EXHIBIT 10.1 CREDIT AGREEMENT UNITED STATES EXPLORATION, INC.

EXHIBIT 10.1

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XXXXXX XXXXXXXXX

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XXXXXX XXXXXX EXPLORATION, INC.

and

ING (U.S.) CAPITAL CORPORATION

as Agent

and CERTAIN FINANCIAL INSTITUTIONS

as Lenders

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$35,000,000

May 15, 1998

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TABLE OF CONTENTS

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CREDIT AGREEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

ARTICLE I - Definitions and References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 1.1. Defined Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 1.2. Exhibits and Schedules; Additional Definitions . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 1.3. Amendment of Defined Instruments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Section 1.4. References and Titles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Section 1.5. Calculations and Determinations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14

ARTICLE II - The Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Section 2.1. Commitments to Lend; Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Section 2.2. Requests for New Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Section 2.3. Continuations and Conversions of Existing Loans . . . . . . . . . . . . . . . . . . . . . . . 16
Section 2.4. Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Section 2.5. Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Section 2.6. Optional Prepayments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Section 2.7. Repayments and . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Section 2.8. Initial Borrowing Base . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Section 2.9. Subsequent Determinations of Borrowing Base . . . . . . . . . . . . . . . . . . . . . . . . . 19
Section 2.10. Borrower's Reduction of Borrowing Base . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Section 2.11. Letters of Credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Section 2.12. Requesting Letters of Credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Section 2.13. Reimbursement and Participations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Section 2.14. Letter of Credit Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Section 2.15. No Duty to Inquire . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Section 2.16. LC Collateral . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24

ARTICLE III - Payments to Lenders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Section 3.1. General Procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Section 3.2. Capital Reimbursement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Section 3.3. Increased Cost of Eurodollar Loans or Letters of Credits . . . . . . . . . . . . . . . . . . . 26
Section 3.4. Availability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Section 3.5. Funding Losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Section 3.6. Reimbursable Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Section 3.7. Change of Applicable Lending Office . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29

ARTICLE IV - Conditions Precedent to Lending . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Section 4.1. Documents to be Delivered . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Section 4.2. Closing of Acquisition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Section 4.3. Additional Conditions Precedent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31

ARTICLE V - Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32

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Section 5.1. No Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Section 5.2. Organization and Good Standing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Section 5.3. Authorization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Section 5.4. No Conflicts or Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Section 5.5. Enforceable Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Section 5.6. Initial Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Section 5.7. Other Obligations and Restrictions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Section 5.8. Full Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Section 5.9. Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Section 5.10. Labor Disputes and Acts of God . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Section 5.11. ERISA Plans and Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Section 5.12. Environmental and Other Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Section 5.13. Names and Places of Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Section 5.14. Borrower's Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Section 5.15. Title to Properties; Licenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Section 5.16. Government Regulation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Section 5.17. Officers, Directors and Shareholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38

ARTICLE VI - Affirmative Covenants of Borrower . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Section 6.1. Payment and Performance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Section 6.2. Books, Financial Statements and Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Section 6.3. Other Information and Inspections . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Section 6.4. Notice of Material Events and Change of Address . . . . . . . . . . . . . . . . . . . . . . . 41
Section 6.5. Maintenance of Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
Section 6.6. Maintenance of Existence and Qualifications . . . . . . . . . . . . . . . . . . . . . . . . . 42
Section 6.7. Payment of Trade Liabilities, Taxes, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . 42
Section 6.8. Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
Section 6.9. Performance on Borrower's Behalf . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
Section 6.10. Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
Section 6.11. Compliance with Agreements and Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
Section 6.12. Environmental Matters; Environmental Reviews . . . . . . . . . . . . . . . . . . . . . . . . 43
Section 6.13. Evidence of Compliance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
Section 6.14. Solvency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
Section 6.15. Agreement to Deliver Security Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
Section 6.16. Perfection and Protection of Security Interests and Liens . . . . . . . . . . . . . . . . . . 44
Section 6.17. Bank Accounts; Offset . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
Section 6.18. Guaranties of Borrower's Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
Section 6.19. Production Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45

ARTICLE VII - Negative Covenants of Borrower . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
Section 7.1. Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
Section 7.2. Limitation on Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
Section 7.3. Hedging Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
Section 7.4. Limitation on Mergers, Issuances of Securities, Diminution of Interests . . . . . . . . . . . 47
Section 7.5. Limitation on Sales of Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47

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Section 7.6. Limitation on Dividends and Redemptions . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
Section 7.7. Limitation on Investments and New Businesses . . . . . . . . . . . . . . . . . . . . . . . . . 49
Section 7.8. Limitation on Credit Extensions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
Section 7.9. Transactions with Affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
Section 7.10. Certain Contracts; Amendments; Multiemployer ERISA Plans . . . . . . . . . . . . . . . . . . 49
Section 7.11. Working Capital and Current Ratio . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
Section 7.12. Tangible Net Worth . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
Section 7.13. EBITDA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50

ARTICLE VIII - Events of Default and Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
Section 8.1. Events of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
Section 8.2. Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53

ARTICLE IX - Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
Section 9.1. Appointment and Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
Section 9.2. Exculpation, Agent's Reliance, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
Section 9.3. Credit Decisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
Section 9.4. Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
Section 9.5. Rights as Lender . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
Section 9.6. Sharing of Set-Offs and Other Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
Section 9.7. Investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
Section 9.8. Benefit of Article IX . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
Section 9.9. Resignation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56

ARTICLE X - Miscellaneous. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
Section 10.1. Waivers and Amendments; Acknowledgments . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
Section 10.2. Survival of Agreements; Cumulative Nature . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
Section 10.3. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
Section 10.4. Payment of Expenses; Indemnity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
Section 10.5. Joint and Several Liability; Parties in Interest; Assignments . . . . . . . . . . . . . . . . . 60
Section 10.6. Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
Section 10.7. Governing Law; Submission to Process . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
Section 10.8. Limitation on Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
Section 10.9. Termination; Limited Survival . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
Section 10.10. Partial Release . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
Section 10.11. Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
Section 10.12. Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
Section 10.13. Waiver of Jury Trial, Punitive Damages, etc. . . . . . . . . . . . . . . . . . . . . . . . . . 64

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Schedules and Exhibits:

Lender Schedule
Schedule 1 - Disclosure Schedule
Schedule 2 - Security Schedule
Schedule 3 - Insurance Schedule

Exhibit A - Promissory Note
Exhibit B - Borrowing Notice
Exhibit C - Continuation/Conversion Notice
Exhibit D - Certificate Accompanying Financial Statements
Exhibit E - (Intentionally Omitted)
Exhibit F - Environmental Compliance Certificate
Exhibit G-1 - Opinion of Counsel for Restricted Persons
Exhibit G-2 - Opinions of Special Counsel
Exhibit H - Assignment and Assumption Agreement

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CREDIT AGREEMENT

THIS CREDIT AGREEMENT is made as of May 15, 1998, by and among UNITED
STATES EXPLORATION, INC., a Colorado corporation (herein called "Borrower"),
ING (U.S.) Capital Corporation, individually and as agent (herein called
"Agent") and the Lenders referred to below. In consideration of the mutual
covenants and agreements contained herein the parties hereto agree as follows:

ARTICLE I - Definitions and References

Section 1.1. Defined Terms. As used in this Agreement, each of the
following terms has the meaning given it in this Section 1.1 or in the sections
and subsections referred to below:

"Acquisition Documents" mean (i) that certain Purchase and Sale
Agreement made as of April 9, 1998 between Union Pacific Resources Company and
Borrower, and (ii) all conveyances, bills of sale and other documents to be
executed and delivered in connection therewith.

"Affiliate" means, as to any Person, each other Person that directly
or indirectly (through one or more intermediaries or otherwise) controls, is
controlled by, or is under common control with, such Person. A Person shall be
deemed to be "controlled by" any other Person if such other Person possesses,
directly or indirectly, power

(a) to vote 20% or more of the securities (on a fully
diluted basis) having ordinary voting power for the election of
directors or managing general partners; or

(b) to direct or cause the direction of the management
and policies of such Person whether by contract or otherwise.

"Agent" means ING (U.S.) Capital Corporation, as Agent hereunder, and
its successors in such capacity; provided, however, that until such time as a
Lender other than ING (U.S.) Capital Corporation becomes a party hereto,
"Agent" shall mean ING (U.S.) Capital Corporation, individually.

"Agreement" means this Credit Agreement.

"Applicable Lending Office" means, with respect to each Lender, such
Lender's Domestic Lending Office in the case of Base Rate Loans and such
Lender's Eurodollar Lending Office in the case of Eurodollar Loans.

"Bank Parties" means Agent, LC Issuer and all Lenders.

"Base Rate" means the Base Rate Margin plus the higher of (a) the
Reference Rate and (b) the Federal Funds Rate plus one-half percent (0.5%) per
annum. For purposes of this definition, "Reference Rate" means the arithmetic
average of the rates of interest publicly

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announced by The Chase Manhattan Bank, Citibank, N.A. and Xxxxxx Guaranty Trust
Company of New York (or their respective successors) as their respective prime
commercial lending rates (or, as to any such bank that does not announce such a
rate, such bank's 'base' or other rate determined by Agent to be the equivalent
rate announced by such bank), except that, if any such bank shall, for any
period, cease to announce publicly its prime commercial lending (or equivalent)
rate, Agent shall, during such period, determine the "Reference Rate" based
upon the prime commercial lending (or equivalent) rates announced publicly by
the other such banks. The Base Rate shall in no event, however, exceed the
Highest Lawful Rate.

"Base Rate Loan" means any Loan which bears interest at the Base Rate.

"Base Rate Margin" means on each day:

(a) three-eights of one percent (.375%) per annum when the Facility
Usage on such day is less than or equal to $30,000,000; and

(b) three-fourths of one percent (.75%) per annum when the Facility
Usage on such day is greater than $30,000,000.

"Borrower" means United States Exploration, Inc., a Colorado
corporation.

"Borrowing" means a borrowing of new Loans of a single Type pursuant
to Section 2.2 or a continuation or conversion of existing Loans into a single
Type (and, in the case of Eurodollar Loans, with the same Interest Period)
pursuant to Section 2.3.

"Borrowing Base" means, at the particular time in question, either the
amount provided for in Section 2.8 or the amount determined by Agent and
Majority Lenders in accordance with the provisions of Section 2.9, as reduced
by Borrower pursuant to Section 2.10; provided, however, that in no event shall
the Borrowing Base ever exceed the Maximum Loan Amount.

"Borrowing Base Deficiency" has the meaning given it in Section 2.7.

"Borrowing Notice" means a written or telephonic request, or a written
confirmation, made by Borrower which meets the requirements of Section 2.2.

"Business Day" means a day, other than a Saturday or Sunday, on which
commercial banks are open for business with the public in New York, New York.
Any Business Day in any way relating to Eurodollar Loans (such as the day on
which an Interest Period begins or ends) must also be a day on which, in the
judgment of Agent, significant transactions in dollars are carried out in the
interbank eurocurrency market.

"Cash Equivalents" means investments in:

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

(b) demand deposits, and time deposits (including certificates of
deposit) maturing within 12 months from the date of deposit thereof, with any
office of any Lender or with a domestic office of any national or state bank or
trust company which is organized under the Laws of the United States of America
or any state therein, which has capital, surplus and undivided profits of at
least $500,000,000, and whose certificates of deposit have at least the third
highest credit rating given by either Rating Agency;

(c) repurchase obligations with a term of not more than seven days
for underlying securities of the types described in clause (a) above entered
into with any commercial bank meeting the specifications of clause (b) above;

(d) open market commercial paper, maturing within 270 days after
acquisition thereof, which has the highest or second highest credit rating
given by either Rating Agency; and

(e) investments in money market or other mutual funds substantially
all of whose assets comprise securities of the types described in clauses (a)
through (d) above.

"Change of Control" means the occurrence of any one or more of the
following events: (i) any Person or two or more Persons acting as a group
(other than Xxxxx X. Xxxxxx, any members of Borrower's Board of Directors on
the date of this Agreement or any of Borrower's officers) shall acquire
beneficial ownership (within the meaning of Rule 13d-3 of the Securities and
Exchange Commission under the Securities Act of 1934, as amended, and including
holding proxies to vote for the election of directors other than proxies held
by Borrower's management or their designees to be voted in favor of Persons
nominated by Borrower's Board of Directors) of 30% or more of the outstanding
voting securities of Borrower, measured by voting power (including both common
stock and any preferred stock or other equity securities entitling the holders
thereof to vote with the holders of common stock in elections for directors of
Borrower) or (ii) one-third or more of the directors of Borrower shall consist
of Persons not nominated by Borrower's Board of Directors or (iii) Xxxxx X.
Xxxxxx shall cease to be the chief executive officer of Borrower.

"Collateral" means all property of any kind which is subject to a Lien
in favor of Lenders (or in favor of Agent for the benefit of Lenders) or which,
under the terms of any Security Document, is purported to be subject to such a
Lien.

"Commitment Period" means the period from and including the date
hereof until and including December 31, 1999 (or, if earlier, the day on which
the Notes first become due and payable in full).

"Consolidated" refers to the consolidation of any Person, in
accordance with GAAP, with its properly consolidated subsidiaries. References
herein to a Person's Consolidated financial

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statements, financial position, financial condition, liabilities, etc. refer to
the consolidated financial statements, financial position, financial condition,
liabilities, etc. of such Person and its properly consolidated subsidiaries.

"Consolidated EBITDA" means, for each period of four consecutive
Fiscal Quarters, the sum of (1) the Consolidated Net Income of Borrower during
such period, plus (2) Consolidated Interest Expense during such period, plus
(3) all income taxes which were deducted in determining such Consolidated Net
Income, plus (4) all depreciation, amortization (including amortization of good
will and debt issue costs) and other non-cash charges (including any provision
for the reduction in the carrying value of assets recorded in accordance with
GAAP) which were deducted in determining such Consolidated Net Income, minus
(5) all non-cash items of income which were included in determining such
Consolidated Net Income.

"Consolidated Interest Expense" means, for any applicable period, all
interest paid or accrued during such period on Indebtedness (including
amortization of original issue discount and the interest component of any
deferred payment obligations and capital lease obligations) which was deducted
in determining Consolidated Net Income.

"Consolidated Net Income" means, for any applicable period on a
Consolidated basis for Borrower and its Consolidated Subsidiaries, the gross
revenues of such Persons for such period, plus any cash dividends or
distributions actually received by such Persons from any other business entity,
minus all expenses and other proper charges (including taxes on income, to the
extent imposed upon such Persons), determined on a Consolidated basis after
eliminating earnings or losses attributable to outstanding minority interests,
but excluding the net earnings of any other business entity in which such
Persons have an ownership interest.

"Consolidated Tangible Net Worth" means the remainder of all
Consolidated assets of Borrower and its Subsidiaries, other than intangible
assets (including without limitation as intangible assets such assets as
patents, copyrights, licenses, franchises, goodwill, trade names, trade secrets
and leases other than oil, gas or mineral leases or leases required to be
capitalized under GAAP), minus Consolidated liabilities of Borrower and its
Subsidiaries.

"Continuation/Conversion Notice" means a written or telephonic
request, or a written confirmation, made by Borrower which meets the
requirements of Section 2.3.

"Default" means any Event of Default and any default, event or
condition which would, with the giving of any requisite notices and the passage
of any requisite periods of time, constitute an Event of Default.

"Default Rate" means, at the time in question, two percent (2.0%) per
annum plus the Base Rate then in effect; provided that, with respect to any
Eurodollar Loan with an Interest Period extending beyond the date such
Eurodollar Loan becomes due and payable, "Default Rate" shall mean two percent
(2.0%) per annum plus the related Eurodollar Rate. The Default Rate shall
never exceed the Highest Lawful Rate.

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"Determination Date" has the meaning given it in Section 2.9.

"Disclosure Report" means either a notice given by Borrower under
Section 6.4 or a certificate given by Borrower's chief financial officer under
Section 6.2(b).

"Disclosure Schedule" means Schedule 1 hereto.

"Distribution" means (a) any dividend or other distribution made by a
Restricted Person on or in respect of any stock, partnership interest, or other
equity interest in such Restricted Person (including any option or warrant to
buy such an equity interest), or (b) any payment made by a Restricted Person to
purchase, redeem, acquire or retire any stock, partnership interest, or other
equity interest in such Restricted Person (including any such option or
warrant).

"Domestic Lending Office" means, with respect to any Lender, the
office of such Lender specified as its "Domestic Lending Office" below its name
on the Lender Schedule attached hereto, or such other office as such Lender may
from time to time specify to Borrower and Agent.

"Eligible Transferee" means a Person which (a) is a Lender or (b) is
consented to as an Eligible Transferee by Agent and, so long as no Event of
Default is continuing by Borrower, which consents in each case will not be
unreasonably withheld (provided that no Person organized outside the United
States may be an Eligible Transferee if Borrower would be required to pay
withholding taxes on interest or principal owed to such Person).

"Engineering Report" means the Initial Engineering Report and each
engineering report delivered pursuant to Section 6.2(d).

"Environmental Complaint" means any written or oral complaint, order,
directive, claim, citation, notice of environmental report or investigation, or
other notice by any Tribunal or any other Person with respect to (a) air
emissions, (b) spills, releases, or discharges to soils, any improvements
located thereon, surface water, groundwater, or the sewer, septic, waste
treatment, storage, or disposal systems servicing any property of any
Restricted Person or any Collateral, (c) solid or liquid waste disposal, (d)
the use, generation, storage, transportation, or disposal of any Hazardous
Substance, or (e) other environmental, health or safety matters affecting any
property of any Restricted Person or any Collateral or the business conducted
thereon.

"Environmental Laws" means any and all Laws relating to the
environment or to emissions, discharges, releases or threatened releases of
pollutants, contaminants, chemicals, or industrial, toxic or hazardous
substances or wastes into the environment including ambient air, surface water,
ground water, or land, or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport, or handling of
pollutants, contaminants, chemicals, or industrial, toxic or hazardous
substances or wastes.

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

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"ERISA Affiliate" means Borrower and all members of a controlled group
of corporations and all trades or businesses (whether or not incorporated)
under common control that, together with Borrower, are treated as a single
employer under Section 414 of the Internal Revenue Code of 1986, as amended.

"ERISA Plan" means any employee pension benefit plan subject to Title
IV of ERISA maintained by any ERISA Affiliate with respect to which any
Restricted Person has a fixed or contingent liability.

"Eurodollar Loan" means a Loan which is properly designated as a
Eurodollar Loan pursuant to Section 2.2 or 2.3.

"Eurodollar Margin" means, on each day:

(a) One and seven-eights percent (1.875%) per annum when the Facility
Usage on such day is less than or equal to $30,000,000; and

(b) Two and one-fourth percent (2.25%) per annum when the Facility
Usage on such day is greater than $30,000,000.

"Eurodollar Lending Office" means, with respect to any Lender, the
office of such Lender specified as its "Eurodollar Lending Office" below its
name on the Lender Schedule attached hereto (or, if no such office is
specified, its Domestic Lending Office), or such other office of such Lender as
such Lender may from time to time specify to Borrower and Agent.

"Eurodollar Rate" means, with respect to each particular Eurodollar
Loan and the associated LIBOR Rate and Reserve Percentage, the rate per annum
calculated by Agent (rounded upwards, if necessary, to the next higher 0.01%)
determined on a daily basis pursuant to the following formula:

Eurodollar Rate =

LIBOR Rate
--------------------------- + Eurodollar Margin
100.0% - Reserve Percentage

The Eurodollar Rate for any Eurodollar Loan shall change whenever the
Eurodollar Margin or the Reserve Percentage changes. No Eurodollar Rate shall
ever exceed the Highest Lawful Rate.

"Evaluation Date" means each of the following:

(a) January 1 and July 1 of each year, beginning with January 1, 1999;

(b) Each date which either Borrower or Required Lenders, at their
respective options, specifies as a date as of which the Borrowing Base is to be
redetermined, provided that each such date must be the first or last date of a
current calendar month and that Borrower shall not be

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entitled to request any such redetermination more than once during any six (6)
month period and that Borrower shall not be entitled to request any such
redetermination after the end of the Commitment Period.

"Event of Default" has the meaning given it in Section 8.1.

"Exploration Agreement" means that certain Exploration Agreement dated
April 9, 1998 between Borrower and Union Pacific Resources Corporation.

"Facility Usage" means, at the time in question, the aggregate amount
of outstanding Loans and existing LC Obligations at such time.

"Federal Funds Rate" shall mean, for any day, the rate per annum
(rounded upwards, if necessary, to the nearest 1/100th of one percent) equal to
the weighted average of the rates on overnight Federal funds transactions with
members of the Federal Reserve System arranged by Federal funds brokers on such
day, as published by the Federal Reserve Bank of New York on the Business Day
next succeeding such day, provided that (i) if the day for which such rate is
to be determined is not a Business Day, the Federal Funds Rate for such day
shall be such rate on such transactions on the next preceding Business Day as
so published on the next succeeding Business Day, and (ii) if such rate is not
so published for any day, the Federal Funds Rate for such day shall be the
average rate quoted to Agent on such day on such transactions as determined by
Agent.

"Fiscal Quarter" means a three-month period ending on March 31, June
30, September 30, or December 31 of any year.

"Fiscal Year" means a twelve-month period ending on December 31 of any
year.

"GAAP" means those generally accepted accounting principles and
practices which are recognized as such by the Financial Accounting Standards
Board (or any generally recognized successor) and which, in the case of
Borrower and its Consolidated subsidiaries, are applied for all periods after
the date hereof in a manner consistent with the manner in which such principles
and practices were applied to the audited Initial Financial Statements. If any
material change in any accounting principle or practice is required by the
Financial Accounting Standards Board (or any such successor) in order for such
principle or practice to continue as a generally accepted accounting principle
or practice, all reports and financial statements required hereunder with
respect to Borrower or with respect to Borrower and its Consolidated
subsidiaries may be prepared in accordance with such change, but all
calculations and determinations to be made hereunder may be made in accordance
with such change only after notice of such change is given to Agent, and
Majority Lenders agree to such change insofar as it affects the accounting of
Borrower or of Borrower and its Consolidated subsidiaries.

"Guarantor" means any Person who has guaranteed some or all of the
Obligations pursuant to a guaranty listed on the Security Schedule or any other
Person who has guaranteed some or all of the Obligations and who has been
accepted by Agent as a Guarantor.

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"Hazardous Materials" means any substances regulated under any
Environmental Law, whether as pollutants, contaminants, or chemicals, or as
industrial, toxic or hazardous substances or wastes, or otherwise.

"Hedging Contract" means (a) any agreement providing for options,
swaps, floors, caps, collars, forward sales or forward purchases involving
interest rates, commodities or commodity prices, equities, currencies, bonds,
or indexes based on any of the foregoing, (b) any option, futures or forward
contract traded on an exchange, and (c) any other derivative agreement or other
similar agreement or arrangement.

"Highest Lawful Rate" means, with respect to each Lender, the maximum
nonusurious rate of interest that such Lender is permitted under applicable Law
to contract for, take, charge, or receive with respect to its Loan. All
determinations herein of the Highest Lawful Rate, or of any interest rate
determined by reference to the Highest Lawful Rate, shall be made separately
for each Lender as appropriate to assure that the Loan Documents are not
construed to obligate any Person to pay interest to any Lender at a rate in
excess of the Highest Lawful Rate applicable to such Lender.

"Indebtedness" of any Person means Liabilities in any of the following
categories:

(a) Liabilities for borrowed money,

(b) Liabilities constituting an obligation to pay the deferred
purchase price of property or services,

(d) Liabilities which (i) would under GAAP be shown on such Person's
balance sheet as a liability, and (ii) are payable more than one year from the
date of creation thereof (other than reserves for taxes and reserves for
contingent obligations),

(e) Liabilities arising under operating leases or under Hedging
Contracts,

(f) Liabilities constituting principal under leases capitalized in
accordance with GAAP,

(g) Liabilities arising under conditional sales or other title
retention agreements,

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

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(i) Liabilities (for example, repurchase agreements) consisting of an
obligation to purchase securities or other property, if such Liabilities arises
out of or in connection with the sale of the same or similar securities or
property,

(j) Liabilities with respect to letters of credit or applications or
reimbursement agreements therefor,

(k) Liabilities with respect to payments received in consideration of
oil, gas, or other minerals yet to be acquired or produced at the time of
payment (including obligations under "take-or-pay" contracts to deliver gas in
return for payments already received and the undischarged balance of any
production payment created by such Person or for the creation of which such
Person directly or indirectly received payment), or

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

provided, however, that the "Indebtedness" of any Person shall not include
Liabilities that were incurred by such Person on ordinary trade terms to
vendors, suppliers, or other Persons providing goods and services for use by
such Person in the ordinary course of its business, unless and until such
Liabilities are outstanding more than 120 days after the incurrence thereof.

