CARBON ENERGY CORP
EXHIBIT 10-1
<DOCUMENT>
<TYPE>EX-10.1
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<FILENAME>a2063516zex-10_1.htm
<DESCRIPTION>EXHIBIT 10-1
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<TITLE> Prepared by MERRILL CORPORATION
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<BR></FONT><FONT SIZE=2><B>FINANCING COMMITMENT<BR>  <BR>    FOR<BR>  <BR>    CEC RESOURCES&nbsp;LTD.    <BR>  </B></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;This Financing Commitment constitutes the whole and entire agreement between the Borrower, CIBC and PLC and cancels and supersedes any prior agreements,
undertakings, declarations, representations and warranties, written or verbal, among the parties in respect of the subject matter of this Financing Commitment, including any prior Financing Commitment
or arrangements. </FONT></P>

<P ALIGN="RIGHT"><FONT SIZE=2>September&nbsp;14,
2001 </FONT></P>

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<TABLE WIDTH="100%" BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR VALIGN="TOP">
<TD WIDTH="31%"><FONT SIZE=2><B>BORROWER:</B></FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=6><FONT SIZE=2>CEC Resources&nbsp;Ltd. (the "</FONT><FONT SIZE=2><B>Borrower</B></FONT><FONT SIZE=2>")</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="31%"><BR><FONT SIZE=2><B> GUARANTOR:</B></FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD COLSPAN=6><FONT SIZE=2><BR>
Carbon Energy Corporation (the "</FONT><FONT SIZE=2><B>Guarantor</B></FONT><FONT SIZE=2>")</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="31%"><BR><FONT SIZE=2><B>LENDER:</B></FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD COLSPAN=6><FONT SIZE=2><BR>
Canadian Imperial Bank of Commerce ("</FONT><FONT SIZE=2><B>CIBC</B></FONT><FONT SIZE=2>")</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="31%"><BR><FONT SIZE=2><B>GAS PURCHASE AND SALE TRANSACTIONS FACILITATOR:</B></FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD COLSPAN=6><FONT SIZE=2><BR>
CIBC World Markets PLC or any other subsidiary of CIBC from time to time ("</FONT><FONT SIZE=2><B>PLC</B></FONT><FONT SIZE=2>")</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="31%"><BR><FONT SIZE=2><B>CONFIDENTIALITY:</B></FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD COLSPAN=6><FONT SIZE=2><BR>
This Financing Commitment will be treated in confidence by the Borrower, CIBC and PLC unless disclosure is required by law or other reporting or disclosure requirements.</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="31%"><BR><FONT SIZE=2><B>AMOUNT:</B></FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD COLSPAN=6><FONT SIZE=2><BR>
Cdn. $14,000,000 as a revolving/term production loan (the "</FONT><FONT SIZE=2><B>Production Loan</B></FONT><FONT SIZE=2>") and,</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="31%"><FONT SIZE=2><BR>
&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD COLSPAN=6><FONT SIZE=2><BR>
U.S. $3,500,000 as a swap facility (the "</FONT><FONT SIZE=2><B>Swap Facility</B></FONT><FONT SIZE=2>")</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="31%"><FONT SIZE=2><BR>
&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD COLSPAN=6><FONT SIZE=2><BR>
(collectively, the "</FONT><FONT SIZE=2><B>Facility</B></FONT><FONT SIZE=2>").</FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD WIDTH="31%"><BR><FONT SIZE=2><B>PURPOSE OF THE FACILITY:</B></FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD COLSPAN=6 VALIGN="TOP"><BR><FONT SIZE=2><B>Production Loan</B></FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="31%"><FONT SIZE=2><BR>
&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD COLSPAN=6><FONT SIZE=2><BR>
For normal operating requirements and to assist the Borrower in the exploration, development, production and/or acquisition of oil and gas reserves in Western Canada.</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="31%"><FONT SIZE=2><BR>
&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD COLSPAN=6><BR><FONT SIZE=2><B>Swap Facility</B></FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="31%"><FONT SIZE=2><BR>
&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD COLSPAN=6><FONT SIZE=2><BR>
To provide for the Borrower's contingent exposure under commodity swaps either financially or physically settled.</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="31%"><BR><FONT SIZE=2><B>HOSTILE ACQUISITION:</B></FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD COLSPAN=6><FONT SIZE=2><BR>
The Borrower shall not utilize whether directly or indirectly Availments to facilitate, assist or participate in a hostile acquisition without the prior written consent of CIBC which may be withheld in CIBC's sole discretion.</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="31%"><BR><FONT SIZE=2><B>BORROWING BASE:</B></FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD COLSPAN=6><FONT SIZE=2><BR>
Subject to the satisfaction of the Conditions Precedent to Funding, the Production Loan currently permits draws of up to Cdn. $14,000,000, (the "</FONT><FONT SIZE=2><B>Borrowing Base</B></FONT><FONT SIZE=2>") subject to adjustment as herein provided,
and will remain in effect until expiration of the Revolving Phase.</FONT></TD>
</TR>
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&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD COLSPAN=6><FONT SIZE=2><BR>
CIBC will undertake at any time, but not less frequently than semi-annually during the Revolving and Term phase if CIBC so chooses, a review of the Borrower's oil and gas properties evaluated in an independently prepared economic and reserve
evaluation report (provided annually) for purposes of redetermining the Borrowing Base applicable to the Facility. To assist in such redetermination, the Borrower will provide to CIBC operating statements and such other technical information with
respect to the properties being reviewed as CIBC may request.</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="31%"><FONT SIZE=2><BR>
&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD COLSPAN=6><FONT SIZE=2><BR>
Should CIBC determine at any time that there is a Borrowing Base Shortfall, during both the Revolving Phase and the Term Phase, the Borrower will, within 60&nbsp;days, use whatever means necessary to reduce its indebtedness under this Financing
Commitment by that amount stipulated by CIBC, or alternatively pledge additional security to CIBC sufficient to cover, in CIBC's opinion, such deficiency.</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="31%"><FONT SIZE=2><BR>
&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD COLSPAN=6><FONT SIZE=2><BR>
While a Borrowing Base Shortfall exists, the Borrower shall:</FONT></TD>
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<TD WIDTH="31%"><FONT SIZE=2><BR>
&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2><BR>
&#149;</FONT></TD>
<TD COLSPAN=5><FONT SIZE=2><BR>
not request new Availments;</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="31%"><FONT SIZE=2><BR>
&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2><BR>
&#149;</FONT></TD>
<TD COLSPAN=5><FONT SIZE=2><BR>
provide CIBC with information needed to determine the Borrower's Available Cash Flow;</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="31%"><FONT SIZE=2><BR>
&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2><BR>
&#149;</FONT></TD>
<TD COLSPAN=5><FONT SIZE=2><BR>
dedicate on a monthly basis for repayment of this Financing Commitment such portion of its Available Cash Flow as is required to eliminate the Borrowing Base Shortfall within 60&nbsp;days from the date CIBC delivers notice to the Borrower of the
Borrowing Base Shortfall; and</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="31%"><FONT SIZE=2><BR>
&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2><BR>
&#149;</FONT></TD>
<TD COLSPAN=5><FONT SIZE=2><BR>
pay the increased compensation required under the heading "Borrowing Base Rate Shortfall or Event of Default".</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="31%"><BR><FONT SIZE=2><B>PRODUCTION LOAN AVAILABILITY:</B></FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD COLSPAN=6><FONT SIZE=2><BR>
The Production Loan can be advanced by way of any combination of the following availments:</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="31%"><FONT SIZE=2><BR>
&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2><BR>
&#149;</FONT></TD>
<TD COLSPAN=5><FONT SIZE=2><BR>
overdraft borrowings in Canadian dollars;</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="31%"><FONT SIZE=2><BR>
&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2><BR>
&#149;</FONT></TD>
<TD COLSPAN=5><FONT SIZE=2><BR>
letters of credit, letters of guarantee, cheque credits, bid cheques for out of Province land sales and corporate visa (collectively the "</FONT><FONT SIZE=2><B>Sundry Options</B></FONT><FONT SIZE=2>").</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="31%"><BR><FONT SIZE=2><B>SWAP FACILITY AVAILABILITY:</B></FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD COLSPAN=6><FONT SIZE=2><BR>
At the Borrower's request and subject to market availability, CIBC and/or PLC will provide quotes for (i) forward rate agreements to provide fixed or floating rate funding for part or all of the Production Loan, (ii)&nbsp;commodity swaps covering a
portion of the Borrower's oil and gas production, (iii) forward exchange contracts and (iv)&nbsp;firm gas purchase and sale transactions, subject to the following:</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="31%"><FONT SIZE=2><BR>
&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2><BR>
&#149;</FONT></TD>
<TD COLSPAN=5><FONT SIZE=2><BR>
Forward Rate Agreements&#151;terms shall not exceed the lesser of two years and the date of expiry or termination of the Production Loan, with aggregate amounts hedged not to exceed 60% of the average Principal Indebtedness outstanding during the
Borrower's previous fiscal quarter;</FONT></TD>
</TR>
</TABLE>
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<TD WIDTH="31%"><FONT SIZE=2><BR>
&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2><BR>
&#149;</FONT></TD>
<TD COLSPAN=5><FONT SIZE=2><BR>
Commodity Swaps&#151;terms shall not exceed the lesser of two years and the date of expiry or termination of the Production Loan, with aggregate production volumes hedged from all sources, for both natural gas and oil, (calculated separately, not
collectively) not to exceed 60% of the Borrower's average production as forecast by CIBC.</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="31%"><FONT SIZE=2><BR>
&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2><BR>
&#149;</FONT></TD>
<TD COLSPAN=5><FONT SIZE=2><BR>
Forward Exchange Contracts&#151;terms shall not exceed the lesser of two years and the date of expiry or termination of the Production Loan, with aggregate amounts hedged not to exceed 60% of the Borrower's applicable foreign revenue;</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="31%"><FONT SIZE=2><BR>
&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2><BR>
&#149;</FONT></TD>
<TD COLSPAN=5><FONT SIZE=2><BR>
Physical Gas Purchase and Sale Transactions&#151;terms and conditions as outlined in the Master Firm Gas Purchase/Sale Agreement, terms shall not exceed the lesser of two years and the date of expiry or termination of the Production Loan, with
aggregate production volumes hedged from natural gas not to exceed 60% of the Borrower's current daily production volume as determined by CIBC;</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="31%"><FONT SIZE=2><BR>
&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD COLSPAN=6><FONT SIZE=2><BR>
provided that in all instances, the Borrower's contingent liability to CIBC and/or PLC under the Swap Facility shall be secured and rank </FONT><FONT SIZE=2><I>pari passu</I></FONT><FONT SIZE=2> with the Principal Indebtedness.</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="31%"><FONT SIZE=2><BR>
&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD COLSPAN=6><FONT SIZE=2><BR>
Notwithstanding the foregoing, the sum of the aggregate production volumes hedged with CIBC and/or PLC from natural gas under both the commodity swaps and physical gas purchase and sale transactions described above shall not at any time exceed 60% of
the Borrower's current daily production volumes of natural gas as determined by CIBC.</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="31%"><BR><FONT SIZE=2><B>TERM AND REPAYMENT:</B></FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD COLSPAN=6><FONT SIZE=2><BR>
The Production Loan will revolve and fluctuate at the Borrower's option until March&nbsp;31, 2002 (the "</FONT><FONT SIZE=2><B>Revolving Phase</B></FONT><FONT SIZE=2>") with interest payable monthly in arrears. At the request of the Borrower, the
Production Loan may be renewed upon such terms and for such period, and subject to the requirements listed below, as CIBC may in its discretion agree to (a "</FONT><FONT SIZE=2><B>Revolving Period</B></FONT><FONT SIZE=2>"). CIBC may elect to renew
all or only a portion of the Production Loan for a further Revolving Phase.</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="31%"><FONT SIZE=2><BR>
&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD COLSPAN=6><BR><FONT SIZE=2><B>Revolving Phase</B></FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="31%"><FONT SIZE=2><BR>
&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD COLSPAN=6><FONT SIZE=2><BR>
While the Production Loan is in the Revolving Phase, the Borrower may, at least 60&nbsp;days prior to the termination of the then current Revolving Phase, request an extension of the Revolving Phase provided:</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="31%"><FONT SIZE=2><BR>
&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2><BR>
&#149;</FONT></TD>
<TD COLSPAN=5><FONT SIZE=2><BR>
the extension is for 364&nbsp;days or less;</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="31%"><FONT SIZE=2><BR>
&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2><BR>
&#149;</FONT></TD>
<TD COLSPAN=5><FONT SIZE=2><BR>
the extension will not result in the then current Revolving Period extending beyond 364&nbsp;days; and</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="31%"><FONT SIZE=2><BR>
&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2><BR>
&#149;</FONT></TD>
<TD COLSPAN=5><FONT SIZE=2><BR>
CIBC, in its unrestricted discretion, consents to the extension.</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="31%"><FONT SIZE=2><BR>
&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD COLSPAN=6><FONT SIZE=2><BR>
An extension of the Revolving Phase will create a new and separate Revolving Phase which in turn can only be extended as provided above.</FONT></TD>
</TR>
</TABLE>
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<TR VALIGN="TOP">
<TD WIDTH="31%"><FONT SIZE=2><BR>
&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD COLSPAN=6><FONT SIZE=2><BR>
Upon the expiration or termination of the then current Revolving Phase, any amount undrawn under the Production Loan will be permanently cancelled.</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="31%"><FONT SIZE=2><BR>
&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD COLSPAN=6><BR><FONT SIZE=2><B>Term Phase</B></FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="31%"><FONT SIZE=2><BR>
&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD COLSPAN=6><FONT SIZE=2><BR>
During the Term Phase, the Production Loan will be permanently reduced by way of consecutive monthly principal payments commencing 30&nbsp;days after the end of the Revolving Phase over an amortization period consistent with the Borrower's cash flow
profile, as determined by CIBC, by applying its usual practice for similar type loans in comparable circumstances, provided that such amortization period shall not exceed 24&nbsp;months.</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="31%"><FONT SIZE=2><BR>
&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD COLSPAN=6><FONT SIZE=2><BR>
Where used herein, the term "</FONT><FONT SIZE=2><B>Term Phase</B></FONT><FONT SIZE=2>" means the period commencing immediately after the end of the Revolving Phase until repayment of the Production Loan in full.</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="31%"><BR><FONT SIZE=2><B>PREPAYMENT AND CANCELLATION:</B></FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD COLSPAN=6><FONT SIZE=2><BR>
The Borrower may permanently prepay the Facility in whole or in part, subject to the following:</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="31%"><FONT SIZE=2><BR>
&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2><BR>
&#149;</FONT></TD>
<TD COLSPAN=5><FONT SIZE=2><BR>
All prepayments, during the Term Phase, will be made in inverse order of maturity;</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="31%"><FONT SIZE=2><BR>
&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2><BR>
&#149;</FONT></TD>
<TD COLSPAN=5><FONT SIZE=2><BR>
Availments by way of commodity swaps (financial or physical), forward rate agreements and forward exchange contracts may be prepaid only at maturity except where the Borrower agrees to pay CIBC's breaking costs due to early redemption of offsetting
positions or otherwise, including all costs associated with reversing positions, provided such early redemption is possible; and</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="31%"><FONT SIZE=2><BR>
