Execution Version

 

 

 

$200,000,000

 

CREDIT AGREEMENT

 

among

 

AMERICAN EAGLE ENERGY CORPORATION,

 

as Borrower,

 

THE LENDERS PARTY HERETO from time to time,

 

as Lenders,

 

and

 

MORGAN STANLEY CAPITAL GROUP INC.,

 

as Administrative Agent, Syndication Agent and Arranger

 

August 19, 2013

 

 

  

 

 

 

 

table of contents

 

 

Page

    table of contents     ARTICLE I DEFINITIONS AND ACCOUNTING TERMS 1      
Section 1.01 Certain Defined Terms 1       Section 1.02 Computation of Time
Periods 23       Section 1.03 Accounting Terms; Changes in GAAP 23       Section
1.04 Miscellaneous 23       ARTICLE II CREDIT FACILITIES 24       Section 2.01
Commitment for Loans 24       Section 2.02 Method of Borrowing 25       Section
2.03 Prepayment of Loans 26       Section 2.04 Repayment of Loans 28      
Section 2.05 Fees 28       Section 2.06 Interest 29       Section 2.07 Payments
and Computations 29       Section 2.08 Sharing of Payments, Etc. 30      
Section 2.09 Breakage Costs 30       Section 2.10 Increased Costs 30      
Section 2.11 Taxes 31       Section 2.12 Designation of a Different Lending
Office 34       Section 2.13 Replacement of Lender 35       Section 2.14
Payments and Deductions to a Defaulting Lender 35       Section 2.15 Syndication
Amendments 36       ARTICLE III CONDITIONS 36       Section 3.01 Conditions
Precedent to Initial Borrowings 36       Section 3.02 Conditions Precedent to
Spyglass Transaction 39       Section 3.03 Conditions Precedent to All
Borrowings 40       ARTICLE IV REPRESENTATIONS AND WARRANTIES 41       Section
4.01 Existence; Subsidiaries 41       Section 4.02 Power 41       Section 4.03
Authorization and Approvals 41       Section 4.04 Enforceable Obligations 42    
  Section 4.05 Financial Statements 42       Section 4.06 True and Complete
Disclosure 42

 

-i-

 

 

Table of Contents

(continued)

 

   

Page

      Section 4.07 Litigation; Compliance with Laws 42       Section 4.08 Use of
Proceeds 43       Section 4.09 Investment Company Act 43       Section 4.10
Taxes 43       Section 4.11 Pension Plans 44       Section 4.12 Condition of
Property; Casualties 44       Section 4.13 No Burdensome Restrictions; No
Affiliate Transactions 45       Section 4.14 Environmental Condition 45      
Section 4.15 Permits, Licenses, Etc. 46       Section 4.16 Liens; Titles,
Leases, Etc. 46       Section 4.17 Solvency and Insurance 47       Section 4.18
Hedging Agreements 47       Section 4.19 Gas Imbalances 47       Section 4.20
OFAC 47       Section 4.21 Buildings 47       Section 4.22 Commodity Exchange
Act 47       Section 4.23 No Default; Material Adverse Change 47       Section
4.24 Spyglass Transaction Documents 47       Section 4.25 Officer’s Financial
Certificate 48       ARTICLE V AFFIRMATIVE COVENANTS 48       Section 5.01
Compliance with Laws, Etc. 48       Section 5.02 Maintenance of Insurance 48    
  Section 5.03 Preservation of Corporate Existence, Etc. 48       Section 5.04
Payment of Taxes, Etc. 49       Section 5.05 Visitation Rights 49       Section
5.06 Reporting Requirements 49       Section 5.07 Maintenance of Property 52    
  Section 5.08 Agreement to Pledge; Additional Guarantors; Accounts 52      
Section 5.09 Use of Proceeds 53       Section 5.10 Title Evidence 53      
Section 5.11 Further Assurances; Cure of Title Defects 54       Section 5.12
Leases; Development and Maintenance 54       Section 5.13 Hedging 54

 

-ii-

 

 

Table of Contents

(continued)

 

   

Page

      Section 5.14 Commodity Exchange Act Covenants 55       Section 5.15
Assigned Security Documents 55       Section 5.16 Post-Closing Covenants 55    
  ARTICLE VI NEGATIVE COVENANTS 56       Section 6.01 Liens, Etc. 56      
Section 6.02 Debts, Guaranties, and Other Obligations 57       Section 6.03
Agreements Restricting Liens and Distributions 58       Section 6.04 Merger or
Consolidation; Asset Sales; Hedge Terminations 59       Section 6.05 Restricted
Payments 60       Section 6.06 Investments 60       Section 6.07 Affiliate
Transactions 61       Section 6.08 Compliance with ERISA 61       Section 6.09
Sale-and-Leaseback 61       Section 6.10 Change of Business 61       Section
6.11 Organizational Documents, Name Change, Change in Accounting 62      
Section 6.12 Use of Proceeds 62       Section 6.13 Gas Imbalances, Take-or-Pay
or Other Prepayments 62       Section 6.14 Limitation on Hedging 62      
Section 6.15 Additional Subsidiaries 63       Section 6.16 Prepayment and
Repayment of Debt 63       Section 6.17 Amendments to Spyglass Transaction
Documents 63       Section 6.18 Current Ratio 63       Section 6.19 Total
Leverage Ratio 63       ARTICLE VII EVENTS OF DEFAULT; REMEDIES 64       Section
7.01 Events of Default 64       Section 7.02 Optional Acceleration of Maturity
66       Section 7.03 Automatic Acceleration of Maturity 66       Section 7.04
Right of Set-off 67       Section 7.05 Non-exclusivity of Remedies 67      
Section 7.06 Application of Proceeds 67       Section 7.07 Affiliate Operators
67       ARTICLE VIII ADMINISTRATIVE AGENT 68       Section 8.01 Authorization
and Action 68

 

-iii-

 

 

Table of Contents

(continued)

 

   

Page

      Section 8.02 Administrative Agent’s Reliance, Etc. 68       Section 8.03
Administrative Agent and Its Affiliates 68       Section 8.04 No Reliance 69    
  Section 8.05 Indemnification 69       Section 8.06 Successor Administrative
Agent 70       Section 8.07 Additional Agents; Delegation by Administrative
Agent 71       Section 8.08 Collateral Matters 71       ARTICLE IX MISCELLANEOUS
72       Section 9.01 Amendments, Etc. 72       Section 9.02 Notices, Etc. 73  
    Section 9.03 No Waiver; Remedies 73       Section 9.04 Costs and Expenses 73
      Section 9.05 Binding Effect 74       Section 9.06 Lender Assignments and
Participations 74       Section 9.07 Indemnification; Waiver 76       Section
9.08 Confidentiality 77       Section 9.09 Execution in Counterparts 78      
Section 9.10 Electronic Execution of Assignments 78       Section 9.11 Survival
of Representations, Etc. 78       Section 9.12 Severability 78       Section
9.13 Governing Law 78       Section 9.14 Submission to Jurisdiction; Waiver of
Venue 79       Section 9.15 Usury Not Intended 79       Section 9.16 Usury
Recapture 80       Section 9.17 WAIVER OF JURY TRIAL 80       Section 9.18 USA
Patriot Act 80       Section 9.19 Integration 80       Section 9.20 Waiver 80  
    Section 9.21 Restatement; Existing Swap Facility 81

 

-iv-

 

 

Table of Contents

 

EXHIBITS:

 

Exhibit A - Form of Assignment and Acceptance Exhibit B - Form of Compliance
Certificate Exhibit C - Form of Guaranty Exhibit D - Form of Mortgage Exhibit E
- Form of Note Exhibit F - Form of Form of Notice of Borrowing Exhibit G - Form
of Notice of Continuation Exhibit H - Form of Pledge and Security Agreement
Exhibit I - Form of Transfer Letters Exhibit J-1 - Form of U.S. Tax Compliance
Certificate Exhibit J-2 - Form of U.S. Tax Compliance Certificate Exhibit J-3 -
Form of U.S. Tax Compliance Certificate Exhibit J-4 - Form of U.S. Tax
Compliance Certificate Exhibit K - Form of Warrant

 

SCHEDULES:

 

Schedule I  -   Borrower, Administrative Agent, and Lender Information Schedule
II - Commitments; Pro Rata Shares Schedule III - Repayment of Loans Schedule
1.01(a) - Excluded Oil and Gas Properties Schedule 4.01 - Equity Interests
Schedule 4.05 - Permitted Debt Schedule 4.07 - Litigation Schedule 4.13(b) -
Affiliate Transactions Schedule 4.16(b) - Hydrocarbon Interests Schedule 4.16(c)
- Mineral Interest Agreements Schedule 4.18 - Hedging Contracts Schedule 4.19 -
Gas Imbalances

   

-v-

 

 

CREDIT AGREEMENT

 

This Credit Agreement dated as of August 19, 2013 (this “Agreement”) is among
AMERICAN EAGLE ENERGY CORPORATION, a Nevada corporation (“Borrower”), the
lenders party hereto from time to time (the “Lenders”), and MORGAN STANLEY
CAPITAL GROUP INC., as administrative agent for such Lenders (in such capacity,
“Administrative Agent”).

 

The parties hereto hereby agree as follows:

  

ARTICLE I

DEFINITIONS AND ACCOUNTING TERMS

 

Section 1.01         Certain Defined Terms. As used in this Agreement, the terms
defined above shall have the meanings set forth therein and the following terms
shall have the following meanings (unless otherwise indicated, such meanings to
be equally applicable to both the singular and plural forms of the terms
defined):

 

“Acceptable Security Interest” in any Property means a Lien which (a) exists in
favor of Administrative Agent for the benefit of the Secured Parties, (b) is
superior to all Liens or rights of any other Person in the Property encumbered
thereby, other than Permitted Liens, (c) secures the Secured Obligations, and
(d) is perfected and enforceable.

 

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

 

“Administrative Agent” means Administrative Agent as defined in the preamble
hereto in its capacity as agent pursuant to Article VIII, and any successor
agent pursuant to Section 8.06.

 

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

 

“Affiliate” means, as to any Person, any other Person that, directly or
indirectly, through one or more intermediaries, controls, is controlled by, or
is under common control with, such Person or any Subsidiary of such Person. The
term “control” (including the terms “controlled by” or “under common control
with”) means the possession, directly or indirectly, of the power to direct or
cause the direction of the management and policies of a Person, whether through
ownership of a Control Percentage, by contract, or otherwise.

 

“Affiliate Transactions” has the meaning set forth in Section 6.07.

 

“Agreement” means this Agreement (as defined in the preamble hereto), including
all schedules, annexes and exhibits hereto.

 

1

 

 

“Applicable Margin” means, with respect to any Loan, the rate per annum set
forth in the pricing grid based on the relevant PV9/Debt Ratio applicable at
such time. The Applicable Margin for any Loan shall change when and as the
PV9/Debt Ratio changes.

 

PV9/Debt Ratio   Applicable Margin Less than 1.25 to 1.0   950 basis points
(bps) Greater than or equal to 1.25 to 1.0 but less than to 1.45 to 1.0   750
bps Greater than or equal to 1.45 to 1.0 but less than 1.65 to 1.0   600 bps
Greater than or equal to 1.65 to 1.0   450 bps

 

“Applicable Premium” has the meaning set forth in Section 2.03(b).

 

“Approved Fund” means 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 Hedge Counterparty” any Lender Hedge Counterparty and any commercial
bank or other financial institution approved by Administrative Agent; provided,
however, in no event shall any natural person or any Subsidiary or any other
Affiliate of Borrower qualify as an Approved Hedge Counterparty.

 

“ASC 410, 718 and 815” means the Financial Accounting Standards Board (FASB)
Accounting Standards Codification (ASC) Topic 410, Asset Retirement and
Environmental Conditions, Topic 718, Stock Compensation (formerly, FASB
Statement 123R), and Topic 815, Derivatives and Hedging.

 

“Assigned Liens” means the Liens evidenced by the “Assigned Interests” as
defined in the Assignment.

 

“Assignment” means, collectively, (i) that certain Letter Agreement dated as of
August 19, 2013 by and among the Borrower, AMZG, Inc., Macquarie Bank Limited
and Administrative Agent and (ii) that certain Assignment and Novation of Liens
and Security Interests dated as of August 19, 2013 by and among the Borrower,
AMZG, Inc., Macquarie Bank Limited and Administrative Agent.

 

“Assignment and Acceptance” means an assignment and acceptance entered into by a
Lender and an Eligible Assignee, and accepted by Administrative Agent, in
substantially the form of the attached Exhibit A.

 

“Banking Services” means each and any of the following bank services provided to
Borrower or any Subsidiary by any Lender or any Affiliate of a Lender: (a)
commercial credit cards, (b) stored value cards and (c) treasury management
services (including, without limitation, controlled disbursement, automated
clearinghouse transactions, return items, overdrafts and interstate depository
network services).

 

“Banking Services Obligations” means any and all obligations of Borrower or any
Subsidiary, whether absolute or contingent and howsoever and whensoever created,
arising, evidenced or acquired (including all renewals, extensions and
modifications thereof and substitutions therefor) in connection with Banking
Services.

 

“Banking Services Provider” means any Lender or Affiliate of a Lender that
provides Banking Services to Borrower or any Subsidiary.

 

2

 

 

“Borrower” has the meaning assigned to such term in the preamble hereto.

 

“Borrowing” means a borrowing consisting of Loans made on the same day by the
Lenders.

 

“Business Day” means (a) a day of the year other than (i) a Saturday or a Sunday
or (ii) a legal holiday on which banks are required or authorized to close in
Houston, Texas or New York, New York and (b) if the applicable Business Day
relates to any Loans, then in addition to the requirements of clause (a) above,
a day on which dealings are carried on by banks in the London interbank market.

 

“Capital Leases” means, as applied to any Person, any lease of any Property by
such Person as lessee that would, in accordance with GAAP, be required to be
classified and accounted for as a capital lease on the balance sheet of such
Person.

 

“CERCLA” means the Comprehensive Environmental Response, Compensation, and
Liability Act of 1980, as amended, state and local analogs, and all rules and
regulations and requirements thereunder in each case as now or hereafter in
effect.

 

“Change of Control” means the occurrence of any of the following events: (a) on
or before January 1, 2015, if either Brad Colby is no longer the President and
Chief Executive Officer of Borrower or Tom Lantz is no longer the Chief
Operating Officer of Borrower, with such officers having the responsibilities
and obligations such titles carry as of the Closing Date or both of such parties
are incapacitated or otherwise unable to perform such duties or either of such
parties fails to devote a substantial amount of their time to the management of
Borrower or is incapacitated or otherwise unable to perform such duties for a
period of thirty (30) consecutive days (but no more than forty-five (45) days in
any twelve (12) month period), (b) after January 1, 2015, if either Brad Colby
is no longer the President and Chief Executive Officer of Borrower or Tom Lantz
is no longer the Chief Operating Officer of Borrower, with such officers having
the responsibilities and obligations such titles carry as of the Closing Date or
both of such parties are incapacitated or otherwise unable to perform such
duties or either of such parties fails to devote a substantial amount of their
time to the management of Borrower or is incapacitated or otherwise unable to
perform such duties for a period of thirty (30) days (but no more than
forty-five (45) days in any twelve (12) month period), and such officer or
officers, as the case may be, are not replaced by another qualified Person
satisfactory to Administrative Agent in its reasonable discretion within ninety
(90) days, (c) Borrower ceases to own all of the Equity Interest in each of its
Subsidiaries (other than Foreign Subsidiaries) or own fifty percent (50%) of all
of the Equity Interest in each of the Foreign Subsidiaries, (d) a purchase or
acquisition, directly or indirectly, by any “person” or “group” within the
meaning of Sections 13(d)(3) and 14(d)(2) of the Securities and Exchange Act of
1934 (a “Group”), of “beneficial ownership” (as such term is defined in Rule
13d-3 of the Securities and Exchange Act of 1934) of the Equity Interests of
Borrower which, together with Equity Interests owned beneficially by any
“affiliates” or “associates” of such Group (as such terms are defined in Rule
12b-2 under the Securities and Exchange Act of 1934 ), shall represent more than
fifty percent (50%) of the combined Equity Interests of Borrower or (e) Borrower
ceases to be a listed company on the OTCQX U.S. marketplace administered by OTC
Markets Group Inc. (and its Common Stock is not otherwise quoted on any other
tier of the OTC Markets Group Inc.) and is not otherwise a listed company on a
“national securities exchange” registered with the Securities and Exchange
Commission in accordance with the Securities and Exchange Act of 1934.

 

“Change of Control Payment Date” has the meaning set forth in Section 2.03(d).

 

“Change of Control Prepayment” has the meaning set forth in Section 2.03(d).

 

3

 

 

“Change in Law” means the occurrence, after the date of this Agreement, of any
of the following: (a) the adoption or taking effect of any law, rule, regulation
or treaty, (b) any change in any law, rule, regulation or treaty or in the
administration, interpretation or application thereof by any Governmental
Authority or (c) the making or issuance of any request, guideline or directive
(whether or not having the force of law) by any Governmental Authority;
provided, notwithstanding anything to the contrary (i) the Dodd-Frank Wall
Street Reform and Consumer Protection Act and all requests, guidelines or
directives in connection therewith are deemed to have gone into effect and
adopted after the date hereof and (ii) all requests, 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, are
deemed to have gone into effect and adopted after the date hereof.

 

“Closing Date” means August 19, 2013.

 

“Closing Fee” has the meaning set forth in Section 2.05(b).

 

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

 

“Collateral” means all “Collateral,” and “Mortgaged Property” (as defined in
each of the Mortgages, and the Security Agreements, as applicable) or similar
terms used in the Security Instruments.

 

“Commitment” means the Tranche A Commitment and the Tranche B Commitment,
collectively, as such amounts may be reduced or terminated pursuant to Article
VII or otherwise under this Agreement.

 

“Commitment Termination Date” means the earlier of (a) the Maturity Date and (b)
the earlier termination in whole of the Commitments pursuant to Article VII or
otherwise under this Agreement.

 

“Commodity Exchange Act” means the Commodity Exchange Act (7 U.S.C. § 1 et
seq.), as amended from time to time, and any successor statute, or any rule,
regulation or order of the U.S. Commodity Futures Trading Commission (or the
application or official interpretation of any thereof).

 

“Common Stock” means common stock, $0.001 par value per share, of Borrower.

 

“Compliance Certificate” means a compliance certificate in the form of the
attached Exhibit B signed by a Responsible Officer of Borrower.

 

“Consolidated Net Income” means, with respect to any Person and its consolidated
Subsidiaries, for any period, the net income (or loss) for such period after
taxes, as determined in accordance with GAAP, excluding, however,
(a) extraordinary items, including (i) any net non-cash gain or loss during such
period arising from the sale, exchange, retirement or other disposition of
capital assets (such term to include all fixed assets and all securities) other
than in the ordinary course of business and (ii) any write-up or write-down of
assets and (b) the cumulative effect of any change in GAAP.

 

“Control Percentage” means, with respect to any Person, the percentage of the
outstanding Equity Interest (including any options, warrants or similar rights
to purchase such Equity Interest) of such Person having ordinary voting power
which gives the direct or indirect holder of such Equity Interest the power to
elect a majority of the board of directors (or other applicable governing body)
of such Person.

 

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

 

4

 

 

“Debt” for any Person, means, without duplication:

 

(a)          indebtedness of such Person for borrowed money, including, without
limitation, obligations under letters of credit and agreements relating to the
issuance of letters of credit or acceptance financing;

 

(b)         obligations of such Person evidenced by bonds, debentures, notes or
other similar instruments;

 

(c)         obligations of such Person to pay the deferred purchase price of
Property or services (including, without limitation, obligations that are
non-recourse to the credit of such Person but are secured by the assets of such
Person, but excluding trade accounts payable);

 

(d)         obligations of such Person as lessee under Capital Leases and
obligations of such Person in respect of synthetic leases;

 

(e)         obligations of such Person under any Hedge Transaction;

 

(f)          obligations of such Person owing in respect of redeemable preferred
stock or other preferred equity interest of such Person which constitute debt
under GAAP;

 

(g)         any obligations of such Person owing in connection with any
volumetric or production prepayments;

 

(h)         obligations of such Person under direct or indirect guaranties in
respect of, and obligations (contingent or otherwise) of such Person to purchase
or otherwise acquire, or otherwise to assure a creditor against loss in respect
of, indebtedness or obligations of others of the kinds referred to in
clauses (a) through (g) above;

 

(i)          indebtedness or obligations of others of the kinds referred to in
clauses (a) through (h) secured by any Lien on or in respect of any Property of
such Person;

 

(j)          all liabilities of such Person in respect of unfunded vested
benefits under any Plan; and

 

(k)         accounts payable, as determined in accordance with GAAP.

 

“Default” means (a) an Event of Default or (b) any event or condition which with
notice or lapse of time or both, unless cured or waived, would become an Event
of Default.

 

“Default Rate” means a per annum rate equal to two percent (2%) plus the
non-default rate applicable to Loans when the PV9/Debt Ratio is less than 1.25
to 1.0.

 

“Defaulting Lender” means any Lender that (a) has failed to fund its Pro Rata
Share of any Loan required to be funded by it hereunder within one Business Day
of the date required to be funded by it hereunder unless such failure has been
cured within three Business Days (or such longer time period accepted by
Borrower and Administrative Agent), (b) has otherwise failed to pay over to
Administrative Agent or any other Lender any other amount required to be paid by
it hereunder within one Business Day of the date when due, unless the subject of
a good faith dispute or unless such failure has been cured within three Business
Days (or such longer time period accepted by Administrative Agent or such other
Lender, as applicable), (c) has notified Administrative Agent, or has stated
publicly, that it will not comply with any such obligations hereunder, or (d) as
to which a Lender Insolvency Event has occurred and is continuing with respect
to such Lender. Any determination that a Lender is a Defaulting Lender will be
made by Administrative Agent in its sole reasonable discretion acting in good
faith.

 

5

 

 

“Deposit Account Control Agreement” means that certain Deposit Account Control
Agreement by and among Borrower, as Debtor, Administrative Agent, and Keybank
National Association, or another banking institution acceptable to
Administrative Agent, delivered in accordance with Section 5.08.

 

“Disposition” means any sale, lease, transfer, assignment, farm-out, conveyance,
or other disposition of any Property (including any working interest, overriding
royalty interest, production payments, net profits interest, royalty interest,
or mineral fee interest).

 

“Documentary Conditions Precedent” means the execution and delivery of the
documents described in Section 3.01(a) without reference to any condition
precedent that requires the discretion or satisfaction of the Administrative
Agent.

 

“Dollars” and “$” mean lawful money of the United States of America.

 

“EBITDAX” means, with respect to Borrower and its consolidated Subsidiaries, for
any period, without duplication, (a) Consolidated Net Income for such period
plus (b) to the extent deducted in determining Consolidated Net Income, Interest
Expense, exploration expenses, income taxes, depreciation, depletion,
amortization (including, without limitation, amortization of goodwill and
non-cash debt issue costs) and other non-cash items of expense for such period
(including any provision for the reduction in the carrying value of assets
recorded in accordance with GAAP and including non-cash charges resulting from
the requirements of ASC 410, 718 and 815) for such period minus (c) all non-cash
items of income which were included in determining such Consolidated Net Income
(including non-cash income resulting from the requirements of ASC 410, 718 and
815); provided, that, such EBITDAX shall be subject to pro forma adjustments for
acquisitions and non-ordinary course asset sales assuming that such transactions
had occurred on the first day of the applicable calculation period for
calculation of the Total Leverage Ratio, which adjustments shall be made in a
manner reasonably acceptable to Administrative Agent.

 

“Eligible Assignee” means (a) any Lender (other than a Defaulting Lender), (b)
any Subsidiary or Affiliate of a Lender (other than a Defaulting Lender), (c)
any Approved Fund and (d) any commercial bank or other financial institution
approved by Administrative Agent and, if no Default or Event of Default exists,
by Borrower not to be unreasonably withheld; provided, however, in no event
shall any natural person or any Subsidiary or any other Affiliate of Borrower
qualify as an Eligible Assignee.

 

“Engagement Letter” means the letter agreement dated June 18, 2013 executed by
Administrative Agent and Borrower.

 

“Environment” or “Environmental” shall have the meanings set forth in CERCLA.

 

“Environmental Claim” means any third party (including governmental agencies and
employees) action, lawsuit, claim, written demand, regulatory action or
proceeding, order, decree, consent agreement or written notice of potential or
actual responsibility or violation (including claims or proceedings under the
Occupational Safety and Health Acts or similar laws or requirements relating to
health or safety of employees, in each case where relating to Hazardous
Substances) that seeks to impose liability under any Environmental Law.

 

6

 

 

“Environmental Law” means, as to Borrower or its Subsidiaries, all Legal
Requirements or common law theories applicable to Borrower or its Subsidiaries
arising from, relating to, or in connection with the Environment, health or
safety relating to exposure to Hazardous Substances, including without
limitation CERCLA, relating to (a) pollution, contamination, natural resource
damage, destruction, loss, protection, cleanup, reclamation or restoration of
the air, surface water, groundwater, land surface or subsurface strata, or other
natural resources; (b) solid, gaseous or liquid waste generation, treatment,
processing, recycling, reclamation, cleanup, storage, disposal or
transportation; (c) exposure to pollutants, contaminants, hazardous substances
or toxic substances, materials or wastes; (d) the safety or health of employees
relating to exposure to Hazardous Substances; or (e) the manufacture,
processing, handling, transportation, distribution in commerce, use, storage or
disposal of hazardous substances, or toxic substances, materials or wastes.

 

“Environmental Permit” means any permit, license, order, approval, or
registration under any Environmental Law.

 

“Equity Interest” means with respect to any Person, any shares, interests,
participation, or other equivalents (however designated) of corporate stock,
membership interests or partnership interests (or any other ownership interests)
of such Person, including any options, warrants or similar rights to purchase
such equity interest.

 

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended
from time to time, and the regulations promulgated thereunder.

 

“Eurocurrency Liabilities” has the meaning assigned to that term in Regulation D
of the Federal Reserve Board (or any successor), as in effect from time to time.

 

“Eurodollar Base Rate” means (a) in determining Eurodollar Rate the inter-bank
offered rate in effect from time to time for delivery of funds for three (3)
months in amounts approximately equal to the principal amount of the applicable
Loans; provided that, Administrative Agent will base its quotation of the
interbank offered rate upon such market indicators of the inter-bank market on
the rate determined under the following clause (b), and (b) in determining
Eurodollar Rate for all other purposes, the rate per annum (rounded upward to
the nearest whole multiple of 1/100th of 1%) equal to the interest rate per
annum set forth on the Reuters Reference LIBOR1 page as the London Interbank
Offered Rate, for deposits in Dollars at 11:00 a.m. (London, England time) two
(2) Business Days before the first day of the applicable Interest Period and for
a period equal to such Interest Period; provided that, if such quotation is not
available for any reason, then for purposes of this clause (b), Eurodollar Base
Rate shall then be the rate determined by Administrative Agent to be the rate at
which deposits in Dollars for delivery on the first day of such Interest Period
in immediately available funds in the approximate amount of the Loans being made
or continued by the Lenders and with a term equivalent to such Interest Period
would be offered by Administrative Agent’s London Branch (or other branch or
Affiliate of Administrative Agent, or in the event that Administrative Agent
does not have a London branch, the London branch of a Lender chosen by
Administrative Agent) to major banks in the London or other offshore interbank
market for Dollars at their request at approximately 11:00 a.m. (London, England
time) two (2) Business Days prior to the commencement of such Interest Period.

 

“Eurodollar Rate” means for any Interest Period with respect to any Loan, a rate
per annum determined by Administrative Agent (which determination shall be
conclusive in the absence of manifest error) pursuant to the following formula:

 

Eurodollar Rate  = Eurodollar Base Rate   1.00 – Eurodollar Rate Reserve
Percentage

 

7

 

 

“Eurodollar Rate Reserve Percentage” of any Lender for the Interest Period for
any Loan means the reserve percentage applicable during such Interest Period (or
if more than one such percentage shall be so applicable, the daily average of
such percentages for those days in such Interest Period during which any such
percentage shall be so applicable) under regulations issued from time to time by
the Federal Reserve Board for determining the maximum reserve requirement
(including, without limitation, any emergency, supplemental, or other marginal
reserve requirement) for such Lender with respect to liabilities or assets
consisting of or including Eurocurrency Liabilities having a term equal to such
Interest Period.

 

“Event of Default” has the meaning specified in Section 7.01.

 

“Excluded Oil and Gas Properties” means Borrower’s and Subsidiaries’ Oil and Gas
Properties set forth on Schedule 1.01(a).

 

“Excluded Prepayment” means a payment of the Loans that is made solely from
amounts attributable to the following:

 

(a)          proceeds received by Borrower from non-Affiliates of Borrower in
exchange for Borrower’s issuance of its Equity Interests to such non-Affiliates;
and

 

(b)          Consolidated Net Income from the sale of Hydrocarbons and Liquid
Investments in the ordinary course of business;

 

provided that, the aggregate of (a) and (b) in this definition shall in no event
exceed $25,000,000 in the aggregate for all such payments.

 

“Excluded Swap Obligation” means, with respect to any party to a Loan Document,
any Swap Obligation if, and to the extent that, all or a portion of the guaranty
of such party of, or the grant by such party of a security interest or lien to
secure, or the provision of other support of, such Swap Obligation (or any
guarantee or provision of support thereof) is or becomes illegal under the
Commodity Exchange Act by virtue of such party’s failure for any reason to
constitute an “eligible contract participant” as defined in the Commodity
Exchange Act at the time such guaranty, grant of security interest or lien or
provision of support of, such Swap Obligation (or any guarantee or provision of
support thereof) becomes effective. If a Swap Obligation arises under a Master
Agreement governing more than one Swap, such exclusion shall apply only to the
portion of such Swap Obligation that is attributable to Swaps for which such
guaranty, grant of security interest or lien to secure or provision of other
support is or becomes illegal.

 

“Excluded Taxes” means any of the following Taxes imposed on or with respect to
a Recipient or required to be withheld or deducted from a payment to a
Recipient, (a) Taxes imposed on or measured by net income (however denominated),
franchise Taxes, and branch profits Taxes, in each case, (i) imposed as a result
of such Recipient being organized under the laws of, or having its principal
office or, in the case of any Lender, its applicable Lending Office located in,
the jurisdiction imposing such Tax (or any political subdivision thereof) or
(ii) that are Other Connection Taxes, (b) in the case of a Lender, U.S. federal
withholding Taxes imposed on amounts payable to or for the account of such
Lender with respect to an applicable interest in a Loan or Commitment pursuant
to a law in effect on the date on which (i) such Lender acquires such interest
in the Loan or Commitment (other than pursuant to an assignment request by
Borrower under Section 2.13) or (ii) such Lender changes its Lending Office,
except in each case to the extent that, pursuant to Section 2.11, amounts with
respect to such Taxes were payable either to such Lender's assignor immediately
before such Lender became a party hereto or to such Lender immediately before it
changed its Lending Office, (c) Taxes attributable to such Recipient’s failure
to comply with Section 2.11(g) and (d) any U.S. federal withholding Taxes
imposed under FATCA.

 

8

 

 

“Existing Obligations” means the obligations payable upon termination of the
Existing Swap Facility.

 

“Existing Swap Facility” means that certain ISDA Master Agreement dated as of
December 27, 2012 (together with any Confirmations, Schedules, Annexes or other
amendments or modifications prior to the date hereof) between Borrower and
Macquarie Bank Limited.

 

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

 

“Federal Funds Rate” means, for any day, a fluctuating interest rate per annum
equal for each day during such period to the weighted average of the rates on
overnight Federal funds transactions with members of the Federal Reserve System
arranged by Federal funds brokers, as published for such day (or, if such day is
not a Business Day, for the next preceding Business Day) by the Federal Reserve
Bank of New York or, if such rate is not so published for any day which is a
Business Day, the average of the quotations for any such day for such
transactions received by Administrative Agent from three Federal funds brokers
of recognized standing selected by it.

 

“Federal Reserve Board” means the Board of Governors of the Federal Reserve
System or any of its successors.

 

“Financial Statements” means the financial statements of Borrower and its
Subsidiaries, but excluding the pro forma balance sheet of Borrower and its
Subsidiaries as of the Closing Date prepared by Borrower giving pro forma effect
to the Transactions.

 

“Foreign Lender” means (a) if Borrower is a U.S. Person, a Lender that is not a
U.S. Person, and (b) if the Borrower is not a U.S. Person, a Lender that is
resident or organized under the laws of a jurisdiction other than that in which
Borrower is resident for tax purposes.

 

“Foreign Subsidiary” means EERG Energy, ULC and AEE Canada Inc.

 

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

 

“GAAP” means generally accepted accounting principles in the United States of
America as in effect from time to time, applied on a basis consistent with the
requirements of Section 1.03.

 

“Governmental Authority” means, as to any Person in connection with any subject,
any foreign, national, state or provincial governmental authority, or any
political subdivision of any state thereof, or any agency, department,
commission, board, authority or instrumentality, bureau or court, in each case
having jurisdiction over such Person or such Person’s Property in connection
with such subject.

 

“Guarantor” means each entity executing a Guaranty, including each Subsidiary of
Borrower.

 

“Guaranty” means a Guaranty in substantially the form of the attached Exhibit C
and executed by a Guarantor.

 

9

 

 

“Hazardous Substance” means the substances identified as such pursuant to CERCLA
and those regulated under any other Environmental Law, including without
limitation pollutants, contaminants, petroleum, petroleum products,
radionuclides, radioactive materials, and medical and infectious waste.

 

“Hazardous Waste” means the substances regulated as such pursuant to any
Environmental Law.

 

“Hedge Counterparty” any counterparty to a Hedge Transaction with Borrower or
any Subsidiary.

 

“Hedge Obligations” all obligations of Borrower or any of its Subsidiaries owing
to any Hedge Counterparty under any Hedge Transaction.

 

“Hedge Transaction” means (a) any and all interest rate swap transactions, basis
swaps, credit derivative transactions, forward rate transactions, commodity
swaps, commodity options, forward commodity contracts, deferred premium
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, spot contracts, 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”).

 

“Hydrocarbon Hedge Agreement” means a Hedge Transaction that is intended to
reduce or eliminate the risk of fluctuations in the price of Hydrocarbons.

 

“Hydrocarbon Interests” means all rights, titles, interests and estates now or
hereafter acquired in and to fee mineral interests, term mineral interests,
Leases, subleases, farm-outs, royalties, overriding royalties, net profit
interests, carried interests, production payments and similar mineral interests,
including any reserved or residual interests of whatever nature.

 

“Hydrocarbons” means oil, gas, coal seam gas, coalbed methane, casinghead gas,
drip gasoline, natural gasoline, condensate, distillate, and all other liquid
and gaseous hydrocarbons produced or to be produced in conjunction therewith
from a well bore and all products, by-products, and other substances derived
therefrom or the processing thereof, and all other minerals and substances
produced in conjunction with such substances, including, but not limited to,
sulfur, geothermal steam, water, carbon dioxide, helium and any and all
minerals, ores or substances of value and the products and proceeds therefrom.

 

“Incremental Amendments” has the meaning set forth in Section 2.01(b).

 

“Indemnified Party” has the meaning set forth in Section 9.07(a).

 

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

 

“Independent Engineer” means Ryder Scott or another independent, third-party
engineering firm selected by Borrower and acceptable to Administrative Agent in
its reasonable credit judgment.

 

10

 

 

“Initial Reserve Report” means the engineering report prepared by the
Administrative Agent prior to the Closing Date and covering the consolidated Oil
and Gas Properties of Borrower and its Subsidiaries.

 

“Interest Expense” means, for any Person and its consolidated Subsidiaries, for
any period, total interest, letter of credit fees, and other fees and expenses
incurred in connection with any Debt for such period, whether paid or accrued,
including, without limitation, all commissions, discounts and other fees and
charges owed with respect to letters of credit and bankers’ acceptance
financing, imputed interest under Capital Leases and net costs under Interest
Hedge Agreements, all as determined in conformity with GAAP.

 

“Interest Hedge Agreement” means a Hedge Transaction between Borrower and one or
more financial institutions providing for the exchange of nominal interest
obligations between Borrower and such financial institution or the cap of the
interest rate on any Debt of Borrower.

 

“Interest Period” means, for each Loan comprising part of the same Borrowing,
the three month period commencing on the date of such Loan and ending on the
last day of such period and, thereafter, each subsequent three-month period
commencing on the last day of the immediately preceding Interest Period and
ending on the last day of the following three-month period. The duration of each
such Interest Period shall be three (3) months; provided, however, that:

 

(a)          no Interest Period shall end after the Maturity Date, and in such
event, the Interest Period shall be reformed to equal the length from the date
of such Borrowing until the Maturity Date and Borrower must compensate Lenders
for any breakage or other costs related to the premature termination of such
three-month Interest Period;

 

(b)          whenever the last day of any Interest Period would otherwise occur
on a day other than a Business Day, the last day of such Interest Period shall
be extended to occur on the next succeeding Business Day, provided that if such
extension would cause the last day of such Interest Period to occur in the next
following calendar month, the last day of such Interest Period shall occur on
the next preceding Business Day; and

 

(c)          any Interest Period that begins on the last Business Day of a
calendar month (or on a day for which there is no numerically corresponding day
in the calendar month at the end of such Interest Period) shall end on the last
Business Day of the calendar month in which it would have ended if there were a
numerically corresponding day in such calendar month.

 

“IRS” means United States Internal Revenue Service.

 

“Leases” means all oil and gas leases, oil, gas and mineral leases, oil, gas and
casinghead gas leases or any other instruments, agreements, or conveyances under
and pursuant to which the lessee thereof has or obtains the right to enter upon
lands and explore for, drill, and develop such lands for the production of
Hydrocarbons.

 

“Legal Requirement” means, as to any Person, any law, statute, ordinance,
decree, requirement, order, judgment, rule, regulation (or official
interpretation of any of the foregoing) of, and the terms of any license or
permit issued by, any Governmental Authority, including, but not limited to,
Regulations D, T, U, and X, that is applicable to such Person.

 

11

 

 

“Lender Hedge Counterparty” means (a) any Lender or Affiliate of a Lender that
is a counterparty to any Hedge Transaction with Borrower or any Subsidiary and
(b) any counterparty to any other Hedge Transaction with Borrower or any
Subsidiary; provided that such counterparty is a Lender or an Affiliate of a
Lender or was a Lender or an Affiliate of a Lender at the time the applicable
Hedge Transactions (and not the Master Agreement between such parties) were
entered into; and provided further that, in either case of (a) or (b), at the
time the Master Agreement between such parties and at the time the applicable
Hedge Transactions were entered into, such Lender’s or such Affiliate’s, as the
case may be, debt securities are rated not less than “BBB” (or the then
equivalent) by the rating service of Standard & Poor’s Ratings Group or of
Moody’s Investors Service, Inc. For the avoidance of doubt, “Lender Hedge
Counterparty” shall not include any participant of a Lender pursuant to Section
9.06(e) other than to the extent such participant is otherwise a Lender or an
Affiliate of a Lender.

 

“Lender Hedge Obligations” all obligations of Borrower or any of its
Subsidiaries owing to any Lender Hedge Counterparty under any Hedge Transaction;
provided that, (a) when any Lender Hedge Counterparty assigns or otherwise
transfers any interest held by it under any Hedge Transaction to any other
Person pursuant to the terms of such agreement, the obligations thereunder shall
constitute Obligations only if such assignee or transferee is also then a Lender
or an Affiliate of a Lender and (b) if a Hedge Counterparty ceases to be a
Lender hereunder or an Affiliate of a Lender hereunder, obligations owing to
such Hedge Counterparty shall be included as Obligations only to the extent such
obligations arise from transactions under such individual Hedge Transactions
(and not the Master Agreement between such parties) entered into prior to the
Closing Date or at the time such Hedge Counterparty was a Lender hereunder or an
Affiliate of a Lender hereunder, without giving effect to any extension,
increases, or modifications thereof which are made after such Hedge Counterparty
ceases to be a Lender hereunder or an Affiliate of a Lender hereunder, but in
each case excluding any Excluded Swap Obligations.

 

“Lender Insolvency Event” means that (a) a Lender or its Parent Company is
insolvent, or is generally unable to pay its debts as they become due, or admits
in writing its inability to pay its debts as they become due, or makes a general
assignment for the benefit of its creditors or (b) such Lender or its Parent
Company is the subject of a bankruptcy, insolvency, reorganization, liquidation
or similar proceeding, or a receiver, trustee, conservator, intervenor or
sequestrator or the like has been appointed for such Lender or its Parent
Company, or such Lender or its Parent Company has taken any action in
furtherance of or indicating its consent to or acquiescence in any such
proceeding or appointment; provided, that a Lender Insolvency Event shall not be
triggered solely as the result of the acquisition or maintenance of an ownership
interest in such Lender or its Parent Company by a governmental authority or an
instrumentality thereof.

 

“Lenders” means a party hereto that (a) is a lender listed on the signature
pages of this Agreement on the date hereof or (b) is an Eligible Assignee that
became a lender under this Agreement pursuant to Section 2.13 or 9.06.

 

“Lending Office” means, as to any Lender, the office or offices of such Lender
described as such in such Lender’s Administrative Questionnaire, or such other
office or offices as a Lender may from time to time notify Borrower and
Administrative Agent.

 

“Lending Party” has the meaning set forth in Section 9.08.

 

“Lien” means any mortgage, lien, pledge, assignment, charge, deed of trust,
security interest, hypothecation, preference, deposit arrangement or encumbrance
(or other type of arrangement having the practical effect of the foregoing) to
secure or provide for the payment of any obligation of any Person, whether
arising by contract, operation of law, or otherwise (including, without
limitation, the interest of a vendor or lessor under any conditional sale
agreement, Synthetic Lease, Capital Lease, or other title retention agreement).

 

12

 

 

“Liquid Investments” means:

 

(a)          direct obligations of, or obligations the principal of and interest
on which are unconditionally guaranteed by, the United States or any agency
thereof maturing within 180 days from the date of any acquisition thereof;

 

(b)          (i) negotiable or nonnegotiable certificates of deposit, time
deposits, or other similar banking arrangements maturing within 180 days from
the date of acquisition thereof (“bank debt securities”), issued by (A) any
Lender (or any Affiliate of any Lender) or (B) any other bank or trust company
so long as such certificate of deposit is pledged to secure Borrower’s or any
Subsidiary’s ordinary course of business bonding requirements, or any other bank
or trust company which has primary capital of not less than $500,000,000, if at
the time of deposit or purchase, such bank debt securities are rated not less
than ”AA” (or the then equivalent) by the rating service of Standard & Poor’s
Ratings Group or of Moody’s Investors Service, Inc., and (ii) commercial paper
issued by (A) any Lender (or any Affiliate of any Lender) or (B) any other
Person if at the time of purchase such commercial paper is rated not less than
“A-1” (or the then equivalent) by the rating service of Standard & Poor’s
Ratings Group or not less than “P-1” (or the then equivalent) by the rating
service of Moody’s Investors Service, Inc., or upon the discontinuance of both
of such services, such other nationally recognized rating service or services,
as the case may be, as shall be selected by Borrower with the consent of the
Majority Lenders;

 

(c)          deposits in money market funds investing exclusively in investments
described in clauses (a) and (b) above;

 

(d)          repurchase agreements relating to investments described in clauses
(a) and (b) above with a market value at least equal to the consideration paid
in connection therewith, with any Person who regularly engages in the business
of entering into repurchase agreements and has a combined capital and surplus
and undivided profit of not less than $500,000,000, if at the time of entering
into such agreement the debt securities of such Person are rated not less than
“AA” (or the then equivalent) by the rating service of Standard & Poor’s Ratings
Group or of Moody’s Investors Service, Inc.; and

 

(e)          such other instruments (within the meaning of Article 9 of the UCC)
or investment property as Borrower may request and Administrative Agent may
approve in writing.