"Initial Engineering Report" means the engineering report concerning
oil and gas properties of Restricted Persons prepared by Xxxx X. Xxxxxxx as
of January 1, 1998, and the engineering report concerning the oil and gas
properties subject to the Acquisition Documents prepared by Questa Engineering
Corporation as of January 1, 1998.

"Initial Financial Statements" means the audited annual Consolidated
financial statements of Borrower dated as of December 31, 1997.

"Insurance Schedule" means Schedule 3 attached hereto.

"Interest Period" means, with respect to each particular Eurodollar
Loan in a Borrowing, a period of 1, 2, 3 or 6 months, as specified in the
Borrowing Notice applicable thereto, beginning on and including the date
specified in such Borrowing Notice (which must be a Business Day), and ending
on but not including the same day of the month as the day on which it began
(e.g., a period beginning on the third day of one month shall end on but not
include the third day of another month), provided that each Interest Period
which would otherwise end on a day which is not a Business Day shall end on the
next succeeding Business Day (unless such next succeeding Business Day is the
first Business Day of a calendar month, in which case such Interest Period
shall end on the immediately preceding Business Day). No Interest Period may
be elected which would extend past the date on which the associated Note is due
and payable in full or would require the repayment of the related Eurodollar
Loan prior to the end of such Interest Period in order to make a scheduled
installment payment on the Notes.

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"Investment" means any investment, in cash or by delivery of property
made, directly or indirectly in any Person, whether by acquisition of shares of
capital stock, indebtedness or other obligations or securities or by loan,
advance, capital contribution or otherwise.

"Law" means any statute, law, regulation, ordinance, rule, treaty,
judgment, order, decree, permit, concession, franchise, license, agreement or
other governmental restriction of the United States or any state or political
subdivision thereof or of any foreign country or any department, province or
other political subdivision thereof.

"LC Application" means any application for a Letter of Credit
hereafter made by Borrower to LC Issuer.

"LC Collateral" has the meaning given it in Section 2.16.

"LC Issuer" means ING (U.S.) Capital Corporation in its capacity as
the issuer of Letters of Credit hereunder, and its successors in such capacity.
Agent may, with the consent of Borrower and the Lender in question, appoint any
Lender hereunder as the LC Issuer in place of or in addition to ING (U.S.)
Capital Corporation.

"LC Obligations" means, at the time in question, the sum of all
Matured LC Obligations plus the Maximum Drawing Amount.

"Lenders" means each signatory hereto (other than Borrower and
Restricted Persons a party hereto), including ING Capital in its capacity as a
lender hereunder rather than as Agent or LC Issuer, and the successors of each
such party as holder of a Note.

"Lending Office" means, with respect to any Lender, the office,
branch, or agency through which it funds its Eurodollar Loans; with respect to
LC Issuer, the office, branch, or agency through which it issues Letters of
Credit; and with respect to Agent, the office, branch, or agency through which
it administers this Agreement.

"Letter of Credit" means any letter of credit issued by LC Issuer
hereunder at the application of Borrower.

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

"LIBOR Rate" means, with respect to each particular Eurodollar Loan
and the related Interest Period, the rate per annum (rounded upwards, if
necessary, to the nearest 1/16 of 1%) reported, on the date two Business Days
prior to the first day of such Interest Period, on Telerate Access Service Page
3750 (British Bankers Association Settlement Rate) as the London Interbank
Offered Rate for dollar deposits having a term comparable to such Interest
Period and in an amount of $1,000,000 or more (or, if such Page shall cease to
be publicly available or if the

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information contained on such Page, in Agent's sole judgment, shall cease to
accurately reflect such London Interbank Offered Rate, as reported by any
publicly available source of similar market data selected by Agent that, in
Agent's sole judgment, accurately reflects such London Interbank Offered Rate).

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

"Loan" has the meaning given it in Section 2.1.

"Loan Documents" means this Agreement, the Notes, the Security
Documents, the Letters of Credit, the LC Applications, and all other
agreements, certificates, or reports delivered pursuant to any requirement of
this Agreement..

"Majority Lenders" means Lenders whose aggregate Percentage Shares
equal or exceed sixty-six and two-thirds percent (66 2/3%).

"Material Adverse Change" means a material and adverse change, from
the state of affairs presented in the Initial Financial Statements, to (a)
Borrower's financial condition or the Consolidated financial condition of
Borrower and its Subsidiaries, (b) the business, operations or properties of
Borrower and its Subsidiaries, considered as a whole, (c) Borrower's ability to
timely pay the Obligations, or (d) the enforceability of the material terms of
any Loan Documents.

"Matured LC Obligations" means all amounts paid by LC Issuer on drafts
or demands for payment drawn or made under or purported to be under any Letter
of Credit and all other amounts due and owing to LC Issuer under any LC
Application for any Letter of Credit, to the extent the same have not been
repaid to LC Issuer (with the proceeds of Loans or otherwise).

"Maximum Drawing Amount" means at the time in question the sum of the
maximum amounts which Agent might then or thereafter be called upon to advance
under all Letters of Credit then outstanding.

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"Maximum Loan Amount" means the amount of $35,000,000.

"Note" has the meaning given it in Section 2.1.

"Obligations" means all Liabilities from time to time owing by any
Restricted Person to any Bank Party under or pursuant to any of the Loan
Documents, including all LC Obligations. "Obligation" means any part of the
Obligations.

"Percentage Share" means, with respect to any Lender (a) when used in
Sections 2.1 or 2.5, in any Borrowing Notice or when no Loans are outstanding
hereunder, the percentage set forth opposite such Lender's name on Lender
Schedule attached hereto, and (b) when used otherwise, the percentage obtained
by dividing (i) the sum of the unpaid principal balance of such Lender's Loans
at the time in question plus the Matured LC Obligations which such Lender has
funded pursuant to Section 2.13(c) plus the portion of the Maximum Drawing
Amount which such Lender might be obligated to fund under Section 2.14(c), by
(ii) the sum of the aggregate unpaid principal balance of all Loans at such
time plus the aggregate amount of LC Obligations outstanding at such time.

"Permitted Investments" means (i) Cash Equivalents and (ii)
Investments in wholly-owned Subsidiaries of Borrower who are Guarantors.

"Permitted Lien" has the meaning given to such term in Section 7.2.

"Person" means an individual, corporation, partnership, limited
liability company, association, joint stock company, trust or trustee thereof,
estate or executor thereof, unincorporated organization or joint venture,
Tribunal, or any other legally recognizable entity.

"Rating Agency" means either Standard & Poor's Ratings Group (a
division of McGraw Hill, Inc.) or Xxxxx'x Investors Service, Inc., or their
respective successors.

"Regulation D" means Regulation D of the Board of Governors of the
Federal Reserve System as from time to time in effect.

"Reserve Percentage" means, on any day with respect to each particular
Eurodollar Loan, the maximum reserve requirement, as determined by Agent
(including without limitation any basic, supplemental, marginal, emergency or
similar reserves), expressed as a percentage and rounded to the next higher
0.01%, which would then apply under Regulation D with respect to "Eurocurrency
liabilities", as such term is defined in Regulation D, of $1,000,000 or more.
If such reserve requirement shall change after the date hereof, the Reserve
Percentage shall be automatically increased or decreased, as the case may be,
from time to time as of the effective time of each such change in such reserve
requirement.

"Restricted Person" means any of Borrower, each Subsidiary of
Borrower, and each Guarantor.

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"Security Documents" means the instruments listed in the Security
Schedule and all other security agreements, deeds of trust, mortgages, chattel
mortgages, pledges, guaranties, financing statements, continuation statements,
extension agreements and other agreements or instruments now, heretofore, or
hereafter delivered by any Restricted Person to Agent in connection with this
Agreement or any transaction contemplated hereby to secure or guarantee the
payment of any part of the Obligations or the performance of any Restricted
Person's other duties and obligations under the Loan Documents.

"Security Schedule" means Schedule 2 hereto.

"Subsidiary" means, with respect to any Person, any corporation,
association, partnership, joint venture, or other business or corporate entity,
enterprise or organization which is directly or indirectly (through one or more
intermediaries) controlled by or owned fifty percent or more by such Person;
provided that the particular relationship (a) which is established pursuant to
a standard form operating agreement or similar agreement or which is a
partnership for purposes of federal income taxation only, (b) which is not a
corporation or partnership (or subject to the Uniform Partnership Act) under
applicable state Law, and (c) whose business is limited to the exploration,
development and operation of oil, gas or mineral properties and interests owned
directly by the parties in such relationship, shall not be deemed to be
"Subsidiaries" of such Person.

"Termination Event" means (a) the occurrence with respect to any ERISA
Plan of (i) a reportable event described in Sections 4043(b)(5) or (6) of ERISA
or (ii) any other reportable event described in Section 4043(b) of ERISA other
than a reportable event not subject to the provision for 30-day notice to the
Pension Benefit Guaranty Corporation pursuant to a waiver by such corporation
under Section 4043(a) of ERISA, or (b) the withdrawal of any ERISA Affiliate
from an ERISA Plan during a plan year in which it was a "substantial employer"
as defined in Section 4001(a)(2) of ERISA, or (c) the filing of a notice of
intent to terminate any ERISA Plan or the treatment of any ERISA Plan amendment
as a termination under Section 4041 of ERISA, or (d) the institution of
proceedings to terminate any ERISA Plan by the Pension Benefit Guaranty
Corporation under Section 4042 of ERISA, or (e) any other event or condition
which might constitute grounds under Section 4042 of ERISA for the termination
of, or the appointment of a trustee to administer, any ERISA Plan.

"Tribunal" means any government, any arbitration panel, any court or
any governmental department, commission, board, bureau, agency or
instrumentality of the United States of America or any state, province,
commonwealth, nation, territory, possession, county, parish, town, township,
village or municipality, whether now or hereafter constituted and/or existing.

"Type" means, with respect to any Loans, the characterization of such
Loans as either Base Rate Loans or Eurodollar Loans.

Section 1.2. Exhibits and Schedules; Additional Definitions. All
Exhibits and Schedules attached to this Agreement are a part hereof for all
purposes. Reference is hereby made to the

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Security Schedule for the meaning of certain terms defined therein and used but
not defined herein, which definitions are incorporated herein by reference.

Section 1.3. Amendment of Defined Instruments. Unless the context
otherwise requires or unless otherwise provided herein the terms defined in
this Agreement which refer to a particular agreement, instrument or document
also refer to and include all renewals, extensions, modifications, amendments
and restatements of such agreement, instrument or document, provided that
nothing contained in this section shall be construed to authorize any such
renewal, extension, modification, amendment or restatement.

Section 1.4. References and Titles. All references in this Agreement
to Exhibits, Schedules, articles, sections, subsections and other subdivisions
refer to the Exhibits, Schedules, articles, sections, subsections and other
subdivisions of this Agreement unless expressly provided otherwise. Titles
appearing at the beginning of any subdivisions are for convenience only and do
not constitute any part of such subdivisions and shall be disregarded in
construing the language contained in such subdivisions. The words "this
Agreement", "this instrument", "herein", "hereof", "hereby", "hereunder" and
words of similar import refer to this Agreement as a whole and not to any
particular subdivision unless expressly so limited. The phrases "this section"
and "this subsection" and similar phrases refer only to the sections or
subsections hereof in which such phrases occur. The word "or" is not
exclusive, and the word "including" (in its various forms) means "including
without limitation". Pronouns in masculine, feminine and neuter genders shall
be construed to include any other gender, and words in the singular form shall
be construed to include the plural and vice versa, unless the context otherwise
requires.

Section 1.5. Calculations and Determinations. All calculations under
the Loan Documents of interest chargeable with respect to Eurodollar Loans and
of fees shall be made on the basis of actual days elapsed (including the first
day but excluding the last) and a year of 360 days. All other calculations of
interest made under the Loan Documents shall be made on the basis of actual
days elapsed (including the first day but excluding the last) and a year of 365
or 366 days, as appropriate. Each determination by a Bank Party of amounts to
be paid under Sections 3.2 through 3.6 or any other matters which are to be
determined hereunder by a Bank Party (such as any Eurodollar Rate, LIBOR Rate,
Business Day, Interest Period, or Reserve Percentage) shall, in the absence of
manifest error, be conclusive and binding. Unless otherwise expressly provided
herein or unless Majority Lenders otherwise consent all financial statements
and reports furnished to any Bank Party hereunder shall be prepared and all
financial computations and determinations pursuant hereto shall be made in
accordance with GAAP.

ARTICLE II - The Loans and Letters of Credit

Section 2.1. Commitments to Lend; Notes. Subject to the terms and
conditions hereof, each Lender agrees to make loans to Borrower (herein called
such Lender's "Loans") upon Borrower's request from time to time during the
Commitment Period, provided that (a) subject to Sections 3.3, 3.4 and 3.6, all
Lenders are requested to make Loans of the same Type in accordance with their
respective Percentage Shares and as part of the same Borrowing, and (b) after
giving effect to such Loans, the Facility Usage does not exceed the Borrowing
Base

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determined as of the date on which the requested Loans are to be made. The
aggregate amount of all Loans in any Borrowing must be greater than or equal to
$500,000 or must equal the remaining availability under the Borrowing Base.
Borrower may have no more than five Borrowings of Eurodollar Loans outstanding
at any time and the amount of each Eurodollar Loan must equal $500,000 or any
higher integral multiple of $100,000. The obligation of Borrower to repay to
each Lender the aggregate amount of all Loans made by such Lender, together
with interest accruing in connection therewith, shall be evidenced by a single
promissory note (herein called such Lender's "Note") made by Borrower payable
to the order of such Lender in the form of Exhibit A with appropriate
insertions. The amount of principal owing on any Lender's Note at any given
time shall be the aggregate amount of all Loans theretofore made by such Lender
minus all payments of principal theretofore received by such Lender on such
Note. Interest on each Note shall accrue and be due and payable as provided
herein and therein, with Eurodollar Loans bearing interest at the Eurodollar
Rate and Base Rate Loans bearing interest at the Base Rate (subject to the
applicability of the Default Rate and limited by the provisions of Section
10.8). Subject to the terms and conditions hereof, Borrower may borrow, repay,
and reborrow hereunder.

Section 2.2. Requests for New Loans. Borrower must give to Agent
written notice (or telephonic notice promptly confirmed in writing) of any
requested Borrowing of new Loans to be advanced by Lenders. Each such notice
constitutes a "Borrowing Notice" hereunder and must:

(a) specify (i) the aggregate amount of any such Borrowing of
new Base Rate Loans and the date on which such Base Rate Loans are to
be advanced, or (ii) the aggregate amount of any such Borrowing of new
Eurodollar Loans, the date on which such Eurodollar Loans are to be
advanced (which shall be the first day of the Interest Period which is
to apply thereto), and the length of the applicable Interest Period;
and

(b) be received by Agent not later than noon, New York, New
York time, on (i) the day on which any such Base Rate Loans are to be
made, or (ii) the third Business Day preceding the day on which any
such Eurodollar Loans are to be made.

Each such written request or confirmation must be made in the form and
substance of the "Borrowing Notice" attached hereto as Exhibit B, duly
completed. Each such telephonic request shall be deemed a representation,
warranty, acknowledgment and agreement by Borrower as to the matters which are
required to be set out in such written confirmation. Upon receipt of any such
Borrowing Notice, Agent shall give each Lender prompt notice of the terms
thereof. If all conditions precedent to such new Loans have been met, each
Lender will on the date requested promptly remit to Agent at Agent's office in
New York, New York the amount of such Lender's new Loan in immediately
available funds, and upon receipt of such funds, unless to its actual knowledge
any conditions precedent to such Loans have been neither met nor waived as
provided herein, Agent shall promptly make such Loans available to Borrower.
Unless Agent shall have received prompt notice from a Lender that such Lender
will not make available to Agent such Lender's new Loan, Agent may in its
discretion assume that such Lender has made such Loan available to Agent in
accordance with this section and Agent may if it chooses, in reliance upon such
assumption, make such Loan available to Borrower. If and to the extent such
Lender shall

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not so make its new Loan available to Agent, such Lender and Borrower severally
agree to pay or repay to Agent within three days after demand the amount of
such Loan together with interest thereon, for each day from the date such
amount was made available to Borrower until the date such amount is paid or
repaid to Agent, with interest at (i) the Federal Funds Rate, if such Lender is
making such payment and (ii) the interest rate applicable at the time to the
other new Loans made on such date, if Borrower is making such repayment. If
neither such Lender nor Borrower pay or repay to Agent such amount within such
three-day period, Agent shall in addition to such amount be entitled to recover
from such Lender and from Borrower, on demand, interest thereon at the Default
Rate, calculated from the date such amount was made available to Borrower. The
failure of any Lender to make any new Loan to be made by it hereunder shall not
relieve any other Lender of its obligation hereunder, if any, to make its new
Loan, but no Lender shall be responsible for the failure of any other Lender to
make any new Loan to be made by such other Lender.

Section 2.3. Continuations and Conversions of Existing Loans.
Borrower may make the following elections with respect to Loans already
outstanding: to convert Base Rate Loans to Eurodollar Loans, to convert
Eurodollar Loans to Base Rate Loans on the last day of the Interest Period
applicable thereto, or to continue Eurodollar Loans beyond the expiration of
such Interest Period by designating a new Interest Period to take effect at the
time of such expiration. In making such elections, Borrower may combine
existing Loans made pursuant to separate Borrowings into one new Borrowing or
divide existing Loans made pursuant to one Borrowing into separate new
Borrowings. To make any such election, Borrower must give to Agent written
notice (or telephonic notice promptly confirmed in writing) of any such
conversion or continuation of existing Loans, with a separate notice given for
each new Borrowing. Each such notice constitutes a "Continuation/Conversion
Notice" hereunder and must:

(a) specify the existing Loans which are to be continued or
converted;

(b) specify (i) the aggregate amount of any Borrowing of Base
Rate Loans into which such existing Loans are to be continued or
converted and the date on which such continuation or conversion is to
occur, or (ii) the aggregate amount of any Borrowing of Eurodollar
Loans into which such existing Loans are to be continued or converted,
the date on which such continuation or conversion is to occur (which
shall be the first day of the Interest Period which is to apply to
such Eurodollar Loans), and the length of the applicable Interest
Period; and

(c) be received by Agent not later than 10:00 a.m., New York,
New York time, on the third Business Day preceding the day on which
any such continuation or conversion to Eurodollar Loans is to occur.

Each such written request or confirmation must be made in the form and
substance of the "Continuation/Conversion Notice" attached hereto as Exhibit C,
duly completed. Each such telephonic request shall be deemed a representation,
warranty, acknowledgment and agreement by Borrower as to the matters which are
required to be set out in such written confirmation. Upon receipt of any such
Borrowing Notice, Agent shall give each Lender prompt notice of the

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terms thereof. Each Borrowing Notice shall be irrevocable and binding on
Borrower. During the continuance of any Default, Borrower may not make any
election to convert existing Loans into Eurodollar Loans or continue existing
Loans as Eurodollar Loans. If (due to the existence of a Default or for any
other reason) Borrower fails to timely and properly give any notice of
continuation or conversion with respect to a Borrowing of existing Eurodollar
Loans at least three days prior to the end of the Interest Period applicable
thereto, such Eurodollar Loans shall automatically be converted into Base Rate
Loans at the end of such Interest Period. No new funds shall be repaid by
Borrower or advanced by any Lender in connection with any continuation or
conversion of existing Loans pursuant to this section, and no such continuation
or conversion shall be deemed to be a new advance of funds for any purpose;
such continuations and conversions merely constitute a change in the interest
rate applicable to already outstanding Loans.

Section 2.4. Use of Proceeds. Borrower shall (i) use the proceeds of
the initial Loan to finance the purchase price under the Acquisition Documents
and (ii) use the proceeds of Loans after the initial Loan to finance
development of proved oil and gas reserves and to acquire and develop
additional proved oil and gas reserves, to refinance Matured LC Obligations,
and provide working capital for its operations and for other general business
purposes. Borrower shall use all Letters of Credit for its general corporate
purposes. In no event shall the funds from any Loan or Letter of Credit be
used directly or indirectly by any Person for personal, family, household or
agricultural purposes or for the purpose, whether immediate, incidental or
ultimate, of purchasing, acquiring or carrying any "margin stock" or any
"margin securities" (as such terms are defined respectively in Regulation U and
Regulation G promulgated by the Board of Governors of the Federal Reserve
System) or to extend credit to others directly or indirectly for the purpose of
purchasing or carrying any such margin stock or margin securities. Borrower
represents and warrants that Borrower is not engaged principally, or as one of
Borrower's important activities, in the business of extending credit to others
for the purpose of purchasing or carrying such margin stock or margin
securities.

Section 2.5. Fees.

(a) Commitment Fees. In consideration of each Lender's commitment to
make Loans, Borrower will pay to Agent for the account of each Lender a
commitment fee determined on a daily basis by applying a rate of one-half of
one percent (0.50%) per annum to such Lender's Percentage Share of the unused
portion of the Borrowing Base on each day during the period beginning with the
earlier of (i) May 15, 1998 or (ii) the date all of the conditions precedent
to the first Loan under Article IV have been satisfied and ending on the last
day of the Commitment Period, determined for each such day by deducting from
the amount of the Borrowing Base at the end of such day the Facility Usage.
This commitment fee shall be due and payable in arrears on the last day of each
Fiscal Quarter and at the end of the Commitment Period.

(b) Agent's Fees. In addition to all other amounts due to Agent
under the Loan Documents, Borrower will pay fees to Agent as described in a
letter agreement dated May 15, 1998 between Agent and Borrower.

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Section 2.6. Optional Prepayments. Borrower may, upon five Business
Days' notice to Agent, from time to time and without premium or penalty prepay
the Notes, in whole or in part, so long as the aggregate amounts of all partial
prepayments of principal on the Notes is an integral multiple of $100,000, and
so long as Borrower does not make any prepayments which would reduce the unpaid
principal balance of all Loan to less than $100,000 without first either (a)
terminating this Agreement or (b) providing assurance satisfactory to Agent in
its discretion that Lenders' legal rights under the Loan Documents are in no
way affected by such reduction. Each partial prepayment of principal made after
the end of the Commitment Period shall be applied to the regular installments
of principal due under the Notes in the inverse order of their maturities. Each
prepayment of principal under this section shall be accompanied by all interest
then accrued and unpaid on the principal so prepaid. Any principal or interest
prepaid pursuant to this section shall be in addition to, and not in lieu of,
all payments otherwise required to be paid under the Loan Documents at the time
of such prepayment.

Section 2.7. Repayments and Prepayments.

(a) The principal amount of the Loans shall be due and payable in
twenty (20) quarterly installments, in the amounts set forth below, each of
which shall be due and payable on the last day of each Fiscal Quarter,
beginning March 31, 2000, and continuing regularly thereafter until December
31, 2004, at which time the unpaid principal balance of the Loans and all
interest accrued hereon shall be due and payable in full:

March 31, 2000 $2,000,000
June 30, 2000 $2,000,000
September 30, 2000 $2,000,000
December 31, 2000 $2,000,000
March 31, 2001 $1,875,000
June 30, 2001 $1,875,000
September 30, 2001 $1,875,000
December 31, 2001 $1,875,000
March 31, 2002 $1,750,000
June 30, 2002 $1,750,000
September 30, 2002 $1,750,000
December 31, 2002 $1,750,000
March 31, 2003 $1,750,000
June 30, 2003 $1,750,000
September 30, 2003 $1,750,000
December 31, 2003 $1,750,000
March 31, 2004 $1,375,000
June 30, 2004 $1,375,000
September 30, 2004 $1,375,000
December 31, 2004 $1,375,000

(b) If at any time the Facility Usage is in excess of the Borrowing
Base (such excess being herein called a "Borrowing Base Deficiency"), Borrower
shall, within forty-five Business

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Days after Agent gives notice of such fact to Borrower, prepay the principal
amount of the Loans in an aggregate amount at least equal to such Borrowing
Base Deficiency (or, if the Loans have been paid in full, pay to LC Issuer LC
Collateral as required under Section 2.16(a)).

