AMENDED AND RESTATED CREDIT AGREEMENT

EXHIBITS:

SCHEDULES:

Schedule I                                      -           Addresses and Commitments

Schedule 4.01                                -           Subsidiaries

Schedule 4.05                                -           Existing Debt

Schedule 4.07                                -           Litigation

Schedule 4.17                                -           Gas Imbalances

Schedule 4.20                                -           Hedging Agreements

Schedule 4.21                                -           Material Agreements

Schedule 6.07                                -           Affiliate Transactions

This Amended and Restated Credit Agreement dated as of October 5, 2009 is among ABRAXAS PETROLEUM CORPORATION, a Nevada corporation ("Borrower"), the lenders party hereto from time to time as Lenders (as defined below), and SOCIÉTÉ GÉNÉRALE , as Administrative Agent (as defined below) and as Issuing Lender (as defined below).

A.           Reference is made to that certain Credit Agreement dated as of June 27, 2007 among Borrower, the lenders party thereto, including the Lenders (the " Existing APC Lenders ") and Société Générale as administrative agent (in such capacity, the " Existing APC Agent ") and as issuing lender (in such capacity, the " Existing APC Issuing Lender "), as amended by that certain Amendment No. 1 dated as of February 4, 2009, as further amended by that certain Amendment No. 2 and Waiver dated as of May 13, 2009, and as further amended by that certain Amendment No. 3 and Waiver dated as of August 7, 2009, in each case by and among Borrower, Existing APC Agent and Existing APC Issuing Lender (as so amended, the " Existing APC Credit Agreement ").

B.           Reference is made to that certain Amended and Restated Credit Agreement dated as of January 31, 2008 among Abraxas MLP (as defined below), the lenders party thereto, including the Lenders (the " Existing Senior MLP Lenders ") and Société Générale as administrative agent (in such capacity, the " Existing Senior MLP Agent ") and as issuing lender (in such capacity, the " Existing Senior MLP Issuing Lender " and, together with the Existing APC Issuing Lender, collectively, the " Existing Issuing Lenders ")), as amended by that certain Amendment No. 1 dated as of January 16, 2009, as further amended by that certain Amendment No. 2 dated as of April 30, 2009, as further amended by that certain Amendment No. 3 dated as of May 7, 2009, as further amended by that certain Amendment No. 4 dated as of June 30, 2009, and as further amended by that certain Amendment No. 5 dated as of July 22, 2009, in each case, by and among Abraxas MLP, Existing Senior MLP Agent, Existing Senior MLP Issuing Lender and the Existing Senior MLP Lenders party thereto (as so amended, the " Existing Senior MLP Credit Agreement ").

C.           Reference is made to that certain Subordinated Credit Agreement dated as of January 31, 2008 among Abraxas MLP, the lenders party thereto, including the Lenders (the " Existing Subordinated MLP Lenders " and, together with the Existing APC Lenders and the Existing Senior MLP Lenders, collectively, the " Existing Lenders ") and Société Générale as administrative agent (in such capacity, the " Existing Subordinated MLP Agent " and, together with the Existing APC Agent and the Existing Senior MLP Agent, collectively, the " Existing Agent ") as amended by that certain Amendment No. 1 dated as of January 16, 2009, as further amended by that certain Amendment No. 2 dated as of April 30, 2009, as further amended by that certain Amendment No. 3 dated as of May 7, 2009, as further amended by that certain Amendment No. 4 dated as of June 30, 2009, as further amended by that certain Amendment No. 5 dated as of July 22, 2009, as further amended by that certain Amendment No. 6 dated as of August 13, 2009, and as further amended by that certain Amendment No. 7 dated as of August 31, 2009, in each case by and among Abraxas MLP, Existing Subordinated MLP Agent, and the Existing Subordinated MLP Lenders party thereto (as so amended, the " Existing Subordinated

MLP Credit Agreement " and, together with the Existing APC Credit Agreement and the Existing Senior MLP Credit Agreement, collectively, the " Existing Credit Agreements ").

D.           Pursuant to the Merger Agreement (as defined below), Abraxas MLP will merge with and into Merger Sub (as defined below), a wholly owned direct subsidiary of Borrower substantially simultaneously with the effectiveness of this Agreement.

E.           The Borrower, Merger Sub (as successor to Abraxas MLP), the Existing Agents, the Existing Issuing Lenders and the Existing Lenders, together with the other Lenders have agreed to amend and restate (but not extinguish) each of the Existing Credit Agreements in their entirety as hereinafter set forth through the execution of this Agreement.

F.           It is the intention of the parties hereto that (i) this Agreement is an amendment and restatement of the Existing Credit Agreements and not a new or substitute credit agreement, and (ii) the Borrower will assume the full obligations of itself and of Abraxas MLP under the Existing Credit Agreements.

NOW, THEREFORE, in consideration of the premises and agreements, provisions and covenants herein contained, the parties hereto (i) do hereby agree that the Existing Credit Agreements are amended and restated (but not substituted or extinguished) in their entirety as set forth herein, and (ii) do hereby agree as follows:

Section 1.01                       Certain Defined Terms .  As used in this Agreement, the terms defined above shall have the meaning set forth therein and the following terms shall have the following meanings:

" Abraxas MLP " means Abraxas Energy Partners, L.P., a Delaware limited partnership.

" Abraxas Properties " means Abraxas Properties Incorporated, a Texas corporation.

" Acceptable Security Interest " in any Property means a Lien which (a) exists in favor of the Administrative Agent for the benefit of the Secured Parties, (b) with respect to Property that is not Borrowing Base Assets, is the only Lien on such Property other than Permitted Subject Liens and which is superior to all Liens or rights of any other Person in the Property encumbered thereby other than Permitted Subject Liens, (c) with respect to Borrowing Base Assets, is the only Lien on such Property other than Permitted Borrowing Base Liens, and which is superior to all Liens or rights of any other Person in the Property encumbered thereby other than Permitted Borrowing Base Liens, (d) secures the Obligations, and (e) is perfected and enforceable.

" Accession Agreement " means that certain Accession Agreement dated as of August 25, 2009 among Merger Sub, Borrower, and Abraxas MLP.

" Acquisition " means the purchase by the Borrower or any of its Subsidiaries of any business, including the purchase of associated assets or operations or of stock (or other ownership interests) of a Person.

" Act " is defined in Section 9.17.

" Adjusted Reference Rate " means, for any day, the fluctuating rate per annum of interest equal to the greater of (a) the Reference Rate in effect on such day, (b) the Federal Funds Rate in effect on such day plus ½ of 1%, and (c) the Eurodollar Rate in effect on such day for an Interest Period equal to one month.

" Administrative Agent " means Société Générale, in its capacity as agent pursuant to Article VIII, and any successor agent pursuant to Section 8.06.

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

" Advance " means a Revolving Advance or a Term Advance.

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

" Agreement " means this Amended and Restated Credit Agreement, as the same may be amended, supplemented, and otherwise modified from time to time.

" Applicable Lending Office " means (a) with respect to any Lender, the office, branch, subsidiary, affiliate or correspondent bank of such Lender specified in its Administrative Questionnaire or such other office, branch, subsidiary, affiliate or correspondent bank as such Lender may from time to time specify to the Borrower and the Administrative Agent from time to time and (b) with respect to the Administrative Agent, the address specified for such Person on Schedule I or to such other address, facsimile number, electronic mail address or telephone number as shall be designated by such party in a notice to the other parties.

" Applicable Margin " means, with respect to any Advance, (a) during such times as any Event of Default exists, 3% per annum plus the rate per annum set forth below for the relevant Type of such Advance based on the present Utilization applicable from time to time, and (b) at all other times, the rate per annum set forth below for the relevant Type of such Advance based on the relevant Utilization applicable from time to time.  The Applicable Margin for any Advance shall change when and as the relevant Utilization changes and when and as any such Event of Default commences or terminates.

" Assignment and Acceptance " means an assignment and acceptance entered into by a Lender and an Eligible Assignee, and accepted by the Administrative Agent, in substantially the form of the attached Exhibit A or any other form approved by the Administrative Agent.

" Borrower " shall have the meaning set forth in the preamble hereof.

" Borrowing " means a Revolving Borrowing or a Term Borrowing.

" Borrowing Base " means at any particular time, the Dollar amount determined in accordance with Section 2.02 (and adjusted from time to time pursuant to Section 2.02 or Section 6.04(b)) on account of Proven Reserves attributable to Oil and Gas Properties of the Borrower and its Subsidiaries subject to an Acceptable Security Interest and described in the most recent Independent Engineering Report or Internal Engineering Report, as applicable, delivered to the Administrative Agent and the Lenders pursuant to Section 2.02.

" Borrowing Base Assets " means, at any time, any assets that are given value in the most recently determined Borrowing Base.

" Borrowing Base Deficiency " means the amount by which the aggregate outstanding amount of the Revolving Advances plus the Letter of Credit Exposure exceeds the lesser of (x) the Borrowing Base and (y) the aggregate Revolving Commitments.

" Business Day " means a day of the year on which banks are not required or authorized to close in Houston, Texas and New York, New York, and, if the applicable Business Day relates to any Eurodollar Rate Advances, on which dealings are carried on by banks in the London interbank market.

" Business Loan Agreement " means the Business Loan Agreement dated November 13, 2008 by and among Borrower, Abraxas Properties, and PlainsCapital Bank, as amended through the date of this Agreement.

" Canadian Abraxas " means Canadian Abraxas Petroleum Corporation, an Alberta, Canada corporation and wholly-owned subsidiary of Borrower.

" Capital Leases " means, as applied to any Person, any lease of any Property by such Person as lessee which would, in accordance with GAAP, be required to be classified and accounted for as a capital lease on the balance sheet of such Person.

" Cash Collateral Account " means a special interest bearing cash collateral account pledged by the Borrower to the Issuing Lender containing cash deposited pursuant to Sections 2.05(b), 2.07(d)(iii), 7.02(b), or 7.03(b) to be maintained with the Issuing Lender in accordance with Section 2.07(g) and bear interest or be invested in the Issuing Lender's reasonable discretion.

" CERCLA " means the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, as amended, state and local analogs, and all rules and regulations and requirements thereunder in each case as now or hereafter in effect.

" Change in Control " shall mean the occurrence of any of the following events:

(a)           the occurrence of any transaction, the result of which is that the Borrower ceases to own, either directly or indirectly, 100% of the Equity Interest in any Subsidiary;

(b)           any "person" or "group" (as such terms are used in Sections 13(d) and 14(d) of the Exchange Act) becomes the "beneficial owner" (as defined in Rules 13d-3 and 13d-5 under the Exchange Act, except that a person or group shall be deemed to have "beneficial ownership" of all securities that such person or group has the right to acquire (such right, an "option right"), whether such right is exercisable immediately or only after the passage of time), directly or indirectly, of 25% or more of the Equity Interest of the Borrower; or

(c)           during any period of 12 consecutive months, a majority of the members of the board of directors or other equivalent governing body of the Borrower cease to be composed of individuals (i) who were members of that board or equivalent governing body on the first day of such period, (ii) whose election or nomination to that board or equivalent governing body was approved by individuals referred to in clause (i) above constituting at the time of such election or nomination at least a majority of that board or equivalent governing body or (iii) whose election or nomination to that board or other equivalent governing body was approved by individuals referred to in clauses (i) and (ii) above constituting at the time of such election or nomination at least a majority of that board or equivalent governing body.

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

" Closing Date " means October 5, 2009.

" Code " means the Internal Revenue Code of 1986, as amended, and any successor statute.

" Collateral " means (a) all "Collateral", "Pledged Collateral" and "Mortgaged Properties" (as defined in each of the Mortgages, the Security Agreements, and the Pledge Agreement, as applicable) or similar terms used in the Security Instruments, and (b) all amounts contained in the Borrower's and its Subsidiaries' bank accounts.

" Commitment " means, as to any Lender, the sum of its Revolving Commitment and its Term Commitment, if applicable.

" Commitment Fee Rate " means a 0.500% per annum commitment fee rate.

" Commitment Termination Date " means the earlier of (a) the Revolving Maturity Date and (b) the earlier termination in whole of the Commitments pursuant to Section 2.04 or Article VII.

" Company Group " shall mean Borrower and each Subsidiary.

" Compliance Certificate " means a compliance certificate in the form of the attached Exhibit B signed by a Responsible Officer of the Borrower.

" Consolidated EBITDAX " means, without duplication, for the Borrower, its consolidated Subsidiaries, and Canadian Abraxas for any period (a) consolidated Net Income for such period plus (b) to the extent deducted in determining consolidated Net Income, Interest Expense, oil and gas exploration expenses, taxes, depreciation, amortization, depletion, and other non-cash charges for such period (including any provision for the reduction in the carrying value of assets recorded in accordance with GAAP and including non-cash charges resulting from the requirements of SFAS 133 or 143 and any non-cash expenses incurred pursuant to SFAS 123R) for such period plus (c) all realized net cash proceeds arising from the settlement or monetization of any Hedge Contract (including any Hydrocarbon Hedge Agreement) or upon any Hedge Termination minus (d) all positive non-cash items of income which were included in determining such consolidated Net Income (including non-cash income resulting from the requirements of SFAS 133 or 143).

" Control " means the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of a Person, whether through the ability to exercise voting power, by contract or otherwise.  " Controls ", " Controlled by ", " Controlling " and " Controlled " have meanings correlative thereto.  Without limiting the generality of the foregoing, a Person shall be deemed to be Controlled by another Person if such other Person possesses, directly or indirectly, the power to vote 10% or more of the securities having ordinary voting power for the election of directors, managing general partners or the equivalent.

