Exhibit 10.1

Execution Version

 

 

TERM LOAN CREDIT AGREEMENT

DATED AS OF

APRIL 28, 2017

AMONG

REX ENERGY CORPORATION,

AS BORROWER,

ANGELO, GORDON ENERGY SERVICER, LLC,

AS ADMINISTRATIVE AGENT AND COLLATERAL AGENT,

AND

THE LENDERS PARTY HERETO

 

 

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TABLE OF CONTENTS

 

                Page  

ARTICLE I DEFINITIONS AND ACCOUNTING MATTERS

     1    

Section 1.01

    

Terms Defined Above

     1    

Section 1.02

    

Certain Defined Terms

     1    

Section 1.03

    

Terms Generally; Rules of Construction

     32    

Section 1.04

    

Accounting Terms and Determinations; GAAP

     33  

ARTICLE II THE CREDITS

     33    

Section 2.01

    

Commitments

     33    

Section 2.02

    

Loans

     34    

Section 2.03

    

Requests for Loans

     35    

Section 2.04

    

Funding of Loans

     36    

Section 2.05

    

Incremental Facility

     36    

Section 2.06

    

Letters of Credit

     38    

Section 2.07

    

Termination of Commitments and Reduction of Delayed Draw Commitments

     45  

ARTICLE III PAYMENTS OF PRINCIPAL AND INTEREST; PREPAYMENTS; FEES

     46    

Section 3.01

    

Repayment of Loans

     46    

Section 3.02

    

Interest

     47    

Section 3.03

    

Alternate Rate of Interest

     47    

Section 3.04

    

Prepayments

     48    

Section 3.05

    

Fees

     51  

ARTICLE IV PAYMENTS; PRO RATA TREATMENT; SHARING OF SET-OFFS

     52    

Section 4.01

    

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

     52    

Section 4.02

    

Presumption of Payment by the Borrower

     53    

Section 4.03

    

Payments and Deductions by the Administrative Agent; Defaulting Lenders

     53    

Section 4.04

    

Disposition of Proceeds

     56  

ARTICLE V INCREASED COSTS; BREAK FUNDING PAYMENTS; TAXES; ILLEGALITY

     56    

Section 5.01

    

Increased Costs

     56    

Section 5.02

    

Taxes

     57    

Section 5.03

    

Mitigation Obligations; Replacement of Lenders

     62   ARTICLE VI CONDITIONS PRECEDENT      63    

Section 6.01

    

Effective Date

     63    

Section 6.02

    

Each Credit Event

     66  

 

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ARTICLE VII REPRESENTATIONS AND WARRANTIES

     67    

Section 7.01

    

Organization; Powers

     67    

Section 7.02

    

Authority; Enforceability

     68    

Section 7.03

    

Approvals; No Conflicts

     68    

Section 7.04

    

Financial Condition; No Material Adverse Change

     68    

Section 7.05

    

Litigation

     69    

Section 7.06

    

Environmental Matters

     69    

Section 7.07

    

Compliance with the Laws and Agreements; No Defaults

     70    

Section 7.08

    

Investment Company Act

     71    

Section 7.09

    

Taxes

     71    

Section 7.10

    

ERISA

     71    

Section 7.11

    

Disclosure; No Material Misstatements

     72    

Section 7.12

    

Insurance

     73    

Section 7.13

    

Restriction on Liens

     73    

Section 7.14

    

Subsidiaries

     73    

Section 7.15

    

Location of Business and Offices

     73    

Section 7.16

    

Properties; Titles, Etc.

     73    

Section 7.17

    

Maintenance of Properties

     74    

Section 7.18

    

Gas Imbalances, Prepayments

     75    

Section 7.19

    

Marketing of Production

     75    

Section 7.20

    

Swap Agreements

     75    

Section 7.21

    

Use of Loans and Letters of Credit

     76    

Section 7.22

    

Solvency

     76    

Section 7.23

    

International Operations

     76    

Section 7.24

    

Anti-Corruption Laws, Sanctions, OFAC

     76    

Section 7.25

    

Foreign Corrupt Practices

     77  

ARTICLE VIII AFFIRMATIVE COVENANTS

     77    

Section 8.01

    

Financial Statements; Other Information

     77    

Section 8.02

    

Notices of Material Events

     81    

Section 8.03

    

Existence; Conduct of Business

     81    

Section 8.04

    

Payment of Obligations

     81    

Section 8.05

    

Performance of Obligations under Loan Documents

     82    

Section 8.06

    

Operation and Maintenance of Properties

     82  

 

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Section 8.07

    

Insurance

     83    

Section 8.08

    

Books and Records; Inspection Rights

     83    

Section 8.09

    

Compliance with Laws

     83    

Section 8.10

    

Environmental Matters

     83    

Section 8.11

    

Further Assurances

     84    

Section 8.12

    

Reserve Reports

     85    

Section 8.13

    

Title Information

     86    

Section 8.14

    

Additional Collateral; Additional Guarantors

     86    

Section 8.15

    

ERISA Compliance

     87    

Section 8.16

    

Marketing Activities

     88    

Section 8.17

    

Deposit Accounts

     88    

Section 8.18

    

Acquisition of Oil and Gas Properties – Mortgage Coverage

     88    

Section 8.19

    

Lender Call and Meetings

     89    

Section 8.20

    

Swap Agreements

     89    

Section 8.21

    

EEA Financial Institution

     90    

Section 8.22

    

Post-Effective Date Requirements

     90  

ARTICLE IX NEGATIVE COVENANTS

     91    

Section 9.01

    

Financial Covenants

     91    

Section 9.02

    

Debt

     91    

Section 9.03

    

Liens

     92    

Section 9.04

    

Dividends, Distributions and Redemptions; Senior Debt Redemption and Amendment

     93    

Section 9.05

    

Investments, Loans and Advances

     95    

Section 9.06

    

Nature of Business

     97    

Section 9.07

    

Limitation on Leases

     97    

Section 9.08

    

Proceeds of Loans

     97    

Section 9.09

    

ERISA Compliance

     98    

Section 9.10

    

Sale or Discount of Receivables

     99    

Section 9.11

    

Mergers, Etc.

     99    

Section 9.12

    

Sale of Properties

     99    

Section 9.13

    

Environmental Matters

     101    

Section 9.14

    

Transactions with Affiliates

     101    

Section 9.15

    

Subsidiaries

     101    

Section 9.16

    

Negative Pledge Agreements; Dividend Restrictions

     101  

 

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Section 9.17

    

Gas Imbalances, Take-or-Pay or Other Prepayments or Minimum Volume Contracts

     102    

Section 9.18

    

Swap Agreements

     102    

Section 9.19

    

Amendments to Series A Preferred Stock

     103    

Section 9.20

    

New Deposit Accounts

     103    

Section 9.21

    

Sale Lease-Leaseback

     103    

Section 9.22

    

Excluded ACH Account, Credit Line and Excluded Accounts

     103  

ARTICLE X EVENTS OF DEFAULT; REMEDIES

     104    

Section 10.01

    

Events of Default

     104    

Section 10.02

    

Remedies

     106  

ARTICLE XI THE ADMINISTRATIVE AGENT AND THE COLLATERAL AGENT

     109    

Section 11.01

    

Appointment; Powers

     109    

Section 11.02

    

Duties and Obligations of Administrative Agent and Collateral Agent

     110    

Section 11.03

    

Action by Administrative Agent and Collateral Agent

     111    

Section 11.04

    

Reliance by Administrative Agent and Collateral Agent

     112    

Section 11.05

    

Subagents

     112    

Section 11.06

    

Resignation of Administrative Agent and Collateral Agent

     112    

Section 11.07

    

Administrative Agents and Collateral Agent as Lenders

     113    

Section 11.08

    

No Reliance

     113    

Section 11.09

    

Administrative Agent and Collateral Agent May File Proofs of Claim

     114    

Section 11.10

    

Authority of Collateral Agent to Release Collateral, Liens and Guarantors

     115  

ARTICLE XII MISCELLANEOUS

     115    

Section 12.01

    

Notices

     115    

Section 12.02

    

Waivers; Amendments

     117    

Section 12.03

    

Expenses, Indemnity; Damage Waiver

     120    

Section 12.04

    

Successors and Assigns

     123    

Section 12.05

    

Survival; Revival; Reinstatement

     126    

Section 12.06

    

Counterparts; Integration; Effectiveness

     127    

Section 12.07

    

Severability

     127    

Section 12.08

    

Right of Setoff

     128    

Section 12.09

    

GOVERNING LAW; JURISDICTION; SERVICE OF PROCESS

     128    

Section 12.10

    

Headings

     129    

Section 12.11

    

Confidentiality

     129    

Section 12.12

    

Interest Rate Limitation

     130    

Section 12.13

    

EXCULPATION PROVISIONS

     131  

 

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Section 12.14

    

Collateral Matters; Swap Agreements; Secured Cash Management Agreements

     131    

Section 12.15

    

No Third Party Beneficiaries

     132    

Section 12.16

    

USA Patriot Act Notice

     132    

Section 12.17

    

Amendment and Restatement of Existing Credit Agreement

     132    

Section 12.18

    

INTERCREDITOR AGREEMENTS

     133    

Section 12.19

    

Acknowledgement and Consent to Bail-In of EEA Financial Institutions

     134    

Section 12.20

    

ORIGINAL ISSUE DISCOUNT

     134  

 

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ANNEXES, EXHIBITS AND SCHEDULES

 

Annex I    List of Commitments Exhibit A    Form of Note Exhibit B    Form of
Borrowing Request Exhibit C-1    Form of Effective Date Certificate Exhibit C-2
   Form of Section 8.01(c) Certificate Exhibit D    Security Instruments Exhibit
E    Form of Assignment and Assumption Exhibit F-1    Form of U.S. Tax
Compliance Certificate (Foreign Lender/not Partnership) Exhibit F-2    Form of
U.S. Tax Compliance Certificate (Foreign Participant/not Partnership) Exhibit
F-3    Form of U.S. Tax Compliance Certificate (Foreign Participant/Partnership)
Exhibit F-4    Form of U.S. Tax Compliance Certificate (Foreign
Lender/Partnership) Exhibit G    Swap Intercreditor Agreement Exhibit H    Form
of Increased Facility Activation Notice Exhibit I    Form of New Lender
Supplement Schedule 7.05    Litigation Schedule 7.06    Environmental Matters
Schedule 7.14    Subsidiaries and Partnerships Schedule 7.19    Marketing
Contracts Schedule 7.20    Swap Agreements Schedule 9.03    Existing Liens
Schedule 9.05    Investments Schedule 9.12    Asset Sale Schedule 9.14   
ionsExisting Affiliate Transact

 

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THIS TERM LOAN CREDIT AGREEMENT dated as of April 28, 2017 is among: Rex Energy
Corporation, a corporation duly formed and existing under the laws of the State
of Delaware (the “Borrower”); each of the Lenders from time to time party
hereto; the Issuing Bank; Angelo, Gordon Energy Servicer, LLC, as administrative
agent for the Lenders and the Issuing Bank (in such capacity, together with its
successors in such capacity, the “Administrative Agent”), and Angelo, Gordon
Energy Servicer, LLC, as collateral agent for the Secured Parties (in such
capacity, the “Collateral Agent”).

R E C I T A L S

The Borrower, Royal Bank of Canada as the administrative agent and the lenders
party thereto have heretofore entered into that certain Amended and Restated
Credit Agreement, dated as of March 27, 2013 (as heretofore amended, modified or
supplemented, the “Existing Credit Agreement”).

The Borrower has requested that the Lenders, and the Lenders have agreed, to
amend and restate the Existing Credit Agreement and to continue the loans
thereunder as Initial Term Loans, subject to the terms and conditions of this
Agreement.

The Borrower has also requested that the Lenders, and the Lenders have agreed,
to provide Delayed Draw Commitments which may be utilized subject to the terms
and conditions herein.

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

ARTICLE I

DEFINITIONS AND ACCOUNTING MATTERS

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

Section 1.02 Certain Defined Terms. As used in this Agreement, the following
terms have the meanings specified below:

“Adjusted LIBO Rate” means, an interest rate per annum (rounded upwards, if
necessary, to the next 1/16 of 1%) equal to (a) the then effective LIBO Rate
multiplied by (b) the Statutory Reserve Rate.

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

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

 

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

“Anti-Corruption Laws” means all laws, rules, and regulations of any
jurisdiction applicable to the Borrower or any of its Affiliates from time to
time concerning or relating to bribery or corruption.

“Applicable Margin” means, for any day, 8.75% per annum.

“Applicable Percentage” means, with respect to any Lender, a percentage equal to
a fraction (a) the numerator of which is the sum of (i) the aggregate
outstanding principal amount of the Loans of such Lender and (ii) the unused
outstanding Delayed Draw Commitments of such Lender and (b) the denominator of
which is the sum of (i) the outstanding principal amount of the Loans of all
Lenders and (ii) the total unused outstanding Delayed Draw Commitments of all
Lenders.

“Approved Counterparty” means (a) BP Energy Company, (b) Macquarie Bank Limited,
(c) EDF Trading North America, (d) Morgan Stanley Capital Group Inc., (e) J.
Aron and Company or (f) any Person whose (or guarantor of such Person whose)
long term senior unsecured debt rating at the time a particular Swap Agreement
transaction is entered into is A- or A3 by S&P or Moody’s (or their equivalent),
respectively, or higher or (g) any other Person agreed by the Administrative
Agent or the Majority Lenders.

“Approved Fund” means any Person (other than a natural person) that is engaged
in making, purchasing, holding or investing in bank revolving loans and similar
extensions of credit in the ordinary course of its business and that is
affiliated with a Lender and administered or managed by (a) a Lender, (b) an
Affiliate of a Lender or (c) an entity or an Affiliate of an entity that
administers or manages a Lender.

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

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

“Availability Period” means the period from and including the Effective Date to
but excluding the date that is five (5) days prior to the earlier of (a) the one
year anniversary of the Effective Date and (b) the Delayed Draw Commitment
Termination Date.

“Backstop Letter of Credit” means that certain Letter of Credit issued by the
Issuing Bank in the original face amount of $48,655,242.85 to secure the
outstanding letters of credit issued by Royal Bank of Canada and reduced by the
amount of each such letter of credit upon its expiration or termination by the
beneficiary thereof.

 

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“Bail-In Action” means the exercise of any Write-Down and Conversion Powers by
the applicable EEA Resolution Authority in respect of any liability of an EEA
Financial Institution.

“Bail-In Legislation” means, with respect to any EEA Member Country implementing
Article 55 of Directive 2014/59/EU of the European Parliament and of the Council
of the European Union, the implementing law for such EEA Member Country from
time to time which is described in the EU Bail-In Legislation Schedule.

“Bankruptcy Event” means, with respect to any Person, such Person or its direct
or indirect parent company becomes the subject of a bankruptcy or insolvency
proceeding, or has had a receiver, conservator, trustee, administrator,
custodian, assignee for the benefit of creditors or similar Person charged with
the reorganization or liquidation of its business appointed for it, or, in the
good faith determination of the Administrative Agent, has taken any action in
furtherance of, or indicating its consent to, approval of, or acquiescence in,
any such proceeding or appointment; provided that a Bankruptcy Event shall not
result solely by virtue of any ownership interest, or the acquisition of any
ownership interest, in such Person by a Governmental Authority or
instrumentality thereof; provided, further, that such ownership interest does
not result in or provide such Person with immunity from the jurisdiction of
courts within the United States or from the enforcement of judgments or writs of
attachment on its assets or permit such Person (or such Governmental Authority
or instrumentality) to reject, repudiate, disavow or disaffirm any contracts or
agreements made by such Person.

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

“Borrower’s Swap Policy” means, a policy which provides that (a) the notional
volumes for swaps added after the Effective Date shall constitute no less than
40% of Reasonably Anticipated Projected Production, (b) the notional volumes for
two-way collars added after the Effective Date shall constitute no more than 30%
of Reasonably Anticipated Projected Production (subject to the additional
requirement that the floor prices on such collars shall in the aggregate be no
less than 90% of the then current corresponding monthly quoted NYMEX futures
contract price for such period); and (c) the notional volumes for swaptions,
three-way collars and other hedging structures shall constitute no more than 30%
of Reasonably Anticipated Projected Production.

“Borrowing Base” means, for the purpose of compliance with any applicable
intercreditor agreement, an amount equal to the sum of (a) $300,000,000, (b) the
amount of the Yield Maintenance Amount calculated as of the Effective Date on a
principal amount equal to the amount in clause (a) and (c) the amount of the
Call Protection Amount calculated as of the Effective Date on a principal amount
equal to the amount in clause (a).

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

“Business Day” means any day that is not a Saturday, Sunday or other day on
which commercial banks in New York City are authorized or required by law to
remain closed and if such day relates to LIBOR, any such day on which dealings
in dollar deposits are conducted between banks in the London interbank
Eurodollar market.

 

3

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“Call Protection Amount” means (a) during the period commencing on the Effective
Date and ending on the date that is 30 months thereafter, an amount equal to
3.0% of (i) any payment, refinancing, substitution or replacement of principal
of the Loans, including any payment made in accordance with Section 3.01,
Section 3.04 or Section 10.02(a) (or in the case of an acceleration of any Loans
pursuant to Section 10.02(a), in the principal amount of the Loans accelerated)
and (ii) the principal amount of any termination or reduction of a Delayed Draw
Commitment pursuant to Section 2.07(b) and (b) during the period commencing on
the date that is 30 months and 1 day after the Effective Date and ending on the
date that is 36 months after the Effective Date, an amount equal to 1.0% of
(i) any payment, refinancing, substitution or replacement of principal of the
Loans, including any payment made in accordance with Section 3.01, Section 3.04
or Section 10.02(a) (or in the case of an acceleration of any Loans pursuant to
Section 10.02(a), in the principal amount of the Loans accelerated) and (ii) the
principal amount of any termination or reduction of a Delayed Draw Commitment
pursuant to Section 2.07(b). If any acceleration occurs prior to such dates, the
applicable Call Protection Amount shall be due and payable, regardless of when
any payment is made on the Loans. For the avoidance of doubt, the Call
Protection Amount shall not be payable with respect to any Delayed Draw Loan
that was made in connection with the acceleration of the Loans pursuant to
Section 10.02(a) to Cash Collateralize outstanding Letters of Credit to the
extent the Call Protection Amount was or is paid on the Delayed Draw Commitment
for such Delayed Draw Loan at the time the Loans were accelerated pursuant to
Section 10.02(a).

“Capital Expenditures” means, in respect of any Person, for any period, the
aggregate (determined without duplication) of all exploration and development
expenditures and costs that are capital in nature and any other cash
expenditures that are capitalized on the financial statements of such Person in
accordance with GAAP.

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

“Cash Collateralization Cap” means, with regard to the Delayed Draw Lenders’
obligation to Cash Collateralize Letters of Credit, Letters of Credit with a
face amount of $46,338,326.52.

“Cash Collateralize” means, to pledge and deposit with or deliver to the
Administrative Agent cash or deposit account balances pursuant to documentation
in form and substance satisfactory to the Administrative Agent and the Issuing
Bank in an amount not less than the Minimum Collateral Amount, for the benefit
of the Issuing Bank or the Lenders, as collateral for LC Exposure or obligations
of the Lenders to fund participations in respect of LC Exposure. “Cash
Collateral” shall have a meaning correlative to the foregoing and shall include
the proceeds of such Cash Collateral and other credit support.

“Cash Equivalents” means any Investment of the types described in Section
9.05(c) through Section 9.05(g).

 

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“Cash Management Agreement” means any agreement to provide cash management
services, including treasury, depository, automated clearinghouse transactions,
overdraft, credit or debit card, stored value cards, electronic funds transfer
and other cash management services.

“Casualty Event” means any loss, casualty or other insured damage to, or any
nationalization, taking under power of eminent domain or by condemnation or
similar proceeding of, any Property of the Borrower or any of its Subsidiaries
having a fair market value in excess of $5,000,000 in the aggregate for any
calendar year.

“Change in Control” means any Person or group (within the meaning of the
Securities Exchange Act of 1934 and the rules of the SEC thereunder, but
excluding any employee benefit plan of such Person or its Subsidiaries, and any
Person acting in its capacity as trustee, agent or other fiduciary or
administrator of any such plan) becomes the “beneficial owner” (as defined in
Rules 13d-3 and 13d-5 of the Securities Exchange Act of 1934) of 51% or more of
the equity securities of the Borrower entitled to vote for members of the board
of directors of the Borrower; provided that a Debt Equitization Event and any
resulting change in the holders of the equity securities of the Borrower as a
result thereof shall not be a “Change in Control”.

“Change in Law” means (a) the adoption of any law, rule or regulation after the
date of this Agreement, (b) any change in any law, rule or regulation or in the
interpretation or application thereof by any Governmental Authority after the
date of this Agreement or (c) compliance by any Lender or the Issuing Bank (or,
for purposes of Section 5.01(b), by any lending office of such Lender or by such
Lender’s or the Issuing Bank’s holding company, if any) with any request,
guideline or directive (whether or not having the force of law) of any
Governmental Authority made or issued after the date of this Agreement; provided
that notwithstanding anything herein to the contrary (i) the Dodd-Frank Wall
Street Reform and Consumer Protection Act and all requests, rules, guidelines or
directives thereunder or issued in connection therewith, or in implementation
thereof and (ii) all requests, rules, guidelines, requirements or directives
concerning capital adequacy promulgated by the Bank for International
Settlements, the Basel Committee on Banking Regulations and Supervisory
Practices (or any successor or similar authority) or the United States financial
regulatory authorities, in each case pursuant to Basel III, shall be deemed to
be a “Change in Law”, regardless of the date enacted, adopted, promulgated,
issued or implemented.

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

“Commitment” means with respect to (a) each Lender, the sum of such Lender’s
Initial Term Loan Commitment and Delayed Draw Commitment, as applicable, in
effect at such time and each such Lender’s obligation to acquire participations
in Letters of Credit hereunder and (b) the Issuing Bank, its LC Commitment in
effect at such time.

“Commodity Exchange Act” means the Commodity Exchange Act (7 U.S.C. § 1 et
seq.), as amended from time to time, and any successor statute and any
regulations promulgated thereunder.

 

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“Connection Income Taxes” means Other Connection Taxes that are imposed on or
measured by net income (however denominated) or that are franchise Taxes or
branch profits Taxes.

“Consolidated Cash Balance” means, at any time, the aggregate amount of
unrestricted cash and Cash Equivalents, in each case held by the Borrower and
its Subsidiaries.

“Consolidated Net Income” means with respect to the Borrower and the
Consolidated Subsidiaries, for any period, the aggregate of the net income (or
loss) of the Borrower and the Consolidated Subsidiaries after allowances for
Taxes for such period determined on a consolidated basis in accordance with
GAAP; provided that there shall be excluded from such net income (to the extent
otherwise included therein) the following: (a) the net income of any Person in
which the Borrower or any Consolidated Subsidiary has an interest (which
interest does not cause the net income of such other Person to be consolidated
with the net income of the Borrower and the Consolidated Subsidiaries in
accordance with GAAP), except to the extent of the amount of dividends or
distributions actually paid in cash during such period by such other Person to
the Borrower or to a Consolidated Subsidiary, as the case may be; (b) the net
income (but not loss) during such period of any Consolidated Subsidiary to the
extent that the declaration or payment of dividends or similar distributions or
transfers or loans by that Consolidated Subsidiary is not at the time permitted
by operation of the terms of its charter or any agreement, instrument or
Governmental Requirement applicable to such Consolidated Subsidiary or is
otherwise restricted or prohibited, in each case determined in accordance with
GAAP; (c) the net income (or deficit) of any Person accrued prior to the date it
becomes a Consolidated Subsidiary or is merged into or consolidated with the
Borrower or any of its Consolidated Subsidiaries; (d) the net income of any
Consolidated Subsidiary that is not a Guarantor; (e) any extraordinary gains or
losses during such period; (f) non-cash gains, losses or adjustments under FASB
ASC 815 as a result of changes in the fair market value of derivatives; (g) any
gains or losses attributable to writeups or writedowns of assets and (h) any
cancellation of debt income; and provided further that if the Borrower or any
Consolidated Subsidiary shall make a Material Acquisition or Material
Divestiture during such period, then Consolidated Net Income shall be calculated
after giving pro forma effect to such Material Acquisition or Material
Divestiture, as if such Material Acquisition or Material Divestiture had
occurred on the first day of such period.

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

“Control” means the power, directly or indirectly, to direct or cause the
direction of the management and policies of such Person, whether through the
ownership of voting securities, by contract or otherwise. “Controlling” and
“Controlled” have meanings correlative thereto.

“Credit Exposure” means, at any time with respect to any Lender, the sum of the
outstanding principal amount of such Lender’s Loans and 106.7% of its LC
Exposure at such time.

“Credit Party” means the Administrative Agent, the Issuing Bank or any Lender.

 

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

“Debt Equitization Event” means the repayment, retirement and extinguishment of
existing Second Lien Notes that results in a reduction of the outstanding
aggregate principal amount of Second Lien Notes to no more than $287,950,000.

“Dedicated Cash Receipts” means all cash received by or on behalf of the
Borrower or any Guarantor with respect to the following: (a) any amounts payable
under or in connection with any Oil and Gas Properties; (b) cash representing
operating revenue earned or to be earned by the Borrower or any Guarantor;
(c) proceeds from Loans; and (d) any other cash received by the Borrower or any
Guarantor from whatever source (including amounts received in respect of the
Liquidation of any Swap Agreement) other than (i) liability insurance proceeds
required to be paid directly to third parties, (ii) payments made to the
Borrower or any Guarantor for the account of third parties under or in
connection with joint operating agreements or similar joint development
agreements and (iii) amounts described in the definition of “Excluded Deposit
Accounts” which are deposited in Excluded Deposit Accounts.

“Default” means any event or condition which constitutes an Event of Default or
which upon notice, lapse of time or both would, unless cured or waived, become
an Event of Default.

 

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“Defaulting Lender” means any Lender that (a) has failed, within two Business
Days of the date required to be funded or paid, to (i) fund any portion of its
Loans, (ii) fund any portion of its participations in Letters of Credit or
(iii) pay over to any Credit Party any other amount required to be paid by it
hereunder, unless, in the case of clause (i) above, such Lender notifies the
Administrative Agent in writing that such failure is the result of such Lender’s
good faith determination that a condition precedent to funding (specifically
identified and including the particular default, if any) has not been satisfied,
(b) has notified the Borrower or any Credit Party in writing, or has made a
public statement to the effect, that it does not intend or expect to comply with
any of its funding obligations under this Agreement (unless such writing or
public statement indicates that such position is based on such Lender’s good
faith determination that a condition precedent (specifically identified and
including the particular default, if any) to funding a loan under this Agreement
cannot be satisfied) or generally under other agreements in which it commits to
extend credit, (c) has failed, within three Business Days after request by a
Credit Party, acting in good faith, to provide a certification in writing from
an authorized officer of such Lender that it will comply with its obligations
(and is financially able to meet such obligations) to fund prospective Loans
under this Agreement; provided that such Lender shall cease to be a Defaulting
Lender pursuant to this clause (c) upon such Credit Party’s receipt of such
certification in form and substance satisfactory to it and the Administrative
Agent, (d) has become the subject of a Bankruptcy Event or (e) has, or has a
direct or indirect parent company that has become the subject of a Bail-In
Action.

“Delayed Draw Amount” means with respect to each Delayed Draw Lender, the amount
set forth opposite such Delayed Draw Lender’s name on Annex I under the caption
“Delayed Draw Commitment”, as the same may be (i) reduced by the amount of any
reductions of the Delayed Draw Commitments pursuant to Sections 2.01(b), 2.01(c)
and 2.07(b) or (ii) reduced or increased from time to time by the amount of
reductions or increases in the Delayed Draw Commitments pursuant to assignments
thereof by or to any Delayed Draw Lender pursuant to Section 12.04(b).

“Delayed Draw Applicable Percentage” means, with respect to any Delayed Draw
Lender, a percentage equal to a fraction (a) the numerator of which is the sum
of (ii) the aggregate outstanding principal amount of the Delayed Draw Loans of
such Delayed Draw Lender and (ii) the unused outstanding Delayed Draw
Commitments of such Delayed Draw Lender and (b) the denominator of which is the
sum of (i) the outstanding principal amount of the Delayed Draw Loans of all
Delayed Draw Lenders and (ii) the total unused outstanding Delayed Draw
Commitments of all Delayed Draw Lenders; provided, however, that if all of the
Delayed Draw Commitments have terminated, then each Lender’s Delayed Draw
Applicable Percentage shall mean such Lender’s Delayed Draw Applicable
Percentage as in effect immediately before such termination.

“Delayed Draw Cap” means, as of any date of determination, an amount equal to
the difference between (a) clause (a) of the definition of “Borrowing Base” and
(b) the sum of (i) outstanding Initial Term Loans and (ii) 106.7% of, without
duplication, the (A) available LC Commitment and (B) LC Exposure, each on such
date; provided that such amount shall not be less than the Threshold Amount as
of such date.

 

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“Delayed Draw Commitment” means with respect to each Delayed Draw Lender, the
commitment of such Delayed Draw Lender to make Delayed Draw Loans hereunder in
an aggregate amount not to exceed its Delayed Draw Amount. The aggregate amount
of the Delayed Draw Lenders’ Delayed Draw Commitments on the Effective Date is
$156,500,000.

“Delayed Draw Commitment Termination Date” means the earlier of (a) April 28,
2018 and (b) the date of termination of all remaining Delayed Draw Commitments
pursuant to Section 2.07(b); provided that the date in clause (a) above may be
extended up to 12 months with the consent of all of the Delayed Draw Lenders.

“Delayed Draw Credit Exposure” means, at any time with respect to any Delayed
Draw Lender, the sum of the outstanding principal amount of such Delayed Draw
Lender’s Delayed Draw Loans and 106.7% of its LC Exposure at such time.

“Delayed Draw Lenders” means the Persons listed on Annex I with a Delayed Draw
Commitment and any Person with a Delayed Draw Commitment that shall have become
a party hereto pursuant to an assignment and assumption.

“Delayed Draw Loans” means term loans made by the Delayed Draw Lenders pursuant
to Section 2.01(b).

“Delayed Draw Note” means a note of the Borrower payable to any Delayed Draw
Lender in substantially the form of Exhibit A hereto, together with all
amendments, modifications, replacements, extensions and rearrangements thereof.

“Deposit Account” has the meaning assigned to such term in the UCC.

“Deposit Account Control Agreement” means a deposit account control agreement
providing for the Collateral Agent’s exclusive control of a Deposit Account
after an Event of Default, in form and substance reasonably satisfactory to the
Collateral Agent, executed and delivered by the Borrower or a Guarantor, as
applicable, the Collateral Agent, and the applicable financial institution at
which such relevant Deposit Account is maintained, as the same may be amended,
modified or supplemented from time to time.

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

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

 

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

“EBITDAX” means, as of any date of determination, the sum of Consolidated Net
Income for the most recently ended four fiscal quarters (including any such
quarter ending on such date of determination) plus the following expenses or
charges to the extent deducted from Consolidated Net Income in such four fiscal
quarter period: Interest Expense, income taxes, depreciation, depletion,
amortization, exploration expenses and other similar non-cash charges (including
non-cash expenses associated with the granting of stock-based compensation to
employees and directors of the Borrower or its Subsidiaries, non-recurring
non-cash losses (or minus any gains), and non-cash impairments or accounting
adjustments with respect to any disposition of assets permitted hereby), minus
all non-cash income added to Consolidated Net Income.

“EEA Financial Institution” means (a) any institution established in any EEA
Member Country which is subject to the supervision of an EEA Resolution
Authority, (b) any entity established in an EEA Member Country which is a parent
of an institution described in clause (a) of this definition, or (c) any
institution established in an EEA Member Country which is a subsidiary of an
institution described in clauses (a) or (b) of this definition and is subject to
consolidated supervision with its parent.

“EEA Member Country” means any of the member states of the European Union,
Iceland, Liechtenstein, and Norway.

“EEA Resolution Authority” means any public administrative authority or any
person entrusted with public administrative authority of any EEA Member Country
(including any delegee) having responsibility for the resolution of any EEA
Financial Institution.

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

“Environmental Laws” means any and all Governmental Requirements pertaining in
any way to health, safety, the environment or the preservation or reclamation of
natural resources, in effect in any and all jurisdictions in which the Borrower
or any Subsidiary is conducting or at any time has conducted business, or where
any Property of the Borrower or any Subsidiary is located, including the Oil
Pollution Act of 1990 (“OPA”), as amended, the Clean Air Act, as amended, the
Comprehensive Environmental, Response, Compensation, and Liability Act of 1980
(“CERCLA”), as amended, the Federal Water Pollution Control Act, as amended, the
Occupational Safety and Health Act of 1970, as amended, the Resource
Conservation and Recovery Act of 1976 (“RCRA”), as amended, the Safe Drinking
Water Act, as amended, the Toxic Substances Control Act, as amended, the
Superfund Amendments and Reauthorization Act of 1986, as amended, the Hazardous
Materials Transportation Act, as amended, and other environmental conservation
or protection Governmental Requirements. The term “oil” shall have the meaning
specified in OPA, the terms “hazardous substance” and “Release” (or “threatened
Release”) have the meanings specified in CERCLA, the terms “solid waste” and
“disposal” (or “disposed”) have the meanings specified in RCRA and the term “oil
and gas waste” shall mean those waste that are excluded from the definition of
“hazardous waste”

 

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pursuant to 40 C.F.R. Section 261.4(b)(5) (“Section 261.4(b)(5)”); provided,
however, that (a) in the event either OPA, CERCLA, RCRA or Section 261.4(b)(5)
is amended so as to broaden the meaning of any term defined thereby, such
broader meaning shall apply subsequent to the effective date of such amendment
and (b) to the extent the laws of the state or other jurisdiction in which any
Property of the Borrower or any Subsidiary is located establish a meaning for
“oil,” “hazardous substance,” “Release,” “solid waste,” “disposal” or “oil and
gas waste” which is broader than that specified in either OPA, CERCLA, RCRA or
Section 261.4(b)(5), such broader meaning shall apply.

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

“Equity Interests” means shares of capital stock, partnership interests,
membership interests in a limited liability company, beneficial interests in a
trust or other equity ownership interests in a Person, and any warrants, options
or other rights entitling the holder thereof to purchase or acquire any such
Equity Interest.

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

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

“ERISA Event” means (a) a “Reportable Event” described in section 4043 of ERISA
and the regulations issued thereunder (other than an award for which the 30-day
notice period is waived), (b) the withdrawal of the Borrower, a Subsidiary or
any ERISA Affiliate from a Plan during a plan year in which it was a
“substantial employer” as defined in section 4001(a)(2) of ERISA, (c) the filing
of a notice of intent to terminate a Plan in a distress termination under
Section 4041(c) of ERISA or the treatment of a Plan amendment as a termination
under section 4041 of ERISA, (d) the institution of proceedings to terminate a
Plan by the PBGC, (e) receipt of a notice of withdrawal liability pursuant to
Section 4202 of ERISA or (f) any other event or condition which might constitute
grounds under section 4042 of ERISA for the termination of, or the appointment
of a trustee to administer, any Plan.

“EU Bail-In Legislation Schedule” means the EU Bail-In Legislation Schedule
published by the Loan Market Association (or any successor person), as in effect
from time to time.

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

“Excepted Liens” means: (a) Liens for Taxes, assessments or other governmental
charges or levies which are not delinquent or which are being contested in good
faith by appropriate action and for which adequate reserves have been maintained
in accordance with GAAP; (b) Liens in connection with workers’ compensation,
unemployment insurance or other social security, old age pension or public
liability obligations which are not delinquent or which

 

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are being contested in good faith by appropriate action and for which adequate
reserves have been maintained in accordance with GAAP; (c) landlord’s liens,
operators’, vendors’, carriers’, warehousemen’s, repairmen’s, mechanics’,
suppliers’, workers’, materialmen’s, construction or other like Liens, in each
case arising in the ordinary course of business or incident to the exploration,
development, operation and maintenance of Oil and Gas Properties each of which
is in respect of obligations that are not delinquent or which are being
contested in good faith by appropriate action and for which adequate reserves
have been maintained in accordance with GAAP; (d) contractual Liens which arise
in the ordinary course of business under operating agreements, joint venture
agreements, oil and gas partnership agreements, oil and gas leases, farm-out
agreements, division orders, contracts for the sale, transportation or exchange
of oil and natural gas, unitization and pooling declarations and agreements,
area of mutual interest agreements, overriding royalty agreements, marketing
agreements, processing agreements, net profits agreements, development
agreements, gas balancing or deferred production agreements, injection,
repressuring and recycling agreements, salt water or other disposal agreements,
seismic or other geophysical permits or agreements, and other agreements which
are usual and customary in the oil and gas business and are for claims which are
not delinquent or which are being contested in good faith by appropriate action
and for which adequate reserves have been maintained in accordance with GAAP;
provided that any such Lien referred to in this clause does not materially
impair the use of the Property covered by such Lien for the purposes for which
such Property is held by the Borrower or any Subsidiary or materially impair the
value of such Property subject thereto; (e) Liens arising solely by virtue of
any statutory or common law provision relating to banker’s liens, rights of
set-off or similar rights and remedies and burdening only deposit accounts or
other funds maintained with a creditor depository institution; provided that no
such deposit account is a dedicated cash collateral account or is subject to
restrictions against access by the depositor in excess of those set forth by
regulations promulgated by the Board and no such deposit account is intended by
the Borrower or any of its Subsidiaries to provide collateral to the depository
institution for any other purpose; (f) easements, restrictions, servitudes,
permits, conditions, covenants, exceptions or reservations in any Property of
the Borrower or any Subsidiary for the purpose of roads, pipelines, transmission
lines, transportation lines, distribution lines for the removal of gas, oil,
coal or other minerals or timber, and other like purposes, or for the joint or
common use of real estate, rights of way, facilities and equipment, that do not
secure any monetary obligations and which in the aggregate do not materially
impair the use of such Property for the purposes of which such Property is held
by the Borrower or any Subsidiary or materially impair the value of such
Property subject thereto; (g) Liens on cash or securities pledged to secure
performance of tenders, surety and appeal bonds, government contracts,
performance and return of money bonds, bids, trade contracts, leases, statutory
obligations, regulatory obligations and other obligations of a like nature
incurred in the ordinary course of business and (h) judgment and attachment
Liens not giving rise to an Event of Default; provided that any appropriate
legal proceedings which may have been duly initiated for the review of such
judgment shall not have been finally terminated or the period within which such
proceeding may be initiated shall not have expired and no action to enforce such
Lien has been commenced; provided, further that Liens described in clauses
(a) through (e) shall remain “Excepted Liens” only for so long as no action to
enforce such Lien has been commenced and no intention to subordinate the first
priority Lien granted in favor of the Collateral Agent and the Lenders is to be
hereby implied or expressed by the permitted existence of such Excepted Liens.

 

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“Excess Cash Flow” means, for any fiscal year, the amount of EBITDAX for such
fiscal year including any realized gain on Swaps, less, without duplication and
to the extent not already included in EBITDAX, each of the following for such
year: (a) Capital Expenditures made in cash for such year, (b) any optional
repayment or scheduled amortization of the Secured Obligations permitted or
required hereunder including Yield Maintenance Amounts and Call Protection
Amounts on such prepayment, (c) repayments of other Debt made in cash permitted
hereunder (provided that if such Debt is revolving, a permanent reduction in the
commitments for such Debt in an equal amount occurs), (d) Investments permitted
by Section 9.05(i) and Section 9.05(j) made in cash, (e) Restricted Payments
made in reliance on Section 9.04(a)(iv), (f) Interest Expense paid in cash for
such year, (g) federal and state income taxes paid in cash during such year, and
(h) any non-cash gains or expenses, plus (i) any non-cash losses included in
EBITDAX.

“Excess First Lien RBL Obligations” has the meaning assigned to such term in the
Second Lien Intercreditor Agreement as in effect on the date hereof.

“Excluded ACH Account” means a Deposit Account of the Borrower with a Secured
Cash Management Provider to be used by the Borrower to pay ordinary course
expenses through automated clearing house disbursements.

“Excluded Deposit Account” means (a) any Deposit Account the balance of which
consists exclusively of (i) withheld income taxes and federal, state or local
employment taxes required to be paid to the Internal Revenue Service or state or
local government agencies with respect to employees of the Borrower or any
Subsidiary and (ii) amounts required to be paid over to an employee benefit plan
pursuant to DOL Reg. Sec. 2510.3 102 on behalf of or for the benefit of
employees of the Borrower or any Subsidiary, (b) all segregated Deposit Accounts
constituting (and the balance of which consists solely of funds set aside in
connection with) payroll accounts, trust accounts, and accounts dedicated to the
payment of accrued employee benefits, medical, dental and employee benefits
claims to employees of the Borrower or any Subsidiary, (c) the Excluded ACH
Account and (d) any Deposit Account used solely as collateral for the Loan
Parties’ obligations in respect of their corporate credit card program.

“Excluded Swap Obligation” has the meaning assigned to such term in the Guaranty
Agreement.

“Excluded Taxes” means any of the following Taxes imposed on or with respect to
a Recipient or required to be withheld or deducted from a payment to a
Recipient, (a) Taxes imposed on or measured by net income (however denominated),
franchise Taxes, and branch profits Taxes, in each case, (i) imposed as a result
of such Recipient being organized under the laws of, or having its principal
office or, in the case of any Lender, its applicable lending office located in,
the jurisdiction imposing such Tax (or any political subdivision thereof) or
(ii) that are Other Connection Taxes, (b) in the case of a Lender (other than an
assignee pursuant to a request by the Borrower under Section 5.03), any U.S.
federal withholding tax that is imposed on amounts payable to or for the account
of such Lender with respect to an applicable interest in a Loan or Commitment
pursuant to a law in effect on the date on which (i) such Lender acquires such
interest in the Loan or Commitment (other than pursuant to an assignment request
by the Borrower under Section 5.03(b)) or (ii) such Lender changes its lending
office, except in each

 

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case to the extent that, pursuant to Section 5.02, amounts with respect to such
Taxes were payable either to such Lender’s assignor immediately before such
Lender became a party hereto or to such Lender immediately before it changed its
lending office, (c) Taxes attributable to such Recipient’s failure to comply
with Section 5.02(f), and (d) any U.S. withholding Tax that is imposed under
FATCA.

“Existing Credit Agreement” has the meaning assigned such term in the Recitals
to this Agreement.

“FATCA” means Sections 1471 through 1474 of the Code, as of the date of this
Agreement (or any amended or successor version that is substantively comparable
and not materially more onerous to comply with), any current or future
regulations or official interpretations thereof and any agreements entered into
pursuant to Section 1471(b)(1) of the Code and any law, regulation, rule,
promulgation or official agreement implementing an official government agreement
with respect to the foregoing.

“FCPA” means the Foreign Corrupt Practices Act of 1977, as amended.

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

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

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

“Five-Year Strip Price” means, as of the date that is five days prior to
delivery of a Reserve Report or other information and materials required to be
delivered pursuant to the terms of this Agreement, (a) for the 60-month period
commencing with the month in which such date occurs, as quoted on the New York
Mercantile Exchange (the “NYMEX”) and published in a nationally recognized
publication for such pricing as selected by the Administrative Agent (as such
prices may be corrected or revised from time to time by the NYMEX in accordance
with its rules and regulations), the corresponding monthly quoted futures
contract price for months 0–60 and (b) for periods after such 60 month period,
the average corresponding monthly quoted futures contract price for months
49–60, and in each instance of (a) and (b) shall reflect the price of the
monthly future contract prices for each appropriate Hydrocarbon category
included in the Reserve Report for the volumes of each type of Hydrocarbon
produced and delivered at a particular location, adjusted for the basis
differential between the actual delivery location and the

 

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reference price delivery location, and adjusted for any price differentials
between the actual product delivered and the reference product, in each case
using methodology consistent with past practices and in good faith based on
observable differentials (which utilized differentials shall be, volume weighted
on the basis of current and expected future arrangements for the sale of
production, the least of (i) the average actual differentials for the last
quarter, (ii) the average actual differentials for the last twelve months and
(iii) those future differentials which may be hedged by contract); provided,
however, that (A) if the NYMEX no longer provides futures contract price quotes
for sixty (60) month periods, the longest period of quotes of less than sixty
(60) months shall be used and (B) if the NYMEX no longer provides such futures
contract quotes or has ceased to operate, the Administrative Agent shall
designate another nationally recognized commodities exchange to replace the
NYMEX for purposes of the references to the NYMEX in this definition; provided
further that in the event such average contract prices are not reasonably
satisfactory to the Required Lenders, the “Five-Year Strip Price” as of any date
of determination shall be such price as the Required Lenders shall reasonably
determine.

“Foreign Lender” means any Lender that is not a U. S. Person.

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

“GAAP” means generally accepted accounting principles in the United States of
America as in effect from time to time subject to the terms and conditions set
forth in .Section 1.04

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

“Governmental Requirement” means any law, statute, code, ordinance, order,
determination, rule, regulation, judgment, decree, injunction, franchise,
permit, certificate, license, authorization or other directive or requirement,
whether now or hereinafter in effect, including, Environmental Laws, energy
regulations and occupational, safety and health standards or controls, of any
Governmental Authority.

“Guarantors” means, until it or any of them is released as a Guarantor pursuant
to the Loan Documents:

 

  (a) Rex Energy I, LLC,

 

  (b) Rex Energy Operating Corp.,

 

  (c) PennTex Resources Illinois, Inc.,

 

  (d) Rex Energy IV, LLC,

 

  (e) R.E. Gas Development, LLC, and

 

  (f) each other Subsidiary that guarantees the Secured Obligations pursuant to
Section 8.14(b).

 

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“Guaranty Agreement” means the Amended and Restated Guaranty and Collateral
Agreement listed on Exhibit D, as the same may from time to time be amended,
amended and restated, modified or supplemented.

“Hazardous Material” means any substance regulated or as to which liability
might arise under any applicable Environmental Law and including: (a) any
chemical, compound, material, product, byproduct, substance or waste defined as
or included in the definition or meaning of “hazardous substance,” “hazardous
material,” “hazardous waste,” “solid waste,” “toxic waste,” “extremely hazardous
substance,” “toxic substance,” “contaminant,” “pollutant,” or words of similar
meaning or import found in any applicable Environmental Law; (b) petroleum
hydrocarbons, petroleum products, petroleum substances, natural gas, oil, oil
and gas waste, crude oil, and any components, fractions, or derivatives thereof;
and (c) radioactive materials, asbestos containing materials, polychlorinated
biphenyls, or radon.

“Highest Lawful Rate” means, with respect to each Lender, the maximum
nonusurious interest rate, if any, that at any time or from time to time may be
contracted for, taken, reserved, charged or received on the Notes or on other
Secured Obligations under laws applicable to such Lender which are presently in
effect or, to the extent allowed by law, under such laws from time to time in
effect.

“Hydrocarbon Interests” means all rights, titles, interests and estates now or
hereafter acquired in and to oil and gas leases, oil, gas and mineral leases, or
other liquid or gaseous hydrocarbon leases, mineral fee interests, overriding
royalty and royalty interests, net profit interests and production payment
interests, including any reserved or residual interests of whatever nature.
Unless otherwise indicated herein, each reference to the term “Hydrocarbon
Interests” shall mean Hydrocarbon Interests of the Borrower and/or the
Subsidiaries, as the context requires.

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

“Increased Facility Activation Date” means any Business Day on which the
Borrower and any Lender shall execute and deliver to the Administrative Agent an
Increased Facility Activation Notice pursuant to Section 2.05(a).

“Increased Facility Activation Notice” means a notice substantially in the form
of Exhibit H.

“Increased Facility Closing Date” means any Business Day designated as such in
an Increased Facility Activation Notice.

“Incremental Amount” means, as of any date of determination, the lesser of
(a) the amount of additional first lien debt permitted by each applicable
intercreditor agreement as of such date that would not cause any portion of the
Loans, Delayed Draw Commitments, LC

 

16

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Exposure, Yield Protection Amount or Call Protection Amount as of such date to
be classified as Excess First Lien RBL Obligations or any similar or
corresponding term under any applicable intercreditor agreement, (b) the amount
of additional Net Senior Secured Debt that would not cause the Borrower to be in
violation of any covenant hereunder on a pro forma basis as of such date, or (c)
$100,000,000.

“Incremental Term Lenders” means (a) on any Increased Facility Activation Date
relating to Incremental Term Loans, the Lenders signatory to the relevant
Increased Facility Activation Notice and (b) thereafter, each Lender that is a
holder of an Incremental Term Loan.

“Incremental Term Loans” means any term loans made pursuant to Section 2.05(a).

“Indemnified Taxes” means (a) Taxes other than Excluded Taxes, imposed on or
with respect to any payment made by or on account of any obligation of the
Borrower under any Loan Document, and (b) to the extent not otherwise described
in (a), Other Taxes.

“Initial Reserve Report” means the report of Netherland, Sewell and Associates,
dated as of February 16, 2017, with respect to certain Oil and Gas Properties of
the Borrower and its Subsidiaries as of December 31, 2016.

“Initial Term Loan Commitment” means with respect to each Initial Term Loan
Lender, the commitment of such Initial Term Loan Lender to make Initial Term
Loans hereunder in an aggregate amount not to exceed the amount set forth
opposite such Initial Term Loan Lender’s name on Annex I under the caption “Term
Loan Commitment”, as the same may be (a) reduced or increased from time to time
pursuant to assignments by or to such Initial Term Loan Lender pursuant to
Section 12.04(b). The aggregate amount of the Initial Term Loan Lenders’ Initial
Term Loan Commitments on the Effective Date is $143,500,000.

“Initial Term Loans” means term loans made by the Initial Term Loan Lenders
pursuant to Section 2.01(a).

“Initial Term Loan Lenders” means the Persons listed on Annex I with an Initial
Term Loan Commitment and any Person that shall have become a party hereto
pursuant to an assignment and assumption.

“Initial Term Loan Note” means a note of the Borrower payable to any Initial
Term Loan Lender in substantially the form of Exhibit A hereto, together with
all amendments, modifications, replacements, extensions and rearrangements
thereof.

“Interest Expense” means, for any period, the sum (determined without
duplication) of the aggregate gross interest expense of the Borrower and the
Consolidated Subsidiaries for such period, including to the extent included in
interest expense under GAAP: (a) amortization of debt discount, (b) capitalized
interest, (c) the portion of any payments or accruals under Capital Leases
allocable to interest expense, plus the portion of any payments or accruals
under Synthetic Leases allocable to interest expense, (d) all Letter of Credit
fees (but only to the extent included in interest expense and not in other
expense categories pursuant to the Borrower’s historical accounting practices)
and (e) all cash interest paid in connection with Debt permitted hereunder to
the extent that such payments are not accounted for as interest expense pursuant
to

 

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Accounting Standards Certification 470-60 or another applicable codification, in
each instance whether or not the same constitutes interest expense under GAAP;
provided, that if the Borrower or any Consolidated Subsidiary shall have a
Material Acquisition during such period, then Interest Expense shall be
calculated after giving pro forma effect to any Debt associated therewith and
permitted hereunder, as if such Material Acquisition had occurred on the first
day of such period and provided further, that if the Borrower or any
Consolidated Subsidiary shall have a Material Disposition during such period,
then Interest Expense shall be calculated after giving pro forma effect to the
repayment of any Debt associated therewith and permitted hereunder, as if such
Material Disposition had occurred on the first day of such period.

“Interest Payment Date” means the last Business Day of each March, June,
September and December.

“Investment” means, for any Person: (a) the acquisition (whether for cash,
Property, services or securities or otherwise) of Equity Interests of any other
Person or any agreement to make any such acquisition (including any “short sale”
or any sale of any securities at a time when such securities are not owned by
the Person entering into such short sale); (b) the making of any deposit with,
or advance, loan or capital contribution to, the assumption of Debt of, the
purchase or other acquisition of any other Debt of or equity participation or
interest in, or other extension of credit to, any other Person (including the
purchase of Property from another Person subject to an understanding or
agreement, contingent or otherwise, to resell such Property to such Person, but
excluding any such advance, loan or extension of credit having a term not
exceeding ninety (90) days representing the purchase price of inventory or
supplies sold by such Person in the ordinary course of business); (c) the
purchase or acquisition (in one or a series of transactions) of Property of
another Person that constitutes a business unit or (d) the entering into of any
guarantee of, or other contingent obligation (including the deposit of any
Equity Interests to be sold) with respect to, Debt or other liability of any
other Person and (without duplication) any amount committed to be advanced, lent
or extended to such Person.

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

“Issuing Bank” means Macquarie Bank Limited, in its capacity as the issuer of
Letters of Credit hereunder, and its successors in such capacity as provided in
Section 2.06(i). The Issuing Bank may, in its discretion, arrange for one or
more Letters of Credit to be issued by Affiliates of the Issuing Bank, in which
case the term “Issuing Bank” shall include any such Affiliate with respect to
Letters of Credit issued by such Affiliate.

“Keystone Transactions” means those certain 3 waterline agreements with Keystone
Clearwater for sale-leaseback-like arrangements in an aggregate amount of
$5,100,000.

“LC Commitment” means, on any date of determination, $46,338,326.52, plus, while
it remains outstanding, the face amount of the Backstop Letter of Credit on such
date, less (a) the amount of any Letter of Credit that is terminated during the
term of this Agreement, (b) reductions made pursuant to Section 2.06(k) and
(c) the aggregate amount of LC Disbursements during the term of this Agreement.

 

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“LC Disbursement” means a payment made by the Issuing Bank pursuant to a Letter
of Credit.

“LC Exposure” means, at any time, the sum of (a) the aggregate undrawn amount of
all outstanding Letters of Credit at such time plus (b) the aggregate amount of
all LC Disbursements that have not yet been reimbursed by or on behalf of the
Borrower or converted into a Delayed Draw Loan at such time. The LC Exposure of
any Delayed Draw Lender at any time shall be its Delayed Draw Applicable
Percentage of the total LC Exposure at such time.

“LC Required Delayed Draw Event” will occur if (a) any outstanding Letter of
Credit is not Cash Collateralized on or prior to the date that is five (5) days
prior to the Delayed Draw Commitment Termination Date, (b) any modification will
be made within five (5) days to the Delayed Draw Commitment or the Delayed Draw
Commitment Termination Date, (c) the Delayed Draw Commitments are terminated
pursuant to Section 10.02(a)(i)(A) or Section 10.02(a)(ii)(A) or (d) any other
event or circumstance occurs that, in the Issuing Bank’s good faith reasonable
determination, more than immaterially increases the likelihood that a Letter of
Credit will not be Cash Collateralized when required to be hereunder or that no
Delayed Draw Loans will be available to Cash Collateralize the LC Exposure when
required to be hereunder.

“Lenders” means the Initial Term Loan Lenders, the Delayed Draw Lenders, and the
Incremental Term Lenders, if any.

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

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

“LIBO Rate” means the greater of (a) 1.00% and (b) as of the date of
determination, the rate per annum (rounded upwards, if necessary, to the next
1/100 of 1%) determined on the basis of the rate for deposits in dollars for a
period equal to three months appearing on the applicable Bloomberg LIBOR Screen
Page as of 11:00 a.m., London time, two Business Days prior to such date. If
such rate does not appear on such page (or otherwise on such screen), the “LIBO
Rate” shall be determined by reference to such other comparable publicly
available service for displaying the Eurodollar rates as may be selected by the
Administrative Agent. If such rate is not available at such time for any reason,
then the “LIBO Rate” shall be the rate per annum determined by the
Administrative Agent to be the average of the rates per annum at which deposits
in Dollars for delivery on such date in same day funds in the approximate amount
of the Loans with a term of three months would be offered by major banks in the
London interbank eurodollar market at their request at approximately 11:00 a.m.
(London time) two (2) Business Days prior to such date.

“Lien” means any interest in Property securing an obligation owed to, or a claim
by, a Person other than the owner of the Property, whether such interest is
based on the common law, statute or contract, and whether such obligation or
claim is fixed or contingent, and including (a) the lien or security interest
arising from a mortgage, encumbrance, pledge, security agreement, conditional
sale or trust receipt or a lease, consignment or bailment for security purposes
or (b)

 

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production payments and the like payable out of Oil and Gas Properties. The term
“Lien” shall include easements, restrictions, servitudes, permits, conditions,
covenants, exceptions or reservations.

“Liquidate” means, with respect to any Swap Agreement, the sale, assignment,
novation (other than a novation of Swap Agreements between the Borrower and/or
Guarantors), unwind or termination of all or any part of such Swap Agreement or
the creation of an offsetting position against all or any part of such Swap
Agreement. The terms “Liquidated” and “Liquidation” have correlative meanings
thereto.

“Loan Documents” means this Agreement, the Notes, the Letter of Credit
Agreements, the Letters of Credit and the Security Instruments.

“Loan Parties” means the Borrower and each Guarantor.

“Loans” means the Initial Term Loans, the Delayed Draw Loans and the Incremental
Term Loans made by the Lenders to the Borrower pursuant to this Agreement. For
the avoidance of doubt, after the funding of each Delayed Draw Term Loan, such
Loan shall be on otherwise identical terms as the Initial Term Loans.

“Majority Lenders” means, (a) at any time there are two (2) or fewer Lenders,
all of the Lenders and (b) at any time there are more than two (2) Lenders, two
(2) or more un-affiliated Lenders having Loans, LC Exposures and unused
Commitments, as applicable, representing more than 50% of the sum of the Loans,
LC Exposures and unused Commitments at such time.

“Material Acquisition” means any acquisition by the Borrower or its Subsidiaries
of Oil and Gas Properties permitted by this Agreement if the consideration
therefore exceeds $5,000,000.

“Material Adverse Effect” means a material adverse change in, or material
adverse effect on (a) the business, operations, Property or condition (financial
or otherwise) of the Borrower and the Subsidiaries taken as a whole, (b) the
ability of the Borrower, any Subsidiary or any Guarantor to perform any of its
obligations under any Loan Document to which it is a party, (c) the validity or
enforceability of any Loan Document or (d) the rights and remedies of or
benefits available to the Administrative Agent, the Collateral Agent, the
Issuing Bank or any Lender under any Loan Document.

“Material Divestiture” means any sale, assignment, farm-out, conveyance or other
transfer of Oil and Gas Properties permitted by Section 9.12 if the
consideration therefore exceeds $5,000,000.

“Material Divestiture or Acquisition Date” means, the date of (a) Material
Divestiture or (b) Material Acquisition.

“Material Domestic Subsidiary” means, as of any date, any Domestic Subsidiary
that together with its Subsidiaries, owns Property having a fair market value of
$2,000,000 or more other than RE Disposal, LLC, RW Gathering, LLC, R.E. Ventures
Holdings, LLC and Rex Energy Marketing, LLC.

 

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“Material Indebtedness” means any Debt (other than the Loans and Letters of
Credit), or net obligations in respect of one or more Swap Agreements, of any
one or more of the Borrower and its Subsidiaries, in either case in principal
amount exceeding, on any date of determination, $20,000,000. For purposes of
determining Material Indebtedness, the “principal amount” of the obligations of
the Borrower or any Subsidiary in respect of any Swap Agreement at any time
shall be the Swap Termination Value determined under the circumstances and in
accordance with the provision of clause (a) of such term “Swap Termination
Value”.

“Maturity Date” means the earlier of (a) April 28, 2021 and (b) the date that is
six months prior to the maturity of any Second Lien Notes which remain
outstanding on the Effective Date; provided that this clause (b) shall not apply
if the principal amount of Second Lien Notes outstanding on the date that is six
months prior to their maturity is equal to or less than $25,000,000 and no Event
of Default exists on such date.

“Minimum Collateral Amount” means, at any time with respect to Cash Collateral
consisting of cash or deposit account balances, an amount equal to 103.5% of the
LC Exposure at such time.

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

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

“Multiemployer Plan” means any employee pension plan as defined in Section 3(2)
of ERISA covered by Title IV of ERISA that is a multiemployer plan as defined in
section 3(37) or 4001 (a)(3) of ERISA.

“Net Cash Proceeds” means:

(a) with respect to any issuance or sale of Equity Interest or the sale or
incurrence of any Debt, means the cash proceeds of such issuance or sale net of
attorneys’ fees, accountants’ fees, investment banking fees, listing fees,
discounts or commissions and brokerage, consultant and other fees, expenses and
charges actually incurred in connection with such issuance or sale and net of
taxes paid or payable as a result of such issuance or sale; and

(b) with respect to any Transfer of assets, the aggregate cash proceeds received
by the Borrower or any of its Subsidiaries in respect of such Transfer
(including any cash received upon the sale or other disposition of any non-cash
consideration received in any Transfer), net of, without duplication:

(i) the direct costs relating to such Transfer, including legal, title,
engineering, environmental, accounting and investment banking fees, and sales
commissions, and any relocation expenses incurred as a result thereof;

(ii) taxes paid or reasonably estimated to be payable as a result thereof;

 

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(iii) amounts required to be applied to the repayment of Debt (other than under
this Agreement) secured by a Lien on the asset or assets that were the subject
of such Transfer; and

(iv) any reserve established in accordance with GAAP against liabilities
associated with such Transfer or any amount placed in escrow for adjustment in
respect of the purchase price of such Transfer, until such time as such reserve
is reversed or such escrow arrangement is terminated, in which case Net Cash
Proceeds shall be increased by the amount of the reserve so reversed or the
amount returned to the Borrower or its Subsidiaries from such escrow
arrangement, as the case may be.

