Exhibit 10.0

 

AMENDED AND RESTATED CREDIT AGREEMENT

 

DATED AS OF JUNE 13, 2005

 

 

AMONG

 

CIMAREX ENERGY CO.,

AS BORROWER,

 

THE LENDERS,

 

JPMORGAN CHASE BANK, N.A.,

AS ADMINISTRATIVE AGENT,

 

U.S. BANK NATIONAL ASSOCIATION,

AS CO-SYNDICATION AGENT,

 

BANK OF AMERICA, N.A.,

AS CO-SYNDICATION AGENT

 

AND

 

WELLS FARGO BANK, N.A.,

AS DOCUMENTATION AGENT

 

 

--------------------------------------------------------------------------------

 

$1,000,000,000

 

 

J.P. MORGAN SECURITIES INC.,

AS LEAD ARRANGER AND SOLE BOOK RUNNER

 

--------------------------------------------------------------------------------

 

TABLE OF CONTENTS

 

ARTICLE I DEFINITIONS

 

 

 

 

ARTICLE II THE CREDITS [a05-12630_1ex10d0.htm#ArticleiiTheCredits_031954]

 

Section 2.1. [a05-12630_1ex10d0.htm#Section2_1_Commitment__032003]

Commitment [a05-12630_1ex10d0.htm#Section2_1_Commitment__032003]

 

Section 2.2. [a05-12630_1ex10d0.htm#Section2_2_RequiredPaymentsTermin_032008]

Required Payments; Termination
[a05-12630_1ex10d0.htm#Section2_2_RequiredPaymentsTermin_032008]

 

Section 2.3. [a05-12630_1ex10d0.htm#Section2_3__032009]

Ratable Loans [a05-12630_1ex10d0.htm#Section2_3__032009]

 

Section 2.4. [a05-12630_1ex10d0.htm#Section2_4__032010]

Types of Advances [a05-12630_1ex10d0.htm#Section2_4__032010]

 

Section 2.5. [a05-12630_1ex10d0.htm#Section2_5__032021]

Commitment Fee; Initial Aggregate Commitment; Changes in Aggregate Commitment
[a05-12630_1ex10d0.htm#Section2_5__032021]

 

Section 2.6. [a05-12630_1ex10d0.htm#Section2_6__032035]

Borrowing Base and Required Reserve Value
[a05-12630_1ex10d0.htm#Section2_6__032035]

 

Section 2.7. [a05-12630_1ex10d0.htm#Section2_7__032101]

Minimum Amount of Each Advance [a05-12630_1ex10d0.htm#Section2_7__032101]

 

Section 2.8. [a05-12630_1ex10d0.htm#Section2_8__032116]

Principal Payments [a05-12630_1ex10d0.htm#Section2_8__032116]

 

Section 2.9. [a05-12630_1ex10d0.htm#Section2_9__032124]

Method of Selecting Types and Interest Periods for new Advances
[a05-12630_1ex10d0.htm#Section2_9__032124]

 

Section 2.10. [a05-12630_1ex10d0.htm#Section2_10__032149]

Conversion and Continuation of Outstanding Advances
[a05-12630_1ex10d0.htm#Section2_10__032149]

 

Section 2.11. [a05-12630_1ex10d0.htm#Section2_11__032153]

Changes in Interest Rate, etc [a05-12630_1ex10d0.htm#Section2_11__032153]

 

Section 2.12. [a05-12630_1ex10d0.htm#Section2_12__032239]

Rates Applicable After Default [a05-12630_1ex10d0.htm#Section2_12__032239]

 

Section 2.13. [a05-12630_1ex10d0.htm#Section2_13__032253]

Method of Payment [a05-12630_1ex10d0.htm#Section2_13__032253]

 

Section 2.14. [a05-12630_1ex10d0.htm#Section2_14__032344]

Evidence of Indebtedness [a05-12630_1ex10d0.htm#Section2_14__032344]

 

Section 2.15. [a05-12630_1ex10d0.htm#Section2_15__032401]

Telephonic Notices [a05-12630_1ex10d0.htm#Section2_15__032401]

 

Section 2.16. [a05-12630_1ex10d0.htm#Section2_16__032405]

Interest Payment Dates; Interest and Fee Basis
[a05-12630_1ex10d0.htm#Section2_16__032405]

 

Section 2.17. [a05-12630_1ex10d0.htm#Section2_17__032410]

Notification of Advances, Interest Rates, Prepayments and Commitment Reductions
[a05-12630_1ex10d0.htm#Section2_17__032410]

 

Section 2.18. [a05-12630_1ex10d0.htm#Section2_18__032414]

Lending Installations [a05-12630_1ex10d0.htm#Section2_18__032414]

 

Section 2.19. [a05-12630_1ex10d0.htm#Section2_19__032445]

Non-Receipt of Funds by the Administrative Agent
[a05-12630_1ex10d0.htm#Section2_19__032445]

 

Section 2.20. [a05-12630_1ex10d0.htm#Section2_20__032447]

Facility LCs [a05-12630_1ex10d0.htm#Section2_20__032447]

 

Section 2.21. [a05-12630_1ex10d0.htm#Section2_21__032641]

Replacement of Lender [a05-12630_1ex10d0.htm#Section2_21__032641]

 

Section 2.22. [a05-12630_1ex10d0.htm#Section2_22__032646]

Limitation of Interest [a05-12630_1ex10d0.htm#Section2_22__032646]

 

 

 

 

ARTICLE III YIELD PROTECTION; TAXES
[a05-12630_1ex10d0.htm#ArticleiiiYieldProtectionTaxes_032723]

 

Section 3.1. [a05-12630_1ex10d0.htm#Section3_1__032730]

Yield Protection [a05-12630_1ex10d0.htm#Section3_1__032730]

 

Section 3.2. [a05-12630_1ex10d0.htm#Section3_2__032828]

Changes in Capital Adequacy Regulations
[a05-12630_1ex10d0.htm#Section3_2__032828]

 

Section 3.3. [a05-12630_1ex10d0.htm#Section3_3__032831]

Taxes [a05-12630_1ex10d0.htm#Section3_3__032831]

 

Section 3.4. [a05-12630_1ex10d0.htm#Section3_4__032904]

Availability of Types of Advances [a05-12630_1ex10d0.htm#Section3_4__032904]

 

Section 3.5. [a05-12630_1ex10d0.htm#Section3_5__032908]

Funding Indemnification [a05-12630_1ex10d0.htm#Section3_5__032908]

 

Section 3.6. [a05-12630_1ex10d0.htm#Section3_6__032913]

Lender Statements; Survival of Indemnity
[a05-12630_1ex10d0.htm#Section3_6__032913]

 

 

 

 

ARTICLE IV CONDITIONS PRECEDENT
[a05-12630_1ex10d0.htm#ArticleivConditionsPrecedent_032945]

 

Section 4.1. [a05-12630_1ex10d0.htm#Section4_1__032950]

Initial Credit Extension [a05-12630_1ex10d0.htm#Section4_1__032950]

 

Section 4.2. [a05-12630_1ex10d0.htm#Section4_2_EachCreditExtension_Th_054952]

Each Credit Extension
[a05-12630_1ex10d0.htm#Section4_2_EachCreditExtension_Th_054952]

 

 

 

 

ARTICLE V REPRESENTATIONS AND WARRANTIES [a05-12630_1ex10d0.htm#Articlev_054955]

 

Section 5.1. [a05-12630_1ex10d0.htm#Section5_1_ExistenceAndStanding_E_054957]

Existence and Standing
[a05-12630_1ex10d0.htm#Section5_1_ExistenceAndStanding_E_054957]

 

Section 5.2. [a05-12630_1ex10d0.htm#Section5_2_AuthorizationAndValidi_054957]

Authorization and Validity
[a05-12630_1ex10d0.htm#Section5_2_AuthorizationAndValidi_054957]

 

Section 5.3. [a05-12630_1ex10d0.htm#Section5_3_NoConflictGovernmentCo_054958]

No Conflict; Government Consent
[a05-12630_1ex10d0.htm#Section5_3_NoConflictGovernmentCo_054958]

 

Section 5.4. [a05-12630_1ex10d0.htm#Section5_4_FinancialStatements_Th_055001]

Financial Statements
[a05-12630_1ex10d0.htm#Section5_4_FinancialStatements_Th_055001]

 

 

i

--------------------------------------------------------------------------------

 

Section 5.5. [a05-12630_1ex10d0.htm#Section5_5_MaterialAdverseChange__055001]

Material Adverse Change
[a05-12630_1ex10d0.htm#Section5_5_MaterialAdverseChange__055001]

 

Section 5.6. [a05-12630_1ex10d0.htm#Section5_6_Taxes_TheBorrowerAndIt_055002]

Taxes [a05-12630_1ex10d0.htm#Section5_6_Taxes_TheBorrowerAndIt_055002]

 

Section 5.7. [a05-12630_1ex10d0.htm#Section5_7_LitigationAndContingen_055004]

Litigation and Contingent Obligations
[a05-12630_1ex10d0.htm#Section5_7_LitigationAndContingen_055004]

 

Section 5.8. [a05-12630_1ex10d0.htm#Section5_8_Subsidiaries_TheDisclo_055005]

Subsidiaries [a05-12630_1ex10d0.htm#Section5_8_Subsidiaries_TheDisclo_055005]

 

Section 5.9. [a05-12630_1ex10d0.htm#Section5_9_Erisa_TheUnfundedLiabi_055007]

ERISA [a05-12630_1ex10d0.htm#Section5_9_Erisa_TheUnfundedLiabi_055007]

 

Section 5.10. [a05-12630_1ex10d0.htm#Section5_10_AccuracyOfInformation_055009]

Accuracy of Information
[a05-12630_1ex10d0.htm#Section5_10_AccuracyOfInformation_055009]

 

Section 5.11. [a05-12630_1ex10d0.htm#Section5_11_Regulationu_MarginSto_055009]

Regulation U [a05-12630_1ex10d0.htm#Section5_11_Regulationu_MarginSto_055009]

 

Section 5.12. [a05-12630_1ex10d0.htm#Section5_12_MaterialAgreements_Ne_060344]

Material Agreements
[a05-12630_1ex10d0.htm#Section5_12_MaterialAgreements_Ne_060344]

 

Section 5.13. [a05-12630_1ex10d0.htm#Section5_13_ComplianceWithLaws_Th_055017]

Compliance With Laws
[a05-12630_1ex10d0.htm#Section5_13_ComplianceWithLaws_Th_055017]

 

Section 5.14. [a05-12630_1ex10d0.htm#Section5_14_OwnershipOfProperties_055018]

Ownership of Properties
[a05-12630_1ex10d0.htm#Section5_14_OwnershipOfProperties_055018]

 

Section 5.15. [a05-12630_1ex10d0.htm#Section5_15_PlanAssetsProhibitedT_055021]

Plan Assets; Prohibited Transactions
[a05-12630_1ex10d0.htm#Section5_15_PlanAssetsProhibitedT_055021]

 

Section 5.16. [a05-12630_1ex10d0.htm#Section5_16_EnvironmentalMatters__055022]

Environmental Matters
[a05-12630_1ex10d0.htm#Section5_16_EnvironmentalMatters__055022]

 

Section 5.17. [a05-12630_1ex10d0.htm#Section5_17_InvestmentCompanyAct__055023]

Investment Company Act
[a05-12630_1ex10d0.htm#Section5_17_InvestmentCompanyAct__055023]

 

Section 5.18. [a05-12630_1ex10d0.htm#Section5_18_PublicUtilityHoldingC_055025]

Public Utility Holding Company Act
[a05-12630_1ex10d0.htm#Section5_18_PublicUtilityHoldingC_055025]

 

Section 5.19. [a05-12630_1ex10d0.htm#Section5_19_Insurance_TheCertific_055025]

Insurance [a05-12630_1ex10d0.htm#Section5_19_Insurance_TheCertific_055025]

 

Section 5.20. [a05-12630_1ex10d0.htm#Section5_20_Solvency__055027]

Solvency [a05-12630_1ex10d0.htm#Section5_20_Solvency__055027]

 

Section 5.21. [a05-12630_1ex10d0.htm#Section5_21_ClosingDocuments_Borr_055029]

Closing Documents
[a05-12630_1ex10d0.htm#Section5_21_ClosingDocuments_Borr_055029]

 

 

 

 

ARTICLE VI AFFIRMATIVE COVENANTS [a05-12630_1ex10d0.htm#Articlevi_055030]

 

Section 6.1. [a05-12630_1ex10d0.htm#Section6_1_FinancialReport_TheBor_055031]

Financial Report
[a05-12630_1ex10d0.htm#Section6_1_FinancialReport_TheBor_055031]

 

Section 6.2. [a05-12630_1ex10d0.htm#Section6_2_UseOfProceeds_TheBorro_055035]

Use of Proceeds [a05-12630_1ex10d0.htm#Section6_2_UseOfProceeds_TheBorro_055035]

 

Section 6.3. [a05-12630_1ex10d0.htm#Section6_3_NoticeOfDefault_TheBor_055037]

Notice of Default
[a05-12630_1ex10d0.htm#Section6_3_NoticeOfDefault_TheBor_055037]

 

Section 6.4. [a05-12630_1ex10d0.htm#Section6_4_ConductOfBusiness_TheB_055038]

Conduct of Business
[a05-12630_1ex10d0.htm#Section6_4_ConductOfBusiness_TheB_055038]

 

Section 6.5. [a05-12630_1ex10d0.htm#Section6_5_Taxes_TheBorrowerWillA_055039]

Taxes [a05-12630_1ex10d0.htm#Section6_5_Taxes_TheBorrowerWillA_055039]

 

Section 6.6. [a05-12630_1ex10d0.htm#Section6_6_Insurance_TheBorrowerW_055041]

Insurance [a05-12630_1ex10d0.htm#Section6_6_Insurance_TheBorrowerW_055041]

 

Section 6.7. [a05-12630_1ex10d0.htm#Section6_7_ComplianceWithLaws_The_055042]

Compliance With Laws
[a05-12630_1ex10d0.htm#Section6_7_ComplianceWithLaws_The_055042]

 

Section 6.8. [a05-12630_1ex10d0.htm#Section6_8_MaintenanceOfPropertie_055043]

Maintenance of Properties
[a05-12630_1ex10d0.htm#Section6_8_MaintenanceOfPropertie_055043]

 

Section 6.9. [a05-12630_1ex10d0.htm#Section6_9_Inspection_TheBorrower_055045]

Inspection [a05-12630_1ex10d0.htm#Section6_9_Inspection_TheBorrower_055045]

 

Section 6.10. [a05-12630_1ex10d0.htm#Section6_10_PermittedBondDocument_055046]

Permitted Bond Documents; 9.60% Senior Notes Refinancing Documents
[a05-12630_1ex10d0.htm#Section6_10_PermittedBondDocument_055046]

 

 

 

 

ARTICLE VII NEGATIVE COVENANTS [a05-12630_1ex10d0.htm#Articlevii_055047]

 

Section 7.1. [a05-12630_1ex10d0.htm#Section7_1_RestrictedPayments_The_055049]

Restricted Payments
[a05-12630_1ex10d0.htm#Section7_1_RestrictedPayments_The_055049]

 

Section 7.2. [a05-12630_1ex10d0.htm#Section7_2_Indebtedness_TheBorrow_055050]

Indebtedness [a05-12630_1ex10d0.htm#Section7_2_Indebtedness_TheBorrow_055050]

 

Section 7.3. [a05-12630_1ex10d0.htm#Section7_3_Merger_TheBorrowerWill_055053]

Merger [a05-12630_1ex10d0.htm#Section7_3_Merger_TheBorrowerWill_055053]

 

Section 7.4. [a05-12630_1ex10d0.htm#Section7_4_SaleOfAssets_TheBorrow_055053]

Sale of Assets [a05-12630_1ex10d0.htm#Section7_4_SaleOfAssets_TheBorrow_055053]

 

Section 7.5. [a05-12630_1ex10d0.htm#Section7_5_Investments_TheBorrowe_055056]

Investments [a05-12630_1ex10d0.htm#Section7_5_Investments_TheBorrowe_055056]

 

Section 7.6. [a05-12630_1ex10d0.htm#Section7_6_Liens_TheBorrowerWillN_055058]

Liens [a05-12630_1ex10d0.htm#Section7_6_Liens_TheBorrowerWillN_055058]

 

Section 7.7. [a05-12630_1ex10d0.htm#Section7_7_Affiliates_TheBorrower_055101]

Affiliates [a05-12630_1ex10d0.htm#Section7_7_Affiliates_TheBorrower_055101]

 

Section 7.8. [a05-12630_1ex10d0.htm#Section7_8_SaleOfAccounts_TheBorr_055102]

Sale of Accounts
[a05-12630_1ex10d0.htm#Section7_8_SaleOfAccounts_TheBorr_055102]

 

Section 7.9. [a05-12630_1ex10d0.htm#Section7_9_SaleAndLeasebackTransa_055103]

Sale and Leaseback Transactions and other Off-Balance Sheet Liabilities
[a05-12630_1ex10d0.htm#Section7_9_SaleAndLeasebackTransa_055103]

 

Section 7.10. [a05-12630_1ex10d0.htm#Section7_10_ContingentObligations_055106]

Contingent Obligations
[a05-12630_1ex10d0.htm#Section7_10_ContingentObligations_055106]

 

Section 7.11. [a05-12630_1ex10d0.htm#Section7_11_FinancialContracts_No_055107]

Financial Contracts
[a05-12630_1ex10d0.htm#Section7_11_FinancialContracts_No_055107]

 

Section 7.12. [a05-12630_1ex10d0.htm#Section7_12_LettersOfCredit_TheBo_055109]

Letters of Credit
[a05-12630_1ex10d0.htm#Section7_12_LettersOfCredit_TheBo_055109]

 

Section 7.13. [a05-12630_1ex10d0.htm#Section7_13_ProhibitedContracts_E_055111]

Prohibited Contracts
[a05-12630_1ex10d0.htm#Section7_13_ProhibitedContracts_E_055111]

 

Section 7.14. [a05-12630_1ex10d0.htm#Section7_14_SeniorNoteDocumentsPe_055113]

Senior Note Documents; Permitted Bond Documents; 9.60% Senior Notes Refinancing
Documents [a05-12630_1ex10d0.htm#Section7_14_SeniorNoteDocumentsPe_055113]

 

 

ii

--------------------------------------------------------------------------------

 

ARTICLE VIII FINANCIAL COVENANTS [a05-12630_1ex10d0.htm#Articleviii_055115]

 

Section 8.1. [a05-12630_1ex10d0.htm#Section8_1_CurrentRatio_TheBorrow_055116]

Current Ratio [a05-12630_1ex10d0.htm#Section8_1_CurrentRatio_TheBorrow_055116]

 

Section 8.2. [a05-12630_1ex10d0.htm#Section8_2_LeverageRatio_TheBorro_055117]

Leverage Ratio [a05-12630_1ex10d0.htm#Section8_2_LeverageRatio_TheBorro_055117]

 

 

 

 

ARTICLE IX COLLATERAL AND GUARANTEES [a05-12630_1ex10d0.htm#Articleix_055126]

 

Section 9.1. [a05-12630_1ex10d0.htm#Section9_1_Collateral_ExceptAsOth_055127]

Collateral [a05-12630_1ex10d0.htm#Section9_1_Collateral_ExceptAsOth_055127]

 

Section 9.2. [a05-12630_1ex10d0.htm#Section9_2_Guarantees_OnTheDateHe_055130]

Guarantees [a05-12630_1ex10d0.htm#Section9_2_Guarantees_OnTheDateHe_055130]

 

Section 9.3. [a05-12630_1ex10d0.htm#Section9_3_FurtherAssurances_Borr_055132]

Further Assurances
[a05-12630_1ex10d0.htm#Section9_3_FurtherAssurances_Borr_055132]

 

Section 9.4. [a05-12630_1ex10d0.htm#Section9_4_ProductionProceeds_Not_055134]

Production Proceeds
[a05-12630_1ex10d0.htm#Section9_4_ProductionProceeds_Not_055134]

 

 

 

 

ARTICLE X DEFAULTS [a05-12630_1ex10d0.htm#Articlex_055135]

 

 

 

 

ARTICLE XI ACCELERATION, WAIVERS, AMENDMENTS AND REMEDIES
[a05-12630_1ex10d0.htm#Articlexi_055159]

 

Section 11.1. [a05-12630_1ex10d0.htm#Section11_1_AccelerationFacilityL_055201]

Acceleration; Facility LC Collateral Account
[a05-12630_1ex10d0.htm#Section11_1_AccelerationFacilityL_055201]

 

Section 11.2. [a05-12630_1ex10d0.htm#Section11_2_Amendments_SubjectToT_055205]

Amendments [a05-12630_1ex10d0.htm#Section11_2_Amendments_SubjectToT_055205]

 

Section 11.3. [a05-12630_1ex10d0.htm#Section11_3_PreservationOfRights__055208]

Preservation of Rights
[a05-12630_1ex10d0.htm#Section11_3_PreservationOfRights__055208]

 

 

 

 

ARTICLE XII GENERAL PROVISIONS [a05-12630_1ex10d0.htm#Articlexii_055209]

 

Section 12.1. [a05-12630_1ex10d0.htm#Section12_1_SurvivalOfRepresentat_055210]

Survival of Representations
[a05-12630_1ex10d0.htm#Section12_1_SurvivalOfRepresentat_055210]

 

Section 12.2. [a05-12630_1ex10d0.htm#Section12_2_GovernmentalRegulatio_055211]

Governmental Regulation
[a05-12630_1ex10d0.htm#Section12_2_GovernmentalRegulatio_055211]

 

Section 12.3. [a05-12630_1ex10d0.htm#Section12_3_Headings_SectionHeadi_055212]

Headings [a05-12630_1ex10d0.htm#Section12_3_Headings_SectionHeadi_055212]

 

Section 12.4. [a05-12630_1ex10d0.htm#Section12_4_EntireAgreement_TheLo_055213]

Entire Agreement
[a05-12630_1ex10d0.htm#Section12_4_EntireAgreement_TheLo_055213]

 

Section 12.5. [a05-12630_1ex10d0.htm#Section12_5_SeveralObligationsBen_055214]

Several Obligations; Benefits of this Agreement
[a05-12630_1ex10d0.htm#Section12_5_SeveralObligationsBen_055214]

 

Section 12.6. [a05-12630_1ex10d0.htm#Section12_6_ExpensesIndemnificati_055222]

Expenses; Indemnification
[a05-12630_1ex10d0.htm#Section12_6_ExpensesIndemnificati_055222]

 

Section 12.7. [a05-12630_1ex10d0.htm#Section12_7_NumbersOfDocuments_Al_055225]

Numbers of Documents
[a05-12630_1ex10d0.htm#Section12_7_NumbersOfDocuments_Al_055225]

 

Section 12.8. [a05-12630_1ex10d0.htm#Section12_8_Accounting_ExceptAsPr_055226]

Accounting [a05-12630_1ex10d0.htm#Section12_8_Accounting_ExceptAsPr_055226]

 

Section 12.9. [a05-12630_1ex10d0.htm#Section12_9_SeverabilityOfProvisi_055227]

Severability of Provisions
[a05-12630_1ex10d0.htm#Section12_9_SeverabilityOfProvisi_055227]

 

Section 12.10. [a05-12630_1ex10d0.htm#Section12_10_NonliabilityOfLender_055229]

Nonliability of Lenders
[a05-12630_1ex10d0.htm#Section12_10_NonliabilityOfLender_055229]

 

Section 12.11. [a05-12630_1ex10d0.htm#Section12_11_Confidentiality_Each_054109]

Confidentiality [a05-12630_1ex10d0.htm#Section12_11_Confidentiality_Each_054109]

 

Section 12.12. [a05-12630_1ex10d0.htm#Section12_12_Nonreliance_EachLend_055233]

Nonreliance [a05-12630_1ex10d0.htm#Section12_12_Nonreliance_EachLend_055233]

 

Section 12.13. [a05-12630_1ex10d0.htm#Section12_13_Disclosure_TheBorrow_055234]

Disclosure [a05-12630_1ex10d0.htm#Section12_13_Disclosure_TheBorrow_055234]

 

 

 

 

ARTICLE XIII THE ADMINISTRATIVE AGENT [a05-12630_1ex10d0.htm#Articlexiii_053952]

 

Section 13.1. [a05-12630_1ex10d0.htm#Section13_1_AppointmentNatureOfRe_055236]

Appointment; Nature of Relationship
[a05-12630_1ex10d0.htm#Section13_1_AppointmentNatureOfRe_055236]

 

Section 13.2. [a05-12630_1ex10d0.htm#Section13_2_Powers_TheAdministrat_055238]

Powers [a05-12630_1ex10d0.htm#Section13_2_Powers_TheAdministrat_055238]

 

Section 13.3. [a05-12630_1ex10d0.htm#Section13_3_GeneralImmunity_Neith_055239]

General Immunity
[a05-12630_1ex10d0.htm#Section13_3_GeneralImmunity_Neith_055239]

 

Section 13.4. [a05-12630_1ex10d0.htm#Section13_4_NoResponsibilityForLo_055240]

No Responsibility for Loans, Recitals, etc.
[a05-12630_1ex10d0.htm#Section13_4_NoResponsibilityForLo_055240]

 

Section 13.5. [a05-12630_1ex10d0.htm#Section13_5_ActionOnInstructionsO_055242]

Action on Instructions of Lenders
[a05-12630_1ex10d0.htm#Section13_5_ActionOnInstructionsO_055242]

 

Section 13.6. [a05-12630_1ex10d0.htm#Section13_6_EmploymentOfAgentsAnd_055244]

Employment of Agents and Counsel
[a05-12630_1ex10d0.htm#Section13_6_EmploymentOfAgentsAnd_055244]

 

Section 13.7. [a05-12630_1ex10d0.htm#Section13_7_RelianceOnDocumentsCo_055246]

Reliance on Documents; Counsel
[a05-12630_1ex10d0.htm#Section13_7_RelianceOnDocumentsCo_055246]

 

Section 13.8. [a05-12630_1ex10d0.htm#Section13_8_AdministrativeAgentsR_055247]

Administrative Agent’s Reimbursement and Indemnification
[a05-12630_1ex10d0.htm#Section13_8_AdministrativeAgentsR_055247]

 

Section 13.9. [a05-12630_1ex10d0.htm#Section13_9_NoticeOfDefault_TheAd_055249]

Notice of Default
[a05-12630_1ex10d0.htm#Section13_9_NoticeOfDefault_TheAd_055249]

 

Section 13.10. [a05-12630_1ex10d0.htm#Section13_10_RightsAsALender_InTh_055250]

Rights as a Lender
[a05-12630_1ex10d0.htm#Section13_10_RightsAsALender_InTh_055250]

 

Section 13.11. [a05-12630_1ex10d0.htm#Section13_11_LenderCreditDecision_055252]

Lender Credit Decision
[a05-12630_1ex10d0.htm#Section13_11_LenderCreditDecision_055252]

 

Section 13.12. [a05-12630_1ex10d0.htm#Section13_12_SuccessorAdministrat_055253]

Successor Administrative Agent
[a05-12630_1ex10d0.htm#Section13_12_SuccessorAdministrat_055253]

 

Section 13.13. [a05-12630_1ex10d0.htm#Section13_13_AdministrativeAgentA_055255]

Administrative Agent and Arranger Fees
[a05-12630_1ex10d0.htm#Section13_13_AdministrativeAgentA_055255]

 

Section 13.14. [a05-12630_1ex10d0.htm#Section13_14_DelegationToAffiliat_055256]

Delegation to Affiliates
[a05-12630_1ex10d0.htm#Section13_14_DelegationToAffiliat_055256]

 

Section 13.15. [a05-12630_1ex10d0.htm#Section13_15_ExecutionOfCollatera_055257]

Execution of Collateral Documents
[a05-12630_1ex10d0.htm#Section13_15_ExecutionOfCollatera_055257]

 

Section 13.16. [a05-12630_1ex10d0.htm#Section13_16_CollateralReleases_T_055259]

Collateral Releases
[a05-12630_1ex10d0.htm#Section13_16_CollateralReleases_T_055259]

 

 

iii

--------------------------------------------------------------------------------

 

Section 13.17. [a05-12630_1ex10d0.htm#Section13_17_DocumentationAgentSy_055300]

Documentation Agent, Syndication Agent, etc.
[a05-12630_1ex10d0.htm#Section13_17_DocumentationAgentSy_055300]

 

 

 

 

ARTICLE XIV SETOFF; RATABLE PAYMENTS [a05-12630_1ex10d0.htm#Articlexiv_055301]

 

Section 14.1. [a05-12630_1ex10d0.htm#Section14_1_Setoff_InAdditionToAn_055302]

Setoff [a05-12630_1ex10d0.htm#Section14_1_Setoff_InAdditionToAn_055302]

 

Section 14.2. [a05-12630_1ex10d0.htm#Section14_2_RatablePayments_IfAny_055303]

Ratable Payments
[a05-12630_1ex10d0.htm#Section14_2_RatablePayments_IfAny_055303]

 

 

 

 

ARTICLE XV BENEFIT OF AGREEMENT; ASSIGNMENTS; PARTICIPATIONS
[a05-12630_1ex10d0.htm#Articlexv_055306]

 

Section 15.1. [a05-12630_1ex10d0.htm#Section15_1_SuccessorsAndAssigns__055307]

Successors and Assigns
[a05-12630_1ex10d0.htm#Section15_1_SuccessorsAndAssigns__055307]

 

Section 15.2. [a05-12630_1ex10d0.htm#Section15_2_Participations__055313]

Participations [a05-12630_1ex10d0.htm#Section15_2_Participations__055313]

 

Section 15.3. [a05-12630_1ex10d0.htm#Section15_3_Assignments__055316]

Assignments [a05-12630_1ex10d0.htm#Section15_3_Assignments__055316]

 

Section 15.4. [a05-12630_1ex10d0.htm#Section15_4_DisseminationOfInform_055319]

Dissemination of Information
[a05-12630_1ex10d0.htm#Section15_4_DisseminationOfInform_055319]

 

Section 15.5. [a05-12630_1ex10d0.htm#Section15_5_TaxTreatment_IfAnyInt_055319]

Tax Treatment [a05-12630_1ex10d0.htm#Section15_5_TaxTreatment_IfAnyInt_055319]

 

Section 15.6. [a05-12630_1ex10d0.htm#Section15_6_ProcedureForIncreases_055320]

Procedure for Increases and Addition of New Lenders
[a05-12630_1ex10d0.htm#Section15_6_ProcedureForIncreases_055320]

 

 

 

 

ARTICLE XVI NOTICES [a05-12630_1ex10d0.htm#Articlexvi_055323]

 

Section 16.1. [a05-12630_1ex10d0.htm#Section16_1_Notices_ExceptAsOther_055325]

Notices [a05-12630_1ex10d0.htm#Section16_1_Notices_ExceptAsOther_055325]

 

Section 16.2. [a05-12630_1ex10d0.htm#Section16_2_ChangeOfAddress_TheBo_055327]

Change of Address
[a05-12630_1ex10d0.htm#Section16_2_ChangeOfAddress_TheBo_055327]

 

 

 

 

ARTICLE XVII COUNTERPARTS [a05-12630_1ex10d0.htm#Articlexvii_055327]

 

 

 

 

ARTICLE XVIII CHOICE OF LAW; CONSENT TO JURISDICTION; WAIVER OF JURY TRIAL
[a05-12630_1ex10d0.htm#Articlexviii_055330]

 

Section 18.1. [a05-12630_1ex10d0.htm#Section18_1_ChoiceOfLaw_TheLoanDo_055332]

CHOICE OF LAW [a05-12630_1ex10d0.htm#Section18_1_ChoiceOfLaw_TheLoanDo_055332]

 

Section 18.2. [a05-12630_1ex10d0.htm#Section18_2_ConsentToJurisdiction_055333]

CONSENT TO JURISDICTION
[a05-12630_1ex10d0.htm#Section18_2_ConsentToJurisdiction_055333]

 

Section 18.3. [a05-12630_1ex10d0.htm#Section18_3_WaiverOfJuryTrial_The_055335]

WAIVER OF JURY TRIAL
[a05-12630_1ex10d0.htm#Section18_3_WaiverOfJuryTrial_The_055335]

 

 

 

 

ARTICLE XIX USA PATRIOT ACT NOTICE [a05-12630_1ex10d0.htm#Articlexix_055336]

 

 

 

 

ARTICLE XX AMENDMENT AND RESTATEMENT [a05-12630_1ex10d0.htm#Articlexx_055339]

 

 

iv

--------------------------------------------------------------------------------

 

SCHEDULE 1 PRICING SCHEDULE
[a05-12630_1ex10d0.htm#Schedule1PricingSchedule_060919]

 

SCHEDULE 2 LENDERS SCHEDULE
[a05-12630_1ex10d0.htm#Schedule2LendersSchedule_060922]

 

SCHEDULE 3 DISCLOSURE SCHEDULE
[a05-12630_1ex10d0.htm#Schedule3DisclosureSchedule_054945]

 

SCHEDULE 4 EXISTING FINANCIAL CONTRACTS
[a05-12630_1ex10d0.htm#Schedule4ExistingFinancialContrac_054952]

 

EXHIBIT A NOTE [a05-12630_1ex10d0.htm#ExhibitaNote_055001]

 

EXHIBIT B COMPLIANCE CERTIFICATE
[a05-12630_1ex10d0.htm#ExhibitbComplianceCertificate_055003]

 

EXHIBIT C ASSIGNMENT AND ASSUMPTION AGREEMENT
[a05-12630_1ex10d0.htm#ExhibitcAssignmentAndAssumptionAg_055005]

 

EXHIBIT D OPINION [a05-12630_1ex10d0.htm#ExhibitdOpinion_055007]

 

EXHIBIT E GUARANTY [a05-12630_1ex10d0.htm#ExhibiteGuaranty_055012]

 

EXHIBIT F FORM OF AMENDMENT FOR AN INCREASED OR NEW COMMITMENT
[a05-12630_1ex10d0.htm#ExhibitfFormofAmendmentForAnIncre_055020]

 

EXHIBIT G -1 FORM OF PLEDGE AGREEMENT (CORPORATION)
[a05-12630_1ex10d0.htm#Exhibitg1FormofPledgeAgreementcor_055024]

 

EXHIBIT G-2 FORM OF PLEDGE AGREEMENT (PARTNERSHIP)
[a05-12630_1ex10d0.htm#Exhibitg2FormofPledgeAgreementpar_055031]

 

EXHIBIT G-3 FORM OF PLEDGE AGREEMENT (LIMITED LIABILITY COMPANY)
[a05-12630_1ex10d0.htm#Exhibitg3FormofPledgeAgreementlim_055043]

 

EXHIBIT H FORM OF CONFIDENTIALITY AGREEMENT
[a05-12630_1ex10d0.htm#ExhibithFormofConfidentialityAgre_055051]

 

EXHIBIT I FORM OF CERTIFICATE OF EFFECTIVENESS
[a05-12630_1ex10d0.htm#Exhibiti_055054]

 

 

v

--------------------------------------------------------------------------------

 

LIST OF DEFINED TERMS

 

9.60% Senior Notes

 

9.60% Senior Notes Indenture

 

9.60% Senior Notes Refinancing

 

9.60% Senior Notes Refinancing Documents

 

9.60% Senior Notes Supplemental Indenture

 

Acquisition

 

Administrative Agent

 

Advance

 

Affected Lender

 

Affiliate

 

Aggregate Commitment

 

Aggregate Outstanding Credit Exposure

 

Agreement

 

Agreement Accounting Principles

 

Alternate Base Rate

 

Amendments to Existing Cimarex Mortgages

 

Annualized Consolidated EBITDA

 

Applicable Fee Rate

 

Applicable Margin

 

Arranger

 

Article

 

Authorized Officer

 

Available Aggregate Commitment

 

Borrower

 

Borrower/MHR Merger

 

Borrower/MHR Merger Agreement

 

Borrower/MHR Merger Articles

 

Borrower/MHR Merger Documents

 

Borrowing Base

 

Borrowing Base Properties

 

Borrowing Base Usage Percentage

 

Borrowing Date

 

Borrowing Notice

 

Business Day

 

Calculation Period

 

Capitalized Lease

 

Capitalized Lease Obligations

 

Cash Equivalent Investments

 

Certificate of Effectiveness

 

Change

 

Change in Control

 

Closing Date

 

Closing Documents

 

 

vi

--------------------------------------------------------------------------------

 

Closing Transactions

 

CNAC

 

Code

 

Collateral

 

Collateral Documents

 

Collateral Shortfall Amount

 

Commitment

 

Confidential Information

 

Consolidated EBITDA

 

Consolidated Funded Indebtedness

 

Consolidated Indebtedness

 

Consolidated Interest Expense

 

Consolidated Net Income

 

Contingent Obligation

 

Controlled Group

 

Conversion/Continuation Notice

 

Convertible Senior Notes

 

Convertible Senior Notes Indenture

 

Convertible Senior Notes Supplemental Indenture

 

Credit Extension

 

Credit Extension Date

 

Default

 

Deficiency

 

Determination Date

 

Disclosure Schedule

 

Dividend

 

Engineered Projected Production

 

Engineered Value

 

Engineering Report

 

Environmental Laws

 

Equity

 

ERISA

 

Eurodollar Advance

 

Eurodollar Base Rate

 

Eurodollar Loan

 

Eurodollar Rate

 

Excluded Taxes

 

Exhibit

 

Existing Cimarex Credit Agreement

 

Existing Cimarex Indebtedness

 

Existing Cimarex Lenders

 

Existing Cimarex Loan Documents

 

Existing Cimarex Mortgages

 

Existing Indebtedness

 

Existing Letter of Credit

 

Existing MHR Credit Agreement

 

 

vii

--------------------------------------------------------------------------------

 

Existing MHR Indebtedness

 

Existing MHR Lenders

 

Existing MHR Mortgages

 

Facility LC

 

Facility LC Application

 

Facility LC Collateral Account

 

Facility Termination Date

 

Federal Funds Effective Rate

 

Fifty Percent Utilization Period

 

Financial Contract

 

Fiscal Year

 

Floating Rate

 

Floating Rate Advance

 

Floating Rate Loan

 

Fund

 

Guarantors

 

Guaranty

 

Highest Lawful Rate

 

Increase

 

Indebtedness

 

Indentures

 

Initial Engineering Report

 

Interest Period

 

Investment

 

JPMorgan

 

JPMSI

 

LC Fee

 

LC Issuer

 

LC Obligations

 

LC Payment Date

 

Lender Assignments

 

Lenders

 

Lenders Schedule

 

Lending Installation

 

Letter of Credit

 

Level I Status

 

Level II Status

 

Level III Status

 

Level IV Status

 

Level V Status

 

Lien

 

Loan

 

Loan Documents

 

Material Adverse Effect

 

Material Indebtedness

 

Material Indebtedness Agreement

 

 

viii

--------------------------------------------------------------------------------

 

Material Subsidiary

 

Maximum Credit Amount

 

Merger Documents

 

Mergers

 

MHR

 

MHR/CNAC Merger

 

MHR/CNAC Merger Agreement

 

MHR/CNAC Merger Articles

 

MHR/CNAC Merger Documents

 

Minimum Collateral Amount

 

Modification

 

Modify

 

Moody’s

 

Mortgage

 

Multiemployer Plan

 

Non-U.S. Lender

 

Note

 

Notice of Assignment

 

Obligations

 

Off-Balance Sheet Liability

 

Operating Lease

 

Other Taxes

 

Outstanding Credit Exposure

 

Participants

 

Payment Date

 

PBGC

 

PDP Reserves

 

Permitted Bond Documents

 

Permitted Bond Indebtedness

 

Permitted Encumbrances

 

Person

 

Plan

 

Post-Closing Effective Date

 

Pricing Schedule

 

Prime Rate

 

Pro Rata Share

 

Property

 

Proved Reserves

 

Purchasers

 

Rate Management Obligations

 

Rate Management Transaction

 

Redetermination

 

Register

 

Regulation D

 

Regulation U

 

Reimbursement Obligations

 

 

ix

--------------------------------------------------------------------------------

 

Reportable Event

 

Required Lenders

 

Required Reserve Value

 

Reserve Requirement

 

Restricted Payment

 

Risk-Based Capital Guidelines

 

Rolling Period

 

S&P

 

Sale and Leaseback Transaction

 

Schedule

 

Scheduled Redetermination

 

SEC

 

Section

 

Secured Obligations

 

Senior Note Documents

 

Senior Notes

 

Single Employer Plan

 

SPE Definitions

 

Special Redetermination

 

Status

 

Subsidiary

 

Substantial Portion

 

Supplemental Indentures

 

Taxes

 

Transferee

 

Type

 

Unfunded Liabilities

 

Unmatured Default

 

Wholly-Owned Subsidiary

 

 

x

--------------------------------------------------------------------------------

 

AMENDED AND RESTATED CREDIT AGREEMENT

 

This Amended and Restated Credit Agreement, dated as of June 13, 2005, is among
Cimarex Energy Co., a Delaware corporation, the Lenders, JPMorgan Chase Bank,
N.A., successor by merger to Bank One, NA (Main Office Chicago), a national
banking association, as an LC Issuer and as Administrative Agent, U.S. Bank
National Association, a national banking association, and Bank of America, N.A.,
a national banking association, as Co-Syndication Agents, and Wells Fargo Bank,
N.A., a national banking association, as Documentation Agent.

 

W I T N E S S E T H:

 

WHEREAS, Borrower, Administrative Agent, and the financial institutions named
and defined therein as Lenders (the “Existing Cimarex Lenders”) are parties to
that certain Credit Agreement dated as of October 2, 2002 (as amended or
supplemented prior to the date hereof, the “Existing Cimarex Credit Agreement”),
pursuant to which the Existing Cimarex Lenders provided certain loans and
extensions of credit to Borrower (all Indebtedness arising pursuant to the
Existing Cimarex Credit Agreement is herein called the “Existing Cimarex
Indebtedness”); and

 

WHEREAS, as of the date of this Agreement, there is no outstanding Existing
Cimarex Indebtedness; and

 

WHEREAS, Magnum Hunter Resources, Inc., a Nevada corporation (“MHR”), Deutsche
Bank Trust Company Americas (formerly known as Bankers Trust Company), as
administrative agent, and the financial institutions parties thereto as lenders
(the “Existing MHR Lenders”) are parties to that certain Fourth Amended and
Restated Credit Agreement dated as of March 15, 2002 (as amended or supplemented
prior to the date hereof, the “Existing MHR Credit Agreement”), pursuant to
which the Existing MHR Lenders provided certain loans and extensions of credit
to MHR (all Indebtedness arising pursuant to the Existing MHR Credit Agreement
is herein called the “Existing MHR Indebtedness”); and

 

WHEREAS, pursuant to the MHR/CNAC Merger Documents, Cimarex Nevada Acquisition
Co., a Nevada corporation (“CNAC”) and a Wholly-Owned Subsidiary of Borrower,
merged with and into MHR, with MHR being the surviving corporation and a
Wholly-Owned Subsidiary of Borrower, and in connection therewith and upon the
effectiveness thereof (i) Borrower became the owner of all of the outstanding
capital stock of MHR, and (ii) the existence of CNAC ceased; and

 

WHEREAS, after giving effect to the MHR/CNAC Merger and pursuant to the
Borrower/MHR Merger Documents, MHR merged with and into Borrower, with Borrower
being the surviving corporation, and in connection therewith and upon the
effectiveness thereof, (i) the existence of MHR ceased, and (ii) Borrower became
the obligor under the Indentures and with respect to the Existing MHR
Indebtedness; and

 

WHEREAS, immediately prior to the execution of this Agreement, certain of the
Existing Cimarex Lenders have purchased and assumed certain of the rights and
interests of certain other Existing Cimarex Lenders (the “Lender Assignments”);
and

 

1

--------------------------------------------------------------------------------

 

WHEREAS, following the consummation of the Borrower/MHR Merger, the parties
hereto desire to consolidate, amend, restate and otherwise restructure the
Existing Cimarex Credit Agreement and the Existing MHR Credit Agreement in the
form of this Agreement and to appoint JPMorgan Chase Bank, N.A. as
Administrative Agent hereunder, and Borrower desires to obtain Borrowings (as
herein defined) (i) to refinance and replace the Existing MHR Indebtedness, (ii)
to refinance the Existing Cimarex Indebtedness, and (iii) for other purposes
permitted herein; and

 

WHEREAS, upon the execution, delivery and effectiveness of this Agreement and
the refinancing and replacement of the Existing MHR Indebtedness with the
proceeds of the initial Borrowing under this Agreement, this Agreement will
constitute and be the “Senior Credit Facility” for purposes of, and as defined
in, the 9.60% Senior Notes Indenture; and

 

WHEREAS, after giving effect to the Lender Assignments and the consolidation,
amendment, restatement and restructuring of the Existing Cimarex Credit
Agreement and the Existing MHR Credit Agreement pursuant to the terms hereof,
the Commitment of each Lender hereunder will be as set forth on the Lenders
Schedule; and

 

WHEREAS, pursuant to certain separate agreements among JPMorgan Chase Bank,
N.A., J.P. Morgan Securities Inc. (“JPMSI”) and Borrower, JPMSI has been
appointed Lead Arranger and Sole Book Runner for the credit facility provided
herein;

 

NOW, THEREFORE, in consideration of the mutual covenants and agreements herein
contained, and other good and valuable consideration, the receipt and adequacy
of which are hereby acknowledged, and subject to the satisfaction of each
condition precedent contained in Section 4.1 hereof, the satisfaction of which
shall be evidenced by the execution by Borrower and the Administrative Agent of
the Certificate of Effectiveness, the parties hereto agree that (i) the Existing
MHR Credit Agreement is refinanced and replaced, and (ii) the Existing Cimarex
Credit Agreement is hereby amended, renewed, extended and restated in its
entirety on (and subject to) the terms and conditions set forth herein.  It is
the intention of the parties hereto that this Agreement supersedes and replaces
the Existing MHR Credit Agreement and the Existing Cimarex Credit Agreement in
their entirety; provided, that, (a) such amendment and restatement shall operate
to renew, amend, modify and extend certain of the rights and obligations of
Borrower under the Existing Cimarex Credit Agreement and as provided herein, but
shall not act as a novation thereof, and (b) the Liens securing the Obligations
under and as defined in the Existing Cimarex Credit Agreement and the
liabilities and obligations of Borrower and its Subsidiaries under the Existing
Cimarex Credit Agreement and the Loan Documents (as therein defined and referred
to herein as the “Existing Cimarex Loan Documents”) shall not be extinguished
but shall be carried forward and shall secure such obligations and liabilities
as amended, renewed, extended and restated hereby.  The parties hereto ratify
and confirm each of the Existing Cimarex Loan Documents entered into prior to
the Closing Date (but excluding the Existing Cimarex Credit Agreement) and agree
that such Existing Cimarex Loan Documents continue to be legal, valid, binding
and enforceable in accordance with their terms (except to the extent amended,
restated and superseded in their entirety in connection with the transactions
contemplated hereby), however, for all matters arising prior to the Closing Date
(including the accrual and payment of interest and fees, and matters relating to
indemnification and compliance with financial covenants), the terms of the
Existing Cimarex Credit Agreement (as unmodified

 

2

--------------------------------------------------------------------------------

 

by this Agreement) shall control and are hereby ratified and confirmed. 
Borrower and each of its Subsidiaries represent and warrant that, as of the
Closing Date, there are no claims or offsets against, or defenses or
counterclaims to, their obligations under the Existing Cimarex Credit Agreement
or any of the other Existing Cimarex Loan Documents.  The parties hereto further
agree as follows:

 

ARTICLE I

DEFINITIONS

 

As used in this Agreement:

 

“9.60% Senior Notes” means, collectively, the 9.60% Senior Notes due 2012,
Series A, and the 9.60% Senior Notes due 2012, Series B, in each case issued by
MHR pursuant to the 9.60% Senior Notes Indenture and in an original aggregate
principal amount of $300,000,000.

 

“9.60% Senior Notes Indenture” means that certain Indenture, dated as of March
15, 2002, by and among MHR, as Issuer, the subsidiary guarantors named therein,
and Deutsche Bank Trust Company Americas (formerly known as Bankers Trust
Company), as Trustee, relating to the issuance of the 9.60% Senior Notes, as
supplemented and modified by the 9.60% Senior Notes Supplemental Indenture, and
as further supplemented and modified from time to time to the extent permitted
hereunder.

 

“9.60% Senior Notes Refinancing” means Indebtedness incurred by the Borrower to
refinance in full the 9.60% Senior Notes (including accrued interest thereon),
provided, that, such Indebtedness (i) does not exceed the aggregate amount of
Indebtedness evidenced by the 9.60% Senior Notes in existence on the Closing
Date (including accrued interest thereon), (ii) has a coupon or interest rate
not in excess of 9.60% per annum, (iii) is not subject to negative covenants or
events of default (or other provisions which have the same effect as negative
covenants or events of default) which have not been approved by the
Administrative Agent, (iv) shall not mature sooner than the date which is one
year following the Facility Termination Date, (v) is not secured by any assets
of the Borrower or its Subsidiaries, and (vi) otherwise has terms and conditions
satisfactory to the Administrative Agent in its sole reasonable discretion.

 

“9.60% Senior Notes Refinancing Documents” means, collectively, the indenture,
senior unsecured notes, senior subordinated notes, all guarantees of any such
notes, and all other agreements, documents or instruments executed and delivered
by the Borrower or any of its Subsidiaries in connection with, or pursuant to,
the issuance of the Indebtedness evidencing the 9.60% Senior Notes Refinancing.

 

“9.60% Senior Notes Supplemental Indenture” means that certain First
Supplemental Indenture dated as of June 13, 2005, by and among Borrower, the
subsidiary guarantors party thereto, and Deutsche Bank Trust Company Americas,
as Trustee, providing for, among other things, the assumption by Borrower of the
obligations of MHR under the 9.60% Senior Notes and the 9.60% Senior Notes
Indenture.

 

“Acquisition” means any transaction, or any series of related transactions,
consummated on or after the date of this Agreement (after giving effect to the
Closing Transactions), by which

 

3

--------------------------------------------------------------------------------

 

the Borrower or any of its Subsidiaries (i) acquires any going business or all
or substantially all of the assets of any firm, corporation or limited liability
company, or division thereof, whether through purchase of assets, merger or
otherwise or (ii) directly or indirectly acquires (in one transaction or as the
most recent transaction in a series of transactions) at least a majority (in
number of votes) of the securities of a corporation which have ordinary voting
power for the election of directors (other than securities having such power
only by reason of the happening of a contingency) or a majority (by percentage
or voting power) of the outstanding ownership interests of a partnership or
limited liability company.

 

“Administrative Agent” means JPMorgan, successor by merger to Bank One, NA (Main
Office Chicago), in its capacity as contractual representative of the Lenders
pursuant to Article XIII, and not in its individual capacity as a Lender, and
any successor Administrative Agent appointed pursuant to Article XIII.

 

“Advance” means a borrowing hereunder, (i) made by the Lenders on the same
Borrowing Date, or (ii) converted or continued by the Lenders on the same date
of conversion or continuation, consisting, in either case, of the aggregate
amount of the several Loans of the same Type and, in the case of Eurodollar
Loans, for the same Interest Period.

 

“Affected Lender” is defined in Section 2.21.

 

“Affiliate” of any Person means any other Person directly or indirectly
controlling, controlled by or under common control with such Person.  For
purposes of this definition, a Person shall be deemed to control another Person
if the controlling Person owns 10% or more of any class of voting securities (or
other ownership interests) of the controlled Person or possesses, directly or
indirectly, the power to direct or cause the direction of the management or
policies of the controlled Person, whether through ownership of stock, by
contract or otherwise.

 

“Aggregate Commitment” means the aggregate of the Commitments of all the
Lenders, as reduced or increased from time to time pursuant to the terms hereof;
provided that the Aggregate Commitment shall never exceed the Borrowing Base.

 

“Aggregate Outstanding Credit Exposure” means, at any time, the aggregate of the
Outstanding Credit Exposure of all the Lenders.

 

“Agreement” means this Amended and Restated Credit Agreement, as it may be
amended or modified and in effect from time to time.

 

“Agreement Accounting Principles” means generally accepted accounting principles
as in effect from time to time, applied in a manner consistent with that used in
preparing the financial statements referred to in Section 5.4.

 

“Alternate Base Rate” means, for any day, a rate of interest per annum equal to
the higher of (i) the Prime Rate for such day and (ii) the sum of the Federal
Funds Effective Rate for such day plus 1/2% per annum.

 

“Amendments to Existing Cimarex Mortgages” means Amendments to Mortgages to be
entered into among Borrower, certain of its Subsidiaries and Administrative
Agent, in form

 

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and substance satisfactory to the Administrative Agent, pursuant to which the
Existing Cimarex Mortgages shall be amended to reflect the amendment and
restatement of the Existing Cimarex Credit Agreement pursuant hereto.

 

“Annualized Consolidated EBITDA” means, for purposes of calculating the
financial ratio set forth in Section 8.2 for each Rolling Period ending on or
prior to March 31, 2006, the Borrower’s actual Consolidated EBITDA for such
Rolling Period multiplied by the factor determined for such Rolling Period in
accordance with the table below:

 

Rolling Period Ending

 

Factor

 

September 30, 2005

 

4

 

December 31, 2005

 

2

 

March 31, 2006

 

1.333

 

 

“Applicable Fee Rate” means, at any time, the percentage rate per annum at which
commitment fees are accruing on the unused portion of the Aggregate Commitment
under Section 2.5.2 at such time at the rate set forth in the Pricing Schedule.

 

“Applicable Margin” means, with respect to Advances of any Type at any time, the
percentage rate per annum which is applicable at such time with respect to
Advances of such Type as set forth in the Pricing Schedule.

 

“Arranger” means J.P. Morgan Securities Inc., a Delaware corporation, and its
successors, in its capacity as Lead Arranger and Sole Book Runner.

 

“Article” means an article of this Agreement unless another document is
specifically referenced.

 

“Authorized Officer” means any of the president, the chief financial officer,
any vice president, the treasurer or any assistant treasurer of the Borrower,
acting singly.

 

“Available Aggregate Commitment” means, at any time, the Aggregate Commitment
then in effect minus the Aggregate Outstanding Credit Exposure at such time.

 

“Borrower” means Cimarex Energy Co., a Delaware corporation, and its successors
and assigns.

 

“Borrower/MHR Merger” means, collectively, (i) the merger of MHR with and into
Borrower pursuant to, and in accordance with, the Borrower/MHR Merger Documents,
with Borrower being the surviving corporation, and, upon the effectiveness of
which, the existence of MHR shall cease and Borrower will, accordingly, be
obligated on the Existing MHR Indebtedness, and (ii) the other reorganization
transactions contemplated by the Borrower/MHR Merger Agreement.

 

“Borrower/MHR Merger Agreement” means the Agreement and Plan of Merger, as the
same may be amended, dated as of June 7, 2005 between Borrower and MHR

 

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“Borrower/MHR Merger Articles” means, collectively, (i) the Certificate of
Ownership and Merger dated as of June 13, 2005, executed by Borrower and filed
on June 13, 2005 with the Secretary of State of Delaware to effect the
Borrower/MHR Merger in Delaware, and (ii) the Articles of Merger dated as of
June 13, 2005, executed by Borrower and MHR and filed on June 13, 2005 with the
Secretary of State of Nevada to effect the Borrower/MHR Merger in Nevada, and
certified copies of which shall subsequently be filed in such jurisdictions as
Administrative Agent shall require.

 

“Borrower/MHR Merger Documents” means the Borrower/MHR Merger Agreement, the
Borrower/MHR Merger Articles, and all other material documents, instruments and
agreements executed and/or delivered by Borrower and/or MHR pursuant to the
Borrower/MHR Merger Agreement or in connection with the Borrower/MHR Merger.

 

“Borrowing Base” means, at the particular time in question, either the amount
provided for in Section 2.6.1 or the amount otherwise determined in accordance
with the provisions of Section 2.6; provided, however, that in no event shall
the Borrowing Base ever exceed the Maximum Credit Amount.

 

“Borrowing Base Properties” means all oil and gas properties evaluated by
Lenders for purposes of establishing the Borrowing Base.

 

“Borrowing Base Usage Percentage” means, for any day, the quotient obtained by
dividing (i) the Aggregate Outstanding Credit Exposure on such day, by (ii) the
Borrowing Base in effect on such day, multiplied by 100.

 

“Borrowing Date” means a date on which an Advance is made hereunder.

 

“Borrowing Notice” is defined in Section 2.9.

