Table of Contents

UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of Earliest Event Reported): December 22, 2005
American Real Estate Partners, L.P.

(Exact name of registrant as specified in its charter)
 	 	 	 	 	
Delaware	 	1-9516	 	13-3398766	
 	 	 	 	 	
(State or other jurisdiction of
incorporation)	 	(Commission File Number)	 	(IRS Employer
Identification No.)	

 	100 South Bedford Road, Mt. Kisco, NY	 	10549	 	
 	(Address of principal executive offices)	 	(Zip Code)	 	
Registrant’s telephone number, including area code: (914) 242-7700
N/A
 
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
o Written communication pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

TABLE OF CONTENTS
 	 	 	 	 	 	 	 	 	
 	Item 1.01 — Entry into a Definitive Material Agreement.	
 	Item 2.03 — Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.	
 	Item 9.01(d) Exhibits	
SIGNATURES	
EX-10.1: CREDIT AGREEMENT	
EX-10.2: SECURITY AGREEMENT	
EX-10.3: GUARANTY	
EX-10.4: AMENDED AND RESTATED CREDIT AGREEMENT	

Table of Contents
Section 1 — Registrant’s Business and Operations
 	 	 	
                    	 	Item 1.01 — Entry into a Definitive Material Agreement.	
Section 2 — Financial Information
 	 	 	
                    	 	Item 2.03 — Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.	
On December 22, 2005, AREP Oil & Gas LLC, our wholly-owned subsidiary, entered into a credit agreement, dated as of December 20, 2005, with Citicorp USA, Inc., as Administrative Agent, Bear Stearns Corporate Lending Inc., as Syndication Agent, and other lender parties thereto. The credit agreement is secured by substantially all the assets of AREP Oil & Gas and its subsidiaries, has a five-year term and permits payments and reborrowings, subject to a borrowing base calculation based on the proved oil and gas reserves of AREP Oil & Gas and its subsidiaries.
AREP Oil & Gas will use the proceeds of the initial $300 million funding to (1) purchase the existing obligations of its indirect subsidiary, NEG Operating LLC, or NEGO, from the lenders under NEGO’s credit facility with Mizuho Corporate Bank, Ltd., as administrative agent, (2) permit its subsidiary, National Onshore LP, to repay a loan of approximately $85 million from American Real Estate Holdings Limited Partnership, or AREH, of which we are the 99% limited partner, (3) pay a dividend or distribution to AREH or a subsidiary of AREH in the amount of up to $80 million, (4) pay transaction costs and (5) finance capital expenditures and working capital needs.
Under the credit agreement, AREP Oil & Gas will be permitted to borrow up to $500 million. Borrowings under the new credit facility will be subject to a borrowing base determination based on the oil and gas properties of AREP Oil & Gas and its subsidiaries and the reserves and production related to those properties. The initial borrowing base is set at $335 million and will be subject to semi-annual redeterminations, based on engineering reports to be provided by AREP Oil & Gas by March 31 and September 30 of each year, beginning March 31, 2006. Obligations under the credit agreement are secured by liens on all of the assets of AREP Oil & Gas and its wholly-owned subsidiaries, including pledges of the equity of AREP Oil & Gas in its subsidiaries, notes and other debt securities issued by subsidiaries of AREP Oil & Gas and owned by it (including the 10 3 / 4 % notes due 2006 issued by National Energy Group, Inc.) and AREP Oil & Gas’s rights under the restated NEGO credit facility and the collateral securing obligations under that facility. The credit agreement has a term of five years and all amounts will be due and payable on December 20, 2010. Advances under the credit agreement will be in the form of either base rate loans or Eurodollar loans, each as defined.
The credit agreement includes covenants that, among other things, restrict the incurrence of indebtedness by AREP Oil & Gas and its subsidiaries, the creation of liens by them, hedging contracts, mergers and issuances of securities by them, and distributions and investments by AREP Oil & Gas and its subsidiaries. The covenant restricting indebtedness allows, among other things, for the incurrence of up to $200 million principal amount of second lien borrowings or high yield debt that satisfy certain conditions specified in the credit agreement. The restriction on distributions and investments allows, among other things, for distributions from the proceeds from the issuance or borrowing of second lien or high yield debt, distributions in connection with an initial equity offering, as defined, quarterly tax distributions to AREP Oil & Gas’s

Table of Contents
equityholders, repayment of currently outstanding advances by AREH to subsidiaries of AREP Oil & Gas aggregating approximately $40 million and other cash distributions to AREP Oil & Gas’s equityholders not to exceed $8 million in any fiscal year.
The credit agreement also requires AREP Oil & Gas to maintain: (1) a ratio of consolidated total debt to consolidated EBITDA (for the four fiscal quarter period ending on the date of the consolidated balance sheet used to determine consolidated total debt), as defined, of not more than 3.5 to 1.0; (2) consolidated tangible net worth, as defined, of not less than $240 million, plus 50% of consolidated net income for each fiscal quarter ending after December 31, 2005 for which consolidated net income is positive; and (3) a ratio of consolidated current assets to consolidated current liabilities of not less than 1.0 to 1.0.
Obligations under the credit agreement are immediately due and payable upon the occurrence of certain events of default as defined in the credit agreement, including failure to pay any principal component of any obligation when due and payable, failure to comply with any covenant or condition of any loan document or hedging contract, as defined in the credit agreement, within 30 days of receiving notice of such failure, any change of control or any event of default as defined in the restated NEGO credit facility.
The description set forth above is qualified in its entirety by the credit agreement and related documents, copies of which are filed as exhibits to this report and incorporated by reference.
Section 9 — Financial Statements and Exhibits
 	 	 	
                    	 	Item 9.01(d) Exhibits	

Exhibit 10.1 —	 	Credit Agreement, dated as of December 20, 2005, with Citicorp USA, Inc., as Administrative Agent, Bear Stearns Corporate Lending Inc., as Syndication Agent, and other lender parties thereto.	

Exhibit 10.2 —	 	Security Agreement, dated as of December 20, 2005, from the Guarantors referred to therein to Citicorp USA, Inc., as Administrative Agent.	

Exhibit 10.3 —	 	Guaranty, dated as of December 20, 2005, from the guarantors named therein and the Additional Guarantors referred to therein in favor of the Guaranteed Parties referred to therein.	

Exhibit 10.4 —	 	Amended and Restated Credit Agreement, dated as of December 20, 2005, among NEG Operating LLC, as the Borrower, AREP Oil & Gas LLC, as the Lender, AREP Oil & Gas LLC, as Administrative Agent for the Lender, and Citicorp USA, Inc., as Collateral Agent for the Lender and the Hedging Counterparties	

[remainder of page intentionally left blank; signature page follows]

Table of Contents
SIGNATURES
     Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
 	 	 	 	 	 	 	 	 	
 	 	AMERICAN REAL ESTATE PARTNERS, L.P.
(Registrant)	
 	 	 	 	 	 	 	 	 	
 	 	By:	 	American Property Investors, Inc.
General Partner	
 	 	 	 	 	 	 	 	 	
 	 	 	 	By:	 	/s/ John P. Saldarelli	
 	 	 	 	 	 	 	
 	 	 	 	 	 	John P. Saldarelli
Vice President	 	 	
Date: December 29, 2005

Table of Contents
 	 	 	
Exhibit No.	 	Description	
 	 	 	
Exhibit 10.1	 	Credit Agreement, dated as of December 20, 2005, with Citicorp USA, Inc., as Administrative Agent, Bear Stearns Corporate Lending Inc., as Syndication Agent, and other lender parties thereto.	
 	 	 	
Exhibit 10.2	 	Security Agreement, dated as of December 20, 2005, from the Guarantors referred to therein to Citicorp USA, Inc., as Administrative Agent.	
 	 	 	
Exhibit 10.3	 	Guaranty, dated as of December 20, 2005, from the guarantors named therein and the Additional Guarantors referred to therein in favor of the Guaranteed Parties referred to therein.	
 	 	 	
Exhibit 10.4	 	Amended and Restated Credit Agreement, dated as of December 20, 2005, among NEG Operating LLC, as the Borrower, AREP Oil & Gas LLC, as the Lender, AREP Oil & Gas LLC, as Administrative Agent for the Lender, and Citicorp USA, Inc., as Collateral Agent for the Lender and the Hedging Counterparties	

Exhibit 10.1

================================================================================

CREDIT AGREEMENT

----------

AREP OIL & GAS LLC,
as Borrower

CITICORP USA, INC.,
as Administrative Agent

BEAR STEARNS CORPORATE LENDING INC.,
as Syndication Agent

and CERTAIN FINANCIAL INSTITUTIONS,
as Lenders

----------

$500,000,000 Senior Secured Revolving Credit Agreement

December 20, 2005

================================================================================

TABLE OF CONTENTS

Page
----

ARTICLE I - Definitions and References...................................     1
Section 1.1.   Defined Terms..........................................     1
Section 1.2.   Exhibits and Schedules; Additional Definitions.........    27
Section 1.3.   Terms Generally; References and Titles.................    27
Section 1.4.   Calculations and Determinations........................    28
Section 1.5.   Joint Preparation; Construction of Indemnities and
Releases............................................    28

ARTICLE II - The Loans and Letters of Credit.............................    28
Section 2.1.   Commitments to Lend; Notes.............................    28
Section 2.2.   Requests for New Loans.................................    29
Section 2.3.   Continuations and Conversions of Existing Loans........    30
Section 2.4.   Use of Proceeds........................................    31
Section 2.5.   Interest Rates and Fees; Payment Dates.................    31
Section 2.6.   Optional Prepayments...................................    32
Section 2.7.   Mandatory Prepayments..................................    33
Section 2.8.   Initial Borrowing Base.................................    34
Section 2.9.   Subsequent Determinations of Borrowing Base............    34
Section 2.10.  Letters of Credit......................................    36
Section 2.11.  Requesting Letters of Credit...........................    37
Section 2.12.  Reimbursement and Participations.......................    37
Section

2.13.  Letter of Credit Fees..................................    39
Section 2.14.  No Duty to Inquire.....................................    39
Section 2.15.  LC Collateral..........................................    40
Section 2.16.  Obligations of Lenders Several.........................    41
Section 2.17.  Increase in Commitments................................    41

ARTICLE III - Payments to Lenders........................................    42
Section 3.1.   General Procedures.....................................    42
Section 3.2.   Increased Costs........................................    44
Section 3.3.   Illegality.............................................    45
Section 3.4.   Funding Losses.........................................    45
Section 3.5.   Taxes..................................................    45
Section 3.6.   Alternative Rate of Interest...........................    47
Section 3.7.   Mitigation Obligations; Replacement of Lenders.........    48
Section 3.8.   Payments by Borrower; Presumptions by Administrative
Agent...............................................    49

ARTICLE IV - Conditions Precedent to Lending.............................    49
Section 4.1.   Documents to be Delivered..............................    49
Section 4.2.   Additional Conditions Precedent........................    51

ARTICLE V - Representations and Warranties...............................    52

i

Section 5.1.   No Default.............................................    52
Section 5.2.   Organization and Good Standing.........................    52
Section 5.3.   Authorization..........................................    52
Section 5.4.   No Conflicts, Contravention or Consents; No Violation
of Rights...........................................    52
Section 5.5.   Enforceable Obligations................................    53
Section 5.6.   Initial Financial Statements...........................    53
Section 5.7.   Other Obligations and Restrictions.....................    53
Section 5.8.   Full Disclosure........................................    53
Section 5.9.   Litigation.............................................    54
Section 5.10.  Labor Disputes and Acts of God.........................    54
Section 5.11.  ERISA Plans and Liabilities............................    54
Section 5.12.  Environmental and Other Laws...........................    54
Section 5.13.  Names and Places of Business...........................    55
Section 5.14.  Subsidiaries...........................................    55
Section 5.15.  Government Regulation..................................    55
Section 5.16.  Solvency...............................................    55
Section 5.17.  Title to Properties; Licenses..........................    55
Section 5.19.  Leases and Contracts; Performance of Obligations.......    56
Section 5.20.  Sale of Production.....................................    57
Section 5.21.  Operation of Oil and Gas Properties....................    58
Section 5.22.  Ad Valorem and Severance Taxes; Litigation.............    58
Section 5.23.  Internal Control Event.................................    58
Section 5.24.  Separateness of Each Credit Party......................    58

ARTICLE VI - Affirmative Covenants of Borrower...........................    59
Section 6.1.   Payment and Performance................................    59
Section 6.2.   Books, Financial Statements and Reports................    59
Section 6.3.   Other Information and Inspections......................    61
Section 6.4.   Notice of Material Events and Change of Name or
Address.............................................    62
Section 6.5.   Maintenance of Properties..............................    62
Section 6.6.   Maintenance of Existence and Qualifications............    63
Section 6.7.   Payment of Trade Liabilities, Taxes, etc...............    63
Section 6.8.   Insurance..............................................    63
Section 6.9.   Performance on Borrower's Behalf.......................    64
Section 6.10.  Interest...............................................    64
Section 6.11.  Compliance with Agreements and Law.....................    64
Section 6.12.  Environmental Matters; Environmental Reviews...........    64
Section 6.13.  Actions after the Initial Equity Offering..............    65
Section 6.14.  Bank Accounts; Offset..................................    65
Section 6.15.  Guaranties.............................................    66
Section 6.16.  Production Proceeds....................................    66
Section 6.17.  Collateral.............................................    66
Section 6.18.  Separateness of Each Credit Party......................    67

ARTICLE VII - Negative Covenants of Borrower.............................    68
Section 7.1.   Indebtedness...........................................    68

ii

Section 7.2.   Limitation on Liens....................................    69
Section 7.3.   Hedging Contracts......................................    69
Section 7.4.   Limitation on Mergers, Issuances of Securities.........    70
Section 7.5.   Limitation on Sales of Property........................    71
Section 7.6.   Limitation on Distributions; Prepayments of Allowed
Second Lien/Unsecured Indebtedness..................    71
Section 7.7.   Limitation on Investments and New Businesses...........    73
Section 7.8.   Limitation on Credit Extensions........................    73
Section 7.9.   Transactions with Affiliates; No Prepayments or
Amendments of Restated NEGO Credit Facility.........    73
Section 7.10.  Prohibited Contracts...................................    73
Section 7.11.  Financial Covenants....................................    74

ARTICLE VIII - Events of Default and Remedies............................    74
Section 8.1.   Events of Default......................................    74
Section 8.2.   Remedies...............................................    76
Section 8.3.   Application of Proceeds after Acceleration.............    76

ARTICLE IX - Administrative Agent........................................    77
Section 9.1.   Appointment and Authority..............................    77
Section 9.2.   Reliance by Administrative Agent.......................    78
Section 9.3.   Non-Reliance on Administrative Agent and Other
Lenders.............................................    78
Section 9.4.   Rights as a Lender.....................................    78
Section 9.5.   Sharing of Set-Offs and Other Payments.................    79
Section 9.6.   Investments............................................    79
Section 9.7.   Resignation of Administrative Agent....................    79
Section 9.8.   Delegation of Duties...................................    80
Section 9.9.   No Other Duties, etc...................................    80

ARTICLE X - Miscellaneous................................................    80
Section 10.1.  Waivers and Amendments; Acknowledgments................    80
Section 10.2.  Survival of Agreements; Cumulative Nature..............    83
Section 10.3.  Notices; Effectiveness; Electronic Communication.......    83
Section 10.4.  Expenses; Indemnity; Damage Waiver.....................    85
Section 10.5.  Successors and Assigns; Joint and Several Liability....    86
Section 10.6.  Confidentiality........................................    89
Section 10.7.  Governing Law; Submission to Process...................    89
Section 10.8.  Limitation on Interest.................................    90
Section 10.9.  Termination; Limited Survival..........................    91
Section 10.10. Severability...........................................    91
Section 10.11. Counterparts; Integration; Effectiveness...............    91
Section 10.12. Waiver of Jury Trial, Punitive Damages, etc............    91
Section 10.13. USA PATRIOT Act Notice.................................    92

iii

Schedules and Exhibits:

Schedule 1 - Disclosure Schedule
Schedule 2 - Security Schedule
Schedule 3 - Insurance Schedule
Schedule 4 - Allowed Second Lien/Unsecured Indebtedness
Schedule 5 - Lenders Schedule
Schedule 6 - Required Closing Date Hedges

Exhibit A - Form of Promissory Note
Exhibit B - Form of Borrowing Notice
Exhibit C - Form of Continuation/Conversion Notice
Exhibit D - Form of Certificate Accompanying Financial Statements
Exhibit E - Assignment and Assumption Agreement
Exhibit F - Letter of Credit Application
Exhibit G - Commitment Increase Agreement

iv

CREDIT AGREEMENT

THIS CREDIT AGREEMENT is made as of December 20, 2005, by and among AREP
Oil & Gas LLC, a Delaware limited liability company ("Borrower"), Citicorp USA,
Inc., individually and as administrative agent ("Administrative Agent") and as
LC Issuer, Bear Stearns Corporate Lending Inc., as syndication agent, and the
Lenders referred to below.

WITNESSETH:

In consideration of the mutual covenants and agreements contained herein in
consideration of the loans which may hereafter be made by Lenders and the
Letters of Credit which may be made available by LC Issuer to Borrower, and for
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto do hereby 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 to such term in this Section 1.1 or in the sections
and subsections referred to below:

"Adjusted Base Rate" means, on any day, the Base Rate for such day plus the
Base Rate Margin for such day, provided that the Adjusted Base Rate charged by
any Person shall never exceed the Highest Lawful Rate.

"Adjusted Eurodollar Rate" means, for any Eurodollar Loan for any day
during any Interest Period therefor, the rate per annum equal to the sum of (a)
the Eurodollar Margin for such day plus (b) the rate per annum (rounded upwards,
if necessary, to the nearest 1/100 of 1%) determined by Administrative Agent to
be equal to the quotient obtained by dividing (i) the Eurodollar Rate for such
Eurodollar Loan for such Interest Period by (ii) 1 minus the Reserve Requirement
for such Eurodollar Loan for such Interest Period, provided that no Adjusted
Eurodollar Rate charged by any Person shall ever exceed the Highest Lawful Rate.
The Adjusted Eurodollar Rate for any Eurodollar Loan shall change whenever the
Eurodollar Margin or the Reserve Requirement changes.

"Administrative Agent" means Citicorp USA, Inc., as Administrative Agent
hereunder, and its successors in such capacity.

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

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

1

"Aggregate Commitments" means, at any time, the sum of the Commitments then
in effect. On the date hereof the Aggregate Commitments total $335,000,000 but
are subject to increase hereafter pursuant to Section 2.17.

"Agreement" means this Credit Agreement.

"Allowed Second Lien/Unsecured Indebtedness" means Indebtedness for
borrowed money under the "Bonds" or the "Second Lien Notes" described in
Schedule 4 hereto, provided that all applicable conditions and requirements
described in such Schedule have been satisfied at the time Borrower becomes
liable thereunder.

"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.

"Applicable Utilization Level" means on any date the level set forth below
that corresponds to the percentage, at the close of business on such day,
equivalent to the (i) Facility Usage divided by (ii) the Borrowing Base (the
"Utilization Percent"):

Applicable Utilization Level          Utilization Percent
----------------------------   --------------------------------

Level I                        less than 33%

Level II             greater than or equal to 33% but
less than 66%

Level III            greater than or equal to 66% but
less than 80%

Level IV               Greater than or equal to 80%

"Approved Fund" means any Fund that is administered or managed by (a) a
Lender, (b) an Affiliate of a Lender or (c) an entity or an Affiliate of an
entity that administers or manages a Lender.

"AREH" means American Real Estate Holdings Limited Partnership, a Delaware
limited partnership.

"AREP" means American Real Estate Partners, L.P., a Delaware limited
partnership.

"Assignment and Assumption" means an assignment and assumption entered into
by a Lender and an Eligible Assignee (with the consent of any party whose
consent is required by Section 10.5), and accepted by Administrative Agent, in
substantially the form of Exhibit E or any other form approved by Administrative
Agent.

2

"Available Borrowing Base" means, at any time of determination, the
remainder of (a) the lesser of the Borrowing Base or the Aggregate Commitments,
minus (b) the Facility Usage.

"Base Rate" means, for any period, a fluctuating interest rate per annum as
shall be in effect from time to time, which rate per annum shall be equal at all
times to the highest of the following:

(a) the rate of interest announced publicly by Administrative Agent in New
York, New York, from time to time, as Administrative Agent's base rate;

(b) the sum (adjusted to the nearest 0.25% or, if there is no nearest
0.25%, to the next higher 0.25%) of (i) 0.5% per annum, (ii) the rate per annum
obtained by dividing (A) the latest three week moving average of secondary
market morning offering rates in the United States for three month certificates
of deposit of major United States money market banks, such three week moving
average being determined weekly on each Monday (or, if any such day is not a
Business Day, on the next succeeding Business Day) for the three week period
ending on the previous Friday by Administrative Agent on the basis of such rates
reported by certificate of deposit dealers to and published by the Federal
Reserve Bank of New York or, if such publication shall be suspended or
terminated, on the basis of quotations for such rates received by Administrative
Agent from three New York certificate of deposit dealers of recognized standing
selected by Administrative Agent, by (B) a percentage equal to 100% minus the
average of the daily percentages specified during such three week period by the
Federal Reserve Board for determining the maximum reserve requirement (including
any emergency, supplemental or other marginal reserve requirement) for
Administrative Agent in respect of liabilities consisting of or including (among
other liabilities) three month U.S. dollar nonpersonal time deposits in the
United States and (iii) the average during such three week period of the maximum
annual assessment rates estimated by Administrative Agent for determining the
then current annual assessment payable by Administrative Agent to the Federal
Deposit Insurance Corporation (or any successor) for insuring Dollar deposits in
the United States; and

(c) 0.5% per annum plus the Federal Funds Rate.

"Base Rate Loan" means a Loan that bears interest at the Adjusted Base
Rate.

"Base Rate Margin" means, on any date, with respect to each Base Rate Loan,
the rate per annum set forth below based on the Applicable Utilization Level on
such date:

Applicable Utilization Level   Base Rate Margin
----------------------------   ----------------

Level I                    0.00%

Level II                   0.25%

Level III                  0.50%

Level IV                   0.75%

3

Changes in the applicable Base Rate Margin will occur automatically without
prior notice as changes in the Applicable Utilization Level occur.
Administrative Agent will give notice promptly to Borrower and the Lenders of
changes in the Base Rate Margin.

"Borrower" means AREP Oil & Gas LLC, a Delaware limited liability company.

"Borrowing" means a borrowing of new Loans of a single Type (and, in the
case of Eurodollar Loans, with the same Interest Period) 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 in accordance with
the provisions of Section 2.9; provided, however, that in no event shall the
Borrowing Base ever exceed the Maximum Senior Credit Amount.

"Borrowing Base Deficiency" has the meaning given to such term in Section
2.7(b).

"Borrowing Base Period" means (a) the time period from the date of this
Agreement until the first Scheduled Redetermination; and (b) thereafter each
period from and including the date of a Scheduled Redetermination until, but not
including, the date of the next Scheduled Redetermination.

"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 Administrative Agent, significant transactions in dollars are
carried out in the interbank eurocurrency market.

"Capital Lease" means a lease with respect to which the lessee is required
concurrently to recognize the acquisition of an asset and the incurrence of a
liability in accordance with GAAP.

"Capital Lease Obligation" means, with respect to any Person and a Capital
Lease, the amount of the obligation of such Person as the lessee under such
Capital Lease which should, in accordance with GAAP, appear as a liability on
the balance sheet of such Person.

"Cash Equivalents" means Investments in:

(a) marketable obligations, maturing within twelve 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 twelve 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

4

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 long term
certificates of deposit are rated at least Aa3 by Moody's or AA- by S & P;

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

(d) open market commercial paper, maturing within 270 days after
acquisition thereof, which are rated at least P-1 by Moody's or A-1 by S & P;

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

(f) auction rated reset securities rated at least A by S&P or A by Moody's
(notwithstanding their classification under GAAP).

"Change in Law" means the occurrence, after the date of this Agreement, of
any of the following: (a) the adoption or taking effect of any Law, (b) any
change in any Law, or in the administration, interpretation or application
thereof by any Governmental Authority or (c) the making or issuance of any
request, guideline or directive (whether or not having the force of Law) by any
Governmental Authority.

"Change of Control" means the occurrence of any event or series of events
pursuant to which:

(a) at any time, any Person or two or more Persons acting as a group
(within the meaning of Rule 13d-3 of the Securities and Exchange Commission
under the Securities Exchange Act of 1934, as amended) shall own, directly or
indirectly, more of the economic interests and voting power of the Equity of
Borrower than the Icahn Group, or

(b) prior to the Initial Equity Offering, the Icahn Group shall cease to
own for any reason, directly or indirectly, greater than 30% of the outstanding
voting securities of Borrower, measured by voting power (including both common
Equity and any preferred Equity or other Equity entitling the holders thereof to
vote with the holders of common Equity in elections for directors of Borrower).
As used herein, "Icahn Group" means (1) Carl C. Icahn, any spouse and any child,
stepchild, sibling or descendant of Carl C. Icahn, (2) any estate of Carl C.
Icahn or any Person under clause (1), (3) any Person who receives a beneficial
interest in any estate under clause (2) to the extent of such interest, (4) any
executor, personal administrator or trustee who holds such beneficial interest
for the benefit of, or as a fiduciary for, any person under clauses (1), (2), or
(3) to the extent of such interest and (5) any corporation, partnership, limited
liability company, trust, or similar entity, directly or indirectly owned or
Controlled by Carl C. Icahn or any other Person or Persons identified in clauses
(1), (2) or (3).

"Closing Date" means the date on which all of the conditions precedent set
forth in Section 4.1 and Section 4.2 shall have been satisfied or waived.

5

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

"Commitment" means, for each Lender, the obligation of such Lender to make
Loans to, and participate in Letters of Credit issued upon the application of,
Borrower in an aggregate amount not exceeding the amount set forth on the
Lenders Schedule or as set forth in any Assignment and Assumption relating to
any assignment that has become effective pursuant to Section 10.5, as such
amount may be modified from time to time pursuant to the terms hereof.

"Commitment Fee Rate" means, on any date, the rate per annum set forth
below based on the Applicable Utilization Level on such date:

Applicable Utilization Level   Commitment Fee Rate
----------------------------   -------------------

Level I                     0.375%

Level II                    0.375%

Level III                   0.50%

Level IV                    0.50%

Changes in the applicable Commitment Fee Rate will occur automatically without
prior notice as changes in the Applicable Utilization Level occur.
Administrative Agent will give notice promptly to Borrower and the Lenders of
changes in the Commitment Fee Rate.

"Commitment Period" means the period from and including the Closing Date
until the Maturity Date (or, if earlier, the day on which the obligations of
Lenders to make Loans hereunder or the obligations of LC Issuer to issue Letters
of Credit hereunder have been terminated or 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 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 Current Assets" means, for any period, the aggregate amount
of all assets of Borrower and its Consolidated Subsidiaries which would be
properly classified as current assets in accordance with GAAP plus any Available
Borrowing Base, but excluding any unrealized assets resulting from compliance
with the Financial Accounting Standards Board's Statement 133 concerning
mark-to-market requirements on hedging transactions.

6

"Consolidated Current Liabilities" means, for any period, the aggregate
amount of all liabilities of Borrower and its Consolidated Subsidiaries which
would be properly classified as current liabilities in accordance with GAAP, but
excluding (i) any unrealized liabilities resulting from compliance with the
Financial Accounting Standards Board's Statement 133 concerning mark-to-market
requirements on hedging transactions, and (ii) any current liabilities relating
to Intercompany Obligations.

"Consolidated EBITDA" means for any period of four consecutive Fiscal
Quarters, the Consolidated Net Income of Borrower for such period; plus each of
the following (without duplication) determined for Borrower and its Consolidated
Subsidiaries on a Consolidated basis for such period: (a) any provision for (or
less any benefit from) income or franchise taxes included in determining
Consolidated Net Income; (b) any interest expense deducted in determining
Consolidated Net Income; and (c) any depreciation, depletion or amortization
expense deducted in determining Consolidated Net Income and any other non-cash
charge, expense or loss deducted in determining Consolidated Net Income; and
minus each of the following (without duplication) determined for Borrower and
its Consolidated Subsidiaries on a Consolidated basis for such period, to the
extent included in determining such Consolidated Net Income for such period: (i)
any extraordinary income or gains; (ii) any other non-cash income or gain, and
(iii) the cumulative effect of any change in accounting principles, provided
however, that in determining Consolidated Net Income for the purposes of this
definition for any period of four Fiscal Quarters in which Borrower or any of
its Consolidated Subsidiaries acquires additional Subsidiaries (whether by
purchase, merger or otherwise) or acquires or disposes of producing Oil and Gas
Properties, (1) the Consolidated Net Income of such acquired Subsidiaries shall
be included in such calculation on a pro forma basis as if they had been owned
by Borrower and its Consolidated Subsidiaries throughout such four Fiscal
Quarter period, (2) the revenues attributable to the oil and gas production from
such acquired Oil and Gas Properties during such four Fiscal Quarter period,
less the direct operating expenses and severance and ad valorem taxes incurred
with respect to such properties during such four Fiscal Quarter period, shall be
included in such calculation on a pro forma basis as if they had been owned by
Borrower and its Consolidated Subsidiaries throughout such four Fiscal Quarter
period, and (3) the revenues attributable to the oil and gas production from
producing Oil and Gas Properties disposed of during such four Fiscal Quarter
period, less the direct operating expenses and severance and ad valorem taxes
incurred with respect to such properties during such four Fiscal Quarter period,
shall be deducted in such calculation on a pro forma basis as if they had not
been owned by Borrower and its Consolidated Subsidiaries throughout such four
Fiscal Quarter period.

"Consolidated Net Income" means, for any period, the net income (or loss)
of Borrower and its Consolidated Subsidiaries for such period determined in
accordance with GAAP, provided that the following shall be excluded in
calculating Consolidated Net Income and Consolidated EBITDA: (i) any gain or
loss from the sale of assets other than in the ordinary course of business, (ii)
any non-cash income, gains, losses or charges resulting from the requirements of
SFAS 133 or 143, and (iii) any non-cash interest expense in respect of
Intercompany Obligations owing to Debt Holdco.

"Consolidated Tangible Net Worth" means, at any time, the sum of (i) the
total assets of Borrower and its Consolidated Subsidiaries at such time
determined in accordance with GAAP, minus (ii) the total liabilities of Borrower
and its Consolidated Subsidiaries at such time

7

determined in accordance with GAAP, minus (iii) all intangible assets properly
classified as such in accordance with GAAP, including, but without limitation,
patents, patent rights, trademarks, trade names, franchises, copyrights,
licenses, permits and goodwill (whether representing the excess of cost of
tangible assets acquired over book value or otherwise), plus (iv) Indebtedness
owed by any Credit Party to Debt Holdco, plus (v) any net liabilities of any
Credit Party in respect of Hedging Contracts, and minus (vi) any net assets of
any Credit Party in respect of Hedging Contracts.

"Consolidated Total Debt" means, at any time, the aggregate of all
Indebtedness (including the current portion thereof) of Borrower and its
Consolidated Subsidiaries at such time determined in accordance with GAAP, but
excluding Indebtedness in respect of Hedging Contracts, Indebtedness in respect
of Letters of Credit not otherwise supporting Indebtedness, and Intercompany
Obligations owing to Debt Holdco.

"Continuation" shall refer to the continuation pursuant to Section 2.3
hereof of a Eurodollar Loan as a Eurodollar Loan from one Interest Period to the
next Interest Period.

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

"Control" means the possession, directly or indirectly, of the power to
direct or cause the direction of the management or policies of a Person, whether
through the ability to exercise voting power, by contract or otherwise.
"Controlling" and "Controlled" have meanings correlative thereto.

"Conversion" shall refer to a conversion pursuant to Section 2.3 or Article
III of one Type of Loan into another Type of Loan.

"Credit Party" means any of Borrower, each Subsidiary of Borrower, and each
Guarantor.

"Debt Holdco" means a newly formed subsidiary of AREH that is formed to
carry out the activities contemplated herein for "Debt Holdco" and that has no
other businesses or liabilities.

"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 (a) with respect to any Base
Rate Loan or other Obligation other than a Eurodollar Loan, the rate per annum
equal to two percent (2%) above the Adjusted Base Rate then in effect for such
Loan and (b) with respect to any Eurodollar Loan, the rate per annum equal to
two percent (2%) above the Adjusted Eurodollar Rate then in effect for such
Loan, provided in each case that no Default Rate charged by any Person shall
ever exceed the Highest Lawful Rate.

"Determination Date" has the meaning given to such term in Section 2.9.

"Disclosure Schedule" means Schedule 1 hereto.

8

"Distribution" means (a) any dividend or other distribution made by a
Credit Party on or in respect of any Equity in such Credit Party or any other
Credit Party, (b) any payment made by a Credit Party to purchase, redeem,
acquire or retire any Equity in such Credit Party or any other Credit Party, or
(c) any payment by a Credit Party on account of Indebtedness owed to Debt Holdco
or IPO Co or any other Person other than a Credit Party that is an Affiliate of
Borrower.

"Domestic Lending Office" means, with respect to any Lender, the office of
such Lender specified as its "Domestic Lending Office" on the Lenders Schedule,
or such other office as such Lender may from time to time specify to Borrower
and Administrative Agent; with respect to LC Issuer, the office, branch, or
agency through which it issues Letters of Credit; and, with respect to
Administrative Agent, the office, branch, or agency through which it administers
this Agreement.

"Eligible Assignee" means (a) a Lender, (b) an Affiliate of a Lender, (c)
an Approved Fund, and (d) any other Person (other than a natural person)
approved by (i) Administrative Agent, and LC Issuer and (ii) unless an Event of
Default has occurred and is continuing, Borrower (each such approval not to be
unreasonably withheld or delayed); provided that notwithstanding the foregoing,
"Eligible Assignee" shall not include Borrower or any of Borrower's Affiliates
or Subsidiaries.

"Engineered Oil and Gas Property" means any Oil and Gas Property listed in
the Initial Engineering Report or any subsequent Engineering Report.

"Engineering Report" means the Initial Engineering Report and each
engineering report delivered pursuant to Section 6.2. To the extent that two or
more engineering firms prepare reports as of the same date for portions of the
properties required to be reported on, such reports will collectively constitute
a single "Engineering Report" for the purposes hereof.

"Environmental Laws" means any and all Laws relating to the protection
and/or preservation of 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, but not including any licenses or permits issued
pursuant to any Environmental Laws.

"Equity" means shares of capital stock or a partnership, profits, capital,
member or other equity interest of any Person and options, warrants or any other
rights to otherwise acquire the capital stock or a partnership, profits,
capital, member or other equity interest of any Person.

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

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

9

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

"Eurodollar Lending Office" means, with respect to any Lender, the office
of such Lender specified as its "Eurodollar Lending Office" on the Lenders
Schedule (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 Administrative Agent.

"Eurodollar Loan" means a Loan that bears interest at the Adjusted
Eurodollar Rate.

"Eurodollar Margin" means, on any date, with respect to each Eurodollar
Loan, the rate per annum set forth below based on the Applicable Utilization
Level on such date:

Applicable Utilization Level   Eurodollar Margin
----------------------------   -----------------

Level I                     1.00%

Level II                    1.25%

Level III                   1.50%

Level IV                    1.75%

Changes in the applicable Eurodollar Margin will occur automatically without
prior notice as changes in the Applicable Utilization Level occur.
Administrative Agent will give notice promptly to Borrower and the Lenders of
changes in the Eurodollar Margin.

"Eurodollar Rate" means, with respect to any Interest Period for any
Eurodollar Loan within a Borrowing and with respect to the related Interest
Period therefor, the rate of interest determined by the Administrative Agent to
be the rate per annum at which deposits in Dollars are offered by the principal
office of Administrative Agent in London to major banks in the London interbank
market at 11:00 a.m. (London time) two Business Days before the first day of
such Interest Period in an amount substantially equal to the Eurodollar Loan of
Administrative Agent for a period equal to such Interest Period.

"Event of Default" has the meaning given to such term in Section 8.1.

"Excluded Taxes" means, with respect to Administrative Agent, any Lender,
LC Issuer or any other recipient of any payment to be made by or on account of
any obligation of Borrower hereunder, (a) taxes imposed on or measured by its
overall net income (however denominated), and franchise taxes imposed on it (in
lieu of net income taxes), by the jurisdiction (or any political subdivision
thereof) under the laws of which such recipient is organized or in which its
principal office is located or, in the case of any Lender, in which its
applicable lending office is located, (b) any branch profits taxes imposed by
the United States of America or any similar tax imposed by any other
jurisdiction in which Borrower is located and (c) in the case of a Foreign

10

Lender (other than an assignee pursuant to a request by the Borrower under
Section 3.7(b)), any withholding tax that would be imposed on amounts payable to
such Foreign Lender under the Laws in effect at the time such Foreign Lender
becomes a party hereto (or designates a new lending office) or is attributable
to such Foreign Lender's failure or inability (other than as a result of a
Change in Law) to comply with Section 3.5(e), except to the extent that such
Foreign Lender (or its assignor, if any) was entitled immediately prior to the
designation of a new lending office (or assignment), to receive additional
amounts from the Borrower with respect to such withholding tax pursuant to
Section 3.5(a).

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

"Federal Funds Rate" means, 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 Bank of New York on the
Business Day next succeeding such day, provided that (a) 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 (b) if such rate is
not so published for any day, the Federal Funds Rate for such day shall be the
average rate quoted to Administrative Agent on such day on such transactions as
determined by Administrative 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.

"Foreign Lender" means any Lender that is organized under the laws of a
jurisdiction other than that in which Borrower is resident for tax purposes. For
purposes of this definition, the United States of America, each State thereof
and the District of Columbia shall be deemed to constitute a single
jurisdiction.

"Fund" means any Person (other than a natural person) that is (or will be)
engaged in making, purchasing, holding or otherwise investing in commercial
loans and similar extensions of credit in the ordinary course of its business.

"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 Credit Parties and
their 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 Initial Financial Statements. If any 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 any Credit
Party or with respect to any Credit Party and its Consolidated Subsidiaries may
be prepared in accordance with such change, but all calculations and
determinations to be

11

made hereunder may be made in accordance with such change only after notice of
such change is given to the Administrative Agent, and Majority Lenders and
Administrative Agent agree to such change insofar as it affects the accounting
of such Credit Party and its Consolidated Subsidiaries.

"Governmental Authority" means the government of the United States of
America or any other nation, or of any political subdivision thereof, whether
state or local, and any agency, authority, instrumentality, regulatory body,
court, central bank or other entity exercising executive, legislative, judicial,
taxing, regulatory or administrative powers or functions of or pertaining to
government (including any supra-national bodies such as the European Union or
the European Central Bank).

"Guarantor" means (a) any Person who has guaranteed some or all of the
Obligations pursuant to a Guaranty listed on the Security Schedule, (b) any
other Person who has guaranteed some or all of the Obligations and who has been
accepted by Administrative Agent as a Guarantor, or (c) any Subsidiary of
Borrower, and, on or after the consummation of the Initial Equity Offering, IPO
Co, in each case, which now or hereafter executes and delivers a Guaranty to
Administrative Agent pursuant to Section 6.15.

"Guaranty" means the Guaranty provided on the Closing Date by National
Onshore, National Offshore, and the other subsidiaries of Borrower excluding the
NEG Subsidiaries. Guaranty also means any other guaranty agreement in
substantially the same form that is hereafter accepted by Administrative Agent
as a Guaranty hereunder.

"Hazardous Materials" means any substances regulated under any
Environmental Law, including, but not limited to, (a) any oil, natural gas,
naturally occurring radioactive materials, oil field fluids and wastes, salt
water, produced water and petroleum and (b) any "hazardous substances," "toxic
substances," "hazardous waste," "extremely hazardous waste," "extremely
hazardous substance," or words of similar import under any Environmental Laws.

"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 Party to whom
Obligations are owed, the maximum nonusurious rate of interest that such Lender
Party is permitted under applicable Law to contract for, take, charge, or
receive with respect to such Obligations. 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 Party as
appropriate to assure that the Loan Documents are not construed to obligate any
Person to pay interest to any Lender Party at a rate in excess of the Highest
Lawful Rate applicable to such Lender Party.

"Increase Effective Date" has the meaning given to such term in Section
2.17(b).

"Indebtedness" of any Person means, without duplication, Liabilities in any
of the following categories (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

12

other Persons providing goods and services for use by such Person in the
ordinary course of its business or any Liability to pay dividends or
distributions that have been declared in compliance herewith):

(a) Liabilities for borrowed money;

(b) Liabilities constituting an obligation to pay the deferred purchase
price of property or services, other than purchase price adjustments to be made
post-closing under agreements for the sale or purchase of properties in
compliance with this Agreement;

(c) Liabilities evidenced by a bond, debenture, note or similar instrument;

(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 or incurrence thereof (other than reserves for taxes and
reserves for contingent obligations);

(e) Liabilities arising under Hedging Contracts (on a net basis to the
extent netting is provided for in the applicable Hedging Contract);

(f) Liabilities constituting principal under Capital Leases;

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

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

(i) Liabilities (for example, repurchase agreements, mandatorily redeemable
preferred stock and sale/leaseback agreements) consisting of an obligation to
purchase or redeem securities or other property, if such Liabilities arise out
of or in connection with the sale or issuance 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 banker's acceptances;

(l) 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

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

13

"Indemnified Taxes" means Taxes other than Excluded Taxes.

"Initial Borrowing Base" has the meaning given to such term in Section 2.8.

"Initial Engineering Report" means the three following engineering reports
concerning oil and gas properties of Credit Parties: (a) the report prepared by
Netherland, Sewell & Associates as of July 1, 2005, (b) the report prepared by
DeGolyer & MacNaughton as of June 30, 2005, and (c) the report concerning the
Minden Field properties prepared by Borrower's internal engineering staff as of
August 31, 2005.

"Initial Equity Offering" means a series of transactions resulting in:

(a) NEGH and NEGO becoming wholly owned Subsidiaries, directly or
indirectly, of Borrower,

(b) IPO Co offering its Equity to the public, and

(c) the payment or termination, or reassignment to Borrower, or any
combination of the foregoing, of all Intercompany Obligations owing to Debt
Holdco by Borrower or any of Borrower's Subsidiaries,

provided that all of the foregoing must occur without any payment or asset
transfer of any kind by Borrower or any of its Subsidiaries other than
Distributions allowed under Section 7.6 and the following permitted payments and
asset transfers:

(i) the distribution of Borrower's shares in NEGI to Debt Holdco
(which may include immediate intermediate transfers through AREH or a
Subsidiary of AREH) within one week prior to the merger of NEGI into IPO
Co, with such shares remaining subject to the Liens of Administrative Agent
under the Loan Documents until NEGH and its Subsidiaries become wholly
owned Subsidiaries of Borrower held otherwise than through NEGI,

(ii) Borrower's or Debt Holdco's surrender of its shares in NEGI as
part of the merger of NEGI into IPO Co, provided that (A) NEGH and its
Subsidiaries then become, or previously have become, wholly owned
Subsidiaries of Borrower held otherwise than through NEGI and (B) after
giving effect to such transfer of ownership of NEGH and its Subsidiaries
pursuant to the preceding clause (A), no Oil & Gas Properties, cash or
other material assets belong to NEGI, directly or indirectly (except for
the assets owned directly by NEGI on September 30, 2005, including cash and
Cash Equivalents of approximately $4,500,000, other miscellaneous assets
thereafter acquired by NEGI for use in its management business, receivables
owing at the time of the transfer of ownership of NEGH and its Subsidiaries
under various management agreements with NEGO, National Onshore and
National Offshore, and tax assets), provided that NEGI may continue to hold
legal title to minor Oil and Gas Properties for the benefit of NEGO if
transfer of such legal title to NEGO cannot reasonably be made prior to the
time of such merger,

14

(iii) the issuance by Borrower to IPO Co of Equity in Borrower,

(iv) any Distribution by any Credit Party to AREH or any of AREH's
Affiliates of:

(A) the proceeds of the Initial Equity Offering, provided that
the repayment of Loans required under Section 2.7(c) is made
concurrently therewith, and

(B) if the issuance or borrowing of the Allowed Second
Lien/Unsecured Indebtedness occurs substantially concurrently with the
Initial Equity Offering, the proceeds of the Allowed Second
Lien/Unsecured Indebtedness, provided that the condition set forth in
Section 4.1(r) is satisfied.

In connection with any Distribution pursuant to this clause (iv), NEGI
may, in a transaction with Borrower or Debt Holdco, use the proceeds
described in the foregoing clauses (A) and (B) to pay its 10 3/4%
Senior Notes due November 1, 2006 or may retire such Senior Notes by
exchanging for such Senior Notes NEGI's right to receive some or all
of the "NEGI Priority Amount" (as defined in the limited liability
company operating agreement of NEGH), but only to the extent that the
NEGI Priority Amount so exchanged is concurrently (or substantially
concurrently) paid using the proceeds described in the foregoing
clauses (A) and (B), terminated, or reassigned to Borrower, or any
combination of the foregoing.

"Initial Financial Statements" means (a) the audited annual Consolidated
financial statements of each of NEGI, National Onshore and National Offshore as
of and for the Fiscal Year ended December 31, 2004, (b) the consolidating
compilation of such audited annual Consolidated financial statements for the
Fiscal Year ended December 31, 2004 and (c) the unaudited quarterly
consolidating financial statements of Borrower as of September 30, 2005.

"Insurance Schedule" means Schedule 3 attached hereto.

"Intercompany Obligations" means, without duplication:

(a) present or future Indebtedness owing by National Onshore or National
Offshore to Borrower or presently existing Indebtedness owing by National
Onshore or National Offshore to a Subsidiary of Borrower that is a Guarantor,
provided in each case that such Indebtedness is evidenced by a promissory note
in form acceptable to Administrative Agent that has been pledged and delivered
to Administrative Agent under a Security Document acceptable to Administrative
Agent and further provided that such presently existing Indebtedness owing to a
Subsidiary of Borrower that is a Guarantor shall be transferred by such
Subsidiary to Borrower (by merger, assignment, or otherwise) as soon as
reasonably practicable after the Closing Date,

(b) Indebtedness owing by NEGI to Borrower under NEGI's 10 3/4% Senior
Notes due November 1, 2006,

15

(c) Indebtedness described in clauses (a) and (b) of this definition that
is now or hereafter assigned (in whole or in part) by Borrower to Debt Holdco,
provided that Borrower retains all rights to receive payments of interest on
such Indebtedness and that Debt Holdco first becomes a Guarantor and
acknowledges that such Indebtedness is subject to Administrative Agent's Lien,
and further provided that all such Indebtedness is paid in full with the
proceeds of the Initial Equity Offering or the Allowed Second Lien/Unsecured
Indebtedness or assigned to Borrower by Debt Holdco promptly after the
conclusion of the Initial Equity Offering without further charge,

(d) the obligation of NEGH to pay to NEGI the "NEGI Priority Amount" (as
defined in the limited liability company operating agreement of NEGH), which
obligation may be transferred to Borrower or may be transferred as contemplated
in the final sentence of the definition of "Initial Equity Offering".

(e) Indebtedness owing by NEGO to Borrower under the Restated NEGO Credit
Facility; provided that no additional extensions of credit may be made by
Borrower to NEGO under the Restated NEGO Credit Facility during the existence of
a Default under the Restated NEGO Credit Facility, and

(f) other Indebtedness owing by any Subsidiary of Borrower to any other
Credit Party, provided that such Indebtedness is (i) evidenced by a promissory
note pledged and delivered to Administrative Agent under a Security Document
acceptable to Administrative Agent, and (ii) subordinated to the Obligations on
terms set out in a Guaranty or otherwise acceptable to Administrative Agent.

"Intercreditor Agreement" means any intercreditor and lien subordination
agreement entered into in connection with Second Lien Notes as contemplated
under the heading "Subordination Agreement" in Part II of Schedule 4.

"Interest Payment Date" means (a) with respect to each Base Rate Loan, the
last Business Day of each March, June, September and December, and (b) with
respect to each Eurodollar Loan, the last day of the Interest Period that is
applicable thereto and, if such Interest Period is six months in length, each
date specified by Administrative Agent which is approximately three months after
such Interest Period begins; provided that the last day of each calendar month
shall also be an Interest Payment Date for each such Loan so long as any Event
of Default exists under Section 8.1 (a) or (b).

"Interest Period" means, with respect to each Eurodollar Loan, the period
specified in the Borrowing Notice or Continuation/Conversion Notice applicable
to such Eurodollar Loan, beginning on and including the date specified in such
Borrowing Notice or Continuation/ Conversion Notice (which must be a Business
Day), and ending one, two, three or six months thereafter, as Borrower may elect
in such notice; provided that: (a) any Interest Period which would otherwise end
on a day which is not a Business Day shall be extended to the next succeeding
Business Day unless such Business Day falls in another calendar month, in which
case such Interest Period shall end on the next preceding Business Day; (b) any
Interest Period which begins on the last Business Day in a calendar month (or on
a day for which there is no numerically corresponding day in the calendar month
at the end of such Interest Period) shall end

16

on the last Business Day in a calendar month; and (c) notwithstanding the
foregoing, any Interest Period which would otherwise end after the Maturity Date
shall end on the last day of the Commitment Period (or, if the Maturity Date is
not a Business Day, on the next preceding Business Day).

"Internal Control Event" means a material weakness in, or fraud that
involves management or other employees who have significant role in, any Credit
Party's internal controls over financial reporting, in each case as described in
the Securities Laws.

"Internal Revenue Code" means the United States Internal Revenue Code of
1986, as amended from time to time and any successor statute or statutes,
together with all rules and regulations promulgated with respect thereto.

"Investment" means any investment, made directly or indirectly, in any
Person, whether by purchase, acquisition of Equity, Indebtedness or other
obligations or securities or by extension of credit, loan, advance, capital
contribution or otherwise and whether made in cash, by the transfer of property,
or by any other means. "Investments" does not include purchases of working
interests, royalty interests, overriding royalty interests and mineral estates.

"IPO Co" means a corporation that will issue its Equity to the public in
the Initial Equity Offering and thereafter serve as the partial owner and sole
managing member of Borrower.

"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. Any reference to a Law includes any
amendment or modification to such Law, and all regulations, rulings, and other
Laws promulgated under such Law.

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

"LC Collateral" has the meaning given to such term in Section 2.15(a).

"LC Conditions" has the meaning given to such term in Section 2.10.

"LC Issuer" means Citicorp USA, Inc. (or any Affiliate of Citicorp USA,
Inc. that also executes a signature page hereto as an "LC Issuer") in its
capacity as the issuer of Letters of Credit hereunder, and its successors in
such capacity. Administrative Agent may, with the consent of the Lender in
question, appoint any Lender hereunder as an LC Issuer in place of or in
addition to Citicorp USA, Inc.

"LC Obligations" means, at the time in question, the sum of all Matured LC
Obligations plus the maximum amounts which LC Issuer might then or thereafter be
called upon to advance under all Letters of Credit then outstanding.

"LC Sublimit" means $25,000,000.

17

"Lender Hedging Obligations" means all obligations arising from time to
time under Hedging Contracts entered into from time to time between Borrower or
NEGO and a counterparty that is a Lender or an Affiliate of a Lender; provided
that (a) if such counterparty ceases to be a Lender hereunder or an Affiliate of
a Lender hereunder, Lender Hedging Obligations shall only include such
obligations to the extent arising from transactions entered prior to the time
such counterparty ceases to be a Lender hereunder or an Affiliate of a Lender
hereunder, and (b) for any of the forgoing to be included within "Lender Hedging
Obligations" hereunder, the applicable counterparty (other than the
Administrative Agent or any Affiliate thereof) must have provided Administrative
Agent written notice of the existence thereof promptly after such transaction is
entered into and such transaction must not otherwise be prohibited under this
Agreement. The Lender Hedging Obligations also include any guaranties by any
Credit Party of any of the obligations mentioned previously in this paragraph.

"Lender Parties" means Administrative Agent, LC Issuer, and all Lenders.

"Lenders" means each signatory hereto (other than Borrower and any Credit
Party that is a party hereto), including Citicorp USA, Inc. in its capacity as a
Lender hereunder rather than as Administrative Agent or LC Issuer, and the
successors of each such party as Lender hereunder pursuant to Section 10.5.

"Lenders Schedule" means Schedule 5 hereto.

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

"Letter of Credit Fee Rate" means, on any date, with respect to each Letter
of Credit, the Eurodollar Margin then in effect.

"Leverage Ratio" means, on any day, the ratio of the Consolidated Total
Debt on such day to the Consolidated EBITDA for the four fiscal Quarter Period
ending on the date of the Consolidated balance sheet most recently provided by
Borrower under Section 6.2(a) or (b).

"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.

"Lien" means, with respect to any property or assets, any right or interest
therein of a creditor to secure Liabilities owed to it or any other arrangement
with such creditor which provides for the payment of such Liabilities out of
such property or assets or which allows such creditor 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

18

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 Documents" means this Agreement, the Notes, each Guaranty, the
Security Documents, the Letters of Credit, the LC Applications, the
Intercreditor Agreement (if any), and all other agreements, certificates,
documents, instruments and writings at any time delivered in connection herewith
or therewith (exclusive of term sheets and commitment letters).

"Loans" has the meaning given to such term in Section 2.1.

"Majority Lenders" means Lenders whose aggregate Percentage Shares exceed
fifty percent (50%).

"Material Adverse Change" means any material adverse change from the state
of affairs presented in the Initial Financial Statements or as represented or
warranted in any Loan Document, in (a) Borrower's Consolidated financial
condition, considered as a whole, (b) Borrower's Consolidated business,
operations, properties or condition, considered as a whole, or (c) the validity
or enforceability of the terms of any Loan Document or the rights and remedies
thereunder in a manner that materially reduces the amount of Collateral
effectively subject thereto or materially interferes with the practical
realization of the benefits intended to be provided by the Loan Documents,
considered as a whole. References herein to any event, development or
circumstance that would reasonably be anticipated to cause a Material Adverse
Change means that a reasonable and sophisticated financial institution would
determine that such event, development or circumstance presents a material
possibility (more than remote, but not required to be more probable than not) of
causing a Material Adverse Change.

"Matured LC Obligations" means all amounts paid by LC Issuer on drafts or
demands for payment drawn or made under or purported to be made 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).

"Maturity Date" means December 20, 2010.

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

"Maximum Senior Credit Amount" means the principal amount of $500,000,000,
as such amount may be reduced by Borrower from time to time as provided in
Section 2.5(f).

"Moody's" means Moody's Investors Service, Inc., or its successor.

"National Offshore" means National Offshore LP, a Delaware limited
partnership.

"National Onshore" means National Onshore LP, a Delaware limited
partnership.

19

"NEG Subsidiaries" means NEGI, NEGH, NEGO, NGX Energy, NGX LP, NGX GP, and
Shana National LLC, provided that each such Person shall cease to be a "NEG
Subsidiary" when and if such Person becomes wholly owned, directly or
indirectly, by Borrower.

"NEGH" means NEG Holding LLC, a Delaware limited liability company.

"NEGI" means National Energy Group, Inc., a Delaware corporation.

"NEGO" means NEG Operating LLC, a Delaware limited liability company.

"NEGO Collateral" means all property of any kind which is subject to a Lien
in favor of Administrative Agent, as collateral agent, granted to secure the
Restated NEGO Credit Facility and certain Hedging Contracts of NEGO.

"NEGO Credit Facility" means that certain Credit Agreement dated as of
December 29, 2003 among NEGO, Mizuho Corporate Bank, Ltd., as administrative
agent, and certain commercial lending institutions, as lenders.

"NGX Energy" means NGX Energy Limited Partnership, a Delaware limited
partnership.

"NGX GP" means NGX GP of Delaware LLC, a Delaware limited liability
company.

"NGX LP" means NGX LP of Delaware LLC, a Delaware limited liability
company.

"Note" has the meaning given to such term in Section 2.1.

"NYMEX" means the New York Mercantile Exchange (or its successor).

"NYMEX Pricing" means, as of any date of determination with respect to any
month:

(a) for crude oil, the closing settlement price for the Light, Sweet
Crude Oil futures contract for the first nearby month, and

(b) for natural gas, the closing settlement price for the Henry Hub
Natural Gas futures contract for the first nearby month,

in each case as published by NYMEX on its website currently located at
www.nymex.com, or any successor thereto (as such price may be corrected or
revised from time to time by NYMEX in accordance with its rules and
regulations).

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

"Oil and Gas Properties" means all oil, gas and/or mineral leases, oil, gas
or mineral properties, mineral servitudes and/or mineral rights of any kind
(including, without limitation, mineral fee interests, lease interests, farmout
interests, overriding royalty and royalty interests, net profits interests, oil
payment interests, production payment interests and other types of mineral
interests), and all oil and gas gathering, treating, storage, processing and
handling assets.

20

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

"Participant" has the meaning assigned to such term in clause (d) of
Section 10.5.

"Percentage Share" means, with respect to any Lender (a) when used in
Section 2.1 or Section 2.5, in any Borrowing Notice or when no Loans are
outstanding hereunder, the percentage obtained by dividing such Lender's
Commitment by the Aggregate Commitments, 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 2.12(c) plus the portion of the
Maximum Drawing Amount which such Lender might be obligated to fund under
Section 2.12(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:

(a) Cash Equivalents;

(b) existing Investments described in the Disclosure Schedule;

(c) normal and prudent extensions of credit by Credit Parties to their
customers buying goods and services in the ordinary course of business or to
another Credit Party 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;

(d) extensions of Intercompany Obligations, provided that the only
extensions of Intercompany Obligations from Borrower or any Guarantor to any NEG
Subsidiary that constitute Permitted Investments are the loans from Borrower to
NEGO made pursuant to the Restated NEGO Credit Facility and the Intercompany
Obligations outstanding on the date hereof that are described in clauses (a)
through (d) of the definition of "Intercompany Obligations";

(e) investments to acquire any Person that, at the time of such
acquisition, becomes a Subsidiary of Borrower and a Guarantor, grants the
Collateral that is required hereunder, and otherwise is in compliance with all
terms of the Loan Documents applicable to Guarantors and Subsidiaries of
Borrower;

(f) investments under any Hedging Contract permitted hereunder; and

(g) Investments not described in subsections (a) through (f) above which do
not (taking into account all Investments of all Credit Parties) exceed an
aggregate amount of $5,000,000 during any Fiscal Year.

"Permitted Liens" means:

21

(a) statutory Liens for taxes, assessments or other governmental charges or
levies which are not yet delinquent or which are being contested in good faith
by appropriate action and for which adequate reserves have been maintained in
accordance with GAAP;

(b) landlords', carriers', warehousemen's, repairmen's, mechanics',
materialmen's, or other like Liens, as well as Liens under operating agreements,
unit agreements, mineral leases, oil and gas leases, processing agreements,
transportation agreements, gas balancing agreements, and other agreements for
the handling of oil and gas production, provided that none of the foregoing
Liens secure Indebtedness, and in each case only to the extent arising in the
ordinary course of business and only to the extent securing obligations which
are not delinquent or which are being contested in good faith by appropriate
proceedings and for which adequate reserves have been maintained in accordance
with GAAP;

(c) easements, rights of way, restrictions, encroachments and other minor
defects and irregularities in title to any property, so long as such defects and
irregularities neither secure Indebtedness nor materially impair the value of
such property or the use of such property for the purposes for which such
property is held;

(d) deposits of cash or securities to secure the performance of bids, trade
contracts, leases, statutory obligations and other obligations of a like nature
(excluding appeal bonds) incurred in the ordinary course of business;

(e) Liens under the Security Documents, including liens securing the Lender
Hedging Obligations

(f) Liens securing the Restated NEGO Credit Facility, provided such Liens
have been collaterally assigned by Borrower to Administrative Agent, and that
the "Loan Documents" (as defined in the Restated NEGO Credit Facility)
evidencing such Liens have been amended or restated to also secure obligations
arising from time to time under Hedging Contracts entered into between NEGO and
a counterparty that is a Lender or an Affiliate of a Lender;

(g) purchase money Liens on specific items of equipment and related assets,
as described in Section 7.1(g), securing purchase money Indebtedness
incompliance with Section 7.1(g);

(h) Liens incurred in the ordinary course of business in connection with
workers' compensation, unemployment insurance and other types of social
security;

(i) Liens solely on any cash earnest money deposits made by a Credit Party
in connection with any letter of intent or purchase agreement permitted
hereunder;

(j) purported Liens evidenced by the filing of precautionary UCC financing
statements relating solely to operating leases of personal property entered into
in the ordinary course of business;

(k) Liens in favor of customs and revenue authorities arising as a matter
of law to secure payment of customs duties in connection with the importation of
goods;

22

(l) Liens existing on the date hereof that secure Intercompany Obligations
that have been pledged to Administrative Agent, provided that such Liens have
also been collaterally assigned to Administrative Agent;

(m) Liens securing "Second Lien Notes" as defined in Schedule 4;

(n) Liens described on Section 7.2 of the Disclosure Schedule; and

(o) Liens securing Indebtedness permitted pursuant to Section 7.1(i),
provided that such Liens burden only cash collateral securing letters of credit
with respect to which NEGO, National Onshore or National Offshore is liable.

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

"Projected Oil and Gas Production" means the projected production of oil or
gas (measured by volume unit or BTU equivalent, not sales price) from properties
and interests owned by the Credit Parties that are located in or offshore of the
United States and that have attributable to them proved oil or gas reserves, as
such production is projected in the Engineering Report most recently delivered,
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 a separate or supplemental
report meeting the requirements of Section 6.2(f) or (g) and otherwise are
satisfactory to Administrative Agent.

"PV10" with respect to oil and gas properties, means, as of any date of
determination, the sum of (a) the present value of future revenues, net of taxes
(other than income taxes), operating expenses and capital expenditures, expected
to be obtained from the applicable proved oil and gas reserves of Borrower and
its Subsidiaries, all as evaluated in the most recently delivered Engineering
Report but (i) discounted at a rate of 10% per annum, (ii) utilizing PV10
Pricing, and (iii) utilizing an annual escalation factor of 3% for operating
expenses for the four complete calendar years following the current calendar
year (or, in the case of a mid-year report, following the current partial
calendar year) that is reported on in such Engineering Report, plus (b) the
aggregate mark-to-market value to Borrower and its Subsidiaries of their Hedging
Contracts, if positive (or less such mark-to-market value, if negative), whether
or not such mark-to-market value is required to be reported under GAAP; provided
that, whenever NEGI and its Subsidiaries are not wholly-owned Subsidiaries of
Borrower, the present value of the future net revenues from the oil and gas
properties of NEGI and its Subsidiaries shall, for the purposes of determining
PV10 of Borrower and its Subsidiaries, be deemed reduced by X in the following
formula, to the extent X is a positive number:

X = 25% of [A - (B + C + D)]

where:

A = PV10 of the oil and gas properties owned by NEGI and its Subsidiaries,
as determined without regard to this proviso,

23

B = the amount of the Indebtedness (including accrued interest) owing on
the effective date of such Engineering Report by NEGI to Borrower or to
Debt Holdco,

C = the amount of the preferential future distributions (including interest
or its equivalent), as accrued on the effective date of such
Engineering Report, to which Borrower is entitled in its capacity as an
owner of NEGH as a result of the dedication of other distributions to
be used to pay Indebtedness described in B above, and

D = the amount of the Indebtedness (including accrued interest) owing on
the effective date of such Engineering Report by NEGO to Borrower under
the Restated NEGO Credit Facility.

"PV10 Pricing" means:

(a) for anticipated sales of oil and gas that are fixed in a firm fixed
price sales contract with an investment grade counterparty (or another
counterparty approved by Administrative Agent), the fixed price or prices
provided for in such sales contract during the term thereof; and

(b) for anticipated sales of oil and gas, if such sales are not under a
sales contract that is described in paragraph (a) above, for the date of
calculation (or, if such date is not a Business Day, for the first Business Day
thereafter), adjusted in each case for historical location and quality
differentials during the twelve months preceding such date of determination:

(i) for the remainder of the current calendar year (whether a whole or
partial year), the average NYMEX Pricing for the remaining contracts in the
current calendar year,

(ii) for each of the succeeding three complete calendar years, the
average NYMEX Pricing for the twelve months in each such calendar year, and

(iii) for the succeeding fourth complete calendar year, and for each
calendar year thereafter, the average NYMEX Pricing for the twelve months
in such fourth calendar year.

"Rating Agency" means either S & P or Moody's.

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

"Related Parties" means, with respect to any Person, such Person's
Affiliates and the partners, directors, officers, employees, agents and advisors
of such Person and of such Person's Affiliates.

"Required Closing Date Hedges" means Hedging Contracts as described on
Schedule 6.

24

"Reserve Requirement" means, at any time, the maximum rate at which
reserves (including any marginal, special, supplemental, or emergency reserves)
are required to be maintained under regulations issued from time to time by the
Board of Governors of the Federal Reserve System (or any successor) by member
banks of the Federal Reserve System against "Eurocurrency liabilities" (as such
term is used in Regulation D). Without limiting the effect of the foregoing, the
Reserve Requirement shall reflect any other reserves required to be maintained
by such member banks with respect to (a) any category of liabilities which
includes deposits by reference to which the Adjusted Eurodollar Rate is to be
determined, or (b) any category of extensions of credit or other assets which
include Eurodollar Loans.

"Restated NEGO Credit Facility" means the NEGO Credit Facility as amended
by that certain Amended and Restated Credit Agreement of even date herewith by
and among NEGO, as borrower, the Borrower, as administrative agent and lender,
and Citicorp USA, Inc., as collateral agent, to provide for up to $180,000,000
of loans thereunder, and as from time to time further amended with the consent
of the Majority Lenders.

"S & P" means Standard & Poor's Ratings Services (a division of The McGraw
Hill Companies), or its successor.

"Sarbanes-Oxley" means the Sarbanes-Oxley Act of 2002.

"Scheduled Determination" has the meaning given to such term in Section
2.9(a).

"Secured Obligations" means all Obligations and all Lender Hedging
Obligations.

"Securities Laws" means the Securities Act of 1933, the Securities Exchange
Act of 1934, Sarbanes-Oxley, and, in each case, the rules and regulations of the
U.S. Securities and Exchange Commission promulgated thereunder, and the
applicable accounting and auditing principles, rules, standards and practices
promulgated, approved or incorporated by the U.S. Securities and Exchange
Commission or the Public Company Accounting Oversight Board, as each of the
foregoing may be amended and in effect on any applicable date under this
Agreement.

"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 Credit Party to Administrative 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 Lender Hedging Obligations or the
performance of any Credit Party's other duties and obligations under the Loan
Documents.

"Security Schedule" means Schedule 2 hereto.

"Special Determinations" has the meaning given to such term in Section
2.9(b).

"Subsidiary" means, with respect to any Person, any corporation,
association, partnership, limited liability company, joint venture, or other
business or corporate entity, enterprise or organization which is directly or
indirectly (through one or more intermediaries)

25

controlled by or majority owned by such Person, provided that associations,
joint ventures or other relationships (a) which are established pursuant to a
standard form operating agreement or similar agreement or which are partnerships
for purposes of federal income taxation only, (b) which are not corporations or
partnerships (or subject to the Uniform Partnership Act) under applicable state
Law, and (c) 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, shall not be
deemed to be "Subsidiaries" of such Person.

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

"Taxes" means all present or future taxes, levies, imposts, duties,
deductions, withholdings, assessments, fees or other charges imposed by any
Governmental Authority, including any interest, additions to tax or penalties
applicable thereto.

"Termination Event" means:

(a) the occurrence with respect to any ERISA Plan of a reportable
event described in Section 4043(c) 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) or 4043(b)(4) of ERISA, which could reasonably be expected to
result in a Termination Event described in subsections (b) through (g)
below, 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(c) 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 could reasonably be expected to
result in the termination of, or the appointment of a trustee to
administer, any ERISA Plan under Section 4042 of ERISA, or

(f) any ERISA Affiliate incurs withdrawal liability in excess of
$10,000,000 in respect of any "multiemployer plan" as defined in Section
4001 of ERISA, or

(g) any "accumulated funding deficiency" (as defined in Section 412(a)
of the Internal Revenue Code) in excess of $10,000,000 exists with respect
to any ERISA Plan, whether or not waived by the Secretary of the Treasury
or his delegate,

provided that (i) in each of the cases listed in subsections (a), (c), (d) and
(e) above, 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

26

$10,000,000, and (ii) in the case of a Termination Event described in subsection
(b) above, the withdrawing employer's proportionate share of such excess
liability exceeds $10,000,000), and provided further that any event described in
subsections (a), (b), (c), (d), (e), (f) or (g) above that occurs with respect
to an ERISA Plan that is not maintained for the benefit of the employees of
Borrower, any of Borrower's Subsidiaries, or IPO Co shall not constitute a
"Termination Event" for the purposes hereof so long as both of the following
conditions are met: (1) no claim is made on any Credit Party to make any payment
or contribution on account of such event that is not paid or otherwise resolved
within 60 days thereafter without any payment by any Credit Party and (2) within
seven days after such claim is made, and thereafter while such claim remains
unpaid or unresolved, the Credit Parties are fully and effectively indemnified
for any losses relating to such event under that certain Undertaking dated as of
November 20, 1998, made by Starfire Holding Corporation, a Delaware corporation,
for the benefit of AREP and its subsidiaries, or under another indemnity
agreement made by an Affiliate of the Credit Parties that has the financial
resources to honor its indemnity obligations.

"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 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. Terms Generally; References and Titles. The definitions of
terms herein shall apply equally to the singular and plural forms of the terms
defined. Whenever the context may require, any pronoun shall include the
corresponding masculine, feminine and neuter forms. The words "include,"
"includes" and "including" shall be deemed to be followed by the phrase "without
limitation." Unless the context requires otherwise (a) any definition of or
reference to any agreement, instrument or other document herein shall be
construed as referring to such agreement, instrument or other document as from
time to time amended, supplemented or otherwise modified (subject to any
restrictions on such amendments, supplements or modifications set forth herein),
(b) any reference herein to any Person shall be construed to include such
Person's successors and assigns, (c) the words "herein," "hereof" and
"hereunder," and words of similar import, shall be construed to refer to this
Agreement in its entirety and not to any particular provision hereof, (d) all
references herein to Articles, Sections, Exhibits and Schedules shall be
construed to refer to Articles and Sections of, and Exhibits and Schedules to,
this Agreement, (e) any reference to any law or regulation herein shall, unless
otherwise specified, refer to such law or regulation as amended, modified or
supplemented from time to time and (f) the words "asset" and "property" shall be
construed to have the same meaning and effect and to refer to any and all
tangible and intangible assets and properties, including cash, securities,
accounts and contract rights. References to any document, instrument, or
agreement (a) shall include all exhibits, schedules, and other attachments
thereto, and (b) shall include all documents, instruments, or agreements issued
or executed in replacement thereof. 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 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

27

exclusive. Accounting terms have the meanings assigned to them by GAAP, as
applied by the accounting entity to which they refer. References to "days" shall
mean calendar days, unless the term "Business Day" is used. Unless otherwise
specified, references herein to any particular Person also refer to its
successors and permitted assigns.

