OBE Obsidian Energy Ltd

Exhibit

Description

ARTICLE 1

INTERPRETATION

1.1

Definitions.

1.2

Headings.

1.3

Subdivisions.

1.4

Number.

1.5

Statutes, Regulations and Rules.

1.6

Monetary Reference.

1.7

Time.

1.8

Governing Law.

1.9

Enurement.

1.10

Amendments.

1.11

No Waiver.

1.12

Severability.

1.13

Inconsistency.

1.14

Accounting Terms and Principles.

1.15

Accounting Change.

1.16

Schedules.

ARTICLE 2

CONDITIONS PRECEDENT TO EFFECTIVENESS

2.1

Conditions Precedent to Effectiveness.

ARTICLE 3

CREDIT FACILITY

3.1

The Credit Facility.

3.2

Increase in Commitment Amount.

3.3

Outstanding Letters of Credit as at the Closing Date.

3.4

Extension of Tranche A.

3.5

Maturity Date.

3.6

Repayment of Credit Facility.

3.7

Revolving Facility.

3.8

Payments to Agent.

3.9

Use of Proceeds.

3.10

Swing Line Loans.

ARTICLE 4

ADVANCES

4.1

Types of Accommodation.

4.2

Interest and Fees.

4.3

Applicable Margins on Closing Date.

ARTICLE 5

UNSECURED CREDIT FACILITY

5.1

Unsecured Credit Facility.

ARTICLE 6

FUNDING AND OTHER MECHANICS APPLICABLE TO

THE CREDIT FACILITY

6.1

Funding of Accommodations.

6.2

Notice Provisions.

6.3

Irrevocability.

6.4

Rollover or Conversion of Accommodations.

6.5

Agent’s Obligations.

6.6

Lenders’ Obligations.

6.7

Currency Fluctuation.

6.8

Excess Relating to LIBOR, LCs and BAs.

ARTICLE 7

DRAWDOWN UNDER THE CREDIT FACILITY

7.1

Conditions Precedent to all Drawdowns.

7.2

Hostile Acquisitions.

7.3

Adjustment of Rateable Portion.

7.4

Subsequent Drawdowns.

7.5

Prepayment.

ARTICLE 8

CALCULATION OF INTEREST AND FEES

8.1

Records.

8.2

Payment of Interest and Fees.

8.3

Payment of Stamping Fee.

8.4

Calculation and Payment of Issuance Fees and Fronting Fees.

8.5

Standby Fees.

8.6

Debit Authorization.

8.7

Conversion to Another Currency.

8.8

Maximum Rate of Return.

8.9

Waiver of Judgment Interest Act (Alberta).

8.10

Deemed Reinvestment Not Applicable.

ARTICLE 9

GENERAL PROVISIONS RELATING TO LIBOR BASED LOANS

9.1

General.

9.2

Early Termination of LIBOR Periods.

9.3

Inability to Make LIBOR Based Loans.

ARTICLE 10

BANKERS’ ACCEPTANCES

10.1

General.

10.2

Terms of Acceptance by the Lenders.

10.3

General Mechanics.

10.4

BA Equivalent Advance.

10.5

Execution of Bankers’ Acceptances.

10.6

Escrowed Funds.

10.7

Market Disruption.

ARTICLE 11

LETTERS OF CREDIT

11.1

General.

11.2

Records.

11.3

Certain Notices to the Agent with Respect to Letters of Credit.

ARTICLE 12

INCREASED COSTS

12.1

Changes in Law.

12.2

Changes in Circumstances.

12.3

Application of Sections 12.1 and 12.2.

12.4

Limitations on Additional Compensation.

12.5

Taxes.

ARTICLE 13

REPRESENTATIONS AND WARRANTIES OF THE BORROWER

13.1

Representations and Warranties.

13.2

Acknowledgement.

13.3

Survival and Inclusion.

ARTICLE 14

COVENANTS OF THE BORROWER

14.1

Affirmative Covenants.

14.2

Financial Covenants.

14.3

Negative Covenants.

ARTICLE 15

DESIGNATION OF RESTRICTED SUBSIDIARIES

15.1

Designation of Non-Restricted/Restricted Subsidiaries.

ARTICLE 16

INDEMNITIES OF BORROWER

16.1

Indemnity of Borrower.

16.2

General Indemnity.

16.3

Right to Defend.

ARTICLE 17

REORGANIZATION

17.1

Successor Entity.

ARTICLE 18

EVENTS OF DEFAULT

18.1

Event of Default.

18.2

Remedies.

18.3

Adjustments.

18.4

Waivers.

18.5

Set-off.

18.6

Application of Proceeds.

ARTICLE 19

CONFIDENTIALITY

19.1

Non-Disclosure.

19.2

Exceptions.

19.3

Permitted Disclosures by Agent and Lenders.

19.4

Survival.

ARTICLE 20

ASSIGNMENT

20.1

Assignment of Interests.

20.2

Assignment by the Lenders.

20.3

Effect of Assignment.

20.4

Participations.

ARTICLE 21

ADMINISTRATION OF THE CREDIT FACILITY

21.1

Authorization and Action.

21.2

Procedure for Making Advances.

21.3

Remittance of Payments.

21.4

Redistribution of Payment.

21.5

Duties and Obligations.

21.6

Prompt Notice to the Lenders.

21.7

Agent and Agent Authority.

21.8

Lenders’ Credit Decisions.

21.9

Indemnification.

21.10

Successor Agent.

21.11

Taking and Enforcement of Remedies.

21.12

Reliance Upon Agent.

21.13

Agent May Perform Covenants.

21.14

No Liability of Agent.

21.15

Nature of Obligations under this Agreement.

21.16

Lender Consent.

21.17

Defaulting Lenders.

21.18

Departing Lenders.

ARTICLE 22

MISCELLANEOUS

22.1

Notices.

22.2

Telephone Instructions.

22.3

No Partnership, Joint Venture or Agency.

22.4

Judgment Currency.

22.5

Further Assurances.

22.6

Expenses.

22.7

Waiver of Laws.

22.8

Attornment and Waiver of Jury Trial.

22.9

Interest on Out-of-Pocket Payments.

22.10

Payments Due on Banking Day.

22.11

Anti-Money Laundering Legislation.

22.12

Whole Agreement.

22.13

Counterparts.

Definitions.

Headings.

Subdivisions.

Number.

Statutes, Regulations and Rules.

Monetary Reference.

Time.

Governing Law.

Enurement.

Amendments.

No Waiver.

Subject to Sections 1.11(c) and 21.16(a), no waiver by a Party of any provision or of the breach of any provision of any of the Documents will be effective unless it is contained in a written instrument duly executed by an authorized officer or representative of such Party. Such written waiver will affect only the matter specifically identified in the instrument granting the waiver and will not extend to any other matter, provision or breach.

The failure of a Party to take any steps in exercising any right in respect of the breach or non-fulfilment of any provision of any of the Documents will not operate as a waiver of that right, breach or provision, nor will any single or partial exercise of any right preclude any other or future exercise of that right or the exercise of any other right, whether in Law or otherwise.

Acceptance of payment by a Party after a breach or non-fulfilment of any provision of any of the Documents requiring a payment to such Party will constitute a waiver of such provision if cured by such payment, but will not constitute a waiver or cure of any other provision of any of the Documents.

Severability.

Inconsistency.

Accounting Terms and Principles.

Accounting Change.

In the event that any Accounting Change occurs, the Borrower will provide notice thereof to the Agent (an “Accounting Change Notice”) together with a description of the nature of such Accounting Change. Such notice shall describe the effect of such Accounting Change on the Borrower’s current and immediately prior year’s financial statements. If the Borrower, the Agent or the Majority Lenders determines that any such change would cause an amount required to be determined for the purposes of any financial covenant in Section 14.2 or any other financial calculation hereunder (each a “Financial Calculation”) to be materially different than the amount that would be determined without giving effect to such change, then the Borrower, the Agent or the Majority Lenders, as the case may be, shall notify the other Parties of such Accounting Change. Such notice shall state whether the Borrower, the Agent or the Majority Lenders, as applicable, wishes to revise the method of calculating one or more of the Financial Calculations (including the revision of any of the defined terms used in the determination of such Financial Calculation) in order that amounts determined after giving effect to such Accounting Change and the revised method of calculating such Financial Calculation will approximate the amount that would be determined without giving effect to such Accounting Change and without giving effect to the revised method of calculating such Financial Calculation; provided that if the Accounting Change Notice is delivered by the Agent or the Majority Lenders, they may request that the Borrower provide, within a reasonable time, the Accounting Change’s effect on the Borrower’s current and immediately prior year’s financial statements. The Accounting Change Notice shall be delivered within 60 days after the end of the fiscal quarter in which the Accounting Change is implemented or, if such Accounting Change is implemented in the fourth fiscal quarter or in respect of an entire fiscal year, within 120 days after the end of such period. Following receipt of an Accounting Change Notice, either the Borrower or the Majority Lenders may provide a proposal to the other as to how to amend the provisions of this Agreement.

If, pursuant to the Accounting Change Notice, the Borrower, the Agent or Majority Lenders, as applicable, does not indicate that it desires to revise the method of calculating one or more of the Financial Calculations, the Borrower or the Majority Lenders, as applicable, may within 30 days after receipt of the Accounting Change Notice, notify the Borrower or the Lenders, as applicable, that they wish to revise the method of calculating one or more of the Financial Calculations in the manner described above.

If either the Borrower, the Agent or the Majority Lenders so indicate that they wish to revise the method of calculating one or more of the Financial Calculations, the Borrower and the Lenders shall in good faith attempt to agree on a revised method of calculating such Financial Calculations, provided that until such time as any such agreement in writing has been reached, such method of calculation shall not be revised and all amounts to be determined thereunder shall be determined without giving effect to the Accounting Change. For greater certainty, if no notice of a desire to revise the method of calculating the Financial Calculations in respect of an Accounting Change is given by either the Borrower, the Agent or the Majority Lenders within the applicable time period described above, then the method of calculating the Financial Calculations shall not be revised in response to such Accounting Change and all amounts to be determined pursuant to the Financial Calculations shall be determined after giving effect to such Accounting Change.

If a Compliance Certificate is delivered in respect of a fiscal quarter or fiscal year in which an Accounting Change is implemented without giving effect to any revised method of calculating any of the Financial Calculations, and subsequently, as provided above, the method of calculating one or more of the Financial Calculations is revised in response to such Accounting Change, or the amounts to be determined pursuant to any of the Financial Calculations are to be determined without giving effect to such Accounting Change, the Borrower shall, as soon as reasonably possible, deliver a revised Compliance Certificate. Any Event of Default which arises as a result of the Accounting Change and which is cured by this Section 1.15 shall be deemed to have never occurred.

Schedules.

Conditions Precedent to Effectiveness.

a duly executed copy of this Agreement;

a certificate of status or other similar type evidence from its jurisdiction of formation for each Loan Party that is a corporation or a partnership;

a duly executed copy of a Closing Certificate from the Borrower;

a duly executed copy of the Guarantee Agreement by each Loan Party other than the Borrower, in form and substance satisfactory to the Agent, acting reasonably;

a duly executed copy of a guarantee from the Borrower in favour of the Agent on behalf of the Hedge Providers, in form and substance satisfactory to the Agent, acting reasonably;

a duly executed copy of the Closing Opinion;

a duly executed copy of a legal opinion from Lenders’ counsel;

a Notice of Borrowing for an amount sufficient, together with any additional funds for which satisfactory arrangements are in place to ensure payment, to repay in full the Existing Credit Facility;

a copy of a notice of cancellation in respect of the Existing Credit Facility;

any information, including supporting documentation and other evidence, requested by any Lender or the Agent pursuant to Section 22.11; and

the payment of all fees and expenses which are payable by the Borrower to the Agent and Lenders on or prior to the Closing Date.

The Credit Facility.

Tranche A. The Tranche A Lenders, on a several basis, hereby establish Tranche A under the Credit Facility in favour of the Borrower up to the Tranche A

Commitment Amount set forth in Schedule B. Accommodations under Tranche A may be drawn down by the Borrower in Canadian Dollars or the Canadian Dollar Exchange Equivalent thereof in U.S. Dollars, or any combination thereof, to a maximum of the Tranche A Commitment Amount. The Individual Tranche A Commitment Amount of each Tranche A Lender is set out in Schedule B. The Swing Line Loan Limit will be made available under Tranche A by way of Swing Line Loans by the Swing Line Lender in accordance with the terms of this Agreement.

Tranche B.  The Tranche B Lenders, on a several basis, hereby establish Tranche B under the Credit Facility in favour of the Borrower up to the Tranche B Commitment Amount set forth in Schedule B. Accommodations under Tranche B may be drawn down by the Borrower in Canadian Dollars or the Canadian Dollar Exchange Equivalent thereof in U.S. Dollars, or any combination thereof, to a maximum of the Tranche B Commitment Amount. The Individual Tranche B Commitment Amount of each Tranche B Lender is set out in Schedule B.

Increase in Commitment Amount.

no Default or Event of Default has occurred and is continuing:

the Tranche A Commitment Amount as a result of the application of this Section 3.2 shall not at any time exceed Cdn. $1,450,000,000;

the Agent, the Swing Line Lender and each Fronting Lender have each consented to such financial institution becoming a Lender or, in the case of an existing Lender, increasing its Individual Commitment Amount, such consent not to be unreasonably withheld;

the Individual Commitment Amount of a new financial institution being added as a Lender pursuant to this Section 3.2 shall be no less than Cdn. $[Redacted];

concurrently with the addition of a financial institution as an additional Lender or the increase of a Lender’s Individual Commitment Amount, such financial institution or Lender, as the case may be, shall purchase from each Lender, such portion of the Aggregate Principal Amount owed to each Lender as is necessary to ensure that the Aggregate Principal Amount owed to all Lenders and including therein such additional financial institution and the increased Individual Commitment Amount of any Lender, are in accordance with the Lender’s Rateable Portions of all such Lenders (including any new financial institution and the increased Individual Commitment Amount of any Lender) and such financial institution shall execute such documentation as is required by the Agent, acting reasonably, to novate such financial institution as a Lender hereunder; provided

that with respect to any portion of such Aggregate Principal Amount which is outstanding by way of Bankers’ Acceptance, the new financial institution or such Lender shall provide an indemnity to the other Lenders (provided that no such indemnity may exceed two months in duration unless agreed to by all of the affected Lenders) in order to ensure such Bankers’ Acceptances are outstanding in accordance with the new Rateable Portions; and

the Borrower has provided to the Agent a certified copy of a directors’ resolution of the Borrower authorizing any such increase in the Commitment Amount (which may be the original directors’ resolution authorizing the credit facility hereunder) together with a legal opinion with respect thereto in substantially the same form as the Closing Opinion.

Outstanding Letters of Credit as at the Closing Date.

Extension of Tranche A.

Notice by Borrower.    The Borrower may, at its option, request (an “Extension Request”) that the Termination Date applicable to Tranche A be extended from the Termination Date then applicable to Tranche A (an “Extension”) at any time after the date that annual audited consolidated financial statements of the Borrower are delivered under Section 14.1(h) until six months thereafter (the “Request Period”), provided that following the granting of such Extension, the term to maturity of Tranche A shall not exceed five years from the date of the Extension Notice in respect of the applicable Extension Request. The Agent will promptly after receipt thereof, provide a copy of the Extension Request to each of the Tranche A Lenders. If the Borrower fails to make an Extension Request during the Request Period in respect of Tranche A, Tranche A will no longer be capable of being extended as herein provided until the next Request Period. For certainty, there is no right to request an extension of Tranche B provided under this Agreement.

Electing and Non-Electing Lenders.   Each Tranche A Lender may, in its sole discretion, pursuant to an Extension Request, elect to extend the current Termination Date with respect to its Individual Tranche A Commitment Amount, subject however to such conditions and amendments respecting the Credit Facility or Tranche A, if any, as the Electing Lenders (as defined below) unanimously agree upon and are acceptable to the Borrower. Each such Tranche A Lender will make its election by notice to the Agent on or before 30 days from the date of the Extension Request (the “Election Period”). Each Tranche A Lender which grants an Extension is referred to herein as an “Electing Lender”, and each Tranche A Lender which elects not to grant an Extension, or fails to make such election within the Election Period, is referred to herein as a “Non-Electing Lender”.

No Extension.    No Extension shall occur unless those Tranche A Lenders who wish to grant an Extension pursuant to an Extension Request represent at least 66 2/3% of the aggregate Individual Tranche A Commitment Amount of all Tranche A Lenders who are not Non-Electing Lenders at the time of such Extension Request. If no Extension occurs, the then current Termination Date of the Tranche A Lenders under Tranche A who are not already Non-Electing Lenders will, subject to Section 3.4(e), continue for each such Tranche A Lender and each such Tranche A Lender’s Individual Tranche A Commitment Amount will remain available for Drawdown in accordance with Section 6.6 until the Termination Date under Tranche A; provided that the Borrower may again make an Extension Request in respect of Tranche A during the Request Period in the next calendar year in accordance with Section 3.4(a).

