Exhibit 10.1

 

 

 

CREDIT AGREEMENT

 

dated as of July 14, 2011

 

among

 

CIMAREX ENERGY CO.,

as Borrower,

 

JPMORGAN CHASE BANK, N.A.,

as Administrative Agent,

 

WELLS FARGO BANK, N.A. and DEUTSCHE BANK SECURITIES INC.,

as Co-Syndication Agents,

 

UNION BANK, N.A.

and

BBVA COMPASS BANK,

as Co-Documentation Agents,

 

and

 

The Lenders Party Hereto

 

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J.P. MORGAN SECURITIES LLC,

as Sole Bookrunner

 

J.P. MORGAN SECURITIES LLC and WELLS FARGO SECURITIES, LLC,

as Joint Lead Arrangers

 

 

 

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TABLE OF CONTENTS

 

 

 

 

 

 

Page

 

 

 

 

 

 

ARTICLE I Definitions and Accounting Matters

 

1

 

 

 

 

 

 

 

Section 1.01

 

Terms Defined Above

 

1

 

Section 1.02

 

Certain Defined Terms

 

1

 

Section 1.03

 

Types of Loans and Borrowings

 

22

 

Section 1.04

 

Terms Generally; Rules of Construction

 

22

 

Section 1.05

 

Accounting Terms and Determinations; GAAP

 

23

 

 

 

 

 

 

ARTICLE II The Credits

 

23

 

 

 

 

 

 

 

Section 2.01

 

Commitments

 

23

 

Section 2.02

 

Loans and Borrowings

 

23

 

Section 2.03

 

Requests for Borrowings

 

24

 

Section 2.04

 

Interest Elections

 

25

 

Section 2.05

 

Funding of Borrowings

 

26

 

Section 2.06

 

Termination and Reduction of Aggregate Maximum Credit Amounts

 

27

 

Section 2.07

 

Borrowing Base

 

28

 

Section 2.08

 

Letters of Credit

 

30

 

 

 

 

 

 

ARTICLE III Payments of Principal and Interest; Prepayments; Fees

 

34

 

 

 

 

 

 

 

Section 3.01

 

Repayment of Loans

 

34

 

Section 3.02

 

Interest

 

35

 

Section 3.03

 

Alternate Rate of Interest

 

35

 

Section 3.04

 

Prepayments

 

36

 

Section 3.05

 

Fees

 

38

 

 

 

 

 

 

ARTICLE IV Payments; Pro Rata Treatment; Sharing of Set-offs

 

39

 

 

 

 

 

 

 

Section 4.01

 

Payments Generally; Pro Rata Treatment; Sharing of Set-offs

 

39

 

Section 4.02

 

Presumption of Payment by the Borrower

 

40

 

Section 4.03

 

Payments and Deductions to a Defaulting Lender

 

40

 

 

 

 

 

 

ARTICLE V Increased Costs; Break Funding Payments; Taxes; Illegality

 

43

 

 

 

 

 

 

 

Section 5.01

 

Increased Costs

 

43

 

Section 5.02

 

Break Funding Payments

 

44

 

Section 5.03

 

Taxes

 

44

 

Section 5.04

 

Mitigation Obligations; Replacement of Lenders

 

47

 

Section 5.05

 

Illegality

 

48

 

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ARTICLE VI Conditions Precedent

 

48

 

 

 

 

 

 

 

Section 6.01

 

Effective Date

 

48

 

Section 6.02

 

Each Credit Event

 

50

 

 

 

 

 

 

ARTICLE VII Representations and Warranties

 

51

 

 

 

 

 

 

 

Section 7.01

 

Organization; Powers

 

51

 

Section 7.02

 

Authority; Enforceability

 

51

 

Section 7.03

 

Approvals; No Conflicts

 

51

 

Section 7.04

 

Financial Condition; No Material Adverse Change

 

52

 

Section 7.05

 

Litigation

 

52

 

Section 7.06

 

Environmental Matters

 

52

 

Section 7.07

 

Compliance with the Laws and Agreements; No Defaults

 

54

 

Section 7.08

 

Investment Company Act

 

54

 

Section 7.09

 

Taxes

 

54

 

Section 7.10

 

ERISA

 

54

 

Section 7.11

 

Disclosure; No Material Misstatements

 

55

 

Section 7.12

 

Insurance

 

55

 

Section 7.13

 

Subsidiaries; Foreign Operations

 

56

 

Section 7.14

 

Properties; Titles, Etc.

 

56

 

Section 7.15

 

Maintenance of Properties

 

57

 

Section 7.16

 

Gas Imbalances, Prepayments

 

57

 

Section 7.17

 

Marketing of Production

 

57

 

Section 7.18

 

Swap Agreements

 

58

 

Section 7.19

 

Use of Loans and Letters of Credit

 

58

 

Section 7.20

 

Solvency

 

58

 

 

 

 

 

 

ARTICLE VIII Affirmative Covenants

 

58

 

 

 

 

 

 

 

Section 8.01

 

Financial Statements; Other Information

 

58

 

Section 8.02

 

Notices of Material Events

 

60

 

Section 8.03

 

Existence; Conduct of Business

 

61

 

Section 8.04

 

Payment of Obligations

 

61

 

Section 8.05

 

Performance of Obligations under Loan Documents

 

61

 

Section 8.06

 

Operation and Maintenance of Properties

 

61

 

Section 8.07

 

Insurance

 

62

 

Section 8.08

 

Books and Records; Inspection Rights

 

62

 

Section 8.09

 

Compliance with Laws

 

62

 

Section 8.10

 

Environmental Matters

 

62

 

Section 8.11

 

Further Assurances

 

63

 

Section 8.12

 

Reserve Reports

 

63

 

Section 8.13

 

Additional Guarantors

 

64

 

Section 8.14

 

ERISA Compliance

 

64

 

Section 8.15

 

Swap Agreement Termination

 

65

 

Section 8.16

 

Marketing Activities

 

65

 

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ARTICLE IX Negative Covenants

 

65

 

 

 

 

 

 

 

Section 9.01

 

Financial Covenants

 

65

 

Section 9.02

 

Debt

 

66

 

Section 9.03

 

Liens

 

66

 

Section 9.04

 

Restricted Payments

 

66

 

Section 9.05

 

Investments, Loans and Advances

 

67

 

Section 9.06

 

Nature of Business

 

68

 

Section 9.07

 

Proceeds of Notes

 

68

 

Section 9.08

 

ERISA Compliance

 

69

 

Section 9.09

 

Mergers, Etc.

 

69

 

Section 9.10

 

Sale of Properties

 

69

 

Section 9.11

 

Environmental Matters

 

70

 

Section 9.12

 

Transactions with Affiliates

 

70

 

Section 9.13

 

Subsidiaries

 

70

 

Section 9.14

 

Dividend Restrictions

 

71

 

Section 9.15

 

Swap Agreement

 

71

 

 

 

 

 

 

ARTICLE X Events of Default; Remedies

 

71

 

 

 

 

 

 

 

Section 10.01

 

Events of Default

 

71

 

Section 10.02

 

Remedies

 

73

 

 

 

 

 

 

ARTICLE XI The Agents

 

74

 

 

 

 

 

 

 

Section 11.01

 

Appointment; Powers

 

74

 

Section 11.02

 

Duties and Obligations of Administrative Agent

 

74

 

Section 11.03

 

Action by Administrative Agent

 

75

 

Section 11.04

 

Reliance by Administrative Agent

 

76

 

Section 11.05

 

Subagents

 

76

 

Section 11.06

 

Resignation or Removal of Administrative Agent

 

76

 

Section 11.07

 

Agents as Lenders

 

77

 

Section 11.08

 

No Reliance

 

77

 

Section 11.09

 

Administrative Agent May File Proofs of Claim

 

77

 

Section 11.10

 

The Arrangers, the Syndication Agents and the Documentation Agents

 

78

 

 

 

 

 

 

ARTICLE XII Miscellaneous

 

78

 

 

 

 

 

 

 

Section 12.01

 

Notices

 

78

 

Section 12.02

 

Waivers; Amendments

 

79

 

Section 12.03

 

Expenses, Indemnity; Damage Waiver

 

80

 

Section 12.04

 

Successors and Assigns

 

82

 

Section 12.05

 

Survival; Revival; Reinstatement

 

86

 

Section 12.06

 

Counterparts; Integration; Effectiveness

 

86

 

Section 12.07

 

Severability

 

87

 

Section 12.08

 

Right of Setoff

 

87

 

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Section 12.09

 

GOVERNING LAW; JURISDICTION; CONSENT TO SERVICE OF PROCESS

 

87

 

Section 12.10

 

Headings

 

88

 

Section 12.11

 

Confidentiality

 

88

 

Section 12.12

 

Interest Rate Limitation

 

89

 

Section 12.13

 

EXCULPATION PROVISIONS

 

90

 

Section 12.14

 

No Third Party Beneficiaries

 

90

 

Section 12.15

 

Pari Passu Obligations

 

90

 

Section 12.16

 

USA Patriot Act Notice

 

90

 

iv

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Annexes, Exhibits and Schedules

 

Annex I

 

List of Maximum Credit Amounts

 

 

 

Exhibit A

 

Form of Note

Exhibit B

 

Form of Borrowing Request

Exhibit C

 

Form of Interest Election Request

Exhibit D

 

Form of Compliance Certificate

Exhibit E

 

Form of Legal Opinion of Holme, Roberts & Owen LLP, special counsel to the
Borrower

Exhibit F

 

Form of Guaranty Agreement

Exhibit G

 

Form of Assignment and Assumption

Exhibit H

 

Form of Reserve Report Certificate

Exhibit I

 

Form of Tax Certificate

 

 

 

Schedule 1.01

 

Existing Letters of Credit

Schedule 7.05

 

Litigation

Schedule 7.06

 

Environmental Matters

Schedule 7.10

 

ERISA

Schedule 7.13

 

Subsidiaries and Partnerships

Schedule 7.16

 

Gas Imbalances

Schedule 7.17

 

Marketing Contracts

Schedule 7.18

 

Swap Agreements

Schedule 9.05

 

Investments

 

v

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THIS CREDIT AGREEMENT dated as of July 14, 2011 is among: Cimarex Energy Co., a
Delaware corporation (the “Borrower”); each of the Lenders from time to time
party hereto; JPMorgan Chase Bank, N.A. (in its individual capacity,
“JPMorgan”), as administrative agent for the Lenders (in such capacity, together
with its successors in such capacity, the “Administrative Agent”); Wells Fargo
Bank, N.A. and Deutsche Bank Securities, Inc., as Co-Syndication Agents for the
Lenders (in such capacity, together with their successors in such capacity, the
“Syndication Agents”); and Union Bank, N.A. and BBVA Compass Bank, as
Co-Documentation Agents for the Lenders (in such capacity, together with their
successors in such capacity, the “Documentation Agents”).

 

R E C I T A L S

 

A.            The Borrower has requested that the Lenders provide certain loans
to and extensions of credit on behalf of the Borrower.

 

B.            The Lenders have agreed to make such loans and extensions of
credit subject to the terms and conditions of this Agreement.

 

C.            In consideration of the mutual covenants and agreements herein
contained and of the loans, extensions of credit and commitments hereinafter
referred to, the parties hereto agree as follows:

 

ARTICLE I

Definitions and Accounting Matters

 

Section 1.01           Terms Defined Above.  As used in this Agreement, each
term defined above has the meaning indicated above.

 

Section 1.02           Certain 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.

 

“Adjusted LIBO 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 the LIBO Rate for such Interest Period multiplied
by the Statutory Reserve Rate.

 

“Administrative Questionnaire” means an Administrative Questionnaire in a form
supplied by the Administrative Agent.

 

“Affected Loans” has the meaning assigned such term in Section 5.05.

 

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

 

1

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“Agents” means, collectively, the Administrative Agent, the Syndication Agents
and the Documentation Agents; and “Agent” shall mean either the Administrative
Agent, the individual Syndication Agents or the individual Documentation Agents,
as the context requires.

 

“Aggregate Maximum Credit Amounts” at any time shall equal the sum of the
Maximum Credit Amounts, as the same may be reduced or terminated pursuant to
Section 2.06.

 

“Agreement” means this Credit Agreement, as the same may from time to time be
amended, modified, supplemented or restated.

 

“Alternate Base Rate” means, for any day, a rate per annum equal to the greatest
of (a) the Prime Rate in effect on such day, (b) the Federal Funds Effective
Rate in effect on such day plus ½ of 1.0% and (c) the Adjusted LIBO Rate for a
one month Interest Period on such day (or if such day is not a Business Day, the
immediately preceding Business Day) plus 1.0%.  Any change in the Alternate Base
Rate due to a change in the Prime Rate, the Federal Funds Effective Rate or the
Adjusted LIBO Rate shall be effective from and including the effective date of
such change in the Prime Rate, the Federal Funds Effective Rate or the Adjusted
LIBO Rate, respectively.

 

“Applicable Margin” means, for any day, with respect to any ABR Loan or
Eurodollar Loan, as the case may be, the rate per annum set forth in the
Applicable Margin Grid below based upon the Leverage Ratio then in effect:

 

Applicable Margin Grid

 

Leverage Ratio

 

< 1.0

 

> 1.0, but < 2.0

 

> 2.0, but < 3.0

 

> 3.0

 

ABR Loans

 

0.75%

 

1.00%

 

1.25%

 

1.50%

 

Eurodollar Loans

 

1.75%

 

2.00%

 

2.25%

 

2.50%

 

 

The Leverage Ratio for purposes of determining the Applicable Margin shall be
calculated as of each date based upon Total Debt as of such day to EBITDA for
the most recently ended period of four fiscal quarters for which financial
statements are then available.  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.  If
the Borrower fails to deliver the annual or quarterly financial statements
required to be delivered by it pursuant to Section 8.01(a) or (b), then
effective as of the date such financial statements were required to be
delivered, the Leverage Ratio shall be deemed to be greater than 3.0 and shall
remain at such level until such financial statements are so delivered.  In the
event that any financial statement delivered is shown to be inaccurate when
delivered (regardless of whether this Agreement or the Commitments are in effect
when such inaccuracy is discovered, but in no event more than two years after
the date of such delivery) and such inaccuracy, if corrected, would have led to
the application of a higher Applicable Margin for any period (an “Applicable
Period”) than the Applicable Margin applied for such Applicable Period, then the
Borrower shall immediately (i) deliver to the Administrative Agent corrected

 

2

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financial statements for such Applicable Period, (ii) determine the Applicable
Margin for such Applicable Period based upon the corrected financial statements
and (iii) immediately pay to the Administrative Agent for the account of the
Lenders the accrued additional interest (after giving effect to any credits
resulting from a lower Applicable Margin in other affected periods) owing as a
result of such increased Applicable Margin for such Applicable Period.

 

“Applicable Percentage” means, with respect to any Lender, the percentage of the
Aggregate Maximum Credit Amounts represented by such Lender’s Maximum Credit
Amount as such percentage is set forth on Annex I; provided that if the
Commitments have terminated or expired, the Applicable Percentages shall be
determined based upon Commitments most recently in effect.

 

“Approved Counterparty” means (a) any Lender or any Affiliate of a Lender and,
(b) any other Person whose long term senior unsecured debt rating is A-/A3 by
S&P or Moody’s (or their equivalent) or higher.

 

“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) an Affiliate of a Lender or (c) an entity or an
Affiliate of an entity that administers or manages a Lender.

 

“Approved Petroleum Engineers” means (a) Netherland, Sewell & Associates, Inc.,
(b) Ryder Scott Company Petroleum Consultants, L.P., (c) DeGolyer and
MacNaughton and (d) any other independent petroleum engineers reasonably
acceptable to the Administrative Agent.

 

“Arrangers” means J.P. Morgan Securities LLC, in its capacities as joint lead
arranger and sole bookrunner hereunder and Wells Fargo Securities, LLC, in its
capacity as joint lead arranger hereunder.

 

“Assignment and Assumption” means an assignment and assumption entered into by a
Lender and an assignee (with the consent of any party whose consent is required
by Section 12.04(b)), and accepted by the Administrative Agent, substantially in
the form of Exhibit G or any other form approved by the Administrative Agent.

 

“Availability Period” means the period from and including the Effective Date to
but excluding the Termination Date.

 

“Board” means the Board of Governors of the Federal Reserve System of the United
States of America or any successor Governmental Authority.

 

“Borrowing” means 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.

 

“Borrowing Base” means at any time an amount equal to the amount determined in
accordance with Section 2.07, as the same may be adjusted from time to time
pursuant to Sections 2.07(e) or 9.10.

 

3

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“Borrowing Base Deficiency” occurs if at any time the Total Debt exceeds the
Borrowing Base then in effect.

 

“Borrowing Base Increasing Lenders” means, at any time while no Loans or LC
Exposure are outstanding, Lenders having more than ninety-five percent (95.0%)
of the Aggregate Maximum Credit Amounts; and at any time while any Loans or LC
Exposure are outstanding, Lenders holding more than ninety-five percent (95.0%)
of the outstanding aggregate principal amount of the Loans and participation
interests in Letters of Credit (without regard to any sale by a Lender of a
participation in any Loan under Section 12.04(c)).

 

“Borrowing Base Utilization Percentage” means, as of any day, the fraction
expressed as a percentage, the numerator of which is Total Debt on such day and
the denominator of which is the Borrowing Base in effect on such day.

 

“Borrowing Request” means a request by the Borrower for a Borrowing in
accordance with Section 2.03.

 

“Business Day” means any day that is not a Saturday, Sunday or other day on
which commercial banks in New York City or Houston, Texas, are authorized or
required by law to remain closed; and if such day relates to a Borrowing or
continuation of, a payment or prepayment of principal of or interest on, or a
conversion of or into, or the Interest Period for, a Eurodollar Loan or a notice
by the Borrower with respect to any such Borrowing or continuation, payment,
prepayment, conversion or Interest Period, any day which is also a day on which
banks are open for dealings in dollar deposits in the London interbank market.

 

“Capital Leases” means, in respect of any Person, all leases which shall have
been, or should have been, in accordance with GAAP, recorded as capital leases
on the balance sheet of the Person liable (whether contingent or otherwise) for
the payment of rent thereunder.

 

“Change in Control” means (a) the acquisition of ownership, directly or
indirectly, beneficially or of record, by any Person or group (within the
meaning of the Securities Exchange Act of 1934 and the rules of the SEC
thereunder as in effect on the date hereof), of Equity Interests representing
more than 35.0% of the aggregate ordinary voting power represented by the issued
and outstanding Equity Interests of the Borrower or (b) 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 of the
Borrower nor (ii) appointed by directors so nominated.

 

“Change in Law” means (a) the adoption of any law, rule or regulation by any
Governmental Authority 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 the Issuing Bank (or, for purposes of Section 5.01(b)), by any lending
office of such Lender or by such Lender’s or the 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. Notwithstanding anything herein to the contrary, (i) the
Dodd-Frank Wall Street Reform and Consumer Protection Act and all requests,
rules, guidelines, requirements or directives

 

4

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thereunder or issued in connection therewith (whether or not having the force of
law) or in implementation thereof, and (ii) all requests, rules, regulations,
guidelines, interpretations, requirements, interpretations and directives
promulgated by the Bank for International Settlements, the Basel Committee on
Banking Supervision (or any successor or similar authority) or the United States
or foreign regulatory authorities (whether or not having the force of law), in
each case pursuant to Basel III, shall, in each case, be deemed to be a Change
in Law, regardless of the date enacted, adopted, issued or implemented.

 

“Code” means the U.S. Internal Revenue Code of 1986, as amended from time to
time, and any successor statute.

 

“Commitment” means, with respect to each Lender, the commitment of such Lender
to make Loans and to acquire participations in Letters of Credit hereunder,
expressed as an amount representing the maximum aggregate amount of such
Lender’s Revolving Credit Exposure hereunder, as such commitment may be
(a) modified from time to time pursuant to Section 2.06 and (b) modified from
time to time pursuant to assignments by or to such Lender pursuant to
Section 12.04(b).  The amount representing each Lender’s Commitment shall at any
time be the lesser of such Lender’s Maximum Credit Amount and such Lender’s
Applicable Percentage of the then effective Borrowing Base.

 

“Consolidated Net Income” means with respect to the Borrower and the
Consolidated Subsidiaries, for any period, the aggregate of the net income (or
loss) of the Borrower and the Consolidated Subsidiaries after allowances for
taxes for such period determined on a consolidated basis in accordance with
GAAP; provided that there shall be excluded from such net income (to the extent
otherwise included therein) the following: (a) the net income of any Person in
which the Borrower or any Consolidated Subsidiary has an interest (which
interest does not cause the net income of such other Person to be consolidated
with the net income of the Borrower and the Consolidated Subsidiaries in
accordance with GAAP), except to the extent of the amount of dividends or
distributions actually paid in cash during such period by such other Person to
the Borrower or to a Consolidated Subsidiary, as the case may be; (b) the net
income (but not loss) during such period of any Consolidated Subsidiary to the
extent that the declaration or payment of dividends or similar distributions or
transfers or loans by that Consolidated Subsidiary is not at the time permitted
by operation of the terms of its charter or any agreement, instrument or
Governmental Requirement applicable to such Consolidated Subsidiary or is
otherwise restricted or prohibited, in each case determined in accordance with
GAAP; (c) any extraordinary non-cash gains or losses during such period and
(d) any gains or losses attributable to writeups or writedowns of assets,
including ceiling test writedowns; and provided further that if the Borrower or
any Consolidated Subsidiary shall acquire or dispose of any Property during such
period, then Consolidated Net Income shall be calculated after giving pro forma
effect to such acquisition or disposition in accordance with GAAP, as if such
acquisition, disposition or redesignation had occurred on the first day of such
period.

 

“Consolidated Subsidiaries” means each Subsidiary of the Borrower (whether now
existing or hereafter created or acquired) the financial statements of which
shall be (or should have been) consolidated with the financial statements of the
Borrower in accordance with GAAP.

 

5

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“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.  For the
purposes of this definition, and without limiting the generality of the
foregoing, any Person that owns directly or indirectly 10% or more of the Equity
Interests having ordinary voting power for the election of the directors or
other governing body of a Person (other than as a limited partner of such other
Person) will be deemed to “control” such other Person.  “Controlling” and
“Controlled” have meanings correlative thereto.

 

“Credit Party” means the Borrower and each Guarantor.

 

“Debt” means, for any Person, the sum of the following (without duplication):
(a) all obligations of such Person for borrowed money or evidenced by bonds,
bankers’ acceptances, debentures, notes or other similar instruments; (b) all
obligations of such Person (whether contingent or otherwise) in respect of
letters of credit, surety or other bonds and similar instruments; (c) all
accounts payable and all accrued expenses, liabilities or other obligations of
such Person to pay the deferred purchase price of Property or services; (d) all
obligations under Capital Leases; (e) all obligations under Synthetic Leases;
(f) all Debt (as defined in the other clauses of this definition) of others
secured by (or for which the holder of such Debt has an existing right,
contingent or otherwise, to be secured by) a Lien on any Property of such
Person, whether or not such Debt is assumed by such Person; (g) all Debt (as
defined in the other clauses of this definition) of others guaranteed by such
Person or in which such Person otherwise assures a creditor against loss of the
Debt (howsoever such assurance shall be made) to the extent of the lesser of the
amount of such Debt and the maximum stated amount of such guarantee or assurance
against loss; (h) all obligations or undertakings of such Person to maintain or
cause to be maintained the financial position or covenants of others or to
purchase the Debt or Property of others; (i) obligations to deliver commodities,
goods or services, including, without limitation, Hydrocarbons, in consideration
of one or more advance payments, other than gas balancing arrangements in the
ordinary course of business; (j) obligations to pay for goods or services even
if such goods or services are not actually received or utilized by such Person;
(k) any Debt of a partnership for which such Person is liable either by
agreement, by operation of law or by a Governmental Requirement but only to the
extent of such liability; (l) Disqualified Capital Stock; and (m) the
undischarged balance of any production payment created by such Person or for the
creation of which such Person directly or indirectly received payment.  The Debt
of any Person shall include all obligations of such Person of the character
described above to the extent such Person remains legally liable in respect
thereof notwithstanding that any such obligation is not included as a liability
of such Person under GAAP.

 

“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.

 

“Defaulting Lender” means any Lender, as reasonably determined by the
Administrative Agent, that has (a) failed to fund any portion of its Loans or
participations in Letters of Credit within three Business Days of the date
required to be funded by it hereunder, unless in the case of any Loan, such
Lender has notified the Administrative Agent and the Borrower in writing that
such failure is the result of such Lender’s determination that one or more
conditions precedent to funding (each of which conditions precedent, together
with any applicable default, shall be specifically identified in such writing)
has not been satisfied, (b) notified the Borrower, the

 

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Administrative Agent, the Issuing Bank or any Lender in writing that it does not
intend to comply with any of its funding obligations under this Agreement or has
made a public statement to the effect that it does not intend to comply with its
funding obligations under this Agreement (unless such writing or public
statement relates to such Lender’s obligation to fund a Loan hereunder and
states that such position is based on such Lender’s determination that a
condition precedent to funding (which condition precedent, together with any
applicable default, shall be specifically identified in such writing or public
statement) cannot be satisfied), (c) failed, within three Business Days after
request by the Administrative Agent, to confirm that it will comply with the
terms of this Agreement relating to its obligations to fund prospective Loans
and participations in then outstanding Letters of Credit (provided that such
Lender shall cease to be a Defaulting Lender pursuant to this clause (c) upon
receipt of such written confirmation by the Administrative Agent and the
Borrower), (d) otherwise failed to pay over to the Administrative Agent or any
other Lender any other amount required to be paid by it hereunder within three
Business Days of the date when due, unless the subject of a good faith dispute,
or (e) become the subject of a bankruptcy or insolvency proceeding, or has had a
receiver, conservator, trustee or custodian appointed for it, or has taken any
action in furtherance of, or indicating its consent to, approval of or
acquiescence in any such proceeding or appointment or has a parent company that
has become the subject of a bankruptcy or insolvency proceeding, or has had a
receiver, conservator, trustee or custodian appointed for it, or has taken any
action in furtherance of, or indicating its consent to, approval of or
acquiescence in any such proceeding or appointment; provided that a Lender shall
not be a Defaulting Lender solely by virtue of an Undisclosed Administration or
the control, ownership or acquisition of any equity interest in that Lender or
any direct or indirect parent company thereof by a governmental authority so
long as such Undisclosed Administration or ownership interest does not result in
or provide such Lender with immunity from the jurisdiction of courts within the
United States or from the enforcement of judgments or writs of attachment on its
assets or permit such Lender (or such governmental authority or regulatory body
or appointed Person) to reject, repudiate, disavow or disaffirm any contracts or
agreements made with such Lender.

 

“Disqualified Capital Stock” means any Equity Interest that, by its terms (or by
the terms of any security into which it is convertible or for which it is
exchangeable) or upon the happening of any event, matures or is mandatorily
redeemable for any consideration other than other Equity Interests (which would
not constitute Disqualified Capital Stock), pursuant to a sinking fund
obligation or otherwise, or is convertible or exchangeable for Debt or
redeemable for any consideration other than other Equity Interests (which would
not constitute Disqualified Capital Stock) at the option of the holder thereof,
in whole or in part, on or prior to the date that is one year after the earlier
of (a) the Maturity Date and (b) the date on which there are no Loans, LC
Exposure or other obligations hereunder outstanding and all of the Commitments
are terminated.

 

“dollars” or “$” refers to lawful money of the United States of America.

 

“Domestic Subsidiary” means any Subsidiary that is organized under the laws of
the United States of America or any state thereof or the District of Columbia.

 

“EBITDA” means, for any period, the sum of Consolidated Net Income for such
period plus the following expenses or charges to the extent deducted from
Consolidated Net Income in

 

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such period: interest, income taxes, depreciation, depletion, amortization and
other similar noncash charges, minus all noncash income added to Consolidated
Net Income.

 

“Effective Date” means the date on which the conditions specified in
Section 6.01 are satisfied (or waived in accordance with Section 12.02).

 

“Engineering Reports” has the meaning assigned such term in Section 2.07(c)(i).

 

“Environmental Laws” means any and all Governmental Requirements pertaining in
any way to health, safety, the environment, the preservation or reclamation of
natural resources, or the management, Release or threatened Release of any
Hazardous Materials, in effect in any and all jurisdictions in which the
Borrower or any Subsidiary is conducting, or at any time has conducted,
business, or where any Property of the Borrower or any Subsidiary is located,
including, the Oil Pollution Act of 1990 (“OPA”), as amended, the Clean Air Act,
as amended, the Comprehensive Environmental, Response, Compensation, and
Liability Act of 1980 (“CERCLA”), as amended, 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 Law, as amended, and other
environmental conservation or protection Governmental Requirements.

 

“Environmental Permit” means any permit, registration, license, notice,
approval, consent, exemption, variance, or other authorization required under or
issued pursuant to applicable Environmental Laws.

 

“Equity Interests” means shares of capital stock, partnership interests,
membership interests in a limited liability company, beneficial interests in a
trust or other equity ownership interests in a Person, and any warrants, options
or other rights entitling the holder thereof to purchase or acquire any such
Equity Interest (other than any Debt security which by its terms is convertible
at the option of the holder into Equity Interests).

 

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended,
and any successor statute.

 

“ERISA Affiliate” means each trade or business (whether or not incorporated)
which together with the Borrower or a Subsidiary would be deemed to be a “single
employer” within the meaning of section 4001(b)(1) of ERISA or subsections (b),
(c), (m) or (o) of section 414 of the Code.

 

“Eurodollar”, 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 Adjusted LIBO Rate.

 

“Event of Default” has the meaning assigned such term in Section 10.01.

 

“Excepted Liens” means:  (a) Liens for Taxes, assessments or other governmental
charges or levies which are not delinquent or which are being contested in good
faith by

 

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appropriate action and for which adequate reserves have been maintained in
accordance with GAAP; (b) Liens in connection with workers’ compensation,
unemployment insurance or other social security, old age pension or public
liability obligations 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; (c) statutory landlord’s liens, operators’,
vendors’, carriers’, warehousemen’s, repairmen’s, mechanics’, suppliers’,
workers’, materialmen’s, construction, customs authorities or other like Liens
arising by operation of law in the ordinary course of business or incident to
the exploration, development, operation and maintenance of Oil and Gas
Properties each of which is in respect of obligations that 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; (d) contractual
Liens which 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
does not materially impair the use of the Property covered by such Lien for the
purposes for which such Property is held by the Borrower or any Subsidiary or
materially impair the value of such Property subject thereto; (e) 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, provided that no such deposit account is a dedicated cash
collateral account or is subject to restrictions against access by the depositor
in excess of those set forth by regulations promulgated by the Board and no such
deposit account is intended by the Borrower or any of its Subsidiaries to
provide collateral to the depository institution; (f) easements, restrictions,
servitudes, permits, conditions, covenants, exceptions or reservations in any
Property of the Borrower or any Subsidiary for the purpose of roads, pipelines,
transmission lines, transportation lines, distribution lines for the removal of
gas, oil, coal or other minerals or timber, and other like purposes, or for the
joint or common use of real estate, rights of way, facilities and equipment,
that do not secure any monetary obligations and which in the aggregate do not
materially impair the use of such Property for the purposes of which such
Property is held by the Borrower or any Subsidiary or materially impair the
value of such Property subject thereto; (g) Liens on cash or securities pledged
to secure performance of tenders, surety and appeal bonds, government contracts,
performance and return of money bonds, bids, trade contracts, leases, statutory
obligations, regulatory obligations and other obligations of a like nature
incurred in the ordinary course of business and (h) judgment and attachment
Liens not giving rise to an Event of Default, provided that any appropriate
legal proceedings which may have been duly initiated for the review of such
judgment shall not have been finally terminated or the period within which such
proceeding may be initiated shall not have expired and no action to enforce such
Lien has been commenced; and no intention to subordinate the first priority Lien

 

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granted in favor of the Administrative Agent and the Lenders is to be hereby
implied or expressed by the permitted existence of Excepted Liens.

