UP TO CDN. $1,200,000,000 EXTENDIBLE REVOLVING TERM CREDIT FACILITY FIFTH AMENDED AND RESTATED CREDIT AGREEMENT BETWEEN: PENGROWTH CORPORATION (AS BORROWER) - AND - THE FINANCIAL INSTITUTIONS AND OTHER ENTITIES NAMED HEREIN IN THEIR CAPACITIES AS...

Exhibit 99.2

UP TO CDN. $1,200,000,000
EXTENDIBLE REVOLVING TERM CREDIT FACILITY

FIFTH AMENDED AND RESTATED
CREDIT AGREEMENT

BETWEEN:

PENGROWTH CORPORATION
(AS BORROWER)

- AND -

THE FINANCIAL INSTITUTIONS AND OTHER ENTITIES NAMED HEREIN
IN THEIR CAPACITIES AS LENDERS
(AS LENDERS)

- AND -

ROYAL BANK OF CANADA
(AS ADMINISTRATIVE AGENT)

- AND –

BANK OF MONTREAL
(AS SYNDICATION AGENT)

- AND –

THE BANK OF NOVA SCOTIA,
CANADIAN IMPERIAL BANK OF COMMERCE
and HSBC BANK CANADA
(AS CO-DOCUMENTATION AGENTS)

June 15, 2007

Burnet, Xxxxxxxxx & Xxxxxx LLP
Xxxxxxx Xxxxx LLP

TABLE OF CONTENTS

		Page
ARTICLE 1 INTERPRETATION		1
1.1 Definitions		1
1.2 Headings and Table of Contents		28
1.3 References		28
1.4 Rules of Interpretation		29
1.5 Generally Accepted Accounting Principles		29
1.6 Time		29
1.7 Payment for Value		29
ARTICLE 2 REPRESENTATIONS AND WARRANTIES		29
2.1 Representations and Warranties		29
2.2 Deemed Representation and Warranty		33
ARTICLE 3 THE CREDIT FACILITY		34
3.1 Amendment and Restatement and Obligations of Each Lender		34
3.2 Purpose		35
3.3 Takeover		36
3.4 Borrowings		37
3.5 Selection of Libor Interest Periods		37
3.6 Conditions Applicable to Bankers’ Acceptances and BA Equivalent Advances		38
3.7 Agent’s Duties re Bankers’ Acceptances and BA Equivalent Advances		41
3.8 Letters of Credit Issued by Lenders		43
3.9 Letters of Credit Issued by Issuing Lender		44
3.10 Notice of Repayment		48
3.11 Pro-Rata Treatment of Borrowings		48
3.12 Conversion Option		49
3.13 Rollovers		49
3.14 Notices Irrevocable		50
3.15 Extension of Maturity Date		50
ARTICLE 4 REPAYMENT AND PREPAYMENT		51
4.1 Reduction of Commitment and Repayment of Borrowings		51
4.2 Repayment of Borrowings due to Exchange Rate Fluctuations		51
4.3 Cancellation of Commitment and Prepayment		52
4.4 Cancellation of a Lender’s Commitment		52
4.5 Early Repayment of Bankers’ Acceptances and Libor Loans		53
4.6 Evidence of Indebtedness		53
ARTICLE 5 PAYMENT OF INTEREST AND FEES		53
5.1 Interest on Cdn. Prime Loans		53
5.2 Interest on U.S. Base Rate Loans		54
5.3 Interest on Libor Loans		54
5.4 Bankers’ Acceptance Fees		54

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		Page
5.5 Letter of Credit Fees		55
5.6 Interest on Overdue Amounts		55
5.7 Standby Fees		56
5.8 Agent’s Fees		56
5.9 Commitment Fees		56
5.10 Maximum Rate Permitted by Law		57
5.11 Waiver		57
5.12 Interest and Fee Adjustment		57
5.13 Nominal Rates		57
ARTICLE 6 PAYMENT AND TAXES		57
6.1 Time, Place and Currency of Payment		57
6.2 Application of Payments Prior to an Event of Default		58
6.3 Taxes		58
6.4 Account Debit Authorization		59
ARTICLE 7 CONDITIONS PRECEDENT TO DISBURSEMENT OF THE BORROWINGS		59
7.1 Conditions Precedent		59
7.2 Continuing Conditions Precedent		60
7.3 Waiver of a Condition Precedent		61
ARTICLE 8 COVENANTS OF THE BORROWER		61
8.1 Positive Covenants of the Borrower		61
8.2 Negative Covenants of the Borrower		66
8.3 Financial Covenants		69
ARTICLE 9 EVENTS OF DEFAULT		70
9.1 Events of Default		70
9.2 Acceleration and Demand		73
9.3 Waiver of Default		73
9.4 Application of Payments Following Demand and Acceleration		73
9.5 Remedies Cumulative		74
9.6 Set-Off		74
9.7 Cash Collateral Accounts		75
9.8 Lenders May Perform Covenants		75
ARTICLE 10 EXPENSES AND INDEMNITIES		75
10.1 Reimbursement of Expenses and Indemnity		75
10.2 Increased Cost		75
10.3 Illegality		76
10.4 Substitute Basis of Borrowing		77
10.5 Funding Indemnity		77
10.6 General Indemnity		78
ARTICLE 11 THE AGENT AND THE LENDERS		78

iii

		Page
11.1 Authorization of Agent		78
11.2 Responsibility of Agent		78
11.3 Acknowledgment of Lenders		79
11.4 Rights and Obligations of Each Lender		79
11.5 Determinations by Lenders		80
11.6 Notices between the Lenders, the Agent and the Borrower		80
11.7 Agent’s Duty to Deliver Documents Obtained from the Borrower		80
11.8 Arrangements for Borrowings		80
11.9 Arrangements for Repayment of Borrowings		81
11.10 Repayment by Lenders to Agent		81
11.11 Adjustments Among Lenders		82
11.12 Lenders’ Consents to Waivers, Amendments, etc.		83
11.13 Reimbursement of Agent’s Expenses		84
11.14 Reliance by Agent and Lenders on Notices, etc.		84
11.15 Relations with Borrower		85
11.16 Sharing of Information		85
11.17 Successor Agent		85
11.18 Amendment of this Article 11		85
11.19 Dealing with Agent		86
11.20 Indemnity of Agent		86
ARTICLE 12 SUCCESSORS AND ASSIGNS AND JUDGMENT CURRENCY		86
12.1 Successors and Assigns		86
12.2 Judgment Currency		87
12.3 Exchange and Confidentiality of Information		87
ARTICLE 13 MISCELLANEOUS		88
13.1 Severability		89
13.2 Survival of Undertakings		89
13.3 Failure to Act		89
13.4 Amendments		89
13.5 Notice		90
13.6 Further Assurances		90
13.7 Governing Law		90
13.8 Whole Agreement		90
13.9 Term of Agreement		90
13.10 Time of Essence		90
13.11 Jurisdiction		90
13.12 Counterpart Execution		91

Schedules

Schedule A		Notice of Borrowing, Repayment, Prepayment or Cancellation of Total Commitment
Schedule B		Notice of Borrowing by way of Bankers’ Acceptance
Schedule C		Notice of Conversion
Schedule D		Notice of Rollover
Schedule E		Compliance Certificate
Schedule F		Lender Transfer Agreement
Schedule G		Request for Extension

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Schedule H		Power of Attorney Terms — Bankers’ Acceptance
Schedule I		Letter of Credit Application

          THIS FIFTH AMENDED AND RESTATED CREDIT AGREEMENT is dated as of June 15, 2007

BETWEEN:

PENGROWTH CORPORATION, a corporation incorporated under the laws of the Province of Alberta, having an office in Calgary, Alberta

OF THE FIRST PART

AND

THE FINANCIAL INSTITUTIONS AND OTHER ENTITIES NAMED HEREIN or in Lender Transfer Agreements, in their capacities as Lenders

OF THE SECOND PART

AND

ROYAL BANK OF CANADA, a Canadian chartered bank having a branch in Toronto, Ontario, in its capacity as Administrative Agent

OF THE THIRD PART

          WHEREAS the Borrower, the Lenders and the Agent are parties to the Prior Agreement, and the Borrower has requested the Lenders and the Agent to, inter alia, increase the amount of the credit facility and otherwise amend and restate the Prior Agreement;

          NOW THEREFORE, in consideration of the premises, the covenants herein contained and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged by each of the parties hereto, the parties agree as follows:

ARTICLE 1
INTERPRETATION

1.1 Definitions

          In this Agreement and the Schedules hereto and in all notices pursuant to this Agreement, unless something in the subject matter or context is inconsistent therewith, the following words and phrases shall have the following meanings:

“1265702 Alberta” means 1265702 Alberta ULC, an unlimited liability corporation governed by the laws of the Province of Alberta, having its principal office in Calgary, Alberta;

“1268071 Alberta” means 1268071 Alberta Ltd., a corporation governed by the laws of the Province of Alberta, having its principal office in Calgary, Alberta;

“1275708 Alberta” means 1275708 Alberta Ltd., a corporation governed by the laws of the Province of Alberta, having its principal office in Calgary, Alberta;

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“3174792 Nova Scotia” means 3174792 Nova Scotia Company, an unlimited liability company governed by the laws of the Province of Nova Scotia;

“3174793 Nova Scotia” means 3174793 Nova Scotia Company, an unlimited liability company governed by the laws of the Province of Nova Scotia;

“702 Partnership” means 702 Partnership, a general partnership established under the laws of the Province of Alberta, having its principal office in Calgary, Alberta;

“702 Subco” means 1301253 Alberta Ltd., a corporation governed by the laws of the Province of Alberta, having its principal office in Calgary, Alberta;

“Acceleration Notice” has the meaning given to it in Section 9.2;

“Accommodations” means the advance of Loans by the Lenders, the acceptance of Bankers’ Acceptances or, if applicable, the advance of BA Equivalent Advances by the Lenders and the issue of Letters of Credit by the Lenders or by the Issuing Lender on behalf of the Lenders, as applicable;

“Accounts” means the accounts and records established by the Agent pursuant to Section 4.6 to record the Borrower’s liability to the Agent and each of the Lenders in respect of the Borrowings and other amounts owing by the Borrower to the Agent and each of the Lenders hereunder;

“Additional Compensation” has the meaning given to it in Section 10.2;

“Affected Lender” has the meaning given to it in Section 4.4;

“Affiliate” means, with respect to any person:

(a)		any person which, directly or indirectly, controls, is controlled by or is under common control with, such person; and for the purposes of this definition, “control” (including, with correlative meanings, the terms “controlled by” or “under common control with”) means the power to direct or cause the direction of the management and policies of any person, whether through the ownership of voting shares or by contract or otherwise;
(b)		any person which beneficially owns or holds 10% or more of any class of shares (or in the case of a person that is not a corporation, 10% or more of the partnership or equity interest) of such person; or
(c)		any person of which 10% or more of any class of its shares (or in the case of a person that is not a corporation, 10% or more of the partnership or equity interest) is beneficially owned or held by such person or a subsidiary of such person;

and, for greater certainty, the Trust shall be deemed to be an Affiliate of the Borrower;

“Agent” means Royal when acting in its capacity as administrative agent hereunder and includes any successor administrative agent appointed pursuant to Section 11.17;

“Agent’s Account for Payments” means with respect to payments made by the Borrower or a Lender in connection with Borrowings, such accounts maintained by the Agent at the Agent’s Branch of Account;

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“Agent’s Branch of Account” means the principal office of the Agent in Toronto, Ontario or such other office or branch of the Agent in Canada as the Agent and the Borrower, each acting reasonably, may agree upon from time to time and as advised to the Lenders in writing;

“Agreeing Lender” has the meaning given to it in Section 3.15(b);

“Agreement” means this agreement, all Schedules attached hereto and any future amendments, variations or supplements thereto;

“Anniversary Date” has the meaning given to it in Section 3.15;

“Approved Fund” means any person (other than a natural person) that is (or will be) engaged in making, purchasing, holding or otherwise investing in commercial loans and similar extensions of credit in the ordinary course of business and that is administered or managed by a Lender, an affiliate of a Lender or a person or an affiliate of a person that administers or manages a Lender;

“BA Equivalent Advance” means an advance made in Canadian Dollars by a Non-Acceptance Lender as part of an Accommodation by way of Bankers’ Acceptance;

“Bankers’ Acceptances” means bankers’ acceptances denominated in Canadian Dollars in the form of either a depository xxxx, as defined in the Depository Bills and Notes Act (Canada), or a non-interest bearing xxxx of exchange, as defined in the Bills of Exchange Act (Canada), in either case issued by the Borrower which have been accepted and, if applicable, purchased by the Lenders at the request of the Borrower pursuant to either Section 3.4, 3.12 or 3.13;

“Banking Day” means a day, other than (a) Saturday and Sunday, (b) a day on which commercial banks are required to be closed in Calgary, Alberta, Xxxxxx, Xxxxxxx, Xxxxxxx, Xxxxxx or New York, New York, and (c) a day on which commercial banking institutions are required to be closed in London, England in the case of a Libor Loan;

“Borrower” means Pengrowth Corporation, a corporation governed by the laws of the Province of Alberta, having its principal office in Calgary, Alberta;

“Borrowings” means, at any given time during the term of the Agreement, the principal amount outstanding by way of Loans made by the Lenders together with the undrawn amount of all outstanding Letters of Credit and the face amount of outstanding Bankers’ Acceptances accepted by the Lenders and, if applicable, the amount required to be repaid in respect of any BA Equivalent Advance on its maturity;

“bps” means one one-hundredth of one percent;

“Branch of Account” means, with respect to each Lender (including, if applicable, in its capacity as an Issuing Lender), the branch or office of such Lender at the address set out opposite such Lender’s name on the signature pages of this Agreement or in the Lender Transfer Agreement or such other branch or office in Canada as such Lender may from time to time advise the Borrower and the other Lenders in writing; but, for purposes of delivery of any notice required to be delivered by the Agent to a Lender pursuant to Section 11.8 and for the purposes of effecting any payments to a Lender in connection with this Agreement, a Lender may specify by notice in writing to the Borrower any other branch or office of such Lender in Canada and such branch or office shall thereafter be the Branch of Account of such Lender for such purpose;

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“Bridge Agent” means Royal when acting in its capacity as administrative agent under the Bridge Credit Agreement, and includes any successor administrative agent appointed thereunder;

“Bridge Credit Agreement” means the Cdn. $600,000,000 credit agreement dated January 22, 2007 between the Borrower, the Bridge Lenders and the Bridge Agent, as amended, varied, supplemented or restated from time to time;

“Bridge Indebtedness” means all present and future indebtedness of the Borrower to the Bridge Agent and the Bridge Lenders, absolute or contingent, determined or undetermined, xxxxxx or inchoate, matured or unmatured, howsoever arising or incurred under the Bridge Credit Agreement or under any of the other Bridge Loan Documents and includes all fees, costs, expenses and indemnity obligations under any of the Bridge Loan Documents and the indebtedness of the Borrower pursuant to any judgment obtained in respect of the failure by the Borrower to perform or observe any of its obligations under any of the Bridge Loan Documents;

“Bridge Lenders” means Royal and any other lenders which are or become lenders under the Bridge Credit Agreement, for so long as they continue to be lenders or have commitments thereunder;

“Bridge Loan Documents” means the Bridge Credit Agreement, the Bridge Subordination Agreement, the Bridge Loan Party Guarantee and all other certificates, instruments and documents delivered from time to time by or on behalf of the Borrower, the Trust or a Designated Subsidiary (as defined in the Bridge Credit Agreement) in connection therewith;

“Bridge Loan Party Guarantee” means the loan party guarantee dated as of January 22, 2007 provided by the Trust and the Designated Subsidiaries (as defined in the Bridge Credit Agreement) then in existence in favour of the Bridge Agent on behalf of the Bridge Lenders, as amended, varied, supplemented or restated from time to time;

“Bridge Subordination Agreement” means the subordination agreement dated as of January 22, 2007 between the Bridge Agent, the Borrower, the Trust and the Designated Subsidiaries (as defined in the Bridge Credit Agreement) then in existence, as amended, varied, supplemented or restated from time to time;

“Business Day” means a day, other than (a) Saturday and Sunday, (b) a day on which commercial banks are required to be closed in Calgary, Alberta, Canada or Xxxxxxx, Xxxxxxx, Xxxxxx and, (c) in respect of any matters hereunder relating to U.S. Dollars, a day on which commercial banking institutions are required to be closed in New York, New York in the case of a U.S. Base Rate Loan, and a day on which commercial banking institutions are required to be closed in New York, New York or London, England in the case of a Libor Loan;

“Canadian Dollars”, “Cdn. Dollars” and the symbol “Cdn. $” each means lawful money of Canada;

“Capital Lease” means, in respect of any person, any lease of property, real or personal, which would, in accordance with Generally Accepted Accounting Principles, be required to be classified and accounted for as a capital lease on a balance sheet of a lessee, where the lessee is such person;

“Capitalized Lease Obligation” means, in respect of any person and as at any time, the amount of any obligation which would, in accordance with Generally Accepted Accounting Principles, be required to be classified and accounted for as a Capital Lease on the consolidated balance sheet of such person;

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“Xxxxxx Creek Entities” means 1268071 Alberta, 3174792 Xxxx Xxxxxx, 0000000 Nova Scotia and Xxxxxx Creek Partnership; and “Xxxxxx Creek Entity” means any one of them;

“Xxxxxx Creek Partnership” means Xxxxxx Creek Operating Partnership, a general partnership established under the laws of the Province of Alberta, having its principal office in Calgary, Alberta;

“Cdn. Prime Loans” means the advances made available by the Lenders to the Borrower pursuant to either Section 3.4 or 3.12 and on which the Borrower has agreed to pay interest in accordance with Section 5.1;

“Cdn. Prime Rate” means, with respect to Cdn. Prime Loans, the greater of:

(a)		the annual rate of interest announced from time to time by the Agent as being its reference rate then in effect for determining interest rates on Canadian Dollar denominated commercial loans made by the Agent in Canada; and
(b)		a rate of interest per three hundred and sixty-five (365) day period equal to the One Month BA Rate plus one-half of one percent (1/2%);

“CDOR Rate” means, on any day:

(a)		for Bankers’ Acceptances which have a Standard Term, the per annum rate of interest which is the rate determined as being the arithmetic average of the rates per annum (calculated on the basis of a year of three hundred and sixty-five (365) days) applicable to Canadian Dollar bankers’ acceptances having identical issue and comparable maturity dates as the Bankers’ Acceptances proposed to be issued by the Borrower displayed and identified as such on the display referred to as the “CDOR Page” (or any display substituted therefor) of Reuters Monitor Money Rates Service as at approximately 8:00 a.m. (Calgary time) on such day, or if such day is not a Business Day, then on the immediately preceding Business Day (as adjusted by the Agent in good faith after 8:00 a.m. (Calgary time) to reflect any error in a posted rate of interest or in the posted average annual rate of interest); and
(b)		for Bankers’ Acceptance which do not have a Standard Term or if the rate referred to in paragraph (a) of this definition does not appear on such CDOR Page, then the CDOR Rate, on any day, shall be the arithmetic average of the discount rate quoted by each Schedule I Reference Lender (determined by the Agent as of 8:00 a.m. (Calgary time) on such day) which would be applicable in respect of an issue of bankers’ acceptances in a comparable amount and with identical maturity dates to the Bankers’ Acceptances proposed to be issued by the Borrower on such day, or if such day is not a Business Day, then on the immediately preceding Business Day;

“Change of Control” means the initial acquisition by any person, or any persons acting jointly or in concert (as determined by the Securities Act (Alberta)), whether directly or indirectly, of Trust Units which, together with all other Trust Units held by such person or persons, constitutes, in the aggregate, more than 25% of all outstanding Trust Units;

“Commitment” means the obligation of each Lender to provide to the Borrower hereunder an aggregate principal amount by way of Loans, the issuance of Letters of Credit and the acceptance by such Lender of Bankers’ Acceptances (or, if applicable, making BA Equivalent Advances) at any one time outstanding up to but not exceeding the amount set forth opposite such Lender’s name on the signature pages hereto or in the Lender Transfer Agreement of such Lender as such Lender’s Commitment, as such amount may hereafter be increased, decreased, cancelled or terminated from time to time pursuant to this Agreement

6

and which, for greater certainty, shall in the case of a Letter of Credit issued by the Issuing Lender, only include the Issuing Lender’s Lender’s Proportion thereof;

“Commodity Swap” means an agreement entered into between the Borrower or a Designated Subsidiary and a counterparty on a case by case basis, the purpose and effect of which is to mitigate or eliminate the Borrower’s or such Designated Subsidiary’s exposure to fluctuations in commodity prices;

“Compliance Certificate” means a compliance certificate substantially in the form attached hereto as Schedule E executed on behalf of the Borrower by a Senior Officer of the Borrower;

“Conoco Corporate Entities” means 1265702 Alberta, 1265706 Alberta ULC and 1265707 Alberta ULC, each an unlimited liability corporation governed by the laws of the Province of Alberta, and each having its principal office in Calgary, Alberta; and “Conoco Corporate Entity” means any of them;

“Conoco Entities” means the Conoco Corporate Entities and the Conoco Partnership, and “Conoco Entity” means any of them;

“Conoco Partnership” means 706-707 Partnership, a general partnership established under the laws of the Province of Alberta, having its principal office in Calgary, Alberta;

“Consolidated EBITDA” means at the end of a Fiscal Quarter and as determined in accordance with GAAP for the Trust on a consolidated basis, the net income from operations plus income taxes, interest expense (including the all-in costs of any accounts receivable securitization), depreciation, depletion and amortization expense, as further adjusted by deducting non-cash revenue and adding back non-cash expenses, for the twelve month period ending on the last day of such Fiscal Quarter excluding therefrom any net income from operations and such other items that are attributable to any Non-Recourse Assets of any member of the Loan Parties or any other Subsidiary to which any Non-Recourse Debt holder’s rights, remedies and recourse are limited; provided that for the purpose of calculating Consolidated EBITDA, such calculation shall include an estimate of any EBITDA attributable to (or deducted from) assets (which shall include the acquisition or disposition of all of the Securities of a Subsidiary of the Trust) acquired (or divested) at any time during such twelve month period as if such assets were owned throughout such period or disposed of immediately prior to such period (all in a manner as determined satisfactorily to the Agent, acting reasonably) if the value of all assets acquired or disposed of during such period is in excess of an amount equal to 5% of Consolidated Tangible Assets of the Trust;

“Consolidated Senior Debt” means, as at any time, and as determined in accordance with GAAP for the Trust on a consolidated basis and without duplication (with any amounts owing in a currency other than Cdn. Dollars being calculated at the Equivalent Amount in Cdn. Dollars), all Debt but excluding in any event (without duplication):

(a)		Consolidated Subordinated Debt;
(b)		Convertible Debt; and
(c)		Non-Recourse Debt of such person except to the extent the lender thereunder has made a claim against such person for a breach of any provision of the terms and conditions of the Non-Recourse Debt in respect of which the rights, remedies and recourse of the Non-Recourse Debt holder are not limited as provided for in the definition of Non-Recourse Debt;

“Consolidated Senior Debt to Capitalization Ratio” means, as at a certain date, the ratio of Consolidated Senior Debt to Total Capitalization;

7

“Consolidated Senior Debt to EBITDA Ratio” means as at a certain date, the ratio of Consolidated Senior Debt to Consolidated EBITDA;

“Consolidated Subordinated Debt” means, as at any time, and as determined in accordance with GAAP for the Trust on a consolidated basis and without duplication (with any amounts owing in a currency other than Cdn. Dollars being calculated at the Equivalent Amount in Cdn. Dollars), all Subordinated Debt;

“Consolidated Tangible Assets” means, in respect of a person, the value of all tangible assets (including, without limitation, petroleum and natural gas rights) of such person as valued on such person’s balance sheet less (a) any tangible assets in respect of which there exists a Security Interest in respect of Non-Recourse Debt, (b) deferred revenues, (c) provision for future site restoration costs and (d) minority interests in Subsidiaries of such person, all as determined on a consolidated basis in accordance with GAAP;

“Consolidated Total Debt” means the aggregate of the Consolidated Senior Debt and Consolidated Subordinated Debt;

“Consolidated Total Debt to EBITDA Ratio” means, as at the end of any Fiscal Quarter, the ratio of Consolidated Total Debt to Consolidated EBITDA;

“Conversion” means a conversion of one type of Borrowing into another type of Borrowing pursuant to Section 3.12;

“Conversion Date” means a Banking Day that the Borrower has notified the Agent at the Agent’s Branch of Account as the date on which the Borrower has elected to convert a Borrowing or a portion thereof pursuant to Section 3.12;

“Convertible Debt” means any convertible subordinated debentures or notes created, issued or assumed by the Trust which have all of the following characteristics:

(a)		an initial final maturity or due date in respect of repayment of principal extending beyond the latest Maturity Date of any Lender under this Agreement in effect at the time such debentures or notes are created, issued or assumed;
(b)		no scheduled or mandatory payment or repurchase of principal thereunder (other than acceleration following an event of default in regard thereto or payment which can be satisfied by the delivery of Trust Units as contemplated in paragraph (f) of this definition and other than on a change of control of the Trust where a Change of Control also occurs by reason of the definition thereof in this Agreement) prior to the latest Maturity Date of any Lender under this Agreement in effect at the time such debentures or notes are created, issued or assumed;
(c)		upon and during the continuance of a Default, an Event of Default or acceleration of the time for repayment of any Term Indebtedness, any Operating Indebtedness or any Swap Indebtedness which has not been rescinded, (i) all amounts payable in respect of principal, premium (if any) or interest under such debentures or notes are subordinate and junior in right of payment to all such Term Indebtedness, Operating Indebtedness and Swap Indebtedness and (ii) no enforcement steps or enforcement proceedings may be commenced in respect of such debentures or notes;
(d)		upon distribution of the assets of the Trust on any dissolution, winding up, total liquidation or reorganization of the Trust (whether in bankruptcy, insolvency or receivership proceedings or upon an assignment for the benefit of creditors or any other marshalling of the assets and

8

		liabilities of such person, or otherwise), all Term Indebtedness, Operating Indebtedness and Swap Indebtedness shall first be paid in full, or provisions made for such payment, before any payment is made on account of principal, premium (if any) or interest payable in regard to such debentures or notes;
(e)		the occurrence of a Default or Event of Default hereunder or the acceleration of the time for repayment of any of the Term Indebtedness, any Operating Indebtedness or any Swap Indebtedness or enforcement of the rights and remedies of the Agent and the Lenders hereunder or under any other Loan Document shall not in and of themselves:

	(i)		cause a default or event of default (with the passage of time or otherwise) under such debentures or notes or the indenture governing the same; or
	(ii)		cause or permit the obligations under such debentures or notes to be due and payable prior to the stated maturity thereof; and

(f) payments of interest or principal due and payable under such debentures or notes can be satisfied, at the option of the Trust, by delivering units of the Trust in accordance with the indenture or agreement governing such debentures or notes (whether such units are received by the holders of such debentures or notes as payment or are sold by a trustee or representative under such indenture or agreement to provide cash for payment to holders of such debentures or notes);

“Crispin Partnership” means Crispin Energy Partnership, a general partnership governed by the laws of the Province of Alberta, having its principal office in Calgary, Alberta;

“Currency Swap” means an agreement entered into between the Borrower or a Designated Subsidiary and a counterparty on a case by case basis, in connection with forward rate, currency swap or currency exchange and similar currency related transactions, the purpose and effect of which is to mitigate or eliminate the Borrower’s or such Designated Subsidiary’s exposure to fluctuations in currency exchange rates;

“Debt” means, as at any time, and as determined in accordance with GAAP and without duplication (with any amounts owing in a currency other than Cdn. Dollars being calculated at the Equivalent Amount in Cdn. Dollars), all obligations, liabilities and indebtedness that would be classified as debt on a balance sheet of a person (including the notes thereto), and in any event including without limitation:

(a)		all indebtedness of such person for borrowed money;
(b)		obligations of such person pursuant to bankers’ acceptance facilities, note purchase facilities and commercial paper programs;
(c)		reimbursement obligations of such person in respect of letters of credit and letters of guarantee;
(d)		obligations of such person for the deferred purchase price of property or services which are to remain or do remain unpaid after the expiry of 120 days from the date of acquisition;
(e)		obligations of such person:

(i) to purchase indebtedness or to advance or supply funds for the payment or purchase of indebtedness of a person, including the purchase of debt securities or obligations; or

9

(ii) to make any payment, loan, advance, capital contribution or other investment in or to a person, or become or be bound by any agreement to do so, for the purpose of assuring a minimum equity, an asset base, a working capital or other balance sheet test or condition for any date or to provide funds for the payment of any debt liability, dividend or share liquidation payment, or otherwise to supply funds to or in any manner invest in such person;

		other than where any such obligations relate to payments made or to be made on behalf of any such person in the ordinary course of business in accordance with normal petroleum and natural gas industry practice pursuant to the provisions of operating agreements which require or permit joint operators under any such operating agreements to make such payments after such person has defaulted in the payment thereof;
(f)		actual amounts owed under Swap Agreements of such person upon termination of such Swap Agreements, including early termination, including, without limitation, net settlement amounts payable upon maturity and termination payments payable upon termination;
(g)		net proceeds received by such person from any accounts receivable securitization program;
(h)		indebtedness of such person secured by any Security Interest existing on property owned by such person, whether or not the indebtedness secured thereby shall have been assumed;
(i)		obligations of such person with respect to Prepaid Obligations and deferred revenues relating to third party obligations;
(j)		Capitalized Lease Obligations and obligations relating to Sale-Leaseback transactions of such person;
(k)		all redemption obligations with respect to any shares or units issued by such person which are not held by the Trust, the Borrower or a Designated Subsidiary, and which are by their terms or pursuant to any contract, agreement or arrangement:

	(i)		redeemable, retractable, payable or required to be purchased or otherwise retired or extinguished, or convertible into debt of such person in any case, prior to the then latest Maturity Date of any Lender under this Agreement, (A) at a fixed or determinable date, (B) at the option of any holder thereof, or (C) upon the occurrence of a condition not solely within the control and discretion of such person; or
	(ii)		convertible into any other shares or units described in (i) above;

		but excluding any Trust Units that may be redeemed by way of a distribution in specie of Royalty Units or other assets (excluding facilities, pipelines or other assets associated with oil and natural gas production) so long as the recipient thereof is or would thereupon become bound by the obligations of the Trust under the Subordination Agreement;
(l)		Guarantees of such person in respect of the indebtedness for borrowed money of any other person; provided that any such indebtedness for borrowed money shall include obligations of the kind described in paragraphs (a) through (k) inclusive of this definition of Debt;

and shall exclude in any event (without duplication):

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(m)		to the extent permitted by GAAP, any particular indebtedness of such person if, upon or prior to the maturity thereof, there shall have been irrevocably deposited with the proper depositary in trust the necessary funds (or evidences of indebtedness) for the payment, redemption or satisfaction of such indebtedness, and thereafter such funds and evidences of indebtedness or other security so deposited are not included in any computation of the assets of such person;
(n)		contingent obligations of such person in respect of court actions, suits or other proceedings which have not come to a final and conclusive judgment before a court of competent jurisdiction or such other person as may have jurisdiction in the premises and such person reasonably expects to be successful in the defense of such action, suit or other proceeding;
(o)		any lease or other arrangement relating to real or personal property of such person which would, in accordance with GAAP, not be accounted for as a Capital Lease of such person or as a Sale-Leaseback; and
(p)		deferred or future taxes of such person;

“Default” means any event or circumstance which, with the giving of notice or lapse of time or otherwise, would constitute an Event of Default;

“Designated Subsidiary” means each direct or indirect (as contemplated under Section 8.1(u)) wholly-owned Subsidiary of the Borrower or the Trust which has at the time granted or agreed to become bound by the Loan Party Guarantee and provided a supporting legal opinion from its counsel pursuant to Section 8.1(t);

“Discount Proceeds” means, in respect of any Bankers’ Acceptance denominated in Cdn. Dollars required to be purchased by a Lender hereunder pursuant to Sections 3.6(a) or 3.6(h), an amount (rounded to the nearest whole cent with one-half of one cent being rounded-up) determined as of the applicable Drawdown Date, Conversion Date or Rollover Date which is equal to:

Face Amount x Price

where “Face Amount” is the face amount of such Bankers’ Acceptance and “Price” is equal to:

where the “Rate” is the applicable Discount Rate expressed as a decimal on the Drawdown Date, Conversion Date or Rollover Date, as the case may be; the “Term” is the term of such Bankers’ Acceptance expressed as a number of days; and the Price as so determined is rounded-up or down to the fifth decimal place with .000005 being rounded-up;

“Discount Rate” means on any day:

(a)		with respect to an issue of Bankers’ Acceptances issued by a Schedule I Lender, the CDOR Rate on such day; and
(b)		with respect to an issue of Bankers’ Acceptances issued by a Schedule  II Lender:

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	(i)		which the Borrower has requested the Schedule II Lenders to purchase (and concurrently therewith has requested the Schedule I Lenders to purchase the Bankers’ Acceptances to be accepted by them as part of such issue of Bankers’ Acceptances), the lesser of the rate set out in paragraph (a) of this definition plus seven (7) bps and the arithmetic average of the rates on such day, as determined by the Agent, at or about 8:00 a.m. (Calgary time) on such day as being the discount rate (expressed as a rate per annum based on a year of three hundred and sixty-five (365) days) at which each Schedule II Reference Lender is offering at such time on such day for the purchase of Bankers’ Acceptances denominated in Canadian Dollars having a comparable face value and identical issue and maturity dates to the face value and issue and maturity date of the Bankers’ Acceptances proposed to be issued by the Borrower and accepted by the Schedule II Lenders on such day; and
	(ii)		which the Borrower has requested the Schedule II Lenders to purchase but has determined to market the Bankers’ Acceptances of the Schedule I Lenders issued as a part of such issue of Bankers’ Acceptances on its own, the arithmetic average of the discount rates (expressed as a rate per annum on the basis of a year of three hundred and sixty-five (365) days) at which the Bankers’ Acceptances of the Schedule I Lenders issued as a part of such issue of Bankers’ Acceptances were sold (the “Schedule I Average Cdn. Rate”) plus the lesser of (A) the difference between the Schedule I Average Cdn. Rate and the arithmetic average of the rates on such day, as determined by the Agent, at or about 8:00 a.m. (Calgary time) on such day as being the discount rate (expressed as a rate per annum based on a year of three hundred and sixty-five (365) days) at which each Schedule II Reference Lender is offering at such time on such day for the purchase of Bankers’ Acceptances denominated in Canadian Dollars having a comparable face value and identical issue and maturity dates to the face value and issue and maturity date of the Bankers’ Acceptances proposed to be issued by the Borrower and accepted by the Schedule II Lenders on such day and (B) seven (7) bps;

“Distribution” means:

(a)		any payment of the Intercompany Subordinated Debt;
(b)		any payment or other distribution of any kind or nature, such as under a royalty or net profits interest, whereby any production or revenues derived from the assets of the Borrower or any Subsidiary are paid or distributed to a person;
(c)		any declaration, order or payment of dividends or other capital distributions directly or indirectly to any holder of any shares, trust units, partnership units or other form of equity interest (“Securities”);
(d)		any redemption, retraction, purchase or other acquisition of Securities of the Borrower or any Subsidiary;
(e)		any payment of principal or other amounts in respect of indebtedness or obligations owed to a shareholder of the Borrower or an Affiliate of such shareholder;
(f)		any transfer of property by the Borrower or any Subsidiary for a consideration less than fair market value to a shareholder of the Borrower or to an Affiliate of the Borrower or such shareholder; or

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(g) any loan, advance or other payment of any kind by the Borrower or any Subsidiary to a holder of Securities in such person or an Affiliate of such holder;

provided that “Distribution” shall not include any of the foregoing if made to the Borrower or to a Designated Subsidiary;

“Drawdown Date” means a Banking Day on which the Borrower has requested Borrowings pursuant to Section 3.4;

“Effective Date” has the meaning given to it in Section 7.1;

“Energy Partnership” means the limited partnership known as Pengrowth Energy Partnership, established under the laws of the Province of Alberta, having its principal office in Calgary, Alberta;

“Engineering Report” means an engineering evaluation report in form and substance satisfactory to the Agent, acting reasonably, prepared or audited at the cost of the Borrower by independent engineers acceptable to the Agent, acting reasonably, which report shall, as of the date of such report, set forth the reserves attributable to the oil and gas properties owned by the Borrower and any Designated Subsidiaries and evaluated therein, the royalties and other burdens applicable thereto and a projection of the rate of production and future net revenue therefrom;

“Environmental Laws” means any and all federal, provincial, local and foreign statutes, laws, regulations, ordinances, rules, decrees or other governmental restrictions relating to the environment, to the release of any materials into the environment or to the manufacture, processing, distribution, use, treatment, storage, disposal, transport or handling of pollutants, contaminants, chemicals, industrial substances, toxic substances, hazardous substances or wastes but only to the extent such Environmental Laws are legally applicable to the Borrower, the Trust or any Subsidiary of the Trust;

