Exhibit 10.1

 

Execution Version

 

 

 

CREDIT AGREEMENT

 

dated as of December 7, 2018

 

among

 

BONANZA CREEK ENERGY, INC.,
as Borrower,

 

JPMORGAN CHASE BANK, N.A.,
as Administrative Agent, Sole Bookrunner, and an Issuing Bank,

 

and

 

The Lenders Party Hereto

 

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JPMORGAN CHASE BANK, N.A.,

and

KEYBANK NATIONAL ASSOCIATION

as Joint Lead Arrangers,

 

BANK OF AMERICA, N.A.

as Syndication Agent,

 

and

 

CAPITAL ONE, NATIONAL ASSOCIATION

as Documentation Agent

 

 

 

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TABLE OF CONTENTS

 

 

 

Page

 

 

 

 

Article I

 

 

DEFINITIONS AND ACCOUNTING MATTERS

 

 

 

 

Section 1.01

Terms Defined Above

1

Section 1.02

Certain Defined Terms

1

Section 1.03

Types of Loans and Borrowings

29

Section 1.04

Terms Generally; Rules of Construction

29

Section 1.05

Accounting Terms and Determinations; GAAP

30

Section 1.06

Divisions

30

 

 

 

 

Article II

 

 

THE REVOLVING CREDIT FACILITY

 

 

 

 

Section 2.01

Commitments

31

Section 2.02

Revolving Credit Loans and Borrowings

32

Section 2.03

Requests for Revolving Credit Borrowings

33

Section 2.04

Funding of Revolving Credit Borrowings

35

Section 2.05

Termination and Reduction of Aggregate Maximum Credit Amounts

36

Section 2.06

Borrowing Base

37

Section 2.07

Letters of Credit

40

 

 

 

 

Article III

 

 

PAYMENTS OF PRINCIPAL AND INTEREST ON REVOLVING CREDIT LOANS; PREPAYMENTS OF
REVOLVING CREDIT LOANS; FEES

 

 

 

 

Section 3.01

Repayment of Revolving Credit Loans

49

Section 3.02

Interest on Revolving Credit Loans

49

Section 3.03

Prepayments of Revolving Credit Loans

50

Section 3.04

Fees

53

 

 

 

 

Article IV

 

 

PAYMENTS; PRO RATA TREATMENT; SHARING OF SET-OFFS

 

 

 

 

Section 4.01

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

53

Section 4.02

Deductions by the Administrative Agent; Defaulting Lender

55

Section 4.03

Disposition of Proceeds

57

 

 

 

 

Article V

 

 

INCREASED COSTS; REIMBURSEMENT OF PREPAYMENT COSTS;

 

 

TAXES; LIBO RATE AVAILABILITY

 

 

 

 

Section 5.01

Increased Costs

57

Section 5.02

Reimbursement of Prepayment Costs

59

Section 5.03

Taxes

59

Section 5.04

Mitigation Obligations; Designation of Different Lending Office

63

Section 5.05

Replacement of Lenders

64

Section 5.06

Circumstances Affecting LIBO Rate Availability

64

Section 5.07

Laws Affecting LIBO Rate Availability

65

 

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Section 5.08

Eurodollar Lending Office

65

Section 5.09

Right of Lenders to Fund through Branches and Affiliates

65

Section 5.10

Alternate Rate of Interest

66

Section 5.11

Interest Rates; LIBOR Notifications

66

 

 

 

 

Article VI

 

 

CONDITIONS PRECEDENT

 

 

 

 

Section 6.01

Effective Date

67

Section 6.02

Each Credit Event

69

 

 

 

 

Article VII

 

 

REPRESENTATIONS AND WARRANTIES

 

 

 

 

Section 7.01

Organization; Powers

70

Section 7.02

Authority; Enforceability

70

Section 7.03

Approvals; No Conflicts

70

Section 7.04

Financial Condition; No Material Adverse Change

71

Section 7.05

Litigation

71

Section 7.06

Environmental Matters

71

Section 7.07

Compliance with the Laws and Agreements; No Defaults

72

Section 7.08

Investment Company Act

73

Section 7.09

Taxes

73

Section 7.10

ERISA

73

Section 7.11

Disclosure; No Material Misstatements

74

Section 7.12

Insurance

74

Section 7.13

Restriction on Liens

74

Section 7.14

Subsidiaries

75

Section 7.15

Location of Business and Offices

75

Section 7.16

Properties; Titles, Etc.

75

Section 7.17

Maintenance of Properties

76

Section 7.18

Marketing of Production

76

Section 7.19

Swap Agreements

76

Section 7.20

Use of Loans and Letters of Credit

76

Section 7.21

Solvency

76

Section 7.22

Anti-Corruption Laws and Sanctions

77

Section 7.23

EEA Financial Institutions

77

Section 7.24

Security Instruments

77

 

 

 

 

Article VIII

 

 

AFFIRMATIVE COVENANTS

 

 

 

 

Section 8.01

Financial Statements; Other Information

77

Section 8.02

Notices of Material Events

80

Section 8.03

Existence; Conduct of Business

80

Section 8.04

Payment of Obligations

81

Section 8.05

Performance of Obligations under Loan Documents

81

Section 8.06

Operation and Maintenance of Properties

81

Section 8.07

Insurance

82

Section 8.08

Books and Records; Inspection Rights

82

 

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Section 8.09

Compliance with Laws

82

Section 8.10

Environmental Matters

82

Section 8.11

Further Assurances

83

Section 8.12

Reserve Reports

84

Section 8.13

Title Information

85

Section 8.14

Additional Collateral; Additional Guarantors

85

Section 8.15

ERISA Compliance

86

Section 8.16

Marketing Activities

86

Section 8.17

Unrestricted Subsidiaries

87

Section 8.18

Account Control Agreements

88

 

 

 

 

Article IX

 

 

NEGATIVE COVENANTS

 

 

 

 

Section 9.01

Financial Covenants

89

Section 9.02

Debt

89

Section 9.03

Liens

90

Section 9.04

Restricted Payments

91

Section 9.05

Investments, Loans and Advances

91

Section 9.06

Nature of Business

92

Section 9.07

Proceeds of Loans

92

Section 9.08

Mergers, Etc.

93

Section 9.09

Sale or Discount of Receivables

93

Section 9.10

Sale of Properties

93

Section 9.11

Transactions with Affiliates

94

Section 9.12

Subsidiaries

95

Section 9.13

Negative Pledge Agreements; Dividend Restrictions

95

Section 9.14

Swap Agreements

95

Section 9.15

Permitted Additional Debt Restrictions

96

Section 9.16

Amendments to Organizational Documents

97

Section 9.17

Changes in Fiscal Periods

97

 

 

 

 

Article X

 

 

EVENTS OF DEFAULT; REMEDIES

 

 

 

 

Section 10.01

Events of Default

97

Section 10.02

Remedies

99

 

 

 

 

Article XI

 

 

THE AGENTS

 

 

 

 

Section 11.01

Authorization and Action

100

Section 11.02

Administrative Agent’s Reliance, Indemnification, Etc.

103

Section 11.03

Posting of Communications

104

Section 11.04

The Administrative Agent Individually

106

Section 11.05

Successor Administrative Agent

106

Section 11.06

Acknowledgements of Lenders and Issuing Banks

107

Section 11.07

Collateral Matters

108

Section 11.08

Credit Bidding

109

Section 11.09

Certain ERISA Matters

110

 

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Article XII

 

 

MISCELLANEOUS

 

 

 

 

Section 12.01

Notices

112

Section 12.02

Waivers; Amendments

112

Section 12.03

Expenses, Indemnity; Damage Waiver

114

Section 12.04

Successors and Assigns

117

Section 12.05

Survival; Revival; Reinstatement

120

Section 12.06

Counterparts; Integration; Effectiveness

121

Section 12.07

Severability

121

Section 12.08

Right of Setoff

121

Section 12.09

GOVERNING LAW; JURISDICTION; CONSENT TO SERVICE OF PROCESS; WAIVER OF TRIAL BY
JURY

121

Section 12.10

Headings

123

Section 12.11

Confidentiality

123

Section 12.12

Interest Rate Limitation

123

Section 12.13

EXCULPATION PROVISIONS

124

Section 12.14

Collateral Matters; Swap Agreements; Cash Management

126

Section 12.15

No Third Party Beneficiaries

126

Section 12.16

USA Patriot Act Notice

126

Section 12.17

Keepwell

127

Section 12.18

Acknowledgement and Consent to Bail-In of EEA Financial Institutions

127

Section 12.19

Flood Insurance

127

Section 12.20

Intercreditor Agreements

128

 

Schedules and Exhibits:

 

Schedule 1.1

 

Applicable Margin

Schedule 1.2

 

Allocations

Schedule 1.3

 

Compliance Information

Schedule 7.04(c)

 

Material Debt and Liabilities

Schedule 7.05

 

Litigation

Schedule 7.06

 

Environmental Matters

Schedule 7.14

 

Subsidiaries

Schedule 7.18

 

Marketing Agreements

Schedule 7.19

 

Swap Agreements

Schedule 9.05

 

Investments

Schedule 9.11

 

Affiliate Transactions

Schedule 12.01

 

Notices

 

 

 

Exhibit A

 

Form of Revolving Credit Note

Exhibit B

 

Form of Revolving Credit Borrowing Request

Exhibit C

 

Form of Compliance Certificate

Exhibit D

 

Security Instruments

Exhibit E

 

Form of Assignment and Assumption

Exhibit F

 

Form of Notice of Issuance of Letter of Credit

 

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Exhibit G-1

 

Form of U.S. Tax Compliance Certificate (Foreign Lenders; not Partnerships)

Exhibit G-2

 

Form of U.S. Tax Compliance Certificate (Foreign Participants; not Partnerships)

Exhibit G-3

 

Form of U.S. Tax Compliance Certificate (Foreign Participants; Partnerships)

Exhibit G-4

 

Form of U.S. Tax Compliance Certificate (Foreign Lenders; Partnerships)

 

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CREDIT AGREEMENT

 

CREDIT AGREEMENT, dated as of December 7, 2018, is among Bonanza Creek
Energy, Inc., a Delaware corporation (the “Borrower”), each of the Lenders from
time to time party hereto, JPMorgan Chase Bank, N.A. as administrative agent for
the Lenders (in such capacity, together with its successors in such capacity,
the “Administrative Agent”) and each of the other parties from time to time
party hereto.

 

RECITALS

 

A.            The Borrower has requested that the Lenders provide certain loans
to and extensions of credit on behalf of the Borrower.

 

B.            The Lenders have agreed to make such loans and extensions of
credit subject to the terms and conditions of this Agreement.

 

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

 

ARTICLE I
DEFINITIONS AND ACCOUNTING MATTERS

 

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

 

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

 

“ABR”, when used in reference to any Loan or Borrowing, refers to whether such
Loan, or the Loans comprising such Borrowing, are bearing interest at a rate
determined by reference to the Alternate Base Rate.

 

“Adjusted LIBO Rate” means with respect to any Eurodollar Borrowing for any
Interest Period, an interest rate per annum (rounded upwards, if necessary, to
the next 1/16 of 1%) equal to (a) the LIBO Rate for such Interest Period
multiplied by (b) the Statutory Reserve Rate.

 

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

 

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

 

“Agents” means, collectively, the Administrative Agent, the Syndication Agent
and the Documentation Agents; and “Agent” means any of the Administrative Agent,
the Syndication Agent or the Documentation Agent, as the context requires.

 

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“Aggregate Maximum Credit Amounts” at any time shall equal the sum of the
Maximum Credit Amounts, as the same may be reduced or terminated pursuant to
Section 2.05. As of the Effective Date, the Aggregate Maximum Credit Amounts of
the Revolving Credit Lenders is $750,000,000.

 

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

 

“Alternate Base Rate” means, for any day, a rate per annum equal to the greatest
of (a) the Prime Rate in effect on such day, (b) the NYFRB Rate in effect on
such day plus ½ of 1% and (c) the Adjusted LIBO Rate for a one month Interest
Period on such day (or if such day is not a Business Day, the immediately
preceding Business Day) plus 1%, provided that for the purpose of this
definition, the Adjusted LIBO Rate for any day shall be based on the LIBO Screen
Rate (or if the LIBO Screen Rate is not available for such one month Interest
Period, the Interpolated Rate) at approximately 11:00 a.m. London time on such
day.  Any change in the Alternate Base Rate due to a change in the Prime Rate,
the NYFRB Rate or the Adjusted LIBO Rate shall be effective from and including
the effective date of such change in the Prime Rate, the NYFRB Rate or the
Adjusted LIBO Rate, respectively.  If the Alternate Base Rate is being used as
an alternate rate of interest pursuant to Section 5.06, 5.07 or 5.10, then the
Alternate Base Rate shall be the greater of clause (a) and (b) above and shall
be determined without reference to clause (c) above.  For the avoidance of
doubt, if the Alternate Base Rate shall be less than zero, such rate shall be
deemed to be zero for purposes of this Agreement.

 

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

 

“Applicable Margin” means, for any period, with respect to any ABR Revolving
Credit Loan or Eurodollar Revolving Credit Loan, as the case may be, the rate
per annum set forth in the Commitment Utilization Grid set forth on Schedule 1.1
and based upon the Commitment Utilization Percentage then in effect.

 

“Applicable Revolving Credit Percentage” means, with respect to any Revolving
Credit Lender, the percentage of the Aggregate Maximum Credit Amounts
represented by such Revolving Credit Lender’s Maximum Credit Amount as such
percentage (which may be carried out to the seventh decimal place) is set forth
on Schedule 1.2, provided that if the Commitments have terminated or expired,
each Revolving Credit Lender’s Applicable Revolving Credit Percentages shall be
determined based upon the Commitments most recently in effect.

 

“Approved Counterparty” means (a) any Secured Swap Party and (b) any other
Person if such Person or its credit support provider has a long term senior
unsecured debt rating or corporate rating of A-/A3 by S&P or Moody’s (or their
equivalent) or higher.

 

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

 

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“Approved Petroleum Engineers” means Cawley, Gillespie & Associates, Inc.,
DeGolyer and MacNaughton Corp., Netherland, Sewell & Associates, Inc., Ryder
Scott Company Petroleum Consultants, L.P., and any other independent petroleum
engineers reasonably acceptable to the Administrative Agent and the Required
Lenders.

 

“Arrangers” means JPMorgan Chase Bank, N.A., in its capacities as sole
bookrunner and joint lead arranger hereunder, and KeyBank National Association
in its capacity as joint lead arranger hereunder.

 

“ASC 805” means Accounting Standards Codification No. 805 (Business
Combinations), as issued by the Financial Accounting Standards Board.

 

“ASC 815” means Accounting Standards Codification No. 815 (Derivatives and
Hedging), as issued by the Financial Accounting Standards Board.

 

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

 

“Availability Period” means the period from and including the Effective Date to
but excluding the Termination Date.

 

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

 

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

 

“Bankruptcy Code” means Title 11 of the United States Code entitled
“Bankruptcy”, as now and hereafter in effect, or any successor statute.

 

“Benefit Plan”  means any of (a) an “employee benefit plan” (as defined in
Section 3(3) of ERISA) that is subject to Title I of ERISA, (b) a “plan” as
defined in Section 4975 of the Code to which Section 4975 of the Code applies,
or and (c) any Person whose assets include (for purposes of ERISA
Section 3(42)the Plan Asset Regulations or otherwise for purposes of Title I of
ERISA or Section 4975 of the Code) the assets of any such “employee benefit
plan” or “plan”.

 

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

 

“Borrowing” means Loans of the same Type, made, converted or continued on the
same date and, in the case of Eurodollar Loans, as to which a single Interest
Period is in effect.

 

“Borrowing Base” means at any time an amount equal to the amount determined in
accordance with Section 2.06, as the same may be adjusted from time to time
pursuant to the

 

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Borrowing Base Adjustment Provisions.  As of the Effective Date the Borrowing
Base is $350,000,000.

 

“Borrowing Base Adjustment Provisions” means Section 2.06(e),
Section 8.13(c) and Section 9.10, in each case which may adjust (as opposed to
redetermine) the amount of the Borrowing Base.

 

“Borrowing Base Deficiency” means, as of any date, the amount, if any, by which
the aggregate Revolving Credit Exposure on such date exceeds the Borrowing Base
in effect on such date.

 

“Borrowing Base Deficiency Notice” has the meaning assigned to such term in
Section 3.03(c)(ii).

 

“Business Day” means any day that is not a Saturday, Sunday or other day on
which commercial banks in New York, New York are authorized or required by law
to remain closed; provided that, when used in connection with a Eurodollar Loan,
the term “Business Day” shall also exclude any day on which banks are not open
for dealings in dollar deposits in the London interbank market.

 

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

 

“Cash Collateralize” means to pledge and deposit with or deliver to the
Administrative Agent (as a first priority, perfected security interest), for the
benefit of the Issuing Banks and the Revolving Credit Lenders, cash in Dollars,
at a location and pursuant to documentation in form and substance satisfactory
to the Administrative Agent in its reasonable discretion.

 

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

 

“Cash Management Bank” means any Person that, at the time it enters into a Cash
Management Agreement, is a Lender or an Affiliate of a Lender, in its capacity
as a party to such Cash Management Agreement.

 

“Change in Control” means:

 

(a)           any “person” or “group” (as such terms are used in Sections
13(d) and 14(d) of the Exchange Act, but excluding any employee benefit plan of
such person or its subsidiaries, and any person or entity acting in its capacity
as trustee, agent or other fiduciary or administrator of any such plan) becomes
the “beneficial owner” (as defined in Rules 13d-3 and 13d-5 under the Exchange
Act), directly or indirectly, of 50% or more of the aggregate ordinary voting
power represented by the issued and outstanding Equity Interests of the
Borrower; or

 

(b)           occupation of a majority of the seats (other than vacant seats) on
the board of directors of the Borrower by Persons who were not (i) directors of
the Borrower on the date of this

 

4

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Agreement or nominated or appointed by the board of directors of the Borrower or
(ii) appointed by directors so nominated or appointed.

 

“Change in Law” has the meaning ascribed to such term in Section 5.01(b).

 

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

 

“Collateral” means all Property which is subject to a Lien under one or more
Security Instruments.

 

“Commitment” means, with respect to each Revolving Credit Lender, the commitment
of such Revolving Credit Lender to make Revolving Credit Loans and to acquire
participations in Letters of Credit hereunder, expressed as an amount
representing the maximum aggregate amount of such Revolving Credit Lender’s
Revolving Credit Exposure hereunder, as such commitment may be modified from
time to time pursuant to Section 2.01(b) and Section 2.05 and modified from time
to time pursuant to assignments by or to such Revolving Credit Lender pursuant
to Section 12.04(b). The amount representing each Revolving Credit Lender’s
Commitment shall at any time be the least of such Revolving Credit Lender’s
(a) Maximum Credit Amount, (b) Applicable Revolving Credit Percentage of the
then effective Borrowing Base, and (c) Applicable Revolving Credit Percentage of
the then effective Elected Loan Limit.

 

“Commitment Fee Rate” means a rate per annum set forth in the Commitment
Utilization Grid on Schedule 1.1.

 

“Commitment Utilization Percentage” means, as of any day, the fraction expressed
as a percentage, the numerator of which is the sum of the Revolving Credit
Exposures of the Revolving Credit Lenders on such day, and the denominator of
which is the lesser of the Borrowing Base and the Elected Loan Limit in effect
on such day.

 

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

 

“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.

 

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

 

“Consolidated Net Income” means for any period, the consolidated net income (or
loss) of the Borrower and its Restricted Subsidiaries, as applicable, determined
on a consolidated basis in accordance with GAAP; provided that there shall be
excluded (a) the income (or loss) of any Person accrued prior to the date it
becomes a Restricted Subsidiary of the Borrower, or is merged into or
consolidated with the Borrower or any of its Restricted Subsidiaries, as
applicable, (b) the undistributed earnings of any Restricted Subsidiary of the
Borrower, to the extent that the declaration or payment of dividends or similar
distributions by such Restricted Subsidiary is not at the time permitted by the
terms of any contractual obligation (other than under any Loan Document) or by
any law applicable to such Restricted Subsidiary and (c) the income (or loss) of

 

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any Person in which any other Person (other than the Borrower or any of its
Restricted Subsidiaries) has an Equity Interest, except to the extent of the
amount of dividends or other distributions actually paid in cash to the Borrower
or any of its Restricted Subsidiaries during such period.

 

“Consolidated Interest Expense” means, for any period, the sum of aggregate
interest expense and capitalized interest of the Borrower and the Restricted
Subsidiaries determined on a consolidated basis for such period in accordance
with GAAP.

 

“Consolidated Subsidiaries” means, for any Person, any subsidiary or other
entity the accounts of which would be consolidated with those of such Person in
its consolidated financial statements in accordance with GAAP.

 

“Consolidated Restricted Subsidiaries” means any Restricted Subsidiaries that
are Consolidated Subsidiaries.

 

“Consolidated Unrestricted Subsidiaries” means any Unrestricted Subsidiaries
that are Consolidated Subsidiaries.

 

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

 

“Control Agreement” means a deposit account control agreement or securities
account control agreement (or similar agreement), as applicable, in form and
substance reasonably satisfactory to the Administrative Agent, executed by the
applicable Credit Party, the Administrative Agent and the relevant financial
institution party thereto, which establishes the Administrative Agent’s control
(within the meaning of Section 9-104 of the UCC) with respect to the applicable
Deposit Account, Securities Account or Commodities Account covered thereby.

 

“Credit Parties” shall mean the Borrower and the Guarantors, and “Credit Party”
shall mean any one of them, as the context indicates or otherwise requires.

 

“Current Assets” means, as of any date of determination, without duplication,
the sum of all amounts that would, in accordance with GAAP, be set forth
opposite the caption “total current assets” (or any like caption) on a
consolidated balance sheet of the Borrower and the other Credit Parties at such
date, plus the unused Commitments then available to be borrowed, but excluding
all non-cash assets under ASC 410, 718 and 815.

 

“Current Liabilities” means, as of any date of determination, without
duplication, the sum of all amounts that would, in accordance with GAAP, be set
forth opposite the caption “total current liabilities” (or any like caption) on
a consolidated balance sheet of the Borrower and the other Credit Parties on
such date, but excluding (a) all non-cash obligations under ASC 410, 718 and
815, (b) the current portion of (i) the Loans and obligations in respect of
Letters of Credit under this Agreement or (ii) other Debt for borrowed money and
(c) the current portion of any deferred tax obligations.

 

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“Current Ratio” means, as of any date of determination, the ratio of Current
Assets of the Borrower and the other Credit Parties to Current Liabilities of
the Borrower and the other Credit Parties as of such date.

 

“Debt” means, for any Person, the sum of the following (without duplication):

 

(a)           all obligations of such Person for borrowed money or evidenced by
bankers’ acceptances, debentures, notes, bonds or other similar instruments;

 

(b)           all obligations of such Person (whether contingent or otherwise)
in respect of letters of credit, bank guarantees and similar instruments;

 

(c)           all accrued expenses, liabilities or other obligations of such
Person to pay the deferred purchase price of Property;

 

(d)           all obligations under Capital Leases or Synthetic Leases;

 

(e)           all Debt (as defined in the other clauses of this definition) of
others secured by (or for which the holder of such Debt has an existing right,
contingent or otherwise, to be secured by) a Lien on any Property of such Person
to the extent of the value of the Property of such Person which is subject to a
Lien securing such Debt, whether or not such Debt is assumed by such Person;

 

(f)            all Debt (as defined in the other clauses of this definition) of
others guaranteed by such Person or in which such Person otherwise assures a
creditor against loss of the Debt (howsoever such assurance shall be made,
including by means of obligations to pay for goods or services even if such
goods or services are not actually taken, received or utilized) to the extent of
the lesser of the amount of such Debt and the maximum stated amount of such
guarantee or assurance against loss;

 

(g)           any Debt of a partnership for which such Person is liable either
by agreement, by operation of law or by a Governmental Requirement but only to
the extent of such liability;

 

(h)           all Disqualified Capital Stock;

 

(i)            all obligations of such Person to deliver commodities, goods or
services, including, without limitation Hydrocarbons, in consideration of one or
more advance payments, other than gas balancing arrangements in the ordinary
course of business; and

 

(j)            the undischarged balance of any production payment created by
such Person or for the creation of which such Person directly or indirectly
received payment.

 

The Debt of any Person shall include all obligations of such Person of the
character described above to the extent such Person remains legally liable in
respect thereof notwithstanding that any such obligation is not included as a
liability of such Person under GAAP; provided, however, that “Debt” does not
include (i) obligations with respect to surety, performance or appeal bonds and
similar instruments, or (ii) trade accounts payable and similar accounts payable
for goods and services to the extent such accounts payable are due not later
than 90 days after the later of the invoicing thereof or the delivery of such
goods or the performance of such services.

 

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

 

“Defaulting Lender” means any Lender that (a) has failed to (i) fund all or any
portion of its Applicable Revolving Credit Percentage of any Revolving Credit
Loans within two (2) Business Days of the date such Revolving Credit Loans were
required to be funded hereunder, or (ii) pay to the Administrative Agent, any
Issuing Bank or any Lender any other amount required to be paid by it hereunder
(including in respect of its participation in Letters of Credit) within two
(2) Business Days of the date when due, (b) has notified the Borrower, the
Administrative Agent or any Issuing Bank in writing that it does not intend or
expect to comply with its funding obligations hereunder or has made a public
statement to that effect , (c) has failed, within three (3) Business Days after
written request by the Administrative Agent, any Issuing Bank or any other
Lender, acting in good faith, to confirm in writing that it will comply with its
prospective funding obligations hereunder (and is financially able to meet such
obligations); provided that such Lender shall cease to be a Defaulting Lender
pursuant to this clause (c) upon receipt by the requesting party and the
Administrative Agent of such written confirmation in form and substance
satisfactory to such requesting party and the Administrative Agent, or (d) has,
or has a direct or indirect parent company that has, (i) become the subject of a
proceeding under the any liquidation, conservatorship, bankruptcy, assignment
for the benefit of creditors, moratorium, rearrangement, receivership,
insolvency, reorganization, or similar debtor relief laws of the United States
or other applicable jurisdictions from time to time in effect and affecting the
rights of creditors generally, (ii) had appointed for it a receiver, custodian,
conservator, trustee, administrator, assignee for the benefit of creditors or
similar Person charged with reorganization or liquidation of its business or
assets, including the Federal Deposit Insurance Corporation or any other state
or federal regulatory authority acting in such a capacity or (iii) has become
the subject of a Bail-In Action; provided that a Lender shall not be a
Defaulting Lender solely by virtue of the ownership or acquisition of any equity
interest in that Lender or any direct or indirect parent company thereof by a
Governmental Authority, so long as such ownership interest does not result in or
provide such Lender with immunity from the jurisdiction of courts within the
United States or from the enforcement of judgments or writs of attachment on its
assets or permit such Lender (or such Governmental Authority) to reject,
repudiate, disavow or disaffirm any contracts or agreements made by such Lender;
provided, further, that the appointment of an administrator, provisional
liquidator, conservator, receiver, trustee, custodian or other similar official
by a supervisory authority or regulator with respect to a Lender or a direct or
indirect parent company under the Dutch Financial Supervision Act 2007 (as
amended from time to time and including any successor legislation) shall not be
deemed to result in an event described in clause (d) hereof so long as such
appointment does not result in or provide such Lender with immunity from the
jurisdiction of courts within the United States or from enforcement of judgments
or writs of attachment on its assets or permit such Lender (or such
administrator, provisional liquidator, conservator, receiver, trustee, custodian
or other similar official or Governmental Authority) to reject, repudiate,
disavow or disaffirm any contracts or agreements made with such Lender. Any
determination by the Administrative Agent that a Lender is a Defaulting Lender
under any one or more of clauses (a) through (d) above shall be conclusive and
binding absent manifest error, and such Lender shall be deemed to be a
Defaulting Lender upon delivery of written notice of such determination to the
Borrower, each Issuing Bank and each Lender.

 

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“Defaulting Lender’s Unfunded Portion” means such Defaulting Lender’s Applicable
Revolving Credit Percentage of the Aggregate Maximum Credit Amount minus the
aggregate principal amount of all Revolving Credit Loans funded by the
Defaulting Lender.

 

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

 

“Disqualified Capital Stock” means any Equity Interest that, by its terms (or by
the terms of any security into which it is convertible or for which it is
exchangeable) or upon the happening of any event, matures or is mandatorily
redeemable for any consideration other than other Equity Interests (which would
not constitute Disqualified Capital Stock), pursuant to a sinking fund
obligation or otherwise, or is convertible or exchangeable for Debt or
redeemable for any consideration other than other Equity Interests (which would
not constitute Disqualified Capital Stock) at the option of the holder thereof,
in whole or in part (but if in part only with respect to such amount that meets
the criteria set forth in this definition), on or prior to the date that is one
year after the Revolving Credit Maturity Date.

 

“Documentation Agent” means  Capital One, National Association, as the
Documentation Agent.

 

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

 

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

 

“EBITDAX” means, with respect to the Borrower and its Restricted Subsidiaries
for any period, Consolidated Net Income for such period; plus without
duplication and to the extent deducted in the calculation of Consolidated Net
Income for such period, the sum of (a) income or franchise Taxes paid or
accrued; (b) Consolidated Interest Expense; (c) amortization, depletion and
depreciation expense; (d) any non-cash losses or charges on any Swap Agreement
resulting from the requirements of Accounting Standards Codification
Section 815-10 (as successor to FASB Statement 133) for that period; (e) oil and
gas exploration expenses (including all drilling, completion, geological and
geophysical costs) for such period; (f) losses from Transfers of assets (other
than Hydrocarbons produced in the ordinary course of business) and other
extraordinary or non-recurring losses; (g) to the extent actually reimbursed by
insurance providers, expenses with respect to liability or casualty events or
business interruption; and (h) other non-cash charges (excluding accruals for
cash expenses made in the ordinary course of business); minus, to the extent
included in the calculation of Consolidated Net Income, the sum of (i) any
non-cash gains on any Swap Agreements resulting from the requirements of
Accounting Standards Codification Section 815-10 (as successor to FASB Statement
133) for that period; (ii) extraordinary or non-recurring gains; (iii) gains
from Transfers of assets (other than Hydrocarbons produced in the ordinary
course of business); and (iv) cancellation of indebtedness income and other
non-cash gains; provided that, with respect to the determination of Borrower’s
compliance with the Leverage Ratio set forth in Section 9.01(b) for any period,
EBITDAX shall be adjusted to give effect, on a pro forma basis and consistent
with GAAP, to any acquisitions or Transfers made during such period as if such
acquisition or Transfer, as the case may be, was made at the beginning of such
period.

 

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

 

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

 

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

 

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

 

“Elected Loan Limit” has the meaning assigned such term in Section 2.01(b)(i).

 

“Engineering Reports” has the meaning assigned to such term in
Section 2.06(c)(i).

 

“Environmental Laws” means any and all Governmental Requirements pertaining in
any way to public health, the environment, the preservation or reclamation of
natural resources, or the management, Release or threatened Release of any
Hazardous Materials, in effect in any and all jurisdictions in which the
Borrower or any of its Subsidiaries is conducting, or at any time has conducted,
business, or where any Property of the Borrower or any of its Subsidiaries is
located, including, the Oil Pollution Act of 1990 (“OPA”), as amended, the Clean
Air Act, as amended, the Comprehensive Environmental, Response, Compensation,
and Liability Act of 1980 (“CERCLA”), as amended, the Federal Water Pollution
Control Act, as amended, the Occupational Safety and Health Act of 1970, as
amended, the Resource Conservation and Recovery Act of 1976 (“RCRA”), as
amended, the Safe Drinking Water Act, as amended, the Toxic Substances Control
Act, as amended, the Superfund Amendments and Reauthorization Act of 1986, as
amended, the Hazardous Materials Transportation Law, as amended, and other
environmental conservation or protection Governmental Requirements.

 

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

 

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

 

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

 

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“ERISA Affiliate” means each trade or business (whether or not incorporated)
which together with the Borrower or a Subsidiary would be deemed to be a “single
employer” within the meaning of section 4001(b)(1) of ERISA or subsections (b),
(c), (m) or (o) of section 414 of the Code or, solely for purposes of
Section 302 of ERISA and Section 412 of the Code, is treated as a single
employer under Section 414 of the Code.

 

“ERISA Event” means (a) a “Reportable Event” described in section 4043 of ERISA
or the regulations issued thereunder with respect to a Plan, other than a
Reportable Event as to which the provisions of thirty (30) days’ notice to the
PBGC is expressly waived under applicable regulations, (b) the withdrawal of the
Borrower or any ERISA Affiliate from a Plan during a plan year in which it was a
“substantial employer” as defined in section 4001(a)(2) of ERISA, (c) the filing
of a standard termination notice with the PBGC or the treatment of a Plan
amendment as a termination under section 4041 of ERISA, (d) the institution of
proceedings to terminate a Plan by the PBGC, (e) receipt of a notice of
withdrawal liability pursuant to section 4202 of ERISA (f) the failure to
satisfy the minimum funding standards with respect to any Plan (as defined in
Section 412 of the Code or Section 302 of ERISA), whether or not waived, (g) the
filing pursuant to Section 412(d) of the Code or Section 303(d) of ERISA of an
application for a waiver of the minimum funding standard with respect to any
Plan, (h) the incurrence by the Borrower or any of its ERISA Affiliates of any
liability with respect to the withdrawal or partial withdrawal from any Plan or
Multiemployer Plan; (i) the receipt by the Borrower or any ERISA Affiliate of
any notice, or the receipt by any Multiemployer Plan from the Borrower or any
ERISA Affiliate of any notice, concerning the imposition of withdrawal liability
or a determination that a Multiemployer Plan is, or is expected to be,
insolvent, within the meaning of Title IV of ERISA or (j) any other event or
condition which might constitute grounds under section 4042 of ERISA for the
termination of, or the appointment of a trustee to administer, any Plan.

 

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

 

“Eurodollar” when used in reference to any Loan or Borrowing, refers to whether
such Loan, or the Loans comprising such Borrowing, are bearing interest at a
rate determined by reference to the Adjusted LIBO Rate.

 

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

 

“Excepted Liens” means:  (a) Liens for Taxes, assessments or other governmental
charges or levies which are not delinquent or which are being contested in good
faith by appropriate action and for which adequate reserves have been maintained
in accordance with GAAP; (b) Liens in connection with workers’ compensation,
unemployment insurance or other social security, old age pension or public
liability obligations which are not delinquent or which are being contested in
good faith by appropriate action and for which adequate reserves have been
maintained in accordance with GAAP; (c) landlord’s liens, operators’, vendors’,
carriers’, warehousemen’s, repairmen’s, mechanics’, suppliers’, workers’,
materialmen’s, construction or other like Liens of law arising in the ordinary
course of business or incident to the exploration, development, operation and
maintenance of Oil and Gas Properties each of which is in respect of obligations
that are not delinquent or which are being contested in good faith by
appropriate action and for which adequate reserves have been maintained in
accordance with GAAP; (d) Liens which arise in the

 

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ordinary course of business under operating agreements, joint venture
agreements, oil and gas partnership agreements, oil and gas leases, farm-out
agreements, division orders, contracts for the sale, transportation or exchange
of oil and natural gas, unitization and pooling declarations and agreements,
area of mutual interest agreements, overriding royalty agreements, marketing
agreements, processing agreements, net profits agreements, development
agreements, gas balancing or deferred production agreements, injection,
repressuring and recycling agreements, salt water or other disposal agreements,
seismic or other geophysical permits or agreements, and other agreements which
are usual and customary in the oil and gas business and are for claims which are
not delinquent or which are being contested in good faith by appropriate action
and for which adequate reserves have been maintained in accordance with GAAP,
provided that any such Lien referred to in this clause does not materially
impair the use of any material Property covered by such Lien for the purposes
for which such Property is held by any Credit Party or materially impair the
value of any material Property subject thereto; (e) banker’s liens, rights of
set-off or similar rights and remedies arising in the ordinary course of
business and burdening only deposit accounts or other funds maintained with a
creditor depository institution, provided that no such deposit account is a
dedicated cash collateral account; (f) easements, restrictions, servitudes,
permits, conditions, covenants, exceptions, reservations, zoning and land use
requirements and other title defects in any Property of any Credit Party, that
in each case do not secure Debt and that in the aggregate do not materially
impair the use of such Property for the purposes of which such Property is held
by any Credit Party or materially impair the value of such Property subject
thereto; (g) Liens to secure performance of tenders, surety and appeal bonds,
government contracts, performance and return of money bonds, bids, trade
contracts, leases, statutory obligations, regulatory obligations, obligations in
respect of workers’ compensation, unemployment insurance or other forms of
government benefits or insurance and other obligations of a like nature incurred
in the ordinary course of business; (h) Liens, titles and interests of lessors
(including sub-lessors) of property leased by such lessors to Borrower or any
Subsidiary, restrictions and prohibitions on encumbrances and transferability
with respect to such property and any Credit Party’s interests therein imposed
by such leases, and Liens and encumbrances encumbering such lessors’ titles and
interests in such property and to which any Credit Party’s leasehold interests
may be subject or subordinate, in each case, whether or not evidenced by UCC
financing statement filings or other documents of record, provided that such
Liens do not encumber Property of any Credit Party other than the Property that
is the subject of such leases and items located thereon; (i) Liens, titles and
interests of licensors of software and other intangible property licensed by
such licensors to any Credit Party, restrictions and prohibitions on
encumbrances and transferability with respect to such property and any Credit
Party’s interests therein imposed by such licenses, and Liens and encumbrances
encumbering such licensors’ titles and interests in such property and to which
any Credit Party’s license interests may be subject or subordinate, in each
case, whether or not evidenced by UCC financing statement filings or other
documents of record, provided that such Liens do not secure Debt of any Credit
Party and do not encumber Property of any Credit Party other than the Property
that is the subject of such licenses; (j) judgment and attachment Liens not
giving rise to an Event of Default and (k) Liens of issuers of commercial
letters of credit or similar undertakings on the goods that are the subject of
such letters of credit or undertakings.  Provisions in the Loan Documents
allowing Excepted Liens or other Permitted Liens on any item of Property shall
be construed to allow such Excepted Liens and other Permitted Liens also to
cover any improvements, fixtures or accessions to such Property and the proceeds
of such Property, improvements, fixtures or accessions.  No intention to
subordinate any Lien granted in favor of

 

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the Administrative Agent and the Lenders is to be hereby implied or expressed by
the permitted existence of any Excepted Liens.

 

“Excluded Account” means (a) each account all or substantially all of the
deposits in which consist of amounts utilized to fund payroll, employee benefit
or tax obligations of the Credit Parties, (b) fiduciary, trust or escrow
accounts, (c)  “zero balance” accounts, (d) any account that is pledged to a
third party to the extent such Lien is a Permitted Lien, (e) accounts all or
substantially all of the deposits in which consist of monies of third parties,
including working interest owners, royalty owners and the like, and (f) other
accounts so long as the aggregate average daily maximum balance in any such
other account over a 30-day period does not at any time exceed $1,000,000;
provided that the aggregate daily maximum balance for all such bank accounts
excluded pursuant to this clause (f) on any day shall not exceed $2,000,000.

 

“Excluded Swap Obligation” means, with respect to any Guarantor, any Swap
Obligation if, and to the extent that, all or a portion of the Guarantee of such
Guarantor of, or the grant by such Guarantor of a security interest to secure,
such Swap Obligation (or any Guarantee thereof) is or becomes illegal under the
Commodity Exchange Act or any rule, regulation or order of the Commodity Futures
Trading Commission (or the application or official interpretation of any
thereof) by virtue of such Guarantor’s failure for any reason to constitute an
“eligible contract participant” as defined in the Commodity Exchange Act
(determined after giving effect to Section 12.17 and any other “keepwell,
support or other agreement” for the benefit of such Guarantor and any and all
guarantees of such Guarantor’s Swap Obligations by other Credit Parties) at the
time the Guarantee of such Guarantor, or a grant by such Guarantor of a security
interest, becomes effective with respect to such Swap Obligation. 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 Guarantee or security interest is or
becomes excluded in accordance with the first sentence of this definition.

 

“Excluded Taxes” means any of the following Taxes imposed on or with respect to
the Administrative Agent, any Lender, an Issuing Bank or any other recipient of
any payment to be made by or on account of any obligation of any Credit Party
hereunder or under any other Loan Document, (a) Taxes imposed on or measured by
net income (however denominated), franchise taxes (including New York margin
tax), 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 is located in, the
jurisdiction imposing such Tax (or any political subdivision thereof) or
(ii) that are Other Connection Taxes, (b) in the case of a Lender (other than an
assignee pursuant to a request by the Borrower under Section 5.05), any United
States federal withholding tax that is imposed on amounts payable to such Lender
pursuant to a law in effect at the time such Lender becomes a party to this
Agreement (or designates a new lending office), except to the extent that such
Lender (or its assignor, if any) was entitled, at the time of designation of a
new lending office (or assignment), to receive additional amounts with respect
to such withholding tax pursuant to Section 5.03(a) or Section 5.03(c),
(c) taxes attributable to such recipient’s failure to comply with
Section 5.03(e) or Section 5.03(f), or a failure to comply with the provisions
of Section 12.04(b)(viii) relating to the maintenance of a Participant Register
and (d) any United States federal withholding taxes imposed by FATCA.

 

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“Existing Secured Swap Agreements” means any Swap Agreements existing on the
Effective Date between any Credit Party and a Lender or an Affiliate of a Lender
that were entered into prior to the Effective Date.

 

“Existing Credit Agreement” means that certain Amended and Restated Credit
Agreement, dated as of April 28, 2017, among Bonanza Creek Energy, Inc., as
borrower thereunder, KeyBank National Association, as administrative agent and
issuing lender thereunder, and the lenders named therein, as amended from time
to time.

 

“FATCA” means Sections 1471 through 1474 of the Code, as of the date of this
Agreement, (or any amended or successor version that is substantively comparable
and not materially more onerous to comply with), any current or future
regulations or official interpretations thereof, any agreement entered into
pursuant to Section 1471(b)(1) of the Code, any intergovernmental agreement
entered into in connection with the implementation of such Sections of the Code
and any fiscal or regulatory legislation, rules or practices adopted pursuant to
such intergovernmental agreement.

 

“Federal Funds Effective Rate” means, for any day, the rate calculated by the
NYFRB based on such day’s federal funds transactions by depositary institutions
(as determined in such manner as the NYFRB shall set forth on its public website
from time to time) and published on the next succeeding Business Day by the
NYFRB as the federal funds effective rate.

 

“Financial Officer” means, for any Person, the chief executive officer, chief
financial officer, principal accounting officer, general counsel, treasurer,
assistant treasurer, controller or other natural person principally responsible
for the financial matters of such Person.  Unless otherwise specified, all
references herein to a Financial Officer means a Financial Officer of the
Borrower.

 

“Financial Statements” means the financial statement or statements of the
Borrower and the other Credit Parties referred to in Section 7.04(a).

 

“Foreign Lender” means any Lender that is organized under the laws of a
jurisdiction other than that in which the Borrower is located. For purposes of
this definition, the United States of America, each State thereof and the
District of Columbia shall be deemed to constitute a single jurisdiction.

 

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

 

“GAAP” means generally accepted accounting principles in the United States of
America as in effect from time to time subject to the terms and conditions set
forth in Section 1.05.

 

“Gas Balancing Agreement” means any agreement or arrangement whereby the
Borrower or any other Credit Party, or any other party having an interest in any
Hydrocarbons to be produced from Oil and Gas Properties in which the Borrower or
any other Credit Party owns an interest, has a right to take more than its
proportionate share of production therefrom.

 

“Governmental Authority” means the government of the United States of America,
any other nation or any political subdivision thereof, whether state or local,
and any agency, authority, instrumentality, regulatory body, court, central bank
or other entity exercising executive,

 

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legislative, judicial, taxing, regulatory or administrative powers or functions
of or pertaining to government (including without limitation any supranational
bodies such as the European Union or the European Central Bank) and any group or
body charged with setting financial accounting or regulatory capital rules or
standards (including, without limitation, the Financial Accounting Standards
Board, the Bank for International Settlements or the Basel Committee on Banking
Supervision or any successor or similar authority to any of the foregoing).

 

“Governmental Requirement” means any law, statute, code, ordinance, order,
determination, rule, regulation, judgment, decree, injunction, franchise,
permit, certificate, license, rules of common law, authorization or other
directive or requirement, whether now or hereinafter in effect, of any
Governmental Authority.

 

“Guarantee” of or by any Person (in this definition, the “guarantor”) means any
obligation, contingent or otherwise, of the guarantor guaranteeing or having the
economic effect of guaranteeing any Debt or other obligation of any other Person
(the “primary obligor”) in any manner, whether directly or indirectly, and
including any obligation of the guarantor, direct or indirect, (a) to purchase
or pay (or advance or supply funds for the purchase or payment of) such Debt or
other obligation or to purchase (or to advance or supply funds for the purchase
of) any security for the payment thereof, (b) to purchase or lease property,
securities or services for the purpose of assuring the owner of such Debt or
other obligation of the payment thereof, (c) to maintain working capital, equity
capital or any other financial statement condition or liquidity of the primary
obligor so as to enable the primary obligor to pay such Debt or other obligation
or (d) as an account party in respect of any letter of credit or letter of
guaranty issued to support such Debt or obligation; provided, that the term
Guarantee shall not include endorsements for collection or deposit in the
ordinary course of business.

 

“Guarantors” means the Borrower (with respect to the Obligations of the other
Credit Parties) and each Subsidiary of the Borrower that guarantees the
Obligations pursuant to Section 8.14(b) and each other Person executing a
Guarantee Agreement.

 

“Guarantee Agreement” means an agreement executed by the Guarantors in form and
substance satisfactory to the Administrative Agent unconditionally guarantying
on a joint and several basis payment of the Obligations, as the same may be
amended, modified or supplemented from time to time.

 

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

 

“Highest Lawful Rate” means, with respect to each Lender, the maximum
nonusurious interest rate, if any, that at any time or from time to time may be
contracted for, taken, reserved,

 

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charged or received on the Notes or on other Obligations under laws applicable
to such Lender which are presently in effect or, to the extent allowed by law,
under such applicable laws which may hereafter be in effect and which allow a
higher maximum nonusurious interest rate than applicable laws allow as of the
date hereof.

 

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

 

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

 

“IBA” has the meaning assigned to such term in Section 5.11.

 

“Impacted Interest Period” has the meaning given to such term in the definition
of “LIBO Rate”.

 

“Increased Costs” has the meaning ascribed to such term in Section 5.01(b).

 

“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 any
Credit Party under any Loan Document and (b) to the extent not otherwise
described in (a), Other Taxes.

 

“Industry Competitor” means any Person (other than any Credit Party or any of
their Affiliates or Subsidiaries) that is readily identifiable on the basis of
its name and actively engaged as one of its principal businesses in the
exploration, development, production, gathering, marketing or transportation of
Oil and Gas Properties; provided, the term “Industry Competitor” is deemed to
exclude any Lender, any Approved Fund or any of their respective Affiliates, in
each case that is actively engaged in the making of revolving loans.

 

“Initial Reserve Report” means the report prepared by Netherland, Sewell &
Associates, Inc. dated as of September 30, 2018, with respect to the Oil and Gas
Properties of the Credit Parties as of September 30, 2018.

 

“Intercreditor Agreement” means a customary intercreditor agreement providing
for, among other things, (x) the subordination of the Liens on the property and
assets of the Borrower and the other Credit Parties securing any Permitted
Additional Debt (or any refinancing, replacement or similar thereof permitted
hereunder) to the Liens on such property and assets securing the Obligations and
(y) the relative rights and other creditors’ rights, as between the holders of
the Obligations and the holders of any such Permitted Additional Debt, by and
among the Administrative Agent, the Borrower, the other Credit Parties, the
collateral agents or representatives for the holders of the relevant Debt and
the other parties thereto in form and substance satisfactory to the
Administrative Agent and the Majority Lenders.

 

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“Interest Payment Date” means with respect to any ABR Revolving Credit Loan, the
last day of each calendar quarter and with respect to any Eurodollar Revolving
Credit Loan, the last day of the Interest Period applicable to the Revolving
Credit Borrowing of which such Revolving Credit Loan is a part; provided,
however, that if any Interest Period applicable to the Revolving Credit
Borrowing of which such Revolving Credit Loan is a part exceeds three months,
the respective dates that fall every three months after the beginning of such
Interest Period shall also be Interest Payment Dates.