" Controlled Group " means all members of a controlled group of corporations and all businesses (whether or not incorporated) under common control which, together with the Borrower, are treated as a single employer under Section 414 of the Code.

" Convert ," " Conversion ," and " Converted " each refers to a conversion of Advances of one Type into Advances of another Type pursuant to Section 2.03(b).

" Credit Extensions " means (a) an Advance made by any Lender, and (b) the issuance, increase or extension of any Letter of Credit by the Issuing Lender.

" Debt ," for any Person, means without duplication: (a) indebtedness of such Person for borrowed money; (b) obligations of such Person evidenced by bonds, debentures, notes or other similar instruments; (c) obligations of such Person to pay the deferred purchase price of Property or services (including obligations that are non-recourse to the credit of such Person but are secured by the assets of such Person, but excluding trade accounts payable); (d) obligations of such Person as lessee under Capital Leases; (e) the maximum amount of all direct or contingent obligations of such Person arising under letters of credit (including standby and commercial), bankers’ acceptances, bank guaranties, surety bonds and similar instruments; (f) obligations of

such Person under any Hedge Contract; (g) obligations of such Person owing in respect of mandatorily redeemable preferred stock or other mandatorily redeemable preferred equity interest of such Person; (h) any obligations of such Person owing in connection with any volumetric or production payments; (i) obligations of such Person under direct or indirect guaranties in respect of, and obligations (contingent or otherwise) of such Person to purchase or otherwise acquire, or otherwise to assure a creditor against loss in respect of, indebtedness or obligations of others of the kinds referred to in clauses (a) through (h) above; (j) indebtedness or obligations of others of the kinds referred to in clauses (a) through (i) secured by any Lien on or in respect of any Property of such Person; and (k) all liabilities of such Person in respect of unfunded vested benefits under any Plan.

" Default " means (a) an Event of Default or (b) any event or condition which with notice or lapse of time or both would become an Event of Default.

" Defaulting Lender " means, at any time, a Lender as to which the Administrative Agent has notified the Borrower that (i) such Lender has failed for three or more Business Days to comply with its obligations under this Agreement to make an Advance or make a payment to the Issuing Bank in respect of a Letter of Credit reimbursement obligation (each a “ Lender Funding Obligation ”), (ii) such Lender has notified the Administrative Agent, or has stated publicly, that it will not comply with any such Lender Funding Obligation hereunder, or has defaulted on its funding obligations generally under other loan agreements or credit agreements or similar agreements, (iii) such Lender has, for five or more Business Days, failed to confirm in writing to the Administrative Agent, in response to a written request of the Administrative Agent, that it will comply with its funding obligations hereunder, or (iv) a Lender Insolvency Event has occurred and is continuing with respect to such Lender; provided that neither the reallocation of funding obligations provided for in Section 2.15 as a result of a Lender's being a Defaulting Lender nor the performance by Non-Defaulting Lenders of such reallocated funding obligations will by themselves cause the relevant Defaulting Lender to become a Non-Defaulting Lender; and provided further that a Lender shall not be deemed a Defaulting Lender solely by virtue of the acquisition or maintenance of an ownership interest in such Lender or its Parent Company by a Governmental Authority or an instrumentality thereof.  Any determination that a Lender is a Defaulting Lender under clauses (i) through (iv) above will be made by the Administrative Agent acting in good faith.  The Administrative Agent will promptly send to all parties hereto a copy of any notice to the Borrower provided for in this definition.

" Disposition " means a sale, lease, transfer, assignment, Farmout, conveyance, release, surrender, or other disposition of Property (including any working interest, overriding royalty interest, production payments, net profits interest, royalty interest, or mineral fee interest) in any transaction or series of transactions.

" Dollars " and " $ " means lawful money of the United States of America.

" Eligible Assignee " means (a) a Lender, (b) an Affiliate of a Lender, (c) an Approved Fund, (d) a commercial bank organized under the laws of the United States, or any state thereof, and having total assets in excess of $250,000,000 and approved by the Administrative Agent and the Issuing Lender in their sole discretion, (e) a commercial bank organized under the laws of any other country which is a member of the Organization for Economic Cooperation and

Development or a political subdivision of any such country and which has total assets in excess of $250,000,000, provided that such bank is acting through a branch or agency located in the United States and such bank is approved by the Administrative Agent and the Issuing Lender in their sole discretion, (f) a finance company, insurance company, or other financial institution or fund that is engaged in making, purchasing, or otherwise investing in commercial loans or securities in the ordinary course of its business and having (together with its Affiliates) total assets in excess of  $250,000,000 and approved by the Administrative Agent and the Issuing Lender in their sole discretion, (g) any other Person (other than a natural person) approved by (i) the Administrative Agent and the Issuing Lender in their sole discretion and (ii) unless a Default has occurred and is continuing at the time any assignment is effected pursuant to this Agreement, the Borrower; provided that notwithstanding the foregoing, "Eligible Assignee" shall not include the Borrower or any Affiliate or Subsidiary of any member of the Company Group.

" Engineering Report " means either an Independent Engineering Report or an Internal Engineering Report and includes the Initial Engineering Report where applicable.

" Environment " or " Environmental " shall have the meanings set forth in 42 U.S.C.  9601(8) (1988).

" Environmental Claim " means any third party (including governmental agencies and employees) action, lawsuit, claim, demand, regulatory action or proceeding, order, decree, consent agreement or notice of potential or actual responsibility or violation (including claims or proceedings under the OSHA or similar laws or requirements relating to health or safety of employees) which seeks to impose liability under any Environmental Law.

" Environmental Law " means, as to the Borrower or its Subsidiaries, all Legal Requirements or common law theories applicable to the Borrower or its Subsidiaries arising from, relating to, or in connection with the Environment, health, or safety, including CERCLA, relating to (a) pollution, contamination, injury, destruction, loss, protection, cleanup, reclamation or restoration of the air, surface water, groundwater, land surface or subsurface strata, or other natural resources; (b) solid, gaseous or liquid waste generation, treatment, processing, recycling, reclamation, cleanup, storage, disposal or transportation; (c) exposure to pollutants, contaminants, hazardous, medical and infectious, or toxic substances, materials or wastes; (d) the safety or health of employees; or (e) the manufacture, processing, handling, transportation, distribution in commerce, use, storage or disposal of hazardous, medical and infectious, or toxic substances, materials or wastes.

" Environmental Liability " shall mean all liabilities, obligations, damages, losses, claims, actions, suits, judgments, orders, fines, penalties, fees, expenses and costs (including administrative oversight costs, natural resource damages and remediation costs), whether contingent or otherwise, arising out of or relating to (a) compliance or non-compliance with any Environmental Law, (b) the generation, use, handling, transportation, storage, treatment or disposal of any Hazardous Materials, (c) exposure to any Hazardous Materials, (d) the Release of any Hazardous Materials or (e) any contract, agreement or other consensual arrangement pursuant to which liability is assumed or imposed with respect to any of the foregoing.

" Environmental Permit " means any permit, license, order, approval, registration or other authorization under Environmental Law.

" Equity Interest " means, with respect to any Person, any shares, interests, participation, or other equivalents (however designated) of corporate stock, membership interests or partnership interests (or any other ownership interests) of such Person.

" ERISA " means the Employee Retirement Income Security Act of 1974, as amended from time to time.

" ERISA Affiliate " means each member of a controlled group of corporations and all businesses (whether or not incorporated) under common control which, together with the Borrower, are treated as a single employer under Section 414 of the Code.

" Eurocurrency Liabilities " has the meaning assigned to that term in Regulation D of the Federal Reserve Board (or any successor), as in effect from time to time.

" Eurodollar Rate " means, for the Interest Period for each Eurodollar Rate Advance comprising the same Borrowing, the greater of (a) 2% per annum and (b) the British Bankers Association LIBOR Rate (“ BBA LIBOR ”), as published by Reuters (or other commercially available source providing quotations of BBA LIBOR as designated by the Administrative Agent from time to time), for deposits in Dollars at 11:00 a.m.  (London, England time) two Business Days before the first day of such Interest Period and for a period equal to such Interest Period; provided , that, if such rate is not available to the Administrative Agent for any reason, the Eurodollar Rate shall be an interest rate per annum equal to the rate per annum at which deposits in Dollars are offered by the principal office of Société Générale in London, England to prime banks in the London interbank market at 11:00 a.m.  (London, England time) two Business Days before the first day of such Interest Period in an amount substantially equal to the Eurodollar Rate Advance to be maintained by the Lender that is the Administrative Agent in respect of such Borrowing and for a period equal to such Interest Period.

" Eurodollar Rate Advance " means an Advance which bears interest as provided in Section 2.09(b).

" Eurodollar Rate Reserve Percentage " of any Lender for the Interest Period for any Eurodollar Rate Advance means the reserve percentage applicable during such Interest Period (or if more than one such percentage shall be so applicable, the daily average of such percentages for those days in such Interest Period during which any such percentage shall be so applicable) under regulations issued from time to time by the Federal Reserve Board for determining the maximum reserve requirement (including any emergency, supplemental, or other marginal reserve requirement) for such Lender with respect to liabilities or assets consisting of or including Eurocurrency Liabilities having a term equal to such Interest Period.

" Event of Default " has the meaning specified in Section 7.01.

" Exchange Act " means the Securities Exchange Act of 1934, as amended.

" Excluded Taxes " means, with respect to the Administrative Agent, any Lender, the Issuing Lender or any other recipient of any payment to be made by or on account of any obligation of any Borrower hereunder, (a) taxes imposed on or measured by its overall net income (however denominated), and franchise or "margin" or similar taxes imposed on it (in lieu of net income taxes), by the jurisdiction (or any political subdivision thereof) under the laws of which such recipient is organized or in which its principal office is located or, in the case of any Lender, in which its applicable lending office is located, (b) any branch profits taxes imposed by the United States of America or any similar tax imposed by any other jurisdiction in which any Borrower is located and (c) in the case of a Foreign Lender (other than an assignee request by the Borrower and any Lender party to this Agreement on the Closing Date), any withholding tax that is imposed on amounts payable to such Foreign Lender at the time such Foreign Lender becomes a party hereto (or designates a new lending office) or is attributable to such Foreign Lender’s failure or inability (other than as a result of a Change in Law) to comply with Section 2.14(e), except to the extent that such Foreign Lender (or its assignor, if any) was entitled, at the time of designation of a new lending office (or assignment), to receive additional amounts from any Borrower with respect to such withholding tax pursuant to Section 2.14(a).  Notwithstanding anything to the contrary contained in this definition, "Excluded Taxes" shall not include any withholding tax imposed at any time on payments made by or on behalf of a Borrower that is not a resident of the United States for tax purposes to any Lender, Administrative Agent or Issuing Lender hereunder or under any other Credit Document, provided that such Lender, such Administrative Agent and such Issuing Lender shall have complied with Section 2.14(e).

" Existing Agent " has the meaning set forth in Recital C.

" Existing APC Agent " has the meaning set forth in Recital A.

" Existing APC Credit Agreement " has the meaning set forth in Recital A.

" Existing APC Issuing Lender " has the meaning set forth in Recital A.

" Existing APC Lenders " has the meaning set forth in Recital A.

" Existing Credit Agreements " has the meaning set forth in Recital C.

" Existing Credit Documents " has the meaning set forth in Section 9.18.

" Existing Issuing Lenders " has the meaning set forth in Recital B.

" Existing Lenders " has the meaning set forth in Recital C.

" Existing Letters of Credit " means the letters of credit issued and outstanding under (a) the Existing APC Credit Agreement and (b) the Existing Senior MLP Credit Agreement.

" Existing Mortgage " means that certain Deed of Trust, Security Agreement and Financing Statement dated as of November 13, 2008 by Borrower in favor of Les Eubank, as Trustee for the benefit of PlainsCapital Bank, securing the obligations under the Business Loan Agreement with Liens on Borrower's headquarters located at 18803 Meisner Drive, San Antonio, TX  78258.

" Existing Senior MLP Agent " has the meaning set forth in Recital B.

" Existing Senior MLP Credit Agreement " has the meaning set forth in Recital B.

" Existing Senior MLP Issuing Lender " has the meaning set forth in Recital B.

" Existing Senior MLP Lenders " has the meaning set forth in Recital B.

" Existing Subordinated MLP Agent " has the meaning set forth in Recital C.

" Existing Subordinated MLP Credit Agreement " has the meaning set forth in Recital C.

" Existing Subordinated MLP Lenders " has the meaning set forth in Recital C.

" Expiration Date " means, with respect to any Letter of Credit, the date on which such Letter of Credit will expire or terminate in accordance with its terms.

" Farmout " means an arrangement pursuant to agreement whereby the owner(s) of one or more oil, gas and/or mineral lease or other oil and natural gas working interest with respect to a property from which production of Hydrocarbons is sought agrees to transfer or assign an interest in such property to one or more Persons in exchange for (a) drilling, or participating in the cost of the drilling of (or agreeing to do so) one or more wells, or undertaking other exploration or development activity or participating in the cost of such activity, to attempt to obtain production of Hydrocarbons from such property, or (b) obtaining production of Hydrocarbons from such property, or participating in the costs of such production.

" Federal Funds Rate " means, for any period, a fluctuating interest rate per annum equal for each day during such period to the weighted average of the rates on overnight Federal funds transactions with members of the Federal Reserve System arranged by Federal funds brokers, as published for such day (or, if such day is not a Business Day, for the immediately preceding Business Day) by the Federal Reserve Bank of New York, or, if such rate is not so published for any day which is a Business Day, the average of the quotations for any such day on such transactions received by the Administrative Agent from three Federal funds brokers of recognized standing selected by it.