 

“Business Day” means (i) with respect to any borrowing, payment or rate
selection of Eurodollar Advances, a day (other than a Saturday or Sunday) on
which banks generally are open in Chicago and New York City for the conduct of
substantially all of their commercial lending activities, interbank wire
transfers can be made on the Fedwire system and dealings in United States
dollars are carried on in the London interbank market and (ii) for all other
purposes, a day (other than a Saturday or Sunday) on which banks generally are
open in Chicago for the conduct of substantially all of their commercial lending
activities and interbank wire transfers can be made on the Fedwire system.

 

“Capitalized Lease” of a Person means any lease of Property by such Person as
lessee which would be capitalized on a balance sheet of such Person prepared in
accordance with Agreement Accounting Principles.

 

“Capitalized Lease Obligations” of a Person means the amount of the obligations
of such Person under Capitalized Leases which would be shown as a liability on a
balance sheet of such Person prepared in accordance with Agreement Accounting
Principles.

 

“Cash Equivalent Investments” means (i) short-term obligations of, or fully
guaranteed by, the United States of America, (ii) commercial paper rated A-1 or
better by S&P or P-1 or

 

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better by Moody’s, (iii) demand deposit accounts maintained in the ordinary
course of business, and (iv) certificates of deposit issued by and time deposits
with commercial banks (whether domestic or foreign) having capital and surplus
in excess of $100,000,000; provided in each case that the same provides for
payment of both principal and interest (and not principal alone or interest
alone) and is not subject to any contingency regarding the payment of principal
or interest.

 

“Certificate of Effectiveness” means a Certificate of Effectiveness in the form
of Exhibit I hereto to be executed by Borrower and Administrative Agent upon the
satisfaction of each of the conditions precedent contained in Section 4.1
hereof.

 

“Change in Control” means the acquisition by any Person, or two or more Persons
acting in concert, of beneficial ownership (within the meaning of Rule 13d-3 of
the Securities and Exchange Commission under the Securities Exchange Act of
1934) of 30% or more of the outstanding shares of voting stock of the Borrower.

 

“Closing Date” means June 13, 2005, provided that the conditions specified in
Section 4.1 are satisfied, and Borrower and Administrative Agent have executed
and delivered the Certificate of Effectiveness.

 

“Closing Documents” means the Merger Documents, the Senior Note Documents, and
all other material documents, instruments and agreements executed and/or
delivered by Borrower, MHR, CNAC or any of Borrower’s Subsidiaries in connection
with or otherwise pertaining to the Mergers, the modification of or supplement
to the Indentures, or the other Closing Transactions.

 

“Closing Transactions” means the transactions to occur on or prior to the
Closing Date, including, without limitation: (a) the completion of the MHR/CNAC
Merger pursuant to the terms of the MHR/CNAC Merger Documents, and, pursuant
thereto, the proper filing of the MHR/CNAC Merger Articles with the Secretary of
State of Nevada, (b) the completion of the Borrower/MHR Merger pursuant to the
terms of the Borrower/MHR Merger Documents, and, pursuant thereto, the proper
filing of the Borrower/MHR Merger Articles with the Secretary of State of
Delaware and the Secretary of State of Nevada, as applicable, (c) the
cancellation of all letters of credit (other than the Existing Letter of Credit
which shall, on the Closing Date, be a Facility LC hereunder pursuant to
Section 2.20), if any, outstanding under the Existing MHR Credit Agreement,
(d) the termination and release of the Existing MHR Mortgages and all other
Liens securing the obligations, Indebtedness (including the Existing MHR
Indebtedness) and liabilities of MHR and its subsidiaries and affiliates under
the Existing MHR Credit Agreement (including, without limitation, the delivery
of UCC-3 releases with respect to all uniform commercial code filings made under
or pursuant to the Existing MHR Credit Agreement), and the delivery to Borrower
(or to a designee acceptable to Administrative Agent) of all original stock (or
other Equity) certificates delivered pursuant to the terms of the Existing MHR
Credit Agreement as security for such Persons’ obligations, Indebtedness and
liabilities thereunder, (e) the release of all guarantees of the obligations,
Indebtedness (including the Existing MHR Indebtedness) and liabilities of MHR
and its subsidiaries and affiliates under the Existing MHR Credit Agreement,
(f) the modification of and supplement to the Indentures and the Senior Notes
and the assumption by Borrower of the obligations of MHR under the Indentures to
reflect the

 

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Mergers, pursuant to terms and documentation (including, without limitation, the
Supplemental Indentures) acceptable to Lenders in their sole discretion, (g) the
termination of all commitments under the Existing MHR Credit Agreement and, to
the extent available after reasonable effort to procure, the delivery to
Borrower (or to a designee acceptable to Administrative Agent) of each original
promissory note issued under the Existing MHR Credit Agreement marked
“Terminated and Paid in Full,” (h) the refinancing in full, with proceeds of the
initial Advance hereunder, of all Existing Indebtedness, and (i) the payment of
all fees and expenses of Administrative Agent in connection with the credit
facility provided herein.

 

“CNAC” has the meaning assigned to such term in the recitals hereof.

 

“Code” means the Internal Revenue Code of 1986, as amended, reformed or
otherwise modified from time to time.

 

“Collateral” means all Property of Borrower and its Subsidiaries in which a Lien
has been granted pursuant to the Collateral Documents.

 

“Collateral Documents” means, collectively, all deeds of trust, mortgages,
amendments to mortgages, assignments, security agreements, pledge agreements and
other security documents from time to time delivered to Administrative Agent to
secure the Secured Obligations.

 

“Collateral Shortfall Amount” is defined in Section 11.1.

 

“Commitment” means, for each Lender, the obligation of such Lender to make Loans
to, and participate in Facility LCs issued upon the application of, the Borrower
in an aggregate amount not exceeding the amount set forth on the Lenders
Schedule or as set forth in any Notice of Assignment relating to any assignment
that has become effective pursuant to Section 15.3.2, as such amount may be
modified from time to time pursuant to the terms hereof; provided that no
Lender’s Commitment shall ever exceed such Lender’s Pro Rata Share of the
Aggregate Commitment.

 

“Consolidated EBITDA” means Consolidated Net Income plus, to the extent deducted
from revenues in determining Consolidated Net Income, (i) Consolidated Interest
Expense, (ii) expense for income and income based taxes paid or accrued,
(iii) depreciation, depletion, amortization and impairment, including without
limitation, impairment of goodwill, and (iv) any non-cash items associated with
(a) mark to market accounting, and/or (b) stock based compensation arising from
the grant of or issuance or replacement of stock, stock options or other
equity-based awards or any amendment, modification, substitution or change of
any such stock, stock options or other equity-based awards, in each case in
connection with employee plans or other compensation arrangements, less, all
non-cash items increasing Consolidated Net Income, all calculated for the
Borrower and its Subsidiaries on a consolidated basis.

 

“Consolidated Funded Indebtedness” means at any time the aggregate dollar amount
of Consolidated Indebtedness which has actually been funded and is outstanding
at such time, whether or not such amount is due or payable at such time.

 

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“Consolidated Indebtedness” means at any time the Indebtedness of the Borrower
and its Subsidiaries calculated on a consolidated basis as of such time.

 

“Consolidated Interest Expense” means, with reference to any period, the
remainder of (a) interest expense minus (b) interest income of the Borrower and
its Subsidiaries calculated on a consolidated basis for such period, all as
determined in conformity with Agreement Accounting Principles.

 

“Consolidated Net Income” means, with reference to any period, the net income
(or loss) of the Borrower and its Subsidiaries calculated on a consolidated
basis for such period.

 

“Contingent Obligation” of a Person means any agreement, undertaking or
arrangement by which such Person assumes, guarantees, endorses, contingently
agrees to purchase or provide funds for the payment of, or otherwise becomes or
is contingently liable upon, the obligation or liability of any other Person, or
agrees to maintain the net worth or working capital or other financial condition
of any other Person, or otherwise assures any creditor of such other Person
against loss, including, without limitation, any comfort letter, operating
agreement, take-or-pay contract or the obligations of any such Person as general
partner of a partnership with respect to the liabilities of the partnership.

 

“Controlled Group” means all members of a controlled group of corporations or
other business entities and all trades or businesses (whether or not
incorporated) under common control which, together with the Borrower or any of
its Subsidiaries, are treated as a single employer under Section 414 of the
Code.

 

“Conversion/Continuation Notice” is defined in Section 2.10.

 

“Convertible Senior Notes” means the Floating Rate Convertible Senior Notes due
2023 issued by MHR pursuant to the Convertible Senior Notes Indenture and in an
original aggregate principal amount of $125,000,000.  The Convertible Senior
Notes will not be considered capital stock under this Agreement.

 

“Convertible Senior Notes Indenture” means that certain Indenture, dated as of
December 17, 2003, by and among MHR, as Issuer, the subsidiary guarantors party
thereto, and Deutsche Bank Trust Company Americas (formerly known as Bankers
Trust Company), as Trustee, relating to the issuance of the Convertible Senior
Notes, as supplemented and modified by the Convertible Senior Notes Supplemental
Indenture, and as further supplemented and modified from time to time to the
extent permitted hereunder.

 

“Convertible Senior Notes Supplemental Indenture” means, collectively, that
certain (i) First Supplemental Indenture dated as of June 6, 2005, by and among
MHR, the subsidiary guarantors party thereto, and Deutsche Bank Trust Company
Americas, as Trustee, providing for, among other things, certain changes to
conform the Convertible Senior Notes Indenture to the offering memorandum for
the Convertible Senior Notes, (ii) Second Supplemental Indenture dated as of
June 7, 2005, by and among Borrower, MHR, the subsidiary guarantors party
thereto, and Deutsche Bank Trust Company Americas, as Trustee, providing for,
among other things, that the Convertible Senior Notes can be converted into cash
and stock of Borrower, and (iii) Third Supplemental Indenture, dated as of June
13, 2005, by and among Borrower, the subsidiary

 

9

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guarantors party thereto, and Deutsche Bank Trust Company Americas, as Trustee,
providing for, among other things, the assumption by Borrower of the obligations
of MHR under the Convertible Senior Notes and the Convertible Senior Notes
Indenture.

 

“Credit Extension” means the making of an Advance or the issuance of a Facility
LC hereunder.

 

“Credit Extension Date” means the Borrowing Date for an Advance or the issuance
date for a Facility LC.

 

“Default” means an event described in Article X.

 

“Deficiency” is defined in Section 2.8(b).

 

“Determination Date” is defined in Section 2.6.2.

 

“Disclosure Schedule” means Schedule 3 attached hereto.

 

“Dividend” means, as to any Person, any declaration or payment of any dividend
or the making of any distribution, loan, advance or investment on or with
respect to any shares (or other evidence of ownership) of a Person’s capital
stock (other than dividends or distributions payable solely in shares or other
evidence of ownership of such Person’s capital stock).

 

“Engineered Value” means, at the time of determination, the future net revenues
of the Borrowing Base Properties calculated by Administrative Agent using the
pricing parameters and discount rate currently being used by Administrative
Agent.

 

“Engineering Report” means the Initial Engineering Report and each engineering
report delivered pursuant to Section 6.1(ix) and Section 6.1(x).

 

“Environmental Laws” means any and all federal, state, local and foreign
statutes, laws, judicial decisions, regulations, ordinances, rules, judgments,
orders, decrees, plans, injunctions, permits, concessions, grants, franchises,
licenses, agreements and other governmental restrictions relating to (i) the
protection of the environment, (ii) the effect of the environment on human
health, (iii) emissions, discharges or releases of pollutants, contaminants,
hazardous substances or wastes into surface water, ground water or land, or
(iv) the manufacture, processing, distribution, use, treatment, storage,
disposal, transport or handling of pollutants, contaminants, hazardous
substances or wastes or the clean-up or other remediation thereof.

 

“Equity” means shares of capital stock or a partnership, profits, capital,
member or other equity interest, or options, warrants or any other rights to
substitute for or otherwise acquire the capital stock or a partnership, profits,
capital, member or other equity interest of any Person.

 

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended
from time to time, and any rule or regulation issued thereunder.

 

“Eurodollar Advance” means an Advance which, except as otherwise provided in
Section 2.12, bears interest at the applicable Eurodollar Rate.

 

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“Eurodollar Base Rate” means, with respect to a Eurodollar Advance for the
relevant Interest Period, the applicable British Bankers’ Association LIBOR rate
for deposits in U.S. dollars as reported by any generally recognized financial
information service as of 11:00 a.m. (London time) two Business Days prior to
the first day of such Interest Period, and having a maturity equal to such
Interest Period, provided that, if no such British Bankers’ Association LIBOR
rate is available to the Administrative Agent, the applicable Eurodollar Base
Rate for the relevant Interest Period shall instead be the rate determined by
the Administrative Agent to be the rate at which JPMorgan or one of its
Affiliate banks offers to place deposits in U.S. dollars with first-class banks
in the London interbank market at approximately 11:00 a.m. (London time) two
Business Days prior to the first day of such Interest Period, in the approximate
amount of JPMorgan’s relevant Eurodollar Loan and having a maturity equal to
such Interest Period.

 

“Eurodollar Loan” means a Loan which, except as otherwise provided in
Section 2.12, bears interest at the applicable Eurodollar Rate.

 

“Eurodollar Rate” means, with respect to a Eurodollar Advance for the relevant
Interest Period, an interest rate per annum equal to the sum of (i) the quotient
of (a) the Eurodollar Base Rate applicable to such Interest Period, divided by
(b) one minus the Reserve Requirement (expressed as a decimal) applicable to
such Interest Period, plus (ii) the Applicable Margin.

 

“Excluded Taxes” means, in the case of each Lender or applicable Lending
Installation and the Administrative Agent, taxes imposed on its overall net
income, and franchise taxes imposed on it, by (i) the jurisdiction under the
laws of which such Lender or the Administrative Agent is incorporated or
organized or (ii) the jurisdiction in which the Administrative Agent’s or such
Lender’s principal executive office or such Lender’s applicable Lending
Installation is located.

 

“Exhibit” refers to an exhibit to this Agreement, unless another document is
specifically referenced.

 

“Existing Cimarex Credit Agreement” has the meaning assigned to such term in the
recitals hereto.

 

“Existing Cimarex Indebtedness” has the meaning assigned to such term in the
recitals hereto.

 

“Existing Cimarex Lenders” has the meaning assigned to such term in the recitals
hereto.

 

“Existing Cimarex Loan Documents” has the meaning assigned to such term in the
preamble hereto.

 

“Existing Cimarex Mortgages” means the mortgages, deeds of trust, security
agreements, assignments, pledges and other documents, instruments and
agreements, which establish Liens on certain of the Borrowing Base Properties to
secure the obligations, Indebtedness and liabilities of Borrower under the
Existing Cimarex Credit Agreement.

 

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“Existing Indebtedness” means, collectively, the Existing Cimarex Indebtedness
and the Existing MHR Indebtedness.

 

“Existing Letter of Credit” means that certain letter of credit, Number S-15235,
dated May 19, 2003, in the original stated amount of $2,500,000, issued by
Deutsche Bank Trust Company Americas (formerly known as Bankers Trust Company)
for the account of MHR to Chevron U.S.A. Inc. as beneficiary.

 

“Existing MHR Credit Agreement” has the meaning assigned to such term in the
recitals hereto.

 

“Existing MHR Indebtedness” has the meaning assigned to such term in the
recitals hereto.

 

“Existing MHR Lenders” has the meaning assigned to such term in the recitals
hereto.

 

“Existing MHR Mortgages” means the mortgages, deeds of trust, security
agreements, assignments, pledges and other documents, instruments and agreements
which establish Liens on MHR’s and its subsidiaries’ assets and properties to
secure the obligations, Indebtedness and liabilities of such Persons under the
Existing MHR Credit Agreement.

 

“Facility LC” is defined in Section 2.20.1 and shall include, without
limitation, the Existing Letter of Credit.

 

“Facility LC Application” is defined in Section 2.20.3.

 

“Facility LC Collateral Account” is defined in Section 2.20.11.

 

“Facility Termination Date” means July 1, 2010, or any earlier date on which the
Aggregate Commitment is reduced to zero or otherwise terminated pursuant to the
terms hereof.

 

“Federal Funds Effective Rate” means, for any day, an interest rate per annum
equal to the weighted average of the rates on overnight Federal funds
transactions with members of the Federal Reserve System arranged by Federal
funds brokers on such day, as published for such day (or, if such day is not a
Business Day, for the immediately preceding Business Day) by the Federal Reserve
Bank of New York, or, if such rate is not so published for any day which is a
Business Day, the average of the quotations at approximately 10:00 a.m. (Chicago
time) on such day on such transactions received by the Administrative Agent from
three Federal funds brokers of recognized standing selected by the
Administrative Agent in its sole discretion.

 

“Fifty Percent Utilization Period” means any period during which the Borrowing
Base Usage Percentage on each consecutive day is and remains greater than or
equal to 50%.

 

“Financial Contract” of a Person means (i) any exchange-traded or
over-the-counter futures, forward, swap or option contract or other financial
instrument with similar characteristics, and (ii) any Rate Management
Transaction.

 

“Fiscal Year” means the fiscal year of the Borrower.

 

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“Floating Rate” means, for any day, a rate per annum equal to (i) the Alternate
Base Rate for such day plus (ii) the Applicable Margin, in each case changing
when and as the Alternate Base Rate changes.

 

“Floating Rate Advance” means an Advance which, except as otherwise provided in
Section 2.12, bears interest at the Floating Rate.

 

“Floating Rate Loan” means a Loan which, except as otherwise provided in
Section 2.12, bears interest at the Floating Rate.

 

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

 

“Guarantors” means each Material Subsidiary and their successors and assigns. 
As of the date hereof (and after giving effect to the Closing Transactions),
“Guarantors” means each of the Material Subsidiaries listed and identified on
the Disclosure Schedule.

 

“Guaranty” means, collectively, that certain Amended and Restated Subsidiary
Guaranty dated of even date herewith executed by the Guarantors in favor of the
Administrative Agent, for the ratable benefit of the Lenders, as it may be
amended or modified and in effect from time to time, together with any
additional Guaranty executed and delivered pursuant to Section 9.2 hereof.

 

“Highest Lawful Rate” means, on any day with respect to each Lender to whom
Obligations are owed, the maximum nonusurious rate of interest that such Lender
is permitted under applicable law to contract for, take, charge or receive with
respect to such Obligations for such day.  All determinations herein of the
Highest Lawful Rate, or of any interest rate determined by reference to the
Highest Lawful Rate, shall be made separately for each Lender as appropriate to
assure that the Loan Documents are not construed to obligate any Person to pay
interest to any Lender at a rate in excess of the Highest Lawful Rate applicable
to such Lender.

 

“Increase” is defined in Section 2.5.4.

 

“Indebtedness” of a Person means such Person’s (i) obligations for borrowed
money, (ii) obligations representing the deferred purchase price of Property or
services (other than accounts payable arising in the ordinary course of such
Person’s business payable on terms customary in the trade), (iii) obligations,
whether or not assumed, secured by Liens or payable out of the proceeds or
production from Property now or hereafter owned or acquired by such Person
(other than Permitted Encumbrances), (iv) obligations which are evidenced by
notes, acceptances, or other instruments, (v) obligations of such Person to
purchase securities or other Property arising out of or in connection with the
sale of the same or substantially similar securities or Property,
(vi) Capitalized Lease Obligations, (vii) Contingent Obligations,
(viii) obligations to reimburse issuers of Letters of Credit, (ix) obligations
with respect to payments received in consideration of oil, gas, or other
minerals yet to be acquired or produced at the time of payment (including
obligations under “take-or-pay” contracts to deliver gas in return for payments
already received and the undischarged balance of any production payment created
by such Person or for the creation of which such Person directly or indirectly
received

 

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payment), (x) obligations with respect to other obligations to deliver goods or
services in consideration of advance payments therefor, and (xi) other
obligations for borrowed money or other financial accommodation which in
accordance with Agreement Accounting Principles would be shown as a liability on
the consolidated balance sheet of such Person.

 

“Indentures” means, collectively, the 9.60% Senior Notes Indenture and the
Convertible Senior Notes Indenture.

 

“Initial Engineering Report” means, collectively, the engineering report
concerning oil and gas properties of Borrower and its Subsidiaries prepared by
Borrower as of January 1, 2005 and audited by Ryder Scott Company, and the
engineering report concerning oil and gas properties of MHR prepared by DeGolyer
and McNaughton as of January 1, 2005.

 

“Interest Period” means, with respect to a Eurodollar Advance, a period of one,
two, three or six months commencing on a Business Day selected by the Borrower
pursuant to this Agreement.  Such Interest Period shall end on the day which
corresponds numerically to such date one, two, three or six months thereafter,
provided, however, that if there is no such numerically corresponding day in
such next, second, third or sixth succeeding month, such Interest Period shall
end on the last Business Day of such next, second, third or sixth succeeding
month.  If an Interest Period would otherwise end on a day which is not a
Business Day, such Interest Period shall end on the next succeeding Business
Day, provided, however, that if said next succeeding Business Day falls in a new
calendar month, such Interest Period shall end on the immediately preceding
Business Day.

 

“Investment” of a Person means any loan, advance (other than commission, travel
and similar advances to officers and employees made in the ordinary course of
business), extension of credit (other than accounts receivable arising in the
ordinary course of business on terms customary in the trade) or contribution of
capital by such Person; stocks, bonds, mutual funds, partnership interests,
notes, debentures or other securities owned by such Person; any deposit accounts
and certificate of deposit owned by such Person; and structured notes,
derivative financial instruments and other similar instruments or contracts
(other than Financial Contracts permitted under Section 7.11) owned by  such
Person.

 

“JPMorgan” means JPMorgan Chase Bank, N.A., successor by merger to Bank One, NA
(Main Office Chicago), a national banking association, in its individual
capacity, and its successors.

 

“JPMSI” has the meaning assigned to such term in the recitals hereto.

 

“LC Fee” is defined in Section 2.20.4.

 

“LC Issuer” means JPMorgan (or any subsidiary or affiliate of JPMorgan
designated by JPMorgan) in its capacity as issuer of Facility LCs hereunder,
and, with respect to the Existing Letter of Credit only, Deutsche Bank Trust
Company Americas in its capacity as issuer of the Existing Letter of Credit.

 

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“LC Obligations” means, at any time, the sum, without duplication, of (i) the
aggregate undrawn stated amount under all Facility LCs outstanding at such time
plus (ii) the aggregate unpaid amount at such time of all Reimbursement
Obligations.

 

“LC Payment Date” is defined in Section 2.20.5.

 

“Lender Assignments” has the meaning assigned to such term in the recitals
hereto.

 

“Lenders” means the lending institutions listed on the signature pages of this
Agreement and their respective successors and assigns.

 

“Lenders Schedule” means Schedule 2 attached hereto.

 

“Lending Installation” means, with respect to a Lender or the Administrative
Agent, the office, branch, subsidiary or affiliate of such Lender or the
Administrative Agent listed on the signature pages hereof or on the Lenders
Schedule or otherwise selected by such Lender or the Administrative Agent
pursuant to Section 2.18.

 

“Letter of Credit” of a Person means a letter of credit or similar instrument
which is issued upon the application of such Person or upon which such Person is
an account party or for which such Person is in any way liable.

 

“Lien” means any lien (statutory or other), mortgage, pledge, hypothecation,
assignment, deposit arrangement, encumbrance or preference, priority or other
security agreement or preferential arrangement of any kind or nature whatsoever
(including, without limitation, the interest of a vendor or lessor under any
conditional sale, Capitalized Lease or other title retention agreement).

 

“Loan” means, with respect to a Lender, such Lender’s loan made pursuant to
Article II (or any conversion or continuation thereof).

 

“Loan Documents” means this Agreement, the Facility LC Applications, any Notes
issued pursuant to Section 2.14, the Collateral Documents and the Guaranty.

 

“Material Adverse Effect” means a material adverse effect on (i) the business,
Property, condition (financial or otherwise), results of operations, or
prospects of the Borrower and its Subsidiaries taken as a whole, (ii) the
ability of the Borrower to perform its obligations under the Loan Documents to
which it is a party, or (iii) the validity or enforceability of any of the Loan
Documents or the rights or remedies of the Administrative Agent, the LC Issuer
or the Lenders thereunder.

 

“Material Indebtedness” means Indebtedness in an outstanding principal amount of
$5,000,000 or more in the aggregate (or the equivalent thereof in any currency
other than U.S. dollars).

 

“Material Indebtedness Agreement” means any agreement under which any Material
Indebtedness was created or is governed or which provides for the incurrence of
Indebtedness in

 

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an amount which would constitute Material Indebtedness (whether or not an amount
of Indebtedness constituting Material Indebtedness is outstanding thereunder).

 

“Material Subsidiary” means a Subsidiary of Borrower that owns a Substantial
Portion of the Property of Borrower and its Subsidiaries.  As of the date hereof
(and after giving effect to the Closing Transactions), “Material Subsidiary”
means each of the Borrower’s Subsidiaries listed and identified as a Material
Subsidiary on the Disclosure Schedule.

 

“Maximum Credit Amount” means One Billion Dollars ($1,000,000,000).

 

 “Merger Documents” means, collectively, the MHR/CNAC Merger Documents and the
Borrower/MHR Merger Documents.

 

“Mergers” means, collectively, the MHR/CNAC Merger and the Borrower/MHR Merger.

 

“MHR” has the meaning assigned to such term in the recitals hereto.

 

“MHR/CNAC Merger” means, collectively, (i) the merger of CNAC with and into MHR
pursuant to, and in accordance with, the MHR/CNAC Merger Documents, with MHR
being the surviving corporation as a Wholly-Owned Subsidiary of Borrower, and,
upon the effectiveness of which, the existence of CNAC shall cease, and (ii) the
other reorganization transactions contemplated by the MHR/CNAC Merger Agreement.

 

“MHR/CNAC Merger Agreement” means the Agreement and Plan of Merger, as the same
may be amended, dated as of January 25, 2005 among Borrower, CNAC and MHR.

 

“MHR/CNAC Merger Articles” means those certain Articles of Merger dated as of
June 7, 2005, executed by MHR and CNAC and filed on June 7, 2005 with the
Secretary of State of Nevada to effect the MHR/CNAC Merger in Nevada, and
certified copies of which shall subsequently be filed in such jurisdictions as
Administrative Agent shall require.

 

“MHR/CNAC Merger Documents” means the MHR/CNAC Merger Agreement, the MHR/CNAC
Merger Articles, and all other material documents, instruments and agreements
executed and/or delivered by Borrower, CNAC and/or MHR pursuant to the MHR/CNAC
Merger Agreement or in connection with the MHR/CNAC Merger.

 

“Minimum Collateral Amount” means with respect to any Aggregate Commitment, 75%
of the Required Reserve Value established by Administrative Agent to support
such Aggregate Commitment.

 

“Modify” and “Modification” are defined in Section 2.20.1.

 

“Moody’s” means Moody’s Investors Service, Inc.

 

“Mortgage” means, collectively, all deeds of trust and mortgages included in the
Collateral Documents.

 

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“Multiemployer Plan” means a Plan maintained pursuant to a collective bargaining
agreement or any other arrangement to which the Borrower or any member of the
Controlled Group is a party to which more than one employer is obligated to make
contributions.

 

“Note” is defined in Section 2.14(iv).

 

“Notice of Assignment” is defined in Section 15.3.2.

 

“Obligations” means all unpaid principal of and accrued and unpaid interest on
the Loans, all Reimbursement Obligations, all accrued and unpaid fees and all
expenses, reimbursements, indemnities and other obligations of the Borrower to
the Lenders or to any Lender, the Administrative Agent, the LC Issuer or any
indemnified party arising under the Loan Documents.

 

“Off-Balance Sheet Liability” of a Person means (i) any repurchase obligation or
liability of such Person with respect to accounts or notes receivable sold by
such Person, (ii) any liability under any Sale and Leaseback Transaction which
is not a Capitalized Lease, (iii) any liability under any so-called “synthetic
lease” transaction entered into by such Person, or (iv) any obligation arising
with respect to any other transaction which is the functional equivalent of or
takes the place of borrowing but which does not constitute a liability on the
balance sheets of such Person, but excluding from this clause (iv) Operating
Leases.

 

“Operating Lease” of a Person means any lease of Property (other than a
Capitalized Lease) by such Person as lessee which has an original term
(including any required renewals and any renewals effective at the option of the
lessor) of one year or more.

 

“Other Taxes” is defined in Section 3.3(ii).

 

“Outstanding Credit Exposure” means, as to any Lender at any time, the sum of
(i) the aggregate principal amount of its Loans outstanding at such time, plus
(ii) an amount equal to its Pro Rata Share of the LC Obligations at such time.

 

“Participants” is defined in Section 15.2.1.

 

“Payment Date” means the last day of each fiscal quarter of Borrower.

 

“PBGC” means the Pension Benefit Guaranty Corporation, or any successor thereto.

 

“PDP Reserves” means Proved Reserves that are categorized as both “Developed”
and “Producing” in the SPE Definitions.

 

“Permitted Bond Documents” means, collectively, the indenture, senior unsecured
notes, senior subordinated notes, all guarantees of any such notes, and all
other agreements, documents or instruments executed and delivered by the
Borrower or any of its Subsidiaries in connection with, or pursuant to, the
issuance of the Permitted Bond Indebtedness.

 

“Permitted Bond Indebtedness” means Indebtedness of the Borrower resulting from
a single issue of the Borrower’s senior unsecured notes or senior unsecured
subordinated notes in

 

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an aggregate outstanding principal amount of not greater than $200,000,000, and
which Indebtedness (a) is not subject to negative covenants or events of default
(or other provisions which have the same effect as negative covenants or events
of default) which have not been approved by the Administrative Agent, (b) has a
coupon or interest rate not in excess of 9.0% per annum, (c) shall not mature
sooner than the date which is one year following the Facility Termination Date,
(d) is not secured by any assets of the Borrower or its Subsidiaries, and (e) is
evidenced and governed by an indenture and related documentation containing
customary terms and conditions for senior unsecured notes or senior unsecured
subordinated notes of like tenor and amount, each of which shall be satisfactory
to the Administrative Agent in its sole reasonable discretion.

 

“Permitted Encumbrances” means any Lien permitted by Section 7.6.

 

“Person” means any natural person, corporation, firm, joint venture,
partnership, limited liability company, association, enterprise, trust or other
entity or organization, or any government or political subdivision or any
agency, department or instrumentality thereof.

 

“Plan” means an employee pension benefit plan which is covered by Title IV of
ERISA or subject to the minimum funding standards under Section 412 of the Code
as to which the Borrower or any member of the Controlled Group may have any
liability.

 

“Pricing Schedule” means Schedule 1 attached hereto.

 

“Prime Rate” means a rate per annum equal to the prime rate of interest
announced from time to time by JPMorgan or its parent (which is not necessarily
the lowest rate charged to any customer), changing when and as said prime rate
changes.

 

“Pro Rata Share” means, with respect to a  Lender, a portion equal to a fraction
the numerator of which is such Lender’s Commitment and the denominator of which
is the Aggregate Commitment.

 

“Property” of a Person means any and all property, whether real, personal,
tangible, intangible, or mixed, of such Person, or other assets owned, leased or
operated by such Person.

 

“Proved Reserves” means “Proved Reserves” as defined in the SPE Definitions.

 

“Purchasers” is defined in Section 15.3.1.

 

“Rate Management Obligations” of a Person means any and all obligations of such
Person, whether absolute or contingent and howsoever and whensoever created,
arising, evidenced or acquired (including all renewals, extensions and
modifications thereof and substitutions therefor), under (i) any and all Rate
Management Transactions, and (ii) any and all cancellations, buy backs,
reversals, terminations or assignments of any Rate Management Transactions.

 

“Rate Management Transaction” means any transaction (including an agreement with
respect thereto) now existing or hereafter entered into by the Borrower which is
a rate swap, basis swap, forward rate transaction, commodity swap, commodity
option, equity or equity index

 

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swap, equity or equity index option, bond option, interest rate option, foreign
exchange transaction, cap transaction, floor transaction, collar transaction,
forward transaction, currency swap transaction, cross-currency rate swap
transaction, currency option or any other similar transaction (including any
option with respect to any of these transactions) or any combination thereof,
whether linked to one or more interest rates, foreign currencies, commodity
prices, equity prices or other financial measures.  Notwithstanding the
foregoing, a “Rate Management Transaction” shall not include any contract for
the purchase and sale of natural gas or oil entered into in the ordinary course
of business and on customary trade terms.

 

“Redetermination” means a Scheduled Redetermination, a Special Redetermination,
or a redetermination of the Borrowing Base pursuant to Section 2.6.6.

 

“Register” is defined in Section 15.3.3.

 

“Regulation D” means Regulation D of the Board of Governors of the Federal
Reserve System as from time to time in effect and any successor thereto or other
regulation or official interpretation of said Board of Governors relating to
reserve requirements applicable to member banks of the Federal Reserve System.

 

“Regulation U” means Regulation U of the Board of Governors of the Federal
Reserve System as from time to time in effect and any successor or other
regulation or official interpretation of said Board of Governors relating to the
extension of credit by banks for the purpose of purchasing or carrying margin
stocks applicable to member banks of the Federal Reserve System.

 

“Reimbursement Obligations” means, at any time, the aggregate of all obligations
of the Borrower then outstanding under Section 2.20 to reimburse the LC Issuer
for amounts paid by the LC Issuer in respect of any one or more drawings under
Facility LCs.

 

“Reportable Event” means a reportable event as defined in Section 4043 of ERISA
and the regulations issued under such section, with respect to a Plan,
excluding, however, such events as to which the PBGC has by regulation waived
the requirement of Section 4043(a) of ERISA that it be notified within 30 days
of the occurrence of such event, provided, however, that a failure to meet the
minimum funding standard of Section 412 of the Code and of Section 302 of ERISA
shall be a Reportable Event regardless of the issuance of any such waiver of the
notice requirement in accordance with either Section 4043(a) of ERISA or
Section 412(d) of the Code.

 

“Required Lenders” means Lenders in the aggregate having at least 66 2/3% of the
Aggregate Commitment or, if the Aggregate Commitment has been terminated,
Lenders in the aggregate holding at least 66 2/3% of the Aggregate Outstanding
Credit Exposure.

 

“Required Reserve Value” means, with respect to any Aggregate Commitment, that
portion of the Borrowing Base Properties that Administrative Agent has
determined, in its sole discretion, is necessary to support such Aggregate
Commitment.

 

“Reserve Requirement” means, with respect to an Interest Period, the maximum
aggregate reserve requirement (including all basic, supplemental, marginal and
other reserves) which is imposed under Regulation D on Eurocurrency liabilities.

 

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“Restricted Payment” means (a) any Dividend and (b) any payment on account of
the purchase, redemption or other acquisition or retirement for value by a
Person of any of such Person’s capital stock (except capital stock acquired on
the conversion or exchange thereof into or for other capital stock of such
Person).

 

“Rolling Period” means (a) for the fiscal quarters ending on September 30, 2005,
December 31, 2005 and March 31, 2006, the period commencing on July 1, 2005 and
ending on the last day of such applicable fiscal quarter, and (b) for the fiscal
quarter ending on June 30, 2006, and for each fiscal quarter thereafter, any
period of four (4) consecutive fiscal quarters ending on the last day of such
applicable fiscal quarter.

 

“S&P” means Standard and Poor’s Ratings Services, a division of The McGraw Hill
Companies, Inc.

 

“Sale and Leaseback Transaction” means any sale or other transfer of Property by
any Person with the intent to lease such Property as lessee.

 

“Schedule” refers to a specific schedule to this Agreement, unless another
document is specifically referenced.

 

“Scheduled Redetermination” means any redetermination of the Borrowing Base
pursuant to Section 2.6.2.

 

“SEC” means the Securities and Exchange Commission.

 

“Section” means a numbered Section of this Agreement, unless another document is
specifically referenced.

 

“Secured Obligations” means, collectively, (i) the Obligations and (ii) all Rate
Management Obligations owing to one or more Lenders or any affiliates of such
Lenders.

 

“Senior Note Documents” means, collectively, the Indentures, the Supplemental
Indentures, the Senior Notes, all guarantees of the Senior Notes, and all other
agreements, documents or instruments executed and delivered by the Borrower, MHR
or any of their Subsidiaries in connection with, or pursuant to, the issuance
and/or assumption of the Senior Notes.

 

“Senior Notes” means, collectively, the 9.60% Senior Notes and the Convertible
Senior Notes.

 

“Single Employer Plan” means a Plan maintained by the Borrower or any member of
the Controlled Group for employees of the Borrower or any member of the
Controlled Group.

 

“Special Redetermination” means any redetermination of the Borrowing Base
pursuant to Section 2.6.3 or Section 2.6.4.

 

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“SPE Definitions” means the Definitions for Oil and Gas Reserves promulgated by
the Society of Petroleum Engineers (or any generally recognized successor) as in
effect at the time in question.

 

“Subsidiary” of a Person means (i) any corporation more than 50% of the
outstanding securities having ordinary voting power of which shall at the time
be owned or controlled, directly or indirectly, by such Person or by one or more
of its Subsidiaries or by such Person and one or more of its Subsidiaries, or
(ii) any partnership, limited liability company, association, joint venture or
similar business organization more than 50% of the ownership interests having
ordinary voting power of which shall at the time be so owned or controlled,
provided that associations, joint ventures or other relationships (a) which are
established pursuant to a standard form operating agreement or similar agreement
or which are partnerships for purposes of federal income taxation only,
(b) which are not corporations or partnerships (or subject to the Uniform
Partnership Act) under applicable state applicable law, and (c) whose businesses
are limited to the exploration, development and operation of oil, gas or mineral
properties and interests owned directly by the parties in such associations,
joint ventures or relationships, shall not be deemed to be “Subsidiaries” of
such Person.  Unless otherwise expressly provided, all references herein to a
“Subsidiary” shall mean a Subsidiary of the Borrower.  For purposes of this
Agreement, Metrix Networks, Inc. shall not be deemed a “Subsidiary” of Borrower.

 

“Substantial Portion” means, with respect to the Property of the Borrower and
its Subsidiaries, Property which represents more than 10% of the consolidated
assets of the Borrower and its Subsidiaries or property which is responsible for
more than 10% 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).

 

“Supplemental Indentures” means, collectively, the 9.60% Senior Notes
Supplemental Indenture and the Convertible Senior Notes Supplemental Indenture.

 

“Taxes” means any and all present or future taxes, duties, levies, imposts,
deductions, charges or withholdings, and any and all liabilities with respect to
the foregoing, but excluding Excluded Taxes and Other Taxes.

 

“Transferee” is defined in Section 15.4.

 

“Type” means, with respect to any Advance, its nature as a Floating Rate Advance
or a Eurodollar Advance and with respect to any Loan, its nature as a Floating
Rate Loan or a Eurodollar Loan.

 

“Unfunded Liabilities” means the amount (if any) by which the present value of
all vested and unvested accrued benefits under all Single Employer Plans exceeds
the fair market value of all such Plan assets allocable to such benefits, all
determined as of the then most recent

 

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valuation date for such Plans using PBGC actuarial assumptions for single
employer plan terminations.

 

“Unmatured Default” means an event which but for the lapse of time or the giving
of notice, or both, would constitute a Default.

 

“Wholly-Owned Subsidiary” of a Person means (i) any Subsidiary all of the
outstanding voting securities of which shall at the time be owned or controlled,
directly or indirectly, by such Person or one or more Wholly-Owned Subsidiaries
of such Person, or by such Person and one or more Wholly-Owned Subsidiaries of
such Person, or (ii) any partnership, limited liability company, association,
joint venture or similar business organization 100% of the ownership interests
having ordinary voting power of which shall at the time be so owned or
controlled.

 

The foregoing definitions shall be equally applicable to both the singular and
plural forms of the defined terms.

 

ARTICLE II

THE CREDITS

 

Section 2.1.           Commitment.  From and including the date of this
Agreement and prior to the Facility Termination Date, each Lender severally
agrees, on the terms and conditions set forth in this Agreement, to (i) make
Loans to the Borrower and (ii) participate in Facility LCs issued upon the
request of the Borrower, provided that, after giving effect to the making of
each such Loan and the issuance of each such Facility LC, such Lender’s
Outstanding Credit Exposure shall not exceed its Commitment and the Aggregate
Outstanding Credit Exposure shall not exceed the Aggregate Commitment.  Subject
to the terms of this Agreement, the Borrower may borrow, repay and reborrow at
any time prior to the Facility Termination Date.  The Commitments to extend
credit hereunder shall expire on the Facility Termination Date.  The LC Issuer
will issue Facility LCs hereunder on the terms and conditions set forth in
Section 2.20.

 

Section 2.2.           Required Payments; Termination.  The Aggregate
Outstanding Credit Exposure and all other unpaid Obligations shall be paid in
full by the Borrower on the Facility Termination Date.

 

Section 2.3.           Ratable Loans.  Each Advance hereunder shall consist of
Loans made from the several Lenders ratably according to their Pro Rata Shares.

 

Section 2.4.           Types of Advances.  The Advances may be Floating Rate
Advances or Eurodollar Advances, or a combination thereof, selected by the
Borrower in accordance with Section 2.9 and Section 2.10.

 

Section 2.5.           Commitment Fee; Initial Aggregate Commitment; Changes in
Aggregate Commitment.

 

2.5.1.       The initial Aggregate Commitment is $500,000,000, and
Administrative Agent has notified Borrower of the Required Reserve Value for
such Aggregate Commitment.

 

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2.5.2.       The Borrower agrees to pay to the Administrative Agent for the
account of each Lender according to its Pro Rata Share a commitment fee at a per
annum rate equal to the Applicable Fee Rate on the average daily Available
Aggregate Commitment from the date hereof to and including the Facility
Termination Date, payable on each Payment Date hereafter and on the Facility
Termination Date.  All accrued commitment fees shall be payable on the effective
date of any termination of the obligations of the Lenders to make Credit
Extensions hereunder.

 

2.5.3.       Once during each period between Scheduled Redeterminations, the
Borrower may  reduce the Aggregate Commitment in whole, or in part ratably among
the Lenders in integral multiples of $10,000,000, upon at least three Business
Days’ written notice to the Administrative Agent, which notice shall specify the
amount of any such reduction, provided, however, that the amount of the
Aggregate Commitment may not be reduced below the aggregate principal amount of
the Aggregate Outstanding Credit Exposure.

 

2.5.4.       So long as no Default or Unmatured Default has occurred and is
continuing, the Borrower shall have the right to increase the Aggregate
Commitment by obtaining additional Commitments (the amount of such increase is
herein called the “Increase”), either from one or more of the Lenders or another
lending institution provided that (a) Borrower shall have notified
Administrative Agent of the amount of the Increase and Administrative Agent
shall have notified Borrower and Lenders of the Required Reserve Value for the
Aggregate Commitment as increased by the Increase, (b) each Lender shall have
had the option to increase its Commitment by its Pro Rata Share of the Increase,
(c) the Administrative Agent shall have approved the identity of any such new
Lender, such approval not to be unreasonably withheld, (d) any such new Lender
shall have assumed all of the rights and obligations of a “Lender” hereunder,
(e) the procedure described in Section 15.6 shall have been complied with,
(f) first Liens (subject only to Permitted Encumbrances) shall have been created
by Mortgages in favor of Administrative Agent in the Minimum Collateral Amount
of the Borrowing Base Properties (based upon the new Required Reserve Value as
described above), and (g) after giving effect to the Increase, the Aggregate
Commitment shall not exceed the Borrowing Base.

 

Section 2.6.           Borrowing Base and Required Reserve Value.

 

2.6.1.       During the period from the date hereof to the first Determination
Date the Borrowing Base shall be $825,000,000.

 

2.6.2.       By March 31 and September 30 of each year beginning September 30,
2005, Borrower shall furnish to each Lender all information, reports and data
that Administrative Agent has then requested concerning the businesses and
properties (including their oil and gas properties and interests and the
reserves and production relating thereto) of Borrower and its Subsidiaries,
together with the Engineering Report.  Within 30 days after receiving such
information, reports and data, or as promptly thereafter as practicable,
Required Lenders shall agree upon an amount for the Borrowing Base (provided
that all Lenders must agree to any increase in the Borrowing Base) and
Administrative Agent shall by notice to Borrower designate such amount as the
new Borrowing Base available to Borrower hereunder and the Required Reserve
Value for the Aggregate Commitment then in effect, which designation shall take
effect immediately on the date such notice is sent (herein called a
“Determination Date”) and shall

 

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remain in effect until but not including the next date as of which the Borrowing
Base is redetermined.  If Borrower does not furnish all such information,
reports and data by the date specified in the first sentence of this Section,
Administrative Agent may nonetheless designate the Borrowing Base and the
Required Reserve Value at any amount which Required Lenders determine and may
redesignate the Borrowing Base and the Required Reserve Value from time to time
thereafter until each Lender receives all such information, reports and data,
whereupon Required Lenders shall designate a new Borrowing Base and Required
Reserve Value as described above.  Required Lenders shall determine the amount
of the Borrowing Base based upon the loan collateral value which they in their
discretion assign to the various oil and gas properties included in the
Collateral at the time in question and based upon such other credit factors
(including without limitation the assets, liabilities, cash flow, hedged and
unhedged exposure to price, foreign exchange rate, and interest rate changes,
business, properties, prospects, management and ownership of Borrower and its
Subsidiaries) as they in their discretion deem significant.  It is expressly
understood that Lenders and Administrative Agent have no obligation to agree
upon or designate the Borrowing Base or the Required Reserve Value at any
particular amount, whether in relation to the Aggregate Commitment or otherwise.

 

2.6.3.       In addition to Scheduled Redeterminations, Required Lenders shall
be permitted to make a Special Redetermination of the Borrowing Base once in
each calendar year.  Any request by Required Lenders pursuant to this
Section 2.6.3 shall be submitted to Administrative Agent and Borrower.

 

2.6.4.       In addition to Scheduled Redeterminations, Borrower shall be
permitted to request a Special Redetermination of the Borrowing Base once in
each calendar year.  Such request shall be submitted to Administrative Agent and
Lenders and at the time of such request Borrower shall (x) deliver to
Administrative Agent and each Lender an Engineering Report, and (y) notify
Administrative Agent and each Lender of the Borrowing Base requested by Borrower
in connection with such Special Redetermination.

 

2.6.5.       Any Special Redetermination shall be made by Lenders in accordance
with the procedures and standards set forth in Section 2.6.2; provided, that, no
Engineering Report will be required to be delivered to Administrative Agent and
Lenders in connection with any Special Redetermination requested by Required
Lenders pursuant to Section 2.6.3.

 

2.6.6.       In addition to Scheduled Redeterminations and Special
Redeterminations, Administrative Agent and/or Required Lenders shall be
permitted to initiate and cause a redetermination of the Borrowing Base
simultaneously with (or within five (5) Business Days of) the consummation of
(a) the issuance by the Borrower of any Permitted Bond Indebtedness, and/or (b)
any lease, sale or other disposition of any Property of the Borrower and its
Subsidiaries pursuant to Section 7.4(iv)(A), which lease, sale or other
disposition relates to Property constituting more than 10% of the Engineered
Value of the Borrowing Base Properties as determined by Administrative Agent in
its sole discretion.  Any redetermination of the Borrowing Base pursuant to this
Section 2.6.6 shall be made by Lenders in accordance with the procedures and
standards set forth in Section 2.6.2; provided, that, no Engineering Report will
be required to be delivered to Administrative Agent and Lenders in connection
with any redetermination of the Borrowing Base pursuant to this Section 2.6.6.

 

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Section 2.7.           Minimum Amount of Each Advance.  Each Eurodollar Advance
shall be in the minimum amount of $3,000,000 (and in multiples of $500,000 if in
excess thereof), and each Floating Rate Advance shall be in the minimum amount
of $1,000,000 (and in multiples of $500,000 if in excess thereof), provided,
however, that any Floating Rate Advance may be in the amount of the Available
Aggregate Commitment.

 

Section 2.8.           Principal Payments.

 

(a)           Optional Principal Payments.  The Borrower may from time to time
pay, without penalty or premium, all outstanding Floating Rate Advances, or, in
a minimum aggregate amount of $1,000,000 or any integral multiple of $500,000 in
excess thereof, any portion of the outstanding Floating Rate Advances upon two
Business Days’ prior notice to the Administrative Agent.  The Borrower may from
time to time pay, subject to the payment of any funding indemnification amounts
required by Section 3.5 but without penalty or premium, all outstanding
Eurodollar Advances, or, in a minimum aggregate amount of $3,000,000 or any
integral multiple of $500,000 in excess thereof, any portion of the outstanding
Eurodollar Advances upon three Business Days’ prior notice to the Administrative
Agent.

 

(b)           Mandatory Payments.  If at any time (i) the Aggregate Outstanding
Credit Exposure is in excess of the Aggregate Commitment (in this Section, such
excess is called a “Deficiency”), Borrower shall, except as otherwise provided
below, within 90 days after Administrative Agent gives notice of such fact to
Borrower, prepay the principal of the Loans in an aggregate amount at least
equal to such Deficiency (or, if the Loans have been paid in full, deposit into
the Facility LC Collateral Account the amount required to eliminate the
Deficiency), or (ii) the Borrower or any of its Subsidiaries become obligated to
prepay all or any portion of the Senior Notes, any Permitted Bond Indebtedness
or any Indebtedness evidenced by a 9.60% Senior Notes Refinancing, as a result
of acceleration (or similar action) after a default or event of default
thereunder or with respect thereto, the Borrower or its Subsidiaries shall,
prior to any such prepayment, and except as otherwise provided and permitted by
Section 7.14(c), prepay the Loans and reduce the Commitments in full. 
Notwithstanding anything to the contrary contained herein, upon any
redetermination of the Borrowing Base pursuant to Section 2.6.6 which results in
a Deficiency (or increase in any existing Deficiency), the Borrower shall
promptly, but in all events within two (2) Business Days after the
Administrative Agent gives notice of such Deficiency (or increase in such
Deficiency) to the Borrower, prepay the principal of the Loan in an aggregate
amount at least equal to such Deficiency (or increase in any previously existing
Deficiency) or, if the Loans have been paid in full, deposit into the Facility
LC Collateral Account the amount required to eliminate the Deficiency (or
increase in any previously existing Deficiency).  Each payment of principal
under this Section shall be accompanied by all interest then accrued and unpaid
on the principal so prepaid.  Any principal or interest prepaid pursuant to this
Section shall be in addition to, and not in lieu of, all payments otherwise
required to be paid under the Loan Documents at the time of such prepayment.

 

Section 2.9.           Method of Selecting Types and Interest Periods for new
Advances.  The Borrower shall select the Type of Advance and, in the case of
each Eurodollar Advance, the Interest Period applicable thereto from time to
time.  The Borrower shall give the Administrative Agent irrevocable notice (a
“Borrowing Notice”) not later than 11:00 a.m. (Chicago time) on the

 

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same Business Day as the Borrowing Date of each Floating Rate Advance and three
Business Days before the Borrowing Date for each Eurodollar Advance, specifying:

 

(i)            the Borrowing Date, which shall be a Business Day, of such
Advance,

 

(ii)           the aggregate amount of such Advance,

 

(iii)          the Type of Advance selected, and

 

(iv)          in the case of each Eurodollar Advance, the Interest Period
applicable thereto.

 

Not later than noon (Chicago time) on each Borrowing Date, each Lender shall
make available its Loan or Loans in funds immediately available in Chicago to
the Administrative Agent at its address specified pursuant to Article XVI.  The
Administrative Agent will make the funds so received from the Lenders available
to the Borrower at the Administrative Agent’s aforesaid address.

 

Section 2.10.        Conversion and Continuation of Outstanding Advances. 
Floating Rate Advances shall continue as Floating Rate Advances unless and until
such Floating Rate Advances are converted into Eurodollar Advances pursuant to
this Section 2.10 or are repaid in accordance with Section 2.8.  Each Eurodollar
Advance shall continue as a Eurodollar Advance until the end of the then
applicable Interest Period therefor, at which time such Eurodollar Advance shall
be automatically converted into a Floating Rate Advance unless (x) such
Eurodollar Advance is or was repaid in accordance with Section 2.8 or (y) the
Borrower shall have given the Administrative Agent a Conversion/Continuation
Notice (as defined below) requesting that, at the end of such Interest Period,
such Eurodollar Advance continue as a Eurodollar Advance for the same or another
Interest Period.  Subject to the terms of Section 2.7, the Borrower may elect
from time to time to convert all or any part of a Floating Rate Advance into a
Eurodollar Advance.  The Borrower shall give the Administrative Agent
irrevocable notice (a “Conversion/Continuation Notice”) of each conversion of a
Floating Rate Advance into a Eurodollar Advance or continuation of a Eurodollar
Advance not later than 10:00 a.m. (Chicago time) at least three Business Days
prior to the date of the requested conversion or continuation, specifying:

 

(i)            the requested date, which shall be a Business Day, of such
conversion or continuation,

 

(ii)           the aggregate amount and Type of the Advance which is to be
converted or continued, and

 

(iii)          the amount of such Advance which is to be converted into or
continued as a Eurodollar Advance and the duration of the Interest Period
applicable thereto.

 

Section 2.11.        Changes in Interest Rate, etc.  Each Floating Rate Advance
shall bear interest on the outstanding principal amount thereof, for each day
from and including the date such Advance is made or is automatically converted
from a Eurodollar Advance into a

 

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Floating Rate Advance pursuant to Section 2.10, to but excluding the date it is
paid or is converted into a Eurodollar Advance pursuant to Section 2.10, at a
rate per annum equal to the Floating Rate for such day.  Changes in the rate of
interest on that portion of any Advance maintained as a Floating Rate Advance
will take effect simultaneously with each change in the Alternate Base Rate. 
Each Eurodollar Advance shall bear interest on the outstanding principal amount
thereof from and including the first day of the Interest Period applicable
thereto to (but not including) the last day of such Interest Period at the
interest rate determined by the Administrative Agent as applicable to such
Eurodollar Advance based upon the Borrower’s selections under Section 2.9 and
Section 2.10 and otherwise in accordance with the terms hereof.  No Interest
Period may end after the Facility Termination Date.

 

Section 2.12.        Rates Applicable After Default.  Notwithstanding anything
to the contrary contained in Section 2.9, Section 2.10 or Section 2.11, during
the continuance of a Default or Unmatured Default the Required Lenders may, at
their option, by notice to the Borrower, declare that no Advance may be made as,
converted into or continued as a Eurodollar Advance.  During the continuance of
a Default the Required Lenders may, at their option, by notice to the Borrower,
declare that (i) each Eurodollar Advance shall bear interest for the remainder
of the applicable Interest Period at the rate otherwise applicable to such
Interest Period plus 2% per annum, (ii) each Floating Rate Advance shall bear
interest at a rate per annum equal to the Floating Rate in effect from time to
time plus 2% per annum and (iii) the LC Fee shall be increased by 2% per annum,
provided that, during the continuance of a Default under Section 10.6 or
Section 10.7, the interest rates set forth in clauses (i) and (ii) above and the
increase in the LC Fee set forth in clause (iii) above shall be applicable to
all Credit Extensions without any election or action on the part of the
Administrative Agent or any Lender.

 

Section 2.13.        Method of Payment.

 

2.13.1.     All payments of the Obligations hereunder shall be made, without
setoff, deduction, or counterclaim, in immediately available funds to the
Administrative Agent at the Administrative Agent’s address specified pursuant to
Article XVI, or at any other Lending Installation of the Administrative Agent
specified in writing by the Administrative Agent to the Borrower, by noon (local
time) on the date when due and shall (except in the case of Reimbursement
Obligations for which the LC Issuer has not been fully indemnified by the
Lenders, or as otherwise specifically required hereunder) be applied ratably by
the Administrative Agent among the Lenders.  Each payment delivered to the
Administrative Agent for the account of any Lender shall be delivered promptly
by the Administrative Agent to such Lender in the same type of funds that the
Administrative Agent received at its address specified pursuant to Article XVI
or at any Lending Installation specified in a notice received by the
Administrative Agent from such Lender.  The Administrative Agent is hereby
authorized to charge the account of the Borrower maintained with JPMorgan for
each payment of principal, interest, Reimbursement Obligations and fees as it
becomes due hereunder.  Each reference to the Administrative Agent in this
Section 2.13 shall also be deemed to refer, and shall apply equally, to the LC
Issuer, in the case of payments required to be made by the Borrower to the LC
Issuer pursuant to Section 2.20.

