Exhibit 10.1
 
[U.S. CREDIT AGREEMENT]
[EXECUTION]
AMENDED AND RESTATED CREDIT AGREEMENT
dated as of February 9, 2007
among
QUICKSILVER RESOURCES INC.,
as Borrower,
THE LENDERS PARTY HERETO,
BNP PARIBAS and
BANK OF AMERICA, N.A.,
as Co-Global Syndication Agents,
FORTIS CAPITAL CORP.,
THE BANK OF NOVA SCOTIA and
DEUTSCHE BANK TRUST COMPANY AMERICAS,
as Co-Global Documentation Agents,
and
JPMORGAN CHASE BANK, N.A.,
as Global Administrative Agent
 
J.P. MORGAN SECURITIES INC.
and
BANC OF AMERICA SECURITIES LLC,
as Co-Lead Arrangers and Joint Bookrunners
 

 

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TABLE OF CONTENTS

                      Page No.  
 
  ARTICLE I        
 
  DEFINITIONS        
 
           
Section 1.1
  Defined Terms     2  
Section 1.2
  Classification of Loans and Borrowings     37  
Section 1.3
  Terms Generally     37  
Section 1.4
  Accounting Terms; GAAP     38  
Section 1.5
  Designation of Material Subsidiaries     38  
 
           
 
  ARTICLE II        
 
  THE CREDITS        
 
           
Section 2.1
  Global Commitments and Revolving Commitments     38  
Section 2.2
  Loans and Borrowings     41  
Section 2.3
  Requests for Revolving Borrowings     42  
Section 2.4
  Swingline Loans     42  
Section 2.5
  Letters of Credit     45  
Section 2.6
  Funding of Borrowings     50  
Section 2.7
  Interest Elections     50  
Section 2.8
  Global Borrowing Base     52  
Section 2.9
  Termination and Reduction of Global Commitments and Commitments; Extension of
Maturity Date     57  
Section 2.10
  Repayment of Loans; Evidence of Indebtedness     60  
Section 2.11
  Prepayment of Loans     60  
Section 2.12
  Fees     63  
Section 2.13
  Interest     64  
Section 2.14
  Alternate Rate of Interest     65  
Section 2.15
  Illegality     66  
Section 2.16
  Increased Costs     67  
Section 2.17
  Break Funding Payments     68  
Section 2.18
  Taxes     69  
Section 2.19
  Payments Generally; Pro Rata Treatment; Sharing of Set-offs     71  
Section 2.20
  Mitigation Obligations; Replacement of Lenders     73  
Section 2.21
  Currency Conversion and Currency Indemnity     74  
 
           
 
  ARTICLE III        
 
  REPRESENTATIONS AND WARRANTIES        
 
           
Section 3.1
  Existence and Power     75  
Section 3.2
  Loan Party and Governmental Authorization; Contravention     75  
Section 3.3
  Binding Effect     76  
Section 3.4
  Financial Information     76  
Section 3.5
  Litigation     77  
Section 3.6
  ERISA     77  
Section 3.7
  Taxes and Filing of Tax Returns     78  
Section 3.8
  Ownership of Properties Generally     78  
Section 3.9
  Mineral Interests     78  

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                      Page No.  
Section 3.10
  Licenses, Permits, Etc     79  
Section 3.11
  Compliance with Law     79  
Section 3.12
  Full Disclosure     79  
Section 3.13
  Organizational Structure; Nature of Business     80  
Section 3.14
  Environmental Matters     80  
Section 3.15
  Fiscal Year     81  
Section 3.16
  No Default     81  
Section 3.17
  Government Regulation     81  
Section 3.18
  Insider     81  
Section 3.19
  Gas Balancing Agreements and Advance Payment Contracts     81  
Section 3.20
  Existing Subordinate Debt and Falcon Seaboard Settlement Agreement     81  
Section 3.21
  Use of Proceeds and Letters of Credit     81  
Section 3.22
  Location of Business and Offices     82  
Section 3.23
  Subsidiaries     82  
Section 3.24
  Material Agreements     82  
Section 3.25
  Priority; Security Matters     82  
Section 3.26
  Hedging Agreements     83  
Section 3.27
  Insurance     83  
Section 3.28
  Status as Senior Indebtedness     83  
 
           
 
  ARTICLE IV        
 
  CONDITIONS        
 
           
Section 4.1
  Initial Loan     83  
Section 4.2
  Each Credit Event     89  
 
           
 
  ARTICLE V        
 
  AFFIRMATIVE COVENANTS        
 
           
Section 5.1
  Information     90  
Section 5.2
  Business of Borrower and Subsidiaries     93  
Section 5.3
  Maintenance of Existence; Oil and Gas Properties     93  
Section 5.4
  Title Data; Title to Oil and Gas Properties     94  
Section 5.5
  Right of Inspection     94  
Section 5.6
  Maintenance of Insurance     95  
Section 5.7
  Payment of Taxes and Claims     95  
Section 5.8
  Compliance with Laws and Documents     96  
Section 5.9
  Operation of Properties and Equipment     96  
Section 5.10
  Environmental Law Compliance     96  
Section 5.11
  ERISA Reporting Requirements     97  
Section 5.12
  Environmental Review     97  
Section 5.13
  Casualty and Condemnation     97  
Section 5.14
  Performance of Obligations     98  
Section 5.15
  Additional Subsidiaries     98  
Section 5.16
  Information Regarding Collateral     99  
Section 5.17
  Further Assurances     99  
Section 5.18
  Pledges of Equity Interests in non-Loan Parties     101  

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                      Page No.  
 
  ARTICLE VI        
 
  FINANCIAL COVENANTS          
Section 6.1
  Current Ratio     101  
Section 6.2
  EBITDAX Ratio     101  
 
           
 
  ARTICLE VII        
 
  NEGATIVE COVENANTS        
 
           
Section 7.1
  Incurrence of Debt     102  
Section 7.2
  Restricted Payments     103  
Section 7.3
  Negative Pledge     105  
Section 7.4
  Consolidations and Mergers     105  
Section 7.5
  Asset Dispositions.     105  
Section 7.6
  Amendments to Organizational Documents; Other Material Agreements     106  
Section 7.7
  Use of Proceeds     107  
Section 7.8
  Investments     107  
Section 7.9
  Transactions with Affiliates     108  
Section 7.10
  ERISA     108  
Section 7.11
  Hedge Transactions     108  
Section 7.12
  Fiscal Year     108  
Section 7.13
  Change in Business     109  
Section 7.14
  Existing Subordinate Debt, Permitted Senior Notes Debt and Falcon Seaboard
Settlement Agreement     109  
Section 7.15
  Governmental Rules     110  
 
           
 
  ARTICLE VIII        
 
  EVENTS OF DEFAULT        
 
           
Section 8.1
  Listing of Events of Default     110  
Section 8.2
  Action if Bankruptcy     112  
Section 8.3
  Action if Other Event of Default     112  
 
           
 
  ARTICLE IX        
 
  AGENTS          
 
  ARTICLE X        
 
  MISCELLANEOUS        
 
           
Section 10.1
  Notices     115  
Section 10.2
  Waivers; Amendments     117  
Section 10.3
  Expenses; Indemnity; Damage Waiver     118  
Section 10.4
  Successors and Assigns     120  
Section 10.5
  Survival     123  
Section 10.6
  Counterparts; Effectiveness     123  
Section 10.7
  Severability     123  
Section 10.8
  Right of Setoff     124  
Section 10.9
  GOVERNING LAW; JURISDICTION; CONSENT TO SERVICE OF PROCESS     124  
Section 10.10
  WAIVER OF JURY TRIAL     125  
Section 10.11
  Headings     125  
Section 10.12
  Confidentiality     125  
Section 10.13
  Interest Rate Limitation     126  
Section 10.14
  USA PATRIOT Act Notice     128  
Section 10.15
  Collateral Matters; Hedging Agreements     128  

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                      Page No.  
Section 10.16
  Arrangers; Co-Global Documentation Agents; Co-Global Syndication Agents; Other
Agents     128  
Section 10.17
  Intercreditor Agreement; Security Documents; Designation     129  
Section 10.18
  Waiver of Consumer Credit Laws     129  
Section 10.19
  Status as Senior Indebtedness     129  
Section 10.20
  NO ORAL AGREEMENTS     129  

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EXHIBITS AND SCHEDULES

      EXHIBITS:    
Exhibit A
  Form of Note
Exhibit B-1
  Form of Legal Opinion of General Counsel of Borrower
Exhibit B-2
  Form of Legal Opinion of Jones Day, Texas counsel to Borrower
Exhibit B-3
  Form of Legal Opinion of Loomis, Ewert, Parsley, Davis & Gotting, Michigan,
local counsel to Borrower
Exhibit B-4
  Form of Legal Opinion of Marian McGrath Pearcy, Indiana, local counsel to
Borrower
Exhibit C
  Form of Certificate of Financial Officer
Exhibit D
  Form of Assignment and Acceptance
Exhibit E-1
  Form of Revolving Borrowing Request
Exhibit E-2
  Form of Interest Election Request (Revolving Borrowing)
Exhibit E-3
  Form of Swingline Borrowing Request
Exhibit E-4
  Form of Interest Election Request (Swingline Borrowing)
Exhibit F
  Form of Pledge Agreement and Irrevocable Proxy
Exhibit G
  Form of Guaranty
Exhibit H
  Form of Mortgage
Exhibit I
  Form of Security Agreement
Exhibit J
  Form of Additional Lender Certificate
Exhibit K
  [Reserved]
Exhibit L
  Material Subsidiaries; Other Subsidiaries
Exhibit M
  Form of Assignment of Production
Exhibit N
  Description of MLP Transactions

      SCHEDULES:    
Schedule 2.1
  Global Commitments and Commitments
Schedule 3.5
  Litigation
Schedule 3.13
  Loan Party Information
Schedule 3.14
  Environmental Disclosure
Schedule 3.22
  Location of Offices
Schedule 3.26
  Hedging Agreements
Schedule 3.27
  Insurance
Schedule 7.1
  Existing Indebtedness
Schedule 7.3
  Existing Liens
Schedule 7.8
  Investments

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LIST OF DEFINED TERMS

              Page No.  
ABR
    2  
Act
    128  
Additional Lender Certificate
    39  
Adjusted Eurodollar Rate
    2  
Administrative Questionnaire
    2  
Advance Payment
    2  
Advance Payment Contract
    2  
Affiliate
    3  
Agents
    3  
Agreed Currency
    74  
Agreement
    3  
Allocated Canadian Borrowing Base
    54  
Allocated U.S. Borrowing Base
    54  
Alternate Base Rate
    3  
Applicable Lending Office
    3  
Applicable Margin
    3  
Applicable Percentage
    4  
Approved Engineer
    4  
Approved Fund
    4  
Arrangers
    4  
Assignment and Acceptance
    4  
Assignment of Production
    4  
Authorized Officer
    5  
Availability Period
    5  
Board
    5  
BofA Fee Letter
    15  
Borrower
    1  
Borrower’s Global Effectiveness Notice
    5  
Borrowing
    5  
Borrowing Base Allocation Notice
    54  
Borrowing Base Properties
    5  
Borrowing Request
    5  
Business Day
    5  
C$
    6  
Canadian Administrative Agent
    6  
Canadian Borrower
    6  
Canadian Commitment
    6  
Canadian Credit Agreement
    6  
Canadian Dollars
    6  
Canadian Flex Portion
    6  
Canadian Lenders
    6  
Canadian Loan Documents
    6  
Canadian Obligations
    6  
Canadian Security Documents
    6  

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              Page No.  
Capital Lease Obligations
    6  
Casualty Event
    7  
CERCLA
    7  
Certificate of Mortgaged Properties
    88  
Change in Law
    7  
Change of Control
    7  
Chicago
    7  
Class
    7  
Closing Date
    7  
Code
    7  
Co-Global Documentation Agents
    7  
Co-Global Syndication Agents
    8  
Collateral
    8  
Combined Commitments
    8  
Combined Credit Agreements
    8  
Combined Credit Exposure
    8  
Combined Lenders
    8  
Combined Loan Documents
    8  
Combined Loans
    8  
Combined Obligations
    8  
Commitment
    8  
Commitment Fee
    63  
Consolidated Current Assets
    8  
Consolidated Current Liabilities
    9  
Consolidated EBITDAX
    9  
Consolidated Net Income
    10  
Consolidated Net Interest Expense
    10  
Consolidated Subsidiaries
    10  
Consolidated Subsidiary
    10  
Contractual Obligation
    10  
control
    3  
Control
    10  
Controlled
    10  
controlled by
    3  
Controlling
    10  
Credit Exposure
    10  
Darden Group
    10  
Debenture
    10  
Debt Issuance Reduction Amount
    11  
Default
    11  
Default Rate
    65  
Deficiency Notification Date
    56  
Designation
    11  
disposal
    12  
Distribution
    11  
Dollar
    37  

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              Page No.  
Environmental Complaint
    11  
Environmental Laws
    11  
Environmental Liability
    12  
Equity Interests
    12  
Equivalent Amount
    12  
ERISA
    12  
ERISA Affiliate
    12  
Eurodollar
    13  
Eurodollar Rate
    13  
Event of Default
    110  
Exchange Act
    13  
Excluded Taxes
    13  
Existing Convertible Debentures
    13  
Existing Convertible Note Indenture
    13  
Existing Credit Agreement
    1  
Existing Lenders
    1  
Existing Letter of Credit
    49  
Existing Loan Documents
    1  
Existing Loan Indebtedness
    1  
Existing Subordinate Debt
    14  
Existing Subordinate Note Documents
    14  
Existing Subordinate Note Indenture
    14  
Existing Subordinate Notes
    14  
Falcon Seaboard Settlement Agreement
    14  
Federal Funds Effective Rate
    15  
Fee Letter
    15  
Financial Officer
    15  
Financial Statements
    15  
Financing Transactions
    15  
Fiscal Quarter
    15  
Fiscal Year
    15  
Flex Lender
    15  
Flex Percentage
    15  
Flex Portion
    15  
Foreign Entity
    16  
Foreign Lender
    16  
Foreign Subsidiary
    16  
GAAP
    16  
Gas Balancing Agreement
    16  
Global Administrative Agent
    16  
Global Borrowing Base
    16  
Global Borrowing Base Deficiency
    16  
Global Borrowing Base Designation Notice
    53  
Global Borrowing Base Utilization
    16  
Global Commitment
    16  
Global Commitment Increase
    39  

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              Page No.  
Global Effective Date
    17  
Governmental Approval
    17  
Governmental Authority
    17  
Governmental Rule
    17  
Guarantee
    17  
Guaranteed
    17  
Guaranties
    17  
Guarantor
    17  
Guaranty
    17  
Hazardous Discharge
    18  
Hazardous Material
    18  
Hedge Transaction
    18  
Hedge Transactions
    18  
Hedging Agreements
    18  
Hedging Obligations
    18  
Highest Lawful Rate
    127  
Holdings
    18  
Hydrocarbons
    18  
Immaterial Title Deficiencies
    79  
Indebtedness
    18  
Indemnified Taxes
    19  
Indemnitee
    119  
Initial Reserve Report
    19  
Intercreditor Agreement
    19  
Interest Election Request
    19  
Interest Payment Date
    20  
Interest Period
    20  
Investment
    20  
IPO
    20  
Issuing Bank
    20  
JPM Fee Letter
    15  
JPMorgan
    21  
Judgment Currency
    74  
LC Disbursement
    21  
LC Exposure
    21  
Lender Affiliate
    21  
Lender Parties
    21  
Lenders
    21  
Letter of Credit
    21  
Lien
    21  
Loan Documents
    21  
Loan Parties
    22  
Loans
    22  
Long Term Debt
    22  
Majority Lenders
    22  
Margin Stock
    22  

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              Page No.  
Material Adverse Effect
    22  
Material Agreement
    22  
Material Gas Imbalance
    22  
Material Subsidiary
    22  
Maturity Date
    23  
Mercury Exploration
    23  
Mercury Production
    23  
Mineral Interests
    23  
Minimum Threshold Amount
    54  
MLP
    23  
MLP Subsidiaries
    23  
MLP Transactions
    23  
Monthly Date
    23  
Moody’s
    23  
Mortgage
    23  
Mortgaged Property
    24  
Net Cash Proceeds
    24  
Non-Consenting Lender
    24,74  
Non-Recourse Debt
    24  
Note
    25  
Obligations
    25  
oil
    12  
Oil and Gas Hedge Transaction
    25  
Oil and Gas Properties
    25  
OPA
    26  
Organic Documents
    26  
Other Currency
    74  
Other Taxes
    26  
parent
    35  
Participant
    122  
PBGC
    26  
Permitted Encumbrances
    26  
Permitted Investments
    28  
Permitted Senior Notes Debt
    30  
Permitted Senior Notes Documents
    31  
Person
    31  
Pipeline Partners
    31  
Plan
    31  
Pledge Agreement
    31  
Pledge Agreements
    31  
Pledging Subsidiary
    31  
PPSA
    31  
Prime Rate
    31  
Pro Rata Lender
    32  
Processing Partners
    31  
Production Payments
    32  

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              Page No.  
Property
    32  
Property Description
    78  
Proved Mineral Interests
    32  
Proved Producing Mineral Interests
    32  
QELP
    32  
QR Canada
    32  
QRC Class C Shares
    32  
rate of exchange
    74  
RCRA
    12  
Recognized Value
    32  
Redetermination Date
    32  
Register
    122  
Regulation U
    32  
Related Parties
    33  
release
    12  
Required Lenders
    33  
Required Reserve Value
    33  
Reserve Report
    33  
Restricted Payment
    33  
Revolving Loan
    33  
S&P
    33  
Scheduled Redetermination
    34  
SEC
    34  
Security Agreement
    34  
Security Agreements
    34  
Security Documents
    34  
SFAS 133
    34  
SFAS 143
    34  
SFAS 144
    34  
Solvent
    34  
Specified Rate
    35  
Statutory Reserve Rate
    35  
Subsidiary
    35  
Supermajority Lenders
    35  
Sweep Accounts
    35  
Swingline Exposure
    36  
Swingline Lender
    36  
Swingline Loan
    36  
Taxes
    36  
Toronto
    36  
Type
    36  
U.S.
    36  
U.S. Borrowing Base
    36  
U.S. Borrowing Base Deficiency
    36  
U.S. Borrowing Base Properties
    37  
U.S. Dollars
    37  

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              Page No.  
U.S. Flex Portion
    37  
U.S. Only Lender
    37  
U.S. Required Lenders
    37  
U.S. Required Reserve Value
    37  
U.S. Supermajority Lenders
    37  
U.S.$
    37  
UCC
    36  
UCC Searches
    36  
under common control with
    3  
United States
    36  
Unutilized Commitment
    36  
Upfront Fee
    64  
Wholly-Owned Subsidiary
    37  

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AMENDED AND RESTATED CREDIT AGREEMENT
     THIS AMENDED AND RESTATED CREDIT AGREEMENT, dated as of February 9, 2007,
is among QUICKSILVER RESOURCES INC., a Delaware corporation (the “Borrower”),
the LENDERS party hereto, BNP PARIBAS and BANK OF AMERICA, N.A., as Co-Global
Syndication Agents, FORTIS CAPITAL CORP., THE BANK OF NOVA SCOTIA and DEUTSCHE
BANK TRUST COMPANY AMERICAS, as Co-Global Documentation Agents, and JPMORGAN
CHASE BANK, N.A. (successor by merger to Bank One, NA), as Global Administrative
Agent.
     WHEREAS, the Borrower, the Global Administrative Agent and the financial
institutions named and defined therein as Lenders (the “Existing Lenders”) and
Agents are parties to that certain Credit Agreement dated as of July 28, 2004
(as amended or supplemented prior to the date hereof, the “Existing Credit
Agreement”), pursuant to which the Existing Lenders provided certain loans and
extensions of credit to the Borrower (all Indebtedness (as hereinafter defined)
arising pursuant to the Existing Credit Agreement is herein called the “Existing
Loan Indebtedness”); and
     WHEREAS, the parties hereto desire to amend and restate the Existing Credit
Agreement in the form of this Agreement and to appoint JPMorgan Chase Bank, N.A.
as Global Administrative Agent hereunder, and the Borrower desires to obtain
Borrowings (as herein defined) to renew and restate the Existing Loan
Indebtedness and for other purposes permitted hereunder; and
     WHEREAS, after giving effect to the amendment and restatement of the
Existing Credit Agreement pursuant to the terms hereof, the Commitment of each
Lender hereunder will be as set forth on Schedule 2.1;
     NOW, THEREFORE, in consideration of the mutual covenants and agreements
herein contained, and other good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, and subject to the satisfaction (or
waiver in accordance with Section 10.2) of each condition precedent contained in
Section 4.1 hereof, the satisfaction of which shall be evidenced by the
notification delivered by the Global Administrative Agent to the Borrower, the
Canadian Borrower, the Canadian Administrative Agent and the Combined Lenders of
the Global Effective Date, the parties hereto agree that the Existing Credit
Agreement is hereby amended, renewed, extended and restated in its entirety on
(and subject to) the terms and conditions set forth herein. It is the intention
of the parties hereto that this Agreement supersedes and replaces the Existing
Credit Agreement in its entirety; provided, that, (a) such amendment and
restatement shall operate to renew, amend, modify and extend certain of the
rights and obligations of the Borrower under the Existing Credit Agreement and
as provided herein, but shall not act as a novation thereof, and (b) the Liens
(as hereinafter defined) securing the Obligations under and as defined in the
Existing Credit Agreement and the liabilities and obligations of the Borrower
and its Subsidiaries under the Existing Credit Agreement and the Loan Documents
(as therein defined and referred to herein as the “Existing Loan Documents”)
shall not be extinguished but shall be carried forward and shall secure such
obligations and liabilities as amended, renewed, extended and restated hereby.
The parties hereto ratify and confirm each of the Existing Loan Documents
entered into prior to the Closing Date (but

1

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excluding the Existing Credit Agreement) and agree that such Existing Loan
Documents continue to be legal, valid, binding and enforceable in accordance
with their terms (except to the extent amended, restated and superseded in their
entirety in connection with the transactions contemplated hereby), however, for
all matters arising prior to the Global Effective Date (including the accrual
and payment of interest and fees, and matters relating to indemnification and
compliance with financial covenants), the terms of the Existing Credit Agreement
(as unmodified by this Agreement) shall control and are hereby ratified and
confirmed. The Borrower represents and warrants that, as of the Closing Date and
the Global Effective Date, there are no claims or offsets against, or defenses
or counterclaims to, the obligations of the Loan Parties (as defined in the
Existing Credit Agreement) under the Existing Credit Agreement or any of the
other Existing Loan Documents.
     The parties hereto further agree as follows:
ARTICLE I
DEFINITIONS
     SECTION 1.1 Defined Terms. As used in this Agreement, the following terms
have the meanings specified below:
     “ABR”, when used in reference to any Loan or Borrowing, refers to whether
such Loan, or the Loans comprising such Borrowing, are bearing interest at a
rate determined by reference to the Alternate Base Rate.
     “Additional Lender Certificate” is defined in Section 2.1(b).
     “Adjusted Eurodollar Rate” means, with respect to any Eurodollar Borrowing
for any Interest Period, an interest rate per annum (rounded upwards, if
necessary, to the next 1/100 of 1%) equal to (a) the Eurodollar Rate for such
Interest Period multiplied by (b) the Statutory Reserve Rate.
     “Administrative Questionnaire” means an Administrative Questionnaire to be
delivered by the Lenders to the Global Administrative Agent, in a form supplied
by the Global Administrative Agent.
     “Advance Payment” is defined in the definition of “Advance Payment
Contract” in this Section 1.1.
     “Advance Payment Contract” means any contract whereby any Loan Party either
(a) receives or becomes entitled to receive (either directly or indirectly) any
payment (each, an “Advance Payment”) to be applied toward payment of the
purchase price of Hydrocarbons produced or to be produced from any Borrowing
Base Properties and which Advance Payment is, or is to be, paid in advance of
actual delivery of such production to or for the account of the purchaser
regardless of such production, or (b) grants an option or right of refusal to
the purchaser to take delivery of such production in lieu of payment, and, in
either of the foregoing instances, the Advance Payment is, or is to be, applied
as payment in full for such production when sold and delivered or is, or is to
be, applied as payment for a portion only of the purchase price thereof or of a
percentage or share of such production; provided, that (x) inclusion of

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standard “take or pay” or prepayment provisions in any gas sales or purchase
contract or any other similar contract shall not, in and of itself, constitute
such contract as an Advance Payment Contract for the purposes hereof and (y) for
purposes hereof, the term “Advance Payment Contract” shall not include any Gas
Balancing Agreement.
     “Affiliate” of any Person means any Person directly or indirectly
controlled by, controlling or under common control with such first Person. For
purposes of this definition, any Person which owns directly or indirectly 10% or
more of the securities having ordinary voting power for the election of
directors or other governing body of a corporation or 10% or more of the
partnership or other ownership interests of any other Person (other than as a
limited partner of such other Person) will be deemed to “control” (including,
with its correlative meanings, “controlled by” and “under common control with”)
such corporation or other Person.
     “Agents” means each of the Global Administrative Agent, the Co-Global
Syndication Agents and the Co-Global Documentation Agents.
     “Agreed Currency” is defined in Section 2.21(a).
     “Agreement” means this Amended and Restated Credit Agreement, as it may be
amended, supplemented, restated or otherwise modified and in effect from time to
time.
     “Allocated Canadian Borrowing Base” is defined in Section 2.8(d)(ii).
     “Allocated U.S. Borrowing Base” is defined in Section 2.8(d)(i).
     “Alternate Base Rate” means, for any day, a rate per annum equal to the
greater of (a) the Prime Rate in effect on such day, and (b) the Federal Funds
Effective Rate in effect on such day plus 1/2 of 1%. Any change in the Alternate
Base Rate due to a change in the Prime Rate or the Federal Funds Effective Rate
shall be effective from and including the effective date of such change in the
Prime Rate or the Federal Funds Effective Rate, respectively. If for any reason
the Global Administrative Agent shall have determined (which determination shall
be conclusive and binding, absent manifest error) that it is unable to ascertain
the Federal Funds Effective Rate for any reason, including, without limitation,
the inability or failure of the Global Administrative Agent to obtain sufficient
bids or publications in accordance with the terms hereof, the Alternate Base
Rate shall be the Prime Rate until the circumstances giving rise to such
inability no longer exist.
     “Applicable Lending Office” means, for each Lender and for each Type of
Loan, such office of such Lender (or of an Affiliate of such Lender) as such
Lender may from time to time specify in writing to the Global Administrative
Agent and the Borrower as the office by which its Loans of such Type are to be
made and/or issued and maintained.
     “Applicable Margin” means, for any day and with respect to any Eurodollar
Loans, any ABR Loans, any Specified Rate Swingline Loans or any Commitment Fees
payable hereunder, as the case may be, the applicable percentage rate per annum
set forth below under the caption “Eurodollar Loans”, “ABR Loans”, “Specified
Rate Swingline Loans” or “Commitment Fees”, as the case may be, based on the
Global Borrowing Base Utilization on such date.

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                              Specified Rate                 Swingline  
Commitment Global Borrowing   Eurodollar Loans   ABR Loans (in   Loans (in basis
  Fees (in basis Base Utilization:   (in basis points)   basis points)   points)
  points)
Less than 50%
  100.0   0.0   100.0   25.0
50% or greater and less than 75%
  125.0   0.0   125.0   30.0
75% or greater and less than 90%
  150.0   0.0   150.0   35.0
90% or greater
  175.0   0.0   175.0   37.5

For purposes of the foregoing, any change in the Applicable Margin will occur
automatically without prior notice upon any change in the Global Borrowing Base
Utilization. Each change in the Applicable Margin shall apply during the period
commencing on the effective date of such change and ending on the date
immediately preceding the effective date of the next such change.
     “Applicable Percentage” means, with respect to any Lender, the percentage
of the total Commitments represented by such Lender’s Commitment. If the
Commitments have terminated or expired, the Applicable Percentages shall be
determined based upon the Commitments most recently set forth in the Register,
giving effect to any assignments made in accordance with Section 10.4 or any
increases or decreases in Commitments made in accordance with this Agreement.
     “Approved Engineer” means Schlumberger Data and Consulting Services,
LaRoche Petroleum Consultants Limited, or any other reputable firm of
independent petroleum engineers or independent petroleum consultants expert in
the matters required to be performed in connection with the preparation and
delivery or auditing of a Reserve Report as shall be selected by the Borrower
which is reasonably satisfactory to the Global Administrative Agent.
     “Approved Fund” means any Person (other than a natural person) that is
engaged in making, purchasing, holding or investing in bank loans and similar
extensions of credit in the ordinary course of its business and that is
administered or managed by (a) a Lender, (b) a Lender Affiliate or (c) a Person
or an Affiliate of a Person that administers or manages a Lender.
     “Arrangers” means J.P. Morgan Securities Inc. and Banc of America
Securities LLC, in their capacity as co-lead arrangers and joint bookrunners.
     “Assignment and Acceptance” means an assignment and acceptance entered into
by a Lender and an assignee (with the consent of any party whose consent is
required by Section 10.4), and accepted by the Global Administrative Agent, in
substantially the form of Exhibit D or any other form approved by the Global
Administrative Agent.
     “Assignment of Production” means an Assignment of Production delivered
pursuant to the Loan Documents in substantially the form of Exhibit M (or in
such other form as the Global Administrative Agent may approve), executed and
delivered by the Borrower or any Loan Party (other than Foreign Subsidiaries),
as the case may be, as

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amended, supplemented, restated or otherwise modified from time to time in
accordance with the terms of this Agreement and the other Loan Documents.
     “Authorized Officer” means, as to any Person, its Chief Executive Officer,
its President, its Chief Financial Officer, its Vice President-Treasurer, its
Assistant Treasurer, its Vice President-General Counsel, its Vice
President-Controller or any other officer specified as such to the Global
Administrative Agent in writing by any of the aforementioned officers of such
Person or by resolution from the board of directors or similar governing body of
such Person.
     “Availability Period” means the period from and including the Global
Effective Date to but excluding the earlier of the Maturity Date and the date of
termination of all of the Global Commitments and Commitments.
     “Board” means the Board of Governors of the Federal Reserve System of the
United States of America.
     “Borrower” has the meaning given to such term in the preamble.
     “Borrower’s Global Effectiveness Notice” means a notice and certificate of
the Borrower properly executed by an Authorized Officer of the Borrower
addressed to the Combined Lenders and delivered to the Global Administrative
Agent whereby the Borrower certifies its satisfaction (except to the extent
previously waived in accordance with the Combined Loan Documents) of all the
conditions precedent to the effectiveness under Section 4.1 of each Combined
Credit Agreement to be satisfied solely by the Borrower or any Loan Party or any
“Loan Party” as defined in the Canadian Credit Agreement.
     “Borrowing” means (a) Revolving Loans of the same Type, made, converted or
continued on the same date and, in the case of Eurodollar Loans, as to which a
single Interest Period is in effect, and (b) Swingline Loans.
     “Borrowing Base Allocation Notice” is defined in Section 2.8(d)(iii).
     “Borrowing Base Properties” means those Oil and Gas Properties owned by the
Borrower or any of its Subsidiaries, or in which the Borrower or any of its
Subsidiaries has an economic interest, that are evaluated for purposes of the
then current Global Borrowing Base.
     “Borrowing Request” means a written or telephonic request by an Authorized
Officer of the Borrower for (a) a Revolving Borrowing in accordance with
Section 2.3, which if written shall be in substantially the form of Exhibit E-1,
or (b) a Swingline Borrowing in accordance with Section 2.4, which if written
shall be substantially in the form of Exhibit E-3, or, in either case, any other
form approved by the Global Administrative Agent.
     “Business Day” means any day that is not a Saturday, Sunday or a United
States federal holiday or any other day on which the Chicago office of the
Global Administrative Agent is closed; provided that, when used in connection
with a Eurodollar Loan, the term “Business Day” shall also exclude any day on
which banks are not open for dealings in Dollar deposits in the London interbank
market.

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     “Canadian Administrative Agent” means JPMorgan Chase Bank, N.A., Toronto
Branch (successor by merger to Bank One, NA, Canada Branch), in its capacity as
Canadian administrative agent for the lenders party to the Canadian Credit
Agreement, and any successor thereto.
     “Canadian Borrower” means QR Canada, as borrower under the Canadian Credit
Agreement.
     “Canadian Commitment” means, with respect to each Canadian Lender, the
“Commitment” of such Canadian Lender (as defined in the Canadian Credit
Agreement). The initial aggregate principal amount of the Canadian Commitments
of the Canadian Lenders is U.S.$423,529,411.78.
     “Canadian Credit Agreement” means that certain Amended and Restated Credit
Agreement of even date herewith among the Canadian Borrower, the Canadian
Lenders, the Global Administrative Agent, the Canadian Administrative Agent and
the other agents party thereto, as it may be amended, supplemented, restated or
otherwise modified and in effect from time to time.
     “Canadian Dollars” or “C$” refers to lawful money of Canada.
     “Canadian Flex Portion” means that unallocated portion of the Canadian
Commitments remaining after making the allocations described in
Section 2.1(c)(ii) and (iii).
     “Canadian Lenders” means the financial institutions from time to time party
to the Canadian Credit Agreement and their respective successors and permitted
assigns.
     “Canadian Loan Documents” means the Canadian Credit Agreement and the
Canadian Security Documents, together with all exhibits, schedules and
attachments thereto, and all other agreements, documents, certificates,
financing statements and instruments from time to time executed and delivered
pursuant to or in connection with any of the foregoing.
     “Canadian Obligations” means, at any time, the Equivalent Amount in U.S.
Dollars of the sum of (a) the aggregate “Credit Exposure” (as defined in the
Canadian Credit Agreement) of the Canadian Lenders under the Canadian Loan
Documents plus (b) all accrued and unpaid interest and fees owing to the
Canadian Lenders under the Canadian Loan Documents plus (c) all Hedging
Obligations in connection with all Hedging Agreements between the Canadian
Borrower or any of its Subsidiaries and any Canadian Lender or any Affiliate of
a Canadian Lender plus (d) all other obligations (monetary or otherwise) of the
Canadian Borrower to any Canadian Lender or the “Agents” (as defined in the
Canadian Credit Agreement) under the Canadian Credit Agreement, whether or not
contingent, arising under or in connection with any of the Canadian Loan
Documents.
     “Canadian Security Documents” means the “Security Documents” as defined
under the Canadian Credit Agreement.
     “Capital Lease Obligations” means, for any Person, all obligations of such
Person to pay rent or other amounts under a lease of (or other agreement
conveying the right to use)

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Property to the extent such obligations are required to be classified and
accounted for as a capital lease on a balance sheet of such Person under GAAP,
and, for purposes of this Agreement, the amount of such obligations shall be the
capitalized amount thereof, determined in accordance with GAAP.
     “Casualty Event” means any loss, casualty or other insured damage to, or
any taking under power of eminent domain or by condemnation or similar
proceeding of, any Collateral.
     “CERCLA” means the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, 42 U.S.C. § 9601, et. seq., as amended from time to time.
     “Certificate of Mortgaged Properties” is defined in Section 4.1(s).
     “Change in Law” means (a) the adoption of any law, rule or regulation after
the date of this Agreement, (b) any change in any law, rule or regulation or in
the interpretation or application thereof by any Governmental Authority after
the date of this Agreement, or (c) compliance by any Lender or any Issuing Bank
(or, for purposes of Section 2.16(b), by any Applicable Lending Office of such
Lender or any Issuing Bank or by such Lender’s or any Issuing Bank’s holding
company, if any) with any request, guideline or directive (whether or not having
the force of law) of any Governmental Authority made or issued after the date of
this Agreement.
     “Change of Control” means the occurrence, after the date hereof, of any of
the following events: (a) any Person or “group” (within the meaning of Section
13(d) or 14(d) of the Securities Exchange Act of 1934, as amended), other than
the Darden Group, shall have acquired ownership, directly or indirectly,
beneficially or of record, of Equity Interests representing more than 35% of the
aggregate ordinary voting power represented by the issued and outstanding Equity
Interests of the Borrower or (b) the occupation of a majority of the seats
(other than vacant seats) on the board of directors of the Borrower by Persons
who were neither (i) nominated by the board of directors or the stockholders of
the Borrower nor (ii) appointed by directors a majority of whom was so
nominated, or (c) except as permitted by Section 7.4 and Section 7.5(a), the
Borrower shall cease to own, directly or indirectly, 100% of the issued and
outstanding Equity Interests of each Material Subsidiary.
     “Chicago” means Chicago, Illinois.
     “Class,” when used in reference to any Loan or Borrowing, refers to whether
such Loan, or the Loans comprising such Borrowing, are Revolving Loans or
Swingline Loans.
     “Closing Date” means the date of this Agreement.
     “Code” means the Internal Revenue Code of 1986, as amended from time to
time.
     “Co-Global Documentation Agents” means Fortis Capital Corp., The Bank of
Nova Scotia and Deutsche Bank Trust Company Americas, in their capacity as
co-global documentation agents for the Lenders hereunder, and their respective
successors.

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     “Co-Global Syndication Agents” means BNP Paribas and Bank of America, N.A.,
in their capacity as co-global syndication agents for the Lenders hereunder, and
their respective successors.
     “Collateral” means any and all “Collateral” and “Mortgaged Property”, as
defined in the Security Documents and the Canadian Security Documents.
     “Combined Commitments” means the aggregate of (a) the Commitments of the
Lenders hereunder and (b) the Canadian Commitments. The initial aggregate
principal amount of the Combined Commitments is U.S.$1,200,000,000.
     “Combined Credit Agreements” means this Agreement and the Canadian Credit
Agreement.
     “Combined Credit Exposure” means, at the time of determination, the sum of
(a) the aggregate Credit Exposure of the Lenders hereunder, and (b) the
Equivalent Amount in U.S. Dollars of the aggregate “Credit Exposure” (as defined
in the Canadian Credit Agreement) of the Canadian Lenders.
     “Combined Lenders” means the Lenders hereunder and the Canadian Lenders.
     “Combined Loan Documents” means the Loan Documents and the Canadian Loan
Documents.
     “Combined Loans” means the loans made by the Combined Lenders to the
Borrower and the Canadian Borrower pursuant to the Combined Loan Documents.
     “Combined Obligations” means the aggregate of the Obligations and the
Canadian Obligations (without duplication of any Hedging Obligations).
     “Commitment” means, with respect to each Lender, the commitment of such
Lender to make Revolving Loans and to acquire participations in Letters of
Credit and Swingline Loans hereunder, and the commitment of the Swingline Lender
to make Swingline Loans, expressed as an amount representing the maximum
aggregate amount of such Lender’s Credit Exposure hereunder, as such commitment
may be (a) adjusted from time to time pursuant to Section 2.1(c), (b) reduced or
increased from time to time pursuant to assignments by or to such Lender
pursuant to Section 10.4, and (c) terminated pursuant to Section 8.2 or
Section 8.3; provided, however, that the Commitment of any Lender shall at no
time be greater than its Global Commitment. The initial amount of each Lender’s
Commitment is set forth on Schedule 2.1, or in the Register following any
Assignment and Acceptance to which such Lender is a party. The initial aggregate
principal amount of the Commitments of the Lenders is U.S.$776,470,588.22.
     “Commitment Fee” is defined in Section 2.12(a).
     “Consolidated Current Assets” means, for any Person at any time, the
current assets of such Person and its Consolidated Subsidiaries determined in
accordance with GAAP at such time, plus, in the case of Borrower, the Unutilized
Commitment at such time, but excluding, for any Person at any time, (a) any
current asset of such Person for any Hedging Agreement

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resulting from the requirements of SFAS 133 at such time, and (b) current SFAS
143 assets. Notwithstanding anything to the contrary contained herein, including
the definition of “Consolidated Subsidiaries,” upon closing of the IPO and
thereafter, all calculations of Consolidated Current Assets shall be calculated,
determined and adjusted to exclude, for any applicable period or date of
determination, in each case, occurring on and after the closing of the IPO and
thereafter, the current assets of the MLP Subsidiaries determined in accordance
with GAAP for such period or date of determination; provided, however, that,
notwithstanding the foregoing, at no time, whether before, on or after the
closing of the IPO, shall any assets received by Holdings, or any of its direct
or indirect parent companies, from any of the MLP Subsidiaries be excluded from
the calculation of Consolidated Current Assets.
     “Consolidated Current Liabilities” means, for any Person at any time, the
current liabilities of such Person and its Consolidated Subsidiaries determined
in accordance with GAAP at such time, but excluding (a) any current liability
for any Hedging Agreement resulting from the requirements of SFAS 133 at such
time, and (b) current SFAS 143 liabilities, and in the case of Borrower,
excluding current maturities of Long Term Debt of Borrower and its Consolidated
Subsidiaries outstanding at such time. Notwithstanding anything to the contrary
contained herein, including the definition of “Consolidated Subsidiaries,” upon
closing of the IPO and thereafter, all calculations of Consolidated Current
Liabilities shall be calculated, determined and adjusted to exclude, for any
applicable period or date of determination, in each case, occurring on and after
the closing of the IPO, the current liabilities of the MLP Subsidiaries
determined in accordance with GAAP for such period or date of determination.
     “Consolidated EBITDAX” means, for any Person for any period, the
Consolidated Net Income of such Person for such period, plus each of the
following determined for such Person and its Consolidated Subsidiaries on a
consolidated basis for such period: (a) any provision for (or less any benefit
from) income, sales or franchise Taxes included in determining Consolidated Net
Income; (b) Consolidated Net Interest Expense deducted in determining
Consolidated Net Income; (c) depreciation, depletion and amortization expense
deducted in determining Consolidated Net Income; (d) any unusual or
non-recurring non-cash expenses or losses (including, whether or not otherwise
includable as a separate item in the statement of such Consolidated Net Income
for such period, non-cash losses on sales of assets outside of the ordinary
course of business); (e) other non-cash charges deducted in determining
Consolidated Net Income to the extent not already included in clauses (b), (c)
and (d) of this definition; and (f) costs and expenses associated with seismic,
geological and geophysical services performed in connection with, and
attributable to, oil and gas exploration, to the extent deducted in determining
Consolidated Net Income. Notwithstanding anything to the contrary contained
herein, including the definition of “Consolidated Subsidiaries,” upon closing of
the IPO and thereafter, all calculations of Consolidated EBITDAX shall be
calculated, determined and adjusted to exclude, for any applicable period or
date of determination, in each case, occurring on and after the closing of the
IPO, any income, loss, results of operations, deduction, charge or other
adjustments, in each case determined in accordance with GAAP, with respect to
the MLP Subsidiaries for such period or date of determination; provided,
however, that, notwithstanding the foregoing, at no time, whether before, on or
after the closing of the IPO, shall any income or gains of Holdings, or any of
its direct or indirect parent companies, attributable to assets received by
Holdings, or any of its direct or indirect parent companies, from any of the MLP
Subsidiaries be excluded from the calculation of Consolidated EBITDAX.

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     “Consolidated Net Income” means, for any Person as of any period, the net
income (or loss) of such Person and its Consolidated Subsidiaries for such
period determined in accordance with GAAP, but excluding: (a) the income of any
other Person (other than its Consolidated Subsidiaries) in which such Person or
any of its Subsidiaries has an ownership interest, unless received by such
Person or its Consolidated Subsidiaries in a cash distribution; (b) any
after-tax gains attributable to asset dispositions; (c) any non-cash gains,
losses or charges on any Hedging Agreement resulting from the requirements of
SFAS 133 for that period; (d) any non-cash gains, losses or charges resulting
from the requirements of SFAS 143 or SFAS 144 for that period; and (e) to the
extent not included in clauses (a), (b), (c) and (d) above, any after-tax
(i) extraordinary gains (net of extraordinary losses) or (ii) non-cash
nonrecurring gains.
     “Consolidated Net Interest Expense” means, for any Person for any period,
the remainder of the following for such Person and its Consolidated Subsidiaries
for such period: (a) interest expense determined in accordance with GAAP, minus
(b) interest income determined in accordance with GAAP. Notwithstanding anything
to the contrary contained herein, including the definition of “Consolidated
Subsidiaries,” upon the closing of the IPO and thereafter, all calculations of
Consolidated Net Interest Expense shall be calculated, determined and adjusted
to exclude for any applicable period or date of determination, in each case,
occurring on and after the closing of the IPO, the interest expense and interest
income, in each case determined in accordance with GAAP, of the MLP Subsidiaries
for such period or date of determination.
     “Consolidated Subsidiaries” means each Subsidiary of a Person (whether now
existing or hereafter created or acquired) the financial statements of which
shall be (or should have been) consolidated with the financial statements of
such Person in accordance with GAAP. Unless otherwise indicated, each reference
to the term “Consolidated Subsidiary” means a Subsidiary consolidated with the
Borrower.
     “Contractual Obligation” means, as to any Person, any provision of any
security issued by such Person or of any agreement, contract, instrument or
other undertaking to which such Person is a party or by which it or any of its
property is bound.
     “Control” means the possession, directly or indirectly, of the power to
direct or cause the direction of the management or policies of a Person, whether
through the ability to exercise voting power, by contract or otherwise, but not
solely by being an officer or director of that Person. “Controlling” and
“Controlled” have meanings correlative thereto.
     “Credit Exposure” means, with respect to any Lender at any time, without
duplication, the sum of the outstanding principal amount of such Lender’s
Revolving Loans and its LC Exposure and Swingline Exposure at such time.
     “Darden Group” means, collectively, Mercury Exploration, Mercury
Production, QELP, The Discovery Fund, Pennsylvania Avenue Limited Partnership,
Pennsylvania Management Company, the estate of Frank Darden, Lucy Darden, Anne
Darden Self, Glenn Darden and Thomas Darden, and their respective successors,
assigns, designees, heirs, beneficiaries, trusts, estates and controlled
affiliates.
     “Debenture” shall have the meaning set forth in the Canadian Credit
Agreement.