" Federal Reserve Board " means the Board of Governors of the Federal Reserve System or any of its successors.

" Fee Letter " means that certain fee letter dated September 8, 2009 among the Borrower, Société Générale, and SG Americas Securities, LLC.

" Financial Statements " means (a) the audited consolidated balance sheet of the Borrower and its consolidated Subsidiaries as at December 31, 2008 and the related audited consolidated and consolidating statements of income, cash flow, and retained earnings of the Borrower and its consolidated Subsidiaries for the fiscal year then ended, (b) the unaudited consolidated and consolidating balance sheet of the Borrower and its consolidated Subsidiaries dated June 30, 2009 and the related unaudited consolidated and consolidating statements of income, cash flow, and retained earnings of the Borrower and its consolidated Subsidiaries for the three month

period then ended, and (c) the pro forma unaudited consolidated balance sheet of the Borrower and its consolidated Subsidiaries as of June 30, 2009 (after giving effect to the Hedge Termination which occurred on July 29, 2009, the Merger and the Credit Extensions occurring on the Initial Funding Date), and including the certification of a Responsible Officer of the Borrower, all prepared in accordance with GAAP (except for the absence of footnotes and adjustments typically made at year-end), in each case, the copies of which have been delivered to the Administrative Agent and the Lenders.

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

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

" GAAP " means United States generally accepted accounting principles as in effect from time to time, applied on a basis consistent with the requirements of Section 1.03.

" Gas Imbalance " means (a) a sale or utilization by Borrower or other members of the Company Group of volumes of natural gas in excess of its gross working interest, (b) receipt of volumes of natural gas into a gathering system and redelivery by Borrower or other members of the Company Group of a larger or smaller volume of natural gas under the terms of the applicable Transportation Agreement, or (c) delivery to a gathering system of a volume of natural gas produced by Borrower or a member of the Company Group that is larger or smaller than the volume of natural gas such gathering system redelivers for the account of Borrower or such member of the Company Group, as applicable.

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

" Guarantor " means each entity, which may from time to time, execute a Guaranty or a supplement to a Guaranty, including each Subsidiary of the Borrower other than Canadian Abraxas.

" Guaranty " means a Guaranty in substantially the form of the attached Exhibit C and executed by a Guarantor.

" Hazardous Substance " means the substances identified as such pursuant to CERCLA and those regulated under any other Environmental Law, including pollutants, contaminants, petroleum, petroleum products, radionuclides, radioactive materials, and medical and infectious waste.

" Hazardous Waste " means the substances regulated as such pursuant to any Environmental Law.

" Headquarters " means (a) the premises described as: LOTS 3 AND 4, BLOCK 7, NEW CITY BLOCK 17606, CREEKSIDE@CONCORD PARK (PLANNED UNIT DEVELOPMENT), IN THE CITY OF SAN ANTONIO, BEXAR COUNTY, TEXAS, ACCORDING TO PLAT THEREOF RECORDED IN VOLUME 9562, PAGE(S) 156-157, DEED AND PLAT RECORDS OF BEXAR COUNTY, TEXAS,   together with all of the easements, rights of way,   privileges, liberties, hereditaments, strips and gores, streets, alleys,   passages, ways, waters, watercourses, rights and appurtenances thereunto   belonging or appertaining, and all of the estate, right, title, interest, claim or   demand whatsoever of Abraxas Properties therein and in the streets and ways adjacent   thereto, either in law or in equity (collectively, the " Land "); (b) the structures or buildings, and all additions and improvements thereto, now or hereafter erected upon the Land, including all building materials and Fixtures (hereinafter defined) now or hereafter forming a part of said structures or buildings, or delivered to the Land and intended to be installed in such structures or buildings (collectively, the " Improvements "); and (c) all fixtures owned by Abraxas Properties now or hereafter located on and used in connection with the Land or the Improvements, (collectively, the " Fixtures ").

" Hedge Contract " means (a) any and all rate swap transactions, basis swaps, credit derivative transactions, forward rate transactions, commodity swaps, commodity options, forward commodity contracts, equity or equity index swaps or options, bond or bond price or bond index swaps or options or forward bond or forward bond price or forward bond index transactions, interest rate swaps or options, forward foreign exchange transactions, cap transactions, floor transactions, collar transactions, currency swap transactions, cross-currency rate swap transactions, currency options, spot contracts, or any other similar transactions or any combination of any of the foregoing (including any options to enter into any of the foregoing), whether or not any such transaction is governed by or subject to any master agreement, and (b) any and all transactions of any kind, and the related confirmations, which are subject to the terms and conditions of, or governed by, any form of master agreement published by the International Swaps and Derivatives Association, Inc., any International Foreign Exchange Master Agreement, or any other master agreement (any such master agreement, together with any related schedules, a "Master Agreement"), including any such obligations or liabilities under any Master Agreement.

" Hedge Termination " means any termination (other than a termination that occurs on the date scheduled for such termination and not as a result of an event of default or other early termination event), cancellation, novation or disposition of any Hedge Contract.

" Hedging Report " means the report described in Section 5.06(e).

" Hydrocarbon Hedge Agreement " means, as to any Person, a Hedge Contract between such Person and any financial institution or other counterparty which is intended to reduce or eliminate the risk of fluctuations in the price of Hydrocarbons.

" Hydrocarbons " means oil, gas, coal seam gas, casinghead gas, drip gasoline, natural gasoline, condensate, distillate, and all other liquid and gaseous hydrocarbons produced or to be

produced in conjunction therewith from a well bore and all products, by-products, and other substances derived therefrom or the processing thereof, and all other minerals and substances produced in conjunction with such substances, including sulfur, geothermal steam, water, carbon dioxide, helium, and any and all minerals, ores, or substances of value and the products and proceeds therefrom.

" Indemnified Taxes " means Taxes other than Excluded Taxes.

" Independent Engineer " means DeGolyer and MacNaughton or any other third party engineering firm acceptable to the Administrative Agent in its sole discretion.

" Independent Engineering Report " means a report, in form and substance satisfactory to the Administrative Agent and each of the Lenders, prepared by an Independent Engineer, addressed to the Administrative Agent and the Lenders with respect to the Oil and Gas Properties owned by the Borrower or any of its Subsidiaries (or to be acquired by the Borrower or any of its Subsidiaries, as applicable) which are, or are to be, included in the Borrowing Base, which report shall (a) specify the location, quantity, and type of the estimated Proven Reserves attributable to such Oil and Gas Properties, (b) contain a projection of the rate of production of such Oil and Gas Properties, (c) contain an estimate of the net operating revenues to be derived from the production and sale of Hydrocarbons from such Proven Reserves based on product price and cost escalation assumptions specified by the Administrative Agent and the Lenders which are consistent with the Administrative Agent's and the Lenders' customary internal standards and practices for valuing and redetermining the value of Oil and Gas Properties in connection with reserve based oil and gas loan transactions, and (d) contain such other information as is customarily obtained from and provided in such reports or is otherwise reasonably requested by the Administrative Agent or any Lender.

" Information " is defined in Section 9.09.

" Initial Engineering Report " means an Internal Engineering Report dated as of June 1, 2009 and covering the Proven Reserves of the Loan Parties after giving pro forma effect to the Merger and otherwise in form acceptable to the Administrative Agent.

" Initial Funding Date " means the earlier of (a) the date on which the initial Advances are made, and (b) the date the initial Letter of Credit is issued.

" Intercompany Debt " means Debt incurred by one or more Loan Parties and owing to any other Loan Party or Loan Parties.

" Interest Expense " means, for the Borrower, its consolidated Subsidiaries, and Canadian Abraxas for any period, total interest, letter of credit fees, and other fees and expenses incurred in connection with any Debt for such period, whether paid or accrued, including, without limitation, all commissions, discounts and other fees and charges owed with respect to letters of credit and bankers’ acceptance financing, imputed interest under Capital Leases and realized gains and losses under Interest Hedge Agreements, all as determined in conformity with GAAP.

" Interest Hedge Agreement " means, as to any Person, a Hedge Contract between such Person and one or more financial institutions providing for the exchange of nominal interest

obligations between such Person and such financial institution or the cap of the interest rate on any Debt of such Person.

" Interest Period " means, for each Eurodollar Rate Advance comprising part of the same Borrowing, the period commencing on the date of such Eurodollar Rate Advance or the date of the Conversion of any Reference Rate Advance into a Eurodollar Rate Advance and ending on the last day of the period selected by the Borrower pursuant to the provisions below and Section 2.03 and, thereafter, each subsequent period commencing on the last day of the immediately preceding Interest Period and ending on the last day of the period selected by the Borrower pursuant to the provisions below and Section 2.03.  The duration of each such Interest Period shall be one, two, three, or six months, in each case as the Borrower may, upon notice received by the Administrative Agent not later than 11:00 a.m.  (New York time) on the third Business Day prior to the first day of such Interest Period, select; provided , however , that:

(a)           the Borrower may not select any Interest Period which ends after the Commitment Termination Date;

(b)           Interest Periods commencing on the same date for Advances comprising part of the same Borrowing shall be of the same duration;

(c)           whenever the last day of any Interest Period would otherwise occur on a day other than a Business Day, the last day of such Interest Period shall be extended to occur on the next succeeding Business Day; provided, that, if such extension would cause the last day of such Interest Period to occur in the next following calendar month, the last day of such Interest Period shall occur on the immediately preceding Business Day; and

(d)           any Interest Period which begins on the last Business Day of a calendar month (or on a day for which there is no numerically corresponding day in the calendar month at the end of such Interest Period) shall end on the last Business Day of the calendar month in which it would have ended if there were a numerically corresponding day in such calendar month.

" Internal Engineering Report " means a report, in form and substance satisfactory to the Administrative Agent and each Lender, prepared by the Borrower and certified by a Responsible Officer of the Borrower, addressed to the Administrative Agent and the Lenders with respect to the Oil and Gas Properties owned by the Borrower or any of its Subsidiaries (or to be acquired by the Borrower or any of its Subsidiaries, as applicable) which are, or are to be, included in the Borrowing Base, which report shall (a) specify the location, quantity, and type of the estimated Proven Reserves attributable to such Oil and Gas Properties, (b) contain a projection of the rate of production of such Oil and Gas Properties, (c) contain an estimate of the net operating revenues to be derived from the production and sale of Hydrocarbons from such Proven Reserves based on product price and cost escalation assumptions specified by the Administrative Agent and the Lenders which are consistent with the Administrative Agent's and the Lenders' customary internal standards and practices for valuing and redetermining the value of Oil and Gas Properties in connection with reserve based oil and gas loan transactions, and (d) contain such other information as is customarily obtained from and provided in such reports or is otherwise reasonably requested by the Administrative Agent or any Lender.

" Issuing Lender " means Société Générale in its capacity as issuer of Letters of Credit hereunder, and any successor Issuing Lender pursuant to Section 8.06.

" Leases " means all oil and gas leases, oil, gas and mineral leases, oil, gas and casinghead gas leases, wellbore assignments or any other instruments, agreements, or conveyances under and pursuant to which the owner thereof has or obtains the right to enter upon lands and explore for, drill, and develop such lands for the production of Hydrocarbons.

" Legal Requirement " means, as to any Person, any law, statute, ordinance, decree, requirement, order, judgment, rule, regulation (or official interpretation of any of the foregoing) of, and the terms of any license or permit issued by, any Governmental Authority, including Regulations D, T, U, and X, which is applicable to such Person.

" Lender Funding Obligation " has the meaning set forth in the definition of Defaulting Lender.

" Lender Hedging Obligations " means all obligations arising from time to time under Hedge Contracts entered into from time to time between any Loan Party and a counterparty that is a Lender or an Affiliate of a Lender; provided that if such counterparty ceases to be a Lender hereunder or an Affiliate of a Lender hereunder, Lender Hedging Obligations shall only include such obligations to the extent arising from transactions entered into at the time such counterparty was a Lender hereunder or an Affiliate of a Lender hereunder.

" Lender Insolvency Event " means that (i) a Lender or its Parent Company is insolvent, or is generally unable to pay its debts as they become due, or admits in writing its inability to pay its debts as they become due, or makes a general assignment for the benefit of its creditors, or (ii) such Lender or its Parent Company is the subject of a bankruptcy, insolvency, reorganization, liquidation or similar proceeding, or a receiver, trustee, conservator, intervenor or sequestrator or the like has been appointed for such Lender or its Parent Company, or such Lender or its Parent Company has taken any action in furtherance of or indicating its consent to or acquiescence in any such proceeding or appointment.

" Lenders " means the lenders listed on the signature pages of this Agreement and each Eligible Assignee that shall become a party to this Agreement pursuant to Section 9.08.

" Letter of Credit " means, individually, any standby letter of credit issued by the Issuing Lender for the account of the Borrower in connection with the Commitments and which is subject to this Agreement, and " Letters of Credit " means all such letters of credit collectively.

" Letter of Credit Application " means the Issuing Lender's standard form letter of credit application for standby letters of credit that has been executed by the Borrower and accepted by the Issuing Lender in connection with the issuance of a Letter of Credit.

" Letter of Credit Documents " means all Letters of Credit, Letter of Credit Applications, and agreements, documents, and instruments entered into in connection with or relating thereto.

" Letter of Credit Exposure " means, at any time, the sum of (a) the aggregate undrawn maximum face amount of each Letter of Credit at such time plus (b) the aggregate unpaid amount of all Reimbursement Obligations at such time.