(c) Simultaneously with the sale, transfer or other disposition of
any assets or property of any Restricted Person (other than a sale, transfer or
other disposition of any assets or property of the type described in
subsections 7.5 (a), (b), (c), (d), (e) or (g)), Borrower shall prepay the
principal amount of the Loans in an aggregate amount equal to the proceeds
thereof, net of reasonable costs of such sale, transfer or other disposition.

(d) Simultaneously with the issuance of any equity securities of any
Restricted Person (other than issuance of equity securities to another
Restricted Person), Borrower shall prepay the principal amount of the Loans in
an aggregate amount equal to the proceeds thereof, net of reasonable costs of
such issuance.

(e) This section shall not be construed to permit any transaction
which is otherwise restricted by this Agreement. At the time of each
prepayment pursuant to subsection (c) or (d), Majority Lenders shall have the
option to redetermine the Borrowing Base after giving effect to such
prepayment. Each prepayment of principal under this section shall be
accompanied by all interest then accrued and unpaid on the principal so
prepaid. Any principal or interest prepaid pursuant to this section shall be
in addition to, and not in lieu of, all payments otherwise required to be paid
under the Note or the other Loan Documents at the time of such prepayment.

Section 2.8. Initial Borrowing Base. During the period from the date
hereof to the first Determination Date the Borrowing Base shall be $35,000,000.

Section 2.9. Subsequent Determinations of Borrowing Base.

By March 1 and September 1 of each year, or within 30 days after notice of an
Evaluation Date, Borrower shall furnish to Agent all information, reports and
data which Agent has then requested concerning Restricted Persons' businesses
and properties (including Borrower's oil and gas properties and interests and
the reserves and production relating thereto), together with the Engineering
Reports described in Section 6.2(d) or (e) as applicable. Within thirty days
after receiving such information, reports and data, or as promptly thereafter
as practicable, Majority Lenders shall agree upon an amount for the Borrowing
Base (provided that all Lenders must agree to any increase in the Borrowing
Base) and Agent shall by notice to Borrower designate such amount as the new
Borrowing Base available to Borrower hereunder, which designation shall take
effect immediately on the date such notice is sent (herein called a
"Determination Date") and shall remain in effect until but not including the
next date as of which the Borrowing Base is redetermined. If Borrower does not
furnish all such information, reports and data by the date specified in the
first sentence of this section, Agent may nonetheless designate the Borrowing
Base at any amount which Majority Lenders determine and may redesignate the
Borrowing Base from time to time thereafter until Agent receives all such
information, reports and data, whereupon Majority Lenders shall designate a new
Borrowing Base as described above. Majority Lenders shall determine the amount
of the Borrowing Base based upon the loan

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collateral value which they in their sole discretion assign to the various oil
and gas properties which constitute Collateral of Restricted Persons at the
time in question and based upon such other credit factors (including without
limitation the assets, liabilities, cash flow, hedged and unhedged exposure to
price, foreign exchange rate, and interest rate changes, business, properties,
prospects, management and ownership of Borrower and its Affiliates) as they in
their discretion deem significant. It is expressly understood that Lenders and
Agent have no obligation to agree upon or designate the Borrowing Base at any
particular amount, whether in relation to the face amount of the Notes, the
Maximum Loan Amount or otherwise, and that Lenders' commitments to advance
funds hereunder is determined by reference to the Borrowing Base from time to
time in effect, which Borrowing Base shall be used for calculating commitment
fees under Section 2.5 and, to the extent permitted by Law and regulatory
authorities, for the purposes of capital adequacy determination and
reimbursements under Section 3.2.

Section 2.10. Borrower's Reduction of Borrowing Base.

Until the termination of the Commitment Period Borrower may, during the
fifteen-day period beginning on each Determination Date (each such period being
called in this section an "Option Period"), reduce the Borrowing Base from the
amount designated by Agent to any lesser amount. To exercise such option
Borrower must within an Option Period send notice to Agent of the amount of the
Borrowing Base chosen by Borrower. If Borrower does not affirmatively exercise
this option during an Option Period the Borrowing Base shall be the amount
designated by Agent. Any choice by Borrower of a Borrowing Base shall be
effective as of the first day of the Option Period during which such choice was
made and shall continue in effect until the next date as of which the Borrowing
Base is redetermined.

Section 2.11. Letters of Credit. Subject to the terms and conditions
hereof, Borrower may during the Commitment Period request LC Issuer to issue
one or more Letters of Credit, provided that, after taking such Letter of
Credit into account:

(a) the Facility Usage does not exceed the Borrowing Base at
such time; and

(b) the aggregate amount of LC Obligations at such time does
not exceed $3,000,000; and

(c) the expiration date of such Letter of Credit is prior to
the end of the Commitment Period; provided, however, up to $1,000,000
in face amount of Letters of Credit may be outstanding at any one time
with expiration dates of up to one year after the end of the
Commitment Period;

and further provided that:

(d) such Letter of Credit is to be used for Borrower's
general corporate purposes in the ordinary course of its business;

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(e) such Letter of Credit is not directly or indirectly used
to assure payment of or otherwise support any Indebtedness of any
Person (other than Letters of Credit in an aggregate face amount of up
to $1,000,000 in respect of Hedging Contracts of a Restricted Person);

(f) the issuance of such Letter of Credit will be in
compliance with all applicable governmental restrictions, policies,
and guidelines and will not subject LC Issuer to any cost which is not
reimbursable under Article III;

(g) the form and terms of such Letter of Credit are
acceptable to LC Issuer in its sole and absolute discretion; and

(h) all other conditions in this Agreement to the issuance of
such Letter of Credit have been satisfied.

LC Issuer will honor any such request if the foregoing conditions (a) through
(h) (in the following Section 2.12 called the "LC Conditions") have been met as
of the date of issuance of such Letter of Credit. LC Issuer may choose to
honor any such request for any other Letter of Credit but has no obligation to
do so and may refuse to issue any other requested Letter of Credit for any
reason which LC Issuer in its sole discretion deems relevant.

Section 2.12. Requesting Letters of Credit. Borrower must make
written application for any Letter of Credit at least five Business Days before
the date specified by Borrower as the date on which Borrower desires for LC
Issuer to issue such Letter of Credit. By making any such written application
Borrower shall be deemed to have represented and warranted that the LC
Conditions described in Section 2.11 will be met as of the date of issuance of
such Letter of Credit. Each such written application for a Letter of Credit
must be made in writing in the form and substance of Exhibit G, the terms and
provisions of which are hereby incorporated herein by reference (or in such
other form as may mutually be agreed upon by LC Issuer and Borrower). On the
day specified by Borrower in the application for such Letter of Credit or, if
later, on the Business Day on which all of the LC Conditions for a Letter of
Credit have been met as described in Section 2.11, if such conditions are
satisfied prior to 11:00 a.m. New York, New York time or the next Business Day
if such conditions are satisfied after 11:00 a.m. New York, New York time, LC
Issuer will issue such Letter of Credit at LC Issuer's office in New York, New
York. If any provisions of any LC Application conflict with any provisions of
this Agreement, the provisions of this Agreement shall govern and control.

Section 2.13. Reimbursement and Participations.

(a) Reimbursement by Borrower. Each Matured LC Obligation shall
constitute a loan by LC Issuer to Borrower. Borrower promises to pay to LC
Issuer, or to LC Issuer's order, on demand, the full amount of each Matured LC
Obligation, together with interest thereon at the Default Rate.

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(b) Letter of Credit Advances. If the beneficiary of any Letter of
Credit makes a draft or other demand for payment thereunder then Borrower may,
during the interval between the making thereof and the honoring thereof by LC
Issuer, request Lenders to make Loans to Borrower in the amount of such draft
or demand, which Loans shall be made concurrently with LC Issuer's payment of
such draft or demand and shall be immediately used by LC Issuer to repay the
amount of the resulting Matured LC Obligation. Such a request by Borrower
shall be made in compliance with all of the provisions hereof, provided that
for the purposes of the first sentence of Section 2.1 the amount of such Loans
shall be considered but the amount of the Matured LC Obligation to be
concurrently paid by such Loans shall not be considered.

(c) Participation by Lenders. LC Issuer irrevocably agrees to grant
and hereby grants to each Lender, and -- to induce LC Issuer to issue Letters
of Credit hereunder -- each Lender irrevocably agrees to accept and purchase
and hereby accepts and purchases from LC Issuer, on the terms and conditions
hereinafter stated and for such Lender's own account and risk an undivided
interest equal to such Lender's Percentage Share of LC Issuer's obligations and
rights under each Letter of Credit issued hereunder and the amount of each
Matured LC Obligation paid by LC Issuer thereunder. Each Lender
unconditionally and irrevocably agrees with LC Issuer that, if a Matured LC
Obligation is paid under any Letter of Credit for which LC Issuer is not
reimbursed in full by Borrower in accordance with the terms of this Agreement
and the related LC Application (including any reimbursement by means of
concurrent Loans or by the application of LC Collateral), such Lender shall (in
all circumstances and without set-off or counterclaim) pay to LC Issuer on
demand, in immediately available funds at LC Issuer's address for notices
hereunder, such Lender's Percentage Share of such Matured LC Obligation (or any
portion thereof which has not been reimbursed by Borrower). Each Lender's
obligation to pay LC Issuer pursuant to the terms of this subsection is
irrevocable and unconditional. If any amount required to be paid by any Lender
to LC Issuer pursuant to this subsection is paid by such Lender to LC Issuer
within three Business Days after the date such payment is due, LC Issuer shall
in addition to such amount be entitled to recover from such Lender, on demand,
interest thereon calculated from such due date at the Federal Funds Rate. If
any amount required to be paid by any Lender to LC Issuer pursuant to this
subsection is not paid by such Lender to LC Issuer within three Business Days
after the date such payment is due, LC Issuer shall in addition to such amount
be entitled to recover from such Lender, on demand, interest thereon calculated
from such due date at the Default Rate.

(d) Distributions to Participants. Whenever LC Issuer has in
accordance with this section received from any Lender payment of such Lender's
Percentage Share of any Matured LC Obligation, if LC Issuer thereafter receives
any payment of such Matured LC Obligation or any payment of interest thereon
(whether directly from Borrower or by application of LC Collateral or
otherwise, and excluding only interest for any period prior to LC Issuer's
demand that such Lender make such payment of its Percentage Share), LC Issuer
will distribute to such Lender its Percentage Share of the amounts so received
by LC Issuer; provided, however, that if any such payment received by LC Issuer
must thereafter be returned by LC Issuer, such Lender shall return to LC Issuer
the portion thereof which LC Issuer has previously distributed to it.

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(e) Calculations. A written advice setting forth in reasonable
detail the amounts owing under this section, submitted by LC Issuer to Borrower
or any Lender from time to time, shall be prima facie evidence of the amounts
thereof.

Section 2.14. Letter of Credit Fees. In consideration of LC Issuer's
issuance of any Letter of Credit, Borrower agrees to pay to Agent, for the
account of all Lenders in accordance with their respective Percentage Shares, a
letter of credit fee at a rate equal to one and three-fourths percent (1.75%)
per annum; but in no event will the letter of credit fee for any single Letter
of Credit be less than $500. Each such fee will be calculated on a daily basis
on the face amount of such Letter of Credit and will be payable in arrears on
the last day of each March, June, September and December. In addition,
Borrower will pay to LC Issuer an issuance fee at the time of issuance of each
Letter of Credit equal to the greater of (i) one-eight percent (.125%) of the
face amount of the Letter of Credit or (ii) $100, and an administrative drawing
fee of $250 upon any drawing under a Letter of Credit.

Section 2.15. No Duty to Inquire.

(a) Drafts and Demands. LC Issuer is authorized and instructed to
accept and pay drafts and demands for payment under any Letter of Credit
without requiring, and without responsibility for, any determination as to the
existence of any event giving rise to said draft, either at the time of
acceptance of payment or thereafter. LC Issuer is under no duty to determine
the proper identity of anyone presenting such a draft or making such a demand
(whether by tested telex or otherwise) as the officer, representative or agent
of any beneficiary under any Letter of Credit, and payment by LC Issuer to any
such beneficiary when requested by any such purported officer, representative
or agent is hereby authorized and approved. Borrower agrees to hold LC Issuer
and each other Bank Party harmless and indemnified against any liability or
claim in connection with or arising out of the subject matter of this section,
WHICH INDEMNITY SHALL APPLY WHETHER OR NOT ANY SUCH LIABILITY OR CLAIM IS IN
ANY WAY OR TO ANY EXTENT CAUSED, IN WHOLE OR IN PART, BY ANY NEGLIGENT ACT OR
OMISSION OF ANY KIND BY ANY BANK PARTY, provided only that no Bank Party shall
be entitled to indemnification for that portion, if any, of any liability or
claim which is proximately caused by its own individual gross negligence or
willful misconduct, as determined in a final judgment.

(b) Extension of Maturity. If the maturity of any Letter of Credit
is extended by its terms or by Law or governmental action, or if any extension
of the maturity or time for presentation of drafts or any other modification of
the terms of any Letter of Credit is made at the request of any Restricted
Person, or if the amount of any Letter of Credit is increased at the request of
any Restricted Person, this Agreement shall be binding upon all Restricted
Persons with respect to such Letter of Credit as so extended, increased or
otherwise modified, with respect to drafts and property covered thereby, and
with respect to any action taken by LC Issuer, LC Issuer's correspondents, or
any Bank Party in accordance with such extension, increase or other
modification.

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(c) Transferees of Letters of Credit. If any Letter of Credit
provides that it is transferable, LC Issuer shall have no duty to determine the
proper identity of anyone appearing as transferee of such Letter of Credit, nor
shall LC Issuer be charged with responsibility of any nature or character for
the validity or correctness of any transfer or successive transfers, and
payment by LC Issuer to any purported transferee or transferees as determined
by LC Issuer is hereby authorized and approved, and Borrower further agrees to
hold LC Issuer and each other Bank Party harmless and indemnified against any
liability or claim in connection with or arising out of the foregoing, WHICH
INDEMNITY SHALL APPLY WHETHER OR NOT ANY SUCH LIABILITY OR CLAIM IS IN ANY WAY
OR TO ANY EXTENT CAUSED, IN WHOLE OR IN PART, BY ANY NEGLIGENT ACT OR OMISSION
OF ANY KIND BY ANY BANK PARTY, provided only that no Bank Party shall be
entitled to indemnification for that portion, if any, of any liability or claim
which is proximately caused by its own individual gross negligence or willful
misconduct, as determined in a final judgment.

Section 2.16. LC Collateral.

(a) LC Obligations in Excess of Borrowing Base. If, after the making
of all mandatory prepayments required under Section 2.7, the outstanding LC
Obligations will exceed the Borrowing Base, then in addition to such prepayment
Borrower will immediately pay to LC Issuer an amount equal to such excess. LC
Issuer will hold such amount as security for the remaining LC Obligations (all
such amounts held as security for LC Obligations being herein collectively
called "LC Collateral") until such LC Obligations become Matured LC
Obligations, at which time such LC Collateral may be applied to such Matured LC
Obligations. Neither this subsection nor the following subsection shall,
however, limit or impair any rights which LC Issuer may have under any other
document or agreement relating to any Letter of Credit or LC Obligation,
including any LC Application, or any rights which any Bank Party may have to
otherwise apply any payments by Borrower and any LC Collateral under Section
3.1.

(b) Acceleration of LC Obligations. If the Obligations or any part
thereof become immediately due and payable pursuant to Section 8.1 then, unless
Majority Lenders otherwise specifically elect to the contrary (which election
may thereafter be retracted by Majority Lenders at any time), all LC
Obligations shall become immediately due and payable without regard to whether
or not actual drawings or payments on the Letters of Credit have occurred, and
Borrower shall be obligated to pay to LC Issuer immediately an amount equal to
the aggregate LC Obligations which are then outstanding. All amounts so paid
shall first be applied to Matured LC Obligations and then held by LC Issuer as
LC Collateral until such LC Obligations become Matured LC Obligations, at which
time such LC Collateral shall be applied to such Matured LC Obligations.

(c) Investment of LC Collateral. Pending application thereof, all LC
Collateral shall be invested by LC Issuer in such investments as LC Issuer may
choose in its sole discretion. All interest on such investments shall be
reinvested and constitute additional LC Collateral. To the extent all other
Obligations have been satisfied in full, including all Matured LC Obligations
and all of Borrower's reimbursement obligations in connection therewith, as
Letters of Credit expire or are terminated, LC Issuer shall release the amount
of any LC Collateral in excess of the

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remaining outstanding LC Obligations. Borrower hereby assigns and grants to LC
Issuer a continuing security interest in all LC Collateral paid by it to LC
Issuer, all investments purchased with such LC Collateral, and all proceeds
thereof to secure its Matured LC Obligations and its Obligations under this
Agreement, the Note, and the other Loan Documents, and Borrower agrees that
such LC Collateral and investments shall be subject to all of the terms and
conditions of the Security Documents. Borrower further agrees that LC Issuer
shall have all of the rights and remedies of a secured party under the Uniform
Commercial Code as adopted in the State of New York with respect to such
security interest and that an Event of Default under this Agreement shall
constitute a default for purposes of such security interest.

(d) Payment of LC Collateral. When Borrower is required to provide
LC Collateral for any reason and fails to do so on the day when required, LC
Issuer may without notice to Borrower or any other Restricted Person provide
such LC Collateral (whether by application of proceeds of other Collateral, by
transfers from other accounts maintained with LC Issuer, or otherwise) using
any available funds of Borrower or any other Person also liable to make such
payments. Any such amounts which are required to be provided as LC Collateral
and which are not provided on the date required shall, for purposes of each
Security Document, be considered past due Obligations owing hereunder, and LC
Issuer is hereby authorized to exercise its respective rights under each
Security Document to obtain such amounts.

ARTICLE III - Payments to Lenders

Section 3.1. General Procedures. Borrower will make each payment
which it owes under the Loan Documents to Agent for the account of the Bank
Party to whom such payment is owed. Each such payment must be received by
Agent not later than 1:00 p.m., New York, New York time, on the date such
payment becomes due and payable, in lawful money of the United States of
America, without set-off, deduction or counterclaim, and in immediately
available funds. Any payment received by Agent after such time will be deemed
to have been made on the next following Business Day. Should any such payment
become due and payable on a day other than a Business Day, the maturity of such
payment shall be extended to the next succeeding Business Day, and, in the case
of a payment of principal or past due interest, interest shall accrue and be
payable thereon for the period of such extension as provided in the Loan
Document under which such payment is due. Each payment under a Loan Document
shall be due and payable at the place provided therein and, if no specific
place of payment is provided, shall be due and payable at the place of payment
of Agent's Note. When Agent collects or receives money on account of the
Obligations, Agent shall distribute all money so collected or received, and
each Bank Party shall apply all such money so distributed, as follows:

(a) first, for the payment of all Obligations which are then
due (and if such money is insufficient to pay all such Obligations,
first to any reimbursements due Agent under Section 6.9 or 10.4 and
then to the partial payment of all other Obligations then due in
proportion to the amounts thereof, or as Bank Parties shall otherwise
agree);

(b) then for the prepayment of amounts owing under the Loan
Documents (other than principal on the Notes) if so specified by
Borrower;

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(c) then for the prepayment of principal on the Notes,
together with accrued and unpaid interest on the principal so prepaid;
and

(d) last, for the payment or prepayment of any other
Obligations.

All payments applied to principal or interest on any Note shall be applied
first to any interest then due and payable, then to principal then due and
payable, and last to any prepayment of principal and interest in compliance
with Sections 2.6 and 2.7. All distributions of amounts described in any of
subsections (b), (c) or (d) above shall be made by Agent pro rata to each Bank
Party then owed Obligations described in such subsection in proportion to all
amounts owed to all Bank Parties which are described in such subsection;
provided that if any Lender then owes payments to LC Issuer for the purchase of
a participation under Section 2.13 hereof, any amounts otherwise distributable
under this section to such Lender shall be deemed to belong to LC Issuer, to
the extent of such unpaid payments, and Agent shall apply such amounts to make
such unpaid payments rather than distribute such amounts to such Lender.

Section 3.2. Capital Reimbursement. If either (a) the introduction
or implementation of or the compliance with or any change in or in the
interpretation of any Law, or (b) the introduction or implementation of or the
compliance with any request, directive or guideline from any central bank or
other governmental authority (whether or not having the force of Law) affects
or would affect the amount of capital required or expected to be maintained by
any Bank Party or any corporation controlling any Bank Party, then, upon demand
by such Bank Party, Borrower will pay to Agent for the benefit of such Bank
Party, from time to time as specified by such Bank Party, such additional
amount or amounts which such Bank Party shall determine to be appropriate to
compensate such Bank Party or any corporation controlling such Bank Party in
light of such circumstances, to the extent that such Bank Party reasonably
determines that the amount of any such capital would be increased or the rate
of return on any such capital would be reduced by or in whole or in part based
on the existence of the face amount of such Bank Party's Loans, Letters of
Credit, participations in Letters of Credit, or commitments under this
Agreement.

Section 3.3. Increased Cost of Eurodollar Loans or Letters of
Credits. If any applicable Law (whether now in effect or hereinafter enacted
or promulgated, including Regulation D) or any interpretation or administration
thereof by any governmental authority charged with the interpretation or
administration thereof (whether or not having the force of Law):

(a) shall change the basis of taxation of payments to any
Bank Party of any principal, interest, or other amounts attributable
to any Eurodollar Loan or Letter of Credit or otherwise due under this
Agreement in respect of any Eurodollar Loan or Letter of Credit (other
than taxes imposed on the overall net income of such Bank Party or any
lending office of such Bank Party by any jurisdiction in which such
Bank Party or any such lending office is located); or

(b) shall change, impose, modify, apply or deem applicable
any reserve, special deposit or similar requirements in respect of any
Eurodollar Loan or any Letter of Credit

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(excluding those for which such Bank Party is fully compensated
pursuant to adjustments made in the definition of Eurodollar Rate) or
against assets of, deposits with or for the account of, or credit
extended by, such Bank Party; or

(c) shall impose on any Bank Party or the interbank
eurocurrency deposit market any other condition affecting any
Eurodollar Loan or Letter of Credit, the result of which is to
increase the cost to any Bank Party of funding or maintaining any
Eurodollar Loan or of issuing any Letter of Credit or to reduce the
amount of any sum receivable by any Bank Party in respect of any
Eurodollar Loan or Letter of Credit by an amount deemed by such Bank
Party to be material,

then such Bank Party shall promptly notify Agent and Borrower in writing of the
happening of such event and of the amount required to compensate such Bank
Party for such event (on an after-tax basis, taking into account any taxes on
such compensation), whereupon (i) Borrower shall pay such amount to Agent for
the account of such Bank Party and (ii) Borrower may elect, by giving to Agent
and such Bank Party not less than three Business Days' notice, to convert all
(but not less than all) of any such Eurodollar Loans into Base Rate Loans.

Section 3.4. Availability. If (a) any change in applicable Laws, or
in the interpretation or administration thereof of or in any jurisdiction
whatsoever, domestic or foreign, shall make it unlawful or impracticable for
any Bank Party to fund or maintain Eurodollar Loans or to issue or participate
in Letters of Credit, or shall materially restrict the authority of any Bank
Party to purchase or take offshore deposits of dollars (i.e., "eurodollars"),
or (b) any Bank Party determines that matching deposits appropriate to fund or
maintain any Eurodollar Loan are not available to it, or (c) any Bank Party
determines that the formula for calculating the Eurodollar Rate does not fairly
reflect the cost to such Bank Party of making or maintaining loans based on
such rate, then, upon notice by such Bank Party to Borrower and Agent,
Borrower's right to elect Eurodollar Loans from such Bank Party (or, if
applicable, to obtain Letters of Credit) shall be suspended to the extent and
for the duration of such illegality, impracticability or restriction and all
Eurodollar Loans of such Bank Party which are then outstanding or are then the
subject of any Borrowing Notice and which cannot lawfully or practicably be
maintained or funded shall immediately become or remain, or shall be funded as,
Base Rate Loans of such Bank Party. Borrower agrees to indemnify each Bank
Party and hold it harmless against all costs, expenses, claims, penalties,
liabilities and damages which may result from any such change in Law,
interpretation or administration. Such indemnification shall be on an
after-tax basis, taking into account any taxes imposed on the amounts paid as
indemnity.