 

“Interest Period” means with respect to any Eurodollar Borrowing, the period
commencing on the date of such Borrowing and ending on the numerically
corresponding day in the calendar month that is one, two, three or six months
thereafter (or such other period that is twelve months or less that is then
available to all Lenders), as the Borrower may elect; provided, that if any
Interest Period would end on a day other than a Business Day, such Interest
Period shall be extended to the next succeeding Business Day unless such next
succeeding Business Day would fall in the next calendar month, in which case
such Interest Period shall end on the next preceding Business Day and any
Interest Period pertaining to a Eurodollar Borrowing that commences on the last
Business Day of a calendar month (or on a day for which there is no numerically
corresponding day in the last calendar month of such Interest Period) shall end
on the last Business Day of the last calendar month of such Interest Period. 
For purposes hereof, the date of a Borrowing initially shall be the date on
which such Borrowing is made and thereafter shall be the effective date of the
most recent conversion or continuation of such Borrowing.

 

“Interim Redetermination” has the meaning assigned to such term in
Section 2.06(b).

 

“Interim Redetermination Date” means the date on which a Borrowing Base that has
been redetermined pursuant to an Interim Redetermination becomes effective as
provided in Section 2.06(d).

 

“Interpolated Rate” means, at any time, for any Interest Period, the rate per
annum (rounded to the same number of decimal places as the LIBO Screen Rate)
determined by the Administrative Agent (which determination shall be conclusive
and binding absent manifest error) to be equal to the rate that results from
interpolating on a linear basis between: (a) the LIBO Screen Rate for the
longest period (for which the LIBO Screen Rate is available) that is shorter
than the Impacted Interest Period and (b) the LIBO Screen Rate for the shortest
period (for which the LIBO Screen Rate is available) that exceeds the Impacted
Interest Period, in each case, at such time.

 

“Investment” means, for any Person:  the acquisition (whether for cash,
Property, services or securities or otherwise) of Equity Interests of any other
Person; or the making of any deposit with, or advance, loan or capital
contribution to, assumption of Debt of, purchase or other acquisition of any
other Debt or equity participation or interest in, or other extension of credit
to, any other Person; the purchase or acquisition (in one or a series of
transactions) of all or substantially all of the assets of any other Person; or
the entering into of any guarantee of, or other surety obligation (including the
deposit of any Equity Interests to be sold) with respect to, Debt of any other
Person.

 

“Issuing Bank” means (a) JPMorgan Chase Bank, N.A., and (b) if requested by the
Borrower and reasonably acceptable to the Administrative Agent, any other Person
who is a

 

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Lender at the time of such request and who accepts such appointment in writing
with the Borrower and the Administrative Agent, in their respective capacities
as issuers of Letters of Credit hereunder.  Each Issuing Bank may, in its
discretion, arrange for one or more Letters of Credit to be issued by Affiliates
of such Issuing Bank, in which case the term “Issuing Bank” shall include any
such Affiliate with respect to Letters of Credit issued by such Affiliate. 
References herein and in the Loan Documents to the Issuing Bank shall be deemed
to refer to the Issuing Bank in respect of the applicable Letter of Credit or to
all Issuing Banks, as the context requires.

 

“Issuing Office” means such office as each Issuing Bank shall designate as its
Issuing Office.

 

“L/C Indemnified Amounts” has the meaning assigned to such term in
Section 2.07(i).

 

“L/C Indemnified Person” has the meaning assigned to such term in
Section 2.07(i).

 

“Lenders” means the Persons listed on Schedule 1.2 and any Person that shall
have become a party hereto pursuant to an Assignment and Assumption, other than,
in each case, any such Person that ceases to be a party hereto pursuant to an
Assignment and Assumption.

 

“Letter(s) of Credit” means any standby letters of credit issued by any Issuing
Bank at the request of the Borrower pursuant to Section 2.07.

 

“Letter of Credit Agreement” means, collectively, the letter of credit
application and related documentation executed and/or delivered by the Borrower
in respect of each Letter of Credit, in each case satisfactory to the applicable
Issuing Bank in its reasonable discretion, as amended, restated, amended and
restated, supplemented or otherwise modified from time to time.

 

“Letter of Credit Documents” has the meaning assigned to such term in
Section 2.07(g)(i).

 

“Letter of Credit Fees” means the fees payable in connection with Letters of
Credit pursuant to Section 2.07(d)(i)(A) and (B).

 

“Letter of Credit Maximum Amount” means $15,000,000.

 

“Letter of Credit Obligations” means at any date of determination, the sum of
(a) the aggregate undrawn amount of all Letters of Credit then outstanding, and
(b) the aggregate amount of Reimbursement Obligations which remain unpaid as of
such date.

 

“Letter of Credit Payment” means any amount paid or required to be paid by an
Issuing Bank in its capacity hereunder as issuer of a Letter of Credit as a
result of a draft or other demand for payment under any Letter of Credit.

 

“Leverage Ratio” means, as of any date of determination, the ratio of (a) Total
Net Debt as of such day to (b) EBITDAX for the trailing four fiscal quarter
period ending on such day (or, if the Leverage Ratio is being calculated for a
purpose other than testing compliance with Section 9.01(b), EBITDAX for the then
most recently ended four fiscal quarter period for which financial statements
are available).

 

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“LIBO Rate” means, with respect to any Eurodollar Borrowing for any Interest
Period, the LIBO Screen Rate at approximately 11:00 a.m., London time, two
Business Days prior to the commencement of such Interest Period; provided that
if the LIBO Screen Rate shall not be available at such time for such Interest
Period (an “Impacted Interest Period”) then the LIBO Rate shall be the
Interpolated Rate.

 

“LIBO Screen Rate” means, for any day and time, with respect to any Eurodollar
Borrowing for any Interest Period, the London interbank offered rate as
administered by ICE Benchmark Administration (or any other Person that takes
over the administration of such rate) for U.S. Dollars for a period equal in
length to such Interest Period as displayed on such day and time on
pages LIBOR01 or LIBOR02 of the Reuters screen that displays such rate (or, in
the event such rate does not appear on a Reuters page or screen, on any
successor or substitute page on such screen that displays such rate), or on the
appropriate page of such other information service that publishes such rate from
time to time as selected by the Administrative Agent in its reasonable
discretion, provided that if the LIBO Screen Rate shall be less than zero, such
rate shall be deemed to be zero for the purposes of this Agreement.

 

“Lien” means any interest in Property securing an obligation owed to, or a claim
by, a Person other than the owner of the Property, whether such interest is
based on the common law, statute or contract, and whether such obligation or
claim is fixed or contingent, and including but not limited to the lien or
security interest arising from a mortgage, pledge, security agreement,
conditional sale or trust receipt or a lease, consignment or bailment for
security purposes.  For the purposes of this Agreement, the Credit Parties shall
be deemed to be the owner of any Property which they have acquired or hold
subject to a conditional sale agreement, or lease under a financing lease or
other arrangement pursuant to which title to the Property has been retained by
or vested in some other Person in a transaction intended to create a financing.

 

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

 

“Loans” means, collectively, the Revolving Credit Loans.

 

“Majority Lenders” means at any time (a) so long as the Aggregate Maximum Credit
Amount has not been terminated, the Non-Defaulting Lenders holding more than
fifty percent (50%) of the aggregate Commitments and (b) if the Aggregate
Maximum Credit Amount has been terminated (whether by maturity, acceleration or
otherwise), the Non-Defaulting Lenders holding more than fifty percent (50%) of
the aggregate principal amount then outstanding under the Revolving Credit
Loans; provided that, for purposes of determining Majority Lenders hereunder,
the Reimbursement Obligations shall be allocated among the Revolving Credit
Lenders based on their respective Applicable Revolving Credit Percentages;
provided further that, such calculations shall be made without regard to any
sale by a Non-Defaulting Lender of a participation in any Loan under
Section 12.04(b)(vi).

 

“Material Adverse Effect” means a material adverse change in, or material
adverse effect on, the business, operations, Property or financial condition of
the Credit Parties taken as a whole, the ability of any Credit Party to perform
any of its payment obligations under any Loan Document, the validity or
enforceability of any Loan Document or the rights and remedies of or benefits

 

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available to the Administrative Agent, any other Agent, an Issuing Bank or any
Lender under any Loan Document.

 

“Material Gas Imbalance” means, with respect to all Gas Balancing Agreements to
which the Borrower or any other Credit Party is a party or by which any Oil and
Gas Property owned by the Borrower or another Credit Party is bound, a net
overproduced gas imbalance to the Borrower and the other Credit Parties, taken
as a whole, in excess of 110,000 Mcf.

 

“Material Indebtedness” means Debt (other than the Loans and Letters of Credit),
or obligations in respect of one or more Swap Agreements, of any one or more of
the Credit Parties in an aggregate principal amount exceeding the greater of
(a) $25,000,000 and (b) 5% of the Borrowing Base.  For purposes of determining
Material Indebtedness, the “principal amount” of the obligations of any Credit
Party in respect of any Swap Agreement at any time shall be the Swap Termination
Value.

 

“Maximum Credit Amount” means, as to each Revolving Credit Lender, the amount
set forth opposite such Revolving Credit Lender’s name on Schedule 1.2 under the
caption “Maximum Credit Amount”, as the same may be reduced or terminated from
time to time in connection with a reduction or termination of the Aggregate
Maximum Credit Amounts pursuant to Section 2.05(b) or modified from time to time
pursuant to any assignment permitted by Section 12.04(b).

 

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

 

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

 

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

 

“Net Cash Proceeds” means the aggregate cash payments received by any of the
Credit Parties from any Transfer, the issuance of Equity Interests or the
issuance of Debt, as the case may be, net of the ordinary and customary direct
costs incurred in connection with such sale or issuance, as the case may be,
such as legal, accounting and investment banking fees, sales commissions, and
other third party charges, and net of property taxes, transfer taxes and any
other taxes paid or payable by the Credit Parties in respect of any sale or
issuance.

 

“New Borrowing Base Notice” has the meaning assigned to such term in
Section 2.06(d).

 

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

 

“Notes” means, collectively, the Revolving Credit Notes.

 

“NYFRB” means the Federal Reserve Bank of New York.

 

“NYFRB Rate” means, for any day, the greater of (a) the Federal Funds Effective
Rate in effect on such day and (b) the Overnight Bank Funding Rate in effect on
such day(or for any day

 

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that is not a Banking Day, for the immediately preceding Banking Day); provided
that if none of such rates are published for any day that is a Business Day, the
term “NYFRB Rate” means the rate for a federal funds transaction quoted at 11:00
a.m. on such day received to the Administrative Agent from a Federal funds
broker of recognized standing selected by it; provided, further, that if any of
the aforesaid rates shall be less than zero, such rate shall be deemed to be
zero for purposes of this Agreement.

 

“Obligations” means any and all amounts owing or to be owing by the Credit
Parties (whether direct or indirect (including those acquired by assumption),
absolute or contingent, due or to become due, now existing or hereafter
arising):  to the Administrative Agent, an Issuing Bank, any Lender or any
Affiliate of any Lender under any Loan Document; to any Secured Swap Party under
any Secured Swap Agreement; to any Cash Management Bank under any Secured Cash
Management Agreement including interest and fees that accrue after the
commencement by or against any Credit Party or Affiliate thereof under any
Federal, state, foreign bankruptcy, insolvency, receivership, or similar law
naming such Person as the debtor in such proceeding, regardless of whether such
interests and fees are allowed claims in such proceeding; and all renewals,
extensions and/or rearrangements of any of the above; provided that the
“Obligations” shall exclude any Excluded Swap Obligations.

 

“Oil and Gas Properties” means all Hydrocarbon Interests, all Properties now or
hereafter pooled or unitized with Hydrocarbon Interests, and 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.  Unless otherwise
indicated herein, each reference to the term “Oil and Gas Properties” shall mean
Oil and Gas Properties of the Credit Parties.

 

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

 

“Other Taxes” means any and all present or future stamp or documentary taxes or
any other excise or Property taxes, charges or similar levies arising from any
payment made hereunder or from the execution, delivery or enforcement of, or
otherwise with respect to, this Agreement and any other Loan Document, except
any such Taxes that are Other Connection Taxes imposed with respect to an
assignment (other than an assignment made pursuant to Section 5.05).

 

“Overnight Bank Funding Rate” means, for any day, the rate comprised of both
overnight federal funds and overnight Eurodollar borrowings by U.S.-managed
banking offices of depository institutions (as such composite rate shall be
determined by the NYFRB as set forth on its public website from time to time)
and published on the next succeeding Business Day by the NYFRB as an overnight
bank funding rate (from and after such date as the NYFRB shall commence to
publish such composite rate).

 

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“Participant” has the meaning set forth in Section 12.04(b)(vi).

 

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

 

“PBGC” means the Pension Benefit Guaranty Corporation.

 

“Permitted Additional Debt” means Debt issued pursuant to Section 9.02(f),
including the Guarantee of such Debt permitted in Section 9.02(d).

 

“Permitted Lien” means any Lien permitted under Section 9.03.

 

“Permitted Refinancing” means any Debt of any Credit Party, and Debt
constituting Guarantees thereof by any Credit Party, to the extent incurred or
issued in exchange for, or to the extent the Net Cash Proceeds of which are used
to extend, refinance, renew, replace, defease or refund, existing Debt that is
permitted under this Agreement, in whole or in part, from time to time; provided
that (a) the principal amount of such Permitted Refinancing (or if such
Permitted Refinancing is issued at a discount, the initial issuance price of
such Permitted Refinancing) does not exceed the principal amount of the Debt
being refinanced (plus the amount of any premiums, accrued and unpaid interest
and fees and expenses incurred in connection therewith), (b) such Permitted
Refinancing does not provide for any scheduled repayment, mandatory redemption
or payment of a sinking fund obligation prior to the date which is 180 days
after the Revolving Credit Maturity Date (except for any offer to redeem such
Debt required as a result of asset sales or the occurrence of a “Change of
Control” under and as defined in the applicable agreement governing the terms of
such Debt), (c) if the Debt being refinanced is unsecured, then such Permitted
Refinancing is unsecured, (d) if the Debt being refinanced is secured, then such
Permitted Refinancing may be secured but only with the same priority as the Debt
being refinanced and such Permitted Refinancing Debt shall be subject to an
Intercreditor Agreement, (e) no Subsidiary of the Borrower is required to
Guarantee such Permitted Refinancing unless such Subsidiary is (or concurrently
with any such Guarantee becomes) a Guarantor, and (f) to the extent such
Permitted Refinancing is or is intended to be expressly subordinate to the
payment in full of all of the Obligations, the subordination provisions
contained therein are either (x) at least as favorable to the Secured Parties as
the subordination provisions contained in the Debt being refinanced or
(y) reasonably satisfactory to the Administrative Agent and the Majority
Lenders; provided that, in the case of any incurrence or issuance of Debt as to
which only a portion of such incurred or issued Debt satisfies the foregoing
conditions, the portion thereof that satisfies the foregoing conditions shall be
deemed to constitute a Permitted Refinancing, notwithstanding that other
portions of such incurred or issued Debt do not constitute a Permitted
Refinancing.

 

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

 

“Plan” means any employee pension benefit plan, as defined in section 3(2) of
ERISA, which is subject to Title IV of ERISA or Section 412 of the Code or
Section 302 of ERISA and which is currently or hereafter sponsored, maintained
or contributed to by the Borrower, a Subsidiary or an ERISA Affiliate or with
respect to which the Borrower, a Subsidiary or an ERISA Affiliate is (or, if
such plan were terminated, would under Section 4069 of ERISA be deemed to be) an
“employer” as defined in Section 3(5) of ERISA or was at any time during the six
calendar

 

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years preceding the date hereof, sponsored, maintained or contributed to by the
Borrower, a Subsidiary or an ERISA Affiliate.

 

“Plan Asset Regulations” means the regulations at 29 CFR § 2510.3-101, as
modified by Section 3(42) of ERISA, as amended from time to time.

 

“Prime Rate” means the rate of interest per annum publicly announced from time
to time by JPMorgan Chase Bank, N.A. as its prime rate in effect at its office
located at 270 Park Avenue, New York, New York; each change in the Prime Rate
shall be effective from and including the date such change is publicly announced
as being effective.

 

“Property” means any interest in any kind of property or asset, whether real,
personal or mixed, or tangible or intangible, including, without limitation,
cash, securities, accounts and contract rights.

 

“Proposal Letter” means the amended and restated proposal letter dated
November 30, 2018, among the Borrower and JPMorgan Chase Bank, N.A., as amended,
restated, supplemented or otherwise modified from time to time.

 

“Proposed Borrowing Base” has the meaning assigned to such term in
Section 2.06(c)(i).

 

“Proposed Borrowing Base Notice” has the meaning assigned to such term in
Section 2.06(c)(ii).

 

“Proved Developed Producing Reserves” or “PDP Reserves” means “proved developed
producing oil and gas reserves” as such term is defined by the SPE in its
standards and guidelines.

 

“Proved Reserves” or “Proved” means collectively, “proved oil and gas reserves,”
“proved developed producing oil and gas reserves,” “proved developed
non-producing oil and gas reserves” (consisting of proved developed shut-in oil
and gas reserves and proved developed behind pipe oil and gas reserves), and
“proved undeveloped oil and gas reserves,” as such terms are defined by the SPE
in its standards and guidelines.

 

“Purchase Money Indebtedness” means Debt, the proceeds of which are used to
finance the acquisition, construction, or improvement of inventory, equipment or
other Property.

 

“Qualified ECP Guarantor” shall mean, at any time, each Credit Party with total
assets exceeding $10,000,000 or that qualifies at such time as an “eligible
contract participant” under the Commodity Exchange Act and can cause another
person to qualify as an “eligible contract participant” at such time under
§1a(18)(A)(v)(II) of the Commodity Exchange Act.

 

“Qualified Midstream Assets” means assets used in the gathering, distributing,
marketing, treating, processing, transporting of, or storage, disposal, or other
handling of, Hydrocarbons, water, sand, minerals, chemicals or other products or
substances commonly created, used, recovered, produced or processed in the
conduct of the oil and gas business, including compression, pumping, treatment
and disposal facilities, gathering lines and systems, and other assets commonly
considered midstream assets or useful in connection with the conduct of

 

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midstream operations, and for the avoidance of doubt, the Qualified Midstream
Assets do not include any Oil and Gas Properties included in the Borrowing Base.

 

“Redemption” means with respect to any Debt, the repurchase, redemption,
prepayment, repayment, defeasance or any other acquisition or retirement for
value of such Debt, including payments of cash in lieu of fractional shares in
connection therewith.  “Redeem” has the correlative meaning thereto.

 

“Redetermination Date” means, with respect to any Scheduled Redetermination or
any Interim Redetermination, the date that the redetermined Borrowing Base
related thereto becomes effective pursuant to Section 2.06(d).

 

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

 

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

 

“Reimbursement Obligation(s)” means the aggregate amount of all unreimbursed
drawings under all Letters of Credit (excluding for the avoidance of doubt,
reimbursement obligations that are deemed satisfied pursuant to a deemed
disbursement under Section 2.07(f)(iii)).

 

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

 

“Release” means any depositing, spilling, leaking, pumping, pouring, emitting,
emptying, discharging, injecting, escaping, leaching, dumping, or disposing.

 

“Relevant Debt” has the meaning assigned to such term in Section 8.17(g).

 

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

 

“Required Lenders” means at any time (a) so long as the Aggregate Maximum Credit
Amount has not been terminated, the Non-Defaulting Lenders holding more than
sixty-six and two-thirds percent (66-2/3%) of the aggregate Commitments and
(b) if the Aggregate Maximum Credit Amount has been terminated (whether by
maturity, acceleration or otherwise), the Non-Defaulting Lenders holding more
than sixty-six and two-thirds percent (66-2/3%) of the aggregate principal
amount then outstanding under the Revolving Credit Loans; provided that, for
purposes of determining Required Lenders hereunder, the Reimbursement
Obligations shall be allocated among the Revolving Credit Lenders based on their
respective Applicable Revolving Credit Percentages; provided further that, such
calculations shall be made without regard to any sale by a Non-Defaulting Lender
of a participation in any Loan under Section 12.04(b)(vi).

 

“Reserve Report” means a report, in form and substance reasonably satisfactory
to the Administrative Agent, setting forth, on the dates required in
Section 8.12 (or such other date in the event of an Interim Redetermination) the
oil and gas reserves attributable to the Oil and Gas Properties of the Credit
Parties, together with a projection of the rate of production and future net
income, taxes, operating expenses and capital expenditures with respect thereto
as of such date,

 

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based upon the pricing assumptions consistent with the Administrative Agent’s
lending requirements at the time.

 

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

 

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

 

“Restricted Subsidiary” means any Domestic Subsidiary of the Borrower that is
not an Unrestricted Subsidiary.

 

“Revolving Credit Borrowing” means a Borrowing of a Revolving Credit Loan.

 

“Revolving Credit Borrowing Request” means a request by the Borrower for a
Borrowing in accordance with Section 2.03 in the form attached hereto as
Exhibit B.

 

“Revolving Credit Exposure” means, with respect to any Revolving Credit Lender
at any time, the sum of (a) the outstanding principal amount of such Revolving
Credit Lender’s Revolving Credit Loans, and (b) its Applicable Revolving Credit
Percentage of any outstanding Letter of Credit Obligations.

 

“Revolving Credit Lenders” means the financial institutions from time to time
parties hereto as lenders of Revolving Credit Loans.

 

“Revolving Credit Loan” shall mean a borrowing requested by the Borrower and
made by the Revolving Credit Lenders under Section 2.01(a) of this Agreement,
including without limitation any readvance, refunding or conversion of such
borrowing and any deemed disbursement of a Loan in respect of a Letter of Credit
under Section 2.07(f)(iii), and may include, subject to the terms hereof,
Eurodollar Loans and ABR Loans.

 

“Revolving Credit Maturity Date” means December 7, 2023.

 

“Revolving Credit Notes” means the promissory notes of the Borrower described in
Section 2.02(d) and being substantially in the form of Exhibit A, together with
all amendments, modifications, replacements, extensions and rearrangements
thereof.

 

“Sanctioned Country” means, at any time, a country, region or territory which is
the subject or target of any Sanctions (as of the Effective Date, Crimea,
Cuba, Iran, North Korea and Syria).

 

“Sanctioned Person” means, at any time, (a) any Person listed in any
Sanctions-related list of designated Persons maintained by the Office of Foreign
Assets Control of the U.S. Department of the Treasury, the U.S. Department of
State, (b) any Person operating, organized or resident in a

 

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Sanctioned Country or (c) any Person owned or controlled by any such Person or
Persons described in the foregoing clauses (a) or (b).

 

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

 

“Scheduled Redetermination” has the meaning assigned to such term in
Section 2.06(b).

 

“Scheduled Redetermination Date” means the date on which a Borrowing Base that
has been redetermined pursuant to a Scheduled Redetermination becomes effective
as provided in Section 2.06(d).

 

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

 

“Secured Cash Management Agreement” means any Cash Management Agreement that is
entered into by and between any Credit Party and any Cash Management Bank.

 

“Secured Party” means the Administrative Agent, each Issuing Bank, any Lender,
any Secured Swap Party under any Secured Swap Agreement, any Cash Management
Bank under any Secured Cash Management Agreement and any other holder of
Obligations.

 

“Secured Swap Agreement” means (a) the Existing Secured Swap Agreements and
(b) any Swap Agreement between any Credit Party and any Lender or Affiliate of
any Lender (a “Secured Swap Party”) that entered into such Swap Agreement with a
Credit Party before or while such Person was a Lender or an Affiliate of a
Lender, even if such Person subsequently ceases to be a Lender (or an Affiliate
thereof) for any reason; provided that, for the avoidance of doubt, the term
“Secured Swap Agreement” shall not include any Swap Agreement or transactions
under any Swap Agreement entered into after the time that such Secured Swap
Party ceases to be a Lender or an Affiliate of a Lender.

 

“Secured Swap Party” has the meaning assigned to such term in the definition of
Secured Swap Agreement.

 

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

 

“Security Agreement” means that certain security agreement executed by the
Credit Parties on the Effective Date, in form and substance satisfactory to the
Administrative Agent (which satisfaction the Administrative Agent hereby
confirms by its execution of this Agreement).

 

“Security Instruments” means the mortgages, deeds of trust, pledge agreements,
security agreements, including without limitation the Security Agreement,
control agreements, and other agreements, instruments and supplements described
or referred to in Exhibit D, and any and all other agreements, instruments and
supplements now or hereafter executed and delivered by the Credit Parties (other
than Secured Swap Agreements or participation or similar agreements between any
Lender and any other lender or creditor with respect to any Obligations pursuant
to

 

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this Agreement) as security for the payment or performance of the Obligations,
the Notes, this Agreement, or Reimbursement Obligations, as such agreements may
be amended, modified, supplemented or restated from time to time.

 

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

 

“SPE” means Society of Petroleum Engineers.

 

“Specified Credit Party” means any Credit Party that is not an “eligible
contract participant” under the Commodity Exchange Act (determined prior to
giving effect to Section 12.17).

 

“Statutory Reserve Rate” means a fraction (expressed as a decimal), the
numerator of which is the number one and the denominator of which is the number
one minus the aggregate of the maximum reserve percentage (including any
marginal, special, emergency or supplemental reserves) expressed as a decimal
established by the Board to which the Administrative Agent is subject with
respect to the Adjusted LIBO Rate, for eurocurrency funding (currently referred
to as “Eurocurrency Liabilities” in Regulation D of the Board).  Such reserve
percentage shall include those imposed pursuant to such Regulation D. 
Eurodollar Loans shall be deemed to constitute eurocurrency funding and to be
subject to such reserve requirements without benefit of or credit for proration,
exemptions or offsets that may be available from time to time to any Lender
under such Regulation D or any comparable regulation.  The Statutory Reserve
Rate shall be adjusted automatically on and as of the effective date of any
change in any reserve percentage.

 

“subsidiary” means, with respect to any Person (the “parent”) at any date, any
other Person the accounts of which would be consolidated with those of the
parent in the parent’s consolidated financial statements if such financial
statements were prepared in accordance with GAAP as of such date, as well as any
other Person of which Equity Interests representing more than 50% of the equity
or more than 50% of the ordinary voting power (irrespective of whether or not at
the time Equity Interests of any other class or classes of such Person shall
have or might have voting power by reason of the happening of any contingency)
or, in the case of a partnership, any general partnership interests are, as of
such date, owned, controlled or held, or that is, as of such date, otherwise
Controlled, by the parent or one or more subsidiaries of the parent or by the
parent and one or more subsidiaries of the parent.

 

“Subsidiary” means any subsidiary of the Borrower.

 

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

 

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

 

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

 

“Syndication Agent” means Bank of America, N.A., in its capacity as syndication
agent.

 

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

 

“Taxes” means any and all present or future taxes, levies, imposts, duties,
deductions, charges or withholdings imposed by any Governmental Authority.

 

“Termination Date” means the earlier of the Revolving Credit Maturity Date and
the date of termination of the Commitments.

 

“Total Assets” means, at any time, the amount that would, in conformity with
GAAP, be set forth opposite the caption “total assets” (or any like caption) on
a consolidated balance sheet of the Credit Parties.

 

“Total Debt” means with respect to any Person, at any time, without duplication,
Debt of such Person excluding contingent obligations arising under ASC 815 and
excluding Debt of the type described in clauses (c), (i) and (j) of the
definition thereof; provided that Debt with respect to letters of credit
referred to in clause (b) of such definition shall be considered “Total Debt”
only to the extent such letters of credit are drawn or funded.  For the
avoidance of doubt the Total Debt of the Borrower is the consolidated Total Debt
of the Credit Parties, determined in accordance with GAAP.

 

“Total Net Debt” means, as of any date, the difference of (a) consolidated Total
Debt of the Borrower and the other Credit Parties and (b) any unrestricted cash
and cash equivalents which is subject to a perfected, first priority Lien in
favor of the Administrative Agent; provided that the amount in this clause
(b) shall not exceed $25,000,000 if any Loans or Letters of Credit are
outstanding as of such date of determination.

 

“Transactions” means, with respect to each Credit Party, (a) the execution,
delivery and performance of this Agreement, each other Loan Document to which it
is a party, the borrowing

 

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of Loans, and the issuance of Letters of Credit hereunder, (b) the Guaranteeing
of the Obligations and the other obligations under the Guarantee Agreement by
such Credit Party and such Credit Party’s grant of the security interests and
provision of Collateral under the Security Instruments and (c) the grant of
Liens on Mortgaged Properties pursuant to the Security Instruments.

 

“Transfer” has the meaning assigned to such term in Section 9.10.

 

“Type”, when used in reference to any Loan or Borrowing, refers to whether the
rate of interest on such Loan, or on the Loans comprising such Borrowing, is
determined by reference to the Alternate Base Rate or the Adjusted LIBO Rate.

 

“UCC” means the Uniform Commercial Code of the State of New York or of any other
state the laws of which are required to be applied in connection with the
perfection of security interests in any Collateral.

 

“Unrestricted Subsidiary” means any Person that would otherwise be a Subsidiary
of the Borrower that the Borrower has designated to be an “Unrestricted
Subsidiary” in writing to the Administrative Agent pursuant to Section 8.17 and
each subsidiary thereof.

 

“USA Patriot Act” means the Trading with the Enemy Act, as amended, or any of
the foreign assets control regulations of the United States Treasury Department
(31 CFR, Subtitle B, Chapter V, as amended) or any enabling legislation or
executive order relating thereto, or The United and Strengthening America by
providing appropriate Tools Required to Intercept and Obstruct Terrorism.

 

“U.S. Person” means a “United States person” within the meaning of
Section 7701(a)(30) of the Code.

 

“U.S. Tax Compliance Certificate” has the meaning assigned such term in
Section 5.03(e)(ii)(B)(3).

 

“Withholding Agent” means any Credit Party or the Administrative Agent.

 

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

 

Section 1.03                             Types of Loans and Borrowings  For
purposes of this Agreement, Loans and Borrowings, respectively, may be
classified and referred to by Type (e.g., a “Eurodollar Loan” or a “Eurodollar
Borrowing”).

 

Section 1.04                             Terms Generally; Rules of Construction 
The definitions of terms herein shall apply equally to the singular and plural
forms of the terms defined.  Whenever the context may require, any pronoun shall
include the corresponding masculine, feminine and neuter forms.  The words
“include”, “includes” and “including” as used in this Agreement shall be deemed
to be followed by the phrase “without limitation”.  The word “or” is not
exclusive.  The word “shall” shall be construed to have the same meaning and
effect as the word “will”.  Unless the context

 

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

 

Section 1.05                             Accounting Terms and Determinations;
GAAP  Unless otherwise specified herein, all accounting terms used herein shall
be interpreted, all determinations with respect to accounting matters hereunder
shall be made, and all financial statements and certificates and reports as to
financial matters required to be furnished to the Administrative Agent or the
Lenders hereunder shall be prepared, in accordance with GAAP, applied on a basis
consistent with the Financial Statements except for changes in which the
Borrower’s independent certified public accountants concur and which are
disclosed to the Administrative Agent as part of, or along with, the audited
annual financial statements delivered to the Lenders pursuant to
Section 8.01(a); provided that, unless the Borrower and the Majority Lenders
shall otherwise agree in writing, no such change shall modify or affect the
manner in which compliance with the covenants set forth in Section 9.01 is
computed such that all such computations shall be conducted utilizing financial
information presented consistently with prior periods.  Notwithstanding anything
herein to the contrary, for the purposes of calculating any of the ratios tested
under Section 9.01, and the components of each of such ratios, all Unrestricted
Subsidiaries (including their assets, liabilities, income, losses, cash flows,
and the elements thereof) shall be excluded, except for any cash dividends or
distributions actually paid by any Unrestricted Subsidiary to any Credit
Parties, which shall be deemed to be income to such Credit Party when actually
received by it. Notwithstanding anything to the contrary in this Agreement or
any other Loan Document, for purposes of compliance with the terms of this
Agreement or any other Loan Document, GAAP will be deemed to treat operating
leases and Capital Leases in a manner consistent with their current treatment
under GAAP as of the Effective Date, notwithstanding any modifications or
interpretive changes thereto that may occur thereafter, including, for the
avoidance of doubt, any future phase-in of changes to GAAP contemplated by
amendments to GAAP that have been adopted as of the Effective Date (it being
understood that financial statements shall be prepared without giving effect to
this sentence).

 

Section 1.06                             Divisions For all purposes under the
Loan Documents, in connection with any division or plan of division under
Delaware law (or any comparable event under a different jurisdiction’s laws):
(a) if any asset, right, obligation or liability of any Person becomes the
asset, right, obligation or liability of a different Person, then it shall be
deemed to have been transferred from the original Person to the subsequent
Person, and (b) if any new Person comes into existence,

 

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such new Person shall be deemed to have been organized on the first date of its
existence by the holders of its Equity Interests at such time.

 

ARTICLE II
THE REVOLVING CREDIT FACILITY

 

Section 2.01          Commitments.

 

(a)           Commitments. Subject to the terms and conditions set forth herein,
each Revolving Credit Lender severally and for itself alone, agrees to make
Revolving Credit Loans to the Borrower during the Availability Period in an
aggregate principal amount that will not result in such Revolving Credit
Lender’s Revolving Credit Exposure exceeding such Revolving Credit Lender’s
Commitment or the total Revolving Credit Exposures exceeding the total
Commitments.  Within the foregoing limits and subject to the terms and
conditions set forth herein, the Borrower may borrow, repay and reborrow the
Revolving Credit Loans.

 

(b)           Borrower’s Option to Elect Lower Loan Limit.

 

(i)            Within three (3) Business Days of its receipt of a New Borrowing
Base Notice under Section 2.06(d), the Borrower may provide written notice to
the Administrative Agent and the Lenders that specifies for the period from the
effective date of the new Borrowing Base as set forth in Section 2.06(d) until
subsequently decreased or increased pursuant to this Section 2.01(b), the
maximum availability under this Agreement will, subject to the Borrowing Base
Adjustment Provisions, be a lesser amount (the “Elected Loan Limit”), than the
amount set forth in such New Borrowing Base Notice.  The Borrower’s notice under
this Section 2.01(b)(i) shall be irrevocable, but without prejudice to its
rights to initiate Interim Redeterminations under Section 2.06 or to
subsequently decrease or increase the Elected Loan Limit pursuant to this
Section 2.01(b).

 

(ii)           The Borrower may thereafter increase the Elected Loan Limit in
connection with any Scheduled Redetermination or Interim Redetermination of the
Borrowing Base up to an amount not to exceed the amount of the redetermined
Borrowing Base by giving written notice to the Administrative Agent and the
Lenders prior to the issuance of the related New Borrowing Base Notice, subject
to the following conditions:

 

(A)          if each Lender so consents and agrees to accept its Applicable
Revolving Credit Percentage of such increase, then the Elected Loan Limit shall
be increased (ratably among the Lenders in accordance with each Lender’s
Applicable Revolving Credit Percentage) by the amount requested by the Borrower;
or

 

(B)          if any Lender does not consent to accept its Applicable Revolving
Credit Percentage of such increase, then (1) the Elected Loan Limit shall be
increased to the extent each Lender has agreed to accept all or a portion of
such increase, (2) the Maximum Credit Amount and Applicable Revolving Credit
Percentage of all Lenders will be reallocated to reflect the amount of such
increase as to which each Lender

 

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is willing to accept and (3) Schedule 1.2 will be deemed amended to reflect such
reallocations.

 

(C)          The Administrative Agent shall record the information regarding
such increases in the Register and distribute a revised Schedule 1.2, if
necessary.

 

(iii)          Notwithstanding anything to the contrary set forth in Section
2.01(b)(ii), the Applicable Revolving Credit Percentage of the then effective
Elected Loan Limit of any Lender cannot be increased without the written consent
of such Lender.

 

Section 2.02          Revolving Credit Loans and Borrowings

 

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

 

(b)           Types of Revolving Credit Loans.  Each Revolving Credit Borrowing
shall be comprised entirely of ABR Revolving Credit Loans or Eurodollar
Revolving Credit Loans as the Borrower may request in accordance herewith.  Each
Revolving Credit Lender at its option may make any Eurodollar Revolving Credit
Loan by causing any domestic or foreign branch or Affiliate of such Revolving
Credit Lender to make such Revolving Credit Loan; provided that any exercise of
such option shall not affect the obligation of the Borrower to repay such
Revolving Credit Loan in accordance with the terms of this Agreement.

 

(c)           Minimum Amounts; Limitation on Number of Revolving Credit
Borrowings.  At the commencement of each Interest Period for any Eurodollar
Revolving Credit Borrowing, such Revolving Credit Borrowing shall be in an
amount not less than $500,000 and increments of $500,000 in excess thereof.  At
the time that each ABR Revolving Credit Borrowing is made, such Revolving Credit
Borrowing shall be in an amount not less than $500,000 and increments of
$500,000 in excess thereof; provided that, notwithstanding the foregoing, an ABR
Revolving Credit Borrowing may be in an aggregate amount that is equal to the
entire unused balance of the total Commitments or that is required to finance
the reimbursement of a Reimbursement Obligation as contemplated by Section
2.07(f)(iii).  Revolving Credit Borrowings of more than one Type may be
outstanding at the same time, provided that there shall not at any time be more
than a total of six Eurodollar Revolving Credit Borrowings outstanding. 
Notwithstanding any other provision of this Agreement, the Borrower shall not be
entitled to request, or to elect to convert or continue, any Revolving Credit
Borrowing if the Interest Period requested with respect thereto would end after
the Revolving Credit Maturity Date.

 

(d)           Revolving Credit Notes.  Upon request of such Revolving Credit
Lender, the Revolving Credit Loans made by a Revolving Credit Lender shall be
evidenced by a single promissory note of the Borrower in substantially the form
of Exhibit A, and, (i) in the case of any Revolving Credit Lender party hereto
as of the date of this Agreement, such Revolving Credit

 

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Note shall be dated as of the date of this Agreement, or (ii) in the case of any
Revolving Credit Lender that becomes a party hereto pursuant to an Assignment
and Assumption, such Revolving Credit Note shall be dated as of the effective
date of the Assignment and Assumption, in each case, payable to such Revolving
Credit Lender in a principal amount equal to its Maximum Credit Amount as in
effect on such date, and otherwise duly completed.  In the event that any
Revolving Credit Lender’s Maximum Credit Amount increases or decreases for any
reason (whether pursuant to Section 2.05, Section 12.04(b) or otherwise), the
Borrower shall, upon request of such Revolving Credit Lender, deliver or cause
to be delivered on the effective date of such increase or decrease, a new
Revolving Credit Note payable to such Revolving Credit Lender in a principal
amount equal to its Maximum Credit Amount after giving effect to such increase
or decrease, and otherwise duly completed, against return to the Borrower of the
Revolving Credit Note so replaced.  The date, amount, Type, interest rate and,
if applicable, Interest Period of each Revolving Credit Loan made by each
Revolving Credit Lender, and all payments made on account of the principal
thereof, shall be recorded by such Revolving Credit Lender on its books for its
Revolving Credit Note.  Failure to make any such notation or to attach a
schedule shall not affect any Revolving Credit Lender’s or the Borrower’s rights
or obligations in respect of such Revolving Credit Loans.

 

(e)           Register.  The Administrative Agent shall maintain the Register
pursuant to Section 12.04(b)(iv), and a subaccount therein for each Revolving
Credit Lender, in which Register and subaccounts (taken together) shall be
recorded (i) the amount of each Revolving Credit Borrowing made hereunder, the
type thereof and each Interest Period applicable to any Eurodollar Borrowing,
(ii) the amount of any principal or interest due and payable or to become due
and payable from the Borrower to each Revolving Credit Lender hereunder in
respect of the Revolving Credit Borrowings and (iii) both the amount of any sum
received by the Administrative Agent hereunder from the Borrower in respect of
the Revolving Credit Borrowings and each Revolving Credit Lender’s share
thereof.  The entries made in the Register maintained pursuant to this Section
2.02(e) shall, absent manifest error, to the extent permitted by applicable law,
be prima facie evidence of the existence and amounts of the obligations of the
Borrower therein recorded; provided, however, that the failure of any Revolving
Credit Lender or the Administrative Agent to maintain the Register or any
account, as applicable, or any error therein, shall not in any manner affect the
obligation of the Borrower to repay the Revolving Credit Borrowings (and all
other amounts owing with respect thereto) made to the Borrower by the Revolving
Credit Lenders in accordance with the terms of this Agreement.

 

Section 2.03          Requests for Revolving Credit Borrowings The Borrower may
request a Revolving Credit Borrowing, a continuation of any Revolving Credit
Borrowing in the same Type of Borrowing or to convert any Revolving Credit
Borrowing to any other Type of Revolving Credit Borrowing only by delivery to
the Administrative Agent of a Revolving Credit Borrowing Request executed by a
Responsible Officer of the Borrower, subject to the following:

 

(a)           each such Revolving Credit Borrowing Request shall set forth the
information required on the Revolving Credit Borrowing Request, including
without limitation:

 

(i)            the proposed date of such Revolving Credit Borrowing (or the
continuation or conversion of an outstanding Revolving Credit Borrowing), which
must be a Business Day;

 

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(ii)           whether such Borrowing is a new Revolving Credit Borrowing or a
continuation or conversion of an outstanding Revolving Credit Borrowing; and

 

(iii)          whether such Revolving Credit Borrowing is to be an ABR Borrowing
or a Eurodollar Borrowing, and, except in the case of an ABR Borrowing, the
first Interest Period applicable thereto.

 

(b)           each such Revolving Credit Borrowing Request shall be delivered to
the Administrative Agent by 12:00 p.m. (New York time) three (3) Business Days
prior to the proposed date of the Revolving Credit Borrowing, except in the case
of an ABR Borrowing, for which the Request for Borrowing must be delivered by
12:00 p.m. (New York time) on the proposed date for such Revolving Credit
Borrowing; provided that any such notice of an ABR Borrowing to finance the
reimbursement of a Letter of Credit Payment as contemplated by Section 2.07(f)
may be given not later than 11:00 a.m., New York City time, on the date of the
proposed Borrowing;

 

(c)           on the proposed date of such Revolving Credit Borrowing, the sum
of (x) the aggregate principal amount of all Revolving Credit Exposures
outstanding on such date (including, without duplication, the Loans that are
deemed to be disbursed by Administrative Agent under Section 2.07(f)(iii) hereof
in respect of Borrower’s Reimbursement Obligations hereunder), after giving
effect to all outstanding requests for Revolving Credit Borrowings and for the
issuance of any Letters of Credit, shall not exceed the least of (i) the
Aggregate Maximum Credit Amount, (ii) the then applicable Borrowing Base and
(iii) the then applicable Elected Loan Limit;

 

(d)           a Revolving Credit Borrowing Request, once delivered to the
Administrative Agent, shall not be revocable by the Borrower and (other than a
Revolving Credit Borrowing Request to refund, continue or convert any
outstanding Revolving Credit Borrowing) shall constitute a certification by the
Borrower as of the date thereof that the conditions set forth in Sections
2.06(a) and (b) have been satisfied;

 

(e)           if the Borrower fails to deliver a timely Revolving Credit
Borrowing Request with respect to a Eurodollar Revolving Credit Borrowing prior
to the end of the Interest Period applicable thereto, then, unless such
Borrowing is repaid as provided herein, at the end of such Interest Period such
Borrowing shall be converted to a Eurodollar Revolving Credit Borrowing having
an Interest Period of one month’s duration; notwithstanding any contrary
provision hereof, if an Event of Default has occurred and is continuing, no
outstanding Revolving Credit Borrowing may be converted to or continued as a
Eurodollar Revolving Credit Borrowing (and any Revolving Credit Borrowing
Request that requests the conversion of any Revolving Credit Borrowing to, or
continuation of any Revolving Credit Borrowing as, a Eurodollar Revolving Credit
Borrowing shall be ineffective) and unless repaid, each Eurodollar Revolving
Credit Borrowing shall be converted to an ABR Revolving Credit Borrowing at the
end of the Interest Period applicable thereto;

 

the Administrative Agent, acting on behalf of the Revolving Credit Lenders, may
also, at its option, lend under this Section 2.03 upon the telephone or email
request of a Responsible Officer of the Borrower and, in the event the
Administrative Agent, acting on behalf of the Revolving Credit

 

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Lenders, makes any such Revolving Credit Borrowing upon a telephone or email
request, a Responsible Officer shall fax or deliver by electronic file to the
Administrative Agent, on the same day as such telephone or email request, an
executed Revolving Credit Borrowing Request.  The Borrower hereby authorizes the
Administrative Agent to disburse Revolving Credit Borrowings under this Section
2.03 pursuant to the telephone or email instructions of any person purporting to
be a Responsible Officer.  Notwithstanding the foregoing, the Borrower
acknowledges that the Borrower shall bear all risk of loss resulting from
disbursements made upon any telephone or email request.  Each telephone or email
request for a Revolving Credit Borrowing from a Responsible Officer for the
Borrower shall constitute a certification of the matters set forth in the
Revolving Credit Borrowing Request form as of the date of such requested
Revolving Credit Borrowing.

 

Section 2.04          Funding of Revolving Credit Borrowings

 

(a)           Upon receiving any Revolving Credit Borrowing Request from
Borrower under Section 2.03, the Administrative Agent shall promptly notify each
Revolving Credit Lender by wire, telex or telephone (confirmed by wire, telecopy
or telex) of the amount of such Revolving Credit Borrowing being requested and
the date such Revolving Credit Borrowing is to be made by each Revolving Credit
Lender in an amount equal to its Applicable Revolving Credit Percentage of such
Revolving Credit Borrowing.  Unless such Revolving Credit Lender’s Commitment to
make Revolving Credit Loans hereunder shall have been suspended or terminated in
accordance with this Agreement, each such Revolving Credit Lender shall make
available the amount of its Applicable Revolving Credit Percentage of each
Revolving Credit Borrowing in immediately available funds to the Administrative
Agent, as follows:

 

(i)            for ABR Revolving Credit Borrowings, at the office of the
Administrative Agent located at 383 Madison Avenue, New York, New York 10179,
not later than 1:00 p.m. (New York time) on the date of such Borrowing; and

 

(ii)           for Eurodollar Borrowings, at the office of the Administrative
Agent located at 383 Madison Avenue, New York, New York 10179, not later than
1:00 p.m. (New York time) on the date of such Borrowing.

 

(b)           Except in respect of Revolving Credit Borrowings covering the
reimbursement of Letters of Credit pursuant to Section 2.07(f), the
Administrative Agent will make such Revolving Credit Loans available to the
Borrower by promptly crediting the funds so received from the Revolving Credit
Lenders to an account of the Borrower designated by the Borrower in the
applicable Revolving Credit Borrowing Request not later than 4:00 p.m. (New York
time); provided that ABR Revolving Credit Borrowings made to finance the
reimbursement of a Letter of Credit Payment as provided in Section 2.07(f) shall
be remitted by the Administrative Agent to the applicable Issuing Bank.

 

(c)           The Administrative Agent shall deliver the documents and papers
received by it for the account of each Revolving Credit Lender to such Revolving
Credit Lender.  Unless the Administrative Agent shall have been notified by any
Revolving Credit Lender prior to the date of any proposed Revolving Credit
Borrowing that such Revolving Credit Lender does not intend to make available to
the Administrative Agent such Revolving Credit Lender’s Applicable Revolving
Credit Percentage of such Borrowing, the Administrative Agent may assume that
such

 

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Revolving Credit Lender has made such amount available to the Administrative
Agent on such date, as aforesaid.  The Administrative Agent may, but shall not
be obligated to, make available to the Borrower the amount of such payment in
reliance on such assumption.  If such amount is not in fact made available to
the Administrative Agent by such Revolving Credit Lender, as aforesaid, the
Administrative Agent shall be entitled to recover such amount on demand from
such Revolving Credit Lender.  If such Revolving Credit Lender does not pay such
amount forthwith upon the Administrative Agent’s demand therefor and the
Administrative Agent has in fact made a corresponding amount available to the
Borrower, the Administrative Agent shall promptly notify the Borrower and the
Borrower shall pay such amount to the Administrative Agent, if such notice is
delivered to the Borrower prior to 1:00 p.m. (New York time) on a Business Day,
on the day such notice is received, and otherwise on the next Business Day, and
such amount paid by the Borrower shall be applied as a prepayment of the
Revolving Credit Loans (without any corresponding reduction in the Aggregate
Maximum Credit Amount), reimbursing the Administrative Agent for having funded
said amounts on behalf of such Revolving Credit Lender.  The Borrower shall
retain its claim against such Revolving Credit Lender with respect to the
amounts repaid by it to the Administrative Agent and, if such Revolving Credit
Lender subsequently makes such amounts available to the Administrative Agent,
the Administrative Agent shall promptly make such amounts available to the
Borrower as a Revolving Credit Borrowing.  The Administrative Agent shall also
be entitled to recover from such Revolving Credit Lender or the Borrower, as the
case may be, but without duplication, interest on such amount in respect of each
day from the date such amount was made available by the Administrative Agent to
the Borrower, to the date such amount is recovered by the Administrative Agent,
at a rate per annum equal to:

 

(i)            in the case of such Revolving Credit Lender, for the first two
(2) Business Days such amount remains unpaid, the NYFRB Rate, and thereafter, at
the rate of interest then applicable to such Revolving Credit Borrowings; and

 

(ii)           in the case of the Borrower, the rate of interest then applicable
to such Revolving Credit Borrowing.