" Letter of Credit Obligations " means any obligations of the Borrower under this Agreement in connection with the Letters of Credit, including the Reimbursement Obligations.

" Lien " means any mortgage, lien, pledge, assignment, charge, deed of trust, security interest, hypothecation, preference, deposit arrangement or encumbrance (or other type of arrangement having the practical effect of the foregoing) to secure or provide for the payment of any obligation of any Person, whether arising by contract, operation of law, or otherwise (including the interest of a vendor or lessor under any conditional sale agreement, synthetic lease, Capital Lease, or other title retention agreement).

" Liquid Investments " means:

(a)           direct obligations of, or obligations the principal of and interest on which are unconditionally guaranteed by, the United States maturing within 270 days from the date of any acquisition thereof;

(b)           (i) negotiable or nonnegotiable certificates of deposit, time deposits, or other similar banking arrangements maturing within 270 days from the date of acquisition thereof or which may be liquidated for the full amount thereof without penalty or premium ("bank debt securities"), issued by (A) any Lender (or any Affiliate of any Lender), or (B) any other bank or trust company so long as either (x) such certificate of deposit is not pledged to secure the Borrower’s or any Subsidiaries’ ordinary course of business bonding requirements, and (y) the amount thereof is less than or equal to $100,000, or any other bank or trust company, if at the time of deposit or purchase, such bank debt securities are rated A or A2 or better by either S&P or Moody's, and (ii) commercial paper issued by (A) any Lender (or any Affiliate of any Lender) or (B) any other Person if at the time of purchase such commercial paper is rated at the highest or the second highest credit rating given by either S&P or Moody's, or upon the discontinuance of both of such services, such other nationally recognized rating service or services, as the case may be, as shall be selected by the Borrower with the consent of the Required Lenders;

(c)           deposits in money market funds investing exclusively in investments described in clauses (a) and (b) above;

(d)           repurchase agreements relating to investments described in clauses (a) and (b) above with a market value at least equal to the consideration paid in connection therewith, with any Person who regularly engages in the business of entering into repurchase agreements and has a combined capital and surplus and undivided profit of not less than $500,000,000.00, if at the time of entering into such agreement the debt securities of such Person are rated at the highest or the second highest credit rating given by either S&P or Moody's; and

(e)           such other instruments (within the meaning of Article 9 of the Uniform Commercial Code in effect in New York) or investment property as the Borrower may request and the Administrative Agent may approve in writing.

" Liquidity " means an amount equal to (i) the Loan Parties' unrestricted cash plus (ii) Liquid Investments plus (iii) (A) the lesser of the Borrowing Base and the Revolving Commitments minus (B) the aggregate Revolving Credit Extensions.

" Loan Documents " means this Agreement, the Notes, the Letter of Credit Documents, the Guaranties, the Security Instruments, any Hedge Contract with a Swap Counterparty, and each other agreement, instrument, or document executed by the Borrower, any Guarantor, or any of the Borrower’s or a Guarantor’s Subsidiaries or any of their officers at any time in connection with this Agreement.

" Loan Party " means the Borrower or any Guarantor.

" Material Adverse Change " means (a) a material adverse change in the business, assets (including the Oil and Gas Properties), condition (financial or otherwise), results of operations or prospects of the Borrower individually, or the Company Group, taken as a whole or (b) a material adverse effect on the Borrower's, individually, or the Company Group's, taken as a whole, ability to perform its obligations under this Agreement, any Note, any Guaranty, or any other Loan Document.

" Maximum Exposure Amount " means, at any time for each Lender, the sum of (a) the unfunded Revolving Commitment held by such Lender at such time; plus (b) the aggregate unpaid principal amount of the Revolving Advances held by such Lender at such time, plus (c) such Lender's Revolving Pro Rata Share of the Letter of Credit Exposure; plus (d) the aggregate unpaid principal amount of the Term Advances held by such Lender at such time.

" Maximum Rate " means the maximum nonusurious interest rate under applicable law (determined under such laws after giving effect to any items which are required by such laws to be construed as interest in making such determination, including if required by such laws, certain fees and other costs).

" Merger " means the merger of Abraxas MLP into Merger Sub, as more fully described in the Merger Agreement.

" Merger Agreement " means that certain Amended and Restated Agreement and Plan of Merger by and among Borrower, Abraxas MLP, and Merger Sub as defined therein, dated as of July 17, 2009, as modified by the Accession Agreement.

" Merger Sub " means Abraxas Merger Sub, LLC, a Delaware limited liability company.

" Moody's " means Moody's Investors Service, Inc. and any successor thereto.

" Mortgage " means the mortgage or deed of trust executed by any one or more of the Loan Parties in favor of the Administrative Agent for the ratable benefit of the Secured Parties in substantially the form of the attached Exhibit D or such other form as may be requested by the Administrative Agent, together with any assumptions or assignments of the obligations thereunder by the Borrower, any Guarantor or any of their respective Subsidiaries, as may be amended, amended and restated, or otherwise modified from time to time.

" Multiemployer Plan " means a "multiemployer plan" as defined in Section 4001(a)(3) of ERISA.

" Net Income " means, with respect to the Borrower, its consolidated Subsidiaries, and Canadian Abraxas for any period, the net income for such period after taxes, as determined in accordance with GAAP, excluding, however, (a) extraordinary items, including (i) any net non-cash gain or loss during such period arising from the sale, exchange, retirement or other disposition of capital assets (such term to include all fixed assets and all securities) other than in the ordinary course of business and (ii) any write-up or write-down of assets (including ceiling test write-downs) and (b) the cumulative effect of any change in GAAP.

" Non-Defaulting Lender " means, at any time, a Lender that is not a Defaulting Lender or a Potential Defaulting Lender.

" Note " means a Revolving Note or a Term Note.

" Notice of Borrowing " means a notice of borrowing in the form of the attached Exhibit G signed by a Responsible Officer of the Borrower.

" Notice of Conversion or Continuation " means a notice of conversion or continuation in the form of the attached Exhibit H signed by a Responsible Officer of the Borrower.

" Obligations " means (a) all principal, interest, fees, reimbursements, indemnifications, and other amounts payable by the Borrower, any Guarantor or any of their respective Subsidiaries to the Administrative Agent, the Issuing Lender or the Lenders under the Loan Documents (other than the Hedge Contracts with a Swap Counterparty), including the Letter of Credit Obligations, and (b) all Lender Hedging Obligations.

" Oil and Gas Business " means (a) the acquisition, exploration, exploitation, development, operation and disposition of interests in Oil and Gas Properties and Hydrocarbons, (b) the gathering, marketing, treating, processing, storage, selling and transporting of any production from such interests or properties, including the marketing of Hydrocarbons obtained from unrelated Persons, (c) any business relating to or arising from exploration for or development, production, treatment, processing, storage, transportation or marketing of oil, gas and other minerals and products produced in association therewith, (d) any business relating to oilfield sales and service, and (e) any activity that is ancillary or necessary or desirable to facilitate the activities described in clauses (a) through (d) of this definition.

" Oil and Gas Properties " means fee mineral interests, term mineral interests, Leases, subleases, Farmouts, royalties, overriding royalties, net profit interests, carried interests, production payments, back-in interests and reversionary interests and similar mineral interests, and all unsevered and unextracted Hydrocarbons in, under, or attributable to such oil and gas Properties and interests.

" OFAC " means the Office of Foreign Assets Control.

" OSHA " means the Occupational Safety and Health Act 29 U.S.C. § 651 et seq. and its implementing regulations.

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

" Parent Company " means, with respect to a Lender, the bank holding company (as defined in Federal Reserve Board Regulation Y), if any, of such Lender, and/or any Person owning, beneficially or of record, directly or indirectly, a majority of the shares of such Lender.

" Participant " has the meaning assigned to such term in paragraph (d) of Section 9.08.

" PBGC " means the Pension Benefit Guaranty Corporation or any entity succeeding to any or all of its functions under ERISA.

" Permit " means any approval, certificate of occupancy, consent, waiver, exemption, variance, franchise, order, permit, authorization, right or license of or from any Governmental Authority, including an Environmental Permit.

" Permitted Borrowing Base Liens " means the Liens permitted under paragraphs (a), (c), (d), (e), (f), (h), (i), and (o) of Section 6.01.

" Permitted Holder " means any holder of Equity Interest in the Borrower on the Closing Date.

" Permitted Liens " is defined in Section 6.01.

" Permitted Subject Liens " means the Liens permitted under paragraphs (b), (c), (d), (e), (f), (g), (h), (i), (j), (k), (l), (m), (n), (o), and (p) of Section 6.01.

" Person " (whether or not capitalized) means an individual, partnership, corporation (including a business trust), joint stock company, limited liability company, limited liability partnership, trust, unincorporated association, joint venture or other entity, Governmental Authority or other entity.

" Plan " means an employee benefit plan (other than a Multiemployer Plan) maintained for employees of the Borrower or any member of the Controlled Group and covered by Title IV of ERISA or subject to the minimum funding standards under Section 412 of the Code.

" Pledge Agreement " means a Pledge Agreement in substantially the form of the attached Exhibit I , executed by the Borrower or any of its Subsidiaries or any of the Guarantors, if applicable, covering 100% of the Equity Interests owned in each direct or indirect Subsidiary of Borrower.

" Potential Defaulting Lender " means, at any time, a Lender (i) as to which the Administrative Agent has notified the Borrower that an event of the kind referred to in the definition of “Lender Insolvency Event” has occurred and is continuing in respect of any financial institution affiliate of such Lender, (ii) as to which the Administrative Agent or the Issuing Bank has in good faith determined and notified the Borrower and (in the case of the

Issuing Bank) the Administrative Agent that such Lender or its Parent Company or a financial institution affiliate thereof has notified the Administrative Agent, or has stated publicly, that it will not comply with its funding obligations generally under other loan agreements or credit agreements or other similar financing agreements or (iii) that has, or whose Parent Company has, a non-investment grade rating from Moody’s or S&P or another nationally recognized rating agency; provided that a Lender shall not be deemed a Potential Defaulting Lender solely by virtue of the acquisition or maintenance of an ownership interest in such Lender or its Parent Company by a Governmental Authority or an instrumentality thereof.  Any determination that a Lender is a Potential Defaulting Lender under any of clauses (i) through (iii) above will be made by the Administrative Agent or, in the case of clause (ii), the Issuing Bank acting in good faith.  The Administrative Agent will promptly send to all parties hereto a copy of any notice to the Borrower provided for in this definition.

" Pro Rata Share " means, with respect to any Lender, the ratio (expressed as a percentage) of aggregate outstanding Term Advances plus aggregate Commitments of such Lender to the aggregate outstanding Term Advances plus aggregate Commitments of all the Lenders, or if all such Commitments have been terminated, the ratio (expressed as a percentage) of Credit Extensions owing to such Lender to the aggregate Credit Extensions owing to all such Lenders.

" Production Report " means the report described in Section 5.06(d).

" Projected Oil and Gas Production " means the projected production of oil or gas (measured by volume unit or BTU equivalent, not sales price) for the term of the contracts or a particular month, as applicable, from the Loan Parties' Oil and Gas Properties which are located in or offshore of the United States to the extent such Oil and Gas Properties have attributable to them proved developed producing oil or gas reserves, as such proved developed producing production is projected in the Initial Engineering Report or most recent Independent Engineering Report or Internal Engineering Report delivered pursuant to Section 5.06(g) below, as applicable, after deducting projected production from any properties or interests sold or under contract for sale that had been included in such report and, other than as to the Initial Engineering Report, after adding projected production from any properties or interests that had not been reflected in such report but that are reflected in separate or supplemental Independent Engineering Reports or Internal Engineering Reports  meeting the requirements of such Section 5.06(g) and that are otherwise satisfactory to Administrative Agent.

" Projections " means, for each of the fiscal years 2009, 2010 and 2011, Borrower’s and the Company Group’s forecasted (a) balance sheets, (b) profit and loss statements, and (c) cash flow statements, based on good faith estimates and assumptions made by the management of the Borrower.

" Property " of any Person means any property or assets (whether real, personal, or mixed, tangible or intangible) of such Person.

" Proven Reserves " means, at any particular time, the estimated quantities of Hydrocarbons which geological and engineering data demonstrate with reasonable certainty to be recoverable in future years from known reservoirs attributable to Oil and Gas Properties

included or to be included in the Borrowing Base under then existing economic and operating conditions (i.e., prices and costs as of the date the estimate is made).

" PV-10 " means estimated future net revenue, discounted at a rate of 10% per annum, after income Taxes and with no price or cost escalation or de-escalation in accordance with guidelines promulgated by the SEC, using the Administrative Agent's price deck.

" Reference Rate " means a fluctuating interest rate per annum as shall be in effect from time to time equal to the rate of interest publicly announced by Société Générale as its reference rate, whether or not the Borrower has notice thereof.

" Reference Rate Advance " means an Advance which bears interest as provided in Section 2.09(a).

" Register " has the meaning set forth in of Section 9.08(c).

" Regulations D, T, U, and X " mean Regulations D, T, U, and X of the Federal Reserve Board, as the same is from time to time in effect, and all official rulings and interpretations thereunder or thereof.

" Reimbursement Obligations " means all of the obligations of the Borrower to reimburse the Issuing Lender for amounts paid by the Issuing Lender under Letters of Credit as established by the Letter of Credit Applications and Section 2.07(d).

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

" Release " shall have the meaning set forth in CERCLA or under any other Environmental Law.

" Reportable Event " means a "reportable event" described in Section 4043 of ERISA and the regulations issued thereunder.