 

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2.13.2.     When Administrative Agent collects or receives proceeds of
Collateral, Administrative Agent shall distribute all money so collected or
received, and Administrative Agent and each Lender shall apply all such money so
distributed, as follows:

 

(a)           first, for the payment of all Secured Obligations which are then
due and if such money is insufficient to pay all such Secured Obligations, first
to any reimbursements due Administrative Agent under Section 12.6 and then to
the partial payment of all other Secured Obligations then due in proportion to
the amounts thereof, or as Administrative Agent and Lender shall otherwise
agree;

 

(b)           then for the prepayment of the Secured Obligations; and

 

(c)           last, for the payment or prepayment of any other indebtedness or
obligations secured by the Collateral.

 

All payments applied to principal or interest on any Note shall be applied first
to any interest then due and payable, then to principal then due and payable,
and last to any prepayment of principal and interest in compliance with
Section 2.8.  All distributions of amounts described in any of subsections (b)
or (c) above shall be made by Administrative Agent pro rata to each Lender (or
its affiliate, as applicable) then owed Secured Obligations described in such
subsection in proportion to all amounts owed to Administrative Agent and all
Lenders (or their affiliates, as applicable) which are described in such
subsection; provided that if any Lender then owes payments to LC Issuer for the
purchase of a participation under Section 2.20.5 or to Administrative Agent
under Section 13.8, any amounts otherwise distributable under this Section to
such Lender shall be deemed to belong to LC Issuer, or Administrative Agent,
respectively, to the extent of such unpaid payments, and Administrative Agent
shall apply such amounts to make such unpaid payments rather than distribute
such amounts to such Lender.

 

Section 2.14.        Evidence of Indebtedness.

 

(i)            Each Lender shall maintain in accordance with its usual practice
an account or accounts evidencing the indebtedness of the Borrower to such
Lender resulting from each Loan made by such Lender from time to time, including
the amounts of principal and interest payable and paid to such Lender from time
to time hereunder.

 

(ii)           The Administrative Agent shall also maintain accounts in which it
will record (a) the amount of each Loan made hereunder, the Type thereof and the
Interest Period with respect thereto, (b) the amount of any principal or
interest due and payable or to become due and payable from the Borrower to each
Lender hereunder, (c) the original stated amount of each Facility LC and the
amount of LC Obligations outstanding at any time, and (d) the amount of any sum
received by the Administrative Agent hereunder from the Borrower and each
Lender’s share thereof.

 

(iii)          The entries maintained in the accounts maintained pursuant to
paragraphs (i) and (ii) above shall be prima facie evidence of the existence and
amounts of the Obligations therein recorded; provided, however, that the failure
of the Administrative Agent or any Lender to maintain such accounts or any error
therein shall not in any manner affect the obligation of the Borrower to repay
the Obligations in accordance with their terms.

 

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(iv)          Each Lender’s Loans and interest thereon shall at all times be
evidenced by a promissory note in the form of Exhibit A hereto (each a “Note”)
payable to the order of such Lender.

 

Section 2.15.        Telephonic Notices.  The Borrower hereby authorizes the
Lenders and the Administrative Agent to extend, convert or continue Advances,
effect selections of Types of Advances and to transfer funds based on telephonic
notices made by any person or persons the Administrative Agent or any Lender in
good faith believes to be acting on behalf of the Borrower, it being understood
that the foregoing authorization is specifically intended to allow Borrowing
Notices and Conversion/Continuation Notices to be given telephonically.  The
Borrower agrees to deliver promptly to the Administrative Agent a written
confirmation, if such confirmation is requested by the Administrative Agent or
any Lender, of each telephonic notice signed by an Authorized Officer.  If the
written confirmation differs in any material respect from the action taken by
the Administrative Agent and the Lenders, the records of the Administrative
Agent and the Lenders shall govern absent manifest error.

 

Section 2.16.        Interest Payment Dates; Interest and Fee Basis.  Interest
accrued on each Floating Rate Advance shall be payable on each Payment Date,
commencing with the first such date to occur after the date hereof, on any date
on which the Floating Rate Advance is prepaid, whether due to acceleration or
otherwise, and at maturity.  Interest accrued on that portion of the outstanding
principal amount of any Floating Rate Advance converted into a Eurodollar
Advance on a day other than a Payment Date shall be payable on the date of
conversion.  Interest accrued on each Eurodollar Advance shall be payable on the
last day of its applicable Interest Period, on any date on which the Eurodollar
Advance is prepaid, whether by acceleration or otherwise, and at maturity. 
Interest accrued on each Eurodollar Advance having an Interest Period longer
than three months shall also be payable on the last day of each three-month
interval during such Interest Period.  Interest, commitment fees and LC Fees
shall be calculated for actual days elapsed on the basis of a 360-day year. 
Interest shall be payable for the day an Advance is made but not for the day of
any payment on the amount paid if payment is received prior to noon (local time)
at the place of payment.  If any payment of principal of or interest on an
Advance shall become due on a day which is not a Business Day, such payment
shall be made on the next succeeding Business Day and, in the case of a
principal payment, such extension of time shall be included in computing
interest in connection with such payment.

 

Section 2.17.        Notification of Advances, Interest Rates, Prepayments and
Commitment Reductions.  Promptly after receipt thereof, the Administrative Agent
will notify each Lender of the contents of each Aggregate Commitment reduction
notice, Borrowing Notice, Conversion/Continuation Notice, and repayment notice
received by it hereunder.  Promptly after notice from the LC Issuer, the
Administrative Agent will notify each Lender of the contents of each request for
issuance of a Facility LC hereunder.  The Administrative Agent will notify each
Lender of the interest rate applicable to each Eurodollar Advance promptly upon
determination of such interest rate and will give each Lender prompt notice of
each change in the Alternate Base Rate.

 

Section 2.18.        Lending Installations.  Each Lender may book its Loans and
its participation in any LC Obligations and the LC Issuer may book the Facility
LCs at any Lending Installation selected by such Lender or the LC Issuer, as the
case may be, and may change its

 

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Lending Installation from time to time.  All terms of this Agreement shall apply
to any such Lending Installation and the Loans, Facility LCs, participations in
LC Obligations and any Notes issued hereunder shall be deemed held by each
Lender or the LC Issuer, as the case may be, for the benefit of any such Lending
Installation.  Each Lender and the LC Issuer may, by written notice to the
Administrative Agent and the Borrower in accordance with Article XVI, designate
replacement or additional Lending Installations through which Loans will be made
by it or Facility LCs will be issued by it and for whose account Loan payments
or payments with respect to Facility LCs are to be made.

 

Section 2.19.        Non-Receipt of Funds by the Administrative Agent.  Unless
the Borrower or a Lender, as the case may be, notifies the Administrative Agent
prior to the date on which it is scheduled to make payment to the Administrative
Agent of (i) in the case of a Lender, the proceeds of a Loan or (ii) in the case
of the Borrower, a payment of principal, interest or fees to the Administrative
Agent for the account of the Lenders, that it does not intend to make such
payment, the Administrative Agent may assume that such payment has been made. 
The Administrative Agent may, but shall not be obligated to, make the amount of
such payment available to the intended recipient in reliance upon such
assumption.  If such Lender or the Borrower, as the case may be, has not in fact
made such payment to the Administrative Agent, the recipient of such payment
shall, on demand by the Administrative Agent, repay to the Administrative Agent
the amount so made available together with interest thereon in respect of each
day during the period commencing on the date such amount was so made available
by the Administrative Agent until the date the Administrative Agent recovers
such amount at a rate per annum equal to (x) in the case of payment by a Lender,
the Federal Funds Effective Rate for such day for the first three days and,
thereafter, the interest rate applicable to the relevant Loan or (y) in the case
of payment by the Borrower, the interest rate applicable to the relevant Loan.

 

Section 2.20.        Facility LCs.

 

2.20.1.     Issuance.  The LC Issuer hereby agrees, on the terms and conditions
set forth in this Agreement, to issue standby and commercial letters of credit
(each, together with the Existing Letter of Credit, a “Facility LC”) and to
renew, extend, increase, decrease or otherwise modify each Facility LC
(“Modify,” and each such action a “Modification”), from time to time from and
including the date of this Agreement and prior to the Facility Termination Date
upon the request of the Borrower; provided that immediately after each such
Facility LC is issued or Modified, (i) the aggregate amount of the outstanding
LC Obligations shall not exceed $50,000,000 and (ii) the Aggregate Outstanding
Credit Exposure shall not exceed the Aggregate Commitment.  No Facility LC shall
have an expiry date later than one year after the issuance thereof; provided
that if such expiry date is after the fifth Business Day prior to the Facility
Termination Date, Borrower shall deposit in the Facility LC Collateral Account
on such fifth Business Day immediately available funds in an amount equal to or
greater than the undrawn amount of such Facility LC.

 

2.20.2.     Participations.  Upon the issuance or Modification by the LC Issuer
of a Facility LC in accordance with this Section 2.20, and, with respect to the
Existing Letter of Credit, on the Closing Date, the LC Issuer shall be deemed,
without further action by any party hereto, to have unconditionally and
irrevocably sold to each Lender, and each Lender shall be deemed, without
further action by any party hereto, to have unconditionally and irrevocably

 

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purchased from the LC Issuer, a participation in such Facility LC (and each
Modification thereof) and the related LC Obligations in proportion to its Pro
Rata Share.

 

2.20.3.     Notice.  Subject to Section 2.20.1, the Borrower shall give the LC
Issuer notice prior to 10:00 a.m. (Chicago time) at least five Business Days
prior to the proposed date of issuance or Modification of each Facility LC,
specifying the beneficiary, the proposed date of issuance (or Modification) and
the expiry date of such Facility LC, and describing the proposed terms of such
Facility LC and the nature of the transactions proposed to be supported
thereby.  Upon receipt of such notice, the LC Issuer shall promptly notify the
Administrative Agent, and the Administrative Agent shall promptly notify each
Lender, of the contents thereof and of the amount of such Lender’s participation
in such proposed Facility LC.  The issuance or Modification by the LC Issuer of
any Facility LC shall, in addition to the conditions precedent set forth in
Article IV (the satisfaction of which the LC Issuer shall have no duty to
ascertain), be subject to the conditions precedent that such Facility LC shall
be satisfactory to the LC Issuer and that the Borrower shall have executed and
delivered such application agreement and/or such other instruments and
agreements relating to such Facility LC as the LC Issuer shall have reasonably
requested (each, a “Facility LC Application”).  In the event of any conflict
between the terms of this Agreement and the terms of any Facility LC
Application, the terms of this Agreement shall control.

 

2.20.4.     LC Fees.  The Borrower shall pay to the Administrative Agent, for
the account of the Lenders ratably in accordance with their respective Pro Rata
Shares, at the time of issuance of each Facility LC, a letter of credit fee
calculated at an amount equal to the greater of $500.00 or a per annum rate
equal to the Applicable Margin for Eurodollar Loans on the stated amount of such
Facility LC (each such fee described in this sentence an “LC Fee”).  The
Borrower shall also pay to the LC Issuer for its own account at the time of
issuance of each Facility LC, a fronting fee in an amount equal to 0.125% of the
initial stated amount, and documentary and processing charges in connection with
the issuance or Modification of and draws under Facility LCs in accordance with
the LC Issuer’s standard schedule for such charges as in effect from time to
time.

 

2.20.5.     Administration; Reimbursement by Lenders.  Upon receipt from the
beneficiary of any Facility LC of any demand for payment under such Facility LC,
the LC Issuer shall notify the Administrative Agent and the Administrative Agent
shall promptly notify the Borrower and each Lender as to the amount to be paid
by the LC Issuer as a result of such demand and the proposed payment date (the
“LC Payment Date”).  The responsibility of the LC Issuer to the Borrower and
each Lender shall be only to determine that the documents (including each demand
for payment) delivered under each Facility LC in connection with such
presentment shall be in conformity in all material respects with such Facility
LC.  The LC Issuer shall endeavor to exercise the same care in the issuance and
administration of the Facility LCs as it does with respect to letters of credit
in which no participations are granted, it being understood that in the absence
of any gross negligence or willful misconduct by the LC Issuer, each Lender
shall be unconditionally and irrevocably liable without regard to the occurrence
of any Default or any condition precedent whatsoever, to reimburse the LC Issuer
on demand for (i) such Lender’s Pro Rata Share of the amount of each payment
made by the LC Issuer under each Facility LC to the extent such amount is not
reimbursed by the Borrower pursuant to Section 2.20.6 below, plus (ii) interest
on the foregoing amount to be reimbursed by such Lender, for each day from the
date

 

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of the LC Issuer’s demand for such reimbursement (or, if such demand is made
after 11:00 a.m. (Chicago time) on such date, from the next succeeding Business
Day) to the date on which such Lender pays the amount to be reimbursed by it, at
a rate of interest per annum equal to the Federal Funds Effective Rate for the
first three days and, thereafter, at a rate of interest equal to the rate
applicable to Floating Rate Advances.

 

2.20.6.     Reimbursement by Borrower.  The Borrower shall be irrevocably and
unconditionally obligated to reimburse the LC Issuer on or before the applicable
LC Payment Date for any amounts to be paid by the LC Issuer upon any drawing
under any Facility LC, without presentment, demand, protest or other formalities
of any kind; provided that neither the Borrower nor any Lender shall hereby be
precluded from asserting any claim for direct (but not consequential) damages
suffered by the Borrower or such Lender to the extent, but only to the extent,
caused by (i) the willful misconduct or gross negligence of the LC Issuer in
determining whether a request presented under any Facility LC issued by it
complied with the terms of such Facility LC or (ii) the LC Issuer’s failure to
pay under any Facility LC issued by it after the presentation to it of a request
strictly complying with the terms and conditions of such Facility LC.  All such
amounts paid by the LC Issuer and remaining unpaid by the Borrower shall bear
interest, payable on demand, for each day until paid at a rate per annum equal
to (x) the rate applicable to Floating Rate Advances for such day if such day
falls on or before the applicable LC Payment Date and (y) the sum of 2% plus the
rate applicable to Floating Rate Advances for such day if such day falls after
such LC Payment Date.  The LC Issuer will pay to each Lender ratably in
accordance with its Pro Rata Share all amounts received by it from the Borrower
for application in payment, in whole or in part, of the Reimbursement Obligation
in respect of any Facility LC issued by the LC Issuer, but only to the extent
such Lender has made payment to the LC Issuer in respect of such Facility LC
pursuant to Section 2.20.5.  Subject to the terms and conditions of this
Agreement (including without limitation the submission of a Borrowing Notice in
compliance with Section 2.9 and the satisfaction of the applicable conditions
precedent set forth in Article IV), the Borrower may request an Advance
hereunder for the purpose of satisfying any Reimbursement Obligation.

 

2.20.7.     Obligations Absolute.  The Borrower’s obligations under this
Section 2.20 shall be absolute and unconditional under any and all circumstances
and irrespective of any setoff, counterclaim or defense to payment which the
Borrower may have or have had against the LC Issuer, any Lender or any
beneficiary of a Facility LC.  The Borrower further agrees with the LC Issuer
and the Lenders that the LC Issuer and the Lenders shall not be responsible for,
and the Borrower’s Reimbursement Obligation in respect of any Facility LC shall
not be affected by, among other things, the validity or genuineness of documents
or of any endorsements thereon, even if such documents should in fact prove to
be in any or all respects invalid, fraudulent or forged, or any dispute between
or among the Borrower, any of its Affiliates, the beneficiary of any Facility LC
or any financing institution or other party to whom any Facility LC may be
transferred or any claims or defenses whatsoever of the Borrower or of any of
its Affiliates against the beneficiary of any Facility LC or any such
transferee.  The LC Issuer shall not be liable for any error, omission,
interruption or delay in transmission, dispatch or delivery of any message or
advice, however transmitted, in connection with any Facility LC.  The Borrower
agrees that any action taken or omitted by the LC Issuer or any Lender under or
in connection with each Facility LC and the related drafts and documents, if
done without gross negligence or willful misconduct, shall be binding upon the
Borrower and shall not put the LC

 

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Issuer or any Lender under any liability to the Borrower.  Nothing in this
Section 2.20.7 is intended to limit the right of the Borrower to make a claim
against the LC Issuer for damages as contemplated by the proviso to the first
sentence of Section 2.20.6.

 

2.20.8.     Actions of LC Issuer.  The LC Issuer shall be entitled to rely, and
shall be fully protected in relying, upon any Facility LC, draft, writing,
resolution, notice, consent, certificate, affidavit, letter, cablegram,
telegram, telecopy, telex or teletype message, statement, order or other
document believed by it to be genuine and correct and to have been signed, sent
or made by the proper Person or Persons, and upon advice and statements of legal
counsel, independent accountants and other experts selected by the LC Issuer. 
The LC Issuer shall be fully justified in failing or refusing to take any action
under this Agreement unless it shall first have received such advice or
concurrence of the Required Lenders as it reasonably deems appropriate or it
shall first be indemnified to its reasonable satisfaction by the Lenders against
any and all liability and expense which may be incurred by it by reason of
taking or continuing to take any such action.  Notwithstanding any other
provision of this Section 2.20, the LC Issuer shall in all cases be fully
protected in acting, or in refraining from acting, under this Agreement in
accordance with a request of the Required Lenders, and such request and any
action taken or failure to act pursuant thereto shall be binding upon the
Lenders and any future holders of a participation in any Facility LC.

 

2.20.9.     Indemnification.  The Borrower hereby agrees to indemnify and hold
harmless each Lender, the LC Issuer and the Administrative Agent, and their
respective directors, officers, agents and employees from and against any and
all claims and damages, losses, liabilities, costs or expenses which such
Lender, the LC Issuer or the Administrative Agent may incur (or which may be
claimed against such Lender, the LC Issuer or the Administrative Agent by any
Person whatsoever) by reason of or in connection with the issuance, execution
and delivery or transfer of or payment or failure to pay under any Facility LC
or any actual or proposed use of any Facility LC, including, without limitation,
any claims, damages, losses, liabilities, costs or expenses which the LC Issuer
may incur (i) by reason of or in connection with the failure of any other Lender
to fulfill or comply with its obligations to the LC Issuer hereunder (but
nothing herein contained shall affect any rights the Borrower may have against
any defaulting Lender) or (ii) by reason of or on account of the LC Issuer
issuing any Facility LC which specifies that the term “Beneficiary” included
therein includes any successor by operation of law of the named Beneficiary, but
which Facility LC does not require that any drawing by any such successor
Beneficiary be accompanied by a copy of a legal document, satisfactory to the LC
Issuer, evidencing the appointment of such successor Beneficiary; provided that
the Borrower shall not be required to indemnify any Lender, the LC Issuer or the
Administrative Agent for any claims, damages, losses, liabilities, costs or
expenses to the extent, but only to the extent, caused by (x) the willful
misconduct or gross negligence of the LC Issuer in determining whether a request
presented under any Facility LC complied with the terms of such Facility LC or
(y) the LC Issuer’s failure to pay under any Facility LC after the presentation
to it of a request strictly complying with the terms and conditions of such
Facility LC.  Nothing in this Section 2.20.9 is intended to limit the
obligations of the Borrower under any other provision of this Agreement.

 

2.20.10.   Lenders’ Indemnification.  Each Lender shall, ratably in accordance
with its Pro Rata Share, indemnify the LC Issuer, its affiliates and their
respective directors,

 

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officers, agents and employees (to the extent not reimbursed by the Borrower)
against any cost, expense (including reasonable counsel fees and disbursements),
claim, demand, action, loss or liability (except such as result from such
indemnitees’ gross negligence or willful misconduct or the LC Issuer’s failure
to pay under any Facility LC after the presentation to it of a request strictly
complying with the terms and conditions of the Facility LC) that such
indemnitees may suffer or incur in connection with this Section 2.20 or any
action taken or omitted by such indemnitees hereunder.

 

2.20.11.   Facility LC Collateral Account.  The Borrower agrees that it will,
upon the request of the Administrative Agent or the Required Lenders and until
the final expiration date of any Facility LC and thereafter as long as any
amount is payable to the LC Issuer or the Lenders in respect of any Facility LC,
maintain a special collateral account pursuant to arrangements satisfactory to
the Administrative Agent (the “Facility LC Collateral Account”) at the
Administrative Agent’s office at the address specified pursuant to Article XVI,
in the name of the Borrower but under the sole dominion and control of the
Administrative Agent, for the benefit of the Lenders and in which the Borrower
shall have no interest other than as set forth in Section 11.1.  The Borrower
hereby pledges, assigns and grants to the Administrative Agent, on behalf of and
for the ratable benefit of the Lenders and the LC Issuer, a security interest in
all of the Borrower’s right, title and interest in and to all funds which may
from time to time be on deposit in the Facility LC Collateral Account to secure
the prompt and complete payment and performance of the Obligations.  The
Administrative Agent will invest any funds on deposit from time to time in the
Facility LC Collateral Account in certificates of deposit of JPMorgan having a
maturity not exceeding 30 days.  Nothing in this Section 2.20.11 shall either
obligate the Administrative Agent to require the Borrower to deposit any funds
in the Facility LC Collateral Account or limit the right of the Administrative
Agent to release any funds held in the Facility LC Collateral Account in each
case other than as required by Section 11.1.

 

2.20.12.   Rights as a Lender.  In its capacity as a Lender, the LC Issuer shall
have the same rights and obligations as any other Lender.

 

Section 2.21.        Replacement of Lender.  If the Borrower is required
pursuant to Section 3.1, Section 3.2 or Section 3.5 to make any additional
payment to any Lender or if any Lender’s obligation to make or continue, or to
convert Floating Rate Advances into, Eurodollar Advances shall be suspended
pursuant to Section 3.4 (any Lender so affected an “Affected Lender”), the
Borrower may elect, if such amounts continue to be charged or such suspension is
still effective, to replace such Affected Lender as a Lender party to this
Agreement, provided that no Default or Unmatured Default shall have occurred and
be continuing at the time of such replacement, and provided further that,
concurrently with such replacement, (i) another bank or other entity which is
reasonably satisfactory to the Borrower and the Administrative Agent shall
agree, as of such date, to purchase for cash the Advances and other Obligations
due to the Affected Lender pursuant to an assignment substantially in the form
of Exhibit C and to become a Lender for all purposes under this Agreement and to
assume all obligations of the Affected Lender to be terminated as of such date
and to comply with the requirements of Section 15.3 applicable to assignments,
and (ii) the Borrower shall pay to such Affected Lender in same day funds on the
day of such replacement (a) all interest, fees and other amounts then accrued
but unpaid to such Affected Lender by the Borrower hereunder to and including
the date of termination, including without limitation payments due to such
Affected Lender under

 

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Section 3.1, Section 3.2 and Section 3.5, and (b) an amount, if any, equal to
the payment which would have been due to such Lender on the day of such
replacement under Section 3.4 had the Loans of such Affected Lender been prepaid
on such date rather than sold to the replacement Lender.

 

Section 2.22.        Limitation of Interest.  The Borrower, the Administrative
Agent and the Lenders intend to strictly comply with all applicable laws,
including applicable usury laws.  Accordingly, the provisions of this
Section 2.22 shall govern and control over every other provision of this
Agreement or any other Loan Document which conflicts or is inconsistent with
this Section 2.22, even if such provision declares that it controls.  As used in
this Section 2.22, the term “interest” includes the aggregate of all charges,
fees, benefits or other compensation which constitute interest under applicable
law, provided that, to the maximum extent permitted by applicable law, (a) any
non-principal payment shall be characterized as an expense or as compensation
for something other than the use, forbearance or detention of money and not as
interest, and (b) all interest at any time contracted for, reserved, charged or
received shall be amortized, prorated, allocated and spread, in equal parts
during the full term of the Obligations.  In no event shall the Borrower or any
other Person be obligated to pay, or any Lender have any right or privilege to
reserve, receive or retain, total interest in excess of the amount which such
Lender could lawfully have contracted for, reserved, received, retained or
charged had the interest been calculated for the full term of the Obligations at
the Highest Lawful Rate.  None of the terms and provisions contained in this
Agreement or in any other Loan Document which directly or indirectly relate to
interest shall ever be construed without reference to this Section 2.22, or be
construed to create a contract to pay for the use, forbearance or detention of
money at an interest rate in excess of the Highest Lawful Rate.

 

ARTICLE III

YIELD PROTECTION; TAXES

 

Section 3.1.           Yield Protection.  If, on or after the date of this
Agreement, the adoption of any law or any governmental or quasi-governmental
rule, regulation, policy, guideline or directive (whether or not having the
force of law), or any change in the interpretation or administration thereof by
any governmental or quasi-governmental authority, central bank or comparable
agency charged with the interpretation or administration thereof, or compliance
by any Lender or applicable Lending Installation or the LC Issuer with any
request or directive (whether or not having the force of law) of any such
authority, central bank or comparable agency:

 

(i)            subjects any Lender or any applicable Lending Installation or the
LC Issuer to any Taxes, or changes the basis of taxation of payments (other than
with respect to Excluded Taxes) to any Lender or the LC Issuer in respect of its
Eurodollar Loans, Facility LCs or participations therein, or

 

(ii)           imposes or increases or deems applicable any reserve, assessment,
insurance charge, special deposit or similar requirement against assets of,
deposits with or for the account of, or credit extended by, any Lender or any
applicable Lending

 

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Installation or the LC Issuer (other than reserves and assessments taken into
account in determining the interest rate applicable to Eurodollar Advances), or

 

(iii)          imposes any other condition the result of which is to increase
the cost to any Lender or any applicable Lending Installation or the LC Issuer
of making, funding or maintaining its Eurodollar Loans, or of issuing or
participating in Facility LCs, or reduces any amount receivable by any Lender or
any applicable Lending Installation or the LC Issuer in connection with its
Eurodollar Loans, Facility LCs or participations therein, or requires any Lender
or any applicable Lending Installation or the LC Issuer to make any payment
calculated by reference to the amount of Eurodollar Loans, Facility LCs or
participations therein held or interest or LC Fees received by it, by an amount
deemed material by such Lender or the LC Issuer as the case may be,

 

and the result of any of the foregoing is to increase the cost to such Lender or
applicable Lending Installation or the LC Issuer, as the case may be, of making
or maintaining its Eurodollar Loans or Commitment or of issuing or participating
in Facility LCs or to reduce the return received by such Lender or applicable
Lending Installation or the LC Issuer, as the case may be, in connection with
such Eurodollar Loans, Commitment, Facility LCs or participations therein, then,
within 15 days of demand by such Lender or the LC Issuer, as the case may be,
the Borrower shall pay such Lender or the LC Issuer, as the case may be, such
additional amount or amounts as will compensate such Lender or the LC Issuer, as
the case may be, for such increased cost or reduction in amount received.

 

Section 3.2.           Changes in Capital Adequacy Regulations.  If a Lender or
the LC Issuer determines the amount of capital required or expected to be
maintained by such Lender or the LC Issuer, any Lending Installation of such
Lender or the LC Issuer, or any corporation controlling such Lender or the LC
Issuer is increased as a result of a Change, then, within 15 days of demand by
such Lender or the LC Issuer, the Borrower shall pay such Lender or the LC
Issuer the amount necessary to compensate for any shortfall in the rate of
return on the portion of such increased capital which such Lender or the LC
Issuer determines is attributable to this Agreement, its Outstanding Credit
Exposure or its Commitment to make Loans and issue or participate in Facility
LCs, as the case may be, hereunder (after taking into account such Lender’s or
the LC Issuer’s policies as to capital adequacy).  “Change” means (i) any change
after the date of this Agreement in the Risk-Based Capital Guidelines or
(ii) any adoption of or change in any other law, governmental or
quasi-governmental rule, regulation, policy, guideline, interpretation, or
directive (whether or not having the force of law) after the date of this
Agreement which affects the amount of capital required or expected to be
maintained by any Lender or the LC Issuer or any Lending Installation or any
corporation controlling any Lender or the LC Issuer.  “Risk-Based Capital
Guidelines” means (i) the risk-based capital guidelines in effect in the United
States on the date of this Agreement, including transition rules, and (ii) the
corresponding capital regulations promulgated by regulatory authorities outside
the United States implementing the July 1988 report of the Basle Committee on
Banking Regulation and Supervisory Practices Entitled “International Convergence
of Capital Measurements and Capital Standards,” including transition rules, and
any amendments to such regulations adopted prior to the date of this Agreement.

 

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Section 3.3.           Taxes.

 

(i)            All payments by the Borrower to or for the account of any Lender,
the LC Issuer or the Administrative Agent hereunder or under any Note or
Facility LC Application shall be made free and clear of and without deduction
for any and all Taxes.  If the Borrower shall be required by law to deduct any
Taxes from or in respect of any sum payable hereunder to any Lender, the LC
Issuer or the Administrative Agent, to the extent not prohibited by applicable
law, (a) the sum payable shall be increased as necessary so that after making
all required deductions (including deductions applicable to additional sums
payable under this Section 3.3) such Lender, the LC Issuer or the Administrative
Agent (as the case may be) receives an amount equal to the sum it would have
received had no such deductions been made, (b) the Borrower shall make such
deductions, (c) the Borrower shall pay the full amount deducted to the relevant
authority in accordance with applicable law and (d) the Borrower shall furnish
to the Administrative Agent the original copy of a receipt evidencing payment
thereof within 30 days after such payment is made.

 

(ii)           In addition, the Borrower hereby agrees to pay any present or
future stamp or documentary taxes and any other excise or property taxes,
charges or similar levies which arise from any payment made hereunder or under
any Note or Facility LC Application or from the execution or delivery of, or
otherwise with respect to, this Agreement or any Note or Facility LC Application
(“Other Taxes”).

 

(iii)          The Borrower hereby agrees to indemnify the Administrative Agent,
the LC Issuer and each Lender for the full amount of Taxes or Other Taxes
(including, without limitation, any Taxes or Other Taxes imposed on amounts
payable under this Section 3.3) paid by the Administrative Agent, the LC Issuer
or such Lender and any liability (including penalties, interest and expenses)
arising therefrom or with respect thereto.  Payments due under this
indemnification shall be made within 30 days of the date the Administrative
Agent, the LC Issuer or such Lender makes demand therefor pursuant to
Section 3.6.

 

(iv)          Each Lender that is not incorporated under the laws of the United
States of America or a state thereof (each a “Non-U.S. Lender”) agrees that it
will, not more than ten Business Days after the date of this Agreement,
(i) deliver to the Administrative Agent two duly completed copies of United
States Internal Revenue Service Form W-8BEN or W-8ECI, certifying in either case
that such Lender is entitled to receive payments under this Agreement without
deduction or withholding of any United States federal income taxes, and
(ii) deliver to the Administrative Agent a United States Internal Revenue Form
W-8 or W-9, as the case may be, and certify that it is entitled to an exemption
from United States backup withholding tax.  Each Non-U.S. Lender further
undertakes to deliver to each of the Borrower and the Administrative Agent
(x) renewals or additional copies of such form (or any successor form) on or
before the date that such form expires or becomes obsolete, and (y) after the
occurrence of any event requiring a change in the most recent forms so delivered
by it, such additional forms or amendments thereto as may be reasonably
requested by the Borrower or the Administrative Agent.  All forms or amendments
described in the preceding sentence shall certify that such Lender is entitled
to receive payments under this Agreement without deduction or withholding of any
United States federal income taxes, unless an event (including without

 

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limitation any change in treaty, law or regulation) has occurred prior to the
date on which any such delivery would otherwise be required which renders all
such forms inapplicable or which would prevent such Lender from duly completing
and delivering any such form or amendment with respect to it and such Lender
advises the Borrower and the Administrative Agent that it is not capable of
receiving payments without any deduction or withholding of United States federal
income tax.

 

(v)           For any period during which a Non-U.S. Lender has failed to
provide the Borrower with an appropriate form pursuant to clause (iv) above
(unless such failure is due to a change in treaty, law or regulation, or any
change in the interpretation or administration thereof by any governmental
authority, occurring subsequent to the date on which a form originally was
required to be provided), such Non-U.S. Lender shall not be entitled to
indemnification under this Section 3.3 with respect to Taxes imposed by the
United States; provided that, should a Non-U.S. Lender which is otherwise exempt
from or subject to a reduced rate of withholding tax become subject to Taxes
because of its failure to deliver a form required under clause (iv) above, the
Borrower shall take such steps as such Non-U.S. Lender shall reasonably request
to assist such Non-U.S. Lender to recover such Taxes.

 

(vi)          Any Lender that is entitled to an exemption from or reduction of
withholding tax with respect to payments under this Agreement or any Note
pursuant to the law of any relevant jurisdiction or any treaty 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 as will permit such payments to be made without
withholding or at a reduced rate.

 

(vii)         If the U.S. Internal Revenue Service or any other governmental
authority of the United States or any other country or any political subdivision
thereof asserts a claim that the Administrative Agent did not properly withhold
tax from amounts paid to or for the account of any Lender (because the
appropriate form was not delivered or properly completed, because such Lender
failed to notify the Administrative Agent of a change in circumstances which
rendered its exemption from withholding ineffective, or for any other reason),
such Lender shall indemnify the Administrative Agent fully for all amounts paid,
directly or indirectly, by the Administrative Agent as tax, withholding
therefor, or otherwise, including penalties and interest, and including taxes
imposed by any jurisdiction on amounts payable to the Administrative Agent under
this subsection, together with all costs and expenses related thereto (including
attorneys fees and time charges of attorneys for the Administrative Agent, which
attorneys may be employees of the Administrative Agent).  The obligations of the
Lenders under this Section 3.3(vii) shall survive the payment of the Obligations
and termination of this Agreement.

 

Section 3.4.           Availability of Types of Advances.  If any Lender
determines that maintenance of its Eurodollar Loans at a suitable Lending
Installation would violate any applicable law, rule, regulation, or directive,
whether or not having the force of law, or if the Required Lenders determine
that (i) deposits of a type and maturity appropriate to match fund Eurodollar
Advances are not available or (ii) the interest rate applicable to Eurodollar
Advances does not accurately reflect the cost of making or maintaining
Eurodollar Advances, then the Administrative Agent shall suspend the
availability of Eurodollar Advances and require any

 

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affected Eurodollar Advances to be repaid or converted to Floating Rate
Advances, subject to the payment of any funding indemnification amounts required
by Section 3.5.

 

Section 3.5.           Funding Indemnification.  If any payment of a Eurodollar
Advance occurs on a date which is not the last day of the applicable Interest
Period, whether because of acceleration, prepayment or otherwise, or a
Eurodollar Advance is not made on the date specified by the Borrower for any
reason other than default by the Lenders, the Borrower will indemnify each
Lender for any loss or cost incurred by it resulting therefrom, including,
without limitation, any loss or cost in liquidating or employing deposits
acquired to fund or maintain such Eurodollar Advance.

 

Section 3.6.           Lender Statements; Survival of Indemnity.  To the extent
reasonably possible, each Lender shall designate an alternate Lending
Installation with respect to its Eurodollar Loans to reduce any liability of the
Borrower to such Lender under Section 3.1, Section 3.2, and Section 3.3 or to
avoid the unavailability of Eurodollar Advances under Section 3.4, so long as
such designation is not, in the judgment of such Lender, disadvantageous to such
Lender.  Each Lender shall deliver a written statement of such Lender to the
Borrower (with a copy to the Administrative Agent) as to the amount due, if any,
under Section 3.1, Section 3.2, Section 3.3, or Section 3.5.  Such written
statement shall set forth in reasonable detail the calculations upon which such
Lender determined such amount and shall be final, conclusive and binding on the
Borrower in the absence of manifest error.  Determination of amounts payable
under such Sections in connection with a Eurodollar Loan shall be calculated as
though each Lender funded its Eurodollar Loan through the purchase of a deposit
of the type and maturity corresponding to the deposit used as a reference in
determining the Eurodollar Rate applicable to such Loan, whether in fact that is
the case or not.  Unless otherwise provided herein, the amount specified in the
written statement of any Lender shall be payable on demand after receipt by the
Borrower of such written statement.  The obligations of the Borrower under
Section 3.1, Section 3.2, Section 3.3, and Section 3.5 shall survive payment of
the Obligations and termination of this Agreement.

 

ARTICLE IV

CONDITIONS PRECEDENT

 

Section 4.1.           Initial Credit Extension.  The Lenders shall not be
required to make the initial Credit Extension hereunder unless:

 

4.1.1.       The Borrower has furnished to the Administrative Agent the
following, with sufficient copies for the Lenders:

 

(i)            Copies of the certificate or articles of incorporation,
certificate or articles of organization, certificate of partnership or
comparable charter documents of the Borrower and each Material Subsidiary,
together with all amendments, and a certificate of existence, good standing and
foreign qualification for the Borrower and each Material Subsidiary, each
certified by the appropriate governmental officer in the Borrower’s and each
such Material Subsidiary’s applicable jurisdiction of incorporation or
organization and, with

 

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respect to foreign qualification certificates, in such jurisdictions as the
Administrative Agent has requested.

 

(ii)           Copies, certified by the Secretary or Assistant Secretary of the
Borrower and each Material Subsidiary, as applicable, of its by-laws,
regulations or comparable charter documents, and all amendments thereto, and of
its Board of Directors’ (or comparable authority) resolutions (or comparable
authorizations) and of resolutions or actions of any other body authorizing the
execution of the Loan Documents to which the Borrower and/or such Material
Subsidiaries are a party and the consummation of the Mergers and the other
Closing Transactions.

 

(iii)          An incumbency certificate, executed by the Secretary or Assistant
Secretary of the Borrower and each Material Subsidiary, as applicable, which
shall identify by name and title and bear the signatures of the Authorized
Officers and any other officers of the Borrower and such Material Subsidiaries
authorized to sign the Loan Documents to which the Borrower and/or such Material
Subsidiaries are a party, upon which certificate the Administrative Agent and
the Lenders shall be entitled to rely until informed of any change in writing by
the Borrower.

 

(iv)          A certificate, signed by the chief financial officer of the
Borrower, stating that on the initial Credit Extension Date no Default or
Unmatured Default has occurred and is continuing.

 

(v)           A written opinion of counsel to the Borrower and the Guarantors,
addressed to the Administrative Agent and the Lenders in substantially the form
of Exhibit D.

 

(vi)          A Note payable to the order of each Lender.

 

(vii)         If the initial Credit Extension will be the issuance of a Facility
LC, a properly completed Facility LC Application.

 

(viii)        The Guaranty and the Collateral Documents to be delivered on the
Closing Date pursuant to Article IX.

 

(ix)           The insurance certificate described in Section 5.19.

 

(x)            Initial Engineering Report.

 

(xi)           A copy of each Closing Document requested by the Administrative
Agent, duly executed and delivered by each party thereto, together with a
certificate from an Authorized Officer of Borrower certifying that such copies
are accurate and complete and represent the complete understanding and agreement
of the parties with respect to the subject matter thereof.

 

(xii)          Such other documents as any Lender or its counsel may have
reasonably requested.

 

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4.1.2.       The following additional conditions shall have been satisfied:

 

(i)            The Closing Transactions, including, without limitation, the
completion and consummation of the Mergers, shall have been consummated on the
terms set forth in the Closing Documents.

 

(ii)           All fees and expenses owing by Borrower or its Subsidiaries to
Administrative Agent shall have been paid, including attorneys fees.

 

All documents executed or submitted pursuant to this Section 4.1 by and on
behalf of Borrower or any of its Subsidiaries shall be in form and substance
satisfactory to Administrative Agent and its counsel.  The obligations of the
Lenders to make Loans and of the LC Issuer to issue a Facility LC hereunder
shall not become effective unless each of the foregoing conditions is satisfied
at or prior to 2:00 p.m., Chicago, Illinois time, on June 13, 2005.  Upon
satisfaction of each of the conditions set forth in this Section 4.1, including,
without limitation, the completion and consummation of the Mergers, Borrower and
Administrative Agent shall execute and deliver the Certificate of
Effectiveness.  Upon the execution and delivery of the Certificate of
Effectiveness, the Existing Cimarex Credit Agreement shall automatically and
completely be amended and restated on the terms set forth herein without
necessity of any other action on the part of any Lender, Administrative Agent or
Borrower.  Until the execution and delivery of the Certificate of Effectiveness,
the Existing Cimarex Credit Agreement shall remain in full force and effect in
accordance with its terms.  Each Lender hereby authorizes Administrative Agent
to execute the Certificate of Effectiveness on its behalf and acknowledges and
agrees that the execution of the Certificate of Effectiveness by Administrative
Agent shall be binding on each such Lender.

 

Section 4.2.           Each Credit Extension.  The Lenders shall not be required
to make any Credit Extension unless on the applicable Credit Extension Date:

 

(i)            There exists no Default or Unmatured Default.

 

(ii)           The representations and warranties contained in Article V are
true and correct as of such Credit Extension Date except to the extent any such
representation or warranty is stated to relate solely to an earlier date, in
which case such representation or warranty shall have been true and correct on
and as of such earlier date.

 

(iii)          All legal matters incident to the making of such Credit Extension
shall be satisfactory to the Lenders and their counsel.

 

Each Borrowing Notice or request for issuance of a Facility LC with respect to
each such Credit Extension shall constitute a representation and warranty by the
Borrower that the conditions contained in Section 4.2(i) and Section 4.2(ii)
have been satisfied.  Any Lender may require a duly completed compliance
certificate in substantially the form of Exhibit B as a condition to making a
Credit Extension.

 

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ARTICLE V

 

REPRESENTATIONS AND WARRANTIES

 

The Borrower represents and warrants (which representations and warranties are
true and correct on the date hereof (and after giving effect to the Closing
Transactions), and will be true and correct on the occasion of each Credit
Extension, except to the extent that such representations and warranties are
expressly limited to an earlier date) to the Lenders that:

 

Section 5.1.           Existence and Standing.  Each of the Borrower and its
Subsidiaries is a corporation, partnership (in the case of Subsidiaries only) or
limited liability company duly and properly incorporated or organized, as the
case may be, validly existing and (to the extent such concept applies to such
entity) in good standing under the laws of its jurisdiction of incorporation or
organization and has all requisite authority to conduct its business in each
jurisdiction in which its business is conducted.

 

Section 5.2.           Authorization and Validity.  Each of the Borrower and its
Subsidiaries has the power and authority and legal right to execute and deliver
the Loan Documents to which it is a party and to perform its obligations
thereunder.  The execution and delivery by the Borrower and its Subsidiaries of
the Loan Documents to which it is a party and the performance of its obligations
thereunder have been duly authorized by proper corporate (or other
organizational) proceedings, and the Loan Documents to which the Borrower and
its Subsidiaries are a party constitute legal, valid and binding obligations of
the Borrower and such Subsidiaries enforceable against the Borrower and its
Subsidiaries in accordance with their terms, except as enforceability may be
limited by bankruptcy, insolvency or similar laws affecting the enforcement of
creditors’ rights generally.

 

Section 5.3.           No Conflict; Government Consent.  Neither the execution
and delivery by the Borrower or its Subsidiaries of the Loan Documents to which
it is a party, nor the consummation of the transactions therein contemplated,
nor compliance with the provisions thereof, nor the consummation of the Closing
Transactions, will violate (i) any law, rule, regulation, order, writ, judgment,
injunction, decree or award binding on the Borrower or any of its Subsidiaries
or (ii) the Borrower’s or any Subsidiary’s articles or certificate of
incorporation, partnership agreement, certificate of partnership, articles or
certificate of organization, by-laws, or operating or other management
agreement, as the case may be, or (iii) the provisions of any indenture
(including, without limitation, the Indentures), instrument or agreement
(including, without limitation, any Permitted Bond Document or 9.60% Senior
Notes Refinancing Document) to which the Borrower or any of its Subsidiaries is
a party or is subject, or by which it, or its Property, is bound, or conflict
with or constitute a default thereunder, or result in, or require, the creation
or imposition of any Lien in, of or on the Property of the Borrower or a
Subsidiary pursuant to the terms of any such indenture, instrument or agreement
(including, without limitation, any Permitted Bond Document or 9.60% Senior
Notes Refinancing Document).  No order, consent, adjudication, approval,
license, authorization, or validation of, or filing, recording or registration
with, or exemption by, or other action in respect of any governmental or public
body or authority, or any subdivision thereof, which has not been obtained by
the Borrower or any of its Subsidiaries, is required to be obtained by the
Borrower or any of its Subsidiaries in connection with the execution and
delivery of the Loan Documents, the

 

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borrowings under this Agreement, the payment and performance by the Borrower of
the Obligations, the legality, validity, binding effect or enforceability of any
of the Loan Documents, or the consummation of the Closing Transactions.

 

Section 5.4.           Financial Statements.  The audited annual and unaudited
quarterly, consolidated financial statements of Borrower heretofore delivered to
the Lenders were prepared in accordance with generally accepted accounting
principles in effect on the date such statements were prepared and fairly
present the consolidated financial condition and operations of the Borrower and
its Subsidiaries at such date and the consolidated results of their operations
for the period then ended.

 

Section 5.5.           Material Adverse Change.  Since December 31, 2004 there
has been no change in the business, Property, prospects, condition (financial or
otherwise) or results of operations of the Borrower and its Subsidiaries which
could reasonably be expected to have a Material Adverse Effect.

 

Section 5.6.           Taxes.  The Borrower and its Subsidiaries have filed all
United States federal tax returns and all other tax returns which are required
to be filed and have paid all taxes due pursuant to said returns or pursuant to
any assessment received by the Borrower or any of its Subsidiaries, except such
taxes, if any, as are being contested in good faith and as to which adequate
reserves have been provided in accordance with Agreement Accounting Principles
and as to which no Lien exists.  No tax liens have been filed and no claims are
being asserted with respect to any such taxes.  The charges, accruals and
reserves on the books of the Borrower and its Subsidiaries in respect of any
taxes or other governmental charges are adequate.

 

Section 5.7.           Litigation and Contingent Obligations.  There is no
litigation, arbitration, governmental investigation, proceeding or inquiry
pending or, to the knowledge of any of their officers, threatened against or
affecting the Borrower or any of its Subsidiaries which could reasonably be
expected to have a Material Adverse Effect or which seeks to prevent, enjoin or
delay the making of any Credit Extensions.  Other than any liability incident to
any litigation, arbitration or proceeding which could not reasonably be expected
to have a Material Adverse Effect, neither the Borrower nor any of its
Subsidiaries has any material Contingent Obligations not provided for or
disclosed in the financial statements referred to in Section 5.4 or in the
Disclosure Schedule.

 

Section 5.8.           Subsidiaries.  The Disclosure Schedule contains an
accurate list of all Subsidiaries of the Borrower as of the date of this
Agreement (and after giving effect to the Closing Transactions), setting forth
(i) their respective jurisdictions of organization, (ii) the percentage of their
respective capital stock or other ownership interests owned by the Borrower or
other Subsidiaries, and (iii) which of such Subsidiaries are Material
Subsidiaries as of the date hereof.  All of the issued and outstanding shares of
capital stock or other ownership interests of such Subsidiaries have been (to
the extent such concepts are relevant with respect to such ownership interests)
duly authorized and issued and are fully paid and non-assessable.

 

Section 5.9.           ERISA.  The Unfunded Liabilities of all Single Employer
Plans do not in the aggregate exceed $500,000.  Neither the Borrower nor any
other member of the Controlled Group has incurred, or is reasonably expected to
incur, any withdrawal liability to

 

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Multiemployer Plans.  Each Plan complies in all material respects with all
applicable requirements of law and regulations, no Reportable Event has occurred
with respect to any Plan, neither the Borrower nor any other member of the
Controlled Group has withdrawn from any Plan or initiated steps to do so, and no
steps have been taken to reorganize or terminate any Plan except as disclosed in
the Disclosure Schedule.

 

Section 5.10.        Accuracy of Information.  No information, exhibit or report
furnished by the Borrower or any of its Subsidiaries to the Administrative Agent
or to any Lender in connection with the Closing Transactions or in connection
with the negotiation of, or compliance with, the Loan Documents contained any
material misstatement of fact or omitted to state a material fact or any fact
necessary to make the statements contained therein not misleading.

 

Section 5.11.        Regulation U.  Margin stock (as defined in Regulation U)
constitutes less than 25% of the value of those assets of the Borrower and its
Subsidiaries which are subject to any limitation on sale, pledge, or other
restriction hereunder.

 

Section 5.12.        Material Agreements.  Neither the Borrower nor any
Subsidiary is a party to any agreement or instrument or subject to any charter
or other corporate restriction that could reasonably be expected to have a
Material Adverse Effect.  Neither the Borrower nor any Subsidiary is in default
in the performance, observance or fulfillment of any of the obligations,
covenants or conditions contained in (i) any agreement to which it is a party,
which default could reasonably be expected to have a Material Adverse Effect or
(ii) any agreement or instrument evidencing or governing Indebtedness, which
default could reasonably be expected to have a Material Adverse Effect.

 

Section 5.13.        Compliance With Laws.  The Borrower and its Subsidiaries
have complied with all applicable statutes, rules, regulations, orders and
restrictions of any domestic or foreign government or any instrumentality or
agency thereof having jurisdiction over the conduct of their respective
businesses or the ownership of their respective Property except for any failure
to comply with any of the foregoing which could not reasonably be expected to
have a Material Adverse Effect.

 

Section 5.14.        Ownership of Properties.  Except for matters that would not
have a Material Adverse Effect, each of Borrower and its Subsidiaries has (after
giving effect to the Closing Transactions) good and defensible title to all of
its material properties and assets purported to be owned by it, including,
without limitation, all properties and assets reflected on the financial
statements referred to in Section 5.4, free and clear of all Liens,
encumbrances, or adverse claims other than Permitted Encumbrances and of all
impediments to the use of such properties and assets in such of Borrower and its
Subsidiaries’ business, except that no representation or warranty is made with
respect to any oil, gas or mineral property or interest to which no proved oil
or gas reserves are properly attributed.  Each of Borrower and its Subsidiaries
owns the net interests in production attributable to the wells and units
evaluated in the Initial Engineering Report and which are included in Engineered
Value subject to Permitted Encumbrances.  The ownership of such properties does
not in the aggregate in any material respect obligate Borrower or any of its
Subsidiaries consolidated financial statements provided to Administrative Agent
as owned by Borrower and its Subsidiaries to bear the costs and expenses

 

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relating to the maintenance, development and operations of such properties in an
amount materially in excess of the working interest of such properties set forth
in the Initial Engineering Reports.  Upon delivery of each Engineering Report
furnished to the Lenders pursuant to Section 6.1(ix) and Section 6.1(x), the
statements made in the preceding sentences of this Section shall be true with
respect to such Engineering Report.  Each of Borrower and its Subsidiaries
possesses all licenses, permits, franchises, patents, copyrights, trademarks and
trade names, and other intellectual property (or otherwise possesses the right
to use such intellectual property without violation of the rights of any other
Person) which are necessary to carry out its business as presently conducted and
as presently proposed to be conducted hereafter, and none of Borrower or its
Subsidiaries is in violation in any material respect of the terms under which it
possesses such intellectual property or the right to use such intellectual
property, except with respect to such types of property having an aggregate
value of less than $6,000,000.

 

Section 5.15.        Plan Assets; Prohibited Transactions.  The Borrower is not
an entity deemed to hold “plan assets” within the meaning of 29 C.F.R. §
2510.3-101 of an employee benefit plan (as defined in Section 3(3) of ERISA)
which is subject to Title I of ERISA or any plan (within the meaning of
Section 4975 of the Code), and neither the execution of this Agreement nor the
making of Loans hereunder gives rise to a prohibited transaction within the
meaning of Section 406 of ERISA or Section 4975 of the Code.

 

Section 5.16.        Environmental Matters.  In the ordinary course of its
business, the officers of the Borrower consider the effect of Environmental Laws
on the business of the Borrower and its Subsidiaries, in the course of which
they identify and evaluate potential risks and liabilities accruing to the
Borrower due to Environmental Laws.  On the basis of this consideration, and
after giving effect to the Closing Transactions, the Borrower has concluded that
Environmental Laws cannot reasonably be expected to have a Material Adverse
Effect.  Neither the Borrower nor any Subsidiary has received any notice to the
effect that its operations are not in material compliance with any of the
requirements of applicable Environmental Laws or are the subject of any federal
or state investigation evaluating whether any remedial action is needed to
respond to a release of any toxic or hazardous waste or substance into the
environment, which non-compliance or remedial action could reasonably be
expected to have a Material Adverse Effect.

 

Section 5.17.        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 the Investment Company Act of 1940,
as amended.

 

Section 5.18.        Public Utility Holding Company Act.  Neither the Borrower
nor any Subsidiary is a “holding company” or a “subsidiary company” of a
“holding company”, or an “affiliate” of a “holding company” or of a “subsidiary
company” of a “holding company”, within the meaning of the Public Utility
Holding Company Act of 1935, as amended.

 

Section 5.19.        Insurance.  The certificate signed by the President or
Chief Financial Officer of the Borrower, that attests to the existence and
adequacy of, and summarizes, the property and casualty insurance program carried
by the Borrower with respect to itself and its Subsidiaries and that has been
furnished by the Borrower to the Administrative Agent and the Lenders, is
complete and accurate.  This summary includes the insurer’s or insurers’
name(s),

 

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policy number(s), expiration date(s), amount(s) of coverage, type(s) of
coverage, exclusion(s), and deductibles.  This summary also includes similar
information, and describes any reserves, relating to any self-insurance program
that is in effect.

 

Section 5.20.        Solvency.

 

(i)            Immediately after the consummation of the Closing Transactions
and immediately following the making of each Loan, if any, made on the date
hereof and after giving effect to the application of the proceeds of such Loans,
(a) the fair value of the assets of the Borrower and its Subsidiaries on a
consolidated basis, at a fair valuation, will exceed the debts and liabilities,
subordinated, contingent or otherwise, of the Borrower and its Subsidiaries on a
consolidated basis; (b) the present fair saleable value of the Property of the
Borrower and its Subsidiaries on a consolidated basis will be greater than the
amount that will be required to pay the probable liability of the Borrower and
its Subsidiaries on a consolidated basis on their debts and other liabilities,
subordinated, contingent or otherwise, as such debts and other liabilities
become absolute and matured; (c) the Borrower and its Subsidiaries on a
consolidated basis will be able to pay their debts and liabilities,
subordinated, contingent or otherwise, as such debts and liabilities become
absolute and matured; and (d) the Borrower and its Subsidiaries on a
consolidated basis will not have unreasonably small capital with which to
conduct the businesses in which they are engaged as such businesses are now
conducted and are proposed to be conducted after the date hereof.

 

(ii)           The Borrower does not intend to, or to permit any of its
Subsidiaries to, and does not believe that it or any of its Subsidiaries will,
incur debts beyond its ability to pay such debts as they mature, taking into
account the timing of and amounts of cash to be received by it or any such
Subsidiary and the timing of the amounts of cash to be payable on or in respect
of its Indebtedness or the Indebtedness of any such Subsidiary.

 

Section 5.21.        Closing Documents.  Borrower has provided to Administrative
Agent a true, correct and complete copy of each Closing Document requested by
the Administrative Agent, including all amendments and modifications thereto
(whether characterized as an amendment, modification, waiver, consent or similar
document).  No material rights or obligations of any party to any of the Closing
Documents have been waived and no party to any of the Closing Documents is in
default of its obligations or in breach of any representations or warranties
made thereunder.  Each of the Closing Documents is a valid, binding and
enforceable obligation of each party thereto in accordance with its terms, and
is in full force and effect.

 

ARTICLE VI

 

AFFIRMATIVE COVENANTS

 

During the term of this Agreement, unless the Required Lenders shall otherwise
consent in writing:

 

Section 6.1.           Financial Report.  The Borrower will maintain, for itself
and each Subsidiary, a system of accounting established and administered in
accordance with generally accepted accounting principles, and furnish to the
Lenders:

 

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(i)            Within 95 days after the close of each of its Fiscal Years or
within 5 days after such earlier day as such financial statements are required
to be filed with the SEC as part of an annual report on Form 10-K or any
successor form, an unqualified audit report certified by KPMG LLP or other
independent certified public accountants acceptable to the Lenders, prepared in
accordance with Agreement Accounting Principles on a consolidated basis for
itself and its Subsidiaries, including balance sheets as of the end of such
period and statements of operations, stockholders equity and cash flows,
accompanied by any management letter prepared by said accountants.

 

(ii)           Within 50 days after the close of the first three quarterly
periods of each of its Fiscal Years, or within 5 days after such earlier day as
such financial statements are required to be filed with the SEC as part of a
quarterly report on Form 10Q or any successor form, for itself and its
Subsidiaries, consolidated unaudited balance sheets as at the close of each such
period and statements of operations, stockholders equity and cash flows for the
period from the beginning of such Fiscal Year to the end of such quarter, all
certified by its chief financial officer.

 

(iii)          Together with the financial statements required under
Section 6.1(i) and Section 6.1(ii), copies of all certifications made by
officers of Borrower to the SEC in connection with such financial statements and
a compliance certificate in substantially the form of Exhibit B signed by its
chief financial officer showing the calculations necessary to determine
compliance with this Agreement and stating that no Default or Unmatured Default
exists, or if any Default or Unmatured Default exists, stating the nature and
status thereof.

