Applicable Borrowing Base Lenders shall agree to review in a reasonably prompt manner, and (if acceptable) approve a new Borrowing Base, which shall become effective upon receipt by the Borrower of notice of such fiscal quarternew Borrowing Base. Any Lender that shall fail to reject the proposed Borrowing Base within fifteen (15) days of notice of the proposed Borrowing Base shall be deemed to have approved the proposed amount of such Borrowing Base. In connection with any such redetermination of the Borrowing Base, the Borrower shall deliver promptly upon the request of the Administrative Agent an Alternate Reserve Report to the Administrative Agent; provided that Borrower maythe Borrower’s failure to deliver such Alternate Reserve Report shall not preclude or impact the making of such redetermination of the Borrowing Base by the Administrative Agent or the approval of such Borrowing Base by the Applicable Borrowing Base Lenders. (d) At the request of the Administrative Agent, the Syndication Agent or the Required Borrowing Base Lenders, in its their sole discretion, deliver an Inventory Summary Report as the Borrowing Base shall be adjusted in conformity with Section 2.9(c) [Borrowing Base] contemporaneously with (i) the sale, transfer, lease, contribution or other conveyance in one or more transactions after the date of the last day latest redetermination or adjustment of the Borrowing Base pursuant to this Agreement by any Loan Party to one or more Persons (other than another Loan Party), of Proved Reserves with an aggregate value exceeding 5% of the Borrowing Base then in effect (whether directly or indirectly by means of the sale of equity interests in a Loan Party or otherwise) pursuant to Section 8.2.13(e) [Sale of Proved Reserves; Pooling] and (ii) the early monetization or early termination of any fiscal monthSwap Agreements relied on by the Administrative Agent, the Syndication Agent and the Lenders in determining the Borrowing Base that has an economic value exceeding five percent (5%) of the Borrowing Base then in effect. (e) The Borrowing Base shall represent the good faith determination by the Administrative Agent and the Syndication Agent, of the loan value of the Borrowing Base Properties based upon, among other things, information contained in the Reserve Report and in accordance with the applicable definitions and provisions herein contained, the Syndication Agent’s standard policies regarding energy lending, industry lending practices, and consideration for the nature of the facilities established hereunder. The Inventory Summary Report shall reflect Inventory Borrower acknowledges that Borrower determines in good faith to designate as Loan Inventory. Upon Administrative Agent’s receipt the determination of the Inventory Summary ReportBorrowing Base contains an equity cushion (market value in excess of the value of all Indebtedness of the Loan Parties), which is acknowledged by the Borrower to be essential for the adequate protection of the Administrative Agent may conduct inspections or reviews and the Lenders. (f) Unless otherwise waived in writing by the Required Lenders, upon the issuance of any Permitted Unsecured Notes in accordance with Section 8.2.1(m)(x) [Indebtedness] (other than any Refinancing Indebtedness in respect thereof), the subject Inventory that Administrative Agent deems appropriate, at Borrowing Base then in effect shall automatically be reduced by $0.25 for each $1.00 in stated principal amount of such Permitted Unsecured Notes on the expense of the Borrower, subject to the reimbursement limitation set forth in Section 7.18date such Permitted Unsecured Notes are issued.

Borrowing Base. The Lender shall promptly notify the Borrowers (ifollowing the Lender's receipt of notice from the Agent (a "DEFICIENCY NOTICE")) If the Leverage Ratio as if following any redetermination of the end of a fiscal quarter for which the Borrower has or was required to deliver financial statements pursuant to Section 7.1 (the earliest of such datesBorrowing Base, the “BB Compliance Date”) equals or exceeds 0.95 to 1.00, at any time on or after the BB Compliance Date through the immediately following BB Compliance Date, the Borrower will not permit the Borrowing Base (determined (A) as of the end of such fiscal quarter and set forth on the Inventory Summary Report required to be delivered for such fiscal quarter pursuant to Section 7.27.2 (ii) or (B) as of the end of any fiscal month and set forth on the Inventory Summary Report for such fiscal month delivered pursuant to the proviso of Section 7.27.2(ii)) to be then in effect is less than the aggregate principal Principal Amount of the Loans and Letter of Credit Liabilities outstanding at such time (with any amounts outstanding in U.S. Dollars being expressed as an Equivalent Amount in Canadian Dollars)(the amount of Senior Indebtedness such difference being called herein the "BORROWING BASE DEFICIENCY"); and within 30 days after the date of the Deficiency Notice, the Borrowers shall notify the Lender and the Agent of the Borrowers' intentions with respect to compliance with the procedures set forth in this Section 2.11(a). As specified in such notice from the Borrowers, the Borrowers shall (excluding Permitted Nonrecourse Indebtedness and Permitted Purchase Money within 90 days after the date of the Deficiency Notice (the "DEFICIENCY CURE PERIOD")) (i) prepay (in accordance with the procedures of this Agreement) the outstanding principal of the Loans (except BA Loans) outstanding at any time during such periodin the manner as specified in clause (e) below and, it being understood that if as all of the end of the immediately following fiscal quarter the Leverage Ratio is less than 0.95 to 1.00, this Section 7.27.2(iLoans (except BA Loans) shall no longer apply from have been prepaid and after the related BB Compliance Date until the immediately following BB Compliance Date (the “a Borrowing Base Requirement”). Deficiency still