 

“Loan” means any loan or advance by a Lender to Borrower pursuant to Sections
2.01 or 2.02 as part of a Borrowing and refers to a Tranche A Loan or a Tranche
B Loan.

 

“Loan Documents” means this Agreement, the Notes, the Guaranties, the Security
Instruments and each other agreement, instrument, or document executed by
Borrower or any of its Subsidiaries or any of their officers at any time in
connection with this Agreement. For the avoidance of doubt, Loan Documents shall
not include Hedge Transactions or Master Agreements.

 

“Loan Party” means Borrower or any Guarantor.

 

“Majority Lenders” means, at any time, Lenders holding more than fifty percent
(50%) of the Commitments or, if the Commitments have been terminated, the
outstanding principal amount of the Loans; provided that, if there are two (2)
or more Lenders, the Commitment of, and the portion of the Loans held or deemed
held by, any Defaulting Lender shall be excluded for purposes of making a
determination of Majority Lenders unless all Lenders are Defaulting Lenders.

 

“Make Whole Premium” has the meaning set forth in Section 2.03(c).

 

13

 

 

“Master Agreement” is defined in the definition of “Hedge Transaction”.

 

“Material Adverse Change” means a material adverse change in, or material
adverse effect on, (a) the business, assets (including the Oil and Gas
Properties of Borrower and its Subsidiaries), condition (financial or
otherwise), or results of operations of Borrower and its Subsidiaries (excluding
the Foreign Subsidiaries), taken as a whole, since the Closing Date after giving
effect to the Transactions, (b) Borrower’s ability to perform its obligations
under this Agreement, any Note, any other Loan Document, (c) the Subsidiaries’
(when taken as a whole) ability to perform their respective obligations under
this Agreement, any Guaranty, any Note, any other Loan Document, (d) the
validity or enforceability of any Loan Document or (e) the rights and remedies
of or benefits available to any Secured Party under any Loan Document; a
“Material Adverse Change” shall have occurred if there is any reduction, delay
or shut-in of the production of Hydrocarbons arising out of, or caused by any of
the foregoing.

 

“Maturity Date” means August 17, 2018.

 

“Maximum Rate” means the maximum nonusurious interest rate under applicable law
(determined under such laws after giving effect to any items which are required
by such laws to be construed as interest in making such determination, including
without limitation if required by such laws, certain fees and other costs).

 

“Minimum Amortization Amount” means $390,000; provided that, if the aggregate
amount of all Tranche A Loans made to Borrower hereunder (notwithstanding any
repayment thereof) exceed $68,000,000, the “Minimum Amortization Amount” shall
mean $600,000.

 

“Mortgage” means any mortgage or deed of trust executed by any one or more of
Borrower or its Subsidiaries in favor of Administrative Agent for the ratable
benefit of the Secured Parties in substantially the form of the attached Exhibit
D or such other form as may be requested by Administrative Agent.

 

“Multiemployer Plan” means a “multiemployer plan” as defined in
Section 4001(a)(3) of ERISA.

 

“Net Cash Proceeds” means (a) with respect to any Disposition of Oil and Gas
Properties of Borrower or any Subsidiary that have a positive value in the most
recently delivered Reserve Report, all cash and Liquid Investments received by
Borrower or any of its Subsidiaries from such Disposition after payment of, or
provision for, all estimated cash taxes attributable to such Disposition and
payable by Borrower or such Subsidiary, and other reasonable out of pocket fees
and expenses actually incurred by Borrower or such Subsidiary directly in
connection with such Disposition (including reasonable legal fees, investment
banking fees, survey costs and other customary fees), (b) with respect to any
novation, assignment, unwinding, termination, or amendment of any hedge position
or any other Hedging Contract by Borrower or any Subsidiary, the sum of the cash
and Liquid Investments received by Borrower or any Subsidiary in connection with
such transaction after giving effect to any netting agreements, (c) proceeds
received by Borrower from non-Affiliates of Borrower on or after August 19, 2014
in exchange for Borrower’s issuance of its Equity Interests to such
non-Affiliates and (d) proceeds from any Debt (other than Debt expressly
permitted by Section 6.02).

 

“Non-Consenting Lender” means any Lender that does not consent to a proposed
amendment, waiver, consent or release with respect to this Agreement or any
other Loan Document that requires the consent of each Lender.

 

“Note” means a promissory note of Borrower payable to any Lender, in
substantially the form of the attached Exhibit E, evidencing indebtedness of
Borrower to such Lender resulting from Loans owing to such Lender.

 

14

 

 

“Notice of Borrowing” means a notice of borrowing in the form of the attached
Exhibit F signed by a Responsible Officer of Borrower.

 

“Notice of Continuation” means a notice of continuation in the form of the
attached Exhibit G signed by a Responsible Officer of Borrower.

 

“Obligations” means all principal, interest, fees, the Prepayment Premium (if
any), the Make Whole Premium (if any), the Change of Control Premium (if any),
reimbursements, indemnifications, and other amounts payable by Borrower or any
Subsidiary to Administrative Agent or the Lenders under the Loan Documents.

 

“OFAC” means The Office of Foreign Assets Control of the U.S. Department of the
Treasury.

 

“Oil and Gas Properties” means (a) Hydrocarbon Interests; (b) the real property
now or hereafter pooled or unitized with Hydrocarbon Interests owned by Borrow
or its Subsidiaries; (c) all presently existing or future unitization, pooling
agreements and declarations of pooled units and the units created thereby
(including without limitation all units created under orders, regulations and
rules of any Governmental Authority) which may affect all or any portion of the
Hydrocarbon Interests; (d) all operating agreements, contracts and other
agreements, including production sharing contracts and agreements, which relate
to any of the Hydrocarbon Interests or the production, sale, purchase, exchange
or processing of Hydrocarbons from or attributable to such Hydrocarbon
Interests; (e) all Hydrocarbons in and under and which may be produced and saved
or attributable to the Hydrocarbon Interests, including all oil in tanks, and
all rents, issues, profits, proceeds, products, revenues and other incomes from
or attributable to the Hydrocarbon Interests; (f) all tenements, hereditaments,
appurtenances and Properties in any manner appertaining, belonging, affixed or
incidental to the Hydrocarbon Interests and (g) all Properties, rights, titles,
interests and estates described or referred to above, including any and all
Property, real or personal, now owned or hereinafter acquired by Borrower or its
Subsidiaries and situated upon, used, held for use or useful in connection with
the operating, working or development of any of such Hydrocarbon Interests or
Property (excluding drilling rigs, automotive equipment, rental equipment or
other personal Property which may be on such premises for the purpose of
drilling a well or for other similar temporary uses) and including any and all
oil wells, gas wells, injection wells or other wells, buildings, structures,
fuel separators, liquid extraction plants, plant compressors, pumps, pumping
units, field gathering systems, tanks and tank batteries, fixtures, valves,
fittings, machinery and parts, engines, boilers, meters, apparatus, equipment,
appliances, tools, implements, cables, wires, towers, casing, tubing and rods,
surface leases, rights-of-way, easements and servitudes together with all
additions, substitutions, replacements, accessions and attachments to any and
all of the foregoing.

 

“ORRI Agreement” means (a) that certain Letter Agreement dated October 15, 2006,
by and among Eternal Energy Corp., Fairway Exploration, LLC, Prospector Oil,
Inc. and 0770890 B.C. Ltd., and (b) that certain Overriding Royalty Agreement
dated September 4, 2008, by and among Rover Resources Inc., Fairway Exploration
LLC and Prospector Oil, Inc., without giving effect to any amendment, supplement
or modification thereof not expressly consented to in writing by the
Administrative Agent.

 

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

 

15

 

 

“Other Taxes” means all present or future stamp, court or documentary,
intangible, recording, filing or similar Taxes that arise from any payment made
under, from the execution, delivery, performance, enforcement or registration
of, from the receipt or perfection of a security interest under, or otherwise
with respect to, any Loan Document, except any such Taxes that are Other
Connection Taxes imposed with respect to an assignment other than an assignment
made pursuant to Section 2.13.

 

“Parent Company” means, with respect to a Lender, the bank holding company (as
defined in Federal Reserve Board Regulation Y), if any, of such Lender, and/or
any Person owning, beneficially or of record, directly or indirectly, a majority
of the shares of such Lender.

 

“Participant Register” has the meaning set forth in Section 9.06(e).

 

“Patriot Act” means the USA Patriot Act (Title III of Pub. L. 107-56 (signed
into law October 26, 2001)).

 

“Payment Date” means the last Business Day of each month set forth under
“Payment Date” on Schedule III.

 

“PBGC” means the Pension Benefit Guaranty Corporation or any entity succeeding
to any or all of its functions under ERISA.

 

“PDP Reserves” means Proved Reserves which are categorized as both “Developed”
and “Producing” in the definitions promulgated by the Society of Petroleum
Evaluation Engineers and the World Petroleum Congress as in effect at the time
in question.

 

“Permit” means any approval, certificate of occupancy, consent, waiver,
exemption, variance, franchise, order, permit, authorization, right or license
of or from any Governmental Authority, including without limitation, an
Environmental Permit.

 

“Permitted Liens” means the Liens permitted to exist pursuant to Section 6.01.

 

“Person” means an individual, partnership, corporation (including a business
trust), joint stock company, limited liability corporation or company, limited
liability partnership, trust, unincorporated association, joint venture or other
entity, or a government or any political subdivision or agency thereof or any
trustee, receiver, custodian or similar official.

 

“Plan” (whether or not capitalized) means an employee benefit plan (other than a
Multiemployer Plan) maintained for employees of Borrower or any member of the
Controlled Group and covered by Title IV of ERISA or subject to the minimum
funding standards under Section 412 of the Code.

 

“Prepayment Premium” has the meaning set forth in Section 2.03(b).

 

“Pro Rata Share” means, with respect to any Lender, and with respect to either
the Tranche A Commitment or the Tranche B Commitment, as the case may be, (a)
with respect to amounts owing under the Commitments, (i) if such Commitments
have not been cancelled, the ratio (expressed as a percentage) of such Lender’s
uncancelled Commitment at such time to the aggregate uncancelled Commitments at
such time or (ii) if the aggregate Commitments have been terminated, the Pro
Rata Share of such Lender as determined pursuant to the preceding clause (i)
immediately prior to such termination, or (b) with respect to amounts owing
generally under this Agreement and the other Loan Documents, the ratio
(expressed as a percentage) of the Commitment of such Lender to the aggregate
Commitments of all the Lenders (or if such Commitments have been terminated, the
ratio (expressed as a percentage) of Loans owing to such Lender to the aggregate
Loans owing to all such Lenders).

 

16

 

 

“Property” of any Person means any property or assets (whether real, personal,
or mixed, tangible or intangible) of such Person.

 

“Proved Reserves” means, at any particular time, the estimated quantities of
Hydrocarbons which are classified as both “Proved Reserves” and one of the
following: (a) “Developed Producing Reserves”, (b) “Developed Non-Producing
Reserves” and (c) “Undeveloped Reserves” in the definitions promulgated by the
Society of Petroleum Evaluation Engineers and the World Petroleum Congress as in
effect at the time in question.

 

“PV9 Value” means, with respect to any PDP Reserves expected to be produced from
Borrower’s or a Loan Parties’ Oil and Gas Properties, the net present value of
the future net revenues (discounted at nine percent (9%) per annum) calculated
by Administrative Agent in its sole reasonable judgment (including using price
curve and costs determined in accordance with the definition of Reserve Report)
after having reviewed the information from the most recently delivered Reserve
Report and taking into account aggregate production, Dispositions and reductions
by any such revenue from any Oil and Gas Properties which Administrative Agent
determines are not in compliance with the terms and covenants of this Agreement
(including without limitation Section 5.10 hereof) or any Loan Document;
provided that if Borrower fails to deliver any Reserve Report required to be
delivered hereunder, the PV9 Value shall be the value calculated by
Administrative Agent in its sole and absolute discretion.

 

“PV9/Debt Ratio” means, determined as of each day, the ratio of (a) the PV9
Value to (b) the aggregate outstanding principal amount of all Loans at such
time plus the accrued but unpaid Closing Fee at such time.

 

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

 

“Register” has the meaning set forth in paragraph (c) of Section 9.06.

 

“Regulations D, T, U, and X” mean Regulations D, T, U, and X of the Federal
Reserve Board, as the same are from time to time in effect, and all official
rulings and interpretations thereunder or thereof.

 

“Release” has the meaning set forth in CERCLA or under any other Environmental
Law.

 

“Required Lenders” means, on any date of determination, Lenders holding at least
sixty-six and two-thirds percent (66-2/3%) of the Commitments or, if the
Commitments have been terminated, the aggregate outstanding principal amount of
the Loans; provided that, if there are two (2) or more Lenders, the Commitment
of, and the portion of the Loans held or deemed held by, any Defaulting Lender
shall be excluded for purposes of making a determination of Required Lenders
unless all Lenders are Defaulting Lenders.

 

“Reserve Report” means the Initial Reserve Report or a report from Ryder Scott
or another Independent Engineer, in form and substance reasonably satisfactory
to Administrative Agent, addressed to Administrative Agent and the Lenders with
respect to the Oil and Gas Properties owned by Borrower or its Subsidiaries (or
to be acquired by Borrower or any of its Subsidiaries, as applicable, but
excluding the Excluded Oil and Gas Properties), which report shall (a) specify
the location, quantity, and type of Hydrocarbons of the estimated Proved
Reserves attributable to such Oil and Gas Properties, (b) contain a projection
of the rate of production of such Oil and Gas Properties, (c) contain an
estimate of the net operating revenues to be derived from the production and
sale of Hydrocarbons from such Proved Reserves based on product price and cost
escalation assumptions specified by Administrative Agent and the Lenders, and
(d) contain such other information as is customarily obtained from and provided
in such reports or is otherwise reasonably requested by Administrative Agent or
any Lender.

 

17

 

 

“Response” has the meaning set forth in CERCLA or under any other Environmental
Law.

 

“Responsible Officer” means (a) with respect to any Person that is a
corporation, such Person’s Chief Executive Officer, President, Chief Financial
Officer (or other financial officer), Vice President or any other Person duly
authorized in accordance with the applicable organizational documents, bylaws,
regulations or resolutions to act on behalf of such Person, (b) with respect to
any Person that is a limited liability company, a manager or the Responsible
Officer of such Person’s managing member, manager or any other Person duly
authorized in accordance with the applicable organizational documents,
agreements, regulations or resolutions to act on behalf of such Person and (c)
with respect to any Person that is a general partnership or a limited liability
partnership, the Responsible Officer of such Person’s general partner, partners
or any other Person duly authorized in accordance with the applicable
organizational documents, agreements, regulations or resolutions to act on
behalf of such Person.

 

“Restricted Common Equity Issuance” means the issuance of Common Stock pursuant
to the Restricted Common Equity Issuance Documents.

 

“Restricted Common Equity Issuance Documents” means that certain Common Stock
Purchase Agreement dated August 9, 2013 by and between Borrower and Power Energy
Holdings, LLC and all documents executed or delivered in connection therewith.

 

“Restricted Payment” means, with respect to any Person, (a) any direct or
indirect dividend or distribution (whether in cash, securities or other
Property) in respect of the Equity Interest of such Person or any direct or
indirect payment of any kind or character (whether in cash, securities or other
Property) in consideration for or otherwise in connection with any retirement,
purchase, redemption or other acquisition of any Equity Interest of such Person,
or any options, warrants or rights to purchase or acquire any such Equity
Interest of such Person or (b) principal or interest payments (in cash, Property
or otherwise) on, or redemptions of, subordinated debt of such Person; provided
that the term “Restricted Payment” shall not (i) include any dividend or
distribution payable solely in Equity Interests of Borrower or warrants, options
or other rights to purchase such Equity Interests or (ii) refer to any payment
of principal or interest on any debt, to the extent such Debt is permitted to be
incurred pursuant to Section 6.02 and such payments are permitted under Section
6.16.

 

“Sanctioned Entity” means (a) a country or a government of a country, (b) an
agency of the government of a country, (c) an organization directly or
indirectly controlled by a country or its government, or (d) a Person resident
in a country, in each case, that is subject to a country sanctions program
administered and enforced by OFAC.

 

“Sanctioned Person” means a person named on the list of Specially Designated
Nationals maintained by OFAC.

 

“Secured Obligations” means (a) the Obligations, (b) the Banking Services
Obligations, and (c) the Lender Hedge Obligations, but in each case excluding
any Excluded Swap Obligations.

 

“Secured Parties” means Administrative Agent, the Lenders, the Lender Hedge
Counterparties and Banking Services Providers.

 

18

 

 

“Security Agreement” means the Pledge and Security Agreement, in substantially
the form of the attached Exhibit H, executed by the Loan Parties.

 

“Security Instruments” means, collectively, (a) the Mortgages, (b) the Transfer
Letters, (c) the Security Agreement, (d) the Deposit Account Control Agreement,
(e) each other agreement, instrument or document executed by any Loan Party at
any time in connection with the Security Agreement or the Mortgages, and
(f) each other agreement, instrument or document executed by any Loan Party at
any time in connection with securing the Obligations.

 

“Six Month Roll Forward Outstanding Debt” means (a) the Six Month Roll Forward
Projected PDP divided by (b) the Six Month Roll Forward Applicable Factor.

 

“Six Month Roll Forward Amortization Amount” means the Six Month Roll Forward
Amount divided by six (6).

 

“Six Month Roll Forward Amount” means for any Payment Date, (a) the aggregate
outstanding principal amount of all Loans plus the accrued but unpaid Closing
Fee on the most recent Six Month Roll Forward Calculation Date minus (b) the Six
Month Roll Forward Outstanding Debt calculated at the most recent Six Month Roll
Forward Calculation Date.

 

“Six Month Roll Forward Applicable Factor” shall be the amounts shown on
Schedule III under “Six Month Roll Forward Applicable Factor.”

 

“Six Month Roll Forward Calculation Date” means each December 31 and June 30,
starting with June 30, 2014.

 

“Six Month Roll Forward Projected PDP” means for each Six Month Roll Forward
Calculation Date occurring (a) on June 30, the PV9 Value for the next following
December 31 and (b) on December 31, the PV9 Value for the next following June
30.

 

“Solvent” means, with respect to any Person or group consolidated under GAAP
(hereinafter in this paragraph, “group”) on the date of any determination, that
on such date (a) the fair value of the Property of such Person or group (both at
fair valuation and at present fair saleable value) is greater than the total
liabilities, including contingent liabilities, of such Person or group, (b) the
present fair saleable value of the assets of such Person or group is not less
than the amount that will be required to pay the probable liability of such
Person or group on its or their debts as they become absolute and matured, (c)
such Person or group is able to realize upon its assets and pay its or their
debts and other liabilities, contingent obligations, and other commitments as
they mature in the normal course of business, (d) such Person or group does not
intend to, and does not believe that it will, incur debts or liabilities beyond
such Person’s or group’s ability to pay as such debts and liabilities mature,
and (e) such Person or group is not engaged in business or a transaction, and is
not about to engage in business or a transaction, for which such Person’s or
group’s Property would constitute unreasonably small capital after giving due
consideration to current and anticipated future capital requirements and current
and anticipated future business conduct and the prevailing practice in the
industry in which such Person or group is engaged. In computing the amount of
contingent liabilities at any time, such liabilities shall be computed at the
amount which, in light of the facts and circumstances existing at such time,
represents the amount that can reasonably be expected to become an actual or
matured liability.

 

“Specified Representations” means (a) the representations and warranties set
forth in Article IV of this Agreement and (b) the representations and warranties
contained in the Security Instruments, the Guaranties, and each of the other
Loan Documents.

 

19

 

 

“Spyglass Carry” means a Carry Agreement executed by and among Borrower, AMZG,
Inc., Next Era Energy Gas Producing, LLC, and USG Properties Bakken I, LLC in
form and substance satisfactory to the Administrative Agent in its sole
discretion, without giving effect to any amendment, supplement or modification
thereof not expressly permitted under Section 6.17.

 

“Spyglass Farmout” means a Farmout Agreement executed by and between Borrower
and USG Properties Bakken I, LLC in form and substance satisfactory to the
Administrative Agent in its sole discretion, without giving effect to any
amendment, supplement or modification thereof not expressly permitted under
Section 6.17.

 

“Spyglass Oil and Gas Properties” means those certain Oil and Gas Properties to
be acquired by Borrower pursuant to the Spyglass PSA.

 

“Spyglass PSA” means a Purchase and Sale Agreement executed by and among
Borrower, AMZG, Inc., Next Era Energy Gas Producing, LLC, and USG Properties
Bakken I, LLC in form and substance satisfactory to the Administrative Agent in
its sole discretion, without giving effect to any amendment, supplement or
modification thereof not expressly permitted under Section 6.17.

 

“Spyglass Transaction Documents” means, collectively, the Spyglass Carry, the
Spyglass Farmout and the Spyglass PSA, the assignments described thereunder and
any other documents delivered in connection with the foregoing.

 

“Subsidiary” of a Person means any corporation or other entity of which more
than fifty percent (50%) of the outstanding Equity Interests having ordinary
voting power under ordinary circumstances to elect a majority of the board of
directors or similar governing body of such corporation or other entity
(irrespective of whether at such time Equity Interests of any other class or
classes of such corporation or other entity shall or might have voting power
upon the occurrence of any contingency) is at the time directly or indirectly
owned or controlled by such Person, by such Person and one or more Subsidiaries
of such Person or by one or more Subsidiaries of such Person. Unless otherwise
indicated herein, each reference to the term “Subsidiary” shall mean a direct or
indirect Subsidiary of Borrower.

 

“Swap” means any “swap” within the meaning of section 1a(47) of the Commodity
Exchange Act.

 

“Swap Obligation” means any obligation to pay or perform under any Swap (whether
or not such obligation is a Hedge Obligation hereunder).

 

“Syndication Amendments” has the meaning set forth in Section 2.15.

 

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

 

“Taxes” means all present or future taxes, levies, imposts, duties, deductions,
withholdings (including backup withholding), assessments, fees or other charges
imposed by any Governmental Authority, including any interest, additions to tax
or penalties applicable thereto, other than for purposes of Section 4.10 for
which the term “Taxes” is defined in Section 4.10(b).

 

20

 

 

“Tax Group” has the meaning set forth in Section 4.10(a).

 

“Termination Event” means (a) a reportable event described in Section 4043 of
ERISA and the regulations issued thereunder with respect to any Plan subject to
Title IV of ERISA (other than a reportable event not subject to the provision
for 30-day notice to the PBGC under such regulations), (b) the withdrawal of
Borrower or any member of the Controlled Group from a Plan subject to Title IV
of ERISA during a plan year in which it was a “substantial employer” as defined
in Section 4001(a)(2) of ERISA, (c) the filing of a notice of intent to
terminate a Plan subject to Title IV of ERISA or the treatment of an amendment
to a Plan subject to Title IV of ERISA as a termination under Section 4041 of
ERISA, (d) the institution of proceedings to terminate a Plan subject to Title
IV of ERISA by the PBGC, or (e) any other event or condition which constitutes
grounds under Section 4042 of ERISA for the termination of, or the appointment
of a trustee to administer, any Plan subject to Title IV of ERISA.

 

“Total Leverage Ratio” has the meaning set forth in Section 6.19.

 

“Tranche A Commitment” means, for any Lender, the amount set opposite such
Lender’s name on Schedule II hereof as its Tranche A Commitment Amount, or if
such Lender has entered into any Assignment and Acceptance, as set forth for
such Lender as its Tranche A Commitment Amount in the Register maintained by
Administrative Agent pursuant to Section 9.06(c), as such amount may be reduced
or terminated pursuant to Article VII or otherwise under this Agreement.

 

“Tranche A Commitment Termination Date” means the earlier of (a) October 31,
2013 and (b) the earlier termination in whole of the Commitments pursuant to
Article VII or otherwise under this Agreement.

 

“Tranche A Loan” means any loan or advance by a Lender to Borrower pursuant to
Section 2.01(a) as part of a Borrowing.

 

“Tranche B Commitment” means, for any Lender, the amount set opposite such
Lender’s name on Schedule II hereof as its Tranche B Commitment Amount as
amended from time to time pursuant to Section 2.01(b), or if such Lender has
entered into any Assignment and Acceptance, as set forth for such Lender as its
Tranche B Commitment Amount in the Register maintained by Administrative Agent
pursuant to Section 9.06(c), as such amount may be reduced or terminated
pursuant to Article VII or otherwise under this Agreement; provided that, the
aggregate amount of such Tranche B Commitments shall not exceed $92,000,000.

 

“Tranche B Commitment Effective Date” has the meaning set forth in Section
2.01(b)(ii).

 

“Tranche B Commitment Request” has the meaning set forth in Section 2.01(b)(i).

 

“Tranche B Loan” means any loan or advance by a Lender to Borrower pursuant to
Section 2.01(b) as part of a Borrowing.

 

“Transactions” means, collectively, (a) the execution, delivery and performance
by Borrower or any Guarantor of this Agreement and each other Loan Document to
which it is a party and the initial borrowings and other extensions of credit
under this Agreement, and (b) the payment of fees, commissions and expenses in
connection with each of the foregoing.

 

“Transfer Letters” means, collectively, the letters in lieu of transfer orders
in substantially the form of the attached Exhibit I and executed by Borrower or
any Subsidiary executing a Mortgage, as each of the same may be amended,
modified or supplemented from time-to-time.

 

21

 

 

“Triggering Event” means (a) (i) the Disposition of Oil and Gas Properties of
Borrower or any Subsidiary that have a positive value in the most recently
delivered Reserve Report and (ii) the novation or assignment (unless novated or
assigned to a counterparty with equal or better creditworthiness), unwinding or
termination (unless replaced with positions or contracts no less advantageous to
Borrower or the Subsidiary party thereto), or amendment (if such amendment is
materially adverse to Borrower or the Subsidiary party thereto) of a hedge
position or Hedge Transaction, which, in either such case of (i) and (ii), after
giving effect to such event, the aggregate effect is to reduce the PV9 Value by
more than $1,000,000 in any twelve (12) month period, (b) Borrower’s sale and
issuance of its Equity Interests to non-Affiliates occurring on or after August
19, 2014 (other than a sale or issuance of Equity Interests to officers,
directors or employees of Borrower, whether upon the exercise of options or
otherwise pursuant to a compensation plan approved by the Administrative Agent),
and (c) Borrower’s or any of its Subsidiaries’ creation, incurrence or
assumption of any Debt (other than Debt expressly permitted by Section 6.02).
For the calculation of the “aggregate amount of all events” in the preceding
clause (a), in the case of a Disposition, the amount shall be the value of the
Proved Reserves from the most recent Reserve Report and, in the case of a change
to a hedge position, the change in the amount attributable to such hedge
position as reasonably determined by the Administrative Agent.

 

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

 

“Unused Commitment Amount” means the sum of the Unused Tranche A Commitment
Amount plus the Unused Tranche B Commitment Amount.

 

“Unused Tranche A Commitment Amount” means, with respect to a Lender at any
time, (a) such Lender’s Tranche A Commitment at such time minus (b) the
aggregate amount of all Tranche A Loans made to Borrower by such Lender
hereunder (notwithstanding any repayment thereof).

 

“Unused Tranche B Commitment Amount” means, with respect to a Lender at any
time, (a) such Lender’s Tranche B Commitment at such time minus (b) the
aggregate amount of all Tranche B Loans made to Borrower by such Lender
hereunder (notwithstanding any repayment thereof).

 

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

 

“U.S. Tax Compliance Certificate” has the meaning assigned to such term in
paragraph (g) of Section 2.11.

 

“Warrants” means penny-warrants in Common Stock, in substantially the form of
the attached Exhibit K.

 

“Withholding Agent” means Borrower and the Administrative Agent.

 

“Working Capital” means the difference of (i) current assets and (ii) current
liabilities. For purposes of this calculation, (i) “current assets” shall
exclude, as of the date of calculation, the aggregate Unused Commitment Amount
and, as of the date of calculation, any asset representing a valuation account
arising from the application of ASC 718 and 815 and (ii) “current liabilities”
shall exclude, as of the date of calculation, the current portion of long–term
Debt existing under this Agreement and any liabilities representing a valuation
account arising from stock based compensation, derivatives and hedging and the
application of ASC 718 and 815.

 

22

 

 

Section 1.02         Computation of Time Periods. In this Agreement, with
respect to the computation of periods of time from a specified date to a later
specified date, the word “from” means “from and including” and the words “to”
and “until” each means “to but excluding.”

 

Section 1.03         Accounting Terms; Changes in GAAP. Except as otherwise
expressly provided herein, all accounting terms used herein shall be
interpreted, and all financial statements and certificates and reports as to
financial matters required to be delivered to the Lenders hereunder shall
(unless otherwise disclosed to the Lenders in writing at the time of delivery
thereof) be prepared, in accordance with GAAP applied on a basis consistent with
those used in the preparation of the latest financial statements furnished to
the Lenders hereunder (which prior to the delivery of the first financial
statements under Section 5.06 hereof, shall mean the Financial Statements).
Except as otherwise expressly provided herein, all calculations made for the
purposes of determining compliance with this Agreement shall (a) be made by
application of GAAP applied on a basis consistent with those used in the
preparation of the annual or quarterly financial statements furnished to the
Lenders pursuant to Section 5.06 hereof most recently delivered prior to or
concurrently with such calculations (or, prior to the delivery of the first
financial statements under Section 5.06 hereof, used in the preparation of the
Financial Statements), (b) apply to Borrower and its Subsidiaries on a
consolidated basis, and (c) be calculated without giving effect to any election
made by any applicable Person to value its financial liabilities or indebtedness
at the fair value thereof pursuant to the Statement of Financial Accounting
Standards No. 159 (or any similar accounting principle). If at any time any
change in GAAP would materially affect the computation of any financial ratio or
requirement set forth herein, and either Borrower or the Majority Lenders shall
so request, Administrative Agent, the Lenders and Borrower shall negotiate in
good faith to amend such ratio or requirement to preserve the original intent
thereof in light of such change in GAAP (subject to the approval of the Majority
Lenders); provided that, until so amended, (a) such ratio or requirement shall
continue to be computed in accordance with GAAP prior to such change therein,
and (b) Borrower shall provide to Administrative Agent and the Lenders financial
statements and other documents required under this Agreement or as reasonably
requested hereunder setting forth a reconciliation between calculations of such
ratio or requirement made before and after giving effect to such change in GAAP.
In addition, all calculations and defined accounting terms used herein shall,
unless expressly provided otherwise, when referring to any Person, refer to such
Person on a consolidated basis and mean such Person and its consolidated
Subsidiaries.

 

Section 1.04         Miscellaneous. Article, Section, Schedule, and Exhibit
references are to Articles and Sections of and Schedules and Exhibits to this
Agreement, unless otherwise specified. All references to instruments, documents,
contracts, and agreements are references to such instruments, documents,
contracts, and agreements as the same may be amended, supplemented, and
otherwise modified from time to time, unless otherwise specified and shall
include all schedules and exhibits thereto unless otherwise specified. The words
“hereof,” “herein,” and “hereunder” and words of similar import when used in
this Agreement shall refer to this Agreement as a whole and not to any
particular provision of this Agreement. The term “including” means “including,
without limitation,”. Paragraph headings have been inserted in this Agreement as
a matter of convenience for reference only and it is agreed that such paragraph
headings are not a part of this Agreement and shall not be used in the
interpretation of any provision of this Agreement.

 

23

 

 

 

ARTICLE II

CREDIT FACILITIES

 

Section 2.01         Commitment for Loans.

 

(a)  Tranche A Loans. Provided that each of the conditions precedent set forth
in Sections 3.01, 3.02 and 3.03, as applicable, have been satisfied, each Lender
severally agrees, on the terms and conditions set forth in this Agreement, to
make Tranche A Loans to Borrower from time to time on any Business Day during
the period from the date of this Agreement until the Tranche A Commitment
Termination Date in an amount for each Lender not to exceed at any time such
Lender’s Unused Tranche A Commitment Amount. Each Borrowing shall be in an
aggregate amount not less than $2,500,000 and in integral multiples of $250,000
in excess thereof, and in each case shall consist of Tranche A Loans by the
Lenders ratably according to their respective Tranche A Commitments. Once
borrowed, the Borrower may not reborrow any Tranche A Loans that have been
repaid, whether in whole or in part.

 

(b)  Tranche B Loans.

 

(i)          Provided that each of the conditions precedent set forth in Section
3.03 have been satisfied and aggregate amount of all Tranche A Loans made to
Borrower hereunder (notwithstanding any repayment thereof) equal $108,000,000,
Borrower may irrevocably request, on one or more occasions, that the Lenders
increase their respective Tranche B Commitment, up to an aggregate total amount
of $92,000,000 or a lesser amount in integral multiples of $10,000,000 (the
“Tranche B Commitment Request”).

 

(ii)         The Tranche B Commitment Request shall set forth the requested
amount of the Tranche B Commitment, the proposed effective date for the making
of Tranche B Loans pursuant to such Tranche B Commitment (not less than thirty
(30) days from the date of such request). The Administrative Agent shall notify
each of the Lenders of Borrower’s request and determine whether each such Lender
agrees to provide any Tranche B Commitment (which agreement may be given or
withheld at such Lender’s sole and absolute discretion) and, if so, whether by
an amount equal to, greater than, or less than its Pro Rata Share of such
requested Tranche B Commitment. Any Lender not responding within five (5)
Business Days shall be deemed to have declined to provide a Tranche B
Commitment. The Administrative Agent shall notify Borrower of the aggregate
amount of Tranche B Commitments received from the Lenders, and the date that
Lenders, or any of them, agree to provide Tranche B Commitments in accordance
with this Section 2.01(b), which shall be the “Tranche B Commitment Effective
Date” and Borrower agrees to pay all fees due hereunder in connection with such
Tranche B Commitment Effective Date.

 

(iii)        On and after the Tranche B Commitment Effective Date, Tranche B
Commitments received from the Lenders (or any of them) shall be Commitments
under this Agreement pursuant to an amendment (an “Incremental Amendment”) to
this Agreement and, as appropriate, the other Loan Documents. The Borrower and
each Loan Party agree to execute and deliver any Incremental Amendment as long
as each of their obligations under this Agreement remain unchanged. The Lenders
agree to execute and deliver any Incremental Amendment as long as the principal,
interest and fees payable to such Lender remain unchanged.

 

24

 

 

(iv)        Subject to the foregoing, each Lender severally agrees, on the terms
and conditions set forth in this Agreement, to make Tranche B Loans to Borrower
from time to time on any Business Day during the period from the date of this
Agreement until the Commitment Termination Date in an amount for each Lender not
to exceed at any time such Lender’s Unused Tranche B Commitment Amount. Each
Borrowing shall be in an aggregate amount not less than $2,500,000 and in
integral multiples of $250,000 in excess thereof, and in each case shall consist
of Tranche B Loans by the Lenders ratably according to their respective Tranche
B Commitments. Once borrowed, the Borrower may not reborrow any Tranche B Loans
that have been repaid, whether in whole or in part.

 

(c)  Evidence of Indebtedness. The Loans made by each Lender shall be evidenced
by one or more accounts or records maintained by such Lender and by
Administrative Agent in the ordinary course of business. The accounts or records
maintained by Administrative Agent and the applicable Lenders shall be
conclusive absent manifest error of the amount of the Loans made by such Lenders
to Borrower and the interest and payments thereon. Any failure to so record or
any error in doing so shall not, however, limit or otherwise affect the
obligation of Borrower hereunder to pay any amount owing with respect to the
Obligations. In the event of any conflict between the accounts and records
maintained by any Lender and the accounts and records of Administrative Agent in
respect of such matters, the accounts and records of Administrative Agent shall
control in the absence of manifest error. Upon the request of any Lender to
Borrower made through Administrative Agent, Borrower shall execute and deliver
to such Lender (through Administrative Agent) a Note which shall evidence such
Lender’s Loans to Borrower in addition to such accounts or records. Each Lender
may attach schedules to such Notes and endorse thereon the date, amount, and
maturity of its Loans and payments with respect thereto. In the event of any
conflict between the accounts and records maintained by Administrative Agent and
the accounts and records of any Lender in respect of such matters, the accounts
and records of Administrative Agent shall control in the absence of manifest
error.

 

Section 2.02         Method of Borrowing.

 

(a)  Notice. Each Borrowing shall be made pursuant to a Notice of Borrowing (or
by telephone notice promptly confirmed in writing by a Notice of Borrowing),
given not later than 11:00 a.m. (New York time) on the third Business Day before
the date of the proposed Borrowing by Borrower to Administrative Agent, which
shall in turn give to each Lender prompt notice of such proposed Borrowing by
facsimile. Each Notice of a Borrowing shall be given in writing, including by
facsimile, specifying the information required therein. Administrative Agent
shall promptly notify each Lender of the applicable interest rate under Section
2.06(a). Each Lender shall, before 11:00 a.m. (New York time) on the date of
such Borrowing, make available for the account of its applicable Lending Office
to Administrative Agent at its address referred to in Section 9.02, or such
other location as Administrative Agent may specify by notice to the Lenders, in
same day funds, in the case of a Borrowing, such Lender’s Pro Rata Share of such
Borrowing. After Administrative Agent’s receipt of such funds and upon
fulfillment of the applicable conditions set forth in Article III,
Administrative Agent shall make such funds available to Borrower by wire
transfer to a deposit account in the name of Borrower or one of the
Subsidiaries.

 

(b)  Continuations. Each Borrowing under this Section 2.02 shall automatically
continue upon the end of each Interest Period for another Interest Period. Upon
each such continuation, Borrower shall have been deemed to deliver a Notice of
Continuation, with equal force and effect to Borrower’s actual delivery thereof.

 

(c)  Notices Irrevocable. Each Notice of Borrowing and Notice of Continuation
shall be irrevocable and binding on Borrower. In the case of any Borrowing,
Borrower shall indemnify each Lender against any loss, out-of-pocket cost, or
expense incurred by such Lender as a result of any failure by Borrower to
fulfill on or before the date specified in such Notice of Borrowing for such
Borrowing the applicable conditions set forth in Article III including, without
limitation, any loss (including any loss of profits), cost or expense incurred
by reason of the liquidation or reemployment of deposits or other funds acquired
by such Lender to fund the Loan to be made by such Lender as part of such
Borrowing when such Loan, as a result of such failure, is not made on such date.

 

25

 

 

(d)  Administrative Agent Reliance. Unless Administrative Agent shall have
received notice from a Lender before the date of any Borrowing that such Lender
will not make available to Administrative Agent such Lender’s Pro Rata Share of
a Borrowing, Administrative Agent may assume that such Lender has made its Pro
Rata Share of such Borrowing available to Administrative Agent on the date of
such Borrowing in accordance with paragraph (a) of this Section 2.02 and
Administrative Agent may, in reliance upon such assumption, make available to
Borrower on such date a corresponding amount. If and to the extent that any
Lender shall not have so made its Pro Rata Share of such Borrowing available to
Administrative Agent (the “Non-Funding Lender”), such Non-Funding Lender and
Borrower severally agree to immediately repay to Administrative Agent on demand
such corresponding amount, together with interest on such amount, for each day
from the date such amount is made available to Borrower until the date such
amount is repaid to Administrative Agent, at (i) in the case of Borrower, the
interest rate applicable on such day to Loans comprising such Borrowing and (ii)
in the case of such Non-Funding Lender, the Federal Funds Rate for such day. If
such Non-Funding Lender shall repay to Administrative Agent such corresponding
amount and interest as provided above, such corresponding amount so repaid shall
constitute such Non-Funding Lender’s Loan as part of such Borrowing for purposes
of this Agreement even though not made on the same day as the other Loans
comprising such Borrowing.

 

(e)  Lender Obligations Several. The failure of any Non-Funding Lender to make
the Loan to be made by it as part of any Borrowing shall not relieve any other
Lender of its obligation, if any, to make its Loan on the date of such
Borrowing. No Lender shall be responsible for the failure of any other Lender to
make the Loan to be made by such other Lender on the date of any Borrowing.

 

Section 2.03         Prepayment of Loans.

 

(a)  Optional. Borrower may prepay the Loans, after giving by 11:00 a.m. (New
York time) at least three (3) Business Days’ irrevocable prior written notice
(or irrevocable telephone notice promptly confirmed in writing) to
Administrative Agent stating the proposed date and aggregate principal amount of
such prepayment. If any such notice is given, Borrower shall prepay the Loans in
whole or ratably in part in an aggregate principal amount equal to the amount
specified in such notice, together with (i) accrued interest to the date of such
prepayment on the principal amount prepaid, (ii) amounts, if any, required to be
paid pursuant to Section 2.09 as a result of such prepayment being made on such
date, (iii) the Prepayment Premium, if any and (iv) the Make Whole Premium, if
any; provided, however, that each partial prepayment with respect to any amounts
prepaid shall be applied to Loans comprising part of the same Borrowing and
shall be made in a minimum amount of $1,000,000 and in integral multiples of
$500,000 in excess thereof and in an aggregate principal amount such that after
giving effect thereto such Borrowing shall have a remaining principal amount
outstanding with respect to such Borrowings of at least $500,000. Full
prepayments of any Borrowing are permitted without restriction of amounts.

 

(b)  Prepayment Premium. In connection with the payment of any principal amount
of any Loan, other than pursuant to Section 2.03(f) or Section 2.04(b) or with
respect to an Excluded Prepayment, Borrower shall pay to Administrative Agent
for the ratable benefit of the Lenders, a fee equal to the Applicable Premium
multiplied by the amount prepaid (the “Prepayment Premium”). The Prepayment
Premium shall be the same, irrespective of when in such period the payment is
made. The “Applicable Premium” means a cash amount equal to the percentages of
the aggregate principal amount of the Loans being repaid set forth below:

 

26

 

 

(i)          If repaid at any time on or after the Closing Date but before
August 19, 2015, three percent (3.0%);

 

(ii)         If repaid at any time on or after August 19, 2015 but prior to
August 19, 2016, one percent (1.0%); and

 

(iii)        If repaid on or at any time after August 19, 2016, zero percent
(0.0%).

 

(c)  Make Whole Premium. In connection with the payment of any principal amount
of any Loan occurring on or before August 19, 2014, other than pursuant to
Section 2.03(f) or Section 2.04(b) or with respect to an Excluded Prepayment,
Borrower shall pay to Administrative Agent for the ratable benefit of the
Lenders, a fee (the “Make Whole Premium”) equal to the interest payments
(without discount) that would have been paid on the principal amount of the
Loans so prepaid if such principal amount had been outstanding from the date of
prepayment until August 19, 2014 and the Applicable Martin would have been 950
basis points, less all interest payments made to the date of such prepayment.

 

(d)  Change of Control Premium. If a Change of Control occurs, the Required
Lenders, may, at their option and in their sole discretion, instruct the
Administrative Agent by written notice to the Borrower to declare all
Obligations hereunder to be due and payable on the date set forth in such notice
(“Change of Control Prepayment”), which date (the “Change of Control Payment
Date”) shall be no earlier than thirty (30) days after the date of such notice.
Borrower must pay the Change of Control Prepayment on the Change of Control
Payment Date together with any applicable Prepayment Premium and any applicable
Make Whole Premium, as the case may be.

 

(e)  Triggering Event. Upon the occurrence of any Triggering Event, Borrower
shall pay to the Administrative Agent, for the ratable benefit of the Lenders,
(i) in the case of Net Cash Proceeds attributable to clause (b) of the
definition of Triggering Event, twenty-five percent (25%) of the Net Cash
Proceeds attributable thereto and (ii) in all other cases, one hundred percent
(100%) of the Net Cash Proceeds attributable thereto.

 

(f)  Illegality. If any Lender shall notify Administrative Agent and Borrower
that the adoption of or any change in any applicable Legal Requirement or in the
interpretation of any applicable Legal Requirement by any Governmental Authority
makes it unlawful, or that any central bank or other Governmental Authority
asserts that it is unlawful for such Lender or its applicable Lending Office to
perform its obligations under this Agreement to maintain any Loans of such
Lender then outstanding hereunder, (i) Borrower shall, no later than 11:00 a.m.
(New York time) and if not prohibited by law, (A) on the last day of the
Interest Period for each outstanding Loan made by such Lender, or (B) if
required by such notice, on the second Business Day following its receipt of
such notice, prepay all of the Loans made by such Lender then outstanding and
pay all accrued interest on the principal amount prepaid to the date of such
prepayment and amounts, if any, required to be paid pursuant to Section 2.09 as
a result of such prepayment being made on such date and (ii) the right of
Borrower to borrow Loans from such Lender for any subsequent Borrowing shall be
suspended until such Lender giving notice referred to above shall notify
Administrative Agent that the circumstances causing such suspension no longer
exist.

 

(g)  No Additional Right; Ratable Prepayment. Borrower shall have no right to
prepay any principal amount of any Loan except as provided in this Section 2.03,
and all notices given pursuant to this Section 2.03 shall be irrevocable and
binding upon Borrower. Each payment of any Loan pursuant to this Section 2.03
shall be made in a manner such that all Loans comprising part of the same
Borrowing are paid in whole or ratably in part other than Loans owing to a
Defaulting Lender as provided in Section 2.14.

 

27

 

 

Section 2.04         Repayment of Loans.

 

(a)  Loans. Borrower shall repay to Administrative Agent for the ratable benefit
of the Lenders the outstanding principal amount of each Loan, together with any
accrued interest on the Maturity Date or such earlier date pursuant to Section
7.02 or Section 7.03.

 

(b)  Six Month Roll Forward Amount. Without limitation to Section 2.04(a), on
each Payment Date Borrower shall pay to the Administrative Agent for the ratable
benefit of the Lenders the greater of (i) the Six Month Roll Forward
Amortization Amount on such Payment Date and (ii) the Minimum Amortization
Amount.

 

Section 2.05         Fees.

 

(a)  Commitment Fees. Borrower agrees to pay to Administrative Agent for
allocation as may be agreed by the Lenders a commitment fee equal to two percent
(2%) per annum of the aggregate daily Unused Commitment Amount; provided that,
no commitment fee shall accrue on the Commitment of a Defaulting Lender during
the period such Lender remains a Defaulting Lender and, provided further that no
commitment fee shall accrue on the Tranche A Commitment after the full Tranche A
Commitment has been drawn down notwithstanding any subsequent repayment of
principal under the Trance A Commitment. The commitment fees shall be due and
payable monthly in arrears on the last day of each month and continuing
thereafter through and including the Commitment Termination Date.

 

(b)  Upfront Fees. Borrower agrees to pay the Administrative Agent the closing
fee in an amount equal to three and one-half percent (3.50%) of the aggregate
Tranche A Commitment as of the Closing Date (“Closing Fee”); provided that, if
the aggregate amount of all Tranche A Loans made to Borrower hereunder
(notwithstanding any repayment thereof) do not equal $108,000,000, the Closing
Fee shall be three and one-half percent (3.50%) of the sum of all Tranche A
Loans made hereunder and two percent (2.0%) of the Unused Tranche A Commitment
as of October 31, 2013. The Closing Fee shall be fully earned on the Closing
Date and shall be due and payable on July 31, 2014, at the sole and absolute
discretion of the Administrative Agent (and, in its sole discretion, subject to
Administrative Agent’s receipt of any necessary regulatory approvals or
consents) either (i) in immediately available funds, (ii) by the issuance to the
Administrative Agent of Warrants initially exercisable for a number of shares of
Common Stock that have an aggregate value equal to the amount of immediately
available funds the Administrative Agent elected not to receive under (i) above
or (iii) a combination of immediately available funds and Warrants satisfactory
to the Administrative Agent. The value of the shares of Common Stock issuable
upon exercise of the Warrants shall be a twenty percent (20%) premium over the
average of the closing bid and asked prices of the Common Stock as officially
reported on the OTC Bulletin Board over the 30-trading-day period ending on the
Business Day immediately prior to the Closing Date. Borrower agrees to pay the
Administrative Agent a fee in an amount equal to three and one-half percent
(3.50%) of the increase in the Tranche B Commitment above the previous highest
amount, which fee will have been fully earned, due and payable on each Tranche B
Commitment Effective Date.

 

28

 

 

Section 2.06         Interest.

 

(a)  Applicable Interest Rates. Borrower shall pay interest on the unpaid
principal amount of each Loan made by each Lender from the date of such Loan
until such principal amount shall be paid in full, at a rate per annum equal at
all times during the Interest Period for such Loan to the sum of (i) the greater
of (x) the Eurodollar Rate for such Interest Period and (y) one percent (1%)
plus (ii) the Applicable Margin in effect from time to time, payable on the last
day of each month in arrears and on the Maturity Date (or such earlier date
pursuant to Section 7.02 or Section 7.03).

 

(b)  Default Rate. Notwithstanding the foregoing, (i) upon the occurrence and
during the continuance of an Event of Default under Section 7.01(a) or Section
7.01(e), all Obligations shall bear interest, after as well as before judgment,
at the Default Rate and (ii) upon the occurrence and during the continuance of
any other Event of Default, upon the request of the Required Lenders, all
Obligations shall bear interest, after as well as before judgment, at the
Default Rate. Interest accrued pursuant to this Section 2.06(b) and all interest
accrued but unpaid on or after the Maturity Date (or such earlier date pursuant
to Section 7.02 or Section 7.03) shall be due and payable on demand.

 

Section 2.07         Payments and Computations.

 

(a)  Payment Procedures. Borrower shall make each payment under this Agreement
not later than 11:00 a.m. (New York time) on the day when due in Dollars to
Administrative Agent at the location set forth in Schedule I (or such other
location as Administrative Agent shall designate in writing to Borrower) in same
day funds without deduction, setoff, or counterclaim of any kind. Administrative
Agent shall promptly thereafter cause to be distributed like funds relating to
the payment of principal, interest or fees ratably (other than amounts payable
solely to Administrative Agent or a specific Lender pursuant to the express
terms hereof but after taking into account payments effected pursuant to
Section 9.04) in accordance with each Lender’s Pro Rata Share to the Lenders for
the account of their respective applicable Lending Offices, and like funds
relating to the payment of any other amount payable to any Lender to such Lender
for the account of its applicable Lending Office, in each case to be applied in
accordance with the terms of this Agreement. If at any time insufficient funds
are received by Administrative Agent to pay fully all amounts of principal,
interest and fees then due hereunder, such funds shall be applied, in accordance
with each Lender’s Pro Rata Share, first towards payment of interest and fees
then due to such parties and second towards payment of principal then due to
such parties.

 

(b)  Computations. All computations of interest and fees shall be made by
Administrative Agent, on the basis of the actual number of days elapsed in a
year of three hundred sixty (360) days. Each determination by Administrative
Agent of an interest rate or fee shall be conclusive and binding for all
purposes, absent manifest error.

 

(c)  Non-Business Day Payments. Whenever any payment shall be stated to be due
on a day other than a Business Day, such payment shall be made on the next
succeeding Business Day, and such extension of time shall in such case be
included in the computation of payment of interest or fees, as the case may be;
provided, however, that if such extension would cause payment of interest on or
principal of Loans to be made in the next following calendar month, such payment
shall be made on the next preceding Business Day.

 

(d)  Administrative Agent Reliance. Unless Administrative Agent shall have
received written notice from Borrower prior to the date on which any payment is
due to the Lenders that Borrower shall not make such payment in full,
Administrative Agent may assume that Borrower has made such payment in full to
Administrative Agent on such date and Administrative Agent may, in reliance upon
such assumption, cause to be distributed to each Lender on such date an amount
equal to the amount then due such Lender. If and to the extent Borrower shall
not have so made such payment in full to Administrative Agent, each Lender shall
repay to Administrative Agent forthwith on demand such amount distributed to
such Lender, together with interest, for each day from the date such amount is
distributed to such Lender until the date such Lender repays such amount to
Administrative Agent, at the Federal Funds Rate for such day.

 

29

 

 

Section 2.08         Sharing of Payments, Etc. If any Lender shall obtain any
payment (whether voluntary, involuntary, through the exercise of any right of
set-off, or otherwise) on account of the Loans made by it in excess of its Pro
Rata Share for each respective payment on account of the Loans obtained by all
the Lenders (other than the replacement of a Lender under Section 2.13, the
payments provided in Section 2.14 and such other non-pro rata treatments as
expressly provided herein with respect to Defaulting Lenders), such Lender shall
notify Administrative Agent and forthwith purchase from the other Lenders such
participations in the Loans made by them as shall be necessary to cause such
purchasing Lender to share the excess payment ratably with each of them;
provided, however, that if all or any portion of such excess payment is
thereafter recovered from such purchasing Lender, such purchase from each Lender
shall be rescinded and such Lender shall repay to the purchasing Lender the
purchase price to the extent of such Lender’s ratable share (according to the
proportion of (a) the amount of the participation sold by such Lender to the
purchasing Lender as a result of such excess payment to (b) the total amount of
such excess payment) of such recovery, together with an amount equal to such
Lender’s ratable share (according to the proportion of (i) the amount of such
Lender’s required repayment to the purchasing Lender to (ii) the total amount of
all such required repayments to the purchasing Lender) of any interest or other
amount paid or payable by the purchasing Lender in respect of the total amount
so recovered. Borrower agrees that any Lender so purchasing a participation from
another Lender pursuant to this Section 2.08 may, to the fullest extent
permitted by law, exercise all its rights of payment (including the right of
set-off) with respect to such participation as fully as if such Lender were the
direct creditor of Borrower in the amount of such participation. The provisions
of this Section 2.08 shall not be construed to apply to any payment made by
Borrower pursuant to and in accordance with the express terms of this Agreement
or any payment obtained by a Lender as consideration for the assignment of or
sale of a participation in any of its Loans to any assignee or participant,
other than to Borrower or any Subsidiary or Affiliate thereof (as to which the
provisions of this Section 2.08 shall apply).

 

Section 2.09         Breakage Costs. If (a) any payment of principal of any Loan
other than on the last day of any month as provided herein or pursuant to
Section 2.03(f) or 2.04(b), whether as a result of any payment pursuant to
Section 2.03, the acceleration of the maturity of the Obligations pursuant to
Article VII, or otherwise, or (b) Borrower fails to make a principal or interest
payment with respect to any Loan on the date such payment is due and payable,
Borrower shall, within ten (10) days of any written demand sent by any Lender to
Borrower through Administrative Agent, pay to Administrative Agent for the
account of such Lender any amounts required to compensate such Lender for any
additional losses, out-of-pocket costs or expenses that it actually reasonably
incurred as a result of such payment or nonpayment, including, without
limitation, any loss, cost or expense incurred as a result of the liquidation or
reemployment of deposits or other funds acquired by any Lender to fund or
maintain such Loan.

 

Section 2.10         Increased Costs. If any 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 or participated in by, any Lender (except any
reserve requirement reflected in the Eurodollar Rate); (b) subject any Lender to
any tax of any kind whatsoever with respect to this Agreement or any
participation in any Loan made by it, or change the basis of taxation of
payments to such Lender in respect thereof (except for Indemnified Taxes or
Other Taxes covered by Section 2.11 and the imposition of, or any change in the
rate of, any Excluded Tax payable by such Lender); or (c) impose on any Lender
or the London interbank market any other condition, cost or expense (other than
taxes, which shall be governed by Section 2.11 hereof) affecting this Agreement
or Loans made by such Lender or participation therein; and the result of any of
the foregoing shall be to increase the cost to such Lender of making or
maintaining any Loan (or of maintaining its obligation to make any such Loan),
or to reduce the amount of any sum received or receivable by such Lender
hereunder (whether of principal, interest or any other amount) then, within
thirty (30) days after demand by such Lender, Borrower will pay to such Lender,
as the case may be, such additional amount or amounts as will compensate such
Lender, as the case may be, for such additional costs incurred or reduction
suffered. A certificate as to the nature of such Lender’s claim and the amount
of such increased cost and detailing the calculation of such cost submitted to
Borrower and Administrative Agent by such Lender shall be conclusive and binding
for all purposes, absent manifest error.

 

30

 

 

(a)  Capital Adequacy. If any Lender determines that any Change in Law affecting
such Lender or any Lending Office of such Lender, or such Lender’s holding
company, if any, regarding capital requirements has or would have the effect of
reducing the rate of return on such Lender’s capital or on the capital of such
Lender’s holding company, if any, as a consequence of this Agreement, the
Commitments of such Lender or the Loans made by such Lender to a level below
that which such Lender or such Lender’s holding company could have achieved but
for such Change in Law (taking into consideration such Lender’s policies and the
policies of such Lender’s holding company with respect to capital adequacy),
then from time to time Borrower will pay to such Lender such additional amount
or amounts as will compensate such Lender or such Lender’s holding company for
any such reduction suffered. A certificate as to such amounts and detailing the
calculation of such amounts submitted to Borrower by such Lender shall be
conclusive and binding for all purposes, absent manifest error. Borrower shall
pay such Lender the amount shown as due on any such certificate within thirty
(30) days after receipt thereof.

 

(b)  Delay in Requests. Failure or delay on the part of any Lender to demand
compensation pursuant to this Section 2.10 shall not constitute a waiver of such
Lender’s right to demand such compensation, provided that Borrower shall not be
required to compensate a Lender pursuant to this Section 2.10 for any increased
costs incurred or reductions suffered more than six months prior to the date
that such Lender notifies Borrower of the Change in Law giving rise to such
increased costs or reductions and of such Lender’s intention to claim
compensation therefor (except that, if the Change in Law giving rise to such
increased costs or reductions is retroactive, then the six (6) month period
referred to above shall be extended to include the period of retroactive effect
thereof).

 

Section 2.11         Taxes.

 

(a)         Defined Terms. For purposes of this Section 2.11, the term
“applicable Legal Requirement” includes FATCA.

 

(b)         Payments Free of Taxes. Any and all payments by or on account of any
obligation of Borrower under any Loan Document shall be made without deduction
or withholding for any Taxes, except as required by applicable Legal
Requirement. If any applicable Legal Requirement (as determined in the good
faith discretion of an applicable Withholding Agent) requires the deduction or
withholding of any Tax from any such payment by a Withholding Agent, then the
applicable Withholding Agent shall be entitled to make such deduction or
withholding and shall timely pay the full amount deducted or withheld to the
relevant Governmental Authority in accordance with applicable Legal Requirement
and, if such Tax is an Indemnified Tax, then the sum payable by Borrower shall
be increased as necessary so that after such deduction or withholding has been
made (including such deductions and withholdings applicable to additional sums
payable under this Section) the applicable Recipient receives an amount equal to
the sum it would have received had no such deduction or withholding been made.

 

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

 

31

 

 

(d)          Indemnification by Borrower. Borrower shall indemnify each
Recipient, within ten (10) days after demand therefor, for the full amount of
any Indemnified Taxes (including Indemnified Taxes imposed or asserted on or
attributable to amounts payable under this Section) payable or paid by such
Recipient or required to be withheld or deducted from a payment to such
Recipient and any reasonable expenses arising therefrom or with respect thereto,
whether or not such Indemnified Taxes were correctly or legally imposed or
asserted by the relevant Governmental Authority. A certificate as to the amount
of such payment or liability delivered to Borrower by a Lender (with a copy to
Administrative Agent), or by Administrative Agent on its own behalf or on behalf
of a Lender, shall be conclusive absent manifest error.

 

(e)          Indemnification by the Lenders. Each Lender shall severally
indemnify Administrative Agent, within ten (10) days after demand therefor, for
(i) any Indemnified Taxes attributable to such Lender (but only to the extent
that Borrower has not already indemnified Administrative Agent for such
Indemnified Taxes and without limiting the obligation of Borrower to do so),
(ii) any Taxes attributable to such Lender’s failure to comply with the
provisions of Section 9.06(e) relating to the maintenance of a Participant
Register and (iii) any Excluded Taxes attributable to such Lender, in each case,
that are payable or paid by Administrative Agent in connection with any Loan
Document, and any reasonable expenses arising therefrom or with respect thereto,
whether or not such Taxes were correctly or legally imposed or asserted by the
relevant Governmental Authority. A certificate as to the amount of such payment
or liability delivered to any Lender by Administrative Agent shall be conclusive
absent manifest error. Each Lender hereby authorizes Administrative Agent to set
off and apply any and all amounts at any time owing to such Lender under any
Loan Document or otherwise payable by Administrative Agent to the Lender from
any other source against any amount due to Administrative Agent under this
paragraph (e).

 

(f)          Evidence of Payments. As soon as practicable after any payment of
Taxes by Borrower to a Governmental Authority pursuant to this Section 2.11,
Borrower shall deliver to Administrative Agent the original or a certified copy
of a receipt issued by such Governmental Authority evidencing such payment, a
copy of the return reporting such payment or other evidence of such payment
reasonably satisfactory to Administrative Agent.

 

(g)          Status of Lenders. (i) Any Lender that is entitled to an exemption
from or reduction of withholding Tax with respect to payments made under any
Loan Document shall deliver to Borrower and Administrative Agent, at the time or
times reasonably requested by Borrower or Administrative Agent, such properly
completed and executed documentation reasonably requested by Borrower or
Administrative Agent as will permit such payments to be made without withholding
or at a reduced rate of withholding. In addition, any Lender, if reasonably
requested by Borrower or Administrative Agent, shall deliver such other
documentation prescribed by applicable Legal Requirement or reasonably requested
by Borrower or Administrative Agent as will enable Borrower or Administrative
Agent to determine whether or not such Lender is subject to backup withholding
or information reporting requirements. Notwithstanding anything to the contrary
in the preceding two sentences, the completion, execution and submission of such
documentation (other than such documentation set forth in Section 2.11(g)
(ii)(A), (ii)(B) and (ii)(D) below) 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.

 

(ii)         Without limiting the generality of the foregoing, in the event that
Borrower is a U.S. Borrower,

 

32

 

 

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

 

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

 

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

 

(ii)         executed originals of IRS Form W-8ECI;

 

(iii)        in the case of a Foreign Lender claiming the benefits of the
exemption for portfolio interest under Section 881(c) of the Code, (x) a
certificate substantially in the form of Exhibit J-1 to the effect that such
Foreign Lender is not a “bank” within the meaning of Section 881(c)(3)(A) of the
Code, a “10 percent shareholder” of Borrower within the meaning of Section
881(c)(3)(B) of the Code, or a “controlled foreign corporation” described in
Section 881(c)(3)(C) of the Code (a “U.S. Tax Compliance Certificate”) and (y)
executed originals of IRS Form W-8BEN; or

 

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

 

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

 

33

 

 

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

 

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

 

(h)          Treatment of Certain Refunds. If any party determines, in its sole
discretion exercised in good faith, that it has received a refund of any Taxes
as to which it has been indemnified pursuant to this Section 2.11 (including by
the payment of additional amounts pursuant to this Section 2.11), it shall pay
to the indemnifying party an amount equal to such refund (but only to the extent
of indemnity payments made under this Section with respect to the Taxes giving
rise to such refund), net of all out-of-pocket expenses (including Taxes) of
such indemnified party and without interest (other than any interest paid by the
relevant Governmental Authority with respect to such refund). Such indemnifying
party, upon the request of such indemnified party, shall repay to such
indemnified party the amount paid over pursuant to this paragraph (h) (plus any
penalties, interest or other charges imposed by the relevant Governmental
Authority) in the event that such indemnified party is required to repay such
refund to such Governmental Authority. Notwithstanding anything to the contrary
in this paragraph (h), in no event will the indemnified party be required to pay
any amount to an indemnifying party pursuant to this paragraph (h) the payment
of which would place the indemnified party in a less favorable net after-Tax
position than the indemnified party would have been in if the Tax subject to
indemnification and giving rise to such refund had not been deducted, withheld
or otherwise imposed and the indemnification payments or additional amounts with
respect to such Tax had never been paid. This paragraph shall not be construed
to require any indemnified party to make available its Tax returns (or any other
information relating to its Taxes that it deems confidential) to the
indemnifying party or any other Person.

 

(i)          Survival. Each party’s obligations under this Section 2.11 shall
survive the resignation or replacement of Administrative Agent or any assignment
of rights by, or the replacement of, a Lender, the termination of the
Commitments and the repayment, satisfaction or discharge of all obligations
under any Loan Document.

 

Section 2.12         Designation of a Different Lending Office. If any Lender
requests compensation under Section 2.10, or requires Borrower to pay any
additional amount to any Lender or any Governmental Authority for the account of
any Lender pursuant to Section 2.11, then such Lender shall (at the request of
Borrower) use reasonable efforts to designate a different Lending Office for
funding or booking its Loans hereunder or to assign its rights and obligations
hereunder to another of its offices, branches or affiliates, if, in the
reasonable judgment of such Lender, such designation or assignment (i) would
eliminate or reduce amounts payable pursuant to Section 2.10 or 2.11, as the
case may be, in the future and (ii) would not subject such Lender to any
unreimbursed cost or expense and would not otherwise be disadvantageous to such
Lender. Borrower hereby agrees to pay all reasonable costs and expenses incurred
by any Lender in connection with any such designation or assignment..

 

34

 

 

Section 2.13         Replacement of Lender. If (i) any Lender requests
compensation under Section 2.10 or requires that Borrower pay any additional
amount pursuant to Section 2.11, (ii) any Lender suspends its obligation to
continue Loans pursuant to Section 2.10, (iii) any Lender is a Defaulting
Lender, or (iv) any Lender is a Non-Consenting Lender (any such Lender, a
“Subject Lender”), then (A) in the case of a Defaulting Lender, Administrative
Agent may, upon notice to the Subject Lender and Borrower, require such Subject
Lender to assign and delegate, without recourse (in accordance with and subject
to the restrictions contained in, and consents required by, Section 9.06), all
of its interests, rights and obligations under this Agreement and the related
Loan Documents to an Eligible Assignee that shall assume such obligations (which
Eligible Assignee may be another Lender, if a Lender accepts such assignment)
and (B) in the case of any Subject Lender, including a Defaulting Lender,
Borrower may, upon notice to the Subject Lender and Administrative Agent and at
Borrower’s sole effort and expense, require such Subject Lender to assign,
without recourse (in accordance with and subject to the restrictions contained
in, and consents required by, Section 9.06), all of its interests, rights (other
than its existing rights to payments pursuant to Section 2.11) and obligations
under this Agreement and the related Loan Documents to an assignee that shall
assume such obligations (which assignee may be another Lender, if a Lender
accepts such assignment), provided that:

 

(a)  as to assignments required by Borrower, Borrower shall have paid to
Administrative Agent the assignment fee specified in Section 9.06;

 

(b)  such Subject Lender shall have received payment of an amount equal to the
outstanding principal of its Loans, accrued interest thereon, accrued fees and
all other amounts payable to it hereunder and under the other Loan Documents
(including any amounts under Section 2.09) from the assignee (to the extent of
such outstanding principal and accrued interest and fees) or Borrower (in the
case of all other amounts);

 

(c)  in the case of any such assignment resulting from a claim for compensation
under Section 2.10, such assignment will result in a reduction in such
compensation or payments thereafter;

 

(d)  such assignment does not conflict with applicable Legal Requirements; and

 

(e)  with respect to a Non-Consenting Lender, the proposed amendment, waiver,
consent or release with respect to this Agreement or any other Loan Document has
been approved by the Majority Lenders and such amendment, waiver, consent or
release can be effected as a result of the assignment contemplated by this
Section.

 

A Lender shall not be required to make any such assignment or delegation if,
prior thereto, as a result of a waiver by such Lender or otherwise, the
circumstances entitling Borrower to require such assignment and delegation cease
to apply. Solely for purposes of effecting the assignment required for a
Defaulting Lender under this Section 2.13 and to the extent permitted under
applicable Legal Requirements, each Lender hereby designates and appoints
Administrative Agent as true and lawful agent and attorney-in-fact, with full
power and authority, for and on behalf of and in the name of such Lender to
execute, acknowledge and deliver the Assignment and Acceptance required
hereunder if such Lender was a Defaulting Lender and such Lender shall be bound
thereby as fully and effectively as if such Lender had personally executed,
acknowledged and delivered the same.

 

Section 2.14         Payments and Deductions to a Defaulting Lender.

 

(a)  If any Lender shall fail to make any payment required to be made by it
pursuant to Section 2.01(a), Section 2.01(b) or Section 2.07(d), then
Administrative Agent may, in its discretion (notwithstanding any contrary
provision hereof), apply any amounts thereafter received by Administrative Agent
for the account of such Lender to satisfy such Lender’s obligations under such
Sections until all such unsatisfied obligations are fully paid in cash.

 

35

 

 

(b)  If a Defaulting Lender as a result of the exercise of a set-off shall have
received a payment in respect of its outstanding Loans which results in its
outstanding Loans being less than its Pro Rata Share of the aggregate
outstanding Loans, then no payments will be made to such Defaulting Lender until
such time as all amounts due and owing to the Lenders have been equalized in
accordance with each Lender’s respective Pro Rata Share of the aggregate
outstanding Loans. Further, if at any time prior to the acceleration or maturity
of the Loans, Administrative Agent shall receive any payment in respect of
principal of a Loan while one (1) or more Defaulting Lenders shall be party to
this Agreement, Administrative Agent shall apply such payment first to the
Borrowings for which such Defaulting Lender(s) shall have failed to fund its Pro
Rata Share until such time as such Borrowing(s) are paid in full or each Lender
(including each Defaulting Lender) is owed its Pro Rata Share of all Loans then
outstanding. After acceleration or maturity of the Loans, subject to the first
sentence of this Section 2.14(b), all principal will be paid ratably as provided
in Section 2.08.

 

(c)  Notwithstanding Section 2.03, no Prepayment Premium or Make Whole Premium
shall be due or payable on any Defaulting Lender’s Pro Rata Share of any amount
prepaid hereunder if such Lender is a Defaulting Lender at the time of such
prepayment.

 

Section 2.15         Syndication Amendments. Notwithstanding the provisions of
Section 9.01, the Borrower agrees to execute and deliver amendments to this
Agreement, or one (1) or more Assignment and Acceptances in accordance with
Section 9.06, within fifteen (15) days of written request from the
Administrative Agent if, with regard to such amendments, such amendments act
only to change the priority or allocation of payments by the Borrower among the
Lenders hereunder (or among existing and new Lenders after giving effect to such
Assignment and Acceptances) (“Syndication Amendments”). Notwithstanding the
provisions of Section 9.01, each Lender agrees to execute and deliver
Syndication Amendments within fifteen (15) days of written request which do not
change the priority or allocation of payments to such Lender.

 

ARTICLE III

CONDITIONS

 

Section 3.01         Conditions Precedent to Initial Borrowings. The obligations
of each Lender to make the initial Loan for the initial Borrowing shall be
subject to the conditions precedent that on the date of such Borrowing:

 

(a)  Documentation. Administrative Agent shall have received the following duly
executed by all the parties thereto, in form and substance satisfactory to
Administrative Agent, and where applicable, in sufficient copies for each
Lender:

 

(i)          this Agreement, a Note (if requested by any Lender) payable to each
Lender in the amount of its Commitment, the Guaranties by each Subsidiary of
Borrower, the Deposit Account Control Agreement, the Security Agreement and
Mortgages, which encumber all of Borrower’s and its Subsidiaries’ Oil and Gas
Properties (other than the Excluded Oil and Gas Properties) and each of the
other Loan Documents;

 

36

 

 

(ii)         favorable opinions, dated as of the date of this Agreement, and
satisfactory to Administrative Agent, from Borrower’s (A) New York counsel on
the enforceability of Loan Documents and creation of the personal property Liens
evidenced by the Security Instruments, (B) Nevada counsel on Nevada corporate
documents and perfection of the personal property Liens evidenced by the
Security Instruments for Nevada entities, (C) North Dakota counsel covering
enforceability of the Mortgages on Property located in North Dakota and (D)
Montana counsel covering enforceability of the Mortgages on Property located in
Montana.

 

(iii)        copies, certified as of the date of this Agreement by a Responsible
Officer, the Secretary or an Assistant Secretary of Borrower, of (A) the
resolutions of the board of directors of Borrower, approving the Loan Documents
and authorizing the entering into of Hedge Transactions, (B) the bylaws of
Borrower, (C) the articles of incorporation of Borrower, duly certified by the
Secretary of State of its the state of incorporation, and (D) all other
documents evidencing other necessary corporate action and governmental
approvals, if any, with respect to this Agreement, the Notes and the other Loan
Documents and Hedge Transactions, and a certificate by a Responsible Officer or
the Secretary or an Assistant Secretary certifying the names and true signatures
of the officers authorized to sign this Agreement, the Notes, Notices of
Borrowing, Notices of Continuation, and the other Loan Documents and Hedge
Transactions to which Borrower is a party;

 

(iv)        copies, certified as of the date of this Agreement by a Responsible
Officer or the Secretary or an Assistant Secretary of each Subsidiary (other
than the Foreign Subsidiaries) of (A) the resolutions of the board of directors
or managers (or other applicable governing body) of such Subsidiary approving
the Loan Documents to which it is a party, (B) the articles or certificate (as
applicable) of incorporation (or organization) of such Subsidiary certified by
the Secretary of State for the state of organization, (C) the bylaws or other
governing documents of such Subsidiary, and (D) all other documents evidencing
other necessary corporate action and governmental approvals, if any, with
respect to the Guaranty, the Security Instruments, and the other Loan Documents
to which such Subsidiary is a party, and a certificate of a Responsible Officer
or the Secretary or an Assistant Secretary of each Subsidiary certifying the
names and true signatures of officers of such Subsidiary authorized to sign the
Guaranty, Security Instruments and the other Loan Documents to which such
Subsidiary is a party;

 

(v)         certificates of good standing for Borrower and each Subsidiary in
each state in which each such Person is organized or qualified to do business,
which certificate shall be (A) dated a date not sooner than fourteen (14) days
prior to the date of this Agreement or (B) otherwise effective on the Closing
Date;

 

(vi)        a certificate dated as of the date of this Agreement from a
Responsible Officer of Borrower stating that (A) all representations and
warranties of Borrower set forth in this Agreement are true and correct in all
material respects as of such date (except in the case of representations and
warranties that are made solely as of an earlier date or time, which
representations and warranties shall be true and correct in all material
respects as of such earlier date or time); (B) no Default has occurred and is
continuing; and (C) the conditions in clauses (a), (b), (c), and (g) – (k) of
this Section 3.01 have been met;

 

(vii)       appropriate UCC-1 Financing Statements and UCC-3 Financing
Statements evidencing assignments or terminations, covering the Collateral for
filing with the appropriate authorities and any other documents, agreements or
instruments necessary to create an Acceptable Security Interest in such
Collateral;

 

(viii)      certificates evidencing the Equity Interests required in connection
with the Security Agreement and powers executed in blank for each such
certificate of any Subsidiary of a Loan Party;

 

37

 

 

(ix)         a certificate from Borrower’s insurance broker or other evidence
reasonably satisfactory to Administrative Agent that all insurance required to
be maintained pursuant to Section 5.02 is in full force and effect and that
Administrative Agent and the Lenders have been named as additional insureds or
loss payee, as applicable, thereunder as its interests may appear and to the
extent required under Section 5.02;

 

(x)          the Initial Reserve Report, in form and substance reasonably
satisfactory to Administrative Agent; and

 

(xi)         a certificate of the Chief Financial Officer of Borrower, in form
and substance reasonably satisfactory to Administrative Agent, attesting to the
Solvency of Borrower and its Subsidiaries, on a consolidated basis, immediately
after giving effect to the Transactions.

 

(b)  Payment of Fees. On or prior to the date of this Agreement, Borrower shall
have paid all costs and expenses that have been invoiced and are payable
pursuant to Section 9.04.

 

(c)  Delivery of Financial Statements. Administrative Agent and the Lenders
shall have received a true and correct copy of the pro forma balance sheet of
Borrower and its Subsidiaries as of the Closing Date prepared by Borrower giving
pro forma effect to the Transactions.

 

(d)  Security Instruments. Administrative Agent shall have received all
appropriate evidence required by Administrative Agent necessary to determine
that Administrative Agent (for its benefit and the benefit of the Secured
Parties) shall have an Acceptable Security Interest in the Collateral, subject
to the proper recording thereof.

 

(e)  Title. Administrative Agent shall be satisfied in its sole discretion with
the title to the Oil and Gas Properties of Borrower and its Subsidiaries
(excluding the Excluded Oil and Gas Properties) and that such Oil and Gas
Properties constitute at least eighty percent (80%) of the PV9 Value.

 

(f)  Material Adverse Change; Internal Approvals. There shall not have occurred
a material adverse change or material adverse effect, in either case, since
December 31, 2012, (i) in the production and anticipated production of, and
lease operating expenses related to, the Oil and Gas Properties of Borrower and
its Subsidiaries or (ii) with respect to the loan syndication, financial,
banking or capital markets that, in the Administrative Agent’s discretion could
impair any component of the Credit Agreement or the transactions contemplated
hereby. Administrative Agent and Lenders shall have received all internal
approvals as necessary in the sole discretion of Administrative Agent and such
Lenders.

 

(g)  No Proceeding or Litigation; No Injunctive Relief. Except as set forth on
Schedule 4.07, no action, suit, investigation or other proceeding (including,
without limitation, the enactment or promulgation of a statute or rule) by or
before any arbitrator or any Governmental Authority shall be pending or, to the
knowledge of Borrower, threatened and no preliminary or permanent injunction or
order by a state or federal court shall have been entered (i) in connection with
(A) any of the Oil and Gas Properties or other Properties of Borrower and its
Subsidiaries or (B) this Agreement or any transaction contemplated hereby or
(ii) which, in any case, could reasonably be expected to result in a Material
Adverse Change.

 

(h)  Consents, Licenses, Approvals, etc. Administrative Agent shall have
received true copies (certified to be such by Borrower or another appropriate
party) of all consents, licenses and approvals required in accordance with
applicable Legal Requirements, or in accordance with any document, agreement,
instrument or arrangement to which Borrower or any Subsidiary is a party, in
connection with the execution, delivery, performance, validity and
enforceability of this Agreement and the other Loan Documents.

 

38

 

 

(i)  Notice of Borrowing; Minimum Borrowing Amount. Administrative Agent shall
have received a Notice of Borrowing from Borrower with appropriate insertions
and executed by a duly authorized Responsible Officer of Borrower requesting a
Tranche A Loan in an amount equal to $68,000,000.

 

(j)  Existing Swap Facility. Administrative Agent shall have received a fully
executed and notarized Assignment, enforceable against each party thereto in
accordance with its terms, with sufficient counterparts from each party thereto
as Administrative Agent may request, together with all assignments and UCC-3
financing statements as Administrative Agent may request in its sole and
absolute discretion.

 

(k)  Restricted Common Equity Issuance. Administrative Agent shall be satisfied
that Borrower has received a minimum of $10,000,000.00 in proceeds in exchange
for Borrower’s issuance of restricted common Equity Interests in Borrower as
part of the Restricted Common Equity Issuance and Administrative Agent shall
have received a fully executed copy of the Restricted Common Equity Issuance
Documents, all in form and substance, and upon terms and conditions,
satisfactory to Administrative Agent.

 

(l)  Material Information. Administrative Agent shall not have become aware of
any material information or other matter that is inconsistent in a material and
adverse manner with any previous due diligence, information or matter (including
any financial information and projections) previously delivered to
Administrative Agent.

 

(m)  Hedge Transactions. Schedule 4.18 shall have set forth therein a complete
list of all Hedge Transactions in effect on the Closing Date unless otherwise
agreed by Administrative Agent in its reasonable discretion. Borrower shall have
entered into Hedge Transactions to effect the hedge positions for the volumes,
years and forecasted production set forth in Schedule 4.18.

 

(n)  USA Patriot Act. Within three (3) days prior to the Closing Date,
Administrative Agent shall have received all documentation and other information
that is required by regulatory authorities under applicable “know your customer”
and anti-money-laundering rules and regulations, including, without limitation,
the Patriot Act.

 

(o)  Use of Proceeds. Administrative Agent shall be satisfied that as of the
Closing Date, the proceeds of the initial funding hereunder shall be applied as
provided under Section 5.09.

 

(p)  Insurance. Administrative Agent shall have received information reasonably
requested by it relating to insurance coverage of Borrower and its Subsidiaries
(after giving effect to the Transactions).

 

(q)  Corporate Due Diligence. Administrative Agent and Lenders shall be
satisfied with the ownership, management, capital and corporate, organization,
tax and legal structure of each Loan Party.

 

Section 3.02         Conditions Precedent to Spyglass Transaction. The
obligation of each Lender to make a Loan on the occasion of each Borrowing to be
used in connection with the Spyglass PSA, whether to fund all or any portion of
the purchase price thereunder or otherwise, shall be subject to the further
conditions precedent that on the date of such Borrowing:

 

39

 

 

(a)  Spyglass Transaction Documents. Administrative Agent shall be satisfied
that all conditions precedent to consummation of the Spyglass Transaction
Documents shall have been satisfied and the Spyglass Transaction Documents are
enforceable against each party thereto. The Administrative Agent shall further
be satisfied with all agreements relating to the Spyglass Transaction Documents
including the Spyglass Carry, the Spyglass Farmout, the Spyglass PSA and all
operating agreements, marketing agreements, transportation agreements and
processing agreements. For a Borrowing of Tranche A Loans, the aggregate
adjusted purchase price of the Spyglass Oil and Gas Properties pursuant to the
Spyglass PSA at the closing thereof shall be no greater than $45,300,000.

 

(b)  Spyglass Oil and Gas Properties. Administrative Agent shall be satisfied in
its sole discretion with the title to the Spyglass Oil and Gas Properties and
that after giving effect to the Spyglass PSA, the Borrower will own a working
interest in the Leases constituting such Oil and Gas Properties of no greater
than and a net revenue interest in such Leases of no less than percentages
satisfactory to Administrative Agent in its reasonable discretion.

 

(c)  Financial Condition. For a Borrowing of Tranche A Loans, before and after
giving effect to such Borrowing and before and after giving effect to the
Spyglass Transaction Documents and the effectiveness thereof (and the acceptance
by Borrower of the proceeds of such Borrowing shall constitute a representation
and warranty by Borrower that on the date of such Borrowing the following are
true and correct): (i) Liquid Investments held by Borrower in accounts subject
to the Deposit Account Control Agreement total an amount greater than or equal
to $33,000,000 and (ii) Working Capital totals an amount greater than or equal
to $33,000,000.

 

(d)    Hedging Requirements. Borrower shall have entered into Hedge Transactions
with respect to the Spyglass Oil and Gas Properties satisfactory to the
Administrative Agent in its sole discretion.

 

(e)    Security Documents. Administrative Agent shall have received from
Borrower duly executed and acknowledged supplements or amendments to the
Mortgages and Security Instruments as Administrative Agent may reasonably
request to encumber the Spyglass Oil and Gas Properties.

 

Section 3.03         Conditions Precedent to All Borrowings. The obligation of
each Lender to make a Loan on the occasion of each Borrowing shall be subject to
the further conditions precedent that on the date of such Borrowing:

 

(a)  the following statement shall be true (and each of the giving of the
applicable Notice of Borrowing or Notice of Continuation and the acceptance by
Borrower of the proceeds of such Borrowing shall constitute a representation and
warranty by Borrower that on the date of such Borrowing such statements are
true): with respect to any Borrowing made after the Closing Date, (A) the
Specified Representations are true and correct in all material respects (except
that such materiality qualifier shall not be applicable to any representations
and warranties that already are qualified or modified by materiality in the text
thereof) on and as of the date of such Borrowing, before and after giving effect
to such Borrowing and to the application of the proceeds from such Borrowing, as
though made on and as of such date (except in the case of representations and
warranties which are made solely as of an earlier date or time, which
representations and warranties shall be true and correct in all material
respects as of such earlier date or time, except that such materiality qualifier
shall not be applicable to any representations and warranties that already are
qualified or modified by materiality in the text thereof), (B) no Default or
Event of Default shall have occurred and be continuing or would result from such
Borrowing and (C) no Material Adverse Change shall have occurred or would result
from such Borrowing or from the application of the proceeds thereof.

 

40

 

 

(b)  Administrative Agent shall have received all documents and instruments
requested pursuant to Section 5.10, which title information (i) shall
collectively cover at least eighty percent (80%) of the PV9 Value and (ii) shall
be in form and substance acceptable to Administrative Agent in its sole
discretion.

 

(c)  Administrative Agent shall have received such other approvals, opinions, or
documents as any Lender through Administrative Agent may reasonably request.

 

ARTICLE IV

REPRESENTATIONS AND WARRANTIES

 

Borrower, for itself, and with respect to each of its Subsidiaries and their
respective Properties, as applicable, represents and warrants as follows:

 

Section 4.01         Existence; Subsidiaries. Borrower is (a) a corporation duly
organized and validly existing under the laws of the State of its incorporation
set forth in the preamble hereto and (b) in good standing and qualified to do
business as a foreign corporation in each jurisdiction where its ownership or
lease of Property or conduct of its business requires such qualification. Each
Subsidiary of Borrower is (i) duly organized, validly existing, and in good
standing (if applicable) under the laws of its jurisdiction of formation and
(ii) in good standing and qualified to do business as a foreign business entity
in each jurisdiction where its ownership or lease of Property or conduct of its
business requires such qualification. As of the date of this Agreement, Borrower
has no Subsidiaries other than listed on Schedule 4.01 and Borrower owns no
other Equity Interests in any Person except in such Subsidiaries and otherwise
as set forth in Schedule 4.01.

 

Section 4.02         Power. The execution, delivery, and performance by Borrower
of this Agreement, the Notes, and the other Loan Documents to which it is a
party and by the Subsidiaries of the Loan Documents to which they are a party,
and the consummation of the transactions contemplated hereby and thereby,
(a) are within Borrower’s and such Subsidiaries’ corporate or other governing
powers, (b) have been duly authorized by all necessary corporate or other
governing action, (c) do not contravene (i) Borrower’s or any Subsidiary’s
certificate or articles of incorporation or formation, limited partnership
agreement, bylaws, limited liability company agreement, or other similar
governance documents or (ii) any law or any contractual restriction binding on
or affecting Borrower or any Subsidiary, and (d) will not result in or require
the creation or imposition of any Lien prohibited by this Agreement. At the time
of each Loan, such Loan, and the use of the proceeds of such Loan, will be
within Borrower’s corporate powers, will have been duly authorized by all
necessary corporate action, will not contravene (x) Borrower’s articles of
incorporation or bylaws, or (y) any law or any contractual restriction binding
on or affecting Borrower and will not result in or require the creation or
imposition of any Lien prohibited by this Agreement.

 

Section 4.03         Authorization and Approvals. No consent, order,
authorization, or approval or other action by, and no notice to or filing with,
any Governmental Authority or any other Person is required for the due
execution, delivery, and performance by Borrower of this Agreement, the Notes,
or the other Loan Documents to which Borrower is a party, or by each Subsidiary
of its Guaranty or the other Loan Documents to which it is a party or the
consummation of the transactions contemplated thereby, including the
Transactions, except for (a) the filing of UCC-1 and UCC-3 Financing Statements
and the Mortgages in the state and county filing offices and (b) those consents
and approvals that have been obtained or made on or prior to the date of this
Agreement and that are in full force and effect. At the time of each Borrowing,
no authorization or approval or other action by, and no notice to or filing
with, any Governmental Authority will be required for such Borrowing or the use
of the proceeds of such Borrowing, except for (i) the filing of any additional
UCC-1 or UCC-3 Financing Statements and the Mortgages in the state and county
filing offices, and if necessary, the Bureau of Land Management and (ii) those
consents and approvals that have been obtained or made on or prior to the date
of such Borrowing, which are, as of the date of such Borrowing, in full force
and effect.

 

41

 

 

 

 

Section 4.04         Enforceable Obligations. This Agreement, the Notes, and the
other Loan Documents to which Borrower is a party have been duly executed and
delivered by Borrower, and the other Loan Documents to which each Subsidiary is
a party have been duly executed and delivered by the applicable Subsidiaries.
Each Loan Document to which Borrower is party is the legal, valid, and binding
obligation of Borrower enforceable against Borrower in accordance with its
terms, except as such enforceability may be limited by any applicable
bankruptcy, insolvency, reorganization, moratorium, or similar law affecting
creditors’ rights generally and by general principles of equity. Each Loan
Document to which each Subsidiary is a party is the legal, valid, and binding
obligation of such Subsidiary, enforceable against each such Subsidiary in
accordance with its terms, except as such enforceability may be limited by any
applicable bankruptcy, insolvency, reorganization, moratorium, or similar law
affecting creditors’ rights generally and by general principles of equity.

 

Section 4.05         Financial Statements.

 

(a)    The Financial Statements present fairly in all material respects the
consolidated financial condition of Borrower and its Subsidiaries as of their
respective dates and for their respective periods in accordance with GAAP,
provided, however, that any interim Financial Statements are subject to normal
year-end adjustments and lack footnotes and other presentation items. All
projections, estimates, and pro forma financial information furnished by
Borrower were prepared on the basis of assumptions, data, information, tests, or
conditions believed to be reasonable at the time such projections, estimates,
and pro forma financial information were furnished (it being understood by
Administrative Agent and the Lenders that projections as to future events are
not viewed as facts and that actual results may differ from projected results).

 

(b)    As of the date of this Agreement and after giving effect to the making of
the initial Loans, neither Borrower nor any Subsidiary has any Debt other than
(i) the Debt listed on Schedule 4.05, (ii) the Obligations under this Agreement
and (iii) the Obligations arising under the Hedge Transactions described under
Schedule 4.18.

 

Section 4.06         True and Complete Disclosure. All factual information
(excluding projections, estimates and pro forma financial information)
heretofore or contemporaneously furnished by or on behalf of Borrower or any of
its Subsidiaries in writing to any Lender or Administrative Agent for purposes
of or in connection with this Agreement, any other Loan Document or any
transaction contemplated hereby or thereby is, and all other such factual
information hereafter furnished by or on behalf of Borrower and its Subsidiaries
in writing to Administrative Agent or any of the Lenders shall be true and
accurate in all material respects on the date as of which such information is
dated or certified and does not contain any untrue statement of a material fact
or omit to state any material fact necessary to make the statements contained
therein not misleading at such time.

 

Section 4.07         Litigation; Compliance with Laws.

 

(a)    Except as listed on Schedule 4.07, there is no pending or, to the
knowledge of Borrower, threatened action or proceeding materially affecting
Borrower or any of its Subsidiaries before any court, Governmental Authority or
arbitrator that could reasonably be expected to cause a Material Adverse Change.
Additionally, there is no pending or, to the knowledge of Borrower, threatened
action or proceeding instituted against Borrower or any of its Subsidiaries
which seeks to adjudicate Borrower or any of its Subsidiaries as bankrupt or
insolvent, or seeking liquidation, winding up, reorganization, arrangement,
adjustment, protection, relief, or composition of it or its debts under any law
relating to bankruptcy, insolvency or reorganization or relief of debtors, or
seeking the entry of an order for relief or the appointment of a receiver,
trustee or other similar official for it or for any substantial part of its
Property.

 

42

 

  

(b)    Borrower and its Subsidiaries have complied in all respects with all
Legal Requirements applicable to the conduct of their respective businesses or
the ownership of their respective Property except for such failures to comply
that would not reasonably be expected to result in a Material Adverse Change.

 

Section 4.08         Use of Proceeds. The proceeds of the Loans will be used by
Borrower for the purposes described in Section 5.09. Borrower is not engaged in
the business of extending credit for the purpose of purchasing or carrying
margin stock (within the meaning of Regulation U). No proceeds of any Loan will
be used to purchase or carry any margin stock in violation of Regulation T, U
or X.

 

Section 4.09         Investment Company Act. Neither Borrower nor any of its
Subsidiaries is an “investment company” or a company “controlled” by an
“investment company” within the meaning of the Investment Company Act of 1940,
as amended.

 

Section 4.10         Taxes.

 

(a)    Reports and Payments. All material Returns (as defined below in clause
(c) of this Section) that are required to be filed by or on behalf of Borrower,
or its Subsidiaries (hereafter collectively called the “Tax Group”) have been
duly filed on a timely basis or appropriate extensions have been obtained, and
such Returns are and will be true, complete, and correct in all material
respects; and all Taxes shown to be payable on the Returns or on subsequent
assessments with respect thereto will have been paid in full on a timely basis,
and no other material Taxes will be payable by the Tax Group with respect to
items or periods covered by such Returns, except in each case to the extent of
(i) reserves reflected in the financial statements delivered under this
Agreement or (ii) Taxes that are being contested in good faith and for which
adequate reserves have been establish therefor. The reserves for accrued Taxes
reflected in the financial statements delivered to the Lenders under this
Agreement are adequate in the aggregate for the payment of all unpaid Taxes,
whether or not disputed, for the period ended as of the date thereof and for any
period prior thereto, and for which the Tax Group may be liable in its own
right, as withholding agent or as a transferee of the assets of, or successor
to, any Person.

 

(b)    Taxes Definition. “Taxes” in this Section 4.10 shall mean all taxes,
charges, fees, levies, or other assessments imposed by any federal, state,
local, or foreign taxing authority, including without limitation, income, gross
receipts, excise, real or personal property, sales, occupation, use, service,
leasing, environmental, value added, transfer, payroll, and franchise taxes (and
including any interest, penalties, or additions to tax attributable to or
imposed on with respect to any such assessment).

 

(c)    Returns Definition. “Returns” in this Section 4.10 shall mean any
federal, state, local, or foreign report, estimate, declaration of estimated
Tax, information statement or return relating to, or required to be filed in
connection with, any Taxes, including any information return or report with
respect to backup withholding or other payments of third parties.

 

43

 

  

Section 4.11         Pension Plans. No Termination Event has occurred that alone
or together with any other Termination Events that have occurred resulted in or
could reasonably be expected to result in liability of Borrower and other
members of Borrower’s Controlled Group in an aggregate amount exceeding
$100,000, and each Plan has complied with and been administered in all respects
in accordance with applicable provisions of ERISA and the Code except for any
failures to so comply or administer that could not, individually or in the
aggregate, reasonably be expected to cause a Material Adverse Change. A
determination has not been made, and is not reasonably expected to be made, that
any Plan (which has liabilities with respect to vested benefits with an
actuarial present value that exceeds the current value of the assets of such
Plan allocable to such benefit liabilities by more than $100,000) is in “at
risk” status (within the meaning of Section 303 of ERISA). The conditions for
imposition of a lien under Section 303(k) of ERISA do not exist and are not
reasonably expected to arise with respect to any Plan. The present value of all
benefits vested under each Plan (based on the assumptions used to fund such
Plan) did not, as of the last annual valuation date applicable thereto, exceed
the value of the assets of such Plan allocable to such vested benefits in an
amount in excess of $100,000. Neither Borrower nor any member of the Controlled
Group has had a complete or partial withdrawal from any Multiemployer Plan for
which Borrower or any member of the Controlled Group has incurred any
unsatisfied withdrawal liability that alone or together with any other such
withdrawal from a Multiemployer Plan resulted in or could reasonably be expected
to result in an aggregate amount of unsatisfied withdrawal liability owed by
Borrower or members of the Controlled Group exceeding $100,000. To the knowledge
of Borrower, as of the most recent valuation date applicable thereto, neither
Borrower nor any member of the Controlled Group would become subject to
liability under ERISA exceeding $100,000 if Borrower or any member of the
Controlled Group has received notice that any Multiemployer Plan is insolvent or
in reorganization. Based upon GAAP existing as of the date of this Agreement and
current factual circumstances, Borrower has no reason to believe that the annual
cost during the term of this Agreement to Borrower for post-retirement benefits
to be provided to the current and former employees of Borrower under welfare
benefit plans (as defined in Section 3(1) of ERISA) could, in the aggregate,
reasonably be expected to cause a Material Adverse Change.

 

Section 4.12         Condition of Property; Casualties. Borrower and each of its
Subsidiaries has good and defensible title to, or a valid leasehold interest in,
or has the right to use pursuant to a valid licenses, all of its Oil and Gas
Properties as is customary in the oil and gas industry in all material respects,
free and clear of all Liens, except for Permitted Liens. The material Properties
owned or leased by Borrower or any of its Subsidiaries and used in the
continuing operations of Borrower and its Subsidiaries, are in good repair,
working order and operating condition (subject to normal wear and tear), except
to the extent that the failure to be in such condition could not reasonably be
expected to result in a Material Adverse Change. Since December 31, 2012,
neither the business nor the material Properties of Borrower and each of its
Subsidiaries, taken as a whole and after giving pro forma effect to the
Transactions, has been materially and adversely affected as a result of any
fire, explosion, earthquake, flood, drought, windstorm, accident, strike or
other labor disturbance, embargo, requisition or taking of Property or
cancellation of contracts, Permits, or concessions by a Governmental Authority,
riot, activities of armed forces, or acts of God or of any public enemy. For the
Borrower’s or its Subsidiaries’ Oil and Gas Properties where the Borrower, or an
Affiliate, is the operator, the rights and such Properties presently owned,
leased or licensed by the Borrower or its Subsidiaries including, without
limitation, all easements and rights of way, include all rights and Properties
reasonably necessary to permit the Borrower, or such Affiliate, to conduct its
business for such Oil and Gas Properties in a reasonably prudent manner in
accordance with the usual and customary practices of the industry in this
region. To the Borrower’s knowledge, for the Borrower’s or its Subsidiaries’ Oil
and Gas Properties where another party is the operator, the rights and such
Properties presently owned, leased or licensed by the Borrower, or such
operator, including, without limitation, all easements and rights of way,
include all rights and Properties reasonably necessary to permit the Borrower,
or such operator, to conduct its business for such Properties in a reasonably
prudent manner in accordance with the usual and customary practices of the
industry in this region.

 

44

 

  

Section 4.13         No Burdensome Restrictions; No Affiliate Transactions.

 

(a)    Neither Borrower nor any of its Subsidiaries is a party to any indenture,
loan, or credit agreement or any lease or other agreement or instrument or
subject to any charter or corporate restriction or provision of applicable law
or governmental regulation that could reasonably be expected to cause a Material
Adverse Change. Neither Borrower nor any of its Subsidiaries is in default under
or with respect to any contract, agreement, lease, or other instrument to which
Borrower or any of its Subsidiaries is a party that could reasonably be expected
to cause a Material Adverse Change. Neither Borrower nor any of its Subsidiaries
has received any notice of any default under any contract, agreement, lease, or
other instrument to which Borrower or such Subsidiary is a party and such
contract, agreement, lease or other instrument could reasonably be expected to
result in payments or revenue by Borrower or such Subsidiary in excess of
$50,000 in any fiscal year.

 

(b)    Borrower, or any Subsidiary of Borrower, is not party to any Affiliate
Transaction as of the Closing Date except as disclosed on Schedule 4.13(b) or,
after the Closing Date, unless disclosed to the Administrative Agent in writing
and in compliance with Section 6.07.

 

Section 4.14         Environmental Condition.

 

(a)    Permits, Etc. Borrower and its Subsidiaries (i) have obtained all
Environmental Permits required under Environmental Law for the ownership and
operation of their respective Properties and the conduct of their respective
businesses; (ii) have at all times been and are in compliance with all terms and
conditions of such Environmental Permits and with all other requirements of
applicable Environmental Laws; (iii) have not, except as set forth on Schedule
4.07, received written notice of any outstanding violation or alleged violation
of any Environmental Law or Environmental Permit; and (iv) are not, except as
set forth on Schedule 4.07, subject to any actual, pending or, to Borrower’s
knowledge, threatened Environmental Claim, except for such failures to obtain an
Environmental Permit, failures to comply with Environmental Permits or
Environmental Laws, written notices of violations or alleged violations of
Environmental Laws or Environmental Permits, or Environmental Claims that would
not reasonably be expected to result in a claim, judgment, Lien, or other
encumbrance affecting such Property exceeding $250,000.

 

(b)    Certain Liabilities. None of the present or previously owned, leased or
operated Property of Borrower or any Subsidiary, wherever located, (i) has been
placed on or proposed to be placed on the National Priorities List, the
Comprehensive Environmental Response Compensation Liability Information System
list, or their state or local analogs, or have been otherwise identified by any
Governmental Authority as a potential site for removal, remediation, cleanup,
closure, restoration, reclamation, or other response activity under any
Environmental Laws, except for such removal, remediation, cleanup, closure,
restoration, reclamation or other response that would not reasonably be expected
to exceed $250,000 in costs; (ii) is subject to a Lien, arising under or in
connection with any Environmental Laws, that attaches to any revenues or to any
Property owned, leased or operated by Borrower or any of its Subsidiaries,
wherever located; or (iii) has been the site of any Release of Hazardous
Substances or Hazardous Wastes from present or past operations that has caused
at the site or at any third-party site any condition that has resulted in or
could reasonably be expected to result in the need for Response, except for a
Response that would not reasonably be expected to exceed $250,000.

 

(c)    Certain Actions. Without limiting the foregoing, (i) all necessary
notices have been properly filed, and no further action is required under
current Environmental Law as to each Response or other restoration or remedial
project undertaken by Borrower or its Subsidiaries on any of their presently or
formerly owned, leased or operated Property except for a Response or other
restoration or remedial project that would not reasonably be expected to cause a
Material Adverse Change and (ii) to Borrower’s knowledge, there are no facts,
circumstances, conditions or occurrences with respect to any Property owned,
leased or operated by Borrower or any of its Subsidiaries that could reasonably
be expected to form the basis of an Environmental Claim under Environmental Laws
that would reasonably be expected to cause a Material Adverse Change.

 

45

 

  

Section 4.15         Permits, Licenses, Etc. Borrower and its Subsidiaries
possess all authorizations, Permits, licenses, patents, patent rights or
licenses, trademarks, trademark rights, trade names rights and copyrights which
are material to the conduct of their material business. Borrower and its
Subsidiaries manage and operate their business in all respects in accordance
with all applicable Legal Requirements and good industry practices except for
such failures to do so that would not reasonably be expected to result in a
Material Adverse Change.

 

Section 4.16         Liens; Titles, Leases, Etc. 

  

(a)    Each of Borrower and its Subsidiaries has good and defensible title to
its Property, free and clear of all Liens other than Permitted Liens and none of
the Property of Borrower or any of the Subsidiaries is subject to any Lien other
than Permitted Liens. All leases and agreements necessary for the conduct of
business of Borrower and its Subsidiaries, as it is presently being conducted,
are valid and subsisting, effective and enforceable against Borrower and its
Subsidiaries and to Borrower’s knowledge there exists no default or event of
default or circumstance which with the giving of notice or lapse of time or both
would give rise to a default by Borrower or any Subsidiary, or by any of the
other parties thereto, under any such leases or agreements which would result in
a Material Adverse Change. Neither Borrower nor any of its Subsidiaries is a
party to any agreement or arrangement (other than this Agreement and the
Security Instruments, or subject to any order, judgment, writ or decree, that
either restricts or purports to restrict its ability to grant Liens to secure
the Secured Obligations against their respective Properties.

 

(b)    After giving full effect to the Permitted Liens, Borrower and its
Subsidiaries own a working interest and net revenue interest, in production
attributable to the Hydrocarbon Interests shown on the Initial Reserve Report,
as of the Closing Date as reflected on Schedule 4.16(b) which is consistent in
all material respects with the Initial Reserve Report, and thereafter which is
consistent in all material respects with the most recently delivered Reserve
Report, and the ownership of such Hydrocarbon Interests shall not in any
material respect obligate Borrower or its Subsidiaries to bear the costs and
expenses relating to the maintenance, development and operations of each such
Property in an amount materially in excess of its working interest in each
Property set forth, as of the Closing Date, on Schedule 4.16(b), and thereafter
which is consistent in all material respects with the most recently delivered
Reserve Report, that is not offset by a corresponding proportionate increase in
the Borrower’s or its Subsidiaries’ net revenue interest in such Property.

 

(c)    There are no (i) preferential rights to purchase, (ii) required consents
to assignment, (iii) no Hydrocarbon purchase or sales agreements that are not
cancellable on less than sixty (60) days’ notice that are not scheduled on
Schedule 4.16(c) or (iv) except as set forth in the relevant leases, lease
forfeiture provisions affecting Borrower’s or its Subsidiaries’ Oil and Gas
Properties that have not been disclosed to the Administrative Agent in Schedule
4.16(c), or with respect to Oil and Gas Properties acquired after the Closing
Date, disclosed in writing to Administrative Agent and, following such
disclosure Schedule 4.16(c) shall be deemed amended to reflect such Oil and Gas
Properties.

 

46

 

  

Section 4.17         Solvency and Insurance. Before and after giving effect to
the making of the initial Loans, Borrower and each of its Subsidiaries are, on a
consolidated basis, Solvent. Furthermore, Borrower and its Subsidiaries carry
insurance required under Section 5.02 of this Agreement.

 

Section 4.18         Hedging Agreements. Schedule 4.18 sets forth, as of the
date of this Agreement, a true and complete list of all Hedge Transactions of
Borrower and each Subsidiary (including the term, counterparty, volumes and
pricing).

 

Section 4.19         Gas Imbalances. Except as set forth on Schedule 4.19 or on
the most recent certificate delivered in conjunction with the delivery of a
Reserve Report hereunder, (a) on a net basis there are no gas imbalances, take
or pay or other prepayments which would require Borrower and its Subsidiaries to
deliver Hydrocarbons produced from the Oil and Gas Properties at some future
time without then or thereafter receiving full payment therefor exceeding one
hundred million (100,000,000) cubic feet of gas in the aggregate and (b) neither
Borrower nor any of its Subsidiaries has produced gas, in any material amount,
subject to balancing rights of third parties or subject to balancing duties
under governmental requirements.

 

Section 4.20         OFAC. Neither Borrower nor any of its Subsidiaries is in
violation of any of the country or list based economic and trade sanctions
administered and enforced by OFAC. Neither Borrower nor any of its Subsidiaries
(a) is a Sanctioned Person or a Sanctioned Entity, (b) has its assets located in
Sanctioned Entities, or (c) derives revenues from investments in, or
transactions with Sanctioned Persons or Sanctioned Entities. No proceeds of any
Loan will be used to fund any operations in, finance any investments or
activities in, or make any payments to, a Sanctioned Person or a Sanctioned
Entity.

 

Section 4.21         Buildings. 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 definitions of
“Realty Collateral”, “Personalty Collateral” and “Fixture Collateral” and no
Building or Manufactured (Mobile) Home is encumbered by the Security
Instruments. As used herein, “Flood Insurance Regulations” shall mean (a) the
National Flood Insurance Act of 1968 as now or hereafter in effect or any
successor statute thereto, (b) the Flood Disaster Protection Act of 1973 as now
or hereafter in effect or any successor statue thereto, (c) 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 (d) the Flood Insurance Reform Act
of 2004 and any regulations promulgated thereunder.

 

Section 4.22         Commodity Exchange Act. As of the date hereof and at all
times thereafter, each Loan Party is an “eligible contract participant” as
defined in the Commodity Exchange Act.

 

Section 4.23         No Default; Material Adverse Change. No Default has
occurred and is continuing. As of the Closing Date, and immediately before
giving effect to the Assignment and this Agreement, no default or event of
default existed under the Existing Swap Facility, the Existing Obligations or
any of the “Credit Support Documents” (as defined in the Existing Swap
Facility). Since the Closing Date, no event or circumstance that would cause a
Material Adverse Change has occurred and is continuing.

 

Section 4.24         Spyglass Transaction Documents. No Default has occurred and
is continuing under the Spyglass Transaction Documents and all representations
and warranties of each Loan Party, and to Borrower’s knowledge, all
representations and warranties of each other party, to the Spyglass Transaction
Documents are true and correct in all respects.

 

47

 

  

Section 4.25         Officer’s Financial Certificate. As of the Closing Date,
the information contained in, and attached to, that certain Officer’s Financial
Certificate of Borrower dated August 19, 2013 is true and accurate in all
material respects on the date as of which such information is dated or certified
and does not contain any untrue statement of a material fact or omit to state
any material fact necessary to make the statements contained therein not
misleading at such time, provided that, all projections and estimates furnished
by Borrower and attached thereto were prepared on the basis of reasonable
assumptions, data, information, tests, or conditions at the time such
projections and estimates were furnished.

 

ARTICLE V

AFFIRMATIVE COVENANTS

 

So long as any Note or any amount under any Loan Document shall remain unpaid,
or any Lender shall have any Commitment hereunder, Borrower agrees and will
cause its Subsidiaries to agree, unless the Majority Lenders shall otherwise
consent in writing, to comply with the following covenants.

 

Section 5.01         Compliance with Laws, Etc. Borrower shall comply, and cause
each of its Subsidiaries to comply, with all applicable Legal Requirements
except for such failures to comply that would not reasonably be expected to
result in a Material Adverse Change. Without limiting the generality and
coverage of the foregoing, Borrower shall comply, and shall cause each of its
Subsidiaries to comply, with all Environmental Laws and all laws, regulations,
or directives with respect to equal employment opportunity and employee safety
in all jurisdictions in which Borrower, or any of its Subsidiaries do business
except for such failures to comply that would not reasonably be expected to
result in a Material Adverse Change. Without limitation of the foregoing,
Borrower shall, and shall cause each of its Subsidiaries to, (a) maintain and
possess all authorizations, Permits, licenses, trademarks, trade names, rights
and copyrights which are necessary to the conduct of its business, except to the
extent failure to do so would not reasonably be expected to result in a Material
Adverse Change, and (b) obtain, as soon as practicable, all consents or
approvals required from any states of the United States (or other Governmental
Authorities) necessary to grant Administrative Agent an Acceptable Security
Interest in Borrower’s and its Subsidiaries’ Oil and Gas Properties other than
the Excluded Oil and Gas Properties.

 

Section 5.02         Maintenance of Insurance. Borrower and its Subsidiaries
shall maintain insurance with respect to their respective properties and
business against such liabilities, casualties and risks as is customary in the
relevant industry, all such insurance to be in amounts and from insurers
reasonably acceptable to Administrative Agent, maintained by Borrower, naming
Administrative Agent as loss payee (or, in the case of liability insurance,
together with Lenders, as additional insureds), and, upon any renewal of any
such insurance and at other times upon request by Administrative Agent, furnish
to Administrative Agent evidence, reasonably satisfactory to Administrative
Agent of the maintenance of such insurance.

 

Section 5.03         Preservation of Corporate Existence, Etc. Borrower shall
(a) preserve and maintain, and cause each of its Subsidiaries to preserve and
maintain, its corporate existence (except as otherwise permitted pursuant to
Section 6.04), rights, franchises, and privileges in the jurisdiction of its
incorporation and (b) qualify and remain qualified, and cause each such
Subsidiary to qualify and remain qualified, as a foreign corporation in each
jurisdiction in which qualification is necessary or desirable in view of its
business and operations or the ownership of its Properties.

 

48

 

  

Section 5.04         Payment of Taxes, Etc. Borrower shall pay and discharge,
and cause each of its Subsidiaries to pay and discharge, before the same shall
become delinquent, (a) all taxes, assessments, and governmental charges or
levies imposed upon it or upon its income or profits or Property that are
material in amount, prior to the date on which penalties attach thereto and
(b) all lawful claims that are material in amount which, if unpaid, might by law
become a Lien upon its Property; provided, however, that neither Borrower nor
any such Subsidiary shall be required to pay or discharge any such tax,
assessment, charge, levy, or claim which is being contested in good faith and by
appropriate proceedings, and with respect to which such reserves as may be
required by GAAP, if any, have been established.

 

Section 5.05         Visitation Rights. At any reasonable time and from time to
time, upon reasonable notice, Borrower shall, and shall cause its Subsidiaries
to, permit Administrative Agent and any Lender or any of their respective agents
or representatives thereof, to (a) examine and make copies of and abstracts from
the records and books of account of, and visit and inspect, in each case at
their own expense, except during the existence of a Default, at their reasonable
discretion the Properties of, Borrower and any such Subsidiary and (b) discuss
the affairs, finances and accounts of Borrower and any such Subsidiary with any
of their respective officers or directors.

 

Section 5.06         Reporting Requirements. Borrower shall furnish to
Administrative Agent and each Lender:

 

(a)    Annual Financials. For each fiscal year of Borrower and its consolidated
Subsidiaries ended on or ending after December 31, 2013, as soon as available
and in any event not later than one hundred twenty (120) days after the end of
the fiscal year ending on December 31, 2013, and one hundred twenty (120) days
after the end of each such other fiscal year, (i) a copy of the annual audited
financial report for such year for Borrower and its consolidated Subsidiaries,
including therein Borrower’s and its consolidated Subsidiaries’ balance sheet as
of the end of such fiscal year and Borrower’s and its consolidated Subsidiaries’
statements of income, cash flows, and retained earnings, together with an
unqualified opinion from Hein & Associates or such other independent public
accounting firm registered with the Public Company Accounting Oversight Board
reasonably acceptable to Administrative Agent, and including any management
letters delivered by such accountants to Borrower or any Subsidiary in
connection with such audit and (ii) a Compliance Certificate executed by a
Responsible Officer of Borrower, setting forth reasonably detailed calculations,
with supporting information as may be necessary, to evidence the information
reflected thereon;

 

(b)    Quarterly Financials. As soon as available and in any event not later
than seventy-five (75) days after the end of the first three fiscal quarters of
each fiscal year, commencing with the fiscal quarter ending June 30, 2013, (i)
the unaudited balance sheet and the unaudited statements of income, cash flows,
and retained earnings of Borrower and its consolidated Subsidiaries for such
fiscal period and for the period commencing at the end of the previous fiscal
year and ending with the end of such fiscal quarter, all in reasonable detail
and duly certified with respect to such consolidated statements by a Responsible
Officer of Borrower as having been prepared in accordance with GAAP (subject to
the absence of footnotes and year-end audit adjustments) and (ii) a Compliance
Certificate executed by a Responsible Officer of Borrower, setting forth
reasonably detailed calculations, with supporting information as may be
necessary, to evidence the information reflected thereon; as soon as available
and in any event not later than one hundred and twenty (120) days after the end
of the fourth fiscal quarter of each fiscal year, commencing with the fiscal
quarter ending December 31, 2013, the unaudited balance sheet and the unaudited
statements of income of Borrower and its consolidated Subsidiaries for such
fiscal period, all in reasonable detail and duly certified with respect to such
consolidated statements by a Responsible Officer of Borrower as having been
prepared in accordance with GAAP (subject to the absence of footnotes and
year-end audit adjustments);

 

(c)    Certified Budget and Projections. (i) Within forty-five (45) days prior
to the end of each fiscal year, and within fifteen (15) days prior to the end of
each fiscal quarter, in form satisfactory to Administrative Agent, an estimated
budget, with anticipated capital expenditures, and forecast (including a
projected consolidated balance sheets and income statements) for the following
fiscal year, or the following fiscal quarter, as the case may be, together with
such other information as may be reasonably requested by Administrative Agent,
(ii) a certificate of a Responsible Officer of Borrower that such budget and
forecast are based upon reasonable estimates, information and assumptions and
such Responsible Officer has no reason to believe such budget and forecast are
incorrect or misleading in any material respect and (iii) upon any material
deviation from or modification to such budget and forecast, or if such budget
and forecast would otherwise be materially misleading, a revised budget and
forecast for such fiscal year, or such fiscal quarter, as the case may be,
together with such other information as may be reasonably requested by
Administrative Agent;

 

49

 

  

(d)    Reserve Reports. As soon as available but in any event on or before March
15 and September 15, beginning March 15, 2014, (i) a Reserve Report dated
effective, respectively, as of December 31 and June 30 for such year and (ii)
such other information as may be reasonably requested by Administrative Agent or
any Lender with respect to the Oil and Gas Properties. Administrative Agent may
request additional Reserve Reports in its sole reasonable discretion, together
with such other information as may be reasonably requested by Administrative
Agent or any Lender with respect to the Oil and Gas Properties. Each delivery of
a Reserve Report by Borrower to Administrative Agent and the Lenders shall
constitute a representation and warranty by Borrower to Administrative Agent and
the Lenders that (A) the representations and warranties set forth herein are
true and correct with respect to the Oil and Gas Properties specified therein
and such Oil and Gas Properties comply with the covenants set forth in this
Agreement and that title to Oil and Gas Properties constituting eighty percent
(80%) of the PV9 Value has been reviewed and approved by the Administrative
Agent in accordance with Section 5.10, and (B) the descriptions of the record
title interests of the assets of Borrower and its Subsidiaries that are included
in the calculation of the PV9 Value set forth in such Reserve Report include the
entire record title interests of Borrower and its Subsidiaries in such Oil and
Gas Properties, are complete and accurate in all respects, and take into account
all Permitted Liens;

 

(e)    Production Reports; Lease Operating Expenses. As soon as possible and in
any event within forty-five (45) days after the end of each month, a report, in
form satisfactory to Administrative Agent and certified as being true and
correct in all material respects by a Responsible Officer of Borrower, setting
forth information as to quantities or production from Borrower’s and its
Subsidiaries’ Oil and Gas Properties, volumes of production sold, pricing,
purchasers of production, gross revenues, all lease operating expenses, amounts
payable and aging accounts (as applicable, on a well by well basis) and capital
expenditures attributable thereto, and such other information as Administrative
Agent may reasonably request with respect to the relevant monthly period;

 

(f)     Defaults. As soon as possible and in any event within three (3) Business
Days after a Responsible Officer of Borrower or a Subsidiary has knowledge of
(i) the occurrence of any Default or (ii) the occurrence of any default under
any instrument or document evidencing Debt of Borrower or any Subsidiary having
an aggregate principal amount in excess of $100,000, in each case which Default
or default is continuing on the date of such statement, a statement of a
Responsible Officer of Borrower setting forth the details of such Default or
default, as applicable, and the actions which Borrower or such Subsidiary has
taken and proposes to take with respect thereto;

 

(g)    Quarterly Report on Hedging. Concurrent with the delivery of the
financial statements required under Section 5.06(b) above, a statement prepared
by Borrower and certified as being true and correct in all material respects by
a Responsible Officer of Borrower, setting forth in reasonable detail, all
Hydrocarbon Hedge Agreements to which any production of oil, gas or other
Hydrocarbons from the Oil and Gas Properties of Borrower and its Subsidiaries is
then subject, together with a statement of Borrower’s or its Subsidiary’s, as
applicable, position with respect to each such Hydrocarbon Hedge Agreement;

 

50

 

  

(h)    Termination Events. As soon as possible and in any event (i) within
thirty (30) days after Borrower or any member of the Controlled Group knows or
has reason to know that any Termination Event described in clause (a) of the
definition of “Termination Event” has occurred, and (ii) within ten (10) days
after Borrower or any member of the Controlled Group knows or has reason to know
that any other Termination Event has occurred, a statement of a Responsible
Officer of Borrower describing such Termination Event and the action, if any,
which Borrower or such Controlled Group member proposes to take with respect
thereto;

 

(i)     Termination of Plans. Promptly and in any event within five (5) Business
Days after receipt thereof by Borrower or any member of the Controlled Group
from the PBGC, copies of each notice received by Borrower or any such member of
the Controlled Group of the PBGC’s intention to terminate any Plan or to have a
trustee appointed to administer any Plan;

 

(j)     Other ERISA Notices. Promptly and in any event within ten (10) Business
Days after receipt thereof by Borrower or any member of the Controlled Group
from a Multiemployer Plan sponsor, a copy of each notice received by Borrower or
any member of the Controlled Group concerning the imposition or amount of
withdrawal liability pursuant to Section 4202 of ERISA;

 

(k)    Environmental Notices. Promptly upon the receipt thereof by Borrower or
any of its Subsidiaries, a copy of any form of request, notice, summons or
citation received from the Environmental Protection Agency, or any other
Governmental Authority, concerning (i) violations or alleged violations of
Environmental Laws, which seeks to impose liability therefor and would
reasonably be expected to cause a Material Adverse Change, (ii) any action or
omission on the part of Borrower or any Subsidiary in connection with Hazardous
Waste or Hazardous Substances that would reasonably be expected to result in a
Material Adverse Change, including without limitation any information request
related to, or notice of, potential responsibility under CERCLA, or
(iii) concerning the filing of a material Lien pursuant to Environmental Laws
upon, against or in connection with Borrower or any Subsidiary, or any of their
leased or owned Property, wherever located;

 

(l)     Other Governmental Notices. Promptly and in any event within ten (10)
Business Days after receipt thereof by Borrower or any Subsidiary, a copy of any
notice, summons, citation, or proceeding seeking to modify in any material
respect, revoke, or suspend any material contract, license, permit or agreement
with any Governmental Authority, if such modification, revocation, or suspension
would reasonably be expected to cause a Material Adverse Change;

 

(m)   Material Adverse Changes. Prompt written notice of any condition or event
of which Borrower has knowledge, which condition or event has resulted or could
reasonably be expected to result in a Material Adverse Change, including breach
or non-performance of, or any default under, a material agreement of Borrower or
any Subsidiary;

 

(n)    Disputes, Etc. Prompt written notice of (i) any claims, legal or
arbitration proceedings, proceedings before any Governmental Authority, or
disputes, in each case of which Borrower has knowledge, affecting Borrower or
any of its Subsidiaries that, if adversely determined, would reasonably be
expected to cause a Material Adverse Change, or any material labor controversy
of which Borrower has knowledge resulting in or reasonably considered to be
likely to result in a strike against Borrower or any of its Subsidiaries and
(ii) any claim, judgment, Lien or other encumbrance (other than a Permitted
Lien) affecting any Property of Borrower or any Subsidiary if such claim,
judgment, Lien, or other encumbrance affecting such Property not otherwise
adequately covered by insurance shall exceed $250,000;

 

51

 

  

(o)    Notices Under Other Loan Agreements. Concurrent with the delivery thereof
copies of any statement, report or notice furnished to any Person pursuant to
the terms of any indenture, loan or credit or other similar agreement relating
to Debt of Borrower or its Subsidiaries in an aggregate principal amount in
excess of $500,000, other than this Agreement and not otherwise required to be
furnished to the Lenders pursuant to any other provision of this Section 5.06;

 

(p)    Notices of Dispositions, Acquisitions and Hedge Transactions. Borrower
shall notify Administrative Agent of any (i) Disposition of Oil and Gas
Properties at least thirty (30) days prior to such Disposition, (ii) acquisition
by Borrower or its Subsidiaries of Oil and Gas Properties with a fair market
value in excess of $500,000 and (iii) novation, assignment, unwinding,
termination or amendment of any hedge position or Hedge Transaction (identifying
any new counterparty, any replacement hedge position or Hedge Transaction, or
describing any material adverse amendment with respect thereto) at least ten
(10) days prior to such novation, assignment, unwinding, termination or
amendment;

 

(q)    Spyglass Transaction Documents. All material statements, reports,
information or notices sent or received pursuant to the Spyglass Transaction
Documents;

 

(r)     Public Filings. Notice of all documents filed by Borrower or any
Subsidiary with the Securities and Exchange Commission; and

 

(s)    Other Information. Such other information respecting the business or
Properties, or the condition or operations, financial or otherwise, of Borrower
or any of its Subsidiaries, as any Lender through Administrative Agent may from
time to time reasonably request.

 

Section 5.07         Maintenance of Property. Subject to Section 6.04, Borrower
shall, and shall cause each of its Subsidiaries to, maintain their owned,
leased, or operated Property in good condition and repair in accordance with
customary industry standards (normal wear and tear excepted) and Borrower shall
abstain, and cause each of its Subsidiaries to abstain from, knowingly or
willfully permitting the commission of waste or other injury, destruction, or
loss of natural resources, or the occurrence of pollution, contamination, or any
other condition in, on or about the owned, leased or operated Property involving
the Environment that could reasonably be expected to result in Response
activities and that would reasonably be expected to cause a Material Adverse
Change.

 

Section 5.08         Agreement to Pledge; Additional Guarantors; Accounts.

 

(a)    Upon the acquisition of any Oil and Gas Properties or changes thereto,
but no more frequently than quarterly, or if the aggregate fair market value of
all acquired Oil and Gas Properties during any quarter exceeds $250,000,
Borrower must provide new Mortgages or provide amendments or supplements to
existing Mortgages such that all Oil and Gas Properties (other than the Excluded
Oil and Gas Properties, unless otherwise requested by Administrative Agent in
its sole discretion) are subject to an Acceptable Security Interest and
otherwise comply with this Agreement. In addition, as to any such Oil and Gas
Properties, the Borrower must provide title information satisfactory to the
Administrative Agent in its sole discretion with regard to Oil and Gas
Properties constituting at least eighty percent (80%) of the PV9 Value. All such
Liens will be created and perfected by and in accordance with the provisions of
mortgages, deeds of trust, security agreements and financing statements or other
Security Instruments, all in form and substance reasonably satisfactory to
Administrative Agent and in sufficient executed (and acknowledged where
necessary or appropriate) counterparts for recording purposes.

 

52

 

  

(b)    Borrower shall cause each Subsidiary to guarantee the Secured Obligations
pursuant to a Guaranty Agreement. In connection with any such guaranty, Borrower
shall (i) notify Administrative Agent of the planned formation or acquisition
(or other similar event) of any Subsidiary prior to the date of such formation
or acquisition (or such later date as may be acceptable to Administrative
Agent), (ii) cause such Subsidiary to execute and deliver a supplement to a
Guaranty or a joinder thereto on the date of formation or acquisition of such
Subsidiary (or such later date as may be acceptable to Administrative Agent),
(iii) cause all of the Equity Interests of such Subsidiary to be pledged to
Administrative Agent, for the benefit of the Secured Parties, and to the extent
such Equity Interests are certificated, cause such original stock or other
certificates evidencing such Equity Interests, together with an appropriate
undated stock power for each certificate duly executed in blank by the
registered owner thereof, to be delivered to Administrative Agent, all on the
date of formation or acquisition of such Subsidiary (or such later date as may
be acceptable to Administrative Agent) and (iv) cause such Subsidiary to execute
and deliver such other additional closing documents, certificates and legal
opinions as shall reasonably be requested by Administrative Agent and on such
date as may be acceptable to Administrative Agent.

 

(c)    Borrower shall, and shall cause each of its Subsidiaries to, cause
Administrative Agent to have an Acceptable Security Interest in all of the Loan
Parties’ respective right, title and interest to (i) all present and future
Equity Interests of Subsidiaries owned or held of record or beneficially by the
Loan Parties; (ii) substantially all of the tangible and intangible personal
Property of the Loan Parties relating to the Oil and Gas Properties (other than
such excluded assets as provided in this Agreement or the Security Agreement,
and other than the Excluded Oil and Gas Properties (unless otherwise required by
Administrative Agent in its sole discretion)); and (iii) all products, profits,
rents and proceeds of the foregoing.

 

(d)    On and after ten (10) Business Days following the Closing Date, Borrower
shall, and shall cause each of its Subsidiaries to, cause all operating and
depository accounts of Borrower and its Subsidiaries to be subject to the
Deposit Account Control Agreement.

 

Section 5.09         Use of Proceeds. Borrower shall use the proceeds of the
Loans (a) to refinance the Existing Swap Facility and the Existing Obligations,
(b) for expenditures in relation to Borrower’s or its Subsidiaries’ Oil and Gas
Properties located within the continental United States, including, without
limitation, to finance the acquisition, exploration, development, maintenance,
and production of such Oil and Gas Properties, (c) to finance the purchase price
owed under the Spyglass PSA (subject to the satisfaction of the conditions
precedent in Section 3.02) and (d) for other working capital and general
corporate purposes permitted by this Agreement.

 

Section 5.10         Title Evidence. Borrower shall from take such actions and
execute and deliver such documents and instruments as Administrative Agent shall
require to ensure that Administrative Agent shall, at all times, have received
satisfactory title information (including, if requested, supplemental or new
title opinions addressed to it), which title information (a) shall collectively
cover at least eighty percent (80%) of the PV9 Value and (b) shall be in form
and substance acceptable to Administrative Agent in its sole discretion,
provided, that if such title information collectively covers at least eighty
percent (80%) of the PV9 Value, Borrower’s failure to take such actions or
execute and deliver such documents and instruments shall not be a breach of this
Section 5.10.

 

53

 

  

Section 5.11         Further Assurances; Cure of Title Defects. Borrower shall,
and shall cause each Subsidiary to, cure promptly any defects in the creation
and issuance of the Notes and the execution and delivery of the Security
Instruments and this Agreement. Borrower hereby authorizes the Lenders or
Administrative Agent to file any financing statements without the signature of
Borrower to the extent permitted by applicable law in order to perfect or
maintain the perfection of any security interest granted under any of the Loan
Documents. Borrower at its expense will, and will cause each Subsidiary to,
promptly execute and deliver to Administrative Agent upon its request all such
other documents, agreements and instruments to comply with or accomplish the
covenants and agreements of Borrower or any Subsidiary, as the case may be, in
the Security Instruments and this Agreement, or to further evidence and more
fully describe the collateral intended as security for the Secured Obligations,
or to correct any omissions in the Security Instruments, or to state more fully
the security obligations set out herein or in any of the Security Instruments,
or to perfect, protect or preserve any Liens created pursuant to any of the
Security Instruments, or to make any recordings, to file any notices or obtain
any consents, all as may be necessary or appropriate in connection therewith or
to enable Administrative Agent to exercise and enforce its rights and remedies
with respect to any Collateral. Within thirty (30) days after (a) a request by
Administrative Agent or the Lenders to cure any title defects or exceptions that
are not Permitted Liens raised by such information or (b) a notice by
Administrative Agent that Borrower has failed to comply with Section 5.10 above,
Borrower shall (i) cure such title defects or exceptions that are not Permitted
Liens or substitute acceptable Oil and Gas Properties with no title defects or
exceptions except for Permitted Liens covering Collateral of an equivalent value
and (ii) deliver to Administrative Agent satisfactory title evidence (including
supplemental or new title opinions meeting the foregoing requirements) in form
and substance acceptable to Administrative Agent in its sole discretion as to
Borrower’s and its Subsidiaries’ ownership of such Oil and Gas Properties and
Administrative Agent’s Liens and security interests therein as are required to
maintain compliance with Section 5.10.

 

Section 5.12         Leases; Development and Maintenance. Borrower will, and
will cause its Subsidiaries to: (a) pay and discharge when due, or cause to be
paid and discharged when due, all rentals, delay rentals, royalties, overriding
royalties, payments out of production and other obligations accruing under, and
perform or cause to be performed each and every act required by each of the oil
and gas leases and all other agreements and contracts constituting or affecting
the Oil and Gas Properties of Borrower and its Subsidiaries (except where the
amount thereof is being contested in good faith by appropriate proceedings and
such reserve as may be required by GAAP shall have been made therefor), (b) do
all other things necessary to keep unimpaired its rights thereunder and prevent
any forfeiture thereof or default thereunder, and operate or cause to be
operated such Oil and Gas Properties as a prudent operator would in accordance
with industry standard practices and in compliance with all applicable proration
and conservation Legal Requirements and any other Legal Requirements of every
Governmental Authority to regulate the development and operations of Oil and Gas
Properties and the production and sale of oil, gas and other Hydrocarbons
therefrom, (c) maintain (or cause to be maintained) the Leases, wells, units,
acreage, contracts and agreements to which the Oil and Gas Properties of
Borrower and its Subsidiaries pertain in a prudent manner consistent with
industry standard practices and (d) perform or cause to be performed each and
every act required to be performed by it under the Spyglass Transaction
Documents and do all other things necessary to keep unimpaired its rights
thereunder and prevent any forfeiture thereof or default thereunder.

 

Section 5.13         Hedging.

 

(a)    As of the Closing Date, Borrower shall, and shall cause each Subsidiary
to, enter into Hydrocarbon Hedge Transactions with an Approved Hedge
Counterparty such that after giving effect to such Hydrocarbon Hedge
Transaction, no less than eighty-five percent (85%) of the anticipated
production of natural gas volumes, no less than eighty-five percent (85%) of the
anticipated production of crude oil volumes, and no less than eighty-five
percent (85%) of the anticipated production of natural gas liquids by volume, in
any case, attributable to Borrower’s and its Subsidiaries’ PDP Reserves, as
reflected in the Initial Reserve Report, for a sixty (60) month period are
covered by such Hydrocarbon Hedge Transactions.

 

54

 

  

(b)    On and after the Closing Date, Borrower shall, and shall cause each
Subsidiary to, enter into Hydrocarbon Hedge Transactions with an Approved Hedge
Counterparty such that after giving effect to such Hydrocarbon Hedge
Transaction, no less than sixty-five percent (65%) of the anticipated production
of natural gas volumes, no less than sixty-five percent (65%) of the anticipated
production of crude oil volumes, and no less than sixty-five percent (65%) of
the anticipated production of natural gas liquids by volume, in any case,
attributable to Borrower’s and its Subsidiaries’ PDP Reserves, as reflected in
the most recently delivered Reserve Report, for a rolling thirty-six (36) month
period are covered by such Hydrocarbon Hedge Transactions.

 

(c)    Upon the request of Administrative Agent, Borrower shall enter into
Interest Hedge Agreements to hedge or manage the interest rate exposure
attributable to a minimum of fifty percent (50%) of the projected outstanding
principal amount of the Loans hereunder from the date of such request until the
Maturity Date.

 

Section 5.14         Commodity Exchange Act Covenants. Borrower shall, and shall
cause each of its Subsidiaries to, (a) execute and deliver amendments to any
Loan Documents relating to Swap Obligations which are necessary to comply with
the Commodity Exchange Act and (b) deliver or report any information to any
Lender Hedge Counterparty necessary for such Lender Hedge Counterparty to comply
with the Commodity Exchange Act. Borrower shall, and shall cause each of its
Subsidiaries which is a Qualified ECP Guarantor to, undertake to provide such
funds or other support as may be needed from time to time by each other Loan
Party to honor all of its obligations under any Guaranty in respect of Swap
Obligations (provided, however, that each Qualified ECP Guarantor shall only be
liable under this Section 5.14 for the maximum amount of such liability that can
be hereby incurred without rendering its obligations under this Section 5.14
voidable under applicable law relating to fraudulent conveyance or fraudulent
transfer, and not for any greater amount). The obligations of each Qualified ECP
Guarantor under this Section shall remain in full force and effect until this
Agreement is terminated. Each Qualified ECP Guarantor intends that this Section
5.14 shall constitute, and this Section 5.14 shall be deemed to constitute, a
“keepwell, support, or other agreement” for the benefit of each other Loan Party
for all purposes of Section 1a(18)(A)(v)(II) of the Commodity Exchange Act.
“Qualified ECP Guarantor” means, in respect of any Swap Obligation, each Loan
Party that has total assets exceeding $10,000,000 at the time the relevant
guaranty of such Loan Party, or the grant by such party of a security interest
or lien to secure, or the provision of other support of, such Swap Obligation
becomes effective with respect to such Swap Obligation or such other person as
constitutes an “eligible contract participant” under the Commodity Exchange Act
and can cause another person to qualify as an “eligible contract participant” at
such time by entering into a keepwell under Section 1a(18)(A)(v)(II) of the
Commodity Exchange Act.

 

Section 5.15         Assigned Security Documents. Borrower ratifies, confirms
and renews the Assigned Liens, and agrees that, after giving effect to the
Assignment and the Security Instruments, such Assigned Liens, as amended and
restated, continue to secure the Existing Obligations, as restated hereunder,
and the Obligations.

 

Section 5.16         Post-Closing Covenants. No later than ten (10) Business
Days following the Closing Date, Borrower shall, and shall cause each of its
Subsidiaries to (i) cause all operating and depository accounts of Borrower and
its Subsidiaries to be subject to the Deposit Account Control Agreement and (ii)
deliver all Pledged Securities (as defined in the Security Agreement)
attributable to the Foreign Subsidiaries to Administrative Agent, and all
assignment or transfer powers related thereto, in accordance with and as
required pursuant to Section 4(h)(a) of the Security Agreement.

 

55

 

 

ARTICLE VI

NEGATIVE COVENANTS

 

So long as any Note or any amount under any Loan Document shall remain unpaid,
or any Lender shall have any Commitment, Borrower, for itself and its
Subsidiaries, agrees, unless the Majority Lenders otherwise consent in writing
(other than those covenants that specifically require the consent of
Administrative Agent, which covenants shall only require the consent of
Administrative Agent), to comply with the following covenants.

 

Section 6.01         Liens, Etc. Borrower shall not create, assume, incur, or
suffer to exist, or permit any of its Subsidiaries to create, assume, incur, or
suffer to exist, any Lien on or in respect of any of its Property whether now
owned or hereafter acquired (including, without limitation, the posting or
deposit of cash collateral to secure or assure payment of Hedge Obligations), or
assign any right to receive income, except that Borrower and its Subsidiaries
may create, incur, assume, or suffer to exist:

 

(a)    Liens granted under a Loan Document and securing the Secured Obligations;

 

(b)    purchase money Liens or purchase money security interests upon or in any
equipment acquired or held by Borrower or any of its Subsidiaries in the
ordinary course of business created prior to or at the time of Borrower or such
Subsidiary’s acquisition of such equipment; provided that, the Debt secured by
such Liens (i) was incurred solely for the purpose of financing or refinancing
the acquisition of such equipment, and does not exceed the aggregate purchase
price of such equipment, (ii) is secured only by such equipment, the proceeds of
such equipment and the insurance proceeds related to such equipment and not by
any other Properties of Borrower or its Subsidiaries, and (iii) is permitted
under Section 6.02(b);

 

(c)    Liens securing Capital Leases; provided that the Debt secured by such
Liens (i) is secured only by the Property leased under such Capital Leases, the
proceeds of such Property and the insurance proceeds related to such Property
and not any other Properties of Borrower or any of its Subsidiaries and (ii) is
permitted under Section 6.02(b);

 

(d)    Liens for taxes, assessments, or other governmental charges or levies not
yet due or that (provided foreclosure, sale, or other similar proceedings shall
not have been initiated) are being contested in good faith by appropriate
proceedings, and such reserve as may be required by GAAP shall have been made
therefor;

 

(e)    Liens in favor of vendors, carriers, warehousemen, lessors, repairmen,
mechanics, workmen, materialmen, construction, or similar Liens arising by
operation of law in the ordinary course of business in respect of obligations
that are not yet due or that are being contested in good faith by appropriate
proceedings, and such reserve as may be required by GAAP shall have been made
therefor;

 

(f)     Liens to operators and non-operators under joint operating agreements
arising in the ordinary course of the business of Borrower or any of its
Subsidiaries to secure amounts owing, which amounts are not yet due or are being
contested in good faith by appropriate proceedings, and such reserve as may be
required by GAAP shall have been made therefor; provided that, any Liens from
Borrower, its Subsidiaries or any of their Affiliates that are in favor of
Borrower, its Subsidiaries or any of their Affiliates shall be subordinated to
and expressly subject to the Liens of the Security Instruments, on terms
satisfactory to Administrative Agent in its sole discretion;

 

56

 

  

(g)    royalties, overriding royalties, net profits interests, production
payments, reversionary interests, calls on production, preferential purchase
rights and other burdens on or deductions from the proceeds of production, that
do not secure Debt for borrowed money and that are taken into account in
computing the net revenue interests and working interests of Borrower or any of
its Subsidiaries warranted in the Security Instruments or in this Agreement;

 

(h)    Liens arising in the ordinary course of business out of pledges or
deposits under workers’ compensation laws, unemployment insurance, old age
pensions or other social security or retirement benefits, or similar legislation
or to secure public or statutory obligations of Borrower or any of its
Subsidiaries;

 

(i)     Liens arising under Leases, operating agreements, unitization and
pooling agreements and orders, farmout agreements, gas balancing agreements and
other agreements, in each case that are customary in the oil, gas and mineral
production business and that are entered into in the ordinary course of business
that are taken into account in computing the net revenue interests and working
interests of Borrower or any of its Subsidiaries warranted in the Security
Instruments or in this Agreement, to the extent that any such Lien referred to
in this clause does not materially impair the use of the Property covered by
such Lien for the purposes for which such Property is held by Borrower or any
Subsidiary or materially impair the value of such Property subject thereto;
provided that, any Liens from Borrower, its Subsidiaries or any of their
Affiliates that are in favor of Borrower, its Subsidiaries or any of their
Affiliates shall be subordinated to and expressly subject to the Liens of the
Security Instruments, on terms satisfactory to Administrative Agent in its sole
discretion;

 

(j)     easements, rights-of-way, restrictions, and other similar encumbrances,
and minor defects in the chain of title that are customarily accepted in the oil
and gas financing industry, including in respect of surface operations or for
pipelines or power lines, none of which materially interfere with the ordinary
conduct of the business of Borrower or any Subsidiary or materially detract from
the value or use of the Property to which they apply;

 

(k)    judgment liens in respect of judgments that do not constitute an Event of
Default under Section 7.01(f);

 

(l)     Liens on insurance proceeds securing Debt permitted by Section 6.02(g);

 

(m)   rights reserved to or vested in any Governmental Authority to control or
regulate any Property of Borrower or any of its Subsidiaries, or to use such
Property; provided that, such rights (i) would not reasonably be expected to
materially impair the use of such Property for the purpose for which it is held
by Borrower or any such Subsidiary and (ii) would not reasonably be expected to
materially diminish the value of such Property; and

 

(n)    deposits of cash or securities to secure the performance of bids, trade
contracts, leases, statutory obligations and other obligations of a like nature
incurred in the ordinary course of business, including amounts prepaid to
parties providing drilling or completion services and materials, in an aggregate
amount not to exceed $2,000,000 at any time.

 

Section 6.02         Debts, Guaranties, and Other Obligations. Borrower shall
not, and shall not permit any of its Subsidiaries to, create, assume, suffer to
exist, or in any manner become or be liable in respect of, any Debt except:

 

(a)    Debt of Borrower and its Subsidiaries under the Loan Documents;

 

57

 

  

(b)    Debt secured by the Liens permitted under paragraphs (b) or (c) of
Section 6.01 and any obligations that are Debt permitted under Section 6.09 in
an aggregate amount not to exceed $500,000 at any time;

 

(c)    Debt under Hedge Transactions that are not prohibited by the terms of
Section 6.14; provided that (i) such Debt shall not be secured, other than such
Debt owing to Lender Hedge Counterparties which are secured under the Loan
Documents, and (ii) such Debt shall not contain any requirement, agreement or
covenant for Borrower or any of the Guarantors to post collateral (including a
letter of credit) or margin to secure their obligations under such Hedge
Transactions or to cover market exposures; provided that, this clause (ii) shall
not prevent a Lender Hedge Counterparty from requiring the obligations under its
Hedge Transactions with any Loan Party to be secured by the Liens granted to
Administrative Agent under the Security Instruments pursuant to such Security
Instruments;

 

(d)    Debt consisting of sureties or bonds provided to any Governmental
Authority or other Person and assuring payment of contingent liabilities of
Borrower or any of its Subsidiaries in connection with the operation of the Oil
and Gas Properties, including with respect to plugging, facility removal and
abandonment of its Oil and Gas Properties;

 

(e)    Debt of any Loan Party owing to any other Loan Party; provided that such
Debt is not held, assigned, transferred, negotiated or pledged to any Person
other than a Loan Party, and, provided further, that any such Debt shall be
subordinated to the Secured Obligations on terms set forth in the Guaranty;

 

(f)     endorsements of negotiable instruments for collection in the ordinary
course of business;

 

(g)    Debt owing to an insurance provider and consisting of obligations to pay
insurance premiums;

 

(h)    trade payables which may be incurred from time to time in the ordinary
course of business which are not greater than sixty (60) days past the date of
invoice or delinquent, unless the same are being contested in good faith by
appropriate proceedings, and such reserve as may be required by GAAP shall have
been made therefor;

 

(i)     Debt owing under the Spyglass Farmout and the Spyglass Carry;

 

(j)     other unsecured Debt; provided that, the aggregate outstanding principal
amount of such unsecured Debt shall not at any time exceed $500,000 minus the
aggregate amount of secured Debt permitted under paragraph (b) of this Section;
and

 

(k)    Debt listed on Schedule 4.05 and any refinancings, refundings, renewals,
and extensions thereof; provided that the amount of such Debt may not be
increased except by an amount equal to the premium paid, if any, and fees and
expenses incurred in connection with such refinancing, refunding, renewal or
extension.

 

Section 6.03         Agreements Restricting Liens and Distributions. Borrower
shall not, and shall not permit any of its Subsidiaries to, create, incur,
assume or permit to exist any contract, agreement or understanding (other than
this Agreement and the Security Instruments) that in any way prohibits or
restricts the granting, conveying, creation or imposition of any Lien on any of
its Property, whether now owned or hereafter acquired, to secure the Secured
Obligations or restricts any Subsidiary from paying dividends to Borrower, or
that requires the consent of or notice to other Persons in connection therewith;
provided, that the foregoing shall not apply to (i) restrictions and conditions
imposed by Legal Requirements, (ii) customary restrictions or conditions imposed
by any agreement relating to other secured Debt permitted by this Agreement if
such restrictions or conditions apply only to the Property securing such Debt,
or (iii) customary restrictions in Leases, oil and gas leases, subleases,
licenses, easements, rights of way or assignments listed on Schedule 4.16(c), or
with respect to Properties acquired after the Closing Date, disclosed in writing
to Administrative Agent and, following such disclosure Schedule 4.16(c) shall be
deemed amended to reflect such Properties.

 

58

 

  

Section 6.04         Merger or Consolidation; Asset Sales; Hedge Terminations.

 

(a)    Borrower shall not merge or consolidate with or into any other Person
other than a merger with a wholly owned Subsidiary with Borrower being the
surviving entity; provided that at the time thereof and immediately after giving
effect thereto no Default shall have occurred and Administrative Agent shall
continue to have an Acceptable Security Interest in the Collateral. Borrower
shall not permit any of its Subsidiaries to merge or consolidate with or into
any other Person other than the merger of a Subsidiary into Borrower pursuant to
the immediately preceding sentence or another Subsidiary; provided that at the
time thereof and immediately after giving effect thereto no Default shall have
occurred and Administrative Agent shall continue to have an Acceptable Security
Interest in the Collateral; provided, however, that this Section shall not
prohibit the merger of any other Person with and into Borrower or any Subsidiary
so long as Borrower or such Subsidiary is the surviving entity and the
investment to be made by Borrower or any Subsidiary related to such merger would
be permitted under the terms hereof.

 

(b)    Borrower shall not, and shall not permit any of its Subsidiaries to, make
any Disposition or to novate, assign, unwind, terminate, or amend a hedge
position or Hedge Transaction other than:

 

(i)          the sale of Hydrocarbons or Liquid Investments in the ordinary
course of business;

 

(ii)         the Disposition of equipment that is (A) obsolete, worn out,
depleted or uneconomic and disposed of in the ordinary course of business, (B)
no longer necessary for the business of such Person, or (C) contemporaneously
replaced by equipment of at least comparable use;

 

(iii)        the Disposition of Property to Borrower or a Subsidiary of
Borrower; provided that at the time thereof and immediately after giving effect
thereto no Default shall have occurred and be continuing and Administrative
Agent shall continue to have an Acceptable Security Interest in the Collateral;

 

(iv)        pursuant to the express terms and provisions of the Spyglass Farmout
and Spyglass Carry;

 

(v)         pursuant to and in accordance with the express terms and provisions
of the ORRI Agreement;

 

(vi)        if no Default then exists, (i) any Disposition of Oil and Gas
Properties of Borrower or any Subsidiary and (ii) the novation or assignment
(unless novated or assigned to a counterparty with equal or better
creditworthiness), unwinding, termination, or amendment (if such amendment is
materially adverse to Borrower or such Subsidiary party thereto) of a hedge
position or Hedge Transaction; provided, in the case of each of (i) and (ii) in
this Subsection, (A) (y) such event is not a Triggering Event or (z) such event
is a Triggering Event and (I) the Required Lenders consent to such event, (II)
the PV9 Value is recalculated after giving effect thereto and (III) Borrower
shall have made the payments, if any, required under Section 2.03(b), (B) the
consideration received in respect of such event shall be in the form of cash,
Liquid Investments or like kind exchange of Property and equal to or greater
than the fair market value of the Properties subject to such event, and (C) if
such event is a Disposition and such Disposition is of a Subsidiary owning Oil
and Gas Properties, such sale or other disposition shall include all the Equity
Interests of such Subsidiary; and

 

59

 

  

(vii)       Disposition of any Property other than any PDP Reserves or Developed
Non-Producing Reserves not otherwise permitted by clauses (b)(i) through (b)(vi)
of this Section 6.04 having a fair market value, in the aggregate, not to exceed
$500,000 during any fiscal year period.

 

Section 6.05         Restricted Payments. Borrower shall not, and shall not
permit any of its Subsidiaries to, make any Restricted Payments, except that if
no Default or Event of Default exists before or would result after giving effect
to the making of such Restricted Payment, (i) the Subsidiaries may make
Restricted Payments to Borrower and (ii) upon the prior written consent of the
Administrative Agent, in its sole discretion, any other Restricted Payment.

 

Section 6.06         Investments. Borrower shall not, and shall not permit any
of its Subsidiaries to, make or permit to exist any loans, advances, or capital
contributions to, or make any investment in (including, without limitation, the
making of any Acquisition), or purchase or commit to purchase any stock or other
securities or evidences of indebtedness of or Equity Interests in any Person,
except:

 

(a)    Liquid Investments;

 

(b)    trade and customer accounts receivable which are for goods furnished or
services rendered in the ordinary course of business and are payable in
accordance with customary trade terms;

 

(c)    loans, advances, and investments by Borrower in and to Guarantors
(excluding any Foreign Subsidiary) and investments, loans and advances by
Guarantors in and to other Guarantors (excluding any Foreign Subsidiary) or
Borrower;

 

(d)    loans, advances, and investments by Borrower in and to any Foreign
Subsidiary in an amount not to exceed $500,000 in the aggregate during any
fiscal year;

 

(e)    creation or acquisition of any additional Subsidiaries in compliance with
Section 6.15;

 

(f)     purchase or acquisition (including investments in ownership interests)
of Oil and Gas Properties by Borrower or Subsidiaries that are Guarantors; and

 

(g)    other investments, loans or advances not otherwise permitted by this
Section 6.06 in an amount not to exceed $500,000 in the aggregate at any time,
except for any loans necessary to secure performance bonds for the operation of
Borrower’s and its Subsidiaries Oil and Gas Properties at any time, which loans
to secure performance bonds shall not be included when calculating the $500,000
limit under this Section 6.06(g).

 

60

 

  

Section 6.07         Affiliate Transactions. Borrower shall not, and shall not
it permit any of its Subsidiaries to, directly or indirectly, enter into or
permit to exist any transaction or series of transactions (including, but not
limited to, the purchase, sale, lease or exchange of Property, the making of any
investment, the giving of any guaranty, the assumption of any obligation or the
rendering of any service) with any of their Affiliates (other than transactions
among Subsidiaries and Borrower or other Subsidiaries and other than pursuant to
the ORRI Agreement) (“Affiliate Transactions”) unless such transaction or series
of transactions is governed by a written agreement (with notice thereof
delivered to the Administrative Agent) and is on terms no less favorable to
Borrower or the Subsidiary, as applicable, than those that could be obtained in
a comparable arm’s length transaction with a Person that is not such an
Affiliate; provided that, upon the occurrence and during the continuance of a
Default or Event of Default, the aggregate amount of all sums paid to any
Affiliate pursuant to an Affiliate Transaction by Borrower and its Subsidiaries,
collectively, shall not, without the prior written consent of Administrative
Agent, which consent shall not unreasonably conditioned, delayed or withheld,
exceed in any month (i) in the case of salaries payable to employees of Borrower
and its Subsidiaries, one hundred percent (100%) of the salaries paid to such
employees during the same month in the 2012 fiscal year and (ii) in all other
cases, $75,000.

 

Section 6.08         Compliance with ERISA. Borrower shall not, and shall not
permit any of its Subsidiaries to, directly or indirectly, (a) engage in any
transaction in connection with which Borrower could reasonably be expected to be
subjected to either a civil penalty assessed pursuant to section 502(c), (i) or
(l) of ERISA or a tax imposed by Chapter 43 of Subtitle D of the Code, in either
case, that could result in a liability of Borrower in excess of $250,000; (b)
terminate any Plan in a manner, or take any other action with respect to any
Plan, which could result in any material liability to Borrower or any Controlled
Group member to the PBGC; (c) fail to make full payment when due of all material
amounts which, under the provisions of any Plan, agreement relating thereto or
applicable law, Borrower or any Controlled Group member is required to pay as
contributions thereto; (d) permit a Plan (which has liabilities with respect to
vested benefits with an actuarial present value that exceeds the current value
of the assets of such Plan allocable to such benefit liabilities by more than
$100,000) to be in “at risk” status (within the meaning of Section 303 of
ERISA); (e) permit the actuarial present value of the benefit liabilities under
any Plan (based on the assumptions used to fund such Plan) to exceed, as of the
last annual valuation date applicable thereto, the current value of the assets
of such Plan allocable to such benefit liabilities by more than $250,000; (f)
assume an obligation to contribute to any Multiemployer Plan where the total
aggregate liability of Borrower and any Controlled Group member arising from
withdrawal liability with respect to all Multiemployer Plans in the aggregate
exceeds or is reasonably expected to exceed $250,000; (g) incur a liability to
or on account of a Plan under sections 515, 4062, 4063, 4064, 4201 or 4204 of
ERISA, other than a liability that does not exceed $100,000; (h) assume an
obligation to contribute to any employee welfare benefit plan, as defined in
section 3(1) of ERISA, including, without limitation, any such plan maintained
to provide benefits to former employees of such entities, that may not be
terminated by such entities in their sole discretion without liability other
than liability that does not exceed $250,000; (i) fail to make contributions to
a Plan such that the conditions for a lien under Section 303(k) of ERISA are met
or are likely to be met with respect to a Plan or (j) permit to exist any
occurrence of any Termination Event resulting in a liability of Borrower or any
other member of the Controlled Group in an amount exceeding $100,000.

 

Section 6.09         Sale-and-Leaseback. Borrower shall not, and shall not
permit any of its Subsidiaries to, sell or transfer to a Person any Property,
whether now owned or hereafter acquired, if at the time or thereafter a Borrower
or a Subsidiary shall lease as lessee such Property or any part thereof or other
Property that a Borrower or a Subsidiary intends to use for substantially the
same purpose as the Property sold or transferred.

 

Section 6.10         Change of Business. Borrower shall not, and shall not
permit any of its Subsidiaries to, make any material change in the character of
its business as an independent oil and gas exploration and production company,
nor will Borrower or any Subsidiary operate (other than the Foreign
Subsidiaries) or carry on business in any jurisdiction other than the United
States, excluding the Gulf of Mexico.

 

61

 

  

Section 6.11         Organizational Documents, Name Change, Change in
Accounting. Except as would otherwise be permitted pursuant to Section 6.04,
Borrower shall not, and shall not permit any of its Subsidiaries to, amend,
supplement, modify or restate their articles or certificate of incorporation or
formation, limited partnership agreement, bylaws, limited liability company
agreements, or other equivalent organizational documents, or amend its name or
change its jurisdiction of incorporation, organization or formation, in each
case, in a manner that would be materially adverse to Lenders without prior
consent of Administrative Agent. Borrower shall not, and shall not permit any
Subsidiary to, make any significant change in accounting treatment or reporting
practices, except as required by GAAP (and then subject to Section 1.03), or
change the fiscal year of Borrower or of any Subsidiary.

 

Section 6.12         Use of Proceeds. Borrower will not permit the proceeds of
any Loan to be used for any purpose other than those permitted by Section 5.09.
Borrower will not engage in the business of extending credit for the purpose of
purchasing or carrying margin stock (within the meaning of Regulation U).
Neither Borrower nor any Person acting on behalf of Borrower shall take, nor
permit any of Borrower’s Subsidiaries to take, any action which might cause any
of the Loan Documents to violate Regulation T, U or X or any other regulation of
the Board of Governors of the Federal Reserve System or to violate Section 7 of
the Securities Exchange Act of 1934 or any rule or regulation thereunder, in
each case as now in effect or as the same may hereinafter be in effect,
including without limitation, the use of the proceeds of any Loan to purchase or
carry any margin stock in violation of Regulation T, U or X.

 

Section 6.13         Gas Imbalances, Take-or-Pay or Other Prepayments. Except as
set forth on Schedule 4.19 or on the most recent certificate delivered in
conjunction with the delivery of a Reserve Report hereunder, Borrower shall not,
and shall not permit any of its Subsidiaries to, allow on a net basis, gas
imbalances, take-or-pay or other prepayments with respect to the Oil and Gas
Properties of Borrower or any Subsidiary that would require Borrower or any
Subsidiary to deliver its respective Hydrocarbons produced on a monthly basis
from such Oil and Gas Properties at some future time without then or thereafter
receiving full payment therefor, exceeding one hundred million (100,000,000)
cubic feet of gas in the aggregate.

 

Section 6.14         Limitation on Hedging.

 

(a)    Speculative Purposes. Borrower shall not, and shall not permit any of its
Subsidiaries to purchase, assume, or hold a speculative position in any
commodities market or futures market or enter into any Hedge Transaction for
speculative purposes.

 

(b)    Risk Management; Term; Counterparty. Borrower shall not, and shall not
permit any of its Subsidiaries, to be party to or otherwise enter into any Hedge
Transaction (i) that is entered into for reasons other than as a part of its
normal business operations as a risk management strategy and/or hedge against
changes resulting from market conditions related to Borrower’s operations, (ii)
that would fail to comply with Section 5.13, and (iii) with a Person other than
an Approved Hedge Counterparty.

 

(c)    Additional Limitations on Hedging. Borrower may not, and may not permit
any of its Subsidiaries to, be party to or enter into any Hedge Transaction
unless:

 

(i)          after giving effect to such Hedge Transaction, for any type of
Hydrocarbon referenced in such Hedge Transaction, the aggregate of such type of
Hydrocarbons subject to Hedge Transactions for any period may not exceed ninety
percent (90%) of the projected production of such type of Hydrocarbon for such
period as reflected in the most recently delivered Reserve Report, and
calculated on an aggregate basis for Borrower and its Subsidiaries, taken as a
whole;

 

62

 

  

(ii)         the calculation of volume limitations in clause (i) shall not
double count volumes subject to a collar;

 

(iii)        the volume limitations in clause (i) shall not apply to the
anticipated production of Hydrocarbons which are the subject of an Acquisition
prior to effecting such Acquisition; and

 

(iv)        such Hedge Transactions shall only reference Hydrocarbons of the
type described in the Reserve Report and otherwise comply with the terms of this
Agreement.

 

(d)    Interest Hedge Agreements. Borrower may not be party to or otherwise
enter into any Interest Hedge Agreement if, at the time such Hedge Transaction
is entered into, the aggregate of all Interest Hedge Agreements, before and
after giving effect to such Hedge Transaction, hedge or manage the interest rate
exposure attributable to greater than one hundred percent (100%) of the
projected outstanding principal amount of the Loans hereunder for the period of
such Hedge Transaction.

 

Section 6.15         Additional Subsidiaries. Borrower shall not, and shall not
permit any of its Subsidiaries to, create or acquire any additional Subsidiaries
without (a) prior written notice to Administrative Agent and (b) being in
compliance with Section 5.08. Borrower shall not have any foreign Subsidiaries
other than the Foreign Subsidiaries. Borrower shall not have any Subsidiary
other than Subsidiaries all of the Equity Interests of which are owned, directly
or indirectly, by Borrower.

 

Section 6.16         Prepayment and Repayment of Debt. Borrower shall not, and
shall not permit any of its Subsidiaries to, prepay, redeem, purchase, defease
or otherwise satisfy prior to the scheduled maturity thereof in any manner, or
make any payment in violation of any subordination terms of, any Debt, except
(i) the prepayment of the Obligations in accordance with the terms of the Loan
Documents, (ii) regularly scheduled or required repayments or redemptions of
Debt permitted under Section 6.02 or Section 6.16, and (c) so long as no Event
of Default exists or would result therefrom, other prepayments of Debt permitted
under Section 6.02 or Section 6.16.

 

Section 6.17         Amendments to Spyglass Transaction Documents. Borrower
shall not amend, supplement or otherwise modify any of the documents and
agreements relating to the Spyglass Transaction Documents without the prior
written consent of the Administrative Agent.

 

Section 6.18         Current Ratio. Borrower shall not permit, as of the last
day of each fiscal quarter, commencing with the fiscal quarter ending on
September 30, 2013, the ratio of Borrower’s and its consolidated Subsidiaries’
(a) consolidated current assets to (b) consolidated current liabilities, to be
less than 1.00 to 1.00. For purposes of this calculation, (i) “current assets”
shall include, as of the date of calculation, the aggregate Unused Commitment
Amount but shall exclude, as of the date of calculation, any asset representing
a valuation account arising from the application of ASC 718 and 815, and (ii)
“current liabilities” shall exclude, as of the date of calculation, the current
portion of long–term Debt existing under this Agreement and any liabilities
representing a valuation account arising from stock based compensation,
derivatives and hedging and the application of ASC 718 and 815.

 

Section 6.19         Total Leverage Ratio. Borrower shall not permit the ratio
(the “Total Leverage Ratio”), as of the last day of each fiscal quarter of
Borrower beginning with the fiscal quarter ending March 31, 2014, of (a) all
Debt of Borrower and its Subsidiaries to (b) the consolidated EBITDAX of
Borrower and its Subsidiaries for the four (4) fiscal quarter period then ending
on such date, to be greater than (i) 5.00 to 1.00 for any fiscal quarter ending
during period of January 1, 2014 until December 31, 2014, (ii) 4.50 to 1.00 for
any fiscal quarter ending during the period of January 1, 2015 until December
31, 2015, (iii) 4.00 to 1.00 during the period of January 1, 2016 until December
31, 2016, (iv) 3.50 to 1.00 for any fiscal quarter ending during the period of
January 1, 2017 until December 31, 2017 and (v) 3.25 to 1.00 for any fiscal
quarter ending during the period of January 1, 2018 until the Maturity Date; for
the purposes of this calculation, EBITDAX shall be annualized from the Closing
Date by multiplying EBITDAX for the period of the three (3) fiscal quarter
period ending March 31, 2014 times 4/3rds; for the purposes of the calculation
of “Debt” under this Section 6.19, “Debt” shall not mean or include trade
payables expressly permitted pursuant to Section 6.02(h).

 

63

 

 

ARTICLE VII

EVENTS OF DEFAULT; REMEDIES

 

Section 7.01         Events of Default. The occurrence of any of the following
events shall constitute an “Event of Default” under any Loan Document:

 

(a)    Payment. Borrower (i) shall fail to pay any principal when due hereunder
or under any other Loan Document or (ii) shall fail to pay any interest, fees,
reimbursements, indemnifications, or other amounts due and payable hereunder or
under any other Loan Document and such failure (in (ii) only) shall continue for
a period of three (3) Business Days after the due date therefor;

 

(b)    Representation and Warranties. Any representation or warranty made or
deemed to be made (i) by Borrower or any of its Subsidiaries (or any of their
respective officers) in this Agreement or in any other Loan Document or (ii) by
Borrower or any of its Subsidiaries (or any of their respective officers) in
connection with this Agreement or any other Loan Document shall prove to have
been incorrect in any material respect (except that such materiality qualifier
shall not be applicable to any representations and warranties that already are
qualified or modified by materiality in the text thereof) when made or deemed to
be made;

 

(c)    Covenant Breaches. Borrower or any of its Subsidiaries shall (i) fail to
perform or observe any term or covenant set forth in Section 5.03 (with respect
to the Borrower or any Subsidiary), or Article VI of this Agreement or (ii) fail
to perform or observe any other term or covenant set forth in this Agreement or
in any other Loan Document that is not covered by clause (i) above or covered by
any other provision of this Section 7.01 and such failure (in (ii) only) shall
remain unremedied for a period of thirty (30) calendar days after the earliest
of (A) the date any officer of Borrower or any Subsidiary has actual knowledge
of such breach, and (B) the date written notice thereof shall have been given to
Borrower by Administrative Agent or a Lender (such grace period to be applicable
only in the event such Default can be remedied by corrective action of Borrower
or any of its Subsidiaries);

 

(d)    Cross-Defaults; Spyglass Transaction Documents. (i) Borrower or any of
its Subsidiaries shall fail to pay any principal of or premium or interest on
its Debt that is outstanding in a principal amount of at least $500,000
individually or when aggregated with all such Debt of Borrower and any of its
Subsidiaries so in default (but excluding the Obligations) when the same becomes
due and payable (whether by scheduled maturity, required prepayment,
acceleration, demand or otherwise), and such failure shall continue after the
applicable grace period, if any, specified in the agreement or instrument
relating to such Debt; (ii) any other event shall occur or condition shall exist
under any agreement or instrument relating to Debt (including, without
limitation, any event of default or termination event under any Hedge
Transaction) that is outstanding in a principal amount (or termination payment
amount or similar amount) of at least $250,000 individually or when aggregated
with all such Debt of Borrower and its Subsidiaries so in default, and shall
continue after the applicable grace period, if any, specified in such agreement
or instrument, if the effect of such event or condition is to accelerate, or to
permit the acceleration of, the maturity of such Debt; (iii) any such Debt in a
principal amount of at least $500,000 individually or when aggregated with all
such Debt of Borrower and its Subsidiaries shall be declared to be due and
payable, or required to be prepaid (other than by a regularly scheduled required
prepayment), prior to the stated maturity thereof; or (iv) Borrower, any of its
Subsidiaries or any other Person party to the Spyglass Transaction Documents or
any documents executed in connection therewith fails to duly observe, perform or
comply with the Spyglass Transaction Documents or such other documents (without
giving effect to any waivers not approved in writing by the Administrative
Agent) or the Spyglass Transaction Documents or such other documents cease to be
in full force and effect, enforceable against each Person thereto in accordance
with their terms;

 

64

 

  

(e)    Insolvency. (i) Borrower or any of its Subsidiaries shall generally be
unable to pay its debts as such debts become due, or shall admit in writing its
inability to pay its debts generally, or shall make a general assignment for the
benefit of creditors; (ii) any proceeding shall be instituted by or against
Borrower or any of its Subsidiaries seeking to adjudicate it as bankrupt or
insolvent, or seeking liquidation, winding up, reorganization, arrangement,
adjustment, protection, relief, or composition of it or its debts under any law
relating to bankruptcy, insolvency or reorganization or relief of debtors, or
seeking the entry of an order for relief or the appointment of a receiver,
trustee or other similar official for it or for any substantial part of its
Property and, in the case of any such proceeding instituted against Borrower or
any such Subsidiary either such proceeding shall remain undismissed or unstayed
for a period of sixty (60) days or any of the actions sought in such proceeding
shall occur; or (iii) Borrower or any of its Subsidiaries, shall take any
corporate action to authorize any of the actions set forth above in this
paragraph (e);

 

(f)     Judgments. Any judgment (not covered by insurance satisfactory to
Administrative Agent in its reasonable discretion) or order for the payment of
money in excess of $500,000 shall be rendered against Borrower or any of its
Subsidiaries and either (i) enforcement proceedings shall have been commenced by
any creditor upon such judgment or order or (ii) there shall be any period of
thirty (30) consecutive days during which a stay of enforcement of such judgment
or order, by reason of a pending appeal or otherwise, shall not be in effect;

 

(g)    Termination Events. Any Termination Event shall have occurred and, (i)
thirty (30) days after Borrower shall have notice thereof, such Termination
Event shall not have been corrected and (ii) such Termination Event, together
with any other Termination Events that have occurred and which have not been
corrected within thirty (30) days after Borrower shall have notice thereof,
resulted in liability of Borrower and other members of the Controlled Group in
an aggregate amount exceeding $100,000;

 

(h)    Plan Withdrawals. Borrower or any member of the Controlled Group shall
have made a complete or partial withdrawal from a Multiemployer Plan and the
plan sponsor of such Multiemployer Plan shall have notified such withdrawing
employer that such employer has incurred a withdrawal liability that, together
with any other unsatisfied withdrawal liabilities incurred by Borrower or any
member of the Controlled Group with respect to a complete or partial withdrawal
from a Multiemployer Plan, exceeds $100,000;

 

(i)     Change of Control. A Change of Control shall have occurred;

 

(j)     Loan Documents. Any material provision of any Loan Document shall for
any reason cease to be valid and binding on Borrower or any of its Subsidiaries
or any such Person shall so state in writing;

 

65

 

 

 

(k)    Security Instruments. (i) Administrative Agent shall fail to have an
Acceptable Security Interest in any portion of the Collateral in excess of ten
percent (10%) of the PV9 Value according to the most recently delivered Reserve
Report or (ii) any Security Instrument shall at any time and for any reason
cease to create the Lien on the Property purported to be subject to such
agreement in accordance with the terms of such agreement, or cease to be in full
force and effect, or shall be contested by Borrower or any of its Subsidiaries
except as a result of the sale or other Disposition of the applicable Collateral
permitted under the Loan Documents; or

 

(l)     Potential Failure of Title. The title of Borrower or any of its
Subsidiaries to any of the Oil and Gas Properties subject to the Mortgages in
excess of ten percent (10%) of the PV9 Value of such Oil and Gas Properties
according to the most recent Reserve Report shall become the subject matter of
litigation before any Governmental Authority or arbitrator.

 

Section 7.02         Optional Acceleration of Maturity. If any Event of Default
(other than an Event of Default pursuant to paragraph (e) of Section 7.01) shall
have occurred and be continuing after taking into account the applicable cure
period, then, and in any such event,

 

(a)    Administrative Agent (i) shall at the request, or may with the consent,
of the Majority Lenders, by notice to Borrower, declare the obligation of each
Lender to make extensions of credit hereunder, including making Loans to be
terminated, whereupon the same shall forthwith terminate, and (ii) shall at the
request, or may with the consent, of the Majority Lenders, by notice to
Borrower, declare all Obligations to be forthwith due and payable, whereupon all
such amounts shall become and be forthwith due and payable in full, without
notice of intent to demand, demand, presentment for payment, notice of
nonpayment, protest, notice of protest, grace, notice of dishonor, notice of
intent to accelerate, notice of acceleration, and all other notices, all of
which are hereby expressly waived by Borrower; and

 

(b)    Administrative Agent shall at the request of, or may with the consent of,
the Majority Lenders proceed to enforce its rights and remedies under the
Security Instruments, the Guaranties, and any other Loan Document for the
ratable benefit of itself, and the Lenders by appropriate proceedings.

 

Section 7.03         Automatic Acceleration of Maturity. If any Event of Default
pursuant to paragraph (e) of Section 7.01 shall occur,

 

(a)    (i) the obligation of each Lender to make extensions of credit hereunder,
including making Loans, shall terminate, and (ii) all Obligations shall become
and be forthwith due and payable in full, without notice of intent to demand,
demand, presentment for payment, notice of nonpayment, protest, notice of
protest, grace, notice of dishonor, notice of intent to accelerate, notice of
acceleration, and all other notices, all of which are hereby expressly waived by
Borrower; and

 

(b)    Administrative Agent shall at the request of, or may with the consent of,
the Majority Lenders proceed to enforce its rights and remedies under the
Security Instruments, the Guaranties, and any other Loan Document for the
ratable benefit of itself, and the Lenders by appropriate proceedings.

 

66

 

  

Section 7.04         Right of Set-off. Upon the occurrence and during the
continuance of any Event of Default, Administrative Agent and each Lender is
hereby authorized at any time and from time to time, to the fullest extent
permitted by law, to set off and apply any and all deposits (general or special,
time or demand, provisional or final) at any time held and other indebtedness at
any time owing by Administrative Agent or such Lender to or for the credit or
the account of Borrower against any and all of the Obligations held by
Administrative Agent or such Lender, and the other Loan Documents, irrespective
of whether or not Administrative Agent or such Lender shall have made any demand
under this Agreement, such Notes, or such other Loan Documents, and although
such obligations may be unmatured. Administrative Agent and each Lender agrees
to promptly notify Borrower after any such set-off and application made by
Administrative Agent or such Lender, provided that the failure to give such
notice shall not affect the validity of such set-off and application. The rights
of Administrative Agent and each Lender under this Section 7.04 are in addition
to any other rights and remedies (including, without limitation, other rights of
set-off) which Administrative Agent or such Lender may have.

 

Section 7.05         Non-exclusivity of Remedies. No remedy conferred upon
Administrative Agent and the Lenders is intended to be exclusive of any other
remedy, and each remedy shall be cumulative of all other remedies existing by
contract, at law, in equity, by statute or otherwise.

 

Section 7.06         Application of Proceeds. From and during the continuance of
any Event of Default, any monies or Property actually received by Administrative
Agent pursuant to this Agreement or any other Loan Document, the exercise of any
rights or remedies under any Security Instrument, or any other agreement with
Borrower or any of its Subsidiaries that secures any of the Secured Obligations,
shall be, applied in the following order:

 

(a)    First, to the payment of all amounts, including without limitation costs
and expenses incurred in connection with the collection of such proceeds and the
payment of any part of the Secured Obligations, due to Administrative Agent
under any of the expense reimbursement or indemnity provisions of this Agreement
or any other Loan Document, any Security Instrument, or other collateral
documents, and any applicable law;

 

(b)    Second, ratably, according to the then unpaid amounts thereof, without
preference or priority of any kind among them, to the payment of the Loans then
due and payable, any Lender Hedging Obligations and any Banking Services
Obligations, provided that, to the extent that any Excluded Swap Obligations
exist, payments or the proceeds of any Collateral may not be shared with the
Lender Hedge Counterparties to the extent that doing so would violate the
Commodity Exchange Act;

 

(c)    Third, ratably, to the payment of any remaining Obligations due and
payable, if any; and

 

(d)    Fourth, the remainder, if any, to Borrower, its Subsidiaries, their
respective successors or assigns, or such other Person as may be lawfully
entitled to receive the same or as a court of competent jurisdiction may direct.

 

Section 7.07         Affiliate Operators. In addition to all rights and remedies
under this Agreement, any other Loan Document, at law and in equity, if any
Event of Default shall occur Administrative Agent shall have the right to
request that any operator of any Mortgaged Properties (or similar terms, as
defined in each of the Mortgages) which is either Borrower, a Subsidiary of
Borrower or any of their Affiliates resign (or Borrower or its Subsidiary use
commercially reasonable efforts to cause such other party to resign) as operator
under the joint operating agreement applicable thereto; and no later than sixty
(60) days after receipt by Borrower of any such request, Borrower, such
Subsidiary or either of its Affiliates shall resign (or Borrower or its
Subsidiary shall use commercially reasonable efforts to cause such other party
to resign) as operator of such Mortgaged Properties.

 

67

 

 

ARTICLE VIII

ADMINISTRATIVE AGENT

 

Section 8.01         Authorization and Action. Each Lender hereby appoints and
authorizes Administrative Agent to take such action as agent on its behalf and
to exercise such powers under this Agreement as are delegated to Administrative
Agent by the terms hereof and of the other Loan Documents, together with such
powers as are reasonably incidental thereto. As to any matters not expressly
provided for by this Agreement or any other Loan Document (including, without
limitation, enforcement or collection of the Obligations), Administrative Agent
shall not be required to exercise any discretion or take any action, but shall
be required to act or to refrain from acting (and shall be fully protected in so
acting or refraining from acting) upon the instructions of the Majority Lenders,
and such instructions shall be binding upon all Lenders and all holders of
Obligations; provided, however, that Administrative Agent shall not be required
to take any action that exposes Administrative Agent to personal liability or
that is contrary to this Agreement, any other Loan Document, or applicable law.

 

Section 8.02         Administrative Agent’s Reliance, Etc. Neither
Administrative Agent nor any of its directors, officers, agents, or employees
shall be liable for any action taken or omitted to be taken (INCLUDING
ADMINISTRATIVE AGENT’S OWN NEGLIGENCE) by it or them under or in connection with
this Agreement or the other Loan Documents, except for its or their own gross
negligence or willful misconduct. Without limitation of the generality of the
foregoing, Administrative Agent: (a) may treat the payee of any Note as the
holder thereof until Administrative Agent receives written notice of the
assignment or transfer thereof signed by such payee and in form satisfactory to
Administrative Agent; (b) may consult with legal counsel (including counsel for
Borrower), independent public accountants, and other experts selected by it and
shall not be liable for any action taken or omitted to be taken in good faith by
it in accordance with the advice of such counsel, accountants, or experts;
(c) makes no warranty or representation to any Lender and shall not be
responsible to any Lender for any statements, warranties, or representations
made in or in connection with this Agreement or the other Loan Documents;
(d) shall not have any duty to ascertain or to inquire as to the performance or
observance of any of the terms, covenants or conditions of this Agreement or any
other Loan Document on the part of Borrower or its Subsidiaries or to inspect
the Property (including the books and records) of Borrower or its Subsidiaries;
(e) shall not be responsible to any Lender for the due execution, legality,
validity, enforceability, genuineness, sufficiency, or value of this Agreement
or any other Loan Document; and (f) shall incur no liability under or in respect
of this Agreement or any other Loan Document by acting upon any notice, consent,
certificate, or other instrument or writing (which may be by facsimile) believed
by it to be genuine and signed or sent by the proper party or parties.

 

Section 8.03         Administrative Agent and Its Affiliates. With respect to
its Commitment, the Loans made by it, and the Obligations owed to it,
Administrative Agent shall have the same rights and powers under this Agreement
as any other Lender and may exercise the same as though it were not
Administrative Agent. The term “Lender” or “Lenders” shall, unless otherwise
expressly indicated, include Administrative Agent in its individual capacity.
Administrative Agent and its Affiliates may accept deposits from, lend money to,
act as trustee under indentures of, and generally engage in any kind of business
with, Borrower or any of its Subsidiaries, and any Person who may do business
with or own securities of Borrower or any such Subsidiary, all as if
Administrative Agent were not an agent hereunder and without any duty to account
therefor to the Lenders.

 

68

 

  

Section 8.04         No Reliance.

 

(a)    Each Lender acknowledges that it has, independently and without reliance
upon Administrative Agent, the arranger or any other Lender and based on such
documents and information as it has deemed appropriate, made its own credit
analysis and decision to enter into this Agreement and each other Loan Document
to which it is a party. Each Lender also acknowledges that it will,
independently and without reliance upon Administrative Agent, the arranger or
any other Lender and based on such documents and information as it shall from
time to time deem appropriate, continue to make its own decisions in taking or
not taking action under or based upon this Agreement, any other Loan Document,
any related agreement or any document furnished hereunder or thereunder.
Administrative Agent shall not be required to keep itself informed as to the
performance or observance by Borrower or any of its Subsidiaries of this
Agreement, the Loan Documents or any other document referred to or provided for
herein or to inspect the Properties or books of Borrower or any of its
Subsidiaries. Except for notices, reports and other documents and information
expressly required to be furnished to the Lenders by Administrative Agent
hereunder, neither Administrative Agent nor the arranger shall have any duty or
responsibility to provide any Lender with any credit or other information
concerning the affairs, financial condition or business of Borrower (or any of
its Affiliates) which may come into the possession of Administrative Agent, the
arranger or any of the foregoing’s Affiliates. In this regard, each Lender
acknowledges that Haynes and Boone, LLP is acting in this transaction as special
counsel to Administrative Agent only. Each other party hereto will consult with
its own legal counsel to the extent that it deems necessary in connection with
the Loan Documents and the matters contemplated therein.

 

(b)    The Lenders acknowledge that Administrative Agent and the arranger are
acting solely in administrative capacities with respect to structuring and
syndication of this facility and have no duties, responsibilities or liabilities
under this Agreement and the other Loan Documents other than their
administrative duties, responsibilities and liabilities specifically as set
forth in the Loan Documents and in their capacity as Lenders hereunder. In
structuring, arranging or syndicating this Agreement, each Lender acknowledges
that Administrative Agent and the arranger may be an agent or lender under the
other loans or other securities and waives any existing or future conflicts of
interest associated with their role in such other debt instruments. If in the
administration of this facility or any other debt instrument, Administrative
Agent determines (or is given written notice by any Lender that a conflict
exists), then it shall eliminate such conflict within ninety (90) days or resign
pursuant to the terms hereof and shall have no liability for action taken or not
taken while such conflict existed.

 

Section 8.05         Indemnification. THE LENDERS SEVERALLY AGREE TO INDEMNIFY
ADMINISTRATIVE AGENT AND EACH AFFILIATE THEREOF AND THEIR RESPECTIVE DIRECTORS,
OFFICERS, EMPLOYEES, AND AGENTS (TO THE EXTENT NOT REIMBURSED BY BORROWER),
ACCORDING TO THEIR RESPECTIVE PRO RATA SHARES FROM AND AGAINST ANY AND ALL
LIABILITIES, OBLIGATIONS, LOSSES, DAMAGES, PENALTIES, ACTIONS, JUDGMENTS, SUITS,
COSTS, EXPENSES, OR DISBURSEMENTS OF ANY KIND OR NATURE WHATSOEVER WHICH MAY BE
IMPOSED ON, INCURRED BY, OR ASSERTED AGAINST ADMINISTRATIVE AGENT IN ANY WAY
RELATING TO OR ARISING OUT OF THIS AGREEMENT OR ANY ACTION TAKEN OR OMITTED BY
ADMINISTRATIVE AGENT UNDER THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT (INCLUDING
ADMINISTRATIVE AGENT’S OWN NEGLIGENCE), AND INCLUDING, WITHOUT LIMITATION,
ENVIRONMENTAL CLAIMS AND ANY LIABILITIES ARISING UNDER ENVIRONMENTAL LAW,
PROVIDED THAT NO LENDER SHALL BE LIABLE FOR ANY PORTION OF SUCH LIABILITIES,
OBLIGATIONS, LOSSES, DAMAGES, PENALTIES, ACTIONS, JUDGMENTS, SUITS, COSTS,
EXPENSES, OR DISBURSEMENTS RESULTING FROM ADMINISTRATIVE AGENT’S GROSS
NEGLIGENCE OR WILLFUL MISCONDUCT AS DETERMINED BY A COURT OF COMPETENT
JURISDICTION BY FINAL AND NONAPPEALABLE JUDGMENT. WITHOUT LIMITATION OF THE
FOREGOING, EACH LENDER AGREES TO REIMBURSE ADMINISTRATIVE AGENT PROMPTLY UPON
DEMAND FOR ITS RATABLE SHARE OF ANY OUT-OF-POCKET EXPENSES (INCLUDING COUNSEL
FEES) INCURRED BY ADMINISTRATIVE AGENT IN CONNECTION WITH THE PREPARATION,
EXECUTION, DELIVERY, ADMINISTRATION, MODIFICATION, AMENDMENT, OR ENFORCEMENT
(WHETHER THROUGH NEGOTIATIONS, LEGAL PROCEEDINGS, OR OTHERWISE) OF, OR LEGAL
ADVICE IN RESPECT OF RIGHTS OR RESPONSIBILITIES UNDER, THIS AGREEMENT OR ANY
OTHER LOAN DOCUMENT, TO THE EXTENT THAT ADMINISTRATIVE AGENT IS NOT REIMBURSED
FOR SUCH BY BORROWER. Notwithstanding the foregoing, the preceding provisions of
this Section 8.05 shall apply only to liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements that were
incurred by or asserted against Administrative Agent in its capacity as such, or
against any Affiliate thereof, or any of such Person’s or Affiliate’s respective
directors, officers, employees, or agents, acting for Administrative Agent in
connection with such capacity. To the extent that the indemnity obligations
provided in this Section 8.05 are for the benefit of Administrative Agent as the
named secured party under the Liens granted under the Security Instruments, each
Lender hereby agrees that if such Lender ceases to be a Lender hereunder but
Obligations owing to such Lender or an Affiliate of such Lender continue to be
secured by such Liens, then such Lender shall continue to be bound by the
provisions of this Section 8.05 until such time as such Obligations have been
satisfied or terminated in full and subject to the terms of the last sentence of
Section 9.11. In such event, in determining the pro rata shares under this
Section 8.05, the Lenders shall include the aggregate amount (giving effect to
any netting agreements) that would be owing to such Lender Hedge Counterparty if
such Hedge Transactions were terminated at the time of determination.

 

69

 

  

Section 8.06         Successor Administrative Agent. Administrative Agent may
resign at any time by giving not less than thirty (30) days prior written notice
thereof to the Lenders and Borrower and may be removed at any time with or
without cause by the Majority Lenders upon receipt of written notice from the
Majority Lenders to such effect. Upon receipt of notice of any such resignation
or removal, the Majority Lenders shall have the right to appoint a successor
Administrative Agent with, if any Event of Default has not occurred and is not
continuing, the consent of Borrower, which consent shall not be unreasonably
withheld. If no successor Administrative Agent shall have been so appointed by
the Majority Lenders with the consent of Borrower, and shall have accepted such
appointment, within thirty (30) days after the retiring Administrative Agent’s
giving of notice of resignation or the Majority Lenders’ removal of the retiring
Administrative Agent, then the retiring Administrative Agent may, on behalf of
the Lenders and Borrower, appoint a successor Administrative Agent, which shall
be, in the case of a successor agent, a commercial bank organized under the laws
of the United States of America or of any State thereof and having a combined
capital and surplus of at least $500,000,000; provided that, if Administrative
Agent shall notify Borrower and the Lenders that no qualifying Person has
accepted such appointment, then such resignation shall nonetheless become
effective in accordance with such notice and (a) the retiring Administrative
Agent shall be discharged from its duties and obligations hereunder and under
the other Loan Documents (except that in the case of any collateral security
held by Administrative Agent on behalf of the Lenders under any of the Loan
Documents, the retiring Administrative Agent shall continue to hold such
collateral security until such time as a successor Administrative Agent is
appointed) and (b) all payments, communications and determinations provided to
be made by, to or through the retiring Administrative Agent shall instead be
made by or to each Lender directly, until such time as the Majority Lenders
appoint a successor Administrative Agent as provided for above in this
paragraph. Upon the acceptance of any appointment as Administrative Agent by a
successor Administrative Agent, such successor Administrative Agent shall
thereupon succeed to and become vested with all the rights, powers, privileges,
and duties of the retiring Administrative Agent, and the retiring Administrative
Agent shall be discharged from its duties and obligations under this Agreement
and the other Loan Documents. After any retiring Administrative Agent’s
resignation or removal hereunder as Administrative Agent, the provisions of this
Article VIII shall inure to its benefit as to any actions taken or omitted to be
taken by it while it was Administrative Agent under this Agreement and the other
Loan Documents.

 

70

 

  

Section 8.07         Additional Agents; Delegation by Administrative Agent.
Administrative Agent shall have the right to appoint and nominate arrangers,
documentation agents, syndication agents and such other agents from time to time
in its sole and absolute discretion; provided that, no agent (other than
Administrative Agent) or arranger shall have any duties, obligations or
liabilities in its respective capacity as agent or arranger except as may be
expressly set forth herein. Administrative Agent may perform any and all of its
duties and exercise its rights and powers hereunder or under any other Loan
Document by or through any one or more sub-agents appointed by Administrative
Agent. The exculpatory provisions of this Agreement and the Loan Documents shall
apply to any such sub-agent of Administrative Agent, and shall apply to such
sub-agents’ respective activities in connection with the syndication of the
credit facilities provided for herein as well as activities as Administrative
Agent.

 

Section 8.08         Collateral Matters.

 

(a)    Administrative Agent is authorized on behalf of the Secured Parties,
without the necessity of any notice to or further consent from the Secured
Parties, from time to time, to take any actions with respect to any Collateral
or Security Instruments which may be necessary to perfect and maintain
Acceptable Security Interests in and Liens upon the Collateral granted pursuant
to the Security Instruments. Administrative Agent is further authorized on
behalf of the Secured Parties, without the necessity of any notice to or further
consent from the Secured Parties, from time to time, to take any action (other
than enforcement actions requiring the consent of, or request by, the Majority
Lenders as set forth in Section 7.02 or Section 7.03 above) in exigent
circumstances as may be reasonably necessary to preserve any rights or
privileges of the Secured Parties under the Loan Documents or applicable law. By
accepting the benefit of the Liens granted pursuant to the Security Instruments,
each Secured Party not party hereto hereby agrees to the terms of this paragraph
(a).

 

(b)    Each Secured Party irrevocably authorizes Administrative Agent to release
any Lien granted to or held by Administrative Agent upon any Collateral or
release any Guarantor from its obligations under any Loan Document: (i) upon
termination of the Commitments, termination of all Hedge Transactions with
Lender Hedge Counterparties that are secured by the Liens on the Collateral
(other than Hedge Transactions with any Lender Hedge Counterparty with respect
to which other arrangements satisfactory to the Lender Hedge Counterparty and
Borrower have been made; provided that, unless a Lender Hedge Counterparty
notifies Administrative Agent in writing at least two (2) Business Days prior to
the expected termination of the Commitments that such arrangements have not been
made, then solely for purposes of this clause (b), it shall be deemed that such
satisfactory arrangements have been made), and payment in full of all Secured
Obligations (other than Lender Hedge Obligations with respect to which other
arrangements satisfactory to the Lender Hedge Counterparty and Borrower have
been made; provided that, unless a Lender Hedge Counterparty notifies
Administrative Agent in writing at least two (2) Business Days prior to the
expected termination of the Commitments that such arrangements have not been
made, then solely for purposes of this clause (b), it shall be deemed that such
satisfactory arrangements have been made); (ii) constituting Property sold or to
be sold or otherwise disposed of as part of or in connection with any
Disposition permitted under this Agreement or the other Loan Documents; (iii)
constituting Property in which Borrower or any Subsidiary owned no interest at
the time the Lien was granted or at any time thereafter; (iv) constituting
Property leased to Borrower or any Subsidiary under a lease which has expired or
has been terminated in a transaction permitted under this Agreement or is about
to expire and which has not been, and is not intended by Borrower or such
Subsidiary to be, renewed or extended; or (v) if approved, authorized or
ratified in writing by the applicable Majority Lenders or all the Lenders, as
the case may be, as required by Section 9.01. Upon the request of Administrative
Agent at any time, the Secured Parties will confirm in writing Administrative
Agent’s authority to release particular types or items of Collateral pursuant to
this Section 8.08. By accepting the benefit of the Liens granted pursuant to the
Security Instruments, each Secured Party not party hereto hereby agrees to the
terms of this paragraph (b).

 

71

 

  

(c)    Notwithstanding anything contained in any of the Loan Documents to the
contrary, Borrower, Administrative Agent, and each Secured Party hereby agree
that no Secured Party shall have any right individually to realize upon any of
the Collateral or to enforce the Guaranty, it being understood and agreed that
all powers, rights and remedies hereunder and under the Security Instruments may
be exercised solely by Administrative Agent on behalf of the Secured Parties in
accordance with the terms hereof. By accepting the benefit of the Liens granted
pursuant to the Security Instruments, each Secured Party not party hereto hereby
agrees to the terms of this paragraph (c).

 

ARTICLE IX

MISCELLANEOUS

 

Section 9.01         Amendments, Etc. No amendment or waiver of any provision of
this Agreement or any other Loan Document, nor consent to any departure by
Borrower or any Subsidiary therefrom, shall in any event be effective unless the
same shall be in writing and signed by the Majority Lenders and Borrower, and
then such waiver or consent shall be effective only in the specific instance and
for the specific purpose for which given; provided, however, that:

 

(a)    no amendment, waiver, or consent shall, unless in writing and signed by
all the Lenders directly and adversely affected thereby, do any of the
following: (i) reduce the principal of, or interest on, the Obligations or any
fees or other amounts payable hereunder or under any other Loan Document
(provided that, the consent of the Required Lenders shall be sufficient to waive
or reduce the increased portion of interest resulting from Section 2.06(b)),
(ii) postpone any date fixed for any payment of principal of, or interest on,
the Obligations, or any fees or other amounts payable hereunder or extend the
Maturity Date, the Tranche A Commitment Termination Date or the Commitment
Termination Date, (iii) change the percentage of Lenders that shall be required
for the Lenders or any of them to take any action hereunder or under any other
Loan Document, (iv) amend Section 2.08 in such a manner as to alter the pro rata
sharing of payments required therein or this Section 9.01, or (v) amend the
definition of “Required Lenders” or “Majority Lenders”;

 

(b)    no amendment, waiver, or consent shall, unless in writing and signed by
all of the Lenders affected thereby do any of the following: (i) release any
Subsidiary from its obligations under any Guaranty other than as a result of a
transaction permitted hereby, (ii) waive any of the conditions specified in
Section 3.01, (iii) increase the Tranche A Commitment or the Tranche B
Commitment of any Lender or (iv) release any Collateral securing the Secured
Obligations, except for releases of Collateral as permitted under Section
8.08(b);

 

(c)    no amendment, waiver or consent shall, unless in writing and signed by
Administrative Agent, in addition to the Lenders required above to take such
action, affect the rights or duties of Administrative Agent under this Agreement
or any other Loan Document;

 

(d)    Syndication Amendments shall be governed solely by Section 2.15; and

 

(e)    Incremental Amendments shall be governed solely by Section 2.01(b).

 

No Lender or any Affiliate of a Lender shall have any voting rights under any
Loan Document as a result of the existence of the Hedging Obligations or Banking
Services Obligations.

 

72

 

  

Section 9.02         Notices, Etc.

 

(a)    Standard Application. All notices and other communications (other than
Notices of Borrowing and Notices of Continuation, which are governed by Article
II of this Agreement and other than as provided in clause (b) below) shall be in
writing and hand delivered with written receipt, sent by facsimile (with a hard
copy sent as otherwise permitted in this Section 9.02), sent by a nationally
recognized overnight courier, or sent by certified mail, return receipt
requested as follows: if to a Loan Party, as specified on Schedule I, if to
Administrative Agent, at its credit contact specified under its name on Schedule
I, and if to any Lender, at is credit contact specified in its Administrative
Questionnaire. Each party may change its notice address by written notification
to the other parties. All such notices and communications shall be effective
when delivered, except that notices and communications to any Lender pursuant to
Article II shall not be effective until received and, in the case of facsimile,
such receipt is confirmed by such Lender verbally or in writing.

 

(b)    Electronic Communications. Notices and other communications to the
Lenders hereunder may be delivered or furnished by electronic communication
(including e-mail and Internet or intranet websites) pursuant to procedures
approved by Administrative Agent, provided that the foregoing shall not apply to
notices to any Lender pursuant to Article II if such Lender has notified
Administrative Agent that it is incapable of receiving notices under such
Article by electronic communication. Administrative Agent or Borrower may, in
their discretion, agree to accept notices and other communications to it
hereunder by electronic communications pursuant to procedures approved by it,
provided that approval of such procedures may be limited to particular notices
or communications. Unless Administrative Agent otherwise prescribes, (i) notices
and other communications sent to an e-mail address shall be deemed received upon
the sender’s receipt of an acknowledgement from the intended recipient (such as
by the “return receipt requested” function, as available, return e-mail or other
written acknowledgement), provided that if such notice or other communication is
not sent during the normal business hours of the recipient, such notice or
communication shall be deemed to have been sent at the opening of business on
the next Business Day for the recipient, and (ii) notices or communications
posted to an Internet or intranet website shall be deemed received upon the
deemed receipt by the intended recipient at its e-mail address as described in
the foregoing clause (i) of notification that such notice or communication is
available and identifying the website address therefor.

 

Section 9.03         No Waiver; Remedies. No failure on the part of any Lender
or Administrative Agent to exercise, and no delay in exercising, any right
hereunder or under any Note 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 remedies herein
provided are cumulative and not exclusive of any remedies provided by law.

 

Section 9.04         Costs and Expenses. Borrower agrees to pay on demand (a)
all reasonable out-of-pocket costs and expenses of Administrative Agent in
connection with the preparation, execution, waiver, delivery, administration,
modification, and amendment of this Agreement, the Notes, the Guaranties, and
the other Loan Documents including, without limitation, the reasonable fees and
reasonable out-of-pocket expenses of counsel for Administrative Agent with
respect to advising Administrative Agent as to its rights and responsibilities
under this Agreement, and (b) all out-of-pocket costs and expenses, if any, of
Administrative Agent and each Lender (including, without limitation, counsel
fees and expenses of Administrative Agent and each Lender) incurred in
connection with the enforcement its rights or incurred during the existence of a
Default in connection with the protection if its rights (in any event, whether
through negotiations, legal proceedings, or otherwise) (A) in connection with
this Agreement, the Notes, the Guaranties and the other Loan Documents,
including its rights under this Section, following an Event of Default or (B) in
connection with the Loans made, including all such out-of-pocket expenses
incurred during any workout, restructuring or negotiations in respect of such
Loans.

 

73

 

  

Section 9.05         Binding Effect. This Agreement shall become effective when
it shall have been executed by Borrower, Administrative Agent and when
Administrative Agent shall have, as to each Lender, either received a
counterpart hereof executed by such Lender or been notified by such Lender that
such Lender has executed it and thereafter shall be binding upon and inure to
the benefit of Borrower, Administrative Agent and each Lender and their
respective successors and assigns, except that neither Borrower nor any other
Loan Party shall have the right to assign its rights or delegate its duties
under this Agreement or any interest in this Agreement without the prior written
consent of each Lender.

 

Section 9.06         Lender Assignments and Participations.

 

(a)    Assignments. With the prior written consent of Administrative Agent, any
Lender may assign to one or more Eligible Assignees all or any portion of its
rights and obligations under this Agreement (including, without limitation, all
or a portion of its Commitments, the Loans owing to it, the Obligations held by
it); provided, however, that (i) each such assignment shall be of a constant,
and not a varying, percentage of such Lender’s rights and obligations assigned
under this Agreement and shall be an equal percentage with respect to both its
obligations owing in respect of the Commitments and the related Loans, (ii) the
amount of the Commitments and Loans of such Lender being assigned pursuant to
each such assignment (determined as of the date of the Assignment and Acceptance
with respect to such assignment) shall be, if to an entity other than a Lender,
not less than $1,000,000 and shall be in integral multiples of $1,000,000 in
excess thereof, (iii) the parties to each such assignment shall execute and
deliver to Administrative Agent, for its acceptance and recording in the
Register, an Assignment and Acceptance and (iv) each Eligible Assignee (other
than any Eligible Assignee of Administrative Agent) shall pay to Administrative
Agent a $3,500 administrative fee. Upon such execution, delivery, acceptance and
recording, from and after the effective date specified in each Assignment and
Acceptance, which effective date shall be at least three (3) Business Days after
the execution thereof, (A) the assignee thereunder shall be a party hereto for
all purposes and, to the extent that rights and obligations hereunder have been
assigned to it pursuant to such Assignment and Acceptance, have the rights and
obligations of a Lender hereunder and (B) such Lender thereunder shall, to the
extent that rights and obligations hereunder have been assigned by it pursuant
to such Assignment and Acceptance, relinquish its rights and be released from
its obligations under this Agreement (and, in the case of an Assignment and
Acceptance covering all or the remaining portion of such Lender’s rights and
obligations under this Agreement, such Lender shall cease to be a party hereto).

 

(b)    Terms of Assignments. By executing and delivering an Assignment and
Acceptance, the Lender thereunder and the assignee thereunder confirm to and
agree with each other and the other parties hereto as follows: (i) other than as
provided in such Assignment and Acceptance, such Lender makes no representation
or warranty and assumes no responsibility with respect to any statements,
warranties, or representations made in or in connection with this Agreement or
the execution, legality, validity, enforceability, genuineness, or sufficiency
of value of this Agreement or any other instrument or document furnished
pursuant hereto; (ii) such Lender makes no representation or warranty and
assumes no responsibility with respect to the financial condition of Borrower or
its Subsidiaries or the performance or observance by Borrower or its
Subsidiaries of any of their obligations under this Agreement or any other
instrument or document furnished pursuant hereto; (iii) such assignee confirms
that it has received a copy of this Agreement, together with copies of the
financial statements referred to in Section 4.05 and such other documents and
information as it has deemed appropriate to make its own credit analysis and
decision to enter into such Assignment and Acceptance; (iv) such assignee will,
independently and without reliance upon Administrative Agent, such Lender or any
other Lender and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit decisions in taking or
not taking action under this Agreement; (v) such assignee appoints and
authorizes Administrative Agent to take such action as agent on its behalf and
to exercise such powers under this Agreement as are delegated to Administrative
Agent by the terms hereof, together with such powers as are reasonably
incidental thereto; and (vi) such assignee agrees that it will perform in
accordance with their terms all of the obligations which by the terms of this
Agreement are required to be performed by it as a Lender.

 

74

 

  

(c)    The Register. Administrative Agent acting solely for this purposes as a
non-fiduciary agent of the Borrower shall maintain at its address referred to in
Section 9.02 a copy of each Assignment and Acceptance delivered to and accepted
by 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) of
the Loans owing to, each Lender from time to time (the “Register”). The entries
in the Register shall be conclusive and binding for all purposes, absent
manifest error, and Borrower, Administrative Agent and the Lenders shall treat
each Person whose name is recorded in the Register as a Lender hereunder for all
purposes of this Agreement. The Register shall be available for inspection by
Borrower or any Lender at any reasonable time and from time to time upon
reasonable prior notice.

 

(d)    Procedures. Upon its receipt of an Assignment and Acceptance executed by
a Lender and an Eligible Assignee, Administrative Agent shall, if such
Assignment and Acceptance has been completed and is in substantially the form of
the attached Exhibit A, (i) accept such Assignment and Acceptance, (ii) record
the information contained therein in the Register, and (iii) give prompt notice
thereof to Borrower. Within five (5) Business Days after its receipt of such
notice, Borrower shall execute and deliver to Administrative Agent in exchange
for the surrendered Notes (A) if such Eligible Assignee has acquired a
Commitment and makes a request, a new Note to the order of such Eligible
Assignee in an amount equal to the Commitment assumed by it pursuant to such
Assignment and Acceptance and (B) if such Lender has retained any Commitment and
makes a request, a new Note to the order of such Lender in an amount equal to
the Commitment retained by it hereunder. Such new Notes shall be dated the
effective date of such Assignment and Acceptance and shall otherwise be in
substantially the form of the attached Exhibit E.

 

(e)    Participations. Each Lender may sell participations to one or more banks
or other financial institutions (or any other entity if an Event of Default has
occurred and is continuing) in or to all or a portion of its rights and
obligations under this Agreement (including, without limitation, all or a
portion of its Commitments, the Loans owing to it, and the Obligations held by
it); provided, however, that (i) such Lender’s obligations under this Agreement
(including, without limitation, its Commitments to Borrower hereunder) shall
remain unchanged, (ii) such Lender shall remain solely responsible to the other
parties hereto for the performance of such obligations, (iii) such Lender shall
remain the holder of any such Obligations for all purposes of this Agreement,
(iv) Borrower, Administrative Agent and the other Lenders shall continue to deal
solely and directly with such Lender in connection with such Lender’s rights and
obligations under this Agreement, and (v) such Lender shall not require the
participant’s consent to any matter under this Agreement, except for any matter
set forth in the first proviso of Section 9.01. Borrower hereby agrees that
participants shall have the same rights under Sections 2.09, 2.10, 2.11(d), and
9.07 (subject to the requirements and limitations therein, including the
requirements under Section 2.11(g) (it being understood that the documentation
required under Section 2.11(g) shall be delivered to the participating Lender))
to the same extent as if it were a Lender and had acquired its interest by
assignment pursuant to paragraphs (a) and (b) of this Section; provided that
such participant (A) agrees to be subject to the provisions of Section 2.13 as
if it were an assignee hereunder; and (B) shall not be entitled to receive any
greater payment under Sections 2.10 or 2.11(d), with respect to any
participation, than its participating Lender would have been entitled to
receive, except to the extent such entitlement to receive a greater payment
results from a Change in Law that occurs after such participant acquired the
applicable participation.

 

75

 

 

Each Lender that sells a participation shall, acting solely for this purpose as
a non-fiduciary agent of Borrower, maintain a register on which it enters the
name and address of each participant and the principal amounts (and stated
interest) of each participant’s interest in the Loans or other obligations under
the Loan Documents (the “Participant Register”); provided that no Lender shall
have any obligation to disclose all or any portion of the Participant Register
(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 Loan Document) to any Person 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. 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. For the avoidance of doubt, Administrative Agent (in its capacity
as Administrative Agent) shall have no responsibility for maintaining a
Participant Register.

 

(f)     Certain Pledges. Any Lender may at any time pledge or assign a security
interest in all or any portion of its rights under this Agreement to secure
obligations of such Lender, including any pledge or assignment to secure
obligations to a Federal Reserve Bank or any central bank having jurisdiction
over such Lender; provided that no such pledge or assignment shall release such
Lender from any of its obligations hereunder or substitute any such pledgee or
assignee for such Lender as a party hereto.

 

Section 9.07         Indemnification; Waiver.

 

(a)    Indemnification. BORROWER SHALL INDEMNIFY ADMINISTRATIVE AGENT, THE
LENDERS AND EACH AFFILIATE THEREOF AND THEIR RESPECTIVE DIRECTORS, OFFICERS,
EMPLOYEES, AND AGENTS (each, an “Indemnified Party”) FROM, AND DISCHARGE,
RELEASE, AND HOLD EACH INDEMNIFIED PARTY HARMLESS AGAINST, ANY AND ALL LOSSES,
LIABILITIES, CLAIMS, OR DAMAGES THAT ARE IMPOSED ON, INCURRED BY, OR ASSERTED
AGAINST SUCH INDEMNIFIED PARTY IN ANY WAY RELATING TO OR ARISING OUT OF THE
EXISTING SWAP AGREEMENT, THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS OR
ANY ACTION TAKEN OR OMITTED BY ANY “RELEASEES” (AS DEFINED IN THE ASSIGNMENT)
UNDER THE EXISTING SWAP AGREEMENT OR INDEMNIFIED PARTY UNDER THIS AGREEMENT OR
ANY OTHER LOAN DOCUMENT (A) INCLUDING ANY SUCH LOSSES, LIABILITIES, CLAIMS,
DAMAGES, OR EXPENSE INCURRED BY REASON OF ANY SOLE OR CONCURRENT NEGLIGENCE OF
ANY KIND OR CHARACTER WHATSOEVER, WHETHER ACTIVE OR PASSIVE, WHETHER AN
AFFIRMATIVE ACT OR AN OMISSION, INCLUDING WITHOUT LIMITATION, ALL TYPES OF
NEGLIGENT CONDUCT IDENTIFIED IN THE RESTATEMENT (SECOND) OF TORTS OF ONE OR MORE
OF THE INDEMNIFIED PARTIES OR BY REASON OF STRICT LIABILITY IMPOSED WITHOUT
FAULT ON ANY ONE OR MORE OF THE INDEMNIFIED PARTIES, (B) INCLUDING WITHOUT
LIMITATION ENVIRONMENTAL CLAIMS AND ANY LIABILITIES ARISING UNDER ENVIRONMENTAL
LAW, AND (C) INCLUDING WITHOUT LIMITATION ANY SUCH OTHER LOSSES, LIABILITIES,
CLAIMS, DAMAGES, OR EXPENSES RESULTING FROM ANY LITIGATION, LEGAL PROCEEDING OR
OTHER TYPE OF ACTION, REGARDLESS OF WHETHER ANY INDEMNIFIED PARTY IS PARTY TO
SUCH LITIGATION, LEGAL PROCEEDING OR OTHER ACTION, BUT IN EACH CASE EXCLUDING
ANY SUCH LOSSES, LIABILITIES, CLAIMS, DAMAGES, OR EXPENSES INCURRED BY REASON OF
THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF THE PERSON TO BE INDEMNIFIED AS
DETERMINED BY A COURT OF COMPETENT JURISDICTION BY A FINAL AND NONAPPEALABLE
JUDGMENT. In the case of an investigation, litigation or proceeding to which the
indemnity in this paragraph applies, such indemnity shall be effective whether
or not such investigation, litigation or proceeding is brought by Borrower, any
Subsidiary or Affiliate thereof, any equityholder or creditor thereof, or an
Indemnified Party. Borrower hereby also agrees that no Indemnified Party will
have any liability (whether direct or indirect, in contract or tort, or
otherwise) to Borrower, any Subsidiary or Affiliate thereof, or any equity
holder or creditor thereof arising out of, related to or in connection with any
aspect of the transactions contemplated hereby, except to the extent such
liability is determined in a final, nonappealable judgment by a court of
competent jurisdiction to have resulted from such Indemnified Party’s own gross
negligence or willful misconduct. THE FOREGOING INDEMNITY AND HOLD HARMLESS
SHALL NOT APPLY TO ANY CLAIMS, DAMAGES, LOSSES, LIABILITIES, COSTS OR EXPENSES
THAT ARE INCURRED BY OR ASSERTED OR AWARDED AGAINST ANY INDEMNITEE DIRECTLY FOR,
OR AS A DIRECT CONSEQUENCE OF, SUCH INDEMNITEE BEING A DEFAULTING LENDER,
WHETHER ASSERTED BY BORROWER, ANY GUARANTOR, OR ADMINISTRATIVE AGENT. Borrower
shall not, and shall not permit any of its Subsidiaries to, without the prior
written consent of each Indemnified Party affected thereby (which consent will
not be unreasonably withheld, delayed, denied, or conditioned), settle any
threatened or pending claim or action that would give rise to the right of any
Indemnified Party to claim indemnification hereunder unless such settlement (a)
includes a full and unconditional release of all liabilities arising out of such
claim or action against such Indemnified Party and (b) does not include any
statement as to or an admission of fault, culpability or failure to act by or on
behalf of any Indemnified Party. All amounts due under this Section 9.07(a)
shall be payable not later than ten (10) Business Days after written demand
therefor.

 

76

 

  

(b)    Waiver of Damages. No Indemnified Party will be liable to Borrower, any
Subsidiary or Affiliate thereof, any equity holder or creditor thereof or any
other Person for any indirect, consequential or punitive damages that may be
alleged as a result of this Agreement, any other Loan Documents, or any element
of the transactions contemplated hereby or thereby, including the Transactions.
To the fullest extent permitted by applicable law, Borrower shall not assert,
and hereby waives, any claim against any Indemnified Party, on any theory of
liability, for special, indirect, consequential or punitive damages (as opposed
to direct or actual damages) arising out of, in connection with, or as a result
of, this Agreement, any other Loan Document or any agreement or instrument
contemplated hereby, the transactions contemplated hereby or thereby, any Loan
or the use of the proceeds thereof. Absent gross negligence or willful
misconduct, no Indemnified Party referred to in subsection (a) above 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 Loan Documents or the transactions contemplated hereby or
thereby.

 

Section 9.08         Confidentiality. Administrative Agent and each Lender (each
a “Lending Party”) agree to keep confidential any information furnished or made
available to it by Borrower or any Subsidiary pursuant to this Agreement or any
other Loan Document and identified by Borrower or any Subsidiary as proprietary
or confidential; provided that nothing herein shall prevent any Lending Party
from disclosing such information (a) to any other Lending Party or any Affiliate
of any Lending Party, or any officer, director, employee, agent, or advisor of
any Lending Party or Affiliate of any Lending Party solely for purposes of
administering, negotiating, considering, processing, implementing, syndicating,
assigning, or evaluating the credit facilities provided herein and the
transactions contemplated hereby, (b) to any other Person if directly incidental
to the administration of the credit facilities provided herein, (c) as required
by any Legal Requirement, (d) upon the order of any court or administrative
agency, (e) as may be required by any regulatory agency or authority or in
connection with any pledge or assignment pursuant to Section 9.06(f), (f) that
is or becomes available to the public or that is or becomes available to any
Lending Party other than as a result of a disclosure by any Lending Party or
officer, director, employee, agent, advisor or Affiliate of any Lender Party
prohibited by this Agreement, (g) to the extent necessary in connection with any
litigation relating to this Agreement or any other Loan Document to which such
Lending Party or any of its Affiliates may be a party, (h) to the extent
necessary in connection with the exercise of any right or remedy under this
Agreement or any other Loan Document, and (i) to any actual or proposed
participant or assignee, in each case, subject to provisions similar to those
contained in this Section 9.08. NOTWITHSTANDING ANYTHING TO THE CONTRARY
CONTAINED HEREIN, nothing in this Agreement shall (i) restrict any Lending Party
from providing information to any regulatory or governmental authorities,
including the Federal Reserve Board and its supervisory staff; (ii) require or
permit any Lending Party to disclose to Borrower or any Affiliate thereof that
any information will be or was provided to the Federal Reserve Board or any of
its supervisory staff; or (iii) require or permit any Lending Party to inform
Borrower or any Affiliate thereof of a current or upcoming Federal Reserve Board
examination or any nonpublic Federal Reserve Board supervisory initiative or
action.

 

77

 

  

Section 9.09         Execution in Counterparts. This Agreement may be executed
in any number of counterparts and by different parties hereto in separate
counterparts, each of which when so executed shall be deemed to be an original
and all of which taken together shall constitute one and the same agreement.

 

Section 9.10         Electronic Execution of Assignments. 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, or any other state laws similar to the Uniform Electronic
Transactions Act.

 

Section 9.11         Survival of Representations, Etc. All representations and
warranties contained in this Agreement or made in writing by or on behalf of
Borrower in connection herewith shall survive the execution and delivery of this
Agreement and the Loan Documents, the making of the Loans and any investigation
made by or on behalf of the Lenders, none of which investigations shall diminish
any Lender’s right to rely on such representations and warranties. All
obligations of Borrower provided for in Sections 2.09, 2.10, 2.11(c), 9.04, and
9.07 and all of the obligations of the Lenders in Section 8.05, together with
the provisions in Sections 9.13, 9.14 and 9.17, shall survive any termination of
this Agreement and repayment in full of the Obligations.

 

Section 9.12         Severability. In case one or more provisions of this
Agreement or the other Loan Documents shall be invalid, illegal or unenforceable
in any respect under any applicable law, the validity, legality, and
enforceability of the remaining provisions contained herein or therein shall not
be affected or impaired thereby.

 

Section 9.13         Governing Law. This Agreement and the other Loan Documents
(unless otherwise expressly provided therein) shall be deemed a contract under,
and shall be governed by, and construed and enforced in accordance with, the
INTERNAL laws (AND NOT THE LAW OF CONFLICTS) of the State of New York.

 

78

 

  

Section 9.14         Submission to Jurisdiction; Waiver of Venue. The parties
hereto hereby agree that any suit or proceeding arising in respect of this
Agreement, or any of the matters contemplated hereby or thereby will be tried in
the U.S. District Court for the Southern District of New York or, if such court
does not have subject matter jurisdiction, in any state court located in the
City of New York, New York, and the parties hereto hereby agree to submit to the
jurisdiction of, and venue in, such 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 applicable law. The parties hereto hereby agree that service
of any process, summons, notice or document by registered mail addressed to the
applicable parties will be effective service of process against such party for
any action or proceeding relating to any such dispute. Each party hereto hereby
irrevocably and unconditionally waives, to the fullest extent permitted by
applicable Legal Requirement, any objection that it may now or hereafter have to
the laying of venue of any action or proceeding arising out of or relating to
this Agreement in any court referred to in this Section 9.14. Each of the
parties hereto hereby irrevocably waives, to the fullest extent permitted by
applicable Legal Requirement, the defense of any inconvenient forum to the
maintenance of such action or proceeding in any such court.

 

Section 9.15         Usury Not Intended. It is the intent of each Loan Party and
each Lender in the execution and performance of this Agreement and the other
Loan Documents to contract in strict compliance with applicable usury laws,
including conflicts of law concepts, governing the Loans of each Lender
including such applicable laws of the State of New York, if any, and the United
States of America from time to time in effect. In furtherance thereof, the
Lenders and the Loan Parties stipulate and agree that none of the terms and
provisions contained in this Agreement or the other Loan Documents shall ever be
construed to create a contract to pay, as consideration for the use, forbearance
or detention of money, interest at a rate in excess of the Maximum Rate and that
for purposes of this Agreement “interest” shall include the aggregate of all
charges which constitute interest under such laws that are contracted for,
charged or received under this Agreement; and in the event that, notwithstanding
the foregoing, under any circumstances the aggregate amounts taken, reserved,
charged, received or paid on the Loans, include amounts which by applicable law
are deemed interest which would exceed the Maximum Rate, then such excess shall
be deemed to be a mistake and each Lender receiving same shall credit the same
on the principal of its Obligations (or if such Obligations shall have been paid
in full, refund said excess to Borrower). In the event that the maturity of the
Obligations are accelerated by reason of any election of the holder thereof
resulting from any Event of Default under this Agreement or otherwise, or in the
event of any required or permitted prepayment, then such consideration that
constitutes interest may never include more than the Maximum Rate, and excess
interest, if any, provided for in this Agreement or otherwise shall be canceled
automatically as of the date of such acceleration or prepayment and, if
theretofore paid, shall be credited on the applicable Obligations (or, if the
applicable Obligations shall have been paid in full, refunded to Borrower of
such interest). In determining whether or not the interest paid or payable under
any specific contingencies exceeds the Maximum Rate, the Loan Parties and the
Lenders shall to the maximum extent permitted under applicable law amortize,
prorate, allocate and spread in equal parts during the period of the full stated
term of the Obligations all amounts considered to be interest under applicable
law at any time contracted for, charged, received or reserved in connection with
the Obligations. The provisions of this Section shall control over all other
provisions of this Agreement or the other Loan Documents which may be in
apparent conflict herewith.

 

79

 

  

Section 9.16         Usury Recapture. In the event the rate of interest
chargeable under this Agreement at any time is greater than the Maximum Rate,
the unpaid principal amount of the Loans shall bear interest at the Maximum Rate
until the total amount of interest paid or accrued on the Loans equals the
amount of interest which would have been paid or accrued on the Loans if the
stated rates of interest set forth in this Agreement had at all times been in
effect. In the event, upon payment in full of the Loans, the total amount of
interest paid or accrued under the terms of this Agreement and the Loans is less
than the total amount of interest which would have been paid or accrued if the
rates of interest set forth in this Agreement had, at all times, been in effect,
then Borrower shall, to the extent permitted by applicable law, pay
Administrative Agent for the account of the Lenders an amount equal to the
difference between (a) the lesser of (i) the amount of interest which would have
been charged on its Loans if the Maximum Rate had, at all times, been in effect
and (ii) the amount of interest which would have accrued on its Loans if the
rates of interest set forth in this Agreement had at all times been in effect
and (b) the amount of interest actually paid under this Agreement on its Loans.
In the event the Lenders ever receive, collect or apply as interest any sum in
excess of the Maximum Rate, such excess amount shall, to the extent permitted by
law, be applied to the reduction of the principal balance of the Loans, and if
no such principal is then outstanding, such excess or part thereof remaining
shall be paid to Borrower.

 

Section 9.17         WAIVER OF JURY TRIAL. BORROWER, THE LENDERS AND
ADMINISTRATIVE AGENT HEREBY ACKNOWLEDGE THAT THEY HAVE BEEN REPRESENTED BY AND
HAVE CONSULTED WITH COUNSEL OF THEIR CHOICE, AND HEREBY KNOWINGLY, VOLUNTARILY,
INTENTIONALLY, AND IRREVOCABLY WAIVE ANY AND ALL RIGHT TO TRIAL BY JURY IN
RESPECT OF ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT,
ANY OTHER LOAN DOCUMENT, OR ANY OF THE TRANSACTIONS CONTEMPLATED HEREBY OR
THEREBY.

 

Section 9.18         USA Patriot Act. Each Lender that is subject to the Patriot
Act and Administrative Agent (for itself and not on behalf of any Lender) hereby
notifies Borrower that pursuant to the requirements of the Patriot Act, it is
required to obtain, verify and record information that identifies Borrower,
which information includes the name and address of Borrower and other
information that will allow such Lender or Administrative Agent, as applicable,
to identify Borrower in accordance with the Patriot Act.

 

Section 9.19         Integration. THIS AGREEMENT AND THE LOAN DOCUMENTS, AS
DEFINED IN THIS AGREEMENT, REPRESENT THE FINAL AGREEMENT AMONG THE PARTIES WITH
RESPECT TO THE SUBJECT MATTERS SET FORTH HEREIN AND MAY NOT BE CONTRADICTED BY
EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE
PARTIES.

 

Section 9.20         Waiver.

 

(a)    Borrower hereby expressly waives: (i) notice of the Lenders’ acceptance
of this Agreement; (ii) notice of the existence or creation or non-payment of
all or any of the Obligations other than notices expressly provided for in this
Agreement; (iii) presentment, demand, notice of dishonor, protest, and all other
notices whatsoever other than notices expressly provided for in this Agreement;
(iv) any claim or defense based on an election of remedies; and (v) all
diligence in collection or protection of or realization upon the Obligations or
any part thereof, any obligation hereunder, or any security for or guaranty of
any of the foregoing.

 

(b)    No delay on any of Administrative Agent’s or the Lenders’ part in the
exercise of any right or remedy shall operate as a waiver thereof, and no single
or partial exercise by Administrative Agent or any of the Lenders of any right
or remedy shall preclude other or further exercise thereof or the exercise of
any other right or remedy. No action of Administrative Agent or any of the
Lenders permitted hereunder shall in any way affect or impair any such Lenders’
rights or Borrower’s obligations under this Agreement.

 

80

 

  

(c)    Notwithstanding anything to the contrary contained herein, it is the
intention of Borrower, Administrative Agent and the Lenders that the amount of
the Borrower’s obligations hereunder shall be in, but not in excess of, the
maximum amount thereof not subject to avoidance or recovery by operation of
applicable law governing bankruptcy, reorganization, arrangement, adjustment of
debts, relief of debtors, dissolution, insolvency, fraudulent transfers or
conveyances or other similar laws (collectively, “Applicable Insolvency Laws”).
To that end, but only in the event and to the extent that Borrower’s obligations
hereunder or any payment made pursuant thereto would, but for the operation of
the preceding sentence, be subject to avoidance or recovery under Applicable
Insolvency Laws, the amount of Borrower’s obligations hereunder shall be limited
to the largest amount which, after giving effect thereto, would not, under
Applicable Insolvency Laws, render Borrower’s respective obligations hereunder
unenforceable or avoidable or subject to recovery under Applicable Insolvency
Laws. To the extent any payment actually made hereunder exceeds the limitation
contained in this Section 9.20(c), then the amount of such excess shall, from
and after the time of payment by Borrower, be reimbursed by the Lenders upon
demand by Borrower. The foregoing provision is intended solely to preserve the
rights of Administrative Agent and the Lenders hereunder against Borrower to the
maximum extent permitted by Applicable Insolvency Laws and neither Borrower nor
any Guarantor nor any other Person shall have any right or claim under this
Section 9.20(c) that would not otherwise be available under Applicable
Insolvency Laws.

 

Section 9.21         Restatement; Existing Swap Facility. The parties hereto
agree that this Agreement amends and restates the Existing Swap Facility in its
entirety but does not novate or discharge the Existing Obligations or
obligations outstanding under the Existing Swap Facility. The parties hereto
acknowledge and agree that, from and after the Closing Date, (a) this Agreement
and the Loan Documents shall replace the Existing Swap Facility and the
“Assigned Interests” (as defined in the Assignment) in their entirety and (b)
this Agreement and the Loan Documents shall be the only operative agreements in
effect with respect to the Existing Obligations and other obligations thereunder
or in connection therewith.

 

[Remainder of this page intentionally left blank. Signature pages follow.]

 

81

 

 

EXECUTED as of the date first above written.

 

  BORROWER:       AMERICAN EAGLE ENERGY CORPORATION,     as Borrower         By:
      Bradley M. Colby     President and Chief Executive Officer

 

Signature Page to Credit Agreement

 

 

 

  

  ADMINISTRATIVE AGENT:       MORGAN STANLEY CAPITAL GROUP INC.,   as
Administrative Agent         By:       Nancy King     Vice President        
LENDER:       MORGAN STANLEY CAPITAL GROUP INC.         By:       Nancy King    
Vice President

  

Signature Page to Credit Agreement

 

 

 

 

SCHEDULE I

 

NOTICE INFORMATION FOR Borrower, Administrative Agent, and Lenders

Administrative Agent:

 

Morgan Stanley Capital Group Inc.

2000 Westchester Ave., Floor 01

Purchase, New York 10577-2530

Attention: Keith Cackowsky, Executive Director

Facsimile: (212) 507-3587

Telephone: (914) 225-1548

 

With a copy to:

 

Morgan Stanley Capital Group Inc.

2000 Westchester Ave., Floor 01

Purchase, New York 10577-2530

Attention: Oscar Gutierrez, Vice President

Facsimile: (212) 507-0189

Telephone: (914) 225-4847

 

Borrower:

 

American Eagle Energy Corporation

2549 W. Main Street, Suite 202

Littleton, Colorado 80120

Attention: Brad Colby, CEO

Facsimile: (303) 798-5767

Telephone: (303) 798-5235

 

With copies (which shall not constitute notice) to:

 

Baker & Hostetler LLP

600 Anton Blvd., Suite 900

Costa Mesa, California 92626

Attention: Randolf W. Katz, Esq.

Facsimile: (714) 966-8802

Telephone: (714) 966-8807

Email: rkatz@bakerlaw.com

 

and

 

Roberts & Olivia, LLC

2060 Broadway; Suite 250

Boulder, Colorado 80302

Attention: William R. Roberts, Esq.

Facsimile: (720) 210-5447

Telephone: (720) 210-5447 ext. 71

Email: wrroberts@wrrlaw.com

 

Schedule I

 

 

Lenders:

 

Each to its address (or facsimile number) set forth in its Administrative
Questionnaire.

 

Schedule I

 

 

SCHEDULE II

 

COMMITMENTS; PRO RATA SHARE

 

Each of the Commitments set forth herein is governed by the terms of the Credit
Agreement, which provides for, among other things, limitations which may
restrict Borrower’s ability to request (and the Lenders’ obligation to provide)
Loans to a maximum amount which is less than the Commitments set forth in this
Schedule II. Each Lender’s Pro Rata Share thereof set forth below are subject
to, and governed by, the terms of the Credit Agreement, including, but not
limited to, any increases, decreases, terminations, and assignments thereof.

 

LENDERS  TRANCHE A
COMMITMENT
AMOUNTS   PERCENTAGE
OF TOTAL            MORGAN STANLEY CAPITAL GROUP INC.  $108,000,000.00    100%
TOTAL  $108,000,000.00    100%

 

LENDERS  TRANCHE B
COMMITMENT
AMOUNTS   PERCENTAGE
OF TOTAL              MORGAN STANLEY CAPITAL GROUP INC.  $0.00    100% TOTAL 
$0.00    100%

  

Schedule II

 

 

SCHEDULE III

 

REPAYMENT OF LOANS

  

Payment Date   Six Month Roll
Forward Applicable
Factor  Each month during the period of August 2014 through December 2014 
 1.20  Each month during the period of January 2015 through December 2015 
 1.35  Each month during the period of January 2016 until the Maturity Date 
 1.50 

 

Schedule III

 

  

SCHEDULE 1.01(a)

 

Excluded oil and gas properties

 

1.All leasehold and properties owned by American Eagle Energy Corporation’s
wholly owned Canadian subsidiaries EERG Energy ULC and AEE Canada Inc.

 

 

 

 

SCHEDULE 4.01

 

equity interests

  

1.AMZG, Inc. (wholly-owned by American Eagle Energy Corporation)

 

2.EERG Energy ULC (wholly-owned by American Eagle Energy Corporation)

 

3.AEE Canada Inc. (wholly-owned by AMZG, Inc.)

 

 

 

 

SCHEDULE 4.05

 

Permitted debt

 

-$100,000 securing cash bond for operator in accordance with North Dakota
Century Code 43-02-03-15.

 

-$1,500 securing cash bond for operating wells located within Fort Peck Indian
Reservation.

 

-$26,001, 912 aggregate payout balance outstanding as of 6-1-2013,under the
Carry Agreement dated April 16, 2012 by and between NextEra Energy Gas
Producing, LLC and American Eagle Energy Corporation as amended July 15, 2012.

 

-Obligations under the Spyglass Farmout dated August 12, 2013 by and between USG
Properties Bakken I, LLC and American Eagle Energy Corporation.

 

-$2,134,726 payout balance as of August 1, 2013 and the other obligations under
the Carry Agreement dated August 12, 2013by and between USG Properties Bakken I,
LLC and American Eagle Energy Corporation.

 

 

 

 

SCHEDULE 4.07

 

Litigation

 

None

 

 

 

 

SCHEDULE 4.13(b)

  

affiliate transactions

 

Synergy Resources LLC

 

In January 2010, AMZG, Inc formerly known as American Eagle Energy, Inc. engaged
Synergy Resources LLC, (“Synergy”), to provide geological and engineering
consulting services. Mr. Findley, who currently serves as a director of
Borrower, and Mr. Lantz, who currently serves as Chief Operating Officer of
Borrower, are each a member of Synergy.

 

Paul E. Rumler

 

Borrower routinely obtains legal services from a firm for which Mr. Rumler, one
of Borrower’s directors, serves as a principal. Fees paid this firm totaled
$23,644 and $16,585 for the years ended December 31, 2012 and 2011,
respectively.

  

Overriding Royalty Agreement

 

Borrower’s Chairman, Richard Findley, certain affiliated entities and Borrower’s
Chief Operating Officer, Tom Lantz, have rights under the ORRI Agreements to
receive overriding royalty interests equal to the difference between existing
burdens of record at the time of acquisition of any acreage in certain prospects
and twenty percent provided that in no event, however, will the overriding
royalty interest of Fairway and Findley be less than one and one-half percent
(1.5%). 

 

Compensation to Officers

 

Officers of Borrower do have employment agreements and are compensated on terms
that are no more favorable to the officers than terms for similarly situated
companies.

 

 

 

  

SCHEDULE 4.16(b)

HYDROCARBON INTERESTS

 

Operated Wells BPO Interest APO Interest 150% Payout APO Interest 300% Payout
APO Interest 500% Payout Well Name Spacing Unit WI NRI WI NRI WI NRI WI NRI
Myrtle 2-1-163-101 Township 163 North - Range 101 West, Sections 1 & 12
0.48070000 0.38380000 - - 0.46430000 0.37150000 - - Harvard State 16-36s-164-101
Township 163 North - Range 101 West, Sections 1 & 12 0.48070000 0.38380000 - -
0.46430000 0.37150000 - - Christianson 15-12-163-101 Township 163 North - Range
101 West, Sections 1 & 12 0.19690000 0.15650000 - - - - - - Megan 14-12-163-101
Township 163 North - Range 101 West, Sections 1 & 12 0.28650000 0.23080000
0.28620000 0.23050000 - - - - Frances 2-2S-163-101 Township 163 North - Range
101 West, Sections 2 & 11 0.45600000 0.35610000 - - - - - - Haagenson 3-2S
Township 163 North - Range 101 West, Sections 2 & 11 0.45600000 0.35610000 - - -
- - - Cody 15-11-163-101 Township 163 North - Range 101 West, Sections 2 & 11
0.18940000 0.14650000 0.18490000 0.14270000 - - - - Coplan 1-3-163-101 Township
163 North - Range 101 West, Sections 3 & 10 0.25560000 0.20340000 - - - - - -
Violet 3-3-163-101 Township 163 North - Range 101 West, Sections 3 & 10
0.38980000 0.30780000 - - - - - - Roberta 1-3-163-101 Township 163 North - Range
101 West, Sections 3 & 10 0.38980000 0.30780000 - - - - - - Albert
16-33N-164-102 Township 163 North - Range 101 West, Sections 4 & 9 0.46440000
0.36850000 - - - - - - Anton 3-4-163-101 Township 163 North - Range 101 West,
Sections 4 & 9 0.22860000 0.18160000 - - - - - - Muzzy 15-33S-164-101 Township
163 North - Range 101 West, Sections 4 & 9 0.22860000 0.18160000 - - - - - -
Murielle 9-1E-163-102 Township 163 North - Range 101 West, Sections 5 & 6
0.36480000 0.29100000 - - - - - - Stanley 8-1E-163-102 Township 163 North -
Range 101 West, Sections 5 & 6 0.27110000 0.21310000 0.26910000 0.21230000 - -
0.18340000 0.14300000 Dewitt State 3-16-163-101 Township 163 North - Range 101
West, Sections 16 & 21 0.21090000 0.17080000 - - 0.19870000 0.16090000 - - Axel
2-2N-163-101 Township 164 North - Range 101 West, Sections 26 & 35 0.47660000
0.38130000 0.43800000 0.34920000 - - 0.37480000 0.29890000 Karen 3-2N-163-101
Township 164 North - Range 101 West, Sections 26 & 35 0.47660000 0.38130000
0.43800000 0.34920000 - - 0.37480000 0.29890000 Blackwatch 2-2N(E)-163-101
Township 164 North - Range 101 West, Sections 26 & 35 0.47660000 0.38130000
0.43800000 0.34920000 - - - - Braelynne 2-2N(W)-163-101 Township 164 North -
Range 101 West, Sections 26 & 35 0.47660000 0.38130000 0.43800000 0.34920000 - -
- - Silas 3-2N-163-101 Township 164 North - Range 101 West, Sections 26 & 35
0.25380000 0.20400000 0.21520000 0.17150000 - - - - Hagberg 2-1N-163-101
Township 164 North - Range 101 West, Sections 25 & 36 0.49540000 0.39460000 - -
- - - - Elbert State 16-36N-164-101 Township 164 North - Range 101 West,
Sections 25 & 36 0.49540000 0.39460000 - - - - - - Mona Johnson 1-3N-163-101
Township 164 North - Range 101 West, Sections 27 & 34 0.46930000 0.37550000
0.43100000 0.34290000 - - 0.31620000 0.25290000 Terri Lynn 3-3N-163-101 Township
164 North - Range 101 West, Sections 27 & 34 0.34520000 0.27610000 0.31620000
0.25300000 - - - - Kent 1-3N-163-101 Township 164 North - Range 101 West,
Sections 27 & 34 0.44730000 0.35780000 0.43110000 0.34490000 - - - - Lauren
2-3NBK-163-101 Township 164 North - Range 101 West, Sections 27 & 34 0.44730000
0.35780000 0.43110000 0.34490000 - - - - Lester 16-33N-164-101 Township 164
North - Range 101 West, Sections 28 & 33 0.47840000 0.38280000 0.46000000
0.36810000 - - 0.41840000 0.33480000 Christianson Brothers 15-33N-163-101
Township 164 North - Range 101 West, Sections 28 & 33 0.22760000 0.18330000
0.20920000 0.16700000 - - - - Elizabeth 3-4N-163-101 Township 164 North - Range
101 West, Sections 28 & 33 0.22760000 0.18330000 0.20920000 0.16700000 - - - -

 

Page 1 of 3

 

 

SCHEDULE 4.16(b)

HYDROCARBON INTERESTS

 

Non-Operated Wells       Well Name Spacing Unit Operator WI NRI Aarestad 4-34H
Township 160 North - Range 97 West, Sections 34 & 35 Kodiak Oil & Gas (USA) Inc.
0.00625000 0.00500000 Adams 2-18H Township 163 North - Range 100 West, Sections
6 & 7 SM Energy 0.18520000 0.14810000 Adams 4-18H Township 163 North - Range 100
West, Sections 6 & 7 SM Energy 0.18520000 0.14810000 August 4-26H Township 163
North - Range 101 West, Sections 14 & 23 SM Energy 0.06550000 0.05190000 Bagley
4-30H Township 163 North - Range 101 West, Sections 18 & 19 SM Energy 0.03870000
0.03050000 Baja 1522-04TFH Township 163 North - Range 99 West, Sections 15 & 22
Samson Resources Company 0.00625000 0.00500000 Baja 1522-5MBH Township 163 North
- Range 99 West, Sections 15 & 22 Samson Resources Company 0.00625000 0.00500000
Baja 2215-1H Township 163 North - Range 99 West, Sections 15 & 22 Samson
Resources Company 0.00625000 0.00500000 Baja 2215-2H Township 163 North - Range
99 West, Sections 15 & 22 Samson Resources Company 0.00625000 0.00500000 Baja
2215-3H Township 163 North - Range 99 West, Sections 15 & 22 Samson Resources
Company 0.00625000 0.00500000 Bakke 3229-2TFH Township 163 North - Range 99
West, Sections 5 & 8; Township 164 North - Range 99 West, Sections 29 & 32
Samson Resources Company 0.03940000 0.03160000 Bakke 3229-3TFH Township 163
North - Range 99 West, Sections 5 & 8; Township 164 North - Range 99 West,
Sections 29 & 32 Samson Resources Company 0.03940000 0.03160000 Bakke 3229-4TFH
Township 163 North - Range 99 West, Sections 5 & 8; Township 164 North - Range
99 West, Sections 29 & 32 Samson Resources Company 0.03940000 0.03160000 Bakke
3229-5MBH Township 163 North - Range 99 West, Sections 5 & 8; Township 164 North
- Range 99 West, Sections 29 & 32 Samson Resources Company 0.03940000 0.03160000
Bakke 3229-6TFH Township 163 North - Range 99 West, Sections 5 & 8; Township 164
North - Range 99 West, Sections 29 & 32 Samson Resources Company 0.03940000
0.03160000 Blazer 2-11-163-98H Township 163 North - Range 98 West, Sections 2 &
11 Samson Resources Company 0.00937910 0.00750328 Border Farms 3130-1H Township
163 North - Range 99 West, Sections 6 & 7; Township 164 North - Range 99 West,
Sections 30 & 31 Samson Resources Company 0.17544920 0.14016926 Border Farms
3130-2TFH Township 163 North - Range 99 West, Sections 6 & 7; Township 164 North
- Range 99 West, Sections 30 & 31 Samson Resources Company 0.17544920 0.14016926
Border Farms 3130-3TFH Township 163 North - Range 99 West, Sections 6 & 7;
Township 164 North - Range 99 West, Sections 30 & 31 Samson Resources Company
0.17544920 0.14016920 Border Farms 3130-5TFH Township 163 North - Range 99 West,
Sections 6 & 7; Township 164 North - Range 99 West, Sections 30 & 31 Samson
Resources Company 0.17544920 0.14016926 Border Farms 3130-6TFH Township 163
North - Range 99 West, Sections 6 & 7; Township 164 North - Range 99 West,
Sections 30 & 31 Samson Resources Company 0.17544920 0.14016926 Camino
5-8-163-98H Township 163 North - Range 98 West, Sections 5 & 8 Samson Resources
Company 0.01245082 0.00996065 Denali 13-24-163-98H Township 163 North - Range 98
West, Sections 13 & 24 Samson Resources Company 0.00031300 0.00024900 Gerhardsen
1-10H Township 160 North - Range 97 West, Sections 3 & 10 Continental Resources
0.02369073 0.01895258 Gulbranson 1-1H Township 163 North - Range 100 West,
Sections 1 & 12 SM Energy 0.11370000 0.09020000 Gulbranson 2-1H Township 163
North - Range 100 West, Sections 1 & 12 SM Energy 0.11370000 0.09020000 Jurasin
32-29-163N-100W Township 163 North - Range 100 West, Sections 29 & 32 Crescent
Point Energy 0.00605938 0.00484750 Karen Bailard 3625-1TFH Township 163 North -
Range 99 West, Sections 1 & 12; Township 164 North - Range 99 West, Sections 25
& 36 Samson Resources Company 0.01086893 0.00868741 Lancaster 2-11-162N-102W
Township 162 North - Range 102 West, Sections 2 & 11 Crescent Point Energy
0.06206512 0.04965209 Legaard 2-25HNA Township 163 North - Range 101 West,
Sections 13 & 24 SM Energy 0.04090000 0.03270000 Legaard 2-25HNB Township 163
North - Range 101 West, Sections 13 & 24 SM Energy 0.04090000 0.03270000 Legaard
4-25H Township 163 North - Range 101 West, Sections 13 & 24 SM Energy 0.04090000
0.03270000 Leininger 3-10-1H Township 162 North - Range 101 West, Sections 3 &
10 Mountainview Energy, Inc. 0.01170704 0.00919003

 

Page 2 of 3

 

 

SCHEDULE 4.16(b)

HYDROCARBON INTERESTS

 

Montclair 0112-2TFH Township 163 North - Range 99 West, Sections 1 & 12;
Township 164 North - Range 99 West, Sections 25 & 36 Samson Resources Company
0.01086890 0.00868740 Montclair 0112-5TFH Township 163 North - Range 99 West,
Sections 1 & 12; Township 164 North - Range 99 West, Sections 25 & 36 Samson
Resources Company 0.01086893 0.00868741 Montclair 0112-6TFH Township 163 North -
Range 99 West, Sections 1 & 12; Township 164 North - Range 99 West, Sections 25
& 36 Samson Resources Company 0.01086893 0.00868741 Montclair 1-12-163-99H
Township 163 North - Range 99 West, Sections 1 & 12 Samson Resources Company
0.01574100 0.01260000 Mustang 7-6-163-98H Township 163 North - Range 98 West,
Sections 6 & 7 Samson Resources Company 0.00312500 0.00250000 Nielsen 1-12H
Township 160 North - Range 97 West, Sections 1 & 12 Continental Resources
0.00437314 0.00349851 Nomad 0607-1H Township 163 North - Range 99 West, Sections
6 & 7; Township 164 North - Range 99 West, Sections 30 & 31 Samson Resources
Company 0.17544920 0.14016926 Nomad 0607-2TFH Township 163 North - Range 99
West, Sections 6 & 7; Township 164 North - Range 99 West, Sections 30 & 31
Samson Resources Company 0.17544920 0.14016926 Nomad 0607-3TFH Township 163
North - Range 99 West, Sections 6 & 7; Township 164 North - Range 99 West,
Sections 30 & 31 Samson Resources Company 0.17544920 0.14016930 Nomad 0607-05H
Township 163 North - Range 99 West, Sections 6 & 7; Township 164 North - Range
99 West, Sections 30 & 31 Samson Resources Company 0.17544920 0.14016926 Nomad
0607-6TFH Township 163 North - Range 99 West, Sections 6 & 7; Township 164 North
- Range 99 West, Sections 30 & 31 Samson Resources Company 0.17544920 0.14016926
Nomad 6-7 163-99H Township 163 North - Range 99 West, Sections 6 & 7 Samson
Resources Company 0.28820000 0.23060000 Olson 15-22-162-100H 1CN Township 162
North - Range 100 West, Sections 15 & 22 Baytex Energy USA Ltd. 0.00781250
0.00625000 Prochnick 15-35HSA Township 163 North - Range 100 West, Sections 2 &
11 SM Energy 0.00350000 0.00280000 Prochnick 15-35HSB Township 163 North - Range
100 West, Sections 2 & 11 SM Energy 0.00350000 0.00280000 Prochnick 16-35HS
Township 163 North - Range 100 West, Sections 2 & 11 SM Energy 0.00350000
0.00280000 Ridgeway 25-36-163N-101W Township 163 North - Range 100 West,
Sections 25 & 36 Crescent Point Energy 0.01875000 0.01500000 Riede 4-14H
Township 163 North - Range 100 West, Sections 2 & 11 SM Energy 0.00344532
0.00270528 Rose 16-24HN Township 163 North - Range 101 West, Sections 13 & 24 SM
Energy 0.04090000 0.03270000 Sioux Trail 1-1-12H Township 160 North - Range 101
West, Sections 1 & 12 Hunt Oil Company 0.00500000 0.00400000 Thomte 0508-2TFH
Township 163 North - Range 99 West, Sections 5 & 8; Township 164 North - Range
99 West, Sections 29 & 32 Samson Resources Company 0.03940000 0.03160000 Thomte
0508-3H Township 163 North - Range 99 West, Sections 5 & 8; Township 164 North -
Range 99 West, Sections 29 & 32 Samson Resources Company 0.03940000 0.03160000
Thomte 0508-6TFH Township 163 North - Range 99 West, Sections 5 & 8; Township
164 North - Range 99 West, Sections 29 & 32 Samson Resources Company 0.03940000
0.03160000 Thomte 5-8-163-99H Township 163 North - Range 99 West, Sections 5 & 8
Samson Resources Company 0.06360936 0.04993336 Titan 36-25-164-99H Township 164
North - Range 99 West, Sections 25 & 36 Samson Resources Company 0.00182109
0.00145688 Titan 3625-2TFH Township 163 North - Range 99 West, Sections 1 & 12;
Township 164 North - Range 99 West, Sections 25 & 36 Samson Resources Company
0.01086893 0.00868741 Titan 3625-5TFH Township 163 North - Range 99 West,
Sections 1 & 12; Township 164 North - Range 99 West, Sections 25 & 36 Samson
Resources Company 0.01086890 0.00868740 Torgeson 1-15H Township 163 North -
Range 100 West, Sections 3 & 10 SM Energy 0.04378508 0.03479369 Wigness 5-8-1H
Township 162 North - Range 101 West, Sections 5 & 8 Mountainview Energy, Inc.
0.01561500 0.01225778 William Bailard 0112-1TFH Township 163 North - Range 99
West, Sections 1 & 12; Township 164 North - Range 99 West, Sections 25 & 36
Samson Resources Company 0.01086893 0.00868741 Wolter 1-28H Township 163 North -
Range 100 West, Sections 16 & 21 SM Energy 0.01297565 0.01038000 Wolter 13-9H
Township 163 North - Range 100 West, Sections 4 & 9 SM Energy 0.05900000
0.04640000 Wolter 15-8H Township 163 North - Range 100 West, Sections 5 & 8 SM
Energy 0.01540000 0.01210000 Yukon 12-1-163-98H Township 163 North - Range 98
West, Sections 1 & 12 Samson Resources Company 0.01250000 0.01000000

 

Page 3 of 3

 

  

SCHEDULE 4.16(c)

PREFERENTIAL RIGHTS TO PURCHASE and REQUIRED CONSENTS TO ASSIGNMENT

 

PREFERENTAIL RIGHTS TO PURCHASE:

NONE

 

NON-CUSTOMARY LEASE TERMS:

NONE

 

LEASES REQUIRING CONSENTS TO ASSIGN:

 

LEASE   LESSOR   LESSEE   COUNTY   STATE  

LEASE

DATE

 

RECORDING

INFORMATION

  DESCRIPTION   REQUIREMENT LSE-00253   STATE OF NORTH DAKOTA ACTING BY AND
THROUGH THE BOARD OF UNIVERSITY AND SCHOOL LANDS AND ITS AGENT, THE COMMISSIONER
OF UNIVERSITY AND SCHOOL LANDS OG-06-01726   ROVER RESOURCES, INC.   DIVIDE  
NORTH DAKOTA   11/7/2006  

DOCUMENT NO: 268261

BOOK: 345M

PAGE: 115

 

TOWNSHIP 160 NORTH - RANGE 97 WEST

SECTION 1: LAKEBED IN NE4 , LOT 1

 

CONSENT

TO ASSIGN

LSE-00254   STATE OF NORTH DAKOTA ACTING BY AND THROUGH THE BOARD OF UNIVERSITY
AND SCHOOL LANDS AND ITS AGENT, THE COMMISSIONER OF UNIVERSITY AND SCHOOL LANDS
OG-06-01727   ROVER RESOURCES, INC.   DIVIDE   NORTH DAKOTA   11/7/2006  

DOCUMENT NO: 261807

BOOK: 325M

PAGE: 56

 

TOWNSHIP 160 NORTH - RANGE 97 WEST

SECTION 1: LOT 2

 

CONSENT

TO ASSIGN

LSE-00255   STATE OF NORTH DAKOTA ACTING BY AND THROUGH THE BOARD OF UNIVERSITY
AND SCHOOL LANDS AND ITS AGENT, THE COMMISSIONER OF UNIVERSITY AND SCHOOL LANDS
OG-06-01728   ROVER RESOURCES, INC.   DIVIDE   NORTH DAKOTA   11/7/2006  

DOCUMENT NO: 261808

BOOK: 325M

PAGE: 58

 

TOWNSHIP 160 NORTH - RANGE 97 WEST

SECTION 3: S2NE4, LOTS 1, 2

 

CONSENT

TO ASSIGN

LSE-00256   STATE OF NORTH DAKOTA ACTING BY AND THROUGH THE BOARD OF UNIVERSITY
AND SCHOOL LANDS AND ITS AGENT, THE COMMISSIONER OF UNIVERSITY AND SCHOOL LANDS
OG-06-01729   ROVER RESOURCES, INC.   DIVIDE   NORTH DAKOTA   11/7/2006  

DOCUMENT NO: 261809

BOOK: 325M

PAGE: 60

 

TOWNSHIP 160 NORTH - RANGE 97 WEST

SECTION 3: S2NW4, LOTS 3, 4

 

CONSENT

TO ASSIGN

LSE-00266   STATE OF NORTH DAKOTA ACTING BY AND THROUGH THE BOARD OF UNIVERSITY
AND SCHOOL LANDS AND ITS AGENT, THE COMMISSIONER OF UNIVERSITY AND SCHOOL LANDS
OG-06-01744   ROVER RESOURCES, INC.   DIVIDE   NORTH DAKOTA   11/7/2006  

DOCUMENT NO: 268262

BOOK: 345M

PAGE: 118

 

TOWNSHIP 160 NORTH - RANGE 97 WEST

SECTION 35: NW4

 

CONSENT

TO ASSIGN

LSE-00267   STATE OF NORTH DAKOTA ACTING BY AND THROUGH THE BOARD OF UNIVERSITY
AND SCHOOL LANDS AND ITS AGENT, THE COMMISSIONER OF UNIVERSITY AND SCHOOL LANDS
OG-06-01853   ROVER RESOURCES, INC.   DIVIDE   NORTH DAKOTA   11/7/2006  

DOCUMENT NO: 268263

BOOK: 345M

PAGE: 120

 

TOWNSHIP 163 NORTH - RANGE 100 WEST

SECTION 3: S2NE4, LOTS 1, 2

 

CONSENT

TO ASSIGN

LSE-00268   STATE OF NORTH DAKOTA ACTING BY AND THROUGH THE BOARD OF UNIVERSITY
AND SCHOOL LANDS AND ITS AGENT, THE COMMISSIONER OF UNIVERSITY AND SCHOOL LANDS
OG-06-01854   ROVER RESOURCES, INC.   DIVIDE   NORTH DAKOTA   11/7/2006  

DOCUMENT NO: 269506

BOOK: 348M

PAGE: 617

 

TOWNSHIP 163 NORTH - RANGE 100 WEST

SECTION 3: S2NW4, LOTS 3, 4

 

CONSENT

TO ASSIGN

LSE-00269   STATE OF NORTH DAKOTA ACTING BY AND THROUGH THE BOARD OF UNIVERSITY
AND SCHOOL LANDS AND ITS AGENT, THE COMMISSIONER OF UNIVERSITY AND SCHOOL LANDS
OG-06-01855   ROVER RESOURCES, INC.   DIVIDE   NORTH DAKOTA   11/7/2006  

DOCUMENT NO: 268264

BOOK: 345M

PAGE: 122

 

TOWNSHIP 163 NORTH - RANGE 100 WEST

SECTION 3: SE4

 

CONSENT

TO ASSIGN

 

Page 1 of 10

 

 

SCHEDULE 4.16(c)

PREFERENTIAL RIGHTS TO PURCHASE and REQUIRED CONSENTS TO ASSIGNMENT

 

LSE-00270   STATE OF NORTH DAKOTA ACTING BY AND THROUGH THE BOARD OF UNIVERSITY
AND SCHOOL LANDS AND ITS AGENT, THE COMMISSIONER OF UNIVERSITY AND SCHOOL LANDS
OG-06-01856   ROVER RESOURCES, INC.   DIVIDE   NORTH DAKOTA   11/7/2006  

DOCUMENT NO: 268265

BOOK: 345M

PAGE: 124

 

TOWNSHIP 163 NORTH - RANGE 100 WEST

SECTION 3: SW4

 

CONSENT

TO ASSIGN

LSE-00275   STATE OF NORTH DAKOTA ACTING BY AND THROUGH THE BOARD OF UNIVERSITY
AND SCHOOL LANDS AND ITS AGENT, THE COMMISSIONER OF UNIVERSITY AND SCHOOL LANDS
OG-06-01884   ROVER RESOURCES, INC.   DIVIDE   NORTH DAKOTA   11/7/2006  

DOCUMENT NO: 261811

BOOK: 325M

PAGE: 64

 

TOWNSHIP 163 NORTH - RANGE 101 WEST

SECTION 25: SW4

 

CONSENT

TO ASSIGN

LSE-00278   STATE OF NORTH DAKOTA ACTING BY AND THROUGH THE BOARD OF UNIVERSITY
AND SCHOOL LANDS AND ITS AGENT, THE COMMISSIONER OF UNIVERSITY AND SCHOOL LANDS
OG-06-01889   ROVER RESOURCES, INC.   DIVIDE   NORTH DAKOTA   11/7/2006  

DOCUMENT NO: 261812

BOOK: 325M

PAGE: 66

 

TOWNSHIP 163 NORTH - RANGE 101 WEST

SECTION 36: NE4

 

CONSENT

TO ASSIGN

LSE-00279   STATE OF NORTH DAKOTA ACTING BY AND THROUGH THE BOARD OF UNIVERSITY
AND SCHOOL LANDS AND ITS AGENT, THE COMMISSIONER OF UNIVERSITY AND SCHOOL
LANDSOG-06-01890   ROVER RESOURCES, INC.   DIVIDE   NORTH DAKOTA   11/7/2006  

DOCUMENT NO: 261810

BOOK: 325M

PAGE: 62

 

TOWNSHIP 163 NORTH - RANGE 101 WEST

SECTION 36: SE4

 

CONSENT

TO ASSIGN

LSE-00288   STATE OF NORTH DAKOTA ACTING BY AND THROUGH THE BOARD OF UNIVERSITY
AND SCHOOL LANDS AND ITS AGENT, THE COMMISSIONER OF UNIVERSITY AND SCHOOL LANDS
OG-07-00465   CONTEX ENERGY COMPANY   DIVIDE   NORTH DAKOTA   8/7/2007  

DOCUMENT NO: 261805

BOOK: 325M

PAGE: 52

 

TOWNSHIP 163 NORTH - RANGE 100 WEST

SECTION 16: NE4

 

CONSENT

TO ASSIGN

LSE-00289   STATE OF NORTH DAKOTA ACTING BY AND THROUGH THE BOARD OF UNIVERSITY
AND SCHOOL LANDS AND ITS AGENT, THE COMMISSIONER OF UNIVERSITY AND SCHOOL LANDS
OG-07-00467   CONTEX ENERGY COMPANY   DIVIDE   NORTH DAKOTA   8/7/2007  

DOCUMENT NO: 261806

BOOK: 325M

PAGE: 54

 

TOWNSHIP 163 NORTH - RANGE 100 WEST

SECTION 16: SE4

 

CONSENT

TO ASSIGN

LSE-00290   STATE OF NORTH DAKOTA ACTING BY AND THROUGH THE BOARD OF UNIVERSITY
AND SCHOOL LANDS AND ITS AGENT, THE COMMISSIONER OF UNIVERSITY AND SCHOOL LANDS
OG-08-00422   CONTEX ENERGY COMPANY   DIVIDE   NORTH DAKOTA   5/6/2008  

DOCUMENT NO.: 261804

BOOK: 325M

PAGE: 50

 

TOWNSHIP 163 NORTH - RANGE 100 WEST

SECTION 6: S2NE4, LOTS 1 (40.00), 2 (40.00)

 

CONSENT

TO ASSIGN

LSE-00612   STATE OF NORTH DAKOTA ACTING BY AND THROUGH THE BOARD OF UNIVERSITY
AND SCHOOL LANDS AND ITS AGENT, THE COMMISSIONER OF UNIVERSITY AND SCHOOL LANDS
- OG-10-00709   DIAMOND RESOURCES CO.   DIVIDE   NORTH DAKOTA   2/2/2010  

DOCUMENT NO.: 247726

BOOK: 278M

PAGE: 411

 

TOWNSHIP 164 NORTH - RANGE 101 WEST

SECTION 32: SW4

 

CONSENT

TO ASSIGN

LSE-00817  

UNITED STATES DEPARTMENT OF INTERIOR

BUREAU OF LAND MANAGEMENT

NDM 95994

  PLAYA OIL & GAS, LP   DIVIDE   NORTH DAKOTA   9/1/2006  

DOCUMENT NO.:

269513

BOOK: 348M

PAGE: 651

 

TOWNSHIP 160 NORTH - RANGE 103 WEST

SECTION 15: NW4SW4 W2NW4

SECTION 21: NE4NW4

SECTION 33: LOT 2 AND THE LAKEBED RIPARIAN TO LOT 2

 

CONSENT

TO ASSIGN

LSE-00996  

STATE OF NORTH DAKOTA ACTING BY AND THROUGH THE BOARD OF UNIVERSITY AND SCHOOL
LANDS AND ITS AGENT, THE COMMISSIONER OF UNIVERSITY AND SCHOOL LANDS

OG-12-00133

  AMERICAN EAGLE ENERGY CORPORATION   DIVIDE   NORTH DAKOTA   2/7/2012  

DOCUMENT NO.: 268266 

BOOK: 345M 

PAGE: 126

 

TOWNSHIP 163 NORTH - RANGE 101 WEST

SECTION 4: SE4

 

CONSENT

TO ASSIGN

  

Page 2 of 10

 

 

SCHEDULE 4.16(c)

PREFERENTIAL RIGHTS TO PURCHASE and REQUIRED CONSENTS TO ASSIGNMENT

 

LSE-00997  

STATE OF NORTH DAKOTA ACTING BY AND THROUGH THE BOARD OF UNIVERSITY AND SCHOOL
LANDS AND ITS AGENT, THE COMMISSIONER OF UNIVERSITY AND SCHOOL LANDS

OG-12-00134

  AMERICAN EAGLE ENERGY CORPORATION   DIVIDE   NORTH DAKOTA   2/7/2012  

DOCUMENT NO.: 268268 

BOOK: 345M 

PAGE: 130

 

TOWNSHIP 163 NORTH - RANGE 101 WEST

SECTION 4: E2SW4

 

CONSENT

TO ASSIGN

LSE-00998  

STATE OF NORTH DAKOTA ACTING BY AND THROUGH THE BOARD OF UNIVERSITY AND SCHOOL
LANDS AND ITS AGENT, THE COMMISSIONER OF UNIVERSITY AND SCHOOL LANDS

OG-12-00135

  AMERICAN EAGLE ENERGY CORPORATION   DIVIDE   NORTH DAKOTA   2/7/2012  

DOCUMENT NO.: 268269 

BOOK: 345M 

PAGE: 132

 

TOWNSHIP 163 NORTH - RANGE 101 WEST

SECTION 5: LOTS 3 (39.54), 4 (39.64)

 

CONSENT

TO ASSIGN

LSE-00999  

STATE OF NORTH DAKOTA ACTING BY AND THROUGH THE BOARD OF UNIVERSITY AND SCHOOL
LANDS AND ITS AGENT, THE COMMISSIONER OF UNIVERSITY AND SCHOOL LANDS

OG-12-00136

  AMERICAN EAGLE ENERGY CORPORATION   DIVIDE   NORTH DAKOTA   2/7/2012  

DOCUMENT NO.: 268270 

BOOK: 345M 

PAGE: 134

 

TOWNSHIP 163 NORTH - RANGE 101 WEST

SECTION 9: E2NW4

 

CONSENT

TO ASSIGN

LSE-01000  

STATE OF NORTH DAKOTA ACTING BY AND THROUGH THE BOARD OF UNIVERSITY AND SCHOOL
LANDS AND ITS AGENT, THE COMMISSIONER OF UNIVERSITY AND SCHOOL LANDS

OG-12-00137

  AMERICAN EAGLE ENERGY CORPORATION   DIVIDE   NORTH DAKOTA   2/7/2012  

DOCUMENT NO.: 268271 

BOOK: 345M 

PAGE: 136

 

TOWNSHIP 163 NORTH - RANGE 101 WEST

SECTION 11: SW4

 

CONSENT

TO ASSIGN

LSE-01001  

STATE OF NORTH DAKOTA ACTING BY AND THROUGH THE BOARD OF UNIVERSITY AND SCHOOL
LANDS AND ITS AGENT, THE COMMISSIONER OF UNIVERSITY AND SCHOOL LANDS

OG-12-00138

  AMERICAN EAGLE ENERGY CORPORATION   DIVIDE   NORTH DAKOTA   2/7/2012  

DOCUMENT NO.: 268272 

BOOK: 345M 

PAGE: 138

 

TOWNSHIP 163 NORTH - RANGE 101 WEST

SECTION 16: NE4

 

CONSENT

TO ASSIGN

LSE-01002  

STATE OF NORTH DAKOTA ACTING BY AND THROUGH THE BOARD OF UNIVERSITY AND SCHOOL
LANDS AND ITS AGENT, THE COMMISSIONER OF UNIVERSITY AND SCHOOL LANDS

OG-12-00139

  AMERICAN EAGLE ENERGY CORPORATION   DIVIDE   NORTH DAKOTA   2/7/2012  

DOCUMENT NO.: 268273 

BOOK: 345M 

PAGE: 140

 

TOWNSHIP 163 NORTH - RANGE 101 WEST

SECTION 16: NW4

 

CONSENT

TO ASSIGN

LSE-01003  

STATE OF NORTH DAKOTA ACTING BY AND THROUGH THE BOARD OF UNIVERSITY AND SCHOOL
LANDS AND ITS AGENT, THE COMMISSIONER OF UNIVERSITY AND SCHOOL LANDS

OG-12-00140

  AMERICAN EAGLE ENERGY CORPORATION   DIVIDE   NORTH DAKOTA   2/7/2012  

DOCUMENT NO.: 268274 

BOOK: 345M 

PAGE: 142

 

TOWNSHIP 163 NORTH - RANGE 101 WEST

SECTION 16: SE4

 

CONSENT

TO ASSIGN

LSE-01004  

STATE OF NORTH DAKOTA ACTING BY AND THROUGH THE BOARD OF UNIVERSITY AND SCHOOL
LANDS AND ITS AGENT, THE COMMISSIONER OF UNIVERSITY AND SCHOOL LANDS

OG-12-00141

  AMERICAN EAGLE ENERGY CORPORATION   DIVIDE   NORTH DAKOTA   2/7/2012  

DOCUMENT NO.: 268275 

BOOK: 345M 

PAGE: 144

 

TOWNSHIP 163 NORTH - RANGE 101 WEST

SECTION 16: SW4

 

CONSENT

TO ASSIGN

LSE-01005  

STATE OF NORTH DAKOTA ACTING BY AND THROUGH THE BOARD OF UNIVERSITY AND SCHOOL
LANDS AND ITS AGENT, THE COMMISSIONER OF UNIVERSITY AND SCHOOL LANDS

OG-12-00142

  AMERICAN EAGLE ENERGY CORPORATION   DIVIDE   NORTH DAKOTA   2/7/2012  

DOCUMENT NO.: 268276 

BOOK: 345M 

PAGE: 146

 

TOWNSHIP 163 NORTH - RANGE 101 WEST

SECTION 20: E2NE4

 

CONSENT

TO ASSIGN

 

Page 3 of 10

 

 

SCHEDULE 4.16(c)

PREFERENTIAL RIGHTS TO PURCHASE and REQUIRED CONSENTS TO ASSIGNMENT

 

LSE-01006  

STATE OF NORTH DAKOTA ACTING BY AND THROUGH THE BOARD OF UNIVERSITY AND SCHOOL
LANDS AND ITS AGENT, THE COMMISSIONER OF UNIVERSITY AND SCHOOL LANDS

OG-12-00143

  AMERICAN EAGLE ENERGY CORPORATION   DIVIDE   NORTH DAKOTA   2/7/2012  

DOCUMENT NO.: 268277 

BOOK: 345M 

PAGE: 148

 

TOWNSHIP 163 NORTH - RANGE 101 WEST

SECTION 21: NW4

 

CONSENT

TO ASSIGN

LSE-01007  

STATE OF NORTH DAKOTA ACTING BY AND THROUGH THE BOARD OF UNIVERSITY AND SCHOOL
LANDS AND ITS AGENT, THE COMMISSIONER OF UNIVERSITY AND SCHOOL LANDS

OG-12-00148

  AMERICAN EAGLE ENERGY CORPORATION   DIVIDE   NORTH DAKOTA   2/7/2012  

DOCUMENT NO.: 268278 

BOOK: 345M 

PAGE: 150

 

TOWNSHIP 163 NORTH - RANGE 102 WEST

SECTION 30: S2SE4

 

CONSENT

TO ASSIGN

LSE-01008  

STATE OF NORTH DAKOTA ACTING BY AND THROUGH THE BOARD OF UNIVERSITY AND SCHOOL
LANDS AND ITS AGENT, THE COMMISSIONER OF UNIVERSITY AND SCHOOL LANDS

OG-12-00149

  AMERICAN EAGLE ENERGY CORPORATION   DIVIDE   NORTH DAKOTA   2/7/2012  

DOCUMENT NO.: 268279 

BOOK: 345M 

PAGE: 152

 

TOWNSHIP 163 NORTH - RANGE 102 WEST

SECTION 31: N2NE4

 

CONSENT

TO ASSIGN

LSE-01009  

STATE OF NORTH DAKOTA ACTING BY AND THROUGH THE BOARD OF UNIVERSITY AND SCHOOL
LANDS AND ITS AGENT, THE COMMISSIONER OF UNIVERSITY AND SCHOOL LANDS

OG-12-00150

  AMERICAN EAGLE ENERGY CORPORATION   DIVIDE   NORTH DAKOTA   2/7/2012  

DOCUMENT NO.: 268280 

BOOK: 345M 

PAGE: 154

 

TOWNSHIP 163 NORTH - RANGE 102 WEST

SECTION 31: E2NW4, LOTS 1 (36.03), 2 (36.09)

 

CONSENT

TO ASSIGN

LSE-01010  

STATE OF NORTH DAKOTA ACTING BY AND THROUGH THE BOARD OF UNIVERSITY AND SCHOOL
LANDS AND ITS AGENT, THE COMMISSIONER OF UNIVERSITY AND SCHOOL LANDS

OG-12-00151

  AMERICAN EAGLE ENERGY CORPORATION   DIVIDE   NORTH DAKOTA   2/7/2012  

DOCUMENT NO.: 268281 

BOOK: 345M 

PAGE: 156

 

TOWNSHIP 163 NORTH - RANGE 103 WEST

SECTION 36: NE4

 

CONSENT

TO ASSIGN

LSE-01011  

STATE OF NORTH DAKOTA ACTING BY AND THROUGH THE BOARD OF UNIVERSITY AND SCHOOL
LANDS AND ITS AGENT, THE COMMISSIONER OF UNIVERSITY AND SCHOOL LANDS

OG-12-00152

  AMERICAN EAGLE ENERGY CORPORATION   DIVIDE   NORTH DAKOTA   2/7/2012  

DOCUMENT NO.: 268282 

BOOK: 345M 

PAGE: 158

 

TOWNSHIP 163 NORTH - RANGE 103 WEST

SECTION 36: NW4

 

CONSENT

TO ASSIGN

LSE-01012  

STATE OF NORTH DAKOTA ACTING BY AND THROUGH THE BOARD OF UNIVERSITY AND SCHOOL
LANDS AND ITS AGENT, THE COMMISSIONER OF UNIVERSITY AND SCHOOL LANDS

OG-12-00153

  AMERICAN EAGLE ENERGY CORPORATION   DIVIDE   NORTH DAKOTA   2/7/2012  

DOCUMENT NO.: 268283 

BOOK: 345M 

PAGE: 160

 

TOWNSHIP 163 NORTH - RANGE 103 WEST

SECTION 36: SE4

 

CONSENT

TO ASSIGN

LSE-01013  

STATE OF NORTH DAKOTA ACTING BY AND THROUGH THE BOARD OF UNIVERSITY AND SCHOOL
LANDS AND ITS AGENT, THE COMMISSIONER OF UNIVERSITY AND SCHOOL LANDS

OG-12-00154

  AMERICAN EAGLE ENERGY CORPORATION   DIVIDE   NORTH DAKOTA   2/7/2012  

DOCUMENT NO.: 268284 

BOOK: 345M 

PAGE: 162

 

TOWNSHIP 163 NORTH - RANGE 103 WEST

SECTION 36: SW4

 

CONSENT

TO ASSIGN

LSE-01023   BRP LLC   AMERICAN EAGLE ENERGY CORP   DIVIDE   NORTH DAKOTA  
4/6/2012  

MEMORANDUM RECORDED

DOCUMENT NO.: 264473

BOOK: 333M

PAGE: 84

 

TOWNSHIP 163 NORTH - RANGE 101 WEST

SECTION 11: NW4

 

CONSENT

TO ASSIGN

 

Page 4 of 10

 

 

SCHEDULE 4.16(c)

PREFERENTIAL RIGHTS TO PURCHASE and REQUIRED CONSENTS TO ASSIGNMENT

 

LSE-01087   JOHN R. MORAN, JR., MARGARET L. TOAL AND WELLS FARGO BANK, N.A.
FORMERLY KNOWN AS FIRST INTERSTATE BANK OF DENVER, AS TRUSTEES OF THE TRUST FOR
THE HILL FOUNDATION   DIAMOND RESOURCES CO.   DIVIDE   NORTH DAKOTA   6/25/2012
 

DOCUMENT NO.: 265609 

BOOK: 336M 

PAGE: 532

 

TOWNSHIP 163 NORTH - RANGE 101 WEST

SECTION 3: S2

SECTION 5: S2

SECTION 10: N2

 

CONSENT

TO ASSIGN

LSE-01091  

UNITED STATES DEPARTMENT OF INTERIOR

BUREAU OF LAND MANAGEMENT

NDM 96118

  BOBBY L. JARRETT   DIVIDE   NORTH DAKOTA   11/1/2006  

DOCUMENT NO.:

269511

BOOK: 348M

PAGE: 640

 

TOWNSHIP 164 NORTH - RANGE 103 WEST

SECTION 26: A 60 FOOT STRIP ALONG THE U.S. CANADA BORDER ADJACENT TO LOT 5, 6,
7, 8 CONTAINING 7.28 ACRES

SECTION 27: A 60 FOOT STRIP ALONG THE U.S. CANADA BORDER ADJACENT TO LOTS 4, 5,
6 CONTAINING 4.73 ACRES

 

CONSENT

TO ASSIGN

LSE-01092  

UNITED STATES DEPARTMENT OF INTERIOR

BUREAU OF LAND MANAGEMENT

NDM 96119

  BOBBY L. JARRETT   DIVIDE   NORTH DAKOTA   11/1/2006  

DOCUMENT NO.: 269507

BOOK: 348M

PAGE: 619

 

IN SO FAR AND ONLY IN SO FAR AS SAID LEASE COVERS

TOWNSHIP 164 NORTH - RANGE 102 WEST

SECTION 27: A 60 FOOT STRIP ALONG THE US CANADA BORDER ADJACENT TO LOTS 5, 6, 7,
8 CONTAINING 7.28 ACRES

SECTION 28: A 60 FOOT STRIP ALONG THE U.S. CANADA BORDER ADJACENT TO LOT 5
CONTAINING 1.82 ACRES

 

 

CONSENT

TO ASSIGN

LSE-01092  

UNITED STATES DEPARTMENT OF INTERIOR

BUREAU OF LAND MANAGEMENT

NDM 96119

  BOBBY L. JARRETT   DIVIDE   NORTH DAKOTA   11/1/2006  

DOCUMENT NO.:

269507

BOOK: 348M

PAGE: 619

 

IN SO FAR AND ONLY IN SO FAR AS SAID LEASE COVERS

TOWNSHIP 164 NORTH - RANGE 102 WEST

SECTION 29: A 60 FOOT STRIP ALONG THE U.S. CANADA BORDER ADJACENT TO LOT 5
CONTAINING 1.82 ACRES

 

CONSENT

TO ASSIGN

LSE-01093  

 

UNITED STATES DEPARTMENT OF INTERIOR

BUREAU OF LAND MANAGEMENT

NDM 96120

  BOBBY L. JARRETT   DIVIDE   NORTH DAKOTA   11/1/2006  

DOCUMENT NO.: 269509

BOOK: 348M

PAGE: 629

 

TOWNSHIP 164 NORTH - RANGE 101 WEST

SECTION 26: A 60 FOOT STRIP ALONG THE U.S. CANADA BORDER ADJACENT TO LOTS 5, 6,
7, 8 CONTAINING 7.28 ACRES

SECTION 27: A 60 FOOT STRIP ALONG THE U.S. CANADA BORDER ADJACENT TO LOTS 5, 6,
7, 8 CONTAINING 7.28 ACRES

SECTION 28: A 60 FOOT STRIP ALONG THE U.S. CANADA BORDER ADJACENT TO LOT 5
CONTAINING 1.82 ACRES

SECTION 29: A 60 FOOT STRIP ALONG THE U.S. CANADA BORDER ADJACENT TO LOT 5, 6, 7
CONTAINING 5.46 ACRES

 

CONSENT

TO ASSIGN

LSE-01130  

STATE OF NORTH DAKOTA ACTING BY AND THROUGH THE BOARD OF UNIVERSITY AND SCHOOL
LANDS AND ITS AGENT, THE COMMISSIONER OF UNIVERSITY AND SCHOOL LANDS

OG-12-01107

  AMERICAN EAGLE ENERGY CORPORATION   DIVIDE   NORTH DAKOTA   8/7/2012  

DOCUMENT NO.: 266322 

BOOK: 339M 

PAGE: 154

 

TOWNSHIP 164 NORTH - RANGE 103 WEST

SECTION 36: SW4

 

CONSENT

TO ASSIGN

LSE-01131  

STATE OF NORTH DAKOTA ACTING BY AND THROUGH THE BOARD OF UNIVERSITY AND SCHOOL
LANDS AND ITS AGENT, THE COMMISSIONER OF UNIVERSITY AND SCHOOL LANDS

OG-12-01104

  AMERICAN EAGLE ENERGY CORPORATION   DIVIDE   NORTH DAKOTA   8/7/2012  

DOCUMENT NO.: 266319 

BOOK: 339M 

PAGE: 148

 

TOWNSHIP 164 NORTH - RANGE 103 WEST

SECTION 36: NE4

 

CONSENT

TO ASSIGN

LSE-01132  

STATE OF NORTH DAKOTA ACTING BY AND THROUGH THE BOARD OF UNIVERSITY AND SCHOOL
LANDS AND ITS AGENT, THE COMMISSIONER OF UNIVERSITY AND SCHOOL LANDS

OG-12-01105

  AMERICAN EAGLE ENERGY CORPORATION   DIVIDE   NORTH DAKOTA   8/7/2012  

DOCUMENT NO.: 266320 

BOOK: 339M 

PAGE: 150

 

TOWNSHIP 164 NORTH - RANGE 103 WEST

SECTION 36: NW4

 

CONSENT

TO ASSIGN

LSE-01133  

STATE OF NORTH DAKOTA ACTING BY AND THROUGH THE BOARD OF UNIVERSITY AND SCHOOL
LANDS AND ITS AGENT, THE COMMISSIONER OF UNIVERSITY AND SCHOOL LANDS

OG-12-01106

  AMERICAN EAGLE ENERGY CORPORATION   DIVIDE   NORTH DAKOTA   8/7/2012  

DOCUMENT NO.: 266321 

BOOK: 339M 

PAGE: 152

 

TOWNSHIP 164 NORTH - RANGE 103 WEST

SECTION 36: SE4

 

CONSENT

TO ASSIGN

  

Page 5 of 10

 

 

SCHEDULE 4.16(c)

PREFERENTIAL RIGHTS TO PURCHASE and REQUIRED CONSENTS TO ASSIGNMENT

 

LSE-01134   STATE OF NORTH DAKOTA ACTING BY AND THROUGH THE BOARD OF UNIVERSITY
AND SCHOOL LANDS AND ITS AGENT, THE COMMISSIONER OF UNIVERSITY AND SCHOOL
LANDSOG-12-01053   AMERICAN EAGLE ENERGY CORPORATION   DIVIDE   NORTH DAKOTA  
8/7/2012  

DOCUMENT NO.: 266330 

BOOK: 339M 

PAGE: 170

 

TOWNSHIP 162 NORTH - RANGE 102 WEST

SECTION 15: SE4

 

CONSENT

TO ASSIGN

LSE-01135  

STATE OF NORTH DAKOTA ACTING BY AND THROUGH THE BOARD OF UNIVERSITY AND SCHOOL
LANDS AND ITS AGENT, THE COMMISSIONER OF UNIVERSITY AND SCHOOL LANDS

OG-12-01079

  AMERICAN EAGLE ENERGY CORPORATION   DIVIDE   NORTH DAKOTA   8/7/2012  

DOCUMENT NO.: 266328 

BOOK: 339M 

PAGE: 166

 

TOWNSHIP 163 NORTH - RANGE 102 WEST

SECTION 17: S2NW4

 

CONSENT

TO ASSIGN

LSE-01136  

STATE OF NORTH DAKOTA ACTING BY AND THROUGH THE BOARD OF UNIVERSITY AND SCHOOL
LANDS AND ITS AGENT, THE COMMISSIONER OF UNIVERSITY AND SCHOOL LANDS

OG-12-01103

  AMERICAN EAGLE ENERGY CORPORATION   DIVIDE   NORTH DAKOTA   8/7/2012  

DOCUMENT NO.: 266318 

BOOK: 339M 

PAGE: 146

 

TOWNSHIP 164 NORTH - RANGE 103 WEST

SECTION 35: N2SW4

 

CONSENT

TO ASSIGN

LSE-01137  

STATE OF NORTH DAKOTA ACTING BY AND THROUGH THE BOARD OF UNIVERSITY AND SCHOOL
LANDS AND ITS AGENT, THE COMMISSIONER OF UNIVERSITY AND SCHOOL LANDS

OG-12-01102

  AMERICAN EAGLE ENERGY CORPORATION   DIVIDE   NORTH DAKOTA   8/7/2012  

DOCUMENT NO.: 266317 

BOOK: 339M 

PAGE: 144

 

TOWNSHIP 164 NORTH - RANGE 103 WEST

SECTION 35: E2NW4

 

CONSENT

TO ASSIGN

LSE-01138  

STATE OF NORTH DAKOTA ACTING BY AND THROUGH THE BOARD OF UNIVERSITY AND SCHOOL
LANDS AND ITS AGENT, THE COMMISSIONER OF UNIVERSITY AND SCHOOL LANDS

OG-12-01101

  AMERICAN EAGLE ENERGY CORPORATION   DIVIDE   NORTH DAKOTA   8/7/2012  

DOCUMENT NO.: 266316 

BOOK: 339M 

PAGE: 142

 

TOWNSHIP 164 NORTH - RANGE 103 WEST

SECTION 35: N2NE4, SW4NE4

 

CONSENT

TO ASSIGN

LSE-01139  

STATE OF NORTH DAKOTA ACTING BY AND THROUGH THE BOARD OF UNIVERSITY AND SCHOOL
LANDS AND ITS AGENT, THE COMMISSIONER OF UNIVERSITY AND SCHOOL LANDS

OG-12-01100

  AMERICAN EAGLE ENERGY CORPORATION   DIVIDE   NORTH DAKOTA   8/7/2012  

DOCUMENT NO.: 266315

BOOK: 339M 

PAGE: 140

 

TOWNSHIP 164 NORTH - RANGE 103 WEST

SECTION 26: LOT 5

 

CONSENT

TO ASSIGN

LSE-01140  

STATE OF NORTH DAKOTA ACTING BY AND THROUGH THE BOARD OF UNIVERSITY AND SCHOOL
LANDS AND ITS AGENT, THE COMMISSIONER OF UNIVERSITY AND SCHOOL LANDS

OG-12-01072

  AMERICAN EAGLE ENERGY CORPORATION   DIVIDE   NORTH DAKOTA   8/7/2012  

DOCUMENT NO.: 266312 

BOOK: 339M 

PAGE: 134

 

TOWNSHIP 163 NORTH - RANGE 102 WEST

SECTION 11: RIPARIAN ACREAGE IN SE4 ATTRIBUTABLE TO SECTION 12

 

CONSENT

TO ASSIGN

LSE-01141  

STATE OF NORTH DAKOTA ACTING BY AND THROUGH THE BOARD OF UNIVERSITY AND SCHOOL
LANDS AND ITS AGENT, THE COMMISSIONER OF UNIVERSITY AND SCHOOL LANDS

OG-12-01074

  AMERICAN EAGLE ENERGY CORPORATION   DIVIDE   NORTH DAKOTA   8/7/2012  

DOCUMENT NO.: 266313 

BOOK: 339M 

PAGE: 136

 

TOWNSHIP 163 NORTH - RANGE 102 WEST

SECTION 12: RIPARIAN ACREAGE IN SW4

 

CONSENT

TO ASSIGN

LSE-01142  

STATE OF NORTH DAKOTA ACTING BY AND THROUGH THE BOARD OF UNIVERSITY AND SCHOOL
LANDS AND ITS AGENT, THE COMMISSIONER OF UNIVERSITY AND SCHOOL LANDS

OG-12-01073

  AMERICAN EAGLE ENERGY CORPORATION   DIVIDE   NORTH DAKOTA   8/7/2012  

DOCUMENT NO.: 266332 

BOOK: 339M 

PAGE: 175

 

TOWNSHIP 163 NORTH - RANGE 102 WEST

SECTION 12: LOT 1, NW4SW4, E2SW4

 

CONSENT

TO ASSIGN

 

Page 6 of 10

 

 

SCHEDULE 4.16(c)

PREFERENTIAL RIGHTS TO PURCHASE and REQUIRED CONSENTS TO ASSIGNMENT

 

LSE-01143  

STATE OF NORTH DAKOTA ACTING BY AND THROUGH THE BOARD OF UNIVERSITY AND SCHOOL
LANDS AND ITS AGENT, THE COMMISSIONER OF UNIVERSITY AND SCHOOL LANDS

OG-12-01099

  AMERICAN EAGLE ENERGY CORPORATION   DIVIDE   NORTH DAKOTA   8/7/2012  

DOCUMENT NO.: 266314 

BOOK: 339M 

PAGE: 138

 

TOWNSHIP 164 NORTH - RANGE 102 WEST

SECTION 35: SE4

 

CONSENT

TO ASSIGN

LSE-01144  

STATE OF NORTH DAKOTA ACTING BY AND THROUGH THE BOARD OF UNIVERSITY AND SCHOOL
LANDS AND ITS AGENT, THE COMMISSIONER OF UNIVERSITY AND SCHOOL LANDS

OG-12-01070

  AMERICAN EAGLE ENERGY CORPORATION   DIVIDE   NORTH DAKOTA   8/7/2012  

DOCUMENT NO.: 266310 

BOOK: 339M 

PAGE: 130

 

TOWNSHIP 163 NORTH - RANGE 102 WEST

SECTION 2: SE4 LESS A 1.00 ACRE TRACT IN THE SW4SE4

 

CONSENT

TO ASSIGN

LSE-01145  

STATE OF NORTH DAKOTA ACTING BY AND THROUGH THE BOARD OF UNIVERSITY AND SCHOOL
LANDS AND ITS AGENT, THE COMMISSIONER OF UNIVERSITY AND SCHOOL LANDS

OG-12-01071

  AMERICAN EAGLE ENERGY CORPORATION   DIVIDE   NORTH DAKOTA   8/7/2012  

DOCUMENT NO.: 266311 

BOOK: 339M 

PAGE: 132

 

TOWNSHIP 163 NORTH - RANGE 102 WEST

SECTION 11: NW4

 

CONSENT

TO ASSIGN

LSE-01147   STATE OF NORTH DAKOTA ACTING BY AND THROUGH THE BOARD OF UNIVERSITY
AND SCHOOL LANDS AND ITS AGENT, THE COMMISSIONER OF UNIVERSITY AND SCHOOL LANDS
OG-08-00724   SUNDANCE OIL & GAS, LLC   DIVIDE   NORTH DAKOTA   8/5/2008  

DOCUMENT NO.: 241682 

BOOK: 261M 

PAGE: 281

 

TOWNSHIP 164 NORTH - RANGE 101 WEST

SECTION 36: NE4

 

CONSENT

TO ASSIGN

LSE-01148   STATE OF NORTH DAKOTA ACTING BY AND THROUGH THE BOARD OF UNIVERSITY
AND SCHOOL LANDS AND ITS AGENT, THE COMMISSIONER OF UNIVERSITY AND SCHOOL LANDS
OG-08-00725   SUNDANCE OIL & GAS, LLC   DIVIDE   NORTH DAKOTA   8/5/2008  

DOCUMENT NO.: 241683 

BOOK: 261M 

PAGE: 283

 

TOWNSHIP 164 NORTH - RANGE 101 WEST

SECTION 36: NW4

 

CONSENT

TO ASSIGN

LSE-01149   STATE OF NORTH DAKOTA ACTING BY AND THROUGH THE BOARD OF UNIVERSITY
AND SCHOOL LANDS AND ITS AGENT, THE COMMISSIONER OF UNIVERSITY AND SCHOOL LANDS
OG-08-00726   SUNDANCE OIL & GAS, LLC   DIVIDE   NORTH DAKOTA   8/5/2008  

DOCUMENT NO.: 241683 

BOOK: 261M 

PAGE: 285

 

TOWNSHIP 164 NORTH - RANGE 101 WEST

SECTION 36: SE4

 

CONSENT

TO ASSIGN

LSE-01150   STATE OF NORTH DAKOTA ACTING BY AND THROUGH THE BOARD OF UNIVERSITY
AND SCHOOL LANDS AND ITS AGENT, THE COMMISSIONER OF UNIVERSITY AND SCHOOL LANDS
OG-08-00727   SUNDANCE OIL & GAS, LLC   DIVIDE   NORTH DAKOTA   8/5/2008  

DOCUMENT NO.: 241685 

BOOK: 261M 

PAGE: 287

 

TOWNSHIP 164 NORTH - RANGE 101 WEST

SECTION 36: SW4

 

CONSENT

TO ASSIGN

LSE-01152   STATE OF NORTH DAKOTA ACTING BY AND THROUGH THE BOARD OF UNIVERSITY
AND SCHOOL LANDS AND ITS AGENT, THE COMMISSIONER OF UNIVERSITY AND SCHOOL LANDS
OG-11-00588   SAMSON RESOURCES COMPANY   DIVIDE   NORTH DAKOTA   5/4/2011  

DOCUMENT NO.: 258201 

BOOK: 314M 

PAGE: 48

 

TOWNSHIP 163 NORTH - RANGE 101 WEST

SECTION 30: SE4

 

CONSENT

TO ASSIGN

LSE-01153   STATE OF NORTH DAKOTA ACTING BY AND THROUGH THE BOARD OF UNIVERSITY
AND SCHOOL LANDS AND ITS AGENT, THE COMMISSIONER OF UNIVERSITY AND SCHOOL LANDS
OG-11-00587   SAMSON RESOURCES COMPANY   DIVIDE   NORTH DAKOTA   5/4/2011  

DOCUMENT NO.: 258200 

BOOK: 314M 

PAGE: 46

 

TOWNSHIP 163 NORTH - RANGE 101 WEST

SECTION 29: W2SW4

 

CONSENT

TO ASSIGN

LSE-01154   STATE OF NORTH DAKOTA ACTING BY AND THROUGH THE BOARD OF UNIVERSITY
AND SCHOOL LANDS AND ITS AGENT, THE COMMISSIONER OF UNIVERSITY AND SCHOOL LANDS
OG-11-00590   SAMSON RESOURCES COMPANY   DIVIDE   NORTH DAKOTA   5/4/2011  

DOCUMENT NO.: 258203 

BOOK: 314M 

PAGE: 52

 

TOWNSHIP 163 NORTH - RANGE 101 WEST

SECTION 32: NW4

 

CONSENT

TO ASSIGN

 

Page 7 of 10

 

 

SCHEDULE 4.16(c)

PREFERENTIAL RIGHTS TO PURCHASE and REQUIRED CONSENTS TO ASSIGNMENT

 

LSE-01155   STATE OF NORTH DAKOTA ACTING BY AND THROUGH THE BOARD OF UNIVERSITY
AND SCHOOL LANDS AND ITS AGENT, THE COMMISSIONER OF UNIVERSITY AND SCHOOL LANDS
OG-11-00589   SAMSON RESOURCES COMPANY   DIVIDE   NORTH DAKOTA   5/4/2011  

DOCUMENT NO.: 258202 

BOOK: 314M 

PAGE: 50

 

TOWNSHIP 163 NORTH - RANGE 101 WEST

SECTION 31: SE4

 

CONSENT

TO ASSIGN

LSE-01256   RED CROWN ROYALTIES LLC L33T-924459-26   SAMSON RESOURCES COMPANY  
DIVIDE   NORTH DAKOTA   4/1/2012  

DOCUMENT NO.: 263632 

BOOK: 330M 

PAGE: 587

 

TOWNSHIP 164 NORTH - RANGE 101 WEST

SECTION 25: LOTS 5, 6

 

CONSENT

TO ASSIGN

LSE-01282   RED CROWN ROYALTIES LLC L33T-924459-25   SAMSON RESOURCES COMPANY  
DIVIDE   NORTH DAKOTA   4/1/2012  

DOCUMENT NO.: 263631 

BOOK: 330M 

PAGE: 584

 

TOWNSHIP 164 NORTH - RANGE 101 WEST

SECTION 25: LOTS 1, 2, 3, 4

 

CONSENT

TO ASSIGN

LSE-01290   RED CROWN ROYALTIES LLC L33T-924457-32   SAMSON RESOURCES COMPANY  
DIVIDE   NORTH DAKOTA   4/1/2012  

DOCUMENT NO.: 263633 

BOOK: 330M 

PAGE: 590

 

TOWNSHIP 164 NORTH - RANGE 101 WEST

SECTION 32: SE4

 

CONSENT

TO ASSIGN

LSE-01317  

STATE OF NORTH DAKOTA ACTING BY AND THROUGH THE BOARD OF UNIVERSITY AND SCHOOL
LANDS AND ITS AGENT, THE COMMISSIONER OF UNIVERSITY ANS SCHOOL LANDS

OG-12-00879

  AMERICAN EAGLE ENERGY CORPORATION   DIVIDE   NORTH DAKOTA   5/1/2012  

DOCUMENT NO.: 264421 

BOOK: 332M 

PAGE: 656

 

TOWNSHIP 162 NORTH - RANGE 101 WEST

SECTION 8: NW4

 

CONSENT

TO ASSIGN

LSE-01318  

STATE OF NORTH DAKOTA ACTING BY AND THROUGH THE BOARD OF UNIVERSITY AND SCHOOL
LANDS AND ITS AGENT, THE COMMISSIONER OF UNIVERSITY ANS SCHOOL LANDS

OG-12-00884

  AMERICAN EAGLE ENERGY CORPORATION   DIVIDE   NORTH DAKOTA   5/1/2012  

DOCUMENT NO.: 264420 

BOOK: 332M 

PAGE: 654

 

TOWNSHIP 162 NORTH - RANGE 101 WEST

SECTION 28: W2NE4

 

CONSENT

TO ASSIGN

LSE-01319  

STATE OF NORTH DAKOTA ACTING BY AND THROUGH THE BOARD OF UNIVERSITY AND SCHOOL
LANDS AND ITS AGENT, THE COMMISSIONER OF UNIVERSITY ANS SCHOOL LANDS

OG-12-00885

  AMERICAN EAGLE ENERGY CORPORATION   DIVIDE   NORTH DAKOTA   5/1/2012  

DOCUMENT NO.: 264419 

BOOK: 332M 

PAGE: 652

 

TOWNSHIP 162 NORTH - RANGE 101 WEST

SECTION 28: NW4

 

CONSENT

TO ASSIGN

LSE-01320  

STATE OF NORTH DAKOTA ACTING BY AND THROUGH THE BOARD OF UNIVERSITY AND SCHOOL
LANDS AND ITS AGENT, THE COMMISSIONER OF UNIVERSITY ANS SCHOOL LANDS

OG-12-00886

  AMERICAN EAGLE ENERGY CORPORATION   DIVIDE   NORTH DAKOTA   5/1/2012  

DOCUMENT NO.: 264418 

BOOK: 332M 

PAGE: 650

 

TOWNSHIP 162 NORTH - RANGE 101 WEST

SECTION 29: SW4

 

CONSENT

TO ASSIGN

LSE-01325  

STATE OF NORTH DAKOTA ACTING BY AND THROUGH THE BOARD OF UNIVERSITY AND SCHOOL
LANDS AND ITS AGENT, THE COMMISSIONER OF UNIVERSITY ANS SCHOOL LANDS

OG-10-02231

  TRANSCONTINENTAL OIL COMPANY   DIVIDE   NORTH DAKOTA   8/5/2008  

DOCUMENT NO.: NR

BOOK:

NR

PAGE: NR

 

TOWNSHIP 163 NORTH - RANGE 101 WEST

SECTION 2: S2NW4, LOTS 3, 4, LESS SCHOOL SITE

 

CONSENT

TO ASSIGN

LSE-01329   RED CROWN ROYALTIES LLC L33T-925223-34   SAMSON RESOURCES COMPANY  
DIVIDE   NORTH DAKOTA   4/1/2012  

DOCUMENT NO.: 263635 

BOOK: 330M 

PAGE: 596

 

TOWNSHIP 164 NORTH - RANGE 101 WEST

SECTION 34: SW4

 

CONSENT

TO ASSIGN

LSE-01330   RED CROWN ROYALTIES LLC L33T-925223-33   SAMSON RESOURCES COMPANY  
DIVIDE   NORTH DAKOTA   4/1/2012  

DOCUMENT NO.: 263634 

BOOK: 330M 

PAGE: 593

 

TOWNSHIP 164 NORTH - RANGE 101 WEST

SECTION 33: SE4

 

CONSENT

TO ASSIGN

  

Page 8 of 10

 

 

SCHEDULE 4.16(c)

PREFERENTIAL RIGHTS TO PURCHASE and REQUIRED CONSENTS TO ASSIGNMENT

 

LSE-01332  

STATE OF NORTH DAKOTA ACTING BY AND THROUGH THE BOARD OF UNIVERSITY AND SCHOOL
LANDS AND ITS AGENT, THE COMMISSIONER OF UNIVERSITY ANS SCHOOL LANDS

OG-12-00887

  AMERICAN EAGLE ENERGY CORPORATION   DIVIDE   NORTH DAKOTA   5/1/2012  

DOCUMENT NO.: 264417 

BOOK: 332M 

PAGE: 648

 

TOWNSHIP 162 NORTH - RANGE 101 WEST

SECTION 31: S2NE4

 

CONSENT

TO ASSIGN

LSE-01334  

STATE OF NORTH DAKOTA ACTING BY AND THROUGH THE BOARD OF UNIVERSITY AND SCHOOL
LANDS AND ITS AGENT, THE COMMISSIONER OF UNIVERSITY ANS SCHOOL LANDS

OG-12-00888

  AMERICAN EAGLE ENERGY CORPORATION   DIVIDE   NORTH DAKOTA   5/1/2012  

DOCUMENT NO.: 264416 

BOOK: 332M 

PAGE: 646

 

TOWNSHIP 162 NORTH - RANGE 101 WEST

SECTION 31: SE4

 

CONSENT

TO ASSIGN

LSE-01336  

STATE OF NORTH DAKOTA ACTING BY AND THROUGH THE BOARD OF UNIVERSITY AND SCHOOL
LANDS AND ITS AGENT, THE COMMISSIONER OF UNIVERSITY ANS SCHOOL LANDS

OG-12-00889

  AMERICAN EAGLE ENERGY CORPORATION   DIVIDE   NORTH DAKOTA   5/1/2012  

DOCUMENT NO.: 264415 

BOOK: 332M 

PAGE: 644

 

TOWNSHIP 162 NORTH - RANGE 101 WEST

SECTION 32: SW4

 

CONSENT

TO ASSIGN

LSE-01337  

STATE OF NORTH DAKOTA ACTING BY AND THROUGH THE BOARD OF UNIVERSITY AND SCHOOL
LANDS AND ITS AGENT, THE COMMISSIONER OF UNIVERSITY ANS SCHOOL LANDS

OG-12-00878

  AMERICAN EAGLE ENERGY CORPORATION   DIVIDE   NORTH DAKOTA   5/1/2012  

DOCUMENT NO.: 264422 

BOOK: 332M 

PAGE: 658

 

TOWNSHIP 162 NORTH - RANGE 101 WEST

SECTION 6: S2NE4, LOTS 1, 2

 

CONSENT

TO ASSIGN

LSE-01353  

STATE OF NORTH DAKOTA ACTING BY AND THROUGH THE BOARD OF UNIVERSITY AND SCHOOL
LANDS AND ITS AGENT, THE COMMISSIONER OF UNIVERSITY ANS SCHOOL LANDS

OG-12-01080

  AMERICAN EAGLE ENERGY CORPORATION   DIVIDE   NORTH DAKOTA   8/7/2012  

DOCUMENT NO.: 266329 

BOOK: 339M 

PAGE: 168

 

TOWNSHIP 163 NORTH - RANGE 102 WEST

SECTION 17: N2SW4

 

CONSENT

TO ASSIGN

LSE-01359  

STATE OF NORTH DAKOTA ACTING BY AND THROUGH THE BOARD OF UNIVERSITY AND SCHOOL
LANDS AND ITS AGENT, THE COMMISSIONER OF UNIVERSITY ANS SCHOOL LANDS

OG-12-01081

  AMERICAN EAGLE ENERGY CORPORATION   DIVIDE   NORTH DAKOTA   8/7/2012  

DOCUMENT NO.: 266323 

BOOK: 339M 

PAGE: 156

 

TOWNSHIP 163 NORTH - RANGE 102 WEST

SECTION 19: S2NE4

 

CONSENT

TO ASSIGN

LSE-01360  

STATE OF NORTH DAKOTA ACTING BY AND THROUGH THE BOARD OF UNIVERSITY AND SCHOOL
LANDS AND ITS AGENT, THE COMMISSIONER OF UNIVERSITY ANS SCHOOL LANDS

OG-12-01082

  AMERICAN EAGLE ENERGY CORPORATION   DIVIDE   NORTH DAKOTA   8/7/2012  

DOCUMENT NO.: 266324 

BOOK: 339M 

PAGE: 158

 

TOWNSHIP 163 NORTH - RANGE 102 WEST

SECTION 19: SE4

 

CONSENT

TO ASSIGN

LSE-01361  

STATE OF NORTH DAKOTA ACTING BY AND THROUGH THE BOARD OF UNIVERSITY AND SCHOOL
LANDS AND ITS AGENT, THE COMMISSIONER OF UNIVERSITY ANS SCHOOL LANDS

OG-12-01083

  AMERICAN EAGLE ENERGY CORPORATION   DIVIDE   NORTH DAKOTA   8/7/2012  

DOCUMENT NO.: 266325 

BOOK: 339M 

PAGE: 160

 

TOWNSHIP 163 NORTH - RANGE 102 WEST

SECTION 19: SE4SW4, LOT 4

 

CONSENT

TO ASSIGN

LSE-01367   RED CROWN ROYALTIES LLC L33T-924457-03   SM ENERGY COMPANY   DIVIDE
  NORTH DAKOTA   8/1/2011  

DOCUMENT NO.: 259735 

BOOK: 318M 

PAGE: 647

 

TOWNSHIP 163 NORTH - RANGE 101 WEST

SECTION 3: LOTS 1 (39.49), 2 (39.43), 3 (39.80), 4 (39.72), S2N2

 

CONSENT

TO ASSIGN

 

Page 9 of 10

 

 

SCHEDULE 4.16(c)

PREFERENTIAL RIGHTS TO PURCHASE and REQUIRED CONSENTS TO ASSIGNMENT

 

LSE-01410  

STATE OF NORTH DAKOTA ACTING BY AND THROUGH THE BOARD OF UNIVERSITY AND SCHOOL
LANDS AND ITS AGENT, THE COMMISSIONER OF UNIVERSITY ANS SCHOOL LANDS

OG-12-01096

  AMERICAN EAGLE ENERGY CORPORATION   DIVIDE   NORTH DAKOTA   8/7/2012  

DOCUMENT NO.: 266326 

BOOK: 339M 

PAGE: 162

 

TOWNSHIP 163 NORTH - RANGE 103 WEST

SECTION 1: LOT 4

 

CONSENT

TO ASSIGN

LSE-01410  

STATE OF NORTH DAKOTA ACTING BY AND THROUGH THE BOARD OF UNIVERSITY AND SCHOOL
LANDS AND ITS AGENT, THE COMMISSIONER OF UNIVERSITY ANS SCHOOL LANDS

OG-12-01096

  AMERICAN EAGLE ENERGY CORPORATION   DIVIDE   NORTH DAKOTA   8/7/2012  

DOCUMENT NO.: 266326 

BOOK: 339M 

PAGE: 162

 

TOWNSHIP 163 NORTH - RANGE 103 WEST

SECTION 1: LOT 4

 

CONSENT

TO ASSIGN

LSE-01418  

LEASE NO. OG-12-01098

THE STATE OF NORTH DAKOTA ACTING BY AND THROUGH THE BOARD OF UNIVERSITY AND
SCHOOL LANDS AND ITS AGENT, THE COMMISSIONER OF UNIVERSITY AND SCHOOL LANDS

  AMERICAN EAGLE ENERGY CORPORATION   DIVIDE   NORTH DAKOTA   8/7/2012  

DOCUMENT NO.: 266331

BOOK: 339M

PAGE: 172

 

TOWNSHIP 163 NORTH - RANGE 103 WEST

SECTION 24: SW4

 

CONSENT

TO ASSIGN

LSE-01419  

LEASE NO. OG-12-01097

THE STATE OF NORTH DAKOTA ACTING BY AND THROUGH THE BOARD OF UNIVERSITY AND
SCHOOL LANDS AND ITS AGENT, THE COMMISSIONER OF UNIVERSITY AND SCHOOL LANDS

  AMERICAN EAGLE ENERGY CORPORATION   DIVIDE   NORTH DAKOTA   8/7/2012  

DOCUMENT NO.: 266327

BOOK: 339M

PAGE: 164

 

TOWNSHIP 163 NORTH - RANGE 103 WEST

SECTION 2: S2NE4, LOT 1

 

CONSENT

TO ASSIGN

LSE-00682  

UNITED STATES DEPARTMENT OF INTERIOR

BUREAU OF LAND MANAGEMENT

NDM 95992

  PLAYA OIL & GAS, LP   WILLIAMS   NORTH DAKOTA   9/1/2006   DOCUMENT NO.:
755331  

TOWNSHIP 159 NORTH - RANGE 103 WEST

SECTION 4: LOT2, LAKEBED RIPARIAN TO LOT 2

 

CONSENT

TO ASSIGN

LSE-00816  

UNITED STATES DEPARTMENT OF INTERIOR

BUREAU OF LAND MANAGEMENT

NDM 95993

  PLAYA OIL & GAS, LP   WILLIAMS   NORTH DAKOTA   9/1/2006   DOCUMENT NO.:
755332  

TOWNSHIP 159 NORTH - RANGE 103 WEST

SECTION 9: W2NE4

SECTION 20: SE4

SECTION 25: NW4

SECTION 26: NE4

 

CONSENT

TO ASSIGN

 

Page 10 of 10

 

   

SCHEDULE 4.18

 

Hedging contracts

 

-Hedge agreement of even date herewith between Borrower and Administrative
Agent.

 

 

 

 

SCHEDULE 4.19

 

gas imbalances

 

none.