 

(iv)          Within 270 days after the close of each Fiscal Year, a statement
of the Unfunded Liabilities of each Single Employer Plan, if any, certified as
correct by an actuary enrolled under ERISA.

 

(v)           As soon as possible and in any event within 10 days after the
Borrower knows that any Reportable Event has occurred with respect to any Plan,
a statement, signed by the chief financial officer of the Borrower, describing
said Reportable Event and the action which the Borrower proposes to take with
respect thereto.

 

(vi)          As soon as possible and in any event within 10 days after receipt
by the Borrower, a copy of (a) any notice or claim to the effect that the
Borrower or any of its Subsidiaries is or may be liable to any Person as a
result of the release by the Borrower, any of its Subsidiaries, or any other
Person of any toxic or hazardous waste or substance into the environment, and
(b) any notice alleging any violation of any federal, state or local
environmental, health or safety law or regulation by the Borrower or any of its
Subsidiaries, which, in either case, could reasonably be expected to have a
Material Adverse Effect.

 

(vii)         Promptly upon the furnishing thereof to the stockholders of the
Borrower, copies of all financial statements, reports and proxy statements so
furnished.

 

(viii)        Promptly upon the filing thereof, copies of all registration
statements and annual, quarterly, monthly or other regular reports which the
Borrower or any of its Subsidiaries files with the Securities and Exchange
Commission.

 

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(ix)           By March 31 of each year, an Engineering Report prepared as of
the preceding January 1, by petroleum engineers who are employees of Borrower
and audited by Ryder Scott Company, or other independent petroleum engineers
chosen by Borrower and acceptable to Required Lenders, concerning all oil and
gas properties and interests owned by any Borrower and its Subsidiaries which
are located in or offshore of the United States and which have attributable to
them proved oil or gas reserves.  This reserve audit described above shall
encompass a review of the reserves associated with oil and gas properties
comprising at least 80% of the value stated in the report.  The Engineering
Report shall be satisfactory to Administrative Agent, shall contain sufficient
information to enable Borrower to meet the reporting requirements concerning oil
and gas reserves contained in Regulations S-K and S-X promulgated by the SEC,
shall take into account any “over/under produced” status under gas balancing
arrangements, and shall contain information and analysis comparable in scope to
that contained in the Initial Engineering Report.  This report shall distinguish
(or shall be delivered together with a certificate from an appropriate officer
of Borrower which distinguishes) those properties treated in the report which
are Collateral from those properties treated in the report which are not
Collateral.

 

(x)            By September 30 of each year, and promptly following notice of an
additional Borrowing Base redetermination under Section 2.6.3, an Engineering
Report prepared as of the preceding June 30 (or the first day of the preceding
calendar month in the case of an additional redetermination) by petroleum
engineers who are employees of Borrower (or by the independent engineers named
above), together with an accompanying report on property sales, property
purchases and changes in categories, both in the same form and scope as the
reports in (x) above.

 

(xi)           By March 31 and September 30 of each year, beginning
September 30, 2005, a report describing the gross volume of production and sales
attributable to production during the preceding six-month period from the
properties described in the Engineering Report in Section 6.1(ix) or
Section 6.1(x) and describing the related severance taxes, other taxes, and
leasehold operating expenses attributable thereto and incurred during such
month.

 

(xii)          Promptly after such delivery or receipt, copies of any financial
or other report or notice delivered to, or received from, any holder of Senior
Notes, Permitted Bond Indebtedness (or the notes evidencing same) or
Indebtedness in respect of any 9.60% Senior Notes Refinancing (or the notes
evidencing same), which report or notice has not been delivered to the Lenders
hereunder.

 

(xiii)         Such other information (including non-financial information) as
the Administrative Agent or any Lender may from time to time reasonably request.

 

Section 6.2.           Use of Proceeds.  The Borrower will, and will cause each
Subsidiary to, use the proceeds of the Credit Extensions solely (a) to partially
finance the Mergers, (b) to refinance and replace Existing MHR Indebtedness,
(c) to refinance Existing Cimarex Indebtedness, (d) to refinance other
Indebtedness to the extent permitted hereunder, (e) to fund amounts requested to
be paid in connection with any change in control offer under the Indentures

 

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or in connection with any conversion of the Convertible Senior Notes under the
Convertible Senior Notes Indenture, to the extent permitted hereunder, (f) for
the exploration, development and/or acquisition of oil and gas properties, and
(g) for working capital and other general corporate purposes.  The Borrower will
not, nor will it permit any Subsidiary to, use any of the proceeds of the
Advances to purchase or carry any “margin stock” (as defined in Regulation U).

 

Section 6.3.           Notice of Default.  The Borrower will, and will cause
each Subsidiary to, give prompt notice in writing to the Lenders of the
occurrence of any Default or Unmatured Default and of any other development,
financial or otherwise, which could reasonably be expected to have a Material
Adverse Effect.

 

Section 6.4.           Conduct of Business.  The Borrower will, and will cause
each Subsidiary to, carry on and conduct its business in substantially the same
manner and in substantially the same fields of enterprise as it is presently
conducted and do all things necessary to remain duly incorporated or organized,
validly existing and (to the extent such concept applies to such entity) in good
standing as a domestic corporation, partnership or limited liability company in
its jurisdiction of incorporation or organization, as the case may be, and
maintain all requisite authority to conduct its business in each jurisdiction in
which its business is conducted, except where the failure to do so would not
have a material adverse effect on the Borrower’s or any Subsidiary’s ability to
conduct its business.

 

Section 6.5.           Taxes.  The Borrower will, and will cause each Subsidiary
to, timely file complete and correct United States federal and applicable
foreign, state and local tax returns required by law and pay when due all taxes,
assessments and governmental charges and levies upon it or its income, profits
or Property, except those which are being contested in good faith by appropriate
proceedings and with respect to which adequate reserves have been set aside in
accordance with Agreement Accounting Principles.

 

Section 6.6.           Insurance.  The Borrower will furnish to any Lender upon
request full information as to the insurance carried by the Borrower and its
Subsidiaries.  Upon demand by Administrative Agent, any insurance policies
covering Collateral shall be endorsed (a) to provide for payment of losses to
Administrative Agent as its interests may appear, (b) during any Fifty Percent
Utilization Period, to provide that such policies may not be canceled or reduced
or affected in any material manner for any reason without fifteen days prior
notice to Administrative Agent, and (c) to provide for any other matters
specified in any applicable Collateral Document or which Administrative Agent
may reasonably require; provided that the Borrower shall self insure against
fire, casualty, and other hazards normally insured against.  Notwithstanding
anything contained in this Section 6.6 or any Collateral Document to the
contrary, Borrower may self insure against all liabilities, risks and hazards to
the extent Borrower deems same to be sound business practice.

 

Section 6.7.           Compliance With Laws.  The Borrower will, and will cause
each Subsidiary to, comply with all laws, rules, regulations, orders, writs,
judgments, injunctions, decrees or awards to which it may be subject including,
without limitation, all Environmental Laws in all material respects.

 

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Section 6.8.           Maintenance of Properties.  The Borrower will, and will
cause each Subsidiary to, do all things necessary to maintain, preserve, protect
and keep its Property in good repair, working order and condition, and make all
necessary and proper repairs, renewals and replacements so that its business
carried on in connection therewith may be properly conducted at all times.

 

Section 6.9.           Inspection.  The Borrower will, and will cause each
Subsidiary to, permit the Administrative Agent and the Lenders, by their
respective representatives and agents, to inspect any of the Property, books and
financial records of the Borrower and each Subsidiary, to examine and make
copies of the books of accounts and other financial records of the Borrower and
each Subsidiary, and to discuss the affairs, finances and accounts of the
Borrower and each Subsidiary with, and to be advised as to the same by, their
respective officers at such reasonable times and intervals as the Administrative
Agent or any Lender may designate.

 

Section 6.10.        Permitted Bond Documents; 9.60% Senior Notes Refinancing
Documents.  The Borrower will, and will cause each Subsidiary to, (a) no later
than five (5) Business Days prior to the consummation or effectiveness of the
issuance of any Permitted Bond Indebtedness or 9.60% Senior Notes Refinancing,
provide to the Administrative Agent copies of substantially final drafts of each
Permitted Bond Document and 9.60% Senior Notes Refinancing Document, as
applicable, and (b) promptly upon the effectiveness or issuance of any Permitted
Bond Indebtedness or 9.60% Senior Notes Refinancing, provide to the
Administrative Agent a true, correct and complete copy of each Permitted Bond
Document and 9.60% Senior Notes Refinancing Document, as applicable.

 

ARTICLE VII

 

NEGATIVE COVENANTS

 

Section 7.1.           Restricted Payments.  The Borrower will not, nor will it
permit any Subsidiary to, directly or indirectly, declare or make any Restricted
Payment during any Fifty Percent Utilization Period; provided, that (a) during
any Fifty Percent Utilization Period any Subsidiary may declare and pay
Dividends or make other Restricted Payments to the Borrower or to a Wholly-Owned
Subsidiary, and any Subsidiary may declare and make distributions to the owners
of its Equity on a pro rata basis, and (b) during any Fifty Percent Utilization
Period, the Borrower and its Subsidiaries may declare or make Restricted
Payments so long as (i) no Default, Unmatured Default or Deficiency (as defined
in Section 2.8(b)) exists or would exist after giving effect thereto, and
(ii) all Restricted Payments (other than Restricted Payments made in accordance
with clause (a) above) made by Borrower and its Subsidiaries at any time during
the period from the beginning of the first Fifty Percent Utilization Period to
occur after the Closing Date until the Facility Termination Date (in this
Section called the “Calculation Period“) do not exceed $150,000,000 during the
Calculation Period and do not exceed $35,000,000 during any Fiscal Year which
occurs during the Calculation Period.

 

Section 7.2.           Indebtedness.  The Borrower will not, nor will it permit
any Subsidiary to, create, incur or suffer to exist any Indebtedness, except:

 

(i)            The Loans and the Reimbursement Obligations.

 

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(ii)           Indebtedness existing on the date hereof and described in the
Disclosure Schedule.

 

(iii)          Indebtedness arising under Rate Management Transactions permitted
by Section 7.11.

 

(iv)          Contingent Obligations permitted by Section 7.10.

 

(v)           Non-recourse Indebtedness as to which none of Borrower or its
Subsidiaries (i) provides any guaranty or credit support of any kind (including
any undertaking, guarantee, indemnity, agreement or instrument that would
constitute Indebtedness) or (ii) is directly or indirectly liable (as a
guarantor or otherwise); provided, that after giving effect to such Indebtedness
outstanding from time to time, Borrower is not in violation of Article VIII.

 

(vi)          Indebtedness of Borrower in respect of guarantee obligations of
Cimarex Energy Services, Inc., an Oklahoma corporation, which do not in the
aggregate exceed $75,000,000 at any one time outstanding.

 

(vii)         Indebtedness evidenced by the Senior Notes, and guarantee
obligations of Subsidiaries in respect thereof; provided, that, such guarantee
obligations exist as of the date hereof, are required by the terms of the
Indentures,  or are otherwise on terms and conditions satisfactory to the
Administrative Agent in its sole reasonable discretion.

 

(viii)        Permitted Bond Indebtedness, and guarantee obligations of
Subsidiaries of the Borrower in respect thereof, provided, that, such guarantee
obligations are on terms and conditions satisfactory to the Administrative
Agent, in its sole reasonable discretion.

 

(ix)           Indebtedness in respect of any 9.60% Senior Notes Refinancing,
and guarantee obligations of Subsidiaries of the Borrower in respect thereof,
provided, that, such guarantee obligations are on terms and conditions
satisfactory to the Administrative Agent, in its sole reasonable discretion.

 

(x)            Financial Contracts permitted under Section 7.11.

 

(xi)           Miscellaneous items of Indebtedness not described in subsections
(i) through (x) above which do not in the aggregate (taking into account all
such Indebtedness of Borrower and its Subsidiaries) exceed $25,000,000 at any
one time outstanding.

 

Section 7.3.           Merger.  The Borrower will not, nor will it permit any
Subsidiary to, merge or consolidate with or into any other Person, except that a
Subsidiary may merge into the Borrower or a Wholly-Owned Subsidiary.

 

Section 7.4.           Sale of Assets.  The Borrower will not, nor will it
permit any Subsidiary to, lease, sell or otherwise dispose of its Property to
any other Person (other than to Borrower or any Guarantor), except:

 

(i)            Sales of inventory in the ordinary course of business.

 

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(ii)           Disposition of equipment and other personal property that is
replaced by equivalent property or consumed in the normal operation of its
Property.

 

(iii)          Dispositions of a portion of its Property in connection with
operating agreements, farmouts, farmins, joint exploration and development
agreements and other agreements customary in the oil and gas industry that are
entered into for the purposes of developing its Property and under which it
receives relatively equivalent consideration; provided that such portion of such
property is not included in a drilling or spacing unit for an oil and/or gas
well included in Engineered Value that is subject to a Lien in favor of
Administrative Agent.

 

(iv)          Leases, sales or other dispositions of its Property that, together
with all other Property of the Borrower and its Subsidiaries previously leased,
sold or disposed of (other than (i), (ii) and (iii) above) as permitted by this
Section during (A) the period commencing on the Closing Date and ending on
December 31, 2006, do not constitute more than $150,000,000 in the aggregate;
and (B) any Fiscal Year thereafter, commencing with the Fiscal Year ending
December 31, 2007, do not constitute more than 10% of the Engineered Value of
the Borrowing Base Properties as determined by Administrative Agent in its sole
discretion.

 

(v)           interests in oil and gas properties, portions thereof, to which no
proved reserves of oil, gas or other liquid or gaseous hydrocarbons are properly
attributed.

 

Upon any lease, sale or other disposition of Property permitted pursuant to this
Section 7.4, Administrative Agent will, upon the Borrower’s written request and
at the Borrower’s sole expense, promptly (A) release its Lien in such Property,
and (B) execute and deliver to the Borrower or the applicable Subsidiary of the
Borrower, as applicable, such documents as shall be necessary or appropriate to
effect the release of such Lien.

 

Section 7.5.           Investments.  The Borrower will not, nor will it permit
any Subsidiary to, make or suffer to exist any Investments (including without
limitation, loans and advances to, and other Investments in, Subsidiaries), or
commitments therefor, or to create any Subsidiary or to become or remain a
partner in any partnership or joint venture, or to make any Acquisition of any
Person, except:

 

(i)            Cash Equivalent Investments.

 

(ii)           Investments in Borrower’s Subsidiaries which are Guarantors and
with respect to which 100% of its Equity has been pledged to Administrative
Agent.

 

(iii)          Investments in existence on the date hereof and described on the
Disclosure Schedule.

 

(iv)          Investments in associations, joint ventures, and other
relationships (a) that are established pursuant to standard form operating
agreements or similar agreements or which are partnerships for purposes of
federal income taxation only, (b) that are not corporations or partnerships (or
subject to the Uniform Partnership Act or other applicable state partnership
act) under applicable state law, or (c) whose businesses are limited to the

 

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exploration, development and operation of oil, gas or mineral properties and
interests owned directly by the parties in such associations, joint ventures or
relationships in which the ownership interest of Borrower or its Subsidiary is
in direct proportion to the amount of such Investment.

 

(v)           Investments in Subsidiaries of Borrower that are not Material
Subsidiaries which do not exceed $10,000,000 in the aggregate during any Fiscal
Year.

 

(vi)          Miscellaneous items of Investments not described in clauses (i)
through (v) above which do not (taking into account all such Investments of
Borrower and its Subsidiaries) exceed an aggregate amount of $10,000,000 during
any Fiscal Year.

 

Section 7.6.           Liens.  The Borrower will not, nor will it permit any
Subsidiary to, create, incur, or suffer to exist any Lien in, of, or on the
Property of the Borrower or any of its Subsidiaries, except:

 

(i)            Liens for taxes, assessments or governmental charges or levies on
its Property if the same shall not at the time be delinquent or thereafter can
be paid without penalty, or are being contested in good faith and by appropriate
proceedings and for which adequate reserves in accordance with Agreement
Accounting Principles shall have been set aside on its books.

 

(ii)           Liens imposed by law, such as carriers’, warehousemen’s and
mechanics’ liens and other similar liens arising in the ordinary course of
business which secure payment of obligations not more than 60 days past due or
which are being contested in good faith by appropriate proceedings and for which
adequate reserves shall have been set aside on its books.

 

(iii)          Liens arising out of pledges or deposits under worker’s
compensation laws, unemployment insurance, old age pensions, or other social
security or retirement benefits, or similar legislation.

 

(iv)          Utility easements, building restrictions and such other
encumbrances or charges against real property as are of a nature generally
existing with respect to properties of a similar character and which do not in
any material way affect the marketability of the same or interfere with the use
thereof in the business of the Borrower or its Subsidiaries.

 

(v)           Liens existing on the date hereof and described on the Disclosure
Schedule.

 

(vi)          Liens in favor of the Administrative Agent, for the benefit of the
Lenders, granted pursuant to any Collateral Document.

 

(vii)         Liens on Property other than Collateral to secure Indebtedness
permitted by Section 7.2(v).

 

(viii)        With respect to Property subject to any Collateral Document, Liens
burdening such Property that are expressly allowed by such Collateral Document.

 

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(ix)           Liens arising under operating agreements, unitization, pooling
agreements and other agreements customary in the oil and gas industry securing
amounts owed to operators and joint owners of oil and gas properties that shall
not at the time be delinquent, or thereafter can be paid without penalty, or are
being contested in good faith and by appropriate proceedings and for which
adequate reserves in accordance with Agreement Accounting Principles shall have
been set aside on its books.

 

(x)            Liens on cash or Cash Equivalent Investments securing Financial
Contracts to the extent permitted under Section 7.11(a)(iii).

 

(xi)           Contracts, agreements, instruments, obligations, defects and
irregularities affecting the Property that individually or in the aggregate are
not such as to interfere materially with the use, operation or value of the
Property.

 

Section 7.7.           Affiliates.  The Borrower will not, and will not permit
any Subsidiary to, enter into any transaction (including, without limitation,
the purchase or sale of any Property or service) with, or make any payment or
transfer to, any Affiliate except in the ordinary course of business and
pursuant to the reasonable requirements of the Borrower’s or such Subsidiary’s
business and upon fair and reasonable terms no less favorable to the Borrower or
such Subsidiary than the Borrower or such Subsidiary would obtain in a
comparable arms-length transaction.  Notwithstanding the foregoing, no
transaction, payment or transfer between, among or to any of the Borrower and
any one or more of the Guarantors, or between, among or to any of the
Guarantors, shall be subject to the restrictions of this Section 7.7.

 

Section 7.8.           Sale of Accounts.  The Borrower will not, nor will it
permit any Subsidiary to, sell or otherwise dispose of any notes receivable or
accounts receivable, with or without recourse in excess of $500,000 in the
aggregate during any Fiscal Year.

 

Section 7.9.           Sale and Leaseback Transactions and other Off-Balance
Sheet Liabilities.  The Borrower will not, nor will it permit any Subsidiary to,
enter into or suffer to exist any (a) Sale and Leaseback Transaction or
(b) other transaction pursuant to which it incurs or has incurred Off-Balance
Sheet Liabilities, except for (i) the transaction described in the Disclosure
Schedule, and (ii) Rate Management Obligations permitted to be incurred under
the terms of Section 7.11.

 

Section 7.10.        Contingent Obligations.  The Borrower will not, nor will it
permit any Subsidiary to, make or suffer to exist any Contingent Obligation
(including, without limitation, any Contingent Obligation with respect to the
obligations of a Subsidiary), except (i) by endorsement of instruments for
deposit or collection in the ordinary course of business, (ii) the Reimbursement
Obligations, (iii) the Guaranty, (iv) guarantees to the extent permitted under
clauses (vii), (viii) and (ix) of Section 7.2, and (v) other Contingent
Obligations not to exceed an outstanding aggregate amount of $25,000,000 at any
time.

 

Section 7.11.        Financial Contracts.  None of Borrower or its Subsidiaries
will be a party to or in any manner be liable on any Financial Contract except:

 

(a)           contracts entered into with the purpose and effect of fixing
prices on oil or gas expected to be produced by Borrower and its Subsidiaries,
provided that at all

 

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times: (i) no such contract fixes a price for a term of more than 36 months,
(ii) the aggregate monthly production covered by all such contracts (determined,
in the case of contracts that are not settled on a monthly basis, by a monthly
proration acceptable to Administrative Agent) for any single month does not in
the aggregate exceed 75% of the aggregate Engineered Projected Production (as
defined below) of Borrower and its Subsidiaries anticipated to be sold in the
ordinary course of their businesses for such month, (iii) no such contract
requires Borrower or any of its Subsidiaries to put up money, assets, letters of
credit or other security against the event of its nonperformance prior to actual
default by such Borrower or any of its Subsidiaries in performing its
obligations thereunder (other than customary provisions to post cash margin,
U.S. Government securities or letters of credit), and (iv) each such contract is
with a counterparty or has a guarantor of the obligation of the counterparty who
(unless such counterparty is a Lender or one of its Affiliates) either (A) is
listed and identified on the Disclosure Schedule, or (B) at the time the
contract is made has long-term obligations rated BBB+ or Baa1 or better,
respectively, by either Moody’s or S&P.  As used in this subsection, the term
“Engineered Projected Production“ means the Engineered Value of projected
production of oil or gas (measured by volume unit or BTU equivalent, not sales
price) for the term of the contracts or a particular month, as applicable, from
properties and interests owned by Borrower and its Subsidiaries that are located
in or offshore of the United States and are PDP Reserves, as such production is
projected in the most recent report delivered pursuant to Section 6.1(ix) or
Section 6.1(x), after deducting projected production from any properties or
interests sold or under contract for sale that had been included in such report
and after adding projected production from any properties or interests that had
not been reflected in such report but that are reflected in a separate or
supplemental reports meeting the requirements of such Section 6.1(ix) or
Section 6.1(x) above and otherwise are satisfactory to Administrative Agent;

 

(b)           contracts entered into by Borrower or its Subsidiaries with the
purpose and effect of fixing or exchanging (from one floating rate to another
floating rate, from one fixed rate to another fixed rate, from a fixed rate to
variable rate, from a variable rate to fixed rate or otherwise) interest rates
on a principal amount of indebtedness of such Borrower or its Subsidiaries,
provided that no such contract shall be entered into by Borrower or any of its
Subsidiaries for speculative purposes; and

 

(c)           the Financial Contracts identified on Schedule 4 attached hereto.

 

Section 7.12.        Letters of Credit.  The Borrower will not, nor will it
permit any Subsidiary to, apply for or become liable upon or in respect of any
Letter of Credit other than Facility LCs.

 

Section 7.13.        Prohibited Contracts.  Except as expressly provided for in
the Loan Documents, none of Borrower or its Subsidiaries will, directly or
indirectly, enter into, create, or otherwise allow to exist any contract or
other consensual restriction on the ability of any Subsidiary of Borrower:
(a) to pay dividends or make other distributions to Borrower, (b) to redeem
equity interests held in it by Borrower, (c) to repay loans and other
indebtedness owing by it to Borrower, or (d) to transfer any of its assets to
Borrower, except restrictions arising under farmout agreements and similar
agreements relating to the development of oil and gas properties with respect to
preferential rights to purchase oil and gas properties, required third party
consents to assignments of contracts relating to oil and gas properties, and
similar agreements of general

 

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applicability contained in operating agreements, farmouts, farmins, joint
exploration and development agreements and other agreements customary in the oil
and gas industry.  None of Borrower or its Subsidiaries will enter into any
“take-or-pay” contract or other contract or arrangement for the purchase of
goods or services which obligates it to pay for such goods or service regardless
of whether they are delivered or furnished to it.  None of Borrower or its
Subsidiaries will amend or permit any amendment to any contract or lease which
releases, qualifies, limits, makes contingent or otherwise detrimentally affects
the rights and benefits of Administrative Agent or any Lender under or acquired
pursuant to any Collateral Documents.  None of Borrower or its Subsidiaries will
incur any obligation to contribute to any “Multiemployer Plan”.

 

Section 7.14.        Senior Note Documents; Permitted Bond Documents;
9.60% Senior Notes Refinancing Documents.  The Borrower will not, nor will it
permit any Subsidiary to:

 

(a)           amend, modify or waive any covenant contained in any of the Senior
Note Documents, Permitted Bond Documents, or 9.60% Senior Notes Refinancing
Documents if the effect of such amendment, modification or waiver would be to
make the terms of any such Senior Note Document, Permitted Bond Document, or
9.60% Senior Notes Refinancing Document more onerous to the Borrower or any of
its Subsidiaries;

 

(b)           amend, modify or waive any provision of the Senior Note Documents,
Permitted Bond Documents, or 9.60% Senior Notes Refinancing Documents if the
effect of such amendment, modification or waiver (i) subjects the Borrower or
any of its Subsidiaries to any additional material obligation, (ii) increases
the principal of or rate of interest on any Senior Note or any note evidencing
any Permitted Bond Indebtedness, or any note evidencing Indebtedness in respect
of a 9.60% Senior Notes Refinancing, (iii) accelerates the date fixed for any
payment of principal or interest on any Senior Note or any note evidencing any
Permitted Bond Indebtedness, or any note evidencing Indebtedness in respect of a
9.60% Senior Notes Refinancing, or (iv) would change the percentage of holders
of such Senior Notes, notes evidencing any Permitted Bond Indebtedness, or notes
evidencing Indebtedness in respect of any 9.60% Senior Notes Refinancing
required for any such amendment, modification or waiver from the percentage
required on the Closing Date or, with respect to any notes evidencing any
Permitted Bond Indebtedness or 9.60% Senior Notes Refinancing, from the
percentage required on the date of issuance of any such notes or 9.60% Senior
Notes Refinancing; or

 

(c)           make any payment of principal of, make any voluntary prepayment
of, or optionally redeem, or make any payment in defeasance of, any part of the
Senior Notes, any Permitted Bond Indebtedness or any Indebtedness in respect of
any 9.60% Senior Notes Refinancing; provided, that, so long as no Default or
Deficiency exists on the date of any such payment or redemption, and no Default
or Deficiency would result therefrom, the Borrower and/or its Subsidiaries may
prepay or redeem all or any portion of (i) the 9.60% Senior Notes pursuant to a
9.60% Senior Notes Refinancing or otherwise, (ii) the Senior Notes pursuant to a
change in control offer under the Indentures, or (iii) the Convertible Senior
Notes pursuant to, and in accordance with, Section 3.08 or Article 10 of the
Convertible Senior Notes Indenture.

 

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ARTICLE VIII

 

FINANCIAL COVENANTS

 

Section 8.1.           Current Ratio.  The Borrower will not permit the ratio,
determined as of the end of each of its fiscal quarters, of (i) Borrower’s
consolidated current assets plus the Available Aggregate Commitment to
(ii) Borrower’s consolidated current liabilities, to be less than 1.0 to 1.0.

 

Section 8.2.           Leverage Ratio.  The Borrower will not permit the ratio,
determined as of the end of each of its fiscal quarters, commencing with its
fiscal quarter ending September 30, 2005, of (i) Consolidated Funded
Indebtedness for the fiscal quarter ending on such date to (ii) Consolidated
EBITDA for each Rolling Period ending on such date, or Annualized Consolidated
EBITDA for such Rolling Period in the case of a Rolling Period ending on or
prior to March 31, 2006, to be greater than 3.0 to 1.0.

 

ARTICLE IX

 

COLLATERAL AND GUARANTEES

 

Section 9.1.           Collateral.  Except as otherwise provided below in this
paragraph or in Section 9.1.4, at all times the Secured Obligations shall be
secured by first and prior Liens (subject only to Permitted Encumbrances)
covering and encumbering (x) the Minimum Collateral Amount, and (y) all of the
issued and outstanding Equity of each Guarantor owned by Borrower and/or owned
by each Subsidiary of Borrower.  As soon as practicable, but in any event within
sixty (60) days after the date hereof, the Borrower and its Subsidiaries shall
deliver to Administrative Agent for the ratable benefit of each Lender, the
Amendments to Existing Cimarex Mortgages and the Mortgages, each in form and
substance acceptable to Administrative Agent and duly executed by Borrower and
its Subsidiaries, as applicable, together with (a) such other assignments,
conveyances, amendments, agreements and other writings (each duly authorized and
executed) as Administrative Agent shall deem necessary or appropriate to grant,
evidence and perfect first and prior Liens (subject only to Permitted
Encumbrances) in the Minimum Collateral Amount, and (b) such opinions of counsel
as the Administrative Agent shall deem necessary or appropriate with respect to
the form, sufficiency and other matters regarding such Amendments to Existing
Cimarex Mortgages and such Mortgages as the Administrative Agent shall
reasonably request.

 

9.1.1.       To the extent necessary to comply with the first sentence of
Section 9.1, (i) within 30 days after the beginning of each Fifty Percent
Utilization Period and within 30 days after each Determination Date that occurs
during (or otherwise results in the beginning of) a Fifty Percent Utilization
Period and/or (ii) prior to each increase in the Aggregate Commitment, Borrower
and its Subsidiaries shall execute and deliver to Administrative Agent, for the
ratable benefit of each Lender, Mortgages in form and substance acceptable to
Administrative Agent and duly executed by Borrower and any such Subsidiary (as
applicable) together with (a) such other assignments, conveyances, amendments,
agreements and other writings (each duly authorized and executed) as
Administrative Agent shall deem necessary or appropriate to grant, evidence and
perfect the Liens required by this Section 9.1, and (b) such

 

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opinions of counsel as the Administrative Agent shall deem necessary or
appropriate with respect to the form, sufficiency and other matters regarding
such Mortgages as the Administrative Agent shall reasonably request.

 

9.1.2.       Within 90 days after the date hereof and at any time thereafter
that Borrower or any of its Subsidiaries is required to execute and deliver
Mortgages to Administrative Agent pursuant to Section 9.1.1, Borrower shall also
deliver to Administrative Agent, within 90 days of the date hereof or within 20
days after delivery of such Mortgages to Administrative Agent, as applicable,
evidence of title reasonably satisfactory to Administrative Agent to verify
(i) Borrower’s or such Subsidiary’s title to 75% of the Minimum Collateral
Amount subject to such Mortgages, and (ii) the validity of the Liens created by
such Mortgages.  With respect to Borrower’s and such Subsidiary’s title to such
Property, such evidence may include check stubs, revenue receipts or other
evidence that Borrower or such Subsidiary has been receiving proceeds of
production for a reasonable length of time without interruption or challenge, as
well as joint interest billings or other evidence of the costs and expenses of
operations paid by Borrower or such Subsidiary.  With respect to the validity of
the Liens created by such Mortgages, such evidence may include opinions from
local counsel in each state in which the Property subject to the Lien is
located, that the form of Mortgage is sufficient in such state to create a Lien
on Borrower’s or such Subsidiary’s interest therein, the validity thereof and,
that when the Mortgage is properly filed and recorded, such Liens will be
perfected on Borrower’s and such Subsidiary’s interests in such Property.

 

9.1.3.       On the date hereof and at the time any Subsidiary of Borrower
becomes a Material Subsidiary and prior to any Investments being permitted to be
made in any Material Subsidiary pursuant to the terms of Section 7.5(ii),
Borrower and any Subsidiaries of Borrower (as applicable) shall execute and
deliver to Administrative Agent for the ratable benefit of each Lender, a pledge
agreement substantially in the form of Exhibit G-1, Exhibit G-2 or Exhibit G-3,
as applicable, from Borrower and/or its Subsidiaries (as applicable) covering
the Equity in all Material Subsidiaries, together with all certificates (or
other evidence acceptable to Administrative Agent) evidencing the issued and
outstanding Equity of each such Material Subsidiary of every class owned by
Borrower or such Subsidiary (as applicable) which, if certificated, shall be
duly endorsed or accompanied by stock powers executed in blank (as applicable),
as Administrative Agent shall deem necessary or appropriate to grant, evidence
and perfect the Liens required by Section 9.1 in the issued and outstanding
Equity of each such Material Subsidiary.

 

9.1.4.       Notwithstanding anything contained in this Section 9.1 to the
contrary, from and after the date the Borrower complies with the provisions
contained in the second sentence of the first paragraph of this Section 9.1 (the
“Post-Closing Effective Date“), Borrower shall have no obligation to provide
Mortgages in addition to those Mortgages provided on or prior to the
Post-Closing Effective Date, except as, and only to the extent, provided in
Section 9.1.1

 

Section 9.2.           Guarantees.  On the date hereof and at any time a
Subsidiary of Borrower becomes a Material Subsidiary and prior to any
Investments being permitted to be made in any Material Subsidiary pursuant to
the terms of Section 7.5(ii), payment and performance of the Secured Obligations
shall be fully guaranteed by each Material Subsidiary

 

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pursuant to a Guaranty substantially in the form of Exhibit E, and Borrower
shall cause any such applicable Material Subsidiary to execute and deliver to
Administrative Agent such Guaranty.  Prior to any Investments being permitted to
be made in any other Subsidiary of Borrower in excess of the amount permitted by
Section 7.5(v), such Subsidiary shall also execute and deliver such a Guaranty
in the form of Exhibit E to Administrative Agent for the ratable benefit of each
Lender, together with such other documents as Administrative Agent shall deem
necessary or appropriate to confirm such Guaranty.

 

Section 9.3.           Further Assurances.  Borrower agrees to deliver and to
cause each of its Subsidiaries to deliver, to further secure the Secured
Obligations whenever requested by Administrative Agent in its sole and absolute
discretion, deeds of trust, mortgages, chattel mortgages, security agreements,
financing statements and other Collateral Documents in form and substance
satisfactory to Administrative Agent for the purpose of granting, confirming,
and perfecting first and prior liens or security interests in any real or
personal property which is at such time Collateral or which was intended to be
Collateral pursuant to any Collateral Document previously executed and not then
released by Administrative Agent.

 

Section 9.4.           Production Proceeds.  Notwithstanding that, by the terms
of the various Collateral Documents, Borrower and its Subsidiaries are and will
be assigning to Administrative Agent and Lenders all of the “Production
Proceeds” (as defined therein) accruing to the property covered thereby, so long
as no Unmatured Default has occurred Borrower and its Subsidiaries may continue
to receive from the purchasers of production all such Production Proceeds,
subject, however, to the Liens created under the Collateral Documents, which
Liens are hereby affirmed and ratified.  Upon the occurrence of an Unmatured
Default, Administrative Agent and Lenders may exercise all rights and remedies
granted under the Collateral Documents, including the right to obtain possession
of all Production Proceeds then held by Borrower and its Subsidiaries or to
receive directly from the purchasers of production all other Production
Proceeds.  In no case shall any failure, whether purposed or inadvertent, by
Administrative Agent or Lenders to collect directly any such Production Proceeds
constitute in any way a waiver, remission or release of any of their rights
under the Collateral Documents, nor shall any release of any Production Proceeds
by Administrative Agent or Lenders to Borrower and its Subsidiaries constitute a
waiver, remission, or release of any other Production Proceeds or of any rights
of Administrative Agent or Lenders to collect other Production Proceeds
thereafter.

 

ARTICLE X

 

DEFAULTS

 

The occurrence of any one or more of the following events shall constitute a
Default:

 

Section 10.1.        Any representation or warranty made or deemed made by or on
behalf of the Borrower or any of its Subsidiaries to the Lenders or the
Administrative Agent under or in connection with this Agreement, any Credit
Extension, or any certificate or information delivered in connection with this
Agreement or any other Loan Document shall be materially false on the date as of
which made.

 

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Section 10.2.        Nonpayment of principal of any Loan when due, nonpayment of
any amount due under Section 2.8(b)(i) when due, nonpayment of any Reimbursement
Obligation within one Business Day after the same becomes due, or nonpayment of
interest upon any Loan or of any commitment fee, LC Fee or other obligations
under any of the Loan Documents within five days after the same becomes due.

 

Section 10.3.        The breach by the Borrower of any of the terms or
provisions of Section 6.2, Section 6.3, Article VII, Article VIII or Article IX.

 

Section 10.4.        The breach by the Borrower (other than a breach which
constitutes a Default under another Section of this Article X) of any of the
terms or provisions of this Agreement which is not remedied within ten days
after written notice from the Administrative Agent or any Lender.

 

Section 10.5.        Failure of the Borrower or any of its Subsidiaries to pay
when due any Material Indebtedness; or the default by the Borrower or any of its
Subsidiaries in the performance (beyond the applicable grace period with respect
thereto, if any) of any term, provision or condition contained in any Material
Indebtedness Agreement, or any other event shall occur or condition exist, the
effect of which default, event or condition is to cause, or to permit the
holder(s) of such Material Indebtedness or the lender(s) under any Material
Indebtedness Agreement to cause, such Material Indebtedness to become due prior
to its stated maturity or any commitment to lend under any Material Indebtedness
Agreement to be terminated prior to its stated expiration date; or any Material
Indebtedness of the Borrower or any of its Subsidiaries shall be declared to be
due and payable or required to be prepaid or repurchased (other than by a
regularly scheduled payment) prior to the stated maturity thereof; or the
Borrower or any of its Subsidiaries shall not pay, or admit in writing its
inability to pay, its debts generally as they become due.

 

Section 10.6.        The Borrower or any of its Subsidiaries shall (i) have an
order for relief entered with respect to it under the Federal bankruptcy laws as
now or hereafter in effect, (ii) make an assignment for the benefit of
creditors, (iii) apply for, seek, consent to, or acquiesce in, the appointment
of a receiver, custodian, trustee, examiner, liquidator or similar official for
it or any Substantial Portion of its Property, (iv) institute any proceeding
seeking an order for relief under the Federal bankruptcy laws as now or
hereafter in effect or seeking to adjudicate it a bankrupt or insolvent, or
seeking dissolution, winding up, liquidation, reorganization, arrangement,
adjustment or composition of it or its debts under any law relating to
bankruptcy, insolvency or reorganization or relief of debtors or fail to file an
answer or other pleading denying the material allegations of any such proceeding
filed against it, (v) take any corporate, partnership or other organizational
action to authorize or effect any of the foregoing actions set forth in this
Section 10.6 or (vi) fail to contest in good faith any appointment or proceeding
described in Section 10.7.

 

Section 10.7.        Without the application, approval or consent of the
Borrower or any of its Subsidiaries, a receiver, trustee, examiner, liquidator
or similar official shall be appointed for the Borrower or any of its
Subsidiaries or any Substantial Portion of its Property, or a proceeding
described in Section 10.6(iv) shall be instituted against the Borrower or any of
its Subsidiaries

 

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and such appointment continues undischarged or such proceeding continues
undismissed or unstayed for a period of 60 consecutive days.

 

Section 10.8.        Any court, government or governmental agency shall condemn,
seize or otherwise appropriate, or take custody or control of, all or any
portion of the Property of the Borrower and its Subsidiaries which, when taken
together with all other Property of the Borrower and its Subsidiaries so
condemned, seized, appropriated, or taken custody or control of, during the
twelve-month period ending with the month in which any such action occurs,
constitutes a Substantial Portion.

 

Section 10.9.        The Borrower or any of its Subsidiaries shall fail within
30 days to pay, bond or otherwise discharge one or more (i) judgments or orders
for the payment of money in excess of $1,000,000 (or the equivalent thereof in
currencies other than U.S. Dollars) in the aggregate, or (ii) nonmonetary
judgments or orders which, individually or in the aggregate, could reasonably be
expected to have a Material Adverse Effect, which judgment(s), in any such case,
is/are not stayed on appeal or otherwise being appropriately contested in good
faith.

 

Section 10.10.      The Unfunded Liabilities of all Single Employer Plans shall
exceed in the aggregate $500,000 or any Reportable Event shall occur in
connection with any Plan.

 

Section 10.11.      Nonpayment by the Borrower or any Subsidiary of any Rate
Management Obligation when due or the breach by the Borrower or any Subsidiary
of any term, provision or condition contained in any Rate Management Transaction
or any transaction of the type described in the definition of “Rate Management
Transactions,” whether or not any Lender or Affiliate of a Lender is a party
thereto, after taking into account any applicable grace period.

 

Section 10.12.      Any Change in Control shall occur.

 

Section 10.13.      The Borrower or any of its Subsidiaries shall (i) be the
subject of any proceeding or investigation pertaining to the release by the
Borrower, any of its Subsidiaries or any other Person of any toxic or hazardous
waste or substance into the environment, or (ii) violate any Environmental Law,
which, in the case of an event described in clause (i) or clause (ii), could
reasonably be expected to have a Material Adverse Effect.

 

Section 10.14.      Any Guaranty shall fail to remain in full force or effect or
any action shall be taken to discontinue or to assert the invalidity or
unenforceability of any Guaranty, or any Guarantor shall fail to comply with any
of the terms or provisions of any Guaranty to which it is a party, or any
Guarantor shall deny that it has any further liability under any Guaranty to
which it is a party, or shall give notice to such effect.

 

Section 10.15.      Any Collateral Document shall for any reason fail to create
a valid and perfected first priority security interest in any collateral
purported to be covered thereby, except as permitted by the terms of any
Collateral Document, or any Collateral Document shall fail to remain in full
force or effect; or any action by Borrower or any of its Subsidiaries shall be
taken to discontinue or to assert the invalidity of unenforceability of any
Collateral Document.

 

Section 10.16.      The Borrower shall fail to comply in any material respect
with any of the terms or provisions of any Collateral Document.

 

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Section 10.17.      The representations and warranties set forth in Section 5.15
(“Plan Assets; Prohibited Transactions”) shall at any time not be true and
correct.

 

Section 10.18.      The occurrence of a default under any Senior Note Document,
any Permitted Bond Document or any 9.60% Senior Notes Refinancing Document,
which such default shall continue unremedied or is not waived prior to the
expiration of any applicable period of grace or cure under any such Senior Note
Document, any such Permitted Bond Document, or any such 9.60% Senior Notes
Refinancing Document, as applicable.

 

ARTICLE XI

 

ACCELERATION, WAIVERS, AMENDMENTS AND REMEDIES

 

Section 11.1.        Acceleration; Facility LC Collateral Account.

 

(i)            If any Default described in Section 10.6 or Section 10.7 occurs
with respect to the Borrower, the obligations of the Lenders to make Loans
hereunder and the obligation and power of the LC Issuer to issue Facility LCs
shall automatically terminate and the Obligations shall immediately become due
and payable without any election or action on the part of the Administrative
Agent, the LC Issuer or any Lender and the Borrower will be and become thereby
unconditionally obligated, without any further notice, act or demand, to pay to
the Administrative Agent an amount in immediately available funds, which funds
shall be held in the Facility LC Collateral Account, equal to the difference of
(x) the amount of LC Obligations at such time, less (y) the amount on deposit in
the Facility LC Collateral Account at such time which is free and clear of all
rights and claims of third parties and has not been applied against the
Obligations (such difference, the “Collateral Shortfall Amount“).  If any other
Default occurs and is continuing, the Required Lenders (or the Administrative
Agent with the consent of the Required Lenders) may (a) terminate or suspend the
obligations of the Lenders to make Loans hereunder and the obligation and power
of the LC Issuer to issue Facility LCs, or declare the Obligations to be due and
payable, or both, whereupon the Obligations shall become immediately due and
payable, without presentment, demand, protest or notice of any kind, all of
which the Borrower hereby expressly waives, and (b) upon notice to the Borrower
and in addition to the continuing right to demand payment of all amounts payable
under this Agreement, make demand on the Borrower to pay, and the Borrower will,
forthwith upon such demand and without any further notice or act, pay to the
Administrative Agent the Collateral Shortfall Amount, which funds shall be
deposited in the Facility LC Collateral Account.

 

(ii)           If at any time while any Default is continuing, the
Administrative Agent determines that the Collateral Shortfall Amount at such
time is greater than zero, the Administrative Agent may make demand on the
Borrower to pay, and the Borrower will, forthwith upon such demand and without
any further notice or act, pay to the Administrative Agent the Collateral
Shortfall Amount, which funds shall be deposited in the Facility LC Collateral
Account.

 

(iii)          The Administrative Agent may at any time or from time to time
after funds are deposited in the Facility LC Collateral Account, apply such
funds to the

 

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payment of the Obligations and any other amounts as shall from time to time have
become due and payable by the Borrower to the Lenders or the LC Issuer under the
Loan Documents.

 

(iv)          At any time while any Default is continuing, neither the Borrower
nor any Person claiming on behalf of or through the Borrower shall have any
right to withdraw any of the funds held in the Facility LC Collateral Account. 
After all of the Obligations have been indefeasibly paid in full and the
Aggregate Commitment has been terminated, any funds remaining in the Facility LC
Collateral Account shall be returned by the Administrative Agent to the Borrower
or paid to whomever may be legally entitled thereto at such time.

 

(v)           If, within 30 days after acceleration of the maturity of the
Obligations or termination of the obligations of the Lenders to make Loans and
the obligation and power of the LC Issuer to issue Facility LCs hereunder as a
result of any Default (other than any Default as described in Section 10.6 or
Section 10.7 with respect to the Borrower) and before any judgment or decree for
the payment of the Obligations due shall have been obtained or entered, the
Required Lenders (in their sole discretion) shall so direct, the Administrative
Agent shall, by notice to the Borrower, rescind and annul such acceleration
and/or termination.

 

Section 11.2.        Amendments.  Subject to the provisions of this
Section 11.2, the Required Lenders (or the Administrative Agent with the consent
in writing of the Required Lenders) and the Borrower may enter into agreements
supplemental hereto for the purpose of adding or modifying any provisions to the
Loan Documents or changing in any manner the rights of the Lenders or the
Borrower hereunder or waiving any Default hereunder; provided, however, that no
such supplemental agreement shall (a) increase the amount of the Commitment of
any Lender hereunder without the consent of such Lender, or (b) without the
consent of all of the Lenders:

 

(i)            Extend the final maturity of any Loan, or extend the expiry date
of any Facility LC to a date after the Facility Termination Date or postpone any
regularly scheduled payment of principal of any Loan or forgive all or any
portion of the principal amount thereof or any Reimbursement Obligation related
thereto, or reduce the rate or extend the time of payment of interest or fees
thereon or Reimbursement Obligations related thereto.

 

(ii)           Reduce the percentage specified in the definition of Required
Lenders.

 

(iii)          Extend the Facility Termination Date, or reduce the amount or
extend the payment date for, the mandatory payments required under
Section 2.8(b)(i), or increase the commitment of any Lender to issue Facility
LCs, or permit the Borrower to assign its rights under this Agreement.

 

(iv)          Amend Section 2.6 or this Section 11.2.

 

(v)           Release any Guarantor of any Advance or, except as provided in
this Agreement, release all or substantially all of the Collateral.

 

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(vi)          Increase any Borrowing Base above the Borrowing Base then in
effect.

 

No amendment of any provision of this Agreement relating to the Administrative
Agent shall be effective without the written consent of the Administrative
Agent, and no amendment of any provision relating to the LC Issuer shall be
effective without the written consent of the LC Issuer.

 

Section 11.3.        Preservation of Rights.  No delay or omission of the
Lenders, the LC Issuer or the Administrative Agent to exercise any right under
the Loan Documents shall impair such right or be construed to be a waiver of any
Default or an acquiescence therein, and the making of a Credit Extension
notwithstanding the existence of a Default or the inability of the Borrower to
satisfy the conditions precedent to such Credit Extension shall not constitute
any waiver or acquiescence.  Any single or partial exercise of any such right
shall not preclude other or further exercise thereof or the exercise of any
other right, and no waiver, amendment or other variation of the terms,
conditions or provisions of the Loan Documents whatsoever shall be valid unless
in writing signed by the Lenders required pursuant to Section 11.2, and then
only to the extent in such writing specifically set forth.  All remedies
contained in the Loan Documents or by law afforded shall be cumulative and all
shall be available to the Administrative Agent, the LC Issuer and the Lenders
until the Obligations have been paid in full.

 

ARTICLE XII

 

GENERAL PROVISIONS

 

Section 12.1.        Survival of Representations.  All representations and
warranties of the Borrower contained in this Agreement shall survive the making
of the Credit Extensions herein contemplated.

 

Section 12.2.        Governmental Regulation.  Anything contained in this
Agreement to the contrary notwithstanding, neither the LC Issuer nor any Lender
shall be obligated to extend credit to the Borrower in violation of any
limitation or prohibition provided by any applicable statute or regulation.

 

Section 12.3.        Headings.  Section headings in the Loan Documents are for
convenience of reference only, and shall not govern the interpretation of any of
the provisions of the Loan Documents.

 

Section 12.4.        Entire Agreement.  The Loan Documents embody the entire
agreement and understanding among the Borrower, the Administrative Agent, the LC
Issuer and the Lenders and supersede all prior agreements and understandings
among the Borrower, the Administrative Agent, the LC Issuer and the Lenders
relating to the subject matter thereof other than the fee letter described in
Section 13.13, all of which shall survive and remain in full force and effect
during the term of this Agreement.

 

Section 12.5.        Several Obligations; Benefits of this Agreement.  The
respective obligations of the Lenders hereunder are several and not joint and no
Lender shall be the partner or agent of any other (except to the extent to which
the Administrative Agent is authorized to act as such).  The failure of any
Lender to perform any of its obligations hereunder shall not relieve

 

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any other Lender from any of its obligations hereunder.  This Agreement shall
not be construed so as to confer any right or benefit upon any Person other than
the parties to this Agreement and their respective successors and assigns,
provided, however, that the parties hereto expressly agree that the Arranger
shall enjoy the benefits of the provisions of Section 12.6, Section 12.10 and
Section 13.11 to the extent specifically set forth therein and shall have the
right to enforce such provisions on its own behalf and in its own name to the
same extent as if it were a party to this Agreement.

 

Section 12.6.        Expenses; Indemnification.

 

(i)            The Borrower shall reimburse the Administrative Agent and the
Arranger for any costs, internal charges and out-of-pocket expenses (including
attorneys’ fees and time charges of attorneys for the Administrative Agent,
which attorneys may be employees of the Administrative Agent) paid or incurred
by the Administrative Agent or the Arranger in connection with the preparation,
negotiation, execution, delivery, syndication, review, amendment, modification,
recordation, filing and administration of the Loan Documents.  The Borrower also
agrees to reimburse the Administrative Agent, the Arranger, the LC Issuer and
the Lenders for any costs, internal charges and out-of-pocket expenses
(including attorneys’ fees and time charges of attorneys for the Administrative
Agent, the Arranger, the LC Issuer and the Lenders, which attorneys may be
employees of the Administrative Agent, the Arranger, the LC Issuer or the
Lenders) paid or incurred by the Administrative Agent, the Arranger, the LC
Issuer or any Lender in connection with the collection and enforcement of the
Loan Documents.

 

(ii)           The Borrower hereby further agrees to indemnify the
Administrative Agent, the Arranger, the LC Issuer and each Lender, its
directors, officers and employees against all losses, claims, damages,
penalties, judgments, liabilities and expenses (including, without limitation,
all expenses of litigation or preparation therefor whether or not the
Administrative Agent, the Arranger, the LC Issuer or any Lender is a party
thereto) which any of them may pay or incur arising out of or relating to this
Agreement, the other Loan Documents, the transactions contemplated hereby or the
direct or indirect application or proposed application of the proceeds of any
Credit Extension hereunder except to the extent that they are determined in a
final non-appealable judgment by a court of competent jurisdiction to have
resulted from the gross negligence or willful misconduct of the party seeking
indemnification.  The obligations of the Borrower under this Section 12.6 shall
survive the termination of this Agreement.

 

Section 12.7.        Numbers of Documents.  All statements, notices, closing
documents, and requests hereunder shall be furnished to the Administrative Agent
with sufficient counterparts so that the Administrative Agent may furnish one to
each of the Lenders.

 

Section 12.8.        Accounting.  Except as provided to the contrary herein, all
accounting terms used herein shall be interpreted and all accounting
determinations hereunder shall be made in accordance with Agreement Accounting
Principles, except that any calculation or determination which is to be made on
a consolidated basis shall be made for the Borrower and all its Subsidiaries,
including those Subsidiaries, if any, which are unconsolidated on the Borrower’s
audited financial statements.

 

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Section 12.9.        Severability of Provisions.  Any provision in any Loan
Document that is held to be inoperative, unenforceable, or invalid in any
jurisdiction shall, as to that jurisdiction, be inoperative, unenforceable, or
invalid without affecting the remaining provisions in that jurisdiction or the
operation, enforceability, or validity of that provision in any other
jurisdiction, and to this end the provisions of all Loan Documents are declared
to be severable.

 

Section 12.10.        Nonliability of Lenders.  The relationship between the
Borrower on the one hand and the Lenders, the LC Issuer and the Administrative
Agent on the other hand shall be solely that of borrower and lender.  Neither
the Administrative Agent, the Arranger, the LC Issuer nor any Lender shall have
any fiduciary responsibilities to the Borrower.  Neither the Administrative
Agent, the Arranger, the LC Issuer nor any Lender undertakes any responsibility
to the Borrower to review or inform the Borrower of any matter in connection
with any phase of the Borrower’s business or operations.  The Borrower agrees
that neither the Administrative Agent, the Arranger, the LC Issuer nor any
Lender shall have liability to the Borrower (whether sounding in tort, contract
or otherwise) for losses suffered by the Borrower in connection with, arising
out of, or in any way related to, the transactions contemplated and the
relationship established by the Loan Documents, or any act, omission or event
occurring in connection therewith, unless it is determined in a final
non-appealable judgment by a court of competent jurisdiction that such losses
resulted from the gross negligence or willful misconduct of the party from which
recovery is sought.  Neither the Administrative Agent, the Arranger, the LC
Issuer nor any Lender shall have any liability with respect to, and the Borrower
hereby waives, releases and agrees not to sue for, any special, indirect or
consequential damages suffered by the Borrower in connection with, arising out
of, or in any way related to the Loan Documents or the transactions contemplated
thereby.

 

Section 12.11.        Confidentiality.  Each Lender agrees to use any
confidential information which it may receive from the Borrower or its
Affiliates concerning the Borrower or its Affiliates or its or their Properties
(“Confidential Information“) solely for the purposes of the Loan Documents and
the transactions provided for therein and not for any other purpose.  Each
Lender agrees to hold Confidential Information in confidence and to not disclose
Confidential Information to any Person other than (a) the other Lenders,
Affiliates of such Lender, and Affiliates of the other Lenders, (b) legal
counsel to such Lender, (c) professional advisors (such as petroleum
engineering, geological and geophysical firms) who are engaged by such Lender or
any potential Transferee to evaluate the properties of Borrower and its
Affiliates in connection with the Loans, provided that prior to delivering
Confidential Information to any such advisor, such advisor shall have entered
into a confidentiality agreement in the form of Exhibit H, and (d) to any of the
following Persons, provided that such Person is advised of and agrees to be
bound by the obligations of confidentiality contained in this section: (i) the
direct or indirect contractual counterparties of such Lender or such Lender’s
Affiliates in swap agreements relating to the obligations or assets of Borrower
or its Subsidiaries, (ii) rating agencies if required by such agencies in
connection with a rating relating to the Advances hereunder, (iii) any
Transferee, and (iv) as permitted by Section 15.4.  Nothing contained herein
shall be deemed to prevent disclosure of any Confidential Information if such
disclosure (A) is required by law, rule, regulation or regulatory officials,
(B) is required to be made in a judicial, administrative or governmental
proceeding pursuant to a valid subpoena or other applicable order, or (C) is
made to any Person in connection with any legal proceeding to which such Lender
is a party; provided, however, in making any such disclosure, only that portion
of the

 

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Confidential Information relevant in the circumstances described above shall be
disclosed and all reasonable efforts shall have been taken to preserve the
confidentiality thereof.

 

Section 12.12.        Nonreliance.  Each Lender hereby represents that it is not
relying on or looking to any margin stock (as defined in Regulation U of the
Board of Governors of the Federal Reserve System) for the repayment of the
Credit Extensions provided for herein.

 

Section 12.13.        Disclosure.  The Borrower and each Lender hereby
(i) acknowledge and agree that JPMorgan and/or its Affiliates from time to time
may hold investments in, make other loans to or have other relationships with
the Borrower and/or its Subsidiaries, and (ii) waive any liability of JPMorgan
or such Affiliate to the Borrower or any Lender, respectively, arising out of or
resulting from such investments, loans or relationships other than liabilities
arising out of the gross negligence or willful misconduct of JPMorgan or its
Affiliates.