“Net Senior Secured Debt” means, at any date, (a) the sum of (i) the total
Credit Exposures of all Lenders on such date, (ii) the aggregate principal
amount of Debt (other than Debt referred to in clause (a)(i) of this definition)
of the Borrower and its Consolidated Subsidiaries on such date that is secured
by a first priority Lien on any asset or Property of the Borrower or any
Consolidated Subsidiary and (iii) any Debt included in the determination of
“Maturity Date” in clause (b) thereof rendering such clause (b) inapplicable,
minus (b) the sum of (i) all unrestricted cash in accounts subject to a Deposit
Account Control Agreement and unrestricted Cash Equivalents of the Borrower and
its Consolidated Subsidiaries on such date and (ii) to the extent included in
(a)(i), (ii) or (iii) herein, amounts available to be drawn under
(A) performance letters of credit and surety bonds issued for the account of the
Borrower or a Consolidated Subsidiary to secure obligations under firm
transportation contracts or (B) the Backstop Letter of Credit.

“New Lender” has the meaning assigned to such term in Section 2.05(b).

“New Lender Supplement” has the meaning assigned to such term in Section
2.05(b).

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

“Notes” means the Initial Term Loan Notes and the Delayed Draw Notes, as
applicable.

“Oil and Gas Properties” means (a) Hydrocarbon Interests; (b) the Properties now
or hereafter pooled or unitized with Hydrocarbon Interests; (c) all presently
existing or future unitization, pooling agreements and declarations of pooled
units and the units created thereby (including all units created under orders,
regulations and rules of any Governmental Authority) which may affect all or any
portion of the Hydrocarbon Interests; (d) all operating agreements, contracts
and other agreements, including production sharing contracts and agreements,
which relate to any of the Hydrocarbon Interests or the production, sale,
purchase, exchange or processing of Hydrocarbons from or attributable to such
Hydrocarbon Interests; (e) all Hydrocarbons in and under and which may be
produced and saved or attributable to the Hydrocarbon Interests, including all
oil in tanks, and all rents, issues, profits, proceeds, products, revenues and
other incomes from or attributable to the Hydrocarbon Interests; (f) all
tenements, hereditaments, appurtenances and Properties in any manner
appertaining, belonging, affixed or incidental to the Hydrocarbon Interests and
(g) all Properties, rights, titles, interests and estates

 

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described or referred to above, including any and all Property, real or
personal, now owned or hereinafter acquired and situated upon, used, held for
use or useful in connection with the operating, working or development of any of
such Hydrocarbon Interests or Property (excluding drilling rigs, automotive
equipment, rental equipment or other personal Property which may be on such
premises for the purpose of drilling a well or for other similar temporary uses)
and including any and all oil wells, gas wells, injection wells or other wells,
structures, fuel separators, liquid extraction plants, plant compressors, pumps,
pumping units, field gathering systems, pipelines, tanks and tank batteries,
fixtures, valves, fittings, machinery and parts, engines, boilers, meters,
apparatus, equipment, appliances, tools, implements, cables, wires, towers,
casing, tubing and rods, surface leases, rights-of-way, easements and servitudes
together with all additions, substitutions, replacements, accessions and
attachments to any and all of the foregoing. Unless otherwise indicated herein,
each reference to the term “Oil and Gas Properties” shall mean Oil and Gas
Properties of the Borrower and/or the Subsidiaries, as the context requires.

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

“Other Connection Taxes” means, with respect to any Recipient, Taxes imposed as
a result of a present or former connection between such Recipient and the
jurisdiction imposing such Tax (other than connections arising from such
Recipient having executed, delivered, become a party to, performed its
obligations under, received payments under, received or perfected a security
interest under, engaged in any other transaction pursuant to or enforced any
Loan Document, or sold or assigned an interest in any Loan or Loan Document).

“Other Taxes” means any and all present or future stamp, court or documentary,
intangible, recording, filing or similar Taxes that arise from any payment made
under, from the execution, delivery, performance, enforcement or registration
of, from the receipt or perfection of a security interest under, or otherwise
with respect to, any Loan Document, except any such Taxes that are Other
Connection Taxes imposed with respect to an assignment (other than an assignment
made pursuant to Section 5.03(b)).

“Participant” has the meaning assigned to such term in Section 12.04(c)(i).

“Participant Register” has the meaning assigned to such term in Section
12.04(c)(ii).

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

“PDP Coverage Ratio” means, as of any date of determination, the ratio of
(a) the Borrower’s and the Guarantors’ Total PDP PV-10 as of such date to
(b) Net Senior Secured Debt as of such date.

 

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“Permitted Refinancing Debt” means Debt (for purposes of this definition, “new
Debt”) incurred in exchange for, or proceeds of which are used to refinance, all
of any other Debt (the “Refinanced Debt”); provided that (a) such new Debt is in
an aggregate principal amount not in excess of the sum of (i) the aggregate
principal amount then outstanding of the Refinanced Debt (or, if the Refinanced
Debt is exchanged or acquired for an amount less than the principal amount
thereof to be due and payable upon a declaration of acceleration thereof, such
lesser amount) and (ii) an amount necessary to pay any accrued and unpaid
interest thereon and any fees and expenses, including premiums, related to such
exchange or refinancing; (b) such new Debt has a stated maturity no earlier than
the stated maturity of the Refinanced Debt and an average life no shorter than
the average life of the Refinanced Debt; (c) such new Debt does not have a
stated interest rate in excess of the stated interest rate of the Loans (with
the LIBOR Rate calculated based upon the forward curve for LIBOR on the date
that is three (3) days prior to the date of such Debt); (d) such new Debt does
not contain covenants that, taken as a whole are materially more onerous to the
Borrower and its Subsidiaries than those imposed by the Refinanced Debt (as
determined in the good faith judgment of the Borrower); (e) if the Refinanced
Debt is contractually subordinated to the Secured Obligations, such new Debt
(and any guarantees thereof) is subordinated in right of payment to the Secured
Obligations (or, if applicable, the Guaranty Agreement) to at least the same
extent as the Refinanced Debt and is otherwise subordinated pursuant to an
intercreditor agreement reasonably satisfactory to the Administrative Agent;
(f) if the Refinanced Debt is unsecured, such new Debt is unsecured and (g) if
the Refinanced Debt is Second Lien Notes, such new Debt is unsecured or secured
by Liens having the same or lesser priority thereof.

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

“Plan” means any employee pension benefit plan, as defined in section 3(2) of
ERISA, that is subject to Title IV of ERISA, other than a Multiemployer Plan,
which (a) is currently or hereafter sponsored, maintained or contributed to by
the Borrower, a Subsidiary or an ERISA Affiliate or (b) the Borrower or a
Subsidiary or an ERISA Affiliate may have any liability or obligation, whether
known or unknown, asserted or unasserted, determined or determinable, absolute
or contingent, accrued or unaccrued and whether due or to become due.

“Property” means any interest in any kind of property or asset, whether real,
personal or mixed, or tangible or intangible, including cash, securities,
accounts and contract rights.

“Proved Reserves” means “Proved Reserves” as defined in the Definitions for Oil
and Gas Reserves (in this paragraph, the “Definitions”) promulgated by the
Society of Petroleum Engineers (or any generally recognized successor) as in
effect at the time in question. “Proved Developed Producing Reserves” means
Proved Reserves which are categorized as both “Developed” and “Producing” in the
Definitions, “Proved Developed Nonproducing Reserves” means Proved Reserves
which are categorized as both “Developed” and “Nonproducing” in the Definitions,
“Proved Developed Reserves” means the sum of Proved Developed Producing Reserves
and Proved Developed Nonproducing Reserves, and “Proved Undeveloped Reserves”
means Proved Reserves which are categorized as “Undeveloped” in the Definitions.

 

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“Reasonably Anticipated Projected Production” means the projected production
from total Proved Developed Producing Reserves attributable to Oil and Gas
Properties of the Borrower and its Subsidiaries, determined by reference to
either (a) the Reserve Report most recently delivered pursuant to Section 8.12,
or (b) a Reserve Report with a recent “as of date” delivered to the
Administrative Agent for the purpose of Section 9.18 (together with the
certificate referred to in Section 8.12(c)), which shall be prepared by or under
the supervision of the chief engineer of the Borrower who shall certify such
Reserve Report to be true and accurate in all material respects and, except as
therein disclosed, to have been prepared in accordance with the procedures used
in the immediately preceding Reserve Report prepared by an Approved Engineer.

“Recipient” means (a) the Administrative Agent, (b) any Lender, and (c) the
Issuing Bank, as applicable.

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

“R.E. Gas” means R.E. Gas Development, LLC, a Delaware limited liability
company.

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

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

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

“Release” has the meaning assigned such term in the definition of the term
“Environmental Laws”.

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

“Required Amount” has the meaning assigned to such term in Section 2.01(c).

“Required Lenders” means, (a) at any time there are two (2) or fewer Lenders,
all of the Lenders and (b) at any time there are more than two (2) Lenders, two
or more un-affiliated Lenders having Loans, LC Exposures and unused Commitments,
as applicable, representing at least sixty-six and two-thirds percent (66-2/3%)
of the sum of the Loans, LC Exposures and unused Commitments at such time.

“Reserve Report” means a report, in form and substance reasonably satisfactory
to the Administrative Agent, setting forth, as of the applicable dates required
pursuant to Section 8.12, the oil and gas reserves attributable to the Oil and
Gas Properties of the Borrower and the Loan Parties that, together with a
projection of the rate of production and future net income, taxes, operating
expenses and capital expenditures with respect thereto as of such date based
upon the

 

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Five-Year Strip Price on such date of determination, adjusted for any basis
differential, quality and gravity, using prices and costs as of the date of
estimation without future escalation, without giving effect to non-property
related expenses such as general and administrative expenses, debt service,
future income tax expense and depreciation, depletion and amortization, and
adjusted to give effect to the Swap Agreements with Approved Counterparties then
in effect.

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

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

“RW Gathering” means RW Gathering, LLC, a Delaware limited liability company.

“Sanctioned Country” means, at any time, a country, region or territory which is
itself the subject or target of any Sanctions.

“Sanctioned Person” means, at any time, (a) any Person listed in any
Sanctions-related list of designated Persons maintained by OFAC or the U.S.
Department of State, (b) any Person operating, organized or resident in a
Sanctioned Country or (c) any Person owned or controlled by any such Person or
Persons described in the foregoing clauses (a) or (b).

“Sanctions” means all economic or financial sanctions or trade embargoes
imposed, administered or enforced from time to time by the U.S. government,
including those administered by OFAC or the U.S. Department of State.

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

“Second Lien Agent” means the trustee under the Second Lien Indenture (together
with its successors and permitted assigns in such capacity).

“Second Lien Indenture” that certain Indenture dated as of March 31, 2016 for
those certain 1.00/8.00% Senior Secured Second Lien Notes Due 2020, among the
Borrower, as issuer, the subsidiary guarantors named therein, and Wilmington, as
trustee, as the same may from time to time be amended, amended and restated,
supplemented or otherwise modified to the extent permitted by Section 9.04(b).

“Second Lien Intercreditor Agreement” means that certain intercreditor agreement
dated as of March 31, 2016 among the Administrative Agent, the Second Lien Agent
and the Borrower, as the same may from time to time be amended, amended and
restated, supplemented or otherwise modified in accordance with the terms
thereof.

 

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“Second Lien Note Documents” means the Second Lien Indenture, and any other note
documents entered into in connection therewith, including the Second Lien
Intercreditor Agreement, any promissory notes, mortgages, deeds of trust,
security agreements and instruments, guarantees, collateral or credit support
documents, and any other agreements, instruments consents or certificates
executed by the Borrower or any of its Subsidiaries in connection with, or as
security for the payment or performance of, the Second Lien Notes, in each case,
as the same may from time to time be amended, amended and restated, supplemented
or otherwise modified to the extent permitted by Section 9.04(b).

“Second Lien Notes” means the Borrower’s Senior Secured Second Lien Notes issued
by the Borrower under the Second Lien Indenture, as the same may from time to
time be amended, amended and restated, supplemented or otherwise modified to the
extent permitted by Section 9.04(b).

“Secured Cash Management Agreement” means a Cash Management Agreement between
(a) the Borrower or any Subsidiary and (b) a Secured Cash Management Provider
entered into in the ordinary course of business.

“Secured Cash Management Obligations” means all amounts and other obligations
owing by the Borrower or any Subsidiary to any Secured Cash Management Provider
under any Secured Cash Management Agreement.

“Secured Cash Management Provider” means (a) Manufacturers and Traders Trust
Company, (b) a Lender, (c) an Affiliate of a Lender or (d) any bank so
designated in writing by the Borrower to the Administrative Agent and the
Collateral Agent which is organized under the laws of the United States or any
state thereof.

“Secured Obligations” means, without duplication, any and all amounts owing or
to be owing by the Borrower or any Guarantor whether direct or indirect
(including those acquired by assumption), absolute or contingent, due or to
become due, now existing or hereafter arising: (a) to the Administrative Agent,
the Collateral Agent, the Issuing Bank or any Lender under any Loan Document;
(b) to any Secured Swap Party under any Secured Swap Agreement; (c) to any
Secured Cash Management Provider under any Secured Cash Management Agreement;
(d) to the Issuing Bank in respect of each Letter of Credit, including, without
limitation, all reimbursement obligations in respect of Letters of Credit and
(e) all renewals, extensions and/or rearrangements of any of the above. Without
limitation of the foregoing, the term “Secured Obligations” shall include the
unpaid principal of and interest on the Loans and LC Disbursements (including
Yield Maintenance Amounts, Call Protection Amounts, interest accruing at the
then applicable rate provided in this Agreement after the maturity of the Loans
and LC Exposure and interest accruing at the then applicable rate provided in
this Agreement after the filing of any petition in bankruptcy, or the
commencement of any insolvency, reorganization or like proceeding, relating to
the Borrower, any of its Subsidiaries or any Guarantor, whether or not a claim
for post-filing or post-petition interest is allowed in such proceeding), fees,
reimbursement obligations and unpaid amounts (including to reimburse LC
Disbursements), obligations to post cash collateral in

 

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respect of Letters of Credit, payments in respect of an early termination of
Secured Swap Agreements and unpaid amounts, fees, expenses, indemnities, costs,
and all other obligations and liabilities of every nature of the Borrower, any
Subsidiary or any Guarantor, whether absolute or contingent, due or to become
due, now existing or hereafter arising under this Agreement, the other Loan
Documents, any Secured Swap Agreement, any Letter of Credit or any Secured Cash
Management Agreement and for purposes of the Second Lien Intercreditor
Agreement, “Secured Obligations” constitute “Indebtedness” under the Second Lien
Intercreditor Agreement.

“Secured Parties” has the meaning assigned to such term in the Swap
Intercreditor Agreement.

“Secured Swap Agreement” means any Swap Agreement, whether entered into prior
to, on or after the date hereof, between the Borrower or any Guarantor and any
Secured Swap Party, that is financially settled.

“Secured Swap Obligations” means all amounts and other obligations owing to any
Secured Swap Party under any Secured Swap Agreement.

“Secured Swap Party” means any Approved Counterparty (other than a Loan Party)
that has become party to the Swap Intercreditor Agreement, either by signing the
Swap Intercreditor Agreement directly or by entry into a Swap Counterparty
Joinder (as defined in the Swap Intercreditor Agreement) pursuant to the terms
and conditions of the Swap Intercreditor Agreement.

“Security Instruments” means the Guaranty Agreement, the Second Lien
Intercreditor Agreement, the Swap Intercreditor Agreement, mortgages, deeds of
trust and other agreements, instruments or certificates described or referred to
in Exhibit D, and any and all other agreements, instruments, consents or
certificates now or hereafter executed and delivered by the Borrower, any
Guarantor or any other Person in connection with, or as security for the payment
or performance of the Secured Obligations, the Notes, this Agreement or
reimbursement obligations under the Letters of Credit, as such agreements may be
amended, modified, supplemented or restated from time to time.

“Senior Debt” means (a) the Unsecured Senior Notes, (b) the Second Lien Notes,
(c) any other secured or unsecured senior or subordinated Debt instruments
issued or incurred by the Borrower, and (d) any Permitted Refinancing Debt in
respect of any of the foregoing.

“Senior Debt Indenture” means any indenture or other agreement among the
Borrower and others pursuant to which the Senior Debt is issued or incurred, as
the same may be amended, modified or supplemented in accordance with .(Section
9.04(b

“Series A Preferred Stock” means the Borrower’s Convertible Perpetual Preferred
Stock, Series A (as defined in the Certificate of Designations, Preferences,
Rights and Limitations of 6.00% Convertible Perpetual Preferred Stock, Series A,
of the Borrower) having an aggregate fixed liquidation value of $10,000.00 per
share issued pursuant to and in accordance with the Certificate of Designations,
Preferences, Rights and Limitations of 6.00% Convertible Perpetual Preferred
Stock, Series A, filed for the purpose of amending Borrower’s Certificate of
Incorporation, as amended.

 

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

“Statutory Reserve Rate” means a fraction (expressed as a decimal), the
numerator of which is the number one and the denominator of which is the number
one minus the aggregate of the maximum reserve percentages (including any
marginal, special, emergency or supplemental reserves) expressed as a decimal
for a major bank reasonably selected by the Administrative Agent prescribed by
the Board of Governors of the Federal Reserve System (or any successor thereto)
for determining the reserve requirements (including any basic, supplemental,
marginal, or emergency reserves) that are in effect on such date with respect to
eurocurrency funding (currently referred to as “eurocurrency liabilities”) of
said bank, but so long as such bank is not required or directed under applicable
regulations to maintain such reserves, the Reserve Percentage shall be zero.
Such reserve percentages shall include those imposed pursuant to such Regulation
D. The Loans shall be deemed to constitute eurocurrency funding and to be
subject to such reserve requirements without benefit of or credit for proration,
exemptions or offsets that may be available from time to time to any Lender
under such Regulation D or any comparable regulation. The Statutory Reserve Rate
shall be adjusted automatically on and as of the effective date of any change in
any reserve percentage.

“Subsidiary” means: (a) any Person of which at least a majority of the
outstanding Equity Interests having by the terms thereof ordinary voting power
to elect a majority of the board of directors, manager or other governing body
of such Person (irrespective of whether or not at the time Equity Interests of
any other class or classes of such Person shall have or might have voting power
by reason of the happening of any contingency) is at the time directly or
indirectly owned or controlled by the Borrower or one or more of its
Subsidiaries or by the Borrower and one or more of its Subsidiaries and (b) any
partnership of which the Borrower or any of its Subsidiaries is a general
partner. Unless otherwise indicated herein, each reference to the term
“Subsidiary” shall mean a Subsidiary of the Borrower.

“Swap Agreement” means any agreement (including each confirmation under any
master agreements) with respect to any swap, cap, collar, put, call, floor,
forward, future or derivative transaction or option or similar agreement,
whether exchange traded, “over-the-counter” or otherwise, involving, or settled
by reference to, one or more interest rates, currencies, commodities, equity or
debt instruments or securities, or economic, financial or pricing indices or
measures of economic, financial or pricing risk or value or any similar
transaction or any combination of these transactions; provided that no phantom
stock or similar plan providing for payments only on account of services
provided by current or former directors, officers, employees or consultants of
the Borrower or the Subsidiaries shall be a Swap Agreement.

“Swap Intercreditor Agreement” means the Intercreditor Agreement, dated as of
the date hereof, by and among the Borrower, the Guarantors, the Administrative
Agent, the Collateral Agent and one or more Approved Counterparties, a copy of
which is attached as Exhibit G hereto, as the same may from time to time be
amended, amended and restated, modified or supplemented.

 

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“Swap Obligation” means, with respect to any Guarantor, any obligation to pay or
perform under any agreement, contract or transaction that constitutes a ‘swap’
within the meaning of Section 1a(47) of the Commodity Exchange Act.

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

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

“Taxes” means any and all present or future taxes, levies, imposts, duties,
deductions, assessments, fees, charges or withholdings (including backup
withholding) imposed by any Governmental Authority, including any interest,
additions to tax or penalties applicable thereto.

“Termination Date” means the earlier of the Maturity Date and the date of
termination of the Loans (including an acceleration of the Loans pursuant to
Section 10.02) as provided for herein.

“Threshold Amount” means, at any time, an amount equal to the difference between
(a) the sum of (i) 106.7% of the available LC Commitment at such time and (ii)
106.7% of the LC Exposure at such time and (b) the amount of Cash Collateral
that has been provided in respect of LC Exposure at such time.

“Total PDP PV-10” means, for any Person or group of Persons, the present value
of estimated future revenues less severance and ad valorem taxes, operating,
gathering, transportation and marketing expenses and capital expenditures from
the production of Proved Developed Producing Reserves on such Person’s or such
group’s Oil and Gas Properties as set forth in the most recent Reserve Report
delivered pursuant hereto, calculated in accordance with the SEC guidelines and
using the Five-Year Strip Price without giving effect to non-property related
expenses such as general and administrative expenses, debt service, future
income tax expense and depreciation, depletion and amortization, and discounted
using an annual discount rate of 10% all as reasonably acceptable to the
Administrative Agent. Total PDP PV-10 shall be adjusted to give effect to the
Secured Swap Agreements then in effect discounted at 10%. The Total PDP PV-10
shall be calculated on a pro forma basis, giving effect to (a) acquisitions and
dispositions of Oil and Gas Properties consummated by the Borrower and the
Subsidiaries (provided that in the case of any acquisition, the Administrative
Agent shall have received a

 

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Reserve Report, in form and substance reasonably satisfactory to it, evaluating
the Proved Developed Producing Reserves subject thereto); (b) the Liquidation of
any Swap Agreements to which the Borrower or any Subsidiary is a party, in each
case, occurring since the date of the Reserve Report most recently delivered
pursuant to Section 8.12; and (c) the Proved Developed Producing Reserves
attributable to production from any completed and fully paid wells that have
commenced and flowed into sales during the 60 day period after the measurement
date, subject to such Proved Developed Producing Reserve assessment being
prepared by an Approved Petroleum Engineer.

“Transactions” means, with respect to (a) the Borrower, the execution, delivery
and performance by the Borrower of this Agreement and each other Loan Document,
the borrowing of Loans, the use of the proceeds thereof and the issuance of
Letters of Credit hereunder and the grant of Liens by the Borrower on Mortgaged
Properties and other Properties pursuant to the Security Instruments and
(b) each Guarantor, the execution, delivery and performance by such Guarantor of
each Loan Document to which it is a party, the guaranteeing of the Secured
Obligations and the other obligations under the Guaranty Agreement by such
Guarantor and such Guarantor’s grant of the security interests and provision of
collateral under the Security Instruments, and the grant of Liens by such
Guarantor on Mortgaged Properties and other Properties pursuant to the Security
Instruments.

“Transfer” has the meaning assigned to such term in Section 9.12.

“UCC” means the Uniform Commercial Code as in effect from time to time in the
State of Texas.

“unrestricted” means, as of any date of determination, all cash and/or Cash
Equivalents on the consolidated balance sheet of the Borrower which is not
“restricted” for purposes of GAAP.

“Unsecured Senior Notes” means the Borrower’s (x) 8.875% Senior Notes due 2020
and (y) 6.250% Senior Notes due 2022.

“U.S. Person” means any Person that is a “United States person” as defined in
section 7701(a)(30) of the Code.

“USA Patriot Act” means the Uniting and Strengthening America by Providing
Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001
(Title III of Pub. L. 107-56), as amended.

“U.S. Tax Compliance Certificate” has the meaning assigned to such term in
Section 5.02(f)(ii)(B)(3).

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

“Wilmington” has the meaning assigned to such term in Section 6.01(t).

 

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“Withholding Agent” means the Borrower and the Administrative Agent.

“Write-Down and Conversion Powers” means, with respect to any EEA Resolution
Authority, the write-down and conversion powers of such EEA Resolution Authority
from time to time under the Bail-In Legislation for the applicable EEA Member
Country, which write-down and conversion powers are described in the EU Bail-In
Legislation Schedule.

“Yield Maintenance Amount” means, for (a) any payment, refinancing, substitution
or replacement of any Loans, including any payment made in accordance with
Section 3.01, Section 3.04 or Section 10.02(a) (or in the case of an
acceleration of any Loans pursuant to Section 10.02(a), in the principal amount
of the Loans accelerated) and (b) any termination of the Delayed Draw Commitment
in connection with the acceleration of the Loans in connection with the
acceleration of the Loans pursuant to Section 10.02(a), in each case, during the
period commencing on the Effective Date and ending on the date that is 30 months
thereafter, an amount equal to the interest as determined hereunder (with the
Adjusted LIBO Rate used in such determination based upon the LIBO Rate in effect
on the Business Day immediately prior to the date of such payment, refinancing,
substitution or replacement) on (i) the principal of the Loans paid, refinanced,
substituted or replaced (or in the case of an acceleration of any Loans pursuant
to Section 10.02(a), in the principal amount of the Loans accelerated) and
(ii) the amount of the Delayed Draw Commitment that was terminated in connection
with the acceleration of the Loans pursuant to Section 10.02(a) that was to be
used to Cash Collateralize outstanding Letters of Credit (assuming the full
amount of such Delayed Draw Commitment was drawn to Cash Collateralize
outstanding Letters of Credit), in each case, that would have accrued on such
amount during the period beginning on the date of such payment, refinancing,
substitution or replacement (or in the case of an acceleration of any Loans
pursuant to Section 10.02(a), on the date of such acceleration) and ending on
the date that is 30 months after the Effective Date. No Yield Maintenance Amount
shall be due for any payment made in accordance with Section 3.01, Section 3.04
or Section 10.02(a), or any acceleration pursuant to Section 10.02(a) occurring,
after the date that is 30 months after the Effective Date, but the Yield
Maintenance Amount shall be due and payable if any acceleration occurs pursuant
to Section 10.02(a) prior to such date, regardless of when any payment is made
on the Loans. For the avoidance of doubt, the Yield Maintenance Amount shall not
be payable with respect to any Delayed Draw Loan that was made in connection
with the acceleration of the Loans pursuant to Section 10.02(a) to Cash
Collateralize outstanding Letters of Credit to the extent the Yield Maintenance
Amount was or is paid on the Delayed Draw Commitment for such Delayed Draw Loan
at the time the Loans were accelerated pursuant to Section 10.02(a).

“Yield Maintenance Event” has the meaning assigned to such term in Section
10.02(a).

Section 1.03 Terms Generally; Rules of Construction. The definitions of terms
herein shall apply equally to the singular and plural forms of the terms
defined. Whenever the context may require, any pronoun shall include the
corresponding masculine, feminine and neuter forms. The words “include”,
“includes” and “including” shall be deemed to be followed by the phrase “without
limitation”. The word “will” shall be construed to have the same meaning and
effect as the word “shall”. Unless the context requires otherwise, the word “or”
is not exclusive. Unless the context requires otherwise (a) any definition of or
reference to any agreement, instrument or other document herein shall be
construed as referring to such agreement, instrument or other

 

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document as from time to time amended, supplemented or otherwise modified
(subject to any restrictions on such amendments, supplements or modifications
set forth in the Loan Documents), (b) any reference herein to any law shall be
construed as referring to such law as amended, modified, codified or reenacted,
in whole or in part, and in effect from time to time, (c) any reference herein
to any Person shall be construed to include such Person’s successors and assigns
(subject to the restrictions contained in the Loan Documents), (d) the words
“herein”, “hereof” and “hereunder”, and words of similar import, shall be
construed to refer to this Agreement in its entirety and not to any particular
provision hereof, (e) with respect to the determination of any time period, the
word “from” means “from and including” and the word “to” means “to and
including” and (f) any reference herein to Articles, Sections, Annexes, Exhibits
and Schedules shall be construed to refer to Articles and Sections of, and
Annexes, Exhibits and Schedules to, this Agreement. No provision of this
Agreement or any other Loan Document shall be interpreted or construed against
any Person solely because such Person or its legal representative drafted such
provision.

Section 1.04 Accounting Terms and Determinations; GAAP. Unless otherwise
specified herein, all accounting terms used herein shall be interpreted, all
determinations with respect to accounting matters hereunder shall be made, and
all financial statements and certificates and reports as to financial matters
required to be furnished to the Administrative Agent or the Lenders hereunder
shall be prepared, in accordance with GAAP, applied on a basis consistent with
the Financial Statements except for changes in which the Borrower’s independent
certified public accountants concur and which are disclosed to the
Administrative Agent on the next date on which financial statements are required
to be delivered to the Lenders pursuant to Section 8.01(a); provided that,
unless the Borrower and the Majority Lenders shall otherwise agree in writing,
no such change shall modify or affect the manner in which compliance with the
covenants contained herein is computed such that all such computations shall be
conducted utilizing financial information presented consistently with prior
periods; provided further, in the event of an accounting change requiring all
leases to be capitalized, only those leases (assuming for purposes hereof that
such leases were in existence on the Effective Date) that would constitute
capital leases in conformity with GAAP on the Effective Date shall be considered
capital leases and all calculations and deliverables under this Agreement or any
other Loan Document shall be made or delivered, as applicable, in accordance
therewith.

ARTICLE II

THE CREDITS

Section 2.01 Commitments.

(a) Initial Term Loans. Subject to the terms and conditions set forth herein,
each Initial Term Loan Lender severally, and not jointly, agrees to make Initial
Term Loans to the Borrower on the Effective Date in a principal amount equal to
such Initial Term Loan Lender’s Initial Term Loan Commitment; provided that the
Initial Term Loans shall be issued with an original issue discount of 3.0% of
par. Amounts paid or prepaid in respect of the Initial Term Loans may not be
reborrowed.

(b) Delayed Draw Loans. Subject to the terms and conditions set forth herein,
including Section 2.01(c), each Delayed Draw Lender severally, and not jointly,
agrees to make

 

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Delayed Draw Loans to the Borrower from time to time (but in any event with
respect to Delayed Draw Loans made pursuant to this Section 2.01(b), limited to
fifteen (15) drawings from all Delayed Draw Lenders, each in an aggregate
principal amount of at least $5,000,000), on any Business Day until the Delayed
Draw Commitment Termination Date, in a principal amount that will not result in
(i) the Delayed Draw Loan to be made by a Lender on such date exceeding such
Lender’s Delayed Draw Commitment on such date, (ii) the total Delayed Draw Loans
exceeding the Delayed Draw Cap, (iii) the total Loans outstanding exceeding the
then effective Borrowing Base or (iv) the aggregate Delayed Draw Commitment
reducing below the Threshold Amount at such time. The Delayed Draw Loans shall
be issued with an original issue discount of 3.0% of par. The Delayed Draw
Commitments shall be permanently reduced by the amount of each Delayed Draw Loan
when made and amounts paid or prepaid in respect of the Delayed Draw Loans may
not be reborrowed.

(c) Delayed Draw Loans to Reimburse LC Disbursements or Cash Collateralize LC
Exposure. If an LC Disbursement has not been reimbursed by the Borrower under
Section 2.06(e) or an LC Required Delayed Draw Event has occurred, then each
Delayed Draw Lender agrees to fund a Delayed Draw Loan in an amount equal to
(the “Required Amount”) the sum of (i) its participation interest in such LC
Disbursement or other LC Exposure, as applicable, and (ii) its Delayed Draw
Applicable Percentage of any accrued and unpaid fees and expenses then owing
hereunder by the Borrower to the Issuing Bank (it being understood that the
principal amount of each such Loan shall be 103.1% of such LC Disbursement or,
if an LC Required Delayed Draw Event has occurred, the amount required to Cash
Collateralize the lesser of (A) the undrawn face amount of all outstanding
Letters of Credit, and (B) the Cash Collateralization Cap, plus, in each case,
the amount of any such unpaid fees and expenses), provided that making such
Delayed Draw Loan will not result in (1) the Delayed Draw Loan to be made by a
Lender on such date exceeding such Lender’s Delayed Draw Commitment on such
date, (2) the total Delayed Draw Loans exceeding the Delayed Draw Cap or (3) the
total Loans outstanding exceeding the then effective Borrowing Base. Each
Lender’s obligations under this Section 2.01(c) will expire on the Delayed Draw
Commitment Termination Date. Such Delayed Draw Loans shall be issued with an
original issue discount of 3.0% of par. The Delayed Draw Commitments shall be
permanently reduced by the amount of each such Delayed Draw Loan when made and
amounts paid or prepaid in respect of the Delayed Draw Loans may not be
reborrowed.

Section 2.02 Loans.

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

(b) Notes. Any Lender may request that the Loans made by it shall be evidenced
by a note of the Borrower in substantially the form of Exhibit A dated, in the
case of (i) any Lender party hereto as of the date of this Agreement, as of the
date of this Agreement, (ii) any Delayed Draw Loan, as of the date of such
Delayed Draw Loan, or (iii) any Lender that

 

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becomes a party hereto pursuant to an Assignment and Assumption, as of the
effective date of the Assignment and Assumption, payable to such Lender in a
principal amount equal to its Initial Term Loan for a Note and its Delayed Draw
Commitment for a Note each in the form of Exhibit A as in effect on such date,
and otherwise duly completed. The date, amount, and interest rate of each Loan
made by each Lender, and all payments made on account of the principal thereof,
shall be recorded by such Lender on its books for its Note, and, prior to any
transfer, may be endorsed by such Lender on a schedule attached to such Note or
any continuation thereof or on any separate record maintained by such Lender.
Failure to make any such notation or to attach a schedule shall not affect any
Lender’s or the Borrower’s rights or obligations in respect of such Loans or
affect the validity of such transfer by any Lender of its Note.

Section 2.03 Requests for Loans.

(a) To request an Initial Term Loan on the Effective Date, the Borrower shall
notify the Administrative Agent of such request not later than 12:00 noon, New
York City time, one Business Day before the date of the proposed borrowing. Each
such Borrowing Request shall be irrevocable. Each such written Borrowing Request
shall be in substantially the form of Exhibit B and signed by the Borrower and
shall specify the following information:

(i) the aggregate amount of the requested Loans;

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

(iii) the total Credit Exposure on the date thereof (i.e., outstanding principal
amount of Loans and LC Exposure without regard to the Loans requested);

(iv) pro forma total Credit Exposure (after giving effect to the Loans
requested); and

(v) the location and number of the Borrower’s account to which funds are to be
disbursed, which shall comply with the requirements of .Section 2.04

(b) To request a Delayed Draw Loan prior to the Delayed Draw Commitment
Termination Date (other than a Delayed Draw Loan under Section 2.01(c)), the
Borrower shall notify the Administrative Agent and the Issuing Bank of such
request not later than 12:00 noon, New York City time, three Business Days
before the date of the proposed borrowing. Each such Borrowing Request shall be
irrevocable. Each such written Borrowing Request shall be in substantially the
form of Exhibit B and signed by the Borrower and shall specify the following
information:

(i) the aggregate amount of the requested Loans;

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

(iii) the total Credit Exposure on the date thereof (i.e., outstanding principal
amount of Loans and LC Exposure without regard to the Loans requested);

 

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(iv) pro forma total Credit Exposure (after giving effect to the Loans
requested); and

(v) the location and number of the Borrower’s account to which funds are to be
disbursed, which shall comply with the requirements of .Section 2.04

(c) Each Borrowing Request shall constitute a representation that the amount of
the requested Loan shall not cause the total Credit Exposures to exceed the
total Commitments.

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

Section 2.04 Funding of Loans.

(a) Funding by Lenders. Each Lender shall make each Loan to be made by it
hereunder on the proposed date thereof by wire transfer of immediately available
funds by 1:00 p.m., New York City time, to the account of the Administrative
Agent most recently designated by it for such purpose by notice to the Lenders.
The Administrative Agent will make such Loans available to the Borrower by
promptly crediting the amounts so received, in like funds, to an account of the
Borrower designated by the Borrower in the applicable Borrowing Request;
provided that Delayed Draw Loans made to finance the reimbursement of an LC
Disbursement as provided in Section 2.06(e) shall be remitted by the
Administrative Agent to the Issuing Bank. Nothing herein shall be deemed to
obligate any Lender to obtain the funds for its Loan in any particular place or
manner or to constitute a representation by any Lender that it has obtained or
will obtain the funds for its Loan in any particular place or manner. Each
borrowing of the Delayed Draw Term Loans shall be made by the Delayed Draw
Lenders pro rata on the basis of their Delayed Draw Commitment.

(b) Funding by the Administrative Agent. Upon verification by the Administrative
Agent that each Lender has funded its Loan, the Administrative Agent shall then
deposit such Loans into the account of the Borrower specified in the Borrowing
Request. The Administrative Agent shall have no obligation to fund to the
Borrower any amounts that a Lender shall fail to fund.

Section 2.05 Incremental Facility.

(a) General. The Borrower and any one or more Lenders (including New Lenders)
may from time to time agree that such Lenders shall make Incremental Term Loans
by executing and delivering to the Administrative Agent an Increased Facility
Activation Notice specifying (i) the amount of such increase, (ii) the
applicable Increased Facility Closing Date, (iii) the applicable interest for
such Incremental Term Loans and (iv) the maturity date for such Incremental Term
Loans, which may not be earlier than the Maturity Date; provided, that if the
total yield (calculated for both the Incremental Term Loans and the existing
Loans, including the upfront fees, any interest rate floors, Yield Maintenance
Amount, Call Protection Amount, and any original issue discount, but excluding
any arrangement, underwriting or similar fee paid by the Borrower in respect of
any Incremental Term Loans exceeds by more than 0.50% per annum

 

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the total yield for the existing Loans (it being understood that any such
increase may take the form of original issue discount, with original issue
discount being equated to the interest rates in a manner determined by the
Administrative Agent equal to the average life to maturity of the Incremental
Term Loans), then the interest for the existing Loans shall be increased so that
the total yield in respect of such Incremental Term Loans is no more than 0.50%
higher than the total yield for the existing Loans. In addition, (1) the
aggregate principal amount of borrowings of Incremental Term Loans shall not
exceed the Incremental Amount at such time, (2) without the consent of the
Administrative Agent, (x) each increase effected pursuant to this Section
2.05(a) shall be in a minimum amount of at least $10,000,000 and (y) no more
than three (3) Increased Facility Closing Dates may be selected by the Borrower
after the Closing Date, (3) such Incremental Term Loans shall not have (x) a
shorter weighted average life to maturity than the Initial Term Loans or
(y) provide for any voluntary, or require any mandatory, prepayments other than
those set forth in this Agreement and on a pro rata basis, (4) the Incremental
Term Loans shall rank pari passu in right of payment and security with the
outstanding Loans and (5) the Incremental Term Loans may not be used to Redeem
Senior Debt. No Lender shall have any obligation to participate in any increase
described in this Section 2.05(a) unless it agrees to do so in its sole
discretion.

(b) New Lender Supplement. Any additional bank, financial institution or other
entity which elects to become a “Lender” under this Agreement in connection with
any transaction described in Section 2.05(a) shall be approved by the
Administrative Agent (such approval not to be unreasonably withheld) and execute
a New Lender Supplement (each, a “New Lender Supplement”), substantially in the
form of Exhibit I, whereupon such bank, financial institution or other entity (a
“New Lender”) shall become a Lender for all purposes and to the same extent as
if originally a party hereto and shall be bound by and entitled to the benefits
of this Agreement.

(c) Conditions Precedent. The effectiveness of the Incremental Term Loans shall
be subject to the following conditions precedent:

(i) no Default or Event of Default shall have occurred and be continuing on the
date of the effectiveness of the Incremental Term Loan and no Default or Event
of Default would occur as a result of the effectiveness of the Incremental Term
Loan;

(ii) the Administrative Agent shall have received a certificate of a Responsible
Officer of Borrower certifying that:

(A) each of the representations and warranties made by any Loan Party in or
pursuant to the Loan Documents is true and correct in all material respects
immediately prior to, and after giving effect to, the incurrence of the
Incremental Term Loan as if made on and as of each such date except to the
extent such representations or warranties are made as of a specified date, in
which case, such representations and warranties shall be true and correct in all
material respects as of such date;

 

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(B) giving pro forma effect to such Incremental Term Loans and the application
of the proceeds thereof, the Borrower shall be in compliance with Section 9.01
and have unrestricted cash and/or unused Delayed Draw Commitments, of at least
$10,000,000; and

(C) such Incremental Term Loans together with the sum of (I) the aggregate
principal amount of all outstanding Loans and LC Exposure, (II) the amount of
the Yield Maintenance Amount calculated as of such date on the principal amount
of all outstanding Loans, LC Exposure and such proposed Incremental Term Loans
and (III) the amount of the Call Protection Amount calculated as of such date on
the principal amount of all outstanding Loans, LC Exposure and such proposed
Incremental Term Loans does not constitute Excess First Lien RBL Obligations or
any similar or corresponding term in any other applicable intercreditor
agreements;

(iii) the Administrative Agent shall have received any customary closing
documents or information, including legal opinions, board resolutions, officers’
certificates, certificates from independent engineers and reaffirmations
agreements, reasonably requested by the Administrative Agent, in a form
consistent with those delivered on the Effective Date under Section 6.01 to the
extent applicable;

(iv) each New Lender shall have executed and delivered to the Administrative
Agent a New Lender Supplement and such other agreements and documentation as the
Administrative Agent shall reasonably specify to evidence the New Lender
becoming a Lender hereunder, and this Agreement and the other Loan Documents
shall have been amended in accordance with Section 2.05(d);

(v) either (A) the Delayed Draw Commitment shall have been fully drawn hereunder
or (B) the Delayed Draw Commitment Termination Date shall have occurred; and

(vi) such other conditions, if any, as the Borrower, the Incremental Term
Lenders and Administrative Agent may agree.

(d) Amendments. In addition to the foregoing, each of the parties hereto hereby
agrees that, on each Increased Facility Activation Date, this Agreement shall be
amended to the extent (but only to the extent) appropriate to effectuate the
existence and terms of the Incremental Term Loans evidenced thereby. Any such
deemed amendment may be effected in writing by the Administrative Agent and the
Borrower and furnished to the other parties hereto.

Section 2.06 Letters of Credit.

(a) General. Subject to the terms and conditions set forth herein, the Borrower
may request the issuance of dollar denominated Letters of Credit for its own
account or for the account of any of its Subsidiaries, in a form acceptable to
the Issuing Bank in its sole discretion, at any time and from time to time
during the Availability Period. In the event of any inconsistency between the
terms and conditions of this Agreement and the terms and conditions of any form
of letter of credit application or other agreement submitted by the Borrower to,
or entered into by the Borrower with, the Issuing Bank relating to any Letter of
Credit, the terms and conditions of this Agreement shall control.

 

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(b) Notice of Issuance, Amendment, Renewal, Extension; Certain Conditions. To
request the issuance of a Letter of Credit (or the amendment, renewal or
extension of an outstanding Letter of Credit), the Borrower shall hand deliver
or telecopy (or transmit by electronic communication, if arrangements for doing
so have been approved by the Issuing Bank) to the Issuing Bank and the
Administrative Agent (not less than five (5) Business Days in advance of the
requested date of issuance, amendment, renewal or extension) a notice:

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

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

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

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

(v) specifying the name and address of the beneficiary thereof and such other
information as shall be necessary to prepare, amend, renew or extend such Letter
of Credit; and

(vi) specifying the current total Credit Exposures (without regard to the
requested Letter of Credit or the requested amendment, renewal or extension of
an outstanding Letter of Credit) and the pro forma total Credit Exposures
(giving effect to the requested Letter of Credit or the requested amendment,
renewal or extension of an outstanding Letter of Credit).

For all purposes of this Agreement, the amount of a Letter of Credit that, by
its terms or the terms of any document related thereto, provides for one or more
automatic increases in the stated amount thereof shall be deemed to be the
maximum stated amount of such Letter of Credit after giving effect to all such
increases, whether or not such maximum stated amount is in effect at the time of
determination; provided however that this provision does not constitute Issuing
Bank’s acceptance of such automatic increases.

The Issuing Bank shall not be required to issue, amend, renew or extend any
Letter of Credit if the Issuing Bank receives a notice from the Administrative
Agent within four (4) Business Days after the Administrative Agent receives the
notice required in Section 2.06(b) stating that any of the Lenders has requested
that the Issuing Bank not issue, amend, renew or extend such Letter of Credit
and otherwise a Letter of Credit shall be issued, amended, renewed or extended
only if (and each notice shall constitute a representation and warranty by the
Borrower that), after giving effect to the requested issuance, amendment,
renewal or extension, as applicable, (A) the LC Exposure shall not exceed the LC
Commitment and (B) the Credit Exposure does not exceed the total Commitments;
provided that the Issuing Bank shall be under no obligation to issue any Letter
of Credit if the issuance of such Letter of Credit would violate one or more
policies of the Issuing Bank now or hereafter applicable to letters of credit
generally.

 

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If requested by the Issuing Bank, the Borrower also shall submit a letter of
credit application on the Issuing Bank’s standard form in connection with any
request for a Letter of Credit; provided that, in the event of any conflict
between such application and the terms of this Agreement, the terms of this
Agreement shall control.

(c) Expiration Date.

(i) Subject to Section 2.06(c)(ii) below, each Letter of Credit shall expire at
or prior to the close of business on the earlier of (A) the date one year after
the date of the issuance of such Letter of Credit (or, in the case of any
renewal or extension thereof, one year after such renewal or extension), and
(B) the date that is five Business Days prior to the Delayed Draw Commitment
Termination Date. Each Letter of Credit with a one (1) year term may provide for
the renewal thereof, at the request of the Borrower and at the sole discretion
of the Issuing Bank, for additional one (1) year periods; provided that, unless
Cash Collateral has been provided for such Letter of Credit under Section
2.06(c)(ii), no such period shall extend beyond the date described in clause
(B) above.

(ii) A Letter of Credit, at the request of the Borrower and at the sole
discretion of the Issuing Bank, may be extended beyond and after the Delayed
Draw Commitment Termination Date if the Borrower has provided Cash Collateral
for such Letter of Credit in the manner specified in Section 2.06(j) on the date
that is five (5) Business Days prior to the earlier of (A) the expiration date
of such Letter of Credit or (B) the Delayed Draw Commitment Termination Date.

(d) Participations. By the issuance of a Letter of Credit (or an amendment to a
Letter of Credit increasing the amount thereof or an extension or renewal
thereof) and without any further action on the part of the Issuing Bank or the
Delayed Draw Lenders, the Issuing Bank hereby grants to each Delayed Draw
Lender, and each Delayed Draw Lender hereby acquires from the Issuing Bank, a
participation in such Letter of Credit equal to such Delayed Draw Lender’s
Delayed Draw Applicable Percentage of the aggregate amount available to be drawn
under such Letter of Credit. In consideration and in furtherance of the
foregoing, each Delayed Draw Lender hereby absolutely and unconditionally agrees
to pay to the Administrative Agent, for the account of the Issuing Bank, such
Lender’s Delayed Draw Applicable Percentage of each LC Disbursement made by the
Issuing Bank and not reimbursed by the Borrower on the date due as provided in
Section 2.06(e), or of any reimbursement payment required to be refunded to the
Borrower for any reason. Each Delayed Draw Lender acknowledges and agrees that
its obligation to acquire participations pursuant to this Section 2.06(d) upon
the issuance, amendment, extension or renewal of each Letter of Credit is
absolute and unconditional and shall not be affected by the occurrence and
continuance of a Default or Event of Default (including any Event of Default
described in Section 10.01(h) or Section 10.01(i)), or reduction or termination
of the Commitments, and that each such payment shall be made without any offset,
abatement, withholding or reduction whatsoever; provided that no Delayed Draw
Lender shall be obligated to fund any participation under this Section 2.06(d)
in an amount in excess of its Delayed Draw Amount.

 

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(e) Reimbursement. If the Issuing Bank shall make any LC Disbursement in respect
of a Letter of Credit, the Borrower shall reimburse such LC Disbursement by
paying to the Issuing Bank an amount equal to such LC Disbursement not later
than 12:00 noon, New York City time, on the date that such LC Disbursement is
made, if the Borrower shall have received notice of such LC Disbursement prior
to 10:00 a.m., New York City time, on such date, or, if such notice has not been
received by the Borrower prior to such time on such date, then not later than
12:00 noon, New York City time, on (i) the Business Day that the Borrower
receives such notice, if such notice is received prior to 10:00 a.m., New York
City time, on the day of receipt, or (ii) the Business Day immediately following
the day that the Borrower receives such notice, if such notice is not received
prior to such time on the day of receipt.

If, prior to the Delayed Draw Commitment Termination Date, the Borrower fails to
make such reimbursement payment when due or an LC Required Delayed Draw Event
has occurred, then the Issuing Bank shall notify the Administrative Agent and
each Delayed Draw Lender of (i) the LC Disbursement, if applicable, (ii) the
amount of payment then due from the Borrower in respect thereof or the amount
required to Cash Collateralize the Letters of Credit in respect of such LC
Required Delayed Draw Event, and (iii) such Lender’s Delayed Draw Applicable
Percentage thereof. The delivery of such notice shall be deemed to be either a
demand for the funding of each Delayed Draw Lender’s participation obligation
under Section 2.06(d) or a request for a borrowing of a Delayed Draw Loan under
Section 2.01(c), in an amount equal to the Required Amount, and the obligation
of the Delayed Draw Lenders to fund such participation or Delayed Draw Loan
shall be absolute and unconditional and shall not be affected by any
circumstance whatsoever including, the conditions set forth in Section 6.02, the
occurrence and continuance of a Default or Event of Default or the reduction or
termination of the Commitments; provided that (i) the Delayed Draw Lenders’
obligations to fund their participation obligations or make the Delayed Draw
Loans to reimburse the Issuing Bank for an LC Disbursement or to Cash
Collateralize Letters of Credit after the occurrence of an LC Required Delay
Draw Event shall not apply to any Letter of Credit to the extent it has been
Cash Collateralized and (ii) no Delayed Draw Lender shall be obligated to fund
any Delayed Draw Loan under this Section 2.06(e) if (A) the amount of such
Delayed Draw Loan would exceed its Delayed Draw Amount at such time or (B) the
aggregate undrawn face amount of Letters of Credit that are Cash Collateralized
would exceed the Cash Collateralization Cap (if such Delayed Draw Loan is to be
used to Cash Collateralize Letters of Credit). Each such funding of
participation obligations or Delayed Draw Loans shall be made without any
offset, abatement, withholding or reduction whatsoever.

If any reimbursement of any LC Disbursement is funded by the Delayed Draw
Lenders pursuant to a Delayed Draw Loan, then, to the extent permitted by
applicable law, the Borrower’s obligation to reimburse the Issuing Bank and the
Lenders’ participation obligations in respect of the applicable Letters of
Credit shall be elevated and replaced by the resulting Delayed Draw Loan.

Each Delayed Draw Lender shall pay to the Administrative Agent its Delayed Draw
Applicable Percentage of the Required Amount in the same manner as provided in

 

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Section 2.04 with respect to Loans made by such Lender (and Section 2.04 shall
apply, mutatis mutandis, to the payment obligations of the Lenders), and the
Administrative Agent shall (i) in the case of an LC Disbursement, promptly pay
to the Issuing Bank the amounts so received by it from the Delayed Draw Lenders
and (ii) in the case of an LC Required Delayed Draw Event, retain such amounts
as Cash Collateral for the outstanding Letters of Credit in accordance with
Section 2.06(j) (which amounts shall be deemed to be Cash Collateral provided
hereunder by the Borrower) provided that any amounts representing accrued and
unpaid fees and expenses owing to the Issuing Bank shall be remitted by the
Administrative Agent to the Issuing Bank. Promptly following receipt by the
Administrative Agent of any payment from the Borrower pursuant to this Section
2.06(e) with respect to an LC Disbursement, the Administrative Agent shall
distribute such payment to the Issuing Bank.

In the event the Issuing Bank shall have been reimbursed by the Delayed Draw
Lenders pursuant to this Section 2.06(e) for all or any portion of any drawing
honored by the Issuing Bank under a Letter of Credit, the Issuing Bank shall
distribute to each Delayed Draw Lender which has paid all amounts payable by it
under this Section 2.06(e) with respect to such honored drawing such Delayed
Draw Lender’s Delayed Draw Applicable Percentage of all payments subsequently
received by the Issuing Bank from the Borrower in reimbursement of such honored
drawing when such payments are received.

(f) Obligations Absolute. The Borrower’s obligation to reimburse LC
Disbursements as provided in Section 2.06(e) shall be absolute, unconditional
and irrevocable, and shall be performed strictly in accordance with the terms of
this Agreement under any and all circumstances whatsoever and irrespective of
(i) any lack of validity or enforceability of any Letter of Credit, any Letter
of Credit Agreement or this Agreement, or any term or provision therein,
(ii) any draft or other document presented under a Letter of Credit proving to
be forged, fraudulent or invalid in any respect or any statement therein being
untrue or inaccurate in any respect, (iii) payment by the Issuing Bank under a
Letter of Credit against presentation of a draft or other document that does not
comply with the terms of such Letter of Credit or any Letter of Credit
Agreement, or (iv) any other event or circumstance whatsoever, whether or not
similar to any of the foregoing, that might, but for the provisions of this
Section 2.06(f), constitute a legal or equitable discharge of, or provide a
right of setoff against, the Borrower’s obligations hereunder. Neither the
Administrative Agent, the Lenders nor the Issuing Bank, nor any of their Related
Parties shall have any liability or responsibility by reason of or in connection
with the issuance or transfer of any Letter of Credit or any payment or failure
to make any payment thereunder (irrespective of any of the circumstances
referred to in the preceding sentence), or any error, omission, interruption,
loss or delay in transmission or delivery of any draft, notice or other
communication under or relating to any Letter of Credit (including any document
required to make a drawing thereunder), any error in interpretation of technical
terms or any consequence arising from causes beyond the control of the Issuing
Bank; provided that the foregoing shall not be construed to excuse the Issuing
Bank from liability to the Borrower to the extent of any direct damages (as
opposed to consequential damages, claims in respect of which are hereby waived
by the Borrower to the extent permitted by applicable law) suffered by the
Borrower that are caused by the Issuing Bank’s gross negligence or willful
misconduct when determining whether drafts and other documents presented under a
Letter of Credit comply with the terms thereof. In furtherance of the foregoing
and without limiting the generality thereof, the parties agree that,

 

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with respect to documents presented which appear on their face to be in
substantial compliance with the terms of a Letter of Credit, an Issuing Bank
may, in its sole discretion, either accept and make payment upon such documents
without responsibility for further investigation, regardless of any notice or
information to the contrary, or refuse to accept and make payment upon such
documents if such documents are not in strict compliance with the terms of such
Letter of Credit.

(g) Disbursement Procedures. The Issuing Bank shall, promptly following its
receipt thereof, examine all documents purporting to represent a demand for
payment under a Letter of Credit. The Issuing Bank shall promptly notify the
Administrative Agent and the Borrower by telephone (confirmed by email) of such
demand for payment and whether the Issuing Bank has made or will make an LC
Disbursement thereunder; provided that any failure to give or delay in giving
such notice shall not relieve the Borrower of its obligation to reimburse the
Issuing Bank with respect to any such LC Disbursement.

(h) Interim Interest. If the Issuing Bank shall make any LC Disbursement, then,
until the Borrower shall have reimbursed the Issuing Bank for such LC
Disbursement (either with its own funds or a Delayed Draw Loan under Section
2.06(e)), the unpaid amount thereof shall bear interest, for each day from and
including the date such LC Disbursement is made to but excluding the date that
the Borrower reimburses such LC Disbursement, at the rate per annum then
applicable to the Loans. Interest accrued pursuant to this Section 2.06(h) shall
be for the account of the Issuing Bank, except that interest accrued on and
after the date of payment by any Lender pursuant to Section 2.06(e) to reimburse
the Issuing Bank shall be for the account of such Lender to the extent of such
payment.

(i) Replacement of the Issuing Bank. The Issuing Bank may be replaced at any
time by written agreement among the Borrower, the Administrative Agent, the
replaced Issuing Bank and the successor Issuing Bank. The Administrative Agent
shall notify the Lenders of any such replacement of the Issuing Bank. At the
time any such replacement shall become effective, the Borrower shall pay all
unpaid fees accrued for the account of the replaced Issuing Bank pursuant to
Section 3.05(b). From and after the effective date of any such replacement,
(i) the successor Issuing Bank shall have all the rights and obligations of the
Issuing Bank under this Agreement with respect to Letters of Credit to be issued
thereafter and (ii) references herein to the term “Issuing Bank” shall be deemed
to refer to such successor or to any previous Issuing Bank, or to such successor
and all previous Issuing Banks, as the context shall require. After the
replacement of the Issuing Bank hereunder, the replaced Issuing Bank shall
remain a party hereto and shall continue to have all the rights and obligations
of the Issuing Bank under this Agreement with respect to Letters of Credit
issued by it prior to such replacement, but shall not be required to issue
additional Letters of Credit.

(j) Cash Collateralization. If (i) any Event of Default shall occur and be
continuing and the Borrower receives notice from the Administrative Agent or the
Majority Lenders demanding that the Borrower Cash Collateralize the outstanding
LC Exposure, (ii) the Borrower is required to Cash Collateralize the excess
attributable to an LC Exposure in connection with any prepayment pursuant to
Section 3.04(b), (iii) the expiration of a Letter of Credit extends beyond the
Delayed Draw Commitment Termination Date pursuant to Section 2.06(c)(ii), (iv)
the Borrower is required to Cash Collateralize a Defaulting Lender’s LC Exposure
pursuant to Section 4.03(c)(iii)(B), (v) the proceeds of a Delayed Draw Loan are

 

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required to be used to Cash Collateralize the outstanding Letters of Credit
hereunder due to the occurrence of an LC Required Delayed Draw Event, (vi) at
any time the LC Exposure exceeds the LC Commitment, (vii) any other event occurs
that requires the Letters of Credit to be Cash Collateralized under the Loan
Documents or (viii) at the election of the Borrower, then the Borrower shall
Cash Collateralize such LC Exposure (or in the case of clause (ii) above, the
amount of the excess) as of such date plus any accrued and unpaid interest
thereon; provided that the obligation to deposit such Cash Collateral shall
become effective immediately, and shall become immediately due and payable,
without demand or other notice of any kind, upon the occurrence of any Event of
Default described in Section 10.01(h) or Section 10.01(i). The Borrower hereby
grants to the Administrative Agent, for the benefit of the Issuing Bank and the
Lenders, an exclusive first priority and continuing perfected security interest
in and Lien on each account in which Borrower has deposited Cash Collateral and
all cash, checks, drafts, certificates and instruments, if any, from time to
time deposited or held in such account, all deposits or wire transfers made
thereto, any and all investments purchased with funds deposited in such account,
all interest, dividends, cash, instruments, financial assets and other Property
from time to time received, receivable or otherwise payable in respect of, or in
exchange for, any or all of the foregoing, and all proceeds, products,
accessions, rents, profits, income and benefits therefrom, and any substitutions
and replacements therefor. The Borrower’s obligation to deposit amounts pursuant
to this Section 2.06(j) shall be absolute and unconditional, without regard to
whether any beneficiary of any Letter of Credit has attempted to draw down all
or a portion of such amount under the terms of a Letter of Credit, and, to the
fullest extent permitted by applicable law, shall not be subject to any defense
or be affected by a right of set-off, counterclaim or recoupment which the
Borrower or any Subsidiary may now or hereafter have against any such
beneficiary, the Issuing Bank, the Administrative Agent, the Lenders or any
other Person for any reason whatsoever. Such deposit shall be held as collateral
securing the payment and performance of the Borrower’s and the Guarantors’
obligations under this Agreement and the other Loan Documents. The
Administrative Agent shall, subject to the terms of the Loan Documents, have
exclusive dominion and control, including the exclusive right of withdrawal,
over such account. Other than any interest earned on the investment of such
deposits of the type described in Sections 9.05c), 9.05)(d), 9.05e), 9.05)f) and
9.05)(g), which investments shall be made at the option of the Administrative
Agent and with the consent of the Borrower, but at the Borrower’s risk and
expense, such deposits shall not bear interest. Interest or profits, if any, on
such investments shall accumulate in such account. Moneys in such account shall
be applied by the Administrative Agent to reimburse the Issuing Bank for LC
Disbursements for which it has not been reimbursed and, to the extent not so
applied, shall be held for the satisfaction of the reimbursement obligations of
the Borrower for the LC Exposure at such time or, if the maturity of the Loans
has been accelerated, amounts in excess of the foregoing shall be applied to
satisfy other obligations of the Borrower and the Guarantors under this
Agreement and the other Loan Documents. If the Borrower is required to provide
Cash Collateral hereunder as a result of the occurrence of an Event of Default
or pursuant to Section 4.03(c)(iii)(B) as a result of a Defaulting Lender, and
the Borrower is not otherwise required to Cash Collateralize the excess
attributable to an LC Exposure in connection with any prepayment pursuant to
Section 3.04(b) or otherwise provide Cash Collateral hereunder, then such amount
(to the extent not applied as aforesaid) shall be returned to the Borrower
within five (5) Business Days after all Events of Default have been cured or
waived or the events giving rise to such Cash Collateralization pursuant to
Section 4.03(c)(iii)(B) have been satisfied or resolved and such Cash Collateral
is no

 

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longer required under Section 4.03(c)(iii)(B). If a Letter of Credit that has
been Cash Collateralized expires, any Cash Collateral with respect to such
Letter of Credit that has not been used to fund an LC Disbursement shall be
returned to the Borrower within five (5) Business Days after the expiration of
such Letter of Credit.

(k) Optional Termination and Reduction of LC Commitment.

(i) The Borrower may at any time terminate, or from time to time reduce, the LC
Commitment; provided that (A) each such termination or reduction thereof shall
be in an amount that is an integral multiple of $1,000,000 and not less than
$5,000,000 and (B) the Borrower shall not terminate or reduce the LC Commitment
if after giving effect to such termination or reduction, the LC Exposure would
exceed the LC Commitment.