" Required Lenders " means (a) other than as provided in clause (b) below, two or more Lenders holding at least 66 2/3% of the aggregate Maximum Exposure Amounts of all Lenders, and (b) at any time when there is only one Lender, such Lender.

" Required Revolving Lenders " means, at any time, Revolving Lenders holding at least 66 2/3% of the Revolving Commitments or, if the Revolving Commitments have been terminated or expired, the outstanding amount of the Revolving Credit Extensions with the aggregate amount of each Revolving Lender's risk participation and funded participation in Letter of Credit Obligations being deemed to be "held" by such Revolving Lender for purposes of this definition).

" Required Term Lenders " means, at any time, Term Lenders holding at least 66 2/3% of the unpaid principal amount of the Term Advances.

" Response " shall have the meaning set forth in CERCLA or under any other Environmental Law.

" Responsible Officer " means (a) with respect to any Person that is a corporation, such Person's Chief Executive Officer, President, Chief Financial Officer, or Vice President, (b) with respect to any Person that is a limited liability company, if such Person has officers, then such Person's Chief Executive Officer, President, Chief Financial Officer, or Vice President, and if such Person is managed by members, then a Responsible Officer of such Person’s managing member, and if such Person is managed by managers, then a manager (if such manager is an individual) or a Responsible Officer of such manager (if such manager is an entity), and (c) with respect to any Person that is a general partnership or a limited liability partnership, the Responsible Officer of such Person’s general partner or partners.

" Restricted Payment " means, with respect to any Person, (a) any direct or indirect dividend or distribution (whether in cash, securities or other Property) with respect to any Equity Interests, including any payment of any kind or character (whether in cash, securities or other Property) in consideration for or otherwise in connection with any retirement, purchase, redemption or other acquisition of any Equity Interest of such Person, or any options, warrants or rights to purchase or acquire any such Equity Interest of such Person or (b) principal or interest payments (in cash, Property or otherwise) on, or redemptions of, subordinated debt of such Person; provided, that, the term "Restricted Payment" shall not include any dividend or distribution payable solely in Equity Interests of such Person or warrants, options or other rights to purchase such Equity Interests or to exchange such warrants, options or other rights for such Equity Interests.

" Revolving Advance " means any advance by a Revolving Lender to the Borrower as part of a Revolving Borrowing and refers to a Reference Rate Advance or a Eurodollar Rate Advance.

" Revolving Borrowing " means, subject to Section 2.03(c)(ii), a borrowing consisting of simultaneous Revolving Advances of the same Type made by each Revolving Lender pursuant to Section 2.03(a), continued by each Lender pursuant to Section 2.03(b), or Converted by each Lender to Advances of a different Type pursuant to Section 2.03(b).

" Revolving Commitment " means, for any Revolving Lender, the amount set opposite such Revolving Lender's name on Schedule I as its Revolving Commitment, or if such Revolving Lender has entered into any Assignment and Acceptance, as set forth for such Revolving Lender as its Revolving Commitment in the Register maintained by the Administrative Agent pursuant to Section 9.08(c), as such amount may be reduced or terminated pursuant to Section 2.04 or Article VII or otherwise under this Agreement.  The initial amount of the aggregate Revolving Commitments is $300,000,000, subject to the Borrowing Base.

" Revolving Credit Extension " means (a) a Revolving Advance made by any Revolving Lender, and (b) the issuance, increase or extension of any Letter of Credit by the Issuing Lender.

" Revolving Lenders " means Lenders having a Revolving Commitment, or if such Revolving Commitments have been terminated, Lenders that are owed repayments of Revolving Advances.

" Revolving Maturity Date " means October 5, 2012.

" Revolving Note " means a promissory note of the Borrower payable to the order of any Revolving Lender in an amount not to exceed the Revolving Commitment of such Revolving Lender, in substantially the form of the attached Exhibit E , evidencing indebtedness of the Borrower to such Revolving Lender resulting from Revolving Advances owing to such Revolving Lender.

" Revolving Pro Rata Share " means, with respect to any Lender, (a) with respect to amounts owing under the Revolving Commitments, (i) if such Revolving Commitments have not been canceled, the ratio (expressed as a percentage) of such Lender's uncancelled Revolving Commitment at such time to the aggregate uncancelled Revolving Commitments at such time, or (ii) if the aggregate Revolving Commitments have been terminated, the ratio as determined pursuant to the preceding clause (i) immediately prior to such termination or (b) with respect to amounts owing generally under this Agreement and the other Loan Documents, the ratio (expressed as a percentage) of aggregate Revolving Commitments of such Lender to the aggregate Revolving Commitments of all the Lenders (or if such Revolving Commitments have been terminated, the ratio (expressed as a percentage) of Revolving Credit Extensions owing to such Lender to the aggregate Revolving Credit Extensions owing to all such Lenders.

" S&P " means Standard & Poor's Ratings Services, a division of The McGraw-Hill Companies, Inc., and any successor thereto.

" Sandia " means Sandia Operating Corp., a Texas corporation.

" SEC " means the United States Securities and Exchange Commission.

" Secured Parties " means the Administrative Agent, the Issuing Lender, the Lenders, and the Persons that are owed Lender Hedging Obligations.

" Security Agreements " means the Security Agreements, each in substantially the form of the attached Exhibit J , executed by the Borrower, any of its Subsidiaries, or any of the Guarantors.

" Security Instruments " means, collectively: (a) the Mortgages, (b) the Transfer Letters, (c) the Pledge Agreement, (d) the Security Agreements, (e) each other agreement, instrument or document executed at any time in connection with the Pledge Agreement, the Security Agreements, or the Mortgages, (f) each agreement, instrument or document executed in connection with the Cash Collateral Account, and (g) each other agreement, instrument or document executed at any time in connection with securing the Obligations.

" Solvent " means, with respect to any Person as of the date of any determination, that on such date (a) the fair value of the Property of such Person (both at fair valuation and at present fair saleable value) is greater than the total liabilities, including contingent liabilities, of such

Person, (b) the present fair saleable value of the assets of such Person is not less than the amount that will be required to pay the probable liability of such Person on its debts as they become absolute and matured, (c) such Person is able to realize upon its assets and pay its debts and other liabilities, contingent obligations, and other commitments as they mature in the normal course of business, (d) such Person does not intend to, and does not believe that it will, incur debts or liabilities beyond such Person's ability to pay as such debts and liabilities mature, and (e) such Person is not engaged in business or a transaction, and is not about to engage in business or a transaction, for which such Person's Property would constitute unreasonably small capital after giving due consideration to current and anticipated future capital requirements and current and anticipated future business conduct and the prevailing practice in the industry in which such Person is engaged.  In computing the amount of contingent liabilities at any time, such liabilities shall be computed at the amount which, in light of the facts and circumstances existing at such time, represents the amount that can reasonably be expected to become an actual or matured liability.

" Subsidiary " means, with respect to any Person (the " parent ") at any date, any other Person the accounts of which would be consolidated with those of the parent in the parent's consolidated financial statements if such financial statements were prepared in accordance with GAAP as of such date, as well as any Person, a majority of whose outstanding Voting Securities (other than directors' qualifying shares) shall at any time be owned by such parent or one or more Subsidiaries of such parent.  Unless otherwise specified (a) all references herein to a "Subsidiary" or to "Subsidiaries" shall refer to a Subsidiary or Subsidiaries of the Borrower and (b) Canadian Abraxas shall not be considered a Subsidiary of the Borrower for purposes of this Agreement or any other Loan Document.

" Swap Counterparty " means any Lender (or Affiliate of a Lender) that is party to any Hedge Contract with the Borrower or any of its Subsidiaries.

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

" Term Advance " means a one-time advance by a Term Lender to the Borrower as a part of a Term Borrowing and refers to a Reference Rate Advance or a Eurodollar Rate Advance.

" Term Borrowing " means the Borrowing consisting of simultaneous Term Advances made pursuant to Section 2.01(a), continued by each Term Lender pursuant to Section 2.03(b), or Converted by each Term Lender to Term Advances of a different Type pursuant to Section 2.03(b).

" Term Commitment " means for any Term Lender, the amount set opposite such Term Lender's name on Schedule I as its Term Commitment or if such Term Lender has entered into any Assignment and Acceptance, as set forth for such Term Lender as its Term Commitment in the Register maintained by the Administrative Agent pursuant to Section 9.08(c); provided that, after the Closing Date, the Term Commitment of each Term Lender shall be zero. The aggregate Term Commitments on the date hereof are equal to $10,000,000.

" Term Lenders " means Lenders having a Term Commitment or after such Term Commitments have been terminated, Lenders that are owed Term Advances.

" Term Loan " means the loans evidenced by Term Notes to be made by the Term Lenders to the Borrower hereunder.

" Term Maturity Date " means December 31, 2010.

" Term Note " means a promissory note of the Borrower payable to the order of a Term Lender in the amount of such Term Lender's initial Term Commitment (or if such Term Lender has entered into any Assignment and Acceptance, as set forth for such Term Lender as its outstanding Term Advances in the Register maintained by the Administrative Agent pursuant to Section 9.08(c)), in substantially the same form as Exhibit F , evidencing indebtedness of the Borrower to such Term Lender resulting from any Term Advances owing to such Term Lender.

" Termination Event " means (a) a Reportable Event described in Section 4043 of ERISA and the regulations issued thereunder (other than a Reportable Event not subject to the provision for 30-day notice to the PBGC under such regulations), (b) the withdrawal of the Borrower or any of its Affiliates from a Plan during a plan year in which it was a "substantial employer" as defined in Section 4001(a)(2) of ERISA, (c) the filing of a notice of intent to terminate a Plan or the treatment of a Plan amendment as a termination under Section 4041 of ERISA, (d) the institution of proceedings to terminate a Plan by the PBGC, or (e) any other event or condition which constitutes grounds under Section 4042 of ERISA for the termination of, or the appointment of a trustee to administer, any Plan.

" Total Debt " means, as of any date of determination, the outstanding principal amount of the Debt of the Borrower, its Subsidiaries, and Canadian Abraxas on a consolidated basis, excluding (a) Debt under the Business Loan Agreement that is permitted under Section 6.02, (b) obligations in respect of surety bonds, and (c) the net obligations of the Borrower and its Subsidiaries under Hedge Contracts, in each case to the extent included in Debt.

" Total Debt to Consolidated EBITDAX Ratio " means, as of any date of determination, the ratio of (a) Total Debt as of such date to (b) Consolidated EBITDAX for the period of the four fiscal quarters most recently ended.

" Transfer Letters " means, collectively, the letters in lieu of transfer orders in substantially the form of the attached Exhibit K and executed by the Borrower, any Guarantor or any of their respective Subsidiaries executing a Mortgage.

" Type " has the meaning set forth in Section 1.04.

" Unreallocated Portion " has the meaning set forth in Section 2.15(b).

" Unused Revolving Commitment Amount " means, with respect to a Lender at any time, the lesser of (a) such Lender’s Revolving Commitment at such time and (b) such Lender’s Revolving Pro Rata Share of the Borrowing Base then in effect at such time minus , in each case, the sum of (i) the aggregate outstanding principal amount of all Revolving Advances owed

to such Lender at such time plus (ii) such Lender’s Revolving Pro Rata Share of the aggregate Letter of Credit Exposure at such time.

" Utilization " means the percentage obtained by dividing (a) the outstanding principal amount of the Advances and the Letter of Credit Exposure at such time by (b) the lesser of (i) the Commitments and (ii) the Borrowing Base in effect at such time.

" Voting Securities " means (a) with respect to any corporation (including any unlimited liability company), capital stock of such corporation having general voting power under ordinary circumstances to elect directors of such corporation (irrespective of whether at the time stock of any other class or classes shall have or might have special voting power or rights by reason of the happening of any contingency), (b) with respect to any partnership, any partnership interest or other ownership interest having general voting power to elect the general partner or other management of the partnership or other Person, and (c) with respect to any limited liability company, membership certificates or interests having general voting power under ordinary circumstances to elect managers of such limited liability company.

Section 1.02                       Computation of Time Periods .  In this Agreement, with respect to the computation of periods of time from a specified date to a later specified date, the word "from" means "from and including" and the words "to" and "until" each means "to but excluding".

Section 1.03                       Accounting Terms; Changes in GAAP .  Except as otherwise expressly provided herein, all accounting terms used herein shall be interpreted, and all financial statements and certificates and reports as to financial matters required to be delivered to the Lenders hereunder shall (unless otherwise disclosed to the Lenders in writing at the time of delivery thereof) be prepared, in accordance with GAAP applied on a basis consistent with those used in the preparation of the latest financial statements furnished to the Lenders hereunder (which prior to the delivery of the first financial statements under Section 5.06, shall mean the Financial Statements).  All calculations made for the purposes of determining compliance with this Agreement shall (except as otherwise expressly provided herein) be made by application of GAAP applied on a basis consistent with that used in the preparation of the annual or quarterly financial statements furnished to the Lenders pursuant to Section 5.06 most recently delivered prior to or concurrently with such calculations (or, prior to the delivery of the first financial statements under Section 5.06, used in the preparation of the Financial Statements).  In addition, all calculations and defined accounting terms used herein shall, unless expressly provided otherwise, when referring to any Person, where applicable, refer to such Person on a consolidated basis and mean such Person and its consolidated Subsidiaries.

Section 1.04                       Types of Advances .  Advances are distinguished by " Type ."  The " Type " of an Advance refers to the determination whether such Advance is a Eurodollar Rate Advance or Reference Rate Advance.