 

Until such Revolving Credit Lender has paid the Administrative Agent such
amount, such Revolving Credit Lender shall have no interest in or rights with
respect to such Borrowing for any purpose whatsoever.  The obligation of any
Revolving Credit Lender to make any Revolving Credit Loan hereunder shall not be
affected by the failure of any other Revolving Credit Lender to make any Loan
hereunder, and no Revolving Credit Lender shall have any liability to the
Borrower or any of its Subsidiaries, the Administrative Agent, any other
Revolving Credit Lender, or any other party for another Revolving Credit
Lender’s failure to make any Loan hereunder.

 

Section 2.05          Termination and Reduction of Aggregate Maximum Credit
Amounts

 

(a)           Scheduled Termination of Commitments.  Unless previously
terminated, the Commitments shall terminate on the Revolving Credit Maturity
Date.  If at any time the Aggregate Maximum Credit Amounts, the Elected Loan
Limit or the Borrowing Base are terminated or reduced to zero, then the
Commitments shall terminate on the effective date of such termination or
reduction.

 

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(b)           Optional Termination and Reduction of Aggregate Credit Amounts.

 

(i)            The Borrower may at any time terminate, or from time to time
reduce, the Aggregate Maximum Credit Amounts; provided that each reduction of
the Aggregate Maximum Credit Amounts shall be in an amount that is an integral
multiple of $1,000,000 and not less than $1,000,000 and the Borrower shall not
terminate or reduce the Aggregate Maximum Credit Amounts if, after giving effect
to any concurrent prepayment of the Revolving Credit Loans in accordance with
Section 3.03(c)(i), the total Revolving Credit Exposures would exceed the total
Commitments.

 

(ii)           The Borrower shall notify the Administrative Agent of any
election to terminate or reduce the Aggregate Maximum Credit Amounts under
Section 2.05(b)(i) at least three Business Days prior to the effective date of
such termination or reduction, specifying such election and the effective date
thereof.  Promptly following receipt of any notice, the Administrative Agent
shall advise the Revolving Credit Lenders of the contents thereof.  Each notice
delivered by the Borrower pursuant to this Section 2.05(b)(ii) shall be
irrevocable; provided that a notice of termination of the Aggregate Maximum
Credit Amount delivered by the Borrower may state that such notice is
conditioned upon the effectiveness of other credit facilities or other
agreements, in which case such notice may be revoked by the Borrower (by notice
to the Administrative Agent on or prior to the specified effective date) if such
condition is not satisfied.  Each reduction of the Aggregate Maximum Credit
Amounts shall be made ratably among the Revolving Credit Lenders in accordance
with each Revolving Credit Lender’s Applicable Revolving Credit Percentage.

 

Section 2.06          Borrowing Base

 

(a)           Initial Borrowing Base.  The Borrowing Base on the Effective Date
shall be $350,000,000.  Notwithstanding the foregoing, the Borrowing Base may be
subject to further adjustments from time to time pursuant to the Borrowing Base
Adjustment Provisions.

 

(b)           Scheduled and Interim Redeterminations.  The Borrowing Base shall
be redetermined as provided in accordance with this Section 2.06, and, subject
to Section 2.06(d), the Borrowing Base shall be redetermined semi-annually (each
a “Scheduled Redetermination”), and shall become effective and applicable to the
Borrower, the Administrative Agent, the Issuing Banks and the Revolving Credit
Lenders on or about May 1 (with respect to the Reserve Report delivered on April
1) and on or about November 1 (with respect to the Reserve Report delivered on
October 1) of each year commencing on or about May 1, 2019.  In addition, (i)
Borrower may, by notifying the Administrative Agent thereof, and the
Administrative Agent may, at the direction of the Majority Lenders, by notifying
the Borrower thereof, two times per year, each elect to cause the Borrowing Base
to be redetermined between Scheduled Redeterminations and (ii) the Borrower may
elect, by notifying the Administrative Agent of any acquisition of Oil and Gas
Properties by any Credit Party with a purchase price in the aggregate of at
least five percent (5%) of the then effective Borrowing Base, to cause the
Borrowing Base to be redetermined between Scheduled Redeterminations in
accordance with this Section 2.06 (each redetermination under clause (i) or (ii)
of this sentence, an “Interim Redetermination”).

 

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(c)           Scheduled and Interim Redetermination Procedure.

 

(i)            Each Scheduled Redetermination and each Interim Redetermination
shall be effectuated as follows:  Upon receipt by the Administrative Agent of
the Reserve Report, the certificate required to be delivered by the Borrower to
the Administrative Agent, in the case of a Scheduled Redetermination, pursuant
to Section 8.12(a) and (c), and in the case of an Interim Redetermination,
pursuant to Section 8.12(b) and (c), and such other reports, data and
supplemental information, including, without limitation, the information
provided pursuant to Section 8.12(c), as may, from time to time, be reasonably
requested by the Majority Lenders (the Reserve Report, such certificate and such
other reports, data and supplemental information with respect to the Oil and Gas
Properties and other Properties of the Credit Parties being the “Engineering
Reports”), the Administrative Agent shall evaluate the information contained in
the Engineering Reports and shall, in good faith, propose a new Borrowing Base
(the “Proposed Borrowing Base”) based upon such information and such other
information (including, without limitation, the status of title information with
respect to the Oil and Gas Properties as described in the Engineering Reports
and the existence of any other Debt) as the Administrative Agent deems
appropriate in its reasonable discretion and consistent with its normal oil and
gas lending criteria as it exists at the particular time.

 

(ii)           The Administrative Agent shall notify the Borrower and the
Revolving Credit Lenders of the Proposed Borrowing Base (the “Proposed Borrowing
Base Notice”)

 

(A)          in the case of a Scheduled Redetermination if the Administrative
Agent shall have received the Engineering Reports required to be delivered by
the Borrower pursuant to Section 8.12(a) and (c) in a timely and complete
manner, then on or before April 15 and October 15 of such year following the
date of delivery or if the Administrative Agent shall not have received the
Engineering Reports required to be delivered by the Borrower pursuant to Section
8.12(a) and (c) in a timely and complete manner, then promptly after the
Administrative Agent has received complete Engineering Reports from the Borrower
and has had a reasonable opportunity to determine the Proposed Borrowing Base in
accordance with Section 2.06(c)(i); and

 

(B)          in the case of an Interim Redetermination, promptly, and in any
event, within fifteen (15) days after the Administrative Agent has received the
required Engineering Reports.

 

(iii)          Any Proposed Borrowing Base that would increase the Borrowing
Base then in effect must be approved or deemed to have been approved by all of
the Revolving Credit Lenders as provided in this Section 2.06(c)(iii); and any
Proposed Borrowing Base that would decrease or maintain the Borrowing Base then
in effect (not including an automatic reduction pursuant to Section 2.06(e))
must be approved or be deemed to have been approved by the Required Lenders (in
each Revolving Credit Lender’s sole discretion consistent with its normal oil
and gas criteria as it exists at the particular time) as provided in this
Section 2.06(c)(iii).  Upon receipt of the Proposed Borrowing Base Notice, each
Revolving Credit Lender shall have fifteen (15) days to agree with the Proposed
Borrowing Base or disagree with the Proposed Borrowing Base by proposing an
alternate Borrowing Base.  If, at the end of such fifteen (15) days, any

 

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Revolving Credit Lender has not communicated its approval or disapproval in
writing to the Administrative Agent, such silence shall be deemed to be an
approval of the Proposed Borrowing Base.  If, at the end of such 15-day period,
all of the Revolving Credit Lenders, in the case of a Proposed Borrowing Base
that would increase the Borrowing Base then in effect, or the Required Lenders,
in the case of a Proposed Borrowing Base that would decrease or maintain the
Borrowing Base then in effect, have approved or deemed to have approved, as
aforesaid, then the Proposed Borrowing Base shall become the new Borrowing Base,
effective on the date specified in Section 2.06(d).  If, however, at the end of
such 15-day period, all of the Revolving Credit Lenders or the Required Lenders,
as applicable, have not approved or deemed to have approved, as aforesaid, then
the Administrative Agent shall poll the Revolving Credit Lenders to ascertain
the highest Borrowing Base then acceptable to a number of Revolving Credit
Lenders sufficient to constitute the Required Lenders and, so long as such
amount does not increase the Borrowing Base then in effect, such amount shall
become the new Borrowing Base, effective on the date specified in Section
2.06(d).

 

(d)           Effectiveness of a Redetermined Borrowing Base.  After a
redetermined Borrowing Base is approved or is deemed to have been approved by
all of the Revolving Credit Lenders or the Required Lenders, as applicable,
pursuant to Section 2.06(c)(iii) or adjusted pursuant to the Borrowing Base
Adjustment Provisions, the Administrative Agent shall notify the Borrower and
the Revolving Credit Lenders of the amount of the redetermined (or adjusted)
Borrowing Base (the “New Borrowing Base Notice”), and such amount shall become
the new Borrowing Base, effective and applicable to the Borrower, the
Administrative Agent, the Issuing Banks and the Revolving Credit Lenders:

 

(i)            in the case of a Scheduled Redetermination, if the Administrative
Agent shall have received the Engineering Reports required to be delivered by
the Borrower pursuant to Section 8.12(a) and (c) in a timely and complete
manner, then as of May 1 or November 1 as applicable, or if the Administrative
Agent shall not have received the Engineering Reports required to be delivered
by the Borrower pursuant to Section 8.12(a) and (c) in a timely and complete
manner, then on the Business Day next succeeding delivery of such notice; and

 

(ii)           in the case of an Interim Redetermination or an adjustment to the
Borrowing Base pursuant to the Borrowing Base Adjustment Provisions, on the
Business Day next succeeding delivery of such notice.

 

Such amount shall then become the Borrowing Base until the next Scheduled
Redetermination Date, the next Interim Redetermination Date or the next
adjustment to the Borrowing Base pursuant to the Borrowing Base Adjustment
Provisions, whichever occurs first.  Notwithstanding the foregoing, no Scheduled
Redetermination, Interim Redetermination or adjusted Borrowing Base shall become
effective until the New Borrowing Base Notice related thereto is received by the
Borrower.

 

(e)           Adjustment for Debt Incurrence.  If any Credit Party issues or
incurs any Debt consisting of or related to the Debt permitted under Section
9.02(f) during the period between Scheduled Redeterminations, then (i) on the
date on which such Debt is issued, the Borrowing Base then in effect shall be
reduced by an amount equal to the product of 0.25 multiplied by the stated
principal amount of such Debt, and (ii) the Borrowing Base as so reduced shall
become the

 

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new Borrowing Base immediately upon the date of such issuance, effective and
applicable to the Borrower, the Administrative Agent, the Issuing Banks and the
Lenders on such date until the next redetermination or modification thereof
hereunder. For purposes of this Section 2.06(e), if any such Debt issued
pursuant to Section 9.02(f) (or Guarantee thereof) is issued at a discount or
otherwise sold for less than “par,” the reduction shall be calculated based upon
the stated principal amount without reference to such discount. Notwithstanding
the foregoing, no such reduction to the Borrowing Base shall be required with
respect to any issuance of other Permitted Additional Debt pursuant to Section
9.02(g) to refinance outstanding Permitted Additional Debt except with respect
to any portion of the face principal amount of such refinancing Debt which
exceeds the principal amount of such refinanced Debt (plus any accrued interest,
fees, expenses and premiums of such refinanced Debt).

 

Section 2.07          Letters of Credit

 

(a)           General.  Subject to the terms and conditions of this Agreement,
each Issuing Bank may (but shall not be required to) through the Issuing Office,
at any time and from time to time from and after the date hereof until five (5)
Business Days prior to the Revolving Credit Maturity Date, upon the written
request of the Borrower accompanied by a duly executed Letter of Credit
Agreement and such other documentation related to the requested Letter of Credit
as each Issuing Bank may reasonably require, issue Letters of Credit in Dollars
for the account of any Credit Party, in an aggregate amount for all Letters of
Credit issued hereunder at any one time outstanding by all Issuing Banks not to
exceed the Letter of Credit Maximum Amount.  Notwithstanding that a Letter of
Credit issued or outstanding hereunder is in support of any obligations of, or
is for the account of, any Credit Party other than the Borrower, the Borrower
shall be obligated to reimburse the applicable Issuing Bank hereunder for any
and all drawings under such Letter of Credit.  The Borrower hereby acknowledges
that the issuance of Letters of Credit for the account of any other Credit Party
inures to the benefit of the Borrower and that the Borrower’s business derives
substantial benefits from the businesses of such other Credit Party.  Each
Letter of Credit shall be in a minimum face amount of Twenty-Five Thousand
Dollars ($25,000) (or such lesser amount as may be agreed to by Issuing Bank)
and each Letter of Credit (including any renewal thereof) shall expire not later
than the first to occur of (i) twelve (12) months after the date of issuance
thereof or such longer time as may be approved by Issuing Bank and (ii) five (5)
Business Days prior to the Revolving Credit Maturity Date in effect on the date
of issuance thereof; provided, that any Letter of Credit meeting the immediately
foregoing requirements may contain a customary “evergreen” provision relating to
the renewal thereof; provided, further, to the extent the Borrower Cash
Collateralizes any other Letter of Credit at least one hundred eighty (180) days
prior to the Revolving Credit Maturity Date in cases where such Letter of Credit
could be automatically renewed beyond the Revolving Credit Maturity Date (but in
no event beyond one year following the Revolving Credit Maturity Date), such
Letter of Credit may contain a customary “evergreen” provision relating to the
renewal thereof.  The submission of all applications in respect of and the
issuance of each Letter of Credit hereunder shall be subject in all respects to
the International Standby Practices 98, and any successor documentation thereto
and to the extent not inconsistent therewith, the laws of the State of New
York.  In the event of any conflict between this Agreement and any Letter of
Credit Document other than any Letter of Credit, this Agreement shall control.

 

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(b)           Conditions to Issuance.  No Letter of Credit shall be issued
(including the renewal or extension of any Letter of Credit previously issued)
at the request and for the account of the Borrower unless, as of the date of
issuance (or renewal or extension) of such Letter of Credit:

 

(i)            after giving effect to the Letter of Credit requested, the Letter
of Credit Obligations do not exceed the Letter of Credit Maximum Amount; and
(ii) after giving effect to the Letter of Credit requested, the Letter of Credit
Obligations on such date plus the aggregate amount of all Revolving Credit Loans
(including all Loans deemed disbursed by Administrative Agent under Section
2.07(f)(iii) in respect of the Borrower’s Reimbursement Obligations) hereunder
requested or outstanding on such date do not exceed the least of (A) the
Aggregate Maximum Credit Amount, (B) the then applicable Borrowing Base and (C)
the then applicable Elected Loan Limit;

 

(ii)           the conditions set forth in Section 6.02 have been satisfied;

 

(iii)          if requested by an Issuing Bank, the Borrower shall have
delivered to such Issuing Bank at its Issuing Office the Letter of Credit
Agreement related thereto, together with such other documents and materials as
may be reasonably required pursuant to the terms thereof, and the terms of the
proposed Letter of Credit shall be reasonably satisfactory to such Issuing Bank;

 

(iv)          no order, judgment or decree of any court, arbitrator or
Governmental Authority shall purport by its terms to enjoin or restrain Issuing
Bank from issuing the Letter of Credit requested, or any Revolving Credit Lender
from taking an assignment of its Revolving Credit Percentage thereof pursuant to
Section 2.07(f) hereof, and no law, rule, regulation, request or directive
(whether or not having the force of law) shall prohibit the applicable Issuing
Bank from issuing, or any Revolving Credit Lender from taking an assignment of
its Applicable Revolving Credit Percentage of, the Letter of Credit requested or
letters of credit generally;

 

(v)           there shall have been (A) no introduction of or change in the
interpretation of any law or regulation, (B) no declaration of a general banking
moratorium by banking authorities in the United States, New York or the
respective jurisdictions in which the Revolving Credit Lenders, the Borrower and
the beneficiary of the requested Letter of Credit are located, and (C) no
establishment of any new restrictions by any central bank or other Governmental
Authority on transactions involving letters of credit or on banks generally
that, in any case described in this Section 2.07(b)(v), would make it unlawful
or unduly burdensome for the applicable Issuing Bank to issue or any Revolving
Credit Lender to take an assignment of its Applicable Revolving Credit
Percentage of the requested Letter of Credit or letters of credit generally;

 

(vi)          if any Revolving Credit Lender is a Defaulting Lender, each
Issuing Bank has entered into arrangements reasonably satisfactory to it to
eliminate such Issuing Bank’s risk with respect to the participation in Letters
of Credit by any such Defaulting Lender, including, without limitation, the
creation of a cash collateral account or delivery of other security by the
Borrower to assure payment of such Defaulting Lender’s Applicable Revolving
Credit Percentage of all outstanding Letter of Credit Obligations; and

 

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(vii)         the applicable Issuing Bank shall have received the issuance fees
required in connection with the issuance of such Letter of Credit pursuant to
Section 2.07(d).

 

Each Letter of Credit Agreement submitted to Issuing Bank pursuant hereto shall
constitute the certification by Borrower of the matters set forth in Section
6.02. The Administrative Agent shall be entitled to rely on such certification
without any duty of inquiry.

 

(c)           Notice.  Each Issuing Bank shall deliver to the Administrative
Agent, concurrently with or promptly following its issuance of any Letter of
Credit, a true and complete copy of each Letter of Credit.  Promptly upon its
receipt thereof, the Administrative Agent shall give notice, substantially in
the form attached as Exhibit F, to each Revolving Credit Lender of the issuance
of each Letter of Credit, specifying the amount thereof and the amount of such
Revolving Credit Lender’s Applicable Revolving Credit Percentage thereof.

 

(d)           Letter of Credit Fees.

 

(i)            The Borrower shall pay letter of credit fees as follows:

 

(A)          A participation fee with respect to each Lender’s participations in
Letters of Credit, which shall accrue at the same Applicable Margin used to
determine the interest rate applicable to Eurodollar Revolving Credit Loans on
the average daily amount of such Lender’s Letter of Credit Obligations
(excluding any portion thereof attributable to unreimbursed Letter of Credit
Payments) during the period from and including the Effective Date to but
excluding the later of the date on which such Lender’s Commitment terminates and
the date on which such Lender ceases to have any Letter of Credit Obligations,
shall be paid to the Administrative Agent for distribution to the Revolving
Credit Lenders in accordance with their Applicable Revolving Credit Percentages,
including without limitation as adjusted pursuant to Section 4.02(b)(iii).

 

(B)          A letter of credit fronting fee in the amount of 0.125% per annum
on the face amount of each Letter of Credit during the period from and including
the Effective Date to but excluding the later of the date of termination of the
Commitments and the date on which there ceases to be any Letter of Credit
Obligations (but in no event less than $500 per annum), shall be paid to the
Administrative Agent for distribution to each Issuing Bank for its own account.

 

(ii)           All payments by the Borrower to the Administrative Agent for
distribution to an Issuing Bank or the Revolving Credit Lenders under this
Section 2.07(d) shall be made in Dollars in immediately available funds at the
Issuing Office or such other office of the Administrative Agent as may be
designated from time to time by written notice to Borrower by the Administrative
Agent.  The fees described in Section 2.07(d)(i)(A) and (B) above (i) accrued
through and including the last day of March, June, September and December of
each year shall be payable on the third Business Day following such last day,
commencing on the first such date to occur after the Effective Date; provided
that all such fees shall be payable on the date on which the Aggregate Maximum
Commitment Amount terminates and any such fees accruing after the date on which
the Aggregate Maximum Commitment Amount terminates shall be payable on demand
and (ii) shall be nonrefundable under all circumstances subject to Section
12.12. All

 

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participation fees and fronting fees shall be computed on the basis of a year of
360 days and shall be payable for the actual number of days elapsed (including
the first day but excluding the last day).

 

(e)           Other Fees.  In connection with the Letters of Credit, and in
addition to the Letter of Credit Fees, the Borrower shall pay, for the sole
account of each Issuing Bank, standard documentation, administration, payment
and cancellation charges assessed by such Issuing Bank or the Issuing Office, at
the times, in the amounts and on the terms set forth or to be set forth from
time to time in the standard fee schedule of the Issuing Office in effect from
time to time.

 

(f)            Participation Interests in and Drawings and Demands for Payment
Under Letters of Credit.

 

(i)            By the issuance of a Letter of Credit (or an amendment to a
Letter of Credit increasing the amount thereof) and without any further action
on the part of any Issuing Bank or the Lenders, the applicable Issuing Bank
hereby grants to each Revolving Credit Lender, and each Revolving Credit Lender
hereby acquires from such Issuing Bank, a participation in such Letter of Credit
equal to such Lender’s Applicable Revolving Credit Percentage of the aggregate
amount available to be drawn under such Letter of Credit.  In consideration and
in furtherance of the foregoing, each Revolving Credit Lender hereby absolutely
and unconditionally agrees to pay to the Administrative Agent, for the account
of the applicable Issuing Bank, such Lender’s Applicable Revolving Credit
Percentage of each Letter of Credit Payment made by such Issuing Bank and not
reimbursed by the Borrower on the date due as provided in paragraph (ii) below,
or of any reimbursement payment required to be refunded to the Borrower for any
reason.  Each Revolving Credit Lender acknowledges and agrees that its
obligation to acquire participations pursuant to this paragraph in respect of
Letters of Credit is absolute and unconditional and shall not be affected by any
circumstance whatsoever, including any amendment, renewal or extension of any
Letter of Credit or the occurrence and continuance of a Default, an Event of
Default or reduction or termination of the Commitments, and that each such
payment shall be made without any offset, abatement, withholding or reduction
whatsoever.

 

(ii)           If any Issuing Bank shall honor a draft or other demand for
payment presented or made under any Letter of Credit, the Borrower agrees to pay
to such Issuing Bank an amount equal to the amount paid by such Issuing Bank in
respect of such draft or other demand under such Letter of Credit and all
reasonable expenses paid or incurred by the Administrative Agent relative
thereto not later than 1:00 p.m. (New York time), in Dollars, on (i) the
Business Day that the Borrower received notice of such presentment and honor, if
such notice is received prior to 11:00 a.m. (New York time) or (ii) the Business
Day immediately following the day that the Borrower received such notice, if
such notice is received after 11:00 a.m. (New York time).

 

(iii)          If any Issuing Bank shall honor a draft or other demand for
payment presented or made under any Letter of Credit, but the Borrower does not
reimburse such Issuing Bank as required under Section 2.07(f)(ii) and the
Aggregate Maximum Commitment Amount has not been terminated (whether by
maturity, acceleration or otherwise), the Borrower shall be deemed to have
immediately requested that the Revolving Credit Lenders make a ABR Revolving
Credit Borrowing (which Borrowing may be subsequently converted at any time into
a Eurodollar Borrowing pursuant to Section 2.03 hereof) in the principal amount
equal to the amount paid by

 

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such Issuing Bank in respect of such draft or other demand under such Letter of
Credit and all reasonable expenses paid or incurred by the Administrative Agent
relative thereto. The Administrative Agent will promptly notify the Revolving
Credit Lenders of such deemed request, and each such Lender shall make available
to the Administrative Agent an amount equal to its pro rata share (based on its
Applicable Revolving Credit Percentage) of the amount of such Borrowing.

 

(iv)          If any Issuing Bank shall honor a draft or other demand for
payment presented or made under any Letter of Credit, but the Borrower does not
reimburse such Issuing Bank as required under Section 2.07(f)(ii), and (i) the
Aggregate Maximum Credit Amount has been terminated (whether by maturity,
acceleration or otherwise), or (ii) any reimbursement received by such Issuing
Bank from the Borrower is or must be returned or rescinded upon or during any
bankruptcy or reorganization of the Borrower or any of its Subsidiaries or
otherwise, then the Administrative Agent shall notify each Revolving Credit
Lender, and each Revolving Credit Lender will be obligated to pay the
Administrative Agent for the account of such Issuing Bank its pro rata share
(based on its Applicable Revolving Credit Percentage) of the amount paid by such
Issuing Bank in respect of such draft or other demand under such Letter of
Credit and all reasonable expenses paid or incurred by the Administrative Agent
relative thereto (but no such payment shall diminish the obligations of the
Borrower hereunder).  Upon receipt thereof, the Administrative Agent will
deliver to such Revolving Credit Lender a participation certificate evidencing
its participation interest in respect of such payment and expenses.  To the
extent that a Revolving Credit Lender fails to make such amount available to the
Administrative Agent by 10:00 am New York time on the Business Day next
succeeding the date such notice is given, such Revolving Credit Lender shall pay
interest on such amount in respect of each day from the date such amount was
required to be paid, to the date paid to the Administrative Agent, at a rate per
annum equal to the rate applicable under Section 2.04(c)(i) with respect to
Revolving Credit Borrowings.  The failure of any Revolving Credit Lender to make
its pro rata portion of any such amount available under to the Administrative
Agent shall not relieve any other Revolving Credit Lender of its obligation to
make available its pro rata portion of such amount, but no Revolving Credit
Lender shall be responsible for failure of any other Revolving Credit Lender to
make such pro rata portion available to the Administrative Agent.

 

(v)           In the case of any Borrowing made under this Section 2.07(f), each
such Borrowing shall be disbursed notwithstanding any failure to satisfy any
conditions for disbursement of any Borrowing set forth in Article II hereof or
Article VI, and, to the extent of the Borrowing so disbursed, the Reimbursement
Obligation of Borrower to the Administrative Agent under this Section 2.07(f)
shall be deemed satisfied (unless, in each case, taking into account any such
deemed Borrowings, the aggregate outstanding principal amount of Revolving
Credit Borrowings, plus the Letter of Credit Obligations (other than the
Reimbursement Obligations to be reimbursed by this Borrowing) on such date
exceed the least of the Borrowing Base, the then applicable Aggregate Maximum
Credit Amount or the then applicable Elected Loan Limit).

 

(vi)          If any Issuing Bank shall honor a draft or other demand for
payment presented or made under any Letter of Credit, such Issuing Bank shall
provide notice thereof to the Borrower on the date such draft or demand is
honored, and to each Revolving Credit Lender on such date unless the Borrower
shall have satisfied its Reimbursement Obligations by payment to the
Administrative Agent (for the benefit of such Issuing Bank) as required under
this

 

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Section 2.07(f).  Each Issuing Bank shall further use reasonable efforts to
provide notice to the Borrower prior to honoring any such draft or other demand
for payment, but such notice, or the failure to provide such notice, shall not
affect the rights or obligations of any Issuing Bank with respect to any Letter
of Credit or the rights and obligations of the parties hereto, including without
limitation the obligations of the Borrower under this Section 2.07(f).

 

(vii)         Notwithstanding the foregoing, however, no Revolving Credit Lender
shall be deemed to have acquired a participation in a Letter of Credit if the
officers of the applicable Issuing Bank immediately responsible for matters
concerning this Agreement shall have received written notice from the
Administrative Agent or any Lender at least two (2) Business Days prior to the
date of the issuance or extension of such Letter of Credit or, with respect to
any Letter of Credit subject to automatic extension, at least five (5) Business
Days prior to the date that the beneficiary under such Letter of Credit must be
notified that such Letter of Credit will not be renewed, that the issuance or
extension of Letters of Credit should be suspended based on the occurrence and
continuance of a Default or Event of Default and stating that such notice is a
“notice of default”; provided, however, that the Revolving Credit Lenders shall
be deemed to have acquired such a participation upon the date on which such
Default or Event of Default has been waived by the requisite Revolving Credit
Lenders, as applicable, but effective as of the extension or issuance date.

 

(viii)        Nothing in this Agreement shall be construed to require or
authorize any Revolving Credit Lender to issue any Letter of Credit, it being
recognized that the Issuing Banks shall be the sole issuers of Letters of Credit
under this Agreement.

 

(ix)          In the event that any Revolving Credit Lender becomes a Defaulting
Lender, any Issuing Bank may, at its option, require that the Borrower enter
into arrangements satisfactory to such Issuing Bank to eliminate such Issuing
Bank’s risk with respect to the participation in Letters of Credit by such
Defaulting Lender, including creation of a cash collateral account or delivery
of other security to assure payment of such Defaulting Lender’s Applicable
Revolving Credit Percentage of all outstanding Letter of Credit Obligations.

 

(g)           Obligations Irrevocable.  The obligations of the Borrower to make
payments to the Administrative Agent for the account of any Issuing Bank or the
Revolving Credit Lenders with respect to Letter of Credit Obligations under
Section 2.07(f), shall be unconditional and irrevocable and not subject to any
qualification or exception whatsoever, including, without limitation:

 

(i)            Any lack of validity or enforceability of any Letter of Credit,
any Letter of Credit Agreement, any other documentation relating to any Letter
of Credit, this Agreement or any of the other Loan Documents (the “Letter of
Credit Documents”);

 

(ii)           Any amendment, modification, waiver, consent, or any
substitution, exchange or release of or failure to perfect any interest in
collateral or security, with respect to or under any Letter of Credit Document;

 

(iii)          The existence of any claim, setoff, defense or other right which
the Borrower may have at any time against any beneficiary or any transferee of
any Letter of Credit

 

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(or any persons or entities for whom any such beneficiary or any such transferee
may be acting), the Administrative Agent, any Issuing Bank or any Revolving
Credit Lender or any other Person, whether in connection with this Agreement,
any of the Letter of Credit Documents, the transactions contemplated herein or
therein or any unrelated transactions;

 

(iv)          Any draft or other statement or document presented under any
Letter of Credit proving to be forged, fraudulent, invalid or insufficient in
any respect or any statement therein being untrue or inaccurate in any respect;

 

(v)           Payment by the applicable Issuing Bank to the beneficiary under
any Letter of Credit against presentation of documents which do not comply with
the terms of such Letter of Credit, including failure of any documents to bear
any reference or adequate reference to such Letter of Credit;

 

(vi)          Any failure, omission, delay or lack on the part of the
Administrative Agent, any Issuing Bank or any Revolving Credit Lender or any
party to any of the Letter of Credit Documents or any other Loan Document to
enforce, assert or exercise any right, power or remedy conferred upon the
Administrative Agent, any Issuing Bank, any Revolving Credit Lender or any such
party under this Agreement, any of the other Loan Documents or any of the Letter
of Credit Documents, or any other acts or omissions on the part of the
Administrative Agent, any Issuing Bank, any Revolving Credit Lender or any such
party; or

 

(vii)         Any other event or circumstance that would, in the absence of this
Section 2.07(g), result in the release or discharge by operation of law or
otherwise of the Borrower from the performance or observance of any obligation,
covenant or agreement contained in Section 2.07(f).

 

No setoff, counterclaim, reduction or diminution of any obligation or any
defense of any kind or nature which the Borrower has or may have against the
beneficiary of any Letter of Credit shall be available hereunder to the Borrower
against the Administrative Agent, any Issuing Bank or any Revolving Credit
Lender.  With respect to any Letter of Credit, nothing contained in this Section
2.07(g) shall be deemed to prevent the Borrower, after satisfaction in full of
the absolute and unconditional obligations of the Borrower hereunder with
respect to such Letter of Credit, from asserting in a separate action any claim,
defense, set off or other right which it may have against the Administrative
Agent, any Issuing Bank or any Revolving Credit Lender in connection with such
Letter of Credit.

 

(h)           Risk Under Letters of Credit.

 

(i)            In the administration and handling of Letters of Credit and any
security therefor, or any documents or instruments given in connection
therewith, the Issuing Banks shall have the sole right to take or refrain from
taking any and all actions under or upon the Letters of Credit.

 

(ii)           Subject to other terms and conditions of this Agreement, each
Issuing Bank shall issue the Letters of Credit and shall hold the documents
related thereto in its own name and shall make all collections thereunder and
otherwise administer the applicable Letters of Credit in accordance with such
Issuing Bank’s regularly established practices and

 

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procedures and will have no further obligation with respect thereto.  In the
administration of Letters of Credit, each Issuing Bank shall not be liable for
any action taken or omitted on the advice of counsel, accountants, appraisers or
other experts selected by such Issuing Bank with due care and such Issuing Bank
may rely upon any notice, communication, certificate or other statement from the
Borrower, beneficiaries of Letters of Credit, or any other Person which such
Issuing Bank believes to be authentic.  Each Issuing Bank will, upon request,
furnish the Revolving Credit Lenders with copies of Letter of Credit Documents
related thereto.

 

(iii)          In connection with the issuance and administration of Letters of
Credit and the assignments hereunder, the Issuing Banks make no representation
and shall have no responsibility with respect to (i) the obligations of the
Borrower or the validity, sufficiency or enforceability of any document or
instrument given in connection therewith, or the taking of any action with
respect to same, (ii) the financial condition of, any representations made by,
or any act or omission of the Borrower or any other Person, or (iii) any failure
or delay in exercising any rights or powers possessed by any Issuing Bank in its
capacity as issuer of Letters of Credit in the absence of its gross negligence
or willful misconduct.  Each of the Revolving Credit Lenders expressly
acknowledges that it has made and will continue to make its own evaluations of
the Borrower’s creditworthiness without reliance on any representation of any
Issuing Bank or any Issuing Bank’s officers, agents and employees.

 

(iv)          If at any time any Issuing Bank shall recover any part of any
unreimbursed amount for any draw or other demand for payment under a Letter of
Credit, or any interest thereon, the Administrative Agent or such Issuing Bank,
as the case may be, shall receive same for the pro rata benefit of the Revolving
Credit Lenders in accordance with their respective Applicable Revolving Credit
Percentages and shall promptly deliver to each Revolving Credit Lender its share
thereof, less such Revolving Credit Lender’s pro rata share of the costs of such
recovery, including court costs and attorney’s fees.  If at any time any
Revolving Credit Lender shall receive from any source whatsoever any payment on
any such unreimbursed amount or interest thereon in excess of such Revolving
Credit Lender’s Applicable Revolving Credit Percentage of such payment, such
Revolving Credit Lender will promptly pay over such excess to the Administrative
Agent, for redistribution in accordance with this Agreement.

 

(i)            Indemnification.  The Borrower hereby indemnifies and agrees to
hold harmless the Revolving Credit Lenders, the Issuing Banks and the
Administrative Agent and their respective Affiliates, and the respective
officers, directors, employees and agents of such Persons (each an “L/C
Indemnified Person”), from and against any and all claims, damages, losses,
liabilities, costs or expenses of any kind or nature whatsoever which the
Revolving Credit Lenders, the Issuing Banks or the Administrative Agent or any
such Person may incur or which may be claimed against any of them by reason of
or in connection with any Letter of Credit (collectively, the “L/C Indemnified
Amounts”), and none of the L/C Indemnified Persons shall be liable or
responsible for:

 

(i)            the use which may be made of any Letter of Credit or for any acts
or omissions of any beneficiary in connection therewith;

 

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(ii)           the validity, sufficiency or genuineness of documents or of any
endorsement thereon, even if such documents should in fact prove to be in any or
all respects invalid, insufficient, fraudulent or forged;

 

(iii)          payment by any Issuing Bank to the beneficiary under any Letter
of Credit against presentation of documents which do not strictly comply with
the terms of any Letter of Credit (unless such payment resulted from the gross
negligence or willful misconduct of such Issuing Bank), including failure of any
documents to bear any reference or adequate reference to such Letter of Credit;

 

(iv)          any error, omission, interruption or delay in transmission,
dispatch or delivery of any message or advice, however transmitted, in
connection with any Letter of Credit; or

 

(v)           any other event or circumstance whatsoever arising in connection
with any Letter of Credit.

 

It is understood that in making any payment under a Letter of Credit, the
applicable Issuing Bank will rely on documents presented to it under such Letter
of Credit as to any and all matters set forth therein without further
investigation and regardless of any notice or information to the contrary.

 

With respect to subparagraphs (i) through (v), (A) the Borrower shall not be
required to indemnify any L/C Indemnified Person for any L/C Indemnified Amounts
to the extent such amounts result from the gross negligence or willful
misconduct of such L/C Indemnified Person or any officer, director, employee or
agent of such L/C Indemnified Person as determined by a final, non-appealable
order of a court of competent jurisdiction and (B) the Administrative Agent and
the applicable Issuing Bank shall be liable to the Borrower to the extent, but
only to the extent, of any direct, as opposed to consequential or incidental,
damages suffered by the Borrower which were caused by the gross negligence or
willful misconduct of any L/C Indemnified Person or by such Issuing Bank’s
wrongful dishonor of any Letter of Credit after the presentation to it by the
beneficiary thereunder of a draft or other demand for payment and other
documentation strictly complying with the terms and conditions of such Letter of
Credit, in each case, as determined by a final, non-appealable order of a court
of competent jurisdiction.

 

(j)            Right of Reimbursement.  Each Revolving Credit Lender agrees to
reimburse the applicable Issuing Bank on demand, pro rata in accordance with its
respective Applicable Revolving Credit Percentage, for (i) the reasonable
out-of-pocket costs and expenses of such Issuing Bank to be reimbursed by the
Borrower pursuant to any Letter of Credit Agreement or any Letter of Credit, to
the extent not reimbursed by the Borrower or any of its Subsidiaries and (ii)
any and all liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, fees, reasonable out-of-pocket expenses or
disbursements of any kind and nature whatsoever which may be imposed on,
incurred by or asserted against such Issuing Bank in any way relating to or
arising out of this Agreement (including Section 2.07(f)(iii) hereof), any
Letter of Credit, any documentation or any transaction relating thereto, or any
Letter of Credit Agreement, to the extent not reimbursed by the Borrower, except
to the extent that such liabilities, losses, costs or expenses were incurred by
such Issuing Bank as a result of such Issuing Bank’s gross negligence or willful
misconduct or by such Issuing Bank’s wrongful dishonor of any Letter of Credit
after the

 

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presentation to it by the beneficiary thereunder of a draft or other demand for
payment and other documentation strictly complying with the terms and conditions
of such Letter of Credit, in each case, as determined by a final, non-appealable
order of a court of competent jurisdiction.

 

ARTICLE III
PAYMENTS OF PRINCIPAL AND INTEREST ON REVOLVING CREDIT LOANS; PREPAYMENTS OF
REVOLVING CREDIT LOANS; FEES

 

Section 3.01          Repayment of Revolving Credit Loans The Borrower hereby
unconditionally promises to pay to the Administrative Agent for the account of
each Revolving Credit Lender the then unpaid principal amount of each Revolving
Credit Loan on the Termination Date.

 

Section 3.02          Interest on Revolving Credit Loans

 

(a)           ABR Revolving Credit Loans.  The Revolving Credit Loans comprising
each ABR Revolving Credit Borrowing shall bear interest at the Alternate Base
Rate plus the Applicable Margin, but in no event to exceed the Highest Lawful
Rate.

 

(b)           Eurodollar Revolving Credit Loans.  The Revolving Credit Loans
comprising each Eurodollar Revolving Credit Borrowing shall bear interest at the
Adjusted LIBO Rate for the Interest Period in effect for such Revolving Credit
Borrowing plus the Applicable Margin, but in no event to exceed the Highest
Lawful Rate.

 

(c)           Post-Default Rate.  Notwithstanding the foregoing, if an Event of
Default specified in (i) Sections 10.01(h), 10.01(i) or 10.01(j) has occurred
and is continuing, or (ii) Sections 10.01(a) and 10.01(b) has occurred and is
continuing, then (A) in the case of clause (i) of this Section 3.02(c), all
Revolving Credit Loans outstanding, and (B) in the case of clause (ii) of this
Section 3.02(c), any past due amounts, in each case shall bear interest, after
as well as before judgment, at a rate per annum equal to two percent (2%) plus
the rate applicable to such Revolving Credit Loans or such past due amounts, as
applicable, but in no event to exceed the Highest Lawful Rate.

 

(d)           Interest Payment Dates.  Accrued interest on each Revolving Credit
Loan shall be payable in arrears on each Interest Payment Date for such
Revolving Credit Loan and on the Termination Date; provided that (i) interest
accrued pursuant to Section 3.02(c) shall be payable on demand, (ii) in the
event of any repayment or prepayment of any Revolving Credit Loan (other than an
optional prepayment of an ABR Revolving Credit Loan prior to the Termination
Date at a time when no Borrowing Base Deficiency exists), accrued interest on
the principal amount repaid or prepaid shall be payable on the date of such
repayment or prepayment, and (iii) in the event of any conversion of any
Eurodollar Revolving Credit Loan prior to the end of the current Interest Period
therefor, accrued interest on such Revolving Credit Loan shall be payable on the
effective date of such conversion.

 

(e)           Interest Rate Computations.  All interest on Revolving Credit
Loans shall be computed on the basis of a year of 360 days, unless such
computation would exceed the Highest Lawful Rate, in which case interest shall
be computed on the basis of a year of 365 days (or 366 days in a leap year),
except that interest computed by reference to the Alternate Base Rate at times

 

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when the Alternate Base Rate is based on the Prime Rate shall be computed on the
basis of a year of 365 days (or 366 days in a leap year), and in each case shall
be payable for the actual number of days elapsed (including the first day but
excluding the last day).  The applicable Alternate Base Rate, Adjusted LIBO Rate
or LIBO Rate shall be determined by the Administrative Agent, and such
determination shall be conclusive absent manifest error, and be binding upon the
parties hereto.

 

Section 3.03          Prepayments of Revolving Credit Loans

 

(a)           Optional Prepayments.  Subject to any break funding costs payable
pursuant to Section 5.02, the Borrower shall have the right at any time and from
time to time to prepay any Revolving Credit Borrowing in whole or in part,
without premium or penalty, subject to prior notice in accordance with Section
3.03(b).

 

(b)           Notice and Terms of Optional Prepayment.  The Borrower shall
notify the Administrative Agent by telephone (confirmed by facsimile) of any
prepayment hereunder in the case of prepayment of a Eurodollar Revolving Credit
Borrowing, not later than 12:00 p.m., New York time, three Business Days before
the date of prepayment, and in the case of prepayment of an ABR Revolving Credit
Borrowing, not later than 12:00 p.m., New York time, on the date of prepayment. 
Each such notice shall be irrevocable and shall specify the prepayment date and
the principal amount of each Revolving Credit Borrowing or portion thereof to be
prepaid; provided that, if a notice of prepayment is given in connection with a
conditional notice of termination of the Aggregate Maximum Credit Amount as
contemplated by Section 2.05(b)(ii), then such notice of prepayment may be
revoked if such notice of termination is revoked in accordance with Section
2.05(b)(ii).  Promptly following receipt of any such notice relating to a
Revolving Credit Borrowing, the Administrative Agent shall advise the Revolving
Credit Lenders of the contents thereof.  Each partial prepayment of any
Revolving Credit Borrowing shall be in an amount that would be permitted in the
case of an advance of a Revolving Credit Borrowing of the same Type as provided
in Section 2.02.  Each prepayment of a Borrowing shall be applied ratably to the
Loans included in the prepaid Borrowing.  Prepayments shall be accompanied by
accrued interest to the extent required by Section 3.02.

 

(c)           Mandatory Prepayments.

 

(i)            If, after giving effect to any termination or reduction of the
Aggregate Maximum Credit Amounts pursuant to Section 2.05(b) or reduction of the
Elected Loan Limit pursuant to Section 2.01(b)(i), the total Revolving Credit
Exposures exceeds the total Commitments, then the Borrower shall prepay the
Revolving Credit Borrowings on the date of such termination or reduction in an
aggregate principal amount equal to such excess, and if any excess remains after
prepaying all of the Revolving Credit Borrowings as a result of Letter of Credit
Obligations, Cash Collateralize such excess in an amount equal to the greater of
(A) the amount of such Letter of Credit Obligations and (B) the maximum amount
that may be available to be drawn at any time prior to the stated expiry of all
outstanding Letters of Credit.

 

(ii)           (A) Upon any Scheduled Redetermination or Interim Redetermination
if the total Revolving Credit Exposures exceeds the redetermined Borrowing Base
and the Administrative Agent sends a New Borrowing Base Notice to the Borrower

 

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indicating such Borrowing Base Deficiency (each, a “Borrowing Base Deficiency
Notice”), then the Borrower shall within ten (10) Business Days following
receipt of such Borrowing Base Deficiency Notice elect whether to (1) prepay the
Revolving Credit Borrowings an amount which would, if prepaid immediately,
reduce the total Revolving Credit Exposures to the amount of the Borrowing Base,
(2) execute one or more Security Instruments (or cause a Subsidiary to execute
one or more Security Instruments) covering such other Oil and Gas Properties as
are reasonably acceptable to the Majority Lenders having present values which,
in the reasonable opinion of the Majority Lenders, based upon the Majority
Lenders’ good-faith evaluation of the engineering data provided them, taken in
the aggregate are sufficient to increase the Borrowing Base to an amount at
least equal to the total Revolving Credit Exposures, or (3) do any combination
of the foregoing. If the Borrower fails to make an election within such ten
(10) Business Day period after the Borrower’s receipt of the Borrowing Base
Deficiency Notice, then Borrower shall be deemed to have selected the prepayment
option specified in clause (1) above. To the extent any prepayment of Revolving
Credit Borrowings is required hereunder, if any excess of total Revolving Credit
Exposures over the Borrowing Base then in effect remains after prepaying all
Revolving Credit Borrowings as a result of Letter of Credit Obligations, the
Borrower shall Cash Collateralize such excess in an amount equal to the greater
of (x) the amount of such Letter of Credit Obligations and (y) the maximum
amount that may be available to be drawn at any time prior to the stated expiry
of all outstanding Letters of Credit.

 

(B)                               The Borrower shall deliver such prepayments or
Security Instruments covering additional Oil and Gas Properties in accordance
with its election (or deemed election) pursuant to Section 3.03(c)(ii)(A) as
follows:

 

(1)                                 Prepayment Elections.  If the Borrower
elects to prepay an amount in accordance with Section 3.03(c)(ii)(A)(1) above,
then the Borrower may make such prepayment in three (3) equal consecutive
monthly installments beginning within thirty (30) days after Borrower’s receipt
of the Borrowing Base Deficiency Notice and continuing on the same day of each
month thereafter; provided that all payments required to be made pursuant to
this Section 3.03(c)(ii)(B)(1) must be made on or prior to the Termination Date.

 

(2)                                 Elections to Mortgage Additional Oil and Gas
Properties.  If the Borrower elects to mortgage additional Oil and Gas
Properties in accordance with Section 3.03(c)(ii)(A)(2) above, then (I) such
properties shall be reasonably acceptable to the Majority Lenders having present
values which, in the reasonable opinion of the Majority Lenders, based upon the
Majority Lenders’ good-faith evaluation of the engineering data provided them,
taken in the aggregate are sufficient to increase the Borrowing Base to an
amount at least equal to the total Revolving Credit Exposures, and (II) the
Borrower or such Subsidiary shall execute, acknowledge and deliver to the
Administrative Agent one or more Security Instruments within thirty (30) days
after the Borrower’s receipt of the Borrowing Base Deficiency Notice (or such
longer time as determined by the Administrative Agent); provided, however (x) if
none of the additional Oil and Gas Properties offered by the Borrower are
reasonably acceptable to the Majority Lenders, the Borrower shall be deemed to
have elected the prepayment option specified in Section 3.03(c)(ii)(A)(1) (and
Borrower shall make such prepayment in accordance

 

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with Section 3.03(c)(ii)(B)(1)); and (y) if the aggregate present values of
additional Oil and Gas Properties which are reasonably acceptable to the
Majority Lenders are insufficient to eliminate the Borrowing Base Deficiency,
then the Borrower shall be deemed to have selected the option specified in
Section 3.03(c)(ii)(A)(3) (and the Borrower shall make prepayment and deliver or
cause to be delivered one or more Security Instruments as provided in
Section 3.03(c)(ii)(B)(3)).  Together with such Security Instruments, the
Borrower shall deliver to the Administrative Agent title opinions and/or other
title information and data reasonably acceptable to the Administrative Agent
such that the Administrative Agent shall have received, together with the title
information previously delivered to the Administrative Agent, reasonably
satisfactory title information on at least 85% of the total value of the Proved
Oil and Gas Properties evaluated by the most recent Reserve Report and which are
required to be Mortgaged Properties hereunder.