(ii) The Borrower shall notify the Issuing Bank of any election to terminate or
reduce the LC Commitment under Section 2.06(j)(i) at least three Business Days
prior to the effective date of such termination or reduction, specifying such
election and the effective date thereof. Promptly following receipt of any
notice, the Issuing Bank shall advise the Administrative Agent and the Lenders
of the contents thereof. Each notice delivered by the Borrower pursuant to this
Section 2.06(j)(ii) shall be irrevocable; provided that a notice of termination
of the LC Commitment delivered by the Borrower may state that such notice is
conditioned upon the effectiveness of other credit facilities or occurrence of
another transaction, in which case such notice may be revoked by the Borrower
(by notice to the Issuing Bank on or prior to the specified effective date) if
such condition is not satisfied. Any termination or reduction of the LC
Commitment shall be permanent and may not be reinstated.

(l) Backstop Letter of Credit. Within two (2) Business Days after each reduction
or termination of the Backstop Letter of Credit, the Issuing Bank shall notify
the Administrative Agent and the Borrower in writing of the amount of such
reduction or termination and the then current face amount of the Backstop Letter
of Credit.

Section 2.07 Termination of Commitments and Reduction of Delayed Draw
Commitments.

(a) Scheduled Termination of Commitments. The Initial Term Loan Commitments
shall terminate on the funding of the Initial Term Loans and unless previously
terminated, the Delayed Draw Commitments shall terminate on the Delayed Draw
Commitment Termination Date.

(b) Optional Termination and Reduction of Delayed Draw Commitments.

(i) The Borrower may at any time terminate, or from time to time reduce, the
Delayed Draw Commitments; provided that each reduction of the Delayed Draw
Commitments shall be in an amount that is an integral multiple of $1,000,000 and
not less than $1,000,000; provided that the Delayed Draw Commitments may not be
reduced below an amount equal to the Threshold Amount at such time.

 

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(ii) The Borrower shall notify the Administrative Agent of any election to
terminate or reduce the Delayed Draw Commitments under Section 2.07(b)(i) at
least three Business Days prior to the effective date of such termination or
reduction, specifying such election and the effective date thereof. Promptly
following receipt of any notice, the Administrative Agent shall advise the
Lenders of the contents thereof. Each notice delivered by the Borrower pursuant
to this Section 2.07(b)(ii) shall be irrevocable; provided that a notice of
termination or reduction of the Delayed Draw Commitments delivered by the
Borrower may state that such notice is conditioned upon the effectiveness of
other credit or debt facilities or the consummation of an acquisition or
divestiture, in which case such notice may be revoked by the Borrower (by notice
to the Administrative Agent on or prior to the specified effective date) if such
condition is not satisfied. Any termination or reduction of the Delayed Draw
Commitments shall be permanent and may not be reinstated. Each reduction of the
Delayed Draw Commitments shall be made ratably among the Delayed Draw Lenders in
accordance with each Delayed Draw Lender’s pro rata share of the Delayed Draw
Commitments.

(iii) The Borrower shall pay to the Administrative Agent, for the ratable
benefit of each holder of a Delayed Draw Commitment which was terminated or
reduced, any Call Protection Amount due as a result of the termination or
reduction (but for the avoidance of doubt, other than as a result from the
occurrence of the Delayed Draw Commitment Termination Date pursuant to clause
(a) of the definition thereof) of such Delayed Draw Commitments by the Borrower
pursuant to this Section 2.07(b) on the date such termination or reduction is
effective.

ARTICLE III

PAYMENTS OF PRINCIPAL AND INTEREST; PREPAYMENTS; FEES

Section 3.01 Repayment of Loans. The Borrower hereby unconditionally promises to
pay to the Administrative Agent for the account of each Lender:

(a) Excess Cash Flow. Commencing with (i) the earlier of (A) the tenth (10th)
Business Day following the delivery of annual financial statements for the
fiscal year ending December 31, 2017 or (B) the tenth (10th) Business Day after
the date such annual financial statements are due and (ii) for each fiscal year
thereafter, on the earlier of (A) the tenth (10th) Business Day following the
delivery of annual financial statements for such fiscal year and (B) the tenth
(10th) Business Day after the date such annual financial statements are due:

(i) 75% of Excess Cash Flow until the Borrower has completed a Debt Equitization
Event; and

(ii) 50% of Excess Cash Flow thereafter;

Principal amounts prepaid pursuant to this Section 3.01(a) shall be allocated
pro rata among Loans outstanding at such time.

The Borrower shall provide the Administrative Agent with written notice of any
payment made under this Section 3.01(a) by 12:00 noon at least one (1) Business
Day prior to the date of such payment.

 

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(b) Termination Date. The then unpaid principal amount of each Loan on the
Termination Date.

(c) Interest, Yield Maintenance and Call Protection Amount. Each payment of
principal made pursuant to this Section 3.01, or any refinancing, substitution
or replacement of any Loans (including pursuant to any amendment or waiver of
this Agreement) that effectuates such a payment, refinancing, substitution or
replacement, shall be accompanied by accrued interest on the Loans at such time
and, to the extent applicable, the Yield Maintenance Amount and the Call
Protection Amount, all of which amounts shall be due and payable on the date of
the effectiveness of such payment, refinancing, substitution or replacement.

Section 3.02 Interest.

(a) Interest. The Loans shall bear interest at the Adjusted LIBO Rate plus the
Applicable Margin, but in no event to exceed the Highest Lawful Rate.

(b) Post-Default Rate. If any Event of Default has occurred and is continuing,
or if any principal of or interest on any Loan or any fee payable by the
Borrower pursuant to Section 3.05 or any Guarantor hereunder or under any other
Loan Document is not paid when due, whether at stated maturity, upon
acceleration or otherwise, then all Loans outstanding, all unreimbursed LC
Disbursements, and any overdue amount in the case of a failure to pay amounts
when due, shall bear interest, after as well as before judgment, at a rate per
annum equal to four percent (4%) plus the respective rates then in effect, but
in no event to exceed the Highest Lawful Rate, until such Event of Default has
been cured or such amount is fully paid, as the case may be.

(c) Interest Payment Dates. Accrued interest on each Loan shall be payable in
arrears on each Interest Payment Date for such Loan and on the Termination Date;
provided that (i) interest accrued pursuant to Section 3.02(b) shall be payable
on demand and (ii) in the event of any repayment or prepayment of any Loan,
accrued interest on the principal amount repaid or prepaid shall be payable on
the date of such repayment or prepayment.

(d) Interest Rate Computations. All interest hereunder shall be computed on the
basis of a year of 360 days, unless such computation would exceed the Highest
Lawful Rate, in which case interest shall be computed on the basis of a year of
365 days (or 366 days in a leap year) and in each case for the initial
Borrowing, including the day of the Borrowing to the Interest Payment Date, and
thereafter from the Interest Payment Date to the next Interest Payment Date. The
applicable Adjusted LIBO Rate or LIBO Rate shall be determined by the
Administrative Agent, and such determination shall be conclusive absent manifest
error, and be binding upon the parties hereto.

Section 3.03 Alternate Rate of Interest. If:

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

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

 

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then the Administrative Agent shall give notice thereof to the Borrower and the
Lenders by e-mail as promptly as practicable thereafter and, until the
Administrative Agent notifies the Borrower and the Lenders that the
circumstances giving rise to such notice no longer exist the interest rate shall
equal an alternative, comparable published interest rate index chosen and
determined, as appropriate, by the Administrative Agent in its reasonable
discretion.

Section 3.04 Prepayments.

(a) Optional Prepayments. Subject to prior written notice in accordance with
Section 3.04(a)(ii), the Borrower shall have the right at any time and from time
to time to pay the Loans prior to the Maturity Date, in whole or in part, in a
minimum aggregate amount of $1,000,000 or any integral multiple of $1,000,000 in
excess thereof or, if less, the remaining balance of the Loans (for the
avoidance of doubt, the terms of this Section 3.04(a) shall apply to any
payments made prior to the Maturity Date, irrespective of whether the Loans have
been accelerated pursuant to Section 10.02(a) prior to the date of such
payment); provided that:

(i) each payment made in accordance with this Section 3.04(a), or any
refinancing, substitution, or replacement of any Loans (including pursuant to
any amendment or waiver of this Agreement) that effectuates an optional payment
pursuant to this Section 3.04(a), shall be accompanied by accrued interest on
the Loans at such time and, to the extent applicable, the Yield Maintenance
Amount and the Call Protection Amount, all of which amounts shall be due and
payable on the date of the effectiveness of such payment, refinancing,
substitution or replacement, and

(ii) the Borrower shall have notified the Administrative Agent in writing (which
may be by e-mail) of any optional prepayment hereunder not later than
10:00 a.m., New York City time, three Business Days before the date of
prepayment. Each such notice shall be irrevocable and shall specify the
prepayment date and the principal amount of the Loans or portion thereof to be
prepaid; provided that a notice of optional prepayment delivered by the Borrower
may state that such notice is conditioned upon the effectiveness of other credit
or debt facilities or the consummation of an acquisition or divestiture, in
which case such notice may be revoked by the Borrower (by notice to the
Administrative Agent on or prior to the specified effective date) if such
condition is not satisfied. Promptly following receipt of any such notice, the
Administrative Agent shall advise the Lenders of the contents thereof. Each
prepayment shall be applied ratably to the Loans.

(b) Mandatory Prepayments.

(i) If the Borrower or any Guarantor Transfers Oil and Gas Properties (or any
Equity Interests in any Guarantor owning such Oil and Gas Properties) or
terminates any Swap Agreement, then the Borrower shall either prepay the Loans
together with interest on the amount so prepaid, in an amount equal to 100% of
the Net

 

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Cash Proceeds of all such Transfers and terminations of Swap Agreements or
notify the Administrative Agent that it intends to reinvests such Net Cash
Proceeds, each within five (5) Business Days after such Transfer; provided that
if the Borrower notifies the Administrative Agent that it plans to reinvest such
Net Cash Proceeds in the acquisition or development of Oil and Gas Properties,
then it shall do so within ninety (90) days after the date of such Transfer
(which 90 day period may be extended by an additional 90 days if the Borrower
has entered within such 90 day period into a letter of intent or other binding
agreement to acquire additional Oil and Gas Properties); provided further, that
(I) such reinvestments do not exceed $20,000,000 in the aggregate during the
term of this Agreement and (II) the PDP Coverage Ratio giving pro forma effect
to such Transfer and reinvestment exceeds 1.85; if the Borrower fails to make
such reinvestment in such period, it shall prepay the Loans together with
interest on the amount so prepaid, in amount equal to 100% of such Net Cash
Proceeds within five (5) Business Days after the expiration of such period. This
Section 3.04(b)(i) shall not apply to Transfers permitted pursuant to
Section 9.12(m).

(ii) If the Borrower or any Guarantor issues any Debt for borrowed money not
permitted hereunder then the Borrower shall (A) prepay the Loans in amount equal
to 100% of the Net Cash Proceeds of such issuance within five (5) Business Days
after such issuance and (B) if any excess remains after prepaying all of the
Loans as a result of an LC Exposure, Cash Collateralize such excess as provided
in Section 2.06(j).

(iii) If the Borrower issues any Equity Interests (other than in connection with
stock option plans or other benefit plans for management or employees of the
Borrower and its Subsidiaries or in connection with a Debt Equitization Event or
to Redeem Series A Preferred Stock in compliance with Section 9.04(a) or Second
Lien Notes or Unsecured Senior Notes in compliance with Section 9.04(b)(i)), the
Borrower shall either prepay the Loans together with interest on the amount so
prepaid, in amount equal to 100% of the Net Cash Proceeds of such issuance or
notify the Administrative Agent that it intends to reinvests such Net Cash
Proceeds, each within five (5) Business Days after such issuance; provided that:

(A) the Borrower shall not be required to make such prepayment if:

(1) such issuance is in connection with a Debt for Equity Interest exchange; or

(2) such issuance is after a Debt Equitization Event, no Default or Event of
Default exists or would occur as a result thereof, the PDP Coverage Ratio after
giving pro forma effect to such issuance and any related prepayments of Debt
exceeds 1.85, and such proceeds are used within 90 days after such issuance to
acquire or develop Oil and Gas Properties; provided if the Borrower has within
such 90 day period entered into a letter of intent or other binding agreement to
acquire additional Oil and Gas Properties, such period shall be extended for an
additional 90 days;

(B) if the Borrower fails to acquire or develop Oil and Gas Properties within
the period set forth in Section 3.04(b)(iii)(A)(2), it shall prepay the Loans
together with interest on the amount so prepaid, in amount equal to 100% of such
Net Cash Proceeds within five (5) Business Days after the expiration of such
period.

 

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(iv) If the Borrower or any Guarantor receives a tax refund, insurance proceeds
or other recoveries for a Casualty Event, in each case, in excess of $1,000,000
per event, but not more than $5,000,000 in the aggregate for any fiscal year
(collectively “Recoveries”), then the Borrower shall either prepay the Loans
together with interest on the amount so prepaid, in amount equal to 100% of such
excess recoveries or notify the Administrative Agent that it intends to invest
such Recoveries, each within five (5) Business Days after such issuance;
provided that:

(A) if the Borrower notifies the Administrative Agent it intends to invest such
Recoveries, it may invest such Recoveries in assets useful in its business as in
effect on the Effective Date if such investment is made within 90 days after its
receipt of such Recoveries; provided if the Borrower has within such 90 day
period entered into a letter of intent or other binding agreement to acquire
assets useful in its business such period shall be extended for an additional 90
days;

(B) if the Borrower fails to invest such Recoveries within the period set forth
in Section 3.04(b)(iv)(A), it shall prepay the Loans together with interest on
the amount so prepaid, in amount equal to 100% of such Recoveries within five
(5) Business Days after the expiration of such period.

(v) All mandatory payments made pursuant to this Section 3.04(b), or any
refinancing, substitution or replacement of any Loans (including pursuant to any
amendment or waiver of this Agreement) that effectuates a mandatory payment
pursuant to this Section 3.04(b), shall be accompanied by accrued interest on
the Loans at such time and, other than with respect to those made pursuant to
Section 3.04(b)(iv) and to the extent applicable, the Yield Maintenance Amount
and the Call Protection Amount, all of which amounts shall be due and payable on
the date of the effectiveness of such payment, refinancing, substitution or
replacement. (For the avoidance of doubt, the terms of this Section 3.04(b)
shall apply to any payments made prior to the Maturity Date, irrespective of
whether the Loans have been accelerated pursuant to Section 10.02(a) prior to
the date of such payment).

(vi) The Borrower shall have notified the Administrative Agent in writing (which
may be by e-mail) of any mandatory prepayment or of its decision to reinvest any
Net Cash Proceeds or Recoveries hereunder not later than 10:00 a.m., New York
City time, one Business Day before the date a prepayment would be required. Each
notice of prepayment or reinvestment shall specify the prepayment date, the
principal amount of each Loan (or portion thereof) to be prepaid or the amount
to be reinvested, as applicable, and the Section, subsection or clause of this
Agreement pursuant to which such prepayment or reinvestment, as applicable, is
being made.

 

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(c) If any excess remains after prepaying all of the Loans under this
Section 3.04, the Borrower shall Cash Collateralize the LC Exposure with such
excess as provided in Section 2.06(j).

(d) Principal amounts prepaid pursuant to this Section 3.04 shall be allocated
pro rata among the Loans.

Section 3.05 Fees.

(a) Commitment Fees. The Borrower agrees to pay to the Administrative Agent for
the account of each Delayed Draw Lender a commitment fee, which shall accrue at
3.5% per annum on the average daily amount of the unused amount of the Delayed
Draw Commitment of such Lender during the period from and including the date of
this Agreement to but excluding the Delayed Draw Commitment Termination Date.
Accrued commitment fees shall be payable in arrears on the last Business Day of
March, June, September and December of each year and on the Delayed Draw
Commitment Termination Date, commencing on the first such date to occur after
the date hereof. All commitment fees shall be computed on the basis of a year of
360 days, unless such computation would exceed the Highest Lawful Rate, in which
case such commitment fees shall be computed on the basis of a year of 365 days
(or 366 days in a leap year), and shall be payable for the actual number of days
elapsed (including the first day but excluding the last day).

(b) Letter of Credit Fees. The Borrower agrees to pay to the Issuing Bank (i) a
fronting fee, which shall accrue at the rate of 2.0% per annum on the average
daily amount of the LC Exposure (excluding any portion thereof attributable to
unreimbursed LC Disbursements) during the period from and including the date of
this Agreement to but excluding the date on which there ceases to be any LC
Exposure; provided that in no event shall such fee be less than $500 during any
applicable quarter and (ii) its standard fees with respect to the issuance,
amendment, renewal or extension of any Letter of Credit or processing of
drawings thereunder. Fronting fees accrued through and including the last
Business Day of March, June, September and December of each year shall be
payable on the later of (A) the third Business Day following such last day or
(B) three Business Days after the Borrower’s receipt of a notice therefore from
the Administrative Agent, commencing on the first such date to occur after the
date of this Agreement; provided that all such fees shall be payable on the
Termination Date and any such fees accruing after the Termination Date shall be
payable on demand. Any other fees payable to the Issuing Bank pursuant to this
Section 3.05(b) shall be payable within 10 days after demand. All fronting fees
shall be computed on the basis of a year of 360 days, unless, if such fees are
deemed interest, such computation would exceed the Highest Lawful Rate, in which
case such fees shall be computed on the basis of a year of 365 days (or 366 days
in a leap year), and shall be payable for the actual number of days elapsed
(including the first day but excluding the last day).

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

 

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(d) Allocation of Fees. The Borrower, the Administrative Agent and each Lender
agree that, with respect to any amendments, waivers, consents or similar matters
with respect to this Agreement (each such, an “Amendment”):

(i) each Non-Defaulting Lender shall be offered the opportunity to agree to such
Amendment;

(ii) any fees offered for such Amendment shall be offered to all of the Lenders
pro rata in respect of their outstanding Loans and unfunded Delayed Draw Term
Loan Commitments at the time of such Amendment; and

(iii) paid to each Lender that executes such Amendment in a timely manner.

ARTICLE IV

PAYMENTS; PRO RATA TREATMENT; SHARING OF SET-OFFS

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

(a) Payments by the Borrower. The Borrower shall make each payment required to
be made by it hereunder (whether of principal, interest, fees or reimbursement
of LC Disbursements or of amounts payable under Section 5.01, Section 5.02, or
otherwise) prior to 12:00 noon, New York City time, on the date when due, in
immediately available funds, without defense, deduction, recoupment, set-off or
counterclaim. Fees, once paid, shall be fully earned and shall not be refundable
under any circumstances. Any amounts received after such time on any date may,
in the discretion of the Administrative Agent, be deemed to have been received
on the next succeeding Business Day for purposes of calculating interest
thereon. All such payments shall be made to the Administrative Agent at its
offices specified in writing by the Administrative Agent from time to time for
such purpose, except payments to be made directly to the Issuing Bank as
expressly provided herein and except that payments pursuant to Section
,5.01Section 5.02, and Section 12.03 shall be made directly to the Persons
entitled thereto. The Administrative Agent shall distribute any such payments
received by it for the account of any other Person to the appropriate recipient
promptly following receipt thereof. If any payment hereunder shall be due on a
day that is not a Business Day, the date for payment shall be extended to the
next succeeding Business Day, and, in the case of any payment accruing interest,
interest thereon shall be payable for the period of such extension. All payments
hereunder shall be made in dollars.

(b) Application of Insufficient Payments. If at any time insufficient funds are
received by and available to the Administrative Agent to pay fully all amounts
of principal, unreimbursed LC Disbursements, interest, Yield Maintenance
Amounts, Call Protection Amounts, and fees then due hereunder, such funds shall
be applied as set forth in Section 10.02(c).

(c) Sharing of Payments by Lenders. If any Lender shall, by exercising any right
of set-off or counterclaim or otherwise, obtain payment in respect of any
principal of or interest on any of its Loans or participations in LC
Disbursements, Yield Maintenance Amounts, or Call Protection Amounts on any of
its Loans resulting in such Lender receiving payment of a

 

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greater proportion of the aggregate amount of its Loans and participations in LC
Disbursements and accrued interest, Yield Maintenance Amounts, and Call
Protection Amounts thereon than the proportion received by any other Lender,
then the Lender receiving such greater proportion shall purchase (for cash at
face value) participations in the Loans and participations in LC Disbursements
of other Lenders to the extent necessary so that the benefit of all such
payments shall be shared by the Lenders ratably in accordance with the aggregate
amount of principal of and accrued interest, Yield Maintenance Amount and Call
Protection Amount on their respective Loans and participations in LC
Disbursements; provided that (i) if any such participations are purchased and
all or any portion of the payment giving rise thereto is recovered, such
participations shall be rescinded and the purchase price restored to the extent
of such recovery, without interest, and (ii) the provisions of this
Section 4.01(c) shall not be construed to apply to any payment made by the
Borrower pursuant to and in accordance with the express terms of this Agreement
or any payment obtained by a Lender as consideration for the assignment of or
sale of a participation in any of its Loans or participations in LC
Disbursements to any assignee or participant, other than to the Borrower or any
Subsidiary or Affiliate thereof (as to which the provisions of this
Section 4.01(c) shall apply). The Borrower consents to the foregoing and agrees,
to the extent it may effectively do so under applicable law, that any Lender
acquiring a participation pursuant to the foregoing arrangements may exercise
against the Borrower rights of set-off and counterclaim with respect to such
participation as fully as if such Lender were a direct creditor of the Borrower
in the amount of such participation.

Section 4.02 Presumption of Payment by the Borrower. Unless the Administrative
Agent shall have received notice from the Borrower prior to the date on which
any payment is due to the Administrative Agent for the account of the Lenders or
the Issuing Bank that the Borrower will not make such payment, the
Administrative Agent may assume that the Borrower has made such payment on such
date in accordance herewith and may, in reliance upon such assumption,
distribute to the Lenders or the Issuing Bank, as the case may be, the amount
due. In such event, if the Borrower has not in fact made such payment, then each
of the Lenders or the Issuing Bank, as the case may be, severally agrees to
repay to the Administrative Agent forthwith on demand the amount so distributed
to such Lender or Issuing Bank with interest thereon, for each day from and
including the date such amount is distributed to it to but excluding the date of
payment to the Administrative Agent, at the greater of the Federal Funds
Effective Rate and a rate determined by the Administrative Agent in accordance
with banking industry rules on interbank compensation.

Section 4.03 Payments and Deductions by the Administrative Agent; Defaulting
Lenders.

(a) Certain Deductions by the Administrative Agent. If any Lender shall fail to
make any payment required to be made by it pursuant to Section 2.04(a),
Section 4.02, or Section 12.03(c), then the Administrative Agent may, in its
sole discretion (notwithstanding any contrary provision hereof), (i) apply any
amounts thereafter received by the Administrative Agent for the account of such
Lender for the benefit of the Administrative Agent or the Issuing Bank to
satisfy such Lender’s obligations to it under such Section until all such
unsatisfied obligations are fully paid, and/or (ii) hold any such amounts in a
segregated account as cash collateral for, and application to, any future
funding obligations of such Lender under any such Section, in the case of each
of clauses (i) and (ii) above, in any order as determined by the Administrative
Agent in its sole discretion.

 

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

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

(i) Fees shall cease to accrue on the unfunded portion of the Delayed Draw
Commitment of such Defaulting Lender pursuant to Section 3.05(a) and the
Defaulting Lender shall not be entitled to any Call Protection Amount on any
termination of its Delayed Draw Commitment while such Lender is a Defaulting
Lender.

(ii) The Delayed Draw Commitment and the Credit Exposure of such Defaulting
Lender shall not be included in determining whether the Majority Lenders have
taken or may take any action hereunder (including any consent to any amendment
or waiver pursuant to Section 12.02); provided that any waiver, amendment or
modification requiring the consent of all Lenders or each affected Lender shall
require the consent of such Defaulting Lender; and provided further that the
Delayed Draw Commitments of a Defaulting Lender may not be increased without the
consent of such Defaulting Lender.

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

(A) all or any part of the LC Exposure of such Defaulting Lender shall be
reallocated among the Non-Defaulting Lenders in accordance with their respective
Delayed Draw Applicable Percentages (for the purposes of such reallocation the
Defaulting Lender’s Delayed Draw Commitment shall be disregarded in determining
the Non-Defaulting Lender’s Delayed Draw Applicable Percentage) but only to the
extent (1) the sum of all Non-Defaulting Lenders’ Delayed Draw Credit Exposures
plus such Defaulting Lender’s LC Exposure does not exceed the total of all Non-
Defaulting

 

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Lenders’ Delayed Draw Commitments, and (2) the sum of each Non-Defaulting
Lender’s Delayed Draw Credit Exposure plus its reallocated share of such
Defaulting Lender’s LC Exposure does not exceed such Non-Defaulting Lender’s
Delayed Draw Commitment; provided that, subject to Section 12.19, no
reallocation hereunder shall constitute a waiver or release of any claim of any
party hereunder against a Defaulting Lender arising from that Lender having
become a Defaulting Lender, including any claim of a Non-Defaulting Lender as a
result of such Non-Defaulting Lender’s increased exposure following such
reallocation;

(B) if the reallocation described in clause (A) above cannot, or can only
partially, be effected, then the Borrower shall within one Business Day
following notice by the Administrative Agent Cash Collateralize for the benefit
of the Issuing Bank such Defaulting Lender’s LC Exposure (after giving effect to
any partial reallocation pursuant to clause (A) above) in accordance with the
procedures set forth in Section 2.06(j) for so long as such LC Exposure is
outstanding;

(C) if the LC Exposure of the Non-Defaulting Lenders is reallocated pursuant to
clause (A) above, then the fees payable to the Lenders pursuant to
Section 3.05(a) shall be adjusted in accordance with such Non-Defaulting
Lenders’ Delayed Draw Applicable Percentages;

(D) if all or any portion of such Defaulting Lender’s LC Exposure is neither
reallocated nor Cash Collateralized pursuant to clause (A) or (B) above, then,
without prejudice to any rights or remedies of the Issuing Bank or any Lender
hereunder, all commitment fees that otherwise would have been payable to such
Defaulting Lender (solely with respect to the portion of such Defaulting
Lender’s Delayed Draw Commitment that was utilized by such LC Exposure) shall be
payable to the Issuing Bank until such LC Exposure is reallocated and/or Cash
Collateralized; and

(iv) So long as such Lender is a Defaulting Lender, the Issuing Bank shall not
be required to issue, amend or increase any Letter of Credit, unless it is
satisfied that the related exposure and the Defaulting Lender’s then outstanding
LC Exposure will be 106.7% covered by the Delayed Draw Commitments of the
Non-Defaulting Lenders and/or Cash Collateral will be provided by the Borrower
in accordance with Section 4.03(c), and participating interests in any such
newly issued or increased Letter of Credit shall be allocated among
Non-Defaulting Lenders in a manner consistent with Section 4.03(c)(iii)(A) (and
such Defaulting Lender shall not participate therein).

If the Administrative Agent, the Borrower and the Issuing Bank each agrees that
a Defaulting Lender has adequately remedied all matters that caused such Lender
to be a Defaulting Lender, and such Lender is no longer a Defaulting Lender,
then the LC Exposure of the Lenders shall be readjusted to reflect the inclusion
of such Lender’s LC Exposure and on such date, if necessary, such Lender shall
purchase at par such of the Delayed Draw Loans and/or participations in Letters
of Credit of the other Lenders as the Administrative Agent shall determine may
be necessary in order for such Lender to hold such Loans in accordance with its
Delayed Draw Applicable Percentage.

 

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Section 4.04 Disposition of Proceeds. The Security Instruments contain a
collateral assignment by the Borrower and the Guarantors unto and in favor of
the Administrative Agent for the benefit of the Lenders of all of the Borrower’s
or each Guarantor’s interest in and to production and all proceeds attributable
thereto which may be produced from or allocated to the Mortgaged Property. The
Security Instruments further provide in general for the application of such
proceeds to the satisfaction of the Secured Obligations and other obligations
described therein and secured thereby. Notwithstanding such assignment contained
in such Security Instruments, unless an Event of Default has occurred and is
continuing, (a) the Administrative Agent and the Lenders agree that they will
neither notify the purchaser or purchasers of such production nor take any other
action to cause such proceeds to be remitted to the Administrative Agent or the
Lenders, but the Lenders will instead permit such proceeds to be paid to the
Borrower and its Subsidiaries and (b) the Lenders hereby authorize the
Administrative Agent to take such actions as may be necessary to cause such
proceeds to be paid to the Borrower and/or such Subsidiaries.

ARTICLE V

INCREASED COSTS; BREAK FUNDING PAYMENTS; TAXES; ILLEGALITY

Section 5.01 Increased Costs.

(a) Changes in Law. If any Change in Law shall:

(i) impose, modify or deem applicable any reserve, special deposit or similar
requirement against assets of, deposits with or for the account of, or credit
extended by, any Lender or the Issuing Bank (except any such reserve requirement
reflected in the Adjusted LIBO Rate); or

(ii) subject any Recipient to any Taxes (other than (A) Indemnified Taxes,
(B) Taxes described in clauses (b) through (d) of the definition of Excluded
Taxes and (C) Connection Income Taxes) on its loans, loan principal, letters of
credit, commitments, or other obligations, or its deposits, reserves, other
liabilities or capital attributable thereto; or

(iii) impose on any Lender, the Issuing Bank or the London interbank market any
other condition affecting this Agreement or Loans made by such Lender;

and the result of any of the foregoing shall be to increase the cost to such
Lender of making or maintaining any Loan (or of maintaining its obligation to
make any such Loan) or of the Issuing Bank of participating in, issuing or
maintaining any Letter of Credit (or of maintaining its obligation to make such
Letter of Credit) or to reduce the amount of any sum received or receivable by
such Lender in connection with any such Loan or the Issuing Bank (whether of
principal, interest or otherwise) or the Issuing Bank with respect to such
Letter of Credit, then the Borrower will pay to such Lender or the Issuing Bank,
as applicable, such additional amount or amounts as will compensate such Lender
or the Issuing Bank, as applicable, for such additional costs incurred or
reduction suffered.

(b) Capital Requirements. If any Lender or the Issuing Bank determines that any
Change in Law regarding capital or liquidity requirements has or would have the
effect of

 

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reducing the rate of return on such Lender’s or the Issuing Bank’s capital or on
the capital of such Lender’s or the Issuing Bank’s holding company, if any, as a
consequence of this Agreement or the Loans made by, or participations in Letters
of Credit held by, such Lender, or the Letters of Credit issued by the Issuing
Bank, to a level below that which such Lender or the Issuing Bank or such
Lender’s or the Issuing Bank’s holding company could have achieved but for such
Change in Law (taking into consideration such Lender’s or the Issuing Bank’s
policies and the policies of such Lender’s or the Issuing Bank’s holding company
with respect to capital adequacy or liquidity), then from time to time the
Borrower will pay to such Lender or the Issuing Bank, as the case may be, such
additional amount or amounts as will compensate such Lender or the Issuing Bank
or such Lender’s or the Issuing Bank’s holding company for any such reduction
suffered.

(c) Certificates. A certificate of a Lender or the Issuing Bank setting forth in
reasonable detail the computation of the amount or amounts (as determined
reasonably and in good faith) necessary to compensate such Lender or the Issuing
Bank or its holding company, as the case may be, as specified in Section 5.01(a)
or b) shall be delivered to t)he Borrower and shall be conclusive absent
manifest error. The Borrower shall pay such Lender or the Issuing Bank, as the
case may be, the amount shown as due on any such certificate within 10 days
after receipt thereof. Each such certificate shall contain the representation
and warranty of the Person sending it that the Borrower is being treated no less
favorably with respect to amounts being charged under Section 5.01(a) and
b) than are other similarly situated customers of such ) Lenders or Issuing
Bank.

(d) Effect of Failure or Delay in Requesting Compensation. Failure or delay on
the part of any Lender or the Issuing Bank to demand compensation pursuant to
this Section 5.01 shall not constitute a waiver of such Lender’s or the Issuing
Bank’s right to demand such compensation; provided that the Borrower shall not
be required to compensate a Lender or the Issuing Bank pursuant to this
Section 5.01 for any increased costs or reductions incurred more than 180 days
prior to the date that such Lender or the Issuing Bank, as the case may be,
notifies the Borrower of the Change in Law giving rise to such increased costs
or reductions and of such Lender’s or the Issuing Bank’s intention to claim
compensation therefor; provided further that, if the Change in Law giving rise
to such increased costs or reductions is retroactive, then the 180-day period
referred to above shall be extended to include the period of retroactive effect
thereof.

Section 5.02 Taxes.

(a) Defined Terms. For purposes of this Section 5.02, the term “Lender” includes
any “Issuing Bank” and the term “applicable law” includes FATCA.

(b) Payments Free of Taxes. Any and all payments by or on account of any
obligation of the Borrower or any Guarantor under any Loan Document shall be
made free and clear of and without deduction or withholding for any Taxes,
except as required by applicable law. If any applicable law (as determined in
the good faith discretion of an applicable Withholding Agent) requires the
deduction or withholding of any Tax from any such payment by a Withholding
Agent, then the applicable Withholding Agent shall be entitled to make such
deduction or withholding and shall timely pay the full amount deducted or
withheld to the relevant Governmental Authority in accordance with applicable
law and, if such Tax is an

 

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Indemnified Tax, then the sum payable by the Borrower or a Guarantor, as
applicable, shall be increased as necessary so that after such deduction or
withholding has been made (including such deductions and withholdings applicable
to additional sums payable under this Section) the applicable Recipient receives
an amount equal to the sum it would have received had no such deduction or
withholding been made.

(c) Payment of Other Taxes by the Borrower. The Borrower shall pay to the
relevant Governmental Authority in accordance with applicable law, or at the
option of the Administrative Agent reimburse it for the payment of, any Other
Taxes.

(d) Indemnification by the Borrower. The Borrower shall indemnify each
Recipient, within 10 days after written demand therefor, for the full amount of
any Indemnified Taxes paid by such Recipient on or with respect to any payment
by or on account of any obligation of the Borrower or any Guarantor hereunder or
in connection with any Loan Document (including Indemnified Taxes or Other Taxes
imposed or asserted on or attributable to amounts payable under this
Section 5.02) and any penalties, interest and reasonable expenses respect
thereto, whether or not such Indemnified Taxes were arising therefrom or with
correctly or legally imposed or asserted by the relevant Governmental Authority.
A certificate as to the amount of such payment or liability under this
Section 5.02 shall be delivered to the ower by a Lender (with a copy to the
Administrative Agent) or by the AdministrativBorre Agent on its own behalf or on
behalf of a Lender, and any such certificate shall be conclusive absent manifest
error.

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

(f) Status of Lenders.

(i) Any Lender that is entitled to an exemption from or reduction of withholding
tax with respect to payments under this Agreement or any other Loan Document
shall deliver to the Borrower and the Administrative Agent, at the time or times
prescribed by applicable law or reasonably requested by the Borrower or the
Administrative Agent, such properly completed and executed documentation
prescribed by applicable law or reasonably requested by the Borrower or the
Administrative Agent as will permit such payments to be made without withholding
or at a reduced rate of withholding. In addition, any Lender, if reasonably
requested by the Borrower or the Administrative Agent, shall deliver such other
documentation prescribed by applicable law or reasonably requested by the
Borrower or the Administrative Agent as will enable the Borrower or the
Administrative Agent to determine whether or not such Lender is subject to
backup withholding or information reporting requirements. Notwithstanding
anything to the contrary in the preceding two sentences, the completion,
execution and submission of such documentation (other than such documentation
set forth in Section 5.02(f)(ii)(A), Section 5.02(f)(ii)(B) and
Section 5.02(f)(ii)(D) below) shall not be

 

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required if in the Lender’s judgment such completion, execution or submission
would subject such Lender to any material unreimbursed cost or expense or would
materially prejudice the legal or commercial position of such Lender.

(ii) Without limiting the generality of the foregoing:

(A) any Lender that is a U.S. Person shall deliver to the Borrower and the
Administrative Agent on or prior to the date on which such Lender becomes a
Lender under this Agreement (and from time to time thereafter at the time or
times prescribed by applicable law or upon the reasonable request of the
Borrower or the Administrative Agent), executed originals of IRS Form W-9 (or
any successor form) certifying that such Lender is exempt from U.S. Federal
backup withholding tax;

(B) any Foreign Lender shall, to the extent it is legally entitled to do so,
deliver to the Borrower and the Administrative Agent (in such number of copies
as shall be requested by the recipient) on or prior to the date on which such
Foreign Lender becomes a Lender under this Agreement (and from time to time
thereafter at the time or times prescribed by applicable law or upon the
reasonable request of the Borrower or the Administrative Agent), whichever of
the following is applicable:

(1) in the case of a Foreign Lender claiming the benefits of an income tax
treaty to which the United States is a party (x) with respect to payments of
interest under any Loan Document, executed originals of IRS Form W-8BEN or IRS
W-8BEN-E, as applicable (or any successor form) establishing an exemption from,
or reduction of, U.S. federal withholding Tax pursuant to the “interest” article
of such tax treaty and (y) with respect to any other applicable payments under
any Loan Document, IRS Form W-8BEN or IRS W-8BEN-E, as applicable (or any
successor form) establishing an exemption from, or reduction of, U.S. federal
withholding Tax pursuant to the “business profits” or “other income” article of
such tax treaty;

(2) executed originals of IRS Form W-8ECI (or any successor form);

(3) in the case of a Foreign Lender claiming the benefits of the exemption for
portfolio interest under Section 881(c) of the Code, (x) a certificate
substantially in the form of Exhibit F-1 to the effect that (A) such Foreign
Lender is not a “bank” within the meaning of Section 881(c)(3)(A) of the Code, a
“10 percent shareholder” of the Borrower within the meaning of
Section 881(c)(3)(B) of the Code, or a “controlled foreign corporation”
described in Section 881(c)(3)(C) of the Code and (B) the interest payments in
question are not effectively connected with a U.S. trade or business conducted
by such Foreign Lender or are effectively connected but are not includible in
the Foreign Lender’s gross income for U.S. federal income tax purposes under an
income tax treaty (a “U.S. Tax Compliance Certificate”) and (y) executed
originals of IRS Form W-8BEN or IRS W-8BEN-E, as applicable (or any successor
form); or

 

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(4) to the extent a Foreign Lender is not the beneficial owner, executed
originals of IRS Form W-8IMY (or any successor form), accompanied by a
Form W-8ECI (or any successor form), W-8BEN or W-8BEN-E, as applicable (or any
successor form), a U.S. Tax Compliance Certificate substantially in the form of
Exhibit F-2 or Exhibit F-3, Form W-9 (or any successor form), and/or other
certification documents from each beneficial owner, as applicable; provided that
if the Foreign Lender is a partnership and one or more direct or indirect
partners of such Foreign Lender are claiming the portfolio interest exemption,
such Foreign Lender may provide a U.S. Tax Compliance Certificate substantially
in the form of Exhibit F-4 on behalf of each such direct or indirect partner;

(C) any Foreign Lender shall, to the extent it is legally entitled to do so,
deliver to the Borrower and the Administrative Agent (in such number of copies
as shall be requested by the recipient) on or prior to the date on which such
Foreign Lender becomes a Lender under this Agreement (and from time to time
thereafter at the time or times prescribed by applicable law or upon the
reasonable request of the Borrower or the Administrative Agent), executed
originals of any other form prescribed by applicable law as a basis for claiming
exemption from or a reduction in U.S. federal withholding Tax, duly completed,
together with such supplementary documentation as may be prescribed by
applicable law to permit the Borrower or the Administrative Agent to determine
the withholding or deduction required to be made; and

(D) if a payment made to a Lender under any Loan Document would be subject to
U.S. federal withholding Tax imposed by FATCA if such Lender were to fail to
comply with the applicable reporting requirements of FATCA (including those
contained in Section 1471(b) or 1472(b) of the Code, as applicable), such Lender
shall deliver to the Borrower and the Administrative Agent at the time or times
prescribed by law and at such time or times reasonably requested by the Borrower
or the Administrative Agent such documentation prescribed by applicable law
(including as prescribed by Section 1471(b)(3)(C)(i) of the Code) and such
additional documentation reasonably requested by the Borrower or the
Administrative Agent as may be necessary for the Borrower and the Administrative
Agent to comply with their obligations under FATCA and to determine that such
Lender has complied with such Lender’s obligations under FATCA or to determine
the amount to deduct and withhold from such payment. Solely for purposes of this
clause (D), “FATCA” shall include any amendments made to FATCA after the date of
this Agreement.

Each Lender agrees that if any form or certification it previously delivered
expires or becomes obsolete or inaccurate in any respect, it shall update such
form or certification or promptly notify the Borrower and the Administrative
Agent in writing of its legal inability to do so.

(g) Treatment of Certain Refunds. If any party determines, in its sole
discretion exercised in good faith, that it has received a refund of any Taxes
as to which it has been indemnified pursuant to this Section 5.02 (including by
the payment of additional amounts pursuant to thisSection 5.02), it shall pay to
the indemnifying party an amount nly to the extent of indemnity payments made
under this Section equal to such refund (but o

 

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with respect tothe Taxes giving rise to such refund), net of all out-of-pocket
expenses (including Taxes) of such indemnified party and without interest (other
than any interest paid by the relevant Governmental Authority with respect to
such refund). Such indemnifying party, upon the request of such indemnified
party, shall repay to such indemnified party the amount paid over pursuant to
this paragraph ther charges imposed g) (plus any penalties, interest or o) by
the relevant Governmental Authority) if such indemnified party is required to
repay such refund to such Governmental Authority. Notwithstanding anything to
the contrary in this paragraph be required to pay any amount to an g), in no
event will the indemnified party) indemnifying party pursuant to this paragraph
g) the payment of which would place the ) Tax position than the indemnified
party -indemnified party in a less favorable net after demnification and giving
rise to such refund had would have been in if the Tax subject to in not been
deducted, withheld orotherwise imposed and the indemnification payments or
additional amounts with respect to such Tax had never been paid. This paragraph
shall not be construed to require any indemnified party to make available its
Tax returns (or any other information relating to its Taxes that it deems
confidential) to the indemnifying party or any other Person.

(h) Indemnification by the Lenders. Each Lender shall severally indemnify the
Administrative Agent, within 10 days after demand therefor, for (i) any
Indemnified Taxes attributable to such Lender (but only to the extent that the
Borrower has not already indemnified the Administrative Agent for such
Indemnified Taxes and without limiting the obligation of the Borrower to do so),
(ii) any Taxes attributable to such Lender’s failure to comply with the
provisions of Section 12.04(c)(ii) relating to the maintenance of a Participant
Register and (iii) any Excluded Taxes attributable to such Lender, in each case,
that are payable or paid by the Administrative Agent in connection with any Loan
Document, and any reasonable expenses arising therefrom or with respect thereto,
whether or not such Taxes were correctly or legally imposed or asserted by the
relevant Governmental Authority. A certificate as to the amount of such payment
or liability delivered to any Lender by the Administrative Agent shall be
conclusive absent manifest error. Each Lender hereby authorizes the
Administrative Agent to set off and apply any and all amounts at any time owing
to such Lender under any Loan Document or otherwise payable by the
Administrative Agent to the Lender from any other source against any amount due
to the Administrative Agent under this Section 5.02(h).

(i) Effect of Failure or Delay in Requesting Indemnification. Failure or delay
on the part of the Administrative Agent, any Lender or the Issuing Bank to
demand indemnification pursuant to this Section 5.02 shall not constitute a
waiver of the Administrative Agent’s, such Lender’s or the Issuing Bank’s right
to demand such indemnification; provided that the Borrower shall not be required
to indemnify the Administrative Agent, a Lender or the Issuing Bank pursuant to
this Section 5.02 for any Indemnified Taxes or Other Taxes incurred more than
180 days prior to the date that the Administrative Agent, such Lender or the
Issuing Bank, as the case may be, notifies the Borrower of the event giving rise
to such Indemnified Taxes or Other Taxes and of the Administrative Agent’s, such
Lender’s or the Issuing Bank’s intention to claim indemnification therefor;
provided further that, if the event giving rise to indemnification is
retroactive, then the 180-day period referred to above shall be extended to
include the period of retroactive effect thereof.

 

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Section 5.03 Mitigation Obligations; Replacement of Lenders.

(a) Designation of Different Lending Office. If any Lender or the Issuing Bank
requests compensation under Section 5.01, or if the Borrower is required to pay
any t to any Lender or any Governmental Authority for the account of any
additional amoun Lender pursuant to Section 5.02, then such Lender shall use
reasonable efforts to designate a different lending office for funding or
booking its Loans hereunder or to assign its rights ,and obligations hereunder
to another of its offices, branches or affiliates, if in the judgment of such
Lender, such designation or assignment (i) would eliminate or reduce amounts
payable pursuant to Section 5.01 or Section 5.02, as the case may be, in the
future, and (ii) would not subject such Lender to any unreimbursed cost or
expense and would not otherwise be disadvantageous to such Lender. The Borrower
hereby agrees to pay all reasonable costs and expenses incurred by any Lender in
connection with any such designation or assignment.

(b) Replacement of Lenders. If (i) any Lender or the Issuing Bank requests
compensation under Section 5.01, (ii) the Borrower is required to pay any
additional amount uthority for the account of any to any Lender, the Issuing
Bank or any Governmental A Lender or the Issuing Bank pursuant to Section 5.02,
(iii) any Lender becomes a Defaulting Lender or the Issuing Bank defaults in its
obligation to issue Letters of Credit hereunder, ny proposed amendment, waiver
or modification of or (iv) any Lender does not consent to a any provision of
this Agreement or any other Loan Document that requires the consent of “each
Lender” or “each Lender directly affected thereby” with respect to which the
consent of the Required Lenders has been obtained, then the Borrower may, at its
sole expense and effort, upon notice to such Lender (or the Issuing Bank) and
the Administrative Agent, require such Lender (or the Issuing Bank) to assign
and delegate, without recourse (in accordance with and subject to the
restrictions contained in Section 12.04(b)), all its interests, rights and
obligations under this Agreement to an assignee that shall assume such
obligations (which assignee may be another Lender, if a Lender accepts such
assignment); provided that (i) such Lender shall have received payment of an
amount equal to (A) the outstanding principal of its Loans (at the greater of
par or market at such time as published by Bloomberg or if Bloomberg is no
longer published any successor reasonably chosen by the Administrative Agent)
and participations in LC Disbursements, (B) accrued interest thereon,
(C) accrued fees, (D) the Yield Maintenance Amount and Call Protection Amounts
which would be due if such Loans were prepaid on such date (other than such
amounts that would be due on the undrawn Delayed Draw Commitment of a Defaulting
Lender) and (E) all other amounts payable to it hereunder, from the assignee (to
the extent of such outstanding principal and accrued interest and fees) or the
Borrower (in the case of all other amounts) and (ii) in the case of any such
assignment resulting from a claim for compensation under Section 5.01 or
payments required to be made pursuant to Section 5.02, such assignment will
result in a reduction in such compensation or payments. A Lender shall not be
required to make any such assignment and delegation if, prior thereto, as a
result of a waiver by such Lender or otherwise, the circumstances entitling the
Borrower to require such assignment and delegation cease to apply.
Notwithstanding the foregoing, a Lender shall not be required to make any such
assignment and delegation if such Lender or any Affiliate of such Lender is
party to an outstanding Swap Agreement with the Borrower or any Subsidiary,
unless on or prior thereto, all such Swap Agreements have been terminated or
novated to another Person and such Lender (or its Affiliate) shall have received
payment of all amounts, if any, payable to it in connection with such
termination or novation. Each Lender agrees that if it is replaced pursuant to
this Section 5.03(b), it shall execute and deliver to the Administrative Agent
an Assignment and Assumption to evidence such sale and purchase and shall
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Administrative Agent any Note (if the assigning Lender’s Loans are evidenced by
a Note) subject to such Assignment and Assumption; provided that the failure of
any Lender replaced pursuant to this Section 5.03(b) to execute an Assignment
and Assumption or deliver such Note after a period of ten (10) Business Days
after having receiving such notice shall not render such sale and purchase (and
the corresponding assignment) invalid and such assignment shall be recorded in
the Register and the Note shall be deemed cancelled upon such failure. Each
Lender hereby irrevocably appoints the Administrative Agent (such appointment
being coupled with an interest) as such Lender’s attorney-in-fact, with full
authority in the place and stead of such Lender and in the name of such Lender,
from time to time in the Administrative Agent’s discretion, with prior written
notice to such Lender, to take any action and to execute any such Assignment and
Assumption or other instrument that the Administrative Agent may deem reasonably
necessary to carry out the provisions of this Section 5.03(b).

ARTICLE VI

CONDITIONS PRECEDENT

Section 6.01 Effective Date. The obligations of the Lenders to make Loans and of
the Issuing Bank to issue Letters of Credit hereunder shall not become effective
until the date on which each of the following conditions is satisfied (or waived
in accordance with Section :(12.02

(a) The Administrative Agent and the Lenders shall have received all commitment,
arrangement, upfront and agency fees and all other fees and amounts due and
payable on or prior to the Effective Date, including, to the extent invoiced,
reimbursement or payment of all out-of-pocket expenses required to be reimbursed
or paid by the Borrower hereunder (including the fees and expenses of Simpson
Thacher & Bartlett LLP, counsel to the Administrative Agent).

(b) The Administrative Agent shall have received a certificate of the Secretary
or an Assistant Secretary of the Borrower and each Guarantor setting forth
(i) resolutions of its board of directors or other appropriate governing body
with respect to the authorization of the Borrower or such Guarantor to execute
and deliver the Loan Documents to which it is a party and to enter into the
transactions contemplated in those documents, (ii) the officers of the Borrower
or such Guarantor (A) who are authorized to sign the Loan Documents to which the
Borrower or such Guarantor is a party and (B) who will, until replaced by
another officer or officers duly authorized for that purpose, act as its
representative for the purposes of signing documents and giving notices and
other communications in connection with this Agreement and the transactions
contemplated hereby, (iii) specimen signatures of such authorized officers, and
(iv) the Organizational Documents of the Borrower and such Guarantor, certified
as being true and complete. The Administrative Agent and the Lenders may
conclusively rely on such certificate until the Administrative Agent receives
notice in writing from the Borrower to the contrary.

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

 

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(d) The Administrative Agent shall have received an Effective Date certificate
which shall be substantially in the form of Exhibit C-1, duly and properly
executed by a Responsible Officer and dated as of the Effective Date.

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

(f) The Administrative Agent shall have received duly executed Notes payable to
each Lender requesting a note in a principal amount equal to its Initial Term
Loan Commitment and Delayed Draw Commitment, as applicable, dated as of the date
hereof.

(g) The Administrative Agent shall have received from each party thereto duly
executed counterparts (in such number as may be requested by the Administrative
Agent) of the Security Instruments, including the Guaranty Agreement and the
other Security Instruments described on Exhibit D. In connection with the
execution and delivery of the Security Instruments, the Administrative Agent
shall:

(i) be reasonably satisfied that the Security Instruments create first priority,
perfected Liens (subject only to Excepted Liens identified in clauses (a) to (d)
and (f) of the definition thereof, but subject to the provisos at the end of
such definition) on at least 95% of the total value of the Oil and Gas
Properties evaluated in the Initial Reserve Report (including not less than 95%
of such Properties that are classified as Proved Developed Producing) including
Liens on the Oil and Gas Properties mortgaged pursuant to the Existing Credit
Agreement;

(ii) to the extent such Equity Interests are certificated, have received
certificates, together with undated, blank stock powers for each such
certificate, representing all of the issued and outstanding Equity Interests of
each of the Guarantors; and

(iii) be reasonably satisfied that it has a Lien on all Property of the Borrower
and the Guarantors, as contemplated by the parties hereto.

(h) The Administrative Agent and the Collateral Agent shall have received an
opinion of (i) Jones Day L.L.P., counsel to the Borrower, in form and substance
satisfactory to them, and (ii) local counsel in each state in which a mortgage
or deed of trust is filed naming the Collateral Agent as the secured party and
any other jurisdictions reasonably requested by the Administrative Agent,
substantially in form and substance satisfactory to them.

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

(j) The Administrative Agent shall have received title information as the
Administrative Agent may reasonably require satisfactory to the Administrative
Agent setting forth the status of title to 90% of the Oil and Gas Properties
evaluated in the Initial Reserve Report (including not less than 94% of such
Properties that are classified as Proved Developed Producing).

 

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(k) The Administrative Agent shall be reasonably satisfied with the
environmental condition of the Oil and Gas Properties of the Borrower and its
Subsidiaries.

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

(m) The Administrative Agent shall have received the financial statements
referred to in Section 7.04(a) and the Initial Reserve Report accompanied by a
certificate covering the matters described in Section 8.12(c).

(n) The Administrative Agent shall have received appropriate UCC search results
reflecting no prior Liens encumbering the Properties of the Borrower and the
Guarantors, other than those being assigned or released on or prior to the
Effective Date or Liens permitted by .Section 9.03

(o) The Administrative Agent and the Lenders shall have received, and be
reasonably satisfied in form and substance with, all documentation and other
information required by bank regulatory authorities under applicable
“know-your-customer” and anti-money laundering rules and regulations, including
the USA Patriot Act and a duly executed W-9 (or such other applicable IRS tax
form) of the Borrower.

(p) The Administrative shall have completed a satisfactory due diligence review
of the Loan Parties including business, management background checks, and the
capital structure.

(q) Upon giving effect to the Transactions, the PDP Coverage Ratio shall equal
or exceed 2.25 and the Borrower shall be in compliance with the other
requirements of Section 9.01.

(r) The Administrative Agent shall be satisfied that the Borrower has entered
into, or is concurrently entering into, the Swap Agreements required by
Section 8.20 as of the Effective Date.

(s) Immediately after giving effect to the Transactions, the Borrower shall have
unrestricted cash of not less than $19,000,000.

(t) The Borrower has delivered a written notice to the Administrative Agent and
Wilmington Savings Fund Society, FSB (“Wilmington”), as Second Lien Agent (as
such term is defined in the Second Lien Intercreditor Agreement) designating
this Agreement as a “Refinancing” of the Existing Credit Agreement for all
purposes under the Second Lien Intercreditor Agreement.

(u) The Collateral Agent shall have executed and sent a notice to Wilmington
under the Second Lien Intercreditor Agreement pursuant to which the
Administrative Agent

 

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notifies Wilmington that it replaces Royal Bank of Canada as “First Lien RBL
Agent” for all purposes under the Second Lien Intercreditor Agreement and
provides notice details to Wilmington for the purposes of Section 8.9 of the
Second Lien Intercreditor Agreement.

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

The Administrative Agent shall notify the Borrower and the Lenders of the
Effective Date, and such notice shall be conclusive and binding. Notwithstanding
the foregoing, the obligations of the Lenders to make Loans and of the Issuing
Bank to issue Letters of Credit hereunder shall not become effective unless each
of the foregoing conditions is satisfied (or waived pursuant to Section 12.02)
at or prior to 3:00 p.m., New York City time, on April ,and, in the event such
conditions are not so satisfied or waived) 2017 ,30the Commitments shall
terminate at such time).

Without limiting the generality of the provisions of for purposes of
,1.04Section 1 determining compliance with the conditions specified in
thisSection 6.01, each Lender that has signed this Agreement shall be deemed to
have consented to, approved or accepted or to be satisfied with, each document
or other matter required thereunder to be consented to or approved by or
acceptable or satisfactory to a Lender unless the Administrative Agent shall
have received written notice from such Lender prior to the proposed Effective
Date specifying its objection thereto.

Section 6.02 Each Credit Event. The obligation of each Lender to make a Loan
(including the initial funding, but excluding any Delayed Draw Loan made
pursuant to Section 2.01(c)), and of the Issuing Bank to issue, increase, renew
or extend any Letter of Credit is subject to the satisfaction of the following
conditions:

(a) At the time of and immediately after giving effect to such Loan or the
issuance, increase, renewal or extension of such Letter of Credit, as
applicable, no Default or Event of Default shall have occurred and be
continuing.

(b) The representations and warranties of the Borrower and the Guarantors set
forth in this Agreement and in the other Loan Documents shall be true and
correct on and as of the date of such Loan or the date of issuance, increase,
renewal or extension of such Letter of Credit, as applicable, except to the
extent any such representations and warranties are expressly limited to an
earlier date, in which case, on and as of the date of such Loan or the date of
issuance, amendment, renewal or extension of such Letter of Credit, as
applicable, such representations and warranties shall continue to be true and
correct as of such specified earlier date and except for purposes of this
Section 6.02, the representations and warranties b) shall be deemed to refer to
the fiscal year end date of the most )4contained in Section 7.0 .(recent
financial statement delivered pursuant to Section 8.01(a

(c) The making of each Loan or the issuance, increase, renewal or extension of
such Letter of Credit, as applicable, would not conflict with, or cause any
Lender or the Issuing Bank to violate or exceed, any applicable Governmental
Requirement, and no Change in Law shall have occurred, and no litigation shall
be pending or threatened, which does or, with

 

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respect to any threatened litigation, seeks to, enjoin, prohibit or restrain,
the making or repayment of any Loan, the issuance, amendment, renewal, extension
or repayment of any Letter of Credit or any participations therein or the
consummation of the transactions contemplated by this Agreement or any other
Loan Document.

(d) After giving pro forma effect to such Delayed Draw Loans and the application
of the proceeds thereof, the Borrower shall be in compliance with Section 9.01
(including 9.01(a) as of the date of the draw even if prior to December 31,
2017) and have unrestricted cash and/or unused Delayed Draw Commitments, of at
least $10,000,000.

(e) For any Delayed Draw Loan made prior to the date that is 30 days prior to
the Delayed Draw Commitment Termination Date, the Consolidated Cash Balance and
the pro forma Consolidated Cash Balance after giving effect to (i) such Delayed
Draw Loans, and (ii) if such Delayed Draw Loans will be used to fund the
acquisition of additional Oil and Gas Properties for which the Borrower or a
Guarantor has executed a binding agreement, such use of the proceeds thereof, as
of the end of the Business Day on which such Borrowing will be funded, in each
case, shall not exceed $20,000,000.

(f) Such Delayed Draw Loans together with the sum of (i) the aggregate principal
amount of all outstanding Loans and LC Exposure, (ii) the amount of the Yield
Maintenance Amount calculated as of such date on the principal amount of all
outstanding Loans, LC Exposure and such proposed Delayed Draw Loans and
(iii) the amount of the Call Protection Amount calculated as of such date on the
principal amount of all outstanding Loans, LC Exposure and such proposed Delayed
Draw Term Loans does not constitute Excess First Lien RBL Obligations or any
similar or corresponding term in any other applicable intercreditor agreements;

(g) The receipt by the Administrative Agent of a Borrowing Request in accordance
with Section 2.03(b) or a request by the Issuing Bank for a Letter of Credit in
each instance the certificate accordance with Section 2.06(b), as applicable,
and in .referenced in Section 6.02(h) below

(h) After the Effective Date, the Borrower shall have delivered a certificate to
the Administrative Agent and, for the issuance, increase, renewal or extension
of a Letter of Credit, the Issuing Bank (excluding any Delayed Draw Loan made
pursuant to Section 2.01(c)), representing and warranting on the date thereof to
the matters specified in Section 6.02(a), b), ) d), (e) (but only with respect
to a Delayed Draw Loan) and).(f)

ARTICLE VII

REPRESENTATIONS AND WARRANTIES

The Borrower represents and warrants to the Lenders that:

Section 7.01 Organization; Powers. Each of the Borrower and the Subsidiaries is
duly organized, validly existing and in good standing under the laws of the
jurisdiction of its organization, has all corporate or equivalent requisite
power and authority, and has all material governmental licenses, authorizations,
consents and approvals necessary, to own its assets and to carry on its business
as now conducted, and is qualified to do business in, and is in good standing

 

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in, every jurisdiction where such qualification is required, except where
failure to have such power, authority, licenses, authorizations, consents,
approvals and qualifications could not reasonably be expected to have a Material
Adverse Effect.

Section 7.02 Authority; Enforceability. The Transactions are within the
Borrower’s and each Guarantor’s corporate or equivalent powers and have been
duly authorized by all necessary corporate or equivalent action including any
action required to be taken by any other Person, whether interested or
disinterested, in order to ensure the due authorization of the Transactions.
Each Loan Document to which the Borrower and each Guarantor is a party has been
duly executed and delivered by the Borrower and such Guarantor and constitutes a
legal, valid and binding obligation of the Borrower and such Guarantor, as
applicable, enforceable in accordance with its terms, subject to applicable
bankruptcy, insolvency, reorganization, moratorium or other laws affecting
creditors’ rights generally and subject to general principles of equity,
regardless of whether considered in a proceeding in equity or at law.

Section 7.03 Approvals; No Conflicts. The Transactions (a) do not require, as a
condition thereto, any consent or approval of, registration or filing with, or
any other action by, any Governmental Authority or any other third Person
(including members, shareholders or any class of directors or managers, whether
interested or disinterested, of the Borrower or any other Person) to be obtained
or made by the Borrower or any Subsidiary pursuant to any statutory law or
regulation applicable to it, nor is any such consent, approval, registration,
filing or other action necessary for the validity or enforceability of any Loan
Document against the Borrower or any Guarantor as herein provided or the
consummation of the transactions contemplated thereby, except such as have been
obtained or made and are in full force and effect other than (i) the recording
and filing of the Security Instruments as required by this Agreement and
(ii) those third party approvals or consents which, if not made or obtained,
would not cause a Default hereunder, could not reasonably be expected to have a
Material Adverse Effect or do not have an adverse effect on the enforceability
of the Loan Documents, (b) will not violate any applicable law or regulation or
the Organizational Documents of the Borrower or any Subsidiary or any order of
any Governmental Authority applicable to the Borrower or any Subsidiary,
(c) will not violate or result in a default under any indenture or other
material instrument binding upon the Borrower or any Subsidiary or its
Properties, give rise to a right thereunder to require any payment to be made by
the Borrower or such Subsidiary or to the extent there is a cap on the amount of
first lien loans in any such indenture will not exceed such cap and (d) will not
result in the creation or imposition of any consensual Lien by the Borrower or
any Subsidiary on any Property of the Borrower or any Subsidiary (other than the
Liens created by the Loan Documents).