 

ARTICLE XIII

 

THE ADMINISTRATIVE AGENT

 

Section 13.1.        Appointment; Nature of Relationship.  JPMorgan is hereby
appointed by each of the Lenders as its contractual representative (herein
referred to as the “Administrative Agent“) hereunder and under each other Loan
Document, and each of the Lenders irrevocably authorizes the Administrative
Agent to act as the contractual representative of such Lender with the rights
and duties expressly set forth herein and in the other Loan Documents.  The
Administrative Agent agrees to act as such contractual representative upon the
express conditions contained in this Article XIII.  Notwithstanding the use of
the defined term “Administrative Agent,” it is expressly understood and agreed
that the Administrative Agent shall not have any fiduciary responsibilities to
any Lender by reason of this Agreement or any other Loan Document and that the
Administrative Agent is merely acting as the contractual representative of the
Lenders with only those duties as are expressly set forth in this Agreement and
the other Loan Documents.  In its capacity as the Lenders’ contractual
representative, the Administrative Agent (i) does not hereby assume any
fiduciary duties to any of the Lenders, (ii) is a “representative” of the
Lenders within the meaning of the term “secured party” as defined in the
Colorado Uniform Commercial Code and (iii) is acting as an independent
contractor, the rights and duties of which are limited to those expressly set
forth in this Agreement and the other Loan Documents.  Each of the Lenders
hereby agrees to assert no claim against the Administrative Agent on any agency
theory or any other theory of liability for breach of fiduciary duty, all of
which claims each Lender hereby waives.

 

Section 13.2.        Powers.  The Administrative Agent shall have and may
exercise such powers under the Loan Documents as are specifically delegated to
the Administrative Agent by the terms of each thereof, together with such powers
as are reasonably incidental thereto.  The Administrative Agent shall have no
implied duties to the Lenders, or any obligation to the Lenders to take any
action thereunder except any action specifically provided by the Loan Documents
to be taken by the Administrative Agent.

 

Section 13.3.        General Immunity.  Neither the Administrative Agent nor any
of its directors, officers, agents, or employees shall be liable to the
Borrower, the Lenders or any

 

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Lender for any action taken or omitted to be taken by it or them hereunder or
under any other Loan Document or in connection herewith or therewith except to
the extent such action or inaction is determined in a final non-appealable
judgment by a court of competent jurisdiction to have arisen from the gross
negligence or willful misconduct of such Person.

 

Section 13.4.        No Responsibility for Loans, Recitals, etc.  Neither the
Administrative Agent nor any of its directors, officers, agents, or employees
shall be responsible for or have any duty to ascertain, inquire into, or verify
(a) any statement, warranty or representation made in connection with any Loan
Document or any borrowing hereunder; (b) the performance or observance of any of
the covenants or agreements of any obligor under any Loan Document, including,
without limitation, any agreement by an obligor to furnish information directly
to each Lender; (c) the satisfaction of any condition specified in Article IV,
except receipt of items required to be delivered solely to the Administrative
Agent; (d) the existence or possible existence of any Default or Unmatured
Default; (e) the validity, enforceability, effectiveness, sufficiency or
genuineness of any Loan Document or any other instrument or writing furnished in
connection therewith; (f) the value, sufficiency, creation, perfection or
priority of any Lien in any collateral security; or (g) the financial condition
of the Borrower or any Guarantor of any of the Obligations or of any of the
Borrower’s or any such Guarantor’s respective Subsidiaries.  The Administrative
Agent shall have no duty to disclose to the Lenders information that is not
required to be furnished by the Borrower to the Administrative Agent at such
time, but is voluntarily furnished by the Borrower to the Administrative Agent
(either in its capacity as Administrative Agent or in its individual capacity).

 

Section 13.5.        Action on Instructions of Lenders.  The Administrative
Agent shall in all cases be fully protected in acting, or in refraining from
acting, hereunder and under any other Loan Document in accordance with written
instructions signed by the Required Lenders, and such instructions and any
action taken or failure to act pursuant thereto shall be binding on all of the
Lenders.  The Lenders hereby acknowledge that the Administrative Agent shall be
under no duty to take any discretionary action permitted to be taken by it
pursuant to the provisions of this Agreement or any other Loan Document unless
it shall be requested in writing to do so by the Required Lenders.  The
Administrative Agent shall be fully justified in failing or refusing to take any
action hereunder and under any other Loan Document unless it shall first be
indemnified to its satisfaction by the Lenders pro rata against any and all
liability, cost and expense that it may incur by reason of taking or continuing
to take any such action.

 

Section 13.6.        Employment of Agents and Counsel.  The Administrative Agent
may execute any of its duties as Administrative Agent hereunder and under any
other Loan Document by or through employees, agents, and attorneys-in-fact and
shall not be answerable to the Lenders, except as to money or securities
received by it or its authorized agents, for the default or misconduct of any
such agents or attorneys-in-fact selected by it with reasonable care.  The
Administrative Agent shall be entitled to advice of counsel concerning the
contractual arrangement between the Administrative Agent and the Lenders and all
matters pertaining to the Administrative Agent’s duties hereunder and under any
other Loan Document.

 

Section 13.7.        Reliance on Documents; Counsel.  The Administrative Agent
shall be entitled to rely upon any Note, notice, consent, certificate,
affidavit, letter, telegram, statement, paper or document believed by it to be
genuine and correct and to have been signed or

 

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sent by the proper person or persons, and, in respect to legal matters, upon the
opinion of counsel selected by the Administrative Agent, which counsel may be
employees of the Administrative Agent.

 

Section 13.8.        Administrative Agent’s Reimbursement and Indemnification. 
The Lenders agree to reimburse and indemnify the Administrative Agent ratably in
proportion to their respective Commitments (or, if the Commitments have been
terminated, in proportion to their Commitments immediately prior to such
termination) (i) for any amounts not reimbursed by the Borrower for which the
Administrative Agent is entitled to reimbursement by the Borrower under the Loan
Documents, (ii) for any other expenses incurred by the Administrative Agent on
behalf of the Lenders, in connection with the preparation, execution, delivery,
administration and enforcement of the Loan Documents (including, without
limitation, for any expenses incurred by the Administrative Agent in connection
with any dispute between the Administrative Agent and any Lender or between two
or more of the Lenders) and (iii) for any liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
of any kind and nature whatsoever which may be imposed on, incurred by or
asserted against the Administrative Agent in any way relating to or arising out
of the Loan Documents or any other document delivered in connection therewith or
the transactions contemplated thereby (including, without limitation, for any
such amounts incurred by or asserted against the Administrative Agent in
connection with any dispute between the Administrative Agent and any Lender or
between two or more of the Lenders), or the enforcement of any of the terms of
the Loan Documents or of any such other documents, provided that (a) no Lender
shall be liable for any of the foregoing to the extent any of the foregoing is
found in a final non-appealable judgment by a court of competent jurisdiction to
have resulted from the gross negligence or willful misconduct of the
Administrative Agent and (b) any indemnification required pursuant to
Section 3.3(vii) shall, notwithstanding the provisions of this Section 13.8, be
paid by the relevant Lender in accordance with the provisions thereof.  The
obligations of the Lenders under this Section 13.8 shall survive payment of the
Obligations and termination of this Agreement.

 

Section 13.9.        Notice of Default.  The Administrative Agent shall not be
deemed to have knowledge or notice of the occurrence of any Default or Unmatured
Default hereunder unless the Administrative Agent has received written notice
from a Lender or the Borrower referring to this Agreement describing such
Default or Unmatured Default and stating that such notice is a “notice of
default.”  In the event that the Administrative Agent receives such a notice,
the Administrative Agent shall give prompt notice thereof to the Lenders.

 

Section 13.10.        Rights as a Lender.  In the event the Administrative Agent
is a Lender, the Administrative Agent shall have the same rights and powers
hereunder and under any other Loan Document with respect to its Commitment and
its Loans as any Lender and may exercise the same as though it were not the
Administrative Agent, and the term “Lender” or “Lenders” shall, at any time when
the Administrative Agent is a Lender, unless the context otherwise indicates,
include the Administrative Agent in its individual capacity.  The Administrative
Agent and its Affiliates may accept deposits from, lend money to, and generally
engage in any kind of trust, debt, equity or other transaction, in addition to
those contemplated by this Agreement or any other Loan Document, with the
Borrower or any of its Subsidiaries in which the Borrower or such Subsidiary is
not restricted hereby from engaging with any other Person.

 

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Section 13.11.        Lender Credit Decision.  Each Lender acknowledges that it
has, independently and without reliance upon the Administrative Agent, the
Arranger or any other Lender and based on the financial statements prepared by
the Borrower and such other documents and information as it has deemed
appropriate, made its own credit analysis and decision to enter into this
Agreement and the other Loan Documents.  Each Lender also acknowledges that it
will, independently and without reliance upon the Administrative Agent, the
Arranger or any other Lender and based on such documents and information as it
shall deem appropriate at the time, continue to make its own credit decisions in
taking or not taking action under this Agreement and the other Loan Documents.

 

Section 13.12.        Successor Administrative Agent.  The Administrative Agent
may resign at any time by giving written notice thereof to the Lenders and the
Borrower, such resignation to be effective upon the appointment of a successor
Administrative Agent or, if no successor Administrative Agent has been
appointed, forty-five days after the retiring Administrative Agent gives notice
of its intention to resign.  The Administrative Agent may be removed at any time
with or without cause by written notice received by the Administrative Agent
from the Required Lenders, such removal to be effective on the date specified by
the Required Lenders.  Upon any such resignation or removal, the Required
Lenders shall have the right to appoint, on behalf of the Borrower and the
Lenders, a successor Administrative Agent.  If no successor Administrative Agent
shall have been so appointed by the Required Lenders within thirty days after
the resigning Administrative Agent’s giving notice of its intention to resign,
then the resigning Administrative Agent may appoint, on behalf of the Borrower
and the Lenders, a successor Administrative Agent.  Notwithstanding the previous
sentence, the Administrative Agent may at any time without the consent of the
Borrower or any Lender, appoint any of its Affiliates which is a commercial bank
as a successor Administrative Agent hereunder.  If the Administrative Agent has
resigned or been removed and no successor Administrative Agent has been
appointed, the Lenders may perform all the duties of the Administrative Agent
hereunder and the Borrower shall make all payments in respect of the Obligations
to the applicable Lender and for all other purposes shall deal directly with the
Lenders.  No successor Administrative Agent shall be deemed to be appointed
hereunder until such successor Administrative Agent has accepted the
appointment.  Any such successor Administrative Agent shall be a commercial bank
having capital and retained earnings of at least $100,000,000.  Upon the
acceptance of any appointment as Administrative Agent hereunder by a successor
Administrative Agent, such successor Administrative Agent shall thereupon
succeed to and become vested with all the rights, powers, privileges and duties
of the resigning or removed Administrative Agent.  Upon the effectiveness of the
resignation or removal of the Administrative Agent, the resigning or removed
Administrative Agent shall be discharged from its duties and obligations
hereunder and under the Loan Documents.  After the effectiveness of the
resignation or removal of an Administrative Agent, the provisions of this
Article XIII shall continue in effect for the benefit of such Administrative
Agent in respect of any actions taken or omitted to be taken by it while it was
acting as the Administrative Agent hereunder and under the other Loan
Documents.  In the event that there is a successor to the Administrative Agent
by merger, or the Administrative Agent assigns its duties and obligations to an
Affiliate pursuant to this Section 13.12, then the term “Prime Rate” as used in
this Agreement shall mean the prime rate, base rate or other analogous rate of
the new Administrative Agent.

 

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Section 13.13.        Administrative Agent and Arranger Fees.  The Borrower
agrees to pay to the Administrative Agent and the Arranger, for their respective
accounts, the fees agreed to by the Borrower, the Administrative Agent and the
Arranger pursuant to that certain letter agreement dated March 14, 2005, or as
otherwise agreed from time to time.

 

Section 13.14.        Delegation to Affiliates.  The Borrower and the Lenders
agree that the Administrative Agent may delegate any of its duties under this
Agreement to any of its Affiliates.  Any such Affiliate (and such Affiliate’s
directors, officers, agents and employees) which performs duties in connection
with this Agreement shall be entitled to the same benefits of the
indemnification, waiver and other protective provisions to which the
Administrative Agent is entitled under Article XII and Article XIII.

 

Section 13.15.        Execution of Collateral Documents.  The Lenders hereby
empower and authorize the Administrative Agent to execute and deliver to the
Borrower on their behalf the Certificate of Effectiveness, the Collateral
Documents and all related agreements, documents or instruments as shall be
necessary or appropriate to effect the purposes of the Collateral Documents.

 

Section 13.16.        Collateral Releases.  The Lenders hereby empower and
authorize the Administrative Agent to execute and deliver to the Borrower on
their behalf any agreements, documents or instruments as shall be necessary or
appropriate to effect any releases of Collateral which Borrower and its
Subsidiaries are permitted to sell or otherwise transfer pursuant to
Section 7.4, or which shall otherwise be permitted by the terms hereof or of any
other Loan Document or which shall otherwise have been approved by the Required
Lenders (or, if required by the terms of Section 11.2, all of the Lenders) in
writing.

 

Section 13.17.        Documentation Agent, Syndication Agent, etc.  None of the
Lenders identified in this Agreement as the Documentation Agent or a
Co-Syndication Agent shall have any right, power, obligation, liability,
responsibility or duty under this Agreement other than those applicable to all
Lenders as such.  Without limiting the foregoing, none of such Lenders shall
have or be deemed to have a fiduciary relationship with any Lender.  Each Lender
hereby makes the same acknowledgments with respect to such Lenders as it makes
with respect to the Administrative Agent in Section 13.11.

 

ARTICLE XIV

 

SETOFF; RATABLE PAYMENTS

 

Section 14.1.        Setoff.  In addition to, and without limitation of, any
rights of the Lenders under applicable law, if the Borrower becomes insolvent,
however evidenced, or any Default occurs, any and all deposits (including all
account balances, whether provisional or final and whether or not collected or
available) and any other Indebtedness at any time held or owing by any Lender or
any Affiliate of any Lender to or for the credit or account of the Borrower may
be offset and applied toward the payment of the Obligations owing to such
Lender, whether or not the Obligations, or any part hereof, shall then be due.

 

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Section 14.2.        Ratable Payments.  If any Lender, whether by setoff or
otherwise, has payment made to it upon its Outstanding Credit Exposure (other
than payments received pursuant to Section 3.1, Section 3.2, Section 3.4, or
Section 3.5) in a greater proportion than that received by any other Lender,
such Lender agrees, promptly upon demand, to purchase a portion of the Aggregate
Outstanding Credit Exposure held by the other Lenders so that after such
purchase each Lender will hold its Pro Rata Share of the Aggregate Outstanding
Credit Exposure.  If any Lender, whether in connection with setoff or amounts
which might be subject to setoff or otherwise, receives collateral or other
protection for its Obligations or such amounts which may be subject to setoff,
such Lender agrees, promptly upon demand, to take such action necessary such
that all Lenders share in the benefits of such collateral ratably in proportion
to their respective Pro Rata Shares of the Aggregate Outstanding Credit
Exposure.  In case any such payment is disturbed by legal process, or otherwise,
appropriate further adjustments shall be made.

 

ARTICLE XV

 

BENEFIT OF AGREEMENT; ASSIGNMENTS; PARTICIPATIONS

 

Section 15.1.        Successors and Assigns.  The terms and provisions of the
Loan Documents shall be binding upon and inure to the benefit of the Borrower
and the Lenders and their respective successors and assigns permitted hereby,
except that (i) the Borrower shall not have the right to assign its rights or
obligations under the Loan Documents without the prior written consent of each
Lender, (ii) any assignment by any Lender must be made in compliance with
Section 15.3, and (iii) any transfer by participation must be made in compliance
with Section 15.2.  Any attempted assignment or transfer by any party not made
in compliance with this Section 15.1 shall be null and void, unless such
attempted assignment or transfer is treated as a participation in accordance
with Section 15.3.2.  The parties to this Agreement acknowledge that clause
(ii) of this Section 15.1 relates only to absolute assignments and this
Section 15.1 does not prohibit assignments creating security interests,
including, without limitation, (x) any pledge or assignment by any Lender of all
or any portion of its rights under this Agreement and any Note to a Federal
Reserve Bank or (y) in the case of a Lender which is a Fund, any pledge or
assignment of all or any portion of its rights under this Agreement and any Note
to its trustee in support of its obligations to its trustee; provided, however,
that no such pledge or assignment creating a security interest shall release the
transferor Lender from its obligations hereunder unless and until the parties
thereto have complied with the provisions of Section 15.3.  The Administrative
Agent may treat the Person which made any Loan or which holds any Note as the
owner thereof for all purposes hereof unless and until such Person complies with
Section 15.3; provided, however, that the Administrative Agent may in its
discretion (but shall not be required to) follow instructions from the Person
which made any Loan or which holds any Note to direct payments relating to such
Loan or Note to another Person.  Any assignee of the rights to any Loan or any
Note agrees by acceptance of such assignment to be bound by all the terms and
provisions of the Loan Documents.  Any request, authority or consent of any
Person, who at the time of making such request or giving such authority or
consent is the owner of the rights to any Loan (whether or not a Note has been
issued in evidence thereof), shall be conclusive and binding on any subsequent
holder or assignee of the rights to such Loan.

 

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Section 15.2.        Participations.

 

15.2.1.     Permitted Participants; Effect.  Any Lender may, in the ordinary
course of its business and in accordance with applicable law, at any time sell
to one or more banks or other entities (“Participants“) participating interests
in any Outstanding Credit Exposure of such Lender, any Note held by such Lender,
any Commitment of such Lender or any other interest of such Lender under the
Loan Documents.  In the event of any such sale by a Lender of participating
interests to a Participant, such Lender’s obligations under the Loan Documents
shall remain unchanged, such Lender shall remain solely responsible to the other
parties hereto for the performance of such obligations, such Lender shall remain
the owner of its Outstanding Credit Exposure and the holder of any Note issued
to it in evidence thereof for all purposes under the Loan Documents, all amounts
payable by the Borrower under this Agreement shall be determined as if such
Lender had not sold such participating interests, and the Borrower and the
Administrative Agent shall continue to deal solely and directly with such Lender
in connection with such Lender’s rights and obligations under the Loan
Documents.

 

15.2.2.     Voting Rights.  Each Lender shall retain the sole right to approve,
without the consent of any Participant, any amendment, modification or waiver of
any provision of the Loan Documents other than any amendment, modification or
waiver with respect to any Credit Extension or Commitment in which such
Participant has an interest which would require consent of all of the Lenders
pursuant to the terms of Section 11.2 or of any other Loan Document.

 

15.2.3.     Benefit of Certain Provisions.  The Borrower agrees that each
Participant shall be deemed to have the right of setoff provided in Section 14.1
in respect of its participating interest in amounts owing under the Loan
Documents to the same extent as if the amount of its participating interest were
owing directly to it as a Lender under the Loan Documents, provided that each
Lender shall retain the right of setoff provided in Section 14.1 with respect to
the amount of participating interests sold to each Participant.  The Lenders
agree to share with each Participant, and each Participant, by exercising the
right of setoff provided in Section 14.1, agrees to share with each Lender, any
amount received pursuant to the exercise of its right of setoff, such amounts to
be shared in accordance with Section 14.2 as if each Participant were a Lender. 
The Borrower further agrees that each Participant shall be entitled to the
benefits of Section 3.1, Section 3.2, Section 3.4, and Section 3.5 to the same
extent as if it were a Lender and had acquired its interest by assignment
pursuant to Section 15.3, provided that (i) a Participant shall not be entitled
to receive any greater payment under Section 3.1, Section 3.2, or Section 3.5
than the Lender who sold the participating interest to such Participant would
have received had it retained such interest for its own account, unless the sale
of such interest to such Participant is made with the prior written consent of
the Borrower, and (ii) any Participant not incorporated under the laws of the
United States of America or any State thereof agrees to comply with the
provisions of Section 3.3 to the same extent as if it were a Lender.

 

Section 15.3.        Assignments.

 

15.3.1.     Permitted Assignments.  Any Lender may, in the ordinary course of
its business and in accordance with applicable law, at any time assign to one or
more banks or other entities (“Purchasers“) all or any part of its rights and
obligations under the Loan

 

73

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Documents.  Such assignment shall be substantially in the form of Exhibit C or
in such other form as may be agreed to by the parties thereto.  The consent of
the Borrower, the Administrative Agent and the LC Issuer shall be required prior
to an assignment becoming effective with respect to a Purchaser which is not a
Lender or an Affiliate thereof; provided, however, that if a Default has
occurred and is continuing, the consent of the Borrower shall not be required. 
Such consent shall not be unreasonably withheld or delayed.  Each such
assignment with respect to a Purchaser which is not a Lender or an Affiliate
thereof shall (unless each of the Borrower and the Administrative Agent
otherwise consents) be in an amount not less than the lesser of (i) $5,000,000
or (ii) the remaining amount of the assigning Lender’s Commitment (calculated as
at the date of such assignment) or outstanding Loans (if the applicable
Commitment has been terminated).

 

15.3.2.     Effect; Effective Date.  Upon (i) delivery to the Administrative
Agent of a notice of assignment, substantially in the form attached as Exhibit I
to Exhibit C (a “Notice of Assignment“), together with any consents required by
Section 15.3.1, and (ii) payment of a $3,500 fee to the Administrative Agent for
processing such assignment, such assignment shall become effective on the
effective date specified in such Notice of Assignment.  The Notice of Assignment
shall contain a representation by the Purchaser to the effect that none of the
consideration used to make the purchase of the Commitment and Outstanding Credit
Exposure under the applicable assignment agreement are “plan assets” as defined
under ERISA and that the rights and interests of the Purchaser in and under the
Loan Documents will not be “plan assets” under ERISA.  On and after the
effective date of such assignment, such Purchaser shall for all purposes be a
Lender party to this Agreement and any other Loan Document executed by or on
behalf of the Lenders and shall have all the rights and obligations of a Lender
under the Loan Documents, to the same extent as if it were an original party
hereto, and no further consent or action by the Borrower, the Lenders or the
Administrative Agent shall be required to release the transferor Lender with
respect to the percentage of the Aggregate Commitment and Outstanding Credit
Exposure assigned to such Purchaser.  Upon the consummation of any assignment to
a Purchaser pursuant to this Section 15.3.2, the transferor Lender, the
Administrative Agent and the Borrower shall, if the transferor Lender or the
Purchaser desires that its Loans be evidenced by Notes, make appropriate
arrangements so that new Notes or, as appropriate, replacement Notes are issued
to such transferor Lender and new Notes or, as appropriate, replacement Notes,
are issued to such Purchaser, in each case in principal amounts reflecting their
respective Commitments, as adjusted pursuant to such assignment.

 

15.3.3.     Register.  The Administrative Agent, acting solely for this purpose
as an Administrative Agent of the Borrower, shall maintain at one of its offices
in Chicago, Illinois, 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 Commitments of, and principal amounts of the Loans 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 and
the Lenders may treat each Person whose name is recorded in the Register
pursuant to the terms hereof as a Lender hereunder for all purposes of this
Agreement, notwithstanding notice to the contrary.  The Register shall be
available for inspection by the Borrower and any Lender, at any reasonable time
and from time to time upon reasonable prior notice.

 

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Section 15.4.        Dissemination of Information.  The Borrower authorizes each
Lender to disclose to any Participant or Purchaser or any other Person acquiring
an interest in the Loan Documents by operation of law (each a “Transferee“) and
any prospective Transferee any and all information in such Lender’s possession
concerning the creditworthiness of the Borrower and its Subsidiaries, including
without limitation any information contained in any reports provided to
Administrative Agent; provided that each Transferee and prospective Transferee
agrees to be bound by Section 12.11 of this Agreement.

 

Section 15.5.        Tax Treatment.  If any interest in any Loan Document is
transferred to any Transferee which is not incorporated under the laws of the
United States or any State thereof, the transferor Lender shall cause such
Transferee, concurrently with the effectiveness of such transfer, to comply with
the provisions of Section 3.3(iv).

 

Section 15.6.        Procedure for Increases and Addition of New Lenders.  This
Agreement permits certain increases in a Lender’s Commitment and the admission
of new Lenders providing new Commitments, none of which require any consents or
approvals from the other Lenders.  Any amendment hereto for such an increase or
addition shall be in the form attached hereto as Exhibit F and shall only
require the written signatures of the Administrative Agent, the Borrower and the
Lender(s) being added or increasing their Commitment.  In addition, within a
reasonable time after the effective date of any increase, the Administrative
Agent shall, and is hereby authorized and directed to, revise the Lenders
Schedule reflecting such increase and shall distribute such revised Schedule to
each of the Lenders and the Borrower, whereupon such revised Schedule shall
replace the old Schedule and become part of this Agreement.  On the Business Day
following any such increase, all outstanding Floating Rate Advances shall be
reallocated among the Lenders (including any newly added Lenders) in accordance
with the Lenders’ respective revised Pro Rata Shares.  Eurodollar Advances shall
not be reallocated among the Lenders prior to the expiration of the applicable
Interest Period in effect at the time of any such increase.

 

ARTICLE XVI

 

NOTICES

 

Section 16.1.        Notices.  Except as otherwise permitted by Section 2.9 with
respect to Borrowing Notices, all notices, requests and other communications to
any party hereunder shall be in writing (including facsimile transmission or
similar writing) and shall be given to such party: (x) in the case of the
Borrower or the Administrative Agent, at its address or facsimile number set
forth on the signature pages hereof, (y) in the case of any Lender, at its
address or facsimile number set forth on the Lenders Schedule or (z) in the case
of any party, at such other address or facsimile number as such party may
hereafter specify for the purpose by notice to the Administrative Agent and the
Borrower in accordance with the provisions of this Section 16.1.  Each such
notice, request or other communication shall be effective (i) if given by
facsimile transmission, when transmitted to the facsimile number specified in
this Section and confirmation of receipt is received, (ii) if given by mail, 72
hours after such communication is deposited in the mails with first class
postage prepaid, addressed as aforesaid, or (iii) if given by any other means,
when delivered at the address specified in this Section; provided that notices
to the Administrative Agent under Article II shall not be effective until
received.

 

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Section 16.2.        Change of Address.  The Borrower, the Administrative Agent
and any Lender (i) may each change the address for service of notice upon it by
a notice in writing to the other parties hereto and (ii) shall give such a
notice if its address shall change.

 

ARTICLE XVII

 

COUNTERPARTS

 

This Agreement may be executed in any number of counterparts, all of which taken
together shall constitute one agreement, and any of the parties hereto may
execute this Agreement by signing any such counterpart.  This Agreement shall be
effective when it has been executed by the Borrower, the Administrative Agent,
the LC Issuer and the Lenders and each party has notified the Administrative
Agent by facsimile transmission or telephone that it has taken such action.

 

ARTICLE XVIII

 

CHOICE OF LAW; CONSENT TO JURISDICTION; WAIVER OF JURY TRIAL

 

Section 18.1.        CHOICE OF LAW.  THE LOAN DOCUMENTS (OTHER THAN THOSE
CONTAINING A CONTRARY EXPRESS CHOICE OF LAW PROVISION) SHALL BE CONSTRUED IN
ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF COLORADO, BUT GIVING EFFECT TO
FEDERAL LAWS APPLICABLE TO NATIONAL BANKS.

 

Section 18.2.        CONSENT TO JURISDICTION.  THE BORROWER HEREBY IRREVOCABLY
SUBMITS TO THE NON-EXCLUSIVE JURISDICTION OF ANY UNITED STATES FEDERAL OR
COLORADO STATE COURT SITTING IN DENVER, COLORADO IN ANY ACTION OR PROCEEDING
ARISING OUT OF OR RELATING TO ANY LOAN DOCUMENTS AND THE BORROWER HEREBY
IRREVOCABLY AGREES THAT ALL CLAIMS IN RESPECT OF SUCH ACTION OR PROCEEDING MAY
BE HEARD AND DETERMINED IN ANY SUCH COURT AND IRREVOCABLY WAIVES ANY OBJECTION
IT MAY NOW OR HEREAFTER HAVE AS TO THE VENUE OF ANY SUCH SUIT, ACTION OR
PROCEEDING BROUGHT IN SUCH A COURT OR THAT SUCH COURT IS AN INCONVENIENT FORUM. 
NOTHING HEREIN SHALL LIMIT THE RIGHT OF THE ADMINISTRATIVE AGENT, THE LC ISSUER
OR ANY LENDER TO BRING PROCEEDINGS AGAINST THE BORROWER IN THE COURTS OF ANY
OTHER JURISDICTION.

 

Section 18.3.        WAIVER OF JURY TRIAL.  THE BORROWER, THE ADMINISTRATIVE
AGENT, THE LC ISSUER AND EACH LENDER HEREBY WAIVE TRIAL BY JURY IN ANY JUDICIAL
PROCEEDING INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER (WHETHER SOUNDING IN
TORT, CONTRACT OR OTHERWISE) IN ANY WAY ARISING OUT OF, RELATED TO, OR CONNECTED
WITH ANY LOAN DOCUMENT OR THE RELATIONSHIP ESTABLISHED THEREUNDER.

 

76

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ARTICLE XIX

 

USA PATRIOT ACT NOTICE

 

Each Lender hereby notifies 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 Borrower, which information includes the name and address of Borrower
and other information that will allow such Lender to identify Borrower in
accordance with the Act.

 

ARTICLE XX

 

AMENDMENT AND RESTATEMENT

 

This Agreement amends and restates in its entirety the Existing Cimarex Credit
Agreement, and from and after the date hereof, and subject to the terms hereof,
including, without limitation, the execution and delivery of the Certificate of
Effectiveness, the terms and provisions of the Existing Cimarex Credit Agreement
shall be superseded by the terms and provisions of this Agreement.  Borrower
hereby agrees that (i) the Existing Cimarex Indebtedness, all accrued and unpaid
interest thereon, and all accrued and unpaid fees under the Existing Cimarex
Credit Agreement shall be deemed to be Indebtedness of Borrower outstanding
under and governed by this Agreement and (ii) all Liens securing the Existing
Cimarex Indebtedness shall continue in full force and effect to secure the
Secured Obligations.

 

[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK.]

 

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IN WITNESS WHEREOF, the Borrower, the Lenders and the Administrative Agent have
executed this Agreement as of the date first above written.

 

 

CIMAREX ENERGY CO.

 

 

 

 

 

By:

 

 

 

Paul Korus,

 

 

Vice President, Chief Financial Officer

 

 

and Treasurer

 

 

 

1700 Lincoln Street, Suite 1800

 

Denver, Colorado 80203

 

Attention: Paul Korus

 

Telephone: (303) 295-3995

 

FAX: (303) 285-9299

 

 

[Signature Page]

 

--------------------------------------------------------------------------------

 

 

JPMORGAN CHASE BANK, N.A.,

 

successor by merger to Bank One, NA (Main Office
Chicago), Individually as a Lender, as LC Issuer
and as Administrative Agent

 

 

 

 

 

By:

 

 

 

J. Scott Fowler,

 

 

Vice President

 

 

 

1717 Main Street

 

MC TX1-2448

 

Dallas, Texas 75201

 

Attention: J. Scott Fowler

 

Telephone: (214) 290-2162

 

FAX: (214) 290-2332

 

--------------------------------------------------------------------------------

 

 

U.S. BANK NATIONAL ASSOCIATION,

 

Individually as a Lender and as Co-Syndication
Agent

 

 

 

 

 

By:

 

 

 

 

Kathryn A. Gaiter, Vice President

 

--------------------------------------------------------------------------------

 

 

BANK OF AMERICA, N.A.,

 

Individually as a Lender and as Co-Syndication
Agent

 

 

 

 

 

By:

 

 

 

Name:

 

 

 

Title:

 

 

 

--------------------------------------------------------------------------------

 

 

WELLS FARGO BANK, N.A.,

 

Individually as a Lender and as Documentation
Agent

 

 

 

 

 

By:

 

 

 

Name:

 

 

 

Title:

 

 

 

--------------------------------------------------------------------------------

 

 

UNION BANK OF CALIFORNIA, N.A.,

 

as a Lender

 

 

 

 

 

By:

 

 

 

Name:

 

 

 

Title:

 

 

 

--------------------------------------------------------------------------------

 

 

COMERICA BANK,

 

as a Lender

 

 

 

 

 

By:

 

 

 

Name:

 

 

 

Title:

 

 

 

--------------------------------------------------------------------------------

 

 

DEUTSCHE BANK TRUST COMPANY
AMERICAS,

 

as a Lender

 

 

 

 

 

By:

 

 

 

Name:

 

 

 

Title:

 

 

 

 

 

 

 

By:

 

 

 

Name:

 

 

 

Title:

 

 

 

--------------------------------------------------------------------------------

 

 

BANK OF OKLAHOMA, N.A.,

 

as a Lender

 

 

 

 

 

By:

 

 

 

Name:

 

 

 

Title:

 

 

 

--------------------------------------------------------------------------------

 

 

NATEXIS BANQUES POPULAIRES,

 

as a Lender

 

 

 

 

 

By:

 

 

 

Name:

 

 

 

Title:

 

 

 

 

 

 

 

By:

 

 

 

Name:

 

 

 

Title:

 

 

 

--------------------------------------------------------------------------------

 

 

COMPASS BANK,

 

as a Lender

 

 

 

 

 

By:

 

 

 

Name:

 

 

 

Title:

 

 

 

--------------------------------------------------------------------------------

 

 

BNP PARIBAS,

 

as a Lender

 

 

 

 

 

By:

 

 

 

Name:

 

 

 

Title:

 

 

 

 

 

 

 

By:

 

 

 

Name:

 

 

 

Title:

 

 

 

--------------------------------------------------------------------------------

 

 

BANK OF SCOTLAND,

 

as a Lender

 

 

 

 

 

By:

 

 

 

Name:

 

 

 

Title:

 

 

 

--------------------------------------------------------------------------------

 

 

FORTIS CAPITAL CORP.,

 

as a Lender

 

 

 

 

 

By:

 

 

 

Name:

 

 

 

Title:

 

 

 

 

 

 

 

By:

 

 

 

Name:

 

 

 

Title:

 

 

 

--------------------------------------------------------------------------------

 

 

HARRIS NESBITT FINANCING, INC.,

 

as a Lender

 

 

 

 

 

By:

 

 

 

Name:

 

 

 

Title:

 

 

 

--------------------------------------------------------------------------------

 

 

CALYON NEW YORK BRANCH,

 

as a Lender

 

 

 

 

 

By:

 

 

 

Name:

 

 

 

Title:

 

 

 

 

 

 

 

By:

 

 

 

Name:

 

 

 

Title:

 

 

 

--------------------------------------------------------------------------------

 

 

STERLING BANK,

 

as a Lender

 

 

 

 

 

By:

 

 

 

Name:

 

 

 

Title:

 

 

 

--------------------------------------------------------------------------------

 

 

SOCIETE GENERALE,

 

as a Lender

 

 

 

 

 

By:

 

 

 

Name:

 

 

 

Title:

 

 

 

--------------------------------------------------------------------------------

 

 

KEYBANK, N.A.,

 

as a Lender

 

 

 

 

 

By:

 

 

 

Name:

 

 

 

Title:

 

 

 

--------------------------------------------------------------------------------

 

 

CITICORP NORTH AMERICA, INC.,

 

as a Lender

 

 

 

 

 

By:

 

 

 

Name:

 

 

 

Title:

 

 

 

--------------------------------------------------------------------------------

 

SCHEDULE 1

PRICING SCHEDULE

 

Applicable Margin

 

Level I
Status

 

Level II
Status

 

Level III
Status

 

Level IV
Status

 

Level V
Status

 

Eurodollar Rate

 

1.00

%

1.00

%

1.25

%

1.50

%

1.75

%

Floating Rate

 

0.00

%

0.00

%

0.00

%

0.250

%

0.500

%

 

Applicable Fee Rate

 

Level I
Status

 

Level II
Status

 

Level III
Status

 

Level IV
Status

 

Level V
Status

 

Commitment Fee

 

0.225

%

0.250

%

0.300

%

0.375

%

0.375

%

 

For the purposes of this Schedule, the following terms have the following
meanings, subject to the final paragraph of this Schedule:

 

“Level I Status“ exists at any date if the Borrowing Base Usage Percentage on
such date is less than 25%.

 

“Level II Status“ exists at any date if the Borrowing Base Usage Percentage on
such date is greater than or equal to 25% and less than 50%.

 

“Level III Status“ exists at any date if the Borrowing Base Usage Percentage on
such date is greater than or equal to 50% and less than 75%.

 

“Level IV Status“ exists at any date if the Borrowing Base Usage Percentage on
such date is greater than or equal to 75% and less than 90%.

 

“Level V Status“ exists at any date if the Borrowing Base Usage Percentage on
such date is greater than or equal to 90%.

 

“Status“ means either Level I Status, Level II Status, Level III Status,
Level IV Status or Level V Status.

 

The Applicable Margin and Applicable Fee Rate shall be determined on a daily
basis in accordance with the foregoing table based on the Borrowing Base Usage
Percentage on such day.

 

S1-1

--------------------------------------------------------------------------------

 

SCHEDULE 2

LENDERS SCHEDULE

 

JPMORGAN CHASE BANK, N.A.

 

Pro Rata Share: 6%

 

Lending Installation:

 

1 Bank One Plaza

 

 

Mail Code IL1-0634

 

 

Chicago, Illinois 60670-0634

 

 

Attention: Jim Moore

 

 

312-385-7057 – phone

 

 

312-732-4840 – fax

 

 

jim_t_moore@chase.com

 

 

 

 

Address for Notices:

 

1717 Main Street

 

 

MC TX1-2448

 

 

Dallas, Texas 75201

 

 

Attention: J. Scott Fowler

 

 

214-290-2162 – phone

 

 

214-290-2332 – fax

 

 

scott.fowler@chase.com

 

 

Commitment as of June 13, 2005:

 

$30,000,000

 

 

 

Face Amount of Note:

 

$60,000,000

 

S2-1

--------------------------------------------------------------------------------

 

U.S. BANK NATIONAL ASSOCIATION

 

Pro Rata Share: 6%

 

Lending Installation:

 

555 S.W. Oak PDORP7LS

 

 

Portland, Oregon 97208

 

 

Attn: Raquel Savang

 

 

503-275-7861 – phone

 

 

503-275-8181 - fax

 

 

 

 

Address for Notices:

 

918 17th Street

 

 

DN-CO-BB3E

 

 

Denver, Colorado 80202

 

 

Attention: Kathryn A. Gaiter

 

 

303-585-4210 – phone

 

 

303-585-4362 – fax

 

 

kathryn.gaiter@usbank.com

 

 

Commitment as of June 13, 2005:

 

$30,000,000

 

 

 

Face Amount of Note:

 

$60,000,000

 

S2-2

--------------------------------------------------------------------------------

 

 

BANK OF AMERICA, N.A.

 

Pro Rata Share: 6%

 

Lending Installation:

 

1201 Main Street

 

 

4th Floor

 

 

Dallas, Texas 75202

 

 

Address for Notices:

 

100 Federal Street

 

 

MA5-100-09-08

 

 

Boston, Massachusetts 02110

 

 

Attention: Gregory B. Hanson

 

 

617-434-6613 – phone

 

 

617-434-3652 – fax

 

 

gregory.b.hanson@bankofamerica.com

 

 

Commitment as of June 13, 2005:

 

$30,000,000

 

 

 

Face Amount of Note:

 

$60,000,000

 

S2-3

--------------------------------------------------------------------------------

 

WELLS FARGO BANK, N.A.

 

Pro Rata Share: 6%

 

Lending Installation:

 

1740 Broadway

 

 

Denver, Colorado 80274

 

 

Attention: Marlene Rieb

 

 

303-863-5163 – phone

 

 

303-863-2729 – fax

 

 

marlene.rieb@wellsfargo.com

 

 

 

 

 

 

Address for Notices:

 

1740 Broadway

 

 

Denver, Colorado 80209

 

 

Attention: Laura Bumgarner

 

 

303-863-5799 – phone

 

 

303-863-5196 – fax

 

 

laura.l.bumgarner@wellsfargo.com

 

 

 

 

 

 

Commitment as of June 13, 2005:

 

$30,000,000

 

 

 

 

 

 

Face Amount of Note:

 

$60,000,000

 

S2-4

--------------------------------------------------------------------------------

 

UNION BANK OF CALIFORNIA, N.A.

 

Pro Rata Share: 5.5%

 

Lending Installation:

 

1980 Saturn Street

 

 

V03-251

 

 

Monterey Park, California 91755

 

 

Attention: Maria Suncin

 

 

323-720-2870 – phone

 

 

323-720-2252 – fax

 

 

maria.suncin@uboc.com

 

 

 

 

 

 

Address for Notices:

 

500 North Akard

 

 

Suite 4200

 

 

Dallas, Texas 75201

 

 

Attention: Kimberly Coil

 

 

214-922-4200 – phone

 

 

214.922-4209 – fax

 

 

kimberly.coil@uboc.com

 

 

 

 

 

 

Commitment as of June 13, 2005:

 

$27,500,000

 

 

 

 

 

 

Face Amount of Note:

 

$55,000,000

 

S2-5

--------------------------------------------------------------------------------

 

COMERICA BANK

 

Pro Rata Share: 5.5%

 

Lending Installation:

 

P.O. Box 7500

 

 

Detroit, Michigan 48275-7576

 

 

Attention: Jeff Zelenka

 

 

734-632-3052 – phone

 

 

734-632-2999 – fax

 

 

jeffrey_l_zelenka@comerica.com

 

 

 

 

 

 

Address for Notices:

 

1601 Elm Street

 

 

2nd Floor

 

 

Dallas, Texas 75201

 

 

Attention: Peter L. Sefzik

 

 

214-969-6538 – phone

 

 

214-969-6561 – fax

 

 

peter_l_sefzik@comerica.com

 

 

 

 

 

 

Commitment as of June 13, 2005:

 

$27,500,000

 

 

 

 

 

 

Face Amount of Note:

 

$55,000,000

 

S2-6

--------------------------------------------------------------------------------

 

DEUTSCHE BANK TRUST COMPANY AMERICAS

 

Pro Rata Share: 5%

 

Lending Installation:

 

90 Hudson Street

 

 

Jersey City, New Jersey 07302

 

 

Attention: Joe Cusmai

 

 

201-593-2202 – phone

 

 

201-593-2311 – fax

 

 

joe.cusmai@db.com

 

 

 

 

 

 

Address for Notices:

 

700 Louisiana Street, Suite 1500

 

 

Houston, Texas 77002

 

 

Attention: Mike Janak

 

 

832-239-4649 – phone

 

 

832-239-4693 – fax

 

 

mike.janak@db.com

 

 

 

 

 

 

Commitment as of June 13, 2005:

 

$25,000,000

 

 

 

 

 

 

Face Amount of Note:

 

$50,000,000

 

S2-7

--------------------------------------------------------------------------------

 

SOCIÉTÉ GÉNÉRALE

 

Pro Rata Share: 5%

 

Lending Installation:

 

560 Lexington, 4th Floor

 

 

New York, New York 10022

 

 

Attention: Nancy Kui

 

 

212-278-6164 – phone

 

 

212-278-7490 – fax

 

 

nancy.kui@sbcib.com

 

 

 

 

 

 

Address for Notices:

 

1111 Bagby, Suite 2020

 

 

Houston, Texas 77002

 

 

Attention: Elena Robciuc

 

 

713-759-6316 – phone

 

 

713-650-0824 – fax

 

 

elena.robciuc@sgcib.com

 

 

 

 

 

 

Commitment as of June 13, 2005:

 

$25,000,000

 

 

 

 

 

 

Face Amount of Note:

 

$50,000,000

 

S2-8

--------------------------------------------------------------------------------

 

BNP PARIBAS

 

Pro Rata Share: 5%

 

Lending Installation:

 

919 Third Avenue

 

 

New York, New York 10022

 

 

Attention: Gabriel Candamo

 

 

212-471-6626 – phone

 

 

212-841-2683 – fax

 

 

 

 

 

 

Address for Notices:

 

1200 Smith Street, Suite 3100

 

 

Houston, Texas 77002

 

 

Attention: Russell Otts

 

 

713-982-1100 – phone

 

 

713-659-6915 - fax

 

 

 

 

 

 

Commitment as of June 13, 2005:

 

$25,000,000

 

 

 

 

 

 

Face Amount of Note:

 

$50,000,000

 

S2-9

--------------------------------------------------------------------------------

 

BANK OF SCOTLAND

 

Pro Rata Share: 5%

 

Lending Installation:

 

565 Fifth Avenue, 5th Floor

 

 

New York, New York 10017

 

 

Attention: Karen Weich

 

 

212-450-0877 – phone

 

 

212-479-2806 – fax

 

 

karen_weich@bankofscotland.com

 

 

 

 

 

 

Address for Notices:

 

One City Centre

 

 

1021 Main Street, Suite 1370

 

 

Houston, Texas 77002

 

 

Attention: Richard Butler

 

 

713-650-0036 – phone

 

 

713-651-9714 – fax

 

 

richard_butler@bankofscotland.com

 

 

 

 

 

 

Commitment as of June 13, 2005:

 

$25,000,000

 

 

 

 

 

 

Face Amount of Note:

 

$50,000,000

 

S2-10

--------------------------------------------------------------------------------

 

FORTIS CAPITAL CORP.

 

Pro Rata Share: 5%

 

Lending Installation:

 

3 Stamford Plaza

 

 

301 Tresser Blvd.

 

 

Stamford, Connecticut 06901-3239

 

 

Attention: Frank Campanelli

 

 

203-705-5755 – phone

 

 

203-705-5888 – fax

 

 

robert.Melendez@fortiscapitalusa.com

 

 

 

 

 

 

Address for Notices:

 

15455 North Dallas Parkway, Suite 1400

 

 

Addison, Texas 75001

 

 

Attention: David Montgomery

 

 

214-953-9311 – phone

 

 

214-754-5982 – fax

 

 

david.montgomery@fortiscapitalusa.com

 

 

 

 

 

 

Commitment as of June 13, 2005:

 

$25,000,000

 

 

 

 

 

 

Face Amount of Note:

 

$50,000,000

 

S2-11

--------------------------------------------------------------------------------

 

CALYON NEW YORK BRANCH

 

Pro Rata Share: 5%

 

Lending Installation:

 

1301 Avenue of the Americas

 

 

New York, New York 10019

 

 

Attention: Gener David

 

 

212-261-7633 – phone

 

 

917-849-5440 – fax

 

 

gener.david@us.calyon.com

 

 

 

 

 

 

Address for Notices:

 

1301 Travis, Suite 2100

 

 

Houston, Texas 77002

 

 

Attention: Lucia Martinez

 

 

713-890-8634 – phone

 

 

713-890-8668 – fax

 

 

lucia.martinez@us.calyon.com

 

 

 

 

 

 

Commitment as of June 13, 2005:

 

$25,000,000

 

 

 

 

 

 

Face Amount of Note:

 

$50,000,000

 

S2-12

--------------------------------------------------------------------------------

 

KEYBANK NATIONAL ASSOCIATION

 

Pro Rata Share: 5%

 

Lending Installation:

 

127 Public Square, 8th Floor

 

 

Cleveland, Ohio 44114

 

 

Attention: Yvette M. Dyson-Owens

 

 

216-689-4358 – phone

 

 

216-689-5962 – fax

 

 

 

 

 

 

Address for Notices:

 

8117 Preston Road, Suite 440

 

 

Dallas, Texas 75225

 

 

Attention: Thomas Rajan

 

 

214-414-2580 – phone

 

 

214-414-2621 – fax

 

 

thomas_rajan@keybank.com

 

 

 

 

 

 

Commitment as of June 13, 2005:

 

$25,000,000

 

 

 

 

 

 

Face Amount of Note:

 

$50,000,000

 

S2-13

--------------------------------------------------------------------------------

 

STERLING BANK

 

Pro Rata Share: 5%

 

Lending Installation:

 

2250 North Loop West, Suite 100

 

 

Houston, Texas 77092

 

 

Attention: Cheri Allen

 

 

713-507-7714 – phone

 

 

713-507-7908 – fax

 

 

cheri_allen@banksterling.com

 

 

 

 

 

 

Address for Notices:

 

2250 North Loop West, Suite 100

 

 

Houston, Texas 77092

 

 

Attention: Melissa Bauman

 

 

713-507-7377 – phone

 

 

713-507-7948 – fax

 

 

melissa.bauman@banksterling.com

 

 

 

 

 

 

Commitment as of June 13, 2005:

 

$25,000,000

 

 

 

 

 

 

Face Amount of Note:

 

$50,000,000

 

S2-14

--------------------------------------------------------------------------------

 

BANK OF OKLAHOMA, N.A.

 

Pro Rata Share: 5%

 

Lending Installation:

 

1550 S. Midwest Blvd – L

 

 

Midwest City, Oklahoma 73110

 

 

Attention: Sherry Curry

 

 

405-736-8927 – phone

 

 

405-319-1078 – fax

 

 

scurry@kokf.com

 

 

 

 

 

 

Address for Notices:

 

1625 Broadway

 

 

Suite 1570

 

 

Denver, Colorado 80202

 

 

Attention: Michael M. Logan

 

 

303-534-9462 – phone

 

 

303-534-9499 – fax

 

 

mlogan@bokf.com

 

 

 

 

 

 

Commitment as of June 13, 2005:

 

$25,000,000

 

 

 

 

 

 

Face Amount of Note:

 

$50,000,000

 

S2-15

--------------------------------------------------------------------------------

 

HARRIS NESBITT FINANCING, INC.

 

Pro Rata Share: 5%

 

Lending Installation:

 

115 S. Lasalle St.

 

 

Chicago, Illinois 60603

 

 

Attention: LaTanya Topps

 

 

312-461-6901 – phone

 

 

312-293-8348 – fax

 

 

latanya.topps@harrisbank.com

 

 

 

 

 

 

Address for Notices:

 

700 Louisiana Street

 

 

Houston, Texas 77002

 

 

Attention: Mary Lou Allen

 

 

713-546-9761 – phone

 

 

713-223-4007 – fax

 

 

marylou.allen@harrisnesbitt.com

 

 

 

 

 

 

Commitment as of June 13, 2005:

 

$25,000,000

 

 

 

 

 

 

Face Amount of Note:

 

$50,000,000

 

S2-16

--------------------------------------------------------------------------------

 

NATEXIS BANQUE POPULAIRES

 

Pro Rata Share: 5%

 

 

Lending Installation:

 

333 Clay Street

 

 

Suite 4340

 

 

Houston, Texas 77002

 

 

 

 

 

 

Address for Notices:

 

333 Clay Street

 

 

Suite 4340

 

 

Houston, Texas 77002

 

 

Attention: Tanya McAllister

 

 

 

 

 

 

 

cc:

 

1251 Avenue of the Americas

 

 

34th Floor

 

 

New York, New York 10020

 

 

Attention: Samantha Tang

 

 

 

 

 

 

Commitment as of June 13, 2005:

 

$25,000,000

 

 

 

 

 

 

Face Amount of Note:

 

$50,000,000

 

S2-17

--------------------------------------------------------------------------------

 

COMPASS BANK

 

Pro Rata Share: 5%

 

 

Lending Installation:

 

24 Greenway Plaza

 

 

Suite 1400A

 

 

Houston, Texas 77046

 

 

Attention: Stacey R. Box

 

 

713-993-8580 – phone

 

 

713-968-8292 – fax

 

 

stacey.box@compassbnk.com

 

 

 

 

 

 

Address for Notices:

 

999 18th Street, Suite 2800

 

 

Denver, Colorado 80202

 

 

Attention: John Falbo

 

 

303-217-2227 – phone

 

 

303-217-2280 – fax

 

 

john.falbo@compassbnk.com

 

 

 

 

 

 

Commitment as of June 13, 2005:

 

$25,000,000

 

 

 

 

 

 

Face Amount of Note:

 

$50,000,000

 

S2-18

--------------------------------------------------------------------------------

 

CITICORP NORTH AMERICA, INC.

 

Pro Rata Share: 5%

 

 

Lending Installation:

 

One Penn’s Way

 

 

New Castle, Delaware 19720

 

 

Attention: Dennis Banfield

 

 

302-894-6109 – phone

 

 

212-994-0847 – fax

 

 

dennisl.banfield@citigroup.com

 

 

 

 

 

 

Address for Notices:

 

333 Clay Street, Suite 3700

 

 

Houston, Texas 77002

 

 

Attention: John Miller

 

 

713-654-2911 – phone

 

 

713-654-2849 – fax

 

 

john.miller@citigroup.com

 

 

 

 

 

 

Commitment as of June 13, 2005:

 

$25,000,000

 

 

 

 

 

 

Face Amount of Note:

 

$50,000,000

 

S2-19

--------------------------------------------------------------------------------

 

SCHEDULE 3

DISCLOSURE SCHEDULE

 

Section 5.7 Litigation and Contingent Obligations

 

No legal proceedings are pending the outcome of which management believes will
have a material adverse effect.

 

Section 5.8 Subsidiaries

 

Jurisdiction of organization, percentage owned by Borrower or other subsidiary,
and indication of Material Subsidiaries:

 

Cimarex Energy Co. Subsidiaries:

 

 

 

% Owned

 

 

 

 

 

 

 

Directly or

 

Jurisdiction of

 

Material

 

 

 

Indirectly

 

Organization

 

Subsidiary

 

 

 

 

 

 

 

 

 

Brock Gas Systems & Equipment, Inc.

 

100

%

Texas

 

 

No

 

 

 

 

 

 

 

 

 

 

Cimarex Energy Services, Inc.

 

100

%

Oklahoma

 

 

Yes

 

 

 

 

 

 

 

 

 

 

Cimarex California Pipeline LLC

 

100

%

Colorado

 

 

No

 

 

 

 

 

 

 

 

 

 

Cimarex Texas LLC

 

100

%

Colorado

 

 

Yes

 

Cimarex Texas L.P.

 

100

%

Texas

 

 

Yes

 

 

 

 

 

 

 

 

 

 

Columbus Energy Corp.

 

100

%

Colorado

 

 

No

 

Columbus Energy L.P.

 

100

%

Texas

 

 

No

 

Columbus Gas Services, Inc.

 

100

%

Delaware

 

 

No

 

Columbus Texas, Inc.

 

100

%

Nevada

 

 

No

 

 

 

 

 

 

 

 

 

 

Key Production Company, Inc.

 

100

%

Delaware

 

 

Yes

 

Key Texas LLC

 

100

%

Colorado

 

 

Yes

 

Key Production Texas L.P.

 

100

%

Texas

 

 

Yes

 

 

S3-1

--------------------------------------------------------------------------------

 

 

 

 

% Owned

 

 

 

 

 

 

 

Directly or

 

Jurisdiction of

 

Material

 

 

 

Indirectly

 

Organization

 

Subsidiary

 

 

 

 

 

 

 

 

 

Canvasback Energy, Inc.

 

100

%

Delaware

 

 

No

 

Redhead Energy, Inc.

 

100

%

Delaware

 

 

No

 

Metrix Networks, Inc.

 

80

%

Delaware

 

 

No

 

 

 

 

 

 

 

 

 

 

Gruy Petroleum Management Co.

 

100

%

Texas

 

 

No

 

 

 

 

 

 

 

 

 

 

Magnum Hunter Production, Inc.

 

100

%

Texas

 

 

Yes

 

ConMag Energy Corporation

 

100

%

Texas

 

 

No

 

Trapmar Properties, Inc.

 

100

%

Texas

 

 

No

 

 

 

 

 

 

 

 

 

 

Hunter Gas Gathering, Inc.

 

100

%

Texas

 

 

Yes

 

 

 

 

 

 

 

 

 

 

Hunter Resources, Inc.

 

100

%

Deleware

 

 

No

 

Midland Hunter Petroleum LLC

 

100

%

Wyoming

 

 

No

 

Inesco Corporation

 

100

%

Texas

 

 

No

 

 

 

 

 

 

 

 

 

 

Pintail Energy, Inc.

 

100

%

Delaware

 

 

Yes

 

Oklahoma Gas Processing, Inc.

 

100

%

Delaware

 

 

No

 

Prize Operating Co.

 

100

%

Delaware

 

 

Yes

 

Prize Energy Resources, LP.

 

100

%

Delaware

 

 

Yes

 

PEC (Deleware), Inc.

 

100

%

Delaware

 

 

Yes

 

 

 

 

 

 

 

 

 

 

SPL Gas Marketing, Inc.