“Equivalent Amount” in one currency (the “First Currency”) of an amount in another currency (the “Other Currency”) means, as of the date of determination, the amount of the First Currency which would be required to purchase such amount of the Other Currency at the Bank of Canada noon (Toronto time) spot rate for such currencies on such date of determination (as quoted or published from time to time by the Bank of Canada) or, if such date of determination is not a Business Day, on the Business Day immediately preceding such date of determination, or at such other rate as may have been agreed to by the Borrower and the Agent;

“Esprit Exploration” means Esprit Exploration Ltd., a corporation governed by the federal laws of Canada, having its principal office in Calgary, Alberta;

“Esprit Exchangeco” means Esprit Exchangeco Ltd., a corporation governed by the federal laws of Canada, having its principal office in Calgary, Alberta;

“Esprit Noteholders” means, collectively, the holders from time to time of the Esprit Notes;

“Esprit Note Indenture” means the note indenture dated October 1, 2004 between Esprit Acquisition Corp. (predecessor to Esprit Exploration) and Computershare Trust Company of Canada, as assigned and transferred to the Trust pursuant to a combination agreement dated July 23, 2006, as amended August 22, 2006 among Esprit Energy Trust, Esprit Exploration, the Trust and the Borrower, as the same may be amended, assigned or transferred from time to time in accordance with the provisions hereof;

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“Esprit Notes” means, collectively, any unsecured subordinated notes issued by Esprit Exploration to the Esprit Noteholders pursuant to the Esprit Note Indenture;

“Event of Default” means any of the events or circumstances specified in Section 9.1;

“Fed Funds Rate” means, for any day, the weighted average (rounded upwards, if necessary, to the next 1/100 of 1%) of the annual rates on overnight Federal funds transactions with members of the Federal Reserve System arranged by Federal funds brokers, as published on the next succeeding Business Day by the Federal Reserve Bank of New York, or, if such rate is not so published for any day that is a Business Day, the average (rounded upwards, if necessary, to the next 1/100 of 1%) of the quotations for such day on such transactions received by the Agent from three (3) Federal funds brokers of recognized standing selected by it;

“Financial Assistance” means providing or agreeing to provide (either directly or indirectly) financial assistance to any person (including, without limitation, financial assistance by way of share purchase, equity contribution, loan, guarantee or credit support arrangement of any nature whatsoever), the purpose of which is to assist such person with the repayment of indebtedness for borrowed money or the payment of any other amount which would constitute Debt;

“Fiscal Quarter” means the three month period commencing on the first day of each Fiscal Year and each successive three month period thereafter during such Fiscal Year;

“Fiscal Year” means any Loan Party’s fiscal year, as applicable, which at present commences on January 1 of each year and ends on December 31 of such year;

“Generally Accepted Accounting Principles” or “GAAP” means generally accepted accounting principles which are in effect from time to time in Canada;

“Guarantee” means any undertaking to assume, guarantee, endorse (other than the routine endorsement of cheques in the ordinary course of business), contingently agree to purchase or to provide funds for the payment of, or otherwise become liable in respect of, any obligation of any person;

“Heavy Oil Partnership” means the limited partnership known as Pengrowth Heavy Oil Partnership, established under the laws of the Province of Alberta, having its principal office in Calgary, Alberta;

“Insolvency Event” means an Event of Default specified in Section 9.1(b) or 9.1(c) hereof;

“Intercompany Subordinated Debt” means all present and future indebtedness, obligations and liabilities of the Borrower or any Designated Subsidiary to the Trust including, without limitation, those obligations arising or that may arise under the Royalty Indenture, the NPI Agreement, the Esprit Note Indenture and any Esprit Notes (but excluding any such indebtedness, obligations and liabilities to the extent sold, assigned or transferred by the Trust to one or more Designated Subsidiaries as permitted hereunder), provided that such indebtedness, obligations and liabilities are and remain fully postponed and subordinated to the Term Indebtedness, the Operating Indebtedness and the Swap Indebtedness, as provided for in the Subordination Agreement;

“Interest Date” means the last day of each month;

“Interest Determination Date” means, with respect to a Libor Loan, the date which is two (2) Business Days prior to the first day of the Libor Interest Period applicable to such Libor Loan;

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“Interest Swap” means an agreement entered into between the Borrower or a Designated Subsidiary and a counterparty on a case by case basis, in connection with interest rate swap transactions, interest rate options, cap, floor and collar transactions and other similar interest rate related transactions, the purpose and effect of which is to mitigate or eliminate the Borrower’s or such Designated Subsidiary’s exposure to fluctuations in interest rates;

“Internal Engineering Report” means an engineering evaluation report prepared by qualified internal engineering personnel of the Borrower in form and substance satisfactory to the Agent, acting reasonably, which report shall, as of the date of such report, set forth the reserves attributable to the oil and gas properties owned by the Borrower and any Designated Subsidiaries and evaluated therein, the royalties and other burdens applicable thereto and a projection of the rate of production and future net revenue therefrom;

“Issuing Lender” means the Lender from time to time which issues Letters of Credit on behalf of the other Lenders pursuant to Section 3.9 and which initially shall be Royal;

“Judgment Currency” has the meaning given to it in Section 12.2;

“Lender Transfer Agreement” means an agreement executed by a Lender, substantially in the form of Schedule F with the blanks completed;

“Lender’s Proportion” means:

(a)		in respect of each Lender, the proportion that such Lender’s Commitment bears to the Total Commitment; and
(b)		for the purpose of Section 11.11, in respect of each Lender and the Operating Lender, the proportion that such Lender’s Commitment (together with, in the case of Royal as Operating Lender, the Operating Amount), bears to the sum of the Total Commitment plus the Operating Amount;

“Lenders” means each of the financial institutions and other entities named on the signature pages hereto as Lenders and each permitted financial institution and other entity which has entered into a Lender Transfer Agreement but excluding any financial institution or other entity after it has assigned, cancelled or terminated all of its Commitment hereunder, and including Royal in its capacity as a Lender but excluding Royal or any other Lender in its capacity as Agent and “Lender” means any one of them;

“Letter of Credit” means a documentary letter of credit or demand letter of guarantee in either Canadian Dollars or U.S. Dollars issued by the Lenders or the Issuing Lender on behalf of the Lenders, as applicable, in each case for the account of the Borrower;

“Libor” means, with respect to any Libor Interest Period applicable to a Libor Loan, the per annum rate of interest determined by the Agent, based on a three hundred sixty (360) day year, rounded upwards, if necessary, to the nearest whole multiple of one-sixteenth of one percent (1/16th%), appearing on the display referred to as the “LIBOR 01 Page” (or any display substituted therefor) of Reuters Monitor Money Rates Service (or if such LIBOR 01 Page shall not be available, any successor or similar services as may be selected by the Agent) for deposits in U.S. Dollars for a period equal to the number of days in the applicable Libor Interest Period, at or about 11:00 a.m. (London, England time) on the second Business Day prior to the first day of such Libor Interest Period. If neither such “LIBOR 01 Page” nor any successor or similar service is available, then “Libor” shall mean, with respect to any such Libor Interest Period, the per annum rate of interest, based on a three hundred sixty (360) day year (rounded

15

upwards, if necessary, to the nearest one-sixteenth of one percent (1/16th%)), determined by the Agent at approximately 11:00 a.m. (London, England time) (or so soon thereafter as practicable) on the second Business Day prior to the first day of such Libor Interest Period offered to the Agent by leading banks in the London interbank market for the placing of U.S. Dollar deposits with the Agent having a term comparable to such Libor Interest Period and in an amount comparable to the principal amount of the Agent’s Lender Proportion of the applicable Libor Loan;

“Libor Interest Date” means the date falling on the last day of each Libor Interest Period; provided that if the Borrower selects a Libor Interest Period for a period longer than three (3) months, the Libor Interest Date shall be each date falling every three (3) months after the beginning of such Libor Interest Period and the date falling on the last day of such Libor Interest Period;

“Libor Interest Period” means, with respect to each Libor Loan, the period (subject to availability) of approximately one (1) month, two (2) months, three (3) months, six (6) months, nine (9) months or twelve (12) months (as selected by the Borrower and notified to the Agent pursuant to Section 3.5) commencing on and including the Drawdown Date or Conversion Date, as the case may be, applicable to such Libor Loan and ending on and including the last day of such period, and thereafter in connection with a Rollover of a Libor Loan, each successive period (subject to availability) of approximately one (1) month, two (2) months, three (3) months, six (6) months, nine (9) months or twelve (12) months (as selected by the Borrower and notified to the Agent pursuant to Section 3.5) commencing on and including the last day of the prior Libor Interest Period;

“Libor Loans” means the advances in U.S. Dollars made available by the Lenders to the Borrower pursuant to Sections 3.4, 3.12 or 3.13 and on which the Borrower has agreed to pay interest in accordance with Section 5.3;

“Loan Documents” means this Agreement, the Subordination Agreement (including for greater certainty any addition agreements thereto), the Loan Party Guarantee (including for greater certainty any addition agreements thereto) and all other certificates, instruments and documents executed and delivered to the Agent or the Lenders from time to time by or on behalf of any Loan Party in connection herewith or therewith, and “Loan Document” means any of them;

“Loan Parties” means the Borrower, the Trust and each Designated Subsidiary, and “Loan Party” means any one of them;

“Loan Party Guarantee” means the guarantee dated as of January 22, 2007 provided by the Trust and the Designated Subsidiaries then in existence to and for the benefit of the Agent and the Lenders, as amended from time to time and including, where applicable, any addition agreement substantially in the form attached as a schedule to such guarantee whereby a Designated Subsidiary agrees to be bound by such guarantee;

“Loans” means Cdn. Prime Loans, Libor Loans and U.S. Base Rate Loans;

“Majority Lenders” means, prior to the occurrence of an Event of Default, any Lender or group of Lenders having Lender’s Proportions, in aggregate, of sixty-six and two-thirds percent (66-2/3%) or more and, after the occurrence of an Event of Default, any Lender or group of Lenders having the Equivalent Amount in Canadian Dollars of Borrowings, in aggregate, of sixty-six and two-thirds percent (66-2/3%) or more;

“Manager” means Pengrowth Management Limited and its successors and permitted assigns;

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“Management Agreement” means the Amended and Restated Management Agreement dated as of May 12, 2003 between the Borrower, the Trust, Computershare Trust Company of Canada and the Manager, as the same may be amended from time to time in accordance with the provisions hereof;

“Margin” means, at any time in respect of Loans, Bankers’ Acceptances, Letters of Credit or standby fees payable hereunder, a margin, expressed as a per annum rate of interest based on a year of three hundred and sixty-five (365) days or, in the case of Libor Loans, of three hundred and sixty (360) days, payable to the Lenders with respect to Loans, Bankers’ Acceptances, Letters of Credit and standby fees payable hereunder, equal to the rate set out in the following table below the applicable Consolidated Senior Debt to EBITDA Ratio:

Consolidated Senior Debt to EBITDA Ratio

>1.00:1.00

>1.50:1.00

>2.00:1.00

>2.50:1.00

Type of

and

and

and

and

Borrowing or Fee

<1.00:1.00

<1.50:1.00

<2.00:1.00

<2.50:1.00

<3.00:1.00

>3.00:1.00

Cdn. Prime Loans and U.S. Base Rate Loans

REDACTED

REDACTED

REDACTED

REDACTED

REDACTED

REDACTED

Libor Loans, Bankers’ Acceptances and Letters of Credit

REDACTED

REDACTED

REDACTED

REDACTED

REDACTED

REDACTED

Standby Fee

REDACTED

REDACTED

REDACTED

REDACTED

REDACTED

REDACTED

“Material Acquisition” means, at any time, an acquisition (including an acquisition which is comprised of a number of transactions) by the Borrower, the Trust and/or any other Subsidiary of shares, units or other equity interests in any person or of any properties, in each case:

(a)		which is completed in the immediately preceding twelve months;
(b)		the cost of each such acquisition is in excess of REDACTED% of the Consolidated Tangible Assets of the Trust as shown on the most current financial statements of the Trust at the time of any such acquisition; and
(c)		is in respect of Voting Shares or other equity interests in any person or of any properties that the Borrower, the Trust and/or a Subsidiary continue to own at such time,

and which, when netted against each disposition by the Borrower, the Trust or any Subsidiary during the same period which is equal to or greater than REDACTED % of the Consolidated Tangible Assets of the Trust as shown on the most current financial statements of the Trust at the time of any such disposition, increases such Consolidated Tangible Assets of the Trust as shown on the most recent consolidated financial statements of the Trust at such time by more than REDACTED %;

“Material Adverse Effect” means a material adverse effect on:

(a)		the business, financial condition, operations, assets or properties of the Loan Parties taken as a whole;
(b)		the ability of the Loan Parties taken as a whole to repay the Borrowings or any other amount outstanding hereunder or under any guarantee thereof; or
(c)		the validity or enforceability of any material term of this Agreement or any other Loan Document;

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“Material Contracts” means the Trust Indenture, the Management Agreement, the Unanimous Shareholder Agreement and the Subtrust Trust Indenture, and, except to the extent any such agreement may cease to constitute a Material Contract hereunder:

(a)		the Royalty Indenture;
(b)		the NPI Agreement; and
(c)		the Esprit Note Indenture;

“Maturity Date” means June 16, 2010, or such later date to which the Maturity Date may be extended from time to time by the Agreeing Lenders pursuant to Section 3.15;

“Miscellaneous Encumbrances” means, in respect of a person, Security Interests (provided they are not of general application against the property of the relevant person, such as floating charges and general security agreements over all present and after-acquired property) on property of such person which are not otherwise Permitted Encumbrances described in paragraphs (a) through (u) of the definition of Permitted Encumbrances;

“Non-Acceptance Discount Rate” means, for any day, the Discount Rate in paragraph (a) of the definition thereof;

“Non-Acceptance Lenders” means a Lender which is not a Canadian chartered bank or which cannot accept bankers’ acceptances in the ordinary course of its business;

“Non-Agreeing Lender” has the meaning given to it in Section 3.15(b);

“Non-Recourse Assets” has the meaning given to it in the definition of Non-Recourse Debt;

“Non-Recourse Debt” means, in respect of a person, indebtedness incurred by such person to finance the construction, development or acquisition of assets from a person at arms’-length to such person, where the recourse of the lender of such indebtedness (or any agent, trustee, receiver or other person acting on behalf of the lender in respect of such indebtedness) or any judgment in respect of such indebtedness is limited, in all circumstances (other than in respect of false or misleading representations, warranties and covenants (but not including, for greater certainty, any covenant to pay such Non-Recourse Debt) customary in limited recourse financing, in respect of which the lender’s recourse is against such person on an unsecured basis) to the assets constructed, developed or acquired (including all personal property arising from or relating to such assets) (the “Non-Recourse Assets”) and in respect of which such indebtedness has been incurred;

“Non-Takeover Lender” has the meaning given to it in Section 3.3;

“NPI” means the net profits interest payable by Esprit Exploration to the NPI Owner pursuant to the NPI Agreement;

“NPI Agreement” means the net profits interest agreement dated October 1, 2004 among Esprit Exploration, as grantor, and Esprit Energy Trust, as NPI Owner, as assigned and transferred to the Trust pursuant to a combination agreement dated July 23, 2006, as amended August 22, 2006 among Esprit Energy Trust, Esprit Exploration, the Trust and the Borrower, and the assignment and novation agreement dated October 2, 2006 among the Trust, Esprit Exploration and Esprit Energy Trust, as the same may be amended, assigned or transferred from time to time in accordance with the provisions hereof;

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“NPI Owner” means the owners from time to time of the NPI;

“Oil and Gas Properties” means, at any time, the Petroleum and Natural Gas Rights owned by the Borrower or any Designated Subsidiary to which are attributed Proved Producing Reserves located in Canada, including, without limitation, the offshore jurisdictions of Canada or its provinces;

“Old System Issuer” means a Lender, other than a Non-Acceptance Lender, who does not issue Bankers’ Acceptances as depository bills under the Depository Bills and Notes Act (Canada);

“One Month BA Rate” means, on any day, the per annum rate of interest determined as being the arithmetic average of the “BA 1 month” rate applicable to Canadian Dollar Bankers’ Acceptances displayed and identified as such on the display referred to as the “CDOR Page” (or any display substituted therefor) of Reuters Monitor Money Rates Service as at approximately 8:00 a.m. (Calgary time) on such day, or if such day is not a Business Day, then on the immediately preceding Business Day (as adjusted by the Agent in good faith after 8:00 a.m. (Calgary time) or so soon thereafter as practicable to reflect any error in a posted rate of interest or in the posted average annual rate of interest); provided, however, if such a rate does not appear on such CDOR Page as contemplated, the “One Month B/A Rate” on any day shall be the thirty (30) day discount rate of the Agent (determined as at approximately 8:00 a.m. (Calgary time) on such day) which would be applicable in respect of an issuance of Bankers’ Acceptances with a term to maturity of one month issued on such day, or if such day is not a Business Day, then on the immediately preceding Business Day;

“Operating Amount” means Cdn. $35,000,000 or such other maximum amount as may be available to the Borrower from time to time under the Operating Credit Agreement;

“Operating Borrowings” means the amount of Borrowings (as defined in the Operating Credit Agreement) outstanding from time to time under the Operating Credit Agreement;

“Operating Credit Agreement” means the Cdn. $35,000,000 operating credit agreement dated as of June 16, 2006 between the Operating Lender and the Borrower as amended, varied, supplemented or restated from time to time;

“Operating Indebtedness” means the Operating Borrowings and all other present and future indebtedness of the Borrower to the Operating Lender, absolute or contingent, determined or undetermined, xxxxxx or inchoate, matured or unmatured, howsoever arising or incurred under the Operating Credit Agreement or any of the other Operating Loan Documents and includes all fees, costs, expenses and indemnity obligations under any of the Operating Loan Documents, and the indebtedness of the Borrower pursuant to any judgment obtained in respect of the failure of the Borrower to perform or observe any of its obligations under any of the Operating Loan Documents;

“Operating Lender” means Royal in its capacity as lender under the Operating Credit Agreement;

“Operating Loan Documents” means the Operating Credit Agreement, the Subordination Agreement (including for greater certainty any addition agreements thereto), the Loan Party Guarantee (including for greater certainty any addition agreements thereto) and all other certificates, instruments and documents executed and delivered from time to time by or on behalf of any Loan Party in connection therewith;

“Permitted Disposition” means, in respect of a person, any of the following:

(a) a sale or disposition of petroleum and natural gas properties (and related tangibles) resulting from any pooling, unit or farmout agreement entered into in the ordinary course of business and in

19

		accordance with sound industry practice when, in the reasonable judgment of such person, it is necessary or of advantage to do so in order to facilitate the orderly exploration, development or operation of such petroleum and natural gas properties;
(b)		a sale or disposition in the ordinary course of business and in accordance with sound industry practice in Alberta of tangible personal property that is obsolete, no longer useful for its intended purpose or being replaced in the ordinary course of business;
(c)		a sale or disposition of current, in transit or stored production from petroleum and natural gas properties made in the ordinary course of business;
(d)		the abandonment, surrender or termination of any petroleum and natural gas rights in respect thereto in the ordinary course of business and in accordance with sound industry practice;
(e)		a non-prepaid forward sale of production from petroleum and natural gas properties made in the ordinary course of business and not for speculative purposes in order to hedge against price fluctuations;
(f)		a sale or disposition of Non-Recourse Assets by such person which are subject to a Security Interest in respect of Non-Recourse Debt;
(g)		a sale or disposition of any assets or properties classified as property, plant and equipment on the balance sheet of such person including a Sale-Leaseback and any Prepaid Obligations, where the proceeds of disposition are used to repay Borrowings and permanently reduce the Total Commitment by the amount repaid;
(h)		a contribution of money or other assets to the Xxxx Creek Remediation Trust or the Sable Offshore Energy Project Environmental Restoration Fund where the aggregate amount contributed thereto in any Fiscal Year does not exceed Cdn. $5,000,000;
(i)		a sale or disposition of marketable securities of an entity other than a Subsidiary; and
(j)		a sale or disposition of any assets or properties from one Loan Party to another Loan Party;

“Permitted Encumbrances” means, in respect of a person, any of the following:

(a)		Security Interests for taxes, assessments or governmental charges which are not due or delinquent, or the validity of which such person shall be contesting in good faith if such contest will involve no risk of loss of any material part of the property of such person taken as a whole and such person shall have made adequate provision therefor in accordance with GAAP;
(b)		the Security Interests of any judgment rendered, or claim filed, against such person which such person shall be contesting in good faith if such contest will involve no risk of loss of any material part of the property of such person taken as a whole and such person shall have made adequate provision therefor in accordance with GAAP;
(c)		Security Interests imposed or permitted by law such as carriers’ liens, builders’ liens, materialmens’ liens and other liens, privileges or other charges of a similar nature which relate to obligations not due or delinquent or if due or delinquent, any lien, privilege or charge which such person shall be contesting in good faith if such contest will involve no risk of loss of any material part of the property of such person taken as a whole;

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(d)		Security Interests arising in the ordinary course of and incidental to construction or current operations which have not been filed pursuant to law against such person or in respect of which no steps or proceedings to enforce such lien have been initiated or which relate to obligations which are not due or delinquent or if due or delinquent, any lien which such person shall be contesting in good faith if such contest will involve no risk of loss of any material part of the property of such person taken as a whole and such person shall have made adequate provision therefor in accordance with GAAP;
(e)		Security Interests incurred or created in the ordinary course of business and in accordance with sound petroleum and natural gas industry practice in Alberta in respect of the joint operation of petroleum and natural gas properties or related production or processing facilities as security in favour of any other person conducting the development or operation of the property to which such Security Interests relate, for such person’s portion of the costs and expenses of such development or operation provided that such costs or expenses are not due or delinquent or, if due or delinquent, any Security Interests which such person shall be contesting in good faith if such contest will involve no risk of loss of any material part of the property of such person taken as a whole and such person shall have made adequate provision therefor in accordance with GAAP;
(f)		lessor royalties (including crown or freehold lessor royalties), overriding royalty interests, net profit interests, reversionary interests and carried interests or other similar burdens on production (but for greater certainty not including the Royalty or the NPI) in respect of such person’s petroleum and natural gas properties that are entered into with or granted to arm’s length third parties in the ordinary course of business and in accordance with sound petroleum and natural gas industry practice in Alberta provided such interests or burdens are reflected in the Engineering Reports, the Internal Engineering Reports and any other data provided with respect to the Petroleum and Natural Gas Rights of the Borrower and the Designated Subsidiaries;
(g)		Security Interests for penalties arising under non-participation provisions of operating agreements in respect of such person’s petroleum and natural gas properties if such Security Interests do not materially detract from the value of any material part of the property of such person taken as a whole;
(h)		easements, rights-of-way, servitudes, zoning or other similar rights or restrictions in respect of land held by such person (including, without limitation, rights-of-way and servitudes for railways, sewers, drains, pipe lines, gas and water mains, electric light and power and telephone or telegraph or cable television conduits, poles, wires and cables) which, either alone or in the aggregate, do not materially detract from the value of such land or materially impair its use in the operation of the business of such person taken as a whole;
(i)		any lien or trust arising in connection with workers’ compensation, unemployment insurance, pension and employment laws or regulations;
(j)		security given by such person to a public utility or any municipality or governmental or other public authority when required by such public utility or municipality or other governmental authority in the ordinary course of the business of such person in connection with operations of such person if such security is not of general application against the property of such person such as floating charges and general security agreements and if such security does not, either alone or in the aggregate, materially impair its use in the conduct of the business of such person taken as a whole;

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(k)		the right reserved to or vested in any governmental body by the terms of any lease, license, grant or permit or by any statutory or regulatory provision to terminate any such lease, license, grant or permit or to require annual or other periodic payments as a condition of the continuance thereof;
(l)		all reservations in the original grant from the Crown of any lands and premises or any interests therein and all statutory exceptions, qualifications and reservations in respect of title;
(m)		any right of first refusal in favour of any person granted in the ordinary course of business with respect to all or any of the oil and gas properties of such person;
(n)		any Security Interest the satisfaction of which has been provided for by deposit with the Agent or a court of competent jurisdiction of cash or a surety bond or other security satisfactory to the Agent in an amount sufficient to pay the liability in respect of such Security Interest in full;
(o)		Security Interests in respect of Non-Recourse Debt on the Non-Recourse Assets constructed, developed or acquired with the proceeds of the Non-Recourse Debt;
(p)		liens on cash or marketable securities of such person granted in connection with Swaps provided that (i) such Swaps do not, as a result thereof, result in a breach of Section 8.2(e) hereof; (ii) the obligations secured by such liens are not due and delinquent; and (iii) the fair market value of all such cash and marketable securities, together with the aggregate amount outstanding under any Purchase-Money Security Interests, Capital Leases, Sale-Leasebacks and Miscellaneous Encumbrances, is not at any time in excess of an amount equal to REDACTED % of Consolidated Tangible Assets of the Trust as shown on the most recent consolidated financial statements of the Trust provided to the Lenders hereunder, or the Equivalent Amount thereof in any other currency;
(q)		any Security Interest created pursuant to Section 4.9 of the Remediation Trust Maintenance Agreement as such Security Interest is in existence on the date hereof;
(r)		the Royalty, the Royalty Units and the Royalty Indenture provided that the right to receive the Royalty is at all times held by any one or more of the Trust and the Designated Subsidiaries, and provided further that if any such right is held by the Trust, the Trust’s rights and interest in such Royalty, Royalty Units and the Royalty Indenture are and remain fully postponed and subordinated to the Term Indebtedness, the Operating Indebtedness and the Swap Indebtedness as provided for in the Subordination Agreement;
(s)		the NPI and the NPI Agreement provided that the right to receive the NPI is at all times held by any one or more of the Trust and the Designated Subsidiaries, and provided further that, if any portion of the NPI is held by the Trust, the Trust’s interest in such NPI and the NPI Agreement are and remain fully postponed and subordinated to the Term Indebtedness, the Operating Indebtedness and the Swap Indebtedness as provided for in the Subordination Agreement;
(t)		any Security Interest granted to the Agent on behalf of the Lenders in respect of any cash cover as contemplated by Section 9.7;
(u)		any Security Interest from time to time disclosed by such person to the Agent and which is consented to by the Majority Lenders and the Operating Lender;
(v)		Purchase-Money Security Interests, Capital Leases and Sale-Leasebacks, provided that the aggregate amount outstanding thereunder and under any Miscellaneous Encumbrances, together with the fair market value of any cash and marketable securities covered by a lien pursuant to

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		subsection (p) of this definition, shall not at any time be greater than REDACTED % of Consolidated Tangible Assets of the Trust as shown on the most recent consolidated financial statements of the Trust provided to the Lenders hereunder, or the Equivalent Amount thereof in any other currency; and
(w)		Miscellaneous Encumbrances, provided that the aggregate amount outstanding thereunder and under any Purchase-Money Security Interests, Capital Leases and Sale-Leasebacks, together with the fair market value of any cash and marketable securities covered by a lien pursuant to subsection (p) of this definition, shall not at any time be greater than REDACTED % of Consolidated Tangible Assets of the Trust as shown on the most recent consolidated financial statements of the Trust provided to the Lenders hereunder, or the Equivalent Amount thereof in any other currency;

provided that nothing in this definition shall, in and of itself, constitute or be deemed to constitute an agreement or acknowledgment by the Agent or any Lender that the indebtedness subject to or secured by any such Permitted Encumbrance ranks (apart from the effect of any Security Interest included in or inherent in any such Permitted Encumbrance) in priority to the indebtedness of the Borrower hereunder or of the Trust or any Designated Subsidiary under the Loan Party Guarantee;

“Permitted Financial Assistance” means:

(a)		Financial Assistance provided to, or for the benefit of, a Loan Party; and
(b)		Financial Assistance (other than to, or for the benefit of, a Loan Party) in an aggregate amount not exceeding Cdn. $ REDACTED;

“Permitted Title Defects” means, in respect of any particular asset of a person, any of the following:

(a)		Permitted Encumbrances;
(b)		title defects or irregularities which are of a minor nature and in the aggregate will not materially impair the use of such asset for the purposes for which it is held, or impair its saleability, or cause a disruption or reduction in the production or cash flow (if any) associated therewith; and
(c)		title defects which are disclosed to and expressly consented to by the Majority Lenders as constituting Permitted Title Defects hereunder;

“Petroleum and Natural Gas Rights” means, in respect of a person, all of its right, title, estate and interest, whether contingent or absolute, legal or beneficial, present or future, vested or not, and whether or not an “interest in land”, at such time in and to any, or such as are stipulated, of the following, by whatever name the same are known:

(a)		rights to explore for, drill for, produce, take, save or market Petroleum Substances from or allocated to its lands or lands with which the same have been pooled or unitized;
(b)		rights to a share of the production of Petroleum Substances from or allocated to its lands or lands with which the same have been pooled or unitized;
(c)		rights to a share of the proceeds of, or to receive payments calculated by reference to the quantity or value of, the production of Petroleum Substances from or allocated to its lands or lands with which the same have been pooled or unitized;

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(d)		rights in lands or documents of title related thereto, including leases, subleases, licenses, permits, reservations, rights and privileges; and
(e)		rights to acquire any of the above rights described in paragraphs (a) through (d) of this definition,

and includes interests and rights known as working interests, royalty interests, overriding royalty interests, gross overriding interests, production payments, profits interests, net profits interests, revenue interests, net revenue interests and other economic interests;

“Petroleum Substances” means petroleum, natural gas, natural gas liquids, related hydrocarbons and any and all other substances, whether liquid, solid or gaseous, whether hydrocarbons or not, produced or producible in association with any of the foregoing;

“Prepaid Obligations” means, in respect of a person, “take-or-pay” or similar indebtedness of such person whereby such person is obligated to settle, at some future date more than 90 days from the date the obligation is incurred, payment in respect of petroleum substances, whether by deliveries (accelerated or otherwise) of petroleum substances, payment of money or otherwise howsoever, including all such obligations for which such person is liable without having received and retained a payment therefor or having assumed such obligations;

“Prior Agreement” means the Fourth Amended and Restated Credit Agreement dated June 16, 2006, as amended October 2, 2006, among the Borrower, the Lenders and the Agent;

“Production Payment” means:

(a)		the sale (including any forward sale) or other transfer of any Petroleum Substances, whether in place or when produced for a period of time until, or of an amount such that, the purchaser will realize therefrom a specified amount of money (however determined, including by reference to interest rates or other factors which may not be fixed) or a specified amount of such product; and
(b)		any other interest in property of the character commonly referred to as a “production payment”;

“Proved Producing Reserves” means those oil and gas reserves estimated as recoverable under current technology and existing economic conditions from that portion of a reservoir which can be reasonably evaluated as economically productive on the basis of analysis of drilling, geological, geophysical and engineering data, including reserves to be obtained by enhanced recovery processes demonstrated to be economic and technically successful in the subject reservoir and which are actually on production;

“Purchase-Money Security Interests” means, in respect of a person, purchase money Security Interests upon or in any tangible personal property and fixtures (including real property surface rights upon which such fixtures are located) acquired by such person in the ordinary course of business to secure the purchase price of such property or to secure indebtedness incurred solely for the purpose of financing the acquisition of such property, including any Security Interests existing on such property at the time of its acquisition (other than any such Security Interest created in contemplation of any such acquisition);

“Purchasing Lender” means each Lender in respect of whom the Borrower has made an election pursuant to Section 3.6(h) to have such Lender purchase the Bankers’ Acceptances accepted by such Lender;

“Remaining Lenders” has the meaning given to it in Section 11.17;

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“Remediation Trust Maintenance Agreement” means the Agreement to Maintain the Xxxx Creek Remediation Trust dated October 15, 1997 between Imperial Oil Resources and the Borrower, as amended from time to time;

“Request for Extension” means a request substantially in the form of Schedule G requesting an extension of the Maturity Date pursuant to Section 3.15;

“Requested Lender ” has the meaning given to it in Section 3.15;

“Rollover” means either a confirmation of a Libor Loan or a part thereof for a new Libor Interest Period or the issuance of new Bankers’ Acceptances (subject to the provisions hereof) in respect of all or a portion of Bankers’ Acceptances which are maturing, in each case pursuant to Section 3.13;

“Rollover Date” means a Business Day that the Borrower has notified the Agent at the Agent’s Branch of Account as the date on which the Borrower has elected to effect a Rollover of a Bankers’ Acceptance or a Libor Loan;

“Royal” means Royal Bank of Canada and its successors and permitted assigns;

“Royalty” means the royalty payable by the Borrower to the Royalty Unitholders pursuant to the Royalty Indenture;

“Royalty Indenture” means the Amended and Restated Royalty Indenture dated as of June 17, 2003 between the Borrower and Computershare Trust Company of Canada, for and on behalf of the Royalty Unitholders and the Trust Unitholders, as the same may be amended, assigned or transferred from time to time in accordance with the provisions hereof;

“Royalty Units” means the Royalty Units created and issued from time to time under the Royalty Indenture and “Royalty Unit” means any one of such Royalty Units;

“Royalty Unitholders” means the holders from time to time of the Royalty Units;

“Sale-Leaseback” means an arrangement under which title to any tangible personal property or fixture is transferred by a person (a “transferor”) to another person which leases or otherwise grants the right to use such property to the transferor (or nominee of the transferor), whether or not in connection therewith the transferor also acquires a right or is subject to an obligation to acquire the property, assets or interest, and regardless of the accounting treatment of such arrangement;

“Schedule I Lender” means a Lender which is a Canadian chartered bank listed on Schedule I to the Bank Act (Canada);

“Schedule I Reference Lender” means each of Royal Bank of Canada and such other Schedule I Lender as is agreed to from time to time by the Borrower and the Agent, each acting reasonably; provided that there shall be no more than two Schedule I Reference Lenders at any one time;

“Schedule II Lender” means a Lender which is a Canadian chartered bank listed on Schedule II or Schedule III to the Bank Act (Canada) (other than a Lender that is a Non-Acceptance Lender);

“Schedule II Reference Lender” means:

(a) if there is only one Schedule II Lender, such Schedule II Lender; or

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(b) if there is more than one Schedule II Lender, such Schedule II Lenders as are agreed to from time to time by the Borrower and the Agent, each acting reasonably; provided that there shall be no more than two Schedule II Reference Lenders at any one time;

“Securities” has the meaning given to it in the definition of “Distribution” hereunder;

“Security Interest” means any assignment, mortgage, charge, pledge, lien, encumbrance, title retention agreement (including, without limitation, a Capital Lease) or any security interest whatsoever, howsoever created or arising, whether absolute or contingent, fixed or floating, legal or equitable, perfected or not which secures payment or performance of an obligation but excluding a right of set-off created in the ordinary course of business unless such right of set-off is created for the purposes of securing repayment of indebtedness for borrowed money;

“Senior Officer” means any one of the Chairman, the President, the Chief Operating Officer, the Chief Financial Officer, a Vice President or the Treasurer of the Borrower;

“Standard Term” means the term to maturity of a Bankers’ Acceptance for which a quote is available in respect of such Bankers’ Acceptance on the display referred to as the “CDOR Page” (or any display substituted therefor) of Xxxxxx Monitor Money Rates Service provided such term to maturity is not less than seven (7) days and not greater than six (6) months;

“Stellar” means Stellar Resources Limited, a corporation governed by the laws of the Province of Alberta, having its principal office in Calgary, Alberta;

“Subject Maturity Date” has the meaning given to it in Section 3.15;

“Subordinated Debt” means any unsecured obligation, liability or indebtedness incurred by the Trust, the Borrower or a Subsidiary that constitutes Debt and which is subordinated to the Term Indebtedness, the Operating Indebtedness and any Swap Indebtedness then in existence and which, without limitation, has all of the following characteristics:

(a)		the maturity date thereof shall be later than the latest Maturity Date in effect at the time such obligation, liability or indebtedness is incurred, provided, however, that if the Trust, the Borrower or a Subsidiary enters into a subordinated bridge facility in connection with a material acquisition, the maturity date thereof may be prior to such latest Maturity Date so long as such Subordinated Debt matures and is repaid within six months of its incurrence;
(b)		subject to the proviso in paragraph (a) of this definition, no scheduled principal payments thereon or mandatory principal reductions thereunder are required to be made (except upon acceleration after default but subject always to the subordination agreement referred to below) until after the latest Maturity Date in effect at the time such obligation, liability or indebtedness is incurred;
(c)		if a default occurs in respect of such obligation, liability or indebtedness, the holders thereof are subject to a standstill period ending at least six months after the latest Maturity Date; and
(d)		the holders of such obligation, liability or indebtedness (or if applicable, their agent or trustee on their behalf) shall have entered into a subordination agreement with the Agent on terms and conditions satisfactory to the Majority Lenders, acting reasonably;

“Subordination Agreement” means the subordination agreement dated as of January 22, 2007 among, inter alia, the Agent, Computershare Trust Company of Canada as trustee of the Trust pursuant to the

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Trust Indenture and as trustee for and on behalf of the Royalty Unitholders and the Trust Unitholders pursuant to the Royalty Indenture, the Designated Subsidiaries then in existence and the Borrower, as amended from time to time and including, where applicable, any addition agreement substantially in the form attached as a schedule to such subordination agreement whereby a Designated Subsidiary agrees to be bound by such agreement;

“Subsidiary” means, in respect of any person:

(a)		any corporation of which securities or other ownership interests having ordinary voting power to elect a majority of the board of directors are directly or indirectly beneficially owned or controlled by such person alone or in conjunction with its other Subsidiaries; or
(b)		any partnership, trust or other person of which at least a majority of the outstanding income interests or capital, beneficial or ownership interests (however designated) are directly or indirectly owned or controlled by such person alone or in conjunction with its other Subsidiaries;

and shall include any person in like relation to a Subsidiary, and references herein to Subsidiary unless otherwise specifically indicated herein, shall be references to a Subsidiary of the Trust;

“Subtrust” means Pengrowth Holdings Trust, a trust established under the laws of the Province of Alberta by the Subtrust Trust Indenture, having its principal office in Calgary, Alberta, or the Subtrust Trustee, as the context may require;

“Subtrust Trust Indenture” means the deed of trust dated May 27, 2004 between Pengrowth Corporation and Xxxxxx Xxxxxxx, as amended from time to time;

“Subtrust Trust Units” means the trust units, if any, created and issued from time to time under the Subtrust Trust Indenture and “Subtrust Trust Unit” means any one of such Subtrust Trust Units;

“Subtrust Trustee” means Pengrowth Corporation or any successor thereto in its capacity as trustee of the Subtrust;

“Successor” has the meaning given to it in Section 8.2(b);

“Swap” means any Commodity Swap, Currency Swap or Interest Swap;

“Swap Agreement” means an agreement in any form including an ISDA master agreement between the Borrower or any Designated Subsidiary and any counterparty pursuant to which Swaps are entered into and includes all schedules attached or intended to be attached thereto, provided that entering into such Swap does not result in a breach of Section 8.2(e);

“Swap Indebtedness” means any liability of the Borrower or any Designated Subsidiary to a Swap Lender under a Swap Agreement;

“Swap Lender” means a person which, at the time that it entered into a Swap Agreement, was a Lender or the Operating Lender or an Affiliate of a Lender or the Operating Lender;

“Takeover” has the meaning given to it in Section 3.3;

“Takeover Lender” has the meaning given to it in Section 3.3;

“Takeover Loan” has the meaning given to it in Section 3.3;

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“Target” has the meaning given to it in Section 3.3;

“Taxes” means all present and future taxes, levies, imposts, stamp taxes, deductions, charges or withholdings, and all liabilities with respect thereto, and any interest, additions to tax and penalties imposed with respect thereto, excluding, with respect to the Agent or any Lender, taxes based upon or computed by reference to its income or gains or capital and franchise taxes imposed on it by any taxation authority;

“Term Indebtedness” means the Borrowings and all other present and future indebtedness of the Borrower to the Agent and the Lenders, absolute or contingent, determined or undetermined, xxxxxx or inchoate, matured or unmatured, howsoever arising or incurred hereunder or under any of the other Loan Documents and includes all fees, costs, expenses and indemnity obligations hereunder or under any of the other Loan Documents and under the indebtedness of the Borrower pursuant to any judgment obtained in respect of the failure by the Borrower to perform or observe any of its obligations under any of the Loan Documents;

“Threshold Amount” means the greater of Cdn. $ REDACTED (or the Equivalent Amount thereof in any other currency) or an amount equal to REDACTED % of Consolidated Tangible Assets of the Trust as shown on the most recent consolidated financial statements of the Trust provided to the Lenders hereunder;

“Total Capitalization” means the sum of Consolidated Total Debt and Unitholders’ Equity;

“Total Commitment” means the aggregate of the Commitments of each of the Lenders, as hereafter increased, decreased, cancelled or terminated from time to time pursuant to this Agreement, not to exceed Cdn. $1,200,000,000;

“Transaction” has the meaning given to it in Section 8.2(b);

“Trust” means Pengrowth Energy Trust, a trust established under the laws of the Province of Alberta by the Trust Indenture, or the Trustee of Pengrowth Energy Trust, as the context may require;

“Trust Indenture” means the Amended and Restated Trust Indenture dated as of June 11, 2007 between the Borrower and Computershare Trust Company of Canada, for and on behalf of the Trust Unitholders, as the same may be amended from time to time in accordance with the provisions hereof;

“Trust Unitholders” means the holders from time to time of the Trust Units;

“Trust Units” means the trust units created and issued from time to time under the Trust Indenture and “Trust Unit” means any one of such Trust Units;

“Trustee” means Computershare Trust Company of Canada or any successor thereto in its capacity as trustee of the Trust;

“Unanimous Shareholder Agreement” means the Amended and Restated Unanimous Shareholder Agreement dated as of June 11, 2007 between the Borrower, the Manager, the Trust and Computershare Trust Company of Canada, as the same may be amended from time to time in accordance with the provisions hereof;

“Unitholders’ Equity” means at any time, the unitholders’ equity in the Trust as shown on the consolidated financial statements of the Trust, plus, to the extent not included in the foregoing, the

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principal amount of any outstanding Convertible Debt minus the equity attributable to Voting Shares held by the Trust in Subsidiaries which are not Designated Subsidiaries and minus the equity attributable to any Non-Recourse Debt and any Non-Recourse Assets of the Trust and its Subsidiaries to which any such Non-Recourse Debt holder’s rights, remedies and recourse are limited and all retained earnings attributable to such Non-Recourse Assets;

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

(a)		the annual rate of interest announced from time to time by the Agent as being its reference rate then in effect for determining interest rates on U.S. Dollar denominated commercial loans made by the Agent in Canada; and
(b)		a rate of interest per three hundred sixty-five (365) day period equal to the Fed Funds Rate (equated, for these purposes, to a rate based on a year of 365 days rather than 360 days) plus one-half of one percent (1/2%);

“U.S. Base Rate Loans” means the advances in U.S. Dollars made available by the Lenders to the Borrower pursuant to either Section 3.4 or 3.12 and on which the Borrower has agreed to pay interest in accordance with Section 5.2;

“U.S. Dollars” and the symbol “U.S. $” each means lawful money of the United States of America; and

“Voting Shares” means:

(a)		share capital of any class of any corporation or securities of any other person which carry voting rights to elect the board of directors or other body exercising similar functions under any circumstances, but shares or other securities which carry the right to so vote conditionally upon the happening of an event shall not be considered Voting Shares until the occurrence of such event; and
(b)		an interest in a general partnership, limited partnership, trust or similar person which entitles the holder of such interest to receive a share of the profits, or on dissolution or partition, of the assets, of such person.

1.2 Headings and Table of Contents

          The headings, the table of contents and the Article and Section titles are inserted for convenience of reference only and shall not affect the construction or interpretation of this Agreement.

1.3 References

          Unless something in the subject matter or context is inconsistent therewith, all references to Sections, Articles and Schedules are to Sections, Articles and Schedules to this Agreement. The words “hereto”, “herein”, “hereof”, “hereunder” and similar expressions mean and refer to this Agreement.

1.4 Rules of Interpretation

          In this Agreement, unless otherwise specifically provided, the singular includes the plural and vice versa, “month” means calendar month, “quarter” means calendar quarter, “person” includes any individual, firm, partnership, company, corporation, joint venture, government, governmental body, agency or instrumentality, unincorporated body of persons or association, and “in writing” or “written”

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includes printing, typewriting, or any electronic means of communication capable of being visibly reproduced at the point of reception, including telecopier.

1.5 Generally Accepted Accounting Principles

          All financial statements required to be furnished by the Borrower to the Lenders hereunder shall be prepared in accordance with Generally Accepted Accounting Principles consistently applied. Each accounting term used in this Agreement, unless otherwise defined herein, has the meaning assigned to it under Generally Accepted Accounting Principles consistently applied and reference to any balance sheet item, statement of income and retained earnings item, statement of income and accumulated earnings item, or statement of cash flows or changes in cash position item means such item as computed from the applicable financial statement prepared in accordance with Generally Accepted Accounting Principles consistently applied.

1.6 Time

          Unless otherwise provided herein, all references to a time in this Agreement shall mean local time in Calgary, Alberta.

1.7 Payment for Value

          All payments required to be made hereunder shall be made for value on the required day in same day immediately available funds.

ARTICLE 2
REPRESENTATIONS AND WARRANTIES

2.1 Representations and Warranties

          The Borrower represents and warrants to the Agent and each of the Lenders, all of which representations and warranties shall survive the execution and delivery of this Agreement, that:

(a)		Corporate Existence of the Borrower: the Borrower is a corporation duly incorporated, validly subsisting and in good standing with respect to the filing of annual returns under the laws of the Province of Alberta and is duly registered and qualified to carry on business as a corporation under the laws of each jurisdiction in which the nature of any business conducted by it or the character of any properties and assets owned or leased by it requires such registration and qualification except to the extent failure to register or qualify would not reasonably be expected to have a Material Adverse Effect;
(b)		Existence of Corporate and Partnership Parties: each Designated Subsidiary which is a corporation is a corporation duly incorporated, validly subsisting and in good standing with respect to the filing of annual returns under the laws of its jurisdiction of incorporation, and each Designated Subsidiary which is a partnership is a partnership duly organized and subsisting under the laws of its jurisdiction of creation, and each is duly registered and qualified as an extra-provincial corporation or partnership, as applicable, under the laws of each jurisdiction in which the nature of any business transacted by it or the character of any properties and assets owned or leased by it requires such registration and qualification, except to the extent failure to register or qualify would not reasonably be expected to have a Material Adverse Effect;

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(c)		Existence of the Trusts: the Trust is a “mutual fund trust” (within the meaning of the Income Tax Act (Canada)) and each of the Trust and each Designated Subsidiary which is a trust is a trust validly created and subsisting under the laws of the Province of Alberta and is fully qualified to carry on business as a trust under the laws of each jurisdiction in which the nature of any business conducted by it or the character of any properties and assets owned or leased by it requires such qualification except to the extent failure to qualify would not reasonably be expected to have a Material Adverse Effect. As at the Effective Date, Computershare Trust Company of Canada has been duly appointed as, and is the trustee of the Trust;
(d)		Power to Carry on Business: each of the Loan Parties has full corporate, partnership or trust power and capacity, as applicable, to own and lease its properties and assets and conduct its business as presently conducted;
(e)		Authority: the execution, delivery and performance by each Loan Party of each of the Loan Documents to which it is a party:

	(i)		have been duly authorized by all necessary corporate, partnership or trust action, as applicable;
	(ii)		are within its corporate, partnership or trust power and capacity, as applicable;
	(iii)		do not violate any provision of any law or regulation binding upon it, or of its articles of incorporation or by-laws (in respect of the Borrower and any corporate Designated Subsidiaries), or of its partnership agreement (in respect of any partnership Designated Subsidiaries) or of its trust indenture (in respect of the Trust or any trust Designated Subsidiaries);
	(iv)		do not result in the breach of or constitute a default or require any consent under, or result in the creation of any Security Interest upon any of its property or assets pursuant to any indenture or other agreement or instrument to which it is a party or by which it or its property may be bound or affected including, without limitation, the Material Contracts; and
	(v)		do not require any license, consent or approval of or advance notice to or advance filing with any governmental agency or regulatory authority;

(f)		Execution and Delivery of Loan Documents: each Loan Document to which each Loan Party is a party has been duly executed and delivered by each such Loan Party;
(g)		Enforceability: each Loan Document to which each Loan Party is a party is a legal, valid and binding obligation of each such party, enforceable against it in accordance with its terms except as enforceability may be limited by general principles of equity and bankruptcy, insolvency, reorganization or similar laws affecting creditors’ rights generally and by moratorium laws from time to time in effect;
(h)		Consolidated Financial Condition of the Trust: the annual audited consolidated financial statements of the Trust for the Fiscal Year most recently ended:

(i) fairly present in all material respects the consolidated financial condition of the Trust as at the date thereof and the results of its operations for the period covered thereby; and

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(ii) have been prepared in accordance with Generally Accepted Accounting Principles consistently applied;

		and since such date, except to the extent the Borrower has otherwise advised the Agent in writing, there has been no material adverse change in the consolidated financial condition, operations or business of the Trust from that set forth in such financial statements as at such date which would reasonably be expected to have a Material Adverse Effect;
(i)		Litigation: there are no suits or proceedings (including proceedings by or before any arbitrator, government commission, board, bureau or other administrative agency) pending or, to the knowledge of the Borrower, threatened against or affecting any Loan Party which would reasonably be expected to have a Material Adverse Effect;
(j)		Compliance with Laws and Contracts: each Loan Party is in compliance with all federal, provincial, state and local laws, statutes and regulations and all contracts, agreements and employee benefit plans except to the extent failure to so comply would not reasonably be expected to have a Material Adverse Effect;
(k)		Environmental Matters: each Loan Party and each Subsidiary has obtained all permits, licenses and other authorizations which are required under all applicable Environmental Laws except to the extent failure to have any such permit, license or authorization would not reasonably be expected to have a Material Adverse Effect; and each Loan Party and each Subsidiary is in compliance with all Environmental Laws and all terms and conditions of all such permits, licenses and authorizations, except to the extent failure to comply would not reasonably be expected to have a Material Adverse Effect;
(l)		Environmental Condition of Property: the properties and assets of each Loan Party and each Subsidiary:

	(i)		are not the subject of any outstanding orders from a governmental agency or regulatory authority or otherwise alleging violation of any Environmental Laws; and
	(ii)		comply, with respect to their use and condition, with all Environmental Laws and all terms and conditions of all permits, licenses and other authorizations, which are required under all Environmental Laws, except to the extent failure to comply would not reasonably be expected to have a Material Adverse Effect;

(m)		Events of Default: no Default or Event of Default has occurred which is continuing;
(n)		Title to Assets: subject only to Permitted Title Defects, each Loan Party has good, valid and marketable title to all of its assets and properties and, except for Permitted Encumbrances, such assets and properties are not subject to any Security Interests;
(o)		Taxes: each Loan Party has filed all income tax returns which were required to be filed by it and has paid or made provision for payment of all Taxes which are due and payable by it, except for Taxes the payment of which is being contested by it in good faith and for which provision has been made for adequate reserves;
(p)		Oil and Gas Information: to the best of the knowledge of the Borrower after due enquiry, all Engineering Reports and Internal Engineering Reports and other related data provided by the Borrower to the Agent or the Lenders with respect to the Petroleum and Natural Gas Rights of the

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		Borrower and the Designated Subsidiaries are accurate as at the date prepared and fairly reflect the matters described therein;
(q)		Accuracy of Information: all information, materials and documents, including environmental reports and data, prepared by the Borrower and delivered to the Agent were true, complete and accurate in all material respects as at their respective dates, except to the extent that any inaccuracies would not have a Material Adverse Effect;
(r)		Designated Subsidiaries: as at the Effective Date, the Subtrust, the Energy Partnership, the Heavy Oil Partnership, Stellar, the Crispin Partnership, the Xxxxxx Creek Entities, Esprit Exploration, Esprit Exchangeco, 1275708 Alberta, the Conoco Entities, 702 Subco and 702 Partnership are the only Designated Subsidiaries;
(s)		Designated Subsidiaries Asset Test: as at the Effective Date, the Consolidated Tangible Assets of the Loan Parties (determined on an unconsolidated basis and excluding inter-company items) is not less than 85% of the Consolidated Tangible Assets of the Trust;
(t)		Material Contracts: as at the Effective Date, there are no contracts or agreements between the Trust and the other Loan Parties (or any one or more of the other Loan Parties) other than those evidencing existing Intercompany Subordinated Debt and certain Material Contracts, which provide for or create any obligation of such Loan Party to make payments to the Trust by way of cash, distributions or the transfer of any of such Loan Party’s Petroleum and Natural Gas Rights, including, without limitation, any payments on account of indebtedness for borrowed money owed to the Trust, or which provide for or create any receivables payable to the Trust. As of the Effective Date, neither the Borrower nor any Designated Subsidiary is in default of any Material Contract;
(u)		Intercompany Subordinated Debt, Royalty Units, NPI and Esprit Notes: as at the Effective Date: the Trustee holds 100% of the Royalty Units; the Trust holds 100% of the NPI and all of the other Intercompany Subordinated Debt; and there are no Esprit Notes issued and outstanding;
(v)		Shares of Borrower: as at the Effective Date, the Trust is the legal and beneficial owner of at least 90.9% of the common shares of the Borrower, and the Manager is the legal and beneficial owner of no more than 9.1% of the common shares of the Borrower;
(w)		Capital of Borrower: as at the Effective Date, the Borrower’s issued capital consists only of common shares; and
(x)		Shares of Subsidiaries: as at the Effective Date:

	(i)		the Borrower is the legal and beneficial owner of all of the issued and outstanding shares of Stellar, 1268071 Alberta and 1275708 Alberta;
	(ii)		the Trust is the legal and beneficial owner of all of the ownership interests of the Subtrust, including any Subtrust Trust Units, and of all of the issued and outstanding shares of Esprit Exchangeco;
	(iii)		the Trust and Esprit Exchangeco are the legal and beneficial owners of all of the issued and outstanding shares of Esprit Exploration;

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	(iv)		Stellar is the general partner of each of the Energy Partnership and the Heavy Oil Partnership and is the managing partner of the Crispin Partnership;
	(v)		the Borrower and Stellar are the only partners in each of the Energy Partnership, the Heavy Oil Partnership and the Crispin Partnership;
	(vi)		1268071 Alberta is the legal and beneficial owner of all of the issued and outstanding shares of 3174792 Nova Scotia;
	(vii)		3174792 Nova Scotia is the legal and beneficial owner of all of the issued and outstanding shares of 3174793 Nova Scotia;
	(viii)		3174792 Nova Scotia and 3174793 Nova Scotia are the only partners in the Xxxxxx Creek Partnership, and 3174793 Nova Scotia is the managing partner of the Xxxxxx Creek Partnership;
	(ix)		1275708 Alberta is the legal and beneficial owner of all of the issued and outstanding shares of each Conoco Corporate Entity, and 1265707 Alberta ULC and 1265706 Alberta ULC are the only partners in the Conoco Partnership; and
	(x)		0000000 Alberta is the legal and beneficial owner of all of the issued and outstanding shares of 702 Subco; and
	(xi)		the Borrower, 1265702 Alberta, 702 Subco, Energy Partnership, Crispin Partnership, Esprit Exploration and the Conoco Partnership are the only partners in the 702 Partnership.

2.2 Deemed Representation and Warranty

          Each request by the Borrower for Borrowings pursuant to Section 3.4 or for a conversion of Borrowings pursuant to Section 3.12 or for a Rollover of Libor Loans or Bankers’ Acceptances pursuant to Section 3.13 shall be deemed to be a representation and warranty by the Borrower to the Agent and each of the Lenders that as of the date of such request and as of the applicable Drawdown Date, Conversion Date or Rollover Date there exists no Default or Event of Default and, in the case of a request by the Borrower for Borrowings pursuant to Section 3.4 or delivery of a Request for Extension, that the matters referred to in Section 2.1 are, as of the applicable Drawdown Date or date of extension of the Maturity Date pursuant to Section 3.15, true and correct in all material respects as of each such date.

ARTICLE 3
THE CREDIT FACILITY

3.1 Amendment and Restatement and Obligations of Each Lender

(a) Amendment and Restatement:

(i) Relying on each of the representations and warranties set out in Article 2 and subject to the terms and conditions of this Agreement, the Lenders, the Agent and the Borrower agree that, effective on the Effective Date, the Prior Agreement shall be amended in its entirety on the terms and conditions of this Agreement and that all indebtedness and liability of the Borrower to the Lenders and the Agent under the Prior Agreement including, without limitation, “Borrowings” (as defined under the Prior Agreement) and

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			accrued and unpaid interest and fees thereon and standby fees accrued thereunder, shall be construed as indebtedness and liability of the Borrower to the Lenders and the Agent under this Agreement.
	(ii)		The Borrower, the Agent and the Lenders acknowledge and agree that on the Effective Date, the Borrowings may not be outstanding in accordance with the Lender’s Proportion of each Lender and, in order to ensure that such Borrowings will be outstanding in accordance with the Lender’s Proportion of each Lender as soon as possible, agree as follows:

	(A)		to make such adjustments to all Cdn. Prime Loans and U.S. Base Rate Loans so that such Loans are outstanding in accordance with the Lender’s Proportion of each Lender;
	(B)		to allocate all new Borrowings in such manner and for such period of time as is necessary to ensure that Borrowings outstanding with the Lenders are outstanding in accordance with the Lender’s Proportion of each Lender as soon as reasonably possible; and
	(C)		until such time as the Borrowings are outstanding in accordance with the Lender’s Proportion of each Lender, the definition of Majority Lenders shall be determined based on Borrowings outstanding rather than on the Total Commitment;

provided that nothing herein shall require that a Lender have Borrowings outstanding at any time in excess of its Commitment. The Borrower, the Agent and the Lenders further acknowledge that on the Effective Date there will be Banker’s Acceptances outstanding in the principal amount of $190,000,000 maturing June 25, 2007 (the “Existing BAs”), and agree that each Lender (an “Existing BA Lender”) who accepted the Existing BAs shall remain liable for its obligations thereunder, and for greater certainty, the Lenders shall have no obligation to indemnify the Existing BA Lenders in respect of the Existing BAs.

(b) Obligations of each Lender: Relying on each of the representations and warranties set out in Article 2 and subject to the terms and conditions of this Agreement, each Lender hereby severally agrees to make Accommodations available to the Borrower up to the amount of its Commitment for the purposes set forth in Section 3.2, provided that at no time shall the Equivalent Amount in Canadian Dollars of the Borrowings outstanding hereunder exceed the Total Commitment. Accommodations shall be available from each Lender from and after the Effective Date until the earlier of the Maturity Date of such Lender and the day on which an Event of Default occurs, and shall be available by way of:

	(i)		Loans: the advance of Loans by such Lender and the delivery of the proceeds of such advance for the account of the Borrower through the Agent at the Agent’s Account for Payments;
	(ii)		Bankers’ Acceptances: either:

(A) the acceptance of Bankers’ Acceptances (or the making of a BA Equivalent Advance) by such Lender and the delivery of the discounted proceeds of sale received by such Lender (or the amount of the BA Equivalent Advance) (less the applicable fees payable by the Borrower to such Lender pursuant to Section 5.4)

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			in respect thereof for the account of the Borrower through the Agent at the Agent’s Account for Payments; or
	(B)		the acceptance and purchase of Bankers’ Acceptances (or the making of a BA Equivalent Advance) by such Lender if it is a Purchasing Lender and the delivery of the Discount Proceeds in respect of such Bankers’ Acceptances (or BA Equivalent Advance) (less the applicable fees payable by the Borrower to such Lender pursuant to Section 5.4) for the account of the Borrower through the Agent at the Agent’s Account for Payments; and

(iii) Letters of Credit: the issuance of Letters of Credit in Canadian Dollars or U.S. Dollars by the Issuing Lender on behalf of the Lenders or by the Lenders; provided that the aggregate of the Equivalent Amount in Canadian Dollars of all Letters of Credit outstanding hereunder shall not at any time exceed Cdn. $50,000,000.

(c)		Several Obligations: No Lender shall be responsible for the Commitment of any other Lender. The failure of a Lender to make available its share of any Accommodation in accordance with this Agreement shall not release any other Lender from its obligations hereunder.
		For greater certainty, no Lender shall have any obligation to make any Loans, accept Bankers’ Acceptances or make BA Equivalent Advances or issue Letters of Credit if, after giving effect thereto, Borrowings from such Lender would at any time exceed its Commitment.
(d)		Nature of Credit Facility: Prior to the Maturity Date of each Lender, the credit facility provided hereunder is a revolving credit facility and the Borrower may increase or decrease Borrowings from such Lender by obtaining Loans, Bankers’ Acceptances and BA Equivalent Advances or Letters of Credit and by making repayments in respect thereof.
(e)		Ranking: All Term Indebtedness, Operating Indebtedness and Swap Indebtedness shall rank in right of payment in priority to the Intercompany Subordinated Debt, the Convertible Debt and the Subordinated Debt.

3.2 Purpose

          Accommodations shall be available for the general corporate purposes of the Borrower.

3.3 Takeover

          In the event the Borrower wishes to utilize Borrowings to fund, or to provide funds to any Subsidiary to fund, any offer to acquire (which shall include an offer to purchase securities, solicitation of an offer to sell securities, an acceptance of an offer to sell securities, whether or not the offer to sell was solicited, or any combination of the foregoing) outstanding securities of any person (other than a private issuer as defined under the Securities Act (Alberta) or a corporation or limited partnership whose shares or units are directly or indirectly held by one person) (the “Target”) where, as of the date of the offer to acquire, the securities that are subject to the offer to acquire, together with the securities of such person that are beneficially owned, or over which control or direction is exercised, by the Borrower and its Subsidiaries and any person acting jointly or in concert with any thereof on the date that the offer to acquire is made, constitute in the aggregate the lesser of such percentage of outstanding securities as is considered to be a “takeover bid” under any law or regulation applicable to the Target and ten percent (10%) or more of all of the outstanding securities of that class of securities of the person (a “Takeover”), then either:

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(a)		Agreement of the Target: prior to or concurrently with delivery of any notice to the Agent pursuant to Section 3.4 requesting one or more Accommodations the proceeds of which are to be utilized to finance such Takeover, the Borrower shall provide to the Agent evidence satisfactory to the Agent (acting reasonably) that the board of directors or like body of the Target has approved or recommended to security holders acceptance of the Takeover; or
(b)		No Conflict by Lenders: the following steps shall be followed:

	(i)		at least seven (7) Business Days prior to the delivery of any notice to the Agent pursuant to Section 3.4 requesting Accommodations intended to be utilized for such Takeover, the President, the Chief Executive Officer, the Chief Operating Officer, the Chief Financial Officer or the Treasurer of the Borrower shall advise the Agent (who shall promptly advise an appropriate officer of each Lender) of the particulars of such Takeover in sufficient detail to enable such Lender to determine whether it has a conflict of interest if Accommodations from such Lender are utilized by the Borrower for such Takeover;
	(ii)		within five (5) Business Days of being so advised, each Lender shall notify the Agent of such Lender’s determination, acting reasonably, as to whether such a conflict of interest exists (such determination to be made by such Lender in the exercise of its sole discretion having regard to such considerations as it deems appropriate), provided that in the event such Lender does not so notify the Agent within such five (5) Business Day period, such Lender shall be deemed to have notified the Agent that it has such a conflict of interest; and
	(iii)		the Agent shall promptly notify the President, the Chief Executive Officer, the Chief Operating Officer, the Chief Financial Officer or the Treasurer of the Borrower of each Lender’s determination or deemed determination;

		and in the event that any Lender has, or is deemed to have, such a conflict of interest, then upon the Agent so notifying the Borrower, such Lender shall have no obligation to provide Accommodations for such Takeover notwithstanding any other provision of this Agreement to the contrary; provided, however, that each other Lender (a “Takeover Lender”) which has no such conflict of interest shall have an obligation, up to the amount of its Commitment, to provide Accommodations for such Takeover, and any such Accommodations provided for such Takeover shall be provided by each Takeover Lender in accordance with the ratio that its Lender’s Proportion bears to the aggregate of the Lender’s Proportions of all the Takeover Lenders; and
(c)		Takeover Loans: if Accommodations are utilized for the purposes of a Takeover (a “Takeover Loan”) and there are Lenders other than Takeover Lenders (the “Non-Takeover Lenders”), the Lender’s Proportion of each Non-Takeover Lender shall be temporarily adjusted in accordance with Section 3.3(b) and, as applicable, subsequent Borrowings shall be funded firstly by Non-Takeover Lenders and subsequent repayments shall be applied firstly to Takeover Lenders, in each case until such time as the Lender’s Proportion of each Takeover Lender and Non-Takeover Lender is equal to such Lender’s Proportion in effect immediately prior to the advance of the Takeover Loan.

3.4 Borrowings

          Subject to the provisions of this Agreement, the Borrower may borrow, repay and reborrow by way of Accommodations from each Lender up to the lesser of such Lender’s Commitment and its Lender’s Proportion of the Total Commitment:

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(a) Cdn. Prime Loans: by way of Cdn. Prime Loans from the Lenders in minimum aggregate amounts of Cdn. $10,000,000 and in multiples of Cdn. $1,000,000 thereafter upon same day prior written notice for amounts less than or equal to Cdn. $20,000,000 and upon one (1) Business Day prior written notice for amounts greater than Cdn. $20,000,000;

(b) U.S. Base Rate Loans: by way of U.S. Base Rate Loans from the Lenders in minimum aggregate amounts of U.S. $10,000,000 and in multiples of U.S. $1,000,000 thereafter upon same day prior written notice for amounts less than or equal to U.S. $20,000,000 and upon one (1) Business Day prior written notice for amounts greater than U.S. $20,000,000;

(c) Libor Loans: by way of Libor Loans from the Lenders in minimum aggregate amounts of U.S. $10,000,000 and multiples of U.S. $1,000,000 thereafter upon at least three (3) Business Days prior written notice;

(d) Bankers’ Acceptances: by way of Bankers’ Acceptances accepted by the Lenders in minimum aggregate amounts of at least Cdn. $10,000,000 and multiples of Cdn. $1,000,000 thereafter upon one (1) Business Day prior written notice; and

(e) Letters of Credit: by the way of the issue of Letters of Credit in Canadian Dollars or U.S. Dollars upon at least three (3) Business Days prior written notice;

each such notice to be given to the Agent at the Agent’s Branch of Account by 10:00 a.m. (Calgary time) on the day such notice is to be given and to be substantially in the form of Schedule A; provided that with respect to any requests for Cdn. Prime Loans and U.S. Base Rate Loans where no more than same day prior written notice is required to be given, each such notice shall be given by 8:00 a.m. (Calgary time). Notwithstanding the foregoing, any such notice may be given by telephone and in such case shall be followed by delivery on the day of such telephone notice of a written confirmation by the Borrower to the Agent or Lender, as applicable, of such telephone notice.

3.5 Selection of Libor Interest Periods

          If the Borrower elects to borrow by way of a Libor Loan pursuant to Section 3.4, elects to convert a Borrowing into a Libor Loan pursuant to Section 3.12 or elects to Rollover a Libor Loan pursuant to Section 3.13, the Borrower shall, prior to the beginning of the Libor Interest Period applicable to such Libor Loan, in accordance with the same period of notice required for the initial drawdown of a Libor Loan as set forth in Section 3.4, select and notify the Agent at the Agent’s Branch of Account in writing, of the Libor Interest Period (which shall begin and end on a Business Day) applicable to such Libor Loan.

3.6 Conditions Applicable to Bankers’ Acceptances and BA Equivalent Advances

(a) Acceptance of Bankers’ Acceptances: Subject to the terms and conditions of this Agreement, each Lender hereby agrees to accept its Lender’s Proportion of Bankers’ Acceptances issued by the Borrower pursuant to Sections 3.4, 3.12 and 3.13. The Borrower shall market all Bankers’ Acceptances accepted by the Lenders on its own (except for Old System Issuers which shall in all instances purchase the Bankers’ Acceptances accepted by them) unless it elects, pursuant to Section 3.6(h), to require the applicable Lenders referred to in Section 3.6(h) to purchase such Bankers’ Acceptances at the applicable Discount Rate and provide to the Agent for the account of the Borrower the Discount Proceeds less the applicable fees payable to the Borrower to such Lender pursuant to Section 5.4. Notwithstanding that the Borrower has not elected to have the Lenders purchase Bankers’ Acceptances issued by it, the Borrower may request that any Lender

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		quote for the purchase of Bankers’ Acceptances accepted by any Lender and any such Lender may or may not so quote; provided that in such circumstances nothing herein shall obligate any such Lender to purchase Bankers’ Acceptances or require the Borrower to sell Bankers’ Acceptances to any such Lender. Any Lender may at any time and from time to time hold, sell, rediscount or otherwise dispose of any or all Bankers’ Acceptances purchased by it.
(b)		Delivery of Notice where Borrower is marketing its own Bankers’ Acceptances: If the Borrower has not elected to have the Lenders purchase Bankers’ Acceptances to be issued by it, the Borrower shall, at or prior to 10:00 a.m. (Calgary time) on the Drawdown Date, Conversion Date or Rollover Date relating to any Bankers’ Acceptances to be issued hereunder, deliver to the Agent at the Agent’s Branch of Account written notice with respect to such Bankers’ Acceptances in the form of Schedule B hereto.
(c)		Payment to Borrower: On the Drawdown Date, Conversion Date or Rollover Date relating to any issue of Bankers’ Acceptances:

(i) on any Drawdown Date, each Lender shall:

	(A)		if such Lender is not a Purchasing Lender, deliver the discounted proceeds of the sale of such Bankers’ Acceptances received by it (less any fees payable to such Lender in respect thereof pursuant to Section 5.4), for the account of the Borrower through the Agent at the Agent’s Account for Payments; and
	(B)		if such Lender is a Purchasing Lender, deliver the Discount Proceeds of the Bankers’ Acceptances purchased by it (less any fees payable to such Lender in respect thereof pursuant to Section 5.4) for the account of the Borrower through the Agent at the Agent’s Account for Payments;

	(ii)		on any Rollover Date relating to any Rollover of Bankers’ Acceptances, the Borrower shall be liable to each Lender for the principal amount of maturing Bankers’ Acceptances accepted by such Lender; in order to satisfy the continuing liability of the Borrower to each such Lender for the principal amount of the maturing Bankers’ Acceptances, each such Lender shall receive and retain for its own account the discounted proceeds of sale of such new Bankers’ Acceptances or the Discount Proceeds from the purchase by such Lender of such Bankers’ Acceptances, as applicable, and the Borrower shall on the maturity date of the maturing Bankers’ Acceptances pay to each such Lender, through the Agent at the Agent’s Account for Payments, an amount equal to the difference between the principal amount of the maturing Bankers’ Acceptances and the discounted proceeds of sale or the Discount Proceeds, as applicable, from the new Bankers’ Acceptances together with the fee to which each such Lender is entitled pursuant to Section 5.4; and
	(iii)		on any Conversion Date relating to Bankers’ Acceptances:

(A) in the case of a Conversion from a Cdn. Prime Loan into Bankers’ Acceptances, in order to satisfy the continuing liability of the Borrower to each Lender for the amount of the converted Borrowing, each such Lender shall receive for its own account the discounted proceeds of sale of the Bankers’ Acceptances or the Discount Proceeds from the purchase by such Lender of such Bankers’ Acceptances, as applicable, and the Borrower shall on the Conversion Date pay to each such Lender, through the Agent at the Agent’s Account for Payments, the difference between the principal amount of the converted Borrowing and the

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			discounted proceeds of sale or the Discount Proceeds, as applicable, from such Bankers’ Acceptances together with the fee to which each such Lender is entitled pursuant to Section 5.4;
	(B)		in the case of a Conversion from a Libor Loan or U.S. Base Rate Loan into a Bankers’ Acceptance, the Borrower shall be responsible for the payment to each Lender of the Libor Loan or U.S. Base Rate Loan being converted and may use the discounted proceeds of sale of such Bankers’ Acceptances or the Discount Proceeds from the purchase by such Lender of such Bankers’ Acceptances, as applicable, less any fees to which such Lender is entitled, to purchase U.S. Dollars in order to make such payment; and
	(C)		in the case of a Conversion from Bankers’ Acceptances to another type of Accommodation, in order to satisfy the continuing liability of the Borrower to each Lender for an amount equal to the face amount of such Bankers’ Acceptances, the Agent and each such Lender shall record the obligation of the Borrower to each such Lender as a Borrowing of the type into which the maturing Bankers’ Acceptance has been converted; provided that in the case of a conversion into U.S. Dollars, the Borrower shall be responsible for payment to such Lender of an amount in Canadian Dollars equal to the principal amount of the Bankers’ Acceptance being converted.

(d) Waiver of Presentment and Other Conditions: The Borrower waives presentment for payment and, except to the extent of the gross negligence or willful misconduct of the Lenders referred to in the Power of Attorney Terms – Bankers’ Acceptances set out in Schedule H, any other defence to payment of any amounts due to any Lender in respect of a Bankers’ Acceptance accepted and, if applicable, purchased by it pursuant to this Agreement which might exist solely by reason of such Bankers’ Acceptance being held, at the maturity thereof, by such Lender in its own right and the Borrower agrees not to claim any days of grace if such Lender as holder sues the Borrower on the Bankers’ Acceptance for payment of the amount payable by the Borrower thereunder. On the specified maturity date of a Bankers’ Acceptance, or such earlier date as may be required or permitted pursuant to the provisions of this Agreement, the Borrower shall pay the Agent on behalf of the Lender that has accepted such Bankers’ Acceptance the full face amount of such Bankers’ Acceptance or, if applicable, shall effect a Conversion or Rollover of such Bankers’ Acceptances and make such additional payments, if any, as are required pursuant to Section 3.6(c).