&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2><BR>
&#149;</FONT></TD>
<TD COLSPAN=5><FONT SIZE=2><BR>
the Borrower may at any time, upon giving CIBC two Banking Days prior notice, cancel any unused part of the Facility and any cancelled portion will not be reinstated.</FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD WIDTH="31%"><BR><FONT SIZE=2><B>RATES AND STAMPING FEES:</B></FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD COLSPAN=6 VALIGN="TOP"><BR><FONT SIZE=2><B>Revolving Phase</B></FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="31%"><FONT SIZE=2><BR>
&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2><BR>
&#149;</FONT></TD>
<TD COLSPAN=5><FONT SIZE=2><BR>
CIBC Prime Rate in effect from time to time plus <SUP>1</SUP>/<SMALL>2</SMALL> of 1% per annum with interest payable monthly in arrears.</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="31%"><FONT SIZE=2><BR>
&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD COLSPAN=6><BR><FONT SIZE=2><B>Term Phase</B></FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="31%"><FONT SIZE=2><BR>
&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2><BR>
&#149;</FONT></TD>
<TD COLSPAN=5><FONT SIZE=2><BR>
CIBC Prime Rate in effect from time to time plus 1<SUP>1</SUP>/<SMALL>2</SMALL>% per annum with interest payable monthly in arrears.</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="31%"><BR><FONT SIZE=2><B>STANDBY FEE:</B></FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD COLSPAN=6><FONT SIZE=2><BR>
During the Revolving Phase, a Standby Fee of <SUP>1</SUP>/<SMALL>4</SMALL> of 1% per annum calculated on the undrawn portion of the available and unused Production Loan is payable monthly in arrears.</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="31%"><BR><FONT SIZE=2><B>RENEWAL FEE:</B></FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD COLSPAN=6><FONT SIZE=2><BR>
$7,000 is payable upon the Borrower's acceptance of the terms and conditions hereof.</FONT></TD>
</TR>
</TABLE>
<!-- insert table folio -->
<!-- ZEQ.=4,SEQ=4,EFW="2063516",CP="CARBON ENERGY CORPORATION",DN="2",CHK=541035,FOLIO='4',FILE='DISK030:[01DEN7.01DEN2257]KG2257A.;22',USER='RJEDLIC',CD='14-NOV-2001;01:57' -->
<A NAME="page_kg2257_1_5"> </A>
<!-- end of table folio -->
<TABLE WIDTH="100%" BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR VALIGN="TOP">
<TD WIDTH="31%"><BR><FONT SIZE=2><B>SUNDRY OPTIONS:</B></FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD COLSPAN=6><FONT SIZE=2><BR>
Fees on Sundry Options are subject to change without notice and are payable as follows:</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="31%"><FONT SIZE=2><BR>
&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD COLSPAN=4><FONT SIZE=2><BR>
Letters of Credit/Letters of Guarantee<BR>
<BR>
Corporate Visa<BR>
Bid Cheques</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="31%" VALIGN="BOTTOM"><FONT SIZE=2><BR>
&#151;&nbsp;1.3% per annum or portion thereof in advance with a minimum of $150<BR>
&#151;&nbsp;CIBC standard rates<BR>
&#151;&nbsp;2.0% per annum plus $10.00 per cheque for out of province Bid Cheque transactions</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="31%"><BR><FONT SIZE=2><B>BORROWING BASE SHORTFALL OR EVENT OF DEFAULT:</B></FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD COLSPAN=6><FONT SIZE=2><BR>
Effective on the 30th day following receipt by the Borrower of a notice of a Borrowing Base Shortfall or an Event of Default (the "Effective Date"), the interest rates then applicable to CIBC Prime Rate loans shall increase by 2% per annum and such
increase shall remain in effect for as long as a Borrowing Base Shortfall or Event of Default subsists.</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="31%"><BR><FONT SIZE=2><B>LEGAL FEES:</B></FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD COLSPAN=6><FONT SIZE=2><BR>
CIBC's costs, including legal and the cost to prepare any environmental assessments, in connection with the preparation, establishment, operation or enforcement of this Financing Commitment, including the Security, are for the account of the
Borrower.</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="31%"><BR><FONT SIZE=2><B>SECURITY:</B></FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD COLSPAN=6><FONT SIZE=2><BR>
The Borrower will provide to CIBC and PLC and maintain the following as security for all obligations of the Borrower arising under this Financing Commitment, including any liability or exposure of CIBC under the Sundry Options and CIBC and/or PLC
under the Swap Facility;</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="31%"><FONT SIZE=2><BR>
&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2><BR>
&#149;</FONT></TD>
<TD COLSPAN=5><FONT SIZE=2><BR>
Acknowledgement, in form satisfactory to CIBC, from the Borrower to CIBC and PLC that all previous Security granted to CIBC by the Borrower under any existing facility or any other previous facilities including, without limitation, the financing
commitments dated November&nbsp;25, 1998, October&nbsp;8, 1999 and September&nbsp;15, 2000, remains in full force and effect;</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="31%"><FONT SIZE=2><BR>
&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2><BR>
&#149;</FONT></TD>
<TD COLSPAN=5><FONT SIZE=2><BR>
a Second Supplemental Debenture in the amount of $25,000,000 conveying a first floating charge (with right to fix) over all the present and after-acquired property of the Borrower together with a pledge thereof;</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="31%"><FONT SIZE=2><BR>
&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2><BR>
&#149;</FONT></TD>
<TD COLSPAN=5><FONT SIZE=2><BR>
Negative pledge from CEC Resources&nbsp;Ltd. and undertaking to provide fixed charge security;</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="31%"><FONT SIZE=2><BR>
&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2><BR>
&#149;</FONT></TD>
<TD COLSPAN=5><FONT SIZE=2><BR>
Guarantee from Carbon Energy Corporation with respect to the unconditional guarantee of the Borrower's indebtedness to CIBC and PLC (containing an acknowledgement that the Negative Pledge dated October&nbsp;6, 2000 granted by the Guarantor continues
in full force and effect), together with a legal opinion of the Guarantor's counsel in support thereof, in form satisfactory to CIBC;</FONT></TD>
</TR>
</TABLE>
<!-- insert table folio -->
<!-- ZEQ.=5,SEQ=5,EFW="2063516",CP="CARBON ENERGY CORPORATION",DN="2",CHK=344151,FOLIO='5',FILE='DISK030:[01DEN7.01DEN2257]KG2257A.;22',USER='RJEDLIC',CD='14-NOV-2001;01:57' -->
<A NAME="page_kg2257_1_6"> </A>
<!-- end of table folio -->
<TABLE WIDTH="100%" BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR VALIGN="TOP">
<TD WIDTH="31%"><FONT SIZE=2><BR>
&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2><BR>
&#149;</FONT></TD>
<TD COLSPAN=5><FONT SIZE=2><BR>
General Security Agreement providing a first priority security interest in all present and after-acquired personal property of the Borrower;</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="31%"><FONT SIZE=2><BR>
&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2><BR>
&#149;</FONT></TD>
<TD COLSPAN=5><FONT SIZE=2><BR>
Officer's certificate certifying ownership of properties and interests as evaluated by CIBC;</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="31%"><FONT SIZE=2><BR>
&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2><BR>
&#149;</FONT></TD>
<TD COLSPAN=5><FONT SIZE=2><BR>
Standard CIBC agreement respecting hydrocarbons;</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="31%"><FONT SIZE=2><BR>
&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2><BR>
&#149;</FONT></TD>
<TD COLSPAN=5><FONT SIZE=2><BR>
Standard CIBC agreement and documentation relative to Sundry Options;</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="31%"><FONT SIZE=2><BR>
&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2><BR>
&#149;</FONT></TD>
<TD COLSPAN=5><FONT SIZE=2><BR>
Standard CIBC overdraft lending agreement;</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="31%"><FONT SIZE=2><BR>
&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2><BR>
&#149;</FONT></TD>
<TD COLSPAN=5><FONT SIZE=2><BR>
Standard ISDA form agreement relative to swap transactions, (when required);</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="31%"><FONT SIZE=2><BR>
&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2><BR>
&#149;</FONT></TD>
<TD COLSPAN=5><FONT SIZE=2><BR>
Master Firm Gas Purchase/Sale Agreement with any relating documents as required by CIBC or its counsel, (when required); and</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="31%"><FONT SIZE=2><BR>
&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2><BR>
&#149;</FONT></TD>
<TD COLSPAN=5><FONT SIZE=2><BR>
Any and all other security or documents as required by CIBC or its counsel.</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="31%"><FONT SIZE=2><BR>
&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD COLSPAN=6><FONT SIZE=2><BR>
(collectively the "Security").</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="31%"><FONT SIZE=2><BR>
&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD COLSPAN=6><FONT SIZE=2><BR>
In the event of any conflict between this Financing Commitment and the Security, this Financing Commitment shall govern.</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="31%"><BR><FONT SIZE=2><B>OTHER COVENANT:</B></FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD COLSPAN=6><FONT SIZE=2><BR>
The Borrower covenants not to provide any financial support by guarantee, pledge of its shares, granting of a security interest or other mortgage, charge, lien or encumbrance of any kind, or otherwise to an affiliate (as such term is defined in the
</FONT><FONT SIZE=2><I>Business Corporations Act </I></FONT><FONT SIZE=2>(Alberta)) without the prior written consent of CIBC, in its sole discretion.</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="31%"><BR><FONT SIZE=2><B>UNDERTAKING:</B></FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD COLSPAN=6><FONT SIZE=2><BR>
Upon request, the Borrower agrees to provide CIBC with such additional security that in CIBC's reasonable opinion is required to cover its or PLC's contingent exposure and all indebtedness under the Swap Facility, including without limitation, an
acknowledgement and amending agreement and such other documentation as CIBC may request to confirm that the Security held by CIBC as at date hereof secures such contingent exposure and indebtedness to PLC and to amend the Security
accordingly.</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="31%"><BR><FONT SIZE=2><B>CONDITIONS PRECEDENT TO FUNDING:</B></FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD COLSPAN=6><FONT SIZE=2><BR>
CIBC's obligation to provide increased Availments shall be subject to the following conditions precedent being met, unless waived in writing by CIBC:</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="31%"><FONT SIZE=2><BR>
&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2><BR>
&#149;</FONT></TD>
<TD COLSPAN=5><FONT SIZE=2><BR>
execution of the Financing Commitment;</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="31%"><FONT SIZE=2><BR>
&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2><BR>
&#149;</FONT></TD>
<TD COLSPAN=5><FONT SIZE=2><BR>
the Security in form and substance satisfactory to CIBC;</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="31%"><FONT SIZE=2><BR>
&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2><BR>
&#149;</FONT></TD>
<TD COLSPAN=5><FONT SIZE=2><BR>
the receipt by CIBC of a duly executed environmental certificate in CIBC's standard form;</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="31%"><FONT SIZE=2><BR>
&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2><BR>
&#149;</FONT></TD>
<TD COLSPAN=5><FONT SIZE=2><BR>
no Event of Default shall have occurred nor any event which, after notice or lapse of time or both, would become an Event of Default; and</FONT></TD>
</TR>
</TABLE>
<!-- insert table folio -->
<!-- ZEQ.=6,SEQ=6,EFW="2063516",CP="CARBON ENERGY CORPORATION",DN="2",CHK=106542,FOLIO='6',FILE='DISK030:[01DEN7.01DEN2257]KG2257A.;22',USER='RJEDLIC',CD='14-NOV-2001;01:57' -->
<A NAME="page_kg2257_1_7"> </A>
<!-- end of table folio -->
<TABLE WIDTH="100%" BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR VALIGN="TOP">
<TD WIDTH="31%"><FONT SIZE=2><BR>
&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2><BR>
&#149;</FONT></TD>
<TD COLSPAN=5><FONT SIZE=2><BR>
the appropriate notice of borrowing shall have been delivered in accordance with the notice provisions provided herein.</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="31%"><BR><FONT SIZE=2><B>ADDITIONAL CONDITION:</B></FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD COLSPAN=6><FONT SIZE=2><BR>
In addition to the conditions set forth above, CIBC's obligation to provide Availments, other than rollovers or conversions of a then maturing advance, shall be suspended for as long as there exists a Borrowing Base Shortfall.</FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD WIDTH="31%"><BR><FONT SIZE=2><B>REPORTING REQUIREMENTS:</B></FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD COLSPAN=6 VALIGN="TOP"><FONT SIZE=2><BR>
The Borrower will provide to CIBC:</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="31%"><FONT SIZE=2><BR>
&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2><BR>
&#149;</FONT></TD>
<TD COLSPAN=5><FONT SIZE=2><BR>
audited financial statements of the Guarantor within 120&nbsp;days of the Borrower's fiscal year-end;</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="31%"><FONT SIZE=2><BR>
&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2><BR>
&#149;</FONT></TD>
<TD COLSPAN=5><FONT SIZE=2><BR>
the Guarantor's quarterly 10 Q filings within 60&nbsp;days of the end of the first three fiscal quarters of each fiscal year;</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="31%"><FONT SIZE=2><BR>
&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2><BR>
&#149;</FONT></TD>
<TD COLSPAN=5><FONT SIZE=2><BR>
unaudited annual financial statements of the Borrower within 120&nbsp;days of the Borrower's fiscal year-end;</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="31%"><FONT SIZE=2><BR>
&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2><BR>
&#149;</FONT></TD>
<TD COLSPAN=5><FONT SIZE=2><BR>
unaudited quarterly financial statements within 60&nbsp;days of the end of the first three fiscal quarters of each fiscal year;</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="31%"><FONT SIZE=2><BR>
&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2><BR>
&#149;</FONT></TD>
<TD COLSPAN=5><FONT SIZE=2><BR>
an independently prepared economic and reserve evaluation report covering the Borrower's oil and gas properties along with annual cash flow projections and capital expenditure budgets within 90&nbsp;days of the end of each fiscal year;</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="31%"><FONT SIZE=2><BR>
&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2><BR>
&#149;</FONT></TD>
<TD COLSPAN=5><FONT SIZE=2><BR>
production revenue statements on a monthly basis within 60&nbsp;days of each month end, such statements indicating the gross oil and gas production, net production, total revenues, royalties and other burdens, operating expenses and net revenues, in
a format acceptable to CIBC;</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="31%"><FONT SIZE=2><BR>
&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2><BR>
&#149;</FONT></TD>
<TD COLSPAN=5><FONT SIZE=2><BR>
compliance certificate substantially in the form of Schedule&nbsp;B hereto within 60&nbsp;days of the end of each fiscal quarter; and</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="31%"><FONT SIZE=2><BR>
&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2><BR>
&#149;</FONT></TD>
<TD COLSPAN=5><FONT SIZE=2><BR>
such other documentation and information as CIBC may reasonably request, including any internally or independently prepared environmental assessment reports in the Borrower's possession.</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="31%"><BR><FONT SIZE=2><B>DISPOSITION LIMIT:</B></FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD COLSPAN=6><FONT SIZE=2><BR>
In addition to the Borrower's covenants found in Schedule&nbsp;A hereto, the Borrower will not sell, convey or otherwise dispose of any of its Proved Producing Reserves or related facilities, other than in the normal course of business and on arm's
length terms, provided that, if cumulative proceeds of all dispositions to be received by the Borrower exceed $1,000,000 in any calendar year, such proceeds will be used to permanently repay the Principal Indebtedness, unless other arrangements are
made with CIBC.</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="31%"><BR><FONT SIZE=2><B>CHANGE OF CONTROL:</B></FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD COLSPAN=6><FONT SIZE=2><BR>
The Borrower shall notify CIBC of a Change of Control as soon as it becomes aware thereof, and CIBC may at its sole discretion, by written notice to the Borrower, terminate the Facility upon a Change of Control occurring. Such termination will be
effective on the 30th day following the giving of the notice by CIBC and thereupon all Principal Indebtedness, interest, fees and all amounts due by the Borrower to CIBC or PLC under the Facility will be due and payable.</FONT></TD>
</TR>
</TABLE>
<!-- insert table folio -->