Extension Notice.    Promptly after the expiry of the Election Period, the Agent will notify the Borrower of the decision of the Tranche A Lenders with respect to its Extension Request (the “Extension Notice”). The Extension Notice will identify the Electing Lenders and Non-Electing Lenders, the term of the Extension, if granted, and a list the conditions or amendments, if any, respecting the Credit Facility or Tranche A as the Electing Lenders have unanimously agreed upon as a condition to the granting of the Extension. The Borrower will, within 20 days of receipt of the Extension Notice from the Agent, notify the Agent as to its acceptance or rejection of the conditions or amendments, if any, stipulated by the Electing Lenders respecting the Credit Facility or Tranche A. If the Borrower accepts all such conditions or amendments requested by the Electing Lenders, the Termination Date applicable to Tranche A with respect to the Electing Lenders will be deemed to have been extended for that period of time set out in the Extension Notice and, subject to Section 3.4(e), the Termination Date with respect to the Non-Electing Lenders shall not be extended. If the Borrower notifies the Agent that it does not accept such conditions or amendments or fails to notify the Agent within the time provided above for acceptance, the Termination Date applicable to Tranche A will not be extended as herein provided and will continue until the Termination Date with each Tranche A Lenders’ Individual Tranche A Commitment Amount remaining available for Drawdown until the then existing Termination Date; provided that the Borrower may again make an Extension Request during the next Request Period.

Replacement of Non-Electing Lender.    Notwithstanding Section 3.7(b), and provided that Tranche A Lenders representing more than 66 2/3% of the aggregate Individual Tranche A Commitment Amounts of all Electing Lenders have elected to grant an Extension in respect of Tranche A, the Borrower will be entitled to exercise one of the following options, with respect to any Tranche A Lender who has become a Non-Electing Lender, prior to the Termination Date applicable to such Non-Electing Lender under Tranche A:

so long as no Default or Event of Default has occurred and is continuing, the Borrower may repay in full the Principal Amount under Tranche A owing to such Non-Electing Lender (and if such Tranche A Lender is also a Tranche B Lender, then, at the Borrower’s election, the Principal Amount under Tranche B as well) together with all accrued but unpaid interest and fees thereon and any expenses and breakage and other costs determined in accordance with Section 9.2 and including cash collateralization in full of any contingent obligations in respect of any outstanding Letters of Credit for which the Non-Electing Lender is the LC Issuer, provided that a Bankers’ Acceptance will not be paid prior to its Maturity Date (but provided that the Borrower may provide Escrow Funds in respect thereof to the Agent on behalf of such Tranche A Lender in accordance with Section 10.6), and upon such payment such Tranche A Lender’s Individual Tranche A Commitment Amount (and if applicable its Individual Tranche B Commitment Amount) will be permanently cancelled (subject to Section 3.10(i)); or

the Borrower may replace the Non-Electing Lender with one or more financial institutions with the consent of the Agent, the Swing Line Lender and each Fronting Lender, such consent not to be unreasonably be withheld, who purchase such Tranche A Lender’s entire Individual Tranche A Commitment Amount (and if applicable its Individual Tranche B Commitment Amount) in accordance with Section 20.2.

Maturity Date.

Repayment of Credit Facility.

Revolving Facility.

Revolving Nature.  The Borrower may borrow, repay and re-borrow any amount of the Individual Commitment Amount under either Tranche of each Lender

based on the Rateable Portion of such Lender’s Individual Commitment Amount under such Tranche until the Termination Date applicable to such Lender under such Tranche.

General Right to Prepay.      Subject to Section 3.4(e), Section 3.7(c) and Section 9.2 and with the same notice required when the Advance to be prepaid was made, the Borrower may at any time prepay, without premium, bonus or penalty, any or all of the Aggregate Principal Amount (including under one Tranche and not the other), except that a Bankers’ Acceptance will not be paid prior to its Maturity Date and an unexpired Letter of Credit will not be prepaid prior to its Maturity Date (except by the return of the original thereof to the LC Issuer for cancellation or by the collateralization thereof in the manner set forth in Section 11.1(e) with the consent of the LC Issuer and the Agent).

General Right to Cancel.   Subject to Section 3.4(e), the Borrower may also at any time, upon the Borrower giving the Agent not less than 3 Banking Days’ prior notice, cancel in whole or in part any undrawn portion of the Commitment Amount under either Tranche, provided that any such cancellation of the Commitment Amount will be made pro rata to all Lenders under the applicable Tranche on the basis of each such Lender’s Rateable Portion thereof and will result in a permanent reduction of the Commitment Amount under such Tranche.

Payments to Agent.

Use of Proceeds.

Swing Line Loans.

Availability.   Notwithstanding Sections 6.2, 6.4, 6.6 and 21.2(a), the Borrower may obtain Swing Line Loans (which shall be available solely under Tranche A) in the following manner:

in the case of Canadian Prime Rate Loans and U.S. Base Rate Loans, on an overdraft basis or by delivering a duly executed Notice of Borrowing to the Swing Line Lender not later than 10:00 a.m. (Calgary time) on the proposed Drawdown Date;

in the case of Bankers’ Acceptances, by delivering a duly executed Notice of Borrowing to the Swing Line Lender not later than 9:00 a.m. (Calgary time) on the proposed Drawdown Date; and

in the case of Swing Line Letters of Credit and subject to Section 3.10(j), by delivering a duly executed Notice of Borrowing to the Swing Line Lender at least 3 Banking Days prior to the proposed Drawdown Date (or such shorter or longer period as may be determined by the Swing Line Lender, acting reasonably).

Individual Limits.   Subject to Section 6.7, at no time shall (i) the Aggregate Principal Amount of all Swing Line Loans owing to the Swing Line Lender exceed the Swing Line Loan Limit or (ii) the Aggregate Principal Amount of all Swing Line Loans owing to the Swing Line Lender plus such Lender’s Rateable Portion of the Aggregate Principal Amount of all Syndicated Advances under Tranche A exceed such Lender’s Individual Tranche A Commitment Amount; provided that the Agent may, in its discretion, acting reasonably, adjust each Tranche A Lender’s (including the Swing Line Lender’s) Rateable Portion of Syndicated Advances in accordance with its customary practice if and to the extent required to ensure that, subject to Section 3.10(c), any undrawn availability of Swing Line Loans or Syndicated Advances under Tranche A, as applicable, is capable of being fully drawn, including deeming all or any portion of the Swing Line Loan Limit to be drawn for purposes of determining the Rateable Portion of the Swing Line Lender for each Syndicated Advance under Tranche A. If at any time for whatever reason the Aggregate Principal Amount of all Swing Line Loans owing to the Swing Line Lender exceeds the Swing Line Loan Limit, the amount of such excess shall be immediately repaid by the Borrower to the Swing Line Lender either directly or by way of a conversion of such excess amount into a Syndicated Advance under Tranche A in accordance with Section 3.10(h).

Aggregate Limit.  Subject to Section 6.7, at no time shall the Aggregate Principal Amount of all Swing Line Loans plus the Aggregate Principal Amount of all Syndicated Advances under Tranche A exceed the Tranche A Commitment Amount.

Repayment.   Each Swing Line Loan (other than a Swing Line Letter of Credit) shall be repaid by the Borrower (or converted into a Syndicated Advance under Tranche A in accordance with Section 3.10(h)) within 30 days after the relevant Drawdown Date (in the case of a Canadian Prime Rate Loan or a U.S. Base Rate Loan) or on the maturity date (not to exceed 30 days after the relevant Drawdown Date) selected by the Borrower in the Notice of Borrowing requesting such Swing Line Loan (in the case of Bankers’ Acceptances). No notice of repayment shall be required to be given by the Borrower in respect of any such repayment of any Swing Line Loan nor shall Swing Line Loans be Rolled Over or Converted except for conversions into Syndicated Advances under Tranche A in accordance with Section 3.10(h).

Mandatory Repayment.  If the Borrower requests a Syndicated Advance under Tranche A and the Swing Line Lender’s Rateable Portion of such Syndicated Advance would cause its Rateable Portion of all Syndicated Advances then outstanding under Tranche A together with the Aggregate Principal Amount of all Swing Line Loans to exceed the Swing Line Lender’s Individual Commitment Amount, then the Borrower shall be required to repay such Swing Line Loans (or to Convert some into a Syndicated Advance under Tranche A in accordance with Section 3.10(h)) to the extent of such excess on or before the requested date of such Syndicated Advance.

Prepayments.   The Borrower may make prepayments of Swing Line Loans at any time and from time to time without notice or penalty; provided that: (i) any Swing Line Loan by way of Bankers’ Acceptances cannot be prepaid prior to its Maturity Date, and (ii) any Swing Line Letter of Credit may only be prepaid if the original of such Letter of Credit is returned to the Swing Line Lender for cancellation or collateralized in accordance with Section 11.1(e), subject to the consent of the Swing Line Lender and the Agent.

Sole Account.  All interest payments, acceptance fees, standby fees and principal repayments of or in respect of Swing Line Loans and the Swing Line Loan Limit shall be solely for the account of the Swing Line Lender. Subject to Section 3.10(h), all costs and expenses relating to the Swing Line Loans shall be solely for the account of the Swing Line Lender.

Conversion to Syndicated Advances.  Notwithstanding anything to the contrary herein contained, (i) at any time at the option of the Borrower or (ii) if an Event of Default occurs, if the Aggregate Principal Amount of all Swing Line Loans owing to the Swing Line Lender exceeds the Swing Line Loan Limit or if any Swing Line Loan is not repaid on its Maturity Date, then (in the case of clause (i) above) the Borrower shall give notice to the Swing Line Lender and the Agent, or (in the case of clause (ii) above) the Swing Line Lender shall give notice to the Borrower and the Agent (which notice shall in each case direct a conversion of such Swing Line Loan into a Syndicated Advance under Tranche A and shall specify the particulars of such Swing Line Loans), and the Agent shall forthwith provide a copy of such notice to the other Lenders and, effective on the effective date of such notice, the Borrower shall be deemed to have requested a conversion of such Swing Line Loan into a Syndicated Advance under Tranche A, in the same type of Accommodation as the relevant Swing Line Loan (which in the case of a maturing Bankers’ Acceptance, shall be a Canadian Prime Rate Loan), and in an amount sufficient to repay the relevant Swing Line Loan and accrued and unpaid interest in respect thereof. Subject to the same notice period set out in Section 6.2, and excluding any Swing Line Letters of Credit which are to be converted into Fronted Letters of Credit, such other Tranche A Lenders shall disburse to the Agent for payment to the Swing Line Lender their respective

Rateable Portions of such amounts and such amounts shall thereupon be deemed to have been advanced by such other Tranche A Lenders to the Borrower and to constitute Syndicated Advances under Tranche A by way of Canadian Prime Rate Loans (if the relevant Swing Line Loan was denominated in Canadian Dollars) or U.S. Base Rate Loans (if the relevant Swing Line Loan was denominated in U.S. Dollars). Such Syndicated Advances under Tranche A shall be deemed to be comprised of principal and accrued and unpaid interest in the same proportions as the corresponding Swing Line Loans.

Unconditional Obligation.  For certainty, it is hereby acknowledged and agreed that the Tranche A Lenders shall be obligated to disburse to the Agent for payment to the Swing Line Lender their respective Rateable Portions of any Syndicated Advances under Tranche A contemplated by Section 3.10(h) regardless of:

whether a Default or Event of Default has occurred or is then continuing or whether any other condition in Section 7.1 is met;

whether or not the Borrower has, in fact, actually requested such conversion (by delivery of a Notice of Conversion or otherwise); and

whether or not a Person was a Lender at the time the applicable Swing Line Loan was made.

Swing Line Letters of Credit.   The Swing Line Lender may also, at the request of the Borrower, issue Letters of Credit as a Swing Line Loan in Canadian Dollars or U.S. Dollars (each, a “Swing Line Letter of Credit”) in accordance with the terms set forth in Section 11.1.

Swing Line Loan Limit.   The Borrower may, upon written notice to the Agent from time to time but no more than once per calendar month, change the Swing Line Loan Limit (in multiples of $1,000,000) provided that the maximum amount of the Swing Line Loan Limit shall at no time exceed Cdn.$100,000,000 (the “Swing Line Loan Limit”). As of the Closing Date, the Swing Line Loan Limit is Cdn.$75,000,000.

Types of Accommodation.

Canadian Dollar Advances.  For Advances in Canadian Dollars:

Canadian Prime Rate Loans in minimum amounts of not less than Cdn. $25,000,000 and in multiples of Cdn. $100,000 (except no such

minimum shall apply to Swing Line Cdn. $ Loans (which shall be available solely under Tranche A), or when Swing Line Cdn. $ Loans are converted into Syndicated Advances under Tranche A);

Bankers’ Acceptances;

under Tranche A only, Fronted Letters of Credit, subject to Section 11.1(a)(i); and

under Tranche A only, Swing Line Letters of Credit, subject to Section 11.1(a)(ii).

U.S. Dollar Advances.  For Advances in U.S. Dollars:

U.S. Base Rate Loans in minimum amounts of not less than U.S. $25,000,000 and in multiples of U.S. $100,000 (except no such minimum shall apply to Swing Line U.S. $ Loans (which shall be available solely under Tranche A) or when Swing Line U.S. $ Loans are converted into Syndicated Advances);

LIBOR Based Loans;

under Tranche A only, Fronted Letters of Credit, subject to Section 11.1(a)(i); and

under Tranche A only, Swing Line Letters of Credit, subject to Section 11.1(a)(ii).

Interest and Fees.

Canadian Prime Rate Loans.   Each Advance of a Canadian Prime Rate Loan will bear interest at a variable rate of interest per annum equal to the Canadian Prime Rate plus the applicable margin as indicated in the table set forth in Section 4.2(i).

U.S. Base Rate Loans.    Each Advance of a U.S. Base Rate Loan will bear interest at a variable rate per annum equal to the U.S. Base Rate plus the applicable margin as indicated in the table set forth in Section 4.2(i).

LIBOR Based Loans.  Each Advance of a LIBOR Based Loan will bear interest at a rate per annum equal to LIBOR plus the applicable margin as indicated in the table set forth in Section 4.2(i).

Stamping Fees on Bankers’ Acceptances.    For each Advance by way of a Bankers’ Acceptance, the stamping fee payable by the Borrower will be calculated on the face amount of the Bankers’ Acceptance and adjusted for the term to maturity thereof, and will be the applicable margin as indicated in the table set forth in Section 4.2(i) (expressed as a rate per annum).

Issuance Fees for Letters of Credit.  For each Letter of Credit, the Issuance Fee in respect thereof will be calculated based on the face amount of such Letter of Credit and the term thereof, such Issuance Fee to be equal to the applicable margin for Letters of Credit (expressed as a rate per annum) as indicated in the table set forth in Section 4.2(i), subject to a minimum fee to be charged by the applicable LC Issuer on each issuance or renewal of a Letter of Credit as determined in accordance with such LC Issuer’s usual and customary practices. The Borrower will also pay to the LC Issuer, for its own account, its customary administrative charges in respect of such Letter of Credit, and each drawing made under such Letter of Credit.

Fronting Fee.    The Borrower will pay to the Agent for distribution to the applicable Fronting Lender, in respect of each Fronted Letter of Credit issued, to be issued or renewed by such Fronting Lender and as a condition of such issuance or renewal, a non-refundable fronting fee (“Fronting Fee”) for the account of such Fronting Lender, in the currency of the Fronted Letter of Credit calculated, on a basis of the face amount and term of the Fronted Letter of Credit at a rate per annum as is agreed in writing between the Borrower and the applicable Fronting Lender from time to time (as advised to the Agent in writing by such Fronting Lender from time to time).

Standby Fee.  The Borrower will, effective from and including the Closing Date, pay to the Agent for the benefit of each Lender a standby fee equal to the Basis Points indicated in the table set forth in Section 4.2(i), calculated on the basis of a 365 day year, multiplied by an amount equal to the Individual Commitment Amount of such Lender under the Credit Facility less the Canadian Dollar Exchange Equivalent of the Principal Amount owing to such Lender under the Credit Facility. The standby fee payable on the Swing Line Loan Limit shall be applied to the Swing Line Loan Limit less the Principal Amount of Swing Line Loans outstanding and shall accrue solely to the Swing Line Lender (provided that for the purposes of calculating standby fees on the remainder of the Swing Line’s Lender’s Individual Tranche A Commitment Amount, the Swing Line Loan Limit shall be deducted from such Individual Tranche A Commitment).