(e) Terms of Each Bankers’ Acceptance: Each Bankers’ Acceptance shall:

	(i)		have a maturity date which shall be on a Business Day;
	(ii)		subject to availability, have a Standard Term (excluding days of grace) or, with the consent of the Agent, such consent not to be unreasonably withheld, and subject to availability, have a term which is not a Standard Term;
	(iii)		be denominated in the amount of Cdn. $100,000 and whole multiples thereof; and
	(iv)		be in the standard form of each Lender;

It is the intention of the parties that pursuant to the Depository Bills and Notes Act (Canada) (“DBNA”), all Bankers’ Acceptances accepted by the Lenders (other than the Old System Issuers)

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under this Agreement shall be issued in the form of a “depository xxxx” (as defined in the DBNA), deposited with the Canadian Depository for Securities Ltd. (“CDS”) and will be made payable to CDS & Co. In order to give effect to the foregoing, the Agent for the Lenders (other than the Old System Issuers) shall, subject to the approval of the Borrower and the Lenders (other than the Old System Issuers), establish and notify the Borrower and the Lenders (other than the Old System Issuers) of any additional procedures, consistent with the terms of this Agreement, as are reasonably necessary to accomplish such intention, including, without limitation:

	(A)		any instrument held by the Agent for the purposes of Bankers’ Acceptances shall have marked prominently and legibly on its face and within its text, at or before the time of issue, the words “This is a depository xxxx subject to the Depository Bills and Notes Act (Canada)”;
	(B)		any reference to the authentication of the Bankers’ Acceptance will be removed; and
	(C)		any reference to “bearer” will be removed and such Bankers’ Acceptance shall not be marked with any words prohibiting negotiation, transfer or assignment of it or of an interest in it.

(f)		Power of Attorney: As a condition precedent to each Lender’s obligation to accept and, if applicable, purchase Bankers’ Acceptances hereunder, the Borrower agrees to the Power of Attorney Terms — Bankers’ Acceptances set out in Schedule H hereto.
(g)		Failure to Give Notice of Repayment: If the Borrower fails to give notice to the Agent at the Agent’s Branch of Account of the method of repayment of a Bankers’ Acceptance prior to the date of maturity of such Bankers’ Acceptance in accordance with the same period of notice required for the original acceptance of such Bankers’ Acceptance as set forth in Section 3.4, the face amount of such Bankers’ Acceptance shall be converted on its maturity to a Cdn. Prime Loan pursuant to Section 3.12.
(h)		Lenders to Purchase: The Borrower shall be entitled to elect to have:

	(i)		each and every Lender purchase all, but not less than all, of any Bankers’ Acceptances issued by the Borrower and accepted by each such Lender and forming a part of the same issue of Bankers’ Acceptances; or
	(ii)		each and every Schedule II Lender purchase all, but not less than all, of any Bankers’ Acceptances issued by the Borrower and accepted by each such Lender and forming a part of the same issue of Bankers’ Acceptances;

in each case on any Drawdown Date, Conversion Date or Rollover Date by advising the applicable Lenders of such election in any written notice of Borrowing by way of Bankers’ Acceptances in the form of Schedule A or notice of Conversion of a Borrowing to Bankers’ Acceptances in the form of Schedule C or any notice of Rollover of Bankers’ Acceptances in the form of Schedule D. If the Borrower fails to advise the applicable Lenders of any such election in any such written notice, it shall be deemed not to have elected to have any of such Lenders purchase such Bankers’ Acceptances except in the case of Old System Issuers which shall purchase all Bankers’ Acceptances accepted by them.

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(i)		BA Equivalent Advances: Notwithstanding the foregoing provisions of this Section 3.6, a Non-Acceptance Lender shall, in lieu of accepting Bankers’ Acceptances, make a BA Equivalent Advance. The amount of each BA Equivalent Advance shall be equal to the Discount Proceeds which would be realized from a hypothetical sale of those Bankers’ Acceptances which, but for this Section 3.6(i), such Lender would otherwise be required to accept as part of such an Accommodation by way of Bankers’ Acceptances. To determine the amount of such Discount Proceeds, the hypothetical sale shall be deemed to take place at the Non-Acceptance Discount Rate. Any BA Equivalent Advance shall be made on the relevant Drawdown Date, Conversion Date or Rollover Date, as the case may be and shall remain outstanding for the term of the Bankers’ Acceptances issued concurrently therewith. Concurrently with the making of a BA Equivalent Advance, a Non-Acceptance Lender shall be entitled to deduct therefrom an amount equal to the acceptance fee which, but for this Section 3.6(i), such Lender would otherwise be entitled to receive as part of such issue of Bankers’ Acceptances. The BA Equivalent Advance shall accrue interest at a rate per annum equal to the Non-Acceptance Discount Rate for such Bankers’ Acceptance for the term of such BA Equivalent Advance. Upon the maturity date for such Bankers’ Acceptances, the Borrower shall pay to each Non-Acceptance Lender, in satisfaction of the BA Equivalent Advance and interest accrued thereon, an amount equal to the face amount of the Bankers’ Acceptance which, but for this Section 3.6(i), such Lender would otherwise have been required to accept as part of such Accommodation by way of Bankers’ Acceptance, failing which such amount shall be converted to a Cdn. Prime Loan.
		All BA Equivalent Advances made by a Non-Acceptance Lender shall, if requested by such Lender, be evidenced by promissory notes of the Borrower in form and substance satisfactory to the Borrower and such Lender, each acting reasonably.
		All references herein to “Bankers’ Acceptances” shall, unless otherwise expressly provided herein or unless the context otherwise requires, be deemed to include BA Equivalent Advances made by a Non-Acceptance Lender as part of an Accommodation by way of Bankers’ Acceptances.

3.7 Agent’s Duties re Bankers’ Acceptances and BA Equivalent Advances

(a) Advice to the Lenders: The Agent, promptly following receipt of a notice of Borrowing by way of Bankers’ Acceptance in the form of Schedule A or a notice of Conversion of a Borrowing to a Bankers’ Acceptance in the form of Schedule C or a notice of a Rollover of a Bankers’ Acceptance in the form of Schedule D, shall:

	(i)		advise the Borrower of the allocation of Bankers’ Acceptances and, if applicable, BA Equivalent Advances to each Lender such that the aggregate amount of Bankers’ Acceptances required to be accepted or BA Equivalent Advances required to be made by such Lender hereunder is in a whole multiple of Cdn. $100,000; or
	(ii)		if the Borrower has elected to have the Purchasing Lenders purchase such Bankers’ Acceptances pursuant to Section 3.6(h), advise each Purchasing Lender of the face amount of each Bankers’ Acceptance to be purchased by it and the term thereof which term shall be identical for all Purchasing Lenders and for all Lenders who are not Purchasing Lenders. By no later than 8:30 a.m. (Calgary time), on each Drawdown Date, Conversion Date or Rollover Date on which the Purchasing Lenders are required to purchase Bankers’ Acceptances hereunder, the Borrower, each Schedule I Reference Lender (in the case of Bankers’ Acceptances which do not have a Standard Term) and each Schedule II Reference Lender, as applicable, shall notify the Agent of the applicable rate (as contemplated in the definition of Discount Rate) to be used by the Agent in the

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calculation of the Discount Rate in respect of the issuance and purchase of such Bankers’ Acceptances by Schedule I Lenders and Schedule II Lenders, as applicable.

(b)		Bankers’ Acceptances Not Being Purchased: If the Borrower has not elected to have the Lenders purchase Bankers’ Acceptances issued by it hereunder, the Agent, as soon as practicable following receipt of a notice of Borrowing by way of Bankers’ Acceptance in the form of Schedule B, shall provide either written or telephone advice to each applicable Lender on or before 10:00 a.m. (Calgary time) of the amount of each issue of Bankers’ Acceptances to be accepted by it or BA Equivalent Advance to be made by it, the face amount of each Bankers’ Acceptance, the discounted proceeds of sale deliverable in respect thereof or the amount of the BA Equivalent Advance, the person to whom the Bankers’ Acceptances have been sold and from whom the discounted proceeds of sale in respect thereof should be received, and the term thereof, which term shall be identical for all Lenders. Such advice, if provided by telephone, shall be confirmed in writing at or prior to 2:30 p.m. (Calgary time) on the applicable Drawdown Date, Conversion Date or Rollover Date by delivery to each applicable Lender of a written confirmation with respect to such Bankers’ Acceptances.
(c)		Bankers’ Acceptances Being Purchased: If the Borrower has elected to have the Purchasing Lenders purchase Bankers’ Acceptances issued by it pursuant to Section 3.6(h), then on or prior to 9:00 a.m. (Calgary time) on the Drawdown Date, Conversion Date or Rollover Date relating to all Bankers’ Acceptances to be purchased by the Purchasing Lenders on such date, the Agent shall provide either written or telephone advice to the Borrower and each Purchasing Lender confirming the particulars with respect to such Bankers’ Acceptances and related BA Equivalent Advances. Such advice, if provided by telephone, shall be confirmed in writing on or prior to 2:30 p.m. (Calgary time) on such Drawdown Date, Conversion Date or Rollover Date by delivery to the Borrower and each Purchasing Lender of a written confirmation with respect to such Bankers’ Acceptances.
(d)		Completion of Bankers’ Acceptance When Not Being Purchased: Upon receipt of the written or telephone advice pursuant to Section 3.7(b), each applicable Lender shall complete and sign Bankers’ Acceptances on behalf of the Borrower in accordance with the Power of Attorney Terms — Bankers’ Acceptances in the form of Schedule H and the particulars advised by the Agent. Such Lenders shall then deliver such Bankers’ Acceptances to the person designated to receive such Bankers’ Acceptances upon receipt by such Lender of the discounted proceeds of sale payable in respect thereof, in accordance with the particulars so advised by the Agent.
(e)		Completion of Bankers’ Acceptance When Being Purchased: Upon receipt of such written or telephone advice pursuant to Section 3.7(c), each Purchasing Lender shall complete and sign Bankers’ Acceptances on behalf of the Borrower in accordance with the Power of Attorney Terms — Bankers’ Acceptances in the form of Schedule H and the particulars advised by the Agent.

3.8 Letters of Credit Issued by Lenders

(a) Issuance: The Borrower may give the Agent a notice requesting that a Letter of Credit be issued by each Lender in accordance with Section 3.4(e). In the absence of an election to the contrary by the Borrower, all Letters of Credit shall be issued by the Issuing Lender pursuant to Section 3.9. If the Borrower elects to have a Letter of Credit issued on a pro-rata basis, each Lender shall be required to issue a Letter of Credit for their respective Lender’s Proportion of all such Letters of Credit to be issued on the same date in favour of the same beneficiary (each such issue of Letters of Credit being referred to in this Section 3.8 as an “Issuance”). In addition, it shall be a term of each Letter of Credit forming part of the same Issuance that:

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	(i)		any drawing under such Letter of Credit shall be made concurrently with drawings under all other Letters of Credit forming part of such Issuance;
	(ii)		each such drawing shall be made pro rata with drawings under such other Letters of Credit forming part of such Issuance, on the basis of the Lender’s Proportion of each Lender; and
	(iii)		each such drawing shall be conditional upon the beneficiary of such Letters of Credit providing a certificate as to the matters referred to in Section 3.8(a)(i) and 3.8(a)(ii).

(b)		Documentation: Letters of Credit issued hereunder shall be in a form satisfactory to each Lender acting reasonably and in accordance with its usual and customary practices and shall, in all cases with respect to letters of credit, be issued subject to Uniform Customs & Practice for Documentary Credits, International Chamber of Commerce, Publication No. 500 (or any replacement thereof) and shall, in all cases with respect to letters of guarantee, be issued subject to Uniform Customs & Practice of Demand Guarantees, International Chamber of Commerce, Publication No. 458 (or any replacement thereof). No Lender shall have any obligation to issue a Letter of Credit as part of an Issuance until the Borrower has executed and delivered to the Agent a duly completed Letter of Credit application substantially in the form of Schedule I and has executed and delivered to each Lender such additional ancillary documents, including applications and indemnities, as such Lender generally requires for like transactions and which are consistent with the provisions hereof.
(c)		Expiry: Unless the Lenders otherwise agree, each Letter of Credit forming a part of the same Issuance shall expire not later than the earlier of one (1) year from the date of issue and the then earliest Maturity Date.
(d)		Payment: All payments made by the Lenders to any person pursuant to any Letters of Credit shall, unless the Borrower reimburses the Lenders through the Agent at the Agent’s Account for Payments for such payment on or before the date it is made, be deemed as and from the date of such payment to be an advance to the Borrower of a Cdn. Prime Loan (for any such payments made in Cdn. Dollars) or a U.S. Base Rate Loan (for any such payments made in U.S. Dollars), with the proceeds of such advance being applied against the Borrower’s obligations to reimburse the Lenders for payment made under the Letters of Credit, and the provisions hereof relating to such Cdn. Prime Loans or U.S. Base Rate Loans, as applicable (including interest to be calculated thereon) shall apply thereto. Each Lender shall forthwith advise the Agent of any demand by the beneficiary of a Letter of Credit for payment by such Lender under such Letter of Credit and of any payment made by it on such Letter of Credit to the beneficiary thereof. In determining whether to pay under a Letter of Credit, a Lender shall be responsible only to determine that the documents and certificates required to be delivered under such Letter of Credit have been delivered and that they comply on their face with the requirements of such Letter of Credit.
(e)		Renewal: At or before 10:00 a.m. (Calgary time) at least three (3) Business Days prior to the date of expiry of the Letters of Credit forming part of the same Issuance, the Borrower may elect to renew such Letters of Credit by selecting a new expiry date for the Letters of Credit being renewed, which shall commence on the expiry date of the Letters of Credit being renewed. Renewals of any such Letters of Credit may only be effected by the Lenders extending the expiry date of the existing Letters of Credit and shall be done either by the issuance of a new Letter of Credit containing the new expiry date or by an amendment to the existing one, and, in either case, with or without a reduction in the face amount thereof. Any Issuance to a new beneficiary, any increase in the face amount of the Letters of Credit forming a part of the same Issuance or any

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other change in the terms thereof shall be considered to be a new Borrowing and may only be effected by the Borrower delivering a drawdown notice pursuant to Section 3.4(e). Fees in respect of any renewed or extended Letters of Credit shall be payable pursuant to Section 5.5 and shall be computed for the period of renewal or extension.

3.9 Letters of Credit Issued by Issuing Lender

(a)		Issuance: If the Borrower does not elect to have Letters of Credit issued by the Lenders on a pro rata basis in accordance with Section 3.8, the Issuing Lender, on behalf of the Lenders, subject to the terms and conditions hereof and in reliance on the agreements of the Lenders set forth in Section 3.9(b), agrees to issue Letters of Credit for the account of the Borrower from time to time on any Business Day. No Letter of Credit shall have an expiry date other than as provided for in Section 3.8(c). Letters of Credit issued hereunder shall be in a form satisfactory to the Issuing Lender, acting reasonably and in accordance with its usual and customary practices and shall, in all cases with respect to letters of credit, be issued subject to Uniform Customs & Practice for Documentary Credits, International Chamber of Commerce, Publication No. 500 (or any replacement thereof) and shall, in all cases with respect to letters of guarantee, be issued subject to Uniform Customs & Practice of Demand Guarantees, International Chamber of Commerce, Publication No. 458 (or any replacement thereof). A Letter of Credit may not be issued by the Issuing Lender if the Issuing Lender is made aware that any Lender would be prohibited, if it were issuing such Letter of Credit, from issuing such Letter of Credit by any applicable law, regulation, treaty, official directive or regulatory requirement now or hereafter in effect (whether or not having the force of law).
(b)		Letter of Credit Participations: The Issuing Lender irrevocably grants, and, in order to induce the Issuing Lender to issue its Letters of Credit hereunder, each Lender irrevocably accepts and hereby purchases from the Issuing Lender on the terms and conditions hereinafter stated, for its own account and risk, an undivided interest (equal to the Lender’s Proportion of such Lender) in the Issuing Lender’s obligations and rights under each Letter of Credit issued by the Issuing Lender pursuant to this Section 3.9 and the amount of each draft paid by the Issuing Lender thereunder. Each Lender unconditionally and irrevocably agrees with the Issuing Lender that, on or before the close of business of the Issuing Lender on each day on which a draft is paid under a Letter of Credit for which the Issuing Lender is not reimbursed in full by the Borrower in accordance with the terms of this Agreement, including, without limitation, pursuant to Section 3.9(h) (a “Participation Date”), such Lender will pay to the Agent for the account of the Issuing Lender at the Agent’s Branch of Account the Lender’s Proportion of such Lender of any such unpaid amount. The Issuing Lender shall notify the Agent who shall notify each Lender of the occurrence of a Participation Date and the amount payable by such Lender to the Agent based on the Lender’s Proportion of such Lender. Any such notice may be oral if promptly confirmed in writing (including telecopy or electronic mail). If any Lender fails to make any such payment on the day on which such Lender receives notice as provided above, then interest shall accrue on such Lender’s obligation to make such payment during the period from such day to the day such Lender makes such payment (or, if earlier, the date on which the Borrower reimburses the Issuing Lender as required pursuant to Section 3.9(h)), at a rate determined by the Agent (such rate to be conclusive and binding on such Lender or the Borrower as the case may be) in accordance with the Agent’s usual banking practice for similar advances to financial institutions of like standing to such Lender.
(c)		Repayment of Lenders: Upon and only upon receipt by the Issuing Lender of funds from the Borrower in full or partial reimbursement of any draft paid under a Letter of Credit with respect to which any Lender has theretofor paid the Agent for the account of the Issuing Lender in full for

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such Lender’s participation pursuant to Section 3.9(b) and in full or partial payment of interest on such draft paid under a Letter of Credit, the Issuing Lender will pay to the Agent for the account of such Lender, in the same funds as those received by the Issuing Lender, or net against any then due obligation of such Lender under Section 3.9(b) to make any payment to the Issuing Lender, the Lender’s Proportion of such Lender of such funds.

(d) Role of the Issuing Lender: The Issuing Lender will exercise and give the same care and attention to each Letter of Credit issued by it pursuant to this Section 3.9 as it gives to its other letters of credit and similar obligations, and the Issuing Lender’s sole liability to the Lenders shall be to promptly return to the Agent for the account of each such Lender, such Lender’s Lender’s Proportion of any payments made to the Issuing Lender by the Borrower pursuant to Section 3.9(b) where the Borrower has made a payment to the Issuing Lender pursuant to Section 3.9(c). Each Lender agrees that, in paying any drawing under a Letter of Credit, the Issuing Lender shall not have any responsibility to obtain any document (other than as expressly required by such Letter of Credit) or to ascertain or inquire as to the validity or accuracy of any such document or the authority of any person delivering any such document. Neither the Issuing Lender nor any of its representatives, officers, employees or agents shall be liable to any Lender for:

	(i)		any action taken or omitted to be taken in connection herewith at the request or with the approval of the Majority Lenders;
	(ii)		any action taken or omitted to be taken in connection with any Letter of Credit in the absence of gross negligence or willful misconduct; or
	(iii)		the execution, effectiveness, genuineness, validity, or enforceability of any Letter of Credit, or any other document contemplated thereby.

		The Issuing Lender shall not incur any liability by acting in reliance upon any notice, consent, certificate, statement or other writing (which may be a bank wire, telex or similar writing) believed by it to be genuine or to be signed by the proper party or parties.
(e)		Each Lender’s Obligations Absolute: Each Lender acknowledges that its obligations to the Issuing Lender under this Section 3.9, including the obligation to purchase and fund a participation in the obligations and rights of the Issuing Lender under each Letter of Credit and any drafts paid by it for which it has not been fully reimbursed by the Borrower, are absolute and unconditional and shall not be affected by any circumstance whatsoever, including, without limitation:

	(i)		the occurrence and continuance of any Default or Event of Default;
	(ii)		any failure or inability of any other Lender to purchase or fund such a participation hereunder; or
	(iii)		any other failure by any other Lender to fulfill its obligations hereunder.

		Each payment by a Lender to the Issuing Lender shall be made, without any offset, compensation, abatement, withholding or reduction whatsoever.
(f)		Reinstatement and Survival: Notwithstanding anything herein to the contrary, if the Issuing Lender is required at any time whether before or after any Maturity Date to make any payment

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under a Letter of Credit, each Lender shall pay over to the Agent in accordance with the provisions of this Section 3.9 and for the account of the Issuing Lender, the amount of the Lender’s Proportion of such Lender of such amount. If the Issuing Lender is required at any time to return to the Borrower or to a trustee, receiver, liquidator, custodian or other similar official any portion of the payments made by or on behalf of the Borrower to the Issuing Lender in reimbursement of the Borrower’s obligations in respect of such Letter of Credit and interest thereon, each Lender shall, on demand of the Issuing Lender forthwith pay over to the Agent for the account of the Issuing Lender the Lender’s Proportion of such Lender of such amount, plus interest thereon from the day such demand is made to the day such amount is returned by such Lender to the Issuing Lender at a rate determined by the Agent (such rate to be conclusive and binding on such Lender or the Borrower as the case may be) in accordance with the Agent’s usual banking practice for similar advances to financial institutions of like standing to such Lender.

(g) Procedure for Issuance and Renewal of Letters of Credit:

	(i)		The Borrower may request that the Issuing Lender issue a Letter of Credit pursuant to Section 3.9 by delivering a notice to the Agent pursuant to Section 3.4(e) and by delivering to the Issuing Lender at the Issuing Lender’s Branch of Account a letter of credit application and indemnity in the Issuing Lender’s then customary form (as such form may be modified from time to time, the “Letter of Credit Application”), completed to the satisfaction of the Issuing Lender together with the proposed form of such Letter of Credit (which shall comply with the applicable requirements set forth herein) and such other certificates, documents and other papers and information as the Issuing Lender may reasonably request; provided that in the event of a conflict between this Agreement and the Letter of Credit Application, this Agreement shall govern with respect to such conflict.
	(ii)		Within three (3) Business Days following the date on which the Issuing Lender shall have received the notice pursuant to Section 3.4(e) and the Issuing Lender shall have received the Letter of Credit Application including the proposed form of the Letter of Credit and such additional certificates, documents and other papers and information as the Issuing Lender may have reasonably requested in satisfaction of all conditions to the issuance thereof, the Issuing Lender shall, provided all other conditions precedent contained in this Agreement have been complied with, issue such Letter of Credit.
	(iii)		The Borrower may request the extension or renewal of a Letter of Credit issued under this Section 3.9 by giving written notice to the Issuing Lender at least three (3) Business Days prior to the then current expiry date of such Letter of Credit (provided that the Issuing Lender may accommodate notices on shorter notice in its sole discretion). If all conditions precedent contained in this Agreement (including the payment of the necessary fees under Section 5.6) shall have been fulfilled as required thereby and subject to the other terms of this Agreement, the Issuing Lender shall promptly issue such extension or renewal.

(h)		Reimbursement of the Agent:
		In the event that any drawing shall be made under any Letter of Credit issued under this Section 3.9:

(i) the Issuing Lender shall promptly notify the Agent who shall promptly notify the Borrower of such payment and of the amount thereof;

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	(ii)		the Borrower shall pay to the Issuing Lender the amount of any such drawing on the date of such drawing, failing which the payment by the Issuing Lender of such drawing shall constitute the making of a Cdn. Prime Loan or U.S. Base Rate Loan, as applicable, to the Borrower by each Lender according to the Lender’s Proportion of such Lender (without limiting each Lender’s obligations to the Issuing Lender, including under Section 3.9(b));
	(iii)		the Agent shall notify each Lender by telecopier or by telephone (confirmed by telecopier) of such drawing; and
	(iv)		immediately upon receipt of such notice, each Lender shall make such Lender’s Lender’s Proportion of such amount in Cdn. Dollars or U.S. Dollars, as applicable, available to the Agent for the account of the Issuing Lender by wire transfer of immediately available funds to the Agent’s Account for Payments for the account of the Issuing Lender.

(i) Designation and Termination of Issuing Lender:

	(i)		The Borrower shall be entitled from time to time to terminate an Issuing Lender as an Issuing Lender by providing a written notice of such termination to the Agent and the Issuing Lender and, concurrently with such termination or if an Issuing Lender provides a notice to the Borrower pursuant to Section 3.9(i)(iii), designate another Lender as an Issuing Lender by providing a written notice to the Agent designating such Lender to be the Issuing Lender and which notice shall include the consent to such designation of such Lender; provided that at any one time there shall be no more than one Issuing Lender which is eligible to issue Letters of Credit under this Section 3.9.
	(ii)		In the event that the Borrower exercises its right to terminate an Issuing Lender as an Issuing Lender pursuant to Section 3.9(i)(i) and there are Letters of Credit outstanding which were issued by such Issuing Lender, the Borrower shall use its reasonable commercial efforts to replace all such Letters of Credit with Letters of Credit issued by the new Issuing Lender and, upon such replacement, such Issuing Lender shall cease to be an Issuing Lender.
	(iii)		In the event that an Issuing Lender has notified the Borrower in writing that, pursuant to Section 10.3, it is no longer able to issue Letters of Credit on behalf of the Lenders, then such Issuing Lender shall not be required to issue additional Letters of Credit and, in any such case and if the Issuing Lender requests in writing, the Borrower shall use its reasonable commercial efforts to replace all Letters of Credit issued by such Issuing Lender as soon as practicable with Letters of Credit issued by the Issuing Lender designated by the Borrower to replace such Issuing Lender pursuant to Section 3.9(i)(i).
	(iv)		Where, pursuant to Section 3.9(i)(i) the Borrower terminates an Issuing Lender as an Issuing Lender or pursuant to Section 10.3 an Issuing Lender provides a notice to the Borrower that it is no longer able to issue Letters of Credit on behalf of the Lenders, such Issuing Lender shall remain an Issuing Lender under all Letters of Credit issued by it until all such Letters of Credit have been either replaced, expired or been presented for payment and all payments required to be made to such Issuing Lender by the Borrower and/or the other Lenders pursuant to this Section 3.9 as a result of any payment made under any Letter of Credit issued by such Issuing Lender have been made.

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3.10 Notice of Repayment

          The Borrower shall give the Agent, at the Agent’s Branch of Account, prior written notice of each repayment of Borrowings in accordance with the same period of notice required pursuant to Section 3.4 for the initial drawdown of the basis of Borrowing being repaid, such notice to be substantially in the form of Schedule A. Notwithstanding the foregoing, a Bankers’ Acceptance and a BA Equivalent Advance shall, subject to Section 4.5, only be repaid on its maturity date and a Libor Loan shall, subject to Sections 4.5 and 10.5, only be repaid on the last day of the Libor Interest Period related thereto.

3.11 Pro-Rata Treatment of Borrowings

(a)		Pro-Rata Borrowings: Subject to Section 3.1, Section 3.3, Section 3.9 and Section 3.11(b), each Accommodation and each basis of Borrowing shall be made available by each Lender and all repayments and reductions in respect thereof shall be made and applied in a manner so that the proportion of Borrowings outstanding to such Lender will, to the extent possible, thereafter be in the same proportion as such Lender’s Proportion. The Agent is authorized by the Borrower and each Lender to determine, in its sole and unfettered discretion, the amount of Borrowings and each basis of Borrowing to be made available by each Lender and the application of repayments and reductions of Borrowings to give effect to the provisions of this Section 3.11(a), and Section 6.2; provided that no Lender shall, as a result of any such determination, have Borrowings outstanding in an amount which is in excess of the amount of its Commitment.
(b)		Agent’s Discretion on Allocation: In the event it is not practicable to:

	(i)		allocate each basis of Borrowing in accordance with Section 3.11(a) by reason of the occurrence of circumstances described in Section 10.2, Section 10.3 or Section 10.4; or
	(ii)		allocate Bankers’ Acceptances and BA Equivalent Advances to each Lender in accordance with Section 3.11(a) such that the aggregate amount of Bankers’ Acceptances required to be accepted or purchased or BA Equivalent Advances required to be made by such Lender hereunder is in a whole multiple of Cdn. $100,000;

		the Agent is authorized by the Borrower and each Lender to make such allocation as the Agent determines in its sole and unfettered discretion may be equitable in the circumstances but no Lender shall, as a result of any such allocation, have Borrowings outstanding in an amount which is in excess of the amount of its Commitment.
(c)		Further Assurances by Borrower: To the extent reasonably possible, the Borrower and each Lender agrees to be bound by and to do all things necessary or appropriate to give effect to the provisions of this Section 3.11.

3.12 Conversion Option

          The Borrower may, during the term of this Agreement and, in the case of a conversion into a Libor Loan or a Bankers’ Acceptance, if no Default or Event of Default has occurred which is continuing, upon giving the Agent at the Agent’s Branch of Account prior written notice of a Conversion in accordance with the period of notice and other requirements set out in Section 3.4 (other than delivery of a notice in the form of Schedule A) in respect of the basis of Borrowing to which any Borrowing is being converted, such notice to be substantially in the form of Schedule C, convert any basis of Borrowing (other than a Letter of Credit) to another basis of Borrowing (other than a Letter of Credit);

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provided that a Bankers’ Acceptance may only be converted on its maturity date and a Libor Loan may only be converted on the last day of the Libor Interest Period applicable to such Libor Loan or on any other day if the Borrower pays all amounts payable in respect thereof pursuant to Sections 4.5 or 10.5, respectively. On each Conversion Date, the Borrower shall be required to repay to the Agent the basis of Borrowing which is being converted (subject to any netting procedures of the Agent in respect of conversions in accordance with its usual practice) and, subject to the provisions of this Agreement and any such netting procedures, the Lenders shall be required to make available to the Borrower the Borrowings into which such basis of Borrowing is being converted.

3.13 Rollovers

          The Borrower may, during the term of this Agreement, Rollover all or any portion of a Bankers’ Acceptance on its maturity date or all or any portion of a Libor Loan for an additional Libor Interest Period subsequent to the initial or any subsequent Libor Interest Period, upon giving the Agent at the Agent’s Branch of Account prior written notice thereof, substantially in the form of Schedule D, and in accordance with the period of notice and other requirements set out in Section 3.4 applicable to Bankers’ Acceptances or Libor Loans (other than delivery of a notice in the form of Schedule A), unless immediately prior to the issue of any such Bankers’ Acceptances or the commencement of any subsequent Libor Interest Period, a Default or an Event of Default shall have occurred and be continuing, in which event the Borrower shall be deemed to have converted such Bankers’ Acceptance into a Cdn. Prime Loan or such Libor Loan to a U.S. Base Rate Loan, in each case pursuant to Section 3.12 and the Borrower shall not be entitled to issue such Bankers’ Acceptances or continue such Libor Loan subsequent to the existing Libor Interest Period. In the event notice of a Rollover of an existing Bankers’ Acceptance or Libor Loan is not given pursuant to this Section 3.13 or notice of a Conversion of such existing Bankers’ Acceptance or Libor Loan is not given pursuant to Section 3.12, such Bankers’ Acceptance shall be converted into a Cdn. Prime Loan on the maturity date of such Bankers’ Acceptance and such Libor Loan shall be converted to a U.S. Base Rate Loan on the last day of the Libor Interest Period applicable to such existing Libor Loan. The Rollover of a Libor Loan to another Libor Loan shall not constitute a repayment or prepayment hereunder.

3.14 Notices Irrevocable

          All notices delivered by the Borrower hereunder shall be irrevocable and shall oblige the Borrower to take the action contemplated on the date specified therein.

3.15 Extension of Maturity Date

(a) Request for Extension: The Borrower may, from time to time, request an extension of the Maturity Date of each Lender who has not yet refused to extend the Maturity Date (or been deemed to have refused to extend the Maturity Date) pursuant to any prior Request for Extension (each, a “Requested Lender”) by sending to the Agent the Request for Extension, not later than the sixtieth day and not earlier than the ninetieth day prior to any anniversary of the date hereof (each, an “Anniversary Date”) and the Agent shall forthwith, and in any event within four (4) Business Days, notify each Requested Lender of such request. In this Section 3.15, the Maturity Date of the Requested Lenders is referred to as the “Subject Maturity Date”. Each Requested Lender shall advise the Agent as to whether it agrees to extend the Subject Maturity Date in accordance with any such Request for Extension within thirty (30) days of the delivery by the Borrower to the Agent of a Request for Extension, provided that in the event such Requested Lender does not so advise the Agent within such thirty (30) day period, such Requested Lender shall be deemed to have advised the Agent that it is not prepared to extend the Subject Maturity Date. Within four (4) Business Days of the Agent receiving from each Requested Lender its

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		decision with respect to extending the Subject Maturity Date, the Agent shall, subject to Section 3.15(c), advise the Borrower of each Requested Lender’s decision.
(b)		Repayment or Replacement by Borrower: Subject to Section 3.15(c), if a Requested Lender does not agree to extend the Subject Maturity Date applicable to it (such Lender being a “Non-Agreeing Lender” and any Requested Lender agreeing to extend the Subject Maturity Date applicable to it being an “Agreeing Lender”) the Borrower may, but is not obligated, to:

	(i)		so long as there exists no Event of Default and subject to Section 10.5, repay all Borrowings and other amounts owing hereunder to any Non-Agreeing Lender on or prior to the Subject Maturity Date and upon such payment any Non-Agreeing Lender shall cease to be a Lender hereunder and each such Non-Agreeing Lender’s Commitment shall be terminated and the Total Commitment reduced accordingly; or
	(ii)		arrange for replacement lender(s) (which may be one or more of the Lenders) to replace each Non-Agreeing Lender’s Borrowings and its Commitment; provided that any such replacement lender (if it is not a Lender) shall have been approved by the Agent (such approval not to be unreasonably withheld) and shall be novated into the Loan Documents in the place and stead of the Non-Agreeing Lender by execution of all necessary documentation on or prior to the Subject Maturity Date and in respect of which the Lenders shall do all things and make all such adjustments as are reasonably necessary to give effect to any such replacement.

(c)		Non-Extension: The Subject Maturity Date shall not be extended in accordance with Section 3.15(a) if Requested Lenders holding less than sixty-six and two-thirds percent (66 2/3%) of the Commitments of all Requested Lenders agree to extend the Subject Maturity Date pursuant to any Request for Extension. In such case, the Subject Maturity Date for all Requested Lenders shall not be extended.
(d)		Extension for all Requested Lenders: If all Requested Lenders agree to extend the Subject Maturity Date pursuant to a Request for Extension, then the Subject Maturity Date shall be extended for the period requested by the Borrower, provided that following the granting of any such extension, the Maturity Date of the Agreeing Lenders shall not be more than three years from the applicable Anniversary Date.
(e)		Partial Extension: If, with respect to any Request for Extension, the provisions of Section 3.15(c) or 3.15(d) are not applicable and there are Non-Agreeing Lenders under Section 3.15(b), then:

	(i)		the Subject Maturity Date for those Requested Lenders agreeing to extend the Subject Maturity Date shall be extended for the period requested by the Borrower, provided that following the granting of any such extension, the Maturity Date of the Agreeing Lenders and any replacement lenders under Section 3.15(b)(ii) shall not be more than three years from the applicable Anniversary Date; and
	(ii)		for those Non-Agreeing Lenders, the Subject Maturity Date of all such Lenders shall not be extended.

(f) Maturity Date: Any Subject Maturity Date which shall be extended pursuant to Sections 3.15(d) or 3.15(e), shall constitute the Maturity Date for the applicable Agreeing Lender for all purposes of this Agreement after such extension.

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(g)		Independent Decision: The Borrower understands that consideration of any Request for Extension constitutes an independent credit decision which each Lender retains the absolute and unfettered discretion to make and that no commitment in this regard is hereby given by any Lender.
(h)		Default or Event of Default: Notwithstanding the foregoing, the Borrower shall not be entitled to make a Request for Extension or accept any offer made by the Agent on behalf of the Agreeing Lenders to extend the Subject Maturity Date if a Default or Event of Default has occurred and is continuing or it is unable to make the representations and warranties as required pursuant to Section 2.2 at such time.

ARTICLE 4
REPAYMENT AND PREPAYMENT

4.1 Reduction of Commitment and Repayment of Borrowings

          On the applicable Maturity Date of each Lender, the Borrower shall repay all Borrowings then outstanding to such Lender together with all other amounts owing hereunder to such Lender and the Commitment of such Lender shall be reduced to zero. The Borrower shall ensure that Libor Loans, Bankers’ Acceptances, BA Equivalent Advances and Letters of Credit either mature or expire in sufficient amounts to facilitate the reduction of the Commitment of such Lender and the making of payments required pursuant to this Section 4.1.

4.2 Repayment of Borrowings due to Exchange Rate Fluctuations

          If due to exchange rate fluctuations the amount of Borrowings (determined in Cdn. Dollars with all such Borrowings denominated in U.S. Dollars being converted to the Equivalent Amount in Cdn. Dollars) outstanding to any Lender is, on any Interest Date, Drawdown Date, Conversion Date or Rollover Date, as applicable, in excess of the amount of such Lender’s Commitment, the Agent shall advise the Borrower in writing of the amount of such excess and the Borrower shall, if requested by the Agent and within five (5) Business Days of any such request, repay, provide cash cover to be held by the Agent on behalf of such Lender in the manner provided for in Section 9.7 or otherwise reduce a portion of such Borrowings to the extent of the amount of such excess.

4.3 Cancellation of Commitment and Prepayment

          The Borrower may, without penalty or premium, at any time during the term of this Agreement upon three (3) Business Days prior written notice substantially in the form of Schedule A, cancel all of the Total Commitment or any portion thereof in minimum amounts of Cdn. $10,000,000 and whole multiples of Cdn. $1,000,000 thereafter if, on or prior to the last day of such notice period, the Borrower has:

(a)		prepaid or otherwise reduced the Borrowings outstanding to each Lender in an amount equal to the amount by which the Borrowings outstanding to such Lender would otherwise be in excess of such Lender’s Commitment immediately after the reduction of the Total Commitment provided for in such notice; and
(b)		paid all accrued interest and other charges and fees in respect of the Borrowings being repaid or reduced as aforesaid.