Section 1.05                       Miscellaneous .  The definitions of terms herein shall apply equally to the singular and plural forms of the terms defined.  Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms.  The words "include," "includes" and "including" shall be deemed to be followed by the phrase "without limitation."  The word "will" shall be construed to have the same meaning and effect as the word "shall."

Unless the context requires otherwise (a) any definition of or reference to any agreement, instrument or other document herein shall be construed as referring to such agreement, instrument or other document as from time to time amended, supplemented or otherwise modified (subject to any restrictions on such amendments, supplements or modifications set forth herein), (b) any reference herein to any Person shall be construed to include such Person’s successors and assigns, (c) the words "herein," "hereof" and "hereunder," and words of similar import, shall be construed to refer to this Agreement in its entirety and not to any particular provision hereof, (d) all references herein to Articles, Sections, paragraphs, Exhibits and Schedules shall be construed to refer to Articles, Sections and paragraphs, of, and Exhibits and Schedules to, this Agreement, (e) any reference to any law or regulation herein shall, unless otherwise specified, refer to such law or regulation as amended, modified or supplemented from time to time and (f) the words "asset" and "property" shall be construed to have the same meaning and effect and to refer to any and all tangible and intangible assets and properties, including cash, securities, accounts and contract rights.

Section 2.01                       Commitment for Advances .

(a)            Term Advances . Each Term Lender severally agrees, on the terms and conditions set forth in this Agreement (including without limitation, the terms set forth in Section 3.01), to make to the Borrower on the Initial Funding Date a Term Advance in an amount not to exceed such Lender's Term Commitment. The Borrower may not reborrow any Term Advances that have been repaid.

(b)            Revolving Advances .  Each Revolving Lender severally agrees, on the terms and conditions set forth in this Agreement (including without limitation, the terms set forth in Section 3.01), to make Revolving Advances to the Borrower from time to time on any Business Day during the period from the date of this Agreement until the Revolving Commitment Termination Date in an amount for each Revolving Lender not to exceed such Revolving Lender’s Unused Revolving Commitment Amount.  Each Revolving Borrowing shall, in the case of Revolving Borrowings consisting of Reference Rate Advances, be in an aggregate amount not less than $250,000 and in integral multiples of $100,000 in excess thereof, and in the case of Revolving Borrowings consisting of Eurodollar Rate Advances, be in an aggregate amount not less than $500,000 and in integral multiples of $100,000 in excess thereof, and in each case shall consist of Revolving Advances of the same Type made on the same day by the Revolving Lenders ratably according to their respective Revolving Commitments.  Within the limits of each Revolving Lender's Revolving Commitment, and subject to the terms of this Agreement, the Borrower may from time to time borrow, prepay, and reborrow Revolving Advances.

(c)            Evidence of Debt .

(i)           The Advances made by each Lender shall be evidenced by the records maintained by the Administrative Agent in the ordinary course of business.  The records maintained by the Administrative Agent shall be conclusive absent manifest error of the amount of the Advances made by the Lenders to the Borrower and the interest and payments thereon.

Any failure to so record or any error in doing so shall not, however, limit or otherwise affect the obligation of the Borrower hereunder to pay any amount owing with respect to the Obligations.  In the event of any conflict between the accounts and records maintained by any Lender and the accounts and records of the Administrative Agent in respect of such matters, the accounts and records of the Administrative Agent shall control in the absence of manifest error.  Upon the request of any Lender to Borrower made through the Administrative Agent, the Borrower shall execute and deliver to such Lender (through the Administrative Agent) a Note, which shall evidence the obligation of the Borrower to repay to such Lender’s Advances to such Borrower in addition to such records maintained by the Administrative Agent.  Each Lender may attach schedules to a Note and endorse thereon the date, Type (if applicable), amount, currency and maturity of its Loans and payments with respect thereto, but such action or the failure to do so shall not control over the records thereof maintained by the Administrative Agent.

(ii)           In addition to the accounts and records referred to in subsection (i), each Lender and the Administrative Agent shall maintain in accordance with its usual practice accounts or records evidencing the purchases and sales by such Lender of participations in Letters of Credit.  In the event of any conflict between the accounts and records maintained by the Administrative Agent and the accounts and records of any Lender in respect of such matters, the accounts and records of the Administrative Agent shall control in the absence of manifest error.

Section 2.02                       Borrowing Base .

(a)            Borrowing Base .  The initial Borrowing Base with respect to the Revolving Commitment in effect as of the date of this Agreement has been set by the Administrative Agent and the Revolving Lenders and acknowledged by the Borrower as $145,000,000.  Such initial Borrowing Base shall remain in effect until the next redetermination made pursuant to this Section 2.02 or Section 6.04(b).  The Borrowing Base shall be determined in accordance with the standards set forth in Section 2.02(d) and is subject to periodic redetermination pursuant to Sections 2.02(b), 2.02(c) and 6.04(b).

(b)            Calculation of Borrowing Base .

(i)           The Borrower shall deliver to the Administrative Agent and each of the Lenders on or before each February 28 or February 29, as applicable (beginning February 28, 2010) an Independent Engineering Report dated effective as of the immediately preceding December 31, and such other information as may be reasonably requested by any Revolving Lender with respect to the Oil and Gas Properties included or to be included in the Borrowing Base.  Within thirty (30) days after receipt of the Independent Engineering Report and such other information, the Administrative Agent shall make an initial determination of the new Borrowing Base and upon such initial determination shall promptly notify the Revolving Lenders in writing of its initial determination of the proposed Borrowing Base.  Subject to the last sentence of this Section 2.02(b)(i), the Required Revolving Lenders shall approve or reject the Administrative Agent’s initial determinations of the proposed Borrowing Base by written notice to the Administrative Agent within fifteen (15) days of the Administrative Agent’s notification of its initial determinations; provided, however that, the failure by any Revolving Lender to confirm in writing the Administrative Agent’s determination of the proposed Borrowing Base within such

fifteen (15) day period shall be deemed an approval of such proposed Borrowing Base by such Revolving Lender.  If the Required Revolving Lenders fail to approve any such proposed Borrowing Base determined by the Administrative Agent hereunder in such fifteen (15) day period, then the Administrative Agent shall poll the Revolving Lenders to ascertain the highest proposed Borrowing Base then acceptable to the Required Revolving Lenders for purposes of this Section 2.02(b)(i) and, subject to the last sentence of this Section 2.02(b)(i), such amounts shall become the new Borrowing Base, effective on the date specified in this Section 2.02(b)(i).  Until such approval or deemed approval, the Borrowing Base in effect before the proposed Borrowing Base shall remain in effect.  Upon agreement by the Administrative Agent and the Required Revolving Lenders of the new Borrowing Base, the Administrative Agent shall, by written notice to the Borrower and the Revolving Lenders, designate the new Borrowing Base available to the Borrower.  Such designation shall be effective as of the Business Day specified in such written notice (or, if no effective date is specified in such written notice, the next Business Day following delivery of such written notice) and such new Borrowing Base shall remain in effect until the next determination or redetermination of the Borrowing Base in accordance with this Agreement.  Notwithstanding anything contained herein to the contrary, (A) any determination or redetermination of the Borrowing Base resulting in any increase of the Borrowing Base in effect immediately prior to such determination or redetermination shall require the written approval (and not deemed approval) of all the Revolving Lenders in their sole discretion but subject to paragraph (d) of this Section 2.02, (B) in no event shall the determined or redetermined Borrowing Base exceed the aggregate Commitments of the Revolving Lenders, and (C) any determination or redetermination of the Borrowing Base resulting in any decrease of the Borrowing Base in effect immediately prior to such determination or redetermination shall not require the approval of any Defaulting Lender (and the definition of "Required Revolving Lenders" will automatically be deemed modified accordingly with respect to any such determination or redetermination).

(ii)           The Borrower shall deliver to the Administrative Agent and each Lender on or before each August 31, beginning August 31, 2010, an Internal Engineering Report dated effective as of the immediately preceding June 30, and such other information as may be reasonably requested by the Administrative Agent or any Lender with respect to the Oil and Gas Properties included or to be included in the Borrowing Base.  Within thirty (30) days after receipt of the Internal Engineering Report and such other information, the Administrative Agent shall make an initial determination of the new Borrowing Base and upon such initial determination shall promptly notify the Revolving Lenders in writing of its initial determination of the proposed Borrowing Base.  Subject to the last sentence of this Section 2.02(b)(ii), the Required Revolving Lenders shall approve or reject the Administrative Agent’s initial determinations of the proposed Borrowing Base by written notice to the Administrative Agent within fifteen (15) days of the Administrative Agent’s notification of its initial determinations; provided, however that, the failure by any Revolving Lender to confirm in writing the Administrative Agent’s determination of the proposed Borrowing Base within such fifteen (15) day period shall be deemed an approval of the such proposed Borrowing Base by such Revolving Lender.  If the Required Revolving Lenders fail to approve any such proposed Borrowing Base determined by the Administrative Agent hereunder in such fifteen (15) day period, then the Administrative Agent shall poll the Revolving Lenders to ascertain the highest proposed Borrowing Base then acceptable to the Required Revolving Lenders for purposes of this Section 2.02(b)(ii) and, subject to the last sentence of this Section 2.02(b)(ii), such amounts shall become

the new Borrowing Base, effective on the date specified in this Section 2.02(b)(ii).  Until such approval or deemed approval, the Borrowing Base in effect before the proposed Borrowing Base shall remain in effect.  Upon agreement by the Administrative Agent and the Required Revolving Lenders of the new Borrowing Base, the Administrative Agent shall, by written notice to the Borrower and the Revolving Lenders, designate the new Borrowing Base available to the Borrower.  Such designation shall be effective as of the Business Day specified in such written notice (or, if no effective date is specified in such written notice, the next Business Day following delivery of such written notice) and such new Borrowing Base shall remain in effect until the next determination or redetermination of the Borrowing Base in accordance with this Agreement.  Notwithstanding anything contained herein to the contrary, (A) any determination or redetermination of the Borrowing Base resulting in any increase of the Borrowing Base in effect immediately prior to such determination or redetermination shall require the written approval (and not deemed approval) of all the Revolving Lenders in their sole discretion but subject to paragraph (d) of this Section 2.02, (B) in no event shall the determined or redetermined Borrowing Base exceed the aggregate Commitments of the Revolving Lenders, and (C) any determination or redetermination of the Borrowing Base resulting in any decrease of the Borrowing Base in effect immediately prior to such determination or redetermination shall not require the approval of any Defaulting Lender (and the definition of "Required Revolving Lenders" will automatically be deemed modified accordingly with respect to any such determination or redetermination).

(iii)           In the event that the Borrower does not furnish to the Administrative Agent and the Revolving Lenders the Independent Engineering Report, Internal Engineering Report or other information specified in clauses (i) and (ii) above by the date specified therein, the Administrative Agent and the Revolving Lenders may nonetheless redetermine the Borrowing Base and redesignate the Borrowing Base from time to time thereafter in their sole discretion until the Administrative Agent and the Revolving Lenders receive the relevant Independent Engineering Report, Internal Engineering Report, or other information, as applicable, whereupon the Administrative Agent and the Revolving Lenders shall redetermine the Borrowing Base as otherwise specified in this Section 2.02.

(iv)           Each delivery of an Engineering Report by the Borrower to the Administrative Agent and the Revolving Lenders shall constitute a representation and warranty by the Borrower to the Administrative Agent and the Revolving Lenders that (A) the Borrower and its Subsidiaries, as applicable, own the Oil and Gas Properties specified therein subject to an Acceptable Security Interest and free and clear of any Liens (except Permitted Liens), and (B) on and as of the date of such Engineering Report each Oil and Gas Property described as "proved developed" therein was developed for oil and/or gas, and the wells pertaining to such Oil and Gas Properties that are described therein as producing wells ("Wells"), were each producing oil and/or gas in paying quantities, except for Wells that were utilized as water or gas injection wells or as water disposal wells.  Additionally, the Borrower shall deliver with each such Engineering Report a list of any Proven Reserves that have been sold or acquired by the Borrower and its Subsidiaries since the date of the last Engineering Report delivered to the Administrative Agent; provided that, such requirement shall not constitute nor be construed as a consent to any sale or proposed sale that would not be permitted under the terms of this Agreement.

(c)            Interim Redetermination .  In addition to the Borrowing Base redeterminations provided for in Section 2.02(b), the Administrative Agent and the Revolving Lenders may (i) in their sole discretion make one additional redetermination of the Borrowing Base during any six-month period between scheduled redeterminations and (ii) at the request of the Borrower make one additional redetermination of the Borrowing Base during any six-month period between scheduled redeterminations, and in any case, based on such information as the Administrative Agent and the Revolving Lenders deem relevant (but in accordance with Section 2.02(d)).  Additionally, the Administrative Agent and the Revolving Lenders may request (A) an additional redetermination in connection with any sale or proposed sale of Oil and Gas Properties of the Borrower or any of its Subsidiaries having a market value that would, when aggregated with all other such sales that have been consummated since the date of the last redetermination, equal or exceed an amount equal to 5% of the Borrowing Base then in effect; provided that, such request shall not constitute nor be construed as a consent to any sale or proposed sale that would not be permitted under the terms of this Agreement, (B) an additional redetermination in connection with any Hedge Termination if such Hedge Termination, when aggregated with all other such Hedge Terminations that have been consummated since the date of the last redetermination, could reasonably be expected to result in a decrease of 5% or more to the collateral value of the Oil and Gas Properties which are given value in the Borrowing Base most recently in effect, as determined by the Administrative Agent in its sole discretion; provided that, such request shall not constitute nor be construed as a consent to any Hedge Termination that would not be permitted under the terms of this Agreement, and (C) an additional redetermination if the net aggregate amount of Gas Imbalances with respect to the Oil and Gas Properties of the Borrower and its Subsidiaries exceeds at any time an amount equal to 1% of the Proven Reserves that are categorized as "proved, developed and producing" on the most recently delivered Engineering Report; provided that, such request shall not constitute nor be construed as a consent to or a waiver of any Default or Event of Default occurring as a result of any such Gas Imbalance.  The party requesting the redetermination shall give the other parties at least 10 days' prior written notice that a redetermination of the Borrowing Base pursuant to this paragraph (c) is to be performed.  In connection with any redetermination of the Borrowing Base under this Section 2.02(c), the Borrower shall provide the Administrative Agent and the Revolving Lenders with such information regarding the Borrower and its Subsidiaries' business (including its Oil and Gas Properties, the Proven Reserves, and production relating thereto) as the Administrative Agent or any Revolving Lender may request, including, without limitation, an updated Independent Engineering Report.  The Administrative Agent shall promptly notify the Borrower in writing of each redetermination of the Borrowing Base pursuant to this Section 2.02(c) and the amount of the Borrowing Base as so redetermined.