 

(3)                                 Combination Elections.  If the Borrower
elects (or is deemed to have elected) to eliminate the Borrowing Base Deficiency
by a combination of prepayment and mortgaging of additional Oil and Gas
Properties in accordance with Section 3.03(c)(ii)(A)(3), then within thirty (30)
days after the Borrower’s receipt of the Borrowing Base Deficiency Notice (or
such longer time as determined by the Administrative Agent), the Borrower shall
(or shall cause a Subsidiary to) execute, acknowledge and deliver to the
Administrative Agent one or more Security Instruments covering such additional
Oil and Gas Properties and pay the Administrative Agent the amount by which the
Borrowing Base Deficiency exceeds the present values of such additional Oil and
Gas Properties in three (3) equal consecutive monthly installments beginning
within thirty (30) days after Borrower’s receipt of the Borrowing Base
Deficiency Notice and continuing on the same day of each month thereafter;
provided that all payments required to be made pursuant to this
Section 3.03(c)(ii)(B)(3) must be made on or prior to the Termination Date.

 

(iii)                               Upon any adjustment to the Borrowing Base
pursuant to Section 9.10 or pursuant to Section 2.06(e), if the total Revolving
Credit Exposures exceeds the Borrowing Base as adjusted, then the Borrower shall
prepay the Revolving Credit Borrowings in an aggregate principal amount equal to
such excess, and if any excess remains after prepaying all of the Revolving
Credit Borrowings as a result of Letter of Credit Obligations, Cash
Collateralize such excess in an amount equal to the greater of (A) the amount of
such Letter of Credit Obligations and (B) the maximum amount that may be
available to be drawn at any time prior to the stated expiry of all outstanding
Letters of Credit.  The Borrower shall be obligated to make such prepayment
and/or Cash Collateralize such excess on the second (2nd) Business Day after it
receives the applicable New Borrowing Base Notice in accordance with
Section 2.06(d); provided that all payments required to be made pursuant to this
Section 3.03(c)(iii) must be made on or prior to the Termination Date.

 

(iv)                              Each prepayment of Revolving Credit Borrowings
pursuant to this Section 3.03(c) shall be applied, first, ratably to any ABR
Revolving Credit Borrowings then outstanding, and second, to any Eurodollar
Revolving Credit Borrowings then outstanding, and if more than one Eurodollar
Revolving Credit Borrowing is then outstanding, to each such Eurodollar

 

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Revolving Credit Borrowing in order of priority beginning with the Eurodollar
Revolving Credit Borrowing with the least number of days remaining in the
Interest Period applicable thereto and ending with the Eurodollar Revolving
Credit Borrowing with the most number of days remaining in the Interest Period
applicable thereto; provided, however, if any excess remains after the
prepayment of all Revolving Credit Borrowings and after the Borrower Cash
Collateralizes all Letter of Credit Obligations or outstanding Letters of
Credit, such excess shall be prepaid by the Borrower.

 

(v)                                 Each prepayment of Revolving Credit
Borrowings pursuant to this Section 3.03(c) shall be accompanied by accrued
interest on the amount prepaid to the extent required by Section 3.02.

 

(d)                                 No Premium or Penalty.  Prepayments
permitted or required under this Section 3.03 shall be without premium or
penalty, except as required under Section 5.02.

 

Section 3.04                             Fees

 

(a)                                 Commitment Fees.  The Borrower agrees to pay
to the Administrative Agent for the account of each Revolving Credit Lender a
commitment fee, which shall accrue at the applicable Commitment Fee Rate on the
actual daily amount of the undrawn Commitment of such Revolving Credit Lender
during the period from and including the date of this Agreement to but excluding
the Termination Date (such fee, the “Commitment Fee”).  Accrued Commitment Fees
shall be payable in arrears on the last day of each March, June, September and
December of each year (with respect to the preceding three months or portion
thereof) and on the Termination Date (and, if applicable, thereafter on demand),
commencing on the first such date to occur after the date hereof.  If there is
any change in the Commitment of any Revolving Credit Lender during any such
three-month period, the actual daily amount of the Commitment shall be computed
and multiplied by the Commitment Fee Rate separately for each period during such
three-month period such Commitment was in effect.  All Commitment Fees shall be
computed on the basis of a year of 360 days, unless such computation would
exceed the Highest Lawful Rate, in which case interest shall be computed on the
basis of a year of 365 days (or 366 days in a leap year), and shall be payable
for the actual number of days elapsed (including the first day but excluding the
last day).

 

(b)                                 Administrative Agent Fees.  The Borrower
agrees to pay to the Administrative Agent, for its own account, fees payable in
the amounts and at the times set forth in the Proposal Letter.

 

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

 

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

 

(a)                                 Payment Procedure.

 

(i)                                     All payments to be made by the Borrower
shall be made without condition or deduction for any counterclaim, defense,
recoupment or setoff.  Except as otherwise provided herein, all payments made by
the Borrower of principal, interest or fees hereunder shall

 

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be made without setoff or counterclaim on the date specified for payment under
this Agreement and must be received by the Administrative Agent not later than
1:00 p.m. (New York time) on the date such payment is required or intended to be
made in Dollars in immediately available funds to the Administrative Agent at
the Administrative Agent’s office located at 270 Park Avenue, New York, New York
10017, for the ratable benefit of the Revolving Credit Lenders in the case of
payments in respect of the Revolving Credit Loans and any Letter of Credit
Obligations. Any payment received by the Administrative Agent after 1:00
p.m. (New York time) shall be deemed received on the next succeeding Business
Day and any applicable interest or fee shall continue to accrue.  Upon receipt
of each such payment, the Administrative Agent shall make prompt payment to each
applicable Lender, or, in respect of Eurodollar Borrowing, such Lender’s
Eurodollar Lending Office, in like funds and currencies, of all amounts received
by it for the account of such Lender.

 

(ii)                                  Unless the Administrative Agent shall have
been notified in writing by the Borrower at least two (2) Business Days prior to
the date on which any payment to be made by the Borrower is due that the
Borrower does not intend to remit such payment, the Administrative Agent may, in
its sole discretion and without obligation to do so, assume that the Borrower
has remitted such payment when so due and the Administrative Agent may, in
reliance upon such assumption, make available to each Revolving Credit Lender,
as the case may be, on such payment date an amount equal to such Lender’s share
of such assumed payment.  If the Borrower has not in fact remitted such payment
to the Administrative Agent, each Lender shall forthwith on demand repay to the
Administrative Agent the amount of such assumed payment made available or
transferred to such Lender, together with the interest thereon, in respect of
each day from and including the date such amount was made available by the
Administrative Agent to such Lender to the date such amount is repaid to the
Administrative Agent at a rate per annum equal to the NYFRB Rate for the first
two (2) Business Days that such amount remains unpaid, and thereafter at a rate
of interest then applicable to such Borrowings.

 

(iii)                               Subject to the definition of “Interest
Period” in Section 1.02 of this Agreement, whenever any payment to be made
hereunder shall otherwise be due on a day which is not a Business Day, such
payment shall be made on the next succeeding Business Day and such extension of
time shall be included in computing interest, if any, in connection with such
payment.

 

(b)                                 Application of Insufficient Payments.  If at
any time insufficient funds are received by and available to the Administrative
Agent to pay fully all amounts of principal, Reimbursement Obligations, interest
and fees then due hereunder, such funds shall be applied first, towards payment
of interest and fees then due hereunder, ratably among the parties entitled
thereto in accordance with the amounts of interest and fees then due to such
parties, and second, towards payment of principal and Reimbursement Obligations
then due hereunder, ratably among the parties entitled thereto in accordance
with the amounts of principal and Reimbursement Obligations then due to such
parties.

 

(c)                                  Sharing of Payments by Lenders.  If any
Lender shall, by exercising any right of set-off or counterclaim or otherwise,
obtain payment in respect of any principal of or interest on any of its Loans or
participations in Reimbursement Obligations resulting in such Lender receiving
payment of a greater proportion of the aggregate amount of its Loans and
participations in Reimbursement Obligations and accrued interest thereon than
the proportion

 

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

 

Section 4.02                             Deductions by the Administrative Agent;
Defaulting Lender

 

(a)                                 Certain Deductions by the Administrative
Agent.  If any Lender shall fail to make any payment required to be made by it
pursuant to Section 2.04(a), Section 2.07(f) or Section 4.02, then the
Administrative Agent may, in its sole discretion (notwithstanding any contrary
provision hereof), (i) apply any amounts thereafter received by the
Administrative Agent for the account of such Lender to satisfy such Lender’s
obligations under such Sections until all such unsatisfied obligations are fully
paid or (ii) hold any such amounts in a segregated account as cash collateral
for, and application to, any future funding obligations of such Lender
hereunder, in the case of each of (i) and (ii) above, in any order as determined
by the Administrative Agent in its discretion.

 

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

 

(i)                                     The obligation of any Lender to make any
Loan hereunder shall not be affected by the failure of any other Lender to make
any Loan under this Agreement, and no Lender shall have any liability to the
Borrower or any of its Subsidiaries, the Administrative Agent, any other Lender,
or any other Person for another Lender’s failure to make any loan or Loan
hereunder.

 

(ii)                                  If any Lender shall become a Defaulting
Lender, then such Defaulting Lender’s right to participate in the administration
of the loans, this Agreement and the other Loan Documents, including without
limitation any right to vote in respect of any amendment, consent or waiver of
the terms of this Agreement or such other Loan Documents, or to direct or
approve any action or inaction by the Administrative Agent shall be suspended
for the entire period that such Lender remains a Defaulting Lender and the
stated commitment amounts and outstanding Loans of such Defaulting Lender shall
not be included in determining whether all Lenders, the

 

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Required Lenders (or any class thereof) or the Majority Lenders (or any class
thereof), as the case may be, have taken or may take any action hereunder
(including, without limitation, any action to approve any consent, waiver or
amendment to this Agreement or the other Loan Documents); provided, however,
that the foregoing shall not permit (A) an increase in such Defaulting Lender’s
stated commitment amounts, (B) the waiver, forgiveness or reduction of the
principal amount of any Obligations outstanding to such Defaulting Lender
(unless all other Lenders affected thereby are treated similarly), (C) the
extension of the final maturity date(s) of such Defaulting Lenders’ portion of
any of the loans or other extensions of credit or other obligations of the
Borrower owing to such Defaulting Lender, in each case without such Defaulting
Lender’s consent, (D) any other modification which under Section 12.02 requires
the consent of all Lenders or Lender(s) affected thereby which affects the
Defaulting Lender differently than the Non-Defaulting Lenders affected by such
modification, other than a change to or waiver of the requirements of
Section 4.01(b) which results in a reduction of the Defaulting Lender’s
commitment or its share of the Obligations on a non pro-rata basis.

 

(iii)                               All or any part of such Defaulting Lender’s
participation in Letter of Credit Obligations shall be reallocated among the
Non-Defaulting Lenders in accordance with their respective Applicable Revolving
Credit Percentages (calculated without regard to such Defaulting Lender’s
Commitment) but only to the extent that such reallocation does not cause the
aggregate Revolving Credit Exposure of any Non-Defaulting Lender to exceed such
Non-Defaulting Lender’s Commitment.  No reallocation hereunder shall constitute
a waiver or release of any claim of any party hereunder against a Defaulting
Lender arising from that Lender having become a Defaulting Lender, including any
claim of a Non-Defaulting Lender as a result of such Non-Defaulting Lender’s
increased exposure following such reallocation.

 

(iv)                              To the extent and for so long as a Lender
remains a Defaulting Lender and notwithstanding the provisions of
Section 4.01(b), the Administrative Agent shall be entitled, without limitation,
(A) to withhold or setoff and to apply in satisfaction of those obligations for
payment (and any related interest) in respect of which the Defaulting Lender
shall be delinquent or otherwise in default to the Administrative Agent or any
Lender (or to hold as cash collateral for such delinquent obligations or any
future defaults) the amounts otherwise payable to such Defaulting Lender under
this Agreement or any other Loan Document, (B) if the amount of Loans made by
such Defaulting Lender is less than its Applicable Revolving Credit Percentage,
as the case may be, requires, apply payments of principal made by the Borrower
amongst the Non-Defaulting Lenders on a pro rata basis until all outstanding
Loans are held by all Lenders according to their respective Applicable Revolving
Credit Percentages, and (C) to bring an action or other proceeding, in law or
equity, against such Defaulting Lender in a court of competent jurisdiction to
recover the delinquent amounts, and any related interest.  Performance by the
Borrower of its obligations under this Agreement and the other Loan Documents
shall not be excused or otherwise modified as a result of the operation of this
Section, except to the extent expressly set forth herein and in any event the
Borrower shall not be required to pay any Commitment Fee under
Section 3.04(a) of this Agreement in respect of such Defaulting Lender’s
Unfunded Portion for the period during which such Lender is a Defaulting
Lender.  Furthermore, the rights and remedies of the Borrower, the
Administrative Agent, the Issuing Banks and the other Lenders against a
Defaulting Lender under this section shall be in addition to any other rights
and remedies such parties may have against the Defaulting Lender under this
Agreement or any of the

 

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other Loan Documents, applicable law or otherwise, and the Borrower waives no
rights or remedies against any Defaulting Lender.

 

Section 4.03                             Disposition of Proceeds  The Security
Instruments contain an assignment by the Borrower and/or the Guarantors unto and
in favor of the Administrative Agent for the benefit of the Secured Parties of
all of the Borrower’s or each Guarantor’s interest in and to production and all
proceeds attributable thereto which may be produced from or allocated to the
Mortgaged Property.  The Security Instruments further provide in general for the
application of such proceeds to the satisfaction of the Obligations and other
obligations described therein and secured thereby.  Notwithstanding the
assignment contained in such Security Instruments, until the occurrence of an
Event of Default, the Administrative Agent and the Lenders agree that they will
neither notify the purchaser or purchasers of such production nor take any other
action to cause such proceeds to be remitted to the Administrative Agent or the
Lenders, but the Lenders will instead permit such proceeds to be paid to the
Borrower and its Subsidiaries and the Lenders hereby authorize the
Administrative Agent to take such actions as may be necessary to cause such
proceeds to be paid to the Borrower and/or such Subsidiaries.

 

ARTICLE V
INCREASED COSTS; REIMBURSEMENT OF PREPAYMENT COSTS;
TAXES; LIBO RATE AVAILABILITY

 

Section 5.01                             Increased Costs

 

(a)                                 Increased Costs.  If any Change in Law
shall:

 

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

 

(ii)                                  impose on any Lender or any Issuing Bank
or the London interbank market any other condition, cost or expense (other than
Taxes) affecting this Agreement or Loans made by such Lender or any Letter of
Credit or participation therein; or

 

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

 

and the result of any of the foregoing shall be to increase the cost to such
Lender or such other Recipient of making, continuing, converting or maintaining
any Loan (or of maintaining its obligation to make any such Loan) or to increase
the cost to such Lender, such Issuing Bank or such other Recipient of
participating in, issuing or maintaining any Letter of Credit or to reduce the
amount of any sum received or receivable by such Lender, such Issuing Bank or
such other Recipient hereunder (whether of principal, interest or otherwise),
then the Borrower will pay to such Lender, such Issuing Bank or such other
Recipient, as the case may be, such additional

 

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amount or amounts as will compensate such Lender, such Issuing Bank or such
other Recipient, as the case may be, for such additional costs incurred or
reduction suffered.

 

(b)                                 Capital Adequacy and Other Increased Costs.

 

(i)                                     If, after the Effective Date, the
adoption or introduction of, or any change in any applicable law, treaty,
rule or regulation (whether domestic or foreign) now or hereafter in effect and
whether or not presently applicable to any Lender or the Administrative Agent,
or any interpretation or administration thereof by any Governmental Authority
charged with the interpretation or administration thereof, or compliance by any
Lender or the Administrative Agent with any guideline, request or directive of
any such authority (whether or not having the force of law), including any risk
based capital guidelines (each, a “Change in Law”), affects or would affect the
amount of capital or liquidity required to be maintained by such Lender or the
Administrative Agent (or any corporation controlling such Lender or the
Administrative Agent) and such Lender or the Administrative Agent, as the case
may be, determines that the amount of such capital or liquidity is increased by
or based upon the existence of such Lender’s or the Administrative Agent’s
obligations or Borrowings hereunder and such increase has the effect of reducing
the rate of return on such Lender’s or the Administrative Agent’s (or such
controlling corporation’s) capital as a consequence of such obligations or
Borrowings hereunder to a level below that which such Lender or the
Administrative Agent (or such controlling corporation) could have achieved but
for such circumstances (taking into consideration its policies with respect to
capital adequacy) (collectively, “Increased Costs”), then the Administrative
Agent or such Lender shall notify the Borrower, and thereafter the Borrower
shall pay to such Lender or the Administrative Agent, as the case may be, within
ten (10) Business Days of written demand therefor from such Lender or the
Administrative Agent, additional amounts sufficient to compensate such Lender or
the Administrative Agent (or such controlling corporation) for any increase in
the amount of capital or liquidity and reduced rate of return which such Lender
or the Administrative Agent reasonably determines to be allocable to the
existence of such Lender’s or the Administrative Agent’s obligations or
Borrowings hereunder.  A statement setting forth the amount of such
compensation, the methodology for the calculation and the calculation thereof
which shall also be prepared in good faith and in reasonable detail by such
Lender or the Administrative Agent, as the case may be, shall be submitted by
such Lender or by the Administrative Agent to the Borrower, reasonably promptly
after becoming aware of any event described in this Section 5.01(b) and shall be
conclusively presumed to be correct, absent manifest error.  Notwithstanding
anything herein to the contrary, (x) the Dodd-Frank Wall Street Reform and
Consumer Protection Act and all requests, rules, guidelines or directives
thereunder or issued in connection therewith and (y) all requests, rules,
guidelines or directives promulgated by the Bank for International Settlements,
the Basel Committee on banking Supervision (or any successor or similar
authority) or the United States or foreign regulatory authorities, in each case
pursuant to Basel III, shall in each case be deemed to be a “Change in Law”
regardless of the date enacted, adopted or issued.

 

(ii)                                  Notwithstanding the foregoing, however,
the Borrower shall not be required to pay any increased costs under
Sections 5.01(a) or 5.01(b) for any period ending prior to the date that is 270
days prior to the making of a Lender’s initial request for such additional
amounts unless the applicable Change in Law or other event resulting in such
increased costs is effective retroactively to a date more than 270 days prior to
the date of such request, in which case

 

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a Lender’s request for such additional amounts relating to the period more than
180 days prior to the making of the request must be given not more than 270 days
after such Lender becomes aware of the applicable Change in Law or other event
resulting in such increased costs.

 

Section 5.02                             Reimbursement of Prepayment Costs  If
(a) the Borrower makes any payment of principal with respect to any Eurodollar
Borrowing on any day other than the last day of the Interest Period applicable
thereto (whether voluntarily, pursuant to any mandatory provisions hereof, by
acceleration, or otherwise); (b) the Borrower converts or refunds (or attempts
to convert or refund) any such Borrowing or Loan on any day other than the last
day of the Interest Period applicable thereto; (c) the Borrower fails to borrow,
refund or convert any Eurodollar Borrowing after notice has been given by the
Borrower to the Administrative Agent in accordance with the terms hereof
requesting such Borrowing or Loan; or (d) or if the Borrower fails to make any
payment of principal in respect of a Eurodollar Borrowing when due, the Borrower
shall reimburse the Administrative Agent for itself and/or on behalf of any
Lender, as the case may be, within ten (10) Business Days of written demand
therefor for any resulting loss, cost or expense incurred (excluding the loss of
any Applicable Margin) by the Administrative Agent and Lenders, as the case may
be, as a result thereof, including, without limitation, any such loss, cost or
expense incurred in obtaining, liquidating, employing or redeploying deposits
from third parties, whether or not the Administrative Agent and Lenders, as the
case may be, shall have funded or committed to fund such Borrowing or Loan.  The
amount payable hereunder by the Borrower to the Administrative Agent for itself
and/or on behalf of any Lender, as the case may be, shall be deemed to equal an
amount equal to the excess, if any, of (i) the amount of interest which would
have accrued on the amount so prepaid, or not so borrowed, refunded or
converted, for the period from the date of such prepayment or of such failure to
borrow, refund or convert, through the last day of the relevant Interest Period,
at the applicable rate of interest for said Borrowing(s) or Loans(s) provided
under this Agreement, over (ii) the amount of interest (as reasonably determined
by the Administrative Agent and the Lenders, as the case may be) which would
have accrued to the Administrative Agent and the Lenders, as the case may be, on
such amount by placing such amount on deposit for a comparable period with
leading banks in the interbank Eurocurrency market.  Calculation of any amounts
payable to any Lender under this paragraph shall be made as though such Lender
shall have actually funded or committed to fund the relevant Borrowing or Loan
through the purchase of an underlying deposit in an amount equal to the amount
of such Borrowing or Loan and having a maturity comparable to the relevant
Interest Period; provided, however, that any Lender may fund any Eurodollar
Borrowing in any manner it deems fit and the foregoing assumptions shall be
utilized only for the purpose of the calculation of amounts payable under this
paragraph.

 

The Administrative Agent and the Lenders shall deliver to the Borrower a
certificate setting forth the basis for determining such losses, costs and
expenses, which certificate shall be conclusively presumed correct, absent
manifest error.

 

Section 5.03                             Taxes

 

(a)                                 Payments Free of Taxes.  Any and all
payments by or on account of any obligation of the Withholding Agent under any
Loan Document shall be made free and clear of and without deduction for any
Indemnified Taxes; provided that if any Credit Party shall be required to deduct
any Indemnified Taxes from such payments, then the sum payable by the Credit

 

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Parties shall be increased as necessary so that after making all required
deductions or withholdings (including deductions or withholdings of Indemnified
Taxes applicable to additional sums payable under this Section 5.03), the
Administrative Agent or Lender (as the case may be) receives an amount equal to
the sum it would have received had no such deductions or withholdings been made,
the Withholding Agent shall make such deductions or withholdings and the
Withholding Agent shall pay the full amount deducted or withheld to the relevant
Governmental Authority in accordance with applicable law.

 

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

 

(c)                                  Indemnification by the Borrower, Guarantors
and Lenders.

 

(i)                                     The Borrower or Guarantors, as
applicable, shall indemnify the Administrative Agent and each Lender, within ten
(10) days after written demand therefor, for the full amount of any Indemnified
Taxes paid by the Administrative Agent or such Lender, as the case may be, on or
with respect to any payment by or on account of any obligation of the Borrower
or Guarantors, as applicable, hereunder (including Indemnified Taxes or imposed
or asserted on or attributable to amounts payable under this Section 5.03) and
any penalties, interest and 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 of
the Administrative Agent or a Lender as to the amount of such payment or
liability under this Section 5.03 shall be delivered to the Borrower or
Guarantors, as applicable, and shall be conclusive absent manifest error.

 

(ii)                                  Each Lender shall severally indemnify the
Administrative Agent, within 10 days after demand therefor, for (A) any
Indemnified Taxes attributable to such Lender (but only to the extent that any
Credit Party has not already indemnified the Administrative Agent for such
Indemnified Taxes and without limiting the obligation of the Credit Parties to
do so), (B) any Taxes attributable to such Lender’s failure to comply with the
provisions of Section 12.04(b)(viii) relating to the maintenance of a
Participant Register and (C) any Excluded Taxes attributable to such Lender, in
each case, that are payable or paid by the Administrative Agent in connection
with any Loan Document, and any reasonable expenses arising therefrom or with
respect thereto, whether or not such Taxes were correctly or legally imposed or
asserted by the relevant Governmental Authority.  A certificate as to the amount
of such payment or liability delivered to any Lender by the Administrative Agent
shall be conclusive absent manifest error.  Each Lender hereby authorizes the
Administrative Agent to set off and apply any and all amounts at any time owing
to such Lender under any Loan Document or otherwise payable by the
Administrative Agent to the Lender from any other source against any amount due
to the Administrative Agent under this Section 5.03(c)(ii).

 

(d)                                 Evidence of Payments.  As soon as
practicable after any payment of Taxes by the Credit Parties to a Governmental
Authority, the Borrower shall deliver to the Administrative Agent the original
or a certified copy of a receipt issued by such Governmental Authority

 

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evidencing such payment, a copy of the return reporting such payment or other
evidence of such payment reasonably satisfactory to the Administrative Agent.

 

(e)                                  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 the Withholding Agent, at the time or
times reasonably requested by the Withholding Agent, such properly completed and
executed documentation reasonably requested by the Withholding Agent as will
permit such payments to be made without withholding or at a reduced rate of
withholding.  In addition, any Lender, if reasonably requested by the
Withholding Agent, shall deliver such other documentation prescribed by
applicable law or reasonably requested by the Withholding Agent as will enable
the Withholding Agent to determine whether or not such Lender is subject to
backup withholding or information reporting requirements.  Notwithstanding
anything to the contrary in the preceding two sentences, the completion,
execution and submission of such documentation (other than such documentation
set forth in Section 5.03(e)(ii)(A) and (ii)(B) and Section 5.03(g) 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 the Borrower is a “United States person” as defined
in Section 7701(a)(30) of the Code,

 

(A)                               any Lender that is a “United States person” as
defined in Section 7701(a)(30) of the Code shall deliver to the Withholding
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 the
Withholding 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 the Withholding 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 the Withholding Agent), whichever of
the following is applicable:

 

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

 

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

 

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(3)                                 in the case of a Foreign Lender claiming the
benefits of the exemption for portfolio interest under Section 881(c) of the
Code, (x) a certificate substantially in the form of Exhibit G-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 the Borrower
within the meaning of Section 871(h)(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 IRS
Form W-8BEN-E; or

 

(4)                                 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 or IRS Form W-8BEN-E, a U.S. Tax Compliance
Certificate substantially in the form of Exhibit G-2 or Exhibit G-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 G-4 on behalf of each such
direct and indirect partner; and

 

(C)                               any Foreign Lender shall, to the extent it is
legally entitled to do so, deliver to the Withholding 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 the Withholding Agent), executed
originals of any other form prescribed by applicable law as a basis for claiming
exemption from or a reduction in U.S. federal withholding tax, duly completed,
together with such supplementary documentation as may be prescribed by
applicable law to permit the Withholding Agent to determine the withholding or
deduction required to be made.

 

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

 

(f)                                   Administrative Agent.  On or before the
date on which JPMorgan Chase Bank, N.A. (and any successor or replacement
Administrative Agent) becomes the Administrative Agent hereunder, it shall
deliver to the Borrower two duly executed originals of either (i) IRS Form W-9,
or (ii) IRS Form W-8ECI (with respect to any payments to be received on its own
behalf) and IRS Form W-8IMY (for all other payments), establishing that the
Borrower can make payments to the Administrative Agent without deduction or
withholding of any Taxes imposed by the United States, including Taxes imposed
under FATCA.

 

(g)                                  FATCA.

 

(i)                                     If a payment made to a Lender under this
Agreement would be subject to United States federal withholding tax imposed by
FATCA if such Lender fails to comply with the applicable reporting requirements
of FATCA (including those contained in

 

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Section 1471(b) or 1472(b) of the Code, as applicable), such Lender shall
deliver to the Withholding Agent, at the time or times prescribed by law and at
such time or times reasonably requested by the Withholding Agent, such
documentation prescribed by applicable law (including as prescribed by
Section 1471(b)(3)(C)(i) of the Code) and such additional documentation
reasonably requested by the Withholding Agent as may be necessary for the
Withholding Agent to comply with its obligations under FATCA, 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.  For purposes of
Section 5.03(f) and this Section 5.03(g), “FATCA” shall include any amendments
made to FATCA after the date of this Agreement.

 

(ii)                                  For purposes of determining withholding
Taxes imposed under FATCA, from and after the Effective Date, the Borrower and
the Administrative Agent shall treat (and the Lenders hereby authorize the
Administrative Agent to treat) the Credit Agreement as not qualifying as a
“grandfathered obligation” within the meaning of Treasury Regulation
Section 1.1471-2(b)(2)(i).

 

(h)                                 Treatment of Certain Refunds.  If the
Administrative Agent or a Lender determines, in its reasonable discretion, that
it has received a refund of any Indemnified Taxes as to which it has been
indemnified by the Borrower or any Guarantor or with respect to which the
Borrower or any Guarantor has paid additional amounts pursuant to this
Section 5.03, it shall pay to the Borrower or any Guarantor, as applicable, an
amount equal to such refund (but only to the extent of indemnity payments made,
or additional amounts paid, by the Borrower or any Guarantor under this
Section 5.03 with respect to the Indemnified Taxes giving rise to such refund),
net of all out-of-pocket expenses of the Administrative Agent or such Lender, as
the case may be, and without interest (other than any interest paid by the
relevant Governmental Authority with respect to such refund).  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 5.03 shall survive the resignation or replacement of the
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.

 

(j)                                    Defined Terms.  For purposes of this
Section 5.03, the term “Lender” includes any Issuing Bank and the term
“applicable law” includes FATCA.

 

Section 5.04                             Mitigation Obligations; Designation of
Different Lending Office  If any Lender requests compensation under
Section 5.01, or if the Borrower is required to pay any additional amount to any
Lender or any Governmental Authority for the account of any Lender pursuant to
Section 5.03, then such Lender shall use reasonable efforts to designate a
different

 

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lending office for funding or booking its Loans hereunder or to assign its
rights and obligations hereunder to another of its offices, branches or
affiliates, if, in the judgment of such Lender, such designation or assignment
would eliminate or reduce amounts payable pursuant to Section 5.01 or
Section 5.03, as the case may be, in the future and would not subject such
Lender to any unreimbursed cost or expense and would not otherwise be
disadvantageous to such Lender.  The Borrower hereby agrees to pay all
reasonable costs and expenses incurred by any Lender in connection with any such
designation or assignment.

 

Section 5.05                             Replacement of Lenders  If (a) any
Lender requests compensation under Section 5.01, (b) the Borrower is required to
pay any additional amount to any Lender or any Governmental Authority for the
account of any Lender pursuant to Section 5.03, (c) any Lender is a Defaulting
Lender, (d) any Lender fails to provide its consent to increase or maintain the
Borrowing Base pursuant to Section 2.06(c)(iii) and the Required Lenders have
provided their consent to increase or maintain the Borrowing Base pursuant to
Section 2.06(c)(iii) or (e) any Lender fails to approve a proposed waiver,
consent or amendment which has been approved by the Majority Lenders, then the
Borrower may, at its sole expense and effort, upon notice to such Lender and the
Administrative Agent (and, in the case of clause (d) above, within thirty (30)
days of the effectiveness of the redetermination of the Borrowing Base pursuant
to Section 2.06(d)), require, in the case of clauses (a) through (c) above, such
Lender (and, in the case of clause (d) above, within thirty (30) days of the
effectiveness of the redetermination of the Borrowing Base pursuant to
Section 2.06(d)) to assign and delegate, without recourse (in accordance with
and subject to the restrictions contained in Section 12.04(a)), all its
interests, rights and obligations under this Agreement to an assignee that shall
assume such obligations (which assignee may be another Lender, if a Lender
accepts such assignment); provided that (i) the Borrower shall have received the
prior written consent of the Administrative Agent and the Issuing Banks, which
consent shall not unreasonably be withheld, (ii) such Lender shall have received
payment of an amount equal to the outstanding principal of its Loans and
participations in Reimbursement Obligations, accrued interest thereon, accrued
fees and all other amounts payable to it hereunder, from the assignee (to the
extent of such outstanding principal and accrued interest and fees) or the
Borrower (in the case of all other amounts) and (iii) in the case of any such
assignment resulting from a claim for compensation under Section 5.01 or
payments required to be made pursuant to Section 5.03, such assignment will
result in a reduction in such compensation or payments.  A Lender shall not be
required to make any such assignment and delegation if, prior thereto, as a
result of a waiver by such Lender or otherwise, the circumstances entitling the
Borrower to require such assignment and delegation cease to apply. 
Notwithstanding the foregoing, a Lender (other than a Defaulting Lender) shall
not be required to make any such assignment and delegation if such Lender (or
its Affiliate) is a Secured Swap Party with any outstanding Secured Swap
Agreement, unless on or prior thereto, all such Swap Agreements have been
terminated or novated to another Person and such Lender (or its Affiliate) shall
have received payment of all amounts, if any, payable to it in connection with
such termination or novation.

 

Section 5.06                             Circumstances Affecting LIBO Rate
Availability  If the Administrative Agent or the Majority Lenders (after
consultation with the Administrative Agent) shall determine in good faith that,
by reason of circumstances affecting the foreign exchange and interbank markets
generally, deposits in Eurodollars in the applicable amounts are not being
offered to the Administrative Agent or such Lenders at the applicable LIBO Rate,
then the Administrative Agent shall forthwith give notice thereof to the
Borrower.  Thereafter, until Administrative Agent notifies

 

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Borrower that such circumstances no longer exist, (i) the obligation of the
Lenders to make Loans which bear interest at or by reference to the LIBO Rate,
and the right of the Borrower to convert a Borrowing to or refund a Borrowing as
a Borrowing which bears interest at or by reference to the LIBO Rate shall be
suspended, (ii) effective upon the last day of each Interest Period related to
any existing Eurodollar Borrowing, each such Eurodollar Borrowing shall
automatically be converted into a Borrowing which bears interest at or by
reference to the Alternate Base Rate (without regard to the satisfaction of any
conditions to conversion contained elsewhere herein), and (iii) effective
immediately following such notice, each ABR Borrowing which bears interest by
reference to the LIBO Rate shall automatically be converted into Borrowing which
bears interest at or by reference to the Alternate Base Rate without regard to
the reference in the definition thereof to the LIBO Rate (and without regard to
the satisfaction of any conditions to conversion contained elsewhere herein).

 

Section 5.07                             Laws Affecting LIBO Rate Availability 
If, after the date of this Agreement, the adoption or introduction of, or any
change in, any applicable law, rule or regulation or in the interpretation or
administration thereof by any Governmental Authority charged with the
interpretation or administration thereof, or compliance by any of the Lenders
(or any of their respective Eurodollar Lending Offices) with any request or
directive (whether or not having the force of law) of any such authority, shall
make it unlawful or impossible for any of the Lenders (or any of their
respective Eurodollar Lending Offices) to honor its obligations hereunder to
make or maintain any Loan which bears interest at or by reference to the LIBO
Rate, such Lender shall forthwith give notice thereof to the Borrower and to the
Administrative Agent.  Thereafter, (a) the obligations of the applicable Lenders
to make Loans which bear interest at or by reference to the LIBO Rate and the
right of the Borrower to convert a Borrowing into or refund a Borrowing as a
Borrowing which bears interest at or by reference to the LIBO Rate shall be
suspended and thereafter only the Alternate Base Rate shall be available, and
(b) if any of the Lenders may not lawfully continue to maintain a Borrowing
which bears interest at or by reference to the LIBO Rate, the applicable
Borrowing shall immediately be converted to a Borrowing which bears interest at
or by reference to the Alternate Base Rate.  For purposes of this Section 5.07,
a Change in Law or any change in rule, regulation, interpretation or
administration shall include, without limitation, any change made or which
becomes effective on the basis of a law, rule, regulation, interpretation or
administration presently in force, the effective date of which change is delayed
by the terms of such law, rule, regulation, interpretation or administration.

 

Section 5.08                             Eurodollar Lending Office  For any
Eurodollar Loan, if the Administrative Agent or a Lender, as applicable, shall
designate a Eurodollar Lending Office which maintains books separate from those
of the rest of the Administrative Agent or such Lender, the Administrative Agent
or such Lender, as the case may be, shall have the option of maintaining and
carrying the relevant Loan on the books of such Eurodollar Lending Office.

 

Section 5.09                             Right of Lenders to Fund through
Branches and Affiliates  Each Lender may, if it so elects, fulfill its
commitment as to any Borrowing hereunder by designating a branch or Affiliate of
such Lender to make such Borrowing; provided that (a) such Lender shall remain
solely responsible for the performances of its obligations hereunder and (b) no
such designation shall result in any increased costs to Borrower.

 

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Section 5.10                             Alternate Rate of Interest  At any time
that (a) the circumstances set forth in Section 5.06 or 5.07 have arisen and
such circumstances are unlikely to be temporary or (b) the circumstances set
forth in Section 5.06 or 5.07 have not arisen but either (i) the supervisor or
the administrator of the LIBO Screen Rate has made a public statement that the
administrator of the LIBO Screen Rate is insolvent (and there is no successor
administrator that will continue publication of the LIBO Screen Rate), (ii) the
administrator of the LIBO Screen Rate has made a public statement identifying a
specific date after which the LIBO Screen Rate will permanently or indefinitely
cease to be published by it (and there is no successor administrator that will
continue publication of the LIBO Screen Rate) or (iii) the supervisor for the
administrator of the LIBO Screen Rate or a Governmental Authority having
jurisdiction over the Administrative Agent has made a public statement
identifying a specific date after which the LIBO Screen Rate may no longer be
used for determining interest rates for loans, then the Administrative Agent and
the Borrower shall endeavor to establish an alternate rate of interest to the
LIBO Rate that gives due consideration to the then prevailing market convention
for determining a rate of interest for syndicated loans in the United States at
such time, and shall enter into an amendment to this Agreement to reflect such
alternate rate of interest and such other related changes to this Agreement as
may be applicable.  Notwithstanding anything to the contrary in Section 12.02,
such amendment shall become effective without any further action or consent of
any other party to this Agreement so long as the Administrative Agent shall not
have received, within five Business Days of the date notice of such alternate
rate of interest is provided to the Lenders, a written notice from the Required
Lenders stating that such Required Lenders object to such amendment.  At any
time that the circumstances set forth in Section 5.06 or 5.07 have arisen, then
until an alternate rate of interest shall be determined in accordance with this
Section 5.10, (i) any Revolving Credit Borrowing Request that requests the
conversion of any Revolving Credit Borrowing to, or continuation of any
Revolving Credit Borrowing as, a Eurodollar Borrowing shall be ineffective and
(ii) if any Borrowing Request requests a Eurodollar Borrowing, such Borrowing
shall be made as an ABR Borrowing; provided that, if such alternate rate of
interest shall be less than zero, such rate shall be deemed to be zero for the
purposes of this Agreement.

 

Section 5.11                             Interest Rates; LIBOR Notifications.  
The interest rate on Eurodollar Loans is determined by reference to the LIBO
Rate, which is derived from the London interbank offered rate.  The London
interbank offered rate is intended to represent the rate at which contributing
banks may obtain short-term borrowings from each other in the London interbank
market.  In July 2017, the U.K. Financial Conduct Authority announced that,
after the end of 2021, it would no longer persuade or compel contributing banks
to make rate submissions to the ICE Benchmark Administration (together with any
successor to the ICE Benchmark Administrator, the “IBA”) for purposes of the IBA
setting the London interbank offered rate. As a result, it is possible that
commencing in 2022, the London interbank offered rate may no longer be available
or may no longer be deemed an appropriate reference rate upon which to determine
the interest rate on Eurodollar Loans.  In light of this eventuality, public and
private sector industry initiatives are currently underway to identify new or
alternative reference rates to be used in place of the London interbank offered
rate.  In the event that the London interbank offered rate is no longer
available or in certain other circumstances as set forth in Sections 5.06 or
5.07 of this Agreement, Sections 5.06 or 5.07 provide a mechanism for
determining an alternative rate of interest.  The Administrative Agent will
notify the Borrower, pursuant to Sections 5.06 or 5.07, in advance of any change
to the reference rate upon which the interest rate on Eurodollar Loans is
based.  However, the Administrative Agent does not warrant or accept any
responsibility for, and shall

 

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not have any liability with respect to, the administration, submission or any
other matter related to the London interbank offered rate or other rates in the
definition of “LIBO Rate” or with respect to any alternative or successor rate
thereto, or replacement rate thereof, including without limitation, whether the
composition or characteristics of any such alternative, successor or replacement
reference rate, as it may or may not be adjusted pursuant to Section 5.06 or
5.07, will be similar to, or produce the same value or economic equivalence of,
the LIBO Rate or have the same volume or liquidity as did the London interbank
offered rate prior to its discontinuance or unavailability.

 

ARTICLE VI
CONDITIONS PRECEDENT

 

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

 

(a)                                 The Administrative Agent, the Arrangers and
the Lenders shall have received all commitment and agency fees and all other
fees and amounts due and payable on or prior to the Effective Date, including,
to the extent invoiced at least two (2) Business Days prior to the Effective
Date, reimbursement or payment of all out-of-pocket expenses required to be
reimbursed or paid by the Borrower hereunder (including, to the extent invoiced
at least two (2) Business Days prior to the Effective Date, the fees and
expenses of Vinson & Elkins L.L.P., counsel to the Administrative Agent).

 

(b)                                 The Administrative Agent shall have received
a certificate of the Secretary, Assistant Secretary or a Responsible Officer of
the Credit Parties each setting forth resolutions of the members, board of
directors or other appropriate governing body with respect to the authorization
of the Credit Parties to execute and deliver the Loan Documents to which it is a
party and to enter into the transactions contemplated in those documents, the
officers of the Credit Parties who are authorized to sign the Loan Documents to
which the Credit Parties is a party and who will, until replaced by another
officer or officers duly authorized for that purpose, act as its representative
for the purposes of signing documents and giving notices and other
communications in connection with this Agreement and the transactions
contemplated hereby, specimen signatures of such authorized officers, and the
limited liability company agreement, the articles or certificate of
incorporation and bylaws or other applicable organizational documents of the
Credit Parties, certified as being true and complete.  The Administrative Agent
and the Lenders may conclusively rely on such certificate until the
Administrative Agent receives notice in writing from the Credit Parties to the
contrary.

 

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

 

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

 

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

 

(f)                                   The Administrative Agent shall have
received duly executed Revolving Credit Notes payable to each Revolving Credit
Lender requesting a Revolving Credit Note (to the extent requested at least two
(2) Business Days prior to the Effective Date) in a principal amount equal to
its Maximum Credit Amount dated as of the date hereof.

 

(g)                                  The Administrative Agent shall have
received from each party thereto duly executed counterparts (in such number as
may be requested by the Administrative Agent) of (i) the Guarantee Agreement and
(ii) each Security Instrument described on Exhibit D.  In connection with the
execution and delivery of the Security Instruments, the Administrative Agent
shall be reasonably satisfied that the Security Instruments create first
priority, perfected Liens (subject only to Permitted Liens) on, among other
things, at least 85% of the total value of the Proved Oil and Gas Properties
evaluated in the Initial Reserve Report.

 

(h)                                 The Administrative Agent shall have received
an opinion of (i) Simpson Thacher & Bartlett LLP, counsel to the Credit Parties
and (ii) local counsel to the Credit Parties in the State of Colorado, in each
case form and substance reasonably satisfactory to the Administrative Agent.

 

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

 

(j)                                    The Administrative Agent shall have
received title information as the Administrative Agent may reasonably require
setting forth the status of title to at least 85% of the total value of the
Proved Oil and Gas Properties evaluated in the Initial Reserve Report.

 

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

 

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

 

(m)                             The Administrative Agent shall have received a
duly executed payoff letter with respect to the Existing Credit Agreement and
shall have received evidence satisfactory to it (including mortgage releases and
UCC-3 financing statement terminations) that substantially simultaneously with
the Effective Date and the initial funding hereunder, the Existing Credit
Agreement is being repaid in full and the commitments thereunder will be
terminated and that the Liens securing the Existing Credit Agreement are being
released, subject only to the filing of applicable terminations and releases.

 

(n)                                 The Administrative Agent shall have received
appropriate UCC and other lien search certificates reflecting no prior Liens
encumbering the Properties of the Credit Parties

 

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for the State of Delaware and any other jurisdiction requested by the
Administrative Agent, other than those being assigned or released on or prior to
the Effective Date or Permitted Liens.

 

(o)                                 The Administrative Agent shall have received
the Initial Reserve Report accompanied by a certificate covering the matters
described in Section 8.12(c).

 

(p)                                 The Administrative Agent and the Lenders
shall have received, and be reasonably satisfied in form and substance with, all
documentation and other information required by bank regulatory authorities
under applicable “know-your-customer” and anti-money laundering rules and
regulations, including but not restricted to the USA PATRIOT Act, to the extent
that Administrative Agent and/or the Lender have requested such documentation or
other information at least five (5) Business Days prior to the Effective Date.

 

(q)                                 No material litigation, arbitration or
similar proceeding shall be pending or threatened which calls into question the
validity or enforceability of this Agreement, the other Loan Documents or the
Transactions.

 

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

 

The Administrative Agent shall notify the Borrower and the Lenders of the
Effective Date, and such notice shall be conclusive and binding.

 

Section 6.02                             Each Credit Event  The obligation of
each Lender to make a Loan on the occasion of any Borrowing (including the
initial funding, but excluding a Revolving Credit Borrowing to continue or
convert any outstanding Revolving Credit Borrowing), and of the Issuing Banks to
issue, amend, renew or extend any Letter of Credit (but excluding any automatic
renewal or extension of any Letter of Credit, or amendment the sole purpose of
which is to extend or renew any Letter of Credit), is subject to the
satisfaction of the following conditions (or waiver in accordance with
Section 12.02):

 

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

 

(b)                                 The representations and warranties of the
Credit Parties set forth in this Agreement and in the other Loan Documents shall
be true and correct in all material respects (unless already qualified by
materiality in which case such applicable representation and warranty shall be
true and correct) on and as of the date of such Borrowing or the date of
issuance, amendment, renewal or extension of such Letter of Credit, as
applicable, except to the extent any such representations and warranties are
expressly limited to an earlier date, in which case, on and as of the date of
such Borrowing or the date of issuance, amendment, renewal or extension of such
Letter of Credit, as applicable, such representations and warranties shall
continue to be true and correct in all material respects (unless already
qualified by materiality in which case such applicable representation and
warranty shall be true and correct) as of such specified earlier date.

 

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(c)                                  The making of such Loan or the issuance,
amendment, renewal or extension of such Letter of Credit, as applicable, would
not conflict with, or cause any Lender or any Issuing Bank to violate or exceed,
any applicable Governmental Requirement.

 

(d)                                 The receipt by the Administrative Agent of a
Revolving Credit Borrowing Request in accordance with Section 2.03 or a request
for a Letter of Credit in accordance with Section 2.07(b), as applicable.

 

Each request for a Borrowing and each request for the issuance, amendment,
renewal or extension of any Letter of Credit shall be deemed to constitute a
representation and warranty by the Borrower on the date thereof as to the
matters specified in Section 6.02(a) and (b).

 

ARTICLE VII
REPRESENTATIONS AND WARRANTIES

 

The Borrower represents and warrants to the Lenders that:

 

Section 7.01                             Organization; Powers  Each of the
Credit Parties is duly organized, validly existing and in good standing under
the laws of the jurisdiction of its organization, has all requisite corporate or
other organizational power and authority, and has all material governmental
licenses, authorizations, consents and approvals necessary, to own its assets
and to carry on its business as now conducted, and is qualified to do business
in, and is in good standing in, every jurisdiction where such qualification is
required, except where failure to have such licenses, authorizations, consents,
approvals and/or qualifications would not reasonably be expected to have a
Material Adverse Effect.

 

Section 7.02                             Authority; Enforceability  The
Transactions are within each Credit Party’s corporate, limited liability company
or partnership powers and have been duly authorized by all necessary corporate,
limited liability company or partnership action and, if required, action by any
holders of its Equity Interests (including, without limitation, any action
required to be taken by any class of directors, managers or supervisors, whether
interested or disinterested, as applicable, of the Credit Parties or any other
Person, in order to ensure the due authorization of the Transactions).  Each
Loan Document to which a Credit Party is a party has been duly executed and
delivered by such Credit Party and constitutes a legal, valid and binding
obligation of such Credit Party, enforceable in accordance with its terms,
subject to applicable bankruptcy, insolvency, reorganization, moratorium or
other laws affecting creditors’ rights generally and subject to general
principles of equity, regardless of whether considered in a proceeding in equity
or at law.

 

Section 7.03                             Approvals; No Conflicts  The
Transactions (a) do not require any consent or approval of, registration or
filing with, or any other action by, any Governmental Authority or any other
third Person, nor is any such consent, approval, registration, filing or other
action necessary for the validity or enforceability of any Loan Document or the
consummation of the Transactions, except such as have been obtained or made and
are in full force and effect other than the recording and filing of the Security
Instruments as required by this Agreement and those approvals or consents which,
if not made or obtained, would not cause a Default hereunder or would not
reasonably be expected to have a Material Adverse Effect and (b) will not
violate or

 

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result in a default under any indenture, agreement or other instrument
evidencing Material Indebtedness binding upon any Credit Party or any of their
respective assets, or give rise to a right thereunder to require any payment to
be made by any Credit Party.