Section 7.04 Financial Condition; No Material Adverse Change.

(a) The Borrower has heretofore furnished to the Lenders (i) its consolidated
balance sheet and statements of income, stockholders equity and cash flows as of
and for the fiscal year ended December 31, 2016, reported on by KPMG LLP or
other independent public accountants and (ii) a pro forma consolidated balance
sheet as of the Effective Date. The financial statements described in clause
(i) of the preceding sentence present fairly, in all material respects, the
financial position and results of operations and cash flows of the Borrower and
its Consolidated Subsidiaries as of such dates and for such periods in
accordance with GAAP, except as therein provided and subject to year-end audit
adjustments and the absence of footnotes in the case of the unaudited quarterly
financial statements.

 

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(b) Since December 31, 2016, there has been no event, development or
circumstance that has had or could reasonably be expected to have a Material
Adverse Effect.

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

Section 7.05 Litigation.

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

(b) Since the date of this Agreement, there has been no change in the status of
the matters disclosed in Schedule the aggregate, has resulted in, that,
individually or in 7.05 .or could be reasonably expected to result in, a
Material Adverse Effect

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

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

(b) the Borrower and its Subsidiaries have obtained all Environmental Permits
required for their respective operations and each of their Properties, with all
such Environmental Permits being currently in full force and effect, and none of
Borrower or its Subsidiaries has received any written notice or otherwise has
knowledge that any such existing Environmental Permit will be revoked or that
any application for any new Environmental Permit or renewal of any existing
Environmental Permit will be protested or denied;

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

 

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

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

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

(g) there has been no exposure of any Person or property to any Hazardous
Materials as a result of or in connection with the operations and businesses of
any of the Borrower’s or its Subsidiaries’ Properties that would reasonably be
expected to form the basis for a claim for damages or compensation and there are
no conditions or circumstances that would reasonably be expected to result in
the receipt of notice regarding such exposure; and

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

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

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

(b) Neither the Borrower nor any Subsidiary is in default nor has any event or
circumstance occurred which, but for the expiration of any applicable grace
period or the giving of notice, or both, would constitute a default or would
require the Borrower or a Subsidiary to

 

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Redeem or make any offer to Redeem under any indenture, note, credit agreement
or instrument pursuant to which any Material Indebtedness is outstanding or by
which the Borrower or any Subsidiary or any of their Properties is bound.

(c) No Default has occurred and is continuing.

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

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

Section 7.10 ERISA.

(a) Except for such noncompliance as could not reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect, the Borrower, the
Subsidiaries and each ERISA Affiliate have complied with ERISA and, where
applicable, the Code regarding each Plan.

(b) Except as could not reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect, each Plan is, and has been, maintained in
substantial compliance with ERISA and, where applicable, the Code.

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

(d) No Plan (other than a defined contribution plan) or any trust created under
any such Plan has been terminated in a distress termination under Section
4041(c) of ERISA since January 1, 2000. Except as could not reasonably be
expected to have, individually or in the aggregate, a Material Adverse Effect,
no liability to the PBGC (other than for the payment of current premiums which
are not past due) by the Borrower, any Subsidiary or any ERISA Affiliate has
been incurred with respect to any Plan. Except as could not reasonably be
expected to have, individually or in the aggregate, a Material Adverse Effect,
no ERISA Event with respect to any Plan has occurred.

 

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(e) Except as could not reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect, full payment when due has been made of all
amounts which the Borrower, the Subsidiaries or any ERISA Affiliate is required
under the terms of each Plan or applicable law to have paid as contributions to
such Plan as of the date hereof, and no accumulated funding deficiency (as
defined in section 302 of ERISA and section 412 of the Code), whether or not
waived, exists with respect to any Plan.

(f) Except as could not reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect, the actuarial present value of the benefit
liabilities under each Plan which is subject to Title IV of ERISA does not, as
of the end of the Borrower’s most recently ended fiscal year, exceed the current
value of the assets (computed on a plan termination basis in accordance with
Title IV of ERISA) of such Plan allocable to such benefit liabilities. The term
“actuarial present value of the benefit liabilities” shall have the meaning
specified in section 4041 of ERISA.

(g) Except as could not reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect, neither the Borrower, the Subsidiaries nor
any ERISA Affiliate sponsors, maintains, or contributes to an employee welfare
benefit plan, as defined in section 3(1) of ERISA, including any such plan
maintained to provide benefits to former employees of such entities, that may
not be terminated by the Borrower, a Subsidiary or any ERISA Affiliate in its
sole discretion at any time.

(h) Except as could not reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect, neither the Borrower, the Subsidiaries nor
any ERISA Affiliate sponsors, maintains or contributes to, or has at any time in
the six-year period preceding the date hereof sponsored, maintained or
contributed to, any Multiemployer Plan.

(i) Except for amounts less than $100,000, neither the Borrower, the
Subsidiaries nor any ERISA Affiliate is required to provide security under
section 401(a)(29) of the Code due to a Plan amendment that results in an
increase in current liability for the Plan.

Section 7.11 Disclosure; No Material Misstatements. No reports, financial
statements, certificates or other information furnished by or on behalf of the
Borrower or any Subsidiary to the Administrative Agent or any Lender or any of
their Affiliates in connection with the negotiation of this Agreement or any
other Loan Document or delivered hereunder or under any other Loan Document (as
modified or supplemented by other information so furnished, and taken as a
whole) contain any material misstatement of fact or omits to state any material
fact necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading in any material respect; provided
that, with respect to projected financial information, the Borrower represents
only that such information was prepared in good faith based upon assumptions
believed to be reasonable at the time. There are no statements or conclusions in
any Reserve Report, taken as a whole, prepared by the chief engineer of the
Borrower (and with respect to a Reserve Report prepared by an Approved Petroleum
Engineer, to the knowledge of a Responsible Officer of the Borrower), which at
the time provided are based upon or include materially misleading information or
fail to take into account material information regarding the matters reported
therein.

 

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Section 7.12 Insurance. The Borrower maintains, and has caused to be maintained
for each of its Subsidiaries, with financially sound and reputable insurance
companies, insurance in such amounts and against such risks as are customarily
maintained by companies engaged in the same or similar businesses operating in
the same or similar locations. The loss payable clauses or provisions in said
insurance policy or policies insuring any of the collateral for the Loans are
endorsed in favor of and made payable to the Administrative Agent and the
Collateral Agent as its interests may appear, and such policies name the
Administrative Agent, the Collateral Agent and the Lenders as “additional
insureds” and provide that the insurer will endeavor to give at least 10 days
prior notice of any cancellation to the Administrative Agent and the Collateral
Agent.

Section 7.13 Restriction on Liens. Neither the Borrower nor any of the
Subsidiaries is a party to any material agreement or arrangement (other than
(a) any Senior Debt Indenture and (b) Capital Leases creating Liens permitted by
Section 9.03(c), but then only on the Property subject of such Capital Lease),
or subject to any order, judgment, writ or decree, which either restricts or
purports to restrict its ability to grant Liens to the Collateral Agent and the
Lenders on or in respect of their Properties to secure the Secured Obligations
and the Loan Documents, except, in each case, as provided in .Section 9.16

Section 7.14 Subsidiaries. Except as set forth on Schedule or as disclosed in
7.14 ive Agent (which shall promptly furnish a copy to the Lenders), writing to
the Administrat which shall be asupplement to Schedule the Borrower has no
Subsidiaries and the ,7.14 -Borrower has no Foreign Subsidiaries. Each
Subsidiary on such schedule is a Wholly .Owned Subsidiary

Section 7.15 Location of Business and Offices. The Borrower’s jurisdiction of
organization is Delaware; the name of the Borrower as listed in the public
records of its jurisdiction of organization is Rex Energy Corporation; and the
organizational identification number of the Borrower in its jurisdiction of
organization is 4313846 (or, in each case, as set forth in a notice delivered to
the Administrative Agent pursuant to Section 8.01(m) in accordance with chief
executive Section 12.01). The Borrower’s principal place of business and offices
are located at the address specified in) Section 12.01or as set forth in a
notice delivered pursuant to Section 8.01(m) and Section 12.01(c)). Each
Subsidiary’s jurisdiction of organization, name as listed in the public records
of its jurisdiction of organization, organizational identification number in its
jurisdiction of organization, and the location of its principal place of
business and chief executive office is stated on Schedule or as set forth ) 7.14
.((pursuant to Section 8.01(m in a notice delivered

Section 7.16 Properties; Titles, Etc.

(a) Each of the Borrower and the Subsidiaries has good and defensible title to
the Oil and Gas Properties evaluated in the most recently delivered Reserve
Report and to all its personal Properties, in each case, free and clear of all
Liens except Liens permitted by Section and s 9.03uch defects in title as could
not, individually or in the aggregate, reasonably be expected to materially
distract from the value thereof to, or the use thereof in, the business of the
Borrower and its Subsidiaries. After giving full effect to the Excepted Liens,
the Borrower or the

 

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Subsidiary specified as the owner owns the net interests in production
attributable to the Hydrocarbon Interests as reflected in the most recently
delivered Reserve Report, and the ownership of such Properties shall not in any
material respect obligate the Borrower or such Subsidiary to bear the costs and
expenses relating to the maintenance, development and operations of each such
Property in an amount in excess of the working interest of each Property set
forth in the most recently delivered Reserve Report that is not offset by a
corresponding proportionate increase in the Borrower’s or such Subsidiary’s net
revenue interest in such Property.

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

(c) The rights and Properties presently owned, leased or licensed by the
Borrower and the Subsidiaries including all easements and rights of way, include
all rights and Properties necessary to permit the Borrower and the Subsidiaries
to conduct their business in all material respects in the same manner as its
business has been conducted prior to the date hereof (other than as result from
dispositions permitted hereunder).

(d) All of the personal Properties of the Borrower and the Subsidiaries which
are reasonably necessary for the operation of their businesses are in good
working condition and are maintained in accordance with prudent business
standards, except for such Properties as could not reasonably be expected to
have, individually or in the aggregate, a Material Adverse Effect.

(e) The Borrower and each Subsidiary owns, or possesses the right to use, all
trademarks, tradenames, copyrights, patents and other intellectual Property
material to its business, and the use thereof by the Borrower and such
Subsidiary does not infringe upon the rights of any other Person, except for any
such infringements that, individually or in the aggregate, could not reasonably
be expected to result in a Material Adverse Effect. The Borrower and its
Subsidiaries either own or have valid licenses or other rights to use all
databases, geological data, geophysical data, engineering data, seismic data,
maps, interpretations and other technical information used in their businesses
as presently conducted, subject to the limitations contained in the agreements
governing the use of the same, which limitations are customary for companies
engaged in the business of the exploration and production of Hydrocarbons, with
such exceptions as could not reasonably be expected to have a Material Adverse
Effect.

Section 7.17 Maintenance of Properties. Except for such acts or failures to act
as could not be reasonably expected to have a Material Adverse Effect, the Oil
and Gas Properties (and Properties unitized therewith) of the Borrower and its
Subsidiaries have been maintained, operated and developed by the Borrower or its
Subsidiaries in a good and workmanlike manner and in conformity with all
applicable Governmental Requirements and in conformity with the provisions of
all leases, subleases or other contracts comprising a part of the Hydrocarbon
Interests and other contracts and agreements forming a part of the Oil and Gas
Properties of the

 

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Borrower and its Subsidiaries, in each case to which the Borrower or its
Subsidiaries are a party. Specifically in connection with the foregoing, except
for those as could not be reasonably expected to have a Material Adverse Effect,
(i) no Oil and Gas Property of the Borrower or any Subsidiary is subject to
having allowable production reduced below the full and regular allowable
(including the maximum permissible tolerance) because of any overproduction
(whether or not the same was permissible at the time) and (ii) none of the wells
comprising a part of the Oil and Gas Properties (or Properties unitized
therewith) of the Borrower or any Subsidiary is deviated from the vertical more
than the maximum permitted by Governmental Requirements, and such wells are, in
fact, bottomed under and are producing from, and the well bores are wholly
within, the Oil and Gas Properties (or in the case of wells located on
Properties unitized therewith, such unitized Properties) of the Borrower or such
Subsidiary. All pipelines, wells, gas processing plants, platforms and other
material improvements, fixtures and equipment owned in whole or in part by the
Borrower or any of its Subsidiaries that are necessary to conduct normal
operations are being maintained in a condition reasonably adequate to conduct
normal operations, and with respect to such of the foregoing which are operated
by the Borrower or any of its Subsidiaries, in a manner consistent with the
Borrower’s or its Subsidiaries’ past practices (other than those the failure of
which to maintain in accordance with this Section 7.17 could not reasonably be
expected to have a Material Adverse Effect).

Section 7.18 Gas Imbalances, Prepayments. Except as set forth on the most recent
certificate delivered pursuant to Section 8.12(c), on a net basis there are no
gas imbalances, take or pay or other prepayments which would require the
Borrower or any of its Subsidiaries to deliver Hydrocarbons produced from the
Oil and Gas Properties at some future time without then or thereafter receiving
full payment therefor exceeding one-half bcf of gas (on an mcf equivalent basis)
in the aggregate.

Section 7.19 Marketing of Production. Except for contracts listed and in effect
on the date hereof on Schedule closed in writing to the and thereafter either
dis ,7.19 Administrative Agent or included in the most recently delivered
Reserve Report (with respect to all of which contracts the Borrower represents
that it or its Subsidiaries are receiving a price for all production sold
thereunder which is computed substantially in accordance with the terms of the
relevant contract and are not having deliveries curtailed substantially below
the subject Property’s delivery capacity), no material agreements exist which
are not cancelable on 60 days’ notice or less without penalty or detriment for
the sale of production from the Borrower’s or its Subsidiaries’ Hydrocarbons
(including calls on or other rights to purchase, production, whether or not the
same are currently being exercised) that (a) pertain to the sale of production
at a fixed price and (b) have a maturity or expiry date of longer than six (6)
months from the date hereof.

Section 7.20 Swap Agreements. Schedule as of the date hereof, and after the
,7.20 the Borrower pursuant to Section date hereof, each report required to be
delivered by e), sets forth a true and complete list of)8.01 all Swap Agreements
of the Borrower and each Subsidiary, the material terms thereof (including the
type, term, effective date, termination date and notional amounts or volumes),
the net mark to market value thereof, all credit support agreements relating
thereto (including any margin required or supplied) and the counterparty to each
such agreement.

 

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Section 7.21 Use of Loans and Letters of Credit. The proceeds of the Loans and
the Letters of Credit shall be used for (a) the payment of fees and expenses
hereunder, (b) up to $10,000,000 of the Loans may be used as part of a Debt
Equitization Event, (c) general corporate purposes and (d) Delayed Draw Loans
may be utilized to Cash Collateralize, or reimburse the Issuing Bank for draws
under, Letters of Credit. No proceeds of the Incremental Term Loans may be used
to Redeem any Second Lien Notes. The Borrower and its Subsidiaries are not
engaged principally, or as one of its or their important activities, in the
business of extending credit for the purpose, whether immediate, incidental or
ultimate, of buying or carrying margin stock (within the meaning of
Regulation T, U or X of the Board). No part of the proceeds of any Loan or
Letter of Credit will be used for any purpose which violates the provisions of
Regulations T, U or X of the Board.

Section 7.22 Solvency. After giving effect to the transactions contemplated
hereby, (a) the aggregate assets (after giving effect to amounts that could
reasonably be received by reason of indemnity, offset, insurance or any similar
arrangement), at a fair valuation, of the Borrower and the Guarantors, taken as
a whole, will exceed the aggregate Debt of the Borrower and the Guarantors on a
consolidated basis, as the Debt becomes absolute and matures, (b) each of the
Borrower and the Guarantors will not have incurred or intended to incur, and
will not believe that it will incur, Debt beyond its ability to pay such Debt
(after taking into account the timing and amounts of cash to be received by each
of the Borrower and the Guarantors and the amounts to be payable on or in
respect of its liabilities, and giving effect to amounts that could reasonably
be received by reason of indemnity, offset, insurance or any similar
arrangement) as such Debt becomes absolute and matures and (c) each of the
Borrower and the Guarantors will not have (and will have no reason to believe
that it will have thereafter) unreasonably small capital for the conduct of its
business.

Section 7.23 International Operations. None of the Borrower and its Subsidiaries
own, and have not acquired or made any other expenditure (whether such
expenditure is capital, operating or otherwise) in or related to, any Oil and
Gas Properties located outside of the geographical boundaries of the United
States or in the offshore federal waters of the United States of America.

Section 7.24 Anti-Corruption Laws, Sanctions, OFAC.

(a) Implementation of Policies and Procedures. The Borrower has implemented and
maintains in effect policies and procedures designed to ensure compliance by the
Borrower, its Subsidiaries and their respective directors, officers, employees
and agents with applicable Anti-Corruption Laws and applicable Sanctions.

(b) Compliance. The Borrower, its Subsidiaries, their respective officers and
employees and, to the knowledge of the Borrower, its directors and agents are in
compliance with Anti-Corruption Laws and applicable Sanctions in all material
respects and are not knowingly engaged in any activity that would reasonably be
expected to result in any Group Member being designated as a Sanctioned Person.

(c) Dealings With Sanctioned Persons. None of (i) the Borrower, any Subsidiary
or any of their respective directors, officers or employees, or (ii) to the
knowledge of

 

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the Borrower, any agent of the Borrower that will act in any capacity in
connection with or benefit from the credit facility established hereby, is a
Sanctioned Person. The Borrower will not directly or, to its knowledge,
indirectly use the proceeds from the Loans or lend, contribute or otherwise make
available such proceeds to any Subsidiary, joint venture partner or other
Person, for the purpose of financing the activities of any Person currently
subject to any applicable Sanctions.

Section 7.25 Foreign Corrupt Practices. Neither the Borrower nor any of its
Subsidiaries, nor any director, officer, agent, employee or Affiliate of the
Borrower or any of its Subsidiaries is aware of or has taken any action,
directly or indirectly, that would result in a material violation by such
Persons of the FCPA, including without limitation, making use of the mails or
any means or instrumentality of interstate commerce corruptly in furtherance of
an offer, payment, promise to pay or authorization of the payment of any money,
or other property, gift, promise to give, or authorization of the giving of
anything of value to any “foreign official” (as such term is defined in the
FCPA) or any foreign political party or official thereof or any candidate for
foreign political office, in contravention of the FCPA; and, the Borrower, its
Subsidiaries and its and their Affiliates have conducted their business in
material compliance with the FCPA and have instituted and maintain policies and
procedures designed to ensure, and which are reasonably expected to continue to
ensure, continued compliance therewith.

ARTICLE VIII

AFFIRMATIVE COVENANTS

Until the Commitments have expired or been terminated and the principal of and
interest on each Loan and all fees payable hereunder and all other amounts
payable under the Loan Documents (other than contingent indemnification
obligations for which no claim has been made) shall have been paid in full and
all Letters of Credit shall have expired or terminated or been Cash
Collateralized and all LC Disbursements shall have been reimbursed, the Borrower
covenants and agrees with the Lenders that:

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

(a) Annual Financial Statements. As soon as available, but in any event in
accordance with then applicable law and not later than 90 days after the end of
each fiscal year of the Borrower commencing December 31, 2017, its audited
consolidated balance sheet and related statements of operations, stockholders’
equity and cash flows as of the end of and for such year, setting forth in each
case in comparative form the figures for the previous fiscal year, all reported
on by KPMG LLP or other independent public accountants of recognized national
standing (without a “going concern” or like qualification or exception (other
than one such exception in not more than one reporting period that is expressly
solely with respect to, or expressly resulting solely from either or both:
(A) an upcoming maturity date under this Agreement provided for herein that is
scheduled to occur within one year from the time such opinion is delivered or
(B) any projected inability on a future date or in a future period to satisfy
the requirements of Section 9.01(b) or Section 9.01(c)) and without any
qualification or exception as to the scope of such audit) to the effect that
such consolidated financial statements present fairly in all material respects
the financial condition and results of operations of the Borrower and its
Consolidated Subsidiaries on a consolidated basis in accordance with GAAP
consistently applied.

 

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

(c) Certificate of Financial Officer – Compliance. Concurrently with any
delivery of financial statements under Section 8.01(a) or Section 8.01(b), a
certificate of a Financial Officer in substantially the form of Exhibit C-2
hereto (i) certifying as to whether a Default has occurred and, if a Default has
occurred, specifying the details thereof and any action taken or proposed to be
taken with respect thereto, (ii) setting forth reasonably detailed calculations
demonstrating compliance with Section 8.14(a), Section 9.01 and for financial
statements delivered pursuant to Section 8.01(a) reasonably detailed
calculations of Excess Cash Flow for such year, (iii) listing all Letters of
Credit outstanding as of the date of such certificate listing for each the face
amount, expiration date and beneficiary and stating whether there has been a
drawing thereunder, and (iv) stating whether any change in GAAP or in the
application thereof has occurred since the date of the audited financial
statements referred to in Section 7.04(a) that would affect the preparation of
the financial statements most-recently required to be delivered in accordance
with Section 8.01(a) and Section 8.01(b) or the computation of any financial
ratio in Section 9.01 or the determination of Excess Cash Flow and, if any such
change has occurred, specifying the effect of such change on the financial
statements accompanying such certificate.

(d) Certificate of Financial Officer – Consolidating Information. If, at any
time, all of the Subsidiaries of the Borrower are not Consolidated Subsidiaries,
then concurrently with any delivery of financial statements under Section
8.01(a) or Section 8.01(b), a certificate of a Financial Officer setting forth
consolidating spreadsheets that show all Subsidiaries and the eliminating
entries, in such form as would be presentable to the independent accountants of
the Borrower. A Financial Officer shall deliver separate financial statements
setting forth the balance sheet and related statement of operations,
stockholder’s equity and cash flow of each Subsidiary that is not a Guarantor,
including the impact on the Borrower’s consolidated balance sheet and related
statements of operations, stockholders’ equity and cash flows.

(e) Certificate of Financial Officer – Swap Agreements. Concurrently with any
delivery of financial statements under Section 8.01(a) and Section 8.01(b), a
certificate of a Financial Officer, in form reasonably satisfactory to the
Administrative Agent, setting forth as of the last Business Day of such fiscal
quarter or fiscal year, a true and complete list of all Swap Agreements of the
Borrower and each Subsidiary, the material terms thereof (including the type,
term, effective date, termination date and notional amounts or volumes), the net
mark-to-market

 

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value therefor, any new credit support agreements relating thereto not listed on
Schedule ,7.19 any margin required or supplied under any credit support
document, and the counterparty .to each such agreement

(f) Certificate of Insurer – Insurance Coverage. Concurrently with any delivery
of financial statements under Section 8.01(a), a certificate of insurance
coverage from each insurer or one or more insurance agencies with respect to the
insurance required by Section ,in form and substance reasonably satisfactory to
the Administrative Agent ,8.07and, if requested by the Administrative Agent,
copies of the applicable policies.

(g) Monthly Reports. Within thirty (30) days after the end of each month, a
report setting forth, for such month and the year to date for such fiscal year,
a report of material operational developments and any material changes from the
Borrower’s previously published operational and financial guidance.

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

(i) Notices Under Material Instruments. Promptly after the furnishing thereof,
copies of any financial statement, report or notice furnished by the Borrower to
any holder of debt securities of the Borrower or any Subsidiary pursuant to the
terms of any preferred stock designation, indenture, loan or credit or other
similar agreement (including the Second Lien Note Documents), other than this
Agreement and not otherwise required to be furnished to the Administrative Agent
pursuant to any other provision of this .Section 8.01

(j) Lists of Purchasers. Promptly following the written request of the
Administrative Agent, a list of all Persons, as of a specified date, purchasing
Hydrocarbons from the Borrower or any Subsidiary.

(k) Notice of Sales of Oil and Gas Properties and Liquidation of Swap
Agreements. In the event the Borrower or any Subsidiary intends to sell,
transfer, assign or otherwise dispose of any Oil or Gas Properties or any Equity
Interests in any Subsidiary in accordance with Section 9.12 (other than
Hydrocarbons in the ordinary course of business), prior written notice of such
disposition, the price thereof and the anticipated date of closing and any other
details thereof reasonably requested by the Administrative Agent. If the
Borrower or any Subsidiary receives any notice of early termination of any Swap
Agreement to which it is a party from any of its counterparties, or any Swap
Agreement to which the Borrower or any Subsidiary is a party is Liquidated,
prompt written notice of the receipt of such early termination notice or such
Liquidation, as the case may be, together with a reasonably detailed description
or explanation thereof and any other details thereof requested by the
Administrative Agent or any Lender.

(l) Notice of Casualty Events. Prompt written notice, and in any event within
three Business Days (or if under the circumstances the Administrative Agent
determines a longer period is reasonable, such longer period) following the
knowledge thereof by, or the services of

 

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process on, (as the case may be) a Responsible Officer of the Borrower, of the
occurrence of any Casualty Event or the commencement of any action or proceeding
that could reasonably be expected to result in a Casualty Event.

(m) Information Regarding Borrower and Guarantors. Prompt written notice (and in
any event within ten (10) Business Days thereafter (or such longer period as is
acceptable to the Administrative Agent, but in no event more than fifteen
(15) Business Days)) of any change (i) in the Borrower’s or any Guarantor’s
company or corporate name or in any trade name used to identify such Person in
the conduct of its business or in the ownership of its Properties, (ii) in the
location of the Borrower’s or any Guarantor’s chief executive office or
principal place of business, (iii) in the Borrower’s or any Guarantor’s identity
or company or corporate structure or in the jurisdiction in which such Person is
incorporated, organized or formed, (iv) in the Borrower’s or any Guarantor’s
organizational identification number in its jurisdiction of organization, and
(v) in the Borrower’s or any Guarantor’s federal taxpayer identification number.

(n) Production Report and Lease Operating Statements. Within sixty (60) days
after the end of each fiscal quarter, a report setting forth, for each calendar
month during the then elapsed portion of the fiscal year, the volume of
production and sales attributable to production (and the prices at which such
sales were made and the revenues derived from such sales) for each such calendar
month from the Oil and Gas Properties of the Borrower and the Guarantors, and
setting forth the related ad valorem, severance and production taxes and lease
operating expenses attributable thereto and incurred for each such calendar
month.

(o) Notices of Certain Changes. Promptly, but in any event within five
(5) Business Days after the execution thereof, copies of any amendment,
modification or supplement to any of the Second Lien Note Documents or to the
Organizational Documents, any preferred stock designation or any other organic
document of the Borrower or any Subsidiary.

(p) Annual Budget. With the delivery of the annual financial statements pursuant
to Section 8.01(a), the Borrower’s budget for the current and following three
(3) fiscal years in such detail as the Administrative Agent may reasonably
request.

(q) Other Requested Information. Promptly following any request therefor, such
other information regarding the operations, business affairs and financial
condition of the Borrower or any Subsidiary (including any Plan or Multiemployer
Plan and any reports or other information required to be filed under ERISA), or
compliance with the terms of this Agreement or any other Loan Document, as the
Administrative Agent (or any Lender through the Administrative Agent) may
reasonably request.

(r) Material Divestiture or Acquisition. Upon any Material Divestiture or
Acquisition Date, the Borrower shall provide to the Administrative Agent and the
Lenders written notice thereof.

Documents required to be delivered pursuant to Section 8.01(a), (b), (h), (i) or
(j), to the extent any such documents are included in materials otherwise filed
with the SEC, may be delivered electronically and shall be deemed to have been
delivered to the Administrative Agent

 

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and each Lender on the date on which the Borrower posts such documents or
provides a link thereto on the Borrower’s website on the Internet at the website
address listed in Section 12.01; or such documents are posted on the Borrower’s
behalf on an Internet or intranet website, if any, to which Lender and the
Administrative Agent have access.

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

(a) the occurrence of any Default;

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

(c) the occurrence of any ERISA Event that, alone or together with any other
ERISA Events that have occurred, could reasonably be expected to result in
liability of the Borrower and its Subsidiaries in an aggregate amount exceeding
$5,000,000;

(d) the occurrence of any of the events described in Section 10.01(h), i) or)j)
) with respect to any Subsidiary that is not a Guarantor; and

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

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

Section 8.03 Existence; Conduct of Business. The Borrower will, and will cause
each Subsidiary to, do or cause to be done all things necessary to preserve,
renew and keep in full force and effect its legal existence and the rights,
licenses, permits, privileges and franchises material to the conduct of its
business and maintain, if necessary, its qualification to do business in each
other jurisdiction in which its Oil and Gas Properties is located or the
ownership of its Properties requires such qualification, except where the
failure to so qualify could not reasonably be expected to have a Material
Adverse Effect; provided that the foregoing shall not prohibit any merger,
conversion, consolidation, liquidation or dissolution permitted under
.Section 9.11

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

 

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Section 8.05 Performance of Obligations under Loan Documents. The Borrower will
pay the Loans in accordance with the terms hereof, and the Borrower will, and
will cause each Subsidiary to, do and perform every act and discharge all of the
obligations to be performed and discharged by them under the Loan Documents,
including this Agreement, at the time or times and in the manner specified.

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

(a) operate its Oil and Gas Properties and other material Properties or cause
such Oil and Gas Properties and other material Properties to be operated in a
careful and efficient manner in accordance with the practices of the industry
and in compliance with all applicable contracts and agreements and in compliance
with all applicable Governmental Requirements, including applicable pro ration
requirements and Environmental Laws, and all applicable laws, rules and
regulations of every other Governmental Authority from time to time constituted
to regulate the development and operation of its Oil and Gas Properties and the
production and sale of Hydrocarbons and other minerals therefrom, except, in
each case, where the failure to comply could not reasonably be expected to have
a Material Adverse Effect.

(b) keep and maintain all Property material to the conduct of its business in
good working order and condition, ordinary wear and tear excepted, and preserve,
maintain and keep in good repair, working order and efficiency (ordinary wear
and tear excepted) all of its material Oil and Gas Properties and other material
Properties, including all equipment, machinery and facilities.

(c) promptly pay and discharge, or make reasonable and customary efforts to
cause to be paid and discharged, all delay rentals, royalties, expenses and
indebtedness accruing under the leases or other agreements affecting or
pertaining to its Oil and Gas Properties and will do all other things necessary
to keep unimpaired their rights with respect thereto and prevent any forfeiture
thereof or default thereunder, except where (i) the validity or amount thereof
is being contested in good faith by appropriate actions, (ii) it has set aside
adequate reserves with respect thereto in accordance with GAAP and (iii) the
failure to so act could not reasonably be expected to result in a Material
Adverse Effect or result in the forfeiture of any of its material Property.

(d) promptly perform or make reasonable and customary efforts to cause to be
performed, in accordance with industry standards, the obligations required by
each and all of the assignments, deeds, leases, sub-leases, contracts and
agreements affecting its interests in its Oil and Gas Properties and other
material Properties, except where (i) the validity or amount thereof is being
contested in good faith by appropriate actions, (ii) it has set aside adequate
reserves with respect thereto in accordance with GAAP and (iii) the failure to
so act could not reasonably be expected to result in a Material Adverse Effect
or result in the forfeiture of any of its material Property.

(e) to the extent the Borrower is not the operator of any Property, the Borrower
shall use reasonable efforts to cause the operator to comply with this Section
8.06; provided, however, in no event shall it be required to expend any amounts,
incur any obligations or expose itself to any economic consequences as a
requirement to comply with .(this Section 8.06(e

 

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Section 8.07 Insurance. The Borrower will, and will cause each Subsidiary to,
maintain, with financially sound and reputable insurance companies, insurance in
such amounts and against such risks as are customarily maintained by companies
engaged in the same or similar businesses operating in the same or similar
locations. The loss payable clauses or provisions in said insurance policy or
policies insuring any of the collateral for the Loans shall be endorsed in favor
of and made payable to the Administrative Agent and the Collateral Agent as its
interests may appear and such policies shall name the Administrative Agent and
the Collateral Agent and the Lenders as “additional insureds” and provide that
the insurer will endeavor to give at least 10 days prior notice of any
cancellation to the Administrative Agent and the Collateral Agent.

Section 8.08 Books and Records; Inspection Rights. The Borrower will, and will
cause each Subsidiary to, keep proper books of record and account in which full,
true and correct entries are made of all dealings and transactions in relation
to its business and activities. The Borrower will, and will cause each
Subsidiary to, permit any representatives designated by the Administrative Agent
(or any Lender through the Administrative Agent), upon reasonable prior notice
and during normal business hours, to visit and inspect its Properties, to
examine and make extracts from its books and records, and to discuss its
affairs, finances and condition with its officers and independent accountants,
all at such reasonable times and as often as reasonably requested, in each case,
subject to applicable safety standards, applicable privilege and confidentiality
restrictions, and restrictions of owners of such records or properties who are
neither the Borrower nor any Subsidiary.

Section 8.09 Compliance with Laws. The Borrower will, and will cause each
Subsidiary to, comply in all material respects with all laws, rules, regulations
and orders of any Governmental Authority applicable to it or its Property,
except where (i) such law, rule, regulation or order is being contested in good
faith by appropriate actions diligently conducted or (ii) the failure to do so,
individually or in the aggregate, could not reasonably be expected to result in
a Material Adverse Effect. The Borrower will maintain in effect and enforce
policies and procedures designed to ensure compliance by it and its Subsidiaries
and their respective directors, officers, employees and agents with applicable
Anti-Corruption Laws and applicable Sanctions.

Section 8.10 Environmental Matters.

(a) The Borrower shall: (i) comply, and shall cause its Properties and
operations and each Subsidiary and each Subsidiary’s Properties and operations
to comply, with all applicable Environmental Laws, the breach of which could be
reasonably expected to have a Material Adverse Effect; (ii) not dispose of or
otherwise release, and shall cause each Subsidiary not to dispose of or
otherwise release, any oil, oil and gas waste, hazardous substance, or solid
waste on, under, about or from any of the Borrower’s or its Subsidiaries’
Properties or any other Property to the extent caused by the Borrower’s or any
of its Subsidiaries’ operations except in compliance with applicable
Environmental Laws, the disposal or release of which could reasonably be
expected to have a Material Adverse Effect; (iii) timely obtain or file, and
shall

 

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cause each Subsidiary to timely obtain or file, all notices, permits, licenses,
exemptions, approvals, registrations or other authorizations, if any, required
under applicable Environmental Laws to be obtained or filed in connection with
the operation or use of the Borrower’s or its Subsidiaries’ Properties, which
failure to obtain or file could reasonably be expected to have a Material
Adverse Effect; (iv) promptly commence and diligently prosecute to completion,
and shall cause each Subsidiary to promptly commence and diligently prosecute to
completion, any assessment, evaluation, investigation, monitoring, containment,
cleanup, removal, repair, restoration, remediation or other remedial obligations
(collectively, the “Remedial Work”) in the event any Remedial Work is required
or reasonably necessary under applicable Environmental Laws because of or in
connection with the actual or suspected past, present or future disposal or
other release of any oil, oil and gas waste, hazardous substance or solid waste
on, under, about or from any of the Borrower’s or its Subsidiaries’ Properties,
which failure to commence and diligently prosecute to completion could
reasonably be expected to have a Material Adverse Effect; and (v) establish and
implement, and shall cause each Subsidiary to establish and implement, such
policies of environmental audit and compliance as may be necessary to
continuously determine and assure that the Borrower’s and its Subsidiaries’
obligations under this Section 8.10(a) are timely and fully satisfied, which
failure to establish and implement could reasonably be expected to have a
Material Adverse Effect.

(b) The Borrower will promptly, but in no event later than five days of the
occurrence of a triggering event, notify the Administrative Agent in writing of
any threatened (in writing) action, investigation or inquiry by any Governmental
Authority or any threatened (in writing) demand or lawsuit by any landowner or
other third party against the Borrower or its Subsidiaries or their Properties
of which the Borrower has knowledge in connection with any Environmental Laws
(excluding routine testing and corrective action) if the Borrower reasonably
anticipates that such action will result in liability (whether individually or
in the aggregate) in excess of $1,000,000, not covered by insurance, subject to
normal deductibles.

(c) The Borrower will, and will cause each Subsidiary to, provide environmental
audits and tests in accordance with American Society of Testing Materials
standards upon request by the Administrative Agent and no more than once per
year in the absence of any Event of Default (or as otherwise required to be
obtained by the Administrative Agent or the Lenders by any Governmental
Authority), in connection with any future acquisitions of Oil and Gas Properties
or other Properties.

Section 8.11 Further Assurances.

(a) The Borrower at its sole expense will, and will cause each Subsidiary to,
promptly execute and deliver to the Administrative Agent all such other
documents, agreements and instruments reasonably requested by the Administrative
Agent to comply with, cure any defects or accomplish the conditions precedent,
covenants and agreements of the Borrower or any Subsidiary, as the case may be,
in the Loan Documents, including the Notes, or to further evidence and more
fully describe the collateral intended as security for the Secured Obligations,
or to correct any omissions in this Agreement or the Security Instruments, or to
state more fully the obligations secured therein, or to perfect, protect or
preserve any Liens created pursuant to this Agreement or any of the Security
Instruments or the priority thereof, or to make any recordings, file any notices
or obtain any consents, all as may be reasonably necessary or appropriate, in
the reasonable discretion of the Administrative Agent, in connection therewith.

 

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(b) The Borrower hereby authorizes the Administrative Agent to file one or more
financing or continuation statements, and amendments thereto, relative to all or
any part of the Mortgaged Property without the signature of the Borrower or any
other Guarantor where permitted by law. A carbon, photographic or other
reproduction of the Security Instruments or any financing statement covering the
Mortgaged Property or any part thereof shall be sufficient as a financing
statement where permitted by law.

Section 8.12 Reserve Reports.

(a) On or before March 1st, June 1st. September 1st and December 1st of each
year, commencing June 1, 2017, the Borrower shall furnish to the Administrative
Agent a Reserve Report evaluating the Oil and Gas Properties of the Borrower and
its Subsidiaries as of the immediately preceding December 31st, March 31st, June
30th and September 30th respectively. The Reserve Report as of December 31st of
each year shall be prepared by one or more Approved Petroleum Engineers, and the
other Reserve Reports of each year shall be prepared by or under the supervision
of the chief engineer of the Borrower who shall certify such Reserve Report to
be true and accurate in all material respects and to have been prepared in
accordance with the procedures used in the immediately preceding December 31st
Reserve Report.

(b) If the Majority Lenders reasonably determine not more than one time between
delivery of a Reserve Report that there has been a material adverse change in
the Borrower’s and its Subsidiaries’ Oil and Gas Properties, drilling results,
Total PDP PV-10 or cash flows, they may request an interim Reserve Report (each
such, an “Interim Reserve Report”), and the Borrower shall furnish to the
Administrative Agent such Interim Reserve Report prepared by an Approved
Petroleum Engineer. For any Interim Reserve Report so requested, the Borrower
shall provide such Reserve Report with an “as of” date as reasonably required by
the Administrative Agent as soon as possible, but in any event no later than
thirty (30) days following the receipt of such request.

(c) With the delivery of each Reserve Report (including any Interim Reserve
Report), the Borrower shall provide to the Administrative Agent a certificate
from a Responsible Officer certifying that in all material respects: (i) the
factual information contained in the Reserve Report and any other information
delivered in connection therewith is true and correct, (ii) the Borrower or its
Subsidiaries owns good and defensible title to the Oil and Gas Properties
evaluated in such Reserve Report and such Properties are free of all Liens
except for Liens permitted by Section 9.03, (iii) except as set forth on an
exhibit to the certificate, on a net basis there are no gas imbalances, take or
pay or other prepayments in excess of the volume specified in s evaluated in
such Section 7.18 with respect to its Oil and Gas Propertie Reserve Report which
would require the Borrower or any Subsidiary to deliver Hydrocarbons either
generally or produced from such Oil and Gas Properties at some future time
without then or thereafter receiving full payment therefor, (iv) none of their
Oil and Gas Properties have been sold since the date of the last Reserve Report
except as set forth on an exhibit to the certificate, which certificate shall
list all of its Oil and Gas Properties sold, (v) attached to the certificate is
a list of all marketing agreements entered into subsequent to the later

 

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of the date hereof or the most recently delivered Reserve Report which the
Borrower could reasonably be expected to have been obligated to list on Schedule
had such agreement 7.19 n effect on the date hereof and (vi) attached thereto is
a schedule of the Oil and Gas been i Properties evaluated by such Reserve Report
that are Mortgaged Properties and demonstrating the percentage of the total
value of the Oil and Gas Properties that the value of such Mortgaged Properties
represent.

Section 8.13 Title Information.

(a) On or before the delivery to the Administrative Agent and the Lenders of
each Reserve Report required by Section 8.12(a), the Borrower will deliver title
information in form and substance reasonably acceptable to the Administrative
Agent covering enough of the Oil and Gas Properties evaluated by such Reserve
Report that were not included in the immediately preceding Reserve Report, so
that the Administrative Agent shall have received together with title
information previously delivered to the Administrative Agent, reasonably
satisfactory title information on at least 91% of the total value of the Oil and
Gas Properties evaluated by such Reserve Report.

(b) If the Borrower has provided title information for additional Properties
under Section 8.13(a), the Borrower shall, within 60 days of notice from the
Administrative Agent that title defects or exceptions (other than, of a nature
or type that constitutes a permitted Lien pursuant to st with respect to such
additional Properties, either (i) cure Section 9.03) exi any such title defects
or exceptions (including defects or exceptions as to priority) which are not
permitted by Section 9.03 raised by such information, (ii) substitute reasonably
Mortgaged Properties with no title defects or exceptions except for Excepted
acceptable Liens (other thanExcepted Liens described in clauses (e), (g) and (h)
of such definition and other than, of a nature or type that constitutes a
permitted Lien pursuant to n 9.03) having Sectio an equivalent value or (iii)
deliver title information in form and substance reasonably acceptable to the
Administrative Agent so that the Administrative Agent shall have received,
together with title information previously delivered to the Administrative
Agent, reasonably satisfactory title information on at least 91% of the value of
the Oil and Gas Properties evaluated by such Reserve Report.

Section 8.14 Additional Collateral; Additional Guarantors.

(a) In connection with the delivery of each Reserve Report, the Borrower shall
review the Reserve Report and the list of current Mortgaged Properties (as
described in Section 8.12(c)(vi)) to ascertain whether the Mortgaged Properties
represent (i) at least 95% of the total value of the Oil and Gas Properties
evaluated in the most recently completed Reserve Report after giving effect to
exploration and production activities, acquisitions, dispositions and production
and (ii) any leases that were extended by payment and not production after the
delivery of the previous Reserve Report that are not Mortgaged Properties. If
the Mortgaged Properties do not represent at least 95% of such total value and
all of the leases that were extended by payment and not production after the
delivery of the previous Reserve Report that are not Mortgaged Properties, then
the Borrower shall, and shall cause its Subsidiaries to, grant (from its
available unencumbered Property), within thirty (30) days of delivery of the
certificate required under Section 8.12(c), to the Collateral Agent as security
for the Secured Obligations a

 

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first-priority Lien interest (provided that Excepted Liens of the type described
in clauses (a) to (d) and (f) of the definition thereof may exist, but subject
to the provisos at the end of such definition) on additional Oil and Gas
Properties not already subject to a Lien of the Security Instruments such that
after giving effect thereto, the Mortgaged Properties will represent at least
95% of such total value and all of the leases that were extended by payment and
not production after the delivery of the previous Reserve Report that are not
Mortgaged Properties. All such Liens will be created and perfected by and in
accordance with the provisions of deeds of trust, security agreements and
financing statements or other Security Instruments, all in form and substance
reasonably satisfactory to the Collateral Agent and the Borrower and in
sufficient executed (and acknowledged where necessary or appropriate)
counterparts for recording purposes. In order to comply with the foregoing, if
any Subsidiary places a Lien on its Oil and Gas Properties and such Subsidiary
is not a Guarantor, then it shall become a Guarantor and comply with Section
8.14(b).

(b) If any Subsidiary is or becomes a Material Domestic Subsidiary, then the
Borrower shall promptly (and, in any event, within thirty (30) days after such
date) cause such Subsidiary to guarantee the Secured Obligations pursuant to the
Guaranty Agreement. In connection with any such guaranty, the Borrower shall, or
shall cause such Subsidiary to, (i) execute and deliver a supplement to the
Guaranty Agreement executed by such Subsidiary, (ii) pledge all of the Equity
Interests of such new Subsidiary (including delivery (if applicable) of original
certificates evidencing the Equity Interests of such Subsidiary, together with
an appropriate undated stock powers for each certificate duly executed in blank
by the registered owner thereof) and (iii) execute and deliver such other
additional closing documents, certificates and legal opinions as shall
reasonably be requested by the Administrative Agent and the Collateral Agent.

(c) If the Borrower or any Subsidiary intends to grant any Lien on any Property
to secure any Second Lien Notes, then the Borrower will provide at least fifteen
(15) days’ prior written notice thereof to the Administrative Agent and the
Collateral Agent (or such shorter time as the Collateral Agent may agree in its
sole discretion), and the Borrower will, and will cause its Subsidiaries to,
first grant to the Collateral Agent to secure the Secured Obligations a prior
Lien, on the same Property pursuant to Security Instruments in form and
substance satisfactory to the Collateral Agent to the extent a prior Lien has
not already been granted to the Collateral Agent on such Property. In connection
therewith, the Borrower shall, or shall cause its Subsidiaries to, execute and
deliver such other additional closing documents, certificates and legal opinions
as shall reasonably be requested by the Administrative Agent or the Collateral
Agent. The Borrower will cause any Subsidiary and any other Person guaranteeing
any Second Lien Notes to contemporaneously guarantee the Secured Obligations
pursuant to the Guaranty Agreement.

Section 8.15 ERISA Compliance. The Borrower will promptly furnish and will cause
the Subsidiaries and any ERISA Affiliate to promptly furnish to the
Administrative Agent (i) promptly after receipt of a written request by the
Administrative Agent, copies of each annual and other report with respect to
each Plan or any trust created thereunder, filed with the United States
Secretary of Labor, the Internal Revenue Service or the PBGC, (ii) immediately
upon becoming aware of the occurrence of any ERISA Event or of any “prohibited
transaction,” as described in section 406 of ERISA or in section 4975 of the
Code, in connection with any Plan

 

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or any trust created thereunder, a written notice signed by the Chief Executive
Officer or the principal Financial Officer, the Subsidiary or the ERISA
Affiliate, as the case may be, specifying the nature thereof, what action the
Borrower, the Subsidiary or the ERISA Affiliate is taking or proposes to take
with respect thereto, and, when known, any action taken or proposed by the
Internal Revenue Service, the Department of Labor or the PBGC with respect
thereto, and (iii) immediately upon receipt thereof, copies of any notice of the
PBGC’s intention to terminate or to have a trustee appointed to administer any
Plan. With respect to each Plan (other than a Multiemployer Plan), the Borrower
will, and will cause each Subsidiary and ERISA Affiliate to, (i) satisfy in full
and in a timely manner, without incurring any late payment or underpayment
charge or penalty and without giving rise to any lien, all of the contribution
and funding requirements of section 412 of the Code (determined without regard
to subsections (d), (e), (f) and (k) thereof) and of section 302 of ERISA
(determined without regard to sections 303, 304 and 306 of ERISA), and (ii) pay,
or cause to be paid, to the PBGC in a timely manner, without incurring any late
payment or underpayment charge or penalty, all premiums required pursuant to
sections 4006 and 4007 of ERISA.

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

Section 8.17 Deposit Accounts.

(a) At all times, the Borrower shall, and shall cause each of the Guarantors to,
deposit or cause to be deposited directly, all Dedicated Cash Receipts into one
or more Deposit Accounts (other than Excluded Deposit Accounts, except as
permitted under Section 9.22) in which the Collateral Agent has been granted a
Lien and in each case is subject to a Deposit Account Control Agreement.

(b) Upon the request of the Administrative Agent the Borrower shall provide to
the Administrative Agent, within two (2) Business Days of any such request (or
such longer period the Administrative Agent may agree), balance statements, in a
form reasonably acceptable to the Administrative Agent, for each Deposit Account
of the Borrower and each Subsidiary.

Section 8.18 Acquisition of Oil and Gas Properties – Mortgage Coverage. In
connection with the acquisition of any Oil and Gas Property by the Borrower or
its Subsidiaries, the Borrower shall, and shall cause its Subsidiaries to, grant
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such Oil and Gas Properties by the Borrower or such Subsidiary, to the
Collateral Agent as security for the Secured Obligations a first-priority Lien
(provided that Excepted Liens of the type described in clauses (a) to (d) and
(f) of the definition thereof may exist, but subject to the provisos at the end
of such definition) on 95% of the total proved value of such additional Oil and
Gas Properties being acquired. All such Liens will be created and perfected by
and in accordance with the provisions of deeds of trust, security agreements and
financing statements or other Security Instruments, all in form and substance
reasonably satisfactory to the Administrative Agent and the Collateral Agent and
the Borrower and in sufficient executed (and acknowledged where necessary or
appropriate) counterparts for recording purposes. In order to comply with the
foregoing, if any Subsidiary places a Lien on its Oil and Gas Properties and
such Subsidiary is not a Guarantor, then it shall become a Guarantor and comply
with Section 8.14(b).

Section 8.19 Lender Call and Meetings. The Borrower shall schedule a conference
call within two (2) Business Days after the delivery of the financial statements
pursuant to Sections 8.01(a) and (b) (or such longer period as the
Administrative Agent may agree), to go over the results of its operations and
other matters concerning the Borrower and its Subsidiaries with the Lenders. At
the request of the Majority Lenders, and upon reasonable notice, the Borrower
shall meet with the Lenders and provide such information therein that the
Majority Lenders reasonably request.

Section 8.20 Swap Agreements.

(a) The Borrower shall enter into and maintain Swap Agreements in accordance
with the Borrower’s Swap Policy, with Approved Counterparties, the notional
volumes for which (when aggregated and netted with other commodity Swap
Agreements then in effect other than basis differential swaps on volumes already
hedged pursuant to other Swap Agreements), as of the date such Swap Agreement is
executed, of not less than (i) on the Effective Date, 75% of the Reasonably
Anticipated Projected Production from the Oil and Gas Properties with Proved
Developed Producing Reserves, as listed on the most recently delivered Reserve
Report, of the Loan Parties for each of crude oil, liquids and natural gas,
calculated separately or in the aggregate based upon the relative economic value
of each of crude oil, liquids and natural gas, including basis differentials,
during the period commencing on the Effective Date through the 24th month
thereafter (with no individual month less than 70%), (ii) within fifteen
(15) days after the Effective Date, 50% of the Reasonably Anticipated Projected
Production from the Oil and Gas Properties with Proved Developed Producing
Reserves, as listed on the most recently delivered Reserve Report, of the Loan
Parties for each of crude oil, liquids and natural gas, calculated separately or
in the aggregate based upon the relative economic value of each of crude oil,
liquids and natural gas, including basis differentials, during the period
commencing on the 25th month after the Effective Date through the 36th month
after the Effective Date (with no individual month less than 45%), and
(iii) within fifteen (15) days after the Effective Date, 35% of the Reasonably
Anticipated Projected Production from the Oil and Gas Properties with Proved
Developed Producing Reserves, as listed on the most recently delivered Reserve
Report, of the Loan Parties for each of crude oil, liquids and natural gas,
calculated separately or in the aggregate based upon the relative economic value
of each of crude oil, liquids and natural gas, including basis differentials,
during the period commencing on the 37th month after the Effective Date through
the 48th month after the Effective Date (with no individual month less than
30%).

 

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(b) Notwithstanding Section 8.20(a), the Borrower may delay entering into one
half (1/2) of the Swap Agreements required by Section 8.20(a)(ii) and all of the
Swap Agreements required by Section 8.20(a)(iii) until the date that is six
(6) months after the Effective Date.

(c) On or before each six (6) month anniversary of the Effective Date the
Borrower will enter into and maintain Swap Agreements in accordance with the
Borrower’s Swap Policy, with Approved Counterparties, the notional volumes for
which (when aggregated and netted with other commodity Swap Agreements then in
effect other than basis differentials swaps on volumes already hedged pursuant
to other Swap Agreements), as of the date such Swap Agreement is executed, of
not less than (i) 75% of the Reasonably Anticipated Projected Production from
the Oil and Gas Properties with Proved Developed Producing Reserves, as listed
on the most recently delivered Reserve Report, of the Loan Parties for each of
crude oil, liquids and natural gas, calculated separately or in the aggregate
based upon the relative economic value of each of crude oil, liquids and natural
gas, including basis differentials, during the period commencing on the month
when such Swap Agreement is executed through the 24th month thereafter (with no
individual month less than 70%), (ii) 50% of the Reasonably Anticipated
Projected Production from the Oil and Gas Properties with Proved Developed
Producing Reserves, as listed on the most recently delivered Reserve Report, of
the Loan Parties for each of crude oil, liquids and natural gas, calculated
separately or in the aggregate based upon the relative economic value of each of
crude oil, liquids and natural gas, including basis differentials, during the
period commencing on the 25th month after such Swap Agreement is executed
through the 36th month after such Swap Agreement is executed (with no individual
month less than 45%), and (iii) 35% of the Reasonably Anticipated Projected
Production from the Oil and Gas Properties with Proved Developed Producing
Reserves, as listed on the most recently delivered Reserve Report, of the Loan
Parties for each of crude oil, liquids and natural gas, calculated separately or
in the aggregate based upon the relative economic value of each of crude oil,
liquids and natural gas, including basis differential, during the period
commencing on the 37th month after such Swap Agreement is executed through the
48th month after such Swap Agreement is executed (with no individual month less
than 30%).

Section 8.21 EEA Financial Institution. Neither the Borrower nor any other
Subsidiary of the Borrower is an EEA Financial Institution.

Section 8.22 Post-Effective Date Requirements.

(a) Within three (3) Business Days after the Effective Date (or such later date
as may be reasonably agreed by the Administrative Agent), the Borrower shall
cause PennTex Resources Illinois, Inc. to close the Deposit Account number
8891671607 at Manufacturers and Traders Trust Company.

(b) Within fifteen (15) days after the Effective Date, the Borrower shall have
obtained a CUSIP number for the Loans and an LXID with IHSMarkit.

 

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ARTICLE IX

NEGATIVE COVENANTS

Until the Commitments have expired or terminated and the principal of and
interest on each Loan and all fees payable hereunder and all other amounts
payable under the Loan Documents (other than contingent indemnification
obligations for which no claim has been made) have been paid in full and all
Letters of Credit shall have expired or terminated or been Cash Collateralized
and all LC Disbursements shall have been reimbursed, the Borrower covenants and
agrees with the Lenders that:

Section 9.01 Financial Covenants.

(a) PDP Coverage Ratio. The Borrower will not permit, as of the last day of any
fiscal quarter ending on or after December 31, 2017, the PDP Coverage Ratio to
be less than 1.65 to 1.00.

(b) Ratio of Net Senior Secured Debt to EBITDAX. The Borrower will not, as of
the last day of any fiscal quarter ending on or after March 31, 2017, permit its
ratio of Net Senior Secured Debt as of such date to EBITDAX for the period of
four (4) fiscal quarters then ending on such day to be greater than 3.25 to
1.00; provided that EBITDAX for the four (4) fiscal quarters ending on
(i) March 31, 2017 shall be EBITDAX for the fiscal quarter then ending
multiplied by four (4) and (ii) June 30, 2017 shall be EBITDAX for the two
(2) fiscal quarters then ending multiplied by two (2).

(c) Ratio of EBITDAX to Interest Expense. The Borrower will not, as of the last
day of any fiscal quarter ending on or after September 30, 2017, permit its
ratio of EBITDAX for the four (4) fiscal quarters then ending to cash Interest
Expense for such four (4) fiscal quarter period to be less than (i) 1.0 to 1.0
for any fiscal quarter ending on or before December 31, 2017 and (ii) 1.3 to 1.0
for each fiscal quarter thereafter.

Section 9.02 Debt. The Borrower will not, and will not permit any Subsidiary to,
incur, create, assume or suffer to exist any Debt, except:

(a) the Secured Obligations or any guaranty of or suretyship arrangement for the
Secured Obligations.

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

(c) Debt under Capital Leases not to exceed $5,000,000 in the aggregate at any
one time.

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

 

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(e) Intercompany Debt between the Borrower and any Subsidiary Guarantor or
between Subsidiary Guarantors to the extent permitted by Section 9.05(h);
provided that (i) such Debt is not held, assigned, transferred, negotiated or
pledged to any Person other than the Borrower or one of its Wholly-Owned
Subsidiaries that is a Guarantor, (ii) any such Debt owed by either the Borrower
or a Guarantor shall be subordinated to the Secured Obligations on terms set
forth in the Guaranty Agreement and (iii) any such Debt shall not have any
scheduled amortization prior to 90 days after the Maturity Date.

(f) Endorsements of negotiable instruments for collection in the ordinary course
of business.

(g) Guarantees of the Borrower and any Guarantor in respect of Debt otherwise
permitted hereunder.

(h) Debt in respect of (i) the Unsecured Senior Notes and any guarantees
thereof, in an aggregate stated principal amount which does not exceed at any
time outstanding $12,696,000, (ii) the Second Lien Notes and any guarantees
thereof in an aggregate principal amount not to exceed $587,950,000 at any time
outstanding, and (iii) Debt which constitutes Permitted Refinancing Debt of any
of the foregoing or of Permitted Refinancing Debt; provided that any reduction
of any of the foregoing as a result of a Debt Equitization Event shall reduce
the amount permitted to be outstanding pursuant to this Section 9.02(h) by the
amount of such Debt so reduced.

(i) The Keystone Transactions.

(j) Debt in a deemed principal amount not in excess of $10,000,000 resulting
from the Transfer contemplated by Section 9.12(m)(i) on terms substantially
similar to the prior Keystone Transactions or terms otherwise reasonably
acceptable to the Administrative Agent.

(k) Other Debt not to exceed $10,000,000 in the aggregate principal amount at
any one time outstanding.

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

(a) Liens granted under the Loan Documents securing the payment of any Secured
Obligations.

(b) Excepted Liens.

(c) Liens securing Capital Leases permitted by Section 9.02(d) but only on the
Property under lease.

(d) Liens existing on the date hereof and listed in Schedule 9.03 and any
renewals or extensions thereof; provided that (i) neither the property nor the
description of the property covered thereby is changed other than as a result of
maintenance Capital Expenditures, (ii) the amount secured or benefited thereby
is not increased, and (iii) the direct or any contingent obligor with respect
thereto is not changed other than in a transaction that is not prohibited by
Section 9.11.

 

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(e) Liens on Property not otherwise permitted by the foregoing clauses of this
Section 9.03; provided that the aggregate principal or face amount of all Debt
secured under this Section 9.03(e) shall not exceed $1,000,000 at any time.

(f) Liens on the Property of a Person which becomes a Subsidiary, or Property
acquired after the date hereof securing Debt permitted by Section 9.02; provided
that (i)such Liens existed at the time such Person becomes a Subsidiary or such
Property is acquired, as the case may be, and were not created in anticipation
thereof, (ii) no such Lien covers any other Property of the Borrower or a
Guarantor, and (iii) the amount of Debt secured thereby is not increased.

(g) Liens on Property securing Second Lien Notes (or Permitted Refinancing Debt
in respect thereof) permitted by Section 9.02(i); provided, however, that
(i) such Liens are subordinate to the Liens securing the Secured Obligations
pursuant to the Second Lien Intercreditor Agreement or another intercreditor
agreement reasonably satisfactory to the Administrative Agent and (ii) both
before and immediately after giving effect to the incurrence of any such Lien,
(A) the Borrower has, or has caused its Subsidiaries to, first grant to the
Collateral Agent to secure the Secured Obligations, a prior Lien on the same
Property pursuant to Security Instruments in form and substance reasonably
satisfactory to the Collateral Agent to the extent a prior Lien has not already
been granted to the Collateral Agent on such Property (and in connection
therewith, the Borrower shall, or shall cause its Subsidiaries to, execute and
deliver such other additional closing documents, certificates and legal opinions
as shall reasonably be requested by the Administrative Agent or the Collateral
Agent); and (B) the Borrower is in compliance with the applicable intercreditor
agreement.

Section 9.04 Dividends, Distributions and Redemptions; Senior Debt Redemption
and Amendment.

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

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

(ii) Subsidiaries may declare and pay dividends ratably with respect to their
Equity Interests;

(iii) the Borrower may make Restricted Payments pursuant to and in accordance
with stock option plans or other benefit plans for management or employees of
the Borrower and its Subsidiaries;

 

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(iv) the Borrower may declare and pay the cumulative quarterly cash dividend to
the holders of the Series A Preferred Stock in accordance with the terms of the
Series A Preferred Stock in an aggregate amount not to exceed $2,400,000 if,
both before and immediately after giving effect thereto, no Default or Event of
Default has occurred and is continuing or would result therefrom;

(v) the Borrower may make Restricted Payments in respect of the Series A
Preferred Stock in an aggregate amount, together with all payments made in
reliance on Section 9.04(b)(i)(F), not in excess of $10,000,000; and

(vi) the Borrower may Redeem Series A Preferred Stock with cash proceeds
received from an issuance of Equity Interests (other than Disqualified Capital
Stock) of the Borrower provided that (A) no Default or Event of Default exists
or would exists upon such prepayment or redemption, (B) after giving pro forma
effect to such prepayment or redemption the Borrower is (I) in compliance with
the covenants hereunder and (II) the Borrower’s PDP Coverage Ratio is at least
1.85 to 1.00.