<!-- ZEQ.=7,SEQ=7,EFW="2063516",CP="CARBON ENERGY CORPORATION",DN="2",CHK=93972,FOLIO='7',FILE='DISK030:[01DEN7.01DEN2257]KG2257A.;22',USER='RJEDLIC',CD='14-NOV-2001;01:57' -->
<A NAME="page_kg2257_1_8"> </A>
<!-- end of table folio -->
<TABLE WIDTH="100%" BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR VALIGN="TOP">
<TD WIDTH="31%"><BR><FONT SIZE=2><B>INDEMNITY:</B></FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD COLSPAN=6><FONT SIZE=2><BR>
The Borrower agrees to indemnify and hold CIBC and its officers, directors, employees and agents harmless against any and all liabilities and costs associated with or as a result of CIBC and PLC entering into and performing their obligations under
this Financing Commitment, including but not limited to liabilities or costs associated with or as a result of (i)&nbsp;any transaction financed or to be financed in whole or part, directly or indirectly, by the proceeds of this Facility; or
(ii)&nbsp;any breach or non-compliance of any legislation, order, directive or judgment by the Borrower for the protection of the environment. This indemnity will survive the repayment, cancellation or termination of this Financing
Commitment.</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="31%"><BR><FONT SIZE=2><B>NOTICES:</B></FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD COLSPAN=6><FONT SIZE=2><BR>
Any notice or communication to be given hereunder and under the Security may be effectively given by delivering the same at the addresses hereinafter set forth or by telecopy or by sending the same by prepaid registered mail to the parties at such
addresses. Any notice so mailed will be deemed to have been given upon actual receipt thereof. The address of the parties are:</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="31%"><FONT SIZE=2><BR>
&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD COLSPAN=6><FONT SIZE=2><BR>
CEC Resources&nbsp;Ltd.<BR>
1750, 530&nbsp;-&nbsp;8th Avenue S.W.<BR>
Calgary, Alberta<BR>
T2P&nbsp;3S8</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="31%"><FONT SIZE=2><BR>
&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD COLSPAN=2><FONT SIZE=2><BR>
Attention:<BR>
<BR>
Telecopy:</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="21%" VALIGN="BOTTOM"><FONT SIZE=2><BR>
Robert R. Morrison<BR>
President<BR>
(403)&nbsp;262-8167</FONT></TD>
<TD WIDTH="2%" VALIGN="BOTTOM"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="31%" VALIGN="BOTTOM"><FONT SIZE=2><BR>
&nbsp;</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="31%"><FONT SIZE=2><BR>
&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD COLSPAN=6><FONT SIZE=2><BR>
Canadian Imperial Bank of Commerce<BR>
Oil and Gas Group<BR>
10th Floor Bankers Hall<BR>
855&nbsp;-&nbsp;2nd Street S.W.<BR>
Calgary, Alberta<BR>
T2P&nbsp;2P2</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="31%"><FONT SIZE=2><BR>
&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD COLSPAN=2><FONT SIZE=2><BR>
Attention:<BR>
Telecopy:</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD COLSPAN=3 VALIGN="BOTTOM"><FONT SIZE=2><BR>
Vice President, Oil&nbsp;&amp; Gas<BR>
(403)&nbsp;221-5779</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="31%"><FONT SIZE=2><BR>
&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD COLSPAN=6><FONT SIZE=2><BR>
Either party may from time to time notify the other, in accordance with the provisions hereof, of any change of address or addressee, which thereafter, until changed by like notice, will be the address of such party for all purposes of this Financing
Commitment and the Security.</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="31%"><BR><FONT SIZE=2><B>GENERAL TERMS AND CONDITIONS:</B></FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD COLSPAN=6><FONT SIZE=2><BR>
Schedule&nbsp;A hereto contains general definitions, covenants, events of default, terms and conditions which form part of this Financing Commitment.</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="31%"><BR><FONT SIZE=2><B>PRIOR INDEBTEDNESS:</B></FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD COLSPAN=6><FONT SIZE=2><BR>
All amounts owing by the Borrower as at the effective date hereof under any other financing commitment or agreement shall be deemed to be amounts owing under this Facility and this Financing Commitment as of the effective date hereof.</FONT></TD>
</TR>
</TABLE>
<!-- insert table folio -->
<!-- ZEQ.=8,SEQ=8,EFW="2063516",CP="CARBON ENERGY CORPORATION",DN="2",CHK=207501,FOLIO='8',FILE='DISK030:[01DEN7.01DEN2257]KG2257A.;22',USER='RJEDLIC',CD='14-NOV-2001;01:57' -->
<A NAME="page_kg2257_1_9"> </A>
<!-- end of table folio -->
<TABLE WIDTH="100%" BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR VALIGN="TOP">
<TD WIDTH="31%"><FONT SIZE=2><BR>
&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD COLSPAN=6><BR><FONT SIZE=2><B>OUR FINANCING COMMITMENT IS OPEN TO ACCEPTANCE BY YOU ON OR PRIOR TO SEPTEMBER&nbsp;24, 2001.</B></FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="31%"><FONT SIZE=2><BR>
&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD COLSPAN=6><BR><FONT SIZE=2><B>CANADIAN IMPERIAL BANK OF COMMERCE</B></FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="31%"><FONT SIZE=2><BR>
&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD COLSPAN=2><FONT SIZE=2><BR>
Per:</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="21%" VALIGN="BOTTOM"><FONT SIZE=2><BR>
&nbsp;&nbsp;</FONT><HR NOSHADE></TD>
<TD WIDTH="2%" VALIGN="BOTTOM"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="31%" VALIGN="BOTTOM"><FONT SIZE=2><BR>
&nbsp;</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="31%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2><FONT SIZE=2>Name:</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="21%" VALIGN="BOTTOM"><FONT SIZE=2>Glenn Kalyniuk</FONT></TD>
<TD WIDTH="2%" VALIGN="BOTTOM"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="31%" VALIGN="BOTTOM"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="31%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2><FONT SIZE=2>Title:</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="21%" VALIGN="BOTTOM"><FONT SIZE=2>Director Commercial Credit</FONT></TD>
<TD WIDTH="2%" VALIGN="BOTTOM"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="31%" VALIGN="BOTTOM"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="31%"><FONT SIZE=2><BR>
&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD COLSPAN=2><FONT SIZE=2><BR>
Per:</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="21%" VALIGN="BOTTOM"><FONT SIZE=2><BR>
&nbsp;&nbsp;</FONT><HR NOSHADE></TD>
<TD WIDTH="2%" VALIGN="BOTTOM"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="31%" VALIGN="BOTTOM"><FONT SIZE=2><BR>
&nbsp;</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="31%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2><FONT SIZE=2>Name:</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="21%" VALIGN="BOTTOM"><FONT SIZE=2>Scott Daniel</FONT></TD>
<TD WIDTH="2%" VALIGN="BOTTOM"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="31%" VALIGN="BOTTOM"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="31%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2><FONT SIZE=2>Title:</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="21%" VALIGN="BOTTOM"><FONT SIZE=2>Manager, Commercial Banking</FONT></TD>
<TD WIDTH="2%" VALIGN="BOTTOM"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="31%" VALIGN="BOTTOM"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="31%"><FONT SIZE=2><BR>
&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD COLSPAN=6><BR><FONT SIZE=2><B>THE ABOVE TERMS AND CONDITIONS AND THOSE CONTAINED IN THE ATTACHED SCHEDUlE&nbsp;"A" ARE AGREED TO BE EFFECTIVE THE 17<SUP>th</SUP> DAY OF SEPTEMBER&nbsp;2001.</B></FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="31%"><FONT SIZE=2><BR>
&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD COLSPAN=6><BR><FONT SIZE=2><B>CEC RESOURCES&nbsp;LTD.</B></FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="31%"><FONT SIZE=2><BR>
&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD COLSPAN=2><FONT SIZE=2><BR>
Per:</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="21%" VALIGN="BOTTOM"><FONT SIZE=2><BR>
&nbsp;&nbsp;</FONT><HR NOSHADE></TD>
<TD WIDTH="2%" VALIGN="BOTTOM"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="31%" VALIGN="BOTTOM"><FONT SIZE=2><BR>
&nbsp;</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="31%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2><FONT SIZE=2>Name:</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="21%" VALIGN="BOTTOM"><FONT SIZE=2>Robert Morrison</FONT></TD>
<TD WIDTH="2%" VALIGN="BOTTOM"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="31%" VALIGN="BOTTOM"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="31%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2><FONT SIZE=2>Title:</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="21%" VALIGN="BOTTOM"><FONT SIZE=2>President</FONT></TD>
<TD WIDTH="2%" VALIGN="BOTTOM"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="31%" VALIGN="BOTTOM"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="31%"><FONT SIZE=2><BR>
&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD COLSPAN=2><FONT SIZE=2><BR>
Per:</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="21%" VALIGN="BOTTOM"><FONT SIZE=2><BR>
&nbsp;&nbsp;</FONT><HR NOSHADE></TD>
<TD WIDTH="2%" VALIGN="BOTTOM"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="31%" VALIGN="BOTTOM"><FONT SIZE=2><BR>
&nbsp;</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="31%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2><FONT SIZE=2>Name:</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="21%" VALIGN="BOTTOM"><FONT SIZE=2>Kevin D. Struzeski</FONT></TD>
<TD WIDTH="2%" VALIGN="BOTTOM"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="31%" VALIGN="BOTTOM"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="31%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2><FONT SIZE=2>Title:</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="21%" VALIGN="BOTTOM"><FONT SIZE=2>Treasurer</FONT></TD>
<TD WIDTH="2%" VALIGN="BOTTOM"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="31%" VALIGN="BOTTOM"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
</TABLE>
<!-- end of user-specified TAGGED TABLE -->


<P><FONT SIZE=2>
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</FONT></P>

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<P ALIGN="CENTER"><FONT SIZE=2><A
NAME="page_ki2257_1_10"> </A> </FONT></P>

<!-- TOC_END -->
<P ALIGN="CENTER"><FONT SIZE=2><B>THIS IS SCHEDUlE&nbsp;A TO THE FINANCING COMMITMENT OF<BR>
CANADIAN IMPERIAL BANK OF COMMERCE IN FAVOUR OF<BR>
CEC RESOURCES&nbsp;LTD. DATED SEPTEMBER&nbsp;14, 2001  </B></FONT></P>

<P ALIGN="CENTER"><FONT SIZE=2><B> <A NAME="ki2257_article_1_definitions"> </A>
<A NAME="toc_ki2257_1"> </A>
<BR>    ARTICLE&nbsp;1    <BR>    <BR>    DEFINITIONS    <BR>  </B></FONT></P>

<P><FONT SIZE=2><B>1.1</B></FONT><FONT SIZE=2><B><I>&nbsp;&nbsp;Definitions.</I></B></FONT><FONT SIZE=2>&nbsp;&nbsp;Capitalized words and phrases used in the Financing Commitment and in all
notices and communications expressed to be made pursuant thereto shall have the meanings set out below, unless otherwise defined in this Financing Commitment. </FONT></P>

<P><FONT SIZE=2><B><I>"Available Cash Flow"</I></B></FONT><FONT SIZE=2> means, in respect of the Borrower for any period, its revenue from operations (including net proceeds of a
Property Disposition) for such period, less: </FONT></P>

<UL>
<DL compact>
<DT><FONT SIZE=2>(a)</FONT></DT><DD><FONT SIZE=2>royalties
and other contractual obligations necessary to preserve and maintain title to its oil and gas properties for such period;
<BR><BR></FONT></DD><DT><FONT SIZE=2>(b)</FONT></DT><DD><FONT SIZE=2>interest
or other fees pursuant to this Financing Commitment;
<BR><BR></FONT></DD><DT><FONT SIZE=2>(c)</FONT></DT><DD><FONT SIZE=2>its
reasonable general, administrative and operating expenses for such period;
<BR><BR></FONT></DD><DT><FONT SIZE=2>(d)</FONT></DT><DD><FONT SIZE=2>taxes
applicable to such period;
<BR><BR></FONT></DD><DT><FONT SIZE=2>(e)</FONT></DT><DD><FONT SIZE=2>reasonable
abandonment and reclamation costs consistent with industry standards; and
<BR><BR></FONT></DD><DT><FONT SIZE=2>(f)</FONT></DT><DD><FONT SIZE=2>any
other amounts that CIBC may allow in writing. </FONT></DD></DL>
</UL>

<P><FONT SIZE=2><B><I>"Availment"</I></B></FONT><FONT SIZE=2> means an availment by the Borrower permitted under this Financing Commitment. </FONT></P>

<P><FONT SIZE=2><B><I>"Banking Day"</I></B></FONT><FONT SIZE=2> means any day, other than a Saturday or Sunday, on which Canadian chartered banks are open for domestic and
foreign exchange business in Calgary, Alberta. </FONT></P>

<P><FONT SIZE=2><B><I>"Borrowing Base Shortfall"</I></B></FONT><FONT SIZE=2> means that amount expressed in Cdn. Dollars by which the Principal Indebtedness under the Production
Loan at any time exceeds the then existing Borrowing Base applicable to the Production Loan. </FONT></P>

<P><FONT SIZE=2><B><I>"Cdn. Dollars"</I></B></FONT><FONT SIZE=2> means such currency of Canada which, as at the time of payment or determination, is legal tender in Canada for
the payment of public or private debts. </FONT></P>

<P><FONT SIZE=2><B><I>"Cdn. Dollar Exchange Equivalent"</I></B></FONT><FONT SIZE=2> means, with reference to an amount (the "original amount") expressed in a currency other than
Cdn. Dollars, the amount expressed in Cdn. Dollars which CIBC would be required to pay in Calgary at the opening of business on the date specified, in order to purchase the original amount, in
accordance with CIBC's usual foreign exchange practice. </FONT></P>

<P><FONT SIZE=2><B><I>"Change of Control"</I></B></FONT><FONT SIZE=2> means if any Person (the "Acquiror") acquires, directly or indirectly, alone or in concert with other
Persons within the meaning of the Alberta Securities Act, over a period of time or at any one time, shares in the capital of the Borrower aggregating in excess of 30% of all of the then issued and
outstanding Voting Shares of the Borrower. </FONT></P>

<P><FONT SIZE=2><B><I>"CIBC Prime Rate"</I></B></FONT><FONT SIZE=2> means the variable rate of interest quoted by CIBC from time to time as the reference rate of interest which
it employs to determine the interest rate it will charge for demand loans in Cdn. Dollars to its customers in Canada and which it designates as its prime rate. If on the date an outstanding advance
under the Facility is converted into a CIBC Prime Rate loan, CIBC Prime Rate is less than the Floor Rate on that date, then the interest rate applicable to such CIBC Prime Rate loan shall be the Floor
Rate. </FONT></P>

<P><FONT SIZE=2>
<!-- ZEQ.=1,SEQ=10,EFW="2063516",CP="CARBON ENERGY CORPORATION",DN="2",CHK=951530,FOLIO='10',FILE='DISK030:[01DEN7.01DEN2257]KI2257A.;24',USER='RJEDLIC',CD='14-NOV-2001;01:57' -->
<A NAME="page_ki2257_1_11"> </A></FONT> <FONT SIZE=2><B><I>"Distribution"</I></B></FONT><FONT SIZE=2> means any: </FONT></P>

<UL>
<DL compact>
<DT><FONT SIZE=2>(a)</FONT></DT><DD><FONT SIZE=2>payment
of any dividend on or in respect of any shares of any class in the capital of the Borrower (including any shares thereof acquired through the exercise of warrants or rights
of conversion, exchange or purchase);
<BR><BR></FONT></DD><DT><FONT SIZE=2>(b)</FONT></DT><DD><FONT SIZE=2>redemption,
retraction, purchase or other acquisition or retirement, in whole or in part, of shares of any class in the capital of the Borrower (including any shares thereof
acquired through the exercise of warrants or rights of conversion, exchange or purchase); or
<BR><BR></FONT></DD><DT><FONT SIZE=2>(c)</FONT></DT><DD><FONT SIZE=2>payment
of principal, interest or other amounts in whole or in part, of any indebtedness of the Borrower for borrowed money (including without limitation, any indebtedness incurred
or assumed by the Borrower pursuant to a capital lease or operating lease); </FONT></DD></DL>
</UL>