Section 1.4. Calculations and Determinations. All calculations under the
Loan Documents of interest chargeable with respect to Adjusted Base Rate Loans
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. All other
calculations of interest or fees 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 360 days. Each determination by a Lender Party of amounts to
be paid under Article III or any other matters which are to be determined
hereunder by a Lender Party (such as any Eurodollar Rate, Adjusted Eurodollar
Rate, Business Day, Interest Period, or Reserve Requirement) 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 Lender Party hereunder shall be prepared
and all financial computations and determinations pursuant hereto shall be made
in accordance with GAAP.

Section 1.5. Joint Preparation; Construction of Indemnities and Releases.
This Agreement and the other Loan Documents have been reviewed and negotiated by
sophisticated parties with access to legal counsel and no rule of construction
shall apply hereto or thereto which would require or allow any Loan Document to
be construed against any party because of its role in drafting such Loan
Document.

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 3.7, Loans
of the same Type shall be made by Lenders 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 lesser of the Aggregate
Commitments then in effect or the Borrowing Base then in effect. The aggregate
amount of all Loans (other than Loans made pursuant to Section 2.12(b)) in any
Borrowing must be equal to $5,000,000 or any higher integral multiple of
$1,000,000 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. 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. Each Note shall be
due and payable as provided herein, and

28

shall be due and payable in full on the Maturity Date. 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 Administrative
Agent written or electronic 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 Administrative Agent not later than 10:00 a.m., 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, Administrative 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 Administrative Agent at
Administrative 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, Administrative Agent shall promptly make such
Loans available to Borrower. Unless Administrative Agent shall have received
notice from a Lender prior to the proposed date of any Borrowing that such
Lender will not make available to Administrative Agent such Lender's share of
such Borrowing, Administrative Agent may assume that such Lender has made such
share available on such date in accordance with this Section 2.2 and may, in
reliance upon such assumption, make available to Borrower a corresponding
amount. In such event, if a Lender has not in fact made its share of the
applicable Borrowing available to Administrative Agent, then the applicable
Lender and the Borrower severally agree to pay to Administrative Agent forthwith
on demand such corresponding amount with interest thereon, for each day from and
including the date such amount is made available to the Borrower to but
excluding the date of payment to the Administrative Agent, at (i) in the case of
a payment to be made by such Lender, the greater of the Federal Funds Rate and a
rate determined by Administrative Agent in accordance with banking industry
rules on interbank compensation and (ii) in the case of a payment to be made by
Borrower, the interest rate applicable to Base Rate Loans. If Borrower and such
Lender shall pay such amount or such interest to Administrative Agent for the
same or an overlapping period, Administrative Agent shall promptly remit to
Borrower the amount so paid by Borrower for such period. If such Lender pays its
share of the applicable Borrowing to Administrative Agent, then the amount so
paid shall constitute such Lender's Loan included in such Borrowing. Any

29

payment by Borrower shall be without prejudice to any claim Borrower may have
against a Lender that shall have failed to make such payment to Administrative
Agent.

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, and 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, provided that Borrower
may have no more than five Borrowings of Eurodollar Loans outstanding at any
time. To make any such election, Borrower must give to Administrative 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 Administrative Agent not later than 10:00 a.m., New
York, New York time, on (i) the day on which any such Continuation or Conversion
to Base Rate Loans is to occur, or (ii) 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
Continuation/Conversion Notice, Administrative Agent shall give each Lender
prompt notice of the terms thereof. Each Continuation/Conversion 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 Continuation/Conversion Notice 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

30

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 use all Loans:

(a) to purchase Indebtedness of NEGO from the lenders under the NEGO Credit
Facility on the Closing Date,

(b) to make loans of approximately $85,000,000 to National Onshore that
will be used by National Onshore on the Closing Date to repay existing
Indebtedness owed by National Onshore to AREH that was incurred to purchase the
Minden Field properties,

(c) to finance capital expenditures from time to time,

(d) to pay a dividend or distribution in the amount of $80,000,000 to AREH
or a Subsidiary of AREH on or shortly after the Closing Date (which dividend or
distribution may be made in part using cash on hand, so long as the condition in
Section 4.1(r) remains satisfied immediately after such dividend or distribution
is made),

(e) to pay costs of this transaction, and

(f) to provide working capital from time to time for operations and for
other general business purposes of Borrower and its Subsidiaries.

Borrower shall use all Letters of Credit for the general business purposes of
Borrower and its Subsidiaries. In no event shall the funds from any Loan or any
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" (as such term is defined in Regulation U 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. 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.

Section 2.5. Interest Rates and Fees; Payment Dates.

(a) Interest Rates. Subject to subsection (b) below, (i) each Base Rate
Loan shall bear interest on each day outstanding at the Adjusted Base Rate in
effect on such day, and (ii) each Eurodollar Loan shall bear interest on each
day during the related Interest Period at the related Adjusted Eurodollar Rate
in effect on such day.

(b) Default Rate. If an Event of Default shall have occurred and be
continuing under Section 8.1(a), (b), (h)(i), (h)(ii), or (h)(iii), all
outstanding Loans shall bear interest at the applicable Default Rate. In
addition, if an Event of Default shall have occurred and be continuing (other
than under Section 8.1(a), (b), (h)(i), (h)(ii), or (h)(iii)), Majority Lenders
may, by notice to Borrower, elect to have the outstanding Loans bear interest at
the applicable Default Rate, whereupon such Loans shall bear interest at the
applicable Default Rate until the earlier of

31

(i) the first date thereafter upon which there shall be no Event of Default
continuing and (ii) the date upon which Majority Lenders shall have rescinded
such notice.

(c) Commitment Fees. In consideration of each Lender's commitment to make
Loans, Borrower will pay to Administrative Agent for the account of each Lender
(i) the amount agreed to by Borrower and Administrative Agent in connection with
the syndication of this Agreement and (ii) a quarterly commitment fee determined
on a daily basis by applying the Commitment Fee Rate to such Lender's Percentage
Share of the Available Borrowing Base determined at the end of each day during
the Commitment Period. This quarterly 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.

(d) Administrative Agent's Fees. In addition to all other amounts due to
Administrative Agent under the Loan Documents, Borrower will pay fees to
Administrative Agent as described in a letter agreement dated as of November 7,
2005 between Administrative Agent and Borrower.

(e) Payment Dates. On each Interest Payment Date relating to Base Rate
Loans, Borrower shall pay to the Lenders all unpaid interest which has accrued
on the Base Rate Loans to but not including such Interest Payment Date. On each
Interest Payment Date relating to a Eurodollar Loan, Borrower shall pay to
Lenders all unpaid interest which has accrued on such Eurodollar Loan to but not
including such Interest Payment Date.

(f) Reductions in Maximum Senior Credit Amount. Until the termination of
the Commitment Period, Borrower may, upon three (3) Business Days prior written
notice to Administrative Agent, reduce the Maximum Senior Credit Amount from the
then designated amount to any lesser amount, provided that the amount of any
such reduction must be equal to $5,000,000 or any higher integral multiple of
$1,000,000. Any such reduction by Borrower of a Maximum Senior Credit Amount
shall be effective as of such third Business Day (or any later date as designed
by Borrower in such written notice) and shall continue in effect until the next
date as of which the Maximum Senior Credit Amount is so reduced.

Section 2.6. Optional Prepayments. Borrower may, (a) upon one Business
Days' notice to Administrative Agent with respect to any Base Rate Loan and (b)
upon three Business Days' notice to each Lender with respect to any Eurodollar
Loan, from time to time and without premium or penalty prepay the Notes, in
whole or in part, provided (i) that the aggregate amounts of all partial
prepayments of principal on the Notes equals $5,000,000 or any higher integral
multiple of $1,000,000, (ii) that Borrower does not make any prepayments which
would reduce the aggregate unpaid principal balance of all Loans to less than
$10,000,000 without first either (1) terminating this Agreement or (2) providing
assurance satisfactory to Administrative Agent in its discretion that Lenders'
legal rights under the Loan Documents are in no way adversely affected by such
reduction, and (iii) that if Borrower prepays any Eurodollar Loan on any day
other than the last day of the Interest Period applicable thereto, it shall pay
to Lenders any amounts due under Section 3.4. 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.

32

Section 2.7. Mandatory Prepayments

(a) If at any time the Facility Usage exceeds the Maximum Senior Credit
Amount (whether due to a reduction in the Maximum Senior Credit Amount in
accordance with this Agreement, or otherwise), Borrower shall immediately upon
demand prepay the principal of the Loans (and after all Loans are repaid in
full, provide LC Collateral in accordance with Section 2.15(a)) in an amount at
least equal to such excess.

(b) If at any time the Facility Usage is less than the Maximum Senior
Credit Amount but in excess of the Borrowing Base (such excess being herein
called a "Borrowing Base Deficiency"), Borrower shall, within five Business Days
after Administrative Agent gives notice of such fact to Borrower, either:

(i) give notice to Administrative Agent electing to prepay the
principal of the Loans (and after all Loans are repaid in full, provide LC
Collateral in accordance with Section 2.15(a)) 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 2.15
(a)), and thereupon 50% of such prepayment must be made on or before the
ninetieth day after such notice by Administrative Agent to Borrower of such
Borrowing Base Deficiency and the remainder of such prepayment must be made
in full on or before the one-hundred and eightieth day after such notice by
Administrative Agent to Borrower of such Borrowing Base Deficiency; or

(ii) give notice to Administrative Agent that Borrower desires to
provide Administrative Agent with (A) a supplemental Engineering Report
covering new Oil and Gas Properties not previously the subject of the
immediately preceding Engineering Report and (B) deeds of trust, mortgages,
chattel mortgages, security agreements, financing statements and other
Security Documents (including amendments to Security Documents already
covering NEGO Collateral or other Collateral) in form and substance
satisfactory to Administrative Agent, granting, confirming, and perfecting
Liens, subject only to Permitted Liens, in such new Oil and Gas Properties
to Administrative Agent, to the extent needed to allow Super Majority
Lenders to increase the Borrowing Base (as they determine in accordance
with Section 2.9(c)) to an amount which eliminates such Borrowing Base
Deficiency, and then provide such Security Documents within thirty days
after Administrative Agent specifies such Collateral to Borrower. If, prior
to any such specification by Administrative Agent, Super Majority Lenders
determine that the giving of such Security Documents will not serve to
eliminate such Borrowing Base Deficiency, then, within five Business Days
after receiving notice of such determination from Administrative Agent,
Borrower will elect to make, and thereafter make, the prepayments specified
in subsection (i) of this subsection (b).

(c) If the proceeds, net of transaction costs, from (i) the Initial Equity
Offering and (ii) the borrowing or issuance of Allowed Second Lien/Unsecured
Indebtedness (if it is incurred substantially concurrently with the Initial
Equity Offering) exceed $210,000,000, then at such time Borrower will prepay the
Loans in an amount equal to such excess proceeds, provided that Borrower will
not be obligated to prepay more than $125,000,000 under this subsection (c).
Such prepayments will not reduce the Commitments or the Borrowing Base.

33

(d) Immediately upon the consummation by Borrower of the incurrence of any
Indebtedness other than Indebtedness permitted by Section 7.1, Borrower shall
make a mandatory prepayment of the principal of the Loans in an amount equal to
one hundred percent (100%) of the proceeds (net of any usual and customary
transaction costs) received from such incurrence of Indebtedness, whereupon the
Borrowing Base shall be immediately reduced by the same amount until the next
determination of the Borrowing Base.

(e) 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 2.8. Initial Borrowing Base. Until the first Determination Date the
Borrowing Base shall be $335,000,000.

Section 2.9. Subsequent Determinations of Borrowing Base. Upon each
designation of a new Borrowing Base on a Scheduled Determination or a Special
Determination, Administrative Agent shall notify Borrower of the new Borrowing
Base which designation shall take effect immediately on the date such notice is
sent (each such date, a "Determination Date") and shall remain in effect until,
but not including, the next Determination Date (subject to Section 2.7(c)). The
Borrowing Base shall be determined in accordance with the following methodology:

(a) By March 31 and September 30 of each year beginning March 31, 2006,
Borrower shall furnish to Administrative Agent (with sufficient copies for each
Lender of any information provided on paper, computer disks, or other tangible
media) the Engineering Report then required under Section 6.2(f) or (g) together
with all information, reports and data that Administrative Agent requests
concerning the businesses and properties of Borrower and its Subsidiaries
(including their Oil and Gas Properties and the reserves and production relating
thereto) and, until such time as the Allowed Second Lien/Unsecured Indebtedness
has been issued, Borrower's written request to Lenders to either (i) determine
the Borrowing Base assuming that such Indebtedness will be issued during the
following six months or (ii) determine the Borrowing Base assuming that such
Indebtedness will not be issued during the following six months. (Any failure of
Borrower to make such a request shall be deemed a request to assume that such
Indebtedness will be issued.) Within 30 days after receiving such Engineering
Report, information, reports and data, or as promptly thereafter as practicable,
Administrative Agent shall designate a Borrowing Base following the procedures
in subsection (c) below. Each such determination of the Borrowing Base is herein
called a "Scheduled Determination". If Borrower does not furnish all such
information, reports and data by the date specified in the first sentence of
this Section, Administrative Agent may nonetheless designate the Borrowing Base
at any amount that Super Majority Lenders determine (or, in the case of an
increase, that all Lenders determine) and the Borrowing Base may similarly be
designated from time to time thereafter until each Lender receives all such
information, reports and data, whereupon the Lenders shall designate a new
Borrowing Base as described above. In doing the foregoing, each Lender shall
consider the loan collateral value which it in its judgment assigns to the
various Oil and Gas Properties included in the Collateral at the time in
question (using its then customary pricing and discount models and assumptions
(rather than PV10 Pricing), adjusted as deemed appropriate for

34

Borrower's and its Subsidiaries' properties and production) and such other
credit factors (including without limitation Borrower's requested assumption
concerning Allowed Second Lien/Unsecured Indebtedness and the assets,
liabilities, cash flow, hedged and unhedged exposure to prices and interest
rates, drilling risks, business, properties, and prospects of Borrower and its
Subsidiaries) as such Lender deems relevant. It is expressly understood and
agreed that Lenders and Administrative Agent have no obligation to agree upon or
designate the Borrowing Base at any particular amount, whether in relation to
the Aggregate Commitments or otherwise, and Lenders and Administrative Agent may
designate a Borrowing Base that is less than, equal to, or more than the
Aggregate Commitments. The commitment fees under Section 2.5 shall be calculated
based on the lesser of the Borrowing Base and the Aggregate Commitments, and
such lesser amount shall, to the extent permitted by Law and regulatory
authorities, be used for the purposes of capital adequacy determination and
determining reimbursements under Section 3.2.

(b) In addition to Scheduled Determinations, Borrower may request the
Lenders to make an additional determination of the Borrowing Base once during
each twelve month interval between Scheduled Determinations based on January 1
Engineering Reports, and Administrative Agent also may (and at the request of
Super Majority Lenders must) request the Lenders to make an additional
determination of the Borrowing Base once during each twelve month interval
between Scheduled Determinations based on January 1 Engineering Reports.
Administrative Agent shall give notice to Borrower of any such request made by
Administrative Agent to the Lenders. Borrower shall submit any such request made
by Borrower to Administrative Agent and each Lender and, at the time of such
request, Borrower shall (i) deliver to Administrative Agent and each Lender an
updated Engineering Report prepared either by Borrower or by independent
petroleum engineers, and (ii) notify Administrative Agent and each Lender of the
Borrowing Base requested by Borrower. Any determination of the Borrowing Base
made pursuant to a request under this subsection (b) is herein called a "Special
Determination". Any Special Determination shall be made by Lenders in accordance
with the procedures set forth in Section 2.9(c), provided, however, that
Borrower shall not be required to deliver an updated Engineering Report to
Administrative Agent and Lenders in connection with any Special Determination
requested by Administrative Agent.

(c) Administrative Agent shall (within 30 days after receiving the
information required for a Scheduled Determination or a Special Determination),
having consulted with Borrower, propose to the Lenders a specific Borrowing Base
amount for the Lenders to approve or disapprove. Within fifteen days thereafter
each Lender shall respond to Administrative Agent in writing, either approving
such proposed amount or setting out a reasonable alternative amount (based on
the criteria described in clause (a) above), and any Lender's failure to respond
to such proposal within such time will be deemed approval. After receiving such
responses or deemed responses from all Lenders, Administrative Agent will
designate the new Borrowing Base at the highest amount approved (i) by all
Lenders, in the case of an increase to the then current Borrowing Base, or (ii)
at the highest amount approved by Super Majority Lenders, in the case of a
reduction to or continuation of the then current Borrowing Base.

(d) In addition to the foregoing, Administrative Agent and Lenders shall
also have the right to redetermine the Borrowing Base (which shall not count as
a Special Determination but which shall otherwise be done in accordance with the
procedures set forth in Section 2.9(c)) if

35

Borrower or any Subsidiaries sell or otherwise transfer (excluding only
transfers to Borrower or a Subsidiary of Borrower that is a Guarantor) Oil and
Gas Properties that, on a cumulative basis since the then most recent
Determination Date, represent more than ten percent of the value of all of their
proved reserves, as determined in the most recently delivered Engineering
Report. Borrower will immediately pay any Borrowing Base Deficiency that results
from this redetermination.

Section 2.10. Letters of Credit. Subject to the terms and conditions
hereof, Borrower may at any time during the Commitment Period request LC Issuer
to issue, amend or extend the expiration date of, one or more Letters of Credit
denominated in U.S. Dollars, provided that, after taking such Letter of Credit
into account:

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

(b) the aggregate amount of LC Obligations at such time does not exceed the
LC Sublimit;

(c) the expiration date of such Letter of Credit (taking into account any
extensions thereof) is prior to the date which is five days prior to the end of
the Commitment Period;

(d) such Letter of Credit is to be used for general corporate purposes of
Borrower or any Subsidiary of Borrower;

(e) such Letter of Credit is not directly or indirectly used to assure
payment of or otherwise support any Indebtedness of any Credit Party that is not
permitted hereunder or any Indebtedness of any other 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 amount, form and terms of such Letter of Credit are acceptable to
LC Issuer in its sole and absolute discretion (subject only to extension terms
acceptable to such LC Issuer);

(h) the expiration date of such Letter of Credit is not more than one year
from the date of issuance of such Letter of Credit; provided that any Letter of
Credit may provide for the renewal thereof for additional one-year periods that
otherwise comply with the requirements of this Section 2.10 so long as the LC
Issuer has the power to prevent such renewals by giving notice of its decision
to do so;

(i) no Lender obligated to participate in such Letter of Credit is in
default of its obligations hereunder to Administrative Agent of LC Issuer; and

(j) 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
(j) (the "LC Conditions") have been met as of the date of issuance of such
Letter of Credit. LC Issuer may

36

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 2.11. Requesting Letters of Credit. Borrower must make written
application for any Letter of Credit at least five Business Days (or such
shorter period as LC Issuer may in its discretion from time to time agree)
before 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 2.10 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 F, 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). Two Business Days after the LC
Conditions for a Letter of Credit have been met as described in Section 2.10 (or
if LC Issuer otherwise desires to issue such Letter of Credit), 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. Borrower shall
promptly examine a copy of each Letter of Credit and each amendment thereto that
is delivered to it and, in the event of any claim of noncompliance with
Borrower's instructions or other irregularity, Borrower will immediately notify
LC Issuer.

Section 2.12. 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 (i) at the rate applicable to Base Rate Loans to
and including the first Business Day after such demand is made by LC Issuer and
(ii) at the Default Rate applicable to Base Rate Loans on each day thereafter.
The obligation of Borrower to reimburse LC Issuer for each Matured LC Obligation
shall be absolute, unconditional and irrevocable, and shall be paid strictly in
accordance with the terms of this Agreement (including any LC Application) under
all circumstances, including the following: (i) any lack of validity or
enforceability of such Letter of Credit or any other agreement or instrument
relating thereto; (ii) the existence of any claim, counterclaim, set-off,
defense or other right that Borrower may have at any time against any
beneficiary or any transferee of such Letter of Credit (or any Person for whom
any such beneficiary or any such transferee may be acting), LC Issuer or any
other Person, whether in connection with this Agreement, the transactions
contemplated hereby or by such Letter of Credit or any agreement or instrument
relating thereto, or any unrelated transaction; (iii) any draft, demand,
certificate or other document presented under such Letter of Credit proving to
be forged, fraudulent, invalid or insufficient in any respect or any statement
therein being untrue or inaccurate in any respect; or any loss or delay in the
transmission or otherwise of any document required in order to make a drawing
under such Letter of Credit; (iv) any payment by LC Issuer under such Letter of
Credit against presentation of a draft or certificate that does not strictly
comply with the terms of such Letter of Credit; or (v) any other circumstance or
happening whatsoever, whether or not similar to any of the foregoing. Without
limiting the generality of the foregoing, it is expressly agreed that the
absolute and unconditional nature of Borrower's obligations under this section
to reimburse LC Issuer for each drawing under a Letter of Credit will not be
excused by the gross

37

negligence or willful misconduct of LC Issuer. However, the foregoing shall not
be construed to excuse LC Issuer from liability to Borrower to the extent of any
direct damages (as opposed to consequential damages, claims in respect of which
are hereby waived by Borrower to the extent permitted by applicable Law)
suffered by Borrower that are caused by LC Issuer's gross negligence or willful
misconduct in determining whether drafts and other documents presented under a
Letter of Credit substantially comply with the terms thereof.

(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(a), the amount of such Loans shall be
considered in determining the Facility Usage, but the amount of the Matured LC
Obligation to be concurrently paid by such Loans shall not be considered in
determining the Facility Usage.

(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 applicable to Base Rate Loans.

(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

38

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.

(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 conclusive, absent manifest error, as to the
amounts thereof.

Section 2.13. Letter of Credit Fees. In consideration of LC Issuer's
issuance of any Letter of Credit, Borrower agrees to pay (a) to Administrative
Agent, for the account of all Lenders in accordance with their respective
Percentage Shares, a letter of credit issuance fee at a rate equal to the Letter
of Credit Fee Rate then in effect (which shall be increased by two percent
(2.00%) per annum during any period in which interest on the Loans accrues at
the Default Rate), and (b) to such LC Issuer for its own account, a letter of
credit fronting fee at a rate equal to one-quarter percent (.25%) per annum
times the face amount of such Letter of Credit (but in no event less than $500
per annum). In addition, Borrower will pay to LC Issuer the LC Issuer's
customary fees for administrative issuance, amendment and drawing of each Letter
of Credit. The letter of credit fee and the letter of credit fronting fee will
be calculated on the undrawn face amount of each Letter of Credit outstanding on
each day at the above-applicable rates and will be due and payable in arrears on
the last day of each Fiscal Quarter and at the end of the Commitment Period.

Section 2.14. 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 or
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 releases each Lender Party
from, and agrees to hold each Lender 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 Lender Party, provided only that no
Lender 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, 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 Credit Party, or if
the amount of any Letter of Credit is increased at the request of any Credit
Party, this Agreement shall be binding upon all Credit Parties with respect to
such Letter of Credit as so extended, increased or otherwise modified, with
respect to drafts and property

39

covered thereby, and with respect to any action taken by LC Issuer, LC Issuer's
correspondents, or any Lender Party in accordance with such extension, increase
or other modification.

(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 releases each Lender Party from,
and agrees to hold each Lender 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 Lender Party, provided only that no Lender 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.

(d) Applicability of ISP and UCP. Unless otherwise expressly agreed by LC
Issuer and Borrower when a Letter of Credit is issued, (i) the rules of the
"International Standby Practices 1998" of the Institute of International Banking
Law & Practice, as most recently published by the International Chamber of
Commerce at the time of issuance, shall apply to each standby Letter of Credit,
and (ii) the rules of the Uniform Customs and Practice for Documentary Credits,
as most recently published by the International Chamber of Commerce at the time
issuance, shall apply to each commercial Letter of Credit.

Section 2.15. 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 prepayment of the entire
principal balance of the Loans 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") and the other Obligations, and
such collateral may be applied from time to time to any Matured LC Obligations
or other Obligations which are due and payable. 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,
LC Collateral or LC Obligation, including any LC Application, or any rights
which any Lender 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, which amount shall be held by LC Issuer
as LC Collateral securing the remaining LC Obligations and the other
Obligations, and such LC

40

Collateral may be applied from time to time to any Matured LC Obligations or any
other Obligations which are due and payable.

(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 reasonable discretion. All interest on (and other proceeds of)
such Investments shall be reinvested or applied to Matured LC Obligations or
other Obligations which are due and payable. When all Obligations have been
satisfied in full, including all LC Obligations, all Letters of Credit have
expired or been terminated, and all of Borrower's reimbursement obligations in
connection therewith have been satisfied in full, LC Issuer shall release any
remaining LC Collateral to Borrower or the Person who provided such Collateral.
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, each Note, and the other
Loan Documents, and Borrower agrees that LC Issuer shall have with respect to
all LC Collateral, Investments and proceeds all the rights and remedies under
the Security Documents insofar as such Security Documents apply with respect to
security interests in personal property. 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
or Administrative Agent may without prior notice to Borrower or any other Credit
Party 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 Administrative Agent and LC Issuer are hereby authorized to exercise its
respective rights under each Security Document to obtain such amounts.

Section 2.16. Obligations of Lenders Several. The obligations of the
Lenders hereunder to make Loans, to fund participations in Letters of Credit and
to make payments pursuant to Section 10.4(c) are several and not joint. The
failure of any Lender to make any Loan, to fund any such participation, or to
make any payment under Section 10.4(c) on any date required hereunder shall not
relieve any other Lender of its corresponding obligation to do so on such date,
and no Lender shall be responsible for the failure of any other Lender to so
make its Committed Loan, to purchase its participation or to make its payment
under Section 10.4(c).

Section 2.17. Increase in Commitments.

(a) If and when Lenders designate a Borrowing Base that exceeds the
Aggregate Commitments then in effect, Borrower and Administrative Agent may,
without any further consent of any of the Lenders, from time to time cause an
increase in the Aggregate Commitments by adding to this Agreement one or more
additional Lenders or by allowing one or

41

more Lenders to increase their respective Commitments, provided, however, that
(i) each such additional Lender shall be an Eligible Assignee, (ii) the
conditions precedent for additional Loans that are set out in Section 4.2 are
then satisfied, (iii) no such increase shall result in the Aggregate Commitments
exceeding the Maximum Senior Credit Amount, (iv) no such increase shall result
in the Aggregate Commitments exceeding the Borrowing Base then in effect, and
(v) no Lender's Commitment shall be increased without such Lender's consent. Any
such addition of an additional Lender or increase in a Lender's Commitment shall
be evidenced by a Commitment Increase Agreement executed by such Lender,
Borrower, and Administrative Agent substantially in the form of Exhibit G
hereto, which shall contain a revised Schedule 5 that shall thereupon be the
Lenders Schedule for the purposes of this Agreement.

(b) If the Aggregate Commitments are increased in accordance with this
section, Administrative Agent and Borrower shall determine the effective date
(the "Increase Effective Date") and the final allocation of such increase.
Administrative Agent shall promptly notify Borrower and Lenders of the final
allocation of such increase and the Increase Effective Date. As a condition
precedent to such increase, Borrower shall deliver to Administrative Agent a
certificate of each Credit Party dated as of the Increase Effective Date (in
sufficient copies for each Lender) executed by such Credit Party (i) certifying
and attaching the resolutions adopted by such Credit Party approving or
consenting to such increase, and (ii) in the case of Borrower, certifying that
the conditions precedent for additional Loans that are set out in Section 4.2
are then satisfied, before and after giving effect to such increase. Borrower
shall prepay any Loans outstanding on the Increase Effective Date (and pay any
additional amounts required pursuant to Section 3.4), and shall borrow new Loans
from the Lender whose Commitments have increased, to the extent necessary to
keep the outstanding Loans ratable with any revised Percentage Shares arising
from any nonratable increase in the Commitments under this section.

(c) Notwithstanding the normal provisions for borrowings or prepayments
hereunder, Lenders hereby authorize Borrower to make non-ratable borrowings and
prepayments of the Loans (and if any such prepayment requires the payment of
Eurodollar Loans other than on the last day of the applicable Interest Period,
Borrower shall pay any required amounts pursuant to Section 3.4) in order to
ensure that the Loans of the Lenders shall be outstanding on a ratable basis in
accordance with their Percentage Shares.

(d) This section shall supersede any provisions in Section 10.1 to the
contrary.

ARTICLE III - Payments to Lenders

Section 3.1. General Procedures. Borrower will make each payment which it
owes under the Loan Documents to Administrative Agent for the account of the
Lender Party to whom such payment is owed, in lawful money of the United States
of America, without set-off, deduction or counterclaim, and in immediately
available funds. Each such payment must be received by Administrative Agent not
later than 12:00 noon, New York, New York time, on the date such payment becomes
due and payable. Any payment received by Administrative 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

42

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 payment address set forth for Administrative Agent on the Lenders
Schedule.

(b) When Administrative Agent collects or receives proceeds of Collateral,
it shall allocate such proceeds among the secured parties (including hedge
counterparties) for whose benefit it holds such Collateral in accordance with
the relevant Security Document and the Intercreditor Agreement, and
Administrative Agent shall then distribute in accordance with the following
subsection (c) of this section the portions of such proceeds that are allocable
to the Lender Parties. When Administrative Agent collects or receives proceeds
of NEGO Collateral, it shall allocate such proceeds among the secured parties
for whose benefit it holds such NEGO Collateral in accordance with the relevant
Security Document and the Intercreditor Agreement, provided that all proceeds
otherwise allocable to Borrower shall be allocated to the Lender Parties, and
Administrative Agent shall then distribute in accordance with the following
subsection (c) of this section the portions of such proceeds that are allocable
to the Lender Parties.

(c) When Administrative Agent collects or receives money that is allocable
to the Lender Parties, Administrative Agent shall distribute all money so
collected or received, and each Lender Party shall apply all such money so
distributed, as follows (except as otherwise provided in Section 8.3):

(i) 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 Administrative Agent under Section 6.9 or 10.4 or
similar section of any Security Documents and then to the partial payment
of all other Obligations then due in proportion to the amounts thereof, or
as Lender Parties shall otherwise agree);

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

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

(iv) 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 (ii),
(iii) or (iv) above shall be made by Administrative Agent pro rata to each
Lender Party then owed Obligations described in such subsection in proportion to
all amounts owed to all Lender 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(c) or to Administrative Agent under Section
10.4(c), any amounts otherwise distributable under this section to such Lender
shall be deemed to belong to LC Issuer, or Administrative Agent, respectively,
to the extent of such unpaid payments, and Administrative

43

Agent shall apply such amounts to make such unpaid payments rather than
distribute such amounts to such Lender.

Section 3.2. Increased Costs.

(a) Increased Costs Generally. If any Change in Law shall:

(i) impose, modify or deem applicable any reserve, special deposit,
compulsory loan, insurance charge or similar requirement against assets of,
deposits with or for the account of, or credit extended or participated in
by, any Lender Party (except any reserve requirement reflected in the
Adjusted Eurodollar Rate);

(ii) subject any Lender Party to any tax of any kind whatsoever with
respect to this Agreement, any Letter of Credit, any participation in a
Letter of Credit or any Eurodollar Loan made by it, or change the basis of
taxation of payments to such Lender Party in respect thereof (except for
Indemnified Taxes or Other Taxes covered by Section 3.5 and the imposition
of, or any change in the rate of, any Excluded Tax payable by such Lender
Party); or

(iii) impose on any Lender Party or the London interbank market any
other condition, cost or expense affecting this Agreement or Eurodollar
Loans made by such Lender or any Letter of Credit or participation therein;

and the result of any of the foregoing shall be to increase the cost to such
Lender of making or maintaining any Eurodollar Loan (or of maintaining its
obligation to make any such Loan), or to increase the cost to such Lender or LC
Issuer of participating in, issuing or maintaining any Letter of Credit (or of
maintaining its obligation to participate in or to issue any Letter of Credit),
or to reduce the amount of any sum received or receivable by such Lender Party
hereunder (whether of principal, interest or any other amount) then, upon
request of such Lender or LC Issuer, Borrower will pay to such Lender Party, as
the case may be, such additional amount or amounts as will compensate such
Lender Party, as the case may be, for such additional costs incurred or
reduction suffered.

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

(c) Certificates for Reimbursement. A certificate of a Lender Party setting
forth in reasonable detail the computation of the amount or amounts necessary to
compensate such

44

Lender Party or its holding company, as the case may be, as specified in
paragraph (a) or (b) of this Section shall be delivered to Borrower and shall be
conclusive absent manifest error. Borrower shall pay such Lender Party, the
amount shown as due on any such certificate within 10 days after receipt
thereof.

(d) Delay in Requests. Failure or delay on the part of any Lender Party to
demand compensation pursuant to this Section shall not constitute a waiver of
such Lender Party's right to demand such compensation.

Section 3.3. Illegality. If any Change in Law shall make it unlawful for
any Lender Party to fund or maintain Eurodollar Loans, then, upon notice by such
Lender Party to Borrower and Administrative Agent, (a) Borrower's right to elect
Eurodollar Loans from such Lender Party shall be suspended to the extent and for
the duration of such illegality, (b) all Eurodollar Loans of such Lender Party
which are then the subject of any Borrowing Notice and which cannot be lawfully
funded shall be funded as Base Rate Loans of such Lender Party, and (c) all
Eurodollar Loans of such Lender Party shall be converted automatically to Base
Rate Loans on the respective last days of the then current Interest Periods with
respect to such Loans or within such earlier period as required by Law. If any
such conversion of a Eurodollar Loan occurs on a day which is not the last day
of the then current Interest Period with respect thereto, Borrower shall pay to
such Lender Party such amounts, if any, as may be required pursuant to Section
3.4.

Section 3.4. Funding Losses. In addition to its other obligations
hereunder, Borrower will indemnify each Lender Party against, and reimburse each
Lender Party on demand for, any loss or expense incurred or sustained by such
Lender Party (including any loss or expense incurred by reason of the
liquidation or reemployment of deposits or other funds acquired by a Lender
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 effective date,
of a Continuation/Conversion Notice requesting the continuation of outstanding
Eurodollar Loans as, or the conversion of outstanding Base Rate Loans to,
Eurodollar Loans, 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 requesting the continuation of
outstanding Eurodollar Loans as, or the conversion of outstanding Base Rate
Loans to, Eurodollar Loans to become effective due to any condition precedent
not being satisfied or due to any other action or inaction of any Credit Party,
(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, or (e) any assignment of a Eurodollar Loan on a day other
than the last day of the Interest Period therefor as a result of a request by
Borrower pursuant to Section 3.7(b). Such indemnification shall be on an
after-tax basis.

Section 3.5. Taxes.

(a) Payments Free of Taxes. Any and all payments by or on account of any
obligation of Borrower hereunder or under any other Loan Document shall be made
free and

45

clear of and without reduction or withholding for any Indemnified Taxes or Other
Taxes, provided that if Borrower shall be required by applicable law to deduct
any Indemnified Taxes (including any Other Taxes) from such payments, then (i)
the sum payable shall be increased as necessary so that after making all
required deductions (including deductions applicable to additional sums payable
under this Section) Administrative Agent, LC Issuer, or Lender, as the case may
be, receives an amount equal to the sum it would have received had no such
deductions been made, (ii) Borrower shall make such deductions and (iii)
Borrower shall timely pay the full amount deducted to the relevant Governmental
Authority in accordance with applicable law.

(b) Payment of Other Taxes by the Borrower. Without limiting the provisions
of subsection (a) above, Borrower shall timely pay any Other Taxes to the
relevant Governmental Authority in accordance with applicable law.

(c) Indemnification by the Borrower. Borrower shall indemnify each Lender
Party, within 10 days after demand therefor, for the full amount of any
Indemnified Taxes or Other Taxes which (i) arise from any payment made hereunder
or under any other Loan Document (including Indemnified Taxes or Other Taxes
imposed or asserted on or attributable to amounts payable under this Section)
and (ii) are paid by such Lender Party, and any penalties, interest and
reasonable expenses arising therefrom or with respect thereto, whether or not
such Indemnified Taxes or Other Taxes were correctly or legally imposed or
asserted by the relevant Governmental Authority but net of any foreign tax
credit or the benefit of any deduction or other tax benefit determined in good
faith by such Lender Party to be attributable to the imposition of such
Indemnified Tax. A certificate as to the amount of such payment or liability
delivered in good faith to Borrower by a Lender Party (with a copy to
Administrative Agent), or by Administrative Agent on its own behalf or on behalf
of a Lender Party, shall be conclusive absent manifest error.

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

(e) Status of Lenders. Any Foreign Lender that is entitled to an exemption
from or reduction of withholding tax under the law of the jurisdiction in which
Borrower is resident for tax purposes, or any treaty to which such jurisdiction
is a party, with respect to payments hereunder or under any other Loan Document
shall deliver to the Borrower (with a copy to Administrative Agent), at the time
or times prescribed by applicable law or reasonably requested by Borrower or
Administrative Agent, such properly completed and executed documentation
prescribed by applicable law as will permit such payments to be made without
withholding or at a reduced rate of withholding. In addition, any Lender, if
requested by Borrower or Administrative Agent, shall deliver such other
documentation prescribed by applicable law or reasonably requested by Borrower
or Administrative Agent as will enable Borrower or Administrative Agent to
determine whether or not such Lender is subject to backup withholding or
information reporting requirements.

46

Without limiting the generality of the foregoing, in the event that
Borrower is resident for tax purposes in the United States of America, any
Foreign Lender shall deliver to Borrower and Administrative Agent (in such
number of copies as shall be requested by the recipient) on or prior to the date
on which such Foreign Lender becomes a Lender under this Agreement (and from
time to time thereafter upon the request of Borrower or Administrative Agent,
but only if such Foreign Lender is legally entitled to do so), whichever of the
following is applicable:

(i) duly completed copies of Internal Revenue Service Form W-8BEN
claiming eligibility for benefits of an income tax treaty to which the
United States of America is a party,

(ii) duly completed copies of Internal Revenue Service Form W-8ECI,

(iii) in the case of a Foreign Lender claiming the benefits of the
exemption for portfolio interest under section 881(c) of the Code, (x) a
certificate to the effect that such Foreign Lender is not (A) a "bank"
within the meaning of section 881(c)(3)(A) of the Code, (B) a "10 percent
shareholder" of Borrower within the meaning of section 881(c)(3)(B) of the
Code, or (C) a "controlled foreign corporation" described in section
881(c)(3)(C) of the Code and (y) duly completed copies of Internal Revenue
Service Form W-8BEN, or

(iv) any other form prescribed by applicable law as a basis for
claiming exemption from or a reduction in United States Federal withholding
tax duly completed together with such supplementary documentation as may be
prescribed by applicable law to permit the Borrower to determine the
withholding or deduction required to be made.

(f) Treatment of Certain Refunds. If any Lender Party determines that it
has received a refund of any Taxes or Other Taxes as to which it has been
indemnified by Borrower or with respect to which Borrower has paid additional
amounts pursuant to this Section, it shall pay to Borrower an amount equal to
such refund (but only to the extent of indemnity payments made, or additional
amounts paid, by Borrower under this Section with respect to the Taxes or Other
Taxes giving rise to such refund), net of all out-of-pocket expenses of such
Lender Party and without interest (other than any interest paid by the relevant
Governmental Authority with respect to such refund), provided that Borrower,
upon the request of such Lender Party, agrees to repay the amount paid over to
Borrower (plus any penalties, interest or other charges imposed by the relevant
Governmental Authority) to such Lender Party in the event Lender Party is
required to repay such refund to such Governmental Authority. This Agreement
shall not be construed to require any Lender Party to make available its tax
returns (or any other information relating to its taxes that it deems
confidential) to Borrower or any other Person, and each Lender Party shall make
its determination under this subsection in its sole discretion.

Section 3.6. Alternative Rate of Interest. If prior to the commencement of
any Interest Period for a Borrowing of Eurodollar Loans:

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

47

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

then Administrative Agent shall give notice thereof to Borrower and Lenders by
telephone or telecopy as promptly as practicable thereafter and, until
Administrative Agent notifies Borrower and Lenders that the circumstances giving
rise to such notice no longer exist, (i) any Continuation/Conversion Notice that
requests the conversion of any Borrowing to, or continuation of any Borrowing
as, a Borrowing of Eurodollar Loans shall be ineffective and shall be deemed a
request to continue such Borrowing as a Borrowing of Base Rate Loans and (ii) if
any Borrowing Notice requests a Borrowing of Eurodollar Loans, such Borrowing
shall be made as a Borrowing of Base Rate Loans. Upon receipt of such notice,
Borrower may revoke any pending request for a Borrowing of, conversion to or
continuation of Eurodollar Loans.

Section 3.7. Mitigation Obligations; Replacement of Lenders.

(a) Designation of a Different Lending Office. If any Lender requests
compensation under Section 3.2, or requires Borrower to pay any additional
amount or indemnification to any Lender or any Governmental Authority for the
account of any Lender pursuant to Section 3.5, then such Lender shall use
reasonable efforts to designate a different lending office for funding or
booking its Loans hereunder or to assign its rights and obligations hereunder to
another of its offices, branches or affiliates, if, in the judgment of such
Lender, such designation or assignment (i) would eliminate or reduce amounts
payable pursuant to Section 3.2 or 3.5, as the case may be, in the future and
(ii) would not subject such Lender to any unreimbursed cost or expense and would
not otherwise be disadvantageous to such Lender. Borrower hereby agrees to pay
all reasonable costs and expenses incurred by any Lender in connection with any
such designation or assignment.

(b) Replacement of Lenders. If any Lender requests compensation under
Section 3.2, or if Borrower is required to pay any additional amount to any
Lender or any Governmental Authority for the account of any Lender pursuant to
Section 3.5, or if any Lender defaults in its obligation to fund Loans
hereunder, or if any Lender fails to consent to any Borrowing Base amount
proposed by the Administrative Agent, then Borrower may, at its sole expense and
effort, upon notice to such Lender and the Administrative Agent, require such
Lender to assign and delegate, without recourse (in accordance with and subject
to the restrictions contained in, and consents required by, Section 10.5), all
of its interests, rights and obligations under this Agreement and the related
Loan Documents to an Eligible Assignee that shall assume such obligations (which
assignee may be another Lender, if a Lender accepts such assignment), provided
that:

(i) Borrower shall have paid to Administrative Agent the assignment
fee specified in Section 10.5;

(ii) such Lender shall have received payment of an amount equal to the
outstanding principal of its Loans and participations in Matured LC
Obligations, accrued interest thereon, accrued fees and all other amounts
payable to it hereunder and under the other Loan Documents (including any
amounts under Section 3.4) from the assignee (to the

48

extent of such outstanding principal and accrued interest and fees) or
Borrower (in the case of all other amounts);

(iii) in the case of any such assignment resulting from a claim for
compensation under Section 3.2 or payments required to be made pursuant to
Section 3.5, such assignment will result in a reduction in such
compensation or payments thereafter; and

(iv) such assignment does not conflict with applicable law.

A Lender shall not be required to make any such assignment or delegation if,
prior thereto, as a result of a waiver by such Lender or otherwise, the
circumstances entitling the Borrower to require such assignment and delegation
cease to apply.

Section 3.8. Payments by Borrower; Presumptions by Administrative Agent.
Unless Administrative Agent shall have received notice from Borrower prior to
the date on which any payment is due to Administrative Agent for the account of
any Lender Party hereunder that Borrower will not make such payment,
Administrative Agent may assume that Borrower has made such payment on such date
in accordance herewith and may, in reliance upon such assumption, distribute to
such Lender Party as the case may be, the amount due. In such event, if Borrower
has not in fact made such payment, then each Lender Party agrees to repay to
Administrative Agent forthwith on demand the amount so distributed to such
Lender Party, with interest thereon, for each day from and including the date
such amount is distributed to it to but excluding the date of payment to
Administrative Agent, at the greater of the Federal Funds Rate and a rate
determined by Administrative Agent in accordance with banking industry rules on
interbank compensation.

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 Administrative Agent shall have received all of the following,
duly executed and delivered (as applicable) and in form, substance and date
satisfactory to Administrative Agent:

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

(b) Each Note.

(c) Each Guaranty and each Security Document listed in the Security
Schedule.

(d) Certain certificates of Borrower including:

(i) An "Omnibus Certificate" of Borrower, executed by the Secretary
and of the Chairman of the Board or President of Borrower (or an equivalent
representative of Borrower's managing member), which shall contain the
names and signatures of the officers or representatives of Borrower
authorized to execute Loan Documents and which

49

shall certify to the truth, correctness and completeness of the following
exhibits attached thereto: (1) a copy of resolutions duly adopted 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 Borrower, executed by the Chairman
of the Board or President of Borrower (or an equivalent representative of
Borrower's managing member) 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) and (c) of Section 4.2.

(e) 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 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 DLA Piper Rudnick Gray Cary US LLP, counsel for
Credit Parties, in form and substance reasonably satisfactory to Administrative
Agent and such other opinions of special and local counsel as may be required by
Administrative Agent.

(h) The Initial Financial Statements.

(i) A certificate of Borrower, executed by the chief financial officer,
certifying the Initial Financial Statements delivered pursuant to clause (h)
above.

(j) Certificates or binders evidencing Credit Parties' insurance in effect
on the date hereof.

(k) A certificate of Borrower, executed by the chief executive officer or
chief financial officer of Borrower in form and detail acceptable to
Administrative Agent confirming the insurance that is in effect as of the date
hereof and certifying that such insurance is in compliance with the requirements
of this Agreement.

(l) The Initial Engineering Report.

(m) Title review in form, substance, and authorship satisfactory to
Administrative Agent, with respect to Borrower's oil and gas reserves
representing a percentage determined by Administrative Agent of the present
discounted value of Credit Parties' proven oil and gas reserves in connection
with the pre-closing due diligence.

50

(n) UCC-1 search reports conducted in such jurisdictions and reflecting
such names as Administrative Agent shall request.

(o) A certificate of each Credit Party either (A) attaching copies of all
consents, licenses and approvals required in connection with the execution,
delivery and performance by such Credit Party and the validity against such
Credit Party of the Loan Documents to which it is a party, and such consents,
licenses and approvals shall be in full force and effect, or (B) stating that no
such consents, licenses or approvals are so required.

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

(q) Evidence satisfactory to Administrative Agent that Borrower has
successfully novated the Required Existing Hedges to the satisfaction of
Administrative Agent.

(r) Evidence satisfactory to Administrative Agent that Borrower, after
giving effect to all extensions of credit hereunder, shall have at least
$35,000,000 of Available Borrowing Base and either $15,000,000 of unrestricted
cash or an additional $15,000,000 of Available Borrowing Base.

(s) All documents and instruments which Administrative Agent has then
reasonably requested, in addition to those described in this Section 4.1. All
such additional documents and instruments shall be reasonably satisfactory to
Administrative Agent in form, substance and date.

In addition to the foregoing, Borrower shall, prior to the making of the first
Loan (or using the proceeds thereof), have paid all fees, expenses and
disbursements required to be paid before the making of such first Loan,
including those fees described in Sections 2.5(c)(i) and 2.5(d) and the
estimated fees, expenses and disbursements of Thompson & Knight LLP, counsel for
Administrative Agent.

Section 4.2. 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 additional
conditions precedent have been satisfied:

(a) All representations and warranties made by any Credit Party in any Loan
Document shall be true in all respects on and as of the date of such Loan or the
date of issuance of such Letter of Credit 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, except to the extent that such representation or warranty
specifically refers to an earlier date, in which case it shall be true in all
respects on and as of such earlier date.

(b) No Default shall exist at the date of such Loan or the date of issuance
of such Letter of Credit, both before and after giving effect to the making of
such Loan or the issuance of such Letter of Credit.

51

(c) No Material Adverse Change shall have occurred, and no event or
circumstance shall have occurred that would reasonably be anticipated to cause a
Material Adverse Change, since the date of the Initial Financial Statements.

ARTICLE V - Representations and Warranties

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

Section 5.1. No Default. No event has occurred and is continuing which
constitutes a Default.

Section 5.2. Organization and Good Standing. Each Credit Party 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
Credit Party is duly qualified, in good standing, and authorized to do business
in all jurisdictions within the United States wherein it owns Oil and Gas
Properties included in the most recent Engineering Report and in all other
jurisdictions where the character of the properties owned or held by it or the
nature of the business transacted by it makes such qualification necessary
except where the failure to be qualified in such other jurisdictions would not
reasonably be anticipated to cause a Material Adverse Change. Each Credit Party
has taken all actions and procedures customarily taken in order to enter, for
the purpose of conducting business or owning property, each jurisdiction outside
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 actions and procedures
desirable.

Section 5.3. Authorization. Each Credit Party 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, Contravention or Consents; No Violation of
Rights. The execution and delivery by each Credit Party 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 (a) conflict with or contravene any
provision of (i) any Law in any material respect, (ii) the organizational
documents of any Credit Party, or (iii) any material agreement, judgment,
license, order or permit applicable to or binding upon any Credit Party, (b)
result in the acceleration of any Indebtedness owed by any Credit Party, (c)
result in or require the creation of any Lien upon any assets or properties of
any Credit Party except as expressly contemplated or permitted in the Loan
Documents or (d) violate any rights of the public shareholders of NEGI. Except
as expressly contemplated in the Loan Documents no permit, consent, approval,
authorization or order of, and no notice to or filing with, any Governmental
Authority or third party is required in

52

connection with the execution, delivery or performance by any Credit Party 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 by each party thereto will be, legal,
valid and binding obligations of each Credit Party which is a party hereto or
thereto, enforceable in accordance with their respective terms except as such
enforcement may be limited by bankruptcy, insolvency, moratorium, or similar
Laws of general application relating to the enforcement of creditors' rights and
subject to general principles of equity, regardless of whether considered in a
proceeding in equity or law.

Section 5.6. Initial Financial Statements. Credit Parties have heretofore
delivered to each Lender true, correct and complete copies of the Initial
Financial Statements. The Initial Financial Statements fairly present in
accordance with GAAP the financial positions of the respective Persons reported
on therein at the respective dates thereof and the results of such Persons'
operations and such Persons' cash flows for the respective periods thereof,
subject in the case of unaudited interim statements to year-end audit
adjustments. Since the date of the unaudited quarterly Initial Financial
Statements of Borrower as and for the nine months ended September 30, 2005, no
Material Adverse Change has occurred, except as reflected in Section 5.6 of the
Disclosure Schedule. All financial statements provided hereunder have been
prepared in accordance with GAAP (other than with respect to their presentation
in consolidating form) except that unaudited quarterly financial statements do
not include footnotes in accordance therewith and are subject to year-end audit
adjustments.

Section 5.7. Other Obligations and Restrictions. No Credit Party has any
outstanding Liabilities of any kind (including contingent obligations, tax
assessments, and unusual forward or long-term commitments) which are, in the
aggregate, material to the Credit Parties, taken as a whole, or material with
respect to Borrower's Consolidated financial condition and not reflected in the
Initial Financial Statements or disclosed in Section 5.7 of the Disclosure
Schedule or otherwise permitted under Section 7.1 and except in the case of any
tax assessment that is being contested by a Credit Party in good faith and for
which adequate reserves have been established. Except as reflected in the
Initial Financial Statements or disclosed in Section 5.7 of the Disclosure
Schedule, no Credit Party is subject to or restricted by any franchise,
contract, deed, charter restriction, or other instrument or restriction which
would reasonably be anticipated to cause a Material Adverse Change.

Section 5.8. Full Disclosure. No certificate, statement or other
information delivered herewith or heretofore by any Credit Party to any Lender
(as modified or supplemented by other information so furnished) in connection
with the negotiation of this Agreement or in connection with any transaction
contemplated hereby contains, as of the date made or deemed made, any material
misstatement of fact or omits to state any material fact necessary to make the
statements contained herein or therein, taken as a whole, not misleading. The
data provided by Borrower to the engineers who prepared each Engineering Report
was not false or misleading and Borrower did not fail to provide any material
data available to Borrower that would have been useful or necessary for
preparation of any such Engineering Report. Borrower has heretofore delivered to
each Lender true, correct and complete copies of the Initial Engineering Report.

53

Section 5.9. Litigation. Except as disclosed in the Initial Financial
Statements or in Section 5.9 of the Disclosure Schedule: (a) there are no
actions, suits or legal, equitable, arbitrative or administrative proceedings
pending, or to the knowledge of any Credit Party threatened in writing, against
any Credit Party or affecting any Collateral of such Credit Party (including any
which challenge or otherwise pertain to any Credit Party's title to any
Collateral) before any Governmental Authority which would reasonably be
anticipated to cause a Material Adverse Change, and (b) there are no outstanding
judgments, injunctions, writs, rulings or orders by any such Governmental
Authority against any Credit Party or to each Credit Party's knowledge any
Credit Party's stockholders, partners, members, directors or officers or
affecting any Collateral or any of its material assets or property which would
reasonably be anticipated to cause a Material Adverse Change.

Section 5.10. Labor Disputes and Acts of God. Except as disclosed in
Section 5.10 of the Disclosure Schedule, neither the business nor the properties
of any Credit Party 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 would reasonably be anticipated to cause a Material Adverse
Change.

Section 5.11. ERISA Plans and Liabilities. All currently existing ERISA
Plans, if any, that are maintained for the benefit of the employees of Borrower,
any of Borrower's Subsidiaries or IPO Co are listed in Section 5.11 of the
Disclosure Schedule. Except as disclosed in the Initial Financial Statements or
in Section 5.11 of the Disclosure Schedule, no Termination Event has occurred
and all ERISA Plans maintained for the benefit of the employees of Borrower, any
of Borrower's Subsidiaries or IPO Co are in compliance with ERISA in all
material respects.

Section 5.12. Environmental and Other Laws. Except as disclosed in Section
5.12 of the Disclosure Schedule: (a) Credit Parties are conducting their
businesses in material compliance with all applicable Laws, including
Environmental Laws, and have and are in material compliance with all licenses
and permits required under any such Laws; (b) none of the operations or
properties of any Credit Party is the subject of federal, state or local
investigation evaluating whether any material remedial action is needed to
respond to a release of any Hazardous Materials into the environment or to the
improper storage or disposal (including storage or disposal at offsite
locations) of any Hazardous Materials; (c) no Credit Party (and to the best
knowledge of Borrower, no other Person) has filed any notice under any Law
indicating that any Credit Party is responsible for the improper release into
the environment, or the improper storage or disposal, of any material amount of
any Hazardous Materials or that any Hazardous Materials have been improperly
released, or are improperly stored or disposed of, upon any property of any
Credit Party; (d) no Credit Party has transported or arranged for the
transportation of any Hazardous Material to any location which is (i) listed on
the National Priorities List under the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended, listed for possible
inclusion on such National Priorities List by the Environmental Protection
Agency in its Comprehensive Environmental Response, Compensation and Liability
Information System List, or listed on any similar state list or (ii) the subject
of federal, state or local enforcement actions or other investigations which may
lead to claims against any Credit Party for clean-up costs, remedial work,
damages to natural resources or for personal injury claims (whether under
Environmental Laws or otherwise); and (e) no Credit

54

Party otherwise has any known material contingent liability under any
Environmental Laws or in connection with the release into the environment, or
the storage or disposal, of any Hazardous Materials. Each Credit Party
undertook, at the time of its acquisition of each of its material properties, a
reasonable investigation into the previous ownership and uses of the Property
and any potential environmental liabilities associated therewith.

Section 5.13. Names and Places of Business. No Credit Party has, during the
preceding five years, had, been known by, or used any other trade or fictitious
name or been organized in any jurisdiction, except as disclosed in Section 5.13
of the Disclosure Schedule.

Section 5.14. Subsidiaries. Borrower does not presently have any Subsidiary
except those listed in Section 5.14 of the Disclosure Schedule or disclosed to
Administrative Agent in writing. No Credit Party has any equity investments in
any other Person except those listed in Section 5.14 of the Disclosure Schedule
or disclosed to Administrative Agent in writing. Borrower owns, directly or
indirectly, the Equity in each of its Subsidiaries as indicated in Section 5.14
of the Disclosure Schedule or has been disclosed to Administrative Agent in
writing. Except as listed on the Disclosure Schedule, no Subsidiary of Borrower
owns Oil and Gas Properties on the date hereof other than NEGO, National
Offshore, and National Onshore. None of NGX Energy, NGX GP or NGX LP have any
assets or liabilities except those listed in Section 5.14 of the Disclosure
Schedule.

Section 5.15. Government Regulation. Neither Borrower nor any other Credit
Party owing Obligations is (a) an "investment company" or a company "controlled"
by an "investment company" within the meaning of the Investment Company Act of
1940, as amended, or (b) subject to regulation under the Federal Power Act, as
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.

Section 5.16. Solvency. Immediately after giving effect to the issuance of
the Notes, the execution of the Loan Documents by Borrower and each Guarantor
and the consummation of the transactions contemplated hereby, Borrower and each
Guarantor will be solvent (as such term is used in applicable bankruptcy,
liquidation, receivership, insolvency or similar Laws), and the sum of
Borrower's and each Guarantor's absolute and contingent liabilities, including
the Obligations or guarantees thereof, shall not exceed the fair market value of
such Person's assets, and (ii) Borrower's and each Guarantor's capital should be
adequate for the businesses in which such Person is engaged and intends to be
engaged. Neither Borrower nor any Guarantor has incurred (whether under the Loan
Documents or otherwise), nor does Borrower or any Guarantor intend to incur or
believe that it will incur, liabilities that will be beyond its ability to pay
as such debts mature.

Section 5.17. Title to Properties; Licenses. Each Credit Party has good and
defensible title to, or valid leasehold interests in, all of the Collateral
owned or leased by such Credit Party and all of its other material properties
and assets necessary or used in the ordinary conduct of its business, free and
clear of all Liens, encumbrances, or adverse claims and of all impediments to
the use of such properties and assets in such Credit Party's business other than
Permitted Liens and other minor defects or irregularities in title that do not
interfere in any material respect with the operation thereof, except that no
representation or warranty is made with respect to any oil,

55

gas or mineral property or interest to which no proved oil or gas reserves are
properly attributed. On the date hereof, each Credit Party owns the net
interests in production attributable to the wells and units evaluated in the
Initial Engineering Report. The ownership of such Properties does not in the
aggregate in any material respect obligate such Credit Party to bear the costs
and expenses relating to the maintenance, development and operations of such
Properties in an amount materially in excess of the working interest of such
Properties set forth in the Initial Engineering Reports. Upon delivery of each
Engineering Report furnished to the Lenders pursuant to Sections 6.2(f) and (g),
the statements made in the preceding sentences of this section and in Section
5.19 shall be true with respect to such Engineering Report. Each Credit Party
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, except where the failure to
possess such licenses would not be reasonably anticipated to cause a Material
Adverse Change and no Credit Party 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 5.18. Use of Proceeds; Margin Stock. The Letters of Credit and
proceeds of the Loans will be used solely for the purposes specified in Section
2.4. None of such proceeds will be used by any Credit Party, directly or
indirectly, for the purpose of purchasing or carrying any "margin stock" as
defined in Regulations T, U or X, or for the purpose of reducing or retiring any
Indebtedness which was originally incurred to purchase or carry a "margin stock"
or for any other purpose which might constitute this transaction a "purpose
credit" within the meaning of Regulations T, U or X. Borrower has not taken nor
will Borrower take any action which might cause any of the Loan Documents to
violate Regulations T, U or X, or any other regulations of the Board of
Governors of the Federal Reserve System or to violate Section 8 of the
Securities Exchange Act of 1934 or any rule or regulation thereunder, in each
case as now in effect or as the same may be in effect at the time such proceeds
are used.

Section 5.19. Leases and Contracts; Performance of Obligations. The leases,
contracts, servitudes and other agreements forming a part of the Engineered Oil
and Gas Properties of the Credit Parties are in full force and effect. All
rents, royalties and other payments due and payable under such leases,
contracts, servitudes and other agreements, or under any Permitted Liens, or
otherwise attendant to the ownership or operation of any Engineered Oil and Gas
Properties, have been properly and timely paid where such failure to pay could
materially and adversely affect the ownership or operation of any material
Engineered Oil and Gas Property. No Credit Party is in default with respect to
its obligations (and no Credit Party is aware of any default by any third party
with respect to such third party's obligations) under any such leases,
contracts, servitudes and other agreements, or under any Permitted Liens, or
otherwise attendant to the ownership or operation of any part of the Engineered
Oil and Gas Properties, where such default could materially and adversely affect
the ownership or operation of any material Engineered Oil and Gas Property. No
Credit Party is currently accounting for any royalties, or overriding royalties
or other payments out of production, based on oil and gas prices other than the
prices actually received by such Credit Party (calculated at the well) from sale
of production, and no Credit Party has any liability (or alleged liability) to
account for the same on any such other basis.

56

Section 5.20. Sale of Production. Except as set forth in Section 5.20 of
the Disclosure Schedule, no Engineered Oil and Gas Property is subject to any
material contractual or other arrangement (i) whereby payment for production is
or can be deferred for a substantial period after the month in which such
production is delivered (in the case of oil, not in excess of 60 days, and in
the case of gas, not in excess of 90 days) or (ii) whereby payments are made to
a Credit Party other than by checks, drafts, wire transfer advises or other
similar writings, instruments or communications for the immediate payment of
money. Except for production sales contracts, processing agreements,
transportation agreements and other agreements relating to the marketing of
production that are listed in Section 5.20 of the Disclosure Schedule in
connection with the Engineered Oil and Gas Properties to which such contract or
agreement relates: (i) no Engineered Oil and Gas Property is subject to any
material contractual or other arrangement for the sale, processing or
transportation of production (or otherwise related to the marketing of
production) which cannot be canceled on 120 days' (or less) notice and (ii) all
material contractual or other arrangements for the sale, processing or
transportation of production (or otherwise related to the marketing of
production) are bona fide arm's length transactions made with third parties not
affiliated with Credit Parties. Each Credit Party is presently receiving a price
for all production from (or attributable to) each Engineered Oil and Gas
Property covered by a production sales contract or marketing contract listed on
the Disclosure Schedule that is computed in accordance with the terms of such
contract, and no Credit Party is having deliveries of production from such
Engineered Oil and Gas Property curtailed substantially below such property's
delivery capacity, except for curtailments caused (a) by an act or event of
force majeure, or (b) by routine maintenance requirements in the ordinary course
of business. Except as set forth in the Disclosure Schedule, no Credit Party,
nor, to such Credit Party's knowledge, any Credit Party's predecessors in title,
has received prepayments (including payments for gas not taken pursuant to "take
or pay" or other similar arrangements) for any oil, gas or other hydrocarbons
produced or to be produced from any Engineered Oil and Gas Properties after the
date hereof. Except as set forth in the Disclosure Schedule, no Engineered Oil
and Gas Property is subject to any "take or pay" or other similar arrangement
(i) which can be satisfied in whole or in part by the production or
transportation of gas from other properties or (ii) as a result of which
production from any Engineered Oil and Gas Property may be required to be
delivered to one or more third parties without payment (or without full payment)
therefor as a result of payments made, or other actions taken, with respect to
other properties. Except as set forth in the Disclosure Schedule, there is no
Engineered Oil and Gas Property with respect to which any Credit Party, or, to
such Credit Party's knowledge, any Credit Party's predecessors in title, has,
prior to the date hereof, taken more ("overproduced"), or less
("underproduced"), in any material respect, gas from the lands covered thereby
(or pooled or unitized therewith) than its ownership interest in such Engineered
Oil and Gas Property would entitle it to take; and the Disclosure Schedule
accurately reflects, in all material respects, for each well or unit with
respect to which such an imbalance is shown thereon to exist, (i) whether such
Credit Party is overproduced or underproduced and (ii) the volumes (in cubic
feet or British thermal units) of such overproduction or underproduction and the
effective date of such information. Except as set forth in the Disclosure
Schedule, no Engineered Oil and Gas Property is subject to a gas balancing
arrangement under which one or more third parties may take a portion of the
production attributable to such Engineered Oil and Gas Property without payment
(or without full payment) therefor as a result of production having been taken
from, or as a result of other actions or inactions with respect to, other
properties. No Engineered Oil and Gas Property is

57

subject at the present time to any regulatory refund obligation and, to such
Credit Party's knowledge, no facts exist which might cause the same to be
imposed.

Section 5.21. Operation of Oil and Gas Properties. Except as disclosed in
Section 5.12 of the Disclosure Schedule, the Engineered Oil and Gas Properties
(and all properties unitized therewith) are, in all material respects, being
(and, to the extent the same could materially and adversely affect the ownership
or operation of the Engineered Oil and Gas Properties after the date hereof, to
the applicable Credit Party's knowledge, have in the past been) maintained,
operated and developed in a good and workmanlike manner, in accordance with
prudent industry standards and in conformity with all applicable Laws and in
conformity with all oil, gas or other mineral leases and other contracts and
agreements forming a part of the Engineered Oil and Gas Property and in
conformity with the Permitted Liens. No Engineered Oil and Gas Property is
subject to having allowable production after the date hereof reduced below the
full and regular allowable (including the maximum permissible tolerance) because
of any overproduction (whether or not the same was permissible at the time)
prior to the date hereof and (ii) none of the wells located on the Engineered
Oil and Gas Properties (or properties unitized therewith) are or will be
deviated from the vertical more than the maximum permitted by applicable laws,
regulations, rules and orders, and such wells are bottomed under and producing
from, with the well bores wholly within, the Engineered Oil and Gas Properties
(or, in the case of wells located on properties unitized therewith, such
unitized properties). There are no dry holes, or otherwise inactive wells,
located on the Engineered Oil and Gas Properties or on lands pooled or unitized
therewith, except for wells that have been properly plugged and abandoned. Each
Credit Party has all material governmental licenses and permits reasonably
necessary or appropriate to own and operate its Engineered Oil and Gas
Properties, and except as disclosed in Section 5.12 of the Disclosure Schedule
no Credit Party has received notice in writing of any material violations in
respect of any such licenses or permits.

Section 5.22. Ad Valorem and Severance Taxes; Litigation. Each Credit Party
has paid and discharged when due all ad valorem taxes assessed against its
Engineered Oil and Gas Properties or any part thereof and all production,
severance and other taxes assessed against, or measured by, the production or
the value, or proceeds, of the production therefrom, except in the case of any
tax assessment that is being contested by such Credit Party in good faith and
for which adequate reserves have been established. There are no suits, actions,
claims, investigations, inquiries, proceedings or demands pending (or, to any
Credit Party's knowledge, threatened) which might adversely affect any material
Engineered Oil and Gas Property, including any which challenge or otherwise
pertain to any Credit Party's title to any material Engineered Oil and Gas
Property or rights to produce and sell oil and gas therefrom.

Section 5.23. Internal Control Event. Since the date of the annual Initial
Financial Statements, no Internal Control Event has occurred which would be
reasonably anticipated to cause a Material Adverse Change.

Section 5.24. Separateness of Each Credit Party. Each Credit Party: (a)
maintains separate records and books of account that are distinct from those of
any Affiliate of such Credit Party, appropriately identifying such Credit
Party's separate assets and liabilities, and in such records and books of
account properly documents all inter-Affiliate transactions; (b) except for
treasury management systems in which ownership of deposits and investments are
separately

58

accounted for, does not commingle its funds or assets with those of any
Affiliate of such Credit Party; (c) holds all appropriate meetings of its board
of directors or other analogous governing body to authorize and approve such
Credit Party's actions, which meetings are separate from those of other
Affiliates and at which meetings all appropriate officers are elected or
appointed to offices that are separate from those of Affiliates; and (d) does
not hold itself out as directly owning the assets of its Affiliates and does not
allow any Affiliate to hold itself out as directly owning the assets of such
Credit Party. Pursuant to the Securities Exchange Act, NEGI presents its
Consolidated financial condition of NEGI and its Subsidiaries to the public
separately from that of Borrower and Borrower's other Subsidiaries. Borrower
acknowledges and agrees that the Lender Parties have relied on the separate
existence of each Credit Party, as represented to them by Borrower, in agreeing
on the structure of the credit transactions contemplated by this Agreement and
in making the Loans based on the support of the various Guaranties and other
Security Documents provided by the various Credit Parties as separate and
distinct entities.

ARTICLE VI - Affirmative Covenants of Borrower

To conform with the terms and conditions under which each Lender Party is
willing to have credit outstanding to Borrower, and to induce each Lender Party
to enter into this Agreement and extend credit hereunder, Borrower 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. Each Credit Party will pay all
amounts due under the Loan Documents, to which it is a party, in accordance with
the terms thereof and will observe, perform and comply with every covenant, term
and condition set forth in the Loan Documents to which it is a party. Borrower
will cause each Credit Party that is a wholly-owned Subsidiary of Borrower to
observe, perform and comply with every such term, covenant and condition in any
Loan Document. The parties recognize that Borrower may not have the legal power
to cause any Credit Parties other than Borrower and its wholly-owned
Subsidiaries so to comply with the Loan Documents, but Borrower agrees that the
failure of any such other Credit Party to comply with the terms of the Loan
Documents will nonetheless constitute a Default or Event of Default hereunder.

Section 6.2. Books, Financial Statements and Reports. Each Credit Party
will at all times maintain full and accurate books of account and records.
Borrower and each Credit Party that is a Subsidiary of Borrower will maintain a
standard system of accounting, will maintain its Fiscal Year, and will furnish
the following statements and reports to the Administrative Agent at Borrower's
expense:

(a) As soon as available, and in any event within ninety (90) days after
the end of each Fiscal Year, complete Consolidated and consolidating financial
statements of Borrower together with all notes thereto, prepared in reasonable
detail in accordance with GAAP, together with an opinion with respect to such
Consolidated statements (without a "going concern" or like qualification or
exception or without any qualification or exception as to the scope of such
audit), based on an audit using generally accepted auditing standards, by Grant
Thornton or another

59

independent certified public accounting firm selected by Borrower and reasonably
acceptable to Administrative Agent, to the effect that such Consolidated
financial statements present fairly in all material respects the financial
condition and results of operations of Borrower and its consolidated
subsidiaries on a consolidated basis in accordance with GAAP consistently
applied. These financial statements shall contain a Consolidated and
consolidating balance sheet as of the end of such Fiscal Year and Consolidated
and consolidating 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. In addition, after the
Initial Equity Offering, to the extent required by the Securities Laws,
concurrently with the delivery of such financial statements, IPO Co will furnish
an attestation report of an independent certified public accounting firm as to
IPO Co's internal controls pursuant to Section 404 of Sarbanes-Oxley and no
conclusion made by such firm shall identify a material weakness as to which the
Majority Lenders object.

(b) As soon as available, and in any event within forty-five (45) days
after the end of the first three Fiscal Quarters in each Fiscal Year, Borrower's
Consolidated and consolidating balance sheet as of the end of such Fiscal
Quarter and Consolidated and consolidating 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 and that not all notes required by GAAP need be presented. 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 of Borrower in the form of Exhibit D signed by the chief
financial officer of Borrower stating that such financial statements present
fairly in all material respects the consolidated financial condition and results
of operations of Borrower and its consolidated subsidiaries (subject to normal
year-end adjustments and the absence of notes with respect to the financial
statements furnished pursuant to this subsection (b)), 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 7.1, 7.3, 7.6 and 7.11 and stating that all Collateral required under
Section 6.17 has been provided and that no Default or Internal Control Event
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 or Internal
Control Event.