Agency Fee.      The Borrower will pay to the Agent on an annual basis commencing on the Closing Date and on each anniversary thereof, the agency fee agreed upon between the Borrower and the Agent.

Applicable Margins.   The following table is referred to herein as the “Pricing Table”:

*        Non-Financial LCs will be issued at 66 2/3 % of the applicable issuance fees stated in the Pricing Table above applicable to Financial LCs.

Change in Rates Due to Change in Ratio.  The effective date on which any change in interest rates on Canadian Prime Rate Loans, U.S. Base Rate Loans and LIBOR Based Loans, standby fees, stamping fees or Issuance Fees occurs will be the earlier of: (i) the third Banking Day following the receipt by the Agent of the Compliance Certificate which evidences a change in the Consolidated Senior Debt to EBITDA Ratio: and (ii) the date such Compliance Certificate is due in accordance with Section 14.1(g). If the Borrower fails to deliver a Compliance Certificate in accordance with Section 14.1(g), then the applicable margins indicated in the Pricing Table shall be deemed to be at Level 5 in the Pricing Table until such time as the applicable Compliance Certificate is delivered (and notwithstanding the Event of Default which arises from such failure to so deliver such Compliance Certificate). Any increase or decrease in the interest rates on LIBOR Based Loans or Issuance Fees on Letters of Credit outstanding on the effective date of a change in such ratio will apply proportionately to each such LIBOR Based Loan or Letter of Credit outstanding on the basis of the number of days remaining in the term to maturity thereof. The stamping fees already paid by the Borrower in respect of any Bankers’ Acceptance having an unexpired maturity date in excess of 45 days on the effective date referred to above will be adjusted to reflect the applicable stamping fee for the remaining term of the Bankers’ Acceptance, and the Borrower will pay to the Agent for the benefit of the Lenders any resulting increase in stamping fees in respect of such outstanding Bankers’ Acceptances, and the Lenders will pay to the Agent for the benefit of the Borrower any resulting decrease in stamping fees in respect of such outstanding Bankers’ Acceptances, in each case within 3 Banking Days of the effective date of such change.

Event of Default.  Effective immediately following receipt by the Borrower of a notice of an Event of Default (the “Effective Date”), the interest rates then applicable to Canadian Prime Rate Loans, LIBOR Based Loans and U.S. Base Rate Loans, Issuance Fees on outstanding Letters of Credit and stamping fees on Bankers’ Acceptances hereunder will each increase by [Redacted]% per annum and such increase will remain in effect for as long as such Event of Default subsists. An increase in stamping fees on Bankers’ Acceptances hereunder and in interest rates on LIBOR Based Loans hereunder as aforesaid arising from an Event of Default will on the Effective Date apply proportionately to each such Advance outstanding on the basis of the number of days remaining in the term to maturity of each such Advance. The Borrower will pay to the Agent for the

benefit of the applicable Lenders any resulting increase in stamping fees with respect to outstanding Bankers’ Acceptances and Issuance Fees on outstanding Letters of Credit on or prior to the third Banking Day following the Effective Date. In the event that the Event of Default no longer subsists and the Borrower has paid in advance the increased rate for the term to maturity of a particular Advance, the Lenders will provide a credit to the Borrower for the amount of the increase for the remaining term to maturity of such Advance.

Restatement of Ratio.    If the Borrower has delivered a Compliance Certificate certifying financial results that are subsequently found to be inaccurate in any way as a result of the Borrower’s financial results having to be restated or if the Borrower’s financial results were inaccurately reflected in the original financial results on which such Compliance Certificate was based or for any other reason and the result thereof is that the reported Consolidated Senior Debt to EBITDA Ratio was lower than it otherwise would have been in the absence of such inaccuracy or prior to such restatement, then the Borrower will, immediately upon the correction of such inaccuracy or upon such restatement, pay to the Agent for the benefit of the applicable Lenders an amount equal to the interest, stamping fees, Issuance Fees and standby fees that the Lenders should have received, but did not receive, over the applicable period had the originally reported Consolidated Senior Debt to EBITDA Ratio, and the underlying components thereof, been reported correctly in the first instance.

Applicable Margins on Closing Date.

Unsecured Credit Facility.

Funding of Accommodations.

Notice Provisions.

with respect to Advances, other than by way of LIBOR Based Loans or Letters of Credit, at least 1 Banking Day prior to such Advance provided notice is received by the Agent no later than 11:00 a.m. Calgary, Alberta time on the Banking Day immediately preceding the requested Drawdown Date or the date of Rollover or Conversion, as applicable;

with respect to a Drawdown, Rollover or Conversion of or into a LIBOR Based Loan, at least 3 LIBOR Banking Days prior to such Advance, provided notice is received by the Agent no later than 10:00 a.m. Calgary, Alberta time on the third LIBOR Banking Day immediately preceding the Drawdown Date or the date of Rollover or Conversion, as applicable; and

with respect to Letters of Credit, at least 3 Banking Days prior to such Advance (or such shorter or longer period as may be determined by the LC Issuer, acting reasonably).

Irrevocability.

Rollover or Conversion of Accommodations.

Subject to Sections 3.10(d) and 6.2, Article 9 and Article 10, the Borrower will be entitled to Rollover one type of Accommodation (other than Letters of Credit) into the same type of Accommodation under the same Tranche under which such Accommodation was made or Convert one type of Accommodation into another type of Accommodation under the same Tranche under which such Accommodation was made on the terms herein provided.

If the Borrower fails to give the Agent a duly completed Notice of Rollover or Notice of Conversion if and as required by Section 6.2, or if in giving such notice the Borrower fails to provide for the Rollover or Conversion of all of the Advances then maturing, the Borrower will be deemed to have irrevocably elected to Convert such maturing Advances, or that part of such maturing Advances which the Borrower has failed to provide for in such notice, as the case may be, into a Canadian Prime Rate Loan with respect to a Canadian Dollar Advance or a U.S. Base Rate Loan with respect to a U.S. Dollar Advance under the same Tranche under which such Advance was made, except for Letters of Credit which will expire in accordance with the terms thereof.

No Conversion of a Bankers’ Acceptance will be made prior to the Maturity Date thereof and no Rollover of a Bankers Acceptance or a LIBOR Based Loan may be made if a Default or Event of Default exists on the Maturity Date thereof.

Subject to Section 9.2, the Borrower may elect to Convert a LIBOR Based Loan prior to the Maturity Date thereof into another type of Accommodation under the same Tranche under which such Accommodation was made.

For certainty, except as provided in Section 11.1(d) and Section 18.3(d), the Borrower may not effect a Conversion of any Letter of Credit.

Agent’s Obligations.

Lenders’ Obligations.

Currency Fluctuation.

Excess Relating to LIBOR, LCs and BAs.

Conditions Precedent to all Drawdowns.

the appropriate Notice of Borrowing, Notice of Rollover or Notice of Conversion will have been delivered in accordance with the notice provisions provided in Section 6.2, but subject to Section 3.10;

no Default or Event of Default will have occurred and be continuing and no Default or Event of Default shall occur as a result of the making of the applicable Advance;

subject to Section 13.2, each of the representations and warranties set out in Article 13 will be true and correct with the same effect as if such representations and warranties had been made on the date of such Advance; and

the notice with respect to a Hostile Acquisition if required to be given pursuant to Section 7.2 will have been provided by the Borrower and the other provisions of Section 7.2, if applicable, will have been complied with.

Hostile Acquisitions.

at least 10 Banking Days prior to the delivery to the Agent of a Notice of Borrowing made in connection with a Hostile Acquisition, the chairman, chief executive officer, president or a senior financial officer of the Borrower will notify the Agent (who will then notify the Lenders) of the particulars of the Hostile Acquisition in sufficient detail to enable each Lender to determine, in each Lender’s sole discretion, whether it will participate in a Drawdown to be utilized for such Hostile Acquisition;

if a Lender decides not to fund an Advance to be utilized for such Hostile Acquisition, then upon such Lender so notifying the Agent and the Borrower, such Lender will have no obligation to fund such Advance notwithstanding any other provision of this Agreement to the contrary; and

each Lender will use reasonable commercial efforts to notify the Agent as soon as practicable (and in any event within 4 Banking Days of receipt of the particulars thereof from the Agent) of its decision whether or not to fund a proposed Hostile Acquisition.

Adjustment of Rateable Portion.

Subsequent Drawdowns.

Prepayment.

Records.

Payment of Interest and Fees.

Interest.   Except as expressly stated otherwise herein, all Canadian Prime Rate Loans, U.S. Base Rate Loans and LIBOR Based Loans from time to time outstanding under the Credit Facility will bear interest, as well after as before maturity, default and judgment, with interest on overdue interest, at the applicable rates as prescribed under Sections 4.2 and 22.9, as applicable. Interest payable at a variable rate will be adjusted automatically without notice to the Borrower whenever there is a variation in such rate.

Calculation of Interest.    Interest under the Credit Facility on Canadian Prime Rate Loans and U.S. Base Rate Loans will accrue and be calculated daily and be payable monthly in arrears on the first Banking Day of each month for the immediately preceding month, or, after notice to the Borrower, on such other Banking Day as is customary for the Agent having regard to its then existing practice. Interest under the Credit Facility on Canadian Prime Rate Loans and U.S. Base Rate Loans, stamping fees under the Credit Facility on Bankers’ Acceptances and Issuance Fees and Fronting Fees will be calculated on the basis of a 365 day year.

Interest Act (Canada).    For the purposes of the Interest Act (Canada) and all other applicable Laws which may hereafter regulate the calculation or computation of interest on borrowed funds, the annual rates of interest and fees applicable under the Credit Facility to Canadian Prime Rate Loans, U.S. Base Rate Loans, Bankers’ Acceptances and Letters of Credit, respectively, are the rates as determined hereunder multiplied by the actual number of days in a period of one year commencing on the first day of the period for which such interest or such fee is payable and divided by 365.

LIBOR Based Loans.  Interest on LIBOR Based Loans under the Credit Facility will accrue and be calculated daily and be payable at the end of each applicable LIBOR Period, provided that, where the LIBOR Period exceeds 90 days, interest will be calculated and payable every 90 days during the term of the LIBOR Period and on the last day of the applicable LIBOR Period. Interest on LIBOR Based Loans will be calculated on the basis of the actual number of days in each LIBOR Period divided by 360. For the purposes of the Interest Act (Canada) and other applicable Laws which may hereafter regulate the calculation or computation of interest on borrowed funds, the annual rates of interest applicable to LIBOR Based Loans under the Credit Facility are the rates as determined hereunder multiplied by the actual number of days in a period of one year commencing on the first day of the period for which such interest is payable and divided by 360.

Payment of Stamping Fee.

Calculation and Payment of Issuance Fees and Fronting Fees.

Standby Fees.

Debit Authorization.

Conversion to Another Currency.

Maximum Rate of Return.

Waiver of Judgment Interest Act (Alberta).

Deemed Reinvestment Not Applicable.

General.

The aggregate amount of each Advance by way of a LIBOR Based Loan will be at least U.S. $25,000,000 and in multiples of U.S. $100,000 for any amount in excess thereof.

If the Borrower requests a Drawdown by way of a LIBOR Based Loan, to Rollover a LIBOR Based Loan or to Convert an Accommodation into a LIBOR Based Loan, the Borrower will specify in its Notice of Borrowing, Notice of Rollover or Notice of Conversion, as applicable, the LIBOR Period (which will begin and end on a LIBOR Banking Day) applicable to such LIBOR Based Loan. Subject to Section 6.4(b), if the Borrower fails, as required hereunder, to select a LIBOR Period for any proposed LIBOR Based Loan, then the applicable LIBOR Period will be approximately one month as determined by the Agent.

Any amounts owing by the Borrower in respect of any LIBOR Based Loan which is not paid at its Maturity Date in accordance with this Agreement will, as and from its Maturity Date, be deemed to be outstanding as a U.S. Base Rate Loan.

Early Termination of LIBOR Periods.

Inability to Make LIBOR Based Loans.

the Agent (acting reasonably) makes a determination, which determination shall be conclusive and binding upon the Borrower, and notifies the Borrower, that:

by reason of circumstances affecting the London Interbank Eurodollar Market, adequate and fair means do not exist for ascertaining the rate of interest with respect to, or deposits of U.S. Dollars are not available in sufficient amounts in the ordinary course of business at the rate determined hereunder to fund, a requested LIBOR Based Loan during the ensuing LIBOR Period selected; or

the making or continuing of a LIBOR Based Loan by the Lenders has been made impracticable by the occurrence of an event which materially adversely affects the London Interbank Eurodollar Market generally; or

the Agent is advised by Lenders holding at least 25% of the Commitment Amount of all Lenders hereunder by written notice (each, a “Lender LIBOR Suspension Notice”) that such Lenders have determined (acting reasonably and in good faith) that LIBOR will not or does not accurately reflect the cost of funds of such Lenders of United States Dollar deposits in such market for the relevant LIBOR Period;

the right of the Borrower to request LIBOR Based Loans from any Lender shall be suspended until the Agent determines that the circumstances causing such suspension no longer exist, and so notifies the Borrower and the Lenders;

any outstanding Notice of Borrowing requesting an Advance by way of a LIBOR Based Loan shall be deemed to be a Notice of Borrowing requesting an Advance by way of a U.S. Base Rate Loan in the amount specified in the original Notice of Borrowing;

any outstanding Notice of Conversion requesting a Conversion of an Advance by way of a LIBOR Based Loan shall be deemed to be a Notice of Conversion requesting a Conversion of such Advance into an Advance by way of a U.S. Base Rate Loan; and

any outstanding Notice of Rollover requesting a Rollover of an Advance by way of a LIBOR Based Loan, shall be deemed to be a Notice of Conversion requesting a Conversion of such Advances into an Advance by way of a U.S. Base Rate Loan.

General.

Terms of Acceptance by the Lenders.

Power of Attorney.  To facilitate the procedures contemplated in this Agreement, the Borrower appoints each Lender from time to time as the attorney-in-fact of the Borrower to execute, endorse and deliver on behalf of the Borrower drafts or depository bills in the form or forms prescribed by such Lender for Bankers’ Acceptances denominated in Canadian Dollars (each such executed draft or depository bill which has not yet been accepted by a Lender being referred to as a “Draft”). Each Bankers’ Acceptance executed and delivered by a Lender on behalf of the Borrower will be as binding upon the Borrower as if it had been executed and delivered by a duly authorized officer of the Borrower. The foregoing appointment will cease to be effective, in respect of any Lender, three Banking Days following receipt by such Lender of a notice from the Borrower revoking such appointment (which notice will be copied to the Agent); provided that any such revocation will not affect Bankers’ Acceptances previously executed and delivered by a Lender pursuant to such appointment.

Payment.  The Borrower will provide for payment to the Agent for the benefit of the applicable Lenders of each Bankers’ Acceptance issued on its behalf at its maturity, either by payment of the face amount thereof or, subject to Section 8.5, through the utilization of an Accommodation in accordance with this Agreement, or through a combination thereof. The Borrower waives presentment for payment of Bankers’ Acceptances by the Lenders and will not claim from the applicable Lenders any days of grace for the payment at maturity of Bankers’ Acceptances. Any amount owing by the Borrower in respect of any Bankers’ Acceptance issued which is not paid at maturity in accordance with this Agreement, will, as and from its maturity date, be deemed to be outstanding as a Canadian Prime Rate Loan under the Tranche which such Bankers’ Acceptance was issued.

No Liability.   The Lenders will not be liable for any damage, loss or improper use of any bankers’ acceptance draft endorsed in blank except for any loss arising

by reason of such Lender failing to use the same standard of care in the custody of such bankers’ acceptance drafts as such Lender uses in the custody of its own property of a similar nature.

Bankers’ Acceptances Purchased by Lenders.  Where the Borrower so elects in the Notice of Borrowing, Notice of Rollover or Notice of Conversion, all Lenders under the applicable Tranche identified therein, or those Lenders distinguished as either Schedule I, Schedule II or Schedule III banks (as listed in the Bank Act (Canada)), or any combination thereof, will purchase Bankers’ Acceptances accepted by it for an amount equal to the Discount Proceeds having regard to the Discount Rate applicable to such Lender.

Marketing of BAs.  Subject to Section 10.2(d), the Borrower will be responsible for, and will make its own arrangements with respect to, the sale of Bankers’ Acceptances in the market place. Notwithstanding the foregoing, a Lender may purchase from the Borrower for its own account any Bankers’ Acceptance issued by it at the applicable Discount Rate or as otherwise agreed by the Borrower or the applicable Lender.