<P><FONT SIZE=2>to
(in the case of (a) and (c)) or by or from (in the case of (b)) any shareholder or any affiliate of a shareholder of the Borrower, whether made or paid in or for cash, property or both, or the
transfer of any property for consideration of less than fair market value to any shareholder or any affiliate of a shareholder of the Borrower. </FONT></P>


<P><FONT SIZE=2><B><I>"Event of Default"</I></B></FONT><FONT SIZE=2> means an Event of Default as set out in Section&nbsp;8.1 of this Schedule&nbsp;A. </FONT></P>

<P><FONT SIZE=2><B><I>"Floor Rate"</I></B></FONT><FONT SIZE=2> means, for any day, the CDOR Screen Rate at or about 10:00&nbsp;a.m., Toronto time on that day, plus 1%. </FONT></P>

<P><FONT SIZE=2><B><I>"Full Life Net Present Worth"</I></B></FONT><FONT SIZE=2> means, at any time, the discounted net present value, as determined by CIBC, of the Borrower's
forecasted cash flow, based on CIBC's estimate of the present and future production derived from those Proved Producing Reserves as are considered by CIBC in determining the Borrowing Base, and as
adjusted by CIBC using the discount rates, inflation rates and pricing forecast as applied by CIBC based on its then current lending practice for loans of a similar nature to the Facility and with
respect to similar type property. </FONT></P>

<P><FONT SIZE=2><B><I>"Material Adverse Change"</I></B></FONT><FONT SIZE=2> means a material adverse change in: </FONT></P>

<UL>
<DL compact>
<DT><FONT SIZE=2>(a)</FONT></DT><DD><FONT SIZE=2>the
financial condition of the Borrower;
<BR><BR></FONT></DD><DT><FONT SIZE=2>(b)</FONT></DT><DD><FONT SIZE=2>the
Borrower's ability to perform its obligations under this Financing Commitment;
<BR><BR></FONT></DD><DT><FONT SIZE=2>(c)</FONT></DT><DD><FONT SIZE=2>the
property, business, operations or liabilities of the Borrower; or
<BR><BR></FONT></DD><DT><FONT SIZE=2>(d)</FONT></DT><DD><FONT SIZE=2>the
lending value of the Borrower's oil and gas properties. </FONT></DD></DL>
</UL>

<P><FONT SIZE=2><B><I>"Material Adverse Effect"</I></B></FONT><FONT SIZE=2> means a material adverse effect on: </FONT></P>

<UL>
<DL compact>
<DT><FONT SIZE=2>(a)</FONT></DT><DD><FONT SIZE=2>the
financial condition of the Borrower;
<BR><BR></FONT></DD><DT><FONT SIZE=2>(b)</FONT></DT><DD><FONT SIZE=2>the
Borrower's ability to perform its obligations under this Financing Commitment;
<BR><BR></FONT></DD><DT><FONT SIZE=2>(c)</FONT></DT><DD><FONT SIZE=2>the
property, business, operations or liabilities of the Borrower; or
<BR><BR></FONT></DD><DT><FONT SIZE=2>(d)</FONT></DT><DD><FONT SIZE=2>the
lending value of the Borrower's oil and gas properties. </FONT></DD></DL>
</UL>

<P><FONT SIZE=2><B><I>"Permitted Encumbrances"</I></B></FONT><FONT SIZE=2> means: </FONT></P>

<UL>
<DL compact>
<DT><FONT SIZE=2>(a)</FONT></DT><DD><FONT SIZE=2>undetermined
or inchoate liens arising in the ordinary course of and incidental to construction or current operations which have not been filed pursuant to law against the Borrower
or in respect of which no steps or proceedings to enforce such lien have been initiated or which relate to obligations which are not due or delinquent or if due or delinquent, any lien which the
Borrower will be contesting in good faith if such contest will involve, in the opinion of CIBC, no risk of loss of any material part of the property of the Borrower;
<BR><BR></FONT></DD><DT><FONT SIZE=2>(b)</FONT></DT><DD><FONT SIZE=2>liens
incurred or created in the Borrower's ordinary course of business and in accordance with sound industry practice in respect of the joint operation of oil and gas properties or
related </FONT><P><FONT SIZE=2>
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<A NAME="page_ki2257_1_12"> </A></FONT> <FONT SIZE=2>
production or processing facilities as security in favour of a Person conducting the development or operation of the property to which such liens relate, for the Borrower's portion of the costs and
expenses of such development or operation, provided that such costs or expenses are not due or delinquent or if due or delinquent, any lien which the Borrower will be contesting in good faith if such
contest will involve, in the opinion of CIBC, no risk of loss of any material part of the property of the Borrower; </FONT></P>

</DD><DT><FONT SIZE=2>(c)</FONT></DT><DD><FONT SIZE=2>to
the extent a security interest is constituted or created thereby, a sale or disposition of oil and gas properties resulting from any pooling or unit agreement entered into in the
ordinary course of business when, in the Borrower's reasonable judgement, it is necessary to do so to facilitate the orderly exploration, development or operation of such properties, provided that the
Borrower's resulting pooled or unitized interest is proportional to the interest contributed by it and is not materially less than the Borrower's interest in such oil and gas properties prior to such
pooling or unitization, and its obligations in respect thereof, are not greater than its proportional share based on the interest acquired by it;
<BR><BR></FONT></DD><DT><FONT SIZE=2>(d)</FONT></DT><DD><FONT SIZE=2>to
the extent a security interest is constituted or created thereby, farmouts or overriding royalty interests, net profit interests, reversionary interests and carried interests in
respect of the Borrower's oil and gas properties that are entered into with or granted to arm's length third parties in the ordinary course of business and in accordance with sound industry practice;
<BR><BR></FONT></DD><DT><FONT SIZE=2>(e)</FONT></DT><DD><FONT SIZE=2>liens
for penalties arising under non-participation provisions of operating agreements in respect of the Borrower's oil and gas properties, if such liens do not, in the
opinion of CIBC, materially detract from the value of any material part of the property of the Borrower;
<BR><BR></FONT></DD><DT><FONT SIZE=2>(f)</FONT></DT><DD><FONT SIZE=2>easements,
rights-of-way, servitudes, zoning or other similar rights or restrictions in respect of land owned by the Borrower (including, without
limitation, rights-of-way and servitudes for railways, sewers, drains, pipe lines, gas and water mains, electric light and power and telephone or telegraph or cable television
conduits, poles, wires and cables) which, either alone or in the aggregate, do not, in the opinion of CIBC, materially detract from the value of such land or materially impair its use in the operation
of the business of the Borrower;
<BR><BR></FONT></DD><DT><FONT SIZE=2>(g)</FONT></DT><DD><FONT SIZE=2>any
lien or trust arising in connection with worker's compensation, unemployment insurance, pension and employment laws or regulations;
<BR><BR></FONT></DD><DT><FONT SIZE=2>(h)</FONT></DT><DD><FONT SIZE=2>the
right reserved to or vested in any municipality or governmental or other public authority by the terms of any lease, license, franchise, grant or permit acquired by the
Borrower, or by any statutory provision to terminate any such lease, license, franchise, grant or permit or to require annual or other periodic payments as a condition of the continuance thereof;
<BR><BR></FONT></DD><DT><FONT SIZE=2>(i)</FONT></DT><DD><FONT SIZE=2>all
reservations in the original grant from the Crown of any lands and premises or any interests therein and all statutory exceptions, qualifications and reservations in respect of
title;
<BR><BR></FONT></DD><DT><FONT SIZE=2>(j)</FONT></DT><DD><FONT SIZE=2>to
the extent a security interest is constituted or created thereby, any right of first refusal in favour of any Person granted in the ordinary course of business with respect to
the oil and gas properties of the Borrower;
<BR><BR></FONT></DD><DT><FONT SIZE=2>(k)</FONT></DT><DD><FONT SIZE=2>any
claim or encumbrance from time to time disclosed by the Borrower to CIBC and which is consented to in writing by CIBC;
<BR><BR></FONT></DD><DT><FONT SIZE=2>(l)</FONT></DT><DD><FONT SIZE=2>to
the extent a security interest is constituted or created thereby, sales of production made in the ordinary course of business, sale and leaseback transactions and purchase money
security interests on property other than property used by CIBC to establish the then applicable Borrowing Base; and
<BR><BR></FONT></DD><DT><FONT SIZE=2>(m)</FONT></DT><DD><FONT SIZE=2>public
and statutory liens not yet due arising by operation of law. </FONT><P><FONT SIZE=2>
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<A NAME="page_ki2257_1_13"> </A></FONT></P>

</DD></DL>
</UL>

<P><FONT SIZE=2><B><I>"Person"</I></B></FONT><FONT SIZE=2> is to be broadly interpreted and will include an individual, a corporation, a partnership, a trust, an unincorporated
organization, a joint venture, the government of a country or any political subdivision thereof, or an agency or department of any such government, and the executors, administrators or other legal
representatives of an individual in such capacity. </FONT></P>

<P><FONT SIZE=2><B><I>"Permitted Indebtedness"</I></B></FONT><FONT SIZE=2> means: </FONT></P>

<UL>
<DL compact>
<DT><FONT SIZE=2>(a)</FONT></DT><DD><FONT SIZE=2>all
trade payables and other similar indebtedness of the Borrower not past due by more than 60&nbsp;days (other than indebtedness for borrowed money) incurred in the normal course
of business, provided each such indebtedness is classified as a current liability on the Borrowers' financial statements and based on generally accepted accounting principles in Canada;
<BR><BR></FONT></DD><DT><FONT SIZE=2>(b)</FONT></DT><DD><FONT SIZE=2>all
indebtedness of the Borrower to CIBC and/or PLC under this Financing Commitment;
<BR><BR></FONT></DD><DT><FONT SIZE=2>(c)</FONT></DT><DD><FONT SIZE=2>all
indebtedness arising from the sale and leaseback by the Borrower of personal property to be used in its ongoing oil and gas operations, provided such indebtedness does not in
the aggregate exceed at any one time 5% of the then applicable Borrowing Base; and
<BR><BR></FONT></DD><DT><FONT SIZE=2>(d)</FONT></DT><DD><FONT SIZE=2>any
other indebtedness of the Borrower consented to in writing by CIBC. </FONT></DD></DL>
</UL>

<P><FONT SIZE=2><B><I>"Principal Indebtedness"</I></B></FONT><FONT SIZE=2> means at anytime the outstanding principal indebtedness owed by the Borrower to CIBC and/or PLC under
this Financing Commitment, including, without limitation, any contingent obligations or exposure of CIBC and/or PLC arising from the Sundry Options or Availments pursuant to the Swap Facility. </FONT></P>

<P><FONT SIZE=2><B><I>"Property Disposition"</I></B></FONT><FONT SIZE=2> means any sale, transfer or swap of, grant of a security interest in or loss, destruction or any other
disposition whatsoever, whether voluntary or involuntary, of any of the Borrower's oil and gas properties used in the determination of the Borrowing Base. </FONT></P>

<P><FONT SIZE=2><B><I>"Proved Producing Reserves"</I></B></FONT><FONT SIZE=2> means those oil and gas reserves estimated as recoverable under current technology and existing
economic conditions from that portion of a reservoir which can be reasonably evaluated as economically productive on the basis of analysis of drilling, geological, geophysical and engineering data,
including reserves to be obtained by enhanced recovery processes demonstrated to be economic and technically successful in the subject reservoir and which are actually on production. </FONT></P>

<P><FONT SIZE=2><B><I>"Quarter"</I></B></FONT><FONT SIZE=2> means a 3&nbsp;month period commencing on the first day of each and every January, April, July and October. </FONT></P>

<P><FONT SIZE=2><B><I>"U.S. Dollars"</I></B></FONT><FONT SIZE=2> means such currency of the United States of America which, as at the time of payment or determination, is legal
tender in the United States of America for the payment of public or private debts. </FONT></P>

<P><FONT SIZE=2><B><I>"Voting Shares"</I></B></FONT><FONT SIZE=2> means shares of capital stock of any class of any corporation carrying voting rights under all circumstances,
provided that, for the purposes of this definition, shares which only carry the right to vote conditionally on the happening of an event shall not be considered Voting Shares, whether or not such
event shall have occurred, nor shall any shares be deemed to cease to be Voting Shares of another class or classes by reason of the happening of such event. </FONT></P>

<P><FONT SIZE=2><B>1.2</B></FONT><FONT SIZE=2><B><I>&nbsp;&nbsp;Number.</I></B></FONT><FONT SIZE=2>&nbsp;&nbsp;Wherever the context of this Financing Commitment so requires, a term used herein
importing the singular shall also include the plural and vice versa. </FONT></P>

<P><FONT SIZE=2><B>1.3</B></FONT><FONT SIZE=2><B><I>&nbsp;&nbsp;Monetary References.</I></B></FONT><FONT SIZE=2>&nbsp;&nbsp;Whenever an amount of money is referred to in this Financing Commitment
or any document entered into pursuant hereto, such amount shall, unless otherwise expressly stated, be in Cdn. Dollars. </FONT></P>

<P><FONT SIZE=2><B>1.4</B></FONT><FONT SIZE=2><B><I>&nbsp;&nbsp;Time.</I></B></FONT><FONT SIZE=2>&nbsp;&nbsp;Time shall be of the essence in this Financing Commitment. </FONT></P>

<P><FONT SIZE=2><B>1.5</B></FONT><FONT SIZE=2><B><I>&nbsp;&nbsp;Governing Law.</I></B></FONT><FONT SIZE=2>&nbsp;&nbsp;This Financing Commitment shall be governed by and construed in accordance
with the laws in force in the Province of Alberta from time to time. </FONT></P>

<P><FONT SIZE=2>
<!-- ZEQ.=4,SEQ=13,EFW="2063516",CP="CARBON ENERGY CORPORATION",DN="2",CHK=193654,FOLIO='13',FILE='DISK030:[01DEN7.01DEN2257]KI2257A.;24',USER='RJEDLIC',CD='14-NOV-2001;01:57' -->
<A NAME="page_ki2257_1_14"> </A></FONT> <FONT SIZE=2><B>1.6</B></FONT><FONT SIZE=2><B><I>&nbsp;&nbsp;Enurement.</I></B></FONT><FONT SIZE=2>&nbsp;&nbsp;This Financing Commitment shall be binding upon and shall enure to the benefit of
the Borrower and its respective successors and permitted assigns. </FONT></P>

<P><FONT SIZE=2><B>1.7</B></FONT><FONT SIZE=2><B><I>&nbsp;&nbsp;Amendments.</I></B></FONT><FONT SIZE=2>&nbsp;&nbsp;This Financing Commitment may only be amended by an instrument in writing signed
by the parties. </FONT></P>

<P><FONT SIZE=2><B>1.8</B></FONT><FONT SIZE=2><B><I>&nbsp;&nbsp;No Waiver.</I></B></FONT><FONT SIZE=2>&nbsp;&nbsp;</FONT></P>

<UL>
<DL compact>
<DT><FONT SIZE=2>(a)</FONT></DT><DD><FONT SIZE=2>No
waiver by a party of any provision or of the breach of any provision of any of this Financing Commitment shall be effective unless it is contained in a written instrument duly
executed by an authorized officer or representative of such party. Such written waiver shall affect only the matter specifically identified in the instrument granting the waiver and shall not extend
to any other matter, provision or breach.
<BR><BR></FONT></DD><DT><FONT SIZE=2>(b)</FONT></DT><DD><FONT SIZE=2>The
failure of a party to take any steps in exercising any right in respect of the breach or nonfulfillment of any provision of any of this Financing Commitment shall not operate as
a waiver of that right, breach or provision, nor shall any single or partial exercise of any right preclude any other or future exercise of that right or the exercise of any other right, whether in
law or otherwise. </FONT></DD></DL>
</UL>