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

(d) Together with each set of financial statements furnished under
subsections (a) and (b) of this section, Borrower will furnish a report (in form
reasonably satisfactory to Administrative Agent) of all Hedging Contracts of
Borrower and each of its Subsidiaries, setting forth the type, term, effective
date, termination date and notional amounts or volumes and the counterparty to
each such agreement.

(e) As soon as available, and in any event within ninety (90) days after
the end of each Fiscal Year, a business and financial plan, together with a
capital expenditure schedule, for

60

Borrower (in form reasonably satisfactory to Administrative Agent), prepared by
a senior financial officer thereof, setting forth for the first year thereof,
quarterly financial projections and budgets for Borrower, and thereafter yearly
financial projections and budgets until the Maturity Date.

(f) By March 31 of each year commencing March 31, 2006, an Engineering
Report prepared as of the preceding January 1 by one or more of Netherland,
Sewell & Associates, DeGolyer & MacNaughton, or other independent petroleum
engineers chosen by Borrower and acceptable to Administrative Agent, concerning
all Oil and Gas Properties owned by any Credit Party 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 reasonably satisfactory to Administrative
Agent, shall be prepared using PV10 Pricing, shall take into account any
"over-produced" status under gas balancing arrangements, and shall contain
information and analysis consistent in form and scope in all material respects
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) (i) the Oil and Gas
Properties owned by each Credit Party and (ii) those properties treated in the
report which are Collateral from those properties treated in the report which
are not Collateral.

(g) By September 30 of each year, commencing September 30, 2006, an
Engineering Report prepared as of the preceding July 1 (or the last day of the
preceding calendar month in the case of a Special Determination) by petroleum
engineers who are employees of Borrower (or, at the option of Borrower, by the
independent engineers named above or selected in accordance with (f) above),
together with an accompanying report on property sales, property purchases and
changes in categories that have occurred since the date of the prior Engineering
Report, both in the same form and scope as the reports in (f) above.

(h) As soon as available, and in any event within forty-five (45) days
after the end of each calendar quarter, a report describing by major operating
unit the net volume of production of the Credit Parties and sales attributable
to production during each month of such quarter from the properties described in
the most recent Engineering Report and describing the related severance taxes,
other taxes, leasehold operating expenses and capital costs attributable thereto
and incurred during such month.

(i) At least ten Business Days prior to any sale or transfer of Oil and Gas
Properties for more than $50,000,000 or that will require execution of a release
of Collateral by Administrative Agent, written notice of such sale describing
the Oil and Gas Properties to be sold, the anticipated sales price, and a
request for the release of any such Collateral.

Section 6.3. Other Information and Inspections. Each Credit Party will
furnish to each Lender any information which Administrative Agent may from time
to time request concerning any provision of the Loan Documents, any Collateral,
or any matter in connection with Credit Parties' businesses, properties,
prospects, financial condition and operations, including all evidence which
Administrative Agent from time to time reasonably requests as to the accuracy
and validity of or compliance with all representations, warranties and covenants
made by any Credit Party in the Loan Documents, the satisfaction of all
conditions contained therein, and all other matters pertaining thereto. Borrower
and each Credit Party will permit representatives

61

appointed by Administrative Agent or any Lender (including independent
accountants, auditors, agents, attorneys, appraisers and any other Persons) upon
reasonable prior written notice to visit and inspect during normal business
hours any of such Credit Party'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, and each Credit
Party shall permit Administrative Agent or its representatives to investigate
and verify the accuracy of the information furnished to Administrative Agent or
any Lender in connection with the Loan Documents and, upon reasonable prior
written notice, to discuss all such matters with its principal executive and
financial officers.

Section 6.4. Notice of Material Events and Change of Name or Address.
Borrower will promptly notify each Lender Party 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 Credit
Party or of any default by any Credit Party 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 would be reasonably anticipated to cause a Material Adverse Change,

(d) the occurrence of any Termination Event,

(e) any claim of $5,000,000 or more, or any notice of potential liability
under any Environmental Laws which might exceed such amount, and

(f) the filing of any suit or proceeding against any Credit Party in which
an adverse decision would reasonably be anticipated to cause a Material Adverse
Change or to materially and adversely affect title to any material Engineered
Oil and Gas Property of Borrower or any Subsidiary.

Upon the occurrence of any of the foregoing Credit Parties 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
Administrative Agent and Administrative Agent's counsel in writing at least
twenty Business Days prior to the date that any Credit Party changes its name or
its jurisdiction of organization.

Section 6.5. Maintenance of Properties. Each Credit Party will maintain,
preserve, protect, and keep all Collateral and all other property owned by such
Person that is used or useful in the conduct of its business in good condition
(ordinary wear and tear excepted) in accordance with prudent industry standards,
in material compliance with all applicable Laws, and in conformity with all
applicable material contracts, servitudes, leases and agreements, and each

62

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.

Section 6.6. Maintenance of Existence and Qualifications. Each Credit Party
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 (a) as contemplated in the above
definition of "Initial Equity Offering" or (b) where the failure to do any of
the foregoing would not be reasonably anticipated to cause a Material Adverse
Change.

Section 6.7. Payment of Trade Liabilities, Taxes, etc. Each Credit Party
will (a) timely file all required tax returns including any extensions; (b)
timely pay all taxes, assessments, and other governmental charges or levies
imposed upon it or upon its income, profits or property before the same become
delinquent; (c) within ninety (90) days past the original invoice or billing
date therefor 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, other than royalty payments suspended
in the ordinary course of business; and (e) maintain appropriate accruals and
reserves for all of the foregoing in accordance with GAAP, provided that each
Credit Party may delay paying or discharging any of the foregoing so long as it
is in good faith contesting the validity thereof by appropriate proceedings, if
necessary, and has set aside on its books adequate reserves therefore which are
required by GAAP.

Section 6.8. Insurance.

(a) Each Credit Party shall at all times maintain (at its own expense)
insurance for its property in accordance with the Insurance Schedule with
financially sound and reputable insurance companies, as well as insurance in
such amounts, with such limitations or deductibles, against such risks, and in
such form as are customarily maintained by companies of established repute
engaged in the same or similar businesses operating in the same or similar
locations. All insurance policies covering Collateral shall be endorsed (i) to
provide for payment of losses to Administrative Agent as its interests may
appear, (ii) to provide that such policies may not be canceled or reduced or
affected in any material manner for any reason without ten (10) days prior
notice to Administrative Agent, and (iii) to provide for any other matters
specified in any applicable Security Document or which Administrative Agent may
reasonably require. Each Credit Party 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.

(b) Reimbursement under any liability insurance maintained by Credit
Parties pursuant to this Section 6.8 may be paid directly to the Person who has
incurred the liability covered by such insurance. With respect to any loss
involving damage to Collateral, each Credit Party will make or cause to be made
the necessary repairs to or replacements of such Collateral, and any proceeds of
insurance maintained by each Credit Party pursuant to this Section 6.8 shall be
paid to such Credit Party by Administrative Agent as reimbursement for the costs
of such repairs or replacements as such repairs or replacements are made or
acquired; provided that

63

Administrative Agent shall be entitled (but not obligated) to retain and apply
such proceeds as Collateral during the continuance of any Event of Default.

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

Section 6.10. Interest. In addition to Borrower's obligations to pay
interest at the Default Rate on the Loans under Section 2.5 and the Matured LC
Obligations under Section 2.12(a), Borrower hereby promises to each Lender Party
to pay interest at the Default Rate applicable to Base Rate Loans on all
Obligations (including Obligations to pay fees or to reimburse or indemnify any
Lender) that Borrower has in this Agreement promised to pay to such Lender Party
and which are not paid when due (and subject to the obligations of such Lender
to repay such interest if it is required to repay any such amount to Borrower).
Such interest shall accrue from the date such other Obligations become due until
they are paid.

Section 6.11. Compliance with Agreements and Law. Each Credit Party 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 (other than the Loan
Documents) to which it is a party or by which it or any of its properties is
bound. Each Credit Party will conduct its business and affairs in compliance in
all material respects with all Laws applicable thereto. Each Credit Party will
cause all material licenses and permits for the conduct of its business and the
ownership and operation of its material Engineered Oil and Gas Properties used
and useful in the conduct of its business to be at all times maintained in good
standing and in full force and effect.

Section 6.12. Environmental Matters; Environmental Reviews.

(a) Each Credit Party will comply in all material respects with all
Environmental Laws now or hereafter applicable to such Credit Party, as well as
all contractual obligations and agreements with respect to environmental
remediation or other environmental matters, and shall obtain, at or prior to the
time required by applicable Environmental Laws, all environmental permits,
licenses and other authorizations reasonably necessary for its operations and
will maintain such authorizations in full force and effect. No Credit Party will
do anything or permit anything to be done which will subject any of its
properties to any material remedial obligations under, or result in
noncompliance in any material respect with applicable permits and licenses
issued under, any applicable Environmental Laws, assuming disclosure to the
applicable governmental authorities of all relevant facts, conditions and
circumstances. Upon Administrative Agent's reasonable request, at any time and
from time to time (but no more frequently than once per calendar year with
respect to the same property), Borrower will provide at its own expense an
environmental inspection of any of the Credit Parties' material real properties
and audit of their environmental compliance procedures and practices, in each
case from an engineering or consulting firm selected by Borrower and reasonably
approved by Administrative Agent.

64

(b) Borrower will promptly furnish to Administrative Agent copies of all
written notices of violation, orders, claims, citations, complaints, penalty
assessments, suits or other proceedings received by any Credit Party, or of
which Borrower otherwise has notice, pending or threatened in writing against
any Credit Party 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 any Credit Party's ownership or
use of its properties or the operation of its business.

(c) Borrower will promptly furnish to Administrative Agent all requests for
information, notices of claim, demand letters, and other notifications that are
received by Borrower in connection with any Credit Party's 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 (excluding only routine correspondence concerning
matters in the ordinary course of business with respect to duties that the
Credit Parties are not disputing).

Section 6.13. Actions after the Initial Equity Offering. If and when the
Initial Equity Offering occurs, Borrower will ensure that all of the terms of
the proviso in the above definition of "Initial Equity Offering" are met and
Borrower and NEGO will novate the then existing Hedging Contracts of NEGO so
that Borrower replaces NEGO as a party thereto (with the consent of each other
party thereto other than Citibank, N.A., who hereby gives such consent) and
amend and restate the Security Documents given by NEGO so that they (a) are in
substantially the same form as the Security Documents provided by National
Onshore and National Offshore and (b) secure the Obligations directly.

Section 6.14. Bank Accounts; Offset. To secure the repayment of the
Obligations Borrower hereby grants to each Lender Party, and each of their
respective Affiliates, 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
Lender Party or any of their respective Affiliates, 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 Lender Party
or any of their respective Affiliates, 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 Lender Party, or any of their respective Affiliates,
and (c) any other credits and claims of Borrower at any time existing against
any Lender Party, including claims under certificates of deposit. At any time
and from time to time after the occurrence of any Event of Default, each Lender
Party, and each of their respective Affiliates, 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; irrespective of whether or not such Lender Party or Affiliate shall have
made any demand under this Agreement or any other Loan Document and although
such obligations of the Borrower may be contingent or unmatured or are owed to a
branch or office of such Lender Party different from the branch or office
holding such items. 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.

65

Section 6.15. Guaranties. Each of the Subsidiaries of Borrower on the date
hereof, other than the NEG Subsidiaries, shall promptly execute and deliver to
Administrative Agent an absolute and unconditional guaranty of the timely
repayment of the Obligations and the due and punctual performance of the
obligations of Borrower under the Loan Documents, which guaranty shall be
satisfactory to Administrative Agent in form and substance and shall be
delivered prior to the making of any Loan hereunder. IPO Co, upon its
acquisition of more than 10% of the issued and outstanding Equity of Borrower,
Debt Holdco, upon its acquisition of any Intercompany Obligation, each Person
that hereafter becomes a Subsidiary of Borrower, and each Person that is a NEG
Subsidiary on the date hereof but hereafter ceases to be a NEG Subsidiary but
remains a Subsidiary of Borrower, shall promptly execute and deliver to
Administrative Agent an absolute and unconditional guaranty of the timely
repayment of the Obligations and the due and punctual performance of the
obligations of Borrower under the Loan Documents, which guaranty shall be
satisfactory to Administrative Agent in form and substance. Borrower will cause
each such Guarantor to deliver to Administrative Agent, simultaneously with its
delivery of such a guaranty, written evidence satisfactory to Administrative
Agent and its counsel that such Guarantor has taken all company 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. To the extent
that any Subsidiary of Borrower which is a Guarantor owes any Intercompany
Obligation to Borrower then, notwithstanding any restrictions on repayment of
such Intercompany Obligation in any Loan Document, any payment made by such
Subsidiary under its Guaranty will constitute a payment in the same amount of
such Intercompany Obligation owed by such Subsidiary to Borrower.

Section 6.16. Production Proceeds. Notwithstanding that, by the terms of
the various Security Documents, Guarantors and Borrower are and will be
assigning to Administrative Agent and Lenders all of the "Production Proceeds"
(as defined therein) accruing to the property covered thereby, so long as no
Event of Default has occurred such Credit Parties 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 an Event of Default, Administrative 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 Credit Parties or to receive directly from the purchasers of
production all other Production Proceeds. In no case shall any failure, whether
purposed or inadvertent, by Administrative 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 Administrative Agent or Lenders to Credit
Parties constitute a waiver, remission, or release of any other Production
Proceeds or of any rights of Administrative Agent or Lenders to collect other
Production Proceeds thereafter.

Section 6.17. Collateral.

(a) At all times the Secured Obligations shall be secured by Liens (subject
only to Permitted Liens) covering and encumbering (i) at least 90% of the total
value of the proved reserves of oil and gas attributable to the Oil and Gas
Properties of Borrower and its Subsidiaries, other than the NEG Subsidiaries,
(ii) all of the issued and outstanding Equity of each Subsidiary of Borrower
that is owned by any Credit Party, (iii) all existing Intercompany

66

Obligations (except for the obligation of NEGH to pay to NEGI the "NEGI Priority
Amount" referred to in clause (d) of the definition of "Intercompany
Obligations"), and (iv) Borrower's rights under the Restated NEGO Credit
Facility and under mortgages securing the Restated NEGO Credit Facility that
cover at least 90% of the total value of the proved reserves of oil and gas
attributable to the Oil and Gas Properties of the NEG Subsidiaries. On the date
hereof, and from time to time hereafter as any such Equity or Intercompany
Obligation is acquired by a Credit Party, such Credit Party shall deliver to
Administrative Agent for the ratable benefit of each Lender pledge agreements
covering such Equity and Intercompany Obligation, each in form and substance
acceptable to Administrative Agent.

(b) To the extent necessary to comply with the first sentence of Section
6.17(a), (i) within 30 days after the delivery of each Engineering Report, the
Credit Parties that own Oil and Gas Properties shall execute and deliver
mortgages and deeds of trust in form and substance acceptable to Administrative
Agent, together with such other assignments, conveyances, amendments, agreements
and other writings (each duly authorized and executed) as Administrative Agent
shall deem necessary or appropriate to grant, evidence and perfect the Liens
required by this Section 6.17.

(c) Borrower agrees to deliver and to cause each other Credit Party to
deliver, to further secure the Obligations (or, in the case of the NEG
Subsidiaries, to secure the Restated NEGO Credit Facility) whenever requested by
Administrative Agent in its sole and absolute discretion: (i) deeds of trust,
mortgages, chattel mortgages, security agreements, financing statements and
other Security Documents in form and substance satisfactory to Administrative
Agent for the purpose of granting, confirming, and perfecting Liens (subject
only to Permitted Liens) in any real or personal property now owned or hereafter
acquired by any Credit Party, (ii) transfer orders or letters in lieu thereof
with respect to the production and proceeds of production from the Collateral,
in form and substance satisfactory to Administrative Agent, and (iii) favorable
title opinions from legal counsel acceptable to Administrative Agent with
respect to any Credit Party's properties and interests designated by
Administrative Agent, based upon abstract or record examinations to dates
acceptable to Administrative Agent and (1) stating that such Credit Party has
good and defensible title to such properties and interests, free and clear of
all Liens other than Permitted Liens, (2) confirming that such properties and
interests are subject to Security Documents securing the Obligations that
constitute and create legal, valid and duly perfected deed of trust or mortgage
liens in such properties and interests and assignments of and security interests
in the oil and gas attributable to such properties and interests and the
proceeds thereof, subject only to Permitted Liens, and (c) covering such other
matters as Administrative Agent may reasonably request. Upon request by
Administrative Agent, Borrower will deliver, and will cause each other Credit
Party to deliver, releases of any Permitted Liens securing Intercompany
Obligations that are described in subsection (l) of the above definition of
"Permitted Liens".

Section 6.18. Separateness of Each Credit Party. Each Credit Party will:
(a) maintain separate records and books of account that are distinct from those
of any Affiliate of such Credit Party, appropriately identifying such Credit
Party's separate assets and liabilities, and in such records and books of
account properly document all inter-Affiliate transactions; (b) except for
treasury management systems in which ownership of deposits and investments are
separately accounted for, not commingle its funds or assets with those of any
Affiliate of such Credit Party;

67

(c) hold all appropriate meetings of its board of directors or other analogous
governing body to authorize and approve such Credit Party's actions, which
meetings are separate from those of other Affiliates, and at which meetings all
appropriate officers will be elected or appointed to offices that are separate
from those of Affiliates; and (d) not hold itself out as directly owning the
assets of its Affiliates, and not allow any Affiliate to hold itself out as
directly owning the assets of such Credit Party. For so long as NEGI is a
reporting company under the federal securities laws, Borrower will insure that
NEGI complies with the requirements of all Securities Laws to present the
Consolidated financial condition of NEGI and its Subsidiaries to the public
separately from that of Borrower and Borrower's other Subsidiaries.

ARTICLE VII - Negative Covenants of Borrower

To conform with the terms and conditions under which each Lender Party is
willing to have credit outstanding to Borrower, and to induce each Lender Party
to enter into this Agreement and make the Loans, Borrower 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 Credit Party will in any manner owe or be
liable for Indebtedness except:

(a) the Obligations.

(b) Allowed Second Lien/Unsecured Indebtedness, and any guarantees thereof
by any of the Guarantors, provided that if Borrower has in connection with any
Borrowing Base determination requested Lenders to assume that Allowed Second
Lien/Unsecured Indebtedness will not be issued in the following six months,
Borrower may not issue or borrow Allowed Second Lien/Unsecured Indebtedness
until completion of the next following Borrowing Base determination in
connection with which Borrower has requested Lenders to assume that the Allowed
Second Lien/Unsecured Indebtedness will be issued in the following six months.

(c) Intercompany Obligations.

(d) Indebtedness for borrowed money hereafter lent to Borrower by one or
more of its equity owners, provided that such Indebtedness (i) does not provide
for any payments in cash or in property of Borrower, whether for principal,
interest or otherwise, prior to the payment in full of the Obligations, (ii) has
a scheduled maturity after the Maturity Date, which maturity cannot be
accelerated prior to the Maturity Date under any circumstances, (iii) is not
secured, and (iv) is otherwise subordinated to the Obligations upon terms and
conditions satisfactory to Administrative Agent in its sole and absolute
discretion.

(e) Indebtedness outstanding under the instruments and agreements described
in Section 7.1(e) of the Disclosure Schedule (excluding any renewals or
extensions of such Indebtedness).

(f) Indebtedness arising under Hedging Contracts permitted under Section
7.3.

68

(g) purchase money Indebtedness in an aggregate principal amount not to
exceed $15,000,000 at any time that is incurred for the purchase of equipment,
provided that the original principal amount of any such Indebtedness shall not
be in excess of the purchase price of the equipment acquired thereby and such
Indebtedness shall be secured only by the acquired equipment, any accessions
thereto and any proceeds thereof.

(h) Indebtedness of IPO Co or Borrower owing to AREH or any of its
Affiliates for expenses incurred for the Initial Equity Offering, provided that
the terms of such Indebtedness provide that such Indebtedness will be paid out
of - and only out of - the proceeds of the Initial Equity Offering.

(i) miscellaneous items of Indebtedness not described in subsections (a)
through (g) which do not in the aggregate (taking into account all such
Indebtedness of all Credit Parties) exceed $10,000,000 at any one time
outstanding.

Section 7.2. Limitation on Liens. Except for Permitted Liens, no Credit
Party will create, assume or permit to exist any Lien upon any of the properties
or assets which it now owns or hereafter acquires.

Section 7.3. Hedging Contracts.

(a) No Credit Party will be a party to or in any manner be liable on any
Hedging Contract except:

(i) Hedging Contracts entered into by Borrower or (prior to the
Initial Equity Offering) by NEGO with the purpose and effect of fixing
prices on oil or gas expected to be produced by NEGO, National Onshore or
National Offshore (in the case of Hedging Contracts entered into by
Borrower) or by NEGO (in the case of Hedging Contracts entered into by
NEGO), provided that at all times: (1) the aggregate monthly production
covered by all such contracts of Borrower (determined, in the case of
contracts that are not settled on a monthly basis, by a monthly proration
acceptable to Administrative Agent) for any single month does not in the
aggregate exceed eighty percent (80%) of Credit Parties' (excluding the NEG
Subsidiaries) aggregate Projected Oil and Gas Production anticipated (at
the time such Hedging Contract is entered into) to be sold in the ordinary
course of such Credit Parties' businesses for such month, (2) the aggregate
monthly production covered by all such contracts of NEGO (determined, in
the case of contracts that are not settled on a monthly basis, by a monthly
proration acceptable to Administrative Agent) for any single month does not
in the aggregate exceed eighty percent (80%) of NEGO's aggregate Projected
Oil and Gas Production anticipated (at the time such Hedging Contract is
entered into) to be sold in the ordinary course of the NEGO's business for
such month, (3) except for letters of credit and the Collateral under the
Security Documents with respect to Lender Hedging Obligations, no such
contract requires any Credit Party to put up money, assets, or other
security against the event of its nonperformance prior to actual default by
such Credit Party in performing its obligations thereunder, 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 Lender or one of its
Affiliates) at the time the contract is made has long-term obligations
rated A or A2 or

69

better, respectively, by either Rating Agency. As used in this subsection,
the term "Projected Oil and Gas Production" means the projected production
of oil or gas (measured by volume unit or BTU equivalent, not sales price)
from properties and interests owned by any Credit Party which are located
in or offshore of the United States and which have attributable to them
proved producing oil or gas reserves, as such production from proved
producing reserves is projected in the most recent Engineering Report
delivered pursuant to Section 6.2(f) or (g), 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 a separate or supplemental reports meeting the
requirements of such Section 6.2(f) or (g) above and otherwise are
satisfactory to Administrative Agent; and

(ii) Hedging Contracts entered into by Borrower or NEGO with the
purpose and effect of fixing interest rates (or reversing previous Hedging
Contracts entered into to fix such interest rates) on a principal amount of
Indebtedness of Borrower or NEGO that is accruing interest at a variable
rate, provided that (i) the aggregate notional amount of such contracts
never exceeds one hundred percent (100%) 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,
(ii) 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 (iii) each such contract is
with a counterparty or has a guarantor of the obligation of the
counterparty who (unless such counterparty is a Lender or an Affiliate of
any Lender at the time such contract is entered into) at the time the
contract is made has long-term unsecured and unenhanced debt obligations
rated A or A2 or better, respectively, by either Rating Agency; and

(b) No Credit Party will terminate or amend the Required Closing Date
Hedges, except to the extent such Credit Party replaces such Required Closing
Date Hedges with new Hedging Contracts allowed under Section 7.3(a) that provide
equal or greater price protection on the same or greater amount of Projected Oil
and Gas Production.

Section 7.4. Limitation on Mergers, Issuances of Securities. Other than as
contemplated in the above definition of "Initial Equity Offering", no Credit
Party will merge or consolidate with or into any other Person, or be liquidated
into any Person, except that any Subsidiary of Borrower may be merged into or
consolidated or liquidated with (a) another Subsidiary of Borrower, so long as a
Guarantor is the surviving business entity, or (b) Borrower, so long as Borrower
is the surviving business entity; provided that no Default or Event of Default
exists or would exist after giving effect to such merger or consolidation and
that all parties to such transaction are Solvent both before and (to the extent
still existing) after such transaction. Borrower will not issue any Equity
securities other than its common Equity and any options or warrants giving the
holders thereof only the right to acquire such common Equity. No Subsidiary of
Borrower will issue any additional shares of its Equity securities or any
options, warrants or other rights to acquire such additional Equity securities
except to Borrower or a Guarantor and only to the extent not otherwise forbidden
under the terms hereof.

70

Section 7.5. Limitation on Sales of Property. Except for transfers pursuant
to any merger, consolidation or liquidation permitted under Section 7.4 or any
Distribution permitted under Section 7.6, no Credit Party will (or agree to)
sell, transfer, lease, exchange, alienate or dispose of any of its material
assets or properties or any material interest therein, or discount, sell, pledge
or assign any notes payable to it, accounts receivable or future income, 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;

(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) Equity interests of any of Borrower's Subsidiaries which are
transferred to Borrower or a Guarantor; and

(d) any Oil and Gas Properties which are sold or otherwise transferred for
fair consideration to Persons who are not Affiliates of Borrower, provided that
(i) no Default exists at the time of any such sale or other transfer of
Collateral (other than Defaults that will be cured upon the application of the
proceeds of such sale or other transfer), (ii) Borrower must first give notice
to Administrative Agent of any such sale of properties subject to Security
Documents, (iii) if the Oil and Gas Properties so sold or transferred, on a
cumulative basis since the then most recent Determination Date, represent more
than ten percent of the value of all of the proved reserves of Borrower and its
Subsidiaries, as determined in the most recently delivered Engineering Report,
the sale or other transfer may not be made until Administrative Agent and the
Lenders have made a Special Determination as contemplated in Section 2.9(d), and
(iv) concurrently with such sale or other transfer Borrower must pay in full any
Borrowing Base Deficiency that results from such Special Determination.

Administrative Agent shall deliver to Borrower a release with respect to any
Collateral sold in accordance with this section and shall execute and deliver
such instruments and documents as shall reasonably be requested by Borrower to
evidence and record such release, and each Lender hereby irrevocably consents to
and authorizes all such release, instruments and documents.

Section 7.6. Limitation on Distributions; Prepayments of Allowed Second
Lien/Unsecured Indebtedness. No Credit Party will declare or make any
Distribution, other than, so long as no Event of Default or Borrowing Base
Deficiency exists after giving effect to such Distribution:

(a) Distributions permitted under Section 2.4 hereof.

(b) Distributions payable to Borrower or to Guarantors that are
Subsidiaries of Borrower, to the extent not in violation of the investment
restrictions of Section 7.7.

(c) Distributions payable to Borrower's Equity holders out of the proceeds
from the issuance or borrowing of Allowed Second Lien/Unsecured Indebtedness,
provided that the condition described in Section 4.1(r) is satisfied as of the
date of such Distribution.

71

(d) Distributions that result in Debt Holdco holding Intercompany
Obligations and becoming a Guarantor as contemplated in subsection (c) of the
definition of "Intercompany Obligations".

(e) Distributions in accordance with the above definition of "Initial
Equity Offering".

(f) Distributions by a Credit Party payable only in such Credit Party's
common Equity, so long as Borrower's interest in any of its Subsidiaries is not
thereby reduced.

(g) with respect to any period during which Borrower is a pass-through
entity or disregarded entity for federal income tax purposes, quarterly cash
Distributions to each Equity holder in Borrower for the US federal, state and
local income taxes, including estimated taxes, payable by such Equity holder (in
any jurisdiction in which Borrower or its Subsidiaries own Oil and Gas
Properties) that are attributable to the taxable income allocated to such Equity
holder from Borrower and its Subsidiaries, calculated assuming that such Equity
holder is taxed as a corporation for federal income tax purposes and has no
income or losses other than its share of Borrower's income or losses (taking
into account for any period any loss carry-forwards of such Equity holder
attributable to losses allocated to such Equity holder from Borrower for prior
periods that have not previously been offset by income from Borrower, and taking
into account any adjustments for previous estimated taxes) and provided that
each such Distribution shall be made no earlier than 20 days prior to the due
date for such tax (or the date that quarterly estimated taxes are required to be
paid) that would apply to Borrower if it were a Delaware corporation.

(h) other cash Distributions to Borrower's Equity holders in an aggregate
amount not to exceed $8,000,000 in any Fiscal Year.

(i) Distributions of cash by any NEG Subsidiary to the extent not
restricted under the Restated NEGO Credit Facility.

(j) repayments to AREH or any of its Affiliates of approximately
$38,300,000 heretofore borrowed by National Offshore from AREH and approximately
$1,500,000 heretofore borrowed by NEGO from AREH to provide cash collateral for
Hedging Contracts, which repayments may only be made using such cash collateral
(or in the amount of such cash collateral) at the time such cash collateral is
released at or after the Closing Date (and, to the extent such cash collateral
is not released at the Closing Date, the foregoing Indebtedness to be repaid
thereby shall be deemed permitted under Section 7.1 and the yet-to-be released
Liens on such cash collateral shall be deemed to be Permitted Liens, in each
case until such cash collateral is so released).

(k) only to the extent made out of proceeds of the Initial Equity Offering
received by Borrower from IPO Co, payments by Borrower on behalf of IPO Co of
the expenses of the Initial Equity Offering (including repayment of Indebtedness
described in Section 7.1(h).

(l) after IPO Co becomes a guarantor, any dividend by IPO Co of any
Distributions from Borrower permitted under subsection (h).

72

Borrower may make no prepayment of Allowed Second Lien/Unsecured Indebtedness if
the Facility Usage exceeds 90% of the Available Borrowing Base after giving
effect to such prepayment or if any Default or Borrowing Base Deficiency then
exists under this Agreement after giving effect to such prepayment. Borrower is
otherwise free to prepay the Allowed Second Lien/Unsecured Indebtedness, in
whole or in part, at any time. This Section 7.6 does not prevent Borrower or any
of its Subsidiaries from reimbursing IPO Co or NEGI for all of their costs
incurred to manage the properties of Borrower and its Subsidiaries. For as long
as the sole business of IPO Co is to own its interest in Borrower, serve as the
managing member of Borrower, and otherwise manage the business and properties of
Borrower and its Subsidiaries, this reimbursement may include all of IPO Co's
cash expenses.

Section 7.7. Limitation on Investments and New Businesses. No Credit Party
will (a) make any expenditure or commitment or incur any obligation or enter
into or engage in any transaction except in the ordinary course of the oil and
gas business, (b) engage directly or indirectly in any business or conduct any
operations except in connection with or incidental to its present oil and gas
businesses and operations, or (c) make any Investments in any Person other than
Permitted Investments.

Section 7.8. Limitation on Credit Extensions. Except for Permitted
Investments, no Credit Party will extend credit, make advances or make loans
other than normal and prudent extensions of credit to customers or joint working
interest owners 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.

Section 7.9. Transactions with Affiliates; No Prepayments or Amendments of
Restated NEGO Credit Facility. Except for transactions contemplated in the above
definition of "Initial Equity Offering" or as permitted pursuant to Section 7.6
or Section 7.1(d), neither Borrower nor any of its Subsidiaries nor any
Guarantor will engage in any material transaction with any Person that is an
Affiliate of Borrower 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 solely among Borrower and Guarantors. Until NEGO becomes a
Guarantor, no prepayments will be made or allowed under the Restated NEGO Credit
Facility if such prepayment would decrease the outstanding principal amount
thereof to less than $160,000,000. Borrower will not amend, modify, or waive any
provision of, or consent to any amendment, modification or waiver of any
provision of, or assign any of its rights under, the Restated NEGO Credit
Facility or any of the "Loan Documents" as defined therein except either
pursuant to the Security Documents or with the consent of Administrative Agent.

Section 7.10. Prohibited Contracts. Except as set forth in Section 7.10 of
the Disclosure Schedule, no Credit Party 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: (a) pay dividends
or make other distributions to Borrower, (b) to redeem equity interests held in
it by Borrower, (c) to repay loans and other indebtedness owing by it to
Borrower, or (d) to transfer any of its assets to Borrower. No Credit Party will
enter into any "take-or-pay" contract or other contract or arrangement for the
purchase of goods or services which obligates it to pay for such goods or
service regardless of whether they are delivered or furnished to it. No Credit

73

Party will hereafter enter into any contract or agreement that forbids it from
granting the Liens required hereunder.

Section 7.11. Financial Covenants.

(a) Leverage Ratio. Borrower will not permit the Leverage Ratio to be
greater than 3.5 to 1.0.

(b) Consolidated Tangible Net Worth. Borrower will not permit Consolidated
Tangible Net Worth to be less than $240,000,000, plus 50% of Consolidated Net
Income for each Fiscal Quarter ended after December 31, 2005 for which
Consolidated Net Income was positive.

(c) Current Ratio. Borrower will not permit the ratio of Consolidated
Current Assets to Consolidated Current Liabilities to be less than 1.0 to 1.0.

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 Credit Party fails to pay any 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 Credit Party fails to pay any Obligation (other than the
Obligations in subsection (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) The occurrence of an "Event of Default" as defined in the Restated NEGO
Credit Facility;

(d) Any Credit Party fails to duly observe, perform or comply with any
covenant, agreement or provision of Section 6.4 (a) and (b) or Article VII;

(e) Any Credit Party 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 to which it is a party or
any Hedging Contract relating to Lender Hedging Obligations, and such failure
remains unremedied for a period of thirty (30) days after notice of such failure
is given by Administrative Agent to Borrower;

(f) Any representation or warranty made herein or in any writing by or on
behalf of any Credit Party in connection with any Loan Document shall prove to
have been false or incorrect in any material respect on any date on or as of
which made, or any Loan Document at

74

any time ceases to be valid, binding and enforceable for any reason other than
its release or subordination by Administrative Agent;

(g) The occurrence of any Termination Event;

(h) Any Credit Party:

(i) suffers the entry against it of a judgment, decree or order for
relief by a Governmental Authority 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 sixty 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 is
generally not paying (or admits in writing its inability to pay) its debts
as such debts become due; or takes corporate or other action authorizing
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 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 sixty
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 $15,000,000 (not covered by insurance satisfactory to
Administrative 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 Governmental Authority 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;

(i) Any Credit Party (i) fails to pay any portion, when such portion is
due, of any of its Indebtedness (including any Allowed Second Lien/Unsecured
Indebtedness) in excess of $10,000,000, or (ii) breaches or defaults in the
performance of any agreement or instrument by which any such Indebtedness is
issued, evidenced, governed, or secured, any such failure, breach or default
continues beyond any applicable period of grace provided therefore, and the
effect of any failure referred to in this clause (ii) is to cause, or permit the
holder or holders of such

75

Indebtedness or a trustee on its or their behalf (with or without the giving of
notice) to cause, such Indebtedness to become due prior to its stated maturity;

(j) The Loan Documents after delivery thereof shall for any reason, except
to the extent permitted by the terms thereof, cease to be in full force and
effect and valid, binding and enforceable in accordance with their terms against
the Borrower or any Guarantor party thereto or shall be repudiated by any of
them, or cease to create a valid and perfected Lien of the priority required
thereby on any of the Collateral purported to be covered thereby, except to the
extent permitted by the terms of this Agreement, or the Borrower or a Guarantor
shall so state in writing; and

(k) Any Change of Control occurs.

Upon the occurrence of an Event of Default described in subsection (h)(i),
(h)(ii) or (h)(iii) of this section with respect to any Credit Party, 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 Credit Party who at any time
ratifies or approves this Agreement. Upon any such acceleration, any obligation
of any Lender to make any further Loans and any obligation of LC Issuer to issue
Letters of Credit hereunder shall be permanently terminated. During the
continuance of any other Event of Default, Administrative Agent at any time and
from time to time may (and upon written instructions from Majority Lenders,
Administrative Agent shall), without notice to Borrower or any other Credit
Party, do either or both of the following: (1) terminate any obligation of
Lenders to make Loans hereunder, and any obligation of LC Issuer to issue
Letters of Credit 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 Credit Party who at any time ratifies or approves this Agreement.

Section 8.2. Remedies. If any Event of Default shall occur and be
continuing, each Lender Party may protect and enforce any rights provided to it
under the Loan Documents by any available proceedings, including proceedings for
specific performance. All rights, remedies and powers conferred upon Lender
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.

Section 8.3. Application of Proceeds after Acceleration. If Administrative
Agent collects or receives money pursuant to the Loan Documents after the
acceleration of the Obligations as provided in Section 8.1 or upon foreclosure
upon Collateral, Administrative Agent shall distribute all money so collected or
received in accordance with the Intercreditor Agreement and then:

(a) first to any reimbursements due Administrative Agent hereunder or under
any Security Document; and

76

(b) then ratably to the payment of the Obligations, including LC
Obligations (and among the outstanding Obligations in the manner provided in
Section 3.1), and the Lender Hedging Obligations, until such Obligations and
Lender Hedging Obligations are paid in full.

Administrative Agent shall have no responsibility to determine the existence or
amount of Lender Hedging Obligations and may reserve from the application of
amounts under this Section amounts distributable in respect of Lender Hedging
Obligations until it has received evidence satisfactory to it of the existence
and amount of such Lender Hedging Obligations.

ARTICLE IX - Administrative Agent

Section 9.1. Appointment and Authority. Each of the Lenders and LC Issuer
hereby irrevocably appoints Citicorp USA, Inc. to act on its behalf as
Administrative Agent hereunder and under the other Loan Documents and authorizes
Administrative Agent to take such actions on its behalf and to exercise such
powers as are delegated to Administrative Agent by the terms hereof or thereof,
together with such actions and powers as are reasonably incidental thereto. The
provisions of this Article are solely for the benefit of the Lender Parties, and
neither Borrower nor any other Credit Party shall have rights as a third party
beneficiary of any of such provisions. Administrative Agent shall not have any
duties or obligations except those expressly set forth herein and in the other
Loan Documents. Without limiting the generality of the foregoing, Administrative
Agent:

(a) shall not be subject to any fiduciary or other implied duties,
regardless of whether a Default has occurred and is continuing;

(b) shall not have any duty to take any discretionary action or exercise
any discretionary powers, except discretionary rights and powers expressly
contemplated hereby or by the other Loan Documents that Administrative Agent is
required to exercise as directed in writing by the Majority Lenders (or such
other number or percentage of Lenders as shall be expressly provided for herein
or in the other Loan Documents), provided that Administrative Agent shall not be
required to take any action that, in its opinion or the opinion of its counsel,
may expose Administrative Agent to liability or that is contrary to any Loan
Document or applicable law; and

(c) shall not, except as expressly set forth herein and in the other Loan
Documents, have any duty to disclose, and shall not be liable for the failure to
disclose, any information relating to Borrower or any of its Affiliates that is
communicated to or obtained by the Person serving as Administrative Agent or any
of its Affiliates in any capacity.

Administrative Agent shall not be liable for any action taken or not taken
by it (i) with the consent or at the request of Majority Lenders (or such other
number or percentage of the Lenders as shall be necessary, or as Administrative
Agent shall believe in good faith shall be necessary, under the circumstances as
provided in Sections 10.1 and 8.2) or (ii) in the absence of its own gross
negligence or willful misconduct. Administrative Agent shall be deemed not to
have knowledge of any Default unless and until notice describing such Default is
given to Administrative Agent by Borrower or a Lender.

77

Administrative Agent shall not be responsible for or have any duty to
ascertain or inquire into (i) any statement, warranty or representation made in
or in connection with this Agreement or any other Loan Document, (ii) the
contents of any certificate, report or other document delivered hereunder or
thereunder or in connection herewith or therewith, (iii) the performance or
observance of any of the covenants, agreements or other terms or conditions set
forth herein or therein or the occurrence of any Default, (iv) the validity,
enforceability, effectiveness or genuineness of this Agreement, any other Loan
Document or any other agreement, instrument or document or (v) the satisfaction
of any condition set forth in Article IV or elsewhere herein, other than to
confirm receipt of items expressly required to be delivered to Administrative
Agent.

Section 9.2. Reliance by Administrative Agent. Administrative Agent shall
be entitled to rely upon, and shall not incur any liability for relying upon,
any notice, request, certificate, consent, statement, instrument, document or
other writing (including any electronic message, Internet or intranet website
posting or other distribution) believed by it to be genuine and to have been
signed, sent or otherwise authenticated by the proper Person. Administrative
Agent also may rely upon any statement made to it orally or by telephone and
believed by it to have been made by the proper Person, and shall not incur any
liability for relying thereon. In determining compliance with any condition
hereunder to the making of a Loan, or the issuance of a Letter of Credit, that
by its terms must be fulfilled to the satisfaction of a Lender or LC Issuer,
Administrative Agent may presume that such condition is satisfactory to such
Lender or LC Issuer unless Administrative Agent shall have received notice to
the contrary from such Lender or LC Issuer prior to the making of such Loan or
the issuance of such Letter of Credit. Administrative Agent may consult with
legal counsel (who may be counsel for Borrower), independent accountants and
other experts selected by it, and shall not be liable for any action taken or
not taken by it in accordance with the advice of any such counsel, accountants
or experts.

Section 9.3. Non-Reliance on Administrative Agent and Other Lenders. Each
Lender Party acknowledges that it has, independently and without reliance upon
Administrative Agent or any other Lender Party or any of their Related Parties
and based on such documents and information as it has deemed appropriate, made
its own credit analysis and decision to enter into this Agreement. Each Lender
Party also acknowledges that it will, independently and without reliance upon
Administrative Agent or any other Lender Party or any of their Related Parties
and based on such documents and information as it shall from time to time deem
appropriate, continue to make its own decisions in taking or not taking action
under or based upon this Agreement, any other Loan Document or any related
agreement or any document furnished hereunder or thereunder.

Section 9.4. Rights as a Lender. The Person serving as Administrative Agent
hereunder shall have the same rights and powers in its capacity as a Lender as
any other Lender and may exercise the same as though it were not Administrative
Agent and the term "Lender" or "Lenders" shall, unless otherwise expressly
indicated or unless the context otherwise requires, include the Person serving
as Administrative Agent hereunder in its individual capacity. Such Person and
its Affiliates may accept deposits from, lend money to, act as the financial
advisor or in any other advisory capacity for and generally engage in any kind
of business with Borrower or any Subsidiary or other Affiliate thereof as if
such Person were not Administrative Agent hereunder and without any duty to
account therefor to the Lenders.

78

Section 9.5. Sharing of Set-Offs and Other Payments. Each Lender 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, taking into account all distributions made by Administrative Agent under
Section 3.1, causes such Lender Party to have received more than it would have
received had such payment been received by Administrative 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 Lender 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 Administrative Agent and all Lender Parties
share all payments of Obligations as provided in Section 3.1; provided, however,
that nothing contained in this section shall in any way affect the right of any
Lender 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 the order of a Governmental Authority order to be paid on account of
the possession of such funds prior to such recovery.

Section 9.6. Investments. Whenever Administrative Agent in good faith
determines that it is uncertain about how to distribute to Lender Parties any
funds which it has received, or whenever Administrative Agent in good faith
determines that there is any dispute among Lender Parties about how such funds
should be distributed, Administrative Agent may choose to defer distribution of
the funds which are the subject of such uncertainty or dispute. If
Administrative Agent in good faith believes that the uncertainty or dispute will
not be promptly resolved, or if Administrative Agent is otherwise required to
invest funds pending distribution to Lender Parties, Administrative Agent shall
invest such funds in Cash Equivalents 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 Administrative Agent for distribution to Lender Parties
(other than to the Person who is Administrative Agent in its separate capacity
as a Lender or LC Issuer) shall be held by Administrative Agent pending such
distribution solely as Administrative Agent for such Lender Parties, and
Administrative Agent shall have no equitable title to any portion thereof.

Section 9.7. Resignation of Administrative Agent. Administrative Agent may
at any time give notice of its resignation to the Lenders and Borrower. Upon
receipt of any such notice of resignation, Majority Lenders shall have the
right, in consultation with Borrower, to appoint a successor, which shall be a
bank with an office in the United States, or an Affiliate of any such bank with
an office in the United States. If no such successor shall have been so
appointed by Majority Lenders and shall have accepted such appointment within 30
days after the retiring Administrative Agent gives notice of its resignation,
then the retiring Administrative Agent may on behalf of the Lenders Parties,
appoint a successor Administrative Agent meeting the

79

qualifications set forth above provided that if Administrative Agent shall
notify Borrower and the Lenders that no qualifying Person has accepted such
appointment, then such resignation shall nonetheless become effective in
accordance with such notice and (1) the retiring Administrative Agent shall be
discharged from its duties and obligations hereunder and under the other Loan
Documents (except that in the case of any Collateral held by Administrative
Agent on behalf of the Lenders Parties under any of the Loan Documents, the
retiring Administrative Agent shall continue to hold such Collateral until such
time as a successor Administrative Agent is appointed) and (2) all payments,
communications and determinations provided to be made by, to or through
Administrative Agent shall instead be made by or to each Lender Parties
directly, until such time as Majority Lenders appoint a successor Administrative
Agent as provided for above in this paragraph. Upon the acceptance of a
successor's appointment as Administrative Agent hereunder, such successor shall
succeed to and become vested with all of the rights, powers, privileges and
duties of the retiring (or retired) Administrative Agent, and the retiring
Administrative Agent shall be discharged from all of its duties and obligations
hereunder or under the other Loan Documents (if not already discharged therefrom
as provided above in this paragraph). The fees payable by Borrower to a
successor Administrative Agent shall be the same as those payable to its
predecessor unless otherwise agreed between Borrower and such successor. After
the retiring Administrative Agent's resignation hereunder and under the other
Loan Documents, the provisions of this Article and Section 10.4 shall continue
in effect for the benefit of such retiring Administrative Agent, its sub-agents
and their respective Related Parties in respect of any actions taken or omitted
to be taken by any of them while the retiring Administrative Agent was acting as
Administrative Agent.

Section 9.8. Delegation of Duties. Administrative Agent may perform any and
all of its duties and exercise its rights and powers hereunder or under any
other Loan Document by or through any one or more sub-agents appointed by
Administrative Agent. Administrative Agent and any such sub-agent may perform
any and all of its duties and exercise its rights and powers by or through their
respective Related Parties. The exculpatory provisions of this Article shall
apply to any such sub-agent and to the Related Parties of Administrative Agent
and any such sub-agent, and shall apply to their respective activities in
connection with the syndication of the credit facilities provided for herein as
well as activities as Administrative Agent.

Section 9.9. No Other Duties, etc. Anything herein to the contrary
notwithstanding, none of the "Bookrunners," "Arrangers," "Co-Arrangers,"
"Syndication Agent" or "Documentation Agent" listed on the cover page hereof
shall have any powers, duties or responsibilities under this Agreement or any of
the other Loan Documents, except in its capacity, as applicable, as
Administrative Agent, a Lender or LC Issuer hereunder.

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 Lender in exercising any right, power or remedy
which such Lender Party may have under any of the Loan Documents shall operate
as a waiver thereof or of any other right,

80

power or remedy, nor shall any single or partial exercise by any Lender 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 Credit Party shall in any case of itself entitle any
Credit Party 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 Administrative Agent or LC Issuer,
by such party, and (iii) if such party is a Lender, by Majority Lenders.
Notwithstanding the foregoing or anything to the contrary herein (but subject to
Section 2.17), Administrative 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,

(2) increase the maximum amount which such Lender is committed
hereunder to lend,

(3) reduce any fees payable to such Lender hereunder, or the principal
of, or interest on, such Lender's Note,

(4) extend the Maturity Date or postpone any date fixed for any
payment of any such fees, principal or interest,

(5) amend the definition herein of "Majority Lenders" or "Super
Majority Lenders" or otherwise change the aggregate amount of Percentage
Shares which is required for Administrative Agent, Lenders or any of them
to take any particular action under the Loan Documents,

(6) release Borrower from its obligation to pay such Lender's
Obligations or release any Guarantor from its Guaranty of such payment,
except that a Guarantor's Guaranty may be released in connection with a
sale of such Guarantor's Equity that has been consented to by Majority
Lenders and except that Debt Holdco's Guaranty (as well as its Obligations
under any other Security Documents) shall be released upon the payment or
termination, or reassignment to Borrower, or any combination of the
foregoing, of all Intercompany Obligations owing to Debt Holdco by Borrower
or any of Borrower's Subsidiaries,

(7) release all or any material portion of the Collateral, except for
such releases relating to sales or dispositions of property permitted by
the Loan Documents or required

81

under any intercreditor agreement entered into in connection with the
"Second Lien Notes" (as described in Schedule 4) issued by Borrower in
compliance herewith, or

(8) amend this Section 10.1(a).

Notwithstanding the foregoing or anything to the contrary herein, Administrative
Agent shall not, without the prior consent of each individual Lender affected
thereby (or, as applicable, an Affiliate of such Lender), execute and deliver
any waiver or amendment to any Loan Document which would (i) cause an obligation
under any outstanding Hedging Contract owing to such Lender (or its Affiliate)
that, prior to such waiver or amendment, constituted a "Lender Hedging
Obligation" as defined herein to cease to be a "Lender Hedging Obligation" as
defined herein or (ii) change the provisions of Section 8.3 in any way that
reduced the ratable payment of such Lender Hedging Obligation as set out in such
section.

(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 any Lender Party, 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
Lender 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 Lender 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
Credit Parties, on one hand, and each Lender Party on the other hand, is and
shall be solely that of debtor and creditor, respectively, provided that, solely
for purposes of Section 10.5(c), Administrative Agent shall act as the agent of
Borrower in maintaining the Register as set forth therein, (vi) no partnership
or joint venture exists with respect to the Loan Documents between any Credit
Party and any Lender Party, (vii) Administrative Agent is not Borrower's
Administrative Agent, but Administrative Agent for Lenders, (viii) should an
Event of Default or Default occur or exist, each Lender 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
Lender Party, or any representative thereof, and no such representation or
covenant has been made, that any Lender 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 Lender 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) 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.

82

THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.

Section 10.2. Survival of Agreements; Cumulative Nature. All of Credit
Parties' 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 Lender Party and all of Lender Parties' obligations to Borrower are
terminated. All statements and agreements contained in any certificate or other
instrument delivered by any Credit Party to any Lender 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 Credit Parties in the Loan
Documents, and the rights, powers, and privileges granted to Lender 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 Lender 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; Effectiveness; Electronic Communication.

(a) Notices Generally. Except in the case of notices and other
communications expressly permitted to be given by telephone (and except as
provided in paragraph (b) below), all notices and other communications provided
for herein shall be in writing and shall be delivered by hand or overnight
courier service, mailed by certified or registered mail or sent by telecopier as
follows and all notices and other communications expressly permitted hereunder
to be given by telephone shall be made to the applicable telephone number, as
follows and all notices and other communications expressly permitted hereunder
to be given by telephone shall be made to the applicable telephone number, as
follows:

(i) if to Borrower, Administrative Agent or LC Issuer, to the address,
telecopier number, electronic mail address or telephone number specified
for such person on the signature pages hereto;

(ii) if to any other Lender Party, to it at its address, telecopier
number, electronic mail address or telephone number as specified on the
Lenders Schedule;

(iii) if to any Guarantor, to the address, telecopier number,
electronic mail address or telephone number specified for such person in
its Guaranty, or if no address is given in the Guaranty, in care of
Borrower.

Notices sent by hand or overnight courier service, or mailed by certified or
registered mail, shall be deemed to have been given when received; notices sent
by telecopier shall be deemed to have

83

been given when sent (except that, if not given during normal business hours for
the recipient, shall be deemed to have been given at the opening of business on
the next business day for the recipient). Notices delivered through electronic
communications to the extent provided in paragraph (b) below, shall be effective
as provided in said paragraph (b).

(b) Electronic Communications. Notices and other communications to the
Lenders hereunder may be delivered or furnished by electronic communication
(including e-mail and Internet or intranet websites) pursuant to procedures
approved by Administrative Agent, provided that the foregoing shall not apply to
notices to any Lender pursuant to Article II if such Lender, as applicable, has
notified Administrative Agent that it is incapable of receiving notices under
such Article by electronic communication. Administrative Agent or Borrower or
any other Credit Party may, in its discretion, agree to accept notices and other
communications to it hereunder by electronic communications pursuant to
procedures approved by it, provided that approval of such procedures may be
limited to particular notices or communications.

Unless Administrative Agent otherwise prescribes, (i) notices and other
communications sent to an e-mail address shall be deemed received upon the
sender's receipt of an acknowledgement from the intended recipient (such as by
the "return receipt requested" function, as available, return e-mail or other
written acknowledgement), provided that if such notice or other communication is
not sent during the normal business hours of the recipient, such notice or
communication shall be deemed to have been sent at the opening of business on
the next business day for the recipient, and (ii) notices or communications
posted to an Internet or intranet website shall be deemed received upon the
deemed receipt by the intended recipient at its e-mail address as described in
the foregoing clause (i) of notification that such notice or communication is
available and identifying the website address therefor.

Borrower hereby acknowledges that (a) Administrative Agent will make
available to the Lenders Parties materials and/or information provided by or on
behalf of Borrower hereunder (collectively, "Borrower Materials") by posting the
Borrower Materials on IntraLinks or another similar electronic system (the
"Platform") and (b) certain of the Lenders may be "public-side" Lenders (i.e.,
Lenders that do not wish to receive material non-public information with respect
to the Borrower or its securities) (each, a "Public Lender"). Borrower hereby
agrees that (w) all Borrower Materials that are to be made available to Public
Lenders shall be clearly and conspicuously marked "PUBLIC" which, at a minimum,
shall mean that the word "PUBLIC" shall appear prominently on the first page
thereof; (x) by marking Borrower Materials "PUBLIC," the Borrower shall be
deemed to have authorized the Lender Parties to treat such Borrower Materials as
not containing any material non-public information with respect to the Borrower
or its securities for purposes of United States Federal and state securities
laws (provided, however, that to the extent such Borrower Materials constitute
Information, they shall be treated as set forth in Section 10.7); (y) all
Borrower Materials marked "PUBLIC" are permitted to be made available through a
portion of the Platform designated "Public Investor;" and (z) the Administrative
Agent and the Arranger shall be entitled to treat any Borrower Materials that
are not marked "PUBLIC" as being suitable only for posting on a portion of the
Platform not designated "Public Investor."

(c) Change of Address, Etc. Each of Borrower, any other Credit Party,
Administrative Agent and LC Issuer may change its address, telecopier or
telephone number for

84

notices and other communications hereunder by notice to the other parties
hereto. Each other Lender Party may change its address, telecopier or telephone
number for notices and other communications hereunder by notice to Borrower,
Administrative Agent and LC Issuer.

Section 10.4. Expenses; Indemnity; Damage Waiver.

(a) Costs and Expenses. Borrower shall pay (i) all reasonable out-of-pocket
expenses incurred by Administrative Agent and its Affiliates (including the
reasonable fees, charges and disbursements of counsel for Administrative Agent),
in connection with the syndication of the credit facilities provided for herein,
the preparation, negotiation, execution, delivery and administration of this
Agreement and the other Loan Documents or any amendments, modifications or
waivers of the provisions hereof or thereof (whether or not the transactions
contemplated hereby or thereby shall be consummated), (ii) all reasonable
out-of-pocket expenses incurred by LC Issuer in connection with the issuance,
amendment, renewal or extension of any Letter of Credit or any demand for
payment thereunder and (iii) all out-of-pocket expenses incurred by the
Administrative Agent, any Lender or LC Issuer (including the fees, charges and
disbursements of any counsel for Administrative Agent, any Lender or LC Issuer),
in connection with the enforcement or protection of its rights (A) in connection
with this Agreement and the other Loan Documents, including its rights under
this section, or (B) in connection with the Loans made or Letters of Credit
issued hereunder, including all such out-of-pocket expenses incurred during any
workout, restructuring or negotiations in respect of such Loans or Letters of
Credit.

(b) Indemnification by Borrower. Borrower shall indemnify Administrative
Agent (and any sub-agent thereof), each Lender and LC Issuer, and each Related
Party of any of the foregoing Persons (each such Person being called an
"Indemnitee") against, and hold each Indemnitee harmless from, any and all
losses, claims, damages, liabilities and related expenses (including the fees,
charges and disbursements of any counsel for any Indemnitee), and shall
indemnify and hold harmless each Indemnitee from all fees and time charges and
disbursements for attorneys who may be employees of any Indemnitee, incurred by
any Indemnitee or asserted against any Indemnitee by any third party or by
Borrower or any other Credit Party arising out of, in connection with, or as a
result of (i) the execution or delivery of this Agreement, any other Loan
Document or any agreement or instrument contemplated hereby or thereby, the
performance by the parties hereto of their respective obligations hereunder or
thereunder or the consummation of the transactions contemplated hereby or
thereby, (ii) any Loan or Letter of Credit or the use or proposed use of the
proceeds therefrom (including any refusal by LC Issuer to honor a demand for
payment under a Letter of Credit if the documents presented in connection with
such demand do not strictly comply with the terms of such Letter of Credit),
(iii) any actual or alleged presence or release or discharge of Hazardous
Materials on or from any property owned or operated by Borrower or any of its
Subsidiaries, or any Environmental Liability related in any way to Borrower or
any Credit Party, or (iv) any actual or prospective claim, litigation,
investigation or proceeding relating to any of the foregoing, whether based on
contract, tort or any other theory, whether brought by a third party or by
Borrower or any other Credit Party, and regardless of whether any Indemnitee is
a party thereto. THE FOREGOING INDEMNIFICATION WILL 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 CAUSED, IN

85

WHOLE OR IN PART BY ANY NEGLIGENT ACT OR OMISSION OF ANY KIND BY ANY INDEMNITEE,
provided that such indemnity shall not, as to any Indemnitee, be available to
the extent that such losses, claims, damages, liabilities or related expenses
are determined by a court of competent jurisdiction by final and nonappealable
judgment to have resulted from the gross negligence or willful misconduct of
such Indemnitee or if Borrower or such Credit Party has obtained a final and
nonappealable judgment in its favor on such claim as determined by a court of
competent jurisdiction.

(c) Reimbursement by Lenders. To the extent that Borrower for any reason
fails to indefeasibly pay any amount required under paragraph (a) or (b) of this
Section to be paid by it to Administrative Agent (or any sub-agent thereof), LC
Issuer or any Related Party of any of the foregoing, each Lender severally
agrees to pay to Administrative Agent (or any such sub-agent), LC Issuer or such
Related Party, as the case may be, such Lender's Percentage share (determined as
of the time that the applicable unreimbursed expense or indemnity payment is
sought) of such unpaid amount, provided that the unreimbursed expense or
indemnified loss, claim, damage, liability or related expense, as the case may
be, was incurred by or asserted against Administrative Agent (or any such
sub-agent) or LC Issuer in its capacity as such, or against any Related Party of
any of the foregoing acting for Administrative Agent (or any such sub-agent) or
LC Issuer in connection with such capacity. The obligations of the Lenders under
this paragraph (c) are subject to the provisions of Section 2.17.

(d) Waiver of Consequential Damages, Etc. To the fullest extent permitted
by applicable law, Borrower shall not assert, and hereby waives, any claim
against any Indemnitee, on any theory of liability, for special, indirect,
consequential or punitive damages (as opposed to direct or actual damages)
arising out of, in connection with, or as a result of, this Agreement, any other
Loan Document or any agreement or instrument contemplated hereby, the
transactions contemplated hereby or thereby, any Loan or Letter of Credit or the
use of the proceeds thereof. No Indemnitee referred to in paragraph (b) above
shall be liable for any damages arising from the use by unintended recipients of
any information or other materials distributed by it through telecommunications,
electronic or other information transmission systems in connection with this
Agreement or the other Loan Documents or the transactions contemplated hereby or
thereby.

(e) Payments. All amounts due under this Section shall be payable not later
than ten (10) days after demand therefor.

Section 10.5. Successors and Assigns; Joint and Several Liability.

(a) Successors and Assigns Generally. The provisions of this Agreement
shall be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns permitted hereby, except that neither Borrower
nor any other Credit Party may assign or otherwise transfer any of its rights or
obligations hereunder without the prior written consent of Administrative Agent
and each Lender and no Lender may assign or otherwise transfer any of its rights
or obligations hereunder except (i) to an Eligible Assignee in accordance with
the provisions of paragraph (b) of this Section, (ii) by way of participation in
accordance with the provisions of paragraph (d) of this Section or (iii) by way
of pledge or assignment of a security interest subject to the restrictions of
paragraph (f) of this Section (and any other attempted assignment or transfer by
any party hereto shall be null and void). Nothing in this Agreement,

86

expressed or implied, shall be construed to confer upon any Person (other than
the parties hereto, their respective successors and assigns permitted hereby,
Participants to the extent provided in paragraph (d) of this Section and, to the
extent expressly contemplated hereby, the Related Parties of each of
Administrative Agent and the Lenders) any legal or equitable right, remedy or
claim under or by reason of this Agreement.

(b) Assignments by Lenders. Any Lender may at any time assign to one or
more Eligible Assignees all or a portion of its rights and obligations under
this Agreement and the other Loan Documents (including all or a portion of its
commitment and the Loans at the time owing to it); provided that

(i) except in the case of an assignment of the entire remaining amount
of the assigning Lender's commitment and the Loans at the time owing to it
or in the case of an assignment to a Lender or an Affiliate of a Lender or
an Approved Fund with respect to a Lender, the aggregate amount of the
Commitment (which for this purpose includes Loans outstanding thereunder)
or, if the applicable Commitment is not then in effect, the principal
outstanding balance of the Loans of the assigning Lender subject to each
such assignment (determined as of the date the Assignment and Assumption
with respect to such assignment is delivered to Administrative Agent or, if
"Trade Date" is specified in the Assignment and Assumption, as of the Trade
Date) shall not be less than $5,000,000, unless each of Administrative
Agent and, so long as no Event of Default has occurred and is continuing,
Borrower otherwise consents (each such consent not to be unreasonably
conditioned, withheld or delayed);

(ii) each partial assignment shall be made as an assignment of a
proportionate part of all the assigning Lender's rights and obligations
under this Agreement with respect to the Loan or the commitment assigned;

(iii) any assignment of a Commitment must be approved by LC Issuer
unless the Person that is the proposed assignee is itself a Lender with a
Commitment (whether or not the proposed assignee would otherwise qualify as
an Eligible Assignee); and

(iv) the parties to each assignment shall execute and deliver to
Administrative Agent an Assignment and Assumption, together with the Note
subject to such assignment and a processing and recordation fee of $3,500,
and the Eligible Assignee, if it shall not be a Lender, shall deliver to
Administrative Agent an Administrative Questionnaire.

Subject to acceptance and recording thereof by Administrative Agent pursuant to
paragraph (c) of this Section, from and after the effective date specified in
each Assignment and Assumption, the Eligible Assignee thereunder shall be a
party to this Agreement and, to the extent of the interest assigned by such
Assignment and Assumption, have the rights and obligations of a Lender under
this Agreement, and the assigning Lender thereunder shall, to the extent of the
interest assigned by such Assignment and Assumption, be released from its
obligations under this Agreement (and, in the case of an Assignment and
Assumption covering all of the assigning Lender's rights and obligations under
this Agreement, such Lender shall cease to be a party hereto) but shall continue
to be entitled to the benefits of Sections 3.2, 3.4, 3.5 and 10.4 with respect
to facts and circumstances occurring prior to the effective date of such
assignment. Any

87

assignment or transfer by a Lender of rights or obligations under this Agreement
that does not comply with this paragraph shall be treated for purposes of this
Agreement as a sale by such Lender of a participation in such rights and
obligations in accordance with paragraph (d) of this Section.

(c) Register. Administrative Agent, acting solely for this purpose as an
agent of the Borrower, shall maintain at one of its offices a copy of each
Assignment and Assumption delivered to it and a register for the recordation of
the names and addresses of the Lenders, and the commitments of, and principal
amounts of the Loans owing to, each Lender pursuant to the terms hereof from
time to time (the "Register"). The entries in the Register shall be conclusive,
and Borrower, Administrative Agent and the Lenders may treat each Person whose
name is recorded in the Register pursuant to the terms hereof as a Lender
hereunder for all purposes of this Agreement, notwithstanding notice to the
contrary. The Register shall be available for inspection by Borrower and any
Lender, at any reasonable time and from time to time upon reasonable prior
notice.

(d) Participations. Any Lender may at any time, without the consent of, or
notice to, Borrower or Administrative Agent, sell participations to any Person
(other than a natural person or Borrower or any of Borrower's Affiliates or
Subsidiaries) (each, a "Participant") in all or a portion of such Lender's
rights and/or obligations under this Agreement (including all or a portion of
its commitment and/or the Loans owing to it); provided that (i) such Lender's
obligations under this Agreement shall remain unchanged, (ii) such Lender shall
remain solely responsible to the other parties hereto for the performance of
such obligations and (iii) Borrower, and the Lenders Parties shall continue to
deal solely and directly with such Lender in connection with such Lender's
rights and obligations under this Agreement. Any agreement or instrument
pursuant to which a Lender sells such a participation shall provide that such
Lender shall retain the sole right to enforce this Agreement and to approve any
amendment, modification or waiver of any provision of this Agreement; provided
that such agreement or instrument may provide that such Lender will not, without
the consent of the Participant, agree to any amendment, modification or waiver
described in the fifth sentence of Section 10.1(a) that affects such
Participant. Subject to paragraph (e) of this Section, the Borrower agrees that
each Participant shall be entitled to the benefits of Sections 3.2, 3.4 and 3.5
to the same extent as if it were a Lender and had acquired its interest by
assignment pursuant to paragraph (b) of this section. To the extent permitted by
law, each Participant also shall be entitled to the benefits of Section 6.14 as
though it were a Lender, provided such Participant agrees to be subject to
Section 9.5 as though it were a Lender.

(e) Limitations upon Participant Rights. A Participant shall not be
entitled to receive any greater payment under Sections 3.2 and 3.5 than the
applicable Lender would have been entitled to receive with respect to the
participation sold to such Participant, unless the sale of the participation to
such Participant is made with the Borrower's prior written consent. A
Participant that would be a Foreign Lender if it were a Lender shall not be
entitled to the benefits of Section 3.5 unless the Borrower is notified of the
participation sold to such Participant and such Participant agrees, for the
benefit of the Borrower, to comply with Section 3.5(e) as though it were a
Lender. Each Participant shall be subject to Section 3.7(b) and shall be
required to sell its participation pursuant thereto, as if it were a Lender
holding a direct interest in this Agreement.

88

(f) Certain Pledges. Any Lender may at any time pledge or assign a security
interest in all or any portion of its rights under this Agreement to secure
obligations of such Lender, including any pledge or assignment to secure
obligations to a Federal Reserve Bank; provided that no such pledge or
assignment shall release such Lender from any of its obligations hereunder or
substitute any such pledgee or assignee for such Lender as a party hereto.

(g) Joint and Several Liability. All Obligations which are incurred by two
or more Credit Parties shall be their joint and several obligations and
liabilities.

Section 10.6. Confidentiality. Each of the Lender Parties agrees to
maintain the confidentiality of the Information (as defined below), except that
Information may be disclosed (a) to its Affiliates and to its and its
Affiliates' respective partners, directors, officers, employees, agents,
advisors and other representatives (it being understood that the Persons to whom
such disclosure is made will be informed of the confidential nature of such
Information and instructed to keep such Information confidential), (b) to the
extent requested by any regulatory authority purporting to have jurisdiction
over it (including any self-regulatory authority, such as the National
Association of Insurance Commissioners), (c) to the extent required by
applicable laws or regulations or by any subpoena or similar legal process, (d)
to any other party hereto, (e) in connection with the exercise of any remedies
hereunder or under any other Loan Document or any action or proceeding relating
to this Agreement or any other Loan Document or the enforcement of rights
hereunder or thereunder, (f) subject to an agreement containing provisions
substantially the same as those of this Section, to (i) any assignee of or
Participant in, or any prospective assignee of or Participant in, any of its
rights or obligations under this Agreement or (ii) any actual or prospective
counterparty (or its advisors) to any swap or derivative transaction relating to
Borrower and its obligations, (g) with the consent of Borrower or (h) to the
extent such Information (x) becomes publicly available other than as a result of
a breach of this Section or (y) becomes available to such Lender Party or any of
its Affiliates on a nonconfidential basis from a source other than a Credit
Party.

For purposes of this Section, "Information" means all information received
from Borrower or any of its Subsidiaries relating to Borrower or any of its
Subsidiaries or any of their respective businesses, other than any such
information that is available to a Lender Party on a nonconfidential basis prior
to disclosure by Borrower or any of its Subsidiaries, provided that, in the case
of information received from Borrower or any of its Subsidiaries after the date
hereof, such information is clearly identified at the time of delivery as
confidential. Any Person required to maintain the confidentiality of Information
as provided in this Section shall be considered to have complied with its
obligation to do so if such Person has exercised the same degree of care to
maintain the confidentiality of such Information as such Person would accord to
its own confidential information.

Section 10.7. Governing Law; Submission to Process.

(a) GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.

89

(b) SUBMISSION TO JURISDICTION. BORROWER AND EACH OTHER CREDIT PARTY
IRREVOCABLY AND UNCONDITIONALLY SUBMITS, FOR ITSELF AND ITS PROPERTY, TO THE
NONEXCLUSIVE JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK SITTING IN NEW
YORK COUNTY AND OF THE UNITED STATES DISTRICT COURT OF THE SOUTHERN DISTRICT OF
NEW YORK, AND ANY APPELLATE COURT FROM ANY THEREOF, IN ANY ACTION OR PROCEEDING
ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT, OR FOR
RECOGNITION OR ENFORCEMENT OF ANY JUDGMENT, AND EACH OF THE PARTIES HERETO
IRREVOCABLY AND UNCONDITIONALLY AGREES THAT ALL CLAIMS IN RESPECT OF ANY SUCH
ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN SUCH NEW YORK STATE COURT
OR, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, IN SUCH FEDERAL COURT.
EACH OF THE PARTIES HERETO AGREES THAT A FINAL JUDGMENT IN ANY SUCH ACTION OR
PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY
SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW. NOTHING IN THIS
AGREEMENT OR IN ANY OTHER LOAN DOCUMENT SHALL AFFECT ANY RIGHT THAT
ADMINISTRATIVE AGENT, ANY LENDER OR LC ISSUER MAY OTHERWISE HAVE TO BRING ANY
ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT
AGAINST BORROWER OR ANY OTHER CREDIT PARTY OR ITS PROPERTIES IN THE COURTS OF
ANY JURISDICTION.

(c) WAIVER OF VENUE. BORROWER AND EACH OTHER CREDIT PARTY IRREVOCABLY AND
UNCONDITIONALLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY
OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY ACTION
OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN
DOCUMENT IN ANY COURT REFERRED TO IN PARAGRAPH (B) OF THIS SECTION. EACH OF THE
PARTIES HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY
APPLICABLE LAW, THE DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH
ACTION OR PROCEEDING IN ANY SUCH COURT.