 

“Excluded Taxes” means, with respect to the Administrative Agent, any Lender,
the Issuing Bank or any other recipient of any payment to be made by or on
account of any obligation of the Borrower or any Guarantor hereunder or under
any other Loan Document, (a) income or franchise taxes imposed on (or measured
by) its net income (however denominated), or branch profits (or similar taxes)
imposed by a jurisdiction under the laws of which such recipient is organized or
is resident or in which its principal office is located or, in the case of any
Lender, in which its applicable lending office is located, (b) in the case of a
Foreign Lender or Foreign Issuing Bank (other than an assignee pursuant to a
request by the Borrower under Section 5.04(a)), any withholding tax imposed by
the United States or any jurisdiction described in clause (a) above that is
imposed on amounts payable to such Foreign Lender or Foreign Issuing Bank at the
time such Foreign Lender or Foreign Issuing Bank becomes a party to this
Agreement (or designates a new lending office) or is attributable to such
Foreign Lender’s or Foreign Issuing Bank’s failure to comply with
Section 5.03(e), except to the extent that such Foreign Lender or Foreign
Issuing Bank (or its assignor, if any) was entitled, at the time of designation
of a new lending office (or assignment), to receive additional amounts with
respect to such withholding tax pursuant to Section 5.03(a) or Section 5.03(c),
and (c) any taxes imposed pursuant to FATCA.

 

“Existing Credit Agreement” means that certain Credit Agreement dated as of
April 14, 2009 (as amended, supplemented or modified), among the Borrower, the
lenders party thereto, and JPMorgan, as administrative agent thereunder.

 

“Existing Letter of Credit” means the letters of credit issued under the
Existing Credit Agreement listed on Schedule 1.01.

 

“Existing Senior Notes” means the following senior unsecured notes issued by the
Borrower:  those certain $350.0 million 7.125% Senior Notes due 2017.

 

“FATCA” means Sections 1471 through 1474 of the Code as of the date hereof, any
substantially similar amendments or successor statutes and any current or future
regulations or official interpretations thereof.

 

“Fee Letters” means those certain letter agreements dated June 8, 2011 between
the Borrower, Administrative Agent and Arrangers related to the payment of
certain fees by the Borrower.

 

“Federal Funds Effective Rate” means, for any day, the weighted average (rounded
upwards, if necessary, to the next 1/100 of 1%) of the rates on overnight
Federal funds transactions with members of the Federal Reserve System arranged
by Federal funds brokers, as published on the next succeeding Business Day by
the Federal Reserve Bank of New York, or, if such rate is not so published for
any day that is a Business Day, the average (rounded upwards, if necessary, to
the next 1/100 of 1%) of the quotations for such day for such transactions
received by the Administrative Agent from three Federal funds brokers of
recognized standing selected by it.

 

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“Financial Officer” means, for any Person, the chief financial officer,
principal accounting officer, treasurer or controller of such Person.  Unless
otherwise specified, all references herein to a Financial Officer means a
Financial Officer of the Borrower.

 

“Financial Statements” means the financial statement or statements of the
Borrower and its Consolidated Subsidiaries referred to in Section 7.04(a).

 

“Foreign Issuing Bank” means any Issuing Bank that is not a “United States
person” within the meaning of Section 7701(a)(30) of the Code.

 

“Foreign Lender” means any Lender that is not a “United States person” within
the meaning of section 7701(a)(30) of the Code.

 

“Foreign Subsidiary” means any Subsidiary that is not a Domestic Subsidiary.

 

“GAAP” means generally accepted accounting principles in the United States of
America as in effect from time to time subject to the terms and conditions set
forth in Section 1.05.

 

“Governmental Authority” means the government of the United States of America,
any other nation or any political subdivision thereof, whether state or local,
and any agency, authority, instrumentality, regulatory body, court, central bank
or other entity exercising executive, legislative, judicial, taxing, regulatory
or administrative powers or functions of or pertaining to government.

 

“Governmental Requirement” means any law, statute, code, ordinance, order,
determination, rule, regulation, judgment, decree, injunction, franchise,
permit, certificate, license, rules of common law, authorization or other
directive or requirement, whether now or hereinafter in effect, of any
Governmental Authority.

 

“Guarantors” means:

 

(a)           each Material Domestic Subsidiary, and

 

(b)           each other Domestic Subsidiary that guarantees any Senior Notes or
is otherwise required to guarantee the Indebtedness pursuant to
Section 8.13(ii).

 

“Guaranty Agreement” means an agreement executed by the Guarantors in
substantially the form of Exhibit F unconditionally guarantying on a joint and
several basis, payment of the Indebtedness, as the same may be amended, modified
or supplemented from time to time.

 

“Hazardous Material” means any substance regulated or as to which liability
might arise under any applicable Environmental Law including:  (a) any chemical,
compound, material, product, byproduct, substance or waste defined as or
included in the definition or meaning of “hazardous substance,” “hazardous
material,” “hazardous waste,” “solid waste,” “toxic waste,” “extremely hazardous
substance,” “toxic substance,” “contaminant,” “pollutant,” or words of similar
meaning or import found in any applicable Environmental Law; (b) Hydrocarbons,
petroleum products, petroleum substances, natural gas, oil, oil and gas waste,
crude oil, and any

 

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components, fractions, or derivatives thereof; and (c) radioactive materials,
explosives, asbestos or asbestos containing materials, polychlorinated
biphenyls, radon, infectious or medical wastes.

 

“Highest Lawful Rate” means, with respect to each Lender, the maximum
nonusurious interest rate, if any, that at any time or from time to time may be
contracted for, taken, reserved, charged or received on the Notes or on other
Indebtedness under laws applicable to such Lender which are presently in effect
or, to the extent allowed by law, under such applicable laws which may hereafter
be in effect and which allow a higher maximum nonusurious interest rate than
applicable laws allow as of the date hereof.

 

“Hydrocarbon Interests” means all rights, titles, interests and estates now or
hereafter acquired in and to oil and gas leases, oil, gas and mineral leases, or
other liquid or gaseous hydrocarbon leases, mineral fee interests, overriding
royalty and royalty interests, net profit interests and production payment
interests, including any reserved or residual interests of whatever nature.

 

“Hydrocarbons” means oil, gas, casinghead gas, drip gasoline, natural gasoline,
condensate, distillate, liquid hydrocarbons, gaseous hydrocarbons and all
products refined or separated therefrom.

 

“Indebtedness” means any and all amounts owing or to be owing by the Borrower,
any Subsidiary or any Guarantor (whether direct or indirect (including those
acquired by assumption), absolute or contingent, due or to become due, now
existing or hereafter arising): (a) to the Administrative Agent, the Issuing
Bank or any Lender under any Loan Document; (b) to any Lender or any Affiliate
of a Lender under any Swap Agreement between the Borrower or any Subsidiary and
such Lender or Affiliate of a Lender while such Person (or in the case of its
Affiliate, the Person affiliated therewith) is a Lender hereunder (after giving
effect to all netting agreements relating to such Swap Agreements),
(c) obligations under all Treasury Management Agreements with Lenders or
Affiliates of Lenders while such Person (or in the case of its Affiliate, the
Person affiliated therewith) is a Lender hereunder and (d) all renewals,
extensions and/or rearrangements of any of the above.

 

“Indemnified Taxes” means Taxes other than Excluded Taxes.

 

“Indemnitee” has the meaning assigned to such term in Section 12.03(b).

 

“Indentures” means, collectively, the indentures, supplemental indentures or
other agreements under or pursuant to which the Senior Notes are issued
including, without limitation, that certain Indenture dated as of May 1, 2007 by
Borrower, as Issuer and U.S. Bank National Association, as Trustee.

 

“Information Memorandum” means the Confidential Information Memorandum dated
June 21, 2011 relating to the Borrower and the Transactions.

 

“Initial Reserve Report” means the report of DeGolyer and MacNaughton dated as
of February 25, 2011 with respect to certain Oil and Gas Properties of the
Borrower and its Subsidiaries as of December 31, 2010.

 

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“Interest Election Request” means a request by the Borrower to convert or
continue a Borrowing in accordance with Section 2.04.

 

“Interest Expense” means, for any period, the sum (determined without
duplication) of the aggregate gross interest expense of the Borrower and the
Consolidated Subsidiaries for such period, including to the extent included in
interest expense under GAAP:  (a) amortization of debt discount, (b) capitalized
interest and (c) the portion of any payments or accruals under Capital Leases
allocable to interest expense, plus the portion of any payments or accruals
under Synthetic Leases allocable to interest expense whether or not the same
constitutes interest expense under GAAP.

 

“Interest Payment Date” means (a) with respect to any ABR Loan, the last day of
each March, June, September and December and (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 months’ duration, each day prior to the last day of
such Interest Period that occurs at intervals of three months’ duration after
the first day of such Interest Period.

 

“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 in the calendar month that is one, two, three or six months
(or, with the consent of each Lender, 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 and (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.  For purposes hereof, the date
of a 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.

 

“Interim Redetermination” has the meaning assigned such term in Section 2.07(b).

 

“Interim Redetermination Date” means the date on which a Borrowing Base that has
been redetermined pursuant to an Interim Redetermination becomes effective as
provided in Section 2.07(d).

 

“Investment” means, for any Person: (a) the acquisition (whether for cash,
Property, services or securities or otherwise) of Equity Interests of any other
Person or any agreement to make any such acquisition (including, without
limitation, any “short sale” or any sale of any securities at a time when such
securities are not owned by the Person entering into such short sale); (b) the
making of any deposit with, or advance, loan or capital contribution to,
assumption of Debt of, purchase or other acquisition of any other Debt or equity
participation or interest in, or other extension of credit to, any other Person
(including the purchase of Property from another Person subject to an
understanding or agreement, contingent or otherwise, to resell such Property to
such Person, but excluding any such advance, loan or extension of credit having
a term not

 

13

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exceeding ninety (90) days representing the purchase price of inventory or
supplies sold by such Person in the ordinary course of business); (c) the
purchase or acquisition (in one or a series of transactions) of Property of
another Person that constitutes a business unit or (d) the entering into of any
guarantee of, or other contingent obligation (including the deposit of any
Equity Interests to be sold) with respect to, Debt or other liability of any
other Person and (without duplication) any amount committed to be advanced, lent
or extended to such Person.

 

“IRS” means the U.S. Internal Revenue Service.

 

“Issuing Bank” means JPMorgan or Wells Fargo Bank, N.A., as the case may be, in
its capacity as the issuer of Letters of Credit hereunder.  The Issuing Bank
may, in its discretion, arrange for one or more Letters of Credit to be issued
by Affiliates of the Issuing Bank, in which case the term “Issuing Bank” shall
include any such Affiliate with respect to Letters of Credit issued by such
Affiliate.

 

“Krug Litigation” means the lawsuit filed in the Tulsa County District Court in
the matter H.B. Krug et. al. vs. Helmerich & Payne, Inc., and the judgment
rendered against the Borrower (having assumed the liabilities of Helmericah &
Payne, Inc.), in the approximate amount of $140,000,000, together with interest
and related litigation expenses.

 

“LC Commitment” at any time means Eighty Million dollars ($80,000,000).

 

“LC Disbursement” means a payment made by the 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 total LC Exposure at such time.

 

“Lenders” means the Persons listed on Annex I and any Person that shall have
become a party hereto pursuant to an Assignment and Assumption, other than any
such Person that ceases to be a party hereto pursuant to an Assignment and
Assumption.

 

“Letter of Credit” means any Existing Letter of Credit or any letter of credit
issued pursuant to this Agreement.

 

“Letter of Credit Agreements” means all letter of credit applications and other
agreements (including any amendments, modifications or supplements thereto)
submitted by the Borrower, or entered into by the Borrower, with the Issuing
Bank relating to any Letter of Credit.

 

“Leverage Ratio” means, for any date, the ratio of Total Debt as of such time to
EBITDA for the four fiscal quarters ending on the last day of the fiscal quarter
immediately preceding the date of determination for which financial statements
are available.

 

“LIBO Rate” means, with respect to any Eurodollar Borrowing for any Interest
Period, the rate (rounded upwards, if necessary, to the next 1/100 of 1%)
appearing on Reuters Screen

 

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LIBOR01 Page (or on any successor or substitute page of such service, or any
successor to or substitute for such service, providing rate quotations
comparable to those currently provided on such page of such service, as
determined by the Administrative Agent from time to time for purposes of
providing quotations of interest rates applicable to dollar deposits in the
London interbank market) at approximately 11:00 a.m., London time, two Business
Days prior to the commencement of such Interest Period, as the rate for dollar
deposits with a maturity comparable to such Interest Period.  In the event that
such rate is not available at such time for any reason, then the “LIBO Rate”
with respect to such Eurodollar Borrowing for such Interest Period shall be the
rate (rounded upwards, if necessary, to the next 1/100 of 1%) at which dollar
deposits of an amount comparable to such Eurodollar Borrowing and for a maturity
comparable to such Interest Period are offered by the principal London office of
the Administrative Agent in immediately available funds in the London interbank
market at approximately 11:00 a.m., London time, two Business Days prior to the
commencement of such Interest Period.

 

“Lien” means any interest in Property securing an obligation owed to, or a claim
by, a Person other than the owner of the Property, whether such interest is
based on the common law, statute or contract, and whether such obligation or
claim is fixed or contingent, and including but not limited to (a) the lien or
security interest arising from a mortgage, encumbrance, pledge, security
agreement, conditional sale or trust receipt or a lease, consignment or bailment
for security purposes or (b) production payments and the like payable out of Oil
and Gas Properties.  The term “Lien” shall include easements, restrictions,
servitudes, permits, conditions, covenants, exceptions or reservations. For the
purposes of this Agreement, the Borrower and its Subsidiaries shall be deemed to
be the owner of any Property which it has acquired or holds subject to a
conditional sale agreement, or leases under a financing lease or other
arrangement pursuant to which title to the Property has been retained by or
vested in some other Person in a transaction intended to create a financing.

 

“Loan Documents” means this Agreement, the Notes, if any, the Fee Letters, the
Letter of Credit Agreements, the Letters of Credit, and the Guaranty Agreement.

 

“Loans” means the loans made by the Lenders to the Borrower pursuant to this
Agreement.

 

“Majority Lenders” means, at any time while no Loans or LC Exposure are
outstanding, Lenders having more than fifty percent (50.0%) of the Aggregate
Maximum Credit Amounts; and at any time while any Loans or LC Exposure are
outstanding, Lenders holding more than fifty percent (50.0%) of the outstanding
aggregate principal amount of the Loans and participation interests in Letters
of Credit (without regard to any sale by a Lender of a participation in any Loan
under Section 12.04(c)).

 

“Material Adverse Effect” means a material adverse change in, or material
adverse effect on (a) the business, operations, Property, condition (financial
or otherwise) or prospects of the Borrower and the Subsidiaries taken as a
whole, (b) the ability of the Borrower or any Guarantor to perform any of its
obligations under any Loan Document to which it is a party, (c) the validity or
enforceability of any Loan Document or (d) the rights and remedies of or
benefits available to the Administrative Agent, any other Agent, the Issuing
Bank or any Lender under any Loan Document, but, to the extent not resulting in
an Event of Default under Section 10.01(k), shall

 

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exclude the entry of any final, non-appealable order or judgment in the Krug
Litigation and the payment of such judgment.

 

“Material Domestic Subsidiary” means, as of any date, any Domestic Subsidiary
that (a) is a Wholly-Owned Subsidiary and (b) together with its Subsidiaries,
owns Property which represents more than 3% of the consolidated assets of the
Borrower and its Subsidiaries or property which is responsible for more than 3%
of the consolidated net sales or of the consolidated net income of the Borrower
and its Subsidiaries, in each case, as would be shown in the consolidated
financial statements of the Borrower and its Subsidiaries as at the beginning of
the twelve-month period ending with the month in which such determination is
made (or if financial statements have not been delivered hereunder for that
month which begins the twelve-month period, then the financial statements
delivered hereunder for the quarter ending immediately prior to that month).

 

“Material Indebtedness” means Debt (other than the Loans and Letters of Credit),
or obligations in respect of one or more Swap Agreements, of any one or more of
the Borrower and any Subsidiary in an aggregate principal amount exceeding
$50,000,000.  For purposes of determining Material Indebtedness, the “principal
amount” of the obligations of the Borrower or any Subsidiary in respect of any
Swap Agreement at any time shall be the Swap Termination Value.

 

“Maturity Date” means July 14, 2016.

 

“Maximum Credit Amount” means, as to each Lender, the amount set forth opposite
such Lender’s name on Annex I under the caption “Maximum Credit Amounts”, as the
same may be (a) reduced or terminated from time to time in connection with a
reduction or termination of the Aggregate Maximum Credit Amounts pursuant to
Section 2.06(b), (b) modified from time to time pursuant to any assignment
permitted by Section 12.04(b).

 

“Moody’s” means Moody’s Investors Service, Inc. and any successor thereto that
is a nationally recognized rating agency.

 

“Mortgaged Property” means any Property owned by the Borrower or any Guarantor
which is subject to the Liens existing and to exist under the terms of the
Security Instruments.

 

“New Borrowing Base Notice” has the meaning assigned such term in
Section 2.07(d).

 

“Non-Defaulting Lender” means, at any time, each Lender that is not a Defaulting
Lender at such time.

 

“Notes” means the promissory notes of the Borrower described in
Section 2.02(d) and being substantially in the form of Exhibit A, together with
all amendments, modifications, replacements, extensions and rearrangements
thereof.

 

“Oil and Gas Properties” means (a) Hydrocarbon Interests; (b) the Properties now
or hereafter pooled or unitized with Hydrocarbon Interests; (c) 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

 

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Governmental Authority) which may affect all or any portion of the Hydrocarbon
Interests; (d) all operating agreements, contracts and other agreements,
including production sharing contracts and agreements, which relate to any of
the Hydrocarbon Interests or the production, sale, purchase, exchange or
processing of Hydrocarbons from or attributable to such Hydrocarbon Interests;
(e) all Hydrocarbons in and under and which may be produced and saved or
attributable to the Hydrocarbon Interests, including all oil in tanks, and all
rents, issues, profits, proceeds, products, revenues and other incomes from or
attributable to the Hydrocarbon Interests; (f) all tenements, hereditaments,
appurtenances and Properties in any manner appertaining, belonging, affixed or
incidental to the Hydrocarbon Interests and (g) all Properties, rights, titles,
interests and estates described or referred to above, including any and all
Property, real or personal, now owned or hereinafter acquired and situated upon,
used, held for use or useful in connection with the operating, working or
development of any of such Hydrocarbon Interests or Property (excluding drilling
rigs, automotive equipment, rental equipment or other personal Property which
may be on such premises for the purpose of drilling a well or for other similar
temporary uses) and including any and all oil wells, gas wells, injection wells
or other wells, buildings, structures, fuel separators, liquid extraction
plants, plant compressors, pumps, pumping units, field gathering systems, tanks
and tank batteries, fixtures, valves, fittings, machinery and parts, engines,
boilers, meters, apparatus, equipment, appliances, tools, implements, cables,
wires, towers, casing, tubing and rods, surface leases, rights-of-way, easements
and servitudes together with all additions, substitutions, replacements,
accessions and attachments to any and all of the foregoing.

 

“Organizational Documents” means, with respect to any Person, (a) in the case of
any corporation, the certificate of incorporation and by-laws (or similar
documents) of such Person, (b) in the case of any limited liability company, the
certificate of formation and limited liability company agreement (or similar
documents) of such Person, (c) in the case of any limited partnership, the
certificate of formation and limited partnership agreement (or similar
documents) of such Person, (d) in the case of any general partnership, the
partnership agreement (or similar document) of such Person and (e) in any other
case, the functional equivalent of the foregoing.

 

“Other Taxes” means any and all present or future stamp or documentary taxes or
any other excise or Property taxes, charges or similar levies imposed by any
Governmental Authority arising from any payment made hereunder or from the
execution, delivery or enforcement of, or otherwise with respect to, this
Agreement and any other Loan Document.

 

“Participant” has the meaning set forth in Section 12.04(c)(i).

 

“Participant Register” has the meaning set forth in Section 12.04(c)(ii).

 

“Permitted Refinancing Debt” means Debt (for purposes of this definition, “new
Debt”) incurred in exchange for, or proceeds of which are used to refinance, all
of any other Debt (the “Refinanced Debt”); provided that (a) such new Debt is in
an aggregate principal amount not in excess of the sum of (i) the aggregate
principal amount then outstanding of the Refinanced Debt (or, if the Refinanced
Debt is exchanged or acquired for an amount less than the principal amount
thereof to be due and payable upon a declaration of acceleration thereof, such
lesser amount) and (ii) an amount necessary to pay any fees and expenses,
including premiums, related

 

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to such exchange or refinancing; (b) such new Debt has a stated maturity no
earlier than the stated maturity of the Refinanced Debt and an average life no
shorter than the average life of the Refinanced Debt; (c) such new Debt has a
market rate of interest; (d) such new Debt is governed by an indenture, loan
agreement, credit agreement or similar document, and related documentation
containing customary terms and conditions for Debt of its type or like tenor and
amount, reasonably satisfactory to the Administrative Agent and (e) if the
Refinanced Debt is subordinated in right of payment to the Indebtedness, such
new Debt (and any guarantees thereof) is subordinated in right of payment to the
Indebtedness (or, if applicable, the Guaranty Agreement) to at least the same
extent as the Refinanced Debt and is otherwise subordinated on terms
substantially the same as those in the Refinanced Debt or otherwise reasonably
satisfactory to the Administrative Agent.

 

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

 

“Plan” means any employee pension benefit plan, as defined in section 3(2) of
ERISA, which (a) is currently or hereafter sponsored, maintained or contributed
to by the Borrower, a Subsidiary or an ERISA Affiliate or (b) was at any time
during the six calendar years preceding the date hereof, sponsored, maintained
or contributed to by the Borrower or a Subsidiary or an ERISA Affiliate.

 

“Prime Rate” means the rate of interest per annum publicly announced from time
to time by the Administrative Agent as its prime rate in effect at its principal
office in New York City; each change in the Prime Rate shall be effective from
and including the date such change is publicly announced as being effective. 
Such rate is set by the Administrative Agent as a general reference rate of
interest, taking into account such factors as the Administrative Agent may deem
appropriate; it being understood that many of the Administrative Agent’s
commercial or other loans are priced in relation to such rate, that it is not
necessarily the lowest or best rate actually charged to any customer and that
the Administrative Agent may make various commercial or other loans at rates of
interest having no relationship to such rate.

 

“Property” means any interest in any kind of property or asset, whether real,
personal or mixed, or tangible or intangible, including, without limitation,
cash, securities, accounts and contract rights.

 

“Proposed Borrowing Base” has the meaning assigned to such term in
Section 2.07(c)(i).

 

“Proposed Borrowing Base Notice” has the meaning assigned to such term in
Section 2.07(c)(ii).

 

“Redemption” means with respect to any Debt, the repurchase, redemption,
prepayment, repayment, defeasance or any other acquisition or retirement for
value (or the segregation of funds with respect to any of the foregoing) of such
Debt.  “Redeem” has the correlative meaning thereto.

 

“Redetermination Date” means, with respect to any Scheduled Redetermination or
any Interim Redetermination, the date that the redetermined Borrowing Base
related thereto becomes effective pursuant to Section 2.07(d).

 

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“Refinanced Debt” has the meaning assigned such term in the definition of
“Permitted Refinancing Debt”.

 

“Register” has the meaning assigned such term in Section 12.04(b)(iv).

 

“Regulation D” means Regulation D of the Board, as the same may be amended,
supplemented or replaced from time to time.

 

“Related Parties” means, with respect to any specified Person, such Person’s
Affiliates and the respective directors, officers, employees, agents and
advisors (including attorneys, accountants and experts) of such Person and such
Person’s Affiliates.

 

“Release” means any depositing, spilling, leaking, pumping, pouring, placing,
emitting, discarding, abandoning, emptying, discharging, migrating, injecting,
escaping, leaching, dumping, or disposing.

 

“Remedial Work” has the meaning assigned such term in Section 8.10(a).

 

“Required Lenders” means, at any time while no Loans or LC Exposure are
outstanding, Lenders having at least sixty-six and two-thirds percent (66-2/3%)
of the Aggregate Maximum Credit Amounts; and at any time while any Loans or LC
Exposure are outstanding, Lenders holding at least sixty-six and two-thirds
percent (66-2/3%) of the outstanding aggregate principal amount of the Loans or
participation interests in such Letters of Credit (without regard to any sale by
a Lender of a participation in any Loan under Section 12.04(c)).

 

“Reserve Report” means a report, in form and substance reasonably satisfactory
to the Administrative Agent, setting forth, as of each January 1st (or such
other date in the event of an Interim Redetermination) the oil and gas reserves
attributable to the Oil and Gas Properties of the Borrower and the Subsidiaries,
together with a projection of the rate of production and future net income,
taxes, operating expenses and capital expenditures with respect thereto as of
such date, based upon the economic assumptions consistent with the
Administrative Agent’s lending requirements at the time.

 

“Reserve Report Certificate” means a certificate of a Responsible Officer in
substantially the form of Exhibit H attached hereto certifying as the matters
set forth in Section 8.12(c).

 

“Responsible Officer” means, as to any Person, the Chief Executive Officer, the
President, any Financial Officer or any Vice President of such Person.  Unless
otherwise specified, all references to a Responsible Officer herein shall mean a
Responsible Officer of the Borrower.

 

“Restricted Payment” means any dividend or other distribution (whether in cash,
securities or other Property) with respect to any Equity Interests in the
Borrower or any of its Subsidiaries, or any payment (whether in cash, securities
or other Property), including any sinking fund or similar deposit, on account of
the purchase, redemption, retirement, acquisition, cancellation or termination
of any such Equity Interests in the Borrower or any of its Subsidiaries.

 

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“Revolving Credit Exposure” means, with respect to any Lender at any time, the
sum of the outstanding principal amount of such Lender’s Loans and its LC
Exposure at such time.

 

“Riley Ridge Gas Plant and Related Assets” means all of Borrower’s right, title
and interest in and to (i) the certain natural gas and helium processing plant
(as of the Effective Date under construction) on a 33.83 acre parcel in
Section 16, T. 29 N., R. 114 W., 6th PM, Sublette County, Wyoming pursuant to
the terms of that certain Special Use Lease dated effective September 1, 2008
from the Wyoming Board of Land Commissioners, as Lessor, to Borrower, as Lessee,
and the related equipment, fixtures, processing, construction, through-put and
transportation contracts related to the construction and operation of such plant
and the sale or disposal of methane, helium, and carbon dioxide and other waste
gases processed by such plant, and the permits, licenses and agreements related
thereto; (ii) the Oil and Gas Properties located in the Riley Ridge Federal
Exploratory Unit WYW-109661X, dated December 23, 1981, and all personal
property, fixtures, equipment and facilities, and contracts, permits, licenses
and agreements related thereto; (iii) the Oil and Gas Properties located within
the Area of Mutual Interest established by the Rands Butte Federal Exploratory
Unit Formation Agreement, dated February 2, 2010, between Borrower and Riley
Ridge LLC, as amended; and (iv) all other oil, gas and other assets that are
subject to that certain Purchase and Sale Agreement, dated June 24, 2011,
between Borrower and Denbury Onshore LLC.

 

“Scheduled Redetermination” has the meaning assigned such term in
Section 2.07(b).

 

“Scheduled Redetermination Date” means the date on which a Borrowing Base that
has been redetermined pursuant to a Scheduled Redetermination becomes effective
as provided in Section 2.07(d).

 

“SEC” means the Securities and Exchange Commission or any successor Governmental
Authority.

 

“Senior Notes” means the Existing Senior Notes and any Permitted Refinancing
Debt in respect thereof and any guarantees thereof by a Guarantor.

 

“S&P” means Standard & Poor’s Ratings Group, a division of The McGraw-Hill
Companies, Inc., and any successor thereto that is a nationally recognized
rating agency.

 

“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 maximum reserve percentages (including any
marginal, special, emergency or supplemental reserves) expressed as a decimal
established by the Board to which the Administrative Agent is subject with
respect to the Adjusted LIBO 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 such Regulation D. 
Eurodollar Loans shall be deemed to constitute eurocurrency funding and to be
subject to such reserve requirements without 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.

 

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“subsidiary” means, with respect to any Person (the “parent”) at any date, any
other Person whose Equity Interests representing more than 50% of the equity or
more than 50% of the ordinary voting power (irrespective of whether or not at
the time Equity Interests of any other class or classes of such Person shall
have or might have voting power by reason of the happening of any contingency)
or, in the case of a partnership, any general partnership interests are, as of
such date, owned, controlled or held by the parent or one or more subsidiaries
of the parent or by the parent and one or more subsidiaries of the parent.

 

“Subsidiary” means any subsidiary of the Borrower.

 

“Swap Agreement” means any agreement with respect to any swap, forward, future
or derivative transaction or option or similar agreement, whether exchange
traded, “over-the-counter” or otherwise, involving, or settled by reference to,
one or more rates, currencies, commodities, equity or debt instruments or
securities, or economic, financial or pricing indices or measures of economic,
financial or pricing risk or value or any similar transaction or any combination
of these transactions.

 

“Swap Termination Value” means, in respect of any one or more Swap Agreements,
after taking into account the effect of any legally enforceable netting
agreement relating to such Swap Agreements, (a) for any date on or after the
date such Swap Agreements have been closed out and termination
value(s) determined in accordance therewith, such termination value(s) and
(b) for any date prior to the date referenced in clause (a), the
amount(s) determined as the mark-to-market value(s) for such Swap Agreements, as
determined by the counterparties to such Swap Agreements.

 

“Synthetic Leases” means, in respect of any Person, all leases which shall have
been, or should have been, in accordance with GAAP, treated as operating leases
on the financial statements of the Person liable (whether contingently or
otherwise) for the payment of rent thereunder and which were properly treated as
indebtedness for borrowed money for purposes of U.S. federal income taxes, if
the lessee in respect thereof is obligated to either purchase for an amount in
excess of, or pay upon early termination an amount in excess of, 80% of the
residual value of the Property subject to such operating lease upon expiration
or early termination of such lease.