(b) Redemption or Amendment of Terms of Certain Debt. The Borrower will not, and
will not permit any Subsidiary to, prior to the date that is one hundred eighty
(180) days after the Maturity Date:

(i) call, make or offer to make any optional or voluntary Redemption of or
otherwise optionally or voluntarily Redeem (whether in whole or in part) the
Second Lien Notes, the Unsecured Senior Notes or any Permitted Refinancing Debt
in respect of any of the foregoing; provided that the Borrower may:

(A) Unsecured Senior Notes: prepay, repay or Redeem Unsecured Senior Notes with
the proceeds of any Permitted Refinancing Debt or exchange any Unsecured Senior
Notes for Equity Interests (other than Disqualified Capital Stock) of the
Borrower;

(B) Second Lien Notes: in connection with a Debt Equitization Event, exchange
Second Lien Notes for Equity Interests (other than Disqualified Capital Stock)
of the Borrower and with cash in an amount not to exceed $1,000,000;

(C) Second Lien Notes: prepay, repay or Redeem Second Lien Notes with the
proceeds of any Permitted Refinancing Debt or exchange Second Lien Notes for
Equity Interests (other than Disqualified Capital Stock) of the Borrower;

(D) Unsecured Senior Notes or Second Lien Notes: prepay, repay or Redeem
Unsecured Senior Notes or Second Lien Notes (or any Permitted Refinancing Debt
of either) with cash proceeds received from an issuance of Equity Interests
(other than Disqualified Capital Stock) of the Borrower provided that (I) no
Default or Event of Default exists or would exists upon such prepayment or
redemption, (II) after giving pro forma effect to such prepayment or redemption
the Borrower is (1) in compliance with the covenants hereunder and (2) the
Borrower’s PDP Coverage Ratio is at least 1.85 to 1.00;

 

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(E) Permitted Refinancing Debt. prepay, repay or Redeem Permitted Refinancing
Debt with the proceeds of any Permitted Refinancing Debt in respect thereof or
exchange such Permitted Refinancing Debt for Equity Interests (other than
Disqualified Capital Stock) of the Borrower; and

(F) Unsecured Senior Notes and Second Lien Notes. prepay, repay or Redeem
Unsecured Senior Notes or Second Lien Notes in an aggregate cash amount,
together with all payments made in reliance on Section 9.04(a)(v), not to exceed
$10,000,000; or

(ii) amend, modify, waive or otherwise change, consent or agree to any
amendment, modification, waiver or other change to, any of the terms of the
Second Lien Documents, the Unsecured Senior Notes or any Permitted Refinancing
Debt of any of the foregoing if:

(A) the effect thereof would be to shorten its maturity or average life or
increase the amount of any payment of principal thereof or premium or fee (other
than a consent, amendment or similar fee consistent with market practice at such
time in the Borrower’s reasonable good faith determination) with respect thereto
or increase the rate (in an amount more than permitted in the definition of
“Permitted Refinancing Debt”) or shorten any period for payment of interest
thereon or would otherwise (taken as a whole) be materially adverse to the
interests of the Lenders; or

(B) such action requires the payment of a consent fee (howsoever described),
provided that the foregoing shall not prohibit the execution of other indentures
or agreements and fees standard at the time thereunder in connection with the
issuance of Permitted Refinancing Debt or the execution of supplemental
indentures to add guarantors if required by the terms of any Senior Debt
Indenture provided such Person complies with Section 8.14(b).

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

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

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

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

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

(e) deposits maturing within one year from the date of acquisition thereof with,
including certificates of deposit issued by, any Lender or any office located in
the United

 

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States of any other bank or trust company which is organized under the laws of
the United States or any state thereof, has capital, surplus and undivided
profits aggregating at least $100,000,000 (as of the date of such bank or trust
company’s most recent financial reports) and has a short term deposit rating of
no lower than A2 or P2, as such rating is set forth from time to time, by S&P or
Moody’s, respectively.

(f) repurchase obligations with a term of not more than 30 days from the date of
acquisition thereof for underlying securities of the type described in Section
9.05(c) and Section 9.05(e).

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

(h) Investments (i) made by the Borrower in or to the Guarantors, (ii) made by
any Subsidiary in or to the Borrower or any Guarantor and (iii) made by the
Borrower or any Subsidiary in or to all other Subsidiaries which are not
Guarantors in an aggregate amount at any one time outstanding not to exceed
$2,000,000.

(i) subject to the limits in Section 9.06, Investments (including capital
contributions) in general or limited partnerships or other types of entities
(each a “venture”) entered into by the Borrower or a Subsidiary with others in
the ordinary course of business; provided that (i) any such venture is engaged
exclusively in oil and gas exploration, development, production, processing and
related activities, including transportation, (ii) the interest in such venture
is acquired in the ordinary course of business and on fair and reasonable terms
and (iii) such venture interests acquired and capital contributions made (valued
as of the date such interest was acquired or the contribution made) do not
exceed, in the aggregate at any time outstanding an amount equal to $5,000,000.

(j) subject to the limits in Section 9.06, Investments in direct ownership
interests in additional Oil and Gas Properties and gas gathering systems related
thereto or related to farm-out, farm-in, joint operating, joint venture or area
of mutual interest agreements, gathering systems, pipelines or other similar
arrangements which are usual and customary in the oil and gas exploration and
production business located within the geographic boundaries of the United
States of America.

(k) loans or advances to employees, officers or directors in the ordinary course
of business of the Borrower or any of its Subsidiaries, in each case only as
permitted by applicable law, including Section 402 of the Sarbanes Oxley Act of
2002, but in any event not to exceed $2,000,000 in the aggregate at any time
outstanding.

(l) Investments in stock, obligations or securities received in settlement of
debts arising from Investments permitted under this Section 9.05 owing to the
Borrower or any Subsidiary as a result of a bankruptcy or other insolvency
proceeding of the obligor in respect of such debts or upon the enforcement of
any Lien in favor of the Borrower or any of its Subsidiaries; provided that the
Borrower shall give the Administrative Agent prompt written notice if the
aggregate amount of all Investments held at any one time under this Section
9.05(l) exceeds $5,000,000.

 

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(m) (i) guarantees permitted by Section 9.02, and (ii) guarantees by the
Borrower or any Subsidiary for the performance or payment obligations of the
Borrower or any Guarantor, which obligations were incurred in the ordinary
course of business and do not constitute Secured Obligations.

(n) Investments in any Person to the extent such Investment represents the
non-cash portion of consideration received for a disposition of any property
that was made pursuant to and in compliance with .Section 9.12

(o) any Investments received solely in exchange for Equity Interests consisting
of common stock of the Borrower.

(p) other Investments not to exceed $2,000,000 in the aggregate at any time.

(q) Investments by R.E. Gas in RW Gathering in an aggregate amount not to exceed
$30,000,000 in cash and $3,000,000 in Property (and for the avoidance of doubt,
such amounts are inclusive of Investments made prior to the Effective Date).

(r) Investments as a result of a debt exchange permitted by Section 9.04.

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

Section 9.07 Limitation on Leases. The Borrower will not, and will not permit
any Subsidiary to, create, incur, assume or suffer to exist any obligation for
the payment of rent or hire of Property of any kind whatsoever (real or personal
but excluding Capital Leases and leases of Oil and Gas Properties), under leases
or lease agreements which would cause the aggregate amount of all net payments
made by the Borrower and the Subsidiaries pursuant to all such leases or lease
agreements, including any residual payments at the end of any lease, to exceed
$5,000,000 in any period of twelve consecutive calendar months during the life
of such leases.

Section 9.08 Proceeds of Loans. The Borrower will not permit the proceeds of the
Loans to be used for any purpose other than those permitted by Section 7.21.
Neither the Borrower nor any Person acting on behalf of the Borrower has taken
or will take any action which might cause any of the Loan Documents to violate
Regulations T, U or X or any other regulation of the Board or to violate
Section 7 of the Securities Exchange Act of 1934 or any rule or regulation
thereunder, in each case as now in effect or as the same may hereinafter be in
effect. If requested by the Administrative Agent, the Borrower will furnish to
the Administrative Agent a statement to the foregoing effect in conformity with
the requirements of FR Form U-1 or such other form referred to in Regulation U,
Regulation T or Regulation X of the Board, as the case may be. The Borrower will
not request any Borrowing or Letter of Credit, and the Borrower shall not
directly or, to the knowledge of the Borrower, indirectly use, and shall procure
that its Subsidiaries and its or their respective directors, officers, employees
and agents shall not directly or, to the knowledge of such Person, indirectly
use, the proceeds of any Borrowing or Letter of Credit (a) in furtherance of an
offer, payment, promise to pay, or authorization of the payment or giving of
money, or anything else of value, to any Person in

 

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violation of any Anti-Corruption Laws, (b) for the purpose of funding, financing
or facilitating any activities, business or transaction of or with any
Sanctioned Person, or in any Sanctioned Country to the extent such activities,
businesses or transaction would be prohibited by Sanctions if conducted by a
corporation incorporated in the United States or (c) in any manner that would
result in the violation of any Sanctions applicable to any party hereto.

Section 9.09 ERISA Compliance. The Borrower will not, and will not permit any
Subsidiary to, at any time:

(a) engage in, or permit any ERISA Affiliate to engage in, any transaction in
connection with which the Borrower, a Subsidiary or any ERISA Affiliate could be
subjected to either a civil penalty assessed pursuant to subsections (c), (i) or
(l) of section 502 of ERISA or a tax imposed by Chapter 43 of Subtitle D of the
Code.

(b) terminate, or permit any ERISA Affiliate to terminate, any Plan in a manner,
or take any other action with respect to any Plan, which could result in any
liability of the Borrower, a Subsidiary or any ERISA Affiliate to the PBGC.

(c) fail to make, or permit any ERISA Affiliate to fail to make, full payment
when due of all amounts which, under the provisions of any Plan, agreement
relating thereto or applicable law, the Borrower, a Subsidiary or any ERISA
Affiliate is required to pay as contributions thereto.

(d) permit to exist, or allow any ERISA Affiliate to permit to exist, any
accumulated funding deficiency within the meaning of section 302 of ERISA or
section 412 of the Code, whether or not waived, with respect to any Plan.

(e) except as could not reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect, permit, or allow any ERISA Affiliate to
permit, the actuarial present value of the benefit liabilities under any Plan
maintained by the Borrower, a Subsidiary or any ERISA Affiliate which is
regulated under Title IV of ERISA to exceed the current value of the assets
(computed on a plan termination basis in accordance with Title IV of ERISA) of
such Plan allocable to such benefit liabilities. The term “actuarial present
value of the benefit liabilities” shall have the meaning specified in section
4041 of ERISA.

(f) except as could not reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect, contribute to or assume an obligation to
contribute to, or permit any ERISA Affiliate to contribute to or assume an
obligation to contribute to, any Multiemployer Plan.

(g) except as could not reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect, acquire, or permit any ERISA Affiliate to
acquire, an interest in any Person that causes such Person to become an ERISA
Affiliate with respect to the Borrower or a Subsidiary or with respect to any
ERISA Affiliate of the Borrower or a Subsidiary if such Person sponsors,
maintains or contributes to, or at any time in the six-year period preceding
such acquisition has sponsored, maintained, or contributed to, (1) any
Multiemployer Plan, or (2) any other Plan that is subject to Title IV of ERISA
under which the actuarial present value of the benefit liabilities under such
Plan exceeds the current value of the assets (computed on a plan termination
basis in accordance with Title IV of ERISA) of such Plan allocable to such
benefit liabilities.

 

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(h) incur, or permit any ERISA Affiliate to incur, a liability to or on account
of a Plan under sections 515, 4062, 4063, 4064, 4201 or 4204 of ERISA.

(i) amend, or permit any ERISA Affiliate to amend, a Plan resulting in an
increase in current liability such that the Borrower, a Subsidiary or any ERISA
Affiliate is required to provide security to such Plan under section 401(a)(29)
of the Code.

Section 9.10 Sale or Discount of Receivables. Except for receivables obtained by
the Borrower or any Subsidiary out of the ordinary course of business or the
settlement of joint interest billing accounts in the ordinary course of business
or discounts granted to settle collection of accounts receivable or the sale of
defaulted accounts arising in the ordinary course of business in connection with
the compromise or collection thereof and not in connection with any financing
transaction, the Borrower will not, and will not permit any Subsidiary to,
discount or sell (with or without recourse) any of its notes receivable or
accounts receivable.

Section 9.11 Mergers, Etc. Other than (i) a merger of the Borrower or a Domestic
Subsidiary to effectuate a reincorporation or statutory conversion in another
state of the United States or (ii) a statutory conversion in any state of the
United States, in either case upon at least 30 days’ prior written notice to the
Administrative Agent, the Borrower will not, and will not permit any Subsidiary
to, merge into or with or consolidate with any other Person, or permit any other
Person to merge into or consolidate with it, or sell, transfer, lease or
otherwise dispose of (whether in one transaction or in a series of transactions)
all or substantially all of its Property to any other Person (whether now owned
or hereafter acquired) (any such transaction, a “consolidation”), or liquidate
or dissolve; except that (i) any Guarantor may merge with or dissolve into any
other Guarantor, (ii) that the Borrower may merge with any Subsidiary (or such
Subsidiary may be dissolved into the Borrower) so long as the Borrower is the
survivor, (iii) any Subsidiary may dispose of all or substantially all of its
assets (upon voluntary liquidation or otherwise) to the Borrower or to another
Subsidiary, and may thereafter liquidate or dissolve if applicable; provided
that if the transferor in such a transaction is a Guarantor, then the transferee
must either be the Borrower or a Guarantor and (iv) the Borrower or any
Subsidiary may dispose of all of the Equity Interests of any Subsidiary in
accordance with .Section 9.12

Section 9.12 Sale of Properties. The Borrower will not, and will not permit any
Subsidiary to, sell, assign, farm-out, convey or otherwise transfer any Property
(each, a “Transfer”) except for:

(a) the sale of Hydrocarbons in the ordinary course of business;

(b) farmouts in the ordinary course of business of non-proven acreage and
assignments in connection with such farmouts on standard industry terms for
non-proven acreage at the time, or the abandonment, farm-out, exchange, lease or
sublease of Oil and Gas Properties not containing such reserves;

 

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(c) the sale or transfer of equipment that is no longer useful or necessary for
the business of the Borrower or such Subsidiary or is replaced by equipment of
at least comparable value or use;

(d) the sale or other disposition of any Oil and Gas Property or any interest
therein or any Subsidiary owning Oil and Gas Properties; provided that (i) 100%
of the consideration received in respect of such sale or other disposition shall
be cash, (ii) the consideration received in respect of such sale or other
disposition shall be equal to or greater than the fair market value of the Oil
and Gas Property, interest therein or Subsidiary subject of such sale or other
disposition (if such consideration exceeds $5,000,000, as reasonably determined
by the board of directors or other governing body of the Borrower and, if
requested by the Administrative Agent, the Borrower shall deliver a certificate
of a Responsible Officer of the Borrower certifying to that effect), and
(iii) if any such sale or other disposition is of a Subsidiary owning Oil and
Gas Properties, such sale or other disposition shall include all the Equity
Interests of such Subsidiary;

(e) dispositions permitted by ;((Section 9.11 (other than Section 9.11(iv

(f) the trade or exchange of unproved Oil and Gas Properties or Proved
Undeveloped Reserves for Oil and Gas Properties of equivalent (as reasonably
determined by the Borrower in good faith) value (including any cash or Cash
Equivalents necessary to achieve an exchange of equivalent value);

(g) the grant in the ordinary course of business of any non-exclusive license of
patents, trademarks, registrations therefor and other similar intellectual
property;

(h) the granting of any Lien permitted hereunder and dispositions of property
subject to any such Lien that is transferred to the lienholder or its designee
in satisfaction or settlement of such lienholder’s claim;

(i) any disposition of assets pursuant to (i) a condemnation, appropriation,
seizure or similar taking or proceeding by a Governmental Authority, (ii) the
requirement of, or at the direction of, a Governmental Authority or (iii) a
Casualty Event;

(j) dispositions of assets constituting non-cash contributions to a joint
venture to the extent such Investment is permitted pursuant to Section 9.05(i)
(for the purpose of determining compliance with the limitations of such Section,
the assets shall be valued at the value attributable thereto in the joint
venture agreement, or, if greater, fair market value);

(k) dispositions of Property to the Borrower or any Guarantor;

(l) sales and other dispositions of Properties having a fair market value not to
exceed $5,000,000 during any 12-month period;

(m) the divestiture of (i) the Salineville, Ohio waterline and related assets,
including certain impoundments/temporary waterlines used in connection with such
waterline for an aggregate amount not in excess of $10,000,000 and
(ii) divestiture of assets located in Western Lawrence Area consisting of wells,
equipment and all related property and appurtenances on (A) the Patterson Pad
and (B) the Kephart Pad for an aggregate amount not in excess of $10,000,000;
and

(n) the disposition described on Schedule 9.12; provided that the consideration
for such disposition does not exceed $2,500,000.

 

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Section 9.13 Environmental Matters. The Borrower will not, and will not permit
any Subsidiary to, cause or permit any of its Property to be in violation of, or
perform any action or permit any action which will subject any such Property to
any Remedial Work under any Environmental Laws, assuming disclosure to the
applicable Governmental Authority of all relevant facts, conditions and
circumstances, if any, pertaining to such Property where such violations or
remedial obligations could reasonably be expected to have a Material Adverse
Effect.

Section 9.14 Transactions with Affiliates. The Borrower will not, and will not
permit any Subsidiary to, enter into any transaction, including any purchase,
sale, lease or exchange of Property or the rendering of any service, with any
Affiliate (other than the Guarantors) unless such transactions are upon fair and
reasonable terms no less favorable to it than it would obtain in a comparable
arm’s length transaction with a Person not an Affiliate; provided that the
foregoing restriction shall not apply to transactions as follows: (i)
transactions between or among the Borrower and any Guarantor or between and
among any Guarantors; (ii) any Restricted Payment permitted by Section 9.04(a)
or transactions permitted by Section 9.04(b); (iii) Investments permitted under
Section 9.05(h), Section 9.05(i) or Section 9.05(j); (iv) loans and advances
permitted under Section 9.05(k) and Guarantees permitted under Section 9.05(m);
(v) the performance of employment, equity award, equity option or equity
appreciation agreements, plans or other similar compensation or benefit plans or
arrangements (including vacation plans, health and insurance plans, deferred
compensation plans and retirement or savings plans) entered into by the Borrower
or any Subsidiary in the ordinary course of its business with its employees,
officers and directors; (vi) the performance of any agreement set forth under
Schedule and existing on the date hereof or as otherwise in a form as 9.14
provided on such Schedule, together with each extension, renewal, amendment or
modification to the extent it does not expand the scope of undertakings provided
thereby on more restrictive or onerous terms than as in effect on the date
hereof; and (vii) fees and compensation to, and indemnity provided on behalf of,
officers, directors, and employees of the Borrower or any Guarantor in their
capacity as such, to the extent such fees and compensation are customary.

Section 9.15 Subsidiaries. The Borrower will not, and will not permit any
Subsidiary to, create or acquire any additional Subsidiary unless the Borrower
gives written notice to the Administrative Agent of such creation or acquisition
and complies with Section 8.14(b). The Borrower shall not, and shall not permit
any Subsidiary to, sell, assign or otherwise dispose of any Equity Interests in
any Subsidiary except in compliance with Section 9.12. Neither the .Subsidiary
shall have any Foreign Subsidiaries Borrower nor any

Section 9.16 Negative Pledge Agreements; Dividend Restrictions. Except for
restrictions and conditions:

(a) imposed by law;

 

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(b) of a customary nature contained in agreements relating to the disposition of
a Subsidiary otherwise permitted under this Agreement pending such disposition;
provided such restrictions and conditions apply only to the Subsidiary that is
to be Disposed of;

(c) contained in the Second Lien Note Documents (and any Permitted Refinancing
Debt thereof);

(d) contained in joint venture agreements or other similar agreements entered
into in the ordinary course of business in respect to the disposition or
distribution of assets of such joint venture;

(e) in any negative pledge incurred or provided in favor of any holder of a Lien
permitted by clause (g) in the defined term “Excepted Liens” or by Section
9.03(c) or (e) solely to the extent such negative pledge relates to the property
the subject of such Debt or Lien;

(f) contained in customary provisions in leases, licenses and similar contracts
restricting the assignment, encumbrance, sub-letting or transfer thereof; and

(g) with respect to any Excluded Collateral (as defined in the Guaranty
Agreement);

the Borrower will not, and will not permit any Subsidiary to, create, incur,
assume or suffer to exist any contract, agreement or understanding which in any
way prohibits or restricts the granting, conveying, creation or imposition of
any Lien on any of its Property in favor of the Collateral Agent and the Lenders
or restricts any Subsidiary from paying dividends or making distributions to the
Borrower or any Guarantor, or which requires the consent of or notice to other
Persons in connection therewith.

Section 9.17 Gas Imbalances, Take-or-Pay or Other Prepayments or Minimum Volume
Contracts. The Borrower will not, and will not permit any Subsidiary to,
(a) allow gas imbalances, take-or-pay or other prepayments with respect to the
Oil and Gas Properties of the Borrower or any Subsidiary that would require the
Borrower or such Subsidiary to deliver Hydrocarbons at some future time without
then or thereafter receiving full payment therefor to exceed one bcf of gas (on
an mcf equivalent basis) in the aggregate or (b) enter into additional minimum
volume contracts for gathering, processing or transportation of production that
require the payment of a fee in the event such minimum volumes are not met which
are in areas where such contracts are already in place or for production where
such contracts are already in place covering more than the sum of (a) Reasonably
Anticipated Projected Production and (b) that production which the Borrower
reasonably expects will result from budgeted oil and gas capital expenditures
expected to occur within the twelve month period from the date of measurement.

Section 9.18 Swap Agreements. The Borrower will not, and will not permit any
Subsidiary to, enter into any Swap Agreements that would cause it to violate the
Borrower’s Swap Policy, or with any Person other than (a) Swap Agreements in
respect of commodities (i) with an Approved Counterparty and (ii) the notional
volumes for which (when aggregated with other commodity Swap Agreements then in
effect other than basis differential swaps on volumes

 

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already hedged pursuant to other Swap Agreements) do not exceed, as of the date
such Swap Agreement is executed, 90% of Reasonably Anticipated Projected
Production for the 36 months following the date such Swap Agreement is entered
into, and 75% of Reasonably Anticipated Projected Production thereafter, for
each of crude oil, liquids and natural gas, calculated separately; provided that
the Borrower may purchase put or floor options as to which an upfront premium
has been paid and which do not require further payment by the Borrower, the
notional volumes for which exceed the foregoing percentage limitations (but
which, when aggregated with other commodity Swap Agreements then in effect, do
not exceed, as of the date such Swap Agreement is executed, 100% of Reasonably
Anticipated Projected Production, and (b) Swap Agreements in respect of interest
rates with an Approved Counterparty, as follows: (i) Swap Agreements effectively
converting interest rates from fixed to floating, the notional amounts of which
(when aggregated with all other Swap Agreements of the Borrower and its
Subsidiaries then in effect effectively converting interest rates from fixed to
floating) do not exceed 50% of the then outstanding principal amount of the
Borrower’s Debt for borrowed money which bears interest at a fixed rate and
(ii) Swap Agreements effectively converting interest rates from floating to
fixed, the notional amounts of which (when aggregated with all other Swap
Agreements of the Borrower and its Subsidiaries then in effect effectively
converting interest rates from floating to fixed) do not exceed the greater of
$20,000,000 and 75% of the then outstanding principal amount of the Borrower’s
Debt for borrowed money which bears interest at a floating rate. In no event
shall any Swap Agreement contain any requirement, agreement or covenant for the
Borrower or any Subsidiary to post collateral or margin to secure their
obligations under such Swap Agreement or to cover market exposures other than
collateral provided for in, and upon the terms and conditions set forth in, this
Agreement and the relevant Security Instruments.

Section 9.19 Amendments to Series A Preferred Stock. The Borrower will not
amend, modify or supplement the terms of the Series A Preferred Stock in a
manner that could reasonably be expected to be adverse to the Administrative
Agent, Issuing Bank, Lenders or the Secured Swap Parties.

Section 9.20 New Deposit Accounts. The Borrower will not, and will not permit
any Guarantor to, open or otherwise establish, or deposit or otherwise transfer
Dedicated Cash Receipts into, any Deposit Account other than Deposit Accounts
listed in which the Collateral Agent has been granted a Lien in each such
Deposit Account and each such Deposit Account is subject to a Deposit Account
Control Agreement in favor of the Collateral Agent.

Section 9.21 Sale Lease-Leaseback. The Borrower will not, and will not permit
any Subsidiary to, enter into any sale lease-back transactions other than the
Keystone Transactions and the Salineville, Ohio waterline and related assets
transaction described in 9.12(m).

Section 9.22 Excluded ACH Account, Credit Line and Excluded Accounts.

(a) The Borrower shall only use the Excluded ACH Account to fund anticipated
automated clearing house payments to be made by the Borrower which are scheduled
to be sent within twenty-four (24) hours after such amounts are deposited in the
Excluded ACH Account in an amount equal to the lesser of $5,000,000 or the
anticipated payments to be made therefrom. After making each disbursement from
the Excluded ACH Account the Borrower shall deposit any remaining amounts in
such account in excess of $250,000 in a Deposit Account subject to Deposit
Account Control Agreement.

 

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(b) The Borrower will not permit the credit line it maintains for funding of
automated clearing house payments to exceed a principal amount of $5,000,000 at
any time.

(c) The Borrower shall not allow the amount in any Deposit Account that is an
Excluded Deposit Account solely pursuant to clause (d) of the definition thereof
to exceed $100,000 at any time.

ARTICLE X

EVENTS OF DEFAULT; REMEDIES

Section 10.01 Events of Default. The occurrence of any one or more of the
following events shall constitute an “Event of Default”:

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

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

(c) any representation or warranty made or deemed made by or on behalf of the
Borrower or any Subsidiary in or in connection with any Loan Document or any
amendment or modification of any Loan Document or waiver under such Loan
Document, or in any report, certificate, financial statement or other document
furnished by or on behalf of the Borrower or any Subsidiary pursuant to or in
connection with any Loan Document or any amendment or modification thereof or
waiver thereunder, shall prove to have been incorrect when made or deemed made.

(d) the Borrower or any Subsidiary shall fail to observe or perform any
covenant, condition or agreement contained in Section 3.04(b), Section 8.01(i),
Section 8.01(m), Section 8.02, Section 8.03, ,Section 8.14Section 8.15, Section
8.17, Section 8.18 or in Article .IX

(e) the Borrower or any Subsidiary shall fail to observe or perform any
covenant, condition or agreement contained in this Agreement (other than those
specified in Section 10.01(a), Section 10.01(b) or Section 10.01(d)) or any
other Loan Document (i) with respect to Section 8.04 with respect to Taxes,
Section 8.07, Section 8.12 or Section 8.20 and such failure shall continue
unremedied for a period of 10 days after the earlier to occur of (A) notice
thereof from the Administrative Agent to the Borrower (which notice will be
given at the request of any Lender) or (B) a Responsible Officer of the Borrower
or such Subsidiary otherwise becoming aware of such default or (ii) with respect
to any other provisions of this Agreement and such failure shall continue
unremedied for a period of 30 days after the earlier to occur of

 

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(A) notice thereof from the Administrative Agent to the Borrower (which notice
will be given at the request of any Lender) or (B) a Responsible Officer of the
Borrower or such Subsidiary otherwise becoming aware of such default.

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

(g) any event or condition occurs that results in any Material Indebtedness
becoming due prior to its scheduled maturity or that enables or permits (with or
without the giving of notice, the lapse of time or both) the holder or holders
of any Material Indebtedness or any trustee or agent on its or their behalf to
cause any Material Indebtedness to become due, or to require the Redemption
thereof or any offer to Redeem to be made in respect thereof, prior to its
scheduled maturity or require the Borrower or any Subsidiary to make an offer in
respect thereof provided that this Section 10.01(g) shall not apply to Debt that
becomes due as a result of the voluntary sale or transfer of the property or
assets securing such Debt, if such sale or transfer is permitted hereunder and
the Borrower repays such Debt in full upon receipt of the Net Cash Proceeds from
such sale or transfer.

(h) an involuntary proceeding shall be commenced or an involuntary petition
shall be filed seeking (i) liquidation, reorganization or other relief in
respect of the Borrower or any Guarantor or its debts, or of a substantial part
of its assets, under any Federal, state or foreign bankruptcy, insolvency,
receivership or similar law now or hereafter in effect or (ii) the appointment
of a receiver, trustee, custodian, sequestrator, conservator or similar official
for the Borrower or any Guarantor or for a substantial part of its assets, and,
in any such case, such proceeding or petition shall continue undismissed for
sixty (60) days or an order or decree approving or ordering any of the foregoing
shall be entered.

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

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

(k) (i) one or more judgments for the payment of money in an aggregate amount in
excess of $20,000,000 (to the extent not covered by independent third party
insurance provided by financially sound and reputable insurers as to which the
insurer does not dispute coverage and is not subject to an insolvency
proceeding) or (ii) any one or more non-monetary judgments that have, or could
reasonably be expected to have, individually or in the aggregate, a

 

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Material Adverse Effect, shall be rendered against the Borrower, any Subsidiary
or any combination thereof and the same shall remain undischarged for a period
of 30 consecutive days during which execution shall not be effectively stayed,
or any action shall be legally taken by a judgment creditor to attach or levy
upon any assets of the Borrower or any Subsidiary to enforce any such judgment.

(l) any material provision of any Loan Document after delivery thereof shall for
any reason, except to the extent permitted by the terms thereof, cease to be in
full force and effect and valid, binding and enforceable in accordance with
their terms against the Borrower or a Guarantor party thereto as represented and
warranted pursuant to Section 7.02 or shall be repudiated by any of them, or
cease to create a valid and perfected Lien of the priority required thereby on
any of the collateral purported to be covered thereby, except to the extent
permitted by the terms of this Agreement, or the Borrower or any Guarantor shall
so state in writing.

(m) an ERISA Event shall have occurred that, when taken together with all other
ERISA Events that have occurred, could reasonably be expected to result in a
Material Adverse Effect.

(n) a Change in Control shall occur.

Section 10.02 Remedies.

(a) In the case of an Event of Default:

(i) other than one described in Section 10.01(h), Section 10.01(i) or Section
10.01(j), at any time thereafter during the continuance of such Event of
Default, the Administrative Agent may, and at the request of the Majority
Lenders, shall, by notice to the Borrower, take either or both of the following
actions, at the same or different times:

(A) terminate the Commitments (provided that, before such termination, Delayed
Draw Commitments in an amount necessary to Cash Collateralize each Delayed Draw
Lender’s Delayed Draw Applicable Percentage of the lesser of (I) the then
current LC Exposure and (II) the Cash Collateralization Cap, will be funded
pursuant to Section 2.06 as Delayed Draw Loans by the Delayed Draw Lenders to
the Issuing Bank to secure the reimbursement obligations of the Borrower with
respect to such Letters of Credit), and thereupon the Commitments shall
terminate immediately and the Yield Maintenance Amount, Call Protection Amount
and other similar amounts on such terminated Commitments (including any
Commitments that were utilized to secure the reimbursement obligations of the
Borrower with respect to Letters of Credit) shall be due and payable
immediately, without presentment, demand, protest, notice of intent to
accelerate, notice of acceleration or other notice of any kind, all of which are
hereby waived by the Borrower and each Guarantor, and/or

(B) declare the principal amount of the Notes and the Loans then outstanding,
and accrued interest, fees, Yield Maintenance Amount, Call Protection Amount and
other similar amounts thereon, to be due and payable in whole (or in part, in

 

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which case any principal not so declared to be due and payable may thereafter be
declared to be due and payable), and thereupon the principal of the Loans so
declared to be due and payable, together with accrued interest thereon and all
fees and other obligations of the Borrower and the Guarantors accrued hereunder
and under the Notes and the other Loan Documents (including the payment of Cash
Collateral to secure the LC Exposure as provided in Section 2.06(j)) shall
become due and payable immediately, without presentment, demand, protest, notice
of intent to accelerate, notice of acceleration or other notice of any kind, all
of which are hereby waived by the Borrower and each Guarantor; and

(ii) described in Section 10.01(h), Section 10.01(i) or Section 10.01(j):

(A) the Commitments shall automatically terminate (provided that Delayed Draw
Commitments in an amount necessary to Cash Collateralize each Delayed Draw
Lender’s Delayed Draw Applicable Percentage of the lesser of (I) the then
current LC Exposure and (II) the Cash Collateralization Cap, will be funded
pursuant to Section 2.06 as Delayed Draw Loans by the Delayed Draw Lenders (in
an amount not to exceed each such Lender’s Delayed Draw Amount) to the Issuing
Bank to secure the reimbursement obligations of the Borrower with respect to
such Letters of Credit) and the Yield Maintenance Amount, Call Protection Amount
and other similar amounts on such terminated Commitments (including any
Commitments that were utilized to secure the reimbursement obligations of the
Borrower with respect to Letters of Credit) shall automatically become due and
payable, without presentment, demand, protest or other notice of any kind, all
of which are hereby waived by the Borrower and each Guarantor; and

(B) the principal amount of the Notes and the principal of the Loans then
outstanding, together with accrued interest thereon and all fees, Yield
Maintenance Amount, Call Protection Amount and the other obligations of the
Borrower and the Guarantors accrued hereunder and under the Notes and the other
Loan Documents (including the payment of Cash Collateral to secure the LC
Exposure as provided in Section 2.06(j)) shall automatically become due and
payable, without presentment, demand, protest or other notice of any kind, all
of which are hereby waived by the Borrower and each Guarantor.

Without limiting the generality of the foregoing, it is understood and agreed
that if, prior to the Maturity Date, the Loans are accelerated or otherwise
become due, in each case, in respect of any Event of Default (including, but not
limited to, upon the occurrence of a bankruptcy or insolvency event (including
the acceleration of claims by operation of law) (a “Yield Maintenance Event”)),
the Call Protection Amount and Yield Maintenance Amount that would have applied
if, at the time of such acceleration, the Borrower had (i) paid, refinanced,
substituted or replaced any or all of the Loans as contemplated in Sections 3.01
and/or 3.04 will also be due and payable as though a Yield Maintenance Event had
occurred and the Call Protection Amount and Yield Maintenance Amount shall
constitute part of the Secured Obligations, in view of the impracticability and
extreme difficulty of ascertaining actual damages and by mutual agreement of the
parties as to a reasonable calculation of the Lenders’ lost profits as a result
thereof. Any Call Protection Amount and Yield Maintenance Amount payable above

 

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shall be presumed to be the liquidated damages sustained by the Lenders as the
result of payment or acceleration, as applicable, prior to the Maturity Date and
the Borrower and Guarantors agree that the Call Protection Amount and Yield
Maintenance Amount are reasonable under the circumstances currently existing.
The Call Protection Amount and Yield Maintenance Amount shall also be payable in
the event the Secured Obligations (and/or this Agreement) are satisfied or
released by foreclosure (whether by power of judicial proceeding), deed in lieu
of foreclosure or by any other similar means. THE BORROWER AND EACH GUARANTOR
EXPRESSLY WAIVES (TO THE FULLEST EXTENT IT MAY LAWFULLY DO SO) THE PROVISIONS OF
ANY PRESENT OR FUTURE STATUTE OR LAW THAT PROHIBITS OR MAY PROHIBIT THE
COLLECTION OF THE FOREGOING CALL PROTECTION AMOUNT AND YIELD MAINTENANCE AMOUNT
IN CONNECTION WITH ANY SUCH ACCELERATION. The Borrower and each Guarantor
expressly agrees (to the fullest extent that it may lawfully do so) that:
(A) the Call Protection Amount and Yield Maintenance Amount are reasonable and
are the product of an arm’s length transaction between sophisticated business
people, ably represented by counsel; (B) the Call Protection Amount and Yield
Maintenance Amount shall be payable notwithstanding the then prevailing market
rates at the time payment is made; (C) there has been a course of conduct
between the Lenders and the Borrower and Guarantors giving specific
consideration in this transaction for such agreement to pay the Call Protection
Amount and Yield Maintenance Amount; and (D) the Borrower and each Guarantor
shall each be estopped hereafter from claiming differently than as agreed to in
this paragraph. The Borrower and each Guarantor expressly acknowledges that its
agreement to pay the Call Protection Amount and Yield Maintenance Amount to the
Lenders as herein described is a material inducement to the Lenders to provide
the Commitments and make the Loans. In the case of any Event of Default
occurring by reason of any willful action or inaction taken or not taken by or
on behalf of the Borrower or any Guarantor with the intention of avoiding
payment of the Call Protection Amount and Yield Maintenance Amount that the
Borrower would have had to pay if the Borrower then had elected to pay the Loans
prior to the Maturity Date pursuant to Section 3.01 and/or 3.04(a), an
equivalent premium, without duplication, will become and be immediately due and
payable to the extent permitted by law upon the acceleration of the Loans.

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

(c) All proceeds realized from the liquidation or other disposition of
collateral or otherwise received after maturity of the Notes, whether by
acceleration or otherwise, shall be applied:

(i) first, to payment or reimbursement of that portion of the Secured
Obligations constituting fees, expenses and indemnities payable to the
Administrative Agent, the Collateral Agent and the Issuing Bank in their
capacities as such;

(ii) second, pro rata to payment or reimbursement of that portion of the Secured
Obligations (other than the Secured Cash Management Obligations) constituting
fees, expenses and indemnities payable to the Lenders and any Secured Swap
Parties (to the extent not paid pursuant to (i) above);

 

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(iii) third, pro rata to payment of accrued interest on the Loans and LC
Disbursements and any Yield Maintenance Amount and Call Protection Amount then
due other than any Excess First Lien RBL Obligations;

(iv) fourth, pro rata to payment of (A) principal outstanding on the Loans other
than Excess First Lien RBL Obligations, (B) reimbursement obligations in respect
of Letters of Credit pursuant to Section 2.06 other than Excess First Lien RBL
Obligations (and Cash Collateralization of LC Exposure hereunder, but not
Letters of Credit in an undrawn face amount in excess of the Cash
Collateralization Cap), (C) Secured Swap Obligations owing to Secured Swap
Parties (other than fees, expenses and indemnities paid pursuant to (ii) above),
and (D) Secured Cash Management Obligations owed to a Secured Cash Management
Provider;

(v) fifth, to the payment of Excess First Lien RBL Obligations;

(vi) sixth, pro rata to any other Secured Obligations; and

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

Notwithstanding the foregoing, amounts received from the Borrower or any
Guarantor that is not an “eligible contract participant” under the Commodity
Exchange Act shall not be applied to any Excluded Swap Obligation (it being
understood, that in the event that any amount is applied to Secured Obligations
other than any Excluded Swap Obligation as a result of this this clause, the
Administrative Agent shall make such adjustments as it determines are
appropriate to distributions pursuant to clause fourth above from amounts
received from “eligible contract participants” under the Commodity Exchange Act
to ensure, as nearly as possible, that the proportional aggregate recoveries
with respect to Secured Obligations described in clause fourth above by the
holders of any Excluded Swap Obligation are the same as the proportional
aggregate recoveries with respect to other Secured Obligations pursuant to
clause fourth above).

ARTICLE XI

THE ADMINISTRATIVE AGENT AND THE COLLATERAL AGENT

Section 11.01 Appointment; Powers. Each of the Lenders and the Issuing Bank
hereby irrevocably appoints the Administrative Agent and the Collateral Agent as
its agent and authorizes the Administrative Agent and/or the Collateral Agent,
as applicable, to take such actions on its behalf and to exercise such powers as
are delegated to the Administrative Agent or the Collateral Agent, as
applicable, by the terms hereof and the other Loan Documents, together with such
actions and powers as are reasonably incidental thereto. The provisions of this
Article are solely for the benefit of the Administrative Agent and the
Collateral Agent, the Lenders and the Issuing Bank, and neither the Borrower nor
any Guarantor shall have rights as a third party beneficiary of any of such
provisions (other than the provisions of Section 11.06). Each Lender (and each
Person that becomes a Lender hereunder pursuant to Section 12.04) hereby
authorizes and directs the Collateral Agent to enter into the Security
Instruments on behalf of such Lender, in each case, as the Collateral Agent
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the Collateral Agent may take such actions on its behalf as is contemplated by
the terms of any such applicable Security Instrument. Without limiting the
provisions of Sections 11.02 and 12.03, each Lender hereby consents to the
Administrative Agent and the Collateral Agent and any successor serving in
either such capacity and agrees not to assert any claim (including as a result
of any conflict of interest) against the Administrative Agent, the Collateral
Agent or any such successor, arising from the role of the Administrative Agent,
the Collateral Agent or such successor under the Loan Documents so long as it is
either acting in accordance with the terms of such documents and otherwise has
not engaged in gross negligence or willful misconduct.

Section 11.02 Duties and Obligations of Administrative Agent and Collateral
Agent. Neither the Administrative Agent nor the Collateral Agent shall have any
duties or obligations except those expressly set forth in the Loan Documents.
Without limiting the generality of the foregoing, (a) neither the Administrative
Agent nor the Collateral Agent shall be subject to any fiduciary or other
implied duties, regardless of whether a Default has occurred and is continuing
(the use of the term “agent” herein and in the other Loan Documents with
reference to the Administrative Agent or the Collateral Agent is not intended to
connote any fiduciary or other implied (or express) obligations arising under
agency doctrine of any applicable law; rather, such term is used merely as a
matter of market custom, and is intended to create or reflect only an
administrative relationship between independent contracting parties), (b)
neither the Administrative Agent nor the Collateral Agent shall have any duty to
take any discretionary action or exercise any discretionary powers, except as
provided in Section 11.03, and (c) except as expressly set forth herein, neither
the Administrative Agent nor the Collateral Agent shall have any duty to
disclose, and shall not be liable for the failure to disclose, any information
relating to the Borrower or any of its Affiliates that is communicated to or
obtained by the Person serving as Administrative Agent or Collateral Agent or
any of their Affiliates in any capacity. Neither the Administrative Agent nor
the Collateral Agent shall be deemed to have knowledge of any Default unless and
until written notice thereof is given to the Administrative Agent or Collateral
Agent by the Borrower or a Lender, and shall not be responsible for or have any
duty to ascertain or inquire into (i) any statement, warranty or representation
made in or in connection with this Agreement or any other Loan Document,
(ii) the contents of any certificate, report or other document delivered
hereunder or under any other Loan Document or in connection herewith or
therewith, (iii) the performance or observance of any of the covenants,
agreements or other terms or conditions set forth herein or in any other Loan
Document, (iv) the validity, enforceability, or effectiveness of this Agreement,
any other Loan Document or any other agreement, instrument or document, (v) the
satisfaction of any condition set forth in uired Article VI or elsewhere herein,
other than to confirm receipt of items expressly req to be delivered to the
Administrative Agent, the Collateral Agent or as to those conditions precedent
expressly required to be to the Administrative Agent’s satisfaction, (vi) the
existence, value, perfection or priority of any collateral security or the
financial or other condition of the Borrower and its Subsidiaries or any other
obligor or guarantor, or (vii) any failure by the Borrower or any other Person
(other than itself) to perform any of its obligations hereunder or under any
other Loan Document or the performance or observance of any covenants,
agreements or other terms or conditions set forth herein or therein. For
purposes of determining compliance with the conditions specified in Article VI,
each Lender shall be to, approved or accepted or to be satisfied with, each
deemed to have consented document or other matter required thereunder to be
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acceptable or satisfactory to a Lender unless the Administrative Agent shall
have received written notice from such Lender prior to the proposed closing date
specifying its objection thereto.

Section 11.03 Action by Administrative Agent and Collateral Agent.

(a) Neither the Administrative Agent nor the Collateral Agent shall have any
duty to take any discretionary action or exercise any discretionary powers,
except discretionary rights and powers expressly contemplated hereby or by the
other Loan Documents that the Administrative Agent and/or the Collateral Agent
is required to exercise in writing as directed by the Majority Lenders (or such
other number or percentage of the Lenders as shall be necessary under the
circumstances as provided in Section 12.02) and in all cases the Administrative
Agent and/or the Collateral Agent shall be fully justified in failing or
refusing to act hereunder or under any other Loan Documents unless (i) it shall
receive written instructions from the Majority Lenders or the Lenders, as
applicable, (or such other number or percentage of the Lenders as shall be
necessary under the circumstances as provided in tion 12.02) specifying the
action Sec to be taken (ii) such instructions do not conflict with the
provisions of this Agreement or any other Loan Document or any applicable law,
(iii) the Administrative Agent and/or the Collateral Agent determines, in its
sole and absolute discretion, that such instructions are not ambiguous,
inconsistent or in conflict with previously received instructions or otherwise
insufficient to direct the actions of the Administrative Agent and/or the
Collateral Agent (provided that the Administrative Agent and/or the Collateral
Agent explains the grounds for a refusal based on a deficiency of instructions)
and (iv) it shall be indemnified to its satisfaction by the Lenders against any
and all liability and expenses which may be incurred by it by reason of taking
or continuing to take any such action. The instructions as aforesaid and any
action taken or failure to act pursuant thereto by the Administrative Agent
and/or the Collateral Agent shall be binding on all of the Lenders. If a Default
has occurred and is continuing, then the Administrative Agent and/or the
Collateral Agent shall take such action with respect to such Default as shall be
directed by the requisite Lenders in the written instructions (with indemnities)
described in this Section 11.03; provided that, unless and until the
Administrative Agent and the Collateral Agent shall have received such
directions, the Administrative Agent and/or the Collateral Agent may (but shall
not be obligated to) take such action, or refrain from taking such action, with
respect to such Default as it shall deem advisable in the best interests of the
Lenders. In no event, however, shall the Administrative Agent or the Collateral
Agent be required to take any action which exposes the Administrative Agent or
the Collateral Agent, as applicable, to personal liability or which is contrary
to this Agreement, the Loan Documents or applicable law. Neither the
Administrative Agent nor the Collateral Agent shall be liable for any action
taken or not taken by it with the consent or at the request of the Majority
Lenders or the Lenders (or such other number or percentage of the Lenders as
shall be necessary under the circumstances as provided in ent Section 12.02),
and otherwise neither the Administrative Ag nor the Collateral Agent shall be
liable for any action taken or not taken by them hereunder or under any other
Loan Document or under any other document or instrument referred to or provided
for herein or therein or in connection herewith or therewith INCLUDING ITS OWN
ORDINARY NEGLIGENCE, except for its own gross negligence or willful misconduct.

 

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(b) Nothing in this Section 11.03 shall impair the right of the Administrative
Agent and/or the Collateral Agent in its discretion to take any action
authorized under this Agreement or the Security Instruments, to the extent that
the consent of any Secured Party is not required or to the extent such action is
not prohibited by the terms hereof or thereof, which it deems proper and
consistent with the instructions given by the Secured Parties as provided for
herein or otherwise in the best interest of the Secured Parties.

Section 11.04 Reliance by Administrative Agent and Collateral Agent. Each of the
Administrative Agent and the Collateral Agent shall be entitled to rely upon,
and shall not incur any liability for relying upon, any notice, request,
certificate, consent, statement, instrument, document or other writing believed
by it to be genuine and to have been signed or sent by the proper Person. Each
of the Administrative Agent and the Collateral Agent also may rely upon any
statement made to it orally or by telephone and believed by it to be made by the
proper Person, and shall not incur any liability for relying thereon and each of
the Borrower, the Lenders and the Issuing Bank hereby waives the right to
dispute the Administrative Agent’s or the Collateral Agent’s, as applicable,
record of such statement, except in the case of gross negligence or willful
misconduct by the Administrative Agent or the Collateral Agent, as applicable.
Each of the Administrative Agent and the Collateral Agent may consult with legal
counsel (who may be counsel for the Borrower), independent accountants and other
experts selected by it, and shall not be liable for any action taken or not
taken by it in accordance with the advice of any such counsel, accountants or
experts. Each of the Administrative Agent and the Collateral Agent may deem and
treat the payee of any Note as the holder thereof for all purposes hereof unless
and until a written notice of the assignment or transfer thereof permitted
hereunder shall have been filed with the Administrative Agent.

Section 11.05 Subagents. Each of the Administrative Agent and the Collateral
Agent may perform any and all its duties and exercise its rights and powers by
or through any one or more sub-agents appointed by the Administrative Agent or
the Collateral Agent, as applicable. The Administrative Agent, the Collateral
Agent and any such sub-agent may perform any and all its duties and exercise its
rights and powers through their respective Related Parties. The exculpatory
provisions of the preceding Sections of this Article XI shall apply to any such
agent and to-sub the Related Parties of the Administrative Agent, the Collateral
Agent and any such sub-agent, and shall apply to their respective activities in
connection with the syndication of the credit facilities provided for herein as
well as activities as Administrative Agent and Collateral Agent.

Section 11.06 Resignation of Administrative Agent and Collateral Agent. The
Administrative Agent may at any time give notice of its resignation (which will
also include its resignation as the Collateral Agent) to the Lenders, the
Issuing Bank and the Borrower. Upon receipt of any such notice of resignation,
the Majority Lenders shall have the right, in consultation with (and, absent the
occurrence and continuation of an Event of Default, approval of) the Borrower,
to appoint a successor, which shall be an institution with an office in New
York. If no such successor shall have been so appointed by the Majority Lenders
and shall have accepted such appointment within 30 days after the retiring
Administrative Agent gives notice of its resignation, then the retiring
Administrative Agent may on behalf of the Lenders and the Issuing Bank, appoint
a successor Administrative Agent (and Collateral Agent) meeting the
qualifications set forth above; provided that if the Administrative Agent shall
notify the

 

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Borrower and the Lenders that no qualifying Person has accepted such
appointment, then such resignation shall nonetheless become effective in
accordance with such notice and (a) the retiring Administrative Agent shall be
discharged from its duties and obligations hereunder and under the other Loan
Documents (except that in the case of any collateral held by the Collateral
Agent on behalf of the Lenders under any of the Loan Documents, the retiring
Collateral Agent shall continue to hold such collateral until such time as a
successor Collateral Agent is appointed) and (b) all payments, communications
and determinations provided to be made by, to or through the Administrative
Agent shall instead be made by or to each Lender directly by the Borrower, until
such time as the Majority Lenders appoint a successor Administrative Agent as
provided for above in this Section 11.06. Upon the acceptance of a successor’s
appointment as Administrative Agent (and Collateral Agent) hereunder, such
successor shall succeed to and become vested with all of the rights, powers,
privileges and duties of the retiring (or retired) Administrative Agent (and
Collateral Agent), and the retiring Administrative Agent (and Collateral Agent)
shall be discharged from all of its duties and obligations hereunder or under
the other Loan Documents (if not already discharged therefrom as provided above
in this Section 11.06). The fees payable by the Borrower to a successor
Administrative Agent shall be the same as those payable to its predecessor
unless otherwise agreed between the Borrower and such successor. After the
retiring Administrative Agent’s (and Collateral Agent’s) resignation hereunder
and under the other Loan Documents, the provisions of this Article XI and
Section 12.03 shall continue in effect for the benefit of such retiring
Administrative Agent, Collateral Agent, their sub-agents and their respective
Related Parties in respect of any actions taken or omitted to be taken by any of
them while the retiring Administrative Agent was acting as Administrative Agent
or the Collateral Agent was acting as the Collateral Agent.

Section 11.07 Administrative Agents and Collateral Agent as Lenders. Each Person
serving as an Administrative Agent or Collateral Agent hereunder shall have the
same rights and powers in its capacity as a Lender as any other Lender and may
exercise the same as though it were not an Administrative Agent and/or
Collateral Agent, and such Person and its Affiliates may accept deposits from,
lend money to and generally engage in any kind of business with the Borrower or
any Subsidiary or other Affiliate thereof as if it were not an Administrative
Agent and/or Collateral Agent hereunder.

Section 11.08 No Reliance. Each Lender acknowledges that it has, independently
and without reliance upon the Administrative Agent, the Collateral Agent or any
other Lender and based on such documents and information as it has deemed
appropriate, made its own credit analysis and decision to enter into this
Agreement and each other Loan Document to which it is a party. Each Lender also
acknowledges that it will, independently and without reliance upon the
Administrative Agent, the Collateral Agent or any other Lender and based on such
documents and information as it shall from time to time deem appropriate,
continue to make its own decisions in taking or not taking action under or based
upon this Agreement, any other Loan Document, any related agreement or any
document furnished hereunder or thereunder. The Administrative Agent and the
Collateral Agent shall not be required to keep themselves informed as to the
performance or observance by the Borrower or any of its Subsidiaries of this
Agreement, the Loan Documents or any other document referred to or provided for
herein or to inspect the Properties or books of the Borrower or its
Subsidiaries. Except for notices, reports and other documents and information
expressly required to be furnished to the Lenders by the Administrative Agent
hereunder, neither the Administrative Agent nor the Collateral Agent shall

 

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have any duty or responsibility to provide any Lender with any credit or other
information concerning the affairs, financial condition or business of the
Borrower (or any of its Affiliates) which may come into the possession of the
Administrative Agent, the Collateral Agent or any of their Affiliates. In this
regard, each Lender acknowledges that Simpson Thacher and Bartlett LLP is acting
in this transaction as special counsel to the Administrative Agent and the
Collateral Agent only, except to the extent otherwise expressly stated in any
legal opinion or any Loan Document. Each other party hereto will consult with
its own legal counsel to the extent that it deems necessary in connection with
the Loan Documents and the matters contemplated therein.

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

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

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

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

Each Secured Party agrees that only the Collateral Agent, and none of them,
shall be entitled to credit bid all or any of the Secured Obligations, provided
that the Secured Parties agree, solely for their own benefit, that any credit
bid of Secured Obligations will be made ratably for the ratable benefit of the
creditors in respect thereof.

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

 

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Section 11.10 Authority of Collateral Agent to Release Collateral, Liens and
Guarantors. Each Lender and the Issuing Bank hereby authorizes the Collateral
Agent to release any collateral that is permitted to be sold or released and
release any Guarantor that is permitted to be released from its obligations
under the Loan Documents, in each case pursuant to the applicable terms of the
Loan Documents. Each Lender and the Issuing Bank hereby authorizes the
Collateral Agent to execute and deliver to the Borrower, at the Borrower’s sole
cost and expense, any and all releases of Liens, termination statements,
assignments, release of guarantees or Guarantors (as the case may be) or other
documents reasonably requested by the Borrower in connection with any sale or
other disposition of Property or any one or more Guarantors to the extent such
sale or other disposition is permitted by the terms of Section 9.12 or is
otherwise authorized by the terms of the Loan Documents.

ARTICLE XII

MISCELLANEOUS

Section 12.01 Notices.

(a) Except in the case of notices and other communications expressly permitted
to be given by telephone (and subject to Section 12.01(b)), all notices and
other communications provided for herein shall be in writing and shall be
delivered by hand or overnight courier service, mailed by certified or
registered mail or sent by email, as follows:

(i) if to the Borrower, to it at:

Rex Energy Corporation

366 Walker Drive

State College, PA 16801

Attn: Thomas Rajan, Chief Financial Officer

Email: trajan@rexenergycorp.com

(the Borrower’s website for electronic delivery is www.rexenergy.com);

with a copy to:

Jennifer McDonough, Senior Vice President, General

Counsel and Secretary

jmcdonough@rexenergycorp.com

Fax: 814-278-7286

(ii) if to the Administrative Agent or the Collateral Agent, to it at:

Angelo, Gordon Energy Servicer, LLC, as Administrative

Agent and Collateral Agent

c/o Cortland Capital Market Services LLC

 

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225 W. Washington St. 21st Floor

Chicago, Illinois 60606

Attn: Agency Services – Angelo, Gordon and Legal Department

Email: AngeloGordonAgency@cortlandglobal.com and

legal@cortlandglobal.com

Tele: 312-564-5078

Fax: 312-376-0751

with a copy to:

AG Energy Funding, LLC

245 Park Ave

26th Floor

NYC, NY 10167

Attn: Scott McMurtry

Email: smcmurtry@angelogordon.com;

(iii) if to the Issuing Bank, to it at:

Macquarie Bank Limited - Representative Office

125 West 55th Street, 22nd Floor

New York, NY 10019

Attn: Anthony Lennon, Senior Managing Director

Tele: 212-231-2083

Fax: 212-231-2177

Email: anthony.lennon@macquarie.com

with a copy to:

Macquarie Bank Limited – Representative Office

500 Dallas Street, Suite 3300

Houston, Texas 77002

Attn: Michael Sextro, Division Director

Tele: 713-275-6207

Fax: 713-275-6222

Email: MECLoansHouston@macquarie.com; and

(iv) the Administrative Agent will forward all relevant notices from the
Borrower to the Lenders.

(b) Notices and other communications to the Lenders hereunder may be delivered
or furnished by electronic communications pursuant to procedures approved by the
Administrative Agent; provided that the foregoing shall not apply to notices
pursuant to Article II, ,Article III ,Article IVArticle V unless otherwise
agreed by the Administrative Agent and the applicable Lender. The Administrative
Agent or the Borrower may, in its accept notices and other communications to it
hereund discretion, agree toer by electronic communications pursuant to
procedures approved by it; provided that approval of such procedures may be
limited to particular notices or communications.

(c) Any party hereto may change its address or telecopy number for notices and
other communications hereunder by notice to the other parties hereto. All
notices and other communications given to any party hereto in accordance with
the provisions of this Agreement shall be deemed to have been given on the date
of receipt.

 

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Section 12.02 Waivers; Amendments.

(a) No failure on the part of the Administrative Agent, the Collateral Agent,
the Issuing Bank or any Lender to exercise and no delay in exercising, and no
course of dealing with respect to, any right, power or privilege, or any
abandonment or discontinuance of steps to enforce such right, power or
privilege, under any of the Loan Documents shall operate as a waiver thereof,
nor shall any single or partial exercise of any right, power or privilege under
any of the Loan Documents preclude any other or further exercise thereof or the
exercise of any other right, power or privilege. The rights and remedies of the
Administrative Agent, the Collateral Agent the Issuing Bank and the Lenders
hereunder and under the other Loan Documents are cumulative and are not
exclusive of any rights or remedies that they would otherwise have. No waiver of
any provision of this Agreement or any other Loan Document or consent to any
departure by the Borrower therefrom shall in any event be effective unless the
same shall be permitted by Section 12.02(b), and then such waiver or consent
shall be effective only in the specific instance and for the purpose for which
given. Without limiting the generality of the foregoing, the making of a Loan or
issuance of a Letter of Credit shall not be construed as a waiver of any
Default, regardless of whether the Administrative Agent, the Collateral Agent,
any Lender or the Issuing Bank may have had notice or knowledge of such Default
at the time.

(b) Neither this Agreement nor any provision hereof nor any Security Instrument
or any provision thereof may be waived, amended or modified except pursuant to
an agreement or agreements in writing entered into by the Borrower and the
Majority Lenders, or by the Borrower and the Administrative Agent with the
consent of the Majority Lenders; provided that no such agreement shall:

(i) increase the Commitment of any Lender without the written consent of such
Lender;

(ii) waive or amend Section 10.02(c) without the consent of each Lender and, to
the extent such waiver, amendment or modification would adversely affect the
rights of a Secured Swap Party or Secured Cash Management Provider, such Secured
Swap Party or Secured Cash Management Provider;

(iii) reduce the principal amount of any Loan or LC Disbursement or reduce the
rate of interest thereon, or reduce any Yield Maintenance Amount, Call
Protection Amount or fees payable hereunder, or reduce any other Secured
Obligations hereunder or under any other Loan Document, without the written
consent of each Lender affected thereby; provided, however, that only the
consent of the Majority Lenders shall be necessary to amend the meaning of
“default rate” or to waive any obligation of the Borrower to pay interest or
Letter of Credit fees at such default rate;

 

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(iv) postpone the scheduled date of payment or prepayment of the principal
amount of any Loan or LC Disbursement, or any interest thereon, or any fees
payable hereunder, or any other Secured Obligations hereunder or under any other
Loan Document, or reduce the amount of, waive or excuse any such payment, or
postpone or extend the Termination Date without the written consent of each
Lender affected thereby;

(v) change Section 4.01(b) or Section 4.01(c) in a manner that would alter the
pro rata sharing of payments required thereby, without the written consent of
each Lender;

(vi) waive or amend Section 3.04(b), Section 6.01, Section 6.02, Section 8.14 or
Section 12.14, without the written consent of each Lender affected ;thereby

(vii) release any Guarantor (except as set forth in the Guaranty Agreement or in
any other Loan Document), release all or substantially all, or subordinate the
Liens on any, of the collateral (other than as provided in Section 11.10),
;nderwithout the written consent of each Le

(viii) change any of the provisions of this Section 12.02(b) or Section 12.04(a)
or the definition of “Majority Lenders”, “Required Lenders” or any other
provision hereof specifying the number or percentage of Lenders required to
waive, amend or modify any rights hereunder or under any other Loan Documents or
make any determination or grant any consent hereunder or any other Loan
Documents, without the written consent of each Lender;

(ix) without the prior written consent of each Secured Swap Party if such
amendment, restatement, supplement, modification, termination, consent, waiver,
replacement or refinancing would:

(A) amend or otherwise change the definition of “Approved Counterparty”, “Loan
Documents”, “Secured Obligations”, “Secured Swap Agreement”, “Secured Swap
Obligations”, “Secured Swap Party”, “Security Instruments”, “Swap Agreement”, or
“Swap Intercreditor Agreement”;

(B) provide for any of the Secured Swap Obligations to cease to be secured by
the Security Instruments;

(C) cause the Security Instruments to secure obligations other than the Secured
Obligations;

(D) cause the Secured Swap Obligations (other than fees, expenses and
indemnities) to cease to be (I) secured on a first priority, pari passu basis
with principal on the Loans and reimbursement obligations under Letters of
Credit in respect of the Collateral (other than Excess First Lien RBL
Obligations) or (II)

 

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guaranteed on a pari passu basis with the Loan Obligations (as defined in the
Swap Intercreditor Agreement), or cause the fees, expenses and indemnities of
the Secured Swap Parties constituting Secured Obligations to cease to be secured
on a first priority, pari passu basis with the fees, expenses and indemnities of
the Administrative Agent, the Collateral Agent and the Issuing Bank constituting
Secured Obligations;

(E) have a material detrimental effect on the rights or obligations of any
Secured Swap Party under any Security Instrument;

(F) restrict any recoupment, netting or setoff rights or rights as an unsecured
creditor of a Secured Swap Party under its Secured Swap Agreements; or

(G) release or permit the release of (I) any Guarantor from any of its
obligations under any Loan Documents or (II) any Collateral, in either case, if
such release is not permitted under the Loan Documents as of the Effective Date;
or

(x) amend Section 2.01(c), Section 2.06, or the definition of “Threshold Amount”
or lower the Delayed Draw Commitment below the Threshold Amount without the
consent of the Issuing Bank; or

(xi) without the prior written consent of each Secured Swap Party or the Issuing
Bank, amend the definition of “Borrowing Base” in any manner that would result
in Loan Obligations (as defined in the Swap Intercreditor Agreement)
constituting Excess First Lien RBL Obligations ; or

(xii) without the prior written consent of the Secured Cash Management Provider,

(A) amend or otherwise change the definition of “Secured Cash Management
Agreement”, “Secured Cash Management Obligations”, “Secured Cash Management
Provider” or “Secured Obligations”;

(B) provide for any of the Secured Cash Management Obligations to cease to be
secured by the Security Instruments; or

(C) cause the Secured Cash Management Obligations to cease to be (I) secured on
a first priority, pari passu basis with principal on the Loans and reimbursement
obligations under Letters of Credit in respect of the Collateral or
(II) guaranteed on a pari passu basis with the Loan Obligations (as defined in
the Swap Intercreditor Agreement);

provided further that no such agreement shall amend, modify or otherwise affect
the rights or duties of the Administrative Agent or the Issuing Bank hereunder
or under any other Loan Document without the prior written consent of the
Administrative Agent or the Issuing Bank, as applicable.