(d) SERVICE OF PROCESS. EACH PARTY HERETO IRREVOCABLY CONSENTS TO SERVICE
OF PROCESS IN THE MANNER PROVIDED FOR NOTICES IN SECTION 10.3. NOTHING IN THIS
AGREEMENT WILL AFFECT THE RIGHT OF ANY PARTY HERETO TO SERVE PROCESS IN ANY
OTHER MANNER PERMITTED BY APPLICABLE LAW.

Section 10.8. Limitation on Interest. Lender Parties, Credit Parties 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 contracted for, charged, or
received by applicable Law from time to time in effect. Neither any Credit Party
nor any present

90

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 contracted for, charged, or received 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 or Lender Hedging
Obligations are owing (other than indemnity obligations and similar obligations
that survive the termination of this Agreement for which no notice of a claim
has been received by Borrower) elect in a written notice delivered to
Administrative Agent to terminate this Agreement. Upon receipt by Administrative
Agent of such a notice, if no such Obligations or Lender Hedging 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 Credit Party in any Loan Document, any
Obligations under Sections 3.2 through Section 3.6, and any obligations which
any Person may have to indemnify or compensate any Lender Party shall survive
any termination of this Agreement or any other Loan Document. At the request and
expense of Borrower, Administrative Agent shall prepare and execute all
necessary instruments to reflect and effect such termination of the Loan
Documents. Administrative Agent is hereby irrevocably authorized to execute all
such instruments (as well as any release referred to in clauses (6) or (7) of
Section 10.1(a)) on behalf of all Lenders, without the joinder of or further
action by any Lender.

Section 10.10. 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 10.11. Counterparts; Integration; Effectiveness. This Agreement may
be executed in counterparts (and by different parties hereto in different
counterparts), each of which shall constitute an original, but all of which when
taken together shall constitute a single contract. This Agreement and the other
Loan Documents, and any separate letter agreements with respect to fees payable
to Administrative Agent, constitute the entire contract among the parties
relating to the subject matter hereof and supersede any and all previous
agreements and understandings, oral or written, relating to the subject matter
hereof. Except as provided in Section 4.1, this Agreement shall become effective
when it shall have been executed by Administrative Agent and when Administrative
Agent shall have received counterparts hereof that, when taken together, bear
the signatures of each of the other parties hereto. Delivery of an executed
counterpart of a signature page of this Agreement by telecopy shall be effective
as delivery of a manually executed counterpart of this Agreement.

Section 10.12. Waiver of Jury Trial, Punitive Damages, etc. EACH PARTY
HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE
LAW, (A) ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING
DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER
LOAN DOCUMENT OR THE

91

TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY (WHETHER BASED ON CONTRACT, TORT OR
ANY OTHER THEORY, AND (B) ANY RIGHT IT MAY HAVE TO CLAIM OR RECOVER IN ANY SUCH
LEGAL PROCEEDING ANY "SPECIAL DAMAGES," AS DEFINED BELOW. EACH PARTY HERETO (X)
CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PERSON HAS
REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PERSON WOULD NOT, IN THE
EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (Y) ACKNOWLEDGES
THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS
AGREEMENT AND THE OTHER LOAN DOCUMENTS BY, AMONG OTHER THINGS, THE MUTUAL
WAIVERS AND CERTIFICATIONS 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.

Section 10.13. USA PATRIOT Act Notice. Each Lender Party that is subject to
the Act (as hereinafter defined) hereby notifies Borrower that pursuant to the
requirements of the USA PATRIOT Act (Title III of Pub. L. 107-56 (signed into
law October 26, 2001) (the "Act"), it is required to obtain, verify and record
information that identifies Borrower, which information includes the name and
address of Borrower and other information that will allow such Lender Party or
Administrative Agent, as applicable, to identify Borrower in accordance with the
Act.

[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK.]

92

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

AREP OIL & GAS LLC,
Borrower

By: /s/ Philip D. Devlin
------------------------------------
Name: Philip D. Devlin
Title: Vice President and Secretary

Address:
1400 One Energy Square
4925 Greenville Avenue
Dallas, TX 75206

Attention: Philip D. Devlin

Telephone: (214) 692-9211
Fax:       (214) 692-5055

CITICORP USA, INC.,
Administrative Agent, LC Issuer
and Lender

By: /s/ David E. Hunt
------------------------------------
Name: David E. Hunt
Title: Vice President

Address:
388 Greenwich Street
New York, NY 10013

Attention: David E. Hunt

Telephone: (713) 654-2829
Fax:       (713) 654-2849

CITIBANK, N.A., as LC Issuer

By: /s/ David E. Hunt
------------------------------------
Name: David E. Hunt
Title: Vice President

Address:
388 Greenwich Street
New York, NY 10013

Attention: David E. Hunt

Telephone: (713) 654-2829
Fax:       (713) 654-2849

BEAR STEARNS CORPORATE LENDING INC.,
Syndication Agent and Lender

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

Address:
Bear, Stearns & Co. Inc.
383 Madison Avenue, 8th Floor
New York, NY 10179

Attention: Bryan J. Carter Jr.

Telephone: (212) 272-0219
Fax:       (212) 272-9184

ALLIED IRISH BANKS P.L.C., Lender

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

Address:
AIB Corporate Banking
405 Park Avenue, 4th Floor
New York, NY 10022

Attention: Mark Connelly
Telephone: (212) 515-6773
Fax:       (212) 339-8325

AMEGY BANK N.A., Lender

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

Address:
1807 Ross Avenue, 4th Floor
Dallas, TX 75201

Attention: Tim Merrell

Telephone: (214) 754-6033
Fax:       (214) 754-9687

BANK OF TEXAS, N.A., Lender

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

Address:
1401 McKinney, Suite 1650
Houston, TX 77010

Attention: Mari Salazar

Telephone: (713) 289-5813
Fax:       (713) 289-5825

MALAYAN BANKING BERHAD, NY BRANCH,
Lender

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

Address:
400 Park Avenue, 9th Floor
New York, NY 10022

Attention: Nor Akmar Wallace

Telephone: (212) 303-1319
Fax:       (212) 308-0109

MIZUHO CORPORATE BANK, LTD., Lender

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

Address:
1251 Avenue of the Americas
New York, NY 10020

Attention: Leon Mo

Telephone: (212) 282-4984
Fax:       (212) 282-4488

REGIONS BANK, Lender

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

Address:
5005 Woodway, Suite 110
Houston, TX 77056

Attention: Gardner Cannon

Telephone: (713) 426-7142
Fax:       (713) 426-7180

THE BANK OF NOVA SCOTIA, Lender

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

Address:
1100 Louisiana, Suite 3000
Houston, TX 77002

Attention: Mike Roberts

Telephone: (713) 759-3449
Fax:       (713) 752-2425

WESTLB AG, NY BRANCH, Lender

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

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

Address:
1211 Avenue of the Americas
New York, NY 10036

Attention: Duncan Robertson

Telephone: (212) 852-6107
Fax:       (212) 597-1157

EXHIBIT A

FORM OF PROMISSORY NOTE

$______________                                             *[December __, 2005]

FOR VALUE RECEIVED, the undersigned, AREP OIL & GAS LLC, a Delaware limited
liability company ("Borrower"), hereby promises to pay to the order of
______________________________________ ("Lender"), the principal sum of
________________ Dollars ($_________), or, if greater or less, the aggregate
unpaid principal amount of the Loans made 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 set forth in the Credit Agreement,
both principal and interest payable as herein provided in lawful money of the
United States of America at the offices of Administrative Agent under the Credit
Agreement, or at such other place 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
dated *[December __, 2005] among Borrower, Citicorp USA, Inc., as Administrative
Agent, Bear Stearns Corporate Lending Inc., as Syndication Agent, and the
lenders (including Lender) referred to therein (as from time to time
supplemented, amended or restated, 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 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.

The principal amount of this Note, together with all interest accrued
hereon, shall be due and payable in full on the Maturity Date.

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
contracted for, charged, or received 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

EXHIBIT A-1

payable hereunder, in each case, in accordance with the terms and conditions set
forth in the Credit Agreement.

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.

AREP OIL & GAS LLC

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

EXHIBIT A-2

EXHIBIT B

FORM OF BORROWING NOTICE

Reference is made to that certain Credit Agreement dated as of *[December
__, 2005] (as amended or supplemented, the "Agreement"), by and among AREP Oil &
Gas LLC ("Borrower"), Citicorp USA, Inc., as Administrative Agent, Bear Stearns
Corporate Lending Inc., as Syndication Agent, and certain financial institutions
("Lenders"). Terms which are defined in the Agreement are used herein with the
meanings given them in the Agreement. Borrower hereby requests a Borrowing of
new Loans to be advanced pursuant to Section 2.1 of the Agreement as follows:

Aggregate amount of Borrowing:                   $_________________

Type of Loans in Borrowing:                      __________________

Date on which Loans are to be advanced:          __________________

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

If combined with existing Loans see attached
Continuation/Conversion Notice.

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

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.

(a) The representations and warranties of each Credit Party set forth in
the Agreement and the other Loan Documents are true and correct in all respects
on and as of the date hereof, except for any such representation or warranty
specifically refers to an earlier date, in which case such representation or
warranty shall have been true in all respects on and as of such earlier date.

(b) No Default exists on the date hereof, both before and after giving
effect to the making of the Loan requested hereby.

(c) No Material Adverse Change has occurred, and no event or circumstance
has occurred that would reasonably be anticipated to cause a Material Adverse
Change since the date of the Initial Financial Statements.

EXHIBIT B-1

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 ____________, 20__.

AREP OIL & GAS LLC

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

EXHIBIT B-2

EXHIBIT C

FORM OF CONTINUATION/CONVERSION NOTICE

Reference is made to that certain Credit Agreement dated as of *[December
__, 2005] (as amended or supplemented, the "Agreement"), by and among AREP Oil &
Gas LLC ("Borrower"), Citicorp USA, Inc., as Administrative Agent, Bear Stearns
Corporate Lending Inc., as Syndication Agent, and the lenders referred to
therein ("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

If being combined with new Loans, $____________ of new Loans to be
advanced on ____________

Aggregate amount of 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

To meet the conditions set out in the Agreement for such
conversion/continuation, Borrower hereby represents, warrants, acknowledges, and
agrees to and with Administrative Agent and each Lender that:

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 contained herein.

(a) The representations and warranties of each Credit Party set forth in
the Agreement and the other Loan Documents are true and correct in all respects
on and as of the date hereof, except for any such representation or warranty
specifically refers to an earlier date, in which case such representation or
warranty shall have been true in all respects on and as of such earlier date.

EXHIBIT C-1

(b) No Default exists on the date hereof, both before and after giving
effect to the making of the Loan requested hereby.

(c) No Material Adverse Change has occurred, and no event or circumstance
has occurred that would reasonably be anticipated to cause a Material Adverse
Change since the date of the Initial Financial Statements.

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 ___________, 20__.

AREP OIL & GAS LLC

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

EXHIBIT C-2

EXHIBIT D

FORM OF CERTIFICATE ACCOMPANYING
FINANCIAL STATEMENTS

Reference is made to that certain Credit Agreement dated as of *[December
__, 2005] (as amended or supplemented, the "Agreement"), by and among AREP Oil &
Gas LLC ("Borrower"), Citicorp USA, Inc., as Administrative Agent, Bear Stearns
Corporate Lending Inc., as Syndication Agent, and certain financial institutions
("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.

This Certificate is furnished pursuant to Section 6.2(d) of the Agreement.
Together herewith Borrower is furnishing to Administrative Agent Borrower's
financial statements (the "Financial Statements") as at ____________ (the
"Reporting Date"). Borrower hereby represents, warrants, and acknowledges to
Administrative 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 [7.1, 7.3,
7.6 and 7.11] of the Agreement [and Borrower's non-compliance as of such date
with the requirements of Section(s) [7.1, 7.3, 7.6 and 7.11] of the Agreement];

(d) on the Reporting Date Borrower was, and on the date hereof Borrower is,
in full compliance with the requirements of Section 6.17 of the Agreement, and
no Default or Internal Control Event otherwise existed on the Reporting Date or
otherwise exists on the date of this instrument *[except as described on a
schedule attached hereto].

(e) *[Unless otherwise disclosed on a schedule attached hereto,] The
representations and warranties of each Credit Party set forth in the Agreement
and the other Loan Documents are true and correct in all respects on and as of
the date hereof, except for any such representation or warranty specifically
refers to an earlier date, in which case such representation or warranty shall
have been true in all respects on and as of such earlier date.

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.

EXHIBIT D-1

IN WITNESS WHEREOF, this instrument is executed as of ____________, 20__.

AREP OIL & GAS LLC

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

EXHIBIT D-2

EXHIBIT E

ASSIGNMENT AND ASSUMPTION

This Assignment and Assumption (the "Assignment and Assumption") is dated
as of the Effective Date set forth below and is entered into by and between
[Insert name of Assignor] (the "Assignor") and [Insert name of Assignee] (the
"Assignee"). Capitalized terms used but not defined herein shall have the
meanings given to them in the Credit Agreement identified below (as amended, the
"Credit Agreement"), receipt of a copy of which is hereby acknowledged by the
Assignee. The Standard Terms and Conditions set forth in Annex 1 attached hereto
are hereby agreed to and incorporated herein by reference and made a part of
this Assignment and Assumption as if set forth herein in full.

For an agreed consideration, the Assignor hereby irrevocably sells and
assigns to the Assignee, and the Assignee hereby irrevocably purchases and
assumes from the Assignor, subject to and in accordance with the Standard Terms
and Conditions and the Credit Agreement, as of the Effective Date inserted by
Administrative Agent as contemplated below (i) all of the Assignor's rights and
obligations as a Lender under the Credit Agreement and any other documents or
instruments delivered pursuant thereto to the extent related to the amount and
percentage interest identified below (including, without limitation, any letters
of credit included in such facilities) and (ii) to the extent permitted to be
assigned under applicable law, all claims, suits, causes of action and any other
right of the Assignor (in its capacity as a Lender) against any Person, whether
known or unknown, arising under or in connection with the Credit Agreement, any
other documents or instruments delivered pursuant thereto or the loan
transactions governed thereby or in any way based on or related to any of the
foregoing, including, but not limited to, contract claims, tort claims,
malpractice claims, statutory claims and all other claims at law or in equity
related to the rights and obligations sold and assigned pursuant to clause (i)
above (the rights and obligations sold and assigned pursuant to clauses (i) and
(ii) above being referred to herein collectively as the "Assigned Interest").
Such sale and assignment is without recourse to the Assignor and, except as
expressly provided in this Assignment and Assumption, without representation or
warranty by the Assignor.

1. Assignor:             _______________________________

2. Assignee:             _______________________________
[and is an Affiliate/Approved Fund of [identify
Lender]]

3. Borrower(s):          AREP OIL & GAS LLC

4. Administrative Agent: CITICORP USA, INC., as the administrative agent under
the Credit Agreement

5. Credit Agreement:     The Credit Agreement dated as of *[December __, 2005]
among AREP Oil & Gas LLC, the Lenders from time to
time party thereto, Citicorp USA, Inc., as
Administrative Agent, and the other agents parties
thereto.

6. Assigned Interest:    _______________________________

EXHIBIT E-1

AGGREGATE AMOUNT OF                                     PERCENTAGE
COMMITMENT/LOANS FOR ALL   AMOUNT OF COMMITMENT/LOANS      ASSIGNED OF
LENDERS                    ASSIGNED            COMMITMENT/LOANS
------------------------   --------------------------   ----------------

$                           $                       %
$                           $                       %
$                           $                       %

7. [Trade Date: _______________________________]

EXHIBIT E-2

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

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

ASSIGNOR
[NAME OF ASSIGNOR]

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

ASSIGNEE
[NAME OF ASSIGNEE]

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

[Consented to and] Accepted:

CITICORP USA, INC., as
Administrative Agent

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

[Consented to]:

[NAME OF BORROWER OR OTHER CONSENTING
PARTY]

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

EXHIBIT E-3

ANNEX 1 to Assignment and Assumption

STANDARD TERMS AND CONDITIONS
FOR ASSIGNMENT AND ASSUMPTION

1.   Representations and Warranties.

1.1. Assignor. The Assignor (a) represents and warrants that (i) it is the
legal and beneficial owner of the Assigned Interest, (ii) the Assigned Interest
is free and clear of any lien, encumbrance or other adverse claim and (iii) it
has full power and authority, and has taken all action necessary, to execute and
deliver this Assignment and Assumption and to consummate the transactions
contemplated hereby; and (b) assumes no responsibility with respect to (i) any
statements, warranties or representations made in or in connection with the
Credit Agreement or any other Loan Document, (ii) the execution, legality,
validity, enforceability, genuineness, sufficiency or value of the Loan
Documents or any collateral thereunder, (iii) the financial condition of the
Borrower, any of its Subsidiaries or Affiliates or any other Person obligated in
respect of any Loan Document or (iv) the performance or observance by Borrower,
any of its Subsidiaries or Affiliates or any other Person of any of their
respective obligations under any Loan Document.

1.2. Assignee. The Assignee (a) represents and warrants that (i) it has
full power and authority, and has taken all action necessary, to execute and
deliver this Assignment and Assumption and to consummate the transactions
contemplated hereby and to become a Lender under the Credit Agreement, (ii) it
meets all requirements of an Eligible Assignee under the Credit Agreement
(subject to receipt of such consents as may be required under the Credit
Agreement as a Lender thereunder and, to the extent of the Assigned Interest,
shall have the obligations of a Lender thereunder, (iv) it has received a copy
of the Credit Agreement, together with copies of the most recent financial
statements delivered pursuant to Section 6.2 thereof, as applicable, and such
other documents and information as it has deemed appropriate to make its own
credit analysis and decision to enter into this Assignment and Assumption and to
purchase the Assigned Interest on the basis of which it has made such analysis
and decision independently and without reliance on Administrative Agent or any
other Lender, and (v) if it is a Foreign Lender, attached to the Assignment and
Assumption is any documentation required to be delivered by it pursuant to the
terms of the Credit Agreement, duly completed and executed by the Assignee; and
(b) agrees that (i) it will, independently and without reliance on
Administrative Agent, the Assignor or any other Lender, and based on such
documents and information as it shall deem appropriate at the time, continue to
make its own credit decisions in taking or not taking action under the Loan
Documents, and (ii) it will perform in accordance with their terms all of the
obligations that by the terms of the Loan Documents are required to be performed
by it as a Lender.

2. Payments. From and after the Effective Date, Administrative Agent shall
make all payments in respect of the Assigned Interest (including payments of
principal, interest, fees and other amounts) to the Assignor for amounts that
have accrued to but excluding the Effective Date and to the Assignee for amounts
that have accrued from and after the Effective Date.

EXHIBIT E-4

3. General Provisions. This Assignment and Assumption shall be binding
upon, and inure to the benefit of, the parties hereto and their respective
successors and assigns. This Assignment and Assumption may be executed in any
number of counterparts, which together shall constitute one instrument. Delivery
of an executed counterpart of a signature page of this Assignment and Assumption
by telecopy shall be effective as delivery of a manually executed counterpart of
this Assignment and Assumption. This Assignment and Assumption shall be governed
by, and construed in accordance with, the laws of the State of New York.

EXHIBIT E-5

EXHIBIT F

LETTER OF CREDIT APPLICATION

EXHIBIT F-1

EXHIBIT G

FORM OF COMMITMENT INCREASE AGREEMENT

THIS COMMITMENT INCREASE AGREEMENT is made as of the ___ day of _______,
20__, by and among AREP OIL & GAS LLC, a Delaware limited liability company (the
"BORROWER"), CITICORP USA, INC., as administrative agent (in such capacity, the
"ADMINISTRATIVE AGENT"), and the parties signatory hereto as the Increasing
Lenders and the New Lenders.

RECITALS

Borrower, Administrative Agent, Bear Stearns Corporate Lending Inc., as
Syndication Agent, and the Lenders party thereto ("LENDERS") have entered into
that certain Credit Agreement dated as of December __, 2005 (as heretofore
amended, supplemented, modified, or restated, the "CREDIT AGREEMENT"). All terms
used herein and not otherwise defined shall have the same meaning given to them
in the Credit Agreement.

Pursuant to Section 2.17 of the Credit Agreement, Borrower and
Administrative Agent, without any further consent of any of the Lenders, have
the right, in the event that the Lenders designate a Borrowing Base in excess of
the Aggregate Commitment then in effect, to cause an increase in the Aggregate
Commitment by adding to the Credit Agreement one or more financial institutions
as Lenders (such financial institutions being referred to herein as "NEW
LENDERS" and each such financial institution a "NEW LENDEr") or by allowing one
or more Lenders to increase their respective Commitments (such Lenders being
referred to herein as "INCREASING LENDERS" and each such Lender an "INCREASING
LENDER"); provided however that each of the conditions to such increase in
Section 2.17 of the Credit Agreement shall have occurred and been complied with
as of the Increase Effective Date (as defined below).

AGREEMENT

1. Borrower, Administrative Agent, the parties signatory hereto as
Increasing Lenders or as New Lenders hereby agree that from and after the date
hereof, Increasing Lenders and New Lenders shall have the respective Commitments
as set forth on the attached Supplement to Schedule 1. By its execution and
delivery of this Commitment Increase Agreement, each New Lender hereby assumes
all of the rights and obligations of a Lender under the Credit Agreement. Such
Commitment of each New Lender and the increase in the Commitments of each
Increasing Lenders shall represent an increase in the Aggregate Commitments
pursuant to Section 2.17 of the Credit Agreement.

2. Administrative Agent hereby consents to and approves the Commitment of
each New Lender and the increase in the Commitment of each Increasing Lender and
such resulting increase in the Aggregate Commitments pursuant to Section 2.17 of
the Credit Agreement.

3. This Commitment Increase Agreement shall be effective on the date (the
"INCREASE EFFECTIVE DATE") that (i) Borrower and each New Lender and each
Increasing Lender

EXHIBIT G-1

execute a counterpart hereof and delivers the same to Administrative Agent, (ii)
Administrative Agent executes a counterpart hereof, and (iii) each of the
conditions to the increase in the Commitment in Section 2.17 of the Credit
Agreement shall have occurred.

4. Borrower (i) represents and warrants that, as of the Increase Effective
Date, the representations and warranties contained in the Credit Agreement and
the other Loan Documents are true and correct in all respects on and as of the
Increase Effective Date after giving effect to such increase, except as to the
extent that such representations and warranties specifically refer to an earlier
date, in which case they were true and correct in all material respects as of
such earlier date, and no Default or Event of Default exists, (ii) ratifies and
confirms each of the Loan Documents to which it is a party, (iii) agrees that
all Loan Documents shall apply to the Obligations as they are increased by this
Commitment Increase Agreement, and (iv) agrees that its obligations and
covenants under each Loan Document are otherwise unimpaired hereby and shall
remain in full force and effect.

5. Each New Lender and each Increasing Lender represents and warrants that
it has received a copy of the Credit Agreement, the most recent financial
statement delivered pursuant to Section 6.2 thereof and such other document and
information as it has determined appropriate to make its own credit analysis and
decision to enter into this Commitment Increase Agreement, and that it has made
such analysis and decision independently and without reliance on Administrative
Agent, LC Issuer or any other Lender.

6. This Commitment Increase Agreement may not be amended, changed, waived
or modified, except by a writing executed by the parties hereto.

7. This Commitment Increase Agreement together with the Credit Agreement
embody the entire agreement among New Lenders, Increasing Lenders, Borrower and
Administrative Agent with respect to the subject matter hereof and supersedes
all other prior arrangements and understandings relating to the subject matter
hereof.

8. This Commitment Increase Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original. Each such
counterpart shall become effective when counterparts have been executed by all
parties hereto. Delivery of an executed counterpart of this Commitment Increase
Agreement by telecopier shall be effective as delivery of a manually executed
counterpart of this Commitment Increase Agreement.

9. This Commitment Increase Agreement shall be binding upon and inure to
the benefit of each Lender, Administrative Agent, and Borrower and their
respective successors and permitted assigns, except that no party may assign or
transfer any of its rights or obligations hereunder except as contemplated in
the Credit Agreement.

10. This Commitment Increase Agreement shall be governed by, and construed
in accordance with, the internal laws of the State of New York.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

EXHIBIT G-2

IN WITNESS WHEREOF, Administrative Agent, Borrower, and each New Lender and
each Increasing Lender have executed this Commitment Increase Agreement as of
the date shown above.

AREP OIL & GAS LLC

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

CITICORP USA, INC., as Administrative
Agent

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

EXHIBIT G-3

Signature Page to Commitment Increase Agreement

IN WITNESS WHEREOF, the undersigned has executed this Commitment Increase
Agreement as of the date shown above.

----------------------------------------
[Name of Lender]

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

EXHIBIT G-4

CONSENT AND AGREEMENT

Reference is hereby made to (i) that certain Commitment Increase Agreement
dated as of ________, 20__ (the "COMMITMENT INCREASE AGREEMENT"), by and among
AREP OIL & GAS LLC a Delaware limited liability company (the "BORROWER"),
CITICORP USA, INC., as administrative agent (the "ADMINISTRATIVE AGENT"), and
the Lenders party thereto, (ii) that certain Credit Agreement dated as of
December __, 2005 (as amended, supplemented, modified or restated, the "CREDIT
AGREEMENT") by and among Borrower, Administrative Agent and the Lenders party
thereto, and (iii) the Guaranty to which any of the undersigned is a party.
Terms that are defined in the Credit Agreement and used but not defined herein
have the meanings given to them in the Credit Agreement.

By its execution below, each of the undersigned hereby (a) consents to the
provisions of the Commitment Increase Agreement and the transactions
contemplated therein, (b) ratifies and confirms the Guaranty and the Security
Documents executed by it pursuant to the Credit Agreement after giving effect to
the Commitment Increase Agreement, (c) agrees that all of its respective
obligations and covenants under such Guaranty and Security Documents shall
remain unimpaired by the execution and delivery of the Commitment Increase
Agreement and the other documents and instruments executed in connection
therewith, and (d) agrees that such Guaranty and Security Documents shall remain
in full force and effect.

[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK.]

EXHIBIT G-5

IN WITNESS WHEREOF, the undersigned Guarantors have executed this Consent
and Agreement to Commitment Increase Agreement as of the date shown above.

[GUARANTORS]

By:
------------------------------------

EXHIBIT G-6

SUPPLEMENT TO SCHEDULE I
COMMITMENTS

LENDER   COMMITMENT
------   ----------

EXHIBIT G-7

Exhibit 10.2

SECURITY AGREEMENT

dated as of December 20, 2005

from

the Grantors referred to herein,

to

CITICORP USA, INC.,
as Administrative Agent

TABLE OF CONTENTS

SECTION                                                                     PAGE
-------                                                                     ----

Section 1.    Grant of Security..........................................     2
Section 2.    Security for Obligations...................................     5
Section 3.    Grantors Remain Liable.....................................     5
Section 4.    Delivery and Control of Security Collateral................     6
Section 5.    Maintaining the Account Collateral.........................     8
Section 6.    Investing of Amounts in the Securities Acccounts...........     9
Section 7.    Maintaining Letter-of-Credit Rights and Giving Notice of
Commercial Tort Claims.....................................     9
Section 8.    Representations and Warranties.............................    10
Section 9.    Further Assurances.........................................    12
Section 10.   Post-Closing Changes; Bailees; Collections on Receivables
and Related Contracts......................................    13
Section 11.   As to Intellectual Property Collateral.....................    14
Section 12.   Voting Rights; Dividends; Etc..............................    15
Section 13.   As to Letter-of-Credit Rights..............................    16
Section 14.   Additional Shares..........................................    17
Section 15.   Administrative Agent Appointed Attorney-in-Fact............    17
Section 16.   Administrative Agent May Perform...........................    17
Section 17.   The Administrative Agent's Duties..........................    17
Section 18.   Remedies...................................................    18
Section 19.   Indemnity and Expenses.....................................    22
Section 20.   Subordination of Liens.....................................    23
Section 21.   Amendments; Waivers; Additional

Grantors; Etc..............    23
Section 22.   Notices, Etc...............................................    24
Section 23.   Continuing Security Interest; Assignments under the Credit
Agreement..................................................    24
Section 24.   Release; Termination.......................................    25

i

Section 25.   Terms Generally; References and Titles.....................    25
Section 26.   Execution in Counterparts..................................    26
Section 27.   Governing Law..............................................    26

Schedules

Schedule I     -   Location, Type of Organization, Jurisdiction of Organization
and Organizational Identification Number
Schedule II    -   Pledged Equity and Pledged Debt
Schedule III   -   Changes in Name, Location, Etc.
Schedule IV    -   Intellectual Property
Schedule V     -   Securities Accounts and Deposit Accounts
Schedule VI    -   Letters of Credit

Exhibits

Exhibit A      -   Form of Security Agreement Supplement
Exhibit B      -   Form of Deposit Account Control Agreement
Exhibit C      -   Form of Account Control Agreement (Deposit Account/Securities
Account)
Exhibit D      -   Form of Securities Account Control Agreement
Exhibit E      -   Form of Intellectual Property Security Agreement
Exhibit F      -   Form of Intellectual Property Security Agreement Supplement
Exhibit G      -   Form of Consent to Assignment of Letter of Credit Rights

ii

SECURITY AGREEMENT

SECURITY AGREEMENT dated as of December 20, 2005 made by AREP OIL &
GAS LLC, a Delaware limited liability company (the "BORROWER"), the other
Persons listed on the signature pages hereof and the Additional Grantors (as
defined in Section 21) (the Borrower, the Persons so listed and the Additional
Grantors being collectively the "GRANTORS"), to CITIBANK USA, INC., as
administrative agent (the "ADMINISTRATIVE AGENT") for the Secured Parties (as
hereinafter defined)).

PRELIMINARY STATEMENTS.

(1) The Borrower has entered into the Credit Agreement dated as of
December 20, 2005 (as amended, restated, supplemented, or otherwise modified
from time to time, the "CREDIT AGREEMENT"; capitalized terms defined therein and
not otherwise defined herein being used herein as therein defined) with certain
Lenders party thereto, Citicorp USA, Inc., as administrative agent (the
"ADMINISTRATIVE AGENT"), and Bear, Stearns & Co., Inc., as syndication agent.

(2) As contemplated in the Credit Agreement, the Grantors owe, and may
hereafter owe, Lender Hedging Obligations to some or all of the Lender Parties
and their Affiliates. The Lender Hedging Contracts under which such Lender
Hedging Obligations are owed are herein called the "LENDER HEDGING CONTRACTS".
The Lender Parties, together with all such Affiliates to which Lender Hedging
Obligations are at any time owing, are herein called the "SECURED PARTIES".

(3) The Grantors are entering into this Agreement in order to grant to
the Administrative Agent for the ratable benefit of the Secured Parties a
security interest in the Collateral (as hereinafter defined).

(4) Each Grantor is the owner of the shares of stock or other Equity
(the "INITIAL PLEDGED EQUITY") set forth opposite such Grantor's name on and as
otherwise described in Part I of Schedule II hereto and issued by the Persons
named therein and of the indebtedness (the "INITIAL PLEDGED DEBT") set forth
opposite such Grantor's name on and as otherwise described in Part II of
Schedule II hereto and issued by the obligors named therein.

(5) The Grantors have security entitlements (the "PLEDGED SECURITY
ENTITLEMENTS") with respect to all the financial assets (the "PLEDGED FINANCIAL
ASSETS") credited from time to time to the Grantors' securities accounts (the
"SECURITIES ACCOUNTS"), in their respective names and subject to this Agreement,
described in Schedule V hereto.

(6) The Grantors have opened deposit accounts (the "DEPOSIT ACCOUNTS")
with banks, in their respective names and subject to this Agreement, as
described in Schedule V hereto.

(7) It is a condition precedent to the making of Loans and the
issuance of Letters of Credit by the Secured Parties under the Credit Agreement
and the entry into Lender Hedging Contracts by the Lenders from time to time
that the Grantors shall have granted the

assignment and security interest and made the pledge and assignment contemplated
by this Agreement.

(8) Each Grantor will derive substantial direct and indirect benefit
from the transactions contemplated by the Loan Documents and the Lender Hedging
Contracts.

(9) Unless otherwise defined in this Agreement or in the Credit
Agreement, terms defined in Article 8 or 9 of the UCC (as defined below) and/or
in the Federal Book Entry Regulations (as defined below) are used in this
Agreement as such terms are defined in such Article 8 or 9 and/or the Federal
Book Entry Regulations. "UCC" means the Uniform Commercial Code as in effect,
from time to time, in the State of New York; provided that, if perfection or the
effect of perfection or non-perfection or the priority of any security interest
in any Collateral is governed by the Uniform Commercial Code as in effect in a
jurisdiction other than the State of New York, "UCC" means the Uniform
Commercial Code as in effect from time to time in such other jurisdiction for
purposes of the provisions hereof relating to such perfection, effect of
perfection or non-perfection or priority. "FEDERAL BOOK ENTRY REGULATIONS" means
(a) the federal regulations contained in Subpart B ("Treasury/Reserve Automated
Debt Entry System (TRADES)") governing book-entry securities consisting of U.S.
Treasury bonds, notes and bills and Subpart D ("ADDITIONAL PROVISIONS") of 31
C.F.R. Part 357, 31 C.F.R. Section 357.2, Section 357.10 through Section 357.14
and Section 357.41 through Section 357.44 and (b) to the extent substantially
identical to the federal regulations referred to in clause (a) above (as in
effect from time to time), the federal regulations governing other book-entry
securities.

NOW, THEREFORE, in consideration of the premises and in order to
induce the Secured Parties to make Loans and issue Letters of Credit under the
Credit Agreement and to induce the Secured Parties to enter into Lender Hedging
Contracts from time to time, each Grantor agrees with the Administrative Agent
for the ratable benefit of the Secured Parties as follows:

Section 1. Grant of Security. Each Grantor grants to the
Administrative Agent, for the ratable benefit of the Secured Parties, a security
interest in such Grantor's right, title and interest in and to the following, in
each case, as to each type of property described below, whether now owned or
hereafter acquired by such Grantor, wherever located, and whether now or
hereafter existing or arising (collectively, the "COLLATERAL"):

(a) all equipment in all of its forms, including all machinery, tools,
motor vehicles, furniture and fixtures, and all parts thereof and all
accessions thereto and all software related thereto, including software
that is embedded in and is part of the equipment (any and all such property
being the "Equipment");

(b) all inventory in all of its forms, including:

(i) all raw materials, work in process, finished goods and
materials used or consumed in the manufacture, production, preparation
or shipping thereof,

(ii) goods in which such Grantor has an interest in mass or a
joint or other interest or right of any kind (including goods in which
such Grantor has an interest or right as consignee) and

2

(iii) goods that are returned to or repossessed or stopped in
transit by such Grantor),

and all accessions thereto and products thereof and documents therefor, and
all software related thereto, including software that is embedded in and is
part of the inventory (any and all such property being the "INVENTORY");

(c) all chattel paper (including tangible chattel paper and electronic
chattel paper), instruments (including promissory notes), deposit accounts,
letter-of-credit rights, general intangibles (including payment intangibles
and rights as administrative agent or other agent under any loan agreements
relating to Pledged Debt (as defined below)) and other obligations of any
kind, whether or not arising out of or in connection with the sale or lease
of goods or the rendering of services and whether or not earned by
performance, and all rights now or hereafter existing in and to all
supporting obligations and in and to all security agreements, mortgages,
Liens, leases, letters of credit and other contracts securing or otherwise
relating to the foregoing property (any and all of such accounts, chattel
paper, instruments, deposit accounts, letter-of-credit rights, general
intangibles and other obligations, to the extent not referred to in clause
(d), (e) or (f) below, being the "RECEIVABLES", and any and all such
supporting obligations, security agreements, mortgages, Liens, leases,
letters of credit and other contracts being the "RELATED CONTRACTS");

(d) the following (the "SECURITY COLLATERAL"):

(i) the Initial Pledged Equity and the certificates, if any,
representing the Initial Pledged Equity, and all dividends,
distributions, return of capital, cash, instruments and other property
from time to time received, receivable or otherwise distributed in
respect of or in exchange for any or all of the Initial Pledged Equity
and all subscription warrants, rights or options issued thereon or
with respect thereto;

(ii) the Initial Pledged Debt and the instruments, if any,
evidencing the Initial Pledged Debt, and all interest, cash,
instruments and other property from time to time received, receivable
or otherwise distributed in respect of or in exchange for any or all
of the Initial Pledged Debt;

(iii) all additional shares of stock and other Equity from time
to time acquired by such Grantor in any manner (such shares and other
Equity, together with the Initial Pledged Equity, being the "PLEDGED
EQUITY"), and the certificates, if any, representing such additional
shares or other Equity, and all dividends, distributions, return of
capital, cash, instruments and other property from time to time
received, receivable or otherwise distributed in respect of or in
exchange for any or all of such shares or other Equity and all
subscription warrants, rights or options issued thereon or with
respect thereto;

(iv) all additional Indebtedness from time to time owed to such
Grantor (such Indebtedness, together with the Initial Pledged Debt,
being the "PLEDGED

3

DEBT") and the instruments, if any, evidencing such indebtedness, and
all interest, cash, instruments and other property from time to time
received, receivable or otherwise distributed in respect of or in
exchange for any or all of such indebtedness;

(v) the Securities Accounts, all Pledged Security Entitlements
with respect to all Pledged Financial Assets from time to time
credited to the Securities Accounts, all Pledged Financial Assets, and
all dividends, distributions, return of capital, interest, cash,
instruments and other property from time to time received, receivable
or otherwise distributed in respect of or in exchange for any or all
of the Pledged Security Entitlements or the Pledged Financial Assets
and all subscription warrants, rights or options issued thereon or
with respect thereto; and

all other investment property (including all (A) securities, whether
certificated or uncertificated, (B) security entitlements, (C) securities
accounts, (D) commodity contracts and (E) commodity accounts) in which such
Grantor has now, or acquires from time to time hereafter, any right, title
or interest in any manner, and the certificates or instruments, if any,
representing or evidencing such investment property, and all dividends,
distributions, return of capital, interest, distributions, value, cash,
instruments and other property from time to time received, receivable or
otherwise distributed in respect of or in exchange for any or all of such
investment property and all subscription warrants, rights or options issued
thereon or with respect thereto;

(e) the following (collectively, the "ACCOUNT COLLATERAL"):

(i) the Deposit Accounts and all funds from time to time credited
thereto, all interest, cash and other property from time to time
received, receivable or otherwise distributed in respect of or in
exchange for any or all of such funds, and all certificates and
instruments, if any, from time to time representing or evidencing the
Deposit Accounts;

(ii) all promissory notes, certificates of deposit, checks and
other instruments from time to time delivered to or otherwise
possessed by the Administrative Agent for or on behalf of such
Grantor, including those delivered or possessed in substitution for or
in addition to any or all of the then existing Account Collateral; and

(iii) all interest, cash and other property from time to time
received, receivable or otherwise distributed in respect of or in
exchange for any or all of the then-existing Account Collateral;

(f) the following (collectively, the "INTELLECTUAL PROPERTY
COLLATERAL"):

(i) all patents, patent applications, utility models and
statutory invention registrations, all inventions claimed or disclosed
therein and all improvements thereto;

4

(ii) all trademarks and service marks, together, in each case,
with the goodwill symbolized thereby;

(iii) all copyrights, whether registered or unregistered;

(iv) all computer software, programs and databases;

(g) all books and records (including customer lists, credit files,
printouts and other computer output materials and records) of such Grantor
pertaining to any of the Collateral; and

(h) all proceeds of, collateral for, income, royalties and other
payments now or hereafter due and payable with respect to, and supporting
obligations relating to, any and all of the Collateral (including proceeds,
collateral and supporting obligations that constitute property of the types
described in clauses (a) through (g) of this Section 1 and this clause (h))
and, to the extent not otherwise included, all (A) payments under insurance
(whether or not the Administrative Agent is the loss payee thereof), or any
indemnity, warranty or guaranty, payable by reason of loss or damage to or
otherwise with respect to any of the foregoing Collateral, (B) tort claims,
including all commercial tort claims and (C) cash,

but in each case excluding from the foregoing any property for which the grant
of a security interest pursuant to this Section 1 would violate any Law or
require the consent of a third party.

Section 2. Security for Obligations. This Agreement secures, in the
case of each Grantor, the payment of all Obligations of any Credit Party that
are now or hereafter existing under the Loan Documents and all Lender Hedging
Obligations of any Credit Party that are now or hereafter existing, in each case
whether direct or indirect, absolute or contingent, and whether for principal,
reimbursement obligations, interest, fees, premiums, penalties,
indemnifications, contract causes of action, costs, expenses or otherwise (all
such Obligations and Lender Hedging Obligations being the "SECURED
OBLIGATIONS").

Section 3. Grantors Remain Liable. Anything herein to the contrary
notwithstanding:

(a) each Grantor shall remain liable under the contracts and
agreements included in such Grantor's Collateral to the extent set forth
therein to perform all of its duties and obligations thereunder to the same
extent as if this Agreement had not been executed;

(b) the exercise by the Administrative Agent of any of the rights
hereunder shall not release any Grantor from any of its duties or
obligations under the contracts and agreements included in the Collateral;
and

(c) no Secured Party shall have any obligation or liability under the
contracts and agreements included in the Collateral by reason of this
Agreement, any other Loan Document or any Lender Hedging Contract, nor
shall any Secured Party be obligated to

5

perform any of the obligations or duties of any Grantor thereunder or to
take any action to collect or enforce any claim for payment assigned
hereunder.

Section 4. Delivery and Control of Security Collateral. (a) All
certificates or instruments representing or evidencing Security Collateral shall
be delivered to and held by or on behalf of the Administrative Agent pursuant
hereto and shall be in suitable form for transfer by delivery, or shall be
accompanied by duly executed instruments of transfer or assignment in blank, all
in form and substance satisfactory to the Administrative Agent. The
Administrative Agent shall have the right, at any time in its discretion and
without notice to any Grantor, to transfer to or to register in the name of the
Administrative Agent or any of its nominees any or all of the Security
Collateral, subject only to the revocable rights specified in Section 12(a). In
addition, the Administrative Agent shall have the right, upon the occurrence and
during the continuance of an Event of Default at any time to exchange
certificates or instruments representing or evidencing Security Collateral for
certificates or instruments of smaller or larger denominations.

(b) With respect to any Security Collateral in which any Grantor has
any right, title or interest and that constitutes an uncertificated security,
such Grantor will cause the issuer thereof either:

(i) to register the Administrative Agent as the registered owner of
such security or

(ii) to agree in an authenticated record with such Grantor and the
Administrative Agent that such issuer will comply with instructions with
respect to such security originated by the Administrative Agent without
further consent of such Grantor, such authenticated record to be in form
and substance satisfactory to the Administrative Agent.

With respect to any Security Collateral in which any Grantor has any right,
title or interest and that is not an uncertificated security, upon the request
of the Administrative Agent, such Grantor will notify each such issuer of
Pledged Equity that such Pledged Equity is subject to the security interest
granted hereunder. Each Grantor that is the issuer of any Security Collateral or
Pledged Equity belonging to another Grantor acknowledges the security interest
granted hereunder in such Security Collateral and will take the actions
described above in this subsection (b).

(c) With respect to any Security Collateral in which any Grantor has
any right, title or interest and that constitutes a security entitlement in
which the Administrative Agent is not the entitlement holder, such Grantor will
cause the securities intermediary with respect to such security entitlement
either:

(i) to identify in its records the Administrative Agent as the
entitlement holder of such security entitlement against such securities
intermediary or

(ii) to agree in an authenticated record with such Grantor and the
Administrative Agent that such securities intermediary will comply with
entitlement orders (that is, notifications communicated to such securities
intermediary directing

6

transfer or redemption of the financial asset to which such Grantor has a
security entitlement) originated by the Administrative Agent without
further consent of such Grantor, such authenticated record to be in
substantially the form of Exhibit C hereto (in the case of a combined
Deposit Account and Securities Account) or Exhibit D hereto (in any other
case) or otherwise in form and substance satisfactory to the Administrative
Agent (such agreements together being the "SECURITIES ACCOUNT CONTROL
AGREEMENTS").

(d) No Grantor will add any securities intermediary that maintains a
Securities Account for such Grantor or open any new securities account with any
then-existing securities intermediary unless:

(i) the Administrative Agent shall have received at least 10 days'
prior written notice of such securities intermediary or such new securities
account, and

(ii) the Administrative Agent shall have received, in the case of a
securities intermediary that is not the Administrative Agent, a Securities
Account Control Agreement authenticated by such new securities intermediary
and such Grantor, or a supplement to an existing Securities Account Control
Agreement with such then-existing securities intermediary, covering such
new securities account (and, upon the receipt by the Administrative Agent
of such Securities Account Control Agreement or supplement, Schedule V
hereto shall be automatically amended to include such Securities Account).

No Grantor shall terminate any securities intermediary or terminate any
Securities Account, except that a Grantor may terminate a Securities Account,
and terminate a securities intermediary with respect to such Securities Account
if it gives the Administrative Agent at least 10 days' prior written notice of
such termination (and, upon such termination, Schedule V hereto shall be
automatically amended to delete such securities intermediary and Securities
Account).

(e) Upon any termination by a Grantor of any Securities Account or any
securities intermediary with respect thereto, such Grantor will immediately:

(i) transfer all property held in such terminated Securities Account
to another Securities Account, and

(ii) notify all Obligors that were making payments to such Securities
Account to make all future payments to another Securities Account, in each
case so that the Administrative Agent shall have a continuously perfected
security interest in such Account Collateral, funds and property.

(f) So long as no Event of Default shall have occurred and be
continuing, each Grantor shall have sole right to direct the disposition of
funds with respect to each of its Securities Accounts.

(g) The Administrative Agent may transfer, direct the transfer of, or
sell property credited to any Securities Account to satisfy the Grantor's
obligations under the Loan Documents and Lender Hedging Contracts if an Event of
Default shall have occurred and be continuing.

7

(h) Upon the request of the Administrative Agent upon the occurrence
and during the continuance of an Event of Default, such Grantor will notify each
such issuer of Pledged Debt that such Pledged Debt is subject to the security
interest granted hereunder.

Section 5. Maintaining the Account Collateral. So long as any Loan or
any other Obligation of any Loan Party under any Loan Document shall remain
unpaid, any Letter of Credit shall be outstanding, any Lender Hedging Contract
shall be in effect or any Secured Party shall have any Commitment:

(a) Each Grantor will maintain all Account Collateral only with the
Administrative Agent or with banks (the "PLEDGED ACCOUNT BANKS") that have
agreed, in a record authenticated by the Grantor, the Administrative Agent and
the Pledged Account Banks, to:

(i) comply with instructions originated by the Administrative Agent
directing the disposition of funds in the Account Collateral without the
further consent of the Grantor and

(ii) waive or subordinate in favor of the Administrative Agent all
claims of the Pledged Account Banks (including claims by way of a security
interest, lien or right of setoff or right of recoupment) to the Account
Collateral, which authenticated record shall be substantially in the form
of Exhibit C hereto (in the case of a combined Deposit Account and
Securities Account) or of Exhibit B hereto (in any other case), or shall
otherwise be in form and substance reasonably satisfactory to, and as
negotiated in good faith by, the Administrative Agent (such agreements
together being the "ACCOUNT CONTROL AGREEMENTS"), provided that each
Grantor shall have up to 30 days following the date hereof to provide any
such Account Control Agreement.

(b) Each Grantor will promptly instruct each Person obligated at any
time to make any payment to such Grantor for any reason (an "OBLIGOR") to make
such payment to a Deposit Account.

(c) Except for any deposit account holding LC Collateral, no Grantor
will add any bank that maintains a deposit account for such Grantor or open any
new deposit account with any then existing Pledged Account Bank unless:

(i) the Administrative Agent shall have received at least 10 days'
prior written notice of such additional bank or such new deposit account,
and

(ii) the Administrative Agent shall have received, in the case of a
bank or Pledged Account Bank that is not the Administrative Agent, an
Account Control Agreement authenticated by such new bank and such Grantor,
or a supplement to an existing Account Control Agreement with such then
existing Pledged Account Bank, covering such new deposit account (and, upon
the receipt by the Administrative Agent of such Account Control Agreement
or supplement, Schedule V hereto shall be automatically amended to include
such Deposit Account).

8

No Grantor shall terminate any bank as a Pledged Account Bank or terminate any
Account Collateral, except that a Grantor may terminate a Deposit Account, and
terminate a bank as a Pledged Account Bank with respect to such Deposit Account
if it gives the Administrative Agent at least 10 days' prior written notice of
such termination (and, upon such termination, Schedule V hereto shall be
automatically amended to delete such Pledged Account Bank and Deposit Account).

(d) Upon any termination by a Grantor of any Deposit Account or any
Pledged Account Bank with respect thereto, such Grantor will immediately:

(i) transfer all funds held in such terminated Deposit Account to
another Deposit Account, and

(ii) notify all Obligors that were making payments to such Deposit
Account to make all future payments to another Deposit Account, in each
case so that the Administrative Agent shall have a continuously perfected
security interest in such Account Collateral, funds and property.

(e) So long as no Event of Default shall have occurred and be
continuing, each Grantor shall have sole right to direct the disposition of
funds with respect to each of its Deposit Accounts.

(f) The Administrative Agent may, at any time and without notice to,
or consent from, a Grantor transfer, or direct the transfer of, funds from the
Account Collateral to satisfy the Grantor's obligations under the Loan Documents
and Lender Hedging Contracts if an Event of Default shall have occurred and be
continuing.

(g) Upon the occurrence and during the continuance of any Event of
Default, the Administrative Agent shall be authorized to send to each Pledged
Account Bank a Notice of Exclusive Control as defined in and under any Account
Control Agreement.

Section 6. Investing of Amounts in the Securities Acccounts(a) . So
long as no Event of Default has occurred and is continuing, the Grantors may,
subject to Sections 5, and 18, from time to time, make investments credited to
Securities Accounts to the extent allowed under Section 7.7 of the Credit
Agreement.

Section 7. Maintaining Letter-of-Credit Rights and Giving Notice of
Commercial Tort Claims. So long as any Obligation of any Loan Party under any
Loan Document shall remain unpaid, any Letter of Credit shall be outstanding,
any Lender Hedging Contract shall be in effect or any Secured Party shall have
any Commitment:

(a) Each Grantor will maintain all letter-of-credit rights assigned to
the Administrative Agent, including all letter-of-credit rights associated
with the letters of credit described in Schedule VI so that the
Administrative Agent has control of the letter-of-credit rights in the
manner specified in Section 9-107 of the UCC; and

(b) Each Grantor will promptly give notice to the Administrative Agent
of any commercial tort claim that may arise in the future and will
immediately execute or

9

otherwise authenticate a supplement to this Agreement, and otherwise take
all necessary action, to subject such commercial tort claim to the first
priority security interest created under this Agreement.

Section 8. Representations and Warranties. Each Grantor represents and
warrants as follows:

(a) Such Grantor's exact legal name, as defined in Section 9-503(a) of
the UCC, is correctly set forth in Schedule I (as amended as provided in
Section 10(a)). Such Grantor has only the trade names and marks listed on
Schedule IV. Such Grantor is located (within the meaning of Section 9-307
of the UCC), is the type of organization and is organized in the state or
jurisdiction set forth in Schedule I (as amended as provided in Section
10(a)). The information set forth in Schedule I(as amended as provided in
Section 10(a)) with respect to such Grantor is true and accurate in all
respects. Such Grantor has not, within the prior five years, changed its
name, location, chief executive office, place where it maintains its
agreements, type of organization, jurisdiction of organization or
organizational identification number from those set forth in Schedule I (as
amended as provided in Section 10(a)) except as disclosed in Schedule V.

(b) All Security Collateral consisting of certificated securities and
instruments have been delivered to the Administrative Agent. None of the
Receivables is evidenced by a promissory note or other instrument that has
not been delivered to the Administrative Agent.

(c) Such Grantor is the legal and beneficial owner of the Collateral
of such Grantor free and clear of any Lien, claim, option or right of
others, except for the security interest created under this Agreement or as
permitted under the Credit Agreement. No effective financing statement or
other instrument similar in effect covering all or any part of such
Collateral or listing such Grantor or any trade name of such Grantor as
debtor is on file in any recording office, except such as may have been
filed in favor of the Administrative Agent relating to the Loan Documents
or as otherwise permitted under the Credit Agreement.

(d) The Pledged Equity pledged by such Grantor hereunder has been duly
authorized and validly issued and is fully paid and non-assessable. With
respect to the Pledged Equity that is an uncertificated security, such
Grantor has caused the issuer thereof either:

(i) to register the Administrative Agent as the registered owner
of such security or

(ii) to agree in an authenticated record with such Grantor and
the Administrative Agent that such issuer will comply with
instructions with respect to such security originated by the
Administrative Agent without further consent of such Grantor.

If such Grantor is an issuer of Pledged Equity, such Grantor confirms that
it has received notice of such security interest. The Pledged Debt pledged
by such Grantor hereunder

10

has been duly authorized, authenticated or issued and delivered, is the
legal, valid and binding obligation of the issuers thereof, is evidenced by
one or more promissory notes (which notes have been delivered to the
Administrative Agent) and is not in default.

(e) The Initial Pledged Equity pledged by such Grantor constitutes the
percentage of the issued and outstanding Equity of the issuers thereof
indicated on Schedule II. The Initial Pledged Debt constitutes all of the
outstanding indebtedness owed to such Grantor by the issuers thereof and is
outstanding in the principal amount indicated on Schedule II.

(f) All of the investment property owned by such Grantor as of the
date hereof is listed on Schedule II.

(g) Except for any deposit account in which LC Collateral may be held,
such Grantor has no deposit account, other than the Account Collateral
listed on Schedule V, as amended from time to time pursuant to Section
5(c), and legal, binding and enforceable Account Control Agreements are in
effect for each deposit account that constitutes Account Collateral (other
than Account Collateral consisting of deposit accounts maintained with the
Administrative Agent). Such Grantor has instructed all existing Obligors to
make all payments to either a Deposit Account.

(h) Such Grantor is not a beneficiary or assignee under any letter of
credit, other than any letter of credit described in Schedule VI, as
amended from time to time, and legal, binding and enforceable Consents to
Assignment of Letter of Credit Rights, in the form of the Consent to
Assignment of Letter of Credit Rights attached hereto as Exhibit G, are in
effect for each letter of credit that constitutes Collateral. Such Grantor
has instructed all issuers and nominated persons under letters of credit in
which the Grantor is the beneficiary or assignee to make all payments to
either a Deposit Account.

(i) All filings and other actions (including (A) actions necessary to
obtain control of Collateral as provided in Sections 9-104, 9-105, 9-106
and 9-107 of the UCC and (B) actions necessary to perfect the
Administrative Agent's security interest with respect to Collateral
evidenced by a certificate of ownership) necessary to perfect the security
interest in the Collateral of such Grantor created under this Agreement
have been duly made or taken and are in full force and effect, and this
Agreement creates in favor of the Administrative Agent for the benefit of
the Secured Parties a valid and, together with such filings and other
actions, perfected first priority security interest in the Collateral of
such Grantor (subject to Permitted Liens), securing the payment of the
Secured Obligations.

(j) No authorization or approval or other action by, and no notice to
or filing with, any governmental authority or regulatory body or any other
third party is required for:

(i) the grant by such Grantor of the security interest granted
hereunder or for the execution, delivery or performance of this
Agreement by such Grantor,

11

(ii) the perfection or maintenance of the security interest
created hereunder (including the first priority nature of such
security interest), except for the filing of financing and
continuation statements under the UCC, which financing statements have
been duly filed and are in full force and effect, the recordation of
the Intellectual Property Security Agreements referred to in Section
11 with the U.S. Patent and Trademark Office and the U.S. Copyright
Office, which Agreements have been duly recorded and are in full force
and effect, and the actions described in Section 4 with respect to
Security Collateral, which actions have been taken and are in full
force and effect, or

(iii) the exercise by the Administrative Agent of its voting or
other rights provided for in this Agreement or the remedies in respect
of the Collateral pursuant to this Agreement, except as may be
required in connection with the disposition of any portion of the
Security Collateral by laws affecting the offering and sale of
securities generally.

(k) The Grantor has no commercial tort claims (as defined in Section
9-102(13) of the UCC), except for commercial tort claims with respect to
which it has taken the actions required by Section 7(b).

Section 9. Further Assurances. (a) From time to time, at the expense
of such Grantor, each Grantor will promptly execute and deliver, or otherwise
authenticate, all further instruments and documents, and take all further action
that may be necessary or desirable, or that the Administrative Agent may
reasonably request, in order to perfect and protect any pledge or security
interest granted or purported to be granted by such Grantor hereunder or to
enable the Administrative Agent to exercise and enforce its rights and remedies
hereunder with respect to any Collateral of such Grantor. Without limiting the
generality of the foregoing, each Grantor will promptly with respect to
Collateral of such Grantor:

(i) mark conspicuously each document included in Inventory, each
chattel paper included in Receivables, each Related Contract, and, at the
reasonable request of the Administrative Agent, each of its records
pertaining to such Collateral with a legend, in form and substance
satisfactory to the Administrative Agent, indicating that such document,
chattel paper, Related Contract or Collateral is subject to the security
interest granted hereby;

(ii) if any such Collateral shall be evidenced by a promissory note or
other instrument or chattel paper, deliver and pledge to the Administrative
Agent hereunder such note or instrument or chattel paper duly indorsed and
accompanied by duly executed instruments of transfer or assignment, all in
form and substance satisfactory to the Administrative Agent;

(iii) execute or authenticate and file such financing or continuation
statements, or amendments thereto, and such other instruments or notices,
as may be necessary or desirable, or as the Administrative Agent may
request, in order to perfect and preserve the security interest granted or
purported to be granted by such Grantor hereunder;

12

(iv) deliver and pledge to the Administrative Agent for benefit of the
Secured Parties certificates representing Security Collateral that
constitutes certificated securities, accompanied by undated stock or bond
powers executed in blank;

(v) take all action necessary to ensure that the Administrative Agent
has control of Collateral consisting of deposit accounts, electronic
chattel paper, investment property, letter-of-credit rights and
transferable records as provided in Sections 9-104, 9-105, 9-106 and 9-107
of the UCC;

(vi) at the reasonable request of the Administrative Agent, take all
action to ensure that the Administrative Agent's security interest is noted
on any certificate of ownership related to any Collateral evidenced by a
certificate of ownership;

(vii) at the reasonable request of the Administrative Agent, cause the
Administrative Agent to be the beneficiary under all letters of credit that
constitute Collateral, with the exclusive right to make all draws under
such letters of credit, and with all rights of a transferee under Section
5-114(e) of the UCC; and

(viii) deliver to the Administrative Agent evidence that all other
action that the Administrative Agent may deem reasonably necessary or
desirable in order to perfect and protect the security interest created by
such Grantor under this Agreement has been taken.

(b) Each Grantor authorizes the Administrative Agent to file one or
more financing or continuation statements, and amendments thereto, including one
or more financing statements indicating that such financing statements cover all
assets or all personal property (or words of similar effect) of such Grantor, in
each case without the signature of such Grantor, and regardless of whether any
particular asset described in such financing statements falls within the scope
of the UCC or the granting clause of this Agreement. A photocopy or other
reproduction of this Agreement or any financing statement covering the
Collateral or any part thereof shall be sufficient as a financing statement
where permitted by law. Each Grantor ratifies its authorization for the
Administrative Agent to have filed such financing statements, continuation
statements or amendments filed prior to the date hereof.

(c) Each Grantor will furnish to the Administrative Agent from time to
time statements and schedules further identifying and describing the Collateral
of such Grantor and such other reports in connection with such Collateral as the
Administrative Agent may reasonably request, all in reasonable detail.

Section 10. Post-Closing Changes; Bailees; Collections on Receivables
and Related Contracts. (a) No Grantor will change its name, type of
organization, jurisdiction of organization, organizational identification number
or location from those set forth in Section 8(a) without first giving at least
30 days' prior written notice to the Administrative Agent and taking all action
required by the Administrative Agent for the purpose of perfecting or protecting
the security interest granted by this Agreement. No Grantor will become bound by
a security agreement authenticated by another Person (determined as provided in
Section 9-203(d) of the UCC) without giving the Administrative Agent 30 days'
prior written notice thereof and taking all action required by the
Administrative Agent to ensure that the perfection and first priority

13

nature of the Administrative Agent's security interest in the Collateral will be
maintained. . Schedule I to this Agreement may be supplemented from time to time
by the Grantors, or by Additional Grantors at the time of the change or addition
of any Additional Grantor, by prior written notice (as provided herein or as
provided in the Credit Agreement) to the Administrative Agent and from the date
of such notice such Schedule shall be deemed automatically amended to reflect
the information set forth in such notice.

(b) If any Collateral of any Grantor is at any time in the possession
or control of a warehouseman, bailee or agent, or if the Administrative Agent so
requests such Grantor will:

(i) notify such warehouseman, bailee or agent of the security interest
created hereunder,

(ii) instruct such warehouseman, bailee or agent to hold all such
Collateral solely for the Administrative Agent's account subject only to
the Administrative Agent's instructions (which shall permit such Collateral
to be removed by such Grantor in the ordinary course of business until the
Administrative Agent notifies such warehouseman, bailee or agent that an
Event of Default has occurred and is continuing),

(iii) use commercially reasonable efforts, to cause such warehouseman,
bailee or agent to authenticate a record acknowledging that it holds
possession of such Collateral for the Administrative Agent's benefit and
shall act solely on the instructions of the Administrative Agent without
the further consent of the Grantor or any other Person, and

(iv) make such authenticated record available to the Administrative
Agent.

(c) Except as otherwise provided in this subsection (c), each Grantor
will continue to collect, at its own expense, all amounts due or to become due
such Grantor under Receivables and Related Contracts. In connection with such
collections, such Grantor may take (and, at the Administrative Agent's
direction, will take) such action as such Grantor or the Administrative Agent
may deem necessary or advisable to enforce collection of the Receivables and
Related Contracts; provided that the Administrative Agent shall have the right
at any time, upon the occurrence and during the continuance of an Event of
Default and upon written notice to such Grantor of its intention to do so, to
notify the Obligors under any Receivables and Related Contracts of the
assignment of such Receivables and Related Contracts to the Administrative Agent
and to direct such Obligors to make payment of all amounts due or to become due
to such Grantor thereunder directly to the Administrative Agent and, upon such
notification and at the expense of such Grantor, to enforce collection of any
such Receivables and Related Contracts, to adjust, settle or compromise the
amount or payment thereof, in the same manner and to the same extent as such
Grantor might have done, and to otherwise exercise all rights with respect to
such Receivables and Related Contracts, including those set forth set forth in
Section 9-607 of the UCC.

Section 11. As to Intellectual Property Collateral(a) . (a) With
respect to its Intellectual Property Collateral, each Grantor will execute or
otherwise authenticate an Intellectual Property Security Agreement, in
substantially the form set forth in Exhibit E hereto

14

or otherwise in form and substance satisfactory to the Administrative Agent, for
recording the security interest granted hereunder to the Administrative Agent in
such Intellectual Property Collateral with the U.S. Patent and Trademark Office,
the U.S. Copyright Office and any other governmental authorities necessary to
perfect the security interest hereunder in such Intellectual Property
Collateral.

(b) Should any Grantor obtain an ownership interest in any item of the
type set forth in Section 1(f) that is not on the date hereof a part of the
Intellectual Property Collateral:

(i) this Agreement shall automatically apply thereto, and

(ii) any such item and, in the case of trademarks, the goodwill
symbolized thereby, shall automatically become part of the Intellectual
Property Collateral subject to this Agreement.

Each Grantor shall give prompt written notice to the Administrative Agent
identifying such items, and such Grantor shall execute and deliver to the
Administrative Agent with such written notice, or otherwise authenticate, an
Intellectual Property Security Agreement Supplement substantially in the form of
Exhibit F hereto or otherwise in form and substance satisfactory to the
Administrative Agent covering such items, which supplement shall be recorded
with the U.S. Patent and Trademark Office, the U.S. Copyright Office and any
other governmental authorities necessary to perfect the security interest
hereunder in such items.

Section 12. Voting Rights; Dividends; Etc. (a) Except as set forth in
subsection (b):

(i) Each Grantor shall be entitled to exercise any and all voting and
other consensual rights pertaining to the Security Collateral of such
Grantor or any part thereof for any purpose; provided that such Grantor
will not exercise or refrain from exercising any such right if such action
would have a material adverse effect on the value of the Security
Collateral or any part thereof.

Each Grantor shall be entitled to receive and retain any and all dividends,
interest and other distributions paid in respect of the Security Collateral
of such Grantor if and to the extent that the payment thereof is not
otherwise prohibited by the terms of the Loan Documents.

(ii) The Administrative Agent will execute and deliver (or cause to be
executed and delivered) to each Grantor all such proxies and other
instruments as such Grantor may reasonably request for the purpose of
enabling such Grantor to exercise the voting and other rights that it is
entitled to exercise pursuant to paragraph (i) above and to receive the
dividends or interest payments that it is authorized to receive and retain
pursuant to paragraph (ii) above.

(b) Upon the occurrence and during the continuance of an Event of
Default:

(i) All rights of each Grantor:

15

(A) to exercise or refrain from exercising the voting and other
consensual rights that it would otherwise be entitled to exercise
pursuant to Section 12(a)(i) shall, upon notice to such Grantor by the
Administrative Agent, cease and

(B) to receive the dividends, interest and other distributions
that it would otherwise be authorized to receive and retain pursuant
to Section 12(a)(ii) shall automatically cease,

and all such rights shall thereupon become vested in the Administrative
Agent, which shall thereupon have the sole right to exercise or refrain
from exercising such voting and other consensual rights and to receive and
hold as Security Collateral such dividends, interest and other
distributions.

(ii) All dividends, interest and other distributions that are received
by any Grantor contrary to the provisions of paragraph (i) of this Section
12(b) shall be received in trust for the benefit of the Administrative
Agent, shall be segregated from other funds of such Grantor and shall be
forthwith paid over to the Administrative Agent as Security Collateral in
the same form as so received (with any necessary indorsement).

(iii) The Administrative Agent shall be authorized to send to each
Securities Intermediary as defined in and under any Security Control
Agreement a Notice of Exclusive Control as defined in and under such
Security Account Control Agreement.

Section 13. As to Letter-of-Credit Rights. (a) Each Grantor, by
granting a security interest in its Receivables consisting of letter-of-credit
rights to the Administrative Agent, intends to (and does) assign to the
Administrative Agent its rights (including its contingent rights) to the
proceeds of all Related Contracts consisting of letters of credit of which it is
or hereafter becomes a beneficiary or assignee. Each Grantor will promptly use
its commercially reasonable efforts to cause the issuer of each letter of credit
and each nominated person (if any) with respect thereto to consent to such
assignment of the proceeds thereof in substantially the form of the Consent to
Assignment of Letter of Credit Rights attached hereto as Exhibit G or otherwise
in form and substance satisfactory to the Administrative Agent and deliver
written evidence of such consent to the Administrative Agent.

(b) Upon the occurrence of an Event of Default, each Grantor will,
promptly upon request by the Administrative Agent:

(i) notify (and such Grantor hereby authorizes the Administrative
Agent to notify) the issuer and each nominated person with respect to each
of the Related Contracts consisting of letters of credit that the proceeds
thereof have been assigned to the Administrative Agent hereunder and any
payments due or to become due in respect thereof are to be made directly to
the Administrative Agent or its designee, and

(ii) arrange for the Administrative Agent to become the transferee
beneficiary of letter of credit.

16

Section 14. Additional Shares. Each Grantor will pledge hereunder,
immediately upon its acquisition (directly or indirectly) thereof, any
additional Equity or other securities of each issuer of the Pledged Equity.

Section 15. Administrative Agent Appointed Attorney-in-Fact. Each
Grantor irrevocably appoints the Administrative Agent such Grantor's
attorney-in-fact, with full authority in the place and stead of such Grantor and
in the name of such Grantor or otherwise, from time to time , upon the
occurrence and during the continuance of an Event of Default, in the
Administrative Agent's discretion, to take any action and to execute any
instrument that the Administrative Agent may deem necessary or advisable to
accomplish the purposes of this Agreement, including, without limitation:

(a) to obtain and adjust insurance required to be paid to the
Administrative Agent pursuant to Section 6.8(a) of the Credit Agreement

(b) to ask for, demand, collect, sue for, recover, compromise, receive
and give acquittance and receipts for moneys due and to become due under or
in respect of any of the Collateral,

(c) to receive, indorse and collect any drafts or other instruments,
documents and chattel paper, in connection with clause (a) or (b) above,
and

(d) to file any claims or take any action or institute any proceedings
that the Administrative Agent may deem necessary or desirable for the
collection of any of the Collateral or otherwise to enforce the rights of
the Administrative Agent with respect to any of the Collateral.

Section 16. Administrative Agent May Perform. If any Grantor fails to
perform any agreement contained herein, the Administrative Agent may, but
without any obligation to do so and without notice, itself perform, or cause
performance of, such agreement, and the expenses of the Administrative Agent
incurred in connection therewith shall be payable by such Grantor under Section
19.

Section 17. The Administrative Agent's Duties. (a) The powers
conferred on the Administrative Agent hereunder are solely to protect the
Secured Parties' interest in the Collateral and shall not impose any duty upon
it to exercise any such powers. Except for the safe custody of any Collateral in
its possession and the accounting for moneys actually received by it hereunder,
the Administrative Agent shall have no duty as to any Collateral, as to
ascertaining or taking action with respect to calls, conversions, exchanges,
maturities, tenders or other matters relative to any Collateral, whether or not
any Secured Party has or is deemed to have knowledge of such matters, or as to
the taking of any necessary steps to preserve rights against any parties or any
other rights pertaining to any Collateral. The Administrative Agent shall be
deemed to have exercised reasonable care in the custody and preservation of any
Collateral in its possession if such Collateral is accorded treatment
substantially equal to that which it accords its own property.

(b) Anything contained herein to the contrary notwithstanding, the
Administrative Agent may from time to time, when the Administrative Agent deems
it to be

17

necessary, appoint one or more subagents for the Administrative Agent hereunder
with respect to all or any part of the Collateral. If the Administrative Agent
so appoints any such subagent with respect to any Collateral:

(i) the assignment and pledge of such Collateral and the security
interest granted in such Collateral by each Grantor hereunder shall be
deemed for purposes of this Security Agreement to have been made to such
subagent, in addition to the Administrative Agent, for the ratable benefit
of the Secured Parties, as security for the Secured Obligations of such
Grantor,

(ii) such subagent shall automatically be vested, in addition to the
Administrative Agent, with all rights, powers, privileges, interests and
remedies of the Administrative Agent hereunder with respect to such
Collateral, and

(iii) the term "Administrative Agent," when used herein in relation to
any rights, powers, privileges, interests and remedies of the
Administrative Agent with respect to such Collateral, shall include such
subagent;

provided that no such subagent shall be authorized to take any action with
respect to any such Collateral unless and except to the extent expressly
authorized in writing by the Administrative Agent.