<P><FONT SIZE=2><B>1.9</B></FONT><FONT SIZE=2><B><I>&nbsp;&nbsp;Severability.</I></B></FONT><FONT SIZE=2>&nbsp;&nbsp;If the whole or any portion of this Financing Commitment or the application
thereof to any circumstance shall be held invalid or unenforceable to an extent that does not affect the operation of this Financing Commitment in a fundamental way, the remainder of the provision in
question, or its
application to any circumstance other than that to which it has been held invalid or unenforceable, and the remainder of this Financing Commitment, shall not be affected thereby and shall be valid and
enforceable to the fullest extent permitted by law. </FONT></P>

<P><FONT SIZE=2><B>1.10</B></FONT><FONT SIZE=2><B><I>&nbsp;&nbsp;Accounting Terms and Principles.</I></B></FONT><FONT SIZE=2>&nbsp;&nbsp;Except as otherwise expressly provided, all accounting
terms, principles and calculations applicable to this Financing Commitment, including the financial statements of the Borrower shall be interpreted, applied and calculated, as the case may be, in
accordance with Canadian generally accepted accounting principles. The basis of accounting shall be applied and made on a consistent basis and shall not be changed unless agreed to by CIBC in writing,
such consent not to be unreasonably withheld. </FONT></P>

<P ALIGN="CENTER"><FONT SIZE=2><A
NAME="ki2257_article_2_funding_and_other_mechanics"> </A>
<A NAME="toc_ki2257_2"> </A>
<BR></FONT><FONT SIZE=2><B>ARTICLE&nbsp;2    <BR>    <BR>    FUNDING AND OTHER MECHANICS    <BR>  </B></FONT></P>

<P><FONT SIZE=2><B>2.1</B></FONT><FONT SIZE=2><B><I>&nbsp;&nbsp;Funding of Availments.</I></B></FONT><FONT SIZE=2>&nbsp;&nbsp;Where applicable, all Availments requested by the Borrower shall be
made available by deposit of the applicable funds into the appropriate Borrower's account for value on the Banking Day on which the advance is to take place. </FONT></P>

<P><FONT SIZE=2><B>2.2</B></FONT><FONT SIZE=2><B><I>&nbsp;&nbsp;Notice Provisions.</I></B></FONT><FONT SIZE=2>&nbsp;&nbsp;Availments shall be made available to the Borrower provided a notice of
borrowing is received from the Borrower by CIBC, with respect to Availments in excess of $5,000,000 in the applicable currency, no later than 10:00&nbsp;a.m. Calgary, Alberta time on the second
Banking Day immediately preceding the drawdown date. Any such notice may be given by the Borrower, at its sole risk, to CIBC by telephone and in such case shall be immediately followed by the Borrower
delivering to CIBC on the same day the written notice required hereunder confirming such instructions. </FONT></P>

<P><FONT SIZE=2><B>2.3</B></FONT><FONT SIZE=2><B><I>&nbsp;&nbsp;Irrevocability.</I></B></FONT><FONT SIZE=2>&nbsp;&nbsp;A notice of borrowing shall be in such form as the Borrower and CIBC agree
and when given by the Borrower shall be irrevocable and shall oblige the Borrower and CIBC to take the action contemplated herein and therein on the date specified therein. </FONT></P>


<P><FONT SIZE=2><B>2.4</B></FONT><FONT SIZE=2><B><I>&nbsp;&nbsp;Exchange Rate Fluctuations.</I></B></FONT><FONT SIZE=2>&nbsp;&nbsp;If as a result of currency fluctuation the Cdn. Dollar Exchange
Equivalent of the Principal Indebtedness exceeds the then applicable Borrowing Base (the "Excess"), the Borrower shall forthwith pay the Excess to CIBC as a repayment of principal. </FONT></P>

<P ALIGN="CENTER"><FONT SIZE=2>
<!-- ZEQ.=5,SEQ=14,EFW="2063516",CP="CARBON ENERGY CORPORATION",DN="2",CHK=525223,FOLIO='14',FILE='DISK030:[01DEN7.01DEN2257]KI2257A.;24',USER='RJEDLIC',CD='14-NOV-2001;01:57' -->
<A NAME="page_ki2257_1_15"> </A></FONT></P>

<P ALIGN="CENTER"><FONT SIZE=2><A
NAME="ki2257_article_3_calculation_of_interest_and_fees"> </A>
<A NAME="toc_ki2257_3"> </A>
<BR></FONT><FONT SIZE=2><B>ARTICLE&nbsp;3    <BR>    <BR>    CALCULATION OF INTEREST AND FEES    <BR>  </B></FONT></P>

<P><FONT SIZE=2><B>3.1</B></FONT><FONT SIZE=2><B><I>&nbsp;&nbsp;Records.</I></B></FONT><FONT SIZE=2>&nbsp;&nbsp;CIBC shall maintain records, in written or electronic form, evidencing all advances
and all other indebtedness owing by the Borrower to CIBC under this Financing Commitment. CIBC shall enter in such records details of all amounts from time to time owing, paid or prepaid by the
Borrower to it hereunder. The information entered in such records shall constitute prima facie evidence of the indebtedness of the Borrower to CIBC under this Financing Commitment. </FONT></P>

<P><FONT SIZE=2><B>3.2</B></FONT><FONT SIZE=2><B><I>&nbsp;&nbsp;Payment of Interest and Fees.</I></B></FONT><FONT SIZE=2>&nbsp;&nbsp;</FONT></P>

<UL>
<DL compact>
<DT><FONT SIZE=2>(a)</FONT></DT><DD><FONT SIZE=2><B><I>Interest.&nbsp;&nbsp;</I></B></FONT><FONT SIZE=2>Except as expressly stated otherwise herein, all CIBC Prime Rate loans and U.S. Base Rate loans from time
to time outstanding hereunder shall bear interest, as well after as before maturity, default and judgment, with interest on overdue interest, at the applicable rates. Interest payable at a variable
rate shall be adjusted automatically without notice to the Borrower whenever there is a variation in such rate.
<BR><BR></FONT></DD><DT><FONT SIZE=2>(b)</FONT></DT><DD><FONT SIZE=2><B><I>Calculation of Interest and Stamping Fees.&nbsp;&nbsp;</I></B></FONT><FONT SIZE=2>Interest on CIBC Prime Rate loans, and U.S. Base Rate loans shall accrue
and be calculated daily and be payable on such Banking Day as is customary for CIBC having regard to its then existing practice. Interest on CIBC Prime Rate loans and U.S. Base Rate loans shall be
calculated on the basis of a 365&nbsp;day year.
<BR><BR></FONT></DD><DT><FONT SIZE=2>(c)</FONT></DT><DD><FONT SIZE=2><B><I>Interest Act (Canada).&nbsp;&nbsp;</I></B></FONT><FONT SIZE=2>For the purposes of the Interest Act (Canada) and all other applicable laws which may
hereafter regulate the calculation or computation of interest in this Financing Commitment, the annual rates of interest and fees applicable to CIBC Prime Rate loans and U.S. Base Rate loans,
respectively, are the rates as determined under this Financing Commitment multiplied by the actual number of days in a period of one year commencing on the first day of the period for which such
interest or stamping fee is payable and divided by 365. </FONT></DD></DL>
</UL>

<P><FONT SIZE=2><B>3.3</B></FONT><FONT SIZE=2><B><I>&nbsp;&nbsp;Conversion to Another Currency.</I></B></FONT><FONT SIZE=2>&nbsp;&nbsp;A conversion of an advance from one currency to another
currency shall not be made by a netting out of funds unless agreed upon by CIBC. </FONT></P>

<P><FONT SIZE=2><B>3.4</B></FONT><FONT SIZE=2><B><I>&nbsp;&nbsp;Waiver of Judgment Interest Act (Alberta).</I></B></FONT><FONT SIZE=2>&nbsp;&nbsp;To the extent permitted by applicable law, the
provisions of the Judgment Interest Act (Alberta) shall not apply to this Financing Commitment and are hereby expressly waived by the Borrower. </FONT></P>

<P><FONT SIZE=2><B>3.5</B></FONT><FONT SIZE=2><B><I>&nbsp;&nbsp;Deemed Reinvestment Not Applicable.</I></B></FONT><FONT SIZE=2>&nbsp;&nbsp;For the purposes of the Interest Act (Canada), the
principle of deemed reinvestment of interest shall not apply to any interest calculation under this Financing Commitment and the rates of interest stipulated in this Financing Commitment are intended
to be nominal rates and not effective rates or yields. </FONT></P>

<P ALIGN="CENTER"><FONT SIZE=2><A
NAME="ki2257_article_4_letters_of_credit_and_letters_of_guarantee"> </A>
<A NAME="toc_ki2257_4"> </A>
<BR></FONT><FONT SIZE=2><B>ARTICLE&nbsp;4    <BR>    <BR>    LETTERS OF CREDIT AND LETTERS OF GUARANTEE    <BR>  </B></FONT></P>

<P><FONT SIZE=2><B>4.1</B></FONT><FONT SIZE=2><B><I>&nbsp;&nbsp;Conditions Precedent to Issuance.</I></B></FONT><FONT SIZE=2>&nbsp;&nbsp;CIBC shall issue letters of credit and give letters of
guarantee on behalf of the Borrower upon execution by the Borrower of CIBC's standard forms applicable thereto. </FONT></P>

<P><FONT SIZE=2><B>4.2</B></FONT><FONT SIZE=2><B><I>&nbsp;&nbsp;Issuance Fees.</I></B></FONT><FONT SIZE=2>&nbsp;&nbsp;</FONT></P>

<UL>
<DL compact>
<DT><FONT SIZE=2>(a)</FONT></DT><DD><FONT SIZE=2>The
Borrower shall pay to CIBC an issuance fee in respect of each outstanding letter of credit and letter of guarantee at CIBC's standard charges applicable thereto provided that
such fee shall be in a minimum amount of $150.
<BR><BR></FONT></DD><DT><FONT SIZE=2>(b)</FONT></DT><DD><FONT SIZE=2>Issuance
fees in respect of letters of credit and letters of guarantee shall be calculated on the face amount thereof and shall be payable annually in advance commencing on the date
of issuance. If any letter of credit or letter of guarantee is cancelled, there shall be a rebate of </FONT><P><FONT SIZE=2>
<!-- ZEQ.=6,SEQ=15,EFW="2063516",CP="CARBON ENERGY CORPORATION",DN="2",CHK=1025599,FOLIO='15',FILE='DISK030:[01DEN7.01DEN2257]KI2257A.;24',USER='RJEDLIC',CD='14-NOV-2001;01:57' -->
<A NAME="page_ki2257_1_16"> </A></FONT></P>

<P><FONT SIZE=2>such
fee to take into account the number of days remaining in the annual period of its cancellation. </FONT></P>

</DD></DL>
</UL>

<P><FONT SIZE=2><B>4.3</B></FONT><FONT SIZE=2><B><I>&nbsp;&nbsp;Payments Pursuant to Letters of Credit and Letters of Guarantee.</I></B></FONT><FONT SIZE=2>&nbsp;&nbsp;The Borrower shall
forthwith reimburse CIBC for any payment made by it pursuant to a letter of credit or letter of guarantee issued under the Facility either by: </FONT></P>

<UL>
<UL>
<DL compact>
<DT><FONT SIZE=2>(i)</FONT></DT><DD><FONT SIZE=2>payment
thereof in full; or
<BR><BR></FONT></DD><DT><FONT SIZE=2>(ii)</FONT></DT><DD><FONT SIZE=2>utilization
of another Availment; or
<BR><BR></FONT></DD><DT><FONT SIZE=2>(iii)</FONT></DT><DD><FONT SIZE=2>a
combination of payment and utilization of another Availment. </FONT></DD></DL>
</UL>
</UL>

<P><FONT SIZE=2><B>4.4</B></FONT><FONT SIZE=2><B><I>&nbsp;&nbsp;Reliance.</I></B></FONT><FONT SIZE=2>&nbsp;&nbsp;CIBC shall be entitled to honour each demand made under a letter of credit or
letter of guarantee in accordance with the terms thereof without inquiring as to the propriety, sufficiency or genuineness of any such demand, provided that if the letter of credit or letter of
guarantee is a documentary letter of credit or letter of guarantee, CIBC must receive to CIBC's satisfaction the required documents in the prescribed form under applicable law prior to honouring any
such demand. </FONT></P>

<P ALIGN="CENTER"><FONT SIZE=2><A
NAME="ki2257_article_5_increased_costs"> </A>
<A NAME="toc_ki2257_5"> </A>
<BR></FONT><FONT SIZE=2><B>ARTICLE&nbsp;5    <BR>    <BR>    INCREASED COSTS    <BR>  </B></FONT></P>

<P><FONT SIZE=2><B>5.1</B></FONT><FONT SIZE=2><B><I>&nbsp;&nbsp;Changes in Law.</I></B></FONT><FONT SIZE=2>&nbsp;&nbsp;</FONT></P>

<UL>
<DL compact>
<DT><FONT SIZE=2>(a)</FONT></DT><DD><FONT SIZE=2>If
due to either:
<BR><BR></FONT>
<DL compact>
<DT><FONT SIZE=2>(i)</FONT></DT><DD><FONT SIZE=2>the
introduction of, or any change in, or in the interpretation of any law, whether having the force of law or not, resulting in the imposition or
increase of reserves, deposits or similar requirements by any central bank or administrative body charged with the administration thereof; or
<BR><BR></FONT></DD><DT><FONT SIZE=2>(ii)</FONT></DT><DD><FONT SIZE=2>the
compliance with any guideline or request from any central bank or other administrative body which CIBC, acting reasonably, determines that it
is required to comply with, </FONT></DD></DL>
</DD></DL>
</UL>
<UL>
<UL>

<P><FONT SIZE=2>there
shall be any increase in the cost to CIBC of agreeing to make or making, funding or maintaining this Financing Commitment or there shall be any reduction in the effective return to CIBC
thereunder, then, subject to the paragraph&nbsp;below, the Borrower shall, within 5 Banking Days after being notified by CIBC of such event, pay to CIBC quarterly in arrears, that amount (the
"Additional Compensation") which CIBC, acting reasonably, determines shall compensate it, after taking into account all applicable taxes, for any such increased costs or reduced returns incurred or
suffered by CIBC. </FONT></P>

</UL>
<DL compact>
<DT><FONT SIZE=2>(b)</FONT></DT><DD><FONT SIZE=2>If
Additional Compensation is payable pursuant to the above paragraph, the Borrower shall have the option to prepay any amount of the Principal Indebtedness owed to CIBC, subject to
provisions herein. </FONT></DD></DL>
</UL>

<P><FONT SIZE=2><B>5.2</B></FONT><FONT SIZE=2><B><I>&nbsp;&nbsp;Changes in Circumstances.</I></B></FONT><FONT SIZE=2>&nbsp;&nbsp;Notwithstanding anything to the contrary herein contained, if on
any date CIBC determines in good faith, which determination shall be conclusive and binding on the parties, and provided written notice is given to the Borrower that its ability to maintain, or
continue to offer any Availment has become unlawful or impossible due to: </FONT></P>

<UL>
<DL compact>
<DT><FONT SIZE=2>(a)</FONT></DT><DD><FONT SIZE=2>any
change in applicable laws, or in the interpretation or administration thereof by authorities having jurisdiction in the matter; or
<BR><BR></FONT></DD><DT><FONT SIZE=2>(b)</FONT></DT><DD><FONT SIZE=2>the
imposition of any condition, restriction or limitation upon CIBC which is outside of its control, </FONT></DD></DL>
</UL>

<P><FONT SIZE=2>then,
in any such case, the Borrower shall forthwith repay to CIBC all principal amounts affected thereby, together with all unpaid interest accrued thereon to the date of repayment and all other </FONT></P>