Section 3.5. Funding Losses. In addition to its other obligations
hereunder, Borrower will indemnify each Bank Party against, and reimburse each
Bank Party on demand for, any loss or expense incurred or sustained by such
Bank Party (including any loss or expense incurred by reason of the liquidation
or reemployment of deposits or other funds acquired by a Bank Party to fund or
maintain Eurodollar Loans), as a result of (a) any payment or prepayment
(whether authorized or required hereunder or otherwise) of all or a portion of
a Eurodollar Loan on a day other than the day on which the applicable Interest
Period ends, (b) any payment or prepayment, whether required hereunder or
otherwise, of a Loan made after the delivery, but before the

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effective date, of a Continuation/Conversion Notice, if such payment
or prepayment prevents such Continuation/Conversion Notice from
becoming fully effective, (c) the failure of any Loan to be made or of
any Continuation/Conversion Notice to become effective due to any
condition precedent not being satisfied or due to any other action or
inaction of any Restricted Person, or (d) any conversion (whether
authorized or required hereunder or otherwise) of all or any portion
of any Eurodollar Loan into a Base Rate Loan or into a different
Eurodollar Loan on a day other than the day on which the applicable
Interest Period ends. Such indemnification shall be on an after-tax
basis, taking into account any taxes imposed on the amounts paid as
indemnity.

Section 3.6. Reimbursable Taxes. Borrower covenants and agrees that:

(a) Borrower will indemnify each Bank Party against and
reimburse each Bank Party for all present and future income, stamp and
other taxes, levies, costs and charges whatsoever imposed, assessed,
levied or collected on or in respect of this Agreement or any
Eurodollar Loans or Letters of Credit (whether or not legally or
correctly imposed, assessed, levied or collected), excluding, however,
any taxes imposed on or measured by the overall net income of Agent or
such Bank Party or any lending office of such Bank Party by any
jurisdiction in which such Bank Party or any such lending office is
located (all such non-excluded taxes, levies, costs and charges being
collectively called "Reimbursable Taxes" in this section). Such
indemnification shall be on an after-tax basis, taking into account
any taxes imposed on the amounts paid as indemnity.

(b) All payments on account of the principal of, and interest
on, each Bank Party's Loans and Note, and all other amounts payable by
Borrower to any Bank Party hereunder, shall be made in full without
set-off or counterclaim and shall be made free and clear of and
without deductions or withholdings of any nature by reason of any
Reimbursable Taxes, all of which will be for the account of Borrower.
In the event of Borrower being compelled by Law to make any such
deduction or withholding from any payment to any Bank Party, Borrower
shall pay on the due date of such payment, by way of additional
interest, such additional amounts as are needed to cause the amount
receivable by such Bank Party after such deduction or withholding to
equal the amount which would have been receivable in the absence of
such deduction or withholding. If Borrower should make any deduction
or withholding as aforesaid, Borrower shall within 60 days thereafter
forward to such Bank Party an official receipt or other official
document evidencing payment of such deduction or withholding.

(c) If Borrower is ever required to pay any Reimbursable Tax
with respect to any Eurodollar Loan, Borrower may elect, by giving to
Agent and such Bank Party not less than three Business Days' notice,
to convert all (but not less than all) of any such Eurodollar Loan
into a Base Rate Loan, but such election shall not diminish Borrower's
obligation to pay all Reimbursable Taxes.

(d) Notwithstanding the foregoing provisions of this section,
Borrower shall be entitled, to the extent it is required to do so by
Law, to deduct or withhold (and not to make any indemnification or
reimbursement for) income or other similar taxes imposed

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by the United States of America (other than any portion thereof
attributable to a change in federal income tax Laws effected after the
date hereof) from interest, fees or other amounts payable hereunder
for the account of any Bank Party, other than a Bank Party (i) who is
a U.S. person for Federal income tax purposes or (ii) who has the
Prescribed Forms on file with Agent (with copies provided to Borrower)
for the applicable year to the extent deduction or withholding of such
taxes is not required as a result of the filing of such Prescribed
Forms, provided that if Borrower shall so deduct or withhold any such
taxes, it shall provide a statement to Agent and such Bank Party,
setting forth the amount of such taxes so deducted or withheld, the
applicable rate and any other information or documentation which such
Bank Party may reasonably request for assisting such Bank Party to
obtain any allowable credits or deductions for the taxes so deducted
or withheld in the jurisdiction or jurisdictions in which such Bank
Party is subject to tax. As used in this section, "Prescribed Forms"
means such duly executed forms or statements, and in such number of
copies, which may, from time to time, be prescribed by Law and which,
pursuant to applicable provisions of (x) an income tax treaty between
the United States and the country of residence of the Bank Party
providing the forms or statements, (y) the Internal Revenue Code of
1986, as amended from time to time, or (z) any applicable rules or
regulations thereunder, permit Borrower to make payments hereunder for
the account of such Bank Party free of such deduction or withholding
of income or similar taxes.

Section 3.7. Change of Applicable Lending Office. Each Bank Party
agrees that, upon the occurrence of any event giving rise to the operation of
Sections 3.2 through 3.6 with respect to such Bank Party, it will, if requested
by Borrower, use reasonable efforts (subject to overall policy considerations
of such Bank Party) to designate another Lending Office, provided that such
designation is made on such terms that such Bank Party and its Lending Office
suffer no economic, legal or regulatory disadvantage, with the object of
avoiding the consequence of the event giving rise to the operation of any such
section. Nothing in this section shall affect or postpone any of the
obligations of Borrower or the rights of any Bank Party provided in Sections
3.2 through 3.6.

ARTICLE IV - Conditions Precedent to Lending

Section 4.1. Documents to be Delivered. No Lender has any obligation
to make its first Loan, and LC Issuer has no obligation to issue the first
Letter of Credit unless Agent shall have received all of the following, at
Agent's office in New York, New York, duly executed and delivered and in form,
substance and date satisfactory to Agent:

(a) This Agreement and any other documents that Lenders are
to execute in connection herewith.

(b) Each Note.

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(d) Certain certificates of Borrower including:

(i) An "Omnibus Certificate" of the Secretary and of
the Chairman of the Board or President of Borrower, which
shall contain the names and signatures of the officers of
Borrower authorized to execute Loan Documents and which shall
certify to the truth, correctness and completeness of the
following exhibits attached thereto: (1) a copy of
resolutions duly adopted by the Board of Directors of Borrower
and in full force and effect at the time this Agreement is
entered into, authorizing the execution of this Agreement and
the other Loan Documents delivered or to be delivered in
connection herewith and the consummation of the transactions
contemplated herein and therein, (2) a copy of the charter
documents of Borrower and all amendments thereto, certified by
the appropriate official of Borrower's state of organization,
and (3) a copy of any bylaws of Borrower; and

(ii) A "Compliance Certificate" of the Chairman of
the Board or President and of the chief financial officer of
Borrower, of even date with such Loan or such Letter of
Credit, in which such officers certify to the satisfaction of
the conditions set out in subsections (a), (b), (c) and (d) of
Section 4.3.

(e) A certificate (or certificates) of the due formation,
valid existence and good standing of Borrower in its state of
organization, issued by the appropriate authorities of such
jurisdiction, and certificates of Borrower's good standing and due
qualification to do business, issued by appropriate officials in any
states in which Borrower owns (or will own) property subject to
Security Documents.

(f) Documents similar to those specified in subsections
(d)(i) and (e) of this section with respect to each Guarantor and the
execution by it of its guaranty of Borrower's Obligations.

(g) A favorable opinion of Xxxxxxx & Xxxxxx L.L.C., Counsel
for Restricted Persons, substantially in the form set forth in Exhibit
G-1, and Xxxxxxxx & Xxxx, A Professional Corporation, special Oklahoma
counsel for Agent, substantially in the form set forth in Exhibit G-2.

(h) The Initial Engineering Report and the Initial Financial
Statements.

(i) Certificates or binders evidencing Restricted Persons'
insurance in effect on the date hereof.

(j) A favorable report of Pilko & Associates, Inc. regarding
their environmental assessment of (i) the material properties of
Restricted Persons, (ii) the properties subject to the Acquisition
Documents and (iii) the properties related to the former refining
operations of Borrower, each in scope and results acceptable to Agent.

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(k) Title review in form, substance and authorship
satisfactory to Agent of (i) the material properties of Restricted
Persons, and (ii) the properties subject to the Acquisition Documents.

(l) A favorable report of Agent's professional insurance
consultants regarding their assessment of the insurance maintained by
Restricted Persons, in scope and results acceptable to Agent. A
certificate signed by the chief executive officer of Borrower in form
and detail acceptable to Agent confirming the insurance that is in
effect as of the date hereof and certifying that such insurance is
customary for the businesses conducted by Restricted Persons and is in
compliance with the requirements of this Agreement.

(m) A copy of each Acquisition Document, duly executed and
delivered by each party thereto.

(n) Payment of all commitment, facility, agency and other
fees required to be paid to any Bank Party pursuant to any Loan
Documents or any commitment agreement heretofore entered into.

Section 4.2. Closing of Acquisition. Contemporaneously with the
initial Loan hereunder, Borrower shall have consummated the transactions
contemplated under the Acquisition Documents, in form and substance
satisfactory to Agent. Borrower, for itself and on behalf of each Restricted
Person, hereby acknowledges and agrees that (1) the consummation of the
transactions contemplated under this Agreement and the Acquisition Documents,
including without limitation the making of the Loans, are intended to be
simultaneous for all intents and purposes, and (2) each Restricted Person shall
be deemed to have executed and delivered each Loan Document as set forth in
Section 4.1 above, including without limitation each Security Document,
immediately prior to or simultaneously with the making of the Loans hereunder.

Section 4.3. Additional Conditions Precedent. No Lender has any
obligation to make any Loan (including its first), and LC Issuer has no
obligation to issue any Letter of Credit (including its first), unless the
following conditions precedent have been satisfied:

(a) All representations and warranties made by any Restricted
Person in any Loan Document shall be true on and as of the date of
such Loan or the date of issuance of such Letter of Credit (except to
the extent that the facts upon which such representations are based
have been changed by the extension of credit hereunder) as if such
representations and warranties had been made as of the date of such
Loan or the date of issuance of such Letter of Credit.

(b) No Default shall exist at the date of such Loan or the
date of issuance of such Letter of Credit.

(c) No Material Adverse Change shall have occurred to, and no
event or circumstance shall have occurred that could reasonably be
expected to cause a Material

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Adverse Change to, Borrower's Consolidated financial condition or
businesses since the date of the consummation of the Acquisition.

(d) Each Restricted Person shall have performed and complied
with all agreements and conditions required in the Loan Documents to
be performed or complied with by it on or prior to the date of such
Loan or the date of issuance of such Letter of Credit.

(e) The making of such Loan or the issuance of such Letter of
Credit shall not be prohibited by any Law and shall not subject any
Lender or any LC Issuer to any to any penalty or other onerous
condition under or pursuant to any such Law.

(f) Agent shall have received all documents and instruments
which Agent has then reasonably requested, in addition to those
described in Section 4.1 (including opinions of legal counsel for
Restricted Persons and Agent; corporate documents and records;
documents evidencing governmental authorizations, consents, approvals,
licenses and exemptions; and certificates of public officials and of
officers and representatives of Borrower and other Persons), as to (i)
the accuracy and validity of or compliance with all representations,
warranties and covenants made by any Restricted Person in this
Agreement and the other Loan Documents, (ii) the satisfaction of all
conditions contained herein or therein, and (iii) all other matters
pertaining hereto and thereto. All such additional documents and
instruments shall be satisfactory to Agent in form, substance and
date.

ARTICLE V - Representations and Warranties

To confirm each Bank Party's understanding concerning Restricted
Persons and Restricted Persons' businesses, properties and obligations and to
induce each Bank Party to enter into this Agreement and to extend credit
hereunder, Borrower represents and warrants to each Bank Party that:

Section 5.1. No Default. No Restricted Person is in default in the
performance of any of the covenants and agreements contained in any Loan
Document. No event has occurred and is continuing which constitutes a Default.

Section 5.2. Organization and Good Standing. Each Restricted Person
is duly organized, validly existing and in good standing under the Laws of its
jurisdiction of organization, having all powers required to carry on its
business and enter into and carry out the transactions contemplated hereby.
Each Restricted Person is duly qualified, in good standing, and authorized to
do business in all other jurisdictions within the United States wherein the
character of the properties owned or held by it or the nature of the business
transacted by it makes such qualification necessary.

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Section 5.3. Authorization. Each Restricted Person has duly taken
all action necessary to authorize the execution and delivery by it of the Loan
Documents to which it is a party and to authorize the consummation of the
transactions contemplated thereby and the performance of its obligations
thereunder. Borrower is duly authorized to borrow funds hereunder.

Section 5.4. No Conflicts or Consents. The execution and delivery by
the various Restricted Persons of the Loan Documents to which each is a party,
the performance by each of its obligations under such Loan Documents, and the
consummation of the transactions contemplated by the various Loan Documents, do
not and will not (i) conflict with any provision of (1) any Law, (2) the
organizational documents of any Restricted Person, or (3) any agreement,
judgment, license, order or permit applicable to or binding upon any Restricted
Person, (ii) result in the acceleration of any Indebtedness owed by any
Restricted Person, or (iii) result in or require the creation of any Lien upon
any assets or properties of any Restricted Person except as expressly
contemplated in the Loan Documents. Except as expressly contemplated in the
Loan Documents no consent, approval, authorization or order of, and no notice
to or filing with, any Tribunal or third party is required in connection with
the execution, delivery or performance by any Restricted Person of any Loan
Document or to consummate any transactions contemplated by the Loan Documents.

Section 5.5. Enforceable Obligations. This Agreement is, and the
other Loan Documents when duly executed and delivered will be, legal, valid and
binding obligations of each Restricted Person which is a party hereto or
thereto, enforceable in accordance with their terms except as such enforcement
may be limited by bankruptcy, insolvency or similar Laws of general application
relating to the enforcement of creditors' rights.

Section 5.6. Initial Financial Statements. Borrower has heretofore
delivered to Agent true, correct and complete copies of the Initial Financial
Statements. The Initial Financial Statements fairly present Borrower's
Consolidated financial position at the respective dates thereof and the
Consolidated results of Borrower's operations and Borrower's Consolidated cash
flows for the respective periods thereof. Since the date of the annual Initial
Financial Statements no Material Adverse Change has occurred, except as
reflected in the quarterly Initial Financial Statements or in the Disclosure
Schedule. All Initial Financial Statements were prepared in accordance with
GAAP.

Section 5.7. Other Obligations and Restrictions. No Restricted
Person has any outstanding Liabilities of any kind (including contingent
obligations, tax assessments, and unusual forward or long-term commitments)
which is, in the aggregate, material to Borrower or material with respect to
Borrower's Consolidated financial condition and not shown in the Initial
Financial Statements or disclosed in the Disclosure Schedule or a Disclosure
Report. Except as shown in the Initial Financial Statements or disclosed in
the Disclosure Schedule or a Disclosure Report, no Restricted Person is subject
to or restricted by any franchise, contract, deed, charter restriction, or
other instrument or restriction which could be reasonably expected to cause a
Material Adverse Change.

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Section 5.8. Full Disclosure. No certificate, statement or other
information delivered herewith or heretofore by any Restricted Person to any
Bank Party in connection with the negotiation of this Agreement or in
connection with any transaction contemplated hereby, taken together with all
other certificates, statements or other information so provided, contains any
untrue statement of a material fact or omits to state any material fact known
to any Restricted Person (other than industry-wide risks normally associated
with the types of businesses conducted by Restricted Persons) necessary to make
the statements contained herein or therein not misleading as of the date made
or deemed made. There is no fact known to any Restricted Person (other than
industry-wide risks normally associated with the types of businesses conducted
by Restricted Persons) that has not been disclosed to Agent in writing which
could reasonably be expected to cause a Material Adverse Change. There are no
statements or conclusions in any Engineering Report, business plan or other
forward looking statement which are based upon or include misleading
information or fail to take into account material information regarding the
matters reported therein, it being understood that each Engineering Report,
business plan or other forward looking statement is necessarily based upon
professional opinions, estimates and projections and that Borrower does not
warrant that such opinions, estimates and projections will ultimately prove to
have been accurate. Borrower has heretofore delivered to Agent true, correct
and complete copies of the Initial Engineering Report.

Section 5.9. Litigation. Except as disclosed in the Initial
Financial Statements or in the Disclosure Schedule: (i) there are no actions,
suits or legal, equitable, arbitrative or administrative proceedings pending,
or to the knowledge of any Restricted Person threatened, against any Restricted
Person before any Tribunal which could reasonably be expected to cause a
Material Adverse Change, and (ii) there are no outstanding judgments,
injunctions, writs, rulings or orders by any such Tribunal against any
Restricted Person or any Restricted Person's partners, directors or officers
which could reasonably be expected to cause a Material Adverse Change.

Section 5.10. Labor Disputes and Acts of God. Except as disclosed in
the Disclosure Schedule or a Disclosure Report, neither the business nor the
properties of any Restricted Person has been affected by any fire, explosion,
accident, strike, lockout or other labor dispute, drought, storm, hail,
earthquake, embargo, act of God or of the public enemy or other casualty
(whether or not covered by insurance), which could reasonably be expected to
cause a Material Adverse Change.

Section 5.11. ERISA Plans and Liabilities. All currently existing
ERISA Plans are listed in the Disclosure Schedule or a Disclosure Report.
Except as disclosed in the Initial Financial Statements or in the Disclosure
Schedule or a Disclosure Report, no Termination Event has occurred with respect
to any ERISA Plan and all ERISA Affiliates are in compliance with ERISA in all
material respects. No ERISA Affiliate is required to contribute to, or has any
other absolute or contingent liability in respect of, any "multiemployer plan"
as defined in Section 4001 of ERISA. Except as set forth in the Disclosure
Schedule or a Disclosure Report: (i) no "accumulated funding deficiency" (as
defined in Section 412(a) of the Internal Revenue Code of 1986, as amended)
exists with respect to any ERISA Plan, whether or not waived by the Secretary
of the Treasury or his delegate, and (ii) the current value of each ERISA
Plan's benefits

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does not exceed the current value of such ERISA Plan's assets available for the
payment of such benefits by more than $500,000.

Section 5.12. Environmental and Other Laws.

As used in this section: "CERCLA" means the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as amended, "CERCLIS" means
the Comprehensive Environmental Response, Compensation and Liability
Information System List of the Environmental Protection Agency, and "Release"
has the meaning given such term in 42 U.S.C. Section 9601(22). Except as set
forth in the Disclosure Schedule or a Disclosure Report:

(a) Restricted Persons are conducting their businesses in compliance
in all material respects with all applicable Laws, including Environmental
Laws, and have all permits, licenses and authorizations required in connection
with the conduct of their businesses, except to the extent failure to have any
such permit, license or authorization could not cause a Material Adverse
Change. Each Restricted Person is in compliance with the terms and conditions
of all such permits, licenses and authorizations, and is also in compliance
with all other limitations, restrictions, conditions, standards, prohibitions,
requirements, obligations, schedules and timetables contained in any applicable
Environmental Law or in any regulation, code, plan, order, decree, judgment,
injunction, notice or demand letter issued, entered, promulgated or approved
thereunder, except to the extent failure to comply could not cause a Material
Adverse Change.

(b) No notice, notification, demand, request for information,
citation, summons or order has been issued, no complaint has been filed, no
penalty has been assessed, and no investigation or review is pending or
threatened by any Tribunal or any other Person with respect to (i) any alleged
generation, treatment, storage, recycling, transportation, disposal, or Release
of any Hazardous Materials, either by any Restricted Person or on any property
owned by any Restricted Person, (ii) any material remedial action which might
be needed to respond to any such alleged generation, treatment, storage,
recycling, transportation, disposal, or Release, or (iii) any alleged failure
by any Restricted Person to have any permit, license or authorization required
in connection with the conduct of its business or with respect to any such
generation, treatment, storage, recycling, transportation, disposal, or
Release.

(c) No Restricted Person otherwise has any known material contingent
liability in connection with any alleged generation, treatment, storage,
recycling, transportation, disposal, or Release of any Hazardous Materials.

(d) No Restricted Person has handled any Hazardous Materials, other
than as a generator, on any properties now or previously owned or leased by any
Restricted Person to an extent that such handling has caused, or could
reasonably be expected to cause, a Material Adverse Change; and further, except
to an extent that the following has not caused, and could not reasonably be
expected to have caused, a Material Adverse Change:

(i) no PCBs are or have been present at any properties now or
previously owned or leased by any Restricted Person;

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(ii) no asbestos is or has been present at any properties now or
previously owned or leased by any Restricted Person;

(iii) there are no underground storage tanks for Hazardous
Materials, active or abandoned, at any properties now or
previously owned or leased by any Restricted Person;

(iv) no Hazardous Materials have been Released, in a reportable
quantity, where such a quantity has been established by
statute, ordinance, rule, regulation or order, at, on or under
any properties now or previously owned or leased by any
Restricted Person;

(v) no Hazardous Materials have been otherwise Released at, on or
under any properties now or previously owned or leased by any
Restricted Person to an extent that such release has caused,
or could reasonably be expected to cause, a Material Adverse
Change.

(e) No Restricted Person has transported or arranged for the
transportation of any Hazardous Material to any location which is listed on the
National Priorities List under CERCLA, listed for possible inclusion on the
National Priorities List by the Environmental Protection Agency in CERCLIS, or
listed on any similar state list or which is the subject of federal, state or
local enforcement actions or other investigations which may lead to claims
against any Restricted Person for clean-up costs, remedial work, damages to
natural resources or for personal injury claims, including, but not limited to,
claims under CERCLA.

(f) No material amount of Hazardous Material generated by any
Restricted Person has been recycled, treated, stored, disposed of or released
by any Restricted Person at any location other than those listed in Disclosure
Schedule.

(g) No oral or written notification of a Release of a Hazardous
Material has been filed by or on behalf of any Restricted Person (and to the
best knowledge of Borrower, no such notification has been filed with respect to
any Restricted Person by any other Person), and no property now or previously
owned or leased by any Restricted Person is listed or proposed for listing on
the National Priority list promulgated pursuant to CERCLA, in CERCLIS, or on
any similar state list of sites requiring investigation or clean-up.

(h) There are no Liens arising under or pursuant to any Environmental
Laws on any of the real properties or properties owned or leased by any
Restricted Person, and no government actions have been taken or are in process
which could subject any of such properties to such Liens; nor would any
Restricted Person be required to place any notice or restriction relating to
the presence of Hazardous Materials at any properties owned by it in any deed
to such properties.

(i) There have been no environmental investigations, studies, audits,
tests, reviews or other analyses conducted by or which are in the possession of
any Restricted Person in relation to

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any properties or facility now or previously owned or leased by any Restricted
Person which have not been made available to Agent.

Section 5.13. Names and Places of Business. No Restricted Person has,
during the preceding five years (i) changed its proper corporate name, or (ii)
maintained an office in any state, in either case, except as disclosed in the
Disclosure Schedule. To the knowledge of Borrower's current management, no
Restricted Person has, during the preceding five years (a) had, been known by,
or used any other trade or fictitious name or (b) maintained its chief
executive office and principal place of business of at any address other than
the address of Borrower set out in Section 10.3, except as disclosed in the
Disclosure Schedule. Except as indicated in the Disclosure Schedule or a
Disclosure Report, no Restricted Person has any other office or place of
business.

Section 5.14. Borrower's Subsidiaries. Borrower does not presently
have any Subsidiary or own any stock in any other corporation or association
except those listed in the Disclosure Schedule or a Disclosure Report. Neither
Borrower nor any Restricted Person is a member of any general or limited
partnership, joint venture or association of any type whatsoever except those
listed in the Disclosure Schedule or a Disclosure Report and associations,
joint ventures or other relationships (i) which are established pursuant to a
standard form operating agreement or similar agreement or which are
partnerships for purposes of federal income taxation only, (ii) which are not
corporations or partnerships (or subject to the Uniform Partnership Act) under
applicable state Law, and (iii) whose businesses are limited to the
exploration, development and operation of oil, gas or mineral properties and
interests owned directly by the parties in such associations, joint ventures or
relationships. Except as otherwise revealed in a Disclosure Report, Borrower
owns, directly or indirectly, the equity interest in each of its Subsidiaries
which is indicated in the Disclosure Schedule.

