Exhibit 10.56

Execution Version

 

 

 

EIGHTH AMENDMENT

TO

CREDIT AGREEMENT

AMONG

REX ENERGY CORPORATION,

as Borrower,

THE GUARANTORS,

KEYBANK NATIONAL ASSOCIATION,

as Administrative Agent,

ROYAL BANK OF CANADA,

as Syndication Agent,

KEYBANK NATIONAL ASSOCIATION

AND

ROYAL BANK OF CANADA,

as Joint Arrangers,

AND

THE LENDERS SIGNATORY HERETO

DATED AS OF DECEMBER 22, 2011

 

 

 

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EIGHTH AMENDMENT TO CREDIT AGREEMENT

This EIGHTH AMENDMENT TO CREDIT AGREEMENT (this “Eighth Amendment”) dated as of
December 22, 2011 is among REX ENERGY CORPORATION, a corporation formed under
the laws of the State of Delaware (the “Borrower”); each of the undersigned
guarantors (the “Guarantors”, and together with the Borrower, the “Obligors”);
KEYBANK NATIONAL ASSOCIATION, as administrative agent for the Lenders (in such
capacity, together with its successors, the “Administrative Agent”); and the
Lenders signatory hereto.

RECITALS

A. The Borrower, the Administrative Agent and the Lenders are parties to that
certain Credit Agreement dated as of September 28, 2007, as amended by that
certain First Amendment dated as of April 14, 2008, as amended by that certain
Second Amendment dated as of December 23, 2008, as amended by that certain Third
Amendment dated as of April 20, 2009, as amended by that certain Fourth
Amendment dated December 18, 2009, as amended by that certain Fifth Amendment
dated as of August 30, 2010, as amended by that certain Sixth Amendment dated
effective as of August 2, 2011 and as amended by that certain Seventh Amendment
dated as of September 30, 2011 (the “Credit Agreement”), pursuant to which the
Lenders have made certain credit available to and on behalf of the Borrower.

B. The Guarantors are parties to that certain Guaranty and Collateral Agreement
dated as of September 28, 2007 made by each of the other Grantors (as defined
therein) in favor of the Administrative Agent (as heretofore amended, modified
or supplemented, the “Guaranty”).

C. The Borrower, the Administrative Agent and the Lenders have agreed to amend
certain provisions of the Credit Agreement as more fully set forth herein.

D. NOW, THEREFORE, in consideration of the premises and the mutual covenants
herein contained, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:

Section 1. Defined Terms. Each capitalized term which is defined in the Credit
Agreement, but which is not defined in this Eighth Amendment, shall have the
meaning ascribed such term in the Credit Agreement. Unless otherwise indicated,
all article and section references in this Eighth Amendment refer to articles
and sections of the Credit Agreement.

 

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Section 2. Amendments to Credit Agreement.

2.1 Amendments to Section 1.02.

(a) The definition of “EBITDAX” is hereby amended in its entirety to read as
follows:

“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, income taxes, depreciation, depletion, amortization,
exploration expenses and other similar non-cash charges (including non-cash
expenses associated with the granting of stock options to employees and
directors of the Borrower or its Subsidiaries), minus all non-cash income added
to Consolidated Net Income; provided that for date for which EBITDAX is required
to be determined pursuant to Section 9.01(a) or 9.01(b) that ends on or prior to
December 31, 2012, EBITDAX shall be determined by calculating EBITDAX for the
most recently ended fiscal quarter and multiplying by four.

(b) The definition of “Loan Documents” is hereby amended in its entirety to read
as follows:

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

(c) The definition of “Majority Lenders” is hereby amended in its entirety to
read as follows:

“Majority Lenders” means, at any time while no Loans or LC Exposure is
outstanding, Lenders having more than fifty percent (50%) of the Aggregate
Maximum Credit Amounts; and at any time while any Loans or LC Exposure is
outstanding, Lenders holding more than fifty percent (50%) of the outstanding
aggregate principal amount of the Loans and participation interests in Letters
of Credit (without regard to any sale by a Lender of a participation in any Loan
under Section 12.04(c)).

(d) The definition of “Interest Expense” is hereby amended in its entirety to
read as follows:

“Interest Expense” means, for any period, the sum (determined without
duplication) of the aggregate gross interest expense of the Borrower and the
Consolidated Subsidiaries for such period, including to the extent included in
interest expense under GAAP: (a) amortization of debt discount, (b) capitalized
interest and (c) the portion of any payments or accruals under Capital Leases
allocable to interest expense, plus the portion of any payments or accruals
under Synthetic Leases allocable to interest expense whether or not the same
constitutes interest expense under GAAP; provided that for date for which
Interest Expense is required to be determined pursuant to Section 9.01(a) that
ends on or prior to December 31, 2012, Interest Expense shall be determined by
calculating Interest Expense for the most recently ended fiscal quarter and
multiplying by four.

 

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(e) The following definitions are hereby added where alphabetically appropriate
to read as follows:

“Initial Second Lien Funding Date” means the date on which Second Lien Term Debt
in an aggregate principal amount of $50,000,000 is first made to the Borrower
pursuant to the Second Lien Term Loan Agreement.

“Intercreditor Agreement” means that certain Intercreditor Agreement dated as of
December 22, 2011 among the Borrower and KeyBank National Association, as the
Administrative Agent and as the Second Lien Administrative Agent, as amended,
modified or supplemented in accordance with the terms thereof.

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

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

“Second Lien Administrative Agent” means KeyBank National Association in its
capacity as administrative agent under the Second Lien Term Loan Agreement.

“Second Lien Notes” means the notes issued pursuant to the Second Lien Term Loan
Agreement, together with all amendments, modifications, replacements, extensions
and rearrangements thereof permitted by Section 9.19.

“Second Lien Term Debt” means the loans made by the lenders party to the Second
Lien Term Loan Agreement to the Borrower pursuant to the Second Lien Term Loan
Agreement, together with all amendments, modifications, replacements, extensions
and rearrangements thereof permitted by Section 9.19.

“Second Lien Term Loan Agreement” means that certain Second Lien Term Loan
Agreement dated as of December 22, 2011 among the Borrower, KeyBank National
Association, as the Second Lien Administrative Agent, and the lenders party
thereto, together with all amendments, modifications and supplements thereto
permitted by Section 9.19.

 

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“Second Lien Term Loan Documents” means the Second Lien Term Loan Agreement, the
Second Lien Notes and any other “Loan Documents” (as defined therein), in each
case, together with all amendments, modifications and supplements thereto
permitted by Section 9.19.

“Senior Debt” means any unsecured senior or unsecured senior subordinated Debt
securities (whether registered or privately placed) issued or incurred by the
Borrower pursuant to a Senior Debt Indenture.

“Senior Debt Indenture” means any indenture among the Borrower, as issuer, the
subsidiary guarantors party thereto and the trustee named therein, pursuant to
which the Senior Debt is issued or incurred, as the same may be amended,
modified or supplemented in accordance with Section 9.20.

2.2 Amendments to Section 2.07.

(a) Section 2.07(d) is hereby amended by deleting the second to last sentence
thereof in its entirety and replacing it with the following:

Such amount shall then become the Borrowing Base until the next Scheduled
Redetermination Date, the next Interim Redetermination pursuant to this
Section 2.07(d) or the next adjustment to the Borrowing Base under
Section 2.07(e), Section 2.07(f), Section 8.13(c) or Section 9.12(d), whichever
occurs first.

(b) Section 2.07 is hereby amended by adding the following at the end of such
Section:

(e) Reduction of the Borrowing Base Upon Incurrence of Second Lien Term Debt.
Notwithstanding anything to the contrary contained herein, if the Borrower
incurs any additional Second Lien Term Debt after the Initial Second Lien
Funding Date, then the Borrowing Base then in effect shall be reduced
immediately upon the date of such incurrence by an amount equal to the product
of 0.25 multiplied by the stated principal amount of such additional Second Lien
Term Debt, and the Borrowing Base as so reduced shall become the new Borrowing
Base immediately upon the date of such incurrence, effective and applicable to
the Borrower, the Agents, the Issuing Bank and the Lenders on such date until
the next redetermination or modification thereof hereunder.

(f) Reduction of Borrowing Base Upon Incurrence of Senior Debt. Notwithstanding
anything to the contrary contained herein, if the Borrower incurs any Senior
Debt, then the Borrowing Base then in effect shall be reduced immediately upon
the date of such incurrence by an amount equal to the product of 0.25 multiplied
by an amount equal to the stated principal amount of such Senior Debt minus the
principal amount of Second Lien Term Debt contemporaneously

 

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repaid with the proceeds of such Senior Debt. The Borrowing Base as so reduced
shall become the new Borrowing Base immediately upon the date of such
incurrence, effective and applicable to the Borrower, the Agents, the Issuing
Bank and the Lenders on such date until the next redetermination or modification
thereof hereunder. For purposes of this Section 2.07(f), if any such Senior Debt
is issued at a discount or otherwise sold for less than “par”, the reduction
shall be calculated based upon the stated principal amount without reference to
such discount.

(c) Section 2.07 is hereby amended by replacing each reference to the term
“Majority Lenders” wherever it appears in Section 2.07 with the term “Required
Lenders”.

2.3 Amendments to Section 3.04. Section 3.04(c)(ii) and Section 3.04(c)(iii) are
hereby amended and restated in their entirety as follows:

(ii) Upon any redetermination of or adjustment to the amount of the Borrowing
Base in accordance with Section 2.07 (other than pursuant to Section 2.07(e) or
Section 2.07(f)) or Section 8.13(c), if the total Revolving Credit Exposure
exceeds the redetermined or adjusted Borrowing Base, then the Borrower shall
(a) prepay the Borrowings in an aggregate principal amount equal to such excess,
and (b) if any excess remains after prepaying all of the Borrowings as a result
of an LC Exposure, pay to the Administrative Agent on behalf of the Lenders an
amount equal to such excess to be held as cash collateral as provided in
Section 2.08(j). The Borrower shall be obligated to make the full payment and/or
deposit of cash collateral within ninety (90) days following its receipt of the
New Borrowing Base Notice in accordance with Section 2.07(d) or the date the
adjustment occurs pursuant to Section 8.13(c); provided that all payments
required to be made pursuant to this Section 3.04(c)(ii) must be made on or
prior to the Termination Date.

(iii) Upon any adjustments to the Borrowing Base pursuant to Section 2.07(e),
Section 2.07(f) or Section 9.12(d), if the total Revolving Credit Exposures
exceed the Borrowing Base as adjusted, then the Borrower shall (A) prepay the
Borrowings in an aggregate principal amount equal to such excess, and (B) if any
excess remains after prepaying all of the Borrowings as a result of an LC
Exposure, pay to the Administrative Agent on behalf of the Lenders an amount
equal to such excess to be held as cash collateral as provided in
Section 2.08(j). The Borrower shall be obligated to make such prepayment and/or
deposit of cash collateral (A) in the case of an adjustment pursuant to
Section 2.07(e), on the date of incurrence of the Second Lien Term Debt, (B) in
the case of an adjustment pursuant to Section 2.07(f), on the date of incurrence
of the Senior Debt, and (C) in the case of an adjustment pursuant to
Section 9.12(d), on the date that the relevant sale or other disposition occurs;
provided that all payments required to be made pursuant to this
Section 3.04(c)(iii) must be made on or prior to the Termination Date.

 

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2.4 Amendment to Section 5.04. Section 5.04(b) is hereby amended by replacing
the term “Majority Lenders” in clause (iv) thereof with the term “Required
Lenders”.

2.5 Amendment to Section 7.13. Section 7.13 is hereby amended by deleting the
parenthetical therein and replacing such parenthetical with the following:

(other than (a) the Second Lien Term Loan Documents, (b) the Senior Debt
Indenture and (c) Capital Leases creating Liens permitted by Section 9.03(c),
but then only on the Property subject of such Capital Lease)

2.6 Amendments to Section 8.01. Section 8.01 is hereby amended by inserting the
following immediately following Section 8.01(r):

(s) Notice of Second Lien Term Debt Incurrence. Written notice at least five
(5) Business Days prior to the incurrence of any increase of the “Commitment”
under the Second Lien Term Loan Agreement in accordance with the terms thereof
and as contemplated in Section 9.02(i).

(t) Notice of Senior Debt Issuance. Written notice at least (5) days prior to
the offering of any Senior Debt as contemplated by Section 9.02(j), the amount
thereof and the anticipated date of closing and a copy of the preliminary
offering memorandum (if any) and the final offering memorandum (if any) and any
other material documents relating to such offering of Senior Debt.

(u) 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.

2.7 Amendment to Section 8.13. Section 8.13(c) is hereby amended by replacing
each reference to the term “Majority Lenders” wherever it appears in
Section 8.13(c) with the term “Required Lenders” and each reference to the term
“Mortgaged Properties” wherever it appears in Section 8.13(c) with the term “Oil
and Gas Properties”.

2.8 Amendment to Section 8.14. Section 8.14 is hereby amended by adding the
following at the end of such Section:

(c) In the event that the Borrower or any Subsidiary is granting a Lien on any
Property to secure any Second Lien Term Debt, the Borrower will, and will cause
any Subsidiary to, contemporaneously grant to the Administrative Agent to secure
the Indebtedness a Lien on the same Property pursuant to Security Instruments in
form and substance satisfactory to the Administrative Agent. The Borrower will
cause any Domestic Subsidiary guaranteeing any Second Lien Term Debt to
contemporaneously guarantee the Indebtedness pursuant to the Guaranty Agreement.

 

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2.9 Amendments to Section 9.01.

(a) Section 9.01(a) is hereby amended and restated in its entirety as follows:

(a) Interest Coverage Ratio. The Borrower will not, as of the last day of any
fiscal quarter, permit its ratio of EBITDAX for the period ending on such day to
Interest Expense for the period of the four fiscal quarters ending on such day
to be less than 3.0 to 1.0.

(b) Section 9.01(b) is hereby amended and restated in its entirety as follows:

(b) Ratio of Total Debt to EBITDAX. The Borrower will not, as of the last day of
any fiscal quarter, permit its ratio of Total Debt as of such date to EBITDAX
for the period ending on such day to be greater than (i) 4.25 to 1.00 for each
fiscal quarter ending December 31, 2011 through the fiscal quarter ending
December 31, 2012, and (ii) 4.00 to 1.00 for each fiscal quarter ending after
December 31, 2012.

2.10 Amendments to Section 9.02. Section 9.02 is hereby amended by
(a) renumbering Section 9.02(i) to be 9.02(k) and (b) adding the following
Section 9.02(i) and Section 9.02(j):

(i) Second Lien Term Debt and any guarantees thereof, the principal amount of
which does not exceed $100,000,000 in the aggregate at any one time outstanding;
provided that: (i) upon the incurrence of any such Debt after the Initial Second
Lien Funding Date: (A) the Borrower shall have complied with Section 8.01(s),
(B) both before and immediately after giving effect to the incurrence of any
such Debt, no Default, Event of Default or Borrowing Base Deficiency exists or
would exist (after giving effect to any concurrent prepayment made pursuant to
Section 3.04(c)(iii) and any concurrent repayment of Debt with the proceeds of
such incurrence, if any), and (C) the Borrowing Base shall be reduced in
accordance with Section 2.07(e) and the Borrower shall make any prepayment
required by Section 3.04(c)(iii); (ii) such Second Lien Term Debt does not have
any scheduled principal amortization prior to the date which is one hundred
eighty (180) days after the Maturity Date; and (iii) such Second Lien Term Debt
does not mature sooner than the date which is one hundred eighty (180) days
after the Maturity Date.

(j) Senior Debt and any guarantees thereof, the principal amount of which does
not exceed $200,000,000 in the aggregate at any one time outstanding; provided
that: (i) the Borrower shall have complied with Section 8.01(t); (ii) both
before and immediately after giving effect to the incurrence of any such Debt,
no Default, Event of Default or Borrowing Base Deficiency exists or would exist
(after giving effect to any concurrent prepayment made pursuant to
Section 3.04(c)(iii) and any concurrent

 

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repayment of Debt with the proceeds of such incurrence, if any); (iii) the
Borrowing Base shall be adjusted to the extent required by Section 2.07(f) and
the Borrower shall make any prepayment required by Section 3.04(c)(iii);
(iv) such Senior Debt does not have any scheduled principal amortization prior
to the date which is one hundred eighty days after the Maturity Date; (v) such
Senior Debt does not mature sooner than the date which is one hundred eighty
days after the Maturity Date; (vi) the net cash proceeds of which are applied
substantially simultaneously with (and in any event not later than the third
Business Day next following) the incurrence thereof to prepay outstanding Second
Lien Term Debt, if any; (vii) no Subsidiary is required to guarantee such Senior
Debt unless such Subsidiary has guaranteed the Indebtedness pursuant to the
Guaranty Agreement; (viii) if such Senior Debt is senior subordinated Debt, such
Senior Debt is expressly subordinate to the payment in full of all of the
Indebtedness on terms and conditions reasonably satisfactory to the
Administrative Agent and the Required Lenders; (ix) such Senior Debt and any
guarantees thereof are on terms, taken as a whole, at least as favorable to the
Borrower and the Subsidiaries as market terms for issuers of similar size and
credit quality given the then prevailing market conditions as determined by the
Administrative Agent and the Required Lenders; and (x) such Senior Debt does not
have any mandatory prepayment or redemption provisions (other than customary
change of control or asset sale tender offer provisions) which would require a
mandatory prepayment or redemption in priority to the Indebtedness.

2.11 Amendments to Section 9.03. Section 9.03 is hereby amended by adding the
following Section 9.03(g):

(g) Liens on Property securing Debt permitted by Section 9.02(i); provided,
however, that (i) such Liens securing such Debt are subordinate to the Liens
securing the Indebtedness, this Agreement and the other Loan Documents pursuant
to the Intercreditor Agreement and (ii) both before and after giving effect to
the incurrence of any such Lien, the Borrower is in compliance with
Section 8.14(c) and the Intercreditor Agreement.

2.12 Amendments to Section 9.04(b). Section 9.04(b) is hereby amended by
deleting the clause “The Borrower will not, and will not permit any Subsidiary
to:” and replacing it with “Other than as provided in Sections 9.19 and 9.20,
the Borrower will not and will not permit any Subsidiary to:”.

2.13 Amendments to Section 9.16. Section 9.16 is hereby amended by removing the
reference to “this Agreement” and “the Security Instruments” in the
parenthetical in such Section and replacing it with a reference to “the Second
Lien Term Loan Documents”.

 

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2.14 Amendment to Article IX. Article IX is hereby amended by adding the
following at the end of such Article:

Section 9.19 Redemption of Second Lien Term Debt and Amendment of Second Lien
Term Loan Agreement. The Borrower will not, and will not permit any Subsidiary
to: (a) prior to the date that is one hundred eighty (180) days after the
Maturity Date, call, make or offer to make any optional or voluntary Redemption
of or otherwise optionally or voluntarily Redeem (whether in whole or in part)
any Second Lien Term Debt, except for the payment of interest at its scheduled
payment date or otherwise in accordance with the terms of such Debt and provided
that the Borrower may make any prepayments made with the proceeds from and
contemporaneously with the incurrence of Senior Debt to the extent permitted by
Section 9.02(j) so long as no Default, Event of Default or Borrowing Base
Deficiency shall have occurred and be continuing or would exist after giving
effect to any such prepayment; or (b) 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 Term Loan Agreement or any other Second Lien
Term Loan Document except in accordance with the terms of the Intercreditor
Agreement.

Section 9.20 Repayment of Senior Debt; Amendment to Terms of Senior Debt. The
Borrower will not, and will not permit any of its Subsidiaries 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) any Senior Debt;
provided that, so long as no Default, Event of Default or Borrowing Base
Deficiency shall have occurred and be continuing or would result therefrom, the
Borrower may prepay Senior Debt with the net cash proceeds of any sale of Equity
Interests (other than Disqualified Capital Stock) of the Borrower; (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 Senior Debt or
the Senior Debt Indenture 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 increase the rate or shorten any period for payment of interest
thereon or (B) such action requires the payment of a consent fee (howsoever
described), provided that the foregoing shall not prohibit the execution of
supplemental indentures associated with the incurrence of additional Senior Debt
to the extent permitted by Section 9.02(j) 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) or (C) with respect
to any Senior Debt that is subordinated to the Indebtedness or any other Debt,
designate any Debt (other than obligations of the Borrower and the Subsidiaries
pursuant to the Loan Documents) as “Specified Senior Indebtedness” or “Specified
Guarantor Senior Indebtedness” or give any such other Debt any other similar
designation for the purposes of any Senior Debt Indenture related to Senior Debt
that is subordinated to the Indebtedness or any other Debt.

 

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2.15 Amendment to Section 10.01. Section 10.01 is hereby amended by adding the
following at the end of such Section:

(o) an “Event of Default” shall occur under the Second Lien Term Loan Agreement.

2.16 Amendment to Section 10.02. Section 10.02(c) is hereby amended deleting
“All” and inserting “Subject to the Intercreditor Agreement, all”.

2.17 Amendment to Section 11.06. Section 11.06 is hereby amended by replacing
the term “Majority Lenders” in the first sentence thereof with the term
“Required Lenders”.

2.18 Amendments to Section 12.02. Section 12.02 is hereby amended by
(i) deleting the word “or” at the end of clause (vii) thereof; (ii) adding the
word “or” immediately after clause (viii) thereof; (iii) 12.02(b)(viii) is
hereby amended by inserting “, “Required Lenders”” before “or any other
provision hereof”; and (iv) adding a new clause (ix) immediately following
clause (viii) thereof to read as follows:

(ix) waive or amend Section 9.02(i) or Section 9.02(j) without the prior written
consent of the Required Lenders

2.19 Amendment to Article XII. Article XII is hereby amended to add following
new Section 12.18 thereto:

Section 12.18 INTERCREDITOR AGREEMENT.

(a) EACH LENDER HEREBY (I) INSTRUCTS AND AUTHORIZES THE ADMINISTRATIVE AGENT TO
EXECUTE AND DELIVER THE INTERCREDITOR AGREEMENT ON ITS BEHALF, (II) AUTHORIZES
THE ADMINISTRATIVE AGENT TO EXERCISE ALL OF THE ADMINISTRATIVE AGENT’S RIGHTS
AND TO COMPLY WITH ALL OF ITS OBLIGATIONS UNDER THE INTERCREDITOR AGREEMENT, AND
(III) UNDERSTANDS, ACKNOWLEDGES AND AGREES THAT AT ALL TIMES FOLLOWING THE
EXECUTION AND DELIVERY OF THE INTERCREDITOR AGREEMENT SUCH LENDER (AND EACH OF
ITS SUCCESSORS AND ASSIGNS) SHALL BE BOUND BY THE TERMS THEREOF.

(b) EACH LENDER ACKNOWLEGES THAT IT HAS REVIEWED AND IS SATISFIED WITH THE TERMS
AND PROVISIONS OF THE INTERCREDITOR AGREEMENT AND ACKNOWLEGES AND AGREES THAT
SUCH LENDER IS RESPONSIBLE FOR MAKING ITS OWN ANALYSIS AND REVIEW OF THE
INTERCREDITOR AGREEMENT AND THE TERMS AND PROVISIONS THEREOF, AND NO AGENT OR
ANY OF ITS AFFILIATES MAKES ANY REPRESENTATION TO ANY LENDER AS TO THE
SUFFICIENCY OR ADVISABILITY OF THE PROVISIONS CONTAINED IN THE INTERCREDITOR
AGREEMENT.

 

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2.20 Amendment to Exhibit D-1 and D-2. Exhibit D-1 and Exhibit D-2 to the Credit
Agreement are hereby superseded and replaced by the Exhibit D-1 and Exhibit D-2,
respectively, to this Eighth Amendment.

Section 3. Borrowing Base Increase. For the period from and including the Eighth
Amendment Effective Date (as defined below) to but excluding the next
Redetermination Date, the amount of the Borrowing Base shall be equal to
$255,000,000. Notwithstanding the foregoing, the Borrowing Base may be subject
to further adjustments from time to time pursuant to Sections 2.07(e), 2.07(f),
8.13(c) or 9.12(d) of the Credit Agreement.

Section 4. Acknowledgement and Consent to Amendment to Guaranty and Collateral
Agreement. Pursuant to Section 12.02 of the Credit Agreement, each Lender party
hereto hereby acknowledges and consents to that certain First Amendment to the
Guaranty and Collateral Agreement among the Borrower, Grantors (as such term is
defined therein) and Administrative Agent dated as of even date herewith.

Section 5. Conditions Precedent. This Eighth Amendment shall become effective
when each of the following conditions is satisfied (or waived in accordance with
Section 12.02 of the Credit Agreement) (the “Eighth Amendment Effective Date”):

5.1 Eighth Amendment. The Administrative Agent shall have received multiple
counterparts as requested of this Eighth Amendment from the Borrower, each other
Obligor and the Lenders.

5.2 Collateral. The Administrative Agent shall be satisfied that all Property
constituting security for the Second Lien Term Loan Agreement is subject to a
first priority, perfected Lien in favor of the Administrative Agent under the
Security Instruments.

5.3 Intercreditor Agreement. The Administrative Agent shall have received a
fully executed copy of the Intercreditor Agreement, and the Intercreditor
Agreement shall be in form and substance satisfactory to the Administrative
Agent and the Lenders.

5.4 Second Lien Term Loan Documents. The Administrative Agent shall have
received a copy, certified by a Responsible Officer as true and complete, of
each Second Lien Term Loan Documents (in each case, together with all amendments
or supplements thereto, if any, through the Eighth Amendment Effective Date),
and each such Second Lien Term Loan Document shall be in form and substance
satisfactory to the Administrative Agent and the Lenders.

5.5 Other Documents. The Administrative Agent shall have received such other
documents as the Administrative Agent or special counsel to the Administrative
Agent may reasonably request.

 

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5.6 Payment of Outstanding Invoices. Payment by the Borrower to the
Administrative Agent of all fees and other amounts due and payable on or prior
to the Eighth Amendment 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 (including, but not limited to the fees of Vinson &
Elkins LLP).

5.7 No Default. No Default or Event of Default shall be continuing as of the
Eighth Amendment Effective Date.

Section 6. Representations and Warranties; Etc. Each Obligor hereby affirms:
(a) that as of the date of execution and delivery of this Eighth Amendment,
after giving effect to the terms of this Eighth Amendment, all of the
representations and warranties contained in each Loan Document to which it is a
party are true and correct in all material respects as though made on and as of
the Eighth Amendment Effective Date (unless made as of a specific earlier date,
in which case, was true as of such date); and (b) that after giving effect to
this Eighth Amendment and to the transactions contemplated hereby, no Defaults
exist under the Loan Documents or will exist under the Loan Documents.

Section 7. Miscellaneous.

7.1 Confirmation. The provisions of the Credit Agreement (as amended by this
Eighth Amendment) shall remain in full force and effect in accordance with its
terms following the effectiveness of this Eighth Amendment.

7.2 Ratification and Affirmation of the Obligors. Each Obligor hereby expressly
(a) acknowledges the terms of this Eighth Amendment; (b) ratifies and affirms
its obligations under, and acknowledges, renews and extends its continued
liability under, each Loan Document to which it is a party, and agrees that each
Loan Document to which it is a party remains in full force and effect, as
amended hereby; and (c) agrees that from and after the Eighth Amendment
Effective Date each reference to the Credit Agreement in the Guaranty and the
other Loan Documents shall be deemed to be a reference to the Credit Agreement,
as amended by this Eighth Amendment.

7.3 Counterparts. This Eighth Amendment may be executed by one or more of the
parties hereto in any number of separate counterparts, and all of such
counterparts taken together shall be deemed to constitute one and the same
instrument. Delivery of an executed counterpart of a signature page of this
Eighth Amendment by telecopy, facsimile or email transmission shall be effective
as delivery of a manually executed counterpart of this Eighth Amendment.

7.4 No Oral Agreement. THIS WRITTEN EIGHTH AMENDMENT, THE CREDIT AGREEMENT AND
THE OTHER LOAN DOCUMENTS EXECUTED IN CONNECTION HEREWITH AND THEREWITH REPRESENT
THE FINAL AGREEMENT BETWEEN THE PARTIES 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.

 

Page 12

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7.5 Governing Law. THIS EIGHTH AMENDMENT (INCLUDING, BUT NOT LIMITED TO, THE
VALIDITY AND ENFORCEABILITY HEREOF) SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF TEXAS.

7.6 Guarantors Bound by Intercreditor Agreement; Amendment to Guaranty. The
Obligors hereby acknowledge and agree that at all times following the execution
and delivery of the Intercreditor Agreement each Subsidiary of the Borrower that
becomes a “Guarantor” pursuant to Section 8.14(b) of the Credit Agreement shall
be bound by the terms of the Intercreditor Agreement regardless of whether such
Subsidiary has executed the Intercreditor Agreement. The parties hereto agree
that Exhibit A attached hereto supersedes and replaces Annex II to the Guaranty
(and Annex II to the Guaranty is hereby amended and restated in its entirety to
read as set forth on Exhibit A attached hereto).

7.7 Release of Lenders. IN CONSIDERATION OF THIS EIGHTH AMENDMENT AND, SUBJECT
TO THE CONDITIONS STATED HEREIN, THE BORROWER AND EACH OTHER OBLIGOR HEREBY
RELEASES, ACQUITS, FOREVER DISCHARGES, AND COVENANTS NOT TO SUE, THE
ADMINISTRATIVE AGENT AND EACH OF THE LENDERS, ALONG WITH ALL OF THEIR
BENEFICIARIES, OFFICERS, DIRECTORS, AGENTS, EMPLOYEES, SERVANTS, ATTORNEYS AND
REPRESENTATIVES, AS WELL AS THEIR RESPECTIVE HEIRS, EXECUTORS, LEGAL
REPRESENTATIVES, ADMINISTRATORS, PREDECESSORS IN INTEREST, SUCCESSORS AND
ASSIGNS (EACH INDIVIDUALLY, A “RELEASED PARTY” AND COLLECTIVELY, THE “RELEASED
PARTIES”) FROM ANY AND ALL CLAIMS, DEMANDS, DEBTS, LIABILITIES, SUITS, OFFSETS
AGAINST THE INDEBTEDNESS EVIDENCED BY THE LOAN DOCUMENTS AND ACTIONS, CAUSES OF
ACTION OR CLAIMS FOR RELIEF OF WHATEVER KIND OR NATURE, WHETHER KNOWN OR
UNKNOWN, SUSPECTED OR UNSUSPECTED BY BORROWER OR ANY OBLIGOR, WHICH BORROWER,
ANY OBLIGOR, OR ANY SUBSIDIARY MAY HAVE OR WHICH MAY HEREAFTER ACCRUE RELATED TO
ANY ACTIONS OR FACTS OCCURRING PRIOR TO THE EIGHTH AMENDMENT EFFECTIVE DATE
AGAINST ANY RELEASED PARTY, FOR OR BY REASON OF ANY MATTER, CAUSE OR THING
WHATSOEVER OCCURRING ON OR PRIOR TO THE EIGHTH AMENDMENT EFFECTIVE DATE, WHICH
RELATE TO, IN WHOLE OR IN PART, DIRECTLY OR INDIRECTLY THE CREDIT AGREEMENT, ANY
HEDGING AGREEMENT, ANY NOTE, ANY SECURITY INSTRUMENT, ANY OTHER LOAN DOCUMENT OR
THE TRANSACTIONS EVIDENCED THEREBY, INCLUDING, WITHOUT LIMITATION, ANY
DISBURSEMENTS UNDER THE CREDIT AGREEMENT, ANY HEDGING AGREEMENT, ANY NOTES, THE
NEGOTIATION OF ANY OF THE CREDIT AGREEMENT, THE SWAP AGREEMENTS, THE NOTES, OR
THE OTHER LOAN DOCUMENTS, THE TERMS THEREOF, OR THE APPROVAL, ADMINISTRATION,
ENFORCEMENT OR SERVICING THEREOF.

7.8 Royal Bank of Canada Signature Page. For the avoidance of doubt, Royal Bank
of Canada’s signature page attached to this Eighth Amendment is evidence of its
consent and approval of all provisions and amendments contained herein except
for the provisions of Section 2.1(a) of this Eighth Amendment related to the
amendment of the definition of “EBITDAX” contained in Section 1.02 of the Credit
Agreement.

[Signatures Begin on Next Page]

 

Page 13

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IN WITNESS WHEREOF, the parties hereto have caused this Eighth Amendment to be
duly executed effective as of the Eighth Amendment Effective Date.

 

BORROWER:     REX ENERGY CORPORATION       By:   /s/ Thomas C. Stabley        
Thomas C. Stabley        

Chief Executive Officer and

Chief Financial Officer

 

GUARANTORS:     REX ENERGY OPERATING CORP.       By:   /s/ Thomas C. Stabley    
    Thomas C. Stabley        

Chief Executive Officer and

Chief Financial Officer

 

    REX ENERGY I, LLC     R.E. GAS DEVELOPMENT, LLC     PENNTEX RESOURCES
ILLINOIS, INC.     REX ENERGY IV, LLC       By:   /s/ Thomas C. Stabley        
Thomas C. Stabley         Vice President

 

Eighth Amendment

Signature Page

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ADMINISTRATIVE AGENT:    

KEYBANK NATIONAL ASSOCIATION,

as Administrative Agent and Lender

      By:   /s/ David Morris       Name:   David Morris       Title:   Vice
President

 

Eighth Amendment

Signature Page

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LENDERS:     ROYAL BANK OF CANADA       By:   /s/ Don J. McKinnerney       Name:
  Don J. McKinnerney       Title:   Authorized Signatory

 

Eighth Amendment

Signature Page

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    M&T BANK       By:   /s/ David Ladori       Name:   David Ladori      
Title:   Vice President

 

Eighth Amendment

Signature Page

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    CAPITAL ONE, NATIONAL ASSOCIATION.       By:   /s/ Peter Shen       Name:  
Peter Shen       Title:   Vice President

 

Eighth Amendment

Signature Page

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    BANK OF MONTREAL       By:   /s/ Joseph Bliss       Name:   Joseph Bliss    
  Title:   Managing Director

 

Eighth Amendment

Signature Page

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    UNION BANK, N.A.       By:   /s/ Zachary Holly       Name:   Zachary Holly  
    Title:   Assistant Vice President

 

Eighth Amendment

Signature Page

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    WELLS FARGO BANK, NATIONAL ASSOCIATION       By:   /s/ Jonathan Herrick    
  Name:   Jonathan Herrick       Title:   Assistant Vice President

 

Eighth Amendment

Signature Page

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    SUNTRUST BANK       By:   /s/ Gregory C. Magnuson       Name:   Gregory C.
Magnuson       Title:   Vice President

 

Eighth Amendment

Signature Page

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    U.S. BANK NATIONAL ASSOCIATION       By:   /s/ Tyler Fauerbach       Name:  
Tyler Fauerbach       Title:   Vice President

 

Eighth Amendment

Signature Page

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EXHIBIT D-1

FORM OF

COMPLIANCE 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 Credit Agreement dated as of September 28, 2007 (together with all
amendments, restatements, supplements or other modifications thereto being the
“Agreement”) among the Borrower, KeyBank National Association, as Administrative
Agent, and the other agents and 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) The Borrower has performed and complied with all agreements and conditions
contained in the Agreement and in the Loan Documents required to be performed or
complied with by it prior to or at the time of delivery hereof [or specify
default and describe].

(b) Since [same date as audited financials in Section 7.04(a)], no change has
occurred, either in any case or in the aggregate, in the condition, financial or
otherwise, of the Borrower or any Subsidiary which could reasonably be expected
to have a Material Adverse Effect [or specify event].

(c) There exists no Default or Event of Default [or specify Default and
describe].

(d) Attached hereto are the detailed computations necessary to determine whether
the Borrower is in compliance with Section 9.01 and Section 8.14 as of the end
of the [fiscal quarter][fiscal year] ending [            ].

 

Exhibit D-1 - 1

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

EXECUTED AND DELIVERED this [            ] day of [            ].

 

REX ENERGY CORPORATION By:     Name:   Title:  

 

Exhibit D-1 - 2

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

EXHIBIT D-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 Credit Agreement dated as of September 28, 2007 (together with all
amendments, restatements, supplements or other modifications thereto being the
“Agreement”) among the Borrower, KeyBank National Association, as Administrative
Agent, and the other agents and 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) and 8.14 as of
the end of the [fiscal quarter][fiscal year] ending [            ].

(c) [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].

 

Exhibit D-2 - 1

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EXECUTED AND DELIVERED this [            ] day of [            ].

 

REX ENERGY CORPORATION By:     Name:   Title:  

 

Exhibit D-2 - 2

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

Exhibit A

Annex II

Assumption Agreement

ASSUMPTION AGREEMENT, dated as of [            ], 201[    ], made by
[            ], a [            ] (the “Additional Grantor”), in favor of KeyBank
National Association, as administrative agent (in such capacity, the
“Administrative Agent”) for the Lenders party to the Credit Agreement referred
to below. All capitalized terms not defined herein shall have the meaning
ascribed to them in the Guaranty and Collateral Agreement referred to below.

W I T N E S S E T H:

WHEREAS, Rex Energy Corporation, a corporation duly formed and existing under
the laws of the State of [Delaware] (the “Borrower”), the Administrative Agent,
and certain financial institutions (the “Lenders”) have entered into that
certain Credit Agreement, dated as of September 28, 2007 (as amended, restated,
supplemented or otherwise modified from time to time, the “Credit Agreement”);

WHEREAS, in connection with the Credit Agreement, the Borrower and certain of
its affiliates (other than the Additional Grantor) have entered into that
certain Guaranty and Collateral Agreement, dated as of September 28, 2007 (as
amended, restated, supplemented or otherwise modified from time to time, the
“Guaranty and Collateral Agreement”) in favor of the Administrative Agent for
the ratable benefit of the Secured Parties;

WHEREAS, the Credit Agreement requires the Additional Grantor to become a party
to the Guaranty and Collateral Agreement; and

WHEREAS, the Additional Grantor has agreed to execute and deliver this
Assumption Agreement in order to become a party to the Guaranty and Collateral
Agreement;

NOW, THEREFORE, IT IS AGREED:

1. Guaranty and Collateral Agreement. By executing and delivering this
Assumption Agreement, the Additional Grantor, as provided in Section 9.13 of the
Guaranty and Collateral Agreement, hereby becomes a party to the Guaranty and
Collateral Agreement as a Grantor thereunder with the same force and effect as
if originally named therein as a Grantor and, without limiting the generality of
the foregoing, hereby expressly assumes all obligations and liabilities of a
Grantor and a Guarantor thereunder. The information set forth in Annex 1-A
hereto is hereby added to the information set forth in the Schedules to the
Guaranty and Collateral Agreement. The Additional Grantor hereby represents and
warrants that, with respect to itself and as applicable, each of the
representations and warranties contained in Article IV of the Guaranty and
Collateral Agreement is true and correct on and as the date hereof (after giving
effect to this Assumption Agreement) as if made on and as of such date.

 

Exhibit A

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

2. Intercreditor Agreement. By executing and delivering this Assumption
Agreement, the Additional Grantor hereby becomes a party to the Intercreditor
Agreement with the same force and effect as if originally named therein as a
Guarantor and, without limiting the generality of the foregoing, hereby
expressly agrees to be bound by the terms of the Intercreditor Agreement (and
this Assumption Agreement shall be deemed to constitute a joinder agreement to
the Intercreditor Agreement for this purpose).

3. Governing Law. This Assumption Agreement shall be governed by, and construed
in accordance with, the laws of the State of Texas.

4. Miscellaneous. This Assumption 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. Any provision of this Assumption Agreement held to be invalid,
illegal or unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such invalidity, illegality or unenforceability
without affecting the validity, legality and enforceability of the remaining
provisions hereof; and the invalidity of a particular provision in a particular
jurisdiction shall not invalidate such provision in any other jurisdiction.

IN WITNESS WHEREOF, the undersigned has caused this Assumption Agreement to be
duly executed and delivered as of the date first above written.

 

[ADDITIONAL GRANTOR] By:     Name:   Title:  

 

Exhibit A