 

“Taxes” means any and all present or future taxes, levies, imposts, duties,
deductions, charges or withholdings imposed by any Governmental Authority.

 

“Termination Date” means the earlier of the Maturity Date and the date of
termination of the Commitments.

 

“Total Debt” means, at any date, all Debt of the Borrower and the Consolidated
Subsidiaries on a consolidated basis, excluding (i) non-cash obligations under
FAS 133 and (ii) accounts payable and other obligations or liabilities (for the
deferred purchase price of Property or services) from time to time incurred in
the ordinary course of business which are not greater than ninety (90) days past
the date of invoice or delinquent or which are being contested in good faith by
appropriate action and for which adequate reserves have been maintained in
accordance with GAAP.

 

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“Transactions” means, with respect to (a) the Borrower, the execution, delivery
and performance by the Borrower of this Agreement and each other Loan Document
to which it is a party, the borrowing of Loans and the use of the proceeds
thereof and the Existing Letters of Credit and the issuance of Letters of Credit
hereunder and (b) each Guarantor, the execution, delivery and performance by
such Guarantor of each Loan Document to which it is a party and the guaranteeing
of the Indebtedness and the other obligations under the Guaranty Agreement by
such Guarantor.

 

“Treasury Management Agreements” means any agreements regarding bank services
provided to any Credit Party for commercial credit cards, stored value cards and
treasury management services, including, without limitation, controlled
disbursement, automated clearinghouse transactions, return items, overdrafts and
interstate depository network services.

 

“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 Alternate Base Rate or the Adjusted LIBO Rate.

 

“Undisclosed Administration” means, in relation to a Lender, the appointment of
an administrator, provisional liquidator, conservator, receiver, trustee,
custodian or other similar official by a supervisory authority or regulator
under or based on the law in the country where such Lender is subject to home
jurisdiction supervision if applicable law requires that such appointment is not
to be publicly disclosed.

 

“Wholly-Owned Subsidiary” means any Subsidiary of which all of the outstanding
Equity Interests (other than any directors’ qualifying shares mandated by
applicable law), on a fully-diluted basis, are owned by the Borrower or one or
more of the Wholly-Owned Subsidiaries or are owned by the Borrower and one or
more of the Wholly-Owned Subsidiaries.

 

Section 1.03           Types of Loans and Borrowings.  For purposes of this
Agreement, Loans and Borrowings, respectively, may be classified and referred to
by Type (e.g., a “Eurodollar Loan” or a “Eurodollar Borrowing”).

 

Section 1.04           Terms Generally; Rules of Construction.  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” as used in this Credit Agreement shall be deemed to
be followed by the phrase “without limitation”.  The word “will” shall be
construed to have the same meaning and effect as the word “shall”.  Unless the
context requires otherwise (a) any definition of or reference to any agreement,
instrument or other document herein shall be construed as referring to such
agreement, instrument or other document as from time to time amended,
supplemented or otherwise modified (subject to any restrictions on such
amendments, supplements or modifications set forth in the Loan Documents),
(b) any reference herein to any law shall be construed as referring to such law
as amended, modified, codified or reenacted, in whole or in part, and in effect
from time to time, (c) any reference herein to any Person shall be construed to
include such Person’s successors and assigns (subject to the restrictions
contained in the Loan Documents), (d) 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

 

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provision hereof, (e) with respect to the determination of any time period, the
word “from” means “from and including” and the word “to” means “to and
including” and (f) any reference herein to Articles, Sections, Annexes, Exhibits
and Schedules shall be construed to refer to Articles and Sections of, and
Annexes, Exhibits and Schedules to, this Agreement.  No provision of this
Agreement or any other Loan Document shall be interpreted or construed against
any Person solely because such Person or its legal representative drafted such
provision.

 

Section 1.05           Accounting Terms and Determinations; GAAP.  Unless
otherwise specified herein, all accounting terms used herein shall be
interpreted, all determinations with respect to accounting matters hereunder
shall be made, and all financial statements and certificates and reports as to
financial matters required to be furnished to the Administrative Agent or the
Lenders hereunder shall be prepared, in accordance with GAAP, applied on a basis
consistent with the Financial Statements except for changes in which Borrower’s
independent certified public accountants concur and which are disclosed to
Administrative Agent on the next date on which financial statements are required
to be delivered to the Lenders pursuant to Section 8.01(a); provided that,
unless the Borrower and the Majority Lenders shall otherwise agree in writing,
no such change shall modify or affect the manner in which compliance with the
covenants contained herein is computed such that all such computations shall be
conducted utilizing financial information presented consistently with prior
periods.

 

ARTICLE II
The Credits

 

Section 2.01           Commitments.  Subject to the terms and conditions set
forth herein, each Lender agrees to make Loans to the Borrower during the
Availability Period in an aggregate principal amount that will not result in
(a) such Lender’s Revolving Credit Exposure exceeding such Lender’s Commitment
or (b) the total Revolving Credit Exposures exceeding the total Commitments. 
Within the foregoing limits and subject to the terms and conditions set forth
herein, the Borrower may borrow, repay and reborrow the Loans.

 

Section 2.02           Loans and Borrowings.

 

(a)           Borrowings; Several Obligations.  Each Loan shall be made as part
of a Borrowing consisting of Loans made by the Lenders ratably in accordance
with their respective Commitments.  The failure of any Lender to make any Loan
required to be made by it shall not relieve any other Lender of its obligations
hereunder; provided that the Commitments are several and no Lender shall be
responsible for any other Lender’s failure to make Loans as required.

 

(b)           Types of Loans.  Subject to Section 3.03, each Borrowing shall be
comprised entirely of ABR Loans or Eurodollar Loans 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)           Minimum Amounts; Limitation on Number of Borrowings.  At the
commencement of each Interest Period for any Eurodollar Borrowing, such
Borrowing shall be

 

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in an aggregate amount that is an integral multiple of $500,000 and not less
than $3,000,000.  At the time that each ABR Borrowing is made, such Borrowing
shall be in an aggregate amount that is an integral multiple of $500,000 and not
less than $1,000,000; provided that an ABR Borrowing may be in a lesser
aggregate amount that is equal to the entire unused balance of the total
Commitments or that is required to finance the reimbursement of an LC
Disbursement as contemplated by Section 2.08(e).  Borrowings of more than one
Type may be outstanding at the same time, provided that there shall not at any
time be more than a total of eight Eurodollar Borrowings outstanding. 
Notwithstanding any other provision of this Agreement, the Borrower shall not be
entitled to request, or to elect to convert or continue, any Borrowing if the
Interest Period requested with respect thereto would end after the Maturity
Date.

 

(d)           Notes.  If requested by a Lender, the Loans made by each Lender
shall be evidenced by a single promissory note of the Borrower in substantially
the form of Exhibit A, dated, in the case of (i) any Lender party hereto as of
the date of this Agreement, as of the date of this Agreement or (ii) any Lender
that becomes a party hereto pursuant to an Assignment and Assumption, as of the
effective date of the Assignment and Assumption, payable to the order of such
Lender in a principal amount equal to its Maximum Credit Amount as in effect on
such date, and otherwise duly completed.  In the event that any Lender’s Maximum
Credit Amount increases or decreases for any reason (whether pursuant to
Section 2.06, Section 12.04(b) or otherwise), the Borrower shall deliver or
cause to be delivered on the effective date of such increase or decrease, a new
Note payable to the order of such Lender in a principal amount equal to its
Maximum Credit Amount after giving effect to such increase or decrease, and
otherwise duly completed.  The date, amount, Type, interest rate and, if
applicable, Interest Period of each Loan made by each Lender, and all payments
made on account of the principal thereof, shall be recorded by such Lender on
its books for its Note, and, prior to any transfer, may be endorsed by such
Lender on a schedule attached to such Note or any continuation thereof or on any
separate record maintained by such Lender.  Failure to make any such notation or
to attach a schedule shall not affect any Lender’s or the Borrower’s rights or
obligations in respect of such Loans or affect the validity of such transfer by
any Lender of its Note.

 

Section 2.03           Requests for Borrowings.  To request a Borrowing, the
Borrower shall notify the Administrative Agent of such request by telephone or
e-mail, with respect to the initial Borrowing on the date of closing, and  by
telephone or e-mail, with respect to each subsequent Borrowing, (a) in the case
of a Eurodollar Borrowing, not later than 12:00 noon, New York City time, three
Business Days before the date of the proposed Borrowing or (b) in the case of an
ABR Borrowing, not later than 11:00 a.m., New York City time, on the date of the
proposed Borrowing; provided that no such notice shall be required for any
deemed request of an ABR Borrowing to finance the reimbursement of an LC
Disbursement as provided in Section 2.08(e).  Each such telephonic Borrowing
Request shall be irrevocable and shall be confirmed promptly by hand delivery or
telecopy to the Administrative Agent of a written Borrowing Request in
substantially the form of Exhibit B and signed by the Borrower.  Each such
telephonic and written Borrowing Request shall specify the following information
in compliance with Section 2.02:

 

(i)            the aggregate amount of the requested Borrowing;

 

(ii)           the date of such Borrowing, which shall be a Business Day;

 

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(iii)          whether such Borrowing is to be an ABR 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”;

 

(v)           the amount of the then effective Borrowing Base, the current total
Revolving Credit Exposures and Total Debt (in each case, without regard to the
requested Borrowing) and the pro forma total Revolving Credit Exposures and
Total Debt (in each case, giving effect to the requested Borrowing); and

 

(vi)          the location and number of the Borrower’s account to which funds
are to be disbursed, which shall comply with the requirements of Section 2.05.

 

If no election as to the Type of Borrowing is specified, then the requested
Borrowing shall be an ABR 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.  Each Borrowing
Request shall constitute a representation that the amount of the requested
Borrowing shall not cause the total Revolving Credit Exposures to exceed the
total Commitments (i.e., the lesser of the Aggregate Maximum Credit Amounts and
the then effective Borrowing Base).

 

Promptly following receipt of a Borrowing Request in accordance with this
Section 2.03, the Administrative Agent shall advise each Lender of the details
thereof and of the amount of such Lender’s Loan to be made as part of the
requested Borrowing.

 

Section 2.04           Interest Elections.

 

(a)           Conversion and Continuance.  Each Borrowing initially shall be of
the Type specified in the applicable Borrowing Request and, in the case of a
Eurodollar Borrowing, shall have an initial Interest Period as specified in such
Borrowing Request.  Thereafter, the Borrower may elect to convert such Borrowing
to a different Type or to continue such Borrowing and, in the case of a
Eurodollar Borrowing, may elect Interest Periods therefor, all as provided in
this Section 2.04.  The Borrower may elect different options with respect to
different portions of the affected Borrowing, in which case each such portion
shall be allocated ratably among the Lenders holding the Loans comprising such
Borrowing, and the Loans comprising each such portion shall be considered a
separate Borrowing.

 

(b)           Interest Election Requests.  To make an election pursuant to this
Section 2.04, the Borrower shall notify the Administrative Agent of such
election by telephone by the time that a Borrowing Request would be required
under Section 2.03 if the Borrower were requesting a 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 Administrative Agent of a
written Interest Election Request in substantially the form of Exhibit C and
signed by the Borrower.

 

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(c)           Information in Interest Election Requests.  Each telephonic and
written Interest Election Request shall specify the following information in
compliance with Section 2.02:

 

(i)            the 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 Borrowing (in
which case the information to be specified pursuant to Section 2.04(c)(ii) and
(iii) shall be specified for each resulting 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 Borrowing is to be an ABR Borrowing or a
Eurodollar Borrowing; and

 

(iv)          if the resulting 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)           Notice to Lenders by the Administrative Agent.  Promptly following
receipt of an Interest Election Request, the Administrative Agent shall advise
each Lender of the details thereof and of such Lender’s portion of each
resulting Borrowing.

 

(e)           Effect of Failure to Deliver Timely Interest Election Request and
Events of Default and Borrowing Base Deficiencies on Interest Election.  If the
Borrower fails to deliver a timely Interest Election Request with respect to a
Eurodollar Borrowing prior to the end of the Interest Period applicable thereto,
then, unless such Borrowing is repaid as provided herein, at the end of such
Interest Period such Borrowing shall be converted to an ABR Borrowing. 
Notwithstanding any contrary provision hereof, if an Event of Default or a
Borrowing Base Deficiency has occurred and is continuing:  (i) no outstanding
Borrowing may be converted to or continued as a Eurodollar Borrowing (and any
Interest Election Request that requests the conversion of any Borrowing to, or
continuation of any Borrowing as, a Eurodollar Borrowing shall be ineffective)
and (ii) unless repaid, each Eurodollar Borrowing shall be converted to an ABR
Borrowing at the end of the Interest Period applicable thereto.

 

Section 2.05           Funding of Borrowings.

 

(a)           Funding by Lenders.  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., New York City time, to the account of the
Administrative Agent most recently designated by it for such purpose by notice
to the Lenders.  The Administrative Agent will make such Loans available to the
Borrower by promptly crediting the amounts so received, in like funds, to an
account of the Borrower maintained with the Administrative Agent in New York,
New York or such other account designated by Borrower and designated by the
Borrower in the applicable

 

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Borrowing Request; provided that ABR Loans made to finance the reimbursement of
an LC Disbursement as provided in Section 2.08(e) shall be remitted by the
Administrative Agent to the Issuing Bank.  Nothing herein shall be deemed to
obligate any Lender to obtain the funds for its Loan in any particular place or
manner or to constitute a representation by any Lender that it has obtained or
will obtain the funds for its Loan in any particular place or manner.

 

(b)           Presumption of Funding by the Lenders.  Unless the Administrative
Agent shall have received notice from a Lender prior to the proposed date of any
Borrowing that such Lender will not make available to the Administrative Agent
such Lender’s share of such Borrowing, the Administrative Agent may assume that
such Lender has made such share available on such date in accordance with
Section 2.05(a) and may, in reliance upon such assumption, make available to the
Borrower a corresponding amount.  In such event, if a Lender has not in fact
made its share of the applicable Borrowing available to the Administrative
Agent, then the applicable Lender and the Borrower severally agree to pay to the
Administrative Agent forthwith on demand such corresponding amount together with
the accrued interest thereon without duplication, for each day from and
including the date such amount is made available to the Borrower to but
excluding the date of payment to the Administrative Agent, at (i) in the case of
such Lender, the greater of the Federal Funds Effective Rate and a rate
determined by the Administrative Agent in accordance with banking industry
rules on interbank compensation or (ii) in the case of the Borrower, the
interest rate applicable to ABR Loans.  If such Lender pays such amount to the
Administrative Agent, then such amount shall constitute such Lender’s Loan
included in such Borrowing.

 

Section 2.06           Termination and Reduction of Aggregate Maximum Credit
Amounts.

 

(a)           Scheduled Termination of Commitments.  Unless previously
terminated, the Commitments shall terminate on the Maturity Date.  If at any
time the Aggregate Maximum Credit Amounts or the Borrowing Base is terminated or
reduced to zero, then the Commitments shall terminate on the effective date of
such termination or reduction.

 

(b)           Optional Termination and Reduction of Aggregate Credit Amounts.

 

(i)            The Borrower may at any time terminate, or from time to time
reduce, the Aggregate Maximum Credit Amounts; provided that (A) each reduction
of the Aggregate Maximum Credit Amounts shall be in an amount that is an
integral multiple of $10,000,000 and (B) the Borrower shall not terminate or
reduce the Aggregate Maximum Credit Amounts if, after giving effect to any
concurrent prepayment of the Loans in accordance with Section 3.04(b), the total
Revolving Credit Exposures would exceed the total Commitments.

 

(ii)           The Borrower shall notify the Administrative Agent of any
election to terminate or reduce the Aggregate Maximum Credit Amounts under
Section 2.06(b)(i) at least three 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 notice, the Administrative Agent
shall advise the Lenders of the contents thereof.  Each notice delivered by the
Borrower pursuant to this Section 2.06(b)(ii) shall be irrevocable.  Any
termination or reduction of the Aggregate Maximum Credit Amounts shall be
permanent and

 

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may not be reinstated.  Each reduction of the Aggregate Maximum Credit Amounts
shall be made ratably among the Lenders in accordance with each Lender’s
Applicable Percentage.

 

Section 2.07           Borrowing Base.

 

(a)           Initial Borrowing Base.  For the period from and including the
Effective Date to but excluding the first Redetermination Date, the amount of
the Borrowing Base shall be $2,000,000,000.  Notwithstanding the foregoing, the
Borrowing Base may be subject to further adjustments from time to time pursuant
to  Section 2.07(e) or Section 9.10.

 

(b)           Scheduled and Interim Redeterminations.  The Borrowing Base shall
be redetermined annually in accordance with this Section 2.07 (a “Scheduled
Redetermination”), and, subject to Section 2.07(d), such redetermined Borrowing
Base shall become effective and applicable to the Borrower, the Administrative
Agent, the Issuing Bank and the Lenders on April 15th of each year, commencing
April 15th, 2012.  In addition, the Borrower may, by notifying the
Administrative Agent thereof, and the Administrative Agent may, at the direction
of the Required Lenders, by notifying the Borrower thereof, one time during any
12-month period, each elect to cause the Borrowing Base to be redetermined
between Scheduled Redeterminations (an “Interim Redetermination”) in accordance
with this Section 2.07.

 

(c)           Scheduled and Interim Redetermination Procedure.

 

(i)            Each Scheduled Redetermination and each Interim Redetermination
shall be effectuated as follows:  Upon receipt by the Administrative Agent of
(A) the Reserve Report and the Reserve Report Certificate, and (B) such other
reports, data and supplemental information, including, without limitation, the
information provided pursuant to Section 8.12(c), as may, from time to time, be
reasonably requested by the Majority Lenders (the Reserve Report, such
certificate and such other reports, data and supplemental information being the
“Engineering Reports”), the Administrative Agent shall evaluate the information
contained in the Engineering Reports and shall, in its sole discretion, propose
a new Borrowing Base (the “Proposed Borrowing Base”) based upon such information
and such other information as the Administrative Agent deems appropriate in its
sole discretion and consistent with its normal oil and gas lending criteria as
it exists at the particular time.

 

(ii)           The Administrative Agent shall notify the Borrower and the
Lenders of the Proposed Borrowing Base (the “Proposed Borrowing Base Notice”):

 

(A)          in the case of a Scheduled Redetermination (1) if the
Administrative Agent shall have received the Engineering Reports required to be
delivered by the Borrower pursuant to Section 8.12(a) and (c) in a timely and
complete manner, then on or before the April 1st of such year following the date
of delivery or (2) if the Administrative Agent shall not have received the
Engineering Reports required to be delivered by the Borrower pursuant to
Section 8.12(a) and (c) in a timely and complete manner, then promptly after the
Administrative Agent has received complete Engineering Reports from the Borrower
and has had a reasonable opportunity to determine the Proposed Borrowing Base in
accordance with Section 2.07(c)(i); and

 

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(B)           in the case of an Interim Redetermination, promptly, and in any
event, within fifteen (15) days after the Administrative Agent has received the
required Engineering Reports.

 

(iii)          Any Proposed Borrowing Base that would increase the Borrowing
Base then in effect must be approved or deemed to have been approved by the
Borrowing Base Increasing Lenders in their sole discretion as provided in this
Section 2.07(c)(iii); and any Proposed Borrowing Base that would decrease or
maintain the Borrowing Base then in effect must be approved or be deemed to have
been approved by the Required Lenders in their sole discretion as provided in
this Section 2.07(c)(iii) .  Upon receipt of the Proposed Borrowing Base Notice,
each Lender shall have fifteen (15) days to agree with the Proposed Borrowing
Base or disagree with the Proposed Borrowing Base by proposing an alternate
Borrowing Base.  If at the end of such fifteen (15) days, any Lender has not
communicated its approval or disapproval in writing to the Administrative Agent,
such silence shall be deemed to be an approval of the Proposed Borrowing Base. 
If, at the end of such 15-day period, the Borrowing Base Increasing Lenders, in
the case of a Proposed Borrowing Base that would increase the Borrowing Base
then in effect, or the Required Lenders, in the case of a Proposed Borrowing
Base that would decrease or maintain the Borrowing Base then in effect, have
approved or deemed to have approved, as aforesaid, then the Proposed Borrowing
Base shall become the new Borrowing Base, effective on the date specified in
Section 2.07(d).  If, however, at the end of such 15-day period, the Borrowing
Base Increasing Lenders or the Required Lenders, as applicable, have not
approved or deemed to have approved, as aforesaid, then the Administrative Agent
shall poll the Lenders to ascertain the highest Borrowing Base then acceptable
to a number of Lenders sufficient to constitute the Borrowing Base Increasing
Lenders or the Required Lenders, as applicable, and, so long as such amount does
not increase the Borrowing Base then in effect, such amount shall become the new
Borrowing Base, effective on the date specified in Section 2.07(d).

 

(d)           Effectiveness of a Redetermined Borrowing Base.  After a
redetermined Borrowing Base is approved or is deemed to have been approved by
all of the Lenders or the Required Lenders, as applicable, pursuant to
Section 2.07(c)(iii), the Administrative Agent shall notify the Borrower and the
Lenders of the amount of the redetermined Borrowing Base (the “New Borrowing
Base Notice”), and such amount shall become the new Borrowing Base, effective
and applicable to the Borrower, the Administrative Agent, the Issuing Bank and
the Lenders:

 

(i)            in the case of a Scheduled Redetermination, (A) if the
Administrative Agent shall have received the Engineering Reports required to be
delivered by the Borrower pursuant to Section 8.12(a) and (c) in a timely and
complete manner, then by the April 1st following such notice, or (B) if the
Administrative Agent shall not have received the Engineering Reports required to
be delivered by the Borrower pursuant to Section 8.12(a) and (c) in a timely and
complete manner, then on the Business Day next succeeding delivery of such New
Borrowing Base Notice; and

 

(ii)           in the case of an Interim Redetermination, on the Business Day
next succeeding delivery of such notice.

 

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Such amount shall then become the Borrowing Base until the next Scheduled
Redetermination Date, the next Interim Redetermination Date or the next
adjustment to the Borrowing Base under Section 2.07(e) or Section 9.10,
whichever occurs first.  Notwithstanding the foregoing, no Scheduled
Redetermination or Interim Redetermination shall become effective until the New
Borrowing Base Notice related thereto is received by the Borrower.

 

(e)           Reduction of Borrowing Base Upon Termination of Hedge Positions.
If the Borrower or any Subsidiary shall terminate or create any off-setting
positions in respect of any hedge positions (whether evidenced by a floor, put
or Swap Agreement) upon which the Lenders relied in determining the Borrowing
Base, then the Borrowing Base shall be contemporaneously reduced in an amount
determined by the Required Lenders equal to the economic value of such hedge
positions.

 

Section 2.08           Letters of Credit.

 

(a)           General.  Subject to the terms and conditions set forth herein,
the Borrower may request the issuance of dollar denominated Letters of Credit
for its own account or for the account of any of its Subsidiaries, in a form
reasonably acceptable to the Administrative Agent and the Issuing Bank, at any
time and from time to time during the Availability Period; provided that the
Borrower may not request the issuance, amendment, renewal or extension of
Letters of Credit hereunder if a Borrowing Base Deficiency exists at such time
or would exist as a result thereof.  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, the 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.  To request the issuance of a Letter of Credit (or the amendment,
renewal or extension of an outstanding Letter of Credit), the Borrower shall
hand deliver or telecopy (or transmit by electronic communication, if
arrangements for doing so have been approved by the Issuing Bank) to the Issuing
Bank and the Administrative Agent (not less than five (5) Business Days in
advance of the requested date of issuance, amendment, renewal or extension) a
notice:

 

(i)            requesting the issuance of a Letter of Credit or identifying the
Letter of Credit to be amended, renewed or extended;

 

(ii)           specifying the date of issuance, amendment, renewal or extension
(which shall be a Business Day);

 

(iii)          specifying the date on which such Letter of Credit is to expire
(which shall comply with Section 2.08(c));

 

(iv)          specifying the amount of such Letter of Credit;

 

(v)           specifying 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; and

 

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(vi)          specifying the amount of the then effective Borrowing Base and
whether a Borrowing Base Deficiency exists at such time, the current total
Revolving Credit Exposures and Total Debt (in each case, without regard to the
requested Letter of Credit or the requested amendment, renewal or extension of
an outstanding Letter of Credit) and the pro forma total Revolving Credit
Exposures and Total Debt (in each case, giving effect to the requested Letter of
Credit or the requested amendment, renewal or extension of an outstanding Letter
of Credit).

 

Each notice shall constitute a representation that after giving effect to the
requested issuance, amendment, renewal or extension, as applicable, (i) the LC
Exposure shall not exceed the LC Commitment and (ii) the total Revolving Credit
Exposures shall not exceed the total Commitments (i.e. the lesser of the
Aggregate Maximum Credit Amounts and the then effective Borrowing Base).

 

If requested by the Issuing Bank, the Borrower also shall submit a letter of
credit application on the Issuing Bank’s standard form in connection with any
request for a Letter of Credit.

 

(c)           Expiration Date.  Each Letter of Credit shall expire at or prior
to the close of business on the earlier of (i) 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, one year after such renewal or extension) and (ii) the date
that is five Business Days prior to the Maturity Date.

 

(d)           Participations.  On the date of closing with respect to Existing
Letters of Credit and 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 Issuing Bank or the Lenders, the Issuing Bank hereby grants
to each Lender, and each Lender hereby acquires from the 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 Administrative Agent,
for the account of the Issuing Bank, such Lender’s Applicable Percentage of each
LC Disbursement made by the Issuing Bank and not reimbursed by the Borrower on
the date due as provided in Section 2.08(e), 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 Section 2.08(d) 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, the existence of a Borrowing Base
Deficiency or reduction or termination of the Commitments, and that each such
payment shall be made without any offset, abatement, withholding or reduction
whatsoever.

 

(e)           Reimbursement.  If the 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 Administrative Agent an amount equal to such LC
Disbursement not later than 12:00 noon, New York City 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., New York City 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 12:00 noon, New York City time, on (i) the Business
Day that the Borrower receives

 

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such notice, if such notice is received prior to 10:00 a.m., New York City time,
on the day of receipt, or (ii) the Business Day immediately following the day
that the Borrower receives such notice, if such notice is not received prior to
such time on the day of receipt; provided that if such LC Disbursement is not
less than $1,000,000, the Borrower shall, subject to the conditions to Borrowing
set forth herein, be deemed to have requested, and the Borrower does hereby
request under such circumstances, that such payment be financed with an ABR
Borrowing 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 Borrowing.  If the Borrower fails to make such payment when due,
the 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 Administrative Agent its Applicable
Percentage of the payment then due from the Borrower, in the same manner as
provided in Section 2.05 with respect to Loans made by such Lender (and
Section 2.05 shall apply, mutatis mutandis, to the payment obligations of the
Lenders), and the Administrative Agent shall promptly pay to the Issuing Bank
the amounts so received by it from the Lenders.  Promptly following receipt by
the Administrative Agent of any payment from the Borrower pursuant to this
Section 2.08(e), the Administrative Agent shall distribute such payment to the
Issuing Bank or, to the extent that Lenders have made payments pursuant to this
Section 2.08(e) to reimburse the Issuing Bank, then to such Lenders and the
Issuing Bank as their interests may appear.  Any payment made by a Lender
pursuant to this Section 2.08(e) to reimburse the Issuing Bank for any LC
Disbursement (other than the funding of ABR 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 Section 2.08(e) 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, any Letter
of Credit Agreement or this Agreement, or of any term or provision 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 being
untrue or inaccurate in any respect, (iii) payment by the 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 any Letter of Credit
Agreement, 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 2.08(f), constitute a legal or equitable discharge of, or provide a
right of setoff against, the Borrower’s obligations hereunder.  Neither the
Administrative Agent, the Lenders nor the 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 the Issuing
Bank; provided that the foregoing shall not be construed to excuse the Issuing
Bank from liability to the Borrower to the extent of any direct damages (as
opposed to consequential 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

 

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by the 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 the Issuing Bank (as finally
determined by a court of competent jurisdiction), the Issuing Bank shall be
deemed to have exercised all requisite care 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, the
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.  The Issuing Bank shall, promptly
following its receipt thereof, examine all documents purporting to represent a
demand for payment under a Letter of Credit.  The Issuing Bank shall promptly
notify the Administrative Agent and the Borrower by telephone (confirmed by
telecopy) of such demand for payment and whether the 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 the Issuing Bank and the Lenders with respect to any such LC
Disbursement.

 

(h)           Interim Interest.  If the Issuing Bank shall make any LC
Disbursement, then, until the Borrower shall have reimbursed the Issuing Bank
for such LC Disbursement (either with its own funds or a Borrowing under
Section 2.08(e)), 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 Loans.  Interest accrued pursuant to this
Section 2.08(h) shall be for the account of the Issuing Bank, except that
interest accrued on and after the date of payment by any Lender pursuant to
Section 2.08(e) to reimburse the Issuing Bank shall be for the account of such
Lender to the extent of such payment.

 

(i)            Cash Collateralization.  If (i) any Event of Default shall occur
and be continuing and the Borrower receives notice from the Administrative Agent
or the Majority Lenders demanding the deposit of cash collateral pursuant to
this Section 2.08(i), or (ii) the Borrower is required to pay to the
Administrative Agent the excess attributable to an LC Exposure in connection
with any prepayment pursuant to Section 3.04(c), then the Borrower shall
deposit, in an account with the Administrative Agent, in the name of the
Administrative Agent and for the benefit of the Lenders, an amount in cash equal
to, in the case of an Event of Default, the LC Exposure, and in the case of a
payment required by Section 3.04(c), the amount of such excess as provided in
Section 3.04(c), 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 or any Subsidiary described in
Section 10.01(h), Section 10.01(i) or Section 10.01(j).  The Borrower hereby
grants to the Administrative Agent, for the benefit of the Issuing Bank and the
Lenders, an exclusive first priority and continuing perfected security interest
in and Lien on such account and all cash, checks, drafts, certificates and
instruments, if any, from time to time deposited or held in such account, all
deposits or wire transfers made thereto, any and all

 

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investments purchased with funds deposited in such account, all interest,
dividends, cash, instruments, financial assets and other Property from time to
time received, receivable or otherwise payable in respect of, or in exchange
for, any or all of the foregoing, and all proceeds, products, accessions, rents,
profits, income and benefits therefrom, and any substitutions and replacements
therefor.  The Borrower’s obligation to deposit amounts pursuant to this
Section 2.08(i) shall be absolute and unconditional, without regard to whether
any beneficiary of any such Letter of Credit has attempted to draw down all or a
portion of such amount under the terms of a Letter of Credit, and, to the
fullest extent permitted by applicable law, shall not be subject to any defense
or be affected by a right of set-off, counterclaim or recoupment which the
Borrower or any of its Subsidiaries may now or hereafter have against any such
beneficiary, the Issuing Bank, the Administrative Agent, the Lenders or any
other Person for any reason whatsoever.  Such deposit shall be held as
collateral securing the payment and performance of the Borrower’s and the
Guarantor’s obligations under this Agreement and the other Loan Documents.  The
Administrative Agent shall have exclusive dominion and control, including the
exclusive right of withdrawal, over such account.  Other than any interest
earned on the investment of such deposits, which investments shall be made at
the option and sole discretion of the Administrative Agent and at the Borrower’s
risk and expense, such deposits shall not bear interest.  Interest or profits,
if any, on such investments shall accumulate in such account.  Moneys in such
account shall be applied by the Administrative Agent to reimburse the 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 LC Exposure at such time or, if the maturity
of the Loans has been accelerated, be applied to satisfy other obligations of
the Borrower and the Guarantors under this Agreement or the other Loan
Documents.  If the Borrower is required to provide an amount of cash collateral
hereunder as a result of the occurrence of an Event of Default, and the Borrower
is not otherwise required to pay to the Administrative Agent the excess
attributable to an LC Exposure in connection with any prepayment pursuant to
Section 3.04(c), then such amount (to the extent not applied as aforesaid) shall
be returned to the Borrower within three Business Days after all Events of
Default have been cured or waived.