Section 5.15. Title to Properties; Licenses. Each Restricted Person
has good and defensible title to all of its material properties and assets,
free and clear of all Liens other than Permitted Liens and of all impediments
to the use of such properties and assets in such Restricted Person's business,
except that no representation or warranty is made with respect to any oil, gas
or mineral property or interest to which no proved oil or gas reserves are
properly attributed. Each Restricted Person possesses all licenses, permits,
franchises, patents, copyrights, trademarks and trade names, and other
intellectual property (or otherwise possesses the right to use such
intellectual property without violation of the rights of any other Person)
which are necessary to carry out its business as presently conducted and as
presently proposed to be conducted hereafter, and no Restricted Person is in
violation in any material respect of the terms under which it possesses such
intellectual property or the right to use such intellectual property.

Section 5.16. Government Regulation. Neither Borrower nor any other
Restricted Person owing Obligations is subject to regulation under the Public
Utility Holding Company Act of 1935, the Federal Power Act, the Investment
Company Act of 1940 (as any of the preceding acts have been amended) or any
other Law which regulates the incurring by such Person of Indebtedness,
including Laws relating to common contract carriers or the sale of electricity,
gas, steam, water or other public utility services.

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Section 5.17. Officers, Directors and Shareholders. The officers and
directors of Borrower are those persons disclosed in the definitive proxy
statement prepared by Borrower and filed with the Securities and Exchange
Commission in connection with Borrower's most recent annual meeting, copies of
which proxy statement have been previously furnished in connection with the
negotiation hereof.

ARTICLE VI - Affirmative Covenants of Borrower

To conform with the terms and conditions under which each Bank Party
is willing to have credit outstanding to Borrower, and to induce each Bank
Party to enter into this Agreement and extend credit hereunder, Borrower
warrants, covenants and agrees that until the full and final payment of the
Obligations and the termination of this Agreement, unless Majority Lenders have
previously agreed otherwise:

Section 6.1. Payment and Performance. Borrower will pay all amounts
due under the Loan Documents in accordance with the terms thereof and will
observe, perform and comply with every covenant, term and condition expressed
or implied in the Loan Documents. Borrower will cause each other Restricted
Person to observe, perform and comply with every such term, covenant and
condition.

Section 6.2. Books, Financial Statements and Reports. Each
Restricted Person will at all times maintain full and accurate books of account
and records. Borrower will maintain and will cause its Subsidiaries to
maintain a standard system of accounting, will maintain its Fiscal Year, and
will furnish the following statements and reports to Agent at Borrower's
expense:

(a) As soon as available, and in any event within one hundred
and five (105) days after the end of each Fiscal Year, complete
Consolidated financial statements of Borrower together with all notes
thereto, prepared in reasonable detail in accordance with GAAP,
together with an unqualified opinion, based on an audit using
generally accepted auditing standards, by Xxxxxx & Xxxxx or other
independent certified public accountants selected by Borrower and
acceptable to Majority Lenders, stating that such Consolidated
financial statements have been so prepared. These financial
statements shall contain a Consolidated balance sheet as of the end of
such Fiscal Year and Consolidated statements of earnings, of cash
flows, and of changes in owners' equity for such Fiscal Year, each
setting forth in comparative form the corresponding figures for the
preceding Fiscal Year.

(b) As soon as available, and in any event within fifty (50)
days after the end of each Fiscal Quarter, Borrower's Consolidated
balance sheet as of the end of such Fiscal Quarter and Consolidated
statements of Borrower's earnings and cash flows for the period from
the beginning of the then current Fiscal Year to the end of such
Fiscal Quarter, all in reasonable detail and prepared in accordance
with GAAP, subject to changes resulting from normal year-end
adjustments. In addition Borrower will, together with each such set
of financial statements and each set of financial statements furnished
under subsection (a) of this section, furnish a certificate in the
form of Exhibit D signed by the chief financial officer of Borrower
stating that such financial statements are accurate and

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complete (subject to normal year-end adjustments), stating that he has
reviewed the Loan Documents, containing calculations showing
compliance (or non-compliance) at the end of such Fiscal Quarter with
the requirements of Sections 7.11, 7.12 and 7.13 and stating that no
Default exists at the end of such Fiscal Quarter or at the time of
such certificate or specifying the nature and period of existence of
any such Default.

(c) Promptly upon their becoming available, copies of all
financial statements, reports, notices and proxy statements sent by
any Restricted Person to its stockholders and all registration
statements, periodic reports and other statements and schedules filed
by any Restricted Person with any securities exchange, the Securities
and Exchange Commission or any similar governmental authority.

(d) By March 1 of each year, an engineering report (as of the
January 1 Evaluation Date) prepared by Questa Engineering Corporation,
or other independent petroleum engineers chosen by Borrower and
acceptable to Majority Lenders, concerning all oil and gas properties
and interests owned by any Restricted Person which are located in or
offshore of the United States and which have attributable to them
proved oil or gas reserves. This report shall be satisfactory to
Agent, shall contain sufficient information to enable Borrower to meet
the reporting requirements concerning oil and gas reserves contained
in Regulations S-K and S-X promulgated by the Securities and Exchange
Commission, shall take into account any "over-produced" status under
gas balancing arrangements, and shall contain information and analysis
comparable in scope to that contained in the Initial Engineering
Report. This report shall distinguish (or shall be delivered together
with a certificate from an appropriate officer of Borrower which
distinguishes) those properties treated in the report which are
Collateral from those properties treated in the report which are not
Collateral.

(e) By September 1 of each year, an engineering report (as of
the July 1 Evaluation Date) prepared by petroleum engineers employed
by Borrower, concerning all oil and gas properties and interests owned
by any Restricted Person which are located in or offshore of the
United States and which have attributable to them proved oil and gas
reserves. This report shall be in form and substance as the report
delivered under Section 6.2(d) and otherwise satisfactory to Majority
Lenders.

(f) As soon as available, and in any event within forty-five
(45) days after the end of each month, beginning with the month of
July, 1998, a report describing by lease or unit the gross volume of
production and sales attributable to production during such month from
the properties described in subsection (d) above and describing the
related severance taxes, other taxes, leasehold operating expenses and
capital costs attributable thereto and incurred during such month.

(g) Promptly, and in any event within 30 days following a
request by Agent but in no event more often than once during any
fiscal year (and in no event prior to July 1, 1998) a list, by name
and address, of those Persons who have purchased production during
such Fiscal Year from the Mortgaged Properties, giving each such
purchaser's

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owner number for Borrower and each other grantor of a Lien on
Mortgaged Properties and each such purchaser's property number for
each such Mortgaged Property.

(h) As soon as available, and in any event within thirty (30)
days after the end of each Fiscal Year, Borrower shall deliver to
Agent an environmental compliance certificate signed by the president
or chief executive officer of Borrower in the form attached hereto as
Exhibit F. Further, if requested by Agent, Borrower shall permit and
cooperate with an environmental and safety review made in connection
with the operations of Restricted Persons' oil and gas properties one
time during each Fiscal Year beginning with the Fiscal Year 1998, by
Pilko & Associates, Inc. or other consultants selected by Agent which
review shall, if requested by Agent, be arranged and supervised by
environmental legal counsel for Agent, all at Borrower's cost and
expense.

(i) Concurrently with the annual renewal of the Borrower's
insurance policies, Borrower shall, if requested by Agent in writing,
cause a certificate or report to be issued by Agent's professional
insurance consultants or other insurance consultants satisfactory to
Agent certifying that Borrower's insurance for the next succeeding
year after such renewal (or for such longer period for which such
insurance is in effect) complies with the provisions of this Agreement
and the Security Documents.

(j) By March 1 and September 1 of each year, detailed
operating and capital expenditure budgets and financial plans and
reports of projected financial condition for the each of the next
succeeding 12 months, in form and detail satisfactory to Majority
Lenders.

(k) No later than October 1 of each year, a report on
Borrower's business plan regarding the satisfaction of Borrower's
obligations under the Exploration Agreement for the 12 month period
beginning on the next November 1, in form, substance and detail
satisfactory to Majority Lenders, setting forth detail on at least a
quarterly basis. As soon as available, and in any event within fifty
(50) days after the end of each Fiscal Quarter (beginning with the
Fiscal Quarter ending on December 31, 1998), a report on Borrower's
status of drilling, or contracting with third parties by farm-out or
otherwise for the drilling, of xxxxx required to be drilled under the
Exploration Agreement for the then current Option Year (as defined in
the Exploration Agreement), in form and detail satisfactory to
Majority Lenders.

Section 6.3. Other Information and Inspections. Each Restricted
Person will furnish to Agent any information which Agent may from time to time
request in writing concerning any covenant, provision or condition of the Loan
Documents or any matter in connection with Restricted Persons' businesses and
operations. Each Restricted Person will permit representatives appointed by
Agent (including independent accountants, auditors, agents, attorneys,
appraisers and any other Persons) to visit and inspect during normal business
hours any of such Restricted Person's property, including its books of account,
other books and records, and any facilities or other business assets, and to
make extra copies therefrom and photocopies and photographs thereof, and to
write down and record any information such representatives obtain,

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and each Restricted Person shall permit Agent or its representatives to
investigate and verify the accuracy of the information furnished to Agent or
any Lender in connection with the Loan Documents and to discuss all such
matters with its officers, employees and representatives.

Section 6.4. Notice of Material Events and Change of Address.
Borrower will promptly notify Agent in writing, stating that such notice is
being given pursuant to this Agreement, of:

(a) the occurrence of any Material Adverse Change,

(b) the occurrence of any Default,

(c) the acceleration of the maturity of any Indebtedness owed
by any Restricted Person or of any default by any Restricted Person
under any indenture, mortgage, agreement, contract or other instrument
to which any of them is a party or by which any of them or any of
their properties is bound, if such acceleration or default could cause
a Material Adverse Change,

(d) the occurrence of any Termination Event,

(e) any claim of $100,000 or more, any notice of potential
liability under any Environmental Laws which might exceed such amount,
or any other material adverse claim asserted against any Restricted
Person or with respect to any Restricted Person's properties, and

(f) the filing of any suit or proceeding against any
Restricted Person in which the amount involved is $100,000 or more or
in which an adverse decision could cause a Material Adverse Change.

Upon the occurrence of any of the foregoing Restricted Persons will take all
necessary or appropriate steps to remedy promptly any such Material Adverse
Change, Default, acceleration, default or Termination Event, to protect against
any such adverse claim, to defend any such suit or proceeding, and to resolve
all controversies on account of any of the foregoing. Borrower will also
notify Agent and Agent's counsel in writing at least twenty Business Days prior
to the date that any Restricted Person changes its name or the location of its
chief executive office or principal place of business or the place where it
keeps its books and records concerning the Collateral, furnishing with such
notice any necessary financing statement amendments or requesting Agent and its
counsel to prepare the same.

Section 6.5. Maintenance of Properties. Each Restricted Person will
maintain, preserve, protect, and keep all Collateral and all other material
property used or useful in the conduct of its business in good condition and in
compliance with all applicable Laws, and will from time to time make all
repairs, renewals and replacements needed to enable the business and operations
carried on in connection therewith to be promptly and advantageously conducted
at all times.

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Section 6.6. Maintenance of Existence and Qualifications. Each
Restricted Person will maintain and preserve its existence and its rights and
franchises in full force and effect and will qualify to do business in all
states or jurisdictions where required by applicable Law, except where the
failure so to qualify will not cause a Material Adverse Change.

Section 6.7. Payment of Trade Liabilities, Taxes, etc. Each
Restricted Person will (a) timely file all required tax returns; (b) timely pay
all taxes, assessments, and other governmental charges or levies imposed upon
it or upon its income, profits or property; (c) within one hundred twenty (120)
days after the occurrence thereof, pay all Liabilities owed by it on ordinary
trade terms to vendors, suppliers and other Persons providing goods and
services used by it in the ordinary course of its business; (d) pay and
discharge when due all other Liabilities now or hereafter owed by it; and (e)
maintain appropriate accruals and reserves for all of the foregoing in
accordance with GAAP. Each Restricted Person may, however, delay paying or
discharging any of the foregoing so long as it is in good faith contesting the
validity thereof by appropriate proceedings and has set aside on its books
adequate reserves therefor.

Section 6.8. Insurance. Each Restricted Person will keep or cause to
be kept insured by financially sound and reputable insurers its property in
accordance with the Insurance Schedule. Borrower will maintain the additional
insurance coverage as described in the respective Security Documents. Upon
demand by Agent any insurance policies covering Collateral shall be endorsed
(a) to provide for payment of losses to Agent as its interests may appear, (b)
to provide that such policies may not be canceled or reduced or affected in any
material manner for any reason without fifteen days prior notice to Agent, (c)
to provide for any other matters specified in any applicable Security Document
or which Agent may reasonably require; and (d) to provide for insurance on
assets (other than normal production equipment at the well site) against fire,
casualty and any other hazards normally insured against, in the amount of the
full value (less a reasonable deductible not to exceed amounts customary in the
industry for similarly situated businesses and properties) of the property
insured. Each Restricted Person shall at all times maintain insurance against
its liability for injury to persons or property in accordance with the
Insurance Schedule, which insurance shall be by financially sound and reputable
insurers. Without limiting the foregoing, each Restricted Person shall at all
time maintain liability insurance in the amounts set out on the Insurance
Schedule.

Section 6.9. Performance on Borrower's Behalf. If any Restricted
Person fails to pay any taxes, insurance premiums, expenses, attorneys' fees or
other amounts it is required to pay under any Loan Document, Agent may pay the
same. Borrower shall immediately reimburse Agent for any such payments and
each amount paid by Agent shall constitute an Obligation owed hereunder which
is due and payable on the date such amount is paid by Agent.

Section 6.10. Interest. Borrower hereby promises to each Bank Party
to pay interest at the Default Rate on all Obligations (including Obligations
to pay fees or to reimburse or indemnify any Bank Party) which Borrower has in
this Agreement promised to pay to such Bank Party and which are not paid when
due. Such interest shall accrue from the date such Obligations become due
until they are paid.

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Section 6.11. Compliance with Agreements and Law. Each Restricted
Person will perform all material obligations it is required to perform under
the terms of each indenture, mortgage, deed of trust, security agreement,
lease, franchise, agreement, contract or other instrument or obligation to
which it is a party or by which it or any of its properties is bound. Each
Restricted Person will conduct its business and affairs in compliance with all
Laws applicable thereto.

Section 6.12. Environmental Matters; Environmental Reviews.

(a) Each Restricted Person will comply in all material respects with
all Environmental Laws now or hereafter applicable to such Restricted Person
and shall obtain, at or prior to the time required by applicable Environmental
Laws, all environmental, health and safety permits, licenses and other
authorizations necessary for its operations and will maintain such
authorizations in full force and effect.

(b) Borrower will promptly furnish to Agent all written notices of
violation, orders, claims, citations, complaints, penalty assessments, suits or
other proceedings received by Borrower, or of which it has notice, pending or
threatened against Borrower, by any governmental authority with respect to any
alleged violation of or non-compliance with any Environmental Laws or any
permits, licenses or authorizations in connection with its ownership or use of
its properties or the operation of its business.

(c) Borrower will promptly furnish to Agent all requests for
information, notices of claim, demand letters, and other notifications,
received by Borrower in connection with its ownership or use of its properties
or the conduct of its business, relating to potential responsibility with
respect to any investigation or clean-up of Hazardous Material at any location.

Section 6.13. Evidence of Compliance. Each Restricted Person will
furnish to Agent at such Restricted Person's or Borrower's expense all evidence
which Agent from time to time reasonably requests in writing as to the accuracy
and validity of or compliance with all representations, warranties and
covenants made by any Restricted Person in the Loan Documents, the satisfaction
of all conditions contained therein, and all other matters pertaining thereto.

Section 6.14. Solvency. Upon giving effect to the issuance of the
Notes, the execution of the Loan Documents by Borrower and the consummation of
the transactions contemplated hereby, Borrower will be solvent (as such term is
used in applicable bankruptcy, liquidation, receivership, insolvency or similar
laws).

Section 6.15. Agreement to Deliver Security Documents. Borrower
agrees to deliver and to cause each other Restricted Person to deliver, to
further secure the Obligations whenever requested by Agent in its sole and
absolute discretion, deeds of trust, mortgages, chattel mortgages, security
agreements, financing statements and other Security Documents in form and
substance satisfactory to Agent for the purpose of granting, confirming, and
perfecting first and prior liens or security interests in any real or personal
property now owned or hereafter acquired

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by any Restricted Person and first and prior liens or security interests in any
real or personal property which is at such time Collateral or which was
intended to be Collateral pursuant to any Security Document previously executed
and not then released by Agent. Borrower also agrees to deliver, whenever
requested by Agent in its sole and absolute discretion, favorable title
opinions from legal counsel acceptable to Agent with respect to any Restricted
Person's properties and interests designated by Agent (but specifically
excluding properties or interests for which Agent has previously received
favorable title opinions acceptable to Agent) based upon abstract or record
examinations to dates acceptable to Agent and (a) stating that such Restricted
Person has good and defensible title to such properties and interests, free and
clear of all Liens other than Permitted Liens, (b) confirming that such
properties and interests are subject to Security Documents securing the
Obligations that constitute and create legal, valid and duly perfected first
deed of trust or mortgage liens in such properties and interests and first
priority assignments of and security interests in the oil and gas attributable
to such properties and interests and the proceeds thereof, and (c) covering
such other matters as Agent may request.

Section 6.16. Perfection and Protection of Security Interests and
Liens. Borrower will from time to time deliver, and will cause each other
Restricted Person from time to time to deliver, to Agent any financing
statements, continuation statements, extension agreements and other documents,
properly completed and executed (and acknowledged when required) by Restricted
Persons in form and substance satisfactory to Agent, which Agent requests for
the purpose of perfecting, confirming, or protecting any Liens or other rights
in Collateral securing any Obligations.

Section 6.17. Bank Accounts; Offset. To secure the repayment of the
Obligations, Borrower hereby grants to each Bank Party a security interest, a
lien, and a right of offset, each of which shall be in addition to all other
interests, liens, and rights of any Bank Party at common law, under the Loan
Documents, or otherwise, and each of which shall be upon and against (a) any
and all moneys, securities or other property (and the proceeds therefrom) of
Borrower now or hereafter held or received by or in transit to any Bank Party
from or for the account of Borrower, whether for safekeeping, custody, pledge,
transmission, collection or otherwise, (b) any and all deposits (general or
special, time or demand, provisional or final) of Borrower with any Bank Party,
and (c) any other credits and claims of Borrower at any time existing against
any Bank Party, including claims under certificates of deposit. At any time
and from time to time after the occurrence of any Default, each Bank Party is
hereby authorized to foreclose upon, or to offset against the Obligations then
due and payable (in either case without notice to Borrower), any and all items
hereinabove referred to. The remedies of foreclosure and offset are separate
and cumulative, and either may be exercised independently of the other without
regard to procedures or restrictions applicable to the other.

Section 6.18. Guaranties of Borrower's Subsidiaries. Each Subsidiary
of Borrower now existing or created, acquired or coming into existence after
the date hereof shall, promptly upon request by Agent, execute and deliver to
Agent an absolute and unconditional guaranty of the timely repayment of the
Obligations and the due and punctual performance of the obligations of Borrower
hereunder, which guaranty shall be satisfactory to Agent in form and substance.
Each Subsidiary of Borrower existing on the date hereof shall duly execute and
deliver such a guaranty

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prior to the making of any Loan hereunder. Borrower will cause each of such
Subsidiaries to deliver to Agent, simultaneously with its delivery of such a
guaranty, written evidence satisfactory to Agent and its counsel that such
Subsidiary has taken all corporate or partnership action necessary to duly
approve and authorize its execution, delivery and performance of such guaranty
and any other documents which it is required to execute.

Section 6.19. Production Proceeds. Notwithstanding that, by the
terms of the various Security Documents, Restricted Persons are and will be
assigning to Agent and Lenders all of the "Production Proceeds" (as defined
therein) accruing to the property covered thereby, so long as no Default has
occurred Restricted Persons may continue to receive from the purchasers of
production all such Production Proceeds, subject, however, to the Liens created
under the Security Documents, which Liens are hereby affirmed and ratified.
Upon the occurrence of a Default, Agent and Lenders may exercise all rights and
remedies granted under the Security Documents, including the right to obtain
possession of all Production Proceeds then held by Restricted Persons or to
receive directly from the purchasers of production all other Production
Proceeds. In no case shall any failure, whether purposed or inadvertent, by
Agent or Lenders to collect directly any such Production Proceeds constitute in
any way a waiver, remission or release of any of their rights under the
Security Documents, nor shall any release of any Production Proceeds by Agent
or Lenders to Restricted Persons constitute a waiver, remission, or release of
any other Production Proceeds or of any rights of Agent or Lenders to collect
other Production Proceeds thereafter.

ARTICLE VII - Negative Covenants of Borrower

To conform with the terms and conditions under which each Bank Party
is willing to have credit outstanding to Borrower, and to induce each Bank
Party to enter into this Agreement and make the Loans, Borrower warrants,
covenants and agrees that until the full and final payment of the Obligations
and the termination of this Agreement, unless Majority Lenders have previously
agreed otherwise:

Section 7.1. Indebtedness. No Restricted Person will in any manner
owe or be liable for Indebtedness except:

(a) the Obligations;

(b) obligations under operating leases entered into in the ordinary
course of such Restricted Person's business in arm's length transactions at
competitive market rates under competitive terms and conditions in all
respects, provided that the obligations required to be paid in any Fiscal Year
under any such operating leases do not in the aggregate exceed $500,000;

(d) Indebtedness outstanding under the instruments and agreements
described on the Disclosure Schedule, excluding any renewals or extensions of
such Liabilities;

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(e) Indebtedness arising under Hedging Contracts permitted under
Section 7.3; and

(f) miscellaneous items of Indebtedness not described in subsections
(a) through (e) which do not in the aggregate (taking into account all such
Indebtedness of all Restricted Persons) exceed $250,000 at any one time
outstanding.

Section 7.2. Limitation on Liens. No Restricted Person will create,
assume or permit to exist any Lien upon any of the properties or assets which
it now owns or hereafter acquires, except, to the extent not otherwise
forbidden by the Security Documents the following ("Permitted Liens"):

(a) Liens which secure Obligations only;

(b) statutory Liens for taxes, statutory or contractual mechanics'
and materialmen's Liens incurred in the ordinary course of business, and other
similar Liens incurred in the ordinary course of business, provided such Liens
do not secure Indebtedness and secure only obligations which are not delinquent
or which are being contested as provided in Section 6.7;

(d) Liens permitted under Section 7.3(a)(3); and

(e) as to property which is Collateral, any Liens expressly permitted
to encumber such Collateral under any Security Document covering such
Collateral.

Section 7.3. Hedging Contracts. No Restricted Person will be a party
to or in any manner be liable on any Hedging Contract, except:

(a) contracts entered into with the purpose and effect of fixing
prices on oil or gas expected to be produced by Restricted Persons, provided
that at all times: (1) no such contract fixes a price for a term of more than
twenty- four (24) months; (2) the aggregate monthly production covered by all
such contracts (determined, in the case of contracts that are not settled on a
monthly basis, by a monthly proration acceptable to Agent) for any single month
does not in the aggregate exceed eighty-five percent (85%) of Restricted
Persons' aggregate Projected Oil and Gas Production anticipated to be sold in
the ordinary course of Restricted Persons' businesses for such month, (3) no
such contract requires any Restricted Person to put up money, assets, letters
of credit or other security against the event of the nonperformance of its
obligations thereunder; provided that Borrower may put up cash margin or
Letters of Credit in favor of a counterparty which is not a Lender provided
that the aggregate amount of all such cash margin or Letters of Credit so
required under all Hedging Contracts shall not exceed $1,000,000, and (4) each
such contract is with a counterparty or has a guarantor of the obligation of
the counterparty who (unless such counterparty is a Bank Party or one of its
Affiliates) at the time the contract is made has long-term obligations rated A
or A2 or better, respectively, by either Rating Agency or is an investment
grade-rated industry participant. As used in this subsection, the term
"Projected Oil and Gas Production" means the projected production of oil or gas
(measured by volume unit

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or BTU equivalent, not sales price) for the term of the contracts or a
particular month, as applicable, from properties and interests owned by any
Restricted Person which are located in or offshore of the United States and
which have attributable to them proved oil or gas reserves, as such production
is projected in the most recent report delivered pursuant to Section 6.2(d) or
(e), after deducting projected production from any properties or interests sold
or under contract for sale that had been included in such report and after
adding projected production from any properties or interests that had not been
reflected in such report but that are reflected in separate or supplemental
reports meeting the requirements of such Section 6.2(d) or (e) above and
otherwise are satisfactory to Agent.