Notwithstanding the foregoing, (a) any supplement to Schedule 7.14 diaries)
shall be effective upon delivery by the Borrower toSubsi) the Administrative

 

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Agent a supplemental schedule clearly marked as such and, upon receipt, the
Administrative Agent will promptly deliver a copy thereof to the Lenders,
(b) any Security Instrument may be supplemented to add additional collateral
with the consent of the Administrative Agent and the Collateral Agent and
(c) this Agreement and the other Loan Documents may be amended by the Borrower
and Administrative Agent to (i) cure ambiguities, omissions, mistakes or defects
or to cause such guarantee or other Loan Document to be consistent with this
Agreement and (ii) to give effect to Section 2.05(d), in each case, as
reasonably determined by the Borrower and the Administrative Agent, without the
consent of the Lenders.

Section 12.03 Expenses, Indemnity; Damage Waiver.

(a) The Borrower shall pay (i) all reasonable out-of-pocket expenses incurred by
the Administrative Agent, the Collateral Agent, their Affiliates and the Issuing
Bank, including the reasonable fees, charges and disbursements of counsel and
other outside consultants for the Administrative Agent (including reasonable and
documented out of pocket costs associated with the valuation reports the
Administrative Agent is required to perform on behalf of its investors in an
amount not to exceed $50,000 per year) and the Collateral Agent, the costs to
the Administrative Agent of a third party servicer or data servicer in the
course of its administration of the Loans and the Loan Documents on its behalf,
the reasonable travel, photocopy, mailing, courier, telephone and other similar
expenses, and the cost of environmental audits and surveys and appraisals, in
connection with the syndication of the credit facilities provided for herein,
the preparation, negotiation, execution, delivery and administration (both
before and after the execution hereof and including advice of counsel to the
Administrative Agent and the Collateral Agent as to the rights and duties of the
Administrative Agent, the Collateral Agent and the Lenders with respect thereto)
of this Agreement and the other Loan Documents and any amendments, modifications
or waivers of or consents related to the provisions hereof or thereof (whether
or not the transactions contemplated hereby or thereby shall be consummated),
(ii) all costs, expenses, Taxes, assessments and other charges incurred in
connection with any filing, registration, recording or perfection of any
security interest contemplated by this Agreement or any Security Instrument or
any other document referred to therein, (iii) all reasonable out-of-pocket
expenses incurred by the Issuing Bank in connection with the issuance,
amendment, renewal or extension of any Letter of Credit or any demand for
payment thereunder and (iv) all out-of-pocket expenses incurred by the Issuing
Bank or any Lender, including the fees, charges and disbursements of any counsel
for the Issuing Bank or any Lender, in connection with the enforcement or
protection of its rights in connection with this Agreement or any other Loan
Document, including its rights under this Section 12.03, or in connection with
the Loans made or Letters of Credit issued hereunder, including all such
out-of-pocket expenses incurred during any workout, restructuring or
negotiations in respect of such Loans or Letters of Credit.

(b) THE BORROWER SHALL INDEMNIFY THE ADMINISTRATIVE AGENT, THE ISSUING BANK AND
EACH LENDER, AND EACH RELATED PARTY OF ANY OF THE FOREGOING PERSONS (EACH SUCH
PERSON BEING CALLED AN “INDEMNITEE”) AGAINST, AND HOLD EACH INDEMNITEE HARMLESS
FROM, ANY AND ALL LOSSES, CLAIMS, DAMAGES, LIABILITIES AND RELATED EXPENSES,
INCLUDING THE FEES, CHARGES AND DISBURSEMENTS OF ANY COUNSEL FOR

 

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ANY INDEMNITEE, INCURRED BY OR ASSERTED AGAINST ANY INDEMNITEE ARISING OUT OF,
IN CONNECTION WITH, OR AS A RESULT OF (i) THE EXECUTION OR DELIVERY OF THIS
AGREEMENT OR ANY OTHER LOAN DOCUMENT OR ANY AGREEMENT OR INSTRUMENT CONTEMPLATED
HEREBY OR THEREBY, THE PERFORMANCE BY THE PARTIES HERETO OR THE PARTIES TO ANY
OTHER LOAN DOCUMENT OF THEIR RESPECTIVE OBLIGATIONS HEREUNDER OR THEREUNDER OR
THE CONSUMMATION OF THE TRANSACTIONS CONTEMPLATED HEREBY OR BY ANY OTHER LOAN
DOCUMENT, (ii) THE FAILURE OF THE BORROWER OR ANY SUBSIDIARY TO COMPLY WITH THE
TERMS OF ANY LOAN DOCUMENT, INCLUDING THIS AGREEMENT, OR WITH ANY GOVERNMENTAL
REQUIREMENT, (iii) ANY INACCURACY OF ANY REPRESENTATION OR ANY BREACH OF ANY
WARRANTY OR COVENANT OF THE BORROWER OR ANY GUARANTOR SET FORTH IN ANY OF THE
LOAN DOCUMENTS OR ANY INSTRUMENTS, DOCUMENTS OR CERTIFICATIONS DELIVERED IN
CONNECTION THEREWITH, (iv) ANY LOAN OR LETTER OF CREDIT OR THE USE OF THE
PROCEEDS THEREFROM, INCLUDING (A) ANY REFUSAL BY THE ISSUING BANK TO HONOR A
DEMAND FOR PAYMENT UNDER A LETTER OF CREDIT IF THE DOCUMENTS PRESENTED IN
CONNECTION WITH SUCH DEMAND DO NOT STRICTLY COMPLY WITH THE TERMS OF SUCH LETTER
OF CREDIT, OR (B) THE PAYMENT OF A DRAWING UNDER ANY LETTER OF CREDIT
NOTWITHSTANDING THE NON-COMPLIANCE, NON-DELIVERY OR OTHER IMPROPER PRESENTATION
OF THE DOCUMENTS PRESENTED IN CONNECTION THEREWITH, (v) ANY OTHER ASPECT OF THE
LOAN DOCUMENTS, (vi) THE OPERATIONS OF THE BUSINESS OF THE BORROWER AND ITS
SUBSIDIARIES BY THE BORROWER AND ITS SUBSIDIARIES, (vii) ANY ASSERTION THAT THE
LENDERS WERE NOT ENTITLED TO RECEIVE THE PROCEEDS RECEIVED PURSUANT TO THE
SECURITY INSTRUMENTS, (viii) ANY ENVIRONMENTAL LAW APPLICABLE TO THE BORROWER OR
ANY SUBSIDIARY OR ANY OF THEIR PROPERTIES, INCLUDING THE PRESENCE, GENERATION,
STORAGE, RELEASE, THREATENED RELEASE, USE, TRANSPORT, DISPOSAL, ARRANGEMENT OF
DISPOSAL OR TREATMENT OF OIL, OIL AND GAS WASTES, SOLID WASTES OR HAZARDOUS
SUBSTANCES ON ANY OF THEIR PROPERTIES, (ix) THE BREACH OR NON-COMPLIANCE BY THE
BORROWER OR ANY SUBSIDIARY WITH ANY ENVIRONMENTAL LAW APPLICABLE TO THE BORROWER
OR ANY SUBSIDIARY, (x) THE PAST OWNERSHIP BY THE BORROWER OR ANY SUBSIDIARY OF
ANY OF THEIR PROPERTIES OR PAST ACTIVITY ON ANY OF THEIR PROPERTIES WHICH,
THOUGH LAWFUL AND FULLY PERMISSIBLE AT THE TIME, COULD RESULT IN PRESENT
LIABILITY, (xi) THE PRESENCE, USE, RELEASE, STORAGE, TREATMENT, DISPOSAL,
GENERATION, THREATENED RELEASE, TRANSPORT, ARRANGEMENT FOR TRANSPORT OR
ARRANGEMENT FOR DISPOSAL OF OIL, OIL AND GAS WASTES, SOLID WASTES OR HAZARDOUS
SUBSTANCES ON OR AT ANY OF THE PROPERTIES OWNED OR OPERATED BY THE BORROWER OR
ANY SUBSIDIARY OR ANY ACTUAL OR ALLEGED PRESENCE OR RELEASE OF HAZARDOUS
MATERIALS ON OR FROM ANY PROPERTY OWNED OR OPERATED BY THE BORROWER OR ANY OF
ITS SUBSIDIARIES, (xii) ANY ENVIRONMENTAL LIABILITY RELATED IN ANY WAY TO THE
BORROWER OR ANY OF ITS SUBSIDIARIES, (xiii) ANY OTHER ENVIRONMENTAL, HEALTH OR
SAFETY CONDITION IN CONNECTION WITH THE

 

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LOAN DOCUMENTS, OR (xiv) ANY ACTUAL OR PROSPECTIVE CLAIM, LITIGATION,
INVESTIGATION OR PROCEEDING RELATING TO ANY OF THE FOREGOING, WHETHER BASED ON
CONTRACT, TORT OR ANY OTHER THEORY AND REGARDLESS OF WHETHER ANY INDEMNITEE IS A
PARTY THERETO, AND SUCH INDEMNITY SHALL EXTEND TO EACH INDEMNITEE
NOTWITHSTANDING THE SOLE OR CONCURRENT NEGLIGENCE OF EVERY KIND OR CHARACTER
WHATSOEVER, WHETHER ACTIVE OR PASSIVE, WHETHER AN AFFIRMATIVE ACT OR AN
OMISSION, INCLUDING ALL TYPES OF NEGLIGENT CONDUCT IDENTIFIED IN THE RESTATEMENT
(SECOND) OF TORTS OF ONE OR MORE OF THE INDEMNITEES OR BY REASON OF STRICT
LIABILITY IMPOSED WITHOUT FAULT ON ANY ONE OR MORE OF THE INDEMNITEES; PROVIDED
THAT SUCH INDEMNITY SHALL NOT, AS TO ANY INDEMNITEE, BE AVAILABLE TO THE EXTENT
THAT SUCH LOSSES, CLAIMS, DAMAGES, LIABILITIES OR RELATED EXPENSES ARE
DETERMINED BY A COURT OF COMPETENT JURISDICTION BY FINAL AND NONAPPEALABLE
JUDGMENT TO HAVE RESULTED FROM THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF, OR
VIOLATION OF LAW BY, SUCH INDEMNITEE. NOTWITHSTANDING THE FOREGOING, NO
INDEMNIFICATION SHALL BE GIVEN TO THE EXTENT IT ARISES (y) BY REASON OF A CLAIM
BY ONE OR MORE INDEMNITEES AGAINST ONE OR MORE OTHER INDEMNITEES, OR (z) FROM A
CLAIM BROUGHT BY THE BORROWER AGAINST AN INDEMNITEE FOR (1) SUCH INDEMNITEE’S
BREACH OF ITS OBLIGATIONS HEREUNDER OR UNDER ANY OTHER LOAN DOCUMENT OR (2) BAD
FAITH OF SUCH INDEMNITEE HEREUNDER OR UNDER ANY OTHER LOAN DOCUMENT, IN EITHER
CASE IF THE BORROWER HAS OBTAINED A FINAL NON NONAPPEALABLE JUDGMENT IN ITS
FAVOR ON SUCH CLAIM AS DETERMINED BY A COURT OF COMPETENT JURISDICTION. SO LONG
AS NO DEFAULT IS CONTINUING AND THE BORROWER IS FINANCIALLY SOLVENT, NO
INDEMNITEE MAY SETTLE ANY CLAIM TO BE INDEMNIFIED HEREUNDER WITHOUT THE PRIOR
WRITTEN CONSENT OF THE BORROWER, WHICH CONSENT WILL NOT BE UNREASONABLY OR
UNTIMELY WITHHELD. THIS SECTION 12.03(b) SHALL NOT APPLY WITH RESPECT TO TAXES
OTHER THAN ANY TAXES THAT REPRESENT LOSSES, CLAIMS, DAMAGES, ETC. ARISING FROM
ANY NON-TAX CLAIM.

(c) To the extent that the Borrower fails to pay any amount required to be paid
by it to the Administrative Agent or the Issuing Bank under Section 12.03(a) or
(b) (and provided that such failure is not due to the Administrative Agent’s or
Issuing Bank’s gross negligence or willful misconduct), each Lender severally
agrees to pay to the Administrative Agent or the Issuing Bank, as the case may
be, such Lender’s Applicable Percentage (determined as of the time that the
applicable unreimbursed expense or indemnity payment is sought) of such unpaid
amount; provided that the unreimbursed expense or indemnified loss, claim,
damage, liability or related expense, as the case may be, was incurred by or
asserted against the Administrative Agent or the Issuing Bank in its capacity as
such.

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

(e) All amounts due under this Section 12.03 shall be payable within 30 .days
following receipt by the Borrower of a reasonably detailed statement therefor

 

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Section 12.04 Successors and Assigns.

(a) The provisions of this Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and assigns
permitted hereby (including any Affiliate of the Issuing Bank that issues any
Letter of Credit), except that (i) the Borrower may not assign or otherwise
transfer any of its rights or obligations hereunder without the prior written
consent of each Lender (and any attempted assignment or transfer by the Borrower
without such consent shall be null and void) and (ii) no Lender may assign or
otherwise transfer its rights or obligations hereunder except in accordance with
this Section and in no event may any Lender assign to the Borrower, an Affiliate
of the ) 12.04 aulting Lender all or any portion of Borrower, a Defaulting
Lender or an Affiliate of a Def such Lender’s rights and obligations under this
Agreement or all or any portion of its Commitments or the Loans owing to it
hereunder). Nothing in this Agreement, expressed or implied, shall be construed
to confer upon any Person (other than the parties hereto, their respective
successors and assigns permitted hereby (including any Affiliate of the Issuing
Bank that issues any Letter of Credit), Participants (to the extent provided in
Section 12.04(c)) and, to the extent expressly contemplated hereby, the Related
Parties of each of the Administrative Agent, the Issuing Bank and the Lenders)
any legal or equitable right, remedy or claim under or by reason of this
Agreement.

(b) (i) Subject to the conditions set forth in Section 12.04(b)(ii), any Lender
may assign to one or more assignees all or a portion of its rights and
obligations under this Agreement (including all or a portion of its Commitment
and the Loans at the time owing to it) with the prior written consent (such
consent not to be unreasonably withheld or delayed) of

(A) if prior to the Delayed Draw Commitment Termination Date, the Borrower;
provided that (1) no consent of the Borrower shall be required if such
assignment is to a Lender, an Affiliate of a Lender or an Approved Fund or, if
an Event of Default has occurred and is continuing, and (2) the Borrower shall
be deemed to have consented to any such assignment unless it shall object
thereto by written notice to the Administrative Agent within seven (7) Business
days after having received notice thereof,

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

(C) with respect to an assignment of Delayed Draw Commitments, the Issuing Bank.

 

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

(A) except in the case of an assignment to a Lender or an Affiliate of a Lender
or an assignment of the entire remaining amount of the assigning Lender’s
Commitment or Loans, the amount of the Commitment or Loans of the assigning
Lender subject to each such assignment (determined as of the date the Assignment
and Assumption with respect to such assignment is delivered to the
Administrative Agent) shall not be less than $2,500,000 unless the
Administrative Agent otherwise consent;

(B) each partial assignment shall be made as an assignment of a proportionate
part of all the assigning Lender’s rights and obligations under this Agreement,
provided that a Lender may assign its rights and obligations under its Initial
Term Loans, its Delayed Draw Commitment and outstanding Delayed Draw Loans
separately;

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

(D) the assignee, if it shall not be a Lender, shall deliver to the
Administrative Agent an Administrative Questionnaire and all such documentation
and other information with respect to the assignee that is required by
regulatory authorities under applicable “know your customer” and anti-money
laundering rules and regulations, including the USA Patriot Act; and

(E) no such assignment shall be made to the Borrower, any Affiliate of the
Borrower, a Defaulting Lender (or any entity who, upon becoming a Lender
hereunder, would constitute a Defaulting Lender), any Affiliate of a Defaulting
Lender, a natural person or any holder of Second Lien Notes (or any Affiliate of
such holder).

(iii) Subject to Section 12.04(b)(iv) and the acceptance and recording thereof,
from and after the effective date specified in each Assignment and Assumption
the assignee thereunder shall be a party hereto and, to the extent of the
interest assigned by such Assignment and Assumption, have the rights and
obligations of a Lender under this Agreement, and the assigning Lender
thereunder shall, to the extent of the interest assigned by such Assignment and
Assumption, be released from its obligations under this Agreement (and, in the
case of an Assignment and Assumption covering all of the assigning Lender’s
rights and obligations under this Agreement, such Lender shall cease to be a
party hereto but shall continue to be entitled to the benefits of Section 5.01,
Section 5.02, and Section 12.03). Any assignment or transfer by a Lender of
rights or obligations under this Agreement that does not comply with this
Section 12.04 shall be treated for purposes of this Agreement as a sale by such
Lender of a participation in .(such rights and obligations in accordance with
Section 12.04(c

(iv) The Administrative Agent, acting for this purpose as a non-fiduciary agent
of the Borrower, shall maintain at one of its offices a copy of each Assignment
and Assumption delivered to it and a register for the recordation of the

 

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names and addresses of the Lenders, and the Commitment, and principal amount of
(and stated interest on) the Loans and LC Disbursements owing to, each Lender
pursuant to the terms hereof from time to time (the “Register”). The entries in
the Register shall be conclusive, absent manifest error, and the Borrower, the
Administrative Agent, the Collateral Agent, the Issuing Bank and the Lenders
shall treat each Person whose name is recorded in the Register pursuant to the
terms hereof as a Lender hereunder for all purposes of this Agreement,
notwithstanding notice to the contrary. The Register shall be available for
inspection by the Borrower, the Issuing Bank and any Lender, at any reasonable
time and from time to time upon reasonable prior written notice. In connection
with any changes to the Register, if necessary, the Administrative Agent will
reflect the revisions on Annex I and forward a copy of such revised Annex I to
the Borrower, the Issuing Bank and each Lender.

(v) Upon its receipt of a duly completed Assignment and Assumption executed by
an assigning Lender and an assignee, the assignee’s completed documents required
of the assignee under 12.04(b)(ii)(D) (unless the assignee shall already be a
Lender hereunder), the processing and recordation fee referred to in Section
12.04(b) and any written consent to such assignment required by Section
12.04(b), the Administrative Agent shall accept such Assignment and Assumption
and record the information contained therein in the Register. No assignment
shall be effective for purposes of this Agreement unless it has been recorded in
the Register as provided in this Section 12.04(b).

(c) (i) Any Lender may, without the consent of the Borrower, the Administrative
Agent or the Issuing Bank, sell participations to one or more banks or other
entities (a “Participant”) in all or a portion of such Lender’s rights and
obligations under this Agreement (including all or a portion of its Commitment
and the Loans owing to it); provided that (A) such Lender’s obligations under
this Agreement shall remain unchanged, (B) such Lender shall remain solely
responsible to the other parties hereto for the performance of such obligations
and (C) the Borrower, the Administrative Agent, the Issuing Bank and the other
Lenders shall continue to deal solely and directly with such Lender in
connection with such Lender’s rights and obligations under this Agreement. Any
agreement or instrument pursuant to which a Lender sells such a participation
shall provide that such Lender shall retain the sole right to enforce this
Agreement and to approve any amendment, modification or waiver of any provision
of this Agreement; provided that such agreement or instrument may provide that
such Lender will not, without the consent of the Participant, agree to any
amendment, modification or waiver that affects such Participant. In addition
such agreement must provide that the Participant be bound by the provisions of
Section 12.03. Subject to Section 12.04(c)(ii), the Borrower agrees that each
Participant shall be entitled to the benefits ofSection 5.01 and Section 5.02
erein, including the requirements undersubject to the requirements and
limitations th) Section 5.02 (it being understood that the documentation
required under Section 5.02(f) shall be delivered to the participating Lender))
to the same extent as if it were a Lender and had acquired its interest by
assignment pursuant to Section 12.04(b); provided that such Participant agrees
to be subject to the provisions of Section 5.03 as if it were a Lender and had
acquired its interest by assignment pursuant to Section 12.04(b). To the extent
permitted by law, each Participant also shall be entitled to the benefits of
Section 12.08 as though it were a Lender; provided such Participant agrees to be
subject to Section 4.01(c) as though it were .a Lender

 

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(ii) A Participant shall not be entitled to receive any greater payment under
Section 5.01 or Section 5.02 than the applicable Lender would have been entitled
to receive with respect to the participation sold to such Participant, except to
the extent such entitlement to receive a greater payment results from a Change
in Law that occurs after the Participant acquired the applicable participation.
Each Lender that sells a participation shall, acting solely for this purpose as
a non-fiduciary agent of the Borrower, maintain a register on which it enters
the name and address of each Participant and the principal amounts of (and
stated interest on) each Participant’s interest in the Loans or other
obligations under the Loan Documents (the “Participant Register”). Any such
Participant Register shall be available for inspection by the Administrative
Agent, the Administrative Agent at any reasonable time and from time to time
upon reasonable prior notice; provided that the applicable Lender shall have no
obligation to show such Participant Register to the Borrower except to the
extent such disclosure is necessary to establish that such Loan, commitment,
letter of credit or other obligation is in registered form under Section
5f.l03-l(c) of the Treasury regulations. The entries in the Participant Register
shall be conclusive absent manifest error, and such Lender shall treat each
Person whose name is recorded in the Participant Register as the owner of such
participation for all purposes of this Agreement notwithstanding any notice to
the contrary.

(d) Any Lender may at any time pledge or assign a security interest in all or
any portion of its rights under this Agreement to secure obligations of such
Lender, including any pledge or assignment to secure obligations to a Federal
Reserve Bank, and this Section 12.04(d) shall not apply to any such pledge or
assignment of a security interest; provided that no such pledge or assignment of
a security interest shall release a Lender from any of its obligations hereunder
or substitute any such pledgee or assignee for such Lender as a party hereto.

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

Section 12.05 Survival; Revival; Reinstatement.

(a) All covenants, agreements, representations and warranties made by the
Borrower herein and in the certificates or other instruments delivered in
connection with or pursuant to this Agreement or any other Loan Document shall
be considered to have been relied upon by the other parties hereto and shall
survive the execution and delivery of this Agreement and the making of any Loans
and issuance of any Letters of Credit, regardless of any investigation made by
any such other party or on its behalf and notwithstanding that the
Administrative Agent, the Issuing Bank or any Lender may have had notice or
knowledge of any Default or incorrect representation or warranty at the time any
credit is extended hereunder, and shall continue in full force and effect as
long as the principal of or any accrued interest on any

 

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Loan or any fee or any other amount payable under this Agreement is outstanding
and unpaid or any Letter of Credit is outstanding and so long as the Commitments
have not expired or terminated. The provisions of Section 5.01, Section 5.02,
and Section 12.03 and Article XI guaranteed basis, and remain in full force and
-on an unsecured and non ,shall survive effect regardless of the consummation of
the transactions contemplated hereby, the repayment of the Loans, the expiration
or termination of the Letters ofCredit and the Commitments or the termination of
this Agreement, any other Loan Document or any provision hereof or thereof.

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

Section 12.06 Counterparts; Integration; Effectiveness.

(a) This Agreement may be executed in counterparts (and by different parties
hereto on different counterparts), each of which shall constitute an original,
but all of which when taken together shall constitute a single contract.

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

(c) Except as provided in Section 6.01, this Agreement shall become effective
when it shall have been executed by the Administrative Agent and when the
Administrative Agent shall have received counterparts hereof which, when taken
together, bear the signatures of each of the other parties hereto, and
thereafter shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and assigns. Delivery of an executed counterpart
of a signature page of this Agreement by telecopy or other electronic
transmission shall be effective as delivery of a manually executed counterpart
of this Agreement.

Section 12.07 Severability. Any provision of this Agreement or any other Loan
Document held to be invalid, illegal or unenforceable in any jurisdiction shall,
as to such jurisdiction, be ineffective to the extent of such invalidity,
illegality or unenforceability without

 

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affecting the validity, legality and enforceability of the remaining provisions
hereof or thereof; and the invalidity of a particular provision in a particular
jurisdiction shall not invalidate such provision in any other jurisdiction.

Section 12.08 Right of Setoff. If an Event of Default shall have occurred and be
continuing, each Lender, the Issuing Bank and each of their Affiliates is hereby
authorized at any time and from time to time, to the fullest extent permitted by
law, to set off and apply any and all deposits (general or special, time or
demand, provisional or final) at any time held and other obligations (of
whatsoever kind, including obligations under Swap Agreements) at any time owing
by such Lender, Issuing Bank or Affiliate to or for the credit or the account of
the Borrower or any Subsidiary against any of and all the obligations of the
Borrower or any Subsidiary owed to such Lender or Issuing Bank now or hereafter
existing under this Agreement or any other Loan Document, irrespective of
whether or not such Lender or Issuing Bank shall have made any demand under this
Agreement or any other Loan Document and although such obligations may be
unmatured. The rights of each Lender and the Issuing Bank under this
Section 12.08 are in addition to other rights and remedies (including other
rights of setoff) which such Lender, Issuing Bank or their Affiliates may have.

Section 12.09 GOVERNING LAW; JURISDICTION; SERVICE OF PROCESS.

(a) THIS AGREEMENT AND THE NOTES SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK EXCEPT TO THE EXTENT THAT
UNITED STATES FEDERAL LAW PERMITS ANY LENDER TO CONTRACT FOR, CHARGE, RECEIVE,
RESERVE OR TAKE INTEREST AT THE RATE ALLOWED BY THE LAWS OF THE STATE WHERE SUCH
LENDER IS LOCATED (AND IN SUCH EVENT, SUCH FEDERAL LAWS SHALL PERTAIN SOLELY TO
SUCH LENDER).

(b) EACH PARTY HERETO HEREBY IRREVOCABLY AND UNCONDITIONALLY: SUBMITS (AND THE
BORROWER SHALL CAUSE EACH LOAN PARTY TO SUBMIT) FOR ITSELF AND ITS PROPERTY IN
ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS AGREEMENT AND THE OTHER LOAN
DOCUMENTS TO WHICH IT IS A PARTY, OR FOR RECOGNITION AND ENFORCEMENT OF ANY
JUDGMENT IN RESPECT THEREOF, TO THE EXCLUSIVE JURISDICTION OF THE COURTS OF THE
STATE OF NEW YORK AND THE UNITED STATES OF AMERICA FOR THE SOUTHERN DISTRICT OF
NEW YORK AND APPELLATE COURTS FROM ANY THEREOF; PROVIDED, THAT NOTHING CONTAINED
HEREIN OR IN ANY OTHER LOAN DOCUMENT WILL PREVENT ANY LENDER OR THE
ADMINISTRATIVE AGENT FROM BRINGING ANY ACTION TO ENFORCE ANY AWARD OR JUDGMENT
OR EXERCISE ANY RIGHT UNDER THE SECURITY INSTRUMENTS OR AGAINST ANY COLLATERAL
OR ANY OTHER PROPERTY OF ANY LOAN PARTY IN ANY OTHER FORUM IN WHICH JURISDICTION
CAN BE ESTABLISHED. EACH PARTY HEREBY IRREVOCABLY WAIVES ANY OBJECTION,
INCLUDING ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM
NON CONVENIENS, WHICH IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY SUCH
ACTION OR PROCEEDING IN SUCH RESPECTIVE JURISDICTIONS.

 

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

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

Section 12.10 Headings. Article and Section headings and the Table of Contents
used herein are for convenience of reference only, are not part of this
Agreement and shall not affect the construction of, or be taken into
consideration in interpreting, this Agreement.

Section 12.11 Confidentiality. Each of the Administrative Agent, the Issuing
Bank, the Lenders and each other party hereto or to any other Loan Document,
agrees to maintain, and agrees to cause each of its Affiliates to maintain, the
confidentiality of the Information (as defined below), except that Information
may be disclosed (a) to its Affiliates, partners and investors and their
directors, officers, employees and agents, including accountants, legal counsel
and other advisors (it being understood that the Persons to whom such disclosure
is made will be informed of the confidential nature of such Information and
instructed to keep such Information confidential), (b) to the extent requested
by any regulatory authority purporting to have jurisdiction over it, (c) to the
extent required by applicable laws or regulations or by any subpoena or similar
legal process (and in each such case, such Person shall, if permitted by law,
notify the Borrower of such occurrence as soon as reasonably practicable
following the service of any such process on such Person), (d) to any other
party to this Agreement or any other Loan Document, (e) in connection with the
exercise of any remedies hereunder or under any other Loan Document or any suit,
action or proceeding relating to this Agreement or any other Loan

 

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Document or the enforcement of rights hereunder or thereunder, (f) subject to an
agreement containing provisions substantially the same as those of this
Section 12.11, to (i) any assignee of or Participant in, or any prospective
assignee of or Participant in, any of its rights or obligations under this
Agreement or (ii) any actual or prospective counterparty (or its advisors) to
any Swap Agreement relating to the Borrower and its obligations, (g) with the
consent of the Borrower or (h) to the extent such Information (i) becomes
publicly available other than as a result of a breach of this Section 12.11 or
(ii) becomes available to the Administrative Agent, the Issuing Bank, any Lender
or other party hereto on a nonconfidential basis from asource other than the
Borrower. For the purposes of this Section 12.11, “Information” means all
information received from the Borrower or any Subsidiary relating to the
Borrower or any Subsidiary and their businesses, other than any such information
that is available to the Administrative Agent, the Issuing Bank, any Lender or
any other party hereto on a nonconfidential basis prior to disclosure by the
Borrower or a Subsidiary and other than information pertaining to this Agreement
routinely provided by arrangers to data service providers, including league
table providers, that serve the lending industry. Any Person required to
maintain the confidentiality of Information as provided in this Section 12.11
shall be considered to have complied with its obligation to do so if such Person
has exercised the same degree of care to maintain the confidentiality of such
Information as such Person would accord to its own confidential information.

Section 12.12 Interest Rate Limitation. It is the intention of the parties
hereto that each Lender shall conform strictly to usury laws applicable to it.
Accordingly, if the transactions contemplated hereby would be usurious as to any
Lender under laws applicable to it (including the laws of the United States of
America and the State of New York or any other jurisdiction whose laws may be
mandatorily applicable to such Lender notwithstanding the other provisions of
this Agreement), then, in that event, notwithstanding anything to the contrary
in any of the Loan Documents or any agreement entered into in connection with or
as security for the Notes, it is agreed as follows: (i) the aggregate of all
consideration which constitutes interest under law applicable to any Lender that
is contracted for, taken, reserved, charged or received by such Lender under any
of the Loan Documents or agreements or otherwise in connection with the Notes
shall under no circumstances exceed the maximum amount allowed by such
applicable law, and any excess shall be canceled automatically and if
theretofore paid shall be credited by such Lender on the principal amount of the
Secured Obligations (or, to the extent that the principal amount of the Secured
Obligations shall have been or would thereby be paid in full, refunded by such
Lender to the Borrower); and (ii) if the maturity of the Notes or any other
Secured Obligations is accelerated by reason of an election of the holder
thereof resulting from any Event of Default under this Agreement or otherwise,
or in the event of any required or permitted prepayment, then such consideration
that constitutes interest under law applicable to any Lender may never include
more than the maximum amount allowed by such applicable law, and excess
interest, if any, provided for in this Agreement or otherwise shall be canceled
automatically by such Lender as of the date of such acceleration or prepayment
and, if theretofore paid, shall be credited by such Lender on the principal
amount of the Secured Obligations (or, to the extent that the principal amount
of the Secured Obligations shall have been or would thereby be paid in full,
refunded by such Lender to the Borrower). All sums paid or agreed to be paid to
any Lender for the use, forbearance or detention of sums due hereunder shall, to
the extent permitted by law applicable to such Lender, be amortized, prorated,
allocated

 

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and spread throughout the stated term of the Loans evidenced by the Notes until
payment in full so that the rate or amount of interest on account of any Loans
hereunder does not exceed the maximum amount allowed by such applicable law. If
at any time and from time to time (i) the amount of interest payable to any
Lender on any date shall be computed at the Highest Lawful Rate applicable to
such Lender pursuant to this Section 12.12 and (ii) in respect of any subsequent
interest computation period the amount of interest otherwise payable to such
Lender would be less than the amount of interest payable to such Lender computed
at the Highest Lawful Rate applicable to such Lender, then the amount of
interest payable to such Lender in respect of such subsequent interest
computation period shall continue to be computed at the Highest Lawful Rate
applicable to such Lender until the total amount of interest payable to such
Lender shall equal the total amount of interest which would have been payable to
such Lender if the total amount of interest had been computed without giving
effect to this .Section 12.12

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

Section 12.14 Collateral Matters; Swap Agreements; Secured Cash Management
Agreements. The benefit of the Security Instruments and of the provisions of
this Agreement relating to any collateral securing the Secured Obligations shall
also extend to and be available to the Secured Swap Parties and the Secured Cash
Management Providers (but subject to the terms of the Loan Documents, including
provisions thereof relating to the application and priority of payments to the
Persons entitled thereto) in respect of any Secured Swap Obligations and Secured
Cash Management Obligations. Except as expressly provided herein or in the Swap
Intercreditor Agreement, no Secured Swap Party shall have any voting rights
under any Loan Document as a result of the existence of Secured Swap Obligations
owed to it. Except as expressly provided herein, no Secured Cash Management
Provider shall have any voting or other rights (including any rights to direct
remedies) under any Loan Document as a result of the existence of Secured Cash
Management Obligations owed to it. By accepting the benefits of the Security
Instruments, each Secured Cash Management Provider agrees to the foregoing
sentence and to the terms of, and to be bound by, the Swap Intercreditor
Agreement and the Second Lien Intercreditor Agreement.

 

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Section 12.15 No Third Party Beneficiaries. This Agreement, the other Loan
Documents, and the agreement of the Lenders to make Loans and the Issuing Bank
to issue, amend, renew or extend Letters of Credit hereunder are solely for the
benefit of the Borrower, and no other Person (including any Subsidiary of the
Borrower, any obligor, contractor, subcontractor, supplier or materialsman)
shall have any rights, claims, remedies or privileges hereunder or under any
other Loan Document against the Administrative Agent, the Issuing Bank or any
Lender for any reason whatsoever. There are no third party beneficiaries, other
than to the extent contemplated by Section 12.02(b) and the last sentence of
Section 12.04(a), and (a) each Secured Swap Party is entitled to rely on the
agreements of the Lenders in Section 12.18(a)(IV) and the agreements of the
Secured Swap Parties and Secured Cash Management Providers in Section 12.14 and
(b) each Secured Cash Management Provider is entitled to rely on the agreements
of the Lenders in Section 12.18(a)(IV) and the agreements of the Secured Swap
Parties and Secured Cash Management Providers in Section 12.14.

Section 12.16 USA Patriot Act Notice. Each Lender hereby notifies the Borrower
that pursuant to the requirements of the USA Patriot Act, it is required to
obtain, verify and record information that identifies the Borrower and the
Guarantors, which information includes the name and address of the Borrower and
the Guarantors and other information that will allow such Lender to identify the
Borrower and the Guarantors in accordance with the US Patriot Act.

Section 12.17 Amendment and Restatement of Existing Credit Agreement. On the
Effective Date, the Existing Credit Agreement shall be amended and restated in
its entirety as set forth herein. This Agreement and any Notes issued hereunder
have been given in renewal, extension, rearrangement and increase, and not in
extinguishment of the obligations under the Existing Credit Agreement and the
notes and other documents related thereto. This Agreement does not constitute a
novation of the obligations and liabilities under the Existing Credit Agreement
or evidence repayment of any such obligations and liabilities. All Liens, deeds
of trust, mortgages, assignments and security interests securing the Existing
Credit Agreement and the obligations relating thereto are hereby ratified,
confirmed, renewed, extended, brought forward and rearranged as security for the
Secured Obligations. None of the Liens and security interests created pursuant
to the Existing Credit Agreement are released. Additionally, the substantive
rights and obligations of the parties hereto shall be governed by this
Agreement, rather than the Existing Credit Agreement. Without limitation of any
of the foregoing, (a) this Agreement shall not in any way release or impair the
rights, duties, Indebtedness (as defined in the Existing Credit Agreement) or
Liens (as defined in the Existing Credit Agreement) created pursuant to the
Existing Credit Agreement or any other Loan Document (as defined therein) or
affect the relative priorities thereof, in each case to the extent in force and
effect thereunder as of the Effective Date and except as modified hereby or by
documents, instruments and agreements executed and delivered in connection
herewith, and all of such rights, duties, Indebtedness and Liens are assumed,
ratified and affirmed by the Borrower and each of the Guarantors; (b) all
indemnification obligations of the Borrower and each of the Guarantors under the
Existing Credit Agreement and any other Loan Documents (as defined therein)
shall survive the execution and delivery of this Agreement and shall continue in
full force and effect for the benefit of the Lenders, the Administrative Agent,
the Issuing Bank, and any other Person indemnified under

 

132

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the Existing Credit Agreement or any other Loan Document (as defined therein) at
any time prior to the Effective Date; (c) the Indebtedness incurred under the
Existing Credit Agreement shall, to the extent outstanding on the Effective
Date, continue outstanding under this Agreement and shall not be deemed to be
paid, released, discharged or otherwise satisfied by the execution of this
Agreement, and this Agreement shall not constitute a refinancing, substitution
or novation of such Indebtedness or any of the other rights, duties and
obligations of the parties hereunder, and the terms “Guaranteed Obligations” and
“Secured Obligations” or similar terms as such terms are used in the Loan
Documents shall include the Indebtedness as increased, amended and restated
under this Agreement; (d) the execution, delivery and effectiveness of this
Agreement shall not operate as a waiver of any right, power or remedy of the
Lenders or the Administrative Agent or the Issuing Bank (as defined therein)
under the Existing Credit Agreement, nor constitute a waiver of any covenant,
agreement, default or obligation under the Existing Credit Agreement, except to
the extent that any such covenant, agreement, default or obligation is no longer
set forth herein or is modified hereby; (e) any and all references to the
Existing Credit Agreement in any Security Instrument or other Loan Document
shall, without further action of the parties, be deemed a reference to the
Existing Credit Agreement, as amended and restated by this Agreement, and as
this Agreement shall be further amended, restated, supplemented or otherwise
modified from time to time, and any and all references to the Security
Instruments or Loan Documents in any such Security Instruments or any other Loan
Documents shall be deemed a reference to the Security Instruments or Loan
Documents under the Existing Credit Agreement, as amended and restated by this
Agreement, and as this Agreement shall be further amended, restated,
supplemented or otherwise modified from time to time; and (f) the Liens granted
pursuant to the Security Instruments to which each of the Borrower or any
Subsidiary is a party shall continue without any diminution thereof and shall
remain in full force and effect on and after the Effective Date. The Borrower
hereby designates this Agreement as a “Refinancing of First Lien RBL
Obligations” pursuant to the definition of Discharge of First Lien Priority RBL
Obligations in the Second Lien Intercreditor Agreement.

Section 12.18 INTERCREDITOR AGREEMENTS.

(a) EACH LENDER HEREBY (I) INSTRUCTS AND AUTHORIZES THE ADMINISTRATIVE AGENT AND
THE COLLATERAL AGENT TO EXECUTE AND DELIVER THE SECOND LIEN INTERCREDITOR
AGREEMENT AND THE SWAP INTERCREDITOR AGREEMENT (FOR PURPOSES OF THIS SECTION
12.18, COLLECTIVELY, THE “INTERCREDITOR AGREEMENTS”) ON ITS BEHALF,
(II) AUTHORIZES AND DIRECTS THE ADMINISTRATIVE AGENT AND THE COLLATERAL AGENT TO
EXERCISE ALL OF THE ADMINISTRATIVE AGENT’S AND THE COLLATERAL AGENT’S RIGHTS AND
TO COMPLY WITH ALL OF ITS OBLIGATIONS UNDER THE INTERCREDITOR AGREEMENTS,
(III) AGREES THAT THE ADMINISTRATIVE AGENT AND THE COLLATERAL AGENT MAY TAKE
ACTIONS ON ITS BEHALF AS IS CONTEMPLATED BY THE TERMS OF THE INTERCREDITOR
AGREEMENTS, AND (IV) UNDERSTANDS, ACKNOWLEDGES AND AGREES THAT AT ALL TIMES
FOLLOWING THE EXECUTION AND DELIVERY OF THE INTERCREDITOR AGREEMENTS SUCH LENDER
(AND EACH OF ITS SUCCESSORS AND ASSIGNS) SHALL BE BOUND BY THE TERMS THEREOF.

 

133

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(b) EACH LENDER ACKNOWLEDGES THAT IT HAS REVIEWED AND IS SATISFIED WITH THE
TERMS AND PROVISIONS OF THE INTERCREDITOR AGREEMENTS AND ACKNOWLEDGES AND AGREES
THAT SUCH LENDER IS RESPONSIBLE FOR MAKING ITS OWN ANALYSIS AND REVIEW OF THE
INTERCREDITOR AGREEMENTS AND THE TERMS AND PROVISIONS THEREOF, AND NEITHER THE
ADMINISTRATIVE AGENT NOR ANY OF ITS AFFILIATES MAKES ANY REPRESENTATION TO ANY
LENDER AS TO THE SUFFICIENCY OR ADVISABILITY OF THE PROVISIONS CONTAINED IN THE
INTERCREDITOR AGREEMENTS.

Section 12.19 Acknowledgement and Consent to Bail-In of EEA Financial
Institutions. Notwithstanding anything to the contrary in any Loan Document or
in any other agreement, arrangement or understanding among any such parties,
each party hereto acknowledges that any liability of any EEA Financial
Institution arising under any Loan Document, to the extent such liability is
unsecured, may be subject to the write-down and conversion powers of an EEA
Resolution Authority and agrees and consents to, and acknowledges and agrees to
be bound by:

(a) the application of any Write-Down and Conversion Powers by an EEA Resolution
Authority to any such liabilities arising hereunder which may be payable to it
by any party hereto that is an EEA Financial Institution; and

(b) the effects of any Bail-in Action on any such liability, including, if
applicable:

(i) a reduction in full or in part or cancellation of any such liability;

(ii) a conversion of all, or a portion of, such liability into shares or other
instruments of ownership in such EEA Financial Institution, its parent
undertaking, or a bridge institution that may be issued to it or otherwise
conferred on it, and that such shares or other instruments of ownership will be
accepted by it in lieu of any rights with respect to any such liability under
this Agreement or any other Loan Document; or

(iii) the variation of the terms of such liability in connection with the
exercise of the write-down and conversion powers of any EEA Resolution
Authority.

Section 12.20 ORIGINAL ISSUE DISCOUNT. THE LOANS ARE BEING ISSUED WITH ORIGINAL
ISSUE DISCOUNT FOR UNITED STATES FEDERAL INCOME TAX PURPOSES. THE ISSUE PRICE,
AMOUNT OF ORIGINAL ISSUE DISCOUNT, ISSUE DATE AND YIELD TO MATURITY OF THE LOANS
MAY BE OBTAINED BY WRITING TO THE BORROWER AT ITS ADDRESS SPECIFIED HEREIN.

[SIGNATURES BEGIN NEXT PAGE]

 

134

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

 

BORROWER:     REX ENERGY CORPORATION     By:  

/s/ Thomas C. Stabley

      Thomas C. Stabley       President and Chief Executive Officer

 

Signature Page to Term Loan Credit Agreement

Rex Energy Corporation

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

ADMINISTRATIVE AGENT     ANGELO, GORDON ENERGY SERVICER, LLC     By:  

/s/ Todd Dittman

    Name:   Todd Dittmann     Title:   Authorized Person COLLATERAL AGENT    
ANGELO, GORDON ENERGY SERVICER, LLC     By:  

/s/ Todd Dittman

    Name:   Todd Dittmann     Title:   Authorized Person

 

Signature Page to Term Loan Credit Agreement

Rex Energy Corporation

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

LENDER:     AG ENERGY FUNDING, LLC, in respect of Series 2, 3, 6, 7, 8, 10, 11,
12 and 16 as a Lender     By:  

/s/ Todd Dittman

    Name:   Todd Dittmann     Title:   Authorized Person

 

Signature Page to Term Loan Credit Agreement

Rex Energy Corporation

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

LENDER:     AB ENERGY OPPORTUNITY FUND, L.P., as a Lender     By: AB Energy
Opportunity Management LLC, its General Partner     By:  

/s/ Daniel Posner

    Name:   Daniel Posner     Title:   Co-Chief Investment Officer

 

Signature Page to Term Loan Credit Agreement

Rex Energy Corporation

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

LENDER:     AB PRIVATE CREDIT INVESTORS MIDDLE MARKET DIRECT LENDING FUND, L.P.,
as a Lender     By: AB Private Credit Investors Middle Market Direct Lending
Fund G.P. L.P., its General Partner     By:  

/s/ Kevin Alexander

    Name:   Kevin Alexander     Title:   Vice President

 

Signature Page to Term Loan Credit Agreement

Rex Energy Corporation

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

LENDER:     CANYON VALUE REALIZATION FUND L.P., as a Lender     By:  

/s/ Jonathan M. Kaplan

    Name:  

Jonathan M. Kaplan

    Title:  

Authorized Signatory

 

Signature Page to Term Loan Credit Agreement

Rex Energy Corporation

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

LENDER:     MSD CREDIT OPPORTUNITY FUND, L.P., as a Lender     By:  

/s/ Marcello Liguori

    Name:  

Marcello Liguori

    Title:  

Managing Director

 

Signature Page to Term Loan Credit Agreement

Rex Energy Corporation

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

LENDER:     TAO TALENTS, LLC, as a Lender     By:  

/s/ Steven S. Pluss

    Name:   Steven S. Pluss     Title:   Vice President

 

Signature Page to Term Loan Credit Agreement

Rex Energy Corporation

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

LENDER:     TPG SPECIALTY LENDING, INC., as a Lender     By:  

/s/ Michael Fishman

    Name:   Michael Fishman     Title:   Co-Chief Executive Officer

 

Signature Page to Term Loan Credit Agreement

Rex Energy Corporation

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

ISSUING BANK     MACQUARIE BANK LIMITED     By:  

/s/ Darren Muller

    Name:   Darren Muller     Title:   Executive Director     By:  

/s/ Sarah K S Danne

    Name:   Sarah K S Danne     Title:   Associate Director       Legal Risk
Management     POA Ref: #2090 dated 26 November 2015 expiring 30 November 2017,
signed in Sydney

 

Signature Page to Term Loan Credit Agreement

Rex Energy Corporation

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

ANNEX I

LIST OF COMMITMENTS

 

Name of Lender

   Initial Term Loan
Commitments      Delayed Draw
Commitments  

AG Energy Funding, LLC

   $ 54,530,000      $ 59,470,000  

Canyon Value Realization Fund L.P.

   $ 20,090,000      $ 21,910,000  

MSD Credit Opportunity Fund, L.P.

   $ 20,090,000      $ 21,910,000  

TAO Talents, LLC

   $ 14,350,000      $ 15,650,000  

TPG Specialty Lending, Inc.

   $ 14,350,000      $ 15,650,000  

AB Private Credit Investors Middle Market Direct Lending Fund, L.P.

   $ 13,632,500      $ 14,867,500  

AB Energy Opportunity Fund, L.P.

   $ 6,457,500      $ 7,042,500     

 

 

    

 

 

 

TOTAL

   $ 143,500,000      $ 156,500,000     

 

 

    

 

 

 

 

Annex I to Term Loan Credit Agreement

Rex Energy Corporation

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

EXHIBIT A

FORM OF NOTE

 

$[        ]    [            ], 20[    ]

FOR VALUE RECEIVED, Rex Energy Corporation, a Delaware corporation (the
“Borrower”) hereby promises to pay to [            ] or its registered assigns
(the “Lender”), at the principal office of Angelo, Gordon Energy Servicer, LLC
(the “Administrative Agent”) designated in Section 4.01(a) of the Credit
Agreement, as hereinafter defined, the principal sum of [            ] Dollars
($[        ]) (or such lesser amount as shall equal the aggregate unpaid
principal amount of the Loans made by the Lender to the Borrower under the
Credit Agreement), in lawful money of the United States of America and in
immediately available funds, on the dates and in the principal amounts provided
in the Credit Agreement, and to pay interest on the unpaid principal amount of
each such Loan, at such office, in like money and funds, for the period
commencing on the date of such Loan until such Loan shall be paid in full, at
the rates per annum and on the dates provided in the Credit Agreement.

The date, amount and maturity of each Loan made by the Lender to the Borrower,
and each payment made on account of the principal thereof, shall be recorded by
the Lender on its books and, prior to any transfer of this Note, may be endorsed
by the Lender on the schedules attached hereto or any continuation thereof or on
any separate record maintained by the Lender. Failure to make any such notation
or to attach a schedule shall not affect any Lender’s or the Borrower’s rights
or obligations in respect of such Loans or affect the validity of such transfer
by any Lender of this Note.

This Note is one of the Notes referred to in the Term Loan Credit Agreement
dated as of April 28, 2017 among the Borrower, the Administrative Agent and
lenders signatory thereto (including the Lender), and evidences Loans made by
the Lender thereunder (such Credit Agreement as the same may be amended,
supplemented or restated from time to time, the “Credit Agreement”). Capitalized
terms used in this Note have the respective meanings assigned to them in the
Credit Agreement.

This Note is issued pursuant to, and is subject to the terms and conditions set
forth in, the Credit Agreement and is entitled to the benefits provided for in
the Credit Agreement and the other Loan Documents. The Credit Agreement provides
for the acceleration of the maturity of this Note upon the occurrence of certain
events, for prepayments of Loans upon the terms and conditions specified therein
and other provisions relevant to this Note.

THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF
THE STATE OF NEW YORK.

 

REX ENERGY CORPORATION

By:  

 

Name:  

 

Title:  

 

 

Exhibit A - 1

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

EXHIBIT B

FORM OF BORROWING REQUEST

[            ], 20[    ]

Rex Energy Corporation, a Delaware corporation (the “Borrower”), pursuant to
Section 2.03 of the Term Loan Credit Agreement dated as of April 28, 2017
(together with all amendments, restatements, supplements or other modifications
thereto, the “Credit Agreement”) among the Borrower, the Lenders, the Issuing
Bank and Angelo, Gordon Energy Servicer, LLC, as Administrative Agent for the
Lenders and the Issuing Bank and as Collateral Agent for the Secured Parties
(unless otherwise defined herein, each capitalized term used herein is defined
in the Credit Agreement), hereby requests a Loan as follows:

 

  (i) Aggregate amount of the requested Loan is $[        ];

 

  (ii) Date of such Loan is [            ], 20[    ];

 

  (iii) Total Credit Exposures on the date hereof (i.e., outstanding principal
amount of Loans and LC Exposure without regard to the Loan requested hereby) is
$[        ]; and

 

  (iv) Pro forma total Credit Exposures (giving effect to the requested Loan) is
$[        ]; and

 

  (v) Location and number of the Borrower’s account to which funds are to be
disbursed, which shall comply with the requirements of Section 2.04 of the
:Credit Agreement, is as follows:

 

[                                         ]
[                                         ]
[                                         ]
[                                         ]
[                                         ]

 

Exhibit B - 1

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

The undersigned certifies that he/she is the [                    ] of the
Borrower, and that as such he/she is authorized to execute this certificate on
behalf of the Borrower. The undersigned further certifies, represents and
warrants on behalf of the Borrower that the Borrower is entitled to receive the
requested Loan under the terms and conditions of the Credit Agreement.

 

REX ENERGY CORPORATION

By:  

 

Name:  

 

Title:  

 

 

Exhibit B - 2

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

EXHIBIT C-1

FORM OF

EFFECTIVE DATE CERTIFICATE

April [    ], 2017

The undersigned hereby certifies that he is the President and Chief Executive
Officer of Rex Energy Corporation, a Delaware corporation (the “Borrower”), and
that as such he is authorized to execute this certificate on behalf of the
Borrower. With reference to the Term Loan Credit Agreement dated as of even date
herewith (together with all amendments, restatements, supplements or other
modifications thereto being the “Agreement”) among the Borrower, the Lenders
from time to time thereto, the Issuing Bank party thereto and Angelo, Gordon
Energy Servicer, LLC, as Administrative Agent for the Lenders and the Issuing
Bank and as Collateral Agent for the Secured Parties, which are party thereto,
the undersigned represents and warrants, on behalf of the Borrower and not
individually, as follows (each capitalized term used herein having the same
meaning given to it in the Agreement unless otherwise specified):

(a) The representations and warranties of the Borrower and the Guarantors set
forth in the Credit Agreement and in the other Loan Documents are true and
correct on and as of the date hereof, except to the extent any such
representations and warranties are expressly limited to an earlier date, in
which case, such representations and warranties continue to be true and correct
as of such specified earlier date.

(b) On the date hereof, immediately after giving effect to any Loan or the
issuance, amendment, renewal or extension of any Letter of Credit, as
applicable, no Default shall have occurred and be continuing.

(c) The Borrower has received all consents and approvals required by
Section 7.03 of the Credit Agreement.

(d) Immediately after giving effect to the Transactions, the PDP Coverage Ratio
equals or exceeds 2.25 and the Borrower is in compliance with the other
requirements of Section 9.01 of the Credit Agreement.

(e) Immediately after giving effect to the Transactions, the Borrower has
unrestricted cash of not less than $19,000,000.

[Signature page follows]

 

Exhibit C-1 - 1

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

EXECUTED AND DELIVERED as of the first date written above.

 

REX ENERGY CORPORATION

By:  

 

  Name:   Thomas C. Stabley   Title:   President Chief Executive Officer

 

Exhibit C-1 - 2

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

EXHIBIT C-2

FORM OF SECTION 8.01(C) CERTIFICATE

The undersigned hereby certifies that he/she is the [            ] of Rex Energy
Corporation, a Delaware corporation (the “Borrower”), and that as such he/she is
authorized to execute this certificate on behalf of the Borrower. With reference
to the Term Loan Credit Agreement dated as of April 28, 2017 (together with all
amendments, restatements, supplements or other modifications thereto being the
“Agreement”) among the Borrower, Angelo, Gordon Energy Servicer, LLC, as
Administrative Agent and the lenders (the “Lenders”) which are or become a party
thereto, and such Lenders, the undersigned represents and warrants as follows
(each capitalized term used herein having the same meaning given to it in the
Agreement unless otherwise specified):

(a) There exists no Default or Event of Default [or specify Default and
describe].

(b) Attached hereto are the detailed computations necessary to determine whether
the Borrower is in compliance with Section 9.01(a), (b) and (c) as of the end of
the [fiscal quarter][fiscal year] ending [            ].

(c) [Attached hereto are detailed calculations of the Excess Cash Flow for the
fiscal year ending December 31, 20[    ].]1

(d) Attached hereto is a listing of all outstanding Letters of Credit as of the
date of this certificate listing for each the face amount, expiration date and
beneficiary and stating whether there has been a drawing thereunder.

(e) [Select one of the following as applicable:] [There has been no change in
GAAP or in the application thereof, in each case as GAAP was applied in the
Financial Statements, (i) in the preparation of the Borrower’s financial
statements most-recently required to be delivered in accordance with Section
8.01(a) or (b), or (ii) that would affect the computation of any financial ratio
in Section 9.01] or [There has been one or more changes in GAAP or in the
application thereof, in each case as GAAP was applied in the Financial
Statements, (i) in the preparation of the Borrower’s financial statements
most-recently required to be delivered in accordance with Section 8.01(a) or
(b), or (ii) that would affect the computation of any financial ratio in
Section 9.01, as follows and with the following effects: [specify].

EXECUTED AND DELIVERED this [            ] day of [    ].

 

REX ENERGY CORPORATION

By:  

 

Name:  

 

Title:  

 

 

1  To be used only with the annual financials.

 

Exhibit C-2 - 1

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

EXHIBIT D

SECURITY INSTRUMENTS

1) Amended and Restated Guaranty and Collateral Agreement dated as of April 28,
2017 made by the Borrower and each of the other Grantors (as defined therein) in
favor of the Collateral Agent.

2) Financing Statements in respect of item 1, by:

 

  a) the Borrower

 

  b) Rex Energy I, LLC

 

  c) Rex Energy Operating Corp.

 

  d) PennTex Resources Illinois, Inc.

 

  e) R.E. Gas Development, LLC

 

  f) Rex Energy IV, LLC

3) Stock Powers delivered in respect of item 1.

 

  a) PennTex Resources Illinois, Inc., a Delaware corporation

 

  b) Rex Energy Operating Corp., a Delaware corporation

4) Memorandum of Assignment of Liens and Security Interests dated as of
April 28, 2017 among Royal Bank of Canada, the Administrative Agent and R.E. Gas
Development, LLC (Ohio).

5) Financing Statements in respect of item 4.

6) Assignment of Liens and Security Interests and Amendment to Mortgage dated as
of April 28, 2017, among the Administrative Agent, the Collateral Agent and R.E.
Gas Development, LLC (Ohio).

7) Financing Statements in respect of item 6.

8) Memorandum of Assignment of Liens and Security Interests dated as of
April 28, 2017 among Royal Bank of Canada, the Administrative Agent and R.E. Gas
Development, LLC (Pennsylvania).

9) Financing Statements in respect of item 8.

10) Assignment of Liens and Security Interests and Amendment to Mortgage dated
as of April 28, 2017, among the Administrative Agent, the Collateral Agent and
R.E. Gas Development, LLC (Pennsylvania).

 

Exhibit D - 1

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

11) Financing Statements in respect of item 10.

12) Memorandum of Assignment of Liens and Security Interests dated as of
April 28, 2017 among Royal Bank of Canada, the Administrative Agent and Rex
Energy I, LLC (Pennsylvania).

13) Financing Statements in respect of item 12.

14) Assignment of Liens and Security Interests and Amendment to Mortgage dated
as of April 28, 2017, among the Administrative Agent, the Collateral Agent and
Rex Energy I, LLC (Pennsylvania).

15) Financing Statements in respect of item 14.

16) Blocked Account Agreement by and among Manufacturers and Traders Trust
Company, Rex Energy Corporation and Angelo, Gordon Energy Servicer, LLC dated as
of April 28, 2017 regarding account no. 015004221769465.

17) Blocked Account Agreement made by and among Manufacturers and Traders Trust
Company, R.E. Gas Development, LLC and Angelo, Gordon Energy Servicer, LLC dated
as of April 28, 2017 regarding account no. 000009847503548.

18) Blocked Account Agreement made by and among Manufacturers and Traders Trust
Company, Rex Energy I, LLC and Angelo, Gordon Energy Servicer, LLC dated as of
April 28, 2017 regarding account no. 000008890765889.

19) Blocked Account Agreement made by and among Manufacturers and Traders Trust
Company, Rex Energy Operating Corp. and Angelo, Gordon Energy Servicer, LLC
dated as of April 28, 2017 regarding account nos. 015004219154503 and
000008891671508.

 

Exhibit D - 2

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

EXHIBIT E

FORM OF ASSIGNMENT AND ASSUMPTION

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 Credit Agreement identified below (as amended, the
“Credit Agreement”), receipt of a copy of which is hereby acknowledged by the
Assignee. The Standard 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.

For an agreed consideration, the Assignor hereby irrevocably sells and assigns
to the Assignee, and the Assignee hereby irrevocably purchases and assumes from
the Assignor, subject to and in accordance with the Standard Terms and
Conditions and the Credit Agreement, as of the Effective Date inserted by the
Administrative Agent as contemplated below (i) all of the Assignor’s rights and
obligations in its capacity as a Lender under the Credit Agreement and any other
documents or instruments delivered pursuant thereto to the extent related to the
amount and percentage interest identified below of all of such outstanding
rights and obligations of the Assignor under the respective facilities
identified below (including any letters of credit and guarantees included in
such facilities) and (ii) to the extent permitted to be assigned under
applicable law, all claims, suits, causes of action and any other right of the
Assignor (in its capacity as a Lender) against any Person, whether known or
unknown, arising under or in connection with the Credit Agreement, any other
documents or instruments delivered pursuant thereto or the loan transactions
governed thereby or in any way based on or related to any of the foregoing,
including contract claims, tort claims, malpractice claims, statutory claims and
all other claims at law or in equity related to the rights and obligations sold
and assigned pursuant to clause (i) above (the rights and obligations sold and
assigned pursuant to clauses (i) and (ii) above being referred to herein
collectively as the “Assigned Interest”). Such sale and assignment is without
recourse to the Assignor and, except as expressly provided in this Assignment
and Assumption, without representation or warranty by the Assignor.