Section 18. Remedies. If any Event of Default shall have occurred and
be continuing:

(a) The Administrative Agent may exercise in respect of the
Collateral, in addition to other rights and remedies provided for herein or
otherwise available to it, all the rights and remedies of a Secured Party
upon default under the UCC (whether or not the UCC applies to the affected
Collateral) and also may:

(i) require each Grantor to, and each Grantor will at its expense
and upon request of the Administrative Agent forthwith, assemble all
or part of the Collateral as directed by the Administrative Agent and
make it available to the Administrative Agent at a place and time to
be designated by the Administrative Agent that is reasonably
convenient to both parties;

(ii) without notice except as specified below, sell the
Collateral or any part thereof in one or more parcels at public or
private sale, at any of the Administrative Agent's offices or
elsewhere, for cash, on credit or for future delivery, and upon such
other terms as the Administrative Agent may deem commercially
reasonable;

(iii) occupy any premises owned or leased by any of the Grantors
where the Collateral or any part thereof is assembled or located for a
reasonable period in order to effectuate its rights and remedies
hereunder or under law, without obligation to such Grantor in respect
of such occupation; and

18

(iv) exercise any and all rights and remedies of any of the
Grantors under or in connection with the Collateral, or otherwise in
respect of the Collateral, including:

(A) any and all rights of such Grantor to demand or
otherwise require payment of any amount under, or performance of
any provision of, the Receivables, the Related Contracts and the
other Collateral,

(B) withdraw, or cause or direct the withdrawal, of all
funds with respect to the Account Collateral and

(C) exercise all other rights and remedies with respect to
the Receivables, the Related Contracts and the other Collateral,
including those set forth in Section 9-607 of the UCC.

To the extent that notice of sale shall be required by law, at least 10
days' notice to such Grantor of the time and place of any public sale or
the time after which any private sale is to be made shall constitute
reasonable notification. The Administrative Agent shall not be obligated to
make any sale of Collateral regardless of notice of sale having been given.
The Administrative Agent may adjourn any public or private sale from time
to time by announcement at the time and place fixed therefor, and such sale
may, without further notice, be made at the time and place to which it was
so adjourned.

(b) Any cash held by or on behalf of the Administrative Agent and all
cash proceeds received by or on behalf of the Administrative Agent in
respect of any sale of, collection from, or other realization upon all or
any part of the Collateral may, in the discretion of the Administrative
Agent, be held by the Administrative Agent as collateral for, and/or then
or at any time thereafter applied (after payment of any amounts payable to
the Administrative Agent pursuant to Section 19) in whole or in part by the
Administrative Agent for the ratable benefit of the Secured Parties
against, all or any part of the Secured Obligations, in the following
manner:

(i) first, paid to the Administrative Agent for any amounts then
owing to the Administrative Agent pursuant to the Credit Agreement or
otherwise under the Loan Documents; and

(ii) second, ratably:

(A) paid to the Secured Parties for any amounts then owing
to them, in their capacities as such, under the Loan Documents
and Lender Hedging Contracts ratably in accordance with such
respective amounts then owing to such Secured Parties; provided
that, for purposes of this Section 18, the amount owing to any
Lender pursuant to any Lender Hedging Contract to which it is a
party (other than any amount therefore accrued and unpaid) shall
be deemed to be equal to the Agreement Value therefor and

19

(B) deposited as LC Collateral as provided in the Credit
Agreement up to an amount equal to 100% of the aggregate
Available Amount of all outstanding Letters of Credit; provided
that:

(I) if any such Letter of Credit is drawn, the
Administrative Agent shall pay to the Issuing Bank that
issued such Letter of Credit the amount held in the L/C
Collateral Account in respect of such Letter of Credit, and

(II) to the extent that any such Letter of Credit shall
expire or terminate undrawn and as a result thereof the
amount of the Collateral in the L/C Collateral Account shall
exceed 100% of the aggregate Available Amount of all then
outstanding Letters of Credit, such excess amount of such
Collateral shall be applied in accordance with the remaining
order of priority set out in this Section 18(b).

Any surplus of such cash or cash proceeds held by or on the behalf of the
Administrative Agent and remaining after payment in full of all the Secured
Obligations shall be paid over to the applicable Grantor or to whomsoever
may be lawfully entitled to receive such surplus.

"AGREEMENT VALUE" means, for each Lender Hedging Contract with any Grantor,
on any date of determination, an amount determined by the Secured Party
party thereto equal to:

(1) if such Lender Hedging Contract is documented pursuant to the
Master Agreement (Multicurrency-Cross Border) published by the
International Swap and Derivatives Association, Inc., the amount, if
any, that would be payable by such Grantor to such Secured Party
pursuant to such Lender Hedging Contract, as if (x) such Lender
Hedging Contract was being terminated early on such date of
determination, (y) such Grantor was the sole "affected party", and (z)
the Secured Party was the sole party determining such payment (as
provided in such Master Agreement);

(2) in the case of any Lender Hedging Contract traded on an
exchange, the mark-to-market value of such Lender Hedging Contract,
which will be the unrealized loss thereon to such Grantor, determined
by such Secured Party based on the settlement price of such Lender
Hedging Contract on such date of determination; and

(3) in all other cases, the mark-to-market value of such Lender
Hedging Contract, which will be the unrealized loss thereon to such
Grantor, determined by such Secured Party as the amount, if any, by
which (x) the present value of the future cash flows to be paid by
such Grantor thereunder exceeds (y) the present value of the future
cash flows to be paid by such Grantor thereunder.

(c) All payments received by any Grantor under or in connection with
in respect of the Collateral shall be received in trust for the benefit of
the Administrative

20

Agent, shall be segregated from other funds of such Grantor and shall be
forthwith paid over to the Administrative Agent in the same form as so
received (with any necessary indorsement).

(d) the Administrative Agent may, without notice to any Grantor,
except as required by law and at any time or from time to time, charge,
set-off and otherwise apply all or any part of the Secured Obligations
against any funds held with respect to the Account Collateral or in any
other deposit account.

(e) In the event of any sale or other disposition of any of the
Intellectual Property Collateral of any Grantor, the goodwill symbolized by
any trademarks subject to such sale or other disposition shall be included
therein, and such Grantor shall supply to the Administrative Agent or its
designee such Grantor's know-how and expertise, and documents and things
relating to any Intellectual Property Collateral subject to such sale or
other disposition, and such Grantor's customer lists and other records and
documents relating to such Intellectual Property Collateral and to the
manufacture, distribution, advertising and sale of products and services of
such Grantor.

(f) The Grantors recognize that the Administrative Agent may deem it
impracticable to effect a public sale of all or any part of the Security
Collateral and that the Administrative Agent may, therefore, determine to
make one or more private sales of any such securities to a restricted group
of purchasers who will be obligated to agree, among other things, to
acquire such securities for their own account, for investment and not with
a view to the distribution or resale thereof. The Grantors acknowledge that
any such private sale may be at prices and on terms less favorable to the
seller than the prices and other terms which might have been obtained at a
public sale and, notwithstanding the foregoing, agree that such private
sales shall be deemed to have been made in a commercially reasonable manner
and that the Administrative Agent shall have no obligation to delay sale of
any such securities for the period of time necessary to permit the Issuer
of such securities to register such securities for public sale under the
Securities Act of 1933, as amended. Any offer to sell such securities that
has been:

(i) publicly advertised on a bona fide basis in a newspaper or
other publication of general circulation in the financial community of
New York, New York (to the extent that such an offer may be so
advertised without prior registration under such Securities Act), or

(ii) made privately in the manner described above to not less
than 15 bona-fide offerees,

shall be deemed to involve a "public disposition" for the purposes of
Section 9.610(c) of the UCC (or any successor or similar, applicable
statutory provision), notwithstanding that such sale may not constitute a
"public offering" under the Securities Act, and that the Administrative
Agent or any other Secured Party may, in such event, bid for the purchase
of such securities.

21

Section 19. Indemnity and Expenses. (a) EACH GRANTOR SHALL INDEMNIFY
ADMINISTRATIVE AGENT (AND ANY SUB-AGENT THEREOF), EACH SECURED PARTY AND EACH
RELATED PARTY OF ANY OF THE FOREGOING PERSONS (EACH SUCH PERSON BEING CALLED AN
"INDEMNITEE") AGAINST, AND HOLD EACH INDEMNITEE HARMLESS FROM, ANY AND ALL
LOSSES, CLAIMS, DAMAGES, LIABILITIES AND RELATED EXPENSES (INCLUDING THE FEES,
CHARGES AND DISBURSEMENTS OF ANY COUNSEL FOR ANY INDEMNITEE), AND SHALL
INDEMNIFY AND HOLD HARMLESS EACH INDEMNITEE FROM ALL FEES AND TIME CHARGES AND
DISBURSEMENTS FOR ATTORNEYS WHO MAY BE EMPLOYEES OF ANY INDEMNITEE, INCURRED BY
ANY INDEMNITEE OR ASSERTED AGAINST ANY INDEMNITEE BY ANY THIRD PARTY OR BY ANY
GRANTOR ARISING OUT OF, IN CONNECTION WITH, OR AS A RESULT OF:

(I) THE EXECUTION OR DELIVERY OF THIS AGREEMENT, ANY OTHER LOAN
DOCUMENT, ANY LENDER HEDGING CONTRACT OR ANY AGREEMENT OR INSTRUMENT
CONTEMPLATED HEREBY OR THEREBY, THE PERFORMANCE BY THE PARTIES HERETO OF
THEIR RESPECTIVE OBLIGATIONS HEREUNDER OR THEREUNDER OR THE CONSUMMATION OF
THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY,

(II) ANY LOAN OR LETTER OF CREDIT OR THE USE OR PROPOSED USE OF THE
PROCEEDS THEREFROM, OR

(III) ANY ACTUAL OR PROSPECTIVE CLAIM, LITIGATION, INVESTIGATION OR
PROCEEDING RELATING TO ANY OF THE FOREGOING, WHETHER BASED ON CONTRACT,
TORT OR ANY OTHER THEORY, WHETHER BROUGHT BY A THIRD PARTY OR BY ANY
GRANTOR, AND REGARDLESS OF WHETHER ANY INDEMNITEE IS A PARTY THERETO.

THE FOREGOING INDEMNIFICATION WILL 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 CAUSED, IN WHOLE OR IN PART BY ANY NEGLIGENT
ACT OR OMISSION OF ANY KIND BY ANY INDEMNITEE, PROVIDED THAT SUCH INDEMNITY
SHALL NOT, AS TO ANY INDEMNITEE, BE AVAILABLE TO THE EXTENT THAT SUCH LOSSES,
CLAIMS, DAMAGES, LIABILITIES OR RELATED EXPENSES ARE DETERMINED BY A COURT OF
COMPETENT JURISDICTION BY FINAL AND NON-APPEALABLE JUDGMENT TO HAVE RESULTED
FROM THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF SUCH INDEMNITEE OR IF A
GRANTOR HAS OBTAINED A FINAL AND NON-APPEALABLE JUDGMENT IN ITS FAVOR ON SUCH
CLAIM AS DETERMINED BY A COURT OF COMPETENT JURISDICTION.

(b) Each Grantor will upon demand pay to the Administrative Agent the
amount of any and all reasonable expenses, including the reasonable fees and
expenses of its counsel and of any experts and agents, that the Administrative
Agent may incur in connection with:

(i) the administration of this Agreement,

(ii) the custody, preservation, use or operation of, or the sale of,
collection from or other realization upon, any of the Collateral of such
Grantor,

(iii) the exercise or enforcement of any of the rights of the
Administrative Agent or the other Secured Parties hereunder or

22

(iv) the failure by such Grantor to perform or observe any of the
provisions hereof.

(b) To the fullest extent permitted by applicable law, no Grantor
shall assert, and hereby waives, any claim against any Indemnitee, on any
theory of liability, for special, indirect, consequential or punitive
damages (as opposed to direct or actual damages) arising out of, in
connection with, or as a result of, this Agreement, any other Loan
Document, any Lender Hedging Contract or any agreement or instrument
contemplated hereby or thereby, the transactions contemplated hereby or
thereby, any Loan or Letter of Credit or the use of the proceeds thereof.
No Indemnitee referred to in subsection (a) shall be liable for any damages
arising from the use by unintended recipients of any information or other
materials distributed by it through telecommunications, electronic or other
information transmission systems in connection with this Agreement, the
other Loan Documents, the Lender Hedging Contracts or the transactions
contemplated hereby or thereby.

Section 20. Subordination of Liens. Each Grantor confirms that:

(a) any and all Liens securing debts, liabilities and other
Obligations owed to such Grantor by any other Credit Party ("SUBORDINATED
LIENS") shall be subordinate to any and all Liens under the Security
Documents securing the Secured Obligations ("SENIOR LIENS") as if the
Senior Liens were created, filed, recorded and otherwise perfected prior in
time to the creation, filing, recording and other perfection of the
Subordinated Liens, and

(b) by reason of this Agreement, the Administrative Agent, for the
benefit of the Secured Parties, has a perfected, first-priority Lien on
each Subordinated Lien and the right, to the exclusion of any Grantor, to
enforce, exercise remedies, grant waivers, release and take any and all
other actions with respect to such Subordinated Lien.

Section 21. Amendments; Waivers; Additional Grantors; Etc. (a) No
amendment or waiver of any provision of this Agreement, and no consent to any
departure by any Grantor herefrom shall in any event be effective unless the
same shall be entered into in accordance with Section 10.1 of the Credit
Agreement. No failure on the part of the Administrative Agent or any other
Secured Party to exercise, and no delay in exercising any right hereunder, shall
operate as a waiver thereof; nor shall any single or partial exercise of any
such right preclude any other or further exercise thereof or the exercise of any
other right.

(b) Upon the execution and delivery, or authentication, by any Person
of a security agreement supplement in substantially the form of Exhibit A hereto
(each a "SECURITY AGREEMENT SUPPLEMENT"):

(i) such Person shall be referred to as an "ADDITIONAL GRANTOR" and
shall be and become a Grantor hereunder, and each reference in this
Agreement and the other Loan Documents to "Grantor" shall also mean and be
a reference to such Additional Grantor, and each reference in this
Agreement, the other Loan Documents and the

23

Lender Hedging Contracts to "Collateral" shall also mean and be a reference
to the Collateral of such Additional Grantor, and

(ii) the supplemental schedules attached to each Security Agreement
Supplement shall be incorporated into and become a part of and supplement
the respective Schedule hereto, and the Administrative Agent may attach
such supplemental schedules to such Schedules; and each reference to such
Schedules shall mean and be a reference to such Schedules as supplemented
pursuant to each Security Agreement Supplement.

Section 22. Notices, Etc. All notices and other communications
provided for hereunder shall be delivered in the manner provided in the Credit
Agreement, in the case of the Borrower or the Administrative Agent, addressed to
it at its address specified in the Credit Agreement and, in the case of each
Grantor other than the Borrower, addressed to it at its address set forth
opposite such Grantor's name on the signature pages hereto or on the signature
page to the Security Agreement Supplement pursuant to which it became a party
hereto; or, as to any party, at such other address as shall be designated by
such party in a written notice to the other parties. All such notices and other
communications shall be effective when and as provided in the Credit Agreement.
Delivery by telecopier of an executed counterpart of any amendment or waiver of
any provision of this Agreement or of any Security Agreement Supplement or
Schedule hereto shall be effective as delivery of an original executed
counterpart thereof.

Section 23. Continuing Security Interest; Assignments under the Credit
Agreement. This Agreement shall create a continuing security interest in the
Collateral and shall:

(a) remain in full force and effect until the latest of:

(i) the payment in full in cash of the Secured Obligations,

(ii) the irrevocable termination or expiration of all Commitments
and

(iii) the termination or expiration of all Letters of Credit and
all Lender Hedging Contracts,

(b) be binding upon each Grantor, its successors and assigns and

(c) inure, together with the rights and remedies of the Administrative
Agent hereunder, to the benefit of the Secured Parties and their respective
successors, transferees and assigns.

Without limiting the generality of the foregoing clause (c), any Secured Party
may assign or otherwise transfer all or any portion of its rights and
obligations under the Credit Agreement (including all or any portion of its
Commitment, the Loans owing to it and the Note or Notes, if any, held by it), to
any other Person, and such other Person shall thereupon become vested with all
the benefits in respect thereof granted to such Secured Party herein or
otherwise, in each case as provided in the Credit Agreement.

24

Section 24. Release; Termination. (a) Upon any sale, lease, transfer
or other disposition of any item of Collateral of any Grantor or release of any
Guaranty by a Grantor, in each case in accordance with the terms of the Loan
Documents (other than sales of Inventory in the ordinary course of business),
the Administrative Agent will, at such Grantor's expense, execute and deliver to
such Grantor such documents as such Grantor shall reasonably request to evidence
the release of such item of Collateral from the assignment and security interest
granted hereby; provided that:

(i) at the time of such request and such release no Event of Default
shall have occurred and be continuing,

(ii) such Grantor shall have delivered to the Administrative Agent, at
least 10 Business Days prior to the date of the proposed release, a written
request for release describing the item of Collateral and the terms of the
sale, lease, transfer or other disposition in reasonable detail, including
the price thereof and any expenses in connection therewith, together with a
form of release for execution by the Administrative Agent and a certificate
of such Grantor to the effect that the transaction is in compliance with
the Loan Documents and as to such other matters as the Administrative Agent
may request and

(iii) the proceeds of any such sale, lease, transfer or other
disposition required to be applied, or any payment to be made in connection
therewith, in accordance with the Credit Agreement shall, to the extent so
required, be paid or made to, or in accordance with the instructions of,
the Administrative Agent when and as required under the Credit Agreement.

(b) In the circumstances provided in Section 10.9 of the Credit
Agreement, and subject to the limitations described therein, the
Administrative Agent will release this Agreement.

Section 25. Terms Generally; References and Titles. The definitions of
terms herein shall apply equally to the singular and plural forms of the terms
defined. Whenever the context may require, any pronoun shall include the
corresponding masculine, feminine and neuter forms. The words "include,"
"includes" and "including" shall be deemed to be followed by the phrase "without
limitation." Unless the context requires otherwise:

(a) any definition of or reference to any agreement, instrument or
other document herein shall be construed as referring to such agreement,
instrument or other document as from time to time amended, supplemented or
otherwise modified (subject to any restrictions on such amendments,
supplements or modifications set forth herein);

(b) any reference herein to any Person shall be construed to include
such Person's successors and assigns;

(c) the words "herein," "hereof" and "hereunder," and words of similar
import, shall be construed to refer to this Agreement in its entirety and
not to any particular provision hereof;

25

(d) all references herein to Articles, Sections and Exhibits shall be
construed to refer to Articles and Sections of, and Exhibits and Schedules
to, this Agreement;

(e) any reference to any law or regulation herein shall, unless
otherwise specified, refer to such law or regulation as amended, modified
or supplemented from time to time; and

(f) the words "asset" and "property" shall be construed to have the
same meaning and effect and to refer to any and all tangible and intangible
assets and properties, including cash, securities, accounts and contract
rights.

References to any document, instrument, or agreement shall include:

(i) all exhibits, schedules, and other attachments thereto, and

(ii) shall include all documents, instruments, or agreements issued or
executed in replacement thereof.

Titles appearing at the beginning of any subdivision are for convenience only
and do not constitute any part of such subdivision and shall be disregarded in
construing the language contained in such subdivisions. 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.
Accounting terms have the meanings assigned to them by GAAP, as applied by the
accounting entity to which they refer. References to "days" shall mean calendar
days, unless the term "Business Day" is used. Unless otherwise specified,
references herein to any particular Person also refer to its successors and
permitted assigns.

Section 26. Execution in Counterparts. This Agreement may be executed
in any number of counterparts, each of which when so executed shall be deemed to
be an original and all of which taken together shall constitute one and the same
agreement. Delivery of an executed counterpart of a signature page to this
Agreement by telecopier shall be effective as delivery of an original executed
counterpart of this Agreement.

Section 27. Governing Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of New York.

Section 28. Subordination of Liens. Each Grantor confirms that:

(a) any and all Liens securing debts, liabilities and other
Obligations owed to such Grantor by any other Credit Party ("SUBORDINATED
LIENS") shall be subordinate to any and all Liens under the Security
Documents securing the Secured Obligations ("SENIOR LIENS") as if the
Senior Liens were created, filed, recorded and otherwise perfected prior in
time to the creation, filing, recording and other perfection of the
Subordinated Liens, and

26

(b) by reason of this Agreement, the Administrative Agent, for the
benefit of the Secured Parties, has a perfected, first-priority Lien on
each Subordinated Lien and the right, to the exclusion of any Grantor, to
enforce, exercise remedies, grant waivers, release and take any and all
other actions with respect to such Subordinated Lien.

27

IN WITNESS WHEREOF, each Grantor has caused this Agreement to be duly
executed and delivered by its officer thereunto duly authorized as of the date
first above written.

AREP OIL & GAS LLC

By: /s/ Philip D. Devlin
------------------------------------
Name: Philip D. Devlin
Title: Vice President and Secretary

Address for Notices:                    ONSHORE GP LLC
ONSHORE GP, LLC
1400 One Energy Square
4925 Greenville Avenue                  By: /s/ Philip D. Devlin
Dallas, TX 75206                            ------------------------------------
Name: Philip D. Devlin
Title: Vice President and Secretary

Address for Notices:                    Onshore LP LLC
ONSHORE LP, LLC
1400 One Energy Square
4925 Greenville Avenue                  By: /s/ Philip D. Devlin
Dallas, TX 75206                            ------------------------------------
Name: Philip D. Devlin
Title: Vice President and Secretary

Address for Notices:                    OFFSHORE GP LLC
OFFSHORE GP, LLC
1400 One Energy Square
4925 Greenville Avenue                  By: /s/ Philip D. Devlin
Dallas, TX 75206                            ------------------------------------
Name: Philip D. Devlin
Title: Vice President and Secretary

Address for Notices:                    OFFSHORE LP LLC
OFFSHORE LP, LLC
1400 One Energy Square
4925 Greenville Avenue                  By: /s/ Philip D. Devlin
Dallas, TX 75206                            ------------------------------------
Name: Philip D. Devlin
Title: Vice President and Secretary

28

Address for Notices:                    NATIONAL ONSHORE LP
NATIONAL ONSHORE LP
1400 One Energy Square
4925 Greenville Avenue                  By: /s/ Philip D. Devlin
Dallas, TX 75206                            ------------------------------------
Name: Philip D. Devlin
Title: Vice President and Secretary

Address for Notices:                    NATIONAL OFFSHORE LP
NATIONAL OFFSHORE LP
1400 One Energy Square
4925 Greenville Avenue                  By: /s/ Philip D. Devlin
Dallas, TX 75206                            ------------------------------------
Name: Philip D. Devlin
Title: Vice President and Secretary

Address for Notices:                    MID RIVER LLC
MID RIVER LLC
1400 One Energy Square                  By: AREP Oil & Gas LLC, sole member
4925 Greenville Avenue
Dallas, TX 75206
By: /s/ Philip D. Devlin
------------------------------------
Name: Philip D. Devlin
Title: Vice President and Secretary

Address for Notices:                    GALVESTON BAY PROCESSING CORPORATION
GALVESTON BAY PROCESSING CORPORATION
1400 One Energy Square
4925 Greenville Avenue                  By: /s/ Philip D. Devlin
Dallas, TX 75206                            ------------------------------------
Name: Philip D. Devlin
Title: Vice President and Secretary

Address for Notices:                    GALVESTON BAY PIPELINE COMPANY
GALVESTON BAY PIPELINE COMPANY
1400 One Energy Square
4925 Greenville Avenue                  By: /s/ Philip D. Devlin
Dallas, TX 75206                            ------------------------------------
Name: Philip D. Devlin
Title: Vice President and Secretary

29

EXHIBIT A TO THE
SECURITY AGREEMENT

FORM OF SECURITY AGREEMENT SUPPLEMENT

[Date of Security Agreement Supplement]

CITICORP USA, INC.,
as the Administrative Agent for the
Secured Parties referred to in the
Credit Agreement referred to below
388 Greenwich Street
New York, NY 10013

AREP Oil & Gas LLC

Ladies and Gentlemen:

Reference is made to (i) the Credit Agreement dated as of December 20,
2005 (as amended, amended and restated, supplemented or otherwise modified from
time to time, the "CREDIT AGREEMENT"), among AREP Oil & Gas LLC, the Lenders
party thereto, Citicorp USA, Inc., as Administrative Agent (together with any
successor Administrative Agent appointed pursuant to the Credit Agreement, the
"ADMINISTRATIVE AGENT"), and Bear, Stearns & Co., Inc., as syndication agent,
and (ii) the Security Agreement dated as of December 20, 2005 (as amended,
amended and restated, supplemented or otherwise modified from time to time, the
"SECURITY AGREEMENT") made by the Grantors from time to time party thereto in
favor of the Administrative Agent for the Secured Parties. Terms defined in the
Credit Agreement or the Security Agreement and not otherwise defined herein are
used herein as defined in the Credit Agreement or the Security Agreement.

SECTION 1. Grant of Security. The undersigned hereby grants to the
Administrative Agent, for the ratable benefit of the Secured Parties, a security
interest in, all of its right, title and interest in and to all of the
Collateral of the undersigned, whether now owned or hereafter acquired by the
undersigned, wherever located and whether now or hereafter existing or arising,
including the property and assets of the undersigned set forth on the attached
supplemental schedules to the Schedules to the Security Agreement.

SECTION 2. Security for Obligations. The grant of a security interest
in, the Collateral by the undersigned under this Security Agreement Supplement
and the Security Agreement secures the payment of all Obligations of any Credit
Party that are now or hereafter existing under or in respect of the Loan
Documents and all Lender Hedging Obligations of any Credit Party that are now or
hereafter existing, in each case whether direct or indirect, absolute or
contingent, and whether for principal, reimbursement obligations, interest,
premiums, penalties, fees, indemnifications, contract causes of action, costs,
expenses or otherwise.

2

SECTION 3. Supplements to Security Agreement Schedules. The
undersigned has attached hereto supplemental Schedules to the respective
Schedules to the Security Agreement, and the undersigned hereby certifies, as of
the date first above written, that such supplemental schedules have been
prepared by the undersigned in substantially the form of the equivalent
Schedules to the Security Agreement and are complete and correct.

SECTION 4. Representations and Warranties. The undersigned makes as of
the date hereof each representation and warranty set forth in Section 8 of the
Security Agreement (as supplemented by the attached supplemental schedules) to
the same extent as each other Grantor.

SECTION 5. Obligations Under the Security Agreement. The undersigned
hereby agrees, as of the date first above written, to be bound as a Grantor by
all of the terms and provisions of the Security Agreement to the same extent as
each of the other Grantors. The undersigned further agrees, as of the date first
above written, that each reference in the Security Agreement to an "Additional
Grantor" or a "Grantor" shall also mean and be a reference to the undersigned.

SECTION 6. Governing Law. This Security Agreement Supplement shall be
governed by, and construed in accordance with, the laws of the State of New
York.

Very truly yours,

[NAME OF ADDITIONAL GRANTOR]

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

Address for notices:

----------------------------------------

----------------------------------------

----------------------------------------

EXHIBIT B TO THE
SECURITY AGREEMENT

FORM OF DEPOSIT ACCOUNT CONTROL AGREEMENT

ACCOUNT CONTROL AGREEMENT (this "AGREEMENT") dated as of ________,
____, among____________, a ___________ (the "GRANTOR"), Citibank USA, Inc., as
Administrative Agent (the "ADMINISTRATIVE AGENT"), and _________, a _________
("____________"), as securities intermediary and depository bank (the "ACCOUNT
HOLDER").

PRELIMINARY STATEMENTS:

(1) The Grantor has granted the Secured Party a security interest (the
"SECURITY INTEREST") in the following accounts maintained by the Account Holder
for the Grantor (each, an "ACCOUNT" and collectively, the "ACCOUNTS"):

[Insert account numbers and other identifying information.]

(2) Terms defined in Article 9 of the Uniform Commercial Code in
effect in the State of New York ("N.Y. UNIFORM COMMERCIAL CODE") are used in
this Agreement as such terms are defined in such Article 9.

NOW, THEREFORE, in consideration of the premises and of the mutual
agreements contained herein, the parties hereto hereby agree as follows:

SECTION 1. The Accounts. The Grantor and Account Holder represent and
warrant to, and agree with, the Administrative Agent that:

(a) The Account Holder maintains each Account for the Grantor, and
funds held by the Account Holder for the account of the Grantor are, and
will continue to be, credited to an Account in accordance with instructions
given by the Grantor (unless otherwise provided herein).

(b) To the extent that funds are credited to any Account, such Account
is a deposit account; and to the extent that financial assets are credited
to any Account, such Account is a securities account. The Account Holder is
the bank with which each Account that is a deposit account is maintained.
The Grantor is the Account Holder's customer with respect to the Accounts.

(c) Notwithstanding any other agreement to the contrary, the Account
Holder's jurisdiction with respect to each Account for purposes of the N.Y.
Uniform Commercial Code is, and will continue to be for so long as the
Security Interest shall be in effect, the State of New York.

2

(d) The Grantor and Account Holder do not know of any claim to or
interest in any Account or any property (including funds and financial
assets) credited to any Account, except for claims and interests of the
parties referred to in this Agreement.

SECTION 2. Control by Administrative Agent. The Account Holder will
comply with:

(a) instructions directing disposition of the funds in any and all of
the Accounts,

(b) notifications that the Account Holder receives directing it to
transfer funds in any and all of the Accounts, and

(c) other directions concerning any and all of the Accounts, including
directions to distribute to the Administrative Agent proceeds of any such
transfer or interest or any and all of the Accounts

(any such instruction, notification or direction referred to in clause (a), (b)
or (c) above being an "ACCOUNT DIRECTION"), in each case of clauses (a), (b) and
(c) above originated by the Administrative Agent without further consent by the
Grantor or any other Person.

SECTION 3. Grantor's Rights in Accounts.

(a) Except as otherwise provided in this Section 3, the Account Holder
will comply with Account Directions and other directions concerning each Account
originated by the Grantor without further consent by the Administrative Agent.

(b) Until the Account Holder receives a notice from the Administrative
Agent that the Administrative Agent will exercise exclusive control over any
Account (a "NOTICE OF EXCLUSIVE CONTROL" with respect to such Account), the
Account Holder may distribute to the Grantor all interest and funds in such
Account.

(c) The Account Holder will not comply with any Account Direction
originated by the Grantor that would require the Account Holder to make a free
delivery of any funds or financial asset to the Grantor or any other Person.

(d) If the Account Holder receives from the Administrative Agent a
Notice of Exclusive Control with respect to any Account, the Account Holder will
comply only with Account Directions originated by the Administrative Agent and
will cease:

(i) complying with Account Directions or other directions concerning
such Account originated by the Grantor, and

(ii) distributing to the Grantor interest and dividends on property
(including funds and financial assets) in such Account.

SECTION 4. Priority of Administrative Agent's Security Interest. (a)
The Account Holder:

3

(i) subordinates to the Security Interest and in favor of the
Administrative Agent any security interest, lien, or right of recoupment or
setoff that the Account Holder may have, now or in the future, against any
Account or property (including any funds and financial assets) credited to
any Account, and

(ii) agrees that it will not exercise any right in respect of any such
security interest or lien or any such right of recoupment or setoff until
the Security Interest is terminated,

except that the Account Holder:

(A) will retain its prior security interest and lien on property
credited to any Account,

(B) may exercise any right in respect of such security interest or
lien, and

(C) may exercise any right of recoupment or setoff against any
Account,

in the case of clauses (A), (B) and (C) above, to secure or to satisfy, and only
to secure or to satisfy, payment:

(I) for such property,

(II) for its customary fees and expenses for the routine maintenance
and operation of such Account, and

(III) for the face amount of any items that have been credited to such
Account but are subsequently returned unpaid because of uncollected or
insufficient funds.

(b) The Account Holder will not enter into any other agreement with
any Person relating to Account Directions or other directions with respect to
any Account.

SECTION 5. Statements, Confirmations, and Notices of Adverse Claims.
(a) The Account Holder will send copies of all statements and confirmations for
each Account simultaneously to the Administrative Agent and the Grantor.

(b) When the Account Holder knows of any claim or interest in any
Account or any property (including funds and financial assets) credited to any
Account other than the claims and interests of the parties referred to in this
Agreement, the Account Holder will promptly notify the Administrative Agent and
the Grantor of such claim or interest.

SECTION 6. The Account Holder's Responsibility. (a) Except for
permitting a withdrawal, delivery, or payment in violation of Section 3, the
Account Holder will not be liable to the Administrative Agent for complying with
Account Directions or other directions concerning any Account from the Grantor
that are received by the Account Holder before the Account Holder receives and
has a reasonable opportunity to act on a Notice of Exclusive Control.

4

(b) The Account Holder will not be liable to the Grantor or the
Administrative Agent for complying with a Notice of Exclusive Control or with an
Account Direction or other direction concerning any Account originated by the
Administrative Agent, even if the Grantor notifies the Account Holder that the
Administrative Agent is not legally entitled to issue the Notice of Exclusive
Control or Account Direction or such other direction unless the Account Holder
takes the action after it is served with an injunction, restraining order, or
other legal process enjoining it from doing so, issued by a court of competent
jurisdiction, and had a reasonable opportunity to act on the injunction,
restraining order or other legal process.

(c) This Agreement does not create any obligation of the Account
Holder except for those expressly set forth in this Agreement and in Article 4
of the N.Y. Uniform Commercial Code. In particular, the Account Holder need not
investigate whether the Administrative Agent is entitled under the
Administrative Agent's agreements with the Grantor to give an Account Direction
or other direction concerning any Account or a Notice of Exclusive Control. The
Account Holder may rely on notices and communications it believes given by the
appropriate party.

SECTION 7. Indemnity. The Grantor will indemnify the Account Holder,
its officers, directors, employees and agents against claims, liabilities and
expenses arising out of this Agreement (including reasonable attorney's fees and
disbursements), except to the extent the claims, liabilities or expenses are
caused by the Account Holder's gross negligence or willful misconduct as found
by a court of competent jurisdiction in a final, non-appealable judgment.

SECTION 8. Termination; Survival. (a) The Administrative Agent may
terminate this Agreement by notice to the Account Holder and the Grantor. If the
Administrative Agent notifies the Account Holder that the Security Interest has
terminated, this Agreement will immediately terminate.

(b) The Account Holder may terminate this Agreement on 60 days' prior
notice to the Administrative Agent and the Grantor; provided that before such
termination the Account Holder and the Grantor shall make arrangements to
transfer the property (including all funds and financial assets) credited to
each Account to another Account Holder that shall have executed, together with
the Grantor, a control agreement in favor of the Administrative Agent in respect
of such property in substantially the form of this Agreement or otherwise in
form and substance satisfactory to the Administrative Agent.

(c) Sections 6 and 7 will survive termination of this Agreement.

SECTION 9. Governing Law. This Agreement and each Account will be
governed by the law of the State of New York. The Account Holder and the Grantor
may not change the law governing any Account without the Administrative Agent's
express prior written agreement.

SECTION 10. Entire Agreement. This Agreement is the entire agreement,
and supersedes any prior agreements, and contemporaneous oral agreements, of the
parties concerning its subject matter.

5

SECTION 11. Amendments. No amendment of, or waiver of a right under,
this Agreement will be binding unless it is in writing and signed by the party
to be charged.

SECTION 12. Notices. A notice or other communication to a party under
this Agreement will be in writing (except that Account Directions may be given
orally), will be sent to the party's address set forth under its name below or
to such other address as the party may notify the other parties and will be
effective on receipt.

SECTION 13. Binding Effect. This Agreement shall become effective when
it shall have been executed by the Grantor, the Administrative Agent and the
Account Holder, and thereafter shall be binding upon and inure to the benefit of
the Grantor, the Administrative Agent and the Account Holder and their
respective successors and assigns.

SECTION 14. Execution in Counterparts. This Agreement may be executed
in any number of counterparts and by different parties hereto in separate
counterparts, each of which when so executed shall be deemed to be an original
and all of which taken together shall constitute one and the same agreement.
Delivery of an executed counterpart of a signature page to this Agreement by
telecopier shall be effective as delivery of an original executed counterpart of
this Agreement.

6

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their respective officers thereunto duly authorized, as of the
date first above written.

[NAME OF GRANTOR]

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

Address:

----------------------------------------

----------------------------------------

CITIBANK USA, INC., as
Administrative Agent

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

Address:

----------------------------------------

----------------------------------------

[NAME OF ACCOUNT HOLDER]

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

Address:

-------------------------------------

-------------------------------------

EXHIBIT C TO THE
SECURITY AGREEMENT

FORM OF ACCOUNT CONTROL AGREEMENT

(DEPOSIT ACCOUNT/SECURITIES ACCOUNT)

ACCOUNT CONTROL AGREEMENT (this "AGREEMENT") dated as of ________,
____, among____________, a ___________ (the "GRANTOR"), Citibank USA, Inc., as
Administrative Agent (the "ADMINISTRATIVE AGENT"), and _________, a _________
("____________"), as securities intermediary and depository bank (the "ACCOUNT
HOLDER").

PRELIMINARY STATEMENTS:

(1) The Grantor has granted the Secured Party a security interest (the
"SECURITY Interest") in the following accounts maintained by the Account Holder
for the Grantor (each, an "ACCOUNT" and collectively, the "ACCOUNTS"):

[Insert account numbers and other identifying information.]

(2) Terms defined in Article 8 or 9 of the Uniform Commercial Code in
effect in the State of New York ("N.Y. UNIFORM COMMERCIAL CODE") are used in
this Agreement as such terms are defined in such Article 8 or 9.

NOW, THEREFORE, in consideration of the premises and of the mutual
agreements contained herein, the parties hereto hereby agree as follows:

SECTION 1. The Accounts. The Grantor and Account Holder represent and
warrant to, and agree with, the Administrative Agent that:

(a) The Account Holder maintains each Account for the Grantor, and all
property (including all funds and financial assets) held by the Account
Holder for the account of the Grantor are, and will continue to be,
credited to an Account in accordance with instructions given by the Grantor
(unless otherwise provided herein).

(b) To the extent that funds are credited to any Account, such Account
is a deposit account; and to the extent that financial assets are credited
to any Account, such Account is a securities account. The Account Holder is
(i) the bank with which each Account that is a deposit account is
maintained and (ii) the securities intermediary with respect to financial
assets held in any Account that is a securities account. The Grantor is (x)
the Account Holder's customer with respect to the Accounts and (y) the
entitlement holder with respect to financial assets credited from time to
time to any Account.

(c) Notwithstanding any other agreement to the contrary, the Account
Holder's jurisdiction with respect to each Account for purposes of the N.Y.
Uniform Commercial Code is, and will continue to be for so long as the
Security Interest shall be in effect, the State of New York.

2

(d) The Grantor and Account Holder do not know of any claim to or
interest in any Account or any property (including funds and financial
assets) credited to any Account, except for claims and interests of the
parties referred to in this Agreement.

SECTION 2. Control by Administrative Agent. The Account Holder will
comply with:

(a) all instructions directing disposition of the funds in any and all
of the Accounts,

(b) all notifications and entitlement orders that the Account Holder
receives directing it to transfer or redeem any financial asset in any and
all of the Accounts, and

(c) all other directions concerning any and all of the Accounts,
including directions to distribute to the Administrative Agent proceeds of
any such transfer or redemption or interest or dividends on property in any
and all of the Accounts

(any such instruction, notification or direction referred to in clause (a), (b)
or (c) above being an "ACCOUNT DIRECTION"), in each case of clauses (a), (b) and
(c) above originated by the Administrative Agent without further consent by the
Grantor or any other Person.

SECTION 3. Grantor's Rights in Accounts.

(a) Except as otherwise provided in this Section 3, the Account Holder
will comply with Account Directions and other directions concerning each Account
originated by the Grantor without further consent by the Administrative Agent.

(b) Until the Account Holder receives a notice from the Administrative
Agent that the Administrative Agent will exercise exclusive control over any
Account (a "NOTICE OF EXCLUSIVE CONTROL" with respect to such Account), the
Account Holder may distribute to the Grantor all interest and regular cash
dividends on property (including funds and financial assets) in such Account.

(c) The Account Holder will not comply with any Account Direction
originated by the Grantor that would require the Account Holder to make a free
delivery of any funds or financial asset to the Grantor or any other Person.

(d) If the Account Holder receives from the Administrative Agent a
Notice of Exclusive Control with respect to any Account, the Account Holder will
comply only with Account Directions originated by the Administrative Agent and
will cease:

(i) complying with Account Directions or other directions concerning
such Account originated by the Grantor and

(ii) distributing to the Grantor interest and dividends on property
(including funds and financial assets) in such Account.

3

SECTION 4. Priority of Administrative Agent's Security Interest. (a)
The Account Holder:

(i) subordinates to the Security Interest and in favor of the
Administrative Agent any security interest, lien, or right of recoupment or
setoff that the Account Holder may have, now or in the future, against any
Account or property (including any funds and financial assets) credited to
any Account, and

(ii) agrees that it will not exercise any right in respect of any such
security interest or lien or any such right of recoupment or setoff until
the Security Interest is terminated,

except that the Account Holder:

(A) will retain its prior security interest and lien on property
credited to any Account,

(B) may exercise any right in respect of such security interest or
lien, and

(C) may exercise any right of recoupment or setoff against any
Account,

in the case of clauses (A), (B) and (C) above, to secure or to satisfy, and only
to secure or to satisfy, payment:

(I) for such property,

(II) for its customary fees and expenses for the routine maintenance
and operation of such Account, and

(III) for the face amount of any items that have been credited to such
Account but are subsequently returned unpaid because of uncollected or
insufficient funds.

(b) The Account Holder will not enter into any other agreement with
any Person relating to Account Directions or other directions with respect to
any Account.

SECTION 5. Statements, Confirmations, and Notices of Adverse Claims.
(a) The Account Holder will send copies of all statements and confirmations for
each Account simultaneously to the Administrative Agent and the Grantor.

(b) When the Account Holder knows of any claim or interest in any
Account or any property (including funds and financial assets) credited to any
Account other than the claims and interests of the parties referred to in this
Agreement, the Account Holder will promptly notify the Administrative Agent and
the Grantor of such claim or interest.

SECTION 6. The Account Holder's Responsibility. (a) Except for
permitting a withdrawal, delivery, or payment in violation of Section 3, the
Account Holder will not be liable to the Administrative Agent for complying with
Account Directions or other directions

4

concerning any Account from the Grantor that are received by the Account Holder
before the Account Holder receives and has a reasonable opportunity to act on a
Notice of Exclusive Control.

(b) The Account Holder will not be liable to the Grantor or the
Administrative Agent for complying with a Notice of Exclusive Control or with an
Account Direction or other direction concerning any Account originated by the
Administrative Agent, even if the Grantor notifies the Account Holder that the
Administrative Agent is not legally entitled to issue the Notice of Exclusive
Control or Account Direction or such other direction unless the Account Holder
takes the action after it is served with an injunction, restraining order, or
other legal process enjoining it from doing so, issued by a court of competent
jurisdiction, and had a reasonable opportunity to act on the injunction,
restraining order or other legal process

(c) This Agreement does not create any obligation of the Account
Holder except for those expressly set forth in this Agreement and, in the case
of any Account that is a securities account, in Part 5 of Article 8 of the N.Y.
Uniform Commercial Code and, in the case of any Account that is a deposit
account, in Article 4 of the N.Y. Uniform Commercial Code. In particular, the
Account Holder need not investigate whether the Administrative Agent is entitled
under the Administrative Agent's agreements with the Grantor to give an Account
Direction or other direction concerning any Account or a Notice of Exclusive
Control. The Account Holder may rely on notices and communications it believes
given by the appropriate party.

SECTION 7. Indemnity. The Grantor will indemnify the Account Holder,
its officers, directors, employees and agents against claims, liabilities and
expenses arising out of this Agreement (including reasonable attorney's fees and
disbursements), except to the extent the claims, liabilities or expenses are
caused by the Account Holder's gross negligence or willful misconduct as found
by a court of competent jurisdiction in a final, non-appealable judgment.

SECTION 8. Termination; Survival. (a) The Administrative Agent may
terminate this Agreement by notice to the Account Holder and the Grantor. If the
Administrative Agent notifies the Account Holder that the Security Interest has
terminated, this Agreement will immediately terminate.

(b) The Account Holder may terminate this Agreement on 60 days' prior
notice to the Administrative Agent and the Grantor; provided that before such
termination the Account Holder and the Grantor shall make arrangements to
transfer the property (including all funds and financial assets) credited to
each Account to another Account Holder that shall have executed, together with
the Grantor, a control agreement in favor of the Administrative Agent in respect
of such property in substantially the form of this Agreement or otherwise in
form and substance satisfactory to the Administrative Agent.

(c) Sections 6 and 7 will survive termination of this Agreement.

SECTION 9. Governing Law. This Agreement and each Account will be
governed by the law of the State of New York. The Account Holder and the Grantor
may not change the law governing any Account without the Administrative Agent's
express prior written agreement.

5

SECTION 10. Entire Agreement. This Agreement is the entire agreement,
and supersedes any prior agreements, and contemporaneous oral agreements, of the
parties concerning its subject matter.

SECTION 11. Amendments. No amendment of, or waiver of a right under,
this Agreement will be binding unless it is in writing and signed by the party
to be charged.

SECTION 12. Financial Assets. To the fullest extent permitted by
applicable law, all property (other than funds) credited from time to time to
any Account will be treated as financial assets under Article 8 of the N.Y.
Uniform Commercial Code.

SECTION 13. Notices. A notice or other communication to a party under
this Agreement will be in writing (except that Account Directions may be given
orally), will be sent to the party's address set forth under its name below or
to such other address as the party may notify the other parties and will be
effective on receipt.

SECTION 14. Binding Effect. This Agreement shall become effective when
it shall have been executed by the Grantor, the Administrative Agent and the
Account Holder, and thereafter shall be binding upon and inure to the benefit of
the Grantor, the Administrative Agent and the Account Holder and their
respective successors and assigns.

SECTION 15. Execution in Counterparts. This Agreement may be executed
in any number of counterparts and by different parties hereto in separate
counterparts, each of which when so executed shall be deemed to be an original
and all of which taken together shall constitute one and the same agreement.
Delivery of an executed counterpart of a signature page to this Agreement by
telecopier shall be effective as delivery of an original executed counterpart of
this Agreement.

6

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their respective officers thereunto duly authorized, as of the
date first above written.

[NAME OF GRANTOR]

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

Address:

----------------------------------------

----------------------------------------

CITIBANK USA, INC., as
Administrative Agent

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

Address:

----------------------------------------

----------------------------------------

[NAME OF ACCOUNT HOLDER]

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

Address:

----------------------------------------

----------------------------------------

EXHIBIT D TO THE
SECURITY AGREEMENT

FORM OF SECURITIES ACCOUNT CONTROL AGREEMENT

CONTROL AGREEMENT dated as of ________, ____, among____________, a
___________ (the "GRANTOR"), CITIBANK USA, INC., as Administrative Agent (the
"ADMINISTRATIVE AGENT"), and _________, a _________ ("____________"), as
securities intermediary (the "SECURITIES INTERMEDIARY").

PRELIMINARY STATEMENTS:

(1) The Grantor has granted the Administrative Agent a security
interest (the "SECURITY INTEREST") in account no. _______________ maintained by
the Securities Intermediary for the Grantor (the "ACCOUNT").

(2) Terms defined in Article 8 or 9 of the Uniform Commercial Code in
effect in the State of New York ("N.Y. UNIFORM COMMERCIAL CODE") are used in
this Agreement as such terms are defined in such Article 8 or 9.

NOW, THEREFORE, in consideration of the premises and of the mutual
agreements contained herein, the parties hereto hereby agree as follows:

SECTION 1. The Account. The Grantor and Securities Intermediary
represent and warrant to, and agree with, the Grantor and the Administrative
Agent that:

(a) The Securities Intermediary maintains the Account for the Grantor,
and all property held by the Securities Intermediary for the account of the
Grantor is, and will continue to be, credited to the Account.

(b) The Account is a securities account. The Securities Intermediary
is the securities intermediary with respect to the property credited from
time to time to the Account. The Grantor is the entitlement holder with
respect to the property credited from time to time to the Account.

(c) The State of New York is, and will continue to be, the Securities
Intermediary's jurisdiction of organization for purposes of Section
8-110(e) of the UCC so long as the Security Interest shall remain in
effect.

(d) The Grantor and Securities Intermediary do not know of any claim
to or interest in the Account or any property credited to the Account,
except for claims and interests of the parties referred to in this
Agreement.

SECTION 2. Control by Administrative Agent. The Securities
Intermediary will comply with all notifications it receives directing it to
transfer or redeem any property in the Account (each an "ENTITLEMENT ORDER") or
other directions concerning the Account (including

2

directions to distribute to the Administrative Agent proceeds of any such
transfer or redemption or interest or dividends on property in the Account)
originated by the Administrative Agent without further consent by the Grantor or
any other person.

SECTION 3. Grantor's Rights in Account.

(a) Except as otherwise provided in this Section 3, the Securities
Intermediary will comply with Entitlement Orders originated by the Grantor
without further consent by the Administrative Agent.

(b) Until the Securities Intermediary receives a notice from the
Administrative Agent that the Administrative Agent will exercise exclusive
control over the Account (a "NOTICE OF EXCLUSIVE CONTROL"), the Securities
Intermediary may distribute to the Grantor all interest and regular cash
dividends on property in the Account.

(c) The Securities Intermediary will not comply with any Entitlement
Order originated by the Grantor that would require the Securities Intermediary
to make a free delivery to the Grantor or any other person.

(d) If the Securities Intermediary receives from the Administrative
Agent a Notice of Exclusive Control, the Securities Intermediary will cease:

(i) complying with Entitlement Orders or other directions concerning
the Account originated by the Grantor and

(ii) distributing to the Grantor interest and dividends on property in
the Account.

SECTION 4. Priority of Administrative Agent's Security Interest. (a)
The Securities Intermediary subordinates in favor of the Administrative Agent
any security interest, lien, or right of setoff it may have, now or in the
future, against the Account or property in the Account, except that the
Securities Intermediary will retain its prior lien on property in the Account to
secure payment for property purchased for the Account and normal commissions and
fees for the Account.

(b) The Securities Intermediary will not agree with any Person not
party to this Agreement that the Securities Intermediary will comply with
Entitlement Orders originated by such Person.

SECTION 5. Statements, Confirmations, and Notices of Adverse Claims.
(a) The Securities Intermediary will send copies of all statements and
confirmations for the Account simultaneously to the Grantor and the
Administrative Agent.

(b) When the Securities Intermediary knows of any claim or interest in
the Account or any property credited to the Account other than the claims and
interests of the parties referred to in this Agreement, the Securities
Intermediary will promptly the Administrative Agent and the Grantor of such
claim or interest.

3

SECTION 6. The Securities Intermediary's Responsibility. (a) Except
for permitting a withdrawal, delivery, or payment in violation of Section 3, the
Securities Intermediary will not be liable to the Administrative Agent for
complying with Entitlement Orders or other directions concerning the Account
from the Grantor that are received by the Securities Intermediary before the
Securities Intermediary receives and has a reasonable opportunity to act on a
Notice of Exclusive Control.

(b) The Securities Intermediary will not be liable to the Grantor or
the Administrative Agent for complying with a Notice of Exclusive Control or
with an Entitlement Order or other direction concerning the Account originated
by the Administrative Agent , even if the Grantor notifies the Securities
Intermediary that the Administrative Agent is not legally entitled to issue the
Notice of Exclusive Control or Entitlement Order or such other direction unless
the Securities Intermediary takes the action after it is served with an
injunction, restraining order, or other legal process enjoining it from doing
so, issued by a court of competent jurisdiction, and had a reasonable
opportunity to act on the injunction, restraining order or other legal process.

(c) This Agreement does not create any obligation of the Securities
Intermediary except for those expressly set forth in this Agreement and in Part
5 of Article 8 of the N.Y. Uniform Commercial Code. In particular, the
Securities Intermediary need not investigate whether the Administrative Agent is
entitled under the Administrative Agent's agreements with the Grantor or
Administrative Agent to give an Entitlement Order or other direction concerning
the Account or a Notice of Exclusive Control. The Securities Intermediary may
rely on notices and communications it believes given by the appropriate party.

SECTION 7. Indemnity. The Grantor will indemnify the Securities
Intermediary, its officers, directors, employees and agents against claims,
liabilities and expenses arising out of this Agreement (including reasonable
attorney's fees and disbursements), except to the extent the claims, liabilities
or expenses are caused by the Securities Intermediary's gross negligence or
willful misconduct as found by a court of competent jurisdiction in a final,
non-appealable judgment.

SECTION 8. Termination; Survival. (a) The Administrative Agent may
terminate this Agreement by notice to the Securities Intermediary and the
Grantor. If the Administrative Agent notifies the Securities Intermediary that
the Security Interest has terminated, this Agreement will immediately terminate.

(b) The Securities Intermediary may terminate this Agreement on 60
days' prior notice to the Administrative Agent and the Grantor; provided that
before such termination the Securities Intermediary and the Grantor shall make
arrangements to transfer the property in the Account to another securities
intermediary that shall have executed, together with the Grantor, a control
agreement in favor of the Administrative Agent in respect of such property in
substantially the form of this Agreement or otherwise in form and substance
satisfactory to the Administrative Agent.

(c) Sections 6 and 7 will survive termination of this Agreement.

4

SECTION 9. Governing Law. This Agreement and the Account will be
governed by the law of the State of New York. The Securities Intermediary and
the Grantor may not change the law governing the Account without the
Administrative Agent's express prior written agreement.

SECTION 10. Entire Agreement. This Agreement is the entire agreement,
and supersedes any prior agreements, and contemporaneous oral agreements, of the
parties concerning its subject matter.

SECTION 11. Amendments. No amendment of, or waiver of a right under,
this Agreement will be binding unless it is in writing and signed by the party
to be charged.

SECTION 12. Financial Assets. To the fullest extent permitted by
applicable law, all property credited from time to time to the Account will be
treated as financial assets under Article 8 of the N.Y. Uniform Commercial Code.

SECTION 13. Notices. A notice or other communication to a party under
this Agreement will be in writing (except that Entitlement Orders may be given
orally), will be sent to the party's address set forth under its name below or
to such other address as the party may notify the other parties and will be
effective on receipt.

SECTION 14. Binding Effect. This Agreement shall become effective when
it shall have been executed by the Grantor, the Administrative Agent and the
Securities Intermediary, and thereafter shall be binding upon and inure to the
benefit of the Grantor, the Administrative Agent and the Securities Intermediary
and their respective successors and assigns.

SECTION 15. Execution in Counterparts. This Agreement may be executed
in any number of counterparts and by different parties hereto in separate
counterparts, each of which when so executed shall be deemed to be an original
and all of which taken together shall constitute one and the same agreement.
Delivery of an executed counterpart of a signature page to this Agreement by
telecopier shall be effective as delivery of an original executed counterpart of
this Agreement.

5

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their respective officers thereunto duly authorized, as of the
date first above written.

[NAME OF GRANTOR]

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

Address:

----------------------------------------

----------------------------------------

CITIBANK USA, INC., as
Administrative Agent

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

Address:
388 Greenwich Street
New York, NY 10013

[NAME OF SECURITIES
INTERMEDIARY]

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

Address:

----------------------------------------

----------------------------------------

EXHIBIT E TO THE
SECURITY AGREEMENT

FORM OF INTELLECTUAL PROPERTY SECURITY AGREEMENT

This INTELLECTUAL PROPERTY SECURITY AGREEMENT (as amended, amended and
restated, supplemented or otherwise modified from time to time, this
"AGREEMENT") dated ________, ____, is made by the Persons listed on the
signature pages hereof (collectively, the "GRANTORS") in favor of CITIBANK USA,
INC. ("Citibank"), as Administrative Agent (the "ADMINISTRATIVE AGENT") for the
Secured Parties (as defined in the Credit Agreement referred to below).

WHEREAS, AREP Oil & Gas, LLC, a Delaware limited liability company,
has entered into a Credit Agreement dated as of December 20, 2005 (as amended,
amended and restated, supplemented or otherwise modified from time to time, the
"CREDIT AGREEMENT"), with Citibank, as administrative agent, Bear Stearns & Co.,
Inc., as syndication agent, and the Secured Parties party thereto. Terms defined
in the Credit Agreement and not otherwise defined herein are used herein as
defined in the Credit Agreement.

WHEREAS, as a condition precedent to the making of Loans and the
issuance of Letters of Credit by the Secured Parties under the Credit Agreement
and the entry into Lender Hedging Contracts by the Lenders from time to time,
each Grantor has executed and delivered that certain Security Agreement dated as
of December 20, 2005 made by the Grantors to the Administrative Agent (as
amended, amended and restated, supplemented or otherwise modified from time to
time, the "SECURITY AGREEMENT").

WHEREAS, under the terms of the Security Agreement, the Grantors have
granted to the Administrative Agent, for the ratable benefit of the Secured
Parties, a security interest in, among other property, certain intellectual
property of the Grantors, and have agreed as a condition thereof to execute this
Agreement for recording with the U.S. Patent and Trademark Office, the United
States Copyright Office and other governmental authorities.

NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, each Grantor agrees as follows:

SECTION 1. Grant of Security. Each Grantor hereby grants to the
Administrative Agent for the ratable benefit of the Secured Parties a security
interest in all of such Grantor's right, title and interest in and to the
following (the "COLLATERAL"):

(i) the patents and patent applications set forth in Schedule A
hereto;

(ii) the trademark and service mark registrations and
applications set forth in Schedule B hereto (provided that no security
interest shall be granted in United States intent-to-use trademark
applications to the extent that, and solely during the period in
which, the grant of a security interest therein would impair the
validity or enforceability of such intent-to-use trademark
applications under applicable federal law), together with the goodwill
symbolized thereby;

2

(iii) all copyrights, whether registered or unregistered, now
owned or hereafter acquired by such Grantor, including the copyright
registrations and applications and exclusive copyright licenses set
forth in Schedule C hereto;

(iv) all reissues, divisions, continuations,
continuations-in-part, extensions, renewals and reexaminations of any
of the foregoing, all rights in the foregoing provided by
international treaties or conventions, all rights corresponding
thereto throughout the world and all other rights of any kind
whatsoever of such Grantor accruing thereunder or pertaining thereto;

(v) any and all claims for damages and injunctive relief for
past, present and future infringement, dilution, misappropriation,
violation, misuse or breach with respect to any of the foregoing, with
the right, but not the obligation, to sue for and collect, or
otherwise recover, such damages; and

(vi) any and all proceeds of, collateral for, income, royalties
and other payments now or hereafter due and payable with respect to,
and supporting obligations relating to, any and all of the Collateral
of or arising from any of the foregoing.

SECTION 2. Security for Obligations. The grant of a security interest
in, the Collateral by each Grantor under this Agreement secures the payment of
all Obligations of any Credit Party that are now or hereafter existing under or
in respect of the Loan Documents and all Lender Hedging Obligations of any
Credit Party that are now or hereafter existing, in each case whether direct or
indirect, absolute or contingent, and whether for principal, reimbursement
obligations, interest, premiums, penalties, fees, indemnifications, contract
causes of action, costs, expenses or otherwise.

SECTION 3. Recordation. Each Grantor authorizes and requests that the
Register of Copyrights, the Commissioner for Patents and the Commissioner for
Trademarks and any other applicable government officer record this Agreement.

SECTION 4. Execution in Counterparts. This Agreement may be executed
in any number of counterparts, each of which when so executed shall be deemed to
be an original and all of which taken together shall constitute one and the same
agreement.

SECTION 5. Grants, Rights and Remedies. This Agreement has been
entered into in conjunction with the provisions of the Security Agreement. Each
Grantor does hereby acknowledge and confirm that the grant of the security
interest hereunder to, and the rights and remedies of, the Administrative Agent
with respect to the Collateral are more fully set forth in the Security
Agreement, the terms and provisions of which are incorporated herein by
reference as if fully set forth herein.

SECTION 6. Governing Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of New York.

3

IN WITNESS WHEREOF, each Grantor has caused this Agreement to be duly
executed and delivered by its officer thereunto duly authorized as of the date
first above written.

[NAME OF GRANTOR]

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

Address for Notices:

----------------------------------------

----------------------------------------

----------------------------------------

[NAME OF GRANTOR]

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

Address for Notices:

----------------------------------------

----------------------------------------

----------------------------------------

EXHIBIT F TO THE
SECURITY AGREEMENT

FORM OF INTELLECTUAL PROPERTY SECURITY AGREEMENT SUPPLEMENT

This INTELLECTUAL PROPERTY SECURITY AGREEMENT SUPPLEMENT (this
"SUPPLEMENT") dated ________, ____, is made by the Person listed on the
signature page hereof (the "GRANTOR") in favor of CITIBANK USA, INC.
("Citibank"), as Administrative Agent (the "ADMINISTRATIVE AGENT") for the
Lenders (as defined in the Credit Agreement referred to below).

WHEREAS, AREP Oil & Gas LLC, a Delaware limited liability company, has
entered into the Credit Agreement dated as of December 20, 2005 (as amended,
amended and restated, supplemented or otherwise modified from time to time, the
"CREDIT AGREEMENT"), with Citibank, as administrative agent, Bear Stearns & Co.,
Inc., as syndication agent, and the Lenders party thereto. Terms defined in the
Credit Agreement and not otherwise defined herein are used herein as defined in
the Credit Agreement.

WHEREAS, pursuant to the Credit Agreement, the Grantor and certain
other Persons have executed and delivered the Security Agreement dated as of
December 20, 2005 made by the Grantor and such other Persons to the
Administrative Agent (as amended, amended and restated, supplemented or
otherwise modified from time to time, the "SECURITY AGREEMENT") and the
Intellectual Property Security Agreement dated ________, ______ (as amended,
amended and restated, supplemented or otherwise modified from time to time, the
"IP SECURITY AGREEMENT").

WHEREAS, under the Security Agreement, the Grantor has granted to the
Administrative Agent, for the ratable benefit of the Secured Parties, a security
interest in the Additional Collateral (as defined in Section 1 below) of the
Grantor and has agreed as a condition thereof to execute this Supplement for
recording with the U.S. Patent and Trademark Office, the United States Copyright
Office and other governmental authorities.

NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Grantor agrees as follows:

SECTION 1. Grant of Security. Each Grantor hereby grants to the
Administrative Agent, for the ratable benefit of the Secured Parties, a security
interest in all of such Grantor's right, title and interest in and to the
following (the "ADDITIONAL COLLATERAL"):

(i) the patents and patent applications set forth in Schedule A
hereto;

(ii) the trademark and service mark registrations and
applications set forth in Schedule B hereto (provided that no security
interest shall be granted in United States intent-to-use trademark
applications to the extent that, and solely during the period in
which, the grant of a security interest therein would impair the
validity or enforceability of such intent-to-use trademark
applications under applicable federal law), together with the goodwill
symbolized thereby;

2

(iii) the copyright registrations and applications and exclusive
copyright licenses set forth in Schedule C hereto;

(iv) all reissues, divisions, continuations,
continuations-in-part, extensions, renewals and reexaminations of any
of the foregoing, all rights in the foregoing provided by
international treaties or conventions, all rights corresponding
thereto throughout the world and all other rights of any kind
whatsoever of such Grantor accruing thereunder or pertaining thereto;

(v) all any and all claims for damages and injunctive relief for
past, present and future infringement, dilution, misappropriation,
violation, misuse or breach with respect to any of the foregoing, with
the right, but not the obligation, to sue for and collect, or
otherwise recover, such damages; and

(vi) any and all proceeds of, collateral for, income, royalties
and other payments now or hereafter due and payable with respect to,
and supporting obligations relating to, any and all of the foregoing
or arising from any of the foregoing.

SECTION 2. Supplement to Security Agreement. Schedule VI to the
Security Agreement is, effective as of the date hereof, hereby supplemented to
add to such Schedule the Additional Collateral.

SECTION 3. Security for Obligations. The grant of a security interest
in the Additional Collateral by the Grantor under this Supplement secures the
payment of all Obligations of any Credit Party that are now or hereafter
existing under or in respect of the Loan Documents and all Lender Hedging
Obligations of any Credit Party that are now or hereafter existing, in each case
whether direct or indirect, absolute or contingent, and whether for principal,
reimbursement obligations, interest, premiums, penalties, fees,
indemnifications, contract causes of action, costs, expenses or otherwise.

SECTION 4. Recordation. The Grantor authorizes and requests that the
Register of Copyrights, the Commissioner for Patents and the Commissioner for
Trademarks and any other applicable government officer to record this
Supplement.

SECTION 5. Grants, Rights and Remedies. This Supplement has been
entered into in conjunction with the provisions of the Security Agreement. The
Grantor does hereby acknowledge and confirm that the grant of the security
interest hereunder to, and the rights and remedies of, the Administrative Agent
with respect to the Additional Collateral are more fully set forth in the
Security Agreement, the terms and provisions of which are incorporated herein by
reference as if fully set forth herein.

SECTION 6. Governing Law. This Supplement shall be governed by, and
construed in accordance with, the laws of the State of New York.

3

IN WITNESS WHEREOF, the Grantor has caused this Supplement to be duly
executed and delivered by its officer thereunto duly authorized as of the date
first above written.

[NAME OF GRANTOR]

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

Address for Notices:

----------------------------------------

----------------------------------------

----------------------------------------

EXHIBIT G TO THE
SECURITY AGREEMENT

FORM OF CONSENT TO ASSIGNMENT OF LETTER OF CREDIT RIGHTS

To:

Citicorp USA, Inc., as Administrative Agent
388 Greenwich Street
New York, NY 10013

[INSERT NAME OF BENEFICIARY], as Beneficiary
[____________________]
[____________________]
[____________________]

We refer to the [INSERT ALL IDENTIFYING INFORMATION WITH RESPECT TO
RELEVANT LETTER OF CREDIT] (as it may be amended, supplemented or otherwise
modified from time to time, the "Letter of Credit. The Letter of Credit has been
established in favor of [INSERT NAME OF BENEFICIARY], as beneficiary (the
"Beneficiary"), and we are the issuing bank (the "ISSUING BANK") required to
give value thereunder pursuant to one [or more] drawing[s] upon the satisfaction
of the conditions stated in the Letter of Credit. The liability of the Issuing
Bank for action or omissions under the Letter of Credit is governed by the laws
of [INSERT RELEVANT JURISDICTION], as chosen by agreement in the Letter of
Credit. The signatories to this consent letter are the only persons obligated to
give value under the Letter of Credit.

We confirm that there is no term in the Letter of Credit or other
restriction that prohibits, restricts or requires any person's consent to the
Beneficiary's assignment of or creation of a security interest in the rights to
payment or performance under the Letter of Credit. We hereby consent to and
acknowledge the assignment by the Beneficiary of all proceeds of and rights to
payment and performance under the Letter of Credit in favor of Citibank USA,
Inc., as administrative agent (the "ADMINISTRATIVE AGENT") pursuant to the
Security Agreement dated as of December 20, 2005 executed by the Beneficiary and
other parties thereto, as grantors, in favor of the Administrative Agent, as
such agreement may be amended, amended and restated, supplemented or otherwise
modified from time to time (the "SECURITY AGREEMENT").

We agree to pay, irrespective of, and without deduction for, any
counterclaim, defense, recoupment or set-off, all proceeds of the Letter of
Credit that would otherwise be paid to the Beneficiary directly to the
Administrative Agent to the following account:

[____________________]
[____________________]
[____________________]
[____________________]

2

We confirm and agree that the Letter of Credit is, and shall continue
to be, in full force and effect and is hereby ratified and confirmed in all
respects and that the Administrative Agent shall have no liability or obligation
under or with respect to the Letter of Credit or any document related thereto as
a result of this consent letter, the Security Agreement or otherwise.

This consent letter may be executed in any number of counterparts and
by different parties hereto in separate counterparts, each of which when so
executed shall be deemed to be an original and all of which taken together shall
constitute but one and the same consent letter. Delivery of an executed
counterpart of a signature page to this consent letter by telecopier shall be
effective as delivery of an original executed counterpart of this consent
letter.

This consent letter shall be governed by, and construed in accordance
with, the laws of the State of New York.

[NAME OF ISSUING BANK]

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

[NAME OF NOMINATED PERSON]

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

The above is acknowledged and agreed to:

[NAME OF GRANTOR/BENEFICIARY]

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

Address for Notices:

-------------------------------------

-------------------------------------

-------------------------------------

Exhibit 10.3

GUARANTY

dated as of December 20, 2005

from

THE GUARANTORS NAMED HEREIN

and

THE ADDITIONAL GUARANTORS REFERRED TO HEREIN

in favor of

THE GUARANTEED PARTIES REFERRED HEREIN

2

TABLE OF CONTENTS

SECTION                                                                     PAGE
-------                                                                     ----

Section 1.  Guaranty; Limitation of Liability ...........................     1
Section 2.  Guaranty Absolute ...........................................     2
Section 3.  Waivers and Acknowledgments .................................     3
Section 4.  Subrogation .................................................     4
Section 5.  Payments Free and Clear of Taxes, Etc .......................     5
Section 6.  Representations and Warranties ..............................     7
Section 7.  Covenants ...................................................     8
Section 8.  Amendments, Guaranty Supplements, Etc .......................     8
Section 9.  Notices, Etc ................................................     8
Section 10. No Waiver; Remedies .........................................     9
Section 11. Right of Set-off ............................................     9
Section 12. Indemnification .............................................     9
Section 13. Subordination ...............................................    10
Section 14. Continuing Guaranty; Assignments under the Credit
Agreement ...................................................    11
Section 15. Execution in Counterparts ...................................    11
Section 16. Terms Generally; References and Titles ......................    12
Section 17. Governing Law; Jurisdiction; Waiver of Jury Trial, Etc ......    13

Exhibit A - Guaranty Supplement

GUARANTY

GUARANTY dated as of December 20, 2005 made by the Persons listed on
the signature pages hereof and the Additional Guarantors (as defined in Section
8(b)) (such Persons so listed and the Additional Guarantors being, collectively,
the "GUARANTORS" and, individually, each a "GUARANTOR") in favor of the
Guaranteed Parties (as defined below).

PRELIMINARY STATEMENT. AREP Oil & Gas, LLC, a Delaware limited
liability company (the "BORROWER"), is party to a Credit Agreement dated as of
December 20, 2005 (as amended, amended and restated, supplemented or otherwise
modified from time to time, the "CREDIT AGREEMENT"; capitalized terms defined
therein and not otherwise defined herein being used herein as therein defined)
with certain Lenders party thereto, Citicorp USA, Inc., as administrative agent
(the "ADMINISTRATIVE AGENT"), and Bear, Stearns & Co., Inc., as syndication
agent. Each Guarantor may receive, directly or indirectly, a portion of the
proceeds of the Advances under the Credit Agreement and will derive substantial
direct and indirect benefits from the transactions contemplated by the Credit
Agreement. It is a condition precedent to the making of Advances and the
issuance of Letters of Credit by the Lender Parties under the Credit Agreement
that each Guarantor shall have executed and delivered this Guaranty. As
contemplated in the Credit Agreement, the Credit Parties owe, and may hereafter
owe, Lender Hedging Obligations to some or all of the Lender Parties and their
Affiliates, and the Hedging Contracts under which such Lender Hedging
Obligations are owed are herein called the "LENDER HEDGING CONTRACTS". The
Lender Parties, together with all such Affiliates to which Lender Hedging
Obligations are at any time owing, are herein called the "GUARANTEED PARTIES".