 

Section 7.04                             Financial Condition; No Material
Adverse Change

 

(a)                                 The Borrower has heretofore furnished to the
Lenders the audited consolidated balance sheet and related statements of income,
stockholders equity and cash flows of the Borrower and its Consolidated
Subsidiaries (i) as of and for the fiscal year ended December 31, 2017, reported
on by Grant Thornton LLP, and (ii) as of and for the fiscal quarter ended
September 30, 2018, together with a certification by a Financial Officer that
the financial statements described in this clause (ii) present fairly, in all
material respects, the financial position and results of operations and cash
flows of the Borrower and its Consolidated Subsidiaries as of such dates and for
such periods in accordance with GAAP, subject to year-end audit adjustments and
the absence of footnotes in the case of the statements referred to in
clause (ii) above.

 

(b)                                 Since December 31, 2017, there has been no
event, development or circumstance that has had a Material Adverse Effect.

 

(c)                                  Except as listed on Schedule 7.04(c) or as
permitted under Section 9.02, no Credit Party has on the date hereof after
giving effect to the Transactions, any Material Indebtedness or any off-balance
sheet liabilities, liabilities for past due taxes, or any unusual forward or
long-term commitments which are, in the aggregate, material to the Credit
Parties taken as a whole or material with respect to the Borrower’s consolidated
financial condition, required under GAAP to be shown but are not shown in the
Borrower’s latest audited consolidated financial statements referred to in
Section 7.04(a)(i).

 

Section 7.05                             Litigation  Except as set forth on
Schedule 7.05, there are no actions, suits, investigations or proceedings that
involve any Loan Document or the Transactions by or before any arbitrator or
Governmental Authority pending against or, to the knowledge of the Borrower,
threatened against or affecting any Credit Party not fully covered by insurance
(except for deductibles) as to which there is a reasonable probability of an
adverse determination that, if adversely determined, would reasonably be
expected, individually or in the aggregate, to result in a Material Adverse
Effect (after taking into account insurance proceeds or other recoveries from
third parties actually received).

 

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

 

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

 

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

 

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Permit will be revoked or that any application for any new Environmental Permit
or renewal of any existing Environmental Permit will be denied;

 

(c)                                  there are no claims, demands, suits,
orders, or proceedings concerning any violation of, or any liability (including
as a potentially responsible party) under, any applicable Environmental Laws
that is pending or, to the Borrower’s knowledge, threatened against the Borrower
or any of its Subsidiaries or any of their respective Properties or as a result
of any operations at such Properties that would reasonably be expected to be
determined adversely;

 

(d)                                 none of the Properties of the Borrower and
its Subsidiaries contain or, to Borrower’s knowledge, have contained any: 
underground storage tanks; asbestos-containing materials; landfills or dumps;
hazardous waste management units as defined pursuant to RCRA or any comparable
state law; or sites on or nominated for the National Priority List promulgated
pursuant to CERCLA or any state remedial priority list promulgated or published
pursuant to any comparable state law;

 

(e)                                  there has been no Release or, to the
Borrower’s knowledge, threatened Release, of Hazardous Materials at, on, under
or from any of the Borrower’s or its Subsidiaries’ Properties, that require, or
that would reasonably be expected to result in, any investigation, remediation,
abatement, removal, or monitoring of Hazardous Materials under applicable
Environmental Laws at such Properties and, to the knowledge of the Borrower,
none of such Properties are adversely affected by any Release or threatened
Release of a Hazardous Material originating or emanating from any other real
property;

 

(f)                                   no Credit Party or its respective
Subsidiaries has received any written notice asserting an alleged liability or
obligation under any applicable Environmental Laws with respect to the
investigation, remediation, abatement, removal, or monitoring of any Hazardous
Materials at, under, or Released or threatened to be Released from any real
properties offsite the Borrower’s or any of its Subsidiaries’ Properties and, to
the Borrower’s knowledge, there are no conditions or circumstances that would
reasonably be expected to result in the receipt of such written notice;

 

(g)                                  to the Borrower’s knowledge, there has been
no exposure of any Person or Property to any Hazardous Materials as a result of
or in connection with Borrower’s or any of its Subsidiaries’ operations of its
Properties that could reasonably be expected to form the basis for a claim for
damages or compensation; and

 

(h)                                 to the extent requested by the
Administrative Agent, the Borrower has made available to the Administrative
Agent complete and correct copies of all non-privileged environmental site
assessment reports, and non-privileged studies on material environmental matters
(including matters relating to any alleged non-compliance with or liability
under Environmental Laws) that are in the Borrower’s possession or control and
relating to any of the Borrower’s or any of its Subsidiaries’ Properties or
operations thereon.

 

Section 7.07                             Compliance with the Laws and
Agreements; No Defaults

 

(a)                                 Each of the Credit Parties is in compliance
with all Governmental Requirements applicable to it or its Property and all
agreements and other instruments binding upon it or its Property, and possesses
all licenses, permits, franchises, exemptions, approvals and

 

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other governmental authorizations necessary for the ownership of its Property
and the conduct of its business, except where the failure to do so, individually
or in the aggregate, would not reasonably be expected to result in a Material
Adverse Effect.

 

(b)                                 No Credit Party is in default and no event
or circumstance has occurred which, but for the expiration of any applicable
grace period or the giving of notice, or both, would constitute a default or
would require any Credit Party to Redeem or make any offer to Redeem under any
indenture, note, credit agreement or instrument pursuant to which any Material
Indebtedness is outstanding or by which any Credit Party or any of their
Properties is bound.

 

(c)                                  No Default has occurred and is continuing.

 

Section 7.08                             Investment Company Act  No Credit Party
is an “investment company” within the meaning of, or subject to regulation
under, the Investment Company Act of 1940, as amended.

 

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

 

Section 7.10                             ERISA  Except for such matters that,
individually or in the aggregate, would not reasonably be expected to have a
Material Adverse Effect:

 

(a)                                 The Credit Parties and each ERISA Affiliate
have complied in all material respects with ERISA and, where applicable, the
Code regarding each Plan.

 

(b)                                 Each Plan is, and has been, established and
maintained in substantial compliance with its terms, ERISA and, where
applicable, the Code.

 

(c)                                  No act, omission or transaction has
occurred which could result in imposition on the Borrower, any other Credit
Party or any ERISA Affiliate (whether directly or indirectly) of either a civil
penalty assessed pursuant to subsections (c), (i), (l) or (m) of section 502 of
ERISA or a tax imposed pursuant to Chapter 43 of Subtitle D of the Code or
breach of fiduciary duty liability damages under section 409 of ERISA.

 

(d)                                 Full payment when due has been made of all
amounts which the Credit Parties or any ERISA Affiliate is required under the
terms of each Plan or applicable law to have paid as contributions to such Plan
as of the date hereof.

 

(e)                                  No ERISA Event individually or together
with any other ERISA Event, has occurred or is reasonably expected to occur.

 

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(f)                                   No Credit Party and no ERISA Affiliate
sponsors, maintains, or contributes to an 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, with
respect to which its sponsorship of, maintenance of or contribution to may not
be terminated by the applicable Credit Party or any ERISA Affiliate in its sole
discretion at any time without any liability other than for benefits due as of,
or claims incurred prior to, the effective date of such termination.

 

Section 7.11                             Disclosure; No Material Misstatements 
The certificates, written statements and reports, and other written information,
taken as a whole, furnished by or on behalf of the Credit Parties to the
Administrative Agent and the Lenders in connection with the negotiation of any
Loan Document (as modified or supplemented by other information so furnished),
do not contain any material misstatement of fact or omit to state any material
fact necessary to make the statements therein, in the light of the circumstances
under which they were or are made, not misleading as of the date such
information is dated or certified; provided that (a) to the extent any such
certificate, written statement, written report, or written information was based
upon or constitutes a forecast or projection, each Credit Party represents only
that such certificate, written statement, written report or written information
was prepared in good faith based on assumptions believed to be reasonable at the
time delivered (it being recognized by the Lenders, however, that projections as
to future events are not to be viewed as facts and that results during the
period(s) covered by such projections may differ from the projected results and
that such differences may be material and that the Credit Parties make no
representation that such projections will be realized) and (b) as to any such
written statements, written information and written reports furnished on behalf
of the Credit Parties to the Administrative Agent and the Lenders by third
parties in connection with the negotiation of any Loan Document (as modified or
supplemented by other information so furnished), the Borrower represents only
that it is not aware of any material misstatement or omission therein.

 

Section 7.12                             Insurance  The Borrower has, and has
caused all of its other Credit Parties to have, all insurance policies
sufficient for the compliance by each of them with all material Governmental
Requirements and all material agreements and insurance coverage in at least
amounts and against such risk (including, without limitation, public liability)
that are usually insured against by companies similarly situated and engaged in
the same or a similar business for the assets and operations of the Credit
Parties.  The Administrative Agent and the Lenders have been named as additional
insured in respect of such liability insurance policies and the Administrative
Agent, on behalf of the Lenders, has been named as loss payee with respect to
Property loss insurance.

 

Section 7.13                             Restriction on Liens  No Credit Party
is a party to any material agreement or arrangement, or subject to any order,
judgment, writ or decree, which either restricts or purports to restrict its
ability to grant Liens to the Administrative Agent and the Lenders on or in
respect of their Properties to secure the Debt and the Loan Documents, or
restricts any Credit Party from paying dividends or making any other
distributions in respect of its Equity Interests to any other Credit Party, or
restricts any Credit Party from making loans or advances to any other Credit
Party, or which requires the consent of other Persons in connection therewith,
except, in each case, for such encumbrances or restrictions permitted under
Section 9.12.

 

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Section 7.14                             Subsidiaries  Except as set forth on
Schedule 7.14 or as disclosed in writing to the Administrative Agent (which
shall promptly furnish a copy to the Lenders), which shall be a supplement to
Schedule 7.14, the Borrower has no Restricted Subsidiaries.  The Borrower has no
Foreign Subsidiaries.

 

Section 7.15                             Location of Business and Offices  The
correct legal name, business address, type of organization and jurisdiction of
organization, tax identification number and other relevant identification
numbers of the Credit Parties are set forth on Schedule 1.3 hereto (or, in each
case, as set forth in a notice delivered to the Administrative Agent pursuant to
Section 8.01(i) in accordance with Section 12.01).

 

Section 7.16                             Properties; Titles, Etc

 

(a)                                 Each of the Credit Parties has good and
defensible title to their respective Oil and Gas Properties evaluated in the
most recently delivered Reserve Report and good title to all its material
personal Properties, in each case, free and clear of all Liens except Permitted
Liens.  The Credit Parties own in all material respects the net interests in
production attributable to the Hydrocarbon Interests as reflected in the most
recently delivered Reserve Report, and the ownership of such Properties shall
not in any material respect obligate the Credit Parties to bear the costs and
expenses relating to the maintenance, development and operations of each such
Property in an amount in excess of the working interest of each Property set
forth in the most recently delivered Reserve Report that is not offset by at
least a corresponding proportionate increase in the Credit Parties’ net revenue
interest in such Property.

 

(b)                                 All leases and agreements necessary for the
conduct of the business of the Credit Parties are valid and subsisting, in full
force and effect, and no Credit Party is in default beyond all applicable grace
or cure periods under any such lease or agreement which default would reasonably
be expected to have a Material Adverse Effect.

 

(c)                                  The rights and Properties presently owned,
leased or licensed by the Credit Parties including, without limitation, all
easements and rights of way, include all rights and Properties necessary to
permit the Credit Parties to conduct their business in all material respects in
the same manner as their business has been conducted in the twelve months prior
to the date hereof.

 

(d)                                 All of the Properties of the Credit Parties
which are reasonably necessary for the operation of their businesses are in good
working condition, normal wear and tear excepted, and are maintained in
accordance with prudent business standards.

 

(e)                                  Each Credit Party owns, or is licensed to
use, all trademarks, trade names, copyrights, patents and other intellectual
Property material to its business, and the use thereof by the Credit Parties
does not infringe upon the rights of any other Person, except for any such
infringements that, individually or in the aggregate, would not reasonably be
expected to result in a Material Adverse Effect.  The Credit Parties either own
or have valid licenses or other rights to use all databases, geological data,
geophysical data, engineering data, seismic data, maps, interpretations and
other technical information used in their businesses as presently conducted,
subject to the limitations contained in the agreements governing the use of the
same.

 

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

 

Section 7.18                             Marketing of Production  Except for
contracts listed and in effect on the date hereof on Schedule 7.18, and
thereafter either disclosed in writing to the Administrative Agent or included
in the most recently delivered Reserve Report, no material agreements exist
which are not cancelable on 60 days’ notice or less without penalty or detriment
for the sale of production from the Credit Parties’ Hydrocarbons (including,
without limitation, calls on or other rights to purchase, production, whether or
not the same are currently being exercised) that pertain to the sale of
production at a fixed price and have a maturity or expiry date of longer than
six (6) months from the date hereof or the date of such Reserve Report, as
applicable.

 

Section 7.19                             Swap Agreements  Schedule 7.19, as of
the date hereof, and after the date hereof, each report required to be delivered
by the Borrower pursuant to Section 8.01(e), as of the date of (or as of the
date(s) otherwise set forth in) such report, sets forth, a true and complete
list of all Swap Agreements of the Credit Parties, the material terms thereof
(including the type, term, effective date, termination date and notional amounts
or volumes), the net mark to market value thereof (as of the last Business Day
of the most recent fiscal quarter preceding the Effective Date and for which a
mark to market value is reasonably available), all credit support agreements
relating thereto (including any margin required or supplied) and the
counterparty to each such agreement.

 

Section 7.20                             Use of Loans and Letters of Credit  The
proceeds of the Loans and the Letters of Credit shall be used for working
capital, for lease acquisitions, for exploration and production operations, for
development (including the drilling and completion of producing wells), for the
payment of fees and expenses incurred in connection with this Agreement and for
any other general business purposes.  The Credit Parties are not engaged
principally, or as one of its or their important activities, in the business of
extending credit for the purpose, whether immediate, incidental or ultimate, of
buying or carrying margin stock (within the meaning of Regulation T, U or X of
the Board).  No part of the proceeds of any Loan or Letter of Credit will be
used for any purpose which violates the provisions of Regulations T, U or X of
the Board.

 

Section 7.21                             Solvency  After giving effect to the
Transactions (including each Borrowing or issuance of any Letter of Credit
hereunder), the aggregate assets (after giving effect to amounts that could
reasonably be expected to be received by reason of indemnity, offset, insurance
or any similar arrangement), at a fair valuation, of the Credit Parties, taken
as a whole, exceed the aggregate Debt of the Credit Parties on a consolidated
basis, the Credit Parties, taken as a whole, have not incurred and do not intend
to incur, and do not believe that they have incurred, Debt beyond their ability
to pay such Debt (after taking into account the timing and amounts of cash they
reasonably expect could be received and the amounts that they reasonably expect
could be payable on or in respect of their liabilities, and giving effect to
amounts that that could reasonably

 

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be expected to be received by reason of indemnity, offset, insurance or any
similar arrangement) as such Debt becomes absolute and matures and the Credit
Parties, taken as a whole, do not have (and do not have reason to believe that
it will have thereafter) unreasonably small capital for the conduct of their
business.

 

Section 7.22                             Anti-Corruption Laws and Sanctions  The
Borrower has implemented and maintains in effect policies and procedures
designed to ensure compliance by the Borrower, its Subsidiaries and their
respective directors, officers, employees and agents with Anti-Corruption Laws
and applicable Sanctions, and the Borrower, its Subsidiaries and their
respective officers and directors and to the knowledge of the Borrower its
employees and agents, are in compliance with Anti-Corruption Laws and applicable
Sanctions in all material respects.  None of (a) the Borrower, any Subsidiary or
any of their respective directors, officers or employees, or (b) to the
knowledge of the Borrower, any agent of the Borrower or any its Subsidiaries
that will act in any capacity in connection with or benefit from the credit
facility established hereby, is a Sanctioned Person.  No Borrowing or Letter of
Credit, use of proceeds or other transaction contemplated by the Credit
Agreement will violate Anti-Corruption Laws or applicable Sanctions.

 

Section 7.23                             EEA Financial Institutions  No Credit
Party is an EEA Financial Institution.

 

Section 7.24                             Security Instruments  The Security
Instruments are effective to create in favor of the Administrative Agent, for
the benefit of the Secured Parties, a legal, valid and enforceable security
interest in the Mortgaged Property and Collateral and proceeds thereof, as
applicable.  Subject to the proviso to Section 8.18, the Secured Obligations are
secured by legal, valid and enforceable first priority perfected Liens in favor
of the Administrative Agent, covering and encumbering (a) the Mortgaged Property
and (b) the Collateral granted pursuant to the Security Agreement, including the
pledged Equity Interests and the Deposit Accounts, Securities Accounts and
Commodities Accounts, in each case to the extent perfection has occurred, as the
case may be, by the recording of a mortgage, the filing of a UCC financing
statement, or, in the case of Deposit Accounts, Securities Accounts and
Commodities Accounts, by obtaining of “control” or, with respect to Equity
Interests represented by certificates, by possession (in each case, to the
extent applicable in the applicable jurisdiction); provided that, except in the
case of pledged Equity Interests, Permitted Liens may exist.

 

ARTICLE VIII
AFFIRMATIVE COVENANTS

 

Until the Commitments have expired or been terminated and the principal of and
interest on each Loan and all fees payable hereunder and all other amounts
payable under the Loan Documents shall have been paid in full and all Letters of
Credit shall have expired or terminated and all Reimbursement Obligations shall
have been reimbursed, the Borrower covenants and agrees with the Lenders that:

 

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

 

(a)                                 Annual Financial Statements.  Within 90 days
after the end of each fiscal year of the Borrower commencing with the fiscal
year ended December 31, 2018, the audited

 

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consolidated balance sheet and related statements of operations, members’ equity
and cash flows of the Borrower and its Consolidated Subsidiaries as of the end
of and for such year, setting forth in each case in comparative form the figures
for the previous fiscal year, all reported on by Grant Thornton LLP or other
independent public accountants of recognized national standing (without a “going
concern” or like qualification or exception (other than a “going concern” or
like qualification or exception that is solely as a result of the Loans maturing
within the next 365 days) and without any qualification or exception as to the
scope of such audit) to the effect that such consolidated financial statements
present fairly in all material respects the financial condition and results of
operations of the Borrower and its Consolidated Subsidiaries on a consolidated
basis in accordance with GAAP consistently applied.

 

(b)                                 Quarterly Financial Statements.  Within 45
days after the end of each of the first three fiscal quarters of each fiscal
year of the Borrower commencing with the fiscal quarter ending March 31, 2019,
the consolidated balance sheet and related statements of operations, members’
equity and cash flows of the Borrower and its Consolidated Subsidiaries as of
the end of and for such fiscal quarter and the then elapsed portion of the
fiscal year, setting forth in each case in comparative form the figures for the
corresponding period or periods of (or, in the case of the balance sheet, as of
the end of) the previous fiscal year, all certified by one of its Financial
Officers as presenting fairly in all material respects the financial condition
and results of operations of the Borrower and its Consolidated Subsidiaries on a
consolidated basis in accordance with GAAP consistently applied, subject to
normal year-end audit adjustments and the absence of footnotes.

 

(c)                                  Certificate of Financial Officer —
Compliance.  Concurrently with any delivery of financial statements under
Section 8.01(a) or Section 8.01(b), a compliance certificate of a Financial
Officer in substantially the form of Exhibit C hereto certifying as to whether a
Default then exists and, if a Default then exists, specifying the details
thereof and any action taken or proposed to be taken with respect thereto,
setting forth reasonably detailed calculations demonstrating compliance with
Section 9.01, and stating whether any change in the application of GAAP to the
Borrower’s financial statements has been made since the preparation of the
Borrower’s audited annual financial statements most recently delivered under
Section 8.01(a) (or, if no such audited financial statements have yet been
delivered, since the preparation of the Financial Statements) and, if any such
change has occurred, specifying the effect of such change on the financial
statements accompanying such certificate.

 

(d)                                 Certificate of Financial Officer —
Consolidated Subsidiaries.  If, at any time, all of the Consolidated
Subsidiaries of the Borrower are not Consolidated Restricted Subsidiaries, then
concurrently with any delivery of financial statements under Section 8.01(a) or
Section 8.01(b), a certificate of a Financial Officer setting forth
consolidating spreadsheets that show all Consolidated Unrestricted Subsidiaries
and the eliminating entries, in such form as would be presentable to the
auditors of the Borrower.

 

(e)                                  Certificate of Financial Officer — Swap
Agreements.  Concurrently with each delivery of a Reserve Report pursuant to
Section 8.12(a), a certificate of a Financial Officer, in form and substance
satisfactory to the Administrative Agent in its reasonable discretion, setting
forth as of the last Business Day of the most recently ended fiscal year or
period, as applicable, (i) a true and complete list of all Swap Agreements of
the Credit Parties, the material terms thereof

 

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(including the type, term, effective date, termination date and notional amounts
or volumes), the net mark-to-market value therefor (as of the last Business Day
of such fiscal year or period, as applicable and for which a mark-to-market
value is reasonably available), any new credit support agreements relating
thereto not listed on Schedule 7.19, any margin required or supplied under any
credit support document, and the counterparty to each such agreement and
(ii) the aggregate projected production from Oil and Gas Properties for the
forthcoming five-year period.

 

(f)                                   Certificate of Insurer — Insurance
Coverage.  On or prior to the date that is thirty (30) days after the renewal of
the applicable policies, one or more certificates of insurance coverage from the
Credit Parties’ insurance broker or insurers with respect to the insurance
required by Section 8.07, in form and substance satisfactory to the
Administrative Agent in its reasonable discretion, and, if requested by the
Administrative Agent, copies of the applicable policies.

 

(g)                                  SEC and Other Filings; Reports to
Shareholders.  To the extent not readily available on a public web site or on an
intranet web site to which the Administrative Agent has access, then promptly
after the same become publicly available, copies of all periodic and other
reports, proxy statements and other materials filed by any Credit Party with the
SEC, or with any national securities exchange, or distributed by the Borrower to
its shareholders generally, as the case may be. Documents required to be
delivered pursuant to Section 8.01(a), Section 8.01(b), and this
Section 8.01(g) may be delivered electronically and shall be deemed to have been
delivered on the date on which the Borrower posts such documents to EDGAR (or
such other free, publicly-accessible internet database that may be established
and maintained by the SEC as a substitute for or successor to EDGAR).

 

(h)                                 Notices Under Material Instruments. 
Promptly after any Credit Party’s receipt thereof, copies of any notice of
default received by such Credit Party pursuant to any Material Indebtedness, and
not otherwise required to be furnished to the Lenders pursuant to any other
provision of this Section 8.01.

 

(i)                                     Information Regarding Borrower and
Guarantors.  Prompt written notice (and in any event within five (5) Business
Days subsequent thereto) of any change in any Credit Party’s corporate name, in
the location of any Credit Party’s chief executive office, in the Credit Party’s
identity or corporate, limited liability company or partnership structure or in
the jurisdiction in which such Person is incorporated or formed, in the Credit
Party’s jurisdiction of organization or such Person’s organizational
identification number in such jurisdiction of organization, and in the Credit
Party’s federal taxpayer identification number.

 

(j)                                    Production Report and Lease Operating
Statements.  Concurrently with the delivery of each Reserve Report under
Section 8.12(a), a report setting forth, for each calendar month during the then
current fiscal year to date, the volume of production and sales attributable to
production (and the prices at which such sales were made and the revenues
derived from such sales) for each such calendar month from the Oil and Gas
Properties set forth in such Reserve Report, setting forth the related ad
valorem, severance and production taxes and lease operating expenses
attributable thereto and incurred for each such calendar month, and setting
forth the drilling and operations for each such calendar month.

 

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(k)                                 Notices of Certain Changes.  Promptly, but
in any event within five (5) Business Days after the execution thereof, copies
of any material amendment, modification or supplement to the certificate of
formation, limited liability company agreement, articles of incorporation,
by-laws, any preferred stock designation or any other organic document of any
Credit Party, in each case to the extent not delivered (or deemed delivered)
pursuant to Section 8.01(g).

 

(l)                                     Cash Flow Forecast.  Concurrently with
the delivery of each Reserve Report as of December 31 of each year under
Section 8.12(a), a copy of the plan and forecast (including a projected
consolidated balance sheet, income statement and funds flow statement) of the
Borrower for each fiscal quarter for the forthcoming four quarter period in form
reasonably satisfactory to the Administrative Agent.

 

(m)                             Other Requested Information.  Promptly following
any reasonable request therefor, (i) such other information regarding the
operations, business affairs and financial condition of the Credit Parties
(including any Plan and any reports or other information required to be filed
with respect thereto under the Code or under ERISA), or compliance with the
terms of this Agreement or any other Loan Document, as the Administrative Agent
or any Lender may reasonably request and (ii) information and documentation
reasonably requested by the Administrative Agent or any Lender for purposes of
compliance with applicable “know your customer” and anti-money laundering
rules and regulations including the USA PATRIOT Act.

 

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

 

(a)                                 the occurrence of any Default;

 

(b)                                 the filing or commencement of, or the threat
in writing of, any action, suit, proceeding, investigation or arbitration by or
before any arbitrator or Governmental Authority against or affecting the
Borrower or any of its Subsidiaries not previously disclosed in writing to the
Lenders or any material adverse development in any action, suit, proceeding,
investigation or arbitration (whether or not previously disclosed to the
Lenders) that, in either case, is reasonably likely to be adversely determined,
and if so determined, would reasonably be expected to result in a Material
Adverse Effect;

 

(c)                                  the occurrence of any ERISA Event that
results in, or would reasonably be expected to result in, a Material Adverse
Effect; and

 

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

 

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

 

Section 8.03                             Existence; Conduct of Business  The
Borrower will, and will cause each other Credit Party to, do or cause to be done
all things necessary to preserve, renew and keep in full force and effect
(a) its legal existence as a Person organized or existing under the laws of the

 

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United States, any state thereof, the District of Columbia, or any territory
thereof and (b) the rights, licenses, permits, privileges and franchises
material to the conduct of its business and maintain, if necessary, its
qualification to do business in each other jurisdiction in which its Oil and Gas
Properties is located or the ownership of its Properties requires such
qualification, except where the failure to so qualify would not reasonably be
expected to have a Material Adverse Effect; provided that the foregoing shall
not prohibit any merger, consolidation, liquidation or dissolution permitted
under Section 9.08.

 

Section 8.04                             Payment of Obligations  The Borrower
will, and will cause each other Credit Party to, pay its obligations, including
Tax liabilities of the Credit Parties, before the same shall become delinquent
or in default, except where the validity or amount thereof is being contested in
good faith by appropriate proceedings, and such Credit Parties have set aside on
their books adequate reserves with respect thereto in accordance with GAAP and
the failure to make payment pending such contest would not reasonably be
expected to result in a Material Adverse Effect or result in the seizure or levy
of any Property of any Credit Party.

 

Section 8.05                             Performance of Obligations under Loan
Documents  The Borrower will pay the Loans in accordance with the terms hereof,
and the Borrower will, and will cause each other Credit Party to, do and perform
every act and discharge all of the obligations to be performed and discharged by
them under the Loan Documents, including, without limitation, this Agreement, at
the time or times and in the manner specified.

 

Section 8.06                             Operation and Maintenance of
Properties  The Borrower, at its own expense, will, and will cause each other
Credit Party to:

 

(a)                                 operate its Oil and Gas Properties and other
material Properties or, if it is not the operator thereof, use commercially
reasonable efforts to cause such Oil and Gas Properties and other material
Properties to be operated, in a careful and efficient manner in accordance with
the generally accepted practices of the industry and in compliance in all
material respects with all applicable contracts and agreements, except, in each
case, where the failure to do so would not reasonably be expected to have a
Material Adverse Effect.

 

(b)                                 keep and maintain all Property material to
the conduct of its business in good working order and condition, ordinary wear
and tear excepted, and preserve, maintain and keep in good repair, working order
and efficiency (ordinary wear and tear and depletion excepted) all of its Oil
and Gas Properties, except, in each case, where the failure to do so would not
reasonably be expected to have a Material Adverse Effect.

 

(c)                                  promptly pay and discharge, or make
reasonable and customary efforts to cause to be paid and discharged, all delay
rentals, royalties, expenses and indebtedness accruing under the leases or other
agreements affecting or pertaining to its Oil and Gas Properties and do all
other things necessary to keep unimpaired their rights with respect thereto and
prevent any forfeiture thereof or default by the Credit Parties thereunder,
except where the failure to do so would not reasonably be expected to result in
a Material Adverse Effect.

 

(d)                                 promptly perform or make reasonable and
customary efforts to cause to be performed, in accordance with customary
industry standards, the obligations required by the

 

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assignments, deeds, leases, sub-leases, contracts and agreements affecting its
interests in its Oil and Gas Properties and other material Properties, except,
in each case, where the failure to do so would not reasonably be expected to
have a Material Adverse Effect.

 

(e)                                  to the extent the Borrower is not the
operator of any Property, the Credit Parties shall use commercially reasonable
efforts to cause the operator to comply with this Section 8.06.

 

Section 8.07                             Insurance  The Borrower will, and will
cause each other Credit Party to, maintain, with financially sound and reputable
insurance companies, insurance in such amounts and against such risks as are
customarily maintained by companies engaged in the same or similar businesses
operating in the same or similar locations.  The Administrative Agent and the
Lenders shall be named as additional insured in respect of such liability
insurance policies, and the Administrative Agent, on behalf of the Lenders,
shall be named as loss payee with respect to Property loss insurance covering
Collateral and such policies shall provide that the Administrative Agent shall
receive 30 days’ notice of cancellation or non-renewal.

 

Section 8.08                             Books and Records; Inspection Rights 
The Borrower will, and will cause each other Credit Party to, keep books of
record and account in conformity with GAAP.  The Borrower will, and will cause
each other Credit Party to, permit any representatives designated by the
Administrative Agent or Majority Lenders, upon reasonable prior notice, to visit
and inspect its Properties, to examine and make extracts from its books and
records, and to discuss its affairs, finances and condition with its officers
and independent accountants, all at such reasonable times and as reasonably
requested and at the sole expense of the Borrower; provided, however, unless an
Event of Default then exists and is continuing, not more than one such
inspection per calendar year shall be at the expense of the Borrower.

 

Section 8.09                             Compliance with Laws  The Borrower
will, and will cause each other Credit Party to, comply with all laws, rules,
regulations and orders of any Governmental Authority applicable to it or its
Property, except where the failure to do so, individually or in the aggregate,
would not reasonably be expected to result in a Material Adverse Effect.  The
Borrower will maintain in effect and enforce policies and procedures designed to
ensure compliance by itself, its Subsidiaries and their respective directors,
officers, employees and agents with Anti-Corruption Laws and applicable
Sanctions.

 

Section 8.10                             Environmental Matters

 

(a)                                 The Borrower shall at its sole expense:
comply, cause each of its Subsidiaries and each such Subsidiary’s Properties and
operations to comply or, if it is not the operator thereof, use commercially
reasonable efforts to cause its Properties and operations to comply, with all
applicable Environmental Laws, the breach of which would reasonably be expected
to have a Material Adverse Effect; not Release or threaten to Release, and shall
cause each of its Subsidiaries not to Release or threaten to Release, any
Hazardous Material on, under, about or from any of its or its Subsidiaries’
Properties or any other property offsite the Property to the extent caused by
its or any of its Subsidiaries’ operations except in compliance with applicable
Environmental Laws, the Release or threatened Release of which would reasonably
be expected to have a Material Adverse Effect; timely obtain or file, and shall
cause each of its Subsidiaries to

 

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timely obtain or file, all Environmental Permits, if any, required under
applicable Environmental Laws to be obtained or filed in connection with the
operation or use of its Subsidiaries’ Properties, which failure to obtain or
file would reasonably be expected to have a Material Adverse Effect; promptly
commence and diligently prosecute to completion, and shall cause each of its
Subsidiaries to promptly commence and diligently prosecute to completion, any
assessment, evaluation, investigation, monitoring, containment, cleanup,
removal, repair, restoration, remediation or other remedial obligations
(collectively, the “Remedial Work”) in the event any Remedial Work is required
under applicable Environmental Laws because of or in connection with the actual
or suspected past, present or future Release or threatened Release of any
Hazardous Material on, under, about or from any of its or its Subsidiaries’
Properties, which failure to commence and diligently prosecute to completion
would reasonably be expected to have a Material Adverse Effect; conduct, and
cause its Subsidiaries to conduct, their respective operations and businesses in
a manner that will not expose any Property or Person to Hazardous Materials that
would reasonably be expected to cause the Borrower or its Subsidiaries to owe
material damages or compensation; and establish and implement, and shall cause
each of its Subsidiaries to establish and implement, such procedures as may be
necessary to determine and assure that the Borrower’s and its Subsidiaries’
obligations under this Section 8.10(a) are timely and fully satisfied, which
failure to establish and implement would reasonably be expected to have a
Material Adverse Effect.

 

(b)                                 If Borrower or any of its Subsidiaries
receives written notice of any action or, investigation by any Governmental
Authority or any threatened demand or lawsuit by any Person against the Borrower
or any of its Subsidiaries or their Properties, in each case in connection with
any Environmental Laws, the Borrower will within fifteen days after any
Responsible Officer learns thereof give written notice of the same to
Administrative Agent if the Borrower would reasonably anticipate that such
action will result in liability (whether individually or in the aggregate) in
excess of $4,000,000, not fully covered by insurance, subject to normal
deductibles.

 

Section 8.11                             Further Assurances

 

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

 

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

 

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covering the Mortgaged Property or any part thereof shall be sufficient as a
financing statement where permitted by law.

 

Section 8.12                             Reserve Reports

 

(a)                                 On or before April 1 and October 1 of each
year, commencing April 1, 2019, the Borrower shall furnish to the Administrative
Agent and the Revolving Credit Lenders a Reserve Report evaluating the Oil and
Gas Properties of the Borrower and its Subsidiaries as of the immediately
preceding December 31 or June 30, respectively.  The Reserve Report as of
December 31 of each year shall be prepared or audited by one or more Approved
Petroleum Engineers, and the Reserve Report as of June 30 of each year shall be
prepared either by Approved Petroleum Engineers or by Borrower’s internal
reserve engineering staff, which shall certify such Reserve Report to be true
and accurate in all material respects (with appropriate exceptions for
projections and cost estimates) and to have been prepared in accordance with the
procedures used in the immediately preceding December 31 Reserve Report.

 

(b)                                 In the event of an Interim Redetermination,
the Borrower shall furnish to the Administrative Agent and the Revolving Credit
Lenders a Reserve Report prepared by Borrower’s internal reserve engineering
staff, which shall certify such Reserve Report to be true and accurate in all
material respects (with appropriate exceptions for projections and cost
estimates) and to have been prepared in accordance with the procedures used in
the immediately preceding December 31 Reserve Report.  For any Interim
Redetermination requested by the Administrative Agent or the Borrower pursuant
to Section 2.06(b), the Borrower shall provide such Reserve Report with an “as
of” date as required by the Administrative Agent as soon as possible, but in any
event no later than thirty (30) days following the receipt of such request.

 

(c)                                  With the delivery of each Reserve Report,
the Borrower shall provide to the Administrative Agent and the Revolving Credit
Lenders a certificate from a Responsible Officer (i) certifying that (A) the
information contained in the Reserve Report and any other information delivered
in connection therewith is true and correct, (B) each Credit Party owns good and
defensible title to the Oil and Gas Properties evaluated in such Reserve Report
and such Properties are free and clear of all Liens except for Permitted Liens,
(C) except as set forth on an exhibit to the certificate, there are no Material
Gas Imbalances with respect to the Oil and Gas Properties evaluated in such
Reserve Report, (D) none of their Proved Oil and Gas Properties have been sold
since the date of the last Borrowing Base determination except as set forth on
an exhibit to the certificate, which certificate shall list all such Oil and Gas
Properties sold and attached thereto is a schedule of the Oil and Gas Properties
evaluated by such Reserve Report that are Mortgaged Properties and (E) attached
thereto is a list of all marketing agreements entered into subsequent to the
later of the date hereof or the most recently delivered certificate delivered
under this Section 8.12(c) which the Borrower would reasonably be expected to
have been obligated to list on Schedule 7.18 had such agreement been in effect
on the date hereof and (ii) demonstrating the percentage of the total value of
the Proved Oil and Gas Properties that the value of such Mortgaged Properties
represents in compliance with Section 8.14(a).

 

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Section 8.13                             Title Information

 

(a)                                 Within thirty (30) days after the delivery
to the Administrative Agent and the Revolving Credit Lenders of each Reserve
Report required by Section 8.12(a), the Borrower will deliver title information
in form and substance reasonably acceptable to the Administrative Agent covering
enough of the Oil and Gas Properties evaluated by such Reserve Report that were
not included in the immediately preceding Reserve Report, so that the
Administrative Agent shall have received together with title information
previously delivered to the Administrative Agent, reasonably satisfactory title
information on at least (i) 85% of the total value of the Oil and Gas Properties
evaluated by such Reserve Report and (ii) 85% of the total value of the Oil and
Gas Properties that are classified as proved developed nonproducing reserves and
proved developed producing reserves evaluated by such Reserve Report.

 

(b)                                 If the Borrower has provided title
information for additional Properties under Section 8.13(a), the Borrower shall,
within 60 days after notice from the Administrative Agent that title defects or
exceptions exist with respect to such additional Properties, either (i) cure any
such title defects or exceptions (including defects or exceptions as to
priority) which are not Permitted Liens raised by such information,
(ii) substitute acceptable Mortgaged Properties with no title defects or
exceptions except for Excepted Liens (other than Excepted Liens described in
clauses (e) and (j) of such definition)  having an aggregate equivalent value or
(iii) deliver title information in form and substance reasonably requested by
the Administrative Agent so that the Administrative Agent shall have received,
together with title information previously delivered to the Administrative
Agent, satisfactory title information to comply with Section 8.13(a).

 

(c)                                  If the Borrower is unable to cure any title
defect requested by the Administrative Agent or the Lenders to be cured within
the 60-day period or the Borrower does not comply with the requirements to
provide reasonably acceptable title information provided for in Section 8.13(a),
such default shall not be a Default or Event of Default, but instead the
Administrative Agent and/or the Required Lenders shall have the right to
exercise the following remedy in their sole discretion from time to time, and
any failure to so exercise this remedy at any time shall not be a waiver as to
future exercise of the remedy by the Administrative Agent or the Required
Lenders: such unacceptable Mortgaged Property shall not count towards the
requirement provided for in Section 8.13(a), and the Administrative Agent may
send a notice to the Borrower and the Lenders that the then outstanding
Borrowing Base shall be reduced by an amount as determined by the Required
Lenders to cause the Borrower to be in compliance with the requirement to
provide acceptable title information as required in Section 8.13(a).  This new
Borrowing Base shall become effective immediately after receipt of such notice.

 

Section 8.14                             Additional Collateral; Additional
Guarantors

 

(a)                                 In connection with each redetermination of
the Borrowing Base, the Borrower shall review the Reserve Report and the list of
current Mortgaged Properties (as described in Section 8.12(c)) to ascertain
whether the Mortgaged Properties represent at least 85% of the total value of
the Oil and Gas Properties evaluated in the most recently completed Reserve
Report after giving effect to exploration and production activities,
acquisitions, dispositions and production.  In the event that the Mortgaged
Properties do not represent at least 85% of such total value as determined by
the Administrative Agent, then the Borrower shall, or shall cause one or

 

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more of the other Credit Parties to, grant, within thirty (30) days after
delivery of the certificate required under Section 8.12(c), to the
Administrative Agent as security for the Obligations, Security Instruments
covering additional Oil and Gas Properties not already subject to a Lien of the
Security Instruments such that after giving effect thereto, the Mortgaged
Properties will represent at least 85% of such total value.  All such Liens will
be created and perfected by and in accordance with the provisions of deeds of
trust, security agreements and financing statements or other Security
Instruments, all in form and substance reasonably satisfactory to the
Administrative Agent and in sufficient executed (and acknowledged where
necessary or appropriate) counterparts for recording purposes.  If any
Subsidiary of the Borrower places a Lien on its Oil and Gas Properties in order
to comply with the foregoing, and such Subsidiary is not a Guarantor, then it
shall become a Guarantor and comply with Section 8.14(b).

 

(b)                                 The Borrower shall promptly cause each
Domestic Subsidiary that is not an Unrestricted Subsidiary to Guarantee the
Obligations pursuant to the Guarantee Agreement.  In connection with any such
Guarantee, the Borrower shall, or shall cause such Subsidiary to, promptly, but
in any event no later than 30 days (or such later date as the Administrative
Agent may agree in its reasonable discretion) after the formation or acquisition
(or other similar event) of such Subsidiary to, execute and deliver (i) a
supplement to the Guarantee Agreement executed by such Subsidiary, (ii) a
supplement executed by such Subsidiary to the Security Agreement executed by the
Credit Parties on the Effective Date, (iii) a pledge all of the Equity Interests
of such Subsidiary (including, without limitation, delivery of original stock
certificates evidencing the Equity Interests of such Subsidiary, together with
an appropriate undated stock powers for each certificate duly executed in blank
by the registered owner thereof) and (iv) such other additional closing
documents, certificates and legal opinions as shall reasonably be requested by
the Administrative Agent.

 

Section 8.15                             ERISA Compliance  The Borrower will
promptly furnish and will cause its Subsidiaries and any ERISA Affiliate to
promptly furnish to the Administrative Agent promptly after request therefor by
the Administrative Agent, copies of each annual and other report with respect to
each Plan or any trust created thereunder, and promptly upon becoming aware of
the occurrence of any “prohibited transaction,” as described in section 406 of
ERISA or in section 4975 of the Code for which no exception exists or is
available by statute, regulation, administrative exemption, or otherwise, in
connection with any Plan or any trust created thereunder, a written notice
signed by the President or the principal Financial Officer, such Subsidiary or
the ERISA Affiliate, as the case may be, specifying the nature thereof, what
action the Borrower, such Subsidiary or the ERISA Affiliate is taking or
proposes to take with respect thereto, and, when known, any action taken or
proposed by the Internal Revenue Service or the Department of Labor with respect
thereto.

 

Section 8.16                             Marketing Activities  The Borrower will
not, and will not permit any of its Subsidiaries to, engage in marketing
activities for any Hydrocarbons or enter into any contracts related thereto
other than contracts for the sale of Hydrocarbons scheduled or reasonably
estimated to be produced from their Proved Oil and Gas Properties during the
period of such contract, contracts for the sale of Hydrocarbons scheduled or
reasonably estimated to be produced from Proved Oil and Gas Properties of third
parties during the period of such contract associated with the Oil and Gas
Properties of the Credit Parties that any Credit Party has the right to market
pursuant to joint operating agreements, unitization agreements or other similar
contracts that are

 

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usual and customary in the oil and gas business and other contracts for the
purchase and/or sale of Hydrocarbons of third parties (A) which have generally
offsetting provisions (i.e. corresponding pricing mechanics, delivery dates and
points and volumes) such that no “position” is taken and (B) for which
appropriate credit support has been taken to alleviate the material credit risks
of the counterparty thereto.

 

Section 8.17                             Unrestricted Subsidiaries

 

(a)                                 Unless designated as an Unrestricted
Subsidiary in accordance with Section 8.17(b), any Person that becomes a
Domestic Subsidiary of the Borrower or any of its Restricted Subsidiaries shall
be classified as a Restricted Subsidiary.

 

(b)                                 The Borrower may designate by written
notification thereof to the Administrative Agent, any Person that would
otherwise be a Restricted Subsidiary of the Borrower, including a newly formed
or newly acquired Person that would otherwise be a Subsidiary of the Borrower,
as an Unrestricted Subsidiary if (i) prior, and after giving effect, to such
designation, neither a Default nor a Borrowing Base Deficiency would exist,
(ii) such Person does not own or operate any Oil and Gas Properties included in
the most recently delivered Reserve Report for which a Borrowing Base has been
established, other than Oil and Gas Properties permitted to be sold or otherwise
transferred pursuant to Section 9.10 (which shall count as a Transfer
thereunder), (iii) such Person is not a guarantor or the primary obligor with
respect to any Debt permitted under Section 9.02(f) unless such Person will be
released contemporaneously with such designation, (iv) such Person is not a
party to any agreement, contract, arrangement or understanding with the Borrower
or any Subsidiary unless the terms of such agreement, contract, arrangement or
understanding are permitted by Section 9.11, (v) such designation is deemed to
be an Investment in an Unrestricted Subsidiary and such Investment would be
permitted to be made under Section 9.05(k) and (vi) the Administrative Agent
shall have received a certificate of a Responsible Officer certifying that such
designation complies with the requirements of this Section 8.17(b).  For
purposes of the foregoing, the designation of a Person as an Unrestricted
Subsidiary shall be deemed to be the designation of all present and future
subsidiaries of such Person as Unrestricted Subsidiaries.  Except as provided in
this Section 8.17(b), no Restricted Subsidiary may be redesignated as an
Unrestricted Subsidiary. For the avoidance of doubt, the Borrower may designate
any Subsidiary that directly owns Qualified Midstream Assets as an Unrestricted
Subsidiary in accordance with the requirements of this Section 8.17(b).

 

(c)                                  The Borrower may designate any Unrestricted
Subsidiary to be a Restricted Subsidiary if after giving effect to such
designation, (i) the representations and warranties of the Credit Parties
contained in each of the Loan Documents are true and correct in all material
respects on and as of such date as if made on and as of the date of such
designation (or, if stated to have been made expressly as of an earlier date,
were true and correct in all material respects as of such date), (ii) no Default
would exist and (iii) the Borrower complies with the requirements of
Section 8.14, Section 8.18 and Section 9.11.

 

(d)                                 The Borrower will cause the management,
business and affairs of each Credit Party to be conducted in such a manner
(including, without limitation, by keeping separate books of account, furnishing
separate financial statements of Unrestricted Subsidiaries to creditors and
potential creditors thereof and by not permitting Properties of the Credit
Parties to be

 

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commingled) so that each Unrestricted Subsidiary will be treated as an entity
separate and distinct from Credit Parties;

 

(e)                                  The Borrower will cause each Unrestricted
Subsidiary (i) to refrain from maintaining its assets in such a manner that
would make it costly or difficult to segregate, ascertain or identify as its
individual assets from those of any other Credit Party and (ii) to observe all
corporate formalities;

 

(f)                                   The Borrower will not, and will not permit
any other Credit Party to, incur, assume, guarantee or be or become liable for
any Debt of any of the Unrestricted Subsidiaries except to the extent permitted
by this Agreement;

 

(g)                                  The Borrower will not, and will not permit
any other Credit Party to, permit any credit agreement for a senior credit
facility, a loan agreement for a senior credit facility, a note purchase
agreement for the sale of promissory notes or an indenture governing capital
markets debt instruments pursuant to which any Credit Party is a borrower,
issuer or guarantor (the “Relevant Debt”), the terms of which would, upon the
occurrence of a default under any Debt of an Unrestricted Subsidiary, (i) result
in, or permit the holder of any Relevant Debt to declare a default on such
Relevant Debt or (ii) cause the payment of any Relevant Debt to be accelerated
or payable before the fixed date on which the principal of such Relevant Debt is
due and payable; and

 

(h)                                 The Borrower will not permit any
Unrestricted Subsidiary to hold any Equity Interest in, or any Debt of, any
Credit Party.

 

Section 8.18                             Account Control Agreements  The
Borrower will, and will cause each other Credit Party to, in connection with any
Deposit Account, Securities Account and/or Commodities Account (other than an
Excluded Account for so long as it is an Excluded Account) established, held or
maintained after the Effective Date promptly, but in any event within thirty
(30) days after the establishment of such account (or such later date as the
Administrative Agent may agree in its sole discretion), cause such Deposit
Account, Securities Account and/or Commodities Account (other than an Excluded
Account for so long as it is an Excluded Account) to be subject to a Control
Agreement; provided, that, notwithstanding the foregoing, with respect to
Deposit Accounts, Securities Accounts and/or Commodities Accounts (other than
Excluded Accounts) in existence on the Effective Date, the Borrower shall not be
required to comply with this Section 8.18 until the date that is 45 days
following the Effective Date (or such later date as the Administrative Agent may
agree in its sole discretion).  In addition, the Borrower will, and will cause
each other Credit Party to, maintain and hold Deposit Accounts (other than an
Excluded Account for so long as it is an Excluded Account) only with Lenders or
Affiliates of Lenders.

 

ARTICLE IX
NEGATIVE COVENANTS

 

Until the Commitments have expired or terminated and the principal of and
interest on each Loan and all fees payable hereunder and all other amounts
payable under the Loan Documents have been paid in full and all Letters of
Credit have expired or terminated and all Reimbursement Obligations shall have
been reimbursed, the Borrower covenants and agrees with the Lenders that:

 

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Section 9.01                             Financial Covenants

 

(a)                                 Current Ratio.  The Borrower will not permit
the Current Ratio, as of the last day of any fiscal quarter, to be less than 1.0
to 1.0.