 

1.    Assignor:                                             
                      2.    Assignee:   
                                                                      [and is an
Affiliate of [identify Lender] ] 3.    Borrower:    Rex Energy Corporation 4.   
Administrative Agent:    Angelo, Gordon Energy Servicer, LLC, as the
administrative agent under the Credit Agreement 5.    Credit Agreement:    The
Term Loan Credit Agreement dated as of April 28, 2017 among Rex Energy
Corporation, the Lenders parties thereto and Angelo, Gordon Energy Servicer,
LLC, as Administrative Agent]

 

Exhibit E - 1

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

6.    Assigned Interest:   

 

Commitment Assigned

   Aggregate Amount of
Commitment/Loans
for all Lenders      Amount of
Commitment/Loans
Assigned      Percentage Assigned
of
Commitment/Loans      $               $                          %     $
              $                          %     $               $                
         % 

Effective Date:                  , 20     [TO BE INSERTED BY ADMINISTRATIVE
AGENT AND WHICH SHALL BE THE EFFECTIVE DATE OF RECORDATION OF TRANSFER IN THE
REGISTER THEREFOR.]

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:  

 

Exhibit E - 2

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

[Consented to and] Accepted: ANGELO, GORDON ENERGY SERVICER, LLC, as
Administrative Agent

By  

 

Title:  

[Consented to:] [NAME OF RELEVANT PARTY]

By  

 

Title:  

 

Exhibit E - 3

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

ANNEX 1

REX ENERGY CORPORATION CREDIT AGREEMENT

STANDARD TERMS AND CONDITIONS FOR

ASSIGNMENT AND ASSUMPTION

1. Representations and Warranties.

1.1. Assignor. The Assignor (a) 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, (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 and (iv) it is not a Defaulting Lender; and (b) assumes no
responsibility with respect to (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
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 or (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.

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) it satisfies the
requirements, if any, specified in the Credit Agreement that are required to be
satisfied by it in order to acquire the Assigned Interest and become a Lender,
(iii) 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, (iv) it has
received a copy of the Credit Agreement, together with copies of the most recent
financial statements delivered pursuant to Section 8.01 thereof, as applicable,
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, (v) it has independently and
without reliance upon the Administrative Agent or any other Lender and base on
such documents and information as it has deemed appropriate, made its own credit
analysis and decision to enter into this Assignment and Assumption and to
purchase the Assigned Interest, and (vi) if it is a Foreign Lender, attached to
the Assignment and Assumption is any documentation required to be delivered by
it 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 their
terms all of the obligations which by the terms of the Loan Documents are
required to be performed by it as a Lender.

 

Exhibit E - 4

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2. Payments. 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 New York.

 

Exhibit E - 5

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EXHIBIT F-1

U.S. TAX COMPLIANCE CERTIFICATE

(For Foreign Lenders That Are Not Partnerships for U.S. Federal Income Tax
Purposes)

Reference is hereby made to the Term Loan Credit Agreement dated as of April 28,
2017 (as amended, supplemented or otherwise modified from time to time, the
“Credit Agreement”), among Rex Energy Corporation, a Delaware corporation (the
“Borrower”); each of the Lenders from time to time party hereto; and Angelo,
Gordon Energy Servicer, LLC, as administrative agent for the Lenders (in such
capacity, together with its successors in such capacity, the “Administrative
Agent”).

Pursuant to the provisions of Section 5.02 of the Credit Agreement, the
undersigned hereby certifies that (i) it is the sole record and beneficial owner
of the Loan(s) (as well as any Note(s) evidencing such Loan(s)) in respect of
which it is providing this certificate, (ii) it is not a bank within the meaning
of Section 881(c)(3)(A) of the Code, (iii) it is not a ten percent (10%)
shareholder of the Borrower within the meaning of Section 871(h)(3)(B) of the
Code, (iv) it is not a controlled foreign corporation related to the Borrower as
described in Section 881(c)(3)(C) of the Code, and (v) the interest payments in
question are not effectively connected with a U.S. trade or business conducted
by the undersigned or are effectively connected but are not includible in the
undersigned’s gross income for U.S. federal income tax purposes under an income
tax treaty.

The undersigned has furnished the Administrative Agent and the Borrower with a
certificate of its non-U.S. Person status on IRS Form W-8BEN or IRS Form
W-8BEN-E, as applicable (or any successor form). By executing this certificate,
the undersigned agrees that (1) if the information provided on this certificate
changes, the undersigned shall promptly so inform the Borrower and the
Administrative Agent, and (2) the undersigned shall have at all times furnished
the Borrower and the Administrative Agent with a properly completed and
currently effective certificate in either the calendar year in which each
payment is to be made to the undersigned, or in either of the two calendar years
preceding such payments.

Unless otherwise defined herein, terms defined in the Credit Agreement and used
herein shall have the meanings given to them in the Credit Agreement.

 

[NAME OF LENDER]

By:  

 

Name:  

 

Title:  

 

Date:  

 

 

Exhibit F-1 - 1

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EXHIBIT F-2

U.S. TAX COMPLIANCE CERTIFICATE

(For Foreign Participants That Are Not Partnerships for U.S. Federal Income Tax
Purposes)

Reference is hereby made to the Term Loan Credit Agreement dated as of April 28,
2017 (as amended, supplemented or otherwise modified from time to time, the
“Credit Agreement”), among Rex Energy Corporation, a Delaware corporation (the
“Borrower”); each of the Lenders from time to time party hereto; and Angelo,
Gordon Energy Servicer, LLC, as administrative agent for the Lenders (in such
capacity, together with its successors in such capacity, the “Administrative
Agent”).

Pursuant to the provisions of Section 5.02 of the Credit Agreement, the
undersigned hereby certifies that (i) it is the sole record and beneficial owner
of the participation in respect of which it is providing this certificate,
(ii) it is not a bank within the meaning of Section 881(c)(3)(A) of the Code,
(iii) it is not a ten percent (10%) shareholder of the Borrower within the
meaning of Section 871(h)(3)(B) of the Code, (iv) it is not a controlled foreign
corporation related to the Borrower as described in Section 881(c)(3)(C) of the
Code, and (v) the interest payments in question are not effectively connected
with a U.S. trade or business conducted by the undersigned or are effectively
connected but are not includible in the undersigned’s gross income for U.S.
federal income tax purposes under an income tax treaty.

The undersigned has furnished the participating Lender with a certificate of its
non-U.S. Person status on IRS Form W-8BEN or IRS Form W-8BEN-E, as applicable
(or any successor form). By executing this certificate, the undersigned agrees
that (1) if the information provided on this certificate changes, the
undersigned shall promptly so inform the Lender in writing, and (2) the
undersigned shall have at all times furnished such Lender with a properly
completed and currently effective certificate in either the calendar year in
which each payment is to be made to the undersigned, or in either of the two
calendar years preceding such payments.

Unless otherwise defined herein, terms defined in the Credit Agreement and used
herein shall have the meanings given to them in the Credit Agreement.

 

[NAME OF PARTICIPANT]

By:

 

 

Name:

 

 

Title:

 

 

Date:

 

 

 

Exhibit F-2 - 1

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EXHIBIT F-3

U.S. TAX COMPLIANCE CERTIFICATE

(For Foreign Participants That Are Partnerships for U.S. Federal Income Tax
Purposes)

Reference is hereby made to the Term Loan Credit Agreement dated as of April 28,
2017 (as amended, supplemented or otherwise modified from time to time, the
“Credit Agreement”), among Rex Energy Corporation, a Delaware corporation (the
“Borrower”); each of the Lenders from time to time party hereto; and Angelo,
Gordon Energy Servicer, LLC, as administrative agent for the Lenders (in such
capacity, together with its successors in such capacity, the “Administrative
Agent”).

Pursuant to the provisions of Section 5.02 of the Credit Agreement, the
undersigned hereby certifies that (i) it is the sole record owner of the
participation in respect of which it is providing this certificate, (ii) its
direct or indirect partners/members are the sole beneficial owners of such
participation, (iii) with respect to such participation, neither the undersigned
nor any of its direct or indirect partners/members is a bank extending credit
pursuant to a loan agreement entered into in the ordinary course of its trade or
business within the meaning of Section 881(c)(3)(A) of the Code, (iv) none of
its direct or indirect partners/members is a ten percent (10%) shareholder of
the Borrower within the meaning of Section 871(h)(3)(B) of the Code, and
(v) none of its direct or indirect partners/members is a controlled foreign
corporation related to the Borrower as described in Section 881(c)(3)(C) of the
Code, and (vi) the interest payments in question are not effectively connected
with a U.S. trade or business conducted by the undersigned or are effectively
connected but are not includible in the undersigned’s gross income for U.S.
federal income tax purposes under an income tax treaty.

The undersigned has furnished its participating Lender with IRS Form W-8IMY
accompanied by one of the following forms from each of its partners/members that
is claiming the portfolio interest exemption: (i) an IRS Form W-8BEN or IRS Form
W-8BEN-E, as applicable (or any successor form), or (ii) an IRS Form W-8IMY
accompanied by an IRS Form W-8BEN or IRS Form W-8BEN-E, as applicable (or any
successor form) from each such partner’s/member’s beneficial owners that is
claiming the portfolio interest exemption. By executing this certificate, the
undersigned agrees that (1) if the information provided on this certificate
changes, the undersigned shall promptly so inform such Lender, and (2) the
undersigned shall have at all times furnished such Lender with a properly
completed and currently effective certificate in either the calendar year in
which each payment is to be made to the undersigned, or in either of the two
(2) calendar years preceding such payments.

Unless otherwise defined herein, terms defined in the Credit Agreement and used
herein shall have the meanings given to them in the Credit Agreement.

 

[NAME OF PARTICIPANT]

By:

 

 

Name:

 

 

Title:

 

 

Date:

 

 

 

Exhibit F-3 - 1

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

EXHIBIT F-4

U.S. TAX COMPLIANCE CERTIFICATE

(For Foreign Lenders That Are Partnerships for U.S. Federal Income Tax Purposes)

Reference is hereby made to the Term Loan Credit Agreement dated as of April 28,
2017 (as amended, supplemented or otherwise modified from time to time, the
“Credit Agreement”), among Rex Energy Corporation, a Delaware corporation (the
“Borrower”); each of the Lenders from time to time party hereto; and Angelo,
Gordon Energy Servicer, LLC, as administrative agent for the Lenders (in such
capacity, together with its successors in such capacity, the “Administrative
Agent”).

Pursuant to the provisions of Section 5.02 of the Credit Agreement, the
undersigned hereby certifies that (i) it is the sole record owner of the Loan(s)
(as well as any Note(s) evidencing such Loan(s)) in respect of which it is
providing this certificate, (ii) its direct or indirect partners/members are the
sole beneficial owners of such Loan(s) (as well as any Note(s) evidencing such
Loan(s)), (iii) with respect to the extension of credit pursuant to this Credit
Agreement or any other Loan Document, neither the undersigned nor any of its
direct or indirect partners/members is a bank extending credit pursuant to a
loan agreement entered into in the ordinary course of its trade or business
within the meaning of Section 881(c)(3)(A) of the Code, (iv) none of its direct
or indirect partners/members is a ten percent (10%) shareholder of the Borrower
within the meaning of Section 871(h)(3)(B) of the Code, (v) none of its direct
or indirect partners/members is a controlled foreign corporation related to the
Borrower as described in Section 881(c)(3)(C) of the Code, and (vi) the interest
payments in question are not effectively connected with a U.S. trade or business
conducted by the undersigned or are effectively connected but are not includible
in the undersigned’s gross income for U.S. federal income tax purposes under an
income tax treaty.

The undersigned has furnished the Administrative Agent and the Borrower with IRS
Form W-8IMY accompanied by one of the following forms from each of its
partners/members that is claiming the portfolio interest exemption: (i) an IRS
Form W-8BEN or IRS Form W-8BEN-E, as applicable (or any successor form), or
(ii) an IRS Form W-8IMY accompanied by an IRS Form W-8BEN or IRS Form W-8BEN-E,
as applicable (or any successor form) from each such partner’s/member’s
beneficial owners that is claiming the portfolio interest exemption. By
executing this certificate, the undersigned agrees that (1) if the information
provided on this certificate changes, the undersigned shall promptly so inform
the Administrative Agent and the Borrower, and (2) the undersigned shall have at
all times furnished the Administrative Agent and the Borrower with a properly
completed and currently effective certificate in either the calendar year in
which each payment is to be made to the undersigned, or in either of the two
calendar years preceding such payments.

Unless otherwise defined herein, terms defined in the Credit Agreement and used
herein shall have the meanings given to them in the Credit Agreement.

 

[NAME OF LENDER] By:  

 

Name:  

 

Title:  

 

Date:  

 

 

Exhibit F-4 - 1

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EXHIBIT G

SWAP INTERCREDITOR AGREEMENT

 

Exhibit G - 1

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

INTERCREDITOR AGREEMENT

THIS INTERCREDITOR AGREEMENT (this “Agreement”) is entered into as of April 28,
2017 by and among Rex Energy Corporation, a Delaware corporation (the
“Borrower”), each other Subsidiary of the Borrower that is a Guarantor under the
Credit Agreement referred to below (the “Guarantors,” and together with Borrower
collectively referred to as the “Loan Parties”), BP Energy Company (“BP”),
Macquarie Bank Limited (“Macquarie”), and Morgan Stanley Capital Group Inc., a
Delaware corporation (“MSCGI”) and together with BP and Macquarie, the “Initial
Swap Counterparties”), any other Person that hereafter becomes a party to this
Agreement as a “Swap Counterparty” in accordance with the terms hereof, and
Angelo, Gordon Energy Servicer, LLC (“AGES”), in its capacity as administrative
agent for the Lenders and the Issuing Bank under the Credit Agreement (in such
capacity, together with its successors and assigns, the “Administrative Agent”)
and in its capacity as the Collateral Agent for the Secured Parties (in such
capacity, together with its successors and assigns, the “Collateral Agent”).

R E C I T A L S:

WHEREAS, pursuant to that certain Term Loan Credit Agreement, dated as of
April 28, 2017 (as the same may be amended, restated, supplemented or otherwise
modified or replaced from time to time, the “Credit Agreement”), among Borrower,
the various financial institutions and entities from time to time parties
thereto as lenders (collectively referred to as the “Lenders”), the Issuing Bank
party thereto (the “Issuing Bank”), and the Administrative Agent, the Lenders
have made, and may on or after the date hereof make Loans (as defined in the
Credit Agreement), to the Borrower and the Issuing Bank may issue Letters of
Credit for the account of the Borrower and its subsidiaries;

WHEREAS, pursuant to (a) the Amended and Restated Guaranty and Collateral
Agreement, dated as of April 28, 2017 (as the same may be amended, restated,
supplemented or otherwise modified or replaced from time to time, the “Guaranty
and Collateral Agreement”) and (b) certain of the other Security Instruments,
the Borrower and each Guarantor party thereto has granted a first priority
(subject to Liens permitted under Section 9.03 of the Credit Agreement) security
interest in the Collateral to secure the Total Obligations;

WHEREAS, (a) Borrower and BP have entered into that certain ISDA Master
Agreement, dated as of November 1, 2016, including the schedules, exhibits and
annexes thereto, and all confirmations and transactions now or hereafter entered
into or novated thereunder, other than in respect of the delivery of physical
products (in each case, as amended, restated, supplemented or otherwise modified
from time to time, the “BP ISDA”), (b) Borrower and Macquarie have entered into
that certain ISDA 2002 Master Agreement dated as of April 28, 2017, including
the schedules, exhibits and annexes thereto and all confirmations and
transactions now or hereafter entered into or novated thereunder, other than in
respect of the delivery of physical products (in each case, as amended,
restated, supplemented or otherwise modified from time to time, the “Macquarie
ISDA”), and (c) Borrower and MSCGI have entered into that certain ISDA 2002
Master Agreement dated as of November 24, 2014, including all schedules and all
exhibits and annexes thereto and all confirmations and transactions now or

 

Exhibit G - 2

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

hereafter entered into or novated thereunder, other than in respect of the
delivery of physical products (in each case, as amended, restated, supplemented
or otherwise modified from time to time, the “MSCGI ISDA” and together with the
BP ISDA and the Macquarie ISDA, the “Approved ISDAs”);

WHEREAS, the Credit Agreement and the Swap Agreements provide or will provide,
among other things, that the parties thereto shall enter into this Agreement to,
among other things, define the rights, duties, authorities and responsibilities
of the Collateral Agent and the Administrative Agent and the respective rights
and remedies among the Secured Parties with respect to the Collateral; and

WHEREAS, Collateral Agent, Administrative Agent (on behalf of itself and the
Lenders and the Issuing Bank), and each Swap Counterparty desire to enter into
this Agreement to (i) establish the relative priorities of the Secured Parties
with respect to the Collateral, (ii) agree with respect to the exercise of
certain remedies with respect to the Collateral, and (iii) appoint the
Collateral Agent to serve, and have the Collateral Agent agree to serve, as
Collateral Agent for the Secured Parties under the Security Instruments for the
purposes of holding and enforcing the Liens created by and existing under the
Security Instruments to secure the Total Obligations and apportioning Proceeds
among the Secured Parties, and for the other purposes set forth herein.

A G R E E M E N T S:

In consideration of the mutual covenants and promises of this Agreement, and for
other consideration, the receipt and adequacy of which are hereby acknowledged,
the parties hereto agree as follows:

1. Definitions. As used in this Agreement (including the preamble and recitals
hereto):

Administrative Agent is defined in the preamble.

AGES is defined in the preamble.

Agreement is defined in the preamble.

Approved ISDA is defined in the recitals to this Agreement.

as in effect on the date hereof means, with respect to any provision of a
Principal Agreement, such provision as is in effect on the date of this
Agreement without giving effect to any amendment, waiver or other modification
thereto.

Borrower is defined in the preamble.

BP is defined in the preamble.

BP ISDA is defined in the recitals to this Agreement.

 

Exhibit G - 3

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

Business Day means any day that is not a Saturday, Sunday or other day on which
commercial banks in New York City are authorized or required by law to remain
closed.

Collateral means, all personal, real or mixed property of the Loan Parties and
rights thereto described in and subject to a Lien under the Security Instruments
and the Rights under letters of credit, if any, posted as collateral support for
the Swap Obligations, but excluding any Excluded Collateral (as defined in the
Guaranty and Collateral Agreement as in effect on the date hereof).

Collateral Agent is defined in the preamble.

Controlling Party means, prior to the Discharge of Loan Obligations, the
Majority Lenders, and from and after the Discharge of Loan Obligations, the Swap
Counterparties holding a majority of the Outstanding Amount of all Swap
Obligations.

Credit Agreement is defined in the recitals to this Agreement.

Credit Parties means Administrative Agent, each Lender, the Issuing Bank, and
each Secured Cash Management Provider.

Debtor Relief Law means Title 11 of the United States Code entitled “Bankruptcy”
and all other applicable liquidation, conservatorship, bankruptcy, insolvency,
rearrangement, moratorium, reorganization, or similar debtor relief laws
affecting the rights of creditors generally from time to time in effect.

Discharge of Loan Obligations means, subject to Section 20, the occurrence of
all of the following: (a) termination of all commitments to extend credit that
would constitute Loan Obligations (other than Secured Cash Management
Obligations), (b) termination or cancellation of or entry into arrangements
satisfactory to the Administrative Agent and the Issuing Bank in their sole
discretion with respect to all Letters of Credit issued and outstanding under
the Credit Agreement, and (c) payment in full in cash of all Loan Obligations
(other than Secured Cash Management Obligations and contingent indemnification
obligations for which no claim has been asserted); provided, that, upon the
Discharge of Loan Obligations, any Secured Cash Management Obligations that
remain outstanding on such date shall no longer constitute “Loan Obligations”
hereunder or “Secured Obligations” under and as defined in any other Security
Instrument or be secured by any Liens granted or purported to be granted under
any Security Instruments, and Secured Cash Management Providers shall no longer
constitute “Secured Parties” hereunder or under any other Security Instrument.

Discharge of Swap Obligations means, subject to Section 20, the occurrence of
all of the following: (a) termination of all Swap Agreements and (b) payment in
full in cash of all Swap Obligations (other than with respect to contingent
indemnification obligations for which no claim has been asserted) under each
Swap Agreement (other than any Swap Agreement with respect to which other
arrangements satisfactory in the sole discretion of the Swap Counterparty that
is party to such Swap Agreement have been made and communicated by such Swap
Counterparty in writing to the Collateral Agent).

 

Exhibit G - 4

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

Early Termination Event means, with respect to any Swap Agreement, the
termination of all transactions or affected transactions thereunder as a result
of the occurrence of an event of default or a termination event (however
defined) thereunder.

Event of Default means (a) an “Event of Default” as defined in the Credit
Agreement or (b) an event of default or a termination event (however defined)
under any Swap Agreement where a Loan Party is the “defaulting party” or an
“affected party”, in each case, however defined.

Excess Loan Obligations has the meaning assigned to the term “Excess First Lien
RBL Obligations” in the Second Lien Intercreditor Agreement.

Governmental Authority means the government of the United States of America, any
other nation or any political subdivision thereof, whether state or local, and
any agency, authority, instrumentality, regulatory body, court, central bank or
other entity exercising executive, legislative, judicial, taxing, regulatory or
administrative powers or functions of or pertaining to government over the
Borrower, any Subsidiary, any of their Properties, the Issuing Bank, any Swap
Counterparty or any Lender.

Guarantors is defined in the preamble.

Guaranty and Collateral Agreement is defined in the recitals to this Agreement.

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

Initial Swap Counterparties is defined in the preamble.

Issuing Bank is defined in the recitals to this Agreement.

Lenders is defined in the recitals to this Agreement.

Letter of Credit means any letter of credit issued pursuant to the Credit
Agreement.

Lien means any interest in Property securing an obligation owed to, or a claim
by, a Person other than the owner of the Property, whether such interest is
based on the common law, statute or contract, and whether such obligation or
claim is fixed or contingent, and including (a) the lien or security interest
arising from a mortgage, encumbrance, pledge, security agreement, conditional
sale or trust receipt or a lease, consignment or bailment for security purposes
or (b) production payments and the like payable out of Oil and Gas Properties.
The term “Lien” shall include easements, restrictions, servitudes, permits,
conditions, covenants, exceptions or reservations.

Loan Documents means the “Loan Documents” as defined in the Credit Agreement.

 

Exhibit G - 5

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

Loan Obligations means, subject to the proviso in the definition of “Discharge
of Loan Obligations” above, Secured Obligations described in clause (a), (c) and
(d) (and for the avoidance of doubt, clause (e) with respect to each of the
foregoing) of the definition thereof in the Credit Agreement as in effect on the
date hereof, in each case, whether direct or indirect (including those acquired
by assumption), absolute or contingent, due or to become due, now existing or
hereafter arising (including Call Protection Amounts and Yield Maintenance
Amounts (each, as defined in the Credit Agreement as in effect on the date
hereof)), interest accruing after the maturity of the Loans and interest
accruing after the filing of any petition in bankruptcy, or the commencement of
any insolvency, reorganization or like proceeding, relating to the Borrower,
whether or not a claim for post-filing or post-petition interest is allowed in
such proceeding).

Loan Parties is defined in the preamble.

Majority Lenders means the “Majority Lenders” as defined in the Credit
Agreement.

Macquarie is defined in the preamble.

Macquarie ISDA is defined in the recitals to this Agreement.

MSCGI is defined in the preamble.

MSCGI ISDA is defined in the recitals to this Agreement.

Outstanding Amount means with respect to any Swap Agreement, (a) at any time
prior to the occurrence of an Early Termination Event under such Swap Agreement,
at the election of the Swap Counterparty party thereto, either (i) the amount of
all Swap Obligations that would be payable to such Swap Counterparty under such
Swap Agreement if there occurred at such time an Early Termination Event under
such Swap Agreement, or (ii) the mark-to-market valuation of all transactions
under such Swap Agreement, in either case, as reasonably determined by such Swap
Counterparty, or (b) at any time from and after the occurrence of an Early
Termination Event under such Swap Agreement, the amount of all Swap Obligations
then due and owing to such Swap Counterparty under such Swap Agreement.

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

Principal Agreements means the Loan Documents and the Swap Agreements,
collectively.

Proceeds includes any and all proceeds from any sale, exchange, destruction,
condemnation, foreclosure, liquidation or other disposition of any of the
Collateral, including, but not limited to, under any Debtor Relief Law, and in
the case of a successful credit bid, any Collateral that is the subject of such
credit bid and any and all proceeds from any guarantee under the Loan Documents;
provided, however, except for during the

 

Exhibit G - 6

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

existence of a Triggering Event, such term will not include sales of any
Hydrocarbons produced from or attributable to the Collateral in the ordinary
course of the Loan Parties’ business or sales, leases or other dispositions of
other Collateral permitted under the Loan Documents.

Property means any interest in any kind of property or asset, whether real,
personal or mixed, or tangible or intangible, including cash, securities,
accounts and contract rights.

Ratably or Ratable means, with respect to any amount to be allocated between the
Credit Parties and the Swap Counterparties as of any date of determination, the
allocation of a portion of such amount to (a) the Credit Parties such that the
ratio that the amount allocated to the Credit Parties bears to the total amount
to be so allocated equals the ratio of the amount of Loan Obligations to the
amount of Total Obligations as of such date and (b) Swap Counterparties such
that the ratio that the amount allocated to Swap Counterparties bears to the
total amount to be so allocated equals the ratio of the amount of Swap
Obligations to the amount of Total Obligations as of such date (and with such
amount allocated to each individual Swap Counterparty under this clause
(b) being equal to its Swap Counterparty Ratable Share of such amount).

Required Consent has the meaning assigned to such term in Section 2(g).

Right or Rights means rights, remedies, powers, privileges and benefits.

Second Lien Intercreditor Agreement has the meaning assigned to such term in the
Credit Agreement as in effect on the date hereof.

Secured Cash Management Obligations has the meaning assigned to such term in the
Credit Agreement as in effect on the date hereof.

Secured Cash Management Provider has the meaning assigned to such term in the
Credit Agreement as in effect on the date hereof.

Secured Parties means, collectively, the Collateral Agent, the Administrative
Agent, each Lender, the Issuing Bank, each Swap Counterparty, and subject to the
proviso in the definition of “Discharge of Loan Obligations” set forth above,
each Secured Cash Management Provider.

Security Instruments means the “Security Instruments” as defined in the Credit
Agreement and includes, without limitation, those documents listed in Schedule 1
attached hereto and incorporated herein by this reference.

Standstill Period means a period equal to ninety (90) days after the occurrence
of a Triggering Event, extended by each day that the Collateral Agent is
pursuing the enforcement of the Rights of the Secured Parties in, to and under
all or substantially all of the Collateral in accordance with the terms of this
Agreement; which period will be tolled during any period in which the Collateral
Agent is not entitled, on behalf of the Secured Parties, to enforce or exercise
any rights or remedies with respect to any Collateral as a result of (a) any
injunction issued by a court of competent jurisdiction or (b) the automatic stay
or any other stay in any Debtor Relief Law.

 

Exhibit G - 7

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Swap Agreement means (a) each Approved ISDA and (b) each other “Secured Swap
Agreement” under and as defined in the Credit Agreement.

Swap Counterparty means (a) each Initial Swap Counterparty and (b) each other
Person that is a “Secured Swap Party” under and as defined in the Credit
Agreement.

Swap Counterparty Joinder means an agreement substantially in the form of
Exhibit A.

Swap Counterparty Ratable Share means, with respect to the portion of the Swap
Counterparties’ Ratable share of any amount to be allocated to an individual
Swap Counterparty as of any date of determination, a percentage equal to a
fraction, the numerator of which is the amount of Swap Obligations owing to such
Swap Counterparty as of such date and the denominator of which is an amount
equal to the total Swap Obligations as of such date.

Swap Obligations means, with respect to each Swap Counterparty, all amounts owed
or to become owing by a Loan Party to such Swap Counterparty under any Swap
Agreement, whether direct, indirect, fixed, contingent, liquidated,
unliquidated, joint, several or joint and several, together with all costs,
expenses and attorneys’ fees incurred in the enforcement or collection thereof,
and interest thereon after the commencement of any proceedings under any Debtor
Relief Laws; provided, however, that for purposes of (a) the definitions of
“Ratable”, “Ratably”, “Outstanding Amount”, and “Swap Counterparty Ratable
Share”, and to the extent used in the definitions of “Ratable”, “Ratably”,
“Outstanding Amount”, or “Swap Counterparty Ratable Share”, “Total Obligations”,
and (b) Section 5(c) of this Agreement, “Swap Obligations” means the amounts due
to such Swap Counterparty under the applicable Swap Agreements following the
netting of the transactions pursuant to the terms of the applicable Swap
Agreements to the extent permitted under applicable law and the applicable Swap
Agreements.

Total Obligations means (a) the Loan Obligations, and (b) the Swap Obligations.

Triggering Event means any of the following:

(i) The Collateral Agent shall have received from any Swap Counterparty written
notice that (A) an event of default or a termination event (however defined)
exists under one or more Swap Agreements to which such Swap Counterparty is a
party, where a Loan Party is the “defaulting party” or an “affected party”, in
each case, however defined, (B) an early termination date has been designated as
a result thereof, (C) specifies the sum (which may be an estimate pending actual
determination of such amounts) of all unpaid amounts and settlement payments
then due to such Swap Counterparty as the result of the designation of such
early termination date and the amount of interest and other amounts then due and
payable by the applicable Loan Party in respect thereof, and (D) the amount set
forth in clause (C) has not been paid in full or discharged to the reasonable
satisfaction of such Swap Counterparty; or

(ii) Each Swap Counterparty, Collateral Agent and the Borrower shall have
received from the Administrative Agent (acting at the direction of the Majority
Lenders) written notice that (A) an Event of Default (as defined in the Credit
Agreement) exists and (B) the unpaid principal amount of the Loans (as defined
in the Credit Agreement) under the Credit Agreement and all interest accrued and
unpaid thereon have been declared to be then due and payable.

 

Exhibit G - 8

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UCC means the Uniform Commercial Code as adopted and in effect in New York from
time to time, or when the laws of any other jurisdiction govern the perfection
or priority of any Lien, the Uniform Commercial Code of such jurisdiction.

2. Obligations and Liens Pari Passu.

(a) Subject to the terms and conditions of this Agreement, the Loan Obligations
and Swap Obligations shall be secured on a first priority, pari passu basis by
the Liens on the Collateral granted to the Collateral Agent for the benefit of
the Secured Parties under the Security Instruments. Substantially
contemporaneously with the execution of this Agreement, the Loan Parties shall
execute the Security Instruments or amendments to the Security Instruments in
effect at the time of execution of this Agreement to cause any Lien granted in
any Collateral to or for the benefit of Administrative Agent or the Collateral
Agent under such Security Instruments to be granted in favor of the Collateral
Agent for the benefit of the Secured Parties to secure the Loan Obligations and
the Swap Obligations in accordance with the terms of this Agreement.

(b) Each Swap Counterparty agrees that, without the prior written consent of the
Collateral Agent (acting at the explicit written direction of Majority Lenders),
such Swap Counterparty will not seek or accept credit support from any Loan
Party (excluding any netting or setoff rights of such Swap Counterparty, which
are acknowledged to be for the sole benefit of such Swap Counterparty,
notwithstanding Section 4 or Section 5 hereof) for any Swap Obligation other
than its Rights under the Security Instruments. Notwithstanding the preceding
sentence, to the extent that a Swap Counterparty, with or without the written
consent of Collateral Agent (acting at the explicit written direction of
Majority Lenders), hereafter obtains any Lien on assets of the Borrower or any
Guarantor to secure all or any portion of its Swap Obligations (excluding any
netting or setoff rights of such Swap Counterparty, which are acknowledged to be
for the sole benefit of such Swap Counterparty, notwithstanding Section 4 or
Section 5 hereof or any other provision to the contrary herein), the Lien held
by such Swap Counterparty on such assets shall secure both the Loan Obligations
and the Swap Obligations notwithstanding (i) the date, manner or order of any
grant, attachment or perfection of any such Lien, (ii) any provision of the UCC,
other applicable law, the Loan Documents or the Swap Agreements or (iii) any
manner of enforcement of any Lien or other Rights. Similarly, each Credit Party
agrees that, without the prior written consent of each Swap Counterparty, it
will not seek or accept credit support from any Loan Party (excluding

 

Exhibit G - 9

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cash collateral pledged for the benefit of the Issuing Bank pursuant to Section
2.06(j) or any other provision of the Credit Agreement as in effect on the date
hereof in respect of Letters of Credit and netting or setoff rights of any
Secured Cash Management Provider) for any Loan Obligation other than its Rights
under the Security Instruments. Notwithstanding the preceding sentence, to the
extent any Credit Party, with or without the written consent of the Swap
Counterparties, hereafter obtains any Lien on assets of the Borrower or the
Guarantors intended to secure all or any portion of the Loan Obligations, the
Lien held by such Credit Party on such assets shall secure both the Loan
Obligations and the Swap Obligations, notwithstanding (i) the date, manner or
order of any grant, attachment or perfection of any such Lien, (ii) any
provision of the UCC, other applicable law, the Loan Documents or the Swap
Agreements or (iii) any manner of enforcement of any Lien or other Rights.

(c) The Administrative Agent (for itself and on behalf of the other Credit
Parties) consents to entry by the Loan Parties into the Approved ISDAs and
agrees that each Approved ISDA is a “Secured Swap Agreement” permitted under the
terms of the Credit Agreement, each Initial Swap Counterparty is an Approved
Counterparty (as defined in the Credit Agreement), the Liens securing the Swap
Obligations are permitted Liens under the Credit Agreement, and that this
Agreement is the Swap Intercreditor Agreement (as defined in the Credit
Agreement). Each Swap Counterparty and the Administrative Agent (for itself and
on behalf of the other Credit Parties) acknowledges and agrees that upon
execution of this Agreement (or of a Swap Counterparty Joinder), each Swap
Counterparty will become a Secured Party under the Security Instruments. All
parties hereto agree that, notwithstanding any provision of this Agreement to
the contrary, each Swap Counterparty and each Secured Cash Management Provider
is entitled to exercise, solely for its benefit, any right of multiple
transaction netting or setoff it may hold with respect to any of its respective
Swap Obligations or Secured Cash Management Obligations, as applicable.

(d) The amounts payable by Borrower or any Guarantor to each Secured Party at
any time under any of the Principal Agreements shall be separate and independent
debts, and each Secured Party shall be entitled to enforce any right arising out
of the applicable Principal Agreement to which it is a party, subject to the
terms thereof and of this Agreement. Subject to Sections 2(n) and 2(o), both
before and during an insolvency or liquidation proceeding, any Secured Party may
take any actions and exercise any and all rights that they would have as an
unsecured creditor which are not inconsistent with this Agreement, including the
commencement of an insolvency or liquidation proceeding against the Loan Parties
in accordance with applicable law and the termination of any Principal Agreement
in accordance with the terms thereof; provided, that if any Secured Party
becomes a judgment Lien creditor in respect of Collateral as a result of its
enforcement of its rights as an unsecured creditor with respect to the Swap
Obligations or the Loan Obligations, as the case may be, such judgment Lien
shall be subject to the terms of this Agreement for all purposes as the other
Liens securing the Total Obligations are subject to this Agreement and the
proceeds thereof shall be applied as provided in Section 5(c). Each of the
Credit Parties and each of the Swap Counterparties hereby agrees that none of
them (whether as the mortgagee or secured party, as the case may be, under the
Security Instruments) shall have any right individually to realize upon any

 

Exhibit G - 10

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Liens granted to the Administrative Agent or the Collateral Agent under any
Security Instrument, it being understood and agreed that such remedies may be
exercised only by Collateral Agent (as the mortgagee or the secured party, as
the case may be, under the Security Instruments) for the benefit of the Secured
Parties, subject to the terms and conditions of this Agreement.

(e) Each Secured Party (other than Secured Cash Management Providers) agrees to
endeavor to deliver to the other Secured Parties (other than Secured Cash
Management Providers) (i) as soon as practicable after it makes delivery to
Borrower, a copy of any notice of default, notice of intent to accelerate or
notice of acceleration with respect to any of the Loan Obligations or the Swap
Obligations, as applicable, and (ii) as soon as practicable after it makes
delivery to any other Person, a copy of any notice of the commencement of any
judicial proceeding and a copy of any other notice with respect to the exercise
of remedies with respect to any of the Loan Obligations or the Swap Obligations,
as applicable. Any failure by a party hereto to furnish a copy under this
Section 2(e) shall not limit or affect the rights or obligations hereunder.

(f) Each of the Swap Counterparties, the Collateral Agent and the Administrative
Agent (acting at the written direction of Majority Lenders) hereby agrees that
it shall endeavor to furnish Borrower as soon as practicable after receipt or
provision thereof, as applicable, with a copy of any notice provided or
received, as applicable, by it which notice would, pursuant to clause (i) or
(ii) of the definition of Triggering Event in Section 1 above, establish a
Triggering Event. Each of the Borrower and the Administrative Agent (acting at
the written direction of Majority Lenders) hereby agrees that it shall endeavor
to furnish to each Swap Counterparty as soon as practicable after receipt or
provision thereof, as applicable, a copy of any notice received or provided, as
applicable, by it which notice would, pursuant to clause (ii) of the definition
of Triggering Event in Section 1 above, establish a Triggering Event. Any
failure by a party hereto to furnish a copy under this Section 2(f) shall not
limit or affect the rights or obligations hereunder.

(g) No amendment, restatement, supplement, modification, termination, consent,
waiver, replacement or refinancing of or to the Credit Agreement or any other
Loan Document may be effectuated without the prior written consent of each Swap
Counterparty if such amendment, restatement, supplement, modification,
termination, consent, waiver, replacement or refinancing would:

(i) amend or otherwise change the definition of “Approved Counterparty”, “Loan
Documents”, “Secured Obligations”, “Secured Swap Agreement”, “Secured Swap
Obligations”, “Secured Swap Party”, “Security Instruments”, “Swap Agreement”, or
“Swap Intercreditor Agreement” (as each term is defined in the Credit Agreement
as of the date hereof);

(ii) provide for any of the Swap Obligations to cease to be secured by the
Security Instruments;

 

Exhibit G - 11

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(iii) cause the Security Instruments to secure obligations other than the Loan
Obligations and the Swap Obligations;

(iv) cause the Swap Obligations to cease to be (A) secured on a first priority,
pari passu basis with principal on the Loans (as defined in the Credit Agreement
as in effect on the date hereof) and reimbursement obligations under Letters of
Credit in respect of the Collateral (other than Excess Loan Obligations) or
(B) guaranteed on a pari passu basis with the Loan Obligations, or cause the
fees, expenses and indemnities of the Swap Counterparties constituting Swap
Obligations to cease to be secured on a first priority, pari passu basis with
the fees, expenses and indemnities of the Administrative Agent, the Collateral
Agent, the Lenders and the Issuing Bank constituting Loan Obligations;

(v) have a material detrimental effect on the Rights or obligations of any Swap
Counterparty under any Security Instrument or under this Agreement;

(vi) restrict any recoupment, netting or setoff rights or rights as an unsecured
creditor of a Swap Counterparty under any of its Swap Agreements;

(vii) release or permit the release of (A) any Guarantor under and as defined in
the Credit Agreement from any of its obligations under any Loan Documents or
(B) any Collateral, in either case, if such release is not permitted under the
Loan Documents as in effect on the date hereof; or

(viii) amend the definition of “Borrowing Base” in the Credit Agreement in any
manner that would result in Loan Obligations constituting Excess First Lien
Obligations under the Second Lien Intercreditor Agreement,

(each of the foregoing, a “Required Consent”). Any such amendment, supplement,
modification, consent, waiver, replacement, or refinancing executed without such
consent shall be null and void.

(h) Borrower hereby agrees to provide written notice to each Swap Counterparty
no less than seven days prior to effectiveness of any amendment, restatement,
material supplement or other material modification to each Loan Document, any
termination of any material Loan Document, or any consent or waiver under any
Loan Document, including with such notice a copy of the proposed amendment,
restatement, supplement, modification, supplement, termination, consent, or
waiver if such amendment, restatement, supplement, modification, termination,
consent, or waiver constitutes a Required Consent. Without limiting the Rights
of the Swap Counterparties under Section 2(g), Borrower hereby agrees to provide
written notice to each Swap Counterparty (which notice may be revoked by
Borrower) no less than seven days prior to the earliest to occur of (i) the date
of (A) signing or (B) closing of any replacement financing or any refinancing of
the Credit Agreement, or (ii) the date of any payment in full and retirement of
the Credit Agreement, including with such notice a copy of the proposed
replacement financing, refinancing or retirement of the Credit Agreement, as
applicable.

 

Exhibit G - 12

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(i) Borrower hereby agrees that each Swap Counterparty may provide to the
Administrative Agent (for distribution to the Lenders), and each Swap
Counterparty hereby agrees to provide to the Administrative Agent (for
distribution to the Lenders), within ten (10) Business Days following receipt of
a written request therefor from the Administrative Agent, (i) a report of the
marked-to-market positions of the transactions under any or all of the Swap
Agreements to which it is a party, and (ii) a copy of any trade confirmation
relating to any transaction under any Swap Agreement to which it is a party that
has not been previously provided to the Administrative Agent; provided that the
foregoing shall not require any Swap Counterparty to disclose to any Person any
information relating to pricing under any Swap Agreement.

(j) Each Swap Counterparty hereby acknowledges and consents to Loan Parties’
grants of security interests to Collateral Agent in all rights of Loan Parties
under the Swap Agreements, including all payments owing to Loan Parties
thereunder, notwithstanding any restrictions on assignment in any Swap
Agreement.

(k) The Collateral Agent shall have the right to release Collateral or
Guarantors solely to the extent such release is permitted under Sections 9.12 or
11.10 of the Credit Agreement, in each case, as in effect on the date hereof;
provided that the Collateral Agent may not release any Collateral if, upon
giving effect thereto, the Loan Parties would not be in compliance with
Section 9.18 of the Credit Agreement (as in effect on the date hereof and as
measured as if all Swap Agreements (as defined in the Credit Agreement) are
being entered into immediately after giving effect to such release of
Collateral). Any other release of Collateral or any Guarantor shall require the
consent of each Swap Counterparty.

(l) Each Secured Party hereby agrees that it shall not (and hereby waives any
right to) contest, or support any other Person in contesting, in any proceedings
(including any insolvency or liquidation proceedings), the priority, validity or
enforceability of a Lien held by or on behalf of the Collateral Agent in any
Collateral; provided that nothing in this Agreement shall be construed to
prevent or impair the rights of the Collateral Agent or any Secured Party to
enforce this Agreement as provided herein.

(m) Each Secured Party agrees that (i) it will not (and hereby waives any right
to) challenge or question in any proceeding the validity or enforceability of
any of the Total Obligations or any Security Instrument or the validity,
attachment, perfection or priority of any Lien under any Security Instrument or
the validity or enforceability of the priorities, rights or duties established
by or other provisions of this Agreement, (ii) it will not take or cause to be
taken any action the purpose or intent of which is, or could be, to interfere,
hinder or delay, in any manner, whether by judicial proceedings or otherwise,
any sale, transfer or other disposition of the Collateral by Collateral Agent in
accordance with the terms of this Agreement, (iii) it will not institute any
suit or assert in any suit, bankruptcy, insolvency or other proceeding any claim
against Collateral Agent or any other Secured Party seeking damages from or
other relief by way of specific performance, instructions or otherwise with
respect to any Collateral, and none of Collateral Agent or any other Secured
Party shall be liable for any action taken or omitted to be taken by Collateral
Agent or any other Secured Party, with respect to any Collateral

 

Exhibit G - 13

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in accordance with the provisions of this Agreement, (iv) it will not seek, and
hereby waives any right, to have any Collateral or any part thereof marshaled
upon any foreclosure or other disposition of such Collateral and (v) it will not
attempt, directly or indirectly, whether by judicial proceedings or otherwise,
to challenge the enforceability of any provision of this Agreement; provided,
that nothing in this Agreement shall be construed to prevent or impair the
rights of any of Collateral Agent or any other Secured Party to enforce this
Agreement.

3. Appointment of AGES as Collateral Agent. Each Swap Counterparty hereby
appoints AGES to (a) act as Collateral Agent, in its name and on its behalf, in
and under the Security Instruments, (b) be the beneficiary of the guarantees
provided under the Loan Documents, (c) hold the Liens on the Collateral, with
power of sale, in its name for the benefit and security of the Secured Parties
and for enforcement and payment of the Total Obligations, (d) take such action
on behalf of the Secured Parties under the terms and provisions of the Security
Instruments and to exercise such rights and remedies under the Security
Instruments as are specifically delegated to or required of AGES, in its
capacity as Collateral Agent, under the terms and provisions of this Agreement
and (e) to act as its agent under the Second Lien Intercreditor Agreement and
perform as the “First Lien RBL Agent” (as defined in the Second Lien
Intercreditor Agreement) thereunder. Subject to the terms hereof, Collateral
Agent agrees to administer and enforce this Agreement, the Second Lien
Intercreditor Agreement, and the Loan Documents to which it is a party as
Collateral Agent, and to foreclose upon, collect and dispose of the Collateral,
within a commercially reasonable time, distribute all Proceeds in accordance
with Section 5(c) below, and otherwise perform its duties and obligations as the
Collateral Agent hereunder and under the Second Lien Intercreditor Agreement in
accordance with the terms hereof and thereof.

4. Collateral Agent’s Authority. (a) Notwithstanding anything herein or in the
Security Instruments to the contrary, if no Triggering Event exists, Collateral
Agent shall be authorized by the Secured Parties to act hereunder and under the
Security Instruments at the direction of the Controlling Party. During the
existence of a Triggering Event, Collateral Agent shall, upon request of the
Controlling Party, and subject to this Agreement and the terms of the Loan
Documents, take any and all actions provided for in the Security Instruments
relating to the exercise of rights and remedies under the Security Instruments,
including, but not limited to, the foreclosure of Liens or other disposition of
the Collateral; provided, however, that following the expiration of the
Standstill Period, if the applicable Triggering Event still exists, (i) neither
the Administrative Agent nor any Lender shall have any right to require the
Collateral Agent to exercise, or decline to exercise, any rights or remedies
granted to the Secured Parties pursuant to the Security Instruments, such right
to belong exclusively to the Swap Counterparties even if no Swap Counterparty
constitutes the Controlling Party, and (ii) each Swap Counterparty shall have
the right to require the Collateral Agent to exercise, or decline to exercise,
any rights or remedies granted to the Collateral Agent or the other Secured
Parties pursuant to the Security Instruments (provided, that, if in the
reasonable determination of the Collateral Agent, instructions given to the
Collateral Agent by more than one Swap Counterparty conflict, the Collateral
Agent shall only accept instruction from the Swap Counterparty holding a
majority of the Outstanding Amount of the Swap Obligations held by the Swap
Counterparties making such conflicting instructions). Notwithstanding

 

Exhibit G - 14

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the foregoing, if any event of default occurs (x) under Section 5(a)(vii) of a
Swap Agreement, (y) under any Principal Agreement as a result of any proceeding
under any Debtor Relief Law in respect of Borrower or any Guarantor, or Borrower
or any Guarantor admits in writing its inability to meet its debts or (z) as a
result of the Loan Obligations being accelerated, and in each instance of (x),
(y) and (z), the Collateral Agent is not actively attempting to collect the
Total Obligations through the realization of the Collateral, any Swap
Counterparty shall have the right to require the Collateral Agent to exercise,
or decline to exercise, any rights or remedies granted to the Secured Parties
pursuant to the Security Instruments immediately even if such Swap Counterparty
is not the Controlling Party (provided, that, if in the reasonable determination
of the Collateral Agent, (x) instructions given to the Collateral Agent by more
than one Swap Counterparty conflict, the Collateral Agent shall only accept
instruction from the Swap Counterparty holding a majority of the Outstanding
Amount of the Swap Obligations held by the Swap Counterparties making such
conflicting instructions, or (y) instructions given to the Collateral Agent by
any Swap Counterparty conflicts with instructions given by the Administrative
Agent (acting at the direction of the Majority Lenders), the Collateral Agent
shall only accept instruction from the Administrative Agent (acting at the
direction of the Majority Lenders)).

(c) All funds received in any deposit account of any Loan Party subject to an
account control agreement in favor of the Collateral Agent (for the benefit of
the Secured Parties) during the existence of any Triggering Event in excess of
amounts reasonably determined in good faith by the Loan Parties and reasonably
agreed by the Administrative Agent and the Collateral Agent as necessary or
appropriate to fund the operation of the Loan Parties’ business during such
Triggering Event shall be maintained in such deposit account and held for the
benefit of the Secured Parties until such time as either (i) no Triggering Event
exists, in which case such amounts shall be freely available to the Loan
Parties, or (ii) Collateral Agent has (x) given a notice of exclusive control
with respect thereto and (y) begun to distribute Proceeds in accordance with
Section 5(c) of this Agreement, in which case such amounts shall be distributed
in accordance with Section 5(c) of this Agreement.

(d) Collateral Agent shall not be obligated to follow any instructions of any
Swap Counterparty if: (i) such instructions conflict with the provisions of this
Agreement, any Principal Agreement, any Security Instrument or any applicable
law, (ii) except as set forth in Section 4(b) and without limiting the rights of
any Swap Counterparty to instruct the Collateral Agent following the expiration
of the Standstill Period, Collateral Agent determines, in its sole and absolute
discretion, that such instructions are ambiguous, inconsistent, in conflict with
previously received instructions or otherwise insufficient to direct the actions
of Collateral Agent, provided that Collateral Agent explains the grounds for a
refusal based on a deficiency of instructions, or (iii) Collateral Agent has not
been adequately indemnified to its satisfaction. Nothing in this Section 4 shall
impair the right of Collateral Agent in its discretion to take any action
authorized under this Agreement or the Security Instruments, to the extent that
the consent of any Secured Party is not required or to the extent such action is
not prohibited by the terms hereof or thereof, which it deems proper and
consistent with the instructions given by the Secured Parties as provided for
herein or otherwise in the best interest of the

 

Exhibit G - 15

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Secured Parties. In the absence of written instructions from a Swap Counterparty
or the Administrative Agent (acting at the direction of the Majority Lenders)
for any particular matter, Collateral Agent shall have no duty to take or
refrain from taking any action unless such action or inaction is explicitly
required by the terms of this Agreement, the Security Instruments or applicable
law. Collateral Agent shall have no duty with respect to a Triggering Event
unless it first receives notice that a Triggering Event has occurred.

(e) If a Triggering Event of the type referred to in clause (ii) of the
definition of Triggering Event exists, at the request of the Administrative
Agent (acting at the written direction of the Majority Lenders), each Swap
Counterparty shall (subject to the netting and setoff rights of such Swap
Counterparty) make payments of any amounts due and owing from such Swap
Counterparty to any Loan Party under the applicable Swap Agreements to
Collateral Agent to be held until such time that either (i) no Triggering Event
exists, in which case such payments shall be released by Collateral Agent
immediately to the Borrower, or (ii) Collateral Agent has begun to distribute
Proceeds in accordance with Section 5(c) of this Agreement, in which case such
payments shall be distributed in accordance with Section 5(c) of this Agreement;
provided, however, that nothing in this Section 4(e) shall limit the rights of
any Swap Counterparty under any Swap Agreement from withholding payments to any
Loan Party or exercising other rights and remedies in accordance with the terms
of such Swap Agreement. Unless and until a Swap Counterparty is notified in
writing by Administrative Agent (acting at the written direction of the Majority
Lenders) to pay to Collateral Agent, in accordance herewith due to the existence
of a Triggering Event, amounts due and owing by such Swap Counterparty to the
applicable Loan Party under the applicable Swap Agreements, such Swap
Counterparty may continue to make such payments to the applicable Loan Party;
provided, the Loan Parties release each Swap Counterparty from any and all
liability resulting from such Swap Counterparty making any such payments to
Collateral Agent after receipt of such notice from Administrative Agent (acting
at the written direction of the Majority Lenders) and the Loan Parties hereby
consent to such payment to Collateral Agent.

(f) Each Secured Party agrees that only the Collateral Agent shall be entitled
to credit bid all or any of the Total Obligations; provided that the Secured
Parties agree, solely for their own benefit, that any credit bid of Total
Obligations will be made ratably for the ratable benefit of the creditors in
respect thereof.

5. Proceeds.

(a) The Secured Parties hereby agree among themselves that (i) if no Triggering
Event exists, each Secured Party shall be entitled to receive and retain for its
own account, and shall never be required to disgorge to the Collateral Agent or
any other Secured Party or acquire direct or participating interests in the Loan
Obligations or the Swap Obligations owing to such Secured Party, scheduled
payments or voluntary prepayments, payments of principal, interest, fees,
settlement payments, termination payments, setoff amounts and any other payments
in respect of the Principal Agreements, all in compliance with the terms
thereof, and (ii) during the existence of a Triggering Event, all such amounts
(other than amounts resulting from the exercise of netting or

 

Exhibit G - 16

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setoff rights by any Swap Counterparty or any Secured Cash Management Provider,
which are acknowledged to be for the sole benefit of the applicable Swap
Counterparty or Secured Cash Management Provider, as applicable, and cash
collateral pledged to the Administrative Agent for the benefit of the Issuing
Bank with respect to Letters of Credit) shall be treated as if constituting
Proceeds and paid to the Collateral Agent for application in accordance with
Section 5(c) of this Agreement.

(b) To the extent any Secured Party (including the Collateral Agent) shall
obtain or receive any amount or payment in respect of any Loan Obligations or
Swap Obligations owed to such Secured Party (other than amounts resulting from
the exercise of netting or setoff rights by any Swap Counterparty or any Secured
Cash Management Provider, which are acknowledged to be for the sole benefit of
the applicable Swap Counterparty or Secured Cash Management Provider, as
applicable, and cash collateral pledged to the Administrative Agent for the
benefit of the Issuing Bank with respect to Letters of Credit) other than in
accordance with this Section 5, such Secured Party shall notify each other
Secured Party and shall promptly pay (in the case of the Collateral Agent, to
the extent in its possession) such amount (less reasonable costs and expenses
incurred by such Secured Party in obtaining such amount) to the Collateral Agent
for application in accordance with Section 5(c) of this Agreement.

(c) All Proceeds received by any Secured Party (including the Collateral Agent)
during the existence of a Triggering Event (other than amounts resulting from
the exercise of netting or setoff rights by any Swap Counterparty or any Secured
Cash Management Provider, which are acknowledged to be for the sole benefit of
the applicable Swap Counterparty or Secured Cash Management Provider, as
applicable, and cash collateral pledged to the Administrative Agent for the
benefit of the Issuing Bank with respect to Letters of Credit) shall be paid to
the Collateral Agent for the account of the Secured Parties and applied by the
Collateral Agent in the following order:

(i) First, to payment or reimbursement of that portion of the Secured
Obligations constituting fees, expenses and indemnities payable to the
Administrative Agent, the Collateral Agent and the Issuing Bank, in each case in
their capacities as such;

(ii) Second, pro rata to payment or reimbursement of that portion of the Total
Obligations (other than Secured Cash Management Obligations) constituting fees,
expenses and indemnities payable to the Secured Parties (to the extent not
addressed in priority First);

(iii) Third, pro rata to payment of accrued interest on the Loans and LC
Disbursements (as defined in the Credit Agreement as in effect on the date
hereof) and any Yield Maintenance Amount and Call Protection Amount (as such
terms are defined in the Credit Agreement as in effect on the date hereof),
other than Excess Loan Obligations, then due;

(iv) Fourth, pro rata to payment of (A) principal outstanding on the Loans (as
defined in the Credit Agreement as in effect on the date hereof), other than
Excess Loan Obligations, (B) reimbursement obligations in respect of Letters of
Credit, other

 

Exhibit G - 17

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

than Excess Loan Obligations (and cash collateralization of LC Exposure (as
defined in the Credit Agreement as in effect on the date hereof) in an amount
equal to 103.5% of the aggregate undrawn amount of such Letters of Credit, in a
manner reasonably satisfactory to the Administrative Agent and the Issuing
Bank), (C) outstanding Swap Obligations owing to Swap Counterparties and
(D) until the Discharge of Loan Obligations has occurred, Secured Cash
Management Obligations owed to Secured Cash Management Providers;

(v) Fifth, to payment of Loan Obligations constituting Excess Loan Obligations;
and

(vi) Sixth, pro rata to any other Total Obligations; and

(vii) Seventh, any excess, after all of the Total Obligations shall have been
indefeasibly paid in full in cash, shall be paid to the Borrower or as otherwise
required by any Governmental Requirement (as defined in the Credit Agreement).

Notwithstanding the foregoing, amounts received from any Loan Party that is not
an “eligible contract participant” under the Commodity Exchange Act shall not be
applied to any Excluded Swap Obligations (as such terms are defined in the
Credit Agreement as in effect on the date hereof); it being understood, that if
any amount is applied to any Total Obligations other than Excluded Swap
Obligations as a result of this clause, Collateral Agent shall make such
adjustments as it reasonably determines are appropriate to distributions
pursuant to priority Fourth above from amounts received from “eligible contract
participants” under the Commodity Exchange Act to ensure, as nearly as possible,
that the proportional aggregate recoveries with respect to Total Obligations
described in priority Fourth above by the holders of any Excluded Swap
Obligations are the same as the proportional aggregate recoveries with respect
to other Total Obligations pursuant to priority Fourth above.

(d) Notwithstanding any other provision of this Agreement or any other Principal
Agreement to the contrary, nothing contained herein shall be construed to impair
the rights of the Administrative Agent or Issuing Bank to exercise its rights
and remedies in respect of any cash collateral pledged to the Administrative
Agent for the benefit of the Issuing Bank under Section 2.06(j) or any other
provision of the Credit Agreement as in effect on the date hereof, and each of
the parties hereto acknowledges and agrees that the Lien of the Administrative
Agent or Issuing Bank in respect of such cash collateral or any account
established and funded to cash collateralize any Letters of Credit issued by the
Issuing Bank and all funds on deposit therein or credited thereto shall be for
the benefit of the Issuing Bank and such cash collateral, accounts or funds on
deposit therein shall not be distributed to any other Secured Party hereunder,
in each case until all obligations in respect of such Letters of Credit have
terminated or have been paid in full in cash, at which point, if a Triggering
Event exists, such cash collateral, accounts and funds on deposit shall be
applied pursuant to Section 5(c).

 

Exhibit G - 18

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

6. Limitation of Liability – Collateral Agent. Neither Collateral Agent nor any
of its representatives shall be liable for any action taken or omitted to be
taken by it or them hereunder or under the Security Instruments in good faith
and reasonably believed by it or them to be within the discretion or power
conferred upon it or them by this Agreement and the Security Instruments or be
responsible for the consequences of any error of judgment, except to the extent
arising solely from its gross negligence, willful misconduct or material breach
of agreement. Collateral Agent shall not be responsible in any manner to any
other party for the effectiveness, enforceability, genuineness, validity or the
due execution of the Security Instruments or for any representation, warranty,
document, certificate, report or statement made in or in connection with the
Security Instruments or be under any obligation to any other party to ascertain
or inquire as to the performance or observance of any of the terms, covenants or
conditions of any of the Loan Documents or the Swap Agreements on the part of
the Borrower or any other Loan Party. Notwithstanding anything else provided
herein, Collateral Agent shall have no obligation or liability to the Credit
Parties, Swap Counterparties or to any other Person, (i) with respect to the
perfection, recording, re-recording, filing, refiling, monitoring, or
maintaining in effect of any Security Instruments or other instruments,
documents, mortgages, deeds of trust, financing statements or continuation
statements or (ii) with respect to the effectiveness, enforceability,
genuineness, validity or the due execution of the Security Instruments or for
any representation, warranty, document, certificate, report or statement made in
or in connection with the Security Instruments. EACH OF THE LENDERS, THE ISSUING
BANK AND SWAP COUNTERPARTIES AGREES TO RATABLY INDEMNIFY COLLATERAL AGENT AND
HOLD IT HARMLESS FROM AND AGAINST ANY AND ALL CLAIMS, LIABILITIES, OBLIGATIONS,
LOSSES, DAMAGES, PENALTIES, ACTIONS, JUDGMENTS, SUITS, COSTS, REASONABLE
EXPENSES AND/OR REASONABLE DISBURSEMENTS OF ANY KIND OR NATURE WHATSOEVER WHICH
MAY BE IMPOSED ON, ASSERTED AGAINST OR INCURRED BY COLLATERAL AGENT IN ANY WAY
RELATING TO OR ARISING OUT OF THE SECURITY INSTRUMENTS OR ANY ACTION TAKEN OR
OMITTED BY COLLATERAL AGENT UNDER THIS AGREEMENT OR THE SECURITY INSTRUMENTS,
EXCEPT TO THE EXTENT ANY OF THE SAME RESULTS SOLELY FROM THE GROSS NEGLIGENCE OR
WILLFUL MISCONDUCT OF, OR MATERIAL BREACH OF AGREEMENT BY COLLATERAL AGENT.
Collateral Agent shall give prompt written notice to the indemnifying party or
parties (provided that later notice shall not relieve indemnifying party(ies) of
its liability and obligations under this Section 6 unless and to the extent the
indemnifying party(ies) is/are prejudiced by such notice not being promptly
provided) after any applicable claim is initiated against Collateral Agent and
allow the indemnifying party(ies) to have sole control and authority of the
defense and settlement of the claim; provided that Collateral Agent shall
approve any settlement of a claim to which Collateral Agent is an actual party
or could reasonably be expected to be a potential party and in respect of which
indemnity may be sought hereunder, so long as such settlement (a) includes an
unconditional release of Collateral Agent from all liability in any way related
to or arising out of such claim and (b) does not impose any actual or potential
liability upon, or contain any factual or legal admission by or with respect to,
Collateral Agent. Collateral Agent shall reasonably cooperate with the
indemnifying party(ies) in the defense of such claims, including providing
reasonable assistance and information at the indemnifying party’s(ies’) expense.