NOW, THEREFORE, in consideration of the premises and in order to
induce the Guaranteed Parties to enter into, and to make Advances and to issue
Letters of Credit under, the Credit Agreement and to enter into Lender Hedging
Contracts from time to time, each Guarantor, jointly and severally with each
other Guarantor, agrees as follows:

Section 1. Guaranty; Limitation of Liability. (a) Each Guarantor
absolutely, unconditionally and irrevocably guarantees the punctual payment when
due, whether at scheduled maturity or on any date of a required prepayment or by
acceleration, demand or otherwise, of all Obligations and Lender Hedging
Obligations of each other Credit Party now or hereafter existing under or in
respect of the Loan Documents (in each case including, all extensions,
modifications, substitutions, amendments or renewals of the Obligations and
Lender Hedging Obligations), whether direct or indirect, absolute or contingent,
and whether for principal, interest, premiums, fees, indemnities, contract
causes of action, costs, expenses or otherwise (such Obligations and Lender
Hedging Obligations being the "GUARANTEED OBLIGATIONS"), and will pay any and
all expenses (including fees and expenses of counsel) incurred by the
Administrative Agent or any other Guaranteed Party in enforcing any rights under
this Guaranty, any other Loan Document or any Lender Hedging Contract. Without
limiting the generality of the foregoing, each Guarantor's liability shall
extend to all amounts that constitute part of the Guaranteed Obligations and
would be owed by any other Credit Party

2

to any Guaranteed Party under or in respect of the Loan Documents or Lender
Hedging Contracts but for the fact that they are unenforceable or not allowable
due to the existence of a bankruptcy, reorganization or similar proceeding
involving such other Credit Party.

(b) Each Guarantor and by its acceptance of this Guaranty the
Administrative Agent and each other Guaranteed Party, confirm that it is the
intention of all such Persons that this Guaranty and the Obligations of each
Guarantor hereunder not constitute a fraudulent transfer or conveyance for
purposes of Bankruptcy Law (as hereinafter defined), the Uniform Fraudulent
Conveyance Act, the Uniform Fraudulent Transfer Act or any similar foreign,
federal or state law to the extent applicable to this Guaranty and the
Obligations of each Guarantor hereunder. To effectuate the foregoing intention,
the Administrative Agent, the other Guaranteed Parties and the Guarantors
irrevocably agree that the Obligations of each Guarantor under this Guaranty at
any time shall be limited to the maximum amount as will result in the
Obligations of such Guarantor under this Guaranty not constituting a fraudulent
transfer or conveyance. For purposes hereof, "BANKRUPTCY LAW" means law with
respect to any proceeding of the type referred to in Section 8.1(h) of the
Credit Agreement or Title 11, U.S. Code, or any similar foreign, federal or
state law for the relief of debtors.

(c) If any payment shall be required to be made to any Guaranteed
Party under this Guaranty or any other guaranty, then, subject to Section 4,
each Guarantor will contribute, to the maximum extent permitted by law, such
amounts to each other Guarantor and each other guarantor so as to maximize the
aggregate amount paid to the Guaranteed Parties under or in respect of the Loan
Documents and the Lender Hedging Contracts.

Section 2. Guaranty Absolute. Each Guarantor guarantees that the
Guaranteed Obligations will be paid strictly in accordance with the terms of the
Loan Documents and Lender Hedging Contracts, regardless of any law, regulation
or order now or hereafter in effect in any jurisdiction affecting any of such
terms or the rights of any Guaranteed Party with respect thereto. The
Obligations of each Guarantor under or in respect of this Guaranty are
independent of the Guaranteed Obligations or any other obligations of any other
Credit Party under or in respect of the Loan Documents or the Lender Hedging
Contracts, and a separate action or actions may be brought and prosecuted
against each Guarantor to enforce this Guaranty, irrespective of whether any
action is brought against the Borrower or any other Credit Party or whether the
Borrower or any other Credit Party is joined in any such action or actions. The
liability of each Guarantor under this Guaranty shall be irrevocable, absolute
and unconditional irrespective of, and each Guarantor hereby irrevocably waives
any defenses it may now have or hereafter acquire in any way relating to, any or
all of the following:

(a) any lack of validity or enforceability of any Loan Document or
Lender Hedging Contract or any agreement or instrument relating thereto;

(b) any change in the time, manner or place of payment of, or in any
other term of, all or any of the Guaranteed Obligations or any other
Obligations, or obligations under any Lender Hedging Contract, of any other
Credit Party under or in respect of the Loan Documents or Lender Hedging
Contracts, or any other amendment or waiver of or any consent to departure
from any Loan Document or Lender Hedging Contract,

3

including any increase in the Guaranteed Obligations resulting from the
extension of additional credit to any Credit Party or any of its
Subsidiaries or otherwise;

(c) any taking, exchange, release or non-perfection of any Collateral
or any other collateral, or any taking, release or amendment or waiver of,
or consent to departure from, any other guaranty, for all or any of the
Guaranteed Obligations;

(d) any manner of application of Collateral or any other collateral,
or proceeds thereof, to all or any of the Guaranteed Obligations, or any
manner of sale or other disposition of any Collateral or any other
collateral for all or any of the Guaranteed Obligations or any other
Obligations of any Credit Party under the Loan Documents or obligations of
any Credit Party under any Lender Hedging Contract or any other assets of
any Credit Party or any of its Subsidiaries;

(e) any change, restructuring or termination of the corporate
structure or existence of any Credit Party or any of its Subsidiaries;

(f) any failure of any Guaranteed Party to disclose to any Credit
Party any information relating to the business, condition (financial or
otherwise), operations, performance, properties or prospects of any other
Credit Party now or hereafter known to such Guaranteed Party;

(g) the failure of any other Person to execute or deliver this
Guaranty, any Guaranty Supplement (as hereinafter defined) or any other
guaranty or agreement or the release or reduction of liability of any
Guarantor or other guarantor or surety with respect to the Guaranteed
Obligations; or

(h) any other circumstance (including any statute of limitations) or
any existence of or reliance on any representation by any Guaranteed Party
that might otherwise constitute a defense available to, or a discharge of,
any Credit Party or any other guarantor or surety.

This Guaranty shall continue to be effective or be reinstated, as the case may
be, if at any time any payment of any of the Guaranteed Obligations is rescinded
or must otherwise be returned by any Guaranteed Party or any other Person upon
the insolvency, bankruptcy or reorganization of the Borrower or any other Credit
Party or otherwise, all as though such payment had not been made.

Section 3. Waivers and Acknowledgments. (a) Each Guarantor
unconditionally and irrevocably waives promptness, diligence, notice of
acceptance, presentment, demand for performance, notice of nonperformance,
default, acceleration, protest or dishonor and any other notice with respect to
any of the Guaranteed Obligations and this Guaranty and any requirement that any
Guaranteed Party protect, secure, perfect or insure any Lien or any property
subject thereto or exhaust any right or take any action against any Credit Party
or any other Person or any Collateral.

4

(b) Each Guarantor unconditionally and irrevocably waives any right to
revoke this Guaranty and acknowledges that this Guaranty is continuing in nature
and applies to all Guaranteed Obligations, whether existing now or in the
future.

(c) Each Guarantor unconditionally and irrevocably waives:

(i) any defense arising by reason of any claim or defense based upon
an election of remedies by any Guaranteed Party that in any manner impairs,
reduces, releases or otherwise adversely affects the subrogation,
reimbursement, exoneration, contribution or indemnification rights of such
Guarantor or other rights of such Guarantor to proceed against any of the
other Credit Parties, any other guarantor or any other Person or any
Collateral, and

(ii) any defense based on any right of set-off or counterclaim against
or in respect of the Obligations of such Guarantor hereunder.

(d) Each Guarantor acknowledges that the Administrative Agent may,
without notice to or demand upon such Guarantor and without affecting the
liability of such Guarantor under this Guaranty, foreclose under any mortgage or
other security agreement by non-judicial sale, and each Guarantor hereby waives
any defense to the recovery by the Administrative Agent and the other Guaranteed
Parties against such Guarantor of any deficiency after such non-judicial sale
and any defense or benefits that may be afforded by applicable law.

(e) Each Guarantor unconditionally and irrevocably waives any duty on
the part of any Guaranteed Party to disclose to such Guarantor any matter, fact
or thing relating to the business, condition (financial or otherwise),
operations, performance, properties or prospects of any other Credit Party or
any of its Subsidiaries now or hereafter known by such Guaranteed Party.

(f) Each Guarantor acknowledges that it will receive substantial
direct and indirect benefits from the financing arrangements contemplated by the
Loan Documents and Lender Hedging Contracts and that the waivers set forth in
Section 2 and this Section 3 are knowingly made in contemplation of such
benefits.

Section 4. Subrogation. Each Guarantor unconditionally and irrevocably
agrees not to exercise any rights that it may now have or hereafter acquire
against the Borrower, any other Credit Party or any other insider guarantor that
arise from the existence, payment, performance or enforcement of such
Guarantor's Obligations under or in respect of this Guaranty or any other Loan
Document or obligations under Lender Hedging Contracts, including any right of
subrogation, reimbursement, exoneration, contribution or indemnification and any
right to participate in any claim or remedy of any Guaranteed Party against the
Borrower, any other Credit Party or any other insider guarantor or any
Collateral, whether or not such claim, remedy or right arises in equity or under
contract, statute or common law, including the right to take or receive from the
Borrower, any other Credit Party or any other insider guarantor, directly or
indirectly, in cash or other property or by set-off or in any other manner,
payment or security on account of such claim, remedy or right, unless and until
all of the Guaranteed Obligations and all other amounts payable under this
Guaranty shall have been paid in full in cash, all Letters of

5

Credit and all Lender Hedging Contracts shall have expired or been terminated
and the Commitments shall have expired or been terminated. If any amount shall
be paid to any Guarantor in violation of the immediately preceding sentence at
any time prior to the latest of:

(a) the payment in full in cash of the Guaranteed Obligations and all
other amounts payable under this Guaranty,

(b) the irrevocable termination or expiration in whole of all
Commitments and

(c) the latest date of expiration or termination of all Letters of
Credit and all Lender Hedging Contracts,

such amount shall be received and held in trust for the benefit of the
Guaranteed Parties, shall be segregated from other property and funds of such
Guarantor and shall forthwith be paid or delivered to the Administrative Agent
in the same form as so received (with any necessary endorsement or assignment)
to be credited and applied to the Guaranteed Obligations and all other amounts
payable under this Guaranty, whether matured or unmatured, in accordance with
the terms of the Loan Documents and the Lender Hedging Contracts, or to be held
as Collateral for any Guaranteed Obligations or other amounts payable under this
Guaranty thereafter arising. If:

(i) any Guarantor shall make payment to any Guaranteed Party of all or
any part of the Guaranteed Obligations,

(ii) all of the Guaranteed Obligations and all other amounts payable
under this Guaranty shall have been paid in full in cash,

(iii) all Commitments shall have been irrevocably terminated or shall
have irrevocably expired in whole and

(iv) all Letters of Credit and all Lender Hedging Contracts shall have
expired or been terminated,

or to the extent otherwise provided in Section 10.9 of the Credit Agreement, the
Guaranteed Parties will, at such Guarantor's request and expense, execute and
deliver to such Guarantor appropriate documents, without recourse and without
representation or warranty, necessary to evidence the transfer by subrogation to
such Guarantor of an interest in the Guaranteed Obligations resulting from such
payment or other condition made by such Guarantor pursuant to this Guaranty.

Section 5. Payments Free and Clear of Taxes, Etc.

(a) Any and all payments by or on account of any obligation of any
Guarantor hereunder or under any other Loan Document or Lender Hedging Contract
shall be made free and clear of and without reduction or withholding for any
Indemnified Taxes or Other Taxes; provided that if a Guarantor shall be required
by applicable law to deduct any Indemnified Taxes (including any Other Taxes)
from such payments, then (i) the sum payable shall be increased as

6

necessary so that after making all required deductions (including deductions
applicable to additional sums payable under this Section) the Administrative
Agent, the LC Issuer, or the Lender, as the case may be, receives an amount
equal to the sum it would have received had no such deductions been made, (ii)
such Guarantor shall make such deductions and (iii) such Guarantor shall timely
pay the full amount deducted to the relevant Governmental Authority in
accordance with applicable law.

(b) Without limiting the provisions of subsection (a) above, each
Guarantor shall timely pay any Other Taxes to the relevant Governmental
Authority in accordance with applicable law.

(c) Each Guarantor shall indemnify each Guaranteed Party, within 10
days after demand therefor, for the full amount of any Indemnified Taxes or
Other Taxes which (i) arise from any payment made hereunder or under any other
Loan Document (including Indemnified Taxes or Other Taxes imposed or asserted on
or attributable to amounts payable under this Section) and (ii) are paid by such
Guaranteed Party, and any penalties, interest and reasonable expenses arising
therefrom or with respect thereto, whether or not such Indemnified Taxes or
Other Taxes were correctly or legally imposed or asserted by the relevant
Governmental Authority but net of any foreign tax credit or the benefit of any
deduction or other tax benefit determined in good faith by such Guaranteed Party
to be attributable to the imposition of such Indemnified Tax. A certificate as
to the amount of such payment or liability delivered in good faith to a
Guarantor by a Guaranteed Party (with a copy to the Administrative Agent), or by
the Administrative Agent on its own behalf or on behalf of a Guaranteed Party,
shall be conclusive absent manifest error.

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

(e) Any Foreign Lender that is entitled to an exemption from or
reduction of withholding tax under the law of the jurisdiction in which a
Guarantor is resident for tax purposes, or any treaty to which such jurisdiction
is a party, with respect to payments hereunder or under any other Loan Document
or any Lender Hedging Contract shall deliver to such Guarantor (with a copy to
the Administrative Agent), at the time or times prescribed by applicable law or
reasonably requested by a Guarantor or the Administrative Agent, such properly
completed and executed documentation prescribed by applicable law as will permit
such payments to be made without withholding or at a reduced rate of
withholding. In addition, any Lender, if requested by a Guarantor or the
Administrative Agent, shall deliver such other documentation prescribed by
applicable law or reasonably requested by such Guarantor or the Administrative
Agent as will enable such Guarantor or the Administrative Agent to determine
whether or not such Lender is subject to backup withholding or information
reporting requirements.

7

(f) Without limiting the generality of the foregoing, in the event
that a Guarantor is resident for tax purposes in the United States of America,
any Foreign Lender shall deliver to the Borrower and the Administrative Agent
(in such number of copies as shall be requested by the recipient) on or prior to
the date on which such Foreign Lender becomes a Lender under the Credit
Agreement (and from time to time thereafter upon the request of the Borrower or
the Administrative Agent, but only if such Foreign Lender is legally entitled to
do so), whichever of the following is applicable:

(i) duly completed copies of Internal Revenue Service Form W-8BEN
claiming eligibility for benefits of an income tax treaty to which the
United States of America is a party,

(ii) duly completed copies of Internal Revenue Service Form W-8ECI,

(iii) in the case of a Foreign Lender claiming the benefits of the
exemption for portfolio interest under section 881(c) of the Code, (x) a
certificate to the effect that such Foreign Lender is not (A) a "bank"
within the meaning of section 881(c)(3)(A) of the Code, (B) a "10 percent
shareholder" of Borrower within the meaning of section 881(c)(3)(B) of the
Code, or (C) a "controlled foreign corporation" described in section
881(c)(3)(C) of the Code and (y) duly completed copies of Internal Revenue
Service Form W-8BEN or

(iv) any other form prescribed by applicable law as a basis for
claiming exemption from or a reduction in United States Federal withholding
tax duly completed together with such supplementary documentation as may be
prescribed by applicable law to permit the Borrower to determine the
withholding or deduction required to be made.

(g) If any Guaranteed Party determines that it has received a refund
of any Taxes or Other Taxes as to which it has been indemnified by a Guarantor
or with respect to which a Guarantor has paid additional amounts pursuant to
this Section, it shall pay to such Guarantor an amount equal to such refund (but
only to the extent of indemnity payments made, or additional amounts paid, by
such Guarantor under this Section with respect to the Taxes or Other Taxes
giving rise to such refund), net of all out-of-pocket expenses of such
Guaranteed Party and without interest (other than any interest paid by the
relevant Governmental Authority with respect to such refund), provided that such
Guarantor, upon the request of such Guaranteed Party, agrees to repay the amount
paid over to such Guarantor (plus any penalties, interest or other charges
imposed by the relevant Governmental Authority) to such Guaranteed Party in the
event Guaranteed Party is required to repay such refund to such Governmental
Authority. This Guaranty shall not be construed to require any Guaranteed Party
to make available its tax returns (or any other information relating to its
taxes that it deems confidential) to any Guarantor or any other Person, and each
Guaranteed Party shall make its determination under this subsection in its sole
discretion.

Section 6. Representations and Warranties. Each Guarantor makes each
representation and warranty made in the Loan Documents and Lender Hedging
Contracts by the

8

Borrower with respect to such Guarantor and each Guarantor hereby further
represents and warrants as follows:

(a) There are no conditions precedent to the effectiveness of this
Guaranty that have not been satisfied or waived.

(b) Such Guarantor has, independently and without reliance upon any
Guaranteed Party and based on such documents and information as it has
deemed appropriate, made its own credit analysis and decision to enter into
this Guaranty and each other Loan Document to which it is or is to be a
party, and such Guarantor has established adequate means of obtaining from
each other Credit Party on a continuing basis information pertaining to,
and is now and on a continuing basis will be completely familiar with, the
business, condition (financial or otherwise), operations, performance,
properties and prospects of such other Credit Party.

Section 7. Covenants. So long as any part of the Guaranteed
Obligations shall remain unpaid, any Letter of Credit shall be outstanding, any
Guaranteed Party shall have any Commitment or any Lender Hedging Contract shall
be in effect, each Guarantor will perform and observe, and cause each of its
Subsidiaries to perform and observe, all of the terms, covenants and agreements
set forth in the Loan Documents and Lender Hedging Contracts on its or their
part to be performed or observed or that the Borrower has agreed to cause such
Guarantor or such Subsidiaries to perform or observe.

Section 8. Amendments, Guaranty Supplements, Etc. (a) No amendment or
waiver of any provision of this Guaranty and no consent to any departure by any
Guarantor herefrom shall in any event be effective unless the same shall be
entered into in accordance with Section 10.1 of the Credit Agreement.

(b) Upon the execution and delivery by any Person of a guaranty
supplement in substantially the form of Exhibit A hereto (each, a "GUARANTY
SUPPLEMENT"), (i) such Person shall be referred to as an "ADDITIONAL GUARANTOR"
and shall become and be a Guarantor hereunder, and each reference in this
Guaranty to a "GUARANTOR" shall also mean and be a reference to such Additional
Guarantor, and each reference in any other Loan Document to a "SUBSIDIARY
GUARANTOR" shall also mean and be a reference to such Additional Guarantor, and
(ii) each reference herein to "THIS GUARANTY", "HEREUNDER", "HEREOF" or words of
like import referring to this Guaranty, and each reference in any other Loan
Document to the "GUARANTY", "THEREUNDER", "THEREOF" or words of like import
referring to this Guaranty, shall mean and be a reference to this Guaranty as
supplemented by such Guaranty Supplement and all other Guaranty Supplements.

Section 9. Notices, Etc. All notices and other communications provided
for hereunder shall be in writing (including telegraphic, telecopy or telex
communication) and mailed, telegraphed, telecopied, telexed or delivered to it,
if to any Guarantor, addressed to it in care of the Borrower at the Borrower's
address specified in Section 10.3 of the Credit Agreement, if to the
Administrative Agent or any other Guaranteed Party, at its address specified in
Section 10.3 of the Credit Agreement, or, as to any party, at such other address
as shall be

9

designated by such party in a written notice to each other party. All such
notices and other communications shall, when mailed, telegraphed, telecopied or
telexed, be effective when deposited in the mails, delivered to the telegraph
company, transmitted by telecopier or confirmed by telex answerback,
respectively. Delivery by telecopier of an executed counterpart of a signature
page to any amendment or waiver of any provision of this Guaranty or of any
Guaranty Supplement to be executed and delivered hereunder shall be effective as
delivery of an original executed counterpart thereof.

Section 10. No Waiver; Remedies. No failure on the part of any
Guaranteed Party to exercise, and no delay in exercising, any right hereunder
shall operate as a waiver thereof; nor shall any single or partial exercise of
any right hereunder preclude any other or further exercise thereof or the
exercise of any other right. The remedies herein provided are cumulative and not
exclusive of any remedies provided by law.

Section 11. Right of Set-off. To secure the repayment of the
Guaranteed Obligations, each Guarantor grants to each Guaranteed Party, and each
of their respective Affiliates, 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 Guaranteed Party or any of their respective Affiliates, at common
Law, under the Loan Documents and Lender Hedging Contracts, 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 such Guarantor now or hereafter held or received by or in
transit to any Guaranteed Party or any of their respective Affiliates, from
or for the account of such Guarantor, whether for safekeeping, custody,
pledge, transmission, collection or otherwise,

(b) any and all deposits (general or special, time or demand,
provisional or final) of such Guarantor with any Guaranteed Party, or any
of their respective Affiliates and

(c) any other credits and claims of Borrower at any time existing
against any Guaranteed Party, including claims under certificates of
deposit. At any time and from time to time after the occurrence of any
Event of Default, each Guaranteed Party, and each of their respective
Affiliates, is authorized to foreclose upon, or to offset against the
Guaranteed Obligations then due and payable (in either case without notice
to such Guarantor), any and all items hereinabove referred to; irrespective
of whether or not such Guaranteed Party or Affiliate shall have made any
demand under this Guaranty, any other Loan Document or any Lender Hedging
Contract and although such obligations of such Guarantor may be contingent
or unmatured or are owed to a branch or office of such Guaranteed Party
different from the branch or office holding such items.

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 12. Indemnification. (a) Without limitation on any other
Obligations of any Guarantor or remedies of the Guaranteed Parties under this
Guaranty, each Guarantor shall,

10

to the fullest extent permitted by law, indemnify, defend and save and hold
harmless each Guaranteed Party and each of their Affiliates and their respective
officers, directors, employees, agents and advisors (each, an "INDEMNIFIED
PARTY") from and against, and shall pay on demand, any and all claims, damages,
losses, liabilities and expenses (including reasonable fees and expenses of
counsel) that may be incurred by or asserted or awarded against any Indemnified
Party in connection with or as a result of any failure of any Guaranteed
Obligations to be the legal, valid and binding obligations of any Credit Party
enforceable against such Credit Party in accordance with their terms.

(b) None of the Indemnified Parties shall have any liability (whether
direct or indirect, in contract, tort or otherwise) to any of the Guarantors or
any of their respective Affiliates or any of their respective officers,
directors, employees, agents and advisors, and no Guarantor will assert any
claim against any Indemnified Party on any theory of liability, for special,
indirect, consequential or punitive damages arising out of or otherwise relating
to the Loan Documents, the actual or proposed use of the proceeds of the
Advances or the Letters of Credit, the Loan Documents, the Lender Hedging
Contracts or any of the transactions contemplated by the Loan Documents or
Lender Hedging Contracts.

(c) Without prejudice to the survival of any of the other agreements
of any Guarantor under this Guaranty or any of the other Loan Documents, the
agreements and obligations of each Guarantor contained in Section 1(a) (with
respect to enforcement expenses), the last sentence of Section 2, Section 5 and
this Section 12 shall survive the payment in full of the Guaranteed Obligations
and all of the other amounts payable under this Guaranty.

Section 13. Subordination. Each Guarantor subordinates any and all
debts, liabilities and other Obligations owed to such Guarantor by each other
Credit Party (the "SUBORDINATED OBLIGATIONS") to the Guaranteed Obligations to
the extent and in the manner hereinafter set forth in this Section 13:

(a) Except during the continuance of an Event of Default (including
the commencement and continuation of any proceeding under any Bankruptcy
Law relating to any other Credit Party), each Guarantor may receive
regularly scheduled payments from any other Credit Party on account of the
Subordinated Obligations. After the occurrence and during the continuance
of any Event of Default (including the commencement and continuation of any
proceeding under any Bankruptcy Law relating to any other Credit Party),
however, unless the Administrative Agent otherwise agrees, no Guarantor
shall demand, accept or take any action to collect any payment on account
of the Subordinated Obligations.

(b) In any proceeding under any Bankruptcy Law relating to any other
Credit Party, the Guaranteed Parties shall be entitled to receive payment
in full in cash of all Guaranteed Obligations (including all interest and
expenses accruing after the commencement of a proceeding under any
Bankruptcy Law, whether or not constituting an allowed claim in such
proceeding ("POST PETITION INTEREST")) before such Guarantor receives
payment of any Subordinated Obligations.

11

(c) After the occurrence and during the continuance of any Event of
Default (including the commencement and continuation of any proceeding
under any Bankruptcy Law relating to any other Credit Party), each
Guarantor shall, if the Administrative Agent so requests, collect, enforce
and receive payments on account of the Subordinated Obligations as trustee
for the Guaranteed Parties and deliver such payments to the Administrative
Agent on account of the Guaranteed Obligations (including all Post Petition
Interest), together with any necessary endorsements or other instruments of
transfer, but without reducing or affecting in any manner the liability of
such Guarantor under the other provisions of this Guaranty.

(d) After the occurrence and during the continuance of any Event of
Default (including the commencement and continuation of any proceeding
under any Bankruptcy Law relating to any other Credit Party), the
Administrative Agent is authorized and empowered (but without any
obligation to so do), in its discretion:

(i) in the name of each Guarantor, to collect and enforce, and to
submit claims in respect of, Subordinated Obligations and to apply any
amounts received thereon to the Guaranteed Obligations (including any and
all Post Petition Interest), and

(ii) to require each Guarantor (A) to collect and enforce, and to
submit claims in respect of, Subordinated Obligations and (B) to pay any
amounts received on such obligations to the Administrative Agent for
application to the Guaranteed Obligations (including any and all Post
Petition Interest).

Section 14. Continuing Guaranty; Assignments under the Credit
Agreement. This Guaranty is a continuing guaranty and shall:

(a) remain in full force and effect until it is released in accordance
with the Credit Agreement,

(b) be binding upon the Guarantor, its successors and assigns and

(c) inure to the benefit of and be enforceable by the Guaranteed
Parties and their successors, transferees and assigns.

Without limiting the generality of clause (c) of the immediately preceding
sentence, any Guaranteed Party may assign or otherwise transfer all or any
portion of its rights and obligations under the Credit Agreement (including all
or any portion of its Commitments, the Advances owing to it and the Note or
Notes held by it) or Lender Hedging Contract to any other Person, and such other
Person shall thereupon become vested with all the benefits in respect thereof
granted to such Guaranteed Party herein or otherwise, in each case as and to the
extent provided in Section 10.5 of the Credit Agreement. No Guarantor shall have
the right to assign its rights hereunder or any interest herein without the
prior written consent of the Guaranteed Parties.

Section 15. Execution in Counterparts. This Guaranty and each
amendment, waiver and consent with respect hereto may be executed in any number
of counterparts and by different parties thereto in separate counterparts, each
of which when so executed shall be

12

deemed to be an original and all of which taken together shall constitute one
and the same agreement. Delivery of an executed counterpart of a signature page
to this Guaranty by telecopier shall be effective as delivery of an original
executed counterpart of this Guaranty.

Section 16. Terms Generally; References and Titles. The definitions of
terms herein shall apply equally to the singular and plural forms of the terms
defined. Whenever the context may require, any pronoun shall include the
corresponding masculine, feminine and neuter forms. The words "include,"
"includes" and "including" shall be deemed to be followed by the phrase "without
limitation." Unless the context requires otherwise:

(a) any definition of or reference to any agreement, instrument or
other document herein shall be construed as referring to such agreement,
instrument or other document as from time to time amended, supplemented or
otherwise modified (subject to any restrictions on such amendments,
supplements or modifications set forth herein);

(b) any reference herein to any Person shall be construed to include
such Person's successors and assigns;

(c) the words "herein," "hereof" and "hereunder," and words of similar
import, shall be construed to refer to this Guaranty in its entirety and
not to any particular provision hereof;

(d) all references herein to Articles, Sections and Exhibits shall be
construed to refer to Articles and Sections of, and Exhibits and Schedules
to, this Guaranty;

(e) any reference to any law or regulation herein shall, unless
otherwise specified, refer to such law or regulation as amended, modified
or supplemented from time to time; and

(f) the words "asset" and "property" shall be construed to have the
same meaning and effect and to refer to any and all tangible and intangible
assets and properties, including cash, securities, accounts and contract
rights.

References to any document, instrument, or agreement shall include:

(i) all exhibits, schedules, and other attachments thereto, and

(ii) shall include all documents, instruments, or agreements issued or
executed in replacement thereof.

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 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.
Accounting terms have the meanings assigned to them by GAAP, as applied by the
accounting entity to which they refer. References to "days" shall mean calendar

13

days, unless the term "Business Day" is used. Unless otherwise specified,
references herein to any particular Person also refer to its successors and
permitted assigns.

Section 17. Governing Law; Jurisdiction; Waiver of Jury Trial, Etc.
(a) THIS GUARANTY SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE
LAWS OF THE STATE OF NEW YORK.

(b) EACH GUARANTOR IRREVOCABLY AND UNCONDITIONALLY SUBMITS, FOR ITSELF AND
ITS PROPERTY, TO THE NONEXCLUSIVE JURISDICTION OF THE COURTS OF THE STATE OF NEW
YORK SITTING IN NEW YORK COUNTY AND OF THE UNITED STATES DISTRICT COURT OF THE
SOUTHERN DISTRICT OF NEW YORK, AND ANY APPELLATE COURT FROM ANY THEREOF, IN ANY
ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS GUARANTY, ANY OTHER LOAN
DOCUMENT OR ANY LENDER HEDGING CONTRACT, OR FOR RECOGNITION OR ENFORCEMENT OF
ANY JUDGMENT, AND EACH GUARANTOR IRREVOCABLY AND UNCONDITIONALLY AGREES THAT ALL
CLAIMS IN RESPECT OF ANY SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED
IN SUCH NEW YORK STATE COURT OR, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE
LAW, IN SUCH FEDERAL COURT. EACH GUARANTOR AGREES THAT A FINAL JUDGMENT IN ANY
SUCH ACTION OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER
JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW.
NOTHING IN THIS GUARANTY, ANY OTHER LOAN DOCUMENT OR LENDER HEDGING CONTRACT
SHALL AFFECT ANY RIGHT THAT ANY GUARANTEED PARTY MAY OTHERWISE HAVE TO BRING ANY
ACTION OR PROCEEDING RELATING TO THIS GUARANTY, ANY OTHER LOAN DOCUMENT OR ANY
LENDER HEDGING CONTRACT AGAINST ANY GUARANTOR OR ITS PROPERTIES IN THE COURTS OF
ANY JURISDICTION.

(c) EACH GUARANTOR IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE FULLEST
EXTENT PERMITTED BY APPLICABLE LAW, ANY OBJECTION THAT IT MAY NOW OR HEREAFTER
HAVE TO THE LAYING OF VENUE OF ANY ACTION OR PROCEEDING ARISING OUT OF OR
RELATING TO THIS GUARANTY, ANY OTHER LOAN DOCUMENT OR ANY LENDER HEDGING
CONTRACT IN ANY COURT REFERRED TO IN SUBSECTION (B) ABOVE. EACH GUARANTOR
IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, THE
DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH ACTION OR PROCEEDING
IN ANY SUCH COURT.

(d) EACH GUARANTOR IRREVOCABLY CONSENTS TO SERVICE OF PROCESS IN THE MANNER
PROVIDED FOR NOTICES IN SECTION 9. NOTHING IN THIS GUARANTY WILL AFFECT THE
RIGHT OF ANY PARTY HERETO TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY
APPLICABLE LAW.

14

(e) EACH GUARANTOR IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY
APPLICABLE LAW, (I) ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL
PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS GUARANTY,
ANY OTHER LOAN DOCUMENT OR ANY LENDER HEDGING CONTRACT OR THE TRANSACTIONS
CONTEMPLATED HEREBY OR THEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER
THEORY, AND (II) ANY RIGHT IT MAY HAVE TO CLAIM OR RECOVER IN ANY SUCH LEGAL
PROCEEDING ANY "SPECIAL DAMAGES," AS DEFINED BELOW. EACH GUARANTOR (X) CERTIFIES
THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PERSON HAS REPRESENTED,
EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PERSON WOULD NOT, IN THE EVENT OF
LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (Y) ACKNOWLEDGES THAT THE
OTHER PARTIES TO THE LOAN DOCUMENTS AND LENDER HEDGING CONTRACTS HAVE BEEN
INDUCED TO ENTER THEREIN BY, AMONG OTHER THINGS, THE WAIVERS AND CERTIFICATIONS
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 HAS EXPRESSLY
PROMISED TO PAY OR DELIVER TO ANY OTHER PARTY.

15

IN WITNESS WHEREOF, each Guarantor has caused this Guaranty to be duly
executed and delivered by its officer thereunto duly authorized as of the date
first-above written.

NATIONAL ONSHORE LP                     NATIONAL OFFSHORE LP

By: /s/ Philip D. Devlin                By: /s/ Philip D. Devlin
---------------------------------       ------------------------------------
Name: Philip D. Devlin                  Name: Philip. D. Devlin
Title: Vice President and Secretary     Title: Vice President and Secretary

ONSHORE GP LLC                          ONSHORE LP LLC

By: /s/ Philip D. Devlin                By: /s/ Philip D. Devlin
---------------------------------       ------------------------------------
Name: Philip D. Devlin                  Name: Philip D. Devlin
Title: Vice President and Secretary     Title: Vice President and Secretary

OFFSHORE GP LLC                         OFFSHORE LP LLC

By: /s/ Philip D. Devlin                By: /s/ Philip D. Devlin
---------------------------------       ------------------------------------
Name: Philip D. Devlin                  Name: Philip D. Devlin
Title: Vice President and Secretary     Title: Vice President and Secretary

GALVESTON BAY PROCESSING CORPORATION    GALVESTON BAY PIPELINE COMPANY

By: /s/ Philip D. Devlin                By: /s/ Philip D. Devlin
---------------------------------       ------------------------------------
Name: Philip D. Devlin                  Name: Philip D. Devlin
Title: Vice President and Secretary     Title: Vice President and Secretary

MID RIVER LLC

By: AREP Oil & Gas LLC, sole member

By: /s/ Philip D. Devlin
---------------------------------
Name: Philip D. Devlin
Title: Vice President and Secretary

EXHIBIT A
TO THE
GUARANTY

FORM OF GUARANTY SUPPLEMENT

_________ __, ____

CITICORP USA, INC., as Administrative Agent
388 Greenwich Street
New York, NY 10013

Credit Agreement dated as of December 20, 2005 among
AREP Oil and Gas, LLC (the "BORROWER"), the Guaranteed Parties
party to the Credit Agreement, Citicorp USA, Inc., as Administrative Agent,
and Bear Stearns & Co., Inc., as Syndication Agent

Ladies and Gentlemen:

Reference is made to the above-captioned Credit Agreement and to the
Guaranty referred to therein (such Guaranty, as in effect on the date hereof and
as it may hereafter be amended, supplemented or otherwise modified from time to
time, together with this Guaranty Supplement, being the "GUARANTY"). Capitalized
terms defined in the Guaranty or in the Credit Agreement and not otherwise
defined herein are used herein as therein defined.

Section 1. Guaranty; Limitation of Liability. (a) The undersigned
absolutely, unconditionally and irrevocably guarantees the punctual payment when
due, whether at scheduled maturity or on any date of a required prepayment or by
acceleration, demand or otherwise, of all Obligations of each other Credit Party
now or hereafter existing under or in respect of the Loan Documents and all
Lender Hedging Obligations (in each case including any extensions,
modifications, substitutions, amendments or renewals of any or all of the
foregoing Obligations and Lender Hedging Obligations), whether direct or
indirect, absolute or contingent, and whether for principal, interest, premium,
fees, indemnities, contract causes of action, costs, expenses or otherwise (such
Obligations and Lender Hedging Obligations being the "GUARANTEED OBLIGATIONS"),
and will pay any and all expenses (including fees and expenses of counsel)
incurred by the Administrative Agent or any other Guaranteed Party in enforcing
any rights under this Guaranty Supplement, the Guaranty, any other Loan Document
or any Lender Hedging Contract. Without limiting the generality of the
foregoing, the undersigned's liability shall extend to all amounts that
constitute part of the Guaranteed Obligations and would be owed by any other
Credit Party to any Guaranteed Party under or in respect of the Loan Documents
or Lender Hedging Contracts but for the fact that they are unenforceable or not
allowable due to the existence of a bankruptcy, reorganization or similar
proceeding involving such other Credit Party.

(b) The undersigned, and by their acceptance of this Guaranty
Supplement, the Administrative Agent and each other Guaranteed Party, confirm
that it is the intention of all

such Persons that this Guaranty Supplement, the Guaranty and the Obligations of
the undersigned hereunder and thereunder not constitute a fraudulent transfer or
conveyance for purposes of Bankruptcy Law, the Uniform Fraudulent Conveyance
Act, the Uniform Fraudulent Transfer Act or any similar foreign, federal or
state law to the extent applicable to this Guaranty Supplement, the Guaranty and
the Obligations of the undersigned hereunder and thereunder. To effectuate the
foregoing intention, the Administrative Agent, the other Guaranteed Parties and
the undersigned hereby irrevocably agree that the Obligations of the undersigned
under this Guaranty Supplement and the Guaranty at any time shall be limited to
the maximum amount as will result in the Obligations of the undersigned under
this Guaranty Supplement and the Guaranty not constituting a fraudulent transfer
or conveyance.

(c) If any payment shall be required to be made to any Guaranteed
Party under this Guaranty Supplement, the Guaranty or any other guaranty, then,
subject to Section 4, the undersigned will contribute, to the maximum extent
permitted by applicable law, such amounts to each other Guarantor and each other
guarantor so as to maximize the aggregate amount paid to the Guaranteed Parties
under or in respect of the Loan Documents and the Lender Hedging Contracts.

Section 2. Obligations Under the Guaranty. The undersigned hereby
agrees, as of the date first-above written, to be bound as a Guarantor by all of
the terms and conditions of the Guaranty to the same extent as each of the other
Guarantors thereunder. The undersigned further agrees, as of the date first
above written, that each reference in the Subsidiary Guaranty to an "ADDITIONAL
GUARANTOR" or a "GUARANTOR" shall also mean and be a reference to the
undersigned, and each reference in any other Loan Document to a "GUARANTOR" or a
"CREDIT PARTY" shall also mean and be a reference to the undersigned.

Section 3. Representations and Warranties. As of the date first-above
written, the undersigned makes each representation and warranty set forth in
Section 6 of the Guaranty to the same extent as each other Guarantor.

Section 4. Delivery by Telecopier. Delivery of an executed counterpart
of a signature page to this Guaranty Supplement by telecopier shall be effective
as delivery of an original executed counterpart of this Guaranty Supplement.

Section 5. Governing Law; Jurisdiction; Waiver of Jury Trial, Etc. (a)
THIS GUARANTY SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS
OF THE STATE OF NEW YORK.

(b) THE UNDERSIGNED IRREVOCABLY AND UNCONDITIONALLY SUBMITS, FOR ITSELF AND
ITS PROPERTY, TO THE NONEXCLUSIVE JURISDICTION OF THE COURTS OF THE STATE OF NEW
YORK SITTING IN NEW YORK COUNTY AND OF THE UNITED STATES DISTRICT COURT OF THE
SOUTHERN DISTRICT OF NEW YORK, AND ANY APPELLATE COURT FROM ANY THEREOF, IN ANY
ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS GUARANTY SUPPLEMENT, THE
GUARANTY, ANY OTHER LOAN DOCUMENT OR ANY LENDER HEDGING CONTRACT, OR FOR

RECOGNITION OR ENFORCEMENT OF ANY JUDGMENT, AND THE UNDERSIGNED IRREVOCABLY AND
UNCONDITIONALLY AGREES THAT ALL CLAIMS IN RESPECT OF ANY SUCH ACTION OR
PROCEEDING MAY BE HEARD AND DETERMINED IN SUCH NEW YORK STATE COURT OR, TO THE
FULLEST EXTENT PERMITTED BY APPLICABLE LAW, IN SUCH FEDERAL COURT. THE
UNDERSIGNED AGREES THAT A FINAL JUDGMENT IN ANY SUCH ACTION OR PROCEEDING SHALL
BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT
OR IN ANY OTHER MANNER PROVIDED BY LAW. NOTHING IN THIS GUARANTY SUPPLEMENT, THE
GUARANTY, ANY OTHER LOAN DOCUMENT OR ANY LENDER HEDGING CONTRACT SHALL AFFECT
ANY RIGHT THAT ANY GUARANTEED PARTY MAY OTHERWISE HAVE TO BRING ANY ACTION OR
PROCEEDING RELATING TO THIS GUARANTY SUPPLEMENT, THE GUARANTY, ANY OTHER LOAN
DOCUMENT OR ANY LENDER HEDGING CONTRACT AGAINST THE UNDERSIGNED OR ITS
PROPERTIES IN THE COURTS OF ANY JURISDICTION.

(c) THE UNDERSIGNED IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE FULLEST
EXTENT PERMITTED BY APPLICABLE LAW, ANY OBJECTION THAT IT MAY NOW OR HEREAFTER
HAVE TO THE LAYING OF VENUE OF ANY ACTION OR PROCEEDING ARISING OUT OF OR
RELATING TO THIS GUARANTY SUPPLEMENT, THE GUARANTY, ANY OTHER LOAN DOCUMENT OR
ANY LENDER HEDGING CONTRACT IN ANY COURT REFERRED TO IN SUBSECTION (B) ABOVE.
THE UNDERSIGNED IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY
APPLICABLE LAW, THE DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH
ACTION OR PROCEEDING IN ANY SUCH COURT.

(d) THE UNDERSIGNED IRREVOCABLY CONSENTS TO SERVICE OF PROCESS IN THE
MANNER PROVIDED FOR NOTICES IN SECTION 9 OF THE GUARANTY. NOTHING IN THIS
GUARANTY SUPPLEMENT OR THE GUARANTY WILL AFFECT THE RIGHT OF ANY PARTY HERETO TO
SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY APPLICABLE LAW.

(e) THE UNDERSIGNED IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY
APPLICABLE LAW, (I) ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL
PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS GUARANTY,
ANY OTHER LOAN DOCUMENT OR ANY LENDER HEDGING CONTRACT OR THE TRANSACTIONS
CONTEMPLATED HEREBY OR THEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER
THEORY, AND (II) ANY RIGHT IT MAY HAVE TO CLAIM OR RECOVER IN ANY SUCH LEGAL
PROCEEDING ANY "SPECIAL DAMAGES," AS DEFINED BELOW. THE UNDERSIGNED (X)
CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PERSON HAS
REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PERSON WOULD NOT, IN THE
EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (Y) ACKNOWLEDGES
THAT THE OTHER PARTIES

TO THE LOAN DOCUMENTS AND LENDER HEDGING CONTRACTS HAVE BEEN INDUCED TO ENTER
THEREIN BY, AMONG OTHER THINGS, THE WAIVERS AND CERTIFICATIONS 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 HAS EXPRESSLY PROMISED TO PAY OR DELIVER
TO ANY OTHER PARTY.

Very truly yours,

[NAME OF ADDITIONAL GUARANTOR]

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

EXHIBIT 10.4

================================================================================

AMENDED AND RESTATED
CREDIT AGREEMENT

dated as of December 20, 2005

among

NEG OPERATING LLC
as the Borrower,

AREP OIL & GAS LLC,
as the Lender,

AREP OIL & GAS LLC,
as Administrative Agent for the Lender

and

CITICORP USA, INC,
as Collateral Agent for the Lender and the Hedging Counterparties

--------------------
================================================================================

AMENDED AND RESTATED CREDIT AGREEMENT

THIS AMENDED AND RESTATED CREDIT AGREEMENT, dated as of December 20, 2005,
is among NEG OPERATING LLC, a Delaware limited liability company (the
"BORROWER"), AREP Oil & Gas LLC, a Delaware limited liability company ("AREP
O&G" and the "LENDER"), AREP O&G, as administrative agent for the Lenders,
successor to MIZUHO CORPORATE BANK, LTD. (in such capacity together with any
successors thereto, the "ADMINISTRATIVE AGENT"), and CITICORP USA, INC., as
collateral agent for the Lenders and Hedging Counterparties, successor to BANK
OF TEXAS, N.A. (in such capacity together with any successors thereto, the
"COLLATERAL AGENT").

W I T N E S S E T H:

WHEREAS, the Borrower entered into a Credit Agreement dated as of December
29, 2003 with, among others, Mizuho Corporate Bank, Ltd., as Administrative
Agent for the Lenders, Bank of Texas, N.A. and The Bank of Nova Scotia, as
co-agents for the Lenders and Bank of Texas as Collateral Agent for the Lenders
(the "ORIGINAL CREDIT AGREEMENT").

WHEREAS, on or prior to the Closing Date, with the consent of Borrower,
each Lender under the Original Credit Agreement has assigned all of its
respective rights and obligations under the Original Credit Agreement and the
other Loan Documents to AREP Oil & Gas LLC ("AREP"), as lender and AREP has
assumed all such rights and obligations.

WHEREAS, on or prior to the Closing Date, with the consent of AREP as the
sole Lender, Mizuho Corporate Bank, Ltd., has assigned all of its rights and
obligations as administrative agent under the Original Credit Agreement and the
other Loan Documents to the Administrative Agent, and the Administrative Agent
has assumed all such rights and obligations.

WHEREAS, on or prior to the Closing Date, with the consent of AREP as the
sole Lender, Bank of Texas, N.A., has assigned all of its Liens, rights and
remedies as collateral agent under the Original Credit Agreement and the other
Loan Documents to the Collateral Agent, and the Collateral Agent has accepted
all such Liens, rights and remedies.

WHEREAS, the Borrower, the Lender, the Administrative Agent and the
Collateral Agent desire to restated and amend the Original Credit Agreement in
its entirety on the terms and conditions hereof.

WHEREAS, the Lender is willing to provide such Loans and other financial
accommodations to the Borrower on the terms and conditions hereof.

NOW, THEREFORE, the parties hereto agree as follows:

ARTICLE I

DEFINITIONS

SECTION 1.1. Defined Terms. The following terms (whether or not
underscored) when used in this Agreement, including its preamble and recitals,
shall, except where the context otherwise requires, have the following meanings:

"ADJUSTED BASE RATE" means, on any day, the Base Rate for such day plus
the Applicable Margin for Base Rate Loans for such day, provided that the
Adjusted Base Rate charged by any Person shall never exceed the Highest Lawful
Rate.

"ADJUSTED EURODOLLAR RATE" means, for any Eurodollar Loan for any day
during any Interest Period therefor, the rate per annum equal to the sum of (a)
the Applicable Margin for Eurodollar Loans for such day plus (b) the rate per
annum (rounded upwards, if necessary, to the nearest 1/100 of 1%) determined by
Collateral Agent to be equal to the quotient obtained by dividing (i) the
Eurodollar Rate for such Eurodollar Loan for such Interest Period by (ii) 1
minus the Reserve Requirement for such Eurodollar Loan for such Interest Period,
provided that no Adjusted Eurodollar Rate charged by any Person shall ever
exceed the Highest Lawful Rate. The Adjusted Eurodollar Rate for any Eurodollar
Loan shall change whenever the Eurodollar Margin or the Reserve Requirement
changes.

"ADMINISTRATIVE AGENT" means AREP O&G in its capacity as administrative
agent hereunder, and includes each other Person as shall have subsequently been
appointed as the successor Administrative Agent pursuant to Section 9.4.

"AFFILIATE" of any Person means any other Person that, directly or
indirectly, controls, is controlled by or is under common control with, such
Person (excluding any trustee under, or any committee with responsibility for
administering, any Plan). A Person shall be deemed to be "controlled by" any
other Person if such other Person possesses, directly or indirectly, power (a)
to vote ten percent (10%) or more of the Equity Interests (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.

"AFFIRMATION OF OBLIGATIONS" mean an affirmation by each Obligor as to all
of its obligations under each Loan Document executed by it prior to the Closing
Date, which shall include the acknowledgement and agreement of each Obligor that
all Security Documents at any time executed by such Obligor shall be deemed to
be for the benefit of each Secured Party.

"AGENTS" means each of the Administrative Agent and the Collateral Agent.

"AGREEMENT" means this Amended and Restated Credit Agreement, as it may be
further amended, supplemented, restated or otherwise modified and in effect from
time to time.

"APPLICABLE MARGIN" means, on any date, with respect to any Eurodollar
Loans or Base Rate Loans then outstanding or payable hereunder, as applicable,
the applicable per annum

2

percentage set forth below under the caption "Eurodollar Loans," or "Base Rate
Loans" as the case may be, based on the Borrowing Base Utilization on such date:

Borrowing Base             Eurodollar Loans         Base Rate Loans
Utilization                (in basis points)        (in basis points)
--------------             -----------------        -----------------

< 33%                            175.0                    75.0

> or = 33% and < 66%             200.0                   100.0

> or = 66% and < 85%             225.0                   125.0

> or = 85%                       250.0                   150.0

For purposes of the foregoing, any change in the Applicable Margin will
occur automatically without prior notice upon any change in the Borrowing Base
Utilization, and each change in the Applicable Margin shall apply during the
period commencing on the effective date of such change and ending on the date
immediately preceding the effective date of the next such change, provided,
however, that for so long as the rights of Lender under this Agreement are
pledged to the AREP Agent: (a) the Applicable Margin from time to time in effect
under this Agreement with respect to Eurodollar Loans will be the lower of (i)
the Applicable Margin as set out above for Eurodollar Loans and (ii) the
"Eurodollar Margin" in effect at such time under the AREP O&G Facility and (b)
the Applicable Margin from time to time in effect under this Agreement with
respect to Base Rate Loans will be the lower of (i) the Applicable Margin as set
out above for Base Rate Loans and (ii) the "Base Rate Margin" in effect at such
time under the AREP O&G Facility.

"AREP AGENT" means the "Administrative Agent" as defined in the AREP O&G
Facility.

"AREP LENDER" means any "Lender" as defined in the AREP O&G Facility.

"AREP O&G" is defined in the preamble.

"AREP O&G FACILITY" means the Credit Agreement dated as of the Closing
Date by and among AREP O&G, as borrower, Citicorp USA, Inc., as administrative
agent, and the other lenders and financial institutions from time to time party
thereto.

"AUTHORIZED OFFICER" means, (a) as to the Borrower, the Borrower's sole
member, or any other Obligor, those of its officers, managing members or
managing partners whose signatures and incumbency shall have been certified to
the Agents pursuant to Section 5.1.2, and (b) as to Borrower, in respect of the
execution and delivery, on behalf of Borrower, of Borrowing Requests or
Continuation/Conversion Notices, any two of Randall D. Cooley, Philip D. Devlin,
or Bob G. Alexander.

"BASE RATE" means, for any period, a fluctuating interest rate per annum
as shall be in effect from time to time, which rate per annum shall be equal at
all times to the highest of the following:

3

(a)   the rate of interest announced publicly by Collateral Agent in New
York, New York, from time to time, as Collateral Agent's base rate;

(b)   the sum (adjusted to the nearest 0.25% or, if there is no nearest
0.25%, to the next higher 0.25%) of (i) 0.5% per annum, (ii) the rate per annum
obtained by dividing (A) the latest three week moving average of secondary
market morning offering rates in the United States for three month certificates
of deposit of major United States money market banks, such three week moving
average being determined weekly on each Monday (or, if any such day is not a
Business Day, on the next succeeding Business Day) for the three week period
ending on the previous Friday by Collateral Agent on the basis of such rates
reported by certificate of deposit dealers to and published by the Federal
Reserve Bank of New York or, if such publication shall be suspended or
terminated, on the basis of quotations for such rates received by Collateral
Agent from three New York certificate of deposit dealers of recognized standing
selected by Collateral Agent, by (B) a percentage equal to 100% minus the
average of the daily percentages specified during such three week period by the
Federal Reserve Board for determining the maximum reserve requirement (including
any emergency, supplemental or other marginal reserve requirement) for
Collateral Agent in respect of liabilities consisting of or including (among
other liabilities) three month U.S. dollar nonpersonal time deposits in the
United States and (iii) the average during such three week period of the maximum
annual assessment rates estimated by Collateral Agent for determining the then
current annual assessment payable by Collateral Agent to the Federal Deposit
Insurance Corporation (or any successor) for insuring Dollar deposits in the
United States; and

(c)   0.5% per annum plus the Federal Funds Rate.

"BASE RATE LOAN" means a Loan bearing interest at a fluctuating rate
determined by reference to the Adjusted Base Rate.

"BORROWER" is defined in the preamble.

"BORROWING" means each extension of credit made by the Lenders by way of
Loans of the same type, having the same Interest Period made, converted or
continued by the same Lenders on the same Business Day pursuant to the same
Borrowing Request.

"BORROWING BASE" means $180,000,000.

"BORROWING BASE UTILIZATION" means, at any time of determination, an
amount (expressed as a percentage) equal to the quotient of (a) the total
principal amount of all outstanding Loans, divided by (b) the Borrowing Base
then in effect.

"BORROWING REQUEST" means a written request by an Authorized Officer of
the Borrower for a Borrowing in accordance with Section 5.2.2, substantially in
the form of Exhibit A hereto.

"BUSINESS DAY" means (a) any day that is neither a Saturday or Sunday nor
a legal holiday on which banks are authorized or required to be closed in New
York, New York, London, England, or Houston, Texas; and (b) relative to the
making, continuing, prepaying or repaying of any Eurodollar Loans, any day on
which dealings in Dollars are carried on in the New York interbank market.

4

"CAPITALIZED LEASE LIABILITIES" means all monetary obligations of the
Borrower or any of its Subsidiaries under any leasing or similar arrangement
which, in accordance with GAAP, would be classified as capitalized leases, and,
for purposes of this Agreement and each other Loan Document, the amount of such
obligations shall be the capitalized amount thereof, determined in accordance
with GAAP, and the stated maturity thereof shall be the date of the last payment
of rent or any other amount due under such lease prior to the first date upon
which such lease may be terminated by the lessee without payment of a penalty.

"CASH EQUIVALENT INVESTMENT" means, at any time: (a) any evidence of
Indebtedness, maturing not more than one year after such time, issued or
guaranteed by the United States Government; (b) commercial paper, maturing not
more than nine (9) months from the date of issue, which is issued by (i) a
corporation (other than an Affiliate of the Borrower or any other Obligor)
organized under the laws of any state of the United States or of the District of
Columbia and rated A-l by Standard & Poor's Corporation or P-l by Moody's
Investors Service, Inc., or (ii) any AREP Lender (or its holding company); (c)
any certificate of deposit or bankers acceptance, maturing not more than one
year after such time, which is issued by either (i) a commercial banking
institution that is a member of the Federal Reserve System and has a combined
capital and surplus and undivided profits of not less than $500,000,000, or (ii)
any AREP Lender; or (d) any repurchase agreement entered into with any AREP
Lender (or other commercial banking institution of the stature referred to in
clause (c)(i)) which (i) is secured by a fully perfected security interest in
any obligation of the type described in any of clauses (a) through (c); and (ii)
has a market value at the time such repurchase agreement is entered into of not
less than 100% of the repurchase obligation of such AREP Lender (or other
commercial banking institution) thereunder.

"CERCLA" means the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended.

"CERCLIS" means the Comprehensive Environmental Response Compensation
Liability Information System List.

"CHANGE IN CONTROL" means the occurrence of any of the following events at
any time:

(a)   NEG Holding shall cease to own 100% of the issued and outstanding
Equity Interests of the Borrower;

(b)   any Person or "group" (within the meaning of Section 13(d) or 14(d)
of the Exchange Act) (other than NEG or any Persons(s) the issued and
outstanding Equity Interests of which are directly or indirectly 100% owned by
Carl Icahn and his Affiliates, individually or collectively) shall obtain the
power (whether or not exercised) to elect the Borrower's managing member;

(c)   NEG Holding shall cease being the managing member of the Borrower;

(d)   a plan is adopted relating to the liquidation or dissolution of any
of the Borrower, Shana National, NEG Holding or NEG;

5

(e)   the Borrower shall consolidate with or merge into any other Person
or convey, transfer or lease substantially all of its Properties to any Person,
or (other than as permitted by Section 7.2.8) any other Person shall consolidate
with or merge into the Borrower;

(f)   NEG or any Person(s) the issued and outstanding Equity Interests of
which are directly or indirectly 100% owned by Carl Icahn and his Affiliates,
individually or collectively, shall cease to own 100% of the Equity Interests of
NEG Holding;

(g)   Carl Icahn and his Affiliates shall cease to own at least forty
percent (40%) of the Equity Interests of NEG; and

(h)   except as permitted by Section 7.2.8, the Borrower shall cease to
own, directly or indirectly, 100% of the Equity Interests of any Subsidiary.

"CLOSING DATE" means the date on which all of the conditions precedent set
forth in Article V have been satisfied or waived in accordance with the terms
hereof.

"CODE" means the Internal Revenue Code of 1986, as amended, reformed or
otherwise modified from time to time.

"COLLATERAL" means any and all "Collateral" or "Mortgaged Property," as
defined in any of the Security Documents.

"COLLATERAL AGENT" means Citicorp USA, Inc., in its capacity as holder of
the Liens securing the Obligations, and includes each other Person as shall have
subsequently been appointed as the successor Collateral Agent pursuant to
Section 9.4.

"COMMITMENT" means, with respect to each Lender, the commitment of such
Lender to make Loans hereunder, expressed as an amount representing the maximum
aggregate amount of such Lender's Loans, as such commitment may be reduced,
increased or terminated in accordance herewith. The initial amount of each
Lender's Commitment is set forth on Schedule 2.1. The term "Commitments" means
the aggregate Commitments of the Lenders hereunder. The aggregate amount of the
Commitments of all Lenders on the Closing Date is $180,000,000.

"COMMITMENT TERMINATION EVENT" means (a) the occurrence of any Default
described in clauses (a) through (d) of Section 8.1.8 with respect to the
Borrower, any of its Subsidiaries or any other Obligor; or (b) the occurrence
and continuance of any other Event of Default and either (i) the declaration of
the Loans to be due and payable pursuant to Section 8.3, or (ii) in the absence
of such declaration, the giving of notice by the Administrative Agent, acting at
the direction of the Lenders, to the Borrower that the Commitments have been
terminated.

"CONSOLIDATED CURRENT ASSETS" means, at any particular time, (i) all
amounts that, in conformity with GAAP, would be included as current assets on a
consolidated balance sheet of the Borrower and its Consolidated Subsidiaries
(provided, however, that current assets shall not include non-cash assets
described in, and calculated pursuant to, FASB 133, 142, 143 and 144) plus (ii)
Unused Availability.

6

"CONSOLIDATED CURRENT LIABILITIES" means, at any particular time, all
amounts that, in conformity with GAAP, would be included as current liabilities
on a consolidated balance sheet of the Borrower and its Consolidated
Subsidiaries; provided, however, that current liabilities shall not include (i)
the current portion of long-term Indebtedness under this Agreement and the other
Loan Documents and (ii) liabilities described in, and calculated pursuant to,
FASB 133, 142, 143 and 144.

"CONSOLIDATED NET INCOME" means with respect to the Borrower and its
Consolidated Subsidiaries, for any period, the aggregate of the net income (or
loss) of the Borrower and its Consolidated Subsidiaries for such period,
determined on a consolidated basis in accordance with GAAP; provided that there
shall be excluded from such net income (to the extent otherwise included
therein) the following: (i) the net income of any Person in which the Borrower
or any Consolidated Subsidiary has an interest (which interest does not cause
the net income of such other Person to be consolidated with the net income of
the Borrower and its Consolidated Subsidiaries in accordance with GAAP), except
to the extent of the amount of dividends or distributions actually paid in such
period by such other Person to the Borrower or to a Consolidated Subsidiary, as
the case may be, (ii) the net income (but not loss) of any Consolidated
Subsidiary to the extent that the declaration or payment of dividends or similar
distributions or transfers or loans by that Consolidated Subsidiary is not at
the time permitted by operation of the terms of its Organic Documents or any
agreement, instrument or Governmental Rule applicable to such Consolidated
Subsidiary, or is otherwise restricted or prohibited (other than under
restrictions or prohibitions that the Borrower or a Wholly-Owned Subsidiary of
the Borrower may waive, in its sole discretion), in each case determined in
accordance with GAAP, (iii) any extraordinary gains or losses, (iv) the
cumulative effect of a change in accounting principles, (v) any gains or losses
attributable to writeups or write downs of assets; and (vi) non-cash gains and
losses, including, without limitation, FASB 133, 142, 143 and 144 non-cash gains
and losses.

"CONSOLIDATED SUBSIDIARIES" means each Subsidiary of the Borrower (whether
now existing or hereafter created or acquired) the financial statements of which
shall be (or should have been) consolidated with the financial statements of the
Borrower in accordance with GAAP. Unless otherwise indicated, each reference to
the term "Consolidated Subsidiary" means a Subsidiary consolidated with the
Borrower.

"CONTINGENT LIABILITY" means any agreement, undertaking or arrangement by
which any Person guarantees, endorses or otherwise becomes or is contingently
liable upon (by direct or indirect agreement, contingent or otherwise, to
provide funds for payment, to supply funds to, or otherwise to invest in, a
debtor, or otherwise to assure a creditor against loss) the indebtedness,
obligation or any other liability of any other Person (other than by
endorsements of instruments in the course of collection), or guarantees the
payment of dividends or other distributions upon the shares of any other Person.
The amount of any Person's obligation under any Contingent Liability shall
(subject to any limitation set forth therein) be deemed to be the outstanding
principal amount (or maximum principal amount, if larger) of the debt,
obligation or other liability guaranteed thereby.

7

"CONTINUATION/CONVERSION NOTICE" means a notice of continuation or
conversion and certificate duly executed by an Authorized Officer of the
Borrower, substantially in the form of Exhibit B hereto.

"CONTROLLED GROUP" means all members of a controlled group of corporations
and all members of a controlled group of trades or businesses (whether or not
incorporated) under common control which, together with the Borrower, are
treated as a single employer under Section 414(b) or 414(c) of the Code or
Section 4001 of ERISA.

"CURRENT RATIO" means, at any date of determination, the ratio of (a)
Consolidated Current Assets to (b) Consolidated Current Liabilities.

"DEFAULT" means any Event of Default or any condition, occurrence or event
which, after notice or lapse of time or both, would constitute an Event of
Default.

"DISCLOSURE SCHEDULE" means the Disclosure Schedule attached hereto as
Schedule I, as it may be amended, supplemented or otherwise modified from time
to time by the Borrower with the written consent of the Agents.

"DOLLAR" and the sign "$" mean lawful money of the United States.

"EBITDA" means, for any period of determination thereof, the sum, without
duplication, of the amounts for such period of Consolidated Net Income plus
Total Interest Expense, plus depreciation, depletion and amortization expense,
plus federal and state income taxes, and plus other non-cash charges and
expenses deducted from revenues in determining net income.

"EFFECTIVE DATE" means the date the Original Credit Agreement became
effective.

"ENVIRONMENTAL LAWS" means all applicable federal, state or local
Governmental Rules pertaining to health or the environment in effect in any and
all jurisdictions in which the Borrower or any Subsidiary or other Obligor is
conducting or at any time has conducted business, or where any Property of the
Borrower or any Subsidiary or other Obligor is located, including, without
limitation, OPA, the Clean Air Act, as amended, CERCLA, the Federal Water
Pollution Control Act, as amended, the Occupational Safety and Health Act of
1970, as amended, the Resource Conservation and Recovery Act of 1976, as amended
("RCRA"), the Safe Drinking Water Act, as amended, the Toxic Substances Control
Act, as amended, the Superfund Amendments and Reauthorization Act of 1986, as
amended, the Hazardous Materials Transportation Act, as amended, and other
environmental conservation or protection laws. The term "oil" shall have the
meaning specified in OPA, the term "release" (or "threatened release") shall
have the meaning specified in CERCLA, and the term "disposal" (or "disposed")
shall have the meaning specified in RCRA; provided, however, that (a) in the
event either OPA, CERCLA or RCRA is amended so as to broaden the meaning of any
term defined thereby, such broader meaning shall apply subsequent to the
effective date of such amendment and (b) to the extent the laws of the state in
which any Property of the Borrower or any Subsidiary or any other Obligor is
located establish a meaning for "oil," "release," or "disposal" that is broader
than that specified in either OPA, CERCLA or RCRA, such broader meaning shall
apply.

8

"ENVIRONMENTAL LIABILITY" means any liability, contingent or otherwise
(including any liability for damages, costs of environmental remediation, fines,
penalties or indemnities), of the Borrower or any of its Subsidiaries directly
or indirectly resulting from or based upon (a) violation of any Environmental
Law, (b) the generation, use, handling, transportation, storage, treatment or
disposal of any Hazardous Materials, (c) exposure to any Hazardous Materials,
(d) the release or threatened release of any Hazardous Materials into the
environment, or (e) any contract, agreement or other consensual arrangement
pursuant to which liability is assumed or imposed with respect to any of the
foregoing.

"EQUITY INTERESTS" means shares of the capital stock, partnership
interests, membership interest in a limited liability company, beneficial
interests in a trust or other equity interests in the Borrower or any Subsidiary
(unless the context requires otherwise) or any warrants, options or other rights
to acquire such interests.

"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, and any successor statute of similar import, together with the
regulations thereunder, in each case as in effect from time to time. References
to sections of ERISA also refer to any successor sections.

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

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

"EURODOLLAR LOAN" means a Loan that bears interest at the Adjusted
Eurodollar Rate.

"EURODOLLAR RATE" means, with respect to any Interest Period for any
Eurodollar Loan within a Borrowing and with respect to the related Interest
Period therefor, the rate of interest determined by the Collateral Agent to be
the rate per annum at which deposits in Dollars are offered by the principal
office of Collateral Agent in London to major banks in the London interbank
market at 11:00 a.m. (London time) two Business Days before the first day of
such Interest Period in the amount of $1,000,000 for a period equal to such
Interest Period.

"EVENT OF DEFAULT" is defined in Section 8.1.

"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended, or
any successor provision thereto.

"FEDERAL FUNDS RATE" means, 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 Bank of New York on the
Business Day next succeeding such day, provided that (a) 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

9

rate on such transactions on the next preceding Business Day as so
published on the next succeeding Business Day, and (b) if such rate is not so
published for any day, the Federal Funds Rate for such day shall be the average
rate quoted to Collateral Agent on such day on such transactions as determined
by Collateral Agent.

"FISCAL QUARTER" means any calendar quarter of a Fiscal Year.

"FISCAL YEAR" means any period of twelve (12) consecutive calendar months
ending on December 31; references to a Fiscal Year with a number corresponding
to any calendar year (e.g. the "2003 Fiscal Year") refer to the Fiscal Year
ending on the December 31 occurring during such calendar year.

"F.R.S. BOARD" means the Board of Governors of the Federal Reserve System
or any successor thereto.

"GAAP" means generally accepted accounting principles in the United States
of America.

"GOVERNMENTAL APPROVAL" means (a) any authorization, consent, approval,
license, ruling, permit, tariff, rate, certification, waiver, exemption, filing,
variance, claim, order, judgment or decree of, or with, (b) any required notice
to, (c) any declaration of or with, or (d) any registration by or with, any
Governmental Authority.

"GOVERNMENTAL AUTHORITY" means the government of the United States or any
other nation or country or any political subdivision thereof, whether state or
local, and any agency, authority, instrumentality, regulatory body, court,
central bank or other entity exercising executive, legislative, judicial,
taxing, regulatory or administrative powers or functions of or pertaining to
government.

"GOVERNMENTAL RULE" means any statute, law, regulation, ordinance, rule,
judgment, order, decree, permit, concession, grant, franchise, license,
agreement, directive, requirement of, or other governmental restriction or any
similar binding form of decision of or determination by, or any binding
interpretation or administration of any of the foregoing by, any Governmental
Authority, whether now or hereafter in effect.

"GUARANTOR" means NEG Holding and each Subsidiary of the Borrower, each
individually a Guarantor and collectively, the "Guarantors."

"GUARANTY" means, collectively, (i) the NEG Holding Guaranty, (ii) each
Subsidiary Guaranty and (iii) each and every Guaranty executed and delivered by
a Guarantor hereunder.

"HAZARDOUS MATERIAL" means (a) any "hazardous substance," as defined by
CERCLA (other than as set forth in clause (c)); (b) any "hazardous waste," as
defined by the RCRA (other than as set forth in clause (c)); (c) any petroleum,
petroleum products or petroleum distillates and associated oil or natural gas
exploration, production and development wastes that are not exempted or excluded
from being defined as "hazardous substances", "hazardous materials", "hazardous
wastes" and "toxic substances" under any Environmental Laws; or (d) any
pollutant or contaminant or hazardous, dangerous or toxic chemical, material or
substance within the

10

meaning of any other applicable federal, state or local law, regulation,
ordinance or requirement (including consent decrees and administrative orders)
relating to or imposing liability or standards of conduct concerning any
hazardous, toxic or dangerous waste, substance or material, all as amended or
hereafter amended.

"HEDGING AGREEMENTS" means any commodity, interest rate or currency swap,
cap, floor, collar, forward agreement or other exchange or protection agreements
or any option with respect to any such transaction.

"HEDGING COUNTERPARTY" means any AREP Lender and any Affiliate of an AREP
Lender that is a counterparty to any Hedging Agreement with Borrower, provided
that if such counterparty ceases to be an AREP Lender or an Affiliate of an AREP
Lender, such counterparty shall continue to be a Hedging Counterparty for the
purposes hereof only to the extent of Hedging Obligations arising from
transactions entered prior to the time such counterparty ceases to be an AREP
Lender or an Affiliate of an AREP Lender.

"HEDGING OBLIGATIONS" means, with respect to any Person, all liabilities
(including but not limited to obligations and liabilities arising in connection
with or as a result of early or premature termination of a Hedging Agreement,
whether or not occurring as a result of a default thereunder) of such Person
under a Hedging Agreement.

"HIGHEST LAWFUL RATE" is defined in Section 4.11.

"HYDROCARBON INTERESTS" means all rights, titles, interests and estates
now owned or hereafter acquired by the Borrower or any of its Subsidiaries in
any and all oil, gas and other liquid or gaseous hydrocarbon properties and
interests, including without limitation, mineral fee or lease interests,
production sharing agreements, concession agreements, license agreements,
service agreements, risk service agreements or similar Hydrocarbons interests
granted by an appropriate Governmental Authority, farmout, overriding royalty
and royalty interests, net profit interests, oil payments, production payment
interests and similar interests in Hydrocarbons, including any reserved or
residual interests of whatever nature.