 

(b)                                 Leverage Ratio.  The Borrower will not
permit the Leverage Ratio, as of the last day of any fiscal quarter, to be
greater than 4.0 to 1.0.

 

Section 9.02                             Debt  The Borrower will not, nor will
it permit any other Credit Party to, incur, create, assume or suffer to exist
any Debt, except:

 

(a)                                 the Notes or other Obligations arising under
the Loan Documents, or Cash Management Agreements or the Secured Swap
Agreements;

 

(b)                                 Debt under Capital Leases or that
constitutes Purchase Money Indebtedness; provided that the aggregate principal
amount of all Debt described in this Section 9.02(b) at the time incurred (after
giving effect to such incurrence) shall not exceed the greater of
(i) $25,000,000 and (ii) 5% of the Borrowing Base;

 

(c)                                  intercompany Debt between the Borrower and
any other Credit Party or between Credit Parties; provided that such Debt is not
held, assigned, transferred, negotiated or pledged to any Person other than a
Credit Party; and, provided further, that any such Debt owed by a Credit Party
shall be subordinated to the Obligations on terms set forth in the Guarantee
Agreement;

 

(d)                                 Debt constituting a Guarantee by a Credit
Party of the Obligations;

 

(e)                                  other unsecured Debt not to exceed in the
aggregate at the time incurred (after giving effect to such incurrence) the
greater of (i) $25,000,000 and (ii) 5% of the Borrowing Base;

 

(f)                                   additional secured or unsecured Debt;
provided that, (i) no Default or Borrowing Base Deficiency exists at the time of
the incurrence of such Debt or would result therefrom (including after giving
effect to any automatic reduction of the Borrowing Base pursuant to
Section 2.06(e)), (ii) after giving pro forma effect to the incurrence of such
Debt and any concurrent repayments, (x) the Leverage Ratio does not exceed 3.25
to 1.00 and (y) the Current Ratio is not less than 1.0 to 1.0, (iii) such Debt
does not require any scheduled amortization of principal or have a maturity date
prior to 180 days after the Revolving Credit Maturity Date at the time of the
incurrence of such Debt, (iv) the covenants and events of default contained in
the documentation governing such Debt are (1) in the case of financial
covenants, not more restrictive than the financial covenants of this Agreement
and the other Loan Documents and (2) in the case of other covenants and events
of default, taken as a whole, not more restrictive than the corresponding terms
of this Agreement and the other Loan Documents in each case as reasonably
determined in good faith by the Borrower, (v) the documents governing such Debt
do not contain any mandatory prepayment or Redemption provisions (other than
customary change of control or asset sale tender offer provisions) which would
require a mandatory prepayment or Redemption of such Debt in priority to the
Loans, (vi) such Debt does not prohibit prior repayment of the Obligations and
(vii) if such Debt is secured, (A) an Intercreditor Agreement shall have been

 

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entered into with respect to such Debt and (B) there shall be no Lien on the
assets of any Credit Party securing any such Debt if the same assets are not
subject to a Lien securing the Indebtedness;

 

(g)                                  Debt which constitutes a Permitted
Refinancing of Debt outstanding or incurred under Section 9.02(f);

 

(h)                                 Debt incurred or deposits made by the Credit
Parties (i) under worker’s compensation laws, unemployment insurance laws or
similar legislation, (ii) in connection with bids, tenders, contracts (other
than for the payment of Debt) or leases to which such Credit Party is a party,
(iii) to secure public or statutory obligations of such Credit Party, and
(iv) of cash or U.S. government securities made to secure the performance of
statutory obligations, surety, stay, customs and appeal bonds to which such
Credit Party is a party in connection with the operation of the Hydrocarbon
Interests in the ordinary course of business; and

 

(i)                                     Debt of any Credit Party assumed in
connection with any acquisition permitted by Section 9.05 so long as such Debt
is not incurred in contemplation of such acquisition, and any Permitted
Refinancing thereof; provided that after giving pro forma effect to such
acquisition and the assumption of such Debt, (i) the Leverage Ratio does not
exceed 3.25 to 1.00 and (ii) the Current Ratio is not less than 1.0 to 1.0.

 

Section 9.03                             Liens  The Borrower will not, nor will
it permit any other Credit Party to, create, incur, assume or permit to exist
any Lien on any of its Properties (now owned or hereafter acquired), except:

 

(a)                                 Liens securing the payment of any
Obligations;

 

(b)                                 Excepted Liens;

 

(c)                                  Liens securing Capital Leases and Purchase
Money Indebtedness permitted by Section 9.02(b) but only on the Property under
lease or the Property purchased with such Purchase Money Indebtedness;

 

(d)                                 Liens on escrowed proceeds for the benefit
of the related holders of debt securities or other Debt (or the underwriters or
arrangers thereof) or on cash set aside at the time of the incurrence of any
Debt purchased with such cash, in either case to the extent such cash prefunds
the payment of interest on such Debt and is held in an escrow account or similar
arrangement to be applied for such purpose;

 

(e)                                  Liens on Property not constituting
Hydrocarbon Interests and not otherwise permitted by this Section 9.03; provided
that the aggregate principal or face amount of all Debt secured by such Liens
pursuant to this Section 9.03(e), and the fair market value of the Properties
subject to such Liens (determined as of the date such Liens are incurred), shall
not exceed $25,000,000 at any time;

 

(f)                                   Liens to secure Debt permitted under
Section 9.02(i); provided that (i) the aggregate principal amount of all Debt
secured by such Liens pursuant to this Section 9.03(f) shall not exceed
$30,000,000 at any time, (ii) such Liens attach at all times only to the assets
acquired pursuant to such acquisition and (iii) such Liens shall not encumber
any Oil and Gas Properties;

 

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(g)                                  Liens on any deposits made in connection
with any Investment permitted by Section 9.05; and

 

(h)                                 Liens securing Permitted Additional Debt
permitted under Section 9.02(f).

 

Section 9.04                             Restricted Payments  The Borrower will
not, nor will it permit any other Credit Party to, declare or make, or agree to
pay or make, directly or indirectly (collectively in this section, “make”), any
Restricted Payment except:

 

(a)                                 any Credit Party may make Restricted
Payments to any other Credit Party;

 

(b)                                 the Borrower may make Restricted Payments
with respect to its Equity Interests payable solely in additional membership
interests or shares of its Equity Interests (other than Disqualified Capital
Stock);

 

(c)                                  the Borrower may make Restricted Payments
pursuant to and in accordance with stock option plans or other benefit plans for
management or employees of any Credit Party in an aggregate amount not to exceed
$2,500,000 in any fiscal year; and

 

(d)                                 any Credit Party may make a Restricted
Payment not otherwise permitted under this Section 9.04, provided that (i) no
Borrowing Base Deficiency, Default or Event of Default has occurred and is
continuing, or would result therefrom, and (ii) after giving pro forma effect to
such Restricted Payment, (A) the Leverage Ratio does not exceed 3.25 to 1.0 and
(B) the Commitment Utilization Percentage does not exceed 85%.

 

Section 9.05                             Investments, Loans and Advances  The
Borrower will not, nor will it permit any other Credit Party to, make or permit
to remain outstanding any Investments in or to any Person, except that the
foregoing restriction shall not apply to:

 

(a)                                 Investments reflected in the Financial
Statements or disclosed to the Lenders in Schedule 9.05;

 

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

 

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

 

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

 

(e)                                  demand deposits, and time deposits maturing
within one year from the date of creation thereof, with, or issued by any Lender
or any office located in the United States of any other bank or trust company
which is organized under the laws of the United States or any state thereof, has
capital, surplus and undivided profits aggregating at least $100,000,000 (as of
the date of such bank or trust company’s most recent financial reports) and has
a short term deposit rating of no lower than A2 or P2, as such rating is set
forth from time to time by S&P or Moody’s, respectively;

 

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

 

(g)                                  Investments made by any Credit Party in or
to any other Credit Party;

 

(h)                                 Investments in stock, obligations or
securities received in settlement of debts arising from Investments permitted
under this Section 9.05 owing to any Credit Party as a result of a bankruptcy or
other insolvency proceeding of the obligor in respect of such obligations or
upon the enforcement of such obligations or of any Lien securing such
obligations; provided that the Borrower shall give the Administrative Agent
prompt written notice in the event that the aggregate amount of all Investments
held at any one time under this Section 9.05(h) exceeds $2,000,000;

 

(i)                                     Investments constituting Debt permitted
under Section 9.02(c);

 

(j)                                    Guarantees constituting Debt permitted by
Section 9.02; and

 

(k)                                 Investments not otherwise permitted under
this Section 9.05; provided that (i) no Borrowing Base Deficiency, Default or
Event of Default has occurred and is continuing, or would result therefrom, and
(ii) after giving pro forma effect to such Investment, (A) the Leverage Ratio
does not exceed 3.25 to 1.0 and (B) the Commitment Utilization Percentage does
not exceed 85%.

 

Section 9.06                             Nature of Business  The Borrower will
not, nor will it permit any other Credit Party to, allow any material change to
be made in the character of their business, taken as a whole, as an independent
oil and gas exploration and production company.

 

Section 9.07                             Proceeds of Loans

 

(a)                                 The Borrower will not, nor will it permit
any other Credit Party to, permit the proceeds of the Loans to be used for any
purpose other than those permitted by Section 7.20.  No Credit Party or any
Person acting on behalf of any Credit Party has taken or will take any action
which might cause any of the Loan Documents to violate Regulations T, U or X or
any other regulation of the Board or to violate section 7 of the Securities
Exchange Act of 1934 or any rule or regulation thereunder, in each case as now
in effect or as the same may hereinafter be in effect.  If requested by the
Administrative Agent, the Borrower will furnish to the Administrative Agent and
each Lender a statement to the foregoing effect in conformity with the
requirements of FR Form U-1 or such other form referred to in Regulation U,
Regulation T or Regulation X of the Board, as the case may be.

 

(b)                                 The Borrower will not request any Borrowing
or Letter of Credit, and no Credit Party shall use, and shall procure that its
Subsidiaries and its or their respective directors, officers, employees and
agents shall not use, the proceeds of any Borrowing or Letter of Credit (i) in
furtherance of an offer, payment, promise to pay, or authorization of the
payment or giving of money, or anything else of value, to any Person in
violation of any Anti-Corruption Laws, (ii) for the purpose of funding,
financing or facilitating any activities, business or transaction of or with any
Sanctioned Person, or in any Sanctioned Country, except to the extent permitted
for a Person

 

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required to comply with Sanctions or (iii)  in any manner that would result in
the violation of  any Sanctions applicable to any party hereto.

 

Section 9.08                             Mergers, Etc  The Borrower will not,
nor will it permit any other Credit Party to, divide or merge into or with or
consolidate with any other Person, or permit any other Person to merge into or
consolidate with it, or sell, transfer, lease or otherwise dispose of (whether
in one transaction or in a series of transactions) all or substantially all of
its Property to any other Person (whether now owned or hereafter acquired) (any
such transaction, a “consolidation”), or liquidate or dissolve; provided that,
so long as no Default has occurred and is then continuing, (a) any Restricted
Subsidiary may participate in a consolidation with the Borrower (provided that
the Borrower shall be the survivor), (b) any Restricted Subsidiary may
participate in a consolidation with any other Restricted Subsidiary in a
transaction in which the surviving entity is a Restricted Subsidiary, (c) any
Restricted Subsidiary may dispose of its assets to the Borrower or to another
Restricted Subsidiary and (d) any Restricted Subsidiary may liquidate or
dissolve if the Borrower determines in good faith that such liquidation or
dissolution is in the best interests of the Borrower and is not materially
disadvantageous to the Lenders.

 

Section 9.09                             Sale or Discount of Receivables  Except
for receivables obtained by any Credit Party out of the ordinary course of
business or the settlement of joint interest billing accounts in the ordinary
course of business or discounts granted to settle collection of accounts
receivable or the sale of defaulted accounts arising in the ordinary course of
business in connection with the compromise or collection thereof and not in
connection with any financing transaction, the Borrower will not, nor will it
permit any other Credit Party to, enter into an agreement with any Person to
securitize any of its notes receivable or accounts receivable.

 

Section 9.10                             Sale of Properties  The Borrower will
not, nor will it permit any other Credit Party to, sell, assign, farm-out,
convey or otherwise transfer (collectively in this section, “Transfer”) any Oil
and Gas Property or any interest in Hydrocarbons produced or to be produced
therefrom or any Equity Interest in any Credit Party that owns any Oil and Gas
Property, commodity Swap Agreement or any interest in Hydrocarbons produced or
to be produced therefrom (in this section, an “E&P Credit Party”) or unwind or
terminate any commodity Swap Agreements, except for:

 

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

 

(b)                                 farmouts, swaps or trades of undeveloped
acreage not included in the most recently delivered Reserve Report and
assignments in connection with such farmouts, swaps or trades;

 

(c)                                  the Transfer of equipment that is no longer
necessary for the business of the Borrower or such other Credit Party or is
replaced by equipment of at least comparable value or use;

 

(d)                                 Transfers of Oil and Gas Properties that are
not Borrowing Base Properties;

 

(e)                                  (i) Transfers of Oil and Gas Properties
that comprise Borrowing Base Properties, provided that such Transfers are for
fair market value, (ii) the unwinding or termination of commodity Swap
Agreements; or (iii) Transfers of all (but not less than all) of the Equity

 

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Interests collectively owned by the Borrower and its Subsidiaries in any E&P
Credit Party; provided that in the case of clause (i) or (ii) above, except with
respect to any novation or replacement, as applicable, contemplated by the final
proviso of this Section 9.10(e), at least 75% (or such greater percentage as may
be required to eliminate any resulting Borrowing Base Deficiency) of the
consideration received in respect of such sale or other disposition or unwinding
or termination, as applicable, shall be cash or cash equivalents; provided,
further, that to the extent that, if during any period commencing with the later
of the most recent Scheduled Redetermination Date or the most recent adjustment
to the Borrowing Base pursuant to this Section 9.10 through the next Scheduled
Redetermination Date, Oil and Gas Properties and commodity Swap Agreements with
an aggregate Borrowing Base value in excess of five percent (5%) of the
Borrowing Base value of all Oil and Gas Properties included in the Borrowing
Base of the Credit Parties (as reasonably determined by the Administrative
Agent), are Transferred or unwound or terminated, as applicable, by any one or
more Credit Parties pursuant to this Section 9.10(e), then the Borrowing Base
will be reduced, effective immediately, by the Borrowing Base values in excess
of such five percent (5%) threshold; provided, further, that for purposes of the
foregoing proviso, (A) a commodity Swap Agreement shall be deemed to have not
been unwound or terminated if, (x) such commodity Swap Agreement is novated from
the existing counterparty to an Approved Counterparty, with the Borrower or the
applicable Credit Party being the “remaining party” for purposes of such
novation, or (y) upon its termination or unwinding, it is replaced, in a
substantially contemporaneous transaction, with one or more commodity Swap
Agreements with the same or longer tenor, covering volumes not less than and for
prices not less than those Swap Agreements being replaced and without cash
payments to any Credit Party in connection therewith, and (B) an Oil and Gas
Property shall be deemed to have not been Transferred if upon its Transfer, it
is replaced, in a substantially contemporaneous transaction, with Oil and Gas
Properties with approximately the same PV-9 value as reasonably determined by
Borrower in good faith and evidenced by delivery to the Administrative Agent of
a certificate of a Responsible Officer containing reasonably detailed supporting
information for such good faith determination; provided, that, this clause
(B) shall only apply and may only be relied on to the extent that the Oil and
Gas Properties so Transferred in exchange for other Oil and Gas Properties in
any period between two successive Scheduled Redetermination Dates does not
exceed 7.5% the Borrowing Base value of all Oil and Gas Properties included in
the Borrowing Base of the Credit Parties (as reasonably determined by the
Administrative Agent).  For the purposes of the preceding sentence, the Transfer
of an E&P Credit Party owning such Oil and Gas Properties and/or commodity Swap
Agreements pursuant to this Section 9.10(e) shall be deemed the Transfer of the
Oil and Gas Properties and the unwinding or termination of the commodity Swap
Agreements owned by such E&P Credit Party; and

 

(f)                                   Transfers in connection with Investments
permitted by Section 9.05.

 

Section 9.11                             Transactions with Affiliates  The
Borrower will not, nor will it permit any other Credit Party to, enter into any
transaction, including, without limitation, any purchase, sale, lease or
exchange of Property, with any Affiliate (other than one of the other Credit
Parties), other than (a) transactions that are upon fair and reasonable terms no
less favorable to it than it would obtain in a comparable arm’s length
transaction with a Person not an Affiliate, (b) transactions between Credit
Parties, (c) transactions between any Credit Party and any partnership listed on
Schedule 9.11, (d) any Restricted Payment permitted by Section 9.04, or (e) any
Investment permitted by Section 9.05.

 

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Section 9.12                             Subsidiaries  The Borrower will not,
nor will it permit any other Credit Party to, create or acquire any additional
Subsidiary or redesignate an Unrestricted Subsidiary as a Restricted Subsidiary
unless the Borrower complies with Section 8.14(b).  The Borrower will not, nor
will it permit any other Credit Party to, sell, assign or otherwise dispose of
any Equity Interests in any Credit Party except (a) to another Credit Party or
(b) in compliance with Section 9.10(e).  No Credit Party shall have any Foreign
Subsidiaries.

 

Section 9.13                             Negative Pledge Agreements; Dividend
Restrictions  The Borrower will not, nor will it permit any other Credit Party
to, create, incur, assume or suffer to exist any contract, agreement or
understanding (other than restrictions or conditions imposed by law, this
Agreement, the Security Instruments, agreements with respect to Purchase Money
Indebtedness or Capital Leases secured by Liens permitted by Section 9.03(c),
but then only with respect to the Property that is the subject of such Capital
Lease or Purchase Money Indebtedness, Liens permitted under Section 9.03(f) but
then only with respect to the assets subject of such Lien, Liens securing
Permitted Additional Debt under Section 9.03(h), and documents creating Liens
which are described in clause (d), (f), (h) or (i) of the definition of
“Excepted Liens”, but then only with respect to the Property that is the subject
of the applicable lease, document or license described in such clause (d), (f),
(h) or (i)) that in any way prohibits or restricts the granting, conveying,
creation or imposition of any Lien on any of its Property in favor of the
Administrative Agent for the benefit of the Secured Parties, or restricts any
Credit Party from paying dividends or making any other distributions in respect
of its Equity Interests to any Credit Party.

 

Section 9.14                             Swap Agreements

 

(a)                                 The Borrower will not, nor will it permit
any other Credit Party to, enter into any Swap Agreements with any Person other
than:

 

(i)                                     Swap Agreements in respect of
commodities with an Approved Counterparty fixing a price for a term of not more
than sixty months and the notional volumes for which (when aggregated with other
commodity Swap Agreements then in effect other than put or floor options as to
which an upfront premium has been paid or basis differential swaps on volumes
already hedged pursuant to other Swap Agreements) do not exceed, as of the date
such Swap Agreement is executed (A) for any month during the first two years of
the forthcoming five year period, the greater of (1) one hundred percent (100%)
of the reasonably anticipated projected production from Oil and Gas Properties
constituting PDP Reserves (as reflected in the most recently delivered Reserve
Report) for each of crude oil, natural gas, and natural gas liquids calculated
separately and (2) eighty-five percent (85%) of the reasonably anticipated
projected production from Oil and Gas Properties constituting Proved Reserves
(as reflected in the most recently delivered Reserve Report) for each of crude
oil, natural gas, and natural gas liquids calculated separately, and (B) for any
month during the last three years of the forthcoming five year period, the
greater of (1) eighty-five percent (85%) of the reasonably anticipated projected
production from Oil and Gas Properties constituting PDP Reserves (as reflected
in the most recently delivered Reserve Report) for each of crude oil, natural
gas, and natural gas liquids calculated separately and (2) sixty-five percent
(65%) of the reasonably anticipated projected production from Oil and Gas
Properties constituting Proved Reserves (as reflected in the most recently
delivered Reserve Report) for each of crude oil, natural gas, and natural gas
liquids calculated separately; provided that the Borrower (1) shall have the
option to update the reasonably

 

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anticipated projected production from Oil and Gas Properties between the
delivery of Reserve Reports hereunder (which updates shall be provided to the
Administrative Agent in writing and shall be in form and substance reasonably
satisfactory to the Administrative Agent) and (2) shall have the option to enter
into commodity Swap Agreements with an Approved Counterparty with respect to
(x) such updated projected production and subject to the volume limitations set
forth in this Section 9.14(a) and (y) reasonably anticipated projected
production from Oil and Gas Properties not then owned by the Credit Parties but
which are subject to a binding purchase agreement (in form and substance
reasonably satisfactory to the Administrative Agent) for which one or more of
the Credit Parties are scheduled to acquire such Oil and Gas Properties within
the applicable period (a “subject acquisition”), provided that, (I) the Credit
Parties are in compliance with this Section 9.14(a) after giving pro forma
effect to such subject acquisition and (II) if such subject acquisition does not
close for any reason on the date required thereunder, including any binding
extensions thereof, within thirty (30) days of such required closing date, the
Credit Parties shall unwind or otherwise terminate the Swap Agreements entered
into with respect to production that was to be acquired thereunder; and

 

(ii)                                  Swap Agreements in respect of interest
rates with an Approved Counterparty, the notional amounts of which (when
aggregated with all other Swap Agreements of the Credit Parties then in effect)
do not exceed seventy-five percent (75%) of the then outstanding principal
amount of the Borrower’s Debt for borrowed money.

 

(b)                                 In no event shall any Swap Agreement, other
than a master Swap Agreement pursuant to which any Credit Party executes only
put or floor options as to which an upfront premium has been paid, contain any
requirement, agreement or covenant for any Credit Party to post collateral or
margin to secure their obligations under such Swap Agreement other than the
benefit of the Security Instruments as contemplated herein.

 

(c)                                  If, after the end of any calendar month,
the Borrower determines that the aggregate notional volume of all Swap
Agreements in respect of commodities for such calendar month exceeded 100% of
actual production of Hydrocarbons in such calendar month, then the Borrower
shall (i) promptly notify the Administrative Agent of such determination, and
(ii) if requested by the Administrative Agent (or if otherwise necessary to
ensure compliance with Section 9.14(a)), within 30 days after such request,
terminate, create off-setting positions, or otherwise unwind or monetize
existing Swap Agreements such that, at such time, future volumes under commodity
Swap Agreements will not exceed 100% of reasonably anticipated projected
production for the then-current and any succeeding calendar months.

 

Section 9.15                             Permitted Additional Debt Restrictions

 

(a)                                 The Borrower will not, nor will it permit
any other Credit Party to, amend, modify, waive or otherwise change, consent or
agree to any amendment, modification, waiver or other change to, any of the
terms of the Permitted Additional Debt if (a) the effect thereof would be to
shorten the maturity of the Permitted Additional Debt to a date that is earlier
than 180 days after the Maturity Date, or (b) such action adds or amends any
representations and warranties, covenants or events of default to be more
restrictive or burdensome than this Agreement in each case as reasonably
determined in good faith by the Borrower without this Agreement being
contemporaneously amended to add similar provisions.

 

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(b)                                 The Borrower will not, nor will it permit
any other Credit Party to, prior to the date that is 180 days after the Maturity
Date, make or offer to make any optional or voluntary Redemption of or otherwise
optionally or voluntarily Redeem (whether in whole or in part) any principal in
respect of any Permitted Additional Debt, except (i) with the Net Cash Proceeds
of any substantially contemporaneous issuance of Equity Interests (other than
Disqualified Capital Stock) or in exchange for Equity Interests (other than
Disqualified Capital Stock), (ii) with the Net Cash Proceeds of any Permitted
Refinancing or (iii) if after giving pro forma effect to such Redemption, (A) no
Borrowing Base Deficiency or Default exists or results therefrom, (B) the
Commitment Utilization Percentage is not more than 85% and (C) the Leverage
Ratio is less than 3.25 to 1.0.

 

Section 9.16                             Amendments to Organizational Documents 
The Borrower will not, nor will it permit any other Credit Party to, amend,
supplement or otherwise modify (or permit to be amended, supplemented or
modified) its organizational documents in any respect that would reasonably be
expected to be materially adverse to the interests of the Administrative Agent
or the Revolving Credit Lenders without the consent of the Administrative Agent
(such consent not to be unreasonably withheld, conditioned or delayed).

 

Section 9.17                             Changes in Fiscal Periods  The Borrower
will not, nor will it permit any other Credit Party to, have its fiscal year end
on a date other than December 31 or change its method of determining fiscal
quarters without the consent of the Administrative Agent (such consent not to be
unreasonably withheld, conditioned or delayed).

 

ARTICLE X
EVENTS OF DEFAULT; REMEDIES

 

Section 10.01                      Events of Default  One or more of the
following events shall constitute an “Event of Default”:

 

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

 

(b)                                 the Borrower shall fail to pay any interest
on any Loan or any fee or any other amount (other than an amount referred to in
Section 10.01(a)) payable under any Loan Document, when and as the same shall
become due and payable, and such failure shall continue unremedied for a period
of five (5) Business Days.

 

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

 

(d)                                 any Credit Party shall fail to observe or
perform any covenant, condition or agreement contained in Section 8.02,
Section 8.03(a), Section 8.07, Section 8.18 or Article IX.

 

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(e)                                  any Credit Party shall fail to observe or
perform any covenant, condition or agreement contained in this Agreement (other
than those specified in Section 10.01(a), Section 10.01(b) or Section 10.01(d))
or any other Loan Document, and such failure shall continue unremedied for a
period of thirty (30) days after the earlier to occur of (i) a Responsible
Officer of the Borrower or any other Credit Party having knowledge of such
default or (ii) written notice thereof from the Administrative Agent to the
Borrower.

 

(f)                                   any Credit Party shall fail to make any
payment of principal or interest on any Material Indebtedness, when and as the
same shall become due and payable, and such failure to pay shall extend beyond
any applicable period of grace.

 

(g)                                  any event or condition occurs that results
in any Material Indebtedness becoming due prior to its scheduled maturity or
that enables or permits (with or without the giving of notice, the lapse of time
or both) the holder or holders of such Material Indebtedness or any trustee or
agent on its or their behalf to cause such Material Indebtedness to become due,
or to require the Redemption thereof or any offer to Redeem to be made in
respect thereof, prior to its scheduled maturity; provided that this
Section 10.01(g) shall not apply to (i) secured Debt that becomes due as a
result of the voluntary sale or transfer of the Property (permitted by this
Agreement) securing such Debt and (ii) Debt that becomes due as a result of a
change in law, tax regulation or accounting treatment so long as such Debt is
paid when due.

 

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

 

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

 

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

 

(k)                                 one or more judgments for the payment of
money in an aggregate amount in excess of the greater of (i) $20,000,000 or
(ii) 5% of the Borrowing Base (to the extent not covered (other than with
respect to deductible amounts) by independent third party insurance  as to which
the insurer does not dispute coverage and is not subject to an insolvency
proceeding),

 

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

 

(l)                                     the Loan Documents after delivery
thereof shall for any reason, except to the extent permitted by the terms
thereof, cease to be in full force and effect and valid, binding and enforceable
in accordance with their terms against the Credit Parties party thereto or shall
be repudiated by any of them, or cease to create valid and perfected Liens of
the priority required thereby on any material portion of the Collateral
purported to be covered thereby, except to the extent permitted by the terms of
this Agreement or the Security Instruments, or any Credit Party shall so state
in writing.

 

(m)                             a Change in Control shall occur.

 

(n)                                 An ERISA Event shall occur that,
individually or together with any other ERISA Event, could reasonably be
expected to have a Material Adverse Effect.

 

Section 10.02                      Remedies

 

(a)                                 In the case of an Event of Default other
than one described in Section 10.01(h), Section 10.01(i) and Section 10.01(j),
at any time thereafter during the continuance of such Event of Default, the
Administrative Agent may, and at the request of the Majority Lenders, shall, by
notice to the Borrower, take either or both of the following actions, at the
same or different times:  terminate the Commitments, and thereupon the
Commitments shall terminate immediately, and declare the Notes and the Loans
then outstanding to be due and payable in whole (or in part, in which case any
principal not so declared to be due and payable may thereafter be declared to be
due and payable), and thereupon the principal of the Loans so declared to be due
and payable, together with accrued interest thereon and all fees and other
obligations of the Credit Parties accrued hereunder and under the Notes and the
other Loan Documents (including, without limitation, the payment of cash
collateral to secure the Letter of Credit Obligations in an amount equal to the
greater of (x) 105% of the amount of such Letter of Credit Obligations and
(y) 105% of the maximum amount that may be available to be drawn at any time
prior to the stated expiry of all outstanding Letters of Credit), shall become
due and payable immediately, without presentment, demand, protest, notice of
intent to accelerate, notice of acceleration or other notice of any kind, all of
which are hereby waived by the Credit Parties; and in case of an Event of
Default described in Section 10.01(h), Section 10.01(i) or Section 10.01(j), the
Commitments shall automatically terminate and the Notes and the principal of the
Loans then outstanding, together with accrued interest thereon and all fees and
the other obligations of the Credit Parties accrued hereunder and under the
Notes and the other Loan Documents (including, without limitation, the payment
of cash collateral to secure the Letter of Credit Obligations in an amount equal
to the greater of (x) 105% of the amount of such Letter of Credit Obligations
and (y) 105% of the maximum amount that may be available to be drawn at any time
prior to the stated expiry of all outstanding Letters of Credit), shall
automatically become due and payable, without presentment, demand, protest or
other notice of any kind, all of which are hereby waived by each Credit Party.

 

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

 

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

 

(i)                                     first, to payment or reimbursement of
that portion of the Obligations constituting fees, expenses and indemnities
payable to the Administrative Agent in its capacity as such;

 

(ii)                                  second, pro rata to payment or
reimbursement of that portion of the Obligations constituting fees, expenses and
indemnities payable to the Lenders as permitted hereunder;

 

(iii)                               third, pro rata to payment of accrued
interest on the Revolving Credit Loans;

 

(iv)                              fourth, pro rata to payment of (A) principal
outstanding on the Revolving Credit Loans and to serve as cash collateral to
secure outstanding Letter of Credit Obligations, (B) Obligations under Secured
Swap Agreements then due and owing to Secured Swap Parties and (C) liabilities
to any Cash Management Bank arising in connection with Secured Cash Management
Agreements;

 

(v)                                 fifth, pro rata to any other Obligations;

 

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

 

Notwithstanding the foregoing, Excluded Swap Obligations with respect to any
Guarantor shall not be paid with amounts received from such Guarantor or its
assets, but appropriate adjustments shall be made with respect to payments from
other Credit Parties to preserve the allocation to the Obligations otherwise set
forth above in this Section 10.02.

 

ARTICLE XI
THE AGENTS

 

Section 11.01                      Authorization and Action

 

(a)                                 Each Lender and each Issuing Bank hereby
irrevocably appoints the entity named as Administrative Agent in the heading of
this Agreement and its successors and assigns to serve as the administrative
agent under the Loan Documents and each Lender and each Issuing Bank authorizes
the Administrative Agent to take such actions as agent on its behalf and to
exercise such powers under this Agreement and the other Loan Documents as are
delegated to the Administrative Agent under such agreements and to exercise such
powers as are reasonably incidental thereto. Without limiting the foregoing,
each Lender and each Issuing Bank hereby authorizes the Administrative Agent to
execute and deliver, and to perform its obligations under,

 

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each of the Loan Documents to which the Administrative Agent is a party, to
exercise all rights, powers and remedies that the Administrative Agent may have
under such Loan Documents.

 

(b)                                 As to any matters not expressly provided for
herein and in the other Loan Documents (including enforcement or collection),
the 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
written instructions of the Required Lenders (or such other number or percentage
of the Lenders as shall be necessary, pursuant to the terms in the Loan
Documents), and, unless and until revoked in writing, such instructions shall be
binding upon each Lender and each Issuing Bank; provided, however, that the
Administrative Agent shall not be required to take any action that (i) the
Administrative Agent in good faith believes exposes it to liability unless the
Administrative Agent receives an indemnification satisfactory to it from the
Lenders and the Issuing Banks with respect to such action or (ii) is contrary to
this Agreement or any other Loan Document or applicable law, including any
action that may be in violation of the automatic stay under any requirement of
law relating to bankruptcy, insolvency or reorganization or relief of debtors or
that may effect a forfeiture, modification or termination of property of a
Defaulting Lender in violation of any requirement of law relating to bankruptcy,
insolvency or reorganization or relief of debtors; provided, further, that the
Administrative Agent may seek clarification or direction from the Required
Lenders prior to the exercise of any such instructed action and may refrain from
acting until such clarification or direction has been provided. Except as
expressly set forth in the Loan Documents, the Administrative Agent shall not
have any duty to disclose, and shall not be liable for the failure to disclose,
any information relating to the Borrower, any Subsidiary or any Affiliate of any
of the foregoing that is communicated to or obtained by the Person serving as
Administrative Agent or any of its Affiliates in any capacity. Nothing in this
Agreement shall require the Administrative Agent to expend or risk its own funds
or otherwise incur any financial liability in the performance of any of its
duties hereunder or in the exercise of any of its rights or powers if it shall
have reasonable grounds for believing that repayment of such funds or adequate
indemnity against such risk or liability is not reasonably assured to it.

 

(c)                                  In performing its functions and duties
hereunder and under the other Loan Documents, the Administrative Agent is acting
solely on behalf of the Lenders and the Issuing Banks (except in limited
circumstances expressly provided for herein relating to the maintenance of the
Register), and its duties are entirely mechanical and administrative in nature.
Without limiting the generality of the foregoing:

 

(i)                                     the Administrative Agent does not assume
and shall not be deemed to have assumed any obligation or duty or any other
relationship as the agent, fiduciary or trustee of or for any Lender, Issuing
Bank or holder of any other obligation other than as expressly set forth herein
and in the other Loan Documents, regardless of whether a Default or an Event of
Default has occurred and is continuing (and it is understood and agreed that the
use of the term “agent” (or any similar term) herein or in any other Loan
Document with reference to the Administrative Agent is not intended to connote
any fiduciary duty or other implied (or express) obligations arising under
agency doctrine of any applicable law, and that such term is used as a matter of
market custom and is intended to create or reflect only an administrative
relationship between contracting parties); additionally, each Lender agrees that
it will not assert any claim against the Administrative Agent based on an
alleged breach of fiduciary duty by the

 

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Administrative Agent in connection with this Agreement and the transactions
contemplated hereby;

 

(ii)                                  where the Administrative Agent is required
or deemed to act as a trustee in respect of any Collateral over which a security
interest has been created pursuant to a Loan Document expressed to be governed
by the laws of the United States, the obligations and liabilities of the
Administrative Agent to the Secured Parties in its capacity as trustee shall be
excluded to the fullest extent permitted by applicable law; and

 

(iii)                               nothing in this Agreement or any Loan
Document shall require the Administrative Agent to account to any Lender for any
sum or the profit element of any sum received by the Administrative Agent for
its own account.

 

(d)                                 The Administrative Agent may perform any 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 the
Administrative Agent. The Administrative Agent and any such sub-agent may
perform any of their respective duties and exercise their respective rights and
powers through their respective Related Parties. The exculpatory provisions of
this Article shall apply to any such sub-agent and to the Related Parties of the
Administrative Agent and any such sub-agent, and shall apply to their respective
activities pursuant to this Agreement. The Administrative Agent shall not be
responsible for the negligence or misconduct of any sub-agent except to the
extent that a court of competent jurisdiction determines in a final and
nonappealable judgment that the Administrative Agent acted with gross negligence
or willful misconduct in the selection of such sub-agent.

 

(e)                                  None of any Syndication Agent, any
Documentation Agent or any Arranger shall have obligations or duties whatsoever
in such capacity under this Agreement or any other Loan Document and shall incur
no liability hereunder or thereunder in such capacity, but all such persons
shall have the benefit of the indemnities provided for hereunder.

 

(f)                                   In case of the pendency of any proceeding
with respect to any Credit Party under any Federal, state or foreign bankruptcy,
insolvency, receivership or similar law now or hereafter in effect, the
Administrative Agent (irrespective of whether the principal of any Loan or any
Reimbursement Obligation shall then be due and payable as herein expressed or by
declaration or otherwise and irrespective of whether the Administrative Agent
shall have made any demand on the Borrower) shall be entitled and empowered (but
not obligated) by intervention in such proceeding or otherwise:

 

(i)                                     to file and prove a claim for the whole
amount of the principal and interest owing and unpaid in respect of the Loans,
Letter of Credit Payment and all other Obligations that are owing and unpaid and
to file such other documents as may be necessary or advisable in order to have
the claims of the Lenders, the Issuing Banks and the Administrative Agent
(including any claim under Sections 3.02, 3.04, 5.01, 5.03, 5.04 and 12.03)
allowed in such judicial proceeding; and

 

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

 

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and any custodian, receiver, assignee, trustee, liquidator, sequestrator or
other similar official in any such proceeding is hereby authorized by each
Lender, each Issuing Bank and each other Secured Party to make such payments to
the Administrative Agent and, in the event that the Administrative Agent shall
consent to the making of such payments directly to the Lenders, the Issuing
Banks or the other Secured Parties, to pay to the Administrative Agent any
amount due to it, in its capacity as the Administrative Agent, under the Loan
Documents (including under Section 12.03). Nothing contained herein shall be
deemed to authorize the Administrative Agent to authorize or consent to or
accept or adopt on behalf of any Lender or Issuing Bank any plan of
reorganization, arrangement, adjustment or composition affecting the Obligations
or the rights of any Lender or Issuing Bank or to authorize the Administrative
Agent to vote in respect of the claim of any Lender or Issuing Bank in any such
proceeding.

 

(g)                                  The provisions of this Article are solely
for the benefit of the Administrative Agent, the Lenders and the Issuing Banks,
and, except solely to the extent of the Borrower’s rights to consent pursuant to
and subject to the conditions set forth in this Article, none of the Borrower or
any Subsidiary, or any of their respective Affiliates, shall have any rights as
a third party beneficiary under any such provisions. Each Secured Party, whether
or not a party hereto, will be deemed, by its acceptance of the benefits of the
Collateral and of the Guarantees of the Obligations provided under the Loan
Documents, to have agreed to the provisions of this Article.

 

Section 11.02                      Administrative Agent’s
Reliance, Indemnification, Etc.

 

(a)                                 Neither the Administrative Agent nor any of
its Related Parties shall be (i) liable for any action taken or omitted to be
taken by it under or in connection with this Agreement or the other Loan
Documents (A) with the consent of or at the request of the Required Lenders (or
such other number or percentage of the Lenders as shall be necessary, or as the
Administrative Agent shall believe in good faith to be necessary, under the
circumstances as provided in the Loan Documents) or (B) in the absence of its
own gross negligence or willful misconduct (such absence to be presumed unless
otherwise determined by a court of competent jurisdiction by a final and
nonappealable judgment) or (ii) responsible in any manner to any of the Lenders
for any recitals, statements, representations or warranties made by any Credit
Party or any officer thereof contained in this Agreement or any other Loan
Document or in any certificate, report, statement or other document referred to
or provided for in, or received by the Administrative Agent under or in
connection with, this Agreement or any other Loan Document or for the value,
validity, effectiveness, genuineness, enforceability or sufficiency of this
Agreement or any other Loan Document or for any failure of any Credit Party to
perform its obligations hereunder or thereunder.

 

(b)                                 The Administrative Agent shall be deemed not
to have knowledge of any Default unless and until written notice thereof
(stating that it is a “notice of default”) is given to the Administrative Agent
by the Borrower, a Lender or an Issuing Bank, and the Administrative Agent shall
not be responsible for or have any duty to ascertain or inquire into (i) any
statement, warranty or representation made in or in connection with any Loan
Document, (ii) the contents of any certificate, report or other document
delivered thereunder or in connection therewith, (iii) the performance or
observance of any of the covenants, agreements or other terms or conditions set
forth in any Loan Document or the occurrence of any Default, (iv) the
sufficiency, validity, enforceability, effectiveness or genuineness of any Loan
Document or any other agreement, instrument or document, (v) the satisfaction of
any condition set forth in Article VI or elsewhere

 

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in any Loan Document, other than to confirm receipt of items expressly required
to be delivered to the Administrative Agent or satisfaction of any condition
that expressly refers to the matters described therein being acceptable or
satisfactory to the Administrative Agent, or (vi) the creation, perfection or
priority of Liens on the Collateral. Notwithstanding anything herein to the
contrary, the Administrative Agent shall not be liable for, or be responsible
for any loss, cost or expense suffered by the Borrower, any Subsidiary, any
Lender or any Issuing Bank as a result of, any determination of the Revolving
Credit Exposure, any of the component amounts thereof or any portion thereof
attributable to each Lender or Issuing Bank.

 

(c)                                  Without limiting the foregoing, the
Administrative Agent (i) may treat the payee of any promissory note as its
holder until such promissory note has been assigned in accordance with
Section 12.04, (ii) may rely on the Register to the extent set forth in
Section 12.04(b), (iii) may consult with legal counsel (including counsel to the
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,
(iv) makes no warranty or representation to any Lender or Issuing Bank and shall
not be responsible to any Lender or Issuing Bank for any statements, warranties
or representations made by or on behalf of any Credit Party in connection with
this Agreement or any other Loan Document, (v) in determining compliance with
any condition hereunder to the making of a Loan, or the issuance of a Letter of
Credit, that by its terms must be fulfilled to the satisfaction of a Lender or
an Issuing Bank, may presume that such condition is satisfactory to such Lender
or Issuing Bank unless the Administrative Agent shall have received notice to
the contrary from such Lender or Issuing Bank sufficiently in advance of the
making of such Loan or the issuance of such Letter of Credit and (vi) shall be
entitled to rely on, and 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 writing may be a fax, any
electronic message, Internet or intranet website posting or other distribution)
or any statement made to it orally or by telephone and believed by it to be
genuine and signed or sent or otherwise authenticated by the proper party or
parties (whether or not such Person in fact meets the requirements set forth in
the Loan Documents for being the maker thereof).

 

Section 11.03                      Posting of Communications

 

(a)                                 The Borrower agrees that the Administrative
Agent may, but shall not be obligated to, make any Communications available to
the Lenders and the Issuing Banks by posting the Communications on IntraLinks™,
DebtDomain, SyndTrak, ClearPar or any other electronic platform chosen by the
Administrative Agent to be its electronic transmission system (the “Approved
Electronic Platform”).

 

(b)                                 Although the Approved Electronic Platform
and its primary web portal are secured with generally-applicable security
procedures and policies implemented or modified by the Administrative Agent from
time to time (including, as of the Effective Date, a user ID/password
authorization system) and the Approved Electronic Platform is secured through a
per-deal authorization method whereby each user may access the Approved
Electronic Platform only on a deal-by-deal basis, each of the Lenders, each of
the Issuing Banks and the Borrower acknowledges and agrees that the distribution
of material through an electronic medium is not necessarily secure and that
there are confidentiality and other risks associated with such

 

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distribution. Each of the Lenders, each of the Issuing Banks and the Borrower
hereby approves distribution of the Communications through the Approved
Electronic Platform and understands and assumes the risks of such distribution.

 

(c)                                  THE APPROVED ELECTRONIC PLATFORM AND THE
COMMUNICATIONS ARE PROVIDED “AS IS” AND “AS AVAILABLE”. THE APPLICABLE PARTIES
(AS DEFINED BELOW) DO NOT WARRANT THE ACCURACY OR COMPLETENESS OF THE
COMMUNICATIONS, OR THE ADEQUACY OF THE APPROVED ELECTRONIC PLATFORM AND
EXPRESSLY DISCLAIM LIABILITY FOR ERRORS OR OMISSIONS IN THE APPROVED ELECTRONIC
PLATFORM AND THE COMMUNICATIONS. NO WARRANTY OF ANY KIND, EXPRESS, IMPLIED OR
STATUTORY, INCLUDING ANY WARRANTY OF MERCHANTABILITY, FITNESS FOR A PARTICULAR
PURPOSE, NON-INFRINGEMENT OF THIRD PARTY RIGHTS OR FREEDOM FROM VIRUSES OR OTHER
CODE DEFECTS, IS MADE BY THE APPLICABLE PARTIES IN CONNECTION WITH THE
COMMUNICATIONS OR THE APPROVED ELECTRONIC PLATFORM. IN NO EVENT SHALL THE
ADMINISTRATIVE AGENT, ANY ARRANGER, ANY DOCUMENTATION AGENT, ANY SYNDICATION
AGENT OR ANY OF THEIR RESPECTIVE RELATED PARTIES (COLLECTIVELY, “APPLICABLE
PARTIES”) HAVE ANY LIABILITY TO ANY CREDIT PARTY, ANY LENDER, ANY ISSUING BANK
OR ANY OTHER PERSON OR ENTITY FOR DAMAGES OF ANY KIND, INCLUDING DIRECT OR
INDIRECT, SPECIAL, INCIDENTAL OR CONSEQUENTIAL DAMAGES, LOSSES OR EXPENSES
(WHETHER IN TORT, CONTRACT OR OTHERWISE) ARISING OUT OF ANY CREDIT PARTY’S OR
THE ADMINISTRATIVE AGENT’S TRANSMISSION OF COMMUNICATIONS THROUGH THE INTERNET
OR THE APPROVED ELECTRONIC PLATFORM.

 

“Communications” means, collectively, any notice, demand, communication,
information, document or other material provided by or on behalf of any Credit
Party pursuant to any Loan Document or the transactions contemplated therein
which is distributed by the Administrative Agent, any Lender or any Issuing Bank
by means of electronic communications pursuant to this Section, including
through an Approved Electronic Platform.

 

(d)                                 Each Lender and each Issuing Bank agrees
that notice to it (as provided in the next sentence) specifying that
Communications have been posted to the Approved Electronic Platform shall
constitute effective delivery of the Communications to such Lender for purposes
of the Loan Documents. Each Lender and Issuing Bank agrees (i) to notify the
Administrative Agent in writing (which could be in the form of electronic
communication) from time to time of such Lender’s or Issuing Bank’s (as
applicable) email address to which the foregoing notice may be sent by
electronic transmission and (ii) that the foregoing notice may be sent to such
email address.

 

(e)                                  Each of the Lenders, each of the Issuing
Banks and the Borrower agrees that the Administrative Agent may, but (except as
may be required by applicable law) shall not be obligated to, store the
Communications on the Approved Electronic Platform in accordance with the
Administrative Agent’s generally applicable document retention procedures and
policies.

 

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(f)                                   Nothing herein shall prejudice the right
of the Administrative Agent, any Lender or any Issuing Bank to give any notice
or other communication pursuant to any Loan Document in any other manner
specified in such Loan Document.

 

Section 11.04                      The Administrative Agent Individually  With
respect to its Commitment, Loans, Letter of Credit Maximum Amount and Letters of
Credit, the Person serving as the Administrative Agent shall have and may
exercise the same rights and powers hereunder and is subject to the same
obligations and liabilities as and to the extent set forth herein for any other
Lender or Issuing Bank, as the case may be. The terms “Issuing Banks”,
“Lenders”, “Required Lenders” and any similar terms shall, unless the context
clearly otherwise indicates, include the Administrative Agent in its individual
capacity as a Lender, Issuing Bank or as one of the Required Lenders, as
applicable. The Person serving as the Administrative Agent and its Affiliates
may accept deposits from, lend money to, own securities of, act as the financial
advisor or in any other advisory capacity for and generally engage in any kind
of banking, trust or other business with, the Borrower, any Subsidiary or any
Affiliate of any of the foregoing as if such Person was not acting as the
Administrative Agent and without any duty to account therefor to the Lenders or
the Issuing Banks.

 

Section 11.05                      Successor Administrative Agent

 

(a)                                 The Administrative Agent may resign at any
time by giving 30 days’ prior written notice thereof to the Lenders, the Issuing
Banks and the Borrower, whether or not a successor Administrative Agent has been
appointed. Upon any such resignation, the Required Lenders shall have the right
to appoint a successor Administrative Agent. If no successor Administrative
Agent shall have been so appointed by the Required Lenders, and shall have
accepted such appointment, within 30 days after the retiring Administrative
Agent’s giving of notice of resignation, then the retiring Administrative Agent
may, on behalf of the Lenders and the Issuing Banks, appoint a successor
Administrative Agent, which shall be a bank with an office in New York, New York
or an Affiliate of any such bank. In either case, such appointment shall be
subject to the prior written approval of the Borrower (which approval may not be
unreasonably withheld and shall not be required while an Event of Default has
occurred and is continuing). Upon the acceptance of any appointment as
Administrative Agent by a successor Administrative Agent, such successor
Administrative Agent shall succeed to, and become vested with, all the rights,
powers, privileges and duties of the retiring Administrative Agent. Upon the
acceptance of appointment as Administrative Agent by a successor Administrative
Agent, the retiring Administrative Agent shall be discharged from its duties and
obligations under this Agreement and the other Loan Documents. Prior to any
retiring Administrative Agent’s resignation hereunder as Administrative Agent,
the retiring Administrative Agent shall take such action as may be reasonably
necessary to assign to the successor Administrative Agent its rights as
Administrative Agent under the Loan Documents.