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     “Debt Issuance Reduction Amount” means, in connection with the issuance of
any Permitted Senior Notes Debt and any reduction of the Global Borrowing Base
and U.S. Borrowing Base in connection therewith in accordance with
Section 2.8(h), an amount equal to U.S. $0.30 per U.S. Dollar on the gross
aggregate principal amount of such Permitted Senior Notes Debt issued and
incurred by the Borrower. For avoidance of doubt, and as an example only,
subject to the provisions of Section 2.8(h), in the event the Borrower incurs
Permitted Senior Notes Debt in accordance with this Agreement in an amount equal
to U.S. $300,000,000, the “Debt Issuance Reduction Amount” will be equal to U.S.
$90,000,000.
     “Default” means any event or condition which constitutes an Event of
Default or which upon notice, lapse of time or both would, unless cured or
waived, become an Event of Default.
     “Deficiency Notification Date” is defined in Section 2.8(f).
     “Designation” means the designation of a Lender as a Flex Lender, a Pro
Rata Lender, or a U.S. Only Lender; provided that no Lender may have more than
one Designation at any time.
     “Discretionary Borrowing Base Reallocation” is defined in
Section 2.8(d)(iv).
     “Distribution” by any Person, means (a) with respect to any stock issued by
such Person or any partnership, joint venture, limited liability company,
membership or other Equity Interest of such Person, the retirement, redemption,
purchase, or other acquisition for value of any such stock or partnership, joint
venture, limited liability company, membership or other Equity Interest, (b) the
declaration or payment of any dividend or other distribution on or with respect
to any stock, partnership, joint venture, limited liability company, membership
or other Equity Interest of any Person, and (c) any other payment by such Person
with respect to such stock, partnership, joint venture, limited liability
company, membership or other Equity Interest of such Person; provided, however,
that, notwithstanding anything to the contrary contained herein or in any other
Combined Loan Document, the term “Distribution” shall be deemed not to include
any cash payment or distribution by the Borrower to any holder of Indebtedness
of the Borrower that is convertible into capital stock of the Borrower that is
made (or agreed to be made) in satisfaction, in whole or in part, of (i) such
Indebtedness or (ii) the Borrower’s obligations to issue capital stock upon any
such holder’s conversion of such Indebtedness to capital stock of the Borrower,
in either case, whether paid or distributed by the Borrower upon any such
Holder’s request to convert any such Indebtedness to capital stock of the
Borrower or otherwise.
     “Environmental Complaint” means any complaint, summons, citation, notice,
directive, order, claim, litigation, investigation, proceeding, judgment, letter
or other communication from any federal, state or municipal authority or any
other party against any Loan Party involving (a) a Hazardous Discharge from,
onto or about any real property owned, leased or operated at any time by any
Loan Party, or (b) a Hazardous Discharge caused, in whole or in part, by any
Loan Party or by any Person acting on behalf of or at the instruction of any
Loan Party, or (c) any violation of any Environmental Law by any Loan Party.
     “Environmental Laws” means any and all applicable Governmental Rules
pertaining to health (with respect to exposure to Hazardous Materials) or the
environment in effect in any and all jurisdictions in which the Borrower or any
Subsidiary is conducting or at any time has

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conducted business, or where any Property of the Borrower or any Subsidiary is
located, including, without limitation, OPA, the Clean Air Act, as amended,
CERCLA, the Federal Water Pollution Control Act, as amended, the Occupational
Safety and Health Act of 1970, as amended, the Resource Conservation and
Recovery Act of 1976 (“RCRA”), as amended, the Safe Drinking Water Act, as
amended, the Toxic Substances Control Act, as amended, the Superfund Amendments
and Reauthorization Act of 1986, as amended, the Hazardous Materials
Transportation Act, as amended, the Environmental Protection and Enhancement
Act, R.S.A. 2000, c. E-12, as amended, the Canadian Environmental Protection
Act, 1999. S.C. 1999. c. 33, as amended, and other environmental conservation or
protection laws. The term “oil” shall have the meaning specified in OPA, the
term “release” (or “threatened release”) shall have the meaning specified in
CERCLA, and the term “disposal” (or “disposed”) shall have the meaning specified
in RCRA; provided, however, that (i) in the event either OPA, CERCLA or RCRA is
amended so as to broaden the meaning of any term defined thereby, such broader
meaning shall apply subsequent to the effective date of such amendment and
(ii) to the extent the laws of the state, province or territory in which any
Property of the Borrower or any Subsidiary is located establish a meaning for
“oil”, “release”, or “disposal” which is broader than that specified in either
OPA, CERCLA or RCRA, such broader meaning shall apply.
     “Environmental Liability” means any liability, contingent or otherwise
(including any liability for damages, costs of environmental remediation, fines,
penalties or indemnities), of the Borrower or any of its Subsidiaries resulting
from or based upon (a) violation of any Environmental Law, (b) the generation,
use, handling, transportation, storage, treatment or disposal of any Hazardous
Materials, (c) exposure to any Hazardous Materials, (d) the release or
threatened release of any Hazardous Materials into the environment, or (e) any
contract or agreement pursuant to which liability is assumed or imposed with
respect to any of the foregoing.
     “Equity Interests” means, with respect to any Person, shares of the capital
stock, partnership interests, membership interests in a limited liability
company, beneficial interests in a trust or other equity interests in such
Person or any warrants, options or other rights to acquire any of the foregoing.
     “Equivalent Amount” means, as at any date, the amount of Canadian Dollars
into which an amount of U.S. Dollars may be converted, or the amount of U.S.
Dollars into which an amount of Canadian Dollars may be converted, in either
case at the rate of exchange for U.S. Dollars and Canadian Dollars as published
in The Wall Street Journal for such day or, if there is no such rate of exchange
so published for such day, at The Bank of Canada mid-point noon spot rate of
exchange for such date in Toronto at approximately 12:00 noon, Toronto time on
such date.
     “ERISA” means the Employee Retirement Income Security Act of 1974, as
amended, and any successor statute of similar import, together with the rules,
regulations and interpretations thereunder, in each case as in effect from time
to time.
     “ERISA Affiliate” means all members of a controlled group of corporations
and all members of a controlled group of trades or businesses (whether or not
incorporated) under

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common control which, together with the Borrower, are treated as a single
employer under Section 414 (b) or 414 (c) of the Code or Section 4001(b)(1) of
ERISA.
     “Eurodollar”, when used in reference to any Revolving Loan or Revolving
Borrowing, refers to whether such Loan, or the Loans comprising such Borrowing,
is bearing interest at a rate determined by reference to the Adjusted Eurodollar
Rate.
     “Eurodollar Rate” means, with respect to any Eurodollar Borrowing for any
Interest Period, the applicable British Bankers’ Association LIBOR rate for
deposits in U.S. Dollars as reported by any generally recognized financial
information service as of 11:00 a.m. (London time) two Business Days prior to
the first day of such Interest Period, and having a maturity equal to such
Interest Period, provided that, if no such British Bankers’ Association LIBOR
rate is available to the Global Administrative Agent, the applicable Eurodollar
Rate for the relevant Interest Period shall instead be the rate determined by
the Global Administrative Agent to be the rate at which JPMorgan or one of its
Affiliate banks offers to place deposits in U.S. Dollars with first-class banks
in the London interbank market at approximately 11:00 a.m. (London time) two
Business Days prior to the first day of such Interest Period, in the approximate
amount of JPMorgan’s relevant Eurodollar loan and having a maturity equal to
such Interest Period.
     “Event of Default” has the meaning assigned to such term in Section 8.1.
     “Exchange Act” means the Securities Exchange Act of 1934, as amended from
time to time.
     “Excluded Taxes” means, with respect to any Agent, any Lender, any Issuing
Bank or any other recipient of any payment to be made by or on account of any
obligation of the Borrower hereunder, (a) income or franchise taxes imposed on
(or measured by) its net income by the United States of America, or by the
jurisdiction under the laws of which such recipient is or was organized or in
which its principal office is or was located or, in the case of any Lender, in
which its Applicable Lending Office is or was located, (b) any branch profits
taxes imposed by the United States of America or any similar tax imposed by any
other jurisdiction in which the recipient is or was located and (c) in the case
of a Foreign Lender (other than an assignee pursuant to a request by the
Borrower under Section 2.20(b)), any withholding tax that is imposed on amounts
payable to such Foreign Lender at the time such Foreign Lender becomes a party
to this Agreement (or designates a new Applicable Lending Office) or is
attributable to such Foreign Lender’s failure to comply with Section 2.18(e),
except to the extent that such Foreign Lender (or its assignor, if any) was
entitled, at the time of designation of a new Applicable Lending Office (or
assignment), to receive additional amounts from the Borrower with respect to
such withholding tax pursuant to Section 2.18(a).
     “Existing Convertible Debentures” means, collectively, each of Borrower’s
1.875% Convertible Subordinated Debentures due 2024, as amended, restated,
renewed, extended, supplemented, increased, replaced or otherwise modified from
time to time to the extent permitted hereunder and under the Existing
Convertible Note Indenture.
     “Existing Convertible Note Indenture” means that certain Indenture dated as
of November 1, 2004, between the Borrower and JPMorgan, as the same may be
modified,

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amended, renewed, supplemented, extended, restated, increased or replaced from
time to time to the extent permitted hereunder and under the Existing
Convertible Note Indenture.
     “Existing Credit Agreement” has the meaning given to such term in the
recitals.
     “Existing Lenders” has the meaning given to such term in the recitals.
     “Existing Letter of Credit” is defined in Section 2.5(j).
     “Existing Loan Documents ” has the meaning given to such term in the
recitals.
     “Existing Loan Indebtedness” has the meaning given to such term in the
recitals.
     “Existing Subordinate Debt” means all unsecured Indebtedness of the
Borrower and its Subsidiaries outstanding from time to time under the Existing
Subordinate Note Documents (including Guarantees thereof by Subsidiaries),
including all renewals, refinancings, replacements, and extensions thereof to
the extent permitted hereunder and made in accordance with the terms of the
Combined Loan Documents (including Section 7.14).
     “Existing Subordinate Note Documents” means the Existing Subordinate Notes,
the Existing Subordinate Note Indenture, the Existing Convertible Debentures,
the Existing Convertible Note Indenture, and all promissory notes, guarantees
and other documents, instruments and agreements executed and delivered pursuant
to the Existing Subordinate Note Indenture or the Existing Convertible Note
Indenture evidencing, guaranteeing or otherwise pertaining to the Existing
Subordinate Debt.
     “Existing Subordinate Note Indenture” means that certain Indenture dated as
of December 22, 2005, between the Borrower and JPMorgan, as Trustee, as
supplemented by that certain (a) First Supplemental Indenture, dated as of
March 16, 2006, among the Borrower, the subsidiary guarantors party thereto and
JPMorgan, as Trustee, (b) Second Supplemental Indenture, dated as of July 31,
2006, among the Borrower, the subsidiary guarantors party thereto and JPMorgan,
as Trustee, and (c) Third Supplemental Indenture, dated as of September 26,
2006, among the Borrower, the subsidiary guarantors party thereto and JPMorgan,
as Trustee, and as the same may be modified, amended, renewed, supplemented,
restated, increased or replaced from time to time to the extent permitted
hereunder and under the Existing Subordinate Note Indenture.
     “Existing Subordinate Notes” means, collectively, each of Borrower’s 71/2%
Senior Subordinated Notes due 2016, as amended, restated, renewed, extended,
supplemented, increased, replaced or otherwise modified from time to time to the
extent permitted hereunder and under the Existing Subordinate Note Indenture.
     “Falcon Seaboard Settlement Agreement” means that certain settlement
agreement dated as of September 30, 1994, pursuant to which Borrower (as
successor in interest to Mercury Exploration) is obligated to deliver certain
gas volumes at a fixed price, as more particularly described therein.

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     “Federal Funds Effective Rate” means, for any day, an interest rate per
annum equal to the weighted average (rounded upwards, if necessary, to the next
1/100th of 1%) of the rates on overnight Federal funds transactions with members
of the Federal Reserve System arranged by Federal funds brokers on such day, as
published for such day (or if such day is not a Business Day, for the
immediately preceding Business Day) by the Federal Reserve Bank of New York, or,
if such rate is not so published for any day which is a Business Day, the
average (rounded upwards, if necessary, to the next 1/100th of 1%) of the
quotations at approximately 10:00 a.m. (Chicago time) on such day on such
transactions received by the Global Administrative Agent from three Federal
funds brokers of recognized standing selected by the Global Administrative Agent
in its sole reasonable discretion.
     “Fee Letter” means, collectively, that certain (a) Fee Letter (the “JPM Fee
Letter”) dated as of January 19, 2007, by and among the Borrower, JPMorgan Chase
Bank, N.A., JPMorgan Chase Bank, N.A., Toronto Branch, and J.P. Morgan
Securities Inc., and (b) Fee Letter (the “BofA Fee Letter”) dated as of
January 24, 2007, by and among the Borrower, Bank of America, N.A., Bank of
America, N.A. (by its Canada branch) and Banc of America Securities LLC, as each
such letter may be amended, supplemented, restated or otherwise modified from
time to time in accordance with the Loan Documents.
     “Financial Officer” of any Person means its Chief Financial Officer;
provided, that if no Person serves in such capacity, “Financial Officer” shall
mean the highest ranking executive officer of such Person with responsibility
for accounting, financial reporting, cash management and similar functions.
     “Financial Statements” means the financial statement or statements of the
Borrower and its Consolidated Subsidiaries described or referred to in
Section 3.4.
     “Financing Transactions” means the execution, delivery and performance by
each Loan Party of the Loan Documents to which it is to be a party, the
borrowing of the Loans, the use of the proceeds thereof and the issuance of
Letters of Credit hereunder.
     “Fiscal Quarter” means the three (3) month periods ending on March 31,
June 30, September 30 and December 31 of each Fiscal Year.
     “Fiscal Year” means a twelve (12) month period ending December 31.
     “Flex Lender” means any Lender identified as a “Flex Lender” on
Schedule 2.1, as such Schedule 2.1 is replaced or amended from time to time
pursuant to the terms hereof.
     “Flex Percentage” means, with respect to each Flex Lender (and its
Affiliate, if any, that is a Canadian Lender), a percentage determined by
dividing the Global Commitment associated with such Flex Lender (and such
Affiliate, if any) by the aggregate Global Commitments associated with all Flex
Lenders (and their Affiliates, if any, that are Canadian Lenders).
     “Flex Portion” means that unallocated portion of the Combined Commitments
remaining after making the allocations described in Section 2.1(c)(ii) and
(iii).

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     “Foreign Entity” means any Person (other than a natural person and a
Foreign Subsidiary) that is organized under the laws of a jurisdiction other
than the United States of America or any State thereof or the District of
Columbia.
     “Foreign Lender” means any Lender that is organized under the laws of a
jurisdiction other than the United States of America or any State thereof or the
District of Columbia.
     “Foreign Subsidiary” means any Subsidiary that is organized under the laws
of a jurisdiction other than the United States of America or any State thereof
or the District of Columbia.
     “GAAP” means generally accepted accounting principles in the United States
of America as in effect from time to time.
     “Gas Balancing Agreement” means any agreement or arrangement whereby any
Loan Party, or any other party having an interest in any Hydrocarbons to be
produced from Mineral Interests in which any Loan Party owns an interest, has a
right to take more than its proportionate share of production therefrom.
     “Global Administrative Agent” means JPMorgan Chase Bank, N.A. (successor by
merger to Bank One, NA), in its capacity as global administrative agent for the
Combined Lenders, and its successors.
     “Global Borrowing Base” means the “Global Borrowing Base” as determined
from time to time pursuant to Section 2.8.
     “Global Borrowing Base Deficiency” means, at the time of determination, the
amount by which (a) the Combined Credit Exposure exceeds (b) the then current
Global Borrowing Base.
     “Global Borrowing Base Designation Notice” is defined in Section 2.8(b).
     “Global Borrowing Base Utilization” means, at the time of determination, an
amount (expressed as a percentage) equal to the quotient of (a) the Combined
Credit Exposure divided by (b) the Global Borrowing Base.
     “Global Commitment” means, with respect to each Lender (and its Affiliate,
if any, that is a Canadian Lender), the amount set forth on Schedule 2.1 as the
“Global Commitment” for such Lender (and such Affiliate, if any) or in the
Register following any Assignment and Acceptance to which such Lender (and such
Affiliate, if any) is a party, as such Global Commitment may be (a) reduced from
time to time pursuant to Section 2.9, (b) increased from time to time pursuant
to Section 2.1(b), (c) reallocated from time to time pursuant to Section 2.1(c),
(d) reduced or increased from time to time pursuant to assignments by or to such
Lender pursuant to Section 10.4, and (e) terminated pursuant to Section 8.2 or
8.3. The initial aggregate principal amount of the Global Commitments of the
Lenders (and their respective Affiliates who are Canadian Lenders) is
U.S.$1,200,000,000.
     “Global Commitment Increase” is defined in Section 2.1(b).

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     “Global Effective Date” means the date on which the conditions specified in
Section 4.1 of each Combined Credit Agreement are satisfied (or waived in
accordance with Section 10.2 of each Combined Credit Agreement).
     “Governmental Approval” means (a) any authorization, consent, approval,
license, ruling, permit, tariff, rate, certification, waiver, exemption, filing,
variance, claim, order, judgment or decree of, or with, (b) any required notice
to, (c) any declaration of or with, or (d) any registration by or with, any
Governmental Authority.
     “Governmental Authority” means the government of the United States of
America, Canada, any other nation or any political subdivision thereof, whether
state, provincial, territorial or local, and any agency, authority,
instrumentality, regulatory body, court, central bank or other entity exercising
executive, legislative, judicial, taxing, regulatory or administrative powers or
functions of or pertaining to government.
     “Governmental Rule” means any statute, law, regulation, ordinance, rule,
judgment, order, decree, permit, concession, grant, franchise, license,
agreement, directive or other governmental restriction or binding form of
decision of or determination by, or binding interpretation or administration of
any of the foregoing by, any Governmental Authority, whether now or hereafter in
effect.
     “Guarantee” by any Person means any obligation, contingent or otherwise, of
such Person directly or indirectly guaranteeing any Indebtedness or other
obligation of any other Person and, without limiting the generality of the
foregoing, any obligation, direct or indirect, contingent or otherwise, of such
Person (a) to purchase or pay (or advance or supply funds for the purchase or
payment of) such Indebtedness or other obligation (whether arising by virtue of
partnership arrangements, by agreement to keep-well, to purchase assets, goods,
securities or services, to take-or-pay, or to maintain financial statement
conditions, by “comfort letter” or other similar undertaking of support or
otherwise) or (b) entered into for the purpose of assuring in any other manner
the obligee of such Indebtedness or other obligation of the payment thereof or
to protect such obligee against loss in respect thereof (in whole or in part),
provided, that the term “Guarantee” shall not include (x) endorsements of
instruments for collection or deposit in the ordinary course of business or
(y) indemnities given in connection with asset sales or otherwise provided in
the ordinary course of business. The terms “Guarantee” and “Guaranteed” used as
a verb shall have a correlative meaning.
     “Guarantor” means each Material Subsidiary listed on Exhibit L (except QR
Canada) under the heading “Material Subsidiaries” and each Subsidiary that is
required to execute a Guaranty pursuant to Section 5.15.
     “Guaranty” means a Guaranty made pursuant to Section 4.1(a) or Section 5.15
by a Guarantor in favor of the Global Administrative Agent, substantially in the
form of Exhibit G, as amended, supplemented, restated or otherwise modified from
time to time in accordance with the terms of this Agreement and the other Loan
Documents. The term “Guaranties” shall include each and every Guaranty executed
and delivered by a Guarantor hereunder.

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     “Hazardous Discharge” means any releasing, spilling, leaking, pumping,
pouring, emitting, emptying, discharging, injecting, escaping, leaching,
disposing or dumping of any Hazardous Material from or onto any real property
owned, leased or operated at any time by any Loan Party or any real property
owned, leased or operated by any other Person.
     “Hazardous Material” means all explosive or radioactive substances or
wastes and all hazardous or toxic substances, wastes or other pollutants,
asbestos or asbestos containing materials, polychlorinated biphenyls, radon gas,
infectious or medical wastes and all other substances or wastes of any nature
regulated pursuant to any Environmental Law, and any petroleum, petroleum
products or petroleum distillates and associated oil or natural gas exploration,
production and development wastes that are not exempted or excluded from being
defined as “hazardous substances”, “hazardous materials”, “hazardous wastes” and
“toxic substances” under such Environmental Laws.
     “Hedge Transaction” means any financial derivative transaction, including
any commodity, interest rate, currency or other derivative, swap, option,
collar, futures contract or other contract pursuant to which a Person hedges
risks related to commodity prices, interest rates, currency exchange rates,
securities prices or financial market conditions. “Hedge Transactions” expressly
includes Oil and Gas Hedge Transactions.
     “Hedging Agreements” means, collectively, any agreement, instrument,
arrangement or schedule or supplement thereto evidencing any Hedge Transaction.
     “Hedging Obligations” means, with respect to any Person, all liabilities
(including but not limited to obligations and liabilities of such Person arising
in connection with or as a result of early or premature termination of a Hedging
Agreement or Hedge Transaction, whether or not occurring as a result of a
default thereunder) of such Person under a Hedging Agreement or Hedge
Transaction.
     “Highest Lawful Rate” is defined in Section 10.13.
     “Holdings” is defined in Exhibit N.
     “Hydrocarbons” means, collectively, oil, gas, casinghead gas, drip
gasolines, natural gasoline, condensate, distillate, and all other liquid and
gaseous hydrocarbons produced or to be produced in conjunction therewith, and
all products, by-products and all other substances refined, separated, settled
or derived therefrom or the processing thereof, and all other minerals and
substances, including, but not limited to, liquified petroleum gas, natural gas,
kerosene, sulphur, lignite, coal, uranium, thorium, iron, geothermal steam,
water, carbon dioxide, helium, and any and all other minerals, ores, or
substances of value, and the products and proceeds therefrom, including, without
limitation, all gas resulting from the in-situ combustion of coal or lignite.
     “Immaterial Title Deficiencies” has the meaning assigned to such term in
Section 3.9.
     “Indebtedness” means, for any Person, (without duplication): (a) all
obligations of such Person for borrowed money, (b) all obligations of such
Person evidenced by bonds, debentures, notes or other similar instruments,
(c) all other indebtedness (including Capital Lease

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Obligations, other than oil and gas leases entered into in the ordinary course
of business) of such Person on which interest charges are customarily paid or
accrued, (d) all Guarantees by such Person, (e) the unfunded or unreimbursed
portion of all letters of credit, banker’s acceptances, surety or other bonds or
instruments issued for the account of such Person, (f) any amount owed by such
Person representing the deferred purchase price of property or services (other
than accounts payable incurred in the ordinary course of business and which have
not been outstanding for more than ninety (90) days past the applicable due
date, or if outstanding beyond such date, such account payable is being
contested in good faith and such Person has established appropriate reserves, if
any, as required in conformity with GAAP), (g) all obligations of such Person
secured by a Lien on any property or asset owned or held by that Person
regardless of whether the indebtedness secured thereby shall have been assumed
by that Person, (h) all obligations under operating leases (i) which require
such Person or its Affiliate to make payments over the term of such lease,
including payments at termination, based on the purchase price or appraisal
value of the Property subject to such lease plus a marginal interest rate, and
(ii) that are used primarily as a financing vehicle for such Property,
(i) obligations to deliver goods or services, including, without limitation,
Hydrocarbons and the forward sale of Hydrocarbons, in consideration of Advance
Payments, (j) the undischarged balance of any Production Payment created by such
Person or for the creation of which such Person directly or indirectly received
payment, to the extent such Production Payment would be reflected as
indebtedness on a consolidated balance sheet of such Person, (k) net liabilities
of such Person under all Hedging Obligations determined in accordance with GAAP,
and (l) all liability of such Person as a general partner of a partnership for
obligations of such partnership of the nature described in clauses (a) through
(k) preceding.
     “Indemnified Taxes” means Taxes other than Excluded Taxes and Other Taxes.
     “Indemnitee” is defined in Section 10.3(b).
     “Initial Reserve Report” means (a) that certain reserve report which was
prepared by Schlumberger Data and Consulting Services, evaluating the Oil and
Gas Properties of the Borrower and its Subsidiaries as of December 31, 2006,
located in the United States and (b) that certain reserve report which was
prepared by LaRoche Petroleum Consultants Limited, evaluating the Oil and Gas
Properties of the Borrower and its Subsidiaries as of December 31, 2006, located
in Canada, true and correct copies of which have been delivered to the Global
Administrative Agent.
     “Intercreditor Agreement” means that certain Amended and Restated
Intercreditor Agreement dated as of even date herewith by and among the Global
Administrative Agent on behalf of the “Combined Lenders”, the “Combined Issuing
Banks”, the “Accepting Lenders”, the “Lender Hedge Counterparties” and the other
“Agents” as defined therein, and the Canadian Administrative Agent on behalf of
the “Canadian Lenders”, the “Canadian Issuing Banks”, the “Accepting Lenders”,
the “Canadian Lender Hedge Counterparties” and the other “Canadian Agents” as
defined therein, as amended, supplemented, restated or otherwise modified from
time to time in accordance with the Combined Loan Documents.
     “Interest Election Request” means a written or telephonic request by an
Authorized Officer of the Borrower to (a) convert or continue a Revolving
Borrowing in accordance with

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Section 2.7, which if written shall be in substantially the form of Exhibit E-2
or any other form approved by the Global Administrative Agent, or (b) convert a
Swingline Borrowing in accordance with Section 2.4, which if written shall be in
substantially the form of Exhibit E-4 or any other form approved by the Global
Administrative Agent.
     “Interest Payment Date” means (a) with respect to any ABR Revolving Loan,
the last day of each March, June, September and December, (b) with respect to
any Eurodollar Loan, the last day of the Interest Period applicable to the
Borrowing of which such Loan is a part and, in the case of a Eurodollar
Borrowing with an Interest Period of more than three (3) months’ duration, each
day prior to the last day of such Interest Period that occurs at intervals of
three (3) months’ duration after the first day of such Interest Period, and
(c) with respect to any Swingline Loan, the day that such Swingline Loan is
required to be repaid pursuant to Section 2.10(a)(ii); provided that, if a
Swingline Loan is converted to a Revolving Loan in accordance with Section 2.4
on a day which is not an Interest Payment Date with respect to Revolving Loans
as provided in clauses (a) or (b) of this definition, then the Interest Payment
Date for such converted Swingline Loan shall, as of the effective date of such
conversion to a Revolving Loan and thereafter, be the Interest Payment Date for
such Revolving Loan.
     “Interest Period” means with respect to any Eurodollar Borrowing, the
period commencing on the date of such Borrowing and ending on the numerically
corresponding day, or, with the consent of the Global Administrative Agent, such
other day, in the calendar month that is one, two, three or six months or, if
available to all Lenders, nine or twelve months thereafter, as the Borrower may
elect; provided, that (a) if any Interest Period would end on a day other than a
Business Day, such Interest Period shall be extended to the next succeeding
Business Day unless such next succeeding Business Day would fall in the next
calendar month, in which case such Interest Period shall end on the next
preceding Business Day, (b) any Interest Period pertaining to a Eurodollar
Borrowing that commences on the last Business Day of a calendar month (or on a
day for which there is no numerically corresponding day in the last calendar
month of such Interest Period) shall end on the last Business Day of the last
calendar month of such Interest Period, and (c) no Interest Period may end later
than the last day of the Availability Period. For purposes hereof, the date of a
Eurodollar Borrowing initially shall be the date on which such Borrowing is made
and thereafter shall be the effective date of the most recent conversion or
continuation of such Borrowing.
     “Investment” means, with respect to any Person, any loan, advance,
extension of credit or capital contribution to, investment in or purchase of the
stock or other securities of, or interests in, any other Person.
     “IPO” is defined in Exhibit N.
     “Issuing Bank” means (i) the Global Administrative Agent and (ii) any other
Lender agreed to among the Borrower and the Global Administrative Agent to issue
Letters of Credit. An Issuing Bank may, in its discretion, arrange for one or
more Letters of Credit to be issued by Affiliates of such Issuing Bank, in which
case the term “Issuing Bank” shall include any such Affiliate with respect to
Letters of Credit issued by such Affiliate.

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     “JPMorgan” means JPMorgan Chase Bank, N.A., a national banking association,
in its individual capacity, and its successors.
     “Judgment Currency” is defined in Section 2.21(b).
     “LC Disbursement” means a payment made by any Issuing Bank pursuant to a
Letter of Credit.
     “LC Exposure” means, at any time, the sum of (a) the aggregate undrawn
amount of all outstanding Letters of Credit at such time plus (b) the aggregate
amount of all LC Disbursements that have not yet been reimbursed by or on behalf
of the Borrower at such time. The LC Exposure of any Lender at any time shall be
its Applicable Percentage of the aggregate LC Exposure at such time.
     “Lender Affiliate” means, with respect to any Lender, (a) an Affiliate of
such Lender or (b) any entity (whether a corporation, partnership, trust or
otherwise) that is engaged in making, purchasing, holding or otherwise investing
in bank loans and similar extensions of credit in the ordinary course of its
business and is administered or managed by a Lender or an Affiliate of such
Lender and with respect to any Lender that is a fund which invests in bank loans
and similar extensions of credit, any other fund that invests in bank loans and
similar extensions of credit and is managed by the same investment advisor as
such Lender or by an Affiliate of such investment advisor.
     “Lender Parties” means the Agents, the Lenders, the Issuing Banks and each
Affiliate of a then current Lender that is party to a Hedge Agreement with the
Borrower (or with any Loan Party that is organized in the United States, any
state thereof or the District of Columbia, and each of their respective
successors, transferees and assigns).
     “Lenders” means the Persons listed on Schedule 2.1 and any other Person
that shall have become a party to this Agreement pursuant to an Additional
Lender Certificate or an Assignment and Acceptance, other than any such Person
that ceases to be a party hereto pursuant to an Assignment and Acceptance.
Unless the context otherwise requires, the term “Lenders” shall include the
Swingline Lender.
     “Letter of Credit” means any letter of credit issued pursuant to this
Agreement.
     “Lien” means (a) any lien, charge or security interest arising from a
mortgage, encumbrance, pledge, security agreement, conditional sale or trust
receipt or a lease, consignment, bailment or margin account for security
purposes, (b) Production Payments and the like which constitute Indebtedness,
payable out of Oil and Gas Properties or (c) reservations, exceptions,
encroachments, easements, rights of way, covenants, conditions, restrictions,
leases and other title exceptions and encumbrances affecting title to Property.
For the purposes of this Agreement, Borrower and its Subsidiaries shall be
deemed to own subject to a Lien any asset which is acquired or held subject to
the interest of a vendor or lessor under any conditional sale agreement, capital
lease or other title retention agreement relating to such asset.
     “Loan Documents” means (a) this Agreement, the Notes, the Security
Documents, the Fee Letter, the Intercreditor Agreement, the Hedging Agreements
between the Borrower or any

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of its U.S. Subsidiaries and any Lender or any Affiliate of a then current
Lender, any Borrowing Request, any Interest Election Request, any Additional
Lender Certificate, and any Assignment and Acceptance, and (b) each other
agreement, document or instrument delivered by the Borrower or any other Person
in connection with this Agreement, as such may be amended from time to time.
     “Loan Parties” means the Borrower, the Guarantors, the Canadian Borrower,
and any Material Subsidiary of the Borrower and any Material Subsidiary (as
defined in the Canadian Credit Agreement) of the Canadian Borrower that executes
a Combined Loan Document, for so long as such Combined Loan Document is in
effect.
     “Loans” means the loans made by the Lenders to the Borrower pursuant to
this Agreement.
     “Long Term Debt” means Indebtedness which matures more than one year from
the date it is incurred, or which can be extended at the option of the
obligor(s) to a date more than one year from the date it is incurred.
     “Majority Lenders” means the Combined Lenders holding Combined Commitments
(or Combined Credit Exposure, as applicable) in the aggregate greater than 50%
of the aggregate Combined Commitments under the Combined Loan Documents, or, if
the Combined Commitments have been terminated, the aggregate Combined Credit
Exposure under the Combined Loan Documents.
     “Margin Stock” means “margin stock” within the meaning of Regulation U.
     “Material Adverse Effect” means a material and adverse effect on (a) the
financial condition, business operations, properties or assets of the Borrower
and its Subsidiaries, taken as a whole, (b) (i) the validity and enforceability
of this Agreement, the Notes, the Security Documents or any other material
Combined Loan Documents, or (ii) the perfection or priority of any material Lien
purported to be created thereby, or (c) the right or ability of the Loan Parties
to fully, completely and timely pay and perform their obligations under the
Combined Loan Documents.
     “Material Agreement” means any material written or oral agreement or
contract to which a Person is a party, by which such Person is bound, or to
which any material assets of such Person are subject, which is not cancelable by
such Person upon notice of thirty (30) days or less without liability for
further payment other than nominal penalty.
     “Material Gas Imbalance” means, with respect to all Gas Balancing
Agreements to which any Loan Party is a party or by which any Borrowing Base
Property is bound, a net negative gas imbalance in the aggregate for all Loan
Parties in excess of one half bcf of gas (on an mcf equivalent basis) in the
aggregate.
     “Material Subsidiary” means (a) any Subsidiary of the Borrower listed on
Exhibit L under the heading “Material Subsidiaries,” and (b) any Subsidiary of
the Borrower that (i) is designated by the Borrower in writing to the Global
Administrative

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Agent as a Material Subsidiary, (ii) owns Mortgaged Properties or (iii) is a
direct or indirect parent of any Material Subsidiary.
     “Maturity Date” means February 9, 2012, as such date may be extended
pursuant to Section 2.9(e).
     “Mercury Exploration” means Mercury Exploration Company, a Texas
corporation.
     “Mercury Production” means Mercury Production Company, a Texas corporation.
     “Mineral Interests” means all rights, estates, titles, and interests in and
to oil and gas leases and any oil and gas interests, royalty and overriding
royalty interests, production payments, net profits interests, oil and gas fee
interests, and other rights therein, including, without limitation, any
reversionary or carried interests relating to the foregoing, together with
rights, titles, and interests created by or arising under the terms of any
unitization, communization, and pooling agreements or arrangements, and all
properties, rights and interests covered thereby, whether arising by contract,
by order, or by operation of Governmental Rules, which now or hereafter include
all or any part of the foregoing.
     “Minimum Threshold Amount” is defined in Section 2.8(d)(iii).
     “MLP” is defined in Exhibit N.
     “MLP Subsidiaries” means, collectively, on and after the closing of the
IPO, (a) the MLP, (b) the General Partner, Operating LLC and Operating GP LLC
(as each term is defined in Exhibit N), (c) Pipeline Partners and Processing
Partners, and (d) any additional Wholly-Owned Subsidiary of Holdings or the MLP,
and any indirect Subsidiary of the Borrower, in each case formed on or after the
Closing Date to effect the MLP Transactions.
     “MLP Transactions” means the transactions described on Exhibit N attached
hereto or in a replacement exhibit that is delivered to and approved by the
Majority Lenders in their sole discretion.
     “Monthly Date” means the fifteenth day of each calendar month.
     “Moody’s” means Moody’s Investors Service, Inc. and any successor thereto
that is a nationally recognized rating agency.
     “Mortgage” means the Mortgage, Deed of Trust, Assignment of Production,
Security Agreement, Financing Statement and Fixture Filing delivered pursuant to
the Loan Documents in substantially the form of Exhibit H (or in such other form
as the Global Administrative Agent may approve), executed and delivered by the
Borrower or any Loan Party (other than Foreign Subsidiaries), as the case may
be, as amended, supplemented, restated or otherwise modified from time to time
in accordance with the terms of this Agreement and the other Loan Documents. The
term “Mortgage” shall include (a) each mortgage supplement or amendment after
execution and delivery of such mortgage supplement or amendment, (b) each and
every Mortgage executed and delivered by each of the Borrower and its
Subsidiaries hereunder, and (c) each and every “Mortgage” (as defined in the
Existing Credit

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Agreement) executed and delivered by each of the Borrower and its Subsidiaries
under the Existing Credit Agreement, as amended, supplemented, restated or
otherwise modified from time to time in accordance with the terms of the
Existing Credit Agreement and the terms of this Agreement and the other Loan
Documents, other than any such Mortgage that has previously been released in
writing by the Global Administrative Agent or by the “Global Administrative
Agent” (as defined in the Existing Credit Agreement).
     “Mortgaged Property” means any Oil and Gas Property with respect to which a
Lien is granted pursuant to a Mortgage.
     “Net Cash Proceeds” means, with respect to any sale or other disposition
(including a Casualty Event), the cash proceeds (including cash equivalents and
any cash payments received by way of deferred payment of principal pursuant to a
note or installment receivable or purchase price adjustment receivable or
otherwise, but only as and when received) of such sale or other disposition
(including a Casualty Event) received by the Borrower or any of its
Subsidiaries, net of (a) all attorneys’ fees, accountants’ fees, investment
banking fees and other customary expenses, fees and commissions actually
incurred by the Borrower or any of its Subsidiaries, (b) Taxes paid as of the
date of receipt of such Net Cash Proceeds as a result of such sale or
disposition by the Borrower or any of its Subsidiaries, (c) amounts required to
be applied to the repayment of any Indebtedness secured by a Lien expressly
permitted hereunder on any Property that is the subject of such sale or other
disposition (other than any Lien pursuant to a Security Document), (d) cash
payments made to satisfy obligations resulting from early termination of Hedging
Agreements, and (e) any portion of the purchase price from such sale or other
disposition held as a reserve or placed in escrow, whether as a reserve for
adjustment of the purchase price, for satisfaction of indemnities in respect of
such sale or other disposition, or otherwise, to the extent directly
attributable to such sale or other disposition; provided, however, that upon
termination of such reserve or escrow, Net Cash Proceeds will be increased by
the portion of funds in such reserve or escrow that are released to the Borrower
or any of its Subsidiaries.
     “Non-Consenting Lender” is defined in Section 2.20(c).
     “Non-Recourse Debt” means Indebtedness of any Subsidiary which does not own
Borrowing Base Properties (a) secured solely by the assets acquired with the
proceeds of such Indebtedness and (b) with respect to which (i) no Loan Party
shall have any liability to any Person for repayment of all or any portion of
such Indebtedness beyond the assets so secured and (ii) the holders thereof
(A) shall have recourse only to, and shall the right to require the obligations
of such Subsidiary to be performed, satisfied or paid only out of, the assets so
secured and (B) shall have no direct or indirect recourse (including by way of
indemnity or guaranty) to any Loan Party, whether for principal, interest, fees,
expenses or otherwise; provided, however, that any such Indebtedness shall not
cease to be “Non-Recourse Debt” solely as a result of the instrument governing
such Indebtedness containing terms pursuant to which such Indebtedness becomes
recourse upon (i) fraud or misrepresentation by the Person in connection with
such Indebtedness, (ii) such Person failing to pay taxes or other charges that
result in the creation of Liens on any portion of the specific property securing
such Indebtedness or failing to maintain any insurance on such property required
under the instruments securing such Indebtedness, (iii) the conversion of any of
the collateral for such Indebtedness, (iv) such

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Person failing to maintain any of the collateral for such Indebtedness in the
condition required under the instruments securing the Indebtedness, (v) any
income generated by the specific property securing such Indebtedness being
applied in a manner not otherwise allowed in the instruments securing such
Indebtedness, (vi) the violation of any Environmental Law or otherwise affecting
the environmental condition of the specific property securing the Indebtedness
or (vii) the rights of the holder of such Indebtedness to the specific property
becoming impaired, suspended or reduced by any act, omission or
misrepresentation of such Person; provided further, however, that, upon the
occurrence of any of the foregoing clauses (i) through (vii) above, any such
Indebtedness shall cease to be “Non-Recourse Debt” and shall be deemed to be
Indebtedness incurred by such Person at such time.
     “Note” means any promissory note delivered pursuant to Section 2.10(e).
     “Obligations” means (without duplication), at any time, the sum of (a) the
Credit Exposure of the Lenders under the Loan Documents plus (b) all accrued and
unpaid interest and fees owing to the Lenders under the Loan Documents plus
(c) all Hedging Obligations in connection with all Hedging Agreements between
the Borrower or any of its Subsidiaries and any Lender or any Affiliate of a
Lender plus (d) all other obligations (monetary or otherwise) of the Borrower or
any Subsidiary to any Lender or any Agent, whether or not contingent, arising
(whether now or hereafter) under or in connection with any of the Loan
Documents.
     “Oil and Gas Hedge Transaction” means a Hedge Transaction pursuant to which
any Person hedges the price to be received by it for future production of
Hydrocarbons.
     “Oil and Gas Properties” means the Mineral Interests; the Properties now or
hereafter pooled or unitized with the Mineral Interests; all presently existing
or future unitization, pooling agreements and declarations of pooled units and
the units created thereby (including without limitation all units created under
orders, regulations and rules of any Governmental Authority having jurisdiction)
which may affect all or any portion of the Mineral Interests; all operating
agreements, joint venture agreements, contracts and other agreements which
relate to any of the Mineral Interests or the production, sale, purchase,
exchange or processing of Hydrocarbons from or attributable to such Mineral
Interests; all Hydrocarbons in and under and which may be produced and saved or
attributable to the Mineral Interests, the lands covered thereby and all oil in
tanks and all rents, issues, profits, proceeds, products, revenues and other
incomes from or attributable to the Mineral Interests; all tenements, profits á
prendre, hereditaments, appurtenances and Properties in anywise appertaining,
belonging, affixed or incidental to the Mineral Interests, Properties, rights,
titles, interests and estates described or referred to above, including any and
all Property, real or personal, now owned or hereafter acquired and situated
upon, used, held for use or useful in connection with the operating, working or
development of any of such Mineral Interests or Property (excluding drilling
rigs, automotive equipment or other personal Property which may be on such
premises for the purpose of drilling a well or for other similar temporary uses)
and including any and all oil wells, gas wells, water wells, injection wells or
other wells, buildings, structures, fuel separators, liquid extraction plants,
plant compressors, pumps, pumping units, field gathering systems, tanks and tank
batteries, fixtures, valves, fittings, machinery and parts, engines, boilers,
meters, apparatus, equipment, appliances, tools, implements, cables, wires,
towers, casing, tubing and rods, surface leases, rights-of-way,

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easements and servitudes together with all additions, substitutions,
replacements, accessions and attachments to any and all of the foregoing.
     “OPA” means the Oil Pollution Act of 1990, as amended from time to time.
     “Organic Documents” means, relative to any Person, its articles of
organization, association, formation or incorporation (or comparable document),
its by-laws, memorandum of association or operating agreement and all
partnership agreements, limited liability company or operating agreements and
similar arrangements applicable to ownership of its Equity Interests.
     “Other Currency” is defined in Section 2.21(a).
     “Other Taxes” means any and all present or future stamp or documentary
taxes or any other excise or property taxes, charges or similar levies arising
from any payment made under any Loan Document or from the execution, delivery or
enforcement of, or otherwise with respect to, any Loan Document, other than
Excluded Taxes and Indemnified Taxes.
     “Participant” is defined in Section 10.4(e).
     “PBGC” means the Pension Benefit Guaranty Corporation referred to and
defined in ERISA and any successor entity performing similar functions.
     “Permitted Encumbrances” means, with respect to any asset:
     (a) Liens securing the Combined Obligations;
     (b) minor defects in title which do not secure the payment of money and
otherwise have no material adverse effect on the value or the operation of the
subject property, and for the purposes of this Agreement, a minor defect in
title shall include, but not be limited to, easements, rights-of-way,
servitudes, permits, zoning restrictions, surface leases and other similar
rights in respect of surface operations, and easements for pipelines, streets,
alleys, highways, telephone lines, power lines, railways and other easements and
rights-of-way, on, over or in respect of any of the properties of any Loan Party
and Immaterial Title Deficiencies;
     (c) inchoate statutory or operators’ Liens securing obligations for labor,
services, materials and supplies arising in the ordinary course of business
which are not delinquent (except to the extent permitted by Section 5.7);
     (d) mechanic’s, materialmen’s, warehouseman’s, journeyman’s, vendor’s,
landlord’s and carrier’s Liens and other similar Liens arising by operation of
law in the ordinary course of business which are not delinquent (except to the
extent permitted by Section 5.7);
     (e) Liens for Taxes, assessments, fees and other charges of any
Governmental Authority not yet due or not yet delinquent, or, if delinquent,
that are being contested in good faith in the normal course of business by
appropriate action, as permitted by Section 5.7;
     (f) lease burdens payable to third parties which are deducted in the
calculation of discounted present value in the Reserve Report including, without
limitation, any royalty,

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overriding royalty, net profits interest, production payment, carried interest
or reversionary working interest in existence as of the Closing Date or as a
result of or in accordance with the Loan Party’s acquisition of the property
burdened thereby;
     (g) Liens securing Non-Recourse Debt permitted by Section 7.1;
     (h) Liens created by and arising out of the Falcon Seaboard Settlement
Agreement;
     (i) pledges or deposits in connection with workers’ compensation,
unemployment compensation and/or other social security legislation, and deposits
in the ordinary course of business securing liabilities to insurance carriers
under insurance or self-insurance arrangements;
     (j) deposits to secure the performance of bids, trade contracts, leases,
statutory obligations, surety and appeal bonds, performance bonds and other
similar obligations incurred in the ordinary course of business;
     (k) judgment Liens in respect of judgments that do not constitute an Event
of Default under Section 8.1(i);
     (l) any Lien existing on any Property or asset prior to the acquisition
thereof by the Borrower or any Subsidiary or existing on any Property or asset
of any Person that becomes a Subsidiary after the date hereof prior to the time
such Person becomes a Subsidiary; provided that (i) such Lien is not created in
contemplation of or in connection with such acquisition or such Person becoming
a Subsidiary, as applicable, (ii) such Lien shall not apply to any other
Property or assets of the Borrower or any Subsidiary and (iii) such Lien shall
secure only those obligations which it secures on the date of such acquisition
or the date such Person becomes a Subsidiary, as applicable, and extensions,
renewals and replacements of such obligations that are not in excess of the
outstanding principal amount of such obligations as of such acquisition date or
date such Person becomes a Subsidiary (provided, that such obligations and such
extensions, renewals, and replacements thereof so secured by such Lien, together
with the Indebtedness secured by Liens described in clause (o) below, shall at
no time exceed U.S.$20,000,000 in the aggregate);
     (m) any interest or title of a lessor under any lease entered into by the
Borrower or any Subsidiary in the ordinary course of business and in accordance
with the Combined Loan Documents and covering only the assets so leased;
     (n) Liens in existence on the date hereof listed on Schedule 7.3 securing
Indebtedness permitted by Section 7.1(e), provided that no such Lien is spread
to cover any additional property after the Closing Date and that the amount of
the Indebtedness secured thereby is not increased;
     (o) Liens on fixed or capital assets acquired, constructed or improved by
the Borrower or any of its Subsidiaries; provided that (i) such Liens secure
Indebtedness permitted by Section 7.1(l) hereof, (ii) such Liens and the
Indebtedness secured thereby are incurred prior to or within 90 days after such
acquisition, construction or improvement, (iii) the Indebtedness secured thereby
does not exceed 100% of the cost of acquiring, constructing or improving such
fixed or capital assets, (iv) such Liens shall not apply to any other property
or assets of Parent or

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any of such Subsidiaries, and (iv) the Indebtedness secured by such Liens,
together with the obligations and extensions, renewals and replacements of such
obligations described in clause (l) above, shall at no time exceed
U.S.$20,000,000 in the aggregate;
     (p) Liens perfected by the filing of UCC financing statements, PPSA
financing statements or other applicable filings regarding any Permitted
Encumbrance;
     (q) Liens arising solely by virtue of any statutory or common law provision
relating to banker’s liens, rights of set-off or similar rights and remedies and
burdening only deposit accounts or other funds maintained with a creditor
depository institution;
     (r) contractual Liens that arise in the ordinary course of business under
operating agreements, joint venture agreements, oil and gas partnership
agreements, oil and gas leases, farm-out agreements, division orders, contracts
for the sale, transportation or exchange of oil and natural gas, unitization and
pooling declarations and agreements, area of mutual interest agreements,
overriding royalty agreements, marketing agreements, processing agreements, net
profits agreements, development agreements, gas balancing or deferred production
agreements, injection, repressuring and recycling agreements, salt water or
other disposal agreements, seismic or other geophysical permits or agreements,
and other agreements which are usual and customary in the oil and gas business
and are for claims which are not delinquent or which are being contested in good
faith by appropriate action and for which adequate reserves have been maintained
in accordance with GAAP; provided, that any such Lien referred to in this clause
(r) does not materially impair (i) the use of the Property covered by such Lien
for the purposes for which such Property is held by any Loan Party, or (ii) the
value of such Property subject thereto;
     (s) any Lien or encumbrance permitted by the Mortgages or the Debentures;
or
     (t) Liens not otherwise included in this definition so long as neither
(i) the aggregate outstanding principal amount of the obligations of all of the
Loan Parties secured thereby nor (ii) the aggregate fair market value
(determined as of the date such Lien is incurred) of the assets subject thereto
exceeds (as to the Borrower and all Subsidiaries) U.S.$40,000,000 at any one
time.
     “Permitted Investments” means:
     (a) readily marketable direct obligations of the United States of America
(or investments in mutual funds or similar funds which invest solely in such
obligations);
     (b) fully insured time deposits and certificates of deposit with maturities
of one year or less of any commercial bank operating in the United States having
capital and surplus in excess of U.S.$100,000,000;
     (c) all Investments held by any Loan Party in the form of cash or cash
equivalents;
     (d) all Investments by any Loan Party in Sweep Accounts;
     (e) commercial paper of a domestic issuer if at the time of purchase such
paper is rated in one of the two highest ratings categories of S&P or Moody’s;

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     (f) money market mutual or similar funds having assets in excess of
U.S.$100,000,000, at least 95% of the assets of which are comprised of assets
specified in clauses (a) through (e) above;
     (g) all Investments described in the Financial Statements or on
Schedule 7.8 hereto;
     (h) all Investments by any Loan Party in a direct or indirect Material
Subsidiary (other than Foreign Subsidiaries) of Borrower, so long as such
Material Subsidiary (other than Foreign Subsidiaries) has provided a Guaranty, a
Security Agreement and/or Mortgage in accordance with Section 4.1, 5.15 and
5.17, and the Equity Interests of such Material Subsidiary owned by the Borrower
or a Subsidiary of the Borrower has been pledged to the Global Administrative
Agent pursuant to a Pledge Agreement in accordance with, and as and to the
extent required by, Section 4.1, 5.15 and 5.17;
     (i) extensions of customer or trade credit in the ordinary course of
business;
     (j) Guarantee obligations permitted by Section 7.1;
     (k) all Investments by any Loan Party in any one or more direct or indirect
Subsidiaries of the Borrower (other than a Material Subsidiary) (i) that own,
lease, hold and/or are party to (A) any Oil and Gas Properties, (B) any gas
processing or gas gathering systems, (C) any farm-out, farm-in, joint operating,
joint venture or area of mutual interest agreements and/or (D) any gathering
systems, pipelines or other similar arrangements, in each case located within or
related to the geographic boundaries of the United States of America or Canada,
or (ii) the purpose of which is to act as a direct or indirect holding company
for any Subsidiary that satisfies one or more provisions of subclause (i) of
this clause (k), so long as the Equity Interests of any such Subsidiary owned by
such Loan Party have been pledged to the Global Administrative Agent pursuant to
a Pledge Agreement in accordance with, and as and to the extent required by,
Section 5.17 and Section 5.18;
     (l) all Investments constituting Indebtedness permitted by Section 7.1;
     (m) all Investments permitted by the Canadian Loan Documents;
     (n) all Investments by the Borrower or any Subsidiary in Foreign
Subsidiaries (i) existing as of the Global Effective Date that are set forth
under the heading “Investments in Foreign Subsidiaries” in Schedule 7.8 and
(ii) made after the Global Effective Date in an aggregate amount not to exceed
U.S.$30,000,000 at any one time outstanding;
     (o) all Investments arising from transactions by the Borrower or any
Subsidiary with customers or suppliers in the ordinary course of business,
including endorsements of negotiable instruments, debt obligations and other
Investments received by the Borrower or any Subsidiary in connection with the
bankruptcy or reorganization of customers and in settlement of delinquent
obligations of, and other disputes with, customers;
     (p) any Investments by any Loan Party in any Persons; provided that, the
aggregate amount of all such Investments made pursuant to this clause (p)
outstanding at any time shall not exceed U.S.$50,000,000 (measured on a cost
basis);

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     (q) all Investments by any Loan Party in Persons in which such Loan Party
owns an Equity Interest (other than a Material Subsidiary or a direct or
indirect Subsidiary of the Borrower) (i) that own, lease, hold and/or are party
to (A) any Oil and Gas Properties, (B) any gas processing or gas gathering
systems, (C) any farm-out, farm-in, joint operating, joint venture or area of
mutual interest agreements and/or (D) any gathering systems, pipelines or other
similar arrangements, in each case located within or related to the geographic
boundaries of the United States of America or Canada, or (ii) the purpose of
which is to act as a direct or indirect holding company for any Person that
satisfies one or more provisions of subclause (i) of this clause (q), so long as
the Equity Interests of such Person owned by such Loan Party have been pledged
to the Global Administrative Agent pursuant to a Pledge Agreement in accordance
with, and as and to the extent required by, Section 5.17 and Section 5.18,
provided, except to the extent any such Investments constitute “Permitted
Investments” under any other subsection of this definition, (x) the Loan Parties
do not make more than U.S.$40,000,000 in the aggregate of any such Investments
during any Fiscal Year and (y) the total amount of any such Investments at any
one time does not exceed U.S.$100,000,000 in the aggregate;
     (r) entry into operating agreements, working interests, royalty interests,
mineral leases, processing agreements, farm-out agreements, contracts for the
sale, transportation or exchange of oil, natural gas or CO2, unitization
agreements, pooling arrangements, area of mutual interest agreements, production
sharing agreements or other similar or customary agreements, transactions,
properties, interests or arrangements, and Investments and expenditures in
connection therewith or pursuant thereto, in each case made in the ordinary
course of the oil and gas business; and
     (s) the initial Investments specifically described on Exhibit N made in
connection with, or as part of or pursuant to, the formation of the MLP and to
effect the MLP Transactions.
For the avoidance of doubt, to the extent any Investment could be attributable
to more than one subsection of this definition of “Permitted Investments,” the
Borrower or any other Loan Party may categorize all or any portion of such
Investment to any one or more subsections of this definition as it elects and
unless as otherwise expressly provided, in no event shall the same portion of
any Investment be deemed to utilize or be attributable to more than one
subsection of this definition.
     “Permitted Senior Notes Debt” means any unsecured Indebtedness (in addition
to, and not including, Existing Subordinate Debt) of the Borrower, and any
Guarantees thereof by Subsidiaries, incurred or assumed after the date of this
Agreement and resulting from one or more issuances of Borrower’s senior
unsecured subordinate notes in an aggregate outstanding principal balance at any
time of not greater than $300,000,000, including all renewals, refinancings,
replacements, and extensions thereof to the extent permitted hereunder and made
in accordance with the terms of the Combined Loan Documents (including
Section 7.14), provided, that all such Indebtedness (i) has a maturity date at
least six (6) months after the Maturity Date, (ii) except to the extent any such
prepayments are made in accordance with subsection (y) to the proviso in
Section 7.14, is not permitted to be prepaid (other than by the conversion of
any such Indebtedness into the capital stock of the Borrower) without the
written consent of the Global Administrative Agent and the Majority Lenders,
(iii) has a coupon not in excess of nine percent

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(9%), (iv) contains covenants not materially more onerous to Borrower and its
Subsidiaries than those contained in the Combined Loan Documents and
(v) contains other terms and conditions (including amount, interest,
amortization, covenants and events of default) as are satisfactory to the Global
Administrative Agent and the Majority Lenders.
     “Permitted Senior Notes Documents” means the indentures or other agreements
under which any Permitted Senior Notes Debt is issued or incurred and all other
instruments, agreements and other documents evidencing or governing such
Permitted Senior Notes Debt or providing for any Guarantee or other right in
respect thereof.
     “Person” means any natural person, corporation, limited liability company,
trust, joint venture, association, company, partnership, Governmental Authority
or other entity.
     “Pipeline Partners” means Cowtown Pipeline Partners L.P., a Texas limited
partnership.
     “Plan” means an employee benefit plan within the meaning of Section 3(3) of
ERISA under which any Loan Party or an ERISA Affiliate of a Loan Party has any
current or future obligation or liability or under which any present or former
employee of any Loan Party or an ERISA Affiliate of a Loan Party, or such
present or former employee’s dependents or beneficiaries, has any current or
future right to benefits resulting from the present or former employee’s
employment relationship with any Loan Party or an ERISA Affiliate of a Loan
Party.
     “Pledge Agreement” means a Pledge Agreement and Irrevocable Proxy, dated as
of the Global Effective Date or otherwise delivered pursuant to the Loan
Documents, substantially in the form of Exhibit F (or such other form acceptable
to the Global Administrative Agent), as amended, supplemented, restated or
otherwise modified from time to time in accordance with the Loan Documents. The
term “Pledge Agreements” shall include each and every Pledge Agreement executed
and delivered pursuant to the Loan Documents.
     “Pledging Subsidiary” means each existing and future Subsidiary (other than
a Foreign Subsidiary) of Borrower that executes and delivers a Pledge Agreement
in accordance with the Loan Documents pursuant to which such Subsidiary pledges
to the Global Administrative Agent, for the ratable benefit of the Lenders, all
of the issued and outstanding Equity Interests of a Material Subsidiary or other
Person owned by such Subsidiary to secure the Obligations.
     “PPSA” means the Personal Property Security Act (Alberta) or such other
similar legislation in effect in any other province or jurisdiction of Canada,
as the same may be amended from time to time.
     “Prime Rate” means a rate of interest per annum equal to the prime rate of
interest announced from time to time by JPMorgan or its parent (which is not
necessarily the lowest rate charged to any customer), changing when and as said
prime rate changes. For purposes of this Agreement, any change in the Alternate
Base Rate due to a change in the Prime Rate shall be effective on the date such
change in the Prime Rate is announced.
     “Processing Partners” means Cowtown Gas Processing Partners L.P., a Texas
limited partnership.

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     “Production Payments” means a production payment obligation (whether
volumetric or dollar denominated) of the Borrower or any of its Subsidiaries
which are payable from a specified share of proceeds received from production
from specified Oil and Gas Properties, together with all undertakings and
obligations in connection therewith.
     “Property” means any interest in any kind of property or asset, whether
real, personal or mixed, or tangible or intangible.
     “Property Description” is defined in Section 3.9.
     “Pro Rata Lender” means any Lender identified as a “Pro Rata Lender” on
Schedule 2.1, as such Schedule 2.1 is replaced or amended from time to time
pursuant to the terms hereof.
     “Proved Mineral Interests” means, collectively, all Mineral Interests which
constitute “proved reserves,” “proved developed producing reserves,” “proved
developed nonproducing reserves,” and “proved undeveloped reserves,” as such
terms are defined from time to time by the Society of Petroleum Engineers of the
American Institute of Mining Engineers.
     “Proved Producing Mineral Interests” means all Mineral Interests which
constitute “proved developed producing reserves” as such term is defined from
time to time by the Society of Petroleum Engineers of the American Institute of
Mining Engineers.
     “QELP” means Quicksilver Energy, L.P., a Michigan limited partnership.
     “QR Canada” means Quicksilver Resources Canada Inc., an Alberta, Canada
corporation, successor by name change to MGV Energy Inc.
     “QRC Class C Shares” means, collectively, the Class C Common shares of QR
Canada.
     “Recognized Value” means, with respect to Mineral Interests, the discounted
present value of the estimated net cash flow to be realized from the production
of Hydrocarbons from such Mineral Interests as determined by the Global
Administrative Agent for purposes of determining the portion of the Global
Borrowing Base and U.S. Borrowing Base which it attributes to such Mineral
Interests in accordance with Section 2.8 hereof.
     “Redetermination Date” means (a) with respect to any Scheduled
Redetermination, each May 1, commencing May 1, 2008, and (b) with respect to any
redetermination of the Global Borrowing Base or U.S. Borrowing Base pursuant to
Section 2.8(e), the first day of the first month which is not less than twenty
(20) Business Days following the date of a request for a redetermination
pursuant to Section 2.8(e).
     “Register” has the meaning set forth in Section 10.4(c).
     “Regulation U” means any of Regulations T, U or X of the Board from time to
time in effect and shall include any successor or other regulations or official
interpretations of the Board or any successor Person relating to the extension
of credit for the purpose of purchasing or

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carrying Margin Stock and which is applicable to member banks of the Federal
Reserve System or any successor Person.
     “Related Parties” means, with respect to any specified Person, such
Person’s Affiliates and the respective directors, officers, employees, agents
and advisors of such Person and such Person’s Affiliates.
     “Required Lenders” means the Combined Lenders holding Combined Commitments
(or Combined Credit Exposure, as applicable) in the aggregate greater than or
equal to 66-2/3% of the aggregate Combined Commitments under the Combined Loan
Documents, or, if the Combined Commitments have been terminated, the aggregate
Combined Credit Exposure under the Combined Loan Documents.
     “Required Reserve Value” means Proved Mineral Interests in respect of the
Borrowing Base Properties that in the aggregate have a Recognized Value of not
less than eighty percent (80%) of the Recognized Value of all Proved Mineral
Interests in respect of the Borrowing Base Properties held by Borrower and its
Subsidiaries.
     “Reserve Report” means the Initial Reserve Report and any other Reserve
Report(s) delivered pursuant to Section 2.8 or 5.1(i), in form and substance
reasonably satisfactory to the Global Administrative Agent, prepared at the sole
cost and expense of the Borrower by an Approved Engineer (or, with respect to a
Reserve Report delivered pursuant to Section 2.8(e), at the Borrower’s option,
the in-house engineer of the Borrower), for which the Approved Engineer (or, as
appropriate, the in-house engineer of the Borrower) shall certify, in writing,
that such Reserve Report was prepared in accordance with the normal and
customary methods and procedures used by such Approved Engineer (or, as
appropriate, such in-house engineer) for evaluating oil and gas reserves. Each
Reserve Report shall evaluate the Proved Mineral Interests attributable to the
Oil and Gas Properties owned directly by the Borrower and/or its Subsidiaries
which the Borrower wishes to include in the Global Borrowing Base, as of the
immediately preceding December 31 or, with respect to a discretionary
redetermination of the Global Borrowing Base and the U.S. Borrowing Base
requested by any Person (other than the Borrower) pursuant to Section 2.8(e), as
of the date reasonably requested by such Person in its request for such
discretionary redetermination, or, in connection with a request by the Borrower,
as otherwise mutually agreed upon by the Borrower and the Global Administrative
Agent, as applicable. Each Reserve Report shall set forth volumes, projections
of the future rate of production, Hydrocarbons prices, escalation rates,
discount rate assumptions, and net proceeds of production, present value of the
net proceeds of production, operating expenses and capital expenditures, in each
case based upon updated economic assumptions reasonably acceptable to the Global
Administrative Agent.
     “Restricted Payment” means, with respect to any Person, any Distribution by
such Person.
     “Revolving Loan” means a Loan made pursuant to Section 2.3.
     “S&P” means Standard & Poor’s Ratings Services, a division of The
McGraw-Hill Companies, Inc. and any successor thereto that is a
nationally-recognized rating agency.

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     “Scheduled Redetermination” means any redetermination of the Global
Borrowing Base and the U.S. Borrowing Base pursuant to Section 2.8(b).
     “SEC” means the Securities and Exchange Commission in the United States and
any successor Governmental Authority.
     “Security Agreement” means a Security Agreement executed and delivered
pursuant to the Loan Documents, between the Global Administrative Agent and the
Borrower or a Material Subsidiary (other than a Foreign Subsidiary),
substantially in the form of Exhibit I (or such other form as acceptable to the
Global Administrative Agent), as amended, supplemented, restated or otherwise
modified from time to time in accordance with the terms of this Agreement and
the other Loan Documents. The term “Security Agreements” shall include each and
every Security Agreement executed and delivered pursuant to the Loan Documents.
     “Security Documents” means the Pledge Agreements, the Guaranties, the
Mortgages, the Security Agreements, the Assignments of Production, and each
other security agreement or other instrument or document executed and delivered
pursuant to Section 4.1, 5.15, 5.17 or pursuant to the Loan Documents to secure
any of the Obligations.
     “SFAS 133” means the Statement of Financial Accounting Standard Number 133
entitled “Accounting for Derivative Instruments and Hedging Activities” issued
by the Financial Accounting Standards Board in June of 1998, as amended and in
effect from time to time.
     “SFAS 143” means the Statement of Financial Accounting Standard Number 143
entitled “Accounting for Asset Retirement Obligations” issued by the Financial
Accounting Standards Board in June of 2001, as amended and in effect from time
to time.
     “SFAS 144” means the Statement of Financial Accounting Standard Number 144
entitled “Accounting for the Impairment or Disposal of Long-Lived Assets” issued
by the Financial Accounting Standards Board in August of 2001, as amended and in
effect from time to time.
     “Solvent” means, with respect to any Person at any time, a condition under
which (a) the fair saleable value of such Person’s assets is, on the date of
determination, greater than the total amount of such Person’s liabilities
(including contingent and unliquidated liabilities) at such time, (b) such
Person is able to pay all of its liabilities as such liabilities mature, (c)
such Person does not intend to, and such Person does not believe it will, incur
debts or liabilities beyond its ability to pay as such debts and liabilities
mature, and (d) such Person is not engaged in a business or transaction, and
such Person is not about to engage in a business or transaction for which such
Person’s property would constitute unreasonably small capital after giving due
consideration to the prevailing practice in the industry in which such Person is
engaged. For purposes of this definition (i) the amount of a Person’s contingent
or unliquidated liabilities at any time shall be that amount which, in light of
all the facts and circumstances then existing, represents the amount which can
reasonably be expected to become an actual or matured liability, (ii) the “fair
saleable value” of an asset shall be the amount which may be realized within a
reasonable time either through collection or sale of such asset at its regular
market value, and (iii) the “regular market value” of an asset shall be the
amount which a capable and

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diligent business person could obtain for such asset from an interested buyer
who is willing to purchase such asset under ordinary selling conditions.
     “Specified Rate” means, with respect to any Swingline Borrowing for any
day, a rate per annum equal to the Money Market Loan Cost of Funds Rate most
recently quoted by JPMorgan and provided to the Borrower and in effect on such
day. If for any reason the Global Administrative Agent shall have determined
(which determination shall be conclusive and binding, absent manifest error)
that it is unable to ascertain the Money Market Loan Cost of Funds Rate for any
reason, the Alternate Base Rate shall be the Specified Rate until the
circumstances giving rise to such inability no longer exist. “Specified Rate,”
when used in reference to any Swingline Loan or Swingline Borrowing, refers to
whether such Loan, or the Loans comprising such Borrowing, are bearing interest
at a rate determined by reference to the Specified Rate.
     “Statutory Reserve Rate” means a fraction (expressed as a decimal), the
numerator of which is the number one and the denominator of which is the number
one minus the aggregate of the applicable maximum reserve percentages (including
all basic, marginal, special, emergency and supplemental reserves) expressed as
a decimal established by the Board to which the Global Administrative Agent is
subject with respect to the Adjusted Eurodollar Rate, for eurocurrency funding
(currently referred to as “Eurocurrency Liabilities” in Regulation D of the
Board). Such reserve percentages shall include those imposed pursuant to
Regulation D. Eurodollar Loans shall be deemed to constitute eurocurrency
fundings and to be subject to such reserve requirements without the benefit of
or credit for proration, exemptions or offsets that may be available from time
to time to any Lender under such Regulation D or any comparable regulation. The
Statutory Reserve Rate shall be adjusted automatically on and as of the
effective date of any change in any reserve percentage.
     “Subsidiary” means, with respect to any Person (the “parent”) at any date
any corporation, limited liability company, partnership (limited or general),
association or other entity the accounts of which would be consolidated with
those of the parent in the parent’s consolidated financial statements if such
financial statements were prepared in accordance with GAAP as of such date.
Unless otherwise indicated herein, each reference to the term “Subsidiary” means
a Subsidiary of the Borrower.
     “Supermajority Lenders” means the Combined Lenders holding Combined
Commitments (or Combined Credit Exposure, as applicable) in the aggregate
greater than or equal to 90% of the aggregate Combined Commitments under the
Combined Loan Documents, or, if the Combined Commitments have been terminated,
the aggregate Combined Credit Exposure under the Combined Loan Documents.
     “Sweep Accounts” means deposit accounts, the proceeds of which are
transferred nightly to an interest-bearing concentration account maintained by
the Global Administrative Agent or another Lender (provided that upon an Event
of Default such Lender shall, at the request of the Global Administrative Agent,
enter into a control agreement with the Global Administrative Agent and the
appropriate Loan Party in form and substance reasonably satisfactory to the
Global Administrative Agent), and re-transferred each morning to the applicable
Loan Party’s

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deposit accounts, all on terms and conditions reasonably satisfactory to the
Global Administrative Agent.
     “Swingline Exposure” means, at any time, the aggregate principal amount of
all Swingline Loans outstanding at such time. The Swingline Exposure of any
Lender at any time shall be its Applicable Percentage of the total Swingline
Exposure at such time.
     “Swingline Lender” means JPMorgan in its capacity as lender of Swingline
Loans hereunder.
     “Swingline Loan” means a Loan made pursuant to Section 2.4.
     “Taxes” means any and all present or future taxes, levies, imposts, duties,
deductions, charges or withholdings imposed by any Governmental Authority.
     “Toronto” means Toronto, Ontario, Canada.
     “Type”, when used in reference to any Loan or Borrowing, refers to whether
the rate of interest on such Loan, or on the Loans comprising such Borrowing, is
determined by reference to the Adjusted Eurodollar Rate, the Alternate Base Rate
or, with respect to Swingline Loans or Swingline Borrowings only, the Specified
Rate.
     “UCC” means the Uniform Commercial Code as in effect in any applicable
state or jurisdiction, as the same may be amended from time to time.
     “UCC Searches” means central and local current financing statement or
equivalent Canadian Lien searches from each state or province in which any
Collateral or a Borrowing Base Property is located, and such other jurisdictions
as the Global Administrative Agent may reasonably request, covering the Borrower
and each Guarantor together with copies of all financing statements listed in
such searches.
     “United States” or “U.S.” means the United States of America, its fifty
states and the District of Columbia.
     “Unutilized Commitment” means, at the time of determination, the amount by
which (a) the lowest of (i) the aggregate amount of the Commitments of all
Lenders at such time, (ii) the amount of the U.S. Borrowing Base as then in
effect at such time and (iii) the amount of the Allocated U.S. Borrowing Base as
then in effect at such time, exceeds (b) the amount of the aggregate Credit
Exposure of the Lenders at such time.
     “Upfront Fee” is defined in Section 2.12(c).
     “U.S. Borrowing Base” means the “U.S. Borrowing Base” as determined from
time to time pursuant to Section 2.8.
     “U.S. Borrowing Base Deficiency” means, at the time of determination, the
amount by which (a) the aggregate Credit Exposure of the Lenders exceeds (b) the
lesser of (i) the then current U.S. Borrowing Base and (ii) the then current
Allocated U.S. Borrowing Base.

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     “U.S. Borrowing Base Properties” means those Borrowing Base Properties
located in the United States owned by the Borrower or any of its U.S.
Subsidiaries.
     “U.S. Dollars” or “U.S.$” or “Dollar” refers to lawful money of the United
States of America.
     “U.S. Flex Portion” means that unallocated portion of the Commitments
remaining after making the allocations described in Section 2.1(c)(ii) and
(iii).
     “U.S. Only Lender” means any Lender identified as a “U.S. Only Lender” on
Schedule 2.1, as such Schedule 2.1 is replaced or amended from time to time
pursuant to the terms hereof.
     “U.S. Required Lenders” means, at the time of determination, the Lenders
holding Commitments (or Credit Exposure, as applicable) in the aggregate greater
than or equal to 66-2/3% of the aggregate Commitments under the Loan Documents,
or, if the Commitments have been terminated, the aggregate Credit Exposure under
the Loan Documents.
     “U.S. Required Reserve Value” means Proved Mineral Interests in respect of
the U.S. Borrowing Base Properties that have a Recognized Value of not less than
eighty percent (80%) of the Recognized Value of all Proved Mineral Interests in
respect of the U.S. Borrowing Base Properties held by Borrower and its
Subsidiaries.
     “U.S. Supermajority Lenders” means, at the time of determination, the
Lenders holding Commitments (or Credit Exposure, as applicable) in the aggregate
greater than or equal to 90% of the aggregate Commitments under the Loan
Documents, or, if the Commitments have been terminated, the aggregate Credit
Exposure under the Loan Documents.
     “Wholly-Owned Subsidiary” means, as to any Person, any Subsidiary of which
all of the outstanding shares of Equity Interests (other than directors’
qualifying shares or, in the case of the Canadian Borrower, non-voting shares
and related exchangeable put rights held by present or former officers,
directors and shareholders of the Canadian Borrower) on a fully-diluted basis,
are owned (whether legally or beneficially by agreement) directly or indirectly
by such Person or one or more of its Wholly-Owned Subsidiaries or by such Person
and one or more of its Wholly-Owned Subsidiaries. Unless otherwise indicated,
each reference to a “Wholly-Owned Subsidiary” means a Wholly-Owned Subsidiary of
the Borrower.
     SECTION 1.2 Classification of Loans and Borrowings. For purposes of this
Agreement, Loans and Borrowings may be classified and referred to by Class
(e.g., a “Revolving Loan” or “Revolving Borrowing”) or by Type (e.g., a
“Eurodollar Loan” or “Eurodollar Borrowing”) or by Class and Type (e.g., an “ABR
Revolving Loan” or “ABR Revolving Borrowing”).
     SECTION 1.3 Terms Generally. The definitions of terms herein shall apply
equally to the singular and plural forms of the terms defined. Whenever the
context may require, any pronoun shall include the corresponding masculine,
feminine and neuter forms. The words “include”, “includes” and “including” shall
be deemed to be followed by the phrase “without limitation”. The word “will”
shall be construed to have the same meaning and effect as the word

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“shall”. Unless the context requires otherwise (a) any definition of or
reference to any agreement, instrument or other document herein shall be
construed as referring to such agreement, instrument or other document as from
time to time amended, restated, increased, renewed, extended, supplemented or
otherwise modified (subject to any restrictions on such amendments,
restatements, increases, renewals, extensions, supplements or modifications set
forth herein), (b) any reference herein to any Person shall be construed to
include such Person’s successors and assigns, provided such successors and
assigns are permitted by the Loan Documents, (c) the words “herein”, “hereof”
and “hereunder”, and words of similar import, shall be construed to refer to
this Agreement in its entirety and not to any particular provision hereof, and
(d) all references herein to Articles, Sections, Exhibits and Schedules shall be
construed to refer to Articles and Sections of, and Exhibits and Schedules to,
this Agreement.
     SECTION 1.4 Accounting Terms; GAAP. Except as otherwise expressly provided
herein, all terms of an accounting or financial nature shall be construed in
accordance with GAAP, as in effect from time to time; provided that, if the
Borrower notifies the Global Administrative Agent that the Borrower requests an
amendment to any provision hereof to eliminate the effect of any change
occurring after the date of this Agreement in GAAP or in the application thereof
on the operation of such provision (or if the Global Administrative Agent
notifies the Borrower that the Majority Lenders request an amendment to any
provision hereof for such purpose), regardless of whether any such notice is
given before or after such change in GAAP or in the application thereof, then
such provision shall be interpreted on the basis of GAAP as in effect and
applied immediately before such change shall have become effective until such
notice shall have been withdrawn or such provision amended in accordance
herewith.
     SECTION 1.5 Designation of Material Subsidiaries. The Borrower shall from
time to time, by notice in writing to the Global Administrative Agent, be
entitled to designate that either (a) a Subsidiary which is not a Material
Subsidiary become a Material Subsidiary (in which event the Borrower will comply
(or cause compliance) with the provisions of Section 5.15 with respect to such
Subsidiary), or (b) a Material Subsidiary which has previously been designated
in writing by the Borrower as a Material Subsidiary (and is not otherwise a
Material Subsidiary pursuant to clauses (b)(ii) or (iii) of the definition
thereof) cease to be a Material Subsidiary; provided, that the Borrower shall
not be entitled to designate that a Material Subsidiary cease to be a Material
Subsidiary if a Default, Event of Default, Global Borrowing Base Deficiency or
U.S. Borrowing Base Deficiency has occurred and is continuing or would result
from or exist immediately after such a designation.
ARTICLE II
THE CREDITS
     SECTION 2.1 Global Commitments and Revolving Commitments.
          (a) Subject to the terms and conditions set forth herein, each Lender
agrees to make Revolving Loans in U.S. Dollars to the Borrower from time to time
during the Availability Period in an aggregate principal amount that will not
result in (i) the Credit Exposure of any Lender exceeding the lowest of (A) the
Commitment of such Lender then in effect, (B) such Lender’s Applicable
Percentage of the U.S. Borrowing Base then in effect or (C) such Lender’s
Applicable Percentage of the Allocated U.S. Borrowing Base then in effect, or
(ii) the aggregate

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amount of the Credit Exposure of all Lenders then in effect exceeding the lowest
of (A) the aggregate Commitments of all the Lenders, (B) the U.S. Borrowing Base
then in effect or (C) the Allocated U.S. Borrowing Base then in effect. Within
the foregoing limits and subject to the terms and conditions set forth herein,
the Borrower may borrow, prepay and reborrow Revolving Loans.
     (b) At any time and from time to time prior to the Maturity Date, the
Borrower may increase the aggregate amount of the Global Commitments of the
Combined Lenders (each such increase, a “Global Commitment Increase”) in an
aggregate amount for all such increases of up to U.S.$250,000,000 so long as
(i) the Global Administrative Agent, the Canadian Administrative Agent, and the
Majority Lenders consent to such requested Global Commitment Increase, which
consent shall not be unreasonably withheld, conditioned or delayed; (ii) the
aggregate Global Commitments calculated after taking into effect the requested
Global Commitment Increase does not exceed U.S.$1,450,000,000; and (iii) each
Combined Lender shall have been offered a pro rata share of such requested
Global Commitment Increase, but no Combined Lender shall have its Global
Commitment increased without such Combined Lender’s consent; provided, that, the
Borrower shall have the right to replace any Non-Consenting Lender pursuant to,
and in accordance with, Section 2.20(c). Each Combined Lender shall have the
option, but no Combined Lender shall have any obligation, to increase its Global
Commitment hereunder in connection with any Global Commitment Increase. If the
Borrower desires to effect a Global Commitment Increase, the Borrower and the
financial institution(s) that the Borrower proposes to become a Lender
hereunder, and, if applicable, the existing Lender(s) that the Borrower proposes
to increase its existing Global Commitment shall (subject at all times to the
consent of each such financial institution or each such existing Lender, as
applicable) execute and deliver to the Global Administrative Agent a certificate
substantially in the form of Exhibit J hereto (an “Additional Lender
Certificate”). Upon receipt of such Additional Lender Certificate (A) any such
additional Lender shall be deemed to be a party in all respects to this
Agreement and the other Loan Documents as of the effective date set forth in
such Additional Lender Certificate and (B) upon the effective date set forth in
such Additional Lender Certificate, any such Lender party to the Additional
Lender Certificate shall purchase a pro rata portion of the outstanding
Revolving Loans (and participation interests in the Letters of Credit and
Swingline Loans) of each of the current Lenders such that the Lenders (including
any additional Lender, if applicable) shall hold their Applicable Percentage of
the outstanding Revolving Loans (and participation interests).
     (c) The Global Commitments shall from time to time be reallocated, and the
Commitments shall from time to time be adjusted, by the Global Administrative
Agent in accordance with this Section 2.1(c). Upon each delivery by the Borrower
of a Borrowing Base Allocation Notice in accordance with Section 2.8(d)(iii) or
(iv), or upon an increase of the Global Commitments pursuant to Section 2.1(b),
or upon a reduction of the Global Commitments by the Borrower pursuant to
Section 2.9, the Global Administrative Agent will reallocate the Global
Commitments of the Combined Lenders between this Agreement and the Canadian
Credit Agreement in order to establish new Commitments under this Agreement and
Canadian Commitments under the Canadian Credit Agreement for the Combined
Lenders pursuant to the following guidelines: (i) the Global Commitments of all
Combined Lenders will be reallocated in such a manner that the ratio of the
aggregate Commitments of all Lenders to the Combined Commitments equals the
ratio of the then proposed Allocated U.S. Borrowing Base (as so

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designated or determined in accordance with Section 2.8) to the then proposed
Global Borrowing Base (as so designated or determined in accordance with
Section 2.8); (ii) the Global Commitments of U.S. Only Lenders shall be
allocated such that the Commitment of each U.S. Only Lender shall be equal to
its Global Commitment; (iii) the Global Commitments of the Pro Rata Lenders (and
their respective Affiliates, if any, that are Canadian Lenders) shall be
reallocated such that (A) if a Pro Rata Lender is both a Lender and a Canadian
Lender, (1) the ratio of such Pro Rata Lender’s Commitment to its Global
Commitment is equal to the ratio of the then proposed Allocated U.S. Borrowing
Base (as so designated or determined in accordance with Section 2.8) to the then
proposed Global Borrowing Base (as so designated or determined in accordance
with Section 2.8) and (2) the ratio of such Pro Rata Lender’s Canadian
Commitment to its Global Commitment is equal to the ratio of the then proposed
Allocated Canadian Borrowing Base (as so designated or determined in accordance
with Section 2.8) to the then proposed Global Borrowing Base (as so designated
or determined in accordance with Section 2.8) and (B) if a Pro Rata Lender is a
Lender and has an Affiliate that is a Canadian Lender, (1) the ratio of such Pro
Rata Lender’s Commitment to the Global Commitment associated with such Pro Rata
Lender and such Affiliate is equal to the ratio of the then proposed Allocated
U.S. Borrowing Base (as so designated or determined in accordance with
Section 2.8) to the then proposed Global Borrowing Base (as so designated or
determined in accordance with Section 2.8) and (2) the ratio of such Affiliate’s
Canadian Commitment to the Global Commitment associated with such Pro Rata
Lender and such Affiliate is equal to the ratio of the then proposed Allocated
Canadian Borrowing Base (as so designated or determined in accordance with
Section 2.8) to the then proposed Global Borrowing Base (as so designated or
determined in accordance with Section 2.8); (iv) after making the reallocations
in clauses (ii) and (iii) above, the Global Administrative Agent shall determine
the Flex Portion of the Combined Commitments, the U.S. Flex Portion of the
Combined Commitments and the Canadian Flex Portion of the Combined Commitments
and shall allocate the Flex Portion of the Combined Commitments, the U.S. Flex
Portion of the Combined Commitments and the Canadian Flex Portion of the
Combined Commitments among the Flex Lenders such that (A) if a Flex Lender is
both a Lender and a Canadian Lender, such Flex Lender shall be allocated (1) its
Flex Percentage of the U.S. Flex Portion of the Combined Commitments and (2) its
Flex Percentage of the Canadian Flex Portion of the Combined Commitments, and
(B) if a Flex Lender is a Lender and has an Affiliate that is a Canadian Lender,
(1) such Flex Lender shall be allocated its Flex Percentage of the U.S. Flex
Portion of the Combined Commitments and (2) its Affiliate shall be allocated
such Affiliate’s Flex Percentage of the Canadian Flex Portion of the Combined
Commitments. The Global Administrative Agent shall (x) in the case of a
reallocation of the Global Commitments as a result of the delivery of a
Borrowing Base Designation Notice, notify the Borrower and the Combined Lenders
of the reallocated Global Commitments and adjusted Combined Commitments at the
same time that it notifies them, pursuant to Section 2.8(d)(iii) or (iv), of the
Allocated U.S. Borrowing Base and the Allocated Canadian Borrowing Base and
(y) in the case of a reallocation of the Global Commitments as a result of an
increase or reduction of the Global Commitments, notify the Borrower and the
Combined Lenders of the reallocated Global Commitments and adjusted Combined
Commitments by the date on which such reduction is to become effective in
accordance with the terms of Section 2.1(b) or 2.9. Any U.S. Only Lender may
become a Pro Rata Lender or a Flex Lender, and any Pro Rata Lender may become a
Flex Lender, in each case by giving the Global Administrative Agent a written
notice of its agreement to be designated as such, which notice shall be
effective as of the date of the next reallocation of

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the Global Commitments made pursuant to this clause (c). No Combined Lender may
have more than one Designation and no Flex Lender may be designated as a Pro
Rata Lender or a U.S. Only Lender and no Pro Rata Lender may be designated as a
U.S. Only Lender.
          (d) The parties hereto acknowledge that any increase in the Global
Commitments pursuant to Section 2.1(b) of the Canadian Credit Agreement or any
reduction in the Global Commitments pursuant to Section 2.8 of the Canadian
Credit Agreement also constitutes an increase or reduction, as the case may be,
of the Global Commitments pursuant to Section 2.1(b) and 2.9 hereof (which
increase or reduction hereunder shall take place simultaneously with the
increase or reduction, as the case may be, under the Canadian Credit Agreement).
     SECTION 2.2 Loans and Borrowings.
          (a) Each Revolving Loan shall be made as part of a Revolving Borrowing
consisting of Revolving Loans made by the Lenders ratably in accordance with
their respective Applicable Percentages. Any Swingline Loan shall be made in
accordance with the procedures set forth in Section 2.4. The failure of any
Lender to make any Revolving Loan required to be made by it shall not relieve
any other Lender of its obligations hereunder; provided that the Commitments of
the Lenders are several and no Lender shall be responsible for any other
Lender’s failure to make Revolving Loans as required.
          (b) Subject to Section 2.14 and 2.15, each Revolving Borrowing shall
be comprised entirely of ABR Revolving Loans or Eurodollar Loans as the Borrower
may request in accordance herewith. Each Swingline Borrowing shall be an ABR
Loan or Specified Rate Loan as the Borrower may request in accordance herewith.
Each Lender at its option may make any Eurodollar Loan by causing any domestic
or foreign branch or Affiliate of such Lender to make such Loan; provided that
any exercise of such option shall not affect the obligation of the Borrower to
repay such Loan in accordance with the terms of this Agreement.
          (c) Each Eurodollar Borrowing shall be in an aggregate amount that is
an integral multiple of U.S.$1,000,000 and not less than U.S.$3,000,000
(including any continuation or conversion of existing Revolving Loans made in
connection therewith). At the time that each ABR Revolving Borrowing is made,
such Revolving Borrowing shall be in an aggregate amount that is an integral
multiple of U.S.$500,000 and not less than U.S.$500,000 (including any
continuation or conversion of existing Revolving Loans made in connection
therewith); provided that an ABR Revolving Borrowing may be in an aggregate
amount that is equal to the entire Unutilized Commitment, if less. Each
Swingline Borrowing shall be in an amount that is an integral multiple of
U.S.$500,000 and not less than U.S.$500,000. Borrowings of more than one Type
and Class may be outstanding at the same time; provided that there shall not at
any time be more than a total of ten (10) Eurodollar Borrowings outstanding.
          (d) Notwithstanding any other provision of this Agreement, the
Borrower shall not be entitled to request, or to elect to convert or continue,
any Eurodollar Borrowing if the Interest Period requested with respect thereto
would end after the Maturity Date.

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     SECTION 2.3 Requests for Revolving Borrowings. To request a Revolving
Borrowing, an Authorized Officer of the Borrower shall notify the Global
Administrative Agent of such request by telephone (a) in the case of a
Eurodollar Borrowing, not later than noon, Chicago time, three (3) Business Days
before the date of the proposed Borrowing or (b) in the case of an ABR Revolving
Borrowing, not later than noon, Chicago time, on the Business Day of the
proposed Borrowing. Each such telephonic Borrowing Request shall be irrevocable
and shall be confirmed promptly by hand delivery or telecopy to the Global
Administrative Agent of a written Borrowing Request executed by an Authorized
Officer of the Borrower, substantially in the form of Exhibit E-1 or otherwise
in a form approved by the Global Administrative Agent. Each such telephonic and
written Borrowing Request shall specify the following information in compliance
with Section 2.2:
     (i) the aggregate amount of the requested Revolving Borrowing;
     (ii) the date of such Revolving Borrowing, which shall be a Business Day;
     (iii) whether such Revolving Borrowing is to be an ABR Revolving Borrowing
or a Eurodollar Borrowing;
     (iv) in the case of a Eurodollar Borrowing, the initial Interest Period to
be applicable thereto, which shall be a period contemplated by the definition of
the term “Interest Period”; and
     (v) either (A) the wire transfer instructions for the account (together
with the account number of such account) of the Borrower maintained with a
Lender to which funds are to be disbursed or (B) if to be disbursed to an
account other than an account maintained with a Lender, the wire transfer
instructions for such account (together with the account number of such
account), each in compliance with Section 2.6.
If no election as to the Type of Revolving Borrowing is specified, then the
requested Revolving Borrowing shall be an ABR Revolving Borrowing. If no
Interest Period is specified with respect to any requested Eurodollar Borrowing,
then the Borrower shall be deemed to have selected an Interest Period of one
month’s duration. Promptly following receipt of a Borrowing Request in
accordance with this Section, the Global Administrative Agent shall advise each
Lender of the details thereof and of the amount of such Lender’s Revolving Loan
to be made as part of the requested Revolving Borrowing.
     SECTION 2.4 Swingline Loans.
     (a) Subject to the terms and conditions set forth herein, the Swingline
Lender agrees to make Swingline Loans in U.S. Dollars to the Borrower from time
to time during the Availability Period in an aggregate principal amount that
will not result in (i) the aggregate Swingline Exposure exceeding
U.S.$50,000,000, (ii) the Credit Exposure of any Lender exceeding the lowest of
(A) the

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          Commitment of such Lender then in effect, (B) such Lender’s Applicable
Percentage of the U.S. Borrowing Base then in effect, or (C) such Lender’s
Applicable Percentage of the Allocated U.S. Borrowing Base then in effect, or
(iii) the aggregate amount of the Credit Exposure of all Lenders then in effect
exceeding the lowest of (A) the aggregate Commitments of all Lenders then in
effect, (B) the U.S. Borrowing Base then in effect, or (C) the Allocated U.S.
Borrowing Base then in effect; provided that the Swingline Lender shall not be
required to make a Swingline Loan to refinance an outstanding Swingline Loan.
Within the foregoing limits and subject to the terms and conditions set forth
herein, the Borrower may borrow, prepay and reborrow Swingline Loans.
          (b) To request a Swingline Loan, the Borrower shall notify the Global
Administrative Agent of such request by telephone, not later than 12:00 noon,
Chicago time, on the Business Day of a proposed Swingline Loan. Each telephonic
request shall be confirmed promptly by hand delivery or telecopy to the Global
Administrative Agent of a written Borrowing Request executed by an Authorized
Officer of the Borrower, substantially in the form of Exhibit E-3 or otherwise
in a form approved by the Global Administrative Agent. Each such notice shall be
irrevocable and shall specify the requested date (which shall be a Business Day)
and amount of the requested Swingline Loan, and whether such Loan shall be an
ABR Swingline Loan or Specified Rate Swingline Loan. The Global Administrative
Agent will promptly advise the Swingline Lender of any such notice received from
the Borrower. The Swingline Lender shall make each Swingline Loan available to
the Borrower by means of a credit to the general deposit account of the Borrower
with the Swingline Lender (or, in the case of a Swingline Loan made to finance
the reimbursement of an LC Disbursement as provided in Section 2.5(e), by
remittance to the Issuing Bank, or pursuant to such other directions received by
the Swingline Lender from the Borrower in connection with its request for such
Swingline Loan) by 2:00 p.m., Chicago time, on the requested date of such
Swingline Loan.
          (c) The Swingline Lender may by written notice given to the Global
Administrative Agent not later than 9:00 a.m., Chicago time, on any Business
Day, require the Lenders to acquire participations on such Business Day in all
or a portion of the Swingline Loans outstanding. Such notice shall specify the
aggregate amount of Swingline Loans in which Lenders will participate. Promptly
upon receipt of such notice, the Global Administrative Agent will give notice
thereof to each Lender, specifying in such notice such Lender’s Applicable
Percentage of such Swingline Loan or Loans. Each Lender hereby absolutely and
unconditionally agrees, upon receipt of notice as provided above, to pay to the
Global Administrative Agent, for the account of the Swingline Lender, such
Lender’s Applicable Percentage of such Swingline Loan or Loans. Each Lender
acknowledges and agrees that its obligation to acquire participations in
Swingline Loans pursuant to this paragraph is absolute and unconditional and
shall not be affected by any circumstance whatsoever, including the occurrence
and continuance of a Default or reduction or termination of the Commitments, and
that each such payment shall be made without any offset, abatement, withholding
or reduction whatsoever. Each Lender shall comply with its obligation under this
paragraph by wire transfer of immediately available funds in the same manner as
provided in Section 2.6 with respect to Loans made by such Lender (and
Section 2.6 shall apply, mutatis mutandis, to the payment obligations of the
Lenders), and the Global Administrative Agent shall promptly pay to the
Swingline Lender the amounts so received by it from the Lenders. The Global
Administrative Agent shall notify the Borrower of any participations in any
Swingline Loan acquired pursuant to this paragraph, and thereafter payments in
respect of such Swingline Loan shall be made to the Global Administrative Agent
and not to the Swingline Lender. Any amounts received by the Swingline Lender
from the Borrower (or other party on behalf of the Borrower) in respect of a
Swingline Loan after receipt by the Swingline Lender of the proceeds of a sale
of participations

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therein shall be promptly remitted to the Global Administrative Agent; any such
amounts received by the Global Administrative Agent shall be promptly remitted
by the Global Administrative Agent to the Lenders that shall have made their
payments pursuant to this paragraph and to the Swingline Lender, as their
interests may appear; provided that any such payment so remitted shall be repaid
to the Swingline Lender or to the Global Administrative Agent, as applicable, if
and to the extent such payment is required to be refunded to the Borrower for
any reason. The purchase of participations in a Swingline Loan pursuant to this
paragraph shall not relieve the Borrower of any default in the payment thereof.
          (d) The unpaid principal amount of each Swingline Loan shall be due
and payable on the earlier of (i) the Maturity Date, and (ii) the first date
after such Swingline Loan is made that is the 15th or last day of a calendar
month and is at least five (5) Business Days after such Swingline Loan is made;
provided that, on each date that a Revolving Borrowing (other than a Revolving
Borrowing resulting from the conversion or continuation of an existing Revolving
Borrowing) is made, the Borrower shall repay all Swingline Loans then
outstanding; provided further, that, except with respect to Swingline Loans
payable on the Maturity Date, in the event the Borrower has not paid the
outstanding principal amount of any Swingline Loan on or prior to 12:00 noon,
Chicago time, on the date due, the Borrower shall be deemed to have requested an
ABR Revolving Loan (it being understood that if such Swingline Loan is being
refinanced with an ABR Revolving Borrowing, such ABR Revolving Borrowing may be
obtained on the same Business Day as the proposed Borrowing, notwithstanding the
advance notice requirements of Section 2.3(b)) in an amount equal to the
outstanding principal amount of such Swingline Loan maturing on such date, and
such Swingline Loan shall be deemed converted to an ABR Revolving Loan on such
date, and shall continue as an ABR Revolving Loan until converted in accordance
with Section 2.7.
          (e) Each Swingline Borrowing initially shall be of the Type specified
in the applicable Borrowing Request (or an ABR Swingline Borrowing if no Type is
specified). Thereafter, the Borrower may elect from time to time to convert such
Swingline Borrowing to a different Class, all as provided in this Section. This
Section shall not apply to the continuation of Swingline Borrowings, or to the
conversion of Swingline Borrowings to a different Type, which Swingline
Borrowings may not be continued or so converted.
          (f) To make an election pursuant to clause (e) of this Section, an
Authorized Officer of the Borrower shall notify the Global Administrative Agent
of such election by telephone by the time that a Borrowing Request would be
required under Section 2.3 if the Borrower were requesting a Revolving Borrowing
of the Type resulting from such election to be made on the effective date of
such election. Each such telephonic Interest Election Request shall be
irrevocable and shall be confirmed promptly by hand delivery or telecopy to the
Global Administrative Agent of a written Interest Election Request executed by
an Authorized Officer of the Borrower, substantially in the form of Exhibit E-4
or otherwise in a form approved by the Global Administrative Agent. The Global
Administrative Agent will promptly advise the Swingline Lender of any such
notice received from the Borrower.
          (g) Each telephonic and written Interest Election Request pursuant to
this Section 2.4 shall specify the following information in compliance with this
Section 2.4:

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     (i) the Swingline Borrowing to which such Interest Election Request
applies;
     (ii) the effective date of the election made pursuant to such Interest
Election Request, which shall be a Business Day;
     (iii) whether the resulting Revolving Borrowing is to be an ABR Revolving
Borrowing or a Eurodollar Borrowing; and
     (iv) if the resulting Revolving Borrowing is a Eurodollar Borrowing, the
Interest Period to be applicable thereto after giving effect to such election,
which shall be a period contemplated by the definition of the term “Interest
Period”.
If any such Interest Election Request requests a Eurodollar Borrowing but does
not specify an Interest Period, then the Borrower shall be deemed to have
selected an Interest Period of one month’s duration.
          (h) Promptly following receipt of an Interest Election Request
pursuant to this Section 2.4, the Global Administrative Agent shall advise each
Lender of the details thereof and of such Lender’s portion of each resulting
Revolving Borrowing.
          (i) Notwithstanding any contrary provision hereof, if an Event of
Default has occurred and is continuing and the Global Administrative Agent, at
the request of the Required Lenders, so notifies the Borrower, then, so long as
such Event of Default is continuing, no outstanding Swingline Borrowing may be
converted to a Eurodollar Borrowing.
     SECTION 2.5 Letters of Credit.
          (a) General. Subject to the terms and conditions set forth herein, an
Authorized Officer of the Borrower may request the issuance of Letters of Credit
for its own account or the account of any Subsidiary (other than a Foreign
Subsidiary), in a form reasonably acceptable to the Global Administrative Agent
and the relevant Issuing Bank, at any time and from time to time during the
Availability Period. In the event of any inconsistency between the terms and
conditions of this Agreement and the terms and conditions of any form of letter
of credit application or other agreement submitted by the Borrower to, or
entered into by the Borrower with, an Issuing Bank relating to any Letter of
Credit, the terms and conditions of this Agreement shall control.
          (b) Notice of Issuance, Amendment, Renewal, Extension; Certain
Conditions; Issuance of Letters of Credit. To request the issuance of a Letter
of Credit (or the amendment, renewal or extension of an outstanding Letter of
Credit), an Authorized Officer of the Borrower shall, prior to noon, Chicago
time, at least three (3) Business Days prior to the proposed date of issuance or
modification, hand deliver or telecopy (or transmit by electronic communication,
if arrangements for doing so have been approved by the relevant Issuing Bank) to
an Issuing Bank and the Global Administrative Agent (reasonably in advance of
the requested date of issuance, amendment, renewal or extension) a notice
requesting the issuance of a Letter of Credit, or identifying the Letter of
Credit to be amended, renewed or extended, and specifying the date of issuance,
amendment, renewal or extension (which shall be a Business Day), the date

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on which such Letter of Credit is to expire (which shall comply with paragraph
(c) of this Section), the amount of such Letter of Credit, the name of the
account party (which shall be the Borrower or a Subsidiary that is not a Foreign
Subsidiary), the name and address of the beneficiary thereof and such other
information as shall be necessary to prepare, amend, renew or extend such Letter
of Credit. If requested by an Issuing Bank, an Authorized Officer of the
Borrower also shall submit a letter of credit application on such Issuing Bank’s
standard form in connection with any request for a Letter of Credit. A Letter of
Credit shall be issued, amended, renewed or extended only if (and upon issuance,
amendment, renewal or extension of each Letter of Credit the Borrower shall be
deemed to represent and warrant that), after giving effect to such issuance,
amendment, renewal or extension (i) the aggregate LC Exposure shall not exceed
U.S.$50,000,000 and (ii) the total Credit Exposure shall not exceed the lowest
of (A) the aggregate Commitments of the Lenders then in effect, (B) the U.S.
Borrowing Base then in effect or (C) the Allocated U.S. Borrowing Base then in
effect. On the Business Day on which a Letter of Credit is requested to be
issued, unless the Global Administrative Agent or the relevant Issuing Bank
determines that any applicable condition precedent required pursuant to this
Agreement has not been satisfied, the relevant Issuing Bank shall issue such
Letter of Credit for the account of the Borrower or the account of the
applicable Subsidiary, as the case may be, by the end of such Business Day.
          (c) Expiration Date. Each Letter of Credit shall expire at or prior to
the close of business on the date one year after the date of the issuance of
such Letter of Credit or, in the case of any renewal or extension thereof of any
Letter of Credit with an initial one-year tenor, one year after such renewal or
extension, provided such date is not beyond the Maturity Date unless, with
respect to such Letter of Credit that has an expiration date extending beyond
the Maturity Date, the Borrower shall, no later than five (5) days prior to the
Maturity Date, deposit in an account with the Global Administrative Agent (and
in accordance with the procedure and subject to the same terms as described in
clause (i) below), in the name of the Global Administrative Agent and for the
benefit of the Lenders as security for the LC Exposure with respect to such
Letter of Credit, cash collateral in an amount equal to the LC Exposure with
respect to such Letter of Credit so remaining as of the Maturity Date.
          (d) Participations. By the issuance of a Letter of Credit (or an
amendment to a Letter of Credit increasing the amount thereof) and without any
further action on the part of the relevant Issuing Bank or the Lenders, such
Issuing Bank hereby grants to each Lender, and each Lender hereby acquires from
such Issuing Bank, a participation in such Letter of Credit equal to such
Lender’s Applicable Percentage of the aggregate amount available to be drawn
under such Letter of Credit. In consideration and in furtherance of the
foregoing, each Lender hereby absolutely and unconditionally agrees to pay to
the Global Administrative Agent, for the account of such Issuing Bank, such
Lender’s Applicable Percentage of each LC Disbursement made by such Issuing Bank
and not reimbursed by the Borrower on the date due as provided in paragraph (e)
of this Section, or of any reimbursement payment required to be refunded to the
Borrower for any reason. Each Lender acknowledges and agrees that its obligation
to acquire participations pursuant to this paragraph in respect of Letters of
Credit is absolute and unconditional and shall not be affected by any
circumstance whatsoever, including any amendment, renewal or extension of any
Letter of Credit or the occurrence and continuance of a Default or reduction or
termination of the Commitments or Global Commitments, and that each such payment
shall be made without any offset, abatement, withholding or reduction
whatsoever.

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          (e) Reimbursement. If an Issuing Bank shall make any LC Disbursement
in respect of a Letter of Credit, the Borrower shall reimburse such LC
Disbursement by paying to the Global Administrative Agent an amount equal to
such LC Disbursement not later than 1:00 p.m., Chicago time, on the date that
such LC Disbursement is made, if the Borrower shall have received notice of such
LC Disbursement prior to 10:00 a.m., Chicago time, on such date, or, if such
notice has not been received by the Borrower prior to such time on such date,
then not later than 1:00 p.m., Chicago time, on the Business Day immediately
following the day that the Borrower receives such notice; provided that the
Borrower may, subject to the conditions to Borrowing set forth herein, request
in accordance with Section 2.3 or Section 2.4 that such payment be financed with
an ABR Revolving Borrowing or Swingline Borrowing (it being understood that if
such payment is to be financed with an ABR Revolving Borrowing, then the
Borrower may request and obtain such ABR Revolving Loan on the same Business Day
as the proposed Borrowing, notwithstanding the advance notice requirements of
Section 2.3(b), so long as such request is made by 12:00 noon, Chicago time) in
an equivalent amount and, to the extent so financed, the Borrower’s obligation
to make such payment shall be discharged and replaced by the resulting ABR
Revolving Borrowing or Swingline Borrowing. If the Borrower fails to make such
payment when due (or request an ABR Revolving Borrowing or Swingline Borrowing
therefor as provided herein), the Global Administrative Agent shall notify each
Lender of the applicable LC Disbursement, the payment then due from the Borrower
in respect thereof and such Lender’s Applicable Percentage thereof. Promptly
following receipt of such notice, each Lender shall pay to the Global
Administrative Agent its Applicable Percentage of the payment then due from the
Borrower, in the same manner as provided in Section 2.6 with respect to Loans
made by such Lender (and Section 2.6 shall apply, mutatis mutandis, to the
payment obligations of the Lenders), and the Global Administrative Agent shall
promptly pay to such Issuing Bank the amounts so received by it from the
Lenders. Promptly following receipt by the Global Administrative Agent of any
payment from the Borrower pursuant to this paragraph (or promptly following the
Global Administrative Agent’s receipt from the Lenders of proceeds from a
requested ABR Revolving Borrowing or Swingline Borrowing), the Global
Administrative Agent shall distribute such payment to such Issuing Bank or, to
the extent that Lenders have made payments pursuant to this paragraph to
reimburse such Issuing Bank, then to such Lenders and such Issuing Bank as their
interests may appear. Any payment made by a Lender pursuant to this paragraph to
reimburse any Issuing Bank for any LC Disbursement (other than the funding of
ABR Revolving Loans or Swingline Loans as contemplated above) shall not
constitute a Loan and shall not relieve the Borrower of its obligation to
reimburse such LC Disbursement.
          (f) Obligations Absolute. The Borrower’s obligation to reimburse LC
Disbursements as provided in paragraph (e) of this Section shall be absolute,
unconditional and irrevocable, and shall be performed strictly in accordance
with the terms of this Agreement under any and all circumstances whatsoever and
irrespective of (i) any lack of validity or enforceability of any Letter of
Credit or this Agreement or the other Loan Documents, or any term or provision
herein or therein, (ii) any draft or other document presented under a Letter of
Credit proving to be forged, fraudulent or invalid in any respect or any
statement therein proving to be untrue or inaccurate in any respect,
(iii) payment by an Issuing Bank under a Letter of Credit against presentation
of a draft or other document that does not comply with the terms of such Letter
of Credit, or (iv) any other event or circumstance whatsoever, whether or not
similar to any of the foregoing, that might, but for the provisions of this
Section, constitute a legal or equitable

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discharge of, or provide a right of setoff against, the Borrower’s obligations
hereunder. Neither the Agents, the Lenders or any Issuing Bank nor any of their
Related Parties shall have any liability or responsibility by reason of or in
connection with the issuance or transfer of any Letter of Credit or any payment
or failure to make any payment thereunder (irrespective of any of the
circumstances referred to in the preceding sentence), or any error, omission,
interruption, loss or delay in transmission or delivery of any draft, notice or
other communication under or relating to any Letter of Credit (including any
document required to make a drawing thereunder), any error in interpretation of
technical terms or any consequence arising from causes beyond the control of
such Issuing Bank; provided that none of the foregoing shall be construed to
excuse such Issuing Bank from liability to the Borrower to the extent of any
direct or actual damages (AS OPPOSED TO SPECIAL, INDIRECT, CONSEQUENTIAL OR
PUNITIVE DAMAGES, CLAIMS IN RESPECT OF WHICH ARE HEREBY WAIVED BY THE BORROWER
TO THE EXTENT PERMITTED BY APPLICABLE LAW) suffered by the Borrower that are
caused by such Issuing Bank’s failure to exercise care when determining whether
drafts and other documents presented under a Letter of Credit comply with the
terms thereof. The parties hereto expressly agree that, in the absence of gross
negligence or willful misconduct on the part of an Issuing Bank (as finally
determined by a court of competent jurisdiction), such Issuing Bank shall be
deemed to have exercised care (REGARDLESS OF WHETHER THE ISSUING BANK HAS BEEN
NEGLIGENT) in each such determination. In furtherance of the foregoing and
without limiting the generality thereof, the parties agree that, with respect to
documents presented which appear on their face to be in substantial compliance
with the terms of a Letter of Credit, any Issuing Bank may, in its sole
discretion, either accept and make payment upon such documents without
responsibility for further investigation, regardless of any notice or
information to the contrary, or refuse to accept and make payment upon such
documents if such documents are not in strict compliance with the terms of such
Letter of Credit.
          (g) Disbursement Procedures. An Issuing Bank shall, promptly following
its receipt thereof, examine all documents purporting to represent a demand for
payment under a Letter of Credit. Such Issuing Bank shall promptly notify the
Global Administrative Agent and the Borrower by telephone (confirmed by telecopy
attaching a copy of each such document) of such demand for payment and whether
such Issuing Bank has made or will make an LC Disbursement thereunder; provided
that any failure to give or delay in giving such notice shall not relieve the
Borrower of its obligation to reimburse such Issuing Bank and the Lenders with
respect to any such LC Disbursement.
          (h) Interim Interest. If an Issuing Bank shall make any LC
Disbursement, then, unless the Borrower shall reimburse such LC Disbursement in
full on the date such LC Disbursement is made, the unpaid amount thereof shall
bear interest, for each day from and including the date such LC Disbursement is
made to but excluding the date that the Borrower reimburses such LC
Disbursement, at the rate per annum then applicable to ABR Revolving Loans;
provided that, if the Borrower fails to reimburse such LC Disbursement within
five (5) days after such reimbursement is due pursuant to paragraph (e) of this
Section, then Section 2.13(d) shall apply. Interest accrued pursuant to this
paragraph shall be for the account of such Issuing Bank, except that interest
accrued on and after the date of payment by any Lender pursuant to paragraph (e)
of this Section to reimburse such Issuing Bank shall be for the account of such
Lender to the extent of such payment.

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     (i) Cash Collateralization. If any Event of Default shall occur and be
continuing, on the Business Day that the Borrower receives written notice from
the Global Administrative Agent or the Required Lenders demanding the deposit of
cash collateral pursuant to this paragraph, the Borrower shall deposit in an
account with the Global Administrative Agent, in the name of the Global
Administrative Agent and for the benefit of the Lenders, an amount in cash equal
to the aggregate LC Exposure as of such date plus any accrued and unpaid
interest thereon; provided that the obligation to deposit such cash collateral
shall become effective immediately, and such deposit shall become immediately
due and payable, without demand or other notice of any kind, upon the occurrence
of any Event of Default with respect to the Borrower described in Section 8.1(g)
or (h). The Borrower also shall deposit cash collateral pursuant to this
paragraph as and to the extent required by Section 2.11, and any such cash
collateral so deposited and held by the Global Administrative Agent hereunder
shall constitute part of the Global Borrowing Base for purposes of determining
compliance with Section 2.11. Each such deposit shall be held by the Global
Administrative Agent as collateral for the payment and performance of the
obligations of the Borrower under this Agreement. The Global Administrative
Agent shall have exclusive dominion and control, including the exclusive right
of withdrawal, over such account. Subject to the proviso at the end of this
sentence, other than any interest, if any, earned on the investment of such
deposits, which investments shall be made at the option and reasonable
discretion of the Global Administrative Agent (provided that it has received
sufficient protection and indemnities as it reasonably requests in connection
with its investing such cash collateral) and at the Borrower’s risk and expense,
such deposits shall not bear interest; provided, that, the Borrower may direct
the Global Administrative Agent to invest amounts credited to such account, at
the Borrower’s risk and expense, in Permitted Investments described in clauses
(a), (b), (e) and (f) of the definition of “Permitted Investments.” Interest or
profits, if any, on such investments shall accumulate in such account. Moneys in
such account shall be applied by the Global Administrative Agent to reimburse
the relevant Issuing Bank for LC Disbursements for which it has not been
reimbursed and, to the extent not so applied, shall be held for the satisfaction
of the reimbursement obligations of the Borrower for the aggregate LC Exposure
at such time or, if the maturity of the Loans has been accelerated (but subject
to the consent of Lenders holding LC Exposure in the aggregate greater than 50%
of the aggregate LC Exposure at such time), be applied to satisfy other
obligations of the Borrower under this Agreement. If the Borrower is required to
provide an amount of cash collateral hereunder as a result of the occurrence of
an Event of Default, such amount (to the extent not applied as aforesaid) and,
if any, all interest and profits thereon shall be returned to the Borrower
within three (3) Business Days after all Events of Default then in existence
have been cured or waived. If the Borrower is required to provide an amount of
cash collateral hereunder pursuant to Section 2.11, such amount (to the extent
not applied as aforesaid) shall be returned to the Borrower as and to the extent
that, after giving effect to such return, the Borrower would remain in
compliance with Section 2.11 and no Event of Default shall have occurred and be
continuing.
     (j) Existing Letters of Credit. Each Letter of Credit (as defined in the
Existing Credit Agreement) issued for the Borrower’s own account, or the account
of any Subsidiary (as defined in the Existing Credit Agreement), under and
pursuant to the terms of the Existing Credit Agreement and that is outstanding
as of the Closing Date (each an “Existing Letter of Credit”), is hereby deemed
to be a Letter of Credit issued and outstanding under this Agreement as of the
Closing Date, and the issuer thereof is hereby deemed to be an Issuing Bank
hereunder.

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     SECTION 2.6 Funding of Borrowings.
          (a) Each Lender shall make each Loan to be made by it hereunder on the
proposed date thereof by wire transfer of immediately available funds by 1:00
p.m. (or 2:00 p.m., in the case of an ABR Revolving Borrowing requested pursuant
to and in accordance with Section 2.5(e)), Chicago time, to the account of the
Global Administrative Agent most recently designated by it for such purpose by
notice to the Lenders; provided, that Swingline Loans shall be made as provided
in Section 2.4. The Global Administrative Agent will make such Loans available
to the Borrower by promptly wiring the amounts so received, in like funds, to an
account of the Borrower in accordance with the wiring instructions set forth in
the relevant Borrowing Request; provided that ABR Revolving Loans made to
finance the reimbursement of an LC Disbursement as provided in Section 2.5(e)
shall be remitted by the Global Administrative Agent to the applicable Issuing
Bank.
          (b) Unless the Global Administrative Agent shall have received notice
from a Lender prior to the proposed date of any Borrowing that such Lender will
not make available to the Global Administrative Agent such Lender’s share of
such Borrowing, the Global Administrative Agent may assume that such Lender has
made such share available on such date in accordance with paragraph (a) of this
Section and may, in reliance upon such assumption, make available to the
Borrower a corresponding amount. In such event, if a Lender has not in fact made
its share of the applicable Borrowing available to the Global Administrative
Agent, then the applicable Lender and the Borrower severally agree to pay to the
Global Administrative Agent forthwith on demand such corresponding amount with
interest thereon, for each day from and including the date such amount is made
available to the Borrower to but excluding the date of payment to the Global
Administrative Agent, at (i) in the case of such Lender, the greater of (A) the
Federal Funds Effective Rate or (B) a rate determined by the Global
Administrative Agent in accordance with banking industry rules on interbank
compensation or (ii) in the case of the Borrower, the interest rate applicable
to Loans made in such Borrowing (provided that any such demand made to the
Borrower shall be made within three (3) Business Days following disbursement by
the Global Administrative Agent, or the Global Administrative Agent shall be
deemed to have waived the right to make such demand for immediate reimbursement
from the Borrower and such funded amount shall be, as with respect to the
Borrower, deemed to be a Loan hereunder). If such Lender pays such amount to the
Global Administrative Agent, then such amount shall constitute such Lender’s
Loan included in such Borrowing.
     SECTION 2.7 Interest Elections.
          (a) Each Revolving Borrowing initially shall be of the Type specified
in the applicable Borrowing Request (or an ABR Revolving Borrowing if no Type is
specified) and, in the case of a Eurodollar Borrowing, shall have an initial
Interest Period as specified in such Borrowing Request (or one month if no
Interest Period is specified). Thereafter, the Borrower may elect from time to
time to convert such Revolving Borrowing to a different Type or to continue such
Revolving Borrowing and, in the case of a Eurodollar Borrowing, may elect
Interest Periods therefor, all as provided in this Section. The Borrower may,
subject to the requirements of Section 2.2(c), elect different options with
respect to different portions of the affected Revolving Borrowing, in which case
each such portion shall be allocated ratably among the Lenders holding the
Revolving Loans comprising such Revolving Borrowing, and the

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Revolving Loans comprising each such portion shall be considered a separate
Revolving Borrowing. This Section shall not apply to Swingline Borrowings, which
may not be converted except to the extent provided in Section 2.4.
          (b) To make an election pursuant to this Section, an Authorized
Officer of the Borrower shall notify the Global Administrative Agent of such
election by telephone by the time that a Borrowing Request would be required
under Section 2.3 if the Borrower were requesting a Revolving Borrowing of the
Type resulting from such election to be made on the effective date of such
election. Each such telephonic Interest Election Request shall be irrevocable
and shall be confirmed promptly by hand delivery or telecopy to the Global
Administrative Agent of a written Interest Election Request executed by an
Authorized Officer of the Borrower, substantially in the form of Exhibit E-2 or
otherwise in a form approved by the Global Administrative Agent.
          (c) Each telephonic and written Interest Election Request pursuant to
this Section 2.7 shall specify the following information in compliance with
Section 2.2:
     (i) the Revolving Borrowing to which such Interest Election Request applies
and, if different options are being elected with respect to different portions
thereof, the portions thereof to be allocated to each resulting Revolving
Borrowing (in which case the information to be specified pursuant to clauses
(iii) and (iv) below shall be specified for each resulting Revolving Borrowing);
     (ii) the effective date of the election made pursuant to such Interest
Election Request, which shall be a Business Day;
     (iii) whether the resulting Revolving Borrowing is to be an ABR Revolving
Borrowing or a Eurodollar Borrowing; and
     (iv) if the resulting Revolving Borrowing is a Eurodollar Borrowing, the
Interest Period to be applicable thereto after giving effect to such election,
which shall be a period contemplated by the definition of the term “Interest
Period”.
If any such Interest Election Request requests a Eurodollar Borrowing but does
not specify an Interest Period, then the Borrower shall be deemed to have
selected an Interest Period of one month’s duration.
          (d) Promptly following receipt of an Interest Election Request
pursuant to this Section 2.7, the Global Administrative Agent shall advise each
Lender of the details thereof and of such Lender’s portion of each resulting
Revolving Borrowing.
          (e) If the Borrower fails to deliver a timely Interest Election
Request (or delivers an Interest Election Request that is inconsistent with a
telephonic election) with respect to a Eurodollar Borrowing prior to the end of
the Interest Period applicable thereto, then, unless such Revolving Borrowing is
repaid as provided herein, at the end of such Interest Period such Revolving
Borrowing shall be converted to an ABR Revolving Borrowing. Notwithstanding any
contrary provision hereof, if an Event of Default has occurred and is continuing
and the Global Administrative Agent, at the request of the Required Lenders, so
notifies the Borrower, then, so long as such Event of Default is continuing,
(i) no outstanding Revolving Borrowing may be

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converted to or continued as a Eurodollar Borrowing and (ii) unless the
Obligations have been accelerated pursuant to Section 8.3, each Eurodollar
Borrowing shall be converted to an ABR Revolving Borrowing at the end of the
Interest Period applicable thereto.
     SECTION 2.8 Global Borrowing Base.
          (a) Initial Global Borrowing Base and U.S. Borrowing Base. During the
period from the date hereof to the date of the first redetermination of the
Global Borrowing Base and the U.S. Borrowing Base pursuant to the provisions of
this Section, (i) the initial amount of the Global Borrowing Base has been
determined by the Global Administrative Agent and acknowledged by the Borrower
and the Canadian Borrower and agreed to by the Combined Lenders to be
U.S.$850,000,000 and (ii) the initial amount of the U.S. Borrowing Base has been
determined by the Global Administrative Agent and acknowledged by the Borrower
and agreed to by the Combined Lenders to be U.S.$650,000,000.
          (b) Annual Scheduled Determinations of the Global and U.S. Borrowing
Bases. Promptly after January 1st of each calendar year (commencing January 1,
2008), and in any event prior to April 1st of each calendar year, commencing
April 1, 2008, the Borrower shall furnish to the Global Administrative Agent and
the Combined Lenders a Reserve Report in form and substance reasonably
satisfactory to the Global Administrative Agent, which Reserve Report shall
evaluate as of December 31st of the immediately preceding calendar year (i) the
Proved Mineral Interests attributable to the Oil and Gas Properties which the
Borrower wishes to include in the Global Borrowing Base, and a projection of the
rate of production and net operating income with respect thereto, as of such
date, and (ii) the Proved Mineral Interests attributable to the Oil and Gas
Properties of the Borrower and its U.S. Subsidiaries which the Borrower wishes
to include in the U.S. Borrowing Base, and a projection of the rate of
production and net operating income with respect thereto, as of such date, in
each case, together with additional data concerning pricing, hedging, operating
costs and quantities of production, and other information and engineering and
geological data as the Global Administrative Agent or any Combined Lender may
reasonably request. Within 30 days after receipt of such report and information,
the Global Administrative Agent shall make an initial determination of the
Global Borrowing Base and the U.S. Borrowing Base, and shall promptly notify the
Combined Lenders and the Borrower in writing of the Global Administrative
Agent’s initial determination of the Global Borrowing Base and the U.S.
Borrowing Base. The Global Administrative Agent shall make such determination in
accordance with its customary practices and standards for oil and gas loans and
in the exercise of its sole discretion. Within fifteen (15) days following their
receipt of the proposed amount for the redetermined Global Borrowing Base and
U.S. Borrowing Base, (A) the Supermajority Lenders (in the case of the Global
Borrowing Base) or the U.S. Supermajority Lenders (in the case of the U.S.
Borrowing Base) (and with the agreement in either case of the Borrower, such
agreement in either case to be given in its sole discretion) if the proposed
amount is an increase or (B) the Required Lenders (in the case of the Global
Borrowing Base) or the U.S. Required Lenders (in the case of the U.S. Borrowing
Base) if the proposed amount is a decrease or maintenance, shall approve or
reject the Global Administrative Agent’s initial determination of the Global
Borrowing Base and U.S. Borrowing Base by written notice to the Global
Administrative Agent; provided, however that failure by any Combined Lender to
reject in writing the Global Administrative Agent’s determination of the Global
Borrowing Base and U.S. Borrowing Base within said fifteen (15) day period shall
be deemed an acceptance of such

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determination by such Combined Lender. If the Supermajority Lenders (in the case
of the Global Borrowing Base) or the U.S. Supermajority Lenders (in the case of
the U.S. Borrowing Base) (and, in either case, with the agreement of the
Borrower in the case of a proposed increase, such agreement in either case to be
given in its sole discretion) or the Required Lenders or U.S. Required Lenders,
as applicable, fail to approve any such determination of the Global Borrowing
Base or U.S. Borrowing Base made by the Global Administrative Agent hereunder,
then the Global Administrative Agent shall poll the Supermajority Lenders, U.S.
Supermajority Lenders, Required Lenders or U.S. Required Lenders, as
appropriate, and the Global Borrowing Base and U.S. Borrowing Base, as
applicable, shall be set at the highest amount on which the Supermajority
Lenders (in the case of the Global Borrowing Base) or the U.S. Supermajority
Lenders (in the case of the U.S. Borrowing Base) (and, in either case, with the
agreement of the Borrower, such agreement in either case to be given in its sole
discretion) if such number would result in an increase in the Global Borrowing
Base or U.S. Borrowing Base, or otherwise, the Required Lenders or U.S. Required
Lenders, as applicable, can agree, it being understood that a Combined Lender is
deemed to have agreed to any and all amounts that are lower than the amount
actually determined by such Combined Lender to be the appropriate value of the
Global Borrowing Base and U.S. Borrowing Base. Upon approval or deemed approval
by the Supermajority Lenders or the U.S. Supermajority Lenders and the Borrower
or the Required Lenders or U.S. Required Lenders, as applicable, of the Global
Borrowing Base and U.S. Borrowing Base, the Global Administrative Agent upon
notice thereof shall, by written notice to the Borrower and the Combined
Lenders, designate the new U.S. Borrowing Base available to the Borrower and
Global Borrowing Base available to the Borrower and the Canadian Borrower (each
such notice in this Section 2.8(b), a “Global Borrowing Base Designation
Notice”). If the Combined Commitments are in effect and/or any Combined
Obligations are outstanding, then upon receipt of such Global Borrowing Base
Designation Notice, the Borrower shall designate the Allocated U.S. Borrowing
Base and the Allocated Canadian Borrowing Base to the Global Administrative
Agent in accordance with Section 2.8(d). The Borrower shall be deemed to have
agreed to the Global Borrowing Base and U.S. Borrowing Base as set forth in such
Global Borrowing Base Designation Notice unless it informs the Global
Administrative Agent in writing of its objection thereto prior to the date it
designates the Allocated U.S. Borrowing Base and Allocated Canadian Borrowing
Base pursuant to Section 2.8(d) following its receipt of such Global Borrowing
Base Designation Notice.
          (c) Maximum Credit. The Global Borrowing Base shall represent the
maximum amount of credit in the form of loans, letters of credit and bankers’
acceptances (subject to the aggregate Combined Commitments and subject to the
other provisions hereof or of the Canadian Credit Agreement) that the Combined
Lenders will extend to the Borrower or the Canadian Borrower pursuant to the
Combined Loan Documents at any one time prior to the Maturity Date. The U.S.
Borrowing Base shall represent the maximum amount of credit in the form of Loans
and Letters of Credit (subject to the aggregate Commitments and subject to the
other provisions thereof) that the Lenders will extend to the Borrower pursuant
to the Loan Documents at any one time prior to the Maturity Date.
          (d) Allocation of the Global Borrowing Base. For so long as any of the
Combined Commitments are in effect and/or any Combined Obligations are
outstanding, the Global Borrowing Base shall be comprised of the Allocated U.S.
Borrowing Base and the Allocated Canadian Borrowing Base, and allocations
between the Allocated U.S. Borrowing

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Base and Allocated Canadian Borrowing Base shall be made in accordance with this
Section 2.8(d).
     (i) The “Allocated U.S. Borrowing Base” means, as of any date, the amount
in U.S. Dollars designated or determined as such from time to time (A) by the
Borrower pursuant to a Borrowing Base Allocation Notice delivered in accordance
with Section 2.8(d)(iii) of this Agreement or (B) in accordance with the other
provisions of this Agreement. As of the date of this Agreement, the initial
Allocated U.S. Borrowing Base shall be U.S.$550,000,000.
     (ii) The “Allocated Canadian Borrowing Base” means, as of any date, the
Equivalent Amount in U.S. Dollars designated as such from time to time (A) by
the Borrower pursuant to a Borrowing Base Allocation Notice delivered in
accordance with Section 2.8(d)(iii) of this Agreement or (B) in accordance with
the other provisions of this Agreement. On the date of this Agreement, the
initial Allocated Canadian Borrowing Base shall be U.S.$300,000,000.
     (iii) Within ten (10) Business Days of receipt of a Global Borrowing Base
Designation Notice, the Borrower shall specify the allocation of the Global
Borrowing Base between the Allocated U.S. Borrowing Base and the Allocated
Canadian Borrowing Base by providing a written notice to the Global
Administrative Agent of such allocation (each such notice herein a “Borrowing
Base Allocation Notice”); provided that (A) the sum of the Allocated U.S.
Borrowing Base and the Allocated Canadian Borrowing Base shall at all times be
equal to the Global Borrowing Base then in effect and (B) at no time shall the
Allocated U.S. Borrowing Base be set at an amount less than U.S.$50,000,000 and
at no time shall the Allocated Canadian Borrowing Base be set at an amount less
than U.S.$50,000,000 (such minimum amount in respect of the Allocated U.S.
Borrowing Base then in effect, the “Minimum Threshold Amount”). In the event
that the Borrower fails to provide the Global Administrative Agent with a
Borrowing Base Allocation Notice required to be delivered upon receipt of a
Global Borrowing Base Designation Notice within the period required by this
Section 2.8(d)(iii), the Global Borrowing Base will be allocated in the same
proportion as existed prior to such redetermination. Promptly upon the
allocation of the Global Borrowing Base between the Allocated U.S. Borrowing
Base and the Allocated Canadian Borrowing Base in accordance with the procedures
set forth above, the Global Administrative Agent shall provide a written notice
to the Combined Lenders and the Borrower, which written notice shall set forth
the Allocated U.S. Borrowing Base and the Allocated Canadian Borrowing Base to
be in effect. Any designation of the Allocated U.S. Borrowing Base or the
Allocated Canadian Borrowing Base effected pursuant to this Section 2.8(d)(iii)
in connection with a determination or redetermination of the Global Borrowing
Base or U.S. Borrowing Base, shall be effective as of the date of the Global
Borrowing Base Designation Notice.
     (iv) So long as no Default or Event of Default shall have occurred and be
continuing, from time to time but in no event more than (i) four (4) times per
Fiscal Year and (ii) once every thirty (30) days, upon at least five
(5) Business Days prior written notice to the Global Administrative Agent, the
Borrower may reallocate the

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Global Borrowing Base between the Allocated U.S. Borrowing Base and the
Allocated Canadian Borrowing Base (a “Discretionary Borrowing Base
Reallocation”). Promptly upon the allocation of the Global Borrowing Base
between the Allocated U.S. Borrowing Base and the Allocated Canadian Borrowing
Base in accordance with the procedures set forth in this clause (iv), the Global
Administrative Agent shall provide a written notice to the Combined Lenders and
the Borrower, which written notice shall set forth the Allocated U.S. Borrowing
Base and the Allocated Canadian Borrowing Base to be in effect. Any designation
of the Allocated U.S. Borrowing Base or the Allocated Canadian Borrowing Base
effected pursuant to this Section 2.8(d)(iv) in connection with a Discretionary
Borrowing Base Reallocation, shall (A) be effective five (5) Business Days
following the date the Global Administrative Agent receives the Borrowing Base
Allocation Notice or the date indicated for such effectiveness in the Borrowing
Base Allocation Notice, whichever is later and (B) be subject to the Minimum
Threshold Amount described in clause (iii) above.
          (e) Discretionary Redetermination of the Global Borrowing Base and
U.S. Borrowing Base. Each of (i) the Borrower or (ii) (A) the Global
Administrative Agent or (B) the Required Lenders, shall have the right to
request in writing a redetermination of the Global Borrowing Base and U.S.
Borrowing Base, in its or their sole discretion at any time and from time to
time, provided, that clause (i) and clause (ii) may each be the basis of an
unscheduled redetermination not more often than one (1) time during any calendar
year, regardless, in the case of clause (ii), of which Person makes such
request. If any Person shall request a discretionary redetermination of the
Global Borrowing Base and U.S. Borrowing Base pursuant to the provisions of this
Section 2.8(e), the Borrower shall, upon receipt of a request therefor from the
Global Administrative Agent, deliver to the Global Administrative Agent, by the
date reasonably requested by the Global Administrative Agent (or, in the event
of an unscheduled redetermination requested by the Borrower, by the date
mutually agreed upon by the Borrower and the Global Administrative Agent), a
Reserve Report dated as of the date requested in such notice and such updated
engineering, production, operating and other data as the Global Administrative
Agent or any other Combined Lender may reasonably request; provided, that, such
Reserve Report may, in the discretion of the Borrower, be (1) a new Reserve
Report, (2) the Reserve Report delivered in connection with the immediately
preceding redetermination (whether scheduled or unscheduled) of the Global
Borrowing Base and the U.S. Borrowing Base, and/or (3) an update of such Reserve
Report described in subclause (2); provided, further that, in connection with
any request for an unscheduled redetermination pursuant to clause (ii) above,
the Reserve Report shall cover such additional Oil and Gas Properties of the
Borrower and its Subsidiaries as the Required Lenders may reasonably request.
The Supermajority Lenders (in the case of the Global Borrowing Base) or the U.S.
Supermajority Lenders (in the case of the U.S. Borrowing Base) (and, in either
case, with the agreement of the Borrower, such agreement in either case to be
given in its sole discretion) if such number would result in an increase in the
Global Borrowing Base or U.S. Borrowing Base or otherwise, the Required Lenders
or U.S. Required Lenders, as the case may be, shall approve and designate the
new Global Borrowing Base and U.S. Borrowing Base in accordance with the
procedures and standards described in Section 2.8(b) and the Borrower shall
provide a Borrowing Base Allocation Notice to the Global Administrative Agent in
accordance with Section 2.8(d)(iii); provided that in the event that the
Borrower fails to provide such Borrowing Base Allocation

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Notice, the Global Borrowing Base shall be allocated between the Allocated U.S.
Borrowing Base and Allocated Canadian Borrowing Base in accordance with
Section 2.8(d)(iii).
          (f) General Provisions With Respect to the Global Borrowing Base. The
determination of the Global Borrowing Base and U.S. Borrowing Base shall be made
by the Global Administrative Agent and the Supermajority Lenders or U.S.
Supermajority Lenders or Required Lenders or U.S. Required Lenders, as
applicable, taking into consideration the estimated value of the Oil and Gas
Properties owned by the Borrower and its Subsidiaries as reflected in the most
recent Reserve Report delivered hereunder and any other relevant information
obtained by or delivered to the Global Administrative Agent or any other
Combined Lender, all in accordance with the other provisions of this Section 2.8
in accordance with their customary practices for oil and gas loans as in effect
from time to time. It is understood by the parties hereto that, unless otherwise
approved by the Supermajority Lenders or U.S. Supermajority Lenders, as
applicable, pursuant to, and in accordance with, the other provisions of this
Section 2.8, the Combined Lenders shall have no commitment or obligation
whatsoever to increase the Global Borrowing Base or U.S. Borrowing Base, as
applicable, to any amount in excess of U.S.$850,000,000 or U.S. $650,000,000,
respectively, and nothing herein contained shall be construed to be a commitment
by the Combined Lenders to so increase the Global Borrowing Base or U.S.
Borrowing Base except to the extent so approved. The Global Borrowing Base and
U.S. Borrowing Base (i) may each be redetermined pursuant to Section 2.8(b)
(annual) and Section 2.8(e) (unscheduled), (ii) subject to the rights of the
Borrower and the applicable Subsidiaries contained in Section 2.8(g), may be
adjusted from time to time to give effect to the occurrence of Casualty Events
under Section 2.8(g), and (iii) may each be reduced by an amount not greater
than the applicable Debt Issuance Reduction Amount pursuant to Section 2.8(h) in
connection with the issuance of any Permitted Senior Notes Debt. In connection
with any redetermination, adjustment or reduction pursuant to any of the
foregoing, if the Global Administrative Agent determines that either a Global
Borrowing Base Deficiency or a U.S. Borrowing Base Deficiency exists, the Global
Administrative Agent shall give written notice thereof to the Borrower and the
date such notice is received shall be the “Deficiency Notification Date”.
          (g) Casualty Event. In the event that a Casualty Event has occurred
with respect to any Borrowing Base Property or U.S. Borrowing Base Property, to
the extent that the Net Cash Proceeds received by the Borrower or any of its
Subsidiaries with respect to such Casualty Event (together with all other Net
Cash Proceeds received during such calendar year) exceeds 5% of the Global
Borrowing Base and have not been applied or budgeted to be applied by the
Borrower or any such Subsidiary to repair, restore or replace the Property
affected by such Casualty Event within 180 days after the receipt thereof, which
actions the Borrower or such Subsidiary shall hereby be permitted to take, the
Global Administrative Agent, at the request of the Required Lenders, shall have
the right to reduce the U.S. Borrowing Base (if the Casualty Event that has
occurred related to a U.S. Borrowing Base Property) and the Global Borrowing
Base, in its reasonable discretion based on its review of such Casualty Event,
by the value of the Property so affected by such Casualty Event as set forth in
the most recent Reserve Report; provided that, if an Event of Default has
occurred and is continuing, (i) such repair, restoration or replacement may
occur only with the written consent of the Global Administrative Agent, (ii) the
Global Administrative Agent may, at the request of the Required Lenders, reduce
the U.S. Borrowing Base and Global Borrowing Base, as the case may be, in the
manner set forth above

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without regard to the 180 day period referenced above and (iii) such Net Cash
Proceeds shall be applied in accordance with Section 2.11 to the extent required
thereby. The Global Administrative Agent shall provide notice to the Borrower
and the Combined Lenders of the reduction in the U.S. Borrowing Base (if the
Casualty Event that has occurred related to a U.S. Borrowing Base Property) and
the Global Borrowing Base, which reduction shall be effective as of the date of
such notice.
          (h) Issuance of Other Indebtedness. In the event of the issuance of
any Permitted Senior Notes Debt permitted pursuant to Section 7.1(o), the Global
Administrative Agent and the Required Lenders shall have the option, on not more
than one occasion in connection with each such issuance, to reduce the Global
Borrowing Base and the U.S. Borrowing Base by an amount agreed to by the
Required Lenders, which reduction amount shall not be greater than the
applicable Debt Issuance Reduction Amount calculated with respect to such
Permitted Senior Notes Debt then most recently issued; provided, that, (i) in
the event the Required Lenders are unable to agree upon any such reduction
amount provided for in this Section 2.8(h) within thirty (30) days of the
issuance of any such Permitted Senior Notes Debt, the Global Borrowing Base and
the U.S. Borrowing Base shall each reduce by an amount equal to the applicable
Debt Issuance Reduction Amount calculated with respect to such Permitted Senior
Notes Debt then most recently issued, and (ii) notwithstanding the foregoing or
anything to the contrary contained in any Combined Loan Document, if and only to
the extent the Borrower uses any of the proceeds of the issuance of any
Permitted Senior Notes Debt to contemporaneously refinance or replace any of the
Existing Subordinate Debt and/or any other Permitted Senior Notes Debt in
accordance with the last sentence of Section 7.14 hereof, then the provisions of
this Section 2.8(h) shall not apply, and the Global Borrowing Base and the U.S.
Borrowing Base shall not be reduced pursuant to the provisions of this
Section 2.8(h) in each case only, to the extent such proceeds are so used. In
connection with any such reduction, the Global Administrative Agent shall
promptly provide written notice to the Borrower and the Combined Lenders of the
reduction of the Global Borrowing Base and the U.S. Borrowing Base. Upon the
approval of the Required Lenders of such reduction amount, or, alternatively,
upon any reduction by an amount equal to the Debt Issuance Reduction Amount, and
the delivery of written notice thereof to the Borrower, the Global Borrowing
Base and U.S. Borrowing Base shall each be reduced as of the date such notice is
delivered or such later date as specified in such notice. Notwithstanding
anything to the contrary in the Combined Loan Documents, (A) the language of the
proviso of Section 2.11(b)(i) of this Agreement shall not apply to any Global
Borrowing Base Deficiency or U.S. Borrowing Base Deficiency resulting from the
application of this Section 2.8(h) and (B) the application of this Section
2.8(h) shall never result in an increase in the Global Borrowing Base or the
U.S. Borrowing Base.
     SECTION 2.9 Termination and Reduction of Global Commitments and
Commitments; Extension of Maturity Date.
          (a) Unless previously terminated, the Global Commitments and the
Commitments shall terminate on the Maturity Date.
          (b) An Authorized Officer of the Borrower may at any time terminate,
or from time to time reduce, without premium or penalty, the Global Commitments;
provided that (i) each reduction of the Global Commitments shall be in an amount
that is an integral multiple of

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U.S.$1,000,000 and not less than U.S.$3,000,000 and (ii) the Borrower shall not
terminate or reduce the Global Commitments if, after giving effect to any
concurrent prepayment of the Loans in accordance with Section 2.11 and after
giving effect to a reallocation of the Global Commitments and adjustment of the
Commitments pursuant to Section 2.1(c), the aggregate Credit Exposure of the
Lenders would exceed the aggregate Commitments of the Lenders.
          (c) An Authorized Officer of the Borrower shall notify the Global
Administrative Agent of any election to terminate or reduce the Global
Commitments under paragraph (b) of this Section at least three (3) Business Days
prior to the effective date of such termination or reduction, specifying such
election and the effective date thereof. Promptly following receipt of any such
notice, the Global Administrative Agent shall advise the Combined Lenders of the
contents thereof and reallocate the Global Commitments and adjust the
Commitments in accordance with Section 2.1(c). Each notice delivered by an
Authorized Officer of the Borrower pursuant to this Section shall be
irrevocable; provided that a notice of termination of the Global Commitments
delivered by an Authorized Officer of the Borrower may state that such notice is
conditioned upon the effectiveness of other credit facilities, in which case
such notice may be revoked by the Borrower (by notice to the Global
Administrative Agent on or prior to the specified effective date) if such
condition is not satisfied. Except as provided in the immediately preceding
sentence, any termination or reduction of the Global Commitments shall be
permanent and may not be reinstated except pursuant to, and in accordance with,
Section 2.1(b). Each reduction of the Global Commitments shall reduce the Global
Commitments of the Combined Lenders on a pro rata basis and result in
adjustments to the Commitments of the Lenders in accordance with Section 2.1(c).
          (d) The Borrower will not terminate, or permit to expire, all of the
Global Commitments and Commitments under this Agreement prior to (i) the
expiration or termination of the Canadian Commitments and (ii) the payment and
performance in full of all Canadian Obligations.
          (e) The Borrower may, by notice to the Global Administrative Agent
(which shall promptly deliver a copy to each of the Lenders) given not less than
90 days and not more than 120 days, prior to the Maturity Date at any time in
effect, and, subject to the proviso below, on not more than two occasions,
request that the Lenders extend the Maturity Date for an additional period of
not more than one year as specified in such notice; provided, that, the Borrower
may, in lieu of the foregoing and not in addition thereto, by notice to the
Global Administrative Agent in accordance with the foregoing provisions of this
clause (e), on not more than one occasion, request that the Lenders extend the
Maturity Date for an additional period of not more than two years as specified
in such notice. Each Lender shall, by notice to the Borrower and the Global
Administrative Agent given not later than fifteen (15) days following receipt of
the Borrower’s request, advise the Borrower and the Global Administrative Agent
whether or not it agrees to such extension. The Global Administrative Agent
shall promptly notify the Borrower and the Lenders of the Lenders’ responses.
Any Lender that has not so advised the Borrower and the Global Administrative
Agent by such day shall be deemed to have declined to agree to such extension.
If the Borrower shall have requested, and if each Lender shall have agreed to,
an extension of the Maturity Date, then the Maturity Date shall be extended for
the additional period specified in the Borrower’s request in accordance with the
terms above, and the Global Administrative Agent shall promptly notify the
Borrower and the Lenders of the

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extension of the Maturity Date, whereupon the Maturity Date shall be extended,
effective as of the Maturity Date in effect immediately prior to such extension,
without the necessity for any further action; provided that, the Borrower shall
(i) execute and deliver, or cause to be executed and delivered, any and all
documents which may be reasonably required by the Global Administrative Agent in
connection with such extension to evidence such extension and new Maturity Date,
and (ii) pay to the Global Administrative Agent, for the account of each Lender,
an extension fee in such amount as shall be agreed upon by the Borrower and the
Global Administrative Agent based on the then prevailing market rate for similar
extensions of comparable credit facilities. THE DECISION TO AGREE OR WITHHOLD
AGREEMENT TO ANY EXTENSION OF THE MATURITY DATE HEREUNDER SHALL BE AT THE SOLE
DISCRETION OF EACH LENDER. Notwithstanding the foregoing provisions of this
paragraph, (A) the Maturity Date may not be extended to a date later than
February 9, 2014 pursuant to this clause (e), (B) the effectiveness of any such
extension shall be subject to (1) the absence of any Default, Event of Default,
Global Borrowing Base Deficiency or U.S. Borrowing Base Deficiency as of the
date of such extension and request therefor, (2) the absence of any material and
adverse effect on the ability of any Loan Party to fully, completely and timely
pay its obligations under this Agreement as of the date of such extension and
request therefor, (3) the accuracy, in all material respects, of the
representations and warranties of each Loan Party set forth in the Loan
Documents to which it is a party as of the date of such extension and request
therefor (or, if stated to have been made expressly as of an earlier date, the
accuracy, in all material respects, as of such date), and (4) a corresponding
extension of the “Maturity Date” (as defined in the Canadian Credit Agreement)
in accordance with the terms of Section 2.8(e) of the Canadian Credit Agreement,
(C) the Borrower shall have the right, pursuant to, and subject to the terms of,
Section 2.20(c), to replace any Non-Consenting Lender that has declined to agree
to any requested extension of the Maturity Date with a Lender or other financial
institution that will agree to such extension of the Maturity Date, (D) the
Borrower shall have the right, at any time prior to the Maturity Date then in
effect, to withdraw its request for an extension under this clause (e) by notice
to the Global Administrative Agent (which shall promptly deliver a notice to
each Lender), in which case the Maturity Date will not be so extended, and
(E) the Borrower shall have the right, at any time prior to the Maturity Date
then in effect, to withdraw its request for an extension of the Maturity Date
for an additional period of two (2) years and, in lieu thereof, request an
extension of the Maturity Date for an additional period of one year, by
providing notice to the Global Administrative Agent (which shall promptly
deliver a notice to each Lender), in which case (1) the Maturity Date will be
extended for one year in the event the Lenders have previously agreed to a two
year extension pursuant to the Borrower’s request and in accordance with this
Section 2.9(e), or (2) in the event any Lender has not previously agreed to a
two year extension pursuant to the Borrower’s request and in accordance with
this Section 2.9(e), any such Lender shall, by notice to the Borrower and the
Global Administrative Agent given not later than fifteen (15) days following
receipt of the Borrower’s request pursuant to this clause (E), advise the
Borrower and the Global Administrative Agent whether or not it agrees to such
one year extension (and the Global Administrative Agent shall promptly notify
the Borrower and the Lenders of the Lenders’ responses), and any Lender that has
not so advised the Borrower and the Global Administrative Agent by such day
shall be deemed to have declined to agree to such one year extension; provided
that, and notwithstanding anything to the contrary contained herein, the
Borrower shall not have the right provided in this clause (E) in the event that
its original request for an extension of two years was not approved by the
Lenders pursuant

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to the terms of this Section 2.9(e) and the Borrower’s alternative request
pursuant to this clause (E) is made (or would be made) by notice to the Global
Administrative Agent given less than 45 days prior to the Maturity Date.
     SECTION 2.10 Repayment of Loans; Evidence of Indebtedness.
          (a) The Borrower hereby unconditionally promises to pay (i) to the
Global Administrative Agent for the account of each Lender the then unpaid
principal amount of each Revolving Loan of such Lender on the Maturity Date, and
(ii) to the Swingline Lender the then unpaid principal amount of each Swingline
Loan on the dates provided in, and in accordance with, Section 2.4(d).
          (b) Each Lender shall maintain in accordance with its usual practice
an account or accounts evidencing the Obligations of the Borrower to such Lender
resulting from each Loan made by such Lender, including the amounts of principal
and interest payable and paid to such Lender from time to time hereunder.
          (c) The Global Administrative Agent shall maintain accounts in which
it shall record (i) the amount of each Loan made hereunder, the Class and Type
thereof and the Interest Period applicable thereto, (ii) the amount of any
principal or interest due and payable or to become due and payable from the
Borrower to each Lender hereunder and (iii) the amount of any sum received by
the Global Administrative Agent hereunder for the account of the Lenders and
each Lender’s share thereof.
          (d) The entries made in the accounts maintained pursuant to paragraphs
(b) or (c) of this Section shall be prima facie evidence of the existence and
amounts of the obligations recorded therein; provided that the failure of any
Lender or the Global Administrative Agent to maintain such accounts or any error
therein shall not in any manner affect the obligation of the Borrower to repay
the Loans in accordance with the terms of this Agreement.
          (e) Any Lender may request that Loans made by it be evidenced by one
or more promissory notes. In such event, the Borrower shall prepare, execute and
deliver to such Lender promissory notes payable to the order of such Lender (or,
if requested by such Lender, to such Lender and its registered assigns and in
substantially the form of Exhibit A). Thereafter, the Loans evidenced by such
promissory notes and interest thereon shall at all times (including after
assignment pursuant to Section 10.4) be represented by one or more promissory
notes in such form payable to the order of the payee named therein (or, if any
such promissory note is a registered note, to such payee and its registered
assigns).
     SECTION 2.11 Prepayment of Loans.
          (a) The Borrower shall have the right at any time and from time to
time to prepay any Borrowing in whole or in part, without premium or penalty
except as expressly provided in this Agreement, subject to the requirements of
Section 2.11(d).
          (b) Subject to clause (c) below, the Borrower shall be required to
prepay the Loans hereunder and “Loans” under the Canadian Credit Agreement in
accordance with the

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following, to the extent the Canadian Borrower does not otherwise make such
prepayment in accordance with the Canadian Credit Agreement:
     (i) Upon the occurrence of a Global Borrowing Base Deficiency resulting
from a redetermination or reduction of the Global Borrowing Base (other than
pursuant to Section 2.8(h)), the Borrower will prepay, or cause to be prepaid,
Loans and “Loans” under the Canadian Credit Agreement in an aggregate principal
amount equal to such deficiency, together, in each case, with unpaid interest
accrued thereon to the date of such prepayment and, if after prepaying all of
such Loans and “Loans” under the Canadian Credit Agreement, a Global Borrowing
Base Deficiency remains as a result of an LC Exposure, pay to the Global
Administrative Agent an amount equal to such remaining Global Borrowing Base
Deficiency to be held as cash collateral as provided in Section 2.5(i); provided
however, that if the Global Borrowing Base Deficiency is the result of a
Scheduled Redetermination or a redetermination of the Global Borrowing Base
pursuant to Section 2.8(e)(ii) or as a result of any other event directly
brought about by the actions of any of the Global Administrative Agent, the
Combined Lenders, the Supermajority Lenders, the U.S. Supermajority Lenders, the
Majority Lenders, the Required Lenders or the U.S. Required Lenders (other than
an acceleration of the Obligations, reduction, reallocation, adjustment or
termination of the Global Commitments or the “Global Commitments” (as defined in
the Canadian Credit Agreement) or the Commitments or Canadian Commitments or an
exercise of rights under Article VIII or Article VIII of the Canadian Credit
Agreement or any other enforcement of rights or remedies under the Combined Loan
Documents), then the Borrower shall, at its option, either (1) make (or cause to
be made) a single prepayment of principal and/or deposit of cash collateral in
an amount equal to such deficiency within thirty (30) days following the
Deficiency Notification Date with respect to such deficiency, (2) make (or cause
to be made) six consecutive mandatory prepayments of principal each of which
shall be in an amount equal to one-sixth (1/6th) of the amount of such Global
Borrowing Base Deficiency commencing on the first Monthly Date (provided such
date is at least thirty (30) days following the Deficiency Notification Date,
otherwise commencing on the immediately following Monthly Date) following the
Deficiency Notification Date and continuing on each Monthly Date thereafter,
(3) within ninety (90) days following the Deficiency Notification Date with
respect to such deficiency, submit (and pledge as Collateral) additional Oil and
Gas Properties owned by the Borrower or any of its Subsidiaries for
consideration in connection with the determination of the Global Borrowing Base
which the Global Administrative Agent and the Lenders deem sufficient in their
sole discretion to eliminate such Global Borrowing Base Deficiency, or
(4) within ninety (90) days following the Deficiency Notification Date with
respect to such deficiency, eliminate such Global Borrowing Base Deficiency
through a combination of prepayments and submission of additional Oil and Gas
Properties as set forth in clauses (1) and (3) above.
     (ii) Upon the occurrence of a U.S. Borrowing Base Deficiency resulting from
a redetermination or reduction of the Global Borrowing Base, the Borrower will
take the action described under clause (i) above.

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     (iii) Upon the occurrence of a U.S. Borrowing Base Deficiency resulting
from a reallocation of the Global Borrowing Base pursuant to Section 2.8(d), the
Borrower will prepay Loans in an aggregate principal amount equal to such
deficiency, together with interest on the principal amount paid accrued to the
date of such prepayment, and if a U.S. Borrowing Base Deficiency remains after
prepaying all of the Loans as a result of an LC Exposure, pay to the Global
Administrative Agent an amount equal to such remaining U.S. Borrowing Base
Deficiency to be held as cash collateral as provided in Section 2.5(i); it being
understood that the Borrower shall be obligated to make such prepayment and/or
deposit of cash collateral on the effective date of such reallocation.
     (iv) Notwithstanding anything in this Section 2.11(b) to the contrary, in
the event that a U.S. Borrowing Base Deficiency exists at a time when no Global
Borrowing Base Deficiency exists, then, to the extent that such action would
cure (in whole or in part) such U.S. Borrowing Base Deficiency, the Borrower may
reallocate the Global Borrowing Base between the Allocated U.S. Borrowing Base
and the Allocated Canadian Borrowing Base by providing the Global Administrative
Agent with its election to do so (which election will designate the relevant
reallocations) on the Business Day on which such U.S. Borrowing Base Deficiency
occurs; provided, however, that no reallocation shall be permitted to the extent
such reallocation would cause the aggregate “Credit Exposure” of the Canadian
Lenders under the Canadian Credit Agreement to be greater than the lower of
(1) the aggregate “Commitments” thereunder and (2) the Allocated Canadian
Borrowing Base.
     (v) Upon the occurrence of a U.S. Borrowing Base Deficiency resulting from
a Casualty Event pursuant to Section 2.8(g) (subject to the Borrower’s and the
applicable Subsidiaries’ rights contained in Section 2.8(g)), the Borrower will
utilize the Net Cash Proceeds of such Casualty Event to take the action
described under clause (i) above (except that prepayments shall first be made in
respect of Loans made pursuant to this Agreement); provided that if a prepayment
or deposit is required under this clause (v), then the Borrower shall be
obligated to make (or cause to be made) such prepayment and/or deposit of cash
collateral within sixty (60) days following the Deficiency Notification Date
with respect to such deficiency.
     (vi) Upon the occurrence of a Global Borrowing Base Deficiency or any U.S.
Borrowing Base Deficiency resulting from the issuance of any Permitted Senior
Notes Debt pursuant to Section 2.8(h), the Borrower will make (or cause to be
made) a single prepayment of principal and/or deposit of cash collateral in an
amount equal to such deficiency within thirty (30) days following the Deficiency
Notification Date with respect to such deficiency.
     (vii) Upon the occurrence of a Global Borrowing Base Deficiency or any U.S.
Borrowing Base Deficiency not resulting from a reason described in clauses (i),
(ii), (iii), (v) or (vi) above, the Borrower will prepay within sixty (60) days
the Loans and “Loans” under the Canadian Credit Agreement in an aggregate
principal amount equal to such Global Borrowing Base Deficiency or U.S.
Borrowing Base Deficiency together, in each case, with unpaid interest thereon
accrued to the date of such prepayment and, if

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after prepaying all such Loans and “Loans” under the Canadian Credit Agreement,
a Global Borrowing Base Deficiency remains as a result of an LC Exposure, pay to
the Global Administrative Agent an amount equal to such remaining Global
Borrowing Base Deficiency to be held as cash collateral as provided in
Section 2.5(i).
          (c) Notwithstanding any other provision of this Section 2.11, if at
any time the Credit Exposure of any Lender exceeds its Commitment (including,
without limitation, as a result of a reallocation of its Global Commitment and
adjustment of its Commitment pursuant to Section 2.1(c)), the Borrower will
forthwith prepay the Loans of such Lender in an aggregate principal amount equal
to such excess, together with interest on the principal amount paid accrued to
the date of such prepayment, and if any excess remains after prepaying all of
such Loans as a result of an LC Exposure of such Lender, pay to the Global
Administrative Agent an amount equal to such remaining excess to be held as cash
collateral for such Lender as provided in Section 2.5(i). The Borrower shall
make prepayments pursuant to this clause (c) prior to making prepayments
pursuant to clause (b) above.
          (d) The Borrower shall notify the Global Administrative Agent (and, in
the case of prepayment of a Swingline Loan, the Swingline Lender) by telephone
(confirmed by telecopy) of any prepayment hereunder (i) in the case of
prepayment of a Eurodollar Borrowing, not later than noon, Chicago time, three
(3) Business Days before the date of prepayment, (ii) in the case of prepayment
of an ABR Revolving Borrowing, not later than noon, Chicago time, one
(1) Business Day before the date of prepayment, and (iii) in the case of
prepayment of a Swingline Borrowing, not later than noon, Chicago time, on the
date of prepayment. Each such notice shall be irrevocable and shall specify the
prepayment date and the principal amount of each Borrowing or portion thereof to
be prepaid (which amount shall, in the case of clause (a) above, be in a minimum
principal amount of U.S.$1,000,000 and in U.S.$1,000,000 increments in excess
thereof, provided that Swingline Loans may be prepaid in any amount); provided
that, if a notice of prepayment is given in connection with a conditional notice
of termination of the Global Commitments as contemplated by Section 2.9, then
such notice of prepayment may be revoked if such notice of termination is
revoked in accordance with Section 2.9. Promptly following receipt of any such
notice relating to a prepayment of a Revolving Borrowing, the Global
Administrative Agent shall advise the Lenders of the contents thereof. Each
partial prepayment of any Borrowing shall be in an amount that would be
permitted in the case of an advance of a Borrowing of the same Type as provided
in Section 2.2. Each prepayment of a Borrowing shall be applied ratably to the
Loans included in the prepaid Borrowing. Prepayments shall be accompanied by
accrued interest to the extent required by Section 2.13 and by any other amounts
then due under this Agreement (including all amounts due under Section 2.17).
     SECTION 2.12 Fees.
          (a) The Borrower agrees to pay to the Global Administrative Agent for
the account of each Lender a commitment fee (the “Commitment Fee”), which shall
accrue at the Applicable Margin on the daily amount equal to the Applicable
Percentage of such Lender of the Unutilized Commitment during the period from
and including the Global Effective Date to but excluding the date on which the
Global Commitments and Commitments terminate. Accrued Commitment Fees shall be
payable in arrears on the last day of March, June, September and

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December of each year and on the date on which the Global Commitments and
Commitments terminate, commencing on the first such date to occur after the date
of this Agreement; provided that any Commitment Fees accruing after the date on
which the Global Commitments and Commitments terminate shall be payable on
demand. All Commitment Fees shall be computed on the basis of a year of 360 days
and shall be payable for the actual number of days elapsed (including the first
day but excluding the last day).
          (b) The Borrower agrees to pay (i) to the Global Administrative Agent
for the account of each Lender a participation fee with respect to its
participation in each Letter of Credit, at a per annum rate equal to the
Applicable Margin as interest on Eurodollar Loans on such Lender’s Applicable
Percentage of the stated face amount of each such outstanding Letter of Credit
during the period from and including the date such Letter of Credit is issued
(or, in the case of the Existing Letters of Credit, the Global Effective Date)
to but excluding the date such Letter of Credit expires, and (ii) to the
relevant Issuing Bank a fronting fee equal to the greater of (A) U.S.$500 and
(B) the rate of 0.125% per annum on the stated face amount of each outstanding
Letter of Credit during the period from and including the date such Letter of
Credit is issued (or, in the case of the Existing Letters of Credit, the Global
Effective Date) to but excluding the date such Letter of Credit expires, as well
as any such Issuing Bank’s standard and customary fees with respect to the
administration, issuance, amendment, renewal or extension of any Letter of
Credit or processing of drawings thereunder. Participation fees and fronting
fees shall be payable upon the issuance and on each renewal of each Letter of
Credit. Any other fees payable to any such Issuing Bank pursuant to this
paragraph shall be payable within ten (10) Business Days after demand. All
participation fees and fronting fees shall be computed on the basis of a year of
360 days.
          (c) The Borrower agrees to pay to (i) the Global Administrative Agent,
for its own account and for the account of each Lender, as applicable, fees,
including, without limitation, an upfront fee (the “Upfront Fee”), and, if and
when applicable, an extension fee (as provided in Section 2.9(e)), in the
amounts and at the times separately agreed upon in writing between the Borrower
and the Global Administrative Agent, including, without limitation, the amounts
agreed upon in the JPM Fee Letter, and (ii) Banc of America Securities LLC, or
its Affiliate, fees in the amounts agreed upon in the BofA Fee Letter.
          (d) Unless otherwise set forth herein, all fees payable hereunder
shall be paid on the dates due, in immediately available funds, to the Global
Administrative Agent (or the relevant Issuing Bank, in the case of fees payable
to it) for distribution, in the case of Commitment Fees and participation fees,
to the Lenders entitled thereto. Fees paid shall not be refundable under any
circumstances absent manifest error (e.g., as a result of a clerical mistake).
     SECTION 2.13 Interest.
          (a) Subject to Section 10.13, the Loans comprising each ABR Revolving
Borrowing shall bear interest at the Alternate Base Rate plus the Applicable
Margin for ABR Loans.

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          (b) Subject to Section 10.13, the Loans comprising each Eurodollar
Borrowing shall bear interest at the Adjusted Eurodollar Rate for the Interest
Period in effect for such Borrowing plus the Applicable Margin for Eurodollar
Loans.
          (c) Subject to Section 10.13, the Swingline Loans shall bear interest
at (i) the Alternate Base Rate plus the Applicable Margin for ABR Loans or
(ii) the Specified Rate plus the Applicable Margin for Specified Rate Swingline
Loans, as elected by the Borrower pursuant to Section 2.4(b).
          (d) Notwithstanding the foregoing, but subject to Section 10.13, if
any principal of or interest on any Loan or any fee or other amount payable by
the Borrower hereunder is not paid when due, whether at stated maturity, upon
acceleration or otherwise, such overdue amount shall until paid or waived in
writing bear interest, after as well as before judgment, at a rate per annum
(the “Default Rate”) equal to (i) in the case of overdue principal of any Loan,
the lesser of (A) the rate otherwise applicable to such Loan as provided in the
preceding paragraphs of this Section plus 2% or (B) the Highest Lawful Rate or
(ii) in the case of any other amount, the lesser of (A) the rate applicable to
ABR Revolving Loans as provided in paragraph (a) of this Section plus 2% or
(B) the Highest Lawful Rate.
          (e) Subject to Section 10.13, accrued interest on each Loan shall be
payable in arrears on each Interest Payment Date for such Loan and upon
termination of the Global Commitments and Commitments; provided that
(i) interest accrued pursuant to paragraph (d) of this Section shall be payable
on demand of the Global Administrative Agent or the Required Lenders, (ii) in
the event of any repayment or prepayment of any Loan (whether due to
acceleration or otherwise), accrued interest on the principal amount repaid or
prepaid shall be payable on the date of such repayment or prepayment and
(iii) in the event of any conversion of any Eurodollar Loan prior to the end of
the current Interest Period therefor, accrued interest on such Loan shall be
payable on the effective date of such conversion.
          (f) Subject to Section 10.13, all interest hereunder shall be computed
on the basis of a year of 360 days, except that interest computed by reference
to the Alternate Base Rate, shall be computed on the basis of a year of 365 days
(or 366 days in a leap year), and in each case shall be payable for the actual
number of days elapsed (including the first day but excluding the last day).
Promptly after the determination of any interest rate provided for herein or any
change therein, the Global Administrative Agent shall notify the Lenders to
which such interest is payable and the Borrower thereof. Each determination by
the Global Administrative Agent of an interest rate or fee hereunder shall,
except in cases of manifest error, be final, conclusive and binding on the
parties.
     SECTION 2.14 Alternate Rate of Interest. If prior to the commencement of
any Interest Period for a Eurodollar Borrowing:
          (a) the Global Administrative Agent determines (which determination
shall be conclusive absent manifest error) that adequate and reasonable means do
not exist for ascertaining the Adjusted Eurodollar Rate or the Eurodollar Rate,
as applicable, for such Interest Period;

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          (b) the Global Administrative Agent is advised by the Required Lenders
that the Adjusted Eurodollar Rate for such Interest Period will not adequately
and fairly reflect the cost to such Lenders of making or maintaining their Loans
included in such Borrowing for such Interest Period; or
          (c) the Global Administrative Agent determines in good faith (which
determination shall be conclusive) that by reason of circumstances affecting the
interbank dollar market generally, deposits in U.S. Dollars in the London
interbank dollar market are not being offered for the applicable Interest Period
and in an amount equal to the amount of the Eurodollar Loan requested by the
Borrower,
then the Global Administrative Agent shall give notice thereof to the Borrower
and the Lenders by telephone or telecopy as promptly as practicable thereafter
and, until the Global Administrative Agent notifies the Borrower and the Lenders
that the circumstances giving rise to such notice no longer exist, which notice
the Global Administrative Agent shall give promptly after becoming aware
thereof, (i) any Interest Election Request that requests the conversion of any
Borrowing to, or continuation of any Borrowing as, a Eurodollar Borrowing for
the affected Interest Period shall be ineffective, and (ii) if any Borrowing
Request requests a Eurodollar Borrowing, such Borrowing shall be made as a
Eurodollar Loan having the shortest Interest Period which is not unavailable
under clauses (a) through (c) of this Section, and if no Interest Period is
available, as an ABR Revolving Borrowing.
     SECTION 2.15 Illegality.
          (a) Notwithstanding any other provision of this Agreement to the
contrary, if (i) by reason of the adoption of any applicable Governmental Rule
or any change in any applicable Governmental Rule or in the interpretation or
administration thereof by any Governmental Authority or compliance by any Lender
with any request or directive (whether or not having the force of law) of any
central bank or other Governmental Authority or (ii) circumstances affecting the
London interbank dollar market or the position of a Lender therein shall at any
time make it unlawful in the sole discretion of a Lender exercised in good faith
for such Lender or its Applicable Lending Office to (A) honor its obligation to
make Eurodollar Loans either generally or for a particular Interest Period
provided for hereunder, or (B) maintain Eurodollar Loans either generally or for
a particular Interest Period provided for hereunder, then such Lender shall
promptly notify the Borrower thereof in writing through the Global
Administrative Agent (who will endeavor to, but not be liable for failing to,
provide the Borrower with the basis therefor in reasonable detail) and such
Lender’s obligation to make or maintain Eurodollar Loans having an affected
Interest Period hereunder shall be suspended until such time as such Lender may
again make and maintain Eurodollar Loans having an affected Interest Period (in
which case the provisions of Section 2.15(b) hereof shall be applicable). Before
giving such notice pursuant to this Section 2.15, such Lender will designate a
different available Applicable Lending Office for the affected Eurodollar Loans
of such Lender or take such other action as the Borrower may request if such
designation or action will avoid the need to suspend such Lender’s obligation to
make Eurodollar Loans hereunder and will not, in the sole opinion of such Lender
exercised in good faith, be disadvantageous to such Lender (provided, that such
Lender shall have no obligation so to designate an Applicable Lending Office for
Eurodollar Loans located in the United States of America).

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          (b) If the obligation of any Lender to make or maintain any Eurodollar
Loans shall be suspended pursuant to Section 2.15(a) hereof, all Loans having an
affected Interest Period which would otherwise be made by such Lender as
Eurodollar Loans shall be made instead as ABR Revolving Loans (and, if such
Lender so requests by written notice to the Borrower with a copy to the Global
Administrative Agent, each Eurodollar Loan having an affected Interest Period of
such Lender then outstanding shall be automatically converted into an ABR
Revolving Loan on the last day of the Interest Period for such Eurodollar Loans
unless earlier conversion is required by applicable law) and, to the extent that
Eurodollar Loans are so made as (or converted into) ABR Revolving Loans, all
payments of principal which would otherwise be applied to such Eurodollar Loans
shall be applied instead to such ABR Revolving Loans.
     SECTION 2.16 Increased Costs.
          (a) If any Change in Law shall:
     (i) impose, modify or deem applicable any reserve, special deposit or
similar requirement against assets of, deposits with or for the account of, or
credit extended by, any Lender (except any such reserve requirement reflected in
the Adjusted Eurodollar Rate) or any Issuing Bank; or
     (ii) impose on any Lender or any Issuing Bank or the London interbank
market any other condition affecting this Agreement or Eurodollar Loans made by
such Lender (except any such reserve requirement reflected in the Adjusted
Eurodollar Rate) or any Letter of Credit or participation therein;
and the result of any of the foregoing shall be to increase the cost to such
Lender of making or maintaining any Eurodollar Loan (or of maintaining its
obligation to make any such Loan) or to increase the cost to such Lender or such
Issuing Bank of participating in, issuing or maintaining any Letter of Credit or
to reduce the amount of any sum received or receivable by such Lender or such
Issuing Bank hereunder (whether of principal, interest or otherwise) with
respect to any Eurodollar Loan or any Letter of Credit, then the Borrower will
pay, in accordance with Section 2.16(c), to such Lender or such Issuing Bank
such additional amount or amounts as will compensate such Lender or such Issuing
Bank, as the case may be, for such additional costs incurred or reduction
suffered with respect to any such Eurodollar Loan or Letter of Credit.
          (b) If any Lender or any Issuing Bank determines in good faith that
any Change in Law regarding capital requirements has or would have the effect of
reducing the rate of return on such Lender’s or such Issuing Bank’s capital or
on the capital of such Lender’s or such Issuing Bank’s holding company, if any,
as a consequence of this Agreement or the Loans made by, or participations in
Letters of Credit held by, such Lender, or the Letters of Credit issued by such
Issuing Bank, to a level below that which such Lender or such Issuing Bank or
such Lender’s or such Issuing Bank’s holding company could have achieved but for
such Change in Law (taking into consideration such Lender’s or such Issuing
Bank’s policies and the policies of such Lender’s or such Issuing Bank’s holding
company with respect to capital adequacy), then the Borrower will pay, in
accordance with Section 2.16(c), to such Lender or such

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Issuing Bank, as the case may be, such additional amount or amounts as will
compensate such Lender or such Issuing Bank or such Lender’s or such Issuing
Bank’s holding company for any such reduction suffered.
          (c) A certificate of a Lender or an Issuing Bank setting forth the
amount or amounts necessary to compensate such Lender or such Issuing Bank or
such Lender’s or such Issuing Bank’s holding company, as the case may be, as
specified in paragraph (a) or (b) of this Section shall be delivered to the
Borrower and shall be conclusive absent manifest error. Except as provided in
Section 2.16(d), the Borrower shall pay such Lender or such Issuing Bank, as the
case may be, the amount shown as due on any such certificate within ten
(10) Business Days after receipt thereof.
          (d) Failure or delay on the part of any Lender or any Issuing Bank to
demand compensation pursuant to this Section shall not constitute a waiver of
such Lender’s or such Issuing Bank’s right to demand such compensation; provided
that the Borrower shall not be required to compensate a Lender or an Issuing
Bank pursuant to this Section for any increased costs or reductions incurred
more than 180 days prior to the date that such Lender or such Issuing Bank, as
the case may be, notifies the Borrower of the Change in Law giving rise to such
increased costs or reductions and of such Lender’s or such Issuing Bank’s
intention to claim compensation therefor; provided further that, if the Change
in Law giving rise to such increased costs or reductions is retroactive, then
the 180-day period referred to above shall be extended to include the period of
retroactive effect thereof.
     SECTION 2.17 Break Funding Payments. In the event of:
          (a) the payment (including prepayment) of any principal of any
Eurodollar Loan other than on the last day of an Interest Period applicable
thereto (including as a result of an Event of Default);
          (b) the conversion of any Eurodollar Loan other than on the last day
of the Interest Period applicable thereto;
          (c) the failure to borrow, convert, continue or prepay any Loan on the
date specified in any notice delivered pursuant hereto (regardless of whether
such notice may be revoked under Section 2.11 and is revoked in accordance
therewith); or
          (d) the assignment of any Eurodollar Loan other than on the last day
of the Interest Period applicable thereto as a result of a request by the
Borrower pursuant to Section 2.1(b) or 2.20;
then, in any such event, the Borrower shall compensate each Lender for the loss,
cost and expense attributable to such event. In the case of a Eurodollar Loan,
such loss, cost or expense to any Lender shall be deemed to include an amount
determined by such Lender to be the excess, if any, of (i) the amount of
interest which would have accrued on the principal amount of such Loan had such
event not occurred, at the Adjusted Eurodollar Rate that would have been
applicable to such Loan, for the period from the date of such event to the last
day of the then current Interest Period therefor (or, in the case of a failure
to borrow, convert or continue, for the period that would have been the Interest
Period for such Loan), over (ii) the amount of interest which would accrue on
such principal amount for such period at the interest rate which such

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Lender would bid were it to bid, at the commencement of such period, for dollar
deposits of a comparable amount and period from other banks in the London
interbank market. A certificate of any Lender setting forth any amount or
amounts that such Lender is entitled to receive pursuant to this Section shall
be delivered to the Borrower and the Global Administrative Agent and shall be
conclusive absent manifest error. Except as provided in the last sentence of
this Section 2.17, the Borrower shall pay such Lender the amount shown as due on
any such certificate within ten (10) Business Days after receipt thereof.
Failure or delay on the part of any Lender or any Issuing Bank to demand
compensation pursuant to this Section shall not constitute a waiver of such
Lender’s or such Issuing Bank’s right to demand such compensation; provided that
the Borrower shall not be required to compensate a Lender or an Issuing Bank
pursuant to this Section for any such loss, cost or expense described in this
Section 2.17 incurred more than 180 days prior to the date that such Lender or
such Issuing Bank, as the case may be, notifies the Borrower of the circumstance
giving rise to such loss, cost or expense described in this Section 2.17 and of
such Lender’s or such Issuing Bank’s intention to claim compensation therefor.
     SECTION 2.18 Taxes.
          (a) Any and all payments by or on account of any obligation of the
Borrower hereunder or under any other Loan Document shall be made free and clear
of and without deduction for any Indemnified Taxes or Other Taxes; provided that
if the Borrower shall be required to deduct any Indemnified Taxes or Other Taxes
from such payments, then (i) the sum payable shall be increased as necessary so
that after making all required deductions (including deductions applicable to
additional sums payable under this Section), the Global Administrative Agent,
each Lender or Issuing Bank (as the case may be) receives an amount equal to the
sum it would have received had no such deductions been made, (ii) the Borrower
shall make such deductions and (iii) the Borrower shall pay the full amount
deducted to the relevant Governmental Authority in accordance with applicable
law; provided that if a Lender has breached or is in breach of its obligations
under Section 2.18(e), then the Borrower shall have no obligations under clause
(i) of this Section 2.18(a) with respect to payments made or to be made to such
Lender where Indemnified Taxes and/or Other Taxes arise in respect of such
payments as a consequence of such Lender’s status as a Foreign Lender.
          (b) In addition, the Borrower shall pay any Other Taxes to the
relevant Governmental Authority in accordance with applicable law.
          (c) THE BORROWER SHALL INDEMNIFY THE GLOBAL ADMINISTRATIVE AGENT, EACH
LENDER AND EACH ISSUING BANK, WITHIN TEN (10) BUSINESS DAYS AFTER WRITTEN DEMAND
THEREFOR, FOR THE FULL AMOUNT OF ANY INDEMNIFIED TAXES OR OTHER TAXES PAID BY
THE GLOBAL ADMINISTRATIVE AGENT, SUCH LENDER OR SUCH ISSUING BANK, AS THE CASE
MAY BE, ON OR WITH RESPECT TO ANY PAYMENT BY OR ON ACCOUNT OF ANY OBLIGATION OF
THE BORROWER HEREUNDER OR UNDER ANY OTHER LOAN DOCUMENT (INCLUDING INDEMNIFIED
TAXES OR OTHER TAXES IMPOSED OR

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ASSERTED ON OR ATTRIBUTABLE TO AMOUNTS PAYABLE UNDER THIS SECTION) AND ANY
PENALTIES, INTEREST AND REASONABLE EXPENSES ARISING THEREFROM OR WITH RESPECT
THERETO, WHETHER OR NOT SUCH INDEMNIFIED TAXES OR OTHER TAXES WERE CORRECTLY OR
LEGALLY IMPOSED OR ASSERTED BY THE RELEVANT GOVERNMENTAL AUTHORITY; PROVIDED
THAT IF SUCH PAYMENTS OR LIABILITIES ARISE FROM THE LENDER HAVING BREACHED OR
BEING IN BREACH OF ITS OBLIGATIONS UNDER SECTION 2.18(e), THEN THE BORROWER
SHALL HAVE NO OBLIGATIONS UNDER THIS SECTION 2.18(c) WITH RESPECT TO SUCH
PAYMENTS OR LIABILITIES. A CERTIFICATE AS TO THE AMOUNT OF SUCH PAYMENT OR
LIABILITY DELIVERED TO THE BORROWER BY A LENDER OR AN ISSUING BANK, OR BY THE
GLOBAL ADMINISTRATIVE AGENT ON ITS OWN BEHALF OR ON BEHALF OF A LENDER OR AN
ISSUING BANK, SHALL BE CONCLUSIVE ABSENT MANIFEST ERROR.
          (d) As soon as practicable after any payment of Indemnified Taxes or
Other Taxes by the Borrower to a Governmental Authority, if available, the
Borrower shall deliver to the Global Administrative Agent the original or a
certified copy of a receipt issued by such Governmental Authority evidencing
such payment, a copy of the return reporting such payment or other evidence of
such payment reasonably satisfactory to the Global Administrative Agent.
          (e) Each Lender that is not organized under the laws of the United
States of America or a state thereof agrees that such Lender will deliver to the
Borrower and the Global Administrative Agent two (2) duly completed copies of
United States Internal Revenue Service Form W-8 BEN or W-8 ECI or successor
forms (or if such forms are no longer required, a representation by such Lender)
certifying in either case that such Lender is entitled to receive payments from
the Loan Parties under the Loan Documents without deduction or withholding of
any United States federal income taxes. Each Lender which so delivers a Form W-8
BEN or W-8 ECI further undertakes to deliver to the Borrower and the Global
Administrative Agent two (2) additional copies of such form (or a successor
form) on or before such form expires or becomes obsolete or after the occurrence
of any event requiring a change in the most recent form so delivered by it and
such amendments thereto or extensions or renewals thereof as may be reasonably
requested by the Borrower or the Global Administrative Agent, in each case,
certifying that such Lender is entitled to receive payments from the Borrower
under the Loan Documents without deduction or withholding of any United States
federal income taxes, unless (i) an event (including without limitation any
change in treaty, law or regulation) has occurred prior to the date on which any
such delivery would otherwise be required which renders all such forms
inapplicable or which would prevent such Lender from duly completing and
delivering any such form with respect to it and (ii) such Lender advises the
Borrower and the Global Administrative Agent that it is not capable of receiving
such payments without any deduction or withholding of United States federal
income tax.
          (f) If the Borrower at any time pays an amount under Section 2.18(a),
(b) or (c) to any Lender, the Global Administrative Agent or any Issuing Bank,
and such payee receives a refund of or credit for any part of any Indemnified
Taxes or Other Taxes which such payee determines in its reasonable judgment is
made with respect to such amount paid by the Borrower, such Lender, the Global
Administrative Agent or any Issuing Bank, as the case may be, shall pay to the
Borrower the amount of such refund or credit promptly, and in any event within
60 days, following the receipt of such refund or credit by such payee.
          (g) If the Borrower pays any amount pursuant to Section 2.18(a) or (c)
with respect to any payment to a Lender or, with the prior written consent of
such Lender, provides

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any security therefor pursuant to applicable law, and the Borrower at its
expense wishes to contest the eligibility of the relevant Taxes and furnishes to
such Lender an opinion of tax counsel satisfactory to such Lender, acting
reasonably, to the effect that there exists a reasonable basis for contesting
such Taxes, the Borrower may contest such Taxes, provided that:
     (i) the Borrower has otherwise complied with this Section 2.18(g);
     (ii) the Borrower has delivered to such Lender such additional security or
assurances as such Lender may require, acting reasonably, in order to be
satisfied that such Lender will not incur any liability by reason of any
contestation, including legal fees, disbursements, interest and penalties; and
     (iii) the conduct of such proceedings (including the settlement or
compromise of same) will remain within the sole discretion of such Lender and
will forthwith be abandoned if such Lender so requires, acting reasonably,
having regard to its overall tax and related interests.
     SECTION 2.19 Payments Generally; Pro Rata Treatment; Sharing of Set-offs.
          (a) The Borrower shall make each payment required to be made by it
hereunder or under any other Loan Document (whether of principal, interest, fees
or reimbursement of LC Disbursements, or of amounts payable under Section 2.16,
Section 2.17 or Section 2.18, or otherwise) prior to the time expressly required
hereunder or under such other Loan Document for such payment (or, if no such
time is expressly required, prior to 2:00 p.m., Chicago time), on the date when
due, in immediately available funds, without set-off or counterclaim. Any
amounts received after such time on any date may, in the discretion of the
Global Administrative Agent, be deemed to have been received on the next
succeeding Business Day for purposes of calculating interest thereon. All such
payments shall be made to the Global Administrative Agent c/o JPMorgan Chase
Bank, N.A., 10 South Dearborn, 7th Floor, Mail Code: IL1-0010, Chicago, Illinois
60603, Attention: Leonida G. Mischke, except payments to be made directly to an
Issuing Bank or the Swingline Lender as expressly provided herein and payments
pursuant to Section 2.16, 2.17, 2.18(c) and 10.3 shall be made directly to the
Persons entitled thereto and payments pursuant to other Loan Documents shall be
made to the Persons specified therein. The Global Administrative Agent shall
distribute any such payments received by it for the account of any other Person
to the appropriate recipient promptly following receipt thereof. Except as set
forth in clause (a) of the definition of “Interest Period”, if any payment under
any Loan Document shall be due on a day that is not a Business Day, the date for
payment shall be extended to the next succeeding Business Day, and, in the case
of any payment accruing interest, interest thereon shall be payable for the
period of such extension. All payments under each Loan Document shall be made in
U.S. Dollars.
          (b) If at any time insufficient funds are received by and available to
the Global Administrative Agent to pay fully all amounts of principal,
unreimbursed LC Disbursements, interest and fees then due hereunder, such funds
shall be applied, subject to Section 10.15 and 10.17, (i) first, towards payment
of interest and fees then due hereunder, ratably among the parties entitled
thereto in accordance with the amounts of interest and fees then due to such
parties, and (ii) second, towards payment of principal and unreimbursed LC

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Disbursements then due hereunder, ratably among the parties entitled thereto in
accordance with the amounts of principal and unreimbursed LC Disbursements then
due to such parties.
          (c) If any Lender shall, by exercising any right of set-off or
counterclaim or otherwise, obtain payment in respect of any principal of or
interest on any of its Revolving Loans or participations in LC Disbursements or
Swingline Loans resulting in such Lender receiving payment of a greater
proportion of the aggregate amount of its Revolving Loans and participations in
LC Disbursements and Swingline Loans and accrued interest thereon than the
proportion received by any other Lender, then the Lender receiving such greater
proportion shall purchase (for cash at face value) participations in the
Revolving Loans and participations in LC Disbursements and Swingline Loans of
other Lenders to the extent necessary so that the benefit of all such payments
shall be shared by the Lenders ratably in accordance with the aggregate amount
of principal of and accrued interest on their respective Revolving Loans and
participations in LC Disbursements and Swingline Loans; provided that (i) if any
such participations are purchased and all or any portion of the payment giving
rise thereto is recovered, such participations shall be rescinded and the
purchase price restored to the extent of such recovery, without interest, and
(ii) the provisions of this paragraph shall not be construed to apply to any
payment made by the Borrower pursuant to and in accordance with the express
terms of this Agreement or any payment obtained by a Lender as consideration for
the assignment of or sale of a participation in any of its Loans or
participations in LC Disbursements and Swingline Loans to any assignee or
participant, other than to the Borrower or any Subsidiary or Affiliate thereof
(as to which the provisions of this paragraph shall apply). The Borrower
consents to the foregoing and agrees, to the extent it may effectively do so
under applicable law, that any Lender acquiring a participation pursuant to the
foregoing arrangements may exercise against the Borrower rights of set-off and
counterclaim with respect to such participation as fully as if such Lender were
a direct creditor of the Borrower in the amount of such participation.
          (d) Unless the Global Administrative Agent shall have received notice
from the Borrower prior to the date on which any payment is due to the Global
Administrative Agent for the account of the Lenders or an Issuing Bank hereunder
that the Borrower will not make such payment, the Global Administrative Agent
may assume that the Borrower has made such payment on such date in accordance
herewith and may, in reliance upon such assumption, distribute to the Lenders or
an Issuing Bank, as the case may be, the amount due. In such event, if the
Borrower has not in fact made such payment, then each of the Lenders or each of
the Issuing Banks, as the case may be, severally agrees to repay to the Global
Administrative Agent forthwith on demand the amount so distributed to such
Lender or such Issuing Bank with interest thereon, for each day from and
including the date such amount is distributed to it to but excluding the date of
payment to the Global Administrative Agent, at the greater of the Federal Funds
Effective Rate and a rate determined by the Global Administrative Agent in
accordance with banking industry rules on interbank compensation.
          (e) If any Lender shall fail to make any payment required to be made
by it pursuant to Section 2.5(d) or (e), 2.6(b), 2.19(d) or 10.3(c) then the
Global Administrative Agent may, in its discretion (notwithstanding any contrary
provision hereof), apply any amounts thereafter received by the Global
Administrative Agent for the account of such Lender to satisfy such Lender’s
obligations under such Sections until all such unsatisfied obligations are fully
paid.

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     SECTION 2.20 Mitigation Obligations; Replacement of Lenders.
          (a) If any Lender requests compensation under Section 2.16, or if the
Borrower is required to pay any additional amount to any Lender or any
Governmental Authority for the account of any Lender pursuant to Section 2.18,
then such Lender shall use reasonable efforts to designate a different
Applicable Lending Office for funding or booking its Loans hereunder or to
assign its rights and obligations hereunder to another of its offices, branches
or Affiliates, if, in the reasonable judgment of such Lender, such designation
or assignment (i) would eliminate or reduce amounts payable pursuant to
Section 2.16 or 2.18, as the case may be, in the future and (ii) would not
subject such Lender to any unreimbursed cost or expense and would not otherwise
be disadvantageous to such Lender. The Borrower hereby agrees to pay all
reasonable costs and expenses incurred by any Lender in connection with any such
designation or assignment.
          (b) If (i) any Lender asserts that events have occurred suspending its
obligation to make or maintain Eurodollar Loans under Section 2.15 when
substantially all other Lenders have not also done so, (ii) any Lender requests
compensation under Section 2.16, (iii) the Borrower is required to pay any
additional amount to any Lender or any Governmental Authority for the account of
any Lender pursuant to Section 2.18, or (iv) any Lender defaults in its
obligation to fund Loans hereunder, then the Borrower may, at its sole expense,
upon notice to such Lender and the Global Administrative Agent, require such
Lender to assign and delegate, without recourse (in accordance with and subject
to the restrictions contained in Section 10.4), all its interests, rights and
obligations under this Agreement to an assignee that shall assume such
obligations (which assignee may be another Lender, if a Lender accepts such
assignment); provided that (A) if the assignee is not a Lender or a Lender
Affiliate, the Borrower shall have received the prior written consent of the
Global Administrative Agent and the Issuing Banks, which consent of such Agent
and Issuing Banks shall not unreasonably be withheld, conditioned or delayed,
(B) such Lender shall have received payment of an amount equal to the
outstanding principal of its Loans and participations in LC Disbursements and
Swingline Loans, accrued interest thereon, accrued fees and all other amounts
payable to it hereunder, from the assignee (to the extent of such outstanding
principal and accrued interest and fees) or the Borrower (in the case of all
other amounts), (C) the assignee and assignor shall have entered into an
Assignment and Acceptance, and (D) in the case of any such assignment resulting
from a claim for compensation under Section 2.16 or payments required to be made
pursuant to Section 2.18, such assignment will result in a reduction in such
compensation or payments.
          (c) In addition to the foregoing provisions of Section 2.20(b), the
Borrower shall be permitted to replace any Lender who becomes a Non-Consenting
Lender (as defined below) with a replacement financial institution (which may be
an existing Lender) pursuant to an assignment and delegation, without recourse
(in accordance with and subject to the restrictions contained in Section 10.4),
of all of such Non-Consenting Lender’s interests, rights and obligations under
this Agreement to such replacement financial institution that shall assume such
obligations; provided, that (i) if the proposed assignee is not a Lender or a
Lender Affiliate, the Borrower shall have received the prior written consent of
the Global Administrative Agent and the Issuing Banks, which consent of such
Global Administrative Agent and Issuing Banks shall not unreasonably be
withheld, conditioned or delayed, (ii) such Non-Consenting Lender shall have
received payment of an amount equal to the outstanding principal of its Loans
and

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participations in LC Disbursements and Swingline Loans, accrued interest
thereon, accrued fees and all other amounts payable to it hereunder, from the
assignee (to the extent of such outstanding principal and accrued interest and
fees) or the Borrower (in the case of all other amounts), (iii) the assignee and
assignor shall have entered into an Assignment and Acceptance, and (iv) the
assignee shall consent, at the time of such assignment, to each matter in
respect of which such Non-Consenting Lender refused to consent. In the event
that, at any time, (A) the Borrower or the Global Administrative Agent has
requested the Lenders to (1) increase the Global Commitments in accordance with
Section 2.1(b), (2) increase, reaffirm or decrease the Global Borrowing Base in
accordance with Section 2.8, or (3) extend the Maturity Date in accordance with
Section 2.9(e), (B) the increase, reaffirmation, decrease or extension in
question requires the agreement of all Lenders, Supermajority Lenders, Required
Lenders or Majority Lenders, as the case may be, in accordance with the terms of
Section 2.1(b), Section 2.8or Section 2.9(e), as applicable, and (C) certain
Lenders, but not Majority Lenders (in the case of Section 2.1(b)), the
Supermajority Lenders (in the case of Section 2.9(e)), the Required Lenders (in
the case of a requested increase in the Global Borrowing Base) or Majority
Lenders (in the case of a requested reaffirmation or decrease of the Global
Borrowing Base) have agreed to such increase, reaffirmation, decrease or
extension, then any Lender, at such time, who does not agree to such increase,
reaffirmation, decrease or extension, as applicable, shall be deemed a
“Non-Consenting Lender.”
     SECTION 2.21 Currency Conversion and Currency Indemnity.
          (a) Payments in Agreed Currency. The Borrower shall make payment
relative to any Obligation in the currency (the “Agreed Currency”) in which the
Obligation was effected. If any payment is received on account of any Obligation
in any currency (the “Other Currency”) other than the Agreed Currency (whether
voluntarily or pursuant to an order or judgment or the enforcement thereof or
the realization of any Collateral or the liquidation of the Borrower or
otherwise howsoever), such payment shall constitute a discharge of the liability
of the Borrower hereunder and under the other Loan Documents in respect of such
obligation only to the extent of the amount of the Agreed Currency which the
relevant Lender, Issuing Bank or Agent, as the case may be, is able to purchase
with the amount of the Other Currency received by it on the Business Day next
following such receipt in accordance with its normal procedures and after
deducting any costs and expenses of exchange.
          (b) Conversion of Agreed Currency into Judgment Currency. If, for the
purpose of obtaining or enforcing judgment in any court in any jurisdiction, it
becomes necessary to convert into a particular currency (the “Judgment
Currency”) any amount due in the Agreed Currency, then the conversion shall be
made on the basis of the rate of exchange prevailing on the next Business Day
following the date such judgment is given and in any event the Borrower shall be
obligated to pay the Agents, Issuing Banks and the Lenders any deficiency in
accordance with Section 2.21(c). For the foregoing purposes “rate of exchange”
means the rate at which the relevant Lender, Issuing Bank or Agent, as
applicable, in accordance with its normal banking procedures is able on the
relevant date to purchase the Agreed Currency with the Judgment Currency after
deducting costs and expenses of exchange.
          (c) Circumstances Giving Rise to Indemnity. To the fullest extent
permitted by applicable law, if (i) any Lender, any Issuing Bank or any Agent
receives any

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payment or payments on account of the liability of the Borrower hereunder
pursuant to any judgment or order in any Other Currency, and (ii) the amount of
the Agreed Currency which the relevant Lender, Issuing Bank or Agent, as
applicable, is able to purchase on the Business Day next following such receipt
with the proceeds of such payment or payments in accordance with its normal
procedures and after deducting any costs and expenses of exchange is less than
the amount of the Agreed Currency due in respect of such liability immediately
prior to such judgment or order, then the Borrower on demand shall, and the
Borrower hereby agrees to, indemnify the Lenders, the Issuing Banks and the
Agents from and against any loss, cost or expense arising out of or in
connection with such deficiency.
          (d) Indemnity Separate Obligation. To the fullest extent permitted by
applicable law, the agreement of indemnity provided for in Section 2.21(c) shall
constitute an obligation separate and independent from all other obligations
contained in this Agreement, shall give rise to a separate and independent cause
of action, shall apply irrespective of any indulgence granted by the Lenders,
the Issuing Banks or Agents or any of them from time to time, and shall continue
in full force and effect notwithstanding any judgment or order for a liquidated
sum in respect of an amount due hereunder or under any judgment or order.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
     In order to induce the Global Administrative Agent, the other Agents, any
Issuing Bank and the Lenders to enter into this Agreement and to make Loans and
issue or participate in Letters of Credit hereunder, the Borrower represents and
warrants to the Global Administrative Agent, the other Agents, any Issuing Bank
and the Lenders that each of the following statements is true and correct:
     SECTION 3.1 Existence and Power. Each Loan Party (a) is a corporation,
partnership or limited liability company duly incorporated or organized (as
applicable), validly existing and, if applicable for such Loan Party in the
jurisdiction in issue, in good standing under the laws of its jurisdiction of
incorporation or organization, (b) has all requisite corporate, partnership or
limited liability company power (as applicable) required to carry on its
businesses as now conducted, and (c) is duly qualified to transact business as a
foreign corporation, partnership or limited liability company in each
jurisdiction where a failure to be so qualified would reasonably be expected to
have a Material Adverse Effect.
     SECTION 3.2 Loan Party and Governmental Authorization; Contravention. The
execution, delivery and performance of this Agreement and the other Loan
Documents by each Loan Party (to the extent each Loan Party is a party to this
Agreement and such Loan Documents) (a) are within such Loan Party’s corporate,
partnership or limited liability company powers, (b) when executed will be duly
authorized by all necessary corporate, partnership or limited liability company
action, (c) require no action by or in respect of, or filing with, any
Governmental Authority (other than (i) actions or filings pursuant to the
Exchange Act, (ii) actions or filings necessary to create or perfect the Liens
required hereby or by any other Combined Loan Document, (iii) actions or filings
that have been taken or made and are in full force and effect, and (iv) actions
or filings which, if not taken or made, would not reasonably be expected to have
a Material Adverse Effect) and (d) do not (i) contravene, or constitute a
default

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under, any provision of (A) applicable Governmental Rule (including, without
limitation, Regulation U), except any contravention or default that would not
reasonably be expected to have a Material Adverse Effect, (B) the articles or
certificate of incorporation, bylaws, regulations, partnership agreement or
comparable charter documents of any Loan Party, or (C) any agreement, judgment,
injunction, order, decree or other instrument binding upon any Loan Party,
including, without limitation, any Existing Subordinate Note Document or, as
applicable, if and when any Permitted Senior Notes Debt is issued and while such
Permitted Senior Notes Debt remains outstanding, any Permitted Senior Notes
Document, except any contravention or default that would not reasonably be
expected to have a Material Adverse Effect and, with respect to the Existing
Convertible Debentures and Existing Convertible Note Indenture, assuming that
any repurchase of the Existing Convertible Debentures pursuant to Section 3.06
of the Existing Convertible Note Indenture is made (1) at a time at which
immediately before and after giving effect to such repurchase no Default, Event
of Default, Global Borrowing Base Deficiency or U.S. Borrowing Base Deficiency
has occurred and is continuing or results therefrom, (2) with the proceeds from
the sale of shares of common stock of the Borrower, or (3) in compliance with
the last sentence of Section 7.14, or (ii) result in the creation or imposition
of any Lien on any Borrowing Base Property or Collateral other than the Liens
securing the Combined Obligations.
     SECTION 3.3 Binding Effect. This Agreement constitutes, and each other Loan
Document when executed and delivered will constitute, valid and binding
obligations of each Loan Party which is a party thereto, enforceable against
each such Loan Party which executes the same in accordance with its terms except
as the enforceability thereof may be limited by (a) bankruptcy, insolvency,
reorganization, moratorium, or similar Governmental Rules affecting creditors’
rights generally, and (b) equitable principles of general applicability (whether
enforcement is sought by proceedings at law or in equity).
     SECTION 3.4 Financial Information.
          (a) The most recent annual audited consolidated balance sheet of the
Borrower and its Consolidated Subsidiaries and the related consolidated
statements of operations and cash flows for the Fiscal Year then ended, copies
of which have been delivered to each Lender, fairly present in all material
respects, in conformity with GAAP, the consolidated financial position of the
Borrower and its Consolidated Subsidiaries as of the end of such Fiscal Year and
its consolidated results of operations and cash flows for such Fiscal Year.
          (b) The most recent quarterly unaudited consolidated balance sheet of
the Borrower and its Consolidated Subsidiaries delivered to the Lenders, and the
related unaudited consolidated statements of operations and cash flows for the
portion of the Borrower’s Fiscal Year then ended, fairly present in all material
respects, in conformity with GAAP applied on a basis consistent with the
financial statements referred to in Section 3.4(a), the consolidated financial
position of the Borrower and its Consolidated Subsidiaries as of such date and
its consolidated results of operations and cash flows for such portion of the
Borrower’s Fiscal Year (except that such balance sheet and other financial
statements do not contain all footnote disclosures required in accordance with
GAAP and are subject to normal year-end audit adjustments).

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          (c) Except as disclosed in writing to the Lenders prior to the
execution and delivery of this Agreement, since December 31, 2005, no event or
circumstance which would reasonably be expected to have a Material Adverse
Effect has occurred.
          (d) After giving effect to the transactions contemplated by this
Agreement, the Borrower and each of its Subsidiaries, on a consolidated basis,
are Solvent.
     SECTION 3.5 Litigation. Except for matters disclosed on Schedule 3.5
attached hereto or in a replacement schedule that is delivered to the Global
Administrative Agent and is approved by the Majority Lenders in their sole
discretion, there is no action, suit or proceeding not fully covered by
insurance (except for normal deductibles and provided that the applicable
insurance company has acknowledged such coverage and a copy thereof is provided
to the Global Administrative Agent) pending against, or to the knowledge of any
Loan Party, threatened against or affecting any Loan Party before any
Governmental Authority in which there is a reasonable possibility of an adverse
decision which would reasonably be expected to have a Material Adverse Effect.
     SECTION 3.6 ERISA. No Loan Party nor any ERISA Affiliate of any Loan Party
maintains or has ever maintained or been obligated to contribute to any Plan
covered by Title IV of ERISA or subject to the funding requirements of
Section 412 of the Code or Section 302 of ERISA. Except in such instances where
an action, omission or failure would not reasonably be expected to have a
Material Adverse Effect, (a) each Plan maintained by any Loan Party or any ERISA
Affiliate of any Loan Party is in compliance with all applicable Governmental
Rules, (b) all returns, reports and notices required to be filed with any
regulatory agency with respect to any Plan have been filed timely, and (c) no
Loan Party nor any ERISA Affiliate of any Loan Party has failed to make any
contribution or pay any amount due or owing as required by the terms of any
Plan. There are not pending or, to the Borrower’s knowledge, threatened claims,
lawsuits, investigations or actions (other than routine claims for benefits in
the ordinary course) asserted or instituted against, and no Loan Party nor any
ERISA Affiliate of any Loan Party has knowledge of any threatened litigation or
claims (other than claims for benefits in the ordinary course) against, the
assets of any Plan or its related trust or against any fiduciary of a Plan with
respect to the operation of such Plan that are likely to result in liability of
any Loan Party resulting in an event or circumstance which would reasonably be
expected to have a Material Adverse Effect. Except in such instances where an
action, omission or failure would not reasonably be expected to have a Material
Adverse Effect, each Plan that is intended to be “qualified” within the meaning
of Section 401(a) of the Code is, and has been during the period from its
adoption to date, so qualified, both as to form and operation, and all necessary
governmental approvals, including a favorable determination as to the
qualification under the Code of such Plan and each amendment thereto, have been
or will be timely obtained. No Loan Party nor any ERISA Affiliate of any Loan
Party has engaged in any non-exempt prohibited transactions, within the meaning
of Section 406 of ERISA or Section 4975 of the Code, in connection with any Plan
which would result in liability of any Loan Party resulting in an event or
circumstance that would reasonably be expected to have a Material Adverse
Effect. No Loan Party nor any ERISA Affiliate of any Loan Party maintains or
contributes to any Plan that provides a post-employment health benefit, other
than a benefit required under Section 601 of ERISA, or maintains or contributes
to a Plan that provides health benefits that is not fully funded except where
the failure to fully fund such Plan would not reasonably be expected to have a

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Material Adverse Effect. No Loan Party nor any ERISA Affiliate of any Loan Party
maintains, has established or has ever participated in a multiple employer
welfare benefit arrangement within the meaning of Section 3(40)(A) of ERISA.
     SECTION 3.7 Taxes and Filing of Tax Returns. Except as otherwise permitted
by Section 5.7, (a) each Loan Party has filed all tax returns required to have
been filed and has paid all Taxes shown to be due and payable on such returns,
including interest and penalties, and all other Taxes which are payable by such
party, to the extent the same have become due and payable, (b) no Loan Party
knows of any proposed material Tax assessment against it, and all Tax
liabilities of each Loan Party are adequately provided for, and (c) no income
tax liability of any Loan Party has been asserted by the Internal Revenue
Service or other Governmental Authority for Taxes in excess of those already
paid.
     SECTION 3.8 Ownership of Properties Generally. Each Loan Party has good and
defensible fee simple or leasehold title (subject to Immaterial Title
Deficiencies and Permitted Encumbrances) to all Borrowing Base Properties and
Collateral purported to be owned by it, including, without limitation, all
Borrowing Base Properties and Collateral reflected in the balance sheets
referred to in Section 3.4(a), and none of such Borrowing Base Properties and
Collateral is subject to any Lien other than Permitted Encumbrances.
     SECTION 3.9 Mineral Interests. The real property described in the
attachment to the Certificate of Mortgaged Properties (the “Property
Description”) is an accurate and complete description of all Mortgaged
Properties owned by the Borrower and its U.S. Subsidiaries which are real
property located in the United States on and as of the Closing Date, and such
Mortgaged Properties (a) constitute at least the U.S. Required Reserve Value and
(b) together with the Mortgaged Properties described in the attachment to the
Certificate of Mortgaged Properties (as defined in the Canadian Credit
Agreement) delivered pursuant to Section 4.1(m) of the Canadian Credit
Agreement, constitute at least the Required Reserve Value. Subject only to
Immaterial Title Deficiencies and Permitted Encumbrances, the Borrower and each
of its Subsidiaries executing a Mortgage (as applicable) have good and
defensible title to all Borrowing Base Properties described in the most recent
Reserve Report delivered pursuant hereto, free and clear of all Liens except for
Permitted Encumbrances. Subject only to Immaterial Title Deficiencies and
Permitted Encumbrances, (i) all Borrowing Base Properties described in the most
recent Reserve Report delivered pursuant hereto are valid, subsisting, and in
full force and effect, and (ii) all material rentals, royalties, and other
amounts due and payable in respect thereof have been duly paid when due, except
as provided in Section 5.3(b)(i) with respect to delay rentals. Without regard
to any consent or non-consent provisions of any joint operating agreement
covering any of the Borrower’s or such Subsidiary’s (as applicable) Proved
Mineral Interests, subject to Immaterial Title Deficiencies and Permitted
Encumbrances, the Borrower’s percentage share and/or the percentage share of
each Subsidiary executing a Mortgage (as applicable) of (A) the costs for each
Proved Mineral Interest described in the most recent Reserve Report delivered
pursuant hereto is not greater than 105% of the decimal fraction set forth in
such Reserve Report, before and after payout, as the case may be, and described
therein by the respective designations “working interests,” “WI,” “gross working
interest,” “GWI,” or similar terms; provided that the Borrower or any applicable
Subsidiary of the Borrower shall have the right to bear costs disproportionate
to the Borrower’s or such Subsidiary’s working interest with respect to any
Mineral Interest for a period of time in order to

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earn an interest in such Mineral Interest from a third party as evidenced by a
written agreement, and (B) production from, allocated to, or attributed to each
such Proved Mineral Interest is not less than the decimal fraction set forth in
such Reserve Report, before and after payout, as the case may be, and described
therein by the designations “net revenue interest,” “NRI,” or similar terms. As
used herein, the term “Immaterial Title Deficiencies” means minor defects or
deficiencies in title which do not diminish more than two percent (2%) the
aggregate value of the Borrowing Base Properties. Each well drilled in respect
of each Proved Producing Mineral Interest described in the most recent Reserve
Report delivered pursuant hereto (1) is capable of, and is presently, producing
Hydrocarbons in commercially profitable quantities (except to the extent shut-in
in accordance with the applicable lease for such Proved Producing Mineral
Interest), and after giving effect to the transactions contemplated by this
Agreement, the Borrower and each of its Subsidiaries executing a Mortgage (as
applicable) will be entitled to receive payments on a current basis for its
share of production, with no funds in respect of any thereof held in suspense,
other than any such funds held in suspense pending delivery of appropriate
division orders, and (2) has been drilled, bottomed, completed, and operated in
compliance in all material respects with all applicable Governmental Rules and
no such well which is currently producing Hydrocarbons is subject to any penalty
in production by reason of such well having produced in excess of its allowable
production.
     SECTION 3.10 Licenses, Permits, Etc. Each Loan Party possesses such valid
franchises, certificates of convenience and necessity, operating rights,
licenses, permits, consents, authorizations, exemptions and orders of
Governmental Authorities as are necessary to carry on its business as now
conducted and as proposed to be conducted, except to the extent a failure to
obtain any such item would not reasonably be expected to have a Material Adverse
Effect.
     SECTION 3.11 Compliance with Law. The business and operations of the Loan
Parties have been and are being conducted in accordance with all applicable
Governmental Rules other than violations of Governmental Rules which would not
(either individually or collectively) reasonably be expected to have a Material
Adverse Effect.
     SECTION 3.12 Full Disclosure. All information heretofore furnished by each
Loan Party to the Global Administrative Agent or any Lender for purposes of or
in connection with this Agreement, any Loan Document or any transaction
contemplated hereby or thereby is, and all such information hereafter furnished
by or on behalf of any Loan Party to the Global Administrative Agent or any
Lender will be, true, complete and accurate in every material respect; provided,
that any projections and pro forma financial information contained in the
materials referenced above are based upon good faith estimates and assumptions
believed by management of the applicable Loan Party to be reasonable at the time
made, it being recognized by the Agents and Lenders that such financial
information as it relates to future events is not to be viewed as fact and that
actual results during the period covered by such financial information may
differ from the projected results as set forth therein by a material amount. The
Loan Parties have disclosed or have caused to be disclosed to Lenders in writing
any and all facts (other than facts of general public knowledge, including those
facts contained in the Borrower’s filings with the SEC) which would reasonably
be expected to have a Material Adverse Effect.

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     SECTION 3.13 Organizational Structure; Nature of Business. The Loan Parties
are engaged only in the business of acquiring, exploring, developing and
operating Mineral Interests and the production, marketing, processing and
transporting of Hydrocarbons therefrom and businesses reasonably related or
complementary thereto. Schedule 3.13 hereto, as of the date hereof or, as
applicable, as of an earlier date as provided in Schedule 3.13, accurately
reflects (a) the jurisdiction of incorporation or organization of each Loan
Party, (b) each jurisdiction in which each Loan Party is qualified to transact
business as a foreign corporation, foreign partnership or foreign limited
liability company, (c) the organizational identification number (if applicable)
of each Loan Party in its jurisdiction of organization, and (d) the authorized,
issued and outstanding Equity Interests of each Loan Party.
     SECTION 3.14 Environmental Matters. Except for matters disclosed on
Schedule 3.14 hereto or in a replacement schedule that is delivered to the
Global Administrative Agent and is approved by the Majority Lenders in their
sole discretion, no operation conducted by any Loan Party and no real or
personal property now or previously owned or leased by any Loan Party
(including, without limitation, Mineral Interests) and no operations conducted
thereon, and to any Loan Party’s knowledge, no operations of any applicable
prior owner, lessee or operator of any such properties, is or has been in
violation of any Environmental Law other than violations which neither
individually nor in the aggregate would reasonably be expected to have a
Material Adverse Effect. Except for matters disclosed on Schedule 3.14 hereto or
in a replacement schedule that is delivered to the Global Administrative Agent
and is approved by the Majority Lenders in their sole discretion, no Loan Party,
nor any such property nor operation is the subject of any existing, pending or,
to any Loan Party’s knowledge, threatened Environmental Complaint which would,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect. All notices, permits, licenses, and similar authorizations,
required to be obtained or filed in connection with the ownership of each tract
of real property or operations of any Loan Party thereon and each item of
personal property owned, leased or operated by any Loan Party, including,
without limitation, notices, licenses, permits and authorizations required in
connection with any past or present treatment, storage, disposal, or release of
Hazardous Materials into the environment, have been duly obtained or filed
except to the extent the failure to obtain or file such notices, licenses,
permits and authorizations would not reasonably be expected to have a Material
Adverse Effect. All Hazardous Materials generated at each tract of real property
or by each item of personal property owned, leased or operated by any Loan Party
have been transported, treated, and disposed of only by carriers or facilities
maintaining valid permits under RCRA and all other applicable Environmental Laws
for the conduct of such activities except in such cases where the failure to
obtain such permits would not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect. Except for matters disclosed on
Schedule 3.14 hereto or in a replacement schedule that is delivered to the
Global Administrative Agent and is approved by the Majority Lenders in their
sole discretion, there have been no Hazardous Discharges which were not in
compliance with Environmental Laws other than Hazardous Discharges which would
not, individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect. Except for matters disclosed on Schedule 3.14 hereto or in a
replacement schedule that is delivered to the Global Administrative Agent and is
approved by the Majority Lenders in their sole discretion, no Loan Party nor any
Subsidiary of any Loan Party has any contingent liability in connection with any
Hazardous Discharge which would reasonably be expected to have a Material
Adverse Effect.

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     SECTION 3.15 Fiscal Year. The Borrower’s Fiscal Year is January 1 through
December 31.
     SECTION 3.16 No Default. Neither a Default nor an Event of Default has
occurred which is continuing, or will exist after giving effect to the
transactions contemplated by this Agreement or the other Loan Documents. Neither
the Borrower nor any Subsidiary is in default under, nor has any event or
circumstance occurred which, but for the expiration of any applicable grace
period or the giving of notice, or both, would constitute a default under, any
Material Agreement to which the Borrower or any Subsidiary is a party or by
which the Borrower or any Subsidiary is bound which default would reasonably be
expected to have a Material Adverse Effect.
     SECTION 3.17 Government Regulation. No Loan Party is subject to regulation
under the Federal Power Act, the Interstate Commerce Act, the Investment Company
Act of 1940 (as any of the preceding acts have been amended), or any other
Governmental Rule which regulates the incurring by such Loan Party of
Indebtedness, including, but not limited to Governmental Rules relating to
common contract carriers or the sale of electricity, gas, steam, water or other
public utility services.
     SECTION 3.18 Insider. No Loan Party is, and no Person having “control” (as
that term is defined in 12 U.S.C. Section 375(b) or regulations promulgated
thereunder) of any Loan Party is, an “executive officer,” “director” or
“shareholder” of any Lender or any bank holding company of which any Lender is a
Subsidiary or of any Subsidiary of such bank holding company.
     SECTION 3.19 Gas Balancing Agreements and Advance Payment Contracts. On the
Closing Date and the Global Effective Date, (a) there is no Material Gas
Imbalance, and (b) the aggregate amount of all Advance Payments received by any
Loan Party under Advance Payment Contracts which have not been satisfied by
delivery of production does not exceed U.S.$250,000.
     SECTION 3.20 Existing Subordinate Debt and Falcon Seaboard Settlement
Agreement.
          (a) As of the Closing Date, the outstanding principal amount of the
Existing Subordinate Debt is not more than U.S.$500,000,000, which is comprised
of $350,000,000 of outstanding principal under the Existing Subordinate Notes,
and not more than $150,000,000 of outstanding principal under the Existing
Convertible Debentures.
          (b) The book value of the Borrower’s obligations under the Falcon
Seaboard Settlement Agreement as of December 31, 2006 is U.S.$399,428.09.
     SECTION 3.21 Use of Proceeds and Letters of Credit. The proceeds of the
Loans are or will be used solely (a) to renew and restate the Existing Loan
Indebtedness, (b) if the Borrower elects and to the extent permitted by
Section 7.14, to pay the Borrower’s obligations under the Falcon Seaboard
Settlement Agreement, (c) to reimburse each Issuing Bank for LC Disbursements in
accordance with Section 2.5(e), or (d) to finance the acquisition, exploration,
development and operation of Mineral Interests and related Property and for any
other business

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activities described in Section 3.13, and for the Borrower’s and its
Subsidiaries’ working capital and general corporate purposes in the ordinary
course of business. No part of the proceeds of any Loan will be used, whether
directly or indirectly, for any purpose that entails a violation of any of the
regulations of the Board, including Regulation U. Letters of Credit will be
issued only to support business operations described in Section 3.13 and/or
general corporate purposes in the ordinary course of business of the Borrower or
any of its Subsidiaries.
     SECTION 3.22 Location of Business and Offices. Each Loan Party’s principal
place of business and chief executive offices are located at the addresses
specified on Schedule 3.22 or at such other address as specified in writing to
the Global Administrative Agent, which address is at a location permitted by the
terms of the Combined Loan Documents.
     SECTION 3.23 Subsidiaries. Except as set forth on Schedule 3.13, Schedule
7.8 or Exhibit L or disclosed in writing to the Global Administrative Agent in
accordance with Section 5.15, the Borrower has no Subsidiaries.
     SECTION 3.24 Material Agreements. Except for the Combined Loan Documents,
the subsidiary guaranties executed in connection therewith, the Existing
Subordinate Note Documents, the subsidiary guaranties executed in connection
therewith, the Falcon Seaboard Settlement Agreement, and the Hedging Agreements,
neither the Borrower nor any of its Subsidiaries are parties to any Material
Agreements in effect, or to be in effect, as of the Closing Date providing for,
evidencing or securing any material Indebtedness of the Borrower or any of its
Subsidiaries.
     SECTION 3.25 Priority; Security Matters. The Combined Obligations are and
shall be at all times secured by valid, perfected first and prior Liens (subject
only to Permitted Encumbrances) in favor of the Global Administrative Agent,
covering and encumbering (a) (i) in the case of the Canadian Obligations only,
the Required Reserve Value and (ii) in the case of the Obligations, the U.S.
Required Reserve Value, (b) all of the issued and outstanding Equity Interests
(other than the QRC Class C Shares) owned by the Borrower of each existing and
future Material Subsidiary (except that, if such Material Subsidiary is a
Foreign Subsidiary, the Equity Interests of such Material Subsidiary to be
pledged shall be limited to 65% of the total combined voting power of all
classes of voting Equity Interests (other than the QRC Class C Shares) of such
Material Subsidiary and 100% of all non-voting Equity Interests (other than the
QRC Class C Shares) of such Material Subsidiary), (c) all of the issued and
outstanding Equity Interests owned by each Pledging Subsidiary of the Borrower
of each existing and future Material Subsidiary thereof (except that, if such
Material Subsidiary is a Foreign Subsidiary, the Equity Interests of such
Material Subsidiary to be pledged shall be limited to 65% of the total combined
voting power of all classes of voting Equity Interests of such Material
Subsidiary and 100% of all non-voting Equity Interests of such Material
Subsidiary) and (d) all other Collateral located in the United States owned by
the Borrower or any Material Subsidiary, pursuant to the Pledge Agreements,
Security Agreements, and Mortgages delivered pursuant to Section 4.1(e), (f) and
(g), or otherwise delivered pursuant to this Agreement or the other Loan
Documents, to the extent perfection has or will occur, by the recording of the
Mortgage, the filing of a UCC financing statement, the filing of a financing
statement under the applicable Personal Property Security Act of the applicable
Canadian province, or by possession.

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     SECTION 3.26 Hedging Agreements. Schedule 3.26 sets forth, as of
December 31, 2006, a true and complete list of all Hedging Agreements (including
commodity price swap agreements) and all forward agreements or contracts of sale
which provide for prepayment for deferred shipment or delivery of oil, gas or
other commodities) of the Borrower and each Subsidiary, the material terms
thereof (including the type, term, effective date, termination date and notional
amounts or volumes), the net mark to market value thereof, all credit support
agreements relating thereto (including any margin required or supplied), and the
counter party to each such agreement. As of the Closing Date, all Hedging
Agreements executed by the Borrower or any of its Subsidiaries are either
(a) unsecured, (b) executed with a Lender as the counterparty, (c) assigned to a
Lender as the counterparty, or (d) secured only by a Letter of Credit issued for
the benefit of the counterparty.
     SECTION 3.27 Insurance. Schedule 3.27 attached hereto contains an accurate
and complete description, as of the Closing Date, of all material policies of
fire, liability, workmen’s compensation and other forms of insurance owned or
held by the Borrower and each Subsidiary. As of the Closing Date, all such
policies will be in full force and effect, all premiums with respect thereto
covering all periods up to and including the Closing Date and through the
respective dates set forth in Schedule 3.27 will have been paid, and no notice
of cancellation or termination will have been received with respect to any such
policy. Such policies, and/or such replacement or additional policies required
to be obtained pursuant to the terms of this Agreement as may be in full force
and effect as of any date subsequent to the Closing Date, are sufficient for
compliance in all material respects with all requirements of law and of all
agreements to which the Borrower or any Subsidiary is a party; are valid,
outstanding and enforceable policies; provide adequate aggregate coverage in at
least such amounts and against at least such risks (but including in any event
public liability) as are usually insured against in the same general area by
companies engaged in the same or a similar business for the assets and
operations of the Borrower and each Subsidiary. All such policies, or the
replacement and additional policies required to be obtained pursuant to the
terms of this Agreement, are in full force and effect and all premiums with
respect thereto have been paid, and no notice of cancellation or termination
will have been received with respect to any such policies.
     SECTION 3.28 Status as Senior Indebtedness. The Loans and other Obligations
hereunder are “Bank Indebtedness,” “Senior Indebtedness” and “Designated Senior
Indebtedness” under both the Existing Subordinate Note Indenture and the
Existing Convertible Note Indenture, and this Agreement is a “Senior Secured
Credit Agreement” under the Existing Subordinate Note Indenture and one of the
“Combined Credit Agreements” under the Existing Convertible Note Indenture.
ARTICLE IV
CONDITIONS
     SECTION 4.1 Initial Loan. The amendment and restatement of the Existing
Credit Agreement on the terms set forth herein, and the obligations of the
Lenders to make Loans or participate in any Letters of Credit or for any Issuing
Bank to issue Letters of Credit hereunder shall not become effective until the
date on which each of the following conditions is satisfied (or waived in
accordance with Section 10.2):

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          (a) Certain Loan Documents. The Global Administrative Agent (or its
counsel) shall have received from each party thereto either a counterpart of
each of the following documents duly executed on behalf of such party or written
evidence satisfactory to the Global Administrative Agent (which may include
telecopy or electronic transmission acceptable to the Global Administrative
Agent of a signed signature page of such document) that each such party has duly
executed for delivery to the Global Administrative Agent a counterpart of each
of the following documents which documents must be acceptable to the Global
Administrative Agent in its sole and absolute discretion: this Agreement, the
Intercreditor Agreement, the Fee Letter, the Notes (to the extent requested by
any Lender), a Guaranty from each Guarantor, the Pledge Agreements required by
Section 4.1(e), the Security Agreements required by Section 4.1(f), and the
Mortgages required by Section 4.1(g), and all related financing statements and
other filings, and the other Loan Documents.
          (b) Canadian Loan Documents. The Global Administrative Agent shall
have received copies of the executed Canadian Loan Documents.
          (c) Opinions of Counsel. The Global Administrative Agent shall have
received opinions, dated the Global Effective Date, addressed to the Global
Administrative Agent, the Canadian Administrative Agent and all Lenders, from
(i) General Counsel of the Borrower, in substantially the form attached hereto
as Exhibit B 1, (ii) Jones Day, counsel to the Borrower, in substantially the
form attached hereto as Exhibit B-2, (iii) Loomis, Ewert, Parsley, Davis &
Gotting, special Michigan counsel to the Borrower, in substantially the form
attached hereto as Exhibit B-3, and (iv) Marian McGrath Pearcy, special Indiana
counsel to the Borrower, in substantially the form attached hereto as
Exhibit B-4.
          (d) Organizational Documents. The Global Administrative Agent shall
have received a certificate of an Authorized Officer of each Loan Party dated as
of the Global Effective Date, certifying:
            (i) that attached to each such certificate is (A) a true and
complete copy of the Organic Documents of such Loan Party, as the case may be,
as in effect on the date of such certificate, (B) a true and complete copy of a
certificate from the applicable Governmental Authority of the jurisdiction of
such Loan Party’s organization to the effect that such entity is validly
existing in such jurisdiction, and (C) a true and complete copy of a certificate
from the appropriate Governmental Authority of each jurisdiction (without
duplication) to the effect that such Loan Party is duly qualified to transact
business in such jurisdiction as a foreign entity, if the failure to be so
qualified would reasonably be expected to have a Material Adverse Effect;
            (ii) that attached to such certificate is a true and complete copy
of resolutions duly adopted by the board of directors, management committee,
members or general partner of such Loan Party, as applicable, authorizing the
execution, delivery and performance of such of the Combined Loan Documents to
which such Loan Party is or is intended to be a party;
            (iii) that attached thereto is (A) a true and complete copy of a
certificate from the applicable Governmental Authority of the jurisdiction of
such Loan Party’s

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organization as to the existence and, except as to any Texas limited
partnerships that are Loan Parties, the good standing of and, except as to the
Canadian Borrower and any Texas limited partnerships that are Loan Parties,
payment of franchise taxes by such Loan Party, dated as of a recent date; and
(B) a true and complete copy of a certificate from the appropriate Governmental
Authority of each jurisdiction (without duplication) to the effect that such
Loan Party is in good standing in such jurisdiction as a foreign entity, if the
failure to be so qualified would reasonably be expected to have a Material
Adverse Effect; and
            (iv) as to the incumbency and specimen signature of each Authorized
Officer of such Loan Party executing such of the Combined Loan Documents to
which such Loan Party is or is intended to be a party.
          (e) Pledge Agreements. The Global Administrative Agent shall have
received counterparts of a Pledge Agreement, dated as of the Global Effective
Date, duly executed and delivered by each of the Borrower and each Material
Subsidiary (that is not a Foreign Subsidiary) that holds Equity Interests in any
Material Subsidiary of the Borrower, together with the following:
            (i) to the extent the stock, membership interests or partnership
interests thereof are certificated, stock, membership or partnership
certificates representing 100% of the outstanding shares of capital stock,
membership interest or partnership interest (other than the QRC Class C Shares)
of all Material Subsidiaries (except that stock, membership or partnership
certificates representing shares of common stock, membership interest or
partnership interest of a Foreign Subsidiary shall be limited to 65% of the
total combined voting power of all classes of voting Equity Interests (other
than the QRC Class C Shares) of such Material Subsidiary and 100% of all
non-voting Equity Interests (other than the QRC Class C Shares) of such Material
Subsidiary) listed in Exhibit L hereto under the heading “Material
Subsidiaries,” and stock powers and instruments of transfer, endorsed in blank,
with respect to such certificates; and
            (ii) all documents and instruments, including Uniform Commercial
Code Financing Statements (Form UCC-1), required by law or reasonably requested
by the Global Administrative Agent to be filed, registered or recorded to create
or perfect the Liens intended to be created under such Pledge Agreement.
          (f) Security Agreements. The Global Administrative Agent shall have
received counterparts of each Security Agreement, dated as of the Global
Effective Date, duly executed and delivered by the Borrower and Terra Energy
Ltd., together with the following:
            (i) Uniform Commercial Code Financing Statements (Form UCC-1) and
such evidence of filing or arrangements for filing as may be acceptable to the
Global Administrative Agent, in appropriate form for filing, naming the Borrower
and each such Subsidiary as debtor and the Global Administrative Agent as the
secured party, or other similar instruments or documents, to be filed under the
Uniform Commercial Code of all jurisdictions as may be necessary or, in the
opinion of the Global Administrative Agent,

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desirable to perfect the security interest of the Global Administrative Agent
pursuant to such Security Agreement; and
            (ii) Uniform Commercial Code Form UCC-3 termination statements, if
any, necessary to release all Liens (except for Permitted Encumbrances) and
other rights of any Person in any Collateral described in the Security Agreement
previously granted by any Person, and together with such other Uniform
Commercial Code Form UCC-3 termination statements as the Global Administrative
Agent may reasonably request.
          (g) Mortgages. The Global Administrative Agent shall have received
executed counterparts of the Mortgages (or amendments to the existing Mortgages
previously delivered under the Existing Credit Agreement which shall be amended
contemporaneously herewith), dated as of the Global Effective Date, duly
executed and delivered by each of the relevant Loan Parties and encumbering the
U.S. Required Reserve Value, together with:
            (i) evidence of the completion (or satisfactory arrangements for the
completion) of all recordings and filings of the Mortgages (including, without
limitation, amendments to existing Mortgages) as may be necessary or, in the
reasonable opinion of the Global Administrative Agent, desirable, effectively to
create a valid, perfected first priority Lien (except for, with respect to
priority, Permitted Encumbrances) against the U.S. Required Reserve Value of the
Loan Parties, as and to the extent such Mortgages are required by
Section 5.17(c); and
            (ii) such other approvals, customary opinions, releases or documents
as the Global Administrative Agent may reasonably request.
          (h) UCC and Lien Searches. The Global Administrative Agent shall have
received (i) the UCC Searches, all dated reasonably close to the Closing Date,
requested by the Global Administrative Agent and in form and substance
satisfactory to the Global Administrative Agent, (ii) evidence reasonably
satisfactory to the Global Administrative Agent that the Liens indicated by the
financing statements (or similar documents) in such UCC Searches are Permitted
Encumbrances or have been released (or assigned to either the Global
Administrative Agent or Canadian Administrative Agent), and (iii) title due
diligence in form and substance acceptable to the Global Administrative Agent
and other evidence of ownership regarding the ownership by the Borrower and its
Subsidiaries of the Borrowing Base Properties.
          (i) Priority; Security Interest. The Collateral and Borrowing Base
Properties shall be free and clear of all Liens, except Permitted Encumbrances.
All filings, notices, recordings and other action necessary to perfect the Liens
in the Collateral shall have been made, given or accomplished or arrangements
for the completion thereof satisfactory to the Global Administrative Agent and
its counsel shall have been made and all filing fees and other expenses related
to such actions either have been paid in full or arrangements have been made for
their payment in full which are satisfactory to the Global Administrative Agent.
          (j) Approvals and Consents. The Borrower and its Subsidiaries shall
have obtained, and the Global Administrative Agent shall have received, copies
of all material Governmental Approvals (if any) and third party consents and
approvals (if any) necessary or

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advisable in connection with the Financing Transactions and the continuing
operation and maintenance of the Borrowing Base Properties, and all applicable
waiting periods and appeal periods shall have expired, in each case without the
imposition of any materially burdensome conditions. There shall be no actual
government or judicial action restraining, preventing or imposing materially
burdensome conditions on the Financing Transactions.
          (k) Insurance. The Global Administrative Agent and the Lenders shall
have received certificates, dated as of such date reasonably close to the
Closing Date as acceptable to the Global Administrative Agent, from the
Borrower’s insurance broker setting forth the insurance maintained by the
Borrower, stating that such insurance is in full force and effect and that all
premiums due have been paid.
          (l) Initial Reserve Report. The Global Administrative Agent and the
Lenders shall have received and shall be satisfied with the contents, results
and scope of the Initial Reserve Report.
          (m) Existing Credit Agreement. The Global Administrative Agent shall
have received evidence satisfactory to it that all Liens associated with the
Existing Credit Agreement have been amended and restated by the Security
Documents, contemporaneously with the making of the initial Loan hereunder, and
that arrangements satisfactory to the Global Administrative Agent have been made
for recording and filing such Liens.
          (n) Existing Subordinate Note Documents. The Global Administrative
Agent and the Lenders (i) shall have received (A) copies of the Existing
Subordinate Note Indenture and the Existing Convertible Note Indenture,
including any and all supplements, amendments or modifications thereto executed
on or prior to the Closing Date, which documents and supplements, amendments or
modifications thereto shall be certified by the Borrower as true, complete and
correct, and (B) any other requested documents and information regarding the
Existing Subordinate Debt, and (ii) shall be satisfied that the Existing
Subordinate Note Documents (A) reflect that this Agreement is a “Senior Secured
Credit Agreement” under the Existing Subordinate Note Indenture and one of the
“Combined Credit Agreements” under the Existing Convertible Note Indenture, and
the Loans and other Obligations hereunder are “Bank Indebtedness,” “Senior
Indebtedness” and “Designated Senior Indebtedness” under both the Existing
Subordinate Note Indenture and the Existing Convertible Note Indenture, and
(B) permit the incurrence of the Combined Obligations, and are otherwise in form
and substance satisfactory to the Global Administrative Agent and the Lenders in
their reasonable discretion.
          (o) Financial Statements. The Global Administrative Agent shall have
received (i) the financial statements described in Section 3.4 hereof and
(ii) copies of all financial statements (including pro forma financial
statements), reports, notices and proxy statements sent by the Borrower to its
respective stockholders and all filings submitted to the SEC in connection with
the Financing Transactions after September 30, 2006.
          (p) Satisfactory Environmental Due Diligence and Other Due Diligence.
The Borrower has adopted and implemented policies and guidelines as the Borrower
has determined are reasonably appropriate to assure compliance in all material
respects with applicable Environmental Laws and to identify and evaluate events
or conditions which would

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result in any material Environmental Liability. On the basis of these procedures
and guidelines, the Global Administrative Agent shall have received a
certificate, signed by an Authorized Officer of the Borrower stating that after
such review the Borrower has reasonably concluded that no Environmental
Liabilities exist or violations of Environmental Laws have occurred, which,
individually or in the aggregate, would reasonably be expected to have a
Material Adverse Effect. The Global Administrative Agent shall have received and
reviewed, with results satisfactory to the Global Administrative Agent and its
counsel, information regarding tax, insurance, pension liabilities (actual or
contingent), Material Agreements, and material hedging and contingent
liabilities of the Borrower and its Material Subsidiaries.
          (q) Borrower’s Global Effectiveness Notice. The Global Administrative
Agent shall have received the Borrower’s Global Effectiveness Notice.
          (r) No Material Adverse Effect; Litigation. The Global Administrative
Agent shall have received a certificate, signed by an Authorized Officer of the
Borrower, stating that (i) no event or condition has occurred since December 31,
2005, which would reasonably be expected to have a Material Adverse Effect and
(ii) except as set forth on Schedule 3.5, no litigation, arbitration,
governmental proceeding, claim for Taxes, dispute or administrative or other
proceeding shall be pending or, to the knowledge of the Borrower, threatened
against the Borrower or any of its Subsidiaries which would reasonably be
expected to have a Material Adverse Effect.
          (s) Certificate of Mortgaged Properties. The Global Administrative
Agent shall have received a certificate (the “Certificate of Mortgaged
Properties”), signed by an Authorized Officer of the Borrower, stating that the
real property attached thereto is an accurate and complete description of all
Mortgaged Properties owned by the Borrower and its U.S. Subsidiaries which are
real property located in the United States on and as of the Closing Date.
          (t) Other Documents. The Global Administrative Agent shall have
received such other customary legal opinions, instruments and documents as any
of the Global Administrative Agent, the Lenders or their counsel may have
reasonably requested.
          (u) Satisfactory Legal Form. All documents executed or submitted
pursuant hereto by and on behalf of the Borrower or any other Loan Party shall
be in form and substance reasonably satisfactory to the Global Administrative
Agent and its counsel. The Global Administrative Agent and its counsel shall
have received all information, approvals, documents or instruments as the Global
Administrative Agent or its counsel may reasonably request.
          (v) Fees and Expenses. The Global Administrative Agent, the Canadian
Administrative Agent, the Arrangers, the other Agents and the Lenders shall have
received all fees, including the Upfront Fee, and other amounts due and payable
pursuant to this Agreement or any other Combined Loan Document on or prior to
the date hereof, including, to the extent invoiced at least two (2) Business
Days prior to the Global Effective Date, reimbursement or payment of all
reasonable out-of-pocket expenses (including reasonable fees, charges and
disbursements of counsel) required to be reimbursed or paid by any Loan Party
hereunder or under any other Combined Loan Document.

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The Global Administrative Agent shall notify the Borrower, the Canadian
Borrower, the Canadian Administrative Agent and the Combined Lenders of the
Global Effective Date, and such notice shall be conclusive and binding. Upon
satisfaction (or waiver pursuant to Section 10.2) of each of the foregoing
conditions and notification by the Global Administrative Agent to the Borrower,
the Canadian Borrower, the Canadian Administrative Agent and the Combined
Lenders of the Global Effective Date, the Existing Credit Agreement shall
automatically and completely be amended and restated on the terms set forth
herein, and until such time, the Existing Credit Agreement shall remain in full
force and effect in accordance with its terms. Notwithstanding the foregoing,
the obligations of the Lenders to make Loans and of the Issuing Banks to issue
Letters of Credit hereunder shall not become effective unless each of the
foregoing conditions is satisfied (or waived pursuant to Section 10.2) at or
prior to 3:00 p.m., Chicago time, on February 9, 2007 (and, in the event such
conditions are not so satisfied or waived, the Global Commitments and
Commitments shall terminate at such time).
     SECTION 4.2 Each Credit Event. The obligation of each Lender to make a Loan
on the occasion of any Borrowing, and of the Issuing Banks to issue, amend,
renew or extend any Letter of Credit, is subject to receipt of the request
therefor in accordance herewith and to the satisfaction of the following
conditions:
          (a) Representations and Warranties. At the time of and immediately
after giving effect to such Borrowing or the issuance, amendment, renewal or
extension of such Letter of Credit, as applicable, the representations and
warranties of each Loan Party set forth in the Combined Loan Documents to which
it is a party shall be true and correct on and as of such date after giving
effect to such funding and to the intended use thereof as if made on and as of
such date (or, if stated to have been made expressly as of an earlier date, were
true and correct in all material respects as of such date), except to the extent
previously waived in writing by the Combined Lenders, the Supermajority Lenders,
the Majority Lenders, the Required Lenders, the Lenders, the U.S. Supermajority
Lenders, the U.S. Required Lenders or the Canadian Lenders, as applicable.
          (b) No Defaults. At the time of and immediately after giving effect to
such Borrowing or the issuance, amendment, renewal or extension of such Letter
of Credit, as applicable, no Default shall have occurred and be continuing.
          (c) No Material Adverse Effect. At the time of and immediately after
giving effect to such Borrowing or the issuance, amendment, renewal or extension
of such Letter of Credit, no event or events shall have occurred which
individually or in the aggregate would reasonably be expected to have a Material
Adverse Effect.
          (d) Borrowing Request. The Global Administrative Agent shall have
received a Borrowing Request for any Borrowing. Each Borrowing and each
issuance, amendment, renewal or extension of a Letter of Credit shall be deemed
to constitute a representation and warranty by the Borrower on the date thereof
as to the matters specified in paragraphs (a), (b) and (c) of this Section.

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ARTICLE V
AFFIRMATIVE COVENANTS
     The Borrower agrees with the Global Administrative Agent, the other Agents,
any Issuing Bank and each Lender that, until the Global Commitments and
Commitments have expired or been terminated and all Obligations shall have been
paid and performed in full and all Letters of Credit shall have expired or
terminated and all LC Disbursements shall have been reimbursed, the Borrower
will perform the obligations set forth in this Article.
     SECTION 5.1 Information. The Borrower shall deliver, or shall cause to be
delivered, to the Global Administrative Agent (and to otherwise make available
for each Lender):
          (a) As soon as available and in any event in accordance with then
applicable law but not later than one-hundred twenty (120) days after the end of
each Fiscal Year, a consolidated balance sheet of the Borrower and its
Consolidated Subsidiaries as of the end of such Fiscal Year and the related
consolidated statements of income, stockholders’ equity, and statements of cash
flow for such Fiscal Year, setting forth in each case in comparative form the
figures for the previous Fiscal Year, all reported by such Loan Party in
accordance with GAAP and audited by a firm of independent public accountants of
nationally recognized standing and reasonably acceptable to the Global
Administrative Agent.
          (b) As soon as available and in any event in accordance with then
applicable law but not later than sixty (60) days after the end of each of the
first three (3) Fiscal Quarters of each Fiscal Year, consolidated balance sheets
of the Borrower and its Consolidated Subsidiaries as of the end of such Fiscal
Quarter, the related consolidated statement of income for such Fiscal Quarter
and for the portion of such Loan Party’s Fiscal Year ended at the end of such
Fiscal Quarter and the related consolidated statement of cash flows for the
portion of such Fiscal Year ended at the end of such Fiscal Quarter, each
prepared in accordance with GAAP (except that such balance sheets and other
financial statements may not contain all footnote disclosures required in
accordance with GAAP and may be subject to normal year-end audit adjustments)
setting forth in each case in comparative form the figures for the corresponding
quarter and the corresponding portion of such Loan Party’s previous Fiscal Year.
          (c) Simultaneously with the delivery of each set of financial
statements referred to in Section 5.1(a) and (b), a certificate of a Financial
Officer of the Borrower in the form of Exhibit C attached hereto, (i) setting
forth in reasonable detail the calculations required to establish whether the
Borrower was in compliance with the requirements of Article VI on the date of
such financial statements, (ii) stating whether there exists on the date of such
certificate any Default and, if any Default then exists, setting forth the
details thereof and the action which the Borrower is taking or proposes to take
with respect thereto, (iii) stating whether or not such financial statements
fairly reflect in all material respects the results of operations and financial
condition of the Borrower and each other Loan Party as of the date of the
delivery of such financial statements and for the period covered thereby, and
(iv) setting forth a summary of the Hedge Transactions to which each Loan Party
is a party on such date (which summary will include the type of information as
set forth in Schedule 3.26).

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          (d) Promptly upon the mailing thereof to the stockholders of any Loan
Party generally, copies of (except to the extent any of the foregoing are
publicly available on the SEC’s LivEdgar website and the Borrower has provided
notice to the Global Administrative Agent thereof) all financial statements,
reports and proxy statements so mailed.
          (e) Promptly upon the filing thereof, copies of all annual reports on
Form 10-K (and any amendments thereto), quarterly reports on Form 10-Q (and any
amendments thereto), current reports on Form 8-K (and any amendments thereto)
and final registration statements (and any post-effective amendments thereto)
which any Loan Party shall have filed with the SEC (except to the extent any of
the foregoing are publicly available on the SEC’s LivEdgar website and the
Borrower has provided notice to the Global Administrative Agent thereof);
provided, that the Borrower must deliver, or cause to be delivered, any annual
reports which any Loan Party shall have filed with the SEC, within ninety
(90) days after the end of each Fiscal Year of such Loan Party, and any
quarterly reports which any Loan Party shall have filed with the SEC, within
forty-five (45) days after the end of each of the first three (3) Fiscal
Quarters of each Fiscal Year of such Loan Party.
          (f) Promptly following an Authorized Officer of any Loan Party
becoming aware of the receipt of same, any notice or other information received
by any Loan Party indicating (i) any potential, actual or alleged non-compliance
with or violation of the requirements of any Environmental Law which could
result in liability to any Loan Party for fines, clean up or any other
remediation obligations or any other liability in excess of U.S.$5,000,000 (to
the extent not paid or fully covered by insurance as to which the relevant
insurance company has acknowledged coverage in writing thereof and a copy of
such acknowledgment has been provided to the Global Administrative Agent) in the
aggregate; (ii) any Hazardous Discharge imposes on any Loan Party a duty to
report to a Governmental Authority or to pay cleanup costs or to take remedial
action under any Environmental Law which could result in liability to any Loan
Party for fines, clean up and other remediation obligations or any other
liability in excess of U.S.$5,000,000 (to the extent not paid or fully covered
by insurance as to which the relevant insurance company has acknowledged
coverage in writing thereof and a copy of such acknowledgment has been provided
to the Global Administrative Agent) in the aggregate; or (iii) the existence of
any Lien arising under any Environmental Law securing any obligation to pay
fines, clean up or other remediation costs or any other liability in excess of
U.S.$5,000,000 in the aggregate. Without limiting the foregoing, each Loan Party
shall provide to the Lenders promptly upon receipt of same by any Loan Party
copies of all environmental consultants’ or engineers’ reports received by any
Loan Party which would render the representations and warranties (or any of
them) contained in Section 3.14 untrue or inaccurate in any respect.
          (g) In the event any notification is provided to any Lender or the
Global Administrative Agent pursuant to Section 5.1(f) hereof or the Global
Administrative Agent or any Lender otherwise learns of any event or condition
under which any such notice would be required, then, upon written request of
Required Lenders, within sixty (60) days following such request, a report by an
environmental consulting firm reasonably acceptable to the Global Administrative
Agent and Required Lenders, stating that a review of such event, condition or
circumstance has been undertaken (the scope of which shall be reasonably
acceptable to the Global Administrative Agent and Required Lenders) and
detailing the findings, conclusions and

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recommendations of such consultant; the Borrower shall bear all expenses and
costs associated with such review and updates thereof.
          (h) Promptly, but in no event later than five (5) Business Days (if
such Default continues to exist as of such fifth Business Day), following any
Authorized Officer of any Loan Party becoming aware of the occurrence of any
Default, a certificate of an Authorized Officer of the Borrower setting forth
the details thereof and the action which the Borrower is taking or proposes to
take with respect thereto.
          (i) No later than April 1 of each year, commencing April 1, 2008, a
Reserve Report with respect to the Proved Mineral Interests attributable to the
Oil and Gas Properties owned by the Borrower and each of its Subsidiaries for
the period of twelve (12) months ending the preceding December 31, which Reserve
Reports shall be prepared on an accrual basis; with the delivery of each Reserve
Report, the Borrower shall provide to the Global Administrative Agent, a
certificate from an Authorized Officer of the Borrower (i) certifying that, to
such officer’s knowledge: (A) the information contained in the Reserve Report
and any other information delivered in connection therewith is true and correct
in all material respects, (B)subject to Immaterial Title Deficiencies and
Permitted Encumbrances, the Borrower owns good and defensible title to the Oil
and Gas Properties evaluated in such Reserve Report and such Properties are free
of all Liens except for Permitted Encumbrances and (C) the Reserve Report
attached as an exhibit to such certificate is true, correct and complete, and
(ii) setting forth (A) whether as of such date there is a Material Gas
Imbalance, and, if so, setting forth the aggregate amount of net negative gas
imbalances to the Loan Parties under all material Gas Balancing Agreements to
which any Loan Party is a party or by which any Borrowing Base Properties owned
by the Borrower is bound, and (B) the aggregate amount of all Advance Payments
received by the Loan Parties under all material Advance Payment Contracts to
which any Loan Party is a party or by which any Borrowing Base Properties are
bound which have not been satisfied in all material respects by delivery of
production, if any.
          (j) Promptly, but in no event later than five (5) Business Days (if
such event or circumstance continues to exist as of such fifth Business Day)
following an Authorized Officer of any Loan Party becoming aware of same, notice
to the Global Administrative Agent of any event or circumstance that would
reasonably be expected to have a Material Adverse Effect.
          (k) Promptly following an Authorized Officer of any Loan Party
becoming aware of same, notice to the Global Administrative Agent of: (i) all
legal or arbitral proceedings, and all proceedings before any Governmental
Authority affecting the Borrower or any Subsidiary, except proceedings which, if
adversely determined, would not reasonably be expected to have a Material
Adverse Effect and (ii) the occurrence of any development that would reasonably
be expected to have a Material Adverse Effect with respect to any action, suit
or proceeding previously disclosed to the Global Administrative Agent or the
Lenders pursuant to this Agreement if such action, suit or proceeding would
reasonably be expected to have a Material Adverse Effect. The Borrower will, and
will cause each of its Subsidiaries to, promptly notify the Global
Administrative Agent and each of the Lenders of any claim, judgment or Lien
(other than Permitted Encumbrances) affecting any Borrowing Base Property or
Collateral if the value of such claim, judgment or Lien when aggregated with all
other existing claims, judgment

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or Liens (other than Permitted Encumbrances) affecting such Property shall
exceed U.S.$10,000,000.
          (l) Promptly following the Borrower’s annual renewal of its insurance
policies each May 1 after the Global Effective Date, a certificate of insurance
coverage from the insurer in form and substance reasonably satisfactory to the
Global Administrative Agent evidencing the insurance coverage required to be
maintained pursuant to Section 5.6 and, if requested, will furnish the Global
Administrative Agent copies of the applicable insurance policies referenced
therein.
          (m) Promptly, but in no event later than five (5) Business Days
following the issuance or incurrence of any Permitted Senior Notes Debt, or any
extension, renewal, refinancing or replacement of any Existing Subordinate Debt
or Permitted Senior Notes Debt, notice to the Global Administrative Agent of
such issuance, incurrence, extension, renewal, refinancing or replacement,
together with true, correct and complete copies of each Permitted Senior Notes
Document, or any such extension, renewal, refinancing or replacement of any
Existing Subordinate Debt or Permitted Senior Notes Debt, requested by the
Global Administrative Agent.
          (n) Promptly following the execution and delivery by (i) any MLP
Subsidiary of the loan or credit agreement evidencing the revolving credit
facility described in the second paragraph of Exhibit N, or (ii) any Loan Party
of any contribution agreement, omnibus agreement or other material document,
instrument or agreement in connection with the MLP Transactions, a true, correct
and complete copy of such loan or credit agreement, contribution agreement,
omnibus agreement or other material document, instrument or agreement.
          (o) From time to time such additional information regarding the
financial position or business of any Loan Party or Person which has any of its
Equity Interests pledged pursuant to a Pledge Agreement as the Global
Administrative Agent, at the request of any Lender, may reasonably request.
     Notwithstanding the foregoing in this Section 5.1, reports and other
information required to be delivered pursuant to Section 5.1(a), 5.1(b), 5.1(d)
and 5.1(e) shall be deemed to have been delivered on the date on which the
Borrower posts such reports on its Intralinks website, the SEC’s website or at
such other website as notified to the Global Administrative Agent.
     SECTION 5.2 Business of Borrower and Subsidiaries. The sole business of the
Borrower shall be the acquisition, exploration, development and operation of
Mineral Interests and the production, marketing, processing and transportation
of Hydrocarbons therefrom and businesses reasonably related or complementary
thereto; and the sole business of each Subsidiary shall be substantially similar
and/or related thereto, or shall otherwise be to act as a holding company for
any such Subsidiary.
     SECTION 5.3 Maintenance of Existence; Oil and Gas Properties.
          (a) The Borrower shall, and shall cause each other Loan Party to, at
all times (i) maintain its corporate, partnership or limited liability company
existence in its state of

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incorporation or organization, and (ii) maintain its good standing (if and when
applicable in the jurisdiction in issue) and qualification to transact business
in all jurisdictions where the failure to maintain good standing or
qualification to transact business would reasonably be expected to have a
Material Adverse Effect; provided that the foregoing shall not prohibit any
action permitted under Section 7.4.
          (b) The Borrower will and will cause each Subsidiary to, in all
material respects, promptly: (i) pay and discharge, or make commercially
reasonable efforts to cause to be paid and discharged, when due all delay
rentals, royalties and expenses accruing under the leases or other agreements
affecting or pertaining to its Oil and Gas Properties, provided that, in the
case of delay rentals, the Borrower and/or the applicable Subsidiary shall only
be required to pay and discharge, or make commercially reasonable efforts to pay
and discharge, delay rentals as and to the extent the Borrower or such
Subsidiary determines in good faith that payment and discharge thereof is in the
Borrower’s or such Subsidiary’s, as applicable, best interest, (ii) perform, or
make reasonable and customary efforts to cause to be performed, the obligations
of the Borrower or any such Subsidiary required by each and all of the
assignments, deeds, leases, subleases, contracts and agreements affecting its
interests in its material Oil and Gas Properties and other material Properties,
and (iii) do all other things necessary to keep unimpaired, except for Permitted
Encumbrances, its rights with respect to its material Oil and Gas Properties and
other material Properties and prevent any forfeiture thereof or a default
thereunder, except to the extent a portion of such Properties is no longer
capable of producing Hydrocarbons in economically reasonable amounts, except for
dispositions permitted by this Agreement or any other Combined Loan Document and
except when the failure to do so would not, in the aggregate, reasonably be
expected to have a Material Adverse Effect.
     SECTION 5.4 Title Data; Title to Oil and Gas Properties. The Borrower
shall, upon the request of the Required Lenders, cause to be delivered to the
Global Administrative Agent such title due diligence regarding title to the
Borrowing Base Properties owned by the Borrower and each of its Subsidiaries and
the perfection and priority of Global Administrative Agent’s Liens therein, as
and to the extent such Borrowing Base Properties are required to be mortgaged
pursuant hereto, as are reasonably appropriate to determine the status thereof.
The Borrower shall, and shall cause each Subsidiary to, in all material respects
maintain good and defensible title (except for Immaterial Title Deficiencies and
Permitted Encumbrances) to (a) the Mortgaged Properties and (b) its and their
other material Oil and Gas Properties, and to do all things reasonably necessary
to cure any material title defects which are not Permitted Encumbrances of which
an Authorized Officer of the Borrower or any Subsidiary has knowledge or has
been provided written notice.
     SECTION 5.5 Right of Inspection. The Borrower will permit, and will cause
each other Loan Party to permit, any officer, employee or agent of the Global
Administrative Agent or of any Lender to visit and inspect any of the assets of
any Loan Party, examine each Loan Party’s books of record and accounts, take
copies and extracts thereof and therefrom, and discuss the affairs, finances and
accounts of each Loan Party with such Loan Party’s officers, accountants and
auditors, all upon prior written notice to the Borrower at such reasonable times
during the Borrower’s or such Loan Party’s normal business hours (and in a
manner so as, to the extent practicable, not to interfere with the normal
business operations of the Borrower or such Loan Party) and as often as the
Global Administrative Agent or any Lender may reasonably

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request, and upon and during the continuance of an Event of Default all at the
expense of the Borrower. Notwithstanding the foregoing, as long as no Event of
Default has occurred and is continuing, the Borrower will not be required to
bear the expense of more than one (1) inspection during any calendar year;
provided that if an Event of Default has occurred and is continuing, the Global
Administrative Agent shall be entitled to conduct more frequent inspections at
the expense of the Borrower.
     SECTION 5.6 Maintenance of Insurance. The Borrower will, and will cause
each other Loan Party to, at all times maintain or cause to be maintained
insurance covering such risks as are customarily carried, or self-insured (in
the case of health and dental insurance), by businesses similarly situated,
including, without limitation, the following: (a) workmen’s compensation
insurance; (b) employer’s liability insurance; (c) comprehensive general public
liability and property damage insurance; (d) insurance against losses
customarily insured against as a result of damage by fire, lightning, hail,
tornado, explosion and other similar risk; and (e) comprehensive automobile
liability insurance. All loss payable clauses or provisions in all policies of
insurance maintained by the Borrower with respect to all or any portion of the
Borrowing Base Properties or any Collateral pursuant to this Section 5.6 shall
be endorsed in favor of and made payable to the Global Administrative Agent for
the ratable benefit of the Lenders, as their interests may appear. In addition,
the Global Administrative Agent on behalf of the Combined Lenders shall be named
(i) as additional insured on all of the Loan Parties’ liability insurance
policies maintained by the Borrower with respect to all or any portion of the
Borrowing Base Properties or any Collateral, and (ii) as loss payee on all of
the Loan Parties’ casualty and property insurance policies covering all or any
portion of the Borrowing Base Properties or any Collateral. Upon the occurrence
and during the continuance of an Event of Default, the Global Administrative
Agent (A) shall have the right, for the ratable benefit of the Lenders, to
collect, and the Borrower hereby assigns to the Global Administrative Agent for
the ratable benefit of the Lenders, any and all monies that may become payable
under any such policies of insurance by reason of damage, loss or destruction of
any Collateral for the Obligations or any part thereof, and (B) may, at its
election, either apply for the ratable benefit of the Lenders all or any part of
the sums so collected toward payment of the Obligations, whether or not such
Obligations are then due and payable, in such manner as the Global
Administrative Agent may elect, or release same to the applicable Loan Party.
     SECTION 5.7 Payment of Taxes and Claims. The Borrower will, and will cause
each other Loan Party to, pay (a) all Taxes imposed upon it or any of its assets
or with respect to any of its franchises, business, income or profits before any
material penalty or interest accrues thereon and (b) all material claims
(including, without limitation, claims for labor, services, materials and
supplies) for sums which have become due and payable and which by law have or
might become a Lien (other than a Permitted Encumbrance) on any of its assets;
provided however, that no payment of such Taxes or claims shall be required to
the extent that (i) (A) the amount, applicability or validity thereof is
currently being contested in good faith by appropriate proceedings promptly
initiated and diligently conducted and no material part of the property or
assets of any Loan Party is subject to any pending levy or execution and (B) the
Loan Parties, as and to the extent required in accordance with GAAP, shall have
set aside on their books reserves (segregated to the extent required by GAAP)
deemed by them to be adequate with respect thereto, or (ii) the failure to make
payment pending such contest would not reasonably be

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expected to have a Material Adverse Effect or result in the seizure or levy of
any material Property of any Loan Party.
     SECTION 5.8 Compliance with Laws and Documents. The Borrower will, and will
cause each other Loan Party to, comply with all Governmental Rules, their
respective certificates (or articles) of incorporation, bylaws, regulations and
similar organizational documents and all Material Agreements to which any Loan
Party is a party, if a violation, alone or when combined with all other such
violations, would reasonably be expected to have a Material Adverse Effect.
     SECTION 5.9 Operation of Properties and Equipment.
          (a) The Borrower will, and will cause each of its Subsidiaries to,
maintain, develop and operate (or use its commercially reasonable efforts to
cause the operator to maintain and operate to the extent the Borrower is not the
operator) its Oil and Gas Properties in a good and workmanlike manner as and to
the extent the Borrower or any of its Subsidiaries, as applicable, elect in
their commercially reasonable discretion to maintain, develop and operate any
such Oil and Gas Property, except to the extent the failure to do so would not
reasonably be expected to have a Material Adverse Effect.
          (b) Subject to Section 7.5 and to exceptions as in the aggregate would
not reasonably be expected to have a Material Adverse Effect, the Borrower will,
and will cause each of its Subsidiaries to, at all times maintain, preserve and
keep all operating equipment used with respect to its Mineral Interests in
proper repair, working order and condition (subject to ordinary wear and tear),
and make all necessary or appropriate repairs, renewals, replacements, additions
and improvements thereto so that, in the Borrower’s commercially reasonable
judgment, the efficiency of such operating equipment shall at all times be
properly preserved and maintained; provided, that no item of operating equipment
need be so repaired, renewed, replaced, added to or improved, if the Borrower
shall in good faith determine that such action is not necessary or desirable for
the continued efficient and profitable operation of the business of such Loan
Party.
     SECTION 5.10 Environmental Law Compliance. The Borrower will, and will
cause each other Loan Party to, comply in all respects with all Environmental
Laws, including, without limitation, (a) all licensing, permitting, notification
and similar requirements of Environmental Laws, and (b) all provisions of all
Environmental Laws regarding storage, discharge, release, transportation,
treatment and disposal of Hazardous Materials, if a violation, alone or when
combined with all other such violations, would reasonably be expected to have a
Material Adverse Effect. The Borrower will, and will cause each other Loan Party
to, promptly pay and discharge when due all legal debts, claims, liabilities and
obligations with respect to any clean-up or remediation measures necessary to
comply with Environmental Laws; provided that such payment or discharge shall
not be required to the extent that (i) (A) the amount, applicability or validity
thereof is currently being contested in good faith by appropriate proceedings
promptly initiated and diligently conducted and no material part of the property
or assets of any Loan Party is subject to any pending levy or execution and
(B) the Loan Parties, as and to the extent required in accordance with GAAP,
shall have set aside on their books reserves (segregated to the extent required
by GAAP) deemed by them to be adequate with respect

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thereto, or (ii) the failure to make such payment or discharge would not
reasonably be expected to have a Material Adverse Effect.
     SECTION 5.11 ERISA Reporting Requirements. The Borrower shall furnish, or
cause to be furnished, to the Global Administrative Agent:
          (a) promptly and in any event (i) within thirty (30) days after an
Authorized Officer of the Borrower or any ERISA Affiliate receives notice from
any regulatory agency of the commencement of an audit, investigation or similar
proceeding with respect to a Plan, and (ii) within ten (10) days after the
Borrower or any ERISA Affiliate contacts the Internal Revenue Service for the
purpose of participation in a closing agreement or any voluntary resolution
program with respect to a Plan, in each case, if the result of any such audit,
investigation or similar proceeding or any such closing agreement or voluntary
resolution would reasonably be expected to have a Material Adverse Effect, a
written notice describing such event and describing what action is being taken
or is proposed to be taken with respect thereto, together with a copy of any
notice of event that is given to the PBGC;
          (b) promptly and in any event within thirty (30) days after the
receipt by the Borrower of a written request therefor by a Lender, copies of any
annual and other report (including Schedule B thereto) with respect to a Plan
filed by the Borrower or any ERISA Affiliate with the United States Department
of Labor, the Internal Revenue Service or the PBGC;
          (c) notification within thirty (30) days of the effective date thereof
of any material increases in the benefits, or material change in the funding
method, of any existing Plan which is not a multiemployer plan (as defined in
Section 4001(a)(3) of ERISA), or the establishment of any material new Plans, or
the commencement of material contributions to any Plan to which the Borrower or
any ERISA Affiliate was not previously contributing; and
          (d) promptly after receipt of written notice of commencement thereof,
notice of all (i) claims (other than routine claims for benefits) made by
participants or beneficiaries with respect to any Plan and (ii) actions, suits
and proceedings before any court or governmental department, commission, board,
bureau, agency or instrumentality, domestic or foreign, affecting the Borrower
or any ERISA Affiliate with respect to any Plan, except those which, in the
aggregate, if adversely determined could not reasonably be expected to have a
Material Adverse Effect.
     SECTION 5.12 Environmental Review. In connection with any acquisition by
any Loan Party of Mineral Interests, other than an acquisition of additional
interests in Mineral Interests in which a Loan Party previously held an
interest, to the extent a Loan Party obtains or is provided the same, the
Borrower shall, promptly following such Loan Party’s obtaining or being provided
with the same, deliver to the Global Administrative Agent all environmental
reports and results of environmental reviews (including Phase I environmental
reports) of such Mineral Interests.
     SECTION 5.13 Casualty and Condemnation. The Borrower (a) will furnish to
the Global Administrative Agent promptly, and in any event within fifteen
(15) Business Days, after an Authorized Officer of the Borrower becoming aware
of the occurrence, written notice of any