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Any such notice of cancellation is irrevocable and the amount of the Commitment of each Lender so cancelled and reduced may not be reinstated hereunder. Notwithstanding the foregoing, the Borrower shall be entitled to exercise its rights under this Section 4.3 in respect of the Commitment of all Lenders who have the same Maturity Date without being required to concurrently cancel the Commitments of any other Lenders.

4.4 Cancellation of a Lender’s Commitment

          If:

(a)		a Lender does not agree to make Borrowings available in respect of a Takeover;
(b)		any payment is required to be made by the Borrower to a Lender (but not to all of the Lenders) pursuant to Section 6.3;
(c)		Additional Compensation is payable by the Borrower to a Lender (but not to all of the Lenders) pursuant to Section 10.2; or
(d)		a Lender is affected by the provisions of Section 10.3 and all of the other Lenders are not so affected;

(any such Lender being called herein the “Affected Lender”)

then the Borrower may so long as no Default or Event of Default has occurred and is continuing:

	(i)		upon at least five (5) Business Days prior written notice to the Agent, irrevocably cancel all but not part of the Affected Lender’s Commitment if on or prior to the last day of such notice period the Borrower has prepaid or otherwise reduced all Borrowings outstanding to such Lender, and paid all accrued interest and other charges and fees in respect of such Borrowings; or
	(ii)		with the consent of the Agent, such consent not to be unreasonably withheld, and within thirty (30) days of any such cancellation, arrange for a replacement lender (which may be one of the Lenders in which case no consent of the Agent shall be required) to replace the Affected Lender’s Commitment and any such replacement lender shall be novated into the Loan Documents in the place and stead of the Affected Lender.

4.5 Early Repayment of Bankers’ Acceptances and Libor Loans

          The Borrower shall not cancel all or any portion of the Total Commitment pursuant to Sections 4.3 or 4.4 if the applicable Borrowings required to be repaid to a Lender as a result thereof include Bankers’ Acceptances accepted by such Lender with a maturity date falling subsequent to the date of such cancellation. The Borrower shall not cancel all or any portion of the Total Commitment pursuant to Sections 4.3 or 4.4 if applicable Borrowings required to be repaid to a Lender as a result thereof include Libor Loans with a Libor Interest Period falling subsequent to the date of such cancellation unless, on the date of such cancellation, the Borrower pays to the Agent at the Agent’s Account for Payments, for the account of such Lender, the amount required to be paid pursuant to Section 10.5.

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4.6 Evidence of Indebtedness

          The Agent shall open and maintain on the books of the Agent at the office of the Agent where the Agent’s Account for Payments is from time to time maintained, accounts and records (the “Accounts”) evidencing the Borrowings and other amounts owing by the Borrower to the Agent and each Lender under this Agreement. The Agent shall debit therein the amount of such Borrowings, and shall enter therein each payment of principal of and interest on such Borrowings and fees and other amounts payable pursuant to this Agreement and shall record the Bankers’ Acceptances accepted by each such Lender and the Letters of Credit issued by each such Lender and all other amounts becoming due to the Agent and each Lender under this Agreement. The Accounts constitute, in the absence of manifest error, prima facie evidence of the indebtedness of the Borrower to the Agent and each Lender pursuant to this Agreement, the date each Lender made each Borrowing available to the Borrower and the amounts the Borrower has paid from time to time on account of the principal of and interest on the Borrowings, fees payable pursuant to this Agreement and other amounts owing hereunder. The Agent shall, from time to time upon the Borrower’s reasonable request, provide to the Borrower copies of such accounts and records.

ARTICLE 5
PAYMENT OF INTEREST AND FEES

5.1 Interest on Cdn. Prime Loans

          The Borrower shall pay interest in Canadian Dollars to the Agent on behalf of each Lender on each Cdn. Prime Loan made by such Lender at the Agent’s Account for Payments at a rate per three hundred sixty-five (365) day period equal to the Cdn. Prime Rate plus the Margin. A change in the Cdn. Prime Rate or the Margin will simultaneously cause a corresponding change in the interest payable for a Cdn. Prime Loan. Such interest is payable monthly in arrears on the first Business Day following each Interest Date for the period commencing on and including the day after the immediately prior Interest Date up to and including such Interest Date or up to but excluding the Maturity Date and shall be calculated on a daily basis and on the basis of the actual number of days elapsed in a year of three hundred sixty-five (365) days. The annual rates of interest to which the rates determined in accordance with the foregoing provisions of this Section 5.1 are equivalent are the rates so determined multiplied by the actual number of days in a period of one (1) year commencing on the first day of the period for which such interest is payable and divided by three hundred sixty-five (365).

5.2 Interest on U.S. Base Rate Loans

          The Borrower shall pay interest in U.S. Dollars to the Agent on behalf of each Lender on each U.S. Base Rate Loan made by such Lender at the Agent’s Account for Payments at a rate per three hundred sixty-five (365) day period equal to the U.S. Base Rate plus the Margin. A change in the U.S. Base Rate or the Margin will simultaneously cause a corresponding change in the interest payable for a U.S. Base Rate Loan. Such interest is payable monthly in arrears on the first Business Day following each Interest Date for the period commencing on and including the day after the immediately prior Interest Date up to and including such Interest Date or up to but excluding the Maturity Date and shall be calculated on a daily basis and on the basis of the actual number of days elapsed in a year of three hundred sixty-five (365) days. The annual rates of interest to which the rates determined in accordance with the foregoing provisions of this Section 5.2 are equivalent are the rates so determined multiplied by the actual number of days in a period of one (1) year commencing on the first day of the period for which such interest is payable and divided by three hundred sixty-five (365).

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5.3 Interest on Libor Loans

          The Borrower shall pay interest in U.S. Dollars to the Agent on behalf of each Lender on each Libor Loan made by it at the Agent’s Account for Payments for the period commencing on and including the first day of the Libor Interest Period applicable to such Libor Loan up to but not including the last day of such Libor Interest Period at a rate per three hundred sixty (360) day period equal to the sum of Libor plus the Margin. A change in the Margin will simultaneously cause a corresponding change in the interest payable for a Libor Loan for the portion of the Libor Interest Period remaining at the time of the change in the Margin. Such interest shall be payable on each Libor Interest Date applicable to such Libor Interest Period and shall be calculated on a daily basis and on the basis of the actual number of days elapsed in the period for which such interest is payable (including the first day of such period but excluding the date on which such interest is payable) divided by three hundred sixty (360). The annual rates of interest to which the rates determined in accordance with the foregoing provisions of this Section 5.3 are equivalent are the rates so determined multiplied by the actual number of days in a period of one (1) year commencing on the first day of the period for which such interest is payable and divided by three hundred sixty (360).

5.4 Bankers’ Acceptance Fees

          The Borrower shall pay acceptance fees in Canadian Dollars to the Agent on behalf of each Lender on each Bankers’ Acceptance accepted by such Lender at the Agent’s Account for Payments. Such acceptance fees are payable forthwith upon the acceptance of each Bankers’ Acceptance issued by the Borrower at a rate per three hundred sixty-five (365) day period equal to the Margin in effect on the acceptance of such Bankers’ Acceptance calculated on the face amount of such Bankers’ Acceptance and on the basis of the number of days in the term of such Bankers’ Acceptance divided by three hundred sixty-five (365). Acceptance fees payable to the Lenders pursuant to this Section 5.4 shall be paid in the manner specified in Section 3.6. All fees payable pursuant to this Section 5.4 on any date in respect of any issuance of Bankers’ Acceptances shall be calculated by the Agent and payable by the Borrower based on the Margin in effect on such date; provided that if during the term of any such Bankers’ Acceptance a change in the Margin occurs, the fees paid by the Borrower in respect of such Bankers’ Acceptance shall be adjusted to reflect the Margin for the remaining term of the Bankers’ Acceptance and the Borrower, in the case of an increase in the Margin, shall forthwith after receipt of a notice from the Agent make such payments to the Agent at the Agent’s Account for Payments for the account of the Lenders as are necessary to reflect such change and the Lenders, in the case of a decrease in the Margin, shall credit any amount which would otherwise be refundable to the Borrower against amounts in respect of interest or fees accruing and next due hereunder.

5.5 Letter of Credit Fees

(a) Issue Fee: The Borrower shall pay to the Agent on behalf of each Lender at the Agent’s Account for Payments an issue fee in Cdn. Dollars or U.S. Dollars, as applicable, equal to the applicable Margin for each Letter of Credit issued hereunder on the date of payment of such issue fee; provided that if during the period for which any such issue fee has been paid a change in the Margin occurs, the issue fees paid by the Borrower in respect of such Letter of Credit shall be adjusted to reflect the Margin for the remaining term of the Letter of Credit and the Borrower, in the case of an increase in the Margin, shall forthwith after receipt of a notice from the Agent make such payments to the Agent at the Agent’s Account for Payments for the account of the Lenders as are necessary to reflect such change and the Lenders, in the case of a decrease in the Margin, shall credit any amount which would otherwise be refundable to the Borrower against amounts in respect of interest or fees accruing and next due hereunder. Such issue fee shall be payable by the Borrower quarterly in advance commencing on the date of issue (which shall

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include any renewal) of such Letter of Credit and thereafter on the first day of each successive calendar quarter during the term of such Letter of Credit and shall be calculated based on the Lender’s Proportion of each Lender of such Letter of Credit, as applicable, of the face amount of each such Letter of Credit and on the basis of the number of days in such calendar quarter or portion thereof and a year of three hundred sixty-five (365) days.

(b)		Fronting Fee: The Borrower shall pay to the Agent (solely for the account of the Issuing Lender) a fronting fee for each Letter of Credit issued by the Issuing Lender pursuant to Section 3.9, in an amount agreed to by the Borrower and the Issuing Lender in writing at or prior to issuing any Letter of Credit calculated and payable in the same manner as the fees under Section 5.5(a) except such fee shall be calculated on the face amount of such Letter of Credit.
(c)		Administration Fee: The Borrower shall pay to the Agent on behalf of each Lender at the Agent’s Account for Payments and at the time of the issuance, amendment or transfer of any Letter of Credit hereunder, each such Lender’s standard documentary and administrative charges for issuing, amending or transferring Letters of Credit of a similar amount, term and risk.
(d)		Credit on Account of Fees: If and to the extent that a Letter of Credit is drawn upon prior to the date of expiry thereof, or is terminated and returned to the Lenders or the Issuing Lender, as applicable, prior to such date of expiry, or the face amount thereof is reduced by the Lenders or the Issuing Lender, as applicable, prior to such date of expiry (other than through a drawing on such Letter of Credit) or any combination thereof, the Lenders and the Issuing Lenders, as applicable, shall forthwith after such event and through the Agent’s Account for Payments credit the Borrower with any fees which it has paid in respect of any such Letter of Credit pursuant to Section 5.5(a) or 5.5(b) based upon the amount of the Letter of Credit on its termination or the amount of the reduction and for the time remaining in the period for which such fees were originally paid.

5.6 Interest on Overdue Amounts

          The Borrower shall, on demand, pay to the Agent on behalf of each Lender at the Agent’s Account for Payments interest on all overdue payments in connection with this Agreement from the date any such payment becomes overdue and for so long as such amount remains unpaid at a rate per annum which is equal to:

(a)		if the overdue payment is in respect of a Loan, the interest rate then applicable to such Loan plus, to the extent permitted by law, one percent (1%);
(b)		the Cdn. Prime Rate plus, to the extent permitted by law, one percent (1%) in respect of all amounts due (other than in respect of a Loan) in Canadian Dollars to the Agent or the Lenders; and
(c)		the U.S. Base Rate plus, to the extent permitted by law, one percent (1%) in respect of all amounts due (other than in respect of a Loan) in U.S. Dollars to the Agent or the Lenders.

Such interest on overdue amounts shall be computed daily and compounded monthly and shall be payable both before and after default, maturity and judgment.

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5.7 Standby Fees

          The Borrower shall pay standby fees to the Agent in Cdn. Dollars on behalf of each Lender at the Agent’s Account for Payments quarterly in arrears on the first Business Day of each calendar quarter in each year during the term of this Agreement commencing with the first Business Day of the calendar quarter occurring after the Effective Date. Each payment of standby fees shall be calculated for the period commencing on and including the date hereof or the last date on which such standby fees were payable hereunder, as the case may be, up to and including the last day of the calendar quarter for which such standby fees are to be paid or the Maturity Date, as the case may be, and shall be in an amount equal to the Margin calculated on the amount, if any, of the difference obtained by subtracting the Borrowings outstanding from such Lender during such period from the amount of such Lender’s Commitment in effect during such period. Such standby fees shall be calculated on a daily basis and on the basis of the actual number of days elapsed in a year of three hundred sixty-five (365) days. For purposes of calculating standby fees payable pursuant to this Section 5.7, the amount of Borrowings outstanding from time to time in U.S. Dollars on each day during the period for which such standby fees are payable shall be notionally converted to the Equivalent Amount in Cdn. Dollars at the rate of exchange in effect for purposes of determining an Equivalent Amount on such day.

5.8 Agent’s Fees

          The Borrower shall pay agency fees to the Agent for the Agent’s sole account at the Agent’s Account for Payments at the time or times and in the amount agreed to in writing by the Borrower and the Agent and such fees shall, for purposes of this Agreement, be deemed to be an amount payable pursuant to this Agreement.

5.9 Commitment Fees

          The Borrower shall pay fees to the Agent on behalf of each Lender on the date of execution of this Agreement in the amounts agreed to in writing by the Borrower and the Agent and such fees shall, for purposes of this Agreement, be deemed to be an amount payable pursuant to this Agreement.

5.10 Maximum Rate Permitted by Law

          Under no circumstances shall a Lender be entitled to receive nor shall it in fact receive a payment or partial payment of interest, fees or other amounts under this Agreement at a rate that is prohibited by applicable law. Accordingly, notwithstanding anything herein or elsewhere contained, if and to the extent that under any circumstances, the effective annual rate of “interest” (as defined in Section 347 of the Criminal Code of Canada) received or to be received by a Lender (determined in accordance with such section) on any amount of “credit advanced” (as defined in that section) pursuant to these presents or any agreement or arrangement collateral hereto entered into in consequence or implementation hereof would, but for this Section 5.10, be a rate that is prohibited by applicable law, then the effective annual rate of interest, as so determined, received or to be received by such Lender on such amount of credit advanced shall be and be deemed to be adjusted to a rate that is one whole percentage point less than the lowest effective annual rate of interest that is so prohibited (the “adjusted rate”); and, if such Lender has received a payment or partial payment which would, but for this Section 5.10, be so prohibited then any amount or amounts so received by such Lender in excess of the adjusted rate shall and shall be deemed to have comprised a credit to be applied to subsequent payments on account of interest, fees or other amounts due to such Lender at the adjusted rate.

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5.11 Waiver

          To the extent permitted by law, any provision of the Judgment Interest Act (Alberta) and the Interest Act (Canada) which restricts the rate of interest on any judgment debt shall be inapplicable to this Agreement and is hereby waived by the Borrower.

5.12 Interest and Fee Adjustment

          All interest and fees payable hereunder which are to be adjusted as a result of a change in the Consolidated Senior Debt to EBITDA Ratio and a corresponding change in the Margin, shall be adjusted effective on the first day of the Fiscal Quarter following the Fiscal Quarter in which the Compliance Certificate is delivered (or which is due to be delivered) which indicates that a change in the Consolidated Senior Debt to EBITDA Ratio has occurred which requires a change to such interest and fees.

5.13 Nominal Rates

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

ARTICLE 6
PAYMENT AND TAXES

6.1 Time, Place and Currency of Payment

          Payments of principal, interest, fees and all other amounts payable by the Borrower pursuant to this Agreement shall be paid in the currency in which it is denominated for value at or before 10:00 a.m. (Calgary time) on the day such amount is due. If any such day is not a Business Day, such amount shall be deemed for all purposes of this Agreement to be due on the Business Day next following such day and such extension of time shall in such case be included in the computation of the payment of any interest or fees payable under this Agreement. All payments shall be made at the Agent’s Account for Payments. Receipt by the Agent from the Borrower of funds pursuant to this Agreement, as principal, interest, fees or otherwise, shall be deemed to be receipt of such funds by the Agent or Lenders, as the case may be.

6.2 Application of Payments Prior to an Event of Default

          Except as otherwise agreed to by the Lenders in their sole discretion, all payments made by or on behalf of the Borrower pursuant to this Agreement prior to the delivery of an Acceleration Notice or the occurrence of an Insolvency Event shall be applied rateably among the Lenders and the Agent in accordance with amounts owed to the Lenders and the Agent in respect of each category of amounts set forth below, each such application to be made in the following order with the balance remaining after application in respect of each category to be applied to the next succeeding category:

(a) firstly, in payment of any amounts due and payable as and by way of recoverable expenses hereunder;

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(b)		secondly, in payment of any amounts due and payable as and by way of the Agent’s fees referred to in Section 5.8;
(c)		thirdly, in payment of any amounts due and payable as and by way of the standby fees referred to in Section 5.7;
(d)		fourthly, in payment of any amounts due and payable as and by way of interest on Borrowings pursuant to Sections 5.1, 5.2 and 5.3, acceptance fees pursuant to Section 5.4, Letter of Credit fees pursuant to Section 5.5, and interest on overdue amounts pursuant to Section 5.6; and
(e)		fifthly, in payment of any amounts (other than Borrowings) then due and payable by the Borrower hereunder other than amounts hereinbefore referred to in this Section 6.2;

with the balance to be applied to repay or otherwise reduce Borrowings in a manner so that the Borrowings and each basis of Borrowing outstanding hereunder to each Lender will, to the extent possible, be in the same proportion as the Lender’s Proportion of such Lender.

6.3 Taxes

          The Borrower shall make all payments to the Agent on behalf of each Lender without set-off or counterclaim, free and clear of, and without deduction for or on account of, any Tax, except as contemplated in the next sentence. If any Tax is deducted or withheld from any payments, other than any Tax withheld by reason of a Lender being a non-resident of Canada within the meaning of the Income Tax Act (Canada), the Borrower shall promptly remit to the Agent on behalf of the Lenders the equivalent of the amounts so deducted or withheld together with such additional amounts as may be necessary so that after making all required deductions or withholdings, including deductions or withholdings applicable to additional amounts paid under this Section 6.3, each Lender shall receive an amount equal to the amount it would have received if no deduction or withholding had been made, and the Borrower, if required by the Agent, shall also provide to the Agent the relevant official receipts or other evidence satisfactory to the Agent evidencing payment to the appropriate taxing authority of each such Tax by the Borrower on behalf of each Lender.

     In the event the Borrower has made a payment pursuant to this Section 6.3 and any Lender is thereafter granted or receives a credit, refund or remission in respect of the Tax for which the deduction or withholding was made, then such Lender shall, subject to the Borrower having paid the relevant amount payable under this Section 6.3 and to the extent it is satisfied that it can do so without prejudice to the retention of the amount of such credit or refund, refund to the Borrower such amount (if any) as such Lender determines in good faith will leave such Lender in no worse position than would have been the case if there had been no obligation to make such deduction or withholding in the first place. No Lender shall be obligated to provide to the Borrower copies of all or any part of its tax returns, financial statements or other corporate financial data by reason of any such matter.

6.4 Account Debit Authorization

          The Borrower authorizes and directs the Agent, in its discretion acting reasonably, to automatically debit, by mechanical, electronic or manual means, the bank accounts of the Borrower maintained with the Agent for all amounts due and payable under this Agreement, including, but not limited to, the repayment of principal and the payment of interest, fees and all charges for the keeping of such bank accounts.

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ARTICLE 7

CONDITIONS PRECEDENT TO DISBURSEMENT OF THE BORROWINGS

7.1 Conditions Precedent

          This Agreement shall become effective on the date (the “Effective Date”) each of the following conditions precedent are satisfied or waived by the Lenders hereunder:

(a)		as of the Effective Date, there exists no “Default” or “Event of Default” (under and as defined in the Prior Agreement) and no Default or Event of Default hereunder and, if the Effective Date is other than the date of this Agreement, the Agent has received a certificate of the Borrower certifying the same;
(b)		the representations and warranties contained in Article 2 are true and correct as of the Effective Date and, if the Effective Date is other than the date of this Agreement, the Agent has received a certificate of the Borrower certifying the same;
(c)		the Agent has received, in sufficient numbers for distribution to each of the Lenders in form and substance satisfactory to the Agent and the Lenders, the following:

	(i)		a duly executed copy of this Agreement;
	(ii)		a duly executed copy of a subordination agreement confirming that any Convertible Debt now in existence is subordinate to the Term Indebtedness, the Operating Indebtedness, the Swap Indebtedness and the Bridge Indebtedness;
	(iii)		a duly executed copy of an addition agreement from each of 702 Subco and the 702 Partnership whereby each such party agrees to be bound by the Loan Party Guarantee;
	(iv)		a duly executed copy of an addition agreement from each of 702 Subco and the 702 Partnership whereby each such party agrees to be bound by the Subordination Agreement;
	(v)		a duly executed copy of the consent and acknowledgement of Guarantors attached to this Agreement from the Trust and each Designated Subsidiary currently in existence (other than 702 Subco and the 702 Partnership) consenting to the provisions hereof and confirming that the Loan Party Guarantee and the Subordination Agreement to which it is a party remains in full force and effect;
	(vi)		certificates of status or compliance in respect of the Borrower and each Designated Subsidiary which is a corporation issued under the laws of its governing jurisdiction;
	(vii)		partnership searches in respect of each Designated Subsidiary which is a partnership issued under the laws of its governing jurisdiction;
	(viii)		an officer’s certificate of or relating to each Loan Party, attaching thereto, inter alia: (i) its articles of incorporation and by-laws, partnership agreement or other constating documents, to the extent not previously provided to the Agent; (ii) specimen signatures of the individuals who will be executing the Loan Documents on its behalf; and (iii) a resolution of its board of directors or equivalent governing body (if required) relating to its authority to execute, deliver and perform its obligations under the Loan Documents to

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			which it is a party and the manner in which and by whom the foregoing documents are to be executed and delivered;
	(ix)		an officer’s certificate of the Borrower attaching thereto any Material Contracts (or any amendments thereto) not previously provided to the Agent, if any;
	(x)		an opinion of Xxxxxxx Xxxxx LLP, counsel to the Loan Parties addressed to the Agent and each Lender with respect to the Loan Documents to which each Loan Party is a party, in form and substance satisfactory to the Lenders, acting reasonably;
	(xi)		an opinion of Burnet, Xxxxxxxxx & Xxxxxx LLP, counsel to the Agent and the Lenders, addressed to the Agent and each Lender with respect to the transactions provided for herein, in form and substance satisfactory to the Lenders, acting reasonably; and
	(xii)		such other information as may be reasonably requested by the Agent;

(d) prior to or concurrently with the execution of this Agreement, the Agent has received, in form and substance satisfactory to the Agent, an agreement between the Borrower and the Agent with respect to the fees payable pursuant to Section 5.8 duly executed by the Borrower and the Agent;

(e) prior to or concurrently with the execution of this Agreement, the Agent has received, in form and substance satisfactory to the Lenders, an agreement between the Borrower and the Agent with respect to the fees payable pursuant to Section 5.9 duly executed by the Borrower and the Agent; and

(f) prior to or concurrently with the execution of this Agreement, the Borrower has paid all fees which are then due which have been agreed to be paid by it in connection herewith to the Agent and the Lenders.

7.2 Continuing Conditions Precedent

          The obligation of each Lender to make available any Borrowings pursuant to Sections 3.4, 3.12 or 3.13 is subject to and conditional upon the following:

(a) the satisfaction of the conditions set forth in Section 7.1; and

(b) that on each Drawdown Date, Conversion Date and Rollover Date there exists no Default or Event of Default and that on each Drawdown Date the representations and warranties referred to in Section 2.2 are true and correct in all material respects on each Drawdown Date with the same effect as if made as of that Drawdown Date.

7.3 Waiver of a Condition Precedent

          The terms and conditions of Sections 7.1 and 7.2 are inserted for the sole benefit of the Agent and the Lenders and may be waived by the Agent by or with the prior consent of all of the Lenders in whole or in part with or without terms or conditions, in respect of all or any portion of the Borrowings, without affecting the right of the Agent or the Lenders to assert such terms and conditions in whole or in part in respect of any other Borrowing.

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ARTICLE 8
COVENANTS OF THE BORROWER

8.1 Positive Covenants of the Borrower

          During the term of this Agreement, the Borrower covenants with each of the Lenders and the Agent that:

(a) Payment and Performance: the Borrower shall duly and punctually pay all sums of money due by it hereunder and perform all other obligations on its part to be performed under the terms of the Loan Documents at the times and places and in the manner provided for therein;

(b) Corporate Existence: the Borrower shall, subject to Section 8.2(b), maintain its corporate existence in good standing under the laws of the Province of Alberta and register and qualify and remain registered and qualified as a corporation authorized to carry on business under the laws of each jurisdiction in which the nature of any business conducted by it or the character of any properties and assets owned or leased by it requires such registration and qualification except to the extent failure to register or qualify would not reasonably be expected to have a Material Adverse Effect;

(c) Trust Existence: the Borrower shall cause the Trust to maintain its existence as a “mutual fund trust” (within the meaning of the Income Tax Act (Canada)) and as a trust validly subsisting under the laws of the Province of Alberta and to qualify and remain qualified as a trust authorized to carry on business under the laws of each jurisdiction in which the nature of any business conducted by it or the character of any properties and assets owned or leased by it requires such qualification except to the extent failure to qualify would not reasonably be expected to have a Material Adverse Effect;

(d) Existence of Designated Subsidiaries: the Borrower shall, subject to Section 8.2(b), cause each Designated Subsidiary which is a corporation to maintain its corporate existence and cause each Designated Subsidiary which is a partnership to maintain its partnership existence and cause each Designated Subsidiary which is a trust to maintain its existence as a trust, each in good standing under the laws of the jurisdiction of incorporation or creation, as the case may be, and shall cause each to register and qualify and remain registered and qualified as an extra provincial corporation, partnership or trust, as the case may be, authorized to carry on business under the laws of each jurisdiction in which the nature of any business transacted by it or the character of any properties and assets owned or leased by it requires such registration and qualification except to the extent failure to register or qualify would not reasonably be expected to have a Material Adverse Effect;

(e) Maintenance of Petroleum and Natural Gas Properties: the Borrower shall and shall cause each of the other Loan Parties to, subject to Permitted Dispositions, maintain and operate all of its properties and assets, including, without limitation, its petroleum and natural gas properties and related production facilities, in a good and workmanlike manner and in accordance with good oilfield practice except to the extent failure to do so would not reasonably be expected to have a Material Adverse Effect, and conduct its business in a proper and prudent manner and maintain and preserve its assets and properties so as not to materially and adversely impair its ability to perform its obligations under this Agreement, the other Loan Documents and the Material Contracts, and the Borrower shall and shall cause each of the other Loan Parties to comply with all of its obligations under all agreements and instruments to which it is a party or by which it is bound or affected, including, without limitation, the Material Contracts, other than non-compliance which does not have a Material Adverse Effect;

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(f) Insurance: the Borrower shall and shall cause each of the other Loan Parties to maintain or have maintained on its behalf in full force and effect such policies of insurance in such amounts (including deductibles, co-insurance and self insurance as is in accordance with prudent oil and gas industry practice) issued by insurers of recognized standing covering the properties and operations of the Loan Parties including, without limitation, their oil and gas properties and related production facilities, as is customarily maintained by persons engaged in the same or similar business in the localities where such properties and operations are located;

(g) Compliance With Laws and Regulations: the Borrower shall and shall cause each of the other Loan Parties and each Subsidiary to:

	(i)		comply in all respects with all applicable laws, rules, regulations and orders of governmental authorities, including, without limitation, Environmental Laws;
	(ii)		observe and conform in all respects to all valid requirements of any governmental or municipal authority relative to any of its assets and all covenants, terms and conditions of all agreements upon or under which any of its assets are held; and
	(iii)		comply in all respects with all permits, licences and authorizations which are required under Environmental Laws;

		except to the extent failure to so comply or failure to so observe and conform does not have and would not reasonably be expected to have a Material Adverse Effect;
(h)		Notices: the Borrower shall:

	(i)		promptly upon acquiring knowledge thereof, provide the Agent with written notice of the discovery of any contaminant or of any spill, discharge, deposit, escape or release of a contaminant into the environment from or upon the land or property of any Loan Party or of any Subsidiary which has or would reasonably be expected to have a Material Adverse Effect;
	(ii)		provide prompt notice to the Agent of any matter of which it is aware that has or would reasonably be expected to have a Material Adverse Effect;
	(iii)		provide the Agent with prompt written notice of any action, suit, litigation or other proceeding which is commenced or threatened against any Loan Party or against any Subsidiary and which involves a claim against any of them which has or would reasonably be expected to have a Material Adverse Effect;
	(iv)		provide prompt notice to the Agent of any Default or Event of Default; and
	(v)		provide prompt written notice to the Agent of any change of control of the Manager or of any transfer of any issued and outstanding shares in the capital of the Borrower held by the Manager;

(i) Environmental Matters: the Borrower shall, upon the request of the Agent, acting reasonably, make available for discussion with the Agent and the Lenders at all reasonable times the senior officers of any Loan Party and any Subsidiary primarily responsible for the environmental activities and affairs of such Loan Party or such Subsidiary and shall provide to the Agent any report which any Loan Party or any Subsidiary provides to its directors with respect to the

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environmental activities and policies of such Loan Party or such Subsidiary at the same time as it provides such report to its directors;

(j) Payment of Taxes and Government Levies: the Borrower shall and shall cause each of the other Loan Parties to pay or cause to be paid all rents, Taxes, rates, levies, royalties and assessments, ordinary or extraordinary, fees and dues, validly levied, assessed or imposed upon it, or upon its properties or any part thereof, by any government authority as and when the same become due and payable, except to the extent failure to do so would not reasonably be expected to have a Material Adverse Effect;

(k) Maintenance of Books and Records: the Borrower shall and shall cause each of the other Loan Parties to keep proper and adequate records and books of account in which true and complete entries will be made in a manner sufficient to enable the preparation of financial statements in accordance with Generally Accepted Accounting Principles and, upon the request of the Agent and subject to any applicable confidentiality provisions, make the same available for confidential inspection by the Agent and its employees at all reasonable times;

(l) Year End Financial Statements of the Trust: the Borrower shall furnish to the Agent as soon as available and in any event within one hundred twenty (120) days after the end of each Fiscal Year of the Trust, a consolidated balance sheet of the Trust as at the close of such Fiscal Year, a consolidated statement of income and accumulated earnings of the Trust, a consolidated statement of cash flows of the Trust and a consolidated statement of unitholders’ equity of the Trust for such Fiscal Year, setting forth in comparative form the corresponding figures of the preceding Fiscal Year together with an auditor’s report, containing:

	(i)		such auditor’s confirmation that their examinations of such consolidated financial statements were made in accordance with generally accepted auditing standards and accordingly included such tests and other procedures as they considered necessary in the circumstances; and
	(ii)		such auditor’s opinion that such consolidated financial statements present fairly the consolidated financial position of the Trust as of the close of such Fiscal Year and the results of its operations and the changes in its financial position for the Fiscal Year then ended in accordance with Generally Accepted Accounting Principles consistently applied;

(m) Quarterly Financial Statements of the Trust: the Borrower shall furnish to the Agent as soon as available and in any event within sixty (60) days after the end of each of the first three Fiscal Quarters of each Fiscal Year of the Trust, a consolidated balance sheet of the Trust as at the end of such Fiscal Quarter, a consolidated statement of income and accumulated earnings of the Trust, a consolidated statement of cash flows of the Trust and a consolidated statement of unitholders’ equity of the Trust for such period, prepared on an unaudited basis which is consistent with the corresponding period of the preceding Fiscal Year;

(n) Compliance Certificate: the Borrower shall furnish to the Agent within sixty (60) days after the end of each of the first three Fiscal Quarters of each Fiscal Year of the Trust, and within ninety (90) days after the end of each Fiscal Year of the Trust, a duly executed and completed Compliance Certificate together with such back-up information as the Agent may reasonably require;

(o) Other Reports: the Borrower shall furnish to the Agent:

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	(i)		promptly upon transmission thereof, all financial statements, proxy statements, annual information forms, information circulars, notices and reports as the Trust shall send to the Trust Unitholders and to the Royalty Unitholders and copies of all prospectuses filed by the Trust with Canadian and United States securities regulatory authorities, registration statements and all material change reports which the Trust files with any Canadian or United States securities regulatory authorities;
	(ii)		promptly upon transmission thereof, all notices of meetings of Royalty Unitholders given pursuant to the Royalty Indenture and all notices of meetings of the Trust Unitholders given pursuant to the Trust Indenture;
	(iii)		promptly upon transmission thereof, any request of Trust Unitholders for the calling of a meeting of the Trust Unitholders or the Royalty Unitholders, respectively;
	(iv)		promptly upon receipt or delivery of the same, as applicable, all material reports which the Trust receives from or provides to the Borrower pursuant to any Material Contract; and
	(v)		promptly upon the same becoming effective, copies of any amendment to (including an assignment of) any Material Contract permitted hereunder;

(p) Additional Information: subject to any applicable confidentiality provisions, the Borrower shall and shall cause each of the other Loan Parties to furnish to the Agent any additional information regarding the business affairs, operations, properties and assets and financial condition of the Borrower or such Loan Party as the Agent may reasonably request from time to time and the Borrower shall and shall cause each of the other Loan Parties to permit any person designated in writing by the Agent, at the Lenders’ expense prior to a Default and at the Borrower’s reasonable expense after a Default which has occurred and is continuing but subject, in either case, to such reasonable access restrictions as may be imposed by the operator of the properties and assets in accordance with its ordinary business practices, to visit and inspect the Borrower’s or such Loan Party’s properties and assets, including, without limitation, their oil and gas properties and related production facilities and to carry out such environmental reviews as the Agent, in its sole discretion, acting reasonably, deems advisable, and to examine the books and financial records of the Borrower or such Loan Party and to discuss the affairs, finances and accounts, all at such reasonable times and as often as may be reasonably requested; provided, however, that such person or persons representing the Agent shall hold all information obtained as a result of such visit or visits in strict confidence for the use of the Agent and the Lenders in the conduct of their business related to the transactions contemplated by this Agreement;

(q) Comply with Permitted Encumbrances: the Borrower shall and shall cause each of the other Loan Parties to comply with all obligations under any Permitted Encumbrances, except to the extent failure to do so would not reasonably be expected to have a Material Adverse Effect;

(r) Accuracy of Oil and Gas Information: the Borrower shall ensure that each Engineering Report and Internal Engineering Report and all other related data and information provided by the Borrower to the Lenders with respect to the Oil and Gas Properties evaluated in any such Engineering Report or Internal Engineering Report or discussed in such related data and information, to the best of the knowledge and belief of the Borrower, after due inquiry, accurately and fairly reflect the interests of the Borrower and the Designated Subsidiaries therein and thereto net of all royalties and other burdens affecting same;

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(s) Engineering Reports: on or before the earlier of a Request for Extension pursuant to Section 3.15 and March 31 in each year during the term of this Agreement, the Borrower shall deliver to the Lenders an Engineering Report in respect of the Oil and Gas Properties. Each such Engineering Report shall be dated on or subsequent to December 31 of the year immediately preceding the year in which it is required to be delivered;

(t) Loan Party Guarantee and Subordination Agreement: within five (5) Business Days of a Subsidiary acquiring assets in an amount which would otherwise result in a violation of Section 8.3(d), or within five (5) Business Days of the Borrower or the Trust acquiring, directly or indirectly, a Subsidiary having assets in an amount which would otherwise result in a violation of Section 8.3(d), or within five (5) Business Days of a request being made by the Borrower to have a Subsidiary become a Designated Subsidiary, the Borrower shall cause such Subsidiary to provide to the Agent on behalf of the Agent and the Lenders an addition agreement (in the form attached as a schedule to the Loan Party Guarantee) whereby it agrees to be bound by the Loan Party Guarantee and an addition agreement (in the form attached as a schedule to the Subordination Agreement) whereby it agrees to be bound by the Subordination Agreement, and in addition thereto, shall provide, or cause to be provided, to the Agent a favourable opinion of counsel satisfactory to the Agent, acting reasonably, as to the legality, validity and enforceability of such addition agreements to the Loan Party Guarantee and the Subordination Agreement and as to such other matters as the Agent may reasonably require together with such other documents, such as certified resolutions and constating documents of the Designated Subsidiary, as the Agent may reasonably require;

(u) Ownership of Designated Subsidiaries: the Borrower shall ensure that each Designated Subsidiary will at all times be a direct or indirect wholly-owned Subsidiary of the Borrower or of the Trust, provided that a Designated Subsidiary may only be an indirect wholly-owned Subsidiary of the Borrower or of the Trust if all shareholders, partners and unitholders (as the case may be) of such Designated Subsidiary, and all shareholders, partners and unitholders (as the case may be) of such shareholders, partners and unitholders (as the case may be) through to the Borrower or the Trust, shall constitute Designated Subsidiaries;

(v) Comply with Material Contracts: the Borrower shall and shall cause each of the other Loan Parties to comply with the provisions of the Material Contracts to which it is a party (except to the extent any failure to comply would not reasonably be expected to have a Material Adverse Effect);

(w) Pari Passu Ranking: the Borrower shall ensure that its payment obligations hereunder rank at least pari passu in right of payment with all of its other existing and future senior unsecured indebtedness for borrowed money;

(x) Intercompany Subordinated Debt: the Borrower shall ensure that the Intercompany Subordinated Debt is at all times held by the Trust (provided that the Trust may sell, assign or transfer all or any portion of its interest in any Intercompany Subordinated Debt to one or more of the Designated Subsidiaries, whereupon such Intercompany Subordinated Debt so sold, assigned or transferred shall cease to constitute Intercompany Subordinated Debt hereunder and shall no longer be subject to the postponement and subordination provided for in the Subordination Agreement);

(y) Royalty: the Borrower shall ensure that the right to receive the Royalty and the Royalty Units are at all times held by any one or more of the Trust and the Designated Subsidiaries, provided that if any such right is held by the Trust, the Trust’s rights and interest in such Royalty, Royalty

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Units and the Royalty Indenture must be and remain fully postponed and subordinated to the Term Indebtedness, the Operating Indebtedness and the Swap Indebtedness as provided for in the Subordination Agreement, and provided further that, if and during the time that the right to receive the Royalty and the Royalty Units are held only by one or more Designated Subsidiaries, the Royalty Indenture shall cease to constitute a Material Contract hereunder, and the Royalty, the Royalty Units and the Royalty Indenture shall no longer be subject to the postponement and subordination provided for in the Subordination Agreement; and

(z) NPI: the Borrower shall ensure that the NPI is at all times held by any one or more of the Trust and the Designated Subsidiaries, provided that if any portion of the NPI is held by the Trust, the Trust’s interest therein and in the NPI Agreement must be and remain fully postponed and subordinated to the Term Indebtedness, the Operating Indebtedness and the Swap Indebtedness as provided for in the Subordination Agreement, and provided further that, if and during the time that the NPI is held only by one or more Designated Subsidiaries, the NPI Agreement shall cease to constitute a Material Contract hereunder, and the NPI and the NPI Agreement shall no longer be subject to the postponement and subordination provided for in the Subordination Agreement.