 

(b)                                 Notwithstanding Section 11.05(a), in the
event no successor Administrative Agent shall have been so appointed and shall
have accepted such appointment within 30 days after the retiring Administrative
Agent gives notice of its intent to resign, the retiring Administrative Agent
may give notice of the effectiveness of its resignation to the Lenders, the
Issuing Banks and the Borrower, whereupon, on the date of effectiveness of such
resignation stated in such notice, (i) the retiring Administrative Agent shall
be discharged from its duties and obligations hereunder

 

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and under the other Loan Documents; provided that, solely for purposes of
maintaining any security interest granted to the Administrative Agent under any
Security Instrument for the benefit of the Secured Parties, the retiring
Administrative Agent shall continue to be vested with such security interest as
collateral agent for the benefit of the Secured Parties, and continue to be
entitled to the rights set forth in such Security Instruments and the other Loan
Documents, and, in the case of any Collateral in the possession of the
Administrative Agent, shall continue to hold such Collateral, in each case until
such time as a successor Administrative Agent is appointed and accepts such
appointment in accordance with this Section (it being understood and agreed that
the retiring Administrative Agent shall have no duty or obligation to take any
further action under any Security Instrument, including any action required to
maintain the perfection of any such security interest), and (ii) the Required
Lenders shall succeed to and become vested with all the rights, powers,
privileges and duties of the retiring Administrative Agent; provided that
(A) all payments required to be made hereunder or under any other Loan Document
to the Administrative Agent for the account of any Person other than the
Administrative Agent shall be made directly to such Person and (B) all notices
and other communications required or contemplated to be given or made to the
Administrative Agent shall directly be given or made to each Lender and each
Issuing Bank. Following the effectiveness of the Administrative Agent’s
resignation from its capacity as such, the provisions of this Article and
Section 12.03, as well as any exculpatory, reimbursement and indemnification
provisions set forth in any other Loan Document, shall continue in effect for
the benefit of such retiring Administrative Agent, its sub-agents and their
respective Related Parties in respect of any actions taken or omitted to be
taken by any of them while the retiring Administrative Agent was acting as
Administrative Agent and in respect of the matters referred to in the proviso
under clause (i) above.

 

Section 11.06                      Acknowledgements of Lenders and Issuing
Banks.

 

(a)                                 Each Lender represents that it is engaged in
making, acquiring or holding commercial loans in the ordinary course of its
business and that it has, independently and without reliance upon the
Administrative Agent, any Arranger or any other Lender, or any of the Related
Parties of any of the foregoing, and based on such documents and information as
it has deemed appropriate, made its own credit analysis and decision to enter
into this Agreement as a Lender, and to make, acquire or hold Loans hereunder.
Each Lender also acknowledges that it will, independently and without reliance
upon the Administrative Agent, any Arranger or any other Lender, or any of the
Related Parties of any of the foregoing, and based on such documents and
information (which may contain material, non-public information within the
meaning of the United States securities laws concerning the Borrower and its
Affiliates) 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 or any related agreement or any document furnished
hereunder or thereunder.

 

(b)                                 Each Lender, by delivering its signature
page to this Agreement on the Effective Date, or delivering its signature
page to an Assignment and Assumption or any other Loan Document pursuant to
which it shall become a Lender hereunder, shall be deemed to have acknowledged
receipt of, and consented to and approved, each Loan Document and each other
document required to be delivered to, or be approved by or satisfactory to, the
Administrative Agent or the Lenders on the Effective Date.

 

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Section 11.07                      Collateral Matters

 

(a)                                 Except with respect to the exercise of
setoff rights in accordance with Section 12.08 or with respect to a Secured
Party’s right to file a proof of claim in an insolvency proceeding, no Secured
Party shall have any right individually to realize upon any of the Collateral or
to enforce any Guarantee of the Obligations, it being understood and agreed that
all powers, rights and remedies under the Loan Documents may be exercised solely
by the Administrative Agent on behalf of the Secured Parties in accordance with
the terms thereof.

 

(b)                                 In furtherance of the foregoing and not in
limitation thereof, no arrangements in respect of cash management services the
obligations under Secured Cash Management Agreements and obligations under
Secured Swap Agreements, will create (or be deemed to create) in favor of any
Secured Party that is a party thereto any rights in connection with the
management or release of any Collateral or of the obligations of any Credit
Party under any Loan Document. By accepting the benefits of the Collateral, each
Secured Party that is a party to any such arrangement in respect of Secured Cash
Management Agreement or Secured Swap Agreement, as applicable, shall be deemed
to have appointed the Administrative Agent to serve as administrative agent and
collateral agent under the Loan Documents and agreed to be bound by the Loan
Documents as a Secured Party thereunder, subject to the limitations set forth in
this paragraph.

 

(c)                                  The Secured Parties irrevocably authorize
the Administrative Agent, at its option and in its discretion, to:

 

(i)                                     subordinate any Lien on any property
granted to or held by the Administrative Agent under any Loan Document to the
holder of any Lien on such property that is permitted by Section 9.03(b); and

 

(ii)                                  release any Lien on any property granted
to or held by Administrative Agent under any Loan Document (A) after the
termination of the Commitments, the payment in full of all principal and
interest on each Loan and all fees payable hereunder and all other amounts
payable under the Loan Documents (other than contingent indemnification or
contingent reimbursement obligations not yet known) to any Agent, the Issuing
Banks or any Lender under any Loan Document, the expiration or termination of
all Letters of Credit (other than Letters of Credit for which other arrangements
satisfactory to the Administrative Agent and the Issuing Banks have been made),
the reimbursement of all Reimbursement Obligations owing under the Loan
Documents, and the payment in full or cash collateralization (or other
arrangements reasonably satisfactory to the Administrative Agent) with respect
to any other Obligations that are due and owing or that would become due and
owing as a result of the termination of this Agreement, (B) that is, or is to
be, sold, released or otherwise disposed of as permitted pursuant to the terms
of the Loan Documents, and (C) if approved, authorized or ratified in writing by
the Majority Lenders (or, if approval, authorization or ratification by all
Lenders is required under the first proviso in Section 12.02(b), then by all
Lenders).

 

(d)                                 The Administrative Agent shall not be
responsible for or have a duty to ascertain or inquire into any representation
or warranty regarding the existence, value or collectability of the Collateral,
the existence, priority or perfection of the Administrative Agent’s

 

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Lien thereon or any certificate prepared by any Credit Party in connection
therewith, nor shall the Administrative Agent be responsible or liable to the
Lenders or any other Secured Party for any failure to monitor or maintain any
portion of the Collateral.

 

Section 11.08                      Credit Bidding  The Secured Parties hereby
irrevocably authorize the Administrative Agent, at the direction of the Required
Lenders, to credit bid all or any portion of the Obligations (including by
accepting some or all of the Collateral in satisfaction of some or all of the
Obligations pursuant to a deed in lieu of foreclosure or otherwise) and in such
manner purchase (either directly or through one or more acquisition vehicles)
all or any portion of the Collateral (a) at any sale thereof conducted under the
provisions of the Bankruptcy Code, including under Sections 363, 1123 or 1129 of
the Bankruptcy Code, or any similar laws in any other jurisdictions to which a
Credit Party is subject, or (b) at any other sale, foreclosure or acceptance of
collateral in lieu of debt conducted by (or with the consent or at the direction
of) the Administrative Agent (whether by judicial action or otherwise) in
accordance with any applicable law. In connection with any such credit bid and
purchase, the Obligations owed to the Secured Parties shall be entitled to be,
and shall be, credit bid by the Administrative Agent at the direction of the
Required Lenders on a ratable basis (with Obligations with respect to contingent
or unliquidated claims receiving contingent interests in the acquired assets on
a ratable basis that shall vest upon the liquidation of such claims in an amount
proportional to the liquidated portion of the contingent claim amount used in
allocating the contingent interests) for the asset or assets so purchased (or
for the equity interests or debt instruments of the acquisition vehicle or
vehicles that are issued in connection with such purchase). In connection with
any such bid, (i) the Administrative Agent shall be authorized to form one or
more acquisition vehicles and to assign any successful credit bid to such
acquisition vehicle or vehicles, (ii) each of the Secured Parties’ ratable
interests in the Obligations which were credit bid shall be deemed without any
further action under this Agreement to be assigned to such vehicle or vehicles
for the purpose of closing such sale, (iii) the Administrative Agent shall be
authorized to adopt documents providing for the governance of the acquisition
vehicle or vehicles (provided that any actions by the Administrative Agent with
respect to such acquisition vehicle or vehicles, including any disposition of
the assets or equity interests thereof, shall be governed, directly or
indirectly, by, and the governing documents shall provide for, control by the
vote of the Required Lenders or their permitted assignees under the terms of
this Agreement or the governing documents of the applicable acquisition vehicle
or vehicles, as the case may be, irrespective of the termination of this
Agreement and without giving effect to the limitations on actions by the
Required Lenders contained in Section 12.02 of this Agreement), (iv) the
Administrative Agent on behalf of such acquisition vehicle or vehicles shall be
authorized to issue to each of the Secured Parties, ratably on account of the
relevant Obligations which were credit bid, interests, whether as equity,
partnership, limited partnership interests or membership interests, in any such
acquisition vehicle and/or debt instruments issued by such acquisition vehicle,
all without the need for any Secured Party or acquisition vehicle to take any
further action, and (v) to the extent that Obligations that are assigned to an
acquisition vehicle are not used to acquire Collateral for any reason (as a
result of another bid being higher or better, because the amount of Obligations
assigned to the acquisition vehicle exceeds the amount of Obligations credit bid
by the acquisition vehicle or otherwise), such Obligations shall automatically
be reassigned to the Secured Parties pro rata with their original interest in
such Obligations and the equity interests and/or debt instruments issued by any
acquisition vehicle on account of such Obligations shall automatically be
cancelled, without the need for any Secured Party or any acquisition vehicle to
take any further action. Notwithstanding

 

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that the ratable portion of the Obligations of each Secured Party are deemed
assigned to the acquisition vehicle or vehicles as set forth in
clause (ii) above, each Secured Party shall execute such documents and provide
such information regarding the Secured Party (and/or any designee of the Secured
Party which will receive interests in or debt instruments issued by such
acquisition vehicle) as the Administrative Agent may reasonably request in
connection with the formation of any acquisition vehicle, the formulation or
submission of any credit bid or the consummation of the transactions
contemplated by such credit bid.

 

Section 11.09                      Certain ERISA Matters

 

(a)                                 Each Lender (x) represents and warrants, as
of the date such Person became a Lender party hereto, to, and (y) covenants,
from the date such Person became a Lender party hereto to the date such Person
ceases being a Lender party hereto, for the benefit of, the Administrative
Agent, and each Arranger and their respective Affiliates, and not, for the
avoidance of doubt, to or for the benefit of the Borrower or any other Credit
Party, that at least one of the following is and will be true:

 

(i)                                     such Lender is not using “plan assets”
(within the meaning of the Plan Asset Regulations) of one or more Benefit Plans
in connection with the Loans, the Letters of Credit or the Commitments,

 

(ii)                                  the transaction exemption set forth in one
or more PTEs, such as PTE 84-14 (a class exemption for certain transactions
determined by independent qualified professional asset managers), PTE 95-60 (a
class exemption for certain transactions involving insurance company general
accounts), PTE 90-1 (a class exemption for certain transactions involving
insurance company pooled separate accounts), PTE 91-38 (a class exemption for
certain transactions involving bank collective investment funds) or PTE 96-23 (a
class exemption for certain transactions determined by in-house asset managers),
is applicable with respect to such Lender’s entrance into, participation in,
administration of and performance of the Loans, the Letters of Credit, the
Commitments and this Agreement, and the conditions for exemptive relief
thereunder are and will continue to be satisfied in connection therewith,

 

(iii)                               (A) such Lender is an investment fund
managed by a “Qualified Professional Asset Manager” (within the meaning of
Part VI of PTE 84-14), (B) such Qualified Professional Asset Manager made the
investment decision on behalf of such Lender to enter into, participate in,
administer and perform the Loans, the Letters of Credit, the Commitments and
this Agreement, (C) the entrance into, participation in, administration of and
performance of the Loans, the Letters of Credit, the Commitments and this
Agreement satisfies the requirements of sub-sections (b) through (g) of Part I
of PTE 84-14 and (D) to the best knowledge of such Lender, the requirements of
subsection (a) of Part I of PTE 84-14 are satisfied with respect to such
Lender’s entrance into, participation in, administration of and performance of
the Loans, the Letters of Credit, the Commitments and this Agreement, or

 

(iv)                              such other representation, warranty and
covenant as may be agreed in writing between the Administrative Agent, in its
sole discretion, and such Lender.

 

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(b)                                 In addition, unless Section 11.09(a)(i) is
true with respect to a Lender or such Lender has not provided another
representation, warranty and covenant as provided in Section 11.09(a)(iv), such
Lender further (x) represents and warrants, as of the date such Person became a
Lender party hereto, to, and (y) covenants, from the date such Person became a
Lender party hereto to the date such Person ceases being a Lender party hereto,
for the benefit of, the Administrative Agent, and each Arranger and their
respective Affiliates, and not, for the avoidance of doubt, to or for the
benefit of the Borrower or any other Credit Party, that:

 

(i)                                     none of the Administrative Agent, or any
Arranger or any of their respective Affiliates is a fiduciary with respect to
the assets of such Lender (including in connection with the reservation or
exercise of any rights by the Administrative Agent under this Agreement, any
Loan Document or any documents related to hereto or thereto),

 

(ii)                                  the Person making the investment decision
on behalf of such Lender with respect to the entrance into, participation in,
administration of and performance of the Loans, the Letters of Credit, the
Commitments and this Agreement is independent (within the meaning of 29 CFR §
2510.3-21, as amended from time to time) and is a bank, an insurance carrier, an
investment adviser, a broker-dealer or other person that holds, or has under
management or control, total assets of at least $50 million, in each case as
described in 29 CFR § 2510.3-21(c)(1)(i)(A)-(E),

 

(iii)                               the Person making the investment decision on
behalf of such Lender with respect to the entrance into, participation in,
administration of and performance of the Loans, the Letters of Credit, the
Commitments and this Agreement is capable of evaluating investment risks
independently, both in general and with regard to particular transactions and
investment strategies (including in respect of the obligations),

 

(iv)                              the Person making the investment decision on
behalf of such Lender with respect to the entrance into, participation in,
administration of and performance of the Loans, the Letters of Credit, the
Commitments and this Agreement is a fiduciary under ERISA or the Code, or both,
with respect to the Loans, the Letters of Credit, the Commitments and this
Agreement and is responsible for exercising independent judgment in evaluating
the transactions hereunder, and

 

(v)                                 no fee or other compensation is being paid
directly to the Administrative Agent, or any Arranger or any their respective
Affiliates for investment advice (as opposed to other services) in connection
with the Loans, the Letters of Credit, the Commitments or this Agreement.

 

(c)                                  The Administrative Agent and each Arranger
hereby informs the Lenders that each such Person is not undertaking to provide
impartial investment advice, or to give advice in a fiduciary capacity, in
connection with the transactions contemplated hereby, and that such Person has a
financial interest in the transactions contemplated hereby in that such Person
or an Affiliate thereof (i) may receive interest or other payments with respect
to the Loans, the Letters of Credit, the Commitments and this Agreement,
(ii) may recognize a gain if it extended the Loans, the Letters of Credit or the
Commitments for an amount less than the amount being paid for an interest in the
Loans, the Letters of Credit or the Commitments by such Lender or (iii) may
receive

 

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fees or other payments in connection with the transactions contemplated hereby,
the Loan Documents or otherwise, including structuring fees, commitment fees,
arrangement fees, facility fees, upfront fees, underwriting fees, ticking fees,
agency fees, administrative agent or collateral agent fees, utilization fees,
minimum usage fees, letter of credit fees, fronting fees, deal-away or alternate
transaction fees, amendment fees, processing fees, term out premiums, banker’s
acceptance fees, breakage or other early termination fees or fees similar to the
foregoing.

 

ARTICLE XII
MISCELLANEOUS

 

Section 12.01                      Notices

 

(a)                                 Except in the case of notices and other
communications expressly permitted to be given by telephone (and subject to
Section 12.01(b)), all notices and other communications provided for herein
shall be in writing and shall be delivered by hand or overnight courier service,
mailed by certified or registered mail or sent by telecopy, to the addresses set
forth on Schedule 12.01, and, if to any Lender other than JPMorgan Chase Bank,
N.A., to it at its address (or telecopy number) set forth in its Administrative
Questionnaire.

 

(b)                                 Notices and other communications to the
Lenders hereunder may be delivered or furnished by electronic communications
(including e-mail and Internet or intranet websites) pursuant to procedures
approved by the Administrative Agent; provided that the foregoing shall not
apply to notices pursuant to Article II, Article III, Article IV and Article V
unless otherwise agreed by the Administrative Agent and the applicable Lender. 
The Administrative Agent or the Borrower may, in its 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.

 

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

 

Section 12.02                      Waivers; Amendments

 

(a)                                 No failure on the part of the Administrative
Agent, any Issuing Bank or any Lender to exercise and no delay in exercising,
and no course of dealing with respect to, any right, power or privilege, or any
abandonment or discontinuance of steps to enforce such right, power or
privilege, under any of the Loan Documents shall operate as a waiver thereof,
nor shall any single or partial exercise of any right, power or privilege under
any of the Loan Documents preclude any other or further exercise thereof or the
exercise of any other right, power or privilege.  The rights and remedies of the
Administrative Agent, any other Agent, the Issuing Banks and the Lenders
hereunder and under the other Loan Documents are cumulative and are not
exclusive of any rights or remedies that they would otherwise have.  No waiver
of any provision of this Agreement or any other Loan Document or consent to any
departure by the Borrower therefrom shall in any event be effective unless the
same shall be permitted by Section 12.02(b), and then such waiver or consent

 

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shall be effective only in the specific instance and for the purpose for which
given.  Without limiting the generality of the foregoing, the making of a Loan
or issuance of a Letter of Credit shall not be construed as a waiver of any
Default, regardless of whether the Administrative Agent, any other Agent, any
Lender or any Issuing Bank may have had notice or knowledge of such Default at
the time.

 

(b)                                 Subject to Section 5.10, Neither this
Agreement nor any provision hereof nor any other Loan Document nor any provision
thereof may be waived, amended or modified except pursuant to an agreement or
agreements in writing entered into by the Borrower and the Majority Lenders or
by the Borrower and the Administrative Agent with the consent of the Majority
Lenders; provided that no such agreement shall (i) increase the Commitment or
the Maximum Credit Amount or postpone the scheduled date of expiration of any
Commitment of any Revolving Credit Lender without the written consent of such
Revolving Credit Lender, (ii) increase the Borrowing Base without the written
consent of each Revolving Credit Lender (other than any Defaulting Lender),
(iii) decrease or maintain the Borrowing Base without the consent of the
Required Lenders, or modify Section 2.06 in any manner without the consent of
the Required Lenders; provided that a Scheduled Redetermination may be postponed
by the Required Lenders, (iv) reduce the principal amount of any Loan or
Reimbursement Obligation or reduce the rate of interest thereon, or reduce any
fees payable hereunder, or reduce any other Obligations hereunder or under any
other Loan Document, without the written consent of each Lender affected
thereby, (v) postpone the scheduled date of payment or prepayment of the
principal amount of any Loan or Reimbursement Obligation, or any interest
thereon, or any fees payable hereunder, or any other Obligations hereunder or
under any other Loan Document, or reduce the amount of, waive or excuse any such
payment, or postpone or extend the Termination Date without the written consent
of each Lender affected thereby, (vi) change any term or condition hereof in a
manner that would alter the pro rata sharing of payments required thereby,
without the written consent of each Lender, (vii) waive or amend
Section 3.03(c), Section 6.01 or Section 10.02(c), without the written consent
of each Lender, (viii) release any Guarantor (except as set forth in the
Guarantee Agreement or this Agreement or as a result of a transaction permitted
under Section 9.10), release, or subordinate the Administrative Agent’s Lien on
or security interest in, in either case, all or substantially all of the
Collateral (other than as provided in Section 11.07) or reduce the percentage
set forth in Section 8.14(a) to less than 85%, without the consent of each
Lender or (ix) impose any greater restriction on the ability of any Revolving
Credit Lender to assign any of its rights or obligations hereunder without the
written consent of, if such Lender is a Revolving Credit Lender, the Majority
Lenders, or change any of the provisions of this Section 12.02(b) or the
definitions of “Applicable Revolving Credit Percentage”, “Majority Lenders”,
“Required Lenders” or any other provision hereof specifying the number or
percentage of Lenders required to waive, amend or modify any rights hereunder or
under any other Loan Documents or make any determination or grant any consent
hereunder or any other Loan Documents, without the written consent of each
Lender; provided further that no such agreement shall amend, modify or otherwise
affect the rights or duties of the Administrative Agent, any other Agent or any
Issuing Bank hereunder or under any other Loan Document without the prior
written consent of the Administrative Agent, such other Agent or such Issuing
Bank, as the case may be.  Notwithstanding anything to the contrary in this
Agreement, fees payable hereunder to any Lender may be reduced with the consent
of the Administrative Agent and the affected Lender.

 

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Section 12.03                      Expenses, Indemnity; Damage Waiver

 

(a)                                 The Borrower shall pay (i) all reasonable
out-of-pocket expenses incurred by the Administrative Agent and its Affiliates,
including, without limitation, the reasonable fees, charges and disbursements of
counsel (which counsel shall be limited to one counsel and a single local
counsel in each material jurisdiction) and other outside consultants for the
Administrative Agent, the reasonable travel, photocopy, mailing, courier,
telephone and other similar expenses, and the cost of environmental invasive and
non-invasive assessments and audits and surveys and appraisals, in connection
with the syndication of the credit facilities provided for herein, the
preparation, negotiation, execution, delivery and administration (both before
and after the execution hereof and including advice of counsel to the
Administrative Agent as to the rights and duties of the Administrative Agent and
the Lenders with respect thereto) of this Agreement and the other Loan Documents
and any amendments, modifications or waivers of or consents related to the
provisions hereof or thereof (whether or not the transactions contemplated
hereby or thereby shall be consummated), all costs, expenses, Taxes, assessments
and other charges incurred by any Agent in connection with any filing,
registration, recording or perfection of any security interest contemplated by
this Agreement or any Security Instrument or any other document referred to
therein, (ii) all reasonable out-of-pocket expenses incurred by the applicable
Issuing Bank in connection with the issuance, amendment, renewal or extension of
any Letter of Credit or any demand for payment thereunder, and (iii) all
out-of-pocket expenses incurred by any Agent, any Issuing Bank or any Lender,
including the fees, charges and disbursements of any counsel for any Agent, any
Issuing Bank or any Lender, in connection with the enforcement or protection of
its rights in connection with this Agreement or any other Loan Document,
including its rights under this Section 12.03, or in connection with the Loans
made or Letters of Credit issued hereunder, including, without limitation, all
such out-of-pocket expenses incurred during any workout, restructuring or
negotiations in respect of such Loans or Letters of Credit.

 

(b)                                 THE BORROWER SHALL, AND SHALL CAUSE EACH
OTHER CREDIT PARTY TO, INDEMNIFY EACH AGENT, THE ARRANGERS, EACH ISSUING BANK
AND EACH LENDER, AND EACH RELATED PARTY OF ANY OF THE FOREGOING PERSONS (EACH
SUCH PERSON BEING CALLED AN “INDEMNITEE”) AGAINST, AND DEFEND AND HOLD EACH
INDEMNITEE HARMLESS FROM, ANY AND ALL LOSSES, CLAIMS, DAMAGES, PENALTIES,
LIABILITIES AND RELATED EXPENSES, INCLUDING THE REASONABLE AND DOCUMENTED
OUT-OF-POCKET FEES, CHARGES AND DISBURSEMENTS OF ANY COUNSEL FOR ANY INDEMNITEE
(WHICH COUNSEL SHALL BE LIMITED TO ONE COUNSEL FOR ALL INDEMNITEES, TAKEN AS A
WHOLE, AND, IF REASONABLY NECESSARY, A SINGLE LOCAL COUNSEL TO ALL INDEMNITEES,
TAKEN AS A WHOLE, IN EACH RELEVANT MATERIAL JURISDICTION TO THE AFFECTED
INDEMNITEES SIMILARLY SITUATED TAKEN AS A WHOLE, AND SOLELY IN THE CASE OF A
CONFLICT OF INTEREST, ONE ADDITIONAL COUNSEL IN EACH APPLICABLE MATERIAL
JURISDICTION TO THE AFFECTED INDEMNIFIED PARTIES SIMILARLY SITUATED TAKEN AS A
WHOLE), DAMAGES AND LIABILITIES OF ANY KIND OR NATURE (THE “INDEMNIFIED
OBLIGATIONS”) INCURRED BY OR ASSERTED AGAINST ANY INDEMNITEE ARISING OUT OF, IN
CONNECTION WITH, OR AS A RESULT OF THE EXECUTION OR DELIVERY OF THIS AGREEMENT
OR ANY OTHER LOAN DOCUMENT OR ANY AGREEMENT OR INSTRUMENT CONTEMPLATED HEREBY OR
THEREBY, THE PERFORMANCE BY THE

 

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PARTIES HERETO OR THE PARTIES TO ANY OTHER LOAN DOCUMENT OF THEIR RESPECTIVE
OBLIGATIONS HEREUNDER OR THEREUNDER OR THE CONSUMMATION OF THE TRANSACTIONS
CONTEMPLATED HEREBY OR BY ANY OTHER LOAN DOCUMENT, THE FAILURE OF ANY CREDIT
PARTY TO COMPLY WITH THE TERMS OF ANY LOAN DOCUMENT, INCLUDING THIS AGREEMENT,
OR WITH ANY GOVERNMENTAL REQUIREMENT, ANY INACCURACY OF ANY REPRESENTATION OR
ANY BREACH OF ANY WARRANTY OR COVENANT OF ANY CREDIT PARTY SET FORTH IN ANY OF
THE LOAN DOCUMENTS OR ANY INSTRUMENTS, DOCUMENTS OR CERTIFICATIONS DELIVERED IN
CONNECTION THEREWITH, ANY LOAN OR LETTER OF CREDIT OR THE USE OF THE PROCEEDS
THEREFROM, INCLUDING, WITHOUT LIMITATION, ANY REFUSAL BY ANY ISSUING BANK TO
HONOR A DEMAND FOR PAYMENT UNDER A LETTER OF CREDIT IF THE DOCUMENTS PRESENTED
IN CONNECTION WITH SUCH DEMAND DO NOT STRICTLY COMPLY WITH THE TERMS OF SUCH
LETTER OF CREDIT, OR THE PAYMENT OF A DRAWING UNDER ANY LETTER OF CREDIT
NOTWITHSTANDING THE NON-COMPLIANCE, NON-DELIVERY OR OTHER IMPROPER PRESENTATION
OF THE DOCUMENTS PRESENTED IN CONNECTION THEREWITH, ANY OTHER ASPECT OF THE LOAN
DOCUMENTS, THE OPERATIONS OF THE BUSINESS OF THE CREDIT PARTIES AND THEIR
RESPECTIVE SUBSIDIARIES BY THE CREDIT PARTIES AND THEIR RESPECTIVE SUBSIDIARIES,
ANY ASSERTION THAT THE LENDERS WERE NOT ENTITLED TO RECEIVE THE PROCEEDS
RECEIVED PURSUANT TO THE SECURITY INSTRUMENTS, ANY ENVIRONMENTAL LAW APPLICABLE
TO THE CREDIT PARTIES, ANY OF THEIR RESPECTIVE SUBSIDIARIES OR ANY OF THEIR
PROPERTIES OR OPERATIONS, INCLUDING, THE PRESENCE, GENERATION, STORAGE, RELEASE,
THREATENED RELEASE, USE, TRANSPORT, DISPOSAL, ARRANGEMENT OF DISPOSAL OR
TREATMENT OF HAZARDOUS MATERIALS ON OR AT ANY OF THEIR PROPERTIES, THE BREACH OR
NON-COMPLIANCE BY ANY CREDIT PARTY OR ANY OF THEIR RESPECTIVE SUBSIDIARIES WITH
ANY ENVIRONMENTAL LAW APPLICABLE TO ANY CREDIT PARTY OR ANY OF THEIR RESPECTIVE
SUBSIDIARIES, THE PAST OWNERSHIP BY ANY CREDIT PARTY OR ANY OF THEIR RESPECTIVE
SUBSIDIARIES OF ANY OF THEIR PROPERTIES OR PAST ACTIVITY ON ANY OF THEIR
PROPERTIES WHICH, THOUGH LAWFUL AND FULLY PERMISSIBLE AT THE TIME, COULD RESULT
IN PRESENT LIABILITY, THE PRESENCE, USE, RELEASE, STORAGE, TREATMENT, DISPOSAL,
GENERATION, THREATENED RELEASE, TRANSPORT, ARRANGEMENT FOR TRANSPORT OR
ARRANGEMENT FOR DISPOSAL OF HAZARDOUS MATERIALS ON OR AT ANY OF THE PROPERTIES
OWNED OR OPERATED BY ANY CREDIT PARTY OR ANY OF THEIR RESPECTIVE SUBSIDIARIES OR
ANY ACTUAL OR ALLEGED PRESENCE OR RELEASE OF HAZARDOUS MATERIALS ON OR FROM ANY
PROPERTY OWNED OR OPERATED BY ANY CREDIT PARTY OR ANY OF THEIR RESPECTIVE
SUBSIDIARIES, ANY ENVIRONMENTAL LIABILITY RELATED IN ANY WAY TO ANY CREDIT PARTY
OR ANY OF THEIR RESPECTIVE SUBSIDIARIES, OR ANY OTHER ENVIRONMENTAL, HEALTH OR
SAFETY CONDITION IN CONNECTION WITH THE LOAN DOCUMENTS, OR ANY ACTUAL OR
PROSPECTIVE CLAIM, LITIGATION, INVESTIGATION OR PROCEEDING RELATING TO ANY OF
THE FOREGOING, AND REGARDLESS OF WHETHER ANY INDEMNITEE IS A PARTY THERETO, AND
SUCH INDEMNITY SHALL

 

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EXTEND TO EACH INDEMNITEE NOTWITHSTANDING THE SOLE OR CONCURRENT NEGLIGENCE OF
EVERY KIND OR CHARACTER WHATSOEVER, WHETHER ACTIVE OR PASSIVE, WHETHER AN
AFFIRMATIVE ACT OR AN OMISSION, INCLUDING WITHOUT LIMITATION, ALL TYPES OF
NEGLIGENT CONDUCT IDENTIFIED IN THE RESTATEMENT (SECOND) OF TORTS OF ONE OR MORE
OF THE INDEMNITEES OR BY REASON OF STRICT LIABILITY IMPOSED WITHOUT FAULT ON ANY
ONE OR MORE OF THE INDEMNITEES; PROVIDED THAT SUCH INDEMNITY SHALL NOT, AS TO
ANY INDEMNITEE, BE AVAILABLE TO THE EXTENT THAT SUCH LOSSES, CLAIMS, DAMAGES,
LIABILITIES OR RELATED EXPENSES ARE DETERMINED BY A COURT OF COMPETENT
JURISDICTION BY FINAL AND NONAPPEALABLE JUDGMENT TO HAVE RESULTED FROM (i) THE
GROSS NEGLIGENCE, BAD FAITH OR WILLFUL MISCONDUCT OF SUCH INDEMNITEE OR (ii) ANY
DISPUTE SOLELY AMONG INDEMNITEES OTHER THAN CLAIMS AGAINST AN INDEMNITEE IN ITS
CAPACITY OR IN FULFILLING ITS ROLE AS AN AGENT OR ARRANGER HEREUNDER AND OTHER
THAN ANY CLAIMS ARISING OUT OF ANY ACT OR OMISSION ON THE PART OF THE BORROWER
OR ANY AFFILIATE THEREOF.  THIS SECTION 12.03(b) SHALL NOT APPLY WITH RESPECT TO
TAXES OTHER THAN TAXES THAT REPRESENT LOSSES, CLAIMS, DAMAGES, ETC. ARISING FROM
ANY NON-TAX CLAIM.

 

(c)                                  To the extent that the Borrower fails to
pay any amount required to be paid by it to any Agent, any Arranger or any
Issuing Bank under Section 12.03(a) or (b), each Revolving Credit Lender
severally agrees to pay to such Agent, any Arranger or such Issuing Bank, as the
case may be, such Lender’s Applicable Revolving Credit Percentage (determined as
of the time that the applicable unreimbursed expense or indemnity payment is
sought) of such unpaid amount; provided that the unreimbursed expense or
indemnified loss, claim, damage, liability or related expense, as the case may
be, was incurred by or asserted against such Agent, any Arranger or such Issuing
Bank in its capacity as such.

 

(d)                                 TO THE EXTENT PERMITTED BY APPLICABLE LAW,
NO PARTY TO THIS AGREEMENT SHALL ASSERT, AND EACH PARTY HEREBY WAIVES, ANY CLAIM
AGAINST ANY OTHER PARTY HERETO, ON ANY THEORY OF LIABILITY, FOR
SPECIAL, INDIRECT, CONSEQUENTIAL OR PUNITIVE DAMAGES (AS OPPOSED TO DIRECT OR
ACTUAL DAMAGES) ARISING OUT OF, IN CONNECTION WITH, OR AS A RESULT OF, THIS
AGREEMENT, ANY OTHER LOAN DOCUMENT OR ANY AGREEMENT OR INSTRUMENT CONTEMPLATED
HEREBY OR THEREBY, THE TRANSACTIONS, ANY LOAN OR LETTER OF CREDIT OR THE USE OF
THE PROCEEDS THEREOF; PROVIDED THAT NOTHING IN THIS SECTION 12.03(d) SHALL
RELIEVE THE BORROWER OF ANY OBLIGATION IT MAY HAVE TO INDEMNIFY AND INDEMNITEE
AGAINST SPECIAL, INDIRECT, CONSEQUENTIAL OR PUNITIVE DAMAGES ASSERTED AGAINST
SUCH INDEMNITEE BY A THIRD PARTY.

 

(e)                                  All amounts due under this Section 12.03
shall be payable not later than ten (10) days after written demand therefor.

 

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Section 12.04                      Successors and Assigns

 

(a)                                 The provisions of this Agreement shall be
binding upon and inure to the benefit of the parties hereto and their respective
successors and assigns permitted hereby (including any Affiliate of any Issuing
Bank that issues any Letter of Credit), except that the Borrower may not assign
or otherwise transfer any of its rights or obligations hereunder without the
prior written consent of each Lender and no Lender may assign or otherwise
transfer its rights or obligations hereunder except in accordance with this
Section 12.04.  Nothing in this Agreement, expressed or implied, shall be
construed to confer upon any Person (other than the parties hereto, their
respective successors and assigns permitted hereby (including any Affiliate of
any Issuing Bank that issues any Letter of Credit), Participants (to the extent
provided in Section 12.04(b)) and, to the extent expressly contemplated hereby,
the Related Parties of each of the Administrative Agent, the Issuing Banks and
the Lenders) any legal or equitable right, remedy or claim under or by reason of
this Agreement.

 

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

 

(A)                               the Borrower; provided that no consent of the
Borrower shall be required if such assignment is to a Lender, an Affiliate of a
Lender that is actively engaged in the making of revolving loans, an Approved
Fund or if an Event of Default has occurred and is continuing; and

 

(B)                               the Administrative Agent (and in the case of
an assignment any Lender’s Commitment or Revolving Credit Loans, the Issuing
Banks); provided that no consent of the Administrative Agent or any Issuing Bank
shall be required for an assignment to an assignee that is a Lender immediately
prior to giving effect to such assignment.

 

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

 

(A)                               except in the case of an assignment to a
Lender or an Affiliate of a Lender or an assignment of the entire remaining
amount of the assigning Lender’s Commitment or Loans, the amount of the
Commitment or Loans of the assigning Lender subject to each such assignment
(determined as of the date the Assignment and Assumption with respect to such
assignment is delivered to the Administrative Agent) shall not be less than
$5,000,000 unless each of the Borrower and the Administrative Agent otherwise
consent; provided that no such consent of the Borrower shall be required if an
Event of Default has occurred and is continuing;

 

(B)                               each partial assignment shall be made as an
assignment of a proportionate part of all the assigning Lender’s rights and
obligations under this Agreement;

 

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(C)                               the parties to each assignment shall execute
and deliver to the Administrative Agent an Assignment and Assumption, together
with a processing and recordation fee of $3,500;

 

(D)                               the assignee, if it shall not be a Lender,
shall deliver to the Administrative Agent an Administrative Questionnaire;

 

(E)                                no such assignment shall be made to a natural
person or a holding company, investment vehicle or trust for, or owned and
operated for, the primary benefit of a natural person, an Industry Competitor,
any Credit Party, any Affiliate of any Credit Party, or any of their respective
Subsidiaries; and

 

(F)                                 no such assignment shall be made to a
Defaulting Lender.

 

(iii)                               Subject to Section 12.04(b)(v) and the
acceptance and recording thereof by the Administrative Agent, from and after the
effective date specified in each Assignment and Assumption the assignee
thereunder shall be a party hereto and, to the extent of the interest assigned
by such Assignment and Assumption, have the rights and obligations of a Lender
under this Agreement, and the assigning Lender thereunder shall, to the extent
of the interest assigned by such Assignment and Assumption, be released from its
obligations under this Agreement (and, in the case of an Assignment and
Assumption covering all of the assigning Lender’s rights and obligations under
this Agreement, such Lender shall cease to be a party hereto but shall continue
to be entitled to the benefits of Section 5.01, Section 5.02, Section 5.03 and
Section 12.03).  Any assignment or transfer by a Lender of rights or obligations
under this Agreement that does not comply with this Section 12.04 shall be
treated for purposes of this Agreement as a sale by such Lender of a
participation in such rights and obligations in accordance with
Section 12.04(b).

 

(iv)                              The Administrative Agent, acting for this
purpose as an agent of the Borrower, shall maintain at one of its offices a copy
of each Assignment and Assumption delivered to it and a register for the
recordation of the names and addresses of the Lenders, and the Maximum Credit
Amount of, and principal amount (and stated interest) of the Loans and
Reimbursement Obligations owing to, each Lender pursuant to the terms hereof
from time to time (the “Register”).  The entries in the Register shall be
conclusive, absent manifest error, and the Borrower, the Administrative Agent,
the Issuing Banks and the Lenders may treat each Person whose name is recorded
in the Register pursuant to the terms hereof as a Lender hereunder for all
purposes of this Agreement, notwithstanding notice to the contrary.  The
Register shall be available for inspection by the Borrower, any Issuing Bank and
any Lender, at any reasonable time and from time to time upon reasonable prior
notice.  In connection with any changes to the Register, if necessary, the
Administrative Agent will reflect the revisions on Schedule 1.2 and forward a
copy of such revised Schedule 1.2 to the Borrower, each Issuing Bank and each
Lender.

 

(v)                                 Upon its receipt of a duly completed
Assignment and Assumption executed by an assigning Lender and an assignee, the
assignee’s completed Administrative Questionnaire (unless the assignee shall
already be a Lender hereunder), the processing and recordation fee referred to
in Section 12.04(b)(ii)(C) and any written consent to such assignment required
by Section 12.04(b)(i), the Administrative Agent shall accept such Assignment
and Assumption and record the information contained therein in the Register.  No
assignment shall be

 

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effective for purposes of this Agreement unless it has been recorded in the
Register as provided in this Section 12.04(b).

 

(vi)                              Any Lender may, without the consent of the
Borrower, the Administrative Agent or any Issuing Bank, sell participations to
one or more banks or other entities (a “Participant”) in all or a portion of
such Lender’s rights and obligations under this Agreement (including all or a
portion of its Commitment and the Loans owing to it); provided that such
Lender’s obligations under this Agreement shall remain unchanged, such Lender
shall remain solely responsible to the other parties hereto for the performance
of such obligations, the Borrower, the Administrative Agent, the Issuing Banks
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 no such participation may be sold to a natural Person or an
Industry Competitor.  Any agreement or instrument pursuant to which a Lender
sells such a participation shall provide that such Lender shall retain the sole
right to enforce this Agreement and to approve any amendment, modification or
waiver of any provision of this Agreement; provided that such agreement or
instrument may provide that such Lender will not, without the consent of the
Participant, agree to any amendment, modification or waiver described in the
proviso to Section 12.02 that affects such Participant.  In addition such
agreement must provide that the Participant be bound by the provisions of
Section 12.03.  Subject to Section 12.04(b)(vii), the Borrower agrees that each
Participant shall be entitled to the benefits of Section 5.01, Section 5.02 and
Section 5.03 to the same extent as if it were a Lender and had acquired its
interest by assignment pursuant to Section 12.04(b).  To the extent permitted by
law, each Participant also shall be entitled to the benefits of Section 12.08 as
though it were a Lender, provided such Participant agrees to be subject to
Section 5.01(c) as though it were a Lender.

 

(vii)                           A Participant shall not be entitled to receive
any greater payment under Section 5.01 or Section 5.03 than the applicable
Lender would have been entitled to receive with respect to the participation
sold to such Participant, unless the sale of the participation to such
Participant is made with the Borrower’s prior written consent or to the extent
such entitlement to receive a greater payment results from a Change in Law that
occurs after the Participant acquired the applicable participation.  A
Participant that would be a Foreign Lender if it were a Lender shall not be
entitled to the benefits of Section 5.03 unless the Borrower is notified of the
participation sold to such Participant and such Participant agrees, for the
benefit of the Borrower, to comply with Section 5.03(e) as though it were a
Lender.

 

(viii)                        Each Lender that sells a participation shall,
acting solely for this purpose as a non-fiduciary agent of the Borrower,
maintain a register on which it enters the name and address of each Participant
and the principal amounts (and 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

 

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this Agreement notwithstanding any notice to the contrary.  For the avoidance of
doubt, the Administrative Agent (in its capacity as Administrative Agent) shall
have no responsibility for maintaining a Participant Register.

 

(c)                                  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, without limitation, any pledge or
assignment to secure obligations to a Federal Reserve Bank or any other central
bank, and this Section 12.04(c) shall not apply to any such pledge or assignment
of a security interest; provided that no such pledge or assignment of a security
interest shall release a Lender from any of its obligations hereunder or
substitute any such pledgee or assignee for such Lender as a party hereto.

 

(d)                                 Notwithstanding any other provisions of this
Section 12.04, no transfer or assignment of the interests or obligations of any
Lender or any grant of participations therein shall be permitted if such
transfer, assignment or grant would require the Borrower to file a registration
statement with the SEC or to qualify the Loans under the “Blue Sky” laws of any
state.

 

Section 12.05                      Survival; Revival; Reinstatement

 

(a)                                 All covenants, agreements, representations
and warranties made by the Credit Parties herein and in the certificates or
other instruments delivered in connection with or pursuant to this Agreement or
any other Loan Document shall be considered to have been relied upon by the
other parties hereto and shall survive the execution and delivery of this
Agreement and the making of any Loans and issuance of any Letters of Credit,
regardless of any investigation made by any such other party or on its behalf
and notwithstanding that the Administrative Agent, any other Agent, any Issuing
Bank or any Lender may have had notice or knowledge of any Default or incorrect
representation or warranty at the time any credit is extended hereunder, and
shall continue in full force and effect as long as the principal of or any
accrued interest on any Loan or any fee or any other amount payable under this
Agreement is outstanding and unpaid or any Letter of Credit is outstanding and
so long as the Commitments have not expired or terminated.  The provisions of
Section 5.01, Section 5.02, Section 5.03 and Section 12.03 and Article XI shall
survive and remain in full force and effect regardless of the consummation of
the transactions contemplated hereby, the repayment of the Loans, the expiration
or termination of the Letters of Credit and the Commitments or the termination
of this Agreement, any other Loan Document or any provision hereof or thereof.

 

(b)                                 To the extent that any payments on the
Obligations or proceeds of any Collateral are subsequently invalidated, declared
to be fraudulent or preferential, set aside or required to be repaid to a
trustee, debtor in possession, receiver or other Person under any bankruptcy
law, common law or equitable cause, then to such extent, the Obligations so
satisfied shall be revived and continue as if such payment or proceeds had not
been received and the Administrative Agent’s and the Lenders’ Liens, security
interests, rights, powers and remedies under this Agreement and each Loan
Document shall continue in full force and effect.  In such event, each Loan
Document shall be automatically reinstated and the Credit Parties shall take
such action as may be reasonably requested by the Administrative Agent and the
Lenders to effect such reinstatement.

 

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Section 12.06                      Counterparts; Integration; Effectiveness

 

(a)                                 This Agreement may be executed in
counterparts (and by different parties hereto on different counterparts), each
of which shall constitute an original, but all of which when taken together
shall constitute a single contract.

 

(b)                                 THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS
REPRESENT THE FINAL AGREEMENT AMONG THE PARTIES HERETO AND THERETO AND MAY NOT
BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL
AGREEMENTS OF THE PARTIES.  THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE
PARTIES.

 

(c)                                  Except as provided in Section 6.01, this
Agreement shall become effective when it shall have been executed by the
Administrative Agent and when the Administrative Agent shall have received
counterparts hereof which, when taken together, bear the signatures of each of
the other parties hereto, and thereafter shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and assigns. 
Delivery of an executed counterpart of a signature page of this Agreement by
telecopy, facsimile, as an attachment to an email or other similar electronic
means shall be effective as delivery of a manually executed counterpart of this
Agreement.

 

Section 12.07                      Severability  Any provision of this Agreement
or any other Loan Document held to be invalid, illegal or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such invalidity, illegality or unenforceability without affecting the validity,
legality and enforceability of the remaining provisions hereof or thereof; and
the invalidity of a particular provision in a particular jurisdiction shall not
invalidate such provision in any other jurisdiction.

 

Section 12.08                      Right of Setoff  If an Event of Default shall
have occurred and be continuing, each Lender and each of its Affiliates is
hereby authorized at any time and from time to time, to the fullest extent
permitted by law, to set off and apply any and all deposits (general or special,
time or demand, provisional or final) at any time held and other obligations (of
whatsoever kind, including, without limitations obligations under Swap
Agreements) at any time owing by such Lender or Affiliate to or for the credit
or the account of any Credit Party against any and all the obligations of any
Credit Party owed to such Lender now or hereafter existing under this Agreement
or any other Loan Document, irrespective of whether or not such Lender shall
have made any demand under this Agreement or any other Loan Document and
although such obligations may be unmatured.  The rights of each Lender under
this Section 12.08 are in addition to other rights and remedies (including other
rights of setoff) which such Lender or its Affiliates may have.

 

Section 12.09                      GOVERNING LAW; JURISDICTION; CONSENT TO
SERVICE OF PROCESS; WAIVER OF TRIAL BY JURY

 

(a)                                 THIS AGREEMENT, THE NOTES AND THE OTHER LOAN
DOCUMENTS SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF
THE STATE OF NEW YORK.

 

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(b)                                 EACH PARTY HERETO HEREBY IRREVOCABLY AND
UNCONDITIONALLY SUBMITS (AND THE BORROWER SHALL CAUSE EACH OTHER CREDIT PARTY TO
SUBMIT) FOR ITSELF AND ITS PROPERTY IN ANY LEGAL ACTION OR PROCEEDING RELATING
TO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS TO WHICH IT IS A PARTY, OR FOR
RECOGNITION AND ENFORCEMENT OF ANY JUDGMENT IN RESPECT THEREOF, TO THE EXCLUSIVE
JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK SITTING IN NEW YORK COUNTY
AND OF THE UNITED STATES DISTRICT COURT OF THE SOUTHERN DISTRICT OF NEW YORK,
AND ANY APPELLATE COURT FROM ANY THEREOF AND AGREES THAT ALL CLAIMS IN RESPECT
OF ANY SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN SUCH NEW YORK
STATE COURT OR, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, IN SUCH
FEDERAL COURT; PROVIDED, THAT NOTHING CONTAINED HEREIN OR IN ANY OTHER LOAN
DOCUMENT WILL PREVENT ANY PARTY FROM BRINGING ANY ACTION TO ENFORCE ANY AWARD OR
JUDGMENT OR EXERCISE ANY RIGHT UNDER THE LOAN DOCUMENTS IN ANY OTHER FORUM IN
WHICH JURISDICTION CAN BE ESTABLISHED.  EACH OF THE PARTIES HERETO AGREES THAT A
FINAL JUDGMENT IN ANY SUCH ACTION OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE
ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER
PROVIDED BY LAW.  EACH PARTY HEREBY IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING
ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON
CONVENIENS, WHICH IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY SUCH
ACTION OR PROCEEDING IN SUCH RESPECTIVE JURISDICTIONS.