 

(j)            Existing Letters of Credit.   The parties hereto acknowledge that
on and after the date of closing the Existing Letters of Credit shall be Letters
of Credit issued by the Issuing Bank indicated as such on Schedule 1.01 for the
account of the Borrower pursuant to this Agreement.

 

(k)           Outstanding Letters of Credit. If requested by any Lender, the
Administrative Agent shall provide the requesting Lender with a list of all
outstanding Letters of Credit.

 

ARTICLE III
Payments of Principal and Interest; Prepayments; Fees

 

Section 3.01        Repayment of Loans.  The Borrower hereby unconditionally
promises to pay to the Administrative Agent for the account of each Lender the
then unpaid principal amount of each Loan on the Termination Date.

 

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Section 3.02        Interest.

 

(a)           ABR Loans.  The Loans comprising each ABR Borrowing shall bear
interest at the Alternate Base Rate plus the Applicable Margin, but in no event
to exceed the Highest Lawful Rate.

 

(b)           Eurodollar Loans.  The Loans comprising each Eurodollar Borrowing
shall bear interest at the Adjusted LIBO Rate for the Interest Period in effect
for such Borrowing plus the Applicable Margin, but in no event to exceed the
Highest Lawful Rate.

 

(c)           Post-Default Rate.  Notwithstanding the foregoing, (i) if a
Default or an Event of Default has occurred and is continuing, the Required
Lenders may, at their option, by notice to the Borrower declare that no
Borrowing may be made as, converted into or continued as a Eurodollar Borrowing,
(ii) during the continuance of an Event of Default the Required Lenders may, at
their option, by notice to the Borrower, declare that (A) each Eurodollar
Borrowing shall bear interest for the remainder of the applicable Interest
Period plus 2% per annum, (B) each ABR Borrowing shall bear interest at a rate
per annum equal to the Alternate Base Rate in effect from time to time plus 2%
per annum and (C) the fees described in Section 3.05(b) shall be increased by 2%
per annum, provided that, during the continuance of an Event of Default under
Section 10.01(h) or Section 10.01(i), the interest rates forth in clauses
(A) and (B) above and the increase in the Letter of Credit fee set forth in
clause (C) above shall be applicable to all Borrowings without any election or
action on the part of the Administrative Agent or any Lender.

 

(d)           Interest Payment Dates.  Accrued interest on each Loan shall be
payable in arrears on each Interest Payment Date for such Loan and on the
Termination Date; provided that (i) interest accrued pursuant to Section 3.02(c)
shall be payable on demand, (ii) in the event of any repayment or prepayment of
any Loan (other than an optional prepayment of an ABR Loan prior to the
Termination Date), 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.

 

(e)           Interest Rate Computations.  All interest hereunder shall be
computed on the basis of a year of 360 days, unless such computation would
exceed the Highest Lawful Rate, in which case interest shall be computed on the
basis of a year of 365 days (or 366 days in a leap year), except that interest
computed by reference to the Alternate Base Rate at times when the Alternate
Base Rate is based on the Prime 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).  The applicable Alternate Base Rate, Adjusted LIBO Rate or LIBO Rate shall
be determined by the Administrative Agent, and such determination shall be
conclusive absent manifest error, and be binding upon the parties hereto.

 

Section 3.03        Alternate Rate of Interest.  If prior to the commencement of
any Interest Period for a Eurodollar Borrowing:

 

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

 

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

 

then the Administrative Agent shall give notice thereof to the Borrower and the
Lenders by telephone or telecopy as promptly as practicable thereafter and,
until the Administrative Agent notifies the Borrower and the Lenders that the
circumstances giving rise to such notice no longer exist, (i) any Interest
Election Request that requests the conversion of any Borrowing to, or
continuation of any Borrowing as, a Eurodollar Borrowing shall be ineffective,
and (ii) if any Borrowing Request requests a Eurodollar Borrowing, such
Borrowing shall be made either as an ABR Borrowing or at an alternate rate of
interest determined by the Majority Lenders as their cost of funds.

 

Section 3.04        Prepayments.

 

(a)           Optional Prepayments. Subject to any break funding costs payable
pursuant to Section 5.02 and prior notice in accordance with Section 3.04(b),
the Borrower shall have the right at any time and from time to time to (i)
prepay any ABR Borrowing in whole in or in part, in a minimum aggregate amount
of $1,000,000 or any integral multiple of $500,000 in excess thereof or if less
than $1,000,000, the remaining balance of the ABR Loans, and (ii) prepay any
Eurodollar Borrowing in whole in or in part, in a minimum aggregate amount of
$3,000,000 or any integral multiple of $500,000 in excess thereof or if less
than $3,000,000, the remaining balance of such Eurodollar Borrowing.

 

(b)           Notice and Terms of Optional Prepayment.  The Borrower shall
notify the Administrative Agent by telephone (confirmed by telecopy) of any
prepayment hereunder (i) in the case of prepayment of a Eurodollar Borrowing,
not later than 12:00 noon, New York City time, three Business Days before the
date of prepayment, or (ii) in the case of prepayment of an ABR Borrowing, not
later than 12:00 noon, New York City time, one Business Day before 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.  Promptly following receipt of any such notice relating to a
Borrowing, the 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 2.02.  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 3.02.

 

(c)           Mandatory Prepayments.

 

(i)            If, after giving effect to any termination or reduction of the
Aggregate Maximum Credit Amounts pursuant to Section 2.06(b), the total
Revolving Credit Exposures exceeds the total Commitments, then the Borrower
shall (A) prepay the Borrowings on the date of such termination or reduction in
an aggregate principal amount equal to such excess, and (B) if any excess
remains after prepaying all of the Borrowings as a result of an LC

 

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Exposure, pay to the Administrative Agent on behalf of the Lenders an amount
equal to such excess to be held as cash collateral as provided in
Section 2.08(i).

 

(ii)           Upon any redetermination of or adjustment to the amount of the
Borrowing Base in accordance with Section 2.07, if the Total Debt exceeds the
redetermined or adjusted Borrowing Base, then the Borrower shall prepay the
Borrowings and, to the extent required by the terms of the Indentures or any
other agreements governing outstanding senior Debt, repay, prepay, redeem or
otherwise decrease its Total Debt in an aggregate principal amount equal to such
excess.  Prepayments of the Borrowings shall be in an aggregate principal amount
equal to such excess.  If any excess remains after prepaying all of the
Borrowings as a result of an LC Exposure, the Borrower shall pay to the
Administrative Agent on behalf of the Lenders an amount equal to such excess to
be held as cash collateral as provided in Section 2.08(i).  The Borrower shall
be obligated to make such prepayments by the thirtieth day following receipt of
the New Borrowing Base Notice in accordance with Section 2.07(d); provided that
all payments required to be made pursuant to this Section 3.04(c)(ii) must be
made on or prior to the Termination Date.

 

(iii)          Upon any adjustments to the Borrowing Base pursuant to
Section 2.07(e), if the Total Debt exceeds the Borrowing Base as adjusted, then
the Borrower shall prepay the Borrowings and, to the extent required by the
terms of the Indentures or any other agreements governing senior Debt, repay,
prepay, redeem or otherwise decrease its Total Debt in an aggregate principal
amount equal to such excess.  Prepayments of the Borrowings shall be in an
aggregate principal amount equal to such excess.  If any excess remains after
prepaying all of the Borrowings as a result of an LC Exposure, the Borrower
shall pay to the Administrative Agent on behalf of the Lenders an amount equal
to such excess to be held as cash collateral as provided in Section 2.08(i). 
The Borrower shall be obligated to make such prepayment and/or deposit of cash
collateral on the date it or any Subsidiary receives cash proceeds as a result
of such termination, creation of offsetting positions or disposition, as
applicable; provided that all payments required to be made pursuant to this
Section 3.04(c)(iii) must be made on or prior to the Termination Date.

 

(iv)          Upon any adjustment to the Borrowing Base pursuant to Section 9.10
or in connection with the incurrence of any other Debt, if the Total Debt
exceeds the Borrowing Base as adjusted, then the Borrower shall prepay the
Borrowings and, to the extent required by the terms of the Indentures or any
other agreements governing senior Debt, repay, prepay, redeem or otherwise
decrease its Total Debt in an aggregate principal amount equal to such excess. 
Prepayments of the Borrowings shall be in an aggregate principal amount equal to
such excess.  If any excess remains after prepaying all of the Borrowings as a
result of an LC Exposure, the Borrower shall pay to the Administrative Agent on
behalf of the Lenders an amount equal to such excess to be held as cash
collateral as provided in Section 2.08(i).  The Borrower shall be obligated to
make such prepayment and/or deposit of cash collateral either on the date it or
any Subsidiary receives cash proceeds as a result of such disposition or incurs
such other Debt; provided that all payments required to be made pursuant to this
Section 3.04(c)(iii) must be made on or prior to the Termination Date.

 

(v)           Each prepayment of Borrowings pursuant to this
Section 3.04(c) shall be applied, first, ratably to any ABR Borrowings then
outstanding, and, second, to any

 

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Eurodollar Borrowings then outstanding, and if more than one Eurodollar
Borrowing is then outstanding, to each such Eurodollar Borrowing in order of
priority beginning with the Eurodollar Borrowing with the least number of days
remaining in the Interest Period applicable thereto and ending with the
Eurodollar Borrowing with the most number of days remaining in the Interest
Period applicable thereto.

 

(vi)          Each prepayment of Borrowings pursuant to this
Section 3.04(c) shall be applied ratably to the Loans included in the prepaid
Borrowings.  Prepayments pursuant to this Section 3.04(c) shall be accompanied
by accrued interest to the extent required by Section 3.02.

 

(d)           No Premium or Penalty.  Prepayments permitted or required under
this Section 3.04 shall be without premium or penalty, except as required under
Section 5.02.

 

Section 3.05        Fees.

 

(a)           Commitment Fees.  The Borrower agrees to pay to the Administrative
Agent for the account of each Lender a commitment fee, which shall accrue at the
rate per annum set forth in the Commitment Fee Grid below based on the Leverage
Ratio then in effect, on the average daily amount of the unused amount of each
Lender’s Applicable Percentage of the Borrowing Base during the period from and
including the date of this Agreement to but excluding the Termination Date. 
Accrued commitment fees shall be payable quarterly in arrears on the third
Business Day following receipt by the Borrower of a quarterly invoice for such
amounts and on the Termination Date.  All commitment fees shall be computed on
the basis of a year of 360 days, unless such computation would exceed the
Highest Lawful Rate, in which case interest shall be computed on the basis of a
year of 365 days (or 366 days in a leap year), and shall be payable for the
actual number of days elapsed (including the first day but excluding the last
day).

 

Commitment Fee Grid

 

Leverage Ratio

 

< 1.0

 

> 1.0

 

Commitment Fee

 

0.375%

 

0.50%

 

 

(b)           Letter of Credit Fees.  The Borrower agrees to pay (i) to the
Administrative Agent for the account of each Lender a participation fee with
respect to its participations in Letters of Credit, which shall accrue at the
same Applicable Margin used to determine the interest rate applicable to
Eurodollar Loans on the average daily amount of such Lender’s LC Exposure
(excluding any portion thereof attributable to unreimbursed LC Disbursements)
during the period from and including the date of this Agreement to but excluding
the later of the date on which such Lender’s Commitment terminates and the date
on which such Lender ceases to have any LC Exposure, (ii) to the Issuing Bank a
fronting fee, which shall accrue at the rate separately agreed upon between the
Borrower and the Issuing Bank on the average daily amount of the LC Exposure
(excluding any portion thereof attributable to unreimbursed LC Disbursements)
during the period from and including the date of this Agreement to but excluding
the later of the date of termination of the Commitments and the date

 

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on which there ceases to be any LC Exposure, and (iii) to the Issuing Bank, for
its own account, its standard fees with respect to the issuance, amendment,
renewal or extension of any Letter of Credit or processing of drawings
thereunder.  Participation fees and fronting fees shall accrue on a quarterly
basis through and including the last day of March, June, September and
December of each year and shall be payable on the third Business Day following
receipt by the Borrower of an invoice for such amounts; provided that all such
fees shall be payable on the Termination Date and any such fees accruing after
the Termination Date shall be payable on written demand.  Any other fees payable
to the Issuing Bank pursuant to this Section 3.05(a) shall be payable within 10
days after demand.  All participation fees and fronting fees shall be computed
on the basis of a year of 360 days, unless such computation would exceed the
Highest Lawful Rate, in which case interest shall be computed on the basis of a
year of 365 days (or 366 days in a leap year), and shall be payable for the
actual number of days elapsed (including the first day but excluding the last
day).

 

(c)           Administrative Agent Fees.  The Borrower agrees to pay to the
Administrative Agent, for its own account, fees payable in the amounts and at
the times separately agreed upon between the Borrower and the Administrative
Agent.

 

ARTICLE IV
Payments; Pro Rata Treatment; Sharing of Set-offs

 

Section 4.01        Payments Generally; Pro Rata Treatment; Sharing of Set-offs.

 

(a)           Payments by the Borrower.  The Borrower shall make each payment
required to be made by it hereunder (whether of principal, interest, fees or
reimbursement of LC Disbursements, or of amounts payable under Section 5.01,
Section 5.02, Section 5.03 or otherwise) prior to 12:00 noon, New York City
time, on the date when due, in immediately available funds, without defense,
deduction, recoupment, set-off or counterclaim.  Fees, once paid, shall be fully
earned and shall not be refundable under any circumstances.  Any amounts
received after such time on any date may, in the discretion of the
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 Administrative Agent at its offices specified in
Section 12.01, except payments to be made directly to the Issuing Bank as
expressly provided herein and except that payments pursuant to Section 5.01,
Section 5.02, Section 5.03 and Section 12.03 shall be made directly to the
Persons entitled thereto.  The 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.  If any payment hereunder 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 hereunder shall be made in dollars.

 

(b)           Application of Insufficient Payments.  If at any time insufficient
funds are received by and available to the Administrative Agent to pay fully all
amounts of principal, unreimbursed LC Disbursements, interest and fees then due
hereunder, such funds shall be applied (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

 

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parties, and (ii) second, towards payment of principal and unreimbursed LC
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)           Sharing of Payments by Lenders.  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 Loans or participations in
LC Disbursements resulting in such Lender receiving payment of a greater
proportion of the aggregate amount of its Loans and participations in LC
Disbursements 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 Loans and participations in LC
Disbursements 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 Loans
and participations in LC Disbursements; 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 returned to the extent of such recovery, without interest, and (ii) the
provisions of this Section 4.01(c) 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 to any assignee or participant, other than to
the Borrower or any Subsidiary or Affiliate thereof (as to which the provisions
of this Section 4.01(c) 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.

 

Section 4.02        Presumption of Payment by the Borrower.  Unless the
Administrative Agent shall have received notice from the Borrower prior to the
date on which any payment is due to the Administrative Agent for the account of
the Lenders or the Issuing Bank that the Borrower will not make such payment,
the 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 the 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 the Issuing Bank, as the case may be, severally agrees to
repay to the Administrative Agent forthwith on demand the amount so distributed
to such Lender or 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 Administrative Agent, at the greater of the Federal Funds
Effective Rate and a rate determined by the Administrative Agent in accordance
with banking industry rules on interbank compensation.

 

Section 4.03        Payments and Deductions to a Defaulting Lender.

 

(a)           If any Lender shall fail to make any payment required to be made
by it pursuant to Section 2.05(a), Section 2.08(d), Section 2.08(e) or
Section 4.02 then the Administrative Agent may, in its discretion
(notwithstanding any contrary provision hereof), apply any amounts thereafter
received by the Administrative Agent for the account of such

 

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Lender to satisfy such Lender’s obligations under such Sections until all such
unsatisfied obligations are fully paid in cash.

 

(b)           If a Defaulting Lender (or a Lender who would be a Defaulting
Lender but for the expiration of the relevant grace period) as a result of the
exercise of a set-off shall have received a payment in respect of its Revolving
Credit Exposure which results in its Revolving Credit Exposure being less than
its Applicable Percentage of the aggregate Revolving Credit Exposures, then no
payments will be made to such Defaulting Lender until such time as such
Defaulting Lender shall have complied with Section 4.03(c) and all amounts due
and owing to the Lenders have been equalized in accordance with each Lender’s
respective pro rata share of the Indebtedness.  Further, if at any time prior to
the acceleration or maturity of the Loans, the Administrative Agent shall
receive any payment in respect of principal of a Loan or a reimbursement of an
LC Disbursement while one or more Defaulting Lenders shall be party to this
Agreement, the Administrative Agent shall apply such payment first to the
Borrowing(s) for which such Defaulting Lender(s) shall have failed to fund its
pro rata share until such time as such Borrowing(s) are paid in full or each
Lender (including each Defaulting Lender) is owed its Applicable Percentage of
all Loans then outstanding.  After acceleration or maturity of the Loans,
subject to the first sentence of this Section 4.03(b), all principal will be
paid ratably as provided in Section 10.02(c).

 

(c)           Notwithstanding any provision of this Agreement to the contrary,
if any Lender becomes a Defaulting Lender, then the following provisions shall
apply for so long as such Lender is a Defaulting Lender:

 

(i)            Fees shall cease to accrue on the unfunded portion of the
Commitment of such Defaulting Lender pursuant to Section 3.05.

 

(ii)           The Commitment of such Defaulting Lender shall not be included in
determining whether all Lenders, the Borrowing Base Increasing Lenders, the
Required Lenders or the Majority Lenders have taken or may take any action
hereunder (including any consent to any amendment or waiver pursuant to
Section 12.02), provided that any waiver, amendment or modification requiring
the consent of all Lenders or each affected Lender shall require the consent of
such Defaulting Lender; and provided further that any redetermination or
affirmation of the Borrowing Base shall occur without the participation of a
Defaulting Lender, but the Commitment (i.e. the Applicable Percentage of the
Borrowing Base of a Defaulting Lender) may not be increased without the consent
of such Defaulting Lender.

 

(iii)          If any LC Exposure exists at the time a Lender becomes a
Defaulting Lender then:

 

(A)          all or any part of such LC Exposure shall be reallocated among the
Non-Defaulting Lenders in accordance with their respective Applicable
Percentages (for the purposes of such reallocation the Defaulting Lender’s
Commitment shall be disregarded in determining the Non-Defaulting Lender’s
Applicable Percentage) but only to the extent (x) the sum of all Non-Defaulting
Lenders’ Revolving Credit Exposures plus such Defaulting Lender’s LC Exposure
does not exceed the total of all Non-Defaulting Lenders’ Commitments, (y) the
conditions set forth in Section 6.02 are satisfied at such time and (z) the sum
of each Non-

 

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Defaulting Lender’s Revolving Credit Exposure plus its reallocated share of such
Defaulting Lender’s LC Exposure does not exceed such Non-Defaulting Lender’s
Commitment;

 

(B)           if the reallocation described in clause (A) above cannot, or can
only partially, be effected, then the Borrower shall within one Business Day
following notice by the Administrative Agent cash collateralize such Defaulting
Lender’s LC Exposure (after giving effect to any partial reallocation pursuant
to clause (A) above) in accordance with the procedures set forth in
Section 10.02 for so long as such LC Exposure is outstanding;

 

(C)           if the Borrower cash collateralizes any portion of such Defaulting
Lender’s LC Exposure pursuant to this Section 4.03 then the Borrower shall not
be required to pay any fees to such Defaulting Lender pursuant to
Section 3.05(b) with respect to such Defaulting Lender’s LC Exposure during the
period such Defaulting Lender’s LC Exposure is cash collateralized;

 

(D)          if the LC Exposure of the Non-Defaulting Lenders is reallocated
pursuant to Section 4.03(c), then the fees payable to the Lenders pursuant to
Section 3.05(a) and Section 3.05(b) shall be adjusted in accordance with such
Non-Defaulting Lenders’ Applicable Percentages; or

 

(E)           if any Defaulting Lender’s LC Exposure is neither cash
collateralized nor reallocated pursuant to Section 4.03(c)(iii), then, without
prejudice to any rights or remedies of the Issuing Bank or any Lender hereunder,
all commitment fees that otherwise would have been payable to such Defaulting
Lender (solely with respect to the portion of such Defaulting Lender’s
Commitment that was utilized by such LC Exposure) and letter of credit fees
payable under Section 3.05(b) with respect to such Defaulting Lender’s LC
Exposure shall be payable to the Issuing Bank until such LC Exposure is cash
collateralized and/or reallocated.

 

(d)           So long as any Lender is a Defaulting Lender, the Issuing Bank
shall not be required to issue, amend or increase any Letter of Credit, unless
it is satisfied that the related exposure will be 100% covered by the
Commitments of the Non-Defaulting Lenders and/or cash collateral will be
provided by the Borrower in accordance with Section 4.03(c), and participating
interests in any such newly issued or increased Letter of Credit shall be
allocated among Non-Defaulting Lenders in a manner consistent with
Section 2.08(d) (and Defaulting Lenders shall not participate therein).

 

(e)           In the event that the Administrative Agent, the Borrower and the
Issuing Bank each agrees that a Defaulting Lender has adequately remedied all
matters that caused such Lender to be a Defaulting Lender, then the LC Exposure
of the Lenders shall be readjusted to reflect the inclusion of such Lender’s
Commitment and on such date, if necessary as a result of a Loan funding pursuant
to Section 2.08(e), such Lender shall purchase at par such of the Loans of the
other Lenders  as the Administrative shall determine may be necessary in order
for such Lender to hold such Loans in accordance with its Applicable Percentage.

 

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ARTICLE V
Increased Costs; Break Funding Payments; Taxes; Illegality

 

Section 5.01        Increased Costs.

 

(a)           Eurodollar Changes in Law.  If any Change in Law (other than a
Change in Law with respect to Indemnified Taxes or Other Taxes, which shall be
governed exclusively by Section 5.03, or Excluded Taxes) shall:

 

(i)            impose, modify or deem applicable any reserve, special deposit or
similar charge or 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 LIBO Rate); or

 

(ii)           impose on any Lender or the London interbank market any other
condition affecting this Agreement or Eurodollar Loans made by such Lender;

 

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 reduce the amount of any sum received or
receivable by such Lender (whether of principal, interest or otherwise), then
the Borrower will pay to such Lender such additional amount or amounts as will
compensate such Lender for such additional costs incurred or reduction suffered.

 

(b)           Capital Requirements.  If any Lender or the Issuing Bank
determines 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 the Issuing
Bank’s capital or on the capital of such Lender’s or the 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 the Issuing Bank, to a level below that which such Lender or
the Issuing Bank or such Lender’s or the Issuing Bank’s holding company could
have achieved but for such Change in Law (taking into consideration such
Lender’s or the Issuing Bank’s policies and the policies of such Lender’s or the
Issuing Bank’s holding company with respect to capital adequacy), then from time
to time the Borrower will pay to such Lender or the Issuing Bank, as the case
may be, such additional amount or amounts as will compensate such Lender or the
Issuing Bank or such Lender’s or the Issuing Bank’s holding company for any such
reduction suffered.

 

(c)           Certificates.  A certificate of a Lender or the Issuing Bank
setting forth the amount or amounts necessary to compensate such Lender or the
Issuing Bank or its holding company, as the case may be, as specified in
Section 5.01(a) or (b) shall be delivered to the Borrower and shall be
conclusive absent manifest error.  The Borrower shall pay such Lender or the
Issuing Bank, as the case may be, the amount shown as due on any such
certificate within 10 days after receipt thereof.

 

(d)           Effect of Failure or Delay in Requesting Compensation.  Failure or
delay on the part of any Lender or the Issuing Bank to demand compensation
pursuant to this Section 5.01 shall not constitute a waiver of such Lender’s or
the Issuing Bank’s right to demand such compensation; provided that the Borrower
shall not be required to compensate a Lender or the Issuing Bank pursuant to
this Section 5.01 for any increased costs or reductions incurred more

 

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than 365 days prior to the date that such Lender or the 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 the 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 365-day period referred to above shall be extended to include the period of
retroactive effect thereof.

 

Section 5.02        Break Funding Payments.  In the event of (a) the payment 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 into an ABR Loan other than on the
last day of the Interest Period applicable thereto, or (c) the failure to
borrow, convert, continue or prepay any Eurodollar Loan on the date specified in
any notice delivered pursuant hereto, 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 LIBO
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 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 eurodollar market.

 

A certificate of any Lender setting forth any amount or amounts that such Lender
is entitled to receive pursuant to this Section 5.02 shall be delivered to the
Borrower and shall be conclusive absent manifest error.  The Borrower shall pay
such Lender the amount shown as due on any such certificate within 10 days after
receipt thereof.

 

Section 5.03        Taxes.

 

(a)           Payments Free of Taxes.  Any and all payments by or on account of
any obligation of the Borrower or any Guarantor under any Loan Document shall be
made free and clear of and without deduction or withholding for any Indemnified
Taxes or Other Taxes; provided that if Indemnified Taxes or Other Taxes are
required by applicable law to be deducted or withheld from such payments, then
(i) the sum payable by the Borrower (or Guarantor) shall be increased as
necessary so that after making all required deductions or withholdings
(including deductions or withholdings applicable to additional sums payable
under this Section 5.03(a)), the Administrative Agent, Lender or Issuing Bank
(as the case may be) receives an amount equal to the sum it would have received
had no such deductions or withholdings been made, and (ii) if the Borrower (or a
Guarantor) is the withholding agent under applicable law, the Borrower (or
Guarantor) shall make such deductions or withholdings and pay the full amount
deducted to the relevant Governmental Authority in accordance with applicable
law.

 

(b)           Payment of Other Taxes by the Borrower.  The Borrower shall pay
any Other Taxes to the relevant Governmental Authority in accordance with
applicable law.

 

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(c)           Indemnification by the Borrower.  The Borrower shall indemnify the
Administrative Agent, each Lender and the Issuing Bank, within 10 days after
written demand therefor, for the full amount of any Indemnified Taxes or Other
Taxes paid (or payable) by the Administrative Agent, such Lender or the 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 (including Indemnified Taxes or Other
Taxes imposed or asserted on or attributable to amounts payable under this
Section 5.03) 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.  A certificate of the Administrative Agent, a Lender or
the Issuing Bank as to the amount of such payment or liability under this
Section 5.03(c) shall be delivered to the Borrower and shall be conclusive
absent manifest error.

 

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

 

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

 

Without limiting the generality of the foregoing, (A) each Lender which is not a
Foreign Lender, on or prior to the date on which such Lender becomes a Lender
under this agreement (and from time to time thereafter upon the reasonable
request of the Borrower or the Administrative Agent) shall deliver to the
Borrower and the Administrative Agent two (2) properly completed and executed
IRS Forms W-9, and (B) each Foreign Lender and Foreign Issuing Bank shall
deliver to the Borrower and the Administrative Agent on or prior to the date on
which such Foreign Lender or Foreign Issuing Bank becomes a Lender or Issuing
Bank under this Agreement (and from time to time thereafter upon the reasonable
request of the Borrower or the Administrative Agent, but only if such Foreign
Lender or Foreign Issuing Bank is legally entitled to do so), whichever of the
following is applicable:

 

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(i)            two (2) properly completed and executed IRS Forms W-8BEN claiming
eligibility for benefits of an income tax treaty to which the United States of
America is a party,

 

(ii)           two (2) properly completed and executed IRS Forms W-8ECI,

 

(iii)          in the case of a Foreign Lender claiming the benefits of the
exemption for portfolio interest under section 881(c) of the Code, (x) a
certificate, attached as Exhibit I, to the effect that such Foreign Lender is
not (A) a “bank” within the meaning of Section 881(c)(3)(A) of the Code, (B) a
“10 percent shareholder” of the Borrower within the meaning of section
881(c)(3)(B) of the Code, or (C) a “controlled foreign corporation” described in
section 881(c)(3)(C) of the Code and (y) two (2) properly completed and executed
IRS Forms W-8BEN,

 

(iv)          two (2) properly completed and executed Forms W-8IMY (together
with forms listed under clauses (i) through (iii) or (v) hereof, as may be
required), or

 

(v)           any other form prescribed by applicable law as a basis for
claiming exemption from or a reduction in U.S. federal withholding tax properly
completed and executed together with any supplementary documentation as may be
prescribed by applicable law to permit the Borrower and the Administrative Agent
to determine the withholding or deduction required to be made.

 

(f)            Tax Refunds.  If the Administrative Agent or a Lender or Issuing
Bank determines, in its sole discretion, that it has received a refund of any
Indemnified Taxes or Other Taxes as to which it has been indemnified by the
Borrower or any Guarantor or with respect to which the Borrower or any Guarantor
has paid additional amounts pursuant to this Section 5.03, it shall pay over
such refund to the Borrower (but only to the extent of indemnity payments made,
or additional amounts paid, by the Borrower or such Guarantor under this
Section 5.03 with respect to the Indemnified Taxes or Other Taxes giving rise to
such refund), net of all out-of-pocket expenses of the Administrative Agent or
such Lender or Issuing Bank and without interest (other than any interest paid
by the relevant Governmental Authority with respect to such refund); provided,
that the Borrower, upon the request of the Administrative Agent or such Lender
or Issuing Bank, agrees to repay the amount paid over to the Borrower or any
Guarantor (plus any penalties, interest or other charges imposed by the relevant
Governmental Authority) to the Administrative Agent or such Lender or Issuing
Bank in the event the Administrative Agent or such Lender or Issuing Bank is
required to repay such refund to such Governmental Authority.  This Section 5.03
shall not be construed to require the Administrative Agent or any Lender or
Issuing Bank to make available its tax returns (or any other information
relating to its taxes which it deems confidential) to the Borrower or any other
Person.