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Casualty Event to any Collateral or the commencement of any action or proceeding
for the taking of any material portion of the Collateral or any part thereof or
interest therein under power of eminent domain or by condemnation or similar
proceeding, to the extent the fair market value of such Collateral so affected,
when aggregated with the fair market value of all other Collateral so affected
by a Casualty Event occurring in the same calendar year, exceeds 5% of the
Global Borrowing Base, and (b) subject to the right of the Borrower and/or the
applicable Subsidiaries to first apply (or budget to apply) such Net Cash
Proceeds as provided in Section 2.8(g) to the repair, restoration or replacement
of the Property affected by a Casualty Event, will ensure that the Net Cash
Proceeds of any such event (whether in the form of insurance proceeds,
condemnation awards or otherwise) are collected and applied in accordance with
the applicable provisions of the Combined Loan Documents.
     SECTION 5.14 Performance of Obligations. The Borrower will and will cause
each Loan Party to do and perform every act and discharge all of the Obligations
as and to the extent required to be performed or discharged by the Borrower or
such Loan Party at the time or times and in the manner specified in the
applicable Loan Documents.
     SECTION 5.15 Additional Subsidiaries. If any additional Subsidiary of the
Borrower is created or acquired after the Global Effective Date, the Borrower
will notify the Global Administrative Agent and the Lenders thereof. On or
before the date of the designation by the Borrower of any direct or indirect
wholly owned Material Subsidiary, the Borrower shall cause such Material
Subsidiary (unless such Material Subsidiary is a Foreign Subsidiary) to execute
and deliver to the Global Administrative Agent a Guaranty. On or before the date
of the designation by the Borrower of a Subsidiary as a Material Subsidiary, the
Borrower or relevant Subsidiary (which shall not be a Foreign Subsidiary), as
applicable, will pledge all Equity Interests (other than the QRC Class C Shares)
in such newly designated Material Subsidiary owned by the Borrower or such
Subsidiary (except that, if such new Material Subsidiary is a Foreign
Subsidiary, the Equity Interests of such Material Subsidiary to be pledged
pursuant to such Pledge Agreement shall be limited to 65% of the total combined
voting power of all classes of voting Equity Interests (other than the QRC
Class C Shares) of such Material Subsidiary and 100% of all non-voting Equity
Interests (other than the QRC Class C Shares) of such Material Subsidiary owned
by the Borrower or such Subsidiary) and shall execute and deliver to the Global
Administrative Agent a Pledge Agreement together with (a) all certificates (or
other evidence acceptable to the Global Administrative Agent) evidencing the
issued and outstanding Equity Interests (other than the QRC Class C Shares)
owned by the Borrower or such Subsidiary (subject to the 65% and 100%
limitations above with respect to Foreign Subsidiaries) of any such new Material
Subsidiary of every class owned by the Borrower or such Subsidiary (as
applicable) which shall be duly endorsed or accompanied by stock powers executed
in blank (as applicable), and (b) such UCC-1 financing statements as the Global
Administrative Agent shall deem reasonably necessary or appropriate to grant,
evidence and perfect the Liens required hereunder in the issued and outstanding
Equity Interests (other than the QRC Class C Shares) of each such new Material
Subsidiary. On or before the designation by the Borrower of any additional
Material Subsidiary after the Global Effective Date, the Borrower will cause
such Material Subsidiary (unless such Material Subsidiary is a Foreign
Subsidiary) to execute a Mortgage, to the extent required by Section 5.17, and
Security Agreement and promptly take such actions to create and perfect Liens on
such Material Subsidiary’s assets, as and to the extent

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such assets are required to be mortgaged or pledged pursuant to Section 5.17, to
secure the Obligations as the Global Administrative Agent shall reasonably
request.
     SECTION 5.16 Information Regarding Collateral. The Borrower will furnish to
the Global Administrative Agent promptly, and in any event within thirty
(30) days upon an Authorized Officer of the Borrower becoming aware of the
following changes, written notice of any change (a) in any Subsidiary’s
corporate name, (b) in the location of any Subsidiary’s chief executive office
or its principal place of business, (c) in any Subsidiary’s identity or
corporate structure, (d) in any Loan Party’s organizational number issued to it
in its jurisdiction of organization, and (e) in the location of the Collateral
to any jurisdiction in which any registration of, or in respect of, the Security
Documents may not be effective to protect the Lien created thereunder,
including, without limitation, information regarding the time of such
relocation, the items being relocated and the intended new locality of such
items.
     SECTION 5.17 Further Assurances.
          (a) The Borrower will, and will cause each Loan Party to, at the
Borrower’s expense, cure promptly any defects in the execution and delivery of
this Agreement and any other Loan Document to which any of them is a party. The
Borrower, at its expense, will and will cause each Subsidiary to, promptly
execute and deliver to the Global Administrative Agent all such other documents,
agreements and instruments reasonably requested by the Global Administrative
Agent to comply with or accomplish the covenants and agreements of the Borrower
or any Subsidiary, as the case may be, in this Agreement and any other Loan
Document, or to file any notices or obtain any consents, all as may be
reasonably necessary or appropriate in connection therewith.
          (b) The Borrower agrees that it will, and will cause each Loan Party
to, at the Borrower’s expense, execute any and all further documents, financing
statements, agreements and instruments and take all such further actions
(including the filing and recording of financing statements, fixture filings,
mortgages, deeds of trust and other documents) that may be required under any
applicable law or which the Global Administrative Agent may reasonably request,
to effect the transactions contemplated by the Security Documents, or to grant,
preserve, protect or perfect the Liens created or intended to be created thereby
or the validity or priority (subject only, with respect to priority, to
Permitted Encumbrances) of any such Liens, all at the expense of the Loan
Parties.
          (c) The Borrower shall at all times cause the Canadian Obligations to
be secured by first and prior Liens (subject only, with respect to priority, to
Permitted Encumbrances) covering and encumbering the Required Reserve Value, and
shall at all times cause the Obligations to be secured by first and prior Liens
(subject only, with respect to priority, to Permitted Encumbrances) covering and
encumbering the U.S. Required Reserve Value. On or before each Redetermination
Date after the Closing Date and at such other times as the Global Administrative
Agent or Required Lenders shall request, the Borrower and its Subsidiaries shall
execute and deliver to Administrative Agent, for the ratable benefit of each
Lender, Mortgages in form and substance reasonably acceptable to the Global
Administrative Agent and duly executed by the Borrower and any such Subsidiary
(as applicable) together with such other assignments, conveyances, amendments,
agreements and other writings, including, without limitation, UCC-1

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financing statements as Administrative Agent shall deem reasonably necessary or
appropriate to grant, evidence and perfect the Liens granted pursuant to the
Security Documents with respect to Borrowing Base Properties acquired by the
Borrower and its Subsidiaries subsequent to the last date on which the Borrower
or any such Subsidiary was required to execute and deliver Mortgages pursuant to
Section 4.1(g), Section 5.15 or this Section 5.17, or which, for any other
reason are not the subject of valid, enforceable, perfected first priority Liens
(subject only to Permitted Encumbrances) in favor of the Global Administrative
Agent for the ratable benefit of Lenders covering the Required Reserve Value and
the U.S. Required Reserve Value. Notwithstanding anything herein to the
contrary, it is the intention of the parties hereto that the Borrower and its
Subsidiaries will not be required to deliver security or collateral for the
Obligations other than (i) as delivered on or before the Closing Date pursuant
to Article IV, (ii) as required pursuant to Section 5.15 or this Section 5.17,
and (iii) as otherwise agreed upon in writing between the Lender Parties and the
Borrower and/or the applicable Subsidiary after the Closing Date, provided that
the Borrower and the Material Subsidiaries shall in no event be required to
pledge, or grant any security interests in any of the following that may now or
hereafter be owned or leased by the Borrower or any Material Subsidiary, or to
which the Borrower or any Material Subsidiary is a party: (A) any vehicles,
(B) any equipment the ownership to which is evidenced by certificate(s) of title
or (C) any Hedging Agreements or computer or software licenses that are
non-assignable by their terms without the consent of the other party or parties
thereto or the licensor (or sublicensor) thereof, as applicable.
          (d) At any time the Borrower or any of its Subsidiaries is required to
execute and deliver Mortgages to the Global Administrative Agent pursuant to
Section 5.15 or this Section 5.17, the Borrower shall also deliver to the Global
Administrative Agent such customary opinions of counsel (including, if so
requested, title opinions, and in each case addressed to the Global
Administrative Agent) and other evidence of title as the Global Administrative
Agent shall deem reasonably necessary or appropriate to verify (i) the
Borrower’s or such Subsidiary’s title to the Required Reserve Value of the
Proved Mineral Interests which are subject to such Mortgages, and (ii) the
validity, perfection of the Liens and priority (subject only, with respect to
priority, to Permitted Encumbrances) of the Liens created by such Mortgages and
such other matters regarding such Mortgages and the Loan Documents as the Global
Administrative Agent shall reasonably request.
          (e) The Borrower agrees to provide to the Global Administrative Agent,
from time to time upon reasonable request of the Global Administrative Agent,
information that is in the possession of the Borrower or its Subsidiaries or
otherwise reasonably obtainable by any of them, reasonably satisfactory to the
Global Administrative Agent as to the perfection and priority (subject only,
with respect to priority, to Permitted Encumbrances) of the Liens created or
intended to be created by the Security Documents. The Security Documents shall
remain in effect at all times unless otherwise released pursuant to the terms of
this Agreement or any other Combined Loan Document.
          (f) In connection with the foregoing, the Borrower hereby authorizes
the Global Administrative Agent and the Lenders to file one or more financing
statements or continuation statements, and amendments thereto, in such
jurisdictions as are necessary or as the Global Administrative Agent, in its
reasonable discretion, deems advisable to perfect, prepare, protect and maintain
the Liens, and the priority thereof, created pursuant to the Security

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Documents relative to all or any part of the Collateral without the signature of
the Borrower or any other Loan Party where permitted by law and describing the
collateral using words such as “all personal property” or “all assets” or other
words of similar import. A carbon, photographic or other reproduction of the
Security Documents or any financing statement covering the Collateral or any
part thereof shall be sufficient as a financing statement where permitted by
law. The Global Administrative Agent will promptly send the Borrower any
financing or continuation statements it files without the signature of the
Borrower or any other Loan Party and the Global Administrative Agent will
promptly send the Borrower the filing or recordation information with respect
thereto.
     SECTION 5.18 Pledges of Equity Interests in non-Loan Parties. Prior to any
Investment being considered a Permitted Investment pursuant to subsections (k)
and (q) of the definition of “Permitted Investment”, the Borrower or relevant
Subsidiary (which shall not be a Foreign Subsidiary), as applicable, will pledge
all Equity Interests in the Person into which the Investment was or will be made
which are owned by the Borrower or such Subsidiary (except that, if such Person
is a Foreign Entity, the Equity Interests of such Person to be pledged pursuant
to such Pledge Agreement shall be limited to 65% of the total combined voting
power of all classes of voting Equity Interests of such Person and 100% of all
non-voting Equity Interests of such Person owned by the Borrower or such
Subsidiary) and shall execute and deliver to the Global Administrative Agent a
Pledge Agreement together with (a) all certificates (or other evidence
acceptable to the Global Administrative Agent) evidencing the issued and
outstanding Equity Interests owned by the Borrower or such Subsidiary (subject
to the 65% and 100% limitations described above with respect to a Foreign
Entity) of any such Person of every class owned by the Borrower or such
Subsidiary (as applicable) which shall be duly endorsed or accompanied by stock
powers executed in blank (as applicable), and (b) such UCC-1 financing
statements as the Global Administrative Agent shall deem reasonably necessary or
appropriate to grant, evidence and perfect the Liens required hereunder in the
issued and outstanding Equity Interests of each such Person.
ARTICLE VI
FINANCIAL COVENANTS
     The Borrower agrees with the Global Administrative Agent, the other Agents,
any Issuing Bank, and each Lender that, until the Commitments have expired or
been terminated and Obligations shall have been paid and performed in full and
all Letters of Credit shall have expired or terminated and all LC Disbursements
shall have been reimbursed, the Borrower will perform the obligations set forth
in this Article.
     SECTION 6.1 Current Ratio. As of the end of any Fiscal Quarter, commencing
with the Fiscal Quarter ending March 31, 2007, the Borrower will not permit its
ratio of Consolidated Current Assets to Consolidated Current Liabilities to be
less than 1.00 to 1.00.
     SECTION 6.2 EBITDAX Ratio. As of the end of any Fiscal Quarter, commencing
with the Fiscal Quarter ending March 31, 2007, the Borrower will not permit its
ratio of Consolidated EBITDAX (for the four (4) previous Fiscal Quarters ending
on such date) to Consolidated Net Interest Expense (for the four (4) previous
Fiscal Quarters ending on such date) to be less than 2.50 to 1.00.

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ARTICLE VII
NEGATIVE COVENANTS
     The Borrower agrees with the Global Administrative Agent, the other Agents,
any Issuing Bank, and each Lender that, until the Global Commitments and
Commitments have expired or been terminated and all Obligations shall have been
paid and performed in full and all Letters of Credit shall have expired or
terminated and all LC Disbursements shall have been reimbursed, the Borrower
will perform the obligations set forth in this Article.
     SECTION 7.1 Incurrence of Debt. The Borrower will not, nor will the
Borrower permit any other Loan Party to, incur, become or remain liable for any
Indebtedness, other than:
          (a) the Combined Obligations;
          (b) the guarantee by the Borrower or any Material Subsidiary of any
Contractual Obligation of any Material Subsidiary so long as such guarantee only
guarantees not more than the percentage of such Contractual Obligation that
equals the percentage of common equity owned directly or indirectly by the
Borrower or any Material Subsidiary, as applicable, in such Material Subsidiary
at the time such guaranty is executed;
          (c) Indebtedness evidenced by and/or arising out of the Falcon
Seaboard Settlement Agreement;
          (d) Indebtedness of any Material Subsidiary (other than a Foreign
Subsidiary) to the Borrower or any other Material Subsidiary (other than a
Foreign Subsidiary);
          (e) Indebtedness outstanding on the date hereof listed on Schedule 7.1
and any refinancings, renewals or extensions thereof (without increasing, or
shortening the maturity of, the principal amount thereof);
          (f) Indebtedness of a Person which becomes a Subsidiary after the date
hereof, provided that (i) such Indebtedness existed at the time such Person
became a Subsidiary and was not created in anticipation thereof and
(ii) immediately after giving effect to the acquisition of such Person by the
Borrower or a Subsidiary, no Default or Event of Default shall have occurred and
be continuing; provided, further, that all Indebtedness incurred under this
clause (f), together with all Indebtedness incurred pursuant to clause (l)
below, does not exceed U.S.$20,000,000 in the aggregate;
          (g) endorsements of negotiable instruments for collection in the
ordinary course of business;
          (h) Indebtedness consisting of performance bonds or surety or appeal
bonds provided by the Borrower or any Subsidiary in the ordinary course of
business;
          (i) Non-Recourse Debt in an aggregate amount outstanding at any time
not to exceed U.S.$5,000,000;

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          (j) Hedging Obligations existing or arising under Oil and Gas Hedge
Transactions to the extent such Oil and Gas Hedge Transactions are not
prohibited by Section 7.11 of this Agreement or the Canadian Credit Agreement;
          (k) Indebtedness constituting Permitted Investments;
          (l) Indebtedness incurred to finance the acquisition, construction or
improvement of fixed or capital assets (including, without limitation, Capital
Lease Obligations) secured by Liens permitted by clause (o) of the definition of
“Permitted Encumbrances” contained herein; provided that all Indebtedness
incurred under this clause (l), together with all Indebtedness incurred pursuant
to clause (f) above, does not exceed U.S.$20,000,000 in the aggregate;
          (m) Indebtedness in an aggregate amount outstanding at any time not to
exceed U.S.$40,000,000;
          (n) the Existing Subordinate Debt; provided, however, that the
aggregate principal amount of such Existing Subordinate Debt does not exceed
U.S.$500,000,000;
          (o) the Permitted Senior Notes Debt; provided, however, that the
aggregate principal amount of such Permitted Senior Notes Debt does not exceed
U.S.$300,000,000;
          (p) Indebtedness associated with worker’s compensation claims,
unemployment insurance laws or similar legislation incurred in the ordinary
course of business; and
          (q) Taxes, assessments or other governmental charges which are not yet
due or are being contested in good faith in accordance with Section 5.7;
provided, that, the Borrower may not incur any new Indebtedness (other than
(i) the renewal, extension, refinancing or replacement of the Existing
Subordinate Debt or any Permitted Senior Notes Debt and (ii) Guarantees by any
Subsidiaries thereof to the extent the same is incurred in accordance with
Section 7.14) described in clauses (f), (i), (j), and (o) above at any time that
a Default, Event of Default, Global Borrowing Base Deficiency or U.S. Borrowing
Base Deficiency has occurred and is continuing.
For the avoidance of doubt, to the extent any Indebtedness could be attributable
to more than one subsection of this Section 7.1, the Borrower or any other Loan
Party may categorize all or any portion of such Indebtedness to any one or more
subsections of this Section 7.1 as it elects and unless as otherwise expressly
provided, in no event shall the same portion of any Indebtedness be deemed to
utilize or be attributable to more than one subsection of this Section 7.1.
     SECTION 7.2 Restricted Payments. The Borrower will not, nor will the
Borrower permit any other Loan Party to, directly or indirectly, declare or pay,
or incur any liability to declare or pay, any Restricted Payment; provided,
that:
          (a) any direct or indirect Subsidiary of the Borrower that has
provided a Guaranty, and all of the Equity Interests of which Subsidiary
directly or indirectly owned by the

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Borrower (or 65% of the total combined voting power of all classes of voting
Equity Interests of such Subsidiary and 100% of the all non-voting Equity
Interests of such Subsidiary, in the case of a Foreign Subsidiary) has been
pledged to the Global Administrative Agent pursuant to a Pledge Agreement, may
make Restricted Payments to the Borrower;
          (b) any direct or indirect Subsidiary of the Borrower that has
provided a Guaranty may make Restricted Payments to any Pledging Subsidiary of
the Borrower owning Equity Interests therein, so long as all of the Equity
Interests in the indirect Subsidiary (or 65% of the total combined voting power
of all classes of voting Equity Interests of such Subsidiary and 100% of the all
non-voting Equity Interests of such Subsidiary, in the case of a Foreign
Subsidiary) of the Borrower owned by such Pledging Subsidiary of the Borrower
has been pledged to the Global Administrative Agent pursuant to a Pledge
Agreement, all of the Equity Interests in the Pledging Subsidiary (or 65% of the
total combined voting power of all classes of voting Equity Interests of such
Subsidiary and 100% of the all non-voting Equity Interests of such Subsidiary,
in the case of a Foreign Subsidiary) of the Borrower owned by the Borrower has
been pledged to the Global Administrative Agent pursuant to a Pledge Agreement,
and, if such Pledging Subsidiary has not provided a Guaranty, such Pledging
Subsidiary of the Borrower makes a Restricted Payment to the Borrower in an
equal amount and on the same Business Day of receipt thereof;
          (c) any Person in which the Borrower directly or indirectly owns
Equity Interests may make Distributions to the Borrower and/or other Persons
owning Equity Interests in such Person, so long as any such Distribution is in
each case made to the Borrower and/or such other Persons ratably in accordance
with its Equity Interests of the same class or series therein;
          (d) in the event no Default, Event of Default, Global Borrowing Base
Deficiency, or U.S. Borrowing Base Deficiency has occurred which is continuing,
the Borrower may repurchase, during the term of this Agreement, a portion of its
common stock, par value U.S.$.01 per share, for an aggregate and cumulative
purchase price of not more than U.S.$20,000,000 in the aggregate;
          (e) the Borrower may declare and pay dividends with respect to its
Equity Interests payable solely in additional shares of its Equity Interests;
          (f) the Borrower may purchase or otherwise acquire Equity Interests in
any Subsidiary using additional shares of its Equity Interests;
          (g) the Borrower or any Subsidiary may make Restricted Payments
pursuant to and in accordance with stock option plans or other benefit plans for
management or employees of the Borrower or any Subsidiary; and
          (h) the Borrower may redeem the share purchase rights issued pursuant
to that certain Rights Agreement, dated as of March 11, 2003, between the
Borrower and Mellon Investor Services LLC, as Rights Agent, in accordance with
the terms of such Rights Agreement.

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Nothing in this Section 7.2 or any other provision of this Agreement or any
Combined Loan Document shall preclude the Borrower’s delivery of gas pursuant to
the terms of the Falcon Seaboard Settlement Agreement.
     SECTION 7.3 Negative Pledge. The Borrower will not, nor will the Borrower
permit any other Loan Party to, create, assume or suffer to exist any Lien on
any of their respective assets, other than Permitted Encumbrances. Subject to
Sections 9-406 through 9-409 of the Uniform Commercial Code as amended and in
effect from time to time, the Borrower will not, nor will the Borrower permit
any other Loan Party to, create, assume or suffer to exist or enter into or
become bound by any agreement (other than this Agreement and the other Combined
Loan Documents or pursuant to agreements creating purchase money security
interests or governing Capital Lease Obligations, in each case to the extent the
same are permitted pursuant to the Combined Loan Documents) that prohibits or
otherwise restricts the right of the Borrower or any other Loan Party to create,
assume or suffer to exist any Lien on any of their respective assets in favor of
the Global Administrative Agent for the ratable benefit of Lenders.
     SECTION 7.4 Consolidations and Mergers. The Borrower will not, nor will the
Borrower permit any other Loan Party to, consolidate or merge with or into any
other Person; provided, that, so long as no Default or Event of Default has
occurred and is continuing or will result therefrom, (a) the Borrower may merge
or consolidate with another Person so long as the Borrower is the surviving
corporation, and (b) any Wholly-Owned Subsidiary of the Borrower may merge or
consolidate with any other Person so long as a Wholly Owned Subsidiary of the
Borrower, or the Borrower, is the surviving Person.
     SECTION 7.5 Asset Dispositions.
          (a) The Borrower will not, nor will the Borrower permit any other Loan
Party to, sell, lease, transfer, abandon or otherwise dispose of any Borrowing
Base Property or Collateral, other than (i) to the Borrower or any Material
Subsidiary, (ii) farmouts of undeveloped acreage and assignments in connection
with such farmouts or the abandonment, farm-out, exchange, lease or sublease of
Oil and Gas Properties not containing Proved Mineral Interests capable of being
produced in material economic quantities and which are not included in the most
recently delivered Reserve Report, (iii) the sale in the ordinary course of
business of Hydrocarbons produced from the Borrower’s and any other Loan Party’s
Mineral Interests (and not pursuant to Advance Payment Contracts), (iv) any
Subsidiary may sell, transfer, lease or otherwise dispose of all or any portion
of its assets to the Borrower or any other Loan Party, (v) the sale or
disposition (including a Casualty Event), in accordance with the Combined Loan
Documents, of assets the Net Cash Proceeds of which are reinvested (whether
through reparation, restoration or replacement of the assets in issue), within
180 days after such sale or disposition, in assets useful in the business of the
Borrower or any Subsidiary or otherwise applied to the prepayment of the
Combined Loans in accordance with the Combined Loan Documents, (vi) the sale or
disposition of assets obtained as a result of mergers, consolidations or other
transactions permitted under this Agreement that are unnecessary or unrelated to
the business of the Borrower and its Subsidiaries, (vii) the sale, transfer or
issuance of any Subsidiary’s Equity Interests to the Borrower or any Loan Party,
(viii) Permitted Investments that are not Mineral Interests, (ix) as permitted
by Section 7.4, (x) the sale or disposition of

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machinery, equipment or other assets which are obsolete, worn out or otherwise
not necessary or useful in the operation of the Borrower’s business or that are
replaced by machinery, equipment or other assets of comparable value and use,
(xi) the initial sale, contribution or disposition of assets (including, without
limitation, all of the Equity Interests of Processing Partners and Pipeline
Partners) specifically described on Exhibit N made as part of, in connection
with, or pursuant to, the formation of the MLP and to effect the MLP
Transactions, notwithstanding anything to the contrary contained in any Combined
Loan Document, and/or (xii) any Subsidiary (other than a Material Subsidiary or
Subsidiary that owns Mortgaged Properties) may liquidate, dissolve or cease
operations if the Borrower determines in good faith that such liquidation or
cessation is in the best interests of the Borrower and is not materially
disadvantageous to the Lenders; provided, that, so long as no Default or Event
of Default has occurred which is continuing, the Borrower and each other Loan
Party shall be permitted to sell or dispose of Mineral Interests during any
period between Scheduled Redeterminations with an aggregate Recognized Value
(measured at the time of such sale or disposition) not in excess of five percent
(5%) of the Global Borrowing Base in effect during such period; provided,
however, and without limiting the foregoing, the Borrower will not, nor will the
Borrower permit any other Loan Party to, (A) sell any Hydrocarbons under Advance
Payment Contracts, except to the extent disclosed on Schedule 7.1 and except to
the extent such sales of Hydrocarbons would not cause the representation in
Section 3.19(b) to no longer be true and correct, (B) sell or securitize any of
their accounts receivable (other than (1) those accounts receivable deemed by
the Borrower to be doubtful or uncollectible, (2) discounts of accounts
receivable granted to settle collection of accounts receivable or (3) the sale
of defaulted accounts arising in the ordinary course of business in connection
with the compromise or collection thereof and not in connection with any
financing transaction), (C) sell any production payment or other term royalty,
other than pursuant to the Falcon Seaboard Settlement Agreement, or (D) sell
assets (other than equipment) and then lease them back (or commit to lease them
back) within 180 days after such sale.
          (b) In the event of any disposition of assets permitted under this
Section 7.5 (including the transfer and disposition of the Equity Interests of
Processing Partners and Pipeline Partners pursuant to the MLP Transactions), the
Global Administrative Agent is authorized on behalf of the Lenders to release
and shall promptly release (or, in connection with the transfer and disposition
of the Equity Interests of Processing Partners and Pipeline Partners pursuant to
the MLP Transactions, release Liens covering such Equity Interests
contemporaneously with the consummation of such MLP Transactions) any Liens in
favor of the Global Administrative Agent for the benefit of the Lenders covering
such assets upon (i) the prior or contemporaneous release of any other Liens
covering the assets, and (ii) the written request from an Authorized Officer of
the Borrower which specifically identifies the subject assets and certifies that
such disposition complies with the terms of this Section 7.5 (including the
release of any other Liens covering the assets).
     SECTION 7.6 Amendments to Organizational Documents; Other Material
Agreements. The Borrower will not, nor will the Borrower permit any other Loan
Party to, enter into or permit any modification or amendment of, or waive any
material right or obligations of any Person under, (a) its Organic Documents
(other than amendments, modifications and waivers which would not, individually
or in the aggregate, reasonably be expected to have a Material Adverse Effect),
(b) the Existing Subordinate Note Documents, and (c) the Permitted

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Senior Notes Documents; provided, that the Borrower may enter into or obtain
amendments, modifications or waivers to or under the Existing Subordinate Note
Documents or the Permitted Senior Notes Documents which do not provide for or
have any of the following effects: (i) cause (A) the outstanding principal
balance of the Existing Subordinate Debt to exceed U.S.$500,000,000 at any time
and (B) the outstanding principal balance of the Permitted Senior Notes Debt to
exceed U.S.$300,000,000 at any time (in each case, as reduced by any prepayments
or redemptions to the extent permitted by Section 7.14 hereof or any other
principal payments hereafter made with the express written consent of the
Majority Lenders); (ii) increase the amount of any scheduled payment of
principal or interest on the Existing Subordinate Debt or Permitted Senior Notes
Debt; (iii) hasten or accelerate the date upon which any installment of
principal or interest of any Existing Subordinate Debt or any Permitted Senior
Notes Debt is due or otherwise accelerate the amortization schedule with respect
to such Existing Subordinate Debt or Permitted Senior Notes Debt; (iv) increase
the rate of interest payable in cash accruing on the Existing Subordinate Debt
or Permitted Senior Notes Debt (other than any increase to the “Default Rate” in
the circumstances provided for in the Existing Subordinate Note Documents or the
Permitted Senior Notes Documents), or impose any additional premium or penalty
in connection with the prepayment or late payment of the Existing Subordinate
Debt or Permitted Senior Notes Debt; (v) subject to the last proviso of this
Section 7.6, provide for the payment of additional fees or for any increase in
existing fees in connection with the Existing Subordinate Debt or Permitted
Senior Notes Debt; or (vi) amend or modify any covenant, obligation or default
of the Borrower contained in the Existing Subordinate Note Documents or
Permitted Senior Notes Documents (including, without limitation, financial
ratios) in a manner which makes such covenants, obligations or defaults
materially more restrictive or onerous than those contained in, in the case of
the applicable Existing Subordinate Note Documents, the Existing Subordinate
Note Documents as in effect on the Global Effective Date or in the Combined
Credit Agreements as then in effect, or, in the case of the Permitted Senior
Notes Documents, materially more restrictive or onerous than those contained in
the Permitted Senior Notes Documents when they are entered into by the Borrower
or applicable Subsidiary thereof, or in the Combined Credit Agreements as then
in effect; provided, however, that, notwithstanding the foregoing or anything
else to the contrary contained in any Combined Loan Document, any agent, any
trustee and any holder of Existing Subordinate Debt or Permitted Senior Notes
Debt shall be entitled to receive fees for amendments (to the extent such
amendments are permitted hereby), providing consents, waiving defaults or
granting forbearances (but solely to the extent such fees are customary, do not
exceed market rates and are permitted by the Existing Subordinate Note Documents
or the Permitted Senior Notes Documents or otherwise approved by the Global
Administrative Agent), and to the reimbursement of any reasonable out-of-pocket
expenses (including fees and expenses of attorneys, appraisers, consultants and
advisors) relating thereto in accordance with the terms of the Existing
Subordinate Note Documents or the Permitted Senior Notes Documents,
respectively.
     SECTION 7.7 Use of Proceeds. The proceeds of the Loans and Letters of
Credit will not be used for any purpose other than in the manner described in
Section 3.21.
     SECTION 7.8 Investments. The Borrower will not, nor will the Borrower
permit any other Loan Party to, directly or indirectly, make or have outstanding
any Investment, other than Permitted Investments.

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     SECTION 7.9 Transactions with Affiliates. The Borrower will not, nor will
the Borrower permit any other Loan Party (other than the Canadian Borrower or,
as applicable, any Subsidiary of the Canadian Borrower) to, engage in any
transaction with any Affiliate (other than Borrower or any Loan Party (other
than the Canadian Borrower or any Subsidiary of the Canadian Borrower)), except
for (a) Permitted Investments, (b) the MLP Transactions and such other
transactions as are otherwise permitted under this Agreement or any other
Combined Loan Document, or (c) such transactions which are on material terms and
conditions materially as favorable to such party as could be obtained in a
comparable arm’s length transaction with a Person that is not an Affiliate. The
Borrower will not, nor will the Borrower permit any other Loan Party (other than
the Canadian Borrower or, as applicable, any Subsidiary of the Canadian
Borrower) to, engage in any transaction with the Canadian Borrower or any
Subsidiary of the Canadian Borrower, except for Permitted Investments or unless
such transaction is on material terms and conditions materially as favorable to
such party as could be obtained in a comparable arm’s length transaction with a
Person that is not an Affiliate of the Borrower or such Subsidiary.
     SECTION 7.10 ERISA. Except in such instances where an action, omission or
failure would not reasonably be expected to have a Material Adverse Effect, the
Borrower will not, nor will the Borrower permit any other Loan Party to,
(a) take any action or fail to take any action which would result in a violation
of ERISA, the Code or other Governmental Rules applicable to the Plans
maintained or contributed to by it or any ERISA Affiliate, or (b) modify the
term of, or the funding obligations or contribution requirements under any
existing Plan, establish a new Plan, or become obligated or incur any liability
under a Plan that is not maintained or contributed to by the Borrower or any
ERISA Affiliate as of the Closing Date.
     SECTION 7.11 Hedge Transactions. The Borrower will not, nor will the
Borrower permit any other Loan Party to, enter into Oil and Gas Hedge
Transactions which would cause the volume of Hydrocarbons with respect to which
a settlement payment is calculated under such Oil and Gas Hedge Transactions to
exceed (a) the lesser of (i) eighty-five percent (85%) of the aggregate of the
Borrower’s and its Subsidiaries’ anticipated production from Proved Mineral
Interests, or (ii) one hundred percent (100%) of the aggregate of the Borrower’s
and its Subsidiaries’ anticipated production from Proved Producing Mineral
Interests plus (b) an amount not to exceed one hundred percent (100%) of
associated royalty owners’ oil, gas and/or natural gas liquids produced from the
same wells, and which oil, gas and/or natural gas liquids the Borrower has the
authority to market and sell, during the period from the immediately preceding
settlement date (or the commencement of such Hedge Transaction if there is no
prior settlement date) to such settlement date; provided that the Borrower will
not, nor will the Borrower permit any other Loan Party to, enter into any Oil
and Gas Hedge Transaction (i) except in the ordinary course of business (and not
for speculative purposes) and (ii) with a counterparty with a rating of its
senior, unsecured, long-term indebtedness for borrowed money that is not
guaranteed by any other Person or subject to any other credit enhancement of
lower than “BBB-” or “Baa3” by S&P and Moody’s, respectively.
     SECTION 7.12 Fiscal Year. The Borrower will not, and the Borrower will not
permit any other Loan Party to, change its Fiscal Year.

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     SECTION 7.13 Change in Business. The Borrower will not, nor will the
Borrower permit any other Loan Party to, engage in any business other than the
businesses described in Section 3.13 hereof.
     SECTION 7.14 Existing Subordinate Debt, Permitted Senior Notes Debt and
Falcon Seaboard Settlement Agreement. In addition to the other restrictions
contained in this Article VII, the Borrower will not, nor will the Borrower
permit any other Loan Party to, directly or indirectly, (a) make any payment of
principal or any other item of any Existing Subordinate Debt or Permitted Senior
Notes Debt (other than accrued interest thereon and reasonable fees and expenses
incurred in accordance with the terms thereof and Restricted Payments made with
respect to any Existing Subordinate Debt or Permitted Senior Notes Debt in
accordance with Section 7.2 to repurchase fractional shares of the Borrower’s
Equity Interests that arise or result from the conversion of any such Existing
Subordinate Debt or Permitted Senior Notes Debt) or payment in respect of the
purchase, repurchase, redemption or defeasance of principal or such other item
of Existing Subordinate Debt or Permitted Senior Notes Debt (other than accrued
interest thereon and reasonable fees and expenses incurred in accordance with
the terms thereof and Restricted Payments made with respect to any Existing
Subordinate Debt or Permitted Senior Notes Debt in accordance with Section 7.2
to repurchase fractional shares of the Borrower’s Equity Interests that arise or
result from the conversion of any such Existing Subordinate Debt or Permitted
Senior Notes Debt) at any time prior to the earlier of (i) the termination of
all Commitments and Canadian Commitments, the payment and performance in full of
the Combined Obligations, the termination or expiration of all Letters of Credit
and the “Letters of Credit” (as defined in the Canadian Credit Agreement), and
the termination or payment of all “Bankers’ Acceptances” (as defined in the
Canadian Credit Agreement) and (ii) the scheduled maturity of such Existing
Subordinate Debt or Permitted Senior Notes Debt, as applicable; (b) make any
prepayment of interest prior to the time that such interest is due except as
expressly permitted by the terms hereof and by the terms of the documentation
evidencing or governing such Existing Subordinate Debt or Permitted Senior Notes
Debt, as applicable; (c) permit (x) the outstanding principal balance of all
Existing Subordinate Debt to exceed U.S.$500,000,000 at any time and (y) the
outstanding principal balance of all Permitted Senior Notes Debt to exceed
U.S.$300,000,000 at any time; or (d) make any delivery on or with respect to the
Falcon Seaboard Settlement Agreement, except as expressly permitted by the terms
of the Falcon Seaboard Settlement Agreement; provided, however, that the
Borrower and/or any Subsidiaries may (x) deliver gas volumes at any time and
from time to time prior to the stated delivery date thereof by Borrower or any
Affiliate of Borrower, or settle in cash at any time and from time to time the
Borrower’s obligations, under the Falcon Seaboard Settlement Agreement, and
(y) prepay or pay at any time and from time to time all or a portion of the
principal of, and interest on, the Existing Subordinate Debt or the Permitted
Senior Notes Debt prior to the scheduled maturity thereof, and may pay the
Existing Subordinate Debt or the Permitted Senior Notes Debt on or after the
maturity date therefor, in each instance (i) so long as, and only so long as,
both immediately before and after giving effect thereto, no Default, Event of
Default, Global Borrowing Base Deficiency or U.S. Borrowing Base Deficiency has
occurred and is continuing or results therefrom, or (ii) if and to the extent
such prepayment or payment is made with shares of common stock of the Borrower
and/or the proceeds from the sale or issuance of the common stock of the
Borrower. Notwithstanding anything to the contrary contained in any Combined
Loan Document, the Borrower shall be permitted to (A) extend, renew, refinance
or replace the Existing Subordinate Debt and/or the Permitted Senior Notes Debt
at any time so long as the

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final maturity date of any such extension, renewal, refinancing or replacement
is no earlier than six (6) months after the Maturity Date and/or (B) repay any
of the Existing Subordinate Debt and/or the Permitted Senior Notes Debt using
proceeds of the issuance of common stock of the Borrower.
     SECTION 7.15 Governmental Rules. Neither the Borrower nor any Person acting
on behalf of the Borrower has taken or will take any action which might cause
any of the Loan Documents to violate Regulation U or any other regulation of the
Board or to violate Section 7 of the Exchange Act or any rule or regulation
thereunder, in each case as now in effect or as the same may hereinafter be in
effect.
ARTICLE VIII
EVENTS OF DEFAULT
     SECTION 8.1 Listing of Events of Default. Each of the following events or
occurrences described in this Section 8.1 shall constitute an “Event of
Default”:
          (a) the Borrower shall fail to pay when due any principal on any Loan;
          (b) the Borrower shall fail to pay when due accrued interest on any
Loan, or any reimbursement obligation made under any Letter of Credit or any
fees or any other amount payable hereunder, and such failure shall continue for
a period of five (5) days following the due date thereof;
          (c) the Borrower shall fail to observe or perform any covenant or
agreement contained in Article VI or Article VII of this Agreement;
          (d) any Loan Party shall fail to observe or perform any covenant or
agreement contained in this Agreement or any other Loan Document (other than
those referenced in Section 8.1(a), (b) and (c)) and such failure continues for
a period of thirty (30) days after the earlier of (i) the date any Authorized
Officer of any Loan Party acquires knowledge of such failure, or (ii) written
notice of such failure has been given to any Loan Party by Global Administrative
Agent or any Lender;
          (e) any representation, warranty, certification or statement made or
deemed to have been made by any Loan Party in any certificate, financial
statement or other document delivered pursuant to this Agreement or any other
Combined Loan Document shall prove to have been incorrect in any material
respect when made;
          (f) any Loan Party shall fail to make one or more payments when due on
any Indebtedness of such Person (including, without limitation, any payment due
under a Hedging Agreement, but excluding any payment due under any Combined Loan
Document) in a principal amount equal to or greater than U.S.$15,000,000
individually or $30,000,000 in the aggregate beyond any applicable grace period
provided with respect thereto which shall continue uncured or unwaived, or any
other event or condition shall occur and be continuing which event or condition
(i) results in the acceleration of the maturity of any such Indebtedness, or
(ii) entitles the holder of such Indebtedness to accelerate the maturity
thereof;

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          (g) any Loan Party shall commence a voluntary case or other proceeding
seeking liquidation, reorganization or other relief with respect to itself or
its debts under any bankruptcy, insolvency or other similar Governmental Rule
now or hereafter in effect or seeking the appointment of a trustee, receiver,
liquidator, custodian or other similar official of it or any substantial part of
its property, or shall consent to any such relief or to the appointment of or
taking possession by any such official in an involuntary case or other
proceeding commenced against it, or shall make a general assignment for the
benefit of creditors, or shall fail generally to pay its debts as they become
due or shall admit in writing its inability to pay its debts as they become due
or shall admit to any of the circumstances, facts or events in clause (g) or (h)
of this Section 8.1, or shall take any corporate, partnership or limited
liability company action to authorize any of the foregoing;
          (h) an involuntary case or other proceeding shall be commenced against
any Loan Party seeking liquidation, reorganization, dissolution, winding up, or
other similar relief (including re-composition or readjustment) with respect to
it or its debts under any bankruptcy, insolvency or other similar Governmental
Rule now or hereafter in effect or seeking the appointment of a trustee,
receiver, liquidator, custodian or other similar official of it or any
substantial part of its property, and such involuntary case or other proceeding
shall remain undismissed, undischarged, unbonded or unstayed for a period of
sixty (60) consecutive days; or an order for relief shall be entered against any
Loan Party under the Federal Bankruptcy Code as now or hereafter in effect;
          (i) one (1) or more final judgments or orders (not paid or fully
covered by insurance as to which the relevant insurance company has acknowledged
coverage and a copy of such acknowledgement has been delivered to the Global
Administrative Agent) for the payment of money aggregating in excess of
U.S.$15,000,000 shall be rendered against any Loan Party and such judgment or
order shall continue unsatisfied or unstayed for sixty (60) days;
          (j) any event occurs with respect to any Plan or Plans pursuant to
which (i) any Loan Party and/or any ERISA Affiliate incur a liability due and
owing at the time of such event, without existing funding therefor, for benefit
payments under such Plan or Plans in excess of U.S.$15,000,000; or (ii) any Loan
Party, any ERISA Affiliate, or any other “party-in-interest” or “disqualified
person,” as such terms are defined in section 3(14) of ERISA and section
4975(e)(2) of the Code, shall engage in transactions which in the aggregate
would reasonably result in a direct or indirect liability to any Loan Party or
any ERISA Affiliate in excess of U.S.$15,000,000 under section 409 or 502 of
ERISA or section 4975 of the Code;
          (k) this Agreement or any other Combined Loan Document shall cease to
be in full force and effect or shall be declared null and void or the validity
or enforceability thereof shall be contested or challenged by any Loan Party, or
any Loan Party shall deny that it has any further liability or obligation under
any of the Combined Loan Documents to which it is a party, or any Lien created
by the Combined Loan Documents shall for any reason (other than the release
thereof in accordance with the Combined Loan Documents) cease to be a valid,
first priority, perfected Lien (subject to, with respect to priority, Permitted
Encumbrances) upon any of the Collateral purported to be covered thereby;

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          (l) any circumstance or event shall occur that has had since
December 31, 2005, or that would reasonably be expected to have a Material
Adverse Effect with respect to the Borrower and its Subsidiaries, taken as a
whole;
          (m) a Change of Control shall occur;
          (n) a “Default” or “Event of Default” (each as defined in each
material Existing Subordinate Note Document, including, without limitation, the
Existing Subordinate Note Indenture and the Existing Convertible Note Indenture,
and each material Permitted Senior Notes Document) shall occur and be
continuing;
          (o) any “Default” or “Event of Default” as defined in the Canadian
Loan Documents shall occur; provided that if such “Default” or “Event of
Default” is cured or waived under the Canadian Loan Documents, then such
“Default” or “Event of Default” shall no longer constitute a Default or an Event
of Default, respectively, under this Agreement; or
          (p) any Guarantor fails to make payment under the Guaranty executed by
such Guarantor in accordance with the terms thereof; or any Guaranty is for any
reason (other than satisfaction in full of all Combined Obligations and the
termination of the Commitments and the Canadian Commitments) partially or wholly
revoked or invalidated, or otherwise ceases to be in full force and effect in
any material respect, or any Guarantor or any other Loan Party contests in any
manner the validity or enforceability thereof or denies that such Guarantor has
any further liability or obligation thereunder.
     SECTION 8.2 Action if Bankruptcy. If any of the Events of Default specified
in Section 8.1(g) or (h) shall occur, then without any notice to any Loan Party
or any other act by the Global Administrative Agent or Lenders, the Global
Commitments and Commitments (if not theretofore terminated) shall automatically
terminate and the outstanding principal amount of all outstanding Loans and all
other Obligations hereunder shall automatically be and become immediately due
and payable, without demand, protest or presentment or notice of any kind, all
of which are hereby expressly waived by the Borrower and its Subsidiaries.
Without limiting the foregoing, the Agents and the Lenders shall be entitled to
exercise any and all other remedies available to them under the Loan Documents
and applicable law.
     SECTION 8.3 Action if Other Event of Default. If any of the Events of
Default (other than any Event of Default specified in Section 8.1(g) or (h))
shall occur for any reason, whether voluntary or involuntary, and be continuing,
the Required Lenders may, by notice to the Borrower, declare (a) the Global
Commitments and Commitments (if not theretofore terminated) to be terminated
and/or (b) all of the outstanding principal amount of the Loans and all other
Obligations hereunder to be due and payable, whereupon the Global Commitments
and Commitments shall terminate and the full unpaid amount of such Loans and
other obligations shall be and become immediately due and payable, without
demand, protest or presentment or notice of any kind, all of which are hereby
waived by the Borrower and its Subsidiaries. Without limiting the foregoing, the
Agents and the Lenders shall be entitled to exercise any and all other remedies
available to them under the Loan Documents and applicable law.

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ARTICLE IX
AGENTS
     Each of the Lenders, the Issuing Banks and the other Agents hereby
irrevocably appoints JPMorgan Chase Bank, N.A., as the Global Administrative
Agent, BNP Paribas and Bank of America, N.A., as Co-Global Syndication Agents,
and Fortis Capital Corp., The Bank of Nova Scotia and Deutsche Bank Trust
Company Americas, as Co-Global Documentation Agents, and authorizes each such
Agent to take such actions on its behalf and to exercise such powers as are
delegated to such Agent by the terms of the Loan Documents, together with such
actions and powers as are reasonably incidental thereto.
     Any bank serving as an Agent hereunder shall have the same rights and
powers in its capacity as a Lender as any other Lender and may exercise the same
as though it were not an Agent, and such bank and its Affiliates may accept
deposits from, lend money to and generally engage in any kind of business with
the Borrower or any Subsidiary or other Affiliate thereof as if it were not an
Agent hereunder.
     The Agents shall not have any duties or obligations except those expressly
set forth in the Loan Documents. Without limiting the generality of the
foregoing, (a) the Agents shall not be subject to any fiduciary or other implied
duties, regardless of whether a Default has occurred and is continuing, (b) each
Agent shall not have any duty to take any discretionary action or exercise any
discretionary powers, except discretionary rights and powers expressly
contemplated by the Loan Documents that such Agent is required to exercise
following its receipt of written instructions from the Required Lenders (or such
other number or percentage of the Combined Lenders as shall be necessary under
the circumstances as provided in Section 10.2), and (c) except as expressly set
forth in the Loan Documents, the Agents shall not have any duty to disclose, and
shall not be liable for the failure to disclose, any information relating to the
Borrower or any of its Subsidiaries that is communicated to or obtained by the
bank serving as such Agent or any of its Related Parties in any capacity. Each
Agent shall not be liable for any action taken or not taken by it with the
consent or at the request of the Required Lenders (or such other number or
percentage of the Combined Lenders as shall be necessary under the circumstances
as provided in Section 10.2) or in the absence of its own gross negligence or
willful misconduct; PROVIDED, HOWEVER, THAT IT IS THE INTENTION OF THE PARTIES
HERETO THAT EACH OF THE AGENTS BE INDEMNIFIED IN THE CASE OF ITS OWN NEGLIGENCE
(OTHER THAN GROSS NEGLIGENCE), REGARDLESS OF WHETHER SUCH NEGLIGENCE IS SOLE OR
CONTRIBUTORY, ACTIVE OR PASSIVE, IMPUTED, JOINT OR TECHNICAL. Each Agent shall
be deemed not to have knowledge of any Default unless and until written notice
thereof is given to such Agent by the Borrower or a Lender, and such Agent shall
not be responsible for or have any duty to ascertain or inquire into (i) any
statement, warranty or representation made in or in connection with any Loan
Document, (ii) the contents of any certificate, report or other document
delivered thereunder or in connection therewith, (iii) the performance or
observance of any of the covenants, agreements or other terms or conditions set
forth in any Loan Document, (iv) the validity, enforceability, effectiveness or
genuineness of any Loan Document or any other agreement, instrument or document,
or (v) the satisfaction of any condition set forth in Article IV or elsewhere in
any Loan Document, other than to confirm receipt of items expressly required to
be delivered to such Agent.