 

100

%

Texas

 

 

No

 

 

S3-2

--------------------------------------------------------------------------------

 

Section 5.9 ERISA

 

None

 

Section 7.2 Indebtedness

 

Guarantees from Magnum Hunter Resources, Inc.:

 

Magnum Hunter Resources, Inc. guarantee dated February 18, 2005 in favor of
Societe Generale in the amount of $20,600,000 or replacement guarantee from
Cimarex Energy Co. Securing the $20,600,000 Construction Loan between Apple Tree
Holdings, LLC and Societe Generale

 

Magnum Hunter Resource, Inc. unlimited guarantee dated December 20, 2004 or
replacement guarantee from Cimarex Energy Co. in favor of Compass Bank. Securing
the $500,000 Loan Agreement between Metrix Networks, Inc. and Compass Bank.

 

Magnum Hunter Resources, Inc. guarantee dated December 28, 2001 or replacement
guarantee from Cimarex Energy Co. in favor of General Electric Capital
Corporation. Guaranteeing performance under the Capital Lease dated January 3,
2002

 

Capital Lease - Dated January 3, 2002

Lessor: General Electric Capital Corporation

Lessee: Magnum Hunter Production, Inc. guaranteed by Magnum Hunter
Resources, Inc.

Equipment: Platform A, South Timbalier Block 266, Platform A, Main Pass Block
164

Principal/payoff balance as of June 2005:   $3,622,400

 

S3-3

--------------------------------------------------------------------------------

 

Section 7.5 Investments and Acquisitions

 

 

 

% Owned

 

 

 

 

 

Directly or

 

 

 

 

 

Indirectly

 

Net Investment

 

 

 

 

 

(in millions)

 

 

 

 

 

 

 

Canvasback Energy, Inc.

 

100

%

$

11.6

 

Mallard Hunter, LP

 

1

%

0.2

 

Teal Hunter, LP

 

5

%

1.9

 

Appletree Holdings, LLC (a)

 

40

%

5.4

 

Magnum Hunter Resources, Inc. Guarantee

 

 

 

20.6

 

Metrix Networks

 

80

%

1.6

 

Old River Gas Pipeline, LLC

 

50

%

2.1

 

 

--------------------------------------------------------------------------------

(a) Magnum Hunter Production on November 12, 1994 purchased an aggregate
undivided 40% interest in an oil and gas exploration and development project
operated by Manzano, LLC known as the La Veta Project, in Huerfano County,
Colorado.  The participants in the Project exchanged their Project assets for
units of ownership of Apple Tree Holdings, LLC. Additionally, as described on as
part of section 7.2 Indebtedness Magnum Hunter Resources, Inc. guaranteed a
$20,600,000 Construction Loan between Apple Tree Holdings, LLC and Societe
Generale.

 

S3-4

--------------------------------------------------------------------------------

 

SCHEDULE 4

EXISTING FINANCIAL CONTRACTS

 

SUMMARY OF HEDGES:

 

Counter

 

Contract

 

Contract

 

Daily

 

Hedge

 

 

 

Party

 

Date

 

Term

 

Volume

 

Price

 

Type

 

 

 

 

 

 

 

 

 

 

 

 

 

Natural Gas

 

 

 

 

 

(Mmbtu

)

 

 

 

 

Deutsche Bank AG

 

10/9/2003

 

1/05-12/05

 

40,000

 

4.00 / 6.25

 

Collar

 

 

 

 

 

 

 

 

 

 

 

 

 

Barclays Bank PLC

 

1/6/2004

 

1/05-12/05

 

10,000

 

4.25 / 6.60

 

Collar

 

 

 

 

 

 

 

 

 

 

 

 

 

Bank of Montreal

 

6/17/2004

 

1/06-12/06

 

20,000

 

5.25 / 6.30

 

Collar

 

 

 

 

 

 

 

 

 

 

 

 

 

Bank of Montreal

 

6/17/2004

 

1/05-12/05

 

20,000

 

6.2525

 

Swap

 

 

 

 

 

 

 

 

 

 

 

 

 

BNP Paribas

 

9/22/2004

 

1/05-12/05

 

10,000

 

5.00 / 9.50

 

Collar

 

 

 

 

 

 

 

 

 

 

 

 

 

Crude Oil

 

 

 

 

 

(Bbl

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

BNP Paribas

 

6/17/2004

 

1/06-12/06

 

1,000

 

30.00 / 35.85

 

Collar

 

 

 

 

 

 

 

 

 

 

 

 

 

BNP Paribas

 

6/17/2004

 

1/05-12/05

 

1,000

 

34.90

 

Swap

 

 

 

 

 

 

 

 

 

 

 

 

 

Societe Generale

 

8/19/2004

 

1/05-12/05

 

1,000

 

35.00 / 55.00

 

Collar

 

 

S4-1

--------------------------------------------------------------------------------

 

EXHIBIT A

NOTE

 

$                    

 

               , 20   

 

Cimarex Energy Co., a Delaware corporation (the “Borrower”), promises to pay to
the order of                                                           (the
“Lender”) the principal sum of                                                 
Dollars ($                   ) or, if greater or less, the aggregate unpaid
principal amount of all Loans made by the Lender to the Borrower pursuant to
Article II of the Agreement (as hereinafter defined), in immediately available
funds at the main office of JPMorgan Chase Bank, N.A. in Chicago, Illinois, as
Administrative Agent, together with interest on the unpaid principal amount
hereof at the rates and on the dates set forth in the Agreement. The Borrower
shall pay the principal of and accrued and unpaid interest on the Loans in full
on the Facility Termination Date.

 

The Lender shall, and is hereby authorized to, record on the schedule attached
hereto, or to otherwise record in accordance with its usual practice, the date
and amount of each Loan and the date and amount of each principal payment
hereunder.

 

This Note is one of the Notes issued pursuant to, and is entitled to the
benefits of, the Amended and Restated Credit Agreement dated as of June 13, 2005
(which, as it may be amended or modified and in effect from time to time, is
herein called the “Agreement”), among the Borrower, the lenders party thereto,
including the Lender, the LC Issuer and JPMorgan Chase Bank, N.A., as
Administrative Agent, to which Agreement reference is hereby made for a
statement of the terms and conditions governing this Note, including the terms
and conditions under which this Note may be prepaid or its maturity date
accelerated. This Note is secured pursuant to the Collateral Documents and
guaranteed pursuant to the Guaranty, all as more specifically described in the
Agreement, and reference is made thereto for a statement of the terms and
provisions thereof. Capitalized terms used herein and not otherwise defined
herein are used with the meanings attributed to them in the Agreement. [This
Note is given in partial renewal, extension and restatement of (but not in
extinguishment or novation of) the Existing Indebtedness, as defined and
described in the Agreement.]

 

 

 

CIMAREX ENERGY CO.

 

 

 

By:

 

 

 

Name:

 

 

 

Title:

 

 

 

A-1

--------------------------------------------------------------------------------

 

SCHEDULE OF LOANS AND PAYMENTS OF PRINCIPAL

TO

NOTE OF CIMAREX ENERGY CO.,

DATED JUNE 13, 2005

 

Date

 

Principal
Amount of
Loan

 

Maturity
of Interest
Period

 

Principal
Amount
Paid

 

Unpaid
Balance

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

A-2

--------------------------------------------------------------------------------

 

EXHIBIT B

COMPLIANCE CERTIFICATE

 

To:                              The Lenders parties to the

 

Credit Agreement Described Below

 

This Compliance Certificate is furnished pursuant to that certain Amended and
Restated Credit Agreement dated as of June 13, 2005 (as amended, modified,
renewed or extended from time to time, the “Credit Agreement”) among Cimarex
Energy Co., a Delaware corporation (the “Borrower”), the lenders party thereto
and JPMorgan Chase Bank, N.A., as Administrative Agent for the Lenders and as LC
Issuer. Unless otherwise defined herein, capitalized terms used in this
Compliance Certificate have the meanings ascribed thereto in the Credit
Agreement.

 

THE UNDERSIGNED HEREBY CERTIFIES THAT:

 

1. I am the duly elected                                         of the
Borrower;

 

2. I have reviewed the terms of the Credit Agreement and I have made, or have
caused to be made under my supervision, a detailed review of the transactions
and conditions of the Borrower and its Subsidiaries during the accounting period
covered by the attached financial statements.

 

3. The examinations described in paragraph 2 did not disclose, and I have no
knowledge of, the existence of any condition or event which constitutes a
Default or Unmatured Default during or at the end of the accounting period
covered by the attached financial statements or as of the date of this
Certificate, except as set forth below.

 

4. Schedule I attached hereto sets forth financial data and computations
evidencing the Borrower’s compliance with certain covenants of the Credit
Agreement, all of which data and computations are true, complete and correct.

 

**[5.    Schedule II attached hereto sets forth the various reports and
deliveries which are required at this time under the Credit Agreement, the
Security Agreement and the other Loan Documents and the status of compliance.]**

 

Described below are the exceptions, if any, to paragraph 3 by listing, in
detail, the nature of the condition or event, the period during which it has
existed and the action which the Borrower has taken, is taking, or proposes to
take with respect to each such condition or event:

 

B-1

--------------------------------------------------------------------------------

 

 

 

The foregoing certifications, together with the computations set forth in
Schedule I **[and Schedule II]** hereto and the financial statements delivered
with this Certificate in support hereof, are made and delivered this
              day of                                              ,           .

 

 

CIMAREX ENERGY CO.

 

 

 

 

 

By:

 

 

 

Name:

 

 

 

Title:

 

 

 

B-2

--------------------------------------------------------------------------------

 

SCHEDULE I TO COMPLIANCE CERTIFICATE

Compliance as of                 ,        with

Provisions of Section 8.1 and 8.2 of

the Credit Agreement

 

B-3

--------------------------------------------------------------------------------

 

SCHEDULE II TO COMPLIANCE CERTIFICATE

Reports and Deliveries Currently Due

 

B-4

--------------------------------------------------------------------------------

 

EXHIBIT C

ASSIGNMENT AND ASSUMPTION AGREEMENT

 

This Assignment and Assumption (the “Assignment and Assumption”) is dated as of
the Effective Date set forth below and is entered into by and between [Insert
name of Assignor] (the “Assignor”) and [Insert name of Assignee] (the
“Assignee”). Capitalized terms used but not defined herein shall have the
meanings given to them in the Amended and Restated Credit Agreement identified
below (as amended, the “Credit Agreement”), receipt of a copy of which is hereby
acknowledged by the Assignee. The Terms and Conditions set forth in Annex 1
attached hereto are hereby agreed to and incorporated herein by reference and
made a part of this Assignment and Assumption as if set forth herein in full.

 

The Assignor hereby sells and assigns to the Assignee, and the Assignee hereby
purchases and assumes from the Assignor, an interest in and to the Assignor’s
rights and obligations under the Credit Agreement and the other Loan Documents,
such that after giving effect to such assignment the Assignee shall have
purchased pursuant to this Assignment Agreement the percentage interest
specified in Item 3 of Schedule 1 of all outstanding rights and obligations
under the Credit Agreement and the other Loan Documents relating to the
facilities listed in Item 3 of Schedule 1 (the “Assigned Interest”). The
aggregate Commitment (or Outstanding Credit Exposure, if the applicable
Commitment has been terminated) purchased by the Assignee hereunder is set forth
in Item 4 of Schedule 1.

 

In consideration for the sale and assignment of Outstanding Credit Exposure
hereunder, the Assignee shall pay the Assignor, on the Effective Date, the
amount agreed to by the Assignor and the Assignee. On and after the Effective
Date, the Assignee shall be entitled to receive all payments of principal,
interest, Reimbursement Obligations and fees with respect to the interest
assigned hereby. The Assignee will promptly remit to the Assignor any interest
on Loans and fees received from the Administrative Agent which relate to the
portion of the Commitment or Outstanding Credit Exposure assigned to the
Assignee hereunder and not previously paid by the Assignee to the Assignor. In
the event that either party hereto receives any payment to which the other party
hereto is entitled under this Assignment Agreement, then the party receiving
such amount shall promptly remit it to the other party hereto.

 

1.

 

Assignor:

 

 

 

 

 

 

 

2.

 

Assignee:

 

                                          [and is an Affiliate/Approved Fund of
[identify Lender](1)

 

 

 

 

 

3.

 

Borrower:

 

Cimarex Energy Co.

 

 

 

 

 

4.

 

Administrative Agent:

 

JPMorgan Chase Bank, N.A., as the administrative agent under the Credit
Agreement.

 

--------------------------------------------------------------------------------

(1)                                  Select as applicable.

 

C-1

--------------------------------------------------------------------------------

 

5.

 

Credit Agreement:

 

The $1,000,000,000 Amended and Restated Credit Agreement dated as of June 13,
2005, among Cimarex Energy Co., the Lenders party thereto, JPMorgan Chase Bank,
N.A., as Administrative Agent, and the other agents party thereto.

 

 

 

 

 

6.

 

Assigned Interest:

 

 

 

 

 

 

 

 

 

 

 

 

a.

Assignee’s percentage interest of credit facility purchased under the Assignment
Agreement

 

 

       %

 

 

 

 

 

 

b.

Amount of credit facility purchased under the Assignment Agreement

 

 

$      

 

 

 

 

 

 

c.

Assignee’s Commitment (or Outstanding Credit Exposure with respect to terminated
Commitments) purchased hereunder:

 

 

$    

 

 

 

 

 

 

7.

 

Trade Date:

 

 

                               (2)

 

 

Effective Date:                           , 20    [TO BE INSERTED BY
ADMINISTRATIVE AGENT AND WHICH SHALL BE THE EFFECTIVE DATE OF RECORDATION OF
TRANSFER BY THE ADMINISTRATIVE AGENT.]

 

[Signature Page Follows]

 

--------------------------------------------------------------------------------

(2)          Insert if satisfaction of minimum amounts is to be determined as of
the Trade Date.

 

C-2

--------------------------------------------------------------------------------

 

The terms set forth in this Assignment and Assumption are hereby agreed to:

 

 

ASSIGNOR

 

[NAME OF ASSIGNOR]

 

 

 

 

 

By:

 

 

 

 

Title:

 

 

 

ASSIGNEE

 

[NAME OF ASSIGNEE]

 

 

 

By:

 

 

 

 

Title:

 

[Consented to and](3) Accepted:

JPMORGAN CHASE BANK, N.A., as Administrative Agent

 

By:

 

 

Title:(4)

[Consented to:]

 

 

[NAME OF RELEVANT PARTY]

 

 

By:

 

 

 

Title:

 

--------------------------------------------------------------------------------

(3)          To be added only if the consent of the Agent is required by the
terms of the Credit Agreement

 

(4)          To be added only if the consent of the Borrower and/or other
parties (e.g. L/C Issuer) is required by the terms of the Credit Agreement.

 

C-3

--------------------------------------------------------------------------------

 

ANNEX 1

TERMS AND CONDITIONS FOR

ASSIGNMENT AND ASSUMPTION

 

1.                                       Representations and Warranties.

 

1.1                                 Assignor. The Assignor represents and
warrants that (i) it is the legal and beneficial owner of the Assigned Interest,
(ii) the Assigned Interest is free and clear of any lien, encumbrance or other
adverse claim and (iii) it has full power and authority, and has taken all
action necessary, to execute and deliver this Assignment and Assumption and to
consummate the transactions contemplated hereby. Neither the Assignor nor any of
its officers, directors, employees, agents or attorneys shall be responsible for
(i) any statements, warranties or representations made in or in connection with
the Credit Agreement or any other Loan Document, (ii) the execution, legality,
validity, enforceability, genuineness, sufficiency, perfection, priority,
collectibility, or value of the Loan Documents or any collateral thereunder,
(iii) the financial condition of the Borrower, any of its Subsidiaries or
Affiliates or any other Person obligated in respect of any Loan Document,
(iv) the performance or observance by the Borrower, any of its Subsidiaries or
Affiliates or any other Person of any of their respective obligations under any
Loan Document, (v) inspecting any of the property, books or records of the
Borrower, or any guarantor, or (vi) any mistake, error of judgment, or action
taken or omitted to be taken in connection with the Loans or the Loan Documents.

 

1.2                                 Assignee. The Assignee (a) represents and
warrants that (i) it has full power and authority, and has taken all action
necessary, to execute and deliver this Assignment and Assumption and to
consummate the transactions contemplated hereby and to become a Lender under the
Credit Agreement, (ii) from and after the Effective Date, it shall be bound by
the provisions of the Credit Agreement as a Lender thereunder and, to the extent
of the Assigned Interest, shall have the obligations of a Lender thereunder,
(iii) agrees that its payment instructions and notice instructions are as set
forth in Schedule 1 to this Assignment and Assumption, (iv) confirms that none
of the funds, monies, assets or other consideration being used to make the
purchase and assumption hereunder are “plan assets” as defined under ERISA and
that its rights, benefits and interests in and under the Loan Documents will not
be “plan assets” under ERISA, (v) agrees to indemnify and hold the Assignor
harmless against all losses, costs and expenses (including, without limitation,
reasonable attorneys’ fees) and liabilities incurred by the Assignor in
connection with or arising in any manner from the Assignee’s non-performance of
the obligations assumed under this Assignment and Assumption, (vi) it has
received a copy of the Credit Agreement, together with copies of financial
statements and such other documents and information as it has deemed appropriate
to make its own credit analysis and decision to enter into this Assignment and
Assumption and to purchase the Assigned Interest on the basis of which it has
made such analysis and decision independently and without reliance on the
Administrative Agent or any other Lender, and (vii) attached as Schedule 1 to
this Assignment and Assumption is any documentation required to be delivered by
the Assignee with respect to its tax status pursuant to the terms of the Credit
Agreement, duly completed and executed by the Assignee and (b) agrees that
(i) it will, independently and without reliance on the Administrative Agent, the
Assignor or any other Lender, and based on such documents and information as it
shall deem appropriate at the time, continue to make its own credit decisions in
taking or not taking action under the Loan Documents, and (ii) it will perform
in accordance with

 

C-4

--------------------------------------------------------------------------------

 

their terms all of the obligations which by the terms of the Loan Documents are
required to be performed by it as a Lender.

 

2.                                       Payments. The Assignee shall pay the
Assignor, on the Effective Date, the amount agreed to by the Assignor and the
Assignee. From and after the Effective Date, the Administrative Agent shall make
all payments in respect of the Assigned Interest (including payments of
principal, interest, fees and other amounts) to the Assignor for amounts which
have accrued to but excluding the Effective Date and to the Assignee for amounts
which have accrued from and after the Effective Date.

 

3.                                       General Provisions. This Assignment and
Assumption shall be binding upon, and inure to the benefit of, the parties
hereto and their respective successors and assigns. This Assignment and
Assumption may be executed in any number of counterparts, which together shall
constitute one instrument. Delivery of an executed counterpart of a signature
page of this Assignment and Assumption by telecopy shall be effective as
delivery of a manually executed counterpart of this Assignment and Assumption.
This Assignment and Assumption shall be governed by, and construed in accordance
with, the law of the State of Colorado.

 

C-5

--------------------------------------------------------------------------------

 

ADMINISTRATIVE QUESTIONNAIRE

 

(Schedule to be supplied by Closing Unit or Trading Documentation Unit)

 

(For Forms for Primary Syndication call [to be provided])

(For Forms after Primary Syndication call [to be provided])

 

C-6

--------------------------------------------------------------------------------

 

US AND NON-US TAX INFORMATION REPORTING REQUIREMENTS

 

(Schedule to be supplied by Closing Unit or Trading Documentation Unit)

 

(For Forms for Primary Syndication call [to be provided])

(For Forms after Primary Syndication call [to be provided])

 

C-7

--------------------------------------------------------------------------------

 

EXHIBIT D

OPINION

 

(to be attached)

 

D-1

--------------------------------------------------------------------------------

 

EXHIBIT E

GUARANTY

 

THIS GUARANTY (this “Guaranty”) is made as of                                  ,
20    , by                                               , a
                             (the “Subsidiary Guarantor”) in favor of the
Administrative Agent, for the benefit of the Lenders, under the Credit Agreement
referred to below;

 

WITNESSETH:

 

WHEREAS, Cimarex Energy Co., a Delaware corporation (the “Principal”) and
JPMorgan Chase Bank, N.A., successor by merger to Bank One, NA (Main Office
Chicago), a national banking association, as Administrative Agent (the
“Administrative Agent”), and certain other Lenders and agents from time to time
party thereto have entered into a certain Amended and Restated Credit Agreement
dated as of June 13, 2005 (as same may be amended or modified from time to time,
the “Credit Agreement”), providing, subject to the terms and conditions thereof,
for extensions of credit to be made by the Lenders to the Principal; and

 

WHEREAS, it is a condition precedent to the making of Credit Extensions under
the Credit Agreement that the Subsidiary Guarantor execute and deliver this
Guaranty whereby the Subsidiary Guarantor shall guarantee the payment when due,
subject to Section 9 hereof, of all Guaranteed Obligations, as defined below;
and

 

WHEREAS, in consideration of the financial and other support that the Principal
has provided, and such financial and other support as the Principal may in the
future provide, to the Subsidiary Guarantor, and in order to induce the Lenders
and the Administrative Agent to extend credit under the Credit Agreement, and
the Lenders and their Affiliates to enter into one or more Rate Management
Transactions with the Principal, and because the Subsidiary Guarantor has
determined that executing this Guaranty is in its interest and to its financial
benefit, the Subsidiary Guarantor is willing to guarantee the obligations of the
Principal under the Credit Agreement, any Note, any Rate Management Transaction,
and the other Loan Documents;

 

NOW, THEREFORE, in consideration of the premises and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows:

 

SECTION 1. Selected Terms Used Herein.

 

“Guaranteed Obligations” is defined in Section 3 below.

 

1.1                                 Terms in Credit Agreement. Other capitalized
terms used herein but not defined herein shall have the meaning set forth in the
Credit Agreement.

 

SECTION 2. Representations and Warranties. The Subsidiary Guarantor represents
and warrants (which representations and warranties shall be deemed to have been
renewed upon each Borrowing Date under the Credit Agreement) that:

 

E-1

--------------------------------------------------------------------------------

 

(a)                                  It is a corporation, partnership or limited
liability company duly and properly incorporated or organized, as the case may
be, validly existing and (to the extent such concept applies to such entity) in
good standing under the laws of its jurisdiction of incorporation or
organization and has all requisite authority to conduct its business in each
jurisdiction in which its business is conducted.

 

(b)                                 It has the power and authority and legal
right to execute and deliver this Guaranty and to perform its obligations
hereunder. The execution and delivery by it of this Guaranty and the performance
of its obligations hereunder have been duly authorized by proper corporate
proceedings, and this Guaranty constitutes a legal, valid and binding obligation
of such Subsidiary Guarantor enforceable against it in accordance with its
terms, except as enforceability may be limited by bankruptcy, insolvency or
similar laws affecting the enforcement of creditors’ rights generally.

 

(c)                                  Neither the execution and delivery by it of
this Guaranty, nor the consummation of the transactions herein contemplated, nor
compliance with the provisions hereof will violate (i) any law, rule,
regulation, order, writ, judgment, injunction, decree or award binding on it or
any of its subsidiaries or (ii) its articles or certificate of incorporation,
partnership agreement, certificate of partnership, articles or certificate of
organization, by laws, or operating or other management agreement, as the case
may be, or (iii) the provisions of any indenture, instrument or agreement to
which it or any of its subsidiaries is a party or is subject, or by which it, or
its Property, is bound, or conflict with or constitute a default thereunder, or
result in, or require, the creation or imposition of any Lien in, of or on the
Property of such Subsidiary Guarantor or a subsidiary thereof pursuant to the
terms of any such indenture, instrument or agreement. No order, consent,
adjudication, approval, license, authorization, or validation of, or filing,
recording or registration with, or exemption by, or other action in respect of
any governmental or public body or authority, or any subdivision thereof, which
has not been obtained by it or any of its subsidiaries, is required to be
obtained by it or any of its subsidiaries in connection with the execution and
delivery of this Guaranty or the performance by it of its obligations hereunder
or the legality, validity, binding effect or enforceability of this Guaranty.

 

2.2                                 Covenants. The Subsidiary Guarantor
covenants that, so long as (b) any Lender has any Commitment outstanding under
the Credit Agreement, (c) any Rate Management Transaction with one or more
Lenders or any affiliates of such Lenders remains in effect, or (d) any of the
Guaranteed Obligations shall remain unpaid, it will, and, if necessary, will
enable the Principal to, fully comply with those covenants and agreements set
forth in the Credit Agreement.

 

SECTION 3. The Guaranty. Subject to Section 9 hereof, the Subsidiary Guarantor
hereby absolutely and unconditionally guarantees, as primary obligor and not as
surety, the full and punctual payment (whether at stated maturity, upon
acceleration or early termination or otherwise, and at all times thereafter) and
performance of the Secured Obligations, including without limitation any such
Secured Obligations incurred or accrued during the pendency of any bankruptcy,
insolvency, receivership or other similar proceeding, whether or not allowed or
allowable in such proceeding (collectively, subject to the provisions of
Section 9 hereof, being referred to collectively as the “Guaranteed
Obligations”). Upon failure by the Principal to pay punctually any such amount,
the Subsidiary Guarantor agrees that it shall forthwith on demand

 

E-2

--------------------------------------------------------------------------------

 

pay to the Administrative Agent for the benefit of the Lenders and, if
applicable, their Affiliates, the amount not so paid at the place and in the
manner specified in the Credit Agreement, any Note, any Rate Management
Transaction or the relevant Loan Document, as the case may be. This Guaranty is
a guaranty of payment and not of collection. The Subsidiary Guarantor waives any
right to require the Lender to sue the Principal, any other guarantor, or any
other person obligated for all or any part of the Guaranteed Obligations, or
otherwise to enforce its payment against any collateral securing all or any part
of the Guaranteed Obligations.

 

SECTION 4. Guaranty Unconditional. Subject to Section 9 hereof, the obligations
of the Subsidiary Guarantor hereunder shall be unconditional and absolute and,
without limiting the generality of the foregoing, shall not be released,
discharged or otherwise affected by:

 

(i)                                     any extension, renewal, settlement,
compromise, waiver or release in respect of any of the Guaranteed Obligations,
by operation of law or otherwise, or any obligation of any other guarantor of
any of the Guaranteed Obligations, or any default, failure or delay, willful or
otherwise, in the payment or performance of the Guaranteed Obligations;

 

(ii)                                  any modification or amendment of or
supplement to the Credit Agreement, any Note, any Rate Management Transaction or
any other Loan Document;

 

(iii)                               any release, non-perfection or invalidity of
any direct or indirect security for any obligation of the Principal under the
Credit Agreement, any Note, any Collateral Document, any Rate Management
Transaction, any other Loan Document, or any obligations of any other guarantor
of any of the Guaranteed Obligations, or any action or failure to act by the
Administrative Agent, any Lender or any Affiliate of any Lender with respect to
any collateral securing all or any part of the Guaranteed Obligations;

 

(iv)                              any change in the corporate existence,
structure or ownership of the Principal or any other guarantor of any of the
Guaranteed Obligations, or any insolvency, bankruptcy, reorganization or other
similar proceeding affecting the Principal, or any other guarantor of the
Guaranteed Obligations, or its assets or any resulting release or discharge of
any obligation of the Principal, or any other guarantor of any of the Guaranteed
Obligations;

 

(v)                                 the existence of any claim, setoff or other
rights which the Subsidiary Guarantor may have at any time against the
Principal, any other guarantor of any of the Guaranteed Obligations, the
Administrative Agent, any Lender or any other Person, whether in connection
herewith or any unrelated transactions;

 

(vi)                              any invalidity or unenforceability relating to
or against the Principal, or any other guarantor of any of the Guaranteed
Obligations, for any reason related to the Credit Agreement, any Rate Management
Transaction, any other Loan Document, or any provision of applicable law or
regulation purporting to prohibit the payment by the Principal, or any other
guarantor of the Guaranteed

 

E-3

--------------------------------------------------------------------------------

 

Obligations, of the principal of or interest on any Note or any other amount
payable by the Principal under the Credit Agreement, any Note, any Rate
Management Transaction or any other Loan Document; or

 

(vii)                           any other act or omission to act or delay of any
kind by the Principal, any other guarantor of the Guaranteed Obligations, the
Administrative Agent, any Lender or any other Person or any other circumstance
whatsoever which might, but for the provisions of this paragraph, constitute a
legal or equitable discharge of any Subsidiary Guarantor’s obligations
hereunder.

 

SECTION 5. Discharge Only Upon Payment In Full: Reinstatement In Certain
Circumstances.  The Subsidiary Guarantor’s obligations hereunder shall remain in
full force and effect until all Guaranteed Obligations shall have been
indefeasibly paid in full, the Commitments under the Credit Agreement shall have
terminated or expired and all Rate Management Transactions have terminated or
expired.  If at any time any payment of the principal of or interest on any Note
or any other amount payable by the Principal or any other party under the Credit
Agreement, any Rate Management Transaction or any other Loan Document is
rescinded or must be otherwise restored or returned upon the insolvency,
bankruptcy or reorganization of the Principal or otherwise, the Subsidiary
Guarantor’s obligations hereunder with respect to such payment shall be
reinstated as though such payment had been due but not made at such time.

 

SECTION 6. Waivers.  The Subsidiary Guarantor irrevocably waives acceptance
hereof, presentment, demand, protest and, to the fullest extent permitted by
law, any notice not provided for herein, as well as any requirement that at any
time any action be taken by any Person against the Principal, any other
guarantor of any of the Guaranteed Obligations, or any other Person.

 

SECTION 7. Subrogation.  The Subsidiary Guarantor hereby agrees not to assert
any right, claim or cause of action, including, without limitation, a claim for
subrogation, reimbursement, indemnification or otherwise, against the Principal
arising out of or by reason of this Guaranty or the obligations hereunder,
including, without limitation, the payment or securing or purchasing of any of
the Guaranteed Obligations by the Subsidiary Guarantor unless and until the
Guaranteed Obligations are indefeasibly paid in full, any commitment to lend
under the Credit Agreement and any other Loan Documents is terminated and all
Rate Management Transactions have terminated or expired.

 

SECTION 8. Stay of Acceleration.  If acceleration of the time for payment of any
of the Guaranteed Obligations is stayed upon the insolvency, bankruptcy or
reorganization of the Principal, all such amounts otherwise subject to
acceleration under the terms of the Credit Agreement, any Note, any Rate
Management Transaction or any other Loan Document shall nonetheless be payable
by the Subsidiary Guarantor hereunder forthwith on demand by the Administrative
Agent made at the request of the Required Lenders.

 

SECTION 9. Limitation on Obligations.

 

(a)                                  The provisions of this Guaranty are
severable, and in any action or proceeding involving any state corporate law, or
any state, federal or foreign bankruptcy, insolvency,

 

E-4

--------------------------------------------------------------------------------

 

reorganization or other law affecting the rights of creditors generally, if the
obligations of the Subsidiary Guarantor under this Guaranty would otherwise be
held or determined to be avoidable, invalid or unenforceable on account of the
amount of the Subsidiary Guarantor’s liability under this Guaranty, then,
notwithstanding any other provision of this Guaranty to the contrary, the amount
of such liability shall, without any further action by the Subsidiary Guarantor,
the Administrative Agent or any Lender, be automatically limited and reduced to
the highest amount that is valid and enforceable as determined in such action or
proceeding (such highest amount determined hereunder being the Subsidiary
Guarantor’s “Maximum Liability”). This Section 9(a) with respect to the Maximum
Liability of the Subsidiary Guarantor is intended solely to preserve the rights
of the Administrative Agent hereunder to the maximum extent not subject to
avoidance under applicable law, and neither the Subsidiary Guarantor nor any
other person or entity shall have any right or claim under this
Section 9(a) with respect to the Maximum Liability, except to the extent
necessary so that the obligations of the Subsidiary Guarantor hereunder shall
not be rendered voidable under applicable law.

 

(b)                                 The Subsidiary Guarantor agrees that the
Guaranteed Obligations may at any time and from time to time exceed the Maximum
Liability of the Subsidiary Guarantor without impairing this Guaranty or
affecting the rights and remedies of the Administrative Agent hereunder. Nothing
in this Section 9(b) shall be construed to increase the Subsidiary Guarantor’s
obligations hereunder beyond its Maximum Liability.

 

(c)                                  In the event the Subsidiary Guarantor (a
“Paying Subsidiary Guarantor”) shall make any payment or payments under this
Guaranty or shall suffer any loss as a result of any realization upon any
collateral granted by it to secure its obligations under this Guaranty, each
other Guarantor, as applicable (each a “Non-Paying Subsidiary Guarantor”), shall
contribute to such Paying Subsidiary Guarantor an amount equal to such
Non-Paying Subsidiary Guarantor’s “Pro Rata Share” of such payment or payments
made, or losses suffered, by such Paying Subsidiary Guarantor.  For the purposes
hereof, each Non-Paying Subsidiary Guarantor’s “Pro Rata Share” with respect to
any such payment or loss by a Paying Subsidiary Guarantor shall be determined as
of the date on which such payment or loss was made by reference to the ratio of
(i) such Non-Paying Subsidiary Guarantor’s Maximum Liability as of such date
(without giving effect to any right to receive, or obligation to make, any
contribution hereunder) or, if such Non-Paying Subsidiary Guarantor’s Maximum
Liability has not been determined, the aggregate amount of all monies received
by such Non-Paying Subsidiary Guarantor from the Principal after the date hereof
(whether by loan, capital infusion or by other means) to (ii) the aggregate
Maximum Liability of the Subsidiary Guarantor hereunder as of such date (without
giving effect to any right to receive, or obligation to make, any contribution
hereunder), or to the extent that a Maximum Liability has not been determined
for the Subsidiary Guarantor, the aggregate amount of all monies received by
such Subsidiary Guarantor from the Principal after the date hereof (whether by
loan, capital infusion or by other means).  Nothing in this Section 9(c) shall
affect the Subsidiary Guarantor’s liability for the entire amount of the
Guaranteed Obligations (up to such Subsidiary Guarantor’s Maximum Liability). 
The Subsidiary Guarantor covenants and agrees that its right to receive any
contribution under this Guaranty from a Non-Paying Subsidiary Guarantor shall be
subordinate and junior in right of payment to all the Guaranteed Obligations. 
The provisions of this Section 9(c) are for the benefit of both the
Administrative Agent and the Subsidiary Guarantor and may be enforced by any
one, or more, or all of them in accordance with the terms hereof.

 

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SECTION 10. Application of Payments.  All payments received by the
Administrative Agent hereunder shall be applied by the Administrative Agent to
payment of the Guaranteed Obligations in the following order unless a court of
competent jurisdiction shall otherwise direct:

 

(a)                                  FIRST, to payment of all costs and expenses
of the Administrative Agent incurred in connection with the collection and
enforcement of the Guaranteed Obligations or of any security interest granted to
the Administrative Agent in connection with any collateral securing the
Guaranteed Obligations;

 

(b)                                 SECOND, to payment of that portion of the
Guaranteed Obligations constituting accrued and unpaid interest and fees, pro
rata among the Lenders and their Affiliates in accordance with the amount of
such accrued and unpaid interest and fees owing to each of them;

 

(c)                                  THIRD, to payment of the principal of the
Guaranteed Obligations and the net early termination payments and any other Rate
Management Obligations then due and unpaid from the Borrower to any of the
Lenders or their Affiliates, pro rata among the Lenders and their Affiliates in
accordance with the amount of such principal and such net early termination
payments and other Rate Management Obligations then due and unpaid owing to each
of them; and

 

(d)                                 FOURTH, to payment of any Guaranteed
Obligations (other than those listed above) pro rata among those parties to whom
such Guaranteed Obligations are due in accordance with the amounts owing to each
of them.

 

SECTION 11. Notices.  All notices, requests and other communications to any
party hereunder shall be given or made by telecopier or other writing and
telecopied, or mailed or delivered to the intended recipient at its address or
telecopier number set forth on the signature pages hereof or such other address
or telecopy number as such party may hereafter specify for such purpose by
notice to the Administrative Agent in accordance with the provisions of
Article XVI of the Credit Agreement.  Except as otherwise provided in this
Guaranty, all such communications shall be deemed to have been duly given when
transmitted by telecopier, or personally delivered or, in the case of a mailed
notice sent by certified mail return-receipt requested, on the date set forth on
the receipt (provided, that any refusal to accept any such notice shall be
deemed to be notice thereof as of the time of any such refusal), in each case
given or addressed as aforesaid.

 

SECTION 12. No Waivers.  No failure or delay by the Administrative Agent or any
Lenders in exercising any right, power or privilege hereunder shall operate as a
waiver thereof nor shall any single or partial exercise thereof preclude any
other or further exercise thereof or the exercise of any other right, power or
privilege.  The rights and remedies provided in this Guaranty, the Credit
Agreement, any Note, any Rate Management Transaction and the other Loan
Documents shall be cumulative and not exclusive of any rights or remedies
provided by law.

 

SECTION 13. No Duty to Advise.  The Subsidiary Guarantor assumes all
responsibility for being and keeping itself informed of the Principal’s
financial condition and assets, and of all other circumstances bearing upon the
risk of nonpayment of the Guaranteed Obligations and the

 

E-6

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nature, scope and extent of the risks that the Subsidiary Guarantor assumes and
incurs under this Guaranty, and agrees that neither the Administrative Agent nor
any Lender has any duty to advise the Subsidiary Guarantor of information known
to it regarding those circumstances or risks.

 

SECTION 14. Successors and Assigns.  This Guaranty is for the benefit of the
Administrative Agent and the Lenders and their respective successors and
permitted assigns and in the event of an assignment of any amounts payable under
the Credit Agreement, any Note, any Rate Management Transaction, or the other
Loan Documents, the rights hereunder, to the extent applicable to the
indebtedness so assigned, shall be transferred with such indebtedness. This
Guaranty shall be binding upon the Subsidiary Guarantor and its respective
successors and permitted assigns.

 

SECTION 15. Changes in Writing.  Neither this Guaranty nor any provision hereof
may be changed, waived, discharged or terminated orally, but only in writing
signed by the Subsidiary Guarantor and the Administrative Agent.  In addition,
all such amendments and waivers shall be effective only if given with the
necessary approvals of Lenders as required in the Credit Agreement.

 

SECTION 16. Costs of Enforcement.  The Subsidiary Guarantor agrees to pay all
costs and expenses including, without limitation, all court costs and attorneys’
fees and expenses paid or incurred by the Administrative Agent or any Lender or
any Affiliate of any Lender in endeavoring to collect all or any part of the
Guaranteed Obligations from, or in prosecuting any action against, the
Principal, the Subsidiary Guarantor or any other guarantor of all or any part of
the Guaranteed Obligations.

 

SECTION 17. GOVERNING LAW; SUBMISSION TO JURISDICTION; WAIVER OF JURY TRIAL. 
THIS GUARANTY SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAW OF
THE STATE OF COLORADO.  THE SUBSIDIARY GUARANTOR HEREBY SUBMITS TO THE
NONEXCLUSIVE JURISDICTION OF ANY UNITED STATES FEDERAL OR COLORADO STATE COURT
SITTING IN DENVER, COLORADO AND FOR PURPOSES OF ALL LEGAL PROCEEDINGS ARISING
OUT OF OR RELATING TO THIS GUARANTY (INCLUDING, WITHOUT LIMITATION, ANY OF THE
OTHER LOAN DOCUMENTS) OR THE TRANSACTIONS CONTEMPLATED HEREBY.  THE SUBSIDIARY
GUARANTOR IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY
OBJECTION WHICH ANY OF THEM MAY NOW OR HEREAFTER HAVE TO THE LAYING OF THE VENUE
OF ANY SUCH PROCEEDING BROUGHT IN SUCH A COURT AND ANY CLAIM THAT ANY SUCH
PROCEEDING BROUGHT IN SUCH A COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM. 
THE SUBSIDIARY GUARANTOR, AND THE ADMINISTRATIVE AGENT AND THE LENDERS ACCEPTING
THIS GUARANTY, HEREBY IRREVOCABLY WAIVE ANY AND ALL RIGHT TO TRIAL BY JURY IN
ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS GUARANTY OR THE
TRANSACTIONS CONTEMPLATED HEREBY.

 

SECTION 18. Taxes. etc.  All payments required to be made by the Subsidiary
Guarantor hereunder shall be made without setoff or counterclaim and free and
clear of and

 

E-7

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without deduction or withholding for or on account of, any present or future
taxes, levies, imposts, duties or other charges of whatsoever nature imposed by
any government or any political or taxing authority thereof except to the extent
prohibited by applicable law (but excluding Excluded Taxes), provided, however,
that if the Subsidiary Guarantor is required by law to make such deduction or
withholding, the Subsidiary Guarantor shall forthwith (a) pay to the
Administrative Agent or any Lender, as applicable, such additional amount as
results in the net amount received by the Administrative Agent or any Lender, as
applicable, equaling the full amount which would have been received by the
Administrative Agent or any Lender, as applicable, had no such deduction or
withholding been made, (b) pay the full amount deducted to the relevant
authority in accordance with applicable law, and (c) furnish to the
Administrative Agent or any Lender, as applicable, certified copies of official
receipts evidencing payment of such withholding taxes within 30 days after such
payment is made.

 

SECTION 19. Setoff.  Without limiting the rights of the Administrative Agent or
the Lenders under applicable law, if all or any part of the Guaranteed
Obligations is then due, whether pursuant to the occurrence of a Default or
otherwise, then the Guarantor authorizes the Administrative Agent and the
Lenders to apply any sums standing to the credit of the Guarantor with the
Administrative Agent or any Lender or any Lending Installation of the
Administrative Agent or any Lender toward the payment of the Guaranteed
Obligations.

 

[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]

 

E-8

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IN WITNESS WHEREOF, the Subsidiary Guarantor has caused this Guaranty to be duly
executed by its authorized officer as of the day and year first above written.

 

Address for Subsidiary Guarantor:

                                                          , a

 

 

 

 

 

 

 

 

 

 

By:

 

 

Attention:

 

 

Name:

 

 

Telephone:

 

 

Title:

 

 

Fax:

 

 

 

 

 

 

ACKNOWLEDGED AND AGREED to
As of the date first written above:

JPMORGAN CHASE BANK, N.A., Administrative Agent

By:

 

 

 

J. Scott Fowler,

 

Vice President

 

E-9

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EXHIBIT F

FORM OF AMENDMENT FOR AN INCREASED OR NEW COMMITMENT

 

This AMENDMENT is made as of the            day of                     , 200  
by and among Cimarex Energy Co., a Delaware corporation (the “Borrower”),
JPMorgan Chase Bank, N.A., as administrative agent under the “Credit Agreement”
(as defined below) (the “Administrative Agent”), and
                                                   (the “Supplemental Lender”).

 

The Borrower, the Administrative Agent and certain other Lenders, as described
therein, are parties to an Amended and Restated Credit Agreement dated as of
June 13, 2005 (as amended, supplemented, or restated, the “Credit Agreement”). 
All terms used herein and not otherwise defined shall have the same meaning
given to them in the Credit Agreement.

 

Pursuant to Section 15.6 of the Credit Agreement, the Borrower has the right to
increase the Aggregate Commitment by obtaining additional Commitments upon
satisfaction of certain conditions.  This Amendment requires only the signature
of the Borrower, the Administrative Agent and the Supplemental Lender so long as
the Aggregate Commitment is not increased above the amount permitted by the
Credit Agreement.

 

The Supplemental Lender is either (a) an existing Lender which is increasing its
Commitment or (b) a new Lender which is a lending institution whose identity the
Administrative Agent will approve by its signature below.

 

In consideration of the foregoing, such Supplemental Lender, from and after the
date hereof shall have a  **[Commitment of $                              
and if it is a new Lender, the Supplemental Lender hereby assumes all of the
rights and obligations of a Lender under the Credit Agreement.]**

 

The Borrower has executed and delivered to the Supplemental Lender as of the
date hereof, if requested by the Supplemental Lender, a new or amended and
restated Note in the form attached to the Credit Agreement as Exhibit A to
evidence the new or increased Commitment of the Supplemental Lender.

 

[Signature Page Follows]

 

F-1

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IN WITNESS WHEREOF, the Administrative Agent, the Borrower and the Supplemental
Lender have executed this Amendment as of the date shown above.

 

 

CIMAREX ENERGY CO.

 

 

 

By:

 

 

 

Name:

 

 

 

Title:

 

 

 

 

 

 

 

 

 

[SUPPLEMENTAL LENDER]

 

 

 

By:

 

 

 

Name:

 

 

 

Title:

 

 

 

 

 

 

 

JPMORGAN CHASE BANK, N.A., as
Administrative Agent

 

 

 

 

 

By:

 

 

 

Name:

 

 

 

Title:

 

 

 

F-2

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EXHIBIT G-1

FORM OF PLEDGE AGREEMENT (CORPORATION)

 

THIS PLEDGE AGREEMENT (CORPORATION) (this “Agreement”) is made as of
                                          , 20      , by
                                                          , a
                                                                 (herein called
“Debtor”), in favor of JPMorgan Chase Bank, N.A., a national banking
association, in its capacity as Administrative Agent for the lenders party to
the Credit Agreement referred to below (herein called “Secured Party”).

 

RECITALS:

 

1.                                       Cimarex Energy Co., a Delaware
corporation (“Borrower”), has executed in favor of Lenders (as such term is
defined below) those certain promissory notes dated June 13, 2005, payable to
the order of Lenders in the aggregate original principal amount of
$1,000,000,000 (such promissory notes, as from time to time amended, and all
promissory notes given in substitution, renewal or extension therefor or
thereof, in whole or in part, being herein collectively called the “Note”).

 

2.                                       The Note was executed pursuant to an
Amended and Restated Credit Agreement dated as of June 13, 2005 (herein, as from
time to time amended, supplemented or restated, called the “Credit Agreement”),
by and between Borrower, Secured Party, and Lenders, pursuant to which Lenders
have agreed to advance funds to Debtor under the Note.

 

3.                                       Pursuant to the Credit Agreement,
Debtor is providing a guaranty of all of the indebtedness of Borrower under the
Credit Agreement and the Note pursuant to a Subsidiary Guaranty of even date
herewith (herein, as from time to time amended, supplemented or restated, called
the “Guaranty”), by Debtor and certain other Subsidiary Guarantors party thereto
in favor of Secured Party for the benefit of the Lenders.

 

4.                                       It is a condition precedent to Lenders
obligation to advance funds pursuant to the Credit Agreement that Debtor shall
execute and deliver this Agreement to Secured Party.

 

5.                                       Borrower owns directly one hundred
percent (100%) of the issued and outstanding shares of common stock of Debtor.

 

6.                                       Borrower, Debtor, and the other direct
and indirect subsidiaries of Borrower are mutually dependent on each other in
the conduct of their respective businesses under a holding company structure,
with the credit needed from time to time by each often being provided by another
or by means of financing obtained by one such Affiliate with the support of the
others for their mutual benefit and the ability of each to obtain such financing
being dependent on the successful operations of the others.

 

7.                                       The board of directors of Debtor has
determined that Debtor’s execution, delivery and performance of this Agreement
may reasonably be expected to benefit Debtor, directly or indirectly, and are in
the best interests of Debtor.

 

G-1-1

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NOW, THEREFORE, in consideration of the premises, of the benefits which will
inure to Debtor from Lenders’ extensions of credit under the Credit Agreement,
and of Ten Dollars and other good and valuable consideration, the receipt and
sufficiency of all of which are hereby acknowledged, and in order to induce
Lenders to extend credit under the Credit Agreement, Debtor hereby agrees with
Secured Party for the benefit of each Lender as follows:

 

AGREEMENTS

 

ARTICLE I - Definitions and References

 

Section 1.1.                                   General Definitions.  As used
herein, the terms “Agreement”, “Debtor”, “Secured Party”, “Note”, “Guaranty”,
“Borrower”, and “Credit Agreement” shall have the meanings indicated above, and
the following terms shall have the following meanings:

 

“Collateral” means all property, of whatever type, which is described in
Section 2.1 as being at any time subject to a security interest granted
hereunder to Secured Party.

 

“Commitment” means the agreement or commitment by Lenders to make loans or
otherwise extend credit to Borrower under the Credit Agreement, and any other
agreement, commitment, statement of terms or other document contemplating the
making of loans or advances or other extension of credit by Lenders to or for
the account of Borrower which is now or at any time hereafter intended to be
secured by the Collateral under this Agreement.

 

“Control” shall have the meaning set forth in Article 8 or, if applicable, in
Section 9-104, 9-105, 9-106 or 9-107 of Article 9 of the UCC.

 

“Issuer” means any issuer of Pledged Shares and any successor of such Issuer.

 

“Lenders” means the lenders party to the Credit Agreement and their successors
and assigns.

 

“Obligation Documents” means the Credit Agreement, the Guaranty, all other Loan
Documents, all documents evidencing Rate Management Transactions with one or
more Lenders or any affiliates of such Lenders, and all other documents and
instruments under, by reason of which, or pursuant to which any or all of the
Secured Obligations are evidenced, governed, secured, guarantied, or otherwise
dealt with, and all other agreements, certificates, and other documents,
instruments and writings heretofore or hereafter delivered in connection
herewith or therewith.

 

“Other Liable Party” means any Person, other than Debtor, but including
Borrower, who may now or may at any time hereafter be primarily or secondarily
liable for any of the Secured Obligations or who may now or may at any time
hereafter have granted to Secured Party or Lenders a Lien upon any property as
security for the Secured Obligations.

 

“Pledged Shares” has the meaning given it in Section 2.1(a).

 

“UCC” means the Colorado Uniform Commercial Code as in effect from time to time.

 

G-1-2

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Section 1.2.                                   Incorporation of Other
Definitions.  Reference is hereby made to the Credit Agreement for a statement
of the terms thereof.  All capitalized terms used in this Agreement which are
defined in the Credit Agreement and not otherwise defined herein shall have the
same meanings herein as set forth therein.  All terms used in this Agreement
which are defined in the UCC and not otherwise defined herein or in the Credit
Agreement shall have the same meanings herein as set forth therein, except where
the context otherwise requires.  The parties intend that the terms used herein
which are defined in the UCC have, at all times, the broadest and most inclusive
meanings possible.  Accordingly, if the UCC shall in the future be amended or
held by a court to define any term used herein more broadly or inclusively than
the UCC in effect on the date hereof, then such term, as used herein, shall be
given such broadened meaning.  If the UCC shall in the future be amended or held
by a court to define any term used herein more narrowly, or less inclusively,
than the UCC in effect on the date hereof, such amendment or holding shall be
disregarded in defining terms used herein.

 

Section 1.3.                                   Attachments.  All exhibits or
schedules which may be attached to this Agreement are a part hereof for all
purposes.

 

Section 1.4.                                   Amendment of Defined
Instruments.  Unless the context otherwise requires or unless otherwise provided
herein, references in this Agreement to a particular agreement, instrument or
document (including, but not limited to, references in Section 2.1) also refer
to and include all renewals, extensions, amendments, modifications, supplements
or restatements of any such agreement, instrument or document, provided that
nothing contained in this Section shall be construed to authorize any Person to
execute or enter into any such renewal, extension, amendment, modification,
supplement or restatement.

 

Section 1.5.                                   References and Titles.  All
references in this Agreement to Exhibits, Articles, Sections, subsections, and
other subdivisions refer to the Exhibits, Articles, Sections, subsections and
other subdivisions of this Agreement unless expressly provided otherwise. 
Titles appearing at the beginning of any subdivision are for convenience only
and do not constitute any part of any such subdivision and shall be disregarded
in construing the language contained in this Agreement.  The words “this
Agreement”, “herein”, “hereof”, “hereby”, “hereunder” and words of similar
import refer to this Agreement as a whole and not to any particular subdivision
unless expressly so limited.  The phrases “this Section” and “this subsection”
and similar phrases refer only to the Sections or subsections hereof in which
the phrase occurs.  The word “or” is not exclusive, and the word “including” (in
all of its forms) means “including without limitation”.  Pronouns in masculine,
feminine and neuter gender shall be construed to include any other gender, and
words in the singular form shall be construed to include the plural and vice
versa unless the context otherwise requires.

 

ARTICLE II - Security Interest

 

Section 2.1.                                   Grant of Security Interest.  As
collateral security for all of the Secured Obligations, Debtor hereby pledges
and assigns to Secured Party and grants to Secured Party a continuing security
interest, for the benefit of each Lender, in and to all right, title and
interest of the following:

 

G-1-3

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(a)                                  Pledged Shares.  All of the following,
whether now or hereafter existing, which are owned by Debtor or in which Debtor
otherwise has any rights: all shares of stock of each Subsidiary of Debtor
described on Exhibit A hereto, all certificates representing any such shares,
all options and other rights, contractual or otherwise, at any time existing
with respect to such shares, and all dividends, cash, instruments and other
property now or hereafter received, receivable or otherwise distributed in
respect of or in exchange for any or all of such shares (any and all such
shares, certificates, options, rights, dividends, cash, instruments and other
property being herein called the “Pledged Shares”).

 

(b)                                 Proceeds.  All proceeds of any and all of
the foregoing Collateral.

 

In each case, the foregoing shall be covered by this Agreement, whether Debtor’s
ownership or other rights therein are presently held or hereafter acquired and
however Debtor’s interests therein may arise or appear (whether by ownership,
security interest, claim or otherwise).

 

Section 2.2.                                   Secured Obligations Secured.  The
security interest created hereby in the Collateral constitutes continuing
collateral security for all of the following obligations, indebtedness and
liabilities, whether now existing or hereafter incurred or arising:

 

(a)                                  Secured Obligations.  The payment by
Borrower, as and when due and payable, of the Secured Obligations, the due
performance by Borrower of all of its other obligations under or in respect of
the various Obligation Documents, the payment by Debtor, as and when due and
payable, of all amounts from time to time owing by Debtor under or in respect of
the Guaranty, and the due performance by Debtor of all of its other obligations
under or in respect of the various Obligation Documents.

 

(b)                                 Renewals.  All renewals, extensions,
amendments, modifications, supplements, or restatements of or substitutions for
any of the foregoing.

 

As used herein, the term “Secured Obligations” refers to all present and future
indebtedness, obligations and liabilities of whatever type which are described
above in this section, including any interest which accrues after the
commencement of any case, proceeding, or other action relating to the
bankruptcy, insolvency, or reorganization of Debtor.  Debtor hereby acknowledges
that the Secured Obligations are owed to the various Lenders and that each
Lender is entitled to the benefits of the Liens given under this Agreement.  It
is the intention of the Debtor and Secured Party that this Agreement not
constitute a fraudulent transfer or fraudulent conveyance under any state or
federal law that may be applied hereto.  Debtor and, by its acceptance hereof,
Secured Party hereby acknowledges and agrees that, notwithstanding any other
provision of this Agreement: (a) the indebtedness secured hereby shall be
limited to the maximum amount of indebtedness that can be incurred or secured by
Debtor without rendering this Agreement subject to avoidance under Section 548
of the United States Bankruptcy Code or any comparable provisions of any
applicable state or federal law, and (b) the Collateral pledged by Debtor
hereunder shall be limited to the maximum amount of Collateral that can be
pledged by Debtor without rendering this Agreement subject to avoidance under
Section 548 of the United States Bankruptcy Code or any comparable provisions of
any applicable state or federal law.

 

G-1-4

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ARTICLE III - Representations, Warranties and Covenants

 

Section 3.1.                                   Representations and Warranties. 
Each of the representations and warranties in the Credit Agreement applicable to
Debtor is true and correct.  In addition, Debtor hereby represents and warrants
to Secured Party and Lenders as follows:

 

(a)                                  Security Interest.  Debtor has and will
have at all times full right, power and authority to grant a security interest
in the Collateral to Secured Party as provided herein, free and clear of any
Lien, adverse claim, or encumbrance.  This Agreement creates a valid and binding
first priority security interest in favor of Secured Party in the Collateral,
which security interest secures all of the Secured Obligations.

 

(b)                                 Perfection.  The taking possession by
Secured Party of all certificates, instruments and cash constituting Collateral
from time to time will perfect, and establish the first priority of, Secured
Party’s security interest hereunder in the Collateral securing the Secured
Obligations.  No further action is necessary or desirable to perfect or
otherwise continue, preserve or protect such security interest.

 

(c)                                  Pledged Shares.  Debtor has delivered to
Secured Party all certificates evidencing Pledged Shares.  All such certificates
are valid and genuine and have not been altered.  All shares and other
securities constituting the Pledged Shares which are certificated securities
have been duly authorized and validly issued, are fully paid and non-assessable,
and were not issued in violation of the preemptive rights of any Person or of
any agreement by which Debtor or the Issuer thereof is bound.  All documentary,
stamp or other taxes or fees owing in connection with the issuance, transfer or
pledge of Pledged Shares (or rights in respect thereof) have been paid.  No
restrictions or conditions exist with respect to the transfer, voting or capital
of any Pledged Shares.  The Pledged Shares constitute the percentage of the
class of issued shares of capital stock which is indicated on Exhibit A.  No
Issuer of any Pledged Shares has any outstanding stock rights, rights to
subscribe, options, warrants or convertible securities outstanding or any other
rights outstanding whereby any Person would be entitled to have issued to him
capital stock of such Issuer.