 

(g)           FATCA.  If a payment made to a Lender under any Loan Document
would be subject to U.S. Federal withholding Tax imposed by FATCA if such Lender
were to fail to comply with the applicable reporting requirements of FATCA
(including those contained in Section 1471(b) or 1472(b) of the Code, as
applicable), such Lender shall deliver to the Administrative Agent and the
Borrower (each a “Withholding Agent”), at the time or times prescribed by law
and at such time or times reasonably requested by the Withholding Agent,

 

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such documentation prescribed by applicable law (including as prescribed by
Section 1471(b)(3)(C)(i) of the Code) and such additional documentation
reasonably requested by the Withholding Agent as may be necessary for the
Withholding Agent to comply with its obligations under FATCA, to determine that
such Lender has or has not complied with such Lender’s obligations under FATCA
or to determine the amount to deduct and withhold from such payment.

 

(h)           Indemnification by the Lenders.  Each Lender shall severally
indemnify the Administrative Agent for any Taxes (but, in the case of any
Indemnified Taxes, only to the extent that the Borrower or any Guarantor has not
already indemnified the Administrative Agent for such Indemnified Taxes and
without limiting the obligation of the Borrower or any Guarantor to do so)
attributable to such Lender that are paid or payable by the Administrative Agent
in connection with any Loan Document and any reasonable expenses arising
therefrom or with respect thereto, whether or not such Taxes were correctly or
legally imposed or asserted by the relevant Governmental Authority.  The
indemnity under this Section 5.03(g) shall be paid within 10 days after the
Administrative Agent delivers to the applicable Lender a certificate stating the
amount of Taxes so paid or payable by the Administrative Agent.  Such
certificate shall be conclusive of the amount so paid or payable absent manifest
error.

 

Section 5.04        Mitigation Obligations; Replacement of Lenders.

 

(a)           Designation of Different Lending Office.  If any Lender requests
compensation under Section 5.01, or if any Credit Party is required to pay any
additional amount to any Lender or any Governmental Authority for the account of
any Lender or indemnify any Lender pursuant to Section 5.03, then such Lender
shall use reasonable efforts to designate a different lending office for funding
or booking its Loans hereunder or to assign its rights and obligations hereunder
to another of its offices, branches or affiliates, if, in the reasonable
judgment of such Lender, such designation or assignment (i) would eliminate or
reduce amounts payable pursuant to Section 5.01 or Section 5.03, 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)           Replacement of Lenders.  If (i) any Lender requests compensation
under Section 5.01, (ii) any Credit Party is required to pay any additional
amount to any Lender or any Governmental Authority for the account of any Lender
or indemnify any Lender pursuant to Section 5.03, (iii) any Lender becomes a
Defaulting Lender or (iv) any Lender fails to approve an increase in the
Borrowing Base or any other amendment requiring approval of all Lenders which
proposed Borrowing Base or amendment has been approved by Lenders holding more
than 75% of the then outstanding Maximum Credit Amounts, then the Borrower may,
at its sole expense and effort, upon notice to such Lender and the
Administrative Agent, require such Lender to assign and delegate, without
recourse (in accordance with and subject to the restrictions contained in
Section 12.04(b)), 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) the
Borrower shall have received the prior written consent of the Administrative
Agent, which consent shall not unreasonably be withheld, (B) such Lender shall
have received payment of an amount equal to the

 

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outstanding principal of its Loans and participations in LC Disbursements,
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)
and (C) in the case of any such assignment resulting from a claim for
compensation under Section 5.01 or payments required to be made pursuant to
Section 5.03, such assignment will result in a reduction in such compensation or
payments.  A Lender shall not be required to make any such assignment and
delegation if, prior thereto, as a result of a waiver by such Lender or
otherwise, the circumstances entitling the Borrower to require such  assignment
and delegation cease to apply.

 

Section 5.05        Illegality.  Notwithstanding any other provision of this
Agreement, in the event that it becomes unlawful for any Lender or its
applicable lending office to honor its obligation to make or maintain Eurodollar
Loans either generally or having a particular Interest Period hereunder, then
(a) such Lender shall promptly notify the Borrower and the Administrative Agent
thereof and such Lender’s obligation to make such Eurodollar Loans shall be
suspended (the “Affected Loans”) until such time as such Lender may again make
and maintain such Eurodollar Loans and (b) all Affected Loans which would
otherwise be made by such Lender shall be made instead as ABR Loans (and, if
such Lender so requests by notice to the Borrower and the Administrative Agent,
all Affected Loans of such Lender then outstanding shall be automatically
converted into ABR Loans on the date specified by such Lender in such notice)
and, to the extent that Affected Loans are so made as (or converted into) ABR
Loans, all payments of principal which would otherwise be applied to such
Lender’s Affected Loans shall be applied instead to its ABR Loans.

 

ARTICLE VI
Conditions Precedent

 

Section 6.01        Effective Date.  The obligations of the Lenders to make
Loans and of the 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 12.02):

 

(a)           The Administrative Agent, the Arrangers and the Lenders shall have
received all commitment, facility and agency fees and all other fees and amounts
due and payable on or prior to the Effective Date, including, to the extent
invoiced, reimbursement or payment of all out-of-pocket expenses required to be
reimbursed or paid by the Borrower hereunder (including, without limitation, the
fees and expenses of Simpson Thacher & Bartlett LLP, counsel to the
Administrative Agent).

 

(b)           The Administrative Agent shall have received a certificate of the
Secretary or an Assistant Secretary of the Borrower and each Guarantor setting
forth (i) resolutions of its board of directors with respect to the
authorization of the Borrower or such Guarantor to execute and deliver the Loan
Documents to which it is a party and to enter into the transactions contemplated
in those documents, (ii) the officers of the Borrower or such Guarantor (y) who
are authorized to sign the Loan Documents to which the Borrower or such
Guarantor is a party and (z) who will, until replaced by another officer or
officers duly authorized for that purpose, act as its representative for the
purposes of signing documents and giving notices and other communications in
connection with this Agreement and the transactions contemplated hereby,

 

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(iii) specimen signatures of such authorized officers, and (iv) the
Organizational Documents of the Borrower and such Guarantor, certified as being
true and complete.  The Administrative Agent and the Lenders may conclusively
rely on such certificate until the Administrative Agent receives notice in
writing from the Borrower to the contrary.

 

(c)           The Administrative Agent shall have received certificates of the
appropriate State agencies with respect to the existence, qualification and good
standing of the Borrower and each Guarantor.

 

(d)           The Administrative Agent shall have received a compliance
certificate which shall be substantially in the form of Exhibit D, duly and
properly executed by a Responsible Officer and dated as of the date of Effective
Date.

 

(e)           The Administrative Agent shall have received from each party
hereto counterparts (in such number as may be requested by the Administrative
Agent) of this Agreement signed on behalf of such party.

 

(f)            The Administrative Agent shall have received from each party
thereto duly executed counterparts of the Guaranty Agreement.

 

(g)           The Administrative Agent shall have received an opinion of Holme
Roberts & Owen LLP, special counsel to the Borrower, substantially in the form
of Exhibit E hereto.

 

(h)           The Administrative Agent shall have received a certificate of
insurance coverage of the Borrower evidencing that the Borrower is carrying
insurance in accordance with Section 7.12.

 

(i)            The Administrative Agent shall have received a certificate of a
Responsible Officer of the Borrower certifying that the Borrower has received
all consents and approvals required by Section 7.03.

 

(j)            The Administrative Agent shall have received the financial
statements referred to in Section 7.04(a) and the Initial Reserve Report
accompanied by a Reserve Report Certificate.

 

(k)           The Administrative Agent shall have received appropriate UCC
search certificates reflecting no prior Liens encumbering the Properties of the
Borrower and the Subsidiaries for each of the following jurisdictions: Delaware,
Texas and any other jurisdiction requested by the Administrative Agent; other
than those being assigned or released on or prior to the Effective Date or Liens
permitted by Section 9.03.

 

(l)            The Existing Credit Agreement and all commitments thereunder
shall have been terminated, all loans thereunder repaid (other than the Existing
Letters of Credit) and all Liens related thereto shall be contemporaneously
released.

 

(m)          The Administrative Agent shall have received such other documents
as the Administrative Agent or special counsel to the Administrative Agent may
reasonably request.

 

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The Administrative Agent shall notify the Borrower and the Lenders of the
Effective Date, and such notice shall be conclusive and binding. 
Notwithstanding the foregoing, the obligations of the Lenders to make Loans and
of the Issuing Bank to issue Letters of Credit hereunder shall not become
effective unless each of the foregoing conditions is satisfied (or waived
pursuant to Section 12.02) at or prior to 2:00 p.m., New York City time, on
July 31, 2011 (and, in the event such conditions are not so satisfied or waived,
the Commitments shall terminate at such time).

 

Section 6.02        Each Credit Event.  The obligation of each Lender to make a
Loan on the occasion of any Borrowing (including the initial funding), and of
the Issuing Bank to issue, amend, renew or extend any Letter of Credit
(including any Loan made or Letter of Credit issued (including for the purpose
of the Existing Letters of Credit) on the initial date of Borrowing), is subject
to the satisfaction of the following conditions:

 

(a)           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.

 

(b)           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 event, development or circumstance has occurred or
shall then exist that has resulted in, or could reasonably be expected to have,
a Material Adverse Effect.

 

(c)           The representations and warranties of the Borrower and the
Guarantors set forth in this Agreement and in the other Loan Documents shall be
true and correct in all material respects on and as of the date of such
Borrowing or the date of issuance, amendment, renewal or extension of such
Letter of Credit, as applicable, except to the extent any such representations
and warranties are expressly limited to an earlier date, in which case, on and
as of the date of such Borrowing or the date of issuance, amendment, renewal or
extension of such Letter of Credit, as applicable, such representations and
warranties shall continue to be true and correct as of such specified earlier
date.

 

(d)           The making of such Loan or the issuance, amendment, renewal or
extension of such Letter of Credit, as applicable, would not conflict with, or
cause any Lender or the Issuing Bank to violate or exceed, any applicable
Governmental Requirement, and no Change in Law shall have occurred, and no
litigation shall be pending or threatened, which does or, with respect to any
threatened litigation, seeks to, enjoin, prohibit or restrain, the making or
repayment of any Loan, the issuance, amendment, renewal, extension or repayment
of any Letter of Credit or any participations therein or the consummation of the
transactions contemplated by this Agreement or any other Loan Document.

 

(e)           The receipt by the Administrative Agent of a Borrowing Request in
accordance with Section 2.03 or a request for a Letter of Credit in accordance
with Section 2.08(b), as applicable.

 

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Each request for a Borrowing and each request for the issuance, amendment,
renewal or extension of any 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 Section 6.02(a) through (e).

 

ARTICLE VII
Representations and Warranties

 

The Borrower represents and warrants to the Lenders that:

 

Section 7.01                                Organization; Powers.  Each of the
Borrower and the Subsidiaries is duly organized, validly existing and in good
standing under the laws of the jurisdiction of its organization, has all
requisite power and authority, and has all material governmental licenses,
authorizations, consents and approvals necessary, to own its assets and to carry
on its business as now conducted, and is qualified to do business in, and is in
good standing in, every jurisdiction where such qualification is required,
except where failure to have such power, authority, licenses, authorizations,
consents, approvals and qualifications could not reasonably be expected to have
a Material Adverse Effect.

 

Section 7.02                                Authority; Enforceability.  The
Transactions are within the Borrower’s and each Guarantor’s corporate powers and
have been duly authorized by all necessary corporate and, if required,
stockholder action (including, without limitation, any action required to be
taken by any class of directors of the Borrower or any other Person, whether
interested or disinterested, in order to ensure the due authorization of the
Transactions).  Each Loan Document to which the Borrower and each Guarantor is a
party has been duly executed and delivered by the Borrower and such Guarantor
and constitutes a legal, valid and binding obligation of the Borrower and such
Guarantor, as applicable, enforceable in accordance with its terms, subject to
applicable bankruptcy, insolvency, reorganization, moratorium or other laws
affecting creditors’ rights generally and subject to general principles of
equity, regardless of whether considered in a proceeding in equity or at law.

 

Section 7.03                                Approvals; No Conflicts.  The
Transactions (a) do not require any consent or approval of, registration or
filing with, or any other action by, any Governmental Authority or any other
third Person (including shareholders or any class of directors, whether
interested or disinterested, of the Borrower or any other Person), nor is any
such consent, approval, registration, filing or other action necessary for the
validity or enforceability of any Loan Document or the consummation of the
transactions contemplated thereby, except such as have been obtained or made and
are in full force and effect, other than those third party approvals or consents
which, if not made or obtained, would not cause a Default hereunder, could not
reasonably be expected to have a Material Adverse Effect or do not have an
adverse effect on the enforceability of the Loan Documents, (b) will not violate
any applicable law or regulation or the charter, by-laws or other organizational
documents of the Borrower or any Subsidiary or any order of any Governmental
Authority, (c) will not violate or result in a default under any indenture,
agreement or other instrument binding upon the Borrower or any Subsidiary or its
Properties, or give rise to a right thereunder to require any payment to be made
by the Borrower or such Subsidiary and (d) will not result in the creation or
imposition of any Lien on any Property of the Borrower or any Subsidiary.

 

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Section 7.04                                Financial Condition; No Material
Adverse Change.

 

(a)                                  The Borrower has heretofore furnished to
the Lenders (i) its consolidated balance sheet and statements of operations,
stockholders’ equity and comprehensive income (loss), and cash flows as of and
for the fiscal year ended December 31, 2010, reported on by KPMG LLP,
independent public accountants and (ii) its unaudited consolidated balance sheet
and statements of operations, stockholders’ equity and comprehensive income
(loss), and cash flows as of and for the fiscal quarter ended March 31, 2011. 
Such financial statements present fairly, in all material respects, the
financial position and results of operations and cash flows of the Borrower and
its Consolidated Subsidiaries as of such dates and for such periods in
accordance with GAAP, subject to year-end audit adjustments and the absence of
footnotes in the case of the unaudited quarterly financial statements.

 

(b)                                 Since December 31, 2010, (i) there has been
no event, development or circumstance that has had or could reasonably be
expected to have a Material Adverse Effect and (ii) the business of the Borrower
and its Subsidiaries has been conducted only in the ordinary course consistent
with past business practices.

 

(c)                                  Neither the Borrower nor any Subsidiary has
on the date hereof any material Debt (including Disqualified Capital Stock) or
any contingent liabilities, off-balance sheet liabilities or partnerships,
liabilities for taxes, unusual forward or long-term commitments or unrealized or
anticipated losses from any unfavorable commitments, except as referred to or
reflected or provided for in the Financial Statements.

 

Section 7.05                                Litigation.

 

(a)                                  Except as set forth on Schedule 7.05, there
are no actions, suits, investigations or proceedings by or before any arbitrator
or Governmental Authority pending against or, to the knowledge of the Borrower,
threatened against or affecting the Borrower or any Subsidiary (i) not fully
covered by insurance (except for normal deductibles) as to which there is a
reasonable possibility of an adverse determination that, if adversely
determined, could reasonably be expected, individually or in the aggregate, to
result in a Material Adverse Effect, or (ii) that involve any Loan Document or
the Transactions.

 

(b)                                 Since the date of this Agreement, there has
been no change in the status of the matters disclosed in Schedule 7.05 that,
individually or in the aggregate, has resulted in, or materially increased the
likelihood of, a Material Adverse Effect.

 

Section 7.06                                Environmental Matters.  Except for
such matters as set forth on Schedule 7.06 or that, individually or in the
aggregate, could not reasonably be expected to have a Material Adverse Effect:

 

(a)                                  the Borrower and the Subsidiaries and each
of their respective Properties and operations thereon are, and within all
applicable statute of limitation periods have been, in compliance with all
applicable Environmental Laws.

 

(b)                                 the Borrower and the Subsidiaries have
obtained all Environmental Permits required for their respective operations and
each of their Properties, with all such

 

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Environmental Permits being currently in full force and effect, and none of
Borrower or the Subsidiaries has received any written notice or otherwise has
knowledge that any such existing Environmental Permit will be revoked or that
any application for any new Environmental Permit or renewal of any existing
Environmental Permit will be protested or denied.

 

(c)                                  there are no claims, demands, suits,
orders, inquiries, or proceedings concerning any violation of, or any liability
(including as a potentially responsible party) under, any applicable
Environmental Laws that is pending or, to Borrower’s knowledge, threatened
against the Borrower or any Subsidiary or any of their respective Properties or
as a result of any operations at such Properties.

 

(d)                                 none of the Properties of the Borrower or
any Subsidiary contain or have contained any:  (i) underground storage tanks;
(ii) asbestos-containing materials; (iii) landfills or dumps; (iv) hazardous
waste management units as defined pursuant to RCRA or any comparable state law;
or (v) sites on or nominated for the National Priority List promulgated pursuant
to CERCLA or any state remedial priority list promulgated or published pursuant
to any comparable state law.

 

(e)                                  there has been no Release or, to the
Borrower’s knowledge, threatened Release, of Hazardous Materials at, on, under
or from the Borrower’s or any Subsidiary’s Properties, there are no
investigations, remediations, abatements, removals, or monitorings of Hazardous
Materials required under applicable Environmental Laws at such Properties and,
to the knowledge of the Borrower, none of such Properties are adversely affected
by any Release or threatened Release of a Hazardous Material originating or
emanating from any other real property.

 

(f)                                    neither the Borrower nor any Subsidiary
has received any written notice asserting an alleged liability or obligation
under any applicable Environmental Laws with respect to the investigation,
remediation, abatement, removal, or monitoring of any Hazardous Materials at,
under, or Released or threatened to be Released from any real properties offsite
the Borrower’s or any Subsidiary’s Properties and, to the Borrower’s knowledge,
there are no conditions or circumstances that could reasonably be expected to
result in the receipt of such written notice.

 

(g)                                 there has been no exposure of any Person or
Property to any Hazardous Materials as a result of or in connection with the
operations and businesses of any of the Borrower’s or the Subsidiaries’
Properties that could reasonably be expected to form the basis for a claim for
damages or compensation.

 

(h)                                 The Borrower and the Subsidiaries have
provided to the Lenders complete and correct copies of all environmental site
assessment reports, investigations, studies, analyses, and correspondence on
environmental matters (including matters relating to any alleged non-compliance
with or liability under Environmental Laws) that are in any of the Borrower’s or
the Subsidiaries’ possession or control and relating to their respective
Properties or operations thereon.

 

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Section 7.07                                Compliance with the Laws and
Agreements; No Defaults.

 

(a)                                  Each of the Borrower and each Subsidiary is
in compliance with all Governmental Requirements applicable to it or its
Property and all agreements and other instruments binding upon it or its
Property, and possesses all licenses, permits, franchises, exemptions, approvals
and other governmental authorizations necessary for the ownership of its
Property and the conduct of its business, except where the failure to do so,
individually or in the aggregate, could not reasonably be expected to result in
a Material Adverse Effect.

 

(b)                                 Neither the Borrower nor any Subsidiary is
in default nor has any event or circumstance occurred which, but for the
expiration of any applicable grace period or the giving of notice, or both,
would constitute a default or would require the Borrower or a Subsidiary to
Redeem or make any offer to Redeem under any indenture, note, credit agreement
or instrument (including, without limitation, the Indentures and the Senior
Notes) pursuant to which any Material Indebtedness is outstanding or by which
the Borrower or any Subsidiary or any of their Properties is bound.

 

(c)                                  No Default has occurred and is continuing.

 

Section 7.08                                Investment Company Act.  Neither the
Borrower nor any Subsidiary is an “investment company” or a company “controlled”
by an “investment company,” within the meaning of, or subject to regulation
under, the Investment Company Act of 1940, as amended.

 

Section 7.09                                Taxes.  Each of the Borrower and its
Subsidiaries has timely filed or caused to be filed all Tax returns and reports
required to have been filed by or with respect to it and has paid or caused to
be paid all Taxes required to have been paid by it, except (a) Taxes that are
being contested in good faith by appropriate proceedings and for which the
Borrower or such Subsidiary, as applicable, has set aside on its books adequate
reserves in accordance with GAAP or (b) to the extent that the failure to do so
could not reasonably be expected to result in a Material Adverse Effect.  The
charges, accruals and reserves on the books of the Borrower and its Subsidiaries
in respect of Taxes and other governmental charges are, in the reasonable
opinion of the Borrower, adequate.  No Tax Lien has been filed and, to the
knowledge of the Borrower, no claim is being asserted with respect to any such
Tax or other such governmental charge.

 

Section 7.10                                ERISA.

 

(a)                                  The Borrower, the Subsidiaries and each
ERISA Affiliate have complied in all material respects with ERISA and, where
applicable, the Code regarding each Plan.

 

(b)                                 Except as disclosed on Schedule 7.10, each
Plan is, and has been, established and maintained in substantial compliance with
its terms, ERISA and, where applicable, the Code.

 

(c)                                  No act, omission or transaction has
occurred which could result in imposition on the Borrower, any Subsidiary or any
ERISA Affiliate (whether directly or indirectly) of (i) either a civil penalty
assessed pursuant to subsections (c), (i), (l) or (m) of section 502 of ERISA or
a tax imposed pursuant to Chapter 43 of Subtitle D of the Code or (ii) breach of
fiduciary duty liability damages under section 409 of ERISA, except as where
such penalty or damages would not have a Material Adverse Effect.

 

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(d)                                 Full payment when due has been made of all
amounts which the Borrower, the Subsidiaries or any ERISA Affiliate is required
under the terms of each Plan or applicable law to have paid as contributions to
such Plan as of the date hereof, except where a failure would not have a
Material Adverse Effect.

 

(e)                                  Except as disclosed in Schedule 7.10,
neither the Borrower, the Subsidiaries nor any ERISA Affiliate sponsors,
maintains, or contributes to an employee welfare benefit plan, as defined in
section 3(1) of ERISA, including, without limitation, any such plan maintained
to provide benefits to former employees of such entities, that may not be
terminated by the Borrower, a Subsidiary or any ERISA Affiliate in its sole
discretion at any time without any material liability.

 

(f)                                    Neither the Borrower, the Subsidiaries
nor any ERISA Affiliate sponsors, maintains or contributes to, or has at any
time in the six-year period preceding the date hereof sponsored, maintained or
contributed to, any employee pension benefit plan, as defined in section 3(2) of
ERISA, that is subject to Title IV of ERISA, section 302 of ERISA or section 412
of the Code.

 

Section 7.11                                Disclosure; No Material
Misstatements.  The Borrower has disclosed to the Administrative Agent and the
Lenders all agreements, instruments and corporate or other restrictions to which
it or any of its Subsidiaries is subject, and all other matters known to it,
that, individually or in the aggregate, could reasonably be expected to result
in a Material Adverse Effect.  Neither the Information Memorandum nor any of the
other reports, financial statements, certificates or other information furnished
by or on behalf of the Borrower or any Subsidiary to the Administrative Agent or
any Lender or any of their Affiliates in connection with the negotiation of this
Agreement or any other Loan Document or delivered hereunder or under any other
Loan Document (as modified or supplemented by other information so furnished)
contains any material misstatement of fact or omits to state any material fact
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading; provided that, with respect to
projected financial information, the Borrower represents only that such
information was prepared in good faith based upon assumptions believed to be
reasonable at the time.  There is no fact peculiar to the Borrower or any
Subsidiary which could reasonably be expected to have a Material Adverse Effect
or in the future is reasonably likely to have a Material Adverse Effect and
which has not been set forth in this Agreement or the Loan Documents or the
other documents, certificates and statements furnished to the Administrative
Agent or the Lenders by or on behalf of the Borrower or any Subsidiary prior to,
or on, the date hereof in connection with the transactions contemplated hereby. 
There are no statements or conclusions in any Reserve Report which are based
upon or include misleading information or fail to take into account material
information regarding the matters reported therein, it being understood that
projections concerning volumes attributable to the Oil and Gas Properties of the
Borrower and the Subsidiaries and production and cost estimates contained in
each Reserve Report are necessarily based upon professional opinions, estimates
and projections and that the Borrower and the Subsidiaries do not warrant that
such opinions, estimates and projections will ultimately prove to have been
accurate.

 

Section 7.12                                Insurance.  The Borrower has, and
has caused all of its Subsidiaries to have, (a) all insurance policies
sufficient for the compliance by each of them with all material

 

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Governmental Requirements and all material agreements and (b) insurance coverage
in at least amounts and against such risk (including, without limitation, public
liability) that are usually insured against by companies similarly situated and
engaged in the same or a similar business for the assets and operations of the
Borrower and its Subsidiaries.

 

Section 7.13                                Subsidiaries; Foreign Operations. 
Except as set forth on Schedule 7.13 or as disclosed in writing to the
Administrative Agent (which shall promptly furnish a copy to the Lenders), which
shall be a supplement to Schedule 7.13, the Borrower has no Subsidiaries and the
Borrower has no Foreign Subsidiaries.  Schedule 7.13 identifies each Subsidiary
as either Domestic or Foreign, and each Subsidiary on such schedule is a
Wholly-Owned Subsidiary.

 

Section 7.14                                Properties; Titles, Etc.

 

(a)                                  Each of the Borrower and the Subsidiaries
has, in all material respects, good and defensible title to the Oil and Gas
Properties evaluated in the most recently delivered Reserve Report and good
title to all its personal Properties, in each case, free and clear of all Liens
except Liens permitted by Section 9.03.  After giving full effect to the
Excepted Liens, the Borrower or the Subsidiary specified as the owner owns, in
all material respects, the net interests in production attributable to the
Hydrocarbon Interests as reflected in the most recently delivered Reserve
Report, and the ownership of such Properties shall not in any material respect
obligate the Borrower or such Subsidiary to bear the costs and expenses relating
to the maintenance, development and operations of each such Property in an
amount in excess of the working interest of each Property set forth in the most
recently delivered Reserve Report that is not offset by a corresponding
proportionate increase in the Borrower’s or such Subsidiary’s net revenue
interest in such Property.

 

(b)                                 All material leases and agreements necessary
for the conduct of the business of the Borrower and the Subsidiaries are valid
and subsisting, in full force and effect, and there exists no default or event
or circumstance which with the giving of notice or the passage of time or both
would give rise to a default under any such lease or leases, which could
reasonably be expected to have a Material Adverse Effect.

 

(c)                                  The rights and Properties presently owned,
leased or licensed by the Borrower and the Subsidiaries including, without
limitation, all easements and rights of way, include all rights and Properties
necessary to permit the Borrower and the Subsidiaries to conduct their business
in all material respects in the same manner as its business has been conducted
prior to the date hereof.

 

(d)                                 All of the Properties of the Borrower and
the Subsidiaries which are reasonably necessary for the operation of their
businesses are in good working condition and are maintained in accordance with
prudent business standards.

 

(e)                                  The Borrower and each Subsidiary owns, or
is licensed to use, all trademarks, tradenames, copyrights, patents and other
intellectual Property material to its business, and the use thereof by the
Borrower and such Subsidiary does not infringe upon the rights of any other
Person, except for any such infringements that, individually or in the
aggregate, could not reasonably be expected to result in a Material Adverse
Effect.  The

 

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Borrower and its Subsidiaries either own or have valid licenses or other rights
to use all databases, geological data, geophysical data, engineering data,
seismic data, maps, interpretations and other technical information used in
their businesses as presently conducted, subject to the limitations contained in
the agreements governing the use of the same, which limitations are customary
for companies engaged in the business of the exploration and production of
Hydrocarbons, with such exceptions as could not reasonably be expected to have a
Material Adverse Effect.

 

Section 7.15                                Maintenance of Properties.  Except
for such acts or failures to act as could not be reasonably expected to have a
Material Adverse Effect, the Oil and Gas Properties (and Properties unitized
therewith) of the Borrower and its Subsidiaries have been maintained, operated
and developed in a good and workmanlike manner and in conformity with all
Governmental Requirements and in conformity with the provisions of all leases,
subleases or other contracts comprising a part of the Hydrocarbon Interests and
other contracts and agreements forming a part of the Oil and Gas Properties of
the Borrower and its Subsidiaries.  Specifically in connection with the
foregoing, except for those as could not be reasonably expected to have a
Material Adverse Effect, (i) no Oil and Gas Property of the Borrower or any
Subsidiary is subject to having allowable production reduced below the full and
regular allowable (including the maximum permissible tolerance) because of any
overproduction (whether or not the same was permissible at the time) and
(ii) none of the wells comprising a part of the Oil and Gas Properties (or
Properties unitized therewith) of the Borrower or any Subsidiary is deviated
from the vertical more than the maximum permitted by Governmental Requirements,
and such wells are, in fact, bottomed under and are producing from, and the well
bores are wholly within, the Oil and Gas Properties (or in the case of wells
located on Properties unitized therewith, such unitized Properties) of the
Borrower or such Subsidiary.  All pipelines, wells, gas processing plants,
platforms and other material improvements, fixtures and equipment owned in whole
or in part by the Borrower or any of its Subsidiaries that are necessary to
conduct normal operations are being maintained in a state adequate to conduct
normal operations, and with respect to such of the foregoing which are operated
by the Borrower or any of its Subsidiaries, in a manner consistent with the
Borrower’s or its Subsidiaries’ past practices (other than those the failure of
which to maintain in accordance with this Section 7.15 could not reasonably be
expected to have a Material Adverse Effect).

 

Section 7.16                                Gas Imbalances, Prepayments.  Except
as set forth on Schedule 7.16 or on the most recent Reserve Report Certificate,
on a net basis there are no gas imbalances, take or pay or other prepayments
which would require the Borrower or any of its Subsidiaries to deliver
Hydrocarbons produced from their Oil and Gas Properties at some future time
without then or thereafter receiving full payment therefor exceeding two (2) Bcf
of gas (on an mcf equivalent basis) in the aggregate.

 

Section 7.17                                Marketing of Production.  Except for
contracts listed and in effect on the date hereof on Schedule 7.17, and
thereafter either disclosed in writing to the Administrative Agent or included
in the most recently delivered Reserve Report (with respect to all of which
contracts the Borrower represents that it or its Subsidiaries are receiving a
price for all production sold thereunder which is computed substantially in
accordance with the terms of the relevant contract and are not having deliveries
curtailed substantially below the subject Property’s delivery capacity), no
material agreements exist which are not cancelable on 60 days

 

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notice or less without penalty or detriment for the sale of production from the
Borrower’s or its Subsidiaries’ Hydrocarbons (including, without limitation,
calls on or other rights to purchase, production, whether or not the same are
currently being exercised) that (a) pertain to the sale of production at a fixed
price and (b) have a maturity or expiry date of longer than six (6) months from
the date hereof.

 

Section 7.18                                Swap Agreements.  Schedule 7.18, as
of the date hereof, and after the date hereof, each report required to be
delivered by the Borrower pursuant to Section 8.01(d), sets forth, a true and
complete list of all Swap Agreements 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 counterparty to each such agreement.

 

Section 7.19                                Use of Loans and Letters of Credit. 
The proceeds of the Loans and the Letters of Credit shall be used to provide
working capital for exploration and production operations, to refinance Debt
under the Existing Credit Agreement and for general corporate purposes.  The
Borrower and its Subsidiaries are not engaged principally, or as one of its or
their important activities, in the business of extending credit for the purpose,
whether immediate, incidental or ultimate, of buying or carrying margin stock
(within the meaning of Regulation T, U or X of the Board).  No part of the
proceeds of any Loan or Letter of Credit will be used for any purpose which
violates the provisions of Regulations T, U or X of the Board.