Depository Bills.  It is the intention of the Parties that pursuant to the DBNA, all Bankers’ Acceptances accepted by the Lenders under this Agreement will be issued in the form of a “depository bill” (as defined in the DBNA), deposited with a “clearing house” (as defined in the DBNA), including The Canadian Depository for Securities Ltd. or its nominee CDS & Co. In order to give effect to the foregoing, the Agent will, subject to the approval of the Borrower and the Lenders, establish and notify the Borrower and the Lenders of any additional procedures, consistent with the terms of this Agreement, as are reasonably necessary to accomplish such intention, including:

any instrument held by the Agent for purposes of Bankers’ Acceptances will have marked prominently and legibly on its face and within its text, at or before the time of issue, the words “This is a depository bill subject to the Depository Bills and Notes Act (Canada)”;

any reference to the authentication of the Bankers’ Acceptance will be removed; and

any reference to the “bearer” will be removed and such Bankers’ Acceptances will not be marked with any words prohibiting negotiation, transfer or assignment of it or of an interest in it.

General Mechanics.

Notice.   The Borrower may in the Notice of Borrowing, Notice of Rollover or Notice of Conversion requesting an Accommodation by way of Bankers’ Acceptances or by subsequent notice to the Agent, provide the Agent with information as to the Discount Proceeds payable by the purchasers of the Bankers’ Acceptances and the party to whom delivery of the Bankers’

Acceptances is to be made against delivery of such Discount Proceeds to the Agent for the credit of the Borrower subject to Section 10.3(c), but if it does not do so, the Borrower will initiate a telephone call to the Agent by 9:00 a.m. (Calgary, Alberta time) on the Drawdown Date or the date of the Rollover or Conversion, as applicable, and provide such information to the Agent. Any such telephone advice will be at the risk of the Borrower pursuant to Section 22.2 and will be confirmed by a notice of the Borrower to the Agent prior to 1:00 p.m. (Calgary, Alberta time) on the same day.

Rollovers.    In the case of a Rollover of maturing Bankers’ Acceptances, each Lender under the applicable Tranche, in order to satisfy the continuing liability of the Borrower to such Lender for the face amount of the maturing Bankers’ Acceptances, will retain for its own account the Net Proceeds of each new Bankers’ Acceptance issued by it in connection with such Rollover and the Borrower will, on the Maturity Date of the maturing Bankers’ Acceptances, pay to the Agent for the benefit of the Lenders under the applicable Tranche an amount equal to the difference between the face amount of the maturing Bankers’ Acceptances and the aggregate Net Proceeds of the new Bankers’ Acceptances.

Conversion from Canadian Dollar Accommodation.        In the case of a Conversion from a Canadian Prime Rate Loan into an Accommodation by way of Bankers’ Acceptances, each Lender under the applicable Tranche, in order to satisfy the continuing liability of the Borrower to each such Lender for the principal amount of the Canadian Prime Rate Loan being Converted, will retain for its own account the Net Proceeds of each new Bankers’ Acceptance issued by it in connection with such Conversion and the Borrower will, on the date of issuance of the Bankers’ Acceptances pay to the Agent for the benefit of the Lenders under the applicable Tranche an amount equal to the difference between the principal amount of the Canadian Prime Rate Loan being Converted, including any accrued interest thereon, owing to the Lenders under the applicable Tranche and the aggregate Net Proceeds of such Bankers’ Acceptances.

Conversion to Canadian Dollar Accommodation.   In the case of a Conversion of an Accommodation by way of Bankers’ Acceptances into a Canadian Prime Rate Loan, in order to satisfy the liability of the Borrower to each Lender under the applicable Tranche for the face amount of the maturing Bankers’ Acceptances, the Agent and each applicable Lender will record the obligation of the Borrower to it as a Canadian Prime Rate Loan unless the Borrower provides for payment to the Agent for the benefit of the Lenders under the applicable Tranche of the face amount of the maturing Bankers’ Acceptance in some other manner acceptable to the applicable Lenders.

Authorization.   The Borrower hereby authorizes each Lender under the Credit Facility to complete, stamp, hold, sell, rediscount or otherwise dispose of all Bankers’ Acceptances accepted by it pursuant to this Section 10.3 in accordance with the instructions provided by the Borrower pursuant to Section 6.3 or Section 6.4, as applicable.

Rounding.  In the case of an issue of Bankers’ Acceptances, the Agent may round allocations amongst the Lenders under the applicable Tranche to ensure that each Bankers’ Acceptance issued has a face amount which is a whole number multiple of Cdn. $1,000 (and such rounded allocations shall constitute the Lenders’ respective Rateable Portions under the applicable Tranche for the purposes of this Agreement).

BA Equivalent Advance.

Execution of Bankers’ Acceptances.

Escrowed Funds.

Market Disruption.

the Agent (acting reasonably) makes a determination, which determination shall be conclusive and binding upon the Borrower, and notifies the Borrower, that there no longer exists an active market for Bankers’ Acceptances accepted by the Lenders; or

the Agent is advised by Lenders holding at least 25% of the Commitment Amount of all Lenders hereunder by written notice (each, a “Lender BA Suspension Notice”) that such Lenders have determined (acting reasonably and in good faith) that the BA Discount Rate will not or does not accurately reflect the cost of funds of such Lenders or the discount rate which would be applicable to a sale of Bankers’ Acceptances accepted by such Lenders in the market;

the right of the Borrower to request Bankers’ Acceptances or BA Equivalent Advances from any Lender shall be suspended until the Agent determines that the circumstances causing such suspension no longer exist, and so notifies the Borrower and the Lenders;

any outstanding Notice of Borrowing requesting an Advance by way of Bankers’ Acceptances or BA Equivalent Advances shall be deemed to be a Notice of Borrowing requesting an Advance by way of Canadian Prime Rate Loans in the amount specified in the original Notice of Borrowing;

any outstanding Notice of Conversion requesting a Conversion of an Advance by way of Bankers’ Acceptances or BA Equivalent Advances shall be deemed to be a Notice of Conversion requesting a Conversion of such Advances into an Advance by way of Canadian Prime Rate Loans; and

any outstanding Notice of Rollover requesting a Rollover of an Advance by way of Bankers’ Acceptances or BA Equivalent Advances, shall be deemed to be a Notice of Conversion requesting a Conversion of such Advances into an Advance by way of Canadian Prime Rate Loans.

General.

Each Letter of Credit will be made available by the applicable LC Issuer and each Letter of Credit (including all documents and instruments required to be presented thereunder) will be satisfactory in form and substance to such LC Issuer, acting reasonably. No Letter of Credit will be issued (or will be renewable at the option of the beneficiary thereunder) for a term in excess of one year, will have an expiration date after the latest Termination Date applicable to Tranche A then in effect, or will require payment in any currency other than Canadian Dollars or U.S. Dollars. Letters of Credit shall be issued by way of, as selected by the Borrower, either:

Letters of Credit (a “Fronted Letter of Credit”) issued by a Fronting Lender on behalf of the Lenders under Tranche A on a “fronted” basis as contemplated by Section 11.1(i); provided that: (A) the Canadian Dollar Exchange Equivalent of the Aggregate Principal Amount of all Fronted Letters of Credit will at no time exceed Cdn.$100,000,000 (the “Fronted LC Commitment”); and (b) the Canadian Dollar Exchange Equivalent of the Aggregate Principal Amount of all Fronted Letters of Credit issued by a given Fronting Lender shall not exceed the Individual Fronted LC Commitment applicable to such Fronting Lender, in each case as determined at the time of issuance of any Fronted Letter of Credit; or

a Swing Line Letter of Credit issued by the Swing Line Lender pursuant to Section 3.10; provided that the Aggregate Principal Amount of all Swing Line Letters of Credit will at no time exceed Cdn. $10,000,000 or the Canadian Dollar Exchange Equivalent thereof as determined at the time of issuance of any Swing Line Letter of Credit.

Subject to Section 8.4, as a condition of the issuance or renewal of any Letter of Credit, the Borrower will pay to the Agent the Issuance Fee, and, if applicable, the Fronting Fee, indicated in Section 4.2. The Borrower will also pay to the LC Issuer, for its own account, its customary administrative charges in respect of the issue of such Letter of Credit, the amendment or transfer of such Letter of Credit, and each drawing made under such Letter of Credit.

An LC Issuer shall only issue a Letter of Credit if the following conditions have been satisfied:

the LC Issuer shall have received a Notice of Borrowing requesting that a Letter of Credit be issued, such Notice of Borrowing to be accompanied by an originally executed LC Application, satisfactory to the LC Issuer, acting reasonably, specifying:

the proposed date of issuance (which shall be a Banking Day at least 3 Banking Days following the date of such request);

the expiry date thereof;

the name and address of the beneficiary thereof;

whether the Letter of Credit is a Financial LC or a Non-Financial LC; provided that in the case of any dispute, the LC Issuer shall determine whether a Letter of Credit is a Financial LC or a Non-Financial LC in accordance with its usual and customary practices;

the face amount and currency thereof; and

the terms and conditions of the requested Letter of Credit and other relevant details; and

the LC Issuer shall have received such other customary administrative documents as it shall have reasonably requested as a condition to the issuance of such Letter of Credit.

If the Borrower does not pay to the LC Issuer sufficient funds in the applicable currency immediately on demand by the LC Issuer as a reimbursement to the LC Issuer for any payment made by it pursuant to such Letter of Credit, the LC Issuer, on behalf of the applicable Lenders, shall without receipt of a Notice of Borrowing and irrespective of whether any other applicable conditions precedent specified herein have been satisfied, make a Canadian Prime Rate Loan or U.S. Base Rate Loan, as applicable depending on the currency of the Letter of Credit, to the Borrower under Tranche A in the amount of such required payment and, in the case of Fronted Letters of Credit, shall forthwith make a demand for reimbursement from the other Lenders for the amount so paid pursuant to Section 11.1(k).

The Borrower agrees to accept each such Canadian Prime Rate Loan or U.S. Base Rate Loan, as applicable, and hereby irrevocably authorizes and directs the LC Issuer to apply the proceeds thereof in payment of the liability of the Borrower with respect to such required payment.

If any Letter of Credit is outstanding on the latest Termination Date applicable to Tranche A then in effect, at any time that an Event of Default occurs, a demand for repayment is made hereunder, or a domestic or foreign court issues any judgment or order restricting or prohibiting payment by the LC Issuer under such Letter of Credit or extending the liability of the LC Issuer to make payment under such Letter of Credit beyond the expiry date specified therein, the Borrower will forthwith upon demand by the LC Issuer deposit into a cash collateral account maintained by and in the name of the LC Issuer funds in the applicable currency in the amount of the Advance constituted by such Letter of Credit and such funds (together with interest thereon) will be held by the LC Issuer for payment of the liability of the Borrower pursuant to this Article 11 or otherwise in respect of such Letter of Credit so long as the LC Issuer has or may in any circumstance have any liability under such Letter of Credit, and, pending such payment, shall bear interest at the LC Issuer’s then prevailing rate in respect of deposits of similar amounts and of similar periods of time. Any balance of such funds and interest remaining at such time as the LC Issuer does not have and may never have any liability under such Letter of Credit will nevertheless continue to be held by the LC Issuer, if and so long as any Default or Event of Default is continuing or after a demand for repayment is made or both, as security for the remaining liabilities of the Borrower hereunder. The deposit of such funds by the Borrower with an LC Issuer as herein provided will not operate as a repayment of the Aggregate Principal Amount until such time as such funds are actually paid to the relevant LC Issuer as a principal repayment.

The Borrower agrees that neither the LC Issuers, the Agent, the Lenders nor their respective officers, directors, employees or agents will assume liability for, or be responsible for, and the Borrower hereby indemnifies and holds harmless any such Person from any losses or Claims resulting from, the following: the use which may be made of any Letter of Credit; any acts or omissions of the beneficiary of any Letter of Credit including the application of any payment made to such beneficiary; the form, validity, sufficiency, correctness, genuineness or legal effect of any document or instrument relating to any Letter of Credit which on its face complies with requirements of the Letter of Credit, even if such document or instrument should in fact prove to be in any respect invalid, insufficient, inaccurate, fraudulent or forged; the failure of any document or instrument to bear any reference or adequate reference to any Letter of Credit; any failure to note the amount of any draft on any Letter of Credit or on any related document or instrument; any failure of the beneficiary of any Letter of Credit to meet the obligations of such beneficiary to the Borrower or any other Person other than the LC Issuer; any errors, inaccuracies, omissions, interruptions or delays in transmission or delivery of any messages, directions or correspondence by mail, facsimile or otherwise, whether or not they are in cipher; any inaccuracies in the

translation of any messages, directions or correspondence or for errors in the interpretation of any technical terms; any failure by the LC Issuer to make payment under any Letter of Credit as a result of any Law, control or restriction rightfully or wrongfully exercised or imposed by any domestic or foreign court or government or government instrumentality; or as a result of any other cause beyond the control of the LC Issuer or its officers, directors or correspondents; or any action to compel payment by a LC Issuer under a Letter of Credit (but only to the extent that the LC Issuer was in fact not required to make such payment) or to restrain a LC Issuer from making payment under a Letter of Credit; provided that nothing in this Agreement shall exonerate an LC Issuer for its own gross negligence or wilful misconduct.

The obligations of the Borrower under this Article 11 with respect to any Letter of Credit will be absolute, unconditional and irrevocable, and will be performed strictly in accordance with the terms hereof under all circumstances including: any matter referred to in Section 11.1(e); any invalidity of any obligation secured by any Letter of Credit; any incapacity, disability or lack or limitation of status or of power of the Borrower or the beneficiary of any Letter of Credit; any lack of validity or enforceability of any Letter of Credit; the existence of any claim, set-off, defence or other right which the Borrower may have at any time against any Lender or the LC Issuer, the beneficiary of any Letter of Credit or any other Person (provided that the provisions hereof shall not be considered to be a waiver of such claim, set-off, defence or other right); or any breach of contract or other dispute between the Borrower and the Agent, any Lender or the LC Issuer, the beneficiary of any Letter of Credit or any other Person.

The LC Issuer may accept as complying with the terms of any Letter of Credit any document or instrument required by such Letter of Credit to be completed, signed, presented or delivered by or on behalf of any beneficiary thereunder which has been completed, signed, presented or delivered by a receiver, trustee in bankruptcy, assignee for the benefit of creditors, secured party or other like Person believed in good faith by the LC Issuer to be lawfully entitled to the property of such beneficiary, and the LC Issuer may make payments under such Letter of Credit to such Person. The provisions of this Article 11 are for the sole benefit of the LC Issuer and the other Parties and may not be relied on by any other Person.

Subject to the other terms and conditions of this Agreement, the Borrower may request that a Fronting Lender issue Fronted Letters of Credit; provided that at no time will a Fronting Lender be required to issue a Fronted Letter of Credit if: (A) the Canadian Dollar Exchange Equivalent of the undrawn amount all Fronted Letters of Credit issued hereunder (including the one requested to be issued) would exceed the Fronted LC Commitment; or (B) the Canadian Dollar Exchange Equivalent of the undrawn amount all Fronted Letters of Credit issued by such Fronting Lender (including the one requested to be issued) would exceed such Fronting Lender’s Individual Fronted LC Commitment.

Each Fronting Lender will exercise and give the same care and attention to each Fronted Letter of Credit issued by it hereunder as it gives to its other letters of credit and similar obligations, and each Fronting Lender’s sole liability to each Lender shall be to promptly return to the Agent for the account of the Lenders, each Lender’s Rateable Portion of any payments made to such Fronting Lender by the Borrower hereunder where the Borrower has made a payment to such Fronting Lender hereunder. Each Lender agrees that, in paying any drawing under a Fronted Letter of Credit, a Fronting Lender shall not have any responsibility to obtain any document (other than as expressly required by such Fronted Letter of Credit) or to ascertain or inquire as to the validity or accuracy of any such document or the authority of any Person delivering any such document. No Fronting Lender nor any of its representatives, officers, employees or agents shall be liable to any Lender for:

any action taken or omitted to be taken in connection herewith at the request or with the approval of the Majority Lenders;

any action taken or omitted to be taken in connection with any Fronted Letter of Credit in the absence of gross negligence or wilful misconduct; or

the execution, effectiveness, genuineness, validity, or enforceability of any Fronted Letter of Credit, or any other document contemplated thereby.

participating share of the amounts drawn or amounts otherwise paid thereunder, is absolute, irrevocable and unconditional and will not be affected by any circumstances whatsoever (including the occurrence or continuance of any Default or Event of Default), and that each such payment will be made without offset, abatement, withholding or other reduction whatsoever.