(d)            Standards for Redetermination .  Each redetermination of the Borrowing Base by the Administrative Agent and the Revolving Lenders pursuant to this Section 2.02 shall be made (i) in the sole discretion of the Administrative Agent and the Revolving Lenders (but in accordance with the other provisions of this Section 2.02(d)), (ii) in accordance with the Administrative Agent's and the Revolving Lenders' customary internal standards and practices for valuing and redetermining the value of Oil and Gas Properties in connection with reserve based oil and gas loan transactions, (iii) in conjunction with the most recent Independent Engineering Report or Internal Engineering Report, as applicable, or other information received by the Administrative Agent and the Revolving Lenders relating to the Proven Reserves of the Borrower and its Subsidiaries, and (iv) based upon the estimated value of the Proven Reserves

owned by the Borrower and its Subsidiaries as determined by the Administrative Agent and the Revolving Lenders.  In valuing and redetermining the Borrowing Base, the Administrative Agent and the Revolving Lenders may also consider the business, financial condition, and Debt obligations of the Borrower and its Subsidiaries and such other factors as the Administrative Agent and the Revolving Lenders customarily deem appropriate.  In that regard, the Borrower acknowledges that the determination of the Borrowing Base reflects a loan amount to market value percentage differential which is essential for the adequate protection of the Administrative Agent and the Revolving Lenders.  No Proven Reserves shall be included or considered for inclusion in the Borrowing Base unless the Administrative Agent and the Revolving Lenders shall have received, at the Borrower's expense, evidence of title satisfactory in form and substance to the Administrative Agent that the Administrative Agent has an Acceptable Security Interest in the Oil and Gas Properties relating thereto pursuant to the Security Instruments.  At all times after the Administrative Agent has given the Borrower notification of a redetermination of the Borrowing Base under this Section 2.02, the Borrowing Base shall be equal to the redetermined amount or such lesser amount designated by the Borrower and disclosed in writing to the Administrative Agent and the Revolving Lenders until the Borrowing Base is subsequently redetermined in accordance with this Section 2.02.

Section 2.03                       Method of Borrowing .

(a)            Notice .  Each Revolving Borrowing shall be made pursuant to a Notice of Borrowing (or by telephone notice promptly confirmed in writing by a Notice of Borrowing), given not later than 11:00 a.m.  (New York time) (i) on the third Business Day before the date of the proposed Revolving Borrowing, in the case of a Revolving Borrowing comprised of Eurodollar Rate Advances or (ii) on the Business Day of the proposed Revolving Borrowing, in the case of a Revolving Borrowing comprised of Reference Rate Advances, by the Borrower to the Administrative Agent, which shall in turn give to each Revolving Lender prompt notice of such proposed Revolving Borrowing by facsimile.  Each Notice of Borrowing shall be in writing (by facsimile or otherwise) specifying the information required therein.  In the case of a proposed Revolving Borrowing comprised of Eurodollar Rate Advances, the Administrative Agent shall promptly notify each Revolving Lender of the applicable interest rate under Section 2.09(b).  Each Revolving Lender shall, before 12:00 noon (New York time) on the date of such Revolving Borrowing, make available for the account of its Applicable Lending Office to the Administrative Agent at its address referred to in Section 9.02, or such other location as the Administrative Agent may specify by notice to the Revolving Lenders, in same day funds, in the case of a Revolving Borrowing, such Revolving Lender's Revolving Pro Rata Share of such Revolving Borrowing.  After the Administrative Agent's receipt of such funds and upon fulfillment of the applicable conditions set forth in Article III, the Administrative Agent shall make such funds available to the Borrower at its account with the Administrative Agent.

(b)            Conversions and Continuations .  The Borrower may elect to Convert or continue any Revolving Borrowing or Term Borrowing under this Section 2.03 by delivering an irrevocable Notice of Conversion or Continuation to the Administrative Agent at the Administrative Agent's office no later than 11:00 a.m.  (New York time) (i) on the date which is at least three Business Days in advance of the proposed Conversion or continuation date in the case of a Conversion to or a continuation of a Borrowing comprised of Eurodollar Rate Advances and (ii) on the Business Day of the proposed Conversion, in the case of a Conversion

to a Borrowing comprised of Reference Rate Advances.  Each such Notice of Conversion or Continuation shall be in writing (by facsimile or otherwise) specifying the information required therein.  Promptly after receipt of a Notice of Conversion or Continuation under this Section, the Administrative Agent shall provide each Lender with a copy thereof and, in the case of a Conversion to or a continuation of a Borrowing comprised of Eurodollar Rate Advances, notify each Lender of the applicable interest rate under Section 2.09(b).

(c)            Certain Limitations .  Notwithstanding anything to the contrary contained in paragraphs (a) and (b) above:

(i)           at no time shall there be more than six Interest Periods applicable to outstanding Eurodollar Rate Advances and the Borrower may not select Eurodollar Rate Advances for any Borrowing at any time that a Default has occurred and is continuing;

(ii)           if any Lender shall, at least one Business Day before the date of any requested Borrowing, Conversion, or continuation, notify the Administrative Agent that the introduction of or any change in or in the interpretation of any law or regulation makes it unlawful, or that any central bank or other Governmental Authority asserts that it is unlawful, for such Lender or its Applicable Lending Office to perform its obligations under this Agreement to make Eurodollar Rate Advances or to fund or maintain Eurodollar Rate Advances, the right of the Borrower to select Eurodollar Rate Advances from such Lender shall be suspended until such Lender shall notify the Administrative Agent that the circumstances causing such suspension no longer exist, and the Advance made by such Lender in respect of such Borrowing, Conversion, or continuation shall be a Reference Rate Advance;

(iii)           if the Administrative Agent is unable to determine the Eurodollar Rate for Eurodollar Rate Advances comprising any requested Borrowing, the right of the Borrower to select Eurodollar Rate Advances for such Borrowing or for any subsequent Borrowing shall be suspended until the Administrative Agent shall notify the Borrower and the Lenders that the circumstances causing such suspension no longer exist, and each Advance comprising such Borrowing shall be a Reference Rate Advance;

(iv)           if the Required Revolving Lenders shall, at least one Business Day before the date of any requested Revolving Borrowing, notify the Administrative Agent that the Eurodollar Rate for Eurodollar Rate Advances comprising such Revolving Borrowing will not adequately reflect the cost to such Revolving Lenders of making or funding their respective Eurodollar Rate Advances, as the case may be, for such Revolving Borrowing, the right of the Borrower to select Eurodollar Rate Advances for such Revolving Borrowing or for any subsequent Revolving Borrowing shall be suspended until the Administrative Agent shall notify the Borrower and the Revolving Lenders that the circumstances causing such suspension no longer exist, and each Revolving Advance comprising such Revolving Borrowing shall be a Reference Rate Advance; and

(v)           if the Borrower shall fail to select the duration or continuation of any Interest Period for any Eurodollar Rate Advances in accordance with the provisions contained in the definition of "Interest Period" in Section 1.01 and paragraph (b) of this Section 2.03, the Administrative Agent shall forthwith so notify the Borrower and the Lenders and such Advances

shall be made available to the Borrower on the date of such Borrowing as Reference Rate Advances or, if an existing Advance, Convert into Reference Rate Advances.

(d)            Notices Irrevocable .  Each Notice of Borrowing and Notice of Conversion or Continuation shall be irrevocable and binding on the Borrower.  In the case of any Borrowing for which the related Notice of Borrowing specifies is to be comprised of Eurodollar Rate Advances, the Borrower shall indemnify each Lender against any loss, out-of-pocket cost, or expense incurred by such Lender as a result of any failure by the Borrower to fulfill on or before the date specified in such Notice of Borrowing for such Borrowing the applicable conditions set forth in Article III including any loss (including any loss of anticipated profits), cost, or expense incurred by reason of the liquidation or reemployment of deposits or other funds acquired by such Lender to fund the Advance to be made by such Lender as part of such Borrowing when such Advance, as a result of such failure, is not made on such date.

(e)            Funding by Lenders; Presumption by Administrative Agent .  Unless the Administrative Agent shall have received notice from a Lender prior to the proposed date of any Borrowing that such Lender will not make available to the Administrative Agent such Lender’s share of such Borrowing, the Administrative Agent may assume that such Lender has made such share available on such date in accordance with paragraph (a) of this Section 2.03 and may, in reliance upon such assumption, make available to the Borrower a corresponding amount.  In such event, if a Lender has not in fact made its share of the applicable Borrowing available to the Administrative Agent, then the applicable Lender and the Borrower severally agree to pay to the Administrative Agent forthwith on demand such corresponding amount with interest thereon, for each day from and including the date such amount is made available to the Borrower to but excluding the date of payment to the Administrative Agent, at (i) in the case of a payment to be made by such Lender, the greater of the Federal Funds Rate and a rate determined by the Administrative Agent in accordance with banking industry rules on interbank compensation and (ii) in the case of a payment to be made by the Borrower, the interest rate applicable to Reference Rate Advances.  If the Borrower and such Lender shall pay such interest to the Administrative Agent for the same or an overlapping period, the Administrative Agent shall promptly remit to the Borrower the amount of such interest paid by the Borrower for such period.  If such Lender pays its share of the applicable Borrowing to the Administrative Agent, then the amount so paid shall constitute such Lender’s Advance included in such Borrowing.  Any payment by the Borrower shall be without prejudice to any claim the Borrower may have against a Lender that shall have failed to make such payment to the Administrative Agent.

(f)            Lender Obligations Several .  The failure of any Lender to make the Advance to be made by it as part of any Borrowing shall not relieve any other Lender of its obligation, if any, to make its Advance on the date of such Borrowing.  No Lender shall be responsible for the failure of any other Lender to make the Advance to be made by such other Lender on the date of any Borrowing.

Section 2.04                       Reduction of the Commitments .

(a)            Revolving Commitments . The Borrower shall have the right, upon at least three Business Days' irrevocable notice to the Administrative Agent, to terminate in whole or reduce ratably in part the unused portion of the Revolving Commitments; provided , that, each partial

reduction shall be in the aggregate amount of $5,000,000 or in integral multiples of $1,000,000 in excess thereof. Any reduction and termination of the Revolving Commitments pursuant to this Section 2.04 shall be applied ratably to each Revolving Lender's Revolving Commitment and shall be permanent, with no obligation of the Lenders to reinstate such Revolving Commitments.

(b)            Term Commitments . On the making of the Term Advances on the Closing Date, each Lender's Term Commitment shall be reduced to zero. Any reduction or termination of the Term Commitments pursuant to this Section 2.04(b) shall be permanent, with no obligation of the Lenders to reinstate such Term Commitments.

(c)            Defaulting Lender . The Borrower may terminate the unused amount of the Revolving Commitment of a Defaulting Lender upon not less than three Business Days’ prior notice to the Administrative Agent (which will promptly notify the Lenders thereof), and in such event the provisions of Section 2.15(c) will apply to all amounts thereafter paid by the Borrower for the account of such Defaulting Lender under this Agreement (whether on account of principal, interest, fees, indemnity or other amounts), provided that such termination will not be deemed to be a waiver or release of any claim the Borrower, the Administrative Agent, the Issuing Bank, or any Lender may have against such Defaulting Lender.

Section 2.05                       Prepayment of Advances .

(a)            Optional .  The Borrower may prepay the Revolving Advances and the Term Advances, after giving by 11:00 a.m.  (New York time): (i) in the case of Eurodollar Rate Advances, at least three Business Days' or (ii) in the case of Reference Rate Advances, same Business Day's, irrevocable prior written notice to the Administrative Agent stating the proposed date and aggregate principal amount of such prepayment.  If any such notice is given, the Borrower shall prepay the Advances in accordance with Borrower's notice in whole or ratably in part in an aggregate principal amount equal to the amount specified in such notice, together with accrued interest to the date of such prepayment on the principal amount prepaid and amounts, if any, required to be paid pursuant to Section 2.12 as a result of such prepayment being made on such date; provided , however, that each partial prepayment with respect to:  (A) any amounts prepaid in respect of Eurodollar Rate Advances shall be applied to Eurodollar Rate Advances comprising part of the same Borrowing; (B) any prepayments made in respect of Reference Rate Advances shall be made in minimum amounts of $250,000 and in integral multiples of $100,000 in excess thereof, and (C) any prepayments made in respect of any Borrowing comprised of Eurodollar Rate Advances shall be made in an aggregate principal amount of at least $500,000 and in integral multiples of $100,000 in excess thereof and in an aggregate principal amount such that after giving effect thereto such Borrowing shall have a remaining principal amount outstanding with respect to such Borrowing of at least $100,000.  Full prepayments of any Borrowing are permitted without restriction of amounts.