8.2 Negative Covenants of the Borrower

          During the term of this Agreement, the Borrower covenants with each of the Lenders and the Agent that, without the prior written consent of the Lenders:

(a) Negative Pledge: except for Permitted Encumbrances, the Borrower shall not and shall not permit any of the other Loan Parties to create, incur, assume or suffer to exist any Security Interest, upon or with respect to any of its undertaking, properties, rights or assets, whether now owned or hereafter acquired and including, without limitation, its Petroleum and Natural Gas Properties and related production facilities;

(b) Restriction on Amalgamation etc.: the Borrower shall not and shall not permit any of the other Loan Parties to enter into any transaction (other than a transaction involving only Loan Parties) whereby all or substantially all of its undertaking, property and assets would become the property of any other person (herein called a “Successor”) whether by way of reconstruction, reorganization, recapitalization, consolidation, amalgamation, merger, transfer, sale or otherwise (each a “Transaction”) unless:

	(i)		the Majority Lenders, acting reasonably, are satisfied with the resulting creditworthiness of the Successor after the Transaction;
	(ii)		prior to or contemporaneously with the consummation of such Transaction:

	(A)		the Successor is or will be (by operation of law or otherwise) bound by or have assumed all the covenants and obligations of the Borrower or such Loan Party under the Loan Documents and the Material Contracts to which it is a party; and
	(B)		the Loan Documents and the Material Contracts to which it is a party will be valid and binding obligations of the Successor, enforceable against the Successor and entitling the Agent and the Lenders, as against the Successor, to exercise all their rights under the Loan Documents to which it is a party;

and provided that the Successor shall also execute and/or deliver to the Agent such documents (including assumption agreements and legal opinions of counsel to the

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Successor), if any, as may, in the reasonable opinion of the Agent, be necessary to effect or establish (A) and (B) above;

	(iii)		the Successor is an entity governed by or created under the federal laws of Canada or the laws in force in a province of Canada, and in the case of the Borrower only, the Successor is a corporation;
	(iv)		such Transaction shall not have a Material Adverse Effect;
	(v)		such Transaction shall be on such terms and shall be carried out in such manner as to preserve and not to impair any of the rights and powers of the Agent and the Lenders hereunder and under any other Loan Documents and not to affect adversely the potential liability of the Agent and the Lenders for any present or future taxes, duties, assessments or charges of whatsoever nature imposed or levied by or on behalf of the Government of Canada or any province or political subdivision thereof or any authority or agency therein or thereof having power to impose or levy taxes, duties, assessments or charges;
	(vi)		such Transaction shall not result in the undertaking, property and assets of the Successor being subject to any Security Interests other than Permitted Encumbrances; and
	(vii)		no Event of Default or Default shall have occurred and be continuing immediately prior to such Transaction or will occur as a result of such Transaction;

and provided further that, in the case of a transaction involving only Loan Parties that would otherwise constitute a Transaction, the Borrower shall not and shall not permit any of the Loan Parties to enter into such a transaction unless the conditions specified in subsections (ii)(A) and (B), (iii) and (vii) above are satisfied, and the Successor shall execute and/or deliver to the Agent such documents (including assumption agreements and legal opinions of counsel to the Successor), if any, as may, in the reasonable opinion of the Agent, be necessary to effect or establish the matters set forth in subsection (ii)(A) and (B) above;

(c) Change of Business: the Borrower shall not and shall not permit any of the other Loan Parties to change in any material respect the nature of its business or operations from the exploration for, and development, production, marketing, transportation and processing of, petroleum, natural gas and related products, nor engage directly or indirectly in any material business or activity not primarily related to the conduct of its business or operations as presently carried on;

(d) Restriction on Sale: the Borrower shall not and shall not permit any of the other Loan Parties to, directly or indirectly, make any sale, exchange, lease, transfer, contribution or other disposition (other than Permitted Dispositions) of any of its assets to any person if such disposition has or would reasonably be expected to have a Material Adverse Effect;

(e) Swap Amounts: the Borrower shall not and shall not permit any of the other Loan Parties to:

	(i)		enter into any Swap with any person unless such Swap complies with the then applicable hedging policies with respect to Swaps approved by the board of directors of the Borrower; or
	(ii)		enter into any Swap with any person unless such Swap is entered into for hedging purposes only in the ordinary course of business and not for speculative purposes;

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(f) Designated Subsidiary Swaps: the Borrower shall not permit any of the Designated Subsidiaries to enter into any Swap with one of the Lenders or any of their affiliates unless the Loan Parties shall have provided a guarantee of the Swap Indebtedness to be incurred thereunder in favour of such Lender (or its affiliate) or the Agent on behalf of, inter alia, such Lender (or its affiliate);

(g) Restriction on Financial Assistance: except for Permitted Financial Assistance, the Borrower shall not and shall not permit any of the other Loan Parties to provide any form of Financial Assistance to any person;

(h) Transactions With Affiliates: except to the extent permitted by Section 8.2(g) above and except for transactions between Loan Parties, the Borrower shall not and shall not permit any of the other Loan Parties to engage in any material transaction with the Manager or any Affiliate of the Borrower or of the Trust on terms which are materially less favourable to the Borrower or such Loan Party than would be obtainable at the time in a comparable transaction with any person which is at arms-length to the Borrower;

(i) Material Contracts: the Borrower shall not permit any of the other Loan Parties to amend, replace, waive strict and timely performance of, terminate or assign any Material Contract (other than any assignments, sales or transfers of any Material Contract or any interest in any Material Contract, including the NPI, the Royalty and the Royalty Units, completed in compliance with Sections 8.1(x), 8.1(y) and 8.1(z) hereof and other than any amendments, replacements, waivers or terminations of any Material Contract that would not reasonably be expected to have a Material Adverse Effect) without the prior written consent of the Lenders, such consent not to be unreasonably withheld;

(j) Shares of Borrower: the Borrower will not permit the issuance of any shares other than common shares in the issued capital of the Borrower without the prior written consent of the Lenders, such consent not to be unreasonably withheld; and

(k) Distributions: if a Default or an Event of Default has occurred and is continuing or would reasonably be expected to occur as a result thereof,

	(i)		the Borrower shall not and shall not permit any Designated Subsidiary to make any Distribution; and
	(ii)		the Borrower shall not, after the delivery of a written notice from the Agent to the Trustee as contemplated by the Subordination Agreement, permit the Trust to make any payment or distribution of any kind to any person other than the Borrower or a Designated Subsidiary.

8.3 Financial Covenants

          During the term of this Agreement, regardless of whether the Borrower has any Borrowings hereunder, the Borrower covenants with the Agent and the Lenders that:

(a) Consolidated Senior Debt to EBITDA Ratio: the Consolidated Senior Debt to EBITDA Ratio as at the end of any Fiscal Quarter shall not exceed 3:1, provided that if the Borrower, the Trust or a Designated Subsidiary completes a Material Acquisition (and provided that the Borrower would have continued to comply with this Section 8.3(a) if such Material Acquisition had not been made and provides a calculation evidencing such compliance in its Compliance Certificate

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relating to such Fiscal Quarter), then during the period from the completion of such Material Acquisition to the end of the second complete Fiscal Quarter after completion of such Material Acquisition, the Borrower may permit the Consolidated Senior Debt to EBITDA Ratio to increase to a level not exceeding 3.5:1;

(b) Consolidated Total Debt to EBITDA Ratio: the Consolidated Total Debt to EBITDA Ratio as at the end of any Fiscal Quarter shall not exceed 3.5:1, provided that if the Borrower, the Trust or a Designated Subsidiary completes a Material Acquisition (and provided that the Borrower would have continued to comply with this Section 8.3(b) if such Material Acquisition had not been made and provides a calculation evidencing such compliance in its Compliance Certificate relating to such Fiscal Quarter), then during the period from the completion of such Material Acquisition to the end of the second complete Fiscal Quarter after completion of such Material Acquisition, the Borrower may permit the Consolidated Total Debt to EBITDA Ratio to increase to a level not exceeding 4.0:1;

(c) Consolidated Senior Debt to Capitalization Ratio: the Consolidated Senior Debt to Capitalization Ratio shall not at any time exceed 50%, provided that if the Borrower, the Trust or a Designated Subsidiary completes a Material Acquisition (and provided that the Borrower would have continued to comply with this Section 8.3(c) if such Material Acquisition had not been made and provides a calculation evidencing such compliance in its Compliance Certificate relating to such Fiscal Quarter), then during the period from the completion of such Material Acquisition to the end of the second complete Fiscal Quarter after completion of such Material Acquisition, the Borrower may permit the Consolidated Senior Debt to Capitalization Ratio to increase to a level not exceeding 55%;

(d) Designated Subsidiaries Asset Test: subject to Section 8.1(t), the Borrower shall ensure that the Consolidated Tangible Assets of the Loan Parties (determined on an unconsolidated basis and excluding inter-company items) shall not at any time be less than 85% of the Consolidated Tangible Assets of the Trust as shown on the most recent consolidated financial statements of the Trust provided to the Lenders hereunder; and

(e) Non-Recourse Debt: the Borrower shall ensure that the aggregate amount of outstanding Non-Recourse Debt of the Borrower and the other Loan Parties (determined on a consolidated basis) shall not exceed an amount equal to 2.5% of the Consolidated Tangible Assets of the Trust as shown on the most recent consolidated financial statements of the Trust provided to the Lenders hereunder.

ARTICLE 9
EVENTS OF DEFAULT

9.1 Events of Default

          The occurrence of any one or more of the following events or circumstances constitutes an Event of Default under this Agreement:

(a) Repayment: the failure to repay or otherwise reduce the Borrowings or any portion thereof or any other amounts due hereunder when due for repayment, payment or other reduction hereunder, for a period of five (5) Business Days after written notice has been given to the Borrower from the Agent that any such amount is overdue;

(b) Voluntary Insolvency: if any Loan Party shall:

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	(i)		apply for or consent to the appointment of a receiver, trustee or liquidator of itself or of all or a substantial part of its assets;
	(ii)		be unable, or admit in writing its inability or failure, to pay its debts generally as they become due;
	(iii)		make a general assignment for the benefit of creditors;
	(iv)		commit an act of bankruptcy under the Bankruptcy and Insolvency Act (Canada);
	(v)		commence any cause, proceeding or other action under any existing or future law relating to bankruptcy, insolvency, reorganization of its indebtedness or relief of debtors seeking to have an order for relief entered with respect to it, or seeking to adjudicate it a bankrupt or insolvent, or seeking reorganization, arrangement or adjustment of its indebtedness, winding up, liquidation, dissolution, composition or other relief with respect to it or its debts or an arrangement with creditors or taking advantage of any insolvency law or proceeding for the relief of debtors, or file an answer admitting the material allegations of a petition filed against it in any bankruptcy, reorganization of its indebtedness or insolvency proceeding; or
	(vi)		take corporate action for the purpose of effecting any of the foregoing;

(c) Involuntary Insolvency: if any cause, proceeding or other action shall be instituted in any court of competent jurisdiction, against any Loan Party, seeking in respect of such Loan Party an adjudication in bankruptcy, reorganization of its indebtedness, dissolution, winding up, liquidation, a composition or arrangement with creditors, a readjustment of debts, the appointment of a trustee, receiver, liquidator or the like of it or of all or any substantial part of its assets, or any other like relief in respect of such Loan Party under any bankruptcy or insolvency law and:

	(i)		such cause, proceeding or other action results in an entry of an order for relief or any such adjudication or appointment; or
	(ii)		if such cause, proceeding or other action is being contested by such Loan Party in good faith, the same shall continue undismissed, or unstayed and in effect, for any period of thirty (30) consecutive days;

(d) Cross Default: if, other than as provided for under Section 9.1(e), 9.1(f) or 9.1(g) hereof:

	(i)		any Loan Party is in default (as principal or as guarantor or other surety) in the payment of any principal of, or interest on, or any other amount in respect of any Debt that would be classified as debt on a consolidated balance sheet of the Trust (other than pursuant to this Agreement or Non-Recourse Debt) or Swap that is outstanding in an aggregate principal amount in excess of the Threshold Amount beyond any period of grace provided with respect thereto;
	(ii)		any Loan Party is in default in the performance of or compliance with any term of any evidence of any Debt that would be classified as debt on a consolidated balance sheet of the Trust (other than pursuant to this Agreement or Non-Recourse Debt) or Swap in an aggregate outstanding principal amount in excess of the Threshold Amount or of any mortgage, indenture or other agreement relating thereto or any other condition exists, and

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			as a consequence of any such default or condition such Debt or Swap has become, or has been declared, due and payable before its stated maturity or before its regularly scheduled dates of payment; or
	(iii)		as a consequence of the occurrence or continuation of any event or condition (other than the passage of time or the right of the holder of Debt to convert such indebtedness into equity interests):

	(A)		any Loan Party has become obligated to purchase or repay Debt that would be classified as debt on a consolidated balance sheet of the Trust (other than pursuant to this Agreement or Non-Recourse Debt) or Swaps before its regular maturity or before its regularly scheduled dates of payment in an aggregate outstanding principal amount in excess of the Threshold Amount; or
	(B)		one or more persons have the right to require any Loan Party so to purchase or repay Debt that would be classified as debt on a consolidated balance sheet of the Trust (other than pursuant to this Agreement or Non-Recourse Debt) or Swaps in an aggregate outstanding principal amount in excess of the Threshold Amount;

(e) Default under Operating Loan Documents: if written demand is made for repayment of the Operating Borrowings and the Borrower defaults in repayment thereof for a period of fifteen (15) days after such demand is made;

(f) Lender Swap Agreements: if any Loan Party defaults under a Swap Agreement with any Lender or an affiliate thereof and such default is not remedied within fifteen (15) days after written notice of such default has been given to the Borrower by such Lender or affiliate;

(g) Default under Bridge Loan Documents: if the Borrower is in default under any term or provision of the Bridge Loan Documents and as a result of such default the Bridge Lenders (or the Bridge Agent) shall have accelerated or shall have the right to accelerate the repayment of any of the Bridge Indebtedness;

(h) Invalid Loan Documents: if for a period of twenty (20) days after written notice thereof to the Borrower, any material provision of any Loan Document continues to be invalid or unenforceable and not cured to the satisfaction of the Agent acting reasonably;

(i) Representations and Warranties: if any representation or warranty made or deemed to be made by any Loan Party in the Loan Documents shall prove to have been incorrect, when made or deemed to be made, in any material respect and shall continue to be incorrect for a period of twenty (20) days after written notice of such incorrect representation or warranty has been given to the Borrower by the Agent;

(j) Judgments: if final judgments for the payment of money aggregating in excess of the Threshold Amount shall be rendered against any Loan Party (other than in respect of Non-Recourse Debt) and the same shall remain undischarged for a period of twenty (20) days during which such judgments shall not be on appeal or execution thereof shall not be effectively stayed;

(k) Writs: if a writ, execution, attachment or similar process is issued or levied against all or a material portion of the property of any Loan Party in connection with any judgment or judgments against such Loan Party aggregating in excess of the Threshold Amount (other than against any Non-Recourse Asset in respect of the Non-Recourse Debt to which it relates) and such writ,

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execution, attachment or similar process is not released, satisfied, discharged, vacated or stayed within twenty (20) days after its entry, commencement or levy;

(l) Encumbrancers: if an encumbrancer or lienor takes possession of any part of the property of any Loan Party (other than a holder of Non-Recourse Debt taking possession of the Non-Recourse Asset to which such debt relates) which property has a fair market value in excess of the Threshold Amount, or if execution or other similar process is enforced against such property and such taking of possession or enforcement is not being contested by such Loan Party in good faith and the encumbrancer or lienor remains in possession for any period of twenty (20) consecutive days;

(m) Change of Control: if a Change of Control has occurred without the consent of the Majority Lenders;

(n) Borrower Ownership: if (i) the Trust and the Designated Subsidiaries (or any one or more of them) cease to collectively own at least 90.1% of the shares and other equity interests of the Borrower, or (ii) any person (other than the Manager, the Trust or the Designated Subsidiaries) owns any shares or other equity interests in the Borrower;

(o) Ownership of Royalty Units, NPI or Intercompany Subordinated Debt: if (i) any person other than the Trust and the Designated Subsidiaries owns any Royalty Units; (ii) any person other than the Trust and the Designated Subsidiaries owns any of the NPI; or (iii) except as a result of any sales, assignments or transfers permitted by Section 8.1(x), 8.1(y) and 8.1(z), the Trust ceases to hold 100% of the Intercompany Subordinated Debt; or

(p) Breach of Other Covenants: if there is a breach or failure of due performance by a Loan Party of any covenant or provision of any of the Loan Documents (other than those heretofore dealt with in this Section 9.1) for a period of thirty (30) days after written notice of such breach or failure shall have been given by the Agent to the Borrower.

9.2 Acceleration and Demand

          Upon the occurrence of any Event of Default which has not been remedied or waived, the Agent may on behalf of the Lenders, and shall if so required by the Majority Lenders, by written notice to the Borrower (the “Acceleration Notice”):

(a) declare the Total Commitment and each Lender’s Commitment and the right of the Borrower to apply for further Accommodations to be terminated; and

(b) declare all indebtedness and liabilities (whether matured or unmatured) of the Borrower outstanding to the Lenders hereunder (including the face amount of all Bankers’ Acceptances and the amount of all BA Equivalent Advances and the undrawn amount of all outstanding Letters of Credit) to be immediately due and payable (or to be due and payable at such later time as may be stated in such notice) without further demand, presentation, protest or other notice of any kind, all of which are expressly waived by the Borrower;

but upon the occurrence of an Insolvency Event, the Total Commitment shall automatically terminate and all indebtedness and liabilities specified in Section 9.2(b) shall automatically become due and payable, in each case without any requirement that notice be given to the Borrower. Immediately upon the occurrence of an Insolvency Event or at the time stated in an Acceleration Notice, the Borrower shall pay to the Agent on behalf of each Lender all amounts owing or payable in respect of such indebtedness and

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liabilities specified in Section 9.2(b), failing which all rights and remedies of the Lenders and the Agent under the Loan Documents shall thereupon become enforceable and shall be enforced by the Agent in accordance with the determinations of the Majority Lenders.

9.3 Waiver of Default

          Any single or partial exercise by the Agent or any Lender of any right or remedy for a default or breach of any term, covenant, condition or agreement contained in the Loan Documents shall not be deemed to be a waiver of or to alter, affect or prejudice any other right or remedy to which the Agent or such Lender may be lawfully entitled for the same default or breach, and any waiver by the Agent or any Lender of the strict observance, performance or compliance with any term, covenant, condition or agreement contained in the Loan Documents, and any indulgence granted thereby, shall be deemed not to be a waiver of any subsequent default. To the extent permitted by applicable law, the Borrower hereby waives any rights now or hereafter conferred by statute or otherwise which may limit or modify any of the Agent’s or Lenders’ rights or remedies under the Loan Documents.

9.4 Application of Payments Following Demand and Acceleration

          Except as otherwise agreed to by all the Lenders in their sole discretion, any sum received by the Lenders or the Agent for application in respect of the Term Indebtedness, the Operating Indebtedness and any Swap Indebtedness at any time after delivery of an Acceleration Notice or the occurrence of an Insolvency Event shall be applied by the Agent among the Lenders, the Operating Lender, the Swap Lenders and the Agent in accordance with amounts owed to the Lenders, the Operating Lender, the Swap Lenders and the Agent in respect of each category of amounts set forth below, each such application to be made in the following order with the balance remaining after application in respect of each category to be applied to the next succeeding category:

(a) firstly, in or towards payment of any fees or expenses then due and payable to the Agent hereunder;

(b) secondly, rateably among the Lenders, the Operating Lender and the Swap Lenders in respect of amounts due and payable to the Lenders, the Operating Lender and the Swap Lenders as and by way of recoverable expenses hereunder, under the Operating Credit Agreement and under any Swap Agreement to which any Swap Lender is a party;

(c) thirdly, rateably among the Lenders and the Operating Lender in respect of amounts due and payable to the Lenders by way of interest pursuant to Sections 5.1, 5.2 and 5.3, acceptance fees pursuant to Section 5.4, Letter of Credit fees pursuant to Section 5.5, interest on overdue amounts pursuant to Section 5.6 and standby fees pursuant to Section 5.7 and similar amounts due and payable to the Operating Lender under the Operating Credit Agreement;

(d) fourthly, rateably among the Lenders and the Operating Lender in respect of any other amount (other than Borrowings and Operating Borrowings) not hereinbefore referred to in this Section 9.4 which are then due and payable by the Borrower hereunder or under the Operating Credit Agreement; and

(e) fifthly, rateably among the Lenders, the Operating Lender and the Swap Lenders in or towards repayment to the Lenders, the Operating Lender and the Swap Lenders of the Borrowings then outstanding, the Operating Borrowings then outstanding and the Swap Indebtedness then outstanding, subject to any adjustments required to be made in accordance with the provisions of Section 11.11; and

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(f) any balance remaining to the Borrower or as otherwise required by applicable law.

9.5 Remedies Cumulative

          For greater certainty, it is expressly understood and agreed that the rights and remedies of the Agent and the Lenders under the Loan Documents are cumulative and are in addition to and not in substitution for any rights or remedies provided by law. The Agent may on behalf of the Lenders and shall if so required by the Majority Lenders, to the extent permitted by applicable law, bring suit at law, in equity or otherwise for any available relief or purpose including but not limited to:

(a)		the specific performance of any covenant or agreement contained in the Loan Documents;
(b)		enjoining a violation of any of the terms of the Loan Documents;
(c)		aiding in the exercise of any power granted by the Loan Documents or by law; or
(d)		obtaining and recovering judgment for any and all amounts due in respect of the Borrowings or amounts otherwise due hereunder or under the Loan Documents.

9.6 Set-Off

          In addition to any rights now or hereafter granted under applicable law and not by way of limitation of any such rights, the Agent and each Lender are authorized at any time after the occurrence of an Event of Default which has not theretofore been waived or rescinded by the Lenders and from time to time thereafter without notice to the Borrower or to any other person, any such notice being expressly waived by the Borrower, to set-off and to appropriate and to apply any and all deposits (general and special) and any other indebtedness at any time held by or owing by the Agent or such Lender to or for the credit of or the account of the Borrower against and on account of the obligations and liabilities of the Borrower to the Agent or such Lender under this Agreement, including without limitation, all claims of any nature or description arising out of or connected with this Agreement, irrespective of whether such obligations, liabilities or claims of the Borrower are contingent or unmatured.

9.7 Cash Collateral Accounts

          Upon the occurrence of an Event of Default or upon receipt of cash cover by the Agent pursuant to Section 4.2 and in addition to any other rights or remedies of the Lenders hereunder, the Agent, for the benefit of the Lenders hereunder, shall thereafter be entitled to deposit and retain in an account to be maintained by the Agent, and which for the purposes hereof shall be considered to be the Agent’s account and not the Borrower’s account (bearing interest for the Borrower’s account at the rates of the Agent as may be applicable in respect of other deposits of similar amounts for similar terms), amounts which are received by the Agent from the Borrower to the extent that and for so long as such amounts either may be required to satisfy any contingent or unmatured obligations or liabilities of the Borrower to the Agent and the Lenders under the Loan Documents or are actually used to satisfy any such obligations or liabilities; provided that if such amounts are no longer required or not so used, the Agent shall forthwith return the same to the Borrower.

9.8 Lenders May Perform Covenants

          If the Borrower shall fail to perform any covenant on its part herein contained, the Agent may on behalf of the Lenders and with the approval of the Majority Lenders, upon five (5) Business Days prior notice to the Borrower, perform any of the said covenants capable of being performed by it and, if

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any such covenant requires the payment or expenditure of money, it may make such payment or expenditure with its own funds on behalf of the Lenders and shall be entitled to reimbursement of any such expenditure from each Lender based upon the proportion that such Lender’s Commitment bears to the Total Commitment. All amounts so paid by the Agent hereunder shall be repaid by the Borrower on demand therefor, and shall bear interest at the rate set forth in Section 5.6 from the date paid by the Agent hereunder to and including the date such amounts are repaid in full by the Borrower.

ARTICLE 10
EXPENSES AND INDEMNITIES

10.1 Reimbursement of Expenses and Indemnity

          All statements, reports, certificates, opinions and other documents or information required to be furnished to the Agent or the Lenders by the Borrower under this Agreement shall be supplied by the Borrower without cost to the Agent or the Lenders. In addition, the Borrower hereby agrees to pay promptly to the Agent on demand all reasonable legal fees and all other reasonable out of pocket expenses which are incurred from time to time by the Agent in respect of the documentation, preparation, negotiation, execution, and administration of the Loan Documents (including stamp taxes or other Taxes payable in connection with the execution, delivery or enforcement of the Loan Documents) and all expenses which are incurred from time to time by the Agent or the Lenders in respect of the enforcement of this Agreement and any other Loan Documents.

10.2 Increased Cost

          If, subsequent to the date of this Agreement, the introduction of, any change in or the implementation of any applicable law, regulation, treaty or official directive or regulatory requirement of general application now or hereafter in effect (whether or not having the force of law) or any change in the interpretation or application thereof by any court or by any judicial or governmental authority charged with the interpretation or administration thereof, or if compliance by any Lender with any request from any central bank or other fiscal, monetary or other authority (whether or not having the force of law):

(a) subjects a Lender to any Tax, or changes the basis of taxation (through Taxes) of payments due to such Lender or increases any existing Tax, on payments of principal, interest or other amounts payable by the Borrower to such Lender under this Agreement;

(b) imposes, modifies or deems applicable any reserve, special deposit, capital adequacy, regulatory or similar requirement against assets or liabilities held by, or deposits in or for the account of, or loans to, or any other acquisition of funds for loans or commitments to fund loans or obligations in respect of bankers’ acceptances accepted by a Lender or letters of credit issued by a Lender; or

(c) imposes on a Lender any other condition with respect to this Agreement;

and the result of (a), (b), or (c) is, in the sole determination of such Lender acting reasonably and in good faith, to increase the cost to such Lender or to reduce the income or return which is receivable by such Lender in respect of a Borrowing or standby fees payable pursuant to Section 5.7, such Lender shall promptly notify the Agent. The Agent shall promptly notify the Borrower and the Borrower shall pay to the Agent for the benefit of such Lender that amount which compensates such Lender for such additional cost or reduction in income (“Additional Compensation”) on the next Libor Interest Date in the case of a Libor Loan, on the next date on which standby fees are payable under Section 5.7 in the case of standby fees and on the next Interest Date in any other case (and each such successive date, if and as applicable). The Borrower shall not be obligated to pay any portion of such Additional Compensation accruing under

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this Section 10.2 for any period prior to the date which is ninety (90) days prior to the date on which the Agent, on behalf of such Lender, gives notice to the Borrower that such Additional Compensation is so accruing. A certificate by a duly authorized officer of such Lender prepared in good faith setting forth the amount of the Additional Compensation and the basis for it must be submitted by the Agent to the Borrower and is conclusive evidence, in the absence of manifest error, of the amount of the Additional Compensation. Such Lender shall, for the purposes of the calculation of Additional Compensation and to the extent contractually permitted, treat the Borrower in a manner consistent with other borrowers of such Lender having credit facilities with such Lender comparable to the credit facilities hereunder. If the Agent notifies the Borrower that Additional Compensation is owed, the Borrower shall pay such Additional Compensation to the Agent for the account of such Lender and the Borrower shall have the right, upon written irrevocable prior notice of at least three (3) Business Days to the Agent at the Agent’s Branch of Account, to make payment in full to the Agent for the account of such Lender in respect of the applicable Borrowing on the date specified in such notice together with accrued interest in respect of such Borrowing or to convert such Borrowing into another basis of Borrowing available under this Agreement.

10.3 Illegality

          If the introduction or application of or any change in applicable law, regulation, treaty or official directive, or regulatory requirement (whether or not having the force of law) or in the interpretation or application thereof by any court or by any governmental authority charged with the administration thereof, makes it unlawful, or prohibited for a Lender (in its good faith sole opinion) to make, to fund or to maintain the Borrowings or a portion of the Borrowings or to perform its obligations under this Agreement (including, in the case of an Issuing Lender, to issue Letters of Credit), such Lender may, by written notice to the Borrower through the Agent terminate its obligations under this Agreement or any portion thereof to make such Borrowings or perform such obligations and the Borrower shall prepay such Borrowings forthwith (or at the end of such period as is permitted under applicable law before the illegality or prohibition takes effect or as such Lender in its discretion otherwise agrees acting in good faith) together with all accrued but unpaid interest and fees as may be applicable to the date of payment or convert by notice to the Agent such Borrowings forthwith into another basis of Borrowing available under this Agreement.

10.4 Substitute Basis of Borrowing

          If, on or prior to any Interest Determination Date in respect of a Libor Loan, a Lender determines acting reasonably and in good faith (which determination is final, conclusive and binding upon the Borrower) that:

(a) adequate and fair means do not exist for ascertaining the rate of interest on such Libor Loan;

(b) the cost to such Lender of making, funding or maintaining such Libor Loan does not accurately reflect the effective cost to such Lender thereof and the costs to such Lender are increased or the income receivable by such Lender is reduced in respect of such Libor Loan;

(c) the making or the continuation of such Libor Loan or a portion of such Libor Loan by such Lender has become impracticable by reason of circumstances which materially and adversely affect the London interbank market; or

(d) deposits in U.S. Dollars are not available to such Lender in the London interbank market in sufficient amounts in the ordinary course of business for the applicable Libor Interest Period to make, fund or maintain such Libor Loan during such Libor Interest Period;

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then, such Lender shall promptly notify the Agent and the Agent shall promptly notify the Borrower in writing of such determination setting forth the basis of such determination and such Lender shall not thereafter be obligated to provide such Libor Loan. The Borrower shall thereupon forthwith notify the Agent as to the substitute basis of Borrowing available under this Agreement which it has selected for such Libor Loan made by such Lender. If the Borrower has not so notified the Agent, such Libor Loan made by such Lender shall automatically be made as or converted to a U.S. Base Rate Loan on the date falling two (2) Business Days subsequent to such Interest Determination Date.

10.5 Funding Indemnity

          If, for any reason whatsoever and whether or not required or permitted pursuant to the provisions of this Agreement, the Borrower repays, prepays, converts or cancels a Libor Loan other than on the last day of a Libor Interest Period applicable to such Libor Loan, the Borrower shall indemnify the applicable Lender for any resulting loss or expense incurred by such Lender including, without limitation, any loss of profit or expenses such Lender incurs by reason of the liquidation or reemployment of deposits or other funds acquired by such Lender to maintain such Libor Loan or any increased interest or other charges payable to lenders of funds borrowed in order to maintain such Libor Loan together with any other out-of-pocket charges, costs or expenses incurred by such Lender relative thereto. If, for any reason whatsoever and whether or not required or permitted pursuant to the provisions of this Agreement, the Agent or any Lender provides the Borrower with the anticipated discounted proceeds of sale of a Bankers’ Acceptance (less any fees payable to such Lender in respect thereof) on any day prior to the receipt by the Agent or such Lender of such proceeds and the Agent or such Lender does not receive such proceeds from the person designated to purchase such Bankers’ Acceptance on the date such proceeds are payable hereunder, the Borrower shall indemnify the Agent and each applicable Lender for any resulting loss, cost or expense incurred by the Agent or such Lender by reason of or arising as a result of the non-receipt or delayed receipt by the Agent or such Lender of such proceeds, including without limitation, any losses which the Agent or such Lender may incur if it arranges for any further sale of such Bankers’ Acceptance in replacement thereof and any costs which the Agent or such Lender may incur in connection with any action against the person designated to purchase such Bankers’ Acceptance, together with any other out-of-pocket charges, costs or expenses incurred by the Agent or such Lender relative thereto. In each case, a certificate of the Agent or a certificate of such Lender (acting reasonably and prepared in good faith) setting out the basis for the determination of the amount necessary to indemnify such Lender shall be, in the absence of manifest error, conclusive evidence thereof.

10.6 General Indemnity

          The Borrower hereby covenants with the Agent and each Lender that it shall at all times hereafter keep the Agent and such Lender indemnified and held harmless from and against all suits (whether founded or unfounded), actions, proceedings, judgments, demands or claims instituted or made against the Agent or such Lender, and all costs, losses, liabilities, damages and expenses (including all reasonable legal fees on a solicitor and his own client basis) incurred by the Agent or such Lender in any way relating to, arising out of, or incidental to (a) any provision of the Loan Documents, (b) any Environmental Laws applying to the Agent or such Lender as a result of it being a party to or performing its obligations under any Loan Document or (c) any default by the Borrower under any provision of any of the Loan Documents. If and for so long as no Event of Default has occurred and is continuing, the Borrower, at its option, shall be entitled to conduct the defence of such suit, action or proceeding with the participation of the Agent or such Lender should they so desire. If the defence of any such suit, action or proceeding is not being conducted in a proper or diligent manner by the Borrower, the Agent or such Lender shall on notice to the Borrower (and for the account of the Borrower) be entitled to take over the conduct of the defence of such suit, action or proceeding with the participation of the Borrower should it so desire. This indemnity shall extend to the officers, directors, employees, agents, shareholders and

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assignees of the Agent and each Lender and shall survive the termination of this Agreement but shall not apply to any suits, actions, proceedings, judgments, demands or claims or costs, losses, liabilities, damages and expenses resulting from or attributable to the willful misconduct or gross negligence of the Agent or any Lender or any officers, directors, employees, agents, shareholders or assignees thereof.

ARTICLE 11
THE AGENT AND THE LENDERS

11.1 Authorization of Agent

          Each Lender irrevocably appoints and authorizes the Agent to exercise such powers, perform such duties, take such actions, make such decisions and determinations and give such consents under the Loan Documents as are required to be exercised, performed, taken, made, given or otherwise carried out by the Agent hereunder or under any other agreement between the Lenders, together with all powers reasonably incidental thereto. As to any matters not expressly required by this Agreement or by any other agreement between the Lenders to be carried out by the Agent, the Agent is not required to exercise any discretion or take or to refrain from taking any action except upon the written instructions of the Majority Lenders. Notwithstanding anything to the contrary in this Agreement, the Agent shall not be required to exercise any discretion or to take or to refrain from taking any action in any manner which is contrary to the Loan Documents, to any other agreement between the Lenders or to applicable law.

11.2 Responsibility of Agent

          The Agent makes no representation or warranty and accepts no responsibility with respect to the due execution, legality, validity, sufficiency, enforceability or priority of any of the Loan Documents nor with respect to the due execution, legality, validity, sufficiency, enforceability, accuracy or authenticity of any documents, papers, materials or other information furnished by the Borrower (or any other person, including the Agent) in connection with the Loan Documents, whether provided before or after the date of this Agreement. The Agent shall incur no liability to the Lenders under or in respect of the Loan Documents with respect to anything which it may do or refrain from doing in the reasonable exercise of its judgment or which may seem to it to be necessary or desirable in the circumstances, except for its gross negligence or willful misconduct. The Agent assumes no responsibility for the payment of any of the Borrowings or other amounts outstanding hereunder or under the other Loan Documents by the Borrower or any other Loan Party.