If any amount required to be paid by any Lender to a Fronting Lender pursuant to clause (i) above in respect of any unreimbursed portion of any amount paid by a Fronting Lender under any Fronted Letter of Credit is paid to the applicable Fronting Lender within three Banking Days after the date such amount is due, such Lender will pay upon demand to the Agent, for the account of such Fronting Lender, an amount equal to the product of (A) such amount multiplied by (B) the rate of interest applicable to such amount incurred by such Fronting Lender during the period from and including the date such amount payable under any Fronted Letter of Credit should have been paid to but excluding the date it is paid by the Lender to the applicable Fronting Lender, multiplied by (C) a fraction the numerator of which is the number of days that elapse during such period and the denominator of which is 365. If any such amount required to be paid by any Lender pursuant to clause (i) above is not in fact made available to the Agent, for the account of the applicable Fronting Lender, by such Lender within three Banking Days after the date such payment is due, the applicable Fronting Lender will be entitled to recover from such Lender, on demand, such amount with interest thereon calculated from such due date at the rate per annum applicable to Canadian Prime Rate Loans or U.S. Base Rate Loans hereunder, as the case may be, depending on the currency of such Fronted Letter of Credit. A certificate of a Fronting Lender submitted to any Lender with respect to any amounts owing under clause (i) above will be conclusive in the absence of manifest error.

Whenever, at any time after a Fronting Lender has paid an amount under any Fronted Letter of Credit and has received from any Lender that Lender’s Rateable Portion under Tranche A of such payment in accordance with clause (i) above, such Fronting Lender receives any reimbursement on account of such unreimbursed portion, or any payment of interest on account thereof, such Fronting Lender will pay to the Agent, for the account of such Lender that Lender’s Rateable Portion under Tranche A thereof; provided, however, that in the event that any such a payment received by a Fronting Lender is required to be returned by such Fronting Lender, such Lender will return to the Agent for the account of such Fronting Lender the portion thereof previously distributed to it.

No LC Issuer shall incur any liability by acting in reliance upon any notice, consent, certificate, statement or other writing (which may be a bank wire, telex or similar writing) appearing on its face to be in compliance with the terms and conditions of the Letter of Credit.

Each Letter of Credit, except as specifically provided therein, and subject to any provision hereof to the contrary, will be subject to the Uniform Customs and Practice for Documentary Credits of the International Chamber of Commerce current at the time of issuance or renewal of such Letter of Credit.

For the purpose of calculating the Aggregate Principal Amount and for any other relevant provision of this Agreement, the amount of Accommodation constituted by any Letter of Credit at any time will be the maximum amount which the LC Issuer may in all circumstances be required to pay pursuant to the terms thereof at such time.

Records.

the dates issuance and expiration thereof;

the amount thereof; and

the date and amount of all payments made thereunder.

Certain Notices to the Agent with Respect to Letters of Credit.

Each Notice of Borrowing in respect of a Letter of Credit shall be delivered in accordance with Section 6.2(c) and, in the case of a Fronted Letter of Credit, shall specify the Fronting Lender.

If the Agent receives a Notice of Borrowing requesting the issuance of a Fronted Letter of Credit, the Agent shall forthwith forward such Notice of Borrowing to the applicable Fronting Lender.

Each Fronting Lender (if other than the Agent) shall forthwith advise the Agent of any payment under, or cancellation of (whether full or partial), any Fronted Letter of Credit issued by such Fronting Lender pursuant hereto.

Changes in Law.

If, after the date hereof, due to either:

the introduction of, or any change in, or in the interpretation of any Law, whether having the force of law or not, resulting in the imposition or increase of reserves, deposits or similar requirements by any central bank or other Administrative Body charged with the administration thereof; or

the compliance with any guideline or request from any central bank or other Administrative Body which a Lender, acting reasonably, determines that it is required to comply with,

If Additional Compensation is payable pursuant to Section 12.1(a), the Borrower will have the option to prepay any amount of the Credit Facility owed to the Lender entitled to receive the Additional Compensation, subject always to Sections 9.2 and 10.6, without obligation to make a corresponding prepayment to any other Lender. If the Additional Compensation relates to outstanding Bankers’ Acceptances under the Credit Facility, such Lender may require the Borrower to deposit in an interest bearing cash collateral account with such Lender such amount as may be necessary to fully satisfy the contingent obligations of such Lender for all outstanding Bankers’ Acceptances in accordance with the arrangements set out in Section 10.6.

Notwithstanding anything contained in this Section 12.1, the Dodd-Frank Wall Street Reform and Consumer Protection Act and all requests, rules, regulations, guidelines and directives thereunder or issued in connection therewith and all requests, rules, regulations, guidelines and directives concerning capital adequacy promulgated by the Bank for International Settlements, the Basel Committee on Banking Supervision (or any successor or similar authority or any United States, Canadian or foreign regulatory authority) (collectively, the “New Rules”) shall, in each case, be deemed a “change in Law” under Section 12.1(a)(i) regardless of

the date enacted, adopted or issued but only to the extent (i) applicable to a Lender claiming Additional Compensation, (ii) materially different from that in effect on the date hereof, and (iii) such New Rules have general application to substantially all banks and their affiliates within the jurisdiction in which the Lender operates.

Changes in Circumstances.

any change in applicable Laws, or in the interpretation or administration thereof by authorities having jurisdiction in the matter;

any material adverse change in or the termination of the London Interbank Eurodollar Market for Eurodollars; or

the imposition of any condition, restriction or limitation upon such Lender which is outside of its control,

Application of Sections 12.1 and 12.2.

Limitations on Additional Compensation.

Taxes.

Representations and Warranties.

Incorporation, Organization and Power.  Each of the Penn West Parties, other than the Partnership Parties, has been duly incorporated or amalgamated, as applicable, and is validly existing under the Laws of Alberta and is duly registered to carry on business in each jurisdiction in Canada in which the nature of any material business carried on by it or the character of any property owned or leased by it makes such registration necessary, and it has full corporate power and capacity to enter into and perform its obligations under the Documents to which it is a party, and to carry on its business as currently conducted. Each of the Partnership Parties has been duly organized as a general partnership or a limited partnership, as applicable, and is validly existing under the Laws of Alberta and is duly registered to carry on business in each jurisdiction in Canada in which the nature of any material business carried on by it or the character of any property owned or leased by it make such registration necessary, and it has full power and capacity to enter into and perform its obligations under the Documents to which it is a party, and to carry on its business as currently conducted.

Authorization and Status of Agreements.    Each Document has been duly authorized, executed and delivered by the Loan Party that is a party thereto and the execution and delivery thereof and the performance of its obligations thereunder does not conflict with or contravene or constitute a default or create an encumbrance, other than a Permitted Encumbrance, under:

the constating documents or by-laws of, or any resolution of the directors, the trustee or partners, as the case may be, of any Loan Party;

any material agreement or document to which any Loan Party is a party or by which any Loan Party’s property is bound; or

any applicable Law.

Enforceability.    Each of the Documents to which a Loan Party is a party constitutes legal, valid and binding obligations of such party and is enforceable against it in accordance with the terms thereof, except to the extent that enforceability may be limited by applicable bankruptcy, insolvency, reorganization, or similar statutes affecting the enforcement of creditors’ rights generally and by general principles of equity.

Litigation.  Other than as previously disclosed in writing to the Agent, there are no actions, suits or proceedings at Law or before or by any Administrative Body existing or pending, or to the Borrower’s knowledge threatened, to which any of the Penn West Parties is, or to the Borrower’s knowledge is pending or threatened to be made, a party, the result of which could reasonably be expected, if successful against such party, to have a Material Adverse Effect.

Environmental Laws.    Each of the Penn West Parties has (i) obtained all permits, licenses and other authorizations which are required under Environmental Laws; and (ii) is in full compliance with Environmental Laws and with the terms and conditions of all such permits, licenses and authorizations; all except to the extent that failure to so obtain or so comply could not reasonably be expected to have a Material Adverse Effect.

Environmental Condition of Property.  The property or any part thereof owned, operated or controlled by any of the Penn West Parties:

(A) other than as previously disclosed in writing to the Agent, is not, to the knowledge of the Borrower, the subject of any outstanding claim, charge or order from an Administrative Body alleging violation of Environmental Laws which would reasonably be expected to have a Material Adverse Effect; or (B) if subject to any such claim, charge or order, the Borrower is taking or causing to be taken, all such remedial, corrective or other action required under the claim, charge or order or is diligently and in good faith contesting or causing the Penn West Parties, as applicable, to contest the validity thereof; and

complies, with respect to each of its use and operation, in all respects with Environmental Laws and with the terms and conditions of all permits, licenses and other authorizations which are required to be obtained by each of them under applicable Environmental Laws, except to the extent that failure to so comply could not reasonably be expected to have a Material Adverse Effect.

Title to Properties.  Each of the Penn West Parties has good and valid title to its properties, subject only to Permitted Encumbrances and to minor defects of title which in the aggregate do not materially affect the rights of ownership therein taken as a whole among all Penn West Parties.

Operation of Properties.  To the best of the Borrower’s knowledge, information and belief, after due enquiry, all of the oil, gas and other wells of the Penn West Parties have been drilled, completed, shut-in and abandoned (and they have abandoned such wells if they were required by applicable Law to have been abandoned), and all property owned or operated by the Penn West Parties has been and will continue to be owned, operated and maintained, as the case may be, in a good and workmanlike manner in accordance with sound industry practice and in accordance with all applicable Laws, except to the extent that the failure to do so could not reasonably be expected to have a Material Adverse Effect.

No Adverse Change.    The audited consolidated financial statements of the Borrower for its most recent fiscal year end provided to the Lenders were prepared in accordance with GAAP and such financial statements present fairly in

all material respects the Borrower’s consolidated financial position as at the date thereof and since that date there has been no occurrence of any event or circumstance which could reasonably be expected to have a Material Adverse Effect, other than as previously disclosed in writing to the Agent.

Information.  All factual information heretofore or contemporaneously furnished by or on behalf of the Penn West Parties to the Agent in connection with the Credit Facility or the Penn West Parties was, in the case of financial projections, prepared in good faith based upon reasonable assumptions at the date of preparation and, in all other cases, true and accurate in all material respects at the time given and the Borrower is not aware of any omission of any material fact which renders such factual information incomplete or misleading in any material way at the time given.

No Breach of Orders, Licences or Statutes.  None of the Penn West Parties is in breach of:

any order, approval or mandatory requirement or directive of any Administrative Body;

any governmental licence or permit; or

any applicable Law,

No Default.  No Default or Event of Default has occurred and is continuing.

Approvals.      All regulatory authorizations, consents, approvals, permits and licenses necessary for each of the Penn West Parties to carry on their respective business, as currently carried on, and all authorizations, consents and approvals necessary for each of them to enter into the Documents and perform their respective obligations thereunder have, in each case, been obtained and are in good standing, except to the extent that failure to so obtain could not reasonably be expected to have a Material Adverse Effect.

Subsidiaries.  As of the Closing Date, (i) the only Subsidiaries of the Borrower are set forth in Schedule F and all of the issued shares or partnership interests of such Subsidiaries have been validly issued, are outstanding as fully paid and non assessable securities and are, directly or indirectly, owned by the Borrower as set forth in Schedule F, and (ii) the legal name, the jurisdiction of formation and its designation as a Restricted Subsidiary (including whether it is a Material Restricted Subsidiary) or a Non-Restricted Subsidiary of each of the Borrower’s Subsidiaries is as set out in Schedule F.

Pension.    Each Penn West Party has in all respects complied with the contractual provisions and applicable Laws relating to each Pension Plan to which it is a party

or by which it is otherwise bound, except to the extent failure to comply could not reasonably be expected to have a Material Adverse Effect. All amounts due and owing under any such Pension Plan have been paid in full, and to the knowledge of the Borrower, no deficiency exists (whether or not waived) under any such Pension Plan that could reasonably be expected to have a Material Adverse Effect. No ERISA Event has occurred or is reasonably expected to occur with respect to any Plan which could be reasonably expected to have a Material Adverse Effect. Since the most recent financial statement with respect to a Plan, there has been no change in the funding status of such Plan which could be reasonably expected to have a Material Adverse Effect. Neither any Penn West Party nor any ERISA Affiliate has incurred or is reasonably expected to incur any Withdrawal Liability to any Multiemployer Plan which could be reasonably expected to have a Material Adverse Effect. Neither any Penn West Party nor any ERISA Affiliate has been notified by the sponsor of a Multiemployer Plan that such Multiemployer Plan is in reorganization or has been terminated, within the meaning of Title IV of ERISA, and no such Multiemployer Plan is reasonably expected to be in reorganization or to be terminated, within the meaning of Title IV of ERISA which could be reasonably expected to have a Material Adverse Effect.

Insurance.  Each Penn West Party has in full force and effect such policies of insurance in such amounts issued by such insurers of recognized standing covering the property of the Penn West Parties in accordance with prudent industry standards and Section 14.1(m).

Taxes.  Except for circumstances which, individually or in the aggregate, do not have and would not reasonably be expected to have a Material Adverse Effect:

all tax returns required to be filed by the Penn West Parties in any jurisdiction have been filed;

all Taxes upon the Penn West Parties or any of their property, which are due and payable, have been paid on a timely basis or within appropriate extension periods or are being contested in good faith by appropriate proceedings (and in respect of which adequate provision has been made on its books);

the Penn West Parties have collected, deducted, withheld and remitted to the proper taxing authorities when due all Taxes, worker’s compensation assessments, employment insurance assessments and other similar amounts required to be collected, deducted, withheld and remitted; and

as at the Closing Date, the Borrower does not know of any proposed additional tax assessments against them for which adequate provision has not been made on their books which have a reasonable likelihood of being adversely determined.

Pari Passu Ranking.    The Indebtedness of the Loan Parties under this Agreement, each other Document and any Hedging Agreements entered into with a Hedge Provider rank at least pari passu in right of payment with all of their other senior unsecured and unsubordinated indebtedness which, for certainty, will include unsecured and unsubordinated indebtedness of the Borrower and the other Loan Parties, as applicable, under Hedging Agreements with counterparties which are not Hedge Providers.

Acknowledgement.

Survival and Inclusion.

Affirmative Covenants.

Punctual Payment.  The Borrower will pay or cause to be paid all Indebtedness and other amounts payable under the Documents punctually when due.

Legal Existence.  Except as permitted by Section 17.1 and as otherwise permitted hereunder, the Borrower will do or will cause to be done all things necessary to preserve and keep in full force and effect the Borrower’s and each other Penn West Parties’ legal existence in good standing under the Laws of its governing jurisdiction.

Notice of Default.  The Borrower will notify the Agent of the occurrence of any Default or Event of Default forthwith upon becoming aware thereof and specify in such notice the nature of the event and the steps taken or proposed to be taken to remedy the same.

Notice of Legal Proceedings.    The Borrower will, forthwith upon becoming aware thereof, notify the Agent of the commencement of any legal or administrative proceedings against any Penn West Party which, if adversely determined against the applicable Penn West Party, could reasonably be expected to have a Material Adverse Effect.

Notice of Environmental Damage.      The Borrower will, forthwith upon becoming aware thereof, notify the Agent of the discovery of any Contaminant or of any Release of a Contaminant into the Environment from or upon the land or property owned, operated or controlled by any of the Penn West Parties which could reasonably be expected to have a Material Adverse Effect.

Compliance with Law.  The Borrower will, and will cause each other Penn West Party to, comply with all applicable Laws, including Environmental Laws, except to the extent that the failure to so comply could not reasonably be expected to have a Material Adverse Effect.

Quarterly Compliance Certificate.  Within 45 days after the end of each of the first three fiscal quarters of each fiscal year of the Borrower and within 90 days after the end of each fiscal year of the Borrower, the Borrower will deliver to the Agent a Compliance Certificate.

Financial Statements.    Within 45 days after the end of each of the first three fiscal quarters of each fiscal year of the Borrower and within 90 days after the end of each fiscal year of the Borrower, the Borrower will deliver to the Agent a copy of the Borrower’s quarterly unaudited consolidated financial statements and with respect to its fiscal year end, its annual audited consolidated financial statements; provided that the requirement to deliver the foregoing financial statements may be satisfied by posting such financial statements or other information on www.SEDAR.com or on a website, as applicable, within the time periods referred to above and forthwith advising the Agent that such financial statements and other information have been so posted and the details of any website on which the same have been posted.

Performance.  The Borrower will, and will cause each other Penn West Party to, observe the terms of and perform its obligations under each of the Documents to which it is a party.

Inspection of Property; Books and Records; Discussions.  The Borrower will, and will cause each other Penn West Party to, maintain books and records of account in accordance with GAAP and all applicable Laws; and permit representatives of the Agent no more than once a year while no Default or Event of Default exists (at the Lenders’ expense) and at any time while a Default or Event of Default exists (at the Borrower’s expense), subject to the Borrower’s health and safety requirements, to visit and inspect any property of any Penn West Party, including with respect to environmental matters related thereto, and to examine and make abstracts from any books and records of any Penn West Party at any reasonable time during normal business hours and upon reasonable request

and notice and to discuss the business, property, condition (financial or otherwise) and prospects of any Penn West Party with their senior officers and (in the presence of such representatives, if any, as it may designate) with its auditors.