<P><FONT SIZE=2>
<!-- ZEQ.=7,SEQ=16,EFW="2063516",CP="CARBON ENERGY CORPORATION",DN="2",CHK=407819,FOLIO='16',FILE='DISK030:[01DEN7.01DEN2257]KI2257A.;24',USER='RJEDLIC',CD='14-NOV-2001;01:57' -->
<A NAME="page_ki2257_1_17"> </A></FONT> <FONT SIZE=2>
expenses incurred in connection with the termination of any such Availment. The Borrower may utilize other forms of Availments not so affected in order to make any required repayment and after any
such repayment, the Borrower may elect to re-borrow the amount repaid by way of some other Availment upon complying with applicable requirements thereof. </FONT></P>

<P ALIGN="CENTER"><FONT SIZE=2><A
NAME="ki2257_article_6_representatio__ki202328"> </A>
<A NAME="toc_ki2257_6"> </A>
<BR></FONT><FONT SIZE=2><B>ARTICLE&nbsp;6    <BR>    <BR>    REPRESENTATIONS AND WARRANTIES OF THE BORROWER    <BR>  </B></FONT></P>

<P><FONT SIZE=2><B>6.1</B></FONT><FONT SIZE=2><B><I>&nbsp;&nbsp;Representations and Warranties.</I></B></FONT><FONT SIZE=2>&nbsp;&nbsp;The Borrower hereby represents and warrants to CIBC as of
the date of this Financing Commitment and each time the Borrower requests an Availment that: </FONT></P>

<UL>
<DL compact>
<DT><FONT SIZE=2>(a)</FONT></DT><DD><FONT SIZE=2><B><I>Incorporation, Organization and Power.&nbsp;&nbsp;</I></B></FONT><FONT SIZE=2>The Borrower has been duly incorporated and is validly existing under the laws
of its jurisdiction of incorporation and is duly registered to carry on business in each jurisdiction in Canada in which the nature of any material business carried on by it or the character of any
property owned or leased by it makes such registration necessary, and it has full corporate power and capacity to enter into and perform its obligations under this Financing Commitment and to carry on
its business as currently conducted.
<BR><BR></FONT></DD><DT><FONT SIZE=2>(b)</FONT></DT><DD><FONT SIZE=2><B><I>Authorization and Status of Agreements.&nbsp;&nbsp;</I></B></FONT><FONT SIZE=2>This Financing Commitment and the Security have been duly authorized,
executed and delivered by the Borrower and does not conflict with or contravene or constitute a default or create an encumbrance, other than a Permitted Encumbrance, under:
<BR><BR></FONT>
<DL compact>
<DT><FONT SIZE=2>(i)</FONT></DT><DD><FONT SIZE=2>its
constating documents or by-laws or any resolution of its directors or partners, as the case may be;
<BR><BR></FONT></DD><DT><FONT SIZE=2>(ii)</FONT></DT><DD><FONT SIZE=2>any
agreement or document to which it is a party or by which any of its property is bound; or
<BR><BR></FONT></DD><DT><FONT SIZE=2>(iii)</FONT></DT><DD><FONT SIZE=2>any
applicable law </FONT></DD></DL>
</DD></DL>
</UL>
<UL>
<UL>

<P><FONT SIZE=2>the
contravention of which would have a Material Adverse Effect. </FONT></P>

</UL>
<DL compact>
<DT><FONT SIZE=2>(c)</FONT></DT><DD><FONT SIZE=2><B><I>Enforceability.&nbsp;&nbsp;</I></B></FONT><FONT SIZE=2>Security constitutes the Borrower's valid and binding obligations and each is enforceable against it
in accordance with its terms, except to the extent that enforceability may be limited by applicable bankruptcy, insolvency, reorganization, or similar statutes affecting the enforcement of creditors'
rights generally and by general principles of equity.
<BR><BR></FONT></DD><DT><FONT SIZE=2>(d)</FONT></DT><DD><FONT SIZE=2><B><I>Litigation.&nbsp;&nbsp;</I></B></FONT><FONT SIZE=2>There are no actions, suits or proceedings at law or before or by any administrative body existing or
pending, or to the Borrower's knowledge threatened, or which, to the Borrower's knowledge, it is threatened to be made a party and the result of which would, if successful against it, have a Material
Adverse Effect or cause a Material Adverse Change.
<BR><BR></FONT></DD><DT><FONT SIZE=2>(e)</FONT></DT><DD><FONT SIZE=2><B><I>Environmental Laws.&nbsp;&nbsp;</I></B></FONT><FONT SIZE=2>The Borrower has obtained all material permits, licenses and other authorizations which are
required under environmental laws. The Borrower is in full compliance with environmental laws and with the terms and conditions of all such permits, licenses and authorizations, except to the extent
that failure to so comply would not have a Material Adverse Effect or cause a Material Adverse Change.
<BR><BR></FONT></DD><DT><FONT SIZE=2>(f)</FONT></DT><DD><FONT SIZE=2><B><I>Environmental Condition of Property.&nbsp;&nbsp;</I></B></FONT><FONT SIZE=2>The property or any part thereof owned, operated or controlled by the Borrower:
<BR><BR></FONT>
<DL compact>
<DT><FONT SIZE=2>(i)</FONT></DT><DD><FONT SIZE=2>is
not, to the knowledge of the Borrower, the subject of any outstanding claim, charge or order from an administrative body alleging violation of
environmental laws or, if subject to any such claim, charge or order, the Borrower is taking or causing to be taken, with respect to its subsidiaries all such remedial, corrective or other action
required under the </FONT><P><FONT SIZE=2>
<!-- ZEQ.=8,SEQ=17,EFW="2063516",CP="CARBON ENERGY CORPORATION",DN="2",CHK=435156,FOLIO='17',FILE='DISK030:[01DEN7.01DEN2257]KI2257B.;7',USER='RJEDLIC',CD='14-NOV-2001;01:57' -->
<A NAME="page_ki2257_1_18"> </A></FONT></P>

<P><FONT SIZE=2>claim,
charge or order or is diligently and in good faith contesting or causing its subsidiaries to contest the validity thereof; and </FONT></P>

</DD><DT><FONT SIZE=2>(ii)</FONT></DT><DD><FONT SIZE=2>complies,
with respect to each of its use and operation, in all material respects with environmental laws and with the terms and conditions of all
permits, licenses and other authorizations which are required to be obtained by each of them under applicable environmental laws. </FONT></DD></DL>
</DD></DL>
</UL>
<BR>
<UL>
<DL compact>
<DT><FONT SIZE=2>(g)</FONT></DT><DD><FONT SIZE=2><B><I>Title to Properties.&nbsp;&nbsp;</I></B></FONT><FONT SIZE=2>The Borrower has and shall continue to maintain good, beneficial and valid title to its oil and
gas properties, subject only to Permitted Encumbrances, and is entitled to charge its interest in such properties in favour of CIBC under the Security without the need to obtain the consent of or
release from any other Person and such oil and gas properties are not held in trust for any other Person other than as disclosed in writing to CIBC.
<BR><BR></FONT></DD><DT><FONT SIZE=2>(h)</FONT></DT><DD><FONT SIZE=2><B><I>Operation of Properties.&nbsp;&nbsp;</I></B></FONT><FONT SIZE=2>To the best of the Borrower's knowledge, information and belief, after due enquiry, all oil,
gas and other wells have been and shall continue to be drilled, completed, shut-in, abandoned (and if required to be so abandoned, abandoned in accordance with applicable law), and the
facilities, plants and equipment in respect thereof have been and shall continue to be operated and maintained, as the case may be, in a good and workmanlike manner in accordance with sound industry
practice and in accordance with all applicable laws, except to the extent that the failure to comply would not have a Material Adverse Affect or cause a Material Adverse Change.
<BR><BR></FONT></DD><DT><FONT SIZE=2>(i)</FONT></DT><DD><FONT SIZE=2><B><I>No Adverse Change.&nbsp;&nbsp;</I></B></FONT><FONT SIZE=2>The most recent financial statements of the Borrower provided to CIBC were prepared in accordance
with United States generally accepted accounting principles and such financial
statements present fairly in all material respects the Borrower's financial position as at the date thereof and since that date there has been no Material Adverse Change.
<BR><BR></FONT></DD><DT><FONT SIZE=2>(j)</FONT></DT><DD><FONT SIZE=2><B><I>Information.&nbsp;&nbsp;</I></B></FONT><FONT SIZE=2>All factual information heretofore or contemporaneously furnished by or on behalf of the Borrower to
CIBC in connection with this Financing Commitment is true and accurate in all material respects and the Borrower is not aware of any omission of any material fact which renders such factual
information incomplete or misleading in any material way.
<BR><BR></FONT></DD><DT><FONT SIZE=2>(k)</FONT></DT><DD><FONT SIZE=2><B><I>No Breach of Orders, Licences or Statutes.&nbsp;&nbsp;</I></B></FONT><FONT SIZE=2>The Borrower is not in breach of:
<BR><BR></FONT>
<DL compact>
<DT><FONT SIZE=2>(i)</FONT></DT><DD><FONT SIZE=2>any
order, approval or mandatory requirement or directive of any administrative body;
<BR><BR></FONT></DD><DT><FONT SIZE=2>(ii)</FONT></DT><DD><FONT SIZE=2>any
governmental licence or permit; or
<BR><BR></FONT></DD><DT><FONT SIZE=2>(iii)</FONT></DT><DD><FONT SIZE=2>any
applicable law </FONT></DD></DL>
</DD></DL>
<UL>

<P><FONT SIZE=2>the
breach of which would have a Material Adverse Effect. </FONT></P>

</UL>
<DL compact>
<DT><FONT SIZE=2>(l)</FONT></DT><DD><FONT SIZE=2><B><I>No Default.&nbsp;&nbsp;</I></B></FONT><FONT SIZE=2>No Event of Default has occurred and no event with the passage of time or the giving of notice, or both,
has occurred which would become an Event of Default.
<BR><BR></FONT></DD><DT><FONT SIZE=2>(m)</FONT></DT><DD><FONT SIZE=2><B><I>Approvals.&nbsp;&nbsp;</I></B></FONT><FONT SIZE=2>All material regulatory approvals, permits and licenses necessary for the Borrower to carry on its
business, as currently carried on, and all approvals, and consents necessary for it to enter into this Financing Commitment and the Security and perform its obligations thereunder have, in each case,
been obtained and are in good standing.
<BR><BR></FONT></DD><DT><FONT SIZE=2>(n)</FONT></DT><DD><FONT SIZE=2><B><I>Subsidiaries.&nbsp;&nbsp;</I></B></FONT><FONT SIZE=2>The Borrower has no direct or indirect subsidiaries other than as disclosed in writing to CIBC.
<BR><BR></FONT></DD><DT><FONT SIZE=2>(o)</FONT></DT><DD><FONT SIZE=2><B><I>Ownership of Voting Shares.&nbsp;&nbsp;</I></B></FONT><FONT SIZE=2>The Voting Shares of the Borrower are 99.7% owned the Guarantor. </FONT><P><FONT SIZE=2>

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<A NAME="page_ki2257_1_19"> </A></FONT></P>

</DD><DT><FONT SIZE=2>(p)</FONT></DT><DD><FONT SIZE=2><B><I>Affiliates.&nbsp;&nbsp;</I></B></FONT><FONT SIZE=2>The Borrower's only affiliates (as such term as defined in the Business Corporations Act (Alberta)) are
Carbon Energy Corporation and Bonneville Fuels Corporation and its subsidiaries, Bonneville Fuels Operating Corporation, Bonneville Fuels Marketing Corporation, Bonneville Fuels Management Corporation
and Colorado Gathering Corporation. </FONT></DD></DL>
</UL>

<P><FONT SIZE=2><B>6.2</B></FONT><FONT SIZE=2><B><I>&nbsp;&nbsp;Acknowledgement.</I></B></FONT><FONT SIZE=2>&nbsp;&nbsp;The Borrower acknowledges that CIBC is relying upon the representations and
warranties in this Article&nbsp;6 in making this Financing Commitment available to the Borrower and that the representations and warranties herein shall be deemed to be restated in every respect
effective on the date each and every Availment is made under this Financing Commitment. </FONT></P>

<P ALIGN="CENTER"><FONT SIZE=2><A
NAME="ki2257_article_7_covenants_of_the_borrower"> </A>
<A NAME="toc_ki2257_7"> </A>
<BR></FONT><FONT SIZE=2><B>ARTICLE&nbsp;7    <BR>    <BR>    COVENANTS OF THE BORROWER    <BR>  </B></FONT></P>

<P><FONT SIZE=2><B>7.1</B></FONT><FONT SIZE=2><B><I>&nbsp;&nbsp;Affirmative Covenants.</I></B></FONT><FONT SIZE=2>&nbsp;&nbsp;While any indebtedness under this Financing Commitment and the
Security is outstanding or any of the Availments remains available to the Borrower and except with the written consent of CIBC, the Borrower covenants with CIBC that: </FONT></P>

<UL>
<DL compact>
<DT><FONT SIZE=2>(a)</FONT></DT><DD><FONT SIZE=2><B><I>Punctual Payment.&nbsp;&nbsp;</I></B></FONT><FONT SIZE=2>The Borrower shall pay or cause to be paid all indebtedness and other amounts payable under this
Financing Commitment and the Security punctually when due.
<BR><BR></FONT></DD><DT><FONT SIZE=2>(b)</FONT></DT><DD><FONT SIZE=2><B><I>Corporate Existence.&nbsp;&nbsp;</I></B></FONT><FONT SIZE=2>The Borrower shall do or shall cause to be done all things necessary to preserve and keep in
full force and effect its corporate existence in good standing as a corporation under the laws of its jurisdiction of incorporation.
<BR><BR></FONT></DD><DT><FONT SIZE=2>(c)</FONT></DT><DD><FONT SIZE=2><B><I>Inspection by CIBC.&nbsp;&nbsp;</I></B></FONT><FONT SIZE=2>The Borrower shall allow and do all things necessary to enable CIBC, acting reasonably, from time
to time to inspect all of the Borrower's corporate and financial records located at its plants and sites including where the Borrower may otherwise carry on business.
<BR><BR></FONT></DD><DT><FONT SIZE=2>(d)</FONT></DT><DD><FONT SIZE=2><B><I>Notice of Event of Default.&nbsp;&nbsp;</I></B></FONT><FONT SIZE=2>The Borrower shall notify CIBC of the occurrence of any Event of Default, or of any event
which with the passage of time or the giving of notice, or both, would become an Event of Default, forthwith upon becoming aware thereof and specify in such notice the nature of the event and the
steps taken or proposed to be taken to remedy the same.
<BR><BR></FONT></DD><DT><FONT SIZE=2>(e)</FONT></DT><DD><FONT SIZE=2><B><I>Notice of Environmental Damage.&nbsp;&nbsp;</I></B></FONT><FONT SIZE=2>The Borrower shall, promptly upon acquiring knowledge thereof, notify CIBC of the
discovery of any contaminant or of any release of a contaminant into the environment from or upon the land or property owned, operated or controlled by the Borrower which could reasonably be expected
to have a Material Adverse Effect.
<BR><BR></FONT></DD><DT><FONT SIZE=2>(f)</FONT></DT><DD><FONT SIZE=2><B><I>Environmental Certificates.&nbsp;&nbsp;</I></B></FONT><FONT SIZE=2>The Borrower shall provide an environmental certificate in CIBC's standard form to CIBC
at the same time as the delivery of its annual financial statements.
<BR><BR></FONT></DD><DT><FONT SIZE=2>(g)</FONT></DT><DD><FONT SIZE=2><B><I>Additional Environmental Information.&nbsp;&nbsp;</I></B></FONT><FONT SIZE=2>The Borrower shall upon the request of CIBC make available for discussion with
CIBC and its nominee at all reasonable times the individuals who were involved in the preparation of any environmental certificate given hereunder.
<BR><BR></FONT></DD><DT><FONT SIZE=2>(h)</FONT></DT><DD><FONT SIZE=2><B><I>Operation of Properties.&nbsp;&nbsp;</I></B></FONT><FONT SIZE=2>The Borrower shall operate its property or, if it is not the operator, use reasonable
efforts to ensure that such property is operated, in accordance with sound industry practice and in accordance with all applicable laws.
<BR><BR></FONT></DD><DT><FONT SIZE=2>(i)</FONT></DT><DD><FONT SIZE=2><B><I>Performance of Leases.&nbsp;&nbsp;</I></B></FONT><FONT SIZE=2>The Borrower shall perform or cause to be performed all obligations under all leases relating
to its oil and gas properties, including payment of rentals, royalties, taxes or other charges in respect thereof which are necessary to maintain all such leases in good standing in all material
respects, provided that this covenant shall not restrict their right to surrender leases which are uneconomic to maintain. </FONT><P><FONT SIZE=2>
<!-- ZEQ.=10,SEQ=19,EFW="2063516",CP="CARBON ENERGY CORPORATION",DN="2",CHK=942351,FOLIO='19',FILE='DISK030:[01DEN7.01DEN2257]KI2257B.;7',USER='RJEDLIC',CD='14-NOV-2001;01:57' -->
<A NAME="page_ki2257_1_20"> </A></FONT></P>