11.3 Acknowledgment of Lenders

          Each Lender acknowledges to the Agent that it has been, and will continue to be, solely responsible for making its own independent appraisal of and investigation into the financial condition, creditworthiness, affairs, status and nature of the Borrower and the other Loan Parties and accordingly each Lender confirms to the Agent that it has not relied, and will not hereafter rely on the Agent:

(a) Information: to check or inquire on its behalf into the adequacy, accuracy or completeness of any information provided by the Borrower or in connection with the Loan Documents (whether or not such information has been or is hereafter circulated to such Lender by the Agent);

(b) Performance: to inquire as to the performance by the Borrower or any other Loan Party of its obligations under the Loan Documents; or

(c) Credit Review: to assess or keep under review on its behalf the financial condition, creditworthiness, affairs, status or nature of the Borrower or any other Loan Party.

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11.4 Rights and Obligations of Each Lender

          The rights and obligations of each Lender under this Agreement are several and no Lender shall be obligated to make Borrowings available to the Borrower in excess of its Commitment. The failure of a Lender to perform its obligations under this Agreement shall neither:

(a) result in any other Lender incurring any liability whatsoever; nor

(b) relieve the Borrower or any other Lender from their respective obligations under any Loan Document.

Nothing contained herein or in any other Loan Document nor any action taken pursuant hereto or thereto shall be deemed to constitute the Lenders a partnership, joint venture or any other similar entity.

          Each of the Lenders hereby acknowledges that, to the extent permitted by applicable law, the remedies provided hereunder to the Lenders are for the benefit of the Lenders collectively and acting together and not severally and further acknowledges that its rights hereunder are to be exercised not severally, but collectively by the Agent upon the decision of the Majority Lenders regardless of whether an Acceleration Notice has been delivered or an Insolvency Event has occurred. Notwithstanding any of the provisions contained herein, each of the Lenders hereby covenants and agrees that it shall not be entitled to individually take any action with respect to the Loan Documents, including, without limitation, taking (including in respect of its Commitment or any indebtedness or liability owed to it) any action contemplated in Sections 9.2(a) and 9.2(b), but that any such action shall be taken only by the Agent with the prior written agreement or instructions of the Majority Lenders; provided that notwithstanding the foregoing if the Agent, having been adequately indemnified against costs and expenses of so doing by the Lenders, shall fail to carry out any such instructions of the Majority Lenders, any Lender may do so on behalf of all Lenders and shall, in so doing, be entitled to the benefit of all protections given the Agent hereunder or elsewhere.

11.5 Determinations by Lenders

(a) Lenders’ Determinations: Where the provisions of this Agreement provide that any waiver of or any amendment to any provision of the Loan Documents may be made or any action, consent or other determination in connection with the Loan Documents may be taken or given, with the consent or agreement of the Majority Lenders or “the Lenders” and not “all the Lenders”, then any such waiver, amendment, action, consent or determination so made, so taken or so given with the consent or agreement of the Majority Lenders shall be binding on all of the Lenders and all of the Lenders shall cooperate in all ways necessary or desirable to implement and effect such waiver, amendment, action, consent or determination.

(b) Deemed Non-Consent: If the Agent delivers a written notice to a Lender requesting advice from such Lender as to whether it consents or objects to any matter in connection with the Loan Documents, then, except as otherwise expressly provided herein, if such Lender does not deliver to the Agent its written consent or objection to such matter within fifteen (15) Business Days of the delivery of such written notice by the Agent to such Lender, such Lender shall be deemed not to have consented thereto upon the expiry of such fifteen (15) Business Day period.

11.6 Notices between the Lenders, the Agent and the Borrower

          All notices by the Lenders to the Agent shall be through the Agent’s Branch of Account and all notices by the Agent to a Lender shall be through such Lender’s Branch of Account. All notices or

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communications between the Borrower and the Lenders which are required or contemplated pursuant to the Loan Documents shall be given or made through the Agent at the Agent’s Branch of Account.

11.7 Agent’s Duty to Deliver Documents Obtained from the Borrower

          The Agent shall within five (5) Business Days deliver to each Lender, at such Lender’s Branch of Account, such documents, papers, materials and other information as are furnished by the Borrower to the Agent on behalf of such Lender pursuant to this Agreement (the Agent’s receipt of which is deemed, insofar as the Borrower and fulfillment of its obligations are concerned, to be receipt by all relevant Lenders notwithstanding the Agent’s failure to perform its obligations under this Section 11.7), and the Borrower shall provide the Agent with sufficient copies of all such information for such purpose. The Agent shall make requests of the Borrower pursuant to Section 8.1(p) from time to time on behalf of a Lender for such information as such Lender may from time to time reasonably request.

11.8 Arrangements for Borrowings

          The Agent shall promptly give written notice to each Lender at its Branch of Account upon receipt by the Agent of any notice given pursuant to Section 3.4, 3.10, 3.12, 3.13, 4.3 or 4.4. The Agent shall advise each Lender of the amount, date and details of each Accommodation and of such Lender’s participation in each such Borrowing. At or before 11:00 a.m. (Calgary time) on the Drawdown Date, Conversion Date or Rollover Date:

(a) Loan Participation: each Lender will make its share of Accommodations by way of Loans available to the Borrower at the Agent’s Account for Payments by forwarding to the Agent the amount of Loans required to be made available by such Lender;

(b) Bankers’ Acceptance Participation: each Lender will make available to the Borrower its share of Accommodations by way of Bankers’ Acceptances (or BA Equivalent Advances) by forwarding to the Agent at the Agent’s Account for Payments the amount of:

	(i)		if such Lender is not a Purchasing Lender, the discounted proceeds of sale of such Bankers’ Acceptances received by such Lender or the amount of any BA Equivalent Advance (less, in each case, the amount of applicable fees payable by the Borrower to such Lender pursuant to Section 5.4); or
	(ii)		if such Lender is a Purchasing Lender, the Discount Proceeds in respect of such Bankers’ Acceptances and BA Equivalent Advances (less, in each case, the amount of applicable fees payable by the Borrower to such Lender pursuant to Section 5.4); and

(c) Letter of Credit Participation: each Lender and the Issuing Lender, as applicable, will make available to the Borrower the Letter of Credit requested by the Borrower at its Branch of Account.

11.9 Arrangements for Repayment of Borrowings

(a) Prior to Acceleration: Prior to the delivery of an Acceleration Notice or the occurrence of an Insolvency Event, upon receipt by the Agent of payments from the Borrower on account of principal, interest, fees or any other amount paid to the Agent on behalf of the Lenders, the Agent shall pay over to each Lender at its Branch of Account the amount to which it is entitled under this Agreement and shall use its best efforts to make such payment to such Lender on the same Business Day on which such payment is received by the Agent. If the Agent does not remit any

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such payment to a Lender on the same Business Day as such payment is received by the Agent, the Agent shall pay interest thereon to such Lender until the date of payment at a rate determined by the Agent (such rate to be conclusive and binding on such Lender) in accordance with the Agent’s usual banking practice in respect of deposits of amounts comparable to the amount of such payment which are received by the Agent at a time similar to the time at which such payment is received by the Agent.

(b) Subsequent to Demand and Acceleration: Following the delivery of an Acceleration Notice or the occurrence of an Insolvency Event, the Lenders shall share any payments subsequently received in accordance with Section 9.4 of this Agreement.

11.10 Repayment by Lenders to Agent

(a) Where Borrower Fails to Pay: Unless the Agent has been notified in writing by the Borrower at least one (1) Business Day prior to the date on which any payment to be made by the Borrower hereunder is due that the Borrower does not intend to remit such payment, the Agent may, in its discretion, assume that the Borrower has remitted such payment when so due and the Agent may, in its discretion and in reliance upon such assumption, make available to each Lender on such payment date an amount equal to the amount of such payment which is due to such Lender pursuant to this Agreement. If the Borrower does not in fact remit such payment to the Agent, the Agent shall promptly notify each Lender and each such Lender shall forthwith on demand repay to the Agent the amount of such assumed payment made available to such Lender, together with interest thereon until the date of repayment thereof at a rate determined by the Agent (such rate to be conclusive and binding on such Lender) in accordance with the Agent’s usual banking practice for similar advances to financial institutions of like standing to such Lender.

(b) Where a Lender Fails to Pay: Unless the Agent has been notified in writing by a Lender at least one (1) Business Day prior to a Drawdown Date, Conversion Date or Rollover Date that such Lender does not intend to make available the amount required to be made available by such Lender pursuant to this Agreement on such Drawdown Date, Conversion Date or Rollover Date, the Agent may, in its discretion, assume that such Lender has remitted funds to the Agent in an amount equal to the amount required to be made available by such Lender pursuant to this Agreement and the Agent may, in its discretion and in reliance upon such assumption, make available to the Borrower on such Drawdown Date, Conversion Date or Rollover Date an amount equal to the amount required to be made available by such Lender pursuant to this Agreement. If such Lender does not in fact remit such funds to the Agent, the Agent shall promptly notify such Lender and such Lender shall forthwith remit such funds to the Agent, failing which:

	(i)		the Borrower shall on two (2) Business Days notice repay to the Agent (without prejudice to the Borrower’s rights against such Lender) the amount made available by the Agent on behalf of such Lender, in each case together with interest thereon until the date of repayment thereof at a rate determined by the Agent (such rate to be conclusive and binding on such Lender or the Borrower, as the case may be) in accordance with the Agent’s usual banking practice for similar advances to financial institutions of like standing to such Lender; and
	(ii)		without prejudice to the Borrower’s other rights against such Lender, Section 4.4(d)(i) or 4.4(d)(ii) shall, at the Borrower’s election, apply in regard to such Lender, mutatis mutandis, as if such Lender were an Affected Lender.

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11.11 Adjustments Among Lenders

(a) Adjustments to Outstanding Borrowings: Each Lender agrees (and the Agent agrees for and on behalf of Royal in its capacity as Operating Lender) that, after the delivery of an Acceleration Notice or the occurrence of an Insolvency Event, it will at any time and from time to time upon the request of the Agent as required by any Lender or the Operating Lender purchase portions of the Borrowings made available by the other Lenders and the Operating Borrowings which, in any case, remain outstanding and make any other adjustments which may be necessary or appropriate, in order that the amount of Borrowings made available by each Lender which remain outstanding, and the Operating Borrowings which remain outstanding, as adjusted pursuant to this Section 11.11, will be in the same proportion as its Lender’s Proportion (calculated pursuant to item (b) of the definition thereof) of the sum of the aggregate Borrowings under this Agreement and the Operating Borrowings then outstanding.

(b) Application of Payments: The Lenders agree that, after the delivery of an Acceleration Notice or the occurrence of an Insolvency Event, the amount of any repayment made by the Borrower in respect of Borrowings under this Agreement, and under the Operating Credit Agreement, and the amount of any proceeds from the exercise of any rights or remedies of the Agent and the Lenders under the Loan Documents, or under the Operating Loan Documents, which are to be applied against amounts owing hereunder, will be so applied in a manner so that to the extent possible the amount of Borrowings made available by each Lender which remain outstanding and the Operating Borrowings which remain outstanding, after giving effect to such application will be in the same proportion as its Lender’s Proportion (calculated pursuant to item (b) of the definition thereof) of the sum of the aggregate Borrowings under this Agreement and the Operating Borrowings then outstanding.

(c) Receipt of Payments other than Borrowings: Notwithstanding anything contained in this Section 11.11, there shall not be taken into account for the purposes of computing any amount payable to any Lender pursuant to this Section 11.11, any amount which a Lender receives as a result of any payment (whether voluntary, involuntary, through the exercise of any right of set-off, or otherwise) on account of any monies owing by the Borrower to such Lender other than on account of liabilities arising under the Loan Documents; provided that, if at any time a Lender receives any payment (whether voluntary, involuntary, through the exercise of any right of set-off, or otherwise) on account of monies owing or payable to it by the Borrower in respect of liabilities of the Borrower arising under the Loan Documents, such Lender shall purchase portions of the Borrowings made available by the other Lenders which remain outstanding to the extent required pursuant to Section 11.11(a).

(d) Further Assurances: The Borrower agrees to be bound by and, at the request of the Agent, to do all things necessary or appropriate to give effect to any and all purchases and other adjustments made by and between the Lenders pursuant to this Section 11.11 but shall incur no increased liabilities, in aggregate, by reason thereof.

11.12 Lenders’ Consents to Waivers, Amendments, etc.

(a) Unanimous Consent: Any waiver of or any amendment to a provision of the Loan Documents which relates to:

(i) a change in the types of Borrowings or interest periods related thereto, interest rates, standby fees, the Margin, notice periods or the amount of any payments payable by the Borrower to the Lenders under this Agreement and including any waiver of the time of

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payment of any amounts payable to the Lenders under this Agreement including, without limitation, the provisions of Section 9.1(a);

	(ii)		an increase or decrease in the Commitment of any Lender other than as contemplated herein;
	(iii)		an assignment or transfer by the Borrower of any of its rights and obligations under this Agreement;
	(iv)		a change in the definition of Majority Lenders or Maturity Date or any other definition to the extent relevant to any of the provisions of this Section 11.12(a);
	(v)		any matter which, pursuant to the Loan Documents, specifically requires the consent or agreement of all of the Lenders;
	(vi)		the provisions of Section 8.1(t), 11.12(a) or 11.12(b); or
	(vii)		any release or material amendment to the Loan Party Guarantee or the Subordination Agreement;

shall bind the Lenders only if such waiver or amendment is agreed to in writing by all of the Lenders.

(b) Majority Consent: Subject to Section 11.12(a) and except as otherwise provided in the Loan Documents, any waiver of or any amendment to any provision of the Loan Documents and any action, consent or other determination in connection with the Loan Documents shall bind all of the Lenders if such waiver, amendment, action, consent or other determination is agreed to in writing by the Majority Lenders.

(c) Agent’s Consent: Any waiver of or any amendment to any provision of the Loan Documents which relates to the rights or obligations of the Agent shall require the agreement of the Agent thereto.

11.13 Reimbursement of Agent’s Expenses

          Each Lender agrees that it will indemnify the Agent for its Lender’s Proportion of any and all costs, expenses and disbursements (including, without limitation, those costs and expenses referred to in Section 10.1) which may be incurred or made by the Agent in good faith in connection with the Loan Documents, and agrees that it will, on written demand, reimburse the Agent for any such costs, expenses or disbursements for which the Agent is not promptly reimbursed at any time by the Borrower. The Agent may refrain from exercising any right, power or discretion or taking any action to protect or enforce the rights of any Lender under the Loan Documents until it has been so reimbursed.

11.14 Reliance by Agent and Lenders on Notices, etc.

(a) Agent’s Reliance: The Agent shall be entitled:

(i) Reliance on Written Documents: to rely upon any writing, letter, notice, certificate, telex, facsimile copy, cable, statement, order or other document believed by the Agent to be genuine and correct and to have been signed, sent or made by the proper person or persons;

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	(ii)		Reliance on Legal Advice: with respect to legal matters, to act upon the advice of legal advisors selected by the Agent concerning all matters pertaining to the Loan Documents and the Agent’s duties thereunder; and
	(iii)		Reliance on Accounting Advice: with respect to accounting matters, to act upon the advice of independent public accountants selected by the Agent;

and the Agent shall assume no responsibility and shall incur no liability to the Borrower or any Lender by reason of relying on any such document or acting on any such advice.

(b) Lender’s Reliance: Each Lender shall be entitled:

	(i)		Reliance on Written Documents: to rely upon any writing, letter, notice, certificate, telex, facsimile copy, cable, statement, order or other document believed by such Lender to be genuine and correct and to have been signed, sent or made by the proper person or persons;
	(ii)		Reliance on Legal Advice: with respect to legal matters, to act upon the advice of legal advisors selected by such Lender concerning all matters pertaining to the Loan Documents and such Lender’s duties thereunder; and
	(iii)		Reliance on Accounting Advice: with respect to accounting matters, to act upon the advice of independent public accountants selected by such Lender;

and such Lender shall assume no responsibility and shall incur no liability to the Borrower or any other Lender by reason of relying on any such document or acting on any such advice.

11.15 Relations with Borrower

          Except for the transactions provided for in this Agreement, each Lender may deal with the Borrower and each other Loan Party in all transactions and generally do any banking business with or provide any financial services to the Borrower and each other Loan Party without having any liability to account to the other Lenders therefor. Where any Lender is the Agent, with respect to such Lender’s Commitment and Lender’s Proportion, such Lender shall have the same rights and powers under this Agreement as any other Lender and may exercise the same as though it were not the Agent.

11.16 Sharing of Information

          The Borrower authorizes the Agent and each Lender to share among each other and with any successor and, provided such person has first agreed in writing in favour of the Borrower and the relevant Lender to be bound by this Section 11.16, with any assignee, or any potential assignee, any information possessed by it regarding the Borrower, any other Loan Party or the Loan Documents. The Agent and each Lender agree to keep all information provided by the Borrower confidential in accordance with Section 12.3 and, subject to Section 12.3, shall not disclose such information to any person whatsoever (other than as provided for herein and other than to employees and professional advisors to the Agent or such Lender (but excluding therefrom any affiliate of such Lender which is not in the commercial banking business) in the necessary course of business).

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11.17 Successor Agent

          Subject to the appointment and acceptance of a successor agent as provided in this Section 11.17, the Agent may resign at any time by giving written notice thereof to each of the Lenders and the Borrower, and the Agent may be removed at any time for cause by the Lenders other than the Agent in its capacity as a Lender (the “Remaining Lenders”) provided that Remaining Lenders holding Commitments of eighty percent (80%) or more of the Commitments of all the Remaining Lenders consent to such removal. Upon any such resignation or removal, the Remaining Lenders shall have the right to appoint a successor agent with the written approval of the Borrower (such approval not to be unreasonably withheld). Any successor agent appointed under this Section 11.17 shall be a Lender which has offices in Calgary, Alberta and Toronto, Ontario. If no successor agent shall have been appointed by the Remaining Lenders and shall have accepted such appointment within thirty (30) days after the retiring agent’s giving of notice of resignation or the Remaining Lenders’ removal of the retiring agent, then the retiring agent may, on behalf of the Lenders and with the written approval of the Borrower (such approval not to be unreasonably withheld), appoint a successor agent. Upon the acceptance of any appointment as Agent by a successor agent such successor agent shall thereupon succeed to and become vested with all the rights, powers, privileges and duties of the retiring agent as Agent, and the retiring agent shall be discharged from its duties and obligations under this Agreement as Agent. After any retiring agent’s resignation or removal hereunder as the Agent, the provisions of this Agreement shall continue in effect for its benefit and for the benefit of the Lenders in respect of any actions taken or omitted to be taken by the retiring agent while it was acting as the Agent.

11.18 Amendment of this Article 11

          Save and except for the provisions of Section 11.12, Section 11.15, Section 11.17 and this Section 11.18, the provisions of this Article 11 may be amended or added to, from time to time, without the agreement of the Borrower provided such amendment or addition does not adversely affect the rights of the Borrower hereunder or increase, in aggregate, the costs or liabilities of the Borrower hereunder or otherwise prejudice the Borrower. A copy of the instrument evidencing such amendment or addition shall be forwarded by the Agent to the Borrower as soon as practicable following the execution thereof.

11.19 Dealing with Agent

          In the absence of notice or any actual knowledge of a lack of authority of the Agent to act for and on behalf of the Lenders in respect of any matter hereunder or under the Loan Documents, the Borrower shall be entitled to conclusively assume that any certificate, directive or other writing of the Agent for and on behalf of the Lenders in connection with such matter has been duly authorized by the Lenders in accordance with this Agreement.

11.20 Indemnity of Agent

          Each Lender hereby agrees to indemnify the Agent (to the extent not reimbursed by the Borrower), as to its Lender’s Proportion from and against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, costs, expenses or disbursements of any kind or nature whatsoever which may be imposed on, incurred by, or asserted against the Agent in any way relating to or arising out of this Agreement or the other Loan Documents or any action taken or omitted by the Agent under or in respect of this Agreement or the other Loan Documents provided that the Lenders shall not be liable for any portion of such liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements resulting from the Agent’s gross negligence or willful misconduct. Without limiting the generality of the foregoing, each Lender agrees to reimburse the Agent promptly

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upon demand for its Lender’s Proportion of any out-of-pocket expenses (including counsel fees) incurred by the Agent in connection with the preservation of any rights of the Agent or the Lenders under, or the enforcement of, or legal advice in respect of rights or responsibilities under, this Agreement and the other Loan Documents, to the extent that the Agent is not reimbursed for such expenses by the Borrower.

ARTICLE 12
SUCCESSORS AND ASSIGNS AND JUDGMENT CURRENCY

12.1 Successors and Assigns

          Subject to Section 8.2(b), the Borrower may not assign its rights or obligations hereunder without the prior written consent of all of the Lenders. If an Event of Default has occurred and is continuing, a Lender may, at the Borrower’s cost and expense, with the prior consent of the Agent (such consent not to be unreasonably withheld) and upon payment by such Lender to the Agent of Cdn. $3,500 but without the Borrower’s consent, assign in whole or in part its rights and obligations under this Agreement and the other Loan Documents. If no Event of Default has occurred or is continuing, a Lender may, at its sole cost and expense, with the prior consent of the Agent and the Borrower (such consents not to be unreasonably withheld) and upon payment by such Lender to the Agent of Cdn. $3,500 (where the Permitted Assignee is not a Lender or, if a Lender, such assignment is not made pursuant to or in the course of, a Request for Extension), assign in whole or in part its rights and obligations under this Agreement and the other Loan Documents where such Lender assigns minimum amounts of its Commitment of at least Cdn. $10,000,000 and, to the extent it is not an assignment of the whole of its Commitment, such Lender would thereafter retain for its own account a Commitment of at least Cdn. $10,000,000. Notwithstanding the foregoing and without the consent of the Borrower or the Agent or the payment of the aforementioned fee of Cdn. $3,500, a Lender may, at any time, assign all or any part of its Commitment to an affiliate of such Lender or an Approved Fund provided that any increased cost arising solely as a result of the residency of such affiliate or Approved Fund will be an obligation of such Lender and provided that, in the case of an assignment to an Approved Fund, such Lender remains responsible for, and is not released from, any and all funding obligations hereunder of such Lender. Upon any assignment by a Lender to an assignee permitted by this Section 12.1 (a “Permitted Assignee”) in accordance with the provisions of this Section 12.1, such Lender shall cause such Permitted Assignee to execute a Lender Transfer Agreement and to be substituted for such Lender in respect of the whole or any part of its rights and obligations under the Loan Documents which are so assigned and such Lender shall, as of the effective date thereof but subject to the provisions of the immediately prior sentence with respect to an assignment to an Approved Fund, be released from its obligations to the Borrower hereunder arising subsequent to such date to the extent thereof. Any such assignment shall not increase, in aggregate, the liabilities of the Borrower hereunder (including, without limitation, under Section 6.3), other than the requirement to pay any costs and expenses associated with an assignment by the Borrower or by a Lender if an Event of Default has occurred and is continuing. Nothing in this Section 12.1 shall restrict a Lender from the sale of participations in all or any part of the Borrowings made or to be made by it; provided that any increased costs to the Borrower as a result of any such participation shall be for the account of such Lender. The selling Lender shall continue to be obligated as a Lender hereunder and the participant’s approval to any amendments or waivers under this Agreement shall not be required notwithstanding any such participation. A person who acquires a participation in Borrowings hereunder shall have no standing as a Lender under the Loan Documents and shall not acquire as a result thereof any rights or benefits under any of the Loan Documents in relation to the Borrower.

12.2 Judgment Currency

          If for the purposes of obtaining judgment in any court in any jurisdiction with respect to this Agreement it becomes necessary to convert into the currency of such jurisdiction (herein called the

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“Judgment Currency”) any amount due hereunder in any currency other than the Judgment Currency, then conversion shall be made at the rate of exchange prevailing on the Business Day before the day on which judgment is given. For this purpose “rate of exchange” means the spot rate at which the Agent will, on the relevant date at or about 12:00 o’clock noon (Toronto time), sell such currency in Toronto, Ontario against the Judgment Currency. In the event that there is a change in the rate of exchange prevailing between the Business Day before the day on which the judgment is given and the date of payment of the amount due, the Borrower will, on the date of payment, pay such additional amounts (if any) as may be necessary to ensure that the amount paid on such date is the amount in the Judgment Currency which when converted at the rate of exchange prevailing on the date of payment is the amount then due under this Agreement in such other currency. Any additional amount due from the Borrower under this Section 12.2 will be due as a separate debt and shall not be affected by judgment being obtained for any other sums due under or in respect of this Agreement.

12.3 Exchange and Confidentiality of Information

          Each of the Lenders and the Agent acknowledges the confidential nature of the financial, environmental, operational and other information, reports and data provided and to be provided to them by the Borrower and the Trust pursuant to this Agreement and the other Loan Documents including, without limitation, any confidential information obtained pursuant to Section 8.1(p) (the “Information”) and agrees to hold the Information in confidence and shall not discuss or disclose or allow access to, or transfer or transmit the Information to any person, provided however that:

(a) each of the Lenders and the Agent may disclose all or any part of the Information if, in its reasonable opinion, such disclosure is required by any applicable law or regulation, or by applicable order, policy or directive having the force of law, to the extent of such requirement, or is required in connection with any actual or threatened judicial, administrative or governmental proceeding, including, without limitation, proceedings initiated under or in respect of this Agreement, provided that in any such circumstance the Lenders and Agent, as soon as reasonably practicable, shall advise the Borrower of their obligation to disclose such Information in order to enable the Borrower, if it so chooses, to attempt to ensure that any such disclosure is made on a confidential basis;

(b) each of the Lenders and the Agent may disclose Information to each other and to any Permitted Assignees or participants and to their respective counsel, agents, employees and advisors; provided that in the case of a participant, the participant has provided the Agent or the applicable Lender with the written agreement referred to in Section 12.3(c) and, in the case of any such agents and advisors, the Agent or the applicable Lender shall advise such person of the confidential nature of the Information;

(c) each of the Lenders and the Agent may disclose and discuss the Information with credit officers of any potential Permitted Assignees for the purposes of assignment pursuant to Section 12.1 or any participant for the purposes of a participation; provided that such potential Permitted Assignee or participant shall have, for the benefit of the Borrower, previously provided to the Agent or such Lender, as the case may be, its written agreement to hold the Information under the same obligations of confidentiality as set forth in this Section 12.3 at all times prior to and, if applicable, after becoming a Permitted Assignee or participant;

(d) each of the Lenders and the Agent may disclose all or any part of the Information so as to enable such Lender or the Agent to initiate any lawsuit against the Borrower or any other Loan Party or to defend any lawsuit commenced by the Borrower or any other Loan Party with respect to or arising from the Loan Documents, the issues of which are directly or indirectly related to the

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Information, but only to the extent such disclosure is necessary or desirable to the initiation or defense of such lawsuit; and

(e) each of the Lenders and the Agent may disclose Information to any person with the prior written consent of the Borrower.

Notwithstanding the foregoing, “Information” shall not include any such information:

(f) which is or becomes readily available to the public (other than by a breach hereof or by a breach of an obligation of confidentiality imposed on a Permitted Assignee or participant or other person referred to in this Section 12.3) or which has been made readily available to the public by the Borrower or any other Loan Party;

(g) which the Agent or any Lender can show was, prior to receipt thereof from the Borrower, lawfully in the Agent’s or such Lender’s possession and not then subject to any obligation on its part to or for the benefit of the Borrower to maintain confidentiality; or

(h) which the Agent or any Lender received from a third party, prior to receipt thereof from the Borrower, which was not, to the knowledge of the Agent or such Lender after due enquiry, subject to a duty of confidentiality to or for the benefit of the Borrower at the time the Information was so received.

ARTICLE 13
MISCELLANEOUS

13.1 Severability

          Any provision of this Agreement which is or becomes prohibited or unenforceable in any jurisdiction does not invalidate, affect or impair the remaining provisions hereof in such jurisdiction and any such prohibition or unenforceability in any jurisdiction does not invalidate or render unenforceable such provision in any other jurisdiction.

13.2 Survival of Undertakings

          All covenants, undertakings, agreements, representations and warranties made pursuant to this Agreement survive the execution and delivery of this Agreement and continue in full force and effect until the full payment and satisfaction of all obligations of the Borrower and the Trust incurred pursuant to the Loan Documents and the termination of this Agreement.

13.3 Failure to Act

          No failure, omission or delay on the part of any Lender in exercising any right, power or privilege hereunder shall impair such right, power or privilege or operate as a waiver thereof.

13.4 Amendments

          No amendment, waiver, discharge or termination of any provision of the Loan Documents shall in any event be effective unless it is in writing and in conformity with Section 11.12 and then such amendment, waiver, discharge or termination will, if and as applicable having regard to the nature thereof, be effective only in the specific instance, for the specific purpose and for the specific length of time for which it is given.

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13.5 Notice

          Except as otherwise expressly provided herein, all notices, advice, requests and demands hereunder shall be in writing (including facsimile transmissions) or, if telephonic, promptly confirmed in writing, and shall be given to or made upon the respective parties hereto at the address or telecopy number set forth opposite their names on the signature pages hereto or at such other address or telecopy number as any party shall designate for itself. All notices shall be effective upon actual receipt. Notices by the Borrower in respect of Letters of Credit may not be given by telephone. In the event of any discrepancy between any telephonic notice, advice, request or demand and the written confirmation thereof, the telephonic version shall govern with respect to actions taken by the recipient thereof notwithstanding subsequent written notice to the contrary but the person receiving such contrary subsequent written notice shall, as soon as practicable, use its reasonable best efforts to act in accordance with the written notice. The Borrower shall indemnify the Agent and each Lender for, and hold them harmless from, any and all loss, damage, claim or expense (including reasonable legal fees on a solicitor and his own client basis), however arising, which the Agent or such Lender may suffer or incur, based on or arising out of any action taken by the Agent or such Lender pursuant to the telephonic notice, advice, request or demand given by the Borrower and which did not result from the Agent’s or such Lender’s gross negligence or willful misconduct.

13.6 Further Assurances

          The Borrower, the Agent and each of the Lenders shall do all such further acts and things and execute and deliver all such further documents as shall be reasonably required in order to fully perform and carry out the terms of the Loan Documents and to ensure that the Loan Documents continue to be legal, valid and binding obligations of the parties thereto enforceable against each such party in accordance with their terms (except as enforceability may be limited by general principles of equity and bankruptcy, insolvency, reorganization or similar laws affecting creditor’s rights generally and by moratorium laws from time to time in effect).

13.7 Governing Law

          The parties agree that this Agreement is conclusively deemed to be made under, and for all purposes to be governed by and construed in accordance with, the laws of the Province of Alberta and of Canada applicable therein.

13.8 Whole Agreement

          This Agreement together with the other Loan Documents constitutes the whole and entire agreement between the parties and cancels and supersedes any prior agreements, undertakings, declarations and representations, written or verbal, in respect of the subject matter of this Agreement and the other Loan Documents.

13.9 Term of Agreement

          The term of this Agreement is until the termination of the Commitment of each Lender and payment in full of all the obligations of the Borrower incurred pursuant to this Agreement and the other Loan Documents.

13.10 Time of Essence

          Time shall be of the essence of this Agreement.

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13.11 Jurisdiction

(a) Submission: The Borrower, the Lenders and the Agent agree that the courts of the Province of Alberta have jurisdiction to settle any disputes in connection with the Loan Documents and accordingly each of them submits to the jurisdiction of the courts of the Province of Alberta.

(b) Forum Convenience and Enforcement Abroad: The Borrower, the Agent and each of the Lenders:

	(i)		waive objection to the courts of the Province of Alberta on grounds of inconvenient forum or otherwise as regards proceedings in connection with a Loan Document; and
	(ii)		agree that a judgment or order of a court of the Province of Alberta in connection with a Loan Document is conclusive and binding on it (subject to any rights of appeal in respect thereof) and may be enforced against it in the courts of any other jurisdiction.

(c) Non-exclusivity: Nothing in this Section 13.11 limits the right of the Borrower, a Lender or the Agent to bring proceedings against any party hereto in connection with any Loan Document:

	(i)		in any other court of competent jurisdiction; or
	(ii)		concurrently in more than one jurisdiction.

13.12 Counterpart Execution

          This Agreement may be executed in any number of counterparts and by different parties in separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same instrument.

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          IN WITNESS WHEREOF the parties hereto have caused this Agreement to be duly executed as of the date first written above.

COMMITMENTS AND
ADDRESS FOR NOTICES:
Borrower:		PENGROWTH CORPORATION
BP Centre
2900, 240 – 0xx Xxxxxx X.X.		Per:		(Signed) “Xxxxxxxxxxx Xxxxxxx”
Calgary, Alberta		Name: Xxxxx Xxxxxxx
T2P 4H4		Title: Chief Financial Officer
Attention: Chief Financial Officer
		Per:		(Signed) “Xxxxx Xxxxxx”
Telecopier: (000) 000-0000		Name: Xxxxx Xxxxxx
		Title: Treasurer

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CONSENT AND ACKNOWLEDGEMENT OF GUARANTORS

The undersigned guarantors hereby consent to the terms of the above Fifth Amended and Restated Credit Agreement (the “Amended Credit Agreement”) and the transactions contemplated thereby and confirm that the Loan Party Guarantee and the Subordination Agreement to which each of the undersigned is a party each remain in full force and effect. Without limiting the generality of the foregoing, the guarantors acknowledge that the “Obligations” guaranteed pursuant to the Loan Party Guarantee include, without limitation, all obligations of the Borrower under the Amended Credit Agreement.

          Dated as of June 15, 2007.