(b) contracts entered into by a Restricted Person with the purpose
and effect of fixing interest rates on a principal amount of indebtedness of
such Restricted Person that is accruing interest at a variable rate, provided
that (1) the aggregate notional amount of such contracts never exceeds
seventy-five percent (75%) of the anticipated outstanding principal balance of
the indebtedness to be hedged by such contracts or an average of such principal
balances calculated using a generally accepted method of matching interest swap
contracts to declining principal balances, (2) the floating rate index of each
such contract generally matches the index used to determine the floating rates
of interest on the corresponding indebtedness to be hedged by such contract and
(3) each such contract is with a counterparty or has a guarantor of the
obligation of the counterparty who (unless such counterparty is a Bank Party or
one of its Affiliates) at the time the contract is made has long-term
obligations rated A or A2 or better, respectively, by either Rating Agency or
is an investment grade-rated industry participant.

Section 7.4. Limitation on Mergers, Issuances of Securities,
Diminution of Interests. Except as expressly provided in this subsection no
Restricted Person will merge or consolidate with or into any other business
entity. Any Subsidiary of Borrower may, however, be merged into or
consolidated with (i) another Subsidiary of Borrower, so long as no diminution
of Borrower's interest (direct or indirect) therein shall occur, and if one
such entity is a Guarantor, a Guarantor is the surviving business entity, or
(ii) Borrower, so long as Borrower is the surviving business entity. Borrower
will not issue any securities other than shares of its common stock and any
options or warrants giving the holders thereof only the right to acquire such
shares. No Subsidiary of Borrower will issue any additional shares of its
capital stock or other securities or any options, warrants or other rights to
acquire such additional shares or other securities except to Borrower and only
to the extent not otherwise forbidden under the terms hereof. No Subsidiary of
Borrower which is a partnership will allow any diminution of Borrower's
interest (direct or indirect) therein.

Section 7.5. Limitation on Sales of Property. No Restricted Person
will sell, transfer, lease, exchange, alienate or dispose of any Collateral or
any of its material assets or properties or any material interest therein
except, to the extent not otherwise forbidden under the Security Documents:

(a) equipment which is worthless or obsolete or which is replaced by
equipment of equal suitability and value;

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(b) inventory (including oil and gas sold as produced and seismic
data) which is sold in the ordinary course of business on ordinary trade terms;

(c) Borrower's interests in oil and gas leases subject to the
Exploration Agreement, and other interests in oil and gas properties, or
portions thereof, to which no proved reserves of oil, gas or other liquid or
gaseous hydrocarbons are properly attributed;

(d) Sale of Borrower's approximately 000 xxxxx xx xxxx xxxxxxx xxxx
Xxxxxxxxx, Xxxxx;

(e) Non-cash exchanges of interests in oil and gas properties for
other interests in oil and gas properties, not in excess of $500,000.00 in the
case of any single transaction (or group of related transactions) and not in
excess of $2,000,000.00 in the aggregate in any Fiscal Year, such value
determined using (i) the discounted present value of projected future net
revenue assigned to the properties transferred in the engineering report most
recently delivered pursuant to Section 6.2(d), using a 10% discount rate and
unescalated prices meeting the reporting requirements of Regulations S-K and
S-X promulgated by the Securities and Exchange Commission or, (ii) if no such
value was assigned to such properties in such report, the value determined in
good faith by the Board of Directors of Borrower as being the fair market value
of such properties.

(f) other property (excluding Collateral) which is sold for fair
consideration not in the aggregate in excess of $500,000 in any Fiscal Year,
the sale of which will not materially impair or diminish the value of the
Collateral or Borrower's Consolidated financial condition, business or
operations; and

(g) Cash Equivalents.

No Restricted Person will sell, transfer or otherwise dispose of capital stock
of or interest in any of the Restricted Persons except as permitted by Section
7.4 hereof. No Restricted Person will discount, sell, pledge or assign any
notes payable to it, accounts receivable or future income.

Section 7.6. Limitation on Dividends and Redemptions. No Restricted
Person will declare or pay any dividends on, or make any other distribution in
respect of, any class of its capital stock or any partnership or other interest
in it, nor will any Restricted Person directly or indirectly make any capital
contribution to or purchase, redeem, acquire or retire any shares of the
capital stock of or partnership interests in any Restricted Person (whether
such interests are now or hereafter issued, outstanding or created), or cause
or permit any reduction or retirement of the capital stock of any Restricted
Person, except (i) Borrower may make normal quarterly dividends for any quarter
prior to and including the Fiscal Quarter ending June 30, 1999 on Borrower's
Class C Preferred Stock to the extent outstanding on the date of this Agreement
not to exceed $0.12 per share per quarter, so long as both before and after
giving effect to such dividend, no Default shall have occurred and be
continuing and no proceed of the Loan are used to pay such dividends, (ii)
Borrower may declare dividends payable only in its common stock, (iii) Borrower
may redeem Borrower's Class C Preferred Stock for consideration consisting only
of common stock; and (iv) dividends, distributions, contributions, purchases,
redemptions,

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acquisitions, retirements or reductions may be made by Borrower and it
Subsidiaries to Borrower or to Subsidiaries of Borrower which are Guarantors.

Section 7.7. Limitation on Investments and New Businesses. No
Restricted Person will (i) make any expenditure or commitment or incur any
obligation or enter into or engage in any transaction except in the ordinary
course of business, (ii) engage directly or indirectly in any business or
conduct any operations except the purchase, sale, exploration and development
of oil and natural gas properties, production transportation and marketing of
oil and natural gas from its properties, gathering, treating and processing of
natural gas and business and operations incidental to such businesses and
operations, (iii) make any acquisitions of or capital contributions to or other
investments in any Person, other than Permitted Investments or other
Investments in the aggregate not in excess of $300,000, or (iv) make any
significant acquisitions or investments in any properties other than oil and
gas properties or gas pipelines.

Section 7.8. Limitation on Credit Extensions. Except for Permitted
Investments, no Restricted Person will extend credit, make advances or make
loans other than (i) normal and prudent extensions of credit to customers
buying goods and services in the ordinary course of business, which extensions
shall not be for longer periods than those extended by similar businesses
operated in a normal and prudent manner, (ii) extensions of credit customary in
the industry in the ordinary course of business to non-operators under joint
operating agreements, and (iii) advances to employees for reimbursable expenses
of such employees in the ordinary course of business.

Section 7.9. Transactions with Affiliates and Partnerships. Except
as disclosed in the Disclosure Schedule, no Restricted Person will engage in
any material transaction with any of its Affiliates on terms which are less
favorable to it than those which would have been obtainable at the time in
arm's-length dealing with Persons other than such Affiliates, provided that
such restriction shall not apply to transactions among Borrower and its wholly
owned Subsidiaries.

Section 7.10. Certain Contracts; Amendments; Multiemployer ERISA
Plans. Except as expressly provided for in the Loan Documents, no Restricted
Person will, directly or indirectly, enter into, create, or otherwise allow to
exist any contract or other consensual restriction on the ability of any
Subsidiary of Borrower to: (i) pay dividends or make other distributions to
Borrower, (ii) to redeem equity interests held in it by Borrower, (iii) to
repay loans and other indebtedness owing by it to Borrower, or (iv) to transfer
any of its assets to Borrower. No Restricted Person will amend or permit any
amendment to any contract or lease which releases, qualifies, limits, makes
contingent or otherwise detrimentally affects the rights and benefits of Agent
or any Lender under or acquired pursuant to any Security Documents. No ERISA
Affiliate will incur any obligation to contribute to any "multiemployer plan"
as defined in Section 4001 of ERISA.

Section 7.11. Working Capital and Current Ratio. The ratio of
Borrower's Consolidated current assets to Borrower's Consolidated current
liabilities will never be less than 1.0 to 1.0. For purposes of this section,
Borrower's Consolidated current assets will include any unused portion of the
Borrowing Base which is then available for borrowing.

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Section 7.12. Tangible Net Worth. Borrower will not, at any time,
permit Consolidated Net Worth to be less than the sum of (a) $20,000,000 plus
(b) an aggregate amount equal to fifty percent (50%) of its Consolidated Net
Income for each Fiscal Quarter (but, in each case, only including such Fiscal
Quarters for which Consolidated Net Income is a positive number) from and after
December 31, 1997 to and including the date of determination thereof, computed
on a cumulative basis for such period plus (c) one hundred percent (100%) of
the net proceeds (after costs of sale) of any stock hereafter issued by
Borrower. For purposes of this section, the net proceeds of that portion of any
stock which is issued for assets other than cash shall be equal to the increase
in Borrower's Consolidated tangible assets derived from such assets.

Section 7.13. EBITDA. The ratio of (a) Borrower's Consolidated
EBITDA to (b) Consolidated Interest Expense will not be less than 2.75 to 1.0,
(i) for the one-Fiscal Quarter period ending September 30, 1998, (ii) for the
two- Fiscal Quarter period ending December 31, 1998, (iii) for the three-Fiscal
Quarter period ending March 31, 1999 or (iv) for the four-Fiscal Quarter period
ending with each Fiscal Quarter thereafter.

ARTICLE VIII - Events of Default and Remedies

Section 8.1. Events of Default. Each of the following events
constitutes an Event of Default under this Agreement:

(a) Any Restricted Person fails to pay the principal component of any
Obligation when due and payable, whether at a date for the payment of a fixed
installment or as a contingent or other payment becomes due and payable or as a
result of acceleration or otherwise;

(b) Any Restricted Person fails to pay any Obligation (other than the
Obligations in clause (a) above) when due and payable, whether at a date for
the payment of a fixed installment or as a contingent or other payment becomes
due and payable or as a result of acceleration or otherwise, within three
Business Days after the same becomes due;

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

(d) Any Restricted Person fails to duly observe, perform or comply
with any covenant, agreement or provision of Section 6.4 or Article VII;

(e) Any Restricted Person fails (other than as referred to in
subsections (a), (b), (c) or (d) above) to duly observe, perform or comply with
any covenant, agreement, condition or provision of any Loan Document, and such
failure remains unremedied for a period of thirty (30) days after notice of
such failure is given by Agent to Borrower;

(f) Any representation or warranty previously, presently or hereafter
made in writing by or on behalf of any Restricted Person in connection with any
Loan Document shall prove to have

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been false or incorrect in any material respect on any date on or as of which
made, or any Loan Document at any time ceases to be valid, binding and
enforceable as warranted in Section 5.5 for any reason other than its release
or subordination by Agent;

(g) Any Restricted Person fails to duly observe, perform or comply
with any agreement with any Person or any term or condition of any other
instrument, if such agreement or instrument is materially significant to
Borrower or to Borrower and its subsidiaries on a Consolidated basis or
materially significant to any Guarantor, and such failure is not remedied
within the applicable period of grace (if any) provided in such agreement or
instrument;

(h) Any Restricted Person (i) fails to pay any portion, when such
portion is due, of any of its Indebtedness in excess of $50,000 (other than
Indebtedness contested in good faith by appropriate proceedings and for which
such Restricted Person has set aside on its books adequate reserves, or (ii)
breaches or defaults in the performance of any agreement or instrument by which
any such Indebtedness is issued, evidenced, governed, or secured, and any such
failure, breach or default continues beyond any applicable period of grace
provided therefor;

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

(j) Any Restricted Person:

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

(ii) commences a voluntary case under any applicable
bankruptcy, insolvency or similar Law now or hereafter in effect,
including the federal Bankruptcy Code, as from time to time amended;
or applies for or consents to the entry of an order for relief in an
involuntary case under any such Law; or makes a general assignment for
the benefit of creditors; or fails generally to pay (or admits in
writing its inability to pay) its debts as such debts become due; or
takes corporate or other action to authorize any of the foregoing; or

(iii) suffers the appointment of or taking possession by a
receiver, liquidator, assignee, custodian, trustee, sequestrator or
similar official of all or a substantial part of

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its assets or of any part of the Collateral in a proceeding brought
against or initiated by it, and such appointment or taking possession
is neither made ineffective nor discharged within thirty days after
the making thereof, or such appointment or taking possession is at any
time consented to, requested by, or acquiesced to by it; or

(iv) suffers the entry against it of a final judgment for the
payment of money in excess of $50,000 (not covered by insurance
satisfactory to Agent in its discretion), unless the same is
discharged within thirty days after the date of entry thereof or an
appeal or appropriate proceeding for review thereof is taken within
such period and a stay of execution pending such appeal is obtained;
or

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

(k) Borrower fails to duly observe, perform or comply with the
Exploration Agreement, and such failure is not remedied within the applicable
period of grace (if any) provided in such agreement, and as a result of one or
more such failures Borrower incurs damages or liabilities thereunder
(including, but not limited to, liquidated damages under Article 3 thereof) in
excess of $250,000; or

(l) Any Change in Control occurs.

Upon the occurrence of an Event of Default described in subsection (j)(i),
(j)(ii) or (j)(iii) of this section with respect to Borrower, all of the
Obligations shall thereupon be immediately due and payable, without demand,
presentment, notice of demand or of dishonor and nonpayment, protest, notice of
protest, notice of intention to accelerate, declaration or notice of
acceleration, or any other notice or declaration of any kind, all of which are
hereby expressly waived by Borrower and each Restricted Person who at any time
ratifies or approves this Agreement. Upon any such acceleration, any
obligation of any Lender to make any further Loans shall be permanently
terminated. During the continuance of any other Event of Default, Agent at any
time and from time to time may (and upon written instructions from Majority
Lenders, Agent shall), without notice to Borrower or any other Restricted
Person, do either or both of the following: (1) terminate any obligation of
Lenders to make Loans hereunder, and (2) declare any or all of the Obligations
immediately due and payable, and all such Obligations shall thereupon be
immediately due and payable, without demand, presentment, notice of demand or
of dishonor and nonpayment, protest, notice of protest, notice of intention to
accelerate, declaration or notice of acceleration, or any other notice or
declaration of any kind, all of which are hereby expressly waived by Borrower
and each Restricted Person who at any time ratifies or approves this Agreement.

Section 8.2. Remedies. If any Default shall occur and be continuing,
each Bank Party may protect and enforce its rights under the Loan Documents by
any appropriate proceedings, including proceedings for specific performance of
any covenant or agreement contained in any

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Loan Document, and each Bank Party may enforce the payment of any Obligations
due it or enforce any other legal or equitable right which it may have. All
rights, remedies and powers conferred upon Bank Parties under the Loan
Documents shall be deemed cumulative and not exclusive of any other rights,
remedies or powers available under the Loan Documents or at Law or in equity.

ARTICLE IX - Agent

Section 9.1. Appointment and Authority. Each Bank Party hereby
irrevocably authorizes Agent, and Agent hereby undertakes, to receive payments
of principal, interest and other amounts due hereunder as specified herein and
to take all other actions and to exercise such powers under the Loan Documents
as are specifically delegated to Agent by the terms hereof or thereof, together
with all other powers reasonably incidental thereto. The relationship of Agent
to the other Bank Parties is only that of one commercial lender acting as
administrative agent for others, and nothing in the Loan Documents shall be
construed to constitute Agent a trustee or other fiduciary for any holder of
any of the Notes or of any participation therein nor to impose on Agent duties
and obligations other than those expressly provided for in the Loan Documents.
With respect to any matters not expressly provided for in the Loan Documents
and any matters which the Loan Documents place within the discretion of Agent,
Agent shall not be required to exercise any discretion or take any action, and
it may request instructions from Lenders with respect to any such matter, in
which case it shall be required to act or to refrain from acting (and shall be
fully protected and free from liability to all Lenders in so acting or
refraining from acting) upon the instructions of Majority Lenders (including
itself), provided, however, that Agent shall not be required to take any action
which exposes it to a risk of personal liability that it considers unreasonable
or which is contrary to the Loan Documents or to applicable Law. Upon receipt
by Agent from Borrower of any communication calling for action on the part of
Lenders or upon notice from any other Bank Party to Agent of any Default or
Event of Default, Agent shall promptly notify each other Bank Party thereof.

Section 9.2. Exculpation, Agent's Reliance, Etc. Neither Agent nor
any of its directors, officers, agents, attorneys, or employees shall be liable
for any action taken or omitted to be taken by any of them under or in
connection with the Loan Documents, INCLUDING THEIR NEGLIGENCE OF ANY KIND,
except that each shall be liable for its own gross negligence or willful
misconduct. Without limiting the generality of the foregoing, Agent (a) may
treat the payee of any Note as the holder thereof until Agent receives written
notice of the assignment or transfer thereof in accordance with this Agreement,
signed by such payee and in form satisfactory to Agent; (b) may consult with
legal counsel (including counsel for Borrower), independent public accountants
and other experts selected by it and shall not be liable for any action taken
or omitted to be taken in good faith by it in accordance with the advice of
such counsel, accountants or experts; (c) makes no warranty or representation
to any other Bank Party and shall not be responsible to any other Bank Party
for any statements, warranties or representations made in or in connection with
the Loan Documents; (d) shall not have any duty to ascertain or to inquire as
to the performance or observance of any of the terms, covenants or conditions
of the Loan

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Documents on the part of any Restricted Person or to inspect the property
(including the books and records) of any Restricted Person; (e) shall not be
responsible to any other Bank Party for the due execution, legality, validity,
enforceability, genuineness, sufficiency or value of any Loan Document or any
instrument or document furnished in connection therewith; (f) may rely upon the
representations and warranties of each Restricted Person and the Lenders in
exercising its powers hereunder; and (g) shall incur no liability under or in
respect of the Loan Documents by acting upon any notice, consent, certificate
or other instrument or writing (including any telecopy, telegram, cable or
telex) believed by it to be genuine and signed or sent by the proper Person or
Persons.

Section 9.3. Credit Decisions. Each Bank Party acknowledges that it
has, independently and without reliance upon any other Bank Party, made its own
analysis of Borrower and the transactions contemplated hereby and its own
independent decision to enter into this Agreement and the other Loan Documents.
Each Bank Party also acknowledges that it will, independently and without
reliance upon any other Bank Party and based on such documents and information
as it shall deem appropriate at the time, continue to make its own credit
decisions in taking or not taking action under the Loan Documents.

Section 9.4. Indemnification. Each Lender agrees to indemnify Agent
(to the extent not reimbursed by Borrower within ten (10) days after demand)
from and against such Lender's Percentage Share of any and all liabilities,
obligations, claims, losses, damages, penalties, fines, actions, judgments,
suits, settlements, costs, expenses or disbursements (including reasonable fees
of attorneys, accountants, experts and advisors) of any kind or nature
whatsoever (in this section collectively called "liabilities and costs") which
to any extent (in whole or in part) may be imposed on, incurred by, or asserted
against Agent growing out of, resulting from or in any other way associated
with any of the Collateral, the Loan Documents and the transactions and events
(including the enforcement thereof) at any time associated therewith or
contemplated therein (including any violation or noncompliance with any
Environmental Laws by any Person or any liabilities or duties of any Person
with respect to Hazardous Materials found in or released into the environment).

THE FOREGOING INDEMNIFICATION SHALL APPLY WHETHER OR NOT SUCH LIABILITIES AND
COSTS ARE IN ANY WAY OR TO ANY EXTENT OWED, IN WHOLE OR IN PART, UNDER ANY
CLAIM OR THEORY OF STRICT LIABILITY, OR ARE CAUSED, IN WHOLE OR IN PART, BY ANY
NEGLIGENT ACT OR OMISSION OF ANY KIND BY AGENT,

provided only that no Lender shall be obligated under this section to indemnify
Agent for that portion, if any, of any liabilities and costs which is
proximately caused by Agent's own individual gross negligence or willful
misconduct, as determined in a final judgment. Cumulative of the foregoing,
each Lender agrees to reimburse Agent promptly upon demand for such Lender's
Percentage Share of any costs and expenses to be paid to Agent by Borrower
under Section 10.4(a) to the extent that Agent is not timely reimbursed for
such expenses by Borrower as provided in such section. As used in this section
the term "Agent" shall refer not only to the

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Person designated as such in Section 1.1 but also to each director, officer,
agent, attorney, employee, representative and Affiliate of such Person.

Section 9.5. Rights as Lender. In its capacity as a Lender, Agent
shall have the same rights and obligations as any Lender and may exercise such
rights as though it were not Agent. Agent may accept deposits from, lend money
to, act as Trustee under indentures of, and generally engage in any kind of
business with any Restricted Person or their Affiliates, all as if it were not
Agent hereunder and without any duty to account therefor to any other Lender.

Section 9.6. Sharing of Set-Offs and Other Payments. Each Bank Party
agrees that if it shall, whether through the exercise of rights under Security
Documents or rights of banker's lien, set off, or counterclaim against Borrower
or otherwise, obtain payment of a portion of the aggregate Obligations owed to
it which, taking into account all distributions made by Agent under Section
3.1, causes such Bank Party to have received more than it would have received
had such payment been received by Agent and distributed pursuant to Section
3.1, then (a) it shall be deemed to have simultaneously purchased and shall be
obligated to purchase interests in the Obligations as necessary to cause all
Bank Parties to share all payments as provided for in Section 3.1, and (b) such
other adjustments shall be made from time to time as shall be equitable to
ensure that Agent and all Lenders share all payments of Obligations as provided
in Section 3.1; provided, however, that nothing herein contained shall in any
way affect the right of any Bank Party to obtain payment (whether by exercise
of rights of banker's lien, set-off or counterclaim or otherwise) of
indebtedness other than the Obligations. Borrower expressly consents to the
foregoing arrangements and agrees that any holder of any such interest or other
participation in the Obligations, whether or not acquired pursuant to the
foregoing arrangements, may to the fullest extent permitted by Law exercise any
and all rights of banker's lien, set-off, or counterclaim as fully as if such
holder were a holder of the Obligations in the amount of such interest or other
participation. If all or any part of any funds transferred pursuant to this
section is thereafter recovered from the seller under this section which
received the same, the purchase provided for in this section shall be deemed to
have been rescinded to the extent of such recovery, together with interest, if
any, if interest is required pursuant to Tribunal order to be paid on account
of the possession of such funds prior to such recovery.

Section 9.7. Investments. Whenever Agent in good faith determines
that it is uncertain about how to distribute to Lenders any funds which it has
received, or whenever Agent in good faith determines that there is any dispute
among Lenders about how such funds should be distributed, Agent may choose to
defer distribution of the funds which are the subject of such uncertainty or
dispute. If Agent in good faith believes that the uncertainty or dispute will
not be promptly resolved, or if Agent is otherwise required to invest funds
pending distribution to Lenders, Agent shall invest such funds pending
distribution; all interest on any such investment shall be distributed upon the
distribution of such investment and in the same proportion and to the same
Persons as such investment. All moneys received by Agent for distribution to
Lenders (other than to the Person who is Agent in its separate capacity as a
Lender) shall be held by Agent pending such distribution solely as Agent for
such Lenders, and Agent shall have no equitable title to any portion thereof.

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Section 9.8. Benefit of Article IX. The provisions of this Article
(other than the following Section 9.9) are intended solely for the benefit of
Bank Parties, and no Restricted Person shall be entitled to rely on any such
provision or assert any such provision in a claim or defense against any Bank
Party. Bank Parties may waive or amend such provisions as they desire without
any notice to or consent of Borrower or any Restricted Person.

Section 9.9. Resignation. Agent may resign at any time by giving
written notice thereof to Lenders and Borrower. Each such notice shall set
forth the date of such resignation. Upon any such resignation Borrower may,
with the written concurrence of Majority Lenders designate a successor Agent.
If within fifteen days after the date of such resignation Borrower makes no
such designation or such written concurrence is not given, Majority Lenders
shall have the right to appoint a successor Agent. A successor must be
appointed for any retiring Agent, and such Agent's resignation shall become
effective when such successor accepts such appointment. If, within thirty days
after the date of the retiring Agent's resignation, no successor Agent has been
appointed and has accepted such appointment, then the retiring Agent may
appoint a successor Agent, which shall be a commercial bank organized or
licensed to conduct a banking or trust business under the Laws of the United
States of America or of any state thereof. Upon the acceptance of any
appointment as Agent hereunder by a successor Agent, the retiring Agent shall
be discharged from its duties and obligations under this Agreement and the
other Loan Documents. After any retiring Agent's resignation hereunder the
provisions of this Article IX shall continue to inure to its benefit as to any
actions taken or omitted to be taken by it while it was Agent under the Loan
Documents.