</DD><DT><FONT SIZE=2>(j)</FONT></DT><DD><FONT SIZE=2><B><I>Insurance.&nbsp;&nbsp;</I></B></FONT><FONT SIZE=2>The Borrower shall maintain or cause to be maintained adequate insurance in respect of its property,
including all wellhead equipment and other plant and equipment according to prudent industry standards, and shall provide CIBC with copies of all insurance policies relating thereto if so requested.
<BR><BR></FONT></DD><DT><FONT SIZE=2>(k)</FONT></DT><DD><FONT SIZE=2><B><I>Material Adverse Claims.&nbsp;&nbsp;</I></B></FONT><FONT SIZE=2>The Borrower shall, except for Permitted Encumbrances, defend its property from all material
adverse claims where the failure to do so may have a Material Adverse Effect.
<BR><BR></FONT></DD><DT><FONT SIZE=2>(l)</FONT></DT><DD><FONT SIZE=2><B><I>Protection of Security.&nbsp;&nbsp;</I></B></FONT><FONT SIZE=2>The Borrower shall do all things reasonably requested by CIBC to protect and maintain the
Security and the priority thereof in relation to other Persons.
<BR><BR></FONT></DD><DT><FONT SIZE=2>(m)</FONT></DT><DD><FONT SIZE=2><B><I>Environmental Audit.&nbsp;&nbsp;</I></B></FONT><FONT SIZE=2>If CIBC, acting reasonably, determines that the Borrower's obligations or other liabilities in
respect of matters dealing with the protection or contamination of the environment or the maintenance of health and safety standards, whether contingent or actual, may have a Material Adverse Effect
then, at the request of CIBC, the Borrower shall assist CIBC in conducting an environmental audit of the property which is the subject matter of such contingent or actual obligations or liabilities,
by an independent consultant selected by CIBC. The cost of such audit shall be for the account of the Borrower, provided that, CIBC shall carry out such audit in consultation with the Borrower to
expedite its completion in a cost effective manner. Should the result of such audit indicate that the Borrower is in breach, or with the passage of time is likely to be in breach, of any environment
law and such breach or potential breach has or may have, in the opinion of CIBC, acting reasonably, a Material Adverse Effect, and without in any way prejudicing or suspending any of the rights and
remedies of CIBC under this Financing Commitment, the Borrower shall forthwith commence and diligently proceed to rectify or cause to be rectified such breach or potential breach, as the case may be,
and shall keep CIBC fully advised of the actions it intends to take and has taken to rectify such breach or potential breach and the progress it is making in rectifying same. CIBC shall be permitted
to retain, for the account of the Borrower, the services of a consultant to monitor the Borrower's compliance with this Section&nbsp;7.1(m).
<BR><BR></FONT></DD><DT><FONT SIZE=2>(n)</FONT></DT><DD><FONT SIZE=2><B><I>Other Information.&nbsp;&nbsp;</I></B></FONT><FONT SIZE=2>The Borrower shall provide to CIBC, at the request of CIBC acting reasonably, such other
documentation and information concerning the Borrower and its business as CIBC may require.
<BR><BR></FONT></DD><DT><FONT SIZE=2>(o)</FONT></DT><DD><FONT SIZE=2><B><I>Security.&nbsp;&nbsp;</I></B></FONT><FONT SIZE=2>The Security shall be in such form or forms as shall be required by CIBC acting reasonably, and shall be
registered in such offices in Canada or any Province thereof or in any other jurisdiction in which the Borrower carries on business as CIBC may from time to time require to protect the security
interests created thereby. Should CIBC determine at any time and from time to time that the form and nature of the then existing Security is deficient in any way or does not fully provide CIBC with
the security interests and priority to which CIBC is entitled hereunder, the Borrower shall forthwith execute and deliver or cause to be executed and delivered to CIBC, at the Borrower's expense, such
amendments to the Security or provide such new security as CIBC may reasonably request.
<BR><BR></FONT></DD><DT><FONT SIZE=2>(p)</FONT></DT><DD><FONT SIZE=2><B><I>Fixed Charge Security.&nbsp;&nbsp;</I></B></FONT><FONT SIZE=2>If CIBC determines in its sole discretion that there has been a Material Adverse Change
(including the occurrence of a Borrowing Base Shortfall) and CIBC considers it necessary for its adequate protection, the Borrower, at the request of CIBC, shall forthwith grant or cause to be granted
to CIBC and/or PLC, a fixed charge and security interest (subject only to Permitted Encumbrances which under applicable law rank in priority thereto) in such of the Borrower's property as CIBC shall,
in its sole discretion, determine as security for all then present and future indebtedness of the Borrower to CIBC and/or PLC under this Financing Commitment. In this connection, the Borrower shall:
<BR><BR></FONT>
<DL compact>
<DT><FONT SIZE=2>(i)</FONT></DT><DD><FONT SIZE=2>provide
CIBC with such information as is reasonably required by CIBC to identify the property to be so charged; </FONT><P><FONT SIZE=2>
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<A NAME="page_ki2257_1_21"> </A></FONT></P>

</DD><DT><FONT SIZE=2>(ii)</FONT></DT><DD><FONT SIZE=2>do
all such things as are reasonably required to grant in favour of CIBC and/or PLC, a fixed charge and security interest (subject only to
Permitted Encumbrances which under applicable law rank in priority thereto) in respect of such property to be so charged;
<BR><BR></FONT></DD><DT><FONT SIZE=2>(iii)</FONT></DT><DD><FONT SIZE=2>provide
CIBC and/or PLC with all corporate resolutions and other action, as reasonably required for the Borrower, to grant to CIBC and/or PLC a
fixed charge and security interest (subject only to Permitted Encumbrances which under applicable law rank in priority thereto) in their respective property identified by CIBC to be so charged;
<BR><BR></FONT></DD><DT><FONT SIZE=2>(iv)</FONT></DT><DD><FONT SIZE=2>provide
CIBC and/or PLC with such security instruments and other documents which CIBC, acting reasonably, deems are necessary to give full force
and effect to the provisions of this Section&nbsp;7.1(p);
<BR><BR></FONT></DD><DT><FONT SIZE=2>(v)</FONT></DT><DD><FONT SIZE=2>assist
CIBC and/or PLC in the registration or recording of such agreements and instruments in such public registry offices in Canada or any Province
thereof as CIBC, acting reasonably, deems necessary to give full force and effect to these provisions; and
<BR><BR></FONT></DD><DT><FONT SIZE=2>(vi)</FONT></DT><DD><FONT SIZE=2>pay
all reasonable costs and expenses incurred by CIBC and/or PLC in connection with the preparation, execution and registration of all agreements,
documents and instruments, including any amendments to the Security, made in connection herewith. </FONT></DD></DL>
</DD></DL>
</UL>

<P><FONT SIZE=2><B>7.2</B></FONT><FONT SIZE=2><B><I>&nbsp;&nbsp;Negative Covenants.</I></B></FONT><FONT SIZE=2>&nbsp;&nbsp;While any indebtedness under this Financing Commitment and the Security
is outstanding or any of the Availments remain available to the Borrower, and except with the prior written consent of CIBC, such consent not to be unreasonably withheld, the Borrower shall not: </FONT></P>

<UL>
<DL compact>
<DT><FONT SIZE=2>(a)</FONT></DT><DD><FONT SIZE=2>incur
indebtedness except for Permitted Indebtedness;
<BR><BR></FONT></DD><DT><FONT SIZE=2>(b)</FONT></DT><DD><FONT SIZE=2>provide
or permit a security interest or lien over its property, except for Permitted Encumbrances;
<BR><BR></FONT></DD><DT><FONT SIZE=2>(c)</FONT></DT><DD><FONT SIZE=2>make
any Distribution;
<BR><BR></FONT></DD><DT><FONT SIZE=2>(d)</FONT></DT><DD><FONT SIZE=2>merge,
amalgamate, or consolidate with another Person or permit a Change of Control;
<BR><BR></FONT></DD><DT><FONT SIZE=2>(e)</FONT></DT><DD><FONT SIZE=2>make
any material change in the nature of its business as now carried on;
<BR><BR></FONT></DD><DT><FONT SIZE=2>(f)</FONT></DT><DD><FONT SIZE=2>make
material investments or enter into ventures of a material nature which are outside the scope of their normal course of business;
<BR><BR></FONT></DD><DT><FONT SIZE=2>(g)</FONT></DT><DD><FONT SIZE=2>grant
a security interest or lien over any shares it owns, either directly or indirectly, in any of its subsidiaries, if any, other than pursuant to the Security; and
<BR><BR></FONT></DD><DT><FONT SIZE=2>(h)</FONT></DT><DD><FONT SIZE=2>make
any sale or disposition of its property, other than in the ordinary course of business. </FONT></DD></DL>
</UL>
<P ALIGN="CENTER"><FONT SIZE=2><A
NAME="ki2257_article_8_events_of_default"> </A>
<A NAME="toc_ki2257_8"> </A>
<BR></FONT><FONT SIZE=2><B>ARTICLE&nbsp;8    <BR>    <BR>    EVENTS OF DEFAULT    <BR>  </B></FONT></P>

<P><FONT SIZE=2><B>8.1</B></FONT><FONT SIZE=2><B><I>&nbsp;&nbsp;Event of Default.</I></B></FONT><FONT SIZE=2>&nbsp;&nbsp;Each of the following events shall constitute an Event of Default under
this Financing Commitment: </FONT></P>

<UL>
<DL compact>
<DT><FONT SIZE=2>(a)</FONT></DT><DD><FONT SIZE=2><B><I>Incorrect Representations.&nbsp;&nbsp;</I></B></FONT><FONT SIZE=2>If any representation or warranty made to CIBC by the Borrower shall prove to have been
incorrect in any material respect when so made or deemed to have been repeated as herein provided and, as a result of such incorrect representation or warranty, there has been a Material Adverse
Change or such incorrect representation or warranty has a Material Adverse Effect.
<BR><BR></FONT></DD><DT><FONT SIZE=2>(b)</FONT></DT><DD><FONT SIZE=2><B><I>Failure to Pay.&nbsp;&nbsp;</I></B></FONT><FONT SIZE=2>If the Borrower makes default in the due and punctual payment of any principal, interest, fees or
other amounts owing under or pursuant to this Financing Commitment as and when the same becomes due and payable, whether at maturity or otherwise and such default continues for a period of
3&nbsp;days after notice of such default is given by CIBC to the Borrower. </FONT><P><FONT SIZE=2>
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<A NAME="page_ki2257_1_22"> </A></FONT></P>

</DD><DT><FONT SIZE=2>(c)</FONT></DT><DD><FONT SIZE=2><B><I>Breach of Covenants.&nbsp;&nbsp;</I></B></FONT><FONT SIZE=2>Except for an Event of Default set out in the above paragraph, if the Borrower defaults in the
performance or observance of any covenant, obligation or condition to be observed or performed by it under or pursuant to this Financing Commitment or any other agreement now or hereafter made by the
Borrower with CIBC, and such default continues for a period of 30&nbsp;days after notice is given to the Borrower by CIBC.
<BR><BR></FONT></DD><DT><FONT SIZE=2>(d)</FONT></DT><DD><FONT SIZE=2><B><I>Insolvency.&nbsp;&nbsp;</I></B></FONT><FONT SIZE=2>If a judgment, decree or order of a court of competent jurisdiction is entered against the Borrower,
(i)&nbsp;adjudging it bankrupt or insolvent, or approving a petition seeking its reorganization or winding-up under the </FONT><FONT SIZE=2><I>Bankruptcy and Insolvency Act  </I></FONT><FONT SIZE=2>(Canada), the </FONT><FONT SIZE=2><I>Companies'
Creditors Arrangement Act </I></FONT><FONT SIZE=2>(Canada) or any other bankruptcy, insolvency or analogous Law, or
(ii)&nbsp;appointing a receiver, trustee, liquidator, or other Person with like powers, over all, or substantially all, of its property or (iii) ordering the involuntary winding up or liquidation of
affairs or (iv)&nbsp;if any receiver or other Person with like powers is appointed over all, or substantially all, of its property, unless such appointment is stayed and of no effect against the
Security and the rights of CIBC and/or PLC thereunder.
<BR><BR></FONT></DD><DT><FONT SIZE=2>(e)</FONT></DT><DD><FONT SIZE=2><B><I>Winding-Up.&nbsp;&nbsp;</I></B></FONT><FONT SIZE=2>If (i)&nbsp;an order or a resolution is passed for the dissolution, winding-up,
reorganization or liquidation of the Borrower, pursuant to applicable laws, including the </FONT><FONT SIZE=2><I>Business Corporations Act </I></FONT><FONT SIZE=2>(Alberta), or (ii)&nbsp;the
Borrower institutes proceedings to be adjudicated bankrupt or insolvent, or consents to the institution of bankruptcy or insolvency proceedings against it under the </FONT><FONT SIZE=2><I>Bankruptcy
and Insolvency Act </I></FONT><FONT SIZE=2>(Canada), the </FONT><FONT SIZE=2><I>Companies' Creditors Arrangement Act </I></FONT><FONT SIZE=2>(Canada) or any other bankruptcy, insolvency or analogous
law, or (iii)&nbsp;the Borrower consents to the filing of any petition under any such law or to the appointment of a receiver, or other Person with like powers, over all, or substantially all, of
such party's property, or (iv)&nbsp;the Borrower makes a general assignment for the benefit of creditors, or becomes unable to pay its debts generally as they become due, or (v)&nbsp;the Borrower
takes or consents to any action in furtherance of any of the aforesaid purposes.
<BR><BR></FONT></DD><DT><FONT SIZE=2>(f)</FONT></DT><DD><FONT SIZE=2><B><I>Other Indebtedness.&nbsp;&nbsp;</I></B></FONT><FONT SIZE=2>The Borrower fails to make any payment of principal or interest in regard to any indebtedness
whatsoever owed by it after the expiry of any applicable grace period or demand therefor, whether incurred before or after the date hereof, to any Person other than CIBC and/or PLC, where the
outstanding principal amount of such indebtedness is more than $500,000, unless (i)&nbsp;the Borrower is contesting the validity of such indebtedness in good faith by appropriate proceedings
diligently conducted, as long as such proceedings do not involve any risk of unindemnified liability on the part of CIBC and/or PLC, (ii)&nbsp;the Borrower notifies CIBC of such contest, and
(iii)&nbsp;the Borrower has established reasonable reserves therefor, adequate in the opinion of CIBC, in accordance with the generally accepted accounting principles in effect in Canada at the time
of such contest.
<BR><BR></FONT></DD><DT><FONT SIZE=2>(g)</FONT></DT><DD><FONT SIZE=2><B><I>Carbon Energy Corporation Indebtedness.&nbsp;&nbsp;</I></B></FONT><FONT SIZE=2>Carbon Energy Corporation fails to make any payment of principal or interest
in regard to any indebtedness whatsoever owed by it, including without limitation, pursuant to any judgment, loan agreement, guarantee, letter of credit, lease or any other agreement evidencing
indebtedness, after the expiry of any applicable grace period or demand therefor, whether
incurred before or after the date hereof, to any Person, where the outstanding principal amount of such indebtedness is, in the case of a single such failure, more than $100,000 or, in the case of the
aggregate of all such failures, more than $500,000, unless (i)&nbsp;Carbon Energy Corporation is contesting the validity of such indebtedness in good faith by appropriate proceedings diligently
conducted, as long as such proceedings do not involve any risk of unindemnified liability on the part of CIBC and/or PLC, (ii)&nbsp;the Borrower notifies CIBC of such contest, and
(iii)&nbsp;Carbon Energy Corporation has established reasonable reserves therefor, adequate in the opinion of CIBC, in accordance with the generally accepted accounting principles in effect in
Canada or the United States, as applicable, at the time of such contest. </FONT><P><FONT SIZE=2>
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<A NAME="page_ki2257_1_23"> </A></FONT></P>