(b)            Mandatory .

(i)            Borrowing Base Deficiency .  Subject to Section 2.05(b)(ii), if a Borrowing Base Deficiency exists, then after receipt of written notice from the Administrative Agent regarding such deficiency, the Borrower shall,

(A) (1) within 3 Business Days after the date such deficiency notice is received by the Borrower, deliver a written notice to the Administrative Agent indicating its intent to prepay Revolving Advances or, if the Revolving Advances have been repaid in full, make deposits into the Cash Collateral Account to provide cash collateral for the Letter of Credit Exposure, such that the Borrowing Base Deficiency is cured, and (2) make such payments and deposits within 10 days after the date such deficiency notice is received by the Borrower;

(B) (1) within 3 Business Days after the date such deficiency notice is received by the Borrower, deliver a written notice to the Administrative Agent indicating its intent to pledge as Collateral for the Obligations additional Oil and Gas Properties acceptable to the Required Revolving Lenders in their sole discretion such that the Borrowing Base Deficiency is cured, and (2) deliver such additional Collateral within 30 days after the date such deficiency notice is received by the Borrower;

(C) (1) within 3 Business Days after the date such deficiency notice is received by the Borrower, deliver a written notice to the Administrative Agent indicating the Borrower's election to repay the Revolving Advances and make deposits into the Cash Collateral Account to provide cash collateral for the Letters of Credit, each in three equal consecutive monthly installments equal to one-third of such Borrowing Base Deficiency with the first such installment due 30 days after the date such deficiency notice is received by the Borrower from the Administrative Agent and each following installment due 30 days after the preceding installment due date, and (2) make such payments and deposits within such time periods; or

(D) (1) within 3 Business Days after the date such deficiency notice is received by the Borrower to the Administrative Agent, deliver a written notice to the Administrative Agent indicating the Borrower's election to combine the options provided in clause (B) and clause (C) above, and also indicating the amount to be prepaid in installments and the amount to be provided as additional Collateral, and (2) make such three equal consecutive monthly installments and deliver such additional Collateral within the time required under clause (B) and clause (C) above.

The failure of the Borrower to deliver any such election notice or to perform the actions chosen to remedy a Borrowing Base Deficiency under this Section 2.05(b)(i) shall constitute an Event of Default.

(ii)            Asset Disposition or Hedge Termination .  Upon any adjustments to the Borrowing Base pursuant to Section 2.02(c) in connection with a Disposition or Hedge Termination, if a Borrowing Base Deficiency exists, then the Borrower shall prepay Revolving Advances or, if the Revolving Advances have been repaid in full, make deposits into the Cash Collateral Account to provide cash collateral for the Letter of Credit Exposure, such that the Borrowing Base Deficiency is cured.  The Borrower shall be obligated to make such prepayment and/or deposit of cash collateral on the date it or any Subsidiary receives cash proceeds as a result of such Disposition or Hedge Termination; provided that all payments required to be made

pursuant to this Section 2.05(b)(ii) must be made on or prior to the Commitment Termination Date.

(iii)            Reduction of Commitments .  On the date of each reduction of the aggregate Revolving Commitments pursuant to Section 2.04, the Borrower agrees to make a prepayment in respect of the outstanding amount of the Revolving Advances to the extent, if any, that the aggregate unpaid principal amount of all Revolving Advances plus the Letter of Credit Exposure exceeds the lesser of (A) the aggregate Revolving Commitments, as so reduced, and (B) the Borrowing Base.  Each prepayment pursuant to this Section 2.05(b)(iii) shall be accompanied by accrued interest on the amount prepaid to the date of such prepayment and amounts, if any, required to be paid pursuant to Section 2.12 as a result of such prepayment being made on such date.  Each prepayment under this Section 2.05(b)(iii) shall be applied to the Revolving Advances as determined by the Administrative Agent and agreed to by the Lenders in their sole discretion, subject to Section 2.15(c).

(iv)            Illegality .  If any Lender shall notify the Administrative Agent and the Borrower that the introduction of or any change in or in the interpretation of any law or regulation makes it unlawful, or that any central bank or other Governmental Authority asserts that it is unlawful for such Lender or its Applicable Lending Office to perform its obligations under this Agreement to maintain any Eurodollar Rate Advances of such Lender then outstanding hereunder, (i) the Borrower shall, no later than 11:00 a.m.  (New York time) (A) if not prohibited by law, on the last day of the Interest Period for each outstanding Eurodollar Rate Advance made by such Lender or (B) if required by such notice, on the second Business Day following its receipt of such notice, prepay all of the Eurodollar Rate Advances made by such Lender then outstanding (or, in the case of the principal of the Term Advance, be deemed to have prepaid), together with accrued interest on the principal amount prepaid (or deemed prepaid) to the date of such prepayment and amounts, if any, required to be paid pursuant to Section 2.12 as a result of such prepayment being made on such date, (ii) such Lender shall simultaneously make (or, in the case of the Term Advance, be deemed to have made) a Reference Rate Advance to the Borrower on such date in an amount equal to the aggregate principal amount of the Eurodollar Rate Advances prepaid (or deemed prepaid) to such Lender, and (iii) the right of the Borrower to select Eurodollar Rate Advances from such Lender for any subsequent Borrowing shall be suspended until such Lender shall notify the Administrative Agent that the circumstances causing such suspension no longer exist.

(c)            Interests, Costs and Application of Payments .  Each prepayment pursuant to any provision of this Section 2.05 shall be accompanied by accrued interest on the amount prepaid to the date of such prepayment and amounts, if any, required to be paid pursuant to Section 2.12 as a result of such prepayment being made on such date.  Except for prepayments under Section 2.05(a), which shall be applied in accordance with Borrower's notice of prepayment, each prepayment under this Section 2.05 (other than paragraph (iv) above) shall be applied to the Advances as determined by the Administrative Agent and agreed to by the Lenders in their sole discretion, subject to Section 2.15(c).

(d)            No Additional Right; Ratable Prepayment .  The Borrower shall have no right to prepay any principal amount of any Advance except as provided in this Section 2.05, and all notices given pursuant to this Section 2.05 shall be irrevocable and binding upon the Borrower.

Each payment of any Advance pursuant to this Section 2.05 shall be made in a manner such that all Advances comprising part of the same Borrowing are paid in whole or ratably in part, subject to Section 2.15(c).

Section 2.06                       Repayment of Advances .

(a)            Revolving Advances . The Borrower shall repay to the Administrative Agent for the ratable benefit of the Revolving Lenders the outstanding principal amount of each Revolving Advance, together with any accrued interest thereon, on the Revolving Maturity Date or such earlier date as is required pursuant to Section 7.02 or Section 7.03.

(b)            Term Advances . The Borrower shall repay to the Administrative Agent for the ratable benefit of the Term Lenders the aggregate outstanding principal amount of the Term Advances in installments equal to $1,000,000 on January 31, 2010, $3,000,000 on March 31, 2010, $2,000,000 on June 30, 2010, $2,000,000 on September 30, 2010, and a final installment of the remaining, unpaid principal balance of the Term Advance payable on the Term Maturity Date or such earlier date as is required pursuant to Section 7.02 or Section 7.03. The amounts and dates set forth in the foregoing sentence may be modified by the Administrative Agent in its sole discretion after receipt of the approval of each Term Lender and the Borrower.

Section 2.07                       Letters of Credit .

(a)            Commitment .  From time to time from the date of this Agreement until 30 days prior to the Revolving Maturity Date, at the request of the Borrower, the Issuing Lender shall, on the terms and conditions set forth in this Agreement (including without limitation, the terms of Section 3.01), issue, increase, or extend the Expiration Date of, Letters of Credit for the account of the Borrower on any Business Day.  No Letter of Credit will be issued, increased, or extended:

(i)           if such issuance, increase, or extension would cause the Letter of Credit Exposure to exceed the lesser of (A) $5,000,000 and (B) the lesser of (1) the aggregate Revolving Commitments minus the aggregate outstanding principal amount of all Revolving Advances at such time and (2) the Borrowing Base in effect at such time minus the aggregate outstanding principal amount of all Revolving Advances at such time;

(ii)           if such Letter of Credit has an Expiration Date later than the earlier of (A) one year after the date of issuance thereof and (B) 30 days prior to the Revolving Maturity Date;

(iii)           unless such Letter of Credit Documents are in form and substance acceptable to the Issuing Lender in its sole discretion;

(iv)           unless such Letter of Credit is a standby letter of credit not supporting the repayment of indebtedness for borrowed money of any Person;

(v)           unless the Borrower has delivered to the Issuing Lender a completed and executed Letter of Credit Application;

(vi)           unless such Letter of Credit is governed by (1) the ICC Uniform Customs and Practice for Documentary Credits (2007 Revision), International Chamber of Commerce Publication No. 600, or (2) the International Standby Practices (ISP98), International Chamber of Commerce Publication No. 590, in either case, including any subsequent revisions thereof approved by a Congress of the International Chamber of Commerce and adhered to by the Issuing Lender; and

(vii)           if any Lender becomes, and during the period it remains a Defaulting Lender or Potential Defaulting Lender, unless the Issuing Bank is satisfied that any exposure that would result therefrom is eliminated or fully covered by the Revolving Commitments of the Non-Defaulting Lenders or by deposits in the Cash Collateral Account or a combination thereof satisfactory to the Issuing Bank.

If the terms of any Letter of Credit Application referred to in the foregoing clause (v) conflicts with the terms of this Agreement, the terms of this Agreement shall control.

(b)            Participations .  Upon the date of the issuance or increase of a Letter of Credit, the Issuing Lender shall be deemed to have sold to each other Revolving Lender having a Revolving Commitment and each other Revolving Lender having a Revolving Commitment shall have been deemed to have purchased from the Issuing Lender a participation in the related Letter of Credit Obligations equal to such Revolving Lender's Revolving Pro Rata Share at such date and such sale and purchase shall otherwise be in accordance with the terms of this Agreement.  The Issuing Lender shall promptly notify each such participant Revolving Lender having a Revolving Commitment by telephone, or telecopy of each Letter of Credit issued, increased, or extended or converted and the actual dollar amount of such Revolving Lender's participation in such Letter of Credit.

(c)            Issuing .  Each Letter of Credit shall be issued, increased, or extended pursuant to a Letter of Credit Application (or by telephone notice promptly confirmed in writing by a Letter of Credit Application), given not later than 11:00 a.m.  (New York time) on the third Business Day before the date of the proposed issuance, increase, or extension of the Letter of Credit, and the Issuing Lender shall give to each other Revolving Lender prompt notice thereof by telephone, or telecopy.  Each Letter of Credit Application shall be delivered by facsimile or by mail specifying the information required therein; provided , that, if such Letter of Credit Application is delivered by facsimile, the Borrower shall follow such facsimile with an original by mail.  After the Issuing Lender’s receipt of such Letter of Credit Application (by facsimile or by mail) and upon fulfillment of the applicable conditions set forth in Article III, the Issuing Lender shall issue, increase, or extend such Letter of Credit for the account of the Borrower.  Each Letter of Credit Application shall be irrevocable and binding on the Borrower.

(d)            Reimbursement .

(i)            Obligation .  The Borrower hereby agrees to pay on demand to the Issuing Lender an amount equal to any amount paid by the Issuing Lender under any Letter of Credit.  In the event the Issuing Lender makes a payment pursuant to a request for draw presented under a Letter of Credit and such payment is not promptly reimbursed by the Borrower upon demand, the Issuing Lender shall give the Administrative Agent notice of the Borrower's failure to make such reimbursement and the Administrative Agent shall promptly notify each Revolving Lender

having a Revolving Commitment of the amount necessary to reimburse the Issuing Lender.  Upon such notice from the Administrative Agent, each Revolving Lender shall promptly reimburse the Issuing Lender for such Revolving Lender's Revolving Pro Rata Share of such amount, and such reimbursement shall be deemed for all purposes of this Agreement to be a Revolving Advance to the Borrower transferred at the Borrower's request to the Issuing Lender.  If such reimbursement is not made by any Revolving Lender to the Issuing Lender on the same day on which the Administrative Agent notifies such Revolving Lender to make reimbursement to the Issuing Lender hereunder, such Revolving Lender shall pay interest on its Revolving Pro Rata Share thereof to the Issuing Lender at a rate per annum equal to the Federal Funds Rate.  The Borrower hereby unconditionally and irrevocably authorizes, empowers, and directs the Administrative Agent and the Revolving Lenders to record and otherwise treat such reimbursements to the Issuing Lender as Reference Rate Advances under a Revolving Borrowing requested by the Borrower to reimburse the Issuing Lender which have been transferred to the Issuing Lender at the Borrower's request.

(ii)            Lenders' Obligations .  Each Revolving Lender's obligation to make Revolving Advances or to purchase and fund risk participations in Letters of Credit pursuant to this Section 2.07(d) shall be absolute and unconditional and shall not be affected by any circumstance, including (a) any setoff, counterclaim, recoupment, defense or other right which such Revolving Lender may have against the Issuing Lender, any Loan Party, or any other Person for any reason whatsoever, (b) the occurrence or continuance of a Default, or (c) any other occurrence, event or condition, whether or not similar to any of the foregoing.&n