 

Section 7.20                                Solvency.  After giving effect to
the transactions contemplated hereby, (a) the aggregate assets (after giving
effect to amounts that could reasonably be received by reason of indemnity,
offset, insurance or any similar arrangement), at a fair valuation, of the
Borrower and the Guarantors, taken as a whole, will exceed the aggregate Debt of
the Borrower and the Guarantors on a consolidated basis, as the Debt becomes
absolute and matures, (b) each of the Borrower and the Guarantors will not have
incurred or intended to incur, and will not believe that it will incur, Debt
beyond its ability to pay such Debt (after taking into account the timing and
amounts of cash to be received by each of the Borrower and the Guarantors and
the amounts to be payable on or in respect of its liabilities, and giving effect
to amounts that could reasonably be received by reason of indemnity, offset,
insurance or any similar arrangement) as such Debt becomes absolute and matures
and (c) each of the Borrower and the Guarantors will not have (and will have no
reason to believe that it will have thereafter) unreasonably small capital for
the conduct of its business.

 

ARTICLE VIII
Affirmative Covenants

 

Until the Commitments have expired or been terminated and the principal of and
interest on each Loan and all fees payable hereunder and all other amounts
payable under the Loan Documents (other than contingent indemnification
obligations) shall have been paid in full and all Letters of Credit shall have
expired or terminated and all LC Disbursements shall have been reimbursed, the
Borrower covenants and agrees with the Lenders that:

 

Section 8.01                                Financial Statements; Other
Information.  The Borrower will furnish to the Administrative Agent and each
Lender:

 

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(a)                                  Annual Financial Statements.  As soon as
available, but in any event in accordance with then applicable law and not later
than 90 days after the end of each fiscal year of the Borrower, its audited
consolidated balance sheet and related statements of operations, stockholders’
equity and cash flows as of the end of and for such year, setting forth in each
case in comparative form the figures for the previous fiscal year, all reported
on by KPMG, LLP or other independent public accountants of recognized national
standing (without a “going concern” or like qualification or exception and
without any qualification or exception as to the scope of such audit) to the
effect that such consolidated financial statements present fairly in all
material respects the financial condition and results of operations of the
Borrower and its Consolidated Subsidiaries on a consolidated basis in accordance
with GAAP consistently applied.

 

(b)                                 Quarterly Financial Statements.  As soon as
available, but in any event in accordance with then applicable law and not later
than 45 days after the end of each of the first three fiscal quarters of each
fiscal year of the Borrower, its consolidated balance sheet and related
statements of operations, stockholders’ equity and cash flows as of the end of
and for such fiscal quarter and the then elapsed portion of the fiscal year,
setting forth in each case in comparative form the figures for the corresponding
period or periods of (or, in the case of the balance sheet, as of the end of)
the previous fiscal year, all certified by one of its Financial Officers as
presenting fairly in all material respects the financial condition and results
of operations of the Borrower and its Consolidated Subsidiaries on a
consolidated basis in accordance with GAAP consistently applied, subject to
normal year-end audit adjustments and the absence of footnotes.

 

(c)                                  Certificate of Financial Officer —
Compliance.  Concurrently with any delivery of financial statements under
Section 8.01(a) or Section 8.01(b), a certificate of a Financial Officer in
substantially the form of Exhibit D hereto (i) certifying as to whether a
Default has occurred and, if a Default has occurred, specifying the details
thereof and any action taken or proposed to be taken with respect thereto,
(ii) setting forth reasonably detailed calculations demonstrating compliance
with Section 9.01 and (iii) stating whether any change in GAAP or in the
application thereof has occurred since December 31, 2010 and, if any such change
has occurred, specifying the effect of such change on the financial statements
accompanying such certificate.

 

(d)                                 Certificate of Financial Officer — Swap
Agreements.  Concurrently with the delivery of its Reserve Report under
Section 8.12(a), a certificate of a Financial Officer, in form and substance
satisfactory to the Administrative Agent, setting forth as of the last Business
Day of the most recently ended calendar month preceding the date of such
delivery for which such information is available, a true and complete list of
all Swap Agreements 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 therefor, any new credit
support agreements relating thereto not listed on Schedule 7.18, any margin
required or supplied under any credit support document, and the counterparty to
each such agreement.

 

(e)                                  Other Accounting Reports.  Promptly upon
receipt thereof, a copy of each other report or letter submitted to the Borrower
or any of its Subsidiaries by independent accountants in connection with any
annual, interim or special audit made by them of the books of the Borrower or
any such Subsidiary, and a copy of any response by the Borrower or any such

 

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Subsidiary, or the Board of Directors of the Borrower or any such Subsidiary, to
such letter or report.

 

(f)                                    SEC and Other Filings; Reports to
Shareholders.  Promptly after the same become publicly available, copies of all
periodic and other reports, proxy statements and other materials filed by the
Borrower or any Subsidiary with the SEC, or with any national securities
exchange, or distributed by the Borrower to its shareholders generally, as the
case may be.

 

(g)                                 Notices Under Material Instruments. 
Promptly after the furnishing thereof, copies of any financial statement, report
or notice furnished to or by any Person pursuant to the terms of any preferred
stock designation, indenture, loan or credit or other similar agreement, other
than this Agreement and not otherwise required to be furnished to the Lenders
pursuant to any other provision of this Section 8.01 including but not limited
to copies of any financial or other report or notice delivered to, or received
from, any holder of Senior Notes or Permitted Refinancing Debt (or the notes
evidencing the same).

 

(h)                                 Permitted Refinancing Debt.  In the event
the Borrower intends to refinance any Debt with the proceeds of Permitted
Refinancing Debt, reasonable prior written notice of such intended offering
therefor, the amount thereof and the anticipated date of closing and will
furnish a copy of the preliminary offering memorandum (if any) and the final
offering memorandum (if any).

 

(i)                                     Production Report and Lease Operating
Statements.  In connection with the delivery of any Reserve Report, a report
setting forth, for each calendar month during the then current fiscal year to
date, the volume of production and sales attributable to production (and the
prices at which such sales were made and the revenues derived from such sales)
for each such calendar month from the Oil and Gas Properties, and setting forth
the related ad valorem, severance and production taxes and lease operating
expenses attributable thereto and incurred for each such calendar month.

 

(j)                                     Other Requested Information.  Promptly
following any request therefor, such other information regarding the operations,
business affairs and financial condition of the Borrower or any Subsidiary
(including, without limitation, any Plan and any reports or other information
required to be filed with respect thereto under the Code or under ERISA), or
compliance with the terms of this Agreement or any other Loan Document, as the
Administrative Agent or any Lender may reasonably request.

 

Section 8.02                                Notices of Material Events.  The
Borrower will furnish to the Administrative Agent and each Lender prompt written
notice of the following:

 

(a)                                  the occurrence of any Default;

 

(b)                                 the filing or commencement of, or the threat
in writing of, any action, suit, proceeding, investigation or arbitration by or
before any arbitrator or Governmental Authority against or affecting the
Borrower or any Affiliate thereof not previously disclosed in writing to the
Lenders or any material adverse development in any action, suit, proceeding,
investigation or arbitration (whether or not previously disclosed to the
Lenders) that, in either case, if adversely determined, could reasonably be
expected to result in a Material Adverse Effect; and

 

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(c)                                  any other development that results in, or
could reasonably be expected to result in, a Material Adverse Effect.

 

Each notice delivered under this Section 8.02 shall be accompanied by a
statement of a Responsible Officer setting forth the details of the event or
development requiring such notice and any action taken or proposed to be taken
with respect thereto.

 

Section 8.03                                Existence; Conduct of Business.  The
Borrower will, and will cause each Material Subsidiary to, do or cause to be
done all things necessary to preserve, renew and keep in full force and effect
its legal existence and the rights, licenses, permits, privileges and franchises
material to the conduct of its business and maintain, if necessary, its
qualification to do business in each other jurisdiction in which its Oil and Gas
Properties is located or the ownership of its Properties requires such
qualification, except where the failure to so qualify could not reasonably be
expected to have a Material Adverse Effect; provided that the foregoing shall
not prohibit any merger, consolidation, liquidation or dissolution permitted
under Section 9.09.

 

Section 8.04                                Payment of Obligations.  The
Borrower will, and will cause each Subsidiary to, pay its obligations, including
Tax liabilities of the Borrower and all of its Subsidiaries before the same
shall become delinquent or in default, except where (a) the validity or amount
thereof is being contested in good faith by appropriate proceedings, (b) the
Borrower or such Subsidiary has set aside on its books adequate reserves with
respect thereto in accordance with GAAP and (c) the failure to make payment
pending such contest could not reasonably be expected to result in a Material
Adverse Effect or result in the seizure or levy of any Property of the Borrower
or any Subsidiary.

 

Section 8.05                                Performance of Obligations under
Loan Documents.  The Borrower will pay the Notes according to the reading, tenor
and effect thereof, and the Borrower will, and will cause each Subsidiary to, do
and perform every act and discharge all of the obligations to be performed and
discharged by them under the Loan Documents, including, without limitation, this
Agreement, at the time or times and in the manner specified.

 

Section 8.06                                Operation and Maintenance of
Properties.  The Borrower, at its own expense, will, and will cause each
Subsidiary to:

 

(a)                                  operate its Oil and Gas Properties and
other material Properties or cause such Oil and Gas Properties and other
material Properties to be operated in a careful and efficient manner in
accordance with the practices of the industry and in compliance with all
applicable contracts and agreements and in compliance with all Governmental
Requirements, including, without limitation, applicable pro ration requirements
and Environmental Laws, and all applicable laws, rules and regulations of every
other Governmental Authority from time to time constituted to regulate the
development and operation of its Oil and Gas Properties and the production and
sale of Hydrocarbons and other minerals therefrom, except, in each case, where
the failure to comply could not reasonably be expected to have a Material
Adverse Effect.

 

(b)                                 keep and maintain all Property material to
the conduct of its business in good working order and condition, ordinary wear
and tear excepted preserve, maintain and keep in good repair, working order and
efficiency (ordinary wear and tear excepted) all of its material

 

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Oil and Gas Properties and other material Properties, including, without
limitation, all equipment, machinery and facilities.

 

(c)                                  promptly pay and discharge, or make
reasonable and customary efforts to cause to be paid and discharged, all delay
rentals, royalties, expenses and indebtedness accruing under the leases or other
agreements affecting or pertaining to its Oil and Gas Properties and will do all
other things necessary to keep unimpaired their rights with respect thereto and
prevent any forfeiture thereof or default thereunder.

 

(d)                                 promptly perform or make reasonable and
customary efforts to cause to be performed, in accordance with industry
standards, the obligations required by each and all of the assignments, deeds,
leases, sub-leases, contracts and agreements affecting its interests in its Oil
and Gas Properties and other material Properties.

 

(e)                                  to the extent the Borrower is not the
operator of any Property, the Borrower shall use reasonable efforts to cause the
operator to comply with this Section 8.06.

 

Section 8.07                                Insurance.  The Borrower will, and
will cause each Subsidiary to, maintain, with financially sound and reputable
insurance companies, insurance in such amounts and against such risks as are
customarily maintained by companies engaged in the same or similar businesses
operating in the same or similar locations.

 

Section 8.08                                Books and Records; Inspection
Rights.  The Borrower will, and will cause each Subsidiary to, keep proper books
of record and account in which full, true and correct entries are made of all
dealings and transactions in relation to its business and activities.  The
Borrower will, and will cause each Subsidiary to, permit any representatives
designated by the Administrative Agent or any Lender, upon reasonable prior
notice, to visit and inspect its Properties, to examine and make extracts from
its books and records, and to discuss its affairs, finances and condition with
its officers and independent accountants, all at such reasonable times and as
often as reasonably requested.

 

Section 8.09                                Compliance with Laws.  The Borrower
will, and will cause each Subsidiary to, comply with all laws, rules,
regulations and orders of any Governmental Authority applicable to it or its
Property, except where the failure to do so, individually or in the aggregate,
could not reasonably be expected to result in a Material Adverse Effect.

 

Section 8.10                                Environmental Matters.

 

(a)                                  The Borrower shall at its sole expense:
(i) comply, and shall cause its Properties and operations and each Subsidiary
and each Subsidiary’s Properties and operations to comply, with all applicable
Environmental Laws, the breach of which could be reasonably expected to have a
Material Adverse Effect; (ii) not Release or threaten to Release, and shall
cause each Subsidiary not to Release or threaten to Release, any Hazardous
Material on, under, about or from any of the Borrower’s or its Subsidiaries’
Properties or any other property offsite the Property to the extent caused by
the Borrower’s or any of its Subsidiaries’ operations except in compliance with
applicable Environmental Laws, the Release or threatened Release of which could
reasonably be expected to have a Material Adverse Effect; (iii) timely obtain or
file, and shall cause each Subsidiary to timely obtain or file, all
Environmental Permits, if any, required

 

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under applicable Environmental Laws to be obtained or filed in connection with
the operation or use of the Borrower’s or its Subsidiaries’ Properties, which
failure to obtain or file could reasonably be expected to have a Material
Adverse Effect; (iv) promptly commence and diligently prosecute to completion,
and shall cause each Subsidiary to promptly commence and diligently prosecute to
completion, any assessment, evaluation, investigation, monitoring, containment,
cleanup, removal, repair, restoration, remediation or other remedial obligations
(collectively, the “Remedial Work”) in the event any Remedial Work is required
or reasonably necessary under applicable Environmental Laws because of or in
connection with the actual or suspected past, present or future Release or
threatened Release of any Hazardous Material on, under, about or from any of the
Borrower’s or its Subsidiaries’ Properties, which failure to commence and
diligently prosecute to completion could reasonably be expected to have a
Material Adverse Effect; (v) conduct, and cause its Subsidiaries to conduct,
their respective operations and businesses in a manner that will not expose any
Property or Person to Hazardous Materials that could reasonably be expected to
form the basis for a claim for damages or compensation; and (vi) establish and
implement, and shall cause each Subsidiary to establish and implement, such
procedures as may be necessary to continuously determine and assure that the
Borrower’s and its Subsidiaries’ obligations under this Section 8.10(a) are
timely and fully satisfied, which failure to establish and implement could
reasonably be expected to have a Material Adverse Effect.

 

(b)                                 The Borrower will promptly, but in no event
later than ten Business Days of the occurrence of a triggering event, notify the
Administrative Agent and the Lenders in writing of any threatened action,
investigation or inquiry by any Governmental Authority or any threatened demand
or lawsuit by any Person against the Borrower or its Subsidiaries or their
Properties of which the Borrower has knowledge in connection with any
Environmental Laws if the Borrower could reasonably anticipate that such action
will result in liability (whether individually or in the aggregate) that would
have a Material Adverse Effect.

 

Section 8.11                                Further Assurances.  The Borrower at
its sole expense will, and will cause each Subsidiary to, promptly execute and
deliver to the Administrative Agent all such other documents, agreements and
instruments reasonably requested by the Administrative Agent to comply with,
cure any defects or accomplish the conditions precedent, covenants and
agreements of the Borrower or any Subsidiary, as the case may be, in the Loan
Documents, including the Notes, or to correct any omissions in this Agreement or
the Guaranty Agreement, or to make any recordings, file any notices or obtain
any consents, all as may be reasonably necessary or appropriate, in the sole
discretion of the Administrative Agent, in connection therewith.

 

Section 8.12                                Reserve Reports.

 

(a)                                  On or before March 15st of each year,
commencing March 15, 2012, the Borrower shall furnish to the Administrative
Agent and the Lenders a Reserve Report evaluating the oil and gas reserves
attributable to the Oil and Gas Properties of the Borrower and its Domestic
Subsidiaries as of the immediately preceding January 1st located within the
geographic boundaries of the United States of America (or the Outer Continental
Shelf adjacent to the United States of America).  The Reserve Report shall be
audited by one or more Approved Petroleum Engineers.

 

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(b)                                 In the event of an Interim Redetermination,
the Borrower shall furnish to the Administrative Agent and the Lenders a Reserve
Report prepared by or under the supervision of the chief engineer of the
Borrower who shall certify such Reserve Report to be true and accurate and to
have been prepared in accordance with the procedures used in the immediately
preceding January 1 Reserve Report.  For any Interim Redetermination requested
by the Administrative Agent or the Borrower pursuant to Section 2.07(b), the
Borrower shall provide such Reserve Report with an “as of” date as required by
the Administrative Agent as soon as possible, but in any event no later than
thirty (30) days following the receipt of such request.

 

(c)                                  With the delivery of each Reserve Report,
the Borrower shall provide to the Administrative Agent and the Lenders a Reserve
Report Certificate certifying that in all material respects: (i) the information
contained in the Reserve Report and any other information delivered in
connection therewith is true and correct, (ii) the Borrower or its Subsidiaries
owns, in all material respects, 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 Liens permitted by Section 9.03, (iii) except as set forth on
an exhibit to the certificate, on a net basis there are no gas imbalances, take
or pay or other prepayments in excess of the volume specified in Section 7.16
with respect to its Oil and Gas Properties evaluated in such Reserve Report
which would require the Borrower or any Subsidiary to deliver Hydrocarbons
either generally or produced from such Oil and Gas Properties at some future
time without then or thereafter receiving full payment therefor, (iv) none of
their Oil and Gas Properties have been sold since the date of the last Borrowing
Base determination except as set forth on an exhibit to the certificate, which
certificate shall list all of its Oil and Gas Properties sold and in such detail
as reasonably required by the Administrative Agent, and (v) attached to the
certificate is a list of all marketing agreements entered into subsequent to the
later of the date hereof or the most recently delivered Reserve Report which the
Borrower could reasonably be expected to have been obligated to list on Schedule
7.17 had such agreement been in effect on the date hereof.

 

Section 8.13                                Additional Guarantors.  In the event
that (i) the Borrower determines that any Subsidiary is a Material Domestic
Subsidiary or (ii) any Domestic Subsidiary guarantees any of the Senior Notes or
incurs or guarantees $25,000,000 or more of Debt, the Borrower shall promptly
cause such Subsidiary to guarantee the Indebtedness pursuant to the Guaranty
Agreement.  In connection with any such guaranty, the Borrower shall, or shall
cause such Subsidiary to, (A) execute and deliver a supplement to the Guaranty
Agreement executed by such Subsidiary and (B) execute and deliver such other
additional closing documents, certificates and legal opinions as shall
reasonably be requested by the Administrative Agent.

 

Section 8.14                                ERISA Compliance.  The Borrower will
promptly furnish and will cause the Subsidiaries and any ERISA Affiliate to
promptly furnish to the Administrative Agent (i) promptly after the filing
thereof with the United States Secretary of Labor or the Internal Revenue
Service, copies of each annual and other report with respect to each Plan or any
trust created thereunder, and (ii) immediately upon becoming aware of the
occurrence of any non-exempt “prohibited transaction,” as described in section
406 of ERISA or in section 4975 of the Code, in connection with any Plan or any
trust created thereunder, a written notice signed by a Responsible Officer of
the Borrower, the Subsidiary or the ERISA Affiliate, as the case may be,
specifying the nature thereof, what action the Borrower, the Subsidiary or the
ERISA Affiliate is

 

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taking or proposes to take with respect thereto, and, when known, any action
taken or proposed by the Internal Revenue Service or the Department of Labor
with respect thereto.

 

Section 8.15                                Swap Agreement Termination.  To the
extent the Borrower or a Subsidiary changes the material terms of any Swap
Agreement, terminates any such Swap Agreement or enters into a new Swap
Agreement which has the effect of creating an off-setting position, the Borrower
will give the Lenders prompt written notice of such event if, with respect to
any commodity-price Swap Agreement, the product of (a) the notional volumes of
such commodity-price Swap Agreement times (b) the excess of (i) the strike or
fixed rate payor price over (ii) the “price deck” used in calculating the
Borrowing Base for the relevant commodities, exceeds in the aggregate during
such period the lesser of (y) $50,000,000 or (z) 3% of the then effective
Borrowing Base, and concurrently with such notice the Required Lenders shall
have the right to adjust the Borrowing Base in accordance with Section 2.07(e).

 

Section 8.16                                Marketing Activities.  The Borrower
will not, and will not permit any of its Subsidiaries to, engage in marketing
activities for any Hydrocarbons or enter into any contracts related thereto
other than (i) contracts for the sale of Hydrocarbons scheduled or reasonably
estimated to be produced from their proved Oil and Gas Properties during the
period of such contract, (ii) contracts for the sale of Hydrocarbons scheduled
or reasonably estimated to be produced from proved Oil and Gas Properties of
third parties during the period of such contract associated with the Oil and Gas
Properties of the Borrower and its Subsidiaries that the Borrower or one of its
Subsidiaries has the right to market pursuant to joint operating agreements,
unitization agreements or other similar contracts that are usual and customary
in the oil and gas business and (iii) other contracts for the purchase and/or
sale of Hydrocarbons of third parties (A) which have generally offsetting
provisions (i.e. corresponding pricing mechanics, delivery dates and points and
volumes) such that no “position” is taken and (B) for which appropriate credit
support has been taken to alleviate the material credit risks of the
counterparty thereto.

 

ARTICLE IX
Negative Covenants

 

Until the Commitments have expired or terminated and the principal of and
interest on each Loan and all fees payable hereunder and all other amounts
payable under the Loan Documents (other than contingent indemnification
obligations) have been paid in full and all Letters of Credit have expired or
terminated and all LC Disbursements shall have been reimbursed, the Borrower
covenants and agrees with the Lenders that:

 

Section 9.01                                Financial Covenants.

 

(a)                                  Leverage Ratio.  The Borrower will not, at
any time, permit its Leverage Ratio to be greater than 3.5 to 1.0.

 

(b)                                 Current Ratio.  The Borrower will not
permit, as of the last day of any fiscal quarter, its ratio of (i) consolidated
current assets (including the unused amount of the total Commitments, but
excluding non-cash assets under FAS 133) to (ii) consolidated current

 

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liabilities (excluding non-cash obligations under FAS 133 and current maturities
under this Agreement) to be less than 1.0 to 1.0.

 

Section 9.02                                Debt.  The Borrower will not, and
will not permit any Subsidiary to, incur any Debt if after giving pro forma
effect to such incurrence and any concurrent repayment of Debt, (a) a Borrowing
Base Deficiency would exist or (b) an Event of Default would exist under
Section 9.01, except:

 

(a)                                  accounts payable and accrued expenses,
liabilities or other obligations to pay the deferred purchase price of Property
or services, from time to time incurred in the ordinary course of business which
are not greater than ninety (90) days past the date of invoice or delinquent or
which are being contested in good faith by appropriate action and for which
adequate reserves have been maintained in accordance with GAAP.

 

(b)                                 Debt associated with bonds or surety
obligations required by Governmental Requirements in connection with the
operation of the Oil and Gas Properties.

 

(c)                                  intercompany Debt between the Borrower and
any Subsidiary or between Subsidiaries to the extent permitted by
Section 9.05(g); provided that such Debt is not held, assigned, transferred,
negotiated or pledged to any Person other than the Borrower or one of its
Wholly-Owned Subsidiaries, and, provided further, that any such Debt owed by
either the Borrower or a Guarantor shall be subordinated to the Indebtedness on
terms set forth in the Guaranty Agreement.

 

(d)                                 endorsements of negotiable instruments for
collection in the ordinary course of business.

 

Section 9.03                                Liens.  The Borrower will not, and
will not permit any Subsidiary to, create, incur, assume or permit to exist any
Lien on any of its Properties (now owned or hereafter acquired), except:

 

(a)                                  Liens securing the payment of any Debt,
provided that any such Debt in the aggregate does not exceed $80,000,000 at any
time.

 

(b)                                 Excepted Liens.

 

(c)                                  Liens securing any Permitted Refinancing
Debt provided that any such Permitted Refinancing Debt is not secured by any
additional or different Property not securing the Refinanced Debt.

 

Section 9.04                                Restricted Payments.  The Borrower
will not, and will not permit any of its Subsidiaries to, declare or make, or
agree to pay or make, directly or indirectly, any Restricted Payment, return any
capital to its stockholders or make any distribution of its Property to its
Equity Interest holders, except:

 

(a)                                  the Borrower may declare and pay dividends
with respect to its Equity Interests payable solely in additional shares of its
Equity Interests (other than Disqualified Capital Stock),

 

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(b)                                 Subsidiaries may declare and pay dividends
ratably with respect to their Equity Interests,

 

(c)                                  any Subsidiary may declare or make any
Restricted Payments to the Borrower or to a Wholly-Owned Subsidiary, and

 

(d)                                 the Borrower may make Restricted Payments if
as of the date such Restricted Payment is made

 

(i)                                     the then current Borrowing Base
Utilization Percentage is less than 50% and no Default or Event of Default
exists (after giving effect to such Restricted Payment), or

 

(ii)                                  the then current Borrowing Base
Utilization Percentage is greater than or equal to 50%, and no Default, Event of
Default or Borrowing Base Deficiency exists (after giving effect to such
Restricted Payment) and such Restricted Payments do not exceed an amount equal
to

 

(A)                              50% of the Consolidated Net Income of the
Borrower for the period commencing December 31, 2010 through the last day of the
most recent fiscal quarter for which financial statements are available prior to
the date of such Restricted Payment, taken as a single accounting period, plus

 

(B)                                $75,000,000 during each fiscal year less

 

(C)                                all Restricted Payments made after the
Effective Date under clause (i) of this Section 9.04(d).

 

Section 9.05                                Investments, Loans and Advances. 
The Borrower will not, and will not permit any Subsidiary to, make or permit to
remain outstanding any Investments in or to any Person, except that the
foregoing restriction shall not apply to:

 

(a)                                  Investments reflected in the Financial
Statements or which are disclosed to the Lenders in Schedule 9.05.

 

(b)                                 accounts receivable arising in the ordinary
course of business.

 

(c)                                  direct obligations of the United States or
any agency thereof, or obligations guaranteed by the United States or any agency
thereof, in each case maturing within one year from the date of creation
thereof.

 

(d)                                 commercial paper maturing within one year
from the date of creation thereof rated in the highest grade by S&P or Moody’s.

 

(e)                                  deposits maturing within one year from the
date of creation thereof with, including certificates of deposit issued by, any
Lender or any office located in the United States of any other bank or trust
company which is organized under the laws of the United States or any state
thereof, has capital, surplus and undivided profits aggregating at least
$100,000,000 (as of

 

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the date of such bank or trust company’s most recent financial reports) and has
a short term deposit rating of no lower than A2 or P2, as such rating is set
forth from time to time, by S&P or Moody’s, respectively or, in the case of any
Foreign Subsidiary, a bank organized in a jurisdiction in which the Foreign
Subsidiary conducts operations having assets in excess of $500,000,000 (or its
equivalent in another currency).

 

(f)                                    deposits in money market funds investing
exclusively in Investments described in Section 9.05(c), Section 9.05(d) or
Section 9.05(e).

 

(g)                                 Investments (i) made by the Borrower in or
to the Guarantors, (ii) made by any Subsidiary in or to the Borrower or any
Guarantor, and (iii) made by the Borrower or any Guarantor in or to any
Subsidiary which is not a Guarantor which do not exceed 5% in the aggregate of
the consolidated quarterly revenues of the Borrower as of the most recently
delivered consolidated quarterly financial statements.

 

(h)                                 subject to the limits in
Section 9.06, Investments (including, without limitation, capital contributions)
in general or limited partnerships or other types of entities (each a “venture”)
entered into by the Borrower or a Subsidiary with others in the ordinary course
of business; provided that (i) any such venture is engaged exclusively in oil
and gas exploration, development, production, processing and related activities,
including transportation, (ii) the interest in such venture is acquired in the
ordinary course of business and on fair and reasonable terms and (iii) such
venture interests acquired and capital contributions made (valued as of the date
such interest was acquired or the contribution made) do not exceed, in the
aggregate at any time outstanding an amount equal to $75,000,000.

 

(i)                                     Investments in stock, obligations or
securities received in settlement of debts arising from Investments permitted
under this Section 9.05 owing to the Borrower or any Subsidiary as a result of a
bankruptcy or other insolvency proceeding of the obligor in respect of such
debts or upon the enforcement of any Lien in favor of the Borrower or any of its
Subsidiaries.

 

(j)                                     other Investments not to exceed
$75,000,000 in the aggregate during any fiscal year.

 

Section 9.06                                Nature of Business.  The Borrower
will not, and will not permit any Subsidiary to, allow any material change to be
made in the character of its business as an independent oil and gas exploration
and production company.

 

Section 9.07                                Proceeds of Notes.  The Borrower
will not permit the proceeds of the Notes to be used for any purpose other than
those permitted by Section 7.19.  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 Regulations T, U or X or any other regulation
of the Board or to violate Section 7 of the Securities Exchange Act of 1934 or
any rule or regulation thereunder, in each case as now in effect or as the same
may hereinafter be in effect.  If requested by the Administrative Agent, the
Borrower will furnish to the Administrative Agent and each Lender a statement to
the foregoing effect in conformity with the requirements

 

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of FR Form U-1 or such other form referred to in Regulation U, Regulation T or
Regulation X of the Board, as the case may be.

 

Section 9.08                                ERISA Compliance.  Without prior
consent of the Required Lenders, the Borrower will not, and will not permit any
Subsidiary to, at any time:

 

(a)                                  engage in, or permit any ERISA Affiliate to
engage in, any transaction in connection with which the Borrower, a Subsidiary
or any ERISA Affiliate could be subjected to either a civil penalty assessed
pursuant to subsections (c), (i), (l) or (m) of section 502 of ERISA or a tax
imposed by Chapter 43 of Subtitle D of the Code except where such penalty or tax
would not have a Material Adverse Effect.

 

(b)                                 fail to make, or permit any ERISA Affiliate
to fail to make, full payment when due of all amounts which, under the
provisions of any Plan, agreement relating thereto or applicable law, the
Borrower, a Subsidiary or any ERISA Affiliate is required to pay as
contributions thereto except where failure would not have a Material Adverse
Effect.

 

(c)                                  contribute to or assume an obligation to
contribute to, or permit any ERISA Affiliate to contribute to or assume an
obligation to contribute to (i) any employee welfare benefit plan, as defined in
section 3(1) of ERISA, including, without limitation, any such plan maintained
to provide benefits to former employees of such entities, that may not be
terminated by such entities in their sole discretion at any time without
material liability in excess of $50,000,000, or (ii) any employee pension
benefit plan, as defined in section 3(2) of ERISA, that is subject to Title IV
of ERISA, section 302 of ERISA or section 412 of the Code.