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     The Global Administrative Agent and the other Agents shall be entitled to
rely upon, and shall not incur any liability for relying upon, any notice,
request, certificate, consent, statement, instrument, document or other writing
believed by it to be genuine and to have been signed or sent by the proper
Person. The Global Administrative Agent and the other Agents also may rely upon
any statement made to it orally or by telephone and believed by it to be made by
the proper Person, and shall not incur any liability for relying thereon. The
Global Administrative Agent and the other Agents may consult with legal counsel
(who may be counsel for the Borrower), independent accountants and other experts
selected by it, and shall not be liable for any action taken or not taken by it
in accordance with the advice of any such counsel, accountants or experts.
     Any Agent may perform any and all its duties and exercise its rights and
powers by or through any one or more sub-agents appointed by such Agent. Any
Agent and any such sub-agent may perform any and all its duties and exercise its
rights and powers through their respective Related Parties. The exculpatory
provisions of the preceding paragraphs shall apply to any such sub-agent and to
the Related Parties of such Agent and any such sub-agent, and shall apply to
their respective activities in connection with the syndication of the credit
facilities provided for herein as well as activities as an Agent.
     Subject to the appointment and acceptance of a successor Global
Administrative Agent as provided in this paragraph, the Global Administrative
Agent may resign at any time by notifying the Combined Lenders and the Borrower.
Upon any such resignation, the Required Lenders shall have the right, with the
consent of the Borrower (unless an Event of Default has occurred and is
continuing), to appoint a successor. If no successor shall have been so
appointed by the Required Lenders, with such consent of the Borrower (unless an
Event of Default has occurred and is continuing), and shall have accepted such
appointment within 30 days after the retiring Global Administrative Agent gives
notice of its resignation, then the retiring Global Administrative Agent may,
with the consent of the Borrower (unless an Event of Default has occurred and is
continuing), on behalf of the Combined Lenders and the Issuing Banks, appoint a
successor Global Administrative Agent which shall be a commercial bank organized
under the laws of the United States of America having combined capital and
surplus of at least U.S.$100,000,000, or an Affiliate of any such bank. Upon the
acceptance of its appointment as Global Administrative Agent hereunder by a
successor, such successor shall succeed to and become vested with all the
rights, powers, privileges and duties of the retiring Global Administrative
Agent, and the retiring Global Administrative Agent shall be discharged from its
duties and obligations hereunder (other than its obligations under
Section 10.12). The fees payable by the Borrower to a successor Global
Administrative Agent shall be the same as those payable to its predecessor
unless otherwise agreed between the Borrower and such successor. After the
Global Administrative Agent’s resignation hereunder, the provisions of this
Article and Section 10.3 shall continue in effect for the benefit of such
retiring Global Administrative Agent, its sub-agents and their respective
Related Parties in respect of any actions taken or omitted to be taken by any of
them while it was acting as Global Administrative Agent.
     Each Lender acknowledges that it has, independently and without reliance
upon any Agent or any other Lender and based on such documents and information
as it has deemed appropriate, made its own credit analysis and decision to enter
into this Agreement and the Intercreditor Agreement. Each Lender also
acknowledges that it will, independently and without

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reliance upon any Agent or any other Lender and based on such documents and
information as it shall from time to time deem appropriate, continue to make its
own decisions in taking or not taking action under or based upon this Agreement,
any other Loan Document or any related agreement or any document furnished
hereunder or thereunder.
     Each of the Lenders, for itself and on behalf of any of its Affiliates, the
Issuing Banks, and the other Agents hereby irrevocably appoints the Global
Administrative Agent to act as its agent under the Intercreditor Agreement and
authorizes the Global Administrative Agent to execute the Intercreditor
Agreement on its behalf and to take such actions on its behalf and to exercise
such powers as are delegated to the Global Administrative Agent by the terms
hereof and thereof, together with such actions and powers as are reasonably
incidental thereto.
     Without limiting the provisions of Section 7.5(b), each of the Lenders, for
itself and on behalf of any of its Affiliates, and the Issuing Banks hereby
authorize the Global Administrative Agent to release any Collateral or
Guaranties that are permitted to be sold or released pursuant to the Loan
Documents, and the Global Administrative Agent agrees to promptly release any
such items upon written request from the Borrower. Each Lender and each Issuing
Bank hereby authorizes the Global Administrative Agent to execute and deliver to
the Borrower, at the Borrower’s sole cost and expense, any and all releases of
Liens, releases of Guaranties, termination statements, or other documents
reasonably requested by the Borrower in connection with (i) any sale or
disposition of Collateral, or (ii) any Subsidiary ceasing to be a Material
Subsidiary hereunder, or otherwise pursuant to any other transaction permitted
by this Agreement or the other Combined Loan Documents.
ARTICLE X
MISCELLANEOUS
     SECTION 10.1 Notices.
          (a) Except in the case of notices and other communications expressly
permitted to be given by telephone, all notices and other communications
provided for herein shall be in writing and shall be delivered by hand or
overnight courier service, mailed by certified or registered mail or sent by
telecopy, as follows:

  (A)   if to the Borrower, to:         Quicksilver Resources Inc.
777 West Rosedale Street, Suite 300
Fort Worth, Texas 76104
Attention: MarLu Hiller
Telephone: (817) 665-4860
Telecopy: (817) 665-5016
Email: mhiller@qrinc.com

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  (B)   if to the Global Administrative Agent, to:         JPMorgan Chase Bank,
N.A.
10 South Dearborn, 7th Floor
Mail Code: IL1-0010
Chicago, Illinois 60603
Attention: Leonida G. Mischke
Telephone: (312) 385-7055
Telecopy: (312) 385-7096
Email: leonida.g.mischke@jpmchase.com

          and, with respect to non-Borrowing related matters, with a copy to:

      JPMorgan Chase Bank, N.A.
1717 Main Street, 4th Floor
TX1-2448
Dallas, Texas 75201
Attention: J. Scott Fowler
Telephone: (214) 290-2162
Telecopy: (214) 290-2332
Email: scott.fowler@jpmorgan.com

          (C) if to any other Agent or Lender (including the Swingline Lender),
to it at its address (or telecopy number) provided to the Global Administrative
Agent and the Borrower or as set forth in its Administrative Questionnaire; and
          (D) if to any Canadian Lender, to it at its address (or telecopy
number) provided to the Canadian Administrative Agent and the Canadian Borrower
or as set forth in its “Administrative Questionnaire” as defined in the Canadian
Credit Agreement.
Upon receipt by the Global Administrative Agent thereof, the Global
Administrative Agent shall promptly provide the Borrower with a copy of each
Lender’s Administrative Questionnaire.
          (b) Notices and other communications to the Lenders hereunder may be
delivered or furnished by electronic communications pursuant to procedures
approved by the Global Administrative Agent; provided that the foregoing shall
not apply to notices pursuant to Article II unless otherwise agreed by the
Global Administrative Agent and the applicable Lender. The Global Administrative
Agent or the Borrower may, in its discretion, agree to accept notices and other
communications to it hereunder by electronic communications pursuant to
procedures approved by it; provided, that approval of such procedures may be
limited to particular notices or communications.
          (c) Any party hereto may change its address or telecopy number for
notices and other communications hereunder by written notice to the other
parties hereto. All notices and other communications given to any party hereto
in accordance with the provisions of this Agreement shall be deemed to have been
given on the date of receipt.

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     SECTION 10.2 Waivers; Amendments.
          (a) No failure or delay by the Global Administrative Agent, any
Issuing Bank or any Lender in exercising any right or power hereunder or under
any other Loan Document shall operate as a waiver thereof, nor shall any single
or partial exercise of any such right or power, or any abandonment or
discontinuance of steps to enforce such a right or power, preclude any other or
further exercise thereof or the exercise of any other right or power. The rights
and remedies of the Global Administrative Agent, the Issuing Banks and the
Lenders hereunder and under the other Loan Documents are cumulative and are not
exclusive of any rights or remedies that they would otherwise have. No waiver of
any provision of any Loan Document or consent to any departure by any Loan Party
therefrom shall in any event be effective unless the same shall be permitted by
paragraph (b) of this Section, and then such waiver or consent shall be
effective only in the specific instance and for the purpose for which given.
Without limiting the generality of the foregoing, the making of a Loan or
issuance of a Letter of Credit shall not be construed as a waiver of any
Default, regardless of whether the Global Administrative Agent, any Lender or
any Issuing Bank may have had notice or knowledge of such Default at the time.
          (b) Neither this Agreement nor any of the Combined Loan Documents nor
any provision hereof or thereof may be waived, amended or modified except, in
the case of this Agreement, pursuant to an agreement or agreements in writing
entered into by the Borrower and the Majority Lenders or by the Borrower and the
Global Administrative Agent with the consent of the Majority Lenders, or, in the
case of any other Combined Loan Document, pursuant to an agreement or agreements
in writing entered into by the relevant Loan Parties thereto and the Majority
Lenders or by the relevant Loan Parties thereto and the Global Administrative
Agent with the consent of the Majority Lenders; provided that no such agreement
shall (i) increase the Global Commitment or Commitment of any Lender without the
written consent of such Lender (other than, in the case of a Commitment of a
Lender, pursuant to a reallocation in accordance with Section 2.1(c)),
(ii) reduce, or otherwise release the Borrower from its obligation to pay, the
principal amount of any Loan or LC Disbursement or reduce the rate of interest
thereon, or reduce any fees payable hereunder, without the written consent of
each Lender affected thereby, (iii) postpone the scheduled date of payment of
the principal amount of any Loan or LC Disbursement, or any interest thereon, or
any fees payable hereunder, or reduce the amount of, waive or excuse any such
payment, or postpone the Maturity Date, without the written consent of each
Lender affected thereby, (iv) change Section 2.19(b) or (c) in a manner that
would alter the pro rata sharing of payments required thereby, without the
written consent of each Lender, (v) change any of the provisions of this
Section 10.2, or Section 2.8 or Section 2.11, or the definition of “Combined
Lenders” or “Majority Lenders” or “Required Lenders” or “Supermajority Lenders”
or “U.S. Required Lenders” or “U.S. Supermajority Lenders” or any other
provision of any Combined Loan Document specifying the number or percentage of
Lenders, Canadian Lenders, or Combined Lenders required to determine or
redetermine the Global Borrowing Base or required to waive, amend or modify any
rights of the Combined Lenders thereunder or make any determination or grant any
consent thereunder, without the written consent of each Combined Lender,
(vi) release any Loan Party from its Guaranty (except as expressly provided in
such Guaranty), or limit its liability in respect of such Guaranty, without the
written consent of each Combined Lender, (vii) except as expressly provided
herein, in the Intercreditor Agreement or in the Security Documents (as defined
herein and in the Canadian Credit Agreement), release all or any part of the
Collateral from the Liens of the Security

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Documents (as defined herein and in the Canadian Credit Agreement), without the
written consent of each Combined Lender, or (viii) amend or modify
Section 2.1(c) without the written consent of each Combined Lender; provided
further that no such agreement shall amend, waive, modify or otherwise affect
the rights or duties of any Agent (as defined herein and in the Canadian Credit
Agreement), any Issuing Bank (as defined herein and in the Canadian Credit
Agreement) or the Swingline Lender without the prior written consent of such
Agent (as defined herein and in the Canadian Credit Agreement), such Issuing
Bank (as defined herein and in the Canadian Credit Agreement) or such Swingline
Lender, as the case may be; and provided further that, without limiting the
provisions of Section 7.5(b) or the last paragraph of Article IX, the Global
Administrative Agent shall have the right to execute and deliver any release of
any Guaranty or Lien (or other similar instrument) without the consent of any
Lender to the extent such release is required to permit the Borrower or a
Subsidiary to consummate a transaction permitted by this Agreement or the other
Combined Loan Documents, or as otherwise required as a result of any Subsidiary
ceasing to be a Material Subsidiary. Notwithstanding anything to the contrary
contained in the Combined Loan Documents, the Borrower and/or any of its
Subsidiaries shall be permitted at any time to consummate, or cause to be
consummated, the MLP Transactions or any part thereof without any further
consent or approval of any of the Agents or Combined Lenders, provided such
transactions are consummated in accordance and material compliance with the
description set forth in Exhibit N.
     SECTION 10.3 Expenses; Indemnity; Damage Waiver.
          (a) The Borrower shall pay (i) all legal, printing, recording,
syndication, travel, advertising and other reasonable and substantiated
out-of-pocket expenses incurred by the Global Administrative Agent and the
Arrangers, including the reasonable and substantiated fees, charges and
disbursements of one (1) outside U.S. counsel, one (1) outside Canadian counsel,
and applicable U.S. local counsel for the Global Administrative Agent, the
Canadian Administrative Agent and the Arrangers, in connection with the
syndication of the credit facilities provided for herein, the preparation,
execution, delivery and administration of this Agreement, the Loan Documents and
each other document or instrument relevant to this Agreement or the Loan
Documents and any amendments, modifications or waivers of the provisions hereof
or thereof (whether or not the transactions contemplated hereby or thereby shall
be consummated), (ii) all reasonable out-of-pocket expenses incurred by an
Issuing Bank in connection with the issuance, amendment, renewal or extension of
any Letter of Credit or any demand for payment thereunder, (iii) the filing,
recording, refiling or rerecording of the Mortgages, the Pledge Agreements and
any other Security Documents and/or any Uniform Commercial Code financing
statements relating thereto and all amendments, supplements and modifications
to, and all releases and terminations of, any thereof and any and all other
documents or instruments of further assurance required to be filed or recorded
or refiled or rerecorded by the terms hereof or of the Mortgages, the Pledge
Agreements and any other Security Documents, and (iv) all reasonable and
substantiated out-of-pocket expenses incurred by the Agents, any Issuing Bank or
any Lender, including the fees, charges and disbursements of any counsel for the
Agents, any Issuing Bank or any Lender, reasonably incurred in connection with
the enforcement or protection of its rights in connection with the Loan
Documents, including its rights under this Section, or in connection with the
Loans made or Letters of Credit issued hereunder, including all such reasonable
and substantiated out-of-pocket expenses

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reasonably incurred during any workout, restructuring or negotiations in respect
of such Loans or Letters of Credit.
          (b) EXCEPT TO THE EXTENT REIMBURSEMENT OF EXPENSES IS LIMITED BY
SECTION 10.3(a) TO REIMBURSEMENT OF EXPENSES OF ONLY CERTAIN PARTIES, THE
BORROWER SHALL INDEMNIFY THE AGENTS, EACH ISSUING BANK, THE ARRANGERS AND EACH
LENDER, AND EACH RELATED PARTY OF ANY OF THE FOREGOING PERSONS (EACH SUCH PERSON
BEING CALLED AN “INDEMNITEE”) AGAINST, AND HOLD EACH INDEMNITEE HARMLESS FROM,
ANY AND ALL LOSSES, CLAIMS, DAMAGES, LIABILITIES AND RELATED EXPENSES, INCLUDING
THE REASONABLE OUT-OF-POCKET FEES, CHARGES AND DISBURSEMENTS OF ANY COUNSEL FOR
ANY INDEMNITEE, INCURRED BY OR ASSERTED AGAINST ANY INDEMNITEE ARISING OUT OF,
IN CONNECTION WITH, OR AS A RESULT OF (i) THE EXECUTION OR DELIVERY OF ANY LOAN
DOCUMENT OR ANY OTHER AGREEMENT OR INSTRUMENT CONTEMPLATED HEREBY, THE
PERFORMANCE BY THE PARTIES TO THE LOAN DOCUMENTS OF THEIR RESPECTIVE OBLIGATIONS
THEREUNDER OR THE CONSUMMATION OF THE FINANCING TRANSACTIONS OR ANY OTHER
TRANSACTIONS CONTEMPLATED HEREBY, (ii) ANY LOAN OR LETTER OF CREDIT OR THE USE
OF THE PROCEEDS THEREFROM (INCLUDING ANY REFUSAL BY AN ISSUING BANK TO HONOR A
DEMAND FOR PAYMENT UNDER A LETTER OF CREDIT IF THE DOCUMENTS PRESENTED IN
CONNECTION WITH SUCH DEMAND DO NOT STRICTLY COMPLY WITH THE TERMS OF SUCH LETTER
OF CREDIT), (iii) ANY ACTUAL OR ALLEGED PRESENCE OR RELEASE OF HAZARDOUS
MATERIALS ON OR FROM ANY PROPERTY CURRENTLY OR FORMERLY OWNED OR OPERATED BY THE
BORROWER OR ANY OF ITS SUBSIDIARIES, OR ANY ENVIRONMENTAL LIABILITY RELATED IN
ANY WAY TO THE BORROWER OR ANY OF ITS SUBSIDIARIES, OR (iv) ANY ACTUAL OR
PROSPECTIVE CLAIM, LITIGATION, INVESTIGATION OR PROCEEDING RELATING TO ANY OF
THE FOREGOING, WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY AND
REGARDLESS OF WHETHER ANY INDEMNITEE IS A PARTY THERETO; PROVIDED THAT SUCH
INDEMNITY AND RELEASE SHALL NOT, AS TO ANY INDEMNITEE, BE AVAILABLE TO THE
EXTENT THAT SUCH LOSSES, CLAIMS, DAMAGES, LIABILITIES OR RELATED EXPENSES
(A) ARE DETERMINED BY A COURT OF COMPETENT JURISDICTION BY FINAL AND
NONAPPEALABLE JUDGMENT TO HAVE RESULTED FROM THE GROSS NEGLIGENCE OR WILLFUL
MISCONDUCT OF SUCH INDEMNITEE (IT BEING UNDERSTOOD THAT IT IS THE INTENTION OF
THE PARTIES HERETO THAT EACH OF THE INDEMNITEES BE INDEMNIFIED IN THE CASE OF
ITS OWN NEGLIGENCE (OTHER THAN GROSS NEGLIGENCE), REGARDLESS OF WHETHER SUCH
NEGLIGENCE IS SOLE OR CONTRIBUTORY, ACTIVE OR PASSIVE, IMPUTED, JOINT OR
TECHNICAL), (B) RELATE TO CLAIMS BETWEEN OR AMONG ANY OF THE LENDERS, THE
AGENTS, THE ARRANGERS OR ANY OF THEIR AFFILIATES, SHAREHOLDERS, PARTNERS OR
MEMBERS, OR (C) ARE IN RESPECT OF ANY PROPERTY FOR ANY OCCURRENCE ARISING FROM
THE ACTS OR OMISSIONS OF ANY AGENT OR ANY LENDER DURING THE

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PERIOD AFTER WHICH SUCH PERSON, ITS SUCCESSORS OR ASSIGNS SHALL HAVE OBTAINED
POSSESSION OF SUCH PROPERTY (WHETHER BY FORECLOSURE OR DEED IN LIEU OF
FORECLOSURE, AS MORTGAGEE-IN-POSSESSION OR OTHERWISE).
          (c) To the extent that the Borrower fails to pay any amount required
to be paid by the Borrower to the Global Administrative Agent, an Issuing Bank
or the Swingline Lender under paragraph (a) or (b) of this Section, each Lender
severally agrees to pay to the Global Administrative Agent, such Issuing Bank or
the Swingline Lender, as the case may be, such Lender’s Applicable Percentage
(determined as of the time that the applicable unreimbursed expense or indemnity
payment is sought) of such unpaid amount; provided that the unreimbursed expense
or indemnified loss, claim, damage, liability or related expense, as the case
may be, was incurred by or asserted against the Global Administrative Agent,
such Issuing Bank or the Swingline Lender in its capacity as such.
          (d) To the extent permitted by applicable law, no party hereto shall
assert, and each party hereby waives, any claim against any other party, on any
theory of liability, for special, indirect, consequential or punitive damages
(as opposed to direct or actual damages) arising out of, in connection with, or
as a result of, this Agreement or any agreement or instrument contemplated
hereby, the Financing Transactions, any Loan or Letter of Credit or the use of
the proceeds thereof.
          (e) All amounts due under this Section shall be payable not later than
thirty (30) days after written demand is received by Borrower therefor.
     SECTION 10.4 Successors and Assigns.
          (a) The provisions of this Agreement shall be binding upon and inure
to the benefit of the parties hereto and their respective successors and assigns
permitted hereby (including any Affiliate of an Issuing Bank that issues any
Letter of Credit), except that the Borrower may not assign or otherwise transfer
any of its rights or obligations hereunder without the prior written consent of
the Global Administrative Agent, each Issuing Bank and each Combined Lender (and
any attempted assignment or transfer by the Borrower without such consent shall
be null and void). Nothing in this Agreement, expressed or implied, shall be
construed to confer upon any Person (other than the parties hereto, their
respective successors and assigns permitted hereby (including any Affiliate of
an Issuing Bank that issues any Letter of Credit) and, to the extent expressly
contemplated hereby, the Related Parties of each of the Global Administrative
Agent, the Issuing Banks and the Lenders) any legal or equitable right, remedy
or claim under or by reason of this Agreement.
          (b) Any Lender may assign to one or more assignees all or a portion of
its rights and obligations under this Agreement (including all or a portion of
its Global Commitment, Commitment and the Loans at the time owing to it);
provided that (i) except in the case of an assignment to a Lender, a Lender
Affiliate or an Approved Fund, each of the Borrower (unless an Event of Default
has occurred and is continuing) and the Global Administrative Agent (and, in the
case of an assignment of all or a portion of a Global Commitment or Commitment
or any Lender’s obligations in respect of its LC Exposure, the

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Issuing Banks) must give their prior written consent to such assignment (which
consents shall not be unreasonably withheld, conditioned or delayed),
(ii) except in the case of an assignment to a Lender, a Lender Affiliate or an
Approved Fund, or an assignment of the entire remaining amount of the assigning
Lender’s Global Commitment, Commitment or Loans, the amount of the Global
Commitment, Commitment or Loans of the assigning Lender subject to each such
assignment (determined as of the date the Assignment and Acceptance with respect
to such assignment is delivered to the Global Administrative Agent) shall be not
less than U.S.$10,000,000 unless each of the Borrower (unless an Event of
Default has occurred and is continuing) and the Global Administrative Agent
otherwise consent, (iii) in the case of an assignment to a Lender, a Lender
Affiliate, or an Approved Fund of an amount less than the entire remaining
amount of the assigning Lender’s Global Commitment, Commitment or Loans, the
amount of the Global Commitment, Commitment or Loans of the assigning Lender
subject to each such assignment (determined as of the date the Assignment and
Acceptance with respect to such assignment is delivered to the Global
Administrative Agent) shall be not less than U.S.$5,000,000, (iv) each partial
assignment shall be made as an assignment of a proportionate part of all the
assigning Lender’s rights and obligations under this Agreement, except that this
clause (iv) shall not be construed to prohibit the assignment of a proportionate
part of all the assigning Lender’s rights and obligations in respect of its
Commitments or Loans in conformity with the Intercreditor Agreement, (v) the
parties to each assignment shall execute and deliver to the Global
Administrative Agent an Assignment and Acceptance, together with a processing
and recordation fee of U.S.$3,500 to the Global Administrative Agent, (vi) the
assignee, if it shall not be a Lender, shall deliver to the Global
Administrative Agent an Administrative Questionnaire, (vii) after giving effect
to any assignment under clause (ii), the assigning Lender shall have a Global
Commitment of at least U.S.$10,000,000 and after giving effect to any assignment
under clause (iii), the assigning Lender shall have a Global Commitment of at
least U.S.$5,000,000, unless, in each case, each of the Borrower and the Global
Administrative Agent otherwise consents, and (viii) any assignee Lender shall
have the same Designation (which Designation may be changed in accordance with
Section 2.1(c)) as the assigning Lender to the extent of the Global Commitment,
Commitments and Loans so assigned by such assigning Lender; and provided further
that any consent of the Borrower otherwise required under this paragraph shall
not be required if an Event of Default under Section 8.1 has occurred and is
continuing. Subject to acceptance and recording thereof pursuant to paragraph
(d) of this Section, from and after the effective date specified in each
Assignment and Acceptance, the assignee thereunder shall be a party hereto and
to the other Loan Documents and, to the extent of the interest assigned by such
Assignment and Acceptance, have the rights and obligations of a Lender under
this Agreement, and the assigning Lender thereunder shall, to the extent of the
interest assigned by such Assignment and Acceptance, be released from its
obligations under this Agreement and the other Loan Documents (and, in the case
of an Assignment and Acceptance covering all of the assigning Lender’s rights
and obligations under this Agreement, such Lender shall cease to be a party
hereto but shall continue to be entitled to the benefits of Section 2.16, 2.17,
2.18, 2.19, 2.21 and 10.3 and be subject to the terms of Section 10.12). Any
assignment or transfer by a Lender of rights or obligations under this Agreement
that does not comply with this paragraph shall be treated for purposes of this
Agreement as a sale by such Lender of a participation in such rights and
obligations in accordance with paragraph (e) of this Section.
          (c) The Global Administrative Agent, acting for this purpose as an
agent of the Borrower, shall maintain at one of its offices in Chicago a copy of
each Assignment and

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Acceptance delivered to it and a register for the recordation of the names and
addresses of the Lenders, and the Global Commitment and Commitment of, and
principal amount of the Loans and LC Disbursements owing to, each Lender
pursuant to the terms hereof from time to time (the “Register”). The entries in
the Register shall be conclusive absent manifest error, and the Borrower, the
Global Administrative Agent, the Issuing Banks and the Lenders may treat each
Person whose name is recorded in the Register pursuant to the terms hereof as a
Lender hereunder for all purposes of this Agreement and the other Loan
Documents, notwithstanding notice to the contrary. The Register shall be
available for inspection by the Borrower, any Issuing Bank and any Lender, at
any reasonable time and from time to time upon reasonable prior notice. In
connection with any changes to the Register, if necessary, the Global
Administrative Agent will reflect the revisions on Schedule 2.1 and forward a
copy of such revised Schedule 2.1 to the Borrower, each Issuing Bank and each
Lender.
          (d) Upon its receipt of a duly completed Assignment and Acceptance
executed by an assigning Lender and an assignee, the assignee’s completed
Administrative Questionnaire (unless the assignee shall already be a Lender
hereunder), the processing and recordation fee referred to in paragraph (b) of
this Section and any written consent to such assignment required by paragraph
(b) of this Section, the Global Administrative Agent shall accept such
Assignment and Acceptance and record the information contained therein in the
Register and will provide prompt written notice to the Borrower of the
effectiveness of such assignment. No assignment shall be effective for purposes
of this Agreement unless it has been recorded in the Register as provided in
this paragraph.
          (e) Any Lender may, without the consent of the Borrower, the Global
Administrative Agent, any Issuing Bank or the Swingline Lender, sell
participations to one or more banks or other entities (a “Participant”) in all
or a portion of such Lender’s rights and obligations under this Agreement
(including all or a portion of its Global Commitment, Commitment and the Loans
owing to it); provided that (i) such Lender’s obligations under this Agreement
shall remain unchanged, (ii) such Lender shall remain solely responsible to the
other parties hereto for the performance of such obligations, and (iii) the
Borrower, the Global Administrative Agent, the Issuing Banks and the other
Lenders shall continue to deal solely and directly with such Lender in
connection with such Lender’s rights and obligations under this Agreement. Any
agreement or instrument pursuant to which a Lender sells such a participation
shall provide that such Lender shall retain the sole right to enforce the Loan
Documents and to approve any amendment, modification or waiver of any provision
of the Loan Documents; provided that such agreement or instrument may provide
that such Lender will not, without the consent of the Participant, agree to any
amendment, modification or waiver described in the second proviso to
Section 10.2(b) that affects such Participant. Subject to paragraph (f) of this
Section, the Borrower agrees that each Participant shall be entitled to the
benefits of Section 2.16, 2.17 and 2.18 to the same extent as if it were a
Lender and had acquired its interest by assignment pursuant to paragraph (b) of
this Section. To the extent permitted by law, each Participant also shall be
entitled to the benefits of Section 10.8 and 10.12 as though it were a Lender,
provided such Participant agrees to be subject to Section 2.19(c) as though it
were a Lender.
          (f) A Participant shall not be entitled to receive any greater payment
under Section 2.16, 2.17 or 2.18 than the applicable Lender would have been
entitled to receive with

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respect to the participation sold to such Participant. A Participant that would
be a Foreign Lender if it were a Lender shall not be entitled to the benefits of
Section 2.18 unless the Borrower is notified of the participation sold to such
Participant and such Participant agrees, for the benefit of the Borrower, to
comply with Section 2.18(e) as though it were a Lender.
          (g) Any Lender may at any time pledge or assign a Lien in all or any
portion of its rights under this Agreement to secure obligations of such Lender,
including any pledge or assignment to secure obligations to a Federal Reserve
Bank or, in the case of a Lender organized in a jurisdiction outside of the
United States, a comparable Person, and this Section shall not apply to any such
pledge or assignment of a security interest; provided that no such pledge or
assignment of a security interest shall release a Lender from any of its
obligations hereunder or substitute any such pledgee or assignee for such Lender
as a party hereto.
     SECTION 10.5 Survival. All covenants, agreements, representations and
warranties made by the Loan Parties in the Loan Documents and in the
certificates or other instruments delivered in connection with or pursuant to
this Agreement or any other Loan Document shall be considered to have been
relied upon by the other parties hereto and shall survive the execution and
delivery of the Loan Documents and the making of any Loans and issuance of any
Letters of Credit, regardless of any investigation made by any such other party
or on its behalf and notwithstanding that any Agent, any Issuing Bank, the
Arrangers or any Lender may have had notice or knowledge of any Default or
incorrect representation or warranty at the time any credit is extended
hereunder, and shall continue in full force and effect as long as the principal
of or any accrued interest on any Loan or any fee or any other amount payable
under this Agreement is outstanding and unpaid or any Letter of Credit is
outstanding and so long as the Global Commitments and Commitments have not
expired or terminated. The provisions of Section 2.16, 2.17, 2.18, 2.19, 2.21,
10.3 and 10.12 and Article IX shall survive and remain in full force and effect
regardless of the consummation of the transactions contemplated hereby, the
repayment of the Loans, the expiration or termination of the Letters of Credit
and the Global Commitments and Commitments or the termination of this Agreement
or any provision hereof.
     SECTION 10.6 Counterparts; Effectiveness. This Agreement may be executed in
counterparts (and by different parties hereto on different counterparts), each
of which shall constitute an original, but all of which when taken together
shall constitute a single contract. Except as provided in Section 4.1, this
Agreement shall become effective when it shall have been executed by the Global
Administrative Agent and when the Global Administrative Agent shall have
received counterparts hereof which, when taken together, bear the signatures of
each of the other parties hereto, and thereafter shall be binding upon and inure
to the benefit of the parties hereto and their respective successors and
assigns. Delivery of an executed counterpart of a signature page of this
Agreement by telecopy (or other electronic transmission acceptable to the Global
Administrative Agent) shall be effective as delivery of a manually executed
counterpart of this Agreement.
     SECTION 10.7 Severability. Any provision of this Agreement held to be
invalid, illegal or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such invalidity, illegality or
unenforceability without affecting the validity, legality and enforceability of
the remaining provisions hereof; and the invalidity of a particular provision in
a particular jurisdiction shall not invalidate such provision in any other
jurisdiction.

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     SECTION 10.8 Right of Setoff. If an Event of Default shall have occurred
and be continuing, each of the Agents, the Issuing Banks, the Lenders and their
Affiliates is hereby authorized at any time and from time to time, to the
fullest extent permitted by law, to set off and apply any and all deposits
(general or special, time or demand, provisional or final) at any time held, and
other obligations at any time owing by such Lender or Affiliate to or for the
credit or the account of, the Borrower or any of its Subsidiaries (other than QR
Canada or any other Foreign Subsidiary) against any and all the obligations of
the Borrower now or hereafter existing under this Agreement held by such Lender,
irrespective of whether or not such Lender shall have made any demand under this
Agreement and although such obligations may be unmatured; provided, however,
that any such set-off and application shall be subject to the provisions of
Section 2.19 and the Intercreditor Agreement. As security for such obligations,
the Borrower hereby grants to the Agents, each Issuing Bank and each Lender a
continuing security interest in any and all balances, credits, deposits,
accounts or moneys of the Borrower and its Subsidiaries then or thereafter
maintained with any of the Agents, such Issuing Bank and such Lenders. The
rights of each Lender under this Section are in addition to other rights and
remedies (including other rights of setoff) which such Lender may have.
     SECTION 10.9 GOVERNING LAW; JURISDICTION; CONSENT TO SERVICE OF PROCESS.
          (a) THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS (OTHER THAN THOSE
CONTAINING A CONTRARY EXPRESS CHOICE OF LAW PROVISION) SHALL BE CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS.
          (b) EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY AND UNCONDITIONALLY
SUBMITS, FOR ITSELF AND ITS PROPERTY, TO THE JURISDICTION OF ANY COURT OF THE
STATE OF TEXAS LOCATED IN TARRANT OR DALLAS COUNTY, TEXAS AND OF THE UNITED
STATES DISTRICT COURT OF THE NORTHERN DISTRICT OF TEXAS, AND ANY APPELLATE COURT
FROM ANY THEREOF, IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS
AGREEMENT OR ANY OTHER LOAN DOCUMENT, OR FOR RECOGNITION OR ENFORCEMENT OF ANY
JUDGMENT, AND EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY AND UNCONDITIONALLY
AGREES THAT ALL CLAIMS IN RESPECT OF ANY SUCH ACTION OR PROCEEDING MAY BE HEARD
AND DETERMINED IN SUCH TEXAS STATE OR, TO THE EXTENT PERMITTED BY LAW, IN SUCH
FEDERAL COURT; PROVIDED, HOWEVER, THAT ANY SUIT SEEKING ENFORCEMENT AGAINST ANY
COLLATERAL OR OTHER PROPERTY MAY BE BROUGHT, AT THE GLOBAL ADMINISTRATIVE
AGENT’S OPTION, IN THE COURTS OF ANY JURISDICTION WHERE SUCH COLLATERAL OR OTHER
PROPERTY MAY BE FOUND. EACH OF THE PARTIES HERETO AGREES THAT, TO THE FULLEST
EXTENT PERMITTED BY APPLICABLE LAW, A FINAL JUDGMENT IN ANY SUCH ACTION OR
PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY
SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW. NOTHING IN THIS
AGREEMENT SHALL AFFECT ANY RIGHT THAT THE AGENTS OR ANY LENDER MAY OTHERWISE
HAVE TO

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BRING ANY ACTION OR PROCEEDING RELATING TO THIS AGREEMENT AGAINST THE BORROWER
OR ITS PROPERTIES IN THE COURTS OF ANY JURISDICTION.
          (c) EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY AND UNCONDITIONALLY
WAIVES, TO THE FULLEST EXTENT IT MAY LEGALLY AND EFFECTIVELY DO SO, ANY
OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY SUIT,
ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT IN ANY COURT
REFERRED TO IN PARAGRAPH (b) OF THIS SECTION. EACH OF THE PARTIES HERETO HEREBY
IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, THE DEFENSE OF AN
INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH ACTION OR PROCEEDING IN ANY SUCH
COURT.
          (d) EACH PARTY TO THIS AGREEMENT IRREVOCABLY CONSENTS TO SERVICE OF
PROCESS BY REGISTERED MAIL, POSTAGE PREPAID, OR BY PERSONAL SERVICE WITHIN OR
WITHOUT THE STATE OF TEXAS. NOTHING IN THIS AGREEMENT WILL AFFECT THE RIGHT OF
ANY PARTY TO THIS AGREEMENT TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY
LAW.
     SECTION 10.10 WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES, TO THE
FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY
JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING
TO THIS AGREEMENT, ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED
HEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO
(a) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS
REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE
EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (b) ACKNOWLEDGES
THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS
AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS
SECTION.
     SECTION 10.11 Headings. Article and Section headings and the Table of
Contents used herein are for convenience of reference only, are not part of this
Agreement and shall not affect the construction of, or be taken into
consideration in interpreting, this Agreement.
     SECTION 10.12 Confidentiality. In the event that a Loan Party provides to
the Global Administrative Agent, the Issuing Banks or the Lenders (including the
Swingline Lender) confidential information belonging to such Loan Party or any
of its Subsidiaries (whether before or after the date of this Agreement), then
the Global Administrative Agent, the Issuing Banks and the Lenders (including
the Swingline Lender) shall thereafter use such information only in connection
with, or as contemplated by, this Agreement, the other Combined Loan Documents
and the transactions contemplated hereby and thereby and shall maintain such
information in

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confidence in accordance with the standards of care and diligence that each
utilizes in maintaining its own confidential information. This obligation of
confidence shall not apply to such portions of the information which (a) are in
the public domain due to no breach hereof by the Global Administrative Agent,
any of the Issuing Banks or any of the Lenders (including the Swingline Lender),
(b) hereafter become part of the public domain without the Global Administrative
Agent, the Issuing Banks or the Lenders (including the Swingline Lender)
breaching their obligation of confidence to such Loan Party as required hereby
or any other Combined Loan Document, (c) are previously known by the Global
Administrative Agent, the Issuing Banks or the Lenders (including the Swingline
Lender) from some source other than such Loan Party, (d) are hereafter developed
by the Global Administrative Agent, the Issuing Banks or the Lenders (including
the Swingline Lender) without using such Loan Party’s information, (e) are
hereafter obtained by or available to the Global Administrative Agent, the
Issuing Banks or the Lenders (including the Swingline Lender) from a third party
who owes no obligation of confidence to such Loan Party with respect to such
information, (f) are disclosed with the Borrower’s or such Loan Party’s consent,
(g) must be disclosed either pursuant to any Governmental Rule or to Persons
regulating the activities of the Global Administrative Agent, the Issuing Banks
or the Lenders (including the Swingline Lender), or (h) as may be required by
law or regulation or order of any Governmental Authority in any judicial,
arbitration or governmental proceeding. Further, the Global Administrative
Agent, an Issuing Bank or a Lender (including the Swingline Lender) may disclose
any such information to any other Lender (including the Swingline Lender), any
independent petroleum engineers or consultants, any independent certified public
or chartered accountants, any legal counsel employed by such Person in
connection with this Agreement or any other Combined Loan Document, including
without limitation, the enforcement or exercise of all rights and remedies
thereunder, or any assignee or participant (including prospective assignees and
participants) in the Loans; provided, however, that the Global Administrative
Agent, the Issuing Banks or the Lenders (including the Swingline Lender) shall
receive a confidentiality agreement from the Person to whom such information is
disclosed such that said Person shall have the same obligation to maintain the
confidentiality of such information as is imposed upon the Global Administrative
Agent, the Issuing Banks or the Lenders (including the Swingline Lender)
hereunder.
     SECTION 10.13 Interest Rate Limitation. It is the intention of the parties
hereto to conform strictly to applicable interest, usury and criminal laws and,
anything herein to the contrary notwithstanding, the obligations of the Borrower
and the Guarantors to a Lender, any Issuing Bank or any Agent under this
Agreement or any Combined Loan Document shall be subject to the limitation that
payments of interest shall not be required to the extent that receipt thereof
would be contrary to provisions of law applicable to such Lender, such Issuing
Bank or Agent limiting rates of interest which may be charged or collected by
such Lender, such Issuing Bank or Agent. Accordingly, if the transactions
contemplated hereby or thereby would be illegal, unenforceable, usurious or
criminal under laws applicable to a Lender, any Issuing Bank or any Agent
(including the laws of any jurisdiction whose laws may be mandatorily applicable
to such Lender or Agent notwithstanding anything to the contrary in this
Agreement or any other Combined Loan Document) then, in that event,
notwithstanding anything to the contrary in this Agreement or any other Combined
Loan Document, it is agreed as follows:
          (i) the provisions of this Section shall govern and control;

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          (ii) the aggregate of all consideration which constitutes interest
under applicable law that is contracted for, taken, reserved, charged or
received under this Agreement or any Combined Loan Document or otherwise in
connection with this Agreement or any Combined Loan Document by such Lender,
such Issuing Bank or such Agent shall under no circumstances exceed the maximum
amount of interest allowed by applicable law (such maximum lawful interest rate,
if any, with respect to each Lender, each Issuing Bank and the Agents herein
called the “Highest Lawful Rate”), and any excess shall be cancelled
automatically and if theretofore paid shall be credited to the Borrower by such
Lender, such Issuing Bank or such Agent (or, if such consideration shall have
been paid in full, such excess refunded to the Borrower);
          (iii) all sums paid, or agreed to be paid, to such Lender, such
Issuing Bank or such Agent for the use, forbearance and detention of the
indebtedness of the Borrower to such Lender, such Issuing Bank or such Agent
hereunder or under any Combined Loan Document shall, to the extent permitted by
laws applicable to such Lender, such Issuing Bank or such Agent, as the case may
be, be amortized, prorated, allocated and spread throughout the full term of
such indebtedness until payment in full so that the actual rate of interest is
uniform throughout the full term thereof;
          (iv) if at any time the interest provided pursuant to this Section or
any other clause of this Agreement or any other Combined Loan Document, together
with any other fees or compensation payable pursuant to this Agreement or any
other Combined Loan Document and deemed interest under laws applicable to such
Lender, such Issuing Bank or such Agent, exceeds that amount which would have
accrued at the Highest Lawful Rate, then the amount of interest and any such
fees or compensation to accrue to such Lender, such Issuing Bank or such Agent
pursuant to this Agreement or such other Combined Loan Document shall be
limited, notwithstanding anything to the contrary in this Agreement or any other
Combined Loan Document, to that amount which would have accrued at the Highest
Lawful Rate, but any subsequent reductions, as applicable, shall not reduce the
interest to accrue to such Lender, such Issuing Bank or such Agent pursuant to
this Agreement or such other Combined Loan Document below the Highest Lawful
Rate until the total amount of interest accrued pursuant to this Agreement or
such other Combined Loan Document, as the case may be, and such fees or
compensation deemed to be interest equals the amount of interest which would
have accrued to such Lender or Agent if a varying rate per annum equal to the
interest provided pursuant to any other relevant Section hereof (other than this
Section) or thereof, as applicable, had at all times been in effect, plus the
amount of fees which would have been received but for the effect of this
Section; and
          (v) with the intent that the rate of interest herein shall at all
times be lawful, and if the receipt of any funds owing hereunder or under any
other agreement related hereto (including any of the other Combined Loan
Documents) by such Lender, such Issuing Bank or such Agent would cause such
Lender to charge the Borrower a criminal rate of interest, the Lenders, the
Issuing Banks and the Agents agree that they will not require the payment or
receipt thereof or a portion thereof which would cause a criminal rate of
interest to be charged by such Lender, such Issuing Bank or such Agent, as
applicable, and if received such affected Lender, such Issuing Bank or Agent
will

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return such funds to the Borrower so that the rate of interest paid by the
Borrower shall not exceed a criminal rate of interest from the date this
Agreement was entered into.
     For purposes of Chapter 303 of the Texas Finance Code, as amended, to the
extent applicable, the Borrower agrees that the Highest Lawful Rate shall be the
“indicated (weekly) rate ceiling” as defined in such Chapter, provided that such
Lender, such Issuing Bank, or such Agent may also rely, to the extent permitted
by applicable laws, on alternative maximum rates of interest under other laws
applicable to such Lender, such Issuing Bank or such Agent, if greater.
     SECTION 10.14 USA PATRIOT Act Notice. Each Lender that is subject to the
Act (as hereinafter defined) and each Agent (for itself and not on behalf of any
Lender) hereby notifies the Borrower and each other Loan Party that pursuant to
the requirements of the USA Patriot Act (Title III of Pub. L. 107-56 (signed
into law October 26, 2001)) (the “Act”), it is required to obtain, verify and
record information that identifies the Borrower and each other Loan Party, which
information includes the name and address of the Borrower and each other Loan
Party and other information that will allow such Lender or such Agent, as
applicable, to identify the Borrower and each other Loan Party in accordance
with the Act.
     SECTION 10.15 Collateral Matters; Hedging Agreements. The benefit of the
Security Documents and of the provisions of this Agreement relating to the
Collateral shall also extend to and be available to those Lenders or their
Affiliates that are counterparties to the Hedging Agreements on a pro rata basis
in respect of any Hedging Obligations of the Borrower or any of its Subsidiaries
that are in effect at such time as such Person (or its Affiliate) is a Lender,
but only while such Person or its Affiliate is a Lender; provided that it is the
intention of the parties hereto that repayment of the Hedging Obligations of the
Borrower and its Subsidiaries under any Hedging Agreement with a Combined
Lender, or any Affiliate of a Combined Lender from realization of any Collateral
shall be subject to the terms of the Intercreditor Agreement and Security
Documents.
     SECTION 10.16 Arrangers; Co-Global Documentation Agents; Co-Global
Syndication Agents; Other Agents. None of the Persons identified on the facing
page or the signature pages of this Agreement as a “Co-Lead Arranger and Joint
Bookrunner” or “Co-Global Documentation Agent” or “Co-Global Syndication Agent”
or any other Agent (other than the Global Administrative Agent) shall have any
right, power, obligation, liability, responsibility or duty under this Agreement
or any other Combined Loan Document other than, except in the case of the
Arrangers, those applicable to all Lenders as such. Without limiting the
foregoing, none of the Arrangers, the Co-Global Documentation Agents, the
Co-Global Syndication Agents or any other Agent shall have or be deemed to have
any fiduciary relationship with any Lender, and none of the Global
Administrative Agent, the Arrangers, the Co-Global Documentation Agents, the
Co-Global Syndication Agents or any other Agent shall have or be deemed to have
any fiduciary relationship with the Borrower or any of its Subsidiaries. The
Borrower and each Lender acknowledges that it has not relied, and will not rely,
on any of the Arrangers, the Co-Global Documentation Agents, the Co-Global
Syndication Agents or any other Agent in deciding to enter into this Agreement
or in taking or not taking any action hereunder or under the Combined Loan
Documents.

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     SECTION 10.17 Intercreditor Agreement; Security Documents; Designation.
Each Lender on behalf of itself and any Affiliate which is a counterparty to a
Hedging Agreement acknowledges and agrees that the Global Administrative Agent
has entered into the Intercreditor Agreement and the Security Documents on
behalf of itself, the other Agents, Lenders and Affiliates thereof that are
parties to a Hedge Transaction, and each of them (by their signature hereto or
acceptance of the benefits of the Security Documents) hereby agree to be bound
by the terms of the Intercreditor Agreement and such Security Documents,
acknowledge receipt of copies of the Intercreditor Agreement and such Security
Documents and consent to the rights, powers, remedies, indemnities and
exculpations given to the Global Administrative Agent thereunder. For so long as
the Intercreditor Agreement shall be in effect, the terms and conditions of this
Agreement and the other Loan Documents are subject to the terms of the
Intercreditor Agreement. In the event of any inconsistency between this
Agreement or any other Loan Document and the terms of the Intercreditor
Agreement, the Intercreditor Agreement shall control. In the event of any
inconsistency between this Agreement and the terms of any other Loan Document
(other than the Intercreditor Agreement), this Agreement shall control. Each
Lender by its signature hereto agrees to its Designation as set forth on
Schedule 2.1.
     SECTION 10.18 Waiver of Consumer Credit Laws. Pursuant to Chapter 346 of
the Texas Finance Code, as amended, Borrower agrees that such Chapter 346 shall
not govern or in any manner apply to the Loans.
     SECTION 10.19 Status as Senior Indebtedness. The Loans and other
Obligations hereunder are “Senior Indebtedness” and “Designated Senior
Indebtedness” under both the Existing Subordinate Note Indenture and the
Existing Convertible Note Indenture.
     SECTION 10.20 NO ORAL AGREEMENTS. THIS WRITTEN AGREEMENT AND THE OTHER LOAN
DOCUMENTS REPRESENT THE FINAL AGREEMENT AMONG THE PARTIES WITH RESPECT TO THE
SUBJECT MATTER HEREOF AND THEREOF AND MAY NOT BE CONTRADICTED BY EVIDENCE OF
PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE
NO UNWRITTEN ORAL AGREEMENTS AMONG THE PARTIES.
     IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective authorized officers as of the day and year
first above written.
[SIGNATURES BEGIN ON FOLLOWING PAGE]

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            QUICKSILVER RESOURCES INC., as Borrower
      By:   /s/ Philip W. Cook         Philip W. Cook,        Senior Vice
President – Chief Financial Officer   

[Signature Page to U.S. Amended And Restated Credit Agreement]

 

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            JPMORGAN CHASE BANK, N.A., as Global Administrative Agent and as a
Lender
      By:   /s/ J. Scott Fowler         J. Scott Fowler,        Senior Vice
President     

[Signature Page to U.S. Amended And Restated Credit Agreement]

 

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            BANK OF AMERICA, N.A., as a Co-Global Syndication Agent and as a
Lender
      By:   /s/ Ronald E. McKaig         Ronald E. McKaig,        Senior Vice
President     

[Signature Page to U.S. Amended And Restated Credit Agreement]

 

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            BNP PARIBAS, as a Co-Global Syndication Agent and as a Lender
      By:   /s/ Brian M. Malone         Brian M. Malone,        Managing
Director            By:   /s/ Russell Otts         Russell Otts,        Vice
President     

[Signature Page to U.S. Amended And Restated Credit Agreement]

 

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            FORTIS CAPITAL CORP., as a Co-Global Documentation Agent and as a
Lender
      By:   /s/ Michele Jones         Michele Jones,        Senior Vice
President            By:   /s/ Darrell Holley         Darrell Holley,       
Managing Director     

[Signature Page to U.S. Amended And Restated Credit Agreement]

 

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            THE BANK OF NOVA SCOTIA, as a Co-Global Documentation Agent and as a
Lender
      By:   /s/ Richard Hawthorne         Richard Hawthorne,        Director   
 

[Signature Page to U.S. Amended And Restated Credit Agreement]

 

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            DEUTSCHE BANK TRUST COMPANY AMERICAS, as a Co-Global Documentation
Agent and as a Lender
      By:   /s/ Saad Iqbal         Saad Iqbal,        Vice President           
By:   /s/ Carin Keegan         Carin Keegan,        Vice President     

[Signature Page to U.S. Amended And Restated Credit Agreement]

 

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            BMO CAPITAL MARKETS FINANCING, INC., as a Lender
      By:   /s/ Mary Lou Allen         Mary Lou Allen,        Vice President   
 

[Signature Page to U.S. Amended And Restated Credit Agreement]

 

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            THE ROYAL BANK OF SCOTLAND plc, as a Lender
      By:   /s/ Robert E. Poirrier Jr.         Robert E. Poirrier Jr.       
Vice President     

[Signature Page to U.S. Amended And Restated Credit Agreement]

 

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            CALYON NEW YORK BRANCH, as a Lender
      By:   /s/ Dennis Petito         Dennis Petito,        Managing Director   
        By:   /s/ Michael Willis         Michael Willis,        Director     

[Signature Page to U.S. Amended And Restated Credit Agreement]

 

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            CITIBANK, N.A., as a Lender
      By:   /s/ John F. Miller         John F. Miller,        Attorney-In-Fact 
   

[Signature Page to U.S. Amended And Restated Credit Agreement]

 

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            SOCIÉTÉ GÉNÉRALE, as a Lender
      By:   /s/ Stephen W. Warfel         Stephen W. Warfel,        Director   
 

[Signature Page to U.S. Amended And Restated Credit Agreement]

 

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            UNION BANK OF CALIFORNIA, N.A., as a Lender
      By:   /s/ Alison Fuqua         Alison Fuqua,        Investment Banking
Officer     

[Signature Page to U.S. Amended And Restated Credit Agreement]

 

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            WELLS FARGO BANK, N.A., as a Lender
      By:   /s/ Charles D. Kirkham         Charles D. Kirkham,        Vice
President     

[Signature Page to U.S. Amended And Restated Credit Agreement]

 

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            TORONTO DOMINION (TEXAS) LLC, as a Lender
      By:   /s/ Ian Murray         Ian Murray,        Authorized Signatory     

[Signature Page to U.S. Amended And Restated Credit Agreement]

 

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            COMERICA BANK, as a Lender
      By:   /s/ Peter L. Sefzik         Peter L. Sefzik,        Vice President 
   

[Signature Page to U.S. Amended And Restated Credit Agreement]

 

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            U.S. BANK NATIONAL ASSOCIATION, as a Lender
      By:   /s/ Daria Mahoney         Daria Mahoney,        Vice President     

[Signature Page to U.S. Amended And Restated Credit Agreement]

 

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            CIBC INC., as a Lender
      By:   /s/ Dominic J. Sorresso         Dominic J. Sorresso,       
Executive Director

CIBC World Markets Corp.
Authorized Signatory     

[Signature Page to U.S. Amended And Restated Credit Agreement]

 

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            COMPASS BANK, as a Lender
      By:   /s/ Murray Brasseux         Murray Brasseux,        Executive Vice
President     

[Signature Page to U.S. Amended And Restated Credit Agreement]

 

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            CREDIT SUISSE, CAYMAN ISLANDS BRANCH, as a Lender
      By:   /s/ Vanessa Gomez         Vanessa Gomez,        Vice President     
      By:   /s/ Mikhail Faybusovich         Mikhail Faybusovich,       
Associate     

[Signature Page to U.S. Amended And Restated Credit Agreement]

 

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            STERLING BANK, as a Lender
      By:   /s/ Melissa A. Bauman         Melissa A. Bauman,        Senior Vice
President     

[Signature Page to U.S. Amended And Restated Credit Agreement]