PENGROWTH ENERGY TRUST, by its trustee, COMPUTERSHARE TRUST COMPANY OF CANADA				PENGROWTH HOLDINGS TRUST, by its trustee, PENGROWTH CORPORATION
Per:		(Signed) “Xxxxx Xxxxxxx”		Per:		(Signed) “Xxxxxxxxxxx Xxxxxxx”
Name:		Xxxxx Xxxxxxx		Name:		Xxxxxxxxxxx Xxxxxxx
Title:		Manager, Corporate Trust		Title:		Chief Financial Officer
Per:		(Signed) “Xxxxx Xxxxx”
Name:		Xxxxx Xxxxx
Title:		Professional, Corporate Trust
STELLAR RESOURCES LIMITED				1268071 ALBERTA LTD.
Per:		(Signed) “Xxxxxxxxxxx Xxxxxxx”		Per:		(Signed) “Xxxxxxxxxxx Xxxxxxx”
Name:		Xxxxxxxxxxx Xxxxxxx		Name:		Xxxxxxxxxxx Xxxxxxx
Title:		Chief Financial Officer		Title:		Vice President
3174792 NOVA SCOTIA COMPANY				3174793 NOVA SCOTIA COMPANY
Per:		(Signed) “Xxxxxxxxxxx Xxxxxxx”		Per:		(Signed) “Xxxxxxxxxxx Xxxxxxx”
Name:		Xxxxxxxxxxx Xxxxxxx		Name:		Xxxxxxxxxxx Xxxxxxx
Title:		Vice President		Title:		Vice President

93

ESPRIT EXCHANGECO LTD.				ESPRIT EXPLORATION LTD.
Per:		(signed) “Xxxxxxxxxxx Xxxxxxx”		Per:		(signed) “Xxxxxxxxxxx Xxxxxxx”
Name:		Xxxxxxxxxxx Xxxxxxx		Name:		Xxxxxxxxxxx Xxxxxxx
Title:		Chief Financial Officer		Title:		Chief Financial Officer
PENGROWTH ENERGY PARTNERSHIP, by its general partner, STELLAR RESOURCES LIMITED				PENGROWTH HEAVY OIL PARTNERSHIP by its general partner, STELLAR RESOURCES LIMITED
Per:		(signed) “Xxxxxxxxxxx Xxxxxxx”		Per:		(signed) “Xxxxxxxxxxx Xxxxxxx”
Name:		Xxxxxxxxxxx Xxxxxxx		Name:		Xxxxxxxxxxx Xxxxxxx
Title:		Chief Financial Officer		Title:		Chief Financial Officer
CRISPIN ENERGY PARTNERSHIP, by its managing partner, STELLAR RESOURCES LIMITED				XXXXXX CREEK OPERATING PARTNERSHIP, by its managing partner, 3174793 NOVA SCOTIA COMPANY
Per:		(signed) “Xxxxxxxxxxx Xxxxxxx”		Per:		(signed) “Xxxxxxxxxxx Xxxxxxx”
Name:		Xxxxxxxxxxx Xxxxxxx		Name:		Xxxxxxxxxxx Xxxxxxx
Title:		Chief Financial Officer		Title:		Vice President
1275708 ALBERTA LTD.				1265707 ALBERTA ULC
Per:		(signed) “Xxxxxxxxxxx Xxxxxxx”		Per:		(signed) “Xxxxxxxxxxx Xxxxxxx”
Name:		Xxxxxxxxxxx Xxxxxxx		Name:		Xxxxxxxxxxx Xxxxxxx
Title:		Vice President		Title:		Vice President
1265706 ALBERTA ULC				1265702 ALBERTA ULC
Per:		(signed) “Xxxxxxxxxxx Xxxxxxx”		Per:		(signed) “Xxxxxxxxxxx Xxxxxxx”
Name:		Xxxxxxxxxxx Xxxxxxx		Name:		Xxxxxxxxxxx Xxxxxxx
Title:		Vice President		Title:		Vice President

94

706-707 PARTNERSHIP, by its managing partner, 1265706 ALBERTA ULC
Per:		(Signed) “Xxxxxxxxxxx Xxxxxxx”
Name:		Xxxxxxxxxxx Xxxxxxx
Title:		Vice President

95

Lender:		ROYAL BANK OF CANADA, as Lender
Suite 1100, 888 – 0xx Xxxxxx X.X.		Per:		(Signed) “Xxxx Xxxx”
Calgary, Alberta		Name:		Xxxx Xxxx
T2P 5C5		Title:		Authorized Signatory
Attention: Senior Manager
Telecopier: (000) 000-0000
Commitment: Cdn. $ REDACTED

96

Lender:		BANK OF MONTREAL, as Lender
2200, 000 — 0xx Xxxxxx X.X.
Xxxxxxx, Xxxxxxx		Per:		(signed) “Xxxx Xxxx”
X0X 0X0		Name:		Xxxx Xxxx
		Title:		Director
Attention: Vice-President
Telecopier: (000) 000-0000
Commitment: Cdn. $ REDACTED

97

Lender:		THE BANK OF NOVA SCOTIA, as Lender
2000, 000 - 0xx Xxxxxx X.X.
P.O. Box 2540		Per:		(signed) “Xxxx Xxxxxx”
Xxxxxxx, Xxxxxxx, X0X 0X0		Name:		Xxxxxxx Xxxxxx
		Title:		Associate Director
Attention: Managing Director
		Per:		(signed) “Xxxxxx Strike”
Telecopier: (000) 000-0000		Name:		Xxxxxx Strike
		Title:		Director
Commitment: Cdn. $ REDACTED

98

Lender:		CANADIAN IMPERIAL BANK OF COMMERCE, as Lender
Oil and Gas Group
000 - 0xx Xx. X.X., 0xx floor
(East Tower, Bankers Hall)		Per:		(signed) “Xxxxx Xxxxx”
Calgary, Alberta		Name:		Xxxxx Xxxxx
T2P 2P2		Title:		Executive Director
Attention: Vice President
		Per:		(signed) “Xxxxx Xxxxx”
Telecopier: (000) 000-0000		Name:		Xxxxx Xxxxx
		Title:		Managing Director
Commitment: Cdn. $ REDACTED

99

Lender:		HSBC BANK CANADA, as Lender
0xx Xxxxx, 000 – 0xx Xxxxxx, X.X.
Xxxxxxx, Xxxxxxx, X0X 0X0		Per:		(signed) “Xxxx Xxxxxxx”
		Name:		Xxxx Xxxxxxx
Attention: Corporate & Institutional Banking		Title:		Director
Telecopier: (000) 000-0000
		Per:		(signed) “Xxxxx Xxxxx”
Commitment: Cdn. $ REDACTED		Name:		Xxxxx Xxxxx
		Title:		Relationship Manager

100

Lender:		THE TORONTO-DOMINION BANK, as Lender
Corporate Banking
800, 000 - 0xx Xxxxxx X.X.		Per:		(signed) “Xxxxxxx Xxxxxxxx”
Calgary, Alberta		Name:		Xxxxxxx Xxxxxxxx
X0X 0X0		Title:		Vice-President & Director
Attention: Vice President – Corporate Credit		Per:
		Name:
Telecopier: (000) 000-0000		Title:
Commitment: Cdn. $ REDACTED

000

Xxxxxx:		XXXXXXXX XXXX XX XXXXXX, as Lender
Corporate Banking
Suite 2802, 450 — 0xx Xxxxxx, X.X.		Per:		(signed) “Xxxx Xxxxxxx”
Xxxxxxx, Xxxxxxx, X0X 0X0		Name:		Xxxx Xxxxxxx
		Title:		Senior Manager
Attention: Senior Manager
Telecopier: (000) 000-0000		Per:		(signed) “Xxxx Xxxxxxx”
		Name:		Xxxx Xxxxxxx
Commitment: Cdn. $ REDACTED		Title:		Manager

102

Lender:		ALBERTA TREASURY BRANCHES, as Lender
000 – 0xx Xxxxxx, X.X.
Xxxxxxx, Xxxxxxx, X0X 0X0		Per:		(signed) “Xxxxxx Xxxxxxxx”
		Name:		Xxxxxx Xxxxxxxx
Attention: Relationship Manager		Title:		Director
Telecopier: (000) 000-0000
		Per:		(signed) “Xxxxx XxXxxxxx”
Commitment: Cdn. $ REDACTED		Name:		Xxxxx XxXxxxxx
		Title:		Account Manager

103

Lender:		SOCIÉTÉ GÉNÉRALE (CANADA BRANCH), as Lender
Suite 1800, 1501 XxXxxx Xxxxxxx Xxxxxx
Xxxxxxxx, Xxxxxx X0X 0X0
		Per:		(signed) “Xxxxxx Xxxxxxxxx”
Attention: Xxxxx Xxxxxxxx		Name:		Xxxxxx Xxxxxxxxx
		Title:		Managing Director
Telecopier: (000) 000-0000
		Per:		(signed) “Xxxx Xxxxxxxxx”
Commitment: Cdn. $ REDACTED		Name:		Xxxx Xxxxxxxxx
		Title:		Vice President

000

Xxxxxx:		XXXXX XXXX XX XXXXXXXXXX, X.X., XXXXXX BRANCH, as Lender
Xxxxx 000, 000 — 0xx Xxxxxx, X.X.
Xxxxxxx, Xxxxxxx X0X 0X0
		Per:				(signed) “Xxxx Xxxxxx”
Attention: Vice President		Name:				Xxxx Xxxxxx
		Title:				Senior Vice President
Telecopier: (000) 000-0000
Commitment: Cdn. $ REDACTED

105

Lender:		FORTIS CAPITAL (CANADA) INC., as Lender
Calgary Xxxxx 0, Xxxxx 0000
000 — 0xx Xxxxxx, X.X.		Per:		(signed) “Xxxx Xxxxxx”
Xxxxxxx, Xxxxxxx X0X 0X0		Name:		Xxxx Xxxxxx
		Title:		Director
Attention:
		Per:		(signed) “Xxxx Xxxxx”
Telecopier: (000) 000-0000		Name:		Xxxx Xxxxx
		Title:		Assistant Vice President
Commitment: Cdn. $ REDACTED

 106 

Administrative Agent:		ROYAL BANK OF CANADA, as Administrative Agent
Agency Services Group
00xx Xxxxx, Xxxxx Xxxxx
Xxxxx Xxxx Xxxxx		Per:		(signed) “Xxx Xxxxxx”
000 Xxx Xxxxxx		Name:		Xxx Xxxxxx
Xxxxxxx, Xxxxxxx, X0X 0X0		Title:		Manager, Agency
Attention: Manager, Agency
Telecopier: (000) 000-0000

Schedule A to the Fifth Amended and Restated Credit Agreement dated as of June 15, 2007 between PENGROWTH CORPORATION as Borrower and a syndicate of Lenders with ROYAL BANK OF CANADA as Administrative Agent

NOTICE OF BORROWING, REPAYMENT, PREPAYMENT OR
CANCELLATION OF TOTAL COMMITMENT

Date:

Royal Bank of Canada
Agency Services Group
00xx Xxxxx, Xxxxx Xxxxx
Xxxxx Xxxx Xxxxx
000 Xxx Xxxxxx
Xxxxxxx, Xxxxxxx X0X 0X0

Attention: Manager, Agency

Dear Sir:

We refer to the Fifth Amended and Restated Credit Agreement dated as of June 15, 2007 between PENGROWTH CORPORATION as Borrower and a syndicate of Lenders with ROYAL BANK OF CANADA, as Administrative Agent (the “Credit Agreement”). Capitalized terms used herein have the same meaning as in the Credit Agreement.

We hereby give notice of our request for a [Accommodation, repayment, and/or cancellation of Total Commitment] pursuant to Section [3.4, 3.10, or 4.3] of the Credit Agreement as follows:

1.		Amount of [Accommodation, prepayment or repayment] [Cdn. $ or U.S. $].
2.		Date of [Accommodation, repayment, prepayment and/or cancellation of Total Commitment].
3.		[If applicable]. Nature of [Accommodation, repayment or prepayment] is by way of a [Cdn. Prime Loan, U.S. Base Rate Loan, Libor Loan, Bankers’ Acceptance and, if applicable, BA Equivalent Advance or Letter of Credit)].
4.		[If applicable]. The amount of the Total Commitment to be cancelled is $                                        .
5.		[If applicable]. The Libor Interest Period for the Libor Loan is                      months.
6.		[If applicable] We hereby request that the [Lenders/Schedule II Lenders] purchase Bankers’ Acceptances at the applicable Discount Rate.
7.		[If applicable — when Lenders not purchasing Bankers’ Acceptances]. We will forward a Notice of Borrowing by way of Bankers’ Acceptance in the form of Schedule B to the Credit Agreement on [the Drawdown Date]. The term of each such Bankers’ Acceptance shall be for a period of                      days, maturing on                                         .
8.		[If applicable — when Purchasing Lenders are purchasing Bankers’ Acceptance]. Please forward the funding particulars with respect to the Bankers’ Acceptance on [the Drawdown Date]. The

2

term of each such Bankers’ Acceptance shall be for a period of                      days, maturing on                                         .

9. [If applicable] Enclosed is a [Letter of Credit Application in the form of Schedule I to the Credit Agreement — in the case of a Letter of Credit issued under Section 3.8/Letter of Credit application and indemnity in the Issuing Lender’s customary form — in the case of a Letter of Credit issued under Section 3.9.]

10. We hereby confirm that each condition precedent referred to in Section 7.2 of the Credit Agreement in regard to a Drawdown Date is satisfied on the date hereof and will be satisfied on the Drawdown Date.

Yours truly,

PENGROWTH CORPORATION

Per:

Name:

Title:

Schedule B to the Fifth Amended and Restated Credit Agreement dated as of June 15, 2007 between PENGROWTH CORPORATION as Borrower and a syndicate of Lenders with ROYAL BANK OF CANADA as Administrative Agent

NOTICE OF BORROWING BY WAY OF BANKERS’ ACCEPTANCE

Date:

Royal Bank of Canada
Agency Services Group
00xx Xxxxx, Xxxxx Xxxxx
Xxxxx Bank Plaza, 000 Xxx Xxxxxx
Xxxxxxx, Xxxxxxx X0X 0X0

Attention: Manager, Agency

Dear Sirs:

We refer to the Fifth Amended and Restated Credit Agreement dated as of June 15, 2007 between PENGROWTH CORPORATION as Borrower and a syndicate of Lenders with ROYAL BANK OF CANADA, as Administrative Agent (the “Credit Agreement”). Capitalized terms used herein have the same meaning as in the Credit Agreement.

In accordance with Section 3.6 of the Credit Agreement, we confirm our instructions regarding the issuance of the following Bankers’ Acceptances for value on                                         .

Each should be dated so as to mature on                                         , resulting in a term of                      days.

Particulars in respect of such Bankers’ Acceptances are as set out in Exhibit 1 attached hereto.

We hereby confirm that each condition precedent referred to in Section 7.2 of the Credit Agreement in regard to a [Drawdown Date/Conversion Date] will be satisfied on the [Drawdown Date/Conversion Date].

Yours truly,

PENGROWTH CORPORATION

Per:

Name:

Title:

2

Exhibit 1 to Notice of Borrowing by way of Bankers’ Acceptances

CONFIRMATION OF BANKERS’ ACCEPTANCES FUNDING DETAILS

Union

The

Bank of

Royal

The

Canadian

Bank

Société

California,

Fortis

Bank

Toronto-

National

Alberta

Imperial

HSBC

of

Générale

N.A.,

Capital

Name of

of

Bank of

Dominion

Bank of

Treasury

Bank of

Bank

Nova

(Canada

Canada

(Canada)

Lender

Canada

Montreal

Bank

Canada

Branches

Commerce

Canada

Scotia

Branch)

Branch

Inc.

Amount

Discount Rate

Price

Discount Proceeds

Acceptance Fee

Net Proceeds

Purchaser

Term

Note: if any Non-Acceptance Lenders include particulars of BA Equivalent Advance

Schedule C to the Fifth Amended and Restated Credit Agreement dated as of June 15, 2007 between PENGROWTH CORPORATION as Borrower and a syndicate of Lenders with ROYAL BANK OF CANADA as Administrative Agent

NOTICE OF CONVERSION

Date:

Royal Bank of Canada
Agency Services Group
00xx Xxxxx, Xxxxx Xxxxx
Xxxxx Xxxx Xxxxx
000 Xxx Xxxxxx
Xxxxxxx, Xxxxxxx X0X 0X0

Attention:      Manager, Agency

Dear Sirs:

We refer to the Fifth Amended and Restated Credit Agreement dated as of June 15, 2007 between PENGROWTH CORPORATION as Borrower and a syndicate of Lenders with ROYAL BANK OF CANADA, as Administrative Agent (the “Credit Agreement”). Capitalized terms used herein have the same meaning as in the Credit Agreement.

We hereby give notice of a conversion of Borrowings pursuant to Section 3.12 of the Credit Agreement.

We have outstanding $                                         by way of [Cdn. Prime Loan, U.S. Base Rate Loan, Libor Loan or Bankers’ Acceptances]. Please convert [Cdn. $ or U.S. $] outstanding by way of [Cdn. Prime Loan, U.S. Base Rate Loan, Libor Loan or Bankers’ Acceptances] into a [Cdn. Prime Loan, U.S. Base Rate Loan, Libor Loan or Bankers’ Acceptance] on the                      day of                     ,                     .

[If Applicable] We hereby request that the [Lenders/Schedule II Lenders] purchase the Bankers’ Acceptances to be issued pursuant to this Notice of Conversion.

[If Applicable] The Libor Interest Period for the Libor Loan is ___days.

[If Applicable — when there are no Purchasing Lenders] We will forward a Notice of Borrowing by way of Bankers’ Acceptances in the form of Schedule B to the Credit Agreement on [the Conversion Date]. [If applicable — when there are Purchasing Lenders]. Please forward a Confirmation of Bankers’ Acceptances Funding Details in the form of Exhibit 1 to Schedule B to the Credit Agreement on [the Conversion Date]. The term of each Bankers’ Acceptance shall be for a period of ___days, maturing on                     .

2

We hereby confirm that each condition precedent referred to in Section 7.2 in regard to a Conversion Date is satisfied on the date hereof and will be satisfied on the Conversion Date.

Yours truly,

PENGROWTH CORPORATION

Per:

Name:

Title:

Schedule D to the Fifth Amended and Restated Credit Agreement dated as of June 15, 2007 between PENGROWTH CORPORATION as Borrower and a syndicate of Lenders with ROYAL BANK OF CANADA as Administrative Agent

NOTICE OF ROLLOVER

Date:

Royal Bank of Canada
Agency Services Group
00xx Xxxxx, Xxxxx Xxxxx
Xxxxx Xxxx Xxxxx
000 Xxx Xxxxxx
Xxxxxxx, Xxxxxxx X0X 0X0

Attention:      Manager, Agency

Dear Sirs:

We refer to the Fifth Amended and Restated Credit Agreement dated as of June 15, 2007 between PENGROWTH CORPORATION as Borrower and a syndicate of Lenders with ROYAL BANK OF CANADA, as Administrative Agent (the “Credit Agreement”). Capitalized terms used herein have the same meaning as in the Credit Agreement.

We hereby give notice of a Rollover of a [Bankers’ Acceptance/Libor Loan] pursuant to Section 3.13 of the Credit Agreement.

We have outstanding [Cdn. $                     by way of Bankers’ Acceptances/U.S. $ by way of Libor Loan.] The [Bankers’ Acceptance matures on                     /Libor Interest Period in respect of such Libor Loan expires on                     .] Please rollover such [Bankers’ Acceptance/Libor Loan] [or Cdn./ U.S. $                     thereof — if less than entire [Bankers’ Acceptance/Libor Loan] is being rolled-over] such that the subsequent [term of each such Bankers’ Acceptance shall be ___days maturing on                     /Libor Interest Period is ___months].

We hereby confirm that each condition precedent referred to in Section 7.2 of the Credit Agreement in regard to a Rollover Date is satisfied on the date hereof and will be satisfied on the Rollover Date.

Yours truly,

PENGROWTH CORPORATION

Per:

Name:

Title:

Schedule E to the Fifth Amended and Restated Credit Agreement dated as of June 15, 2007 between PENGROWTH CORPORATION as Borrower and a syndicate of Lenders with ROYAL BANK OF CANADA as Administrative Agent

COMPLIANCE CERTIFICATE

PART A

          I,                                         , of the City of Calgary, in the Province of Alberta, hereby certify as at the date of this Certificate as follows:

1.		I am the [President, Chief Executive Officer, Chief Operating Officer, Chief Financial Officer or Treasurer] of Pengrowth Corporation (the “Borrower”);
2.		This Certificate applies to the Fiscal [Quarter/Year] ending                     , ___;

3. I am familiar with and have examined the provisions of the fifth amended and restated credit agreement (the “Credit Agreement”) dated as of June 15, 2007 between the Borrower and a syndicate of Lenders and Royal Bank of Canada as Administrative Agent and I have made such reasonable investigations of corporate records and inquiries of other officers and senior personnel of the Borrower and the other Loan Parties as I have deemed necessary for purposes of this Certificate;

4. No Default or Event of Default has occurred and is continuing [other than                                         ];

5. The Consolidated Senior Debt to EBITDA Ratio as of the end of this Fiscal [Quarter/Year] is                      to 1.0 and the details of the calculation thereof are attached hereto as Exhibit 1;

6. The Consolidated Total Debt to EBITDA Ratio as of the end of this Fiscal [Quarter/Year] is ___to 1.0 and the details of the calculation thereof are attached hereto as Exhibit 2.

7. The Consolidated Senior Debt to Capitalization Ratio as of the end of this Fiscal [Quarter/Year] is ___to 1.0 and the details of the calculation thereof are attached hereto as Exhibit 3.

8. The aggregate amount of outstanding Non-Recourse Debt of the Borrower and the other Loan Parties as of the end of this Fiscal [Quarter/Year] is Cdn. $                    .

9. The Consolidated Tangible Assets of the Trust as shown on the most recent financial statements of the Trust is Cdn. $                    .

10. Except where the context otherwise requires, all capitalized terms used herein have the same meaning as in the Credit Agreement; and

11. This Certificate is given by the undersigned officer in his capacity as an officer of the Borrower without any personal liability on the part of such officer.

          Executed at the City of Calgary, in the Province of Alberta this ___day of                     , ___.

2

PENGROWTH CORPORATION

Per:

Name:

Title:

Schedule F to the Fifth Amended and Restated Credit Agreement dated as of June 15, 2007 between PENGROWTH CORPORATION as Borrower and a syndicate of Lenders with ROYAL BANK OF CANADA as Administrative Agent

LENDER TRANSFER AGREEMENT

TO:		Royal Bank of Canada, as Administrative Agent (the “Agent”)
AND TO:		Pengrowth Corporation (the “Borrower”)
RE:		Fifth Amended and Restated Credit Agreement (“Credit Agreement”) made as of June 15, 2007 between the Borrower, the Agent and a syndicate of Lenders

Capitalized terms in this Lender Transfer Agreement shall have the meanings set out in the Credit Agreement.

1. [name of new lender] (the “Assignee”) acknowledges that its proper officers have received and reviewed a copy of the Loan Documents and further acknowledges the provisions of the Loan Documents.

2. The Assignee desires to become a Lender under the Credit Agreement; [name of selling Lender] (the “Assignor”) has agreed to and does hereby sell, assign and transfer to the Assignee Cdn. $                     of the Commitment of the Assignor such that the Commitment of the Assignee shall be Cdn. $                     and of the Assignor shall be Cdn. $                    ; and, accordingly, the Assignee has agreed to execute this Lender Transfer Agreement.

3. The Assignee, by its execution and delivery of this Lender Transfer Agreement, agrees that from and after the date hereof it shall be a Lender under the Credit Agreement and agrees to be bound by and to perform all of the terms, conditions and covenants of the Credit Agreement applicable to a Lender but its liability to make Borrowings shall be limited to its Commitment identified in paragraph 2 of this Lender Transfer Agreement.

4. The Assignee agrees to assume, without recourse to the Assignor, all liabilities and obligations of the Assignor as Lender under the Credit Agreement arising after the date hereof to the extent of the Assignee’s Commitment as provided for herein and the Assignor is hereby released and discharged from such obligations and liabilities to the same extent; provided that if any Bankers’ Acceptances accepted or Letters of Credit issued by the Assignor remain outstanding on such date, such Bankers’ Acceptances and Letters of Credit shall remain the liability and obligation of the Assignor and the Assignor shall be entitled to all of the rights, titles and benefits arising out of the Credit Agreement and the other Loan Documents with respect to such Bankers’ Acceptances and Letters of Credit (including reimbursement rights); provided, however, that the Assignee shall indemnify the Assignor and hold the Assignor harmless from and against any losses or costs paid or incurred by the Assignor in connection with such Bankers’ Acceptances and Letters of Credit (other than losses or costs which arise out of the gross negligence or willful misconduct of the Assignor) and shall be entitled to a proportionate amount of the fees paid in respect of such Bankers’ Acceptances and Letters of Credit as agreed between the Assignor and the Assignee.

5. The Assignee acknowledges and confirms that it has not relied upon and that none of the Assignor, the Agent or any of their respective directors, officers, employees or agents have made

2

any representation or warranty whatsoever as to the due execution, legality, effectiveness, validity or enforceability of any of the Loan Documents or any other documentation or information delivered by the Assignor or the Agent to the Assignee in connection therewith or for the performance thereof by any party thereto or of the financial condition of the Borrower or any other Loan Party. All representations, warranties and conditions express or implied by law or otherwise are hereby excluded.

6. The Assignee represents and warrants that it [is/is not] a non-resident within the meaning of the Income Tax Act (Canada) and that it has itself been, and will continue to be, solely responsible for making its own independent appraisal of and investigation into the financial condition, creditworthiness, affairs, status and nature of the Borrower and the other Loan Parties and has not relied and will not hereafter rely on the Assignor or the Agent or any of their respective directors, officers, employees or agents to appraise or keep under review on its behalf the financial condition, creditworthiness, affairs, status or nature of the Borrower or the other Loan Parties.

7. Each of the Assignor and the Assignee represents and warrants to the other, and to the Agent and the Lenders that it has the capacity and power to enter into this Lender Transfer Agreement in accordance with the terms hereof and to perform its obligations arising therefrom, and all actions required to authorize the execution and delivery hereof and the performance of such obligations have been duly taken.

8. This Lender Transfer Agreement shall be governed by and construed in accordance with the laws of the Province of Alberta, Canada.

9. Notices shall be given to the Assignee in the manner provided for in the Credit Agreement as follows:

[   ]
[   ]

Attention: [   ]
Telecopier: [   ]

10. This Lender Transfer Agreement shall be binding upon the Assignee and its successors and permitted assigns.

3

          DATED this ___day of                     , ___.

[Name of Assignee]

Per:

The Assignor hereby acknowledges the above Lender Transfer Agreement and agrees that its Commitment is reduced by an amount equal to the Commitment assigned to the undersigned hereby.

[Name of Assignor]

Per:

Each of Royal Bank of Canada and Pengrowth Corporation hereby acknowledge the above Lender Transfer Agreement and consent to the Assignee becoming a Lender under the Credit Agreement to the extent of its Commitment as set out in paragraph 2 of the Lender Transfer Agreement.

ROYAL BANK OF CANADA, as agent

Per:

PENGROWTH CORPORATION

Per:

Schedule G to the Fifth Amended and Restated Credit Agreement dated as of June 15, 2007 between PENGROWTH CORPORATION as Borrower and a syndicate of Lenders with ROYAL BANK OF CANADA as Administrative Agent

REQUEST FOR EXTENSION

Date:

Royal Bank of Canada
Agency Services Group
00xx Xxxxx, Xxxxx Xxxxx
Xxxxx Xxxx Xxxxx
000 Xxx Xxxxxx
Xxxxxxx, Xxxxxxx X0X 0X0

Attention:      Manager, Agency

Dear Sirs:

We refer to the Fifth Amended and Restated Credit Agreement dated as of June 15, 2007 between PENGROWTH CORPORATION as Borrower and a syndicate of Lenders with ROYAL BANK OF CANADA, as Administrative Agent (the “Credit Agreement”). Capitalized terms used herein have the same meaning as in the Credit Agreement.

In accordance with Section 3.15 of the Credit Agreement, we hereby request that the Requested Lenders provide an extension of the applicable Subject Maturity Date to • [not to exceed 3 years from applicable Anniversary Date].

We hereby certify that:

1. except as disclosed to the Agent in writing, the representations and warranties contained in Article 2 of the Credit Agreement are true and correct on the date hereof and will be true and correct on the date of extension, as applicable, with the same effect as if such representations and warranties were made on such dates; and

2. neither the Borrower nor the Trust nor any Designated Subsidiary is in breach of any provision of the Loan Documents and no Default or Event of Default has occurred and is continuing.

Yours truly,

PENGROWTH CORPORATION

Per:

Name:

Title:

As a guarantor of the obligations of the Borrower to the Agent and the Lenders, we hereby acknowledge the foregoing and confirm that the Loan Party Guarantee and the Subordination Agreement entered into

2

by us remains in full force and effect in respect of all obligations of the Borrower to the Agent and the Lenders, including those under the Credit Agreement, as so extended.

PENGROWTH ENERGY TRUST, by its trustee, COMPUTERSHARE TRUST COMPANY OF CANADA				PENGROWTH HOLDINGS TRUST, by its trustee, PENGROWTH CORPORATION
Per:				Per:
Name:				Name:		Xxxxxxxxxxx Xxxxxxx
Title:				Title:		Chief Financial Officer
Per:
Name:
Title:
STELLAR RESOURCES LIMITED				1268071 ALBERTA LTD.
Per:				Per:
Name:		Xxxxxxxxxxx Xxxxxxx		Name:		Xxxxxxxxxxx Xxxxxxx
Title:		Chief Financial Officer		Title:		Vice President
3174792 NOVA SCOTIA COMPANY				3174793 NOVA SCOTIA COMPANY
Per:				Per:
Name:		Xxxxxxxxxxx Xxxxxxx		Name:		Xxxxxxxxxxx Xxxxxxx
Title:		Vice President		Title:		Vice President
ESPRIT EXCHANGECO LTD.				ESPRIT EXPLORATION LTD.
Per:				Per:
Name:		Xxxxxxxxxxx Xxxxxxx		Name:		Xxxxxxxxxxx Xxxxxxx
Title:		Chief Financial Officer		Title:		Chief Financial Officer

3

PENGROWTH ENERGY PARTNERSHIP, by its general partner, STELLAR RESOURCES LIMITED				PENGROWTH HEAVY OIL PARTNERSHIP by its general partner, STELLAR RESOURCES LIMITED
Per:				Per:
Name:		Xxxxxxxxxxx Xxxxxxx		Name:		Xxxxxxxxxxx Xxxxxxx
Title:		Chief Financial Officer		Title:		Chief Financial Officer
CRISPIN ENERGY PARTNERSHIP, by its managing partner, STELLAR RESOURCES LIMITED				XXXXXX CREEK OPERATING PARTNERSHIP, by its managing partner, 3174793 NOVA SCOTIA COMPANY
Per:				Per:
Name:		Xxxxxxxxxxx Xxxxxxx		Name:		Xxxxxxxxxxx Xxxxxxx
Title:		Chief Financial Officer		Title:		Vice President
1275708 ALBERTA LTD.				1265707 ALBERTA ULC
Per:				Per:
Name:		Xxxxxxxxxxx Xxxxxxx		Name:		Xxxxxxxxxxx Xxxxxxx
Title:		Vice President		Title:		Vice President
1265706 ALBERTA ULC				1265702 ALBERTA ULC
Per:				Per:
Name:		Xxxxxxxxxxx Xxxxxxx		Name:		Xxxxxxxxxxx Xxxxxxx
Title:		Vice President		Title:		Vice President
706-707 PARTNERSHIP, by its managing partner, 1265706 ALBERTA ULC				1301253 ALBERTA LTD.
Per:				Per:
Name:		Xxxxxxxxxxx Xxxxxxx		Name:		Xxxxxxxxxxx Xxxxxxx
Title:		Vice President		Title:		Vice President

4

702 PARTNERSHIP, by its managing partner, 1301253 ALBERTA LTD.
Per:
Name:		Xxxxxxxxxxx Xxxxxxx
Title:		Vice President
[Revise list of Guarantors if necessary]

Schedule H to the Fifth Amended and Restated Credit Agreement dated as of June 15, 2007 between PENGROWTH CORPORATION as Borrower and a syndicate of Lenders with ROYAL BANK OF CANADA as Administrative Agent

POWER OF ATTORNEY TERMS — BANKERS’ ACCEPTANCES

          In order to facilitate the acceptance of Bankers’ Acceptances or promissory notes evidencing BA Equivalent Advances pursuant to the terms of the Fifth Amended and Restated Credit Agreement dated as of June 15, 2007 between PENGROWTH CORPORATION as Borrower and a syndicate of Lenders with ROYAL BANK OF CANADA as Administrative Agent (the “Credit Agreement”), Pengrowth Corporation (the “Borrower”) hereby appoints each Lender (individually, the “Bank”), acting by its duly authorized signatories (the “Attorney”) for the time being at the Bank’s main branch in Toronto, Ontario (or, if such Bank has no main branch in Xxxxxxx, Xxxxxxx, at the Bank’s main branch in Calgary, Alberta) (the “Branch of Account”), the attorney of the Borrower:

1. to sign for and on behalf and in the name of the Borrower as drawer, drafts in the Bank’s standard form (“Drafts”) which may be “depository bills” under and as defined in the Depository Bills and Notes Act (the “DBNA”) drawn on the Bank payable to the order of the Borrower or to the order of the Bank or to a “clearing house” under the DBNA or its nominee for deposit by the Bank with the “clearing house” after acceptance thereof by the Bank;

2. to sign for and on behalf and in the name of the Borrower as drawer, promissory notes in the Bank’s standard form for advances in the nature of BA Equivalent Advances (the “Notes”) payable to the Bank or its order evidencing BA Equivalent Advances made by the Bank to the Borrower pursuant to the Credit Agreement; and

3. to fill in the amount, date and maturity date of such Drafts or Notes;

provided that such acts in each case are to be undertaken by the Bank in accordance with instructions given to the Bank by the Borrower as provided in this power of attorney.

          Instructions to the Bank relating to the execution, completion, endorsement, discount and/or deposit by the Bank on behalf of the Borrower of Drafts which the Borrower wishes to submit to the Bank for acceptance by the Bank or relating to the execution and completion by the Bank on behalf of the Borrower of Notes which the Borrower wishes to issue to the Bank shall in each case be communicated by the Agent and/or the Borrower to the Bank in writing at the Branch of Account following delivery by the Borrower of a notice in respect of a drawdown, Conversion or Rollover pursuant to the Credit Agreement and shall specify the following information:

4. a Canadian Dollar amount, which shall be the aggregate face amount of the Drafts to be accepted or BA Equivalent Advances to be made by the Bank in respect of a particular drawdown, Conversion or Rollover;

5. a specified period of time, as provided in the Credit Agreement, which shall be the number of days after the date of such Drafts or Notes that such Drafts or Notes are to be payable, and the dates of issue and maturity of such Drafts or Notes; and

2

6. payment instructions specifying the account number of the Borrower and the financial institution at which the proceeds from the sale of such Drafts or the proceeds of such BA Equivalent Advances are to be credited.

          The communication in writing by the Borrower to the Bank of the instructions referred to above shall constitute the authorization and instruction of the Borrower to the Bank to complete, execute and, if applicable, endorse Drafts and to complete and execute Notes in accordance with such information as set out above and the request of the Borrower to the Bank to accept such Drafts and deliver the same, or deposit the same with a “clearing house” under the DBNA, against payment as set out in the instructions. The Borrower acknowledges that the Bank shall not be obligated to accept any such Drafts or make any BA Equivalent Advances and thereafter complete and execute any Notes evidencing the same except in accordance with the provisions of the Credit Agreement. The Bank shall be and is hereby authorized to act on behalf of the Borrower upon and in compliance with instructions communicated to the Bank as provided herein if the Bank reasonably believes them to be genuine.

          The Borrower agrees to indemnify the Bank and its directors, officers, employees, affiliates and agents and to hold it and them harmless from and against any loss, liability, expense or claim of any kind or nature whatsoever incurred by any of them as a result of any action or inaction in any way relating to or arising out of this power of attorney or the acts contemplated hereby including the deposit of any draft with a “clearing house” under the DBNA; provided that this indemnity shall not apply to any such loss, liability, expense or claim which results from the gross negligence or willful misconduct of the Bank or any of its directors, officers, employees, affiliates or agents.

          This power of attorney may be revoked by the Borrower at any time upon not less than five (5) Business Days’ written notice served upon the Bank at the Branch of Account, provided that (i) it may be replaced with another power of attorney forthwith in accordance with the requirements of the Credit Agreement; and (ii) no such revocation shall reduce, limit or otherwise affect the obligations of the Borrower in respect of any Draft or Note executed, completed, endorsed, discounted and/or delivered in accordance herewith prior to the time at which such revocation becomes effective. This power of attorney may be terminated by the Bank at any time upon not less than five (5) Business Days’ written notice to the Borrower in accordance with Section 13.5 of the Credit Agreement.

          Any revocation or termination of this power of attorney shall not affect the rights of the Bank and the obligations of the Borrower with respect to the indemnities of the Borrower above stated with respect to all matters arising prior in time to any such revocation or termination.

          This power of attorney is in addition to and not in substitution for any agreement to which the Bank and the Borrower are parties.

          This power of attorney shall be governed in all respects by the laws of the Province of Alberta and the laws of Canada applicable therein and each of the Borrower and the Bank hereby irrevocably attorns to the non-exclusive jurisdiction of the courts of such jurisdiction in respect of all matters arising out of this power of attorney.

          In the event of a conflict between the provisions of this Power of Attorney and the Credit Agreement, the Credit Agreement shall prevail.

Schedule I to the Fifth Amended and Restated Credit Agreement dated as of June 15, 2007 between PENGROWTH CORPORATION as Borrower and a syndicate of Lenders with ROYAL BANK OF CANADA as Administrative Agent

LETTER OF CREDIT APPLICATION

Date:

Royal Bank of Canada
Agency Services Group
00xx Xxxxx, Xxxxx Xxxxx
Xxxxx Xxxx Xxxxx
000 Xxx Xxxxxx
Xxxxxxx, Xxxxxxx X0X 0X0

Dear Sirs:

We refer to the Fifth Amended and Restated Credit Agreement dated as of June 15, 2007 between PENGROWTH CORPORATION as Borrower and a syndicate of Lenders with ROYAL BANK OF CANADA, as Administrative Agent (the “Credit Agreement”). Capitalized terms used herein have the same meaning as in the Credit Agreement.

This Letter of Credit Application is being delivered to you in your capacity as Agent for the Lenders pursuant to Section 3.8 of the Credit Agreement and is intended to be relied upon by the Lenders in issuing a Letter of Credit pursuant to this Letter of Credit Application. We hereby apply for Letters of Credit pursuant to Section 3.8 of the Credit Agreement on the following terms and conditions:

APPLICANT:		Pengrowth Corporation
		2900, 000 – 0xx Xxxxxx X.X.
		Xxxxxxx, Xxxxxxx X0X 0X0
BENEFICIARY:		Name:
		Address:
		Phone No.:
AMOUNT:		Cdn. or U.S. $
EXPIRY DATE:
PURPOSE:

DOCUMENTS REQUIRED FOR DRAWING:

(a) [to be completed]

2

(b) Certificate of the beneficiary confirming that drawings under the following [letters of credit or letters of guarantee] (which includes this [letter of credit or letter of guarantee]) are being made concurrently:

		[Letter of Credit or
		Letter of Guarantee]
Issuing Lenders		Number
Royal Bank of Canada
Bank of Montreal
The Toronto-Dominion Bank
National Bank of Canada
Alberta Treasury Branches
Canadian Imperial Bank of Commerce
HSBC Bank Canada
The Bank of Nova Scotia
Société Générale (Canada Branch)
Union Bank of California, N.A., Canada Branch
Fortis Capital (Canada) Inc.
[other Lenders]

(c) if any drawing under this [letter of credit or letter of guarantee] is a partial drawing, a certificate of the beneficiary confirming that the amount of the partial drawing under this [letter of credit or letter of guarantee] is ___% of the total amount of drawings then being made under all of the foregoing [letters of credit or letters of guarantee].

Except as otherwise expressly stated, the Letter of Credit to be issued pursuant to this Letter of Credit Application will be subject to the Uniform Customs and Practice for Documentary Credits or the Uniform Customs and Practice of Demand Guarantees, as applicable, as published by the International Chamber of Commerce and in effect from time to time.

The undersigned hereby unconditionally, absolutely and irrevocably covenants with each Lender that it shall at all times hereafter keep such Lender indemnified and held harmless from and against all suits (whether founded or unfounded), actions, proceedings, judgments, costs, claims, demands, losses, liabilities, damages and expenses (including all reasonable legal fees on a solicitor and his own client basis) in any way relating to, arising out of, or incidental to the Letter of Credit and the issue thereof by each Lender, unless such Lender acts with gross negligence or willful misconduct or makes a payment on the Letter of Credit in circumstances where the documents and certificates required to be delivered under such Letter of Credit do not comply on their face with the requirements of such Letter of Credit.

Yours truly,

PENGROWTH CORPORATION

Per:

Title: