Execution Version
Exhibit 10.1

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CREDIT AGREEMENT
DATED AS OF AUGUST 12, 2016

AMONG

CALIFORNIA RESOURCES CORPORATION,
AS THE BORROWER,

THE SEVERAL LENDERS
FROM TIME TO TIME PARTIES HERETO,

GOLDMAN SACHS BANK USA,
AS LEAD ARRANGER AND BOOKRUNNER,

AND

THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A.,
AS ADMINISTRATIVE AGENT AND COLLATERAL AGENT

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Table of Contents
 
 
Page
Article I DEFINITIONS
1
1.1

Defined Terms
1
1.2

Other Interpretive Provisions
46
1.3

Accounting Terms
47
1.4

Rounding
47
1.5

References to Agreements, Laws, Etc
47
1.6

Times of Day
48
1.7

Timing of Payment or Performance
48
1.8

Currency Equivalents Generally.
48
1.9

Classification of Loans and Borrowings
48
1.10

Available Amount Transactions
49
Article II AMOUNT AND TERMS OF CREDIT
49
2.1

Commitments.
49
2.2

Incremental Facilities or Commitments.
49
2.3

Type of Loans
52
2.4

Notice of Borrowing
52
2.5

Disbursement of Funds
52
2.6

Repayment of Loans; Evidence of Debt
53
2.7

Conversions and Continuations
54
2.8

Relationship Among Lenders
55
2.9

Interest
55
2.10

Interest Periods
56
2.11

Increased Costs, Illegality, Etc.
56
2.12

Compensation
58
2.13

Change of Lending Office
58
2.14

Notice of Certain Costs
59
Article III [RESERVED]
59
Article IV FEES; COMMITMENTS
59
4.1

Upfront Fees
59
4.2

Mandatory Termination or Reduction of Commitments
59
Article V PAYMENTS
59
5.1

Optional and Certain Other Prepayments and Repayments; Call
Protection/Make-Whole.
59
5.2

Mandatory Prepayments
60
5.3

Method and Place of Payment
61
5.4

Net Payments
61
5.5

Computations of Interest and Fees
65
5.6

Limit on Rate of Interest
65
Article VI CONDITIONS PRECEDENT TO EFFECTIVENESS
66
6.1

Certain Credit Documents and Other Matters
66
6.2

Secretary’s Certificate of the Borrower
66

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6.3

Good Standing Certificate of the Borrower.
67
6.4

Legal Opinions
67
6.5

Closing Certificates
67
6.6

Secretary’s Certificates of the Credit Parties
67
6.7

Fees and Expenses
67
6.8

Patriot Act
67
6.9

[Reserved]
67
6.10

Solvency Certificate
67
6.11

Uniform Commercial Code Searches
68
6.12

Notification of Effective Date
68
Article VII CONDITIONS PRECEDENT TO ESCROW RELEASE
68
7.1

Certain Credit Documents and Other Matters
68
7.2

Escrow Release Certification
68
7.3

Minimum Loan Size
68
7.4

Legal Opinions
68
7.5

Conditions Precedent
68
Article VIII CONDITIONS PRECEDENT TO ALL CREDIT EVENTS
69
8.1

No Default; Representations and Warranties
69
8.2

Notice of Borrowing
69
Article IX REPRESENTATIONS, WARRANTIES AND AGREEMENTS
69
9.1

Corporate Status
69
9.2

Corporate Power and Authority; Enforceability
70
9.3

No Violation
70
9.4

Litigation
70
9.5

Margin Regulations
70
9.6

Governmental Approvals
70
9.7

Investment Company Act
71
9.8

True and Complete Disclosure
71
9.9

Financial Condition; Financial Statements
71
9.10

Tax Matters
72
9.11

Compliance with ERISA
72
9.12

Subsidiaries
73
9.13

Environmental Laws
73
9.14

Properties
73
9.15

Solvency
74
9.16

Insurance
74
9.17

Hedge Agreements
74
9.18

Patriot Act
74
9.19

Liens Under the Security Documents
74
9.20

No Default
75
9.21

Direct Benefit
75
9.22

Anti-Corruption Laws and Sanctions
75
9.23

EEA Financial Institutions.
75

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Article X AFFIRMATIVE COVENANTS
75
10.1

Information Covenants
76
10.2

Books, Records and Inspections
79
10.3

Maintenance of Insurance
80
10.4

Payment of Taxes
80
10.5

Consolidated Corporate Franchises
81
10.6

Compliance with Statutes, Regulations, Etc.
81
10.7

ERISA
81
10.8

Maintenance of Properties
82
10.9

Post-Closing Actions
82
10.10

Additional Guarantors, Grantors and Collateral
82
10.11

Use of Proceeds
84
10.12

Further Assurances
85
10.13

Reserve Reports.
85
Article XI NEGATIVE COVENANTS
86
11.1

Limitation on Indebtedness
86
11.2

Limitation on Liens
91
11.3

Limitation on Fundamental Changes
94
11.4

Limitation on Sale of Assets
96
11.5

Limitation on Investments
101
11.6

Limitation on Restricted Payments
103
11.7

Limitations on Debt Payments and Amendments
105
11.8

Negative Pledge Agreements
107
11.9

Limitation on Subsidiary Distributions
109
11.10

Hedge Agreements.
110
11.11

Financial Performance Covenant
112
11.12

Transactions with Affiliates
112
11.13

Change in Business
113
11.14

Use of Proceeds
113
11.15

Anti-Layering
114
Article XII EVENTS OF DEFAULT
114
12.1

Payments
114
12.2

Representations, Etc
114
12.3

Covenants
114
12.4

Default Under Other Agreements
114
12.5

Bankruptcy, Etc
115
12.6

ERISA
115
12.7

Guarantee
116
12.8

Security Documents
116
12.9

Judgments
116
12.10

Change of Control
116
Article XIII THE ADMINISTRATIVE AGENT AND THE COLLATERAL AGENT
118

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13.1

Appointment
118
13.2

Delegation of Duties
118
13.3

Exculpatory Provisions
119
13.4

Reliance
121
13.5

Notice of Default
122
13.6

Non-Reliance on Agents and Other Lenders
122
13.7

No Other Duties, Etc.
123
13.8

Indemnification
123
13.9

Agent in Its Individual Capacity
124
13.10

Successor Agent
124
13.11

Withholding Tax
125
13.12

Security Documents and Guarantee
125
13.13

Right to Realize on Collateral and Enforce Guarantee
126
13.14

Administrative Agent May File Proofs of Claim
126
Article XIV MISCELLANEOUS
127
14.1

Amendments, Waivers and Releases
127
14.2

Notices
128
14.3

No Waiver; Cumulative Remedies
130
14.4

Survival of Representations and Warranties
130
14.5

Payment of Expenses; Indemnification
130
14.6

Successors and Assigns; Participations and Assignments
132
14.7

[Reserved]
137
14.8

Adjustments; Set-off
137
14.9

Counterparts
138
14.10

Severability
138
14.11

Integration
138
14.12

GOVERNING LAW
138
14.13

Submission to Jurisdiction; Waivers
138
14.14

Acknowledgments
139
14.15

WAIVERS OF JURY TRIAL
140
14.16

Confidentiality
140
14.17

Release of Collateral and Guarantee Obligations.
141
14.18

Credit Rating Election.
142
14.19

USA PATRIOT Act
143
14.20

Payments Set Aside
143
14.21

Reinstatement
143
14.22

Disposition of Proceeds
143
14.23

[Reserved]
144
14.24

Acknowledgement and Consent to Bail-In of EEA Financial Institutions
144
14.25

Post-First Priority First Out Credit Agreement Third Amendment Fall-Away
144

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Schedules and Exhibits

Schedule 1.1(e)
 
Excluded Stock
Schedule 1.1(f)
 
Excluded Subsidiaries
Schedule 1.1(g)
 
Subsidiary Guarantors
Schedule 2.1(a)
 
Commitments
Schedule 9.4
 
Litigation
Schedule 9.12
 
Subsidiaries
Schedule 10.9
Schedule 11.1
 
Post-Closing Actions
Effective Date Indebtedness
Schedule 11.2
 
Effective Date Liens
Schedule 11.4
 
Scheduled Dispositions
Schedule 11.5
 
Effective Date Investments
Schedule 11.8
 
Effective Date Negative Pledge Agreements
Schedule 11.9
 
Effective Date Contractual Encumbrances
Schedule 11.12
 
Effective Date Affiliate Transactions
Schedule 14.2
 
Notice Addresses
 
 
 
Exhibit A
 
Form of Notice of Borrowing
Exhibit B
 
Form of Guarantee
Exhibit C
 
Form of Security Agreement
Exhibit D
 
Form of Pledge Agreement
Exhibit E
 
Form of Mortgage/Deed of Trust (California)
Exhibit F
 
Form of Credit Party Closing Certificate
Exhibit G
 
Form of Assignment and Acceptance
Exhibit H
 
Form of Promissory Note
Exhibit I
 
Form of First Lien Intercreditor Agreement
Exhibit J
 
Form of Sullivan & Cromwell LLP Legal Opinion
Exhibit K
 
Form of Escrow Agreement

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CREDIT AGREEMENT, dated as of August 12, 2016, among CALIFORNIA RESOURCES
CORPORATION, a Delaware corporation (the “Borrower”), the banks, financial
institutions and other lending institutions from time to time parties as lenders
hereto (each a “Lender” and, collectively, the “Lenders”), GOLDMAN SACHS BANK
USA, as Lead Arranger and Bookrunner, and THE BANK OF NEW YORK MELLON TRUST
COMPANY, N.A., not in its individual capacity, but as Administrative Agent and
Collateral Agent.
WHEREAS, the Borrower has requested that the Lenders extend credit in the form
of term Loans on the Effective Date, in the aggregate principal amount set forth
on Schedule 2.1(a); and
WHEREAS, the proceeds of the Loans are to be used in accordance with Section
10.11;
WHEREAS, the Lenders are willing to extend the credit described herein on the
terms and subject to the conditions set forth herein.
NOW, THEREFORE, in consideration of the premises and the covenants and
agreements contained herein, the parties hereto agree as follows:

ARTICLE I
DEFINITIONS

1.1    Defined Terms.
(a)    Terms defined in the preamble have the meaning ascribed to them in the
preamble.
(b)    As used herein, the following terms shall have the meanings specified in
this Section 1.1 unless the context otherwise requires (it being understood that
defined terms in this Agreement shall include in the singular number the plural
and in the plural the singular):
“2020 Notes” shall mean the Borrower’s 5% Senior Notes due 2020 outstanding on
the Effective Date issued under the indenture governing the existing 2020 Notes.
“2021 Notes” shall mean the Borrower’s 5½% Senior Notes due 2021 outstanding on
the Effective Date issued under the indenture governing the existing 2021 Notes.
“2024 Notes” shall mean the Borrower’s 6% Senior Notes due 2024 outstanding on
the Effective Date issued under the indenture governing the existing 2024 Notes.
“ABR” shall mean for any day a fluctuating rate per annum equal to the highest
of (a) the Federal Funds Effective Rate plus ½ of 1%, (b) the rate of interest
in effect for such day as publicly announced from time to time by the
Administrative Agent as its “prime rate” and (c) the LIBOR

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Rate for a one-month Interest Period on such day (or if such day is not a
Business Day, the immediately preceding Business Day) plus 1.0%; provided that,
for the avoidance of doubt, for purposes of calculating the LIBOR Rate pursuant
to clause (c) above, the LIBOR Rate for any day shall be the rate fixed by ICE
for deposits in Dollars in the London interbank market (or such other Person
assuming the responsibility of ICE in calculating the LIBOR Rate in the event
that ICE no longer fixes such rate) for a one-month Interest Period, as such
rate appears (i) on the Reuters Monitor Money Rates Service page LIBOR01 (or a
successor page on such service) or (ii) if such rate is not available, on such
other information system that provides such information, in each case at
approximately 11:00 a.m. (London time) two (2) Business Days prior to the
commencement of such Interest Period and such rate shall in no event be less
than 1.00% for the purposes of this Agreement. The “prime rate” is a rate set by
the Administrative Agent based upon various factors, including the
Administrative Agent’s costs and desired return, general economic conditions and
other factors, and is used as a reference point for pricing some loans, which
may be priced at, above, or below such announced rate.  Any change in the ABR
due to a change in such rate announced by the Administrative Agent, in the
Federal Funds Effective Rate or in the one-month LIBOR Rate shall take effect at
the opening of business on the day specified in the public announcement of such
change.
“ABR Loan” shall mean each Loan bearing interest based on the ABR.
“Acceptable Security Interest” shall mean a first priority, perfected Mortgage;
provided that Liens which are permitted by the terms of Section 11.2 may exist
and have whatever priority such Liens have at such time under applicable law;
provided, further, that with respect to (a) any production sharing contract or
similar instrument for the Borrower’s “THUMS” and “Tidelands” assets and the
property covered thereby and (b) any other production sharing contract or
similar instrument constituting Proved Reserves on which a Lien cannot be
granted without the consent of a third party or on which a Lien is contractually
or statutorily prohibited, then in each case, the grant of a first priority,
perfected Lien (provided that Liens which are permitted by the terms of
Section 11.2 may exist and have whatever priority such Liens have at such time
under applicable law) in the Stock of the Subsidiary party to such contract
shall be deemed an “Acceptable Security Interest”.
“Additional Assets” means (i) any assets or property that are not classified as
current assets under GAAP and that are used or useful in the onshore oil and gas
business of the Borrower and its Subsidiaries or any business ancillary thereto,
(ii) solely to the extent the equity interests of such Person are pledged as
Collateral, Investments in any Person engaged in an onshore oil and gas business
or any business ancillary thereto (including the acquisition from third parties
of Stock of such Person) as a result of which such other Person becomes a
Subsidiary or a Development Joint Venture, (iii) solely to the extent such Stock
is pledged as Collateral, the acquisition from third parties of Stock of a
Subsidiary or a Development Joint Venture, or (iv) any Industry Investments

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which are Capital Expenditures; provided that any equity interests received in
connection with any Industry Investment shall be pledged as Collateral.
“Administrative Agent” shall mean The Bank of New York Mellon Trust Company,
N.A., not in its individual capacity, but as the administrative agent for the
Lenders under this Agreement and the other Credit Documents, or any successor
administrative agent appointed in accordance with the provisions of
Section 13.10.
“Administrative Agent’s Office” shall mean the Administrative Agent’s address
and, as appropriate, account as set forth on Schedule 14.2, or such other
address or account as the Administrative Agent may from time to time notify in
writing to the Borrower and the Lenders.
“Administrative Questionnaire” shall mean, for each Lender, an administrative
questionnaire in a form provided by the Administrative Agent.
“Affiliate” shall mean, with respect to any Person, any other Person directly or
indirectly controlling, controlled by, or under direct or indirect common
control with such Person.  A Person shall be deemed to control another Person if
such Person possesses, directly or indirectly, the power to direct or cause the
direction of the management and policies of such other Person, whether through
the ownership of voting securities, by contract or otherwise.  “Controlling”
(“controlling”) and “controlled” shall have meanings correlative thereto.
“Agent” shall mean the Administrative Agent or the Collateral Agent.
“Agent Indemnified Liabilities” shall have the meaning provided in Section 14.5.
“Agreement” shall mean this Credit Agreement, as amended, restated, supplemented
or otherwise modified from time to time.
“Anti-Corruption Laws” shall mean all laws, rules, and regulations of any
jurisdiction applicable to the Borrower or its Subsidiaries from time to time
concerning or relating to bribery or corruption.
“Applicable Coupon” shall mean, for purposes of determining the Make-Whole
Amount payable in connection with a prepayment or repayment of Loans, or such
loans becoming due and payable on account of an acceleration, on a particular
Make-Whole Payment Date, (i) if LIBOR Loans are available on such date, the sum
of the LIBOR Rate for a hypothetical LIBOR Loan with an Interest Period of one
month commencing on such date and the Applicable Margin or (ii) if LIBOR Loans
are not available on such date, the sum of the ABR on such date and the
Applicable Margin.
“Applicable Margin” shall mean:

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(a)With respect to any ABR Loan, 9.375%;
and
(b)    With respect to any LIBOR Loan, 10.375%.
“Applicable Premium” shall mean, with respect to a Loan at any Make-Whole
Payment Date, the excess of:
(a)    The net present value at such Make-Whole Payment Date of (i) the
repayment price on the First Call Date of the principal amount that is subject
to prepayment or repayment of such Loan (calculated assuming that such Loan
continued to bear interest at the rate applicable on such Make-Whole Payment
Date) or the subject of acceleration, on such Make-Whole Payment Date plus (ii)
all required remaining scheduled interest payments due on the principal amount
that is subject to prepayment or repayment of such Loan, or the subject of
acceleration, to but excluding the third anniversary of the Effective Date
calculated assuming that such Loan continued to bear interest at the rate
applicable on such Make-Whole Payment Date, computed using a discount rate equal
to the Treasury Rate plus 50 basis points per annum discounted on a semi-annual
bond equivalent basis, over
(b)    The principal amount that is subject to prepayment or repayment, or the
subject of acceleration, of such Loan on such Make-Whole Payment Date.
The Administrative Agent shall not be responsible for calculating the Applicable
Premium.
“Approved Bank” shall have the meaning specified in the definition of “Cash
Equivalents.”
“Approved Fund” shall mean any Fund that is administered or managed by (a) a
Lender, (b) an Affiliate of a Lender or (c) an entity or an Affiliate of an
entity that administers or manages a Lender.
“Approved Petroleum Engineers” shall mean (a) Netherland, Sewell & Associates,
Inc., (b) Ryder Scott Company, L.P., (c) W. D. Van Gonten & Co., (d) LaRoche
Petroleum Consultants, Ltd., (e) DeGolyer and MacNaughton, (f) Gafney, Cline &
Associates and (g) at the Borrower’s option, any other independent petroleum
engineers selected by the Borrower upon written notice to the Administrative
Agent and the Lenders and not objected to in a writing to the Administrative
Agent from the Majority Lenders within ten (10) Business Days of the Borrower
providing such written notice; provided that such Approved Petroleum Engineer
shall at all times be the same independent petroleum engineers that audits or
reviews the reserve reports in connection with the Borrower’s SEC filings.

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“Assignment and Acceptance” shall mean an assignment and acceptance
substantially in the form of Exhibit G or such other form as may be approved by
the Administrative Agent.
“Authorized Officer” shall mean as to (a) any Agent, any officer within the
department of such Agent administering this matter, including any vice
president, assistant vice president, senior associate, assistant secretary,
assistant treasurer, trust officer or any other officer of such Agent who
customarily performs functions similar to those performed by the Persons who at
the time shall be such officers, respectively, or to whom any such matter is
referred because of such person’s knowledge of and familiarity with the
particular subject and who shall have direct responsibility for the
administration of this Agreement; and (b) any other Person, the President, the
Chief Executive Officer, the Chief Financial Officer, the Chief Operating
Officer, the Treasurer, the Assistant or Vice Treasurer, the Executive Vice
President-Finance, the General Counsel, any Senior Vice President, any Executive
Vice President, and any manager, managing member or general partner, in each
case, of such Person, and any other senior officer designated as such in writing
to the Administrative Agent by such Person.  Any document delivered hereunder
that is signed by an Authorized Officer shall be conclusively presumed to have
been authorized by all necessary corporate, limited liability company,
partnership and/or other action on the part of the Borrower or any other Credit
Party and such Authorized Officer shall be conclusively presumed to have acted
on behalf of such Person.
“Available Amount” shall mean, at any time after the first day of the first full
fiscal quarter after the first anniversary of the Effective Date (the “Available
Amount Reference Time”), an amount equal to, without duplication,
(a)    the sum, without duplication, of:
(i)    50% of the Consolidated Net Income accrued during the period (treated as
one accounting period) beginning on the first day of the first full fiscal
quarter after the first anniversary of the Effective Date to the end of the most
recent fiscal quarter ending prior to the Available Amount Reference Time for
which consolidated financial statements of the Borrower are available (or, in
case such Consolidated Net Income shall be a negative number, 100% of such
negative number),
(ii)    returns, profits, distributions and similar amounts received in cash or
Cash Equivalents by Borrower or a Guarantor on Investments made using the
Available Amount,
(iii)    the aggregate Net Cash Proceeds and the fair value (as determined in
good faith by the Borrower) of property or assets received (x) by the Borrower
as capital contributions to the Borrower on or after the first day of the full
fiscal quarter after the first anniversary of the Effective Date or from the
issuance or sale

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(other than to a Subsidiary) of its Stock (other than Disqualified Stock) on or
after the first day of the first full fiscal quarter after the first anniversary
of the Effective Date (other than to the extent applied to increase Consolidated
EBITDAX) or (y) by the Borrower or any Subsidiary from the incurrence by the
Borrower or any Subsidiary on or after the first day of the first full fiscal
quarter after the first anniversary of the Effective Date of Indebtedness that
shall have been converted into or exchanged for Stock of the Borrower (other
than Disqualified Stock) or Stock, plus the amount of any cash and the Fair
Market Value (as determined in good faith by the Borrower) of any property or
assets, received by the Borrower or any Subsidiary upon such conversion or
exchange;
(iv)    in the case of any disposition or repayment of any Investment made using
the Available Amount (without duplication of any amount deducted in calculating
the amount of Investments at any time outstanding under Section 11.5), the
aggregate amount of cash and the Fair Market Value (as determined in good faith
by the Borrower) of any property or assets received by the Borrower or a
Subsidiary with respect to all such dispositions and repayments; minus
(b)    the sum, without duplication, of:
(i)    the aggregate amount of any Investments made by the Borrower or any
Subsidiary pursuant to Section 11.5(b)(viii) on or after the first day of the
first full fiscal quarter after the first anniversary of the Effective Date, and
prior to the Available Amount Reference Time;
(ii)    the aggregate amount of any Restricted Payments made by the Borrower
pursuant to Section 11.6(a) on or after the first day of the first full fiscal
quarter after the first anniversary of the Effective Date, and prior to the
Available Amount Reference Time; and
(iii)    the aggregate amount of prepayments, repurchases, redemptions and
defeasances made by the Borrower or any Subsidiary pursuant to Section
11.7(b)(iii) on or after the first day of the first full fiscal quarter after
the first anniversary of the Effective Date and prior to the Available Amount
Reference Time;
provided, the Available Amount shall not include any (x) Equity Funded
Investment used pursuant to Section 11.5(b)(viii) or (y) Equity Funded
Prepayments used pursuant to Section 11.7(b)(iii).
Concurrently with the consummation of any transaction effected pursuant to
Section 11.5(b)(viii), Section 11.6(l) or Section 11.7(a)(iii) using all or any
portion of the Available Amount, the Borrower shall provide to the
Administrative Agent a certificate of an Authorized Officer of the

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Borrower setting forth in reasonable detail the Available Amount as of the end
of the most recent fiscal year for which financial statements have been provided
pursuant to Section 10.1.
“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 Code” shall have the meaning provided in Section 12.5.
“Bankruptcy Event” means, with respect to any Person, such Person 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 or the Majority Lenders, 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, unless such ownership interest results in or provides
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 permits such Person (or such Governmental Authority or instrumentality) to
reject, repudiate, disavow or disaffirm any contracts or agreements made by such
Person.
“Benefited Lender” shall have the meaning provided in Section 14.8(a).
“Board” shall mean the Board of Governors of the Federal Reserve System of the
United States (or any successor).
“Board of Directors” shall mean, as to any Person, the board of directors or
other governing body of such Person, or if such Person is owned or managed by a
single entity, the board of directors or other governing body of such entity.
“Bookrunner” shall mean Goldman Sachs Bank USA in its capacity as bookrunner in
respect of the Facility.
“Borrower” shall have the meaning provided in the introductory paragraph hereto.
“Borrower Materials” shall have the meaning provided in Section 10.1.

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“Borrowing” shall mean the incurrence of one Type of Loan on a given date (or
resulting from conversions on a given date) having, in the case of LIBOR Loans,
the same Interest Period (provided that ABR Loans incurred pursuant to
Section 2.11(b) shall be considered part of any related Borrowing of LIBOR
Loans) and shall include a borrowing of Loans.
“Borrowing Base” shall mean, with respect to borrowings under the First Lien
First Out Credit Agreement and any Permitted Refinancing Indebtedness in the
form of a reserve-based borrowing base credit facility with lenders that include
commercial banks that is issued or incurred to Refinance any such Indebtedness
or commitments thereunder, the maximum amount in United States dollars
determined or re-determined by the lenders under the First Lien First Out Credit
Agreement or such Permitted Refinancing Indebtedness as the aggregate lending
value to be ascribed to the Oil and Gas Properties of the Credit Parties against
which such lenders are prepared to provide loans to the Credit Parties using
their customary practices and standards for determining reserve-based borrowing
base loans and which are generally applied to borrowers in the oil and gas
business, as determined semi-annually during each year and/or on such other
occasions as may be required therein.
“Business Day” shall mean any day excluding Saturday, Sunday and any other day
on which banking institutions in New York City or Los Angeles, California are
authorized by law or other governmental actions to close, and, if such day
relates to (a) any interest rate settings as to a LIBOR Loan, (b) any fundings,
disbursements, settlements and payments in respect of any such LIBOR Loan, or
(c) any other dealings pursuant to this Agreement in respect of any such LIBOR
Loan, such day shall be a day on which dealings in deposits in Dollars are
conducted by and between banks in the London interbank eurodollar market.
“Capital Expenditures” shall mean, for any period, the aggregate of all
expenditures (whether paid in cash or accrued as liabilities and including in
all events all amounts expended or capitalized under Capital Leases) by the
Borrower and the Subsidiaries during such period that, in conformity with GAAP,
are or are required to be included as capital expenditures on a consolidated
statement of cash flows of the Borrower and its Subsidiaries.
“Capital Lease” shall mean, as applied to any Person, any lease of any property
(whether real, personal or mixed) by that Person as lessee that, in conformity
with GAAP, is, or is required to be, accounted for as a capital lease on the
balance sheet of that Person.
“Capitalized Lease Obligations” shall mean, as applied to any Person, all
obligations under Capital Leases of such Person or any of its Subsidiaries, in
each case taken at the amount thereof accounted for as liabilities in accordance
with GAAP.
“Cash Equivalents” means any of the following:

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(a)    U.S. dollars;
(b)    securities issued or directly and fully and unconditionally guaranteed or
insured by the U.S. government or any agency or instrumentality thereof, the
securities of which are unconditionally guaranteed as a full faith and credit
obligation of such government, with maturities of two (2) years or less from the
date of acquisition;
(c)    certificates of deposit, time deposits and eurodollar time deposits with
maturities of three (3) years or less from the date of acquisition, demand
deposits, bankers’ acceptances with maturities not exceeding three (3) years and
overnight bank deposits, in each case with any domestic or foreign commercial
bank having capital and surplus of not less than $250.0 million in the case of
U.S. banks and $100.0 million (or the U.S. dollar equivalent as of the date of
determination) in the case of non-U.S. banks (any such bank in the foregoing an
“Approved Bank”);
(d)    repurchase obligations for underlying securities of the types described
in clauses (b) and (c) above or clauses (f) and (g) below entered into with any
Approved Bank or recognized securities dealer meeting the qualifications
specified in clause (c) above;
(e)    commercial paper and variable or fixed rate notes issued by an Approved
Bank (or by the parent company thereof) or any commercial paper or variable or
fixed rate note issued by, or guaranteed by, a corporation (other than
structured investment vehicles and other than corporations used in structured
financing transactions) rated at least P-2 (or the equivalent thereof) or A-2
(or the equivalent thereof) from either Moody’s or S&P (or, if at any time
neither Moody’s nor S&P shall be rating such obligations, an equivalent rating
from another nationally recognized statistical rating agency selected by the
Borrower) and in each case maturing within thirty-six (36) months after the date
of acquisition thereof;
(f)    marketable short-term money market and similar liquid funds having either
(i) assets in excess of $500.0 million or (ii) a rating of at least P-2 (or the
equivalent thereof) or A-2 (or the equivalent thereof) from either Moody’s or
S&P, respectively (or, if at any time neither Moody’s nor S&P shall be rating
such obligations, an equivalent rating from another nationally recognized
statistical rating agency selected by the Borrower);
(g)    readily marketable direct obligations issued or fully Guaranteed by any
state, commonwealth or territory of the U.S. or any political subdivision or
taxing authority thereof; provided that each such readily marketable direct
obligation shall have an rating of Baa3 with a stable or better outlook by
Moody’s or BBB- with a stable or better outlook by S&P (or, if at any time
neither Moody’s nor S&P shall be rating such obligations, an equivalent rating
from another nationally recognized statistical rating agency selected by the
Borrower) with maturities of two (2) years or less from the date of acquisition;

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(h)    Investments with average maturities of eighteen (18) months or less from
the date of acquisition in money market funds rated AAA- (or the equivalent
thereof) or better by S&P or Aaa3 (or the equivalent thereof) or better by
Moody’s (or, if at any time neither Moody’s nor S&P shall be rating such
obligations, an equivalent rating from another nationally recognized statistical
rating agency selected by the Borrower);
(i)    investment funds investing substantially all of their assets in
securities of the types described in clauses (a) through (h) above; and
(j)    Indebtedness or preferred stock issued by Persons with a rating of A or
higher from S&P and A-2 from Moody’s with maturities of two (2) years or less
from the date of acquisition.
“Casualty Event” shall mean, with respect to any Collateral, (a) any damage to,
destruction of, or other casualty or loss involving, any property or asset or
(b) any seizure, condemnation, confiscation or taking under the power of eminent
domain of, or any requisition of title or use of, or relating to, or any similar
event in respect of, any property or asset.
“CERCLA” shall mean the Comprehensive Environmental Response, Compensation, and
Liability Act, 42 U.S.C. § 9601 et seq.
“CFC” shall mean a “controlled foreign corporation” within the meaning of
Section 957 of the Code.
“Change in Law” shall mean the occurrence after the date of this Agreement of
any of the following: (a) the adoption of any law, rule, regulation or treaty,
(b) any change in any law, rule, regulation or treaty or in the interpretation,
implementation or application thereof by any Governmental Authority or
(c) compliance by any Lender (or, for purposes of clauses (a)(ii) or (c) of
Section 2.11, by any lending office of such Lender or by such Lender’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,
(x) the Dodd-Frank Wall Street Reform and Consumer Protection Act and all
requests, rules, guidelines or directives thereunder or issued in connection
therewith and (y) all requests, rules, guidelines or directives promulgated by
the Bank for International Settlements, the Basel Committee on Banking
Supervision (or any successor or similar authority) or the United States or
foreign regulatory authorities, in each case pursuant to Basel III, shall be
deemed to be a “Change in “Law”, regardless of the date enacted, adopted or
issued.
“Change of Control” shall mean and be deemed to have occurred if:

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(a)any Person, entity or “group” (within the meaning of Section 13(d) or
14(d) of the Exchange Act, but excluding any employee benefit plan of such
Person, entity or “group” and their respective Subsidiaries and any Person or
entity acting in its capacity as trustee, agent or other fiduciary or
administrator of any such plan), shall at any time have acquired direct or
indirect beneficial ownership (as defined in Rules 13(d)-3 and 13(d)-5 under the
Exchange Act) of voting power of the outstanding Voting Stock of the Borrower
having more than 35% of the ordinary voting power for the election of directors
of the Borrower; or
(b)a “Change of Control” shall occur under the First Lien First Out Credit
Agreement or the Senior Notes Documents.
“Class” refers to whether such Loans are Initial Loans or Incremental Loans not
designated part of another existing Class. Commitments (and, in each case, the
Loans made pursuant to such Commitments) that have different terms and
conditions shall be construed to be in different Classes. Commitments (and, in
each case, the Loans made pursuant to such Commitments) that have the same terms
and conditions shall be construed to be in the same Class.
“Code” shall mean the Internal Revenue Code of 1986, as amended from time to
time.
“Collateral” shall have the meaning provided for such term in each of the
Security Documents; provided that with respect to any Mortgages, “Collateral”,
as defined herein, shall include “Mortgaged Property” as defined therein.
“Collateral Agent” shall mean The Bank of New York Mellon Trust Company, N.A. or
any successor Collateral Agent.
“Collateral Requirements” shall mean, during a Credit Rating Trigger Period, the
collateral requirements set forth in Section 10.10 and in any other Security
Document including without limitation:
(a)a pledge by the Credit Parties of (i) 100% of the stock of each Subsidiary
that is a Domestic Subsidiary directly owned thereby and (ii) 66-2/3% of the
stock of each Subsidiary that is a Foreign Subsidiary directly owned thereby;
and
(b)with respect to substantially all other assets of the Credit Parties other
than Excluded Property, first priority, perfected liens and security interests
subject to one-action rule waivers (to the extent permitted by applicable law)
on such assets of the Credit Parties; provided that, (i) with respect to the
Borrower’s Oil and Gas Properties (other than Excluded Property), the Credit
Parties shall be required to deliver and maintain an Acceptable Security
Interest on not less than 85% (but shall not be required to deliver and maintain
an Acceptable

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Security Interest on more than 85%) of the PV-9 of the Proved Reserves evaluated
in the Reserve Report most recently delivered to the Administrative Agent and
(ii) with respect to all other assets other than Excluded Property, the Credit
Parties shall not be required to take any action to perfect a lien on any such
assets securing the Facilities unless such perfection may be accomplished by (A)
the filing of a UCC-1 financing statement in the obligor’s jurisdiction of
formation, (B) delivery of certificates representing any pledged equity
consisting of certificated securities, in each case, with appropriate
endorsements or transfer powers, (C) granting the Collateral Agent control
(within the meaning of the Uniform Commercial Code) over any pledged equity
consisting of uncertificated securities or (D) prior to the Discharge of the
First Lien First Out Obligations, granting the Collateral Agent control (within
the meaning of the Uniform Commercial Code) over any deposit accounts (other
than Excluded Deposit Accounts) by entering into a deposit account control
agreement with the Collateral Agent and the account bank for such deposit
account; provided, further, that such assets may be subject to Liens permitted
under Section 11.2, and provided, further, that with respect to assets of the
Credit Parties that are not subject to an Acceptable Security Interest of the
Collateral Agent on or after the Effective Date, the Credit Parties shall not be
required to grant such Acceptable Security Interest on such assets until such
Acceptable Security Interest has been granted with respect to the First Lien
First Out Facility, or if no First Lien First Out Facility is then outstanding,
until 60 days after the date first acquired or received by the Borrower or a
Subsidiary Guarantor (or Person required to become a Guarantor pursuant to
Section 10.10(b)), as applicable or as soon as practicable thereafter using
commercially reasonable efforts (but in any event within one hundred twenty
(120) days); and provided, further, that no intention to subordinate the first
priority Lien of the Collateral Agent and the Secured Parties pursuant to the
Security Documents is to be hereby implied or expressed by the permitted
existence of such Permitted Liens. Prior to the Discharge of the First Lien
First Out Obligations, the Collateral Requirements set forth in items (b)(B)-(D)
hereof shall be satisfied by delivery of, or the grant of control to, as
applicable, the First Lien First Out Administrative Agent.
“Commitment” shall mean, with respect to each Lender, the amount set forth
opposite its name on Schedule 2.1(a) as such Lender’s “Commitment”. The
aggregate amount of the Commitments as of the Effective Date is $1,000,000,000.
“Confidential Information” shall have the meaning provided in Section 14.16.
“Consolidated First Lien First Out Secured Debt” shall have the meaning given to
such term in the First Lien First Out Credit Agreement as in existence on the
First Lien First Out Fifth Amendment Effective Date.

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“Consolidated EBITDAX” shall mean, for any period, for the Borrower and its
Subsidiaries on a consolidated basis, an amount equal to Consolidated Net Income
for such period plus (a) the following to the extent deducted in calculating
such Consolidated Net Income: (i) Consolidated Interest Charges for such period,
(ii) an amount equal to the provision for federal, state, and local income and
franchise taxes payable or to become payable by the Borrower and its
Subsidiaries for such period, (iii) depletion, depreciation, amortization and
exploration expense for such period (including all drilling, completion,
geological and geophysical costs), (iv) losses from asset Dispositions
(excluding Hydrocarbons Disposed of in the ordinary course of business), (v) all
other non-cash items reducing such Consolidated Net Income for such period, and
(vi) extraordinary or non-recurring losses for such period, and minus (b) the
following to the extent included in calculating such Consolidated Net Income:
(i) federal, state and local income tax credits of the Borrower and its
Subsidiaries for such period, (ii) gains from asset Dispositions (excluding
Hydrocarbons Disposed of in the ordinary course of business), (iii) all other
non-cash items increasing Consolidated Net Income for such period and (iv)
extraordinary or non-recurring gains for such period.
“Consolidated Interest Charges” shall mean, for any period, for the Borrower and
its Subsidiaries on a consolidated basis, the sum of (a) all interest, premium
payments, debt discount, fees, charges and related expenses of the Borrower and
its Subsidiaries for such period in connection with borrowed money (including
capitalized interest for such period) or in connection with the deferred
purchase price of assets, in each case to the extent treated as interest in
accordance with GAAP and (b) the portion of rent expense of the Borrower and its
Subsidiaries with respect to such period under capital leases that is treated as
interest in accordance with GAAP; provided, that Consolidated Interest Charges
shall not include non-cash interest and amortization of original issue discount
on the Permitted Junior Indebtedness; provided, further, that Consolidated
Interest Charges shall include interest which is paid in kind.
“Consolidated Net Income” shall mean, for any period, for the Borrower and its
Subsidiaries on a consolidated basis, the net income of the Borrower and its
Subsidiaries (excluding extraordinary gains and extraordinary losses and the net
income of any Person (other than the Borrower or a Subsidiary) in which the
Borrower and its Subsidiaries own any Stock or Stock Equivalents for that
period, except to the extent of the amount of dividends and distributions
actually received by the Borrower or a Subsidiary), provided that the
calculation of Consolidated Net Income shall exclude any non-cash charges or
losses and any non-cash income or gains, in each case, required to be included
in net income of the Borrower and its Subsidiaries as a result of the
application of FASB Accounting Standards Codifications 718, 815, 410 and 360,
but shall expressly include any cash charges or payments that have been incurred
as a result of the termination of any Hedge Agreement.
“Consolidated Total Assets” shall mean, as of any date of determination, the
amount that would, in conformity with GAAP, be set forth opposite the caption
“total assets” (or any like caption) on a consolidated balance sheet of the
Borrower and the Subsidiaries at such date.

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“Contractual Requirement” shall have the meaning provided in Section 9.3.
“Credit Documents” shall mean this Agreement, the Guarantee, any promissory
notes issued by the Borrower under this Agreement and during any Credit Rating
Trigger Period, the Security Documents.
“Credit Event” shall mean and include the making (but not the conversion or
continuation) of a Loan.
“Credit Party” shall mean each of the Borrower and the Guarantors.
“Credit Rating” shall mean the corporate credit rating of the Borrower issued by
S&P or the corporate family rating of the Borrower issued by Moody’s, as
applicable.
“Credit Rating Trigger Event” shall mean (a) the public announcement by Moody’s
or S&P that the Borrower’s Credit Rating is either Ba1 or lower from (or is
unrated by) Moody’s or BB+ or lower from (or is unrated by) S&P or (b) the
Borrower or one of its Subsidiaries creates, assumes or suffers to exist an
Enumerated Lien (as defined in the First Lien First Out Credit Agreement as in
existence on the First Lien First Out Fifth Amendment Effective Date).
“Credit Rating Trigger Period” shall mean (a) the first Business Day following a
Credit Rating Trigger Event until the first Business Day on which (i) the
Borrower’s Credit Rating is Baa3 with a stable or better outlook, or higher,
from Moody’s and is BBB- with a stable or better outlook, or higher, from S&P
and (ii) all Enumerated Liens (as defined in the First Lien First Out Credit
Agreement as in existence on the First Lien First Out Fifth Amendment Effective
Date) are released; or (b) the period commencing with the date on which the
Borrower elects under Section 14.18 to have this Agreement subject to the Credit
Rating Trigger Period provisions contained herein and ending on any date on
which the Borrower has elected to cease to have such facility subject to such
provisions contained herein, provided, that on such date, no Credit Rating
Trigger Event is in effect.
“Default” shall mean any event, act or condition that with notice or lapse of
time, or both, would constitute an Event of Default.
“Default Rate” shall have the meaning provided in Section 2.9(c).
“Defaulting Lender” shall mean any Lender whose acts or failure to act, whether
directly or indirectly, cause it to meet any part of the definition of “Lender
Default”.
“Designated Non-Cash Consideration” means the Fair Market Value of non-cash
consideration received by the Borrower or its Subsidiaries in connection with a
Disposition pursuant to Section 11.4(a)(xv)that is designated as Designated
Non-Cash Consideration pursuant to a certificate of an Authorized Officer,
setting forth the basis of such valuation minus the Fair Market

14

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Value of the portion of the non-cash consideration converted to cash or Cash
Equivalents within three hundred sixty-five (365) days following the
consummation of the applicable Disposition.
“Development Joint Venture” shall mean an incorporated or unincorporated
partnership, or other jointly owned enterprise or entity or a joint venture or
contractual relationship (even if not a partnership or joint venture) to which
the Borrower or a Subsidiary is a party which has been formed for the purpose of
exploring for and/or developing Oil and Gas Properties, where each of the
parties thereto have either contributed or agreed to contribute cash, services,
Oil and Gas Properties, other assets, or any combination of the foregoing.
“Discharge of First Lien First Out Obligations” shall mean the “Discharge of
First-Out Obligations” as defined in the First Lien Intercreditor Agreement.
“Disposition” shall have the meaning provided in Section 11.4(a).  “Dispose”
shall have a correlative meaning.
“Disqualified Stock” shall mean, with respect to any Person, any Stock or Stock
Equivalents of such Person which, by its terms, or by the terms of any security
into which it is convertible or for which it is putable or exchangeable, or upon
the happening of any event, matures or is mandatorily redeemable (other than
solely for Stock or Stock Equivalents that is not Disqualified Stock), other
than as a result of a change of control or asset sale, pursuant to a sinking
fund obligation or otherwise, or is redeemable at the option of the holder
thereof (other than as a result of a change of control or asset sale to the
extent the terms of such Stock or Stock Equivalents provide that such Stock or
Stock Equivalents shall not be required to be repurchased or redeemed until the
Maturity Date has occurred or such repurchase or redemption is otherwise
permitted by this Agreement (including as a result of a waiver hereunder)), in
whole or in part, in each case prior to the date that is 91 days after the
Maturity Date hereunder; provided that, if such Stock or Stock Equivalents are
issued to any plan for the benefit of employees of the Borrower or its
Subsidiaries or by any such plan to such employees, such Stock or Stock
Equivalents shall not constitute Disqualified Stock solely because it may be
required to be repurchased by the Borrower or its Subsidiaries in order to
satisfy applicable statutory or regulatory obligations; provided, further, that
any Stock or Stock Equivalents held by any future, present or former employee,
director, manager or consultant of the Borrower, any of its Subsidiaries or any
of its direct or indirect parent companies or any other entity in which the
Borrower or a Subsidiary has an Investment and is designated in good faith as an
“affiliate” by the board of directors or managers of the Borrower, in each case
pursuant to any equity holders’ agreement, management equity plan or stock
incentive plan or any other management or employee benefit plan or agreement
shall not constitute Disqualified Stock solely because it may be required to be
repurchased by the Borrower or its Subsidiaries.

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“Disregarded Entity” shall mean any Domestic Subsidiary that is disregarded for
U.S. federal income tax purposes.
“Dollars” and “$” shall mean dollars in lawful currency of the United States of
America.
“Domestic Subsidiary” shall mean each Subsidiary of the Borrower that is
organized under the laws of the United States or any state thereof, or the
District of Columbia.
“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” shall mean the date on which the conditions set forth in
Articles VI and VIII are satisfied (or waived in accordance with Section 14.1)
and amounts are drawn under this Agreement by the Borrower.
“Environmental Claims” shall mean any and all actions, suits, orders, decrees,
demands, demand letters, claims, liens, notices of noncompliance, violation or
potential responsibility or investigation (other than internal reports prepared
by or on behalf of the Borrower or any of the Subsidiaries (a) in the ordinary
course of such Person’s business or (b) as required in connection with a
financing transaction or an acquisition or disposition of real estate) or
proceedings arising under or based upon any applicable Environmental Law or any
permit issued, or any approval given, under any such Environmental Law
(hereinafter, “Claims”), including, without limitation, (i) any and all Claims
by governmental or regulatory authorities for enforcement, cleanup, removal,
response, remedial or other actions or damages pursuant to any applicable
Environmental Law and (ii) any and all Claims by any third party seeking
damages, contribution, indemnification, cost recovery, compensation or
injunctive relief relating to the presence, release or threatened release of
Hazardous Materials or arising from alleged injury or threat of injury to health
or safety (to the extent relating to human exposure to Hazardous Materials), or
the environment including, without limitation, ambient air, surface water,
groundwater, land surface and subsurface strata and natural resources such as
wetlands.

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“Environmental Law” shall mean any applicable Federal, state, or local statute,
law (including, without limitation, common law), rule, regulation, ordinance, or
code of any Governmental Authority now or hereafter in effect and in each case
as amended, and any binding judicial or administrative interpretation thereof,
including any binding judicial or administrative order, consent decree or
judgment, relating to the protection of the environment, including, without
limitation, ambient air, surface water, groundwater, land surface and subsurface
strata and natural resources such as wetlands, or human health or workplace
safety (to the extent relating to human exposure to Hazardous Materials), or the
release or threatened release of Hazardous Materials.
“Equity Funded Investment” shall have the meaning provided in Section
11.5(b)(viii).
“Equity Funded Prepayment” shall have the meaning provided in Section
11.7(b)(iii).
“ERISA” shall mean the Employee Retirement Income Security Act of 1974, as
amended from time to time. Section references to ERISA are to ERISA as in effect
on the Effective Date and any subsequent provisions of ERISA amendatory thereof,
supplemental thereto or substituted therefor.
“ERISA Affiliate” shall mean each person (as defined in Section 3(9) of ERISA)
that together with the Borrower would be deemed to be a “single employer” within
the meaning of Section 414(b) or (c) of the Code or, solely for purposes of
Section 302 of ERISA and Section 412 of the Code, is treated as a single
employer under Section 414 of the Code.
“Escrow Account” means the escrow account established in order to repay the
revolving facility under the First Lien First Out Credit Agreement which shall
be governed by an agreement substantially in the form attached hereto as Exhibit
K.
“Escrow Agreement” means the agreement establishing the Escrow Account.
“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” shall have the meaning provided in Article XII.
“Excess Cash Proceeds” shall have the meaning provided in Section 11.4(b).
“Exchange Act” shall mean the Securities Exchange Act of 1934, as amended, and
the rules and regulations promulgated thereunder.
“Exchange Rate” shall mean on any day with respect to any currency (other than
Dollars), the rate at which such currency may be exchanged into any other
currency (including Dollars), as set forth at approximately 11:00 a.m. (London
time) on such day on the Reuters World Currency

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Page for such currency.  In the event that such rate does not appear on any
Reuters World Currency Page, the Exchange Rate shall be determined by reference
to such other publicly available service for displaying exchange rates as may be
determined by the Borrower in its reasonable discretion, at or about 11:00 a.m.,
local time, on such date for the purchase of the relevant currency for delivery
two (2) Business Days later.
“Excluded Deposit Account” shall mean deposit accounts the balance of which
consists exclusively of (a) 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, (b) 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 and (c) amounts set aside for
payroll and the payment of accrued employee benefits, medical, dental and
employee benefits claims to employees of the Borrower or any Subsidiary.
“Excluded Hedges” shall mean Hedge Agreements that (i) are basis differential
only swaps for volumes of crude oil and natural gas included under other Hedge
Agreements permitted by Section 11.10(a) or (ii) are a hedge of volumes of crude
oil or natural gas by means of a put or a price “floor” for which there exists
no mark-to-market exposure to the Borrower.
“Excluded Property” shall mean (a) all Excluded Stock, (b) any property to the
extent the grant or maintenance of a Lien on such property (i) is prohibited by
applicable law, (ii) could reasonably be expected to result in material adverse
tax consequences to the Borrower or any Subsidiary of the Borrower, (iii)
requires a consent not obtained of any Governmental Authority pursuant to
applicable law or (iv) is prohibited by, or constitutes a breach or default
under or results in the termination of or requires any consent not obtained
under, any contract, license, agreement, instrument or other document evidencing
or giving rise to such property, except to the extent that such term in such
contract, license, agreement, instrument or other document or similar agreement
providing for such prohibition, breach, default or termination or requiring such
consent is ineffective under applicable law (including without limitation,
pursuant to Section 9‑406, 9‑407, 9‑408 or 9‑409 of the New York Uniform
Commercial Code), (c) motor vehicles and other assets subject to certificates of
title, (d) trust accounts, payroll accounts, zero balance accounts and escrow
accounts, in each case for so long as they remain such type of account, and (e)
any property as to which the Administrative Agent (at the written direction of
the Majority Lenders) and the Borrowers agree in writing that the costs of
obtaining a security interest in, or Lien on, such property, or perfection
thereof, are excessive in relation to the value to the Secured Parties of the
security interest afforded thereby.
“Excluded Stock” shall mean (a) any Stock or Stock Equivalents with respect to
which, in the reasonable judgment of the Borrower (and not reasonably objected
to by the Majority Lenders

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in writing by notice to the Administrative Agent), the cost or other
consequences of pledging such Stock or Stock Equivalents in favor of the Secured
Parties under the Security Documents shall be excessive in view of the benefits
to be obtained by the Secured Parties therefrom, (b) solely in the case of any
pledge of Stock or Stock Equivalents of any Foreign Corporate Subsidiary or
FSHCO to secure the Obligations, any Stock or Stock Equivalents that is Voting
Stock of such Foreign Corporate Subsidiary or FSHCO in excess of 66% of the
outstanding Stock and Stock Equivalents of such class and, solely in the case of
a pledge of Stock or Stock Equivalents of any Disregarded Entity substantially
all of whose assets consist of Stock and Stock Equivalents of Foreign Corporate
Subsidiaries to secure the Obligations, any Stock or Stock Equivalents of such
Disregarded Entity in excess of 66% of the outstanding Stock and Stock
Equivalents of such entity (such percentages to be adjusted upon any change of
law as may be required to avoid adverse U.S. federal income tax consequences to
the Borrower or any Subsidiary), (c) any Stock or Stock Equivalents to the
extent the pledge thereof would be prohibited by any Requirement of Law, (d) in
the case of (i) any Stock or Stock Equivalents of any Subsidiary to the extent
the pledge of such Stock or Stock Equivalents is prohibited by Contractual
Requirements or (ii) any Stock or Stock Equivalents of any Subsidiary that is
not wholly owned by the Borrower and its Subsidiaries at the time such
Subsidiary becomes a Subsidiary, any Stock or Stock Equivalents of each such
Subsidiary described in clause (i) or (ii) to the extent (A) that a pledge
thereof to secure the Obligations is prohibited by any applicable Contractual
Requirement (other than customary non-assignment provisions which are
ineffective under the Uniform Commercial Code or other applicable Requirements
of Law), (B) any Contractual Requirement prohibits such a pledge without the
consent of any other party; provided that this clause (B) shall not apply if
(1) such other party is a Credit Party or a wholly owned Subsidiary or
(2) consent has been obtained to consummate such pledge (it being understood
that the foregoing shall not be deemed to obligate the Borrower or any
Subsidiary to obtain any such consent)) and for so long as such Contractual
Requirement or replacement or renewal thereof is in effect, or (C) a pledge
thereof to secure the Obligations would give any other party (other than a
Credit Party or a wholly owned Subsidiary) to any Contractual Requirement
governing such Stock or Stock Equivalents the right to terminate its obligations
thereunder (other than customary non-assignment provisions that are ineffective
under the Uniform Commercial Code or other applicable Requirement of Law), (e) 
the Stock or Stock Equivalents of any Subsidiary that is not a Material
Subsidiary, (f) the Stock or Stock Equivalents of any Subsidiary of a Foreign
Corporate Subsidiary, (g) any Stock or Stock Equivalents of any Subsidiary to
the extent that the pledge of such Stock or Stock Equivalents would result in
material adverse tax consequences to the Borrower or any Subsidiary as
reasonably determined by the Borrower and (h) any Stock or Stock Equivalents set
forth on Schedule 1.1(e) which have been identified on or prior to the Effective
Date in writing to the Administrative Agent by an Authorized Officer of the
Borrower.
“Excluded Subsidiary” shall mean (a) each Domestic Subsidiary that is not a
wholly owned Subsidiary on any date such Subsidiary would otherwise be required
to become a Guarantor pursuant

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to the requirements of Section 10.10 (for so long as such Subsidiary remains a
non-wholly owned Subsidiary) (provided that no existing Guarantor shall become
an Excluded Subsidiary pursuant to this clause (a) if such Guarantor
subsequently becomes a non-wholly owned Subsidiary), (b) any Disregarded Entity
substantially all the assets of which consist of Stock and Stock Equivalents of
Foreign Corporate Subsidiaries, (c) each Domestic Subsidiary that is prohibited
by any applicable Contractual Requirement or Requirement of Law from
guaranteeing or granting Liens to secure the Obligations at the time such
Subsidiary becomes a Subsidiary (and for so long as such restriction or any
replacement or renewal thereof is in effect) or that would require consent,
approval, license or authorization of a Governmental Authority to guarantee or
grant Liens to secure the Obligations at the time such Subsidiary becomes a
Subsidiary (unless such consent, approval, license or authorization has been
received), (d) each Domestic Subsidiary that is a Subsidiary of a Foreign
Corporate Subsidiary, (e) each other Domestic Subsidiary acquired pursuant to a
Permitted Acquisition financed with secured Indebtedness incurred pursuant to
Section 11.1(i) and permitted by the proviso to subclause (C) of Section 11.1(i)
and each Subsidiary thereof that guarantees such Indebtedness to the extent and
so long as the financing documentation relating to such Permitted Acquisition to
which such Subsidiary is a party prohibits such Subsidiary from guaranteeing or
granting a Lien on any of its assets to secure the Obligations and (f) any other
Domestic Subsidiary with respect to which, (x) in the reasonable judgment of the
Borrower (and not reasonably objected to by the Majority Lenders in writing by
notice to the Administrative Agent), the cost or other consequences of providing
a Guarantee of the Obligations shall be excessive in view of the benefits to be
obtained by the Lenders therefrom or (y) providing such a Guarantee would result
in material adverse tax consequences as reasonably determined by the Borrower.
“Excluded Taxes” shall mean, with respect to the Administrative Agent, any
Lender or any other recipient of any payment to be made by or on account of any
obligation of any Credit Party hereunder or under any other Credit Document,
(i) Taxes imposed on or measured by its overall net income or branch profits
(however denominated, and including (for the avoidance of doubt) any backup
withholding in respect thereof under Section 3406 of the Code or any similar
provision of state, local or foreign law), and franchise (and similar) Taxes
imposed on it (in lieu of net income Taxes), in each case by a jurisdiction
(including any political subdivision thereof) as a result of such recipient
being organized in, having its principal office in, or in the case of any
Lender, having its applicable lending office in, such jurisdiction, or as a
result of any other present or former connection with such jurisdiction (other
than any such connection arising solely from this Agreement or any other Credit
Documents or any transactions contemplated thereunder), (ii) in the case of a
Non-U.S. Lender, any United States federal withholding Tax imposed on any
payment by or on account of any obligation of any Credit Party hereunder or
under any other Credit Document that (A) is required to be imposed on amounts
payable to such Non-U.S. Lender pursuant to laws in force at the time such
Non-U.S. Lender becomes a party hereto (or designates a new lending office),
except to the extent that such Non-U.S. Lender (or its assignor, if any) was
entitled, immediately prior to

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the designation of a new lending office (or assignment), to receive additional
amounts or indemnification payments from any Credit Party with respect to such
withholding Tax pursuant to Section 5.4 or (B) is attributable to such Non-U.S.
Lender’s failure to comply with Section 5.4(e) or Section 5.4(i) or (iii) any
United States federal withholding Tax imposed under FATCA.
“Existing Intercreditor Agreement” shall mean the Intercreditor Agreement among
JPMorgan Chase Bank, N.A., as priority lien agent, The Bank of New York Mellon
Trust Company, N.A., as second lien collateral agent, and the other parties from
time to time party thereto, dated as of December 15 2015, as it may be amended,
restated, supplemented or otherwise modified from time to time.
“Existing Notes” shall have the meaning provided in the definition of Tender
Offer.
“Existing Second Lien Notes” shall mean the Borrower’s 8.00% Senior Secured
Second Lien Notes due 2022 outstanding on the Effective Date under the indenture
governing the existing Existing Second Lien Notes.
“Exposure” shall mean, with respect to any Lender at any time, the outstanding
principal amount of such Lender’s Loans.
“Facility” shall mean the Commitments and the Loans made thereunder.
“Fair Market Value” shall mean, with respect to any asset or group of assets on
any date of determination, the value of the consideration obtainable in a
Disposition of such asset at such date of determination assuming a Disposition
by a willing seller to a willing purchaser dealing at arm’s length and arranged
in an orderly manner over a reasonable period of time having regard to the
nature and characteristics of such asset, as reasonably determined by the
Borrower.
“Fall-Away” shall have the meaning given to such term in Section 14.25.
“farm-in” or “farm-out” shall have the meaning commonly given to such terms in
the oil and gas industry, and without limiting the foregoing, shall expressly
include transactions involving assignments or other dispositions of all or part
of oil, natural gas or mineral interests in which the assignor or other
disposing party retains an interest in consideration of the assignee or other
disposing party assuming or undertaking obligations with respect to such
interests, including cost reimbursement and/or agreements to perform services in
connection with the development of the relevant assets.
“FATCA” shall mean 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 thereunder or official interpretations thereof and any
agreements entered into pursuant to Section 1471(b)(1) of the Code, any

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intergovernmental agreement entered into in connection with the implementation
of such Sections of the Code and any fiscal or regulatory legislation, rules or
practices adopted pursuant to such intergovernmental agreement.
“Federal Funds Effective Rate” shall mean, for any day, the weighted average of
the per annum rates on overnight federal funds transactions with members of the
Federal Reserve System on such day, 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 date that is a Business Day, the Federal Funds Effective Rate for such
day shall be the average rate (rounded upward, if necessary, to a whole multiple
of 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.
“Financial Performance Covenant” shall mean the covenant of the Borrower set
forth in Section 11.11.
“First Call Date” shall have the meaning given to such term in the definition of
“Make-Whole Amount.”
“First Lien Asset Coverage Ratio” shall mean as of the applicable June 30 or
December 31, the ratio of (a) the sum of (i) PV-10 and (ii) Hedge PV, in each
case as of such date to (b) the sum of the aggregate principal amount of all
Indebtedness for borrowed money that is secured by Liens and provides for
collateral recovery in respect of such Liens on an equal priority or greater
priority basis to the collateral recovery in respect of the Obligations.
“First Lien First Out Administrative Agent” shall mean JPMorgan Chase Bank, N.A.
(or any successor thereto), as the “Administrative Agent” as defined in the
First Lien First Out Credit Agreement.
“First Lien First Out Credit Agreement” shall mean the Credit Agreement dated as
of September 24, 2014, among the Borrower, as borrower, the Persons from time to
time party thereto as lenders, JP Morgan Chase, as administrative agent, and
others, as may be amended, refinanced or replaced from time to time.
“First Lien First Out Credit Documents” shall mean the “Credit Documents” as
defined in the First Lien First Out Credit Agreement.
“First Lien First Out Facility” shall mean each of the “Term Loan Facility” and
the “Revolving Facility”, each as defined in the First Lien First Out Credit
Agreement (and collectively, the “First Lien First Out Facilities”).

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“First Lien First Out Fifth Amendment” shall mean the Fifth Amendment to the
First Lien First Out Credit Agreement.
“First Lien First Out Fifth Amendment Effective Date” shall mean the “Effective
Date” as defined in the Fifth Amendment to the First Lien First Out Credit
Agreement.
“First Lien First Out Financial Performance Covenants” means the “Financial
Performance Covenants” as defined in the First Lien First Out Credit Agreement.
“First Lien First Out Obligations” shall have the meaning provided in clause (a)
of the term “Obligations” the First Lien First Out Credit Agreement.
“First Lien First Out Lenders” shall mean the “Lenders” as defined in the First
Lien First Out Credit Agreement.
“First Lien First Out Reserve Report” shall mean a “Reserve Report” as defined
in the First Lien First Out Credit Agreement.
“First Lien First Out Revolving Loan Limit” shall mean the “Revolving Loan
Limit” as defined in the First Lien First Out Credit Agreement.
“First Lien First Out Security Documents” shall mean the “Security Documents” as
defined in the First Lien First Out Credit Agreement.
"First Lien First Out Third Amendment Effective Date” shall mean the “Effective
Date” as defined in the Third Amendment to the First Lien First Out Credit
Agreement.
“First Lien Intercreditor Agreement” shall mean an intercreditor agreement
between the Collateral Agent and the First Lien First Out Administrative Agent
in the form of Exhibit I.
“Fixed Charges” shall mean the sum, without duplication, of:
(1)    Consolidated Interest Charges to the extent paid in cash (or accrued and
payable on a current basis in cash); plus
(2)    scheduled principal payments of any Indebtedness for borrowed money of
the Borrower and its Subsidiaries made or required to be made during such
period; plus
(3)    cash taxes paid by the Borrower and its Subsidiaries; minus
(4)    the consolidated interest income of the Borrower and its Subsidiaries for
such period, whether received or accrued, to the extent such income was included
in determining Consolidated Net Income.

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“Fixed Charge Coverage Ratio” shall mean, with respect to the Borrower and its
Subsidiaries as of any date, the ratio of (1) Consolidated EBITDAX of such
Person for the most recent Test Period preceding the date on which such
calculation of the Fixed Charge Coverage Ratio is made, calculated on a pro
forma basis for such period, to (2) the Fixed Charges of such Person for such
period calculated on a pro forma basis. In the event that the Borrower or any of
its Subsidiaries incurs or redeems or repays any Indebtedness (other than in the
case of revolving credit borrowings unless the related commitments have been
terminated and such Indebtedness has been permanently repaid and has not been
replaced), makes a Qualified Acquisition or Qualified Disposition or issues or
redeems preferred stock or Disqualified Stock subsequent to the commencement of
the period for which the Fixed Charge Coverage Ratio is being calculated but
prior to or simultaneously with the event for which the calculation of the Fixed
Charge Coverage Ratio is made, then the Fixed Charge Coverage Ratio shall be
calculated on a pro forma basis giving effect thereto from the beginning of the
period.
“Foreign Corporate Subsidiary” shall mean a Foreign Subsidiary that is treated
as a corporation for U.S. federal income tax purposes.
“Foreign Plan” shall mean any employee benefit plan, program, policy,
arrangement or agreement maintained or contributed to by the Borrower or any of
its Subsidiaries with respect to employees employed outside the United States.
“Foreign Subsidiary” shall mean each Subsidiary of the Borrower that is not a
Domestic Subsidiary.
“FSHCO” shall mean any direct or indirect Subsidiary that has no material assets
other than the Stock of one or more direct or indirect Foreign Corporate
Subsidiaries.
“Fund” shall mean any Person (other than a natural person) that is (or will be)
engaged in making, purchasing, holding or otherwise investing in commercial
loans and similar extensions of credit in the ordinary course.
“GAAP” shall mean United States generally accepted accounting principles, as in
effect from time to time.
“Governmental Authority” shall mean any nation, sovereign or government, any
state, province, territory or other political subdivision thereof, and any
entity or authority exercising executive, legislative, judicial, regulatory or
administrative functions of or pertaining to government, including a central
bank or stock exchange.
“Guarantee” shall mean the Guarantee made by any Guarantor in favor of the
Collateral Agent for the benefit of the Secured Parties, substantially in the
form of Exhibit B.

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“Guarantee Obligations” shall mean, as to any Person, any obligation of such
Person guaranteeing or intended to guarantee any Indebtedness of any other
Person (the “primary obligor”) in any manner, whether directly or indirectly,
including any obligation of such Person, whether or not contingent, (a) to
purchase any such Indebtedness or any property constituting direct or indirect
security therefor, (b) to advance or supply funds (i) for the purchase or
payment of any such Indebtedness or (ii) to maintain working capital or equity
capital of the primary obligor or otherwise to maintain the net worth or
solvency of the primary obligor, (c) to purchase property, securities or
services primarily for the purpose of assuring the owner of any such
Indebtedness of the ability of the primary obligor to make payment of such
Indebtedness or (d) otherwise to assure or hold harmless the owner of such
Indebtedness against loss in respect thereof; provided, however, that the term
“Guarantee Obligations” shall not include endorsements of instruments for
deposit or collection in the ordinary course of business or customary and
reasonable indemnity obligations in effect on the Effective Date or entered into
in connection with any acquisition or Disposition of assets permitted under this
Agreement (other than such obligations with respect to Indebtedness).  The
amount of any Guarantee Obligation shall be deemed to be an amount equal to the
stated or determinable amount of the Indebtedness in respect of which such
Guarantee Obligation is made or, if not stated or determinable, the maximum
reasonably anticipated liability in respect thereof (assuming such Person is
required to perform thereunder) as determined by such Person in good faith.
“Guarantors” shall mean (i) each Material Subsidiary that is a party to the
Guarantee on the Effective Date and, (ii) each other Domestic Subsidiary (other
than an Excluded Subsidiary) that becomes a party to the Guarantee after the
Effective Date, whether pursuant to Section 10.10 or otherwise.
“Hazardous Materials” shall mean (a) any petroleum or petroleum products,
radioactive materials, friable asbestos, urea formaldehyde foam insulation,
polychlorinated biphenyls, and radon gas, (b) any chemicals, materials or
substances defined as or included in the definition of “hazardous substances”,
“hazardous waste”, “hazardous materials”, “extremely hazardous waste”,
“restricted hazardous waste”, “toxic substances”, “toxic pollutants”,
“contaminants”, or “pollutants”, or words of similar import, under any
applicable Environmental Law and (c) any other chemical, material or substance,
which is prohibited, limited or regulated by any applicable Environmental Law.
“Hedge Agreements” shall mean (a) any and all rate swap transactions, basis
swaps, credit derivative transactions, forward rate transactions, commodity
swaps, commodity options, forward commodity contracts, equity or equity index
swaps or options, bond or bond price or bond index swaps or options or forward
bond or forward bond price or forward bond index transactions, interest rate
options, forward foreign exchange transactions, cap transactions, floor
transactions, collar transactions, currency swap transactions, cross-currency
rate swap transactions, currency options,

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spot contracts, fixed-price physical delivery contracts, whether or not exchange
traded, or any other similar transactions or any combination of any of the
foregoing (including any options to enter into any of the foregoing), whether or
not any such transaction is governed by or subject to any master agreement, and
(b) any and all transactions of any kind, and the related confirmations, which
are subject to the terms and conditions of, or governed by, any form of master
agreement published by the International Swaps and Derivatives
Association, Inc., any International Foreign Exchange Master Agreement or any
other master agreement (any such master agreement, together with any related
schedules, a “Master Agreement”), including any such obligations or liabilities
under any Master Agreement. Notwithstanding the foregoing, agreements or
obligations entered into in the ordinary course of business to physically buy or
sell any commodity produced from the Borrower’s and its Subsidiaries’ Oil and
Gas Properties or electricity generation facilities under an agreement that has
a tenor under 90 days shall not be considered Hedge Agreements.
“Hedge PV” shall mean, with respect to any commodity Hedge Agreement, the
present value, discounted at 10% per annum, of the future receipts expected to
be paid to the Borrower or the Subsidiaries under such Hedge Agreement netted
against the Strip Price.
“Historical Financial Statements” shall mean (a) the audited consolidated
balance sheets of the Borrower and its consolidated Subsidiaries as of
December 31, 2015, and the related audited consolidated statements of
operations, comprehensive income, equity and cash flows for the one-year period
ended December 31, 2015 and (b) the unaudited consolidated balance sheet of the
Borrower and its consolidated Subsidiaries as of March 31, 2016, and the related
unaudited consolidated statements of operations, comprehensive income
shareholder’s equity and cash flows for the three-month period ended March 31,
2016.
“Hydrocarbon Interests” shall mean all rights, titles, interests and estates now
or hereafter acquired in and to oil and gas leases, oil, gas and mineral leases,
or other liquid or gaseous hydrocarbon leases, mineral fee interests, overriding
royalty and royalty interests, net profit interests and production payment
interests, including any reserved or residual interests of whatever nature.
“Hydrocarbons” shall mean oil, gas, casinghead gas, drip gasoline, natural
gasoline, condensate, distillate, liquid hydrocarbons, gaseous hydrocarbons and
all products refined or separated therefrom.
“ICE” shall mean the Intercontinental Exchange Benchmark Administration Limited.
“Identified Contingent Liabilities” shall mean the maximum estimated amount of
liabilities reasonably likely to result from pending litigation, asserted claims
and assessments, guaranties, uninsured risks and other contingent liabilities of
the Borrower and its Subsidiaries taken as a whole after giving effect to the
Transactions (including all fees and expenses related thereto but exclusive

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of such contingent liabilities to the extent reflected in Stated Liabilities),
as identified and explained in terms of their nature and estimated magnitude by
Authorized Officers of the Borrower.
“Incremental Amendment” shall have the meaning provided in Section 2.2(f).
“Incremental Amount” shall mean the aggregate principal amount of Loans prepaid
pursuant to Section 5.2(b).
“Incremental Commitment” shall have the meaning provided in Section 2.2(a).
“Incremental Lender” shall have the meaning provided in Section 2.2(c).
“Incremental Loan” shall have the meaning provided in Section 2.2(b).
“Incremental Loan Request” shall have the meaning provided in Section 2.2(a).
“Incremental Tranche Closing Date” shall have the meaning provided in Section
2.2(d).
“Indebtedness” of any Person shall mean (a) all indebtedness of such Person for
borrowed money, (b) all obligations of such Person evidenced by bonds,
debentures, notes, loan agreements or other similar instruments, (c) the
deferred purchase price of assets or services that in accordance with GAAP would
be included as a liability on the balance sheet of such Person (other than
(i) any earn-out obligation until such obligation becomes a liability on the
balance sheet of such Person in accordance with GAAP and (ii) obligations
resulting under firm transportation contracts or take or pay contracts entered
into in the ordinary course of business), (d) the face amount of all letters of
credit issued for the account of such Person and, without duplication, all
drafts drawn thereunder, (e) all Indebtedness (excluding prepaid interest
thereon) of any other Person secured by any Lien on any property owned by such
Person, whether or not such Indebtedness has been assumed by such Person,
(f) the principal component of all Capitalized Lease Obligations of such Person,
(g) obligations to deliver commodities, goods or services, including
Hydrocarbons, in consideration of one or more advance payments, other than
obligations relating to net oil, natural gas liquids or natural gas balancing
arrangements arising in the ordinary course of business, (h) the undischarged
balance of any Production Payment created by such Person or for the creation of
which such Person directly or indirectly received payment, and (i) without
duplication, all Guarantee Obligations of such Person; provided that
Indebtedness shall not include (i) trade and other ordinary course payables and
accrued expenses arising in the ordinary course of business, (ii) deferred or
prepaid revenue, (iii) purchase price holdbacks in respect of a portion of the
purchase price of an asset to satisfy warranty or other unperformed obligations
of the respective seller, (iv) in the case of the Borrower and its Subsidiaries,
all intercompany Indebtedness having a term not exceeding 364 days (inclusive of
any roll-over or extensions of terms) and made in the ordinary course of
business, (v) any obligation in respect of a farm-in agreement, joint
development agreement, joint operating

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agreement or similar arrangement whereby such Person agrees to pay all or a
share of the drilling, completion or other expenses of an exploratory or
development well (which agreement may be subject to a maximum payment
obligation, after which expenses are shared in accordance with the working or
participation interest therein or in accordance with the agreement of the
parties) or perform the drilling, completion or other operation on such well in
exchange for an ownership interest in an oil or gas property, (vi) any
obligations in respect of any Hedge Agreement that is permitted under this
Agreement, (vii) prepayments for gas or crude oil production not in excess of
$20,000,000 in the aggregate at any time outstanding, (viii) obligations to
deliver commodities or pay royalties or other payments in connection with
Royalty Trust Transactions and obligations arising from net profits interests,
working interests, overriding royalty interests or similar real property
interests.
“Indemnified Taxes” shall mean all Taxes imposed on or with respect to or
measured by, any payment by or on account of any obligation of any Credit Party
hereunder or under any other Credit Document other than (a) Excluded Taxes,
(b) Other Taxes and (c) any interest, penalties or expenses caused by the
Administrative Agent’s or Lender’s gross negligence or willful misconduct.
“Industry Investment” shall mean Investments and expenditures made in the
ordinary course of, and of a nature that is or shall have become customary in,
the oil and gas business as a means of actively engaging therein through
agreements, transactions, interests or arrangements that permit one to share
risks or costs, comply with regulatory requirements regarding local ownership or
satisfy other objectives customarily achieved through the conduct of oil and gas
business jointly with third parties, including: (1) ownership interests in oil
and gas properties or gathering, transportation, processing, electricity and
power generation, or related systems; and (2) Investments and expenditures in
the form of or pursuant to operating agreements, processing agreements, farm-in
agreements, farm-out agreements, development agreements, area of mutual interest
agreements, unitization agreements, pooling arrangements, joint bidding
agreements, service contracts, joint venture agreements, partnership agreements
(whether general or limited), and other similar agreements (including for
limited liability companies) with third parties.
“Initial Loans” shall mean any Loans made on the Effective Date.
“Interest Period” shall mean, with respect to any Loan, the interest period
applicable thereto, as determined pursuant to Section 2.10.
“Interpolated Rate” shall mean, at any time, for any Interest Period, the rate
per annum (rounded to the same number of decimal places as the LIBOR Screen
Rate) determined by the Administrative Agent (which determination shall be
conclusive and binding absent manifest error) to be equal to the rate that
results from interpolating on a linear basis between: (a) the LIBOR Screen Rate
for the longest period for which the LIBOR Screen Rate is available for Dollars)
that is shorter

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than the Impacted Interest Period; and (b) the LIBOR Screen Rate for the
shortest period (for which that Screen Rate is available for Dollars) that
exceeds the Impacted Interest Period, in each case, at such time.
“Investment” shall mean, for any Person:  (a) the acquisition (whether for cash,
property, services or securities or otherwise) of Stock, Stock Equivalents,
bonds, notes, debentures, partnership or other ownership interests or other
securities of any other Person (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 sale), (b) the making of any deposit with, or advance, loan or other
extension of credit to, assumption of Indebtedness of, or capital contribution
to, or purchase or other acquisition of an equity participation in, 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) (including any partnership or joint venture), (c) the entering into
of any guarantee of, or other contingent obligation with respect
to, Indebtedness or (d) the purchase or other acquisition (in one transaction or
a series of transactions) of (x) all or substantially all of the property and
assets or business of another Person or (y) assets constituting a business unit,
line of business or division of such Person; provided that, in the event that
any Investment is made by the Borrower or any Subsidiary in any Person through
substantially concurrent interim transfers of any amount through one or more
other Subsidiaries, then such other substantially concurrent interim transfers
shall be disregarded for purposes of Section 11.5.
“Investment Grade Period” shall mean any period other than a Credit Rating
Trigger Period.
“JP Morgan Chase” means JP Morgan Chase Bank, N.A.
“Lead Arranger” shall mean Goldman Sachs Bank USA in its capacity as lead
arranger in respect of the Facility.
“Lender” shall have the meaning provided in the preamble to this Agreement and
shall include a Lender with a Commitment or an Exposure.
“Lender Default” shall mean (a) the refusal or failure of any Lender to make
available its portion of any incurrence of Loans, which refusal or failure is
not cured within one Business Day after the date of such refusal or failure,
unless such Lender notifies the Administrative Agent and the Borrower in writing
that such failure is the result of such Lender’s determination that one or more
conditions precedent to funding (each of which conditions precedent, together
with any applicable default, shall be specifically identified in such writing)
has not been satisfied; (b) the failure of any Lender to pay over to the
Administrative Agent or any other Lender any other amount required to be paid by
it hereunder within two (2) Business Day of the date when due, unless the
subject of a good faith dispute; (c) a Lender has notified the Borrower or the
Administrative Agent in writing that it does not intend or expect to comply with
any of its funding obligations or has made

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a public statement to that effect with respect to its funding obligations under
the Facility (unless such writing or public statement relates to such Lender’s
obligation to fund a Loan hereunder and states that such position is based on
such Lender’s determination that a condition precedent to funding (which
condition precedent, together with any applicable default, shall be specifically
identified in such writing or public statement) cannot be satisfied); (d) the
failure, within three Business Days after a written request by the
Administrative Agent (given at the direction of the Majority Lenders) or the
Borrower, by a Lender to confirm in writing to the Administrative Agent and the
Borrower that it will comply with its obligations under the Facility (provided
that such Lender shall cease to be a Defaulting Lender pursuant to this clause
(d) upon receipt of such written confirmation by the Administrative Agent and
the Borrower) or (e) a Distressed Person has admitted in writing that it is
insolvent or such Distressed Person becomes subject to a Lender-Related Distress
Event.
“Lender Indemnified Liabilities” shall have the meaning provided in
Section 14.5.
“Lender-Related Distress Event” shall mean, with respect to any Lender, that
such Lender or any Person that directly or indirectly controls such Lender
(each, a “Distressed Person”), as the case may be, is or becomes subject to a
Bail-In Action or a voluntary or involuntary case with respect to such
Distressed Person under any debt relief law, or a custodian, conservator,
receiver or similar official is appointed for such Distressed Person or any
substantial part of such Distressed Person’s assets, or such Distressed Person
or any Person that directly or indirectly controls such Distressed Person is
subject to a forced liquidation, or such Distressed Person makes a general
assignment for the benefit of creditors or is otherwise adjudicated as, or
determined by any Governmental Authority having regulatory authority over such
Distressed Person or its assets to be, insolvent or bankrupt; provided that a
Lender-Related Distress Event shall not be deemed to have occurred solely by
virtue of (i) the ownership or acquisition of any equity interests in any Lender
or any Person that directly or indirectly controls such Lender by a Governmental
Authority or an instrumentality thereof or (ii) an Undisclosed Administration
pursuant to the laws of the Netherlands.
“LIBOR Loan” shall mean any Loan bearing interest at a rate determined by
reference to the LIBOR Rate (other than an ABR Loan bearing interest by
reference to the LIBOR Rate by virtue of clause (c) of the definition of ABR).
“LIBOR Rate” shall mean, for any Interest Period for each LIBOR Loan, the London
interbank offered rate as administered by ICE (or such other Person assuming the
responsibility of ICE in calculating the LIBOR Rate in the event that ICE no
longer fixes such rate for a one-month Interest Period, as such rate appears:
(i) on the Reuters Monitor Money Services page LIBOR01 (or a successor page on
such service) or (ii) if such rate is not available, on such other information
system that provides such information, in each case at approximately 11:00 a.m.
(London time) two (2) Business Days prior to the commencement of such Interest
Period and such rate shall in no event

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be less than 1.00% for the purposes of this Agreement, and provided, further, if
the LIBOR Screen Rate shall not be available at such time for such Interest
Period (an “Impacted Interest Period”) with respect to Dollars then the LIBOR
Rate shall be the Interpolated Rate, provided that, if any Interpolated Rate
shall be less than 1% per annum, such rate shall be deemed to be 1% per annum
for purposes of this Agreement.
“Lien” shall mean 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 or a financing
lease, consignment or bailment for security purposes or (b) Production Payments
and the like payable out of Oil and Gas Properties; provided that in no event
shall an operating lease be deemed to be a Lien.
“Liquidity” shall have the meaning provided in the First Lien First Out Credit
Agreement
“Loan” shall mean any extension of credit by a Lender to the Borrower hereunder
and shall include a Loan made pursuant to Section 2.2(b).
“Majority Lenders” shall mean, at any date, Non-Defaulting Lenders having or
holding more than 50% of the Total Exposure at such date.
“Make-Whole Amount” shall mean an amount (expressed as a percentage of the
aggregate principal amount of any Loans prepaid, refinanced, substituted,
replaced, repaid or accelerated, as the case may be) as set forth below:
Date of Prepayment/Repayment/Acceleration
Make-Whole Amount
From the Effective Date to but excluding the Third Anniversary of the Effective
Date
The Applicable Premium
From the Third Anniversary of the Effective Date (the “First Call Date”) to but
excluding the Fourth Anniversary of the Effective Date
The product of (i) 0.5 and (ii) the Applicable Coupon

On or after the Fourth Anniversary of the Effective Date (the “Make-Whole Expiry
Date”)
0.00

“Make-Whole Expiry Date” shall have the meaning given to such term in the
definition of “Make-Whole Amount.”

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“Make-Whole Payment Date” shall have the meaning given to such term in Section
5.1(a).
“Material Adverse Effect” shall mean a circumstance or condition affecting the
business, assets, operations, properties or financial condition of the Borrower
and the Subsidiaries on a consolidated basis, that would, individually or in the
aggregate, materially adversely affect (a) the ability of the Borrower and the
other Credit Parties, taken as a whole, to perform their payment obligations
under this Agreement or any of the other Credit Documents or (b) the rights and
remedies of the Administrative Agent or Collateral Agent and the Lenders under
this Agreement or under any of the other Credit Documents.
“Material Subsidiary” shall mean, at any date of determination, each wholly
owned (directly or indirectly) Domestic Subsidiary of the Borrower such that the
Total Assets of the non-Material Subsidiaries (when combined with the assets of
each such Subsidiary’s Subsidiaries, after eliminating intercompany obligations)
at the last day of the Test Period for which Section 10.1 Financials have been
delivered are equal to or less than 1% of the Consolidated Total Assets of the
Borrower and the Subsidiaries at such date, determined in accordance with GAAP.
“Maturity Date” shall mean December 31, 2021; provided that (i) in the event
that $100,000,000 or greater aggregate principal amount of 2020 Notes remain
outstanding on the date that is 91 days prior to their stated maturity date
(such 91st day prior the “2020 Notes Springing Maturity Date”), the Maturity
Date shall automatically accelerate to the 2020 Notes Springing Maturity Date
and (ii) in the event that $100,000,000 or greater aggregate principal amount of
2021 Notes remain outstanding on the date that is 91 days prior to their stated
maturity date (such 91st day prior, the “2021 Notes Springing Maturity Date”),
the Maturity Date shall automatically accelerate to the 2021 Notes Springing
Maturity Date.
“Midstream Assets” shall mean all tangible and intangible property used in (a)
gathering, compressing, treating, processing and transporting Hydrocarbons,
water or steam; (b) fractionating and transporting Hydrocarbons, water or steam;
and (c) marketing Hydrocarbons, water or steam; including, without limitation,
gathering lines and gathering systems, pipelines and pipeline systems, storage
facilities, liquid extraction plants, plant compressors, pumps, pumping units,
field gathering systems, gas processing plants, and any other gathering,
transportation, compression, storage, processing, treating, dehydration,
fractionation, generation, disposal or other similar assets related to the
handling of Hydrocarbons, water or steam, and together with surface leases,
rights-of-way, easements and servitudes related to each of the foregoing.
“Moody’s” means Moody’s Investors Service, Inc., or any successor thereto.
“Mortgage” shall mean a mortgage or a deed of trust, deed to secure debt, trust
deed, assignment of as-extracted collateral, fixture filing or other security
document entered into by the owner of a Mortgaged Property and the
Administrative Agent for the benefit of the Secured Parties

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in respect of that Mortgaged Property, substantially in the form of Exhibit E
(with such changes thereto as may be necessary to account for local law matters,
including, without limitation, changes to exclude property subject to the deed
of trust (but not the mortgage) with respect to which a grant or maintenance of
a lien is prohibited by, constitutes a default under, results in termination of,
or requires a consent which has not been obtained under, the document or
instrument giving rise to such property) or otherwise in such form as agreed
between the Borrower and the Administrative Agent.
“Mortgaged Property” shall mean the real property and improvements thereto with
respect to which a Mortgage is required to be granted pursuant to Section 10.10;
provided that, notwithstanding any provision in any Mortgage to the contrary, in
no event shall any Building (as defined in the applicable Flood Insurance
Regulation) or Manufactured (Mobile) Home (as defined in the applicable Flood
Insurance Regulation) located on the Mortgaged Properties (as defined in the
applicable Mortgage) within an area having special flood hazards and in which
flood insurance is available under the National Flood Insurance Act of 1968 be
included in the definition of “Mortgaged Property” or “Mortgaged Properties” and
no such Building or Manufactured (Mobile) Home shall be encumbered by any
Mortgage. As used herein, “Flood Insurance Regulations” shall mean (i) the
National Flood Insurance Act of 1968 as now or hereafter in effect or any
successor statute thereto, (ii) the Flood Disaster Protection Act of 1973 as now
or hereafter in effect or any successor statue thereto, (iii) the National Flood
Insurance Reform Act of 1994 (amending 42 USC 4001, et seq.), as the same may be
amended or recodified from time to time, and (iv) the Flood Insurance Reform Act
of 2004 and any regulations promulgated thereunder.
“Multiemployer Plan” shall mean a multiemployer plan as defined in Section
4001(a)(3) of ERISA that is subject to Title IV of ERISA and is or was within
any of the last preceding six years contributed to by the Borrower or an ERISA
Affiliate.
“Net Cash Proceeds” shall mean (a) with respect to any Disposition, the cash
proceeds (including, without limitation, cash or Cash Equivalents subsequently
received (as and when received) in respect of noncash consideration initially
received (including Designated Non-Cash Consideration)), net of (i) selling
expenses (including reasonable broker’s fees or commissions, legal, accounting
and investment banking fees and expenses, title insurance premiums, survey
costs, transfer and similar taxes and the Borrower’s good faith estimate of
income taxes paid or payable in connection with such sale), (ii) amounts
provided as a reserve, in accordance with GAAP, against any liabilities under
any indemnification obligations or purchase price adjustment associated with
such Disposition (provided that, to the extent and at the time any such amounts
are released from such reserve, such amounts shall constitute Net Cash
Proceeds), (iii) amounts paid in respect of the termination of Hedge Agreements
in respect of notional volumes or amounts corresponding to the property subject
of such Disposition or any Indebtedness being repaid under clause (iv) and (iv)
the principal amount, premium or penalty, if any, interest and other amounts on
any Indebtedness

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permitted hereunder that is secured by a Lien permitted hereunder (other than
any Lien pursuant to a Security Document) on the asset disposed of in such
Disposition and required to be repaid with such proceeds (other than any such
Indebtedness assumed by the purchaser of such asset); and (b) with respect to
any issuance or incurrence of Indebtedness, the cash proceeds thereof, net of
all taxes and attorneys’ fees, accountants’ fees, underwriters’ or placement
agents’ fees, listing fees, commissions and brokerage, consultant and other
customary fees and charges actually incurred in connection with such issuance.  
“Non-Borrowing Base Disposition” shall mean a Disposition by the Borrower or any
of its Subsidiaries to a Person other than the Borrower or any one of the other
Credit Parties of (x) any Non-Borrowing Base Properties or (y) any Stock or
Stock Equivalents of any Subsidiary the only assets of which are Non-Borrowing
Base Properties.
“Non-Borrowing Base Properties” shall mean (i) prior to the Discharge of First
Lien First Out Obligations, all Oil and Gas Properties of the Credit Parties
that are not included in the Borrowing Base (as determined in accordance with
the First Lien First Out Credit Agreement) and (ii) following the Discharge of
First Lien First Out Obligations, all Midstream Assets, Power Assets and
Hydrocarbon Interests and other assets to which no reserves are attributable;
provided, for the avoidance of doubt, prior to the Discharge of First Lien First
Out Obligations any Midstream Assets and Power Assets shall constitute
Non-Borrowing Base Properties.
“Non-Defaulting Lender” shall mean and include each Lender other than a
Defaulting Lender.
“Non-U.S. Lender” shall mean any Lender that is not a “United States person” as
defined by Section 7701(a)(30) of the Code.
“Notice of Borrowing” shall mean a request of the Borrower in accordance with
the terms of Section 2.4 and substantially in the form of Exhibit A or such
other form as shall be approved by the Administrative Agent (acting at the
written direction of the Majority Lenders).
“Notice of Conversion or Continuation” shall have the meaning provided in
Section 2.7(a).
“Obligations” shall mean all advances to, and debts, liabilities, obligations,
covenants and duties of, any Credit Party arising under any Credit Document or
otherwise with respect to any Loan, whether direct or indirect (including those
acquired by assumption), absolute or contingent, due or to become due, now
existing or hereafter arising and including interest and fees that accrue after
the commencement by or against any Credit Party or any Affiliate thereof in any
proceeding under any bankruptcy or insolvency law naming such Person as the
debtor in such proceeding, regardless of whether such interest and fees are
allowed claims in such proceeding.  Without limiting the generality of the
foregoing, the Obligations of the Credit Parties under the Credit Documents

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(and any of their Subsidiaries to the extent they have obligations under the
Credit Documents) include the obligation (including Guarantee Obligations) to
pay principal, interest, charges, make-whole amounts (including the Make-Whole
Amount), expenses, fees, attorney costs, indemnities and other amounts payable
by any Credit Party under any Credit Document, including, but not limited to,
those payable to the Administrative Agent and the Collateral Agent.  For the
avoidance of doubt, and as a result of the impracticability and extreme
difficulty of ascertaining actual damages, it is understood and agreed that any
Make-Whole Amount shall be presumed to be the liquidated damages sustained by
each Lender as a result of the early termination of the Loans and the Credit
Parties agree that such amounts shall constitute Obligations under this
Agreement.
“Oil and Gas Properties” shall mean (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
described or referred to above, including any and all property, real or
personal, now owned or hereafter acquired and situated upon, used, held for use
or useful in connection with the operating, working or development of any of
such 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, gas processing plants and pipeline
systems, power and cogeneration facilities, steam flood facilities and any
related infrastructure to any thereof, 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.
“OPC” shall mean Occidental Petroleum Corporation, a Delaware corporation.
“OPC Related Transactions” shall mean each of:

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(a)    the Separation and Distribution Agreement between OPC and the Borrower
dated on or about the Spinoff Date,
(b)    the Transition Services Agreement between OPC and the Borrower, dated on
or about the Spinoff Date,
(c)    the Tax Sharing Agreement between OPC and the Borrower dated on or about
the Spinoff Date,
(d)    the Employee Matters Agreement between OPC and the Borrower dated on or
about the Spinoff Date,
(e)    the Area of Mutual Interest Agreement between OPC and the Borrower dated
on or about the Spinoff Date,
(f)    the Confidentiality and Trade Secret Protection Agreement between OPC and
the Borrower, dated on or about the Spinoff Date,
(g)    the Intellectual Property License Agreement between OPC and the Borrower
dated on or about the Spinoff Date, and
(h)    the Stockholder’s Registration Rights Agreement between OPC and the
Borrower dated on or about the Spinoff Date.
“Other Taxes” shall mean any and all present or future stamp, registration,
documentary, intangible, recording, filing or any other excise, property or
similar taxes (including interest, fines, penalties, additions to tax and
related, reasonable, out-of-pocket expenses with regard thereto)  arising from
any payment made hereunder or made under any other Credit Document or from the
execution or delivery of, registration or enforcement of, consummation or
administration of, or otherwise with respect to, this Agreement or any other
Credit Document; provided that such term shall not include any of the foregoing
Taxes (i) that result from an assignment, grant of a participation pursuant to
Section 14.6(c) or transfer or assignment to or designation of a new lending
office or other office for receiving payments under any Credit Document
(“Assignment Taxes”) to the extent such Assignment Taxes are imposed as a result
of a connection between the assignor/participating Lender and/or the
assignee/Participant and the taxing jurisdiction (other than a connection
arising solely from any Credit Documents or any transactions contemplated
thereunder), except to the extent that any such action described in this proviso
is requested or required by the Borrower, or (ii) Excluded Taxes.

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“Overnight Rate” shall mean, for any day, the greater of (a) the Federal Funds
Effective Rate and (b) an overnight rate reasonably determined by the
Administrative Agent in accordance with banking industry rules on interbank
compensation.
“Participant” shall have the meaning provided in Section 14.6(c)(i).
“Participant Register” shall have the meaning provided in Section 14.6(c)(ii).
“Patriot Act” shall have the meaning provided in Section 14.19.
“PBGC” shall mean the Pension Benefit Guaranty Corporation established pursuant
to Section 4002 of ERISA, or any successor thereto.
“Permitted Acquisition” shall mean the acquisition, by merger or otherwise, by
the Borrower or any of the Subsidiaries of assets (including any assets
constituting a business unit, line of business or division) or Stock or Stock
Equivalents, so long as (a) such acquisition and all transactions related
thereto shall be consummated in all material respects in accordance with
Requirements of Law; (b) if such acquisition involves the acquisition of Stock
or Stock Equivalents of a Person that upon such acquisition would become a
Subsidiary, such acquisition shall result in the issuer of such Stock becoming a
Subsidiary and, to the extent required by Section 10.10, a Guarantor; (c) such
acquisition shall result in the Administrative Agent, for the benefit of the
Secured Parties, being granted a security interest in any Stock or any assets so
acquired to the extent required by Section 10.10; (d) after giving effect to
such acquisition, no Default or Event of Default shall have occurred and be
continuing; (e) after giving effect to such acquisition, the Borrower and its
Subsidiaries shall be in compliance with Section 11.13; and (f) the Fixed Charge
Coverage Ratio shall be no less than 2.25 to 1.00 after giving pro forma effect
to such acquisition and any transactions taken in connection therewith
(including, without limitation, the incurrence of any Indebtedness).
“Permitted Additional Debt” shall mean unsecured senior, senior subordinated or
subordinated Indebtedness issued by the Borrower or a Guarantor, (a) the terms
of which do not provide for any scheduled repayment, mandatory redemption or
sinking fund obligation prior to the 91st day after the Maturity Date (other
than customary offers to purchase upon a change of control, asset sale or
casualty or condemnation event and customary acceleration rights after an event
of default), (b) the covenants, events of default, guarantees and other terms of
which (other than interest rate, fees, funding discounts and redemption,
prepayment or make-whole premiums determined by the Borrower to be “market”
rates, fees, discounts and premiums at the time of issuance or incurrence of any
such Indebtedness), taken as a whole, are determined by the Borrower to be
“market” terms on the date of issuance or incurrence and in any event are not
more restrictive on the Borrower and its Subsidiaries than the terms of this
Agreement (as in effect at the time of such issuance or incurrence) and do not
require the maintenance or achievement of any financial performance standards
other than as a condition to taking specified actions; provided that a
certificate

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of an Authorized Officer of the Borrower delivered to the Administrative Agent
at least five Business Days prior to the incurrence or issuance of such
Indebtedness, together with a reasonably detailed description of the material
terms and conditions of such Indebtedness or drafts of the documentation
relating thereto, stating that the Borrower has determined in good faith that
such terms and conditions satisfy the foregoing requirements shall be conclusive
evidence that such terms and conditions satisfy the foregoing requirements,
(c) if such Indebtedness is senior subordinated or subordinated Indebtedness,
the terms of such Indebtedness provide for customary subordination of such
Indebtedness to the Obligations and (d) no Subsidiary of the Borrower (other
than a Guarantor) is an obligor under such Indebtedness.
“Permitted Investments” shall mean Investments in Cash Equivalents.
“Permitted Junior Indebtedness” shall mean (a) Permitted Second Lien
Indebtedness and (b) Indebtedness of the Borrower and its Subsidiaries (“First
Lien Third-Out Junior Indebtedness”) that (i) is secured by the Liens on the
Collateral that secure the Obligations and the First Lien First Out Obligations
but provide for collateral recovery in respect of such Liens to be junior to the
collateral recovery in respect of the Obligations and the First Lien First Out
Obligations, (ii) is subject to the Existing Intercreditor Agreement such that
the lending parties under such Indebtedness are “Priority Lien Secured Parties”
(as defined therein), (iii) is subject to the First Lien Intercreditor Agreement
or an intercreditor agreement in form and substance substantially similar to the
First Lien Intercreditor Agreement and otherwise reasonably acceptable to the
Administrative Agent, (iv) is subject to an intercreditor agreement as between
the Administrative Agent, as representative for the Lenders, and the agent for
such First Lien Third-Out Junior Indebtedness, as representative for such debt
holders, in form and substance substantially similar to the First Lien
Intercreditor Agreement with such modifications as necessary to provide that
under such agreement the Obligations will be “First-Out Obligations” and the
Third-Out Junior Indebtedness will be “Second-Out Obligations” or otherwise in a
form reasonably acceptable to the Majority Lenders, (v) has a maturity date that
is not earlier than 91 days after the Maturity Date (determined at the time of
issuance or incurrence), (vi) is issued at market terms, as certified by an
Authorized Officer of the Borrower in good faith on the date of such incurrence
and (vii) may not be mandatorily prepaid prior to the repayment of the Loans
(except regularly scheduled amortization payments not to exceed 1% annually of
the original principal amount of such Indebtedness); provided, further, that the
terms and documentation of such Indebtedness shall be (A) reasonably
satisfactory to the Majority Lenders or (B) either (x) not materially more
restrictive, taken as a whole, to the Borrower and its Subsidiaries, than the
Credit Documents (or if materially more restrictive, the Lenders receive the
benefit of the more restrictive terms which, for the avoidance of doubt, may be
provided to the Lenders without consent) or (y) if more restrictive, then such
more restrictive terms are only applicable after the Maturity Date, in each
case, as certified by an Authorized Officer of the Borrower in good faith.
“Permitted Liens” shall mean:

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(a)    Liens for taxes, assessments or governmental charges or claims not yet
overdue for a period of more than 30 days or that are being contested in good
faith and by appropriate proceedings for which appropriate reserves have been
established to the extent required by and in accordance with GAAP, or for
property taxes on property that the Borrower or one of its Subsidiaries has
determined to abandon if the sole recourse for such tax, assessment, charge or
claim is to such property;
(b)    Liens in respect of property or assets of the Borrower or any of the
Subsidiaries imposed by law, such as landlords’, vendors’, operators’,
suppliers’, carriers’, warehousemen’s, repairmen’s, construction contractors’,
workers’ materialmen’s and mechanics’ Liens and other similar Liens arising in
the ordinary course of business or incident to the exploration, development,
operation or maintenance of Oil and Gas Properties, in each case so long as such
Liens arise in the ordinary course of business and do not individually or in the
aggregate have a Material Adverse Effect;
(c)    Liens incurred, or pledges or deposits made in connection with workers’
compensation, unemployment insurance and other types of social security, old age
pension, public liability obligations or similar legislation and deposits
securing liabilities to insurance carriers under insurance or self-insurance
arrangements in respect of such obligations, or to secure the performance of
tenders, statutory and regulatory obligations, plugging and abandonment
obligations, surety, stay, customs and appeal bonds, bids, leases, government
contracts, trade contracts, performance and return-of-money bonds and other
similar obligations (including letters of credit issued in lieu of such bonds or
to support the issuance thereof) incurred in the ordinary course of business or
otherwise constituting Investments permitted by Section 11.5;
(d)    ground leases, subleases, licenses or sublicenses in respect of real
property on which facilities owned or leased by the Borrower or any of its
Subsidiaries are located;
(e)    easements, rights-of-way, licenses, restrictions (including zoning
restrictions), title defects, exceptions, reservations, deficiencies or
irregularities in title, encroachments, protrusions, servitudes, rights, eminent
domain or condemnation rights, permits, conditions and covenants and other
similar charges or encumbrances (including in any rights of way or other
property of the Borrower or its Subsidiaries for the purpose of roads,
pipelines, transmission lines, transportation lines, distribution lines for the
removal of gas, oil or other minerals or timber, and other like purposes, or for
joint or common use of real estate, rights of way, facilities and equipment) not
interfering in any material respect with the business of the Borrower and its
Subsidiaries, taken as a whole and any exception on the title reports issued in
connection with any Oil and Gas Properties that would not reasonably be expected
have a Material Adverse Effect;

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(f)    any interest or title of a lessor, sublessor, licensor or sublicensor or
secured by a lessor’s, sublessor’s, licensor’s or sublicensor’s interest under
any lease, sublease, license or sublicense permitted by this Agreement;
(g)    Liens in favor of customs and revenue authorities arising as a matter of
law to secure payment of customs duties in connection with the importation of
goods;
(h)    Liens on goods or inventory the purchase, shipment or storage price of
which is financed by a documentary letter of credit or bankers’ acceptance
issued for the account of the Borrower or any of its Subsidiaries; provided that
such Lien secures only the obligations of the Borrower or such Subsidiaries in
respect of such letter of credit or bankers’ acceptance to the extent permitted
under Section 11.1;
(i)    leases, licenses, subleases or sublicenses granted to others not
interfering in any material respect with the business of the Borrower and its
Subsidiaries, taken as a whole;
(j)    Liens arising from precautionary Uniform Commercial Code financing
statement or similar filings made in respect of operating leases entered into by
the Borrower or any of its Subsidiaries;
(k)    Liens created in the ordinary course of business in favor of banks and
other financial institutions over credit balances of any bank accounts of the
Borrower and the Subsidiaries held at such banks or financial institutions, as
the case may be, to facilitate the operation of cash pooling and/or interest
set-off arrangements in respect of such bank accounts in the ordinary course of
business;
(l)    Liens which arise in the ordinary course of business under operating
agreements (including preferential purchase rights, consents to assignment and
other restraints on alienation), joint operating agreements, joint venture
agreements, oil and gas partnership agreements, oil and gas leases, farm-out
agreements, farm-in 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 and royalty agreements, reversionary interests, 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 that are usual and
customary in the oil and gas business and are for claims which are not
delinquent or that are being contested in good faith and by appropriate
proceedings for which appropriate reserves have been established to the extent
required by and in accordance with GAAP; and to the extent the same constitute
Liens, Liens on Oil and Gas Properties that arise pursuant to usual and
customary dedications of Hydrocarbon production

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from specified Oil and Gas Properties in favor of a joint venture providing
midstream services in connection with the obligation to deliver such
Hydrocarbons, if and when produced, for transportation or processing by such
joint venture, in each case so long as such Liens do not secure any monetary
obligation; provided that any such Lien referred to in this clause does not in
the aggregate have a Material Adverse Effect;
(m)    any zoning or similar law or right reserved to or vested in any
Governmental Authority to control or regulate the use of any real property that
does not materially interfere with the ordinary conduct of the business of the
Borrower and its Subsidiaries, taken as a whole; and
(n)    Liens arising under statutory provisions of applicable law with respect
to production purchased from others.
The parties acknowledge and agree that no intention to subordinate the priority
afforded the Liens granted in favor of the Collateral Agent, for the benefit of
the Secured Parties, under the Security Documents is to be hereby implied or
expressed by the permitted existence of such Permitted Liens.
“Permitted Refinancing Indebtedness” shall mean, any Indebtedness issued or
incurred to Refinance any Refinanced Indebtedness (or previous refinancing
thereof constituting Permitted Refinancing Indebtedness); provided that (A) the
principal amount (or accreted value, if applicable) of any such Permitted
Refinancing Indebtedness does not exceed the principal amount (or accreted
value, if applicable) of the Refinanced Indebtedness outstanding immediately
prior to such Refinancing except by an amount equal to the unpaid accrued
interest and premium thereon plus other amounts paid and fees and expenses
incurred in connection with such Refinancing plus an amount equal to any
existing commitment unutilized and letters of credit undrawn thereunder, (B) if
the Indebtedness being Refinanced is Indebtedness permitted by Section 11.1(h)
or 11.1(i), the direct and contingent obligors with respect to such Permitted
Refinancing Indebtedness are not changed (except that a Credit Party may be
added as an additional obligor), (C) other than with respect to a Refinancing in
respect of Indebtedness permitted pursuant to Section 11.1(g), such Permitted
Refinancing Indebtedness shall have a final maturity date equal to or later than
the final maturity date of, and has a Weighted Average Life to Maturity equal to
or greater than the Weighted Average Life to Maturity of, the Refinanced
Indebtedness (calculated at the time such Permitted Refinancing Indebtedness is
incurred), (D) if the Indebtedness being Refinanced is Indebtedness permitted by
Section 11.1 (h) or 11.1(i), terms and conditions of any such Permitted
Refinancing Indebtedness, taken as a whole, are not materially less favorable to
the Lenders than the terms and conditions of the Refinanced Indebtedness being
Refinanced (including, if applicable, as to collateral priority and
subordination, but excluding as to interest rates, fees, floors, funding
discounts and redemption, prepayment or make-whole premiums); provided that a
certificate of an Authorized

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Officer of the Borrower delivered to the Administrative Agent at least five
Business Days prior to the incurrence or issuance of such Indebtedness, together
with a reasonably detailed description of the material terms and conditions of
such Indebtedness or drafts of the documentation relating thereto, stating that
the Borrower has determined in good faith that such terms and conditions satisfy
the foregoing requirement shall be conclusive evidence that such terms and
conditions satisfy the foregoing requirement and (E) if the Indebtedness being
Refinanced is Permitted Junior Indebtedness, the terms and conditions of such
Permitted Refinancing Indebtedness meet the requirements of clauses (i)-(iv) of
the definition of “Permitted Second Lien Indebtedness” or of clauses (b)(i)-(vi)
of the definition of “Permitted Junior Indebtedness”, as applicable, if such
Permitted Refinancing Indebtedness is secured by any property of the Borrower or
its Subsidiaries.
“Permitted Second Lien Indebtedness” shall mean Indebtedness of the Borrower and
its Subsidiaries that is secured by a second priority Lien on any asset or
Property of the Borrower or any Subsidiary (including, without limitation, the
Existing Second Lien Notes or any Permitted Refinancing Indebtedness issued or
incurred to refinance such Existing Second Lien Notes to the extent secured by a
second priority Lien on any asset or Property of the Borrower or any
Subsidiary); provided that such Indebtedness (i) is subject to the Existing
Intercreditor Agreement, (ii) has a maturity date that is not earlier than 91
days after the Maturity Date (determined at the time of issuance or incurrence),
(iii) is issued at market terms, as certified by an Authorized Officer of the
Borrower in good faith and (iv) may not be mandatorily prepaid prior to the
repayment of the Loans (except regularly scheduled amortization payments not to
exceed 1% annually of the original principal amount of such Indebtedness);
provided, further, that the terms and documentation of such Indebtedness shall
be (A) reasonably satisfactory to the Majority Lenders or (B) either (x) not
materially more restrictive, taken as a whole, to the Borrower and its
Subsidiaries, than the Credit Documents (or if materially more restrictive, the
Lenders receive the benefit of the more restrictive terms which, for the
avoidance of doubt, may be provided to the Lenders without consent) or (y) if
more restrictive, then such more restrictive terms are only applicable after the
Maturity Date, in each case, as certified by an Authorized Officer of the
Borrower in good faith.
“Permitted Unsecured Ratio Debt” shall mean unsecured Indebtedness issued by the
Borrower or a Guarantor, (a) the terms of which do not provide for any scheduled
repayment, mandatory redemption or sinking fund obligation prior to the 91st day
after the Maturity Date (other than customary offers to purchase upon a change
of control, asset sale or casualty or condemnation event and customary
acceleration rights after an event of default), (b) the covenants, events of
default, guarantees and other terms of which (other than interest rate, fees,
funding discounts and redemption, prepayment or make-whole premiums determined
by the Borrower to be “market” rates, fees, discounts and premiums at the time
of issuance or incurrence of any such Indebtedness), taken as a whole, are
determined by the Borrower to be “market” terms on the date of issuance or
incurrence and in any event are not more restrictive on the Borrower and its
Subsidiaries than the terms of this Agreement (as in effect at the time of such
issuance or incurrence) and do not require

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the maintenance or achievement of any financial performance standards other than
as a condition to taking specified actions; provided that a certificate of an
Authorized Officer of the Borrower delivered to the Administrative Agent at
least five Business Days prior to the incurrence or issuance of such
Indebtedness, together with a reasonably detailed description of the material
terms and conditions of such Indebtedness or drafts of the documentation
relating thereto, stating that the Borrower has determined in good faith that
such terms and conditions satisfy the foregoing requirements shall be conclusive
evidence that such terms and conditions satisfy the foregoing requirements,
(c) if such Indebtedness is senior subordinated or subordinated Indebtedness,
the terms of such Indebtedness provide for customary subordination of such
Indebtedness to the Obligations, (d) no Subsidiary of the Borrower (other than a
Guarantor) is an obligor under such Indebtedness and (e) the incurrence of which
and the application of proceeds thereof (but without giving effect to any
increase in cash and Cash Equivalents from the proceeds thereof and assuming all
such Indebtedness is fully drawn), and after giving pro forma effect thereto,
shall not cause the Fixed Charge Coverage Ratio as of the last day of the most
recently ended Test Period to be less than 2.25 to 1.00.
“Person” shall mean any individual, partnership, joint venture, firm,
corporation, limited liability company, association, trust or other enterprise
or any Governmental Authority.
“Petroleum Industry Standards” shall mean the Definitions for Oil and Gas
Reserves promulgated by the Society of Petroleum Engineers (or any generally
recognized successor) as in effect at the time in question.
“Plan” shall mean any single-employer plan, as defined in Section 4001 of ERISA
and subject to Title IV of ERISA, that is or was within any of the preceding six
years maintained or contributed to (or to which there is or was an obligation to
contribute or to make payments to) by the Borrower or an ERISA Affiliate.
“Platform” shall have the meaning provided in Section 10.1.
“Pledge Agreement” shall mean the Pledge Agreement entered into by the Borrower,
the other pledgors party thereto and the Collateral Agent, for the benefit of
the Secured Parties, substantially in the form of Exhibit D.
“Power Assets” shall mean all tangible and intangible property used in
connection with the ownership and operation of electric power and cogeneration
facilities, including, without limitation, related transmission lines and gas
lines.
“Previously Absent Financial Maintenance Covenant” shall mean, at any time, any
financial maintenance covenant that is not included in the Credit Documents at
such time.

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“Priority Lien Cap” shall mean, as of any date, (a) the greater of (i) $4.0
billion, (ii) the Borrowing Base (as defined in the First Lien First Out Credit
Agreement) in effect at the time of incurrence of such indebtedness and (iii)
15% of the Consolidated Total Assets of the Borrower and the Subsidiaries if
incurred under any Specified First Lien Indebtedness plus (b) the amount of all
Hedge Obligations arising under Secured Hedge Agreements, plus (c) the amount of
all Cash Management Obligations arising under Secured Cash Management
Agreements, plus (d) the amount of accrued and unpaid interest (excluding any
interest paid-in-kind) and outstanding fees, to the extent such Obligations are
secured by the Priority Liens, plus (e) fees, indemnifications, reimbursements
and expenses as may be due pursuant to the terms of any Priority Lien
Documents.  Unless otherwise indicated, capitalized terms used in this
definition but not defined in this Agreement shall have the meanings given to
such terms in the Existing Intercreditor Agreement.

“Production Payment” shall mean a production payment obligation (whether
volumetric or dollar denominated) of the Borrower or any of its Subsidiaries
which is payable from a specified share of proceeds received from production
from specified Oil and Gas Properties, together with all undertakings and
obligations in connection therewith.
“Projected Volume” shall mean the forecasted production of oil and natural gas
reserves of the Borrower and its Subsidiaries, as determined as of the last day
of each fiscal quarter, by the Borrower based on the Borrower’s internal
engineering reports.
“Proved Developed Reserves” shall mean Proved Reserves that, in accordance with
Petroleum Industry Standards, are classified as one of the following:
(a) “Developed Producing Reserves” or (b) “Developed Non-Producing Reserves”;
and Proved Developed Reserves in the aggregate comprise Proved Reserves that are
“Developed Producing Reserves” and “Developed Non-Producing Reserves”.
“Proved Non-Producing Reserves” shall mean Proved Reserves that, in accordance
with Petroleum Industry Standards, are classified as “Developed Non-Producing
Reserves”.
“Proved Reserves” shall mean oil and gas reserves that, in accordance with
Petroleum Industry Standards, are classified as both “Proved Reserves” and one
of the following: (a) “Developed Producing Reserves”, (b) “Developed
Non-Producing Reserves” or (c) “Undeveloped Reserves”; and “Proved Reserves” in
the aggregate comprise Proved Reserves that are “Developed Producing Reserves”,
“Developed Non-Producing Reserves” and “Undeveloped Reserves”.
“Proved Undeveloped Reserves” shall mean Proved Reserves that, in accordance
with Petroleum Industry Standards, are classified as “Undeveloped Reserves”.
“Public Lender” shall have the meaning provided in Section 10.1.

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“PV-9” shall have the meaning given to such term in the First Lien First Out
Credit Agreement.
“PV-10” shall mean, with respect to any Proved Reserves expected to be produced
from any Oil and Gas Properties, the net present value, discounted at 10% per
annum, of the future net revenues expected to accrue to the Credit Parties’
collective interests in such reserves during the remaining expected economic
lives of such reserves, calculated using the Strip Price; provided that in no
event shall the amount of Proved Undeveloped Reserves included in such
calculation exceed 30% of PV-10.
“Qualified Acquisition” shall mean an acquisition or a series of related
acquisitions in which the consideration paid by the Credit Parties is equal to
or greater than $50,000,000.
“Qualified Disposition” shall mean a Disposition or a series of related
Dispositions in which the consideration received by the Credit Parties is equal
to or greater than $50,000,000.
“Refinance” shall mean to issue or incur in exchange for, or to use the net
proceeds of such issuance or incurrence to modify, extend, refinance, renew,
replace, repay or refund. “Refinancing” shall have a correlative meaning.
“Refinanced Indebtedness” shall mean any Indebtedness Refinanced with
Refinancing Indebtedness.
“Refinancing Indebtedness” shall mean any Indebtedness issued or incurred to
Refinance other Indebtedness.
“Register” shall have the meaning provided in Section 14.6(b)(iv).
“Regulation T” shall mean Regulation T of the Board as from time to time in
effect and any successor to all or a portion thereof establishing margin
requirements.
“Regulation U” shall mean Regulation U of the Board as from time to time in
effect and any successor to all or a portion thereof establishing margin
requirements.
“Regulation X” shall mean Regulation X of the Board as from time to time in
effect and any successor to all or a portion thereof establishing margin
requirements.
“Related Parties” shall mean, with respect to any specified Person, such
Person’s Affiliates and the directors, officers, employees, agents and members
of such Person or such Person’s Affiliates and any Person that possesses,
directly or indirectly, the power to direct or cause the direction of the
management or policies of such Person, whether through the ability to exercise
voting power, by contract or otherwise.

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“Reportable Event” shall mean an event described in Section 4043 of ERISA and
the regulations thereunder, other than any event as to which the 30-day notice
period has been waived.
“Required Lenders” means, as of any date of determination, Lenders having or
holding more than 50% of the sum of the aggregate principal amount of
outstanding Loans and Commitments as of any date of determination.
“Requirement of Law” shall mean, as to any Person, any law, treaty, rule,
regulation statute, order, ordinance, decree, judgment, consent decree, writ,
injunction, settlement agreement or governmental requirement enacted,
promulgated or imposed or entered into or agreed by any Governmental Authority,
in each case applicable to or binding upon such Person or any of its property or
assets or to which such Person or any of its property or assets is subject.
“Reserve Report” shall mean, prior to the Discharge of First Lien First Out
Obligations, a First Lien First Out Reserve Report and thereafter a reserve
report established in accordance with the procedures set forth in the First Lien
First Out Credit Agreement as in effect on the Effective Date and substituting
the relevant Lenders for the First Lien First Out Lenders and in either case
otherwise complying with the requirements of the First Lien First Out Credit
Agreement; provided that in addition to the calculations based upon the most
recent Bank Price Deck (as defined in the First Lien First Out Credit Agreement)
such report shall include parallel calculations based upon the Strip Price;
provided further that each Reserve Report shall be calculated to reflect the net
interests of any Proved Reserves and Proved Developed Reserves contained
therein, excluding any Proved Reserves and Proved Developed Reserves
attributable to interests owned by Persons other than the Borrower and its
wholly owned Subsidiaries.
“Restricted Payments” shall have the meaning provided in Section 11.6.
“Royalty Trust” shall mean a statutory trust, business trust, limited liability
company, partnership or other form of legal entity to which the Borrower or one
or more of its Subsidiaries grants or conveys any term or perpetual overriding
royalty interests, net profits interests or other similar interests in Oil and
Gas Properties in exchange for units of beneficial interest or ownership
interests in such trust or other entity, or for cash.
“Royalty Trust Transaction” shall mean (a) the grant, conveyance or other
disposition by the Borrower or a Subsidiary, to a Royalty Trust, of interests in
Oil and Gas Properties as described in the definition of “Royalty Trust,”
(b) the obligations of the Borrower or a Subsidiary to drill and develop oil and
gas wells burdened by such granted or conveyed interests and (c) the conveyances
or other agreements transferring the interests to the Royalty Trust and any
other agreements between the Borrower or a Subsidiary and such Royalty Trust or
the trustee of such Royalty Trust, and the transactions under such agreements,
providing for any one or more of: (i) the operation of the oil and gas wells
burdened by such interests, (ii) administrative services for the Royalty Trust,

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(iii) registration rights of the Borrower and Subsidiaries and (iv) transactions
incidental to the foregoing.
“S&P” shall mean Standard & Poor’s Ratings Services or any successor by merger
or consolidation to its business.
“Sanctioned Country” shall mean, at any time, a country or territory which is
itself the subject or target of any Sanctions (at the time of this Agreement,
including, but not limited to, Cuba, Iran, North Korea, Sudan and Syria).
“Sanctioned Person” shall mean, at any time, (a) any Person listed in any
Sanctions-related list of designated Persons maintained by the Office of Foreign
Assets Control of the U.S. Department of the Treasury, the U.S. Department of
State, or by the United Nations Security Council, the European Union or any
European Union member 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.
“Sanctions” shall mean economic or financial sanctions or trade embargoes
imposed, administered or enforced from time to time by (a) the U.S. government,
including those administered by the Office of Foreign Assets Control of the U.S.
Department of the Treasury or the U.S. Department of State, or (b) the United
Nations Security Council, the European Union or Her Majesty’s Treasury of the
United Kingdom.
“Scheduled Dispositions” shall have the meaning provided in Section 11.4(a)(ix).
“Scheduled Redetermination” shall have the meaning provided in Section 2.14(b)
of the First Lien First Out Credit Agreement.
“SEC” shall mean the Securities and Exchange Commission or any successor
thereto.
“Section 10.1 Financials” shall mean the financial statements delivered, or
required to be delivered, pursuant to Section 10.1(a) or (b), together with the
accompanying Authorized Officer’s certificate delivered, or required to be
delivered, pursuant to Section 10.1(c).
“Secured Parties” shall mean, collectively, the Collateral Agent, each Lender
and each sub-agent pursuant to Article XIII appointed by the Administrative
Agent with respect to matters relating to the Credit Documents.
“Security Agreement” shall mean the Security Agreement entered into by the
Borrower, the other grantors party thereto and the Collateral Agent, for the
benefit of the Secured Parties, substantially in the form of Exhibit C.

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“Security Documents” shall mean, during any Credit Rating Trigger Period,
collectively, (a) the Security Agreement, (b) the Pledge Agreement, (c) the
Mortgages, and (d) each other security agreement or other instrument or document
executed and delivered pursuant to Section 10.10 or 10.12 or pursuant to any
other such Security Documents or otherwise to secure or perfect the security
interest in any or all of the Obligations.
“Senior Notes” shall mean collectively, so many of the 2020 Notes, the 2021
Notes and the 2024 Notes as, in each case, are outstanding on the Effective
Date.
“Senior Notes Documents” shall mean that certain Indenture pursuant to which the
Senior Notes are issued among the Borrower, the Guarantors party thereto and
Wells Fargo Bank, National Association, as trustee, as the same may be amended,
modified or supplemented from time to time in accordance with the terms of
Section 11.7.
“Solvent” shall mean, with respect to any Person, that as of any date of
determination (a) for the period from the Effective Date through the Maturity
Date, such Person after consummation of the Transactions is a going concern and
has sufficient capital to ensure that it will continue to be a going concern for
such period, in light of the nature of the particular business or businesses
conducted or to be conducted, and based on the needs and anticipated needs for
capital of the business conducted or anticipated to be conducted by such Person
as reflected in projected financial statements and in light of anticipated
credit capacity; and (b) for the period from the Effective Date through the
Maturity Date, such Person will have sufficient assets and cash flow to pay its
Stated Liabilities and Identified Contingent Liabilities as those liabilities
mature or (in the case of contingent liabilities) otherwise become payable, in
light of the business conducted or anticipated to be conducted by such Person as
reflected in projected financial statements and in light of anticipated credit
capacity.
“Specified First Lien Indebtedness” shall mean the (i) Obligations, (ii) First
Lien First Out Obligations, (iii) any Indebtedness incurred pursuant to Section
11.1(bb) and (iv) any First Lien Third-Out Junior Indebtedness.
“Specified First Lien Indebtedness Amount” shall mean, at any date, the sum of
the aggregate principal amount of all Specified First Lien Indebtedness.
“Specified Subsidiary” shall mean, at any date of determination any Subsidiary
(a) whose Total Assets at the last day of the Test Period ending on the last day
of the most recent fiscal period for which Section 10.1 Financials have been
delivered were equal to or greater than 15% of the Consolidated Total Assets of
the Borrower and the Subsidiaries at such date, or (b) whose revenues during
such Test Period were equal to or greater than 15% of the consolidated revenues
of the Borrower and the Subsidiaries for such period, in each case determined in
accordance with GAAP.

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“Spinoff Date” shall mean the date on which the Spinoff Transaction occurred.
“Spinoff Transaction” shall mean (a) the transfer by OPC and/or one or more of
its affiliates of certain of its assets to the Borrower and/or one or more of
its subsidiaries to be used by them in connection with their oil and gas
business (including marketing and other related activities and services) in the
State of California and (b) the distribution by OPC and/or one or more of its
affiliates of more than 80.0% of Borrower’s Stock to the existing shareholders
of OPC.
“Stated Liabilities” shall mean the recorded liabilities (including contingent
liabilities that would be recorded in accordance with GAAP) of the Borrower and
its Subsidiaries taken as a whole, as of the Effective Date after giving effect
to the consummation of the Transactions, determined in accordance with GAAP
consistently applied.
“Stock” shall mean any and all shares of capital stock or shares in the capital,
as the case may be (whether denominated as common stock or preferred stock or
ordinary shares or preferred shares, as the case may be), beneficial,
partnership or membership interests, participations or other equivalents
(regardless of how designated) of or in a corporation, partnership, limited
liability company or equivalent entity, whether voting or non-voting.
“Stock Equivalents” shall mean all securities convertible into or exchangeable
for Stock and all warrants, options or other rights to purchase or subscribe for
any Stock, whether or not presently convertible, exchangeable or exercisable.
“Strip Price” shall mean (x) for purposes of determining Hedge PV and/or the
value of Oil and Gas Properties constituting Proved Reserves, the price
estimated by the Borrower in a Reserve Report prepared by the Borrower’s
petroleum engineers applying the ICE(Brent)/NYMEX (as applicable) published
forward prices adjusted for relevant basis differentials (before any state or
federal or other income tax) and (y) for purposes of determining the value of
basis differential commodity Hedge Agreements, as estimated by the Borrower
applying, if available, the relevant ICE(Brent)/NYMEX (as applicable) published
forward basis differential or, if such ICE(Brent)/NYMEX (as applicable) forward
basis differential is unavailable, in good faith based on historical basis
differentials, but accounting for reasonably expected future conditions (before
any state or federal or other income tax).  For any months beyond the term
included in published ICE(Brent)/NYMEX (as applicable) forward pricing, the
Strip Price used will be equal to the last published contract escalated at 2.0%
per annum.
“Subsidiary” of any Person shall mean and include (a) any corporation more than
50% of whose Stock of any class or classes having by the terms thereof ordinary
voting power to elect a majority of the directors of such corporation
(irrespective of whether or not at the time Stock of any class or classes of
such corporation shall have or might have voting power by reason of the
happening of any contingency) is at the time owned by such Person directly or
indirectly through

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Subsidiaries and (b) any limited liability company, partnership, association,
joint venture or other entity of which such Person directly or indirectly
through Subsidiaries has more than a 50% Stock at the time.  Unless otherwise
expressly provided, all references herein to a “Subsidiary” shall mean a
Subsidiary of the Borrower.  A Royalty Trust shall not constitute a “Subsidiary”
of the Borrower or its Subsidiaries; provided that, Development Joint Ventures
shall not be deemed to be Subsidiaries of the Borrower or of any of its
Subsidiaries.
“Subsidiary Guarantor” shall mean each Subsidiary that is a Guarantor.
“Successor Borrower” shall have the meaning provided in Section 11.3(a).
“Taxes” shall mean any and all present or future taxes, duties, levies, imposts,
assessments, deductions, withholdings or other similar charges imposed by any
Governmental Authority whether computed on a separate, consolidated, unitary,
combined or other basis and any interest, fines, penalties or additions to tax
with respect to the foregoing.
“Tender Offer” shall mean an offer by the Borrower to the current holders of its
outstanding Permitted Second Lien Indebtedness and Senior Notes (collectively,
the “Existing Notes”) to tender their Existing Notes for a cash payment at a
percent of par value of such Existing Notes.
“Tender Offer Documents” shall mean the documents related to the Tender Offer,
including without limitation, the Offer to Purchase, dated as of August 1, 2016,
and the Letter of Transmittal, dated as of August 1, 2016.
“Test Period” shall mean, for any determination under this Agreement, the four
consecutive fiscal quarters of the Borrower then last ended and for which
Section 10.1 Financials have been delivered to the Administrative Agent.
“Total Assets” shall mean, as of any date of determination with respect to any
Person, the amount that would, in conformity with GAAP, be set forth opposite
the caption “total assets” (or any like caption) on a balance sheet of such
Person at such date.
“Total Exposure” shall mean the sum of the Exposures of the Lenders.
“Transaction Expenses” shall mean any fees or expenses incurred or paid by the
Borrower or any of its Subsidiaries or any of their Affiliates in connection
with the Transactions or the Tender Offer.
“Transactions” shall mean, collectively, the execution, delivery and performance
of this Agreement and the other Credit Documents, the borrowing of Loans, the
use of the proceeds thereof in accordance with Section 10.11 and Section 11.14,
including the payment of Transaction Expenses on the Effective Date and the
other transactions contemplated by this Agreement and the Credit

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Documents, including the execution and delivery of the First Lien First Out
Fifth Amendment and the repayment of Indebtedness under the First Lien First Out
Credit Agreement pursuant thereto.
“Transferee” shall have the meaning provided in Section 14.6(e).
“Treasury Rate” shall mean, with respect to a Make-Whole Payment Date, the yield
to maturity at the time of computation of United States Treasury securities with
a constant maturity (as compiled and published in the most recent Federal
Reserve Statistical Release H.15(519) that has become publicly available at
least two (2) Business Days prior to such Make-Whole Payment Date (or, if such
Statistical Release is no longer published, any publicly available source of
similar market data)) most nearly equal to the period from such Make-Whole
Payment Date to but excluding the third anniversary of the Effective Date;
provided, however, that if the period from such Make-Whole Payment Date to but
excluding the third anniversary of the Effective Date is not equal to the
constant maturity of the United States Treasury security for which a weekly
average yield is given, the Treasury Rate shall be obtained by linear
interpolation (calculated to the nearest one-twelfth of a year) from the weekly
average yields of United States Treasury securities for which such yields are
given, except that if the period from such Make-Whole Payment Date to but
excluding the third anniversary of the Effective Date is less than one year, the
weekly average yield on actually traded United States Treasury securities
adjusted to a constant maturity of one year shall be used. The Borrower shall
determine the Treasury Rate in its reasonable discretion pursuant to the
procedures set forth above.
“Type” shall mean, as to any Loan, its nature as an ABR Loan or a LIBOR Loan.
“Undisclosed Administration” shall mean in relation to a Lender the appointment
of an administrator, provisional liquidator, conservator, receiver, trustee,
custodian or other similar official by a supervisory authority or regulator
under or based on the law in the country where such Lender is subject to home
jurisdiction supervision if applicable law requires that such appointment is not
to be publicly disclosed.
“Unfunded Current Liability” of any Plan shall mean the amount, if any, by which
the Accumulated Benefit Obligation (as defined under FASB Accounting Standards
Codification 715 (“ASC 715”)) under the Plan as of the close of its most recent
plan year, determined in accordance with ASC 715 as in effect on the Effective
Date, exceeds the Fair Market Value of the assets allocable thereto.
“Uniform Commercial Code” shall mean the Uniform Commercial Code of the State of
New York or of any other state the laws of which are required to be applied in
connection with the perfection of security interests in any Collateral.
“Upfront Fee” shall have the meaning provided in Section 4.1.

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“Voting Stock” shall mean, with respect to any Person, such Person’s Stock or
Stock Equivalents having the right to vote for the election of directors of such
Person under ordinary circumstances.
“Weighted Average Life to Maturity” shall mean, when applied to any Indebtedness
at any date, the number of years obtained by dividing: (a) the sum of the
products obtained by multiplying (i) the amount of each then remaining
installment, sinking fund, serial maturity or other required payments of
principal, including payment at final maturity, in respect thereof, by (ii) the
number of years (calculated to the nearest one-twelfth) that will elapse between
such date and the making of such payment; by (b) the then outstanding principal
amount of such Indebtedness.
“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.

1.2    Other Interpretive Provisions.  With reference to this Agreement and each
other Credit Document, unless otherwise specified herein or in such other Credit
Document:
(a)    The meanings of defined terms are equally applicable to the singular and
plural forms of the defined terms.
(b)    The words “herein”, “hereto”, “hereof” and “hereunder” and words of
similar import when used in any Credit Document shall refer to such Credit
Document as a whole and not to any particular provision thereof.
(c)    Article, Section, Exhibit and Schedule references are to the Credit
Document in which such reference appears.
(d)    The term “including” is by way of example and not limitation.
(e)    The term “documents” includes any and all instruments, documents,
agreements, certificates, notices, reports, financial statements and other
writings, however evidenced, whether in physical or electronic form.
(f)    In the computation of periods of time from a specified date to a later
specified date, the word “from” means “from and including”; the words “to” and
“until” each mean “to but excluding”; and the word “through” means “to and
including”.
(g)    Section headings herein and in the other Credit Documents are included
for convenience of reference only and shall not affect the interpretation of
this Agreement or any other Credit Document.
(h)    Any reference to any Person shall be constructed to include such Person’s
successors or assigns (subject to any restrictions on assignment set forth
herein) and, in the case of any Governmental Authority, any other Governmental
Authority that shall have succeeded to any or all of the functions thereof.
(i)    Whenever the context may require, any pronoun shall include the
corresponding masculine, feminine and neuter forms.
(j)    The word “will” shall be construed to have the same meaning as the word
“shall”.

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(k)    The words “asset” and “property” shall be construed to have the same
meaning and effect and to refer to any and all tangible and intangible assets
and properties, including cash, securities, accounts and contract rights.

1.3    Accounting Terms.  All accounting terms not specifically or completely
defined herein shall be construed in conformity with, and all financial data
(including financial ratios and other financial calculations) required to be
submitted pursuant to this Agreement shall be prepared in conformity with, GAAP,
applied in a consistent manner; provided, however, that if the Borrower notifies
the Administrative Agent that the Borrower requests an amendment to any
provision hereof to eliminate the effect of any change occurring after the
Effective Date in GAAP or in the application thereof on the operation of such
provision (or if the Administrative Agent notifies the Borrower that all Lenders
request an amendment to any provision hereof for such purpose), regardless of
whether any such notice is given before or after such change in GAAP or in the
application thereof, then such provision shall be interpreted on the basis of
GAAP as in effect and applied immediately before such change shall have become
effective until such notice shall have been withdrawn or such provision amended
in accordance herewith.

1.4    Rounding.  Any financial ratios required to be maintained or complied
with by the Borrower pursuant to this Agreement (or required to be satisfied in
order for a specific action to be permitted under this Agreement) shall be
calculated by dividing the appropriate component by the other component,
carrying the result to one place more than the number of places by which such
ratio is expressed herein and rounding the result up or down to the nearest
number (with a rounding-up if there is no nearest number).

1.5    References to Agreements, Laws, Etc.  Unless otherwise expressly provided
herein, (a) references to organizational documents, agreements (including the
Credit Documents) and other Contractual Requirements shall be deemed to include
all subsequent amendments, restatements, amendment and restatements, extensions,
supplements and other modifications thereto, but only to the extent that such
amendments, restatements, amendment and restatements, extensions, supplements
and other modifications are permitted by any Credit Document and (b) references
to any Requirement of Law shall include all statutory and regulatory provisions
consolidating, amending, replacing, supplementing or interpreting such
Requirement of Law.

1.6    Times of Day.  Unless otherwise specified, all references herein to times
of day shall be references to New York City (daylight or standard, as
applicable).

1.7    Timing of Payment or Performance.  When the payment of any obligation or
the performance of any covenant, duty or obligation is stated to be due or
performance required on a day which is not a Business Day, the date of such
payment (other than as described in Section 2.9) or performance shall extend to
the immediately succeeding Business Day.

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1.8    Currency Equivalents Generally.
(a)    For purposes of any determination under Article X, Article XI (other than
Section 11.11) or Article XII or any determination under any other provision of
this Agreement requiring the use of a current exchange rate, all amounts
incurred, outstanding or proposed to be incurred or outstanding in currencies
other than Dollars shall be translated into Dollars at the Exchange Rate then in
effect on the date of such determination; provided, however, that (x) for
purposes of determining compliance with Article XI with respect to the amount of
any Indebtedness, Investment, Disposition, Restricted Payment or payment under
Section 11.7 in a currency other than Dollars, no Default or Event of Default
shall be deemed to have occurred solely as a result of changes in rates of
exchange occurring after the time such Indebtedness or Investment is incurred or
Disposition, Restricted Payment or payment under Section 11.7 is made, (y) for
purposes of determining compliance with any Dollar-denominated restriction on
the incurrence of Indebtedness, if such Indebtedness is incurred to Refinance
other Indebtedness denominated in a foreign currency, and such Refinancing would
cause the applicable Dollar-denominated restriction to be exceeded if calculated
at the relevant currency exchange rate in effect on the date of such
Refinancing, such Dollar-denominated restriction shall be deemed not to have
been exceeded so long as the principal amount of such Refinancing Indebtedness
does not exceed the principal amount of such Refinanced Indebtedness and (z) for
the avoidance of doubt, the foregoing provisions of this Section 1.8 shall
otherwise apply to such Sections, including with respect to determining whether
any Indebtedness or Investment may be incurred or Disposition, Restricted
Payment or payment under Section 11.7 may be made at any time under such
Sections.  For purposes of Section 11.11, amounts in currencies other than
Dollars shall be translated into Dollars at the applicable exchange rates used
in preparing the most recently delivered financial statements pursuant to
Section 10.1(a) or (b).
(b)    Each provision of this Agreement shall be subject to such reasonable
changes of construction as the Administrative Agent may from time to time
specify at the direction of the Majority Lenders and with the Borrower’s consent
(such consent not to be unreasonably withheld) necessary from time to time to
appropriately reflect a change in currency of any country and any relevant
market conventions or practices relating to such change in currency.

1.9    Classification of Loans and Borrowings.  For purposes of this Agreement,
Loans may be classified and referred to by Type (e.g., a “LIBOR Loan”).

1.10    Available Amount Transactions. If more than one action occurs on any
given date the permissibility of the taking of which is determined hereunder by
reference to the amount of the Available Amount immediately prior to the taking
of such action, the permissibility of the taking of each such action shall be
determined independently and in no event may any two or more such

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actions be treated as occurring simultaneously (i.e., each transaction must be
permitted under the Available Amount as so calculated).

ARTICLE II
AMOUNT AND TERMS OF CREDIT

2.1    Commitments.
(l)    Subject to and upon the terms and conditions herein set forth, each
Lender severally, but not jointly, agrees to make a Loan denominated in Dollars
to the Borrower, which Loan (i) shall be made on the Effective Date, (ii) shall
be in a principal amount not greater than the Commitment of such Lender and
(iii) subject to Section 2.3, may, at the option of the Borrower, be incurred
and maintained as, and/or converted into, ABR Loans or LIBOR Loans; provided
that all Loans made by each of the Lenders pursuant to the same Borrowing shall,
unless otherwise specifically provided herein, consist entirely of Loans of the
same Type. The Commitments of the Lenders to make Loans shall expire upon the
funding of the initial Borrowing on the Effective Date. Any portion of the Loans
that is repaid may not be reborrowed.
(m)    Each Lender may at its option make any LIBOR Loan by causing any domestic
or foreign branch or Affiliate of such Lender to make such Loan, provided that
(1) any exercise of such option shall not affect the obligation of the Borrower
to repay such Loan and (2) in exercising such option, such Lender shall use its
reasonable efforts to minimize any increased costs to the Borrower resulting
therefrom (which obligation of the Lender shall not require it to take, or
refrain from taking, actions that it determines would result in increased costs
for which it will not be compensated hereunder or that it determines would be
otherwise disadvantageous to it and in the event of such request for costs for
which compensation is provided under this Agreement, the provisions of
Section 2.11 shall apply).

2.2    Incremental Facilities or Commitments.
(a)    Incremental Commitments. The Borrower may at any time or from time to
time after the Effective Date, by notice to the Administrative Agent (an
“Incremental Loan Request”), indicate that it has obtained or is requesting (A)
one or more new commitments which may be of the same Class as any outstanding
Loan (a “Loan Increase”) or a new Class of Loans (collectively with any Loan
Increase, the “Incremental Commitments”), whereupon the Administrative Agent
shall promptly deliver a copy of such Incremental Loan Request to each of the
Lenders. Notwithstanding anything to the contrary herein, the aggregate
principal amount of Incremental Loans established under this Section 2.2, when
aggregated together with all Indebtedness incurred under Section 11.1(bb), shall
not exceed the Incremental Amount.

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(b)    Incremental Loans. On any Incremental Tranche Closing Date on which any
Incremental Commitments of any Class are effected, subject to the satisfaction
of the terms and conditions in this Section 2.2, (i) each Incremental Lender of
such Class shall make a Loan to the Borrower (an “Incremental Loan”) in an
amount equal to its Incremental Commitment of such Class and (ii) each
Incremental Lender of such Class shall become a Lender hereunder with respect to
the Incremental Commitment of such Class and the Incremental Loans of such Class
made pursuant thereto. Notwithstanding the foregoing, Incremental Loans may have
identical terms (other than with respect to closing conditions, issuance date
and other terms necessary to effectuate the implementation of such Incremental
Loans) to any of the Loans and be treated as the same Class as any of such
Loans.
(c)    Incremental Loan Request. Each Incremental Loan Request from the Borrower
pursuant to this Section 2.2 shall set forth the requested amount and proposed
terms of the relevant Incremental Loans. Incremental Loans may be made by any
existing Lender (but no existing Lender will have an obligation to make any
Incremental Commitment, nor will the Borrower have any obligation to approach
any existing Lenders to provide any Incremental Commitment) or by any additional
Lender (each such existing Lender or additional Lender providing such Commitment
or Loan, an “Incremental Lender”).
(d)    Effectiveness of Incremental Amendment. The effectiveness of any
Incremental Amendment, and the Incremental Commitments thereunder, shall be
subject to the satisfaction on the date thereof (the “Incremental Tranche
Closing Date”) of each of the following conditions:
(i)    no Default or Event of Default exists or shall exist after giving effect
to such Incremental Amendment; and (B) to the extent subject to testing, the
Borrower shall be in pro forma compliance with the Financial Performance
Covenant after giving effect to such Incremental Amendment;
(ii)    either (x) the representations and warranties of each Credit Party set
forth in Article IX and in each other Credit Document shall be true and correct
in all material respects on and as of the Incremental Tranche Closing Date with
the same effect as though made on and as of such date, except to the extent such
representations and warranties expressly relate to an earlier date, in which
case they shall be true and correct in all material respects as of such earlier
date; and
(iii)    each Incremental Commitment shall be in an aggregate principal amount
that is not less than $5,000,000 and shall be in an increment of $1,000,000.
(e)    Required Terms. The terms, provisions and documentation of any
Incremental Loan or any Incremental Commitment shall be as agreed between the
Borrower and

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the applicable Incremental Lenders providing such Incremental Loans or
Incremental Commitments, and except as otherwise set forth herein, to the extent
not substantially consistent with the Loans existing on the Incremental Tranche
Closing Date (as determined by the Borrower and conclusively evidenced by a
certificate of the Borrower), shall be consistent with clauses (i) and (ii)
below, as applicable, and otherwise shall be reasonably satisfactory to the
Majority Lenders (other than in respect of pricing, fees, interest, rate floors,
optional prepayment, redemption terms, amortization or maturity), it being
understood that to the extent any Previously Absent Financial Maintenance
Covenant is added for the benefit of any Incremental Loan or Incremental
Commitment, no consent shall be required from any existing Lender to the extent
such Previously Absent Financial Maintenance Covenant is (A) also added for the
benefit of the Loans existing on the Incremental Tranche Closing Date or (B)
only applicable after the Maturity Date of any Loan existing on the Incremental
Tranche Closing Date. Notwithstanding the foregoing, in the case of a Loan
Increase, the terms, provisions and documentation of such Loan Increase shall be
identical (other than with respect to underwriting, commitment or upfront fees,
original issue discount or similar fees) to the applicable Loans being
increased. In any event,
(i)    each Incremental Loan or Incremental Commitment:
(A)will rank pari passu in right of security with the other Loans or
Commitments, as applicable, of such Class;
(B)    shall not mature earlier than the Maturity Date with respect to the
Initial Loans (prior to giving effect to any extensions thereof);
(C)    shall have a Weighted Average Life to Maturity not shorter than the
remaining Weighted Average Life to Maturity of the Initial Loans on the date of
incurrence of such Incremental Loans (except by virtue of amortization or
prepayment of the Initial Loans prior to the time of such incurrence);
(D)    shall have fees and, subject to clauses (e)(i)(B) and (e)(i)(C) above and
clause (e)(ii) below, amortization determined by the Borrower and the applicable
Incremental Lenders; and
(E)    may provide for the ability to participate on a pro rata basis, or on a
less than pro rata basis (but not on a greater than pro rata basis), in any
voluntary or mandatory prepayments of Loans hereunder, as specified in the
applicable Incremental Amendment;
(ii)    there shall be no borrowers or guarantors in respect of such Incremental
Loans that are not the Borrower or a Guarantor, and Incremental Loans shall not
be secured

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by assets other than Collateral (except pursuant to an escrow or similar
arrangement with respect to the proceeds of such Incremental Loans or
Incremental Commitments).
(f)    Incremental Amendment. Commitments in respect of Incremental Loans shall
become Commitments, under this Agreement pursuant to an amendment (an
“Incremental Amendment”) to this Agreement and, as appropriate, the other Credit
Documents, executed by the Borrower, each Incremental Lender providing such
Commitments and the Administrative Agent (at the written direction of the
Borrower). The Incremental Amendment may, without the consent of any other
Credit Party or Lender, effect such amendments to this Agreement and the other
Credit Documents (i) as may be necessary or appropriate, in the reasonable
opinion of the Borrower (and not reasonably objected to by the Majority Lenders
in writing within 10 days after notice thereof), to effect the provisions of
this Section 2.2, and/or (ii) so long as such amendments are not materially
adverse to the Lenders, such other changes as may be necessary or appropriate,
in the reasonable opinion of the Borrower (and not reasonably objected to by the
Majority Lenders in writing within 10 days after notice thereof), to maintain
the fungibility of any such Incremental Loans with any tranche of
then-outstanding Loans. The Borrower may use the proceeds, if any, of the
Incremental Loans for any purpose not prohibited by this Agreement. No Lender
shall be obligated to provide any Incremental unless it so agrees.
(g)    This Section 2.2 shall supersede any provisions in Section 14.8 to the
contrary.

2.3    Type of Loans.  Notwithstanding anything to the contrary in this
Agreement, except as set forth in Section 2.7 or Section 2.11, unless the
Required Lenders shall otherwise agree in writing, all Loans shall be LIBOR
Loans.

2.4    Notice of Borrowing. Whenever the Borrower desires to incur Loans, other
than on the Effective Date, the Borrower shall give the Administrative Agent at
the Administrative Agent’s Office, (i) prior to 1:00 p.m. (New York City time)
at least three (3) Business Days’ prior written notice of each Borrowing of
Loans if such Loans are to be initially LIBOR Loans (or prior to 1:00 p.m. (New
York City time) two (2) Business Days’ prior written notice in the case of a
Borrowing of Loans to be made on the Effective Date initially as LIBOR Loans)
and (ii) prior to 1:00 p.m. (New York City time) at least one (1) Business Day’s
prior written notice of each Borrowing of Loans that are to be ABR Loans.  Such
notice (a “Notice of Borrowing”) shall specify (A) the aggregate principal
amount of the Loans to be made pursuant to such Borrowing, (B) the date of the
Borrowing (which shall be a Business Day), and (C) whether the respective
Borrowing shall consist of ABR Loans and/or LIBOR Loans and, if LIBOR Loans, the
Interest Period to be initially applicable thereto (if no Interest Period is
selected, the Borrower shall be deemed to have selected an Interest Period of
one month’s duration).  The Administrative Agent shall promptly give

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each Lender, as applicable, written notice (or telephonic notice promptly
confirmed in writing) of each proposed Borrowing and of the other matters
covered by the related Notice of Borrowing.

2.5    Disbursement of Funds.
(a)    No later than 1:00 p.m. (New York City time) on the date specified in
each Notice of Borrowing, each Lender will make available its pro rata portion
of each Borrowing requested to be made on such date in the manner provided
below; provided that on the Effective Date, such funds shall be made available
by 9:00 a.m. (New York City time) or such earlier time as may be agreed among
the Lenders and the Borrower for the purpose of consummating the Transactions.
(b)    Each Lender shall make available all amounts it is to fund to the
Borrower under any Borrowing in immediately available funds to the
Administrative Agent at the Administrative Agent’s Office in Dollars, and the
Administrative Agent will make available to the Borrower, by depositing or
wiring to an account as designated by the Borrower in the Notice of Borrowing to
the Administrative Agent the aggregate amount of the Commitments, provided that
on the Effective Date, the Lenders shall deposit all such amounts directly into
the Escrow Account, which may then be either (i) released to the First Lien
First Out Administrative Agent by the agent thereunder in accordance with the
Escrow Agreement in order to repay Indebtedness incurred under the First Lien
First Out Facilities at par (and any accrued and unpaid interest due thereon) or
(ii) used to repay amounts borrowed hereunder.  Unless the Administrative Agent
shall have been notified by any Lender prior to the date of any such Borrowing
that such Lender does not intend to make available to the Administrative Agent
its portion of the Borrowing or Borrowings to be made on such date, the
Administrative Agent may assume that such Lender has made such amount available
to the Administrative Agent on such date of Borrowing, and the Administrative
Agent, in reliance upon such assumption, shall make available to the Borrower a
corresponding amount.  If such corresponding amount is not in fact made
available to the Administrative Agent by such Lender, the Administrative Agent
shall be entitled to recover such corresponding amount from such Lender.  The
Administrative Agent shall also be entitled to recover from such Lender interest
on such corresponding amount in respect of each day from the date such
corresponding amount was made available by the Administrative Agent to the
Borrower to the date such corresponding amount is recovered by the
Administrative Agent, at a rate per annum equal to the Overnight Rate. In no
event shall the Administrative Agent be responsible for advancing funds
hereunder.
(c)    Nothing in this Section 2.5 shall be deemed to relieve any Lender from
its obligation to fulfill its commitments hereunder or to prejudice any rights
that the Borrower may have against any Lender as a result of any default by such
Lender hereunder (it being understood,

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however, that no Lender shall be responsible for the failure of any other Lender
to fulfill its commitments hereunder).

2.6    Repayment of Loans; Evidence of Debt.
(a)    The outstanding principal balance of the Loans shall be due and payable
on the Maturity Date.
(b)    Each Lender shall maintain in accordance with its usual practice an
account or accounts evidencing the indebtedness of the Borrower to the
appropriate lending office of such Lender resulting from each Loan made by such
lending office from time to time, including the amounts of principal and
interest payable and paid to such lending office from time to time under this
Agreement.
(c)    The Administrative Agent, on behalf of the Borrower, shall maintain the
Register pursuant to Section 14.6(b), and a subaccount for each Lender, in which
Register and subaccounts (taken together) shall be recorded (i) the amount of
each Loan made hereunder, the Type of each Loan made and the Interest Period
applicable thereto, (ii) the amount of any principal or interest due and payable
or to become due and payable from the Borrower to each Lender and (iii) the
amount of any sum received by the Administrative Agent hereunder from the
Borrower and each Lender’s share thereof.
(d)    The entries made in the Register and accounts and subaccounts maintained
pursuant to clauses (b) and (c) of this Section 2.6 shall, to the extent
permitted by applicable Requirements of Law, be prima facie evidence of the
existence and amounts of the obligations of the Borrower therein recorded;
provided, however, that the failure of any Lender or the Administrative Agent to
maintain such account, such Register or such subaccount, as applicable, or any
error therein, shall not in any manner affect the obligation of the Borrower to
repay (with applicable interest) the Loans made to the Borrower by such Lender
in accordance with the terms of this Agreement.
(e)    Any Lender may request that Loans made by it be evidenced by a promissory
note substantially in the form of Exhibit H hereto.  In such event, the Borrower
shall prepare, execute and deliver to such Lender a promissory note payable to
such Lender (or, if requested by such Lender, to such Lender and its registered
assigns).  Thereafter, the Loans evidenced by such promissory note and interest
thereon shall at all times (including after assignment pursuant to Section 14.6)
be represented by one or more promissory notes in such form payable to the payee
named therein (or, if such promissory note is a registered note, to such payee
and its registered assigns).

2.7    Conversions and Continuations.

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(c)    Subject to Section 2.3 and the penultimate sentence of this clause (a),
(i) the Borrower shall have the option on any Business Day to convert all or a
portion equal to at least $1,000,000 (and in multiples of $100,000 in excess
thereof) of the outstanding principal amount of Loans of one Type into a
Borrowing or Borrowings of another Type and (ii) the Borrower shall have the
option on any Business Day to continue the outstanding principal amount of any
LIBOR Loans as LIBOR Loans for an additional Interest Period; provided that
(A) no partial conversion of LIBOR Loans shall reduce the outstanding principal
amount of LIBOR Loans made pursuant to a single Borrowing to less than
$1,000,000, (B) ABR Loans may not be converted into LIBOR Loans if an Event of
Default is in existence on the date of the conversion and the Majority Lenders 
have determined in their sole discretion not to permit such conversion,
(C) LIBOR Loans may not be continued as LIBOR Loans for an additional Interest
Period if an Event of Default is in existence on the date of the proposed
continuation and the Majority Lenders  have determined in their sole discretion
not to permit such continuation, and (D) the maximum number of Borrowings (and
Interest Periods) outstanding resulting from conversions pursuant to this
Section 2.7 shall be three.  Each such conversion or continuation shall be
effected by the Borrower by giving the Administrative Agent at the
Administrative Agent’s Office prior to 1:00 p.m. (New York City time) at least
(1) three Business Days’, in the case of a continuation of or conversion to
LIBOR Loans or (2) the date of conversion, in the case of a conversion into ABR
Loans, prior written notice (each, a “Notice of Conversion or Continuation”)
specifying the Loans to be so converted or continued, the Type of Loans to be
converted into or continued and, if such Loans are to be converted into or
continued as LIBOR Loans, the Interest Period(s) to be initially applicable
thereto (if no Interest Period is selected, the Borrower shall be deemed to have
selected an Interest Period of one month’s duration).  The Administrative Agent
shall give each applicable Lender notice as promptly as practicable of any such
proposed conversion or continuation affecting any of its Loans.
(d)    If any Event of Default is in existence at the time of any proposed
continuation of any LIBOR Loans and the Majority Lenders have determined in
their sole discretion not to permit such continuation, such LIBOR Loans shall be
automatically converted on the last day of the current Interest Period into ABR
Loans.  If upon the expiration of any Interest Period in respect of LIBOR Loans,
the Borrower has failed to elect a new Interest Period to be applicable thereto
as provided in clause (a) above, the Borrower shall be deemed to have elected an
Interest Period of one month’s duration.
(e)    Notwithstanding anything to the contrary herein, the Borrower may deliver
a Notice of Conversion or Continuation pursuant to which the Borrower elects to
irrevocably continue the outstanding principal amount of any Loans as LIBOR
Loans for each Interest Period.

2.8    Relationship Among Lenders.  It is understood that (a) no Lender shall be
responsible for any default by any other Lender in its obligation to make Loans
hereunder and that each Lender severally but not jointly shall be obligated to
make the Loans provided to be made by it hereunder,

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regardless of the failure of any other Lender to fulfill its commitments
hereunder and (b) failure by a Lender to perform any of its obligations under
any of the Credit Documents shall not release any Person from performance of its
obligation under any Credit Document.

2.9    Interest.
(a)    The unpaid principal amount of each ABR Loan shall bear interest from the
date of the Borrowing thereof until maturity (whether by acceleration or
otherwise) at a rate per annum that shall at all times be the Applicable Margin
plus the ABR, in each case, in effect from time to time.
(b)    The unpaid principal amount of each LIBOR Loan shall bear interest from
the date of the Borrowing thereof until maturity thereof (whether by
acceleration or otherwise) at a rate per annum that shall at all times be the
Applicable Margin plus the relevant LIBOR Rate, in each case, in effect from
time to time.
(c)    Upon the occurrence and during the continuance of an Event of Default,
the Loans and all interest payable thereon shall bear interest at a rate per
annum that is (the “Default Rate”) (A) in the case of overdue principal, the
rate that would otherwise be applicable thereto plus 2% or (B) in the case of
any overdue interest, to the extent permitted by applicable Requirements of Law,
the rate described in Section 2.9(a) plus 2% from the date of such non-payment
to the date on which such amount is paid in full (after as well as before
judgment).
(d)    Interest on each Loan shall accrue from and including the date of any
Borrowing to but excluding the date of any repayment thereof and shall be
payable in Dollars; provided that any Loan that is repaid on the same date on
which it is made shall bear interest for one day.  Except as provided below,
interest shall be payable (i) in respect of each ABR Loan, quarterly in arrears
on the last Business Day of each March, June, September and December, (ii) in
respect of each LIBOR Loan, on the last day of each Interest Period applicable
thereto and, in the case of an Interest Period in excess of three months, on
each date occurring at three-month intervals after the first day of such
Interest Period, (iii) in respect of each Loan, (A) on any prepayment (on the
amount prepaid), (B) at maturity (whether by acceleration or otherwise) and
(C) after such maturity, on demand.
(e)    All computations of interest hereunder shall be made in accordance with
Section 5.5.
(f)    The Administrative Agent, upon determining the interest rate for any
Borrowing of LIBOR Loans, shall promptly notify the Borrower and the relevant
Lenders thereof. 

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Each such determination shall, absent clearly demonstrable error, be final and
conclusive and binding on all parties hereto.

2.10    Interest Periods.  At the time the Borrower gives a Notice of Borrowing
or Notice of Conversion or Continuation in respect of the making of, or
conversion into or continuation as, a Borrowing of LIBOR Loans in accordance
with Section 2.7(a), the Borrower shall give the Administrative Agent written
notice of the Interest Period applicable to such Borrowing, which Interest
Period shall, at the option of the Borrower be a one, two, three or six or (if
available to all the Lenders making such LIBOR Loans as determined by such
Lenders in good faith based on prevailing market conditions) a 12-month period
or any shorter period requested by the Borrower; provided that, notwithstanding
the foregoing, the initial Interest Period beginning on the Effective Date may
be for a period less than one month if agreed upon by the Borrower and each of
the Lenders.
Notwithstanding anything to the contrary contained above:
(a)    the initial Interest Period for any Borrowing of LIBOR Loans shall
commence on the date of such Borrowing (including the date of any conversion
from a Borrowing of ABR Loans) and each Interest Period occurring thereafter in
respect of such Borrowing shall commence on the day on which the next preceding
Interest Period expires;
(b)    if any Interest Period relating to a Borrowing of LIBOR Loans begins on
the last Business Day of a calendar month or begins on a day for which there is
no numerically corresponding day in the calendar month at the end of such
Interest Period, such Interest Period shall end on the last Business Day of the
calendar month at the end of such Interest Period;
(c)    if any Interest Period would otherwise expire on a day that is not a
Business Day, such Interest Period shall expire on the next succeeding Business
Day; provided that, if any Interest Period in respect of a LIBOR Loan would
otherwise expire on a day that is not a Business Day, but is a day of the month
after which no further Business Day occurs in such month, such Interest Period
shall expire on the next preceding Business Day; and
(d)    the Borrower shall not be entitled to elect any Interest Period in
respect of any LIBOR Loan if such Interest Period would extend beyond the
Maturity Date.

2.11    Increased Costs, Illegality, Etc.
(a)    In the event that (x) in the case of clause (i) below, the Majority
Lenders, or (y) in the case of clauses (ii) and (iii) below, any Lender, shall
have reasonably determined (which

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determination shall, absent clearly demonstrable error, be final and conclusive
and binding upon all parties hereto):
(i)    on any date for determining the LIBOR Rate for any Interest Period that
(A) deposits in the principal amounts of the Loans comprising such LIBOR
Borrowing are not generally available in the relevant market, (B) by reason of
any changes arising on or after the Effective Date affecting the interbank LIBOR
market, adequate and fair means do not exist for ascertaining the applicable
interest rate on the basis provided for in the definition of LIBOR Rate, or
(C) the LIBOR Rate for such Interest Period will not adequately and fairly
reflect the cost to such Lenders of making or maintaining their Loans included
in such Borrowing for such Interest Period; or
(ii)    that, due to a Change in Law occurring at any time or after the
Effective Date, which Change in Law shall (A) impose, modify or deem applicable
any reserve, special deposit, compulsory loan, insurance charge or similar
requirement against assets of, deposits with or for the account of, or credit
extended by, any Lender, (B) subject any Lender to any Tax with respect to any
Credit Document or any LIBOR Loan made by it (other than (i) Taxes indemnifiable
under Section 5.4, or (ii) Excluded Taxes), or (C) impose on any Lender or the
London interbank market any other condition, cost or expense affecting this
Agreement or LIBOR Loans made by such Lender, which results in the cost to such
Lender of making, converting into, continuing or maintaining LIBOR Loans
hereunder increasing by an amount which such Lender reasonably deems material or
the amounts received or receivable by such Lender hereunder with respect to the
foregoing shall be reduced; or
(iii)    at any time, that the making or continuance of any LIBOR Loan has
become unlawful as a result of compliance by such Lender in good faith with any
Requirement of Law (or would conflict with any such Requirement of Law not
having the force of law even though the failure to comply therewith would not be
unlawful);
then, and in any such event, such Lenders shall within a reasonable time
thereafter give written notice to the Borrower and to the Administrative Agent
of such determination (which notice the Administrative Agent shall promptly
transmit to each of the other Lenders).  Thereafter (x) in the case of clause
(i) above, LIBOR Loans shall no longer be available until such time as the
Majority Lenders notify the Borrower and the Administrative Agent that the
circumstances giving rise to such notice by the Lenders no longer exist (such
notification not to be unreasonably withheld or delayed), and any Notice of
Borrowing or Notice of Conversion or Continuation given by the Borrower with
respect to LIBOR Loans that have not yet been incurred shall be deemed rescinded
by the Borrower, (y) in the case of clause (ii) above, the Borrower shall pay to
such Lender, promptly (but no later than fifteen days) after receipt of written
demand therefor such additional amounts as

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shall be required to compensate such Lender for such increased costs or
reductions in amounts receivable hereunder (it being agreed that a written
notice as to the additional amounts owed to such Lender, showing in reasonable
detail the basis for the calculation thereof, submitted to the Borrower by such
Lender shall, absent clearly demonstrable error, be final and conclusive and
binding upon all parties hereto) and (z) in the case of clause (iii) above, the
Borrower shall take one of the actions specified in Section 2.11(b) as promptly
as possible and, in any event, within the time period required by applicable
Requirements of Law.
(b)    At any time that any LIBOR Loan is affected by the circumstances
described in Section 2.11(a)(ii) or (iii), the Borrower may (and in the case of
a LIBOR Loan affected pursuant to Section 2.11(a)(iii) shall) either (i) if the
affected LIBOR Loan is then being made pursuant to a Borrowing, cancel such
Borrowing by giving the Administrative Agent written notice thereof on the same
date that the Borrower was notified by a Lender pursuant to Section 2.11(a)(ii)
or (iii) or (ii) if the affected LIBOR Loan is then outstanding, upon at least
three Business Days’ notice to the Administrative Agent, require the affected
Lender to convert each such LIBOR Loan into an ABR Loan; provided that if more
than one Lender is affected at any time, then all affected Lenders must be
treated in the same manner pursuant to this Section 2.11(b).
(c)    If, after the Effective Date, any Change in Law relating to capital
adequacy or liquidity requirements of any Lender or compliance by any Lender or
its parent with any Change in Law relating to capital adequacy or liquidity
requirements occurring after the Effective Date, has or would have the effect of
reducing the rate of return on such Lender’s or its parent’s capital or assets
as a consequence of such Lender’s commitments or obligations hereunder to a
level below that which such Lender or its parent could have achieved but for
such Change in Law (taking into consideration such Lender’s or its parent’s
policies with respect to capital adequacy or liquidity requirements), then from
time to time, promptly (but in any event no later than fifteen (15) days) after
written demand by such Lender (with a copy to the Administrative Agent), the
Borrower shall pay to such Lender such additional amount or amounts as will
compensate such Lender or its parent for such reduction, it being understood and
agreed, however, that a Lender shall not be entitled to such compensation as a
result of such Lender’s compliance with, or pursuant to any request or directive
to comply with, any applicable Requirement of Law as in effect on the Effective
Date (except as otherwise set forth in the definition of Change in Law).  Each
Lender, upon determining in good faith that any additional amounts will be
payable pursuant to this Section 2.11(c), will give prompt written notice
thereof to the Borrower, which notice shall set forth in reasonable detail the
basis of the calculation of such additional amounts, although the failure to
give any such notice shall not, subject to Section 2.14, release or diminish the
Borrower’s obligations to pay additional amounts pursuant to this
Section 2.11(c) upon receipt of such notice.

2.12    Compensation.  If (a) any payment of principal of any LIBOR Loan is made
by the Borrower to or for the account of a Lender other than on the last day of
the Interest Period for such

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LIBOR Loan as a result of a payment or conversion pursuant to Sections 2.6, 2.7,
2.11, 5.1 or 5.2, as a result of acceleration of the maturity of the Loans
pursuant to Article XII or for any other reason, (b) any Borrowing of LIBOR
Loans is not made on the date specified in a Notice of Borrowing, (c) any ABR
Loan is not converted into a LIBOR Loan on the date specified in a Notice of
Conversion or Continuation, (d) any LIBOR Loan is not continued as a LIBOR Loan
on the date specified in a Notice of Conversion or Continuation or (e) any
prepayment of principal of any LIBOR Loan is not made as a result of a withdrawn
notice of prepayment pursuant to Section 5.1 or 5.2, the Borrower shall after
the Borrower’s receipt of a written request by such Lender (which request shall
set forth in reasonable detail the basis for requesting such amount and shall be
conclusive and binding in the absence of manifest error), pay to the
Administrative Agent (within fifteen days after such request) for the account of
such Lender any amounts required to compensate such Lender for any additional
losses, costs or expenses that such Lender may reasonably incur as a result of
such payment, failure to convert, failure to continue or failure to prepay,
including any loss, cost or expense (excluding loss of anticipated profits)
actually incurred by reason of the liquidation or reemployment of deposits or
other funds acquired by any Lender to fund or maintain such LIBOR Loan.

2.13    Change of Lending Office.  Each Lender agrees that, upon the occurrence
of any event giving rise to the operation of Section 2.11(a)(ii), 2.11(a)(iii),
2.11(c) or 5.4 with respect to such Lender, it will, if requested by the
Borrower use reasonable efforts (subject to overall policy considerations of
such Lender) to designate another lending office for any Loans affected by such
event; provided that such designation is made on such terms that such Lender and
its lending office suffer no economic, legal or regulatory disadvantage, with
the object of avoiding the consequence of the event giving rise to the operation
of any such Section.  Nothing in this Section 2.13 shall affect or postpone any
of the obligations of the Borrower or the right of any Lender provided in
Section 2.11 or 5.4.

2.14    Notice of Certain Costs.  Notwithstanding anything in this Agreement to
the contrary, to the extent any notice required by Section 2.11, 2.12 or 5.4 is
given by any Lender more than 180 days after such Lender has knowledge (or
should have had knowledge) of the occurrence of the event giving rise to the
additional cost, reduction in amounts, loss, tax or other additional amounts
described in such Sections, such Lender shall not be entitled to compensation
under Section 2.11, 2.12 or 5.4, as the case may be, for any such amounts
incurred or accruing prior to the 181st day prior to the giving of such notice
to the Borrower; provided that if the circumstance giving rise to such claim is
retroactive, then such 180-day period referred to above shall be extended to
include the period of retroactive effect thereof.

ARTICLE III
    
[RESERVED]

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ARTICLE IV
FEES; COMMITMENTS

4.1    Upfront Fees. The Borrower agrees to pay on the Effective Date to each
Lender party to this Agreement on the Effective Date, as fee compensation for
the funding of such Lender’s Loan an upfront fee (the “Upfront Fee”) in an
amount equal to 1.0% of the stated principal amount of such Lender’s Loan made
on the Effective Date. Such Upfront Fee will be in all respects fully earned,
due and payable on the Effective Date and non-refundable and non-creditable
thereafter and shall be netted against Loans made by such Lender on the
Effective Date.

4.2    Mandatory Termination or Reduction of Commitments. The Commitment of each
Lender in respect of the Initial Loans on the Effective Date shall be
automatically and permanently reduced to $0 upon the making of such Lender’s
Loan pursuant to Section 2.1.

ARTICLE V
    
PAYMENTS

5.1    Optional and Certain Other Prepayments and Repayments; Call
Protection/Make-Whole. 
(a)    If, prior to the Make-Whole Expiry Date, the Borrower prepays,
refinances, substitutes, replaces or is required to repay, for any reason,
whether by mandatory or optional prepayment, at maturity or following
acceleration of the maturity thereof (or if the maturity of the Loans shall be
accelerated under any provisions of Article XII), in connection with an Event of
Default and/or in connection with a voluntary or involuntary Bankruptcy Event or
otherwise, all or any part of the principal balance of the Loans (including,
without limitation, pursuant to any amendment, waiver or consent to this
Agreement that effectuates any such prepayment, refinancing, substitution,
replacement or other required repayment), then on the date of such prepayment,
refinancing, substitution, replacement or other required repayment (the
“Make-Whole Payment Date”), in addition to the amount so prepaid, refinanced,
substituted, replaced, repaid or so accelerated (and any accrued and unpaid
interest due thereon), the Administrative Agent shall be entitled to, for the
ratable benefit of the Lenders, an amount equal to the Make-Whole Amount.
(b)    Each partial prepayment of (i) LIBOR Loans shall be in a minimum amount
of $500,000 and in multiples of $100,000 in excess thereof, and (ii) any ABR
Loans shall be in a minimum amount of $500,000 and in multiples of $100,000 in
excess thereof; provided that no partial prepayment of LIBOR Loans made pursuant
to a single Borrowing shall reduce the

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outstanding LIBOR Loans made pursuant to such Borrowing to an amount less than
$1,000,000 for such LIBOR Loans.
(c)    The Borrower shall give the Administrative Agent at the Administrative
Agent’s Office written notice of its intent to make such prepayment, the amount
of such prepayment and (in the case of LIBOR Loans) the specific Borrowing(s)
being prepaid or repaid, which notice shall be given by the Borrower no later
than 1:00 p.m. (New York City time) (i) in the case of LIBOR Loans, three
Business Days prior to and (ii) in the case of ABR Loans on the date of such
prepayment and shall promptly be transmitted by the Administrative Agent to each
of the Lenders. Each such notice shall specify the date and amount of such
prepayment and the Type of Loans to be prepaid or repaid.
(d)    Amounts prepaid or repaid may not be reborrowed.
(e)    The Borrower acknowledges that any optional prepayments under this
Agreement prior to the Discharge of the First Lien First Out Obligations are
subject to additional restrictions under the First Lien First Out Credit
Agreement.
(f)    The Administrative Agent shall not be responsible for calculating the
Make-Whole Amount.

5.2    Mandatory Prepayments.
(d)    Excess Cash Proceeds Prepayment. Within 60 days after the aggregate
amount of Excess Cash Proceeds exceeds $50,000,000, the Borrower shall apply the
entire amount of Excess Cash Proceeds to prepay Loans at a price equal to (i)
100% of the principal amount thereof plus (ii) accrued but unpaid interest, if
any, to the date of such prepayment; provided that prior to the Discharge of the
First Lien First Out Obligations, any such prepayment from Excess Cash Proceeds
shall only be required in an amount and to the extent permitted by the First
Lien First Out Credit Agreement at such time.
(e)    Escrow Prepayment.    Within three Business Days following the expiration
of the Tender Offer launched in connection with the Tender Offer Documents, the
Borrower shall apply any amounts still held in the Escrow Account plus any
additional amounts necessary to prepay Loans at a price equal to 100% of the
principal amount of the Loans to be so prepaid plus accrued and unpaid interest.

(f)    LIBOR Interest Periods.  In lieu of making any payment pursuant to this
Section 5.2 in respect of any LIBOR Loan, other than on the last day of the
Interest Period therefor so long as no Event of Default shall have occurred and
be continuing, the Borrower at its option

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may deposit, on behalf of the Borrower, with the Administrative Agent an amount
equal to the amount of the LIBOR Loan to be prepaid and such LIBOR Loan shall be
repaid on the last day of the Interest Period therefor in the required amount. 
Such deposit shall be held by the Administrative Agent in a corporate time
deposit account established on terms reasonably satisfactory to the
Administrative Agent, earning interest at the then customary rate for accounts
of such type.  Such deposit shall constitute cash collateral for the LIBOR Loans
to be so prepaid; provided that the Borrower may at any time direct that such
deposit be applied to make the applicable payment required pursuant to this
Section 5.2.

5.3    Method and Place of Payment.
(f)    Except as otherwise specifically provided herein, all payments under this
Agreement shall be made by the Borrower without set-off, counterclaim or
deduction of any kind, to the Administrative Agent for the ratable account of
the Lenders entitled thereto not later than 12:00 noon (New York City time), in
each case, on the date when due and shall be made in immediately available funds
at the Administrative Agent’s Office or at such other office as the
Administrative Agent shall specify for such purpose by notice to the Borrower;
it being understood that written or facsimile notice by the Borrower to the
Administrative Agent to make a payment from the funds in the Borrower’s account
at the Administrative Agent’s Office shall constitute the making of such payment
to the extent of such funds held in such account.  All repayments or prepayments
of any Loans (whether of principal, interest or otherwise) hereunder and all
other payments under each Credit Document shall be made in Dollars.  The
Administrative Agent will thereafter cause to be distributed on the following
Business Day (if payment was actually received by the Administrative Agent prior
to 2:00 p.m. (New York City time) or, otherwise, on the next succeeding Business
Day in the sole discretion of the Administrative Agent) like funds relating to
the payment of principal or interest or fees ratably to the Lenders entitled
thereto.
(g)    For purposes of computing interest or fees, any payments under this
Agreement that are made later than 2:00 p.m. (New York City time) shall be
deemed to have been made on the next succeeding Business Day in the sole
discretion of the Administrative Agent.  Whenever any payment to be made
hereunder shall be stated to be due on a day that is not a Business Day, the due
date thereof shall be extended to the next succeeding Business Day and, with
respect to payments of principal, interest shall be payable during such
extension at the applicable rate in effect immediately prior to such extension.

5.4    Net Payments.
(f)    Any and all payments made by or on behalf of the Borrower or any
Guarantor under this Agreement or any other Credit Document shall be made free
and clear of, and without deduction or withholding for or on account of, any
Indemnified Taxes or Other Taxes; provided

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that if the Borrower or any Guarantor or the Administrative Agent shall be
required by applicable Requirements of Law to deduct or withhold any Taxes from
such payments, then (i) the Borrower or such Guarantor or the Administrative
Agent shall make such deductions or withholdings as are reasonably determined by
the Borrower, such Guarantor or the Administrative Agent to be required by any
applicable Requirement of Law, (ii) the Borrower, such Guarantor or the
Administrative Agent, as applicable, shall timely pay the full amount deducted
or withheld to the relevant Governmental Authority within the time allowed and
in accordance with applicable Requirements of Law, and (iii) to the extent
withholding or deduction is required to be made on account of Indemnified Taxes
or Other Taxes, the sum payable by the Borrower or such Guarantor shall be
increased as necessary so that after making all required deductions and
withholdings (including deductions or withholdings applicable to additional sums
payable under this Section 5.4) the Administrative Agent or any Lender, as the
case may be, receives an amount equal to the sum it would have received had no
such deductions or withholdings been made.  Whenever any Indemnified Taxes or
Other Taxes are payable by the Borrower or such Guarantor, as promptly as
possible thereafter, the Borrower or Guarantor shall send to the Administrative
Agent for its own account or for the account of such Lender, as the case may be,
a certified copy of an official receipt (or other evidence acceptable to such
Lender, acting reasonably) received by the Borrower or such Guarantor showing
payment thereof.  After any payment of Taxes by any Credit Party or the
Administrative Agent to a Governmental Authority as provided in this Section
5.4, the Borrower shall deliver to the Administrative Agent or the
Administrative Agent shall deliver to the Borrower, as the case may be, a copy
of a receipt issued by such Governmental Authority evidencing such payment, a
copy of any return required by laws to report such payment or other evidence of
such payment reasonably satisfactory to the Borrower or the Administrative
Agent, as the case may be.
(g)    The Borrower shall timely pay and shall indemnify and hold harmless the
Administrative Agent and each Lender with regard to any Other Taxes (whether or
not such Other Taxes were correctly or legally imposed or asserted by the
relevant Governmental Authority).
(h)    The Borrower shall indemnify and hold harmless the Administrative Agent
and each Lender within 15 Business Days after written demand therefor, for the
full amount of any Indemnified Taxes or Other Taxes imposed on the
Administrative Agent or such Lender, as the case may be (including Indemnified
Taxes or Other Taxes imposed or asserted on or attributable to amounts payable
under this Section 5.4), and any reasonable expenses arising therefrom or with
respect thereto, whether or not such Indemnified Taxes or Other Taxes were
correctly or legally imposed or asserted by the relevant Governmental
Authority.  A certificate setting forth in reasonable detail the basis and
calculation of the amount of such payment or liability delivered to the Borrower
by a Lender or the Administrative Agent (as applicable) on its own behalf or on
behalf of a Lender shall be conclusive absent manifest error.

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(i)    Each Lender shall deliver to the Borrower and the Administrative Agent,
at such time or times reasonably requested by the Borrower or the Administrative
Agent, such properly completed and executed documentation prescribed by
applicable law and such other reasonably requested information  as will permit
the Borrower or the Administrative Agent, as the case may be, to determine (A)
whether or not any payments made hereunder or under any other Credit Document
are subject to Taxes, (B) if applicable, the required rate of withholding or
deduction, and (C) such Lender’s entitlement to any available exemption from, or
reduction of, applicable Taxes in respect of any payments to be made to such
Lender by any Credit Party pursuant to any Credit Document or otherwise to
establish such Lender’s status for withholding tax purposes in the applicable
jurisdiction.  In addition, any Lender, if requested by the Borrower or the
Administrative Agent, shall deliver such other documentation prescribed by
applicable law or reasonably requested by the Borrower or the Administrative
Agent as will enable the Borrower or the Administrative Agent to determine
whether or not such Lender is subject to backup withholding or information
reporting requirements. Notwithstanding anything to the contrary in the
preceding two sentences, the completion, execution and submission of such
documentation (other than the documentation set forth in Section 5.4(e), (h) and
(i)) shall not be required if in the Lender’s reasonable 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.
(j)    Without limiting the generality of the foregoing, each Non-U.S. Lender
with respect to any Loan made to the Borrower shall, to the extent it is legally
entitled to do so:
(i)    deliver to the Borrower and the Administrative Agent, prior to the date
on which the first payment to the Non-U.S. Lender is due hereunder, two copies
of (A) in the case of a Non-U.S. Lender claiming exemption from U.S. federal
withholding tax under Section 871(h) or 881(c) of the Code with respect to
payments of “portfolio interest”, United States Internal Revenue Service Form
W-8BEN-E (or any applicable successor form) (together with a certificate
representing that such Non-U.S. Lender is not a bank for purposes of Section
881(c) of the Code, is not a 10% shareholder (within the meaning of Section
871(h)(3)(B) of the Code) of the Borrower, is not a CFC related to the Borrower
(within the meaning of Section 864(d)(4) of the Code) and the interest payments
in question are not effectively connected with the United States trade or
business conducted by such Lender), (B) Internal Revenue Service Form W-8BEN-E
or Form W-8ECI (or any applicable successor form), in each case properly
completed and duly executed by such Non-U.S. Lender claiming complete exemption
from, or reduced rate of, U.S. Federal withholding tax on payments by the
Borrower under this Agreement, (C) Internal Revenue Service Form W-8IMY (or any
applicable successor form) and all necessary attachments (including the forms
described in clauses (A) and (B) above, as required) or (D) any other form
prescribed by applicable law as a basis for claiming exemption from or a
reduction in United States federal withholding tax duly completed together with
such supplementary

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documentation as may be prescribed by applicable law to permit the Borrower to
determine the withholding or deduction required to be made; and
(ii)    deliver to the Borrower and the Administrative Agent two further copies
of any such form or certification (or any applicable successor form) on or
before the date that any such form or certification expires or becomes obsolete
or invalid, after the occurrence of any event requiring a change in the most
recent form previously delivered by it to the Borrower, and from time to time
thereafter if reasonably requested by the Borrower and the Administrative Agent;
unless in any such case any Change in Law has occurred prior to the date on
which any such delivery would otherwise be required that renders any such form
inapplicable or would prevent such Non-U.S. Lender from duly completing and
delivering any such form with respect to it and such Non-U.S. Lender promptly so
advises the Borrower and the Administrative Agent.  Each Person that shall
become a Participant pursuant to Section 14.6 or a Lender pursuant to Section
14.6 shall, upon the effectiveness of the related transfer, be required to
provide all the forms and statements required pursuant to this Section 5.4(e);
provided that in the case of a Participant such Participant shall furnish all
such required forms and statements to the Lender from which the related
participation shall have been purchased.
(k)    If any Lender or the Administrative Agent, as applicable, determines, in
its sole discretion, that it had received and retained a refund of an
Indemnified Tax or Other Tax for which a payment has been made by the Borrower
or any Guarantor pursuant to this Agreement or any other Credit Document, which
refund in the good faith judgment of such Lender or the Administrative Agent, as
the case may be, is attributable to such payment made by the Borrower or any
Guarantor, then such Lender or the Administrative Agent, as the case may be,
shall reimburse the Borrower or such Guarantor for such amount (net of all
out-of-pocket expenses of such Lender or the Administrative Agent, as the case
may be, and without interest other than any interest received thereon from the
relevant Governmental Authority with respect to such refund) as such Lender or
the Administrative Agent, as the case may be, determines in its sole discretion
to be the proportion of the refund as will leave it, after such reimbursement,
in no better or worse position (taking into account expenses or any taxes
imposed on the refund) than it would have been in if the payment had not been
required; provided that the Borrower or such Guarantor, upon the request of such
Lender or the Administrative Agent, agrees to repay the amount paid over to the
Borrower or such Guarantor (plus any penalties, interest or other charges
imposed by the relevant Governmental Authority) to such Lender or the
Administrative Agent in the event such Lender or the Administrative Agent is
required to repay such refund to such Governmental Authority.  In such event,
such Lender or the Administrative Agent, as the case may be, shall, at the
Borrower’s request, provide the Borrower with a copy of any notice of assessment
or other evidence of the requirement to repay such refund received from the
relevant Governmental Authority (provided that such Lender or the

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Administrative Agent may delete any information therein that it deems
confidential).  Each Lender and the Administrative Agent shall claim any refund
that it determines is available to it, unless it concludes in its sole
discretion that it would be adversely affected by making such a claim.  No
Lender nor the Administrative Agent shall be obliged to make available its tax
returns (or any other information relating to its taxes that it deems
confidential) to any Credit Party in connection with this clause (f) or any
other provision of this Section 5.4.
(l)    If the Borrower determines that a reasonable basis exists for contesting
a Tax, each Lender or the Administrative Agent, as the case may be, shall use
reasonable efforts to cooperate with the Borrower as the Borrower may reasonably
request in challenging such Tax.  The Borrower shall indemnify and hold each
Lender and the Administrative Agent harmless against any out-of-pocket expenses
incurred by such Person in connection with any request made by the Borrower
pursuant to this Section 5.4(g).  Nothing in this Section 5.4(g) shall obligate
any Lender or the Administrative Agent to take any action that such Person, in
its sole judgment, determines may result in a material detriment to such Person.
(m)    The Administrative Agent and each Lender that is a United States person
under Section 7701(a)(30) of the Code shall deliver to the Borrower and the
Administrative Agent two Internal Revenue Service Forms W-9 (or substitute or
successor form), properly completed and duly executed, certifying that such
Person is exempt from United States federal backup withholding (i) on or prior
to the Effective Date (or on or prior to the date it becomes a party to this
Agreement), (ii) on or before the date that such form expires or becomes
obsolete or invalid, (iii) after the occurrence of a change in Person’s
circumstances requiring a change in the most recent form previously delivered by
it to the Borrower and the Administrative Agent, and (iv) from time to time
thereafter if reasonably requested by the Borrower or the Administrative Agent.
(n)    If a payment made to any Lender or the Administrative Agent under this
Agreement or any other Credit Document would be subject to U.S. federal
withholding tax imposed by FATCA if such Person 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 Person 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, to determine that such Person has or has not complied
with such Person’s obligations under FATCA or to determine the amount, if any,
to deduct and withhold from such payment.  Solely for purposes of this Section
5.4(i), “FATCA” shall include any amendments made to FATCA after the date of
this Agreement.

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(o)    Notwithstanding anything herein to the contrary, the Borrower hereby
agrees that the Administrative Agent shall be entitled to make any withholding
or deduction from payments to the extent necessary to comply with FATCA for
which the Administrative Agent shall not have liability. The Borrower agrees to
indemnify and hold harmless the Administrative Agent for any losses it may
suffer due to actions it takes to comply with FATCA. The terms of this section
shall survive the termination of this Agreement and the resignation or removal
of the Administrative Agent.
(p)    The agreements in this Section 5.4 shall survive the termination of this
Agreement and the payment of the Loans and all other amounts payable hereunder.

5.5    Computations of Interest and Fees. Except as provided in the next
succeeding sentence, Interest on LIBOR Loans and ABR Loans shall be calculated
on the basis of a 360-day year for the actual days elapsed.  Interest on ABR
Loans in respect of which the rate of interest is calculated on the basis of the
Administrative Agent’s prime rate and interest on overdue interest shall be
calculated on the basis of a 365- (or 366-, as the case may be) day year for the
actual days elapsed.

5.6    Limit on Rate of Interest.
(g)    No Payment Shall Exceed Lawful Rate.  Notwithstanding any other term of
this Agreement, the Borrower shall not be obligated to pay any interest or other
amounts under or in connection with this Agreement or otherwise in respect to
any of the Obligations in excess of the amount or rate permitted under or
consistent with any applicable law, rule or regulation.
(h)    Payment at Highest Lawful Rate.  If the Borrower is not obliged to make a
payment that it would otherwise be required to make, as a result of Section
5.6(a), the Borrower shall make such payment to the maximum extent permitted by
or consistent with applicable laws, rules and regulations.
(i)    Adjustment if Any Payment Exceeds Lawful Rate.  If any provision of this
Agreement or any of the other Credit Documents would obligate the Borrower or
any other Credit Party to make any payment of interest or other amount payable
to any Lender in an amount or calculated at a rate that would be prohibited by
any applicable Requirement of Law, then notwithstanding such provision, such
amount or rate shall be deemed to have been adjusted with retroactive effect to
the maximum amount or rate of interest, as the case may be, as would not be so
prohibited by applicable Requirements of Law, such adjustment to be effected, to
the extent necessary, by reducing the amount or rate of interest required to be
paid by the Borrower to the affected Lender under Section 2.9.

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(j)    Rebate of Excess Interest.  Notwithstanding the foregoing, and after
giving effect to all adjustments contemplated thereby, if any Lender shall have
received from the Borrower an amount in excess of the maximum permitted by any
applicable Requirement of Law, then the Borrower shall be entitled, by notice in
writing to the Administrative Agent to obtain reimbursement from that Lender in
an amount equal to such excess, and pending such reimbursement, such amount
shall be deemed to be an amount payable by that Lender to the Borrower.

ARTICLE VI
CONDITIONS PRECEDENT TO EFFECTIVENESS
This Agreement shall be effective upon the satisfaction of the following
conditions precedent:

6.1    Certain Credit Documents and Other Matters.  The Administrative Agent
shall have received (including by facsimile or other electronic means):
(g)     this Agreement (including all Schedules and Exhibits hereto), executed
and delivered by a duly Authorized Officer of the Borrower, the Administrative
Agent and each Lender;
(h)    A copy of the executed First Lien First Out Fifth Amendment;
(i)    evidence satisfactory to it that the holders of no less than $500,000,000
in aggregate face amount of the Existing Notes have tendered such Existing Notes
pursuant to a Tender Offer; and
(j)    a promissory note executed by the Borrower in favor of each Lender that
has requested a promissory note;

6.2    Secretary’s Certificate of the Borrower.  The Administrative Agent shall
have received certificates of the secretary or an assistant secretary of the
Borrower containing specimen signatures of the Persons authorized to execute
Credit Documents to which the Borrower is a party or any other documents
provided for herein or therein, together with (a) a copy of the resolutions, in
form and substance reasonably satisfactory to the Administrative Agent, of the
board of directors Borrower (or a duly authorized committee thereof) authorizing
(i) the execution, delivery and performance of this Agreement (and any
agreements relating thereto) to which it is a party and (ii) the extensions of
credit contemplated hereunder and (b) true and complete copies of each of the
organizational documents of the Borrower as of the Effective Date.

6.3    Good Standing Certificate of the Borrower. The Administrative Agent shall
have received a certificate of good standing (or the equivalent) from the
appropriate governing agency of the Borrower’s jurisdiction of organization.

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6.4    Legal Opinions.  The Administrative Agent shall have received the
executed legal opinion of Sullivan & Cromwell LLP, counsel to the Borrower, in
the form attached as Exhibit J-1.

6.5    Closing Certificates.  The Administrative Agent shall have received a
certificate of the Credit Parties, dated the Effective Date, substantially in
the form of Exhibit F, with appropriate insertions, executed by the President or
any Vice President and the Secretary or any Assistant Secretary of each Credit
Party, and attaching the documents referred to in Section 6.2.

6.6    Secretary’s Certificates of the Credit Parties.  The Administrative Agent
shall have received certificates of the secretary or an assistant secretary of
each Credit Party as of the Effective Date containing specimen signatures of the
Persons authorized to execute Credit Documents to which each such Credit Party
is a party or any other documents provided for herein or therein, together with
(a) a copy of the resolutions of the board of directors of such Credit Party (or
a duly authorized committee thereof) authorizing (i) the execution, delivery and
performance of this Agreement (and any agreements relating thereto) to which it
is a party and (ii) the extensions of credit contemplated hereunder and (b) true
and complete copies of each of the organizational documents of such Credit Party
as of the Effective Date.

6.7    Fees and Expenses.  To the extent invoiced at least three Business Days
prior to the Effective Date (except as otherwise reasonably agreed by the
Borrower), reasonable out-of-pocket expenses of the Administrative Agent
required to be paid under Section 14.5, shall, upon the initial Borrowings
hereunder, have been, or will be substantially concurrently paid.

6.8    Patriot Act.  The Administrative Agent and the Joint Bookrunners shall
have received all documentation and other information about the Borrower and the
Guarantors as shall have been reasonably requested in writing by the
Administrative Agent or the Joint Bookrunners prior to the Effective Date and as
is mutually agreed to be required by U.S. regulatory authorities under
applicable “know your customer” and anti-money laundering rules and regulations,
including without limitation the PATRIOT Act.

6.9    [Reserved].  

6.10    Solvency Certificate.  The Administrative Agent shall have received a
solvency certificate from the chief financial officer or controller (or other
financial officer) of the Borrower, dated as of the Effective Date, setting
forth the conclusion that (after giving effect to the consummation of the
Transactions), the Borrower, on a consolidated basis with its Subsidiaries, is
Solvent.

6.11    Uniform Commercial Code Searches. Appropriate Uniform Commercial Code
search results in respect of the Credit Parties, as may be reasonably requested
by the Lead Arranger, from Delaware and any other relevant jurisdiction,
reflecting no prior Liens encumbering the

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properties of any Credit Party, other than those which shall be released prior
to or contemporaneously with the Effective Date and Permitted Liens.

6.12    Notification of Effective Date. The Borrower shall notify the Lenders
and the Administrative Agent of the Effective Date and an Authorized Officer of
the Borrower shall certify that the foregoing conditions precedent in this
Article VI have been satisfied.

ARTICLE VII
CONDITIONS PRECEDENT TO ESCROW RELEASE
Unless otherwise released as provided for under Section 5.2(b), the amounts held
in the Escrow Account, including the Net Cash Proceeds of the Loans, shall be
released upon the satisfaction of the following conditions precedent (such date,
the “Escrow Release Date”):

7.1    Certain Credit Documents and Other Matters.  The Administrative Agent
shall have received (including by facsimile or other electronic means):
(a)    the Guarantee, executed and delivered by a duly Authorized Officer of
each Person that is a Guarantor as of the Escrow Release Date and the Guarantee
shall be in full force and effect as of the Escrow Release Date; and
(b)    Security Documents, other than any Mortgages (the time period for
delivery of which shall be governed by Section 10.10), executed and delivered by
a duly Authorized Officer of each Person that is a grantor, pledger, mortgagor
or trustor under any Security Document as of the Escrow Release Date, in respect
of all collateral under the First Lien First Out Security Documents as amended
on the First Lien First Out Fifth Amendment Effective Date.

7.2    Escrow Release Certification. The Administrative Agent shall have
received a certificate of an Authorized Officer of the Borrower certifying that
each of the conditions to release set forth in the Escrow Agreement shall have
been satisfied.

7.3    Minimum Loan Size. No less than $500,000,000 aggregate principal amount
of Loans shall be outstanding immediately after giving effect to the release of
the Net Cash Proceeds of the Loans on the Escrow Release Date and the use of
proceeds thereof.

7.4    Legal Opinions.  The Administrative Agent shall have received the
executed legal opinion of Sullivan & Cromwell LLP, counsel to the Borrower, in
the form attached as Exhibit J-2.

7.5    Conditions Precedent. The Borrower shall certify to the Lenders and the
Administrative Agent that the foregoing conditions precedent in this Article VII
have been satisfied.

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ARTICLE VIII
CONDITIONS PRECEDENT TO ALL CREDIT EVENTS
The agreement of each Lender to make any Loan requested to be made by it on any
date is subject to the satisfaction of the following conditions precedent:

8.1    No Default; Representations and Warranties.  At the time of each Credit
Event and also after giving pro forma effect thereto (including the application
of the proceeds thereof) (a) no Default or Event of Default shall have occurred
and be continuing and (b) all representations and warranties made by any Credit
Party contained herein or in the other Credit Documents shall be, to the
knowledge of an Authorized Officer of the Borrower and its Subsidiaries, true
and correct in all material respects (unless such representations and warranties
are already qualified by materiality, Material Adverse Effect or a similar
qualification, in which case they are true and correct in all respects) with the
same effect as though such representations and warranties had been made on and
as of the date of such Credit Event (except where such representations and
warranties expressly relate to an earlier date, in which case such
representations and warranties shall have been true and correct in all material
respects (unless such representations and warranties are already qualified by
materiality, Material Adverse Effect or a similar qualification, in which case
they are true and correct in all respects) as of such earlier date).

8.2    Notice of Borrowing.
(a)    Prior to the making of each Loan the Administrative Agent shall have
received a Notice of Borrowing (in writing) meeting the requirements of Section
2.4. The acceptance of the benefits of each Credit Event shall constitute a
representation and warranty by each Credit Party to each of the Lenders that all
the applicable conditions specified in Article VIII above have been satisfied as
of that time.

ARTICLE IX
REPRESENTATIONS, WARRANTIES AND AGREEMENTS
In order to induce the Lenders to enter into this Agreement and to make the
Loans as provided for herein, the Borrower makes, on the Effective Date and on
each other date as required or otherwise set forth in this Agreement, the
following representations and warranties to, and agreements with, the Lenders,
all of which shall survive the execution and delivery of this Agreement and the
making of the Loans:

9.1    Corporate Status.  Each of the Borrower and each Subsidiary (a) is a duly
organized and validly existing corporation or other entity in good standing
under the laws of the jurisdiction of its organization, (b) has the corporate or
other organizational power and authority to own its property and assets and to
transact the business in which it is engaged, (c) has duly qualified and

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is authorized to do business and is in good standing in all jurisdictions where
it is required to be so qualified, and (d) is in compliance with all
Requirements of Law, except in each case referred to in clauses (b), (c) and
(d), where the failure to be so qualified would not reasonably be expected to
result in a Material Adverse Effect.

9.2    Corporate Power and Authority; Enforceability.  Each Credit Party has the
corporate or other organizational power and authority to execute, deliver and
carry out the terms and provisions of the Credit Documents to which it is a
party and has taken all necessary corporate or other organizational action to
authorize the execution, delivery and performance of the Credit Documents to
which it is a party.  Each Credit Party has duly executed and delivered each
Credit Document to which it is a party and each such Credit Document constitutes
the legal, valid and binding obligation of such Credit Party enforceable in
accordance with its terms, subject to the effects of bankruptcy, insolvency,
fraudulent conveyance, reorganization and other similar laws relating to or
affecting creditors’ rights generally and general principles of equity (whether
considered in a proceeding in equity or law).

9.3    No Violation.  None of the execution, delivery or performance by any
Credit Party of the Credit Documents to which it is a party or the compliance
with the terms and provisions thereof will (a) contravene any material
applicable provision of any material Requirement of Law, (b) result in any
breach of any of the terms, covenants, conditions or provisions of, or
constitute a default under, or result in the creation or imposition of (or the
obligation to create or impose) any Lien upon any of the property or assets of
such Credit Party or any of the Subsidiaries (other than Liens created under the
Credit Documents or Liens disclosed in the Tender Offer Documents) pursuant to
the terms of any indenture, loan agreement, lease agreement, mortgage, deed of
trust, agreement or other instrument to which such Credit Party or any of the
Subsidiaries is a party or by which it or any of its property or assets is bound
(any such term, covenant, condition or provision, a “Contractual Requirement”)
except to the extent such breach, default or Lien that would not reasonably be
expected to result in a Material Adverse Effect or (c) violate any provision of
the certificate of incorporation, by-laws or other organizational documents of
such Credit Party or any of the Subsidiaries.

9.4    Litigation.  Except as set forth on Schedule 9.4, as of the Effective
Date, (a) there are no actions, suits or proceedings pending or, to the
knowledge of an Authorized Officer of the Borrower, threatened with respect to
the Borrower or any of its Subsidiaries and (b) the Borrower has not received
any written notice of Environmental Claims from a Governmental Authority, that,
in each case, would reasonably be expected to result in a Material Adverse
Effect.

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9.5    Margin Regulations.  Neither the making of any Loan hereunder nor the use
of the proceeds thereof will violate the provisions of Regulation T, Regulation
U or Regulation X of the Board. The Borrower is not engaged principally, or as
one of its important activities, in the business of extending credit for the
purpose of buying or carrying margin stock.

9.6    Governmental Approvals.  The execution, delivery and performance of each
Credit Document do not require any consent or approval of, registration or
filing with, or other action by, any Governmental Authority, except for (a) such
as have been obtained or made and are in full force and effect, (b) filings and
recordings in respect of the Liens created pursuant to the Security Documents
and (c) such consents, approvals, registrations, filings or actions the failure
of which to obtain or make would not reasonably be expected to have a Material
Adverse Effect.

9.7    Investment Company Act.  No Credit Party is an “investment company”
within the meaning of the Investment Company Act of 1940, as amended.

9.8    True and Complete Disclosure.
(a)    None of the written factual information and written data (taken as a
whole) furnished by or on behalf of the Borrower, any of the Subsidiaries or any
of their respective authorized representatives to the Administrative Agent, any
Lead Arranger, Bookrunner and/or any Lender on or before the Effective Date
(including all such information and data contained in the Credit Documents) for
purposes of or in connection with this Agreement or any transaction contemplated
herein contained any untrue statement of any material fact or omitted to state
any material fact necessary to make such information and data (taken as a whole)
not materially misleading at such time (after giving effect to all supplements
so furnished prior to such time of the Borrower as filed with the SEC from time
to time) in light of the circumstances under which such information or data was
furnished; it being understood and agreed that for purposes of this Section
9.8(a), such factual information and data shall not include pro forma financial
information, projections or estimates (including financial estimates, forecasts
and other forward-looking information) and information of a general economic or
general industry nature.
(b)    The projections (including financial estimates, forecasts and other
forward-looking information) contained in the information and data referred to
in Section 9.8(a) were based on good faith estimates and assumptions believed by
the Borrower to be reasonable at the time made; it being recognized by the
Administrative Agent and the Lenders that such projections are as to future
events and are not to be viewed as facts, the projections are subject to
significant uncertainties and contingencies, many of which are beyond the
control of the Borrower and the Subsidiaries, that no assurance can be given
that any particular projections will be realized and that actual results during
the period or periods covered by any such projections may differ from the
projected results and such differences may be material.

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9.9    Financial Condition; Financial Statements.
(a)    On the Effective Date, the Historical Financial Statements present fairly
in all material respects the consolidated financial position of the Borrower and
the consolidated Subsidiaries at the dates of such information and for the
period covered thereby and have been prepared in accordance with GAAP
consistently applied except to the extent provided in the notes thereto, if any,
subject, in the case of the unaudited interim financial information, to changes
resulting from audit, normal year-end adjustments and to the absence of
footnotes.
(b)    On the Effective Date, neither the Borrower nor any Subsidiary has any
material Indebtedness (including Disqualified Stock) other than Indebtedness
arising under the Credit Documents, First Lien First Out Obligations, Permitted
Second Lien Indebtedness, Senior Notes, any material guarantee obligations,
contingent liabilities other than liabilities created under the OPC Related
Transactions, off balance sheet liabilities, partnership liabilities for taxes
or unusual forward or long-term commitments that, in each case, are not
reflected or provided for in the Historical Financial Statements, except as
would not reasonably be expected to have a Material Adverse Effect.
(c)    Since the date of the financial statements most recently delivered
pursuant to Section 10.1(a), and only with respect to the Effective Date, since
December 31, 2015, to the actual knowledge of any Authorized Officer of the
Borrower, there has been no Material Adverse Effect.

9.10    Tax Matters.  Except where the failure of which would not be reasonably
expected to have a Material Adverse Effect, (a) each of the Borrower and the
Subsidiaries has filed all federal income tax returns and all other tax returns,
domestic and foreign, required to be filed by it and has paid all material taxes
payable by it that have become due, other than those (i) not yet delinquent or
(ii) being contested in good faith by appropriate proceedings and as to which
adequate reserves have been provided to the extent required by and in accordance
with GAAP and (b) to the extent then due and payable, the Borrower and each of
the Subsidiaries have paid, or have provided adequate reserves (in the good
faith judgment of management of the Borrower or such Subsidiary) in accordance
with GAAP for the payment of, all federal, state, provincial and foreign taxes
applicable for the current fiscal year to the Effective Date.

9.11    Compliance with ERISA.
(a)    Each Plan is in compliance with ERISA, the Code and any applicable
Requirement of Law; no Reportable Event has occurred (or is reasonably likely to
occur) with respect to any Plan; each Plan has satisfied the minimum funding
standards (within the meaning of Section 412 of the Code or Section 302 of
ERISA) applicable to such Plan, and there has been no determination that any
such Plan is, or is expected to be, in “at risk” status (within the meaning of

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Section 4010(d)(2) of ERISA); none of the Borrower or any ERISA Affiliate has
incurred (or is reasonably likely to incur) any liability to or on account of a
Plan or a Multiemployer Plan pursuant to Section 409, 502(i), 502(l), 515, 4062,
4063, 4064, 4069, 4201 or 4204 of ERISA or Section 4971 or 4975 of the Code or
has been notified in writing that it will incur any liability under any of the
foregoing Sections with respect to any Plan or Multiemployer Plan; no
proceedings have been instituted to terminate or to reorganize any Plan or to
appoint a trustee to administer any Plan, and no written notice of any such
proceedings has been given to the Borrower or any ERISA Affiliate; no
Multiemployer Plan is insolvent or in reorganization, and no written notice of
any such insolvency or reorganization has been given to the Borrower or any
ERISA Affiliate; and no lien imposed under the Code or ERISA on the assets of
the Borrower or any ERISA Affiliate exists (or is reasonably likely to exist)
nor has the Borrower or any ERISA Affiliate been notified in writing that such a
lien will be imposed on the assets of the Borrower or any ERISA Affiliate on
account of any Plan or a Multiemployer Plan, except to the extent that a breach
of any of the representations, warranties or agreements in this Section 9.11(a)
would not result, individually or in the aggregate, in an amount of liability
that would be reasonably likely to have a Material Adverse Effect.  No Plan has
an Unfunded Current Liability that would, individually or when taken together
with any other liabilities referenced in this Section 9.11(a), be reasonably
likely to have a Material Adverse Effect.  With respect to Multiemployer Plans,
the representations and warranties in this Section 9.11(a), other than any made
with respect to liability under Section 4201 or 4204 of ERISA, are made to the
knowledge of the Borrower.
(b)    All Foreign Plans are in compliance with, and have been established,
administered and operated in accordance with, the terms of such Foreign Plans
and applicable law, except for any failure to so comply, establish, administer
or operate the Foreign Plans as would not reasonably be expected to have a
Material Adverse Effect.  All contributions or other payments which are due with
respect to each Foreign Plan have been made in full and there are no funding
deficiencies thereunder, except to the extent any such events would not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect.

9.12    Subsidiaries. Schedule 9.12 lists each Subsidiary of the Borrower (and
the direct and indirect ownership interest of the Borrower therein), in each
case existing on the Effective Date.

9.13    Environmental Laws.
(a)    On the Effective Date, except as would not reasonably be expected to have
a Material Adverse Effect as of the Effective Date:  (i) the Borrower and each
of the Subsidiaries and all Oil and Gas Properties are in compliance with all
applicable Environmental Laws; (ii) neither the Borrower nor any Subsidiary has
received written notice of any Environmental Claim or any other liability under
any applicable Environmental Law; (iii) neither the Borrower nor any Subsidiary
is conducting any investigation, removal, remedial or other corrective action
pursuant

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to any applicable Environmental Law at any location; and (iv) there has been no
release or, to the knowledge of any Authorized Officer of the Borrower,
threatened release of any Hazardous Materials at, on or under any Oil and Gas
Properties currently owned or leased by the Borrower or any of its Subsidiaries.
(b)    On the Effective Date, except as would not reasonably be expected to have
a Material Adverse Effect as of the Effective Date, neither the Borrower nor any
of the Subsidiaries has treated, stored, transported, released or disposed or
arranged for disposal or transport for disposal of Hazardous Materials at, on,
under or from any currently or formerly owned or leased Oil and Gas Properties
or facility in a manner that would reasonably be expected to give rise to
liability of the Borrower or any Subsidiary under any applicable Environmental
Law.

9.14    Properties.
(a)    Each Credit Party has good and defensible title to its material Oil and
Gas Properties and good title to its material personal properties (in each case,
subject to any Permitted Liens which are permitted to attach thereto) and owns
such Oil and Gas Properties, in each case, free and clear of all Liens other
than Liens permitted by Section 11.2.  After giving full effect to the Liens
permitted by Section 11.2, the Borrower or the Subsidiary specified as the owner
owns the working interests and net revenue interests 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, except to the extent that any such failure to be valid or
subsisting would not reasonably be expected to have a Material Adverse Effect.
(c)    The rights and properties presently owned, leased or licensed by the
Credit Parties including all easements and rights of way, include all rights and
properties necessary to permit the Credit Parties to conduct their respective
businesses as currently conducted, except to the extent any failure to have any
such rights or properties would not reasonably be expected to have a Material
Adverse Effect.
(d)    All of the properties of the Borrower and the Subsidiaries that are
reasonably necessary for the operation of their businesses are in good working
condition and are maintained

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in accordance with prudent business standards, except to the extent any failure
to satisfy the foregoing would reasonably be expected to have a Material Adverse
Effect.

9.15    Solvency. The Borrower, on a consolidated basis with its Subsidiaries,
is Solvent and neither the Borrower nor any of its Subsidiaries presently
intends to or presently anticipates it will (a) be or become subject to a
voluntary case under any debt relief law, (b) make a general assignment for the
benefit of creditors or (c) have a custodian, conservator, receiver or similar
official appointed for such Person or any substantial part of such Person’s
assets, , and no such Person presently expects or presently anticipates it will
to (w) be or become subject to an involuntary case under any debt relief law,
(x) be subject to a forced liquidation or otherwise be adjudicated as, or
determined by any Governmental Authority having regulatory authority over such
Person or its assets to be, insolvent or bankrupt, (y) make a general assignment
for the benefit of creditors as a result of any direct action by any other
Person or (z) have a custodian, conservator, receiver or similar official
appointed for such Person or any substantial part of such Person’s assets as a
result of any direct action by any other Person.

9.16    Insurance.  The properties of the Borrower and the Subsidiaries are
insured in the manner contemplated by Section 10.3.

9.17    Hedge Agreements.  As of the Effective Date, the Hedge Agreements of the
Credit Parties are in compliance with Section 11.10.

9.18    Patriot Act.  On the Effective Date, each Credit Party is in compliance
in all material respects with the material provisions of the Patriot Act, and
the Borrower has provided to the Administrative Agent and the Lenders all
information related to the Credit Parties (including but not limited to names,
addresses and tax identification numbers (if applicable)) reasonably requested
in writing by the Administrative Agent and the Lenders and mutually agreed to be
required by the Patriot Act to be obtained by the Administrative Agent or any
Lender.

9.19    Liens Under the Security Documents.  During a Credit Rating Trigger
Period, upon the execution and delivery of the Security Documents in accordance
herewith, and where appropriate the filing and recordation thereof with the
appropriate filing or recording officers in each of the necessary jurisdictions,
the Liens granted and to be granted by any Credit Party to the Collateral Agent,
will constitute validly created, perfected and first priority Liens, provided
that Liens permitted under Section 11.2 may exist on such assets and; provided,
further, that no intention to subordinate the first priority Lien of the
Collateral Agent and the Secured Parties pursuant to the Security Documents is
to be hereby implied or expressed by the permitted existence of such Permitted
Liens.

9.20    No Default.  On the Effective Date, no Credit Party is in default under
or with respect to any Contractual Requirement that would, either individually
or in the aggregate, reasonably be

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expected to have a Material Adverse Effect.  No Default has occurred and is
continuing or would result from the consummation of the transactions
contemplated by this Agreement or any other Credit Document.  Each of the
Borrower and each Subsidiary is in compliance in all material respects with the
Requirements of Law applicable to it or to its properties, except in such
instances in which (a) such Requirement of Law is being contested in good faith
by appropriate proceedings diligently conducted or (b) the failure to comply
therewith, either individually or in the aggregate, would not reasonably be
expected to have a Material Adverse Effect.

9.21    Direct Benefit.  The Borrowing hereunder is for the direct benefit of
the Borrower and its Subsidiaries.  The Borrower and its Subsidiaries shall
engage as an integrated group in the business of oil and gas exploration,
production and related activities and other legal business purposes, and any
benefits to the Borrower and its Subsidiaries is a benefit to all of them, both
directly or indirectly, inasmuch as the successful operation and condition of
the Borrower and its Subsidiaries is partially dependent upon the continued
successful performance of the functions of the integrated group as a whole.

9.22    Anti-Corruption Laws and Sanctions.  The Borrower has implemented and
maintains in effect policies and procedures designed to ensure compliance by the
Borrower, its Subsidiaries and its directors, officers, employees and agents
with Anti-Corruption Laws and applicable Sanctions, and the Borrower, its
Subsidiaries and their respective officers and employees and to the knowledge of
the Authorized Officers 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 the Borrower being designated as a Sanctioned Person. 
None of (a) the Borrower, any of its Subsidiaries or to the knowledge of the
Authorized Officers of the Borrower or such Subsidiary any of their respective
directors, officers or employees, or (b) to the knowledge of the Authorized
Officers of the Borrower any agent of the Borrower or any of its Subsidiaries
that will act in any capacity in connection with or benefit from the Facilities,
is a Sanctioned Person.  No Borrowing, use of proceeds or other Transactions
will violate Anti-Corruption Laws or applicable Sanctions.

9.23    EEA Financial Institutions. No Credit Party is an EEA Financial
Institution.

ARTICLE X
AFFIRMATIVE COVENANTS
The Borrower hereby covenants and agrees that on the Effective Date and until
the Loans, together with interest, fees and all other Obligations incurred
hereunder are paid in full:

10.1    Information Covenants.  The Borrower will furnish to the Administrative
Agent (which shall promptly make such information available to the Lenders in
accordance with its customary practice):

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(k)    Annual Financial Statements.  As soon as available and in any event
within five (5) Business Days after the date on which such financial statements
are required to be filed with the SEC (after giving effect to any permitted
extensions) (or, if such financial statements are not required to be filed with
the SEC, on or before the date that is 90 days after the end of each such fiscal
year), the audited consolidated balance sheets of the Borrower and the
Subsidiaries, as at the end of such fiscal year, and the related consolidated
statements of operations, equity and cash flows for such fiscal year, setting
forth comparative consolidated figures for the preceding fiscal years, all in
reasonable detail and prepared in accordance with GAAP, and, certified by
independent certified public accountants of recognized national standing whose
opinion shall not be materially qualified with a “going concern” or like
qualification or exception (other than with respect to, or resulting from, (x)
the occurrence of the Maturity Date within one year from the date such opinion
is delivered or (y) any potential inability to satisfy the Financial Performance
Covenants or the First Lien First Out Financial Performance Covenants on a
future date or in a future period), together in any event with a certificate of
such accounting firm stating that in the course of either (i) its regular audit
of the business of the Borrower and its consolidated Subsidiaries, which audit
was conducted in accordance with generally accepted auditing standards or (ii)
performing certain other procedures permitted by professional standards, such
accounting firm has obtained no knowledge of any Event of Default relating to
the Financial Performance Covenant that has occurred and is continuing or, if in
the opinion of such accounting firm such an Event of Default has occurred and is
continuing, a statement as to the nature thereof, together with, if not
otherwise required to be filed with the SEC, a customary management discussion
and analysis describing the financial condition and results of operations of the
Borrower and its Subsidiaries.
(l)    Quarterly Financial Statements.  As soon as available and in any event
within five (5) Business Days after the date on which such financial statements
are required to be filed with the SEC (after giving effect to any permitted
extensions) with respect to each of the first three quarterly accounting periods
in each fiscal year of the Borrower (or, if such financial statements are not
required to be filed with the SEC, on or before the date that is 60 days after
the end of each such quarterly accounting period), the consolidated balance
sheets of the Borrower and the Subsidiaries, as at the end of such quarterly
period and the related consolidated statements of operations, equity and cash
flows for such quarterly accounting period and for the elapsed portion of the
fiscal year ended with the last day of such quarterly period, and setting forth
comparative consolidated figures for the related periods in the prior fiscal
year or, in the case of such consolidated balance sheet, for the last day of the
prior fiscal year, all of which shall be certified by an Authorized Officer of
the Borrower as fairly presenting in all material respects the financial
condition, results of operations, equity and cash flows, of the Borrower and its
consolidated Subsidiaries in accordance with GAAP, subject to changes resulting
from normal year-end adjustments and the absence of footnotes, together with, if
not otherwise required to be filed with the SEC, a customary management

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discussion and analysis describing the financial condition and results of
operations of the Borrower and its Subsidiaries.
(m)    Officer’s Certificates.  At the time of the delivery of the financial
statements provided for in Section 10.1(a) and (b), a certificate of an
Authorized Officer of the Borrower to the effect that no Default or Event of
Default exists or, if any Default or Event of Default does exist, specifying the
nature and extent thereof, which certificate shall set forth (i) the
calculations required to establish whether the Borrower and its Subsidiaries
were in compliance with the Financial Performance Covenant as at the end of such
fiscal year or period, as the case may be and (ii) a specification of any change
in the identity of the Material Subsidiaries and Guarantors as at the end of
such fiscal year or period, as the case may be, from the Material Subsidiaries
and Guarantors, respectively, provided to the Lenders on the Effective Date or
the most recent fiscal year or period, as the case may be.
(n)    Notice of Default; Litigation.  Promptly after an Authorized Officer of
the Borrower obtains actual knowledge thereof, notice of (i) the occurrence of
any event that constitutes a Default or Event of Default, which notice shall
specify the nature thereof, the period of existence thereof and what action the
Borrower proposes to take with respect thereto and (ii) any litigation or
governmental proceeding pending against the Borrower or any of the Subsidiaries
for which it would reasonably be expected that an adverse determination is
probable, and that such determination would result in a Material Adverse Effect.
(o)    Environmental Matters.  Promptly after an Authorized Officer of the
Borrower obtains written notice of any Governmental Authority of any one or more
of the following environmental matters, unless such environmental matters would
not, individually, or when aggregated with all other such matters, be reasonably
expected to result in a Material Adverse Effect, notice of:
(i)    any pending or threatened Environmental Claim against any Credit Party or
any Oil and Gas Properties;
(ii)    any condition or occurrence on any Oil and Gas Properties that (A) would
reasonably be expected to result in noncompliance by any Credit Party with any
applicable Environmental Law or (B) would reasonably be anticipated to form the
basis of an Environmental Claim against any Credit Party or any Oil and Gas
Properties;
(iii)    any condition or occurrence on any Oil and Gas Properties that would
reasonably be anticipated to cause such Oil and Gas Properties to be subject to
any restrictions on the ownership, occupancy, use or transferability of such Oil
and Gas Properties under any Environmental Law; and

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(iv)    the conduct of any investigation, or any removal, remedial or other
corrective action in response to the actual or alleged presence, release or
threatened release of any Hazardous Material on, at, under or from any Oil and
Gas Properties.
All such notices shall describe in reasonable detail the nature of the claim,
investigation, condition, occurrence or removal or remedial action and the
response thereto.
(p)    Other Information.  (i) Promptly upon filing thereof, copies of any
filings (including on Form 10-K, 10-Q or 8-K) or registration statements with,
and reports to, the SEC or any analogous Governmental Authority in any relevant
jurisdiction by the Borrower or any of the Subsidiaries (other than amendments
to any registration statement (to the extent such registration statement, in the
form it becomes effective, is delivered to the Administrative Agent), exhibits
to any registration statement and, if applicable, any registration statements on
Form S-8), (ii) contemporaneously with the delivery thereof to such other
Person, copies of all financial statements, proxy statements, notices and
reports that the Borrower or any of the Subsidiaries shall send to the First
Lien First Out Administrative Agent, the First Lien First Out Lenders and/or the
holders of any publicly issued debt of the Borrower and/or any of the
Subsidiaries, in each case in their capacity as such holders, lenders or agents
(in each case to the extent not theretofore delivered to the Administrative
Agent pursuant to this Agreement) and (iii) with reasonable promptness, but
subject to the limitations set forth in the last sentences of Section 10.2(a)
and Section 14.16, such other information (financial or otherwise) as any Lender
(acting through the Administrative Agent) may reasonably request in writing from
time to time.
(q)    Quarterly Investor Calls. Quarterly, not more than four times each fiscal
year, participate in a conference call for investors that the Lenders are
permitted to join to discuss the financial condition and results of operations
of the Borrower and its Subsidiaries for the most recently-ended quarterly
period for which financial statements have been delivered.
(r)    Mortgage Filing Status. If requested by any Lender, the Borrower shall
provide an update to the Administrative Agent for the benefit of such Lender as
to the status of the filings of any Mortgages required pursuant to Section
10.10(a). Upon the completion of the filing of each of the Mortgages required
pursuant to Section 10.10(a) with respect to properties owned on the Escrow
Release Date, the Borrower shall provide notice to the Administrative Agent and
the Administrative Agent shall make such notice available to each of the Lenders
in accordance with its customary practice.
Documents required to be delivered pursuant to Sections 10.1(a) and (b) and this
Section 10.1(f) may be delivered electronically and if so delivered, shall be
deemed to have been delivered on the date (i) 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 on Schedule 14.2, (ii) on which

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such documents are transmitted by electronic mail to the Administrative Agent or
(iii) on which such documents are filed of record with the SEC; provided that
the Borrower shall notify (which may be by facsimile or electronic mail) the
Administrative Agent of the posting of any such documents and provide to the
Administrative Agent by electronic mail electronic versions (i.e., soft copies)
of such documents (except that no such notice shall be required to the extent
such documents are filed on record with the SEC).  Notwithstanding anything
contained herein, in every instance the Borrower shall be required to provide
paper copies of the certificates required by Section 10.1(c) to the
Administrative Agent.  Each Lender shall be solely responsible for timely
accessing posted documents or requesting delivery of such documents from the
Administrative Agent and maintaining its copies of such documents.
The Borrower hereby acknowledges that (a) the Administrative Agent and/or the
Lead Arranger may, but shall not be obligated to, make available to the Lenders
materials and/or information provided by or on behalf of the Borrower hereunder
(collectively, “Borrower Materials”) by posting the Borrower Materials on
IntraLinks, Syndtrak, ClearPar, or a substantially similar electronic
transmission system (the “Platform”) and (b) certain of the Lenders (each, a
“Public Lender”) may have personnel who do not wish to receive material
non-public information with respect to the Borrower or its Affiliates, or the
respective securities of any of the foregoing, and who may be engaged in
investment and other market-related activities with respect to such Persons’
securities. The Borrower hereby agrees that it will use commercially reasonable
efforts to identify that portion of the Borrower Materials that may be
distributed to the Public Lenders and that (w) all such Borrower Materials shall
be clearly and conspicuously marked “PUBLIC” which, at a minimum, shall mean
that the word “PUBLIC” shall appear prominently on the first page thereof; (x)
by marking Borrower Materials “PUBLIC,” the Borrower shall be deemed to have
authorized the Administrative Agent, the Lead Arranger and the Lenders to treat
such Borrower Materials as not containing any material non-public information
(although it may be sensitive and proprietary) with respect to the Borrower or
its securities for purposes of United States federal and state securities laws;
(y) all Borrower Materials marked “PUBLIC” are permitted to be made available
through a portion of the Platform designated “Public Side Information;” and (z)
the Administrative Agent and the Lead Arranger shall be entitled to treat any
Borrower Materials that are not marked “PUBLIC” as being suitable only for
posting on a portion of the Platform not designated “Public Side Information.”

10.2    Books, Records and Inspections.
(e)    The Borrower will, and will cause each Subsidiary to, permit officers and
designated representatives of the Administrative Agent or the Majority Lenders
(as accompanied by the Administrative Agent) to visit and inspect any of the
properties or assets of the Borrower or such Subsidiary in whomsoever’s
possession to the extent that it is within such party’s control to permit such
inspection (and shall use commercially reasonable efforts to cause such
inspection to

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be permitted to the extent that it is not within such party’s control to permit
such inspection), and to examine the books and records of the Borrower and any
such Subsidiary and discuss the affairs, finances and accounts of the Borrower
and of any such Subsidiary with, and be advised as to the same by, its and their
officers and independent accountants, upon reasonable advance notice to the
Borrower, all at such reasonable times and intervals during normal business
hours and to such reasonable extent as the Administrative Agent or the Majority
Lenders may desire (and subject, in the case of any such meetings or advice from
such independent accountants, to such accountants’ customary policies and
procedures); provided that, excluding any such visits and inspections during the
continuation of an Event of Default (i) only the Administrative Agent on behalf
of the Majority Lenders may exercise rights of the Administrative Agent and the
Lenders under this Section 10.2, and (ii) only one such visit shall be at the
Borrower’s expense; provided, further, that when an Event of Default exists, the
Administrative Agent (or any of its representatives or independent contractors)
or any representative of the Majority Lenders may do any of the foregoing at the
expense of the Borrower at any time during normal business hours and upon
reasonable advance notice.  The Administrative Agent and the Majority Lenders
shall give the Borrower the opportunity to participate in any discussions with
the Borrower’s independent public accountants.  Notwithstanding anything to the
contrary in Section 10.1(f)(iii) or this Section 10.2, neither the Borrower nor
any Subsidiary will be required to disclose, permit the inspection, examination
or making copies or abstracts of, or discussion of, any document, information or
other matter (i) that constitutes non-financial trade secrets or non-financial
proprietary information, (ii) in respect of which disclosure to the
Administrative Agent or any Lender (or their respective representatives or
contractors) is prohibited by any Requirement of Law or any binding agreement or
(iii) that is subject to attorney-client or similar privilege or constitutes
attorney work product.
(f)    The Borrower will, and will cause each of the Subsidiaries to, maintain
proper books of record and account, in which entries that are full, true and
correct in all material respects and are in conformity with GAAP consistently
applied shall be made of all material financial transactions and matters
involving the assets and business of the Borrower or such Subsidiary, as the
case may be.

10.3    Maintenance of Insurance.  The Borrower will, and will cause each
Subsidiary to, at all times maintain in full force and effect, pursuant to
self-insurance arrangements or with insurance companies that the Borrower
believes (in the good faith judgment of the management of the Borrower) are
financially sound and responsible at the time the relevant coverage is placed or
renewed, insurance in at least such amounts (after giving effect to any
self-insurance which the Borrower believes (in the good faith judgment of
management of the Borrower) is reasonable and prudent in light of the size and
nature of its business) and against at least such risks (and with such risk
retentions) as the Borrower believes (in the good faith judgment of management
of the Borrower) is reasonable and prudent in light of the size and nature of
its business; and will furnish to the Administrative Agent, upon written request
from the Administrative Agent, information presented

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in reasonable detail as to the insurance so carried.  During any Credit Rating
Trigger Period (and only during any Credit Rating Trigger Period), the Secured
Parties shall be the additional insureds on any such liability insurance as
their interests may appear and, if casualty insurance is obtained, the
Administrative Agent shall be the additional loss payee under any such casualty
insurance; provided that, so long as no Event of Default has occurred and is
then continuing, the Secured Parties will provide any proceeds of such casualty
insurance to the Borrower to the extent that the Borrower undertakes to apply
such proceeds to the reconstruction, replacement or repair of the property
insured thereby.  During any Credit Rating Trigger Period (and only during any
Credit Rating Trigger Period), all policies of insurance required by the terms
of this Agreement or any Security Document shall provide that each insurer shall
endeavor to give at least 30 days’ prior written notice to the Administrative
Agent of any cancellation of such insurance (or at least 10 days’ prior written
notice in the case of cancellation of such insurance due to non-payment of
premiums).

10.4    Payment of Taxes.  The Borrower will pay and discharge, and will cause
each of the Subsidiaries to pay and discharge, all taxes, assessments and
governmental charges or levies imposed upon it or upon its income or profits, or
upon any properties belonging to it, prior to the date on which material
penalties attach thereto, and all lawful material claims in respect of any Taxes
imposed, assessed or levied that, if unpaid, would reasonably be expected to
become a material Lien upon any properties of the Borrower or any of the
Subsidiaries; provided that neither the Borrower nor any of the Subsidiaries
shall be required to pay or discharge any such tax, assessment, charge, levy or
claim that is being contested in good faith and by proper proceedings if it has
maintained adequate reserves (in the good faith judgment of management of the
Borrower) with respect thereto to the extent required by, and in accordance
with, GAAP or the failure to pay or discharge would not reasonably be expected
to result in a Material Adverse Effect.

10.5    Consolidated Corporate Franchises.  The Borrower will do, and will cause
each Subsidiary to do, or cause to be done, all things necessary to preserve and
keep in full force and effect its existence, corporate rights and authority,
except to the extent that the failure to do so would not reasonably be expected
to have a Material Adverse Effect; provided, however, that the Borrower and its
Subsidiaries may consummate any transaction permitted under Section 11.3, 11.4
or 11.5.

10.6    Compliance with Statutes, Regulations, Etc.  The Borrower will, and will
cause each Subsidiary to, comply with all Requirements of Law applicable to it
or its property, including all governmental approvals or authorizations required
to conduct its business, and to maintain all such governmental approvals or
authorizations in full force and effect, in each case except where the failure
to do so would not reasonably be expected to have a Material Adverse Effect. The
Borrower will maintain in effect and enforce policies and procedures designed to
ensure compliance by the

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Borrower, its Subsidiaries and their respective directors, officers, employees
and agents with Anti-Corruption Laws and applicable Sanctions.

10.7    ERISA.
(c)    Promptly after the Borrower or any ERISA Affiliate knows or has reason to
know of the occurrence of any of the following events that, individually or in
the aggregate (including in the aggregate such events previously disclosed or
exempt from disclosure hereunder, to the extent the liability therefor remains
outstanding), would be reasonably likely to have a Material Adverse Effect, the
Borrower will deliver to the Administrative Agent a certificate of an Authorized
Officer or any other senior officer of the Borrower setting forth details as to
such occurrence and the action, if any, that the Borrower or such ERISA
Affiliate is required or proposes to take, together with any notices (required,
proposed or otherwise) given to or filed with or by the Borrower, such ERISA
Affiliate, the PBGC, a Plan participant (other than notices relating to an
individual participant’s benefits) or the Plan administrator with respect
thereto:  that a Reportable Event has occurred; that an application is to be
made to the Secretary of the Treasury for a waiver or modification of the
minimum funding standard (including any required installment payments) or an
extension of any amortization period under Section 412 of the Code with respect
to a Plan; that a Plan having an Unfunded Current Liability has been or is to be
terminated, or a Multiemployer Plan is to be reorganized, partitioned or
declared insolvent, under Title IV of ERISA (including the giving of written
notice thereof); that a Plan has an Unfunded Current Liability that has or will
result in a lien under ERISA or the Code; that a proceeding has been instituted
against the Borrower or an ERISA Affiliate pursuant to Section 515 of ERISA to
collect a delinquent contribution to a Multiemployer Plan; that the PBGC has
notified the Borrower or any ERISA Affiliate of its intention to appoint a
trustee to administer any Plan; that the Borrower or any ERISA Affiliate has
failed to make a required installment or other payment pursuant to Section 412
of the Code with respect to a Plan; or that the Borrower or any ERISA Affiliate
has incurred or will incur (or has been notified in writing that it will incur)
any liability (including any contingent or secondary liability) to or on account
of a Plan or a Multiemployer Plan pursuant to Section 409, 502(i), 502(l), 515,
4062, 4063, 4064, 4069, 4201 or 4204 of ERISA or Section 4971 or 4975 of the
Code.
(d)    Promptly following any request therefor, the Borrower will deliver to the
Administrative Agent copies of (i) any documents described in Section 101(k) of
ERISA that the Borrower and any of its Subsidiaries or any ERISA Affiliate may
request with respect to any Multiemployer Plan and (ii) any notices described in
Section 101(l) of ERISA that the Borrower and any of its Subsidiaries or any
ERISA Affiliate may request with respect to any Multiemployer Plan; provided
that if the Borrower, any of its Subsidiaries or any ERISA Affiliate has not
requested such documents or notices from the administrator or sponsor of the
applicable Multiemployer Plan, the Borrower, the applicable Subsidiary(ies) or
the ERISA Affiliate(s) shall promptly, following a request from the
Administrative Agent, make a request for such documents or notices from such

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administrator or sponsor and shall provide copies of such documents and notices
promptly after receipt thereof.

10.8    Maintenance of Properties.  The Borrower will, and will cause each of
the Subsidiaries to, except in each case where the failure to so comply would
not reasonably be expected to result in a Material Adverse Effect:
(d)    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 Contractual Requirements and all
applicable Requirements of Law, including applicable proration requirements and
applicable Environmental Laws, and all applicable Requirements of Law 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;
(e)    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; and
(f)    to the extent a Credit Party is not the operator of any property, the
Borrower shall use reasonable efforts to cause the operator to comply with this
Section 10.8.

10.9    Post-Closing Actions. Notwithstanding anything to the contrary contained
in this Agreement or the other Credit Documents, the parties hereto acknowledge
and agree that the Borrower and its Subsidiaries shall be required to take the
actions specified in Schedule 10.9 as promptly as practicable, and in any event
within the time periods set forth in Schedule 10.9. The provisions of Schedule
10.9 shall be deemed incorporated by reference herein as fully as if set forth
herein in its entirety.

10.10    Additional Guarantors, Grantors and Collateral.
(c)    Subject to any applicable limitations set forth in the Security
Documents, the First Lien Intercreditor Agreement or the Pledge Agreement, upon
the occurrence and during the continuation of a Credit Rating Trigger Period or
on the occurrence of the Escrow Release Date, as soon as practicable using
commercially reasonable efforts (and executing and delivering each Security
Document as it may become available), but in any event within thirty (30) days
(or sixty (60) days with respect to any Mortgages encumbering Midstream Assets
and Power Assets) or as soon as practicable thereafter using commercially
reasonable efforts (but in any event within one

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hundred twenty (120) days) of the first day of such Credit Rating Trigger Period
or the Escrow Release Date, the Borrower will execute and cause its Material
Subsidiaries to execute: (i) the Pledge Agreement, (ii) the Security Agreement,
(iii) the Guarantee (as applicable) and (iv) any Mortgages such that after
giving effect thereto the Borrower will meet the Collateral Requirements,
provided that other than in connection with the Escrow Release Date and prior to
the Discharge of First Lien First Out Obligations, the time period for execution
of such documents shall be governed by the terms of the First Lien First Out
Credit Agreement relating to the comparable documents securing the First Lien
First Out Obligations and shall include any extensions granted by the First Lien
First Out Administrative Agent thereunder; provided further that such Mortgages
shall not be recorded until the First Lien First Out Administrative Agent shall
have recorded the mortgages securing the First Lien First Out Obligations, and
provided further that, in the connection with the delivery of any Mortgages, the
Administrative Agent shall receive, with regards to certain laws of the State of
California, the legal opinion of Day Carter & Murphy LLP or other California
counsel to the Borrower, in a form and substance reasonably satisfactory to the
Administrative Agent, and in each case, subject to customary qualifications and
exceptions.
(d)    Subject to any applicable limitations set forth in the Guarantee, the
Security Documents or the First Lien Intercreditor Agreement, the Borrower will
cause any direct or indirect Material Subsidiary formed or otherwise purchased
or acquired after the Escrow Release Date (including pursuant to a Permitted
Acquisition), within thirty (30) days from the date of such formation or
acquisition or as soon as practicable thereafter using commercially reasonable
efforts (but in any event within one hundred twenty (120) days) to execute a
supplement to each of the Guarantee, and during a Credit Rating Trigger Period,
the Security Agreement and the Pledge Agreement, in each case, in order to
become a Guarantor under the Guarantee, a grantor under the Security Agreement
and a pledgor under the Pledge Agreement, provided that prior to the Discharge
of First Lien First Out Obligations, the time period for execution of such
documents shall be governed by the terms of the First Lien First Out Credit
Agreement relating to the comparable documents securing the First Lien First Out
Obligations and shall include any extensions granted by the First Lien First Out
Administrative Agent thereunder.
(e)    During a Credit Rating Trigger Period or on the occurrence of the Escrow
Release Date, subject to any applicable limitations set forth in the Pledge
Agreement and the First Lien Intercreditor Agreement, and subject to Section
10.10(a) above, the Borrower will pledge, and, if applicable, will cause each
other Subsidiary Guarantor (or Person required to become a Subsidiary Guarantor
pursuant to Section 10.10(b)) to pledge, to the Collateral Agent, for the
benefit of the Secured Parties all of the Stock (other than any Excluded Stock)
of each Subsidiary owned by the Borrower or any Subsidiary Guarantor (or Person
required to become a Guarantor pursuant to Section 10.10(b)), provided that
other than in connection with the Escrow Release Date and prior to the Discharge
of First Lien First Out Obligations, the time period for such pledge shall be
governed by the terms of the First Lien First Out Credit Agreement relating to
the comparable documents

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securing the First Lien First Out Obligations and shall include any extensions
granted by the First Lien First Out Administrative Agent thereunder.
(f)    During a Credit Rating Trigger Period, subject to any applicable
limitations set forth in the Guarantee, the First Lien Intercreditor Agreement
or the Security Documents, the Borrower will make all required filings,
registrations and recordings, including filings of Uniform Commercial Code or
other applicable personal property and financing statements, necessary or
appropriate to create or continue, as applicable, the Liens intended to be
created by any Security Document and perfect such Liens to the extent required
by, and with the priority required by, such Security Document and none of the
Collateral shall be subject to any other pledges, security interests or
mortgages, except for Liens permitted under Section 11.2. Notwithstanding the
foregoing, Borrower will not be required to take any action to perfect a Lien on
any of its or the Subsidiaries’ personal property unless perfection may be
accomplished by (A) the filing of a Uniform Commercial Code financing statement
in Borrower’s or a Subsidiary’s respective jurisdiction of formation or in the
case of as-extracted collateral and goods that are or are to become fixtures or
collateral in connection with a Mortgage, the filing of a financing statement
filed as a fixture filing or as a financing statement covering such property in
the county in which such collateral or fixtures are located, (B) delivery of
certificates representing pledged Stock or Stock Equivalents consisting of
certificated securities together with appropriate endorsements or transfer
powers, (C) granting the Collateral Agent “control” (within the meaning of the
relevant Uniform Commercial Code) over any pledged Stock or Stock Equivalents
consisting of uncertificated securities and (D) granting the Collateral Agent
“control” (within the meaning of the relevant Uniform Commercial Code) over any
deposit accounts (other than Excluded Deposit Accounts) by entering into a
deposit account control agreement with the Collateral Agent and the account bank
for such deposit account.
(g)    During a Credit Rating Trigger Period or on the occurrence of the Escrow
Release Date, subject to any applicable limitations set forth in the Pledge
Agreement and the First Lien Intercreditor Agreement, the Borrower will pledge,
and if applicable will cause each other Subsidiary Guarantor (or Person required
to become a Subsidiary Guarantor pursuant to Section 10.10(b) to pledge, as soon
as is practicable using commercially reasonable efforts, but in any event (i)
prior to the Discharge of First Lien First Out Obligations, such time period as
is permitted under the First Lien First Out Credit Agreement, including any
extensions granted by the administrative agent thereunder, and thereafter (ii)
within ten (10) Business Days or as soon as practicable thereafter using
commercially reasonable efforts (but in any event within thirty (30) Business
Days) of the Escrow Release Date or, for after-acquired property, the date it is
first acquired or received by the Borrower or a Subsidiary Guarantor (or Person
required to become a Guarantor pursuant to Section 10.10(b)), as applicable, to
the Collateral Agent, for the benefit of the Secured Parties, all of the Stock
(other than any Excluded Stock meeting the definition of any of clause (a)-(c)
or (e)-(h) thereof) that is owned by the Borrower or any Subsidiary Guarantor
(or Person required to become a Guarantor pursuant to Section 10.10(b)) in each
Development Joint Venture; provided that other

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than in connection with the Escrow Release Date and prior to the Discharge of
the First Lien First Out Obligations, the time period for such pledge shall be
governed by the terms of the First Lien First Out Credit Agreement relating to
the comparable documents securing the First Lien First Out Obligations and shall
include any extensions granted by the First Lien First Out Administrative Agent
thereunder.

10.11    Use of Proceeds.
(a)    The Borrower will use the proceeds of the Loans to repay Indebtedness
incurred under the First Lien First Out Facilities at par (and any accrued and
unpaid interest due thereon) or to repay amounts borrowed hereunder. It is
understood and agreed that the Net Cash Proceeds of the Loans may be held in the
Escrow Account.
(b)    [Reserved].
(c)    The Borrower shall not request any Borrowing, and the Borrower shall not
use, and shall procure that its Subsidiaries and its or their respective
directors, officers, employees and agents shall not use the proceeds of any
Borrowing (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 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, or (c) in any manner
that would result in the violation of any Sanctions applicable to any party
hereto.

10.12    Further Assurances.  During a Credit Rating Trigger Period:
(c)    Subject to the applicable limitations set forth in Section 10.10 and the
Security Documents, the Borrower will, and will cause each other Credit Party
to, execute any and all further documents, financing statements, agreements and
instruments, and take all such further actions (including the filing and
recording of financing statements, fixture, filings, assignments of as-extracted
collateral, mortgages, deeds of trust and other documents) that may be required
under any applicable Requirements of Law, or that the Majority Lenders may
reasonably request, in order to grant, preserve, protect and perfect the
validity and priority of the security interests created or intended to be
created by the applicable Security Documents, all at the expense of the Borrower
and the Subsidiaries.
(d)    If the Borrower and, prior to the Discharge of First Lien First Out
Obligations, the First Lien First Out Administrative Agent agree in writing that
the cost of creating or perfecting any Lien on any property is excessive in
relation to the benefit afforded to the First Lien First Out Lenders thereby,
then such property may be excluded from the Collateral for purposes of the
Credit Documents; provided that (i) such determination is communicated in
writing to the Collateral Agent

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by Borrower in a certificate of an Authorized Officer, (ii) such determination
is not reasonably objected to in writing by the Majority Lenders within 10
Business Days after receipt of notice thereof and (iii) such property does not
secure any Indebtedness or other obligations in respect of any of the First Lien
First Out Obligations, Permitted Junior Indebtedness, Permitted Second Lien
Indebtedness, Existing Senior Lien Notes, any Indebtedness incurred pursuant to
Section 11.2(bb) or any Refinancing Indebtedness incurred to Refinance any of
the foregoing.

10.13    Reserve Reports.
(e)    Prior to the Discharge of First Lien First Out Obligations the Borrower
shall furnish to the Administrative Agent any Reserve Report prepared for the
First Lien First Out Administrative Agent, to the extent the First Lien First
Out Administrative Agent requests such Reserve Report.
(f)    Following the Discharge of First Lien First Out Obligations, the Borrower
shall provide a Reserve Report on or before April 1st (the “April 1st Reserve
Report”) and October 1st (the “October 1st Reserve Report”) of each year
evaluating, as of the immediately preceding December 31st (with respect to the
April 1st Reserve Report) or June 30th (with respect to the October 1st Reserve
Report) the Proved Reserves of the Borrower and the Credit Parties located
within the geographic boundaries of the United States of America (or the Outer
Continental Shelf adjacent to the United States of America) that the Borrower
desires to have included in any calculation of the First Lien Asset Coverage
Ratio. Each Reserve Report will, at the Borrower’s option, be either (i)
prepared by an Approved Petroleum Engineer or (ii) prepared by or under the
supervision of the Borrower’s chief engineer and in the case of the April 1st
Reserve Report audited by an Approved Petroleum Engineer; provided that (x) the
Reserve Report for December 31st of each year shall be substantially similar to
the Borrower’s year-end reserve report filed with the SEC and (y) the Reserve
Report for June 30th of each year shall be prepared in a customary fashion
substantially similar to past reserve reports delivered under the First Lien
First Out Credit Agreement.

ARTICLE XI
NEGATIVE COVENANTS
The Borrower hereby covenants and agrees that on the Effective Date and
thereafter, until the Loans, together with interest, fees and all other
Obligations incurred hereunder, are paid in full (and, in each case, subject to
the Borrower’s right to determine which exception will apply, in the case of any
particular transaction that may be permitted under more than one exception, and
in any event, with no exception limiting any other exception):

11.1    Limitation on Indebtedness.  The Borrower will not, and will not permit
any of the Subsidiaries to, create, incur, assume or suffer to exist any
Indebtedness other than the following:

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(g)    Indebtedness arising under any of the Credit Documents;
(h)    Indebtedness (including Guarantee Obligations thereunder) in respect of
the Senior Notes and any fees, underwriting discounts, premiums and other costs
and expenses incurred in connection with the foregoing and any Permitted
Refinancing Indebtedness issued or incurred to Refinance such Indebtedness;
(i)    Intercompany loans and advances made by the Borrower to any Subsidiary or
made by any Subsidiary to the Borrower or its Subsidiaries; provided that if
such Indebtedness is owing to a Subsidiary that is not a Guarantor, such
Indebtedness is subject to customary subordination terms, to the extent
permitted by Requirements of Law and not giving rise to material adverse tax
consequences;
(j)    Indebtedness in respect of any bankers’ acceptance, bank guarantees,
letter of credit, warehouse receipt or similar facilities entered into in the
ordinary course of business (including in respect of workers compensation
claims, health, disability or other employee benefits or property, casualty or
liability insurance or self-insurance or other Indebtedness with respect to
reimbursement-type obligations regarding workers compensation claims);
(k)    subject to compliance with Section 11.5, Guarantee Obligations incurred
by (i) Subsidiaries in respect of Indebtedness of the Borrower or other
Subsidiaries that is permitted to be incurred under this Agreement (except that
a Subsidiary that is not a Credit Party may not, by virtue of this
Section 11.1(e) guarantee Indebtedness that such Subsidiary could not otherwise
incur under this Section 11.1) and (ii) the Borrower in respect of Indebtedness
of Subsidiaries that is permitted to be incurred under this Agreement; provided
that (A) if the Indebtedness being guaranteed under this Section 11.1(e) is
subordinated to the Obligations, such Guarantee Obligations shall be
subordinated to the Guarantee of the Obligations on terms at least as favorable
to the Lenders as those contained in the subordination of such Indebtedness and
(B) no guarantee by any Subsidiary of any Permitted Additional Debt (or
Indebtedness under clause (b) above) shall be permitted unless such Subsidiary
shall have also provided a guarantee of the Obligations substantially on the
terms set forth in the Guarantee;
(l)    Guarantee Obligations (i) incurred in the ordinary course of business in
respect of obligations of (or to) suppliers, customers, franchisees, lessors,
licensees or sublicensees or (ii) otherwise constituting Investments permitted
by Sections 11.5(b)(iv), (viii), (xv), (xvi) and (xvii);
(m)    (i) Indebtedness (including Indebtedness arising under Capital Leases)
incurred within 270 days of, or assumed in connection with, the acquisition,
construction, lease, repair, replacement, expansion or improvement of fixed or
capital assets to finance the acquisition, construction, lease, repair,
replacement expansion, or improvement of such fixed or capital assets;

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(ii) Indebtedness arising under Capital Leases, other than (A) Capital Leases in
effect on the Effective Date and (B) Capital Leases entered into pursuant to
subclause (i) above (provided that, in the case of each of the foregoing
subclauses (i) and (ii), the Borrower shall be in compliance on a pro forma
basis after giving effect to the incurrence of such Indebtedness with the
Financial Performance Covenant; and (iii) any Permitted Refinancing Indebtedness
issued or incurred to Refinance any such Indebtedness;
(n)    Indebtedness outstanding on the Effective Date listed on Schedule 11.1
and any Permitted Refinancing Indebtedness issued or incurred to Refinance such
Indebtedness;
(o)     (i) Indebtedness of a Person or Indebtedness attaching to the assets of
a Person that, in either case, becomes a Subsidiary (or is a Subsidiary that
survives a merger with such Person or any of its Subsidiaries) or Indebtedness
attaching to the assets that are acquired by the Borrower or any Subsidiary, in
each case after the Effective Date as the result of a Permitted Acquisition;
provided that:
(A)    such Indebtedness existed at the time such Person became a Subsidiary or
at the time such assets were acquired and, in each case, was not created in
anticipation thereof,
(B)    such Indebtedness is not guaranteed in any respect by the Borrower or any
Subsidiary (other than any such Person that so becomes a Subsidiary or is the
survivor of a merger with such Person or any of its Subsidiaries),
(C)    (1) the Stock of such Person is pledged to the Collateral Agent to the
extent required under Sections 10.10(c) or 10.10(e)  and (2) such Person
executes a supplement to each of the Guarantee, the Security Agreement and the
Pledge Agreement, in each case to the extent required under Section 10.10;
provided that the assets covered by such pledges and security interests may, to
the extent permitted by Section 11.2, equally and ratably secure such
Indebtedness assumed with the Secured Parties subject to customary intercreditor
arrangements not objected to by the Majority Lenders within ten (10) Business
Days of being provided with a substantially final draft of any such
intercreditor agreement; provided, further, that the requirements of this clause
(C) shall not apply to any Indebtedness of the type that could have been
incurred under Section 11.1(g), and
(D)    after giving effect to the assumption of any such Indebtedness, to such
acquisition and to any related pro forma adjustment, the Borrower shall be in
compliance on a pro forma basis with the Financial Performance Covenant;

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(ii)    any Permitted Refinancing Indebtedness incurred to Refinance such
Indebtedness;
(p)    (i) Indebtedness incurred to finance a Permitted Acquisition; provided
that:
(A)    (1) the Stock of the Person acquired is pledged to the Collateral Agent
to the extent required under Sections 10.10(c) or 10.10(e) and (2) such Person
executes a supplement to each of the Guarantee, the Security Agreement and the
Pledge Agreement and delivers any other Security Documents, in each case, to the
extent required under Section 10.10;
(B)    after giving effect to the incurrence of any such Indebtedness, to such
acquisition and to any related pro forma adjustment, the Borrower shall be in
compliance on a pro forma basis with the Financial Performance Covenant, as such
covenant are recomputed as at the last day of the most recently ended Test
Period as if such incurrence and acquisition had occurred on the first day of
such Test Period;
(C)    the maturity of such Indebtedness is not earlier than, and no mandatory
repayment or redemption (other than customary change of control or asset sale
offers or upon any event of default) is required prior to, 91 days after the
Maturity Date (determined at the time of issuance or incurrence); and
(D)    such Indebtedness is not guaranteed in any respect by the Borrower or any
Subsidiary Guarantor except to the extent permitted under Section 11.5;
(ii)    any Permitted Refinancing Indebtedness incurred to Refinance such
Indebtedness;
(q)    Indebtedness consisting of secured financings by a Foreign Subsidiary in
which no Credit Party’s assets are used to secure such Indebtedness;
(r)    Indebtedness in respect of performance bonds, bid bonds, appeal bonds,
surety bonds and completion guarantees and similar obligations not in connection
with money borrowed, in each case provided in the ordinary course of business or
consistent with past practice, including those incurred to secure health, safety
and environmental obligations in the ordinary course of business or consistent
with past practice;
(s)    cash management obligations, cash management services and other
Indebtedness in respect of netting services, automatic clearing house
arrangements, employees’ credit or purchase cards, overdraft protections and
similar arrangements in each case incurred in the ordinary course of business;

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(t)    Indebtedness incurred in the ordinary course of business in respect of
obligations of the Borrower or any Subsidiary to pay the deferred purchase price
of goods or services or progress payments in connection with such goods and
services;
(u)    Indebtedness arising from agreements of the Borrower or any Subsidiary
providing for indemnification, adjustment of purchase price or similar
obligations (including earn-outs), in each case entered into in connection with
the Spinoff Transaction and the OPC Related Transactions, Permitted
Acquisitions, other Investments and the Disposition of any business, assets or
Stock permitted hereunder;
(v)    Indebtedness of the Borrower or any Subsidiary consisting of
(i) obligations to pay insurance premiums or (ii) obligations contained in firm
transportation or supply agreements or other take or pay contracts, in each case
arising in the ordinary course of business;
(w)    Indebtedness representing deferred compensation to employees, consultants
or independent contractors of the Borrower (or, to the extent such work is done
for the Borrower or its Subsidiaries, any direct or indirect parent thereof) and
the Subsidiaries incurred in the ordinary course of business;
(x)    Indebtedness consisting of promissory notes issued by the Borrower or any
Guarantor to current or former officers, managers, consultants, directors and
employees (or their respective spouses, former spouses, successors, executors,
administrators, heirs, legatees or distributees) to finance the purchase or
redemption of Stock or Stock Equivalents of the Borrower (or any direct or
indirect parent thereof) permitted by Section 11.6;
(y)    Indebtedness consisting of obligations of the Borrower and the
Subsidiaries under deferred compensation or other similar arrangements incurred
by such Person in connection with the Transactions, as defined in the First Lien
First Out Credit Agreement, Permitted Acquisitions or any other Investment
permitted hereunder;
(z)    Indebtedness associated with bonds or surety obligations required by
Requirements of Law or by Governmental Authorities in connection with the
operation of Oil and Gas Properties in the ordinary course of business;
(aa)    Indebtedness consisting of the undischarged balance of any Production
Payment in an aggregate principal amount not to exceed $250,000,000 at any one
time outstanding;
(bb)    Indebtedness in respect of (i) the First Lien First Out Obligations in
an aggregate outstanding principal amount not to exceed the greater of (x)
$2,200,000,000 and (y) the Borrowing Base and (ii) any Refinancing Indebtedness
issued or incurred to Refinance such Indebtedness incurred under the preceding
clause (i); provided that (A) such Refinancing

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Indebtedness shall consist of term loans and/or revolving credit facilities with
lenders consisting of commercial banks, investment banks and other institutional
lenders and with pricing, terms and conditions (including without “hard call”
protection or other repayment premiums in excess of 102%) customary for oil and
gas borrowers in the bank and term loan B markets and (B) the principal amount
(or accreted value, if applicable) of any such Refinancing Indebtedness shall
not exceed the principal amount (or accreted value, if applicable) of the
Refinanced Indebtedness outstanding immediately prior to such Refinancing except
by an amount equal to the unpaid accrued interest and premium thereon plus other
amounts paid and fees and expenses incurred in connection with such Refinancing
plus an amount equal to any existing commitment unutilized and letters of credit
undrawn thereunder;
(cc)    during an Investment Grade Period, other Indebtedness; provided that
after giving effect to the incurrence of any such Indebtedness, the Borrower
shall be in compliance on a pro forma basis with the Financial Performance
Covenant, and any Permitted Refinancing Indebtedness issued or incurred to
Refinance such Indebtedness;
(dd)    during a Credit Rating Trigger Period, other Indebtedness so long as (i)
the aggregate principal amount of such Indebtedness at the time of the
incurrence thereof and after giving pro forma effect thereto and the use of
proceeds thereof, does not exceed the greater of 100,000,000 and 1.50% of
Consolidated Total Assets (measured, in each case, as of the date such
Indebtedness is incurred based upon the financial statements most recently
available prior to such date) and (ii) after giving pro forma effect to such
incurrence and any concurrent use of proceeds, the Borrower is in pro forma
compliance with the Financial Performance Covenant, and any Permitted
Refinancing Indebtedness issued or incurred to Refinance such Indebtedness;
(ee)    all premiums (if any), interest (including post-petition interest),
fees, expenses, charges, and additional or contingent interest on obligations
described in clauses (a) through (x) above and (z) through (dd) below;
(ff)    the Existing Second Lien Notes and any Permitted Refinancing
Indebtedness issued or incurred to refinance such Existing Second Lien Notes not
to exceed, at any time, $2,250,000,000;
(gg)    Any Permitted Junior Indebtedness or Permitted Additional Debt of the
Borrower or any other Credit Party incurred solely for the purposes set forth in
Section 11.7(a)(ii) and Permitted Refinancing Indebtedness issued or incurred to
refinance such Indebtedness that also meets the conditions set forth under the
definition of Permitted Junior Indebtedness or Permitted Additional Debt, as
applicable;
(hh)    Indebtedness arising under any First Lien Second-Out Credit Documents
(as defined in the First Lien First Out Credit Agreement (as in effect on the
Effective Date)) in an

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aggregate principal amount not to exceed the Incremental Amount, less the
aggregate principal amount of any Indebtedness established pursuant to Section
2.2;
(ii)    Any Permitted Unsecured Ratio Debt; and
(jj)    During a Credit Rating Trigger Period, Indebtedness secured by a Lien on
Non-Borrowing Base Properties; provided that (i) the aggregate principal amount
of such Indebtedness at the time of the incurrence thereof and after giving pro
forma effect thereto and the use of proceeds thereof, does not exceed
$200,000,000 less the amount of Permitted Additional Debt, Senior Notes or
Permitted Junior Indebtedness obtained as consideration for a Non-Borrowing Base
Disposition in connection with any transaction entered into in accordance with
Section 11.7(a)(i) and (ii) after giving pro forma effect to such incurrence and
any concurrent use of proceeds the Borrower is in pro forma compliance with the
Financial Performance Covenant;
provided that, in no event shall the Specified First Lien Indebtedness Amount
exceed the Priority Lien Cap.

11.2    Limitation on Liens.  The Borrower will not, and will not permit any of
the Subsidiaries to, create, incur, assume or suffer to exist any Lien upon any
property or assets of any kind (real or personal, tangible or intangible) of the
Borrower or any Subsidiary, whether now owned or hereafter acquired, except:
(d)    Liens securing Indebtedness pursuant to Section 11.1(a);
(e)    Permitted Liens;
(f)    Liens (including liens arising under Capital Leases to secure Capital
Lease Obligations) securing Indebtedness permitted pursuant to Section 11.1(g);
provided that such Liens attach concurrently with or within 270 days after the
acquisition, lease, repair, replacement, construction, expansion or improvement
(as applicable) being financed with such Indebtedness, (ii) other than the
property financed by such Indebtedness, such Liens do not at any time encumber
any property, except for replacements thereof and accessions and additions to
such property and the proceeds and the products thereof and customary security
deposits and (iii) with respect to Capital Leases, such Liens do not at any time
extend to or cover any assets (except for accessions and additions to such
assets, replacements and products thereof and customary security deposits) other
than the assets subject to such Capital Leases; provided that individual
financings of equipment provided by one lender may be cross collateralized to
other financings of equipment provided by such lender;
(g)    Liens existing on the Effective Date other than Liens securing
Indebtedness under the First Lien First Out Credit Agreement and Permitted
Second Lien Indebtedness; provided

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that any Lien securing Indebtedness in excess of (i) $5,750,000 individually or
(ii) $11,500,000 in the aggregate (when taken together with all other Liens
securing obligations outstanding in reliance on this clause (d) that are not
listed on Schedule 11.2) shall only be permitted to the extent such Lien is
listed on Schedule 11.2;
(h)    (i) the modification, replacement, extension or renewal of any Lien
permitted by clauses (a), (b), (c), (d), during a Credit Rating Trigger Period,
(f), (i), (s) and (w) of this Section 11.2 upon or in the same assets
theretofore subject to such Lien or upon or in after-acquired property that is
(A) affixed or incorporated into the property covered by such Lien, (B) in the
case of Liens permitted by clauses (f) and (s), subject to a Lien securing
Indebtedness permitted under Section 11.1, the terms of which Indebtedness
require or include a pledge of after-acquired property (it being understood that
such requirement shall not be permitted to apply to any property to which such
requirement would not have applied but for such acquisition) and (C) the
proceeds and products thereof or (ii) during a Credit Rating Trigger Period,
Liens securing Indebtedness incurred in replacement, extension or renewal
(without increase in the amount or change in any direct or contingent obligor
except to the extent otherwise permitted hereunder) of secured Indebtedness, to
the extent the replacement, extension or renewal of the Indebtedness secured
thereby is permitted by Section 11.1;
(i)    during a Credit Rating Trigger Period, Liens existing on the assets of
any Person that becomes a Subsidiary, or existing on assets acquired, pursuant
to a Permitted Acquisition to the extent the Liens on such assets secure
Indebtedness permitted by Section 11.1(i); provided that such Liens attach at
all times only to the same assets that such Liens (or upon or in after-acquired
property that is (i) affixed or incorporated into the property covered by such
Lien, (ii) after-acquired property subject to a Lien securing Indebtedness
permitted under Section 11.1(i), the terms of which Indebtedness require or
include a pledge of after-acquired property (it being understood that such
requirement shall not be permitted to apply to any property to which such
requirement would not have applied but for such acquisition) and (iii) the
proceeds and products thereof) attached to, and secure only, the same
Indebtedness or obligations (or any Permitted Refinancing Indebtedness incurred
to Refinance such Indebtedness permitted by Section 11.1) that such Liens
secured, immediately prior to such Permitted Acquisition;
(j)    during a Credit Rating Trigger Period, Liens placed upon the Stock and
Stock Equivalents of any Person that becomes a Subsidiary pursuant to a
Permitted Acquisition, or the assets of such a Subsidiary, in each case, to
secure Indebtedness incurred pursuant to Section 11.1(j); provided that such
Liens attach at all times only to the Stock and Stock Equivalents or assets so
acquired;

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(k)    during a Credit Rating Trigger Period, Liens securing Indebtedness or
other obligations (i) of the Borrower or a Subsidiary in favor of a Credit Party
and (ii) of any Subsidiary that is not a Credit Party in favor of any Subsidiary
that is not a Credit Party;
(l)    Liens (i) of a collecting bank arising under Section 4-210 of the Uniform
Commercial Code on items in the course of collection, (ii) attaching to
commodity trading accounts or other commodity brokerage accounts incurred in the
ordinary course of business and (iii) in favor of a banking institution arising
as a matter of law encumbering deposits (including the right of set-off);
(m)    Liens (i) on cash advances in favor of the seller of any property to be
acquired in an Investment permitted pursuant to Section 11.5 to be applied
against the purchase price for such Investment, and (ii) consisting of an
agreement to Dispose of any property in a transaction permitted under
Section 11.4, in each case, solely to the extent such Investment or Disposition,
as the case may be, would have been permitted on the date of the creation of
such Lien;
(n)    Liens arising out of conditional sale, title retention, consignment or
similar arrangements for sale or purchase of goods entered into by the Borrower
or any of the Subsidiaries in the ordinary course of business permitted by this
Agreement;
(o)    Liens deemed to exist in connection with Investments in repurchase
agreements permitted under Section 11.5;
(p)    Liens encumbering reasonable customary initial deposits and margin
deposits and similar Liens attaching to brokerage accounts incurred in the
ordinary course of business and approved by the Borrower’s board of directors;
(q)    Liens that are contractual rights of set-off (i) relating to the
establishment of depository relations with banks not given in connection with
the issuance or incurrence of Indebtedness, (ii) relating to pooled deposit or
sweep accounts of the Borrower or any Subsidiary to permit satisfaction of
overdraft or similar obligations incurred in the ordinary course of business of
the Borrower and the Subsidiaries or (iii) relating to purchase orders and other
agreements entered into with customers of the Borrower or any Subsidiary in the
ordinary course of business;
(r)    Liens solely on any cash earnest money deposits made by the Borrower or
any of the Subsidiaries in connection with any letter of intent or purchase
agreement permitted hereunder;
(s)    Liens on insurance policies and the proceeds thereof securing the
financing of the premiums with respect thereto;

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(t)    (i) Liens in respect of Production Payments which, in the case of
Production Payments constituting Indebtedness, shall not exceed an aggregate
principal amount of $250,000,000 at any one time outstanding and (ii) Liens in
connection with Royalty Trust Transactions and obligations arising from net
profits interests, working interests, overriding royalty interests or similar
real property interest;
(u)    the prior right of consignees and their lenders under consignment
arrangements entered into in the ordinary course of business;
(v)    agreements to subordinate any interest of the Borrower or any Subsidiary
in any accounts receivable or other proceeds arising from inventory consigned by
the Borrower or any Subsidiary pursuant to an agreement entered into in the
ordinary course of business;
(w)    Liens on Stock in a joint venture that does not constitute a Subsidiary
securing obligations of such joint venture so long as the assets of such joint
venture do not constitute Collateral;
(x)    Liens securing any Indebtedness permitted by Section 11.1(k);
(y)    Liens arising pursuant to Section 107(l) of CERCLA, or other
Environmental Law, unless such Lien  (i) by action of the lienholder, or by
operation of law, takes priority over any Liens arising under the Credit
Documents on the property upon which it is a Lien, and (ii) relates to a
liability of the Borrower or any Subsidiary that is reasonably likely to exceed
$34,500,000;
(z)    Liens securing any Indebtedness permitted by Section 11.1(v);
(aa)    during a Credit Rating Trigger Period, Liens on any property of the
Borrower or any Subsidiary to secure Indebtedness and obligations of the
Borrower or such Subsidiary under Hedge Agreements permitted under Section 11.10
with counterparties other than a Hedge Bank (as defined in the First Lien First
Out Credit Agreement);
(bb)    Liens arising from judgments or decrees in circumstances not
constituting an Event of Default under Section 12.9; and
(cc)    Liens securing Indebtedness issued or incurred under Section 11.1(z);
provided that such Liens are subordinated to the Liens securing the Obligations
pursuant to the Existing Intercreditor Agreement;
(dd)    during a Credit Rating Trigger Period, Liens on Non-Borrowing Base
Properties securing Indebtedness permitted by Section 11.1(dd);
(ee)    Liens securing Indebtedness incurred under Section 11.1(aa);

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(ff)    Liens securing the counterparty’s interests under farm-in agreements or
farm-out agreements and Development Joint Ventures relating to Developed
Non-Producing Reserves, Proved Non-Producing Reserves, Proved Undeveloped
Reserves or Hydrocarbon Interests to which no Proved Reserves are attributable
or undeveloped acreage to which no Proved Reserves are attributable, which Liens
may be first priority Liens senior to the Liens securing the Obligations, if the
aggregate value of the property secured by such Liens pursuant to this Section
11.2(bb) valued at the time such agreement is entered into, is less than or
equal to $500,000,000; provided that, if requested by the Borrower, the
Administrative Agent shall (and the Lenders hereby agree that the Administrative
Agent shall) subordinate and/or release its Liens relating to such property; and
(gg)    Liens securing Indebtedness pursuant to Section 11.1(bb); provided that
such Indebtedness shall be (i) secured by the Liens on the Collateral that
secure the Obligations and the First Lien First Out Obligations but provide for
collateral recovery in respect of such Liens to be junior to the collateral
recovery in respect of the First Lien First Out Obligations, (ii) subject to the
Existing Intercreditor Agreement such that the lending parties under such
Indebtedness are “Priority Lien Secured Parties” (as defined therein) and (iii)
subject to the First Lien Intercreditor Agreement or an intercreditor agreement
in form and substance substantially similar to the First Lien Intercreditor
Agreement or that is otherwise reasonably acceptable to the Majority Lenders.

11.3    Limitation on Fundamental Changes.  Except as permitted by Sections 11.4
or 11.5, the Borrower will not, and will not permit any of the Subsidiaries to,
enter into any merger, consolidation or amalgamation, or liquidate, wind up or
dissolve itself (or suffer any liquidation or dissolution), or Dispose of, all
or substantially all its business units, assets or other properties, except
that:
(a)    any Subsidiary of the Borrower or any other Person (other than the
Borrower) may be merged, amalgamated or consolidated with or into any one or
more Subsidiaries of the Borrower; provided that (i) in the case of any merger,
amalgamation or consolidation involving one or more Subsidiaries, (A) a
Subsidiary shall be the continuing or surviving Person or (B) the Borrower shall
take all steps necessary to cause the Person formed by or surviving any such
merger, amalgamation or consolidation (if other than a Subsidiary) to become a
Subsidiary, (ii) in the case of any merger, amalgamation or consolidation
involving one or more Guarantors, a Guarantor shall be the continuing or
surviving Person or the Person formed by or surviving any such merger,
amalgamation or consolidation (if other than a Guarantor) shall execute a
supplement to the Guarantee, the Security Agreement, the Pledge Agreement and
any applicable Mortgage, each in form and substance reasonably effective to
cause such Person to be bound by such agreements as if such Person had entered
into the respective agreements directly, (iii) no Default or Event of Default
has occurred and is continuing on the date of such merger, amalgamation or
consolidation or would result from the consummation of such merger, amalgamation
or consolidation and (iv) if such merger, amalgamation or consolidation involves
a Subsidiary and a Person that, prior to the

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consummation of such merger, amalgamation or consolidation, is not a Subsidiary
of the Borrower, (A) the Borrower shall be in compliance, on a pro forma basis
after giving effect to such merger, amalgamation or consolidation, with the
Financial Performance Covenant, (B) the Borrower shall have delivered to the
Administrative Agent an officer’s certificate stating that such merger,
amalgamation or consolidation and such supplements to any Credit Document
preserve the enforceability of the Guarantee and the perfection and priority of
the Liens under the Security Agreement and (C) such merger, amalgamation or
consolidation shall comply with all the conditions set forth in the definition
of the term “Permitted Acquisition” or is otherwise permitted under
Section 11.5;
(b)    any Subsidiary that is not a Guarantor may (i) merge, amalgamate or
consolidate with or into any other Subsidiary and (ii) Dispose of any or all of
its assets (upon voluntary liquidation or otherwise) to the Borrower, a
Guarantor or any other Subsidiary of the Borrower;
(c)    any Subsidiary Guarantor may (i) merge, amalgamate or consolidate with or
into any other Subsidiary Guarantor and (ii) Dispose of any or all of its assets
(upon voluntary liquidation or otherwise) to the Borrower or any other
Guarantor;
(d)    any Subsidiary may liquidate or dissolve if (i) the Borrower determines
in good faith that such liquidation or dissolution is in the best interests of
the Borrower and is not materially disadvantageous to the Lenders and (ii) to
the extent such Subsidiary is a Credit Party, any assets or business of such
Subsidiary not otherwise Disposed of or transferred in accordance with
Section 11.4 or 11.5, in the case of any such business, discontinued, shall be
transferred to, or otherwise owned or conducted by, a Credit Party after giving
effect to such liquidation or dissolution; and
(e)    to the extent that no Default or Event of Default would result from the
consummation of such Disposition, the Borrower and the Subsidiaries may
consummate a merger, dissolution, liquidation, consolidation or Disposition, the
purpose of which is to effect a Disposition permitted pursuant to Section 11.4.

11.4    Limitation on Sale of Assets.
(a)    During a Credit Rating Trigger Period, the Borrower will not, and will
not permit any of the Subsidiaries to, (x) convey, sell, lease, sell and
leaseback, assign, farm-out, transfer

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or otherwise dispose (each of the foregoing a “Disposition”) of any of its
property, business or assets (including receivables and leasehold interests),
whether now owned or hereafter acquired or (y) sell to any Person (other than
the Borrower or a Guarantor) any shares owned by it of any Subsidiary’s Stock
and Stock Equivalents, except that:
(i)    the Borrower and any Subsidiary may Dispose of (i) inventory and other
goods held for sale, including Hydrocarbons, obsolete, worn out, used or surplus
equipment, vehicles and other assets (other than accounts receivable) in the
ordinary course of business (including equipment that is no longer necessary for
the business of the Borrower or its Subsidiaries or is replaced by equipment of
at least comparable value and use), (ii) Permitted Investments, and (iii) assets
for the purposes of community and public outreach, including, without
limitation, charitable contributions and similar gifts, funding of or
participation in trade, business and technical associations, and political
contributions made in accordance with applicable Requirements of Law, to the
extent such assets are not material to the ability of the Borrower and its
Subsidiaries, taken as a whole, to conduct its business in the ordinary course;
(ii)    the Borrower and any Subsidiary may effect a Disposition in accordance
with Section 11.7(a)(i);
(iii)    the Borrower and any Subsidiary may Dispose of property or assets to
the Borrower or to a Subsidiary; provided that if the transferor of such
property is a Credit Party (i) the transferee thereof must either be a Credit
Party or (ii) such transaction is permitted under Section 11.5;
(iv)    the Borrower and any Subsidiary may effect any transaction permitted by
Section 11.3, 11.5 or 11.6;
(v)    the Borrower and any Subsidiary may lease, sublease, license or
sublicense (on a non-exclusive basis with respect to any intellectual property)
real, personal or intellectual property in the ordinary course of business;
(vi)    the Borrower and any Subsidiary may effect Dispositions constituting
like-kind exchanges (including reverse like-kind exchanges) of Oil and Gas
Properties to the extent that (i) such property is exchanged for credit against
the purchase price of similar replacement property or (ii) the proceeds of such
Disposition are applied to the purchase price of such replacement property, in
each case under Section 1031 of the Code or otherwise, and (iii) until the
Discharge of First Lien First Out Obligations, such Disposition is in compliance
with the First Lien First Out Credit Agreement;

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(vii)    the Borrower and any Subsidiary may effect Dispositions of Hydrocarbon
Interests to which no Proved Reserves are attributable and farm-outs of
undeveloped acreage to which no Proved Reserves are attributable and assignments
in connection with such farm-outs;
(viii)    the Borrower and any Subsidiary may effect Dispositions of Investments
in joint ventures (regardless of the form of legal entity) to the extent
required by, or made pursuant to, customary buy/sell arrangements between the
joint venture parties set forth in joint venture arrangements and similar
binding arrangements to the extent the same would be permitted under
Section 11.5(b)(viii);
(ix)    the Borrower and any Subsidiary may effect Dispositions listed on
Schedule 11.4 (“Scheduled Dispositions”);
(x)    the Borrower and any Subsidiary may effect transfers of property subject
to a (i) Casualty Event or in connection with any condemnation proceeding with
respect to Collateral upon receipt of the net cash proceeds of such Casualty
Event or condemnation proceeding or (ii) in connection with any Casualty Event
or any condemnation proceeding, in each case with respect to property that does
not constitute Collateral;
(xi)    the Borrower and any Subsidiary may effect Dispositions of accounts
receivable (i) in connection with the collection or compromise thereof or
(ii) to the extent the proceeds thereof are used to prepay any Loans then
outstanding;
(xii)    [reserved];
(xiii)    [reserved];
(xiv)    the Borrower and any Subsidiary may effect a Disposition of any asset
between or among the Borrower and/or its Subsidiaries as a substantially
concurrent interim Disposition in connection with a Disposition otherwise
permitted pursuant to clauses (i) through (xi) above;
(xv)    the Borrower and any Subsidiary may effect any other Disposition so long
as:
(A)    no Default or Event of Default is occurring or would result therefrom;
(B)    the Borrower or Subsidiary, as the case may be, receives consideration at
the time of such Disposition at least equal to the Fair Market Value of the
assets sold or otherwise disposed of;

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(C)    at least 75% of the consideration therefor received by the Borrower or
such Subsidiary, as the case may be, is in the form of cash, Cash Equivalents or
Additional Assets; provided that the following shall be deemed to be Cash
Equivalents for purposes of this clause (C) and for no other purposes:
(1)    any liabilities (as shown on the Borrower’s or such Subsidiary’s most
recent balance sheet or in the footnotes thereto or if incurred or accrued
subsequent to the date of such balance sheets, such liabilities as would have
been reflected in the Borrower’s consolidated balance sheet or the footnotes
thereto if such incurrence or accrual had been put in place on or prior to the
date of such balance sheet as determined in good faith by the Borrower) of the
Borrower or such Subsidiary, other than contingent liabilities or liabilities
that are by their terms subordinated to the Obligations, that (i) are assumed by
the transferee of any such assets and from which the Borrower and all of its
Subsidiaries shall have been validly released by all applicable creditors in
writing or (ii) that are otherwise cancelled or terminated in connection with
the transaction with such transferee (other than intercompany debt owed to the
Borrower or its Subsidiaries);
(2)    any securities, notes or other obligations or assets received by the
Borrower or such Subsidiary from such transferee that are converted by the
Borrower or such Subsidiary into cash or Cash Equivalents (to the extent of the
cash or Cash Equivalents received) within one hundred and eighty (180) days
following the closing of such Disposition;
(3)    with respect to any Disposition of Oil and Gas Properties by the Borrower
or any Subsidiary in which the Borrower or any Subsidiary retains a direct or
indirect interest in such property (including, without limitation, in the nature
of a reversionary, remainder, increasing or back-in interest), the costs and
expenses related to the exploration, development, completion or production of
such Oil and Gas Properties and activities related thereto agreed to be assumed
by the transferee (or an Affiliate thereof);
(4)    Indebtedness of any Subsidiary that ceases to be a Subsidiary as a result
of such Disposition (other than intercompany debt owed to the Borrower or its
Subsidiaries), to the extent that the Borrower and each other Subsidiary are
released from any Guarantee of payment of the principal amount of such
Indebtedness in connection with such Disposition; and

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(5)    any Designated Non-Cash Consideration received by the Borrower or such
Subsidiary in respect of the applicable Disposition having an aggregate Fair
Market Value, taken together with all other Designated Non-Cash Consideration
received pursuant to this clause (5) at any time outstanding, not in excess of
the greater of (x) $100 million and (y) 1.5% of Consolidated Total Assets
determined as of the time of the receipt of such Designated Non-Cash
Consideration, with the Fair Market Value of each item of Designated Non-Cash
Consideration being measured at the time received and without giving effect to
subsequent changes in value;
(D)    with respect to any Dispositions in excess of $25,000,000 per calendar
year, after giving pro forma effect to such Disposition and any related pro
forma adjustment (including, without limitation, any substantially concurrent
incurrence of Indebtedness and with such pro forma adjustments including the
recalculation of PV-10 on a pro forma basis), the Borrower is in pro forma
compliance with the Financial Performance Covenant; and
(E)    the Net Cash Proceeds from such Disposition are applied in accordance
with clause (b) below.
(b)    Within 365 days after the receipt of any Net Cash Proceeds from a
Disposition made pursuant to Section 11.4(a)(xv) only, and not for any other
Dispositions, the Credit Parties may apply such Net Cash Proceeds:
(i)    subject to the First Lien Intercreditor Agreement, to repay Indebtedness
under the First Lien First Out Credit Agreement;
(ii)    to permanently repay or reduce any additional Permitted Junior
Indebtedness (as defined in the First Lien First Out Credit Agreement as of the
First Lien First Out Fifth Amendment Effective Date) that is secured by the
Liens on the Collateral that secure the Obligations and the First Lien First Out
Obligations but provide for collateral recovery in respect of such Liens to be
equal or senior to the collateral recovery in respect of the Obligations;
provided that if the Borrower shall so repay or reduce any such Permitted Junior
Indebtedness, an equal and ratable portion of such Net Cash Proceeds shall be
deemed to be Excess Cash Proceeds and shall be applied in accordance with
Section 5.2(a);
(iii)    to make Capital Expenditures in respect of the Credit Parties’ onshore
oil and gas business, including without limitation maintenance and repair
expenditures that are Capital Expenditures; provided that this clause (iii)
shall be deemed to be satisfied if a bona fide binding contract committing to
make such Capital Expenditure is entered into by any Credit Party with a Person
other than an Affiliate of any Credit Party within the

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time period specified above and such Net Cash Proceeds are subsequently applied
in accordance with such contract within 180 days following the date such
agreement is entered into; or
(iv)    to invest or reinvest in Additional Assets (including by means of an
Investment in Additional Assets by a Subsidiary with Net Cash Proceeds received
by the Borrower or another Subsidiary);
provided that Borrower shall deliver a notice of its intent to reinvest Net Cash
Proceeds from the Disposition a “Reinvestment Notice” to the Administrative
Agent and the Lenders within 60 days of the receipt by any Credit Party of such
Net Cash Proceeds. Any Net Cash Proceeds from Dispositions that are not applied
or invested as provided in Section 11.4(b) (including amounts not invested
following a Reinvestment Notice) shall constitute “Excess Cash Proceeds” and
shall be applied in accordance with Section 5.2(a).
(c)    On any date during an Investment Grade Period, the Borrower will not, and
will not permit any of the Subsidiaries to, make any Disposition, unless after
giving pro forma effect to such Disposition (i) no Default or Event of Default
has occurred and is continuing or would result therefrom and (ii) the Borrower
shall be in compliance with the Financial Performance Covenant on a pro forma
basis after giving effect to such Disposition.
(d)    Notwithstanding anything to the contrary, the Borrower may Dispose of
property or assets in an amount not to exceed $1,000,000 individually or
$10,000,000 in the aggregate for each fiscal year of the Borrower without such
Dispositions being subject to Sections 11.4(a), (b) and (c) hereof.

11.5    Limitation on Investments.
(a)    [Reserved].
(b)    During a Credit Rating Trigger Period, the Borrower will not, and will
not permit any of the Subsidiaries, to make any Investment except:
(i)    extensions of trade credit and purchases of assets and services
(including purchases of inventory, supplies and materials) in the ordinary
course of business;
(ii)    Investments in assets that constituted Permitted Investments at the time
such Investments were made;
(iii)    loans and advances to officers, directors, employees and consultants of
the Borrower (or any direct or indirect parent thereof) or any of its
Subsidiaries (i) for reasonable and customary business-related travel,
entertainment, relocation and analogous

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ordinary business purposes (including employee payroll advances), (ii) in
connection with such Person’s purchase of Stock or Stock Equivalents of the
Borrower (or any direct or indirect parent thereof; provided that, to the extent
such loans and advances are made in cash, the amount of such loans and advances
used to acquire such Stock or Stock Equivalents shall be contributed to the
Borrower in cash) and (iii) for purposes not described in the foregoing
subclauses (i) and (ii); provided that the aggregate principal amount
outstanding pursuant to this subclause (iii) shall not exceed $20,000,000;
(iv)    (A) Investments existing on, or made pursuant to legally binding written
commitments in existence on, the Effective Date as set forth on Schedule 11.5,
(B) Investments existing on the Effective Date of the Borrower or any Subsidiary
in any other Subsidiary and (C) any extensions, renewals or reinvestments
thereof, so long as the amount of any Investment made pursuant to this clause
(iv) is not increased at any time above the amount of such Investment set forth
on Schedule 11.5;
(v)    Investments received in connection with the bankruptcy or reorganization
of suppliers or customers and in settlement of delinquent obligations of, and
other disputes with, customers arising in the ordinary course of business or
upon foreclosure with respect to any secured Investment or other transfer of
title with respect to any secured Investment;
(vi)    Investments to the extent that payment for such Investments is made with
Stock or Stock Equivalents (other than Disqualified Stock not otherwise
permitted by Section 11.1) of the Borrower (or any direct or indirect parent
thereof);
(vii)    [Reserved];
(viii)    (A) Investments in respect of Permitted Acquisitions, (B) Investments
in respect of Royalty Trusts and master limited partnerships and (C) other
Investments in an amount not to exceed $250,000,000 in the aggregate, in each
case valued at the Fair Market Value (determined by the Borrower acting in good
faith) of such Investment at the time each such Investment is made, in an
aggregate amount pursuant to this Section 11.5(b)(viii) that, at the time each
such Investment is made, would not exceed the sum of (a) $100,000,000 plus (b)
so long as (i) no Default or Event of Default has occurred and is continuing at
the time of any such Investment or would result therefrom and (ii) the Fixed
Charge Coverage Ratio shall be no less than 2.25 to 1.00 after giving pro forma
effect to such Investment and any transactions taken in connection therewith
(including, without limitation, the incurrence of any Indebtedness), the
Available Amount at such time plus (c) the amount of any Net Cash Proceeds of
any issuance or sale of Stock (other than Disqualified Stock) of the Borrower
(provided that any Investments made with such Net Cash Proceeds under this
Section 11.5(b)(viii) are made within one hundred and eighty

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(180) calendar days of the issuance of such Stock) (such amount, an “Equity
Funded Investment”); provided that the foregoing limits shall not apply during
the period in which, and Investments may be made pursuant to this Section
11.5(b)(viii) without limit at any such time during which, after giving pro
forma effect to the making of any such Investment, (1) no Event of Default shall
have occurred and be continuing and (2) Liquidity is not less than 10% of the
then-effective First Lien First Out Revolving Loan Limit (on a pro forma basis
after giving effect to such Investment) or, after the Discharge of First Lien
First Out Obligations, cash on the balance sheet of the Borrower of at least
$220,000,000; provided, further, that (x) intercompany current liabilities
incurred in the ordinary course of business and consistent with past practices,
in connection with the cash management operations of the Borrower and the
Subsidiaries shall not be included in calculating any limitations in this
paragraph at any time and (y) for the avoidance of doubt, any prepayment,
repurchase, redemption or defeasance of the Senior Notes, any Permitted Junior
Indebtedness or any Permitted Additional Debt shall also be subject to
compliance with Section 11.7;
(ix)    Investments constituting non-cash proceeds of Dispositions of assets to
the extent such Disposition is permitted by Section 11.4;
(x)    Investments made to repurchase or retire Stock or Stock Equivalents of
the Borrower or any direct or indirect parent thereof owned by any employee or
any stock ownership plan or key employee stock ownership plan of the Borrower
(or any direct or indirect parent thereof);
(xi)    loans and advances to any direct or indirect parent of the Borrower in
lieu of, and not in excess of the amount of, Restricted Payments to the extent
permitted to be made to such parent in accordance with Section 11.6;
(xii)    Investments consisting of extensions of credit in the nature of
accounts receivable or notes receivable arising from the grant of trade credit
in the ordinary course of business, and Investments received in satisfaction or
partial satisfaction thereof from financially troubled account debtors and other
credits to suppliers in the ordinary course of business;
(xiii)    Investments in the ordinary course of business consisting of
endorsements for collection or deposit and customary trade arrangements with
customers consistent with past practices;
(xiv)    advances of payroll payments to employees, consultants or independent
contractors or other advances of salaries or compensation to employees,
consultants or independent contractors, in each case in the ordinary course of
business;

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(xv)    guarantee obligations of the Borrower or any Subsidiary of leases (other
than Capital Leases) or of other obligations that do not constitute
Indebtedness, in each case entered into in the ordinary course of business;
(xvi)    Investments held by a Person acquired (including by way of merger or
consolidation) after the Effective Date otherwise in accordance with this
Section 11.5 to the extent that such Investments were not made in contemplation
of or in connection with such acquisition, merger or consolidation and were in
existence on the date of such acquisition, merger or consolidation;
(xvii)    Investments in Industry Investments and in interests in additional Oil
and Gas Properties and gas gathering systems related thereto or Investments
related to farm-out, farm-in, joint operating, joint venture, joint development
or other area of mutual interest agreements, other similar industry investments,
gathering systems, pipelines or other similar oil and gas exploration and
production business arrangements whether through direct ownership or ownership
through a joint venture or similar arrangement; provided that any asset,
property, equity interests or other interest that (a) is property described in
clauses (d) or (f) of the definition of Excluded Stock, (b) has an aggregate
value with all such property in excess of $50,000,000 and (c) is received in
connection with any Investment under this clause (xvii) shall be pledged as
Collateral except (i) to the extent such Investment is made in connection with a
farm-in, farm-out or Development Joint Venture or (ii) to the extent otherwise
excluded pursuant to clause (b) of the definition of Excluded Stock;
(xviii)    Investments in Hedge Agreements permitted by Section 11.1 and
Section 11.10;
(xix)    Investments consisting of Indebtedness, fundamental changes,
Dispositions and Restricted Payments permitted under Sections 11.1, 11.3, 11.4
and 11.6 (other than 11.6(c));
(xx)    Investments by the Borrower or any Subsidiary in any Subsidiary;
(xxi)    Investments consisting of licensing of intellectual property pursuant
to joint marketing arrangements with other Persons in the ordinary course of
business.

11.6    Limitation on Restricted Payments.  The Borrower will not pay any
dividends (other than Restricted Payments payable solely in its Stock that is
not Disqualified Stock) or return any capital to its equity holders or make any
other distribution, payment or delivery of property or cash to its equity
holders as such, or redeem, retire, purchase or otherwise acquire, directly or
indirectly, for consideration, any shares of any class of its Stock or Stock
Equivalents or the Stock or Stock

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Equivalents of any direct or indirect parent now or hereafter outstanding, or
set aside any funds for any of the foregoing purposes, or permit any of the
Subsidiaries to purchase or otherwise acquire for consideration (other than in
connection with an Investment permitted by Section 11.5) any Stock or Stock
Equivalents of the Borrower (or any direct or indirect parent thereof), now or
hereafter outstanding (all of the foregoing, “Restricted Payments”); except
that:
(e)    the Borrower may redeem in whole or in part any of its Stock or Stock
Equivalents in exchange for another class of its Stock or Stock Equivalents or
with proceeds from substantially concurrent equity contributions or issuances of
new Stock or Stock Equivalents; provided that such new Stock or Stock
Equivalents contain terms and provisions at least as advantageous to the Lenders
in all material respects to their interests as those contained in the Stock or
Stock Equivalents redeemed thereby, and the Borrower may pay Restricted Payments
payable solely in the Stock and Stock Equivalents (other than Disqualified Stock
not otherwise permitted by Section 11.1) of the Borrower;
(f)    the Borrower may (i) redeem, acquire, retire or repurchase shares of its
Stock or Stock Equivalents held by any present or former officer, manager,
consultant, director or employee (or their respective Affiliates, estates,
spouses, former spouses, successors, executors, administrators, heirs, legatees,
distributees or immediate family members) of the Borrower and its Subsidiaries,
upon the death, disability, retirement or termination of employment of any such
Person or otherwise in accordance with any equity option or equity appreciation
rights plan, any management, director and/or employee equity ownership, benefit
or incentive plan or agreement, equity subscription plan, employment termination
agreement or any other employment agreements or equity holders’ agreement;
provided that, for non-discretionary repurchases, acquisitions, retirements or
redemptions pursuant to the terms of any equity option or equity appreciation
rights plan, any management, director and/or employee equity ownership, benefit
or incentive plan or agreement, equity subscription plan, employment termination
agreement or any other employment agreements or equity holders’ agreement, the
aggregate amount of all cash paid in respect of all such shares of Stock or
Stock Equivalents so redeemed, acquired, retired or repurchased in any calendar
year does not exceed $50,000,0000; and (ii) pay Restricted Payments in an amount
equal to withholding or similar Taxes payable or expected to be payable by any
present or former employee, director, manager or consultant (or their respective
Affiliates, estates or immediate family members) and any repurchases of Stock or
Stock Equivalents in consideration of such payments including deemed repurchases
in connection with the exercise of stock options so long as the amount of such
payments does not exceed $25,000,000 in the aggregate;
(g)    to the extent constituting Restricted Payments, the Borrower may make
Investments permitted by Section 11.5;

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(h)    to the extent constituting Restricted Payments, the Borrower may enter
into and consummate transactions expressly permitted by any provision of
Section 11.3;
(i)    the Borrower may repurchase Stock or Stock Equivalents of the Borrower
(or any direct or indirect parent thereof) upon exercise of stock options or
warrants if such Stock or Stock Equivalents represents all or a portion of the
property to be delivered upon the exercise of such options or warrants;
(j)    the Borrower or any of the Subsidiaries may (i) pay cash in lieu of
fractional shares in connection with any dividend, split or combination thereof
or any Permitted Acquisition and (ii) so long as, after giving pro forma effect
thereto, (A) no Default or Event of Default shall have occurred and be
continuing and (B) if such payment is made while a Credit Rating Trigger Period
is in effect, honor any conversion request by a holder of convertible
Indebtedness and make cash payments in lieu of fractional shares in connection
with any such conversion and may make payments on convertible Indebtedness in
accordance with its terms;
(k)    the Borrower may pay any Restricted Payment within 60 days after the date
of declaration thereof, if at the date of declaration such payment would have
complied with the provisions of this Agreement;
(l)    during any Credit Rating Trigger Period, if, after giving pro forma
effect thereto, no Event of Default shall have occurred and be continuing, and
(ii) Available Revolving Commitment (as defined in the First Lien First Out
Credit Agreement) is not less than 10% of the then effective First Lien First
Out Revolving Loan Limit (on a pro forma basis after giving effect to such
Restricted Payment), the Borrower may make, declare and pay additional
Restricted Payments in an aggregate amount not to exceed $5,000,000 per calendar
year, in cash or otherwise to the holders of its Stock and Stock Equivalents;
(m)    during any Investment Grade Period, if no Event of Default shall have
occurred and be continuing or would result therefrom and after giving effect to
the making of any such Restricted Payment, the Borrower shall be in compliance
on a pro forma basis with the Financial Performance Covenant, then the Borrower
may declare and pay Restricted Payments in cash or other property;
(n)    [reserved];
(o)    the Borrower may make payments described in Sections 11.12(d), (e), (f)
and (i) (subject to the conditions set out therein); and
(p)    the Borrower and its Subsidiaries may make additional Restricted Payments
not to exceed the Available Amount at such time so long as (x) no Default or
Event of Default has

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occurred and is continuing or shall result therefrom and (y) the Fixed Charge
Coverage Ratio shall be no less than 2.25 to 1.00 after giving pro forma effect
to such Restricted Payment and any transactions taken in connection therewith
(including, without limitation, the incurrence of any Indebtedness).

11.7    Limitations on Debt Payments and Amendments.
(g)    Except as permitted by Section 11.7(b), the Borrower shall not, and shall
not permit the other Credit Parties to, make any prepayment, repurchase,
redemption or defeasance of the Senior Notes, any Permitted Junior Indebtedness
or any Permitted Additional Debt (it being understood that payments of regularly
scheduled cash interest in respect of, payment of principal on the scheduled
maturity date of, the Senior Notes or Permitted Junior Indebtedness (only to the
extent permitted under the definition thereof) or Permitted Additional Debt
shall be permitted prior to maturity, as applicable), except the Borrower or any
Credit Party, as applicable, may:
(i)    prepay, repurchase, redeem or defease any Permitted Additional Debt, the
Senior Notes or Permitted Junior Indebtedness with an amount up to 60%
multiplied by the sum of (x) Net Cash Proceeds plus (y) Permitted Additional
Debt, Senior Notes or Permitted Junior Indebtedness obtained as consideration
for a Non-Borrowing Base Disposition; provided that any such Permitted
Additional Debt, Senior Notes or Permitted Second Lien Indebtedness obtained as
consideration shall be valued at Fair Market Value and shall comprise no more
than 60% of the total consideration for such Disposition;
(ii)    prepay, repurchase, redeem, defease or exchange any Permitted Additional
Debt, the Senior Notes or Permitted Junior Indebtedness at a discount to par
(calculated in accordance with the proviso below) with Net Cash Proceeds of the
incurrence of, or exchange for, Permitted Additional Debt, Senior Notes,
Permitted Junior Indebtedness or Indebtedness incurred under Sections 11.1(a),
11.1(aa) or 11.1(bb);
(iii)    prepay, repurchase, redeem, defease or exchange any Permitted
Additional Debt, the Senior Notes or Permitted Junior Indebtedness in an amount
not to exceed $200,000,000 in the aggregate; and
(iv)    prepay, repurchase, redeem or defease any Permitted Junior Indebtedness,
Senior Notes or Permitted Additional Debt not to exceed the Available Amount;
provided that, in each case, (i) no Default or Event of Default has occurred and
is continuing at the time of any such prepayment, repurchase, redemption or
defeasance or would result therefrom and (ii) the Fixed Charge Coverage Ratio
shall be no less than 2.25 to 1.00 after giving pro forma effect to such
prepayment, repurchase, redemption or defeasance and any transactions taken in
connection therewith (including, without limitation, the incurrence of any
Indebtedness);

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provided that with respect to clause (i) above, (A) the principal amount of such
Senior Notes, Permitted Junior Indebtedness, or Permitted Additional Debt, as
applicable, is prepaid, repurchased, redeemed or defeased at a discount to par
(calculated for each prepayment, repurchase, redemption or defeasance on a
weighted average basis giving effect (in addition to the discount in such
prepayment, repurchase, redemption or defeasance) to any prior discount in
prepayments, repurchases, redemptions or defeasances that have occurred from the
first day of the calendar quarter in which such prepayment, repurchase,
redemption or defeasance is consummated to the date such prepayment, repurchase,
redemption or defeasance is consummated (it being understood that such
calculation shall be made exclusive of any consideration paid to the holders of
such Indebtedness in the form of Stock or the cash proceeds of Stock used to
prepay, repurchase, redeem or defease such Indebtedness)), (B) Prior to the
Discharge of First Lien First Out Obligations and after giving pro forma effect
to such prepayment repurchase, redemption or defeasance, Liquidity (as defined
in the First Lien First Out Credit Agreement) is equal to $200,000,000 or
greater, (C) no Event of Default has occurred and is continuing and (D) after
giving pro forma effect to such prepayment, repurchase, redemption or defeasance
and any related pro forma adjustment (including, without limitation, any
substantially concurrent incurrence of Indebtedness or Disposition and with such
pro forma adjustments including the recalculation of PV-10 on a pro forma
basis), the Borrower is in pro forma compliance with the Financial Performance
Covenant. For the avoidance of doubt, for the purposes of this Section 11.7(a),
the amount of any Senior Notes or Permitted Junior Indebtedness shall be
calculated using the Fair Market Value of such Senior Notes or Permitted Junior
Indebtedness at the time of the prepayment, repurchase, redemption or defeasance
thereof.
(h)    Notwithstanding the foregoing, nothing in Section 11.7(a) shall prohibit:
(v)    the repayment or prepayment of intercompany subordinated Indebtedness
owed among the Borrower and/or the Subsidiaries, in either case unless an Event
of Default has occurred and is continuing and the Borrower has received a notice
from the First Lien First Out Administrative Agent instructing it not to make or
permit the Borrower and/or the Subsidiaries to make any such repayment or
prepayment;
(vi)    substantially concurrent transfers of credit positions in connection
with intercompany debt restructurings so long as such Indebtedness is permitted
by Section 11.1 after giving effect to such transfer; or
(vii)     the prepayment, repurchase, redemption or other defeasance of the
Senior Notes, any Permitted Junior Indebtedness or any Permitted Additional Debt
(x) with the amount of the Net Cash Proceeds of the issuance or sale of Stock
(other than Disqualified Stock) of the Borrower within ninety (90) calendar days
of the issuance of such Stock (such amount, an “Equity Funded Prepayment”) or
(y) in exchange for Stock (other than Disqualified Stock) of the Borrower.
(i)    The Borrower will not amend or modify the Senior Notes Documents or the
documentation governing any senior subordinated or subordinated Permitted
Additional Debt or

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the terms applicable thereto to the extent that (i) any such amendment or
modification, taken as a whole, would be adverse to the Lenders in any material
respect or (ii) the provisions of the Senior Notes Documents or the
documentation governing any senior subordinated or subordinated Permitted
Additional Debt, as so amended or modified, would not be permitted to be
included in the documentation governing any senior subordinated or subordinated
Permitted Additional Debt at the time such Indebtedness was issued.

11.8    Negative Pledge Agreements.  The Borrower will not, and will not permit
any of the Subsidiaries to, enter into or permit to exist any Contractual
Requirement (other than this Agreement or any other Credit Document or any
documentation in respect of (a) secured Indebtedness otherwise permitted
hereunder, including Indebtedness incurred pursuant to Section 11.1(v) or
(b) the Credit Parties’ Oil and Gas Properties to the extent that the property
covered thereby is not required to be pledged as Collateral pursuant to the
definition of “Collateral Requirements”) that limits the ability of the Borrower
or any Guarantor to create, incur, assume or suffer to exist Liens on property
of such Person for the benefit of the Secured Parties with respect to the
Obligations or under the Credit Documents; provided that the foregoing shall not
apply to Contractual Requirements that (i)(x) exist on the Effective Date and
(to the extent not otherwise permitted by this Section 11.8) are listed on
Schedule 11.8 and (y) to the extent Contractual Requirements permitted by clause
(x) are set forth in an agreement evidencing Indebtedness or other obligations,
are set forth in any agreement evidencing any Refinancing of Indebtedness in
respect of the First Lien First Out Obligations permitted under Section 11.1(v)
or Permitted Refinancing Indebtedness incurred to Refinance such Indebtedness or
obligation so long as such Permitted Refinancing Indebtedness does not expand
the scope of such Contractual Requirement, (ii) are binding on a Subsidiary at
the time such Subsidiary first becomes a Subsidiary of the Borrower (or are
binding on property at the time such property first becomes property of the
Borrower or a Subsidiary), so long as such Contractual Requirements were not
entered into solely in contemplation of such Person becoming a Subsidiary of the
Borrower (or such property becomes property of the Borrower or a Subsidiary),
(iii) represent Indebtedness of a Subsidiary of the Borrower that is not a
Guarantor to the extent such Indebtedness is permitted by Section 11.1 so long
as such Contractual Requirement applies only to such Subsidiary, (iv) arise
pursuant to agreements entered into with respect to any sale, transfer, lease or
other Disposition permitted by Section 11.4 and applicable solely to assets
under such sale, transfer, lease or other Disposition, (v) are customary
provisions in joint venture agreements and other similar agreements applicable
to joint ventures permitted by Section 11.5 and applicable solely to such joint
venture or otherwise arise in (A) agreements which restrict the Disposition or
distribution of assets or property in oil and gas leases, joint operating
agreements, joint exploration and/or

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development agreements, participation agreements or (B) any production sharing
contract or similar instrument on which a Lien cannot be granted without the
consent of a third party (to the extent that (i) the Collateral Agent and the
Lenders otherwise have an Acceptable Security Interest in the property covered
by such contract or instrument pursuant to the definition thereof or (ii) the
property covered thereby is not required to be pledged as Collateral pursuant to
the definition of “Collateral Requirements”) and, in each case, other similar
agreements entered into in the ordinary course of the oil and gas exploration
and development business, (vi) are negative pledges and restrictions on Liens in
favor of any holder of Indebtedness permitted under Section 11.1, but solely to
the extent any negative pledge relates to the property financed by or the
subject of such Indebtedness, (vii) are customary restrictions on leases,
subleases, licenses or asset sale agreements otherwise permitted hereby so long
as such restrictions relate to the assets subject thereto, (viii) comprise
restrictions imposed by any agreement relating to secured Indebtedness permitted
pursuant to Section 11.1 to the extent that such restrictions apply only to the
property or assets securing such Indebtedness, (ix) are customary provisions
restricting subletting or assignment of any lease governing a leasehold interest
of the Borrower or any Subsidiary or in leases prohibiting Liens on retained
property rights of the lessor in connection with operations of the lessee
conducted on the leased property, (x) are customary provisions restricting
assignment of any agreement entered into in the ordinary course of business,
(xi) restrict the use of cash or other deposits imposed by customers under
contracts entered into in the ordinary course of business, (xii) are imposed by
applicable law, (xiii) exist under any documentation governing any Permitted
Refinancing Indebtedness incurred to Refinance any Indebtedness but only to the
extent such Contractual Requirement was contained in the document evidencing the
Indebtedness being refinanced, (xiv) are customary net worth provisions
contained in real property leases entered into by Subsidiaries of the Borrower,
so long as the Borrower has determined in good faith that such net worth
provisions would not reasonably be expected to impair the ability of the
Borrower and its Subsidiaries to meet their ongoing obligations, (xv) relate to
property, an interest in which has been granted or conveyed to a  Royalty Trust
or a master limited partnership or which is subject to a term net profits
interest, and (xvi) are restrictions regarding licenses or sublicenses by the
Borrower and its Subsidiaries of intellectual property in the ordinary course of
business (in which case such restriction shall relate only to such intellectual
property).

11.9    Limitation on Subsidiary Distributions.  The Borrower will not, and will
not permit any of its Subsidiaries that are not Guarantors to, directly or
indirectly, create or otherwise cause or suffer to exist or become effective any
consensual encumbrance or consensual restriction on the ability of any such
Subsidiary to pay dividends or make any other distributions to the Borrower or
any Subsidiary on its Stock or with respect to any other interest or
participation in, or measured by, its profits or transfer any property to the
Borrower or any Subsidiary except (in each case) for such encumbrances or
restrictions existing under or by reason of:
(h)    contractual encumbrances or restrictions in effect on the Effective Date
that are described on Schedule 11.9 or pursuant to the Credit Documents;

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(i)    the First Lien First Out Credit Agreement, the Credit Documents (as
defined in the First Lien First Out Credit Agreement), Senior Notes, the Senior
Notes Documents and related guarantees;
(j)    purchase money obligations for property acquired in the ordinary course
of business and Capital Lease Obligations that impose restrictions on
transferring the property so acquired;
(k)    Requirement of Law or any applicable rule, regulation or order;
(l)    any agreement or other instrument of a Person acquired by or merged or
consolidated with or into the Borrower or any Subsidiary, or that is assumed in
connection with the acquisition of assets from such Person, in each case that is
in existence at the time of such transaction (but not created in contemplation
thereof), which encumbrance or restriction is not applicable to any Person, or
the properties or assets of any Person, other than the Person and its
Subsidiaries, or the property or assets of the Person and its Subsidiaries, so
acquired or designated;
(m)    contracts for the sale of assets, including customary restrictions with
respect to a Subsidiary of the Borrower pursuant to an agreement that has been
entered into for the sale or disposition of all or substantially all of the
Stock or assets of such Subsidiary;
(n)    secured Indebtedness otherwise permitted to be incurred pursuant to
Sections 11.1 and 11.2 that limit the right of the debtor to dispose of the
assets securing such Indebtedness;
(o)    restrictions on cash or other deposits or net worth imposed by customers
under contracts entered into in the ordinary course of business;
(p)    other Indebtedness, Disqualified Stock or preferred stock of Subsidiaries
permitted to be incurred subsequent to the Effective Date pursuant to
Section 11.1 and either (A) the provisions relating to such encumbrance or
restriction contained in such Indebtedness are no less favorable to the
Borrower, taken as a whole, as determined by the board of directors of the
Borrower in good faith, than the provisions contained in this Agreement as in
effect on the Effective Date or (B) any such encumbrance or restriction
contained in such Indebtedness does not prohibit (except upon a default or an
event of default thereunder) the payment of dividends in an amount sufficient,
as determined by the board of directors of the Borrower in good faith, to make
scheduled payments of cash interest on the Obligations when due;
(q)    customary provisions in joint venture agreements or agreements governing
property held with a common owner and other similar agreements or arrangements
relating solely to such joint venture or property;

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(r)    customary provisions contained in leases, sub-leases, licenses,
sub-licenses or similar agreements, in each case, entered into in the ordinary
course of business; and
(s)    any encumbrances or restrictions imposed by any amendments,
modifications, restatements, renewals, increases, supplements, refundings,
replacements or refinancings of the contracts, instruments or obligations
referred to in clauses (a) through (k) above; provided that such amendments,
modifications, restatements, renewals, increases, supplements, refundings,
replacements or refinancings are, in the good faith judgment of the Borrower’s
board of directors, no more restrictive in any material respect with respect to
such encumbrance and other restrictions taken as a whole than those prior to
such amendment, modification, restatement, renewal, increase, supplement,
refunding, replacement or refinancing.

11.10    Hedge Agreements.
(d)    During a Credit Rating Trigger Period, the Borrower will not, and will
not permit any Subsidiary to, enter into any Hedge Agreements with any Person
other than:
(v)    Hedge Agreements that are non-speculative (including Hedge Agreements
entered into to unwind or offset other permitted Hedge Agreements); provided
that:
(A)    any such Hedge Agreement does not have a term greater than sixty (60)
months from the date such Hedge Agreement is entered into;
(B)    at all times, on a net basis, (A) the aggregate notional volume for each
of natural gas (including natural gas liquids) and crude oil, calculated
separately, covered by market sensitive Hedge Agreements for any month in the
first year of the forthcoming five year period (other than Excluded Hedges)
shall not exceed 90% of the Projected Volume of natural gas (including natural
gas liquids) and crude oil production, calculated separately, for each such
month in such forthcoming period and (B) the aggregate notional volume for each
of natural gas (including natural gas liquids) and crude oil, calculated
separately, covered by market sensitive Hedge Agreements for any month in each
of the second through fifth years of the forthcoming five year period (other
than Excluded Hedges) shall not exceed 80% of the Projected Volume of natural
gas (including natural gas liquids) and crude oil production, calculated
separately, for each such month in such forthcoming period;
(C)    notwithstanding the limitations set forth in clause (i) of this
Section 11.10(a), in contemplation of a Permitted Acquisition, the Borrower and
its Subsidiaries may enter into additional market sensitive Hedge Agreements
such that the aggregate notional volumes for each of natural gas (including
natural gas liquids) and crude oil, calculated separately, for each month in the
forthcoming five year

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period covered by such additional market sensitive Hedge Agreements do not
exceed 70% of the Projected Volume of natural gas (including natural gas
liquids) and crude oil production, calculated separately, from the estimated
reserves to be acquired in such Permitted Acquisition for each month in such
forthcoming period; provided such additional Hedge Agreements are entered into
(A) after the execution of a definitive agreement with respect to a Permitted
Acquisition, but in any event no earlier than 90 days prior to the proposed
funding date of such Permitted Acquisition and (B) in the event such agreement
is terminated or such Acquisition is otherwise not consummated within 90 days
after such initial additional market sensitive Hedge Agreements have been
entered into, then within 15 days after such termination or the end of such 90
day (or longer as soon as commercially practicable thereafter, but in any event
within 180 days) period, as applicable, the Borrower shall and shall cause the
Subsidiaries to novate, unwind or otherwise dispose of market sensitive Hedge
Agreements to the extent necessary to be in compliance with the limitations set
forth in clause (i) of this Section 11.10(a); and
(D)    so long as the Borrower and the Subsidiaries properly identify and
consistently report such hedges, the Borrower and the Subsidiaries may utilize
crude oil hedges as a substitute for hedging natural gas liquids.
(vi)    Hedge Agreements entered into with the purpose and effect of (i) fixing
or limiting interest rates on a principal amount of indebtedness of any Credit
Party that is accruing interest at a variable rate or (ii) obtaining variable
interest rates on a principal amount of indebtedness of any Credit Party that is
accruing interest at a fixed rate (in each case including Hedge Agreements
entered into to unwind or offset other permitted Hedge Agreements), provided
that the aggregate notional amount of such Hedge Agreements does not (on a net
basis) exceed the outstanding principal balance of the variable or fixed rate,
as the case may be, Indebtedness of the Credit Parties at the time such Hedge
Agreement is entered into.
(e)    During an Investment Grade Period, the Borrower will not, and will not
permit any Subsidiary to, enter into any Hedge Agreements with any Person other
than (i) Hedge Agreements not for speculative purposes entered into to hedge or
mitigate risks to which the Borrower or any Subsidiary has or may have exposure
(including with respect to commodity prices), (ii) Hedge Agreements not for
speculative purposes entered into in order to effectively cap, collar or
exchange interest rates (from fixed to floating rates, from one floating rate to
another floating rate or otherwise)  with respect to any interest-bearing
liability or investment of the Borrower or any Subsidiary and (iii) other Hedge
Agreements not for speculative purposes permitted under the

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risk management policies approved by the Borrower’s  Board of Directors from
time to time and not subject the Borrower and its Subsidiaries to material
speculative risks.
It is understood that for purposes of this Section 11.10, the following Hedge
Agreements shall not be deemed speculative or entered into for speculative
purposes: (i) any commodity Hedge Agreement intended, at inception of execution,
to hedge or manage any of the risks related to existing and or forecasted
Hydrocarbon production of the Borrower or its Subsidiaries (whether or not
contracted) and (ii) any Hedge Agreement intended, at inception of execution,
(A) to hedge or manage the interest rate exposure associated with any debt
securities, debt facilities or leases (existing or forecasted) of the Borrower
or its Subsidiaries, (B) for foreign exchange or currency exchange management,
(C) to manage commodity portfolio exposure associated with changes in interest
rates or (D) to hedge any exposure that the Borrower or its Subsidiaries may
have to counterparties under other Hedge Agreements such that the combination of
such Hedge Agreements is not speculative taken as a whole.

11.11    Financial Performance Covenant.  During a Credit Rating Trigger Period,
the Borrower will not permit the First Lien Asset Coverage Ratio as of any June
30 or December 31 to be less than 1.20 to 1:00.

11.12    Transactions with Affiliates.  The Borrower will not, and will not
permit any of the Subsidiaries to conduct, any material transaction with any of
its Affiliates (other than the Borrower and the Subsidiaries or any entity that
becomes a Subsidiary as a result of such transaction) on terms other than those
that are substantially as favorable to the Borrower or such Subsidiary as it
would obtain at the time in a comparable arm’s-length transaction (which
includes, for the avoidance of doubt, any transaction consummated for Fair
Market Value) with a Person that is not an Affiliate, which, if involving
aggregate payments or considerations in excess of $75,000,000, shall be
determined by the board of directors or managers of the Borrower or such
Subsidiary in good faith; provided that the foregoing restrictions shall not
apply to:
(g)    the payment of Transaction Expenses,
(h)    the OPC Related Transactions as in effect from time to time, provided
that any amendment or modification after the Spinoff Date, taken as a whole,
shall not be adverse to the Lenders in any material respect,
(i)    loans, advances and other transactions between or among the Borrower, any
Subsidiary or any joint venture (regardless of the form of legal entity) in
which the Borrower or any Subsidiary has invested (and which Subsidiary or joint
venture would not be an Affiliate of the Borrower or such Subsidiary, but for
the Borrower’s or such Subsidiary’s ownership of Stock or Stock Equivalents in
such joint venture or such Subsidiary) to the extent permitted under Article XI,

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(j)    employment and severance arrangements and health, disability, retirement
savings, employee benefit and similar insurance or benefit plans between the
Borrower (or any direct or indirect parent thereof) and the Subsidiaries and
their respective directors, officers, employees or consultants (including
management and employee benefit plans or agreements, subscription agreements or
similar agreements pertaining to the repurchase of Stock or Stock Equivalents
pursuant to put/call rights or similar rights with current or former employees,
officers, directors or consultants and equity option or incentive plans and
other compensation arrangements) in the ordinary course of business or as
otherwise approved by the board of directors or managers of the Borrower (or any
direct or indirect parent thereof),
(k)    the payment of customary fees and reasonable out of pocket costs to, and
indemnities provided on behalf of, directors, managers, consultants, officers
and employees of the Borrower (or any direct or indirect parent thereof) and the
Subsidiaries in the ordinary course of business to the extent attributable to
the ownership or operation of, or in connection with any services provided to,
the Borrower and the Subsidiaries,
(l)    transactions pursuant to agreements in existence on the Effective Date
and set forth on Schedule 11.12 or any amendment thereto to the extent such an
amendment is not adverse, taken as a whole, to the Lenders in any material
respect,
(m)    Restricted Payments, redemptions, repurchases and other actions permitted
under Section 11.6 and Section 11.7,
(n)    any issuance of Stock or Stock Equivalents or other payments, awards or
grants in cash, securities, Stock, Stock Equivalents or otherwise pursuant to,
or the funding of, employment arrangements, equity options and equity ownership
plans approved by the board of directors or board of managers of the Borrower
(or any direct or indirect parent thereof),
(o)    transactions with joint ventures entered into in the ordinary course of
business and in a manner consistent with prudent business practice followed by
companies in the industry of the Borrower and its Subsidiaries,
(p)    payments by the Borrower (or any direct or indirect parent thereof) and
the Subsidiaries pursuant to tax sharing agreements among the Borrower (and any
such parent) and the Subsidiaries on customary terms; provided that payments by
Borrower and the Subsidiaries under any such tax sharing agreements shall not
exceed the excess (if any) of the amount they would have paid on a standalone
basis over the amount they actually pay directly to Governmental Authorities,
and

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(q)    customary agreements and arrangements with Royalty Trusts and master
limited partnership agreements that comply with the affiliate transaction
provisions of such Royalty Trust or master limited partnership agreement.

11.13    Change in Business.  The Borrower and its Subsidiaries, taken as a
whole, will not fundamentally and substantively alter the character of their
business, taken as a whole, from the business of Industry Investments by the
Borrower and its Subsidiaries and other business activities incidental or
reasonably related to any of the foregoing.

11.14    Use of Proceeds. The Borrower will not, and will not permit any of its
Subsidiaries to, use the proceeds of any Loans, whether directly or indirectly,
and whether immediately, incidentally or ultimately, to purchase or carry margin
stock (within the meaning of Regulation U of the Board) or to extend credit to
others for the purpose of purchasing or carrying margin stock or to refund
indebtedness originally incurred for such purpose.

11.15    Anti-Layering. The Borrower shall not, and shall not permit any Credit
Party to, without the prior written consent of the Majority Lenders, enter into
any contract or agreement with any other creditor the effect of which is to
expressly subordinate or make junior such creditor’s lien pursuant to any of the
Collateral to any First-Out Lien (as defined in the First Lien Intercreditor
Agreement) on the Collateral but senior to the Liens on the Collateral securing
the Obligations.

ARTICLE XII
EVENTS OF DEFAULT
Upon the occurrence of any of the following specified events (each an “Event of
Default”):

12.1    Payments.  The Borrower shall default in the payment when due of any
principal of the Loans (including any payment or prepayment due under Section
5.2) or any interest on the Loans or any fees or of any other amounts owing
hereunder or under any other Credit Document and such default shall continue for
five or more days.

12.2    Representations, Etc.  Any representation, warranty or statement made or
deemed made by any Credit Party herein or in any other Credit Document or any
certificate delivered or required to be delivered pursuant hereto or thereto
shall prove to be untrue in any material respect on the date as of which made or
deemed made.

12.3    Covenants.  Any Credit Party shall:
(a)    default in the due performance or observance by it of any term, covenant
or agreement contained in Sections 10.1(d)(i), 10.5 (solely with respect to the
Borrower) 10.11(c) or Article XI; or

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(b)    default in the due performance or observance by it of any term, covenant
or agreement (other than those referred to in Section 12.1 or 12.2 or clause
(a) of this Section 12.3) contained in this Agreement or any Security Document
and such default shall continue unremedied for a period of at least 30 days
after receipt of written notice thereof by the Borrower from the Administrative
Agent (given pursuant to a written direction from the Majority Lenders).

12.4    Default Under Other Agreements. 
(a)    Prior to or at the time of the Discharge of First Lien First Out
Obligations and to the extent that the First Lien First Out Credit Agreement
contains or contained, respectively, an event of default provision permitting
the First Lien First Out Lenders to accelerate the First Lien First Out
Obligations upon the default of other Indebtedness in an amount in excess of
$125,000,000, the Borrower or any of the Subsidiaries shall (i) default in any
payment with respect to any Indebtedness (other than Indebtedness described in
Section 12.1) in excess of $125,000,000, beyond the grace period, if any,
provided in the instrument or agreement under which such Indebtedness was
created or (ii) without limiting the provisions of clause (i), any such
Indebtedness shall be declared to be due and payable, or shall be required to be
prepaid, defeased or redeemed other than by a regularly scheduled required
prepayment or as a mandatory prepayment (and, other than secured Indebtedness
that becomes due as a result of a Disposition of the property or assets securing
such Indebtedness permitted under this Agreement), prior to the stated maturity
thereof.
(b)    In all other instances not referred to in clause (a) of this Section
12.4, the Borrower or any of the Subsidiaries shall (i) default with respect to
any Indebtedness (other than Indebtedness described in Section 12.1) in excess
of $125,000,000, and such Indebtedness shall have been declared to be due and
payable, or shall be required to be prepaid, defeased or redeemed other than by
a regularly scheduled required prepayment or as a mandatory prepayment (and,
other than secured Indebtedness that becomes due as a result of a Disposition of
the property or assets securing such Indebtedness permitted under this
Agreement), prior to the stated maturity thereof.

12.5    Bankruptcy, Etc.  The Borrower or any Specified Subsidiary shall
commence a voluntary case, proceeding or action concerning itself under
(a) Title 11 of the United States Code entitled “Bankruptcy”; or (b) in the case
of any Foreign Subsidiary that is a Specified Subsidiary, any domestic or
foreign law relating to bankruptcy, judicial management, insolvency,
reorganization, administration or relief of debtors in effect in its
jurisdiction of incorporation, in each case as now or hereafter in effect, or
any successor thereto (collectively, the “Bankruptcy Code”); or an involuntary
case, proceeding or action is commenced against the Borrower or any Specified
Subsidiary and the petition is not dismissed within 60 days after commencement
of the case, proceeding or action or, in connection with any such voluntary
proceeding or action, the Borrower or any Specified Subsidiary commences any
other proceeding or action under any reorganization, arrangement, adjustment of
debt, relief of debtors, dissolution, insolvency or liquidation or similar

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law of any jurisdiction whether now or hereafter in effect relating to the
Borrower or any Specified Subsidiary; or a custodian (as defined in the
Bankruptcy Code), receiver, receiver manager, trustee or similar person is
appointed for, or takes charge of, all or substantially all of the property of
the Borrower or any Specified Subsidiary; or there is commenced against the
Borrower or any Specified Subsidiary any such proceeding or action that remains
undismissed for a period of 60 days; or any order of relief or other order
approving any such case or proceeding or action is entered; or the Borrower or
any Specified Subsidiary suffers any appointment of any custodian, receiver,
receiver manager, trustee or the like for it or any substantial part of its
property to continue undischarged or unstayed for a period of 60 days; or the
Borrower or any Specified Subsidiary makes a general assignment for the benefit
of creditors.

12.6    ERISA.
(a)    Any Plan shall fail to satisfy the minimum funding standard required for
any plan year or part thereof or a waiver of such standard or extension of any
amortization period is sought or granted under Section 412 of the Code; any Plan
or Multiemployer Plan is or shall have been terminated or is the subject of
termination proceedings under ERISA (including the giving of written notice
thereof); an event shall have occurred or a condition shall exist in either case
entitling the PBGC to terminate any Plan or to appoint a trustee to administer
any Plan (including the giving of written notice thereof); the Borrower or any
ERISA Affiliate has incurred or is likely to incur a liability to or on account
of a Plan or a Multiemployer Plan under Section 409, 502(i), 502(l), 515, 4062,
4063, 4064, 4069, 4201 or 4204 or of ERISA or Section 4971 or 4975 of the Code
(including the giving of written notice thereof);
(b)    there results from any event or events set forth in clause (a) of this
Section 12.6 the imposition of a lien, the granting of a security interest, or a
liability; and
(c)    such lien, security interest or liability would be reasonably likely to
have a Material Adverse Effect.

12.7    Guarantee.  The Guarantee or any material provision thereof shall cease
to be in full force or effect (other than pursuant to the terms hereof and
thereof) or any Guarantor or any other Credit Party shall deny or disaffirm in
writing any such Guarantor’s obligations under the Guarantee.

12.8    Security Documents.  During a Credit Rating Trigger Period, the Security
Agreement, Mortgage or any other Security Document pursuant to which the assets
of the Borrower or any Subsidiary are pledged as Collateral or any material
provision thereof shall cease to be in full force or effect (other than pursuant
to the terms hereof or thereof) or any grantor thereunder or any other Credit
Party shall deny or disaffirm in writing any grantor’s obligations under the
Security Agreement, the Mortgage or any other Security Document.

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12.9    Judgments.  One or more monetary judgments or decrees shall be entered
against the Borrower or any of the Subsidiaries involving a liability of
$50,000,000 or more in the aggregate for all such judgments and decrees for the
Borrower and the Subsidiaries (to the extent not paid or covered by insurance
provided by a carrier not disputing coverage) and any such judgments or decrees
shall not have been satisfied, vacated, discharged or stayed or bonded pending
appeal within 60 days after the entry thereof.

12.10    Change of Control.  A Change of Control shall occur.
Then, and in any such event, and at any time thereafter, if any Event of Default
shall then be continuing, the Administrative Agent may and, upon the written
request of the Majority Lenders, shall, by written notice to the Borrower, take
any or all of the following actions, without prejudice to the rights of the
Administrative Agent or any Lender to enforce its claims against the Borrower or
any other Credit Party, except as otherwise specifically provided for in this
Agreement (provided that, if an Event of Default specified in Section 12.5 shall
occur with respect to the Borrower, the result that would occur upon the giving
of written notice by the Administrative Agent as specified below shall occur
automatically without the giving of any such notice):  declare the principal of
and any accrued interest and fees, and the Make-Whole Amount (as provided in
Section 5.1), in respect of any or all Loans and any or all Obligations owing
hereunder and thereunder to be, whereupon the same shall become, forthwith due
and payable without presentment, demand, protest or other notice of any kind,
all of which are hereby waived by the Borrower.  In addition, after the
occurrence and during the continuance of an Event of Default, the Administrative
Agent and the Lenders will have all other rights and remedies available at law
and equity. If the maturity of the Loans shall be accelerated (under any
provision of this Article XII or by operation of law or otherwise) a premium
equal to the Make-Whole Amount (determined as if the Loans were prepaid,
refinanced, substituted, replaced or otherwise repaid at the time of such
acceleration at the option of the Borrower pursuant to Section 5.1) shall become
immediately due and payable, and Borrower will pay such premium, as compensation
to the Lenders for the loss of their investment opportunity and not as a
penalty, whether or not a Bankruptcy Event has commenced, and (if a Bankruptcy
Event has commenced) without regard to whether such Bankruptcy Event is
voluntary or involuntary, or whether payment occurs pursuant to a motion, plan
of reorganization, or otherwise, and without regard to whether the Loans and
other Obligations are satisfied or released by foreclosure (whether or not by
power of judicial proceeding), deed in lieu of foreclosure or by any other
means.  Without limiting the foregoing, any redemption, prepayment, repayment,
or payment of the Obligations in or in connection with a Bankruptcy Event shall
constitute an optional prepayment thereof under the terms of Section 5.1 and
require the immediate payment of the Make-Whole Amount. Any premium payable
pursuant to this Article XII shall be presumed to be the liquidated damages
sustained by each Lender as a result of the early redemption and the Credit
Parties agreed that it is reasonable under the circumstances currently existing.
EACH CREDIT PARTY EXPRESSLY WAIVES (TO THE FULLEST EXTENT IT MAY LAWFULLY DO SO)
THE

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PROVISIONS OF ANY PRESENT OR FUTURE STATUTE OR LAW THAT PROHIBITS OR MAY
PROHIBIT THE COLLECTION OF THE MAKE-WHOLE AMOUNT IN CONNECTION WITH ANY SUCH
ACCELERATION. The Borrower expressly agrees (to the fullest extent it may
lawfully do so) that: (A) the Make-Whole Amount is reasonable and the product of
an arm’s length transaction between sophisticated business people, ably
represented by counsel; (B) the Make-Whole 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 Lenders and the Borrower giving
specific consideration in this transaction for such agreement to pay the
Make-Whole Amount; and (D) the Borrower shall be estopped hereafter from
claiming differently than as agreed to in this paragraph. The Borrower expressly
acknowledges that its agreement to pay the Make-Whole Amount to the
Administrative Agent for the ratable benefit of the Lenders as herein described
is a material inducement to Lenders to provide the Commitments and make the
Loans.
Any amount received by the Administrative Agent from any Credit Party (or from
proceeds of any Collateral) following any acceleration of the Obligations under
this Agreement or any Event of Default with respect to the Borrower under
Section 12.5 shall be applied:
(viii)    first, to payment or reimbursement of that portion of the Obligations
constituting fees, expenses and indemnities payable to the Administrative Agent
and the Collateral Agent;
(ix)    second, to the Secured Parties, an amount equal to all Obligations due
and owing to them on the date of distribution and, if such moneys shall be
insufficient to pay such amounts in full, then ratably (without priority of any
one over any other) to such Secured Parties in proportion to the unpaid amount
thereof; and
(x)    third, pro rata to any other Obligations then due and owing; and
(xi)    fourth, any surplus then remaining, after all of the Obligations then
due shall have been indefeasibly paid in full in cash, shall be paid to the
Borrower or its successors or assigns or to whomever may be lawfully entitled to
receive the same or as a court of competent jurisdiction may award.
Any amount received by the Administrative Agent from any Credit Party (or from
proceeds of any Collateral) following any acceleration of the Obligations under
this Agreement or any Event of Default with respect to the Borrower under
Section 12.5 shall be applied in accordance with Section 6.01 of the First Lien
Intercreditor Agreement.

ARTICLE XIII
THE ADMINISTRATIVE AGENT AND THE COLLATERAL AGENT

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13.1    Appointment.
(f)    Each Lender hereby irrevocably designates and appoints the Administrative
Agent as the agent of such Lender under this Agreement and the other Credit
Documents and irrevocably authorizes the Administrative Agent, in such capacity,
to take such action on its behalf under the provisions of this Agreement and the
other Credit Documents to which the Administrative Agent is a party and to
exercise such powers and perform such duties as are expressly delegated to the
Administrative Agent by the terms of this Agreement and the other Credit
Documents, together with such other powers as are reasonably incidental thereto,
other than any powers granted to the Second-Out Agent (as defined in the First
Lien Intercreditor Agreement) under the First Lien Intercreditor Agreement. 
Each Lender hereby irrevocably designates and appoints the Collateral Agent as
the agent of such Lender under this Agreement and the other Credit Documents and
irrevocably authorizes the Collateral Agent, in such capacity, to take such
action on its behalf under the provisions of this Agreement and the other Credit
Documents to which the Collateral Agent is a party and to exercise such powers
and perform such duties as are expressly delegated to the Collateral Agent by
the terms of this Agreement and the other Credit Documents, together with such
other powers as are reasonably incidental thereto. The provisions of this
Article XIII (other than Section 13.1(b) with respect to the Lead Arranger and
the Bookrunner and Section 13.10 with respect to the Borrower) are solely for
the benefit of the Administrative Agent, the Collateral Agent and the Lenders,
and the Borrower shall not have rights as third party beneficiary of any such
provision.  Notwithstanding any provision to the contrary elsewhere in this
Agreement, neither the Administrative Agent nor the Collateral Agent shall have
any duties or responsibilities, except those expressly set forth herein, or any
fiduciary relationship with any Lender, and no implied covenants, functions,
responsibilities, duties, obligations or liabilities shall be read into this
Agreement or any other Credit Document or otherwise exist against the
Administrative Agent or the Collateral Agent.
(g)    Each of the Lead Arranger and the Bookrunner, each in its capacity as
such, shall not have any obligations, duties or responsibilities under this
Agreement but shall be entitled to all benefits of this Article XIII.

13.2    Delegation of Duties.  Each Agent may execute any of its duties under
this Agreement and the other Credit Documents by or through agents, sub-agents,
employees or attorneys-in-fact and shall be entitled to advice of counsel
concerning all matters pertaining to such duties.  Neither Agent shall be
responsible for the negligence or misconduct of any agents, sub-agents or
attorneys-in-fact selected by it with due care.

13.3    Exculpatory Provisions. 
(e)    No Agent nor any of its officers, directors, employees, agents,
attorneys-in-fact or Affiliates shall be (i) liable to any Lender for any action
lawfully taken or omitted to be taken

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by any of them under or in connection with this Agreement or any other Credit
Document (except for its or such Person’s own gross negligence or willful
misconduct, as determined in the final judgment of a court of competent
jurisdiction, in connection with its duties expressly set forth herein (IT BEING
THE INTENTION OF THE PARTIES HERETO THAT THE AGENTS AND ANY RELATED PARTIES
SHALL, IN ALL CASES, BE INDEMNIFIED FOR ITS ORDINARY, COMPARATIVE, CONTRIBUTORY
OR SOLE NEGLIGENCE)) or (ii) responsible in any manner to any of the Lenders or
any participant for any recitals, statements, representations or warranties made
by any of the Borrower, any other Credit Party or any officer thereof contained
in this Agreement or any other Credit Document or in any certificate, report,
statement or other document referred to or provided for in, or received by such
Agent under or in connection with, this Agreement or any other Credit Document
or for the value, validity, effectiveness, genuineness, enforceability or
sufficiency of this Agreement or any other Credit Document, or the perfection or
priority of any Lien or security interest created or purported to be created
under the Security Documents, or for any failure of the Borrower or any other
Credit Party to perform its obligations hereunder or thereunder. The Agents
shall not be under any obligation to any Lender to ascertain or to inquire as to
the observance or performance of any of the agreements contained in, or
conditions of, this Agreement or any other Credit Document, or to inspect the
properties, books or records of any Credit Party or any Affiliate thereof. The
Agents shall have no duties or obligations except those expressly set forth
herein and in the other Credit Documents; provided that no provision of this
Agreement shall be construed to relieve the Agents from liability for their own
gross negligence or their own willful misconduct. Without limiting the
generality of the foregoing, (a) the Administrative Agent shall not be subject
to any fiduciary or other implied duties, regardless of whether a Default or
Event of Default has occurred and is continuing, and (b) the Agents shall not,
except as expressly set forth herein and in the other Credit Documents, 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 servicing as such Agent or any of its
Affiliates in any capacity. No Agent shall be responsible for or have any duty
to ascertain or inquire into (v) the contents of any certificate, report or
other document delivered hereunder or thereunder or in connection with this
Agreement or any Credit Document, (w) the performance or observance of any of
the covenants, representations, agreement or other terms or conditions set forth
in this Agreement or any other Credit Document, (x) the validity,
enforceability, effectiveness or genuineness of this Agreement, any other Credit
Document or any other agreement, instrument or document, (y) the creation,
perfection or priority of any Lien purported to be created by the Security
Documents, or (z) the value or the sufficiency of any Collateral.
(f)
    No Agent shall be responsible for (i) perfecting, maintaining, monitoring,
preserving or protecting the security interest or lien granted under this
Agreement, any other Credit Document or any agreement or instrument contemplated
hereby or thereby, (ii) the filing, re-filing,

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recording, re-recording or continuing or any document, financing statement,
mortgage, assignment, notice, instrument of further assurance or other
instrument in any public office at any time or times or (iii) providing,
maintaining, monitoring or preserving insurance on or the payment of taxes with
respect to any of the Collateral. The actions described in items (i) through
(iii) shall be the sole responsibility of the Borrower.
(g)
    Each Agent has accepted and is bound by this Agreement and the other Credit
Documents executed by such Agent as of the date of this Agreement and, as
directed in writing by the Majority Lenders, each Agent shall execute additional
Credit Documents delivered to it after the date of this Agreement; provided,
however, that such additional Credit Documents do not adversely affect the
rights, privileges, benefits and immunities of such Agent. Each Agent will not
otherwise be bound by, or be held obligated by, the provisions of any loan
agreement, indenture or other agreement governing the Obligations (other than
this Agreement and the other Credit Documents to which such Agent is a party).
(h)
    No written direction given to any Agent by the Majority Lenders or the
Borrower or any Loan Party that in the sole judgment of such Agent imposes,
purports to impose or might reasonably be expected to impose upon such Agent any
obligation or liability not set forth in or arising under this Agreement and the
other Credit Documents will be binding upon such Agent unless such Agent elects,
at its sole option, to accept such direction.
(i)
    No Agent shall be responsible or liable for any failure or delay in the
performance of its obligations under this Agreement or the other Credit
Documents arising out of or caused, directly or indirectly, by circumstances
beyond its reasonable control, including, without limitation, acts of God;
earthquakes; fire; flood; terrorism; wars and other military disturbances;
sabotage; epidemics; riots; business interruptions; loss or malfunctions of
utilities, computer (hardware or software) or communication services; accidents;
labor disputes; acts of civil or military authority and governmental action.
(j)
    In no event shall any Agent be responsible or liable for special, indirect,
punitive, or consequential loss or damage of any kind whatsoever (including, but
not limited to, loss of profit) irrespective of whether such Agent has been
advised of the likelihood of such loss or damage and regardless of the form of
action.
(k)
    No Agent shall be liable for any error of judgment made in good faith by an

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Authorized Officer of such Agent unless it shall be proved that the Agent was
negligent in ascertaining the pertinent facts.
(l)
    Delivery of any reports, information and documents to the Agents, other than
any notices required to be provided under this Agreement, is for informational
purposes only and such Agent’s receipt of such shall not constitute constructive
notice of any information contained therein or determinable from information
contained therein, including the Borrower’s compliance with any of its covenants
hereunder.
(m)
    No Agent shall be required to qualify in any jurisdiction in which it is not
presently qualified to perform its obligations as such Agent.
(n)
    Beyond the exercise of reasonable care in the custody of the Collateral in
its possession, each Agent will have no duty as to any Collateral in its
possession or control or in the possession or control of any agent or bailee or
any income thereon or as to preservation of rights against prior parties or any
other rights pertaining thereto. Each Agent will be deemed to have exercised
reasonable care in the custody of the Collateral in its possession if the
Collateral is accorded treatment substantially equal to that which it accords
its own property, and each Agent will not be liable or responsible for any loss
or diminution in the value of any of the Collateral by reason of the act or
omission of any carrier, forwarding agency or other agent or bailee selected by
such Agent in good faith.
(o)
    No Agent will be responsible for the existence, genuineness or value of any
of the Collateral or for the validity, perfection, priority or enforceability of
the Liens in any of the Collateral, whether impaired by operation of law or by
reason of any action or omission to act on its part hereunder, except to the
extent such action or omission constitutes gross negligence or willful
misconduct on the part of such Agent, as determined by a court of competent
jurisdiction in a final, nonappealable order, for the validity or sufficiency of
the Collateral or any agreement or assignment contained therein, for the
validity of the title of any grantor to the Collateral, for insuring the
Collateral or for the payment of taxes, charges, assessments or Liens upon the
Collateral or otherwise as to the maintenance of the Collateral. Each Agent
hereby disclaims any representation or warranty to the present and future
holders of the Obligations concerning the perfection of the Liens granted
hereunder or in the value of any of the Collateral.
(p)
    In the event that any Agent is required to acquire title to an asset for any

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reason, or take any managerial action of any kind in regard thereto, in order to
carry out any fiduciary or trust obligation for the benefit of another, which in
such Agent’s sole discretion may cause such Agent to be considered an “owner or
operator” under any environmental laws or otherwise cause such Agent to incur,
or be exposed to, any environmental liability or any liability under any other
federal, state or local law, such Agent reserves the right, instead of taking
such action, either to resign as Agent or to arrange for the transfer of the
title or control of the asset to a court appointed receiver. Absent gross
negligence or willful misconduct, no Agent will be liable to any person for any
environmental liability or any environmental claims or contribution actions
under any federal, state or local law, rule or regulation by reason of such
Agent’s actions and conduct as authorized, empowered and directed hereunder or
relating to any kind of discharge or release or threatened discharge or release
of any hazardous materials into the environment.
(q)
    In connection with its obtaining rates or values from reference banks or
brokers, the Administrative Agent makes no warranty whatsoever as to the value
or correctness of these rates or values, all of which lie with the source
institutions for such rates.

13.4    Reliance.  Each Agent shall be entitled to rely, and shall be fully
protected in relying, upon any writing, resolution, notice, consent,
certificate, affidavit, letter, telecopy, telex or teletype message, statement,
order or other document or instruction believed by it to be genuine and correct
and to have been signed, sent or made by the proper Person or Persons.  Each
Agent may deem and treat the Lender specified in the Register with respect to
any amount owing hereunder as the owner thereof for all purposes unless a
written notice of assignment, negotiation or transfer thereof shall have been
filed with such Agent.  Each Agent may also rely upon any statement made to it
orally or by telephone and believed by it to have been made by the proper
person, and shall not incur any liability for relying thereon. In determining
compliance with any condition hereunder to the Closing Date, that by its terms
must be fulfilled to the satisfaction of a Lender, each Agent may presume that
such condition is satisfactory to such Lender unless such Agent shall have
received notice to the contrary from such Lender prior to the Closing Date. Each
Agent may consult with legal counsel (including counsel to 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 good faith in accordance with
the advice of any such counsel, accountants or experts. Each Agent shall be
fully justified in failing or refusing to take any action under this Agreement
or any other Credit Document unless such Agent shall first receive such advice
or concurrence of the Required Lenders (or such other number or percentage of
the Lenders as shall be necessary under the circumstances provided herein) and
until such instructions are received, such Agent shall act, or refrain from
acting, as it deems advisable. If any Agent so requests, it shall first be
indemnified to its reasonable satisfaction by the Lenders or Required Lenders,
as applicable, against any and all liability and expense that may be incurred by
it by reason of taking or continuing to take any such action. Each Agent shall
in all cases be fully protected in acting, or in refraining from acting, under
this Agreement or any other Credit Document

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in accordance with a request or consent of the Majority Lenders and such request
and any action taken or failure to act pursuant thereto shall be binding upon
all of the Lenders. No provision of this Agreement or any other Credit Document
or any agreement or instrument contemplated hereby or thereby, the transactions
contemplated hereby or thereby shall require any Agent to: (i) expend or risk
its own funds or provide indemnities in the performance of any of its duties
hereunder or the exercise of any of its rights or power or (ii) otherwise incur
any financial liability in the performance of its duties or the exercise of any
of its rights or powers.  For purposes of determining compliance with the
conditions specified in Article VI and Article VIII on the Effective Date, 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
notice from such Lender prior to the proposed Effective Date specifying its
objection thereto.

13.5    Notice of Default. No Agent shall be deemed to have knowledge or notice
of the occurrence of any Default or Event of Default hereunder unless an
Authorized Officer of such Agent has received written notice from a Lender or
the Borrower referring to this Agreement, describing such Default or Event of
Default and stating that such notice is a “notice of default”. In the event that
any Agent receives such a notice, it shall give notice thereof to the Lenders. 
Subject to Section 13.7, each Agent shall take such action with respect to such
Default or Event of Default as shall be reasonably directed by the Majority
Lenders; provided that unless and until such Agent shall have received such
directions, such Agent may (but shall not be obligated to) take such action, or
refrain from taking such action, with respect to such Default or Event of
Default as it shall deem advisable in the best interests of the Lenders.

13.6    Non-Reliance on Agents and Other Lenders.  Each Lender expressly
acknowledges that neither the Agents nor any of their respective officers,
directors, employees, agents, attorneys-in-fact or Affiliates has made any
representations or warranties to it and that no act by any Agent hereinafter
taken, including any review of the affairs of the Borrower or any other Credit
Party, shall be deemed to constitute any representation or warranty by any Agent
to any Lender.  Each Lender represents to the Agents that it has, independently
and without reliance upon any Agent or any other Lender, and based on such
documents and information as it has deemed appropriate, made its own appraisal
of, and investigation into, the business, operations, property, financial and
other condition and creditworthiness of the Borrower and each other Credit Party
and made its own decision to make its Loans hereunder and enter into this
Agreement.  Each Lender also represents that it will, independently and without
reliance upon any 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 analysis, appraisals and decisions in taking or not taking action under
this Agreement and the other Credit Documents, and to make such investigation as
it deems necessary to inform itself as to the business, operations, property,
financial and other condition and creditworthiness of the

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Borrower and any other Credit Party.  Except for notices, reports and other
documents expressly required to be furnished to the Lenders by any Agent
hereunder, no Agent shall have any duty or responsibility to provide any Lender
with any credit or other information concerning the business, assets,
operations, properties, financial condition, prospects or creditworthiness of
the Borrower or any other Credit Party that may come into the possession of such
Agent any of their respective officers, directors, employees, agents,
attorneys-in-fact or Affiliates.

13.7    No Other Duties, Etc. Anything herein to the contrary notwithstanding
the Bookrunner and Lead Arranger listed on the cover page hereof shall have any
powers, duties or responsibilities under this Agreement or any of the other
Credit Documents.

13.8    Indemnification.  The Lenders agree to indemnify each Agent in its
capacity as such upon demand (and, with respect to any EEA Financial
Institution, such amounts shall be deemed due and payable no later than six (6)
days upon demand therefor) (to the extent not reimbursed by the Credit Parties
and without limiting the obligation of the Credit Parties to do so), ratably
according to their respective portions of the Commitments or Loans, as
applicable, outstanding in effect on the date on which indemnification is sought
(or, if indemnification is sought after the date upon which the Commitments
shall have terminated and the Loans shall have been paid in full, ratably in
accordance with their respective portions of the Total Exposure in effect
immediately prior to such date), from and against any and all claims,
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, charges, expenses or disbursements of any kind whatsoever that may at any
time occur (including at any time following the payment of the Loans) be imposed
on, incurred by or asserted against such Agent in any way relating to or arising
out of the Commitments, this Agreement, any of the other Credit Documents or any
documents contemplated by or referred to herein or therein or the transactions
contemplated hereby or thereby or any action taken or omitted by such Agent
under or in connection with any of the foregoing; provided that no Lender shall
be liable to any Agent for the payment of any portion of such claims,
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, charges, expenses or disbursements resulting from such Agent’s gross
negligence, bad faith or willful misconduct as determined by a final judgment of
a court of competent jurisdiction (IT BEING THE INTENTION OF THE PARTIES HERETO
THAT THE AGENTS AND ANY RELATED PARTIES SHALL, IN ALL CASES, BE INDEMNIFIED FOR
ITS ORDINARY, COMPARATIVE, CONTRIBUTORY OR SOLE NEGLIGENCE); provided, further,
that no action taken in accordance with the directions of the Majority Lenders
(or such other number or percentage of the Lenders as shall be required by the
Credit Documents) shall be deemed to constitute gross negligence, bad faith or
willful misconduct for purposes of this Section 13.8.  In the case of any
investigation, litigation or proceeding giving rise to any claims, liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
charges, expenses or disbursements of any kind whatsoever that may at any time
occur (including at any time following the payment of the Loans), this
Section 13.8 applies whether any such investigation, litigation or proceeding is
brought by any Lender or any other Person.  Without

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limitation of the foregoing, each Lender shall reimburse each Agent upon demand
for its ratable share of any costs or out-of-pocket expenses (including
attorneys’ fees) incurred by such Agent in connection with the preparation,
execution, delivery, administration, modification, amendment or enforcement
(whether through negotiations, legal proceedings or otherwise) of, or legal
advice rendered in respect of rights or responsibilities under, this Agreement,
any other Credit Document, or any document contemplated by or referred to
herein, to the extent that such Agent is not reimbursed for such expenses by or
on behalf of the Borrower; provided that such reimbursement by the Lenders shall
not affect the Borrower’s continuing reimbursement obligations with respect
thereto.  If any indemnity furnished to any Agent for any purpose shall, in the
opinion of such Agent, be insufficient or become impaired, such Agent may call
for additional indemnity and cease, or not commence, to do the acts indemnified
against until such additional indemnity is furnished; provided, in no event
shall this sentence require any Lender to indemnify any Agent against any claim,
liability, obligation, loss, damage, penalty, action, judgment, suit, cost,
charge, expense or disbursement in excess of such Lender’s pro rata portion
thereof; and provided, further, this sentence shall not be deemed to require any
Lender to indemnify any Agent against any claim, liability, obligation, loss,
damage, penalty, action, judgment, suit, cost, charge, expense or disbursement
resulting from such Agent’s gross negligence, bad faith or willful misconduct. 
The agreements in this Section 13.8 shall survive the resignation or removal of
any Agents, the payment of the Loans and all other amounts payable hereunder and
the exercise of Write-Down and Conversion Powers by an EEA Resolution Authority
with respect to any Lender that is an EEA Financial Institution.

13.9    Agent in Its Individual Capacity.  Each Agent and its Affiliates may
make loans to, accept deposits from and generally engage in any kind of business
with the Borrower and any other Credit Party as though such Agent were not an
Agent hereunder and under the other Credit Documents.  With respect to the Loans
made by it, each Agent shall have the same rights and powers under this
Agreement and the other Credit Documents as any Lender and may exercise the same
as though it were not an Agent, and the terms “Lender” and “Lenders” shall
include each Agent in its individual capacity.

13.10    Successor Agent.  Each Agent may at any time give notice of its
resignation to the Lenders and the Borrower.  If an Agent becomes a Defaulting
Lender, then such Agent may be removed as an Agent at the request of the
Borrower.  Upon receipt of any such notice of resignation or removal, as the
case may be, the Borrower shall have the right, subject to the consent of the
Majority Lenders (not to be unreasonably withheld or delayed), to appoint a
successor, which shall be a Lender, an Affiliate of a Lender, a bank with an
office in the United States, or an Affiliate of any such bank with an office in
the United States.  If, in the case of the resignation of an Agent, no such
successor shall have been so appointed by the Borrower and shall have accepted
such appointment within 30 days after such Agent gives notice of its
resignation, then for the Collateral Agent, the Collateral Agent may on behalf
of the Lenders appoint a successor Collateral Agent meeting the qualifications
set forth above and, for the Administrative Agent, the Administrative

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Agent’s resignation shall nevertheless thereupon become effective and the
Lenders shall assume and perform all of the duties of the Administrative Agent
until such time, if any, as the Required Lenders appoint a successor
Administrative Agent.  Upon the acceptance of a successor’s appointment as an
Agent hereunder, and upon the execution and filing or recording of such
financing statements, or amendments thereto, and such other instruments or
notices, as may be necessary or desirable, or as the Majority Lenders may
request, in order to continue the perfection of the Liens granted or purported
to be granted by the Security Documents, such successor shall succeed to and
become vested with all of the rights, powers, privileges and duties of the
retiring (or retired) Agent. The retiring Agent shall thereafter be discharged
from all of its duties and obligations hereunder or under the other Credit
Documents (if not already discharged therefrom as provided above in this
Section).  The fees payable by the Borrower (following the effectiveness of such
appointment) to the successor Agent shall be as agreed between the Borrower and
such successor, both acting reasonably.  After the retiring Agent’s resignation
hereunder and under the other Credit Documents, the provisions of this
Article XIII (including Section 13.8) and Section 14.5 shall continue in effect
for the benefit of such retiring Agent, its sub agents and their respective
Related Parties in respect of any actions taken or omitted to be taken by any of
them while the retiring Agent was acting as such Agent.

13.11    Withholding Tax.  To the extent required by any applicable Requirement
of Law, the Administrative Agent may withhold from any payment to any Lender an
amount equivalent to any applicable withholding tax.  If the Internal Revenue
Service or any authority of the United States or other jurisdiction asserts a
claim that the Administrative Agent did not properly withhold tax from amounts
paid to or for the account of any Lender (because the appropriate form was not
delivered, was not properly executed, or because such Lender failed to notify
the Administrative Agent of a change in circumstances that rendered the
exemption from, or reduction of, withholding tax ineffective, or for any other
reason), such Lender shall indemnify the Administrative Agent (to the extent
that the Administrative Agent has not already been reimbursed by any applicable
Credit Party and without limiting the obligation of any applicable Credit Party
to do so) fully for all amounts paid, directly or indirectly, by the
Administrative Agent as Tax or otherwise, including penalties, additions to Tax
and interest, together with all expenses incurred, including legal expenses,
allocated staff costs and any out of pocket expenses.  Each Lender hereby
authorizes the Administrative Agent to set off and apply any and all amounts at
any time owing to such Lender under this Agreement or any other Credit Document
against any amount due to the Administrative Agent under this Section 13.11. 

13.12    Security Documents and Guarantee.  Each Secured Party hereby further
authorizes the Collateral Agent, on behalf of and for the benefit of Secured
Parties, to be the agent for and representative of the Secured Parties with
respect to the Collateral and the Security Documents. Subject to Section 14.1,
without further written consent or authorization from any Secured Party, the
Collateral Agent may (a) execute any documents or instruments necessary in
connection with

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a Disposition of assets permitted by this Agreement, (b) release any Lien
encumbering any item of Collateral that is the subject of such Disposition of
assets or with respect to which the Majority Lenders (or such other Lenders as
may be required to give such consent under Section 14.1) have otherwise
consented, (c) release any Guarantor from the Guarantee with respect to which
the Majority Lenders (or such other Lenders as may be required to give such
consent under Section 14.1) have otherwise consented, (d) enter into a joinder
to the Existing Intercreditor Agreement, (e) enter into a First Lien
Intercreditor Agreement in the form of Exhibit I or (f) enter into an
intercreditor agreement otherwise reasonably acceptable to the Collateral Agent
in substance similar to the First Lien Intercreditor Agreement.

13.13    Right to Realize on Collateral and Enforce Guarantee.  Anything
contained in any of the Credit Documents to the contrary notwithstanding, the
Borrower, the Collateral Agent and each Secured Party hereby agree that (a) no
Secured Party shall have any right individually to realize upon any of the
Collateral or to enforce the Guarantee; it being understood and agreed that all
powers, rights and remedies hereunder may be exercised solely by the Collateral
Agent, on behalf of the Secured Parties in accordance with the terms hereof and
all powers, rights and remedies under the Security Documents may be exercised
solely by the Collateral Agent, and (b) in the event of a foreclosure by the
Collateral Agent on any of the Collateral pursuant to a public or private sale
or other disposition, the Collateral Agent or any Lender may be the purchaser or
licensor of any or all of such Collateral at any such sale or other disposition
and the Collateral Agent, as agent for and representative of the Secured Parties
(but not any Lender or Lenders in its or their respective individual capacities
unless Majority Lenders shall otherwise agree in writing) shall be entitled, for
the purpose of bidding and making settlement or payment of the purchase price
for all or any portion of the Collateral sold at any such public sale, to use
and apply any of the Obligations as a credit on account of the purchase price
for any collateral payable by the Collateral Agent at such sale or other
disposition.

13.14    Administrative Agent May File Proofs of Claim.  In case of the pendency
of any receivership, insolvency, liquidation, bankruptcy, reorganization,
arrangement, adjustment, composition or other judicial proceeding, constituting
an Event of Default under Section 12.5, the Administrative Agent (irrespective
of whether the principal of any Loan shall then be due and payable as herein
expressed or by declaration or otherwise and irrespective of whether the
Administrative Agent shall have made any demand on the Borrower) shall be
entitled and empowered, by intervention in such proceeding or otherwise:
(a)    to file and prove a claim for the whole amount of the principal and
interest owing and unpaid in respect of the Loans and all other Indebtedness
that are owing and unpaid and to file such other documents as may be necessary
or advisable in order to have the claims of the Lenders and the Agents
(including any claim for the reasonable compensation, expenses,

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disbursements and advances of the Lenders and the Agents and their respective
agents and counsel, to the extent due under Section 14.5) allowed in such
judicial proceeding; and
(b)    to collect and receive any monies or other property payable or
deliverable on any such claims and to distribute the same;
and any custodian, receiver, assignee, trustee, liquidator, sequestrator or
other similar official in any such judicial proceeding is hereby authorized by
each Lender to make such payments to the Administrative Agent and, in the event
that the Administrative Agent shall consent to the making of such payments
directly to the Lenders, to pay to the Administrative Agent any amount due for
the reasonable compensation, expenses, disbursements and advances of the
Administrative Agent and its agents and counsel, to the extent due under
Section 14.5.
Nothing contained herein shall be deemed to authorize the Administrative Agent
to authorize or consent to or accept or adopt on behalf of any Lender any plan
of reorganization, arrangement, adjustment or composition affecting the
Indebtedness or the rights of any Lender or to authorize the Administrative
Agent to vote in respect of the claim of any Lender in any such proceeding.

ARTICLE XIV
MISCELLANEOUS

14.1    Amendments, Waivers and Releases.  Except as expressly set forth in this
Agreement, neither this Agreement nor any other Credit Document, nor any terms
hereof or thereof, may be amended, supplemented or modified except in accordance
with the provisions of this Section 14.1.  The Majority Lenders may, or, with
the written consent of the Majority Lenders, the Administrative Agent shall,
from time to time, (a) enter into with the relevant Credit Party or Credit
Parties written amendments, supplements or modifications hereto and to the other
Credit Documents for the purpose of adding any provisions to this Agreement or
the other Credit Documents or changing in any manner the rights of the Lenders
or of the Credit Parties hereunder or thereunder or (b) waive in writing, on
such terms and conditions as the Majority Lenders may specify in such
instrument, any of the requirements of this Agreement or the other Credit
Documents or any Default or Event of Default and its consequences provided,
however, that each such waiver and each such amendment, supplement or
modification shall be effective only in the specific instance and for the
specific purpose for which given; provided, further, that no such waiver and no
such amendment, supplement or modification shall (i) forgive or reduce any
portion of any Loan or reduce the stated rate (it being understood that only the
consent of the Majority Lenders shall be necessary to waive any obligation of
the Borrower to pay interest at the Default Rate or amend Section 2.9(e)), or
forgive any portion, or extend the date for the payment, of any interest or fee
payable hereunder (other than as a result of waiving the applicability of any
post-default increase in interest rates), or extend the final expiration date of
any Lender’s Commitment (provided that any Lender, upon the request of the

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Borrower, may extend the final expiration date of its Commitment without the
consent of any other Lender, including the Majority Lenders), or increase the
amount of the Commitment of any Lender (provided that, any Lender, upon the
request of the Borrower, may increase the amount of its Commitment without the
consent of any other Lender, including the Majority Lenders), or make any Loan,
interest, fee or other amount payable in any currency other than Dollars, in
each case without the written consent of each Lender directly and adversely
affected thereby, or (ii) amend, modify or waive any provision of this Section
14.1, or amend or modify any of the provisions of Section 14.8(a) to the extent
it would alter the ratable allocation of payments thereunder, or reduce the
percentages specified in the definitions of the terms “Majority Lenders”,
consent to the assignment or transfer by the Borrower of its rights and
obligations under any Credit Document to which it is a party (except as
permitted pursuant to Section 11.3) or alter the order of application set forth
in the final paragraph of Article XII or modify any definition used in such
final paragraph if the effect thereof would be to alter the order of payment
specified therein, in each case without the written consent of each Lender
directly and adversely affected thereby, or (iii) amend, modify or waive any
provision of Article XIII without the written consent of the then-current
Administrative Agent or Collateral Agent, as applicable, or any other former
Administrative Agent or Collateral Agent to whom Article XIII then applies in a
manner that directly and adversely affects such Person, or (iv) [reserved], or
(v) [reserved], or (vi) release all or substantially all of the Guarantors under
the Guarantee (except as expressly permitted by the Guarantee or this Agreement)
without the prior written consent of each Lender, or (vii) release all or
substantially all of the Collateral under the Security Documents (except as
expressly permitted by the Security Documents or this Agreement, including upon
the termination of any Credit Rating Trigger Period) without the prior written
consent of each Lender, or (viii) amend Section 2.10 so as to permit Interest
Period intervals greater than six months without regard to availability to
Lenders, without the written consent of each Lender directly and adversely
affected thereby, or (ix) amend, modify or waive Section 5.1(a) or any of the
defined terms used therein (solely as they relate to Section 5.1(a)) without the
written consent of each Lender directly and adversely affected thereby; or (x)
affect the rights or duties of, or any fees or other amounts payable to the
Administrative Agent or Collateral Agent under this Agreement or any other
Credit Document) without the prior written consent of the Administrative Agent,
(xi) amend, modify or waive any provision of Article VII or Article VIII without
the written consent of each Lender; provided, further, that any provision of
this Agreement or any other Credit Document may be amended by an agreement in
writing entered into by the Borrower, the Collateral Agent and the
Administrative Agent to cure any ambiguity, omission, defect or inconsistency so
long as, in each case, the Lenders shall have received at least five Business
Days’ prior written notice thereof and the Administrative Agent shall not have
received, within five Business Days of the date of such notice to the Lenders, a
written notice from the Majority Lenders stating that the Majority Lenders
object to such amendment. Any such waiver and any such amendment, supplement or
modification shall apply equally to each of the affected Lenders and shall be
binding upon the Borrower, such Lenders, the Administrative Agent and all future
holders of the affected Loans.  In the case of any

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waiver, the Borrower, the Lenders, the Collateral Agent and the Administrative
Agent shall be restored to their former positions and rights hereunder and under
the other Credit Documents, and any Default or Event of Default waived shall be
deemed to be cured and not continuing; it being understood that no such waiver
shall extend to any subsequent or other Default or Event of Default or impair
any right consequent thereon.  In connection with the foregoing provisions, the
Administrative Agent may, but shall have no obligations to, with the concurrence
of any Lender, execute amendments, modifications, waivers or consents on behalf
of such Lender.

14.2    Notices.  Unless otherwise expressly provided herein, all notices and
other communications provided for hereunder or under any other Credit Document
shall be in writing (including by facsimile transmission).  All such written
notices shall be mailed, faxed or delivered to the applicable address, facsimile
number or electronic mail address, and all notices and other communications
expressly permitted hereunder to be given by telephone shall be made to the
applicable telephone number, as follows:
(a)    if to the Borrower or the Administrative Agent, to the address, facsimile
number, electronic mail address or telephone number specified for such Person on
Schedule 14.2 or to such other address, facsimile number, electronic mail
address or telephone number as shall be designated by such party in a notice to
the other parties; and
(b)    if to any other Lender, to the address, facsimile number, electronic mail
address or telephone number specified in its Administrative Questionnaire or to
such other address, facsimile number, electronic mail address or telephone
number as shall be designated by such party in a notice to the Borrower and the
Administrative Agent.
All such notices and other communications shall be deemed to be given or made
upon the earlier to occur of (i) actual receipt by the relevant party hereto and
(ii)(A) if delivered by hand or by courier, when signed for by or on behalf of
the relevant party hereto; (B) if delivered by mail, three Business Days after
deposit in the mails, postage prepaid; (C) if delivered by facsimile, when sent
and receipt has been confirmed by telephone; and (D) if delivered by electronic
mail, when delivered; provided that notices and other communications to the
Administrative Agent or the Lenders pursuant to Sections 2.4, 2.7, 2.10 and 5.1
shall not be effective until received.
Notwithstanding anything contrary contained herein, each Agent shall have the
right to accept and act upon instructions from the Borrower, including funds
transfer instructions (“Instructions”) given pursuant to this Agreement and
delivered using Electronic Means; provided, however, that the Borrower shall
provide to each Agent an incumbency certificate listing authorized officers and
containing specimen signatures of such authorized officers, which incumbency
certificate shall be amended by the Borrower whenever a person is to be added or
deleted from the listing.  If the Borrower elects to give any Agent Instructions
using Electronic Means and the Agent

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in its discretion elects to act upon such Instructions, the Agent’s reasonable
understanding of such Instructions shall be deemed controlling.  The Borrower
understands and agrees that the Agents cannot determine the identity of the
actual sender of such Instructions and that the Agents shall conclusively
presume that directions that purport to have been sent by an authorized officer
listed on the incumbency certificate provided to such Agent have been sent by
such authorized officer.  The Borrower shall be responsible for ensuring that
only authorized officers transmit such Instructions to the Agents and that the
Borrower and all authorized officers are solely responsible to safeguard the use
and confidentiality of applicable user and authorization codes, passwords and/or
authentication keys upon receipt by the Borrower.  No Agent shall be liable for
any losses, costs or expenses arising directly or indirectly from such Agent’s
reliance upon and compliance with such Instructions notwithstanding such
directions conflict or are inconsistent with a subsequent written instruction. 
The Borrower agrees: (i) to assume all risks arising out of the use of
Electronic Means to submit Instructions to the Agents, including without
limitation the risk of such Agent acting on unauthorized Instructions, and the
risk of interception and misuse by third parties; (ii) that it is fully informed
of the protections and risks associated with the various methods of transmitting
Instructions to the Agents and that there may be more secure methods of
transmitting Instructions than the method(s) selected by the Borrower; (iii)
that the security procedures (if any) to be followed in connection with its
transmission of Instructions provide to it a commercially reasonable degree of
protection in light of its particular needs and circumstances; and (iv) to
notify the applicable Agent immediately upon learning of any compromise or
unauthorized use of the security procedures. “Electronic Means” shall mean the
following communications methods: S.W.I.F.T., e-mail, facsimile transmission,
secure electronic transmission containing applicable authorization codes,
passwords and/or authentication keys issued by the Agents, or another method or
system specified by such Agent as available for use in connection with its
services hereunder.
Each Public Lender agrees to cause at least one individual at or on behalf of
such Public Lender to at all times have selected the “Private Side Information”
or similar designation on the content declaration screen of the Platform in
order to enable such Public Lender or its delegate, in accordance with such
Public Lender’s compliance procedures and applicable Law, including United
States federal and state securities Laws, to make reference to Borrower
Materials that are not made available through the “Public Side Information”
portion of the Platform and that may contain material non-public information
with respect to the Borrower or its securities for purposes of United States
federal or state securities laws.

14.3    No Waiver; Cumulative Remedies.  No failure to exercise and no delay in
exercising, on the part of the Administrative Agent or any Lender, any right,
remedy, power or privilege hereunder or under the other Credit Documents shall
operate as a waiver thereof, nor shall any single or partial exercise of any
right, remedy, power or privilege hereunder preclude any other or further
exercise thereof or the exercise of any other right, remedy, power or
privilege.  The rights,

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remedies, powers and privileges herein provided are cumulative and not exclusive
of any rights, remedies, powers and privileges provided by Requirements of Law.

14.4    Survival of Representations and Warranties.  All representations and
warranties made hereunder, in the other Credit Documents and in any document,
certificate or statement delivered pursuant hereto or in connection herewith
shall survive the execution and delivery of this Agreement and the making of the
Loans hereunder.

14.5    Payment of Expenses; Indemnification. 

(a)    The Borrower agrees (i) to pay or reimburse each Lender (for all its
reasonable and documented out-of-pocket costs and expenses incurred in
connection with the enforcement or preservation of any rights under this
Agreement, the other Credit Documents and any such other documents (with respect
to attorney costs, limited to the reasonable fees, disbursements and other
charges of one primary counsel and one additional local counsel in each material
jurisdiction to the Lenders and, solely in the case of an actual or potential
conflict of interest, one additional legal counsel in each of the applicable
jurisdictions of the affected Lenders), (ii) to pay, indemnify, and hold
harmless each Lender from, any and all recording and filing fees and (iii) to
pay, indemnify, and hold harmless each Lender and their respective Related
Parties from and against any and all other liabilities, obligations, losses,
damages, penalties, claims, demands, actions, judgments, suits, costs, charges,
expenses or disbursements of any kind or nature whatsoever, whether or not such
proceedings are brought by the Borrower, any of its Related Parties or any other
third Person (with respect to attorney costs, limited to the reasonable and
documented fees, disbursements and other charges of one primary counsel for all
such Persons, taken as a whole, and, if necessary, of one local counsel in each
appropriate jurisdiction for all such Persons, taken as a whole (unless there is
an actual or perceived conflict of interest in which case each such Person may,
with the consent of the Borrower (not to be unreasonably withheld or delayed)
retain its own counsel), with respect to the execution, delivery, enforcement
and administration of this Agreement, the other Credit Documents and any such
other documents, including, without limitation, any of the foregoing relating to
the violation of, noncompliance with or liability under, any applicable
Environmental Law (other than by such indemnified person or any of its Related
Parties (other than any trustee or advisor)) or to any actual or alleged
presence, release or threatened release of Hazardous Materials involving or
attributable to the operations of the Borrower, any of its Subsidiaries or any
of the Oil and Gas Properties (all the foregoing in this clause (iv),
collectively, the “Lender Indemnified Liabilities”); provided that the Borrower
shall have no obligation hereunder to any Lender or any of its respective
Related Parties with respect to Lender Indemnified Liabilities to the extent it
has been determined by a final non-appealable judgment of a court of competent
jurisdiction to have resulted from (i) the gross negligence, bad faith or
willful misconduct of the party to be indemnified or any of its Related Parties
(IT BEING THE INTENTION OF THE PARTIES HERETO THAT EACH

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LENDER AND ITS RESPECTIVE RELATED PARTIES SHALL, IN ALL CASES, BE INDEMNIFIED
FOR ITS ORDINARY COMPARATIVE, CONTRIBUTORY OR SOLE NEGLIGENCE), (ii) any
material breach of any Credit Document by the party to be indemnified or (iii)
disputes, claims, demands, actions, judgments or suits not arising from any act
or omission by the Borrower or its Affiliates, brought by an indemnified Person
against any other indemnified Person. No Person entitled to indemnification
under clause (iv) of this Section 14.5, nor the Borrower or any of its
Subsidiaries, shall have any liability for any special, punitive, indirect,
exemplary or consequential damages (including, without limitation, any loss of
profits, business or anticipated savings) relating to this Agreement or any
other Credit Document or arising out of its activities in connection herewith or
therewith (whether before or after the Effective Date); provided that the
foregoing shall not negate the Borrower’s obligations with respect to Lender
Indemnified Liabilities. All amounts payable under this Section 14.5 shall be
paid within 10 Business Days of receipt by the Borrower of an invoice relating
thereto setting forth such expense in reasonable detail. The agreements in this
Section 14.5 shall survive repayment of the Loans and all other amounts payable
hereunder. This Section 14.5 shall not apply with respect to any claims for
Taxes which shall be governed exclusively by Section 5.4 and, to the extent set
forth therein, Section 2.11.
(b)    The Borrower agrees (i) to pay or reimburse each Agent for all of its
reasonable and documented out-of-pocket costs and expenses (with respect to
attorney costs, limited to reasonable fees, disbursements and other charges of
one primary counsel to the Agents) incurred in connection with the preparation
and execution and delivery of, and any amendment, waiver, supplement or
modification to, this Agreement and the other Credit Documents and any other
documents prepared in connection herewith or therewith, and the consummation and
administration of the transactions contemplated hereby and thereby, including
the reasonable fees, disbursements and other charges of Emmet, Marvin & Martin,
LLP, in its capacity as counsel to the Agents, (ii) to pay or reimburse each
Agent (for all its reasonable and documented out-of-pocket costs and expenses
incurred in connection with the enforcement or preservation of any rights under
this Agreement, the other Credit Documents and any such other documents (with
respect to attorney costs, limited to the reasonable fees, disbursements and
other charges of one primary counsel and one additional local counsel in each
material jurisdiction to the Agents and, solely in the case of an actual or
potential conflict of interest, one additional legal counsel in each of the
applicable jurisdictions of the affected Agents), (iii) to pay, indemnify, and
hold harmless the Agents from, any and all recording and filing fees and (iv) to
pay, indemnify, and hold harmless each Agent and their respective Related
Parties from and against any and all other liabilities, obligations, losses,
damages, penalties, claims, demands, actions, judgments, suits, costs, charges,
expenses or disbursements of any kind or nature whatsoever, whether or not such
proceedings are brought by the Borrower, any of its Related Parties or any other
third Person with respect to the execution, delivery, enforcement and
administration of this Agreement, the other Credit Documents and any such other
documents, including, without limitation, any of the foregoing relating to the
violation

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of, noncompliance with or liability under, any applicable Environmental Law
(other than by such indemnified person or any of its Related Parties (other than
any trustee or advisor)) or to any actual or alleged presence, release or
threatened release of Hazardous Materials involving or attributable to the
operations of the Borrower, any of its Subsidiaries or any of the Oil and Gas
Properties (all the foregoing in this clause (iv), collectively, the “Agent
Indemnified Liabilities”); provided that the Borrower shall have no obligation
hereunder to the Agents or any of their respective Related Parties with respect
to Agent Indemnified Liabilities to the extent it has been determined by a final
non-appealable judgment of a court of competent jurisdiction to have resulted
from the gross negligence, bad faith or willful misconduct of the party to be
indemnified or any of its Related Parties (IT BEING THE INTENTION OF THE PARTIES
HERETO THAT THE AGENTS AND THEIR RESPECTIVE RELATED PARTIES SHALL, IN ALL CASES,
BE INDEMNIFIED FOR ITS ORDINARY COMPARATIVE, CONTRIBUTORY OR SOLE NEGLIGENCE).
NO PERSON ENTITLED TO INDEMNIFICATION UNDER CLAUSE (D) OF THIS SECTION 14.5
SHALL BE LIABLE FOR ANY DAMAGES ARISING FROM THE USE BY UNINTENDED RECIPIENTS OF
ANY INFORMATION OR OTHER MATERIALS DISTRIBUTED BY IT THROUGH TELECOMMUNICATIONS,
ELECTRONIC OR OTHER INFORMATION TRANSMISSION SYSTEMS IN CONNECTION WITH THIS
AGREEMENT OR THE OTHER CREDIT DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED HEREBY
OR THEREBY. THE TELECOMMUNICATIONS, ELECTRONIC OR OTHER INFORMATION TRANSMISSION
SYSTEMS USED BY THE AGENTS IS PROVIDED “AS IS” AND “AS AVAILABLE.” NONE OF THE
AGENTS OR ANY OF THEIR RELATED PARTIES WARRANT THE ADEQUACY OF SUCH
TELECOMMUNICATIONS, ELECTRONIC OR OTHER INFORMATION TRANSMISSION SYSTEMS AND
EXPRESSLY DISCLAIM LIABILITY FOR ERRORS OR OMISSIONS IN THE COMMUNICATIONS. NO
WARRANTY OF ANY KIND, EXPRESS, IMPLIED OR STATUTORY, INCLUDING, WITHOUT
LIMITATION, ANY WARRANTY OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE,
NON-INFRINGEMENT OF THIRD-PARTY RIGHTS OR FREEDOM FROM VIRUSES OR OTHER CODE
DEFECTS, IS MADE BY ANY AGENT OR ANY OF ITS RELATED PARTIES IN CONNECTION WITH
ANY COMMUNICATIONS OR ANY TELECOMMUNICATIONS, ELECTRONIC OR OTHER INFORMATION
TRANSMISSION SYSTEMS. No Person entitled to indemnification under clause (d) of
this Section 14.5, nor the Borrower or any of its Subsidiaries, shall have any
liability for any special, punitive, indirect, exemplary or consequential
damages (including, without limitation, any loss of profits, business or
anticipated savings) relating to this Agreement or any other Credit Document or
arising out of its activities in connection herewith or therewith (whether
before or after the Effective Date); provided that the foregoing shall not
negate the Borrower’s obligations with respect to Agent Indemnified Liabilities.
All amounts payable under this Section 14.5 shall be paid within 10 Business
Days of receipt by the Borrower of an invoice relating thereto setting forth
such expense in reasonable detail. The agreements in this Section 14.5 shall
survive repayment of the Loans and all other amounts payable hereunder. This

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Section 14.5 shall not apply with respect to any claims for Taxes which shall be
governed exclusively by Section 5.4 and, to the extent set forth therein,
Section 2.11.

14.6    Successors and Assigns; Participations and Assignments.
(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, except that (i) except as expressly permitted by Section 11.3,
the Borrower may not assign or otherwise transfer any of its rights or
obligations hereunder without the prior written consent of each Agent and 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 14.6.  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, Participants (to the extent
provided in clause (c) of this Section 14.6) and, to the extent expressly
contemplated hereby, the Related Parties of each of the Administrative Agent and
the Lenders and each other Person entitled to indemnification under
Section 14.5) any legal or equitable right, remedy or claim under or by reason
of this Agreement.
(b)    (i) Subject to the conditions set forth in clause (b)(ii) below, any
Lender may at any time assign to one or more assignees (other than any natural
person or, except as provided in Section 14.6(g), the Borrower, its Subsidiaries
or their Affiliates) all or a portion of its rights and obligations under this
Agreement (including all or a portion of its Commitments and the Loans at the
time owing to it) with the prior written consent or, with respect to the
Administrative Agent, acknowledgment (such consent or acknowledgment not be
unreasonably withheld or delayed; it being understood that, notwithstanding the
foregoing clause, the Borrower shall have the right to withhold or delay its
consent to any assignment (x) if, in order for such assignment to comply with
applicable Requirements of Law, the Borrower would be required to obtain the
consent of, or make any filing or registration with, any Governmental Authority
or (y) with respect to an assignment of Commitments or Loans to an entity other
than a commercial bank or other financial institution customarily engaged in the
business of making loans in the oil and gas industry) of:
(A)    the Borrower; provided that no consent of the Borrower shall be required
for an assignment (1) to a Lender, an Affiliate of a Lender or an Approved Fund
or (2) if an Event of Default under Section 12.1 or Section 12.5 has occurred
and is continuing; and provided, further, that if the Borrower has not responded
within ten (10) Business Days after the delivery of any written request for a
consent, such consent shall be deemed to have been given; and

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(B)    the Administrative Agent; provided that no acknowledgment of the
Administrative Agent shall be required for assignments in respect of any Loans
to a Person who is a Lender, an Affiliate of a Lender or an Approved Fund.
(ii)    Assignments shall be subject to the following additional conditions:
(A)    except in the case of an assignment to a Lender, an Affiliate of a Lender
or an Approved Fund or an assignment of the entire remaining amount of the
assigning Lender’s Commitment or Loans, (1) the amount of the Commitment or
Loans of the assigning Lender subject to each such assignment (determined as of
the date the Assignment and Acceptance with respect to such assignment is
delivered to the Administrative Agent) shall not be less than $5,000,000 and
increments of $1,000,000 in excess thereof and (2) after giving effect to such
assignment, the amount of the remaining Commitment or Loans of the assigning
Lender (determined as of the date the Assignment and Acceptance with respect to
such assignment is delivered to the Administrative Agent) shall not be less than
$15,000,000, in each case unless the Borrower otherwise consents (which consents
shall not be unreasonably withheld or delayed); provided that no such consent of
the Borrower shall be required if an Event of Default under Section 12.1 or
Section 12.5 has occurred and is continuing; provided, further, that
contemporaneous assignments to a single assignee made by Affiliates of Lenders
and related Approved Funds shall be aggregated for purposes of meeting the
minimum assignment amount requirements stated above;
(B)    each partial assignment shall be made as an assignment of a proportionate
part of all the assigning Lender’s rights and obligations under this Agreement;
(C)    the parties to each assignment shall execute and deliver to the
Administrative Agent an Assignment and Acceptance, together with a processing
and recordation fee in the amount of $3,500; provided that the Administrative
Agent may, in its sole discretion, elect to waive such processing and
recordation fee in the case of any assignment; provided, further, that neither
the Lead Arranger or any of its Affiliates shall be subject to any such
processing or recordation fee in their capacity as a Lender; and
(D)    the assignee, if it shall not be a Lender, shall deliver to the
Administrative Agent an Administrative Questionnaire.
(iii)    Subject to acceptance and recording thereof pursuant to clause
(b)(iv) of this Section 14.6, from and after the effective date specified in
each Assignment and

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Acceptance, the assignee thereunder shall be a party hereto and, to the extent
of the interest assigned by such Assignment and Acceptance, have the rights and
obligations of a Lender under this Agreement, and the assigning Lender
thereunder shall, to the extent of the interest assigned by such Assignment and
Acceptance, be released from its obligations under this Agreement (and, in the
case of an Assignment and Acceptance covering all of the assigning Lender’s
rights and obligations under this Agreement, such Lender shall cease to be a
party hereto but shall continue to be entitled to the benefits of Sections 2.11,
2.12, 5.4 and 14.5).  Any assignment or transfer by a Lender of rights or
obligations under this Agreement that does not comply with this Section 14.6
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 clause (c) of
this Section 14.6.
(iv)    The Administrative Agent, acting for this purpose as a non-fiduciary
agent of the Borrower, shall maintain at the Administrative Agent’s Office a
copy of each Assignment and Acceptance delivered to it and a register for the
recordation of the names and addresses of the Lenders, and the Commitments of,
and principal amount (and stated interest amounts) of the Loans owing to, each
Lender pursuant to the terms hereof from time to time (the “Register”). 
Further, the Register shall contain the name and address of the Administrative
Agent and the lending office through which each such Person acts under this
Agreement.  The entries in the Register shall be conclusive, and the Borrower,
the Administrative Agent 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 and, solely with
respect to itself, each other Lender, at any reasonable time and from time to
time upon reasonable prior notice.
(v)    Upon its receipt of a duly completed Assignment and Acceptance executed
by an assigning Lender and an assignee, the assignee’s completed Administrative
Questionnaire (unless the assignee shall already be a Lender hereunder), the
processing and recordation fee referred to in clause (b) of this Section 14.6
(unless waived) and any written consent to such assignment required by clause
(b) of this Section 14.6, the Administrative Agent shall accept such Assignment
and Acceptance and record the information contained therein in the Register.
(v)    (i) Any Lender may, without the consent of the Borrower or the
Administrative Agent, sell participations to one or more banks or other entities
other than the Borrower or any Subsidiary of the Borrower (each, a
“Participant”) in all or a portion of such Lender’s rights and obligations under
this Agreement (including all or a portion of its Commitments 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

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the performance of such obligations and (C) the Borrower, the Administrative
Agent and the 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 or any other Credit Document; provided that such
agreement or instrument may provide that such Lender will not, without the
consent of the Participant, agree to any amendment, modification or waiver
described in clauses (i) or (ii) of the proviso to Section 14.1 that affects
such Participant, provided that the Participant shall have no right to consent
to any modification to the percentages specified in the definitions of the terms
“Majority Lenders” or “Required Lenders”.  Subject to clause (c)(ii) of this
Section 14.6, the Borrower agrees that each Participant shall be entitled to the
benefits of Sections 2.11, 2.12 and 5.4 to the same extent as if it were a
Lender (subject to the limitations and requirements of those Sections as though
it were a Lender and had acquired its interest by assignment pursuant to clause
(b) of this Section 14.6, including the requirements of clause (e) of
Section 5.4).  To the extent permitted by Requirements of Law, each Participant
also shall be entitled to the benefits of Section 14.8(b) as though it were a
Lender; provided such Participant agrees to be subject to Section 14.8(a) as
though it were a Lender.
(i)    A Participant shall not be entitled to receive any greater payment under
Section 2.11, 2.12 or 5.4 than the applicable Lender would have been entitled to
receive with respect to the participation sold to such Participant, unless the
sale of the participation to such Participant is made with the Borrower’s prior
written consent (which consent shall not be unreasonably withheld); provided
that the Participant shall be subject to the provisions in Section 2.13 as if it
were an assignee under clauses (a) and (b) of this Section 14.6.  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 (and related
interest amounts) of each participant’s interest in the Loans or other
obligations under this Agreement (the “Participant Register”).  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.  No Lender shall have any obligation
to disclose all or any portion of the Participant Register to any Person
(including the identity of any Participant or any information relating to a
Participant’s interest in any commitments, loans, letters of credit or its other
obligations under any Credit Document) except to the extent that such disclosure
is necessary to establish that such commitment, loan, letter of credit or other
obligation is in registered form under Section 5f.103-1(c) of the United States
Treasury Regulations.

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(w)    Any Lender may, without the consent of the Borrower or the Administrative
Agent 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 or any
central bank having jurisdiction over such Lender, and this Section 14.6 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.  In order to facilitate such pledge or assignment
or for any other reason, the Borrower hereby agrees that, upon request of any
Lender at any time and from time to time after the Borrower has made its initial
borrowing hereunder, the Borrower shall provide to such Lender, at the
Borrower’s own expense, a promissory note, substantially in the form of
Exhibit H evidencing the Loans owing to such Lender.
(x)    Subject to Section 14.16, the Borrower authorizes each Lender to disclose
to any Participant, secured creditor of such Lender or assignee (each, a
“Transferee”) and any prospective Transferee any and all financial information
in such Lender’s possession concerning the Borrower and its Affiliates that has
been delivered to such Lender by or on behalf of the Borrower and its Affiliates
pursuant to this Agreement or that has been delivered to such Lender by or on
behalf of the Borrower and its Affiliates in connection with such Lender’s
credit evaluation of the Borrower and its Affiliates prior to becoming a party
to this Agreement.
(y)    The words “execution,” “signed,” “signature,” and words of like import in
any Assignment and Acceptance shall be deemed to include electronic signatures
or the keeping of records in electronic form, each of which shall be of the same
legal effect, validity or enforceability as a manually executed signature or the
use of a paper-based recordkeeping system, as the case may be, to the extent and
as provided for in any applicable law, including the Federal Electronic
Signatures in Global and National Commerce Act, the New York State Electronic
Signatures and Records Act, or any other similar state laws based on the Uniform
Electronic Transactions Act.
(z)    Notwithstanding anything herein to the contrary, any Lender may, so long
as no Default or Event of Default has occurred and is continuing or would result
therefrom, assign all or a portion of its rights and obligations with respect to
any Loans under this Agreement to the Borrower or any of its Subsidiaries
through open market purchase on a non-pro rata basis, in each case subject to
the following limitations:
(i)    if the assignee is a Subsidiary of the Borrower, upon such assignment,
transfer or contribution, the applicable assignee shall automatically be deemed
to have contributed or transferred the principal amount of such Loans, plus all
accrued and unpaid interest thereon, to the Borrower; or

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(ii)    if the assignee is the Borrower (including through contribution or
transfers set forth in clause (i) above), (A) the principal amount of such
Loans, along with all accrued and unpaid interest thereon, so contributed,
assigned or transferred to the Borrower shall be deemed automatically cancelled
and extinguished on the date of such contribution, assignment or transfer and
(B) the Borrower shall promptly provide notice to the Administrative Agent of
such contribution, assignment or transfer of such Loans, and the Administrative
Agent, upon receipt of such notice, shall reflect the cancellation of the
applicable Loans in the Register; and
(iii)    no proceeds of revolving Indebtedness shall be used to finance any such
open market purchases.

14.7    [Reserved].

14.8    Adjustments; Set-off.
(e)    If any Lender (a “Benefited Lender”) shall at any time receive any
payment in respect of any principal of or interest on all or part of the Loans
made by it, or receive any collateral in respect thereof (whether voluntarily or
involuntarily, by set-off, pursuant to events or proceedings of the nature
referred to in Section 12.5, or otherwise), in a greater proportion than any
such payment to or collateral received by any other Lender, if any, in respect
of such other Lender’s Loans, or interest thereon, such Benefited Lender shall
(i) notify the Administrative Agent of such fact, and (ii) purchase for cash at
face value from the other Lenders a participating interest in such portion of
each such other Lender’s Loans, or shall provide such other Lenders with the
benefits of any such collateral, or the proceeds thereof, as shall be necessary
to cause such Benefited Lender to share the excess payment or benefits of such
collateral or proceeds ratably in accordance with the aggregate principal of and
accrued interest on their respective Loans and other amounts owing them;
provided, however, that, (A) if all or any portion of such excess payment or
benefits is thereafter recovered from such Benefited Lender, such purchase shall
be rescinded, and the purchase price and benefits returned, to the extent of
such recovery, but without interest and (B) the provisions of this paragraph
shall not be construed to apply to (1) any payment made by the Borrower or any
other Credit Party pursuant to and in accordance with the express terms of this
Agreement and the other Credit Documents, (2) any payment obtained by a Lender
as consideration for the assignment of or sale of a participation in any of its
Loans or participations to any assignee or participant or (3) any
disproportionate payment obtained by a Lender as a result of the extension by
Lenders of the maturity date or expiration date of some but not all Loans or
Commitments or any increase in the Applicable Margin in respect of Loans or
Commitments of Lenders that have consented to any such extension.  Each Credit
Party consents to the foregoing and agrees, to the extent it may effectively do
so under Requirements of Law, that any Lender acquiring a participation pursuant
to the foregoing arrangements may exercise against such Credit Party rights of
set-off and

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counterclaim with respect to such participation as fully as if such Lender were
a direct creditor of such Credit Party in the amount of such participation.
(f)    After the occurrence and during the continuance of an Event of Default,
in addition to any rights and remedies of the Lenders provided by Requirements
of Law, each Lender shall have the right, without prior notice to the Borrower,
any such notice being expressly waived by the Borrower to the extent permitted
by applicable Requirements of Law, upon any amount becoming due and payable by
the Borrower hereunder or under any Credit Document (whether at the stated
maturity, by acceleration or otherwise) to set-off and appropriate and apply
against such amount any and all deposits (general or special, time or demand,
provisional or final), in any currency, and any other credits, indebtedness or
claims, in any currency, in each case whether direct or indirect, absolute or
contingent, matured or unmatured, at any time held or owing by such Lender or
any branch or agency thereof to or for the credit or the account of the
Borrower.  Each Lender agrees promptly to notify the Borrower (and the Credit
Parties, if applicable) and the Administrative Agent after any such set-off and
application made by such Lender; provided that the failure to give such notice
shall not affect the validity of such set-off and application.

14.9    Counterparts.  This Agreement may be executed by one or more of the
parties to this Agreement on any number of separate counterparts (including by
facsimile or other electronic transmission, e.g., a “pdf” or a “tif”), and all
of said counterparts taken together shall be deemed to constitute one and the
same instrument.  A set of the copies of this Agreement signed by all the
parties shall be lodged with the Borrower and the Administrative Agent.

14.10    Severability.  Any provision of this Agreement that is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.

14.11    Integration.  This Agreement and the other Credit Documents represent
the agreement of the Borrower, the Guarantors, the Administrative Agent, the
Collateral Agent and the Lenders with respect to the subject matter hereof and
thereof, and there are no promises, undertakings, representations or warranties
by the Borrower, the Guarantors, the Administrative Agent, the Collateral Agent
nor any Lender relative to subject matter hereof not expressly set forth or
referred to herein or in the other Credit Documents.

14.12    GOVERNING LAW.  THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE
PARTIES HEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN
ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.

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14.13    Submission to Jurisdiction; Waivers.  Each party hereto hereby
irrevocably and unconditionally:
(c)    submits for itself and its property in any legal action or proceeding
relating to this Agreement and the other Credit Documents to which it is a
party, or for recognition and enforcement of any judgment in respect thereof, to
the exclusive general jurisdiction of the courts of the State of New York,
County of New York, the courts of the United States of America for the Southern
District of New York and appellate courts from any thereof;
(d)    consents that any such action or proceeding shall be brought in such
courts and waives any objection that it may now or hereafter have to the venue
of any such action or proceeding in any such court or that such action or
proceeding was brought in an inconvenient court and agrees not to plead or claim
the same;
(e)    agrees that service of process in any such action or proceeding may be
effected by mailing a copy thereof by registered or certified mail (or any
substantially similar form of mail), postage prepaid, to such Person at its
address set forth on Schedule 14.2 at such other address of which the
Administrative Agent shall have been notified pursuant to Section 14.2;
(f)    agrees that nothing herein shall affect the right to effect service of
process in any other manner permitted by Requirements of Law or shall limit the
right to sue in any other jurisdiction;
(g)    waives, to the maximum extent not prohibited by law, any right it may
have to claim or recover in any legal action or proceeding referred to in this
Section 14.13 any special, exemplary, punitive or consequential damages; and
(h)    agrees that a final judgment in any 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.

14.14    Acknowledgments.  The Borrower hereby acknowledges that:
(a)    it has been advised by counsel in the negotiation, execution and delivery
of this Agreement and the other Credit Documents;
(b)    (i) the credit facilities provided for hereunder and any related
arranging or other services in connection therewith (including in connection
with any amendment, waiver or other modification hereof or of any other Credit
Document) are an arm’s-length commercial transaction between the Borrower and
the other Credit Parties, on the one hand, and the Agents and the Lenders, on
the other hand, and the Borrower and the other Credit Parties are capable of
evaluating

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and understanding and understand and accept the terms, risks and conditions of
the transactions contemplated hereby and by the other Credit Documents
(including any amendment, waiver or other modification hereof or thereof);
(ii) in connection with the process leading to such transaction, each of the
Agents and the Lenders is and has been acting solely as a principal and is not
the financial advisor, agent or fiduciary for any of the Borrower, any other
Credit Parties or any of their respective Affiliates, equity holders, creditors
or employees or any other Person; (iii) neither the Agents, any Bookrunner, any
Lead Arranger, nor any Lender has assumed or will assume an advisory, agency or
fiduciary responsibility in favor of the Borrower or any other Credit Party with
respect to any of the transactions contemplated hereby or the process leading
thereto, including with respect to any amendment, waiver or other modification
hereof or of any other Credit Document (irrespective of whether the Agents, any
Bookrunner, any Lead Arranger or any Lender has advised or is currently advising
any of the Borrower, the other Credit Parties or their respective Affiliates on
other matters) and none of the Agents, any Bookrunner, any Lead Arranger or any
Lender has any obligation to any of the Borrower, the other Credit Parties or
their respective Affiliates with respect to the transactions contemplated hereby
except those obligations expressly set forth herein and in the other Credit
Documents; (iv) the Borrower, the other Credit Parties and their respective
Affiliates will not assert any claim based on alleged breach of fiduciary duty;
(v) each Agent and its Affiliates and each Lender and its Affiliates may be
engaged in a broad range of transactions that involve interests that differ from
those of the Borrower and its respective Affiliates, and none of the Agents or
any Lender has any obligation to disclose any of such interests by virtue of any
advisory, agency or fiduciary relationship; and (vi) neither the Agents nor any
Lender has provided and none will provide any legal, accounting, regulatory or
tax advice with respect to any of the transactions contemplated hereby
(including any amendment, waiver or other modification hereof or of any other
Credit Document) and the Borrower has consulted its own legal, accounting,
regulatory and tax advisors to the extent it has deemed appropriate.  The
Borrower hereby waives and releases, to the fullest extent permitted by law, any
claims that it may have against each Agent with respect to any breach or alleged
breach of agency or fiduciary duty; and
(c)    no joint venture is created hereby or by the other Credit Documents or
otherwise exists by virtue of the transactions contemplated hereby among the
Lenders or among the Borrower, on the one hand, and any Lender, on the other
hand.

14.15    WAIVERS OF JURY TRIAL.  THE BORROWER, EACH AGENT AND EACH LENDER HEREBY
IRREVOCABLY AND UNCONDITIONALLY WAIVE TRIAL BY JURY IN ANY LEGAL ACTION OR
PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER CREDIT DOCUMENT AND FOR ANY
COUNTERCLAIM THEREIN.

14.16    Confidentiality.  Each Agent and each Lender shall hold all non-public
information furnished by or on behalf of the Borrower or any of its Subsidiaries
in connection with such Lender’s evaluation of whether to become a Lender
hereunder or obtained by such Lender or such Agent

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pursuant to the requirements of this Agreement (“Confidential Information”),
confidential in accordance with its customary procedure for handling
confidential information of this nature and use or further disclose as permitted
hereunder for use, only as necessary to evaluate and make decisions with respect
to the Loans, and in any event may make disclosure (a) to its Affiliates and to
its Related Parties (it being understood that the Persons to whom such
disclosure is made will be informed of the confidential nature of such
Confidential Information, are instructed to keep such Confidential Information
confidential and agree to keep such Confidential Information confidential on the
same terms as provided herein) (b) as required or requested by any Governmental
Authority, self-regulatory agency or representative thereof or pursuant to legal
process or applicable Requirements of Law, (c) to any other party hereto, (d) to
such Lender’s or such Agent’s attorneys, professional advisors, independent
auditors, trustees or Affiliates, in each case who need to know such information
in connection with the administration of the Credit Documents and are informed
of the confidential nature of such information, (e) in connection with the
exercise of any remedies hereunder or under any other Credit Document or any
action or proceeding relating to this Agreement or any other Credit Document or
the enforcement of rights hereunder or thereunder, (f) to a trustee, collateral
manager, servicer, backup servicer, noteholder or secured party in connection
with the administration, servicing and reporting on the assets serving as
collateral for a securitization and who agrees to treat such information as
confidential, (g) to the CUSIP Service Bureau or any similar agency in
connection with the issuance and monitoring of CUSIP numbers with respect to the
Facility, (h) subject to an agreement containing provisions substantially the
same as those of this Section 14.16, to (x) any assignee of or Participant in,
or any prospective assignee of or Participant in, any of its rights and
obligations under this Agreement, or (y) any actual or prospective party (or its
Related Parties) to any swap, derivative or other transaction under which
payments are to be made by reference to the Borrower and its obligations, this
Agreement or payments hereunder, (i) with the consent of the Borrower and (j) to
the extent such non-public information (x) becomes publicly available other than
as a result of a breach of this Section, or (y) becomes available to the
Administrative Agent, any Lender, or any of their respective Affiliates on a
non-confidential basis from a source other than the Borrower; provided that
unless specifically prohibited by applicable Requirements of Law, each Lender
and each Agent shall endeavor to notify the Borrower (without any liability for
a failure to so notify the Borrower) of any request made to such Lender or such
Agent, as applicable, by any governmental, regulatory or self-regulatory agency
or representative thereof (other than any such request in connection with an
examination of the financial condition of such Lender by such governmental
agency) for disclosure of any such non-public information prior to disclosure of
such information; provided, further, that in no event shall any Lender or any
Agent be obligated or required to return any materials furnished by the Borrower
or any Subsidiary.  In addition, each Lender and each Agent may provide
Confidential Information to prospective Transferees or to any pledgee referred
to in Section 14.6 or to prospective direct or indirect contractual
counterparties in Hedge Agreements to be entered into in connection with Loans
made hereunder as long as such Person is advised of and agrees to be bound by
the provisions of this

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Section 14.16 or confidentiality provisions at least as restrictive as those set
forth in this Section 14.16.

14.17    Release of Collateral and Guarantee Obligations.
(a)    The Lenders hereby irrevocably agree that the Liens granted to the
Collateral Agent by the Credit Parties on any Collateral shall be automatically
released (i) in full, as set forth in clauses (b) or (c) below, (ii) upon the
Disposition of such Collateral (including as part of or in connection with any
other Disposition permitted hereunder) to any Person other than another Credit
Party, to the extent such Disposition is made in compliance with the terms of
this Agreement (and the Collateral Agent may rely conclusively on a certificate
to that effect provided to it by any Credit Party upon its reasonable request
without further inquiry), (iii) to the extent such Collateral is comprised of
property leased to a Credit Party, upon termination or expiration of such lease,
(iv) if the release of such Lien is approved, authorized or ratified in writing
by the Majority Lenders (or such other percentage of the Lenders whose consent
may be required in accordance with Section 14.1, (v) to the extent the property
constituting such Collateral is owned by any Guarantor, upon the release of such
Guarantor from its obligations under the Guarantee (in accordance with the
second succeeding sentence and Section 5.14(b) of the Guarantee), (vi) upon the
release of any Collateral from the Liens securing the First Lien First Out
Credit Agreement in accordance with the terms thereof, (vii) to the extent
required in order to give effect to the release contemplated under Section
11.2(cc) hereof and (viii) as necessary or appropriate to effect any Disposition
of Collateral in connection with any exercise of remedies of the Collateral
Agent pursuant to the Security Documents.  Any such release shall not in any
manner discharge, affect, or impair the Obligations or any Liens (other than
those being released) upon (or obligations (other than those being released) of
the Credit Parties in respect of) all interests retained by the Credit Parties,
including the proceeds of any Disposition, all of which shall continue to
constitute part of the Collateral except to the extent otherwise released in
accordance with the provisions of the Credit Documents.  Additionally, the
Lenders hereby irrevocably agree that (x) the Guarantors shall be released from
the Guarantees upon consummation of any transaction permitted hereunder
resulting in such Subsidiary ceasing to constitute a Subsidiary, or otherwise
becoming an Excluded Subsidiary or ceasing to constitute a Material Subsidiary
and (y) any Collateral that is Excluded Property shall be automatically released
upon the written request of the Borrower to the Collateral Agent.  The Lenders
hereby authorize the Collateral Agent to execute and deliver any instruments,
documents, and agreements reasonably requested of it and necessary or desirable
to evidence and confirm the release of any Guarantor or Collateral pursuant to
the foregoing provisions of this paragraph, all without the further consent or
joinder of any Lender.  For the avoidance of doubt, the Collateral Agent may
rely and shall be fully protected in relying upon a certificate from the
Borrower stating that the conditions precedent to the release have been
satisfied. Any representation, warranty or

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covenant contained in any Credit Document relating to any such Collateral or
Guarantor shall no longer be deemed to be repeated.
(b)    Notwithstanding anything to the contrary contained herein or any other
Credit Document, when all Obligations (other than any contingent or
indemnification obligations not then due) have been paid in full and all
Commitments have terminated or expired, upon request of the Borrower, the
Collateral Agent shall (without notice to, or vote or consent of, any Secured
Party) take such actions reasonably requested of it and as shall be required to
release its security interest (without warranty, representation or recourse) in
all Collateral, and to release all obligations (except for those provisions
which by their terms are intended to survive) under any Credit Document, whether
or not on the date of such release there may be any contingent or
indemnification obligations not then due.  Any such release of Obligations shall
be deemed subject to the provision that such Obligations shall be reinstated if
after such release any portion of any payment in respect of the Obligations
guaranteed thereby shall be rescinded or must otherwise be restored or returned
upon the insolvency, bankruptcy, dissolution, liquidation or reorganization of
the Borrower or any Guarantor, or upon or as a result of the appointment of a
receiver, intervenor or conservator of, or trustee or similar officer for, the
Borrower or any Guarantor or any substantial part of its property, or otherwise,
all as though such payment had not been made.
(c)    Notwithstanding anything to the contrary contained herein or any other
Credit Document, upon the Borrower’s election to enter into an Investment Grade
Period pursuant to Section 14.18 and delivery of the written notice contemplated
therein, the Collateral Agent shall (without notice to, or vote or consent of,
any Secured Party) take such actions as shall be required to release its
security interest (without warranty, representation or recourse) in all
Collateral, and to release all obligations under any Security Document.

14.18    Credit Rating Election.
(a)    At any time that is not a Credit Rating Trigger Period, the Borrower may
provide written notice to the Administrative Agent of its election to enter into
a Credit Rating Trigger Period, which notice shall include a certification of an
Authorized Officer of the Borrower that the Borrower is exercising commercially
reasonable efforts to grant to the Administrative Agent a Lien on the Collateral
in accordance with the requirements of Section 10.10(a). A Credit Rating Trigger
Period will commence upon the Administrative Agent’s receipt of such notice.
(b)    At any time during a Credit Rating Trigger Period, as long as no Credit
Rating Trigger Event has occurred and is continuing, the Borrower may provide
notice to the Administrative Agent of its election to exit such Credit Rating
Trigger Period and enter into an Investment Grade Period together with a
certificate of an Authorized Officer of the Borrower confirming that (A) no
Event of Default exists and (B) no Credit Rating Trigger Event has occurred and
is continuing.

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14.19    USA PATRIOT Act.  Each Agent and each Lender hereby notifies the
Borrower that pursuant to the requirements of the USA Patriot Act (Title III of
Pub. L. 107-56 (signed into law October 26, 2001)) (the “Patriot Act”), it is
required to obtain, verify and record information that identifies each Credit
Party, which information includes the name and address of each Credit Party and
other information that will allow the Agents and such Lender to identify each
Credit Party in accordance with the Patriot Act.

14.20    Payments Set Aside.  To the extent that any payment by or on behalf of
the Borrower is made to the Administrative Agent or any Lender, or the
Administrative Agent or any Lender exercises its right of setoff, and such
payment or the proceeds of such setoff or any part thereof is subsequently
invalidated, declared to be fraudulent or preferential, set aside or required
(including pursuant to any settlement entered into by the Administrative Agent
or such Lender in its discretion) to be repaid to a trustee, receiver or any
other party, in connection with any proceeding or otherwise, then (a) to the
extent of such recovery, the obligation or part thereof originally intended to
be satisfied shall be revived and continued in full force and effect as if such
payment had not been made or such setoff had not occurred, and (b) each Lender
severally agrees to pay to each Agent upon demand its applicable share of any
amount so recovered from or repaid by such Agent, plus interest thereon from the
date of such demand to the date such payment is made at a rate per annum equal
to the applicable Overnight Rate from time to time in effect.

14.21    Reinstatement.  This Agreement shall continue to be effective, or be
reinstated, as the case may be, if at any time payment, or any part thereof, of
any of the Obligations is rescinded or must otherwise be restored or returned by
any Agent or any other Secured Party upon the insolvency, bankruptcy,
dissolution, liquidation or reorganization of the Borrower, or upon or as a
result of the appointment of a receiver, intervenor or conservator of, or
trustee or similar officer for, the Borrower or any substantial part of its
property, or otherwise, all as though such payments had not been made.

14.22    Disposition of Proceeds.  The Security Documents contain an assignment
by the Borrower and/or the Guarantors unto and in favor of the Administrative
Agent and the Collateral Agent for the benefit of the Lenders of all of the
Borrower’s or each Guarantor’s interest in and to their as-extracted collateral
in the form of production and all proceeds attributable thereto which may be
produced from or allocated to the Mortgaged Property.  The Security Documents
further provide in general for the application of such proceeds to the
satisfaction of the Obligations described therein and secured thereby. 
Notwithstanding the assignment contained in such Security Documents, until the
occurrence of an Event of Default, (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

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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.

14.23    [Reserved]. 

14.24    Acknowledgement and Consent to Bail-In of EEA Financial Institutions.
Notwithstanding anything to the contrary in any Credit 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 Credit 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)    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 Credit 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.

14.25    Post-First Priority First Out Credit Agreement Third Amendment
Fall-Away. Upon the delivery by the Borrower to the Administrative Agent of
written notice, which notice shall include a certification of an Authorized
Officer of the Borrower that the Borrower is in compliance with the requirements
of Section 11.11 of the First Lien First Out Credit Agreement as such Section
existed immediately prior to the First Lien First Out Third Amendment Effective
Date, that the Fall-Away, as defined in the First Lien First Out Credit
Agreement, has occurred, the relevant provisions of the Credit Agreement and the
Credit Documents shall be deemed modified to conform to the corresponding
changes to the provisions of the First Lien First Out Credit Agreement and the
First Lien First Out Credit Documents as a result of such Fall-Away.
Reference is made to the First Lien First/Second-Out Pari Passu Intercreditor
Agreement, dated as of the Escrow Release Date between JPMORGAN CHASE BANK,
N.A.,

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as First Lien First Out Agent (as defined therein), and The Bank of New York
Mellon, N.A., as First Lien Second Out Agent (as defined therein) and
acknowledged and agreed by California Resources Corporation and certain of its
subsidiaries (as amended, supplemented, amended and restated or otherwise
modified and in effect from time to time, the “First Lien Intercreditor
Agreement”). Each holder of First Lien Second-Out Obligations (as defined
therein), by its acceptance of such First Lien Second-Out Obligations (i) agrees
that it will be bound by, and will take no actions contrary to, the provisions
of the First Lien Intercreditor Agreement and (ii) authorizes and instructs the
First Lien Second-Out Agent on behalf of each First Lien Second-Out Secured
Party (as defined therein) to enter into the First Lien Intercreditor Agreement
as First Lien Second-Out Agent on behalf of such First Lien Second-Out Secured
Party. The foregoing provisions are intended as an inducement to the lenders
under the First Lien First-Out Credit Agreement (as defined therein) to extend
credit to the Borrower and such lenders are intended third party beneficiaries
of such provisions and the provisions of the First Lien Intercreditor Agreement.
[SIGNATURE PAGES FOLLOW]

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IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed
by their officers thereunto duly authorized as of the date first above written.
BORROWER:
CALIFORNIA RESOURCES CORPORATION
 
By:
/s/ Marshall D. Smith
 
Name:
Marshall D. Smith
 
Title:
Senior Executive Vice President and
Chief Financial Officer

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Schedule 1.1(e)
Excluded Stock
The Stock and Stock Equivalents of the following entities:
•
Felix Oil Company

•
Lomita Gasoline Company, Inc.

•
Monument Production, Inc.

•
Tenby, Inc.

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Schedule 1.1(f)
Excluded Subsidiaries

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Schedule 1.1(g)
Subsidiary Guarantors
 
Name
Jurisdiction of Organization
 
California Heavy Oil, Inc.
Delaware
 
California Resources Coles Levee, LLC
Delaware
 
California Resources Coles Levee, L.P.
Delaware
 
California Resources Elk Hills, LLC
Delaware
 
California Resources Long Beach, Inc.
Delaware
 
California Resources Petroleum Corporation
Delaware
 
California Resources Production Corporation
Delaware
 
California Resources Tidelands, Inc.
Delaware
 
California Resources Wilmington, LLC
Delaware
 
CRC Construction Services, LLC
Delaware
 
CRC Marketing, Inc.
Delaware
 
CRC Services, LLC
Delaware
 
Elk Hills Power, LLC
Delaware
 
Socal Holding, LLC
Delaware
 
Southern San Joaquin Production, Inc.
Delaware
 
Thums Long Beach Company
Delaware
 
Tidelands Oil Production Company
Texas

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Schedule 2.1(a)
Commitments
Lender
Commitment
Goldman Sachs Bank USA
$1,000,000,000
 
 
 
 
 
 
 
 
Total
$1,000,000,000

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Schedule 9.4
Litigation

None, except as disclosed in the Borrower’s Quarterly Report on Form 10-Q for
the quarterly period ended June 30, 2016.

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Schedule 9.12
All Subsidiaries
 
Name
Jurisdiction of Organization
 
California Heavy Oil, Inc.
Delaware
 
California Resources Coles Levee, LLC
Delaware
 
California Resources Coles Levee, L.P.
Delaware
 
California Resources Elk Hills, LLC
Delaware
 
California Resources Long Beach, Inc.
Delaware
 
California Resources Petroleum Corporation
Delaware
 
California Resources Production Corporation
Delaware
 
California Resources Tidelands, Inc.
Delaware
 
California Resources Wilmington, LLC
Delaware
 
CRC Construction Services, LLC
Delaware
 
CRC Marketing, Inc.
Delaware
 
CRC Services, LLC
Delaware
 
Elk Hills Power, LLC
Delaware
 
Socal Holding, LLC
Delaware
 
Southern San Joaquin Production, Inc.
Delaware
 
Thums Long Beach Company
Delaware
 
Tidelands Oil Production Company
Texas
 
Felix Oil Company
California
 
Lomita Gasoline Company, Inc.
California
 
Monument Production, Inc.
California
 
Tenby, Inc.
California

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-SC1:4192491.4
Schedule 10.9
Post-Closing Actions
Within thirty (30) days of the Escrow Release Date, the Borrower shall have
delivered to the Administrative Agent copies of insurance certificates
evidencing the insurance required to be maintained by the Borrower and its
Subsidiaries pursuant to Section 10.3 and cause each of its insurance policies
to be endorsed or otherwise amended to the extent required by and in accordance
with the terms of Section 10.3.

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Schedule 11.1
Effective Date Indebtedness

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Schedule 11.2
Effective Date Liens

Lien granted by California Resources Elk Hills, LLC, in favor of Chevron North
America Exploration and Production Company, in respect of oil and gas
interests.Schedule 11.4 to Credit Agreement

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Schedule 11.4
Scheduled Dispositions

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-
Schedule 11.5
Effective Date Investments

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-
Schedule 11.8
Effective Date Negative Pledge Agreements

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Schedule 11.9
Effective Date Contractual Encumbrances

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Schedule 11.12
Effective Date Affiliate Transactions

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Schedule 14.2
Notice Addresses
Entity
Notice Address/Information
California Resources Corporation
California Resources Corporation
9200 Oakdale Avenue, Suite 900
Los Angeles, California 91311
Facsimile: (818) 661-3750
Attention: Chief Financial Officer
Website: http://www.crc.com

With a copy to:

California Resources Corporation
27200 Tourney Road, Suite 315,
Santa Clarita, California 91355.
Attention: Michael L. Preston
Email: Michael.Preston@crc.com
The Bank of New York Mellon Trust Company, N.A., as Administrative Agent
Stacie Row
2001 Bryan Street
Suite 1000
Dallas, Texas 75201
Telephone: (214) 468-5525
Facsimile: (214) 468-5539
Email: lpcoe-dallasagentsvcs@bnymellon.com

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The Bank of New York Mellon Trust Company, N.A., as Collateral Agent
Raymond Torres
Vice President, The Bank of New York Mellon Trust Company, N.A.
Global Corporate Trust, Corporate Unit,
400 South Hope Street, Suite 500
Los Angeles, CA 90071
Telephone: (213) 630-6175
Facsimile: (213) 630-6298
Email: raymond.torres@bnymellon.com

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EXHIBIT A

FORM OF NOTICE OF BORROWING
[Letterhead of Borrower]
[Date] Date of Notice of Borrowing: To be submitted (A) prior to 1:00 p.m. (New
York City time) at least two Business Days’ prior to each Borrowing of Loans if
such Loans are to be made on the Effective Date initially as LIBOR Loans; (B)
prior to 1:00 p.m. (New York City time) at least three Business Days’ prior to
each Borrowing of Loans if such Loans are to be made after the Effective Date
initially as LIBOR Loans; or (C) prior to 1:00 p.m. (New York City time) on the
date of each Borrowing of Loans that are to be ABR Loans.
The Bank of New York Mellon Trust Company, N.A.
as Administrative Agent and Collateral Agent
Re: California Resources Corporation Notice of Borrowing
Ladies and Gentlemen:
This Notice of Borrowing is delivered to you pursuant to Section 2.4 of that
certain Credit Agreement, dated as of August 12, 2016 (as amended, restated,
supplemented or otherwise modified from time to time, the “Credit Agreement”),
by and among California Resources Corporation, a Delaware corporation (the
“Borrower”), the lenders from time to time party thereto (the “Lenders”),
Goldman Sachs Bank USA, as lead arranger and bookrunner, and The Bank of New
York Mellon Trust Company, N.A., as Administrative Agent and Collateral Agent
(such terms and each other capitalized term used but not defined herein having
the meaning provided in Article I of the Credit Agreement).
The Borrower hereby requests that a Loan be extended as follows:
Aggregate amount of the requested Loan is $[ ];
Date of such Borrowing is [ ], 201[ ];
Requested Borrowing is to be [an ABR Loan][a LIBOR Loan];
In the case of a LIBOR Loan, the initial Interest Period applicable thereto is [
]; If no Interest Period is selected, the Borrower shall be deemed to have
selected an Interest Period of one month’s duration.
Location and number of the Borrower’s account to which funds are to be disbursed
is as follows:
[ ]
[ ]
[ ]
[ ]
[ ]

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IN WITNESS WHEREOF, the undersigned has duly executed this Notice of Borrowing
by its authorized representative as of the day and year first above written.

CALIFORNIA RESOURCES CORPORATION
 
 
By:
 
 
Name:
 
 
Title:
 

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Exhibit B
FORM OF GUARANTEE

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FORM OF GUARANTEE

______________________________________________________________________________

GUARANTEE

made by

each of the Guarantors
from time to time party hereto

in favor of

THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A.,
as Collateral Agent

Dated as of [_______ __], 2016

______________________________________________________________________________

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Table of Contents
 
 
 
Page

SECTION I Definitions
1

1.1

Defined Terms
1

SECTION II Guarantee
2

2.1

Guarantee
2

2.2

Right of Contribution
3

2.3

Right of Set-off
3

2.4

No Subrogation
4

2.5

Amendments, etc. with respect to the Obligations; Waiver of Rights
4

2.6

Guarantee Absolute and Unconditional
5

2.7

Reinstatement
5

2.8

Payments
6

SECTION III Representations and Warranties
6

3.1

Representations and Warranties
6

SECTION IV Covenants
6

4.1

Covenants
6

4.2

Authority of Collateral Agent
6

SECTION V Miscellaneous
7

5.1

Notices
7

5.2

Survival of Representations and Warranties
7

5.3

Counterparts
7

5.4

Severability
7

5.5

Integration
7

5.6

Section Headings
7

5.7

GOVERNING LAW
7

5.8

Submission to Jurisdiction; Waivers
8

5.9

Acknowledgments
8

5.10

WAIVERS OF JURY TRIAL
9

5.11

Amendments in Writing; No Waiver; Cumulative Remedies
9

5.12

Successors and Assigns
9

5.13

Additional Obligors
9

5.14

Termination or Release
9

5.15

Collateral Agent Rights, Protections and Immunities
10

5.16

First Lien Intercreditor Agreement Controls
10

 
 
 
Annex:
 
 
 
 
 
A.

Assumption Agreement

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GUARANTEE
GUARANTEE, dated as of [______ __], 2016 (this “Guarantee”), is made by each of
the Subsidiaries of the Borrower that is a signatory hereto (each of the
signatories hereto, together with any other Subsidiary of the Borrower that
becomes a party hereto from time to time after the date hereof, each,
individually a “Guarantor” and, collectively, the “Guarantors”), in favor of THE
BANK OF NEW YORK MELLON TRUST COMPANY, N.A., as Collateral Agent (in such
capacity, together with its successors in such capacity, the “Collateral Agent”)
for the benefit of the Secured Parties.
WHEREAS, reference is made to that certain Credit Agreement, dated as of [•],
2016 (as amended, restated, supplemented or otherwise modified from time to
time, the “Credit Agreement”), among California Resources Corporation, a
Delaware corporation, (the “Borrower”), the banks, financial institutions and
other lending institutions or entities from time to time party thereto (the
“Lenders”), and The Bank of New York Mellon Trust Company, N.A., as
Administrative Agent and Collateral Agent;
WHEREAS, (a) pursuant to the Credit Agreement, among other things, (i) the
Lenders have severally agreed to make Loans upon the terms and subject to the
conditions set forth therein (the “Extensions of Credit”);
WHEREAS, each Guarantor is a Domestic Subsidiary of the Borrower;
WHEREAS, the proceeds of the Extensions of Credit will be used in part to enable
the Borrower to make valuable transfers to the Guarantors in connection with the
operation of their respective businesses;
WHEREAS, each Guarantor acknowledges that it will derive substantial direct and
indirect benefit from the making of the Extensions of Credit; and
WHEREAS, it is a condition precedent to the obligations of the Secured Parties
to make their respective Extensions of Credit to the Borrower that the
Guarantors shall have executed and delivered this Guarantee to the Collateral
Agent for the ratable benefit of the Secured Parties;
NOW, THEREFORE, in consideration of the premises and for other good and valuable
consideration, the receipt and adequacy of which are hereby acknowledged, and to
induce the Collateral Agent and the Lenders to enter into the Credit Agreement
and the Lenders to make the Extensions of Credit to the Borrower under the
Credit Agreement, the Guarantors hereby agree with the Collateral Agent, for the
ratable benefit of the Secured Parties, as follows:
SECTION I
DEFINITIONS

1.1    Defined Terms.

(a) Unless otherwise defined herein, each term defined in the Credit Agreement
and used herein (including terms used in the preamble and recitals hereto) shall
have the meaning given to it in the Credit Agreement.

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(b) The rules of construction and other interpretive provisions specified in
Sections 1.2, 1.3, 1.5 1.6 and 1.7 of the Credit Agreement shall apply to this
Guarantee, including terms defined in the preamble and recitals hereto.
(c) As used herein, “Obligations” shall have the meaning given such term in the
Credit Agreement; provided that references herein to (a) the Obligations of the
Borrower shall refer to the Obligations (as defined in the Credit Agreement),
and (b) the Obligations of any Guarantor shall refer to such Guarantor’s
Guarantor Obligations.
(d) As used herein, “Guaranteed Transaction Document” means the Credit
Documents.
(e) As used herein, “Guarantor Obligations” means, with respect to any
Guarantor, all Obligations (as defined in the Credit Agreement) of such
Guarantor which may arise under or in connection with the Guarantee and any
other Security Document to which such Guarantor is a party.
(f) As used herein, “Termination Date” means the date on which all Obligations
are paid in full (other than contingent indemnification obligations not then
due).

SECTION II
GUARANTEE

2.1    Guarantee.

(a) Subject to the provisions of Section 2.1(b), each of the Guarantors hereby,
jointly and severally, unconditionally and irrevocably, guarantees to the
Collateral Agent, for the ratable benefit of the Secured Parties, the prompt and
complete payment and performance when due (whether at the stated maturity, by
acceleration or otherwise) of the Obligations (including any extensions,
modifications, substitutions, amendments and renewals of any or all of such
Obligations).

(b) Anything herein or in any other Guaranteed Transaction Document to the
contrary notwithstanding, the maximum liability of each Guarantor hereunder and
under the other Guaranteed Transaction Documents shall in no event exceed the
amount which can be guaranteed by such Guarantor under the Bankruptcy Code or
any applicable federal and state Requirements of Law relating to fraudulent
conveyances, fraudulent transfers or the insolvency of debtors.

(c) To the extent that the Borrower would be required to make payments pursuant
to Section 14.5 of the Credit Agreement, each Guarantor further agrees to pay
any and all expenses (including without limitation, all reasonable fees and
disbursements of counsel) that may be paid or incurred by the Collateral Agent
or any other Secured Party in enforcing, or obtaining advice of counsel in
respect of, any rights with respect to, or collecting, any or all of the
Obligations and/or enforcing any rights with respect to, or collecting against,
such Guarantor under this Guarantee. This Guarantee shall remain in full force
and effect until the Termination Date, notwithstanding that from time to time
prior thereto no amounts may be outstanding under the Guaranteed Transaction
Documents.

(d) Each Guarantor agrees that the Obligations may at any time and from time to
time exceed the amount of the liability of such Guarantor hereunder without
impairing this Guarantee or affecting the rights and remedies of the Collateral
Agent or any other Secured Party hereunder.

(e) No payment or payments made by the Borrower, any of the Guarantors, any
other guarantor or any other Person or received or collected by the Collateral
Agent or any other Secured Party from the Borrower, any Guarantor, any other
guarantor or any other Person by virtue of any action or proceeding or any
set-off or appropriation or application at any time or from time to time in
reduction

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of, or in payment of, the Obligations shall be deemed to modify, reduce, release
or otherwise affect the liability of any Guarantor hereunder, which shall,
notwithstanding any such payment or payments (other than payments made by the
Borrower or such Guarantor in respect of the Obligations or payments received or
collected from such Guarantor in respect of the Obligations), remain liable for
the Obligations up to the maximum liability of such Guarantor hereunder until
the Termination Date.

(f) Each Guarantor agrees that whenever, at any time, or from time to time, it
shall make any payment to the Collateral Agent or any other Secured Party on
account of its liability hereunder, it will notify the Collateral Agent in
writing that such payment is made under this Guarantee for such purpose.

2.2 Right of Contribution. Each Guarantor hereby agrees that to the extent that
a Guarantor shall have paid more than its proportionate share of any payment
made hereunder (including by way of set-off rights being exercised against it),
such Guarantor shall be entitled to seek and receive contribution from and
against any other Guarantor hereunder who has not paid its proportionate share
of such payment. Each Guarantor’s right of contribution shall be subject to the
terms and conditions of Section 2.4. The provisions of this Section 2.2 shall in
no respect limit the obligations and liabilities of any Guarantor to the
Collateral Agent and the other Secured Parties, and each Guarantor shall remain
liable to the Collateral Agent and the other Secured Parties for the full amount
guaranteed by such Guarantor hereunder.

2.3 Right of Set-off. In addition to any rights and remedies of the Secured
Parties provided by applicable Requirements of Law, each Guarantor hereby
irrevocably authorizes each Secured Party at any time and from time to time
following the occurrence and during the continuance of any Event of Default,
without notice to such Guarantor or any other Guarantor, any such notice being
expressly waived by each Guarantor, upon any amount becoming due and payable by
such Guarantor hereunder (whether at stated maturity, by acceleration or
otherwise), to set-off and appropriate and apply against such amount any and all
deposits (general or special, time or demand, provisional or final, but
excluding deposits held by such Guarantor as a fiduciary for others), in any
currency, and any other credits, indebtedness or claims, in any currency, in
each case whether direct or indirect, absolute or contingent, matured or
unmatured, at any time held or owing by such Secured Party to or for the credit
or the account of such Guarantor under any Guaranteed Transaction Document. Each
Secured Party shall notify such Guarantor and the Collateral Agent promptly of
any such set-off and the appropriation and application made by such Secured
Party; provided that the failure to give such notice shall not affect the
validity of such set-off and appropriation and application.

2.4 No Subrogation. Notwithstanding any payment or payments made by any of the
Guarantors hereunder or any set-off or appropriation or application of funds of
any of the Guarantors by any Secured Party, no Guarantor shall be entitled to be
subrogated to any of the rights of the Collateral Agent or any other Secured
Party against the Borrower or any other Guarantor or any collateral security or
guarantee or right of offset held by any Secured Party for the payment of the
Obligations until the Termination Date, nor shall any Guarantor seek or be
entitled to seek any contribution or reimbursement from the Borrower or any
other Guarantor in respect of payments made by such Guarantor hereunder until
the Termination Date. If any amount shall be paid to any Guarantor on account of
such subrogation rights at any time prior to the Termination Date, such amount
shall be held by such Guarantor in trust for the Collateral Agent and the other
Secured Parties, segregated from other funds of such Guarantor, and shall,
forthwith upon receipt by such Guarantor, be turned over to the Collateral Agent
in the exact form received by such Guarantor (duly indorsed by such Guarantor to
the Collateral Agent, if required), to be applied against the Obligations,
whether matured or unmatured, in such order as the Collateral Agent may
determine.

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2.5 Amendments, etc. with respect to the Obligations; Waiver of Rights. Except
for termination of a Guarantor’s obligations hereunder as provided in Section
5.14, each Guarantor shall remain obligated hereunder notwithstanding that,
without any reservation of rights against any Guarantor and without notice to or
further assent by any Guarantor: (a) any demand for payment of any of the
Obligations made by the Collateral Agent or any other Secured Party may be
rescinded by such party and any of the Obligations continued; (b) the
Obligations, or the liability of any other party upon or for any part thereof,
or any collateral security or guarantee therefor or right of offset with respect
thereto, may, from time to time, in whole or in part, be renewed, extended,
amended, modified, accelerated, compromised, waived, surrendered or released by
the Collateral Agent or any other Secured Party (with the consent of the
applicable Credit Parties where required by the terms hereof or thereof); (c)
the Credit Agreement and the other Guaranteed Transaction Documents and any
other documents executed and delivered in connection therewith may be amended,
modified, waived, supplemented or terminated, in whole or in part, in accordance
with the terms of the applicable documents; and (d) any collateral security,
guarantee or right of offset at any time held by the Collateral Agent or any
other Secured Party for the payment of the Obligations may be sold, exchanged,
waived, surrendered or released. Neither the Collateral Agent nor any other
Secured Party shall have any obligation to protect, secure, perfect or insure
any Lien at any time held by it as security for the Obligations or for this
Guarantee or any property subject thereto. When making any demand hereunder
against any of the Guarantors, the Collateral Agent or any other Secured Party
may, but shall be under no obligation to, make a similar demand on the Borrower
or any other Guarantor or guarantor, and any failure by the Collateral Agent or
any other Secured Party to make any such demand or to collect any payments from
the Borrower or any such other Guarantor or guarantor or any release of the
Borrower or such other Guarantor or guarantor shall not relieve any of the
Guarantors in respect of which a demand or collection is not made or any of the
Guarantors not so released of their several obligations or liabilities
hereunder, and shall not impair or affect the rights and remedies, express or
implied, or as a matter of law, of the Collateral Agent or any other Secured
Party against any of the Guarantors. For the purposes hereof “demand” shall
include the commencement and continuance of any legal proceedings.

2.6 Guarantee Absolute and Unconditional. Each Guarantor waives any and all
notice of the creation, contraction, incurrence, renewal, extension, amendment,
waiver or accrual of any of the Obligations and notice of or proof of reliance
by the Collateral Agent or any other Secured Party upon this Guarantee or
acceptance of this Guarantee, the Obligations, and any of them, shall
conclusively be deemed to have been created, contracted or incurred, or renewed,
extended, amended, waived or accrued, in reliance upon this Guarantee. All
dealings between the Borrower and any of the Guarantors, on the one hand, and
the Collateral Agent and the other Secured Parties, on the other hand, likewise
shall be conclusively presumed to have been had or consummated in reliance upon
this Guarantee. To the fullest extent permitted by applicable Requirement of
Law, each Guarantor waives diligence, presentment, protest, demand for payment
and notice of default or nonpayment to, or upon, the Borrower or any other
Guarantor with respect to the Obligations. Each Guarantor understands and agrees
that this Guarantee shall be construed as a continuing, absolute and
unconditional guarantee of payment without regard to (a) the validity,
regularity or enforceability of the Credit Agreement or any other Guaranteed
Transaction Document, any of the Obligations or any other collateral security
therefor or guarantee or right of offset with respect thereto at any time or
from time to time held by the Collateral Agent or any other Secured Party, (b)
any defense, set-off or counterclaim (other than a defense of payment or
performance) which may at any time be available to or be asserted by the
Borrower against the Collateral Agent or any other Secured Party, or (c) any
other circumstance whatsoever (with or without notice to or knowledge of the
Borrower or such Guarantor) which constitutes, or might be construed to
constitute, an equitable or legal discharge of the Credit Parties for the
Obligations, or of such Guarantor under this Guarantee, in

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bankruptcy or in any other instance. When pursuing its rights and remedies
hereunder against any Guarantor, the Collateral Agent and any other Secured
Party may, but shall be under no obligation to, pursue such rights and remedies
as it may have against the Borrower or any other Person or against any
collateral security or guarantee for the Obligations or any right of offset with
respect thereto, and any failure by the Collateral Agent or any other Secured
Party to pursue such other rights or remedies or to collect any payments from
the Borrower or any such other Person or to realize upon any such collateral
security or guarantee or to exercise any such right of offset, or any release of
the Borrower or any such other Person or any such collateral security, guarantee
or right of offset, shall not relieve such Guarantor of any liability hereunder,
and shall not impair or affect the rights and remedies, whether express, implied
or available as a matter of law, of the Collateral Agent and the other Secured
Parties against such Guarantor. Each Guarantor acknowledges that it will receive
substantial direct and indirect benefits from financing arrangements
contemplated by the Guaranteed Transaction Documents and the waivers set forth
herein are knowingly made in contemplation of such benefits. This Guarantee
shall remain in full force and effect and be binding in accordance with and to
the extent of its terms upon each Guarantor and the successors and assigns
thereof, and shall inure to the benefit of the Collateral Agent and the other
Secured Parties, and their respective successors, indorses, transferees and
assigns, until the Termination Date, notwithstanding that from time to time any
Guaranteed Transaction Documents may be free from any Obligations. A Guarantor
shall automatically be released from its obligations hereunder and the Guarantee
of such Guarantor shall be automatically released under the circumstances
described in Section 14.17 of the Credit Agreement.

2.7 Reinstatement. This Guarantee shall continue to be effective, or be
reinstated, as the case may be, if at any time payment, or any part thereof, of
any of the Obligations is rescinded or must otherwise be restored or returned by
the Collateral Agent or any other Secured Party upon the insolvency, bankruptcy,
dissolution, liquidation or reorganization of the Borrower or any Guarantor, or
upon or as a result of the appointment of a receiver, intervenor or conservator
of, or trustee or similar officer for, the Borrower or any Guarantor or any
substantial part of its property, or otherwise, all as though such payments had
not been made.

2.8 Payments. Each Guarantor hereby guarantees that payments hereunder will be
paid to the Collateral Agent without set-off or counterclaim in Dollars at the
office of the Collateral Agent located at the address specified in Section 14.2
of the Credit Agreement or such other office as may be specified from time to
time by the Collateral Agent as its funding office by written notice to the
Borrower and the Lenders. Each Guarantor agrees that the provisions of Sections
5.4 and 14.20 of the Credit Agreement shall apply to such Guarantor’s
obligations under this Guarantee.

SECTION III
REPRESNETATIONS AND WARRANTIES

3.1 Representations and Warranties. Each Guarantor hereby represents and
warrants that, in the case of such Guarantor, the representations and warranties
set forth in Article IX of the Credit Agreement as they relate to such Guarantor
or to the other Credit Documents to which such Guarantor is a party, each of
which is hereby incorporated herein by reference, are true and correct in all
material respects, and the Collateral Agent and each Secured Party shall be
entitled to rely on each of them as if they were fully set forth herein.

Each Guarantor agrees that the foregoing representations and warranties shall be
deemed to have been made by such Guarantor on and as of the date of each Credit
Event (except where such representations

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and warranties expressly relate to an earlier date, in which case such
representations and warranties shall have been true and correct in all material
respects as of such earlier date).
SECTION IV
COVENANTS
4.1 Covenants. Each Guarantor hereby covenants and agrees with the Collateral
Agent and each other Secured Party that, from and after the date of this
Guarantee until the Termination Date, such Guarantor shall take, or shall
refrain from taking, as the case may be, each action that is necessary to be
taken or not taken, as the case may be, so that no Default or Event of Default
is caused by the failure to take such action or to refrain from taking such
action by such Guarantor or any of its Subsidiaries.

4.2 Authority of Collateral Agent. Each Guarantor acknowledges that the rights
and responsibilities of the Collateral Agent under this Guarantee with respect
to any action taken by the Collateral Agent or the exercise or non-exercise by
the Collateral Agent of any option, right, request, judgment or other right or
remedy provided for herein or resulting or arising out of this Guarantee shall,
as between the Collateral Agent and the other Secured Parties, be governed by
the Credit Agreement and by such other agreements with respect thereto as may
exist from time to time among them, but, as between the Collateral Agent and
such Guarantor, the Collateral Agent shall be conclusively presumed to be acting
as agent for the Secured Parties with full and valid authority so to act or
refrain from acting in the manner set forth in Article XIII of the Credit
Agreement, and no Guarantor shall be under any obligation, or entitlement, to
make any inquiry respecting such authority.

SECTION V
MISCELLANEOUS

5.1 Notices. All notices, requests and demands pursuant hereto shall be made in
accordance with Section 14.2 of the Credit Agreement. All communications and
notices hereunder to any Guarantor shall be given to it in care of the Borrower
at the Borrower’s address set forth in Section 14.2 of the Credit Agreement.

5.2 Survival of Representations and Warranties. All representations and
warranties made hereunder, in the other Credit Documents and in any document,
certificate or statement delivered pursuant hereto or in connection herewith
shall survive the execution and delivery of this Guarantee and the making of the
Loans.

5.3 Counterparts. This Guarantee may be executed by one or more of the parties
to this Guarantee on any number of separate counterparts (including by facsimile
or other electronic transmission (e.g. a “pdf” or a “tif”)), and all of said
counterparts taken together shall be deemed to constitute one and the same
instrument. A set of the copies of this Guarantee signed by all the parties
shall be lodged with the Borrower and the Collateral Agent.

5.4 Severability. Any provision of this Guarantee that is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction. The parties hereto shall endeavor in good-faith negotiations
to replace the invalid, illegal or unenforceable provisions with valid
provisions the economic effect of which comes as close as possible to that of
the invalid, illegal or unenforceable provisions.

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5.5 Integration. This Guarantee and the other Credit Documents represent the
agreement of the Guarantors, the Collateral Agent and the Lenders with respect
to the subject matter hereof and thereof, and there are no promises,
undertakings, representations or warranties by the Guarantors, any Agent nor any
Lender relative to subject matter hereof not expressly set forth or referred to
herein or in the other Credit Documents.

5.6 Section Headings. The Section headings used in this Guarantee are for
convenience of reference only and are not to affect the construction hereof or
be taken into consideration in the interpretation hereof.

5.7 GOVERNING LAW. THIS GUARANTEE AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES
HEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE
WITH, THE LAW OF THE STATE OF NEW YORK.

5.8 Submission to Jurisdiction; Waivers. Each Guarantor hereto hereby
irrevocably and unconditionally:

(a) submits for itself and its property in any legal action or proceeding
relating to this Guarantee and the other Guaranteed Transaction Documents to
which it is a party, or for recognition and enforcement of any judgment in
respect thereof, to the exclusive general jurisdiction of the courts of the
State of New York, the courts of the United States of America for the Southern
District of New York and appellate courts from any thereof;

(b) consents that any such action or proceeding shall be brought in such courts
and waives any objection that it may now or hereafter have to the venue of any
such action or proceeding in any such court or that such action or proceeding
was brought in an inconvenient court and agrees not to plead or claim the same;

(c) agrees that service of process in any such action or proceeding may be
effected by mailing a copy thereof by registered or certified mail (or any
substantially similar form of mail), postage prepaid, to such Guarantor in care
of the Borrower at the Borrower’s address referred to in Section 5.1 or at such
other address of which the Collateral Agent shall have been notified pursuant
thereto;

(d) agrees that nothing herein shall affect the right to effect service of
process in any other manner permitted by Requirements of Law or shall limit the
right to sue in any other jurisdiction;

(e) waives, to the maximum extent not prohibited by law, any right it may have
to claim or recover in any legal action or proceeding referred to in this
Section 5.8 any special, exemplary, punitive or consequential damages; and

(f) agrees that a final judgment in any 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.
5.9 Acknowledgments. Each Guarantor hereby acknowledges that:

(a)it has been advised by counsel in the negotiation, execution and delivery of
this Guarantee, the transactions contemplated hereby and the other Guaranteed
Transaction Documents;

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(b)it will not assert any claim against the Collateral Agent or any other
Secured Party based on an alleged breach of fiduciary duty by such party in
connection with this Guarantee, the transactions contemplated hereby or the
other Guaranteed Transaction Documents; and
(c)no joint venture is created hereby or by the other Guaranteed Transaction
Documents or otherwise exists by virtue of the transactions contemplated hereby
among the Collateral Agent and the other Secured Parties or among the Borrower,
the Collateral Agent and the other Secured Parties.

5.10 WAIVERS OF JURY TRIAL. EACH PARTY HERETO HEREBY IRREVOCABLY AND
UNCONDITIONALLY WAIVES TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING
TO THIS GUARANTEE OR ANY OTHER CREDIT DOCUMENT AND FOR ANY COUNTERCLAIM THEREIN.

5.11 Amendments in Writing; No Waiver; Cumulative Remedies.

(a) None of the terms or provisions of this Guarantee may be waived, amended,
supplemented or otherwise modified except by a written instrument executed by
the affected Guarantor(s) and the Collateral Agent in accordance with Section
14.1 of the Credit Agreement.

(b) Neither the Collateral Agent nor any other Secured Party shall by any act
(except by a written instrument pursuant to Section 5.11(a)), delay, indulgence,
omission or otherwise be deemed to have waived any right or remedy hereunder or
to have acquiesced in any Default or Event of Default or in any breach of any of
the terms and conditions hereof. No failure to exercise and no delay in
exercising, on the part of the Collateral Agent or any other Secured Party, any
right, remedy, power or privilege hereunder shall operate as a waiver thereof;
nor shall any single or partial exercise of any right, remedy, power or
privilege hereunder preclude any other or further exercise thereof or the
exercise of any other right, remedy, power or privilege. A waiver by the
Collateral Agent or any other Secured Party of any right or remedy hereunder on
any one occasion shall not be construed as a bar to any right or remedy which
the Collateral Agent or any Secured Party would otherwise have on any future
occasion.

(c) The rights, remedies, powers and privileges herein provided are cumulative,
may be exercised singly or concurrently and not exclusive of any other rights,
remedies, powers and privileges provided by law.

5.12 Successors and Assigns. This Guarantee shall be binding upon the successors
and assigns of each Guarantor and shall inure to the benefit of the Collateral
Agent and the Secured Parties and their successors and assigns.

5.13 Additional Obligors. Each Subsidiary of the Borrower that is required to
become a party to this Guarantee pursuant to Section 10.10 of the Credit
Agreement shall become a Guarantor, with the same force and effect as if
originally named as a Guarantor herein, for all purposes of this Guarantee upon
execution and delivery by such Subsidiary of a supplement in the form of Annex A
hereto or such other form reasonably satisfactory to the Collateral Agent (each
an “Assumption Agreement”). The execution and delivery of any instrument adding
an additional Guarantor as a party to this Guarantee shall not require the
consent of any other Guarantor hereunder. The rights and obligations of each
Guarantor hereunder shall remain in full force and effect notwithstanding the
addition of any new Guarantor as a party to this Guarantee

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5.14 Termination or Release.

(a) This Guarantee shall terminate on the Termination Date.

(b) A Guarantor shall automatically be released from its obligations hereunder
upon the consummation of any transaction permitted by the Credit Agreement as a
result of which such Guarantor ceases to be a Subsidiary.

(c) A Guarantor shall automatically be released from its obligations hereunder
and the Guarantee of such Guarantor shall be automatically released under the
circumstances described in Section 14.17 of the Credit Agreement.

(d) In connection with any termination or release, the Collateral Agent shall
execute and deliver to any Guarantor, at such Guarantor’s expense, all documents
that such Guarantor shall reasonably request to evidence such termination or
release. Any execution and delivery of documents pursuant to this Section 5.14
shall be without recourse to or warranty by the Collateral Agent.

5.15 Collateral Agent Rights, Protections and Immunities. In acting under or by
virtue of the Guarantee, the Collateral Agent shall have the rights, protections
and immunities granted to it under the Credit Agreement, all of which are
incorporated by reference herein, mutatis mutandis.

5.16 First Lien Intercreditor Agreement Controls.

(a) Reference is made to the Pari Passu Intercreditor Agreement, dated as of the
Escrow Release Date, between JPMorgan Chase Bank, N.A., as First-Out Agent (as
defined therein), and The Bank of New York Mellon, as Second-Out Agent (as
defined therein) and acknowledged and agreed by California Resources Corporation
and certain of its subsidiaries (as amended, supplemented, amended and restated
or otherwise modified and in effect from time to time, the “First Lien
Intercreditor Agreement”). Each Secured Party, by accepting the benefits of the
guarantees provided hereby, (i) agrees (or is deemed to agree) that it will be
bound by, and will take no actions contrary to, the provisions of the First Lien
Intercreditor Agreement, (ii) authorizes (or is deemed to authorize) the
Collateral Agent on behalf of such Person to enter into, and perform under, the
First Lien Intercreditor Agreement and (iii) acknowledges (or is deemed to
acknowledge) that a copy of the First Lien Intercreditor Agreement was
delivered, or made available, to such Secured Party.

(b) Notwithstanding any other provision contained herein, this Guarantee and the
rights, remedies, duties and obligations provided for herein are subject in all
respects to the provisions of the First Lien Intercreditor Agreement. In the
event of any conflict or inconsistency between the provisions of this Guarantee
and the First Lien Intercreditor Agreement, the provisions of the First Lien
Intercreditor Agreement shall control.

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

[__________________]
as a Guarantor

By: ___________________________
Name:
Title:

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Acknowledged and Consented to:

THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A.,
as Collateral Agent
 
By:
 
 
 
Name:
 
Title:

   

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ANNEX A
TO GUARANTEE

FORM OF ASSUMPTION AGREEMENT
ASSUMPTION AGREEMENT, dated as of ________________, 201__, is made by
______________________________, a ______________ (the “Additional Obligor”), in
favor of THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A., as Collateral Agent
(in such capacity, the “Collateral Agent”) for the banks and other financial
institutions (the “Lenders”) parties to the Credit Agreement referred to below
and all other Secured Parties.
R E C I T A L S
A.    Reference is made to that certain Credit Agreement, dated as of [•], 2016
(the “Credit Agreement”) among California Resources Corporation, a Delaware
corporation, (the “Borrower”), the Lenders from time to time party thereto, and
The Bank of New York Mellon Trust Company, N.A., as Administrative Agent and
Collateral Agent.
B.     In connection with the Credit Agreement, certain Subsidiaries (other than
the Additional Obligor) have entered into the Guarantee, dated as of even date
with the Credit Agreement (as amended, supplemented or otherwise modified from
time to time, the “Guarantee”) in favor of the Collateral Agent and the other
Secured Parties.
C.    Capitalized terms used herein and not otherwise defined herein (including
in the preamble and the recitals hereto) shall have the meanings assigned to
such terms in the Guarantee or the Credit Agreement, as applicable. The rules of
construction and the interpretive provisions specified in Section 1.1(b)) of the
Guarantee shall apply to this Assumption Agreement, including terms defined in
the preamble and recitals hereto.
D.    The Guarantors have entered into the Guarantee in order to induce the
Collateral Agent and the Lenders to enter into the Credit Agreement and to
induce the Lenders to make their respective Extensions of Credit to the Borrower
under the Credit Agreement.
E.    Section 5.13 of the Guarantee provides that each Subsidiary of the
Borrower that is required to become a party to the Guarantee pursuant to Section
10.10 of the Credit Agreement and the terms thereof shall become a Guarantor,
with the same force and effect as if originally named as a Guarantor therein,
for all purposes of the Guarantee upon execution and delivery by such Subsidiary
of an instrument in the form of this Assumption Agreement. The Additional
Obligor is executing this Assumption Agreement in accordance with the
requirements of the Guarantee to become a Guarantor under the Guarantee in order
to induce the Lenders to make additional Extensions of Credit to the Borrower
under the Credit Agreement and as consideration for Extensions of Credit
previously made.
F.    Now, therefore, it is agreed:
SECTION 1.    By executing and delivering this Assumption Agreement, the
Additional Obligor, as provided in Section 5.13 of the Guarantee, hereby becomes
a party to the Guarantee as a Guarantor thereunder with the same force and
effect as if originally named therein as a Guarantor and, without

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limiting the generality of the foregoing, hereby expressly agrees to all the
terms and provisions of the Guarantee applicable to it as a Guarantor thereunder
and expressly guarantees, jointly and severally, to the Secured Parties the
Obligations. The Additional Obligor hereby represents and warrants that each of
the representations and warranties contained in Section 3 of the Guarantee is
true and correct on and as of the date hereof (after giving effect to this
Assumption Agreement) as if made on and as of such date (except where such
representations and warranties expressly relate to an earlier date, in which
case such representations and warranties shall have been true and correct in all
material respects as of such earlier date). Each reference to a Guarantor in the
Guarantee shall be deemed to include each Additional Obligor. The Guarantee is
hereby incorporated herein by reference.
SECTION 2.    Each Additional Obligor represents and warrants to the Collateral
Agent and the other Secured Parties that this Assumption 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, subject
to the effects of bankruptcy, insolvency, fraudulent conveyance, reorganization
and other similar laws relating to or affecting creditors’ rights generally and
general principles of equity (whether considered in a proceeding in equity or
law).
SECTION 3.    This Assumption Agreement may be executed by one or more of the
parties to this Assumption Agreement on any number of separate counterparts
(including by facsimile or other electronic transmission (e.g. a “pdf” or a
“tif”)), and all of said counterparts taken together shall be deemed to
constitute one and the same instrument. A set of the copies of this Assumption
Agreement signed by all the parties shall be lodged with the Borrower and the
Collateral Agent. This Assumption Agreement shall become effective as to each
Additional Obligor when the Collateral Agent shall have received counterparts of
this Assumption Agreement that, when taken together, bear the signatures of such
Additional Obligor and the Collateral Agent.
SECTION 4.    Except as expressly supplemented hereby, the Guarantee shall
remain in full force and effect.
SECTION 5.    THIS ASSUMPTION AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE
PARTIES HEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN
ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
SECTION 6.    Any provision of this Assumption Agreement that is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof and of the Guarantee, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction. The parties hereto shall
endeavor in good-faith negotiations to replace the invalid, illegal or
unenforceable provisions with valid provisions the economic effect of which
comes as close as possible to that of the invalid, illegal or unenforceable
provisions.

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SECTION 7.    All notices, requests and demands pursuant hereto shall be made in
accordance with Section 14.2 of the Credit Agreement. All communications and
notices hereunder to each Additional Obligor shall be given to it in care of the
Borrower at the Borrower’s address set forth in Section 14.2 of the Credit
Agreement.
IN WITNESS WHEREOF, the undersigned has caused this Assumption Agreement to be
duly executed and delivered by its duly Authorized Officer as of the date first
above written.
[NAME OF ADDITIONAL OBLIGOR],
as Guarantor
 
By:
 
 
 
Name:
 
Title:

   

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Acknowledged and Consented to:

THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A.,
as Collateral Agent
 
By:
 
 
 
Name:
 
Title:

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EXHIBIT C
FORM OF SECURITY AGREEMENT

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FIRST LIEN SECOND-OUT SECURITY AGREEMENT

from

CALIFORNIA RESOURCES CORPORATION,
and
each other Grantor
from time to time party hereto

in favor of

The Bank of New York Mellon Trust Company, N.A.,
as Collateral Agent

Dated as of [_], 2016
 

Reference is made to the FOSO Intercreditor Agreement described below. Each
Second-Out Secured Party, by accepting the benefits of the security provided
hereby, (i) agrees (or is deemed to agree) that it will be bound by, and will
take no actions contrary to, the provisions of the FOSO Intercreditor Agreement,
(ii) authorizes (or is deemed to authorize) the Collateral Agent on behalf of
such Person to enter into, and perform under, the FOSO Intercreditor Agreement
and (iii) acknowledges (or is deemed to acknowledge) that a copy of the FOSO
Intercreditor Agreement was delivered, or made available, to such Second-Out
Secured Party.
Notwithstanding any other provision contained herein, this Agreement, the Liens
created hereby and the rights, remedies, duties and obligations provided for
herein are subject in all respects to the provisions of the FOSO Intercreditor
Agreement. In the event of any conflict or inconsistency between the provisions
of this Agreement and the FOSO Intercreditor Agreement, the provisions of the
FOSO Intercreditor Agreement shall control.

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TABLE OF CONTENTS
 
 
 
Page
 
 
 
ARTICLE I
 
Definitions and References
 
 
 
 
Section 1.1
Definitions in FOSO Intercreditor Agreement
1
Section 1.2
Definitions in Second-Out Credit Agreement
1
Section 1.3
Definitions in the UCC, etc
2
Section 1.4
Definitions in this Agreement
2
Section 1.5
Rules of Construction; References and Titles
3
 
 
 
ARTICLE II
 
Security Interest
 
 
 
 
Section 2.1
Grant of Security Interest
4
Section 2.2
Obligations Secured
5
 
 
 
ARTICLE III
 
Representations and Warranties
 
 
 
 
Section 3.1
Representations and Warranties
5
ARTICLE IV
 
Covenants
 
Section 4.1
General Covenants Applicable to Collateral
7
Section 4.2
Covenants for Specified Types of Collateral
7
 
 
 
ARTICLE V
 
Remedies, Powers and Authorizations
 
 
 
 
Section 5.1
Normal Provisions Concerning the Collateral
9
Section 5.2
Event of Default Remedies
10
Section 5.3
Application of Proceeds
12
Section 5.4
Deficiency
13
Section 5.5
Investment Property and Other Pledged Equity
13
Section 5.6
Indemnity and Expenses
13
Section 5.7
Non-Judicial Remedies
14
Section 5.8
Limitation on Duty of the Collateral Agent in Respect of Collateral
14
Section 5.9
Appointment of Other Agents
15
Section 5.10
No Duty
15
 
 
 
ARTICLE VI
 
Miscellaneous
 
 
 
 
Section 6.1
Notices
15
Section 6.2
Amendments and Waivers
16
Section 6.3
Additional Grantors
16
Section 6.4
Preservation of Rights
16

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Section 6.5
Severability
16
Section 6.6
Survival
16
Section 6.7
Binding Effect and Assignment
16
Section 6.8
Release of Collateral; Termination
17
Section 6.9
Governing Law
17
Section 6.10
Final Agreement; Conflicts
17
Section 6.11
Counterparts; Facsimile
18
Section 6.12
FOSO Intercreditor Agreement Controls.
18
Section 6.13
Concerning the Collateral Agent
18
Section 6.14
Waiver of Jury Trial
19
Section 6.15
Acceptance by the Collateral Agent
19
 
 
 
Schedules and Exhibits
 
Schedule 1
Address for Notices and Jurisdiction of Organization
 
Schedule 2
Scheduled Collateral
 
 
 
 
Exhibit A
Form of Grantor Accession Agreement
 

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FIRST LIEN SECOND-OUT SECURITY AGREEMENT SECURITY AGREEMENT
This FIRST LIEN SECOND-OUT SECURITY AGREEMENT, dated as of [_], 2016 (this
“Agreement”), is made by California Resources Corporation, a Delaware
corporation (the “Borrower”) and each other Grantor party thereto in favor of
The Bank of New York Mellon Trust Company, N.A., as collateral agent (in such
capacity, together with its successors in such capacity, the “Collateral Agent”)
under the Second-Out Credit Agreement for the benefit of the Second-Out Secured
Parties.
WHEREAS, reference is made to that certain Credit Agreement, dated as of [_],
2016 (as amended, restated, supplemented or otherwise modified from time to
time, the “Second-Out Credit Agreement”), among the Borrower, the banks,
financial institutions and other lending institutions from time to time party
thereto (the “Second-Out Lenders”), and The Bank of New York Mellon Trust
Company, N.A., as Administrative Agent and Collateral Agent.
WHEREAS, pursuant to the terms, conditions and provisions of the Second-Out
Credit Agreement, the Second-Out Lenders have severally agreed to make term
loans to the Borrower upon the terms and subject to the conditions set forth
therein (collectively, the “Extensions of Credit”).
WHEREAS, the First-Out Agent (as defined in the FOSO Intercreditor Agreement)
and the Collateral Agent have entered into an intercreditor agreement, dated as
of the date hereof (the “FOSO Intercreditor Agreement”), setting forth the
respective rights and priorities of the First-Out Secured Parties and Second-Out
Secured Parties with respect to payments, rights in the Collateral granted under
this agreement, enforcement of remedies, bankruptcy issues and other customary
subordination and intercreditor provisions.
WHEREAS, each Grantor acknowledges that it will derive substantial direct and
indirect benefit from the making of the Extensions of Credit.
WHEREAS, in order to comply with the requirements of the Second-Out Credit
Agreement, the Grantors desire to grant to the Collateral Agent, for the ratable
benefit of the Second-Out Secured Parties, a security interest in the Collateral
and deliver this Agreement.
NOW, THEREFORE, in consideration of the premises and for other good and valuable
consideration, the receipt and adequacy of which are hereby acknowledged, and to
induce the Collateral Agent and the Second-Out Lenders to enter into the
Second-Out Credit Agreement and the Second-Out Lenders to make the Extensions of
Credit to the Borrower under the Second-Out Credit Agreement, the Grantors
hereby agree with the Collateral Agent, for the ratable benefit of the
Second-Out Secured Parties, as follows:
ARTICLE I
DEFINITIONS AND REFERENCES

Section 1.1    Definitions in FOSO Intercreditor Agreement. Capitalized terms
used herein and not otherwise defined have the respective meanings specified in
the FOSO Intercreditor Agreement.

Section 1.2    Definitions in Second-Out Credit Agreement. Terms used herein
that are not defined herein or in the FOSO Intercreditor Agreement, but that are
defined in the Second-Out Credit Agreement, have the meanings given to them in
the Second-Out Credit Agreement unless the context otherwise requires.

Section 1.3    Definitions in the UCC, etc. Terms used herein that are not
defined herein, in the FOSO Intercreditor Agreement or in the Second-Out Credit
Agreement, but that are defined in the UCC, have the meanings given to them in
the UCC unless the context otherwise requires. If such a term is defined in more
than

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one article of the UCC it shall have the meaning set forth in Article 9 thereof,
including but not limited to the following: Account, Chattel Paper, Commodity
Contract, Commercial Tort Claim, Deposit Account, Document, Equipment, General
Intangible, Instrument, Inventory, Investment Property, Letter of Credit, Letter
of Credit Right, Payment Intangible, Proceeds, Record, Securities Account,
Security, Security Entitlement, Supporting Obligation, Tangible Chattel Paper
and Uncertificated Security.

Section 1.4    Definitions in this Agreement. The following terms have the
following meanings:

“Agreement” has the meaning specified in the preamble.
“Borrower” has the meaning specified in the preamble.
“Collateral” means, with respect to any Grantor, all property described in
Section 2.1 in which such Grantor has any right, title or interest, excluding,
for the avoidance of doubt, Excluded Property. References to Collateral herein
with respect to a Grantor are intended to refer to Collateral in which such
Grantor has any right, title or interest and not to Collateral in which any
other Grantor has any right, title or interest.
“Collateral Agent” has the meaning specified in the preamble.
“Extensions of Credit” shall have the meaning assigned to such term in the
recitals.
“FOSO Intercreditor Agreement” has the meaning specified in the recitals.
“Grantor” means each Person granting a security interest in any Collateral
pursuant to this Agreement. References to “Grantor” in this Agreement are
intended to refer to each such Person as if such Person were the only grantor
pursuant to this Agreement, except:
(a)    that references to “any Grantor” are meant to refer to each Person that
is a Grantor,

(b)    that references to “the Grantors” are meant to refer collectively to all
Persons that are Grantors, and
(c)    as otherwise may be specifically set forth herein.

“Permitted Encumbrance” means a Lien permitted to be placed on the Collateral
under Section [11.2] of the Second-Out Credit Agreement.
“Restricted Person” means the Borrower or any Guarantor.
“Second-Out Credit Agreement” has the meaning specified in the recitals.
“Second-Out Credit Documents” has the meaning given to the term “Credit
Documents” in the Second-Out Credit Agreement.
“Second-Out Lenders” has the meaning specified in the recitals.
“Second-Out Obligations” has the meaning given to the term “Obligations” in the
Second-Out Credit Agreement.
“Second-Out Secured Parties” has the meaning given to the term “Secured Parties”
in the Second-Out Credit Agreement.
“Securities Act” means the Securities Act of 1933.

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“UCC” means the Uniform Commercial Code in effect in the State of New York from
time to time; provided that, if perfection or the effect of perfection or
non-perfection or the priority of any security interest in any Collateral is
governed by the Uniform Commercial Code as in effect in a jurisdiction other
than the State of New York, “UCC” means the Uniform Commercial Code as in effect
from time to time in such other jurisdiction for purposes of the provisions
hereof relating to such perfection, effect of perfection or non-perfection or
priority.
Section 1.5    Rules of Construction; References and Titles. 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:

(a)    Any definition of or reference to any agreement, instrument or other
document herein shall be construed as referring to such agreement, instrument or
other document as from time to time amended, restated, supplemented or otherwise
modified (subject to any restrictions on such amendments, supplements or
modifications set forth herein).

(b)    Unless otherwise specified, any reference herein to any Person shall be
construed to include such Person’s successors and assigns.

(c)    The words “herein,” “hereof” and “hereunder,” and words of similar
import, shall be construed to refer to this Agreement in its entirety and not to
any particular provision hereof.

(d)All references herein to Articles, Sections, Exhibits and Schedules shall be
construed to refer to Articles and Sections of, and Exhibits and Schedules to,
this Agreement.

(e)Any reference to any Law herein shall, unless otherwise specified, refer to
such law as amended, modified or supplemented from time to time.

(f)The words “asset” and “property” shall be construed to have the same meaning
and effect and to refer to any and all tangible and intangible assets and
properties, including cash, securities, accounts and contract rights.

(g)Except as specified otherwise, references to any document, instrument, or
agreement shall include:

(i)all exhibits, schedules, and other attachments thereto, and

(ii)all documents, instruments, or agreements issued or executed in replacement
thereof.

(h)A title appearing at the beginning of any subdivision is for convenience
only, does not constitute any part of such subdivision and shall be disregarded
in construing the language contained in such subdivision.

(i)The phrases “this Section” and “this subsection” and similar phrases refer
only to the section or subsection hereof in which such phrases occur.

(j)The word “or” is not exclusive, and the word “including” (in all of its
grammatical variations) means “including without limitation”.

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ARTICLE II
SECURITY INTEREST

Section 2.1    Grant of Security Interest. As collateral security for the
payment and performance of all Second-Out Obligations, Grantor hereby bargains,
sells, conveys, assigns, sets over, mortgages, pledges, hypothecates, transfers
and grants to the Collateral Agent for the ratable benefit of the Second-Out
Secured Parties a lien on and continuing security interest in all right, title
and interest of Grantor in, to and under the following property, whether now
owned or existing or at any time hereafter acquired by such Grantor or arising,
regardless of where located and howsoever Grantor’s interests therein arise,
whether by ownership, security interest, claim or otherwise:

(a)    all Accounts;

(b)    all books and records (including customer lists, marketing information,
credit files, price lists, operating records, vendor and supplier price lists,
land and title records, geological and geophysical records and data, reserve
engineering reports and data, computer software, computer hardware, computer
disks and tapes and other storage media, printouts and other materials and
records) pertaining to any Collateral or to any oil, gas or mineral properties
and interests;

(c)    all cash;

(d)    all Chattel Paper;

(e)    all Commodity Contracts;

(f)    all Commercial Tort Claims, including all Commercial Tort Claims that are
listed opposite Grantor’s name on Schedule 2, as in effect on the date hereof or
as hereafter modified pursuant to Section 4.2(e);

(g)    all Deposit Accounts, including all Deposit Accounts listed on Schedule
2;

(h)    all Documents;

(i)    all Equipment, all parts thereof, all accessions thereto, and all
replacements therefor;

(j)    all Fixtures;

(k)    all General Intangibles, including all Payment Intangibles;

(l)    all Goods;

(m)    all Instruments;

(n)    all Investment Property, and all dividends, distributions, return of
capital, interest, distributions, value, cash, instruments and other property
from time to time received, receivable or otherwise distributed in respect of or
in exchange for any Investment Property and all subscription warrants, rights or
options issued thereon or with respect thereto, including all Securities
Accounts listed on Schedule 2;

(o)    all Inventory;

(p)    all Letters of Credit and Letter of Credit Rights, including all Letter
of Credit Rights listed on Schedule 2;

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(q)    all Money, including all Money and property of any kind from time to time
in the possession or under the control of any Second-Out Secured Party;

(r)    all Securities Accounts and Securities Entitlements,

(s)    all Supporting Obligations; and

(t)    all substitutions, replacements, accessions, products, and proceeds
(including insurance proceeds, licenses, royalties, income, payments, claims,
damages and proceeds of suit) and to the extent not otherwise included, all
Proceeds and products of any and all of the foregoing.

Notwithstanding the foregoing, this Section 2.1 does not grant a security
interest in any Excluded Property.
Section 2.2    Obligations Secured.

(a)    The security interest created hereby in the Collateral secures the
payment and performance of all Second-Out Obligations.

(b)    Without limiting the generality of the foregoing, this Agreement secures,
as to Grantor, the payment of all amounts that constitute part of the Second-Out
Obligations and would be owed by any Restricted Person to any Second-Out Secured
Party under the Second-Out Credit Documents but for the fact that they are
unenforceable or not allowable due to the existence of a bankruptcy,
reorganization or similar proceeding involving a Restricted Person.

(c)    Notwithstanding any other provision of this Agreement, with respect to
any Grantor, the liability of such Grantor hereunder and under each other
Second-Out Credit Document to which it is a party shall be limited to the
maximum liability that such Grantor may incur without rendering this Agreement
and such other Second-Out Credit Documents subject to avoidance under Section
548 of the United States Bankruptcy Code or any comparable provision of any
applicable state or federal law. This subsection (c) shall not apply to the
Borrower.

ARTICLE III
REPRESENTATIONS AND WARRANTIES

Section 3.1    Representations and Warranties. Each Grantor represents and
warrants to the Second-Out Secured Parties as follows:

(a)    If Grantor is not the Borrower, each representation and warranty made by
the Borrower with respect to Grantor in any other Second-Out Credit Document is
correct in all material respects.

(b)    Grantor has and will have at all times the right, power and authority to
grant to the Collateral Agent as provided herein a security interest in the
Collateral, free and clear of any Lien, except for the Lien granted to the
Collateral Agent pursuant to this Agreement and Permitted Encumbrances.

(c)    Grantor has no Deposit Account as of the date hereof other than those
listed on Schedule 2.

(d)    Grantor has no Securities Account as of the date hereof other than those
listed on Schedule 2.
(e)    Grantor is the beneficiary of no Letter of Credit Right as of the date
hereof other than those listed on Schedule 2.

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(f)    Grantor is not aware of any Commercial Tort Claim that it may have as of
the date hereof other than those listed on Schedule 2.

(g)    Grantor is an entity of the type specified on Schedule 1 (or Schedule 1
to any security agreement supplement delivered by it pursuant to Section 6.3)
opposite its name and is organized under the laws of the jurisdiction specified
in such Schedule opposite its name, which is Grantor’s location for purposes of
UCC. Except as set forth on Schedule 1, within the past five years Grantor has
not conducted business under any name except the name in which it has executed
this Agreement, which is the exact name that appears in Grantor’s organizational
documents. Grantor’s organizational identification number, if any, is set forth
in Schedule 1.

(h)    No effective financing statement or other registration or instrument
similar in effect covering any Collateral is on file in any recording office
except any that have been filed in favor of the Collateral Agent relating to
this Agreement and any that has been filed to perfect or protect any Permitted
Encumbrance.

(i)    There is no condition precedent to the effectiveness of this Agreement
that has not been satisfied or waived.

(j)    Grantor, if other than the Borrower, has, independently and without
reliance upon any Second-Out Secured Party 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 Second-Out Credit Document
to which it is or is to be a party, and Grantor, if other than the Borrower, has
established adequate means of obtaining from each other Restricted Person on a
continuing basis information pertaining to, and is now and on a continuing basis
will be completely familiar with, the business, condition (financial or
otherwise), operations, performance, properties and prospects of each other
Restricted Person.

(k)    After taking into account all rights of contribution of each Grantor
against other Grantors under the Second-Out Security Documents, at law, in
equity or otherwise, the direct or indirect value of the consideration received
and to be received by Grantor in connection herewith is reasonably worth at
least as much as the liability of Grantor hereunder and under each Second-Out
Credit Document to which Grantor is a party, and the incurrence of such
liability in return for such consideration may reasonably be expected to benefit
Grantor, directly or indirectly.

ARTICLE IV
COVENANTS

Section 4.1    General Covenants Applicable to Collateral. Grantor will at all
times perform and observe the covenants contained in the Second-Out Credit
Agreement that are applicable to Grantor. Each Grantor agrees that, in the event
any Grantor takes any action to grant or perfect a Lien in favor of the First
Lien First Our Administrative Agent in any assets, such Grantor shall also take
such action to grant or perfect a Lien (subject to the FOSO Intercreditor
Agreement) in favor of the Collateral Agent to secure the Second-Out Obligations
without request of the Collateral Agent.

Section 4.2    Covenants for Specified Types of Collateral. Grantor will perform
and observe the following to the extent the described Collateral is material:

(a)    Grantor will, upon request by the Collateral Agent, mark each item of
Chattel Paper that is included in the Collateral with a legend indicating that
such item is subject to the security interest granted by this Agreement.

(b)    Grantor will not permit any Collateral that constitutes Equipment to at
any time become so related or attached to, or used in connection with any
particular real property so as to become a fixture upon such real property, or
to be installed in or affixed to other goods so as to become an accession to
such other goods

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unless such real property or other goods are also collateral security for the
Second-Out Obligations, such real property is not required to be provided as
collateral pursuant to the Second-Out Credit Agreement, or such real property is
the leased office space used by the Borrower as its corporate headquarters.

(c)    Subject to the provisions of Section 6.12(c), if Grantor shall at any
time hold or acquire any certificated security, Grantor will forthwith endorse,
assign, and deliver the same to the Collateral Agent, or, prior to the Discharge
of First-Out Obligations, the First Lien First Out Administrative Agent (to hold
as gratuitous bailee for the Collateral Agent), accompanied by such instruments
of transfer or assignment duly executed in blank as the Collateral Agent may
from time to time specify.

(i)    If any security now or hereafter acquired by Grantor is uncertificated
and is issued to Grantor or its nominee directly by the issuer thereof, Grantor
shall promptly notify the Collateral Agent of such issuance and, pursuant to an
agreement in form and substance reasonably satisfactory to the Collateral Agent,
cause the issuer thereof to agree to comply with instructions from the
Collateral Agent as to such security without further consent of Grantor or such
nominee, or arrange for the Collateral Agent to become the registered owner of
the securities or otherwise perfect the Collateral Agent’s security interest in
such security, provided, however, unless there shall occur and be continuing an
Event of Default, the Collateral Agent hereby instructs each such issuer that it
may take instructions from such Grantor to the extent not inconsistent with this
Agreement.

(ii)    If any security, whether certificated or uncertificated, or other
Investment Property or other asset now or hereafter acquired by Grantor, is held
by Grantor or its nominee through a securities intermediary or commodity
intermediary, Grantor shall promptly notify the Collateral Agent thereof, and,
subject to the terms of any securities account control agreement entered in
connection therewith in form and substance reasonably satisfactory to the
Collateral Agent, at the Collateral Agent’s request and option, use its
commercially reasonable efforts (as shall from time to time be certified by such
Grantor to the Collateral Agent upon request therefor), to either:
(A)cause such securities intermediary or commodity intermediary to agree to
comply with entitlement orders or other instructions from the Collateral Agent
to such securities intermediary as to such securities or other Investment
Property, or to apply any value distributed on account of any commodity contract
as directed by the Collateral Agent to such commodity intermediary, in each case
without further consent of Grantor or such nominee, or
(B)in the case of financial assets or other Investment Property held through a
securities intermediary, arrange for the Collateral Agent to become the
entitlement holder with respect to such Investment Property, with Grantor being
permitted to exercise rights to withdraw or otherwise deal with such Investment
Property.

Subsections (A) and (B) above shall not apply to any financial asset credited to
a Securities Account for which the Collateral Agent is the securities
intermediary or commodity intermediary.
(d)    If Grantor is at any time a beneficiary under a letter of credit now or
hereafter issued in favor of Grantor with a face amount in excess of
$50,000,000, Grantor shall promptly notify the Collateral Agent thereof and, at
the request and option of the Collateral Agent, pursuant to an agreement in form
and substance reasonably satisfactory to the Collateral Agent, use its
commercially reasonable efforts (as shall from time to time be certified by such
Grantor to the collateral Agent upon request therefor) to either:

(i)    arrange for the issuer and any confirmer of such letter of credit to
consent to an assignment to the Collateral Agent of the proceeds of any drawing
under such letter of credit; or

(ii)    arrange for the Collateral Agent to become the transferee beneficiary of
such letter of credit.

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(e)    If Grantor shall at any time after the date hereof have a Commercial Tort
Claim, Grantor shall promptly notify the Collateral Agent in writing of the
details thereof and execute and deliver to the Collateral Agent a supplement to
Schedule 2 listing such Commercial Tort Claim, which supplement shall take
effect without further action on the part of any party hereto or beneficiary
hereof and shall make such Commercial Tort Claim collateral security subject to
this Agreement.

(f)    If Grantor shall at any time after the date hereof open a Deposit Account
other than an account listed on Schedule 2, Grantor shall use its commercially
reasonable efforts (as shall from time to time be certified by such Grantor to
the Collateral Agent upon request therefor) to, concurrently therewith, (i)
execute and deliver to the Collateral Agent a supplement to Schedule 2 listing
such Deposit Account, which supplement shall take effect without further action
on the part of any party hereto or beneficiary hereof and (ii) unless such
Deposit Account is an Excluded Deposit Account, enter into a deposit account
control agreement with the First-Out Agent, Collateral Agent and the account
bank for such Deposit Account on terms reasonably satisfactory to the Collateral
Agent and First-Out Agent.

(g)    Unless otherwise agreed by the Collateral Agent in the exercise of its
reasonable discretion, in no event shall the Collateral Agent be required
hereunder to enter into any securities account control agreement, deposit
account control agreement or any other type of account control agreement with
respect to any Collateral which requires the Collateral Agent to indemnify or
reimburse any party thereto from the Collateral Agent’s own funds or from funds
other than those received by the Collateral Agent from the applicable account or
collateral estate of Grantors as are actually in the possession of the
Collateral Agent at the time it receives any demand for reimbursement or
indemnification.

(h)    No Grantor shall change such Grantor’s legal name or jurisdiction of
organization unless it shall have (i) notified the Collateral Agent in writing
within thirty (30) days following any such change, identifying such new proposed
name or jurisdiction of organization and provided all other information in
connection therewith and (ii) taken all actions as shall be necessary to
maintain the continuous validity, perfection and the same priority of the
Collateral Agent’s security interest in the Collateral intended to be granted
hereby.

ARTICLE V
REMEDIES, POWERS AND AUTHORIZATIONS

Section 5.1    Normal Provisions Concerning the Collateral.

(a)    Grantor irrevocably authorizes the Collateral Agent (but the Collateral
Agent is not obligated) at any time and from time to time to file, without the
signature of Grantor, in any jurisdiction any amendments to existing financing
statements and any initial financing statements and amendments thereto that:

(i)    indicate the Collateral as being:

(A)    “all assets of Grantor and all proceeds thereof, and all rights and
privileges with respect thereto” or words of similar effect, regardless of
whether any particular asset comprised in the Collateral falls within the scope
of Article 9 of the UCC or the granting clause of this Agreement, or

(B)    of an equal or lesser scope or with greater detail;

(ii)    contain any other information required for the sufficiency or filing
office acceptance of any financing statement or amendment, including whether
Grantor is an organization, the type of organization and any organization
identification number issued to Grantor; and

(iii)    properly effectuate the transactions described in the Second-Out Credit
Documents.

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Grantor will furnish any such information to the Collateral Agent promptly upon
request. A carbon, photographic or other reproduction of this Agreement or any
financing statement describing any Collateral is sufficient as a financing
statement and may be filed (but the Collateral Agent is not obligated to file)
in any jurisdiction by the Collateral Agent. Grantor ratifies and approves all
financing statements heretofore filed by or on behalf of the Collateral Agent in
any jurisdiction in connection with the transactions contemplated hereby.
(b)    Grantor appoints the Collateral Agent as Grantor’s attorney in fact and
proxy, with full authority in the place and stead of Grantor and in the name of
Grantor or otherwise, from time to time in the Collateral Agent’s discretion
during the continuance of any Event of Default (but the Collateral Agent is not
obligated to act), to take any action and to execute any instrument that the
Collateral Agent may deem necessary or advisable to accomplish the purposes of
this Agreement including any action or instrument:

(i)to obtain and pay all or part of the premiums for any insurance required
pursuant hereto;

(ii)to ask for, demand, collect, sue for, recover, compound, receive and give
acquittance and receipts for moneys due and to become due under or in respect of
any Collateral;

(iii)to receive, indorse and collect any drafts or other Instruments or
Documents;

(iv)to enforce any obligations included in the Collateral; and

(v)to file any claims or take any action or institute any proceedings that the
Collateral Agent may deem necessary or desirable for the collection of any
Collateral or otherwise to enforce the rights of Grantor or the Collateral Agent
with respect to any Collateral.

Such power of attorney and proxy are coupled with an interest, are irrevocable,
and are to be used by the Collateral Agent for the sole benefit of the
Second-Out Secured Parties.
(c)    If Grantor fails to perform any agreement or obligation contained herein,
the Collateral Agent may, but shall have no obligation to, itself perform, or
cause performance of, such agreement or obligation, and the expenses of the
Collateral Agent incurred in connection therewith shall be payable by Grantor
under Section 5.6.

(d)    If any Collateral in which Grantor has granted a security interest
hereunder with a Fair Market Value in excess of $50,000,000 is at any time in
the possession or control of any warehouseman, bailee or any of Grantor’s
agents, Grantor shall, upon the request of the First Lien First Out
Administrative Agent made pursuant to the First Lien First Out Credit Agreement,
notify such warehouseman, bailee or agent of the Collateral Agent’s rights
hereunder and instruct such Person to hold all such Collateral for the
Collateral Agent’s account subject to the Collateral Agent’s instructions (and,
if applicable, to hold such Collateral for the First Lien First Out
Administrative Agent’s instructions). No such request by the Collateral Agent
shall be deemed a waiver of any provision hereof that was otherwise violated by
such Collateral being held by such Person prior to such instructions by Grantor.

(e)    Anything herein to the contrary notwithstanding:

(i)    Grantor shall remain liable to perform all duties and obligations under
the agreements included in the Collateral to the same extent as if this
Agreement had not been executed.

(ii)    The exercise by the Collateral Agent of any right hereunder shall not
release Grantor from any duty or obligation under any agreement included in the
Collateral.

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(iii)    No Second-Out Secured Party shall have any obligation or liability
under the agreements included in the Collateral by reason of this Agreement or
any other Second-Out Credit Document, nor shall any Second-Out Secured Party be
obligated to perform any duty or obligation of Grantor thereunder or take any
action to collect or enforce any claim for payment assigned hereunder

Section 5.2    Event of Default Remedies. If an Event of Default shall have
occurred and be continuing, the Collateral Agent may from time to time in its
discretion, at the sole cost and expense of Grantor, without limitation and
without notice except as expressly provided below:

(a)    Exercise in respect of the Collateral, in addition to any other right and
remedy provided for herein, under the other Second-Out Credit Documents, or
otherwise available to it, all the rights and remedies of a secured party on
default under the UCC (whether or not the UCC applies to the affected
Collateral) and any other applicable law.

(b)    Require Grantor to, and Grantor will at its expense and upon request of
the Collateral Agent forthwith, assemble all or part of the Collateral as
directed by the Collateral Agent and make it (together with all books, records
and information of Grantor relating thereto) available to the Collateral Agent
at a place to be designated by the Collateral Agent that is reasonably
convenient to both parties.

(c)    Prior to the disposition of any Collateral:

(i)    to the extent permitted by applicable Law, enter, with or without process
of law and without breach of the peace, any premises where any Collateral is or
may be located, and without charge or liability to the Collateral Agent seize
and remove such Collateral from such premises,

(ii)    have access to and use the Borrower’s books, records, and information
relating to the Collateral, and

(iii)    store or transfer any Collateral without charge in or by means of any
storage or transportation facility owned or leased by Grantor, process, repair
or recondition any Collateral or otherwise prepare it for disposition in any
manner and to the extent the Collateral Agent deems appropriate and, in
connection with such preparation and disposition, use without charge any
copyright, trademark, trade name, patent or technical process owned by Grantor
or subject to a license or other right to use that Grantor has the right to
assign.

(d)    Reduce its claim to judgment or foreclose or otherwise enforce, in whole
or in part, the security interest created hereby by any available judicial
procedure.

(e)    Dispose of, at its office, on the premises of Grantor or elsewhere, any
Collateral, as a unit or in parcels, by public or private proceedings, and by
way of one or more contracts (but that the sale of any Collateral shall not
exhaust the Collateral Agent’s power of sale, and sales may be made from time to
time, and at any time, until all of the Collateral has been sold or until the
Second-Out Obligations have been paid and performed in full), and at any such
sale it shall not be necessary to exhibit any Collateral.

(f)    Buy (or allow any Second-Out Secured Party to buy) Collateral, or any
part thereof, at any public sale.

(g)    To the extent permitted by applicable Law, buy (or allow any Second-Out
Secured Party to buy) Collateral, or any part thereof, at any private sale if
any Collateral is of a type customarily sold in a recognized market or is of a
type that is the subject of widely distributed standard price quotations.

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(h)    Apply by appropriate judicial proceedings for appointment of a receiver
for the Collateral, or any part thereof, and Grantor consents to any such
appointment.

(i)    Comply with any applicable state or federal Law requirement in connection
with a disposition of Collateral and such compliance shall not be considered to
affect adversely the commercial reasonableness of any sale of Collateral.

(j)    Sell Collateral without giving any warranty, with respect to title or any
other matter.

(k)    Notify (or to require Grantor to notify) any and all obligors under any
Account, Payment Intangible, Instrument or other right to payment included in
the Collateral of the assignment thereof to the Collateral Agent under this
Agreement and to direct such obligors to make payment of all amounts due or to
become due to Grantor thereunder directly to the Collateral Agent and, upon such
notification and at the expense of Grantor and to the extent permitted by law,
to enforce collection of any such Account, Payment Intangible, Instrument or
other right to payment and to adjust, settle or compromise the amount or payment
thereof, in the same manner and to the same extent as Grantor could have done.
After Grantor receives notice that the Collateral Agent has given (or after the
Collateral Agent has required Grantor to give) any notice referred to above in
this subsection:

(i)    all amounts and proceeds (including instruments and writings) received by
Grantor in respect of such Account, Payment Intangible, Instrument or other
right to payment shall be received in trust for the benefit of the Collateral
Agent hereunder, shall be segregated from other funds of Grantor and shall be
forthwith paid over to the Collateral Agent in the same form as so received
(with any necessary endorsement) to be, at the Collateral Agent’s discretion,
either:

(A)held as cash collateral and released to Grantor upon the remedy of all
Defaults and Events of Default, or

(B)while an Event of Default is continuing, applied as specified in Section 5.3;

(ii)    Grantor shall not adjust, settle or compromise the amount or payment of
any such Account, Payment Intangible, Instrument, or other right to payment or
release wholly or partly any account debtor or obligor thereof or allow any
credit or discount thereon.

(iii)    Give any entitlement order, instruction or direction in respect of any
Investment Property to any issuer, securities intermediary, or commodity
intermediary, and to withhold its consent to the exercise of any withdrawal or
dealing rights by Grantor.

(l)    Give an instruction to any depository bank that maintains a Deposit
Account for Grantor with respect to the disposition of funds credited thereto or
restrict the ability of Grantor to withdraw funds credited thereto, except as
authorized in any other Second-Out Credit Document.

(m)    To the extent notice of sale shall be required by law with respect to
Collateral, at least 10-days’ notice to Grantor of the time and place of any
public sale or the time after which any private sale is to be made shall
constitute reasonable notification; provided that, if the Collateral Agent fails
in any respect to give such notice, its liability for such failure shall be
limited to the liability (if any) imposed on it by law under the UCC. The
Collateral Agent shall not be obligated to make any sale of Collateral
regardless of notice of sale having been given. The Collateral Agent may adjourn
any public or private sale from time to time by announcement at the time and
place fixed therefor, and such sale may, without further notice, be made at the
time and place to which it was so adjourned.

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Section 5.3    Application of Proceeds. If an Event of Default shall have
occurred and be continuing, any cash held by or on behalf of the Collateral
Agent and all cash proceeds received by or on behalf of the Collateral Agent in
respect of any sale of, collection from, or other realization upon any
Collateral may, in the discretion of the Collateral Agent, be held by the
Collateral Agent as collateral for, and/or then or at any time thereafter
applied, in whole or in part, by the Collateral Agent for the benefit of the
Second-Out Secured Parties against, any Second-Out Obligation, in accordance
with the final paragraph of Article XII of the Second-Out Credit Agreement.

Section 5.4    Deficiency. If the proceeds of any sale, collection or
realization of or upon the Collateral of the Grantors by the Collateral Agent
are insufficient to pay all Second-Out Obligations and all other amounts to
which the Collateral Agent is entitled, Grantor shall be liable for the
deficiency, together with interest thereon as provided in the Second-Out Credit
Documents or (if no interest is so provided) at such other rate as shall be
fixed by applicable law, together with the costs of collection and the
reasonable fees of any attorneys employed by the Collateral Agent and/or the
other Second-Out Secured Parties to collect such deficiency. Collateral may be
sold at a loss to Grantor, and the Collateral Agent shall have no liability or
responsibility to Grantor for such loss. Grantor acknowledges that a private
sale may result in less proceeds than a public sale.

Section 5.5    Investment Property and Other Pledged Equity. The Second-Out
Secured Parties may deem it impracticable to effect a public sale of any
Investment Property and may determine to make one or more private sales of such
Investment Property to a restricted group of purchasers that will be obligated
to agree, among other things, to acquire the same for their own account, for
investment and not with a view to the distribution or resale thereof. Any such
private sale may be at a price and on other terms less favorable to the seller
than the price and other terms that might have been obtained at a public sale.
Any such private sale nevertheless shall be deemed to have been made in a
commercially reasonable manner, and the Collateral Agent shall not have any
obligation to delay sale of any such Investment Property for the period of time
necessary to permit their registration for public sale under the Securities Act.
Any offer to sell any such Collateral that has been:

(a)    publicly advertised on a bona-fide basis in a newspaper or other
publication of general circulation in the financial community of Los Angeles,
California (to the extent that such an offer may be so advertised without prior
registration under the Securities Act), or

(b)    made privately in the manner described above to not less than 15
bona-fide offerees,

shall be deemed to involve a “public disposition” under Section 9-610(c) of the
UCC, notwithstanding that such sale may not constitute a “public offering” under
the Securities Act, and any Second-Out Secured Party may bid for such
Collateral.
Section 5.6    Indemnity and Expenses. In addition to, but not in duplication
of, any similar obligations under other Second-Out Credit Documents:

(a)    Each Grantor agrees to pay or reimburse the Collateral Agent for all of
its reasonable and documented out-of-pocket costs and expenses (with respect to
attorney costs, limited to reasonable fees, disbursements and other charges of
one primary counsel each to the Collateral Agent and the other Second-Out
Secured Parties) incurred in connection with the preparation and execution and
delivery of, and any amendment, waiver, supplement or modification to, this
Agreement and any other documents prepared in connection herewith or therewith,
and the consummation and administration of the transactions contemplated hereby
and thereby, including the reasonable fees, disbursements and other charges of
Emmet, Marvin & Martin, LLP, in its capacity as counsel to the Collateral Agent,
and one counsel in each appropriate local jurisdiction (other than any allocated
costs of in-house counsel) to the extent the Borrower would be required to do so
pursuant to Section [14.]5 of the Second-Out Credit Agreement.

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(b)    Each Grantor jointly and severally agrees to pay or reimburse the
Collateral Agent and each other Second-Out Secured Party for all its reasonable
and documented out-of-pocket costs and expenses incurred in connection with the
enforcement or preservation of any rights under this Agreement (with respect to
attorney costs, limited to the reasonable fees, disbursements and other charges
of one primary counsel and one additional local counsel in each material
jurisdiction to the Collateral Agent and the other Second-Out Secured Parties
and, solely in the case of an actual or potential conflict of interest, one
additional legal counsel in each of the applicable jurisdictions of the affected
Collateral Agent and the other Second-Out Secured Parties) to the extent the
Borrower would be required to do so pursuant to Section 14.5 of the Second-Out
Credit Agreement.

(c)    Each Grantor jointly and severally agrees to pay, indemnify, and hold
harmless the Collateral Agent, each other Second-Out Secured Party and their
respective Related Parties from and against, (i) any and all recording and
filing fees and (ii) any and all other liabilities, obligations, losses,
damages, charges, penalties, claims, demands, actions, judgments, suits, costs,
expenses or disbursements of any kind or nature whatsoever, whether or not such
proceedings are brought by the Borrower, any other Grantor, any of their
respective Related Parties or any other third Person (with respect to attorney
costs, limited to the reasonable and documented fees, disbursements and other
charges of one primary counsel for the Collateral Agent on the one hand and one
primary counsel for the other Second-Out Secured Parties, taken as a whole, on
the other, and, if necessary, of a single firm of local counsel in each
appropriate jurisdiction for the Collateral Agent and the other Second-Out
Secured Parties, taken as a whole (unless there is an actual or perceived
conflict of interest in which case each such Person may, with the consent of the
Borrower (not to be unreasonably withheld or delayed) retain its own counsel),
with respect to the execution, delivery, enforcement, performance and
administration of this Agreement.

(d)    The agreements in this Section 5.6 shall survive the repayment of the
Loans and any other amounts payable under the Second-Out Credit Agreement and
the other Second-Out Credit Documents and termination of this Agreement and
those Agreements.

Section 5.7    Non-Judicial Remedies. In granting to the Collateral Agent the
power to enforce its rights hereunder without prior judicial process or judicial
hearing, to the extent permitted by applicable Law, each Grantor waives,
renounces and knowingly relinquishes any legal right that might otherwise
require the Collateral Agent to enforce its rights by judicial process and
confirms that such remedies are consistent with the usage of trade, are
responsive to commercial necessity and are the result of a bargain at arm’s
length. The Collateral Agent may, however, in its discretion, resort to judicial
process.

Section 5.8    Limitation on Duty of the Collateral Agent in Respect of
Collateral.

(a)    Beyond the exercise of reasonable care in the custody thereof, the
Collateral Agent shall have no duty as to any Collateral in its possession or
control or in the possession or control of any agent or bailee (including, for
the avoidance of doubt, the First Lien First Out Administrative Agent) or as to
the preservation of rights against prior parties or any other rights pertaining
thereto and the Collateral Agent shall not be responsible for filing any
financing or continuation statements or recording any documents or instruments
in any public office at any time or times or otherwise perfecting or maintaining
the perfection of any Liens on the Collateral. The Collateral Agent shall be
deemed to have exercised reasonable care in the custody of Collateral in its
possession if such Collateral is accorded treatment substantially equal to which
that it accords its own property, and the Collateral Agent shall not be liable
or responsible for any loss or damage to any Collateral, or for any diminution
in the value thereof, by reason of the act or omission of any warehouseman,
carrier, forwarding agency, consignee or other agent or bailee (including, for
the avoidance of doubt, the First Lien First Out Administrative Agent) selected
by the Collateral Agent in good faith.

(b)    The Collateral Agent will not be responsible for the existence,
genuineness or value of any of the Collateral or for the validity, perfection,
priority or enforceability of the Liens in any of the Collateral, for the
validity or sufficiency of the Collateral or any agreement or assignment
contained therein, for the validity of the title of any Grantor to the
Collateral, for insuring the Collateral or for the payment of taxes, charges,

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assessments or Liens upon the Collateral or otherwise as to the maintenance of
the Collateral. The Collateral Agent hereby disclaims any representation or
warranty to the current and future holders of the Second-Out Obligations
concerning the perfection of the security interests granted to it or in the
value of any Collateral. The Collateral Agent shall not be under any obligation
any holder of Second-Out Obligations to ascertain or to inquire as to the
observance or performance of any of the agreements contained in, or conditions
of, this or any other Security Document or the FOSO Intercreditor Agreement or
to inspect the properties, books or records of the Borrower or any Grantor.

(c)    In the event that the Collateral Agent is required to acquire title to an
asset for any reason, or take any managerial action of any kind in regard
thereto, in order to carry out any fiduciary or trust obligation for the benefit
of another, which in Collateral Agent’s sole discretion may cause it to be
considered an “owner or operator” under the provisions of the Comprehensive
Environmental Response, Compensation and Liability Act (“CERCLA”), 42 U.S.C.
§9601, et seq., or otherwise cause it to incur liability under CERCLA or any
other federal, state or local law, the Collateral Agent reserves the right,
instead of taking such action, to either resign or arrange for the transfer of
the title or control of the asset to a court appointed receiver. The Collateral
Agent shall not be liable to any person for any environmental claims or
contribution actions under any federal, state or local law, rule or regulation
by reason of the Collateral Agent’s actions and conduct as authorized, empowered
and directed hereunder or under the other Second-Out Credit Documents or
relating to the discharge, release or threatened release of hazardous materials
into the environment and the Grantors shall indemnify the Collateral Agent
pursuant to the provisions of Section 5.6 in connection with any claim,
litigation, investigation or proceedings relating to any of the foregoing.

Section 5.9    Appointment of Other Agents. At any time, in order to comply with
any legal requirement in any jurisdiction, the Collateral Agent may appoint any
bank or trust company or one or more other Persons, either to act as co-agent or
co-agents, jointly with the Collateral Agent, or to act as separate agent or
agents on behalf of the Collateral Agent, with such power and authority as may
be necessary for the effective operation of the provisions hereof and may be
specified in the instrument of appointment.

Section 5.10    No Duty. The powers conferred on the Collateral Agent hereunder
are solely to protect the interests of the Second-Out Lenders in the Collateral
and shall not impose any duty upon the Collateral Agent or any Second-Out Lender
to exercise any such powers. The Collateral Agent and the Second-Out Lenders
shall be accountable only for amounts that they actually receive as a result of
the exercise of such powers, and neither they nor any of their officers,
directors, employees or agents shall be responsible to any Grantor for any act
or failure to act hereunder, except for their own gross negligence or willful
misconduct.

ARTICLE VI
MISCELLANEOUS
Section 6.1    Notices. Any notice or communication required or permitted
hereunder shall be given in writing or by electronic transmission, sent in the
manner provided in Section 14.2 of the Second-Out Credit Agreement, if to the
Collateral Agent or to a Grantor that is a party to the Second-Out Credit
Agreement, to the address set forth in the Second-Out Credit Agreement and, for
any other Grantor, to the address specified opposite its name on Schedule 1, or
to such other address or to the attention of such other individual as hereafter
shall be designated in writing by the applicable party sent in accordance
herewith. Any such notice or communication shall be deemed to have been given as
provided in the Second-Out Credit Agreement for notices given thereunder.

Section 6.2    Amendments and Waivers. Except as provided in Sections 4.2(e) or
6.3, no amendment of this Agreement shall be effective unless it is in writing
and signed by Grantor and the Collateral Agent, and no waiver of this Agreement
or consent to any departure by Grantor herefrom shall be effective unless it is
in writing and signed by the Collateral Agent, and then such waiver or consent
shall be effective only in the specific instance and for the specific purpose
for that given and to the extent specified in such writing. In addition, all
such amendments and waivers shall be effective only if given with the necessary
approvals required in the Second-Out Credit Agreement. No such amendment shall
bind any Grantor not a party thereto, but no such amendment with respect to any
Grantor shall require the consent of any other Grantor. In executing any
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hereunder, the Collateral Agent shall be entitled to receive an Officer’s
Certificate and opinion of counsel that such amendment or waiver complies with
the requirements of the Security Documents, including this Agreement.
Section 6.3    Additional Grantors. Upon the execution and delivery, or
authentication, by any Person of a security agreement supplement in
substantially the form of Exhibit A:

(a)    such Person shall become a Grantor hereunder, each reference in this
Agreement and the other Second-Out Credit Documents to “Grantor” shall also mean
and be a reference to such Person, and each reference in this Agreement and the
other Second-Out Credit Documents to “Collateral” shall also mean and be a
reference to the Collateral of such Person, and

(b)    Schedule 2 attached to such security agreement supplement shall be
incorporated into and become a part of and supplement Schedule 2 hereto, and the
Collateral Agent may attach such supplemental schedule to such Schedule; and
each reference to such Schedule shall mean and be a reference to such Schedule
as supplemented pursuant to such supplement.

Section 6.4    Preservation of Rights. No failure on the part of the Collateral
Agent or any other Second-Out Secured Party to exercise, and no delay in
exercising, any right hereunder or under any other Second-Out Credit Document
shall operate as a waiver thereof; nor shall any single or partial exercise of
any such right preclude any other or further exercise thereof or the exercise of
any other right. The rights and remedies of the Collateral Agent provided herein
and in the other Second-Out Credit Documents are cumulative and are in addition
to, and not exclusive of, any rights or remedies provided by law or otherwise.

Section 6.5    Severability. Any provision of this Agreement that is prohibited
or unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohibition or invalidity without invalidating
the remaining portions hereof or thereof or affecting the validity or
enforceability of such provision in any other jurisdiction.

Section 6.6    Survival. Each representation and warranty, covenant and other
obligation of Grantor herein shall survive the execution and delivery of this
Agreement, the execution and delivery of any other Second-Out Credit Document
and the creation of the Second-Out Obligations.

Section 6.7    Binding Effect and Assignment. This Agreement shall:

(a)    be binding on Grantor and its successors and permitted assigns, and

(b)    inure, together with all rights and remedies of the Collateral Agent
hereunder, to the benefit of the Collateral Agent and the other Second-Out
Secured Parties and their respective successors, transferees and assigns
permitted under the Second-Out Credit Documents.

Without limiting the generality of the foregoing, the Collateral Agent and any
other Second-Out Secured Party may, in accordance with the provisions of the
Second-Out Credit Documents, pledge, assign or otherwise transfer any right
under any Second-Out Credit Document to any other Person, and such other Person
shall thereupon become vested with all benefits in respect thereof granted
herein or otherwise. No right or duty of Grantor hereunder may be assigned or
otherwise transferred without the prior written consent of the Collateral Agent.
Section 6.8    Release of Collateral; Termination.

(a)    Upon any sale, lease, transfer or other disposition of any Collateral of
Grantor in accordance with the Second-Out Credit Documents, the Collateral Agent
will, at Grantor’s expense, execute and deliver to Grantor such documents as
Grantor shall reasonably request to evidence the release of such Collateral from
the assignment and security interest granted hereby.

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(b)    Upon, and only upon, the indefeasible payment and satisfaction in full in
cash of the Second-Out Obligations (other than any contingent indemnification
obligations) and termination of the Commitments, this Agreement and the security
interest created hereby shall terminate, all rights in the Collateral shall
revert to Grantors and the Collateral Agent, at a Grantor’s request and at the
expense of Grantor, will:

(i)    return to Grantor such of Grantor’s Collateral in the Collateral Agent’s
possession as shall not have been sold or otherwise disposed of or applied
pursuant to the terms hereof, and

(ii)    execute and deliver to Grantor such documents as Grantor shall
reasonably request to evidence such termination.

(iii)    No Grantor is authorized to file any financing statement or amendment
or termination statement with respect to any financing statement originally
filed in connection with this Agreement without the prior written consent of the
Collateral Agent, subject to Grantors’ rights under Sections 9-509(d)(2) and
9-518 of the UCC and other than as permitted under the Second-Out Credit
Agreement. Notwithstanding the foregoing, Section 6.6 shall survive the
termination of this Agreement.

Section 6.9    Governing Law. THIS AGREEMENT, THE OTHER SECOND-OUT CREDIT
DOCUMENTS AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES UNDER THIS AGREEMENT
(INCLUDING ANY CLAIM OR CONTROVERSY ARISING OUT OF OR RELATING TO THIS AGREEMENT
WHETHER SOUNDING IN CONTRACT LAW, TORT LAW OR OTHERWISE) (IN EACH CASE, OTHER
THAN AS EXPRESSLY SET FORTH IN OTHER SECOND-OUT CREDIT DOCUMENTS) SHALL BE
GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF NEW YORK WITHOUT REGARD TO CONFLICT OF LAW PRINCIPLES THAT WOULD RESULT
IN THE APPLICATION OF ANY LAW OTHER THAN THE LAW OF THE STATE OF NEW YORK.

Section 6.10    Final Agreement; Conflicts. This Agreement and the other
Second-Out Credit Documents represent the final agreement between the parties
hereto and may not be contradicted by evidence of prior, contemporaneous, or
subsequent oral agreements of the parties hereto. There are no unwritten oral
agreements between the parties hereto. In the event of a conflict between the
terms and conditions of this Agreement and the terms and conditions of the
Second-Out Credit Agreement, the terms and conditions of the Second-Out Credit
Agreement shall control.

Section 6.11    Counterparts; Facsimile. This Agreement may be separately
executed in any number of counterparts, all of which when so executed shall be
deemed to constitute one and the same Agreement. This Agreement may be validly
delivered by facsimile or other electronic transmission of an executed
counterpart of the signature page hereof.

Section 6.12    FOSO Intercreditor Agreement Controls.

(a)    Each Second-Out Secured Party, by accepting the benefits of the security
provided hereby, (i) agrees (or is deemed to agree) that it will be bound by,
and will take no actions contrary to, the provisions of the FOSO Intercreditor
Agreement, (ii) authorizes (or is deemed to authorize) the Collateral Agent on
behalf of such Person to enter into, and perform under, the FOSO Intercreditor
Agreement and (iii) acknowledges (or is deemed to acknowledge) that a copy of
the FOSO Intercreditor Agreement was delivered, or made available, to such
Second-Out Secured Party.

(b)    Notwithstanding any other provision contained herein, this Agreement, the
Liens created hereby and the rights, remedies, duties and obligations provided
for herein are subject in all respects to the provisions of the FOSO
Intercreditor Agreement. In the event of any conflict or inconsistency between
the

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provisions of this Agreement and the FOSO Intercreditor Agreement, the
provisions of the FOSO Intercreditor Agreement shall control.

(c)    Without limiting the foregoing, at any time prior to the Discharge of
First-Out Obligations (as defined in the FOSO Intercreditor Agreement), any
provision hereof requiring any Grantor to deliver possession of any Collateral
to the Collateral Agent, shall be deemed to have been complied with, if and for
so long as (i) the FOSO Intercreditor Agreement is in full force and effect and
(ii) the First-Out Agent shall have such possession for the benefit of the
Second-Out Secured Parties and as bailee or sub-agent of the Collateral Agent as
provided in the FOSO Intercreditor Agreement. Each Grantor shall provide prompt
written notice to the Collateral Agent identifying any Collateral delivered to
the First-Out Agent pursuant to the First Lien First-Out Credit Documents.

(d)    At any time subsequent to the Discharge of First-Out Obligations, any
provision hereof requiring the Grantor to deliver a Deposit Account Control
Agreement or take any action with respect thereto, and any provision permitting
the Collateral Agent to take any action or pursue any remedy in respect of a
Deposit Control Account Agreement, will in each case fall away and be in no
further force and effect.

Section 6.13    Concerning the Collateral Agent.

(a)    In no event shall the Collateral Agent be responsible or liable for
special, indirect, or consequential loss or damage of any kind whatsoever
(including, but not limited to, loss of profit) irrespective of whether the
Collateral Agent has been advised of the likelihood of such loss or damage and
regardless of the form of action.

(b)    The Collateral Agent shall not be responsible or liable for any failure
or delay in the performance of its obligations hereunder arising out of or
caused by, directly or indirectly, forces beyond its control, including, without
limitation, strikes, work stoppages, accidents, acts of war or terrorism, civil
or military disturbances, nuclear or natural catastrophes or acts of God, and
interruptions, loss or malfunctions of utilities, communications or computer
(software and hardware) services.

(c)    The recitals contained herein shall be taken as the statements of the
Borrower and the Grantors and the Collateral Agent assumes no responsibility for
their correctness. The Collateral Agent makes no representations as to the
validity or sufficiency of this Agreement.

(d)    All of the rights, privileges, protections, immunities and indemnities
afforded the Collateral Agent under the Second-Out Credit Agreement are hereby
incorporated herein, and shall be enforceable by the Collateral Agent hereunder,
as if set forth herein in full.

Section 6.14    Waiver of Jury Trial. EACH OF THE BORROWER, EACH GRANTOR AND THE
COLLATERAL AGENT HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY
APPLICABLE LAW, ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING
ARISING OUT OF OR RELATING TO THIS INDENTURE, THE NOTES OR THE TRANSACTION
CONTEMPLATED HEREBY.

Section 6.15    Acceptance by the Collateral Agent. By its acceptance of the
benefits hereof, the Collateral Agent and the Second-Out Secured Parties shall
be deemed to have agreed to be bound hereby and to perform any obligation on
their part set forth herein.

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IN WITNESS WHEREOF, each Grantor and Collateral Agent have executed and
delivered this Agreement as of the date first-above written.
GRANTOR:
 
[CALIFORNIA RESOURCES CORPORATION]
 
 
 
 
By:
 
 
Name:
 
 
TItle:
 
 
 
 
GRANTOR:
 
[NAME OF GRANTOR]
 
 
 
 
 
 
 
By:
 
 
Name:
 
 
Title:
 

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The Bank of New York Mellon Trust Company, N.A., as Collateral Agent
 
 
 
 
 
 
 
By:
 
 
Name:
 
 
Title:
 

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SCHEDULE 1
to
FIRST LIEN SECOND-OUT SECURITY AGREEMENT

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SCHEDULE 2
to
FIRST LIEN SECOND-OUT SECURITY AGREEMENT
DEPOSIT ACCOUNTS
See attached
LETTER OF CREDIT RIGHTS
See attached
SECURITIES ACCOUNTS
See attached
COMMERCIAL TORT CLAIMS
See attached

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DISCLOSURE SCHEDULES TO
FIRST LIEN SECOND-OUT SECURITY AGREEMENT

among

California Resources Corporation, each other Grantor listed on the signature
pages thereof and each other Grantor that otherwise may become a party thereto,
[_]
and
certain financial institutions, as lenders

Dated as of [_], 2016
Capitalized terms and others used in these disclosure schedules and not
otherwise defined herein are used as defined in the Security Agreement.
These disclosure schedules are qualified in their entirety by reference to
specific provisions of the First Lien Second-Out Security Agreement and are not
intended to constitute, and shall not be construed as constituting, any
representation or warranty of Grantor except as and to the extent expressly
provided in the First Lien Second-Out Security Agreement.
Any disclosure set forth with respect to any particular section shall be deemed
to be disclosed in reference to all other applicable sections of the First Lien
Second-Out Security Agreement if the disclosure in respect of the particular
section is sufficient on its face without further inquiry reasonably to inform
the Collateral Agent and the Lenders of the information required to be disclosed
in respect of the other sections to avoid a breach under the representation or
warranty corresponding to such other sections of the First Lien Second-Out
Security Agreement. The fact that an item appears on a schedule does not
indicate that it is material.

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DEPOSIT ACCOUNTS

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LETTER OF CREDIT RIGHTS

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SECURITIES ACCOUNTS

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COMMERCIAL TORT CLAIMS

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EXHIBIT A
to
FIRST LIEN SECOND-OUT SECURITY AGREEMENT

FORM OF GRANTOR ACCESSION AGREEMENT

[_________], 201[_]
The Bank of New York Mellon Trust Company, N.A., as the Collateral Agent for the
Second-Out Secured Parties referred to in the First Lien Second-Out Security
Agreement referred to below
[_]
[_]
[_]
Attn: [_____]
Ladies and Gentlemen:
The undersigned refers to:
(i)    that certain Second-Out Credit Agreement dated as of [_], 2016 (as
amended, supplemented or restated, the “Second-Out Credit Agreement”) among
California Resources Corporation, a Delaware corporation, the Lenders party
thereto, and you, as collateral agent, and
(ii)    the First Lien Second-Out Security Agreement dated as of [_], 2016 (as
amended, supplemented or restated, the “Security Agreement”) made by the
Grantors from time to time party thereto in your favor for the benefit of the
Second-Out Secured Parties.
Terms defined in the Second-Out Credit Agreement or the Security Agreement and
not otherwise defined herein are used herein as defined in the Second-Out Credit
Agreement or the Security Agreement.
SECTION 1.    Grant of Security. The undersigned grants to you, for the benefit
of the Second-Out Secured Parties, a security interest in all of its right,
title and interest in and to all of the Collateral of the undersigned, whether
now owned or hereafter acquired by the undersigned, wherever located and whether
now or hereafter existing or arising, including the property of the undersigned
set forth on the attached supplemental schedules to the Schedules to the
Security Agreement.
SECTION 2.    Security for Obligations. The grant of a security interest in the
Collateral by the undersigned under this Agreement and the Security Agreement
secures the payment of the Second-Out Obligations. Without limiting the
generality of the foregoing, this Security Agreement Supplement and the Security
Agreement secures the payment of all amounts that constitute part of the
Second-Out Obligations and that would be owed by any Restricted Person to any
Second-Out Secured Party under the Second-Out Credit Documents but for the fact
that such Second-Out Obligations are unenforceable or not allowable due to the
existence of a bankruptcy, reorganization or similar proceeding involving a
Restricted Person.
SECTION 3.    Information Relating to the Undersigned. The undersigned is an
entity of the type specified on Schedule 1 and is organized under the laws of
the jurisdiction specified on Schedule 1 and its address for notices is
specified on Schedule 1.

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SECTION 4.    Supplement to Security Agreement Schedule 2. The undersigned has
attached hereto a supplemental Schedule 2 to Schedule 2 to the Security
Agreement, and the undersigned certifies, as of the date first-above written,
that such supplemental schedule has been prepared by the undersigned in
substantially the form of Schedule to the Security Agreement and is true and
complete.
SECTION 5.    Representations and Warranties. The undersigned as of the date
hereof makes each representation and warranty set forth in Section 3.1 of the
Security Agreement (as supplemented by the attached supplemental schedules).
SECTION 6.    Obligations Under the Security Agreement. The undersigned will, as
of the date first-above written, be bound as a Grantor by all of the terms and
provisions of the Security Agreement. As of the date first-above written, that
each reference in the Security Agreement to a “Grantor” shall also mean and be a
reference to the undersigned.
SECTION 7.    Governing Law. THIS AGREEMENT, THE OTHER SECOND-OUT CREDIT
DOCUMENTS AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES UNDER THIS AGREEMENT
(INCLUDING ANY CLAIM OR CONTROVERSY ARISING OUT OF OR RELATING TO THIS AGREEMENT
WHETHER SOUNDING IN CONTRACT LAW, TORT LAW OR OTHERWISE) (IN EACH CASE, OTHER
THAN AS EXPRESSLY SET FORTH IN OTHER SECOND-OUT CREDIT DOCUMENTS) SHALL BE
GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF NEW YORK WITHOUT REGARD TO CONFLICT OF LAW PRINCIPLES THAT WOULD RESULT
IN THE APPLICATION OF ANY LAW OTHER THAN THE LAW OF THE STATE OF NEW YORK.
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Very truly yours,
 
 
 
 
 
*[NAME OF GRANTOR]
 
 
 
 
 
 
 
By:
 
 
Name:
 
 
Title:
 
 
 
 
 
 
 
 
By:
 
 
Name:
 
 
Title:
 

ACCEPTED AND AGREED AS OF THE DATE FIRST-ABOVE STATED.
 
 
 
The Bank of New York Mellon Trust Company, N.A., as Collateral Agent
 
 
 
 
 
By:
 
Name:
 
Title:
 

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SCHEDULE 1
to
FIRST LIEN SECOND-OUT SECURITY AGREEMENT SUPPLEMENT
Name of Grantor
Type of Organization
Jurisdiction of Organization
Address for Notices

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SCHEDULE 2
to
FIRST LIEN SECOND-OUT SECURITY AGREEMENT SUPPLEMENT
DEPOSIT ACCOUNTS
[List]
LETTER OF CREDIT RIGHTS
[List]
SECURITIES ACCOUNTS
[List]
COMMERCIAL TORT CLAIMS
[List]

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EXHIBIT D
FORM OF PLEDGE AGREEMENT

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FIRST LIEN SECOND-OUT PLEDGE AGREEMENT

from

CALIFORNIA RESOURCES CORPORATION,
and
each of the Subsidiary Pledgors
from time to time party hereto

in favor of

THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A.,
as Collateral Agent

Dated as of [_], 2016

Reference is made to the FOSO Intercreditor Agreement described below. Each
Second-Out Secured Party, by accepting the benefits of the security provided
hereby, (i) agrees (or is deemed to agree) that it will be bound by, and will
take no actions contrary to, the provisions of the FOSO Intercreditor Agreement,
(ii) authorizes (or is deemed to authorize) the Collateral Agent on behalf of
such Person to enter into, and perform under, the FOSO Intercreditor Agreement
and (iii) acknowledges (or is deemed to acknowledge) that a copy of the FOSO
Intercreditor Agreement was delivered, or made available, to such Second-Out
Secured Party.

Notwithstanding any other provision contained herein, this Agreement, the Liens
created hereby and the rights, remedies, duties and obligations provided for
herein are subject in all respects to the provisions of the FOSO Intercreditor
Agreement. In the event of any conflict or inconsistency between the provisions
of this Agreement and the FOSO Intercreditor Agreement, the provisions of the
FOSO Intercreditor Agreement shall control.

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TABLE OF CONTENTS
 
 
 
Page
ARTICLE I
 
DEFINITIONS AND REFERENCES
 
 
 
 
Section 1.01
Definitions in FOSO Intercreditor Agreement
2
Section 1.02
Definitions in the Second-Out Credit Agreement
2
Section 1.03
Definitions in the UCC, etc
2
Section 1.04
Rules of Construction; etc
2
Section 1.05
Definitions in this Agreement
2
Section 1.06
Collateral Terms
3
 
 
 
ARTICLE II
 
GRANT OF SECURITY
 
 
 
 
Section 2.01
Grant of Security Interest
3
 
 
 
ARTICLE III
 
SECURITY FOR OBLIGATIONS
 
 
 
 
Section 3.01
Obligations Secured
4
 
 
 
ARTICLE IV
 
DELIVERY OF THE COLLATERAL
 
 
 
 
Section 4.01
Delivery of the Collateral
4
 
 
 
ARTICLE V
 
REPRESENTATIONS AND WARRANTIES
 
 
 
 
Section 5.01
Representations and Warranties
4
 
 
 
ARTICLE VI
 
CERTIFICATION OF LIMITED LIABILITY COMPANY,
 
LIMITED PARTNERSHIP INTERESTS
 
 
 
 
Section 6.01
Partnership; LLC Interests
5
Section 6.02
Additional Pledgor
6
 
 
 
ARTICLE VII
 
FURTHER ASSURANCES
 
 
 
 
Section 7.01
Further Assurances
6
 
 
 
ARTICLE VIII
 
VOTING RIGHTS; DIVIDENDS AND DISTRIBUTIONS; ETC.
 
 
 
 
Section 8.01
Voting Rights
6
Section 8.02
Dividends and Distributions
6
Section 8.03
Voting Rights, Dividends and Distributions after Event of Default
7

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ARTICLE IX
 
TRANSFERS AND OTHER LIENS; ADDITIONAL COLLATERAL; ETC.
 
 
 
 
Section 9.01
Transfers and Other Liens; Additional Collateral; Etc
8
 
 
 
ARTICLE X
 
COLLATERAL AGENT
 
 
 
 
Section 10.01
Attorney-in-Fact
8
Section 10.02
The Collateral Agent’s Duties
8
 
 
 
ARTICLE XI
 
REMEDIES
 
 
 
 
Section 11.01
Remedies
9
 
 
 
ARTICLE XII
 
AMENDMENTS, ETC. WITH RESPECT
 
TO THE OBLIGATIONS; WAIVER OF RIGHTS
 
 
 
 
Section 12.01
Amendments, etc. with Respect to the Second-Out Obligations; Waiver of Rights
10
 
 
 
ARTICLE XIII
 
CONTINUING SECURITY INTEREST; ASSIGNMENTS UNDER THE Second-Out CREDIT AGREEMENT;
RELEASE
 
 
 
 
Section 13.01
Continuing Security
10
Section 13.02
Assignment
11
Section 13.03
Release of Collateral
11
Section 13.04
Investment Grade Period
11
Section 13.05
Notice of Termination; Release
11
 
 
 
ARTICLE XIV
 
REINSTATEMENT
 
 
 
 
Section 14.01
Reinstatement
11
ARTICLE XV
 
MISCELLEOUS
 
 
 
 
Section 15.01
Notices
11
Section 15.02
Counterparts
11
Section 15.03
Severability
12
Section 15.04
Integration
12
Section 15.05
Amendments in Writing
12
Section 15.06
No Waiver
12
Section 15.07
Cumulative Remedies
12

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Section 15.08
Section Headings
12
Section 15.09
Successors and Assigns
12
Section 15.10
Waiver of Jury Trial
13
Section 15.11
Submission to Jurisdiction
13
Section 15.12
Acknowledgments
13
Section 15.13
Governing Law
14
Section 15.14
FOSO Intercreditor Agreement Controls
14
 
 
 
Schedules and Annexes
 
 
 
 
 
Schedule 1
Pledge Shares
 
 
 
 
Annex A
 
 

 

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PLEDGE AGREEMENT

FIRST LIEN SECOND-OUT PLEDGE AGREEMENT, dated as of [_], 2016 (this
“Agreement”), is made by California Resources Corporation, a Delaware
corporation (the “Borrower”) and each Subsidiary of the Borrower that becomes a
party hereto pursuant to Section 9.01 (each such Subsidiary being a “Subsidiary
Pledgor” and, collectively, the “Subsidiary Pledgors”; the Subsidiary Pledgors
and the Borrower are referred to collectively as the “Pledgors”) in favor of The
Bank of New York Mellon Trust Company, N.A., as collateral agent (in such
capacity, together with its successors in such capacity, the “Collateral Agent”)
under the Second-Out Credit Agreement for the benefit of the Second-Out Secured
Parties.
WHEREAS, reference is made to that certain Credit Agreement, dated as of [_],
2016 (as amended, restated, supplemented or otherwise modified from time to
time, the “Second-Out Credit Agreement”), among the Borrower, the banks,
financial institutions and other lending institutions from time to time party
thereto (the “Second-Out Lenders”), and [_], as Collateral Agent.
WHEREAS, pursuant to the terms, conditions and provisions of the Second-Out
Credit Agreement, the Second-Out Lenders have severally agreed to make term
loans to the Borrower upon the terms and subject to the conditions set forth
therein (collectively, the “Extensions of Credit”).
WHEREAS, reference is made to that certain First Lien Second-Out Security
Agreement, dated as of the date hereof (the “Second-Out Security Agreement”),
among the Borrower, each other Grantor listed on the signature pages thereof or
that becomes a party thereto and the Collateral Trustee.
WHEREAS, the First-Out Agent and the Collateral Agent have entered into an
intercreditor agreement, dated as of the date hereof (the “FOSO Intercreditor
Agreement”), setting forth the respective rights and priorities of the First-Out
Secured Parties and Second-Out Secured Parties with respect to payments, rights
in the Collateral granted under this agreement, enforcement of remedies,
bankruptcy issues and other customary subordination and intercreditor
provisions.
WHEREAS, each Pledgor acknowledges that it will derive substantial direct and
indirect benefit from the making of the Extensions of Credit.
WHEREAS, in order to comply with the requirements of the Second-Out Credit
Agreement, the Borrower and the Subsidiary Pledgors desire to execute and
deliver this Agreement to the Collateral Agent for the ratable benefit of the
Second-Out Secured Parties.
WHEREAS, the Pledgors are the legal and beneficial owners of the Equity
Interests described in Schedule 1 and issued by the entities named therein (such
Equity Interests are, together with any other Equity Interests required to be
pledged pursuant to Section 10.10(b) of the Second-Out Credit Agreement
following the date hereof (the “After-acquired Shares”), referred to
collectively herein as the “Pledged Shares”), as such Schedule may be amended
pursuant to Section 14.1 of the Second-Out Credit Agreement.
NOW, THEREFORE, in consideration of the premises and for other good and valuable
consideration, the receipt and adequacy of which are hereby acknowledged, and to
induce the Collateral Agent and the Second-Out Lenders to enter into the
Second-Out Credit Agreement and the Second-Out Lenders to make the Extensions of
Credit to the Borrower under the Second-Out Credit Agreement, the Pledgors
hereby agree with the Collateral Agent, for the ratable benefit of the
Second-Out Secured Parties, as follows:

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ARTICLE I
DEFINITIONS AND REFERENCES

Section 1.01    Definitions in FOSO Intercreditor Agreement . Unless otherwise
defined herein, terms defined in the FOSO Intercreditor Agreement and used in
this Agreement (including terms used in the preamble and the recitals) shall
have the meanings given to them in the FOSO Intercreditor Agreement.

Section 1.02    Definitions in the Second-Out Credit Agreement. Terms used
herein that are not defined herein or in the FOSO Intercreditor Agreement, but
that are defined in the Second-Out Credit Agreement, have the meanings given to
them in the Second-Out Credit Agreement unless the context otherwise requires.

Section 1.03    Definitions in the UCC, etc. Terms used herein that are not
defined herein, in the FOSO Intercreditor Agreement or in the Second-Out Credit
Agreement, but that are terms defined in the UCC, shall have the meanings
specified therein (and if defined in more than one article of the UCC, shall
have the meaning specified in Article 9 thereof); the term “instrument” shall
have the meaning specified in Article 9 of the UCC.

Section 1.04    Rules of Construction; etc. The rules of construction and other
interpretive provisions specified in Sections 1.2, 1.3, 1.5, 1.6 and 1.7 of the
Second-Out Credit Agreement shall apply to this Agreement, including terms
defined in the preamble and recitals to this Agreement.

Section 1.05    Definitions in this Agreement. The following terms shall have
the following meanings:

“After-acquired Shares” shall have the meaning assigned to such term in the
recitals.
“Agreement” shall have the meaning assigned to such term in the preamble.
“Collateral” shall have the meaning assigned to such term in Section 2.01.
“Collateral Agent” shall have the meaning assigned to such term in the preamble.
“Equity Interests” shall mean Stock and Stock Equivalents.
“Extensions of Credit” shall have the meaning assigned to such term in the
recitals.
“FOSO Intercreditor Agreement” has the meaning specified in the recitals.
“Pledged Debt” means all Investment Property and General Intangibles
constituting or pertaining to Indebtedness owing by any Person to Grantor.
“Pledged Shares” shall have the meaning assigned to such term in the recitals.
“Pledgors” shall have the meaning assigned to such term in the preamble.
“Proceeds” shall mean all “proceeds” as such term is defined in Article 9 of the
UCC and, in any event, shall include with respect to any Pledgor (a) any
consideration received from the sale, exchange, license, lease or other
Disposition of any asset or property that constitutes Collateral, any value
received as a consequence of the possession of any Collateral and any payment
received from any insurer or other Person or entity as a result of the
destruction, loss, theft, damage or other involuntary conversion of whatever
nature of any asset or property that constitutes Collateral, (b) all cash and
negotiable instruments received by or held on behalf of the Collateral

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Agent and (c) any and all other amounts from time to time paid or payable under
or in connection with any of the Collateral.
“Second-Out Credit Agreement” shall have the meaning assigned to such term in
the recitals.
“Second-Out Credit Documents” has the meaning given to the term “Credit
Documents” in the Second-Out Credit Agreement.
“Second-Out Lenders” shall have the meaning assigned to such term in the
recitals.
“Second-Out Obligations” shall have the meaning given to the term “Obligations”
in the Second-Out Credit Agreement; provided that references herein to (a) the
Second-Out Obligations of the Borrower shall refer to the Second-Out Obligations
(as defined in the FOSO Intercreditor Agreement), and (b) the Second-Out
Obligations of any Subsidiary Pledgor shall refer to such Subsidiary Pledgor’s
Subsidiary Pledgor Second-Out Obligations.
“Second-Out Secured Parties” has the meaning given to the term “Secured Parties”
in the Second-Out Credit Agreement.
“Subsidiary Pledgor Second-Out Obligations” shall mean, with respect to any
Subsidiary Pledgor, all Second-Out Obligations (as defined in the FOSO
Intercreditor Agreement) of such Subsidiary Pledgor which may arise under or in
connection with any Second-Out Credit Document to which such Subsidiary Pledgor
is a party.
“Subsidiary Pledgors” shall have the meaning assigned to such term in the
preamble.
“Termination Date” shall mean the date on which all Second-Out Obligations are
paid in full in cash (other than contingent indemnification obligations not then
due) and all commitments are terminated.
“UCC” shall mean the Uniform Commercial Code as from time to time in effect in
the State of New York; provided, however, that, in the event that, by reason of
mandatory provisions of law, any of the attachment, perfection or priority of
the Collateral Agent’s and the Second-Out Secured Parties’ security interest in
any Collateral is governed by the Uniform Commercial Code as in effect in a
jurisdiction other than the State of New York, the term “UCC” shall mean the
Uniform Commercial Code as in effect in such other jurisdiction for purposes of
the provisions hereof relating to such attachment, perfection or priority and
for purposes of definitions related to such provisions.
Section 1.06    Collateral Terms. Where the context requires, terms relating to
the Collateral or any part thereof, when used in relation to a Pledgor, shall
refer to such Pledgor’s Collateral or the relevant part thereof.

ARTICLE II
GRANT OF SECURITY
Section 2.01    Grant of Security Interest. Each Pledgor hereby transfers,
assigns and pledges to the Collateral Agent, for the ratable benefit of the
Second-Out Secured Parties, and grants to the Collateral Agent, for the ratable
benefit of the Second-Out Secured Parties, a lien on and a security interest in
(the “Security Interest”) all of such Pledgor’s right, title and interest in, to
and under the following assets and properties, whether now owned or existing or
at any time hereafter acquired or existing (collectively, the “Collateral”) as
collateral security for the prompt and complete payment and performance when due
(whether at stated maturity, by acceleration or otherwise) of the Second-Out
Obligations:
(a)    the Pledged Shares held by such Pledgor and the certificates, if any,
representing such Pledged Shares and any interest of such Pledgor in the entries
on the books of the issuer of the

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Pledged Shares or any financial intermediary pertaining to the Pledged Shares
and all dividends, cash, warrants, rights, instruments and other property or
Proceeds from time to time received, receivable or otherwise distributed in
respect of or in exchange for any or all of the Pledged Shares; provided that
the Pledged Shares under this Agreement shall not include any Excluded Stock;

(b)    the Pledged Debt held by such Pledgor and the instruments and other
writings, if any, representing such Pledged Debt; provided that the Pledged Debt
under this Agreement shall not include any Excluded Property; and

(c)    to the extent not covered by clauses (a) and (b) above, respectively, all
Proceeds of any or all of the foregoing Collateral.

ARTICLE III
SECURITY FOR OBLIGATIONS

Section 3.01    Obligations Secured. This Agreement secures the payment of all
the Second-Out Obligations. Without limiting the generality of the foregoing,
this Agreement secures the payment of all amounts that constitute part of the
Second-Out Obligations and would be owed by any Pledgor to the Collateral Agent
or the other Second-Out Secured Parties under the Second-Out Credit Documents
but for the effects of bankruptcy, insolvency, fraudulent conveyance,
reorganization and other similar laws relating to or affecting creditors’ rights
generally and general principles of equity (whether considered in a proceeding
in equity or law).

ARTICLE IV
DELIVERY OF THE COLLATERAL

sECTION 4.01    Delivery of the Collateral. Subject to the provisions of Section
15.14(c), all certificates or instruments, if any, representing or evidencing
the Collateral shall be promptly delivered to and held by or on behalf of the
Collateral Agent pursuant hereto to the extent required by the Credit Agreement
and shall be in suitable form for transfer by delivery, or shall be accompanied
by duly executed instruments of transfer or assignment in blank, all in form and
substance reasonably satisfactory to the Collateral Agent. The Collateral Agent
shall have the right, at any time after the occurrence and during the
continuance of an Event of Default and with notice to the relevant Pledgor, to
transfer to or to register in the name of the Collateral Agent or any of its
nominees any or all of the Pledged Shares. Each delivery of Collateral
(including any After-acquired Shares) shall be accompanied by a schedule
describing the assets theretofore and then being pledged hereunder, which shall
be attached hereto as part of Schedule 1 and made a part hereof; provided that
the failure to attach any such schedule hereto shall not affect the validity of
such pledge of such securities. Each schedule so delivered shall supplement any
prior schedules so delivered.
ARTICLE V
REPRESENTATIONS AND WARRANTIES

Section 5.01    Representations and Warranties. Each Pledgor represents and
warrants as follows:

(a)    Schedule 1 (i) correctly represents as of the date hereof the issuer, the
certificate number, if any, the Pledgor and the record and beneficial owner, the
number and class and the percentage of the issued and outstanding Equity
Interests of such class of all Pledged Shares and (ii) together with the
comparable schedule to each supplement hereto, includes all Equity Interests and
promissory notes required to be pledged pursuant to Section 10.10 of the
Second-Out Credit Agreement and Section 9.01

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(b) hereof. Except as set forth on Schedule 1, the Pledged Shares represent all
(or 66-2/3% of all the issued and outstanding Equity Interests in the case of
pledges of Equity Interests in Foreign Subsidiaries) of the issued and
outstanding Equity Interests of each class of Equity Interests in the issuer
owned by such Pledgor on the date hereof.

(b)    Such Pledgor is the legal and beneficial owner of the Collateral pledged
or assigned by such Pledgor hereunder free and clear of any Lien, except for
Liens permitted by Section [11.2] of the Second-Out Credit Agreement and the
Lien created by this Agreement.

(c)    As of the date hereof, the Pledged Shares pledged by such Pledgor
hereunder have been duly authorized and validly issued and, in the case of
Pledged Shares issued by a corporation, are fully paid and non-assessable.

(d)    The execution and delivery by such Pledgor of this Agreement and the
pledge of the Collateral pledged by such Pledgor hereunder pursuant hereto
create a legal, valid and enforceable security interest in such Collateral and,
(i) in the case of certificates or instruments representing or evidencing the
Collateral, upon the earlier of (x) delivery of such Collateral to the
Collateral Agent in the State of New York (subject to the provisions of Section
15.14(c)), and (y) the filing of the applicable Uniform Commercial Code
financing statements described in the Second-Out Security Agreement and (ii) in
the case of all other Collateral, upon the filing of the applicable Uniform
Commercial Code financing statements described in the Second-Out Security
Agreement, shall create a perfected first priority security interest in such
Collateral, securing the payment of the Second-Out Obligations, in favor of the
Collateral Agent, for the ratable benefit of the Second-Out Secured Parties,
subject to the effects of bankruptcy, insolvency, fraudulent conveyance,
reorganization and other similar laws relating to or affecting creditors’ rights
generally and general principles of equity (whether considered in a proceeding
in equity or law).

(e)    Such Pledgor has full power, authority and legal right to pledge all the
Collateral pledged by such Pledgor pursuant to this Agreement and this Agreement
constitutes a legal, valid and binding obligation of each Pledgor, enforceable
in accordance with its terms, subject to the effects of bankruptcy, insolvency,
fraudulent conveyance, reorganization and other similar laws relating to or
affecting creditors’ rights generally and general principles of equity (whether
considered in a proceeding in equity or law).
ARTICLE VI
CERTIFICATION OF LIMITED LIABILITY COMPANY,
LIMITED PARTNERSHIP INTERESTS

Section     6.01Partnership; LLC Interests. Any Equity Interests required to be
pledged hereunder in any Domestic Subsidiary that is organized as a limited
liability company or limited partnership and pledged hereunder shall either (i)
be represented by a certificate and the applicable Pledgor shall cause the
issuer of such interests to elect to treat such interests as a “security” within
the meaning of Article 8 of the Uniform Commercial Code of its jurisdiction of
organization or formation, as applicable, by including in its organizational
documents language substantially similar to the following in order to provide
that such interests shall be governed by Article 8 of the Uniform Commercial
Code:

“The Partnership/LLC hereby irrevocably elects that all membership interests in
the Partnership/LLC shall be securities governed by Article 8 of the Uniform
Commercial Code of [jurisdiction of organization or formation, as applicable].
Each certificate evidencing partnership/membership

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interests in the Partnership/LLC shall bear the following legend: “This
certificate evidences an interest in [name of Partnership/LLC] and shall be a
security for purposes of Article 8 of the Uniform Commercial Code.” No change to
this provision shall be effective until all outstanding certificates have been
surrendered for cancellation and any new certificates thereafter issued shall
not bear the foregoing legend.”
or (ii) the applicable Pledgor shall cause the issuer of such interests not to
elect to have such interests treated as a “security” within the meaning of
Article 8 of the Uniform Commercial Code of its jurisdiction of organization or
formation, as applicable.
Section 6.02    Additional Pledgor. Each Pledgor will comply with Section 10.10
of the Second-Out Credit Agreement.

ARTICLE VII
FURTHER ASSURANCES

Section 7.01    Further Assurances. Each Pledgor agrees that at any time and
from time to time, at the expense of such Pledgor, it will execute or otherwise
authorize the filing of any and all further documents, financing statements,
agreements and instruments, and take all such further actions (including the
filing and recording of financing statements, fixture filings, mortgages, deeds
of trust and other documents), which may be required under any applicable
Requirements of Law, or that the Majority Lenders may reasonably request, in
order (a) to perfect and protect any pledge, assignment or security interest
granted or purported to be granted hereby (including the priority thereof) or
(b) to enable the Collateral Agent to exercise and enforce its rights and
remedies hereunder with respect to any Collateral. Each Pledgor agrees that, in
the event any Pledgor takes any action to grant or perfect a Lien in favor of
the First Lien First Out Administrative Agent in any assets, such Pledgor shall
also take such action to grant or perfect a Lien (subject to the FOSO
Intercreditor Agreement) in favor of the Collateral Agent to secure the
Second-Out Obligations without request of the Collateral Agent.

ARTICLE VIII
VOTING RIGHTS; DIVIDENDS AND DISTRIBUTIONS; ETC.

Section 8.01    Voting Rights. So long as no Event of Default shall have
occurred and be continuing:
(a)    Each Pledgor shall be entitled to exercise any and all voting and other
consensual rights pertaining to the Collateral or any part thereof for any
purpose not prohibited by the terms of this Agreement or the other Second-Out
Credit Documents.

(b)    The Collateral Agent shall execute and deliver (or cause to be executed
and delivered) to each Pledgor all such proxies and other instruments as such
Pledgor may reasonably request for the purpose of enabling such Pledgor to
exercise the voting and other rights that it is entitled to exercise pursuant to
paragraph (a) above.

Section 8.02Dividends and Distributions. Subject to Section 8.03 of this Article
VIII, each Pledgor shall be entitled to receive and retain and use, free and
clear of the Lien created by this Agreement, any and all dividends,
distributions, principal and interest made or paid in respect of the Collateral
to the extent not prohibited by any Second-Out Credit Document; provided,
however, subject to the provisions of Section 15.14(c), any and all noncash
dividends, interest, principal or other distributions that would constitute
Pledged Shares, whether resulting from a subdivision, combination or
reclassification of the outstanding Equity Interests of the issuer of any
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exchange for Pledged Shares or any part thereof, or in redemption thereof, or as
a result of any merger, consolidation, acquisition or other exchange of assets
to which such issuer may be a party or otherwise, shall be, and shall be
forthwith delivered to the Collateral Agent to hold as Collateral and shall, if
received by such Pledgor, be received in trust for the benefit of the Collateral
Agent, be segregated from the other property or funds of such Pledgor and be
forthwith delivered to the Collateral Agent as Collateral in the same form as so
received (with any necessary indorsement).

Section 8.03    Voting Rights, Dividends and Distributions after Event of
Default. Upon written notice to a Pledgor by the Collateral Agent) following the
occurrence and during the continuance of an Event of Default,
(a)    all rights of such Pledgor to exercise or refrain from exercising the
voting and other consensual rights that it would otherwise be entitled to
exercise pursuant to Section 8.01(a) shall cease, and all such rights shall
thereupon become vested in the Collateral Agent, which shall thereupon have the
sole right to exercise or refrain from exercising such voting and other
consensual rights during the continuance of such Event of Default; provided
that, unless otherwise directed by the Majority Lenders, the Collateral Agent
shall have the right (but not the obligation) from time to time following the
occurrence and during the continuance of an Event of Default to permit the
Pledgors to exercise such rights. After all Events of Default have been cured or
waived, each Pledgor will have the right to exercise the voting and consensual
rights that such Pledgor would otherwise be entitled to exercise pursuant to the
terms of Section 8.01(a) (and the obligations of the Collateral Agent under
Section 8.01(b) shall be reinstated);

(b)    all rights of such Pledgor to receive the dividends, distributions and
principal and interest payments that such Pledgor would otherwise be authorized
to receive and retain pursuant to Section 8.02 shall cease, and all such rights
shall thereupon become vested in the Collateral Agent, which shall thereupon
have the sole right to receive and hold as Collateral such dividends,
distributions and principal and interest payments during the continuance of such
Event of Default. After all Events of Default have been cured or waived, the
Collateral Agent shall repay to each Pledgor (without interest) all dividends,
distributions and principal and interest payments that such Pledgor would
otherwise be permitted to receive, retain and use pursuant to the terms of
Section 8.02;

(c)    all dividends, distributions and principal and interest payments that are
received by such Pledgor contrary to the provisions of Section 8.02 shall be
received in trust for the benefit of the Collateral Agent shall be segregated
from other property or funds of such Pledgor and shall forthwith be delivered to
the Collateral Agent as Collateral in the same form as so received (with any
necessary indorsements); and

(d)    in order to permit the Collateral Agent to receive all dividends,
distributions and principal and interest payments to which it may be entitled
under Section 8.02, to exercise the voting and other consensual rights that it
may be entitled to exercise pursuant to Section 8.03(a), and to receive all
dividends, distributions and principal and interest payments that it may be
entitled to under Sections 8.03(b) and 8.03(c), such Pledgor shall from time to
time execute and deliver to the Collateral Agent, appropriate proxies, dividend
payment orders and other instruments as may be required for it to receive all
payments and exercise all rights pursuant to Section 8.02.

ARTICLE IX
TRANSFERS AND OTHER LIENS; ADDITIONAL COLLATERAL; ETC.

Section 9.01    Transfers and Other Liens; Additional Collateral; Etc. Each
Pledgor shall:

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(a)    not except as permitted by the Second-Out Credit Agreement (including
pursuant to waivers and consents thereunder), (i) sell or otherwise dispose of,
or grant any option or warrant with respect to, any of the Collateral except as
permitted by the Second-Out Credit Agreement (including pursuant to waivers and
consents thereunder) or (ii) create or suffer to exist any consensual Lien upon
or with respect to any of the Collateral, except for Liens permitted by Section
11.2 of the Second-Out Credit Agreement and the Lien created by this Agreement;
provided that, in the event such Pledgor sells or otherwise Disposes of assets
as permitted by the Second-Out Credit Agreement (including pursuant to waivers
and consents thereunder), and such assets are or include any of the Collateral,
the Collateral Agent shall release such Collateral to such Pledgor free and
clear of the Lien created by this Agreement concurrently with the consummation
of such sale or Disposition in accordance with Section 14.17 of the Second-Out
Credit Agreement and Article XIII hereunder;

(b)    pledge and, if applicable, cause each Domestic Subsidiary required to
become a party to this Agreement to pledge, to the Collateral Agent for the
ratable benefit of the Second-Out Secured Parties, immediately upon acquisition
thereof, all the After-acquired Shares required to be pledged hereunder pursuant
to Section 10.10 of the Second-Out Credit Agreement, in each case pursuant to a
supplement to this Agreement substantially in the form of Annex A or such other
form reasonably acceptable to the Collateral Agent (it being understood that the
execution and delivery of such a supplement shall not require the consent of any
Pledgor hereunder and that the rights and obligations of each Pledgor hereunder
shall remain in full force and effect notwithstanding the addition of any new
Subsidiary Pledgor as a party to this Agreement); and

(c)    defend its and the Collateral Agent’s title or interest in and to all the
Collateral (and in the Proceeds thereof) against any and all Liens (other than
Liens permitted by Section 11.2 of the Second-Out Credit Agreement and the Lien
created by this Agreement), however arising, and any and all Persons whomsoever.

ARTICLE V
COLLATERAL AGENT
Section 10.01    Attorney-in-Fact. Each Pledgor hereby appoints, which
appointment is irrevocable and coupled with an interest, the Collateral Agent as
such Pledgor’s attorney-in-fact, with full authority in the place and stead of
such Pledgor and in the name of such Pledgor or otherwise, to take any action
and to execute any instrument, in each case after the occurrence and during the
continuance of an Event of Default and with notice to such Pledgor, that the
Collateral Agent may deem reasonably necessary or advisable to accomplish the
purposes of this Agreement, including to receive, indorse and collect all
instruments made payable to such Pledgor representing any dividend, distribution
or principal or interest payment in respect of the Collateral or any part
thereof and to give full discharge for the same.

Section 10.02     The Collateral Agent’s Duties
. The powers conferred on the Collateral Agent hereunder are solely to protect
its interest in the Collateral and shall not impose any duty upon it to exercise
any such powers. Except for the safe custody of any Collateral in its possession
and the accounting for moneys actually received by it hereunder, the Collateral
Agent shall have no duty as to any Collateral, to ascertain or take action with
respect to calls, conversions, exchanges, maturities, tenders or other matters
relative to any Pledged Shares, whether or not the Collateral Agent or any other
Second-Out Secured Party has or is deemed to have knowledge of such matters, or
to take any necessary steps to preserve rights against any parties or any other
rights pertaining to any Collateral. The Collateral Agent shall have the same
rights and protections of the Collateral Agent as set forth in the Second-Out
Security Agreement and the Second-Out Credit Agreement.

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ARTICLE VI
REMEDIES

Section 11.01    Remedies. If any Event of Default shall have occurred and be
continuing, then:

(a)    The Collateral Agent may exercise in respect of the Collateral, in
addition to other rights and remedies provided for herein or otherwise available
to it, all the rights and remedies of a secured party upon default under the UCC
(whether or not the UCC applies to the affected Collateral) or any other
applicable Requirement of Law or in equity and also may with notice to the
relevant Pledgor, sell the Collateral or any part thereof in one or more parcels
at public or private sale, at any exchange broker’s board or at any of the
Collateral Agent’s offices or elsewhere, for cash, on credit or for future
delivery, at such price or prices and upon such other terms as are commercially
reasonable irrespective of the impact of any such sales on the market price of
the Collateral. The Collateral Agent shall be authorized at any such sale (if it
deems it advisable to do so) to restrict the prospective bidders or purchasers
of Collateral to Persons who will represent and agree that they are purchasing
the Collateral for their own account for investment and not with a view to the
distribution or sale thereof, and, upon consummation of any such sale, the
Collateral Agent shall have the right to assign, transfer and deliver to the
purchaser or purchasers thereof the Collateral so sold. Each purchaser at any
such sale shall hold the property sold absolutely free from any claim or right
on the part of any Pledgor, and each Pledgor hereby waives (to the extent
permitted by law) all rights of redemption, stay and/or appraisal that it now
has or may at any time in the future have under any Requirement of Law now
existing or hereafter enacted. The Collateral Agent or any Second-Out Secured
Party shall have the right upon any such public sale, and, to the extent
permitted by law, upon any such private sale, to purchase all or any part of the
Collateral so sold, and the Collateral Agent or such Second-Out Secured Party
may pay the purchase price by crediting the amount thereof against the
Second-Out Obligations. Each Pledgor agrees that, to the extent notice of sale
shall be required by law, at least ten days’ notice to such Pledgor of the time
and place of any public sale or the time after which any private sale is to be
made shall constitute reasonable notification. The Collateral Agent shall not be
obligated to make any sale of Collateral regardless of notice of sale having
been given. The Collateral Agent may adjourn any public or private sale from
time to time by announcement at the time and place fixed therefor, and such sale
may, without further notice, be made at the time and place to which it was so
adjourned. To the extent permitted by law, each Pledgor hereby waives any claim
against the Collateral Agent arising by reason of the fact that the price at
which any Collateral may have been sold at such a private sale was less than the
price that might have been obtained at a public sale, even if the Collateral
Agent accepts the first offer received and does not offer such Collateral to
more than one offeree.

(b)    The Collateral Agent shall apply the Proceeds of any collection or sale
of the Collateral in the manner specified in the final paragraph of Article XII
of the Second-Out Credit Agreement. Upon any sale of the Collateral by the
Collateral Agent (including pursuant to a power of sale granted by statute or
under a judicial proceeding), the receipt of the Collateral Agent or of the
officer making the sale shall be a sufficient discharge to the purchaser or
purchasers of the Collateral so sold and such purchaser or purchasers shall not
be obligated to see to the application of any part of the purchase money paid
over to the Collateral Agent or such officer or be answerable in any way for the
misapplication thereof.

(c)    The Collateral Agent may exercise any and all rights and remedies of each
Pledgor in respect of the Collateral.

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(d)    All payments received by any Pledgor in respect of the Collateral after
the occurrence and during the continuance of an Event of Default shall be
received in trust for the benefit of the Collateral Agent, shall be segregated
from other property or funds of such Pledgor and shall be forthwith delivered to
the Collateral Agent as Collateral in the same form as so received (with any
necessary indorsement).

ARTICLE XII
AMENDMENTS, ETC. WITH RESPECT
TO THE OBLIGATIONS; WAIVER OF RIGHTS

Section 12.01    Amendments, etc. with Respect to the Second-Out Obligations;
Waiver of Rights. Except for the termination of a Pledgor’s Second-Out
Obligations hereunder as provided in Article XIII, each Pledgor shall remain
obligated hereunder notwithstanding that, without any reservation of rights
against any Pledgor and without notice to or further assent by any Pledgor, (a)
any demand for payment of any of the Second-Out Obligations made by the
Collateral Agent or any other Second-Out Secured Party may be rescinded by such
party and any of the Second-Out Obligations continued, (b) the Obligations, or
the liability of any other party upon or for any part thereof, or any collateral
security or guarantee therefor or right of offset with respect thereto, may,
from time to time, in whole or in part, be renewed, extended, amended, modified,
accelerated, compromised, waived, surrendered or released by the Collateral
Agent or any other Second-Out Secured Party, (c) the Second-Out Credit Documents
and any other documents executed and delivered in connection therewith may be
amended, modified, supplemented or terminated, in whole or in part, in
accordance with the terms of the applicable Second-Out Credit Document, and (d)
any collateral security, guarantee or right of offset at any time held by the
Collateral Agent or any other Second-Out Secured Party for the payment of the
Second-Out Obligations may be sold, exchanged, waived, surrendered or released.
Neither the Collateral Agent nor any other Second-Out Secured Party shall have
any obligation to protect, secure, perfect or insure any Lien at any time held
by it as security for the Second-Out Obligations or for this Agreement or any
property subject thereto. When making any demand hereunder against any Pledgor,
the Collateral Agent or any other Second-Out Secured Party may, but shall be
under no obligation to, make a similar demand on the Borrower or any Pledgor or
any other person, and any failure by the Collateral Agent or any other
Second-Out Secured Party to make any such demand or to collect any payments from
the Borrower or any Pledgor or any other person or any release of the Borrower
or any Pledgor or any other person shall not relieve any Pledgor in respect of
which a demand or collection is not made or any Pledgor not so released of its
several obligations or liabilities hereunder, and shall not impair or affect the
rights and remedies, express or implied, or as a matter of law, of the
Collateral Agent or any other Second-Out Secured Party against any Pledgor. For
the purposes hereof “demand” shall include the commencement and continuance of
any legal proceedings.

ARTICLE VIII
CONTINUING SECURITY INTEREST; ASSIGNMENTS UNDER THE Second-Out CREDIT AGREEMENT;
RELEASE

Section 13.01    Continuing Security. This Agreement shall remain in full force
and effect and be binding in accordance with and to the extent of its terms upon
each Pledgor and the successors and assigns thereof, and shall inure to the
benefit of the Collateral Agent and the other Second-Out Secured Parties and
their respective successors, indorsees, transferees and assigns until the
Termination Date, notwithstanding that from time to time prior to the
Termination Date, the Pledgors may be free from any Second-Out Obligations.

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Section 13.02    Assignment. A Subsidiary Pledgor shall automatically be
released from its obligations hereunder and the Collateral of such Subsidiary
Pledgor shall be automatically released upon consummation of any transaction
permitted by the Second-Out Credit Agreement as a result of which such
Subsidiary Pledgor ceases to be a Material Subsidiary or otherwise becomes an
Excluded Subsidiary; provided that, the Majority Lenders shall have consented to
such transaction (to the extent required by the Second-Out Credit Agreement) and
the terms of such consent did not provide otherwise.

Section 13.03    Release of Collateral. The Collateral shall be automatically
released from the Liens of this Agreement (i) upon any Disposition by any
Pledgor of any Collateral that is permitted under the Second-Out Credit
Agreement (other than to another Pledgor) and (ii) pursuant to Section 14.17 of
the Second-Out Credit Agreement. Any such release in connection with any sale,
transfer or other disposition of such Collateral shall result in such Collateral
being sold, transferred or Disposed of, as applicable, free and clear of the
Liens of this Agreement.

Section 13.04    Investment Grade Period. If an Investment Grade Period shall
occur after the date hereof, the Collateral Agent shall (without notice to, or
vote or consent of, any Second-Out Secured Party) take such actions as shall be
required to release its security interest in the Collateral.

Section 13.05    Notice of Termination; Release. In connection with any
termination or release pursuant to this Article XIII the Collateral Agent shall
execute and deliver to any Pledgor or authorize the filing of, at such Pledgor’s
expense, all documents that such Pledgor shall reasonably request to evidence
such termination or release. Any execution and delivery of documents pursuant to
this Article XIII shall be without recourse to or warranty by the Collateral
Agent.

ARTICLE XIV
REINSTATEMENT

Section 14.01    Reinstatement. Each Pledgor further agrees that, if any payment
made by any Credit Party or other Person and applied to the Second-Out
Obligations is at any time annulled, avoided, set aside, rescinded, invalidated,
declared to be fraudulent or preferential or otherwise required to be refunded
or repaid, or the Proceeds of Collateral are required to be returned by any
Second-Out Secured Party to such Credit Party, its estate, trustee, receiver or
any other party, including any Pledgor, under any bankruptcy law, state, federal
or foreign law, common law or equitable cause, then, to the extent of such
payment or repayment, any Lien or other Collateral securing such liability shall
be and remain in full force and effect, as fully as if such payment had never
been made or, if prior thereto the Lien granted hereby or other Collateral
securing such liability hereunder shall have been released or terminated by
virtue of such cancellation or surrender), such Lien or other Collateral shall
be reinstated in full force and effect, and such prior cancellation or surrender
shall not diminish, release, discharge, impair or otherwise affect any Lien or
other Collateral securing the obligations of any Pledgor in respect of the
amount of such payment.
ARTICLE XV
MISCELLANEOUS

Section 15.01    Notices. All notices, requests and demands pursuant hereto
shall be made in accordance with Section 14.2 of the Second-Out Credit
Agreement. All communications and notices hereunder to any Pledgor shall be
given to it in care of the Borrower at the Borrower’s address set forth in
Section 14.2 of the Second-Out Credit Agreement.

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Section 15.02    Counterparts. This Agreement may be executed by one or more of
the parties to this Agreement on any number of separate counterparts (including
by facsimile or other electronic transmission (i.e. a “pdf” or a “tif” file)),
and all of said counterparts taken together shall be deemed to constitute one
and the same instrument. A set of copies of this Agreement signed by all of the
parties shall be lodged with the Collateral Agent and the Borrower.

Section 15.03    Severability. Any provision of this Agreement that is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction. The parties hereto shall
endeavor in good-faith negotiations to replace the invalid, illegal or
unenforceable provisions with valid provisions the economic effect of which
comes as close as possible to that of the invalid, illegal or unenforceable
provisions.

Section 15.04    Integration. This Agreement together with the other Second-Out
Credit Documents represents the agreement of each of the Pledgors with respect
to the subject matter hereof and thereof and there are no promises,
undertakings, representations or warranties by the Collateral Agent or any other
Second-Out Secured Party relative to the subject matter hereof not expressly set
forth or referred to herein or in the other Second-Out Credit Documents.

Section 15.05    Amendments in Writing. None of the terms or provisions of this
Agreement may be waived, amended, supplemented or otherwise modified except by a
written instrument executed by the affected Pledgor(s) and the Collateral Agent
in accordance with Section 14.1 of the Second-Out Credit Agreement; provided,
however, that this Agreement may be supplemented (but no existing provisions may
be modified and no Collateral may be released) through agreements substantially
in the form of Annex A, in each case duly executed by each Pledgor directly
affected thereby.

Section 15.06    No Waiver. Neither the Collateral Agent nor any Second-Out
Secured Party shall by any act (except by a written instrument pursuant to
Section 15.05), delay, indulgence, omission or otherwise be deemed to have
waived any right or remedy hereunder or to have acquiesced in any Default or
Event of Default or in any breach of any of the terms and conditions hereof or
of any other applicable Second-Out Credit Document. No failure to exercise, nor
any delay in exercising, on the part of the Collateral Agent or any other
Second-Out Secured Party, any right, power or privilege hereunder shall operate
as a waiver thereof. No single or partial exercise of any right, power or
privilege hereunder shall preclude any other or further exercise thereof or the
exercise of any other right, power or privilege. A waiver by the Collateral
Agent or any other Second-Out Secured Party of any right or remedy hereunder on
any one occasion shall not be construed as a bar to any right or remedy that the
Collateral Agent or such other Second-Out Secured Party would otherwise have on
any future occasion.

Section 15.07    Cumulative Remedies. The rights, remedies, powers and
privileges herein provided are cumulative, may be exercised singly or
concurrently and are not exclusive of any other rights or remedies provided by
Requirement of Law.

Section 15.08    Section Headings. The Section headings used in this Agreement
are for convenience of reference only and are not to affect the construction
hereof or be taken into consideration in the interpretation hereof.

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Section 15.09    Successors and Assigns. This Agreement shall be binding upon
the successors and assigns of each Pledgor and shall inure to the benefit of the
Collateral Agent and the other Second-Out Secured Parties and their respective
successors and assigns, except that no Pledgor may assign, transfer or delegate
any of its rights or obligations under this Agreement without the prior written
consent of the Collateral Agent, except pursuant to a transaction permitted by
the Second-Out Credit Agreement.

Section 15.10    Waiver of Jury Trial. EACH PARTY HERETO IRREVOCABLY AND
UNCONDITIONALLY WAIVES TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING
TO THIS AGREEMENT, ANY OTHER SECOND-OUT CREDIT DOCUMENT AND FOR ANY COUNTERCLAIM
THEREIN.

Section 15.11    Submission to Jurisdiction. Each party hereto irrevocably and
unconditionally:

(a)    submits for itself and its property in any legal action or proceeding
relating to this Agreement and the other Second-Out Credit Documents to which it
is a party, or for recognition and enforcement of any judgment in respect
thereof, to the exclusive general jurisdiction of the courts of the State of New
York, the courts of the United States of America for the Southern District of
New York and appellate courts from any thereof;

(b)    consents that any such action or proceeding shall be brought in such
courts and waives any objection that it may now or hereafter have to the venue
of any such action or proceeding in any such court or that such action or
proceeding was brought in an inconvenient court and agrees not to plead or claim
the same;

(c)    agrees that service of process in any such action or proceeding may be
effected by mailing a copy thereof by registered or certified mail (or any
substantially similar form of mail), postage prepaid, to such Person at its
address referred to in Section 15.01 or at such other address of which the
Collateral Agent shall have been notified pursuant thereto;

(d)    agrees that nothing herein shall affect the right of any other party
hereto (or any Second-Out Secured Party) to effect service of process in any
other manner permitted by law or shall limit the right of any party hereto (or
any Second-Out Secured Party) to sue in any other jurisdiction; and

(e)    waives, to the maximum extent not prohibited by law, any right it may
have to claim or recover in any legal action or proceeding referred to in this
Section 15.11 any special, exemplary, punitive or consequential damages.

Section 15.12    Acknowledgments. Each party hereto hereby acknowledges that:

(a)    it has been advised by counsel in the negotiation, execution and delivery
of this Agreement and the other Second-Out Credit Documents to which it is a
party;

(b)    (i) neither the Collateral Agent nor any other Agent or Second-Out
Secured Party has assumed or will assume an advisory, agency or fiduciary
responsibility in favor of any Pledgor with respect to any of the transactions
contemplated in this Agreement or the process leading thereto, including with
respect to any amendment, waiver or other modification hereof or of any other
Second-Out Credit Document (irrespective of whether the Collateral Agent or any
other Agent or Second-Out Secured Party

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has advised or is currently advising any of the Pledgors or their respective
Affiliates on other matters) and neither the Collateral Agent or other Agent or
Second-Out Secured Party has any obligation to any of the Pledgors or their
respective Affiliates with respect to the transactions contemplated hereby
except those obligations expressly set forth herein and in the other Second-Out
Credit Documents; (ii) the Collateral Agent and its Affiliates, each other Agent
and each other Second-Out Secured Party and each Affiliate of the foregoing may
be engaged in a broad range of transactions that involve interests that differ
from those of the Pledgors and their respective Affiliates, and neither the
Collateral Agent nor any other Agent or Second-Out Secured Party has any
obligation to disclose any of such interests by virtue of any advisory, agency
or fiduciary relationship; and (iii) neither the Collateral Agent nor any other
Agent or Second-Out Secured Party has provided and none will provide any legal,
accounting, regulatory or tax advice with respect to any of the transactions
contemplated hereby (including any amendment, waiver or other modification
hereof or of any other Second-Out Credit Document) and the Pledgors have
consulted their own respective legal, accounting, regulatory and tax advisors to
the extent they have deemed appropriate. Each Pledgor agrees that it will not
claim that the Collateral Agent or any other Agent or Second-Out Secured Party,
as the case may be, has rendered advisory services of any nature or respect, or
owes a fiduciary or similar duty to such Pledgor, in connection with the
transactions contemplated in this Agreement or the process leading thereto; and

(c)    no joint venture is created hereby or by the other Second-Out Credit
Documents or otherwise exists by virtue of the transactions contemplated hereby
among the Second-Out Lenders, the Agents and any other Second-Out Secured Party
or among the Pledgors and the Second-Out Lenders, the Agents and any other
Second-Out Secured Party.

Section 15.13    Governing Law. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF
THE PARTIES HEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN
ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.

Section 15.14    FOSO Intercreditor Agreement Controls.

(a)    Each Second-Out Secured Party, by accepting the benefits of the security
provided hereby, (i) agrees (or is deemed to agree) that it will be bound by,
and will take no actions contrary to, the provisions of the FOSO Intercreditor
Agreement, (ii) authorizes (or is deemed to authorize) the Collateral Agent on
behalf of such Person to enter into, and perform under, the FOSO Intercreditor
Agreement and (iii) acknowledges (or is deemed to acknowledge) that a copy of
the FOSO Intercreditor Agreement was delivered, or made available, to such
Second-Out Secured Party.

(b)    Notwithstanding any other provision contained herein, this Agreement, the
Liens created hereby and the rights, remedies, duties and obligations provided
for herein are subject in all respects to the provisions of the FOSO
Intercreditor Agreement. In the event of any conflict or inconsistency between
the provisions of this Agreement and the FOSO Intercreditor Agreement, the
provisions of the FOSO Intercreditor Agreement shall control.

(c)    Without limiting the foregoing, at any time prior to the Discharge of the
First-Out Obligations, any provision hereof requiring any Grantor to deliver
possession of any Collateral to the Collateral Agent, shall be deemed to have
been complied with, if and for so long as (i) the FOSO Intercreditor Agreement
is in full force and effect and (ii) the First-Out Agent shall have such
possession for the benefit of the Second-Out Secured Parties and as bailee or
sub-agent of the Collateral Agent as provided in the FOSO Intercreditor
Agreement. Each Pledgor shall provide

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prompt written notice to the Collateral Agent identifying any Collateral
delivered to the First-Out Agent pursuant to the First Lien First-Out Credit
Documents.

[SIGNATURE PAGES FOLLOW]Signature Page

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

[CALIFORNIA RESOURCES CORPORATION],
  as an Additional Pledgor
 
 
By:_____________________________
Name:
Title:

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Acknowledged and Consented to:

The Bank of New York Mellon Trust Company, N.A.,
as Collateral Agent

By:    __________________________
Name:
Title:

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SCHEDULE 1
TO THE PLEDGE AGREEMENT

PLEDGED SHARES

Pledgor
Issuer
Issuer’s Jurisdiction of Formation
Class of Equity Interest
Certificate No(s)
Number of Units
Percentage of Issued and Outstanding Units
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

 

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ANNEX A
TO THE PLEDGE AGREEMENT

SUPPLEMENT NO. [___], dated as of [___], 201___ (this “Supplement”) to the
PLEDGE AGREEMENT, dated as of [_], 2016 (the “Pledge Agreement”), among
CALIFORNIA RESOURCES CORPORATION, a Delaware corporation (the “Borrower”), each
Subsidiary of the Borrower that becomes a party thereto pursuant to Section 9.01
thereof (each such Subsidiary being a “Subsidiary Pledgor” and, collectively,
the “Subsidiary Pledgors”; the Subsidiary Pledgors and the Borrower are referred
to collectively as the “Pledgors”) and The Bank of New York Mellon Trust
Company, N.A., as collateral agent (in such capacity, together with its
successors, in such capacity the “Collateral Agent”) under the Second-Out Credit
Agreement referred to below for the benefit of the Second-Out Secured Parties.

A.Reference is made to that certain Credit Agreement, dated as of [_], 2016 (the
“Second-Out Credit Agreement”) among the Borrower, the banks, financial
institutions and other lending institutions from time to time party thereto (the
“Second-Out Lenders”) and [_], as Collateral Agent.

B.Capitalized terms used herein and not otherwise defined herein (including in
the preamble and the recitals hereto) shall have the meanings assigned to such
terms in the Pledge Agreement or the Second-Out Credit Agreement, as applicable.
The rules of construction and the interpretive provisions specified in Section
1.03 of the Pledge Agreement shall apply to this Supplement, including terms
defined in the preamble and recitals hereto.

C.The Pledgors have entered into the Pledge Agreement in order to induce the
Agents and the Second-Out Lenders to enter into the Second-Out Credit Agreement
and to induce the Second-Out Lenders to make their respective Extensions of
Credit to the Borrower under the Second-Out Credit Agreement.

D.The undersigned [Pledgor] [Domestic Subsidiary] (each an “Additional Pledgor”)
is the legal and beneficial owner of the Equity Interests described in Schedule
1 hereto and issued by the entities named therein (such pledged Equity
Interests, together with all other Equity Interests required to be pledged under
the Pledge Agreement (the “After-acquired Additional Pledged Shares”), referred
to collectively herein as the “Additional Pledged Shares”).

E.Section 10.10 of the Second-Out Credit Agreement and Section 9.01(b) of the
Pledge Agreement provide [that additional Subsidiaries of the Borrower may
become Subsidiary Pledgors under the Pledge Agreement] [that existing Pledgors
may pledge Additional Pledged Shares] by execution and delivery of an instrument
in the form of this Supplement. Each undersigned Additional Pledgor is executing
this Supplement in accordance with the requirements of Section 9.01(b) of the
Pledge Agreement to pledge to the Collateral Agent, for the ratable benefit of
the Second-Out Secured Parties, the Additional Pledged Shares [and to become a
Subsidiary Pledgor under the Pledge Agreement] in order to induce the Second-Out
Lenders to make additional Extensions of Credit to the Borrower under the
Second-Out Credit Agreement and as consideration for Extensions of Credit
previously made.

Accordingly, the Collateral Agent and each undersigned Additional Pledgor agree
as follows:

SECTION 1. In accordance with Section 9.01(b) of the Pledge Agreement, each
Additional Pledgor by its signature hereby transfers, assigns and pledges to the
Collateral Agent, for the ratable benefit of the Second-Out Secured Parties, and
hereby grants to the Collateral Agent, for the ratable benefit of the Second-Out
Secured Parties, a security interest in all of such Additional Pledgor’s right,
title and interest in the following, whether now owned or existing or hereafter
acquired or existing A-2
A-4
(collectively, the “Additional Collateral”) as collateral security for the
prompt payment and performance when due (whether at stated maturity, by
acceleration or otherwise) of the Second-Out Obligations:

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(a)the Additional Pledged Shares held by such Additional Pledgor and the
certificates, if any, representing such Additional Pledged Shares and any
interest of such Additional Pledgor in the entries on the books of the issuer of
the Additional Pledged Shares or any financial intermediary pertaining to the
Additional Pledged Shares and all dividends, cash, warrants, rights, instruments
and other property or Proceeds from time to time received, receivable or
otherwise distributed in respect of or in exchange for any or all of the
Additional Pledged Shares; provided that the Additional Pledged Shares under
this Supplement shall not include any Excluded Stock; and
(b)to the extent not covered by clauses (a) above, all Proceeds of any or all of
the foregoing Additional Collateral.
For purposes of the Pledge Agreement, the Collateral shall be deemed to include
the Additional Collateral.

[SECTION 2. Each Additional Pledgor by its signature below becomes a Pledgor
under the Pledge Agreement with the same force and effect as if originally named
therein as a Pledgor, and each Additional Pledgor hereby agrees to all the terms
and provisions of the Pledge Agreement applicable to it as a Pledgor thereunder.
Each reference to a “Subsidiary Pledgor” or a “Pledgor” in the Pledge Agreement
shall be deemed to include each Additional Pledgor. The Pledge Agreement is
hereby incorporated herein by reference.]

SECTION [2] [3]. Each Additional Pledgor represents and warrants as follows:

(a)Schedule 1 correctly represents as of the date hereof the issuer, the
certificate number, if any, the Additional Pledgor and record and beneficial
owner, the number and class and the percentage of the issued and outstanding
Equity Interests of such class of all Additional Pledged Shares. Except as set
forth on Schedule 1, the Pledged Shares represent all (or 66-2/3% of all the
issued and outstanding Equity Interests in the case of pledges of Equity
Interests in Foreign Subsidiaries) of the issued and outstanding Equity
Interests of each class of Equity Interests of the issuer on the date hereof.

(b)Such Additional Pledgor is the legal and beneficial owner of the Additional
Collateral pledged or assigned by such Additional Pledgor hereunder free and
clear of any Lien, except for Liens permitted by Section 11.2 of the Second-Out
Credit Agreement and the Lien created by this Supplement to the Pledge
Agreement.

(c)As of the date of this Supplement, the Additional Pledged Shares pledged by
such Additional Pledgor hereunder have been duly authorized and validly issued
and, in the case of Additional Pledged Shares issued by a corporation, are fully
paid and non-assessable

(d)The execution and delivery by such Additional Pledgor of this Supplement and
the pledge of the Additional Collateral pledged by such Additional Pledgor
hereunder pursuant hereto create a legal, valid and enforceable security
interest in such Collateral and, (i) in the case of certificates or instruments
representing or evidencing the Collateral, upon the earlier of (x) delivery of
such Collateral to the Collateral Agent or, prior to the Discharge of the
First-Out Obligations, the First-Out Agent (to hold as gratuitous bailee for the
Collateral Agent) in the State of New York and (y) the filing of the applicable
Uniform Commercial Code financing statements described in the Security Agreement
and (ii) in the case of all other Collateral, upon the filing of the applicable
Uniform Commercial Code financing statements described the Security Agreement,
shall create a perfected first priority security interest in such Collateral,
securing the payment of the Second-Out Obligations, in favor of the Collateral
Agent, for the ratable benefit of the Second-Out Secured Parties, subject to the
effects of bankruptcy, insolvency, fraudulent conveyance, reorganization and
other similar laws relating to or affecting creditors’ rights generally and
general principles of equity (whether considered in a proceeding in equity or
law).

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(e)Such Additional Pledgor has full power, authority and legal right to pledge
all the Additional Collateral pledged by such Additional Pledgor pursuant to
this Supplement, and this Supplement constitutes a legal, valid and binding
obligation of each Additional Pledgor, enforceable in accordance with its terms,
subject to the effects of bankruptcy, insolvency, fraudulent conveyance,
reorganization and other similar laws relating to or affecting creditors’ rights
generally and general principles of equity (whether considered in a proceeding
in equity or law).

SECTION [3] [4]. This Supplement may be executed by one or more of the parties
to this Supplement on any number of separate counterparts (including by
facsimile or other electronic transmission (i.e., a “pdf” or “tif” file)), and
all of said counterparts taken together shall be deemed to constitute one and
the same instrument. A set of the copies of this Supplement signed by all the
parties shall be lodged with the Collateral Agent and the Borrower. This
Supplement shall become effective as to each Additional Pledgor when the
Collateral Agent shall have received counterparts of this Supplement that, when
taken together, bear the signatures of such Additional Pledgor and the
Collateral Agent.

SECTION [4] [5]. Except as expressly supplemented hereby, the Pledge Agreement
shall remain in full force and effect.

SECTION [5] [6]. THIS SUPPLEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES
HEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE
WITH, THE LAWS OF THE STATE OF NEW YORK.

SECTION [6] [7]. Any provision of this Supplement that is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof and in the Pledge Agreement, and any such
prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction. The parties
hereto shall endeavor in good-faith negotiations to replace the invalid, illegal
or unenforceable provisions with valid provisions the economic effect of which
comes as close as possible to that of the invalid, illegal or unenforceable
provisions.

SECTION [7] [8]. All notices, requests and demands pursuant hereto shall be made
in accordance with Section 15.01 of the Pledge Agreement. All communications and
notices hereunder to each Additional Pledgor shall be given to it in care of the
Borrower at the Borrower’s address set forth in Section 14.2 of the Second-Out
Credit Agreement.

[SIGNATURE PAGES FOLLOW]

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IN WITNESS WHEREOF, each Additional Pledgor and the Collateral Agent have duly
executed this Supplement to the Pledge Agreement as of the date first above
written.

[ADDITIONAL PLEDGOR],
  as Additional Pledgor
 
 
By:_____________________________
Name:
Title:

By:_____________________________

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[_],
  as Collateral Agent
 
 
By:_____________________________
Name:
Title:

 

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SCHEDULE 1
TO SUPPLEMENT NO. [ ]
TO THE PLEDGE AGREEMENT

PLEDGED SHARES

Pledged Shares

Pledgor
Issuer
Issuer’s Jurisdiction of Formation
Class of Equity Interest
Certificate No(s)
Number of Units
Percentage of Issued and Outstanding Units
 
 
 
 
 
 
 

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Exhibit E
FORM OF MORTGAGE/DEED OF TRUST (CALIFORNIA)

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WHEN RECORDED OR FILED,
PLEASE RETURN TO:

Cahill Gordon & Reindel LLP
80 Pine Street
New York, NY 10005
Attention: Timothy Gallagher, Esq.

Space above for County Recorder's Use

MORTGAGE, LINE OF CREDIT MORTGAGE, DEED OF TRUST (ASSIGNMENT OF AS-EXTRACTED
COLLATERAL), SECURITY AGREEMENT, FIXTURE FILING AND FINANCING STATEMENT

FROM

EACH UNDERSIGNED TRUSTOR

TO

First American Title Insurance Company,
AS TRUSTEE

FOR THE BENEFIT OF

The Bank of New York Mellon Trust Company, N.A.,
as Mortgagee and Collateral Agent

and the Second-Out Secured Parties

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A CARBON, PHOTOGRAPHIC, OR OTHER REPRODUCTION
OF THIS INSTRUMENT IS SUFFICIENT AS A FINANCING STATEMENT.

A POWER OF SALE HAS BEEN GRANTED IN THIS DEED OF TRUST. IN CERTAIN STATES, A
POWER OF SALE MAY ALLOW THE TRUSTEE OR THE MORTGAGEE TO TAKE THE DEED OF TRUST
PROPERTY AND SELL IT WITHOUT GOING TO COURT IN A FORECLOSURE ACTION UPON DEFAULT
BY THE TRUSTOR UNDER THIS DEED OF TRUST.
THIS DEED OF TRUST CONTAINS AFTER-ACQUIRED PROPERTY PROVISIONS.
THIS DEED OF TRUST SECURES PAYMENT OF FUTURE ADVANCES.
THIS DEED OF TRUST COVERS PROCEEDS OF DEED OF TRUST PROPERTY.
THIS DEED OF TRUST COVERS MINERALS AND OTHER SUBSTANCES OF VALUE WHICH MAY BE
EXTRACTED FROM THE EARTH (INCLUDING WITHOUT LIMITATION OIL AND GAS) AND THE
ACCOUNTS RELATED THERETO, WHICH WILL BE FINANCED AT THE WELLHEADS OF THE WELL OR
WELLS LOCATED ON THE PROPERTIES DESCRIBED IN THE EXHIBIT HERETO. THIS DEED OF
TRUST IS TO BE FILED OR FILED FOR RECORD AS A FINANCING STATEMENT,
AMONG OTHER PLACES, IN THE REAL ESTATE RECORDS OR SIMILAR RECORDS OF THE
RECORDERS OF THE COUNTIES LISTED ON THE EXHIBIT HERETO AND WITH A CLERK OF
COURT. THE TRUSTOR HAS AN INTEREST OF RECORD IN THE REAL ESTATE AND IMMOVABLE
PROPERTY CONCERNED, WHICH INTEREST IS DESCRIBED IN THE EXHIBIT ATTACHED HERETO.
PORTIONS OF THE DEED OF TRUST PROPERTY ARE GOODS WHICH ARE OR ARE TO BECOME
AFFIXED TO OR FIXTURES ON THE LAND DESCRIBED IN OR REFERRED TO IN THE EXHIBIT
HERETO. THIS DEED OF TRUST IS TO BE FILED OR REFILED FOR RECORD OR RECORDED AS A
FINANCING STATEMENT, AMONG OTHER PLACES, IN THE REAL ESTATE RECORDS OR SIMILAR
RECORDS OF EACH COUNTY IN WHICH SAID LAND OR ANY PORTION THEREOF IS LOCATED AND
WITH A CLERK OF COURT. THE TRUSTOR IS THE OWNER OF RECORD INTEREST IN THE REAL
ESTATE CONCERNED. THIS INSTRUMENT IS ALSO TO BE INDEXED IN THE INDEX OF
FINANCING STATEMENTS OR THE UCC RECORDS.
TRUSTOR REQUESTS THAT A COPY OF ANY NOTICE OF DEFAULT AND ANY NOTICE OF SALE
HEREUNDER BE MAILED TO IT AT: CALIFORNIA RESOURCES CORPORATION, 9200 Oakdale
Ave., Suite 900, Los Angeles, CA 91311, Attention: General Counsel’s Office.
REFERENCE IS MADE TO THE FIRST LIEN INTERCREDITOR AGREEMENT DESCRIBED BELOW.
EACH SECOND-OUT SECURED PARTY, BY ACCEPTING THE BENEFITS OF THE SECURITY
PROVIDED HEREBY, (I) AGREES (OR IS DEEMED TO AGREE) THAT IT WILL BE BOUND BY,
AND WILL TAKE NO ACTIONS CONTRARY TO, THE PROVISIONS OF THE FIRST LIEN
INTERCREDITOR AGREEMENT, (II) AUTHORIZES (OR IS DEEMED TO AUTHORIZE) THE
COLLATERAL AGENT ON BEHALF OF SUCH PERSON TO ENTER INTO, AND PERFORM UNDER, THE
FIRST LIEN INTERCREDITOR AGREEMENT AND (III) ACKNOWLEDGES (OR IS DEEMED TO
ACKNOWLEDGE) THAT A COPY OF THE FIRST LIEN INTERCREDITOR AGREEMENT WAS
DELIVERED, OR MADE AVAILABLE, TO SUCH SECOND-OUT SECURED PARTY.
NOTWITHSTANDING ANY OTHER PROVISION CONTAINED HEREIN, THIS DEED OF TRUST, THE
LIENS CREATED HEREBY AND THE RIGHTS, REMEDIES, DUTIES AND OBLIGATIONS

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PROVIDED FOR HEREIN ARE SUBJECT IN ALL RESPECTS TO THE PROVISIONS OF THE FIRST
LIEN INTERCREDITOR AGREEMENT. IN THE EVENT OF ANY CONFLICT OR INCONSISTENCY
BETWEEN THE PROVISIONS OF THIS DEED OF TRUST AND THE FIRST LIEN INTERCREDITOR
AGREEMENT, THE PROVISIONS OF THE FIRST LIEN INTERCREDITOR AGREEMENT SHALL
CONTROL.

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TABLE OF CONTENTS
 
 
 
Page
ARTICLE I
 
DEFINITIONS
 
Section 1.01
Terms Defined Above
2
Section 1.02
UCC and Other Defined Terms
2
Section 1.03
Definitions
2
ARTICLE II
 
GRANT OF LIEN AND SECURED OBLIGATIONS
 
Section 2.01
Grant of Liens
4
Section 2.02
Grant of Security Interest
5
Section 2.03
Secured Obligations
5
Section 2.04
Fixture Filing, Etc
5
Section 2.05
Pro Rata Benefit
5
Section 2.06
Excluded Property
6
ARTICLE III
 
ASSIGNMENT OF AS-EXTRACTED COLLATERAL
 
Section 3.01
Assignment
6
Section 3.02
No Modification of Payment Obligations
7
Section 3.03
Excluded Property
7
ARTICLE IV
 
REPRESENTATIONS, WARRANTIES AND COVENANTS
 
Section 4.01
Title
7
Section 4.02
Defend Title
7
Section 4.03
Not a Foreign Person
8
Section 4.04
Power to Create Lien and Security
8
Section 4.05
Revenue and Cost Bearing Interest
8
Section 4.06
Operation By Third Parties
8
Section 4.07
Failure to Perform
8
Section 4.08
Delivery of UCC-3 Financing Statements
9
ARTICLE V
 
RIGHTS AND REMEDIES
 
Section 5.01
Event of Default
9
Section 5.02
Foreclosure and Sale
9
Section 5.03
Substitute Trustees and Agents
10
Section 5.04
Judicial Foreclosure; Receivership
10
Section 5.05
Foreclosure for Installments
10
Section 5.06
Separate Sales
11
Section 5.07
Possession of Deed of Trust Property
11
Section 5.08
Occupancy After Foreclosure
11
Section 5.09
Remedies Cumulative, Concurrent and Nonexclusive
11

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Section 5.10
Discontinuance of Proceedings
12
Section 5.11
No Release of Obligations
12
Section 5.12
Release of and Resort to Collateral
12
Section 5.13
Waiver of Redemption, Notice and Marshalling of Assets, Etc
12
Section 5.14
Application of Proceeds
13
Section 5.15
Resignation of Operator
13
Section 5.16
Indemnity
13
ARTICLE VI
 
THE TRUSTEE
 
Section 6.01
Duties, Rights, and Powers of Trustee
14
Section 6.02
Successor Trustee
14
Section 6.03
Retention of Moneys
14
ARTICLE VII
 
MISCELLANEOUS
 
Section 7.01
Instrument Construed as Mortgage, Etc
14
Section 7.02
Releases
15
Section 7.03
Severability
15
Section 7.04
Successors and Assigns
15
Section 7.05
Application of Payments to Certain Obligations
16
Section 7.06
Nature of Covenants
16
Section 7.07
Notices
16
Section 7.08
Counterparts
16
Section 7.09
Governing Law
16
Section 7.10
Financing Statement; Fixture Filing
16
Section 7.11
Execution of Financing Statements
16
Section 7.12
Exculpation Provisions
17
Section 7.13
References
18
ARTICLE VIII
 
STATE SPECIFIC PROVISIONS
 
Section 8.01
California Mortgage Foreclosure Law
18
ARTICLE IX
 
Concerning the Mortgagee
 
Section 9.01
CERCLA Liability
19
Section 9.02
Rights of Mortgagee
19
 
 
 
Exhibit A
Hydrocarbon Interests
 
Exhibit B
Oil and Gas Properties
 

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THIS MORTGAGE, LINE OF CREDIT MORTGAGE, DEED OF TRUST, ASSIGNMENT OF
AS-EXTRACTED COLLATERAL, SECURITY AGREEMENT, FIXTURE FILING AND FINANCING
STATEMENT (this “Deed of Trust”) is entered into as of August [_], 2016 (the
“Effective Date”) by each of (i) California Resources Elk Hills, LLC, a Delaware
limited liability company (“CREH”), (ii) California Resources Production
Corporation, a Delaware corporation (“Production Corp.”), (iii) California
Resources Petroleum Corporation, a Delaware corporation (“Petroleum Corp.”),
(iv) Southern San Joaquin Production, Inc., a Delaware corporation (“SSJP”), (v)
California Heavy Oil, Inc., a Delaware corporation (“CHO”) and (vi) Socal
Holding, LLC, a Delaware limited liability company (“Socal”); in favor of First
American Title Insurance Company (the “Trustee”), having an office at 1 First
American Way, Santa Ana, CA 92707, for the benefit of The Bank of New York
Mellon Trust Company, N.A., as Collateral Agent (together with its successors
and assigns, the “Mortgagee”), and the Second-Out Secured Parties (as
hereinafter defined).
R E C I T A L S
WHEREAS, reference is made to that certain Credit Agreement, dated as of [_],
2016 (as amended, restated, supplemented or otherwise modified from time to
time, the “Second-Out Credit Agreement”), among California Resources
Corporation, a Delaware corporation (the “Borrower”), the banks, financial
institutions and other lending institutions from time to time party thereto (the
“Second-Out Lenders”), and The Bank of New York Mellon Trust Company, N.A., as
Collateral Agent.
WHEREAS, pursuant to the terms, conditions and provisions of the Second-Out
Credit Agreement, the Second-Out Lenders have severally agreed to make term
loans to the Borrower upon the terms and subject to the conditions set forth
therein (collectively, the “Extensions of Credit”).
WHEREAS, JPMorgan Chase Bank, N.A., as the First-Out Agent (as defined in the
First Lien Intercreditor Agreement) and the Mortgagee have entered into the Pari
Passu Intercreditor Agreement, dated as of the date hereof (the “First Lien
Intercreditor Agreement”), setting forth the respective rights and priorities of
the First-Out Secured Parties (as defined in the First Lien Intercreditor
Agreement) and Second-Out Secured Parties with respect to payments, rights in
the Collateral granted under this Deed of Trust, enforcement of remedies,
bankruptcy issues and other customary subordination and intercreditor
provisions.
WHEREAS, on August [_], 2016, certain Subsidiaries (including the Trustor (as
defined below)) of the Borrower executed a Guarantee (such agreement, as may
from time to time be amended or supplemented, the “Guarantee”) pursuant to
which, upon the terms and conditions stated therein, each such Person has
unconditionally guaranteed the prompt payment, when due, of the obligations
under the Second-Out Credit Agreement, the Credit Documents and the Guarantee
(collectively being the “Second-Out Security Documents”).
WHEREAS, each Trustor acknowledges that it will derive substantial direct and
indirect benefit from the making of the Extensions of Credit.
WHEREAS, in order to comply with the requirements of the Second-Out Credit
Agreement, the Trustors desire to grant to the Mortgagee, for the ratable
benefit of the Second-Out Secured Parties, a security interest in the Collateral
and deliver this Deed of Trust.
NOW, THEREFORE, in consideration of the premises and for other good and valuable
consideration, the receipt and adequacy of which are hereby acknowledged, and to
induce the Collateral Agent, and the Second-Out Lenders to enter into the
Second-Out Credit Agreement and the Second-Out Lenders to make the Extensions of
Credit to the Borrower under the Second-Out Credit Agreement, the Trustors
hereby agree with the Mortgagee, for the ratable benefit of the Second-Out
Secured Parties, as follows:

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ARTICLE I
DEFINITIONS

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

Section 1.02    UCC and Other Defined Terms. Unless otherwise defined in the
Applicable UCC, each capitalized term used in this Deed of Trust and not defined
in this Deed of Trust shall have the meaning ascribed to such term in the
Second-Out Credit Agreement. Any capitalized term not defined in either this
Deed of Trust or the Second-Out Credit Agreement shall have the meaning ascribed
to such term in the Applicable UCC.

Section 1.03    Definitions

“Applicable UCC” means the provisions of the Uniform Commercial Code presently
in effect in the jurisdiction in which the relevant UCC Collateral is situated
or which otherwise is applicable to the creation or perfection of the Liens
described herein or the rights and remedies of Mortgagee under this Deed of
Trust.
“CERCLA” has the meaning assigned to such term in Section 9.01.
“Collateral” means collectively all the Deed of Trust Property and all the UCC
Collateral.
“Event of Default” has the meaning ascribed to such term in Section 5.01.
“Excluded Property” shall have the meaning ascribed to such term in the
Second-Out Credit Agreement.
“Deed of Trust Property” means the Oil and Gas Properties and other properties
and assets described in Section 2.01(a) through Section 2.01(e), excluding, for
the avoidance of doubt, any Excluded Property.
“Flood Insurance Regulations” has the meaning assigned to such term in Section
2.01.

“Future Advances” means future obligations and future advances that the
Mortgagee or any Second-Out Secured Party may make pursuant to any Second-Out
Security Documents.
“Hydrocarbon Interests” means all rights, titles, interests and estates and the
lands and premises covered or affected thereby now or hereafter acquired by the
Trustor in and to oil and gas leases, oil, gas and mineral leases, or other
liquid or gaseous hydrocarbon leases, fee interests, surface interests, mineral
fee interests, overriding royalty and royalty interests, net profit interests
and production payment interests, including any reserved or residual interests
of whatever nature, in each case, which are described on Exhibit A; provided
that, it is the intent of the Trustor that all of such interests be subject to
the Lien of this Deed of Trust even if (i) its interests on Exhibit A shall be
incorrectly described or a description of a part or all of such property or the
Trustor’s interests therein be omitted limited to particular lands,

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specified depths or particular types of property interests or (ii) such
properties or interests may be hereafter acquired.
“Hydrocarbons” means all oil, gas, casinghead gas, drip gasoline, natural
gasoline, condensate, distillate, liquid hydrocarbons, gaseous hydrocarbons and
all products refined or separated therefrom.
“Indemnified Parties” means the Trustee, the Mortgagee, each Second-Out Secured
Party and their officers, directors, employees, representatives, agents,
attorneys, accountants and experts.
“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 described or referred
to above, including any and all property, real or personal, now owned or
hereafter acquired and situated upon, used, held for use or useful in connection
with the operating, working or development of any of such 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, gas processing plants and pipeline systems, power and
cogeneration facilities and any related infrastructure to any thereof, 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.
“Outer Continental Shelf” has the meaning given to the term in the Outer
Continental Shelf Lands Act (43 U.S.C. 1301-1356).
“Permitted Encumbrances” means all Liens permitted to be placed on the Deed of
Trust Properties under Section 11.2 of the Second-Out Credit Agreement.
“Post-Default Rate” means “Default Rate” as defined in the Second-Out Credit
Agreement.
“Second-Out Secured Parties” means the “Secured Parties” as defined in the
Second-Out Credit Agreement.
“Secured Obligations” means the “Obligations” as defined in the Second-Out
Credit Agreement.
“Trustor” means each of CREH, Production Corp., Petroleum Corp., SSJP, CHO and
Socal individually as a Trustor hereunder with respect to the Collateral owned
by it.
“UCC Collateral” means the property and other assets described in Section 2.02,
excluding, for the avoidance of doubt, any Excluded Property.

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ARTICLE II
GRANT OF LIEN AND SECURED OBLIGATIONS

Section 2.01    Grant of Liens. To secure payment and performance of all of the
Secured Obligations, the Trustor does by these presents hereby GRANT, BARGAIN,
SELL, ASSIGN, MORTGAGE, TRANSFER and CONVEY to the Trustee, and Trustee’s
successors and substitutes in trust hereunder, with power of sale, for the use
and ratable benefit of the Mortgagee and the Second-Out Secured Parties, the
real and personal property, rights, titles, interests and estates located in the
State of California or which are located within (or cover or relate to
properties located within) the Outer Continental Shelf or other offshore area
adjacent to the State of California over which the United States of America
asserts jurisdiction and to which the laws of the State of California are
applicable with respect to this Deed of Trust or the Liens created hereby and
described in subsections (a) through (e) below, except for the Excluded
Property:

(a)All rights, titles, interests and estates now owned or hereafter acquired by
the Trustor in and to the Oil and Gas Properties described on Exhibit A.

(b)All rights, titles, interests and estates now owned or hereafter acquired by
the Trustor in and to all geological, geophysical, engineering, accounting,
title, legal and other technical or business data concerning the Oil and Gas
Properties, the Hydrocarbons or any other items of property which are in the
possession of the Trustor, and all books, files, records, magnetic media,
computer records and other forms of recording or obtaining access to such data.

(c)All rights, titles, interests and estates now owned or hereafter acquired by
the Trustor in and to all Hydrocarbons.

(d)Any property that may from time to time hereafter, by delivery or by writing
of any kind, be subjected to the Lien and security interest hereof by Trustor or
by anyone on Trustor's behalf; and Trustee and/or the Mortgagee are hereby
authorized to receive the same at any time as additional security hereunder.

(e)All of the rights, titles and interests of every nature whatsoever now owned
or hereafter acquired by the Trustor in and to the Oil and Gas Properties
described in Exhibit A and all other rights, titles, interests and estates
thereof and every part and parcel thereof, including, without limitation, any
rights, titles, interests and estates as the same may be enlarged by the
discharge of any payments out of production or by the removal of any charges or
Permitted Encumbrances to which any of such Oil and Gas Properties or other
rights, titles, interests or estates are subject or otherwise; all rights of the
Trustor to Liens securing payment of proceeds from the sale of production from
any of such Oil and Gas Properties, together with any and all renewals and
extensions of any of such related rights, titles, interests or estates; all
contracts and agreements supplemental to or amendatory of or in substitution for
the contracts and agreements described or mentioned above; and any and all
additional interests of any kind hereafter acquired by the Trustor in and to the
such related rights, titles, interests or estates.

Notwithstanding any provision in this Deed of Trust to the contrary, in no event
is any Building (as defined in the applicable Flood Insurance Regulation) or
Manufactured (Mobile) Home (as defined in the applicable Flood Insurance
Regulation) included in the definition of “Deed of Trust Property” and no
Building or Manufactured (Mobile) Home is hereby encumbered by this Deed of
Trust. As used herein, “Flood Insurance Regulations” shall mean (i) the National
Flood Insurance Act of 1968 as now

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or hereafter in effect or any successor statute thereto, (ii) the Flood Disaster
Protection Act of 1973 as now or hereafter in effect or any successor statute
thereto, (iii) the National Flood Insurance Reform Act of 1994 (amending 42 USC
4001, et. seq.), as the same may be amended or recodified from time to time,
(iv) the Flood Insurance Reform Act of 2004, and (v) the Biggert-Waters Flood
Reform Act of 2012, and any regulations promulgated thereunder.

Section 2.02    Grant of Security Interest. To further secure the Secured
Obligations, the Trustor hereby grants to the Mortgagee, for its benefit and the
ratable benefit of the Second-Out Secured Parties, a security interest in and to
the following (whether now or hereafter acquired by operation of law or
otherwise), except for the Excluded Property:

(a)    all Accounts relating to this Deed of Trust;

(b)    all General Intangibles (including, without limitation, rights in and
under any Payment Intangible, swap agreement or any Commodity contract) and all
rights under insurance contracts and rights to insurance proceeds relating to
this Deed of Trust;

(c)    all Documents;

(d)    all Instruments;

(e)    all Inventory and all Equipment;

(f)    all Letter-of-Credit Rights (whether or not the letter of credit is
evidenced by a writing);
(g)    all As-Extracted Collateral;

(h)    all Fixtures;

(i)    all Hydrocarbons;

(j)    all books and records pertaining to the Oil and Gas Properties; and

(k)    to the extent not otherwise included, all Proceeds and products of any
and all of the foregoing and all collateral security, third-party guarantees and
other Supporting Obligations given with respect to any of the foregoing.

Section 2.03        Secured Obligations. This Deed of Trust is executed and
delivered by the Trustor to secure and enforce the Secured Obligations.

Section 2.04        Fixture Filing, Etc. Without in any manner limiting the
generality of any of the other provisions of this Deed of Trust: (i) some
portions of the goods described or to which reference is made herein are or are
to become Fixtures on the land described or to which reference is made herein or
on Exhibit A; (ii) the security interests created hereby under applicable
provisions of the Applicable UCC will attach to all As-Extracted Collateral (all
minerals including oil and gas and the Accounts resulting from the sale thereof
at the wellhead or minehead located on the Oil and Gas Properties described or
to which reference is made herein or on Exhibit A) and all other Hydrocarbons;
(iii) this Deed of Trust is to be filed of record in the real estate records or
other appropriate records as a financing

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statement; and (iv) the Trustor is the record owner of the real estate or
interests in the real estate or immoveable property comprised of the Deed of
Trust Property.

Section 2.05    Pro Rata Benefit
. This Deed of Trust is executed and granted for the pro rata benefit and
security of the Mortgagee and the Second-Out Secured Parties to secure the
Secured Obligations for so long as same remains unpaid and thereafter until the
Secured Obligations have been paid in full and satisfied.
Section 2.06    Excluded Property. Notwithstanding any provision in this Deed of
Trust to the contrary, in no event shall the Collateral include any Excluded
Property.

ARTICLE III
ASSIGNMENT OF AS-EXTRACTED COLLATERAL

Section 3.01    Assignment.

(a)    The Trustor has absolutely and unconditionally assigned, transferred,
conveyed and granted a security interest, and does hereby absolutely and
unconditionally assign, transfer, convey and grant a security interest unto the
Mortgagee in and to the following, except for the Excluded Property:

(i)    all of its As-Extracted Collateral located in the county where this Deed
of Trust is filed, including without limitation, all As-Extracted Collateral
relating to the Hydrocarbon Interests, the Hydrocarbons and all products
obtained or processed therefrom;

(ii)    the revenues and proceeds now and hereafter attributable to the Deed of
Trust Properties, including the Hydrocarbons, and said products and all payments
in lieu, such as “take or pay” payments or settlements; and

(iii)    all amounts and proceeds hereafter payable to or to become payable to
the Trustor or now or hereafter relating to any part of the Deed of Trust
Properties and all amounts, sums, monies, revenues and income which become
payable to the Trustor from, or with respect to, any of the Deed of Trust
Properties, present or future, now or hereafter constituting a part of the
Hydrocarbon Interests.
(b)    The Hydrocarbons and products are to be delivered into pipe lines
connected with any Deed of Trust Property, or to the purchaser thereof, to the
credit of the Mortgagee, for its benefit and the benefit of the Second-Out
Secured Parties, free and clear of all taxes, charges, costs and expenses, other
than Permitted Encumbrances; and all such revenues and proceeds shall be paid
directly to the Mortgagee, at its offices in Los Angeles, California with no
duty or obligation of any party paying the same to inquire into the rights of
the Mortgagee to receive the same, what application is made thereof, or as to
any other matter.

(c)    The Trustor agrees to perform all such acts, and to execute all such
further assignments, transfers and division orders and other instruments as may
be required or desired by, and requested of Trustor by the Mortgagee in order to
have the proceeds and revenues referenced in Section 3.01(b) paid to the
Mortgagee as set forth in such section. In addition to any and all rights of a
secured party under Sections 9-607 and 9-609 of the Applicable UCC, the
Mortgagee is fully authorized to receive and take receipt of said revenues and
proceeds; to endorse and cash any and all checks and drafts payable to the order
of the Trustor or the Mortgagee for the account of the Trustor received from or
in connection with said revenues or proceeds and to hold the proceeds thereof in
a Deposit Account with

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the Mortgagee as additional collateral securing the Secured Obligations; and to
execute transfer and division orders in the name of the Trustor, or otherwise,
with warranties binding the Trustor. All proceeds received by the Mortgagee
pursuant to this grant and assignment shall be applied as provided in Section
5.14.
(d)    The Mortgagee shall not be liable for any delay, neglect or failure to
effect collection of any proceeds or to take any other action in connection
therewith or hereunder; but the Mortgagee shall have the right, at its election,
in the name of the Trustor or otherwise, to prosecute and defend any and all
actions or legal proceedings deemed advisable by the Mortgagee in order to
collect such funds and to protect the interests of the Mortgagee and/or the
Trustor, with all costs, expenses and attorneys’ fees incurred in connection
therewith being paid by the Trustor.

(e)    The Trustor hereby appoints the Mortgagee as its attorney-in-fact to
pursue any and all rights of the Trustor to Liens in the Hydrocarbons securing
payment of proceeds of runs attributable to the Hydrocarbons. In addition to the
Liens granted to the Trustee and/or the Mortgagee in Section 2.01(e), the
Trustor hereby further transfers and assigns to the Mortgagee any and all such
Liens, security interests, financing statements or similar interests of the
Trustor attributable to its interest in the As-Extracted Collateral, any other
Hydrocarbons and proceeds of runs therefrom arising under or created by said
statutory provision, judicial decision or otherwise. The power of attorney
granted to the Mortgagee in this Section 3.01, being coupled with an interest,
shall be irrevocable until the Secured Obligations have been paid in full and
satisfied.

(f)    Notwithstanding anything to the contrary contained herein, so long as no
Default shall have occurred and be continuing, Trustor shall have the right to
collect all revenues and proceeds attributable to the Hydrocarbons that accrue
to the Oil and Gas Properties or the products obtained or processed therefrom,
as well as any Liens and security interests security any sales of said
Hydrocarbons and to retain, use and enjoy same.

Section 3.02    No Modification of Payment Obligations. Nothing herein contained
shall modify or otherwise alter the obligation of the Borrower to make prompt
payment of all amounts constituting Secured Obligations when and as the same
become due regardless of whether the proceeds of the As-Extracted Collateral and
Hydrocarbons are sufficient to pay the same and the rights provided in
accordance with the foregoing assignment provision shall be cumulative of all
other security of any and every character now or hereafter existing to secure
payment of the Secured Obligations. Nothing in this Article III is intended to
be an acceptance of collateral in satisfaction of the Secured Obligations.

Section 3.03    Excluded Property. Notwithstanding anything contained in this
Article III to the contrary, the security interest granted to the Mortgagee
pursuant to this Article III shall not extend to any Excluded Property.

ARTICLE IV
REPRESENTATIONS, WARRANTIES AND COVENANTS

The Trustor hereby represents, warrants and covenants as follows:

Section 4.01    Title. To the extent of the undivided interests specified on
Exhibit B, which is intentionally omitted for purposes of any public filings or
recordings, the Trustor has good and

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defensible title to and is possessed of its material Hydrocarbon Interests and
has good title to its material UCC Collateral. The Collateral is free of all
Liens except Permitted Encumbrances.

Section 4.02    Defend Title
. This Deed of Trust is, and always will be kept, a direct first priority Lien
upon the Collateral other than as permitted pursuant to the First Lien
Intercreditor Agreement or, with respect to the indebtedness governed thereby,
the Second-Out Security Documents; provided that no intent to subordinate the
priority of the Liens created hereby is intended or inferred. The Trustor will
not create or suffer to be created or permit to exist any Lien, security
interest or charge prior or junior to or on a parity with the Lien of this Deed
of Trust upon the Collateral or any part thereof other than Permitted
Encumbrances. The Trustor will warrant and defend the title to the Collateral
against the claims and demands of all other Persons whomsoever and will maintain
and preserve the Lien created hereby (and its priority) until the Secured
Obligations shall be paid in full and satisfied. If (i) an adverse claim be made
against or, a cloud develops upon, the title to any part of the Collateral other
than a Permitted Encumbrance or (ii) any Person, including the holder of a
Permitted Encumbrance, shall challenge the priority or validity of the Liens
created by this Deed of Trust, then the Trustor agrees to immediately defend
against such adverse claim, take commercially reasonable action to remove such
cloud or subordinate such Permitted Encumbrance, in each case, at the Trustor’s
sole cost and expense. The Trustor further agrees that the Trustee and/or the
Mortgagee may take such other action as they reasonably deem advisable to
protect and preserve their interests in the Collateral, and in such event the
Trustor will indemnify the Trustee and the Mortgagee against any and all cost,
reasonable attorneys’ fees and other expenses which they may incur in defending
against any such adverse claim or taking action to remove any such cloud.
Section 4.03    Not a Foreign Person. The Trustor is not a “foreign person”
within the meaning of the Code, Sections 1445 and 7701 (i.e. the Trustor is not
a non-resident alien, foreign corporation, foreign partnership, foreign trust or
foreign estate as those terms are defined in the Code and any regulations
promulgated thereunder).

Section 4.04    Power to Create Lien and Security. The Trustor has full power
and lawful authority to grant, bargain, sell, assign, transfer, mortgage and
convey a security interest in all of the Collateral in the manner and form
herein provided. No authorization, approval, consent or waiver of any lessor,
sublessor, Governmental Authority or other party or parties whomsoever is
required in connection with the execution and delivery by the Trustor of this
Deed of Trust.

Section 4.05    Revenue and Cost Bearing Interest. The Trustor’s ownership of
the Hydrocarbon Interests and the undivided interests therein as specified on
Exhibit B will, after giving full effect to all Permitted Encumbrances, afford
the Trustor not materially less than those net interests (expressed as a
fraction, percentage or decimal) in the production from or which is allocated to
such Hydrocarbon Interest specified as net revenue interest on Exhibit B and
will cause the Trustor to bear not materially more than that portion (expressed
as a fraction, percentage or decimal), specified as working interest on Exhibit
B, of the costs of maintaining, developing and operating the wells identified on
Exhibit A, except to the extent of any proportionate corresponding increase in
the net revenue interest.

Section 4.06    Operation By Third Parties. If any portion of the Deed of Trust
Property is comprised of interests which are not working interests or which are
not operated by the Trustor or one of its Affiliates, then with respect to such
interests and properties, the Trustor’s covenants as expressed in this Article
IV are modified to require that the Trustor use reasonable commercial efforts to
obtain

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compliance with such covenants by the working interest owners or the operator or
operators of such Deed of Trust Properties.

Section 4.07    Failure to Perform. The Trustor agrees that if it fails to
perform any act or to take any action which it is required to perform or take
hereunder, upon five (5) days’ prior notice to the Trustor (other than the
payment of monies), or pay any money which the Trustor is required to pay
hereunder, each of the Mortgagee and the Trustee, in the Trustor’s name or its
or their own name, may, but shall not be obligated to, perform or cause to
perform such act or take such action or pay such money, and any expenses so
incurred by either of them and any money so paid by either of them shall be a
demand obligation owing by the Trustor to the Mortgagee or the Trustee, as the
case may be, and each of the Mortgagee and the Trustee, upon making such
payment, shall be subrogated to all of the rights of the Person receiving such
payment. Each amount due and owing by the Trustor to each of the Mortgagee and
the Trustee pursuant to this Deed of Trust shall bear interest from the date of
such expenditure or payment to such Person until paid at the Post-Default Rate.

Section 4.08    Delivery of UCC-3 Financing Statements. On or prior to the fifth
(5th) anniversary of the date hereof, and every five years thereafter, the
Trustor will deliver to the Mortgagee a UCC Financing Statement Amendment (Form
UCC3), to be filed for purposes of continuing the perfection and priority of the
security interest in As-Extracted Collateral created in or evidenced by this
Deed of Trust.

ARTICLE V
RIGHTS AND REMEDIES

Section 5.01    Event of Default. An Event of Default under and as defined in
the Second-Out Credit Agreement shall be an “Event of Default” under this Deed
of Trust.

Section 5.2    Foreclosure and Sale.

(a)    If an Event of Default shall occur and be continuing, to the extent
provided by applicable law, the Mortgagee shall have the right and option to
proceed with foreclosure by directing the Trustee to proceed, with foreclosure
and to sell all or any portion of such Deed of Trust Property at one or more
sales, as an entirety or in parcels, at such place or places in otherwise such
manner and upon such notice as may be required by law, or, in the absence of any
such requirement, as the Mortgagee may deem appropriate, and to make conveyance
to the purchaser or purchasers. Where the Deed of Trust Property is situated in
more than one jurisdiction, notice as above provided shall be posted and filed
in all such jurisdictions (if such notices are required by law), and all such
Deed of Trust Property may be sold in any such jurisdiction and any such notice
shall designate the jurisdiction where such Deed of Trust Property is to be
sold. Nothing contained in this Section 5.02 shall be construed so as to limit
in any way any rights to sell the Deed of Trust Property or any portion thereof
by private sale if and to the extent that such private sale is permitted under
the laws of the applicable jurisdiction or by public or private sale after entry
of a judgment by any court of competent jurisdiction so ordering. The Trustor
hereby irrevocably appoints the Trustee and the Mortgagee, with full power of
substitution, to be the attorneys-in-fact of the Trustor and in the name and on
behalf of the Trustor to execute and deliver any deeds, transfers, conveyances,
assignments, assurances and notices which the Trustor ought to execute and
deliver and do and perform any and all such acts and things which the Trustor
ought to do and perform under the covenants herein contained and generally, to
use the name of the Trustor in the exercise of all or any of the powers hereby
conferred on the Trustee and/or the Mortgagee; provided that, neither the
Trustee nor the Mortgagee shall exercise any such powers unless an Event of
Default

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shall have occurred and is continuing. At any such sale: (i) whether made under
the power herein contained or any other legal enactment, or by virtue of any
judicial proceedings or any other legal right, remedy or recourse, it shall not
be necessary for the Trustee or the Mortgagee, as appropriate, to have
physically present, or to have constructive possession of, the Deed of Trust
Property (the Trustor hereby covenanting and agreeing to deliver any portion of
the Deed of Trust Property not actually or constructively possessed by the
Trustee or the Mortgagee immediately upon his or its demand) and the title to
and right of possession of any such property shall pass to the purchaser thereof
as completely as if the same had been actually present and delivered to
purchaser at such sale, (ii) each instrument of conveyance executed by the
Trustee or the Mortgagee shall contain a general warranty of title, binding upon
the Trustor and its successors and assigns, (iii) each and every recital
contained in any instrument of conveyance made by the Trustee or the Mortgagee
shall conclusively establish the truth and accuracy of the matters recited
therein, including, without limitation, nonpayment of the Secured Obligations,
advertisement and conduct of such sale in the manner provided herein and
otherwise by law and appointment of any successor trustee hereunder, (iv) any
and all prerequisites to the validity thereof shall be conclusively presumed to
have been performed, (v) the receipt of the Trustee, the Mortgagee or of such
other party or officer making the sale shall be a sufficient discharge to the
purchaser or purchasers for its purchase money and no such purchaser or
purchasers, or its assigns or personal representatives, shall thereafter be
obligated to see to the application of such purchase money, or be in any way
answerable for any loss, misapplication or nonapplication thereof, (vi) to the
fullest extent permitted by law, the Trustor shall be completely and irrevocably
divested of all of its right, title, interest, claim and demand whatsoever,
either at law or in equity, in and to the property sold and such sale shall be a
perpetual bar both at law and in equity against the Trustor, and against any and
all other persons claiming or to claim the property sold or any part thereof,
by, through or under the Trustor, and (vii) to the extent and under such
circumstances as are permitted by law, the Mortgagee may be a purchaser at any
such sale, and shall have the right, after paying or accounting for all costs of
said sale or sales, to credit the amount of the bid upon the amount of the
Secured Obligations (in the order of priority set forth in Section 5.14) in lieu
of cash payment.

(b)    If an Event of Default shall occur and be continuing, then (i) the
Mortgagee shall be entitled to all of the rights, powers and remedies afforded a
secured party by the Applicable UCC with reference to the UCC Collateral or (ii)
the Trustee or the Mortgagee may proceed as to any Collateral in accordance with
the rights and remedies granted under this Deed of Trust or applicable law in
respect of the Collateral. To the extent permitted by applicable law, such
rights, powers and remedies shall be cumulative and in addition to those granted
to the Trustee or the Mortgagee under any other provision of this Deed of Trust
or under any Second-Out Security Document. Written notice mailed to the Trustor
as provided herein at least ten (10) days prior to the date of public sale of
any part of the Collateral which is personal property subject to the provisions
of the Applicable UCC, or prior to the date after which private sale of any such
part of the Collateral will be made, shall constitute reasonable notice.

Section 5.03    Substitute Trustees and Agents. The Trustee or Mortgagee may
appoint or delegate any one or more persons as agent to perform any act or acts
necessary or incident to any sale held by the Trustee or Mortgagee, including
the posting of notices and the conduct of sale, but in the name and on behalf of
the Trustee or Mortgagee. If the Trustee or Mortgagee shall have given notice of
sale hereunder, any successor or substitute trustee or mortgagee agent
thereafter appointed may complete the sale and the conveyance of the property
pursuant thereto as if such notice had been given by the successor or substitute
trustee or mortgagee agent conducting the sale.

Section .04    Judicial Foreclosure; Receivership. If any of the Secured
Obligations shall become due and payable and shall not be promptly paid, the
Trustee or the Mortgagee shall have the

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right and power to proceed by a suit or suits in equity or at law, whether for
the specific performance of any covenant or agreement herein contained or in aid
of the execution of any power herein granted, or for any foreclosure hereunder
or for the sale of the Collateral under the judgment or decree of any court or
courts of competent jurisdiction, or for the appointment of a receiver pending
any foreclosure hereunder or the sale of the Collateral under the order of a
court or courts of competent jurisdiction or under executory or other legal
process, or for the enforcement of any other appropriate legal or equitable
remedy. Any money advanced by the Trustee and/or the Mortgagee in connection
with any such receivership shall be a demand obligation (which obligation the
Trustor hereby expressly promises to pay) owing by the Trustor to the Trustee
and/or the Mortgagee and shall bear interest from the date of making such
advance by the Trustee and/or the Mortgagee until paid at the Post-Default Rate.

Section 5.05    Foreclosure for Installments. To the extent permitted by
applicable law, the Mortgagee shall also have the option to proceed with
foreclosure in satisfaction of any installments of the Secured Obligations which
have not been paid when due either through the courts or by directing the
Trustee to proceed with foreclosure in satisfaction of the matured but unpaid
portion of the Secured Obligations as if under a full foreclosure, conducting
the sale as herein provided and without declaring the entire principal balance
and accrued interest and other Secured Obligations then due; such sale may be
made subject to the unmatured portion of the Secured Obligations, and any such
sale shall not in any manner affect the unmatured portion of the Secured
Obligations, but as to such unmatured portion of the Secured Obligations this
Deed of Trust shall remain in full force and effect just as though no sale had
been made hereunder. It is further agreed that, to the extent permitted by
applicable law, several sales may be made hereunder without exhausting the right
of sale for any unmatured part of the Secured Obligations, it being the purpose
hereof to provide for a foreclosure and sale of the security for any matured
portion of the Secured Obligations without exhausting the power to foreclose and
sell the Deed of Trust Property for any subsequently maturing portion of the
Secured Obligations.

Section 5.06    Separate Sales. If an Event of Default shall have occurred and
be continuing, then the Collateral may be sold in one or more parcels and to the
extent permitted by applicable law in such manner and order as the Mortgagee, in
its sole discretion, may elect, it being expressly understood and agreed that
the right of sale arising out of any Event of Default shall not be exhausted by
any one or more sales.

Section 5.07    Possession of Deed of Trust Property. If an Event of Default
shall have occurred and be continuing, then, to the extent permitted by
applicable law, the Trustee or the Mortgagee shall have the right and power to
enter into and upon and take possession of all or any part of the Collateral in
the possession of the Trustor, its successors or assigns, or its or their agents
or servants, and may exclude the Trustor, its successors or assigns, and all
persons claiming under the Trustor, and its or their agents or servants wholly
or partly therefrom; and, holding the same, the Mortgagee may use, administer,
manage, operate and control the Collateral and conduct the business thereof to
the same extent as the Trustor, its successors or assigns, might at the time do
and may exercise all rights and powers of the Trustor, in the name, place and
stead of the Trustor, or otherwise as the Mortgagee shall deem best. All costs,
expenses and liabilities of every character incurred by the Trustee and/or the
Mortgagee in administering, managing, operating, and controlling the Deed of
Trust Property shall constitute a demand obligation (which obligation the
Trustor hereby expressly promises to pay) owing by the Trustor to the Trustee
and/or the Mortgagee and shall bear interest from date of expenditure until paid
at the Post-Default Rate.

Section 5.09    Occupancy After Foreclosure. In the event there is a foreclosure
sale hereunder and at the time of such sale the Trustor or the Trustor’s heirs,
devisees, representatives, successors or

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assigns or any other person claiming any interest in the Collateral by, through
or under the Trustor, are occupying or using any Deed of Trust Property or any
part thereof, each and all shall immediately become the tenant of the purchaser
at such sale, which tenancy shall be a tenancy from day to day, terminable at
the will of either the landlord or tenant, or at a reasonable rental per day
based upon the value of the property occupied, such rental to be due daily to
the purchaser; to the extent permitted by applicable law, the purchaser at such
sale shall, notwithstanding any language herein apparently to the contrary, have
the sole option to demand immediate possession following the sale or to permit
the occupants to remain as tenants at will. In the event the tenant fails to
surrender possession of said property upon demand, the purchaser shall be
entitled to institute and maintain a summary action for possession of the Deed
of Trust Property (such as an action for forcible entry and detainer) in any
court having jurisdiction.

Section 5.09    Remedies Cumulative, Concurrent and Nonexclusive. Every right,
power, privilege and remedy herein given to the Trustee or the Mortgagee shall,
to the extent permitted by applicable law, be cumulative and in addition to
every other right, power and remedy herein specifically given or now or
hereafter existing in equity, at law or by statute (including specifically those
granted by the Applicable UCC in effect and applicable to the Collateral or any
portion thereof). Each and every right, power, privilege and remedy whether
specifically herein given or otherwise existing may be exercised from time to
time and so often and in such order as may be deemed expedient by the Trustee or
the Mortgagee and to the extent permitted by applicable law, and the exercise,
or the beginning of the exercise, or the abandonment, of any such right, power,
privilege or remedy shall not be deemed a waiver of the right to exercise, at
the same time or thereafter any other right, power, privilege or remedy. No
delay or omission by the Trustee or the Mortgagee or any Second-Out Secured
Party in the exercise of any right, power or remedy shall impair any such right,
power, privilege or remedy or operate as a waiver thereof or of any other right,
power, privilege or remedy then or thereafter existing.

Section 5.10    Discontinuance of Proceedings. If the Trustee or the Mortgagee
shall have proceeded to invoke any right, remedy or recourse permitted hereunder
or under any Second-Out Security Document or available at law and shall
thereafter elect to discontinue or abandon same for any reason, then it shall
have the unqualified right so to do and, in such an event, the parties shall be
restored to their former positions with respect to the Secured Obligations, this
Deed of Trust, the Second-Out Credit Agreement, the Collateral and otherwise,
and the rights, remedies, recourses and powers of the Trustee and the Mortgagee,
as applicable, shall continue as if same had never been invoked.

Section 2.11    No Release of Obligations. To the extent permitted by applicable
law, neither the Trustor, any Guarantor nor any other person hereafter obligated
for payment of all or any part of the Secured Obligations shall be relieved of
such obligation by reason of: (a) the failure of the Trustee to comply with any
request of the Trustor, any Guarantor or any other Person so obligated, to
foreclose the Lien of this Deed of Trust or to enforce any provision hereunder
or under the Second-Out Credit Agreement; (b) the release, regardless of
consideration, of the Deed of Trust Property or any portion thereof or interest
therein or the addition of any other property to the Deed of Trust Property; (c)
any agreement or stipulation between any subsequent owner of the Deed of Trust
Property and the Mortgagee extending, renewing, rearranging or in any other way
modifying the terms of this Deed of Trust without first having obtained the
consent of, given notice to or paid any consideration to the Trustor, any
Guarantor or such other Person, and in such event the Trustor, Guarantor and all
such other Persons shall continue to be liable to make payment according to the
terms of any such extension or modification agreement unless expressly released
and discharged in writing by the Mortgagee; or (d) by any other act or
occurrence save and except if the Secured Obligations are paid in full and
satisfied and any other obligations hereunder or under the Second-Out Credit
Agreement are completely fulfilled.

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Section 5.12    Release of and Resort to Collateral. The Mortgagee may release,
regardless of consideration, any part of the Collateral without, as to the
remainder, in any way impairing, affecting, subordinating or releasing the Lien
created in or evidenced by this Deed of Trust or its stature as a first and
prior Lien in and to the Collateral, and without in any way releasing or
diminishing the liability of any Person liable for the repayment of the Secured
Obligations. For payment of the Secured Obligations, the Mortgagee may resort to
any other security therefor held by the Mortgagee or the Trustee in such order
and manner as the Mortgagee may elect.

Section 5.13    Waiver of Redemption, Notice and Marshalling of Assets, Etc. To
the fullest extent permitted by law, the Trustor hereby irrevocably and
unconditionally waives and releases (a) all benefits that might accrue to the
Trustor by virtue of any present or future moratorium law or other law exempting
the Collateral from attachment, levy or sale on execution or providing for any
appraisement, valuation, stay of execution, exemption from civil process,
redemption or extension of time for payment; (b) all notices of any Event of
Default or of the Mortgagee’s or any other secured Person’s intention to
accelerate maturity of the Secured Obligations or of any election to exercise or
any actual exercise of any right, remedy or recourse provided for hereunder or
under any Second-Out Security Document or available at law; and (c) any right to
a marshalling of assets or a sale in inverse order of alienation. If any law
referred to in this Deed of Trust and now in force, of which the Trustor or its
successor or successors might take advantage despite the provisions hereof,
shall hereafter be repealed or cease to be in force, such law shall thereafter
be deemed not to constitute any part of the contract herein contained or to
preclude the operation or application of the provisions hereof. If the laws of
any state which provides for a redemption period do not permit the redemption
period to be waived, the redemption period shall be specifically reduced to the
minimum amount of time allowable by statute.

Section 5.14    Application of Proceeds. If an Event of Default shall have
occurred and be continuing, any cash held by or on behalf of the Trustee or the
Mortgagee and all cash proceeds received by or on behalf of the Trustee or the
Mortgagee in respect of any sale of, collection from, or other realization upon
any Collateral may, in the discretion of the Trustee or the Mortgagee, be held
by the Trustee or the Mortgagee as collateral for, and/or then or at any time
thereafter applied, in whole or in part, by the Trustee or the Mortgagee for the
benefit of the Second-Out Secured Parties against, any Secured Obligation, in
accordance with the final paragraph of Article XII of the Second-Out Credit
Agreement.

Section 5.15    Resignation of Operator. In addition to all rights and remedies
under this Deed of Trust, at law and in equity, if any Event of Default shall
occur and the Trustee or the Mortgagee shall exercise any remedies under this
Deed of Trust with respect to any portion of the Deed of Trust Property (or the
Trustor shall transfer any Deed of Trust Property “in lieu of” foreclosure)
whereupon the Trustor is divested of its title to any of the Collateral, the
Mortgagee shall have the right to request that any operator of any Deed of Trust
Property which is either the Trustor or any Affiliate of the Trustor to resign
as operator under the joint operating agreement applicable thereto, and no later
than 60 days after receipt by the Trustor of any such request and to the extent
permitted by such joint operating agreement, the Trustor shall resign (or cause
such other Person to resign) as operator of such Collateral.

Section 5.16    Indemnity. THE INDEMNIFIED PARTIES SHALL NOT BE LIABLE, IN
CONNECTION WITH ANY ACTION TAKEN, FOR ANY LOSS SUSTAINED BY THE TRUSTOR
RESULTING FROM AN ASSERTION THAT THE MORTGAGEE HAS RECEIVED FUNDS FROM THE
PRODUCTION OF HYDROCARBONS CLAIMED BY THIRD PERSONS OR ANY ACT OR OMISSION OF
ANY INDEMNIFIED PARTY IN ADMINISTERING, MANAGING, OPERATING OR CONTROLLING THE
DEED OF TRUST PROPERTY INCLUDING SUCH LOSS WHICH

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MAY RESULT FROM THE ORDINARY NEGLIGENCE OF AN INDEMNIFIED PARTY UNLESS SUCH LOSS
IS CAUSED BY THE WILLFUL MISCONDUCT OR GROSS NEGLIGENCE OF THE INDEMNIFIED PARTY
SEEKING INDEMNITY. NO INDEMNIFIED PARTY SHALL BE OBLIGATED TO PERFORM OR
DISCHARGE ANY OBLIGATION, DUTY OR LIABILITY OF THE TRUSTOR. THE TRUSTOR SHALL
AND DOES HEREBY AGREE TO INDEMNIFY EACH INDEMNIFIED PARTY FOR, AND TO HOLD EACH
INDEMNIFIED PARTY HARMLESS FROM, ANY AND ALL LIABILITY, LOSS OR DAMAGE WHICH MAY
OR MIGHT BE INCURRED BY ANY INDEMNIFIED PARTY BY REASON OF THIS DEED OF TRUST OR
THE EXERCISE OF RIGHTS OR REMEDIES HEREUNDER UNLESS SUCH LIABILITY, LOSS OR
DAMAGE IS CAUSED BY THE WILLFUL MISCONDUCT OR GROSS NEGLIGENCE OF THE
INDEMNIFIED PARTY SEEKING INDEMNITY. IF ANY INDEMNIFIED PARTY SHALL MAKE ANY
EXPENDITURE ON ACCOUNT OF ANY SUCH LIABILITY, LOSS OR DAMAGE, THE AMOUNT
THEREOF, INCLUDING COSTS, EXPENSES AND REASONABLE ATTORNEYS’ FEES, SHALL BE A
DEMAND OBLIGATION (WHICH OBLIGATION THE TRUSTOR HEREBY EXPRESSLY PROMISES TO
PAY) OWING BY THE TRUSTOR TO SUCH INDEMNIFIED PARTY AND SHALL BEAR INTEREST FROM
THE DATE EXPENDED UNTIL PAID AT THE POST-DEFAULT RATE. THE TRUSTOR HEREBY
ASSENTS TO, RATIFIES AND CONFIRMS ANY AND ALL ACTIONS OF EACH INDEMNIFIED PARTY
WITH RESPECT TO THE DEED OF TRUST PROPERTY TAKEN UNDER AND IN COMPLIANCE WITH
THE TERMS OF THIS DEED OF TRUST. THE LIABILITIES OF THE TRUSTOR AS SET FORTH IN
THIS SECTION 5.16 SHALL SURVIVE THE TERMINATION OF THIS DEED OF TRUST.

ARTICLE VI
THE TRUSTEE

Section 6.01    Duties, Rights, and Powers of Trustee. The Trustee shall have no
duty to see to any recording, filing or registration of this Deed of Trust or
any other instrument in addition or supplemental thereto, or to give any notice
thereof, or to see to the payment of or be under any duty in respect of any tax
or assessment or other governmental charge which may be levied or assessed on
the Deed of Trust Property, or any part thereof, or against the Trustor, or to
see to the performance or observance by the Trustor of any of the covenants and
agreements contained herein. The Trustee shall not be responsible for the
execution, acknowledgment or validity of this Deed of Trust or of any instrument
in addition or supplemental hereto or for the sufficiency of the security
purported to be created hereby, and makes no representation in respect thereof
or in respect of the rights of the Mortgagee. The Trustee shall have the right
to advise with counsel upon any matters arising hereunder and shall be fully
protected in relying as to legal matters on the advice of counsel. The Trustee
shall not incur any personal liability hereunder except for the Trustee’s own
willful misconduct; and the Trustee shall have the right to rely on any
instrument, document or signature authorizing or supporting any action taken or
proposed to be taken by him hereunder, believed by him in good faith to be
genuine.

Section 6.02    Successor Trustee. The Trustee may resign by written notice
addressed to the Mortgagee or be removed at any time with or without cause by an
instrument in writing duly executed on behalf of the Mortgagee. In case of the
death, resignation or removal of the Trustee, a successor may be appointed by
the Mortgagee by instrument of substitution complying with any applicable
Requirements of Law, or, in the absence of any such requirement, without
formality other than appointment and designation in writing. Written notice of
such appointment and designation shall be given by the Mortgagee to the Trustor,
but the validity of any such appointment shall not be impaired or affected by
failure to give such notice or by any defect therein. Such appointment and
designation shall be full evidence of the right and authority to make the same
and of all the facts therein recited.

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Upon the making of any such appointment and designation, this Deed of Trust
shall vest in the successor all the estate and title in and to all of the Deed
of Trust Property and the successor shall thereupon succeed to all of the
rights, powers, privileges, immunities and duties hereby conferred upon the
Trustee named herein, and one such appointment and designation shall not exhaust
the right to appoint and designate an additional successor but such right may be
exercised repeatedly until the Secured Obligations are paid in full and
satisfied. To facilitate the administration of the duties hereunder, the
Mortgagee may appoint multiple trustees to serve in such capacity or in such
jurisdictions as the Mortgagee may designate.

Section 6.03 Retention of Moneys. All moneys received by the Trustee shall,
until used or applied as herein provided, be held in trust for the purposes for
which they were received, but need not be segregated in any manner from any
other moneys (except to the extent required by law) and the Trustee shall be
under no liability for interest on any moneys received by him hereunder.

ARTICLE VII
MISCELLANEOUS

Section 7.01    Instrument Construed as Mortgage, Etc. With respect to any
portions of the Deed of Trust Property located in or adjacent to any State or
other jurisdiction the laws of which do not provide for the use or enforcement
of a deed of trust or the office, rights and authority of the Trustee as herein
provided, the general language of conveyance hereof to the Trustee is intended
and the same shall be construed as words of mortgage unto and in favor of the
Mortgagee and the rights and authority granted to the Trustee herein may be
enforced and asserted by the Mortgagee in accordance with the laws of the
jurisdiction in which such portion of the Deed of Trust Property is located and
the same may be foreclosed at the option of the Mortgagee as to any or all such
portions of the Deed of Trust Property in any manner permitted by the laws of
the jurisdiction in which such portions of the Deed of Trust Property is
situated. This Deed of Trust may be construed as a mortgage, deed of trust,
conveyance, assignment, security agreement, fixture filing, pledge, financing
statement, hypothecation or contract, or any one or more of them, in order fully
to effectuate the Lien hereof and the purposes and agreements herein set forth.

Section 7.02    Releases.

(a)    Upon any sale, lease, transfer or other disposition of any Collateral of
Trustor in accordance with the Credit Documents, the Mortgagee will, at
Trustor’s expense, execute and deliver to Trustor such documents as Trustor
shall reasonably request to evidence the release of such Collateral from the
assignment and security interest granted hereby.

(b)    Upon, and only upon, the indefeasible payment and satisfaction in full in
cash of the Secured Obligations (other than any contingent indemnification
obligations) and termination of the Commitments, this Deed of Trust and the
security interest created hereby shall terminate, all rights in the Collateral
shall revert to the Trustors and the Mortgagee, at a Trustor’s request and at
the expense of Trustor, will:

(i)    return to Trustor such of Trustor’s Collateral in the Mortgagee’s
possession as shall not have been sold or otherwise disposed of or applied
pursuant to the terms hereof, and

(ii)    execute and deliver to Trustor such documents as Trustor shall
reasonably request to evidence such termination.

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(c)    No Trustor is authorized to file any financing statement or amendment or
termination statement with respect to any financing statement originally filed
in connection with this Deed of Trust without the prior written consent of the
Mortgagee, subject to Trustors’ rights under Sections 9-509(d)(2) and 9-518 of
the UCC.

(d)    Possession of Notes. The Trustor acknowledges and agrees that possession
of any promissory note (or any replacements of any said promissory note or other
instrument evidencing any part of the Secured Obligations) at any time by the
Borrower, the Trustor or any other guarantor shall not in any manner extinguish
the Secured Obligations or this Deed of Trust, and the Borrower shall have the
right to issue and reissue any of the promissory notes from time to time as its
interest or as convenience may require, without in any manner extinguishing or
affecting the Secured Obligations or the Lien of this Deed of Trust.

Section 7.03    Severability. If any provision hereof is invalid or
unenforceable in any jurisdiction, the other provisions hereof shall remain in
full force and effect in such jurisdiction and the remaining provisions hereof
shall be liberally construed in favor of the Trustee, the Mortgagee and the
Second-Out Secured Parties in order to effectuate the provisions hereof. The
invalidity or unenforceability of any provision hereof in any jurisdiction shall
not affect the validity or enforceability of any such provision in any other
jurisdiction.

Section 7.04     Successors and Assigns. The terms used to designate any party
or group of persons shall be deemed to include the respective heirs, legal
representatives, successors and assigns of such Persons.

Section 7.05    Application of Payments to Certain Obligations. If any part of
the Secured Obligations cannot be lawfully secured by this Deed of Trust or if
any part of the Deed of Trust Property cannot be lawfully subject to the Lien
hereof to the full extent of the Secured Obligations, then, to the extent
permitted under applicable law, all payments made shall be applied on said
Secured Obligations first in discharge of that portion thereof which is not
secured by this Deed of Trust.

Section 7.06    Nature of Covenants. The covenants and agreements herein
contained shall constitute covenants running with the land and interests covered
or affected hereby and shall be binding upon the heirs, legal representatives,
successors and assigns of the parties hereto.

Section 7.07    Notices. Any notice or communication required or permitted
hereunder shall be given in writing or by electronic transmission, sent in the
manner provided in Section 14.2 of the Second-Out Credit Agreement, if to the
Mortgagee or to a Trustor that is a party to the Second-Out Credit Agreement, to
the address set forth in the Second-Out Credit Agreement and, for any other
Trustor, to the address specified in Section 7.11, or to such other address or
to the attention of such other individual as hereafter shall be designated in
writing by the applicable party sent in accordance herewith. Any such notice or
communication shall be deemed to have been given as provided in the Second-Out
Credit Agreement for notices given thereunder.

Section 7.08    Counterparts. This Deed of Trust is being executed in several
counterparts, all of which are identical, except that to facilitate recordation,
if the Deed of Trust Property is situated in or on the Outer Continental Shelf
adjacent to more than one county, descriptions of only those portions of the
Deed of Trust Property located in or on the Outer Continental Shelf adjacent to
the county in which a particular counterpart is recorded shall be attached as
Exhibit A to such counterpart. Each of such counterparts shall for all purposes
be deemed to be an original and all such counterparts shall

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together constitute but one and the same instrument. Complete copies of this
Deed of Trust containing the entire Exhibit A have been retained by the
Mortgagee.

Section 7.09Governing Law. Insofar as permitted by otherwise applicable law,
this Deed of Trust shall be construed under and governed by the laws of the
State of New York; provided, however, that, with respect to any portion of the
Deed of Trust Property located outside of the State of New York, the laws of the
place in which such property is located in, or offshore area adjacent to (and
State law made applicable as a matter of Federal law), shall apply to the extent
of procedural and substantive matters relating only to the creation, perfection,
foreclosure of Liens and enforcement of rights and remedies against the Deed of
Trust Property.

Section 7.10    Financing Statement; Fixture Filing. This Deed of Trust shall be
effective as a financing statement filed as a fixture filing with respect to all
Fixtures included within the Deed of Trust Property and is to be filed or filed
for record in the real estate records, mortgage records or other appropriate
records of each jurisdiction where any part of the Deed of Trust Property
(including said fixtures) are situated. This Deed of Trust shall also be
effective as a financing statement covering As-Extracted Collateral (including
oil and gas and all other substances of value which may be extracted from the
ground) and accounts financed at the wellhead or minehead of wells or mines
located on the properties subject to the Applicable UCC and is to be filed for
record in the real estate records, UCC records or other appropriate records of
each jurisdiction where any part of the Deed of Trust Property is situated.

Section 7.11    Execution of Financing Statements. Pursuant to the Applicable
UCC, the Trustor authorizes the Mortgagee, its counsel or its representative, at
any time and from time to time, to file or record financing statements,
continuation statements, amendments thereto and other filing or recording
documents or instruments with respect to the Deed of Trust Property without the
signature of the Mortgagee in such form and in such offices as the Mortgagee
reasonably determines appropriate to perfect the security interests of the
Mortgagee under this Deed of Trust. The Trustor also authorizes the Mortgagee,
its counsel or its representative, at any time and from time to time, to file or
record such financing statements that describe the collateral covered thereby as
“all assets of the Mortgagee”, “all personal property of the Mortgagee” or words
of similar effect. The Trustor shall pay all costs associated with the filing of
such instruments.

In that regard, the following information is provided:

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Name of Debtor:
California Resources Elk Hills, LLC, California Resources Production
Corporation, California Resources Petroleum Corporation, Southern San Joaquin
Production, Inc., California Heavy Oil, Inc., and/or Socal Holding, LLC, as
applicable
Address of Debtor
9200 Oakdale Ave., Suite 900
Los Angeles, CA 91311
Attention: Michael Preston
State of Formation/Location
Delaware
 
 
 
 
Principal Place of Business of Debtor:
Same as above
 
 
 
 
Name of Secured Party:
The Bank of New York Mellon Trust Company, N.A. as Collateral Agent
Address of Secured Party:
Global Corporate Trust, Corporate Unit
400 South Hope Street, Suite 400
Los Angeles, CA 90071
 
 
 
 
Owner of Record of Real Property:
California Resources Elk Hills, LLC, California Resources Production
Corporation, California Resources Petroleum Corporation, Southern San Joaquin
Production, Inc., California Heavy Oil, Inc., and/or Socal Holding, LLC, as
applicable

Section 7.12    Exculpation Provisions. EACH OF THE PARTIES HERETO SPECIFICALLY
AGREES THAT IT HAS A DUTY TO READ THIS DEED OF TRUST; AND AGREES THAT IT IS
CHARGED WITH NOTICE AND KNOWLEDGE OF THE TERMS OF THIS DEED OF TRUST; THAT IT
HAS IN FACT READ THIS DEED OF TRUST AND IS FULLY INFORMED AND HAS FULL NOTICE
AND KNOWLEDGE OF THE TERMS, CONDITIONS AND EFFECTS OF THIS DEED OF TRUST; THAT
IT HAS BEEN REPRESENTED BY INDEPENDENT LEGAL COUNSEL OF ITS CHOICE THROUGHOUT
THE NEGOTIATIONS PRECEDING ITS EXECUTION OF THIS DEED OF TRUST; AND HAS RECEIVED
THE ADVICE OF ITS ATTORNEY IN ENTERING INTO THIS DEED OF TRUST; AND THAT IT
RECOGNIZES THAT CERTAIN OF THE TERMS OF THIS DEED OF TRUST 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

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PROVISION OF THIS DEED OF TRUST ON THE BASIS THAT THE PARTY HAD NO NOTICE OR
KNOWLEDGE OF SUCH PROVISION OR THAT THE PROVISION IS NOT “CONSPICUOUS.”

Section 7.13    References. The words “herein,” “hereof,” “hereunder” and other
words of similar import when used in this Deed of Trust refer to this Deed of
Trust as a whole, and not to any particular article, section or subsection. Any
reference herein to a Section shall be deemed to refer to the applicable Section
of this Deed of Trust unless otherwise stated herein. Any reference herein to an
exhibit or schedule shall be deemed to refer to the applicable exhibit or
schedule attached hereto unless otherwise stated herein.

Section 7.014    First Lien Intercreditor Agreement Controls.

(a)    Each Second-Out Secured Party, by accepting the benefits of the security
provided hereby, (i) agrees (or is deemed to agree) that it will be bound by,
and will take no actions contrary to, the provisions of the First Lien
Intercreditor Agreement, (ii) authorizes (or is deemed to authorize) the
Mortgagee on behalf of such Person to enter into, and perform under, the First
Lien Intercreditor Agreement and (iii) acknowledges (or is deemed to
acknowledge) that a copy of the First Lien Intercreditor Agreement was
delivered, or made available, to such Second-Out Secured Party.

(b)    Notwithstanding any other provision contained herein, this Deed of Trust,
the Liens created hereby and the rights, remedies, duties and obligations
provided for herein are subject in all respects to the provisions of the First
Lien Intercreditor Agreement. In the event of any conflict or inconsistency
between the provisions of this Deed of Trust and the First Lien Intercreditor
Agreement, the provisions of the First Lien Intercreditor Agreement shall
control.

(c)    Without limiting the foregoing, at any time prior to the Discharge of the
First-Out Obligations (as defined in the First Lien Intercreditor Agreement),
any provision hereof requiring any Trustor to deliver possession of any
Collateral to the Mortgagee, shall be deemed to have been complied with, if and
for so long as (i) the First Lien Intercreditor Agreement is in full force and
effect and (ii) the First-Out Agent shall have such possession for the benefit
of the Second-Out Secured Parties and as bailee or sub-agent of the Mortgagee as
provided in the First Lien Intercreditor Agreement. Each Trustor shall provide
prompt written notice to the Mortgagee identifying any Collateral delivered to
the First-Out Agent pursuant to the First Lien First-Out Credit Documents (as
defined in the First Lien Intercreditor Agreement).

ARTICLE VIII
STATE SPECIFIC PROVISIONS

Section 8.01    California Mortgage Foreclosure Law. No portion of the Secured
Obligations shall be or be deemed to be offset or compensated by all or any part
of any claim, cause of action, counterclaim or cross-claim, whether liquidated
or unliquidated, which the Trustor may presently have or claim to have against
the Trustee, the Mortgagee or the Second-Out Secured Parties. The Trustor hereby
waives, to the fullest extent permitted by applicable law, the benefits of
California Code of Civil Procedure § 431.70 (and any other applicable law of
similar import) which provides:

Where cross-demands for money have existed between persons at any point in time
when neither demand was barred by the statute of limitations, and an action

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is thereafter commenced by one such person, the other person may assert in the
answer the defense of payment in that the two demands are compensated so far as
they equal each other, notwithstanding that an independent action asserting the
person’s claim would at the time of filing the answer be barred by the statute
of limitations. If the cross-demand would otherwise be barred by the statute of
limitations, the relief accorded under this section shall not exceed the value
of the relief granted to the other party. The defense provided by this section
is not available if the cross-demand is barred for failure to assert it in a
prior action under Section 426.30. Neither person can be deprived of the
benefits of this section by the assignment or death of the other. For purposes
of this section, a money judgment is a demand for money, and, as applied to a
money judgment, the demand is barred by the statute of limitations when
enforcement of the judgment is barred under Chapter 3 (commencing with Section
683.010 of Division 1 of Title 9).
ARTICLE IX
CONCERNING THE MORTGAGEE

Section 9.01    CERCLA Liability. In the event that the Mortgagee is required to
acquire title to an asset for any reason, or take any managerial action of any
kind in regard thereto, in order to carry out any fiduciary or trust obligation
for the benefit of another, which in Mortgagee’s sole discretion may cause it to
be considered an “owner or operator” under the provisions of the Comprehensive
Environmental Response, Compensation and Liability Act (“CERCLA”), 42 U.S.C.
§9601, et seq., or otherwise cause it to incur liability under CERCLA or any
other federal, state or local law, the Mortgagee reserves the right, instead of
taking such action, to either resign or arrange for the transfer of the title or
control of the asset to a court-appointed receiver. Absent gross negligence or
willful misconduct, the Mortgagee shall not be liable to any person for any
environmental claims or contribution actions under any federal, state or local
law, rule or regulation by reason of the Mortgagee’s actions and conduct as
authorized, empowered and directed hereunder or under the other Second-Out
Credit Documents or relating to the discharge, release or threatened release of
hazardous materials into the environment and the Grantors shall indemnify the
Mortgagee pursuant to the provisions hereof in connection with any claim,
litigation, investigation or proceedings relating to any of the foregoing.

Section 9.02    Rights of Mortgagee. In acting hereunder, the Mortgagee shall
have all of the rights, protections and immunities granted to the Collateral
Agent under the Credit Agreement and Security Agreement, all of which are
incorporated herein by reference mutatis mutandis. For the avoidance of doubt,
the Mortgagee shall be under no obligation to make filings and recordings to
perfect or maintain the perfection of the lien hereunder, nor shall it have any
obligation to advance funds hereunder.
[SIGNATURES BEGIN NEXT PAGE]

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EXECUTED this ____ day of August, 2016, to be effective as of the ____ day of
August, 2016.
 
California Resources Elk Hills, LLC
California Resources Production Corporation California Resources Petroleum
Corporation Southern San Joaquin Production, Inc.
California Heavy Oil, Inc.
Socal Holding, LLC
 
 
 
By:
 
Name:Ivan Gaydarov
 
Title:Treasurer of each Trustor

ACKNOWLEDGMENT

State of California
County of                         )

On August ____, 2016, before me,     
personally appeared Ivan Gaydarov, Treasurer of each Trustor, who proved to me
on the basis of satisfactory evidence to be the person(s) whose name(s) is/are
subscribed to the within instrument and acknowledged to me that he/she/they
executed the same in his/her/their authorized capacity(ies), and that by
his/her/their signature(s) on the instrument the person(s), or the entity upon
behalf of which the person(s) acted, executed the instrument.

I certify under PENALTY OF PERJURY under the laws of the State of California
that the foregoing paragraph is true and correct.

WITNESS my hand and official seal.

Signature                             (Seal)

EXECUTED this ____ day of August, 2016, to be effective as of the ____ day of
August, 2016.

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[_]
 
 
 
 
 
By:
 
Name:
 
Title:

ACKNOWLEDGMENT

State of California
County of                         )

On August ____, 2016, before me,     
personally appeared     ,
who proved to me on the basis of satisfactory evidence to be the person(s) whose
name(s) is/are subscribed to the within instrument and acknowledged to me that
he/she/they executed the same in his/her/their authorized capacity(ies), and
that by his/her/their signature(s) on the instrument the person(s), or the
entity upon behalf of which the person(s) acted, executed the instrument.

I certify under PENALTY OF PERJURY under the laws of the State of California
that the foregoing paragraph is true and correct.

WITNESS my hand and official seal.

Signature                             (Seal)

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EXHIBIT A

Hydrocarbon Interests

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Exhibit B
Oil and Gas Properties

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WHEN RECORDED OR FILED
PLEASE RETURN TO:
Cahill Gordon & Reindel LLP
80 Pine Street
new York, NY 10005
Attention: Timothy Gallagher, Esq.
    
Space above for County Recorder's Use

MORTGAGE, LINE OF CREDIT MORTGAGE, DEED OF TRUST, (ASSIGNMENT OF LEASES, RENTS
AND PROFITS), SECURITY AGREEMENT, FIXTURE FILING AND FINANCING STATEMENT

FROM

EACH UNDERSIGNED TRUSTOR

TO

First American Title Insurance Company,
AS TRUSTEE

FOR THE BENEFIT OF

The Bank of New York Mellon Trust Company, N.A.,
as Mortgagee and Collateral Agent

and the Second-Out Secured Parties

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A CARBON, PHOTOGRAPHIC, OR OTHER REPRODUCTION
OF THIS INSTRUMENT IS SUFFICIENT AS A FINANCING STATEMENT.

A POWER OF SALE HAS BEEN GRANTED IN THIS DEED OF TRUST. IN CERTAIN STATES, A
POWER OF SALE MAY ALLOW THE TRUSTEE OR THE MORTGAGEE TO TAKE THE DEED OF TRUST
PROPERTY AND SELL IT WITHOUT GOING TO COURT IN A FORECLOSURE ACTION UPON DEFAULT
BY THE TRUSTOR UNDER THIS DEED OF TRUST.
THIS DEED OF TRUST CONTAINS AFTER-ACQUIRED PROPERTY PROVISIONS.
THIS DEED OF TRUST SECURES PAYMENT OF FUTURE ADVANCES.
THIS DEED OF TRUST COVERS PROCEEDS OF DEED OF TRUST PROPERTY.
THIS DEED OF TRUST COVERS MINERALS AND OTHER SUBSTANCES OF VALUE WHICH MAY BE
EXTRACTED FROM THE EARTH (INCLUDING WITHOUT LIMITATION OIL AND GAS) AND THE
ACCOUNTS RELATED THERETO, WHICH WILL BE FINANCED AT THE WELLHEADS OF THE WELL OR
WELLS LOCATED ON THE PROPERTIES DESCRIBED IN THE EXHIBIT HERETO. THIS DEED OF
TRUST IS TO BE FILED OR FILED FOR RECORD AS A FINANCING STATEMENT,
AMONG OTHER PLACES, IN THE REAL ESTATE RECORDS OR SIMILAR RECORDS OF THE
RECORDERS OF THE COUNTIES LISTED ON THE EXHIBIT HERETO AND WITH A CLERK OF
COURT. THE TRUSTOR HAS AN INTEREST OF RECORD IN THE REAL ESTATE AND IMMOVABLE
PROPERTY CONCERNED, WHICH INTEREST IS DESCRIBED IN THE EXHIBIT ATTACHED HERETO.
PORTIONS OF THE DEED OF TRUST PROPERTY ARE GOODS WHICH ARE OR ARE TO BECOME
AFFIXED TO OR FIXTURES ON THE LAND DESCRIBED IN OR REFERRED TO IN THE EXHIBIT
HERETO. THIS DEED OF TRUST IS TO BE FILED OR REFILED FOR RECORD OR RECORDED AS A
FINANCING STATEMENT, AMONG OTHER PLACES, IN THE REAL ESTATE RECORDS OR SIMILAR
RECORDS OF EACH COUNTY IN WHICH SAID LAND OR ANY PORTION THEREOF IS LOCATED AND
WITH A CLERK OF COURT. THE TRUSTOR IS THE OWNER OF RECORD INTEREST IN THE REAL
ESTATE CONCERNED. THIS INSTRUMENT IS ALSO TO BE INDEXED IN THE INDEX OF
FINANCING STATEMENTS OR THE UCC RECORDS.
TRUSTOR REQUESTS THAT A COPY OF ANY NOTICE OF DEFAULT AND ANY NOTICE OF SALE
HEREUNDER BE MAILED TO IT AT: CALIFORNIA RESOURCES CORPORATION, 9200 Oakdale
Ave., Suite 900, Los Angeles, CA 91311, Attention: General Counsel’s Office.
REFERENCE IS MADE TO THE FIRST LIEN INTERCREDITOR AGREEMENT DESCRIBED BELOW.
EACH SECOND-OUT SECURED PARTY, BY ACCEPTING THE BENEFITS OF THE SECURITY
PROVIDED HEREBY, (I) AGREES (OR IS DEEMED TO AGREE) THAT IT WILL BE BOUND BY,
AND WILL TAKE NO ACTIONS CONTRARY TO, THE PROVISIONS OF THE FIRST LIEN
INTERCREDITOR AGREEMENT, (II) AUTHORIZES (OR IS DEEMED TO AUTHORIZE) THE
Collateral AGENT ON BEHALF OF SUCH PERSON TO ENTER INTO, AND PERFORM UNDER, THE
FIRST LIEN INTERCREDITOR AGREEMENT AND (III) ACKNOWLEDGES (OR IS DEEMED TO
ACKNOWLEDGE) THAT A COPY OF THE FIRST LIEN INTERCREDITOR AGREEMENT WAS
DELIVERED, OR MADE AVAILABLE, TO SUCH SECOND-OUT SECURED PARTY.
NOTWITHSTANDING ANY OTHER PROVISION CONTAINED HEREIN, THIS DEED OF TRUST, THE
LIENS CREATED HEREBY AND THE RIGHTS, REMEDIES, DUTIES AND OBLIGATIONS PROVIDED
FOR HEREIN ARE SUBJECT IN ALL RESPECTS TO THE PROVISIONS OF THE FIRST

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LIEN INTERCREDITOR AGREEMENT. IN THE EVENT OF ANY CONFLICT OR INCONSISTENCY
BETWEEN THE PROVISIONS OF THIS DEED OF TRUST AND THE FIRST LIEN INTERCREDITOR
AGREEMENT, THE PROVISIONS OF THE FIRST LIEN INTERCREDITOR AGREEMENT SHALL
CONTROL.

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TABLE OF CONTENTS
 
 
 
Page
ARTICLE I
 
DEFINITIONS
 
Section 1.01
Terms Defined Above
2

Section 1.02
UCC and Other Defined Terms
2

Section 1.03
Definitions
2

ARTICLE II
 
GRANT OF LIEN AND SECURED OBLIGATIONS
 
Section 2.01
Grant of Liens
4

Section 2.02
Grant of Security Interest
5

Section 2.03
Secured Obligations
5

Section 2.04
Fixture Filing, Etc
5

Section 2.05
Pro Rata Benefit
5

Section 2.06
Excluded Property
6

ARTICLE III
 
ASSIGNMENT OF AS-EXTRACTED COLLATERAL
 
Section 3.01
Assignment
6

Section 3.02
No Modification of Payment Obligations
7

Section 3.03
Excluded Property
7

ARTICLE IV
 
REPRESENTATIONS, WARRANTIES AND COVENANTS
 
Section 4.01
Title
7

Section 4.02
Defend Title
7

Section 4.03
Not a Foreign Person
8

Section 4.04
Power to Create Lien and Security
8

Section 4.05
Revenue and Cost Bearing Interest
8

Section 4.06
Operation By Third Parties
8

Section 4.07
Failure to Perform
8

Section 4.08
Delivery of UCC-3 Financing Statements
9

ARTICLE V
 
RIGHTS AND REMEDIES
 
Section 5.01
Event of Default
9

Section 5.02
Foreclosure and Sale
9

Section 5.03
Substitute Trustees and Agents
10

Section 5.04
Judicial Foreclosure; Receivership
10

Section 5.05
Foreclosure for Installments
10

Section 5.06
Separate Sales
11

Section 5.07
Possession of Deed of Trust Property
11

Section 5.08
Occupancy After Foreclosure
11

Section 5.09
Remedies Cumulative, Concurrent and Nonexclusive
11

Section 5.10
Discontinuance of Proceedings
12

Section 5.11
No Release of Obligations
12

Section 5.12
Release of and Resort to Collateral
12

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Section 5.13
Waiver of Redemption, Notice and Marshalling of Assets, Etc
12

Section 5.14
Application of Proceeds
13

Section 5.15
Resignation of Operator
13

Section 5.16
Indemnity
13

ARTICLE VI
 
THE TRUSTEE
 
Section 6.01
Duties, Rights, and Powers of Trustee
14

Section 6.02
Successor Trustee
14

Section 6.03
Retention of Moneys
14

ARTICLE VII
 
MISCELLANEOUS
 
Section 7.01
Instrument Construed as Mortgage, Etc
14

Section 7.02
Releases
15

Section 7.03
Severability
15

Section 7.04
Successors and Assigns
15

Section 7.05
Application of Payments to Certain Obligations
16

Section 7.06
Nature of Covenants
16

Section 7.07
Notices
16

Section 7.08
Counterparts
16

Section 7.09
Governing Law
16

Section 7.10
Financing Statement; Fixture Filing
16

Section 7.11
Execution of Financing Statements
16

Section 7.12
Exculpation Provisions
17

Section 7.13
References
17

ARTICLE VIII
 
STATE SPECIFIC PROVISIONS
 
Section 8.01
California Mortgage Foreclosure Law
18

ARTICLE IX
 
Concerning the Mortgagee
 
Section 9.01
CERCLA Liability
18

Section 9.02
Rights of Mortgagee
19

 
 
 
Exhibit A
Lands
 
Exhibit B
Power Plant
 

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THIS MORTGAGE, LINE OF CREDIT MORTGAGE, DEED OF TRUST, ASSIGNMENT OF LEASES,
RENTS AND PROFITS, SECURITY AGREEMENT, FIXTURE FILING AND FINANCING STATEMENT
(this “Deed of Trust”) is entered into as of August [_], 2016 (the “Effective
Date”) by each of (i) California Resources Elk Hills, LLC, a Delaware limited
liability company (“CREH”), (ii) California Resources Production Corporation, a
Delaware corporation (“Production Corp.”), (iii) California Resources Petroleum
Corporation, a Delaware corporation (“Petroleum Corp.”), (iv) Southern San
Joaquin Production, Inc., a Delaware corporation (“SSJP”), (v) California Heavy
Oil, Inc., a Delaware corporation (“CHO”) and (vi) Socal Holding, LLC, a
Delaware limited liability company (“Socal”); in favor of First American Title
Insurance Company (the “Trustee”), having an office at 1 First American Way,
Santa Ana, CA 92707, for the benefit of The Bank of New York Mellon Trust
Company, N.A., as Collateral Agent (together with its successors and assigns,
the “Mortgagee”), and the Second-Out Secured Parties (as hereinafter defined).
R E C I T A L S
WHEREAS, reference is made to that certain Credit Agreement, dated as of [_],
2016 (as amended, restated, supplemented or otherwise modified from time to
time, the “Second-Out Credit Agreement”), among California Resources
Corporation, a Delaware corporation (the “Borrower”), the banks, financial
institutions and other lending institutions from time to time party thereto (the
“Second-Out Lenders”), and The Bank of New York Mellon Trust Company, N.A., as
Collateral Agent.
WHEREAS, pursuant to the terms, conditions and provisions of the Second-Out
Credit Agreement, the Second-Out Lenders have severally agreed to make term
loans to the Borrower upon the terms and subject to the conditions set forth
therein (collectively, the “Extensions of Credit”).
WHEREAS, JPMorgan Chase Bank, N.A., as the First-Out Agent (as defined in the
First Lien Intercreditor Agreement) and the Mortgagee have entered into the Pari
Passu Intercreditor Agreement, dated as of the date hereof (the “First Lien
Intercreditor Agreement”), setting forth the respective rights and priorities of
the First-Out Secured Parties (as defined in the First Lien Intercreditor
Agreement) and Second-Out Secured Parties with respect to payments, rights in
the Collateral granted under this Deed of Trust, enforcement of remedies,
bankruptcy issues and other customary subordination and intercreditor
provisions.
WHEREAS, on August [_], 2016, certain Subsidiaries (including the Trustor (as
defined below)) of the Borrower executed a Guarantee (such agreement, as may
from time to time be amended or supplemented, the “Guarantee”) pursuant to
which, upon the terms and conditions stated therein, each such Person has
unconditionally guaranteed the prompt payment, when due, of the obligations
under the Second-Out Credit Agreement, the Credit Documents and the Guarantee
(collectively being the “Second-Out Security Documents”).
WHEREAS, each Trustor acknowledges that it will derive substantial direct and
indirect benefit from the making of the Extensions of Credit.
WHEREAS, in order to comply with the requirements of the Second-Out Credit
Agreement, the Trustors desire to grant to the Mortgagee, for the ratable
benefit of the Second-Out Secured Parties, a security interest in the Collateral
and deliver this Deed of Trust.
NOW, THEREFORE, in consideration of the premises and for other good and valuable
consideration, the receipt and adequacy of which are hereby acknowledged, and to
induce the Collateral Agent, and the Second-Out Lenders to enter into the
Second-Out Credit Agreement and the Second-Out Lenders to make the Extensions of
Credit to the Borrower under the Second-Out Credit Agreement, the Trustors
hereby agree with the Mortgagee, for the ratable benefit of the Second-Out
Secured Parties, as follows:

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ARTICLE I
DEFINITIONS

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

Section 1.02    UCC and Other Defined Terms. Unless otherwise defined in the
Applicable UCC, each capitalized term used in this Deed of Trust and not defined
in this Deed of Trust shall have the meaning ascribed to such term in the
Second-Out Credit Agreement. Any capitalized term not defined in either this
Deed of Trust or the Second-Out Credit Agreement shall have the meaning ascribed
to such term in the Applicable UCC.

Section 1.03    Definitions.

“Applicable UCC” means the provisions of the Uniform Commercial Code presently
in effect in the jurisdiction in which the relevant UCC Collateral is situated
or which otherwise is applicable to the creation or perfection of the Liens
described herein or the rights and remedies of Mortgagee under this Deed of
Trust.
“Buildings” has the meaning assigned to such term in Section 2.01(g).
“CERCLA” has the meaning assigned to such term in Section 9.01.
“Collateral” means collectively all the Deed of Trust Property and all the UCC
Collateral.
“Event of Default” has the meaning ascribed to such term in Section 5.01.
“Excluded Property” shall have the meaning ascribed to such term in the
Second-Out Credit Agreement.
“Deed of Trust Property” means the Lands and other properties and assets
described in Section 2.01(a) through Section 2.01(l), excluding, for the
avoidance of doubt, any Excluded Property.
“Fixtures” has the meaning assigned to such term in Section 2.01(h).

“Flood Insurance Regulations” has the meaning assigned to such term in Section
2.01.

“Future Advances” means future obligations and future advances that the
Mortgagee or any Second-Out Secured Party may make pursuant to any Second-Out
Security Documents.
“Indemnified Parties” means the Trustee, the Mortgagee, each Second-Out Secured
Party and their officers, directors, employees, representatives, agents,
attorneys, accountants and experts.

“Lands” has the meaning assigned to such term in Section 2.01(a).
“Leases” has the meaning assigned to such term in Section 2.01(j).

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“License” has the meaning assigned to such term in Section 3.01.
“Outer Continental Shelf” has the meaning given to the term in the Outer
Continental Shelf Lands Act (43 U.S.C. 1301-1356).
“Permitted Encumbrances” means all Liens permitted to be placed on the Deed of
Trust Properties under Section 11.2 of the Second-Out Credit Agreement.
“Pipeline System” has the meaning assigned to such term in Section 2.01(d).
“Post-Default Rate” means “Default Rate” as defined in the Second-Out Credit
Agreement.
“Power Plant” has the meaning assigned to such term in Section 2.01(g).
“Rents” has the meaning assigned to such term in Section 2.01(j).
“Second-Out Secured Parties” means the “Secured Parties” as defined in the
Second-Out Credit Agreement.
“Secured Obligations” means the “Obligations” as defined in the Second-Out
Credit Agreement.
“Trustor” means each of CREH, Production Corp., Petroleum Corp., SSJP, CHO and
Socal individually as a Trustor hereunder with respect to the Collateral owned
by it.
“UCC Collateral” means the property and other assets described in Section 2.02,
excluding, for the avoidance of doubt, any Excluded Property.
ARTICLE II
GRANT OF LIEN AND SECURED OBLIGATIONS

Section 2.01    Grant of Liens. To secure payment and performance of all of the
Secured Obligations, the Trustor does by these presents hereby GRANT, BARGAIN,
SELL, ASSIGN, MORTGAGE, TRANSFER and CONVEY to the Trustee, and Trustee’s
successors and substitutes in trust hereunder, with power of sale, for the use
and ratable benefit of the Mortgagee and the Second-Out Secured Parties, the
real and personal property, rights, titles, interests and estates located in the
State of California or which are located within (or cover or relate to
properties located within) the Outer Continental Shelf or other offshore area
adjacent to the State of California over which the United States of America
asserts jurisdiction and to which the laws of the State of California are
applicable with respect to this Deed of Trust or the Liens created hereby and
described in subsections (a) through (l) below, except for the Excluded
Property:

(a)    All of Trustor's rights, titles, interests and estates (whether now owned
or hereafter acquired by operation of law or otherwise by the Trustor) in and to
the lands described in Exhibit A hereto, or otherwise described in any of the
right of way grants, easements, servitudes, leases, permits or other instruments
described or referred to in Exhibit A hereto, even though such interest of
Trustor may be incorrectly described in, or omitted from, Exhibit A hereto,
whether the title or interest therein is derived from an instrument of record
referred to on Exhibit A hereto, some other instrument or document, whether of
record or not, or by way of adverse possession, prescriptive use or otherwise
(the “Lands”) and in and to the rights-of-way, permits, servitudes, and
easements specifically described on Exhibit A hereto.

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(b)    All other estates, rights, interests and other claims, both in law and in
equity, that the Trustor now has or may hereafter acquire in (a) the Lands, (b)
all easements, rights of way and rights used in connection therewith or as a
means of access thereto and (c) all tenements, hereditaments and appurtenances
in any manner belonging, relating or appertaining thereto.

(c)    All of Trustor's rights, titles, interests and estates (whether now owned
or hereafter acquired by operation of law or otherwise) in and to any land lying
within the right of way of any streets, open or proposed, adjoining the Lands,
and any and all sidewalks, alleys and strips and gores of land adjacent to or
used in connection therewith.

(d)    All of Trustor's rights, titles, interests and estates (whether now owned
or hereafter acquired by operation of law or otherwise) in and to the pipeline
system located on, under and across the Lands (the “Pipeline System”), and all
of the rights of way, easements, servitudes, licenses, permits, leases,
subleases, agreements, contracts, contract rights, tenements and appurtenances
and other surface and subsurface rights (including all renewals, extensions,
amendments, corrections, counterparts and ratifications thereof and
substitutions and replacements therefor) incidental to or otherwise affecting
the Pipeline System, including but not limited to those rights of way, permits,
servitudes, and easements more fully described on Exhibit A hereto together with
any and all improvements or facilities of any kind whatsoever situated on or
used in connection with the Pipeline System or any of the foregoing (including,
without limitation, all pipelines, flow lines, gathering lines, pumps,
compressors, separators, fittings, valves, meters, tanks, controls, panels,
power facilities, drips, gates, appliances, connections, cathodic protection
equipment, fences, buildings and power, telephone and telegraph lines), and any
other rights, titles, interests or estates in the Pipeline System or any of the
foregoing, owned or claimed by Trustor and used in connection with the Pipeline
System of which the foregoing properties, real, personal and mixed, are a part.

(e)    All of Trustor's interest (whether now owned or hereafter acquired by
operation of law or otherwise) in and to all improvements, materials, supplies,
goods (including, without limitation, inventory, equipment and fixtures) and
other property, real or personal, corporeal or incorporeal (including, without
limitation, all tanks, pipe, pipelines, flow lines, gathering lines, pumps,
compressors, separators, meters, valves, controls, panels, power facilities,
drips, gates, appliances, connections, cathodic protection equipment, and power,
telephone and telegraph lines) which are now or hereafter used, or held for use,
in connection with the properties described in clauses (a) and (d) above, or in
connection with the operation of such properties or in connection with the
treating, handling, transportation or marketing of hydrocarbons transported
through the Pipeline System and all accessions and appurtenances thereto and all
renewals or replacements thereof or substitutions therefor.

(f)    All oil, gas, casinghead gas, condensate, distillate, liquid
hydrocarbons, gaseous hydrocarbons and all products refined therefrom
constituting line fill in the Pipeline System whether now owned or hereafter
acquired by Trustor by operation of law or otherwise.

(g)    All of Trustor’s rights, titles, interests and estates (whether now owned
or hereafter acquired by operation of law or otherwise by the Trustor) in and to
the power plant located on the Lands (the “Power Plant”), more particularly
illustrated on Exhibit B hereto, and any and all buildings and other
improvements now or hereafter located on the Land, including, but not limited
to, all structures, improvements, foundation pads, towers, transmission or
distribution lines, power blocks, substations and other power generating
equipment, rail spurs, dams, reservoirs, water, sanitary and storm sewers,
drainage, electricity, steam, gas, telephone and other utility facilities,
parking areas, roads, driveways, walks and other site improvements of every kind
and description now or hereafter erected or placed on

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the Land, and all building materials, building equipment and fixtures of every
kind and nature located on the Land or, attached to, contained in or used in any
such buildings and other improvements, and all appurtenances and additions
thereto and betterments, substitutions and replacements thereof (the Power Plant
and all of the foregoing estate, right, title and interest being hereinafter
collectively called, the “Buildings”).

(h)    All estate, right, title and interest of the Trustor in and to all such
fixtures, attachments, appliances, equipment, machinery, building materials and
supplies, and other tangible personal property now or hereafter attached to said
Buildings or now or at any time hereafter located on the Land and/or the
Buildings, including, but not limited to, furnaces, boilers, oil burners,
piping, plumbing, refrigeration, air conditioning, lighting, ventilation,
disposal and sprinkler systems, elevators, motors, dynamos, cabling, underground
and overhead interconnections, and all other equipment and machinery,
appliances, fittings and fixtures of every kind located in or used in the
operation of the Buildings located on the Land, together with all additions
thereto and all renewals, alterations, substitutions and replacements thereof,
and any and all products and accessions to any such property that may exist at
any time (all of the foregoing estate, right, title and interest, and products
and accessions, being hereinafter called “Fixtures”).

(i)    all other estate, right, title and interest of the Trustor in and to all
rights, royalties and profits in connection with all minerals, oil and gas and
other hydrocarbon substances on or in the Land, development rights or credits,
air rights, water, water rights (whether riparian, appropriative, constructive
or otherwise and whether or not appurtenant) and water stock.

(j)    all reversion or reversions and remainder or remainders of the Land, the
Pipeline System and the Buildings and all estate, right, title and interest of
the Trustor, as landlord, tenant, subtenant, assignee or otherwise, in and to
any and all present and future leases of space in or of all or any portion of
the Land, the Pipeline System and the Buildings (all of the foregoing present
and future leases of space in or of all or any portion of the Land, the Pipeline
System and the Buildings being herein after collectively called “Leases”), and
all rents, revenues, proceeds, issues, profits, royalties income and other
benefits now or hereafter derived from the Land, the Pipeline System, the
Buildings and the Fixtures, and all right, title and interest of the Trustor in
and to cash or security deposits thereunder, subject to the right, power and
authority hereinafter given to the Trustor to collect and apply the same,
including, but not limited to, any use or occupancy arrangements created
pursuant to Section 365(h) of Title II of the United States Code or otherwise in
connection with the commencement or continuance of any bankruptcy,
reorganization, arrangement, insolvency, dissolution, receivership or similar
proceedings, or any assignment for the benefit of creditors, in respect of any
tenant or occupant of any portion of the Land, the Pipeline System and the
Buildings (all of the foregoing reversions, remainders, leases of space, rents,
revenues, proceeds, issues, profits, royalties, income and other benefits being
hereinafter collectively called “Rents”).

(k)    Any property that may from time to time hereafter, by delivery or by
writing of any kind, be subjected to the Lien and security interest hereof by
Trustor or by anyone on Trustor's behalf; and Trustee and/or the Mortgagee are
hereby authorized to receive the same at any time as additional security
hereunder.

(l)    All proceeds and products of those portions of the Deed of Trust Property
described or referred to in paragraphs (a) through (k) above.

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Section 2.02    Grant of Security Interest. To further secure the Secured
Obligations, the Trustor hereby grants to the Mortgagee, for its benefit and the
ratable benefit of the Second-Out Secured Parties, a security interest in and to
the following (whether now or hereafter acquired by operation of law or
otherwise), except for the Excluded Property:

(a)    all Accounts relating to this Deed of Trust;

(b)    all General Intangibles (including, without limitation, rights in and
under any Payment Intangible, swap agreement or any Commodity contract) and all
rights under insurance contracts and rights to insurance proceeds relating to
this Deed of Trust;

(c)    all Goods (including, without limitation, all Inventory, all Equipment
and all Fixtures relating to the Deed of Trust Properties);

(d)    all Documents;

(e)    all Instruments;

(f)    all Letter-of-Credit Rights (whether or not the letter of credit is
evidenced by a writing);

(g)    all Fixtures;

(h)    all books and records pertaining to the Deed of Trust Properties; and

(i)    to the extent not otherwise included in the Collateral, the Deed of Trust
Property insofar as the Deed of Trust Property consists of personal property of
any kind or character; and

(j)    to the extent not otherwise included, all Proceeds and products of any
and all of the foregoing and all collateral security, third-party guarantees and
other Supporting Obligations given with respect to any of the foregoing.

Section 2.03    Secured Obligations. This Deed of Trust is executed and
delivered by the Trustor to secure and enforce the Secured Obligations.

Section 2.04    Fixture Filing, Etc. Without in any manner limiting the
generality of any of the other provisions of this Deed of Trust: (i) some
portions of the goods described or to which reference is made herein are or are
to become Fixtures on the land described or to which reference is made herein or
on Exhibit A; (ii) this Deed of Trust is to be filed of record in the real
estate records or other appropriate records as a financing statement; and (iii)
the Trustor is the record owner of the real estate or interests in the real
estate or immoveable property comprised of the Deed of Trust Property.

Section 2.05    Pro Rata Benefit. This Deed of Trust is executed and granted for
the pro rata benefit and security of the Mortgagee and the Second-Out Secured
Parties to secure the Secured Obligations for so long as same remains unpaid and
thereafter until the Secured Obligations have been paid in full and satisfied.

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Section 2.06    Excluded Property. Notwithstanding any provision in this Deed of
Trust to the contrary, in no event shall the Collateral include any Excluded
Property.

ARTICLE III
ASSIGNMENT OF Leases, Rents, Issues and Profits

Section 3.01    Assignment of Leases, Rents, Issues and Profits. The Trustor
hereby assigns and transfers to the Beneficiary, FOR THE PURPOSE OF SECURING the
Secured Obligations, all Leases, all Rents, all issues and all profits, to be
effective to create a present security interest in existing and future Leases
and Rents of the Deed of Trust Property under California Civil Code Section
2938, and hereby gives to and confers upon the Mortgagee the right, power and
authority to collect the same in those cases where the Trustor is landlord. The
Trustor irrevocably appoints the Mortgagee its true and lawful attorney in fact,
at its option at any time and from time to time following the occurrence and
during the continuance of an Event of Default, to demand, receive and enforce
payment, to give receipts, releases and satisfactions, and to sue, in the name
of the Trustor or otherwise, for Rents and apply the same to the Secured
Obligations as provided in Section 5.14 of this Deed of Trust; provided,
however, that the Trustor shall be permitted, and is hereby granted by
Beneficiary a license (“License”), to manage and operate the Deed of Trust
Property, including, without limitation, the right to collect the Rents, as they
become due, but not more than one month in advance (except in the case of
security deposits), and to enter into and enforce the Leases, unless and until
there is a continuing Event of Default. Upon the occurrence and during the
continuance of an Event of Default, Mortgagee shall have the right to terminate
the License, provided that it has taken possession of the Lands and undertaken
management and operation of the Deed of Trust Property, and further provided,
such license shall be reinstated immediately following Trustor’s cure of the
Events of Default.

Section 3.02    Collection Upon and Event of Default. To the extent permitted by
law, upon the occurrence of any continuing and uncured Event of Default, the
Mortgagee may, at any time without notice, either in person, by agent or by a
receiver appointed by a court, and without regard to the adequacy of any
security for the Secured Obligations or the solvency of any Trustor, enter upon
and take possession of the Lands, the Pipeline System, the Buildings and the
Fixtures or any part thereof and, in its own name, sue for or otherwise collect
Rents including those past due and unpaid and apply the same, less costs and
expenses of operation and collection, including attorneys’ fees and
disbursements to the payment of the Secured Obligations as provided in Section
5.14 of this Deed of Trust. The collection of Rents or the entering upon and
taking possession of the Lands, the Pipeline System, the Buildings or the
Fixtures or any part thereof, or the application thereof as aforesaid, shall not
cure or waive any Event of Default or notice thereof or invalidate any act done
in response to such Event of Default or pursuant to notice thereof.
ARTICLE IV
REPRESENTATIONS, WARRANTIES AND COVENANTS

The Trustor hereby represents, warrants and covenants as follows:

Section 4.01    Title. Trustor has good and defensible title to and is possessed
of its Deed of Trust Property and has good title to its material UCC Collateral.
The Collateral is free of all Liens except Permitted Encumbrances.

Section 4.02    Defend Title. This Deed of Trust is, and always will be kept, a
direct first priority Lien upon the Collateral other than as permitted pursuant
to the First Lien Intercreditor Agreement or, with respect to the indebtedness
governed thereby, the Second-Out Security Documents; provided that

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no intent to subordinate the priority of the Liens created hereby is intended or
inferred. The Trustor will not create or suffer to be created or permit to exist
any Lien, security interest or charge prior or junior to or on a parity with the
Lien of this Deed of Trust upon the Collateral or any part thereof other than
Permitted Encumbrances. The Trustor will warrant and defend the title to the
Collateral against the claims and demands of all other Persons whomsoever and
will maintain and preserve the Lien created hereby (and its priority) until the
Secured Obligations shall be paid in full and satisfied. If (i) an adverse claim
be made against or, a cloud develops upon, the title to any part of the
Collateral other than a Permitted Encumbrance or (ii) any Person, including the
holder of a Permitted Encumbrance, shall challenge the priority or validity of
the Liens created by this Deed of Trust, then the Trustor agrees to immediately
defend against such adverse claim, take commercially reasonable action to remove
such cloud or subordinate such Permitted Encumbrance, in each case, at the
Trustor’s sole cost and expense. The Trustor further agrees that the Trustee
and/or the Mortgagee may take such other action as they reasonably deem
advisable to protect and preserve their interests in the Collateral, and in such
event the Trustor will indemnify the Trustee and the Mortgagee against any and
all cost, reasonable attorneys’ fees and other expenses which they may incur in
defending against any such adverse claim or taking action to remove any such
cloud.

Section 4.03    Not a Foreign Person. The Trustor is not a “foreign person”
within the meaning of the Code, Sections 1445 and 7701 (i.e. the Trustor is not
a non-resident alien, foreign corporation, foreign partnership, foreign trust or
foreign estate as those terms are defined in the Code and any regulations
promulgated thereunder).

Section 4.04    Power to Create Lien and Security. The Trustor has full power
and lawful authority to grant, bargain, sell, assign, transfer, mortgage and
convey a security interest in all of the Collateral in the manner and form
herein provided. No authorization, approval, consent or waiver of any lessor,
sublessor, Governmental Authority or other party or parties whomsoever is
required in connection with the execution and delivery by the Trustor of this
Deed of Trust.

Section 4.05    Rentals Paid; Leases in Effect
. All rentals and other payments due and payable in accordance with the terms of
any material rights of way, easements, servitudes, permits, licenses, leases or
subleases comprising a part of the Deed of Trust Property have been duly paid or
provided for and all material rights of way, easements, servitudes, permits,
licenses, leases or subleases comprising a part of the Deed of Trust Property
are in full force and effect, except to the extent such failure to pay or
provide for, or such loss of full force and effect, as applicable, could not
reasonably be expected to have a Material Adverse Effect.
Section 4.06    Failure to Perform. The Trustor agrees that if it fails to
perform any act or to take any action which it is required to perform or take
hereunder, upon five (5) days’ prior notice to the Trustor (other than the
payment of monies), or pay any money which the Trustor is required to pay
hereunder, each of the Mortgagee and the Trustee, in the Trustor’s name or its
or their own name, may, but shall not be obligated to, perform or cause to
perform such act or take such action or pay such money, and any expenses so
incurred by either of them and any money so paid by either of them shall be a
demand obligation owing by the Trustor to the Mortgagee or the Trustee, as the
case may be, and each of the Mortgagee and the Trustee, upon making such
payment, shall be subrogated to all of the rights of the Person receiving such
payment. Each amount due and owing by the Trustor to each of the Mortgagee and
the Trustee pursuant to this Deed of Trust shall bear interest from the date of
such expenditure or payment to such Person until paid at the Post-Default Rate.

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ARTICLE V
RIGHTS AND REMEDIES

Section 5.01    Event of Default. An Event of Default under and as defined in
the Second-Out Credit Agreement shall be an “Event of Default” under this Deed
of Trust.

Section 5.02    Foreclosure and Sale.

(a)    If an Event of Default shall occur and be continuing, to the extent
provided by applicable law, the Mortgagee shall have the right and option to
proceed with foreclosure by directing the Trustee to proceed, with foreclosure
and to sell all or any portion of such Deed of Trust Property at one or more
sales, as an entirety or in parcels, at such place or places in otherwise such
manner and upon such notice as may be required by law, or, in the absence of any
such requirement, as the Mortgagee may deem appropriate, and to make conveyance
to the purchaser or purchasers. Where the Deed of Trust Property is situated in
more than one jurisdiction, notice as above provided shall be posted and filed
in all such jurisdictions (if such notices are required by law), and all such
Deed of Trust Property may be sold in any such jurisdiction and any such notice
shall designate the jurisdiction where such Deed of Trust Property is to be
sold. Nothing contained in this Section 5.02 shall be construed so as to limit
in any way any rights to sell the Deed of Trust Property or any portion thereof
by private sale if and to the extent that such private sale is permitted under
the laws of the applicable jurisdiction or by public or private sale after entry
of a judgment by any court of competent jurisdiction so ordering. The Trustor
hereby irrevocably appoints the Trustee and the Mortgagee, with full power of
substitution, to be the attorneys-in-fact of the Trustor and in the name and on
behalf of the Trustor to execute and deliver any deeds, transfers, conveyances,
assignments, assurances and notices which the Trustor ought to execute and
deliver and do and perform any and all such acts and things which the Trustor
ought to do and perform under the covenants herein contained and generally, to
use the name of the Trustor in the exercise of all or any of the powers hereby
conferred on the Trustee and/or the Mortgagee; provided that, neither the
Trustee nor the Mortgagee shall exercise any such powers unless an Event of
Default shall have occurred and is continuing. At any such sale: (i) whether
made under the power herein contained or any other legal enactment, or by virtue
of any judicial proceedings or any other legal right, remedy or recourse, it
shall not be necessary for the Trustee or the Mortgagee, as appropriate, to have
physically present, or to have constructive possession of, the Deed of Trust
Property (the Trustor hereby covenanting and agreeing to deliver any portion of
the Deed of Trust Property not actually or constructively possessed by the
Trustee or the Mortgagee immediately upon his or its demand) and the title to
and right of possession of any such property shall pass to the purchaser thereof
as completely as if the same had been actually present and delivered to
purchaser at such sale, (ii) each instrument of conveyance executed by the
Trustee or the Mortgagee shall contain a general warranty of title, binding upon
the Trustor and its successors and assigns, (iii) each and every recital
contained in any instrument of conveyance made by the Trustee or the Mortgagee
shall conclusively establish the truth and accuracy of the matters recited
therein, including, without limitation, nonpayment of the Secured Obligations,
advertisement and conduct of such sale in the manner provided herein and
otherwise by law and appointment of any successor trustee hereunder, (iv) any
and all prerequisites to the validity thereof shall be conclusively presumed to
have been performed, (v) the receipt of the Trustee, the Mortgagee or of such
other party or officer making the sale shall be a sufficient discharge to the
purchaser or purchasers for its purchase money and no such purchaser or
purchasers, or its assigns or personal representatives, shall thereafter be
obligated to see to the application of such purchase money, or be in any way
answerable for any loss, misapplication or nonapplication thereof, (vi) to the
fullest extent permitted by law, the Trustor shall be completely and irrevocably
divested of all of its right, title, interest,

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claim and demand whatsoever, either at law or in equity, in and to the property
sold and such sale shall be a perpetual bar both at law and in equity against
the Trustor, and against any and all other persons claiming or to claim the
property sold or any part thereof, by, through or under the Trustor, and (vii)
to the extent and under such circumstances as are permitted by law, the
Mortgagee may be a purchaser at any such sale, and shall have the right, after
paying or accounting for all costs of said sale or sales, to credit the amount
of the bid upon the amount of the Secured Obligations (in the order of priority
set forth in Section 5.14) in lieu of cash payment.

(b)    If an Event of Default shall occur and be continuing, then (i) the
Mortgagee shall be entitled to all of the rights, powers and remedies afforded a
secured party by the Applicable UCC with reference to the UCC Collateral or (ii)
the Trustee or the Mortgagee may proceed as to any Collateral in accordance with
the rights and remedies granted under this Deed of Trust or applicable law in
respect of the Collateral. To the extent permitted by applicable law, such
rights, powers and remedies shall be cumulative and in addition to those granted
to the Trustee or the Mortgagee under any other provision of this Deed of Trust
or under any Second-Out Security Document. Written notice mailed to the Trustor
as provided herein at least ten (10) days prior to the date of public sale of
any part of the Collateral which is personal property subject to the provisions
of the Applicable UCC, or prior to the date after which private sale of any such
part of the Collateral will be made, shall constitute reasonable notice.

Section 5.03    Substitute Trustees and Agents. The Trustee or Mortgagee may
appoint or delegate any one or more persons as agent to perform any act or acts
necessary or incident to any sale held by the Trustee or Mortgagee, including
the posting of notices and the conduct of sale, but in the name and on behalf of
the Trustee or Mortgagee. If the Trustee or Mortgagee shall have given notice of
sale hereunder, any successor or substitute trustee or mortgagee agent
thereafter appointed may complete the sale and the conveyance of the property
pursuant thereto as if such notice had been given by the successor or substitute
trustee or mortgagee agent conducting the sale.

Section 5.04    Judicial Foreclosure; Receivership. If any of the Secured
Obligations shall become due and payable and shall not be promptly paid, the
Trustee or the Mortgagee shall have the right and power to proceed by a suit or
suits in equity or at law, whether for the specific performance of any covenant
or agreement herein contained or in aid of the execution of any power herein
granted, or for any foreclosure hereunder or for the sale of the Collateral
under the judgment or decree of any court or courts of competent jurisdiction,
or for the appointment of a receiver pending any foreclosure hereunder or the
sale of the Collateral under the order of a court or courts of competent
jurisdiction or under executory or other legal process, or for the enforcement
of any other appropriate legal or equitable remedy. Any money advanced by the
Trustee and/or the Mortgagee in connection with any such receivership shall be a
demand obligation (which obligation the Trustor hereby expressly promises to
pay) owing by the Trustor to the Trustee and/or the Mortgagee and shall bear
interest from the date of making such advance by the Trustee and/or the
Mortgagee until paid at the Post-Default Rate.

Section 5.05    Foreclosure for Installment. To the extent permitted by
applicable law, the Mortgagee shall also have the option to proceed with
foreclosure in satisfaction of any installments of the Secured Obligations which
have not been paid when due either through the courts or by directing the
Trustee to proceed with foreclosure in satisfaction of the matured but unpaid
portion of the Secured Obligations as if under a full foreclosure, conducting
the sale as herein provided and without declaring the entire principal balance
and accrued interest and other Secured Obligations then due; such sale may be
made subject to the unmatured portion of the Secured Obligations, and any such
sale shall not in any manner affect the unmatured portion of the Secured
Obligations, but as to such unmatured portion of the Secured Obligations this
Deed of Trust shall remain in full force and effect just as though no sale

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had been made hereunder. It is further agreed that, to the extent permitted by
applicable law, several sales may be made hereunder without exhausting the right
of sale for any unmatured part of the Secured Obligations, it being the purpose
hereof to provide for a foreclosure and sale of the security for any matured
portion of the Secured Obligations without exhausting the power to foreclose and
sell the Deed of Trust Property for any subsequently maturing portion of the
Secured Obligations.

Section 5.06Separate Sales. If an Event of Default shall have occurred and be
continuing, then the Collateral may be sold in one or more parcels and to the
extent permitted by applicable law in such manner and order as the Mortgagee, in
its sole discretion, may elect, it being expressly understood and agreed that
the right of sale arising out of any Event of Default shall not be exhausted by
any one or more sales.

Section 5.07    Possession of Deed of Trust Property. If an Event of Default
shall have occurred and be continuing, then, to the extent permitted by
applicable law, the Trustee or the Mortgagee shall have the right and power to
enter into and upon and take possession of all or any part of the Collateral in
the possession of the Trustor, its successors or assigns, or its or their agents
or servants, and may exclude the Trustor, its successors or assigns, and all
persons claiming under the Trustor, and its or their agents or servants wholly
or partly therefrom; and, holding the same, the Mortgagee may use, administer,
manage, operate and control the Collateral and conduct the business thereof to
the same extent as the Trustor, its successors or assigns, might at the time do
and may exercise all rights and powers of the Trustor, in the name, place and
stead of the Trustor, or otherwise as the Mortgagee shall deem best. All costs,
expenses and liabilities of every character incurred by the Trustee and/or the
Mortgagee in administering, managing, operating, and controlling the Deed of
Trust Property shall constitute a demand obligation (which obligation the
Trustor hereby expressly promises to pay) owing by the Trustor to the Trustee
and/or the Mortgagee and shall bear interest from date of expenditure until paid
at the Post-Default Rate.

Section 5.08    Occupancy After Foreclosur. In the event there is a foreclosure
sale hereunder and at the time of such sale the Trustor or the Trustor’s heirs,
devisees, representatives, successors or assigns or any other person claiming
any interest in the Collateral by, through or under the Trustor, are occupying
or using any Deed of Trust Property or any part thereof, each and all shall
immediately become the tenant of the purchaser at such sale, which tenancy shall
be a tenancy from day to day, terminable at the will of either the landlord or
tenant, or at a reasonable rental per day based upon the value of the property
occupied, such rental to be due daily to the purchaser; to the extent permitted
by applicable law, the purchaser at such sale shall, notwithstanding any
language herein apparently to the contrary, have the sole option to demand
immediate possession following the sale or to permit the occupants to remain as
tenants at will. In the event the tenant fails to surrender possession of said
property upon demand, the purchaser shall be entitled to institute and maintain
a summary action for possession of the Deed of Trust Property (such as an action
for forcible entry and detainer) in any court having jurisdiction.

Section 5.09    Remedies Cumulative, Concurrent and Nonexclusive. Every right,
power, privilege and remedy herein given to the Trustee or the Mortgagee shall,
to the extent permitted by applicable law, be cumulative and in addition to
every other right, power and remedy herein specifically given or now or
hereafter existing in equity, at law or by statute (including specifically those
granted by the Applicable UCC in effect and applicable to the Collateral or any
portion thereof). Each and every right, power, privilege and remedy whether
specifically herein given or otherwise existing may be exercised from time to
time and so often and in such order as may be deemed expedient by the Trustee or
the Mortgagee and to the extent permitted by applicable law, and the exercise,
or the beginning of the exercise, or the abandonment, of any such right, power,
privilege or remedy shall not be deemed a

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waiver of the right to exercise, at the same time or thereafter any other right,
power, privilege or remedy. No delay or omission by the Trustee or the Mortgagee
or any Second-Out Secured Party in the exercise of any right, power or remedy
shall impair any such right, power, privilege or remedy or operate as a waiver
thereof or of any other right, power, privilege or remedy then or thereafter
existing.

Section 5.10    Discontinuance of Proceedings. If the Trustee or the Mortgagee
shall have proceeded to invoke any right, remedy or recourse permitted hereunder
or under any Second-Out Security Document or available at law and shall
thereafter elect to discontinue or abandon same for any reason, then it shall
have the unqualified right so to do and, in such an event, the parties shall be
restored to their former positions with respect to the Secured Obligations, this
Deed of Trust, the Second-Out Credit Agreement, the Collateral and otherwise,
and the rights, remedies, recourses and powers of the Trustee and the Mortgagee,
as applicable, shall continue as if same had never been invoked.

Section 5.11    No Release of Obligations. To the extent permitted by applicable
law, neither the Trustor, any Guarantor nor any other person hereafter obligated
for payment of all or any part of the Secured Obligations shall be relieved of
such obligation by reason of: (a) the failure of the Trustee to comply with any
request of the Trustor, any Guarantor or any other Person so obligated, to
foreclose the Lien of this Deed of Trust or to enforce any provision hereunder
or under the Second-Out Credit Agreement; (b) the release, regardless of
consideration, of the Deed of Trust Property or any portion thereof or interest
therein or the addition of any other property to the Deed of Trust Property; (c)
any agreement or stipulation between any subsequent owner of the Deed of Trust
Property and the Mortgagee extending, renewing, rearranging or in any other way
modifying the terms of this Deed of Trust without first having obtained the
consent of, given notice to or paid any consideration to the Trustor, any
Guarantor or such other Person, and in such event the Trustor, Guarantor and all
such other Persons shall continue to be liable to make payment according to the
terms of any such extension or modification agreement unless expressly released
and discharged in writing by the Mortgagee; or (d) by any other act or
occurrence save and except if the Secured Obligations are paid in full and
satisfied and any other obligations hereunder or under the Second-Out Credit
Agreement are completely fulfilled.

Section 5.12    Release of and Resort to Collateral. The Mortgagee may release,
regardless of consideration, any part of the Collateral without, as to the
remainder, in any way impairing, affecting, subordinating or releasing the Lien
created in or evidenced by this Deed of Trust or its stature as a first and
prior Lien in and to the Collateral, and without in any way releasing or
diminishing the liability of any Person liable for the repayment of the Secured
Obligations. For payment of the Secured Obligations, the Mortgagee may resort to
any other security therefor held by the Mortgagee or the Trustee in such order
and manner as the Mortgagee may elect.

Section 5.13    Waiver of Redemption, Notice and Marshalling of Assets, Etc. To
the fullest extent permitted by law, the Trustor hereby irrevocably and
unconditionally waives and releases (a) all benefits that might accrue to the
Trustor by virtue of any present or future moratorium law or other law exempting
the Collateral from attachment, levy or sale on execution or providing for any
appraisement, valuation, stay of execution, exemption from civil process,
redemption or extension of time for payment; (b) all notices of any Event of
Default or of the Mortgagee’s or any other secured Person’s intention to
accelerate maturity of the Secured Obligations or of any election to exercise or
any actual exercise of any right, remedy or recourse provided for hereunder or
under any Second-Out Security Document or available at law; and (c) any right to
a marshalling of assets or a sale in inverse order of alienation. If any law
referred to in this Deed of Trust and now in force, of which the Trustor or its
successor or successors might take advantage despite the provisions hereof,
shall hereafter be repealed or cease to be in force, such law shall thereafter
be deemed not to constitute any part of the contract herein contained

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or to preclude the operation or application of the provisions hereof. If the
laws of any state which provides for a redemption period do not permit the
redemption period to be waived, the redemption period shall be specifically
reduced to the minimum amount of time allowable by statute.

Section 5.14    Application of Proceeds. If an Event of Default shall have
occurred and be continuing, any cash held by or on behalf of the Trustee or the
Mortgagee and all cash proceeds received by or on behalf of the Trustee or the
Mortgagee in respect of any sale of, collection from, or other realization upon
any Collateral may, in the discretion of the Trustee or the Mortgagee, be held
by the Trustee or the Mortgagee as collateral for, and/or then or at any time
thereafter applied, in whole or in part, by the Trustee or the Mortgagee for the
benefit of the Second-Out Secured Parties against, any Secured Obligation, in
accordance with the final paragraph of Article XII of the Second-Out Credit
Agreement.

Section 5.15    Resignation of Operator. In addition to all rights and remedies
under this Deed of Trust, at law and in equity, if any Event of Default shall
occur and the Trustee or the Mortgagee shall exercise any remedies under this
Deed of Trust with respect to any portion of the Deed of Trust Property (or the
Trustor shall transfer any Deed of Trust Property “in lieu of” foreclosure)
whereupon the Trustor is divested of its title to any of the Collateral, the
Mortgagee shall have the right to request that any operator of any Deed of Trust
Property which is either the Trustor or any Affiliate of the Trustor to resign
as operator under the joint operating agreement applicable thereto, and no later
than 60 days after receipt by the Trustor of any such request and to the extent
permitted by such joint operating agreement, the Trustor shall resign (or cause
such other Person to resign) as operator of such Collateral.

Section 5.16    Indemnity. THE INDEMNIFIED PARTIES SHALL NOT BE LIABLE, IN
CONNECTION WITH ANY ACTION TAKEN, FOR ANY LOSS SUSTAINED BY THE TRUSTOR
RESULTING FROM AN ASSERTION THAT THE MORTGAGEE HAS RECEIVED FUNDS FROM THE
PRODUCTION OF HYDROCARBONS CLAIMED BY THIRD PERSONS OR ANY ACT OR OMISSION OF
ANY INDEMNIFIED PARTY IN ADMINISTERING, MANAGING, OPERATING OR CONTROLLING THE
DEED OF TRUST PROPERTY INCLUDING SUCH LOSS WHICH MAY RESULT FROM THE ORDINARY
NEGLIGENCE OF AN INDEMNIFIED PARTY UNLESS SUCH LOSS IS CAUSED BY THE WILLFUL
MISCONDUCT OR GROSS NEGLIGENCE OF THE INDEMNIFIED PARTY SEEKING INDEMNITY. NO
INDEMNIFIED PARTY SHALL BE OBLIGATED TO PERFORM OR DISCHARGE ANY OBLIGATION,
DUTY OR LIABILITY OF THE TRUSTOR. THE TRUSTOR SHALL AND DOES HEREBY AGREE TO
INDEMNIFY EACH INDEMNIFIED PARTY FOR, AND TO HOLD EACH INDEMNIFIED PARTY
HARMLESS FROM, ANY AND ALL LIABILITY, LOSS OR DAMAGE WHICH MAY OR MIGHT BE
INCURRED BY ANY INDEMNIFIED PARTY BY REASON OF THIS DEED OF TRUST OR THE
EXERCISE OF RIGHTS OR REMEDIES HEREUNDER UNLESS SUCH LIABILITY, LOSS OR DAMAGE
IS CAUSED BY THE WILLFUL MISCONDUCT OR GROSS NEGLIGENCE OF THE INDEMNIFIED PARTY
SEEKING INDEMNITY. IF ANY INDEMNIFIED PARTY SHALL MAKE ANY EXPENDITURE ON
ACCOUNT OF ANY SUCH LIABILITY, LOSS OR DAMAGE, THE AMOUNT THEREOF, INCLUDING
COSTS, EXPENSES AND REASONABLE ATTORNEYS’ FEES, SHALL BE A DEMAND OBLIGATION
(WHICH OBLIGATION THE TRUSTOR HEREBY EXPRESSLY PROMISES TO PAY) OWING BY THE
TRUSTOR TO SUCH INDEMNIFIED PARTY AND SHALL BEAR INTEREST FROM THE DATE EXPENDED
UNTIL PAID AT THE POST-DEFAULT RATE. THE TRUSTOR HEREBY ASSENTS TO, RATIFIES AND
CONFIRMS ANY AND ALL ACTIONS OF EACH INDEMNIFIED PARTY WITH RESPECT TO THE DEED
OF TRUST PROPERTY TAKEN UNDER AND IN COMPLIANCE WITH THE TERMS OF THIS DEED OF
TRUST. THE

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LIABILITIES OF THE TRUSTOR AS SET FORTH IN THIS SECTION 5.16 SHALL SURVIVE THE
TERMINATION OF THIS DEED OF TRUST.

ARTICLE VI
THE TRUSTEE

Section 6.01    Duties, Rights, and Powers of Trustee. The Trustee shall have no
duty to see to any recording, filing or registration of this Deed of Trust or
any other instrument in addition or supplemental thereto, or to give any notice
thereof, or to see to the payment of or be under any duty in respect of any tax
or assessment or other governmental charge which may be levied or assessed on
the Deed of Trust Property, or any part thereof, or against the Trustor, or to
see to the performance or observance by the Trustor of any of the covenants and
agreements contained herein. The Trustee shall not be responsible for the
execution, acknowledgment or validity of this Deed of Trust or of any instrument
in addition or supplemental hereto or for the sufficiency of the security
purported to be created hereby, and makes no representation in respect thereof
or in respect of the rights of the Mortgagee. The Trustee shall have the right
to advise with counsel upon any matters arising hereunder and shall be fully
protected in relying as to legal matters on the advice of counsel. The Trustee
shall not incur any personal liability hereunder except for the Trustee’s own
willful misconduct; and the Trustee shall have the right to rely on any
instrument, document or signature authorizing or supporting any action taken or
proposed to be taken by him hereunder, believed by him in good faith to be
genuine.

Section 6.02    Successor Trustee. The Trustee may resign by written notice
addressed to the Mortgagee or be removed at any time with or without cause by an
instrument in writing duly executed on behalf of the Mortgagee. In case of the
death, resignation or removal of the Trustee, a successor may be appointed by
the Mortgagee by instrument of substitution complying with any applicable
Requirements of Law, or, in the absence of any such requirement, without
formality other than appointment and designation in writing. Written notice of
such appointment and designation shall be given by the Mortgagee to the Trustor,
but the validity of any such appointment shall not be impaired or affected by
failure to give such notice or by any defect therein. Such appointment and
designation shall be full evidence of the right and authority to make the same
and of all the facts therein recited. Upon the making of any such appointment
and designation, this Deed of Trust shall vest in the successor all the estate
and title in and to all of the Deed of Trust Property and the successor shall
thereupon succeed to all of the rights, powers, privileges, immunities and
duties hereby conferred upon the Trustee named herein, and one such appointment
and designation shall not exhaust the right to appoint and designate an
additional successor but such right may be exercised repeatedly until the
Secured Obligations are paid in full and satisfied. To facilitate the
administration of the duties hereunder, the Mortgagee may appoint multiple
trustees to serve in such capacity or in such jurisdictions as the Mortgagee may
designate.

Section 6.03    Retention of Moneys. All moneys received by the Trustee shall,
until used or applied as herein provided, be held in trust for the purposes for
which they were received, but need not be segregated in any manner from any
other moneys (except to the extent required by law) and the Trustee shall be
under no liability for interest on any moneys received by him hereunder.

ARTICLE VII
MISCELLANEOUS

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Section 7.01    Instrument Construed as Mortgage, Etc. With respect to any
portions of the Deed of Trust Property located in or adjacent to any State or
other jurisdiction the laws of which do not provide for the use or enforcement
of a deed of trust or the office, rights and authority of the Trustee as herein
provided, the general language of conveyance hereof to the Trustee is intended
and the same shall be construed as words of mortgage unto and in favor of the
Mortgagee and the rights and authority granted to the Trustee herein may be
enforced and asserted by the Mortgagee in accordance with the laws of the
jurisdiction in which such portion of the Deed of Trust Property is located and
the same may be foreclosed at the option of the Mortgagee as to any or all such
portions of the Deed of Trust Property in any manner permitted by the laws of
the jurisdiction in which such portions of the Deed of Trust Property is
situated. This Deed of Trust may be construed as a mortgage, deed of trust,
conveyance, assignment, security agreement, fixture filing, pledge, financing
statement, hypothecation or contract, or any one or more of them, in order fully
to effectuate the Lien hereof and the purposes and agreements herein set forth.

Section 7.02    Releases.

(a)    Upon any sale, lease, transfer or other disposition of any Collateral of
Trustor in accordance with the Credit Documents, the Mortgagee will, at
Trustor’s expense, execute and deliver to Trustor such documents as Trustor
shall reasonably request to evidence the release of such Collateral from the
assignment and security interest granted hereby.

(b)    Upon, and only upon, the indefeasible payment and satisfaction in full in
cash of the Secured Obligations (other than any contingent indemnification
obligations) and termination of the Commitments, this Deed of Trust and the
security interest created hereby shall terminate, all rights in the Collateral
shall revert to the Trustors and the Mortgagee, at a Trustor’s request and at
the expense of Trustor, will:
(i)return to Trustor such of Trustor’s Collateral in the Mortgagee’s possession
as shall not have been sold or otherwise disposed of or applied pursuant to the
terms hereof, and
(ii)execute and deliver to Trustor such documents as Trustor shall reasonably
request to evidence such termination.

(c)    No Trustor is authorized to file any financing statement or amendment or
termination statement with respect to any financing statement originally filed
in connection with this Deed of Trust without the prior written consent of the
Mortgagee, subject to Trustors’ rights under Sections 9-509(d)(2) and 9-518 of
the UCC.

(d)    Possession of Notes. The Trustor acknowledges and agrees that possession
of any promissory note (or any replacements of any said promissory note or other
instrument evidencing any part of the Secured Obligations) at any time by the
Borrower, the Trustor or any other guarantor shall not in any manner extinguish
the Secured Obligations or this Deed of Trust, and the Borrower shall have the
right to issue and reissue any of the promissory notes from time to time as its
interest or as convenience may require, without in any manner extinguishing or
affecting the Secured Obligations or the Lien of this Deed of Trust.

Section 7.03    Severability. If any provision hereof is invalid or
unenforceable in any jurisdiction, the other provisions hereof shall remain in
full force and effect in such jurisdiction and the remaining provisions hereof
shall be liberally construed in favor of the Trustee, the Mortgagee and the
Second-Out Secured Parties in order to effectuate the provisions hereof. The
invalidity or

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unenforceability of any provision hereof in any jurisdiction shall not affect
the validity or enforceability of any such provision in any other jurisdiction.

Section 7.04    Successors and Assigns. The terms used to designate any party or
group of persons shall be deemed to include the respective heirs, legal
representatives, successors and assigns of such Persons.

Section 7.05    Application of Payments to Certain Obligations. If any part of
the Secured Obligations cannot be lawfully secured by this Deed of Trust or if
any part of the Deed of Trust Property cannot be lawfully subject to the Lien
hereof to the full extent of the Secured Obligations, then, to the extent
permitted under applicable law, all payments made shall be applied on said
Secured Obligations first in discharge of that portion thereof which is not
secured by this Deed of Trust.

Section 7.06    Nature of Covenants. The covenants and agreements herein
contained shall constitute covenants running with the land and interests covered
or affected hereby and shall be binding upon the heirs, legal representatives,
successors and assigns of the parties hereto.

Section 7.07    Notices. Any notice or communication required or permitted
hereunder shall be given in writing or by electronic transmission, sent in the
manner provided in Section 14.2 of the Second-Out Credit Agreement, if to the
Mortgagee or to a Trustor that is a party to the Second-Out Credit Agreement, to
the address set forth in the Second-Out Credit Agreement and, for any other
Trustor, to the address specified in Section 7.11, or to such other address or
to the attention of such other individual as hereafter shall be designated in
writing by the applicable party sent in accordance herewith. Any such notice or
communication shall be deemed to have been given as provided in the Second-Out
Credit Agreement for notices given thereunder.

Section 7.08    Counterparts. This Deed of Trust is being executed in several
counterparts, all of which are identical, except that to facilitate recordation,
if the Deed of Trust Property is situated in or on the Outer Continental Shelf
adjacent to more than one county, descriptions of only those portions of the
Deed of Trust Property located in or on the Outer Continental Shelf adjacent to
the county in which a particular counterpart is recorded shall be attached as
Exhibit A to such counterpart. Each of such counterparts shall for all purposes
be deemed to be an original and all such counterparts shall together constitute
but one and the same instrument. Complete copies of this Deed of Trust
containing the entire Exhibit A have been retained by the Mortgagee.

Section 7.09    Governing Law. Insofar as permitted by otherwise applicable law,
this Deed of Trust shall be construed under and governed by the laws of the
State of New York; provided, however, that, with respect to any portion of the
Deed of Trust Property located outside of the State of New York, the laws of the
place in which such property is located in, or offshore area adjacent to (and
State law made applicable as a matter of Federal law), shall apply to the extent
of procedural and substantive matters relating only to the creation, perfection,
foreclosure of Liens and enforcement of rights and remedies against the Deed of
Trust Property.

Section 7.10    Financing Statement; Fixture Filing. This Deed of Trust shall be
effective as a financing statement filed as a fixture filing with respect to all
Fixtures included within the Deed of Trust Property and is to be filed or filed
for record in the real estate records, mortgage records or other appropriate
records of each jurisdiction where any part of the Deed of Trust Property
(including said fixtures) are situated.

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Section 7.11    Execution of Financing Statements. Pursuant to the Applicable
UCC, the Trustor authorizes the Mortgagee, its counsel or its representative, at
any time and from time to time, to file or record financing statements,
continuation statements, amendments thereto and other filing or recording
documents or instruments with respect to the Deed of Trust Property without the
signature of the Mortgagee in such form and in such offices as the Mortgagee
reasonably determines appropriate to perfect the security interests of the
Mortgagee under this Deed of Trust. The Trustor also authorizes the Mortgagee,
its counsel or its representative, at any time and from time to time, to file or
record such financing statements that describe the collateral covered thereby as
“all assets of the Mortgagee”, “all personal property of the Mortgagee” or words
of similar effect. The Trustor shall pay all costs associated with the filing of
such instruments.

In that regard, the following information is provided:
Name of Debtor:
California Resources Elk Hills, LLC, California Resources Production
Corporation, California Resources Petroleum Corporation, Southern San Joaquin
Production, Inc., California Heavy Oil, Inc., and/or Socal Holding, LLC, as
applicable
Address of Debtor
9200 Oakdale Ave., Suite 900
Los Angeles, CA 91311
Attention: Michael Preston
State of Formation/Location
Delaware
 
 
 
 
Principal Place of Business of Debtor:
Same as above
 
 
 
 
Name of Secured Party:
The Bank of New York Mellon Trust Company, N.A. as Collateral Agent
Address of Secured Party:
Global Corporate Trust, Corporate Unit
400 South Hope Street, Suite 400
Los Angeles, CA 90071
 
 
 
 
Owner of Record of Real Property:
California Resources Elk Hills, LLC, California Resources Production
Corporation, California Resources Petroleum Corporation, Southern San Joaquin
Production, Inc., California Heavy Oil, Inc., and/or Socal Holding, LLC, as
applicable

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Section 7.12    Exculpation Provisions. EACH OF THE PARTIES HERETO SPECIFICALLY
AGREES THAT IT HAS A DUTY TO READ THIS DEED OF TRUST; AND AGREES THAT IT IS
CHARGED WITH NOTICE AND KNOWLEDGE OF THE TERMS OF THIS DEED OF TRUST; THAT IT
HAS IN FACT READ THIS DEED OF TRUST AND IS FULLY INFORMED AND HAS FULL NOTICE
AND KNOWLEDGE OF THE TERMS, CONDITIONS AND EFFECTS OF THIS DEED OF TRUST; THAT
IT HAS BEEN REPRESENTED BY INDEPENDENT LEGAL COUNSEL OF ITS CHOICE THROUGHOUT
THE NEGOTIATIONS PRECEDING ITS EXECUTION OF THIS DEED OF TRUST; AND HAS RECEIVED
THE ADVICE OF ITS ATTORNEY IN ENTERING INTO THIS DEED OF TRUST; AND THAT IT
RECOGNIZES THAT CERTAIN OF THE TERMS OF THIS DEED OF TRUST 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 DEED OF TRUST ON THE BASIS THAT THE PARTY HAD
NO NOTICE OR KNOWLEDGE OF SUCH PROVISION OR THAT THE PROVISION IS NOT
“CONSPICUOUS.”

Section 7.13    References. The words “herein,” “hereof,” “hereunder” and other
words of similar import when used in this Deed of Trust refer to this Deed of
Trust as a whole, and not to any particular article, section or subsection. Any
reference herein to a Section shall be deemed to refer to the applicable Section
of this Deed of Trust unless otherwise stated herein. Any reference herein to an
exhibit or schedule shall be deemed to refer to the applicable exhibit or
schedule attached hereto unless otherwise stated herein.

Section 7.14    Additional Undertaking. In the event that Trustor becomes aware
of a violation or a failure to comply with the California Subdivision Map Act
(the “SMA”) with respect to any of the Lands, then Trustor shall promptly
undertake to resolve such SMA violation or otherwise comply with the SMA with
respect to the affected portion of the Lands, and shall notify the Trustee of
such violation. Trustor further hereby undertakes to use commercially reasonable
efforts to conduct due diligence with respect to SMA compliance with the
Borrower’s grant of Liens to the Second-Out Secured Parties over the surface
property interests relating to the Power Plant and those surface leases and
surface fee reasonably determined by Trustor and Collateral Agent to be material
to the operation of the Pipeline System, and Trustor shall take all reasonable
measures to remedy any identified material SMA compliance issues relating
thereto.

Section 7.15    First Lien Intercreditor Agreement Controls.

(a)    Each Second-Out Secured Party, by accepting the benefits of the security
provided hereby, (i) agrees (or is deemed to agree) that it will be bound by,
and will take no actions contrary to, the provisions of the First Lien
Intercreditor Agreement, (ii) authorizes (or is deemed to authorize) the
Mortgagee on behalf of such Person to enter into, and perform under, the First
Lien Intercreditor Agreement and (iii) acknowledges (or is deemed to
acknowledge) that a copy of the First Lien Intercreditor Agreement was
delivered, or made available, to such Second-Out Secured Party.

(b)    Notwithstanding any other provision contained herein, this Deed of Trust,
the Liens created hereby and the rights, remedies, duties and obligations
provided for herein are subject in all respects to the provisions of the First
Lien Intercreditor Agreement. In the event of any conflict or

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inconsistency between the provisions of this Deed of Trust and the First Lien
Intercreditor Agreement, the provisions of the First Lien Intercreditor
Agreement shall control.

(c)    Without limiting the foregoing, at any time prior to the Discharge of the
First-Out Obligations (as defined in the First Lien Intercreditor Agreement),
any provision hereof requiring any Trustor to deliver possession of any
Collateral to the Mortgagee, shall be deemed to have been complied with, if and
for so long as (i) the First Lien Intercreditor Agreement is in full force and
effect and (ii) the First-Out Agent shall have such possession for the benefit
of the Second-Out Secured Parties and as bailee or sub-agent of the Mortgagee as
provided in the First Lien Intercreditor Agreement. Each Trustor shall provide
prompt written notice to the Mortgagee identifying any Collateral delivered to
the First-Out Agent pursuant to the First Lien First-Out Credit Documents (as
defined in the First Lien Intercreditor Agreement).
ARTICLE VIII
STATE SPECIFIC PROVISIONS

Section 8.01    California Mortgage Foreclosure Law. No portion of the Secured
Obligations shall be or be deemed to be offset or compensated by all or any part
of any claim, cause of action, counterclaim or cross-claim, whether liquidated
or unliquidated, which the Trustor may presently have or claim to have against
the Trustee, the Mortgagee or the Second-Out Secured Parties. The Trustor hereby
waives, to the fullest extent permitted by applicable law, the benefits of
California Code of Civil Procedure § 431.70 (and any other applicable law of
similar import) which provides:

Where cross-demands for money have existed between persons at any point in time
when neither demand was barred by the statute of limitations, and an action is
thereafter commenced by one such person, the other person may assert in the
answer the defense of payment in that the two demands are compensated so far as
they equal each other, notwithstanding that an independent action asserting the
person’s claim would at the time of filing the answer be barred by the statute
of limitations. If the cross-demand would otherwise be barred by the statute of
limitations, the relief accorded under this section shall not exceed the value
of the relief granted to the other party. The defense provided by this section
is not available if the cross-demand is barred for failure to assert it in a
prior action under Section 426.30. Neither person can be deprived of the
benefits of this section by the assignment or death of the other. For purposes
of this section, a money judgment is a demand for money, and, as applied to a
money judgment, the demand is barred by the statute of limitations when
enforcement of the judgment is barred under Chapter 3 (commencing with Section
683.010 of Division 1 of Title 9).
ARTICLE IX
Concerning the Mortgagee

Section 9.01    CERCLA Liability. In the event that the Mortgagee is required to
acquire title to an asset for any reason, or take any managerial action of any
kind in regard thereto, in order to carry out any fiduciary or trust obligation
for the benefit of another, which in Mortgagee’s sole discretion may cause it to
be considered an “owner or operator” under the provisions of the Comprehensive
Environmental Response, Compensation and Liability Act (“CERCLA”), 42 U.S.C.
§9601, et seq., or otherwise cause it to incur liability under CERCLA or any
other federal, state or local law, the Mortgagee reserves the right, instead of
taking such action, to either resign or arrange for the transfer of the title or
control of the asset to a court-appointed receiver. Absent gross negligence or
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shall not be liable to any person for any environmental claims or contribution
actions under any federal, state or local law, rule or regulation by reason of
the Mortgagee’s actions and conduct as authorized, empowered and directed
hereunder or under the other Second-Out Credit Documents or relating to the
discharge, release or threatened release of hazardous materials into the
environment and the Grantors shall indemnify the Mortgagee pursuant to the
provisions hereof in connection with any claim, litigation, investigation or
proceedings relating to any of the foregoing.

Section 9.02    Rights of Mortgagee. In acting hereunder, the Mortgagee shall
have all of the rights, protections and immunities granted to the Collateral
Agent under the Credit Agreement and Security Agreement, all of which are
incorporated herein by reference mutatis mutandis. For the avoidance of doubt,
the Mortgagee shall be under no obligation to make filings and recordings to
perfect or maintain the perfection of the lien hereunder, nor shall it have any
obligation to advance funds hereunder.

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EXECUTED this ____ day of August, 2016, to be effective as of the ____ day of
August, 2016.
 
California Resources Elk Hills, LLC
California Resources Production Corporation California Resources Petroleum
Corporation Southern San Joaquin Production, Inc.
California Heavy Oil, Inc.
Socal Holding, LLC
 
 
 
By:
 
Name:Ivan Gaydarov
 
Title:Treasurer of each Trustor

ACKNOWLEDGMENT

State of California
County of                         )

On August ____, 2016, before me,     
personally appeared Ivan Gaydarov, Treasurer of each Trustor, who proved to me
on the basis of satisfactory evidence to be the person(s) whose name(s) is/are
subscribed to the within instrument and acknowledged to me that he/she/they
executed the same in his/her/their authorized capacity(ies), and that by
his/her/their signature(s) on the instrument the person(s), or the entity upon
behalf of which the person(s) acted, executed the instrument.

I certify under PENALTY OF PERJURY under the laws of the State of California
that the foregoing paragraph is true and correct.

WITNESS my hand and official seal.

Signature                             (Seal)

EXECUTED this ____ day of August, 2016, to be effective as of the ____ day of
August, 2016.

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[_]
 
 
 
 
 
By:
 
Name:
 
Title:

ACKNOWLEDGMENT

State of California
County of                         )

On August ____, 2016, before me,     
personally appeared     ,
who proved to me on the basis of satisfactory evidence to be the person(s) whose
name(s) is/are subscribed to the within instrument and acknowledged to me that
he/she/they executed the same in his/her/their authorized capacity(ies), and
that by his/her/their signature(s) on the instrument the person(s), or the
entity upon behalf of which the person(s) acted, executed the instrument.

I certify under PENALTY OF PERJURY under the laws of the State of California
that the foregoing paragraph is true and correct.

WITNESS my hand and official seal.

Signature                             (Seal)

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EXHIBIT A
Land

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EXHIBIT B
Power Plant

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FORM OF CREDIT PARTY CLOSING CERTIFICATE
SECRETARY’S CERTIFICATE
[NAME OF CERTIFYING CREDIT PARTY]
[ ], 2016
Pursuant to Sections [6.2, 6.3,] To include in the CRC version of certificate.
6.5 and 6.6 the Credit Agreement, dated as of August [12], 2016 (the “Second Out
Credit Agreement”) among California Resources Corporation (the
[“Company”][“Borrower”]), The Bank of New York Mellon Trust Company, N.A., as
administrative agent and collateral agent (the “Collateral Agent”), and the
lenders party thereto from time to time, and in connection with the execution
and delivery of the Fifth Amendment, dated as of August [12], 2016 (the “Fifth
Amendment”, and together with the Second Out Credit Agreement, the “Credit
Documents”), among the [Company][Borrower], the Guarantors, JPMorgan Chase Bank
N.A., as administrative agent, swingline lender and a letter of credit issuer
(the “Administrative Agent”), and the lenders party thereto, to the Credit
Agreement dated as of September 24, 2014, among the Company, the subsidiaries of
the [Company][Borrower] listed on the signature pages thereto (collectively, the
“Guarantors”), the lenders party thereto from time to time and the
Administrative Agent, the undersigned, the duly elected or appointed
[Secretary][•] of [the Company][[•], a Credit Party (the “Company”)], hereby
certifies, in such capacity (and not in his individual capacity), that:

1.All representations and warranties made by the Company in each of the Credit
Documents to which it is a party, in each case as they relate to the Company on
the date hereof, to the knowledge of the undersigned are true and correct in all
material respects (unless such representations and warranties are already
qualified by materiality, Material Adverse Effect or a similar qualification, in
which case they are true and correct in all respects) on and as of the date
hereof (except where such representations and warranties expressly relate to an
earlier date, in which case such representations and warranties are true and
correct in all material respects (unless such representations and warranties are
already qualified by materiality, Material Adverse Effect or a similar
qualification, in which case they are true and correct in all respects) as of
such earlier date).

2.Attached hereto as Exhibit A are true, complete and correct copies of the
[charter documents] To reflect organizational form of certifying Credit Party.
of the Company. [Since the date shown on the face of the certification of the
Secretary of State of the State of Delaware attached hereto, there have been no
amendments to the [Certificate of Incorporation] of the Company. Since such
date, no proceeding has been commenced for the merger, consolidation,
dissolution or liquidation of the Company or the sale of all or substantially
all of its assets and there has not been commenced any action or proceeding
threatening the Company’s existence or which would result in the forfeiture of
the [Certificate of Incorporation] of the Company. In addition, the Company has
duly and timely paid all franchise and business taxes and other fees to, and has
duly and timely filed all annual corporation franchise tax returns with, the
appropriate state agencies pursuant to applicable state law.] Not to be given
for Tidelands Oil Production Company. For Tidelands Oil Production Company, item
2 shall read: “Attached hereto as Exhibit A is a true, complete and correct copy
of the partnership agreement of the Company, as in effect on [•] and at all
times through and including the date hereof.”

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3.Attached hereto as Exhibit B is a true, correct and complete copy of the
By-laws of the Company, as in effect on [•], 2016 and at all times through and
including the date hereof.

4.Attached hereto as Exhibit C is a true, correct and complete draft of the
resolutions [adopted on June 24, 2016 and August 4, 2016 by the Board of
Directors of the Company and drafts of the resolutions dated August [•], 2016,
adopted by the pricing committee appointed by the Board of Directors of the
Company, authorizing (i) the execution, delivery and performance of the Fifth
Amendment, each of the Credit Documents (as defined in the Second Out Credit
Agreement) to be executed by the Company and the transactions related to the
foregoing][adopted by the [Board of Directors/General Partner/Sole
Member/Manager] (or a duly authorized committee thereof) of the Company,
authorizing (i) the execution, delivery and performance of the Fifth Amendment,
each of the Credit Documents (as defined in the Second Out Credit Agreement) to
be executed by the Company and the transactions related to the foregoing] and
(ii) the extensions of credit contemplated by the Second Out Credit Agreement.
The aforementioned resolutions have not been amended, rescinded or modified
since their adoption and execution, remain in full force and effect as of the
date hereof and represent the only resolutions adopted or action taken by, or on
behalf of, the [Board of Directors/General Partner/Sole Member/Manager] of the
Company, or any committee thereof relating to the matters described above.

5.The Fifth Amendment [and the Second Out Credit Agreement] [have][has] been
duly authorized, executed and delivered by the Company.

6.Each person who, as an officer of the Company, signed the Fifth Amendment[,
the Second Out Credit Agreement] and the other documents or certificates
delivered by, as of or on the date hereof in connection with the transactions
contemplated hereby was duly elected and qualified as an officer of the Company
and held the office or offices indicated thereon on the date of, and was duly
authorized to take, such action, and each signature of such signing officer is
his or her genuine signature. [Each person who, as an officer of the Company,
will on the Escrow Release Date (as defined in the Second Out Credit Agreement)
sign each of the Credit Documents to be executed by the Company on such date and
the other documents or certificates to be delivered thereby, is on the date
hereof and shall be on the Escrow Release Date in connection with the
transactions contemplated hereby a duly elected and qualified and qualified
officer of the Company and holds and on the Escrow Release Date shall hold the
office or offices indicated thereon, and is and shall continue to be on the
Escrow Release Date duly authorized to take, such action, and the undersigned
shall inspect each signature of such signing officer to confirm that it is his
or her genuine signature.]

7.The individuals named in Exhibit D are duly elected and qualified to sign the
Fifth Amendment, each of the Credit Documents to be executed by the Company and
any related documents on behalf of the Company as of the date hereof (and, if
applicable, shall continue to be so duly elected and qualified on the Escrow
Release Date), holding the offices set forth next to their names, and the
signature set forth opposite the name of each such individual is his or her
genuine signature.

8.[Attached hereto as Exhibit E is a certificate of good standing of the
Company.] To include in the CRC version of certificate.

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Sullivan & Cromwell LLP may rely on this certificate in connection with the
opinions such firm is rendering pursuant to the Fifth Amendment and the Second
Out Credit Agreement. Capitalized terms used but not defined herein shall have
the meanings given to such terms in the Second Out Credit Agreement.

[Remainder of Page Intentionally Left Blank]

IN WITNESS WHEREOF, the undersigned has executed this certificate as of the date
first above written.

                     
Name:    [ ]
Title:
[ ]

The undersigned, the duly qualified [ ] of the Company DOES HEREBY CERTIFY, in
such capacity, that [ ] is the duly elected or appointed [ ] of the Company and
that the signature set forth above his name is his true signature.

IN WITNESS WHEREOF, the undersigned has executed this certificate as of the date
first above written.

                     
Name:    [ ]
Title:
[ ]

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Exhibit A
[Certificate of Organization/Formation/Incorporation/Limited Partnership]

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Exhibit B
[By-Laws/(LLC) Operating Agreement/Limited Partnership Agreement]

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Exhibit C
Resolutions

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Exhibit D
Specimen Signatures
Name
 
Title
 
Signature
[ ]
 
[President/Vice President]
 
 
[ ]
 
[Secretary/Assistant Secretary]
 
 
[ ]
 
[ ]
 
 
[ ]
 
[ ]
 
 

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EXHIBIT G

FORM OF ASSIGNMENT AND ACCEPTANCE AGREEMENT
This Assignment and Acceptance Agreement (the “Assignment”) 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 (as defined below), 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 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, assumes and
accepts 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, the interest in and to all of
the Assignor’s rights and obligations under the Credit Agreement and any other
documents or instruments delivered pursuant thereto that represents the amount
and percentage interest identified below of all of the Assignor’s outstanding
rights and obligations under the respective facilities identified below
(including, to the extent included in any such facilities, letters or credit)
(the “Assigned Interest”). Such sale and assignment is without recourse to the
Assignor and, except as expressly provided in this Assignment and the Credit
Agreement, without representation or warranty by the Assignor.
1.
 
Assignor:
 
 
2.
 
Assignee:
 
 
3.
 
Borrower:
 
California Resources Corporation
4.
 
Administrative Agent:
 
The Bank of New York Mellon Trust Company, N.A., as Administrative Agent under
the Credit Agreement (as defined below).
5.
 
Credit Agreement:
 
That certain Credit Agreement, dated as of August 12, 2016 (the “Credit
Agreement”), among CALIFORNIA RESOURCES CORPORATION, a Delaware corporation (the
“Borrower”), the lenders from time to time party thereto (the “Lenders”),
GOLDMAN SACHS BANK USA, as lead arranger and bookrunner, and THE BANK OF NEW
YORK MELLON TRUST COMPANY, N.A., as Administrative Agent and Collateral Agent
(such terms and each other capitalized term used but not defined herein having
the meaning provided in Article I of the Credit Agreement).
6
 
Assigned Interest:
 
 

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Total Commitment for all
Lenders
Amount of
Commitment/Loans
Assigned (1) The amount of the Commitment or Loans of the assigning Lender being
assigned pursuant to this Assignment shall not be less than $5,000,000 and
increments of $1,000,000 in excess thereof and (2) after giving effect to this
Assignment, the amount of the remaining Commitment or Loans of the assigning
Lender (determined as of the date this Assignment is delivered to the
Administrative Agent) shall not be less than $15,000,000, in each case unless
the amount of the remaining Commitment or Loans of the assigning Lender, after
giving effect to this Assignment, is zero or each of the Borrower otherwise
consents (which consents shall not be unreasonably withheld or delayed).
Type of Commitment/Loans
Assigned
Commitment Percentage Set forth, to at least 9 decimals, as a percentage of the
Commitment/Loans of all Lenders thereunder.
$
$
[Term 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.]
7.
 
Notice and Wire Instructions:
 
 

[NAME OF ASSIGNOR]
 
[NAME OF ASSIGNEE]
Notices:
 
Notices:
Attention:
 
Attention:
Telecopier:
 
Telecopier:
with a copy to:
 
with a copy to:
Attention:
 
Attention:
Telecopier:
 
Telecopier:
Wire Instructions:
 
Wire Instructions:
[ ]
 
[ ]

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The terms set forth in this Assignment are hereby agreed to:
 
ASSIGNOR:
 
 
 
[NAME OF ASSIGNOR]
 
By:
 
 
 
Name:
 
 
Title:
 
ASSIGNEE:
 
[NAME OF ASSIGNEE]
 
By:
 
 
 
Name:
 
 
Title:

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Acknowledged:
THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A.,
as Administrative Agent and Collateral Agent

 
By:
 
 
 
Name:
 
 
Title:
 

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Consented to:
CALIFORNIA RESOURCES CORPORATION
 
By:
 
 
 
Name:
 
 
Title:
 

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ANNEX 1
Annex 1-1
STANDARD TERMS AND CONDITIONS FOR ASSIGNMENT
AND ACCEPTANCE AGREEMENT
Representations and Warranties.
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 and (iii) it has full power and
authority, and has taken all action necessary, to execute and deliver this
Assignment and to consummate the transactions contemplated hereby; and (b)
assumes no responsibility with respect to (i) any statements, warranties or
representations made in or in connection with any Credit Document, (ii) the
execution, legality, validity, enforceability, genuineness, sufficiency or value
of the Credit Agreement or any other instrument or document delivered pursuant
thereto, other than this Assignment (herein collectively the “Credit
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 Credit 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 Credit Document.

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 to consummate the transactions contemplated hereby and to become
a Lender under the Credit Agreement, (ii) from and after the Effective Date, it
shall be bound by the provisions of the Credit Agreement and, to the extent of
the Assigned Interest, shall have the obligations of a Lender thereunder, (iii)
it has received a copy of the Credit Agreement 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 to purchase the Assigned Interest on
the basis of which it has made such analysis and decision, and (iv) if it is a
Non-U.S. Lender, attached to the Assignment 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 that
time, continue to make its own credit decisions in taking or not taking action
under the Credit Documents, and (ii) it will perform in accordance with their
terms all of the obligations which by the terms of the Credit Documents are
required to be performed by it as a Lender.

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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.

General Provisions.
This Assignment shall be binding upon, and inure to the benefit of, the parties
hereto and their respective successors and assigns. This Assignment 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 by telecopy shall be effective as delivery of a manually executed
counterpart of this Assignment. This Assignment shall be governed by, and
construed in accordance with, the internal laws of the State of New York.

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EXHIBIT H

FORM OF PROMISSORY NOTE
New York, New York
[ ], 201[ ]
FOR VALUE RECEIVED, the undersigned, CALIFORNIA RESOURCES CORPORATION, a
Delaware corporation (the “Borrower”), hereby unconditionally promises to pay to
the order of [ ] or its registered assigns (the “Lender”), at the Administrative
Agent’s Office or such other place as THE BANK OF NEW YORK MELLON TRUST COMPANY,
N.A. (the “Administrative Agent”) shall have specified, in Dollars and in
immediately available funds, in accordance with Section 5.3 of the Credit
Agreement (as defined below; capitalized terms used and not otherwise defined
herein shall have the meanings assigned to such terms in Article I of the Credit
Agreement) on the Maturity Date the aggregate unpaid principal amount, if any,
of all advances made by the Lender to the Borrower in respect of Loans pursuant
to the Credit Agreement. The Borrower further promises to pay interest in like
money at such office on the unpaid principal amount hereof from time to time
outstanding at the rates per annum and on the dates specified in Section 2.9 of
the Credit Agreement.
This Promissory Note is one of the promissory notes referred to in Section
2.6(e) of that certain Credit Agreement, dated as of August 12, 2016 (as
amended, restated, supplemented or otherwise modified from time to time, the
“Credit Agreement”), among Borrower, the lenders from time to time party thereto
(the “Lenders”), GOLDMAN SACHS BANK USA, as lead arranger and bookrunner, THE
BANK OF NEW YORK MELLON TRUST COMPANY, N.A., as Administrative Agent and
Collateral Agent (such terms and each other capitalized term used but not
defined herein having the meaning provided in Article I of the Credit
Agreement).
This Promissory Note is subject to, and the Lender is entitled to the benefits
of, the provisions of the Credit Agreement, and the Loans evidenced hereby are
guaranteed and secured as provided therein and in the other Credit Documents.
The Loans evidenced hereby are subject to prepayment prior to the Maturity Date
in whole or in part, as provided in the Credit Agreement.
All parties now and hereafter liable with respect to this Promissory Note,
whether maker, principal, surety, guarantor, endorser or otherwise, hereby waive
diligence, presentment, demand, protest and notice of any kind whatsoever in
connection with this Promissory Note. No failure to exercise and no delay in
exercising, on the part of the Administrative Agent or the Lender, any right,
remedy, power or privilege hereunder or under the Credit Documents shall operate
as a waiver thereof, nor shall any single or partial exercise of any right,
remedy, power or privilege hereunder or thereunder preclude any other or further
exercise thereof or the exercise of any other right, remedy, power or privilege.
A waiver by the Administrative Agent or the Lender of any right, remedy, power
or privilege hereunder or under any Credit Document on any one occasion shall
not be construed as a bar to any right or remedy that the Administrative Agent
or the Lender would otherwise have on any future occasion. The rights, remedies,
powers and privileges herein provided are cumulative, may be exercised singly or
concurrently and are not exclusive of any rights, remedies, powers and
privileges provided by law.

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All payments in respect of the principal of and interest on this Promissory Note
shall be made to the Person recorded in the Register as the holder of this
Promissory Note, as described more fully in Section 2.6 of the Credit Agreement,
and such Person shall be treated as the Lender hereunder for all purposes of the
Credit Agreement.
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THIS PROMISSORY NOTE SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN
ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.

 
CALIFORNIA RESOURCES CORPORATION
 
By:
 
 
 
Name:
 
 
Title:

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EXHIBIT I

FORM OF FIRST LIEN INTERCREDITOR AGREEMENT

PARI PASSU INTERCREDITOR AGREEMENT
dated as of [_________] between
JPMORGAN CHASE BANK, N.A.,
as First-Out Agent
and
The Bank of New York Mellon Trust Company, N.A.,
as Second-Out Agent

THIS IS THE PARI PASSU INTERCREDITOR AGREEMENT REFERRED TO IN (A) THE CREDIT
AGREEMENT DATED AS OF [______________], AMONG CALIFORNIA RESOURCES CORPORATION,
CERTAIN OF ITS SUBSIDIARIES FROM TIME TO TIME PARTY THERETO AND THE BANK OF NEW
YORK MELLON TRUST COMPANY, N.A., AS ADMINISTRATIVE AGENT AND COLLATERAL AGENT,
AND (B) THE CREDIT AGREEMENT DATED AS OF SEPTEMBER 24, 2014, AMONG CALIFORNIA
RESOURCES CORPORATION, CERTAIN OF ITS SUBSIDIARIES FROM TIME TO TIME PARTY
THERETO AND JPMORGAN CHASE BANK, N.A., AS ADMINISTRATIVE AGENT.

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Table of Contents
 
 
 
Page
ARTICLE I DEFINITIONS
2

Section 1.01
Construction; Certain Defined Terms
2

ARTICLE II PARI PASSU LIENS
13

Section 2.01
Lien Priorities
13

Section 2.02
Prohibition on Marshalling, Etc.
13

Section 2.03
No New Liens
14

Section 2.04
Similar Collateral and Agreements
14

Section 2.05
No Duties of First-Out Agent
14

ARTICLE III ENFORCEMENT RIGHTS; PURCHASE OPTIONS
15

Section 3.01
Limitation on Enforcement Action; Prohibition on Contesting Liens
15

Section 3.02
Standstill Period; Permitted Enforcement Action
16

Section 3.03
Insurance
17

Section 3.04
Notification of Release of Collateral
18

Section 3.05
No Interference; Payment Over
18

Section 3.06
Purchase Option
20

ARTICLE IV OTHER AGREEMENTS
22

Section 4.01
Release of Liens
22

Section 4.02
Certain Agreements With Respect to Insolvency or Liquidation Proceedings
23

Section 4.03
Reinstatement
28

Section 4.04
Refinancings; Additional Second-Out Debt.
28

Section 4.05
Amendments to Priority Debt Documents
30

Section 4.06
Legends
31

Section 4.07
Second-Out Secured Parties Rights as Unsecured Creditors; Judgment Lien Creditor
31

Section 4.08
Postponement of Subrogation
31

Section 4.09
Acknowledgment by the Secured Debt Representatives
31

ARTICLE V GRATUITOUS BAILMENT FOR PERFECTION OF CERTAIN SECURITY INTERESTS
32

Section 5.01
General
32

Section 5.02
Deposit Accounts
32

ARTICLE VI APPLICATION OF PROCEEDS; DETERMINATION OF AMOUNTS
33

Section 6.01
Application of Proceeds
33

Section 6.02
Determination of Amounts
33

ARTICLE VII NO RELIANCE; NO LIABILITY; OBLIGATIONS ABSOLUTE; CONSENT OF
GRANTORS; ETC.
33

Section 7.01
No Reliance; Information
33

Section 7.02
No Warranties or Liability.
34

Section 7.03
Obligations Absolute
35

Section 7.04
Grantors Consent
35

ARTICLE VIII REPRESENTATIONS AND WARRANTIES
35

Section 8.01
Representations and Warranties of Each Party
35

Section 8.02
Representations and Warranties of Each Representative
36

ARTICLE IX MISCELLANEOUS
36

Section 9.01
Notices
36

Section 9.02
Waivers; Amendment
37

Section 9.03
Actions Upon Breach; Specific Performance
37

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Section 9.04
Parties in Interest
38

Section 9.05
Survival of Agreement
38

Section 9.06
Counterparts
38

Section 9.07
Severability
38

Section 9.08
Governing Law; Jurisdiction; Consent to Service of Process
38

Section 9.09
WAIVER OF JURY TRIAL
39

Section 9.10
Headings
39

Section 9.11
Conflicts
39

Section 9.12
Provisions Solely to Define Relative Rights
39

Section 9.13
Certain Terms Concerning the First-Out Agent and the Second-Out Agent
39

Section 9.14
Authorization of Secured Agents
40

Section 9.15
Further Assurances
40

Section 9.16
Relationship of Secured Parties
40

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PARI PASSU INTERCREDITOR AGREEMENT, dated as of [________], 2016 (as amended,
supplemented or otherwise modified from time to time in accordance with the
terms hereof, this “Agreement”), between JPMORGAN CHASE BANK, N.A., as
administrative agent for the First-Out Secured Parties referred to herein (in
such capacity, and together with its successors and assigns in such capacity,
the “Original First-Out Agent”) and THE BANK OF NEW YORK MELLON TRUST COMPANY,
N.A., as collateral agent for the Second-Out Secured Parties referred to herein
(in such capacity, and together with its successors in such capacity, the
“Original Second-Out Agent”) and acknowledged and agreed by California Resources
Corporation, a Delaware corporation (the “Borrower”) and the other Grantors
party hereto.
WHEREAS, the Borrower, the Original First-Out Agent, as administrative agent,
and the lenders party thereto from time to time, entered into that certain
Credit Agreement dated as of September 24, 2014 (as amended, restated,
supplemented, modified or refinanced from time to time in accordance with the
terms of this Agreement, the “Original First-Out Credit Agreement”), providing
for a revolving credit facility of up to $1,400,000,000 and a term credit
facility up to $1,000,000,000 (the “Original First-Out Credit Facility”);
WHEREAS, the Borrower, certain subsidiaries of the Borrower and the Original
Second-Out Agent are entering into that certain First Lien Second-Out Credit
Agreement, dated as of the date hereof (as amended, restated, supplemented,
modified or refinanced from time to time in accordance with the terms of this
Agreement, the “Original Second-Out Credit Agreement”), providing for a term
credit facility in an original principal amount of $900,000,000 (the “Original
Second-Out Credit Facility”);
WHEREAS, the First-Out Agent is party to that certain Intercreditor Agreement,
dated as of December 15, 2015 (the “Second Lien Intercreditor Agreement”),
between the First-Out Agent and The Bank of New York Mellon Trust Company, N.A.
as the Second Lien Agent (as defined therein), pursuant to which the First-Out
Obligations constitute “Priority Lien Obligations” under and as defined in the
Second Lien Intercreditor Agreement;
WHEREAS, the First-Out Obligations are secured by the First-Out Collateral
pursuant to the terms of the First-Out Documents;
WHEREAS, the Second-Out Obligations will be secured by the Second-Out Collateral
pursuant to the terms of the Second-Out Documents;
WHEREAS, on the date hereof, the proceeds of the Original Second-Out Credit
Facility will be used to, among other things, refinance a portion of the
First-Out Debt;
WHEREAS, pursuant to Section 4.04(a) of the Second Lien Intercreditor Agreement,
the Borrower has designated the Original Second-Out Credit Facility as a
“Priority Substitute Credit Facility” under (and as defined in) the Second Lien
Intercreditor Agreement, the Second-Out Obligations constitute (together with
the First-Out Obligations) “Priority Lien Obligations” under (and as defined in)
the Second Lien Intercreditor Agreement and the Original Second-Out Agent has
executed a “Priority Confirmation Joinder” under (and as defined in) the Second
Lien Intercreditor Agreement;

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WHEREAS, the First-Out Documents and the Second-Out Documents provide, among
other things, that the parties thereto shall set forth in this Agreement their
respective rights and remedies with respect to the Shared Collateral; and
WHEREAS, in order to induce the First-Out Agent and the other First-Out Secured
Parties to consent to the incurring of the Second-Out Obligations and to induce
the First-Out Secured Parties to continue to extend credit and other financial
accommodations and lend monies to or for the benefit of the Borrower, the
Second-Out Agent on behalf of the Second-Out Secured Parties, has agreed to the
provisions set forth in this Agreement.
NOW THEREFORE, in consideration of the foregoing, the mutual agreements herein
contained and other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the First-Out Agent (for itself and on behalf
of the First-Out Secured Parties) and the Second-Out Agent (for itself and on
behalf of the Second-Out Secured Parties) agree as follows:
ARTICLE I
DEFINITIONS

Section 1.01    Construction; Certain Defined Terms. (a)    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, (i) any
reference herein to any agreement, instrument, other document, statute or
regulation shall be construed as referring to such agreement, instrument, other
document, statute or regulation as from time to time amended, supplemented or
otherwise modified, (ii) any reference herein to any Person shall be construed
to include such Person’s successors and assigns, but shall not be deemed to
include the subsidiaries of such Person unless express reference is made to such
subsidiaries, (iii) 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, (iv) all references herein to
Articles, Sections and Annexes shall be construed to refer to Articles, Sections
and Annexes of this Agreement, (v) unless otherwise expressly qualified herein,
the words “asset” and “property” shall be construed to have the same meaning and
effect and to refer to any and all tangible and intangible assets and
properties, including cash, securities, accounts and contract rights, (vi) the
term “or” is not exclusive and (vii) the term “exercise of rights and remedies”
or terms of like import include remedial acts to which the Borrower or a Grantor
consent or assist.

(b)    All terms used in this Agreement that are defined in Article 1, 8 or 9 of
the New York UCC (whether capitalized herein or not) and not otherwise defined
herein have the meanings assigned to them in Article 1, 8 or 9 of the New York
UCC. If a term is defined in Article 9 of the New York UCC and another Article
of the UCC, such term shall have the meaning assigned to it in Article 9 of the
New York UCC.
(c)    Unless otherwise indicated, capitalized terms used but not defined herein
shall have the meaning given to such terms in the First-Out Credit Agreement as
in effect on the date hereof (or as any such defined term may be amended in a
manner not materially adverse to the holders of Second-Out Obligations).
(d)    As used in this Agreement, the following terms have the meanings
specified below:

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“Accounts” has the meaning assigned to such term in Section 3.01.
“Additional Second-Out Credit Facility” means any credit agreement, indenture,
note or other definitive loan agreement governing Indebtedness for which the
requirements of Section 4.04(b) of this Agreement have been satisfied, as
amended, restated, modified, renewed, refunded, restated, restructured,
increased, supplemented, replaced or refinanced in whole or in part from time to
time in accordance with each applicable Priority Debt Document; provided that
neither the Original Second-Out Credit Facility nor any Second-Out Substitute
Credit Facility shall constitute an Additional Second-Out Credit Facility at any
time.
“Additional Second-Out Documents” means the Additional Second-Out Credit
Facility and the Additional Second-Out Security Documents.
“Additional Second-Out Obligations” means, with respect to any Grantor, any
obligations of such Grantor owed to any Additional Second-Out Secured Party (or
any of its Affiliates) in respect of the Additional Second-Out Documents.
“Additional Second-Out Secured Parties” means, at any time, the trustee, agent
or other representative of the holders of any Series of Second-Out Debt who
maintains the transfer register for such Series of Second-Out Debt (other than
the Original Second-Out Credit Facility or any Second-Out Substitute Credit
Facility), the beneficiaries of each indemnification obligation undertaken by
any Grantor under any Additional Second-Out Document and each other holder of,
or obligee in respect of, any holder or lender pursuant to any Series of Second
Lien Debt outstanding at such time; provided that the Original Second-Out
Secured Parties shall not be deemed Additional Second-Out Secured Parties.
“Additional Second-Out Security Documents” means the Additional Second-Out
Credit Facility (insofar as the same grants a Lien on the Shared Collateral) and
any other security agreements, pledge agreements, collateral assignments,
mortgages, deeds of trust, collateral agency agreements, control agreements, or
grants or transfers for security, now existing or entered into after the date
hereof, executed and delivered by the Borrower or any other Grantor creating (or
purporting to create) a Lien upon the Second-Out Collateral in favor of the
Additional Second-Out Secured Parties.
“Affiliate” of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For purposes of this definition, “control,”
as used with respect to any Person, means the possession, directly or
indirectly, of the power to direct or cause the direction of the management or
policies of such Person, whether through the ownership of voting securities, by
agreement or otherwise; provided that beneficial ownership of 10% or more of the
Voting Stock of a Person will be deemed to be control. For purposes of this
definition, the terms “controlling,” “controlled by” and “under common control
with” have correlative meanings.
“Agreement” has the meaning assigned to such term in the preamble hereto.
“Bankruptcy Code” means Title 11 of the United States Code (as amended, from
time to time).
“Bankruptcy Law” means the Bankruptcy Code and any similar federal, state or
foreign law providing for the relief of debtors.
“Board of Directors” means: (1) with respect to a corporation, the board of
directors of the corporation; (2) with respect to a partnership, the Board of
Directors of the general partner of the

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partnership; and (3) with respect to any other Person, the board or committee of
such Person serving a similar function.
“Borrower” has the meaning assigned to such term in the preamble hereto.
“Business Day” means each day that is not a Saturday, Sunday or other day on
which banking institutions in Houston, Texas or in New York, New York are
authorized or required by law to close.
“Capital Stock” means (a) in the case of a corporation, corporate stock; (b) in
the case of an association or business entity, any and all shares, interests,
participations, rights or other equivalents (however designated) of corporate
stock; (c) in the case of a partnership or limited liability company,
partnership interests (whether general or limited) or membership interests; and
(d) any other interest or participation that confers on a Person the right to
receive a share of the profits and losses of, or distributions of assets of, the
issuing Person.
“Credit Facilities” means, one or more debt facilities, indentures or commercial
paper facilities (including, without limitation, the First-Out Credit Facility),
in each case, with banks or other financial institutions providing for revolving
credit loans, term loans, capital markets financings, private placements,
receivables financings (including through the sale of receivables to such
lenders or to special purpose entities formed to borrow from such lenders
against such receivables) or letters of credit or letter of credit guarantees,
in each case, as amended, restated, modified, supplemented, extended, renewed,
refunded, replaced or refinanced in whole or in part from time to time.
“DIP Financing” has the meaning assigned to such term in Section 4.02(b).
“DIP Financing Liens” has the meaning assigned to such term in Section 4.02(b).
“Discharge of First-Out Obligations” means the occurrence of all of the
following:
(a)    termination or expiration of all commitments to extend credit that would
constitute First-Out Debt;
(b)    payment in full in cash of the principal of and interest and premium (if
any) on all First-Out Debt (other than any undrawn letters of credit), including
the payment in full in cash of all Post-Petition Interest with respect to the
First-Out Debt and, for the avoidance of doubt, all amounts drawn under letters
of credit constituting First-Out Obligations for which the issuing bank has not
been reimbursed by the Borrower;
(c)    discharge or cash collateralization in an amount equal to 105% of the sum
of the aggregate undrawn amount of all then outstanding letters of credit
constituting First-Out Obligations and the aggregate fronting and similar fees
which will accrue thereon through the stated expiry of such letters of credit;
(d)    payment of all obligations under Secured Hedge Agreements constituting
First-Out Obligations then due and payable (or, with respect to any particular
Hedge Agreement, termination of such agreement and payment in full in cash of
all obligations thereunder or such other arrangements as have been made by the
counterparty thereto (and communicated to the First-Out Agent) pursuant to the
terms of the First-Out Credit Agreement); and

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(e)    payment in full in cash of all other First-Out Obligations, including
without limitation, any obligations under Secured Cash Management Agreements,
that are outstanding and unpaid at the time the First-Out Debt is paid in full
in cash (other than any obligations for taxes, costs, indemnifications,
reimbursements, damages and other liabilities in respect of which no claim or
demand for payment has been made at or prior to such time);
provided that, if, at any time after the Discharge of First-Out Obligations has
occurred, the Borrower enters into any First-Out Document evidencing a First-Out
Obligation which incurrence is not prohibited by the applicable Priority Debt
Documents, then such Discharge of First-Out Obligations shall automatically be
deemed not to have occurred for all purposes of this Agreement with respect to
such new First-Out Obligations (other than with respect to any actions taken as
a result of the occurrence of such first Discharge of First-Out Obligations),
and, from and after the date on which the Borrower designates such Indebtedness
as First-Out Debt in accordance with this Agreement, the obligations under such
First-Out Document shall automatically and without any further action be treated
as First-Out Obligations for all purposes of this Agreement, including for
purposes of the priorities and rights in respect of recovery on the Shared
Collateral set forth in this Agreement, any Second-Out Obligations shall be
deemed to have been at all times Second-Out Obligations and at no time First-Out
Obligations. For the avoidance of doubt, a Replacement as contemplated by
Section 4.04(a) shall not be deemed to cause a Discharge of First-Out
Obligations.
“Disposition” shall mean any sale, lease, exchange, assignment, license,
contribution, transfer or other disposition. “Dispose” shall have a correlative
meaning.
“Excess First-Out Obligations” means Obligations constituting First-Out
Obligations for the amount of indebtedness (including letters of credit and
reimbursement obligations) under the First-Out Credit Agreement and/or any other
Credit Facility pursuant to which First-Out Debt has been issued to the extent
that such Obligations for principal, letters of credit and reimbursement
obligations are in excess of the amount in clause (a) of the definition of
“First-Out Priority Cap.”
“First-Out Agent” means the Original First-Out Agent, and, from and after the
date of execution and delivery of a First-Out Substitute Credit Facility, the
agent, collateral agent, trustee or other representative of the lenders or
holders of the indebtedness and other Obligations evidenced thereunder or
governed thereby, in each case, together with its successors in such capacity.
“First-Out Collateral” shall mean all “Collateral”, as defined in the First-Out
Credit Agreement or any other First-Out Document, and any other assets of any
Grantor now or at any time hereafter subject to Liens which secure or purport to
secure any First-Out Obligation.
“First-Out Credit Agreement” means the Original First-Out Credit Agreement and
any credit agreement, loan agreement, note agreement, promissory note, indenture
or any other agreement or instrument evidencing or governing the terms of any
First-Out Substitute Credit Facility.
“First-Out Credit Facility” means the Original First-Out Credit Facility and any
First-Out Substitute Credit Facility.
“First-Out Debt” means the indebtedness under the Original First-Out Credit
Agreement and guarantees thereof (including letters of credit and reimbursement
obligations with respect thereto) and indebtedness under any First-Out
Substitute Credit Facility. For purposes of this Agreement, indebtedness under
the Original First-Out Credit Agreement as in effect on the date hereof is
permitted to be incurred under the Original Second-Out Credit Agreement.

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“First-Out Documents” means the First-Out Credit Agreement, the First-Out
Security Documents, the other “Loan Documents” (as defined in the Original
First-Out Credit Agreement) and all other loan documents, notes, guarantees,
instruments and agreements governing or evidencing, or executed or delivered in
connection with, any First-Out Substitute Credit Facility.
“First-Out Liens” means a Lien granted by the Borrower or other Grantor in favor
of the First-Out Agent, at any time, upon any Property of the Borrower or such
Grantor or the proceeds thereof to secure First-Out Obligations (including Liens
on such First-Out Collateral under the security documents associated with any
First-Out Substitute Credit Facility).
“First-Out Obligations” means First-Out Debt and all other Obligations in
respect thereof, including all “First-Out Obligations” under (and as defined in)
the Original First-Out Credit Agreement. Notwithstanding any other provision
hereof, the term “First-Out Obligations” will include accrued interest, fees,
costs, and other charges incurred under the First-Out Documents, whether
incurred before or after commencement of an Insolvency or Liquidation Proceeding
and whether or not allowable in an Insolvency or Liquidation Proceeding.
“First-Out Priority Cap” means, as of any date, the sum of (a) the positive
difference, if any, between (I) the greater of (i) $4.0 billion, (ii) the
Borrowing Base in effect at the time of incurrence of such indebtedness and
(iii) 15% of the Consolidated Total Assets of the Borrower and the Subsidiaries
and (II) the lesser of (x) the principal amount outstanding under the Second-Out
Credit Agreement as of such date, including any capitalized interest paid
in-kind as of such date and all interest and outstanding fees and fees,
indemnifications, reimbursements and expenses as may be due pursuant to the
terms of any Second-Out Credit Agreement, and (y) $1.25 billion, plus (b) the
amount of all Hedge Obligations arising under Secured Hedge Agreements, plus (c)
the amount of all Cash Management Obligations arising under Secured Cash
Management Agreements, plus (d) the amount of accrued and unpaid interest with
respect to the principal amount described in clause (a) above (excluding any
interest paid-in-kind) and outstanding fees, to the extent such Obligations are
secured by the First-Out Liens, plus (e) fees, indemnifications, reimbursements
and expenses as may be due pursuant to the terms of any First-Out Documents.
“First-Out Secured Parties” means, at any time, the First-Out Agent, each lender
or issuing bank under the First-Out Credit Agreement, each holder, provider or
obligee of any Secured Hedge Agreement and Secured Cash Management Agreement
that is a Cash Management Bank or Hedge Bank, as applicable, and is a secured
party (or a party entitled to the benefits of the security) under any First-Out
Document, the beneficiaries of each indemnification obligation undertaken by any
Grantor under any First-Out Document, each other Person that provides letters of
credit, guarantees or other credit support related thereto under any First-Out
Document and each other holder of, or obligee in respect of, any First-Out
Obligations (including pursuant to a First-Out Substitute Credit Facility).
“First-Out Security Documents” means the First-Out Credit Agreement (insofar as
the same grants a Lien on the First-Out Collateral), each agreement listed in
Part A of Exhibit B hereto, and any other security agreements, pledge
agreements, collateral assignments, mortgages, deeds of trust, control
agreements, or grants or transfers for security, now existing or entered into
after the date hereof, executed and delivered by the Borrower or any other
Grantor creating (or purporting to create) a Lien upon First-Out Collateral in
favor of the First-Out Agent (including any such agreements, assignments,
mortgages, deeds of trust and other documents or instruments associated with any
First-Out Substitute Credit Facility).

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“First-Out Substitute Credit Facility” means any Credit Facility with respect to
which the requirements contained in Section 4.04(a) of this Agreement have been
satisfied and that Replaces the First-Out Credit Facility then in existence. For
the avoidance of doubt, no First-Out Substitute Credit Facility shall be
required to be a revolving, term or asset-based loan facility and may be a
facility evidenced or governed by a credit agreement, loan agreement, note
agreement, promissory note, indenture or any other agreement or instrument;
provided that any First-Out Lien securing such First-Out Substitute Credit
Facility shall be subject to the terms of this Agreement for all purposes
(including the lien priorities as set forth herein as of the date hereof). For
purposes of this Agreement the Original Second-Out Credit Facility does not
constitute a First-Out Substitute Credit Facility.
“Governmental Authority” means the government of the United States or any other
nation, or any political subdivision thereof, whether state, provincial or
local, and any agency, authority, instrumentality, regulatory body, court,
central bank or other Person exercising executive, legislative, judicial,
taxing, regulatory or administrative powers or functions of or pertaining to
government.
“Grantor” means the Borrower, each other subsidiary of the Borrower that shall
have granted any Lien in favor of any of the First-Out Agent or the Second-Out
Agent on any of its assets or properties to secure any of the Priority Secured
Obligations.
“Insolvency or Liquidation Proceeding” means:
(a)    any case commenced by or against the Borrower or any other Grantor under
the Bankruptcy Code or any other Bankruptcy Law, any other proceeding for the
reorganization, recapitalization or adjustment or marshalling of the assets or
liabilities of the Borrower or any other Grantor, any receivership or assignment
for the benefit of creditors relating to the Borrower or any other Grantor or
any similar case or proceeding relative to the Borrower or any other Grantor or
its creditors, as such, in each case whether or not voluntary;
(b)    any liquidation, dissolution, marshalling of assets or liabilities or
other winding up of or relating to the Borrower or any other Grantor, in each
case whether or not voluntary and whether or not involving bankruptcy or
insolvency; or
(c)    any other proceeding of any type or nature including any composition
agreement in which substantially all claims of creditors of the Borrower or any
other Grantor are determined and any payment or distribution is or may be made
on account of such claims.
“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 or a financing
lease, consignment or bailment for security purposes or (b) Production Payments
and the like payable out of Oil and Gas Properties; provided that in no event
shall an operating lease be deemed to be a Lien.
“New York UCC” means the Uniform Commercial Code as from time to time in effect
in the State of New York.
“Obligations” means any principal (including reimbursement obligations and
obligations to provide cash collateral with respect to letters of credit whether
or not drawn), interest, premium (if any), fees, indemnifications,
reimbursements, expenses and other liabilities payable under the documentation
governing any Indebtedness, including Post-Petition Interest, including any
applicable

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post-default interest rate even if such interest is not enforceable, allowable
or allowed as a claim in any Insolvency or Liquidation Proceeding.
“Officer” means, with respect to any Person, the Chairman of the Board, the
Chief Executive Officer, the President, the Chief Operating Officer, the Chief
Financial Officer, the Treasurer, any Assistant Treasurer, the Controller, the
Secretary, any Senior Vice President, any Vice President or any Assistant Vice
President of such Person or any correlative position.
“Officers’ Certificate” means a certificate signed on behalf of the Borrower by
any Officer or Officers of the Borrower.
“Original First-Out Agent” has the meaning assigned to such term in the preamble
hereto.
“Original First-Out Credit Agreement” has the meaning assigned to such term in
the recitals hereto.
“Original First-Out Credit Facility” has the meaning assigned to such term in
the recitals hereto.
“Original Second-Out Agent” has the meaning assigned to such term in the
preamble hereto.
“Original Second-Out Credit Agreement” has the meaning assigned to such term in
the recitals hereto.
“Original Second-Out Credit Facility” has the meaning assigned to such term in
the recitals hereto.
“Original Second-Out Documents” means the Original Second-Out Credit Agreement,
the Original Second-Out Security Documents and all other loan documents, notes,
guarantees, instruments and agreements governing or evidencing, or executed and
delivered in connection with, the Original Second-Out Credit Agreement or any
Second-Out Substitute Credit Facility.
“Original Second-Out Obligations” means, with respect to any Grantor, any
Obligations of such Grantor owed to any Original Second-Out Secured Party (or
any of its Affiliates) in respect of the Original Second-Out Documents.
“Original Second-Out Secured Parties” means, at any time, the Original
Second-Out Agent, the beneficiaries of each indemnification obligation
undertaken by any Grantor under any Original Second-Out Document, each holder or
lender pursuant to any Original Second-Out Document outstanding at such time;
provided that the Additional Second-Out Secured Parties shall not be deemed
Original Second-Out Secured Parties.
“Original Second-Out Security Documents” means the Original Second-Out Credit
Agreement (insofar as the same grants a Lien on the Shared Collateral), each
agreement listed in Part B of Exhibit B hereto and any other security
agreements, pledge agreements, collateral assignments, mortgages, deeds of
trust, collateral agency agreements, control agreements, or grants or transfers
for security, now existing or entered into after the date hereof, executed and
delivered by the Borrower or any other Grantor creating (or purporting to
create) a Lien upon Shared Collateral in favor of the Original Second-Out Agent
(including any such agreements, assignments, mortgages, deeds of trust and other
documents or instruments associated with any Second-Out Substitute Credit
Facility) in connection with the Original Second-Out Obligations.

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“Person” means any individual, corporation, partnership, joint venture,
association, joint-stock company, trust, unincorporated organization, limited
liability company or government or other entity.
“Post-Petition Interest” means any interest, fees, expenses or other amounts
that accrues or would have accrued after the commencement of any Insolvency or
Liquidation Proceeding, whether or not allowed or allowable in any such
Insolvency or Liquidation Proceeding.
“Priority Confirmation Joinder” means an agreement substantially in the form of
Exhibit A.
“Priority Debt Documents” means the First-Out Documents and the Second-Out
Documents.
“Priority Debt Representative” means the First-Out Agent and the Second-Out
Agent.
“Priority Obligations” means the First-Out Obligations and the Second-Out
Obligations.
“Priority Secured Parties” means the First-Out Secured Parties and the
Second-Out Secured Parties.
“Proceeds” means any proceeds (as defined in the New York UCC) of, from or on
account of any Shared Collateral, any interest earned thereon, any insurance
proceeds, any proceeds or value resulting from the Disposition of the Shared
Collateral, whether such Disposition occurs during an Insolvency or Liquidation
Proceeding, any amounts to which any Priority Secured Parties are entitled to
under (and as defined in) the Second Lien Intercreditor Agreement and
consideration received as a result of any distribution of or in respect of any
Shared Collateral (or the proceeds thereof whether or not expressly
characterized as such) upon any Insolvency or Liquidation Proceeding other than
any adequate protection payments for accrued post-petition fees and expenses
awarded to the Second-Out Secured Parties ýthat have been approved by the court
presiding in such Insolvency or Liquidation Proceeding or otherwise approved by
the First-Out Agent, and any new secured debt obligations granted to the
Second-Out Secured Parties under a confirmed plan of reorganization or other
dispositive restructuring plan that satisfies the criteria set forth with
respect thereto in Section 4.02(h) of this Agreement.
“Property” means any interest in any kind of property or asset, whether real,
personal or mixed, or tangible or intangible, including, without limitation,
cash, securities, accounts and contract rights.
“Recovery” has the meaning assigned to such term in Section 4.03.
“Replaces” means, (a) in respect of any agreement or facility with reference to
the First-Out Credit Agreement, the First-Out Obligations or any First-Out
Credit Facility (including a First-Out Substitute Credit Facility), that such
agreement or facility refunds, refinances or replaces the First-Out Credit
Agreement, the First-Out Obligations or such First-Out Credit Facility in whole
(in a transaction that is in compliance with Section 4.04(a)) and that all
commitments thereunder are terminated, or, to the extent permitted by the terms
of the First-Out Credit Agreement or such First-Out Credit Facility, in part and
(b) in respect of any agreement or facility with reference to the Second-Out
Credit Agreement, the Second-Out Obligations or any Second-Out Credit Facility
(including a Second-Out Substitute Credit Facility), that such agreement or
facility refunds, refinances or replaces the Second-Out Credit Agreement, the
Second-Out Obligations or such Second-Out Credit Facility in whole (in a
transaction

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that is in compliance with Section 4.04(a)) and that all commitments thereunder
are terminated, or, to the extent permitted by the terms of the Second-Out
Credit Agreement or such Second-Out Credit Facility, in part. “Replace,”
“Replaced” and “Replacement” shall have correlative meanings.
“Second Lien Intercreditor Agreement” has the meaning assigned to such term in
the recitals hereto.
“Second-Out Agent” means (a) the Original Second-Out Agent, (b) from and after
the date of execution and delivery of a Second-Out Substitute Credit Facility,
the agent, collateral agent, trustee or other representative of the lenders or
holders of the indebtedness and other Obligations evidenced thereunder or
governed thereby and (c) in the case of any other Series of Second-Out Debt, the
trustee, agent or representative of the holders of such Series of Second-Out
Debt who is appointed as a Second-Out Agent (for purposes related to the
administration of the security documents) pursuant to the indenture, credit
agreement or other agreement governing such Series of Second-Out Debt, in each
case together with its successors in such capacity appointed pursuant to the
terms of the Original Second-Out Credit Agreement, Second-Out Substitute Credit
Facility or Additional Second-Out Facility, as applicable. NTD: Agreement needs
to be revised generally to refer to Second-Out Agents (plural).
“Second-Out Credit Agreement” means the Original Second-Out Credit Agreement and
any credit agreement, loan agreement, note agreement, promissory note, indenture
or any other agreement or instrument evidencing or governing the terms of any
Second-Out Substitute Credit Facility or Additional Second-Out Credit Facility.
“Second-Out Credit Facility” means the Original Second-Out Credit Facility and
any Second-Out Substitute Credit Facility or Additional Second-Out Credit
Facility.
“Second-Out Collateral” shall mean all “Collateral”, as defined in the
Second-Out Credit Agreement or any other Second-Out Document, and any other
assets of any Grantor now or at any time hereafter subject to Liens which secure
or purport to secure any Second-Out Obligation.
“Second-Out Debt” means the indebtedness under the Original Second-Out Credit
Facility and guarantees thereof and all additional indebtedness incurred under
any Additional Second-Out Documents, and all indebtedness incurred under any
Second-Out Substitute Credit Facility, in each case that was permitted to be
incurred and secured under the First-Out Documents and with respect to which the
requirements of Section 4.04(a) or 4.04(b), as applicable, have been satisfied.
“Second-Out Documents” means the Original Second-Out Documents and the
Additional Second-Out Documents.
“Second-Out Lien” means a Lien granted by a Second-Out Document to any
Second-Out Agent, at any time, upon any Second-Out Collateral by any Grantor to
secure the Second-Out Obligations (including Liens on such Second-Out Collateral
under the security documents associated with any Second-Out Substitute Credit
Facility).
“Second-Out Obligations” means Second-Out Debt and all other Obligations in
respect thereof. Notwithstanding any other provision hereof, the term
“Second-Out Obligations” will include accrued interest, fees, costs, and other
charges incurred under the Second-Out Documents, whether incurred before or
after commencement of an Insolvency or Liquidation Proceeding and whether or not
allowable in an Insolvency or Liquidation Proceeding.
“Second-Out Purchasers” has the meaning assigned to such term in Section
3.06(a).

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“Second-Out Secured Parties” means the Original Second-Out Secured Parties and
the Additional Second-Out Secured Parties.
“Second-Out Security Documents” means Original Second-Out Security Documents and
the Additional Second-Out Security Documents.
“Second-Out Substitute Credit Facility” means any Credit Facility with respect
to which the requirements contained in Section 4.04(a) of this Agreement have
been satisfied and that is permitted to be incurred pursuant to the First-Out
Documents, the proceeds of which are used to, among other things, Replace the
Original Second-Out Credit Facility and/or any Additional Second-Out Credit
Facility then in existence. For the avoidance of doubt, no Second-Out Substitute
Credit Facility shall be required to be a term facility and may be a facility
evidenced or governed by a credit agreement, loan agreement, note agreement,
promissory note, indenture or any other agreement or instrument; provided that
any such Second-Out Substitute Credit Facility shall be subject to the terms of
this Agreement for all purposes (including the lien priorities as set forth
herein as of the date hereof) to the same extent the other Second-Out Liens
securing the Second-Out Obligations are subject to this Agreement.
“Series of Second-Out Debt” means, severally, the Original Second-Out Credit
Facility and each other issue or series of Second-Out Debt (including any
Additional Second-Out Credit Facility or Second-Out Credit Facility) for which a
single transfer register is maintained.
“Shared Collateral” means all of the assets and property of any Grantor, whether
real, personal or mixed, constituting the First-Out Collateral and/or the
Second-Out Collateral.
“Standstill Period” has the meaning assigned to such term in Section 3.02.
“subsidiary” means, with respect to any specified Person: (1) any corporation,
association, limited liability company or other business entity (other than a
partnership) of which more than 50% of the total voting power of Voting Stock is
at the time owned or controlled, directly or through another subsidiary, by that
Person or one or more of the other subsidiaries of that Person (or a combination
thereof); and (2) any partnership (a) the sole general partner or the managing
general partner of which is such Person or a subsidiary of such Person or (b)
the only general partners of which are that Person or one or more subsidiaries
of that Person (or any combination thereof), or (c) as to which such Person and
its subsidiaries are entitled to receive more than 50% of the assets of such
partnership upon its dissolution.
“Voting Stock” of any Person as of any date means the Capital Stock of such
Person that is at the time entitled (without regard to the occurrence of any
contingency) to vote in the election of the Board of Directors of such Person.
ARTICLE II
PASSU LIENS
Section 2.01    Lien Priorities.

(a)    The grant of the First-Out Liens pursuant to the First-Out Documents and
the grant of the Second-Out Liens pursuant to the Second-Out Documents create
two separate and distinct Liens on the Shared Collateral.
(b)    Subject in all respects to Section 6.01, notwithstanding the date, time,
method, manner or order of grant, attachment or perfection of any Liens securing
any Priority Obligations granted on

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the Shared Collateral and notwithstanding any provision of the Uniform
Commercial Code of any jurisdiction, or any other applicable law or the Priority
Debt Documents or any defect or deficiencies in the Liens securing the Priority
Obligations or any other circumstance whatsoever, each Priority Secured Party
hereby agrees that the Liens securing each Priority Obligation on any Shared
Collateral shall be of equal priority.
(c)    It is acknowledged that, subject to the First-Out Priority Cap as
provided herein (i) the aggregate amount of the First-Out Obligations may be
increased from time to time pursuant to the terms of the First-Out Documents,
(ii) a portion of the First-Out Obligations consists or may consist of
indebtedness that is revolving in nature, and the amount thereof that may be
outstanding at any time or from time to time may be increased or reduced and
subsequently reborrowed or refinanced, and (iii) (A) the First-Out Documents may
be replaced, restated, supplemented, restructured refinanced or otherwise
amended or modified from time to time and (B) the First-Out Obligations may be
increased, extended, renewed, replaced, restated, supplemented, restructured,
repaid, refunded, refinanced or otherwise amended or modified from time to time,
in the case of the foregoing (A) and (B) all without affecting the payment
priorities of the Second-Out Liens hereunder or the provisions of this Agreement
defining the relative rights of the First-Out Secured Parties and the Second-Out
Secured Parties. Subject to the First-Out Priority Cap, the lien priorities
provided for herein shall not be altered or otherwise affected by any amendment,
modification, supplement, extension, increase, renewal, restatement or
Replacement of either the First-Out Obligations (or any part thereof) or the
Second-Out Obligations (or any part thereof), by the release of any Shared
Collateral or of any guarantees for any First-Out Obligations or by any action
that any Priority Debt Representative or Priority Secured Party may take or fail
to take in respect of any Shared Collateral.
Section 2.02    Prohibition on Marshalling, Etc. Until the Discharge of
First-Out Obligations, the Second-Out Agent will not assert any marshalling,
appraisal, valuation, or other similar right that may otherwise be available to
a junior secured creditor.

Section 2.03    No New Liens. The parties hereto agree that, so long as the
Discharge of First-Out Obligations has not occurred, none of the Grantors shall,
nor shall any Grantor permit any of its subsidiaries to, (a) grant or permit any
additional Liens on any asset of a Grantor to secure any Second-Out Obligation,
or take any action to perfect any additional Liens, unless it has granted, or
substantially concurrently therewith grants (or offers to grant), a Lien on such
asset of such Grantor to secure the First-Out Obligations and has taken all
actions required to perfect such Liens; or (b) grant or permit any additional
Liens on any asset of a Grantor to secure any First-Out Obligation, or take any
action to perfect any additional Liens, unless it has granted, or substantially
concurrently therewith grants (or offers to grant), a Lien on such asset of such
Grantor to secure the Second-Out Obligations and has taken all actions required
to perfect such Liens. To the extent that the provisions of the immediately
preceding sentence are not complied with for any reason, or should any Lien upon
any Shared Collateral be released or become unperfected due to breach of this
Agreement or due to inadvertence, neglect or error by any of the Priority
Secured Parties, without limiting any other right or remedy available to the
First-Out Agent or the other First-Out Secured Parties, the Second-Out Agent,
for itself and on behalf of the other Second-Out Secured Parties, agrees that
any amounts received by or distributed to any Second-Out Secured Party pursuant
to or as a result of any Lien granted in contravention of this Section 2.03 or
any such release or lack of perfection shall be subject to Section 3.05(b).

Section 2.04    Similar Collateral and Agreements. The parties hereto
acknowledge and agree that it is their intention that the First-Out Collateral
and the Second-Out Collateral be identical. In furtherance of the foregoing, the
parties hereto agree (a) to cooperate in good faith in order to determine,

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upon any reasonable request by the First-Out Agent or the Second-Out Agent, the
specific assets included in the First-Out Collateral and the Second-Out
Collateral, the steps taken to perfect the First-Out Liens and the Second-Out
Liens thereon and the identity of the respective parties obligated under the
First-Out Documents and the Second-Out Documents in respect of the First-Out
Obligations and the Second-Out Obligations, respectively, (b) that the
Second-Out Security Documents creating Liens on the Shared Collateral shall be
in all material respects the same forms of documents as the respective First-Out
Security Documents creating Liens on the Shared Collateral other than (i) such
modifications to such Second-Out Security Documents which are less restrictive
than the corresponding First-Out Security Documents and (ii) provisions in the
Second-Out Security Documents which are solely applicable to the rights and
duties of the Second-Out Agent and (c) that at no time shall there be any
Grantor that is an obligor in respect of the Second-Out Obligations that is not
also an obligor in respect of the First-Out Obligations. The intention of the
parties hereto that their interests in the Shared Collateral be identical may
not be construed as a condition to the grant, attachment or perfection of any
Lien held by any of the Priority Secured Parties, nor shall it be construed to
confer any third party any right, interest or priority superior to that which
such party would hold in the absence of such intention. To the extent that,
notwithstanding the intentions and obligations stated above, the interests of
the parties hereto in the Shared Collateral are not identical, then the
provisions of the last sentence of Section 2.03 above shall govern.

Section 2.05    No Duties of First-Out Agent. The Second-Out Agent, for itself
and on behalf of each other Second-Out Secured Party, acknowledges and agrees
that neither the First-Out Agent nor any other First-Out Secured Party shall
have any duties or other obligations to any such Second-Out Secured Party with
respect to any Shared Collateral, other than to transfer to the Second-Out Agent
any remaining Shared Collateral and any proceeds of the sale or other
Disposition of any such Shared Collateral remaining in its possession following
the associated Discharge of First-Out Obligations, in each case without
representation or warranty on the part of the First-Out Agent or any First-Out
Secured Party. In furtherance of the foregoing, the Second-Out Agent, for itself
and on behalf of each other Second-Out Secured Party, acknowledges and agrees
that until the Discharge of First-Out Obligations (subject to the terms of
Section 3.02, including the rights of the Second-Out Secured Parties following
the expiration of the Standstill Period), the First-Out Agent shall be entitled,
for the benefit of the First-Out Secured Parties, to sell, transfer or otherwise
Dispose of or deal with such Shared Collateral, as provided herein and in the
First-Out Documents, without regard to any Second-Out Lien or any rights to
which the Second-Out Agent or any Second-Out Secured Party would otherwise be
entitled as a result of such Second-Out Lien. Without limiting the foregoing,
the Second-Out Agent, for itself and on behalf of each other Second-Out Secured
Party, agrees that neither the First-Out Agent nor any other First-Out Secured
Party shall have any duty or obligation first to marshal or realize upon any
type of Shared Collateral, or to sell, Dispose of or otherwise liquidate all or
any portion of such Shared Collateral, in any manner that would maximize the
return to the Second-Out Secured Parties, notwithstanding that the order and
timing of any such realization, sale, Disposition or liquidation may affect the
amount of proceeds actually received by the Second-Out Secured Parties from such
realization, sale, Disposition or liquidation. The Second-Out Agent, for itself
and on behalf of each of the other Second-Out Secured Parties waives any claim
such Second-Out Secured Party may now or hereafter have against the First-Out
Agent or any other First-Out Secured Party arising out of any actions which the
First-Out Agent or the First-Out Secured Parties take or omit to take (including
actions with respect to the creation, perfection or continuation of Liens on any
Shared Collateral, actions with respect to the foreclosure upon, sale, release
or depreciation of, or failure to realize upon, any of the Shared Collateral,
and actions with respect to the collection of any claim for all or any part of
the First-Out Obligations from any account debtor, guarantor or any other party)
in accordance with this Agreement and the First-Out Documents or the valuation,
use, protection or release of any security for the First-Out Obligations.

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ARTICLE III
ENFORCEMENT RIGHTS; PURCHASE OPTIONS

Section 3.01    Limitation on Enforcement Action; Prohibition on Contesting
Liens. Prior to the Discharge of First-Out Obligations, the Second-Out Agent,
for itself and on behalf of each Second-Out Secured Party, hereby agrees that,
subject to Section 3.05(b), none of the Second-Out Agent or any other Second-Out
Secured Party shall commence any judicial or nonjudicial foreclosure proceedings
with respect to, seek to have a trustee, receiver, liquidator or similar
official appointed for or over, attempt any action to take possession of,
exercise any right, remedy or power with respect to, or otherwise take any
action to enforce its interest in or realize upon, or take any other action
available to it in respect of, any Shared Collateral under any Second-Out
Document, applicable law or otherwise (including but not limited to any right of
setoff or under the Second Lien Intercreditor Agreement), it being agreed that
only the First-Out Agent, acting in accordance with the applicable First-Out
Documents, shall have the exclusive right (and whether or not any Insolvency or
Liquidation Proceeding has been commenced), to take any such actions or exercise
any such remedies, in each case, without any consultation with or the consent of
the Second-Out Agent or any other Second-Out Secured Party. In exercising rights
and remedies with respect to the Shared Collateral, the First-Out Agent and the
other First-Out Secured Parties may enforce the provisions of the First-Out
Documents and exercise remedies thereunder, all in such order and in such manner
as they may determine in their sole discretion and regardless of whether such
exercise and enforcement is adverse to the interest of any Second-Out Secured
Party. Such exercise and enforcement shall include the rights of an agent
appointed by them to Dispose of Shared Collateral upon foreclosure, to incur
expenses in connection with any such Disposition or in connection with care or
preservation of the Shared Collateral and to exercise all the rights and
remedies of a secured creditor under the Uniform Commercial Code, the Bankruptcy
Code (including the right to credit bid) or any other applicable or Bankruptcy
Law. Without limiting the generality of the foregoing, the First-Out Agent will
have the exclusive right to deal with that portion of the Shared Collateral
consisting of deposit accounts and securities accounts (collectively
“Accounts”), including exercising rights under control agreements with respect
to such Accounts. The Second-Out Agent, for itself and on behalf of the other
Second-Out Secured Parties, hereby acknowledges and agrees that no covenant,
agreement or restriction contained in any Second-Out Security Document, or any
other Second-Out Document shall be deemed to restrict in any way the rights and
remedies of the First-Out Agent or the other First-Out Secured Parties with
respect to the Shared Collateral as set forth in this Agreement. Notwithstanding
the foregoing, subject to Section 3.05, the Second-Out Agent, on behalf of the
Second-Out Secured Parties, may, but will have no obligation to, take all such
actions (not adverse to the First-Out Liens or the rights of the First-Out Agent
and the First-Out Secured Parties) it deems necessary to perfect or continue the
perfection of the Second-Out Liens in the Shared Collateral or to create,
preserve or protect (but not enforce) the Second-Out Liens in the Shared
Collateral. Notwithstanding the foregoing, nothing herein shall limit the right
or ability of the Second-Out Secured Parties to (a) purchase (by credit bid or
otherwise) all or any portion of the Shared Collateral in connection with any
enforcement of remedies by the First-Out Agent to the extent that, and so long
as, the Discharge of First-Out Obligations occurs immediately after giving
effect thereto, (b) file a proof of claim with respect to the Second-Out
Obligations, (c) take any action in order to create, prove, perfect, preserve or
protect (but not enforce) its rights in, and perfection and priority of its Lien
on, the Shared Collateral, or (d) file any responsive or defensive pleadings in
opposition to any motion, claim, adversary proceeding or other pleading made by
any person objecting to or otherwise seeking the disallowance of the claims of
the Second-Out Secured Parties or the avoidance of any Lien securing such
Second-Out Obligations.

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Section 3.02    Standstill Period; Permitted Enforcement Action . Prior to the
Discharge of First-Out Obligations and notwithstanding Section 3.01, both before
and during an Insolvency or Liquidation Proceeding after a period of 150 days
has elapsed (which period will be tolled during any period in which the
First-Out Agent is not entitled, on behalf of the First-Out Secured Parties, to
enforce or exercise any rights or remedies with respect to any Shared 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 Insolvency or Liquidation
Proceeding) since the date on which the Second-Out Agent has delivered to the
First-Out Agent written notice of the acceleration of any Second-Out Debt (the
“Standstill Period”), the Second-Out Agent and the other Second-Out Secured
Parties may enforce or exercise any rights or remedies with respect to any
Shared Collateral; provided, however that notwithstanding the expiration of the
Standstill Period or anything in the Second-Out Documents to the contrary, in no
event may the Second-Out Agent or any other Second-Out Secured Party enforce or
exercise any rights or remedies with respect to any Shared Collateral, or
commence, join with any Person at any time in commencing, or petition for or
vote in favor of any resolution for, any such action or proceeding, if the
First-Out Agent on behalf of the First-Out Secured Parties or any other
First-Out Secured Party shall have commenced, and shall be diligently pursuing
(or shall have sought or requested relief from, or modification of, the
automatic stay or any other stay or other prohibition in any Insolvency or
Liquidation Proceeding to enable the commencement and pursuit thereof), the
enforcement or exercise of any rights or remedies with respect to the Shared
Collateral (prompt written notice thereof to be given to the Second-Out Agent by
the First-Out Agent); provided, further, that, at any time after the expiration
of the Standstill Period, if neither the First-Out Agent nor any other First-Out
Secured Party shall have commenced and be diligently pursuing (or shall have
sought, and requested relief from, or modification of, the automatic stay or any
other stay or other prohibition in any Insolvency or Liquidation Proceeding to
enable the commencement and pursuit thereof) the enforcement or exercise of any
rights or remedies with respect to any material portion of the Shared
Collateral, and the Second-Out Agent shall have commenced the enforcement or
exercise of any rights or remedies with respect to any material portion of the
Shared Collateral or any such action or proceeding in respect of such rights and
remedies, then for so long as the Second-Out Agent is diligently pursuing such
rights and remedies, none of any First-Out Secured Party or the First-Out Agent
shall take any action of a similar nature with respect to such Shared
Collateral, or commence, join with any Person at any time in commencing, or
petition for or vote in favor of any resolution for, any such action or
proceeding (provided that during such period the First-Out Agent may take any of
the actions the Second-Out Agent is permitted to take during the Standstill
Period). Nothing contained in this Section 3.02 shall relieve the Second-Out
Agent or any Second-Out Secured party of its obligations under Section 3.05(b).
Section 3.03    Insurance. Unless and until the Discharge of First-Out
Obligations has occurred (subject to the terms of Section 3.02, including the
rights of the Second-Out Secured Parties following expiration of the Standstill
Period), the First-Out Agent shall have the sole and exclusive right, subject to
the rights of the Grantors under the First-Out Documents, to adjust and settle
claims in respect of Shared Collateral under any insurance policy in the event
of any loss thereunder and to approve any award granted in any condemnation or
similar proceeding (or any deed in lieu of condemnation) affecting the Shared
Collateral. Unless and until the Discharge of First-Out Obligations has
occurred, and subject to the rights of the Grantors under the First-Out
Documents, all proceeds of any such policy and any such award (or any payments
with respect to a deed in lieu of condemnation) in respect to the Shared
Collateral shall be paid to the First-Out Agent pursuant to the terms of the
First-Out Documents (including for purposes of cash collateralization of
commitments, letters of credit and Hedge Obligations). If the Second-Out Agent
or any Second-Out Secured Party shall, at any time prior to the Discharge of
First-Out Obligations, receive any proceeds of any such insurance policy or any
such award or payment in contravention of the foregoing, it shall pay such
proceeds over to the First-Out Agent. In addition, if by virtue of being named
as an additional insured or loss payee of any insurance policy of any Grantor

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covering any of the Shared Collateral, the Second-Out Agent or any other
Second-Out Secured Party shall have the right to adjust or settle any claim
under any such insurance policy, then unless and until the Discharge of
First-Out Obligations has occurred, the Second-Out Agent and any such Second-Out
Secured Party shall follow the instructions of the First-Out Agent, or of the
Grantors under the First-Out Documents to the extent the First-Out Documents
grant such Grantors the right to adjust or settle such claims, with respect to
such adjustment or settlement (subject to the terms of Section 3.02, including
the rights of the Second-Out Secured Parties following expiration of the
Standstill Period).

Section 3.04    Notification of Release of Collateral. Each Priority Debt
Representative shall give the other Priority Debt Representative prompt written
notice of the Disposition by it of, and Release by it of the Lien on, any Shared
Collateral. Such notice shall describe in reasonable detail the subject Shared
Collateral, the parties involved in such Disposition or Release, the place, time
manner and method thereof, and the consideration, if any, received therefor;
provided, however, that the failure to give any such notice shall not in and of
itself in any way impair the effectiveness of any such Disposition or Release.

Section 3.05    No Interference; Payment Over.

(a)    No Interference. Subject to Section 3.01, Section 3.02 and Section 4.02,
the Second-Out Agent, for itself and on behalf of each Second-Out Secured Party,
agrees that each Second-Out Secured Party (i) will not take or cause to be taken
any action the purpose or effect of which is to give such Second-Out Secured
Party any preference or priority relative to, any First-Out Lien with respect to
the Shared Collateral or any part thereof, (ii) will not challenge or question
in any proceeding the validity or enforceability of any First-Out Obligations or
First-Out Document, or the validity, attachment or perfection of any First-Out
Lien, or the validity or enforceability of the priorities, rights or duties
established by the provisions of this Agreement, (iii) will not take or cause to
be taken any action the purpose or effect 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 Shared Collateral by
any First-Out Secured Party or the First-Out Agent acting on their behalf, (iv)
shall have no right to (A) direct the First-Out Agent or any other First-Out
Secured Party to exercise any right, remedy or power with respect to any Shared
Collateral or (B) consent to the exercise by the First-Out Agent or any other
First-Out Secured Party of any right, remedy or power with respect to any Shared
Collateral, (v) will not institute any suit or assert in any suit or Insolvency
or Liquidation Proceeding any claim against the First-Out Agent or other
First-Out Secured Party seeking damages from or other relief by way of specific
performance, instructions or otherwise with respect to, and neither the
First-Out Agent nor any other First-Out Secured Party shall be liable to any of
the Second-Out Secured Parties for, any action taken or omitted to be taken by
the First-Out Agent or other First-Out Secured Party with respect to any Shared
Collateral, (vi) will not seek, and hereby waives any right, to have any Shared
Collateral or any part thereof marshaled upon any foreclosure or other
Disposition of such Shared Collateral, (vii) will not attempt, directly or
indirectly, whether by judicial proceedings or otherwise, to challenge the
enforceability of any provision of this Agreement, (viii) will not object to
forbearance by the First-Out Agent or any First-Out Secured Party, and (ix) will
not assert, and hereby waives, to the fullest extent permitted by law, any right
to demand, request, plead or otherwise assert or claim the benefit of any
marshalling, appraisal, valuation or other similar right that may be available
under applicable law with respect to the Shared Collateral or any similar rights
a junior secured creditor may have under applicable law; provided that nothing
herein shall limit the rights of any Second-Out Secured Party to enforce the
terms of this Agreement. The First-Out Agent, for itself and on behalf of each
First-Out Secured Party, agrees that each First-Out Secured Party (i) will not
challenge or question in any proceeding the validity or enforceability of any
Second-Out

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Obligations or Second-Out Document, or the validity, attachment or perfection of
any Second-Out Lien, or the validity or enforceability of the priorities, rights
or duties established by the provisions of this Agreement and (ii) will not take
or cause to be taken any action the purpose or effect 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 Shared Collateral by
any Second-Out Secured Party or the Second-Out Agent acting on their behalf to
the extent such sale, transfer or other Disposition is permitted by the terms of
this Agreement.

(b)    Payment Over. The Second-Out Agent, for itself and on behalf of each
other Second-Out Secured Party, hereby agrees that if any Second-Out Secured
Party shall obtain possession of any Shared Collateral or shall realize any
Proceeds or payment in respect of any Shared Collateral, pursuant to any rights
or remedies with respect to the Shared Collateral under any Second-Out Security
Document or on account of any rights available to it under applicable law or in
any Insolvency or Liquidation Proceeding, to the extent permitted hereunder, at
any time prior to the Discharge of First-Out Obligations secured, or intended to
be secured, by such Shared Collateral, then it shall hold such Shared
Collateral, Proceeds or payment in trust for the First-Out Agent and the other
First-Out Secured Parties and transfer such Shared Collateral, Proceeds or
payment, as the case may be, to the First-Out Agent as promptly as practicable;
provided that nothing herein shall limit the rights of the Second-Out Secured
Parties to receive the payments of principal, interest, fees and other amounts
under the Second-Out Documents so long as such payment is not the result of any
exercise of remedies by any Second-Out Secured Party with respect to the Shared
Collateral or a payment in respect of Shared Collateral or the Second-Out
Secured Parties realizing any Proceeds in respect of Shared Collateral. For the
avoidance of doubt, any Proceeds received by any of the Second-Out Secured
Parties in connection with any Insolvency or Liquidation Proceeding shall be
deemed to be the result of an exercise of remedies. Furthermore, the Second-Out
Agent shall, at the Grantors’ expense, promptly send written notice to the
First-Out Agent upon receipt of such Shared Collateral, Proceeds or payment not
permitted hereunder by any Second-Out Secured Party and if directed by the
First-Out Agent within five (5) days after receipt by the First-Out Agent of
such written notice, shall deliver such Shared Collateral, Proceeds or payment
to the First-Out Agent in the same form as received, with any necessary
endorsements, or as a court of competent jurisdiction may otherwise direct. The
First-Out Agent is hereby authorized to make any such endorsements as agent for
the Second-Out Agent or any other Second-Out Secured Party. The Second-Out
Agent, for itself and on behalf of each other Second-Out Secured Party agrees
that if, at any time, it obtains written notice that all or part of any payment
with respect to any First-Out Obligations previously made shall be rescinded for
any reason whatsoever, it will promptly pay over to the First-Out Agent any such
Shared Collateral, Proceeds or payment not permitted hereunder received by it
and then in its possession or under its direct control in respect of any such
First-Out Collateral and shall promptly turn any such Shared Collateral then
held by it over to the First-Out Agent, and the provisions set forth in this
Agreement will be reinstated as if such payment had not been made, until the
Discharge of First-Out Obligations. All Second-Out Liens will remain attached to
and enforceable against all Proceeds so held or remitted, subject to the
priorities set forth in this Agreement. At any time prior to the commencement of
an Insolvency or Liquidation Proceeding, anything contained herein to the
contrary notwithstanding, this Section 3.05(b) shall not apply to any Proceeds
of Shared Collateral realized in a transaction not prohibited by the First-Out
Documents and as to which the possession or receipt thereof by the Second-Out
Agent or any other Second-Out Secured Party is otherwise permitted by the
First-Out Documents.

Section 3.06    Purchase Option.

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(a)    Notwithstanding anything in this Agreement to the contrary, on or at any
time after (i) the commencement of an Insolvency or Liquidation Proceeding, (ii)
the acceleration of the First-Out Obligations, (iii) a payment default under the
First-Out Credit Agreement that has not been cured or waived by the First-Out
Secured Parties within thirty (30) days of its occurrence or (iv) the date on
which the sum of the Total Term Loan Exposure and Total Revolving Commitment is
less than $100,000,000, holders of the Second-Out Obligations and each of their
respective designated Affiliates (the “Second-Out Purchasers”) will have the
right, at their sole option and election (but will not be obligated), at any
time upon prior written notice to the First-Out Agent, to purchase from the
First-Out Secured Parties (A) all (but not less than all) First-Out Obligations
(including unfunded commitments then in effect) other than any First-Out
Obligations constituting Excess First-Out Obligations and (B) all (but not less
than all) of any loans provided by any of the First-Out Secured Parties in
connection with a DIP Financing that are outstanding on the date of such
purchase. Promptly following the receipt of such notice, the First-Out Agent
will deliver to the Second-Out Agent a statement of the amount of First-Out
Debt, other First-Out Obligations (other than any First-Out Obligations
constituting Excess First-Out Obligations) and DIP Financing provided by any of
the First-Out Secured Parties, if any, then outstanding and the amount of the
cash collateral requested by the First-Out Agent to be delivered pursuant to
Section 3.06(b)(ii) below. The right to purchase provided for in this Section
3.06 will expire unless, within 12 Business Days after the receipt by the
Second-Out Agent of such statement from the First-Out Agent, the Second-Out
Agent delivers to the First-Out Agent an irrevocable commitment of the
Second-Out Purchasers to purchase all (but not less than all) of the First-Out
Obligations (including unfunded commitments) other than any First-Out
Obligations constituting Excess First-Out Obligations and all (but not less than
all) of any loans provided by any of the First-Out Secured Parties in connection
with a DIP Financing and to otherwise complete such purchase on the terms set
forth under this Section 3.06.

(b)    On the date specified by the Second-Out Agent (on behalf of the
Second-Out Purchasers) in such irrevocable commitment (which shall not be less
than five Business Days nor more than 20 Business Days, after the receipt by the
First-Out Agent of such irrevocable commitment), the First-Out Secured Parties
shall sell to the Second-Out Purchasers all (but not less than all) First-Out
Obligations (including unfunded commitments) other than any First-Out
Obligations constituting Excess First-Out Obligations and all (but not less than
all) of any loans provided by any of the First-Out Secured Parties in connection
with a DIP Financing that are outstanding on the date of such sale, subject to
any required approval of any Governmental Authority then in effect, if any, and
only if on the date of such sale, the First-Out Agent receives the following:

(i)    payment, as the purchase price for all First-Out Obligations sold in such
sale, of an amount equal to the full amount of all First-Out Obligations (other
than outstanding letters of credit as referred to in clause (ii) below) other
than any First-Out Obligations constituting Excess First-Out Obligations and all
(but not less than all) of the loans provided by any of the First-Out Secured
Parties in connection with a DIP Financing then outstanding (including
principal, pre-petition interest and Post-Petition Interest), fees, reasonable
attorneys’ fees and legal expenses, but excluding contingent indemnification
obligations for which no claim or demand for payment has been made at or prior
to such time); provided that in the case of Hedge Obligations that constitute
First-Out Obligations, the Second-Out Purchasers shall cause the applicable
agreements governing such Hedge Obligations to be assigned and novated or, if
such agreements have been terminated, such purchase price shall include an
amount equal to the sum of any unpaid amounts then due in respect of such Hedge
Obligations, calculated using the market quotation method and after giving
effect to any netting arrangements;

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(ii)    a cash collateral deposit in the amount of one hundred five percent
(105%) of the aggregate outstanding amount of such letters of credit at such
time, which cash collateral shall be (A) held by the First-Out Agent as security
solely to reimburse the issuers of such letters of credit that become due and
payable after such sale and any fees and expenses incurred in connection with
such letters of credit and (B) returned to the Second-Out Agent (except as may
otherwise be required by applicable law or any order of any court or other
Governmental Authority) promptly after the expiration or termination from time
to time of all payment contingencies affecting such letters of credit; and

(iii)    any agreements, documents or instruments which the First-Out Agent may
reasonably request pursuant to which the Second-Out Agent and the Second-Out
Purchasers in such sale expressly assume and adopt all of the obligations of the
First-Out Agent and the First-Out Secured Parties under the First-Out Documents
and in connection with loans provided by any of the First-Out Secured Parties in
connection with a DIP Financing on and after the date of the purchase and sale
and the Second-Out Agent (or any other representative appointed by the holders
of a majority in aggregate principal amount of the Second-Out Debt then
outstanding) becomes a successor agent thereunder.

(c)    Such purchase of the First-Out Obligations (including unfunded
commitments) and any loans provided by any of the First-Out Secured Parties in
connection with a DIP Financing shall be made on a pro rata basis among the
Second-Out Purchasers giving notice to the First-Out Agent of their interest to
exercise the purchase option hereunder according to each such Second-Out
Purchaser’s portion of the Second-Out Debt outstanding on the date of purchase
or such portion as such Second-Out Purchasers may otherwise agree among
themselves. Such purchase price and cash collateral shall be remitted by wire
transfer in federal funds to such bank account of the First-Out Agent as the
First-Out Agent may designate in writing to the Second-Out Agent for such
purpose. Interest shall be calculated to but excluding the Business Day on which
such sale occurs if the amounts so paid by the Second-Out Purchasers to the bank
account designated by the First-Out Agent are received in such bank account
prior to 12:00 noon, New York City time, and interest shall be calculated to and
including such Business Day if the amounts so paid by the Second-Out Purchasers
to the bank account designated by the First-Out Agent are received in such bank
account later than 12:00 noon, New York City time.

(d)    Such sale shall be expressly made without representation or warranty of
any kind by the First-Out Secured Parties as to the First-Out Obligations, the
Shared Collateral or otherwise and without recourse to any First-Out Secured
Party, except that the First-Out Secured Parties shall represent and warrant
severally as to the First-Out Obligations (including unfunded commitments) and
any loans provided by any of the First-Out Secured Parties in connection with a
DIP Financing then owing to it: (i) that such applicable First-Out Secured Party
owns such First-Out Obligations (including unfunded commitments) and any loans
provided by any of the First-Out Secured Parties in connection with a DIP
Financing; and (ii) that such applicable First-Out Secured Party has the
necessary corporate or other governing authority to assign such interests.

(e)    After such sale becomes effective, the outstanding letters of credit will
remain enforceable against the issuers thereof and will remain secured by the
First-Out Liens upon the Shared Collateral in accordance with the applicable
provisions of the First-Out Documents as in effect at the time of such sale, and
the issuers of letters of credit will remain entitled to the benefit of the
First-Out Liens upon the Shared Collateral and sharing rights in the proceeds
thereof in accordance with the provisions of the First-Out Documents as in
effect at the time of such sale, as fully as if the sale of the First-Out Debt
had not been made, but, except with respect to cash collateral held by the
issuer(s) of such letters of credit, only the Person or successor agent to whom
the First-Out Liens are transferred in such sale will have the right to
foreclose upon or otherwise enforce the First-Out Liens and only the

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Second-Out Purchasers in the sale will have the right to direct such Person or
successor as to matters relating to the foreclosure or other enforcement of the
First-Out Liens.

ARTICLE VI
OTHER AGREEMENTS

Section 4.01    Release of Liens. (a)    Prior to the Discharge of First-Out
Obligations, the Second-Out Agent, for itself and on behalf of each other
Second-Out Secured Party agrees that, in the event the First-Out Secured Parties
release their Lien on any Shared Collateral, the Second-Out Lien on such Shared
Collateral shall terminate and be released automatically and without further
action if (i) such release is permitted under the First-Out Documents and the
Second-Out Documents, (ii) such release is effected in connection with the
First-Out Agent’s foreclosure upon, or other exercise of rights or remedies with
respect to, such Shared Collateral (including a Disposition of Shared Collateral
to which the Borrower or Grantor consents or assists), or (iii) such release is
effected in connection with a sale or other Disposition of any Shared Collateral
(or any portion thereof) under Section 363 or any other provision of the
Bankruptcy Code if the First-Out Secured Parties shall have consented to such
sale or Disposition of such Shared Collateral; provided that, in the case of
each of clauses (i), (ii) and (iii), the Second-Out Liens on such Shared
Collateral shall attach to (and shall remain subject to the terms of this
Agreement) any Proceeds of a sale, transfer or other Disposition of Shared
Collateral not paid to the First-Out Secured Parties or that remain after the
Discharge of First-Out Obligations.

(b)    The Second-Out Agent agrees to execute and deliver (at the sole cost and
expense of the Grantors) all such releases and other instruments as shall
reasonably be requested by the First-Out Agent to evidence and confirm any
release of Shared Collateral provided for in this Section 4.01.
Section 4.02    Certain Agreements With Respect to Insolvency or Liquidation
Proceedings.

(a)    The parties hereto acknowledge that this Agreement is a “subordination
agreement” under New York law, New York UCC 9-339 and Section 510(a) of the
Bankruptcy Code and shall continue in full force and effect, notwithstanding the
commencement of any Insolvency or Liquidation Proceeding by or against the
Borrower or any subsidiary of the Borrower. All references in this Agreement to
the Borrower or any subsidiary of the Borrower or any other Grantor will include
such Person or Persons as a debtor-in-possession and any receiver or trustee for
such Person or Persons in an Insolvency or Liquidation Proceeding.

(b)    If the Borrower or any of its subsidiaries shall become subject to any
Insolvency or Liquidation Proceeding and shall, as debtor(s)-in-possession, or
if any receiver or trustee for such Person or Persons shall, move for approval
of financing (“DIP Financing”) to be provided by one or more lenders (the “DIP
Lenders”) under Section 364 of the Bankruptcy Code or the use of cash collateral
under Section 363 of the Bankruptcy Code, Second-Out Agent, for itself and on
behalf of each Second-Out Secured Party, agrees that neither it nor any other
Second-Out Secured Party will raise any objection, contest or oppose, and each
Second-Out Secured Party will waive any claim such Person may now or hereafter
have, to any such DIP Financing or to the Liens on the Shared Collateral
securing the same (“DIP Financing Liens”), or to any use, sale or lease of cash
collateral that constitutes Shared Collateral or to any grant of administrative
expense priority under Section 364 of the Bankruptcy Code, unless (i) the
First-Out Agent or the First-Out Secured Parties oppose or object to such DIP
Financing or such DIP Financing Liens or such use of cash collateral, (ii) the
maximum principal amount of indebtedness permitted under such DIP Financing
exceeds the sum of (A) the amount of First-Out Obligations refinanced with the
proceeds thereof (not including the amount of any Excess First-Out Obligations)

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and (B) the greater of (I) $475 million and (II) 15% of the sum of (x) the
aggregate amount of indebtedness for borrowed money constituting principal
outstanding under the First-Out Documents plus (y) the aggregate face amount of
any letters of credit issued and outstanding under First-Out Documents on the
date of the commencement of such Insolvency or Liquidation Proceeding, or (iii)
the terms of such DIP Financing provide for the sale of a substantial part of
the Shared Collateral or require the confirmation of a plan of reorganization
containing specific terms or provisions (other than repayment in cash of such
DIP Financing on the effective date thereof). To the extent such DIP Financing
Liens are (x) senior to the First-Out Liens on the Shared Collateral, the
Second-Out Agent will, for itself and on behalf of the other Second-Out Secured
Parties, subordinate the Second-Out Liens on the Shared Collateral to the DIP
Financing Liens on the same terms as the First-Out Liens of the First-Out
Secured Parties are subordinated thereto and (y) pari passu to the First-Out
Liens on the Shared Collateral, the Second-Out Liens shall be pari passu to the
DIP Facility Liens and the Second-Out Agent will, for itself and on behalf of
the other Second-Out Secured Parties, confirm the priorities with respect to
such Shared Collateral as set forth herein (including, without limitation, the
payment priorities set forth in Section 6.01 hereof), in each case so long as
the Second-Out Agent, on behalf of the Second-Out Secured Parties, retains Liens
on all the Shared Collateral, including proceeds thereof arising after the
commencement of any Insolvency or Liquidation Proceeding, with the same priority
relative to the First-Out Liens as existed prior to the commencement of the case
under the Bankruptcy Code.

(c)    Prior to the Discharge of First-Out Obligations, without the consent of
the First-Out Agent, in its sole discretion, the Second-Out Agent, for itself
and on behalf of each Second-Out Secured Party agrees not to propose, support or
enter into any DIP Financing.

(d)    The Second-Out Agent, for itself and on behalf of each Second-Out Secured
Party agrees that it will not object to, oppose or contest (or join with or
support any third party objecting to, opposing or contesting) and if requested,
will consent to a sale or other Disposition, a motion to sell or Dispose or the
bidding procedure for such sale or Disposition of any Shared Collateral (or any
portion thereof) under Section 363 of the Bankruptcy Code or any other provision
of the Bankruptcy Code, if the First-Out Secured Parties shall have consented to
such sale or Disposition, such motion to sell or Dispose or such bidding
procedure for such sale or Disposition of such Shared Collateral provided that
(a) all First-Out Liens and Second-Out Liens will attach to the Proceeds of the
sale in the same respective priorities as set forth in this Agreement or (b) the
net cash Proceeds of any Disposition under Section 363(b) of the Bankruptcy Code
are permanently applied to the DIP Financing or to the First-Out Obligations.
(e)    The Second-Out Agent, for itself and on behalf of each other Second-Out
Secured Party waives any claim that may be had against the First-Out Agent or
any other First-Out Secured Party arising out of any DIP Financing Liens or
administrative expense priority under Section 364 of the Bankruptcy Code (in
each case that is granted in a manner that is consistent with this Agreement).

(f)    The Second-Out Agent, for itself and on behalf of each other Second-Out
Secured Party, agrees that neither the Second-Out Agent nor any other Second-Out
Secured Party will file or prosecute in any Insolvency or Liquidation Proceeding
any motion for adequate protection (or any comparable request for relief),
including for payment of Post-Petition Interest, based upon their interest in
the Shared Collateral, nor object to, oppose or contest (or join with or support
any third party objecting to, opposing or contesting) (i) any request by the
First-Out Agent or any other First-Out Secured Party for adequate protection,
including for payment of Post-Petition Interest, or (ii) any objection by the
First-Out Agent or any other First-Out Secured Party to any motion, relief,
action or proceeding based on the First-Out Agent or First-Out Secured Parties
claiming a lack of adequate protection, except that the Second-Out Secured
Parties may:

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(i)    freely seek and obtain relief granting adequate protection in the form of
a replacement lien or additional collateral co-extensive in all respects with,
but with the same relative priority to the First-Out Liens as existed prior to
the commencement of the Insolvency or Liquidation Proceeding, all Liens or
additional collateral granted in the Insolvency or Liquidation Proceeding to, or
for the benefit of, the First-Out Secured Parties (with any such resulting
collateral constituting Shared Collateral hereunder and subject to the terms of
this Agreement, including Section 6.01);

(ii)    freely seek and obtain relief granting adequate protection in the form
of superpriority claims to the same extent granted to the First-Out Secured
Parties; and

(iii)    freely seek and obtain any relief upon a motion for adequate protection
(or any comparable relief), without any condition or restriction whatsoever, at
any time after the Discharge of First-Out Obligations.

(g)    To the extent the Second-Out Obligations and the First-Out Obligations
are classified in the same class under a plan of reorganization, the Second-Out
Agent, for itself and on behalf of each of the other of the Second-Out Secured
Parties waives any claim it or any such other Second-Out Secured Party may now
or hereafter have against the First-Out Agent or any other First-Out Secured
Party (or their representatives) arising out of any election by the First-Out
Agent or any First-Out Secured Parties, in any proceeding instituted under the
Bankruptcy Code, of the application of Section 1111(b) of the Bankruptcy Code.

(h)    The Second-Out Agent, for itself and on behalf of each other Second-Out
Secured Party, agrees that in any Insolvency or Liquidation Proceeding, neither
the Second-Out Agent nor any other Second-Out Secured Party shall support or
vote to accept any plan of reorganization of the Borrower or any other Grantor
unless (i) such plan is accepted by the First-Out Secured Parties in accordance
with Section 1126(c) of the Bankruptcy Code or otherwise provides for the
Discharge of First-Out Obligations on the effective date of such plan of
reorganization or (ii) such plan provides on account of the First-Out
Obligations for the retention by the First-Out Agent, for the benefit of the
First-Out Secured Parties, of the Liens on the Shared Collateral securing the
First-Out Obligations, and on all Proceeds thereof whenever received, and such
plan also provides that any Liens retained by, or granted to, the Second-Out
Agent are only on property securing the First-Out Obligations and shall have the
same relative priority with respect to the Shared Collateral or other property
(including the same relative priority with respect to proceeds of such Shared
Collateral or other property), respectively, as provided in this Agreement with
respect to the Shared Collateral. Except as provided herein, the Second-Out
Secured Parties shall remain entitled to vote their claims in any such
Insolvency or Liquidation Proceeding.

(i)    The Second-Out Agent, for itself and on behalf of each other Second-Out
Secured Party, agrees that neither the Second-Out Agent nor any other Second-Out
Secured Party shall seek relief (or support any other party seeking relief),
pursuant to Section 362(d) of the Bankruptcy Code or otherwise, from the
automatic stay of Section 362(a) of the Bankruptcy Code or from any other stay
in any Insolvency or Liquidation Proceeding in respect of the Shared Collateral
without the prior written consent of the First-Out Agent.

(j)    The Second-Out Agent, for itself and on behalf of each other Second-Out
Secured Party, agrees that neither the Second-Out Agent nor any other Second-Out
Secured Party shall oppose or seek to challenge any claim by the First-Out Agent
or any other First-Out Secured Party for

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allowance or payment in any Insolvency or Liquidation Proceeding of First-Out
Obligations consisting of Post-Petition Interest or cash collateralization of
all letters of credit to the extent of the value of the First-Out Liens (it
being understood that such value will be determined without regard to the
existence of the Second-Out Liens on the Shared Collateral) subject to the
First-Out Priority Cap. Neither the First-Out Agent nor any other First-Out
Secured Party shall oppose or seek to challenge any claim by the Second-Out
Agent or any other Second-Out Secured Party for allowance or payment in any
Insolvency or Liquidation Proceeding of Second-Out Obligations consisting of
post-petition interest, fees or expenses to the extent of the value of the
Second-Out Liens on the Shared Collateral; provided that if the First-Out Agent
or any other First-Out Secured Party shall have made any claim for post-petition
interest, fees or expenses in respect of the First-Out Obligations, such claim
(i) shall have been approved or (ii) will be approved contemporaneously with the
approval of any such claim by the Second-Out Agent or any Second-Out Secured
Party and, to the extent the Second-Out Secured Parties receive any payment on
account of such claims for post-petition interest in respect of the Second-Out
Obligations and the First-Out Secured Parties are not entitled to or do not
receive payment on account of its claims for post-petition interest, the amounts
received by the Second-Out Secured Parties on account of post-petition interest
shall be delivered to the First-Out Agent for application pursuant to Section
6.01 unless otherwise consented to the by the First-Out Agent.

(k)Without the express written consent of the First-Out Agent, none of the
Second-Out Agent or any other Second-Out Secured Party shall (or shall join with
or support any third party in opposing, objecting to or contesting, as the case
may be), in any Insolvency or Liquidation Proceeding involving any Grantor, (i)
oppose, object to or contest the determination of the extent of any Liens held
by any of First-Out Secured Party or the value of any claims of any such holder
under Section 506(a) of the Bankruptcy Code or (ii) oppose, object to or contest
the payment to the First-Out Secured Party of interest, fees or expenses under
Section 506(b) of the Bankruptcy Code, in each case, not in excess of the
First-Out Priority Cap.

(l)Notwithstanding anything to the contrary contained herein, if in any
Insolvency or Liquidation Proceeding a determination is made that any Lien
encumbering any Shared Collateral is not enforceable for any reason, then the
Second-Out Agent for itself and on behalf of each other Second-Out Secured Party
agrees that, any distribution or recovery they may receive in respect of any
Shared Collateral (including assets that would constitute Shared Collateral but
for such determination) shall be segregated and held in trust and forthwith paid
over to the First-Out Agent for the benefit of the First-Out Secured Parties in
the same form as received without recourse, representation or warranty (other
than a representation of the Second-Out Agent that it has not otherwise sold,
assigned, transferred or pledged any right, title or interest in and to such
distribution or recovery) but with any necessary endorsements or as a court of
competent jurisdiction may otherwise direct. The Second-Out Agent, for itself
and on behalf of each other Second-Out Secured Party hereby appoints the
First-Out Agent, and any officer or agent of the First-Out Agent, with full
power of substitution, the attorney-in-fact of each Second-Out Secured Party for
the limited purpose of carrying out the provisions of this Section 4.02(l) and
taking any action and executing any instrument that the First-Out Agent may deem
necessary or advisable to accomplish the purposes of this Section 4.02(l), which
appointment is irrevocable and coupled with an interest.

(m)The Second-Out Agent, for itself and on behalf of each other Second-Out
Secured Party, hereby agrees that the First-Out Agent shall have the right to
credit bid the First-Out Obligations and further that none of the Second-Out
Agent or any other Second-Out Secured Party shall (or shall join with or support
any third party in opposing, objecting to or contesting, as the case may be)
oppose, object to or contest such credit bid by the First-Out Agent. The
Second-Out Secured Parties may

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credit bid, or instruct the Second-Out Agent to credit bid the Second-Out
Obligations in accordance with Sections 363(k) or 1129 of the Bankruptcy Code or
any other applicable law, only if such bid includes a cash payment sufficient to
provide for the Discharge of First-Out Obligations and the Discharge of
First-Out Obligations occurs immediately after giving effect to such credit bid,
or if the First-Out Agent otherwise consents in writing.

(n)Without the consent of the First-Out Agent in its sole discretion, the
Second-Out Agent, for itself and on behalf of each other Second-Out Secured
Party agrees neither the Second-Out Agent nor any Second-Out Secured Party shall
commence or join with any parties to commence an involuntary bankruptcy petition
for the Borrower or any of its subsidiaries, or support entry of an order for
relief in any involuntary bankruptcy proceedings against the Borrower or any of
its subsidiaries, or seek the appointment of an examiner or a trustee for the
Borrower or any of its subsidiaries.
(o)The Second-Out Agent, for itself and on behalf of each other Second-Out
Secured Party waives any right to assert or enforce any claim under Section
506(c) or 552 of the Bankruptcy Code as against any First-Out Secured Party or
any of the Shared Collateral.

(p)The Borrower, each Grantor, the First-Out Agent (on behalf of each First-Out
Secured Party) and the Second-Out Agent (on behalf of each Second-Out Secured
Party) acknowledges and intends that the grants of Liens pursuant to the
First-Out Documents, on the one hand, and the Second-Out Documents, on the other
hand, constitute separate and distinct grants of Liens, and because of, among
other things, their differing priority in right of recovery on the Shared
Collateral with respect to the Proceeds of the Shared Collateral, each of the
First-Out Obligations, on the one hand, and the Second-Out Obligations, on the
other hand, are fundamentally different from one another and must be separately
classified in any plan of reorganization or similar dispositive restructuring
plan proposed or confirmed (or approved) in an Insolvency or Liquidation
Proceeding. To further effectuate the intent of the parties as provided in the
immediately preceding sentence, if it is held that the claims of any of the
First-Out Secured Parties, on the one hand, and the Second-Out Secured Parties,
on the other hand, constitute claims in the same class (rather than separate
classes of secured claims), then the Second-Out Secured Parties hereby
acknowledge and agree (x) to vote to reject such plan of reorganization or
similar dispositive restructuring plan unless the First-Out Secured Parties
holding greater than half in number and two-thirds in amount of the First-Out
Obligations agree to accept such plan or such plan provides for the Discharge of
First-Out Obligations, (y) that all distributions from the Shared Collateral
shall be made as if there were separate classes of First-Out Obligations and
Second-Out Obligations against the Grantors, with the effect being that, to the
extent that the aggregate value of the Shared Collateral is sufficient (for this
purpose ignoring all claims held by the other secured parties), the First-Out
Secured Parties, shall be entitled to receive, in addition to amounts
distributed to them in respect of principal, prepetition interest and other
claims, Post-Petition Interest, before any distribution is made in respect of
the Second-Out Obligations (or any claims, including in respect of post-petition
interest, fees or expenses, related thereto) from, or with respect to, such
Shared Collateral, with each holder of the Second-Out Obligations (and/or any
claim, post-petition interest, fees or expenses, related thereto) hereby
acknowledging and agreeing to turn over to the First-Out Secured Parties amounts
otherwise received or receivable by them from, or with respect to, such Shared
Collateral to the extent necessary to effectuate the intent of this sentence,
even if such turnover has the effect of reducing their aggregate recoveries. The
First-Out Agent (on behalf of all First-Out Secured Parties) and the Second-Out
Agent (on behalf of all Second-Out Secured Parties) each hereby agree it shall
not object to or contest (or support any other party in objection or contesting)
a plan of reorganization or other dispositive restructuring plan on the grounds
that the First-Out Obligations and Second-Out Obligations are classified
separately.

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Section 4.03    Reinstatement. If any First-Out Secured Party is required in any
Insolvency or Liquidation Proceeding or otherwise to turn over or otherwise pay
to the estate of any Grantor any amount (a “Recovery”) for any reason
whatsoever, then the First-Out Obligations shall be reinstated to the extent of
such Recovery and the First-Out Secured Parties shall be entitled to a
reinstatement of First-Out Obligations with respect to all such recovered
amounts. The Second-Out Agent, for itself and on behalf of each other Second-Out
Secured Party agrees that if, at any time, a Second-Out Secured Party receives
notice of any Recovery, the Second-Out Agent and each other Second-Out Secured
Party, shall promptly pay over to the First-Out Agent any payment that is not
permitted hereunder to be received by the Second-Out-Secured Parties received by
it and then in its possession or under its control in respect of any Shared
Collateral and shall promptly turn any Shared Collateral then held by it over to
the First-Out Agent, and the provisions set forth in this Agreement shall be
reinstated as if such payment had not been made. If this Agreement shall have
been terminated prior to any such Recovery, this Agreement shall be reinstated
in full force and effect, and such prior termination shall not diminish,
release, discharge, impair or otherwise affect the obligations of the parties
hereto from such date of reinstatement. Any Shared Collateral or Proceeds
thereof that is not permitted hereunder to be received by the Second-Out Secured
Parties received by the Second-Out Agent or any other Second-Out Secured Party
and then in its possession or under its control on account of the Second Out
Obligations after the termination of this Agreement shall, in the event of a
reinstatement of this Agreement pursuant to this Section 4.03, be held in trust
for and paid over to the First-Out Agent for the benefit of the First-Out
Secured Parties for application to the reinstated First-Out Obligations until
the discharge thereof. This Section 4.03 shall survive termination of this
Agreement.

Section 4.04    Refinancings; Additional Second-Out Debt.

(a)    The First-Out Obligations and the Second-Out Obligations may be Replaced,
by any First-Out Substitute Credit Facility or Second-Out Substitute Credit
Facility, respectively, in each case, without notice to, or the consent of any
Priority Secured Party, all without affecting the Lien priorities provided for
herein or the other provisions hereof; provided, that (i) the First-Out Agent
and the Second-Out Agent shall receive on or prior to incurrence of a First-Out
Substitute Credit Facility or Second-Out Substitute Credit Facility (A) an
Officers’ Certificate from the Borrower stating that (I) the incurrence thereof
is permitted by each applicable Priority Debt Document and (II) the applicable
requirements of this Section 4.04, have been satisfied, and (B) a Priority
Confirmation Joinder from the holders or lenders of any indebtedness that
Replaces the First-Out Obligations or the Second-Out Obligations (or an
authorized agent, trustee or other representative on their behalf), (ii) the
aggregate outstanding principal amount of the First-Out Obligations, after
giving effect to such First-Out Substitute Credit Facility, shall not exceed the
First-Out Priority Cap and (iii) on or before the date of such incurrence, such
First-Out Substitute Credit Facility or Second-Out Substitute Credit Facility is
designated by the Borrower, in an Officers’ Certificate delivered to the
First-Out Agent and the Second-Out Agent, as “First-Out Debt” or “Second-Out
Debt”, as applicable, for the purposes of the Priority Debt Documents and this
Agreement; provided that no series of Priority Debt may be designated as more
than one of First-Out Debt or Second-Out Debt.

(b)    The Borrower will be permitted to designate as an additional holder of
Second-Out Obligations hereunder each Person who is, or who becomes, the
registered holder of Second-Out Debt, incurred by the Borrower after the date of
this Agreement to the extent, but only to the extent, permitted and otherwise in
accordance with the terms of all applicable Priority Debt Documents. The
Borrower may effect such designation by delivering to the First-Out Agent and
the Second-Out Agent each of the following:

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(i)    an Officer’s Certificate stating that the Borrower intends to incur
Additional Second-Out Obligations which will be Second-Out Debt permitted to be
incurred by each applicable Priority Debt Document and secured by a Second-Out
Lien, equally and ratably with all previously existing and future Second-Out
Debt;

(ii) an authorized agent, trustee or other representative on behalf of the
holders or lenders of any Additional Second-Out Obligations must be designated
as an additional holder of Priority Obligations hereunder and must, prior to
such designation, sign and deliver on behalf of the holders or lenders of such
Additional Second-Out Obligations a Priority Confirmation Joinder, and, to the
extent necessary or appropriate to facilitate such transaction, a new
intercreditor agreement substantially similar to this Agreement, as in effect on
the date hereof.

(iii)    evidence that the Borrower has duly authorized, executed (if
applicable) and recorded (or caused to be recorded) in each appropriate
governmental office all relevant filings and recordations deemed necessary by
the Borrower and the holder of such Additional Second-Out Obligations, or its
Priority Debt Representative, to ensure that the Additional Second-Out
Obligations are secured by the Shared Collateral in accordance with the
Second-Out Security Documents (provided that such filings and recordings may be
authorized, executed and recorded following any incurrence on a post-closing
basis if permitted by the Second-Out Agent for such Additional Second-Out
Obligations).

Notwithstanding the foregoing, nothing in this Agreement will be construed to
allow the Borrower or any other Grantor to incur additional indebtedness unless
otherwise permitted by the terms of each applicable Priority Debt Document.
(c)    Each of the then-existing First-Out Agent and the Second-Out Agent shall
be authorized to execute and deliver such documents and agreements (including
amendments or supplements to this Agreement) as such holders, lenders, agent,
trustee or other representative may reasonably request to give effect to any
such Replacement or any incurrence of Additional Second-Out Obligations, it
being understood that the First-Out Agent and the Second-Out Agent or (if
permitted by the terms of the applicable Priority Debt Documents) the Grantors,
without the consent of any other Priority Secured Party or (in the case of the
Grantors) one or more Priority Debt Representatives, may amend, supplement,
modify or restate this Agreement to the extent necessary or appropriate to
facilitate such amendments or supplements to effect such Replacement or
incurrence all at the expense of the Grantors. Upon the consummation of such
Replacement or incurrence and the execution and delivery of the documents and
agreements contemplated in the preceding sentence, the holders or lenders of
such indebtedness and any authorized agent, trustee or other representative
thereof shall be entitled to the benefits of this Agreement.

Section 4.05    Amendments to Priority Debt Documents . (a)     Prior to the
Discharge of First-Out Obligations, without the prior written consent of the
First-Out Agent, no Second-Out Document may be amended, supplemented, restated
or otherwise modified and/or refinanced or entered into to the extent such
amendment, supplement, restatement or modification and/or refinancing, or the
terms of any new Second-Out Document would (i) adversely affect the lien
priority rights of the First-Out Secured Parties or the rights of the First-Out
Secured Parties to receive payments owing pursuant to the First-Out Documents,
(ii) except as otherwise provided for in this Agreement, add any Liens securing
any additional Property as Second-Out Collateral under the Second-Out Security
Documents unless such additional Property is added as First-Out Collateral under
the First-Out Security Documents, (iii) taken

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as a whole, be adverse to the First-Out Secured Parties, or (iv) contravene the
provisions of this Agreement .

(b)Except as to interest rates, premiums, fees, and covenants and other
provisions applicable to periods after the maturity date of the First-Out Credit
Facility, the Second-Out Credit Facility shall have terms that are no more
favorable to the Second-Out Secured Parties in any material respect, taken as a
whole, than the First-Out Credit Facility as in effect on the date hereof.

(c)    In the event that any Second-Out Document is amended to add or make
materially more restrictive on any restricted person any event of default or any
covenant with respect to the Second-Out Document or make any change to any event
of default or any covenant which would have the effect of making such event of
default or covenant materially more restrictive on any restricted person, the
Borrower will offer a corresponding amendment to any comparable provision of the
First-Out Documents to the First-Out Secured Parties.

(d)    To the extent the consent of the “Priority Lien Agent” (as defined in the
Second Lien Intercreditor Agreement) is required to an amendment, supplement,
restatement or other modification to the Second Lien Intercreditor Agreement,
such consent shall only be provided if both the First-Out Agent and the
Second-Out Agent agree in writing to such amendment, supplement, restatement or
other modifications.

(e)    Without the prior written consent of the Second-Out Agent, the definition
of “Obligations” in the First-Out Credit Agreement may not be amended or
modified to the extent such amendment or modification would result in the
Second-Out Obligations not constituting a “Priority Lien Obligation” under (and
as defined in) the Second Lien Intercreditor Agreement.

Section 4.07    Legends. The Second-Out Agent acknowledges with respect to the
Second-Out Security Documents, that the Second-Out Documents (other than control
agreements to which both the First-Out Agent and the Second-Out Agent are
parties), and each associated Second-Out Security Document (other than control
agreements to which both the First-Out Agent and the Second-Out Agent are
parties) granting any security interest in the Shared Collateral will contain
the appropriate legend set forth on Annex I or a legend in such other form
acceptable to the First-Out Agent.

Section 4.07    Second-Out Secured Parties Rights as Unsecured Creditors;
Judgment Lien Creditor. Both before and during an Insolvency or Liquidation
Proceeding, any of the Second-Out Secured Parties may take any actions and
exercise any and all rights that would be available to a holder of unsecured
claims; provided, however, that the Second-Out Secured Parties may not take any
of the actions prohibited by Sections 3.01, 3.05(a), 4.01 or 4.02 or any other
provisions of this Agreement; provided, further that in the event that any of
the Second-Out Secured Parties becomes a judgment lien creditor in respect of
any Shared Collateral as a result of its enforcement of its rights as an
unsecured creditor with respect to the Second-Out Obligations, such judgment
lien shall be subject to the terms of this Agreement for all purposes (including
in relation to the First-Out Obligations) as the Second-Out Liens are subject to
this Agreement.

Section 4.08    Postponement of Subrogation. The Second-Out Agent, for itself
and on behalf of each other Second-Out Secured Party, hereby agrees that no
payment or distribution to any First-Out Secured Party pursuant to the
provisions of this Agreement shall entitle any Second-Out Secured Party to
exercise any rights of subrogation in respect thereof until the Discharge of
First-Out Obligations shall have occurred. Following the Discharge of First-Out
Obligations, but subject to the reinstatement as

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provided in Section 4.03, each First-Out Secured Party will execute such
documents, agreements, and instruments as any Second-Out Secured Party may
reasonably request to evidence the transfer by subrogation to any such Person of
an interest in the First-Out Obligations resulting from payments or
distributions to such First-Out Secured Party by such Person, so long as all
costs and expenses (including all reasonable legal fees and disbursements)
incurred in connection therewith by such First-Out Secured Party are paid by
such Person upon request for payment thereof.

Section 4.09    Acknowledgment by the Secured Debt Representatives. Each of the
First-Out Agent, for itself and on behalf of the other First-Out Secured Parties
and the Second-Out Agent, for itself and on behalf of the other Second-Out
Secured Parties, hereby acknowledges that this Agreement is a material
inducement to enter into a business relationship, that each has relied on this
Agreement to amend the Original First-Out Credit Agreement, to permit the
incurrence of the Second-Out Debt and to enter into the Original Second-Out
Credit Agreement, as applicable, and all documentation related thereto, and that
each will continue to rely on this Agreement in their related future dealings.

ARTICLE V
GRATUITOUS BAILMENT FOR PERFECTION OF CERTAIN SECURITY INTERESTS

Section 5.01    General. Prior to the Discharge of First-Out Obligations, the
First-Out Agent agrees that if it shall at any time hold a First-Out Lien on any
Shared Collateral that can be perfected by the possession or control of such
Collateral or of any Account in which such Shared Collateral is held, and if
such Shared Collateral or any such Account is in fact in the possession or under
the control of the First-Out Agent, the First-Out Agent will serve as gratuitous
bailee for the Second-Out Agent for the sole purpose of perfecting the
Second-Out Lien of the Second-Out Agent on such Shared Collateral. It is agreed
that the obligations of the First-Out Agent and the rights of the Second-Out
Agent and the other Second-Out Secured Parties in connection with any such
bailment arrangement will be in all respects subject to the provisions of
Article II. Notwithstanding anything to the contrary herein, the First-Out Agent
will be deemed to make no representation as to the adequacy of the steps taken
by it to perfect the Second-Out Lien on any such Shared Collateral and shall
have no responsibility, duty, obligation or liability to the Second-Out Agent or
any other Second-Out Secured Party or any other Person for such perfection or
failure to perfect, it being understood that the sole purpose of this Article is
to enable the Second-Out Secured Parties to obtain a perfected Second-Out Lien
in such Shared Collateral to the extent, if any, that such perfection results
from the possession or control of such Shared Collateral or any such Account by
the First-Out Agent. The First-Out Agent acting pursuant to this Section 5.01
shall not have by reason of the First-Out Security Documents, the Second-Out
Security Documents, this Agreement or any other document or theory, a fiduciary
relationship in respect of any First-Out Secured Party, the Second-Out Agent or
any Second-Out Secured Party. Subject to Section 4.03, from and after the
Discharge of First-Out Obligations, the First-Out Agent shall take all such
actions in its power as shall reasonably be requested by the Second-Out Agent
(at the sole cost and expense of the Grantors) to transfer possession or control
of such Shared Collateral or any such Account (in each case to the extent the
Second-Out Agent has a Lien on such Shared Collateral or Account after giving
effect to any prior or concurrent releases of Liens) to the Second-Out Agent for
the benefit of all Second-Out Secured Parties.

Section 5.02    Deposit Accounts. Prior to the Discharge of First-Out
Obligations, to the extent that any Account is under the control of the
First-Out Agent at any time, the First-Out Agent will act as gratuitous bailee
on behalf of the Second-Out Agent for the purpose of perfecting the Liens of the
Second-Out Secured Parties in such Accounts and the cash and other assets
therein as provided in Section 5.01 (but will have no duty, responsibility or
obligation to the Second-Out Secured Parties (including, without

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limitation, any duty, responsibility or obligation as to the maintenance of such
control, the effect of such arrangement or the establishment of such perfection)
except as set forth in the last sentence of this Section 5.02). Unless the
Second-Out Liens on such Shared Collateral shall have been or concurrently are
released, after the occurrence of Discharge of First-Out Obligations, the
First-Out Agent shall, at the request of the Second-Out Agent, cooperate with
the Grantors and the Second-Out Agent (at the expense of the Grantors) in
permitting control of any other Accounts to be transferred to the Second-Out
Agent (or for other arrangements with respect to each such Accounts satisfactory
to the Second-Out Agent to be made).
ARTICLE VI
APPLICATION OF PROCEEDS; DETERMINATION OF AMOUNTS

Section 6.01    Application of Proceeds. Prior to the Discharge of First-Out
Obligations, and regardless of whether an Insolvency or Liquidation Proceeding
has been commenced, Collateral or Proceeds received or payable in connection
with the enforcement or exercise of any rights or remedies with respect to any
portion of the Shared Collateral or pursuant to a plan of reorganization or
similar dispositive restructuring plan, will be applied:

(a)    first, to the First-Out Agent for application to the First-Out
Obligations that are not Excess First-Out Obligations in accordance with the
First-Out Documents, until the Discharge of the First-Out Obligations has
occurred other than with respect to the Excess First-Out Obligations,
(b)    second, to the Second-Out Agent for application to the Second-Out
Obligations in accordance with the Second-Out Documents, until the Second-Out
Obligations are repaid in full and in cash, and

(c)    third, to the payment in full in cash of all Excess First-Out
Obligations;

(d)    fourth, to the Borrower or as otherwise required by the Second Lien
Intercreditor Agreement or by applicable law.

Section 6.02    Determination of Amounts. Whenever a Priority Debt
Representative shall be required, in connection with the exercise of its rights
or the performance of its obligations hereunder, to determine the existence or
amount of any First-Out Obligations (or the existence of any commitment to
extend credit that would constitute First-Out Obligations), or Second-Out
Obligations, or the existence of any Lien securing any such obligations, or the
Shared Collateral subject to any such Lien, it may request that such information
be furnished to it in writing by the other Priority Debt Representative and
shall be entitled to make such determination on the basis of the information so
furnished; provided, however, that if a Priority Debt Representative shall fail
or refuse reasonably promptly to provide the requested information, the
requesting Priority Debt Representative shall be entitled to make any such
determination by such method as it may, in the exercise of its good faith
judgment, determine, including by reliance upon a certificate of the Borrower.
Each Priority Debt Representative may rely conclusively, and shall be fully
protected in so relying, on any determination made by it in accordance with the
provisions of the preceding sentence (or as otherwise directed by a court of
competent jurisdiction) and shall have no liability to the Borrower or any of
their subsidiaries, any Priority Secured Party or any other Person as a result
of such determination.
ARTICLE VII
NO RELIANCE; NO LIABILITY; OBLIGATIONS ABSOLUTE; CONSENT OF GRANTORS; ETC.
Section 7.01    No Reliance; Information. The First-Out Secured Parties and the
Second-Out Secured Parties shall have no duty to disclose to any Second-Out
Secured Party or to any First-Out

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Secured Party, respectively, any information relating to the Borrower or any of
the other Grantors, or any other circumstance bearing upon the risk of
non-payment of any of the First-Out Obligations or the Second-Out Obligations,
respectively, that is known or becomes known to any of them or any of their
Affiliates. In the event any First-Out Secured Party or any Second-Out Secured
Party, in its sole discretion, undertakes at any time or from time to time to
provide any such information to, any Second-Out Secured Party or any First-Out
Secured Party, respectively, it shall be under no obligation (a) to make, and
shall not make or be deemed to have made, any express or implied representation
or warranty, including with respect to the accuracy, completeness, truthfulness
or validity of the information so provided, (b) to provide any additional
information or to provide any such information on any subsequent occasion or (c)
to undertake any investigation.

Section 7.02    No Warranties or Liability.

(q)The First-Out Agent, for itself and on behalf of the other First-Out Secured
Parties, acknowledges and agrees that, except for the representations and
warranties set forth in Article VIII, neither the Second-Out Agent nor any other
Second-Out Secured Party has made any express or implied representation or
warranty, including with respect to the execution, validity, legality,
completeness, collectability or enforceability of any of the Second-Out
Documents, the ownership of any Shared Collateral or the perfection or priority
of any Liens thereon.

(r)The Second-Out Agent, for itself and on behalf of the other Second-Out
Secured Parties, acknowledges and agrees that, except for the representations
and warranties set forth in Article VIII, neither the First-Out Agent nor any
other First-Out Secured Party has made any express or implied representation or
warranty, including with respect to the execution, validity, legality,
completeness, collectability or enforceability of any of the First-Out
Documents, the ownership of any Shared Collateral or the perfection or priority
of any Liens thereon.

(s)The First-Out Agent and the other First-Out Secured Parties shall have no
express or implied duty to the Second-Out Agent or any other Second-Out Secured
Party and the Second-Out Agent and the other Second-Out Secured Parties shall
have no express or implied duty to the First-Out Agent or any other First-Out
Secured Party to act or refrain from acting in a manner which allows, or results
in, the occurrence or continuance of a default or an event of default under any
First-Out Document and any Second-Out Document (other than, in each case, this
Agreement), regardless of any knowledge thereof which they may have or be
charged with.

(t)The Second-Out Agent, for itself and on behalf of each other Second-Out
Secured Party hereby waives any claim that may be had against the First-Out
Agent or any other First-Out Secured Party arising out of any actions which the
First-Out Agent or such First-Out Secured Party takes or omits to take
(including actions with respect to the creation, perfection or continuation of
Liens on any Shared Collateral, actions with respect to the foreclosure upon,
sale, release or depreciation of, or failure to realize upon, any Shared
Collateral, and actions with respect to the collection of any claim for all or
only part of the First-Out Obligations from any account debtor, guarantor or any
other party) in accordance with this Agreement and the First-Out Documents or
the valuation, use, protection or release of any security for such First-Out
Obligations.

Section 7.03    Obligations Absolute. Subject in all respects to Sections
2.01(c) and 6.02 and the First-Out Priority Cap, the payment priorities provided
for herein and the respective rights, interests, agreements and obligations
hereunder of the First-Out Agent and the other First-Out Secured Parties

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and the Second-Out Agent and the other Second-Out Secured Parties shall remain
in full force and effect irrespective of:

(a)    any lack of validity or enforceability of any Priority Debt Document;

(b)    any change in the time, place or manner of payment of, or in any other
term of (including the Replacing of), all or any portion of the First-Out
Obligations, it being specifically acknowledged that a portion of the First-Out
Obligations consists or may consist of Indebtedness that is revolving in nature,
and the amount thereof that may be outstanding at any time or from time to time
may be increased or reduced and subsequently reborrowed;

(c)    any amendment, waiver or other modification, whether by course of conduct
or otherwise, of any Priority Debt Document;
(d)    the securing of any First-Out Obligations or Second-Out Obligations with
any additional collateral or guarantees, or any exchange, release, voiding,
avoidance or non-perfection of any security interest in any Shared Collateral or
any other collateral or any release of any guarantee securing any First-Out
Obligations or Second-Out Obligations;
(e)    the commencement of any Insolvency or Liquidation Proceeding in respect
of the Borrower or any other Grantor; or
(f)    any other circumstances that otherwise might constitute a defense
available to, or a discharge of, the Borrower or any other Grantor in respect of
the First-Out Obligations or the Second-Out Obligations.

Section 7.04    Grantors Consent. Each Grantor hereby consents to the provisions
of this Agreement and the intercreditor arrangements provided for herein and
agrees that the obligations of the Grantors under the Priority Debt Documents
will in no way be diminished or otherwise affected by such provisions or
arrangements (except as expressly provided herein).

ARTICLE VIII
REPRESENTATIONS AND WARRANTIES

Section 8.01    Representations and Warranties of Each Party. Each party hereto
represents and warrants to the other parties hereto as follows:

(a)    Such party is duly organized, validly existing and in good standing under
the laws of the jurisdiction of its organization and has all requisite power and
authority to enter into and perform its obligations under this Agreement.

(b)    This Agreement has been duly executed and delivered by such party.

(c)    The execution, delivery and performance by such party of this Agreement
(i) do not require any consent or approval of, registration or filing with or
any other action by any Governmental Authority of which the failure to obtain
could reasonably be expected to have a Material Adverse Effect (as defined in
the First-Out Credit Agreement), (ii) will not violate any applicable law or
regulation or any order of any Governmental Authority or any indenture,
agreement or other instrument binding upon such party which could reasonably be
expected to have a Material Adverse Effect and (iii) will not violate the
charter, by-laws or other organizational documents of such party.

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Section 8.02    Representations and Warranties of Each Representative. Each of
the First-Out Agent and the Second-Out Agent represents and warrants to the
other parties hereto that it is authorized under the Original First-Out Credit
Agreement and the Original Second-Out Credit Agreement, as the case may be, to
enter into this Agreement.
ARTICLE IX
MISCELLANEOUS
Section 9.01    Notices. All notices and other communications provided for
herein shall be in writing and shall be delivered by hand or overnight courier
service, mailed by certified or registered mail or sent by telecopy, as follows:

(a)    if to the First-Out Agent, to it at:
JPMorgan Chase Bank, N.A.
383 Madison Avenue, 24th Floor
New York, NY 10179
Fax: (917) 210-3391
Attention: Douglas Kravitz

(b)    if to the Second-Out Agent, to it at:
[contact information]
(c)    if to any other Priority Debt Representative, to such address as
specified in the Priority Confirmation Joinder.

Any party hereto may change its address or facsimile 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 (if a Business Day) and on the next Business Day thereafter (in all
other cases) if delivered by hand or overnight courier service or sent by
telecopy or on the date five Business Days after dispatch by certified or
registered mail if mailed, in each case delivered, sent or mailed (properly
addressed) to such party as provided in this Section 9.01 or in accordance with
the latest unrevoked direction from such party given in accordance with this
Section 9.01. As agreed to in writing among the Borrower, the First-Out Agent
and the Second-Out Agent from time to time, notices and other communications may
also be delivered by e-mail to the e-mail address of a representative of the
applicable person provided from time to time by such person.
Section 9.02    Waivers; Amendment. (a)    No failure or delay on the part of
any party hereto in exercising any right or power hereunder shall operate as a
waiver thereof, nor shall any single or partial exercise of any such right or
power, or any abandonment or discontinuance of steps to enforce such a right or
power, preclude any other or further exercise thereof or the exercise of any
other right or power. The rights and remedies of the parties hereto 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 consent to any
departure by any party therefrom shall in any event be effective unless the same
shall be permitted by paragraph (b) of this Section 9.02, and then such waiver
or consent shall be effective only in the specific instance and for the purpose
for which given. No notice or demand on any party hereto in any case shall
entitle such party to any other or further notice or demand in similar or other
circumstances.

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(b)    Neither this Agreement nor any provision hereof may be terminated,
waived, amended or modified except pursuant to an agreement or agreements in
writing entered into by each Priority Debt Representative; provided, however,
that this Agreement may be amended from time to time as provided in Section
4.04. Any amendment of this Agreement that is proposed to be effected without
the consent of a Priority Debt Representative as permitted by the proviso to the
preceding sentence shall be submitted to such Priority Debt Representative for
its review at least ten (10) Business Days prior to the proposed effectiveness
of such amendment.
Section 9.03    Actions Upon Breach; Specific Performance. (a)    Prior to the
Discharge of First-Out Obligations, if any Second-Out Secured Party, contrary to
this Agreement, commences or participates in any action or proceeding against
any Grantor or the Shared Collateral, such Grantor, with the prior written
consent of the First-Out Agent, may interpose as a defense or dilatory plea the
making of this Agreement, and any First-Out Secured Party may intervene and
interpose such defense or plea in its or their name or in the name of such
Grantor.

(b)    Prior to the Discharge of First-Out Obligations, should any Second-Out
Secured Party, contrary to this Agreement, in any way take, attempt to or
threaten to take any action with respect to the Shared Collateral (including any
attempt to realize upon or enforce any remedy with respect to this Agreement),
or take any other action in violation of this Agreement or fail to take any
action required by this Agreement, the First-Out Agent or any other First-Out
Secured Party (in its own name or in the name of the relevant Grantor) or the
relevant Grantor, with the prior written consent of the First-Out Agent, (A) may
obtain relief against such Second-Out Secured Party by injunction, specific
performance and/or other appropriate equitable relief, it being understood and
agreed by the Second-Out Agent on behalf of each Second-Out Secured Party that
(I) the First-Out Secured Parties' damages from its actions may at that time be
difficult to ascertain and may be irreparable, and (II) each Second-Out Secured
Party waives any defense that the Grantors and/or the First-Out Secured Parties
cannot demonstrate damage and/or be made whole by the awarding of damages, and
(B) shall be entitled to damages, as well as reimbursement for all reasonable
and documented costs and expenses incurred in connection with any action to
enforce the provisions of this Agreement.
Section 9.04    Parties in Interest. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective successors and
assigns, as well as the other Priority Secured Parties, all of whom are intended
to be bound by, and to be third party beneficiaries of, this Agreement.

Section 9.05    Survival of Agreement. All covenants, agreements,
representations and warranties made by any party in this Agreement shall be
considered to have been relied upon by the other parties hereto and shall
survive the execution and delivery of this Agreement.

Section 9.06    Counterparts. This 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. Delivery of an executed signature page to
this Agreement by facsimile transmission shall be as effective as delivery of a
manually signed counterpart of this Agreement.

Section 9.07    Severability. Any provision of this Agreement held to be
invalid, illegal or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such invalidity, illegality or
unenforceability without affecting the validity, legality and enforceability of
the remaining provisions hereof; and the invalidity of a particular provision in
a particular jurisdiction shall not invalidate such provision in any other
jurisdiction. The parties shall endeavor in good-faith

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negotiations to replace the invalid, illegal or unenforceable provisions with
valid provisions the economic effect of which comes as close as possible to that
of the invalid, illegal or unenforceable provisions.

Section 9.08    Governing Law; Jurisdiction; Consent to Service of Process. (a)
THIS AGREEMENT SHALL BE GOVERNED BY 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 nonexclusive 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 in
paragraph (b) of this Section 9.08. Each of the parties hereto hereby
irrevocably waives, to the fullest extent permitted by law, the defense of an
inconvenient forum to the maintenance of such action or proceeding in any such
court.
(d)    Each party to this Agreement irrevocably consents to service of process
in the manner provided for notices in Section 9.01. Nothing in this Agreement
will affect the right of any party to this Agreement to serve process in any
other manner permitted by law.
Section 9.09    WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES, TO THE
FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY
JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING
TO THIS AGREEMENT. EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT
OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT
SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE
FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE
BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL
WAIVERS AND CERTIFICATIONS IN THIS SECTION.

Section 9.10    Headings. Article, Section and Annex headings used herein are
for convenience of reference only, are not part of this Agreement and are not to
affect the construction of, or to be taken into consideration in interpreting,
this Agreement.

Section 9.11    Conflicts. In the event of any conflict or inconsistency between
the provisions of this Agreement and the provisions of any Priority Debt
Documents, the provisions of this Agreement shall control.

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Section 9.12    Provisions Solely to Define Relative Rights. The provisions of
this Agreement are and are intended solely for the purpose of defining the
distinct and separate relative rights of the First-Out Secured Parties and the
Second-Out Secured Parties. None of the Borrower, any other Grantor or any other
creditor thereof shall have any rights hereunder, except as expressly provided
in this Agreement (provided that nothing in this Agreement (other than Sections
4.01, 4.02, or 4.05) is intended to or will amend, waive or otherwise modify the
provisions of the Original First-Out Credit Agreement or the Original Second-Out
Credit Agreement, as applicable), and except as expressly provided in this
Agreement neither the Borrower nor any other Grantor may rely on the terms
hereof (other than Sections 4.01, 4.02, 4.04, or 4.05, Article V, Article VII
and Article IX). Nothing in this Agreement is intended to or shall impair the
obligations of the Borrower or any other Grantor, which are absolute and
unconditional, to pay the Obligations under the Priority Debt Documents as and
when the same shall become due and payable in accordance with their terms.
Notwithstanding anything to the contrary herein or in any Priority Debt
Document, the Grantors shall not be required to act or refrain from acting
pursuant to this Agreement, any First-Out Document or any Second-Out Document
with respect to any Shared Collateral in any manner that would cause a default
under any First-Out Document.

Section 9.13    Certain Terms Concerning the First-Out Agent and the Second-Out
Agent. Neither of the First-Out Agent nor the Second-Out Agent shall have any
liability or responsibility for the actions or omissions of any other Priority
Secured Party, or for any other Priority Secured Party's compliance with (or
failure to comply with) the terms of this Agreement. None of the First-Out Agent
or the Second-Out Agent shall have individual liability to any Person if it
shall mistakenly pay over or distribute to any Priority Secured Party (or the
Borrower) any amounts in violation of the terms of this Agreement, so long as
the First-Out Agent or the Second-Out Agent, as the case may be, is acting in
good faith. Each party hereto hereby acknowledges and agrees that each of the
First-Out Agent and the Second-Out Agent is entering into this Agreement solely
in its capacity under the First-Out Documents and the Second-Out Documents,
respectively, and not in its individual capacity. The First-Out Agent shall not
be deemed to owe any fiduciary duty to the Second-Out Agent or any other
Second-Out Secured Party and the Second-Out Agent shall not be deemed to owe any
fiduciary duty to the First-Out Agent or any other First-Out Secured Party.
Nothing herein shall be deemed to modify the terms of the First-Out Documents or
Second-Out Documents, as applicable, governing the standard of care as between
the First-Out Agent and the other First-Out Secured Parties and the Second-Out
Agent and the other Second-Out Secured Parties, respectively.

Section 9.14    Authorization of Secured Agents. By accepting the benefits of
this Agreement and the other First-Out Security Documents, each First-Out
Secured Party authorizes the First-Out Agent to enter into this Agreement and to
act on its behalf as collateral agent hereunder and in connection herewith. By
accepting the benefits of this Agreement and the other Second-Out Security
Documents, each Second-Out Secured Party authorizes the Second-Out Agent to
enter into this Agreement and to act on its behalf as collateral agent hereunder
and in connection herewith.

Section 9.15    Further Assurances. Each of the First-Out Agent, for itself and
on behalf of the other First-Out Secured Party and the Second-Out Agent, for
itself and on behalf of the other Second-Out Secured Parties, and each Grantor
party hereto, for itself and on behalf of its subsidiaries, agrees that it will
execute, or will cause to be executed, any and all further documents, agreements
and instruments, and take all such further actions, as may be required under any
applicable law, or which the First-Out Agent or the Second-Out Agent may
reasonably request, to effectuate the terms of this Agreement, including the
relative Lien priorities provided for herein.

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Section 9.16    Relationship of Secured Parties. Nothing set forth herein shall
create or evidence a joint venture, partnership or an agency or fiduciary
relationship among the Priority Secured Parties. None of the Priority Secured
Parties nor any of their respective directors, officers, agents or employees
shall be responsible to any other Priority Secured Party or to any other Person
for any Grantor's solvency, financial condition or ability to repay the
First-Out Obligations or the Second-Out Obligations, or for statements of any
Grantor, oral or written, or for the validity, sufficiency or enforceability of
the First-Out Documents or the Second-Out Documents, or any security interests
granted by any Grantor to any Priority Secured Party in connection therewith.
Each Priority Secured Party has entered into its respective financing agreements
with the Grantors based upon its own independent investigation, and neither of
the First-Out Agent nor the Second-Out Agent makes any warranty or
representation to the other Priority Debt Representatives or the Priority
Secured Parties for which it acts as agent nor does it rely upon any
representation of the other agents or the Priority Secured Parties for which it
acts as agent with respect to matters identified or referred to in this
Agreement.

Section 9.17 Incorporation of Rights, Privileges and Immunities. As between and
among the Borrower, the Grantors and the Original Section-Out Agent, the
Original Second-Out Agent shall have the rights, protections and immunities
granted to it under the Original Second Out Documents, all of which are
incorporated by reference herein mutatis mutandis. To the extent that such
rights, protections and immunities conflict with any provisions of this
Agreement (before giving effect to the immediately preceding sentence), this
Agreement shall control.

[Signature Pages Follow][Signature Page to Pari Passu Intercreditor Agreement]

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed by their respective authorized officers as of the day and year first
above written.
JPMORGAN CHASE BANK, N.A., as First-Out Agent for the First-Out Secured Parties
By:
 
 
Name:
 
Title:

    

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THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A., as Second-Out Agent for the
Second-Out Secured Parties
By:
 
 
Name:
 
Title:

CALIFORNIA RESOURCES CORPORATION
By:
 
 
Name:
 
Title:

[GRANTORS]
By:
 
 
Name:
 
Title:

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ANNEX I
to the Pari Passu Intercreditor Agreement

LEGEND
Reference is made to the Pari Passu Intercreditor Agreement, dated as of August
__, 2016 (the “Pari Passu Intercreditor Agreement”), setting forth the
respective rights and priorities of the First-Out Secured Parties and Second-Out
Secured Parties with respect to payments, rights in the Collateral granted under
this agreement, enforcement of remedies, bankruptcy issues and other customary
subordination and intercreditor provisions described herein. Each Second-Out
Secured Party, by accepting the benefits of the security provided hereby, (i)
agrees (or is deemed to agree) that it will be bound by, and will take no
actions contrary to, the provisions of the Pari Passu Intercreditor Agreement,
(ii) authorizes (or is deemed to authorize) the Collateral Agent on behalf of
such Person to enter into, and perform under, the Pari Passu Intercreditor
Agreement and (iii) acknowledges (or is deemed to acknowledge) that a copy of
the Pari Passu Intercreditor Agreement was delivered, or made available, to such
Second-Out Secured Party.
Notwithstanding any other provision contained herein, this agreement, the Liens
created hereby and the rights, remedies, duties and obligations provided for
herein are subject in all respects to the provisions of the Pari Passu
Intercreditor Agreement. In the event of any conflict or inconsistency between
the provisions of this agreement and the Pari Passu Intercreditor Agreement, the
provisions of the Pari Passu Intercreditor Agreement shall control.

EXHIBIT A
to Pari Passu Intercreditor Agreement
[FORM OF]
PRIORITY CONFIRMATION JOINDER
Reference is made to the Intercreditor Agreement, dated as of [____], 2016 (as
amended, supplemented, amended and restated or otherwise modified and in effect
from time to time, the “Intercreditor Agreement”) between JPMORGAN CHASE BANK,
N.A., as First-Out Agent for the First-Out Secured Parties (as defined therein),
and The Bank of New York Mellon Trust Company, N.A., as Second-Out Agent for the
Second-Out Secured Parties (as defined therein).
Capitalized terms used but not otherwise defined herein shall have the meaning
set forth in the Intercreditor Agreement. This Priority Confirmation Joinder is
being executed and delivered pursuant to Section 4.04[(a)][(b)] of the
Intercreditor Agreement as a condition precedent to the debt for which the
undersigned is acting as representative being entitled to the rights and
obligations of being [First-Out/Second-Out/Additional Second-Out] Obligations
under the Intercreditor Agreement.
1. Joinder. The undersigned, [_______________], a [_______________], (the “New
Representative”) as [trustee] [collateral trustee] [administrative agent]
[collateral agent] under that certain [describe applicable indenture, credit
agreement or other document governing the First-Out Substitute Credit Facility,
Second-Out Substitute Credit Facility or Additional Second-Out Credit Facility]
hereby:
(a)    represents that the New Representative has been authorized to become a
party to the Intercreditor Agreement on behalf of the [First-Out Secured Parties
under a First-Out Substitute Credit Facility] [Second-Out

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Secured Parties under the Second-Out Substitute Credit Facility] [Additional
Second-Out Secured Parties under the Additional Second-Out Credit Facility] as
[a First-Out Agent under a First-Out Substitute Credit Facility] [a Second-Out
Agent under a Second-Out Substitute Facility or Additional Second-Out Credit
Facility] under the Intercreditor Agreement for all purposes thereof on the
terms set forth therein, and to be bound by the terms of the Intercreditor
Agreement as fully as if the undersigned had executed and delivered the
Intercreditor Agreement as of the date thereof; and
(b)    agrees that its address for receiving notices pursuant to the
Intercreditor Agreement shall be as follows:
[Address];
2.    Priority Confirmation.
[Option A: to be used if additional debt constitutes replacement Priority Debt
Documents] The undersigned New Representative, on behalf of itself and each
Priority Secured Party for which the undersigned is acting as Priority Debt
Representative hereby agrees, for the benefit of all Priority Secured Parties
and each future Priority Debt Representative, and as a condition to being
treated as Priority Obligations under the Intercreditor Agreement, that the New
Representative is bound by the provisions of the Intercreditor Agreement,
including the provisions relating to the ranking of [Priority Liens]. [or]
[Option B: to be used if additional debt constitutes Second-Out Substitute
Credit Facility or Additional Second-Out Credit Facility] The undersigned New
Representative, on behalf of itself and each holder of Obligations in respect of
the Series of Second-Out Debt that constitutes a [Second-Out Substitute
Facility][Additional Second-Out Credit Facility] for which the undersigned is
acting as Second-Out Agent hereby agrees, for the benefit of all Priority
Secured Parties and each future Priority Debt Representative, and as a condition
to being treated as Priority Obligations under the Intercreditor Agreement,
that:
(a)    all Second-Out Obligations will be and are secured equally and ratably by
all Second-Out Liens at any time granted by the Borrower or any other Grantor to
secure any Obligations in respect of such Second-Out Debt, whether or not upon
property otherwise constituting Shared Collateral for such Second-Out Debt, and
that all such Second-Out Liens will be enforceable by the Second-Out Agent with
respect to such Second-Out Debt for the benefit of all Second-Out Secured
Parties equally and ratably;
(b)    the New Representative and each holder of Obligations in respect of the
Series of Second-Out Debt for which the undersigned is acting as Second-Out
Agent are bound by the provisions of the Intercreditor Agreement, including the
provisions relating to the ranking of First-Out Liens and Second-Out Liens and
the order of application of proceeds from enforcement of First-Out Liens and
Second-Out Liens; and
(c)    the New Representative and each holder of Obligations in respect of the
Series of Second-Out Debt for which the undersigned is acting as Second-Out
Agent appoints the Second Lien Collateral Agent and consents to the terms of the
Intercreditor Agreement and the performance by the Second Lien Collateral Agent
of, and directs the Second Lien Collateral Agent to perform, its obligations
under the Intercreditor Agreement and the Second Lien Collateral Agency
Agreement, together with all such powers as are reasonably incidental thereto.
3.    Full Force and Effect of Intercreditor Agreement. Except as expressly
supplemented hereby, the Intercreditor Agreement shall remain in full force and
effect.
4.    Governing Law and Miscellaneous Provisions. The provisions of Article IX
of the Intercreditor Agreement will apply with like effect to this Priority
Confirmation Joinder.

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5.    Expenses. The Borrower agrees to reimburse each Priority Debt
Representative for its reasonable out of pocket expenses in connection with this
Priority Confirmation Joinder, including the reasonable fees, other charges and
disbursements of counsel.

IN WITNESS WHEREOF, the parties hereto have caused this Priority Confirmation
Joinder to be executed by their respective officers or representatives as of
[______________], 20[_].
 
[insert name of New Representative]
 
 
 
 
 
By:
 
Name:
 
Title:

The First-Out Agent hereby acknowledges receipt of this Priority Confirmation
Joinder:
 
 
 
as First-Out Agent
 
 
 
By:
 
Name:
 
Title:

The Second-Out Agent hereby acknowledges receipt of this Priority Confirmation
Joinder:
 
 
 
as Second-Out Agent
 
 
 
By:
 
Name:
 
Title:

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Acknowledged and Agreed to by:
 
 
 
CALIFORNIA RESOURCES CORPORATION, as Borrower
 
 
 
 
 
By:
 
Name:
 
Title:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

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Acknowledged by:
JPMORGAN BANK, N.A.,
as the First-Out Agent and First-Out Authorized Representative,
By:
 
 
Name:
 
Title:

[________], as the Second-Out Agent
and Second-Out Authorized Representative,
By:
 
 
Name:
 
Title:

THE OTHER GRANTORS
LISTED ON SCHEDULE I HERETO
By:
 
 
Name:
 
Title:

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EXHIBIT B
to Pari Passu Intercreditor Agreement
SECURITY DOCUMENTS
PART A.
List of First-Out Security Documents
1.
[_____]

PART B.
List of Original Second-Out Security Documents
1.
[_____]

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EXHIBIT K
FORM OF ESCROW AGREEMENT
 

-SC1:4190905.7
11

ESCROW AGREEMENT

among

CALIFORNIA RESOURCES CORPORATION, as Borrower

and

THE BANK OF NEW YORK MELLON, as Escrow Agent

and

THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A.,
as Administrative Agent and Collateral Agent

dated as of August 12, 2016

ESCROW ACCOUNT NUMBER        9789218400

TITLE OF ACCOUNT            BNY Mellon Esc AC for Cal Res Corp
ESCROW AGREEMENT dated as of August 12, 2016 (the “Agreement”), by and among THE
BANK OF NEW YORK MELLON, a New York banking corporation, as escrow agent and as
“Bank” (as defined in the New York Uniform Commercial Code (the “UCC”)) (in such
capacities, the “Escrow Agent”), THE BANK OF NEW YORK MELLON TRUST COMPANY,
N.A., as Administrative Agent (in such capacity, the “Administrative Agent”) and
Collateral Agent (in such capacity, the “Collateral Agent”) under the Underlying
Agreement described below and CALIFORNIA RESOURCES CORPORATION, a Delaware
corporation (the “Borrower”). Capitalized terms used but not defined herein
shall have the meanings given in the Underlying Agreement (defined below).

    
PRELIMINARY STATEMENTS:

WHEREAS, references have been made to that certain Credit Agreement dated as of
August 12, 2016 (as amended, supplemented or otherwise modified from time to
time, the “Underlying Agreement”), by and among the Borrower, the several
lenders from time to time parties thereto (each, a “Lender” and, collectively,
the “Lenders”), Goldman Sachs Bank USA (“Goldman”), as lead arranger and
bookrunner, and the Administrative Agent and Collateral Agent, pursuant to which
the Lenders shall extend credit to the Borrower;

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WHEREAS, the Underlying Agreement contemplates that the Borrower and Goldman
will cause the Escrow Amount (as defined below) to be deposited into escrow;

WHEREAS, the Borrower wishes to grant to the Collateral Agent for the ratable
benefit of all of the Lenders a security interest in the Escrow Account and the
Escrow Property (in each case, as defined below);

WHEREAS, a copy of the Underlying Agreement has been delivered to the Escrow
Agent;

WHEREAS, the Escrow Agent is willing to act as the Escrow Agent hereunder, and
to establish a non-interest-bearing account no. 9789218400, title: BNY Mellon
Esc for Cal Res Corp (the “Escrow Account”) to hold the Escrow Amount;

NOW, THEREFORE, in consideration of the foregoing and of the mutual agreements
contained herein, and intending to be legally bound hereby, the Borrower hereby
appoints the Escrow Agent to act as, and the Escrow Agent hereby agrees to act
as, escrow agent hereunder and to hold and distribute Escrow Property in
accordance with and subject to the following Instructions and Terms and
Conditions, and the parties hereby agree as follows:

I. INSTRUCTIONS:

1. Escrow Property. Concurrently with the execution and delivery of this Escrow
Agreement,

(a) the Borrower shall cause Goldman and/or the Lenders to deliver to the Escrow
Agent the net cash proceeds of the loans extended to the Borrower pursuant to
the Underlying Agreement consisting of $990,000,000.00 (nine hundred and ninety
million dollars) in funds (the “Loan Amount”), and

(b) the Borrower shall deliver or cause to be delivered to the Escrow Agent an
additional $19,892,638.89 (nineteen million eight hundred and ninety two
thousand six hundred and thirty eight dollars and eighty nine cents) in funds,
consisting of $10,000,000.00 (ten million dollars) in funds to be held for
payment of any premium on the Loan Amount (the “Premium Amount”), $9,795,138.89
(nine million seven hundred and ninety five thousand one hundred and thirty
eight dollars and eighty nine cents) in funds to be held for payment of any
accrued interest on the Loan Amount (the “Accrued Interest Amount”) and $97,500
(ninety seven thousand five hundred dollars) in funds to be held for payment of
certain fees to the Escrow Agent, the Collateral Agent and the Administrative
Agent pursuant to this Agreement and the Underlying Agreement (the “Fee”, and
together with the Loan Amount, the Premium Amount and the Accrued Interest
Amount, the “Escrow Amount”),

in each case, to be held by the Escrow Agent in accordance with the terms
hereof. The Escrow Amount, plus all interest, dividends and other distributions,
payments and earnings thereon and proceeds thereof (collectively the
“Distributions”) received by the Escrow Agent, less any property and/or funds
distributed or paid in accordance with this Escrow Agreement, are collectively
referred to herein as “Escrow Property”. Subject to and in accordance with the
terms and conditions hereof, the Escrow Agent agrees to deposit and hold the
Escrow Property in the Escrow Account, and to administer the Escrow Property in
accordance with the terms of this Escrow Agreement.

2. Grant of Security Interest. As collateral security for the payment and
performance of all Obligations and the obligations hereunder, Borrower hereby
bargains, sells, conveys, assigns, sets over, mortgages, pledges, hypothecates,
transfers and grants to the Collateral Agent for its benefit and the ratable
benefit of the Lenders a lien on and continuing security interest in all right,
title and interest of Borrower in all of the following, whether now owned or
existing or hereafter acquired or created (collectively, the “Collateral”):

(a) the Escrow Account;

(b) the Escrow Property; and

(c) all funds and property from time to time held in the Escrow Account, all
certificates and instruments, if any, from time to time representing or
evidencing the Escrow Account or the Escrow Property, all rights the Borrower
may now have or hereafter acquire against the Escrow Agent in respect of its
holding and managing all or any part of the Collateral and all proceeds (as
defined in Article 9 of the UCC) of any of the foregoing.

3. Collateral Agent’s Control over the Escrow Account.

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(a) This Agreement evidences the Collateral Agent’s control (within the meaning
of Article 9 of the UCC) over the Escrow Account. Subject to Section 4(b) of the
Terms and Conditions, the Escrow Agent hereby acknowledges the Collateral
Agent’s security interest and lien as set forth above. The Escrow Agent shall
comply with the instructions provided by the Borrower until such time as the
Collateral Agent delivers a written notice certifying that an Event of Default
under the Underlying Agreement has occurred and instructing the Escrow Agent to
terminate the Borrower’s access to the Escrow Account and to immediately cease
following any instructions from the Borrower (the “Notice of Sole Control”). If
at any time the Collateral Agent delivers to the Escrow Agent a Notice of Sole
Control, the Escrow Agent agrees that, after receipt of such Notice of Sole
Control, and until the Collateral Agent delivers a written notice to the Escrow
Agent rescinding the Notice of Sole Control, the Escrow Agent shall (i) comply
with all instructions with respect to the Escrow Account solely from the
Collateral Agent without further consent of the Borrower or any person acting or
purporting to act for the Borrower being required, (ii) terminate all
instructions and orders originated by the Borrower with respect to the Escrow
Account or any funds therein, and (iii) cease taking instructions from the
Borrower, including, without limitation, instructions for distribution or
transfer of any funds in the Escrow Account. The Escrow Agent shall comply with,
and is fully entitled to rely upon, any instruction purported to be from the
Collateral Agent, even if such instruction is contrary to any instruction that
the Borrower may give or may have given to the Escrow Agent. The Escrow Agent
shall be under no obligation to verify sources or authority of such written
instructions from the Collateral Agent. All instructions given by the Collateral
Agent shall be made pursuant to the Underlying Agreement, including its right to
be instructed prior to acting.

(b)      The security interest of the Collateral Agent in the Collateral granted
pursuant hereto is and shall at all times be valid, perfected and enforceable as
a first priority security interest, subordinate only to the security interest
granted to the Escrow Agent under Section 4(b) of the Terms and Conditions. The
Borrower shall take all actions on its part to ensure the continuance of a
perfected first priority security interest in the Collateral in favor of the
Collateral Agent in order to secure all Obligations. The Borrower shall not
grant or cause or permit any other person to obtain a security interest,
encumbrance, lien or other claim, direct or indirect, in the Borrower’s right,
title or interest in the Escrow Account or any Collateral, other than the Escrow
Agent pursuant to this Agreement. The Borrower shall file any financing or
continuation statements or financing change statements, as the case may be, with
respect to the Collateral. The Borrower hereby appoints the Collateral Agent as
attorney-in-fact with full power of substitution to do any act that the Borrower
is obligated hereby to do, and the Collateral Agent may, but shall not be
obligated to, upon the occurrence and during the continuation of an Event of
Default, exercise such rights as the Borrower might exercise with respect to the
Collateral and take any action in the Borrower’s name to protect the Collateral
Agent’s security interest hereunder.

(c) The Borrower represents and warrants that as of the date hereof its legal
name is that set forth on the signature pages hereof and it is duly formed and
validly existing as a corporation under the laws of the State of Delaware and is
not organized under the laws of any other jurisdiction. During the term of this
Agreement, the Borrower will not change its legal name, identity or
organizational type, jurisdiction of organization or location of the chief
executive office without giving the Collateral Agent prompt written notice and
within thirty (30) days, the Borrower shall have taken all actions reasonably
necessary to maintain the perfection and priority of the security interest
granted hereunder, if applicable.

4. No Investment of Escrow Property; Escrow Account is a Deposit Account. During
the term of this Escrow Agreement, the Escrow Property shall be held in cash.
For the avoidance of doubt, the Escrow Amount deposited hereunder shall remain
uninvested. The parties hereto acknowledge and agree that the Escrow Account
shall be, and shall be treated as, a “deposit account” (as defined in Article 9
of the UCC). The Escrow Agent represents that it is a “depository bank” (as
defined in Article 9 of the UCC).

5. Distribution of Escrow Property. Subject to Sections 2 and 3 of the
Instructions, the Escrow Agent is directed to hold and distribute the Escrow
Property in the following manner:

(a) Promptly upon receipt of a certificate signed by an officer of the Borrower
(i) certifying that (x) each of the conditions in Article VII of the Underlying
Agreement and in Section 6.2 of the Fifth Amendment and Waiver to the Credit
Agreement, dated August 12, 2016 (the “Fifth Amendment”), among the Borrower,
JPMorgan Chase Bank, N.A. (the “First Lien Administrative Agent”), Bank of
America, N.A. and the lenders party thereto (the “First Lien Lenders”) has been,
or substantially concurrently with the release of Escrow Property will be,
satisfied or waived, (y) the Escrow Property released on such date will be used
to repay Indebtedness incurred under the First Lien First Out Facilities at par
(and any accrued and unpaid interest due thereon), (z) no event of default under
the Underlying Agreement shall have occurred and be continuing (or would result
therefrom) and (ii) specifying the amount of such disbursement, the Escrow Agent
will cause the release of Escrow Property in the amount specified in such
certificate and distribute such amount to the account of the First Lien
Administrative Agent on behalf of the First Lien Lenders pursuant to the wire
instructions attached hereto as Schedule IV. The Borrower may deliver such
certificate multiple times.

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(b) Promptly upon receipt of a certificate signed by an officer of the Borrower
(i) certifying that the release of Escrow Property will comply with Section
5.2(b) of the Underlying Agreement and (ii) specifying the amount of such
disbursement, the Escrow Agent will cause the release of Escrow Property in the
amount specified in such certificate and distribute such amount to the account
of the Administrative Agent on behalf of the Lenders pursuant to the wire
instructions attached hereto as Schedule V.

(c) Promptly upon receipt of a certificate signed by an officer of the Borrower
(i) certifying that no further amounts are or shall at any time in the future be
required to be prepaid to the Administrative Agent on behalf of the Lenders
pursuant to Section 5.2(b) of the Underlying Agreement and (ii) specifying the
amount of such disbursement, the Escrow Agent will cause the release of Escrow
Property in the amount specified in such certificate and distribute such amount
to the account of the Borrower pursuant to the wire instructions attached hereto
as Schedule VI.

Any payments will be made by the Escrow Agent as promptly as possible after the
Escrow Agent verifies the payments instructions in accordance with the procedure
set forth on Schedule II, which in no case shall exceed (i) if the applicable
instructions are provided at or prior to 9:30 a.m. Eastern time, the end of the
same Business Day on which the instructions were delivered and (ii) otherwise,
one (1) Business Day following delivery of such instructions.

6. Authorized Persons. The Borrower and the Collateral Agent shall, on the date
of this Escrow Agreement, deliver to the other parties a certificate in the form
of Schedule I hereto as to the incumbency and specimen signature of at least two
(2) officers or other representatives of such party authorized to act for and
give and receive notices, requests and instructions on behalf of such party in
connection with this Escrow Agreement (each such officer or other
representative, an “Authorized Person”). From time to time, the Borrower or the
Collateral Agent may, by delivering to the other parties a revised certificate
in the form of Schedule I, change the information previously given, but each of
the parties hereto shall be entitled to rely conclusively on the then-current
schedule until receipt of a superseding schedule.

7. Facsimile/Email Instructions. Each of the Borrower and the Collateral Agent
hereby provides to the Escrow Agent and agrees with and accepts the
authorizations, limitations of liability, indemnities, security procedure and
other provisions set forth on Schedule II hereto in connection with the Escrow
Agent’s reliance upon and compliance with instructions and directions sent by
such parties via e-mail, facsimile and other similar unsecured electronic
methods.

8. Addresses. Notices, instructions and other communications shall be sent to
the parties as follows:

If to the Escrow Agent:

The Bank of New York Mellon
Corporate Trust Administration
101 Barclay Street
New York, New York 10286
Attention: Escrow Unit
Telephone: (212) 815-3229
E-mail: Filippo.Triolo@bnymellon.com

If to the Borrower:

California Resources Corporation
9200 Oakdale Avenue, Suite 900
Los Angeles, California 91311
Attention: Chief Financial Officer
Telephone: (818) 661-6019
Facsimile: (818) 661-3750
E-mail: Mark.Smith@crc.com

With a copy to:

California Resources Corporation
9200 Oakdale Avenue, Suite 900
Los Angeles, California 91311
Attention: Treasurer

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Telephone: (818) 661-6030
Facsimile: (818) 661-3750
E-mail: Ivan.Gaydarov@crc.com

If to the Administrative Agent or Collateral Agent:

The Bank of New York Mellon Trust Company, N.A.
2001 Bryan Street, Suite 1000
Dallas, Texas 75201
Attention: Stacie Row
Telephone: (214) 468-5525
Facsimile: (214) 468-5539
E-mail: lpcoe-dallasagentsvcs@bnymellon.com

9. Termination. This Escrow Agreement shall terminate upon the earlier to occur
of (i) distribution or disbursement by the Escrow Agent of all Escrow Property
in accordance with the terms hereof, and (ii) September 12, 2016. In the event
of termination under clause (ii), in conjunction with such termination, and upon
receipt of a certificate signed by an officer of the Borrower, all Escrow
Property remaining in the Escrow Account shall be released and distributed by
the Escrow Agent (x) first, to the account of the Administrative Agent on behalf
of the Lenders in an amount necessary to prepay Loans pursuant to Section 5.2(b)
of the Underlying Agreement, which amount shall be specified in such certificate
from the Borrower, and (y) second, to the account of the Borrower in the amount
of any balance remaining in the Escrow Account following such prepayment.

10. Compensation. (a) In respect of the Escrow Agent’s services hereunder, the
Borrower shall be obligated to pay the Escrow Agent the fees, expenses, charges
and other amounts as set forth on the attached Schedule III. The Borrower may
include payment of such amounts with the deposit of the Premium Amount and/or
the Accrued Interest Amount to the Escrow Agent, and the Escrow Agent may
withdraw any such amounts from the Escrow Account.

(b) The Borrower shall reimburse the Escrow Agent upon demand for all reasonable
expenses, disbursements and advances incurred or made by the Escrow Agent in
connection with this Agreement, including, without limitation, the costs,
expenses and disbursements of legal counsel for the Escrow Agent.

II. TERMS AND CONDITIONS:

1. Escrow Agent’s Duties. The duties, responsibilities and obligations of the
Escrow Agent shall be limited to those expressly set forth herein, and no
duties, responsibilities or obligations shall be inferred or implied. The Escrow
Agent shall not be subject to, nor required to comply with, nor required to
inquire as to the performance of any obligation under, any other agreement of
the Borrower (including the Underlying Agreement), even though reference thereto
may be made herein, or to comply with any direction or instruction (other than
those contained herein or delivered in accordance with this Escrow Agreement)
from the Borrower or any entity acting on its behalf. The Escrow Agent shall not
be required to, and shall not, expend or risk any of its own funds or otherwise
incur any financial liability in the performance of any of its duties hereunder.

2. Agreement for Benefit of Parties. This Agreement is for the exclusive benefit
of the parties hereto and their respective successors hereunder, and shall not
be deemed to give, either express or implied, any legal or equitable right,
remedy, or claim to any other entity or person whatsoever.

3. Escrow Agent’s Reliance on Orders, Etc. If at any time the Escrow Agent is
served with any judicial or administrative order, judgment, decree, writ or
other form of judicial or administrative process which in any way affects Escrow
Property (including, but not limited to, orders of attachment or garnishment or
other forms of levies or injunctions or stays relating to the transfer of Escrow
Property), the Escrow Agent is authorized to comply therewith in any manner as
it or its legal counsel of its own choosing deems appropriate; and if the Escrow
Agent complies with any such judicial or administrative order, judgment, decree,
writ or other form of judicial or administrative process, the Escrow Agent shall
not be liable to any of the parties hereto or to any other person or entity even
though such order, judgment, decree, writ or process may be subsequently
modified or vacated or otherwise determined to have been without legal force or
effect.

4. The Escrow Agent.

(a) The Escrow Agent shall not be liable for any action taken or omitted or for
any loss or injury resulting from its actions

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or its performance or lack of performance of its duties hereunder in the absence
of gross negligence or willful misconduct on its part. In no event shall the
Escrow Agent be liable (i) for acting in accordance with or relying upon (and
shall be fully protected in relying upon) any instruction, notice, demand,
certificate or document from the Borrower, any entity acting on behalf of the
Borrower or any other person or entity which it reasonably believes to be
genuine, (ii) for any indirect, consequential, punitive or special damages, even
if advised of the possibility thereof, (iii) for the acts or omissions of its
nominees, correspondents, designees, subagents or subcustodians selected by it
in good faith, or (iv) for an amount in excess of the value of the Escrow
Amount.

(b) As security for the due and punctual performance of any and all of the
Borrower’s obligations to the Escrow Agent hereunder, now or hereafter arising,
the Borrower hereby pledges, assigns and grants to the Escrow Agent a continuing
security interest in, and a lien on and right of setoff against, the Escrow
Property and all Distributions thereon, investments thereof or additions thereto
(whether such additions are the result of deposits by Depositor or the
investment of Escrow Property or otherwise). If any fees, expenses or costs
incurred by, or any obligations owed to, the Escrow Agent hereunder are not
promptly paid when due, the Escrow Agent may reimburse itself therefor from the
Escrow Property, and may sell, convey or otherwise dispose of any Escrow
Property for such purpose. The security interest and setoff rights of the Escrow
Agent shall at all times be valid, perfected and enforceable by the Escrow Agent
against the Borrower and all third parties in accordance with the terms of this
Escrow Agreement.

(c) The Escrow Agent may consult with legal counsel at the expense of the
Borrower as to any matter relating to this Escrow Agreement, and the Escrow
Agent shall not incur any liability in acting in good faith in accordance with
any advice from such counsel.

(d) The Escrow Agent shall not incur any liability for not performing any act or
fulfilling any duty, obligation or responsibility hereunder by reason of any
occurrence beyond the control of the Escrow Agent (including, but not limited
to, any act or provision of any present or future law or regulation or
governmental authority, any act of God or war or terrorism, or the
unavailability of the Federal Reserve Bank wire or telex or other wire or
communication facility).

5. Collections. Unless otherwise specifically set forth herein, the Escrow Agent
shall proceed as soon as practicable to collect any checks or other collection
items at any time deposited hereunder. All such collections shall be subject to
the Escrow Agent’s usual collection practices or terms regarding items received
by the Escrow Agent for deposit or collection. The Escrow Agent shall not be
required, or have any duty, to notify anyone of any payment or maturity under
the terms of any instrument deposited hereunder, nor to take any legal action to
enforce payment of any check, note or security deposited hereunder or to
exercise any right or privilege which may be afforded to the holder of any such
security.

6. Limitation of Escrow Agent’s Responsibility. The Escrow Agent shall not be
responsible in any respect for the form, execution, validity, value or
genuineness of documents or securities deposited hereunder, or for any
description therein, or for the identity, authority or rights of persons
executing or delivering or purporting to execute or deliver any such document,
security or endorsement.

7. Notices. Notices, instructions or other communications required or permitted
to be given under this Agreement by any party hereto to any other party hereto
shall be considered as properly given if in writing and (a) delivered by hand
against receipt therefor, (b) mailed by registered or certified mail, return
receipt requested and postage prepaid, (c) sent by facsimile or (d) sent by
e-mail, in each case to the address or facsimile number, as the case may be, set
forth in Section 8 of the Instructions (or to such other address as may be
substituted therefor by written notification to the other parties). Notices to
the Escrow Agent shall be deemed to be given when actually received by the
Escrow Agent’s Escrow Unit. The Escrow Agent is authorized to comply with and
rely upon any notices, instructions or other communications believed by it to
have been sent or given by the Borrower or the Collateral Agent or by a person
or persons authorized by the Borrower or the Collateral Agent, including persons
identified on Authorized Persons schedules delivered pursuant to Section 6 of
the Instructions. Whenever under the terms hereof the time for giving a notice
or performing an act falls upon a day that is not a Business Day, such time
shall be extended to the next Business Day. A “Business Day” shall mean any day
of the year, excluding Saturday, Sunday and any other day on which national
banks are required or authorized to close in New York, New York.

8. Indemnity. The Borrower shall be liable for and shall reimburse and indemnify
the Escrow Agent and hold the Escrow Agent and its affiliates, and the Escrow
Agent’s and such affiliates’ respective directors, officers, employees, agents,
successors and assigns, harmless from and against any and all claims, losses,
liabilities, costs, disbursements, damages or expenses (including reasonable
attorneys’ fees and expenses and court costs) (collectively, “Losses”) arising
from or in connection with or related to this Escrow Agreement or being the
Escrow Agent hereunder (including but not

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limited to Losses incurred by the Escrow Agent in connection with its successful
defense, in whole or in part, of any claim of gross negligence or willful
misconduct on its part), provided, however, that nothing contained herein shall
require the Escrow Agent to be indemnified for Losses caused by its gross
negligence or willful misconduct.

9. Removal and Resignation of Escrow Agent; Successor Escrow Agent.

(a) The Borrower may remove the Escrow Agent at any time by giving to the Escrow
Agent thirty (30) calendar days’ prior notice in writing signed by the Borrower.
The Escrow Agent may resign at any time by giving thirty (30) calendar days’
prior written notice thereof.

(b) Within ten (10) calendar days after giving the foregoing notice of removal
to the Escrow Agent or receiving the foregoing notice of resignation from the
Escrow Agent, the Borrower shall appoint a successor Escrow Agent. If a
successor Escrow Agent has not accepted such appointment by the end of such
thirty (30) day period, the Escrow Agent may, in its sole discretion, deliver
the Escrow Property to the Borrower at the address provided herein or may apply
to a court of competent jurisdiction for the appointment of a successor Escrow
Agent or for other appropriate relief, and thereafter be relieved of all further
duties and obligations as Escrow Agent hereunder. The costs and expenses
(including reasonable attorneys’ fees and expenses) incurred by the Escrow Agent
in connection with such proceeding shall be paid by the Borrower.

(c) Upon receipt of the identity of the successor Escrow Agent, the Escrow Agent
shall either deliver the Escrow Property then held hereunder to the successor
Escrow Agent, less the amount of fees, costs and expenses or other obligations
owed to the Escrow Agent, or hold such Escrow Property (or any portion thereof),
pending distribution, until all such fees, costs and expenses or other
obligations are paid.

(d) Upon delivery of the Escrow Property to the Borrower, or in accordance with
the instructions of a court of competent jurisdiction pursuant to subclause (c)
above, or to successor Escrow Agent, the Escrow Agent shall have no further
duties, responsibilities or obligations hereunder.

10. Escrow Agent’s Obligations in the Event of Ambiguities, Conflicting Claims,
Etc.

(a) In the event of any ambiguity or uncertainty hereunder or in any notice,
instruction or other communication received by the Escrow Agent hereunder, the
Escrow Agent may, in its sole discretion, refrain from taking any action other
than to retain possession of the Escrow Property, unless and until the Escrow
Agent receives written instructions, signed by the Borrower, which eliminates
such ambiguity or uncertainty.

(b) In the event of any dispute between or conflicting claims by the Borrower
and/or any other person or entity with respect to any Escrow Property, the
Escrow Agent shall be entitled, in its sole discretion, to refuse to comply with
any and all claims, demands or instructions with respect to such Escrow Property
so long as such dispute or conflict shall continue, and the Escrow Agent shall
not be or become liable in any way to the Borrower for failure or refusal to
comply with such conflicting claims, demands or instructions. The Escrow Agent
shall be entitled to refuse to act until, in its sole discretion, either (i)
such conflicting or adverse claims or demands shall have been determined by a
final order, judgment or decree of a court of competent jurisdiction, which
order, judgment or decree is not subject to appeal, or settled by agreement
between the conflicting parties as evidenced in a writing satisfactory to the
Escrow Agent, or (ii) the Escrow Agent shall have received security or an
indemnity satisfactory to it sufficient to hold it harmless from and against any
and all Losses which it may incur by reason of so acting. The Escrow Agent may,
in addition, elect, in its sole discretion, to commence an interpleader action
or seek other judicial relief or orders as it may deem, in its sole discretion,
necessary. The costs and expenses (including reasonable attorneys’ fees and
expenses) incurred in connection with such proceeding shall be paid by, and
shall be deemed a joint and several obligation of, the Borrower.

11. Governing Law; Jurisdiction; Waiver of Right to Trial by Jury. This
Agreement shall be interpreted, construed, enforced and administered in
accordance with the internal substantive laws (and not the choice of law rules)
of the State of New York. Each of the Borrower, the Collateral Agent and the
Administrative Agent hereby submits to the personal jurisdiction of and each
agrees that all proceedings relating hereto shall be brought in courts located
within the City and State of New York or elsewhere as the Escrow Agent may
select. For purposes of the Uniform Commercial Code, New York shall be the
Escrow’ Agent’s jurisdiction. Each of the Borrower, the Collateral Agent, the
Administrative Agent and the Escrow Agent hereby irrevocably waives, to the
fullest extent permitted by applicable law, any and all right to trial by jury
in any legal proceeding arising out of or relating to this agreement.

12. Amendments, Etc. Except as otherwise permitted herein, this Escrow Agreement
may be modified only by a written

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amendment signed by all the parties hereto, and no waiver of any provision
hereof shall be effective unless expressed in a writing signed by the party to
be charged.

13. Remedies Cumulative. The rights and remedies conferred upon the parties
hereto shall be cumulative, and the exercise or waiver of any such right or
remedy shall not preclude or inhibit the exercise of any additional rights or
remedies. The waiver of any right or remedy hereunder shall not preclude the
subsequent exercise of such right or remedy.

14. Representations and Warranties. Each of the Borrower, the Administrative
Agent and the Collateral Agent represents and warrants (a) that this Escrow
Agreement has been duly authorized, executed and delivered on its behalf 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, reorganization, moratorium or other debtor relief laws
and that certain equitable remedies may not be available regardless of whether
enforcement is sought in equity or at law, and (b) that the execution, delivery
and performance of this Escrow Agreement by it do not and will not violate any
applicable law or regulation.

15. Illegality, Etc. The invalidity, illegality or unenforceability of any
provision of this Agreement shall in no way affect the validity, legality or
enforceability of any other provision; and if any provision is held to be
unenforceable as a matter of law, the other provisions shall not be affected
thereby and shall remain in full force and effect.

16. Entire Agreement. This Agreement shall constitute the entire agreement of
the parties with respect to the subject matter and supersedes all prior oral or
written agreements in regard thereto.

17. Survival of Certain Provisions. Section 10 of the Instructions and Sections
7-8, 11 and 20-21 of the Terms and Conditions shall survive termination of this
Escrow Agreement and/or the resignation or removal of the Escrow Agent.

18. Headings. The headings contained in this Agreement are for convenience of
reference only and shall have no effect on the interpretation or operation
hereof.

19. Counterparts. This Escrow Agreement may be executed by each of the parties
hereto in any number of counterparts, each of which counterpart, when so
executed and delivered, shall be deemed to be an original and all such
counterparts shall together constitute one and the same agreement.

20. Certain Tax Matters. Except as provided in paragraph 4(b) of the Terms and
Conditions above, the Escrow Agent does not have any interest in the Escrowed
Property but is serving as escrow holder only and having only possession
thereof. The Borrower shall be obligated to and shall pay or reimburse the
Escrow Agent upon request for any transfer taxes or other taxes relating to the
Escrowed Property incurred in connection herewith and shall jointly and
severally indemnify and hold harmless the Escrow Agent for any amounts that it
is obligated to pay in the way of such taxes. Any payments of income from this
Escrow Account shall be subject to withholding regulations then in force with
respect to United States taxes. The parties hereto will provide the Escrow Agent
with appropriate W-9 forms for tax I.D., number certifications, or W-8 forms for
non-resident alien certifications, and will inform the Escrow Agent as to the
proper allocation of income in respect of the Escrow Property for annual and
periodic tax and other reporting purposes. It is understood that the Escrow
Agent shall be responsible for income reporting only with respect to income
earned on investment of funds which are a part of the Escrowed Property and is
not responsible for any other reporting.

21. Patriot Act Compliance, Etc. In order to comply with laws, rules,
regulations and executive orders in effect from time to time applicable to
banking institutions, including those relating to the funding of terrorist
activities and money laundering and the Customer Identification Program (“CIP”)
requirements under the USA PATRIOT Act and its implementing regulations,
pursuant to which the Escrow Agent must obtain, verify and record information
that allows the Escrow Agent to identify customers (“Applicable Law”), the
Escrow Agent is required to obtain, verify and record certain information
relating to individuals and entities which maintain a business relationship with
the Escrow Agent. Accordingly, the Borrower agrees to provide to the Escrow
Agent upon its request from time to time such identifying information and
documentation as may be available for the Borrower in order to enable the Escrow
Agent to comply with Applicable Law, including, but not limited to, information
as to name, physical address, tax identification number and other information
that will help the Escrow Agent to identify and the Borrower such as
organizational documents, certificates of good standing, licenses to do business
or other pertinent identifying information. The Borrower understands and agrees
that the Escrow Agent cannot open the Escrow Account unless and until the Escrow
Agent verifies the identity of the Borrower in accordance with its CIP.

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22. Information Sharing. The Bank of New York Mellon Corporation is a global
financial organization that provides services to clients through its affiliates
and subsidiaries in multiple jurisdictions (the “BNY Mellon Group”). The BNY
Mellon Group may centralize functions including audit, accounting, risk, legal,
compliance, sales, administration, product communication, relationship
management, storage, compilation and analysis of customer-related data, and
other functions (the “Centralized Functions”) in one or more affiliates,
subsidiaries and third-party service providers. The Borrower consents to the
disclosure of and authorizes BNY Mellon to disclose information regarding the
Borrower to the BNY Mellon Group and to its third-party service providers who
are subject to customary confidentiality obligations with respect to such
information, in connection with the Centralized Functions. In addition, the BNY
Mellon Group may aggregate the Borrower’s data with other data collected and/or
calculated by the BNY Mellon Group and the BNY Mellon Group will own all such
aggregated data, provided that the BNY Mellon Group shall not distribute the
aggregated data in a format that identifies the Borrower or the Borrower’s data
with the Borrower. In addition, BNY Mellon may store the names and business
addresses of the Borrower’s employees on the systems or in the records of the
BNY Mellon Group or its service providers for purposes of the Centralized
Functions, and the Borrower consents and is authorized to consent to such
storage and confirms that the disclosure to and storage by the BNY Mellon Group
of such information does not violate any relevant data protection legislation.

23. Successors and Assigns of Escrow Agent. Any corporation or other company
into which the Escrow Agent may be merged or converted or with which it may be
consolidated, or any corporation or other company resulting from any merger,
conversion or consolidation to which the Escrow Agent shall be a party, or any
corporation or other company succeeding to the business of the Escrow Agent
shall be the successor of the Escrow Agent hereunder without the execution or
filing of any paper with any party hereto or any further act on the part of any
of the parties hereto, except where an instrument of transfer or assignment is
required by law to effect such succession, anything herein to the contrary
notwithstanding.

24. Administrative Agent and Collateral Agent. In acting hereunder, the
Administrative Agent and the Collateral Agent shall be entitled to their
respective rights, privileges, protections, benefits, immunities and indemnities
provided them in the Underlying Agreement.
[Signature Page to the Escrow Agreement]
IN WITNESS WHEREOF, each of the parties has caused this Escrow Agreement to be
executed by a duly authorized officer as of the day and year first written
above.

CALIFORNIA RESOURCES CORPORATION

By:____________________
Name:
Title:

THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A.,
as Administrative Agent and Collateral Agent

By:____________________
Name:
Title:

THE BANK OF NEW YORK MELLON, as Escrow Agent

By:____________________
Name:
Title:

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Schedule I

Authorized Persons of the Borrower

Name
Signature
Phone Number
 
 
 
 
 
 
 
 
 

Authorized Persons of the Collateral Agent

Name
Signature
Phone Number
 
 
 
 
 
 
 
 
 

Schedule II

ELECTRONIC METHODS AUTHORIZATION, LIMITATION OF LIABILITY AND INDEMNITY

Authorization, Limitation of Liability and Indemnity. The Borrower hereby
authorizes the Escrow Agent and its affiliates (the “Bank”) to rely upon and
comply with instructions and directions sent by it via e-mail, facsimile and
other similar unsecured electronic methods (but excluding on-line communications
systems covered by a separate agreement (such as the Bank’s Inform or
CA$H-Register Plus system) (“On-Line Communications Systems”)) (“Electronic
Methods”) by persons reasonably believed by the Bank to be authorized to give
instructions and directions on behalf of such party. Except as set forth below
with respect to funds transfers, the Bank shall have no duty or obligation to
verify or confirm that the person who sent such instructions or directions is,
in fact, a person authorized to give instructions or directions on behalf of
such party (other than to verify that the signature on a facsimile is the
signature

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of a person authorized to give instructions and directions on behalf of the such
party); and the Bank shall have no liability for any losses, liabilities, costs
or expenses incurred or sustained by the Borrower as a result of such reliance
upon or compliance with such instructions or directions. The Borrower agrees to
assume all risks arising out of the use of Electronic Methods to submit
instructions and directions to the Bank, including without limitation the risk
of the Bank acting on unauthorized instructions, and the risk of interception
and misuse by third parties.

Funds Transfer Security Procedures. With respect to any “funds transfer,” as
defined in Article 4-A of the Uniform Commercial Code, the following security
procedure will apply: The Borrower’s payment instruction is to include the name
and (in the case of a facsimile) signature of the person initiating the funds
transfer request. If the name is listed as an Authorized Person on a certificate
in the form of Schedule I hereto delivered pursuant to the Agreement, the Bank
will confirm the instructions by telephone call to any person listed as an
Authorized Person, who may be the same person who initiated the instruction.
When calling back, the Bank will request from the relevant party’s staff member
his or her name. If the name is listed in the Escrow Agent’s records as an
Authorized Person, the Bank will confirm the instructions with respect to
amount, names and numbers of accounts to be charged or credited and other
relevant reference information. The Borrower acknowledges that the Bank has
offered such party other security procedures that are more secure and are
commercially reasonable for such party, and that such party has nonetheless
chosen the procedures described in this paragraph. The Borrower agrees to be
bound by any payment order issued in its name, whether or not authorized, that
is accepted by the Bank in accordance with the above procedures. When instructed
to credit or pay a party by both name and a unique numeric or alpha-numeric
identifier (e.g. ABA number or account number), the Bank, and any other bank
participating in the funds transfer, may rely solely on the unique identifier,
even if it identifies a party different than the party named. This applies to
beneficiaries as well as any intermediary bank. The Borrower agrees to be bound
by the rules of any funds transfer network used in connection with any payment
order accepted by the Bank hereunder. The Escrow Agent shall not be obliged to
make any payment or otherwise to act on any instruction notified to it under
this Agreement if it is unable to validate the authenticity of the request by
telephoning an Authorized Person who has not executed the relevant request or
instruction of the relevant party. Payment or other action on any instruction by
an Authorized Person of the relevant party will be made or taken by the Escrow
Agent as promptly as possible after Escrow Agent’s verification of instructions
as set forth above, which in no case shall exceed (i) if such instructions are
provided at or prior to 9:30 a.m. Eastern time, the end of the same Business Day
on which such instructions were delivered and (ii) otherwise, one (1) Business
Day following delivery of such instructions.

Authorization. This authorization shall remain in full force and effect until
the earlier of termination of this Agreement or the date it is canceled, revoked
or amended by written notice received by the Escrow Agent; and replaces and
supersedes any previous authorization from the Borrower to the Bank relating to
the giving of instructions by facsimile, e-mail or other similar Electronic
Methods (but excluding On-Line Communications Systems) in relation to this
Agreement, and is in addition to all other authorizations. Notwithstanding any
revocation, cancellation or amendment of this authorization, any action taken by
the Bank pursuant to this authorization prior to the Bank’s actual receipt and
acknowledgement of a notice of revocation, cancellation or amendment shall not
be affected by such notice.

Indemnity. The Borrower agrees to indemnify and hold harmless the Bank against
any and all claims, losses, damages liabilities, judgments, costs and expenses
(including reasonable attorneys’ fees) (collectively, “Losses”) incurred or
sustained by the Bank as a result of or in connection with the Bank’s reliance
upon and compliance with instructions or directions given by such party by
Electronic Methods, provided, however, that such Losses have not arisen from the
gross negligence or willful misconduct of the Bank, it being understood that the
failure of the Bank to verify or confirm that the person giving the instructions
or directions, is, in fact, an Authorized Person does not constitute gross
negligence or willful misconduct.
    
Representation. The Borrower hereby represents and warrants to the Bank that
this authorization is properly given and has been duly approved by a resolution
of its Board of Directors.

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Schedule III

Schedule IV

Wire Instructions for the Account of the First Lien Administrative Agent

JPMORGAN CHASE BANK
Fed. ABA: 021 000 021
Money Transfer Account #: 9008113381H3537
Attn.: LS2 Incoming Account
Reference: CAL RESOURCES CORP 3BN 9-24-14V-1

Schedule V

Wire Instructions for the Account of the Administrative Agent

Bank: The Bank of New York Mellon
ABA#: 021-000-018
Acct. Name: BNYAS Clearing Account
Acct. #: 8900415460
Ref.: California Resources Corporation

Schedule VI

Wire Instructions for the Account of the Borrower

J.P. Morgan Chase Bank
New York, NY
ABA:     021 000 021
Account Name: California Resources Corporation
Account Number: 657-579673
Reference: BNY Mellon Escrow AC

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