Operation of Properties.  The Borrower will, and will cause each other Penn West Party to, manage, maintain and operate their respective property, or, if it is not the operator, use reasonable efforts to ensure that such property is managed, maintained and operated, in accordance with (i) sound industry practice and (ii) all applicable Laws, except, in any case, to the extent that the failure to do so could not reasonably be expected to have a Material Adverse Effect.

Performance of Leases.  The Borrower will, and will cause each other Penn West Party to, perform or cause to be performed all obligations under all leases relating to its property, including payment of rentals, royalties, taxes or other charges in respect thereof which are necessary to maintain all such leases in good standing in all material respects, provided that this covenant will not restrict their right to surrender leases which are uneconomic to maintain.

Insurance.  The Borrower will maintain or cause to be maintained with insurers of recognized standing adequate insurance (including deductibles which are customary and prudent for the industry) in respect of the property of the Penn West Parties, including all wellhead equipment and other plant and equipment according to prudent industry standards, and will provide the Agent with copies of all insurance policies relating thereto if so requested.

Pensions.  Except as could not, individually or in the aggregate, reasonably be expected to result in a Material Adverse Effect, (i) maintain the registered status of each Plan, Multiemployer Plan and Pension Plan and all other applicable Laws which require registration, (ii) pay or cause to be paid all material obligations of each Penn West Party (including fiduciary, funding, investment and administration obligations) required to be performed in connection with each Plan, Multiemployer Plan and Pension Plan in a timely fashion, (iii) properly withhold all employee contributions to each Plan, Multiemployer Plan and Pension Plan by way of authorized payroll deduction or otherwise and pay into those plans in a timely manner, and (iv) cause all material reports and disclosures relating to each Plan, Multiemployer Plan, and Pension Plan required by those plans and any applicable Laws to be filed or distributed in a timely manner.

Information.    The Borrower will promptly provide (or provide access to) any other documentation and information relating to the Penn West Parties and their respective properties (including related to compliance with ERISA) as the Agent on behalf of the Lenders may reasonably request subject to any contractual restrictions regarding confidentiality, provided that the Borrower shall use reasonable commercial efforts to overcome such restrictions.

Payment of Taxes.    The Borrower will, and will cause each other Penn West Party to, file all tax returns which are required to be filed and pay all Taxes (including interest and penalties) which are due and payable, unless such payment

is being disputed in good faith, and the applicable Penn West Party has made all appropriate provision in respect thereof in accordance with GAAP, except, in either case, to the extent that a failure to do so could not reasonably be expected to have a Material Adverse Effect.

Remittances.  The Borrower will, and will cause each other Penn West Party to, make all of the remittances required to be made by each Penn West Party to the applicable federal, provincial, municipal or state governments and keep such remittances up to date, except to the extent that a failure to do so could not reasonably be expected to have a Material Adverse Effect.

Partnership.  The partners in the Partnership Parties that are not Operating JV Development Entities will consist only of the Borrower and one or more Restricted Subsidiaries.

Wholly-Owned Status.  The Borrower and the Restricted Subsidiaries that are not Operating JV Development Entities will be direct or indirect wholly-owned Subsidiaries of the Borrower, provided that any direct or indirect Subsidiary of the Borrower that owns any Voting Securities of an Operating JV Development Entity which is a Restricted JV Development Entity will be a Restricted Subsidiary.

Guarantee Joinders.    Within 10 Banking Days of a Subsidiary (other than an Operating JV Development Entity) becoming a Material Restricted Subsidiary (or concurrently with a Subsidiary (other than an Operating JV Development Entity) becoming a Material Restricted Subsidiary in accordance with a reorganization under Section 17.1 or as otherwise permitted hereunder), the Borrower will cause such Material Restricted Subsidiary to execute and deliver in favour of the Agent a Guarantee Joinder together with a certificate of a senior officer of such Material Restricted Subsidiary confirming that all authorizations and actions have been taken by such Material Restricted Subsidiary to authorize, execute and deliver the Guarantee Joinder and that such Material Restricted Subsidiary is at the time of granting of the Guarantee Joinder a direct or indirect wholly-owned Subsidiary of the Borrower. The Borrower will also deliver or cause to be delivered such other documentation pertained thereto, including legal opinions of Borrower’s Counsel, all in form and content acceptable to the Agent, acting reasonably.

Pari Passu Ranking.  The Borrower will, and will cause each Penn West Party to, ensure that all Indebtedness of the Loan Parties under the Documents and under any Hedging Agreements with Hedge Providers ranks at least pari passu with all other senior, unsecured Indebtedness of the Loan Parties including, for certainty, unsecured and unsubordinated indebtedness of the Loan Parties with counterparties which are not Hedge Providers.

Ownership of Assets.  The Borrower will ensure at all times that the Borrower and the Restricted Subsidiaries directly own not less than 90% of the Consolidated Tangible Assets.

Further Notices. The Borrower will forthwith notify the Agent of (i) the incurrence by any Penn West Party of any Subordinated Debt upon incurrence thereof; (ii) any Penn West Party having a corporate or long term debt rating from any rating agency and any future change in any such rating; and (iii) any Material Adverse Effect.

Financial Covenants.

the Consolidated Senior Debt to EBITDA Ratio of the Borrower will not exceed 3:1, except that upon the consummation of a Material Acquisition and for a period extending to and including the end of the second full fiscal quarter of the Borrower after the completion of the applicable Material Acquisition, the Consolidated Senior Debt to EBITDA Ratio of the Borrower will not exceed 3.5:1;

the Consolidated Total Debt to EBITDA Ratio of the Borrower will not exceed 4:1; and

the Consolidated Senior Debt to Capitalization of the Borrower will not exceed 50%, except that upon the consummation of a Material Acquisition and for a period extending to and including the end of the second full fiscal quarter of the Borrower after the completion of the applicable Material Acquisition, the Consolidated Senior Debt to Capitalization of the Borrower will not exceed 55%,

Negative Covenants.

Limitation on Liens. The Borrower will not, and will not permit the other Penn West Parties to, provide or permit a Security Interest to exist over its property, except for Permitted Encumbrances.

Limitation on Distributions. The Borrower will not, and will not permit the other Penn West Parties to:

make any Distribution or other payment to the Borrower or to the holders of Voting Securities of the Borrower if a Default or Event of Default has occurred and is continuing, except that (A) regularly scheduled cash distributions by the Penn West Parties (other than the Borrower) to the Borrower and (B) regularly scheduled monthly cash distributions by the Borrower to the holders of Voting Securities of the Borrower may in each case be made while a Default is subsisting but prior to an Event of Default occurring, provided in any such case, that no new Default or Event of Default could reasonably be expected to occur as a result of making such Distribution or other payment; or

make any payment in respect of Subordinated Debt and Convertible Debentures during a Default or Event of Default or if such payment could reasonably be expected to cause a Default or Event of Default to occur.

Limitation on Hedging Agreements. The Borrower and the other Penn West Parties shall not enter into or maintain Hedging Agreements unless the same are entered into in accordance with the then applicable hedging policies approved by the board of directors of the Borrower or that are otherwise approved by the board of directors of the Borrower, provided that notwithstanding the foregoing, the Borrower and the other Penn West Parties may not enter into or maintain Hedging Agreements for speculative purposes.

Mergers, Amalgamations and Consolidations. The Borrower will not, and will not permit the other Penn West Parties to, merge, amalgamate or consolidate with another Person (other than the Borrower or wholly-owned Subsidiaries of the Borrower), except as otherwise permitted under Section 17.1.

Financial Assistance or Capital Contributions. The Borrower will not, and will not permit any other Penn West Party to:

provide any guarantee, loan or other financial assistance to any Person, other than to another Penn West Party; or

make any contributions of capital or any other forms of equity investment in any Person that is not a Penn West Party;

which in aggregate exceeds $50,000,000; provided that, notwithstanding the foregoing, the Penn West Parties shall also be entitled to make:

Permitted JV Capital Contributions to JV Development Entities, and

contributions of capital to or any other forms of equity investments (“Non-Penn West Party Investments”) in any Person that is not a Penn West Party, provided that:

such Person carries on business in the oil and gas industry;

such contribution or investment is made in connection with a concurrent sale or other disposition to such Person of oil and gas properties of one or more of the Penn West Parties; and

the aggregate Non-Penn West Party Investment Amount at no time exceeds $750,000,000, in each case determined as of the date of such investment;

and further provided that the sum of the Permitted JV Capital Contributions described in paragraph (a)(i) of the definition of Permitted JV Capital Contributions and the aggregate Non-Penn West Party Investment Amount does not, at any time, exceed $1,500,000,000.

Transactions with Affiliates. The Borrower will not, and will not permit any Penn West Party to, except as specifically permitted hereunder, enter into any transaction, including the purchase, sale or exchange of any property or the rendering of any services, with any of its shareholders, partners or with any Affiliate, or with any of its or their directors or officers, or enter into, assume or suffer to exist any employment, consulting or analogous agreement or arrangement with any such shareholder, partner or Affiliate or with any of its directors or officers, except a transaction or agreement or arrangement which is in the ordinary course of business of the applicable Penn West Party and which is upon fair and reasonable terms not less favourable to the applicable Penn West Party that it would obtain in comparable arms-length transaction; provided that such restriction will not apply to any transaction among the Penn West Parties.

Change in Business. The Borrower will not, and will not permit the other Penn West Parties to, make any material change in the nature of its business as carried on at the Closing Date.

Asset Dispositions. The Borrower will not, and will not permit the other Penn West Parties to, directly or indirectly, make any sale, exchange, lease, transfer or other disposition of any of its properties or assets to any Person if such sale, exchange, lease, transfer or other disposition could reasonably be expected to have a Material Adverse Effect.

Restricted Subsidiary Debt. The Borrower will not permit the Restricted Subsidiaries who are not Material Restricted Subsidiaries and party to the Guarantee Agreement to incur, assume or otherwise become liable for Consolidated Total Debt which in aggregate exceeds $100,000,000; provided that in respect of any such amount attributable to an Operating JV Development Entity which is a Restricted JV Development Entity, the full amount of such debt will be counted in determining compliance with this covenant irrespective of whether or not only a proportionate amount thereof may be attributable to the Borrower’s balance sheet on a consolidated basis under GAAP.

JV Development Entity Indebtedness. The Borrower will not permit the JV Development Entities which are not Restricted JV Development Entities to incur, assume or otherwise become liable for any Indebtedness which would form part of Consolidated Total Debt, other than any such Indebtedness assumed or incurred for working capital purposes of any such JV Development Entity (“JV Working Capital Debt”) provided that the aggregate principal amount of all JV Working Capital Debt of all JV Development Entities which are not Restricted JV Development Entities does not at any time exceed $50,000,000 (and provided that the entire amount of such Indebtedness will be counted in determining compliance with this covenant irrespective of whether or not only a proportionate amount thereof may be attributable to the Borrower’s balance sheet on a consolidated basis under GAAP).

Designation of Non-Restricted/Restricted Subsidiaries.

The Borrower from time to time, by notice to the Agent in the form of Schedule H, shall be entitled to designate (and re-designate) that either:

a Restricted Subsidiary will be a Non-Restricted Subsidiary; or

a Non-Restricted Subsidiary will be a Restricted Subsidiary,

provided that, the Borrower will not be entitled to designate a Restricted Subsidiary to be a Non-Restricted Subsidiary if:

a Default or an Event of Default has occurred and is continuing unless the exercise of the Borrower’s discretion under paragraph (i) or (ii) above would cause such Default or Event of Default to be cured; or

a Default or an Event of Default would result from or exist immediately after such a designation.

If the Borrower designates a Material Restricted Subsidiary to either no longer be a Material Restricted Subsidiary or to be a Non-Restricted Subsidiary as set out in clause (a) above, such Material Restricted Subsidiary shall be released from its obligations under the Guarantee Agreement by the Agent upon written request by the Borrower if such request is accompanied by an officer’s certificate of a senior officer of the Borrower certifying that no Default or Event of Default has occurred and is continuing at the time of such designation or would result from such designation, including pursuant to Section 14.1(v).

As at the Closing Date, the Restricted Subsidiaries, Material Restricted Subsidiaries and Non-Restricted Subsidiaries are as set out in Schedule F. Unless otherwise designated in accordance with Section 15.1(a), all Subsidiaries of the Borrower will be deemed to be Restricted Subsidiaries.

Indemnity of Borrower.

the Release of any Contaminant into the Environment; and

the remedial action, if any, required to be taken by the Agent or the Lenders in respect of any such Release,

General Indemnity.

Right to Defend.

the Borrower will not have the right to participate in or control such action, suit or proceeding if it involves potential imposition of criminal liability upon the Indemnified Party or a conflict of interest between the Borrower and the Indemnified Party; and

the Indemnified Party, at the Borrower’s expense, will have the right to retain its own counsel in the event of inconsistent defences, conflicts of interest, the Borrower not assuming the defence of the action within a reasonable period of time or there being defences available to the Indemnified Party which are different from or in addition to those available to the Borrower, and such participation by the Indemnified Party in defence will not release the Borrower from any liability that it may have to such Indemnified Party.

Successor Entity.

such transaction takes place in accordance with the applicable Laws;

prior to or contemporaneously with the consummation of such transaction, such Penn West Party, and the successor entity, as applicable, shall have executed such instruments and done such things as in the opinion of the Agent are necessary or advisable to establish that upon the consummation of such transaction:

the successor entity shall have assumed all the covenants and obligations of such Penn West Party under the Documents to which it is a party;

the Documents, as applicable, shall be a valid and binding obligation of the successor entity entitling the Agent and the Lenders, as against the successor entity, to exercise all their rights thereunder;

the rights and benefits afforded or intended to be afforded the Agent and the Lenders under the Documents to which such Penn West Party is a party are not adversely affected in any material respect; and

legal opinions satisfactory to the Agent confirming the matters set forth in Sections 17.1(b)(i) and (ii) above are provided by Borrower’s Counsel;

no Default or Event of Default is subsisting or would occur after giving effect to such transaction; and

the Lenders, acting reasonably, are satisfied with the creditworthiness of the successor entity, provided that the Lenders shall be deemed to be satisfied with the creditworthiness of the successor entity or, where the successor entity remains a Restricted Subsidiary or the Borrower, if the senior unsecured long term debt of the successor entity or the Borrower, is rated equal to or above Investment Grade immediately prior to the effective date of the transaction and the Lenders have received satisfactory evidence that the applicable rating agencies have concluded that such rating will be equal to or above Investment Grade after giving effect to the transaction.

Event of Default.

Failure to Pay. If the Borrower defaults in the due and punctual payment of any principal amounts owing under the Documents as and when the same becomes due and payable, whether at maturity or otherwise; or if the Borrower defaults in the payment of any interest, fees or other amounts owing under the Documents as and when the same become due and payable and such default continues for a period of 3 Banking Days.

Incorrect Representations. If any representation or warranty made by any Penn West Party in any Document proves to have been incorrect when so made or deemed to have been repeated as herein provided and the underlying facts, if capable of being remedied such that the representation or warranty if made at

such time would be correct, are not so remedied within 30 days after notice of such incorrectness is given to the Borrower by the Agent (but only if and for so long as the remedying thereof was and continues to be diligently and in good faith pursued and no Material Adverse Effect has occurred or is imminent as a result of such facts).

Breach of Financial Covenants. If there is a breach in the performance or observance of any of the covenants or agreements in Section 14.2 or Section 14.3(h).

Breach of Covenants. Except for an Event of Default set out elsewhere in this Section 18.1, if the Borrower or another Penn West Party defaults in the performance or observance of any covenant, obligation or condition to be observed or performed by it pursuant to any of the Documents or any other agreement now or hereafter made by the Borrower or another Penn West Party with the Agent and the Lenders and such default continues for a period of 30 days after notice thereof being given to the Borrower by the Agent.

Insolvency. If a judgment, decree or order of a court of competent jurisdiction is entered against any of the Penn West Parties, (i) adjudging such party bankrupt or insolvent, or approving a petition seeking its reorganization or winding-up under the Bankruptcy and Insolvency Act (Canada), the Companies’ Creditors Arrangement Act (Canada), Title 11 of the United States Code entitled “Bankruptcy”, or any other bankruptcy, insolvency or analogous Law, or (ii) appointing a receiver, trustee, liquidator, or other person with like powers, over all, or substantially all, of the property of such party, or (iii) ordering the involuntary winding up or liquidation of the affairs of such party, or (iv) if any receiver or other person with like powers is appointed over all, or substantially all, of the property of such party, unless such appointment is stayed and of no effect against the rights of the Lenders thereunder.

Winding Up. If, (i) except as permitted by Section 17.1, an order or a resolution is passed for the dissolution, winding-up, reorganization or liquidation of any of the Penn West Parties, pursuant to applicable Laws, including the Business Corporations Act (Alberta), or (ii) if any of the Penn West Parties institutes proceedings to be adjudicated bankrupt or insolvent, or consents to the institution of bankruptcy or insolvency proceedings against it under the Bankruptcy and Insolvency Act (Canada), the Companies’ Creditors Arrangement Act (Canada) or any other bankruptcy, insolvency or analogous Law, or (iii) any of the Penn West Parties consents to the filing of any petition under any such Law or to the appointment of a receiver, or other person with like powers, over all, or substantially all, of such party’s property, or (iv) any of the Penn West Parties makes a general assignment for the benefit of creditors, or becomes unable to pay its debts generally as they become due, or (v) any of the Penn West Parties takes or consents to any action in furtherance of any of the aforesaid purposes.

Other Indebtedness. Any default shall have occurred and is continuing in respect of any Indebtedness of one or more Penn West Parties (other than Non-Recourse Debt or Indebtedness arising under the Credit Facility) which results in the acceleration of the payment of such Indebtedness or which permits the holder thereof to accelerate the payment of such Indebtedness and if there is a grace period applicable thereto arising under contract or otherwise, such default continues beyond the expiry of such grace period or if any lender shall demand repayment of any Indebtedness owed to it by any Penn West Party which is repayable on demand, and the aggregate principal amount of all such Indebtedness is at least the Threshold Amount.

Final Judgments. A final judgment or judgments or any order is entered against one or more Penn West Parties (other than in respect of Non-Recourse Debt permitted hereunder) in an aggregate amount equal to or greater than the Threshold Amount, which remains unsatisfied or undischarged for a period of 30 days during which such judgment shall not be an appeal or execution thereof will not be effectively stayed.

Cessation of Business. Except as permitted by Section 17.1, any of the Penn West Parties ceases or proposes to cease carrying on business, or a substantial part thereof, or makes or threatens to make a bulk sale of its property.

Seizure of Property. The property of any one or more of the Penn West Parties (other than any such property which secures Non-Recourse Debt permitted hereunder) having a fair market value in excess of the Threshold Amount, in the aggregate, shall be seized (including by way of execution, attachment, garnishment or distraint) or any Security Interest thereon shall be enforced, or such property shall become subject to any charging order or equitable execution of a court, or any writ of enforcement, writ of execution or distress warrant with respect to obligations in excess of the Threshold Amount shall exist in respect of any one or more of the Penn West Parties or such property, or any sheriff, civil enforcement agent or other Person shall become lawfully entitled to seize or distrain upon any such property under the Civil Enforcement Act (Alberta), the Workers’ Compensation Act (Alberta), the Personal Property Security Act (Alberta) or any other applicable Laws whereunder similar remedies are provided, and in any case such seizure, execution, attachment, garnishment, distraint, charging order or equitable execution, or other seizure or right, shall continue in effect and not released or discharged for more than 30 days.

Change of Control. If a Change of Control occurs which is not otherwise consented to by the Majority Lenders or if the Borrower or any other Penn West Party ceases to own and control all of the issued and outstanding Voting Securities or other shares of the Borrower.

Enforceability of Documents. If any material provision of any Document shall at any time cease to be in full force and effect, be declared to be void or voidable or shall be repudiated, or the validity or enforceability thereof shall at any time be contested by any Penn West Party.

Qualified Auditor Report. If the audited financial statements of the Borrower that are required to be delivered by the Borrower pursuant to Section 14.1(h) contain a qualification that is not acceptable to the Majority Lenders, acting reasonably, and within a period of 30 days after the delivery of such financial statements by the Borrower hereunder either (i) such qualification is not rectified or otherwise dealt with to the satisfaction of the Majority Lenders; or (ii) the Borrower has not delivered a plan to the Agent as to how the Borrower plans to rectify or otherwise deal with such qualification (such plan to include the time frame within which the Borrower proposes to rectify or otherwise deal with such qualification) and such plan is not satisfactory to the Majority Lenders, acting reasonably, and following delivery and acceptance of such plan, the Borrower fails to diligently pursue the same and rectify or otherwise deal with the qualification in accordance with the plan and within the proposed time frame.

Remedies.

Adjustments.

If any Swing Line Loans are outstanding, the Swing Line Lender may at any time in its sole and absolute discretion, on behalf of the Borrower (which hereby irrevocably directs and authorizes the Swing Line Lender to make such request on its behalf), request that each Tranche A Lender, through the Agent, make a Canadian Prime Rate Loan or a U.S. Base Rate Loan (or a combination thereof) to the Borrower in an amount equal to the Lender’s Rateable Portion under Tranche A of the principal amount of such Swing Line Loan outstanding on the date such notice is given (the “Refunded Swing Line Loans”), provided that the provisions of this paragraph shall not affect the Borrower’s obligation to repay the Swing Line Loans to the extent they remain outstanding. Each Tranche A Lender will

make the proceeds of any such Canadian Prime Rate Loan or U.S. Base Rate Loan available to the Swing Line Lender on the Banking Day next following the date such notice is given in immediately available funds. The proceeds of such Canadian Prime Rate Loan or such U.S. Base Rate Loan shall be applied by the Swing Line Lender to the payment in full of the Refunded Swing Line Loans.

If any Bankers’ Acceptances are outstanding as a Swing Line Loan, each Tranche A Lender agrees to indemnify and save harmless the Swing Line Lender, based on its Rateable Portion under Tranche A, from any liability the Swing Line Lender may incur or suffer with respect to the such outstanding Bankers’ Acceptance. On the maturity date thereof, the Swing Line Lender may in its sole and absolute discretion give written notice to the Agent that, as of the date such notice is given, such Bankers’ Acceptance will be converted into a Syndicated Advance in the form of a Canadian Prime Rate Loan.

If any Swing Line Letters of Credit are outstanding, the Swing Line Lender may at any time in its sole and absolute discretion give written notice to the Agent that, as of the date such notice is given, the Swing Line Letters of Credit shall constitute Fronted Letters of Credit for all purposes of this Agreement, with the Swing Line Lender being the Fronting Lender with respect to the Fronted Letters of Credit which were previously Swing Line Letters of Credit.

If a Fronted Letter of Credit is drawn upon which results in a payment by a Fronting Lender thereunder (in this Section 18.3, an “LC Payment”), such Fronting Lender will promptly request the Agent on behalf of the Borrower (and for this purpose each Fronting Lender is irrevocably authorized by the Borrower to do so) for an Advance by way of a Canadian Prime Rate Loan or a U.S. Base Rate Loan, as applicable, from the Tranche A Lenders pursuant to Article 11 to reimburse such Fronting Lender for such LC Payment. The Lenders are irrevocably directed by the Borrower to make any Canadian Prime Rate Loan or U.S. Base Rate Loan, as applicable, if so requested by a Fronting Lender and pay the proceeds thereof directly to the Agent for the account of such Fronting Lender. Each Lender unconditionally agrees to pay to the Agent for the account of the applicable Fronting Lender such Lender’s Rateable Portion under Tranche A of each Advance requested by a Fronting Lender on behalf of the Borrower to repay LC Payments made by a Fronting Lender.

The obligations of each Tranche A Lender under this Section 18.3 are unconditional, shall not be subject to any qualification or exception whatsoever and shall be performed in accordance with the terms and conditions of this Agreement under all circumstances including:

any lack of validity or enforceability of the Borrower’s obligations under Section 3.10;

the occurrence of any Default or Event of Default or the exercise of any rights by the Agent under Section 18.2; and

the absence of any demand for payment being made, any proof of claim being filed, any proceeding being commenced or any judgment being obtained by a Lender or the LC Issuer against the Borrower.

such other Tranche A Lender or the LC Issuer shall be entitled to receive any payment which the Non-Paying Lender would otherwise have been entitled to receive in respect of the Credit Facility or otherwise in respect of any Document; and

the overdue amount shall bear interest payable by the Non-Paying Lender to such other Tranche A Lender or the LC Issuer at the rate payable by the Borrower in respect of the obligations which gave rise to such overdue amount.

If for any reason an Advance may not be made pursuant to this Section 18.3 to reimburse the LC Issuer as contemplated thereby, then promptly upon receipt of notification of such fact from the Agent, each Tranche A Lender shall deliver to the Agent for the account of the LC Issuer in immediately available funds the purchase price for such Lender’s participation interest in the relevant unreimbursed LC Payments (including interest then accrued thereon and unpaid by the Borrower). Without duplication, each Tranche A Lender shall, upon demand by the LC Issuer made to the Agent, deliver to the Agent for the account of the LC Issuer interest on such Lender’s Rateable Portion under Tranche A from the date of payment by the LC Issuer of such unreimbursed LC Payments until the date of delivery of such funds to the LC Issuer by such Lender at a rate per annum equal to the one month CDOR Rate for such period. Such payment shall only, however, be made by the Lenders in the event and to the extent the LC Issuer has not been reimbursed in full by the Borrower for interest on the amount of such unreimbursed LC Payments.

Each LC Issuer shall, forthwith upon its receipt of any reimbursement (in whole or in part) by the Borrower for any unreimbursed LC Payments in relation to which other Lenders have purchased a participation interest pursuant to this Section 18.3, or of any other amount from the Borrower or any other Person in respect of such payment (other than pursuant to Section 3.10), transfer to such other Lender such other Lender’s Rateable Portion under Tranche A of such reimbursement or other amount. In the event that any receipt by the LC Issuer of any reimbursement or other amount is found to have been a transfer in fraud of creditors or a preferential payment under any applicable insolvency legislation or

is otherwise required to be returned, such Lender shall promptly return to the LC Issuer any portion thereof previously transferred to it by the LC Issuer, without interest to the extent that interest is not payable by the LC Issuer in connection therewith.

Waivers.

Set-off.

Application of Proceeds.

in payment of any amounts due and payable by way of recoverable expenses;

in payment of any amounts by way of any fees (other than standby fees, stamping fees, Issuance Fees and Fronting Fees);

in payment of any amounts due and payable as and by way of interest or standby fees, stamping fees, Issuance Fees and Fronting Fees, including any interest on overdue amounts; and

in payment of the Aggregate Principal Amount under each Tranche of the Credit Facility and all other amounts under the Documents and the obligations of the Penn West Parties under any Hedging Agreement with a Hedge Provider to the extent crystallized at such time on a pro rata basis.

Non-Disclosure.

Exceptions.

of a Party where that Party consents to its disclosure;

which becomes part of the public domain without breach of Section 19.1;

received from a third party without restriction on further disclosure and without breach of Section 19.1; or

developed independently without breach of Section 19.1.

Permitted Disclosures by Agent and Lenders.

Survival.

Assignment of Interests.

Assignment by the Lenders.

Effect of Assignment.

Participations.

no participation contemplated in this Section 20.4 will relieve such Lender from its commitments or its other obligations hereunder or under any other Document;

such Lender will remain solely responsible for the performance of its commitments and such other obligations as if such participation had not taken place;

the Agent and the Borrower will continue to deal solely and directly with such Lender in connection with such Lender’s rights and obligations under this Agreement and each of the other Documents;

no Participant will have any right (through a right of consent or approval or otherwise) to require such Lender to take or refrain from taking any action hereunder or under any other Document; and

the Borrower will not be required to pay any amount hereunder that is greater than the amount which it would have been required to pay had no participating interest been sold.

Authorization and Action.

Authorization and Action.    Each Lender hereby irrevocably appoints and authorizes the Agent to be its agent in its name and on its behalf and to exercise such rights or powers granted to the Agent or the Lenders under the Documents to the extent specifically provided therein and on the terms thereof, together with such powers and authority as are reasonably incidental thereto. As to any matters not expressly provided for by the Documents, the Agent will not be required to exercise any discretion or take any action, but will be required to act or to refrain from acting (and will be fully indemnified and protected by the Lenders to the greatest extent permitted by applicable Law in so acting or refraining from acting) upon the instructions of the Majority Lenders, and such instructions will be binding upon all Lenders, provided however that the Agent will not be required to take any action which, in the opinion of the Agent, might expose the Agent to liability in such capacity, which could result in the Agent incurring any costs and expenses, or which is contrary to the spirit and intent of this Agreement.

Lenders’ Determination.    Where the provisions of this Agreement provide that any waiver of or any amendment to any provision of the Documents may be made

or any action, consent or other determination in connection with the Documents may be taken or given, with the consent or agreement of the Majority Lenders, then any such waiver, amendment, action, consent or determination so made, so taken or so given with the consent or agreement of the Majority Lenders will be binding on all of the Lenders and all of the Lenders will cooperate in all ways necessary or desirable to implement and effect such waiver, amendment, action, consent or determination.

Deemed Non-Consent.    If the Agent delivers a notice to a Lender requesting advice from such Lender as to whether it consents or objects to any matter in connection with the Documents, then, except as otherwise expressly provided herein, if such Lender does not deliver to the Agent its consent or objection to such matter within the time period referenced in such notice, or if no such period is referenced therein, within 10 Banking Days of the delivery of such notice by the Agent to such Lender, such Lender will be deemed not to have consented thereto upon the expiry of such period.

Procedure for Making Advances.

Pro Rata Advances.    Subject to Sections 3.5, 3.10, 7.2, 7.3, 7.4, 11.1(d) and 21.17 all Advances made by the Lenders will be made in accordance with each Lender’s Rateable Portion of such Advance, except to the extent that the Agent deems any variations therefrom to be immaterial. The Agent shall determine all adjustments to the amounts required to be advanced by the Lenders to reflect as nearly as practicable the respective Rateable Portions of the Lenders under the Credit Facility.

Instructions from Borrower.    Subject to Article 10, the Lenders, through the Agent, will make Advances available to the Borrower as required hereunder by debiting the account of the Agent to which each Lender’s Rateable Portion under the applicable Tranche of such Advances have been credited in accordance with Section 6.6 (or causing such account to be debited) and, in the absence of other arrangements agreed to by the Agent and the Borrower in writing, by transferring (or causing to be transferred) like funds in accordance with the instructions of the Borrower as set forth in the Notice of Borrowing, Notice of Rollover or Notice of Conversion, as the case may be, in respect of each Advance under the applicable Tranche, provided that the obligation of the Agent hereunder will be limited to taking such steps as are in keeping with its normal banking practice commercially reasonable in the circumstances to implement such instructions, and the Agent will not be liable for any damages, claims or costs which may be suffered by the Borrower or any of the Lenders and occasioned by the failure of such funds to reach their designated destination, unless such failure is due to the gross negligence or wilful misconduct of the Agent.

Assumption Respecting Availability.    Unless the Agent has been notified by a Lender within 2 Banking Days prior to an anticipated Advance that such Lender will not make available to the Agent its Rateable Portion of such Advance, the

Agent may assume, without any enquiry required on its part, that such Lender has made or will make such portion of the Advance available to the Agent on the date such Advance is to take place, in accordance with the provisions hereof and the Agent may, in reliance upon such assumption, make available to the Borrower on such date a corresponding amount. If and to the extent such Lender will not have so made its Rateable Portion of an Advance available to the Agent, such Lender agrees to pay to the Agent, forthwith on demand, such Lender’s Rateable Portion of the Advance and all reasonable costs and expenses incurred by the Agent in connection therewith together with interest thereon (at the rate payable thereunder by the Borrower in respect of such Advance) for each day from the date such amount is made available to the Borrower until the date such amount is paid to the Agent, provided however, that if such Lender fails to so pay, the Borrower covenants and agrees that without prejudice to any rights the Borrower may have against such Lender, it will repay the amount of such Lender’s Rateable Portion of the Advance (without duplication) to the Agent for the account of the Agent after receipt of the certificate referred to below and forthwith after demand therefor by the Agent. The amount payable to the Agent pursuant hereto will be as set forth in a certificate delivered by the Agent to such non-paying Lender and the Borrower (which certificate will contain reasonable details of how the amount payable is calculated) and will be conclusive and binding, for all purposes, in the absence of manifest error. If such Lender makes the payment to the Agent as required herein, the amount so paid will constitute such Lender’s Rateable Portion of the Advance for purposes of this Agreement. The failure of any Lender to make its Rateable Portion of the Advance will not relieve any other Lender of its obligation, if any, hereunder to make its Rateable Portion of the Advance on the date that such Advance is to take place, but no Lender will be responsible for the failure of any other Lender to provide its Rateable Portion of any Advance under the Credit Facility.

Remittance of Payments.

Redistribution of Payment.

If it exercises any right of counter-claim, set off, bankers’ lien or similar right with respect to any property of the Borrower or if under applicable Law it receives a secured claim, the security for which is a debt owed by it to the Borrower, it will apportion the amount thereof proportionately between:

amounts outstanding at such time owed by the Borrower to such Lender under this Agreement, which amounts will be applied in accordance with this Section 21.4; and

amounts otherwise owed to it by the Borrower, provided that any cash collateral account held by such Lender as collateral for a letter of credit or bankers’ acceptance (including a Bankers’ Acceptance) issued or accepted by such Lender on behalf of the Borrower may be applied by such Lender to such amounts owed by the Borrower to such Lender pursuant to such letter of credit or in respect of any such bankers’ acceptance without apportionment.

If it receives, through the exercise of a right or the receipt of a secured claim described in paragraph (a) above or otherwise, payment of a proportion of the aggregate amount of principal, interest and fees due to it hereunder which is greater than the proportion received by any other Lender in respect of the aggregate amount of principal, interest and fees due in respect of the Credit Facility (having regard to the respective proportionate amounts advanced as Advances by each of the Lenders), the Lender receiving such proportionately greater payment will purchase a participation (which will be deemed to have been done simultaneously with receipt of such payment) in that portion of the Credit Facility of the other Lenders so that their respective receipts will be pro rata to their respective Rateable Portions, provided however that, if all or part of such proportionately greater payment received by such purchasing Lender will be recovered, such purchase will be rescinded and the purchase price for such participation will be returned to the extent of such recovery, but without interest. Such Lender will exercise its rights in respect of such secured claim in a manner consistent with the rights of the Lenders entitled under this Section 21.4 to share in the benefits of any recovery on such secured claims.

If it does any act or thing permitted by paragraphs (a) or (b) above, it will promptly provide full particulars thereof to the Agent.

Except as permitted under paragraphs (a), (b) and (c) above, no Lender will be entitled to exercise any right of counter-claim, set off, bankers’ lien or similar right without the prior consent of the other Lenders.

Duties and Obligations.

may assume that there has been no assignment or transfer by the Lenders of their rights under the Documents, unless and until the Agent receives a duly executed Assignment from such Lender;

may consult with counsel (including counsel for the Borrower), independent public accountants and other experts selected by it and will not be liable for any action taken or omitted to be taken in good faith by it in accordance with or reliance upon the advice of such counsel, accountants or experts;

will incur no liability under or in respect of the Documents by acting upon any notice, consent, certificate or other instrument or writing believed by it to be genuine and signed or sent by the apparently proper Person or by acting upon any representation or warranty of any Penn West Party made or deemed to be made hereunder;

may assume that no Default or Event of Default has occurred and is continuing unless it has actual knowledge to the contrary; and

may rely, as to any matter of fact which might reasonably be expected to be within the knowledge of any Person, upon a certificate signed by or on behalf of such Person.

Prompt Notice to the Lenders.

Agent and Agent Authority.

Lenders’ Credit Decisions.

Indemnification.

Successor Agent.

Taking and Enforcement of Remedies.

Reliance Upon Agent.

Agent May Perform Covenants.

No Liability of Agent.

Nature of Obligations under this Agreement.

Obligations Separate.    The obligations of each Lender and the Agent under this Agreement are separate. The failure of any Lender to carry out its obligations hereunder will not relieve the other Lenders, the Agent or the Borrower of any of their respective obligations hereunder.

No Liability for Failure by other Lenders.    Neither the Agent nor any Lender will be liable or otherwise responsible for the obligations of any other Lender hereunder.

Lender Consent.

Unanimity.  Notwithstanding anything herein to the contrary and without limiting in any way the context of any provision in this Agreement requiring the consent, approval or action of all Lenders under the Credit Facility, the following matters will require the approval, consent or agreement, as the context requires, of all Lenders under the Credit Facility:

the reduction or forgiveness of any Indebtedness payable by the Borrower to the Lenders under the Credit Facility or under any of the Documents pertaining to the Credit Facility;

any increase of the Commitment Amount (except as permitted by Section 3.2);

the postponement of any maturity date of any Indebtedness of the Borrower to the Lenders under the Credit Facility or under any of the Documents pertaining to the Credit Facility;

subject to Article 17, the requirement for delivery of, or any waiver or material amendment under, or release of the Guarantee Agreement other than as a result of a Restricted Subsidiary being designated as a Non-Restricted Subsidiary in accordance with Section 15.1;

any change in the nature of Advances under the Credit Facility;

any change to the covenants referred to in Sections 3.9, 14.3(h) and 18.4;

any decrease in the Applicable Margins set forth in Section 4.2;

any amendment to Section 2.1, 18.4 or 20.1 or this Section 21.16(a); and

any change to the definition of “Majority Lenders”;

Majority Consent.  Subject to Section 21.16(a), any waiver of or any amendment to any provision of the Documents as they pertain to the Credit Facility and any action, consent or other determination in connection with the Documents as they pertain to the Credit Facility will bind all of the Lenders under the Credit Facility if such waiver, amendment, action, consent or other determination is agreed to in writing by the Majority Lenders.

Defaulting Lenders.

the standby fees payable pursuant to Section 4.2 shall cease to accrue on the unused portion of the Individual Commitment Amount of such Defaulting Lender;

for the purposes of any Advance requested hereunder while there is a Defaulting Lender, each Lender’s Rateable Portion thereof shall be calculated based on such Lender’s Individual Commitment Amount relative to the Commitment Amount reduced by the Individual Commitment Amount of the Defaulting Lender;

a Defaulting Lender, and the Individual Commitment Amount of such Defaulting Lender, shall not be included in determining whether all Lenders or the Majority Lenders have taken or may take any action hereunder (including any consent to any amendment or waiver pursuant to Section 21.16), provided that any waiver or amendment requiring the consent of all Lenders or each affected Lender that: (i)

materially and adversely affects such Defaulting Lender differently than other affected Lenders; (ii) increases the Individual Commitment Amount of such Lender; or (iii) relates to the matters set forth in Section 21.16(a) (except for the matters referred to in subsections 21.16(a)(ii) and (vi)) shall require the consent of such Defaulting Lender;

the Agent, the Swingline Lender or any Fronting Lender may require such Defaulting Lender to pay to the Agent for deposit into an escrow account maintained by and in the name of the Agent an amount equal to such Defaulting Lenders’ maximum contingent obligations hereunder to the Agent, Swingline Lender or such Fronting Lender;

the Agent may withhold any payments owing to such Defaulting Lender for set-off against such Defaulting Lender’s existing or reasonably foreseeable future obligations hereunder;

for the avoidance of doubt, the Borrower shall retain and reserve their other rights and remedies respecting each Defaulting Lender;

if any Swingline Loans or Fronted Letters of Credit are outstanding (the Canadian Dollar Exchange Equivalent of the Aggregate Principal Amount of such Advances is the “Defaulting Lender Exposure”) at the time a Lender becomes a Defaulting Lender, then:

to the extent the Defaulting Lender has not provided cash collateral for its Defaulting Lender Exposure pursuant to Section 21.17(d), such Defaulting Lender Exposure shall be reallocated among the non-Defaulting Lenders for the purposes of Section 18.3 in accordance with their respective Rateable Portions (disregarding any Defaulting Lender’s Individual Commitment Amount) but only to the extent that the sum of (A) the aggregate Canadian Dollar Exchange Equivalent of the Aggregate Principal Amount of all Syndicated Advances made by any non-Defaulting Lender and outstanding at such time, plus (B) such non-Defaulting Lender’s rateable share (after giving effect to the reallocation contemplated herein) of the Defaulting Lender Exposure, does not exceed such non-Defaulting Lender’s Individual Commitment Amount; and

if the reallocation described in Section 21.17(g)(i) above cannot, or can only partially, be effected, the Borrower shall within one Banking Day following notice by the Swingline Lender or any Fronting Lender prepay all outstanding Swingline Loans and Fronted Letters of Credit (in the case of Letters of Credit, by the provision of cash collateral in accordance with Section 11.1(e), the provisions of which Section shall apply thereto as if a demand has been made pursuant thereto by each LC Issuer in respect of each outstanding Letter of Credit); and

so long as any Lender is a Defaulting Lender, the Swingline Lender shall not be required to fund any Swingline Loans and a Fronting Lender shall not be required

to issue any Fronted Letters of Credit unless, in each case, it is satisfied that the related exposure will be 100% covered by the Individual Commitment Amounts of non-Defaulting Lenders in accordance with Section 21.17(g), and participating interests in any such newly made Swingline Loan or newly issued Fronted Letter of Credit shall be allocated among non-Defaulting Lenders in a manner consistent with Section 21.17(g)(i).

Departing Lenders.

replace the Departing Lender with another financial institution acceptable to the Agent, acting reasonably, who purchases at par (or such lesser amount as may be agreed by the Departing Lender in its sole discretion) the Principal Amount owing to the Departing Lender and such Lender’s entire Individual Commitment Amount and assumes the Departing Lender’s Individual Commitment Amount and all other obligations of the Non-Consenting Lender hereunder, provided that prior to or concurrently with such replacement:

the Departing Lender shall have received payment in full (or such lesser amount as may be agreed by the Departing Lender in its sole discretion) of all principal, interest, fees and other amounts through such date of replacement and a release from any further obligations to make Advances under the Documents after the date of such replacement;

the assignment fee required to be paid by Section 20.2 shall have been paid to the Agent;

all of the requirements for such assignment contained in Section 20.2 shall have been satisfied, including, without limitation, the consent of the Agent, the Swingline Lender and the Fronting Lenders and the receipt by the Agent of such agreements, documents and instruments as the Agent may reasonably require; and

each assignee consents, at the time of such assignment, to each matter in respect of which such Departing Lender was a Non-Consenting Lender and the Borrower also requires each other Lender that is a Non-Consenting Lender to assign the Principal Amount owing to it and its Individual Commitment Amount; or

elect to terminate the Departing Lender’s Individual Commitment Amount, in which case the Commitment Amount shall be reduced by an amount equal to the amount of any Individual Commitment Amount so cancelled (provided that prior to or concurrently with such cancellation the Departing Lender shall have received payment in full (or such lesser amount as may be agreed to by the Departing Lender in its sole discretion) of all principal, interest, fees and other amounts through such date of cancellation (including breakage and other costs in accordance with Section 9.2, the provision of Escrow Funds to the Agent on behalf of such Lender in respect of outstanding Bankers’ Acceptances accepted by such Lender and cash collateralization in full of any contingent obligations in respect of any outstanding Letters of Credit for which such Lender is the LC Issuer) and a release from any further obligations to make Advances under the Documents after such termination);

Notices.

left at the relevant address set forth below or in Schedule B, as applicable; or

telecopied or sent by other means of recorded electronic communication; and

if to the Agent, addressed to the Agent at:

Canadian Imperial Bank of Commerce

40 Dundas Street West, 5^th Floor

Toronto, Ontario M5G 2C2

with a copy to:

Canadian Imperial Bank of Commerce

199 Bay Street

Commerce Court West, 11th Floor

Toronto, Ontario M5L 1A2

if to any of Penn West Parties, addressed to any of them at:

Suite 200, 207 – 9^th Avenue S.W.

Calgary, Alberta

T2P 1K3

if to any Lender, to the address otherwise on file with the Agent as of the Closing Date or as otherwise notified to the Agent by the applicable Lender from time to time thereafter.

The Parties each covenant to accept service of judicial proceedings arising under the Documents at its respective address set forth herein.

Any notice or other communication given or made in accordance with this Section 22.1 will be deemed to have been received on the day of delivery if delivered as aforesaid or on the day of receipt of same by telecopy or other recorded means of electronic communication, as the case may be, provided such day is a Banking Day and that such notice is received prior to 12:00 noon local time and, if such day is not a Banking Day or if notice is received after 12:00 noon local time, on the first Banking Day thereafter.

Each Party may change its address and telecopier number for purposes of this Section 22.1 by notice given in the manner provided in this Section 22.1 to the other Parties.

Any notice given under any of the Documents to the Agent will be deemed to also be given to and received by the Agent in its capacity as Lender.

Telephone Instructions.

No Partnership, Joint Venture or Agency.

Judgment Currency.

Deficiency. If, for the purposes of obtaining judgment in any court or any other related purpose hereunder, it is necessary to convert an amount due hereunder in the currency in which it is due (the “Original Currency”) into another currency (the “Second Currency”), the rate of exchange applicable will be the daily noon day rate quoted by the Bank of Canada on the relevant date to purchase in Toronto, Ontario the Original Currency with the Second Currency and includes any premium and costs of exchange payable by the purchaser in connection with such purchase. Each Party (the “First Party”) agrees that its obligation in respect of any Original Currency due from it to the another Party hereunder will, notwithstanding any judgment or payment in the Second Currency, be discharged only to the extent that on the Banking Day following the receipt of any sum so paid in the Second Currency, the other Parties may, in accordance with normal banking procedures, purchase in the Toronto, Ontario foreign exchange market the Original Currency with the amount of the Second Currency so paid; and if the amount of the Original Currency so purchased is less than the amount originally due in the Original Currency, the First Party agrees that the deficiency will be a separate and continuing obligation of it, independent from its obligations under this Agreement, and will constitute in favour of the other Parties a cause of action which will continue in full force and effect notwithstanding any such judgment, or order to the contrary, and the First Party agrees, notwithstanding any such payment or judgment, to indemnify the other Parties against any such loss or deficiency.

Excess. The Lenders through the Agent will pay to the Borrower the amount, if any, after netting out all amounts due by the Borrower under Section 22.4(a), which the Lenders may realize in excess of what is owed to them by virtue of the conversion of the Original Currency into the Second Currency.

Further Assurances.

Expenses.

Waiver of Laws.

Attornment and Waiver of Jury Trial.

submit and attorn to the non-exclusive jurisdiction of the courts of the Province of Alberta for all matters arising out of or relating to the Documents or any of the transactions contemplated thereby; and

waive any right they may have to, or to apply for, trial by jury in connection with any matter, action, proceeding, claim or counterclaim arising out of or relating to the Documents or any of the transactions contemplated thereby.

Interest on Out-of-Pocket Payments.

Except as otherwise provided in this Agreement, interest will be paid by the Parties as follows:

on amounts for which any Party has actually incurred an out-of-pocket expense and for which another Party has an obligation under the Documents to reimburse such amounts to the Party incurring the expenses, interest will be payable on such amount at the Canadian Prime Rate plus the Applicable Margin plus [Redacted]% per annum from and including the day on which the amount was incurred to but excluding the day on which the amount is reimbursed if, commencing on the date which is 3 Banking Days following a demand for payment of the amount in accordance with the terms of the Documents, such expense has not been paid; and

on amounts payable by one Party to another Party under the Documents where such payment is in default but the non-payment of such amount has not required an actual out-of-pocket expense by the Party to whom such payment is due, at the Canadian Prime Rate plus the Applicable Margin plus [Redacted]% per annum from and including the day on which the payment was due to, but excluding the day on which the payment is made whether before or after judgment, but if such payment is a reimbursement by the Lenders to the Borrower for overpayment by it to the Lenders or is in respect of an inadvertent underpayment by the Agent, the Lenders or the Borrower to another Party (based on information provided by such other Party), such interest will only be calculated from the date which is 3 Banking Days following a demand for payment by the Party entitled to it.

All interest referred to in this Section 22.9 will be simple interest calculated daily on the basis of a 365 or 366 day year, as applicable. For the purposes of the Interest Act (Canada), the annual rates of interest to which such rates are equivalent are the rates so determined multiplied by the actual number of days in a period of one year commencing on the first day of the period for which such interest is payable and divided by 365 or 366, as applicable.

Payments Due on Banking Day.

Anti-Money Laundering Legislation.

The Borrower acknowledges that, pursuant to the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (Canada) and other applicable anti-money laundering, anti-terrorist financing, government sanction and “know your client” Laws, whether within Canada or elsewhere (collectively, including any guidelines or orders thereunder, “AML Legislation”), the Lenders and the Agent may be required to obtain, verify and record information regarding the Borrower, its directors, authorized signing officers, direct or indirect shareholders or unitholders or other Persons in control of the Borrower, and the transactions contemplated hereby. The Borrower shall promptly: (i) provide all such information, including supporting documentation and other evidence, as may be reasonably requested by any Lender or the Agent, or any prospective assignee of a Lender or the Agent, in order to comply with any applicable AML Legislation, whether now or hereafter in existence; and (ii) notify the recipient of any such information of any changes thereto.

If, upon the written request of any Lender, the Agent has ascertained the identity of the Borrower or any Restricted Subsidiary or any authorized signatories of the Borrower or any Restricted Subsidiary for the purposes of applicable AML Legislation on such Lender’s behalf, then the Agent:

shall be deemed to have done so as an agent for such Lender, and this Agreement shall constitute a “written agreement” in such regard between such Lender and the Agent within the meaning of applicable AML Legislation; and

shall provide to such Lender copies of all information obtained in such regard without any representation or warranty as to its accuracy or completeness.

Notwithstanding the preceding sentence, each of the Lenders agrees that the Agent has no obligation to ascertain the identity of the Borrower or any Restricted Subsidiary or any authorized signatories of the Borrower or any Restricted Subsidiary, on behalf of any Lender, or to confirm the completeness or accuracy of any information it obtains from the Borrower or any Restricted Subsidiary or any such authorized signatory in doing so.

Whole Agreement.