ARTICLE X - Miscellaneous

Section 10.1. Waivers and Amendments; Acknowledgments.

(a) Waivers and Amendments. No failure or delay (whether by course
of conduct or otherwise) by any Bank Party in exercising any right, power or
remedy which such Bank Party may have under any of the Loan Documents shall
operate as a waiver thereof or of any other right, power or remedy, nor shall
any single or partial exercise by any Bank Party of any such right, power or
remedy preclude any other or further exercise thereof or of any other right,
power or remedy. No waiver of any provision of any Loan Document and no
consent to any departure therefrom shall ever be effective unless it is in
writing and signed as provided below in this section, and then such waiver or
consent shall be effective only in the specific instances and for the purposes
for which given and to the extent specified in such writing. No notice to or
demand on any Restricted Person shall in any case of itself entitle any
Restricted Person to any other or further notice or demand in similar or other
circumstances. This Agreement and the other Loan Documents set forth the
entire understanding between the parties hereto with respect to the
transactions contemplated herein and therein and supersede all prior
discussions and understandings with respect to the subject matter hereof and
thereof, and no waiver, consent, release, modification or amendment of or
supplement to this Agreement or the other Loan Documents shall be valid or
effective against any party hereto unless the same is in writing and signed by
(i) if such party is Borrower, by Borrower, (ii) if such party is Agent or LC
Issuer, by

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such party, and (iii) if such party is a Lender, by such Lender or by Agent on
behalf of Lenders with the written consent of Majority Lenders (which consent
has already been given as to the termination of the Loan Documents as provided
in Section 10.9). Notwithstanding the foregoing or anything to the contrary
herein, Agent shall not, without the prior consent of each individual Lender,
execute and deliver on behalf of such Lender any waiver or amendment which
would: (1) waive any of the conditions specified in Article IV (provided that
Agent may in its discretion withdraw any request it has made under Section
4.3(f)), (2) increase the Maximum Loan Amount of such Lender or subject such
Lender to any additional obligations, (3) reduce any fees payable to such
lender hereunder, or the principal of, or interest on, such Lender's Note, (4)
postpone any date fixed for any payment of any such fees, principal or
interest, (5) amend the definition herein of "Majority Lenders" or otherwise
change the aggregate amount of Percentage Shares which is required for Agent,
Lenders or any of them to take any particular action under the Loan Documents,
or (6) release Borrower from its obligation to pay such Lender's Note or any
Guarantor from its guaranty of such payment.

(b) Acknowledgments and Admissions. Borrower hereby represents,
warrants, acknowledges and admits that (i) it has been advised by counsel in
the negotiation, execution and delivery of the Loan Documents to which it is a
party, (ii) it has made an independent decision to enter into this Agreement
and the other Loan Documents to which it is a party, without reliance on any
representation, warranty, covenant or undertaking by Agent or any Lender,
whether written, oral or implicit, other than as expressly set out in this
Agreement or in another Loan Document delivered on or after the date hereof,
(iii) there are no representations, warranties, covenants, undertakings or
agreements by any Bank Party as to the Loan Documents except as expressly set
out in this Agreement or in another Loan Document delivered on or after the
date hereof, (iv) no Bank Party has any fiduciary obligation toward Borrower
with respect to any Loan Document or the transactions contemplated thereby, (v)
the relationship pursuant to the Loan Documents between Borrower and the other
Restricted Persons, on one hand, and each Bank Party, on the other hand, is and
shall be solely that of debtor and creditor, respectively, (vi) no partnership
or joint venture exists with respect to the Loan Documents between any
Restricted Person and any Bank Party, (vii) Agent is not Borrower's Agent, but
Agent for Lenders, (viii) should an Event of Default or Default occur or exist,
each Bank Party will determine in its sole discretion and for its own reasons
what remedies and actions it will or will not exercise or take at that time,
(ix) without limiting any of the foregoing, Borrower is not relying upon any
representation or covenant by any Bank Party, or any representative thereof,
and no such representation or covenant has been made, that any Bank Party will,
at the time of an Event of Default or Default, or at any other time, waive,
negotiate, discuss, or take or refrain from taking any action permitted under
the Loan Documents with respect to any such Event of Default or Default or any
other provision of the Loan Documents, and (x) all Bank Parties have relied
upon the truthfulness of the acknowledgments in this section in deciding to
execute and deliver this Agreement and to become obligated hereunder.

(c) Representation by Lenders. Each Lender hereby represents that it
will acquire its Note for its own account in the ordinary course of its
commercial lending business; however, the disposition of such Lender's property
shall at all times be and remain within its control and, in particular and
without limitation, such Lender may sell or otherwise transfer its Note, any

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participation interest or other interest in its Note, or any of its other
rights and obligations under the Loan Documents.

(d) Joint Acknowledgment. THIS WRITTEN AGREEMENT AND THE OTHER LOAN
DOCUMENTS REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE
CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL
AGREEMENTS OF THE PARTIES.

THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.

Section 10.2. Survival of Agreements; Cumulative Nature. All of
Restricted Persons' various representations, warranties, covenants and
agreements in the Loan Documents shall survive the execution and delivery of
this Agreement and the other Loan Documents and the performance hereof and
thereof, including the making or granting of the Loans and the delivery of
the Notes and the other Loan Documents, and shall further survive until all of
the Obligations are paid in full to each Bank Party and all of Bank Parties'
obligations to Borrower are terminated. All statements and agreements
contained in any certificate or other instrument delivered by any Restricted
Person to any Bank Party under any Loan Document shall be deemed
representations and warranties by Borrower or agreements and covenants of
Borrower under this Agreement. The representations, warranties, indemnities,
and covenants made by Restricted Persons in the Loan Documents, and the rights,
powers, and privileges granted to Bank Parties in the Loan Documents, are
cumulative, and, except for expressly specified waivers and consents, no Loan
Document shall be construed in the context of another to diminish, nullify, or
otherwise reduce the benefit to any Bank Party of any such representation,
warranty, indemnity, covenant, right, power or privilege. In particular and
without limitation, no exception set out in this Agreement to any
representation, warranty, indemnity, or covenant herein contained shall apply
to any similar representation, warranty, indemnity, or covenant contained in
any other Loan Document, and each such similar representation, warranty,
indemnity, or covenant shall be subject only to those exceptions which are
expressly made applicable to it by the terms of the various Loan Documents.

Section 10.3. Notices. All notices, requests, consents, demands and
other communications required or permitted under any Loan Document shall be in
writing, unless otherwise specifically provided in such Loan Document (provided
that Agent may give telephonic notices to the other Bank Parties), and shall be
deemed sufficiently given or furnished if delivered by personal delivery, by
telecopy or telex, by delivery service with proof of delivery, or by registered
or certified United States mail, postage prepaid, to Borrower and Restricted
Persons at the address of Borrower specified on the signature pages hereto and
to each Bank Party at its address specified on the signature pages hereto
(unless changed by similar notice in writing given by the particular Person
whose address is to be changed). Any such notice or communication shall be
deemed to have been given (a) in the case of personal delivery or delivery
service, as of the date of first attempted delivery during normal business
hours at the address provided herein, (b) in the case of telecopy or telex,
upon receipt, or (c) in the case of

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registered or certified United States mail, three days after deposit in the
mail; provided, however, that no Borrowing Notice shall become effective until
actually received by Agent.

Section 10.4. Payment of Expenses; Indemnity.

(a) Payment of Expenses. Whether or not the transactions
contemplated by this Agreement are consummated, Borrower will promptly (and in
any event, within 30 days after any invoice or other statement or notice) pay:
(i) all transfer, stamp, mortgage, documentary or other similar taxes,
assessments or charges levied by any governmental or revenue authority in
respect of this Agreement or any of the other Loan Documents or any other
document referred to herein or therein, (ii) all reasonable costs and expenses
incurred by or on behalf of Agent (including attorneys' fees, consultants' fees
and engineering fees, travel costs and miscellaneous expenses) in connection
with (1) the negotiation, preparation, execution and delivery of the Loan
Documents, and any and all consents, waivers or other documents or instruments
relating thereto, (2) the filing, recording, refiling and re-recording of any
Loan Documents and any other documents or instruments or further assurances
required to be filed or recorded or refiled or re-recorded by the terms of any
Loan Document, (3) the borrowings hereunder and other action reasonably
required in the course of administration hereof, (4) monitoring or confirming
(or preparation or negotiation of any document related to) Borrower's
compliance with any covenants or conditions contained in this Agreement or in
any Loan Document, and (iii) all reasonable costs and expenses incurred by or
on behalf of any Bank Party (including attorneys' fees, consultants' fees and
accounting fees) in connection with the defense or enforcement of any of the
Loan Documents (including this section) or the defense of any Bank Party's
exercise of its rights thereunder. In addition to the foregoing, until all
Obligations have been paid in full, Borrower will also pay or reimburse Agent
for all reasonable out-of-pocket costs and expenses of Agent or its agents or
employees in connection with the continuing administration of the Loans and the
related due diligence of Agent, including travel and miscellaneous expenses and
fees and expenses of Agent's outside counsel, reserve engineers and consultants
engaged in connection with the Loan Documents.

(b) Indemnity. Borrower agrees to indemnify each Bank Party, upon
demand, from and against any and all liabilities, obligations, claims, losses,
damages, penalties, fines, actions, judgments, suits, settlements, costs,
expenses or disbursements (including reasonable fees of attorneys, accountants,
experts and advisors) of any kind or nature whatsoever (in this section
collectively called "liabilities and costs") which to any extent (in whole or
in part) may be imposed on, incurred by, or asserted against such Bank Party
growing out of, resulting from or in any other way associated with any of the
Collateral, the Loan Documents and the transactions and events (including the
enforcement or defense thereof) at any time associated therewith or
contemplated therein (including any violation or noncompliance with any
Environmental Laws by any Restricted Person or any liabilities or duties of any
Restricted Person or any Bank Party with respect to Hazardous Materials found
in or released into the environment).

THE FOREGOING INDEMNIFICATION SHALL APPLY WHETHER OR NOT SUCH LIABILITIES AND
COSTS ARE IN ANY WAY OR TO ANY EXTENT OWED, IN WHOLE OR IN PART, UNDER ANY
CLAIM OR THEORY OF STRICT LIABILITY, OR ARE

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CAUSED, IN WHOLE OR IN PART, BY ANY NEGLIGENT ACT OR OMISSION OF ANY KIND BY
ANY BANK PARTY,

provided only that no Bank Party shall be entitled under this section to
receive indemnification for that portion, if any, of any liabilities and costs
which is proximately caused by its own individual gross negligence or willful
misconduct, as determined in a final judgment. If any Person (including
Borrower or any of its Affiliates) ever alleges such gross negligence or
willful misconduct by any Bank Party, the indemnification provided for in this
section shall nonetheless be paid upon demand, subject to later adjustment or
reimbursement, until such time as a court of competent jurisdiction enters a
final judgment as to the extent and effect of the alleged gross negligence or
willful misconduct. As used in this section the term "Bank Parties" shall
refer not only to the Persons designated as such in Section 1.1 but also to
each director, officer, agent, attorney, employee, representative and Affiliate
of such Persons.

Section 10.5. Joint and Several Liability; Parties in Interest;
Assignments.

(a) All Obligations which are incurred by two or more Restricted
Persons shall be their joint and several obligations and liabilities. All
grants, covenants and agreements contained in the Loan Documents shall bind and
inure to the benefit of the parties thereto and their respective successors and
assigns; provided, however, that no Restricted Person may assign or transfer
any of its rights or delegate any of its duties or obligations under any Loan
Document without the prior consent of Majority Lenders. Neither Borrower nor
any Affiliates of Borrower shall directly or indirectly purchase or otherwise
retire any Obligations owed to any Lender nor will any Lender accept any offer
to do so, unless each Lender shall have received substantially the same offer
with respect to the same Percentage Share of the Obligations owed to it. If
Borrower or any Affiliate of Borrower at any time purchases some but less than
all of the Obligations owed to all Bank Parties, such purchaser shall not be
entitled to any rights of any Bank Party under the Loan Documents unless and
until Borrower or its Affiliates have purchased all of the Obligations.

(b) No Lender shall sell any participation interest in its commitment
hereunder or any of its rights under its Loans or under the Loan Documents to
any Person other than an Eligible Transferee, and then only if the agreement
between such Lender and such participant at all times provides: (i) that such
participation exists only as a result of the agreement between such participant
and such Lender and that such transfer does not give such participant any right
to vote as a Lender or any other direct claims or rights against any Person
other than such Lender, (ii) that such participant is not entitled to payment
from any Restricted Person under Sections 3.2 through 3.6 of amounts in excess
of those payable to such Lender under such sections (determined without regard
to the sale of such participation), and (iii) unless such participant is an
Affiliate of such Lender, that such participant shall not be entitled to
require such Lender to take any action under any Loan Document or to obtain the
consent of such participant prior to taking any action under any Loan Document,
except for actions which would require the consent of all Lenders under the
last sentence of subsection (a) of Section 10.1. No Lender selling such a
participation shall, as between the other parties hereto and such Lender, be
relieved of any of its obligations hereunder as a result of the sale of such
participation. Each Lender which sells any

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such participation to any Person (other than an Affiliate of such Lender) shall
give prompt notice thereof to Agent and Borrower.

(c) Except for sales of participations under the immediately
preceding subsection (b), no Lender shall make any assignment or transfer of
any kind of its commitments or any of its rights under its Loans or under the
Loan Documents, except for assignments to an Eligible Transferee, and then only
if such assignment is made in accordance with the following requirements:

(i) Each such assignment shall apply to all Obligations owing
to the assignor Lender hereunder and to the unused portion of the
assignor Lender's commitments, so that after such assignment is made
the assignor Lender shall have a fixed (and not a varying) Percentage
Share in its Loans and Note and be committed to make that Percentage
Share of all future Loans, the assignee shall have a fixed Percentage
Share in such Loans and Note and be committed to make that Percentage
Share of all future Loans, and the Percentage Share of the Maximum
Loan Amount of both the assignor and assignee shall equal or exceed
$5,000,000.

(ii) The parties to each such assignment shall execute and
deliver to Agent, for its acceptance and recording in the "Register"
(as defined below in this section), an Assignment and Assumption
Agreement in the form of Exhibit H, appropriately completed, together
with the Note subject to such assignment and a processing fee payable
to Agent of $3,500. Upon such execution, delivery, and payment and
upon the satisfaction of the conditions set out in such Assignment and
Assumption Agreement, then (i) Borrower shall issue new Notes to such
assignor and assignee upon return of the old Notes to Borrower, and
(ii) as of the "Settlement Date" specified in such Assignment and
Acceptance the assignee thereunder shall be a party hereto and a
Lender hereunder and Agent shall thereupon deliver to Borrower and
each Lender a schedule showing the revised Percentage Shares of such
assignor Lender and such assignee Lender and the Percentage Shares of
all other Lenders.

(iii) Each assignee Lender which is not a United States
person (as such term is defined in Section 7701(a)(30) of the Internal
Revenue Code of 1986, as amended) for Federal income tax purposes,
shall (to the extent it has not already done so) provide Agent and
Borrower with the "Prescribed Forms" referred to in Section 3.6(d).

(d) Nothing contained in this section shall prevent or prohibit any
Lender from assigning or pledging all or any portion of its Loans and Note to
any Federal Reserve Bank as collateral security pursuant to Regulation A of the
Board of Governors of the Federal Reserve System and any Operating Circular
issued by such Federal Reserve Bank; provided that no such assignment or pledge
shall relieve such Lender from its obligations hereunder.

(e) By executing and delivering an Assignment and Acceptance, each
assignee Lender thereunder will be confirming to and agreeing with Borrower,
Agents and each other Lender

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hereunder that such assignee understands and agrees to the terms hereof,
including Article IX hereof.

(f) Agent shall maintain a copy of each Assignment and Acceptance and
a register for the recordation of the names and addresses of Lenders and the
Percentage Shares of, and principal amount of the Loans owing to, each Lender
from time to time (in this section called the "Register"). The entries in the
Register shall be conclusive, in the absence of manifest error, and Borrower
and each Bank Party may treat each Person whose name is recorded in the
Register as a Lender hereunder for all purposes. The Register shall be
available for inspection by Borrower or any Bank Party at any reasonable time
and from time to time upon reasonable prior notice.

Section 10.6. Confidentiality. Each Bank Party agrees that it will
take all reasonable steps to keep confidential any proprietary information
given to it by any Restricted Person, provided, however, that this restriction
shall not apply to information which (i) has at the time in question entered
the public domain, (ii) is required to be disclosed by Law (whether valid or
invalid) of any Tribunal, (iii) is disclosed to any Bank Party's Affiliates,
auditors, attorneys, or agents (provided such Persons are obligated to hold
such information in confidence on the terms provided in this section), (iv) is
furnished to any other Bank Party or to any purchaser or prospective purchaser
of participations or other interests in any Loan or Loan Document (provided
each such purchaser or prospective purchaser first agrees to hold such
information in confidence on the terms provided in this section), or (v) is
disclosed in the course of enforcing its rights and remedies during the
existence of an Event of Default.

Section 10.7. Governing Law; Submission to Process.

EXCEPT TO THE EXTENT THAT THE LAW OF ANOTHER JURISDICTION IS EXPRESSLY ELECTED
IN A LOAN DOCUMENT, THE LOAN DOCUMENTS SHALL BE DEEMED CONTRACTS AND
INSTRUMENTS MADE UNDER THE LAWS OF THE STATE OF NEW YORK AND SHALL BE CONSTRUED
AND ENFORCED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW
YORK AND THE LAWS OF THE UNITED STATES OF AMERICA, WITHOUT REGARD TO PRINCIPLES
OF CONFLICTS OF LAW. BORROWER HEREBY AGREES THAT ANY LEGAL ACTION OR
PROCEEDING AGAINST BORROWER WITH RESPECT TO THIS AGREEMENT, THE NOTES OR ANY OF
THE LOAN DOCUMENTS MAY BE BROUGHT IN THE COURTS OF THE STATE OF NEW YORK OR OF
THE UNITED STATES OF AMERICA FOR THE SOUTHERN DISTRICT OF NEW YORK AS BANK
PARTIES MAY ELECT, AND, BY EXECUTION AND DELIVERY HEREOF, BORROWER ACCEPTS AND
CONSENTS FOR ITSELF AND IN RESPECT TO ITS PROPERTY, GENERALLY AND
UNCONDITIONALLY, THE JURISDICTION OF THE AFORESAID COURTS, AND FURTHER AGREES
TO A TRANSFER OF ANY SUCH PROCEEDING TO A FEDERAL COURT SITTING IN THE STATE OF
NEW YORK TO THE EXTENT THAT IT HAS SUBJECT MATTER JURISDICTION, AND OTHERWISE
TO A STATE COURT IN NEW YORK, NEW YORK, AND AGREES THAT SUCH JURISDICTION
SHALL BE EXCLUSIVE, UNLESS WAIVED BY BANK PARTIES IN WRITING, WITH RESPECT TO
ANY ACTION OR PROCEEDING BROUGHT BY IT AGAINST BANK PARTIES AND ANY QUESTIONS
RELATING TO USURY. BORROWER AGREES THAT SECTIONS 5-1401 AND 5-1402 OF THE
GENERAL OBLIGATIONS LAW OF THE STATE OF NEW YORK SHALL APPLY TO THE LOAN
DOCUMENTS AND WAIVES ANY RIGHT TO STAY OR TO DISMISS ANY ACTION OR PROCEEDING

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BROUGHT BEFORE SAID COURTS ON THE BASIS OF FORUM NON CONVENIENS. IN
FURTHERANCE OF THE FOREGOING, BORROWER HEREBY IRREVOCABLY DESIGNATES AND
APPOINTS CT CORPORATION SYSTEM, 0000 XXXXXXXX, XXX XXXX, XXX XXXX, AS AGENT OF
BORROWER TO RECEIVE SERVICE OF ALL PROCESS BROUGHT AGAINST BORROWER WITH
RESPECT TO ANY SUCH PROCEEDING IN ANY SUCH COURT IN NEW YORK, SUCH SERVICE
BEING HEREBY ACKNOWLEDGED BY BORROWER TO BE EFFECTIVE AND BINDING SERVICE IN
EVERY RESPECT. COPIES OF ANY SUCH PROCESS SO SERVED SHALL ALSO, IF PERMITTED
BY LAW, BE SENT BY REGISTERED MAIL TO BORROWER AT ITS ADDRESS SET FORTH BELOW
AND BY REGULAR MAIL, REGISTERED MAIL COURIER OR MESSENGER TO BORROWER AT ITS
ADDRESS SET FORTH BELOW, BUT THE FAILURE OF BORROWER TO RECEIVE SUCH COPIES
SHALL NOT AFFECT IN ANY WAY THE SERVICE OF SUCH PROCESS AS AFORESAID. BORROWER
SHALL FURNISH TO BANK PARTIES A CONSENT OF CT CORPORATION SYSTEM AGREEING TO
ACT HEREUNDER PRIOR TO THE EFFECTIVE DATE OF THIS AGREEMENT. NOTHING HEREIN
SHALL AFFECT THE RIGHT OF BANK PARTIES TO SERVE PROCESS IN ANY OTHER MANNER
PERMITTED BY LAW OR SHALL LIMIT THE RIGHT OF BANK PARTIES TO BRING PROCEEDINGS
AGAINST BORROWER IN THE COURTS OF ANY OTHER JURISDICTION. IF FOR ANY REASON CT
CORPORATION SHALL RESIGN OR OTHERWISE CEASE TO ACT AS BORROWER'S AGENT,
BORROWER HEREBY IRREVOCABLY AGREES TO (A) IMMEDIATELY DESIGNATE AND APPOINT A
NEW AGENT ACCEPTABLE TO AGENT TO SERVE IN SUCH CAPACITY AND, IN SUCH EVENT,
SUCH NEW AGENT SHALL BE DEEMED TO BE SUBSTITUTED FOR CT CORPORATION SYSTEM FOR
ALL PURPOSES HEREOF AND (B) PROMPTLY DELIVER TO BANK PARTIES THE WRITTEN
CONSENT (IN FORM AND SUBSTANCE SATISFACTORY TO AGENT) OF SUCH NEW AGENT
AGREEING TO SERVE IN SUCH CAPACITY.

Section 10.8. Limitation on Interest. Bank Parties, Restricted
Persons and the other parties to the Loan Documents intend to contract in
strict compliance with applicable usury Law from time to time in effect. In
furtherance thereof such persons stipulate and agree that none of the terms and
provisions contained in the Loan Documents shall ever be construed to provide
for interest in excess of the maximum amount of interest permitted to be
charged by applicable Law from time to time in effect. Neither any Restricted
Person nor any present or future guarantors, endorsers, or other Persons
hereafter becoming liable for payment of any Obligation shall ever be liable
for unearned interest thereon or shall ever be required to pay interest thereon
in excess of the maximum amount that may be lawfully charged under applicable
Law from time to time in effect, and the provisions of this section shall
control over all other provisions of the Loan Documents which may be in
conflict or apparent conflict herewith.

Section 10.9. Termination; Limited Survival. In its sole and
absolute discretion Borrower may at any time that no Obligations are owing
elect in a written notice delivered to Agent to terminate this Agreement. Upon
receipt by Agent of such a notice, if no Obligations are then owing this
Agreement and all other Loan Documents shall thereupon be terminated and the
parties thereto released from all prospective obligations thereunder.
Notwithstanding the foregoing or anything herein to the contrary, any waivers
or admissions made by any Restricted Person in any Loan Document, any
Obligations under Sections 3.2 through 3.6, and any obligations which any
Person may have to indemnify or compensate any Bank Party shall survive any
termination of this Agreement or any other Loan Document. At the request and
expense of

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Borrower, Agent shall prepare and execute all necessary instruments to reflect
and effect such termination of the Loan Documents. Agent is hereby authorized
to execute all such instruments on behalf of all Lenders, without the joinder
of or further action by any Lender.

Section 10.10. Partial Release. So long as no Event of Default will
exist after giving effect thereto and, if requested by Agent, Agent has
contemporaneously received a Lien upon any asset, properties or interests
received by Borrower in exchange therefor, upon any transfer of property
permitted under Section 7.5, Agent will release from the Liens under the
Security Documents the property so transferred.