 

Section 9.09                                Mergers, Etc. The Borrower will not,
and will not permit any Subsidiary to, merge into or with or consolidate with
any other Person, or permit any other Person to merge into or consolidate with
it, or sell, transfer, lease or otherwise dispose of (whether in one transaction
or in a series of transactions) all or substantially all of its Property to any
other Person (whether now owned or hereafter acquired) (any such transaction, a
“consolidation”), or liquidate or dissolve; provided that (a) any Subsidiary may
participate in a consolidation with the Borrower so long as the Borrower shall
be the continuing or surviving entity, (b) any Subsidiary may participate in a
consolidation with any other Subsidiary (provided that if one of such
Subsidiaries is a Wholly-Owned Subsidiary, then the surviving Person shall be a
Wholly-Owned Subsidiary) or (c) so long as no Default or Event of Default exists
or results from such consolidation, the Borrower or any Subsidiary may
participate in a consolidation with any other Person whose total assets and
total liabilities do not exceed $100,000,000 respectively, provided that either
the Borrower or the Subsidiary, as applicable, shall be the continuing or
surviving entity.

 

Section 9.10                                Sale of Properties.  The Borrower
will not, and will not permit any Subsidiary to, sell, assign, farm-out, convey
or otherwise transfer any Property (other than to the Borrower or any Guarantor)
except for (a) the sale of Hydrocarbons in the ordinary course of business;
(b) farmouts of undeveloped acreage to which no proved reserves are attributable
and assignments in connection with such farmouts; (c) the sale or transfer of
equipment that is no longer necessary for the business of the Borrower or such
Subsidiary or is replaced by equipment of at least comparable value and use;
(d) the sale or other disposition of any Oil and Gas Property

 

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or any interest therein or any Subsidiary owning Oil and Gas Properties;
provided that (i) either (A) at least 75% of the consideration received in
respect of such sale or other disposition shall be cash and any portion of the
non-cash consideration received (to the extent constituting an Investment) is
permitted under Section 9.05 or (B) such consideration consists of Oil and Gas
Properties which qualify for nonrecognition of gain or loss under the provisions
of Section 1031 of the Code (provided that notwithstanding the foregoing, if a
Borrowing Base Deficiency results from such disposition, the cash portion of the
consideration shall be an amount at least sufficient to pay such Borrowing Base
Deficiency under Section 3.04(c)(iv)), (ii) the consideration received in
respect of such sale or other disposition shall be equal to or greater than the
fair market value of the Oil and Gas Property, interest therein or Subsidiary
subject of such sale or other disposition, (iii) if such sale or other
disposition of Oil and Gas Property or Subsidiary owning Oil and Gas Properties
included in the most recently delivered Reserve Report (other than the Riley
Ridge Gas Plant and Related Assets) during any period between successive
Scheduled Redetermination Dates has a fair market value in excess of five
percent (5%) of the then effective Borrowing Base, the Borrowing Base may be
reduced by the Required Lenders, by an amount not to exceed the value, if any,
assigned such Property in the most recently delivered Reserve Report and (iv) if
any such sale or other disposition is of a Subsidiary owning Oil and Gas
Properties, such sale or other disposition shall include all the Equity
Interests of such Subsidiary; (e) sales and other dispositions of Properties not
regulated by Section 9.10(a) to (d) having a fair market value not to exceed
$200,000,000 during any 12-month period; and (f) the sale of the Riley Ridge Gas
Plant and Related Assets.

 

Section 9.11                                Environmental Matters.  The Borrower
will not, and will not permit any Subsidiary to, cause or permit any of its
Property to be in violation of, or do anything or permit anything to be done
which will subject any such Property to a Release or threatened Release of
Hazardous Materials, exposure to any Hazardous Materials, or to any Remedial
Work under any Environmental Laws, assuming disclosure to the applicable
Governmental Authority of all relevant facts, conditions and circumstances, if
any, pertaining to such Property where such violations, Release or threatened
Release, exposure, or Remedial work could reasonably be expected to have a
Material Adverse Effect.

 

Section 9.12                                Transactions with Affiliates.  The
Borrower will not, and will not permit any Subsidiary to, enter into any
transaction, including, without limitation, any purchase, sale, lease or
exchange of Property or the rendering of any service, with any Affiliate (other
than the Guarantors and Wholly-Owned Subsidiaries of the Borrower) unless such
transactions are otherwise permitted under this Agreement and are upon fair and
reasonable terms no less favorable to it than it would obtain in a comparable
arm’s length transaction with a Person not an Affiliate. Notwithstanding the
foregoing, this Section 9.12 shall not prohibit the Borrower or any Subsidiary
from transferring any Equity Interests in a Subsidiary to the Borrower or
another Subsidiary; provided, that (i) if the transferor is the Borrower or a
Guarantor, the transferee must be the Borrower or another Guarantor, and (ii) if
the Administrative Agent has a Lien on the Equity Interests being transferred to
secure the Indebtedness, the Administrative Agent must have a Lien on such
Equity Interests (of the same priority) following the transfer.

 

Section 9.13                                Subsidiaries.  The Borrower will
not, and will not permit any Subsidiary to, create or acquire any additional
Subsidiary unless the Borrower gives written notice to the Administrative Agent
of such creation or acquisition and complies with Section 8.13.  The

 

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Borrower shall not, and shall not permit any Subsidiary to, sell, assign or
otherwise dispose of any Equity Interests in any Subsidiary except in compliance
with Section 9.10(d).

 

Section 9.14                                Dividend Restrictions.  The Borrower
will not, and will not permit any Subsidiary to, create, incur, assume or suffer
to exist any contract, agreement or understanding (other than this Agreement)
which in any way prohibits or restricts any Subsidiary from paying dividends or
making distributions to the Borrower or any Guarantor, or which requires the
consent of or notice to other Persons in connection therewith.

 

Section 9.15                                Swap Agreement.  The Borrower will
not, and will not permit any Subsidiary to, enter into any Swap Agreements with
any Person other than (a) Swap Agreements in respect of commodities (i) with an
Approved Counterparty and (ii) the notional volumes for which (when aggregated
with other commodity Swap Agreements then in effect other than basis
differential swaps on volumes already hedged pursuant to other Swap Agreements)
do not exceed, as of the date such Swap Agreement is executed, 85% of the
reasonably anticipated projected production from proved, developed, producing
Oil and Gas Properties for each month during the period during which such Swap
Agreement is in effect for each of crude oil and natural gas, calculated
separately, and (b) Swap Agreements in respect of interest rates with an
Approved Counterparty, as follows:  (i) Swap Agreements effectively converting
interest rates from fixed to floating, the notional amounts of which (when
aggregated with all other Swap Agreements of the Borrower and its Subsidiaries
then in effect effectively converting interest rates from fixed to floating) do
not exceed 50% of the then outstanding principal amount of the Borrower’s Debt
for borrowed money which bears interest at a fixed rate and (ii) Swap Agreements
effectively converting interest rates from floating to fixed, the notional
amounts of which (when aggregated with all other Swap Agreements of the Borrower
and its Subsidiaries then in effect effectively converting interest rates from
floating to fixed) do not exceed 75% of the then outstanding principal amount of
the Borrower’s Debt for borrowed money which bears interest at a floating rate.

 

ARTICLE X
Events of Default; Remedies

 

Section 10.01                          Events of Default.  One or more of the
following events shall constitute an “Event of Default”:

 

(a)                                  the Borrower shall fail to pay any
principal of any Loan or any reimbursement obligation in respect of any LC
Disbursement when and as the same shall become due and payable, whether at the
due date thereof or at a date fixed for prepayment thereof, by acceleration or
otherwise.

 

(b)                                 the Borrower shall fail to pay any interest
on any Loan or any fee or any other amount (other than an amount referred to in
Section 10.01(a)) payable under any Loan Document, when and as the same shall
become due and payable, and such failure shall continue unremedied for a period
of five days.

 

(c)                                  any representation or warranty made or
deemed made by or on behalf of the Borrower or any Subsidiary in or in
connection with any Loan Document or any amendment

 

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or modification of any Loan Document or waiver under such Loan Document, or in
any report, certificate, financial statement or other document furnished
pursuant to or in connection with any Loan Document or any amendment or
modification thereof or waiver thereunder, shall prove to have been incorrect in
any material respect when made or deemed made.

 

(d)                                 the Borrower or any Subsidiary shall fail to
observe or perform any covenant, condition or agreement contained in
Section 8.02, Section 8.03, Section 8.13 or in Article IX.

 

(e)                                  the Borrower or any Subsidiary shall fail
to observe or perform any covenant, condition or agreement contained in this
Agreement (other than those specified in Section 10.01(a), Section 10.01(b) or
Section 10.01(c)) or any other Loan Document, and such failure shall continue
unremedied for a period of 30 days after the earlier to occur of (A) notice
thereof from the Administrative Agent to the Borrower (which notice will be
given at the request of any Lender) or (B) a Responsible Officer of the Borrower
or such Subsidiary otherwise becoming aware of such default.

 

(f)                                    the Borrower or any Subsidiary shall fail
to make any payment (whether of principal or interest and regardless of amount)
in respect of any Material Indebtedness, when and as the same shall become due
and payable.

 

(g)                                 any event or condition occurs that results
in any Material Indebtedness becoming due prior to its scheduled maturity or
that enables or permits (with or without the giving of notice, the lapse of time
or both) the holder or holders of any Material Indebtedness or any trustee or
agent on its or their behalf to cause any Material Indebtedness to become due,
or to require the Redemption thereof or any offer to Redeem to be made in
respect thereof, prior to its scheduled maturity or require the Borrower or any
Subsidiary to make an offer in respect thereof.

 

(h)                                 an involuntary proceeding shall be commenced
or an involuntary petition shall be filed seeking (i) liquidation,
reorganization or other relief in respect of the Borrower or any Subsidiary or
its debts, or of a substantial part of its assets, under any Federal, state or
foreign bankruptcy, insolvency, receivership or similar law now or hereafter in
effect or (ii) the appointment of a receiver, trustee, custodian, sequestrator,
conservator or similar official for the Borrower or any Subsidiary or for a
substantial part of its assets, and, in any such case, such proceeding or
petition shall continue undismissed for 30 days or an order or decree approving
or ordering any of the foregoing shall be entered.

 

(i)                                     the Borrower or any Subsidiary shall
(i) voluntarily commence any proceeding or file any petition seeking
liquidation, reorganization or other relief under any Federal, state or foreign
bankruptcy, insolvency, receivership or similar law now or hereafter in effect,
(ii) consent to the institution of, or fail to contest in a timely and
appropriate manner, any proceeding or petition described in Section 10.01(h),
(iii) apply for or consent to the appointment of a receiver, trustee, custodian,
sequestrator, conservator or similar official for the Borrower or any Subsidiary
or for a substantial part of its assets, (iv) file an answer admitting the
material allegations of a petition filed against it in any such proceeding,
(v) make a general assignment for the benefit of creditors or (vi) take any
action for the purpose of effecting any of the foregoing; or any stockholder of
the Borrower shall make any request or take any action for the

 

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purpose of calling a meeting of the stockholders of the Borrower to consider a
resolution to dissolve and wind-up the Borrower’s affairs.

 

(j)                                     the Borrower or any Subsidiary shall
become unable, admit in writing its inability or fail generally to pay its debts
as they become due.

 

(k)                                  one or more judgments for the payment of
money in an aggregate amount in excess of $50,000,000 (to the extent not covered
by independent third party insurance provided by insurers of the highest claims
paying rating or financial strength as to which the insurer does not dispute
coverage and is not subject to an insolvency proceeding) and the same shall
remain undischarged for a period of 30 consecutive days during which execution
shall not be effectively stayed.

 

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

 

(m)                               a Change in Control shall occur.

 

Section 10.02                          Remedies.

 

(a)                                  In the case of an Event of Default other
than one described in Section 10.01(h), Section 10.01(i) or Section 10.01(j), at
any time thereafter during the continuance of such Event of Default, the
Administrative Agent may, and at the request of the Majority Lenders, shall, by
notice to the Borrower, take either or both of the following actions, at the
same or different times:  (i) terminate the Commitments, and thereupon the
Commitments shall terminate immediately, and (ii) declare the Notes and the
Loans then outstanding to be due and payable in whole (or in part, in which case
any principal not so declared to be due and payable may thereafter be declared
to be due and payable), and thereupon the principal of the Loans so declared to
be due and payable, together with accrued interest thereon and all fees and
other obligations of the Borrower and the Guarantors accrued hereunder and under
the Notes and the other Loan Documents (including, without limitation, the
payment of cash collateral to secure the LC Exposure as provided in
Section 2.08(i)), shall become due and payable immediately, without presentment,
demand, protest, notice of intent to accelerate, notice of acceleration or other
notice of any kind, all of which are hereby waived by the Borrower and each
Guarantor; and in case of an Event of Default described in Section 10.01(h),
Section 10.01(i) or Section 10.01(j), the Commitments shall automatically
terminate and the Notes and the principal of the Loans then outstanding,
together with accrued interest thereon and all fees and the other obligations of
the Borrower and the Guarantors accrued hereunder and under the Notes and the
other Loan Documents (including, without limitation, the payment of cash
collateral to secure the LC Exposure as provided in Section 2.08(i)), shall
automatically become due and payable, without presentment, demand, protest or
other notice of any kind, all of which are hereby waived by the Borrower and
each Guarantor.

 

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(b)                                 In the case of the occurrence of an Event of
Default, the Administrative Agent and the Lenders will have all other rights and
remedies available at law and equity.

 

(c)                                  Except as otherwise provided in
Section 4.03, all proceeds received after maturity of the Notes, whether by
acceleration or otherwise, shall be applied:

 

(i)                                     first, to payment or reimbursement of
that portion of the Indebtedness constituting fees, expenses and indemnities
payable to the Administrative Agent in its capacity as such;

 

(ii)                                  second, pro rata to payment or
reimbursement of that portion of the Indebtedness constituting fees, expenses
and indemnities payable to the Lenders;

 

(iii)                               third, pro rata to payment of accrued
interest on the Loans;

 

(iv)                              fourth, pro rata to payment of principal
outstanding on the Loans and Indebtedness referred to in Clause (b) of the
definition of Indebtedness owing to a Lender or an Affiliate of a Lender and in
Clause (c) under Treasury Management Agreements;

 

(v)                                 fifth, pro rata to any other Indebtedness;

 

(vi)                              sixth, to serve as cash collateral to be held
by the Administrative Agent to secure the LC Exposure; and

 

(vii)                           seventh, any excess, after all of the
Indebtedness shall have been indefeasibly paid in full in cash, shall be paid to
the Borrower or as otherwise required by any Governmental Requirement.

 

ARTICLE XI
The Agents

 

Section 11.01                          Appointment; Powers.  Each of the Lenders
and the Issuing Bank hereby irrevocably appoints the Administrative Agent as its
agent and authorizes the Administrative Agent to take such actions on its behalf
and to exercise such powers as are delegated to the Administrative Agent by the
terms hereof and the other Loan Documents, together with such actions and powers
as are reasonably incidental thereto.

 

Section 11.02                          Duties and Obligations of Administrative
Agent.  The Administrative Agent 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 Administrative Agent shall not be subject
to any fiduciary or other implied duties, regardless of whether a Default has
occurred and is continuing (the use of the term “agent” herein and in the other
Loan Documents with reference to the Administrative Agent is not intended to
connote any fiduciary or other implied (or express) obligations arising under
agency doctrine of any applicable law; rather, such term is used merely as a
matter of market custom, and is intended to create or reflect only an
administrative relationship between independent contracting parties), (b) the
Administrative Agent shall have no duty to take any discretionary action or
exercise any discretionary powers, except as provided in Section 11.03, and
(c) except as expressly set forth herein, the

 

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Administrative Agent 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 Administrative Agent or any of its Affiliates in any capacity.  The
Administrative Agent shall be deemed not to have knowledge of any Default unless
and until written notice thereof is given to the Administrative Agent by the
Borrower or a Lender, and shall not be responsible for or have any duty to
ascertain or inquire into (i) any statement, warranty or representation made in
or in connection with this Agreement or any other Loan Document, (ii) the
contents of any certificate, report or other document delivered hereunder or
under any other Loan Document or in connection herewith or therewith, (iii) the
performance or observance of any of the covenants, agreements or other terms or
conditions set forth herein or in any other Loan Document, (iv) the validity,
enforceability, effectiveness or genuineness of this Agreement, any other Loan
Document or any other agreement, instrument or document, (v) the satisfaction of
any condition set forth in Article VI or elsewhere herein, other than to confirm
receipt of items expressly required to be delivered to the Administrative Agent
or as to those conditions precedent expressly required to be to the
Administrative Agent’s satisfaction, (vi) the existence, value, perfection or
priority of any collateral security or the financial or other condition of the
Borrower and its Subsidiaries or any other obligor or guarantor, or (vii) any
failure by the Borrower or any other Person (other than itself) to perform any
of its obligations hereunder or under any other Loan Document or the performance
or observance of any covenants, agreements or other terms or conditions set
forth herein or therein.  For purposes of determining compliance with the
conditions specified in Article VI, each Lender shall be deemed to have
consented to, approved or accepted or to be satisfied with, each document or
other matter required thereunder to be consented to or approved by or acceptable
or satisfactory to a Lender unless the Administrative Agent shall have received
written notice from such Lender prior to the proposed closing date specifying
its objection thereto.

 

Section 11.03                          Action by Administrative Agent.  The
Administrative Agent shall have no duty to take any discretionary action or
exercise any discretionary powers, except discretionary rights and powers
expressly contemplated hereby or by the other Loan Documents that the
Administrative Agent is required to exercise in writing as directed by the
Majority Lenders (or such other number or percentage of the Lenders as shall be
necessary under the circumstances as provided in Section 12.02) and in all cases
the Administrative Agent shall be fully justified in failing or refusing to act
hereunder or under any other Loan Documents unless it shall (a) receive written
instructions from the Majority Lenders or the Lenders, as applicable, (or such
other number or percentage of the Lenders as shall be necessary under the
circumstances as provided in Section 12.02) specifying the action to be taken
and (b) be indemnified to its satisfaction by the Lenders against any and all
liability and expenses which may be incurred by it by reason of taking or
continuing to take any such action.  The instructions as aforesaid and any
action taken or failure to act pursuant thereto by the Administrative Agent
shall be binding on all of the Lenders.  If a Default has occurred and is
continuing, then the Administrative Agent shall take such action with respect to
such Default as shall be directed by the requisite Lenders in the written
instructions (with indemnities) described in this Section 11.03, provided that,
unless and until the Administrative Agent shall have received such directions,
the Administrative Agent may (but shall not be obligated to) take such action,
or refrain from taking such action, with respect to such Default as it shall
deem advisable in the best interests of the Lenders.  In no event, however,
shall the Administrative Agent be required to take any action which exposes the

 

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Administrative Agent to personal liability or which is contrary to this
Agreement, the Loan Documents or applicable law.  If a Default has occurred and
is continuing, neither the Syndication Agents nor the Documentation Agents shall
have any obligation to perform any act in respect thereof.  The Administrative
Agent shall not be liable for any action taken or not taken by it with the
consent or at the request of the Majority Lenders or the Lenders (or such other
number or percentage of the Lenders as shall be necessary under the
circumstances as provided in Section 12.02), and otherwise the Administrative
Agent shall not be liable for any action taken or not taken by it hereunder or
under any other Loan Document or under any other document or instrument referred
to or provided for herein or therein or in connection herewith or therewith
INCLUDING ITS OWN ORDINARY NEGLIGENCE, except for its own gross negligence or
willful misconduct.

 

Section 11.04                          Reliance by Administrative Agent.  The
Administrative Agent shall be entitled to rely upon, and shall not incur any
liability for relying upon, any notice, request, certificate, consent,
statement, instrument, document or other writing believed by it to be genuine
and to have been signed or sent by the proper Person.  The Administrative Agent
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 and each of the Borrower, the Lenders and the Issuing Bank
hereby waives the right to dispute the Administrative Agent’s record of such
statement, except in the case of gross negligence or willful misconduct by the
Administrative Agent.  The Administrative Agent 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.  The
Administrative Agent may deem and treat the payee of any Note as the holder
thereof for all purposes hereof unless and until a written notice of the
assignment or transfer thereof permitted hereunder shall have been filed with
the Administrative Agent.

 

Section 11.05                          Subagents.  The Administrative 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 the Administrative Agent.  The
Administrative 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 Sections of this Article XI shall
apply to any such sub-agent and to the Related Parties of the Administrative
Agent and any such sub-agent, and shall apply to their respective activities in
connection with the syndication of the credit facilities provided for herein as
well as activities as Administrative Agent.

 

Section 11.06                          Resignation or Removal of Administrative
Agent.  Subject to the appointment and acceptance of a successor Administrative
Agent as provided in this Section 11.06, the Administrative Agent may resign at
any time by notifying the Lenders, the Issuing Bank and the Borrower, and the
Administrative Agent may be removed at any time with or without cause by the
Majority Lenders.  Upon any such resignation or removal, the Majority Lenders
shall have the right, in consultation with the Borrower, to appoint a
successor.  If no successor shall have been so appointed by the Majority Lenders
and shall have accepted such appointment within 30 days after the retiring Agent
gives notice of its resignation or removal of the retiring Agent, then the
retiring Agent may, on behalf of the Lenders and the Issuing Bank, appoint a
successor Agent which shall be a bank with an office in New York, New York, or
an

 

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Affiliate of any such bank.  Upon the acceptance of its appointment as Agent
hereunder by a successor, such successor shall succeed to and become vested with
all the rights, powers, privileges and duties of the retiring Agent, and the
retiring Agent shall be discharged from its duties and obligations hereunder. 
The fees payable by the Borrower to a successor Agent shall be the same as those
payable to its predecessor unless otherwise agreed between the Borrower and such
successor.  After the Agent’s resignation hereunder, the provisions of this
Article XI and Section 12.03 shall continue in effect for the benefit of such
retiring 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 Agent.

 

Section 11.07                          Agents as Lenders.  Each 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.

 

Section 11.08                          No Reliance.  Each Lender acknowledges
that it has, independently and without reliance upon the Administrative Agent,
any other 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 each other Loan Document to which it is a party.  Each
Lender also acknowledges that it will, independently and without reliance upon
the Administrative Agent, any other 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, any related agreement or any
document furnished hereunder or thereunder.  The Agents shall not be required to
keep themselves informed as to the performance or observance by the Borrower or
any of its Subsidiaries of this Agreement, the Loan Documents or any other
document referred to or provided for herein or to inspect the Properties or
books of the Borrower or its Subsidiaries.  Except for notices, reports and
other documents and information expressly required to be furnished to the
Lenders by the Administrative Agent hereunder, no Agent or the Arrangers shall
have any duty or responsibility to provide any Lender with any credit or other
information concerning the affairs, financial condition or business of the
Borrower (or any of its Affiliates) which may come into the possession of such
Agent or any of its Affiliates.  In this regard, each Lender acknowledges that
Simpson Thacher & Bartlett LLP is acting in this transaction as special counsel
to the Administrative Agent only, except to the extent otherwise expressly
stated in any legal opinion or any Loan Document.  Each other party hereto will
consult with its own legal counsel to the extent that it deems necessary in
connection with the Loan Documents and the matters contemplated therein.

 

Section 11.09                          Administrative Agent May File Proofs of
Claim.  In case of the pendency of any receivership, insolvency, liquidation,
bankruptcy, reorganization, arrangement, adjustment, composition or other
judicial proceeding relative to the Borrower or any of its Subsidiaries, the
Administrative Agent (irrespective of whether the principal of any Loan shall
then be due and payable as herein expressed or by declaration or otherwise and
irrespective of whether the Administrative Agent shall have made any demand on
the Borrower) shall be entitled and empowered, by intervention in such
proceeding or otherwise:

 

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(a)                                  to file and prove a claim for the whole
amount of the principal and interest owing and unpaid in respect of the Loans
and all other Indebtedness that are owing and unpaid and to file such other
documents as may be necessary or advisable in order to have the claims of the
Lenders and the Administrative Agent (including any claim for the reasonable
compensation, expenses, disbursements and advances of the Lenders and the
Administrative Agent and their respective agents and counsel and all other
amounts due the Lenders and the Administrative Agent under Section 12.03)
allowed in such judicial proceeding; and

 

(b)                                 to collect and receive any monies or other
property payable or deliverable on any such claims and to distribute the same;

 

and any custodian, receiver, assignee, trustee, liquidator, sequestrator or
other similar official in any such judicial proceeding is hereby authorized by
each Lender to make such payments to the Administrative Agent and, in the event
that the Administrative Agent shall consent to the making of such payments
directly to the Lenders, to pay to the Administrative Agent any amount due for
the reasonable compensation, expenses, disbursements and advances of the
Administrative Agent and its agents and counsel, and any other amounts due the
Administrative Agent under Section 12.03.

 

Nothing contained herein shall be deemed to authorize the Administrative Agent
to authorize or consent to or accept or adopt on behalf of any Lender any plan
of reorganization, arrangement, adjustment or composition affecting the
Indebtedness or the rights of any Lender or to authorize the Administrative
Agent to vote in respect of the claim of any Lender in any such proceeding.

 

Section 11.10                          The Arrangers, the Syndication Agents and
the Documentation Agents.  The Arrangers, the Syndication Agents and the
Documentation Agents shall have no duties, responsibilities or liabilities under
this Agreement and the other Loan Documents other than their duties,
responsibilities and liabilities in their capacity as Lenders hereunder.

 

ARTICLE XII
Miscellaneous

 

Section 12.01                          Notices.

 

(a)                                  Except in the case of notices and other
communications expressly permitted to be given by telephone (and subject to
Section 12.01(b)), 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:

 

(i)                                     if to the Borrower, to it at 1700
Lincoln Street, Suite 1800 Denver, Colorado 80203, Attention of Mark Burford and
Sherri Nitta (Telecopy No. (303) 285-0229);

 

(ii)                                  if to the Administrative Agent or to
JPMorgan Chase Bank, N.A., as the Issuing Bank, to JPMorgan Chase Bank, N.A.,
Corporate Client Banking Loan Administration, 10 South Dearborn, Floor 07,
Chicago, IL 60603-2003, Attention of Sabana Johnson (Facsimile
No. 888-292-9533), with a copy to JPMorgan Chase Bank, N.A., 712 Main Street,
Floor 12 South, Houston, TX 77002, Attention of Ryan Fuessel (Facsimile
No. 713-216-7770); and

 

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(iii)                               if to any other Lender, to it at its address
(or telecopy number) set forth in its 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 Administrative Agent; provided that the
foregoing shall not apply to notices pursuant to Article II, Article 2.08(k),
Article IV and Article V unless otherwise agreed by the Administrative Agent and
the applicable Lender.  The 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 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.

 

Section 12.02                          Waivers; Amendments.

 

(a)                                  No failure on the part of the
Administrative Agent, any other Agent, the Issuing Bank or any Lender to
exercise and no delay in exercising, and no course of dealing with respect to,
any right, power or privilege, or any abandonment or discontinuance of steps to
enforce such right, power or privilege, under any of the Loan Documents shall
operate as a waiver thereof, nor shall any single or partial exercise of any
right, power or privilege under any of the Loan Documents preclude any other or
further exercise thereof or the exercise of any other right, power or
privilege.  The rights and remedies of the Administrative Agent, any other
Agent, the Issuing Bank 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 this Agreement or any
other Loan Document or consent to any departure by the Borrower therefrom shall
in any event be effective unless the same shall be permitted by
Section 12.02(b), 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 Administrative Agent, any other Agent, any Lender or the Issuing Bank may
have had notice or knowledge of such Default at the time.

 

(b)                                 Neither this Agreement nor any provision
hereof nor the Guaranty Agreement nor any provision thereof may be waived,
amended or modified except pursuant to an agreement or agreements in writing
entered into by the Borrower and the Majority Lenders; provided that no such
agreement shall (i) increase the Commitment or the Maximum Credit Amount of any
Lender without the written consent of such Lender, (ii) increase the Borrowing
Base without the written consent of the Borrowing Base Increasing Lenders,
decrease or maintain the Borrowing Base without the consent of the Required
Lenders, or modify Section 2.07 in any manner without the consent of each
Lender; provided that a Scheduled Redetermination may be postponed by the
Required Lenders, (iii) reduce the principal amount of any Loan or LC
Disbursement or reduce the rate of interest thereon, or reduce any fees payable
hereunder, or reduce any other Indebtedness hereunder or under any other Loan
Document,

 

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without the written consent of each Lender affected thereby, (iv) postpone the
scheduled date of payment or prepayment of the principal amount of any Loan or
LC Disbursement, or any interest thereon, or any fees payable hereunder, or any
other Indebtedness hereunder or under any other Loan Document, or reduce the
amount of, waive or excuse any such payment, or postpone or extend the
Termination Date without the written consent of each Lender affected thereby,
(v) change Section 4.01(b) or Section 4.01(c) in a manner that would alter the
pro rata sharing of payments required thereby, without the written consent of
each Lender, (vi) waive or amend Section 3.04(b), Section 6.01, Section 8.13, or
Section 10.02(c), (vii) release any Guarantor (except as set forth in the
Guaranty Agreement) without the written consent of each Lender, or (viii) change
any of the provisions of this Section 12.02(b) or the definitions of “Required
Lenders”, “Borrowing Base Increasing Lenders” or “Majority Lenders” or any other
provision hereof specifying the number or percentage of Lenders required to
waive, amend or modify any rights hereunder or under any other Loan Documents or
make any determination or grant any consent hereunder or any other Loan
Documents, without the written consent of each Lender; provided further that no
such agreement shall amend, modify or otherwise affect the rights or duties of
the Administrative Agent, any other Agent, or the Issuing Bank hereunder or
under any other Loan Document without the prior written consent of the
Administrative Agent, such other Agent or the Issuing Bank, as the case may be. 
Notwithstanding the foregoing, any supplement to Schedule 7.13 (Subsidiaries)
shall be effective simply by delivering to the Administrative Agent a
supplemental schedule clearly marked as such and, upon receipt, the
Administrative Agent will promptly deliver a copy thereof to the Lenders.

 

Section 12.03                          Expenses, Indemnity; Damage Waiver.

 

(a)                                  The Borrower shall pay (i) all reasonable
out-of-pocket expenses incurred by the Administrative Agent, the Arrangers and
their Affiliates, including, without limitation, the reasonable fees, charges
and disbursements of counsel and other outside consultants for the
Administrative Agent, the reasonable travel, photocopy, mailing, courier,
telephone and other similar expenses, and the cost of environmental invasive and
non-invasive assessments and audits and surveys and appraisals, in connection
with the syndication of the credit facilities provided for herein, the
preparation, negotiation, execution, delivery and administration (both before
and after the execution hereof and including advice of counsel to the
Administrative Agent as to the rights and duties of the Administrative Agent and
the Lenders with respect thereto) of this Agreement and the other Loan Documents
and any amendments, modifications or waivers of or consents related to 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 the Issuing Bank in connection with the issuance,
amendment, renewal or extension of any Letter of Credit or any demand for
payment thereunder, (iii) all out-of-pocket expenses incurred by any Agent, the
Issuing Bank or any Lender, including the fees, charges and disbursements of any
counsel for any Agent, the Issuing Bank or any Lender, in connection with the
enforcement or protection of its rights in connection with this Agreement or any
other Loan Document, including its rights under this Section 12.03, or in
connection with the Loans made or Letters of Credit issued hereunder, including,
without limitation, all such out-of-pocket expenses incurred during any workout,
restructuring or negotiations in respect of such Loans or Letters of Credit.