 

Section 3.2.                                   Covenants.  Unless Secured Party
shall otherwise consent in writing, Debtor will at all times (i) comply with the
covenants contained in the Credit Agreement which are applicable to Debtor and
(ii) comply with the covenants contained in this Section 3.2 so long as any part
of the Secured Obligations or the Commitment is outstanding.

 

(a)                                  Delivery of Pledged Shares.  All
instruments, certificates, and writings evidencing the Pledged Shares shall be
delivered to Secured Party on or prior to the execution and delivery of this
Agreement, together with a true and correct copy of the articles of
incorporation and bylaws of each Issuer and all amendments and supplements
thereto.  All other certificates, instruments, or writings hereafter evidencing
or constituting Pledged Shares, and all amendments or supplements to the
articles of incorporation or bylaws of any Issuer (whether or not authorized
hereunder), shall be delivered to Secured Party promptly upon the receipt
thereof by or on behalf of Debtor.  All such Pledged Shares shall be held by or
on behalf of Secured Party pursuant hereto and shall be delivered in suitable
form for transfer by delivery with any

 

G-1-5

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necessary endorsement or shall be accompanied by fully executed instruments of
transfer or assignment in blank, all in form and substance satisfactory to
Secured Party.

 

(b)                                 Proceeds of Pledged Shares.  If Debtor shall
receive, by virtue of its being or having been an owner of any Pledged Shares,
any (i) stock certificate (including any certificate representing a stock
dividend or distribution in connection with any increase or reduction of
capital, reorganization, reclassification, merger, consolidation, sale of
assets, combination of shares, stock split, spinoff or split-off), promissory
note or other instrument or writing; (ii) option or right, whether as an
addition to, substitution for, or in exchange for, any Pledged Shares, or
otherwise; (iii) dividends payable in cash (except such dividends permitted to
be retained by Debtor pursuant to Section 4.8 hereof) or in securities or other
property, or (iv) dividends or other distributions in connection with a partial
or total liquidation or dissolution or in connection with a reduction of
capital, capital surplus or paid-in surplus, Debtor shall receive the same in
trust for the benefit of Secured Party, shall segregate it from Debtor’s other
property, and shall promptly deliver it to Secured Party in the exact form
received, with any necessary endorsement or appropriate stock powers duly
executed in blank, to be held by Secured Party as Collateral.

 

(c)                                  Status of Pledged Shares.  The certificates
evidencing the Pledged Shares shall at all times be valid and genuine and shall
not be altered.  The Pledged Shares at all times shall be duly authorized,
validly issued, fully paid, and non-assessable, and shall not be issued in
violation of the pre-emptive rights of any Person or of any agreement by which
Debtor or the Issuer thereof is bound and shall not be subject to any
restrictions with respect to transfer, voting or capital of such Pledged Shares.

 

(d)                                 Dilution of Shareholdings.  Debtor will not
permit the issuance of (i) any additional shares of any class of capital stock
of any Issuer (unless immediately upon issuance the same are pledged and
delivered to Secured Party pursuant to the terms hereof to the extent necessary
to give Secured Party a first priority security interest after such issue in at
least the same percentage of such Issuer’s outstanding shares as Debtor had
before such issue), (ii) any securities convertible voluntarily by the holder
thereof or automatically upon the occurrence or non-occurrence of any event or
condition into, or exchangeable for, any such shares of capital stock, or
(iii) any warrants, options, contracts or other commitments entitling any Person
to purchase or otherwise acquire any such shares of capital stock not
outstanding as of the date of this Agreement.

 

(e)                                  Restrictions on Pledged Shares.  Debtor
will not enter into any agreement creating, or otherwise permit to exist, any
restriction or condition upon the transfer, voting or Control of any Pledged
Shares.

 

ARTICLE IV - Remedies, Powers and Authorizations

 

Section 4.1.                                   Provisions Concerning the
Collateral.

 

(a)                                  Financing Statements and Other Actions;
Defense of Title.  Debtor hereby authorizes Secured Party to file, and if
requested will execute and deliver to Secured Party, all financing or
continuation statements (and amendments thereto) and other documents

 

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and take such other actions as may from time to time be requested by Secured
Party in order to maintain a first perfected security interest in and, if
applicable, control of, the Collateral.  Debtor will take any and all actions
necessary to defend title to the Collateral against all persons and to defend
the security interest of Secured Party in the Collateral and the priority
thereof against any Lien not expressly permitted hereunder.

 

(b)                                 Power of Attorney.  Debtor hereby
irrevocably appoints Secured Party as Debtor’s attorney-in-fact and proxy, with
full authority in the place and stead of Debtor and in the name of Debtor or
otherwise, upon the occurrence and during the continuance of a Default, from
time to time in Secured Party’s discretion, to take any action, and to execute
or indorse any instrument, certificate or notice, which Secured Party may deem
necessary or advisable to accomplish the purposes of this Agreement including
any action or instrument: (i) to request or instruct each Issuer (and each
registrar, transfer agent, or similar Person acting on behalf of each Issuer) to
register the pledge or transfer of the Collateral to Secured Party; (ii) to
otherwise give notification to any Issuer, registrar, transfer agent, financial
intermediary, or other Person of Secured Party’s security interests hereunder;
(iii) to ask, demand, collect, sue for, recover, compound, receive and give
acquittance and receipts for moneys due and to become due under or in respect of
any of the Collateral; (iv) to receive, indorse and collect any drafts or other
instruments or documents; (v) to enforce any obligations included among the
Collateral; and (vi) to file any claims or take any action or institute any
proceedings which Secured Party may deem necessary or desirable for the
collection of any of the Collateral or otherwise to enforce, perfect, or
establish the priority of the rights of Secured Party with respect to any of the
Collateral.  Debtor hereby acknowledges that such power of attorney and proxy
are coupled with an interest, and are irrevocable.

 

(c)                                  Performance by Secured Party.  If Debtor
fails to perform any agreement or obligation contained herein, Secured Party may
itself perform, or cause performance of, such agreement or obligation, and the
expenses of Secured Party incurred in connection therewith shall be payable by
Debtor under Section 4.5.

 

(d)                                 Collection Rights.  Secured Party shall have
the right at any time, upon the occurrence and during the continuance of a
Default, to notify (or require Debtor to notify) any or all Persons (including
any Issuer) obligated to make payments which are included among the Collateral
(whether accounts, general intangibles, dividends, or otherwise) of the
assignment thereof to Secured Party under this Agreement and to direct such
obligors to make payment of all amounts due or to become due to Debtor
thereunder directly to Secured Party and, upon such notification and at the
expense of Debtor and to the extent permitted by law, to enforce collection
thereof and to adjust, settle or compromise the amount or payment thereof, in
the same manner and to the same extent as Debtor could have done.  After Debtor
receives notice that Secured Party has given (and after Secured Party has
required Debtor to give) any notice referred to above in this subsection:

 

(i)                                     all amounts and proceeds (including
instruments and writings) received by Debtor in respect of such rights to
payments, accounts, or general intangibles shall be received in trust for the
benefit of Secured Party hereunder, shall be segregated from other funds of
Debtor and shall be forthwith paid over to Secured Party in the same

 

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form as so received (with any necessary indorsement) to be applied as specified
in Section 4.3, and

 

(ii)                                  Debtor will not adjust, settle or
compromise the amount or payment of any such account or general intangible or
release wholly or partly any account debtor or obligor thereof (including any
Issuer) or allow any credit or discount thereon.

 

Section 4.2.                                   Default Remedies.  If a Default
shall have occurred and be continuing, Secured Party may from time to time in
its discretion, without limitation and without notice except as expressly
provided below:

 

(a)                                  exercise in respect of the Collateral, in
addition to any other rights and remedies provided for herein, under the other
Obligation Documents or otherwise available to it, all the rights and remedies
of a secured party on default under the UCC (whether or not the UCC applies to
the affected Collateral);

 

(b)                                 require Debtor to, and Debtor hereby agrees
that it will at its expense and upon request of Secured Party, promptly assemble
all books, records and information of Debtor relating to the Collateral at a
place to be designated by Secured Party which is reasonably convenient to both
parties;

 

(c)                                  reduce its claim to judgment or foreclose
or otherwise enforce, in whole or in part, the security interest created hereby
by any available judicial procedure;

 

(d)                                 dispose of, at its office, on the premises
of Debtor or elsewhere, all or any part of the Collateral, as a unit or in
parcels, by public or private proceedings, and by way of one or more contracts
(it being agreed that the sale of any part of the Collateral shall not exhaust
Secured Party’s power of sale, but sales may be made from time to time, and at
any time, until all of the Collateral has been sold or until the Secured
Obligations have been paid and performed in full), and at any such sale it shall
not be necessary to exhibit any of the Collateral;

 

(e)                                  buy (or allow one or more of the Lenders to
buy) the Collateral, or any part thereof, at any public sale;

 

(f)                                    buy (or allow one or more of the Lenders
to buy) the Collateral, or any part thereof, at any private sale if the
Collateral is of a type customarily sold in a recognized market or is of a type
which is the subject of widely distributed standard price quotations;

 

(g)                                 apply by appropriate judicial proceedings
for appointment of a receiver for the Collateral, or any part thereof, and
Debtor hereby consents to any such appointment; and

 

(h)                                 at its discretion, retain the Collateral in
satisfaction of the Secured Obligations whenever the circumstances are such that
Secured Party is entitled to do so under the UCC or otherwise (provided that
Secured Party shall in no circumstances be deemed to have retained the
Collateral in satisfaction of the Secured Obligations in the absence of an
express notice by Secured Party to Debtor that Secured Party has either done so
or intends to do so).

 

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Debtor agrees that, to the extent notice of sale shall be required by law, at
least ten (10) days’ notice to Debtor of the time and place of any public sale
or the time after which any private sale is to be made shall constitute
reasonable notification.  Secured Party shall not be obligated to make any sale
of Collateral regardless of notice of sale having been given.  Secured Party may
adjourn any public or private sale from time to time by announcement at the time
and place fixed therefor, and such sale may, without further notice, be made at
the time and place to which it was so adjourned.

 

Section 4.3.                                   Application of Proceeds.  If any
Default shall have occurred and be continuing, Secured Party may in its
discretion apply any cash held by Secured Party as Collateral, and any cash
proceeds received by Secured Party in respect of any sale of, collection from,
or other realization upon all or any part of the Collateral, to any or all of
the following in such order as Secured Party may (subject to the rights of
Lenders under the Credit Agreement) elect:

 

(a)                                  To the repayment of all costs and expenses,
including reasonable attorneys’ fees and legal expenses, incurred by Secured
Party in connection with (i) the administration of this Agreement, (ii) the
custody, preservation, use or operation of, or the sale of, collection from, or
other realization upon, any Collateral, (iii) the exercise or enforcement of any
of the rights of Secured Party hereunder, or (iv) the failure of Debtor to
perform or observe any of the provisions hereof;

 

(b)                                 To the payment or other satisfaction of any
Liens, encumbrances, or adverse claims upon or against any of the Collateral;

 

(c)                                  To the reimbursement of Secured Party for
the amount of any obligations of Debtor or any Other Liable Party paid or
discharged by Secured Party pursuant to the provisions of this Agreement or the
other Obligation Documents, and of any expenses of Secured Party payable by
Debtor hereunder or under the other Obligation Documents;

 

(d)                                 To the satisfaction of any other Secured
Obligations;

 

(e)                                  By holding the same as Collateral;

 

(f)                                    To the payment of any other amounts
required by applicable law (including any provision of the UCC); and

 

(g)                                 By delivery to Debtor or to whomever shall
be lawfully entitled to receive the same or as a court of competent jurisdiction
shall direct.

 

Section 4.4.                                   Deficiency.  In the event that
the proceeds of any sale, collection or realization of or upon Collateral by
Secured Party are insufficient to pay all Secured Obligations and any other
amounts to which Secured Party is legally entitled, Debtor shall be liable for
the deficiency, together with interest thereon as provided in the governing
Obligation Documents or (if no interest is so provided) at such other rate as
shall be fixed by applicable law, together with the costs of collection and the
reasonable fees of any attorneys employed by Secured Party or Lenders to collect
such deficiency.

 

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Section 4.5.                                   Indemnity and Expenses.  In
addition to, but not in qualification or limitation of, any similar obligations
under other Obligation Documents:

 

(a)                                  Debtor will indemnify Secured Party and
each Lender from and against any and all claims, losses and liabilities growing
out of or resulting from this Agreement (including enforcement of this
Agreement), WHETHER OR NOT SUCH CLAIMS, LOSSES IN AND LIABILITIES ARE IN ANY WAY
OR TO ANY EXTENT OWED, IN WHOLE OR IN PART, UNDER ANY CLAIM OR THEORY OF STRICT
LIABILITY, OR ARE CAUSED BY OR ARISING OUT OF SUCH INDEMNIFIED PARTY’S OWN
NEGLIGENCE, except to the extent such claims, losses or liabilities are
proximately caused by such indemnified party’s individual gross negligence or
willful misconduct.

 

(b)                                 Debtor will upon demand pay to Secured Party
the amount of any and all reasonable costs and expenses, including the
reasonable fees and disbursements of Secured Party’s counsel and of any experts
and agents, which Secured Party may incur in connection with (i) the
transactions which give rise to this Agreement, (ii) the preparation of this
Agreement and the perfection and preservation of this security interest created
under this Agreement, (iii) the administration of this Agreement; (iv) the
custody, preservation, use or operation of, or the sale of, collection from, or
other realization upon, any Collateral; (v) the exercise or enforcement of any
of the rights of Secured Party hereunder; or (vi) the failure by Debtor to
perform or observe any of the provisions hereof, except expenses resulting from
Secured Party’s gross negligence or willful misconduct.

 

Section 4.6.                                   Non-Judicial Remedies.  In
granting to Secured Party the power to enforce its rights hereunder without
prior judicial process or judicial hearing, Debtor expressly waives, renounces
and knowingly relinquishes any legal right which might otherwise require Secured
Party to enforce its rights by judicial process.  In so providing for
non-judicial remedies, Debtor recognizes and concedes that such remedies are
consistent with the usage of trade, are responsive to commercial necessity, and
are the result of a bargain at arm’s length.  Nothing herein is intended,
however, to prevent Secured Party from resorting to judicial process at its
option.

 

Section 4.7.                                   Other Recourse.  Debtor waives
any right to require Secured Party or any Lender to proceed against any other
Person, to exhaust any Collateral or other security for the Secured Obligations,
or to have any Other Liable Party joined with Debtor in any suit arising out of
the Secured Obligations or this Agreement, or pursue any other remedy in Secured
Party’s power.  Debtor further waives any and all notice of acceptance of this
Agreement and of the creation, modification, rearrangement, renewal or extension
for any period of any of the Secured Obligations of any Other Liable Party from
time to time.  Debtor further waives any defense arising by reason of any
disability or other defense of any Other Liable Party or by reason of the
cessation from any cause whatsoever of the liability of any Other Liable Party. 
This Agreement shall continue irrespective of the fact that the liability of any
Other Liable Party may have ceased and irrespective of the validity or
enforceability of any other Obligation Document to which Debtor or any Other
Liable Party may be a party, and notwithstanding any death, incapacity,
reorganization, or bankruptcy of any Other Liable Party or any other event or
proceeding affecting any Other Liable Party.  Until all of the Secured
Obligations shall have been paid in full, Debtor shall have no right to
subrogation and Debtor waives the right to enforce any remedy

 

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which Secured Party or any Lender has or may hereafter have against any Other
Liable Party, and waives any benefit of and any right to participate in any
other security whatsoever now or hereafter held by Secured Party.  Debtor
authorizes Secured Party and each Lender, without notice or demand, without any
reservation of rights against Debtor, and without in any way affecting Debtor’s
liability hereunder or on the Secured Obligations, from time to time to (a) take
or hold any other property of any type from any other Person as security for the
Secured Obligations, and exchange, enforce, waive and release any or all of such
other property, (b) apply the Collateral or such other property and direct the
order or manner of sale thereof as Secured Party may in its discretion
determine, (c) renew, extend for any period, accelerate, modify, compromise,
settle or release any of the obligations of any Other Liable Party in respect to
any or all of the Secured Obligations or other security for the Secured
Obligations, (d) waive, enforce, modify, amend, restate or supplement any of the
provisions of any Obligation Document with any Person other than Debtor, and
(e) release or substitute any Other Liable Party.

 

Section 4.8.                                   Voting Rights, Dividends, Etc. in
Respect of Pledged Shares.

 

(a)                                  So long as no Default shall have occurred
and be continuing Debtor may receive and retain any and all dividends or
interest paid in respect of the Pledged Shares; provided, however, that any and
all

 

(i)                                     dividends and interest paid or payable
other than in cash in respect of, and instruments and other property received,
receivable or otherwise distributed in respect of or in exchange for, any
Pledged Shares,

 

(ii)                                  dividends and other distributions paid or
payable in cash in respect of any Pledged Shares in connection with a partial or
total liquidation or dissolution or in connection with a reduction of capital,
capital surplus or paid-in surplus, and

 

(iii)                               cash paid, payable or otherwise distributed
in redemption of, or in exchange for, any Pledged Shares,

 

shall be, and shall forthwith be delivered to Secured Party to hold as, Pledged
Shares and shall, if received by Debtor, be received in trust for the benefit of
Secured Party, be segregated from the other property or funds of Debtor, and be
forthwith delivered to Secured Party in the exact form received with any
necessary indorsement or appropriate stock powers duly executed in blank, to be
held by Secured Party as Collateral.

 

(b)                                 Upon the occurrence and during the
continuance of a Default:

 

(i)                                     all rights of Debtor to receive and
retain the dividends and interest payments which it would otherwise be
authorized to receive and retain pursuant to subsection (a) of this
section shall automatically cease, and all such rights shall thereupon become
vested in Secured Party which shall thereupon have the sole right to receive and
hold as Pledged Shares such dividends and interest payments;

 

(ii)                                  without limiting the generality of the
foregoing, Secured Party may at its option exercise any and all rights of
conversion, exchange, subscription or any other rights, privileges or options
pertaining to any of the Pledged Shares as if it were the

 

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absolute owner thereof, including, without limitation, the right to exchange, in
its discretion, any and all of the Pledged Shares upon the merger,
consolidation, reorganization, recapitalization or other adjustment of any
Issuer, or upon the exercise by any Issuer of any right, privilege or option
pertaining to any Pledged Shares, and, in connection therewith, to deposit and
deliver any and all of the Pledged Shares with any committee, depository,
transfer, agent, registrar or other designated agent upon such terms and
conditions as it may determine; and

 

(iii)                               all dividends and interest payments which
are received by Debtor contrary to the provisions of subsection (b)(i) of this
section shall be received in trust for the benefit of Secured Party, shall be
segregated from other funds of Debtor, and shall be forthwith paid over to
Secured Party as Pledged Shares in the exact form received, to be held by
Secured Party as Collateral.

 

Anything herein to the contrary notwithstanding, Debtor may at all times
exercise any and all voting rights pertaining to the Pledged Shares or any part
thereof for any purpose not inconsistent with the terms of this Agreement or any
other Obligation Document.

 

Section 4.9.                                   Private Sale of Pledged Shares.
 Debtor recognizes that Secured Party may deem it impracticable to effect a
public sale of all or any part of the Pledged Shares and that Secured Party may,
therefore, determine to make one or more private sales of any such securities to
a restricted group of purchasers who will be obligated to agree, among other
things, to acquire such securities for their own account, for investment and not
with a view to the distribution or resale thereof.  Debtor acknowledges that any
such private sale may be at prices and on terms less favorable to the seller
than the prices and other terms which might have been obtained at a public sale
and, notwithstanding the foregoing, agrees that such private sales shall be
deemed to have been made in a commercially reasonable manner and that Secured
Party shall have no obligation to delay sale of any such securities for the
period of time necessary to permit the Issuer of such securities to register
such securities for public sale under the Securities Act of 1933, as amended
(the “Securities Act”).  Debtor further acknowledges and agrees that any offer
to sell such securities which has been (a) publicly advertised on a bona fide
basis in a newspaper or other publication of general circulation in the
financial community of Denver, Colorado (to the extent that such an offer may be
so advertised without prior registration under the Securities Act), or (b) made
privately in the manner described above to not less than fifteen (15) bona fide
offerees shall be deemed to involve a “public disposition” for the purposes of
Section 9-610(c) of the UCC (or any successor or similar, applicable statutory
provision), notwithstanding that such sale may not constitute a “public
offering” under the Securities Act, and that Secured Party may, in such event,
bid for the purchase of such securities.  Any sale of the Collateral shall be
conducted in accordance with all applicable securities and other laws then in
effect.

 

Article V - Miscellaneous

 

Section 5.1.                                   Notices.  Any notice or
communication required or permitted hereunder shall be given in accordance with
the provisions of Article XVI of the Credit Agreement, and for Debtor’s address
for such purposes shall be as set forth on the signature page hereto.

 

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Section 5.2.                                   Amendments.  No amendment of any
provision of this Agreement shall be effective unless it is in writing and
signed by Debtor and Secured Party, and no waiver of any provision of this
Agreement, and no consent to any departure by Debtor therefrom, shall be
effective unless it is in writing and signed by Secured Party, and then such
waiver or consent shall be effective only in the specific instance and for the
specific purpose for which given and to the extent specified in such writing.
 In addition, all such amendments and waivers shall be effective only if given
with the necessary approvals of Lenders as required in the Credit Agreement.

 

Section 5.3.                                   Preservation of Rights.  No
failure on the part of Secured Party or any Lender to exercise, and no delay in
exercising, any right hereunder or under any other Obligation Document shall
operate as a waiver thereof; nor shall any single or partial exercise of any
such right preclude any other or further exercise thereof or the exercise of any
other right.  Neither the execution nor the delivery of this Agreement shall in
any manner impair or affect any other security for the Secured Obligations.  The
rights and remedies of Secured Party provided herein and in the other Obligation
Documents are cumulative and are in addition to, and not exclusive of, any
rights or remedies provided by law.  The rights of Secured Party under any
Obligation Document against any party thereto are not conditional or contingent
on any attempt by Secured Party to exercise any of its rights under any other
Obligation Document against such party or against any other Person.

 

Section 5.4.                                   Unenforceability.  Any provision
of this Agreement which is prohibited or unenforceable in any jurisdiction
shall, as to such jurisdiction, be ineffective to the extent of such prohibition
or invalidity without invalidating the remaining portions hereof or thereof or
affecting the validity or enforceability of such provision in any other
jurisdiction.

 

Section 5.5.                                   Survival of Agreements.  All
representations and warranties of Debtor herein, and all covenants and
agreements herein shall survive the execution and delivery of this Agreement,
the execution and delivery of any other Obligation Documents and the creation of
the Secured Obligations.

 

Section 5.6.                                   Other Liable Party.  Neither this
Agreement nor the exercise by Secured Party or the failure of Secured Party to
exercise any right, power or remedy conferred herein or by law shall be
construed as relieving any Other Liable Party from liability on the Secured
Obligations or any deficiency thereon.  This Agreement shall continue
irrespective of the fact that the liability of any Other Liable Party may have
ceased or irrespective of the validity or enforceability of any other Obligation
Document to which Debtor or any Other Liable Party may be a party, and
notwithstanding the reorganization, death, incapacity or bankruptcy of any Other
Liable Party, and notwithstanding the reorganization or bankruptcy or other
event or proceeding affecting any Other Liable Party.

 

Section 5.7.                                   Binding Effect and Assignment. 
This Agreement creates a continuing security interest in the Collateral and
(a) shall be binding on Debtor and its successors and permitted assigns and
(b) shall inure, together with all rights and remedies of Secured Party
hereunder, to the benefit of Secured Party and Lenders and their respective
successors, transferees and assigns.  Without limiting the generality of the
foregoing, Secured Party and any Lender may (except as otherwise provided in the
Credit Agreement) pledge, assign or otherwise

 

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transfer any or all of its rights under any or all of the Obligation Documents
to any other Person, and such other Person shall thereupon become vested with
all of the benefits in respect thereof granted to Secured Party, herein or
otherwise.  None of the rights or duties of Debtor hereunder may be assigned or
otherwise transferred without the prior written consent of Secured Party.

 

Section 5.8.                                   Termination.  It is contemplated
by the parties hereto that there may be times when no Secured Obligations are
outstanding, but notwithstanding such occurrences, this Agreement shall remain
valid and shall be in full force and effect as to subsequent outstanding Secured
Obligations.  Upon the satisfaction in full of the Secured Obligations and the
termination or expiration of the Credit Agreement and any other commitment of
Lenders to extend credit to Debtor, then upon written request for the
termination hereof delivered by Debtor to Secured Party this Agreement and the
security interest created hereby shall terminate and all rights to the
Collateral shall revert to Debtor.  Secured Party will, upon Debtor’s request
and at Debtor’s expense, (a) return to Debtor such of the Collateral as shall
not have been sold or otherwise disposed of or applied pursuant to the terms
hereof; and (b) execute and deliver to Debtor such documents as Debtor shall
reasonably request to evidence such termination.

 

Section 5.9.Governing Law.  This Agreement shall be governed by and construed in
accordance with the laws of the State of Colorado applicable to contracts made
and to be performed entirely within such State, except as required by mandatory
provisions of law and except to the extent that the perfection and the effect of
perfection or non-perfection of the security interest created hereunder, in
respect of any particular Collateral, are governed by the laws of a jurisdiction
other than such State, but giving effect to federal laws applicable to national
banks.

 

Section 5.10.                             Final Agreement.  This written
Agreement and the other Loan Documents represent the final agreement between the
parties hereto and may not be contradicted by evidence of prior,
contemporaneous, or subsequent oral agreements of the parties hereto.  There are
no unwritten oral agreements between the parties hereto.

 

Section 5.11.                             Counterparts.  This Agreement may be
separately executed in any number of counterparts, all of which when so executed
shall be deemed to constitute one and the same Agreement.

 

Section 5.12.                             “Loan Document”.  This Agreement is a
“Loan Document”, as defined in the Credit Agreement, and, except as expressly
provided herein to the contrary, this Agreement is subject to all provisions of
the Credit Agreement governing such Loan Documents.

 

Section 5.13.                             Agent.  JPMorgan Chase Bank, N.A.,
successor by merger to Bank One, NA (Main Office Chicago), has been appointed
Administrative Agent for the Lenders hereunder pursuant to Article XIII of the
Credit Agreement.  It is expressly understood and agreed by the parties to this
Agreement that any authority conferred upon Secured Party hereunder is subject
to the terms of the delegation of authority made by the Lenders to Secured Party
pursuant to the Credit Agreement, and that Secured Party has agreed to act (and
any successor Administrative Agent shall act) as such hereunder only on the
express conditions contained in such Article XIII.  Any successor Administrative
Agent appointed pursuant to Article XIII of the Credit Agreement shall be
entitled to all the rights, interests and benefits of Secured Party hereunder.

 

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IN WITNESS WHEREOF, Debtor has caused this Agreement to be executed and
delivered this Agreement by its officer thereunto duly authorized, as of the
date first above written.

 

 

 

 

 

 

 

 

 

By:

 

 

 

Name:

 

 

 

Title:

 

 

 

707 Seventeenth Street, Suite 3300
Denver, Colorado 80202
Attention: Paul Korus
Telephone: (303) 295-3995
Fax: (303) 295-3494

 

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EXHIBIT A

DESCRIPTION OF INTERESTS IN ISSUERS

 

Name of Issuer

 

Certificate
No.

 

No. of Shares

 

Percentage of
Class

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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EXHIBIT G-2

FORM OF PLEDGE AGREEMENT (PARTNERSHIP)

 

THIS PLEDGE AGREEMENT (PARTNERSHIP) (this “Agreement”) is made as of
                                              , 20        , by
                                                      , a
                                                         (“Debtor”), in favor of
JPMorgan Chase Bank, N.A., a national banking association, as Administrative
Agent for the benefit of the Lenders under the Credit Agreement (herein called
“Secured Party”).

 

RECITALS:

 

1.                                       Borrower has executed in favor of
Lenders (as such term is defined below) those certain promissory notes dated
June 13, ,2005, payable to the order of Lenders in the aggregate original
principal amount of $1,000,000,000 (such promissory notes, as from time to time
amended, and all promissory notes given in substitution, renewal or extension
therefor or thereof, in whole or in part, being herein collectively called the
“Note”).

 

2.                                       The Note was executed pursuant to a
Amended and Restated Credit Agreement dated June 13, 2005, (herein, as from time
to time amended, supplemented or restated, called the “Credit Agreement”), by
and between Borrower, Secured Party, as Administrative Agent, and Lenders,
pursuant to which Lenders have agreed to advance funds to Borrower under the
Note.

 

3.                                       Pursuant to the Credit Agreement,
Debtor is concurrently herewith giving to Secured Party a guaranty for the
benefit of each Lender (herein, as from time to time amended, supplemented or
restated, collectively called the “Guaranty”) of all of the indebtedness of
Borrower under the Credit Agreement and the Note.

 

4.                                       The boards of directors and managers,
as the case may be, of the parties constituting Debtor has determined that
Debtor’s execution, delivery and performance of this Agreement may reasonably be
expected to benefit Debtor, directly or indirectly, and are in the best
interests of Debtor.

 

NOW, THEREFORE, in consideration of the premises, of the benefits which will
inure to Debtor from Lenders’ extensions of credit under the Credit Agreement,
and of Ten Dollars and other good and valuable consideration, the receipt and
sufficiency of all of which are hereby acknowledged, and in order to induce
Lenders to extend credit under the Credit Agreement, Debtor hereby agrees with
Secured Party, for the benefit of each Lender, as follows:

 

AGREEMENTS

 

ARTICLE I - DEFINITIONS AND REFERENCES

 

Section 1.1.                                   General Definitions.  As used
herein, the terms “Agreement,” “Debtor,” “Secured Party,” “Note,” “Borrower,”
“Guaranty,” and “Credit Agreement” shall have the meanings indicated above, and
the following terms shall have the following meanings:

 

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“Collateral” means all property, of whatever type, which is described in
Section 2.1 as being at any time subject to a security interest granted
hereunder to Secured Party.

 

“Commitment” means the agreement or commitment by Lenders to make loans or
otherwise extend credit to Borrower under the Credit Agreement, and any other
agreement, commitment, statement of terms or other document contemplating the
making of loans or advances or other extension of credit by Lenders to or for
the account of Borrower which is now or at any time hereafter intended to be
secured by the Collateral under this Agreement.

 

“Lenders” means the Persons who are from time to time “Lenders” as defined in
the Credit Agreement.

 

“Partnership” means any partnership which is included within the term
“Partnerships” pursuant to Section 2.1(a), and any successor of any such
partnership.

 

“Obligation Documents” means the Credit Agreement, all other Loan Documents, all
documents evidencing Rate Management Transactions with one or more Lenders or
any affiliates of such Lenders, and all other documents and instruments under,
by reason of which, or pursuant to which any or all of the Secured Obligations
are evidenced, governed, secured, guarantied, or otherwise dealt with, and all
other agreements, certificates, and other documents, instruments and writings
heretofore or hereafter delivered in connection herewith or therewith.

 

“Other Liable Party” means any Person, other than Debtor, who may now or may at
any time hereafter be primarily or secondarily liable for any of the Secured
Obligations or who may now or may at any time hereafter have granted to or
Lenders a Lien upon any property as security for the Secured Obligations.

 

“Other Partnership Rights” has the meaning given it in Section 2.1(a).

 

“Partnership Agreements”, “Partnership Rights”, and “Partnership Rights to
Payments” have the meanings given them in Section 2.1(a).

 

“UCC” means the Colorado Uniform Commercial Code in effect from time to time.

 

Section 1.2.                                   Incorporation of Other
Definitions.  Reference is hereby made to the Credit Agreement for a statement
of the terms thereof.  All capitalized terms used in this Agreement which are
defined in the Credit Agreement and not otherwise defined herein shall have the
same meanings herein as set forth therein.  All terms used in this Agreement
which are defined in the UCC and not otherwise defined herein or in the Credit
Agreement shall have the same meanings herein as set forth therein, except where
the context otherwise requires.

 

Section 1.3.                                   Attachments.  All exhibits or
schedules which may be attached to this Agreement are a part hereof for all
purposes.

 

Section 1.4.                                   Amendment of Defined
Instruments.  Unless the context otherwise requires or unless otherwise provided
herein, references in this Agreement to a particular agreement, instrument or
document (including, but not limited to, references in Section 2.1) also refer
to and include all renewals, extensions, amendments, modifications, supplements
or

 

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restatements of any such agreement, instrument or document, provided that
nothing contained in this Section shall be construed to authorize any Person to
execute or enter into any such renewal, extension, amendment, modification,
supplement or restatement.

 

Section 1.5.                                   References and Titles.  All
references in this Agreement to Exhibits, Articles, Sections, subsections, and
other subdivisions refer to the Exhibits, Articles, Sections, subsections and
other subdivisions of this Agreement unless expressly provided otherwise. 
Titles appearing at the beginning of any subdivision are for convenience only
and do not constitute any part of any such subdivision and shall be disregarded
in construing the language contained in this Agreement.  The words “this
Agreement”, “herein”, “hereof”, “hereby”, “hereunder” and words of similar
import refer to this Agreement as a whole and not to any particular subdivision
unless expressly so limited.  The phrases “this Section” and “this subsection”
and similar phrases refer only to the Sections or subsections hereof in which
the phrase occurs.  The word “or” is not exclusive, and the word “including” (in
all of its forms) means “including without limitation”.  Pronouns in masculine,
feminine and neuter gender shall be construed to include any other gender, and
words in the singular form shall be construed to include the plural and vice
versa unless the context otherwise requires.

 

ARTICLE II - SECURITY INTEREST

 

Section 2.1.                                   Grant of Security Interest.  As
collateral security for all of the Secured Obligations, Debtor hereby pledges
and assigns to Secured Party and grants to Secured Party a continuing security
interest, for the benefit of each Lender, in and to all right, title and
interest of the following:

 

(a)                                  Partnership Rights.  All of the following
(herein collectively called the “Partnership Rights”), whether now or hereafter
existing, which are owned by Debtor or in which Debtor otherwise has any rights:

 

(i)                                     all proceeds, interest, profits, and
other payments or rights to payment attributable to Debtor’s interests in the
partnership or partnerships (whether one or more, herein called the
“Partnerships”) described on Exhibit A, and all distributions, cash, instruments
and other property now or hereafter received, receivable or otherwise made with
respect to or in exchange for any interest of Debtor in any Partnership,
including interim distributions, returns of capital, loan repayments, and
payments made in liquidation of any Partnership, and whether or not the same
arise or are payable under any partnership agreement or certificate forming any
Partnership or any other agreement governing any Partnership or the relations
among the partners in any Partnership (any and all such proceeds, interest,
profits, payments, rights to payment, distributions, cash, instruments, other
property, interim distributions, returns of capital, loan repayments, and
payments made in liquidation being herein called the “Partnership Rights to
Payments”, and any and all such partnership agreements, certificates, and other
agreements being herein called the “Partnership Agreements”); and

 

(ii)                                  all other interests and rights of Debtor
in any of the Partnerships, whether under the Partnership Agreements or
otherwise, including without limitation any right to cause the dissolution of
any Partnership or to appoint or nominate a successor to

 

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Debtor as a partner in any Partnership (all such other interests and rights
being herein called the “Other Partnership Rights”).

 

(b)                                 Proceeds.  All proceeds of any and all of
the foregoing Collateral.

 

In each case, the foregoing shall be covered by this Agreement, whether Debtor’s
ownership or other rights therein are presently held or hereafter acquired and
however Debtor’s interests therein may arise or appear (whether by ownership,
security interest, claim or otherwise).

 

The granting of the foregoing security interest does not make Secured Party a
successor to Debtor as a partner in any Partnership, and neither Secured Party
nor any of its successors or assigns hereunder shall be deemed to have become a
partner in any Partnership by accepting this Agreement or exercising any right
granted herein unless and until such time, if any, when Secured Party or any
such successor or assign expressly becomes a partner in any Partnership after a
foreclosure upon Other Partnership Rights.  Anything herein to the contrary
notwithstanding (except to the extent, if any, that Secured Party or any of its
successors or assigns hereafter expressly becomes a partner in any Partnership),
neither Secured Party nor any of its successors or assigns shall be deemed to
have assumed or otherwise become liable for any debts or obligations of any
Partnership or of Debtor to or under any Partnership, and the above definition
of “Other Partnership Rights” shall be deemed modified, if necessary, to prevent
any such assumption or other liability.

 

Section 2.2.                                   Secured Obligations Secured.  The
security interest created hereby in the Collateral constitutes continuing
collateral security for all of the following obligations, indebtedness and
liabilities, whether now existing or hereafter incurred or arising:

 

(a)                                  Secured Obligations.  The payment by
Borrower, as and when due and payable, of the Secured Obligations, the due
performance by Borrower of all of its other obligations under or in respect of
the various Obligation Documents, the payment by Debtor, as and when due and
payable, of all amounts from time to time owing by Debtor under or in respect of
the Guaranty, and the due performance by Debtor of all of its other obligations
under or in respect of the various Obligation Documents.

 

(b)                                 Renewals.  All renewals, extensions,
amendments, modifications, supplements, or restatements of or substitutions for
any of the foregoing.

 

As used herein, the term “Secured Obligations” refers to all present and future
indebtedness, obligations and liabilities of whatever type which are described
above in this section, including any interest which accrues after the
commencement of any case, proceeding, or other action relating to the
bankruptcy, insolvency, or reorganization of Debtor.  Debtor hereby acknowledges
that the Secured Obligations are owed to the various Lenders and that each
Lender is entitled to the benefits of the Liens given under this Agreement. It
is the intention of the Debtor and Secured Party that this Agreement not
constitute a fraudulent transfer or fraudulent conveyance under any state or
federal law that may be applied hereto.  Debtor and, by its acceptance hereof,
Secured Party hereby acknowledges and agrees that, notwithstanding any other
provision of this Agreement: (a) the indebtedness secured hereby shall be
limited to the maximum amount of indebtedness that can be incurred or secured by
Debtor without rendering

 

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this Agreement subject to avoidance under Section 548 of the United States
Bankruptcy Code or any comparable provisions of any applicable state or federal
law, and (b) the Collateral pledged by Debtor hereunder shall be limited to the
maximum amount of Collateral that can be pledged by Debtor without rendering
this Agreement subject to avoidance under Section 548 of the United States
Bankruptcy Code or any comparable provisions of any applicable state or federal
law.

 

ARTICLE III - REPRESENTATIONS, WARRANTIES AND COVENANTS

 

Section 3.1.                                   Representations and Warranties. 
Each of the representations and warranties in the Credit Agreement made by
Debtor is true and correct.  In addition, Debtor hereby represents and warrants
to Secured Party and Lenders as follows:

 

(a)                                  Security Interest.  Debtor has and will
have at all times full right, power and authority to grant a security interest
in the Collateral to Secured Party as provided herein, free and clear of any
Lien, adverse claim, or encumbrance.  This Agreement creates a valid and binding
first priority security interest in favor of Secured Party in the Collateral,
which security interest secures all of the Secured Obligations.

 

(b)                                 Perfection.  The filing of financing
statements with the Secretary of State (or equivalent governmental official) of
the State in which Debtor is organized will perfect, and establish the first
priority of, Secured Party’s security interest hereunder in the Collateral
securing the Secured Obligations.  No further or subsequent filing, recording,
registration, other public notice or other action is necessary or desirable to
perfect or otherwise continue, preserve or protect such security interest except
(i) for continuation statements described in Section 9.515(d) of the UCC,
(ii) for filings required to be filed in the event of a change in the name,
identity, state of formation, or entity structure of Debtor, or (iii) in the
event any financing statement filed by Secured Party relating hereto otherwise
becomes inaccurate or incomplete.

 

(c)                                  Partnership Rights.  Debtor has taken or
concurrently herewith is taking all actions necessary to perfect Secured Party’s
security interest in the Partnership Rights.   No other Person has any such
registration in effect.  Debtor owns the interests in each Partnership which are
described on Exhibit A.  No Partnership has made any calls for capital which
have not been fully paid by Debtor and by each other partner in such
Partnership.  Debtor is not in default under any of the Partnership Agreements,
nor is any other partner in any Partnership.  Neither the making of this
Agreement nor the exercise of any rights or remedies of Secured Party hereunder
will cause a default under any of the Partnership Agreements or otherwise
adversely affect or diminish any of the Partnership Rights.  Debtor’s rights
under the Partnership Agreements are enforceable in accordance with their terms,
except as such enforcement may be limited by bankruptcy, insolvency or similar
laws of general application relating to the enforcement of creditors’ rights. 
The Partnership Rights are not evidenced by any certificates.  The Partnership
Rights (i) are not dealt in or traded on securities exchanges or in securities
markets, (ii) do not expressly provided that they are a security governed by
Article 8 of the UCC, and (iii) are not held in a securities account.

 

Section 3.2.                                   Covenants.  Unless Secured Party
shall otherwise consent in writing, Debtor will at all times (i) comply with the
covenants contained in the Credit Agreement which

 

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are applicable to Debtor and (ii) comply with the covenants contained in this
Section 3.2 so long as any part of the Secured Obligations or the Commitment is
outstanding.

 

(a)                                  Partnership Rights.  Debtor will maintain
its ownership of the interests in each Partnership already defined as those
partnerships listed on Exhibit A.  Debtor will timely honor all calls under any
Partnership Agreement to provide capital to any Partnership, and Debtor will not
otherwise default in performing any of Debtor’s obligations under any
Partnership Agreement or allow any Partnership Rights to be adversely affected
or diminished.  Debtor will promptly inform Secured Party of any such failure to
honor a capital call, default, adverse effect, or diminution.  Debtor will
promptly inform Secured Party of any such failure to honor a capital call or
default by another partner in any Partnership.  The Partnership Rights shall at
all times be duly authorized and validly issued and shall not be issued in
violation of the pre emptive rights of any Person or of any agreement by which
Debtor or the Partnership thereof is bound.  Debtor will not allow the
Partnership Rights (i) to be evidenced by certificates, (ii) to be dealt in or
traded on securities exchanges or in securities markets, (iii) to be governed by
Article 8 of the UCC, or (iv) to be placed in a securities account.

 

(b)                                 Delivery of Certificates.  A true and
correct copy of each Partnership Agreement and all amendments and supplements
thereto have been delivered to Secured Party.  All amendments or supplements to
any Partnership Agreement (whether or not authorized hereunder), shall be
delivered to Secured Party promptly upon the receipt thereof by or on behalf of
Debtor.

 

(c)                                  Proceeds of Partnership Rights.  If Debtor
shall receive, by virtue of its being or having been an owner of any Partnership
Rights, any (i) certificate, instrument, deed, bill of sale, promissory note, or
other instrument or writing (including any given in connection with any increase
or reduction of capital, reorganization, reclassification, merger,
consolidation, sale of assets, liquidation, or partial liquidation); (ii) option
or right, whether as an addition to, substitution for, or in exchange for, any
Partnership Rights, or otherwise; or (iii) distributions payable in cash (except
distributions permitted to be retained by Debtor pursuant to Section 4.8 hereof)
or in securities or other property, Debtor shall receive the same in trust for
the benefit of Secured Party, shall segregate it from Debtor’s other property,
and shall promptly deliver it to Secured Party in the exact form received, with
any necessary endorsement or instruments of transfer duly executed in blank, to
be held by Secured Party as Collateral.

 

(d)                                 Diminution of Partnership Rights.  Debtor
will not adjust, settle, compromise, amend or modify any of the Partnership
Rights or the Partnership Agreements.  Debtor will not permit the creation of
any additional interests in any Partnership (unless immediately upon creation
the same are pledged to Secured Party pursuant to the terms hereof to the extent
necessary to give Secured Party a first priority security interest in total
Partnership Rights after such creation which are in the aggregate at least the
same percentage of the outstanding rights of the same kind in any Partnership as
were subject hereto before such issue), whether such additional interests are
presently vested or will vest upon the payment of money or the occurrence or
nonoccurrence of any other condition.  Debtor will not enter into any agreement
(other than the Obligation Documents) creating, or otherwise permit to exist,
any restriction or condition upon the transfer or exercise of any Partnership
Rights.

 

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ARTICLE IV - REMEDIES, POWERS AND AUTHORIZATIONS

 

Section 4.1.                                   Provisions Concerning the
Collateral.

 

(a)                                  Additional Filings.  Debtor hereby
authorizes Secured Party to file, without the signature of Debtor where
permitted by law, one or more financing or continuation statements, and
amendments thereto, covering or otherwise relating to the Collateral.

 

(b)                                 Power of Attorney.  Debtor hereby
irrevocably appoints Secured Party as Debtor’s attorney in fact and proxy, with
full authority in the place and stead of Debtor and in the name of Debtor or
otherwise, upon the occurrence and during the continuance of a Default, from
time to time in Secured Party’s discretion, to take any action, and to execute
or indorse any instrument, certificate or notice, which Secured Party may deem
necessary or advisable to accomplish the purposes of this Agreement including
any action or instrument: (i) to request or instruct each Partnership (and each
registrar, transfer agent, or similar Person acting on behalf of each
Partnership) to register the pledge or transfer of the Collateral to Secured
Party; (ii) to otherwise give notification to any Partnership, registrar,
transfer agent, financial intermediary, or other Person of Secured Party’s
security interests hereunder; (iii) to ask, demand, collect, sue for, recover,
compound, receive and give acquittance and receipts for moneys due and to become
due under or in respect of any of the Collateral; (iv) to receive, indorse and
collect any drafts or other instruments or documents; (v) to enforce any
obligations included among the Collateral; and (vi) to file any claims or take
any action or institute any proceedings which Secured Party may deem necessary
or desirable for the collection of any of the Collateral or otherwise to
enforce, perfect, or establish the priority of the rights of Secured Party with
respect to any of the Collateral.  Debtor hereby acknowledges that such power of
attorney and proxy are coupled with an interest, and are irrevocable.

 

(c)                                  Performance by Secured Party.  If Debtor
fails to perform any agreement or obligation contained herein, Secured Party may
itself perform, or cause performance of, such agreement or obligation, and the
expenses of Secured Party incurred in connection therewith shall be payable by
Debtor under Section 4.5.

 

(d)                                 Collection Rights.  Secured Party shall have
the right at any time, upon the occurrence and during the continuance of a
Default, to notify (or require Debtor to notify) any or all Persons (including
any Partnership) obligated to make payments which are included among the
Collateral (whether accounts, general intangibles, distributions, Partnership
Rights to Payment, or otherwise) of the assignment thereof to Secured Party
under this Agreement and to direct such obligors to make payment of all amounts
due or to become due to Debtor thereunder directly to Secured Party and, upon
such notification and at the expense of Debtor and to the extent permitted by
law, to enforce collection thereof and to adjust, settle or compromise the
amount or payment thereof, in the same manner and to the same extent as Debtor
could have done.  After Debtor receives notice that Secured Party has given (and
after Secured Party has required Debtor to give) any notice referred to above in
this subsection:

 

(i)                                     all amounts and proceeds (including
instruments and writings) received by Debtor in respect of such distributions,
accounts, or general intangibles or Partnership Rights to Payments shall be
received in trust for the benefit of Secured Party

 

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hereunder, shall be segregated from other funds of Debtor and shall be forthwith
paid over to Secured Party in the same form as so received (with any necessary
indorsement) to be applied as specified in Section 4.3, and

 

(ii)                                  Debtor will not adjust, settle or
compromise the amount or payment of any such account or general intangible or
Partnership Right to Payments or release wholly or partly any account debtor or
obligor thereof (including any Partnership) or allow any credit or discount
thereon.

 

Section 4.2.                                   Default Remedies.  If a Default
shall have occurred and be continuing, Secured Party may from time to time in
its discretion, without limitation and without notice except as expressly
provided below:

 

(a)                                  exercise in respect of the Collateral, in
addition to any other rights and remedies provided for herein, under the other
Obligation Documents or otherwise available to it, all the rights and remedies
of a secured party on default under the UCC (whether or not the UCC applies to
the affected Collateral);

 

(b)                                 require Debtor to, and Debtor hereby agrees
that it will at its expense and upon request of Secured Party, promptly assemble
all books, records and information of Debtor relating to the Collateral at a
place to be designated by Secured Party which is reasonably convenient to both
parties;

 

(c)                                  reduce its claim to judgment or foreclose
or otherwise enforce, in whole or in part, the security interest created hereby
by any available judicial procedure;

 

(d)                                 dispose of, at its office, on the premises
of Debtor or elsewhere, all or any part of the Collateral, as a unit or in
parcels, by public or private proceedings, and by way of one or more contracts
(it being agreed that the sale of any part of the Collateral shall not exhaust
Secured Party’s power of sale, but sales may be made from time to time, and at
any time, until all of the Collateral has been sold or until the Secured
Obligations have been paid and performed in full), and at any such sale it shall
not be necessary to exhibit any of the Collateral;

 

(e)                                  buy (or allow one or more of the Lenders to
buy) the Collateral, or any part thereof, at any public sale;

 

(f)                                    buy (or allow one or more of the Lenders
to buy) the Collateral, or any part thereof, at any private sale if the
Collateral is of a type customarily sold in a recognized market or is of a type
which is the subject of widely distributed standard price quotations;

 

(g)                                 apply by appropriate judicial proceedings
for appointment of a receiver for the Collateral, or any part thereof, and
Debtor hereby consents to any such appointment; and

 

(h)                                 at its discretion, retain the Collateral in
satisfaction of the Secured Obligations whenever the circumstances are such that
Secured Party is entitled to do so under the UCC or otherwise (provided that
Secured Party shall in no circumstances be deemed to have retained the
Collateral in satisfaction of the Secured Obligations in the absence of an
express notice by Secured Party to Debtor that Secured Party has either done so
or intends to do so).

 

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Debtor agrees that, to the extent notice of sale shall be required by law, at
least ten (10) days’ notice to Debtor of the time and place of any public sale
or the time after which any private sale is to be made shall constitute
reasonable notification.  Secured Party shall not be obligated to make any sale
of Collateral regardless of notice of sale having been given.  Secured Party may
adjourn any public or private sale from time to time by announcement at the time
and place fixed therefor, and such sale may, without further notice, be made at
the time and place to which it was so adjourned.

 

Section 4.3.                                   Application of Proceeds.  If any
Default shall have occurred and be continuing, Secured Party may in its
discretion apply any cash held by Secured Party as Collateral, and any cash
proceeds received by Secured Party in respect of any sale of, collection from,
or other realization upon all or any part of the Collateral, to any or all of
the following in such order as Secured Party may (subject to the rights of
Lenders under the Credit Agreement) elect:

 

(a)                                  To the repayment of all costs and expenses,
including reasonable attorneys’ fees and legal expenses, incurred by Secured
Party in connection with (i) the administration of this Agreement, (ii) the
custody, preservation, use or operation of, or the sale of, collection from, or
other realization upon, any Collateral, (iii) the exercise or enforcement of any
of the rights of Secured Party hereunder, or (iv) the failure of Debtor to
perform or observe any of the provisions hereof;

 

(b)                                 To the payment or other satisfaction of any
Liens, encumbrances, or adverse claims upon or against any of the Collateral;

 

(c)                                  To the reimbursement of Secured Party for
the amount of any obligations of Debtor or any Other Liable Party paid or
discharged by Secured Party pursuant to the provisions of this Agreement or the
other Obligation Documents, and of any expenses of Secured Party payable by
Debtor hereunder or under the other Obligation Documents;

 

(d)                                 To the satisfaction of any other Secured
Obligations;

 

(e)                                  By holding the same as Collateral;

 

(f)                                    To the payment of any other amounts
required by applicable law (including any provision of the UCC); and

 

(g)                                 By delivery to Debtor or to whomever shall
be lawfully entitled to receive the same or as a court of competent jurisdiction
shall direct.

 

Section 4.4.                                   Deficiency.  In the event that
the proceeds of any sale, collection or realization of or upon Collateral by
Secured Party are insufficient to pay all Secured Obligations and any other
amounts to which Secured Party is legally entitled, Debtor shall be liable for
the deficiency, together with interest thereon as provided in the governing
Obligation Documents or (if no interest is so provided) at such other rate as
shall be fixed by applicable law, together with the costs of collection and the
reasonable fees of any attorneys employed by Secured Party or Lenders to collect
such deficiency.

 

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Section 4.5.                                   Indemnity and Expenses.  In
addition to, but not in qualification or limitation of, any similar obligations
under other Obligation Documents:

 

(a)                                  Debtor will indemnify Secured Party and
each Lender from and against any and all claims, losses and liabilities growing
out of or resulting from this Agreement (including enforcement of this
Agreement), WHETHER OR NOT SUCH CLAIMS, LOSSES AND LIABILITIES ARE IN ANY WAY OR
TO ANY EXTENT OWED, IN WHOLE OR IN PART, UNDER ANY CLAIM OR THEORY OF STRICT
LIABILITY OR ARE CAUSED BY OR ARISE OUT OF SUCH INDEMNIFIED PARTY’S OWN
NEGLIGENCE, except to the extent such claims, losses or liabilities are
proximately caused by such indemnified party’s individual gross negligence or
willful misconduct.

 

(b)                                 Debtor will upon demand pay to Secured Party
the amount of any and all reasonable costs and expenses, including the
reasonable fees and disbursements of Secured Party’s counsel and of any experts
and agents, which Secured Party may incur in connection with (i) the
transactions which give rise to this Agreement, (ii) the preparation of this
Agreement and the perfection and preservation of this security interest created
under this Agreement, (iii) the administration of this Agreement; (iv) the
custody, preservation, use or operation of, or the sale of, collection from, or
other realization upon, any Collateral; (v) the exercise or enforcement of any
of the rights of Secured Party hereunder; or (vi) the failure by Debtor to
perform or observe any of the provisions hereof, except expenses resulting from
Secured Party’s gross negligence or willful misconduct.

 

Section 4.6.                                   Non Judicial Remedies.  In
granting to Secured Party the power to enforce its rights hereunder without
prior judicial process or judicial hearing, Debtor expressly waives, renounces
and knowingly relinquishes any legal right which might otherwise require Secured
Party to enforce its rights by judicial process.  In so providing for non
judicial remedies, Debtor recognizes and concedes that such remedies are
consistent with the usage of trade, are responsive to commercial necessity, and
are the result of a bargain at arm’s length.  Nothing herein is intended,
however, to prevent Secured Party from resorting to judicial process at its
option.

 

Section 4.7.                                   Other Recourse.  Debtor waives
any right to require Secured Party or any Lender to proceed against any other
Person, to exhaust any Collateral or other security for the Secured Obligations,
or to have any Other Liable Party joined with Debtor in any suit arising out of
the Secured Obligations or this Agreement, or pursue any other remedy in Secured
Party’s power.  Debtor further waives any and all notice of acceptance of this
Agreement and of the creation, modification, rearrangement, renewal or extension
for any period of any of the Secured Obligations of any Other Liable Party from
time to time.  Debtor further waives any defense arising by reason of any
disability or other defense of any Other Liable Party or by reason of the
cessation from any cause whatsoever of the liability of any Other Liable Party. 
This Agreement shall continue irrespective of the fact that the liability of any
Other Liable Party may have ceased and irrespective of the validity or
enforceability of any other Obligation Document to which Debtor or any Other
Liable Party may be a party, and notwithstanding any death, incapacity,
reorganization, or bankruptcy of any Other Liable Party or any other event or
proceeding affecting any Other Liable Party.  Until all of the Secured
Obligations shall have been paid in full, Debtor shall have no right to
subrogation and Debtor waives the right to enforce any remedy

 

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which Secured Party or any Lender has or may hereafter have against any Other
Liable Party, and waives any benefit of and any right to participate in any
other security whatsoever now or hereafter held by Secured Party.  Debtor
authorizes Secured Party and each Lender, without notice or demand, without any
reservation of rights against Debtor, and without in any way affecting Debtor’s
liability hereunder or on the Secured Obligations, from time to time to (a) take
or hold any other property of any type from any other Person as security for the
Secured Obligations, and exchange, enforce, waive and release any or all of such
other property, (b) apply the Collateral or such other property and direct the
order or manner of sale thereof as Secured Party may in its discretion
determine, (c) renew, extend for any period, accelerate, modify, compromise,
settle or release any of the obligations of any Other Liable Party in respect to
any or all of the Secured Obligations or other security for the Secured
Obligations, (d) waive, enforce, modify, amend, restate, or supplement any of
the provisions of any Obligation Document with any Person other than Debtor, and
(e) release or substitute any Other Liable Party.