Section 10.11. Severability. If any term or provision of any Loan
Document shall be determined to be illegal or unenforceable all other terms and
provisions of the Loan Documents shall nevertheless remain effective and shall
be enforced to the fullest extent permitted by applicable Law.

Section 10.12. Counterparts. This Agreement may be separately
executed in any number of counterparts and by different parties hereto in
separate counterparts, each of which when so executed shall be deemed to
constitute one and the same Agreement.

Section 10.13. Waiver of Jury Trial, Punitive Damages, etc.

TO THE EXTENT PERMITTED BY LAW, BANK PARTIES AND BORROWER HEREBY KNOWINGLY,
VOLUNTARILY, AND INTENTIONALLY WAIVE ANY RIGHTS THEY MAY HAVE TO A TRIAL BY
JURY IN RESPECT OF ANY LITIGATION BASED HEREON, OR DIRECTLY OR INDIRECTLY
ARISING OUT OF, UNDER, OR IN CONNECTION WITH, THIS AGREEMENT OR ANY OTHER LOAN
DOCUMENT, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER
VERBAL OR WRITTEN) OR ACTIONS OF SUCH PERSONS OR BORROWER. THIS PROVISION IS A
MATERIAL INDUCEMENT FOR BANK PARTIES' ENTERING INTO THIS AGREEMENT AND THE
OTHER LOAN DOCUMENTS. BORROWER AND EACH BANK PARTY HEREBY FURTHER (A)
IRREVOCABLY WAIVES, TO THE MAXIMUM EXTENT NOT PROHIBITED BY LAW, ANY RIGHT IT
MAY HAVE TO CLAIM OR RECOVER IN ANY SUCH LITIGATION ANY "SPECIAL DAMAGES", AS
DEFINED BELOW, (B) CERTIFIES THAT NO PARTY HERETO NOR ANY REPRESENTATIVE OR
AGENT OR COUNSEL FOR ANY PARTY HERETO HAS REPRESENTED, EXPRESSLY OR OTHERWISE,
OR IMPLIED THAT SUCH PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO
ENFORCE THE FOREGOING WAIVERS, AND (C) ACKNOWLEDGES THAT IT HAS BEEN INDUCED TO
ENTER INTO THIS AGREEMENT, THE OTHER LOAN DOCUMENTS AND THE TRANSACTIONS
CONTEMPLATED HEREBY AND THEREBY BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND
CERTIFICATIONS CONTAINED IN THIS SECTION. AS USED IN THIS SECTION, "SPECIAL
DAMAGES" INCLUDES ALL SPECIAL, CONSEQUENTIAL, EXEMPLARY, OR PUNITIVE DAMAGES
(REGARDLESS OF HOW NAMED), BUT DOES NOT INCLUDE ANY PAYMENTS OR FUNDS WHICH ANY
PARTY HERETO HAS EXPRESSLY PROMISED TO PAY OR DELIVER TO ANY OTHER PARTY
HERETO.

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

UNITED STATES EXPLORATION, INC.
Borrower

By:/s/ Xxxxx X. Xxxxxx
------------------------------------
Xxxxx X. Xxxxxx, President and Chief
Executive Officer

Address:
0000 Xxxxxxxx, Xxxxx 0000
Xxxxxx, Xxxxxxxx 00000
Attention: Xxxxx X. Xxxxxx

Telephone: (000) 000-0000
Telecopy: (000) 000-0000

ING (U.S.) CAPITAL CORPORATION
Agent and Lender

By:/s/ Xxxxx X. Xxxxxxx
------------------------------------
Name: Xxxxx X. Xxxxxxx
Title:Senior Associate

Address:
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Attention: Xxxxx Xxxxxxx

Telephone: (000) 000-0000
Telecopy: (000) 000-0000

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SCHEDULE 1
DISCLOSURE SCHEDULE

[Describes exemptions to Borrower's representations and warranties.]

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SCHEDULE 2

SECURITY SCHEDULE

1. Mortgage, Assignment, Security Agreement, Fixture Filing and Financing
Statement from Borrower to Agent to be recorded in Colorado and
Kansas.

2. Mortgage, Assignment, Security Agreement, Fixture Filing and Financing
Statement from Performance Petroleum Co., United States Gas Gathering
Co., Inc. and Pacific Osage, Inc. to Agent to be recorded in
Oklahoma.

3. Financing Statements executed by Borrower in connection with the
Mortgages.

4. Pledge Agreement executed by Borrower in favor of Agent (the "Pledge
Agreement").

5. Financing Statement executed by Borrower in connection with the Pledge
Agreement.

6. Guaranty by Performance Petroleum Co., United States Gas Gathering Co.,
Inc., Pacific Osage, Inc. and Producers Service, Inc

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SCHEDULE 3

INSURANCE SCHEDULE

[Lists Borrower's insurance policies.]

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EXHIBIT A

PROMISSORY NOTE

$35,000,000 New York, New York May 15, 1998

FOR VALUE RECEIVED, the undersigned, United States Exploration, Inc.,
a Colorado corporation (herein called "Borrower"), hereby promises to pay to
the order of ING (U.S.) Capital Corporation, (herein called "Lender"), the
principal sum of Thirty-five Million and No/100 Dollars ($35,000,000), or, if
greater or less, the aggregate unpaid principal amount of the Loan made under
this Note by Lender to Borrower pursuant to the terms of the Credit Agreement
(as hereinafter defined), together with interest on the unpaid principal
balance thereof as hereinafter set forth, both principal and interest payable
as herein provided in lawful money of the United States of America at the
offices of the Agent under the Credit Agreement, as from time to time may be
designated by the holder of this Note.

This Note (a) is issued and delivered under that certain Credit
Agreement of even date herewith among Borrower, Lender, as Agent, and the
lenders (including Lender) referred to therein (herein, as from time to time
supplemented, amended or restated, called the "Credit Agreement"), and is a
"Note" as defined therein, (b) is subject to the terms and provisions of the
Credit Agreement, which contains provisions for payments and prepayments
hereunder and acceleration of the maturity hereof upon the happening of certain
stated events, and (c) is secured by and entitled to the benefits of certain
Security Documents (as identified and defined in the Credit Agreement).
Payments on this Note shall be made and applied as provided herein and in the
Credit Agreement. Reference is hereby made to the Credit Agreement for a
description of certain rights, limitations of rights, obligations and duties of
the parties hereto and for the meanings assigned to terms used and not defined
herein and to the Security Documents for a description of the nature and extent
of the security thereby provided and the rights of the parties thereto.

For the purposes of this Note, the following terms have the meanings
assigned to them below:

"Base Rate Payment Date" means (i) the last day of each Fiscal
Quarter, beginning June 30, 1998, and (ii) any day on which past due interest
or principal is owed hereunder and is unpaid. If the terms hereof or of the
Credit Agreement provide that payments of interest or principal hereon shall be
deferred from one Base Rate Payment Date to another day, such other day shall
also be a Base Rate Payment Date.

"Eurodollar Rate Payment Date" means, with respect to any Eurodollar
Loan: (i) the day on which the related Interest Period ends (and, if such
Interest Period is three months or longer, the three-month anniversary of the
first day of such Interest Period), and (ii) any day on which past due interest
or past due principal is owed hereunder with respect to such Eurodollar Loan
and is unpaid. If the terms hereof or of the Credit Agreement provide that
payments of interest or

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principal with respect to such Eurodollar Loan shall be deferred from one
Eurodollar Rate Payment Date to another day, such other day shall also be a
Eurodollar Rate Payment Date.

The principal amount of this Note shall be due and payable in twenty
(20) quarterly installments, in the amounts set forth below, each of which
shall be due and payable on the last day of each Fiscal Quarter, beginning
March 31, 2000, and continuing regularly thereafter until December 31, 2004, at
which time the unpaid principal balance of this Note and all interest accrued
hereon shall be due and payable in full:

Base Rate Loans from time to time outstanding shall bear interest on
each day outstanding at the Base Rate in effect on such day; unless the Default
Rate shall apply as provided below. On each Base Rate Payment Date Borrower
shall pay to the holder hereof all unpaid interest which has accrued on the
Base Rate Loans to but not including such Base Rate Payment Date. Each
Eurodollar Loan shall bear interest on each day during the related Interest
Period at the related Eurodollar Rate in effect on such day; unless the Default
Rate shall apply as provided below. On each Eurodollar Rate Payment Date
relating to such Eurodollar Loan, Borrower shall pay to the holder hereof all
unpaid interest which has accrued on such Eurodollar Loan to but not including
such Eurodollar Rate Payment Date. All past due principal of and past due
interest on the Loan shall bear interest on each day outstanding at the Default
Rate in effect on such day. Notwithstanding the foregoing provisions of this
paragraph, following the occurrence of an Event of Default and during the
continuance thereof, upon notice to Borrower by Agent, each Loan shall bear
interest at the Default Rate. All interest at the Default Rate shall be due and
payable daily as it accrues. Notwithstanding the foregoing provisions of this
paragraph: (a) this Note shall never bear interest in excess of the Highest
Lawful Rate, and (b) if

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at any time the rate at which interest is payable on this Note is limited by
the Highest Lawful Rate (by the foregoing clause (a) or by reference to the
Highest Lawful Rate in the definitions of Base Rate, Eurodollar Rate, and Late
Payment Rate), this Note shall bear interest at the Highest Lawful Rate and
shall continue to bear interest at the Highest Lawful Rate until such time as
the total amount of interest accrued hereon equals (but does not exceed) the
total amount of interest which would have accrued hereon had there been no
Highest Lawful Rate applicable hereto.

Notwithstanding the foregoing paragraph and all other provisions of this
Note, in no event shall the interest payable hereon, whether before or after
maturity, exceed the maximum interest which, under applicable Law, may be
charged on this Note, and this Note is expressly made subject to the provisions
of the Credit Agreement which more fully set out the limitations on how
interest accrues hereon.

If this Note is placed in the hands of an attorney for collection after
default, or if all or any part of the indebtedness represented hereby is
proved, established or collected in any court or in any bankruptcy,
receivership, debtor relief, probate or other court proceedings, Borrower and
all endorsers, sureties and guarantors of this Note jointly and severally agree
to pay reasonable attorneys' fees and collection costs to the holder hereof in
addition to the principal and interest payable hereunder.

Borrower and all endorsers, sureties and guarantors of this Note hereby
severally waive demand, presentment, notice of demand and of dishonor and
nonpayment of this Note, protest, notice of protest, notice of intention to
accelerate the maturity of this Note, declaration or notice of acceleration of
the maturity of this Note, diligence in collecting, the bringing of any suit
against any party and any notice of or defense on account of any extensions,
renewals, partial payments or changes in any manner of or in this Note or in
any of its terms, provisions and covenants, or any releases or substitutions of
any security, or any delay, indulgence or other act of any trustee or any
holder hereof, whether before or after maturity.

THIS NOTE AND THE RIGHTS AND DUTIES OF THE PARTIES HERETO SHALL BE
GOVERNED BY THE LAWS OF THE STATE OF NEW YORK (WITHOUT REGARD TO PRINCIPLES OF
CONFLICTS OF LAW), EXCEPT TO THE EXTENT THE SAME ARE GOVERNED BY APPLICABLE
FEDERAL LAW.

UNITED STATES EXPLORATION, INC.

By:
--------------------------------
Xxxxx X. Xxxxxx, President and
Chief Executive Officer

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EXHIBIT B

Borrowing Notice

Reference is made to that certain Credit Agreement dated as of May 15,
1998 (as from time to time amended, the "Agreement"), by and among United
States Exploration, Inc. ("Borrower"), ING (U.S.) Capital Corporation, as
Agent, and certain financial institutions ("Lenders"). Terms which are defined
in the Agreement are used herein with the meanings given them in the Agreement.
Pursuant to the terms of the Agreement Borrower hereby requests Lenders to make
Loans to Borrower in the aggregate principal amount of $ __________ and
specifies ____________, 19__, as the date Borrower desires for Lenders to make
such Loans and for Agent to deliver to Borrower the proceeds thereof.

Type of Loans in new Borrowing: __________________

Length of Interest Period for Eurodollar
Loans (1, 2, 3 or 6 months): ___________ months

To induce Lenders to make such Advances, Borrower hereby represents,
warrants, acknowledges, and agrees to and with Agent and each Lender that:

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

(b) The representations and warranties of Borrower set forth
in the Agreement and the other Loan Documents are true and correct on
and as of the date hereof (except to the extent that the facts on
which such representations and warranties are based have been changed
by the extension of credit under the Agreement), with the same effect
as though such representations and warranties had been made on and as
of the date hereof.

(c) There does not exist on the date hereof any condition or
event which constitutes a Default which has not been waived in writing
as provided in Section 10.1(a) of the Agreement; nor will any such
Default exist upon Borrower's receipt and application of the Advances
requested hereby. Borrower will use the Advances hereby requested in
compliance with Section 2.4 of the Agreement.

(d) Except to the extent waived in writing as provided in
Section 10.1(a) of the Agreement, Borrower has performed and complied
with all agreements and conditions in the Agreement required to be
performed or complied with by Borrower on or prior to the date hereof,
and each of the conditions precedent to Advances contained in the
Agreement remains satisfied.

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(e) The Facility Usage, after the making of the Advances
requested hereby, will not be in excess of the Borrowing Base on the
date requested for the making of such Advances.

(f) The Loan Documents have not been modified, amended or
supplemented by any unwritten representations or promises, by any
course of dealing, or by any other means not provided for in Section
10.1(a) of the Agreement. The Agreement and the other Loan Documents
are hereby ratified, approved, and confirmed in all respects.

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

IN WITNESS WHEREOF, this instrument is executed as of ____________,
19__.

UNITED STATES EXPLORATION, INC.

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

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EXHIBIT C

CONTINUATION/CONVERSION NOTICE

Reference is made to that certain Credit Agreement dated as of May 15,
1998 (as from time to time amended, the "Agreement"), by and among United
States Exploration, Inc., as Borrower, ING (U.S.) Capital Corporation, as
Agent, and certain financial institutions, as Lenders. Terms which are defined
in the Agreement are used herein with the meanings given them in the Agreement.

Borrower hereby requests a conversion or continuation of existing
Loans into a new Borrowing pursuant to Section 2.3 of the Agreement as follows:

Existing Borrowing(s) to be continued or converted:

$______________ of Eurodollar Loans with Interest Period
ending ________________

$______________ of Base Rate Loans

Aggregate amount of new Borrowing: $_________________

Type of Loans in new Borrowing: __________________

Date of continuation or conversion: __________________

Length of Interest Period for Eurodollar
Loans (1, 2, 3 or 6 months): ___________ months

Borrower hereby represents, warrants, acknowledges, and agrees to and
with each Bank Party that:

(b) There does not exist on the date hereof any condition or
event which constitutes a Default which has not been waived in writing
as provided in Section 10.1(a) of the Agreement; nor will any such
Default exist upon Borrower's receipt and application of the Loans
requested hereby.

(c) The Loan Documents have not been modified, amended or
supplemented by any unwritten representations or promises, by any
course of dealing, or by any other

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means not provided for in Section 10.1(a) of the Agreement. The
Agreement and the other Loan Documents are hereby ratified, approved,
and confirmed in all respects.

IN WITNESS WHEREOF, this instrument is executed as of ____________,
199__.

UNITED STATES EXPLORATION, INC.

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

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EXHIBIT D

CERTIFICATE ACCOMPANYING
FINANCIAL STATEMENTS

This Certificate is furnished pursuant to Section 6.2 the Agreement.
Together herewith Borrower is furnishing to Agent and each Lender Borrower's
audited financial statements (the "Financial Statements") as at ____________
(the "Reporting Date"). Borrower hereby represents, warrants, and acknowledges
to Agent and each Lender that:

(a) the officer of Borrower signing this instrument is the
duly elected, qualified and acting ____________ of Borrower and as
such is Borrower's chief financial officer;

(b) the Financial Statements are accurate and complete and
satisfy the requirements of the Agreement;

(c) attached hereto is a schedule of calculations showing
Borrower's compliance as of the Reporting Date with the requirements
of Sections ____________ of the Agreement;

(d) on the Reporting Date Borrower was, and on the date
hereof Borrower is, in full compliance with the disclosure
requirements of the Agreement, and no Default otherwise existed on the
Reporting Date or otherwise exists on the date of this.

(e) The representations and warranties of Borrower set forth
in the Agreement and the other Loan Documents are true and correct on
and as of the date hereof (except to the extent that the facts on
which such representations and warranties are based have been changed
by the extension of credit under the Agreement), with the same effect
as though such representations and warranties had been made on and as
of the date hereof.

The officer of Borrower signing this instrument hereby certifies that he
has reviewed the Loan Documents and the Financial Statements and has otherwise
undertaken such inquiry as is in his opinion necessary to enable him to express
an informed opinion with respect to the above representations, warranties and
acknowledgments of Borrower and, to the best of his knowledge, such
representations, warranties, and acknowledgments are true, correct and
complete.

IN WITNESS WHEREOF, this instrument is executed as of ____________,
19__.

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UNITED STATES EXPLORATION, INC.

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

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EXHIBIT E

[INTENTIONALLY OMITTED]

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EXHIBIT F

ENVIRONMENTAL COMPLIANCE CERTIFICATE

1. For the Fiscal Year ending immediately prior to the
date hereof, Borrower has complied and is complying with Section 5.1
of the Credit Agreement;

2. To the best knowledge of the undersigned after due
inquiry, Borrower is on the date hereof in compliance with all
applicable Environmental Laws, noncompliance with which could
reasonably be expected to cause a Material Adverse Change;

3. Borrower has taken (and continues to take) steps to
minimize the generation of potentially harmful effluents;

4. Borrower has established an ongoing program of
conducting an internal audit of each operating facility of Borrower to
identify actual or potential environmental liabilities which could
reasonably be expected to cause a Material Adverse Change; and

5. Borrower has established an ongoing program of
training its employees in issues of environmental, health and safety
compliance, and Borrower presently has one or more individuals in
charge of implementing such training program.

The officer of Borrower signing this instrument hereby certifies that,
to the best of his knowledge after due inquiry and consultation with the
operating officers of Borrower, the above representations, warranties,
acknowledgments, and agreements of Borrower are true, correct and complete.

IN WITNESS WHEREOF, this instrument is executed as of ____________,
19__.

UNITED STATES EXPLORATION, INC.

By:
-------------------------------------
Xxxxx X. Xxxxxx, President and Chief
Executive Officer

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EXHIBIT G-1

[Form of opinion of Borrower's counsel.]

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EXHIBIT H

ASSIGNMENT AND ASSUMPTION AGREEMENT

Date _______________, 199__

Reference is made to that certain Credit Agreement dated as of May 15,
1998 (as from time to time amended, the "Agreement"), by and among United
States Exploration, Inc., as Borrower, ING (U.S.) Capital Corporation, as
Agent, and certain financial institutions, as Lenders, which Agreement is in
full force and effect on the date hereof. Terms which are defined in the
Agreement are used herein with the meanings given them in the Agreement.

____________________ ("Assignor") and ____________________
("Assignee") hereby agree as follows:

1. Assignor hereby sells and assigns to Assignee without recourse
and without representation or warranty (other than as expressly provided
herein), and Assignee hereby purchases and assumes from Assignor, that interest
in and to all of Assignor's rights and duties under the Agreement as of the
date hereof which represents the percentage interest specified in Item 3 of
Annex I hereto (the "Assigned Share") of all of the outstanding rights and
obligations of all Lenders under the Agreement, including, without limitation,
all rights and obligations with respect to the Assigned Share in Assignor's
Loans and Note. After giving effect to such sale and assignment, Assignee's
Percentage Share (and Assignor's remaining Percentage Share) will be as set
forth in Item 3 of Annex I hereto.

2. Assignor: (i) represents and warrants that it is the legal
and beneficial owner of the interest being assigned by it hereunder and that
such interest is free and clear of any adverse claim; (ii) makes no
representation or warranty and assumes no responsibility with respect to any
statements, warranties or representations made in or in connection with the
Agreement, the other Loan Documents or the execution, legality, validity,
enforceability, genuineness, sufficiency or value of the Agreement, the other
Loan Documents or any other instrument or document furnished pursuant thereto;
and (iii) makes no representation or warranty and assumes no responsibility
with respect to the financial condition of Borrower, any other Related Person
or the performance or observance by any of them of any of their respective
obligations under the Agreement, the other Loan Documents, or any other
instrument or document furnished pursuant thereto.

3. Assignee: (i) confirms that it has received a copy of the
Agreement, together with copies of the financial statements most recently
delivered thereunder and such other Loan Documents and other documents and
information as it has deemed appropriate to make its own analysis of Borrower
and the transactions contemplated by the Agreement and its own independent
decision to enter into this Assignment and Assumption Agreement; (ii) agrees
that it will, independently and without reliance upon Assignor or any other
Bank Party and based on

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such documents and information as it shall deem appropriate at the time,
continue to make its own credit decisions in taking or not taking action under
the Agreement; (iii) confirms that it is a an Eligible Transferee under the
Agreement; (iv) appoints and authorizes Agent and Collateral Agent to take such
action as agent on its behalf and to exercise such powers under the Agreement
and the other Loan Documents as are specifically delegated to them, together
with all other powers reasonably incidental thereto; and (v) agrees that it
will perform in accordance with their terms all of the obligations which by the
terms of the Agreement are required to be performed by it as a Lender
(including the obligation to make future Loans). [; and (vi) attaches the
"Prescribed Forms" described in Section 3.6(d) of the Agreement.]

4. Following the execution of this Assignment and Assumption
Agreement by Assignor and Assignee, an executed original hereof (together with
all attachments) will be delivered to Agent. The effective date of this
Assignment and Assumption Agreement (the "Settlement Date") shall be the date
specified in Item 4 of Annex I hereto; provided that this Assignment and
Assumption Agreement shall not be deemed to have taken effect unless (i) the
consent hereto of Agent and Borrower has been obtained (to the extent required
in the Agreement), (ii) Agent has received a fully executed original hereof,
and (iii) Agent has received the processing fee referred to in Section
10.5(c)(ii) of the Agreement.

5. Upon the satisfaction of the foregoing conditions, then as of
the Settlement Date: (i) Assignee shall be a party to the Agreement and, to
the extent provided in this Assignment and Assumption Agreement, have the
rights and obligations of a Lender thereunder and under the other Loan
Documents and (ii) Assignor shall, to the extent provided in this Assignment
and Assumption Agreement, relinquish its rights and be released from its duties
under the Agreement and the other Loan Documents.

6. All interest, fees and other amounts that would otherwise
accrue pursuant to the Agreement and Assignor's Note for the account of
Assignor from and after the Settlement Date shall, instead accrue for the
account of, and be payable to, Assignor and Assignee, as the case may be, in
accordance with their respective interests as reflected in Item 3 to Annex I
hereto. All payments of principal that would otherwise be payable from and
after the Settlement Date to or for the account of Assignor pursuant to the
Agreement and Assignor's Note shall, instead, be payable to or for the account
of Assignor and Assignee, as the case may be, in accordance with their
respective interests as reflected in Item 3 to Annex I hereto. On the
Settlement Date, Assignee shall pay to Assignor an amount specified by Assignor
in writing which represents the portion of Assignor's Loans which is being
assigned and which is outstanding on the Settlement Date, net of any closing
costs. Assignor and Assignee shall make all appropriate adjustments in
payments under the Agreement for periods prior to the Settlement Date directly
between themselves on the Settlement Date.

7. Each of the parties to this Assignment and Assumption
Agreement agrees that at any time and from time to time upon the written
request of any other party, it will execute and deliver such further documents
and do such further acts and things as such other party may reasonably request
in order to effect the purposes of this Assignment and Assumption Agreement.

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8. This Assignment and Assumption Agreement shall be governed by,
and construed in accordance with, the Laws of the State of New York.

IN WITNESS WHEREOF, the parties hereto have caused their duly
authorized officers to execute and deliver this Assignment and Assumption
Agreement, as of the date first above written, such execution also being made
on Annex I hereto.

[NAME OF ASSIGNOR]
as Assignor

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

[NAME OF ASSIGNEE]

By:
----------------------------
Title:
CONSENTED TO AND ACKNOWLEDGED:

ING (U.S.) CAPITAL CORPORATION
as Agent

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

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EXHIBIT 10.1 CREDIT AGREEMENT UNITED STATES EXPLORATION, INC.

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