</DD><DT><FONT SIZE=2>(h)</FONT></DT><DD><FONT SIZE=2><B><I>Other Defaults.&nbsp;&nbsp;</I></B></FONT><FONT SIZE=2>The Borrower defaults in the observance or performance of any non-monetary obligation,
covenant or condition to be observed or performed by it pursuant to any agreement to which it is a party or by which any of its property is bound, where such default would have a Material Adverse
Effect and it fails to remedy such default within a period of 30&nbsp;days after notice of such default.
<BR><BR></FONT></DD><DT><FONT SIZE=2>(i)</FONT></DT><DD><FONT SIZE=2><B><I>Adverse Proceedings.&nbsp;&nbsp;</I></B></FONT><FONT SIZE=2>The occurrence of any action, suit or proceeding against or affecting the Borrower before any
court or before any administrative body which, if successful, would constitute a Material Adverse Change, unless the action, suit, or proceedings shall be contested diligently and in good faith and,
in circumstances where a lower court or tribunal has rendered a decision adverse to such party, such party is appealing such decision, and has provided CIBC with a reserve in respect thereof, adequate
in the opinion of CIBC.
<BR><BR></FONT></DD><DT><FONT SIZE=2>(j)</FONT></DT><DD><FONT SIZE=2><B><I>Cessation of Business.&nbsp;&nbsp;</I></B></FONT><FONT SIZE=2>The Borrower ceases or proposes to cease carrying on business, or a substantial part thereof,
or makes or threatens to make a bulk sale of its property.
<BR><BR></FONT></DD><DT><FONT SIZE=2>(k)</FONT></DT><DD><FONT SIZE=2><B><I>Material Adverse Change.&nbsp;&nbsp;</I></B></FONT><FONT SIZE=2>Any Material Adverse Change occurs, as determined by CIBC acting reasonably, and the
Borrower fails to remedy such Material Adverse Change within a period of 30&nbsp;days after notice thereof from CIBC.
<BR><BR></FONT></DD><DT><FONT SIZE=2>(l)</FONT></DT><DD><FONT SIZE=2><B><I>Pledge of Shares.&nbsp;&nbsp;</I></B></FONT><FONT SIZE=2>Shares of the Borrower become pledged or otherwise encumbered by the owner thereof without the
prior written consent of CIBC, in its sole discretion. </FONT></DD></DL>
</UL>

<P><FONT SIZE=2><B>8.2</B></FONT><FONT SIZE=2><B><I>&nbsp;&nbsp;Remedies.</I></B></FONT><FONT SIZE=2>&nbsp;&nbsp;Upon the occurrence of an Event of Default, CIBC may forthwith terminate any
further obligation to provide Availments, make advances or to grant any further credits to the Borrower and may declare the Principal Indebtedness together with unpaid accrued interest thereon and any
other amounts owing under or pursuant to this Financing Commitment, contingent or otherwise, to be
immediately due and payable, whereupon the Borrower shall be obligated without any further grace period to forthwith pay such amounts to CIBC and CIBC may exercise any and all rights, remedies, powers
and privileges afforded by applicable law or under any and all other instruments, documents and agreements made to secure or assure payment and performance of the obligations of the Borrower under
this Financing Commitment, including, without limitation, the Security. </FONT></P>

<P><FONT SIZE=2><B>8.3</B></FONT><FONT SIZE=2><B><I>&nbsp;&nbsp;Waivers.</I></B></FONT><FONT SIZE=2>&nbsp;&nbsp;An Event of Default may only be waived in writing by CIBC. </FONT></P>

<P ALIGN="CENTER"><FONT SIZE=2><A
NAME="ki2257_article_9_assignment"> </A>
<A NAME="toc_ki2257_9"> </A>
<BR></FONT><FONT SIZE=2><B>ARTICLE&nbsp;9    <BR>    <BR>    ASSIGNMENT    <BR>  </B></FONT></P>

<P><FONT SIZE=2><B>9.1</B></FONT><FONT SIZE=2><B><I>&nbsp;&nbsp;Assignment of Interests.</I></B></FONT><FONT SIZE=2>&nbsp;&nbsp;The rights and obligations of the Borrower under this Financing
Commitment shall not be assignable, in whole or in part, without the prior written consent of CIBC. </FONT></P>

<P ALIGN="CENTER"><FONT SIZE=2><A
NAME="ki2257_article_10_miscellaneous"> </A>
<A NAME="toc_ki2257_10"> </A>
<BR></FONT><FONT SIZE=2><B>ARTICLE&nbsp;10    <BR>    <BR>    MISCELLANEOUS    <BR>  </B></FONT></P>

<P><FONT SIZE=2><B>10.1</B></FONT><FONT SIZE=2><B><I>&nbsp;&nbsp;Telephone Instructions.</I></B></FONT><FONT SIZE=2>&nbsp;&nbsp;Any verbal instructions given by the Borrower in relation to this
Financing Commitment shall be at the risk of the Borrower, and CIBC shall have no liability for any error or omission in such verbal instructions or in the interpretation or execution thereof by CIBC
provided CIBC acted without gross negligence in the circumstances. </FONT></P>

<P><FONT SIZE=2><B>10.2</B></FONT><FONT SIZE=2><B><I>&nbsp;&nbsp;No Partnership, Joint Venture or Agency.</I></B></FONT><FONT SIZE=2>&nbsp;&nbsp;The Borrower agrees that nothing contained in this
Financing Commitment nor the conduct of any party shall in any manner whatsoever constitute or be intended to constitute any party as the agent or representative or fiduciary of the other, constitute
or be intended to constitute a partnership or joint venture between CIBC and the Borrower. </FONT></P>

<P><FONT SIZE=2><B>10.3</B></FONT><FONT SIZE=2><B><I>&nbsp;&nbsp;Judgment Currency Deficiency.</I></B></FONT><FONT SIZE=2>&nbsp;&nbsp;If, for the purposes of obtaining judgment in any court or
any other related purpose hereunder, it is necessary to convert an amount due to CIBC in U.S. Dollars into Cdn.
Dollars, the exchange rate shall be the daily noon day rate quoted by the Bank of Canada on the relevant date to purchase in Calgary the U.S Dollars with the Cdn. Dollars, and includes any premium </FONT></P>


<P><FONT SIZE=2>
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<A NAME="page_ki2257_1_24"> </A></FONT> <FONT SIZE=2>
or costs payable by the purchaser. The Borrower agrees that its obligation in respect of any U.S. Dollars owed to CIBC shall, notwithstanding any judgment or payment in the Cdn. Dollars, be discharged
only to the extent CIBC may, in accordance with normal banking procedures, purchase in the Calgary foreign exchange market the U.S. Dollars with the amount of the Cdn. Dollars paid; and if the amount
of the U.S. Dollars purchased is less than the amount originally due, the Borrower agrees that the deficiency shall be a separate and continuing obligation of it, and shall constitute in favour of
CIBC a cause of action which shall continue in full force and effect notwithstanding any such judgment, or order to the contrary, and the Borrower agrees, notwithstanding any such payment or judgment,
to indemnify CIBC against any such loss or deficiency. The Borrower acknowledges that any indebtedness it may incur or suffer under this paragraph&nbsp;shall be secured by the Security unless
earlier discharged as provided herein. </FONT></P>

<P><FONT SIZE=2><B>10.4</B></FONT><FONT SIZE=2><B><I>&nbsp;&nbsp;Further Assurances.</I></B></FONT><FONT SIZE=2>&nbsp;&nbsp;The Borrower shall, from time to time forthwith at CIBC's request and
at the Borrower's own cost and expense, do, make, execute and deliver, or cause to be done, made, executed and delivered, all such further documents, financing statements, assignments, acts, matters
and things which may be reasonably required by CIBC with respect to this Financing Commitment, the Security or any part thereof and to give effect to any provision thereof. </FONT></P>


<P><FONT SIZE=2><B>10.5</B></FONT><FONT SIZE=2><B><I>&nbsp;&nbsp;Waiver of Laws.</I></B></FONT><FONT SIZE=2>&nbsp;&nbsp;To the extent legally permitted, the Borrower hereby irrevocably and
absolutely waives the provisions of any applicable law which may be inconsistent at any time with, or which may delay or limit in any way, the enforcement of this Financing Commitment and the Security
in accordance with their terms. </FONT></P>

<P><FONT SIZE=2><B>10.6</B></FONT><FONT SIZE=2><B><I>&nbsp;&nbsp;Attornment.</I></B></FONT><FONT SIZE=2>&nbsp;&nbsp;The Borrower does hereby irrevocably submit and attorn to the
non-exclusive jurisdiction of the courts of the Province of Alberta for all matters arising out of or relating to this Financing Commitment and the Security or any of the transactions
contemplated thereby. </FONT></P>

<P><FONT SIZE=2><B>10.7</B></FONT><FONT SIZE=2><B><I>&nbsp;&nbsp;Interest on Payments in Arrears.</I></B></FONT><FONT SIZE=2>&nbsp;&nbsp;Except as otherwise provided in this Financing Commitment,
interest shall be paid by the Borrower as follows: </FONT></P>

<UL>
<DL compact>
<DT><FONT SIZE=2>(a)</FONT></DT><DD><FONT SIZE=2>on
amounts for which CIBC has actually incurred an out-of-pocket expense and for which CIBC has an obligation under this Financing Commitment to reimburse
such amounts to any third party incurring the expenses, interest shall be payable on such amount at the CIBC Prime Rate plus 2% from and including the day on which the amount was incurred to but
excluding the day on which the amount is reimbursed; and
<BR><BR></FONT></DD><DT><FONT SIZE=2>(b)</FONT></DT><DD><FONT SIZE=2>on
amounts payable by the Borrower to CIBC under this Financing Commitment where such payment is in default but the non-payment of such amount has not required an actual
out-of-pocket expense by CIBC, at the CIBC Prime Rate plus 2% from and including the day on which the payment was due, but excluding the day on which the payment is made
whether before or after judgment. </FONT></DD></DL>
</UL>

<P><FONT SIZE=2><B>10.8</B></FONT><FONT SIZE=2><B><I>&nbsp;&nbsp;Payments Due on Banking Day.</I></B></FONT><FONT SIZE=2>&nbsp;&nbsp;Whenever any payment hereunder shall be due on a day other
than a Banking Day, such payment shall be made on the next succeeding Banking Day and such extension of time shall in such case be included in the computation of payment of interest thereunder. </FONT></P>


<P><FONT SIZE=2><B>10.9</B></FONT><FONT SIZE=2><B><I>&nbsp;&nbsp;Application of Proceeds.</I></B></FONT><FONT SIZE=2>&nbsp;&nbsp;Except as otherwise agreed to by CIBC in its sole discretion and
as otherwise expressly provided hereunder, all payments made by or on behalf of the Borrower under this Financing Commitment, after acceleration of the Principal Indebtedness, shall be applied by CIBC
in the following order: </FONT></P>

<UL>
<DL compact>
<DT><FONT SIZE=2>(a)</FONT></DT><DD><FONT SIZE=2>in
payment of any amounts due and payable by way of recoverable expenses;
<BR><BR></FONT></DD><DT><FONT SIZE=2>(b)</FONT></DT><DD><FONT SIZE=2>in
payment of any amounts by way of any fees (other than standby fees);
<BR><BR></FONT></DD><DT><FONT SIZE=2>(c)</FONT></DT><DD><FONT SIZE=2>in
payment of any amounts due and payable as and by way of interest or standby fees, including any interest on overdue amounts;
<BR><BR></FONT></DD><DT><FONT SIZE=2>(d)</FONT></DT><DD><FONT SIZE=2>in
payment of the Principal Indebtedness; and </FONT><P><FONT SIZE=2>
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</DD><DT><FONT SIZE=2>(e)</FONT></DT><DD><FONT SIZE=2>in
payment of all other indebtedness under this Financing Commitment or the Security. </FONT></DD></DL>
</UL>

<P><FONT SIZE=2><B>10.10</B></FONT><FONT SIZE=2><B><I>&nbsp;&nbsp;Counterparts.</I></B></FONT><FONT SIZE=2>&nbsp;&nbsp;This Financing Commitment may be executed in counterpart, each of which when
so executed shall be deemed to be an original and both of which taken together shall constitute one and the same instrument. </FONT></P>

<P><FONT SIZE=2><B>10.11</B></FONT><FONT SIZE=2><B><I>&nbsp;&nbsp;Whole Agreement.</I></B></FONT><FONT SIZE=2>&nbsp;&nbsp;This Financing Commitment constitutes the whole and entire agreement
between the Borrower and CIBC and cancels and supersedes any prior agreements, undertakings, declarations, representations and warranties, written or verbal among all the parties in respect of the
subject matter of this Financing Commitment. </FONT></P>

<P><FONT SIZE=2>
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<BR>
<P><br><A NAME="01DEN2257_2">QuickLinks</A><br></P><!-- TOC_BEGIN -->
<FONT SIZE=2><A HREF="#toc_kg2257_1">FINANCING COMMITMENT FOR CEC RESOURCES LTD.</A></FONT><BR>
<!-- TOC_BEGIN -->
<FONT SIZE=2><A HREF="#toc_ki2257_1">ARTICLE 1 DEFINITIONS</A></FONT><BR>
<FONT SIZE=2><A HREF="#toc_ki2257_2">ARTICLE 2 FUNDING AND OTHER MECHANICS</A></FONT><BR>
<FONT SIZE=2><A HREF="#toc_ki2257_3">ARTICLE 3 CALCULATION OF INTEREST AND FEES</A></FONT><BR>
<FONT SIZE=2><A HREF="#toc_ki2257_4">ARTICLE 4 LETTERS OF CREDIT AND LETTERS OF GUARANTEE</A></FONT><BR>
<FONT SIZE=2><A HREF="#toc_ki2257_5">ARTICLE 5 INCREASED COSTS</A></FONT><BR>
<FONT SIZE=2><A HREF="#toc_ki2257_6">ARTICLE 6 REPRESENTATIONS AND WARRANTIES OF THE BORROWER</A></FONT><BR>
<FONT SIZE=2><A HREF="#toc_ki2257_7">ARTICLE 7 COVENANTS OF THE BORROWER</A></FONT><BR>
<FONT SIZE=2><A HREF="#toc_ki2257_8">ARTICLE 8 EVENTS OF DEFAULT</A></FONT><BR>
<FONT SIZE=2><A HREF="#toc_ki2257_9">ARTICLE 9 ASSIGNMENT</A></FONT><BR>
<FONT SIZE=2><A HREF="#toc_ki2257_10">ARTICLE 10 MISCELLANEOUS</A></FONT><BR>
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