7. Limitation of Liability – Credit Parties and Swap Counterparties. Neither the
Swap Counterparties nor any Credit Party (nor any individual partner, member,
director, employee or agent of either any Swap Counterparty or any Credit Party)
shall incur any liability to the other with respect to the transactions under
the Principal Agreements and this Agreement except for liabilities arising from
its gross negligence, willful misconduct or material breach of agreement.

 

Exhibit G - 19

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

8. Term. Subject to Section 20 below, this Agreement shall terminate upon the
earlier of (i) the Discharge of Loan Obligations and the Discharge of Swap
Obligations and (ii) the execution and delivery to the Collateral Agent of a
written termination notice signed by the Administrative Agent, the Issuing Bank
and each Swap Counterparty.

9. Removal and Resignation of Collateral Agent.

(a) Collateral Agent may only be removed as Collateral Agent with the prior
written consent of each Swap Counterparty and, subject to Section 9(b), the
Majority Lenders. The Administrative Agent and each Swap Counterparty agree to
notify Borrower promptly of any removal of Collateral Agent. The Collateral
Agent may resign at any time by giving thirty (30) days prior written notice of
resignation to the Borrower and each Swap Counterparty. Following delivery by
Collateral Agent of such notice of resignation, the Controlling Party shall have
the right to appoint a successor Collateral Agent with, so long as no Event of
Default exists, the consent of the Borrower (not to be unreasonably withheld,
conditioned or delayed). If no successor shall have been so appointed by the
Controlling Party and approved by the Borrower (if applicable) within 30 days
after such retiring Collateral Agent gives notice of its resignation, then other
Secured Parties may, with, so long as no Event of Default exists, the consent of
the Borrower (not to be unreasonably withheld, conditioned or delayed), appoint
a successor Collateral Agent. Upon its resignation, Collateral Agent agrees to
execute and deliver assignments, in form and substance mutually satisfactory to
Collateral Agent and the other Secured Parties, to the successor Collateral
Agent of the rights of the mortgagee or the secured party, as the case may be,
under the Security Instruments and of the Collateral Agent’s rights as
beneficiary of any guarantee of all or any part of the Total Obligations. Such
assignments shall be prepared at the expense of Borrower. Each Loan Party hereby
consents to such assignments. Upon the acceptance of any appointment as a
Collateral Agent hereunder by a successor entity, such successor shall succeed
to and become vested with all the rights, powers, privileges and duties of such
retiring Collateral Agent, and such retiring Collateral Agent shall have no
further duties, responsibilities or liabilities under this Agreement or the
Security Instruments, but shall remain entitled to the benefit of the
indemnification of the Collateral Agent provided in this Agreement and to
reimbursement, in accordance with applicable provisions of this Agreement, of
expenses incurred in the discharge of the duties of the Collateral Agent prior
to the effective date of such resignation.

(b) If Collateral Agent fails to take any material action under the Security
Instruments to protect or realize upon the Collateral during a Triggering Event
as required under Section 4(b) above within a reasonable time after being
requested to do so in writing by a Swap Counterparty, or if Collateral Agent
materially breaches its obligations to diligently pursue such action as required
under this Agreement, then the Swap Counterparties holding a majority of the
Outstanding Amount of the Swap Obligations may petition a court of competent
jurisdiction to replace Collateral Agent with another Person. Such replacement
Collateral Agent may take such other actions as

 

Exhibit G - 20

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

it may deem necessary or advisable to secure and enforce the Security
Instruments. If a court of competent jurisdiction decides to replace Collateral
Agent, any successor Collateral Agent shall be required to apply all Proceeds of
any realization upon the Collateral in accordance with Section 5(c) above,
provided that any reasonable documented expenses incurred in connection with the
replacement of Collateral Agent may be paid to the Person incurring such
expenses from the Proceeds of the Collateral pursuant to Section 5(c) above.

10. Survival of Rights. All of the respective rights and interests of the
Secured Parties under this Agreement (and the respective obligations and
agreements of the Secured Parties under this Agreement), shall remain in full
force and effect regardless of:

(a) any lack of validity or enforceability of any of the Loan Documents or the
Swap Agreements or any other agreement or instrument related thereto; or

(b) any other circumstance which might otherwise constitute a defense available
to, or discharge of, the Borrower or any Guarantor with respect to the Loan
Obligations or the Swap Obligations (other than the defense that such
obligations have been fully satisfied).

11. Representations and Warranties. Each of the Swap Counterparties, the
Administrative Agent (for itself and on behalf of each Lender and the Issuing
Bank), each of the Loan Parties and Collateral Agent represents and warrants to
the other parties hereto that:

(a) neither the execution and delivery of this Agreement nor its performance of
or compliance with the terms and provisions hereof will conflict with, or result
in a breach of the terms, conditions or provisions of, or constitute a default
under, any other agreement to which it is now subject, including, but not
limited to, any of the Loan Documents or any Swap Agreement;

(b) it has all requisite authority to execute, deliver and perform its
obligations under this Agreement; and

(c) this Agreement constitutes its legal, valid, and binding obligation,
enforceable against it in accordance with its terms, subject only to applicable
bankruptcy, insolvency or similar laws and general principles of equity.

12. Further Assurances. Each of the Swap Counterparties, the Administrative
Agent (for itself and on behalf of the Lenders and the Issuing Bank), each of
the Loan Parties, and Collateral Agent covenants that, as long as this Agreement
remains in effect, it will (at the sole cost and expense of the Borrower)
promptly execute and deliver any and all other documents or instruments and take
all further action that may be necessary or reasonably requested by the other
parties to give effect to the terms and conditions of this Agreement and the
Security Instruments and to enable the Collateral Agent to exercise and enforce
its rights and remedies under the Security Instruments (in accordance with the
terms of the Principal Agreements) with respect to the Collateral or any part
thereof.

 

Exhibit G - 21

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

13. Agreement Binding on Successors and Assigns. This Agreement shall inure to
the benefit of, and shall be binding upon and enforceable against, the Loan
Parties, the Credit Parties, the Swap Counterparties and Collateral Agent and
their respective successors and permitted assigns.

14. Notice. Unless otherwise provided, any consent, request, notice, or other
communication under or in connection with this Agreement must be in writing to
be effective and shall be deemed to have been given (a) if by mail, on the third
Business Day after it is enclosed in an envelope and properly addressed,
stamped, sealed, certified return receipt requested, and deposited in the
appropriate official postal service, or (b) if by courier, electronic
transmissions, or facsimile transmission, when actually delivered. Until changed
by a subsequent notice delivered in accordance with this Section 14, notices for
each party are to be directed to:

For delivery to any Swap Counterparty:

Its address on its signature page hereto or to the applicable Swap Counterparty
Joinder,

For delivery to the Loan Parties:

Rex Energy Corporation

366 Walker Drive

State College, PA 16801

Attn: Thomas Rajan, Chief Financial Officer

Email: trajan@rexenergycorp.com

with a copy to:

Jennifer McDonough, Senior Vice President, General Counsel and Secretary

jmcdonough@rexenergycorp.com

Fax: 814-278-7286

For delivery to Collateral Agent and Administrative Agent:

Angelo, Gordon Energy Servicer, LLC

c/o Cortland Capital Market Services LLC

225 W. Washington St. 21st Floor

Chicago, Illinois 60606

Attn: Agency Services – Angelo, Gordon

Email: AngeloGordonAgency@cortlandglobal.com

Tele: 312-564-5078

Fax: 312-376-0751

15. Amendments. No amendment, modification, termination or waiver of this
Agreement shall in any event be effective without the written concurrence of the
Collateral Agent, the Administrative Agent and each Swap Counterparty; provided
that no such agreement shall amend, modify or otherwise adversely affect the
interests of any Loan Party without such Loan Party’s prior written consent.

 

Exhibit G - 22

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

16. Governing Law.

(a) THIS Agreement SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE THE LAWS OF
THE STATE OF NEW YORK, without giving effect to any conflict of law principles
(but giving effect to Section 5 1401 of the New York General Obligation Law).

(b) Each party hereto hereby irrevocably and unconditionally submits, for itself
and its property, to the exclusive jurisdiction of the Supreme Court of the
State of New York sitting in New York County and of the United States District
Court of the Southern District of New York, and any appellate court from any
thereof, in any action or proceeding arising out of or relating to this
Agreement, or for recognition or enforcement of any judgment, and each of the
parties hereto hereby irrevocably and unconditionally agrees that all claims in
respect of any such action or proceeding may be heard and determined in such New
York State court or, to the extent permitted by law, in such federal court. Each
of the parties hereto agrees that a final judgment in any such action or
proceeding shall be conclusive and may be enforced in other jurisdictions by
suit on the judgment or in any other manner provided by law. Nothing in this
Agreement shall affect any right that any party hereto may otherwise have to
bring any action or proceeding relating to this Agreement in the courts of any
jurisdiction.

(c) Each party hereto hereby irrevocably and unconditionally waives, to the
fullest extent it may legally and effectively do so, any objection which it may
now or hereafter have to the laying of venue of any suit, action or proceeding
arising out of or relating to this Agreement in any court referred to above.
Each of the parties hereto hereby irrevocably waives, to the fullest extent
permitted by law, the defense of an inconvenient forum to the maintenance of
such action or proceeding in any such court.

17. Invalid Provisions. If any part of this Agreement is for any reason found to
be unenforceable, all other portions nevertheless remain enforceable. However,
if the provision held to be unenforceable is a material part of this Agreement,
such unenforceable provision may, to the extent permitted by law, be replaced by
a clause or provision judicially construed and interpreted to be as similar in
substance and content to the original terms of such provision as the context
would reasonably allow, so that such clause or provision would thereafter be
enforceable.

18. Multiple Counterparts. This Agreement may be executed in any number of
counterparts with the same effect as if all signatories had signed the same
document and will be effective upon the execution of one or more counterparts
hereof by each of the parties hereto. In this regard, each of the parties hereto
acknowledges that a counterpart of this Agreement containing a set of
counterpart execution pages reflecting the execution of each party hereto shall
be sufficient to reflect the execution of this Agreement by each party hereto.
All counterparts will, taken together, constitute one and the same instrument.

19. Jury Waiver. EACH OF THE PARTIES HERETO HEREBY VOLUNTARILY, KNOWINGLY,
IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT TO HAVE A JURY PARTICIPATE IN
RESOLVING ANY DISPUTE (WHETHER BASED UPON CONTRACT, TORT OR OTHERWISE) AMONG THE
PARTIES HERETO (OR ANY OF THEM) ARISING OUT OF OR IN ANY WAY RELATED TO THIS
AGREEMENT.

 

Exhibit G - 23

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

20. Reinstatement; Termination. If at any time any payment of the Loan
Obligations or the Swap Obligations is rescinded or must be restored or returned
upon the insolvency, bankruptcy or reorganization of the Loan Parties or
otherwise, the obligations of the Loan Parties, the Credit Parties, Swap
Counterparties and Collateral Agent under this Agreement, with respect to that
payment, shall be reinstated as though the payment had been due but not made at
that time and, if theretofore terminated, this Agreement shall be reinstated in
full force and effect and such prior termination shall not diminish, release,
discharge, impair or otherwise affect the Lien priorities and the relative
rights and obligations of the Secured Parties provided for herein.

21. Controlling Agreement. Notwithstanding any provision to the contrary in any
Principal Agreement, to the extent the terms of this Agreement conflict with a
provision in any Principal Agreement, the terms of this Agreement shall control.

22. New Swap Counterparties. Each of the parties hereto hereby agrees that,
notwithstanding anything to the contrary contained herein, in any Security
Instrument, in the Credit Agreement, or in other Principal Agreement, no Person
providing any Swap Agreement to any Loan Party may become a secured party under
any Security Instrument after the date hereof (a) unless such Person is an
“Approved Counterparty” under and as defined in the Credit Agreement, and
(b) until such Person agrees to be bound by the terms of this Agreement as a
“Swap Counterparty” by executing and delivering a Swap Counterparty Joinder to
the Collateral Agent and the Borrower. In each case, upon execution and delivery
of such Swap Counterparty Joinder by such Person, Collateral Agent (which the
Collateral Agent shall not unreasonably withhold, condition or delay) and
Borrower, such Person shall be deemed a Swap Counterparty hereunder as if an
original signatory hereto. Swap Counterparty Joinders executed pursuant to this
Section 22 do not require the signatures or consents of any other parties to
this Agreement. Promptly after execution of any such Swap Counterparty Joinder,
the parties thereto will endeavor to send a copy thereof to the Administrative
Agent and to each other Swap Counterparty, but failure or delay in doing so will
not make such Swap Counterparty Joinder void or voidable or otherwise affect the
rights and duties of the parties hereto.

23. Integration. THIS AGREEMENT AND ALL DOCUMENTS AND INSTRUMENTS REFERENCED
HEREIN REPRESENT THE FINAL AGREEMENT AMONG THE CREDIT PARTIES, SWAP
COUNTERPARTIES, LOAN PARTIES AND COLLATERAL AGENT WITH RESPECT TO THE SUBJECT
MATTER HEREOF AND THEREOF AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS BY THE PARTIES. THERE ARE NO
UNWRITTEN ORAL AGREEMENTS AMONG THE PARTIES.

 

Exhibit G - 24

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24. Direction of Lenders; Liability of the Administrative Agent.

(a) Each Lender, pursuant to the Credit Agreement, has authorized and directed
the Administrative Agent to execute this Agreement and perform its obligations
hereunder.

(b) The parties hereto agree that the Administrative Agent shall be afforded all
of the rights, privileges, protections, indemnities and immunities afforded to
the Administrative Agent under the Credit Agreement in connection with its
execution of this Agreement and the performance of its respective duties
hereunder.

(Signature Pages Follow)

 

Exhibit G - 25

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

IN WITNESS WHEREOF, the parties have executed this Intercreditor Agreement as of
the date first hereinabove written.

 

SWAP COUNTERPARTY: BP ENERGY COMPANY By:  

 

Name:  

 

Title:  

 

Address for notices: BP Energy Company Attn: Contract Services 201 Helios Way
Houston, Texas 77079 Telephone: 713-323-2000 Facsimile: 713-323-0203 Email:
russell.diamond@bp.com, frank.verducci@bp.com SWAP COUNTERPARTY: MACQUARIE BANK
LIMITED By:  

 

Name:  

 

Title:  

 

By:  

 

Name:  

 

Title:  

 

Address for notices: Macquarie Bank Limited - Representative Office 125 West
55th Street, 22nd Floor New York, NY 10019 Attention:  
Anthony Lennon, Senior Managing Director Phone:   +1 212.231.2083 Fax:   +1
212.231.2177 Email:   anthony.lennon@macquarie.com

 

Exhibit G - 26

Signature Page to Intercreditor Agreement

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

With a copy to: Macquarie Bank Limited - Representative Office 500 Dallas
Street, Suite 3300 Houston, Texas 77002 Attention:   Michael Sextro, Division
Director Telephone:   +1 713.275.6207 Fax:   +1 713.275.6222 Email:  
MECLoansHouston@macquarie.com SWAP COUNTERPARTY: MORGAN STANLEY CAPITAL GROUP
INC. By:  

 

Name:  

 

Title:  

 

Address for notices: [To come.]

 

Exhibit G - 27

Signature Page to Intercreditor Agreement

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

LOAN PARTIES: REX ENERGY CORPORATION

By:  

 

Name:   Title:  

R.E. GAS DEVELOPMENT, LLC REX ENERGY I, LLC REX ENERGY OPERATING CORP. PENNTEX
RESOURCES ILLINOIS, INC. REX ENERGY IV, LLC

By:  

 

Name:   Title:  

 

Exhibit G - 28

Signature Page to Intercreditor Agreement

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

ANGELO, GORDON ENERGY SERVICER, LLC, as Administrative Agent

By:  

 

Name:   Title:  

ANGELO, GORDON ENERGY SERVICER, LLC, as Collateral Agent

By:  

 

Name:   Title:  

 

Exhibit G - 29

Signature Page to Intercreditor Agreement

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

SCHEDULE 1

Listing of Certain Security Instruments

Uniform Commercial Code Filings

Filing of UCC-1 Financing Statements with respect to the Collateral with the
Secretary of State of the State of Delaware

Actions with respect to Pledged Securities

Delivery to the Collateral Agent or a Person designated by the Collateral Agent
of all Pledged Securities consisting of certified securities, in each case
properly endorsed for transfer or in blank.

Description of Commercial Tort Claims With An Asserted Value in Excess of
$1,000,000

None.

Other Actions

 

  1. Memorandum of Assignment of Liens and Security Interests dated as of
April 28, 2017 among Royal Bank of Canada, the Administrative Agent and R.E. Gas
Development, LLC (Ohio).

 

  2. Financing Statements in respect of item 1.

 

  3. Assignment of Liens and Security Interests and Amendment to Mortgage dated
as of April 28, 2017, among the Administrative Agent, the Collateral Agent and
R.E. Gas Development, LLC (Ohio).

 

  4. Financing Statements in respect of item 3.

 

  5. Memorandum of Assignment of Liens and Security Interests dated as of
April 28, 2017 among Royal Bank of Canada, the Administrative Agent and R.E. Gas
Development, LLC (Pennsylvania).

 

  6. Financing Statements in respect of item 5.

 

  7. Assignment of Liens and Security Interests and Amendment to Mortgage dated
as of April 28, 2017, among the Administrative Agent, the Collateral Agent and
R.E. Gas Development, LLC (Pennsylvania).

 

  8. Financing Statements in respect of item 7.

 

  9. Memorandum of Assignment of Liens and Security Interests dated as of
April 28, 2017 among Royal Bank of Canada, the Administrative Agent and Rex
Energy I, LLC (Pennsylvania).

 

Exhibit G - 30

Schedule 1

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

  10. Financing Statements in respect of item 9.

 

  11. Assignment of Liens and Security Interests and Amendment to Mortgage dated
as of April 28, 2017, among the Administrative Agent, the Collateral Agent and
Rex Energy I, LLC (Pennsylvania).

 

  12. Financing Statements in respect of item 11.

 

  13. Blocked Account Agreement by and among Manufacturers and Traders Trust
Company, Rex Energy Corporation and Angelo, Gordon Energy Servicer, LLC dated as
of April 28, 2017 regarding account no. 015004221769465.

 

  14. Blocked Account Agreement made by and among Manufacturers and Traders
Trust Company, R.E. Gas Development, LLC and Angelo, Gordon Energy Servicer, LLC
dated as of April 28, 2017 regarding account no. 000009847503548.

 

  15. Blocked Account Agreement made by and among Manufacturers and Traders
Trust Company, Rex Energy I, LLC and Angelo, Gordon Energy Servicer, LLC dated
as of April 28, 2017 regarding account no. 000008890765889.

 

  16. Blocked Account Agreement made by and among Manufacturers and Traders
Trust Company, Rex Energy Operating Corp. and Angelo, Gordon Energy Servicer,
LLC dated as of April 28, 2017 regarding account no. 015004219154503.

 

  17. Blocked Account Agreement made by and among Manufacturers and Traders
Trust Company, Rex Energy Operating Corp. and Angelo, Gordon Energy Servicer,
LLC dated as of April 28, 2017 regarding account no. 000008891671508.

 

Exhibit G - 31

Schedule 1

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

EXHIBIT A

FORM OF JOINDER

JOINDER NO. [     ] dated as of [            ], 20[    ] (the “Joinder
Agreement”) entered into by [            ] (the “New Swap Counterparty”), to the
Intercreditor Agreement dated as of April 28, 2017, (the “Intercreditor
Agreement”), by and among Rex Energy Corporation, a Delaware corporation (the
“Borrower”), each Guarantor under and as defined in the Credit Agreement (the
“Guarantors,” and together with Borrower collectively referred to as the “Loan
Parties”), each Swap Counterparty, and Angelo, Gordon Energy Servicer, LLC
(“AGES”), in its capacity as administrative agent for the Lenders and the
Issuing Bank under the Credit Agreement (in such capacity, the “Administrative
Agent”) and in its capacity as the Collateral Agent for the Secured Parties, and
each other Person that from time to time becomes a party thereto in accordance
with the terms of the Intercreditor Agreement.

A. Capitalized terms used herein but not otherwise defined herein shall have the
meanings assigned to such terms in the Intercreditor Agreement.

B. As a condition to the ability of the Loan Parties to enter into additional
Swap Agreements and to secure the Swap Obligations arising under such Swap
Agreements with the liens and security interests on the Collateral, the New Swap
Counterparty in respect of such additional Swap Obligations is required to
become subject to and bound by, the Intercreditor Agreement pursuant to the
execution and delivery by the New Swap Counterparty of an instrument in the form
of this Joinder Agreement. The undersigned New Swap Counterparty is executing
this Joinder Agreement in accordance with the requirements of the Intercreditor
Agreement.

Accordingly, the New Swap Counterparty agrees as follows:

SECTION 1. In accordance with Section 22 of the Intercreditor Agreement, the New
Swap Counterparty by its signature below becomes a Swap Counterparty subject to
and bound by, the Intercreditor Agreement with the same force and effect as if
the New Swap Counterparty had originally been named therein as a Swap
Counterparty and the New Swap Counterparty hereby agree to all the terms and
provisions of the Intercreditor Agreement applicable to it as such. Each
reference to a “Swap Counterparty” in the Intercreditor Agreement shall be
deemed to include the New Swap Counterparty. The Intercreditor Agreement is
hereby incorporated herein by reference.

SECTION 2. The New Swap Counterparty represent and warrant to the Collateral
Agent and the other Swap Counterparties, individually, that (i) it has full
power and authority to enter into this Joinder Agreement, in its capacity as a
Swap Counterparty and (ii) this Joinder Agreement has been duly authorized,
executed and delivered by it and constitutes its legal, valid and binding
obligation, enforceable against it in accordance with its terms, except as
enforceability may be limited by applicable bankruptcy, insolvency or similar
laws affecting the enforcement of creditors’ rights generally or by equitable
principles relating to enforceability.

SECTION 3. This Joinder Agreement may be executed in counterparts, each of which
shall constitute an original, but all of which when taken together shall
constitute a single contract. This Joinder Agreement shall become effective when
the Collateral Agent shall have received a

 

Exhibit G - 32

Exhibit A

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

counterpart of this Joinder Agreement that bears the signatures of the New Swap
Counterparty, the Borrower and Collateral Agent. Delivery of an executed
signature page to this Joinder Agreement by facsimile or other electronic
transmission shall be effective as delivery of a manually signed counterpart of
this Joinder Agreement.

SECTION 4. Except as expressly supplemented hereby, the Intercreditor Agreement
shall remain in full force and effect.

SECTION 5. THIS JOINDER AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES
UNDER THIS JOINDER AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED
IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.

SECTION 6. If any part of this Joinder Agreement is for any reason found to be
unenforceable, all other portions nevertheless remain enforceable. However, if
the provision held to be unenforceable is a material part of this Joinder
Agreement, such unenforceable provision may, to the extent permitted by law, be
replaced by a clause or provision judicially construed and interpreted to be as
similar in substance and content to the original terms of such provision as the
context would reasonably allow, so that such clause or provision would
thereafter be enforceable.

SECTION 7. All communications and notices hereunder shall be in writing and
given as provided in Section 14 of the Intercreditor Agreement. All
communications and notices hereunder to the New Swap Counterparty shall be given
to it at the address set forth below its signature hereto.

SECTION 8. The Borrower agrees to reimburse the Collateral Agent for its
reasonable out-of-pocket expenses in connection with this Joinder Agreement,
including the reasonable fees, other charges and disbursements of counsel.

[Signature Page Follows]

 

Exhibit G - 33

Exhibit A

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

IN WITNESS WHEREOF, the New Swap Counterparty has duly executed this Joinder
Agreement to the Intercreditor Agreement as of the day and year first written
above.

 

[NAME OF NEW SWAP COUNTERPARTY By:   Name:   Title:   Address for notices:

 

 

Attention of::   Telephone:   Facsimile:   Electronic Mail:  

 

BORROWER: REX ENERGY CORPORATION

By:  

 

Name:   Title:  

COLLATERAL AGENT: ANGELO, GORDON ENERGY SERVICER,LLC

By:  

 

Name:   Title:  

 

Exhibit G - 34

Exhibit A

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

EXHIBIT H

FORM OF

INCREASED FACILITY ACTIVATION NOTICE—INCREMENTAL TERM LOANS

 

To: Angelo, Gordon Energy Servicer, LLC, as Administrative Agent

under the Credit Agreement referred to below

Reference is made to the Term Loan Credit Agreement, dated as of April 28, 2017
(as amended, supplemented or modified from time to time, the “Credit
Agreement”), among Rex Energy Corporation (the “Borrower”), the Lenders party
thereto and Angelo, Gordon Energy Servicer, LLC, as administrative agent (the
“Administrative Agent”). Capitalized terms used but not defined herein shall
have the meanings assigned to such terms in the Credit Agreement.

This notice is an Increased Facility Activation Notice referred to in the Credit
Agreement, and the Borrower and each Lender party hereto hereby notify you that:

1. Each Lender party hereto agrees to make an Incremental Term Loan in the
amount set forth opposite such Lender’s name on the signature pages hereof under
the caption “Incremental Term Loan Amount”.

2. The Increased Facility Closing Date is                     .

3. The aggregate principal amount of Incremental Term Loans contemplated hereby
is $        .

4. The Incremental Term Loan of each Lender party hereto shall mature on the
Maturity Date and shall be repaid as set forth in Section 3.01 of the Credit
Agreement.

5. The interest for the Incremental Term Loans contemplated hereby is     % per
annum.

6. The agreement of each Lender party hereto to make an Incremental Term Loan on
the Increased Facility Closing Date is subject to the satisfaction of the
conditions precedent set forth in Section 2.05(c) of the Credit Agreement.

 

REX ENERGY CORPORATION By:  

 

  Name:     Title:  

 

Exhibit H-1

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

Incremental Term Loan Amount     [NAME OF LENDER] $           By:  

 

    Name:       Title:  

 

CONSENTED TO: ANGELO, GORDON ENERGY SERVICER, LLC, as Administrative Agent By:  

 

  Name:     Title:  

 

Exhibit H-2

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

EXHIBIT I

FORM OF

NEW LENDER SUPPLEMENT

SUPPLEMENT, dated             , 20[    ], to the Term Loan Credit Agreement,
dated as of April 28, 2017 (as amended, supplemented or modified from time to
time, the “Credit Agreement”), among Rex Energy Corporation (the “Borrower”),
the Lenders party thereto and Angelo, Gordon Energy, Servicer, LLC, as
administrative agent (the “Administrative Agent”). Capitalized terms used but
not defined herein shall have the meanings assigned to such terms in the Credit
Agreement.

W I T N E S S E T H:

WHEREAS, the Credit Agreement provides in Section 2.05(b) thereof that any bank,
financial institution or other entity may become a party to the Credit Agreement
with the consent of the Borrower and the Administrative Agent (which consent
shall not be unreasonably withheld) in connection with a transaction described
in Section 2.05(a) thereof by executing and delivering to the Borrower and the
Administrative Agent a supplement to the Credit Agreement in substantially the
form of this Supplement; and

WHEREAS, the undersigned now desires to become a party to the Credit Agreement;

NOW, THEREFORE, the undersigned hereby agrees as follows:

1. The undersigned agrees to be bound by the provisions of the Credit Agreement,
and agrees that it shall, on the date this Supplement is accepted by the
Borrower and the Administrative Agent, become a Lender for all purposes of the
Credit Agreement to the same extent as if originally a party thereto, with an
Incremental Term Loan of $        .

2. The undersigned (a) represents and warrants that (i) it has full power and
authority, and has taken all action necessary, to execute and deliver this
Supplement and to consummate the transactions contemplated hereby and to become
a Lender under the Credit Agreement, (ii) it satisfies the requirements, if any,
specified in the Credit Agreement that are required to be satisfied by it in
order to become a Lender, (iii) it has received a copy of the Credit Agreement,
together with copies of the most recent financial statements delivered pursuant
to Section 8.01 thereof, and such other documents and information as it has
deemed appropriate to make its own credit analysis and decision to enter into
this Supplement 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 (iv) if it is a Non-U.S. Lender, attached to this Supplement is any
documentation required to be delivered by it pursuant to the terms of the Credit
Agreement, duly completed and executed by the undersigned, and (b) agrees that
(i) it will, independently and without reliance on the Administrative Agent 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 their terms all of the obligations which by the terms of the
Loan Documents are required to be performed by it as a Lender.

 

Exhibit I - 1

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

The undersigned’s address for notices for the purposes of the Credit Agreement
is as follows:

 

 

 

   

 

   

 

 

IN WITNESS WHEREOF, the undersigned has caused this Supplement to be executed
and delivered by a duly authorized officer on the date first above written.

 

[NAME OF LENDER] By:  

 

  Name:     Title:  

Accepted this      day of             , 20    :

 

REX ENERGY CORPORATION By:  

 

  Name:     Title:  

 

ANGELO, GORDON ENERGY SERVICER, LLC, as Administrative Agent By:  

 

  Name:     Title:  

 

Exhibit I - 2

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

SCHEDULE 7.05

LITIGATION

1. A putative class action lawsuit brought in the Court of Common Pleas of
Clearfield County, Pennsylvania styled Lucinda A. Cardinale and Iola Hugney, et
al. v. R. E. Gas Development, LLC and Rex Energy Corporation, Case No. 2011-1791
– CD relating to leasing activities of the defendants in 2008.

2. A putative class action lawsuit brought in the Court of Common Pleas of
Clearfield County, Pennsylvania styled Mary R. Billotte v. R.E. Gas Development,
LLC and Rex Energy Corporation, Case No. 2012 – 1099-CD related to leasing
activities of the defendants in 2008, which has been consolidated with the
Cardinale case.

3. A lawsuit brought in the Court of Common Pleas of Clearfield County,
Pennsylvania styled Dennis Meeker, et al. v. R.E. Gas Development, LLC and Rex
Energy Corporation, Case No. 2012 – 1100-CD related to leasing activities of the
defendants in 2008.

4. A civil action (and eight related cases) brought in the Court of Common Pleas
of Butler County, Pennsylvania styled Fred J. McIntyre and Janet A. McIntyre,
his wife v. Rex Energy Corporation, et al., Case No. AD 13-10079 related to
drilling and stimulation activities of R.E. Gas Development, LLC. This matter,
and eight related cases, involve claims by the plaintiffs (all living in one
housing development) that R.E. Gas Development is responsible for the
degradation of their private water wells. Claims include trespass and nuisance,
among others. The claims for McIntyre and all eight related cases have been
submitted to insurance and our insurer, Chubb, has accepted responsibility for
defense of all nine cases.

5. A civil action brought in the Court of Common Pleas of Butler County,
Pennsylvania styled Rodney Gasch and Laurie Kirsch, his wife, et. al. v. Rex
Energy Corporation and R.E. Gas Development, LLC, Case No. 14-11094 alleging
breach of contract and improper deduction of post-production costs from royalty
payments.

6. Two related cases that challenge the permits obtained for drilling wells on
the Geyer Pad in Butler County, Pennsylvania (the “Geyer Wells”). In re: Zoning
Appeal by Delaware Riverkeeper Network . . . of Zoning Permit Issued to R.E. Gas
Development, LLC for the Geyer Well Site, AD No. 15-10429 is an appeal of the
zoning permit issued by the local municipality, Middlesex Township, for the
Geyer Wells. It alleges the municipality did not have the authority to issue the
permits and raises constitutional challenges to the permits under the PA
Constitution. The Middlesex Township Zoning Hearing Board ruled in favor of the
township, which ruling was later upheld on appeal to the Court of Common Pleas.
The plaintiffs have appealed to the Commonwealth Court of Pennsylvania. The
Delaware Riverkeeper Network et. al. v. Commonwealth of Pennsylvania Department
of Environmental Protection, Appellee, and R.E. Gas Development, LLC, Permittee,
EHB Docket No. 2014-142-B is an appeal by substantially the same plaintiffs of
the PADEP’s issuance of drilling permits for the Geyer Wells. Neither of these
cases involves direct fines, penalties, or potential for cash damages; rather,
they are listed because it is the plaintiffs’ intent to use these cases as test
cases in Pennsylvania. They wish to reach the Pennsylvania Supreme Court with
certain constitutional issues raised in both cases (and

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

in several others, in which the Borrower is not involved), which, if accepted by
the PA Supreme Court and ultimately decided in favor of the plaintiffs’
constitutional arguments, would impact the future course of business for all
operators in Pennsylvania.

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

SCHEDULE 7.06

ENVIRONMENTAL MATTERS

1. A civil action (and eight related cases) brought in the Court of Common Pleas
of Butler County, Pennsylvania styled Fred J. McIntyre and Janet A. McIntyre,
his wife v. Rex Energy Corporation, et al., Case No. AD 13-10079 related to
drilling and stimulation activities of R.E. Gas Development, LLC. This matter,
and eight related cases, involve claims by the plaintiffs (all living in one
housing development) that R.E. Gas Development is responsible for the
degradation of their private water wells. Claims include trespass and nuisance,
among others. The claims for McIntyre and all eight related cases have been
submitted to insurance and our insurer, Chubb, has accepted responsibility for
defense of all nine cases.

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

SCHEDULE 7.14

SUBSIDIARIES AND PARTNERSHIPS

Borrower:

 

Legal Name

  

Current Jurisdiction of
Organization

  

Org. ID No.

  

Taxpayer ID No.

  

Chief Executive Office or
Sole Place of  Business

Rex Energy Corporation    Delaware    4313846    20-8814402   

366 Walker Drive

 

State College, PA 16801

Subsidiaries and Partnerships:

 

* indicates entities which are to be Guarantors

 

Legal Name

  

Current Jurisdiction of
Organization

  

Org. ID No.

  

Taxpayer ID No.

  

Chief Executive Office or
Sole Place of  Business

Rex Energy I, LLC*    Delaware    4335969    20-8909799   

366 Walker Drive

 

State College, PA 16801

Rex Energy Operating Corp.*    Delaware    3865470    20-2120390   

366 Walker Drive

 

State College, PA 16801

Rex Energy IV, LLC*    Delaware    4219136    20-5549688   

366 Walker Drive

 

State College, PA 16801

PennTex Resources Illinois, Inc.*    Delaware    3757111    20-0660609   

366 Walker Drive

 

State College, PA 16801

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

Legal Name

  

Current Jurisdiction of
Organization

  

Org. ID No.

  

Taxpayer ID No.

  

Chief Executive Office or
Sole Place of  Business

R.E. Gas Development, LLC*    Delaware    4456607    20-8814402   

366 Walker Drive

 

State College, PA 16801

R.E. Ventures Holdings, LLC    Delaware    4687040    27-0173276   

366 Walker Drive

 

State College, PA 16801

Rex Energy Marketing, LLC    Delaware    4256285    20-5956080   

366 Walker Drive

 

State College, PA 16801

R.E. Disposal, LLC    Delaware    5023301    30-0729535   

366 Walker Drive

 

State College, PA 16801

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

SCHEDULE 7.19

MARKETING CONTRACTS

BUTLER/MORAINE EAST CONTRACTS

MarkWest

1. Amended and Restated Gas Gathering, Compression and Processing Agreement
between Markwest Liberty Bluestone, L.L.C., R.E. Gas Development, LLC, and Rex
Energy (for limited purposes) dated August 22, 2014, as amended.

2. Natural Gas Liquids Fractionation Exchange and Marketing Agreement
(Bluestone) between Markwest Liberty Midstream & Resources L.L.C., R.E. Gas
Development, LLC, and Rex Energy Corporation (for limited purposes) dated
August 22, 2014, as amended.

BP Energy Company

1. Natural Gas Sales Agreement (85K mmbtu/d), between R.E. Gas Development,
LLC & BP Energy Company. Dated April 29, 2015

2. Natural Gas Purchase & Sale Agreement (20K mmbtu/d), between R.E. Gas
Development, LLC & BP Energy Company. Dated August 9, 2011

3. NAESB – Base Contract for Sale & Purchase of Natural Gas, between R.E. Gas
Development, LLC & BP Energy Company. Dated October 4, 2011

4. AMA Addendum (100K mmbtu/d), between R.E. Gas Development, LLC & BP Energy
Company. Dated February 4, 2015

5. AMA Transaction Confirmation (100K mmbtu/d), between R.E. Gas Development,
LLC & BP Energy Company. Dated February 4, 2015

6. Lebanon Fuel Purchase Confirmation, between R.E. Gas Development, LLC & BP
Energy Company. Dated May 28, 2015

Dominion Transmission, Inc.

1. Service Agreement Applicable to Transportation of Natural Gas Under Rate
Schedule FT (22K mmbtu/d), between Dominion Transmission, Inc & R.E. Gas
Development, LLC. Dated October 24, 2014.

2. Discount Letter Agreement Service Agreement Applicable to Transportation of
Natural Gas Under Rate Schedule FT (22K mmbtu/d), between Dominion Transmission,
Inc & R.E. Gas Development, LLC. Dated August 30, 2016

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

3. Service Agreement Applicable to Transportation of Natural Gas Under Rate
Schedule FT (31,339 mmbtu), between Dominion Transmission, Inc & R.E. Gas
Development, LLC. Dated January 8, 2014.

4. Precedent Agreement for Firm Transportation Services Lebanon West II Project
(130K mmbtu/d), between R.E. Gas Development & Dominion Transmission, Inc. Dated
March 11, 2014.

Enterprise

1. Transportation Services Agreement, between Enterprise Liquids Pipeline, LLC &
R.E. Gas Development, LLC. Dated September 27, 2012.

2. Ethane Marketing Agreement, between Enterprise Products Operating, LLC & R.E.
Gas Development, LLC. Dated December 30, 2016, as amended.

INEOS

1. NGL Purchase and Sale Agreement, between R.E. Gas Development, LLC & INEOS
Europe AG. Dated December 9, 2015.

JERA Energy (Formerly CHUBU Gas Trading)

1. NAESB – Base Contract for Sale and Purchase of Natural Gas, between Chubu
U.S. Gas Trading, LLC & R.E. Gas Development, LLC. Dated November 7, 2014.

2. Special Provisions to the Base Contract for Sale and Purchase of Natural Gas,
between Chubu U.S. Gas Trading LLC & R.E. Gas Development, LLC. Dated
November 7, 2014.

3. Transaction Confirmation, between Chubu U.S. Gas Trading, LLC & R.E. Gas
Development, LLC. Dated November 12, 2014.

National Fuel Gas

1. Service Agreement, between National Fuel Gas Supply Corporation and R.E. Gas
Development, LLC. Dated September 29, 2014.

Nova Chemicals

1. Ethane Sale Agreement, between Nova Chemicals Corporation and R.E. Gas
Development, LLC. Dated January 25, 2013.

Shell Trading (Butler/Moraine East/Warrior North)

1. Condensate Purchase Agreement, between Shell Trading (US) Company and R.E.
Gas Development, LLC. Dated January 29, 2013. As amended.

2. Condensate Purchase Agreement – Price Amendment, between Shell Trading (US)
Company and R.E. Gas Development, LLC. Dated July 14, 2016.

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

Stonehenge

1. Gas Gathering Agreement between Stonehenge Appalachia, LLC and R.E. Gas
Development, LLC. Dated June 21, 2016, as amended.

Tennessee Gas Pipeline FT Agreements

1. Gas Transportation Agreement, Service Package No: 307474, between Tennessee
Gas Pipeline Company, LLC and R.E. Gas Development, LLC. Dated August 1, 2015.

2. Gas Transportation Agreement, Service Package No: 307475, between Tennessee
Gas Pipeline Company, LLC and R.E. Gas Development, LLC. Dated November 1, 2015.

Texas Gas Transmission

1. Precedent Agreement and Amendment No.1 to the Precedent Agreement for Texas
Gas Transmission, LLC’s Ohio-Louisiana Access Project, between Texas Gas
Transmission, LLC and R.E. Gas Development, LLC. Dated October 13, 2016, as
amended.

2. Precedent Agreement and Amendment No.1 to the Precedent Agreement for Texas
Gas Transmission, LLC’s Northern Supply Access Project, between Texas Gas
Transmission, LLC and R.E. Gas Development, LLC. Dated October 13, 2016, as
amended.

3. Amended & Restated Credit Support Agreement, between Texas Gas Transmission,
LLC and R.E. Gas Development, LLC. Dated October 12, 2016, as amended.

4. Negotiated Rate Agreement (100K mmbtu/d). Rate Schedule FT. Agreement No:
34955, between Texas Gas Transmission, LLC and R.E. Gas Development, LLCC. Dated
September 4, 2015.

5. Backhaul Additional Zone Letter Agreement, between R.E. Gas Development, LLC
and Texas Gas Transmission, LLC. Dated March 29, 2016.

6. Negotiated Rate Agreement (30K mmbtu/d). Rate Schedule FT. Agreement No:
34955, between Texas Gas Transmission, LLC and R.E. Gas Development, LLCC. Dated
March 29, 2016.

WARRIOR NORTH

BlueRacer Midstream

1. Gas Gathering, Processing and Fractionation Agreement, between Blue Racer
Midstream, LLC and R.E. Gas Development, LLC. Dated December 1, 2015, as
amended.

2. Long Term Sales Program, between Blue Racer Midstream, LLC and R.E. Gas
Development, LLC. Dated March 13, 2015.

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

BP Energy Company

1. Natural Gas Sales Agreement (14K mmbtu/d), between R.E. Gas Development, LLC
and BP Energy Company. Dated November 30, 2011.

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

SCHEDULE 7.20

SWAP ARRANGEMENTS

A list of all Swap Arrangements of the Borrower and each Subsidiary, the
material terms thereof (including the type, term, effective date, termination
date and notational amounts or volumes), the net mark to market value thereof,
all credit support agreements relating thereto (including any margin required or
supplied ) an the counter-party to each such agreement existing as of the
Closing Date.

 

Loan Party

  

Type

   Term    Effective
Date    Termination
Date   

Notational

Amounts or

Volumes

   Net Mark to
Market
Value(1)     Credit
Support
Agreements
?    Counter-
Party

R.E. Gas

   Oil - Collar Contracts    6 Months    1/1/2018    6/30/2018    3,000
bbls/month    $ 67,327     No    BP

R.E. Gas

   Oil - Collar Contracts    6 Months    1/1/2017    6/30/2017    8,000
bbls/month    $ 1,105     No    SunTrust

R.E. Gas

   Oil - Swap    24 Months    1/1/2017    12/31/2018    5,000 bbls/month    $
252,046     No    BP

R.E. Gas

   Oil - Three-Way Collar    21 Months    4/1/2017    12/31/2018    5,000
bbls/month    $ 174,005     No    BP

R.E. Gas

   Oil - Three-Way Collar    6 Months    7/1/2017    12/31/2017    8,000
bbls/month    $ 43,142     No    SunTrust

R.E. Gas

   Oil – Swap    27 Months    1/1/2019    3/31/2021    2,000 bbls/month      —  
    No    BP       3 Months    1/1/2019    3/31/2019    2,500 bbls/month        

R.E. Gas

   Oil – Collar Contracts    27 Months    1/1/2019    3/31/2020   
5,000 bbls/month      —       No    BP

R.E. Gas

   Oil – Collar Contracts    27 Months    1/1/2019    3/31/2020    2,500
bbls/month      —       No    BP

R.E. Gas

   Natural Gas - Call Contract    12 Months    1/1/2017    12/31/2017   

70,000

mmbtu/month

   ($ 45,564 )    No    BMO

R.E. Gas

   Natural Gas - Call Contract    24 Months    1/1/2017    12/31/2018   

180,000

mmbtu/month

   ($ 745,242 )    No    BMO

R.E. Gas

   Natural Gas - Call Contract    12 Months    1/1/2018    12/31/2018    10,000
mmbtu/day    ($ 368,524 )    No    RBC

R.E. Gas

   Natural Gas - Cap Swaps    18 Months    7/1/2016    12/31/2017   

300,000

mmbtu/month

   ($ 1,653,941 )    No    RBC

R.E. Gas

   Natural Gas - Collar Contract    7 Months    4/1/2017    10/31/2017   

200,000

mmbtu/month

   ($ 376,336 )    No    RBC

R.E. Gas

   Natural Gas - Collar Contract    5 Months    11/1/2017    3/31/2018   

150,000

mmbtu/month

   ($ 58,451 )    No    SunTrust

R.E. Gas

   Natural Gas - Swap    21 Months    4/1/2017    12/31/2018    10,000 mmbtu/day
   ($ 201,844 )    No    BP

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

Loan Party

  

Type

   Term    Effective
Date    Termination
Date   

Notational

Amounts or

Volumes

   Net Mark to
Market
Value(1)     Credit
Support
Agreements
?    Counter-
Party

R.E. Gas

   Natural Gas - Swap    12 Months    1/1/2018    12/31/2018    10,000 mmbtu/day
   $ 259,968     No    BP

R.E. Gas

   Natural Gas - Swap    5 Months    11/1/2017    3/31/2018    10,000 mmbtu/day
   ($ 63,970 )    No    BP

R.E. Gas

   Natural Gas - Swap    3 Months    1/1/2018    3/31/2018    3,750 mmbtu/day   
($ 165,644 )    No    BP

R.E. Gas

   Natural Gas - Swap    12 Months    4/1/2018    3/31/2019    5,000 mmbtu/day
   $ 116,444     No    BP

R.E. Gas

   Natural Gas - Swap    12 Months    4/1/2018    3/31/2019    5,000 mmbtu/day
   $ 116,444     No    BP

R.E. Gas

   Natural Gas - Swap    3 Months    1/1/2018    3/31/2018    3,750 mmbtu/day   
($ 165,644 )    No    BP

R.E. Gas

   Natural Gas - Swap    33 Months    4/1/2016    12/31/2018   

30,000

mmbtu/month

   $ 284,414     No    RBC

R.E. Gas

   Natural Gas - Swap    33 Months    4/1/2016    12/31/2018   

50,000

mmbtu/month

   $ 463,655     No    RBC

R.E. Gas

   Natural Gas - Swap    7 Months    4/1/2017    10/31/2017   

150,000

mmbtu/month

   ($ 390,620 )    No    RBC

R.E. Gas

   Natural Gas - Swap    7 Months    4/1/2017    10/31/2017    5,000 mmbtu/day
   ($ 318,445 )    No    RBC

R.E. Gas

   Natural Gas - Swap    7 Months    4/1/2017    10/31/2017    5,000 mmbtu/day
   ($ 291,787 )    No    RBC

R.E. Gas

   Natural Gas - Swap    7 Months    4/1/2017    10/31/2017    10,000 mmbtu/day
   ($ 583,573 )    No    RBC

R.E. Gas

   Natural Gas - Swap    36 Months    4/1/2018    3/31/2021    10,000 mmbtu/day
     —       No    BP       3 Months    1/1/2019    3/31/2019   
20,000 mmbtu/day        

R.E. Gas

   Natural Gas - Swaptions    12 Months    1/1/2017    12/31/2017   

100,000

mmbtu/month

   ($ 95,095 )    No    RBC

R.E. Gas

   Natural Gas - Swaptions    12 Months    1/1/2017    12/31/2017   

100,000

mmbtu/month

   ($ 141,475 )    No    RBC

R.E. Gas

   Natural Gas - Three-Way Collar    34 Months    3/1/2015    12/31/2017   

500,000

mmbtu/month

   $ 356,159     No    BMO

R.E. Gas

   Natural Gas - Three-Way Collar    36 Months    1/1/2016    12/31/2018   
15,000 mmbtu/day    $ 357,261     No    BMO

R.E. Gas

   Natural Gas - Three-Way Collar    21 Months    4/1/2016    12/31/2017   
5,000 mmbtu/day    ($ 109,387 )    No    Key
Bank

R.E. Gas

   Natural Gas - Three-Way Collar    33 Months    4/1/2016    12/31/2018   

200,000

mmbtu/month

   ($ 1,027,179 )    No    RBC

R.E. Gas

   Natural Gas - Three-Way Collar    5 Months    11/1/2017    3/31/2018   
10,000 mmbtu/day    ($ 249,306 )    No    SunTrust

R.E. Gas

   Natural Gas - Three-Way Collar    3 Months    1/1/2019    3/31/2019   
15,000 mmbtu/day      —       No    BP       15 Months    1/1/2019    3/31/2020
   10,000 mmbtu/day               12 Months    4/1/2020    3/31/2021   

100,000

mmbtu/month

       

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

Loan Party

  

Type

   Term    Effective
Date    Termination
Date   

Notational

Amounts or

Volumes

   Net Mark to
Market
Value(1)     Credit
Support
Agreements
?    Counter-
Party

R.E. Gas

   Ethane - Swap    12 Months    1/1/2017    12/31/2017    20,000 bbls/month   
($ 40 )    No    BP

R.E. Gas

   Ethane - Swap    12 Months    1/1/2018    12/31/2018    25,000 bbls/month   
$ 50,005     No    BP

R.E. Gas

   Ethane - Swap    12 Months    1/1/2018    12/31/2018    10,000 bbls/month   
$ 19,999     No    BP

R.E. Gas

   Ethane - Swap    6 Months    7/1/2017    12/31/2017    10,000 bbls/month    $
53,019     No    BP

R.E. Gas

   Ethane - Swap    24 Months    1/1/2018    12/31/2019    20,000 bbls/month   
($ 142,601 )    No    BP

R.E. Gas

   Ethane - Swap    12 Months    1/1/2017    12/31/2017    20,000 bbls/month   
($ 334,183 )    No    RBC

R.E. Gas

   Ethane - Swap    12 Months    1/1/2017    12/31/2017    25,000 bbls/month   
$ 26,054     No    RBC

R.E. Gas

   Ethane - Swap    21 Months    4/1/2018    12/31/2019    10,000 bbls/month   
  —       No    BP

R.E. Gas

   Ethane – Swap    12 Months    1/1/2019    12/31/2019    10,000 bbls/month   
  —       No    BP

R.E. Gas

   Ethane – Swap    15 Months
4 Months    1/1/2020
1/1/2020    3/31/2021
4/30/2020    3,000 bbls/month 3,000 bbls/month      —       No    BP

R.E. Gas

   Propane - Swap    12 Months    1/1/2017    12/31/2017    11,000 bbls/month   
($ 674,303 )    No    BMO

R.E. Gas

   Propane - Swap    12 Months    1/1/2017    12/31/2017    20,000 bbls/month   
($ 275,793 )    No    BP

R.E. Gas

   Propane - Swap    12 Months    1/1/2017    12/31/2017    15,000 bbls/month   
($ 105,034 )    No    BP

R.E. Gas

   Propane - Swap    12 Months    1/1/2018    12/31/2018    15,000 bbls/month   
$ 113,579     No    BP

R.E. Gas

   Propane - Swap    12 Months    1/1/2017    12/31/2017    5,000 bbls/month   
($ 35,012 )    No    BP

R.E. Gas

   Propane - Swap    12 Months    1/1/2018    12/31/2018    10,000 bbls/month   
$ 38,693     No    BP

R.E. Gas

   Propane - Swap    12 Months    1/1/2018    12/31/2018    25,000 bbls/month   
$ 436,152     No    BP

R.E. Gas

   Propane - Swap    11 Months    2/1/2017    12/31/2017    5,000 bbls/month   
$ 90,292     No    BP

R.E. Gas

   Propane - Swap    11 Months    2/1/2017    12/31/2017    10,000 bbls/month   
$ 264,119     No    BP

R.E. Gas

   Propane - Swap    20 Months    5/1/2016    12/31/2017    15,000 bbls/month   
($ 1,358,066 )    No    RBC

R.E. Gas

   Propane - Swap    6 Months
3 Months    1/1/2018
1/1/2018    6/30/2018
3/31/2018    4,000 bbls/month 2,000 bbls/month      —       No    BP

R.E. Gas

   Propane - Swap    27 Months    1/1/2019    3/31/2021    10,000 bbls/month   
  —       No    BP       3 Months    1/1/2019    3/31/2019    20,000 bbls/month
       

R.E. Gas

   Propane - Swap    15 Months    1/1/2019    3/31/2020    5,000 bbls/month     
—       No    BP       3 Months    1/1/2019    3/31/2019    13,000 bbls/month   
    

R.E. Gas

   IsoButane - Swap    12 Months    1/1/2017    12/31/2017    3,000 bbls/month
   ($ 3,496 )    No    BP

R.E. Gas

   IsoButane - Swap    12 Months    1/1/2018    12/31/2018    2,000 bbls/month
   $ 21,080     No    BP

R.E. Gas

   IsoButane - Swap    17 Months    8/1/2017    12/31/2018    3,000 bbls/month
   $ 46,508     No    BP

R.E. Gas

   IsoButane - Swap    7 Months    2/1/2017    8/31/2017    3,000 bbls/month   
$ 84,139     No    BP

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

Loan Party

  

Type

   Term    Effective
Date    Termination
Date   

Notational

Amounts or

Volumes

   Net Mark to
Market
Value(1)     Credit
Support
Agreements
?    Counter-
Party

R.E. Gas

   IsoButane - Swap    12 Months    1/1/2018    12/31/2018    3,000 bbls/month
   $ 157,513     No    BP

R.E. Gas

   IsoButane - Swap    12 Months    1/1/2017    12/31/2017    1,000 bbls/month
   ($ 65,488 )    No    Key
Bank

R.E. Gas

   IsoButane - Swap    20 Months    5/1/2016    12/31/2017    3,000 bbls/month
   ($ 279,164 )    No    RBC

R.E. Gas

   IsoButane - Swap    6 Months    1/1/2018    6/30/2018    1,000 bbls/month   
  —       No    BP

R.E. Gas

   IsoButane - Swap    3 Months    1/1/2019    3/31/2019    5,500 bbls/month   
  —       No    BP

R.E. Gas

   Butane - Swap    12 Months    1/1/2017    12/31/2017    3,000 bbls/month   
($ 208,632 )    No    BMO

R.E. Gas

   Butane - Swap    12 Months    1/1/2017    12/31/2017    4,000 bbls/month    $
14,199     No    BP

R.E. Gas

   Butane - Swap    12 Months    1/1/2017    12/31/2017    2,000 bbls/month    $
2,923     No    BP

R.E. Gas

   Butane - Swap    12 Months    1/1/2018    12/31/2018    5,000 bbls/month    $
67,453     No    BP

R.E. Gas

   Butane - Swap    17 Months    8/1/2017    12/31/2018    5,000 bbls/month    $
100,029     No    BP

R.E. Gas

   Butane - Swap    6 Months    2/1/2017    7/31/2017    5,000 bbls/month    $
116,525     No    BP

R.E. Gas

   Butane - Swap    12 Months    1/1/2018    12/31/2018    5,000 bbls/month    $
252,591     No    BP

R.E. Gas

   Butane - Swap    20 Months    5/1/2016    12/31/2017    6,000 bbls/month   
($ 542,566 )    No    RBC

R.E. Gas

   Butane - Swap    6 Months    1/1/2018    6/30/2018    1,000 bbls/month     
—       No    BP

R.E. Gas

   Butane - Swap    3 Months    1/1/2019    3/31/2019    10,000 bbls/month     
—       No    BP

R.E. Gas

   C5+ - Swap    12 Months    1/1/2017    12/31/2017    10,000 bbls/month    $
227,274     No    BP

R.E. Gas

   C5+ - Swap    12 Months    1/1/2018    12/31/2018    10,000 bbls/month    $
493,684     No    BP

R.E. Gas

   C5+ - Swap    12 Months    1/1/2017    12/31/2017    8,000 bbls/month    $
106,637     No    BP

R.E. Gas

   C5+ - Swap    12 Months    1/1/2017    12/31/2017    4,000 bbls/month    $
24,080     No    BP

R.E. Gas

   C5+ - Swap    12 Months    1/1/2018    12/31/2018    6,000 bbls/month    $
177,724     No    BP

R.E. Gas

   C5+ - Swap    10 Months    1/1/2017    10/31/2017    10,000 bbls/month    ($
260,905 )    No    RBC

R.E. Gas

   C5+ - Swap    3 Months    1/1/2019    3/31/2019    9,250 bbls/month      —  
    No    BP

R.E. Gas

   DOMSP Basis - Swap    1 Months    4/1/2017    4/30/2017    300,000
mmbtu/month    ($ 190,617 )    No    BP

R.E. Gas

   DOMSP Basis - Swap    11 Months    5/1/2017    3/31/2018    300,000
mmbtu/month    ($ 666,559 )    No    BP

R.E. Gas

   DOMSP Basis - Swap    27 Months    10/1/2017    12/31/2019    7,500 mmbtu/day
   ($ 2,126,747 )    No    BP

R.E. Gas

   DOMSP Basis - Swap    27 Months    10/1/2017    12/31/2019    3,500 mmbtu/day
   ($ 964,453 )    No    BP

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

Loan Party

  

Type

   Term    Effective
Date    Termination
Date   

Notational

Amounts or

Volumes

   Net Mark to
Market
Value(1)     Credit
Support
Agreements
?    Counter-
Party

R.E. Gas

   DOMSP Basis - Swap    27 Months    10/1/2017    12/31/2019    4,000 mmbtu/day
   ($ 942,069 )    No    BP

R.E. Gas

   DOMSP Basis - Swap    7 Months    4/1/2017    10/31/2017    5,000 mmbtu/day
   ($ 273,884 )    No    BP

R.E. Gas

   DOMSP Basis - Swap    48 Months    1/1/2021    12/31/2024    10,000 mmbtu/day
   ($ 1,023,503 )    No    BP

R.E. Gas

   DOMSP Basis - Swap    69 Months    4/1/2015    12/31/2020    5,000 mmbtu/day
   ($ 1,413,531 )    No    RBC

R.E. Gas

   DOMSP Basis - Swap    69 Months    4/1/2015    12/31/2020    5,000 mmbtu/day
   ($ 1,413,531 )    No    RBC

R.E. Gas

   DOMSP Basis - Swap    69 Months    4/1/2015    12/31/2020    10,000 mmbtu/day
   ($ 3,985,640 )    No    RBC

R.E. Gas

   TGT Basis - Swap    24 Months    1/1/2017    12/31/2018    20,000 mmbtu/day
   $ 90,643     No    RBC

R.E. Gas

   TGT Basis - Swap    24 Months    1/1/2017    12/31/2018    20,000 mmbtu/day
   ($ 288,339 )    No    RBC

 

(1) Net Mark to Market Value is as of March 31, 2017

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

SCHEDULE 9.03

EXISTING LIENS

1. To the extent constituting Liens, liens securing the Keystone Transactions.

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

SCHEDULE 9.05

INVESTMENTS

1. Rex Energy I, LLC owns all of the outstanding membership interest of Rex
Energy Marketing, LLC, a Delaware limited liability company.

2. R.E. Gas Development, LLC owns 40% of the outstanding membership interests of
RW Gathering, LLC, a Delaware limited liability company.

3. Rex Energy Operating Corp. owns 50% of the outstanding membership interests
of Charlie Brown Air II, LLC, a Delaware limited liability company.

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

SCHEDULE 9.12

ASSET SALE

The Oil and Gas Properties listed on Exhibit A to the Assignment and Bill of
Sale, dated as of October 1, 2016, by and among R.E. Gas Development, LLC, a
Delaware limited liability company, MFC Drilling, Inc., an Ohio corporation,
ABARTA Oil & Gas Co., Inc., a Delaware corporation, and Antero Resources
Corporation, a Delaware corporation.

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

SCHEDULE 9.14

EXISTING AFFILIATE TRANSACTIONS

1. The use of an Eclipse 500 Airplane owned by Charlie Brown II Limited
Partnership pursuant to the terms of (i) the Amended and Restated Limited
Liability Company Agreement, dated June 21, 2007, of L&B Air LLC, (ii) the
Amended and Restated Limited Partnership Agreement, dated June 21, 2007, of
Charlie Brown II Limited Partnership and (iii) the First Amended and Restated
Aircraft Joint Ownership and Management Agreement, dated June 21, 2007, between
Charlie Brown Air Corp. and Charlie Brown II Limited Partnership.

2. Office lease agreement entered into June 27, 2012 with Shaner Office
Holdings, L.P., of which Lance T. Shaner, Chairman of the Board of Directors of
the Borrower, is an Affiliate.

3. Master Services Agreement with Bronder Technical Services, Inc. dated
July 21, 2015. Lance T. Shaner, Chairman of the Board of Directors of the
Borrower, is an Affiliate of Bronder Technical Services, Inc.

4. Master Services Agreement with HydroRecovery LP dated December 29, 2014.
Lance T. Shaner, Chairman of the Board of Directors of the Borrower, is an
Affiliate of HydroRecovery LP.

5. Hill Barth & King, LLC, the firm of which John A. Lombardi, Director of the
Borrower, is a member, is performing a sales and use tax review for potential
refund opportunities in Pennsylvania. Mr. Lombardi is not participating in the
review.

6. Master Services Agreements (2) with Select Energy Services, LLC dated
October 29, 2010. Eric Mattson, Director of the Borrower, is the Chief Financial
Officer of Select Energy Services, LLC and its affiliated companies. R.E. Gas
Development, LLC and Rex Energy I, LLC have procured water services from Select
Energy Services in the past. Neither the Borrower nor any of its subsidiaries
have utilized Select Energy Services as a contractor since 2014; however, the
Master Services Agreements are still in effect.