 

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(b)           THE BORROWER SHALL INDEMNIFY EACH AGENT, THE ARRANGERS, THE
ISSUING BANK AND EACH LENDER, AND EACH RELATED PARTY OF ANY OF THE FOREGOING
PERSONS (EACH SUCH PERSON BEING CALLED AN “INDEMNITEE”) AGAINST, AND DEFEND AND
HOLD EACH INDEMNITEE HARMLESS FROM, ANY AND ALL LOSSES, CLAIMS, DAMAGES,
PENALTIES, LIABILITIES AND RELATED EXPENSES, INCLUDING THE 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 THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT OR ANY
AGREEMENT OR INSTRUMENT CONTEMPLATED HEREBY OR THEREBY, THE PERFORMANCE BY THE
PARTIES HERETO OR THE PARTIES TO ANY OTHER LOAN DOCUMENT OF THEIR RESPECTIVE
OBLIGATIONS HEREUNDER OR THEREUNDER OR THE CONSUMMATION OF THE TRANSACTIONS
CONTEMPLATED HEREBY OR BY ANY OTHER LOAN DOCUMENT, (ii) THE FAILURE OF THE
BORROWER OR ANY SUBSIDIARY TO COMPLY WITH THE TERMS OF ANY LOAN
DOCUMENT, INCLUDING THIS AGREEMENT, OR WITH ANY GOVERNMENTAL REQUIREMENT,
(iii) ANY INACCURACY OF ANY REPRESENTATION OR ANY BREACH OF ANY WARRANTY OR
COVENANT OF THE BORROWER OR ANY GUARANTOR SET FORTH IN ANY OF THE LOAN DOCUMENTS
OR ANY INSTRUMENTS, DOCUMENTS OR CERTIFICATIONS DELIVERED IN CONNECTION
THEREWITH, (iv) ANY LOAN OR LETTER OF CREDIT OR THE USE OF THE PROCEEDS
THEREFROM, INCLUDING, WITHOUT LIMITATION, (A) ANY REFUSAL BY THE 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, OR (B) THE PAYMENT OF A DRAWING UNDER ANY LETTER OF CREDIT
NOTWITHSTANDING THE NON-COMPLIANCE, NON-DELIVERY OR OTHER IMPROPER PRESENTATION
OF THE DOCUMENTS PRESENTED IN CONNECTION THEREWITH, (v) ANY OTHER ASPECT OF THE
LOAN DOCUMENTS, (vi) THE OPERATIONS OF THE BUSINESS OF THE BORROWER AND ITS
SUBSIDIARIES BY THE BORROWER AND ITS SUBSIDIARIES, (vii) ANY ENVIRONMENTAL LAW
APPLICABLE TO THE BORROWER OR ANY SUBSIDIARY OR ANY OF THEIR PROPERTIES OR
OPERATIONS, INCLUDING, THE PRESENCE, GENERATION, STORAGE, RELEASE, THREATENED
RELEASE, USE, TRANSPORT, DISPOSAL, ARRANGEMENT OF DISPOSAL OR TREATMENT OF
HAZARDOUS MATERIALS ON OR AT ANY OF THEIR PROPERTIES, (viii) THE BREACH OR
NON-COMPLIANCE BY THE BORROWER OR ANY SUBSIDIARY WITH ANY ENVIRONMENTAL LAW
APPLICABLE TO THE BORROWER OR ANY SUBSIDIARY, (ix) THE PAST OWNERSHIP BY THE
BORROWER OR ANY SUBSIDIARY OF ANY OF THEIR PROPERTIES OR PAST ACTIVITY ON ANY OF
THEIR PROPERTIES WHICH, THOUGH LAWFUL AND FULLY PERMISSIBLE AT THE TIME, COULD
RESULT IN PRESENT LIABILITY, (x) THE PRESENCE, USE, RELEASE, STORAGE, TREATMENT,
DISPOSAL, GENERATION, THREATENED RELEASE, TRANSPORT, ARRANGEMENT FOR TRANSPORT
OR ARRANGEMENT FOR DISPOSAL OF HAZARDOUS MATERIALS ON OR AT ANY OF THE
PROPERTIES OWNED OR OPERATED BY THE BORROWER OR ANY SUBSIDIARY OR ANY ACTUAL OR

 

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ALLEGED PRESENCE OR RELEASE OF HAZARDOUS MATERIALS ON OR FROM ANY PROPERTY OWNED
OR OPERATED BY THE BORROWER OR ANY OF ITS SUBSIDIARIES, (xi) ANY ENVIRONMENTAL
LIABILITY RELATED IN ANY WAY TO THE BORROWER OR ANY OF ITS SUBSIDIARIES, OR
(xii) ANY OTHER ENVIRONMENTAL, HEALTH OR SAFETY CONDITION IN CONNECTION WITH THE
LOAN DOCUMENTS, OR (xiii) 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, AND SUCH INDEMNITY SHALL EXTEND TO EACH
INDEMNITEE NOTWITHSTANDING THE SOLE OR CONCURRENT NEGLIGENCE OF EVERY KIND OR
CHARACTER WHATSOEVER, WHETHER ACTIVE OR PASSIVE, WHETHER AN AFFIRMATIVE ACT OR
AN OMISSION, INCLUDING WITHOUT LIMITATION, ALL TYPES OF NEGLIGENT CONDUCT
IDENTIFIED IN THE RESTATEMENT (SECOND) OF TORTS OF ONE OR MORE OF THE
INDEMNITEES OR BY REASON OF STRICT LIABILITY IMPOSED WITHOUT FAULT ON ANY ONE OR
MORE OF THE INDEMNITEES; PROVIDED THAT SUCH INDEMNITY SHALL NOT, AS TO ANY
INDEMNITEE, BE AVAILABLE TO THE EXTENT THAT SUCH LOSSES, CLAIMS, DAMAGES,
LIABILITIES OR RELATED EXPENSES ARE DETERMINED BY A COURT OF COMPETENT
JURISDICTION BY FINAL AND NONAPPEALABLE JUDGMENT TO HAVE RESULTED FROM THE GROSS
NEGLIGENCE OR WILFUL MISCONDUCT OF SUCH INDEMNITEE.

 

(c)           To the extent that the Borrower fails to pay any amount required
to be paid by it to any Agent, the Arrangers or the Issuing Bank under
Section 12.03(a) or (b), each Lender severally agrees to pay to such Agent, the
Arrangers or the Issuing Bank, 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 such Agent, the
Arrangers or the Issuing Bank in its capacity as such.

 

(d)           To the extent permitted by applicable law, the Borrower shall not
assert, and hereby waives, any claim against any Indemnitee, on any theory of
liability, for special, indirect, consequential or punitive damages (as opposed
to direct or actual damages) arising out of, in connection with, or as a result
of, this Agreement, any other Loan Document or any agreement or instrument
contemplated hereby or thereby, the Transactions, any Loan or Letter of Credit
or the use of the proceeds thereof.

 

(e)           All amounts due under this Section 12.03 shall be payable promptly
after written demand therefor.

 

Section 12.04         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 the Issuing Bank that issues any
Letter of Credit), except that (i) the Borrower may not assign or otherwise
transfer any of its rights or obligations hereunder without

 

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the prior written consent of each Lender (and any attempted assignment or
transfer by the Borrower without such consent shall be null and void) and
(ii) no Lender may assign or otherwise transfer its rights or obligations
hereunder except in accordance with this Section 12.04.  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 the Issuing Bank that issues any
Letter of Credit), Participants (to the extent provided in Section 12.04(c))
and, to the extent expressly contemplated hereby, the Related Parties of each of
the Administrative Agent, the Issuing Bank and the Lenders) any legal or
equitable right, remedy or claim under or by reason of this Agreement.

 

(b)           (i)  Subject to the conditions set forth in Section 12.04(b)(ii),
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
Commitment and the Loans at the time owing to it) with the prior written consent
(such consent not to be unreasonably withheld) of:

 

(A)          the Borrower, provided that no consent of the Borrower shall be
required if such assignment is to a Lender, an Affiliate of a Lender, an
Approved Fund or, if an Event of Default has occurred and is continuing, is to
any other assignee; and

 

(B)           the Administrative Agent, provided that no consent of the
Administrative Agent shall be required for an assignment to an assignee that is
a Lender immediately prior to giving effect to such assignment.

 

(ii)           Assignments shall be subject to the following additional
conditions:

 

(A)          except in the case of an assignment to a Lender or an Affiliate of
a Lender or an assignment of the entire remaining amount of the assigning
Lender’s Commitment or Loans, the amount of the Commitment or Loans of the
assigning Lender subject to each such assignment (determined as of the date the
Assignment and Assumption with respect to such assignment is delivered to the
Administrative Agent) shall not be less than $5,000,000 unless each of the
Borrower and the Administrative Agent otherwise consent, provided that no such
consent of the Borrower shall be required if an Event of Default has occurred
and is continuing;

 

(B)           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;

 

(C)           the parties to each assignment shall execute and deliver to the
Administrative Agent an Assignment and Assumption, together with a processing
and recordation fee of $3,500; and

 

(D)          the assignee, if it shall not be a Lender, shall deliver to the
Administrative Agent an Administrative Questionnaire.

 

(iii)          Subject to Section 12.04(b)(iv) and the acceptance and recording
thereof, from and after the effective date specified in each Assignment and
Assumption the assignee thereunder shall be a party hereto and, to the extent of
the interest assigned by such

 

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Assignment and Assumption, have the rights and obligations of a Lender under
this Agreement, and the assigning Lender thereunder shall, to the extent of the
interest assigned by such Assignment and Assumption, be released from its
obligations under this Agreement (and, in the case of an Assignment and
Assumption covering all of the assigning Lender’s rights and obligations under
this Agreement, such Lender shall cease to be a party hereto but shall continue
to be entitled to the benefits and subject to the obligations of Section 5.01,
Section 5.02, Section 5.03 and Section 12.03).  Any assignment or transfer by a
Lender of rights or obligations under this Agreement that does not comply with
this Section 12.04 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
Section 12.04(c).

 

(iv)          The Administrative Agent, acting for this purpose as an agent of
the Borrower, shall maintain at one of its offices a copy of each Assignment and
Assumption delivered to it and a register for the recordation of the names and
addresses of the Lenders, and the Maximum Credit Amount 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, and the Borrower, the Administrative Agent, the Issuing Bank and the
Lenders shall treat each Person whose name is recorded in the Register pursuant
to the terms hereof as a Lender hereunder for all purposes of this Agreement,
notwithstanding notice to the contrary.  The Register shall be available for
inspection by the Borrower, the 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 Administrative Agent will reflect the
revisions on Annex I and forward a copy of such revised Annex I to the Borrower,
the Issuing Bank and each Lender.

 

(v)           Upon its receipt of a duly completed Assignment and Assumption
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
Section 12.04(b) and any written consent to such assignment required by
Section 12.04(b), the Administrative Agent shall accept such Assignment and
Assumption and record the information contained therein in the Register.  No
assignment shall be effective for purposes of this Agreement unless it has been
recorded in the Register as provided in this Section 12.04(b).

 

(c)

 

(i)            Any Lender may, without the consent of the Borrower, the
Administrative Agent or the Issuing Bank, 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
Commitment and the Loans owing to it); provided that (A) such Lender’s
obligations under this Agreement shall remain unchanged, (B) such Lender shall
remain solely responsible to the other parties hereto for the performance of
such obligations and (C) the Borrower, the Administrative Agent, the Issuing
Bank 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 this Agreement and to approve any amendment, modification or waiver of
any

 

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provision of this Agreement; provided that such agreement or instrument may
provide that such Lender will not, without the consent of the Participant, agree
to any amendment, modification or waiver described in the proviso to
Section 12.02 that affects such Participant.  In addition such agreement must
provide that the Participant be bound by the provisions of Section 12.03. 
Subject to Section 12.04(c)(ii), the Borrower agrees that each Participant shall
be entitled to the benefits of Section 5.01, Section 5.02 and Section 5.03 to
the same extent as if it were a Lender and had acquired its interest by
assignment pursuant to Section 12.04(b).  To the extent permitted by law, each
Participant also shall be entitled to the benefits of Section 12.08 as though it
were a Lender, provided such Participant agrees to be subject to
Section 4.01(c) as though it were a Lender.

 

(ii)           A Participant shall not be entitled to receive any greater
payment under Section 5.01 or Section 5.03 than the applicable Lender would have
been entitled to receive with respect to the participation sold to such
Participant, unless the sale of the participation to such Participant is made
with the Borrower’s prior written consent (which consent, if any, expressly
acknowledges any additional obligations of the Borrower in respect of
Indemnified Taxes or Other Taxes).  A Participant that would be a Foreign Lender
if it were a Lender shall not be entitled to the benefits of Section 5.03 unless
such Participant complies with Section 5.03(e) as though it were a Lender.

 

Each Lender that sells a participation shall, acting solely for this purpose as
an agent of the Borrower, maintain a register on which it enters the name and
address of each Participant and the principal amounts (and stated interest) of
each Participant’s interest in the Loans or other obligations under this
Agreement (the “Participant Register”); provided that no Lender shall have any
obligation to disclose all or any portion of the Participant Register to any
Person (including the identity of any Participant or any information relating to
a Participant’s interest in any Commitments, Loans, Letters of Credit or its
other obligations under this Agreement) except to the extent that such
disclosure is necessary to establish that such Commitment, Loan, Letter of
Credit or other obligation is in registered form under Section 5f.103-1(c) of
the United States Treasury Regulations.

 

(d)           Any Lender may at any time pledge or assign a security interest in
all or any portion of its rights under this Agreement to secure obligations of
such Lender, including, without limitation, any pledge or assignment to secure
obligations to a Federal Reserve Bank or any central bank having jurisdiction
over such Lender, and this Section 12.04(d) 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.

 

(e)           Notwithstanding any other provisions of this Section 12.04, no
transfer or assignment of the interests or obligations of any Lender or any
grant of participations therein shall be permitted if such transfer, assignment
or grant would require the Borrower and the Guarantors to file a registration
statement with the SEC or to qualify the Loans under the “Blue Sky” laws of any
state.

 

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Section 12.05         Survival; Revival; Reinstatement.

 

(a)           All covenants, agreements, representations and warranties made by
the Borrower herein 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 this Agreement 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 the
Administrative Agent, any other Agent, the Issuing Bank 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 Commitments
have not expired or terminated.  The provisions of Section 5.01, Section 5.02,
Section 5.03 and Section 12.03 and Article XI 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 Commitments or the termination of this Agreement, any other
Loan Document or any provision hereof or thereof.

 

(b)           To the extent that any payments on the Indebtedness or proceeds of
any collateral are subsequently invalidated, declared to be fraudulent or
preferential, set aside or required to be repaid to a trustee, debtor in
possession, receiver or other Person under any bankruptcy law, common law or
equitable cause, then to such extent, the Indebtedness so satisfied shall be
revived and continue as if such payment or proceeds had not been received and
the Administrative Agent’s and the Lenders’ Liens, security interests, rights,
powers and remedies under this Agreement and each Loan Document shall continue
in full force and effect.  In such event, each Loan Document shall be
automatically reinstated and the Borrower shall take such action as may be
reasonably requested by the Administrative Agent and the Lenders to effect such
reinstatement.

 

Section 12.06         Counterparts; Integration; Effectiveness.

 

(a)           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.

 

(b)           This Agreement, the other Loan Documents and any separate letter
agreements with respect to fees payable to the Administrative Agent constitute
the entire contract among the parties relating to the subject matter hereof and
thereof and supersede any and all previous agreements and understandings, oral
or written, relating to the subject matter hereof and thereof.  THIS AGREEMENT
AND THE OTHER LOAN DOCUMENTS REPRESENT THE FINAL AGREEMENT AMONG THE PARTIES
HERETO AND THERETO AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES.  THERE ARE NO
UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.

 

(c)           Except as provided in Section 6.01, this Agreement shall become
effective when it shall have been executed by the Administrative Agent and when
the Administrative Agent shall have received counterparts hereof which, when
taken together, bear the signatures of

 

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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 shall be effective as delivery of a manually executed
counterpart of this Agreement.

 

Section 12.07         Severability.  Any provision of this Agreement or any
other Loan Document 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 or thereof; and
the invalidity of a particular provision in a particular jurisdiction shall not
invalidate such provision in any other jurisdiction.

 

Section 12.08         Right of Setoff.  If an Event of Default shall have
occurred and be continuing, each Lender and each of its 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 (of
whatsoever kind, including, without limitations obligations under Swap
Agreements) at any time owing by such Lender or Affiliate to or for the credit
or the account of the Borrower or any Subsidiary against any of and all the
obligations of the Borrower or any Subsidiary owed to such Lender now or
hereafter existing under this Agreement or any other Loan Document, irrespective
of whether or not such Lender shall have made any demand under this Agreement or
any other Loan Document and although such obligations may be unmatured.  The
rights of each Lender under this Section 12.08 are in addition to other rights
and remedies (including other rights of setoff) which such Lender or its
Affiliates may have.

 

Section 12.09         GOVERNING LAW; JURISDICTION; CONSENT TO SERVICE OF
PROCESS.

 

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

 

(b)           ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THE LOAN DOCUMENTS
SHALL BE BROUGHT IN THE COURTS OF THE STATE OF NEW YORK OR OF THE UNITED STATES
OF AMERICA FOR THE SOUTHERN DISTRICT OF NEW YORK, AND, BY EXECUTION AND DELIVERY
OF THIS AGREEMENT, EACH PARTY HEREBY ACCEPTS FOR ITSELF AND (TO THE EXTENT
PERMITTED BY LAW) IN RESPECT OF ITS PROPERTY, GENERALLY AND UNCONDITIONALLY, THE
JURISDICTION OF THE AFORESAID COURTS.  EACH PARTY HEREBY IRREVOCABLY WAIVES ANY
OBJECTION, INCLUDING, WITHOUT LIMITATION, ANY OBJECTION TO THE LAYING OF VENUE
OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS, WHICH IT MAY NOW OR HEREAFTER
HAVE TO THE BRINGING OF ANY SUCH ACTION OR PROCEEDING IN SUCH RESPECTIVE
JURISDICTIONS.  THIS SUBMISSION TO JURISDICTION IS NON-EXCLUSIVE AND DOES NOT
PRECLUDE A PARTY FROM OBTAINING JURISDICTION OVER ANOTHER PARTY IN ANY COURT
OTHERWISE HAVING JURISDICTION.

 

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(c)           EACH PARTY IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS OF ANY
OF THE AFOREMENTIONED COURTS IN ANY SUCH ACTION OR PROCEEDING BY THE MAILING OF
COPIES THEREOF BY REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID, TO IT AT THE
ADDRESS SPECIFIED IN SECTION 12.01 OR SUCH OTHER ADDRESS AS IS SPECIFIED
PURSUANT TO SECTION 12.01 (OR ITS ASSIGNMENT AND ASSUMPTION), SUCH SERVICE TO
BECOME EFFECTIVE THIRTY (30) DAYS AFTER SUCH MAILING.  NOTHING HEREIN SHALL
AFFECT THE RIGHT OF A PARTY OR ANY HOLDER OF A NOTE TO SERVE PROCESS IN ANY
OTHER MANNER PERMITTED BY LAW OR TO COMMENCE LEGAL PROCEEDINGS OR OTHERWISE
PROCEED AGAINST ANOTHER PARTY IN ANY OTHER JURISDICTION.

 

(d)           EACH PARTY HEREBY (i) IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO
THE FULLEST EXTENT PERMITTED BY LAW, TRIAL BY JURY IN ANY LEGAL ACTION OR
PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT AND FOR ANY
COUNTERCLAIM THEREIN; (ii) IRREVOCABLY WAIVES, TO THE MAXIMUM EXTENT NOT
PROHIBITED BY LAW, ANY RIGHT IT MAY HAVE TO CLAIM OR RECOVER IN ANY SUCH
LITIGATION ANY SPECIAL, EXEMPLARY, PUNITIVE OR CONSEQUENTIAL DAMAGES, OR DAMAGES
OTHER THAN, OR IN ADDITION TO, ACTUAL DAMAGES; (iii) CERTIFIES THAT NO PARTY
HERETO NOR ANY REPRESENTATIVE OR AGENT OF COUNSEL FOR ANY PARTY HERETO HAS
REPRESENTED, EXPRESSLY OR OTHERWISE, OR IMPLIED THAT SUCH PARTY WOULD NOT, IN
THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVERS, AND
(iv) ACKNOWLEDGES THAT IT HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT, THE
LOAN DOCUMENTS AND THE TRANSACTIONS CONTEMPLATED HEREBY AND THEREBY BY, AMONG
OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS CONTAINED IN THIS
SECTION 12.09.

 

Section 12.10         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 12.11         Confidentiality.  Each of the Administrative Agent, the
Issuing Bank and the Lenders agrees to maintain the confidentiality of the
Information (as defined below), except that Information may be disclosed (a) to
its and its Affiliates’ directors, officers, employees and agents, including
accountants, legal counsel and other advisors (it being understood that the
Persons to whom such disclosure is made will be informed of the confidential
nature of such Information and instructed to keep such Information
confidential), (b) to the extent requested by any regulatory authority or any
self-regulatory authority, (c) to the extent required by applicable laws or
regulations or by any subpoena or similar legal process, (d) to any other party
to this Agreement or any other Loan Document, (e) in connection with the
exercise of any remedies hereunder or under any other Loan Document or any suit,
action or proceeding relating to this Agreement or any other Loan Document or
the enforcement of rights hereunder or thereunder, (f) subject to an agreement
containing provisions substantially the same as those of this Section 12.11, to
(i) any assignee of or Participant in, or any prospective assignee of or
Participant in, any of its rights or obligations under this Agreement or
(ii) any actual or prospective

 

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counterparty (or its advisors) to any Swap Agreement relating to the Borrower
and its obligations, (g) with the consent of the Borrower or (h) to the extent
such Information (i) becomes publicly available other than as a result of a
breach of this Section 12.11 or (ii) becomes available to the Administrative
Agent, the Issuing Bank or any Lender on a nonconfidential basis from a source
other than the Borrower.  For the purposes of this Section 12.11, “Information”
means all information received from the Borrower or any Subsidiary relating to
the Borrower or any Subsidiary and their businesses, other than any such
information that is available to the Administrative Agent, the Issuing Bank or
any Lender on a nonconfidential basis prior to disclosure by the Borrower or a
Subsidiary; provided that, in the case of information received from the Borrower
or any Subsidiary after the date hereof, such information is clearly identified
at the time of delivery as confidential.  Any Person required to maintain the
confidentiality of Information as provided in this Section 12.11 shall be
considered to have complied with its obligation to do so if such Person has
exercised the same degree of care to maintain the confidentiality of such
Information as such Person would accord to its own confidential information.

 

Section 12.12         Interest Rate Limitation.  It is the intention of the
parties hereto that each Lender shall conform strictly to usury laws applicable
to it.  Accordingly, if the transactions contemplated hereby would be usurious
as to any Lender under laws applicable to it (including the laws of the United
States of America and the State of New York or any other jurisdiction whose laws
may be mandatorily applicable to such Lender notwithstanding the other
provisions of this Agreement), then, in that event, notwithstanding anything to
the contrary in any of the Loan Documents or any agreement entered into in
connection with or as security for the Notes, it is agreed as follows:  (i) the
aggregate of all consideration which constitutes interest under law applicable
to any Lender that is contracted for, taken, reserved, charged or received by
such Lender under any of the Loan Documents or agreements or otherwise in
connection with the Notes shall under no circumstances exceed the maximum amount
allowed by such applicable law, and any excess shall be canceled automatically
and if theretofore paid shall be credited by such Lender on the principal amount
of the Indebtedness (or, to the extent that the principal amount of the
Indebtedness shall have been or would thereby be paid in full, refunded by such
Lender to the Borrower); and (ii) in the event that the maturity of the Notes is
accelerated by reason of an election of the holder thereof resulting from any
Event of Default under this Agreement or otherwise, or in the event of any
required or permitted prepayment, then such consideration that constitutes
interest under law applicable to any Lender may never include more than the
maximum amount allowed by such applicable law, and excess interest, if any,
provided for in this Agreement or otherwise shall be canceled automatically by
such Lender as of the date of such acceleration or prepayment and, if
theretofore paid, shall be credited by such Lender on the principal amount of
the Indebtedness (or, to the extent that the principal amount of the
Indebtedness shall have been or would thereby be paid in full, refunded by such
Lender to the Borrower).  All sums paid or agreed to be paid to any Lender for
the use, forbearance or detention of sums due hereunder shall, to the extent
permitted by law applicable to such Lender, be amortized, prorated, allocated
and spread throughout the stated term of the Loans evidenced by the Notes until
payment in full so that the rate or amount of interest on account of any Loans
hereunder does not exceed the maximum amount allowed by such applicable law.  If
at any time and from time to time (i) the amount of interest payable to any
Lender on any date shall be computed at the Highest Lawful Rate applicable to
such Lender pursuant to this Section 12.12 and (ii) in respect of any subsequent
interest computation period the amount of interest otherwise

 

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payable to such Lender would be less than the amount of interest payable to such
Lender computed at the Highest Lawful Rate applicable to such Lender, then the
amount of interest payable to such Lender in respect of such subsequent interest
computation period shall continue to be computed at the Highest Lawful Rate
applicable to such Lender until the total amount of interest payable to such
Lender shall equal the total amount of interest which would have been payable to
such Lender if the total amount of interest had been computed without giving
effect to this Section 12.12.

 

Section 12.13         EXCULPATION PROVISIONS.  EACH OF THE PARTIES HERETO
SPECIFICALLY AGREES THAT IT HAS A DUTY TO READ THIS AGREEMENT AND THE OTHER LOAN
DOCUMENTS AND AGREES THAT IT IS CHARGED WITH NOTICE AND KNOWLEDGE OF THE TERMS
OF THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS; THAT IT HAS IN FACT READ THIS
AGREEMENT AND IS FULLY INFORMED AND HAS FULL NOTICE AND KNOWLEDGE OF THE TERMS,
CONDITIONS AND EFFECTS OF THIS AGREEMENT; THAT IT HAS BEEN REPRESENTED BY
INDEPENDENT LEGAL COUNSEL OF ITS CHOICE THROUGHOUT THE NEGOTIATIONS PRECEDING
ITS EXECUTION OF THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS; AND HAS RECEIVED
THE ADVICE OF ITS ATTORNEY IN ENTERING INTO THIS AGREEMENT AND THE OTHER LOAN
DOCUMENTS; AND THAT IT RECOGNIZES THAT CERTAIN OF THE TERMS OF THIS AGREEMENT
AND THE OTHER LOAN DOCUMENTS RESULT IN ONE PARTY ASSUMING THE LIABILITY INHERENT
IN SOME ASPECTS OF THE TRANSACTION AND RELIEVING THE OTHER PARTY OF ITS
RESPONSIBILITY FOR SUCH LIABILITY.  EACH PARTY HERETO AGREES AND COVENANTS THAT
IT WILL NOT CONTEST THE VALIDITY OR ENFORCEABILITY OF ANY EXCULPATORY PROVISION
OF THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS ON THE BASIS THAT THE PARTY HAD
NO NOTICE OR KNOWLEDGE OF SUCH PROVISION OR THAT THE PROVISION IS NOT
“CONSPICUOUS.”

 

Section 12.14         No Third Party Beneficiaries.  This Agreement, the other
Loan Documents, and the agreement of the Lenders to make Loans and the Issuing
Bank to issue, amend, renew or extend Letters of Credit hereunder are solely for
the benefit of the Borrower, and no other Person (including, without limitation,
any Subsidiary of the Borrower, any obligor, contractor, subcontractor, supplier
or materialsman) shall have any rights, claims, remedies or privileges hereunder
or under any other Loan Document against the Administrative Agent, any other
Agent, the Issuing Bank or any Lender for any reason whatsoever.  There are no
third party beneficiaries.

 

Section 12.15         Pari Passu Obligations.  It is the intent of the Borrower
that subject to the priority set forth in Section 10.02(c), Indebtedness shall
be senior obligations of the Borrower and the Guarantors and rank equal and
ratably with all their other senior, unsecured, unsubordinated obligations.

 

Section 12.16         USA Patriot Act Notice.  Each Lender hereby notifies the
Borrower that pursuant to the requirements of the USA Patriot Act (Title III of
Pub. L. 107-56 (signed into law October 26, 2001)) (the “Act”), it is required
to obtain, verify and record information that identifies the Borrower, which
information includes the name and address of the Borrower and

 

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other information that will allow such Lender to identify the Borrower in
accordance with the Act.

 

[SIGNATURES BEGIN NEXT PAGE]

 

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The parties hereto have caused this Agreement to be duly executed as of the day
and year first above written.

 

 

 

CIMAREX ENERGY CO.

 

 

 

 

 

By:

 

 

 

 

 

Name:

Paul Korus

 

Title:

Senior Vice President and Chief Financial Officer

 

[Signature Page to Credit Agreement]

 

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JPMORGAN CHASE BANK, N.A., as Administrative Agent, Issuing Bank, and a Lender

 

 

 

 

 

By:

 

 

 

 

 

Name:

 

 

Title:

 

 

[Signature Page to Credit Agreement]

 

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WELLS FARGO BANK, N.A., as Co-Syndication Agent and a Lender

 

 

 

 

 

By:

 

 

 

 

 

Name:

 

 

Title:

 

 

[Signature Page to Credit Agreement]

 

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[LENDER], as a Lender

 

 

 

 

 

By:

 

 

 

 

 

Name:

 

 

Title:

 

 

[Signature Page to Credit Agreement]

 

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ANNEX I
LIST OF MAXIMUM CREDIT AMOUNTS

 

Aggregate Maximum Credit Amounts

 

Name of Lender

 

Applicable
Percentage

 

Maximum Credit
Amount

 

JPMorgan Chase Bank, N.A.

 

8.750

%

$

70,000,000.00

 

Compass Bank

 

8.750

%

$

70,000,000.00

 

Deutsche Bank Trust Company Americas

 

8.750

%

$

70,000,000.00

 

Union Bank, N.A.

 

8.750

%

$

70,000,000.00

 

Wells Fargo Bank, N.A.

 

8.750

%

$

70,000,000.00

 

Branch Banking and Trust Company

 

6.875

%

$

55,000,000.00

 

Capital One, N.A.

 

6.875

%

$

55,000,000.00

 

CIBC Inc.

 

6.875

%

$

55,000,000.00

 

Comerica Bank

 

6.875

%

$

55,000,000.00

 

KeyBank National Association

 

6.875

%

$

55,000,000.00

 

U.S. Bank National Association

 

6.875

%

$

55,000,000.00

 

BOKF, N.A., d/b/a Bank of Oklahoma

 

5.000

%

$

40,000,000.00

 

Bank of Scotland plc

 

5.000

%

$

40,000,000.00

 

ING Capital LLC

 

5.000

%

$

40,000,000.00

 

TOTAL

 

100.0000

%

$

800,000,000.00

 

 

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