 

Section 4.8.                                   Exercise of Partnership Rights.

 

(a)                                  So long as no Default or Event of Default
shall have occurred and be continuing, Debtor may receive and retain any and all
distributions of profits paid in cash in respect of the Partnership Rights to
Payments; provided, however, that any and all other payments in respect of the
Partnership Rights to Payments shall be, and shall forthwith be delivered to
Secured Party to hold as, Collateral and shall, if received by Debtor, be
received in trust for the benefit of Secured Party, be segregated from the other
property or funds of Debtor, and be forthwith delivered to Secured Party in the
exact form received with any necessary indorsement or instruments of transfer
duly executed in blank, to be held by Secured Party as Collateral.

 

(b)                                 Upon the occurrence and during the
continuance of a Default or an Event of Default, all rights of Debtor to receive
and retain any distributions of profits or other payments of any kind in respect
of Partnership Rights to Payments which Debtor would otherwise be authorized to
receive and retain pursuant to subsection (a) of this section shall
automatically cease, and all such rights shall thereupon become vested in
Secured Party which shall thereupon have the sole right to receive and hold as
Collateral all such distributions and payments, and all distributions of profits
and other payments of any kind in respect of Partnership Rights to Payments
which are nonetheless received by Debtor shall be received in trust for the
benefit of Secured Party, shall be segregated from other funds of Debtor, and
shall be forthwith paid over to Secured Party in the exact form received, to be
held by Secured Party as Collateral.  Notwithstanding anything contained herein
to the contrary, Debtor may at all times exercise any and all voting rights
pertaining to the Partnership Rights or any part thereof for any purpose not
inconsistent with the terms of this Agreement or any other Obligation Document.

 

Section 4.9.                                   Private Sale of Partnership
Rights.  Debtor recognizes that Secured Party may deem it impracticable to
effect a public sale of all or any part of the Partnership Rights and that
Secured Party may, therefore, determine to make one or more private sales of
Partnership Rights to a restricted group of purchasers who will be obligated to
agree, among other things, to acquire the same for their own account, for
investment and not with a view to the distribution or resale thereof.  Debtor
acknowledges that any such private sale may be at prices

 

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and on terms less favorable to the seller than the prices and other terms which
might have been obtained at a public sale and, notwithstanding the foregoing,
agrees that such private sales shall be deemed to have been made in a
commercially reasonable manner and that Secured Party shall have no obligation
to delay sale of any Partnership Rights for the period of time necessary to
permit their registration for public sale under the Securities Act of 1933, as
amended (the “Securities Act”), to the extent, if any, that it is applicable
thereto.  Debtor further acknowledges and agrees that any offer to sell any
Partnership Rights which has been (a) publicly advertised on a bona fide basis
in a newspaper or other publication of general circulation in the financial
community of Denver, Colorado (to the extent that such an offer may be so
advertised without prior registration under the Securities Act), or (b) made
privately in the manner described above to not less than fifteen (15) bona fide
offerees shall be deemed to involve a “public disposition” for the purposes of
Section 9.610(c) of the UCC (or any successor or similar, applicable statutory
provision), notwithstanding that such sale may not constitute a “public
offering” under the Securities Act, and that Secured Party may, in such event,
bid for the purchase of such Partnership Rights.  Any sale of the Collateral
shall be conducted in accordance with all applicable securities and other laws
then in effect.

 

Section 4.10.                             Limitation on Rights and Waivers.  All
rights, powers and remedies herein conferred shall be exercisable by Secured
Party only to the extent not prohibited by applicable law; and all waivers and
relinquishments of rights and similar matters shall only be effecting to the
extent such waivers or relinquishments are not prohibited by applicable law.

 

ARTICLE V - MISCELLANEOUS

 

Section 5.1.                                   Notices.  Any notice or
communication required or permitted hereunder shall be given as provided in the
Credit Agreement.

 

Section 5.2.                                   Amendments.  No amendment of any
provision of this Agreement shall be effective unless it is in writing and
signed by Debtor and Secured Party, and no waiver of any provision of this
Agreement, and no consent to any departure by Debtor therefrom, shall be
effective unless it is in writing and signed by Secured Party, and then such
waiver or consent shall be effective only in the specific instance and for the
specific purpose for which given and to the extent specified in such writing. 
In addition all such amendments and waivers shall be effective only if given
with any approvals of Lenders as required in the Credit Agreement.

 

Section 5.3.                                   Preservation of Rights.  No
failure on the part of Secured Party or any Lender to exercise, and no delay in
exercising, any right hereunder or under any other Obligation Document shall
operate as a waiver thereof; nor shall any single or partial exercise of any
such right preclude any other or further exercise thereof or the exercise of any
other right.  Neither the execution nor the delivery of this Agreement shall in
any manner impair or affect any other security for the Secured Obligations.  The
rights and remedies of Secured Party provided herein and in the other Obligation
Documents are cumulative and are in addition to, and not exclusive of, any
rights or remedies provided by law.  The rights of Secured Party under any
Obligation Document against any party thereto are not conditional or contingent
on any attempt by Secured Party to exercise any of its rights under any other
Obligation Document against such party or against any other Person.

 

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Section 5.4.                                   Unenforceability.  Any provision
of this Agreement which is prohibited or unenforceable in any jurisdiction
shall, as to such jurisdiction, be ineffective to the extent of such prohibition
or invalidity without invalidating the remaining portions hereof or thereof or
affecting the validity or enforceability of such provision in any other
jurisdiction.

 

Section 5.5.                                   Survival of Agreements.  All
representations and warranties of Debtor herein, and all covenants and
agreements herein shall survive the execution and delivery of this Agreement,
the execution and delivery of any other Obligation Documents and the creation of
the Secured Obligations.

 

Section 5.6.                                   Other Liable Party.  Neither this
Agreement nor the exercise by Secured Party or the failure of Secured Party to
exercise any right, power or remedy conferred herein or by law shall be
construed as relieving any Other Liable Party from liability on the Secured
Obligations or any deficiency thereon.  This Agreement shall continue
irrespective of the fact that the liability of any Other Liable Party may have
ceased or irrespective of the validity or enforceability of any other Obligation
Document to which Debtor or any Other Liable Party may be a party, and
notwithstanding the reorganization, death, incapacity or bankruptcy of any Other
Liable Party, and notwithstanding the reorganization or bankruptcy or other
event or proceeding affecting any Other Liable Party.

 

Section 5.7.                                   Binding Effect and Assignment. 
This Agreement creates a continuing security interest in the Collateral and
(a) shall be binding on Debtor and its successors and permitted assigns and
(b) shall inure, together with all rights and remedies of Secured Party
hereunder, to the benefit of Secured Party and Lenders and their respective
successors, transferees and assigns.  Without limiting the generality of the
foregoing, Secured Party and any Lender may (except as otherwise provided in the
Credit Agreement) pledge, assign or otherwise transfer any or all of its rights
under any or all of the Obligation Documents to any other Person, and such other
Person shall thereupon become vested with all of the benefits in respect thereof
granted to Secured Party, herein or otherwise.  None of the rights or duties of
Debtor hereunder may be assigned or otherwise transferred without the prior
written consent of Secured Party.

 

Section 5.8.                                   Termination.  It is contemplated
by the parties hereto that there may be times when no Secured Obligations are
outstanding, but notwithstanding such occurrences, this Agreement shall remain
valid and shall be in full force and effect as to subsequent outstanding Secured
Obligations.  Upon the satisfaction in full of the Secured Obligations and the
termination or expiration of the Credit Agreement and any other commitment of
Lenders to extend credit to Debtor, then upon written request for the
termination hereof delivered by Debtor to Secured Party this Agreement and the
security interest created hereby shall terminate and all rights to the
Collateral shall revert to Debtor.  Secured Party will, upon Debtor’s request
and at Debtor’s expense, Exhibit H return to Debtor such of the Collateral as
shall not have been sold or otherwise disposed of or applied pursuant to the
terms hereof; and Exhibit I execute and deliver to Debtor such documents as
Debtor shall reasonably request to evidence such termination.

 

Section 5.9.                                   GOVERNING LAW.  THIS AGREEMENT
SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
COLORADO APPLICABLE TO CONTRACTS MADE AND TO BE PERFORMED ENTIRELY WITHIN SUCH
STATE, EXCEPT AS REQUIRED BY

 

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MANDATORY PROVISIONS OF LAW AND EXCEPT TO THE EXTENT THAT THE PERFECTION AND THE
EFFECT OF PERFECTION OR NON PERFECTION OF THE SECURITY INTEREST CREATED
HEREUNDER, IN RESPECT OF ANY PARTICULAR COLLATERAL, ARE GOVERNED BY THE LAWS OF
A JURISDICTION OTHER THAN SUCH STATE, BUT GIVING EFFECT TO FEDERAL LAWS
APPLICABLE TO NATIONAL BANKS.

 

Section 5.10.                             FINAL AGREEMENT.  THIS WRITTEN
AGREEMENT AND THE OTHER LOAN DOCUMENTS REPRESENT THE FINAL AGREEMENT BETWEEN THE
PARTIES HERETO AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES HERETO.  THERE ARE
NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES HERETO.

 

Section 5.11.                             Counterparts.  This Agreement may be
separately executed in any number of counterparts, all of which when so executed
shall be deemed to constitute one and the same Agreement.

 

Section 5.12.                             “Loan Document”.  This Agreement is a
“Loan Document”, as defined in the Credit Agreement, and, except as expressly
provided herein to the contrary, this Agreement is subject to all provisions of
the Credit Agreement governing such Loan Documents.

 

[Remainder of this page intentionally left blank.  Signature Page to follow.]

 

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IN WITNESS WHEREOF, Debtor has caused this Agreement to be executed and
delivered this Agreement by its officer thereunto duly authorized, as of the
date first above written.

 

 

 

 

 

 

 

 

 

By:

 

 

 

Name:

 

 

 

Title:

 

 

 

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EXHIBIT A

 

DESCRIPTION OF INTERESTS IN PARTNERSHIPS

 

Debtor

 

Partnership

 

Interest

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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EXHIBIT G-3

FORM OF PLEDGE AGREEMENT (LIMITED LIABILITY COMPANY)

 

THIS AMENDED AND RESTATED PLEDGE AGREEMENT (LIMITED LIABILITY COMPANY) (this
“Agreement”) is made as of                                               ,
20        , by                                                           , a
                                                           (“Debtor”), in favor
of JPMorgan Chase Bank, N.A., successor by merger to Bank One, NA (Main Office
Chicago), a national banking association, as Administrative Agent for the
benefit of the Lenders under the Credit Agreement (herein called “Secured
Party”).

 

RECITALS:

 

1.                                       Cimarex Energy Co., a Delaware
corporation (“Borrower”), has executed in favor of Lenders (as such term is
defined below) those certain promissory notes dated June 13, 2005, payable to
the order of Lenders in the aggregate original principal amount of
$1,000,000,000 (such promissory notes, as from time to time amended, and all
promissory notes given in substitution, renewal or extension therefor or
thereof, in whole or in part, being herein collectively called the “Note”).

 

2.                                       The Note was executed pursuant to an
Amended and Restated Credit Agreement dated June 13, 2005, (herein, as from time
to time amended, supplemented or restated, called the “Credit Agreement”), by
and between Borrower, Secured Party, and Lenders, pursuant to which Lenders have
agreed to advance funds to Borrower under the Note.

 

3.                                       Pursuant to the Credit Agreement,
Debtor has previously given to Secured Party a guaranty, for the benefit of each
Lender, (herein, as from time to time amended, supplemented or restated, called
the “Guaranty”) of all of the indebtedness of Borrower under the Credit
Agreement and the Note.

 

4.                                       Borrower owns directly, or indirectly
through one or more subsidiaries, one hundred percent (100%) of the issued and
outstanding stock of Debtor.

 

5.                                       The board of directors of Debtor has
determined that Debtor’s execution, delivery and performance of this Agreement
may reasonably be expected to benefit Debtor, directly or indirectly, and are in
the best interests of Debtor.

 

NOW, THEREFORE, in consideration of the premises, of the benefits which will
inure to Debtor from Lenders’ extensions of credit under the Credit Agreement,
and of Ten Dollars and other good and valuable consideration, the receipt and
sufficiency of all of which are hereby acknowledged, and in order to induce
Lenders to extend credit under the Credit Agreement, Debtor hereby agrees with
Secured Party for the benefit of each Lender as follows:

 

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AGREEMENTS

 

ARTICLE I - DEFINITIONS AND REFERENCES

 

Section 1.1.                                   General Definitions.  As used
herein, the terms “Agreement,” “Debtor,” “Secured Party,” “Note,” “Borrower,”
“Guaranty,” and “Credit Agreement” shall have the meanings indicated above, and
the following terms shall have the following meanings:

 

“Collateral” means all property, of whatever type, which is described in
Section 2.1 as being at any time subject to a security interest granted
hereunder to Secured Party.

 

“Commitment” means the agreement or commitment by Lenders to make loans or
otherwise extend credit to Debtor under the Credit Agreement, and any other
agreement, commitment, statement of terms or other document contemplating the
making of loans or advances or other extension of credit by Lenders to or for
the account of Debtor which is now or at any time hereafter intended to be
secured by the Collateral under this Agreement.

 

“Lenders” means the Persons who are from time to time “Lenders” as defined in
the Credit Agreement.

 

“LLC” means any limited liability company which is included within the term
“Limited Liability Company” pursuant to Section 2.1(a), and any successor of any
such limited liability company.

 

“LLC Agreements”, “LLC Rights”, and “LLC Rights to Payments” have the meanings
given them in Section 2.1(a).

 

“Obligation Documents” means the Credit Agreement, all other Loan Documents, all
documents evidencing Rate Management Transactions with one or more Lenders or
any affiliates of such Lenders, and all other documents and instruments under,
by reason of which, or pursuant to which any or all of the Secured Obligations
are evidenced, governed, secured, guarantied, or otherwise dealt with, and all
other agreements, certificates, and other documents, instruments and writings
heretofore or hereafter delivered in connection herewith or therewith.

 

“Other Liable Party” means any Person, other than Debtor, who may now or may at
any time hereafter be primarily or secondarily liable for any of the Secured
Obligations or who may now or may at any time hereafter have granted to Secured
Party or Lenders a Lien upon any property as security for the Secured
Obligations.

 

“Other LLC Rights” has the meaning given it in Section 2.1(a).

 

“UCC” means the Colorado Uniform Commercial Code in effect from time to time.

 

Section 1.2.                                   Incorporation of Other
Definitions.  Reference is hereby made to the Credit Agreement for a statement
of the terms thereof.  All capitalized terms used in this Agreement which are
defined in the Credit Agreement and not otherwise defined herein shall have the
same meanings herein as set forth therein.  All terms used in this Agreement
which are

 

G-3-2

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defined in the UCC and not otherwise defined herein or in the Credit Agreement
shall have the same meanings herein as set forth therein, except where the
context otherwise requires.

 

Section 1.3.                                   Attachments.  All exhibits or
schedules which may be attached to this Agreement are a part hereof for all
purposes.

 

Section 1.4.                                   Amendment of Defined
Instruments.  Unless the context otherwise requires or unless otherwise provided
herein, references in this Agreement to a particular agreement, instrument or
document (including, but not limited to, references in Section 2.1) also refer
to and include all renewals, extensions, amendments, modifications, supplements
or restatements of any such agreement, instrument or document, provided that
nothing contained in this Section shall be construed to authorize any Person to
execute or enter into any such renewal, extension, amendment, modification,
supplement or restatement.

 

Section 1.5.                                   References and Titles.  All
references in this Agreement to Exhibits, Articles, Sections, subsections, and
other subdivisions refer to the Exhibits, Articles, Sections, subsections and
other subdivisions of this Agreement unless expressly provided otherwise. 
Titles appearing at the beginning of any subdivision are for convenience only
and do not constitute any part of any such subdivision and shall be disregarded
in construing the language contained in this Agreement.  The words “this
Agreement”, “herein”, “hereof”, “hereby”, “hereunder” and words of similar
import refer to this Agreement as a whole and not to any particular subdivision
unless expressly so limited.  The phrases “this Section” and “this subsection”
and similar phrases refer only to the Sections or subsections hereof in which
the phrase occurs.  The word “or” is not exclusive, and the word “including” (in
all of its forms) means “including without limitation”.  Pronouns in masculine,
feminine and neuter gender shall be construed to include any other gender, and
words in the singular form shall be construed to include the plural and vice
versa unless the context otherwise requires.

 

ARTICLE II - SECURITY INTEREST

 

Section 2.1.                                   Grant of Security Interest.  As
collateral security for all of the Secured Obligations, Debtor hereby pledges
and assigns to Secured Party and grants to Secured Party a continuing security
interest for the benefit of each Lender in and to all right, title and interest
of the following:

 

(a)                                  LLC Rights.  All of the following (herein
collectively called the “LLC Rights”), whether now or hereafter existing, which
are owned by Debtor or in which Debtor otherwise has any rights:

 

(i)                                     all units of limited liability company
ownership interests and all proceeds, interest, profits, and other payments or
rights to payment attributable to Debtor’s interests in each limited liability
company (whether one or more, herein called the “LLCs”) described on Exhibit A
hereto, and all distributions, cash, instruments and other property now or
hereafter received, receivable or otherwise made with respect to or in exchange
for any interest of Debtor in any LLC, including interim distributions, returns
of capital, loan repayments, and payments made in liquidation of any LLC, and
whether or not the same arise or are payable under any LLC agreement or
certificate

 

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forming any LLC or any other agreement governing any LLC or the relations among
the members of any LLC (any and all such proceeds, interest, profits, payments,
rights to payment, distributions, cash, instruments, other property, interim
distributions, returns of capital, loan repayments, and payments made in
liquidation being herein called the “LLC Rights to Payments”, and any and all
such LLC agreements, certificates, and other agreements being herein called the
“LLC Agreements”); and

 

(ii)                                  all other interests and rights of Debtor
in any of the LLCs, whether under the LLC Agreements or otherwise, including
without limitation any right to cause the dissolution of any LLC or to appoint
or nominate a successor to Debtor as a member in any LLC (all such other
interests and rights being herein called the “Other LLC Rights”).

 

(b)                                 Proceeds.  All proceeds of any and all of
the foregoing Collateral.

 

In each case, the foregoing shall be covered by this Agreement, whether Debtor’s
ownership or other rights therein are presently held or hereafter acquired and
however Debtor’s interests therein may arise or appear (whether by ownership,
security interest, claim or otherwise).

 

The granting of the foregoing security interest does not make Secured Party a
successor to Debtor as a member of any LLC, and neither Secured Party nor any of
its successors or assigns hereunder shall be deemed to have become a member of
any LLC by accepting this Agreement or exercising any right granted herein
unless and until such time, if any, when Secured Party or any such successor or
assign expressly becomes a member of any LLC after a foreclosure upon Other LLC
Rights.  Anything herein to the contrary notwithstanding (except to the extent,
if any, that Secured Party or any of its successors or assigns hereafter
expressly becomes a member of any LLC), neither Secured Party nor any of its
successors or assigns shall be deemed to have assumed or otherwise become liable
for any debts or obligations of any LLC or of Debtor to or under any LLC, and
the above definition of “Other LLC Rights” shall be deemed modified, if
necessary, to prevent any such assumption or other liability.

 

Section 2.2.                                   Secured Obligations Secured.  The
security interest created hereby in the Collateral constitutes continuing
collateral security for all of the following obligations, indebtedness and
liabilities, whether now existing or hereafter incurred or arising:

 

(a)                                  Secured Obligations.  The payment by
Borrower, as and when due and payable, of the Secured Obligations, the due
performance by Borrower of all of its other obligations under or in respect of
the various Obligation Documents, the payment by Debtor, as and when due and
payable, of all amounts from time to time owing by Debtor under or in respect of
the Guaranty, and the due performance by Debtor of all of its other obligations
under or in respect of the various Obligation Documents.

 

(b)                                 Renewals.  All renewals, extensions,
amendments, modifications, supplements, or restatements of or substitutions for
any of the foregoing.

 

As used herein, the term “Secured Obligations” refers to all present and future
indebtedness, obligations, and liabilities of whatever type which are described
above in this section, including any interest which accrues after the
commencement of any case, proceeding, or other action

 

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relating to the bankruptcy, insolvency, or reorganization of Debtor.  It is the
intention of the Debtor and Secured Party that this Agreement not constitute a
fraudulent transfer or fraudulent conveyance under any state or federal law that
may be applied hereto.  Debtor and, by its acceptance hereof, Secured Party
hereby acknowledges and agrees that, notwithstanding any other provision of this
Agreement:  (a) the indebtedness secured hereby shall be limited to the maximum
amount of indebtedness that can be incurred or secured by Debtor without
rendering this Agreement subject to avoidance under Section 548 of the United
States Bankruptcy Code or any comparable provisions of any applicable state or
federal law, and (b) the Collateral pledged by Debtor hereunder shall be limited
to the maximum amount of Collateral that can be pledged by Debtor without
rendering this Agreement subject to avoidance under Section 548 of the United
States Bankruptcy Code or any comparable provisions of any applicable state or
federal law.

 

ARTICLE III - REPRESENTATIONS, WARRANTIES AND COVENANTS

 

Section 3.1.                                   Representations and Warranties. 
Each of the representations and warranties in the Credit Agreement made by
Debtor is true and correct.  In addition, Debtor hereby represents and warrants
to Secured Party and Lenders as follows:

 

(a)                                  Security Interest.  Debtor has and will
have at all times full right, power and authority to grant a security interest
in the Collateral to Secured Party as provided herein, free and clear of any
Lien, adverse claim, or encumbrance.  This Agreement creates a valid and binding
first priority security interest in favor of Secured Party in the Collateral,
which security interest secures all of the Secured Obligations.

 

(b)                                 Perfection. The filing of financing
statements with the Secretary of State (or equivalent governmental official) of
the State in which Debtor is organized will perfect, and establish the first
priority of, Secured Party’s security interest hereunder in the Collateral
securing the Secured Obligations.  No further or subsequent filing, recording,
registration, other public notice or other action is necessary or desirable to
perfect or otherwise continue, preserve or protect such security interest except
(i) for continuation statements described in UCC Section 9.515(d), (ii) for
filings required to be filed in the event of a change in the name, identity,
state of formation, or entity structure of Debtor, or (iii) in the event any
financing statement filed by Secured Party relating hereto otherwise becomes
inaccurate or incomplete.

 

(c)                                  LLC Rights.  All units and other securities
constituting the LLC Rights have been duly authorized and validly issued, are
fully paid and non assessable, and were not issued in violation of the
preemptive rights of any person or of any agreement by which Debtor or any LLC
is bound. All documentary, stamp or other taxes or fees owing in connection with
the issuance, transfer or pledge of the LLC Rights (or rights in respect
thereof) have been paid. No restrictions or conditions exist with respect to the
transfer, voting or capital of any LLC Rights. Except as disclosed to Secured
Party in writing on or prior to the date hereof, no LLC has any outstanding
rights to subscribe, options, warrants or convertible securities outstanding or
any other rights outstanding whereby any person would be entitled to have issued
to it units of ownership interest in any LLC.  Debtor has taken or concurrently
herewith is taking all actions necessary to perfect Secured Party’s security
interest in the LLC Rights.   No other Person has any such registration in
effect.  Debtor owns the interests in each LLC which are described on

 

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Exhibit A.  No LLC has made any calls for capital which have not been fully paid
by Debtor and by each other member of such LLC.  Debtor is not in default under
any of the LLC Agreements, nor is any other member of any LLC.  Neither the
making of this Agreement nor the exercise of any rights or remedies of Secured
Party hereunder will cause a default under any of the LLC Agreements or
otherwise adversely affect or diminish any of the LLC Rights.  Debtor’s rights
under the LLC Agreements are enforceable in accordance with their terms, except
as such enforcement may be limited by bankruptcy, insolvency or similar laws of
general application relating to the enforcement of creditors’ rights.  The LLC
Rights are not evidenced by any certificates.  The LLC Rights (i) are not dealt
in or traded on securities exchanges or in securities markets, (ii) do not
expressly provide that they are a security governed by Article 8 of the UCC, and
(iii) are not held in a securities account.

 

Section 3.2.                                   Covenants.  Unless Secured Party
shall otherwise consent in writing, Debtor will at all times (i) comply with the
covenants contained in the Credit Agreement which are applicable to Debtor and
(ii) comply with the covenants contained in this Section 3.2 so long as any part
of the Secured Obligations or the Commitment is outstanding.

 

(a)                                  LLC Rights.  Debtor will maintain its
ownership of the interests in each LLC listed on Exhibit A.  Debtor will timely
honor all calls under any LLC Agreement to provide capital to any LLC, and
Debtor will not otherwise default in performing any of Debtor’s obligations
under any LLC Agreement or allow any LLC Rights to be adversely affected or
diminished.  Debtor will promptly inform Secured Party of any such failure to
honor a capital call, default, adverse effect, or diminution.  Debtor will
promptly inform Secured Party of any such failure to honor a capital call or
default by another member of any LLC.  The LLC Rights shall at all times be duly
authorized and validly issued and shall not be issued in violation of the pre
emptive rights of any Person or of any agreement by which Debtor or the LLC
thereof is bound.  Debtor will not allow the LLC Rights (i) to be evidenced by
certificates, (ii) to be dealt in or traded on securities exchanges or in
securities markets, (iii) to be governed by Article 8 of the UCC, or (iv) to be
placed in a securities account.

 

(b)                                 Delivery.  A true and correct copy of each
LLC Agreement and all amendments and supplements thereto have been delivered to
Secured Party.  All amendments or supplements to any LLC Agreement (whether or
not authorized hereunder), shall be delivered to Secured Party promptly upon the
receipt thereof by or on behalf of Debtor.

 

(c)                                  Proceeds of LLC Rights.  If Debtor shall
receive, by virtue of its being or having been an owner of any LLC Rights, any
(i) certificate, instrument, deed, bill of sale, promissory note, or other
instrument or writing (including any given in connection with any increase or
reduction of capital, reorganization, reclassification, merger, consolidation,
sale of assets, liquidation, or partial liquidation); (ii) option or right,
whether as an addition to, substitution for, or in exchange for, any LLC Rights,
or otherwise; or (iii) distributions payable in cash (except distributions
permitted to be retained by Debtor pursuant to Section 4.8 hereof) or in
securities or other property, Debtor shall receive the same in trust for the
benefit of Secured Party, shall segregate it from Debtor’s other property, and
shall promptly deliver it to Secured Party in the exact form received, with any
necessary endorsement or instruments of transfer duly executed in blank, to be
held by Secured Party as Collateral.

 

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(d)                                 Diminution of LLC Rights.  Debtor will not
adjust, settle, compromise, amend or modify any of the LLC Rights or the LLC
Agreements.  Debtor will not permit the creation of any additional interests in
any LLC (unless immediately upon creation the same are pledged to Secured Party
pursuant to the terms hereof to the extent necessary to give Secured Party a
first priority security interest in total LLC Rights after such creation which
are in the aggregate at least the same percentage of the outstanding rights of
the same kind in any LLC as were subject hereto before such issue), whether such
additional interests are presently vested or will vest upon the payment of money
or the occurrence or nonoccurrence of any other condition.  Debtor will not
enter into any agreement (other than the Obligation Documents) creating, or
otherwise permit to exist, any restriction or condition upon the transfer or
exercise of any LLC Rights.

 

(e)                                  Status of LLC Rights. The LLC Rights at all
times shall be duly authorized, validly issued, fully paid, and non assessable,
and shall not be issued in violation of the preemptive rights of any person or
of any agreement by which Debtor or any LLC is bound and shall not be subject to
any restrictions with respect to transfer, voting or capital of such LLC Rights.

 

(f)                                    Restrictions on LLC Rights.  Debtor will
not enter into any agreement creating, or otherwise permit to exist, any
restriction or condition upon the transfer, voting or control of any LLC Rights.

 

ARTICLE IV - REMEDIES, POWERS AND AUTHORIZATIONS

 

Section 4.1.                                   Provisions Concerning the
Collateral.

 

(a)                                  Additional Filings.  Debtor hereby
authorizes Secured Party to file, without the signature of Debtor where
permitted by law, one or more financing or continuation statements, and
amendments thereto, covering or otherwise relating to the Collateral.

 

(b)                                 Power of Attorney.  Debtor hereby
irrevocably appoints Secured Party as Debtor’s attorney in fact and proxy, with
full authority in the place and stead of Debtor and in the name of Debtor or
otherwise, upon the occurrence and during the continuance of a Default, from
time to time in Secured Party’s discretion, to take any action, and to execute
or indorse any instrument, certificate or notice, which Secured Party may deem
necessary or advisable to accomplish the purposes of this Agreement including
any action or instrument: (i) to request or instruct each LLC (and each
registrar, transfer agent, or similar Person acting on behalf of each LLC) to
register the pledge or transfer of the Collateral to Secured Party; (ii) to
otherwise give notification to any LLC, registrar, transfer agent, financial
intermediary, or other Person of Secured Party’s security interests hereunder;
(iii) to ask, demand, collect, sue for, recover, compound, receive and give
acquittance and receipts for moneys due and to become due under or in respect of
any of the Collateral; (iv) to receive, indorse and collect any drafts or other
instruments or documents; (v) to enforce any obligations included among the
Collateral; and (vi) to file any claims or take any action or institute any
proceedings which Secured Party may deem necessary or desirable for the
collection of any of the Collateral or otherwise to enforce, perfect, or
establish the priority of the rights of Secured Party with respect to any of the

 

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Collateral.  Debtor hereby acknowledges that such power of attorney and proxy
are coupled with an interest, and are irrevocable.

 

(c)                                  Performance by Secured Party.  If Debtor
fails to perform any agreement or obligation contained herein, Secured Party may
itself perform, or cause performance of, such agreement or obligation, and the
expenses of Secured Party incurred in connection therewith shall be payable by
Debtor under Section 4.5.

 

(d)                                 Collection Rights.  Secured Party shall have
the right at any time, upon the occurrence and during the continuance of a
Default, to notify (or require Debtor to notify) any or all Persons (including
any LLC) obligated to make payments which are included among the Collateral
(whether accounts, general intangibles, dividends, distribution rights, LLC
Rights to Payment, or otherwise) of the assignment thereof to Secured Party
under this Agreement and to direct such obligors to make payment of all amounts
due or to become due to Debtor thereunder directly to Secured Party and, upon
such notification and at the expense of Debtor and to the extent permitted by
law, to enforce collection thereof and to adjust, settle or compromise the
amount or payment thereof, in the same manner and to the same extent as Debtor
could have done.  After Debtor receives notice that Secured Party has given (and
after Secured Party has required Debtor to give) any notice referred to above in
this subsection:

 

(i)                                     all amounts and proceeds (including
instruments and writings) received by Debtor in respect of such accounts,
general intangibles, dividends, distribution rights, or LLC Rights to Payments
shall be received in trust for the benefit of Secured Party hereunder, shall be
segregated from other funds of Debtor and shall be forthwith paid over to
Secured Party in the same form as so received (with any necessary indorsement)
to be applied as specified in Section 4.3, and

 

(ii)                                  Debtor will not adjust, settle or
compromise the amount or payment of any such account or general intangible or
LLC Right to Payments or release wholly or partly any account debtor or obligor
thereof (including any LLC) or allow any credit or discount thereon.

 

Section 4.2.                                   Default Remedies.  If a Default
shall have occurred and be continuing, Secured Party may from time to time in
its discretion, without limitation and without notice except as expressly
provided below:

 

(a)                                  exercise in respect of the Collateral, in
addition to any other rights and remedies provided for herein, under the other
Obligation Documents or otherwise available to it, all the rights and remedies
of a secured party on default under the UCC (whether or not the UCC applies to
the affected Collateral);

 

(b)                                 require Debtor to, and Debtor hereby agrees
that it will at its expense and upon request of Secured Party, promptly assemble
all books, records and information of Debtor relating to the Collateral at a
place to be designated by Secured Party which is reasonably convenient to both
parties;

 

(c)                                  reduce its claim to judgment or foreclose
or otherwise enforce, in whole or in part, the security interest created hereby
by any available judicial procedure;

 

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(d)                                 dispose of, at its office, on the premises
of Debtor or elsewhere, all or any part of the Collateral, as a unit or in
parcels, by public or private proceedings, and by way of one or more contracts
(it being agreed that the sale of any part of the Collateral shall not exhaust
Secured Party’s power of sale, but sales may be made from time to time, and at
any time, until all of the Collateral has been sold or until the Secured
Obligations have been paid and performed in full), and at any such sale it shall
not be necessary to exhibit any of the Collateral;

 

(e)                                  buy (or allow one or more of the Lenders to
buy) the Collateral, or any part thereof, at any public sale;

 

(f)                                    buy (or allow one or more of the Lenders
to buy) the Collateral, or any part thereof, at any private sale if the
Collateral is of a type customarily sold in a recognized market or is of a type
which is the subject of widely distributed standard price quotations;

 

(g)                                 apply by appropriate judicial proceedings
for appointment of a receiver for the Collateral, or any part thereof, and
Debtor hereby consents to any such appointment; and

 

(h)                                 at its discretion, retain the Collateral in
satisfaction of the Secured Obligations whenever the circumstances are such that
Secured Party is entitled to do so under the UCC or otherwise (provided that
Secured Party shall in no circumstances be deemed to have retained the
Collateral in satisfaction of the Secured Obligations in the absence of an
express notice by Secured Party to Debtor that Secured Party has either done so
or intends to do so).

 

Debtor agrees that, to the extent notice of sale shall be required by law, at
least ten (10) days’ notice to Debtor of the time and place of any public sale
or the time after which any private sale is to be made shall constitute
reasonable notification.  Secured Party shall not be obligated to make any sale
of Collateral regardless of notice of sale having been given.  Secured Party may
adjourn any public or private sale from time to time by announcement at the time
and place fixed therefor, and such sale may, without further notice, be made at
the time and place to which it was so adjourned.

 

Section 4.3.                                   Application of Proceeds.  If any
Default shall have occurred and be continuing, Secured Party may in its
discretion apply any cash held by Secured Party as Collateral, and any cash
proceeds received by Secured Party in respect of any sale of, collection from,
or other realization upon all or any part of the Collateral, to any or all of
the following in such order as Secured Party may (subject to the rights of
Lenders under the Credit Agreement) elect:

 

(a)                                  To the repayment of all costs and expenses,
including reasonable attorneys’ fees and legal expenses, incurred by Secured
Party in connection with (i) the administration of this Agreement, (ii) the
custody, preservation, use or operation of, or the sale of, collection from, or
other realization upon, any Collateral, (iii) the exercise or enforcement of any
of the rights of Secured Party hereunder, or (iv) the failure of Debtor to
perform or observe any of the provisions hereof;

 

(b)                                 To the payment or other satisfaction of any
Liens, encumbrances, or adverse claims upon or against any of the Collateral;

 

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(c)                                  To the reimbursement of Secured Party for
the amount of any obligations of Debtor or any Other Liable Party paid or
discharged by Secured Party pursuant to the provisions of this Agreement or the
other Obligation Documents, and of any expenses of Secured Party payable by
Debtor hereunder or under the other Obligation Documents;

 

(d)                                 To the satisfaction of any other Secured
Obligations;

 

(e)                                  By holding the same as Collateral;

 

(f)                                    To the payment of any other amounts
required by applicable law (including any provision of the UCC); and

 

(g)                                 By delivery to Debtor or to whomever shall
be lawfully entitled to receive the same or as a court of competent jurisdiction
shall direct.

 

Section 4.4.                                   Deficiency.  In the event that
the proceeds of any sale, collection or realization of or upon Collateral by
Secured Party are insufficient to pay all Secured Obligations and any other
amounts to which Secured Party is legally entitled, Debtor shall be liable for
the deficiency, together with interest thereon as provided in the governing
Obligation Documents or (if no interest is so provided) at such other rate as
shall be fixed by applicable law, together with the costs of collection and the
reasonable fees of any attorneys employed by Secured Party or Lenders to collect
such deficiency.

 

Section 4.5.                                   Indemnity and Expenses.  In
addition to, but not in qualification or limitation of, any similar obligations
under other Obligation Documents:

 

(a)                                  Debtor will indemnify Secured Party and
each Lender from and against any and all claims, losses and liabilities growing
out of or resulting from this Agreement (including enforcement of this
Agreement), WHETHER OR NOT SUCH CLAIMS, LOSSES AND LIABILITIES ARE IN ANY WAY OR
TO ANY EXTENT OWED, IN WHOLE OR IN PART, UNDER ANY CLAIM OR THEORY OF STRICT
LIABILITY OR ARE CAUSED BY OR ARISE OUT OF SUCH INDEMNIFIED PARTY’S OWN
NEGLIGENCE, except to the extent such claims, losses or liabilities are
proximately caused by such indemnified party’s individual gross negligence or
willful misconduct.

 

(b)                                 Debtor will upon demand pay to Secured Party
the amount of any and all reasonable costs and expenses, including the
reasonable fees and disbursements of Secured Party’s counsel and of any experts
and agents, which Secured Party may incur in connection with (i) the
transactions which give rise to this Agreement, (ii) the preparation of this
Agreement and the perfection and preservation of this security interest created
under this Agreement, (iii) the administration of this Agreement; (iv) the
custody, preservation, use or operation of, or the sale of, collection from, or
other realization upon, any Collateral; (v) the exercise or enforcement of any
of the rights of Secured Party hereunder; or (vi) the failure by Debtor to
perform or observe any of the provisions hereof, except expenses resulting from
Secured Party’s gross negligence or willful misconduct.

 

Section 4.6.                                   Non Judicial Remedies.  In
granting to Secured Party the power to enforce its rights hereunder without
prior judicial process or judicial hearing, Debtor expressly

 

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waives, renounces and knowingly relinquishes any legal right which might
otherwise require Secured Party to enforce its rights by judicial process.  In
so providing for non judicial remedies, Debtor recognizes and concedes that such
remedies are consistent with the usage of trade, are responsive to commercial
necessity, and are the result of a bargain at arm’s length.  Nothing herein is
intended, however, to prevent Secured Party from resorting to judicial process
at its option.

 

Section 4.7.                                   Other Recourse.  Debtor waives
any right to require Secured Party *[or any Lender] to proceed against any other
Person, to exhaust any Collateral or other security for the Secured Obligations,
or to have any Other Liable Party joined with Debtor in any suit arising out of
the Secured Obligations or this Agreement, or pursue any other remedy in Secured
Party’s power.  Debtor further waives any and all notice of acceptance of this
Agreement and of the creation, modification, rearrangement, renewal or extension
for any period of any of the Secured Obligations of any Other Liable Party from
time to time.  Debtor further waives any defense arising by reason of any
disability or other defense of any Other Liable Party or by reason of the
cessation from any cause whatsoever of the liability of any Other Liable Party. 
This Agreement shall continue irrespective of the fact that the liability of any
Other Liable Party may have ceased and irrespective of the validity or
enforceability of any other Obligation Document to which Debtor or any Other
Liable Party may be a party, and notwithstanding any death, incapacity,
reorganization, or bankruptcy of any Other Liable Party or any other event or
proceeding affecting any Other Liable Party.  Until all of the Secured
Obligations shall have been paid in full, Debtor shall have no right to
subrogation and Debtor waives the right to enforce any remedy which Secured
Party or any Lender has or may hereafter have against any Other Liable Party,
and waives any benefit of and any right to participate in any other security
whatsoever now or hereafter held by Secured Party and each Lender.  Debtor
authorizes Secured Party, without notice or demand, without any reservation of
rights against Debtor, and without in any way affecting Debtor’s liability
hereunder or on the Secured Obligations, from time to time to (a) take or hold
any other property of any type from any other Person as security for the Secured
Obligations, and exchange, enforce, waive and release any or all of such other
property, (b) apply the Collateral or such other property and direct the order
or manner of sale thereof as Secured Party may in its discretion determine,
(c) renew, extend for any period, accelerate, modify, compromise, settle or
release any of the obligations of any Other Liable Party in respect to any or
all of the Secured Obligations or other security for the Secured Obligations,
(d) waive, enforce, modify, amend, restate, or supplement any of the provisions
of any Obligation Document with any Person other than Debtor, and (e) release or
substitute any Other Liable Party.

 

Section 4.8.                                   Exercise of LLC Rights.

 

(a)                                  So long as no Default or Event of Default
shall have occurred and be continuing, Debtor may receive and retain any and all
distributions of profits paid in cash in respect of the LLC Rights to Payments;
provided, however, that any and all other payments in respect of the LLC Rights
to Payments shall be, and shall forthwith be delivered to Secured Party to hold
as, Collateral and shall, if received by Debtor, be received in trust for the
benefit of Secured Party, be segregated from the other property or funds of
Debtor, and be forthwith delivered to Secured Party in the exact form received
with any necessary indorsement or instruments of transfer duly executed in
blank, to be held by Secured Party as Collateral.

 

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(b)                                 Upon the occurrence and during the
continuance of a Default or an Event of Default, all rights of Debtor to receive
and retain any distributions of profits or other payments of any kind in respect
of LLC Rights to Payments which Debtor would otherwise be authorized to receive
and retain pursuant to subsection (a) of this section shall automatically cease,
and all such rights shall thereupon become vested in Secured Party which shall
thereupon have the sole right to receive and hold as Collateral all such
distributions and payments, and all distributions of profits and other payments
of any kind in respect of LLC Rights to Payments which are nonetheless received
by Debtor shall be received in trust for the benefit of Secured Party, shall be
segregated from other funds of Debtor, and shall be forthwith paid over to
Secured Party in the exact form received, to be held by Secured Party as
Collateral.  Notwithstanding anything herein to the contrary, Debtor may at all
time exercise any and all voting rights pertaining to the LLC Rights or any part
thereof for any purpose not inconsistent with the terms of this Agreement or any
other Obligation Document.

 

Section 4.9.                                   Private Sale of LLC Rights. 
Debtor recognizes that Secured Party may deem it impracticable to effect a
public sale of all or any part of the LLC Rights and that Secured Party may,
therefore, determine to make one or more private sales of LLC Rights to a
restricted group of purchasers who will be obligated to agree, among other
things, to acquire the same for their own account, for investment and not with a
view to the distribution or resale thereof.  Debtor acknowledges that any such
private sale may be at prices and on terms less favorable to the seller than the
prices and other terms which might have been obtained at a public sale and,
notwithstanding the foregoing, agrees that such private sales shall be deemed to
have been made in a commercially reasonable manner and that Secured Party shall
have no obligation to delay sale of any LLC Rights for the period of time
necessary to permit their registration for public sale under the Securities Act
of 1933, as amended (the “Securities Act”), to the extent, if any, that it is
applicable thereto.  Debtor further acknowledges and agrees that any offer to
sell any LLC Rights which has been (a) publicly advertised on a bona fide basis
in a newspaper or other publication of general circulation in the financial
community of Denver, Colorado (to the extent that such an offer may be so
advertised without prior registration under the Securities Act), or (b) made
privately in the manner described above to not less than fifteen (15) bona fide
offerees shall be deemed to involve a “public disposition” for the purposes of
Section 9.610(c) of the UCC (or any successor or similar, applicable statutory
provision), notwithstanding that such sale may not constitute a “public
offering” under the Securities Act and that Secured Party may, in such event,
bid for the purchase of such LLC Rights.  Any sale of the Collateral shall be
conducted in accordance with all applicable securities and other laws then in
effect.

 

Section 4.10.                             Limitation on Rights and Waivers.  All
rights, powers and remedies herein conferred shall be exercisable by Secured
Party only to the extent not prohibited by applicable law; and all waivers and
relinquishments of rights and similar matter shall only be effective to the
extent such waivers or relinquishments are not prohibited by applicable law.

 

ARTICLE V - MISCELLANEOUS

 

Section 5.1.                                   Notices.  Any notice or
communication required or permitted hereunder shall be given as provided in the
Credit Agreement.

 

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Section 5.2.                                   Amendments.  No amendment of any
provision of this Agreement shall be effective unless it is in writing and
signed by Debtor and Secured Party, and no waiver of any provision of this
Agreement, and no consent to any departure by Debtor therefrom, shall be
effective unless it is in writing and signed by Secured Party, and then such
waiver or consent shall be effective only in the specific instance and for the
specific purpose for which given and to the extent specified in such writing. 
In addition all such amendments and waivers shall be effective only if given
with any approvals of Lenders as required in the Credit Agreement.

 

Section 5.3.                                   Preservation of Rights.  No
failure on the part of Secured Party or any Lender to exercise, and no delay in
exercising, any right hereunder or under any other Obligation Document shall
operate as a waiver thereof; nor shall any single or partial exercise of any
such right preclude any other or further exercise thereof or the exercise of any
other right.  Neither the execution nor the delivery of this Agreement shall in
any manner impair or affect any other security for the Secured Obligations.  The
rights and remedies of Secured Party provided herein and in the other Obligation
Documents are cumulative and are in addition to, and not exclusive of, any
rights or remedies provided by law.  The rights of Secured Party under any
Obligation Document against any party thereto are not conditional or contingent
on any attempt by Secured Party to exercise any of its rights under any other
Obligation Document against such party or against any other Person.

 

Section 5.4.                                   Unenforceability.  Any provision
of this Agreement which is prohibited or unenforceable in any jurisdiction
shall, as to such jurisdiction, be ineffective to the extent of such prohibition
or invalidity without invalidating the remaining portions hereof or thereof or
affecting the validity or enforceability of such provision in any other
jurisdiction.

 

Section 5.5.                                   Survival of Agreements.  All
representations and warranties of Debtor herein, and all covenants and
agreements herein shall survive the execution and delivery of this Agreement,
the execution and delivery of any other Obligation Documents and the creation of
the Secured Obligations.

 

Section 5.6.                                   Other Liable Party.  Neither this
Agreement nor the exercise by Secured Party or the failure of Secured Party to
exercise any right, power or remedy conferred herein or by law shall be
construed as relieving any Other Liable Party from liability on the Secured
Obligations or any deficiency thereon.  This Agreement shall continue
irrespective of the fact that the liability of any Other Liable Party may have
ceased or irrespective of the validity or enforceability of any other Obligation
Document to which Debtor or any Other Liable Party may be a party, and
notwithstanding the reorganization, death, incapacity or bankruptcy of any Other
Liable Party, and notwithstanding the reorganization or bankruptcy or other
event or proceeding affecting any Other Liable Party.

 

Section 5.7.                                   Binding Effect and Assignment. 
This Agreement creates a continuing security interest in the Collateral and
(a) shall be binding on Debtor and its successors and permitted assigns and
(b) shall inure, together with all rights and remedies of Secured Party
hereunder, to the benefit of Secured Party and Lenders and their respective
successors, transferees and assigns.  Without limiting the generality of the
foregoing, Secured Party and any Lender may (except as otherwise provided in the
Credit Agreement) pledge, assign or otherwise transfer any or all of its rights
under any or all of the Obligation Documents to any other Person,

 

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and such other Person shall thereupon become vested with all of the benefits in
respect thereof granted to Secured Party, herein or otherwise.  None of the
rights or duties of Debtor hereunder may be assigned or otherwise transferred
without the prior written consent of Secured Party.

 

Section 5.8.                                   Termination. It is contemplated
by the parties hereto that there may be times when no Secured Obligations are
outstanding, but notwithstanding such occurrences, this Agreement shall remain
valid and shall be in full force and effect as to subsequent outstanding Secured
Obligations.  Upon the satisfaction in full of the Secured Obligations and the
termination or expiration of the Credit Agreement and any other commitment of
Lenders to extend credit to Debtor, then upon written request for the
termination hereof delivered by Debtor to Secured Party this Agreement and the
security interest created hereby shall terminate and all rights to the
Collateral shall revert to Debtor.  Secured Party will, upon Debtor’s request
and at Debtor’s expense, (a) return to Debtor such of the Collateral as shall
not have been sold or otherwise disposed of or applied pursuant to the terms
hereof; and (b) execute and deliver to Debtor such documents as Debtor shall
reasonably request to evidence such termination.

 

Section 5.9.                                   GOVERNING LAW.  THIS AGREEMENT
SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
COLORADO APPLICABLE TO CONTRACTS MADE AND TO BE PERFORMED ENTIRELY WITHIN SUCH
STATE, EXCEPT AS REQUIRED BY MANDATORY PROVISIONS OF LAW AND EXCEPT TO THE
EXTENT THAT THE PERFECTION AND THE EFFECT OF PERFECTION OR NON PERFECTION OF THE
SECURITY INTEREST CREATED HEREUNDER, IN RESPECT OF ANY PARTICULAR COLLATERAL,
ARE GOVERNED BY THE LAWS OF A JURISDICTION OTHER THAN SUCH STATE.

 

Section 5.10.                             FINAL AGREEMENT.  THIS WRITTEN
AGREEMENT AND THE OTHER LOAN DOCUMENTS REPRESENT THE FINAL AGREEMENT BETWEEN THE
PARTIES HERETO AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES HERETO.  THERE ARE
NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES HERETO, BUT GIVING EFFECT TO
FEDERAL LAWS APPLICABLE TO NATIONAL BANKS.

 

Section 5.11.                             Counterparts.  This Agreement may be
separately executed in any number of counterparts, all of which when so executed
shall be deemed to constitute one and the same Agreement.

 

Section 5.12.                             “Loan Document.”  This Agreement is a
“Loan Document”, as defined in the Credit Agreement, and, except as expressly
provided herein to the contrary, this Agreement is subject to all provisions of
the Credit Agreement governing such Loan Documents.

 

Section 5.13.                             Restatement.  That certain LLC Pledge
Agreement dated October 1, 2004, executed by Debtor in connection with the
Existing Credit Agreement (the “Existing Pledge Agreement”) shall be amended and
restated as of the Closing Date in the form of this Agreement.  It is the
intention of the Debtor that this Agreement amends and restates the Existing
Pledge Agreement in its entirety; provided, that such amendment and restatement
shall

 

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not extinguish or constitute a novation of the indebtedness evidenced by the
Existing Pledge Agreement.

 

[Remainder of page intentionally left blank.  Signature Page follows.]

 

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IN WITNESS WHEREOF, Debtor has caused this Agreement to be executed and
delivered this Agreement by its officer thereunto duly authorized, as of the
date first above written.

 

 

CIMAREX ENERGY CO.

 

 

 

 

 

By:

 

 

 

 

Paul Korus,

 

 

Vice President, Chief Financial Officer

 

 

and Treasurer

 

 

 

 

 

 

 

 

 

 

By:

 

 

 

Name:

 

 

 

Title:

 

 

 

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EXHIBIT A

 

DESCRIPTION OF INTERESTS IN LIMITED LIABILITY COMPANIES

 

Debtor

 

Limited Liability Company

 

Interest

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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EXHIBIT H

FORM OF CONFIDENTIALITY AGREEMENT

 

[Insert Date]

 

 

 

 

Re:                               Amended and Restated Credit Agreement, dated
as of June 13, 2005, as amended (the “Credit Agreement”), among Cimarex Energy
Co. (“Cimarex”), JPMorgan Chase Bank, N.A., as Administrative Agent and certain
other agents and Lenders party thereto

 

Ladies and Gentlemen:

 

                                 (“Lender”) has requested that you assist it in
evaluating oil and gas properties (and the related reserves and production) of
Cimarex and its subsidiaries (collectively, the “Company”) for purposes of
determining the Borrowing Base under the Credit Agreement, which Borrowing Base
is to be determined semiannually by April 30 and October 30 of each year and
pursuant to certain Special Redeterminations (“Determination Date”).  Lender has
made and/or will make available to you certain information concerning the
Company’s oil and gas properties and related operations (all of which
information so provided to you, whether prior or subsequent to your execution of
this agreement, shall be known as the “Evaluation Material”).  The term
“Evaluation Material” does not include information which is or becomes generally
available to you on a non-confidential basis, provided that the source of such
information was not known by you after due inquiry to be bound by a
confidentiality agreement or other obligation of confidentiality with respect to
such information.

 

You agree that you will use the Evaluation Material solely for the purposes
described above and that the Evaluation Material will not be used for any other
purpose.  You agree to keep the Evaluation Material confidential and not to
disclose the Evaluation Material to any person or entity other than such of your
officers, directors and employees who have a bona fide need to have access to
the Evaluation Material in order for you to carry out the purposes described
above and who have agreed in writing to be bound by the obligations of
confidentiality contained herein.  You shall be responsible and liable for any
use or disclosure of the Evaluation Material by such parties in violation of
this agreement.  Nothing contained herein shall be deemed to prevent disclosure
of any of the Evaluation Material if, in the opinion of your legal counsel, such
disclosure is legally required to be made in a judicial, administrative or
governmental proceeding pursuant to a valid subpoena or other applicable order;
provided, however, you shall give the Company at least 10 days prior written
notice (unless less time is permitted by the applicable proceeding) before
disclosing any of the Evaluation Material in a proceeding and, in making such
disclosure, you will disclose only that portion thereof required to be disclosed
and shall take all reasonable efforts to preserve the confidentiality thereof,
including obtaining protective orders and supporting the Company in
intervention.

 

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The Company specifically disclaims and makes no representation or warranty,
express or implied, to you with respect to the Evaluation Material.  You agree
not to make or reproduce any copies of any document (or any portion thereof) or
other materials which is part of the Evaluation Material.  Within twenty
business days after the applicable Determination Date for which the Evaluation
Material was made available to you, you will return to the Company all documents
(including all copies thereof) and other materials which have been delivered or
disclosed to you or which you have obtained, as part of the Evaluation Material.

 

You agree that if this agreement is breached, or if a breach hereof is
threatened, the remedy at law may be inadequate, and therefore, without limiting
any other remedy at law or in equity, an injunction, restraining order, specific
performance and other forms of equitable relief or money damages or any
combination thereof shall be available to the Company.  The successful party in
any action or proceeding brought to enforce this agreement shall be entitled to
recover the costs, expenses and fees incurred in any such action or proceeding,
including, without limitation, attorney’s fees and expenses.

 

This agreement is personal unto you, and you may not assign, pledge or otherwise
transfer your rights or delegate your duties or obligations under this agreement
without the prior written consent of the Company.

 

This agreement constitutes the entire understanding between us with respect to
the subject matter thereof and supersedes all negotiations, prior discussions,
or prior agreements and understandings relating to such subject matter.  All
duties, obligations, rights, powers and remedies provided herein are in addition
to the duties, obligations and rights, powers and remedies existing at law or in
equity, including, without limitation, the Uniform Trade Secrets Act and similar
statutes and rules of law pertaining to trade secrets and confidential and
proprietary information.

 

This agreement shall be governed by and construed in accordance with the laws of
the State of Colorado, without giving effect to its conflicts of laws,
principles or rules.  The parties consent to jurisdiction and venue in any court
of competent jurisdiction in such state and in and to the federal courts sitting
in such state.

 

Please confirm your agreement with the foregoing by signing and returning one
copy of this letter to the Company.

 

 

Very truly yours,

 

 

 

CIMAREX ENERGY CO.

 

 

 

By:

 

 

 

Name:

 

 

 

Title:

 

 

 

ACCEPTED AND AGREED:

 

By:

 

 

Name:

 

 

Title:

 

 

 

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EXHIBIT I

 

FORM OF CERTIFICATE OF EFFECTIVENESS

 

This Certificate of Effectiveness (this “Certificate”) is executed the 13th day
of June, 2005 (the “Effective Date”) by and among Cimarex Energy Co., a Delaware
corporation (“Borrower”) and JPMorgan Chase Bank, N.A., as Administrative Agent
(“Administrative Agent”) for the Lenders under and as defined in that certain
Amended and Restated Credit Agreement (the “Agreement”) dated as of June 13,
2005, by and among Borrower, Administrative Agent, and the Lenders and agents
named therein.  This Certificate is executed pursuant to Section 4.1 of the
Agreement and is the “Certificate of Effectiveness” therein referenced.  Unless
otherwise defined herein, all terms used herein with their initial letter
capitalized shall have the meaning given such terms in the Agreement.  Borrower
and Administrative Agent (on behalf of itself and the Lenders) hereby
acknowledge and agree as follows:

 

1.                                       Borrower has satisfied each condition
precedent to the effectiveness of the Agreement contained in Section 4.1 of the
Agreement.

 

2.                                       The Agreement is effective as of the
Effective Date.

 

 

JPMORGAN CHASE BANK, N.A.,

 

as Administrative Agent for the Lenders

 

 

 

 

 

By:

 

 

 

 

J. Scott Fowler,

 

 

Vice President

 

 

 

 

 

CIMAREX ENERGY CO.

 

 

 

 

 

By:

 

 

 

 

Paul Korus,

 

 

Chief Financial Officer

 

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