"HYDROCARBONS" means, collectively, oil, gas, casinghead gas, condensate,
distillate, liquid hydrocarbons, gaseous hydrocarbons, all products refined,
separated, settled and dehydrated therefrom and all products refined therefrom,
including, without limitation, kerosene, liquefied petroleum gas, refined
lubricating oils, diesel fuel, drip gasoline, natural gasoline, helium, sulfur
and all other minerals.

"INCLUDING" means including without limiting the generality of any
description preceding such term. For purposes of this Agreement and each other
Loan Document, the parties hereto agree that the rule of ejusdem generis shall
not be applicable to limit a general statement, which is followed by or
referable to an enumeration of specific matters, to matters similar to the
matters specifically mentioned.

"INDEBTEDNESS" of any Person means, without duplication: (a) all
obligations of such Person for borrowed money and all obligations of such Person
evidenced by bonds, debentures, notes or other similar instruments; (b) all
obligations, contingent or otherwise, relative to the face amount of all letters
of credit, whether or not drawn, and banker's acceptances issued for the

11

account of such Person; (c) all obligations of such Person as lessee under
leases which have been or should be, in accordance with GAAP, recorded as
Capitalized Lease Liabilities; (d) all other items which, in accordance with
GAAP, would be included as liabilities on the liability side of the balance
sheet of such Person as of the date at which Indebtedness is to be determined;
(e) whether or not so included as liabilities in accordance with GAAP, all
obligations of such Person to pay the deferred purchase price of Property or
services, and indebtedness (excluding prepaid interest thereon) secured by a
Lien on Property owned or being purchased by such Person (including indebtedness
arising under conditional sales or other title retention agreements), whether or
not such indebtedness shall have been assumed by such Person or is limited in
recourse; (f) whether or not so included as liabilities in accordance with GAAP,
all obligations of such Person under any "off balance sheet" transactions,
synthetic leases or operating leases; and (g) all Contingent Liabilities of such
Person with respect to any of the foregoing. For all purposes of this Agreement,
the Indebtedness of any Person shall include the Indebtedness of any partnership
or joint venture in which such Person is a general partner or a joint venturer.

"INDEMNIFIED LIABILITIES" is defined in Section 10.4.

"INDEMNIFIED PARTIES" is defined in Section 10.4.

"INTEREST PERIOD" means, relative to any Eurodollar Loans, the period
beginning on (and including) the date on which such Eurodollar Loan is made or
continued as, or converted into, a Eurodollar Loan pursuant to Section 2.3 or
2.4 and shall end on (but exclude) the day which numerically corresponds to such
date one, two or three months thereafter (or, if such month has no numerically
corresponding day, on the last Business Day of such month), in either case as
the Borrower may select in its relevant notice pursuant to Section 2.3 or 2.4;
provided, however, that (a) the Borrower shall not be permitted to select
Interest Periods to be in effect at any one time which have expiration dates
occurring on more than five (5) different dates; (b) Interest Periods commencing
on the same date for Loans comprising part of the same Borrowing shall be of the
same duration; (c) if such Interest Period would otherwise end on a day which is
not a Business Day, such Interest Period shall end on the next following
Business Day (unless such next following Business Day is the first Business Day
of a calendar month, in which case such Interest Period shall end on the
Business Day next preceding such numerically corresponding day); and (d) no
Interest Period may end later than the date set forth in clause (a) of the
definition of "Revolving Credit Termination Date".

"INVESTMENT" means, relative to any Person, (a) the making of any deposit
with, or advance, loan or extension of credit by such Person to any other Person
(including the purchase of Property from another Person subject to an
understanding or agreement, contingent or otherwise, to resell such Property to
such Person, but excluding commission, travel and similar advances to officers
and employees made in the ordinary course of business); (b) any Contingent
Liability of such Person; and (c) any acquisition (whether for cash, property,
services, securities or otherwise) of Equity Interests of any other Person or
any agreement to make any such acquisition (including, without limitation, any
"short sale" or any sale of any securities at a time when such securities are
not owned by the Person entering into such short sale). The amount of any
Investment shall be the original principal or capital amount thereof less all
returns of principal or equity thereon (and without adjustment by reason of the
financial condition of such

12

other Person) and shall, if made by the transfer or exchange of property other
than cash, be deemed to have been made in an original principal or capital
amount equal to the fair market value of such property.

"LENDER" is defined in the preamble, and "LENDERS" means the Lender and
its permitted successors and assigns hereunder who, at the time in question, are
the holders of any of the Loans.

"LIEN" means any interest in Property securing an obligation owed to, or a
claim by, a Person other than the owner of the Property, whether such interest
is based on the common law, statute or contract, and whether such obligation or
claim is fixed or contingent, and including but not limited to (i) the lien,
charge or security interest arising from a mortgage, encumbrance, pledge,
security agreement, conditional sale or trust receipt or a lease, consignment,
bailment or margin account for security purposes or (ii) production payments and
the like which constitute Indebtedness, payable out of Oil and Gas Properties.
The term "LIEN" shall include reservations, exceptions, encroachments,
easements, rights of way, covenants, conditions, restrictions, leases and other
title exceptions and encumbrances affecting Property. For the purposes of this
Agreement, the Borrower or any Subsidiary shall be deemed to be the owner of any
Property that it has acquired or holds subject to a conditional sale agreement,
or leases under a financing lease or other arrangement pursuant to which title
to the Property has been retained by or vested in some other Person in a
transaction intended to create a financing.

"LOAN" is defined in Section 2.1.1.

"LOAN DOCUMENT" means, collectively, (a) this Agreement, each Security
Document, each Note, each Affirmation of Obligations, each Hedging Agreement
between Borrower and any of its Subsidiaries and any Hedging Counterparty and
each Borrowing Request, together, in each case, with all exhibits, schedules and
attachments thereto; and (b) all other agreements, documents or instruments from
time to time executed or delivered in connection with or pursuant to any of the
foregoing.

"MARGIN STOCK" means "margin stock" within the meaning of Regulation U.

"MATERIAL ADVERSE EFFECT" means any material and adverse effect (a) on (i)
the business, condition (financial or otherwise), operations or properties of
the Borrower or the Borrower and its Subsidiaries (taken as a whole) or (ii) the
ability of the Borrower or any other Obligor to perform its obligations under
any of the Loan Documents to which it is a party or (b) that purports to affect
the legality, validity or enforceability of this Agreement, the Notes or any
other Loan Documents.

"MMBTu" means one million British thermal units.

"MORTGAGE" means each Mortgage, Deed of Trust, Assignment, Security
Agreement and Financing Statement executed and delivered pursuant to the Loan
Documents, executed and delivered by the Borrower or any Obligor, as the case
may be, as amended, supplemented, restated or otherwise modified from time to
time in accordance with the terms of this Agreement and the other Loan
Documents.

13

"MORTGAGED PROPERTY" means any Oil and Gas Property with respect to which
a Lien is granted pursuant to a Mortgage.

"NEG" means National Energy Group, Inc., a Delaware corporation.

"NEG GUARANTEED PAYMENT" means any "Guaranteed Payment" (as defined in the
NEG Holding Operating Agreement) payable to NEG by NEG Holding pursuant to
Section 6.5 of the NEG Holding Operating Agreement.

"NEG HOLDING" means NEG Holding LLC, a Delaware limited liability company.

"NEG HOLDING GUARANTY" means the Guaranty dated as of the Effective Date,
executed by NEG Holding in favor of the Administrative Agent, together with any
amendments, renewals, restatements or other modifications thereof from time to
time.

"NEG HOLDING OPERATING AGREEMENT" means that certain Operating Agreement
for NEG Holding LLC dated as of May 1, 2001, by and between NEG and Gascon, as
amended by that certain Assignment and Assumption Agreement entered into by and
among AREP Oil & Gas LLC (as successor to AREP NEG/MP LLC), Gascon Partners and
certain of their Affiliates on June 30, 2005.

"NEG MANAGEMENT AGREEMENT" means that certain Second Amendment to
Management Agreement dated as of April 5, 2004, by and among NEG, the Borrower
and NGX Energy.

"NEG MANAGEMENT FEE" means any "Fee" as defined in Section 3.1 of the NEG
Management Agreement.

"NEG OPERATING LLC OPERATING AGREEMENT" means that certain Operating
Agreement of NEG Operating LLC dated as of May 1, 2001, executed by NEG Holding.

"NGX ENERGY" means NGX Energy Limited Partnership, a Delaware limited
partnership.

"NGX GP" means NGX GP of Delaware, a Delaware limited liability company.

"NGX LP" means NGX LP of Delaware, a Delaware limited liability company.

"NOTE" means a promissory note of the Borrower payable to any Lender (as
such promissory note may be amended, endorsed or otherwise modified from time to
time), and also means all other promissory notes accepted from time to time in
substitution therefor or renewal thereof.

"OBLIGATIONS" means (without duplication), at any time, the sum of (a) all
obligations (monetary or otherwise) of the Borrower and each other Obligor
arising under or in connection with this Agreement, the Notes and each other
Loan Document plus (b) all Hedging Obligations in connection with all Hedging
Agreements between the Borrower or any of its Subsidiaries and any Hedging
Counterparty plus (c) all other obligations (monetary or otherwise) of the
Borrower

14

or any Subsidiary to any Lender or any Agent, whether or not contingent, arising
under or in connection with any of the Loan Documents.

"OBLIGOR" means the Borrower, any Guarantor or any other Person (other
than any of the Agents or any Lender) obligated under any Loan Document.

"OIL AND GAS BUSINESS" means (a) the acquisition, exploration,
exploitation, development, operation, management and disposition of Hydrocarbon
Interests and Hydrocarbons; (b) the gathering, marketing, treating, processing,
storage, selling and transporting of any production from such Hydrocarbon
Interests or such other interests, including, without limitation, the marketing
of Hydrocarbons obtained from unrelated Persons; (c) any business relating to
exploration for or development, production, treatment, processing, storage,
transportation or marketing of oil, gas and other minerals and products produced
in association therewith; and (d) any activity that is ancillary or necessary or
desirable to facilitate the activities described in clauses (a) through (c) of
this definition.

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

"OPA" means the Oil Pollution Act of 1990, as amended from time to time.

"ORGANIC DOCUMENTS" means, for any Person, its articles of incorporation,
association, formation or incorporation (or comparable document), its by-laws,
certificate of formation, regulations, limited liability company agreement, or
similar governing document and all

15

shareholder, membership, partnership or other similar agreements, voting trusts
and similar arrangements.

"PBGC" means the Pension Benefit Guaranty Corporation and any entity
succeeding to any or all of its functions under ERISA.

"PENSION PLAN" means a "pension plan," as defined in section 3(2) of
ERISA, which is subject to Title IV of ERISA (other than a multiemployer plan as
defined in section 4001(a)(3) of ERISA), and to which the Borrower or any
corporation, trade or business that is, along with the Borrower, a member of a
Controlled Group, may have liability, including any liability by reason of
having been a substantial employer within the meaning of section 4063 of ERISA
at any time during the preceding five years, or by reason of being deemed to be
a contributing sponsor under section 4069 of ERISA.

"PERCENTAGE" means, with respect to any Lender, the percentage of the
Commitments represented by such Lender's Commitment. If the Commitments have
terminated or expired, the Percentages shall be determined based upon the most
recent Commitments, giving effect to any assignments made in accordance with
Section 10.12 or any increases or decreases in Commitments made in accordance
with this Agreement.

"PERMITTED NEG AFFILIATE TRANSACTIONS" means transactions with Affiliates
permitted as of the Closing Date pursuant to the NEG Operating LLC Operating
Agreement, the NEG Holding Operating Agreement and the NEG Management Agreement
(including without limitation the NEG Guaranteed Payment).

"PERSON" means any natural person, corporation, limited liability company,
partnership, firm, association, trust, government, governmental agency or any
other entity, whether acting in an individual, fiduciary or other capacity.

"PLAN" means any Pension Plan or Welfare Plan.

"PLEDGE AGREEMENT" means each Pledge Agreement and Irrevocable Proxy,
executed and delivered pursuant to the Loan Documents, as amended, supplemented,
restated or otherwise modified from time to time in accordance with the Loan
Documents.

"PROPERTY" means all property of any kind, name or nature, real or
personal, tangible or intangible, legal or equitable, whether now owned or
hereafter acquired.

"PROVEN RESERVES" means collectively, "proved oil and gas reserves,"
"proved developed producing oil and gas reserves," "proved developed
non-producing oil and gas reserves" (consisting of proved developed shut-in oil
and gas reserves and proved developed behind pipe oil and gas reserves), and
"proved undeveloped oil and gas reserves," as such terms are defined by the SEC
in its standards and guidelines.

"QUARTERLY PAYMENT DATE" means the last day of each March, June, September
and December or, if any such day is not a Business Day, the next succeeding
Business Day.

16

"REGULATION U" means any of Regulations T, U or X of the F.R.S. Board from
time to time in effect, and any successor or other regulations or official
interpretations of the F.R.S. Board or any successor Person, relating to the
extension of credit for the purpose of purchasing or carrying Margin Stock and
that is applicable to member banks of the Federal Reserve System or any
successor Person.

"RELEASE" means a "release," as defined in CERCLA.

"REQUIRED CLOSING DATE HEDGES" means the Hedging Agreements described in
Schedule II.

"REQUIRED LENDERS" means the Lenders at any time holding Commitments in
the aggregate greater than or equal to seventy-five percent (75%) of the
Commitments under the Loan Documents, or, if the Commitments have been
terminated, an aggregate amount greater than or equal to seventy-five percent
(75%) of the then current aggregate principal amount of all outstanding Loans.

"REVOLVING CREDIT TERMINATION DATE" means the earliest of (a) the Stated
Maturity Date; (b) the date on which the Commitments have terminated; and (c)
the date on which any Commitment Termination Event occurs. Upon the occurrence
of any event described in clause (c), the Commitments shall terminate
automatically and without further action.

"SEC" means the United States Securities and Exchange Commission and any
successor Governmental Authority.

"SECURED PARTIES" means (a) each Lender, (b) each Agent, (c) each Hedging
Counterparty, and (d) the AREP Agent, in its capacity as pledgee of the rights
of AREP O&G in all of its capacities hereunder.

"SECURITY AGREEMENT" means each Security Agreement executed and delivered
pursuant to the Loan Documents, as amended, supplemented, restated or otherwise
modified from time to time in accordance with the Loan Documents.

"SECURITY DOCUMENT" means any Pledge Agreement, Guaranty, Security
Agreement or Mortgage, and each other security agreement or other instrument or
document executed and delivered pursuant to Section 5.1, Section 7.1.6, or any
other provision of this Agreement.

"SHANA NATIONAL" means Shana National LLC, a Delaware limited liability
company, and its successors and assigns.

"STATED MATURITY DATE" means the earlier to occur of (i) the date on which
the Borrower and its Subsidiaries become guarantors under the AREP O&G Facility
and (ii) December 20, 2010.

"SUBORDINATED DEBT" means all unsecured Indebtedness of the Borrower or
its Subsidiaries after the date of this Agreement that is owing to AREP O&G for
money borrowed and which is subordinated, in such amounts, and upon terms and
conditions satisfactory to, the Agents and the Lenders, in right of payment to
the payment in full in cash of all Obligations.

17

"SUBSIDIARY" means, with respect to any Person (the "PARENT") at any date
any corporation, limited liability company, partnership (limited or general),
association or other entity (a) of which Equity Interests representing more than
50% or more than 50% of the ordinary voting power or, in the case of a
partnership, more than 50% of the general partnership interests are, as of such
date, owned, controlled or held, or (b) that is, as of such date, otherwise
Controlled, by the parent or one or more subsidiaries of the parent or by the
parent and one or more subsidiaries of the parent. Unless otherwise indicated
herein, each reference to the term "SUBSIDIARY" means a Subsidiary of the
Borrower.

"SUBSIDIARY GUARANTY" means each Guaranty in favor of the Administrative
Agent, executed and delivered by a Subsidiary pursuant to the Loan Documents, as
amended, supplemented, restated or otherwise modified from time to time in
accordance with the Loan Documents.

"TAXES" is defined in Section 4.6.

"TERMINATION EVENT" means (a) the occurrence with respect to any ERISA
Plan of (i) a reportable event described in Section 4043(c)(5) or (6) of ERISA
or (ii) any other reportable event described in Section 4043(c) 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) or 4043(b)(4) 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(c) 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 could reasonably be expected to result in the termination of, or
the appointment of a trustee to administer, any ERISA Plan under Section 4042 of
ERISA.

"TOTAL INTEREST EXPENSE" means with respect to any period for which a
determination thereof is to be made, the sum, without duplication, of (i) the
aggregate amount of all interest accrued (whether or not paid) on all
Indebtedness of the Borrower and its Subsidiaries on a consolidated basis plus
(ii) the portion of any Capitalized Lease Liabilities allocable to interest
expense in accordance with GAAP. Total Interest Expense shall be calculated
quarterly at the end of each fiscal quarter on a rolling four quarter basis.

"TRANSFER" is defined in Section 7.2.10.

"TYPE" means, relative to any Loan, the portion thereof, if any, being
maintained as a Base Rate Loan or a Eurodollar Loan.

"UCC SEARCHES" means central and local current financing statement and
Lien searches from each state in which any Collateral is located, and such other
jurisdictions as the Collateral Agent may request, covering the Borrower and
each Guarantor, together with copies of all financing statements listed in such
searches.

"UNITED STATES" or "U.S." means the United States of America, its fifty
States and the District of Columbia.

18

"UNUSED AVAILABILITY" means at any time an amount equal to the excess of
(i) the Commitments less (ii) the outstanding Loans.

"WELFARE PLAN" means a "welfare plan," as defined in section 3(1) of
ERISA.

"WHOLLY-OWNED SUBSIDIARY" means, as to any Person, any Subsidiary of which
all of the outstanding shares of Equity Interests on a fully-diluted basis, are
owned by such Person or one or more of its Wholly-Owned Subsidiaries or by such
Person and one or more of its Wholly-Owned Subsidiaries. Unless otherwise
indicated, each reference to the "Wholly-Owned Subsidiary" means a Wholly-Owned
Subsidiary of the Borrower.

SECTION 1.2. Use of Defined Terms. Unless otherwise defined or the context
otherwise requires, terms for which meanings are provided in this Agreement
shall have such meanings when used in the Disclosure Schedule and in each Note,
Borrowing Request, Continuation/Conversion Notice, Loan Document, notice and
other communication delivered from time to time in connection with this
Agreement or any other Loan Document. The definitions of terms herein shall
apply equally to the singular and plural forms of the terms defined. Whenever
the context may require, any pronoun shall include the corresponding masculine,
feminine and neuter forms. The words "include," "includes" and "including" shall
be deemed to be followed by the phrase "without limitation". The word "will"
shall be construed to have the same meaning and effect as the word "shall".
Unless the context requires otherwise (a) any definition of or reference to any
agreement, instrument or other document herein shall be construed as referring
to such agreement, instrument or other document as from time to time amended,
supplemented or otherwise modified (subject to any restrictions on such
amendments, supplements or modifications set forth herein), (b) any reference
herein to any Person shall be construed to include such Person's successors and
assigns, provided such successors and assigns are permitted by the Loan
Documents, (c) the words "HEREIN," "HEREOF," "HERETO," "HEREUNDER" and similar
terms contained in this Agreement or any other Loan Document refer to this
Agreement or such other Loan Document, as the case may be, as a whole and not to
any particular Section, paragraph or provision of this Agreement or such other
Loan Document. and (d) all references herein to Articles, Sections, Exhibits and
Schedules shall be construed to refer to Articles and Sections of, and Exhibits
and Schedules to, this Agreement.

SECTION 1.3. Accounting and Financial Determinations. Unless otherwise
specified, all accounting terms used herein or in any other Loan Document shall
be interpreted, all accounting determinations and computations hereunder or
thereunder shall be made, and all financial statements required to be delivered
hereunder or thereunder shall be prepared in accordance with GAAP.

ARTICLE II

THE COMMITMENTS, BORROWING PROCEDURES, NOTES

SECTION 2.1. Loan Balance and Commitments. Borrower and Lender
acknowledge and agree that, as of the Closing Date, after giving effect to any
transactions occurring on the Closing Date, the outstanding unpaid principal
balance of the Loans is

19

$132,357,634.29. On the terms and subject to the conditions of this Agreement
(including Article V), each Lender severally agrees to make additional Loans, as
described in this Section 2.1.

SECTION 2.1.1. Loan Commitment. Each Lender hereby severally agrees to
make loans to the Borrower (relative to such Lender, and of any type, each a
"LOAN" and collectively its "LOANS") from time to time on any Business Day
occurring prior to the Revolving Credit Termination Date, equal to its
Percentage of the aggregate amount of the Borrowing requested by the Borrower to
be made on such Business Day, such Loans being in an aggregate amount never to
exceed the lesser of (i) the aggregate Commitments or (ii) the then-current
Borrowing Base. The commitment of each Lender described in this Section 2.1.1 is
herein referred to as its "COMMITMENT." On the terms and conditions hereof, the
Borrower may from time to time borrow, prepay and reborrow Loans.

SECTION 2.1.2. Lenders Not Permitted or Required to Make Loans.
Notwithstanding anything herein or in any other Loan Document to the contrary,
no Lender shall be permitted or required to make any Loan and the Borrower shall
not be permitted to reduce the Commitments, after giving effect thereto, (a) the
aggregate outstanding principal amount of all Loans of all Lenders would exceed
the lesser of (i) the Commitments or (ii) the then-current Borrowing Base, or
(b) the aggregate outstanding principal amount of all Loans of such Lender would
exceed such Lender's Percentage of the Commitments.

SECTION 2.2. Reduction of Commitments. The Borrower may not voluntarily
reduce the Commitments.

SECTION 2.3. Borrowing Procedures for Loans. To request a Borrowing,
the Borrower shall notify the Administrative Agent of such request (a) in the
case of a Eurodollar Borrowing, not later than 11:00 a.m., New York City time,
three (3) Business Days prior to the date such Borrowing is to be made or (b) in
the case of a Base Rate Borrowing, not later than 10:00 a.m., New York City
time, one (1) Business Day prior to the date such Borrowing is to be made. At
the commencement of each Interest Period for any Eurodollar Borrowing, such
Borrowing shall be in an aggregate amount that is an integral multiple of
$500,000 and not less than $500,000 (including any continuation or conversion of
existing Loans pursuant to Section 2.4 made in connection therewith). At the
time that each Base Rate Borrowing is made, such Borrowing shall be in an
aggregate amount that is an integral multiple of $100,000 and not less than
$500,000 (including any continuation or conversion of existing Loans pursuant to
Section 2.4 made in connection therewith); provided that a Base Rate Borrowing
may be in an aggregate amount that is equal to the entire unused amount of the
Commitments, if less. The Administrative Agent at its option may accept
telephonic requests for Loans, provided that such acceptance shall not
constitute a waiver of the Administrative Agent's right to delivery of a
Borrowing Request in connection with subsequent Loans. Each such telephonic
Borrowing Request for a Loan by the Borrower shall be irrevocable and shall be
confirmed promptly by hand delivery or telecopy to the Administrative Agent of a
written Borrowing Request. On the terms and subject to the conditions of this
Agreement, each Borrowing comprised of Loans shall be comprised of the type of
Loans, and shall be made on the Business Day, specified in such Borrowing
Request. Borrowings of more than one type may be outstanding at the same time;
provided that there shall not at any time be more than a total of five (5)
Eurodollar Borrowings outstanding. On or before 11:00 a.m. New York time on such
Business Day each Lender shall

20

deposit with the Administrative Agent same day funds in an amount equal to such
Lender's Percentage of the requested Borrowing. Such deposit will be made to an
account which the Administrative Agent shall specify from time to time by notice
to the Lenders. To the extent funds are received from the Lenders, the
Administrative Agent shall make such funds available to the Borrower by wire
transfer to the accounts the Borrower shall have specified in its Borrowing
Request. The failure of any Lender to make any Loan required to be made by it
shall not relieve any other Lender of its obligations hereunder; provided that
the Commitments of the Lenders are several and no Lender shall be responsible
for any other Lender's failure to make Loans as required.

SECTION 2.4. Continuation and Conversion Elections. By delivering a
Continuation/Conversion Notice to the Administrative Agent on or before 10:00
a.m., New York time, on a Business Day, the Borrower may from time to time
irrevocably elect, on not fewer than three (3) nor more than five (5) Business
Days' notice that all, or any portion of any Loans, subject to the requirements
of Section 2.3, be, in the case of Base Rate Loans, converted into Eurodollar
Loans, and in the case of Eurodollar Loans, be converted on the last day of the
then current interest period into a Base Rate Loan or continued as a Eurodollar
Loan (in the absence of delivery of a Continuation/Conversion Notice with
respect to any Eurodollar Loan at least three (3) Business Days before the last
day of the then current Interest Period with respect thereto, such Eurodollar
Loan shall, on such last day, automatically convert to a Base Rate Loan);
provided, however, that (i) each such conversion or continuation shall be pro
rated among the applicable outstanding Loans of all Lenders to the Borrower, and
(ii) no portion of the outstanding principal amount of any Loans may be so
continued as, or be so converted into, Eurodollar Loans when any Event of
Default has occurred and is continuing.

SECTION 2.5. Funding. Each Lender may, if it so elects, fulfill its
obligation to make, continue or convert Eurodollar Loans hereunder by causing a
domestic or foreign branch or an Affiliate (or an international banking facility
created by such Lender) to make or maintain such Eurodollar Loan; provided,
however, that such Eurodollar Loan shall nonetheless be deemed to have been made
and to be held by such Lender, and the obligations of the Borrower to repay such
Eurodollar Loan shall nevertheless be to such Lender for the account of such
foreign branch, Affiliate or international banking facility.

SECTION 2.6. Notes. Each Lender's Loans under its Commitment shall be
evidenced by a Note payable to the order of such Lender in a maximum principal
amount equal to such Lender's Percentage of the Commitments. The Borrower hereby
irrevocably authorizes each Lender to make (or cause to be made) appropriate
notations on the grid attached to such Lender's Note (or on any continuation of
such grid or otherwise in its records), which notations, if made, shall
evidence, inter alia, the date of, the outstanding principal of, and the
interest rate and Interest Period applicable to the Loans evidenced thereby.
Such notations shall be conclusive and binding on the Borrower absent manifest
error; provided, however, that the failure of any Lender to make any such
notations shall not limit or otherwise affect any Obligations of the Borrower or
any other Obligor.

ARTICLE III

REPAYMENTS, PREPAYMENTS, INTEREST AND FEES

21

SECTION 3.1. Repayments and Prepayments. The Borrower shall repay in full
the unpaid principal amount of each Loan upon the Revolving Credit Termination
Date. Prior thereto, the Borrower:

(a)   may not make any voluntary prepayment of the Loans that
would reduce the outstanding principal balance thereof to less than
$150,000,000;

(b)   shall, on each date when (i) any reduction in or
termination of the Commitments shall become effective or (ii) the
outstanding aggregate principal amount of all Loans exceeds the
Commitments, make a mandatory prepayment in an amount at least equal to
the aggregate, outstanding principal amount of all Loans in excess of the
Commitments as reduced or terminated, and, if such mandatory prepayment
was not sufficient to reduce the unpaid principal balance of the Loans to
an amount that does not exceed the Commitments as reduced or terminated,
such prepayments to be in an amount equal to the excess, if any, of the
aggregate, outstanding principal amount of all Loans over the Commitments
as so reduced or terminated; and

(c)   shall, immediately upon any acceleration of the Stated
Maturity Date of any Loans pursuant to Section 8.2 or Section 8.3, repay
all Loans, unless, pursuant to Section 8.3, only a portion of all Loans is
so accelerated.

Each prepayment of any Loan made pursuant to this Section 3.1 shall be without
premium or penalty, except as may be required by Section 4.4. No voluntary
prepayment of principal of any Loans shall cause a reduction in the Commitments.
All amounts paid pursuant to this Section 3.1 shall be applied first as
prepayments on the Loans.

SECTION 3.2. Interest Provisions. Interest on the outstanding principal
amount of Loans shall accrue and be payable by the Borrower in accordance with
this Section 3.2.

SECTION 3.2.1. Rates. Pursuant to an appropriately delivered Borrowing
Request or Continuation/Conversion Notice, the Borrower may elect that Loans
comprising a Borrowing accrue interest at a rate per annum: (a) on that portion
maintained from time to time as a Base Rate Loan, equal to the Adjusted Base
Rate; (b) on that portion maintained as a Eurodollar Loan, during each Interest
Period applicable thereto, equal to the Adjusted Eurodollar Rate for such
Interest Period, provided that no interest shall accrue on any portion of the
then outstanding Loan (or portion thereof) to the extent the Borrower has
delivered cash collateral to the Collateral Agent securing such Loan (or portion
thereof).

All Eurodollar Loans shall bear interest from and including the first day
of the applicable Interest Period to (but not including) the last day of such
Interest Period at the interest rate determined as applicable to such Eurodollar
Loan.

SECTION 3.2.2. Post-Default Rates. After the date (after giving effect
to any grace period) any principal amount of any Loan is due and payable
(whether on the Stated Maturity Date, upon acceleration or otherwise), or after
any other monetary Obligation of the Borrower shall have become due and payable,
or after the occurrence of any other Event of Default the Borrower shall pay,
but only to the extent permitted by Governmental Rule, interest (after as

22

well as before judgment) at a rate per annum equal to the sum of (x) the
Adjusted Base Rate from time to time in effect for Base Rate Loans plus (y) 2%.

SECTION 3.2.3. Payment Dates. Interest accrued on each Loan shall be
payable, without duplication by the Borrower: (a) on the Stated Maturity Date
therefor; (b) on the date of any payment or prepayment or cash collateralization
in accordance with the proviso in Section 3.2.1, in whole or in part, of
principal outstanding on such Loan; (c) with respect to Base Rate Loans, in
arrears on the last Business Day of each calendar month occurring after the
Effective Date; (d) with respect to Eurodollar Loans, in arrears on the last day
of each applicable Interest Period; (e) with respect to any Base Rate Loans
converted into Eurodollar Loans on a day when interest would not otherwise have
been payable pursuant to clause (c), on the date of such conversion; and (f) on
that portion of any Loans, the Stated Maturity Date of which is accelerated
pursuant to Section 8.2 or Section 8.3, immediately upon such acceleration.
Interest accrued on Loans or other monetary Obligations arising under this
Agreement or any other Loan Document after the date such amount is due and
payable (whether on the Stated Maturity Date, upon acceleration or otherwise) or
after the occurrence shall be payable by the Borrower upon demand.

ARTICLE IV

CERTAIN EURODOLLAR RATE AND OTHER PROVISIONS

SECTION 4.1. Fixed Rate Lending Unlawful. If any Lender shall determine
(which determination shall, upon notice thereof to the Borrower and the Lenders,
be conclusive and binding on the Borrower) that the introduction of or any
change in or in the interpretation of any law makes it unlawful, or any central
bank or other governmental authority asserts that it is unlawful, for such
Lender to make, continue or maintain any Loan as, or to convert any Loan into, a
Eurodollar Loan of a certain type, the obligations of such Lenders to make,
continue, maintain or convert any such Loans shall, upon such determination,
promptly be suspended until such Lender shall notify the Administrative Agent
that the circumstances causing such suspension no longer exist, and all such
Lenders Eurodollar Loans shall automatically convert into Base Rate Loans at the
end of the then-current Interest Periods with respect thereto or sooner, if
required by such law or assertion.

SECTION 4.2. Deposits Unavailable. If the Administrative Agent shall
have determined that (a) Dollar deposits in the relevant amount and for the
relevant Interest Period are not available to the Administrative Agent in the
Administrative Agent's relevant market; or (b) by reason of circumstances
affecting the interbank dollar market generally adequate means do not exist for
ascertaining the interest rate applicable hereunder to Eurodollar Loans of such
type, then, upon notice from the Administrative Agent to the Borrower and the
Lenders, the obligations of all Lenders under Section 2.3 and Section 2.4 to
make or continue any Loans as, or to convert any Loans into, Eurodollar Loans of
such type shall promptly be suspended until the Administrative Agent shall
notify the Borrower and the Lenders that the circumstances causing such
suspension no longer exist; and (c) all Eurodollar Loans shall automatically
convert into Base Rate Loans at the end of the then current Interest Periods
with respect thereto.

23

SECTION 4.3. Increased Eurodollar Loan Costs, etc. The Borrower agrees
to reimburse each Lender for any increase in the cost to such Lender of, or any
reduction in the amount of any sum receivable by such Lender with respect to,
making, continuing or maintaining (or of its obligation to make, continue or
maintain) any Loans as, or of converting (or of its obligation to convert) any
Loans into, Eurodollar Loans. Such Lender shall promptly notify the
Administrative Agent and the Borrower in writing of the occurrence of any such
event, such notice to state, in reasonable detail, the reasons therefor and the
additional amount required fully to compensate such Lender for such increased
cost or reduced amount. Such additional amounts shall be payable by the Borrower
directly to such Lender within five (5) days of its receipt of such notice, and
such notice shall, in the absence of manifest error, be conclusive and binding
on the Borrower. The Borrower will not be responsible for paying any amounts
pursuant to this Section 4.3 accruing more than one hundred eighty (180) days
prior to the receipt by the Borrower of the notice referred to in the preceding
sentence.

SECTION 4.4. Funding Losses. In the event any Lender shall incur any
loss or expense (including any loss or expense incurred by reason of the
liquidation or reemployment of deposits or other funds acquired by such Lender
to make, continue or maintain any portion of the principal amount of any Loan
as, or to convert any portion of the principal amount of any Loan into, a
Eurodollar Loan) as a result of (a) any conversion or repayment or prepayment of
the principal amount of any Eurodollar Loans on a date other than the scheduled
last day of the Interest Period applicable thereto, whether pursuant to Section
3.1 or otherwise; (b) any Loans not being made as Eurodollar Loans in accordance
with the Borrowing Request therefor; or (c) any Loans not being continued as, or
converted into, Eurodollar Loans in accordance with the Continuation/Conversion
Notice therefor, then, upon the written notice of such Lender to the Borrower
(with a copy to the Administrative Agent), the Borrower shall, within five (5)
days of its receipt thereof, pay directly to such Lender such amount as will (in
the reasonable determination of such Lender) reimburse such Lender for such loss
or expense. Such written notice (which shall include calculations in reasonable
detail) shall, in the absence of manifest error, be conclusive and binding on
the Borrower.

SECTION 4.5. Increased Capital Costs. If any change in, or the
introduction, adoption, effectiveness, interpretation, reinterpretation or
phase-in of, any law or regulation, directive, guideline, decision or request
(whether or not having the force of law) of any court, central bank, regulator
or other governmental authority affects or would affect the amount of capital
required or expected to be maintained by any Lender or any Person controlling
such Lender, and such Lender determines (in its sole and absolute discretion)
that the rate of return on its or such controlling Person's capital as a
consequence of its Commitment, or the Loans made by such Lender is reduced to a
level below that which such Lender or such controlling Person could have
achieved but for the occurrence of any such circumstance, then, in any such case
upon notice from time to time by such Lender to the Borrower, the Borrower shall
immediately pay directly to such Lender additional amounts sufficient to
compensate such Lender or such controlling Person for such reduction in rate of
return. A statement of such Lender as to any such additional amount or amounts
(including calculations thereof in reasonable detail) shall, in the absence of
manifest error, be conclusive and binding on the Borrower. In determining such
amount, such Lender may use any method of averaging and attribution that it (in
its sole and absolute discretion) shall deem applicable.

24

SECTION 4.6. Taxes. All payments by the Borrower of principal of, and
interest on, the Loans and all other amounts payable hereunder and under any
other Loan Document shall be made free and clear of and without deduction for
any present or future income, excise, stamp or franchise taxes and other taxes,
fees, duties, withholdings or other charges of any nature whatsoever imposed by
any taxing authority, but excluding franchise taxes and taxes imposed on or
measured by any Lender's net income or receipts (such non-excluded items being
called "TAXES"). In the event that any withholding or deduction from any payment
to be made by the Borrower hereunder is required with respect to any Taxes
pursuant to any applicable Governmental Rule, then the Borrower will (a) pay
directly to the relevant authority the full amount required to be so withheld or
deducted; (b) promptly forward to the Administrative Agent an official receipt
or other documentation satisfactory to the Administrative Agent evidencing such
payment to such authority; and (c) pay to the Administrative Agent for the
account of the Administrative Agent or such Lender such additional amount or
amounts as is necessary to ensure that the net amount actually received by the
Administrative Agent or such Lender will equal the full amount the
Administrative Agent or such Lender would have received had no such withholding
or deduction been required. Moreover, if any Taxes are directly asserted against
the Administrative Agent or any Lender with respect to any payment received by
the Administrative Agent or such Lender hereunder, the Administrative Agent or
such Lender may pay such Taxes and the Borrower will promptly pay such
additional amounts (including any penalties, interest or expenses) as is
necessary in order that the net amount received by such Person after the payment
of such Taxes (including any Taxes on such additional amount) shall equal the
amount such Person would have received had such Taxes not been asserted.

If the Borrower fails to pay any Taxes when due to the appropriate taxing
authority or fails to remit to the Administrative Agent, for the account of the
Administrative Agent, or any Lender, the required receipts or other required
documentary evidence, the Borrower shall indemnify the Administrative Agent, or
such Lender for any incremental Taxes, interest or penalties that may become
payable by the Administrative Agent or such Lender as a result of any such
failure. For purposes of this Section 4.6, a distribution hereunder by the
Administrative Agent or any Lender to or for the account of the Administrative
Agent or any Lender shall be deemed a payment by the Borrower.

Each Lender which is organized under the laws of a jurisdiction outside
the United States shall, (i) on the day of the initial borrowing from each such
Lender hereunder and (ii) from time to time thereafter if requested by the
Borrower or the Administrative Agent, provide the Administrative Agent and the
Borrower with the forms prescribed by the Internal Revenue Service of the United
States certifying as to such Lender's status for purposes of determining
exemption from United States withholding taxes with respect to all payments to
be made to such Lender hereunder and under the other Loan Documents or other
documents satisfactory to such Lender, the Borrower and the Administrative Agent
and indicating that all payments to be made to such Lender hereunder and under
the other Loan Documents are not subject to United States withholding tax.
Unless the Borrower and the Administrative Agent shall have received such forms
or such documents indicating that payments to such Lender hereunder and under
the other Loan Documents are not subject to United States withholding tax, the
Borrower and the Administrative Agent shall be entitled to withhold United
States withholding taxes from such payments at the applicable statutory rate.

25

SECTION 4.7. Payments, Computations, etc. Unless otherwise expressly
provided, all payments by the Borrower to the Lenders pursuant to this
Agreement, the Notes or any other Loan Document shall be made by the Borrower to
the Administrative Agent for the pro rata account of the Lenders entitled to
receive such payment, provided that during the continuance of any Event of
Default all such payments shall be made by the Borrower to the AREP Agent. All
such payments required to be made to the Agents shall be made, without set off,
deduction or counterclaim, not later than 11:00 a.m., New York time, on the date
due, in same day or immediately available funds, to such account as the
applicable Agent shall specify from time to time by notice to the Borrower.
Funds received after that time shall be deemed to have been received on the next
succeeding Business Day. The Administrative Agent shall promptly remit in same
day funds to each Lender its share, if any, of such payments received by the
Administrative Agent for the account of such Lender. All interest and fees shall
be computed on the basis of the actual number of days (including the first day
but excluding the last day) occurring during the period for which such interest
or fee is payable over a year comprised of 360 days (or, in the case of interest
on a Base Rate Loan, 365 days or, if appropriate, 366 days). Whenever any
payment to be made shall otherwise be due on a day which is not a Business Day,
such payment shall (except as otherwise required by clause (c) of the definition
of the term "INTEREST PERIOD" with respect to Eurodollar Loans) be made on the
next succeeding Business Day and such extension of time shall be included in
computing interest and fees, if any, in connection with such payment.

SECTION 4.8. Sharing of Payments. (a) If any Lender shall obtain any
payment or other recovery (whether voluntary, involuntary, by application of set
off or otherwise) on account of any Loan (other than pursuant to the terms of
Sections 4.3, 4.4, 4.5 and 4.6) in excess of its pro rata share of payments then
or therewith obtained by all Lenders, such Lender shall purchase from the other
Lenders such participations in Loans made by them as shall be necessary to cause
such purchasing Lender to share the excess payment or other recovery ratably
with each of them; provided, however, that if all or any portion of the excess
payment or other recovery is thereafter recovered from such purchasing Lender,
the purchase shall be rescinded and each Lender which has sold a participation
to the purchasing Lender shall repay to the purchasing Lender the purchase price
to the ratable extent of such recovery together with an amount equal to such
selling Lender's ratable share (according to the proportion of (a) the amount of
such selling Lender's required repayment to the purchasing Lender to (b) the
total amount so recovered from the purchasing Lender) of any interest or other
amount paid or payable by the purchasing Lender with respect to the total amount
so recovered. The Borrower agrees that any Lender so purchasing a participation
from another Lender pursuant to this Section 4.8 may, to the fullest extent
permitted by Governmental Rule, exercise all its rights of payment (including
pursuant to Section 4.9) with respect to such participation as fully as if such
Lender were the direct creditor of the Borrower in the amount of such
participation. If under any applicable bankruptcy, insolvency or other similar
Governmental Rule, any Lender receives a secured claim in lieu of a set off to
which this Section 4.8 applies, such Lender shall, to the extent practicable,
exercise its rights with respect to such secured claim in a manner consistent
with the rights of the Lenders entitled under this Section 4.8 to share in the
benefits of any recovery on such secured claim.

SECTION 4.9. Set off. Each Lender shall, upon the occurrence of any
Default described in clauses (a) through (d) of Section 8.1.8 with respect to
the Borrower or any Subsidiary or any other Obligor or, with the consent of the
Agents, upon the occurrence of any

26

other Event of Default, have the right to appropriate and apply to the payment
of the Obligations owing to it (whether or not then due) any and all balances,
credits, deposits, accounts or moneys of the Borrower then or thereafter
maintained with such Lender; provided, however, that any such appropriation and
application shall be subject to the provisions of Section 4.8. Each Lender
agrees promptly to notify the Borrower and the Administrative Agent after any
such set off and application made by such Lender; provided, however, that the
failure to give such notice shall not affect the validity of such set off and
application. The rights of each Lender under this Section 4.9 are in addition to
other rights and remedies (including other rights of set off under applicable
Governmental Rule or otherwise) which such Lender may have.

SECTION 4.10. Use of Proceeds. The Borrower will, and will cause each
Subsidiary to, use the proceeds of the Loans for the Borrower's and its
Subsidiaries' general limited liability company, partnership or corporate
purposes, including, without limitation, working capital. No part of the
proceeds of any Loan will be used, whether directly or indirectly, to acquire
any equity security of a class that is registered pursuant to Section 12 of the
Exchange Act or any Margin Stock, in violation of Regulation U.

SECTION 4.11. Maximum Interest. It is the intention of the parties
hereto to conform strictly to applicable usury laws and, anything herein to the
contrary notwithstanding, the obligations of the Borrower to each Lender under
this Agreement shall be subject to the limitation that payments of interest
shall not be required to the extent that receipt thereof would be contrary to
provisions of law applicable to such Lender limiting rates of interest which may
be charged or collected by such Lender. Accordingly, if the transactions
contemplated hereby would be usurious under applicable law (including the
Federal and state laws of the United States of America, or of any other
jurisdiction whose laws may be mandatorily applicable) with respect to a Lender
then, in that event, notwithstanding anything to the contrary in this Agreement,
it is agreed as follows:

(a)   the provisions of this Section 4.11 shall govern and control;

(b)   the aggregate of all consideration which constitutes interest
under applicable law that is contracted for, charged or received under
this Agreement, or under any of the other aforesaid agreements or
otherwise in connection with this Agreement by such Lender shall under no
circumstances exceed the maximum amount of interest allowed by applicable
law (such maximum lawful interest rate, if any, with respect to such
Lender herein called the "HIGHEST LAWFUL RATE"), and any excess shall be
credited to the Borrower by such Lender (or, if such consideration shall
have been paid in full, such excess promptly refunded to the Borrower);

(c)   all sums paid, or agreed to be paid, to such Lender for
the use, forbearance and detention of the indebtedness of the Borrower to
such Lender hereunder shall, to the extent permitted by applicable law, be
amortized, prorated, allocated and spread throughout the full term of such
indebtedness until payment in full so that the actual rate of interest is
uniform throughout the full term thereof; and

(d)   if at any time the interest provided pursuant to Section
3.2 together with any other fees payable pursuant to this Agreement and
deemed interest under applicable

27

law, exceeds that amount which would have accrued at the Highest Lawful
Rate, the amount of interest and any such fees to accrue to such Lender
pursuant to this Agreement shall be limited, notwithstanding anything to
the contrary in this Agreement to that amount which would have accrued at
the Highest Lawful Rate, but any subsequent reductions, as applicable,
shall not reduce the interest to accrue to such Lender pursuant to this
Agreement below the Highest Lawful Rate until the total amount of interest
accrued pursuant to this Agreement and such fees deemed to be interest
equals the amount of interest which would have accrued to such Lender if a
varying rate per annum equal to the interest provided pursuant to Section
3.2 had at all times been in effect, plus the amount of fees which would
have been received but for the effect of this Section 4.11.

ARTICLE V

CONDITIONS TO BORROWING

SECTION 5.1. Initial Borrowing. The obligations of the Lenders to fund the
initial Borrowing shall be subject to the prior or concurrent satisfaction of
each of the conditions precedent set forth in this Section 5.1.

SECTION 5.1.1. Agreement and Notes. Each Agent (or its counsel) shall have
received (a) an assignment and assumption agreement between each lender under
the Original Credit Agreement and Lender hereunder assigning each such lender's
rights and obligations under the Original Credit Agreement to Lender, (b) an
assignment and assumption between Bank of Texas, N.A., as collateral agent under
the Original Credit Agreement, assigning all of its rights and obligations in
such capacity under the Original Credit Agreement and the Loan Documents to the
Collateral Agent; (b) an assignment and assumption between Mizuho Corporate
Bank, Ltd., as administrative agent under the Original Credit Agreement,
assigning all of its rights and obligations under the Original Credit Agreement
and the Loan Documents to the Administrative Agent (provided that any Liens or
other similar rights shall be assigned to Collateral Agent); (c) from each party
hereto, a counterpart of this Agreement, signed on behalf of such party and (d)
a Note for the account of each Lender, duly executed and delivered by the
Borrower.

SECTION 5.1.2. Organic Documents, Resolutions, etc. Each Agent shall have
received from the Borrower and each other Obligor a certificate from an
Authorized Officer of such Obligor dated as of the Closing Date and certifying:

(a)   that attached to each such certificate are (i) a true and
complete copy of all Organic Documents of such Obligor, as in effect on
the date of such certificate and (ii) a true and complete copy of a
certificate from the Governmental Authority of the state of such Obligor's
organization certifying that such Obligor is duly organized and validly
existing in such jurisdiction;

(b)   that attached to such certificate is a true and complete copy
of resolutions then in full force and effect, adopted by the board of
directors or other governing body of such Obligor, authorizing the
execution, delivery and performance of this Agreement, the Notes and each
other Loan Document to be executed by it;

28

(c)   that attached thereto is a true and complete copy of a
certificate from the appropriate Governmental Authority of the state of
organization or formation, as the case may be, of such Obligor as to the
existence and good standing of such Obligor, each dated within thirty (30)
days prior to the date of delivery pursuant hereto, and that such
certificate of incorporation or certificate of formation, as the case may
be, has not been amended since the date of such certified copy; and a true
and complete copy of a certificate from the appropriate Governmental
Authority of each state (without duplication) as to the good standing of
and payment of franchise taxes by the Borrower or each such Obligor, if
applicable, dated within thirty (30) days prior to the date of delivery
pursuant hereto; and

(d)   as to the incumbency and signatures of those of its officers
authorized to act with respect to each Loan Document executed by it,

upon which certificate each Lender may conclusively rely until it shall
have received a further certificate of the Secretary of the Borrower or such
other Obligor canceling or amending such prior certificate.

SECTION 5.1.3. Required Closing Date Hedges. Each Agent shall be satisfied
that Borrower has in place all Required Closing Date Hedges.

SECTION 5.1.4. Affirmation of Obligations. Each Agent shall have received
from each Obligor an Affirmation of Obligations.

SECTION 5.1.5. Pledge Agreements; Certificates and Blank Powers.

(a)   The Collateral Agent shall have received a copy of the Pledge
Agreement executed and delivered by NEG Holding dated as of the Effective
Date, together with the following:

(i)   confirmation and evidence satisfactory to the Collateral
Agent that the security interest in such uncertificated Equity
Interest of Borrower has been transferred to and perfected by the
Collateral Agent for the benefit of the Lenders by control in
accordance with the Uniform Commercial Code, as in effect in the
State of New York; and

(ii)  all documents and instruments, including Uniform
Commercial Code Financing Statements (Form UCC-1) and an amendment
thereto reflecting the new Collateral Agent as secured party,
required by Governmental Rule or reasonably requested by the
Administrative Agent or the Collateral Agent, to be filed,
registered or recorded to create or perfect the Liens intended to be
created under the Pledge Agreement.

(b)   The Collateral Agent shall have received a copy of the Pledge
Agreements executed and delivered by NEG, dated as of the Effective Date,
together with the following:

29

(i)   confirmation and evidence satisfactory to the
Administrative Agent or the Collateral Agent that the security
interest in such uncertificated Equity Interest of NEG Holding have
been transferred to and perfected by the Collateral Agent for the
benefit of the Lenders by control in accordance with the Uniform
Commercial Code, as in effect in the State of New York; and

(ii)  all documents and instruments, including Uniform
Commercial Code Financing Statements (Form UCC-1) and an amendment
thereto reflecting the new Collateral Agent as secured party,
required by Governmental Rule or reasonably requested by the
Administrative Agent or the Collateral Agent, to be filed,
registered or recorded to create or perfect the Liens intended to be
created under the Pledge Agreement.

(c)   The Collateral Agent shall have received a copy of the Pledge
Agreement executed and delivered by the Borrower, dated as of the
Effective Date and amended as of April 5, 2004, together with the
following:

(i)   confirmation and evidence satisfactory to the
Administrative Agent or the Collateral Agent that the security
interest in such uncertificated Equity Interests of Shana, NGX GP
and NGX LP have been transferred to and perfected by the Collateral
Agent for the benefit of the Lenders by control in accordance with
the Uniform Commercial Code, as in effect in the State of New York;
and

(ii)  all documents and instruments, including Uniform
Commercial Code Financing Statements (Form UCC-1) and an amendment
thereto reflecting the new Collateral Agent as secured party,
required by Governmental Rule or reasonably requested by the
Administrative Agent or the Collateral Agent, to be filed,
registered or recorded to create or perfect the Liens intended to be
created under the Pledge Agreement.

(d)   The Collateral Agent shall have received a copy of the Pledge
Agreement executed and delivered by NGX GP and NGX LP dated as of April 5,
2004, together with the following:

(i)   confirmation and evidence satisfactory to the
Administrative Agent or the Collateral Agent that the security
interest in such uncertificated Equity Interests of NGX Energy have
been transferred to and perfected by the Collateral Agent for the
benefit of the Lenders by control in accordance with the Uniform
Commercial Code, as in effect in the State of New York; and

(ii)  all documents and instruments, including Uniform
Commercial Code Financing Statements (Form UCC-1) and an amendment
thereto reflecting the new Collateral Agent as secured party,
required by Governmental Rule or reasonably requested by the
Administrative Agent or the

30

Collateral Agent, to be filed, registered or recorded to create or
perfect the Liens intended to be created under the Pledge Agreement.

SECTION 5.1.6. Security Agreements and UCC Filings. The Collateral Agent
shall have received a copy of each Security Agreement executed and delivered by,
the Borrower and each of its Subsidiaries, together with the following:

(a)   executed or authorized Uniform Commercial Code Financing
Statements (Form UCC-1) and an amendment thereto reflecting the new
Collateral Agent as secured party, and such evidence of filing or
arrangements for filing as may be acceptable to the Administrative Agent
or the Collateral Agent, naming such Obligor, as applicable, as the debtor
and the Collateral Agent as the secured party, or other similar
instruments or documents, filed or to be under the Uniform Commercial Code
of all jurisdictions as may be necessary or, in the opinion of the
Administrative Agent or the Collateral Agent, desirable to perfect the
security interest of the Collateral Agent pursuant to such Security
Agreement; and

(b)   executed or authorized copies of proper Uniform Commercial
Code Form UCC-3 termination statements, if any, necessary to release all
Liens and other rights of any Person in any Collateral described in the
Security Agreement previously granted by any Person, and together with
such other Uniform Commercial Code Form UCC-3 termination statements as
the Administrative Agent or the Collateral Agent may reasonably request.

SECTION 5.1.7. Mortgages. The Collateral Agent shall have received
counterparts of each of the following, in form acceptable to the Collateral
Agent and duly executed by the Borrower and any other party thereto named below:

(a)   an assignment of each Mortgage to the Collateral Agent from
Bank of Texas, N.A., as collateral agent under the Original Credit
Agreement, and

(b)   a restatement of each Mortgage made by the Borrower, the
Lender and the Collateral Agent to refer to this Amended and Restated
Credit Agreement and to include as additional secured indebtedness the
Hedging Obligations.

Either or both of the foregoing documents shall also reflect that the Lenders'
rights under such restated Mortgage have been collaterally assigned by AREP Oil
& Gas to the AREP Agent.

SECTION 5.1.8. Priority; Security Interest. The Collateral shall be free
and clear of all Liens, except Liens permitted by Section 7.2.3. All filings,
notices, recordings and other action necessary to perfect the Liens in the
Collateral shall have been made, given or accomplished or arrangements for the
completion thereof satisfactory to the Collateral Agent and its counsel shall
have been made and all filing fees and other expenses related to such actions
either have been paid in full or arrangements have been made for their payment
in full which are satisfactory to the Collateral Agent.

SECTION 5.1.9. UCC and Lien Searches. The Collateral Agent shall have
received (i) the UCC Searches, all dated reasonably close to the Closing Date,
in the discretion of the

31

Collateral Agent and in form and substance satisfactory to the Collateral Agent
and (ii) evidence reasonably satisfactory to the Collateral Agent that the Liens
indicated by the financing statements in such UCC Searches are permitted by
Section 7.2.3 or have been released.

SECTION 5.1.10. Satisfactory Review and Legal Form. All legal matters in
connection with this Agreement and the consummation of the transaction
contemplated hereby and by the other Loan Documents shall be approved by each
Agent and its legal counsel, and there shall have been furnished to each Agent
by the Borrower, at the Borrower's expense, such agreements, opinions of
counsel, title opinions, and other records and information, in form, substance,
scope and methodology satisfactory to each Agent in its sole discretion, as it
may reasonably have requested for that purpose.

SECTION 5.1.11. Other Documents. Each Agent shall have received such other
legal opinions, instruments and documents as any of the Agents or their counsel
may have reasonably requested.

SECTION 5.2. All Borrowings. The obligation of each Lender to fund any
Loan on the occasion of any Borrowing (including the initial Borrowing) shall be
subject to the satisfaction of each of the conditions precedent set forth in
this Section 5.2.

SECTION 5.2.1. Representations and Warranties, No Default. Both before and
after giving effect to any Borrowing (but, if any Default of the nature referred
to in Section 8.1.4 shall have occurred with respect to any other Indebtedness,
without giving effect to the application, directly or indirectly, of the
proceeds thereof), the following statements shall be true and correct:

(a)   the representations and warranties of the Borrower and each
other Obligor set forth in the Loan Documents shall be true and correct in
all material respects with the same effect as if then made (unless stated
to relate solely to an earlier date, in which case such representations
and warranties shall be true and correct as of such earlier date); and

(b)   no Default shall have occurred and be continuing.

SECTION 5.2.2. Borrowing Request. The Collateral Agent shall have received
a Borrowing Request for such Borrowing. The delivery of a Borrowing Request and
the acceptance by the Borrower of the proceeds of such Borrowing shall
constitute a representation and warranty by the Borrower that, on the date of
such Borrowing (both immediately before and after giving effect to such
Borrowing and the application of the proceeds thereof), all representations and
warranties of the Borrower and each other Obligor set forth in the Loan
Documents are true and correct with the same effect as if then made (unless
stated to relate solely to an earlier date, in which case such representations
and warranties shall be true and correct as of such earlier date).

SECTION 5.2.3. Satisfactory Legal Form. All documents executed or
submitted pursuant hereto by or on behalf of any Obligor shall be satisfactory
in form and substance to each Agent and its counsel, and each Agent and its
counsel shall have received all information, approvals, opinions, title
opinions, documents or instruments as either Agent or its counsel may reasonably
request.

32

ARTICLE VI

REPRESENTATIONS AND WARRANTIES

In order to induce the Agents and the Lenders to enter into this Agreement
and to make Loans hereunder, the Borrower represents and warrants unto the
Agents and the Lenders as set forth in this Article VI.

SECTION 6.1. Existence, etc. Each Obligor is a corporation, partnership or
limited liability company validly organized and existing and in good standing
under the laws of the State of its organization, incorporation or formation.
Each Obligor is duly qualified to do business and is in good standing as a
foreign entity in each jurisdiction where the nature of its business requires
such qualification. Each Obligor has full power and authority, and holds all
requisite governmental licenses, permits and other approvals, (i) to enter into
and perform its Obligations under this Agreement, the Notes and each other Loan
Document to which it is a party, and (ii) to own and hold under lease its
property and to conduct its business substantially as currently conducted by it.

SECTION 6.2. Due Authorization. Each Obligor has all necessary power and
authority to execute, deliver and perform its obligations under the Loan
Documents to which it is a party; and the execution, delivery and performance by
each Obligor of the Loan Documents to which it is a party, have been duly
authorized by all necessary action on its part; and the Loan Documents
constitute the legal, valid and binding obligations of each Obligor thereto,
enforceable in accordance with their terms, except to the extent that
enforcement may be subject to any applicable bankruptcy, insolvency or similar
laws generally affecting the enforcement of creditors' rights.

SECTION 6.3. Non-Contravention. Neither the execution and delivery of the
Loan Documents, nor compliance with the terms and provisions hereof will
conflict with or result in a breach of, or require any consent which has not
been obtained as of the Effective Date under, the respective Organic Documents
of any Obligor, or any Governmental Rule or any material agreement or instrument
to which any Obligor is a party or by which it is bound or to which it or its
Properties are subject, or constitute a default under any such agreement or
instrument, or result in the creation or imposition of any Lien upon any of the
revenues or assets of any Obligor pursuant to the terms of any such agreement or
instrument other than the Liens created by the Loan Documents.

SECTION 6.4. Government Approval, Regulation, etc. Except for filings
necessary to perfect Liens created under the Loan Documents, no Governmental
Approvals or third party consents are necessary for the execution, delivery or
performance by any Obligor of the Loan Documents or for the validity or
enforceability thereof.

SECTION 6.5. No Material Adverse Change. Since December 31, 2004,

(a)   there has been no change or event which could reasonably be
expected to have a Material Adverse Effect, nor

33

(b)   neither the business nor the Property of the Borrower, any
Subsidiary or any other Obligor has been materially and adversely affected
as a result of any fire, explosion, earthquake, flood, drought, windstorm,
accident, strike or other labor disturbance, embargo, requisition or
taking of Property or cancellation of contracts, permits or concessions by
any Governmental Authority, riot, activities of armed forces or acts of
God or of any public enemy.

SECTION 6.6. Litigation, Labor Controversies, etc. There is no pending or,
to the Borrower's knowledge, threatened litigation, action, proceeding, or labor
controversy affecting the Borrower or any Subsidiary, or any of their respective
properties, businesses, assets or revenues, which could reasonably be expected
to have a Material Adverse Effect, except as disclosed in Item 6.7 of the
Disclosure Schedule. There are no outstanding judgments against the Borrower or
any Subsidiary.

SECTION 6.7. Subsidiaries. On the Closing Date, neither the Borrower nor
any other Obligor has any Subsidiaries except those Subsidiaries identified in
Item 6.8 of the Disclosure Schedule.

SECTION 6.8. Location of Business and Offices. The Borrower's state of
organization, state identification number, principal place of business and chief
executive offices are located at the address stated on the signature page of
this Agreement or as otherwise disclosed in writing to the Collateral Agent and
its Federal Taxpayer Identification Number is 75-2958833. The state of
organization, organizational number, principal place of business, chief
executive office and Federal Tax Payer Identification Number of each Subsidiary
are described in Item 6.8 of the Disclosure Schedule or as otherwise disclosed
in writing to each Agent.

SECTION 6.9. Properties, etc.

(a)   Each of the Borrower and its Subsidiaries has good and
defensible title to, or valid leasehold interests in, its Mortgaged
Properties and its other material (individually or in the aggregate)
Properties, free and clear of all Liens, and free and clear of all
limitations and restrictions on, and consent requirements for, disposition
or transfer, except as permitted pursuant to Section 7.2.3. Other than
those Subsidiaries of the Borrower that are executing a Mortgage pursuant
to this Agreement, no Subsidiary of the Borrower owns any real property.
Except as set forth in Item 6.10 of the Disclosure Schedule, after giving
full effect to the Permitted Liens, the Borrower owns the net interests in
production attributable to the Hydrocarbon Interests that are Collateral
and the ownership of such Properties shall not obligate the Borrower to
bear the costs and expenses relating to the maintenance, development and
operations of each such Property in an amount in excess of the working
interest of each such Property.

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

34

(c)   The rights, Mortgaged Properties and other assets currently
owned, leased or licensed by the Borrower and its Subsidiaries, including,
without limitation, all easements and rights of way, include all rights,
Properties and other assets necessary to permit the Borrower and its
Subsidiaries to conduct their business in all material respects in the
same manner as its business has been conducted prior to the Closing Date.

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

SECTION 6.10. Taxes. The Borrower and each of its Subsidiaries has filed
all tax returns and reports required by Governmental Rule to have been filed by
it and has paid all taxes and governmental charges thereby shown to be owing,
except any such taxes or charges which are being diligently contested in good
faith by appropriate proceedings and for which adequate reserves in accordance
with GAAP shall have been set aside on its books. The Borrower knows of no
pending investigation of the Borrower or any Subsidiary by any taxing authority
or of any pending but unassessed tax liability of the Borrower or any
Subsidiary.

SECTION 6.11. Investment Company Act. Neither the Borrower nor any
Subsidiary is an "investment company" within the meaning of and subject to
regulation under the Investment Company Act of 1940, as amended.

SECTION 6.12. Public Utility Holding Company Act. Neither the Borrower nor
any Subsidiary is a "holding company," or a "subsidiary company" of a "holding
company," or an "affiliate" of a "holding company" or of a "subsidiary company"
of a "holding company," or a "public utility" within the meaning of the Public
Utility Holding Company Act of 1935, as amended.

SECTION 6.13. Environmental Warranties.

(a)   The Borrower and each Subsidiary and all of their respective
Properties and operations are in compliance in all respects with all
Environmental Laws, except as could not reasonably be expected to have a
Material Adverse Effect; neither the Borrower nor any Subsidiary is aware
of, and none of the Borrower or any of its Subsidiaries has received
notice of, any past, present or future conditions, events, activities,
practices or incidents which may interfere with or prevent the compliance
or continued compliance of any of them with all Environmental Laws;

(b)   There have been no past, and there are no pending or, to the
knowledge of the Borrower, threatened, (i) claims or complaints, notices
or requests for information received by the Borrower or any of its
Subsidiaries with respect to any alleged violation of any Environmental
Law by the Borrower or any of its Affiliates, or (ii) complaints, notices
or inquiries to the Borrower or any of its Affiliates regarding potential
liability under any Environmental Law;

(c)   Except as could not reasonably be expected to have a Material
Adverse Effect, there have been no Releases of Hazardous Materials at, on
or under any Property now or previously owned or leased by the Borrower or
any of its Subsidiaries;

35

(d)   Except where the failure to take such actions would not have a
Material Adverse Effect: (i) all notices, permits, licenses or similar
authorizations, if any, required to be obtained or filed in connection
with the operation or use of any and all Property of the Borrower and each
Subsidiary, including without limitation past or present treatment,
storage, disposal or release of a Hazardous Material into the environment,
have been duly obtained or filed, and (ii) the Borrower and each
Subsidiary are in compliance with the terms and conditions of all such
notices, permits, licenses and similar authorizations;

(e)   no Property now or previously owned or leased by the Borrower
or any of its Subsidiaries is listed or proposed for listing (with respect
to owned Property only) on the National Priorities List pursuant to
CERCLA, on the CERCLIS or on any similar state list of sites requiring
investigation or clean-up;

(f)   there are no underground storage tanks, active or abandoned,
including petroleum storage tanks, on or under any Property now or
previously owned or leased by the Borrower or any of its Subsidiaries;

(g)   neither the Borrower nor any Subsidiary of the Borrower has
directly transported or directly arranged for the transportation of any
Hazardous Material to any location which is listed or proposed for listing
on the National Priorities List pursuant to CERCLA, on the CERCLIS or 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 the Borrower or such Subsidiary thereof for any remedial work,
damage to natural resources or personal injury, including claims under
CERCLA;

(h)   Except as could not reasonably be expected to have a Material
Adverse Effect, there are no polychlorinated biphenyls or friable asbestos
present at any Property now or previously owned or leased by the Borrower
or any Subsidiary of the Borrower; and

(i)   Except as could not reasonably be expected to have a Material
Adverse Effect, to the knowledge of the Borrower, no conditions exist at,
on or under any Property now or previously owned or leased by the Borrower
which, with the passage of time, or the giving of notice or both, would
give rise to liability under any Environmental Law.

SECTION 6.14. Regulation U. The Borrower is not engaged in the business of
extending credit for the purpose of purchasing or carrying Margin Stock, and no
proceeds of any Loans will be used for a purpose that violates, or would be
inconsistent with, Regulation U.

SECTION 6.15. Accuracy of Information. All factual information heretofore
or contemporaneously furnished by or on behalf of the Borrower or any other
Obligor in writing to the Collateral Agent, the Collateral Agent or any Lender
for purposes of or in connection with this Agreement, any Loan Document or any
transaction contemplated hereby or thereby is, and all other such factual
information hereafter furnished by or on behalf of any Obligor to the Collateral
Agent, the Collateral Agent or any Lender will be, true and accurate in every
material respect on the date as of which such information is dated or certified
and as of the date of execution and delivery of this Agreement by to the
Collateral Agent, the Collateral Agent or such

36

Lender, and such information is not, or shall not be, as the case may be,
incomplete by omitting to state any material fact necessary to make such
information not misleading. There is no fact existing with respect to the
Borrower or any Subsidiary that could reasonably be expected to have a Material
Adverse Effect and which has not been set forth in this Agreement or the other
documents, certificates and statements furnished to each Agent by or on behalf
of the Borrower or any Subsidiary prior to, or on, the Closing Date in
connection with the transactions contemplated hereby.

SECTION 6.16. Defaults. Neither the Borrower nor any Subsidiary is in
default, nor has any event or circumstance occurred which, but for the
expiration of any applicable grace period or the giving of notice, or both,
would constitute a default, under any material agreement or instrument to which
the Borrower or any Subsidiary is a party or by which the Borrower or any
Subsidiary is bound in any material respect. No Default hereunder has occurred
and is continuing.

SECTION 6.17. Compliance with Law. Neither the Borrower nor any Subsidiary
has violated any Governmental Rule or failed to obtain any Governmental Approval
necessary for the ownership of any of its Properties or the conduct of its
business which could reasonably be expected to have a Material Adverse Effect.
The Oil and Gas Properties (and properties unitized therewith) have been
maintained, operated and developed in a good and workmanlike manner and in
conformity with all applicable Governmental Rules of all Governmental
Authorities having jurisdiction and in conformity with the provisions of all
leases, subleases or other contracts comprising a part of the Hydrocarbon
Interests and other contracts and agreements forming a part of the Oil and Gas
Properties, except to the extent the same could not reasonably be expected to
have a Material Adverse Effect.

SECTION 6.18. Direct Benefit. The Borrowings hereunder are or will be, as
applicable, for the direct benefit of the Borrower. The Borrower and each of the
Guarantors are engaged as an integrated group in the business of oil and gas
exploration and related fields, and any benefits to any such Obligor is a
benefit to all of them, both directly or indirectly, inasmuch as the successful
operation and condition of any such Obligor is dependent upon the continued
successful performance of the functions of the integrated group as a whole.

SECTION 6.19. Use of Proceeds. The proceeds of the Loans shall be used in
accordance with the purposes set forth in Section 4.10.

SECTION 6.20. Priority; Security Matters. The Obligations are and shall be
at all times secured by Liens in all Collateral to the extent perfection has or
will occur by the filing of a UCC financing statement in the States of Texas and
Oklahoma, if applicable, the filing of a Mortgage in real property records of
the parish or county in which such real property or fixtures are located (or
adjacent in the case of properties located on the Outer Continental Shelf), or
by possession, and, except for Liens permitted by Section 7.2.3, all such Liens
shall be first priority Liens, subject only to Permitted Liens.

ARTICLE VII

COVENANTS

37

SECTION 7.1. Affirmative Covenants. The Borrower agrees with Collateral
Agent, the Collateral Agent and the Lenders that, until all Commitments have
terminated and all Obligations have been paid and performed in full, the
Borrower will, and will cause its Subsidiaries to, perform the obligations set
forth in this Section 7.1.

SECTION 7.1.1. Notices, etc. The Borrower will furnish, or will cause to
be furnished, to the Agents for distribution to the Lenders, copies of the
following notices and information:

(a)   Default. Immediately upon the Borrower learning of the
occurrence of any Default or anything that could reasonably be expected to
have a Material Adverse Effect, a statement of an Authorized Officer of
the Borrower setting forth details of such Default or Material Adverse
Effect and the action that the Borrower or such other Obligor has taken
and proposes to take with respect thereto.

(b)   Litigation. Promptly upon the Borrower learning of (x) the
occurrence of any adverse development with respect to any litigation,
action, proceeding, or labor controversy described in Section 6.6 or (y)
the commencement of any labor controversy, litigation, action, proceeding
of the type described in Section 6.6, notice thereof and copies of all
documentation relating thereto.

(c)   Notice of Dispositions of Properties.

(i)   Promptly upon the disposition of any Oil and Gas
Properties or Equity Interests pursuant to Section 7.2.10 or
otherwise, and in any event within five (5) Business Days of such
disposition, the Borrower shall provide each Agent with written
notice of such disposition, setting forth a description of the Oil
and Gas Properties or Equity Interests so disposed of and the
proceeds received in connection with such disposition.

(ii)  Prior to the disposition of any Oil and Gas Properties
pursuant to Section 7.2.10(c), the Borrower shall give each Agent
written notice at least 10 days prior to the date of such
disposition which sets out the proceeds to be received by the
Borrower or any of its Subsidiaries from such disposition and
certifies that no Default exists or would result from such
disposition.