exists, provide cover for Letter of Credit Liabilities and BA Loans in an amount equal to such Borrowing Base Deficiency in the manner specified in clause (f) below and/or (ii) Borrower add to the Hydrocarbon Properties (other than to the interests which Forest has in the Forest Pledged Properties) additional Hydrocarbon Properties (other than Unrestricted Properties) (each such additional Hydrocarbon Property to have a Present Value of Reserves at least equal to C$1,000,000) having a loan value, as determined by the Majority Lenders, in an amount sufficient so that the aggregate amount of such prepayments and/or the loan value of such additional Hydrocarbon Properties shall equal or exceed the Borrowing Base Deficiency (any such additional Hydrocarbon Property to be deemed added to the Hydrocarbon Properties on the date the Borrowers deliver to the Administrative Lender and the Agent an Inventory Summary Report in the form evidence of Exhibit J and incorporated herein within fifty days after the last day of each fiscal quarter in which the Leverage Ratio exceeds 0.95 satisfactory title to 1:00 as of the last day of those additional Hydrocarbon Properties, a written confirmation that such fiscal quarter; provided that Borrower may, in its discretion, deliver an Inventory Summary Report as of the last day of any fiscal month. The Inventory Summary Report shall reflect Inventory that Borrower determines in good faith to designate as Loan Inventory. Upon Administrative Agent’s receipt of the Inventory Summary Report, Administrative Agent may conduct inspections or reviews of the subject Inventory that Administrative Agent deems appropriate, at the expense of the Borrower, additional Hydrocarbon Property is subject to the reimbursement limitation set forth Lien of the Canadian Forest Debenture, or the Lien of similar security granted by a Subsidiary Borrower to the Lender and an opinion of counsel regarding such title and priority in Section 7.18form and substance satisfactory to the Agent and the Majority Lenders).

Borrowing Base. (i) If At any time that the Leverage Ratio as of the end of a fiscal quarter for which the Borrower has or was required to deliver financial statements pursuant to Section 7.1 (the earliest of such dates, the “BB Compliance Date”) equals or exceeds 0.95 1.50 to 1.00, at any time on or after the BB Compliance Date through the immediately following BB Compliance Date, Company and the Borrower will not permit the Borrowing Base (determined (A) as of the end of such fiscal quarter and set forth on the Inventory Summary Report Borrowing Base Certificate required to be delivered for such fiscal quarter pursuant to Section 7.27.2 (ii) or (B) as of the end of any fiscal month and set forth on the Inventory Summary Report for such fiscal month delivered pursuant to the proviso of Section 7.27.2(ii7.1(viii)) to be less than the aggregate principal amount of Senior Indebtedness then outstanding (excluding Permitted Nonrecourse outstanding Alternative Letters of Credit and other Letters of Credit or similar arrangements included in Senior Indebtedness and Permitted Purchase Money Loans) outstanding at any time during such periodnot issued under the Existing Credit Agreement to the extent collateralized by cash, Marketable Securities or Cash Equivalents), it being understood that a(i) if as any Permitted Purchase Money Loans or Permitted Recourse Indebtedness are secured by assets which have a book value at the time of the end calculation of the immediately following fiscal quarter the Leverage Ratio which is greater than or equal to the amount of Indebtedness outstanding in respect of such Permitted Purchase Money LoanLoans or Permitted Recourse Indebtedness, as applicable, then the amount of such Indebtedness shall not be included in the foregoing calculation unless the Borrower has included in the Borrowing Base theof Senior Indebtedness, (ii) if any Permitted Purchase Money Loans or Permitted Recourse Indebtedness are secured by assets which have a book value at the time of the calculation of the Leverage Ratio which is less than 0.95 the amount of Indebtedness in respect of such Permitted Purchase Money Loans or Permitted Recourse Indebtedness, as applicable, and such Permitted Purchase Money Loans or Permitted Recourse Indebtedness, as applicable, are recourse to 1.00any Loan Party (on a secured or unsecured basis) then only the difference between the outstanding principal amount of Indebtedness in respect of such Permitted Purchase Money Loans or Permitted Recourse Indebtedness, this Section 7.27.2(i) as applicable, and the book value of such assets securing such Permitted Purchase Money LoanLoans or Permitted Recourse Indebtedness, as applicable, shall no longer apply from and after the related BB Compliance Date until the immediately following BB Compliance Date (the “Borrowing Base Requirement”). (ii) Borrower shall deliver to the Administrative Agent an Inventory Summary Report be included in the form foregoing calculation of Exhibit J Senior Indebtedness (but in no event in an amount greater than the amount of recourse to any Loan Party) and incorporated herein within fifty days after (iii) the last day amount of each fiscal quarter Indebtedness in which respect of Permitted Nonrecourse Indebtedness shall not be included in the Leverage Ratio exceeds 0.95 to 1:00 as foregoing calculation of the last day of such fiscal quarter; provided that Borrower may, in its discretion, deliver an Inventory Summary Report as of the last day of any fiscal monthSenior Indebtedness. The Inventory Summary Report shall reflect Inventory that Borrower determines in good faith to designate as Loan Inventory. Upon Administrative Agent’s receipt of the Inventory Summary Report, Administrative Agent may conduct inspections or reviews of the subject Inventory that Administrative Agent deems appropriate, at the expense of the Borrower, subject to the reimbursement limitation set forth in Section 7.18.-63- 63