(d)   Notice of Material Adverse Change. As soon as possible and in
any event within five (5) days after the occurrence thereof, written
notice of any matter that could reasonably be expected to have a Material
Adverse Effect.

(e)   Other. Such other information respecting the condition or
operations, financial or otherwise, of the Borrower or any of its
Subsidiaries as any Agent or any Lender may from time to time reasonably
request, including, without limitation, such information as may be
required by Lender in order to comply with its obligations as borrower
under the AREP O&G Facility.

SECTION 7.1.2. Compliance with Laws, Maintenance of Existence, etc. The
Borrower will and will cause each of its Subsidiaries to:

38

(a)   comply in all material respects with all applicable laws,
rules, regulations and orders;

(b)   do all things necessary and proper to maintain and preserve
its respective corporate or other existence and franchises and privileges
in the jurisdiction of its formation and qualify and remain qualified as a
foreign entity authorized to do business in each jurisdiction in which it
conducts business; and

(c)   pay, before the same become delinquent, all taxes, assessments
and governmental charges imposed upon it or upon its Property except to
the extent being diligently contested in good faith by appropriate
proceedings and for which adequate reserves in accordance with GAAP shall
have been set aside on its books. The Borrower will conduct, and will
cause each Subsidiary to conduct, its business in an orderly and efficient
manner in accordance with good business practices.

SECTION 7.1.3. Maintenance of Properties. The Borrower will, and will
cause each of its Subsidiaries to, maintain, preserve, protect and keep its and
their respective Properties in good repair, working order and condition, and
make necessary and proper repairs, renewals and replacements so that its
business carried on in connection therewith may be properly conducted at all
times and otherwise do all other things necessary to keep unimpaired, except for
Liens permitted in Section 7.2.3, its rights with respect to its Oil and Gas
Properties and prevent any forfeiture thereof or a default thereunder, except to
the extent a portion of such Oil and Gas Properties is no longer capable of
producing Hydrocarbons in economically reasonable amounts and except for
dispositions of Property permitted by Section 7.2.10. The Borrower will, and
will cause each of its Subsidiaries to, operate its and their respective Oil and
Gas Properties or cause or make reasonable efforts to cause such Oil and Gas
Properties to be operated in a reasonable and efficient manner in accordance
with the practices of the industry and in compliance with all applicable
contracts and agreements and in compliance in all material respects with all
applicable laws, rules, regulations and orders of any applicable Governmental
Authority.

SECTION 7.1.4. Insurance.

(a)   The Borrower will, and will cause each of its Subsidiaries to,
maintain or cause to be maintained with responsible insurance companies
insurance with respect to its and its Subsidiaries' Properties and
business (including business interruption insurance) against such
casualties and contingencies and of such types and in such amounts as is
customary in the case of similar businesses and will, upon request of
either Agent, furnish to the Agents and the Lenders at reasonable
intervals a certificate of an Authorized Officer of the Borrower setting
forth the nature and extent of all insurance maintained by the Borrower
and its Subsidiaries in accordance with this Section 7.1.4(a). Each
insurance policy covering Collateral shall provide that such policy will
not be canceled or reduced without thirty (30) days' prior written notice
to the Collateral Agent. In the event an Event of Default occurs and
continues for a period of thirty (30) consecutive days, the Borrower will
cause, within five (5) days, each insurance policy covering Collateral to
name the Collateral Agent as additional insured and loss payee for the
benefit of itself, the Agents and the Lenders.

39

(b)   NEG will maintain or cause to be maintained with responsible
insurance companies insurance with respect to its and its Subsidiaries'
Properties and business (including business interruption insurance)
relating to the Borrower against such casualties and contingencies and of
such types and in such amounts as is customary in the case of similar
businesses and will, upon request of either Agent, furnish to each Lender
and each Agent at reasonable intervals a certificate of an Authorized
Officer of NEG setting forth the nature and extent of all insurance
maintained by NEG and its Subsidiaries in accordance with this Section
7.1.4(b).

SECTION 7.1.5. Books and Records. The Borrower will, and will cause each
of its Subsidiaries to, keep books and records which accurately reflect all of
its business affairs and transactions and permit the Administrative Agent, the
Collateral Agent and each Lender or any of their respective representatives, at
reasonable times and intervals, to visit all of its offices, to discuss its
financial matters with its officers and independent public accountant (and the
Borrower hereby authorizes such independent public accountant to discuss the
Borrower's and its Subsidiaries financial matters with each Lender or its
representatives whether or not any representative of the Borrower is present)
and to examine (and, at the expense of the Borrower, photocopy extracts from)
any of its books or other corporate or organizational records. The Borrower
shall pay any fees of such independent public accountant incurred in connection
with the Administrative Agent's, the Collateral Agents or any Lender's exercise
of its rights pursuant to this Section 7.1.5.

SECTION 7.1.6. Delivery of Security Documents; Perfection and Protection
of Security Interests and Liens; Additional Subsidiaries.

(a)   The Borrower agrees to deliver and to cause its Subsidiaries
to deliver, to further secure the Obligations whenever requested by the
Collateral Agent, any Security Documents, financing statements,
continuation statements, extension agreements and other similar agreements
or instruments (in addition to those delivered on the Effective Date) in
form and substance satisfactory to the Collateral Agent for the purpose of
granting, confirming and perfecting first and prior liens or security
interests in any real or personal Property which is at such time
Collateral or that was intended to be Collateral pursuant to any Loan
Document previously executed and not then released by the Collateral
Agent; or Equity Interests in each Subsidiary of the Borrower; provided,
however, that the Borrower and its Subsidiaries shall at all times
maintain in effect in favor of the Collateral Agent such Mortgages as are
necessary to grant, confirm and perfect first and prior liens or security
interests in at least ninety percent (90%) of the net present value of the
Oil and Gas Properties of the Borrower and its Subsidiaries; and provided,
further, however, that in the event that the Hydrocarbon Interests on
which the Collateral Agent has a first priority perfected Lien shall
constitute less than ninety percent (90%) of the net present value of the
Oil and Gas Properties of the Borrower and its Subsidiaries, the Borrower
shall promptly notify the Administrative Agent and the Collateral Agent
and execute or cause to be executed additional Mortgages necessary to
increase such percentage to at least ninety percent (90%) Oil and Gas
Properties of the Borrower and its Subsidiaries, as determined by the
Collateral Agent in its reasonable discretion. The Borrower also agrees to
deliver, and to cause its Subsidiaries to deliver, whenever requested by
the Collateral Agent, favorable title opinions (in addition to those

40

required to be delivered under Article V) from legal counsel acceptable to
the Collateral Agent, or favorable title insurance policies from insurers
acceptable to the Collateral Agent with respect to any Collateral as to
which the Collateral Agent believes that the record ownership of such
Collateral, or the status of Liens securing Obligations, is in question,
based upon abstract or record examinations to date acceptable to the
Collateral Agent, and (i) stating that the Borrower has good and
marketable title to such properties and interest, free and clear of all
Liens except for Liens permitted pursuant to Section 7.2.3; (ii)
confirming that such properties and interest are subject to Security
Documents securing Obligations that constitute and create legal, valid and
duly perfected Liens to such properties and interests and the proceeds
thereof, and (iii) covering such other matters as the Collateral Agent may
request.

(b)   The Borrower will and will cause its Subsidiaries to from time
to time deliver or cause to be delivered to the Collateral Agent any
financing statements, continuation statements, extension agreements and
other documents, properly completed and executed (and acknowledged when
required) by the relevant Person, in form and substance satisfactory to
the Collateral Agent, which the Collateral Agent requests for the purpose
of perfecting, confirming or protecting any Liens or other rights in
Collateral.

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

(d)   The Borrower will furnish to the Collateral Agent promptly,
and in any event within thirty (30) days upon becoming aware of the
following changes, written notice of any change (i) in any Subsidiary's
corporate name or in any trade name used to identify such Subsidiary in
the conduct of its business or in the ownership of its Properties, (ii) in
the location of any Subsidiary's jurisdiction of organization, (iii) in
any Subsidiary's identity or corporate structure, and (iv) in any
Obligor's Federal Taxpayer Identification Number, including, without
limitation, information regarding the time of such relocation, the items
being relocated and the intended new locality of such items. Borrower also
agrees to provide to the Collateral Agent, from time to time upon
reasonable request of the Collateral Agent, information which is in the
possession of the Borrower or its Subsidiaries or otherwise reasonably
obtainable by any of them, reasonably satisfactory to the Collateral Agent
as to the perfection and priority of the Liens created or intended to be
created by the Security Documents. The Security Documents shall remain in
effect at all times unless otherwise released pursuant to the terms of
this Agreement.

(e)   If any additional Subsidiary of the Borrower is formed or
acquired after the Closing Date, the Borrower will notify the Agents and
the Lenders thereof. The

41

Borrower will (i) cause any Subsidiary to execute a Guaranty within 30
days after such Subsidiary is formed or acquired and (ii) pledge, or cause
any Subsidiary to pledge, all Equity Interests in such newly determined
Subsidiary pursuant to a Pledge Agreement.

(f)   The Original Credit Agreement was secured by a pledge and
security interest heretofore made by Lender covering its Equity Interests
in NEG Holding. The parties acknowledge and agree that such pledge and
security interest has terminated and is not collaterally assigned or
pledged to Collateral Agent.

SECTION 7.1.7. Use of Proceeds. The Borrower and its Subsidiaries will use
the proceeds of the Loans only in accordance with the purposes set forth in
Section 4.10.

SECTION 7.1.8. Title to Oil and Gas Properties. The Borrower shall, and
shall cause each Subsidiary to, maintain good and defensible title to its
material (individually or in the aggregate) Oil and Gas Properties, including,
the Mortgaged Properties, if any, and to do all things reasonably necessary to
cure any material title defects that are not Liens permitted by Section 7.2.3 of
which the Borrower or any Subsidiary has knowledge or has been provided notice.

SECTION 7.2. Negative Covenants. The Borrower agrees with each Agent and
each Lender that, until all Commitments have terminated and all Obligations have
been paid and performed in full, the Borrower will, and will cause its
Subsidiaries to, perform the obligations set forth in this Section 7.2.

SECTION 7.2.1. Business Activities. The Borrower will not, and will not
permit any of its Subsidiaries to, engage in any business activity except the
Oil and Gas Business.

SECTION 7.2.2. Indebtedness. The Borrower will not, and will not permit
any of its Subsidiaries to, create, incur, assume or suffer to exist or
otherwise become or be liable with respect to any Indebtedness other than the
following, without duplication:

(a)   Indebtedness with respect to the Loans and other Obligations
(including Obligations under Hedging Agreements);

(b)   Indebtedness in an aggregate principal amount not to exceed
$5,000,000 at any time outstanding which is incurred by the Borrower or
any of its Subsidiaries to a vendor of any assets to finance the
acquisition of such assets;

(c)   unsecured accounts payable by the Borrower incurred in the
ordinary course of business (including open accounts extended by suppliers
on normal trade terms in connection with purchases of goods and services,
but excluding Indebtedness incurred through the borrowing of money or
Contingent Liabilities) which are not more than 90 days past due;

(d)   Indebtedness with respect to Capitalized Lease Liabilities in
an aggregate principal amount not to exceed $5,000,000 at any time
outstanding;

42

(e)   Indebtedness of the Borrower with respect to Hedging
Obligations; provided, that (i) such Hedging Obligations with respect to
commodities (including oil and gas) do not exceed volumes with respect to
any year in excess of eighty percent (80%) of the projected production
attributable to the Borrower's then proved developed producing Oil and Gas
Properties with respect to such year, and are not with respect to forward
sales of production, and are included to protect the Borrower against
price fluctuations and are not entered into for the purpose of speculative
investments; (ii) any Hedging Obligations with respect to interest rates,
are entered into with the purpose and effect of fixing and capping
interest rates on a principal amount of indebtedness of the Borrower that
is accruing interest at a variable rate; provided that (A) the floating
rate index of each such contract generally matches the index used to
determine the floating rates of interest on the corresponding indebtedness
of the Borrower to be hedged by such contract; and (B) the Borrower shall
not establish or maintain any margin accounts with respect to such
contracts; and (iii) in each case, the underlying contracts are with any
counterparty (or the parent entity thereof) who at the time the contract
is made has long-term obligations rated BBB+ or better by Standard &
Poor's Ratings Group or Baa1 or better by Moody's Investors Services,
Inc.;

(f)   Subordinated Debt of the Borrower; and

(g)   Indebtedness in respect of any letters of credit issued for
the benefit of Borrower or any of its Subsidiaries which do not in the
aggregate (taking into account all such Indebtedness of all Obligors)
exceed $1,000,000 at any one time outstanding;

provided, however, that no Indebtedness otherwise permitted by clauses (b), (c),
(d), (e) or (f) shall be permitted if, after giving effect to the incurrence
thereof, any Default shall have occurred and be continuing.

SECTION 7.2.3. Liens. The Borrower will not, and will not permit any of
its Subsidiaries to, create, incur, assume or suffer to exist any Lien upon any
of its Property or revenues, except, with respect to the Borrower and Shana
National only, the following:

(a)   Liens securing payment of the Obligations and any Hedging
Obligations owed to a Lender or a Hedging Counterparty, granted pursuant
to any Loan Document;

(b)   Liens securing payment of Indebtedness of the type permitted
and described in clause (g) of Section 7.2.2 and covering only cash
collateral;

(c)   Liens granted to secure payment of Indebtedness of the type
permitted and described in clause (b) of Section 7.2.2 and covering only
those assets acquired with the proceeds of such Indebtedness;

(d)   Liens for taxes, assessments or other governmental charges or
levies not at the time delinquent or thereafter payable without penalty or
being diligently contested in good faith by appropriate proceedings and
for which adequate reserves in accordance with GAAP shall have been set
aside on its books;

43

(e)   Liens of carriers, warehousemen, mechanics, materialmen and
landlords incurred in the ordinary course of business for sums not overdue
or being diligently contested in good faith by appropriate proceedings and
for which adequate reserves in accordance with GAAP shall have been set
aside on its books;

(f)   Liens incurred in the ordinary course of business in
connection with workmen's compensation, unemployment insurance or other
forms of governmental insurance or benefits, or to secure performance of
tenders, statutory obligations, leases and contracts (other than for
borrowed money) entered into in the ordinary course of business or to
secure obligations on surety or appeal bonds;

(g)   Judgment Liens in existence fewer than fifteen (15) days after
the entry thereof or with respect to which execution has been stayed or
the payment of which is covered in full (subject to a customary
deductible) by insurance maintained with responsible insurance companies;
and

(h)   Liens of operators under joint operating agreements or similar
contractual arrangements with respect to the Borrower's or such
Subsidiary's proportionate share of the expense of exploration,
development and operation of oil, gas and mineral leasehold or fee
interests owned jointly with others, to the extent that same relate to
sums not yet due or that are being contested in good faith by appropriate
action promptly initiated and diligently conducted and in such manner as
not to jeopardize the Administrative Agent's, the Collateral Agent's or
any Lender's rights in and to any Collateral, if cash reserves shall have
been provided therefor.

SECTION 7.2.4. Financial Covenants.

(a)   EBITDA to Interest Expense Ratio. The Borrower will not permit
its ratio of EBITDA to Total Interest Expense (calculated quarterly at the
end of each Fiscal Quarter on a rolling four quarter basis) to be less
than 9.0 to 1.0 at any time.

(b)   Tangible Net Worth. The Borrower will not permit its Tangible
Net Worth at any time to be less than the sum of (1) $139,943,849.40 plus
(2) fifty percent (50%) of the Net Cash Proceeds from the sale of any
Equity Interests of the Borrower after the Effective Date; provided,
however, that non-cash gains and losses, including, without limitation,
FASB 133, 142, 143 and 144 non-cash gains and losses shall be excluded
from the foregoing calculation (to the extent otherwise included therein).

(c)   Current Ratio. The Borrower will not permit its Current Ratio
to be less than 1.0 to 1.0 at any time.

(d)   Indebtedness to EBITDA Ratio. The Borrower will not permit its
ratio of Indebtedness to EBITDA (calculated quarterly at the end of each
Fiscal Quarter on a rolling four quarter basis) to exceed 3.0 to 1.0 at
any time.

SECTION 7.2.5. Investments. The Borrower will not, and will not permit any
of its Subsidiaries to, make, incur, assume or suffer to exist any Investment in
any other Person, except:

44

(a)   Investments existing on the Closing Date and identified in
Item 7.2.5 of the Disclosure Schedule;

(b)   without duplication, Investments permitted as Indebtedness
pursuant to Section 7.2.2;

(c)   Investments by the Borrower in the ordinary course of business
to support the normal and customary oil and gas operations undertaken by
the Borrower through joint ventures or partnerships engaged in the Oil and
Gas Business in an aggregate amount at any time not to exceed $12,000,000;

(d)   with the approval of the Required Lenders, Investments by the
Borrower and its Subsidiaries (except NGX GP, NGX LP and NGX Energy) in
Equity Interests of other Persons engaged in the Oil and Gas Business
which are not Affiliates of the Borrower or any other Obligor in an
aggregate amount at any time not to exceed $5,000,000;

(e)   (i) Investments by the Borrower in Equity Interests of NGX GP
and NGX LP and (ii) Investments by NGX GP and NGX LP in Equity Interests
of NGX Energy, in each case as heretofore made in connection with the
formation of NGX GP, NGX LP and NGX Energy; and

(f)   capital contributions by the Borrower in NGX GP and NGX LP,
and the immediately subsequent capital contributions by NGX GP and NGX LP
in NGX Energy, in each case solely in connection with the transfer of a
one percent (1%) "beneficial" interest in any newly acquired assets of the
Borrower; provided, however, that, contemporaneously with any such capital
contribution, the Borrower shall cause NGX Energy to execute and deliver
any Security Documents required pursuant to the terms of this Agreement;

provided, however, the purchase price with respect to acquisitions
permitted by and effected pursuant to Section 7.2.8(b) shall reduce dollar
per dollar the $12,000,000 Investment limitation set forth in clause (c)
above; provided further, that no Investment otherwise permitted by clauses
(c) and (d) above shall be permitted to be made if, immediately before or
after giving effect thereto, any Default shall have occurred and be
continuing; and provided further that any such Investment shall only be
permitted if the Borrower gives the Administrative Agent written notice of
such investment within five (5) Business days of the making of such
Investment; and provided, further, that the Borrower may, in the ordinary
course of business, acquire or make investments in the Oil and Gas
Properties of another Person.

SECTION 7.2.6. Restricted Payments, etc. On and at all times after the
Closing Date,

(a)   except as set forth below, the Borrower will not declare and
will not permit any Subsidiary to pay or make any dividend or distribution
(in cash, property or obligations) on any shares (or other securities) of
any class of the Borrower's Equity Interests (now or hereafter
outstanding) or on any warrants, options or other rights with

45

respect to any shares (or other securities) of any class of such Equity
Interests (now or hereafter outstanding) or apply, or permit any of its
Subsidiaries to apply, any of its funds or Property to the purchase,
redemption, sinking fund or other retirement of, or agree or permit any of
its Subsidiaries to purchase or redeem, any shares (or other securities)
of any class of the Borrower's Equity Interests (now or hereafter
outstanding), or warrants, options or other rights with respect to any
shares (or other securities) of any class of the Borrower's Equity
Interests (now or hereafter outstanding);

(b)   except as set forth below, (i) the Borrower will not, and will
not permit any Subsidiary to, pay any portion of the Management Fee to NEG
and (ii) the Borrower will not pay any NEG Guaranteed Payments (as defined
in the NEG Holding Operating Agreement) pursuant to Section 6.5 of the NEG
Holding Operating Agreement to NEG;

(c)   the Borrower will not, and will not permit any of its
Subsidiaries to (i) make any payment or prepayment of principal of, or
make any payment of interest on, any Subordinated Debt on any day other
than the stated, scheduled date for such payment or prepayment permitted
in the documents and instruments memorializing such Subordinated Debt;
(ii) make any payment or prepayment of principal of, or make any payment
of interest on, any Subordinated Debt which would violate the
subordination provisions of such Subordinated Debt; or (iii) redeem,
purchase or defease, any Subordinated Debt; and

(d)   the Borrower will not, and will not permit any Subsidiary to,
make any deposit for any of the foregoing purposes;

provided, however, that the Borrower and its Subsidiaries shall be allowed to
effect a dividend or distribution otherwise restricted by clauses (a) or (b)
above (subject at all times, however, with respect to any payment of a
Management Fee, to the limitations set forth in Section 7.2.13) if and only if,
prior to payment of the proposed dividend or distribution, the Borrower delivers
to each Agent a compliance certificate executed by an Authorized Officer of the
Borrower containing a statement to the effect that the Borrower has not become
aware of any Default or Event of Default that has occurred or is continuing.

SECTION 7.2.7. Take or Pay Contracts. The Borrower will not, and will not
permit any of its Subsidiaries to, enter into or be a party to any arrangement
for the purchase of materials, supplies, other Property or services if such
arrangement by its express terms requires that payment be made by the Borrower
or such Subsidiary regardless of whether such materials, supplies, other
Property or services are delivered or furnished to it.

SECTION 7.2.8. Consolidation, Merger, etc. The Borrower will not, and will
not permit any of its Subsidiaries to, liquidate or dissolve, consolidate with,
or merge into or with, any other Person, or purchase or sell, lease or otherwise
dispose of (whether in one transaction or a series of transactions) all or
substantially all of its Property or assets to any other Person except that:

(a)   (i) (A) any Subsidiary of the Borrower may be merged or
consolidated with or into the Borrower and (B) any Subsidiary of the
Borrower (except NGX Energy)

46

may be merged or consolidated with or into any Wholly-Owned Subsidiary;
(ii) (A) the Property or Equity Interests of any Subsidiary may be
purchased or otherwise acquired by the Borrower and (B) the Property or
Equity Interests of any Subsidiary (except NGX Energy) may be purchased or
otherwise acquired by any Wholly-Owned Subsidiary; provided that in any
such transaction involving the Borrower or any Wholly-Owned Subsidiary,
the Borrower or such Wholly-Owned Subsidiary shall be the surviving or
continuing entity; and (iii)(A) any Subsidiary (except NGX Energy) may
sell, lease, transfer or otherwise dispose of any or all of its assets
(upon voluntary liquidation or otherwise) to the Borrower and (B) any
Subsidiary may sell, lease, transfer or otherwise dispose of any or all of
its assets (upon voluntary liquidation or otherwise) to any Wholly-Owned
Subsidiary;

(b)   so long as (i) permitted by Section 7.2.5 and (ii) no Default
has occurred and is continuing or would occur after giving effect thereto,
the Borrower or Shana National may purchase all or substantially all of
the assets of any Person (except, as to Shana National, assets of NGX GP,
NGX LP or NGX Energy), or acquire such Person by merger (except, as to
Shana National, assets of NGX GP, NGX LP or NGX Energy) that, in the
discretion of the Agents, is engaged in the Oil and Gas Business; provided
that in any merger involving the Borrower or Shana National, the Borrower
or Shana National shall be the surviving or continuing entity; and

(c)   the Borrower may sell, transfer or otherwise dispose of to NGX
Energy a one percent (1%) "beneficial" interest in any or all of its
hereafter acquired assets; provided, however, that, contemporaneously with
such sale, transfer or other disposition, the Borrower shall cause NGX
Energy to execute and deliver any Security Documents required pursuant to
the terms of this Agreement.

SECTION 7.2.9. Sale or Discount of Receivables. Neither the Borrower nor
any Subsidiary will discount or sell (with or without recourse) any of its notes
receivable or accounts receivable.

SECTION 7.2.10. Asset Dispositions, etc. The Borrower will not, and will
not permit any of its Subsidiaries to, sell, assign, farm-out, transfer, lease,
contribute, convey or otherwise transfer, or grant options, warrants or other
rights to any Person (each a "TRANSFER") any of its Property (including, without
limitation, accounts receivable, Equity Interests of Subsidiaries and the Oil
and Gas Properties), except for:

(a)   the sale of Hydrocarbons in the ordinary course of business;

(b)   the sale or transfer of equipment that is obsolete, worn out,
depleted or uneconomic and disposed of in the ordinary course of business;

(c)   the sale, transfer or other disposition for cash in one or
more transactions of Properties of the Borrower and its Subsidiaries
(except NGX GP and NGX LP), to Persons other than Affiliates of the
Borrower, provided that the aggregate proceeds received by the Borrower or
such Subsidiaries from the sale, transfer or disposal of such Properties
during any six month period from any January 1 through the following June
30

47

or from any July 1 through the following December 31 shall not exceed four
percent (4%) of the Borrowing Base;

(d)   sales of Equity Interests in the Borrower to NEG Holding; and

(e)   dispositions permitted by Section 7.2.8;

provided, however, that no Transfer shall be permitted pursuant to clause (c) if
a Default or an Event of Default shall have occurred or be continuing or result
therefrom.

SECTION 7.2.11. Modification of Certain Agreements. The Borrower will not
consent to any amendment, supplement or other modification of any of the terms
or provisions contained in, or applicable to any document or instrument
evidencing or applicable to any Subordinated Debt, other than any amendment,
supplement or other modification which extends the date or reduces the amount of
any required repayment or redemption. Furthermore, the Borrower will not (a)
consent to any amendment, supplement or other modification of the NEG Management
Agreement or (b) amend, supplement or otherwise modify, or permit any Subsidiary
to amend, supplement or otherwise modify, any Organic Documents of a Subsidiary,
unless previously consented to in writing by each Agent.

SECTION 7.2.12. Transactions with Affiliates. Except for Permitted NEG
Affiliate Transactions and pursuant hereto, neither the Borrower nor any
Subsidiary will enter into any transaction, including, without limitation, any
purchase, sale, lease or exchange of Property or the rendering of any service,
with any Affiliate unless such transactions are otherwise permitted under this
Agreement, are in the ordinary course of its business and are upon fair and
reasonable terms no less favorable to it than it would obtain in a comparable
arm's length transaction with a Person not an Affiliate.

SECTION 7.2.13. Payment of Management Fee. The Borrower will not, and will
not permit any of its Subsidiaries to, pay to NEG any portion of the NEG
Management Fee (i) during any Fiscal Quarter, to the extent that such NEG
Management Fee exceeds ten percent (10%) of the quarterly gross revenues for the
Borrower and its Consolidated Subsidiaries, and (ii) during any Fiscal Year, to
the extent that such NEG Management Fee exceeds ten percent (10%) of the annual
gross revenues for the Borrower and its Consolidated Subsidiaries.

SECTION 7.2.14. Negative Pledges, Restrictive Agreements, etc. The
Borrower will not, and will not permit any of its Subsidiaries to, enter into
any agreement (excluding this Agreement, any other Loan Document and, with
respect to clause (a) below, by clause (b) of Section 7.2.2 solely as to the
assets financed with the proceeds of such Indebtedness) prohibiting:

(a)   the creation or assumption of any Lien upon its Oil and Gas
Properties or other Property, whether now owned or hereafter acquired; or

(b)   the ability of the Borrower or any other Obligor to amend or
otherwise modify this Agreement or any other Loan Document; or

(c)   the ability of any Subsidiary to make any payments, directly
or indirectly, to the Borrower by way of dividends, advances, repayments
of loans or advances,

48

reimbursements of management and other intercompany charges, expenses and
accruals or other returns on investments, or any other agreement or
arrangement which restricts the ability of any such Subsidiary to make any
payment, directly or indirectly, to the Borrower.

SECTION 7.2.15. Creation of Subsidiaries. The Borrower will not, and will
not permit any of its Subsidiaries to, create or allow to be created any
Subsidiary not already existent and listed on Item 6.8 of the Disclosure
Schedule, without the prior written consent of the each Agent and each Lender;
provided, however, that, in the event that the Borrower deems it necessary or
desirable to effect a corporate restructuring requiring the formation of
Subsidiaries, the Administrative Agent agrees on behalf of itself and the
Lenders to reasonably consider and discuss the feasibility of such
restructuring.

SECTION 7.2.16. Leases. The Borrower will not, and will not permit any of
its Subsidiaries to create, incur, assume or permit to exist any obligation for
the payment of rent or hire of Property of any kind whatsoever (real or
personal, but excluding leases of Hydrocarbon Interests, oil and gas operating
agreements and Capitalized Lease Liabilities), under leases or lease agreements
that would cause the aggregate amount of all payments made by the Borrower and
its Subsidiaries pursuant to all such leases or lease agreements to exceed
$500,000 in any period of twelve consecutive calendar months during the life of
such leases.

SECTION 7.2.17. Sale and Leaseback Transactions. Neither the Borrower nor
any Subsidiary will enter into any arrangement, directly or indirectly, with any
Person whereby the Borrower or any Subsidiary shall sell or transfer any of its
Property, whether now owned or hereafter acquired, and whereby the Borrower or
any Subsidiary shall then or thereafter rent or lease as lessee such Property or
any part thereof or other Property that the Borrower or any Subsidiary intends
to use for substantially the same purpose or purposes as the Property sold or
transferred.

ARTICLE VIII

EVENTS OF DEFAULT

SECTION 8.1. Listing of Events of Default. Each of the following events or
occurrences described in this Section 8.1 shall constitute an "EVENT OF
DEFAULT".

SECTION 8.1.1. Non-Payment of Obligations. Any Obligor shall default in
the payment or prepayment when due of any principal of or interest on any Loan;
or of any fees or any other obligation hereunder or under any other Loan
Document, and such default other than a default of a payment or prepayment of
principal (which shall have no cure period), shall continue unremedied for a
period of three (3) days.

SECTION 8.1.2. Breach of Representation or Warranty. Any representation or
warranty of any Obligor made or deemed to be made hereunder or in any other Loan
Document executed by it or any other writing or certificate furnished by or on
behalf of any Obligor to either Agent or any Lender for the purposes of or in
connection with this Agreement or any such

49

other Loan Document (including any certificates delivered pursuant to Article V)
is or shall be false or in any material respect incorrect when made or deemed
made.

SECTION 8.1.3. Non-Performance of Certain Covenants and Obligations.

(a)   The Borrower shall default in the due performance and
observance of any of its obligations under Section 7.2; or

(b)   The Borrower shall default in the due performance and
observance of any of its obligations under any other Section of this
Agreement, or any Obligor shall default in the performance of its
obligations under any other Loan Document (other than the payment of
amounts due which shall be governed by Section 8.1.1) and such default
shall continue unremedied for a period of thirty (30) days after the
earlier to occur of (i) notice thereof to the Borrower by either Agent, or
(ii) the Borrower otherwise becoming aware of such default.

SECTION 8.1.4. Default on Other Indebtedness. (a) A default shall occur in
the payment when due (subject to any applicable grace period), whether by
acceleration or otherwise, of any Indebtedness (other than Indebtedness
described in Section 8.1.1) of the Borrower or any of its Subsidiaries, or any
other Obligor, having a principal amount, individually or in the aggregate, in
excess of $5,000,000, (b) a default shall occur with respect to any Hedging
Obligation to any Hedging Counterparty or any Affiliate of a Hedging
Counterparty, such default being, individually or in the aggregate, in excess of
$5,000,000, or (c) a default shall occur in the performance or observance of any
obligation or condition with respect to such Indebtedness if the effect of such
default is to accelerate the maturity of any such Indebtedness or such default
shall continue unremedied for any applicable period of time sufficient to permit
the holder or holders of such Indebtedness, or any trustee or agent for such
holders, to cause such Indebtedness to become or be declared due and payable
prior to its expressed maturity.

SECTION 8.1.5. Judgments. Any judgment or order for the payment of money
in excess of $5,000,000 shall be rendered against the Borrower or any of its
Subsidiaries, or any other Obligor, and either

(a)   enforcement proceedings shall have been commenced by any
creditor upon such judgment or order; or

(b)   there shall be any period of ten (10) consecutive days during
which a stay of enforcement of such judgment or order, by reason of a
pending appeal or otherwise, shall not be in effect.

SECTION 8.1.6. Pension Plans. Either (i) any "accumulated funding
deficiency" (as defined in Section 412(a) of the Internal Revenue Code) in
excess of $1,000,000 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

50

$1,000,000 (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);

SECTION 8.1.7. Change of Control. Any Change in Control shall occur.

SECTION 8.1.8. Bankruptcy, Insolvency, etc. The Borrower, any of its
Subsidiaries, or any other Obligor, shall:

(a)   be liquidated or become insolvent or generally fail to pay, or
admit in writing its inability or unwillingness to pay, debts as they
become due;

(b)   apply for, consent to, or acquiesce in, the appointment of a
trustee, receiver, sequestrator or other custodian for the Borrower or any
of its Subsidiaries, or any other Obligor, or any Property of any thereof,
or make a general assignment for the benefit of creditors;

(c)   in the absence of such application, consent or acquiescence,
permit or suffer to exist the appointment of a trustee, receiver,
sequestrator or other custodian for the Borrower or any of its
Subsidiaries, or any other Obligor, or for a substantial part of the
Property of any thereof, and such trustee, receiver, sequestrator or other
custodian shall not be discharged within sixty (60) days, provided that
the Borrower, its Subsidiaries, and the other Obligors hereby expressly
authorizes each Agent and each Lender to appear in any court conducting
any relevant proceeding during such 60-day period to preserve, protect and
defend their rights under the Loan Documents;

(d)   permit or suffer to exist the commencement of any bankruptcy,
reorganization, liquidation, debt arrangement or other case or proceeding
under any bankruptcy or insolvency law, or any dissolution, winding up or
liquidation proceeding, with respect to the Borrower or any of its
Subsidiaries, or any other Obligor, and, if any such case or proceeding is
not commenced by the Borrower or such Subsidiary or such other Obligor,
such case or proceeding or winding up shall be consented to or acquiesced
in by the Borrower or such Subsidiary or such other Obligor or shall
result in the entry of an order for relief or shall remain for sixty (60)
days undismissed, provided that each Obligor and each Subsidiary hereby
expressly authorizes each Agent and each Lender to appear in any court
conducting any such case or proceeding during such 60-day period to
preserve, protect and defend their rights under the Loan Documents; or

(e)   take any action authorizing, or in furtherance of, any of the
foregoing.

SECTION 8.1.9. Impairment of Security, etc. Any Loan Document or any Lien
granted thereunder shall (except in accordance with its terms), in whole or in
part, terminate, cease to be effective or cease to be the legally valid, binding
and enforceable obligation of any Obligor party thereto (for any reason other
than its release or subordination by the Collateral Agent); any Obligor or any
other party shall, directly or indirectly, contest in any manner such
effectiveness, validity, binding nature or enforceability; or any Lien securing
any Obligation shall, in whole or in part, cease to be a perfected first
priority Lien, subject only to those exceptions expressly permitted by such Loan
Document.

51

SECTION 8.1.10. NEG Management Agreement. The NEG Management Agreement is
terminated, cancelled or otherwise deemed unenforceable.

SECTION 8.1.11. Attachment, etc. The Borrower or any of its Subsidiaries,
or any other Obligor, suffers a writ or warrant of attachment or any similar
process to be issued by any Governmental Authority 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.

SECTION 8.2. Action if Bankruptcy. If any Event of Default described in
clauses (a) through (d) of Section 8.1.8 shall occur, the Commitments (if not
theretofore terminated) shall automatically terminate and the outstanding
principal amount of all outstanding Loans and all other Obligations shall
automatically be and become immediately due and payable, without notice or
demand.

SECTION 8.3. Action if Other Event of Default. If any Event of Default
(other than any Event of Default described in clauses (a) through (d) of Section
8.1.8 with respect to the Borrower or any Subsidiary or any other Obligor) shall
occur for any reason, whether voluntary or involuntary, and be continuing, the
Administrative Agent may by notice to the Borrower declare all or any portion of
the outstanding principal amount of the Loans and other Obligations to be due
and payable without further notice, demand or presentment, and/or the
Commitments (if not theretofore terminated) to be terminated, whereupon the full
unpaid amount of such Loans and other Obligations which shall be so declared due
and payable shall be and become immediately due and payable, without further
notice, demand or presentment, and/or, as the case may be, the Commitments shall
terminate.

SECTION 8.4. Application of Proceeds. Notwithstanding any provision of
this Credit Agreement or the Security Documents to the contrary, in the case of
any sale of any Collateral, whether voluntary sale or foreclosure under any
Security Documents, the proceeds and all other proceeds that then may be held or
recovered by the Administrative Agent or the Collateral Agent for the benefit of
Lenders, shall be applied in the following order:

(a)   First, to the payment of the costs and expenses of the sale
and of the collection or enforcement of the Collateral, and reasonable
compensation to Administrative Agent and Collateral Agent, their agents
and attorneys, and of all expenses and liabilities incurred and advances
made by Administrative Agent and Collateral Agent in connection therewith;

(b)   Second, to the payment of all expenses of Lenders (or
Affiliates of Lenders) which the Borrower is obligated to pay pursuant to
this Credit Agreement or any other Loan Document;

(c)   Third, to the payment ratably of the sum of (i) amounts due
for principal and interest on all Loans then outstanding, and (ii) amounts
owed as the Hedging Obligations to any Hedging Counterparty, without
preference or priority of the indebtedness owing to one Lender or Hedging
Counterparty over another, or of Loans over Hedging Obligations, or of
principal over interest; and

52

(d)   Fourth, after payment in full in cash of all of the
Obligations, the termination of all Commitments and all other commitments
by all Lenders, to the Borrower and the other Obligors, to the payment of
the surplus of such cash or cash proceeds, if any, to the Borrower, or to
whomsoever may be lawfully entitled to receive the same, or as a court of
competent jurisdiction may direct.

ARTICLE IX

THE AGENTS

SECTION 9.1. Actions. Each of the Lenders hereby irrevocably appoints AREP
O&G as the Administrative Agent under this Agreement, and each of the Lenders
hereby irrevocably appoints Citicorp USA, Inc. as the Collateral Agent under and
for purposes of this Agreement, the Notes and each other Loan Document. Each
Lender authorizes each such Agent to act as contemplated under this Agreement,
the Notes and each other Loan Document and to exercise such powers hereunder and
thereunder as are specifically delegated to or required of such Agents by the
terms hereof and thereof, together with such powers as may be reasonably
incidental thereto. Each Lender hereby indemnifies (which indemnity shall
survive any termination of this Agreement) the Administrative Agent and the
Collateral Agent pro rata according to such Lender's percentage of all of the
outstanding Obligations owing to all Lenders, WHETHER OR NOT RELATED TO ANY
SINGULAR, JOINT OR CONCURRENT NEGLIGENCE OF THE ADMINISTRATIVE AGENT OR THE
COLLATERAL AGENT, from and against any and all liabilities, obligations, losses,
damages, claims, costs or expenses of any kind or nature whatsoever which may at
any time be imposed on, incurred by, or asserted against, the Administrative
Agent or the Collateral Agent in any way relating to or arising out of this
Agreement, the Notes and any other Loan Document, including reasonable
attorneys' fees, and as to which the Administrative Agent or the Collateral
Agent, as the case may be, is not reimbursed by the Borrower; provided, however,
that no Lender shall be liable for the payment of any portion of such
liabilities, obligations, losses, damages, claims, costs or expenses which are
determined by a court of competent jurisdiction in a final proceeding to have
resulted solely from the Collateral Agent's or the Collateral Agent's gross
negligence or willful misconduct. Neither the Administrative Agent nor the
Collateral Agent shall be required to take any action hereunder, under the Notes
or under any other Loan Document, or to prosecute or defend any suit with
respect to this Agreement, the Notes or any other Loan Document, unless it is
indemnified hereunder to its satisfaction. If any indemnity in favor of the
Administrative Agent or the Collateral Agent shall be or become inadequate, in
the Administrative Agent's or the Collateral Agent's determination, as the case
may be, the Administrative Agent or the Collateral Agent may call for additional
indemnification from the Lenders and cease to do the acts indemnified against
hereunder until such additional indemnity is given. Notwithstanding any
provision to the contrary contained elsewhere in this Agreement or in any other
Loan Document, neither the Administrative Agent nor the Collateral Agent shall
have any duties or responsibilities, except as expressly set forth herein, nor
shall the Administrative Agent or the Collateral Agent have or be deemed to have
any fiduciary relationship with any Lender or Hedging Counterparty, as
applicable, and no implied covenants, functions, responsibilities, duties,
obligations or liabilities shall be read into this Agreement or any other Loan
Document or otherwise exist against the Administrative Agent or the Collateral
Agent. Without limitation of the foregoing, each of Borrower and Lenders
acknowledges and agrees that the Collateral Agent

53

has no duty or obligation to them that in any way restricts the Collateral Agent
from exercising its rights and remedies, and carrying out any duties that it may
have, in its various capacities as Hedging Counterparty, AREP Agent, or AREP
Lender.

SECTION 9.2. Funding Reliance, etc. Unless the Administrative Agent shall
have been notified by telephone, confirmed in writing, by any Lender by 5:00
p.m., New York time, on the day prior to a Borrowing that such Lender will not
make available the amount which would constitute its Percentage of such
Borrowing on the date specified therefor, the Administrative Agent may assume
that such Lender has made such amount available to the Administrative Agent and,
in reliance upon such assumption, make available to the Borrower a corresponding
amount. If and to the extent that such Lender shall not have made such amount
available to the Administrative Agent, such Lender and the Borrower severally
agree to repay the Administrative Agent immediately on demand such corresponding
amount together with interest thereon, for each day from the date the
Administrative Agent made such amount available to the Borrower to the date such
amount is repaid to the Administrative Agent, at the interest rate applicable at
the time to Loans comprising such Borrowing.

SECTION 9.3. Exculpation. Neither the Administrative Agent nor the
Collateral Agent (in their capacities as such), nor any of their respective
directors, officers, employees or agents, shall be liable to any Lender for any
action taken or omitted to be taken by it under this Agreement or any other Loan
Document, or in connection herewith or therewith, except for its own willful
misconduct or gross negligence, nor responsible for any recitals or warranties
herein or therein, nor for the effectiveness, enforceability, validity or due
execution of this Agreement or any other Loan Document, nor for the creation,
perfection or priority of any Liens purported to be created by any of the Loan
Documents, or the validity, genuineness, enforceability, existence, value or
sufficiency of any collateral security, nor to make any inquiry respecting the
performance by the Borrower of its obligations hereunder or under any other Loan
Document. Any such inquiry that may be made by the Administrative Agent or the
Collateral Agent shall not obligate it to make any further inquiry or to take
any action. Each of the Administrative Agent and the Collateral Agent shall be
entitled to rely upon advice of counsel concerning legal matters and upon any
notice, consent, certificate, statement or writing which the Administrative
Agent or the Collateral Agent believes to be genuine and to have been presented
by a proper Person.(1)

SECTION 9.4. Successors.

(a)   Subject to the appointment of a successor as provided below,
the Administrative Agent or the Collateral Agent may resign as such at any
time upon at least thirty (30) days' prior notice to the Borrower, all
Lenders and all Hedging Counterparties. If the Administrative Agent at any
time shall resign, the Lenders may appoint another Lender as the successor
Administrative Agent, which shall thereupon become the Administrative
Agent hereunder. If the Collateral Agent shall at any time resign, the
resigning Collateral Agent may appoint a Hedging Counterparty as the
successor

----------------
(1) Since the Hedging Counterparties will not be parties to this Agreement, they
need to give this exculpation to the Collateral Agent in the Mortgages.

54

Collateral Agent, which shall thereupon become the Collateral Agent
hereunder. If a successor Administrative Agent or Collateral Agent shall
have been so appointed, but shall not have accepted such appointment,
within thirty (30) days after notice of resignation of the retiring
Administrative Agent or Collateral Agent, as the case may be, then the
retiring Administrative Agent or Collateral Agent, as the case may be, may
appoint a successor Administrative Agent or Collateral Agent,
respectively, which shall be one of the Hedging Counterparties or a
commercial banking institution organized under the laws of the U.S. (or
any State thereof) or a U.S. branch or agency of a commercial banking
institution, and having a combined capital and surplus of at least
$100,000,000. Upon the acceptance of any appointment as Administrative
Agent or Collateral Agent hereunder by a successor Administrative Agent or
Collateral Agent, respectively, such successor Administrative Agent or
Collateral Agent shall be entitled to receive from the retiring
Administrative Agent or Collateral Agent such documents of transfer and
assignment as such successor Administrative Agent or Collateral Agent may
reasonably request, and shall thereupon succeed to and become vested with
all rights, powers, privileges and duties of the retiring Administrative
Agent or Collateral Agent, and the retiring Administrative Agent or
Collateral Agent shall be discharged from its duties and obligations under
this Agreement. After any retiring Administrative Agent's or Collateral
Agent's resignation hereunder as the Administrative Agent or Collateral
Agent, respectively, the provisions of this Article IX shall inure to its
benefit as to any actions taken or omitted to be taken by it while it was
the Administrative Agent or Collateral Agent under this Agreement; and
Section 10.3 and Section 10.4 shall continue to inure to its benefit.

(b)   Each of the Borrower, the Lenders, the Administrative Agent,
and the Collateral Agent:

(i)   acknowledges and agrees that AREP O&G has pledged
and granted a security interest in all of its rights and powers
under the Loan Documents, whether as Lender or as Administrative
Agent, to the AREP Agent,

(ii)  consents to and approves such pledge and security
agreement,

(iii) agrees that it will accept the AREP Agent as the
Person entitled to exercise the rights and powers of AREP O&G under
the Loan Documents at any time when the AREP Agent has declared that
an "Event of Default" exists under the AREP O&G Facility, and agrees
further that the AREP Agent may possess and exercise such rights and
powers without assuming or otherwise becoming liable for any
liabilities or duties of AREP O&G in any of its capacities under the
Loan Documents, and

(iv)  agrees that the AREP Agent is an express third
party beneficiary of the Loan Documents.

SECTION 9.5. Extensions of Credit by the Agents. Each of the Agents shall
have the same rights and powers with respect to (x) the Loans made by it or any
of its Affiliates, (y)

55

the Notes held by it or any of its Affiliates, and (z) the rights and powers
held by it as lender to or pledgee of AREP O&G, as any other Lender or Hedging
Counterparty, as applicable, and may exercise the same as if it were not an
Agent. Each of the Agents and their respective Affiliates may accept deposits
from, lend money to, and generally engage in any kind of business with the
Borrower or any Subsidiary or Affiliate of the Borrower as if it were not an
Agent hereunder, as the case may be.

SECTION 9.6. Credit Decisions. Each Lender acknowledges that it has,
independently of the Agents and each other Lender and Hedging Counterparty, and
based on such Person's review of the financial information and reserve based
information of the Borrower and its Subsidiaries, this Agreement, the other Loan
Documents (the terms and provisions of which being satisfactory to such Lender)
and such other documents, information and investigations as such Person has
deemed appropriate, made its own credit decision to extend its Commitment. Each
Lender also acknowledges that it will, independently of the Agents and each
other Lender and Hedging Counterparty, and based on such other documents,
information and investigations as it shall deem appropriate at any time,
continue to make its own credit decisions as to exercising or not exercising
from time to time any rights and privileges available to it under this Agreement
or any other Loan Document.

SECTION 9.7. Copies, etc. The Administrative Agent shall give prompt
notice to the Collateral Agent, each Lender and Hedging Counterparty of each
notice or request required or permitted to be given to the Administrative Agent
by the Borrower pursuant to the terms of this Agreement (unless concurrently
delivered to the Lenders by the Borrower). The Administrative Agent will
distribute to the Collateral Agent, each Lender and each Hedging Counterparty
each document or instrument received for its account and copies of all other
communications received by the Administrative Agent from the Borrower for
distribution to the Collateral Agent and the Lenders in accordance with the
terms of this Agreement.

ARTICLE X

MISCELLANEOUS PROVISIONS

SECTION 10.1. Waivers, Amendments, etc. The provisions of this Agreement
and of each other Loan Document may from time to time be amended, modified or
waived, if such amendment, modification or waiver is in writing and consented to
by the Borrower, the Lenders and the Agents. No failure or delay on the part of
any Agent, any Lender, any Hedging Counterparty or the holder of any Note in
exercising any power or right under this Agreement or any other Loan Document
shall operate as a waiver thereof, nor shall any single or partial exercise of
any such power or right preclude any other or further exercise thereof or the
exercise of any other power or right. No notice to or demand on the Borrower in
any case shall entitle it to any notice or demand in similar or other
circumstances. No waiver or approval by any Agent, any Lender, any Hedging
Counterparty or the holder of any Note under this Agreement or any other Loan
Document shall, except as may be otherwise stated in such waiver or approval, be
applicable to subsequent transactions. No waiver or approval hereunder shall
require any similar or dissimilar waiver or approval thereafter to be granted
hereunder.

56

SECTION 10.2. Notices. All notices and other communications provided to
any party hereto under this Agreement or any other Loan Document shall be in
writing or by facsimile and addressed, delivered or transmitted to such party at
its address or facsimile number set forth below its signature hereto or at such
other address or facsimile number as may be designated by such party in a notice
to the other parties. Any notice, if mailed and properly addressed with postage
prepaid or if properly addressed and sent by pre-paid courier service, shall be
deemed given when received; any notice, if transmitted by facsimile, shall be
deemed given when transmitted and a receipt, demonstrating successful
transmission, is received by the Sender. Delivery by telecopier of an executed
counterpart of any amendment or waiver of any provision of this Agreement or any
other Loan Document shall be effective as delivery of an original executed
counterpart hereof.

SECTION 10.3. Payment of Costs and Expenses. The Borrower agrees to pay on
demand all expenses of the Administrative Agent and the Collateral Agent in
connection with

(a)   the negotiation, preparation, execution and delivery of this
Agreement and of each other Loan Document, including schedules and
exhibits, and any amendments, waivers, consents, supplements or other
modifications to this Agreement or any other Loan Document as may from
time to time hereafter be required, whether or not the transactions
contemplated hereby are consummated;

(b)   the filing, recording, refiling or rerecording of each of the
Security Documents and/or any Uniform Commercial Code financing statements
relating thereto and all amendments, supplements and modifications to any
thereof and any and all other documents or instruments of further
assurance required to be filed or recorded or refiled or rerecorded by the
terms hereof or of the Security Documents; and

(c)   the preparation and review of the form of any document or
instrument relevant to this Agreement or any other Loan Document. Each
Lender and Hedging Counterparty agrees to reimburse the Administrative
Agent, the Collateral Agent and each Lender and Hedging Counterparty on
demand for such Lender's (or Hedging Counterparty, as applicable) pro rata
share (based upon its respective percentage of all of the outstanding
Obligations represented by such Person's outstanding Obligations) of any
such costs or expenses not paid by the Borrower. The Borrower further
agrees to pay, and to save the Administrative Agent, the Collateral Agent,
the Lenders and the Hedging Counterparties harmless from all liability
for, any stamp or other taxes which may be payable in connection with the
execution or delivery of this Agreement, the Borrowings hereunder, or the
issuance of the Notes or any other Loan Documents. The Borrower also
agrees to reimburse the Administrative Agent, the Collateral Agent, the
Lenders and the Hedging Counterparties upon demand for all out-of-pocket
expenses (including reasonable attorneys' fees and legal expenses)
incurred by the Administrative Agent, the Collateral Agent, such Lender or
such Hedging Counterparty in connection with (x) the negotiation of any
restructuring or "work-out," whether or not consummated, of any
Obligations and (y) the enforcement of any Obligations.

SECTION 10.4. Indemnification. In consideration of the execution and
delivery of this Agreement by the Administrative Agent, the Collateral Agent,
each Lender and each

57

Hedging Counterparty, and the extension of the Commitments, and the arrangement
of the facility represented by this Agreement, the Borrower hereby indemnifies,
exonerates and holds the Administrative Agent, the Collateral Agent, each Lender
and each Hedging Counterparty and each of their respective Affiliates, officers,
directors, employees and agents (collectively, the "INDEMNIFIED PARTIES") free
and harmless from and against any and all actions, causes of action, suits,
losses, costs, liabilities and damages, and expenses incurred in connection
therewith (irrespective of whether any such Indemnified Party is a party to the
action for which indemnification hereunder is sought), including reasonable
attorneys' fees and disbursements (collectively, the "INDEMNIFIED LIABILITIES"),
incurred by the Indemnified Parties or any of them as a result of, or arising
out of, or relating to

(a)   any transaction financed or to be financed in whole or in
part, directly or indirectly, with the proceeds of any Borrowing;

(b)   the entering into and performance of this Agreement and any
other Loan Document by any of the Indemnified Parties (including any
action brought by or on behalf of the Borrower as the result of any
determination by the Lenders pursuant to Article V not to fund any
Borrowing);

(c)   any investigation, litigation or proceeding related to any
environmental cleanup, audit, compliance or other matter relating to the
protection of the environment or the Release by the Borrower or any of its
Subsidiaries or any Obligor of any Hazardous Material;

(d)   the presence on or under, or the escape, seepage, leakage,
spillage, discharge, emission, discharging or releases from, any real
property owned or operated by the Borrower or any of its Subsidiaries or
by any other Obligor of any Hazardous Material (including any losses,
liabilities, damages, injuries, costs, expenses or claims asserted or
arising under any Environmental Law); or

(e)   any misrepresentation or inaccuracy or breach of Section 6.13
without giving effect to any knowledge qualification therein contained,
regardless of whether caused by, or within the control of, the Borrower or
such Obligor or such Subsidiary; in each case except for any such
Indemnified Liabilities arising for the account of a particular
Indemnified Party by reason of the relevant Indemnified Party's gross
negligence or willful misconduct, as determined by a court of competent
jurisdiction in a final non-appealable judgment, or such Indemnified
Party's own unexcused breach of any provision of any Loan Document (as
determined by the final non-appealable judgment of a court of competent
jurisdiction), PROVIDED THAT IT IS THE INTENTION OF THE PARTIES HERETO
THAT THE INDEMNIFIED PARTIES BE INDEMNIFIED IN THE CASE OF THEIR OWN
NEGLIGENCE, REGARDLESS OF WHETHER SUCH NEGLIGENCE IS SOLE OR CONTRIBUTORY,
ACTIVE OR PASSIVE, IMPUTED, JOINT OR TECHNICAL. If and to the extent that
the foregoing undertaking may be unenforceable for any reason, the
Borrower hereby agrees to make the maximum contribution to the payment and
satisfaction of each of the Indemnified Liabilities which is permissible
under applicable law.

58

SECTION 10.5. Survival. The obligations of the Borrower under Sections
4.3, 4.4, 4.5, 4.6, 9.3, 10.3 and 10.4, as well as any other indemnification or
exculpation provisions of any Loan Document, and the obligations of the Lenders
under Section 9.1, shall in each case survive any termination of this Agreement,
the payment in full of all Obligations and the termination of all Commitments.
The representations and warranties made by the Borrower and each other Obligor
in this Agreement and in each other Loan Document shall survive the execution
and delivery of this Agreement and each such other Loan Document.

SECTION 10.6. Hedging Counterparties Are Third Party Beneficiaries. The
benefit of the Security Documents and of the provisions of this Agreement
relating to the Collateral shall also extend to and be available to the Hedging
Counterparties with respect to any Hedging Obligations of the Borrower or any of
its Subsidiaries that are in effect, and the Hedging Counterparties are express
third party beneficiaries of the Loan Documents.

SECTION 10.7. Severability. Any provision of this Agreement or any other
Loan Document which is prohibited or unenforceable in any jurisdiction shall, as
to such provision and such jurisdiction, be ineffective to the extent of such
prohibition or unenforceability without invalidating the remaining provisions of
this Agreement or such Loan Document or affecting the validity or enforceability
of such provision in any other jurisdiction.

SECTION 10.8. Headings. The various headings of this Agreement and of each
other Loan Document are inserted for convenience only and shall not affect the
meaning or interpretation of this Agreement or such other Loan Document or any
provisions hereof or thereof.

SECTION 10.9. Execution in Counterparts, Effectiveness, etc. This
Agreement may be executed by the parties hereto in several counterparts, each of
which shall be deemed to be an original and all of which shall constitute
together but one and the same agreement. This Agreement shall become effective
when counterparts hereof executed on behalf of the Borrower and each Lender and
Agent (or notice thereof satisfactory to the Administrative Agent) shall have
been received by the Administrative Agent.

SECTION 10.10. Governing Law; Entire Agreement. THIS AGREEMENT, THE NOTES
AND EACH OTHER LOAN DOCUMENT SHALL EACH BE DEEMED TO BE A CONTRACT MADE UNDER
AND GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW
YORK (WITHOUT GIVING EFFECT TO THE PRINCIPLES THEREOF RELATING TO CONFLICT OF
LAW, EXCEPT SECTION 5-1401 OF THE NEW YORK GENERAL OBLIGATIONS LAW) AND EXCEPT
TO THE EXTENT THAT THE LAWS OF ANOTHER JURSIDICATION ARE EXPRESSLY ELECTED IN
ANOTHER LOAN DOCUMENT. This Agreement, the Notes and the other Loan Documents
constitute the entire understanding among the parties hereto with respect to the
subject matter hereof and supersede any prior agreements, written or oral, with
respect thereto.

SECTION 10.11. Successors and Assigns. This Agreement shall be binding
upon and shall inure to the benefit of the parties hereto and their respective
successors and assigns; provided, however, that:

59

(a)   none of the Borrower or any Lender may assign or transfer its
rights or obligations hereunder without the prior written consent of each
other party hereto, provided, however, that for purposes of this Section
10.11 if the survivor of a merger is obligated with respect to all
obligations of the Borrower hereunder and under all other Loan Documents,
a merger permitted pursuant to Section 7.2.8 hereof shall not be an
assignment or transfer of the Borrower's rights or obligations hereunder;
and

(b)   notwithstanding the preceding subsection (a), AREP O&G may
pledge and collaterally assign all of its rights under the Loan Documents
(in whatever capacities) to AREP Agent (including any successor AREP
Agents), and upon enforcement of such pledge and collateral assignment any
purchaser or other successor to AREP O&G (whether at a foreclosure sale,
under a deed in lieu of foreclosure, or otherwise) may thereafter freely
assign all of its rights under the Loan Documents.

SECTION 10.12. [Reserved]

SECTION 10.13. Other Transactions. Nothing contained herein shall preclude
the Administrative Agent, the Collateral Agent or any other Lender from engaging
in any transaction, in addition to those contemplated by this Agreement or any
other Loan Document, with the Borrower or any of its Affiliates in which the
Borrower or such Affiliate is not restricted hereby from engaging with any other
Person.

SECTION 10.14. Confidentiality. In the event that the Borrower provides to
the Administrative Agent or the Lenders confidential information belonging to
the Borrower or any of the other Obligors, then the Administrative Agent and the
Lenders shall thereafter maintain such information in confidence in accordance
with the standards of care and diligence that each utilizes in maintaining its
own confidential information. This obligation of confidence shall not apply to
such portions of the information that (a) are in the public domain, (b)
hereafter become part of the public domain without the Administrative Agent or
the Lenders breaching their obligation of confidence hereunder, (c) are
previously known by the Administrative Agent or the Lenders from some source
other than the Borrower, (d) are hereafter developed by the Administrative Agent
or the Lenders without using the Borrower's information, (e) are hereafter
obtained by or available to the Administrative Agent or the Lenders from a third
party who owes no obligation of confidence to the Borrower with respect to such
information or through any other means other than through disclosure by the
Borrower, (f) are disclosed with the Borrower's consent (it being acknowledged
that the Borrower consents to Lender's provision of such information to the
Collateral Agent, the AREP Agent and the AREP Lenders), (g) must be disclosed
either pursuant to any Governmental Rule or to Persons regulating the activities
of the Administrative Agent or the Lenders, or (h) as may be required by law or
regulation or order of any Governmental Authority in any judicial, arbitration
or governmental proceeding. Furthermore, the Administrative Agent or a Lender
may disclose any such information to any other Lender, any independent petroleum
engineers or consultants, any independent certified public or chartered
accountants, any legal counsel employed by such Person in connection with this
Agreement or any other Loan Document, including without limitation, the
enforcement or exercise of all rights and remedies thereunder, or any assignee
or participant (including prospective assignees and participants) in the Loans;
provided, however, that the Administrative Agent or the Lenders shall receive a
confidentiality agreement from the Person to whom such

60

information is disclosed such that said Person shall have the same obligation to
maintain the confidentiality of such information as is imposed upon the
Administrative Agent or the Lenders hereunder. Notwithstanding anything to the
contrary provided herein, this obligation of confidence shall cease one (1) year
from the Effective Date, unless the Borrower requests in writing at least thirty
(30) days prior to the expiration of such three-year period, to maintain the
confidentiality of such information for an additional three-year period. The
Borrower waives any and all other rights it may have to confidentiality as
against the Administrative Agent and the Lenders arising by contract, agreement,
statute or law except as expressly stated in this Section 10.14.

SECTION 10.15. Non-Recourse to Officers and Directors. This Agreement and
the Obligations are fully recourse to Borrower and the other Obligors.
Notwithstanding anything to the contrary contained in this Agreement or in any
other Loan Document, no recourse under or upon any Obligation, representation,
warranty or covenant shall be had against any of the officers, directors,
employees, agents or representatives of the Borrower or any other Obligor;
provided, however, that nothing in this Section 10.15 shall be deemed to
constitute a waiver of any Obligation evidenced or secured by, or contained in,
this Agreement or any other Loan Document, or affect in any way the validity or
enforceability of this Agreement or any other Loan Document.

SECTION 10.16. Forum Selection and Consent to Jurisdiction. ANY LITIGATION
BASED HEREON, OR 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 THE ADMINISTRATIVE AGENT, THE
COLLATERAL AGENT, THE LENDERS OR THE BORROWER MAY BE BROUGHT AND MAINTAINED IN
THE COURTS OF THE STATE OF NEW YORK OR IN THE UNITED STATES DISTRICT COURT FOR
THE SOUTHERN DISTRICT OF NEW YORK; PROVIDED, HOWEVER, THAT ANY SUIT SEEKING
ENFORCEMENT AGAINST ANY COLLATERAL OR OTHER PROPERTY MAY BE BROUGHT, AT THE
ADMINISTRATIVE AGENT'S OPTION, IN THE COURTS OF ANY JURISDICTION WHERE SUCH
COLLATERAL OR OTHER PROPERTY MAY BE FOUND. EACH OF THE ADMINISTRATIVE AGENT, THE
COLLATERAL AGENT, THE LENDERS AND THE BORROWER HEREBY EXPRESSLY AND IRREVOCABLY
SUBMITS TO THE JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK AND OF THE
UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK FOR THE
PURPOSE OF ANY SUCH LITIGATION AS SET FORTH ABOVE AND IRREVOCABLY AGREES TO BE
BOUND BY ANY JUDGMENT RENDERED THEREBY IN CONNECTION WITH SUCH LITIGATION. EACH
OF THE ADMINISTRATIVE AGENT, THE COLLATERAL AGENT, THE LENDERS AND THE BORROWER
FURTHER IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS BY REGISTERED MAIL,
POSTAGE PREPAID, OR BY PERSONAL SERVICE WITHIN OR WITHOUT THE STATE OF NEW YORK.
EACH OF THE ADMINISTRATIVE AGENT, THE COLLATERAL AGENT, THE LENDERS AND THE
BORROWER HEREBY EXPRESSLY AND IRREVOCABLY WAIVES, TO THE FULLEST EXTENT
PERMITTED BY LAW, ANY OBJECTION WHICH IT MAY HAVE OR HEREAFTER

61

MAY HAVE TO THE LAYING OF VENUE OF ANY SUCH LITIGATION BROUGHT IN ANY SUCH COURT
REFERRED TO ABOVE AND ANY CLAIM THAT ANY SUCH LITIGATION HAS BEEN BROUGHT IN AN
INCONVENIENT FORUM. TO THE EXTENT THAT THE BORROWER HAS OR HEREAFTER MAY ACQUIRE
ANY IMMUNITY FROM JURISDICTION OF ANY COURT OF FROM ANY LEGAL PROCESS (WHETHER
THROUGH SERVICE OR NOTICE, ATTACHMENT PRIOR TO JUDGMENT, ATTACHMENT IN AID OF
EXECUTION OR OTHERWISE) WITH RESPECT TO ITSELF OR ITS PROPERTY, THE BORROWER
HEREBY IRREVOCABLY WAIVES SUCH IMMUNITY WITH RESPECT TO ITS OBLIGATIONS UNDER
THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS.

SECTION 10.17. Waiver of Jury Trial. EACH PARTY HERETO HEREBY IRREVOCABLY
WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, (A) ANY RIGHT IT MAY
HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING
OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT OR THE
TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY (WHETHER BASED ON CONTRACT, TORT OR
ANY OTHER THEORY, AND (B) ANY RIGHT IT MAY HAVE TO CLAIM OR RECOVER IN ANY SUCH
LEGAL PROCEEDING ANY "SPECIAL DAMAGES," AS DEFINED BELOW. EACH PARTY HERETO (X)
CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PERSON HAS
REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PERSON WOULD NOT, IN THE
EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (Y) ACKNOWLEDGES
THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS
AGREEMENT AND THE OTHER LOAN DOCUMENTS BY, AMONG OTHER THINGS, THE MUTUAL
WAIVERS AND CERTIFICATIONS 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.

SECTION 10.18. No Oral Agreements. THIS 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 AMONG THE PARTIES.

[Signature Pages Follow]

62

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers thereunto duly authorized as of the day
and year first above written.

BORROWER

NEG OPERATING LLC

By:   NEG Holding LLC, its sole Member

By:   AREP Oil & Gas LLC, its Sole Member

By:   _______________________________
Philip D. Devlin
Vice President and Secretary

Address:    1400 One Energy Square
4925 Greenville Avenue
Dallas, TX  75206

Attention:  Philip D. Devlin
Telephone:  (214) 692-9211
Telecopy:   (214) 692-5055

S-1

CITICORP USA, INC., as Collateral Agent

By:    _________________________________
Name:  David E. Hunt
Title: Vice President

Address:
388 Greenwich Street
New York, NY  10013

S-2

AREP OIL & GAS LLC., as a Lender and
as Administrative Agent

By _____________________________________
Name:  Philip D. Devlin
Title: Vice President and Secretary

Address:

1400 One Energy Square
4925 Greenville Avenue
Dallas, TX  75206

S-3

EXHIBIT A

FORM OF BORROWING REQUEST

CITICORP USA, INC..
[_____]
[_____]

Attention:  __________________

NEG OPERATING LLC

Gentlemen and Ladies:

This Borrowing Request is delivered to you pursuant to Section 2.3 of the
Amended and Restated Credit Agreement dated as of December 20, 2005 (together
with all amendments and other modifications, if any, from time to time
thereafter made thereto, the "CREDIT AGREEMENT"), among the Borrower, the
various financial institutions as are or may become parties thereto (including
the Lender) (collectively, the "LENDERS"), AREP Oil & Gas LLC, as administrative
agent (in such capacity together with any successors thereto, the
"ADMINISTRATIVE AGENT") for the Lenders, and the other agents and lenders party
thereto. Unless otherwise defined herein or the context otherwise requires,
capitalized terms used herein have the meanings provided in the Credit
Agreement.

The Borrower hereby requests that a Loan be made in the aggregate
principal amount of $__________ on __________, 20___ as a *[Eurodollar Loan
having an Interest Period of _______ months] [Base Rate Loan].

The Borrower hereby acknowledges that, pursuant to Section 5.2.2 of the
Credit Agreement, each of the delivery of this Borrowing Request and the
acceptance by the Borrower of the proceeds of the Loans requested hereby
constitute a representation and warranty by the Borrower that, on the date of
such Loans, and before and after giving effect thereto and to the application of
the proceeds therefrom, all statements set forth in Section 5.2.1 are true and
correct in all material respects.

The Borrower agrees that if prior to the time of the Borrowing requested
hereby any matter certified to herein by it will not be true and correct at such
time as if then made, it will immediately so notify the Administrative Agent.
Except to the extent, if any, that prior to the time of the Borrowing requested
hereby the Administrative Agent shall receive written notice to the contrary
from the Borrower, each matter certified to herein shall be deemed once again to
be certified as true and correct at the date of such Borrowing as if then made.

--------------
*     Select appropriate interest rate option.

Exhibit A - Page 1

Please wire transfer the proceeds of the Borrowing to the accounts of the
following persons at the financial institutions indicated respectively:

Person to be Paid                                 
Amount to be      -------------------------------      Name, Address, etc.
Transferred            Name        Account No.        of Transferee Lender
--------------      -------------   ---------------     --------------------

$_____________      _____________   _______________   ________________________
________________________
Attention: ____________

$_____________      _____________   _______________   ________________________
________________________                 
Attention: ____________

Balance of such     The Borrower   _________________  ________________________
proceeds                                               Attention: ____________
________________________ 

The Borrower has caused this Borrowing Request to be executed and
delivered, and the certification and warranties contained herein to be
made, by its duly Authorized Officer this ___ day of ___________, 20___.

NEG OPERATING LLC

By: NEG Holding LLC, sole member

By: _________________________________
Name:
Title:

Exhibit A - Page 2

EXHIBIT B

FORM OF CONTINUATION/CONVERSION NOTICE

CITICORP USA, INC..
[_____]
[_____]

Attention:  __________________

NEG OPERATING LLC

Gentlemen and Ladies:

This Continuation/Conversion Notice is delivered to you pursuant to
Section 2.4 of the Amended and Restated Credit Agreement dated as of December
20, 2005 (together with all amendments and other modifications, if any, from
time to time thereafter made thereto, the "CREDIT AGREEMENT"), among the
Borrower, the various financial institutions as are or may become parties
thereto (including the Lender) (collectively, the "LENDERS"), AREP Oil & Gas
LLC, as administrative agent (in such capacity together with any successors
thereto, the "ADMINISTRATIVE AGENT") for the Lenders, and the other agents and
lenders party thereto. Unless otherwise defined herein or the context otherwise
requires, terms used herein have the meanings provided in the Credit Agreement.

The Borrower hereby requests that on  __________, 20___,

(1) $__________ of the presently outstanding principal amount of
the Loans originally made on  __________, 20___ [and $__________ of
the presently outstanding principal amount of the Loans originally
made on __________, 20___],

(2) and all presently being maintained as *[Base Rate Loans]
[Eurodollar Loans],

(3) be [converted into] [continued as],

(4) [Eurodollar Loans having an Interest Period of ______ months]
[Base Rate Loans].

The Borrower hereby:

----------
* Select appropriate interest rate option.

Exhibit B - Page 1

(a)   certifies and warrants that no Event of Default has occurred
and is continuing; and

(b)   agrees that if prior to the time of such continuation or
conversion any matter certified to herein by it will not be true and
correct at such time as if then made, it will immediately so notify the
Administrative Agent.

Except to the extent, if any, that prior to the time of the continuation or
conversion requested hereby the Administrative Agent shall receive written
notice to the contrary from the Borrower, each matter certified to herein shall
be deemed to be certified at the date of such continuation or conversion as if
then made.

The Borrower has caused this Continuation/Conversion Notice to be executed
and delivered, and the certification and warranties contained herein to be made,
by its Authorized Officer this ___ day of _________, 20___.

NEG OPERATING LLC

By: NEG Holding LLC, sole member

By:_______________________________
Name:
Title:

Exhibit B - Page 2