 

(c)                                  EACH PARTY HEREBY (i) IRREVOCABLY AND
UNCONDITIONALLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, TRIAL BY JURY IN
ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER LOAN
DOCUMENT AND FOR ANY COUNTERCLAIM THEREIN; (ii) IRREVOCABLY WAIVES, TO THE
MAXIMUM EXTENT NOT PROHIBITED BY LAW, ANY RIGHT IT MAY HAVE TO CLAIM OR RECOVER
IN ANY SUCH LITIGATION ANY SPECIAL, EXEMPLARY, PUNITIVE OR CONSEQUENTIAL
DAMAGES, OR DAMAGES OTHER THAN, OR IN ADDITION TO, ACTUAL DAMAGES;
(iii) CERTIFIES THAT NO PARTY HERETO NOR ANY REPRESENTATIVE OR AGENT OF COUNSEL
FOR ANY PARTY HERETO HAS REPRESENTED, EXPRESSLY OR OTHERWISE, OR IMPLIED THAT
SUCH PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING
WAIVERS, AND (iv) ACKNOWLEDGES THAT IT HAS BEEN INDUCED TO ENTER INTO THIS
AGREEMENT, THE LOAN DOCUMENTS AND THE TRANSACTIONS CONTEMPLATED HEREBY AND
THEREBY BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS CONTAINED
IN THIS SECTION 12.09.

 

(d)                                 EACH PARTY HEREBY IRREVOCABLY AND
UNCONDITIONALLY AGREES THAT (I) SERVICE OF PROCESS IN ANY SUCH ACTION OR
PROCEEDING MAY BE EFFECTED BY MAILING A COPY THEREOF BY REGISTERED OR CERTIFIED
MAIL (OR ANY SUBSTANTIALLY SIMILAR FORM OF MAIL), POSTAGE PREPAID, TO IT AT ITS
ADDRESS SET FORTH IN SECTION 12.01 OR AT SUCH OTHER ADDRESS OF

 

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WHICH THE ADMINISTRATIVE AGENT SHALL HAVE BEEN NOTIFIED PURSUANT THERETO AND
(II) AGREES THAT NOTHING HEREIN SHALL AFFECT THE RIGHT TO EFFECT SERVICE OF
PROCESS IN ANY OTHER MANNER PERMITTED BY LAW.

 

Section 12.10                      Headings  Article and Section headings and
the Table of Contents used herein are for convenience of reference only, are not
part of this Agreement and shall not affect the construction of, or be taken
into consideration in interpreting, this Agreement.

 

Section 12.11                      Confidentiality  Each of the Administrative
Agent, the Issuing Banks and the Lenders agrees to maintain the confidentiality
of the Information (as defined below), except that Information may be disclosed
(a) to its Affiliates and to its and its Affiliates’ directors, officers,
employees and agents, including accountants, legal counsel and other advisors
(it being understood that the Persons to whom such disclosure is made will be
informed of the confidential nature of such Information and instructed to keep
such Information confidential), (b) to the extent requested by any regulatory
authority, (c) to the extent required by applicable laws or regulations or by
any subpoena or similar legal process, (d) to any other party to this Agreement
or any other Loan Document, (e) in connection with the exercise of any remedies
hereunder or under any other Loan Document or any suit, action or proceeding
relating to this Agreement or any other Loan Document or the enforcement of
rights hereunder or thereunder, (f) subject to an agreement containing
provisions substantially the same as those of this Section 12.11, to any
assignee of or Participant in, or any prospective assignee of or Participant in,
any of its rights or obligations under this Agreement or any actual or
prospective counterparty (or its advisors) to any Swap Agreement relating to any
Credit Party and its obligations, (g) with the consent of the Borrower or (h) to
the extent such Information becomes publicly available other than as a result of
a breach of this Section 12.11 or becomes available to the Administrative Agent,
any Issuing Bank or any Lender on a nonconfidential basis from a source other
than the Borrower.  For the purposes of this Section 12.11, “Information” means
all information received from the Credit Parties relating to the Credit Parties
and their businesses, other than (i) any such information that is available to
the Administrative Agent, any Issuing Bank or any Lender on a nonconfidential
basis prior to disclosure by any Credit Party and (ii) information routinely
provided by arrangers to data service providers, including league table
providers, that serve the lending industry.  Any Person required to maintain the
confidentiality of Information as provided in this Section 12.11 shall be
considered to have complied with its obligation to do so if such Person has
exercised the same degree of care to maintain the confidentiality of such
Information as such Person would accord to its own confidential information.

 

Section 12.12                      Interest Rate Limitation  It is the intention
of the parties hereto that each Lender shall conform strictly to usury laws
applicable to it.  Accordingly, if the transactions contemplated hereby would be
usurious as to any Lender under laws applicable to it (including the laws of the
United States of America and the State of New York or any other jurisdiction
whose laws may be mandatorily applicable to such Lender notwithstanding the
other provisions of this Agreement), then, in that event, notwithstanding
anything to the contrary in any of the Loan Documents or any agreement entered
into in connection with or as security for the Notes, it is agreed as follows: 
the aggregate of all consideration which constitutes interest under law
applicable to any Lender that is contracted for, taken, reserved, charged or
received by such Lender under any of the Loan Documents or agreements or
otherwise in connection with the Notes shall under no circumstances exceed the
maximum amount allowed by such applicable law, and any

 

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excess shall be canceled automatically and if theretofore paid shall be credited
by such Lender on the principal amount of the Obligations (or, to the extent
that the principal amount of the Obligations shall have been or would thereby be
paid in full, refunded by such Lender to the Borrower); and in the event that
the maturity of the Notes is accelerated by reason of an election of the holder
thereof resulting from any Event of Default under this Agreement or otherwise,
or in the event of any required or permitted prepayment, then such consideration
that constitutes interest under law applicable to any Lender may never include
more than the maximum amount allowed by such applicable law, and excess
interest, if any, provided for in this Agreement or otherwise shall be canceled
automatically by such Lender as of the date of such acceleration or prepayment
and, if theretofore paid, shall be credited by such Lender on the principal
amount of the Obligations (or, to the extent that the principal amount of the
Obligations shall have been or would thereby be paid in full, refunded by such
Lender to the Borrower).  All sums paid or agreed to be paid to any Lender for
the use, forbearance or detention of sums due hereunder shall, to the extent
permitted by law applicable to such Lender, be amortized, prorated, allocated
and spread throughout the stated term of the Loans until payment in full so that
the rate or amount of interest on account of any Loans hereunder does not exceed
the maximum amount allowed by such applicable law.  If at any time and from time
to time the amount of interest payable to any Lender on any date shall be
computed at the Highest Lawful Rate applicable to such Lender pursuant to this
Section 12.12 and in respect of any subsequent interest computation period the
amount of interest otherwise payable to such Lender would be less than the
amount of interest payable to such Lender computed at the Highest Lawful Rate
applicable to such Lender, then the amount of interest payable to such Lender in
respect of such subsequent interest computation period shall continue to be
computed at the Highest Lawful Rate applicable to such Lender until the total
amount of interest payable to such Lender shall equal the total amount of
interest which would have been payable to such Lender if the total amount of
interest had been computed without giving effect to this Section 12.12.

 

Section 12.13                      EXCULPATION PROVISIONS

 

(A)                               EACH OF THE PARTIES HERETO SPECIFICALLY AGREES
THAT IT HAS A DUTY TO READ THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS AND
AGREES THAT IT IS CHARGED WITH NOTICE AND KNOWLEDGE OF THE TERMS OF THIS
AGREEMENT AND THE OTHER LOAN DOCUMENTS; THAT IT HAS IN FACT READ THIS AGREEMENT
AND IS FULLY INFORMED AND HAS FULL NOTICE AND KNOWLEDGE OF THE TERMS, CONDITIONS
AND EFFECTS OF THIS AGREEMENT; THAT IT HAS BEEN REPRESENTED BY INDEPENDENT LEGAL
COUNSEL OF ITS CHOICE THROUGHOUT THE NEGOTIATIONS PRECEDING ITS EXECUTION OF
THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS; AND HAS RECEIVED THE ADVICE OF ITS
ATTORNEY IN ENTERING INTO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS; AND THAT
IT RECOGNIZES THAT CERTAIN OF THE TERMS OF THIS AGREEMENT AND THE OTHER LOAN
DOCUMENTS RESULT IN ONE PARTY ASSUMING THE LIABILITY INHERENT IN SOME ASPECTS OF
THE TRANSACTION AND RELIEVING THE OTHER PARTY OF ITS RESPONSIBILITY FOR SUCH
LIABILITY.  EACH PARTY HERETO AGREES AND COVENANTS THAT IT WILL NOT CONTEST THE
VALIDITY OR ENFORCEABILITY OF ANY EXCULPATORY PROVISION OF THIS AGREEMENT AND
THE OTHER LOAN DOCUMENTS ON THE BASIS THAT THE PARTY HAD

 

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NO NOTICE OR KNOWLEDGE OF SUCH PROVISION OR THAT THE PROVISION IS NOT
“CONSPICUOUS”.

 

(B)                               THE BORROWER HEREBY ACKNOWLEDGES THAT (I) THE
CREDIT FACILITIES PROVIDED FOR HEREUNDER AND ANY RELATED ARRANGING OR OTHER
SERVICES IN CONNECTION THEREWITH (INCLUDING IN CONNECTION WITH ANY AMENDMENT,
WAIVER OR OTHER MODIFICATION HEREOF OR OF ANY OTHER LOAN DOCUMENT) ARE AN
ARM’S-LENGTH COMMERCIAL TRANSACTION BETWEEN THE BORROWER AND THE OTHER CREDIT
PARTIES, ON THE ONE HAND, AND THE ADMINISTRATIVE AGENT THE LENDERS AND THE
ISSUING BANKS, ON THE OTHER HAND, AND THE BORROWER AND THE OTHER CREDIT PARTIES
ARE CAPABLE OF EVALUATING AND UNDERSTANDING AND UNDERSTAND AND ACCEPT THE TERMS,
RISKS AND CONDITIONS OF THE TRANSACTIONS CONTEMPLATED HEREBY AND BY THE OTHER
LOAN DOCUMENTS (INCLUDING ANY AMENDMENT, WAIVER OR OTHER MODIFICATION HEREOF OR
THEREOF); (II) IN CONNECTION WITH THE PROCESS LEADING TO SUCH TRANSACTION, EACH
OF THE ADMINISTRATIVE AGENT, THE LENDERS AND THE ISSUING BANKS IS AND HAS BEEN
ACTING SOLELY AS A PRINCIPAL AND IS NOT THE FINANCIAL ADVISOR, AGENT OR
FIDUCIARY FOR ANY OF THE BORROWER, ANY OTHER CREDIT PARTY OR ANY OF THEIR
RESPECTIVE AFFILIATES, EQUITY HOLDERS, CREDITORS OR EMPLOYEES OR ANY OTHER
PERSON; (III) NEITHER THE ADMINISTRATIVE AGENT, ANY OTHER AGENT, ANY ARRANGER,
ANY LENDER NOR ANY ISSUING BANK HAS ASSUMED OR WILL ASSUME AN ADVISORY, AGENCY
OR FIDUCIARY RESPONSIBILITY IN FAVOR OF THE BORROWER OR ANY OTHER CREDIT PARTY
WITH RESPECT TO ANY OF THE TRANSACTIONS CONTEMPLATED HEREBY OR THE PROCESS
LEADING THERETO, INCLUDING WITH RESPECT TO ANY AMENDMENT, WAIVER OR OTHER
MODIFICATION HEREOF OR OF ANY OTHER LOAN DOCUMENT (IRRESPECTIVE OF WHETHER THE
ADMINISTRATIVE AGENT, ANY OTHER AGENT, ANY ARRANGER, ANY LENDER OR ANY ISSUING
BANK HAS ADVISED OR IS CURRENTLY ADVISING ANY OF THE BORROWER, THE OTHER CREDIT
PARTIES OR THEIR RESPECTIVE AFFILIATES ON OTHER MATTERS) AND NONE OF THE
ADMINISTRATIVE AGENT, ANY OTHER AGENT, ANY ARRANGER, ANY LENDER OR ANY ISSUING
BANK HAS ANY OBLIGATION TO ANY OF THE BORROWER, THE OTHER CREDIT PARTIES OR
THEIR RESPECTIVE AFFILIATES WITH RESPECT TO THE TRANSACTIONS CONTEMPLATED
HEREBY, IN EACH CASE, EXCEPT THOSE OBLIGATIONS EXPRESSLY SET FORTH HEREIN AND IN
THE OTHER LOAN DOCUMENTS; (IV) THE BORROWER, THE OTHER CREDIT PARTIES AND THEIR
RESPECTIVE AFFILIATES WILL NOT ASSERT ANY CLAIM BASED ON ALLEGED BREACH OF
FIDUCIARY DUTY; (V) THE ADMINISTRATIVE AGENT AND ITS AFFILIATES, EACH LENDER AND
ITS AFFILIATES AND EACH ISSUING BANK AND ITS AFFILIATES MAY BE ENGAGED IN A
BROAD RANGE OF TRANSACTIONS THAT INVOLVE INTERESTS THAT DIFFER FROM THOSE OF THE
BORROWER, THE OTHER CREDIT PARTIES AND THEIR RESPECTIVE AFFILIATES, AND

 

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NONE OF THE ADMINISTRATIVE AGENT, ANY LENDER OR ANY ISSUING BANK HAS ANY
OBLIGATION TO DISCLOSE ANY OF SUCH INTERESTS BY VIRTUE OF ANY ADVISORY, AGENCY
OR FIDUCIARY RELATIONSHIP; AND (VI) NEITHER THE ADMINISTRATIVE AGENT, ANY LENDER
OR ANY ISSUING BANK HAS PROVIDED AND NONE WILL PROVIDE ANY LEGAL, ACCOUNTING,
REGULATORY OR TAX ADVICE WITH RESPECT TO ANY OF THE TRANSACTIONS CONTEMPLATED
HEREBY (INCLUDING ANY AMENDMENT, WAIVER OR OTHER MODIFICATION HEREOF OR OF ANY
OTHER LOAN DOCUMENT) AND THE BORROWER HAS CONSULTED ITS OWN LEGAL, ACCOUNTING,
REGULATORY AND TAX ADVISORS TO THE EXTENT IT HAS DEEMED APPROPRIATE.  THE
BORROWER HEREBY WAIVES AND RELEASES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY
CLAIMS THAT IT MAY HAVE AGAINST THE ADMINISTRATIVE AGENT WITH RESPECT TO ANY
BREACH OR ALLEGED BREACH OF AGENCY OR FIDUCIARY DUTY.

 

Section 12.14                      Collateral Matters; Swap Agreements; Cash
Management  The benefit of the Security Instruments and of the provisions of
this Agreement relating to any Collateral securing the Obligations shall also
extend to and be available to Secured Swap Parties and to the Cash Management
Banks on a pro rata basis (but subject to the terms of the Loan Documents,
including, without limitation, provisions thereof relating to the application
and priority of payments to the Persons entitled thereto) in respect of any
obligations of the Borrower or any of its Subsidiaries which arise under Secured
Swap Agreements or Secured Cash Management Agreements.  No Secured Swap Party
shall have any voting rights under any Loan Document as a result of the
existence of obligations owed to it under any such Swap Agreements.  No Cash
Management Bank shall have any voting rights under any Loan Document as a result
of the existence of obligations owed to it under any such Secured Cash
Management Agreements.

 

Section 12.15                      No Third Party Beneficiaries  This Agreement,
the other Loan Documents, and the agreement of the Lenders to make Loans and the
Issuing Banks to issue, amend, renew or extend Letters of Credit hereunder are
solely for the benefit of the Credit Parties, and no other Person (including,
without limitation, any Subsidiary of the Borrower (other than a Credit Party),
any other obligor, contractor, subcontractor, supplier or materialmen) shall
have any rights, claims, remedies or privileges hereunder or under any other
Loan Document against the Administrative Agent, any other Agent, any Issuing
Bank or any Lender for any reason whatsoever.  There are no third party
beneficiaries.

 

Section 12.16                      USA Patriot Act Notice  Pursuant to
Section 326 of the USA Patriot Act, the Administrative Agent and the Lenders
hereby notify the Borrower and its Subsidiaries that if they or any of their
Subsidiaries open an account, including any loan, deposit account, treasury
management account, or other extension of credit with the Administrative Agent
or any Lender, the Administrative Agent or the applicable Lender will request
the applicable Person’s name, tax identification number, business address and
other information necessary to identify such Person (and may request such
Person’s organizational documents or other identifying documents) to the extent
necessary for the Administrative Agent and the applicable Lender to comply with
the USA Patriot Act.

 

126

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Section 12.17                      Keepwell  Each Credit Party that is a
Qualified ECP Guarantor at the time the Guarantee or the grant of the security
interest under the Loan Documents, in each case, by any Specified Credit Party,
becomes effective with respect to any Swap Obligation, hereby absolutely,
unconditionally and irrevocably undertakes to provide such funds or other
support to each Specified Credit Party with respect to such Swap Obligation as
may be needed by such Specified Credit Party from time to time to honor all of
its obligations under its Guarantee and the other Loan Documents in respect of
such Swap Obligation (but, in each case, only up to the maximum amount of such
liability that can be hereby incurred without rendering the such Qualified ECP
Guarantor’s obligations and undertakings under this Section 12.17 voidable under
applicable law relating to fraudulent conveyance or fraudulent transfer, and not
for any greater amount). The obligations and undertakings of each Qualified ECP
Guarantor under this Section shall remain in full force and effect until the
Obligations have been indefeasibly paid and performed in full.  Each Qualified
ECP Guarantor intends this Section to constitute, and this Section shall be
deemed to constitute, a Guarantee of the obligations of, and a “keepwell,
support, or other agreement” for the benefit of, each Specified Credit Party for
all purposes of the Commodity Exchange Act.

 

Section 12.18                      Acknowledgement and Consent to Bail-In of EEA
Financial Institutions.

 

Notwithstanding anything to the contrary in any Loan Document or in any other
agreement, arrangement or understanding among any such parties, each party
hereto acknowledges that any liability of any EEA Financial Institution arising
under any Loan Document may be subject to the write-down and conversion powers
of an EEA Resolution Authority and agrees and consents to, and acknowledges and
agrees to be bound by:

 

(a)                                 the application of any Write-Down and
Conversion Powers by an EEA Resolution Authority to any such liabilities arising
hereunder which may be payable to it by any party hereto that is an EEA
Financial Institution; and

 

(b)                                 the effects of any Bail-In Action on any
such liability, including, if applicable:

 

(i)                                     a reduction in full or in part or
cancellation of any such liability;

 

(ii)                                  a conversion of all, or a portion of, such
liability into shares or other instruments of ownership in such EEA Financial
Institution, its parent entity, or a bridge institution that may be issued to it
or otherwise conferred on it, and that such shares or other instruments of
ownership will be accepted by it in lieu of any rights with respect to any such
liability under this Agreement or any other Loan Document; or

 

(iii)                               the variation of the terms of such liability
in connection with the exercise of the write-down and conversion powers of any
EEA Resolution Authority.

 

Section 12.19                      Flood Insurance Notwithstanding any provision
in this Agreement, any Security Instrument or other Loan Document to the
contrary, (a) in no event is (i) any Excluded Asset (as defined in the Security
Agreement) or (ii) any Building or Manufactured (Mobile) Home (as defined in the
applicable Flood Insurance Regulations) included in the definition of
“Collateral” and (b) no Building or Manufactured (Mobile) Home (as defined in
the applicable Flood Insurance Regulations) shall be subject to a Lien under any
Security Instrument.  As used

 

127

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

 

herein, “Flood Insurance Regulations” shall mean (i) the National Flood
Insurance Act of 1968, (ii) the Flood Disaster Protection Act of 1973, (iii) the
National Flood Insurance Reform Act of 1994 (amending 42 USC 4001, et seq.),
(iv) the Flood Insurance Reform Act of 2004 and (v) the Biggert-Waters Flood
Insurance Reform Act of 2012, in each case as now or hereafter in effect or any
successor statute thereto and including any regulations promulgated thereunder.

 

Section 12.20                      Intercreditor Agreements.

 

(a)                                 Each of the Lenders, the Issuing Banks and
the other Secured Parties acknowledges that obligations of the Borrower and the
other Credit Parties with respect to any Permitted Additional Debt may, to the
extent set forth herein, be secured by Liens on assets of the Borrower and the
other Credit Parties that constitute collateral security for the Obligations. 
Upon the approval of an Intercreditor Agreement by the Majority Lenders, each of
the Lenders, the Issuing Banks and the other Secured Parties hereby irrevocably
authorizes and directs the Administrative Agent to execute and deliver, in each
case on behalf of such Secured Party and without any further consent,
authorization or other action by such Secured Party, (i) from time to time upon
the request of the Borrower, in connection with the establishment, incurrence,
amendment, refinancing or replacement of any such Debt, such Intercreditor
Agreement and (ii) any documents relating thereto.

 

(b)                                 Each of the Lenders, the Issuing Banks and
the other Secured Parties hereby irrevocably (i) consents to the treatment of
Liens to be provided for under the Intercreditor Agreements, (ii) agrees that,
upon the execution and delivery thereof, such Secured Party will be bound by the
provisions of any Intercreditor Agreement as if it were a signatory thereto and
will take no actions contrary to the provisions of any Intercreditor Agreement,
(iii) agrees that no Secured Party shall have any right of action whatsoever
against the Administrative Agent as a result of any action taken by the
Administrative Agent pursuant to this Section 12.20 or in accordance with the
terms of any Intercreditor Agreement and (iv) authorizes and directs the
Administrative Agent to carry out the provisions and intent of each
Intercreditor Agreement.

 

(c)                                  Each of the Lenders, the Issuing Banks and
the other Secured Parties hereby irrevocably further authorizes and directs the
Administrative Agent to execute and deliver, in each case on behalf of such
Secured Party and without any further consent, authorization or other action by
such Secured Party, any amendments, supplements or other modifications of any
Intercreditor Agreement that the Borrower may from time to time request (i) to
give effect to any establishment, incurrence, amendment, extension, renewal,
refinancing or replacement of any Permitted Additional Debt, (ii) to confirm for
any party that such Intercreditor Agreement is effective and binding upon the
Administrative Agent on behalf of the Secured Parties or (iii) to effect any
other amendment, supplement or modification so long as the resulting agreement
would constitute an Intercreditor Agreement if executed at such time as a new
agreement.

 

(d)                                 Each of the Lenders, the Issuing Banks and
the other Secured Parties hereby irrevocably further authorizes and directs the
Administrative Agent to execute and deliver, in each case on behalf of such
Secured Party and without any further consent, authorization or other action by
such Secured Party, any amendments, supplements or other modifications of any
Security Instrument to add or remove any legend that may be required pursuant to
any Intercreditor Agreement.

 

128

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

 

(e)                                  The Administrative Agent shall have the
benefit of the provisions of Article XI with respect to all actions taken by it
pursuant to this Section 12.20 or in accordance with the terms of any
Intercreditor Agreement to the full extent thereof.

 

[SIGNATURES BEGIN NEXT PAGE]

 

129

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

 

The parties hereto have caused this Agreement to be duly executed as of the day
and year first above written.

 

BORROWER:

BONANZA CREEK ENERGY, INC.

 

 

 

 

 

By:

/s/ Brant H. DeMuth

 

 

Brant H. DeMuth

 

 

Executive Vice President and Chief Financial Officer

 

SIGNATURE PAGE TO

CREDIT AGREEMENT — BONANZA CREEK ENERGY, INC.

 

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

 

ADMINISTRATIVE AGENT, ISSUING BANK AND LENDER:

JPMORGAN CHASE BANK, N.A.

 

 

 

 

 

 

 

By:

/s/ Arina Mavilian

 

 

Arina Mavilian

 

 

Authorized Officer

 

SIGNATURE PAGE TO

CREDIT AGREEMENT — BONANZA CREEK ENERGY, INC.

 

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

 

LENDER:

KEYBANK NATIONAL ASSOCIATION

 

 

 

 

 

 

 

By:

/s/ George E. McKean

 

 

George E. McKean

 

 

Senior Vice President

 

SIGNATURE PAGE TO

CREDIT AGREEMENT — BONANZA CREEK ENERGY, INC.

 

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

 

LENDER:

BANK OF AMERICA, N.A.

 

 

 

 

 

 

 

By:

/s/ Ronald E. McKaig

 

 

Ronald E. McKaig

 

 

Managing Director

 

SIGNATURE PAGE TO

CREDIT AGREEMENT — BONANZA CREEK ENERGY, INC.

 

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

 

LENDER:

CAPITAL ONE, NATIONAL ASSOCIATION

 

 

 

 

 

 

 

By:

/s/ Nancy Mak

 

 

Nancy Mak

 

 

Sr. Vice President

 

SIGNATURE PAGE TO

CREDIT AGREEMENT — BONANZA CREEK ENERGY, INC.

 

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

 

LENDER:

BMO HARRIS FINANCING, INC.

 

 

 

 

 

 

 

By:

/s/ James Ducote

 

 

James Ducote

 

 

Managing Director

 

SIGNATURE PAGE TO

CREDIT AGREEMENT — BONANZA CREEK ENERGY, INC.

 

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

 

LENDER:

Citibank, N.A.

 

 

 

 

 

 

 

By:

/s/ Saqeeb Ludhi

 

 

Saqeeb Ludhi

 

 

Vice President

 

SIGNATURE PAGE TO

CREDIT AGREEMENT — BONANZA CREEK ENERGY, INC.

 

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

 

LENDER:

SUNTRUST BANK

 

 

 

 

 

By:

/s/ Nick Rolf

 

 

Nick Rolf

 

 

Vice President

 

SIGNATURE PAGE TO

CREDIT AGREEMENT — BONANZA CREEK ENERGY, INC.

 

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

 

LENDER:

COMPASS BANK

 

 

 

 

 

By:

/s/ Kari McDaniel

 

 

Kari McDaniel

 

 

Vice President

 

SIGNATURE PAGE TO

CREDIT AGREEMENT — BONANZA CREEK ENERGY, INC.

 

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

 

LENDER:

BOKF, DBA BANK OF OKLAHOMA

 

 

 

 

 

 

By:

/s/ Guy C. Evangelista

 

 

Guy C. Evangelista

 

 

Senior Vice President

 

SIGNATURE PAGE TO

CREDIT AGREEMENT — BONANZA CREEK ENERGY, INC.

 

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

 

LENDER:

FIFTH THIRD BANK

 

 

 

 

 

By:

/s/ Jonathan H. Lee

 

 

Jonathan H. Lee

 

 

Director

 

SIGNATURE PAGE TO

CREDIT AGREEMENT — BONANZA CREEK ENERGY, INC.

 

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

 

LENDER:

THE HUNTINGTON NATIONAL BANK

 

 

 

 

 

By:

/s/ Cameron Hinojosa

 

 

Cameron Hinojosa

 

 

Vice President

 

SIGNATURE PAGE TO

CREDIT AGREEMENT — BONANZA CREEK ENERGY, INC.

 

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

 

LENDER:

U.S. BANK NATIONAL ASSOCIATION

 

 

 

 

 

By:

/s/ Heather Han

 

 

Heather Han

 

 

Senior Vice President

 

SIGNATURE PAGE TO

CREDIT AGREEMENT — BONANZA CREEK ENERGY, INC.

 

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

 

SCHEDULE 1.1

 

APPLICABLE MARGIN

 

 

 

Commitment Utilization Grid

 

 

Level I

 

Level II

 

Level III

 

Level IV

 

Level V

Commitment Utilization Percentage

 

<25%

 

>25% <50%

 

>50% <75%

 

>75% <90%

 

>90%

Eurodollar Revolving Credit Loans

 

1.75%

 

2.00%

 

2.25%

 

2.50%

 

2.75%

Letters of Credit

 

1.75%

 

2.00%

 

2.25%

 

2.50%

 

2.75%

ABR Revolving Credit Loans

 

0.75%

 

1.00%

 

1.25%

 

1.50%

 

1.75%

Commitment Fee Rate

 

0.375%

 

0.375%

 

0.50%

 

0.50%

 

0.50%

 

Schedule 1.1-1

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

 

EXHIBIT A
FORM OF REVOLVING CREDIT NOTE

 

[          ], 20[   ]

 

On or before the Revolving Credit Maturity Date, FOR VALUE RECEIVED, Bonanza
Creek Energy, Inc. (the “Borrower”) promises to pay to [Insert name of
applicable financial institution] (the “Payee”) at the Administrative Agent’s
principal office located in New York, New York, in lawful money of the United
States of America, the aggregate unpaid principal amount of the Revolving Credit
Loans as may from time to time have been advanced by the Payee and then be
outstanding hereunder pursuant to the Credit Agreement (as amended, restated,
amended and restated, supplemented or otherwise modified from time to time, the
“Credit Agreement”) dated as of December 7, 2018, by and among the financial
institutions from time to time signatory thereto (individually a “Lender”, and
any and all such financial institutions collectively the “Lenders”), JPMorgan
Chase Bank, N.A., as administrative agent for the Lenders (in such capacity, the
“Administrative Agent”), as Issuing Bank, and the Borrower, together with
interest thereon as hereinafter set forth.

 

Each of the Revolving Credit Borrowings made hereunder shall bear interest at
the interest rate from time to time applicable thereto under the Credit
Agreement or as otherwise determined thereunder, and interest shall be computed,
assessed and payable on the unpaid principal amount of each Revolving Credit
Borrowing made by the Payee from the date of such Revolving Credit Borrowing
until paid at the rate and at the times set forth in the Credit Agreement.

 

This Note is a note under which Revolving Credit Borrowings (including
refundings and conversions), repayments and readvances may be made from time to
time, but only in accordance with the terms and conditions of the Credit
Agreement.  This Note evidences borrowings under, is subject to, is secured in
accordance with, and may be prepaid, accelerated or matured under, the terms of
the Credit Agreement, to which reference is hereby made.  Capitalized terms used
herein, except as defined to the contrary, shall have the meanings given them in
the Credit Agreement.

 

This Note shall be interpreted and the rights of the parties hereunder shall be
determined under the laws of, and enforceable in, the State of New York.

 

The Borrower hereby waives presentment for payment, demand, protest and notice
of dishonor and nonpayment of this Note and agrees that no obligation hereunder
shall be discharged by reason of any extension, indulgence, release or
forbearance granted by any holder of this Note to any party now or hereafter
liable hereon or any present or subsequent owner of any property, real or
personal, which is now or hereafter security for this Note.

 

*     *     *

 

[SIGNATURES FOLLOW ON SUCCEEDING PAGE]

 

Exhibit A-1

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

 

Nothing herein shall limit any right granted the Payee by any other instrument
or by law.

 

 

BONANZA CREEK ENERGY, INC.

 

 

 

 

 

By:

 

 

Name:

 

 

Title:

 

 

Exhibit A-2

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

 

EXHIBIT B
FORM OF REVOLVING CREDIT BORROWING REQUEST

 

No.

Dated: [         ], 20[   ]

 

TO:                           JPMorgan Chase Bank, N.A. (the “Administrative
Agent”)

 

RE:                           Credit Agreement (as amended, restated, amended
and restated, supplemented or otherwise modified from time to time, the “Credit
Agreement”) dated as of December 7, 2018, among the Administrative Agent,
JPMorgan Chase Bank, N.A., as an Issuing Bank, the lenders from time to time
party thereto (the “Lenders”), and Bonanza Creek Energy, Inc. (the “Borrower”)

 

Pursuant to the terms and conditions of the Credit Agreement, the Borrower
hereby requests a Revolving Credit Borrowing from the Revolving Credit Lenders,
as described herein:

 

A.                                    Date of Revolving Credit Borrowing(1):

 

B.                                    o                                   
(check if applicable):

 

This Revolving Credit Borrowing is or includes a whole or partial
refunding/conversion of:

 

Advance No(s).

 

C.                                    Type of Revolving Credit Borrowing (check
only one):

 

o                                    ABR Borrowing

 

o                                    Eurodollar Borrowing

 

D.                                    Amount of Revolving Credit Borrowing:

 

$

 

E.                                     Interest Period (applicable to Eurodollar
Borrowings):

 

F.                                      Disbursement Instructions:

 

o                                    JPMorgan Chase Bank, N.A. Account No.

 

o                                    Other:

 

The Borrower certifies to the matters specified in Section 2.03(d) of the Credit
Agreement.

 

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

(1) Which shall be a Business Day.

 

Exhibit B-1

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

 

Capitalized terms used herein, except as defined to the contrary, have the
meanings given them in the Credit Agreement.

 

The undersigned by execution of this document agrees that any copy of this
document signed by it and transmitted by facsimile or email, or any other method
for delivery shall be admissible in evidence as the original itself in any
judicial or administrative proceeding, whether or not the original is in
existence.

 

 

BONANZA CREEK ENERGY, INC.

 

 

 

 

 

By:

 

 

Name:

 

 

Title:

 

 

Agent Approval:

 

Exhibit B-2

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

 

EXHIBIT C
FORM OF COMPLIANCE CERTIFICATE

 

The undersigned hereby certifies that he/she is the [              ] of Bonanza
Creek Energy, Inc., a Delaware corporation (the “Borrower”), and that as such
he/she is authorized to execute this certificate on behalf of the Borrower. 
With reference to the Credit Agreement dated as of December 7, 2018 (together
with all amendments, restatements, supplements or other modifications thereto
being the “Agreement”) among the Borrower, JPMorgan Chase Bank, N.A., as
Administrative Agent, and the other agents and lenders (the “Lenders”) which are
or become a party thereto, the undersigned certifies on behalf of the Borrower
(and not individually) as follows (each capitalized term used herein having the
same meaning given to it in the Agreement unless otherwise specified):

 

1.1                               There exists no Default or Event of Default
[or specify Default and describe].

 

1.2                               Attached hereto are the reasonably detailed
computations necessary to determine whether the Borrower and the other Credit
Parties is in compliance with Section 9.01 as of the end of the [fiscal
quarter][fiscal year] ending [             ].

 

1.3                               No change in the application of GAAP to the
Borrower’s financial statements has been made since the preparation of the
Borrower’s audited annual financial statements most recently delivered under
Section 8.01(a)(2) [except                    ].

 

EXECUTED AND DELIVERED this [             ] day of [            ].

 

 

BONANZA CREEK ENERGY, INC.

 

 

 

By:

 

 

Name:

 

 

Title:

 

 

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

(2) For certificates prior to first audited financial statements, replace with:
“since the preparation of the Financial Statements”

 

Exhibit C-1

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

 

EXHIBIT D
SECURITY INSTRUMENTS

 

1.                                      Pledge and Security Agreement dated as
of December 7, 2018 by and among each of the Credit Parties, as Grantors and
JPMorgan Chase Bank, N.A., in its capacity as administrative agent for the
Lenders and other Secured Parties.

 

2.                                      Deed of Trust, Mortgage, Assignment of
As-Extracted Collateral, Security Agreement, Fixture Filing and Financing
Statement dated as of December 7, 2018 from Bonanza Creek Energy Operating
Company, LLC, as mortgagor to Robert D. Keepers, as trustee for the benefit of
JPMorgan Chase Bank, N.A., as administrative agent for itself and for the
ratable benefit of the other Secured Parties, as mortgagee.

 

3.                                      Guarantee Agreement by each of the
Credit Parties as Guarantors in favor of JPMorgan Chase Bank, N.A., each of the
other Secured Parties and each of their successors and assigns as permitted
pursuant to the Credit Agreement.

 

Exhibit D-1

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

 

EXHIBIT E
FORM OF ASSIGNMENT AND ASSUMPTION

 

This Assignment and Assumption (the “Assignment and Assumption”) is dated as of
the Effective Date set forth below and is entered into by and between [Insert
name of Assignor] (the “Assignor”) and [Insert name of Assignee] (the
“Assignee”).  Capitalized terms used but not defined herein shall have the
meanings given to them in the Credit Agreement identified below (as amended,
restated, amended and restated, supplemented or otherwise modified from time to
time, the “Credit Agreement”), receipt of a copy of which is hereby acknowledged
by the Assignee.  The Standard Terms and Conditions set forth in Annex 1
attached hereto are hereby agreed to and incorporated herein by reference and
made a part of this Assignment and Assumption as if set forth herein in full.

 

For an agreed consideration, the Assignor hereby irrevocably sells and assigns
to the Assignee, and the Assignee hereby irrevocably purchases and assumes from
the Assignor, subject to and in accordance with the Standard Terms and
Conditions and the Credit Agreement, as of the Effective Date inserted by the
Administrative Agent as contemplated below (i) all of the Assignor’s rights and
obligations in its capacity as a Lender under the Credit Agreement and any other
documents or instruments delivered pursuant thereto to the extent related to the
amount and percentage interest identified below of all of such outstanding
rights and obligations of the Assignor under the respective facilities
identified below (including any letters of credit and guarantees included in
such facilities) and (ii) to the extent permitted to be assigned under
applicable law, all claims, suits, causes of action and any other right of the
Assignor (in its capacity as a Lender) against any Person, whether known or
unknown, arising under or in connection with the Credit Agreement, any other
documents or instruments delivered pursuant thereto or the loan transactions
governed thereby or in any way based on or related to any of the foregoing,
including contract claims, tort claims, malpractice claims, statutory claims and
all other claims at law or in equity related to the rights and obligations sold
and assigned pursuant to clause (i) above (the rights and obligations sold and
assigned pursuant to clauses (i) and (ii) above being referred to herein
collectively as the “Assigned Interest”).  Such sale and assignment is without
recourse to the Assignor and, except as expressly provided in this Assignment
and Assumption, without representation or warranty by the Assignor.

 

1.

 

Assignor:

 

 

 

 

 

 

 

2.

 

Assignee:

 

 

 

 

 

 

 

 

 

 

 

[and is an Affiliate/Approved Fund of [identify Lender](3)]

 

 

 

 

 

3.

 

Borrower:

 

Bonanza Creek Energy, Inc.

 

 

 

 

 

4.

 

Administrative Agent:

 

JPMorgan Chase Bank, N.A., as the administrative agent under the Credit
Agreement

 

 

 

 

 

5.

 

Credit Agreement:

 

The Credit Agreement dated as of December 7, 2018, among Bonanza Creek
Energy, Inc., the Issuing Banks, the Lenders parties

 

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

(3) Select as applicable.

 

Exhibit E-1

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

 

 

 

 

 

thereto, JPMorgan Chase Bank, N.A., as Administrative Agent, and the other
agents parties thereto

 

 

 

 

 

6.

 

Assigned Interest:

 

 

 

Facility
Assigned

 

Aggregate Amount of
Commitment/Loans for
all Lenders

 

Amount of
Commitment/Loans
Assigned

 

Percentage Assigned of
Commitment/Loans(4)

 

 

 

$

 

 

$

 

 

 

%

 

 

$

 

 

$

 

 

 

%

 

 

$

 

 

$

 

 

 

%

 

Effective Date: [            ], 20[  ] [TO BE INSERTED BY ADMINISTRATIVE AGENT
AND WHICH SHALL BE THE EFFECTIVE DATE OF RECORDATION OF TRANSFER IN THE REGISTER
THEREFOR.]

 

The terms set forth in this Assignment and Assumption are hereby agreed to:

 

ASSIGNOR:

[NAME OF ASSIGNOR]

 

 

 

By:

 

 

Name:

 

 

Title:

 

 

 

ASSIGNEE:

[NAME OF ASSIGNEE]

 

 

 

By:

 

 

Name:

 

 

Title:

 

 

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

(4) Set forth, to at least 9 decimals, as a percentage of the Commitment/Loans
of all Lenders thereunder.

 

Exhibit E-2

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

 

[Consented to and](5) Accepted:

JPMORGAN CHASE BANK, N.A.,

 

as Administrative Agent

 

 

 

By:

 

 

Name:

 

 

Title:

 

 

 

[Consented to:](6):

BONANZA CREEK ENERGY, INC.

 

 

 

By:

 

 

Name:

 

 

Title:

 

 

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

(5) To be added only if the consent of the Administrative Agent is required by
the terms of the Credit Agreement.

(6) To be added only if the consent of the Borrower and/or other parties (e.g.
Issuing Banks) is required by the terms of the Credit Agreement.

 

Exhibit E-3

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

 

ANNEX 1
[                ](7)

 

STANDARD TERMS AND CONDITIONS FOR
ASSIGNMENT AND ASSUMPTION

 

1.                                      Representations and Warranties.

 

1.2                               Assignor.  The Assignor (a) represents and
warrants that (i) it is the legal and beneficial owner of the Assigned Interest,
(ii) the Assigned Interest is free and clear of any lien, encumbrance or other
adverse claim and (iii) it has full power and authority, and has taken all
action necessary, to execute and deliver this Assignment and Assumption and to
consummate the transactions contemplated hereby; and (b) assumes no
responsibility with respect to (i) any statements, warranties or representations
made in or in connection with the Credit Agreement (as amended, restated,
amended and restated, supplemented or otherwise modified from time to time, the
“Credit Agreement”) or any other Loan Document, (ii) the execution, legality,
validity, enforceability, genuineness, sufficiency or value of the Loan
Documents or any collateral thereunder, (iii) the financial condition of the
Borrower, any of their respective Subsidiaries or any other Person obligated in
respect of any Loan Document or (iv) the performance or observance by the
Borrower, any of their respective Subsidiaries or any other Person of any of
their respective obligations under any Loan Document.

 

1.3                               Assignee.  The Assignee (a) represents and
warrants that (i) it has full power and authority, and has taken all action
necessary, to execute and deliver this Assignment and Assumption and to
consummate the transactions contemplated hereby and to become a Lender under the
Credit Agreement, (ii) it satisfies the requirements, if any, specified in the
Credit Agreement that are required to be satisfied by it in order to acquire the
Assigned Interest and become a Lender, (iii) from and after the Effective Date,
it shall be bound by the provisions of the Credit Agreement as a Lender
thereunder and, to the extent of the Assigned Interest, shall have the
obligations of a Lender thereunder, (iv) it has received a copy of the Credit
Agreement, together with copies of the most recent financial statements
delivered pursuant to Section 8.01 thereof, as applicable, and such other
documents and information as it has deemed appropriate to make its own credit
analysis and decision to enter into this Assignment and Assumption and to
purchase the Assigned Interest on the basis of which it has made such analysis
and decision independently and without reliance on the Administrative Agent or
any other Lender, and (v) if it is a Foreign Lender, attached to the Assignment
and Assumption is any documentation required to be delivered by it pursuant to
the terms of the Credit Agreement, duly completed and executed by the Assignee;
and (b) agrees that (i) it will, independently and without reliance on the
Administrative Agent, the Assignor or any other Lender, and based on such
documents and information as it shall deem appropriate at the time, continue to
make its own credit decisions in taking or not taking action under the Loan
Documents, and (ii) it will perform in accordance with their terms all of the
obligations which by the terms of the Loan Documents are required to be
performed by it as a Lender.

 

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(7) Describe Credit Agreement at option of Administrative Agent.

 

Exhibit E-4

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2.                                      Payments.  From and after the Effective
Date, the Administrative Agent shall make all payments in respect of the
Assigned Interest (including payments of principal, interest, fees and other
amounts) to the Assignor for amounts which have accrued to but excluding the
Effective Date and to the Assignee for amounts which have accrued from and after
the Effective Date.

 

3.                                      General Provisions.  This Assignment and
Assumption shall be binding upon, and inure to the benefit of, the parties
hereto and the other parties to the Credit Agreement and their respective
successors and assigns.  This Assignment and Assumption may be executed in any
number of counterparts, which together shall constitute one instrument. 
Delivery of an executed counterpart of a signature page of this Assignment and
Assumption by telecopy shall be effective as delivery of a manually executed
counterpart of this Assignment and Assumption.  This Assignment and Assumption
shall be governed by, and construed in accordance with, the laws of the State of
New York.

 

Exhibit E-5

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EXHIBIT F
FORM OF NOTICE OF ISSUANCE OF LETTER OF CREDIT

 

TO:                           Revolving Credit Lenders

 

RE:                           Issuance of Letter of Credit pursuant to
Section 2.07 of Credit Agreement dated as of December 7, 2018, (as amended,
restated, amended and restated, supplemented or otherwise modified from time to
time, the “Credit Agreement”) by and among the financial institutions from time
to time signatory thereto (individually a “Lender”, and any and all such
financial institutions collectively the “Lenders”), JPMorgan Chase Bank, N.A.,
as administrative agent for the Lenders (in such capacity, the “Administrative
Agent”), as an Issuing Bank, and Bonanza Creek Energy, Inc. (the “Borrower”)

 

On [            ], 20[  ],(8) [      ](9), as  Issuing Lender, in accordance
with Section 2.07 of the Credit Agreement, issued its Letter of Credit number
[            ], in favor of [            ](10) for the account of
[            ].(11)  The face amount of such Letter of Credit is
$[            ].  The amount of each Revolving Credit Lender’s participation in
such Letter of Credit is as follows:(12)

 

$

 

$

 

$

 

$

 

This notification is delivered this [      ] day of [            ], 20[  ],
pursuant to Section 2.07(c) of the Credit Agreement.  Except as otherwise
defined, capitalized terms used herein have the meanings given them in the
Credit Agreement.

 

 

JPMORGAN CHASE BANK, N.A.,

 

as Administrative Agent

 

 

 

By:

 

 

Name:

 

 

Title:

 

 

[This form of Letter of Credit Notice (including footnotes) is subject in all
respects to the terms and conditions of the Credit Agreement which shall govern
in the event of any inconsistencies or omissions.]

 

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(8)                   Date of Issuance.

(9)                   Name of Issuing Lender.

(10)            Beneficiary.

(11)            Name of the Borrower.

(12)            Amounts based on Applicable Revolving Credit Percentages.

 

Exhibit F-1

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EXHIBIT G-1
FORM OF U.S. TAX COMPLIANCE CERTIFICATE (FOREIGN LENDERS; NOT PARTNERSHIPS)

 

(For Foreign Lenders That Are Not Partnerships For U.S. Federal Income Tax
Purposes)

 

Reference is hereby made to the Credit Agreement dated as of December 7, 2018
(as amended, restated, amended and restated, supplemented or otherwise modified
from time to time, the “Credit Agreement”), among Bonanza Creek Energy, Inc., as
Borrower, JPMorgan Chase Bank, N.A., as Administrative Agent, the Issuing Banks
and the financial institutions from time to time party thereto as Lenders.

 

Pursuant to the provisions of Section 5.03 of the Credit Agreement, the
undersigned hereby certifies that (i) it is the sole record and beneficial owner
of the Loan(s) (as well as any Note(s) evidencing such Loan(s)) in respect of
which it is providing this certificate, (ii) it is not a bank within the meaning
of Section 881(c)(3)(A) of the Code, (iii) it is not a ten percent shareholder
of the Borrower within the meaning of Section 871(h)(3)(B) of the Code and
(iv) it is not a controlled foreign corporation related to the Borrower as
described in Section 881(c)(3)(C) of the Code.

 

The undersigned has furnished the Administrative Agent and the Borrower with a
certificate of its non-U.S. Person status on IRS Form W-8BEN or W-8BEN-E. By
executing this certificate, the undersigned agrees that (1) if the information
provided on this certificate changes, the undersigned shall promptly so inform
the Borrower and the Administrative Agent, and (2) the undersigned shall have at
all times furnished the Borrower and the Administrative Agent with a properly
completed and currently effective certificate in either the calendar year in
which each payment is to be made to the undersigned, or in either of the two
calendar years preceding such payments.

 

Unless otherwise defined herein, terms defined in the Credit Agreement and used
herein shall have the meanings given to them in the Credit Agreement.

 

[NAME OF LENDER]

 

 

 

By:

 

Name:

 

Title:

 

 

 

Date:            , 20[ ]

 

 

Exhibit G-1-1

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EXHIBIT G-2
FORM OF U.S. TAX COMPLIANCE CERTIFICATE (FOREIGN PARTICIPANTS; NOT PARTNERSHIPS)

 

(For Foreign Participants That Are Not Partnerships For U.S. Federal Income Tax
Purposes)

 

Reference is hereby made to the Credit Agreement dated as of December 7, 2018
(as amended, restated, amended and restated, supplemented or otherwise modified
from time to time, the “Credit Agreement”), among Bonanza Creek Energy, Inc., as
Borrower, JPMorgan Chase Bank, N.A., as Administrative Agent, the Issuing Banks
and the financial institutions from time to time party thereto as Lenders.

 

Pursuant to the provisions of Section 5.03 of the Credit Agreement, the
undersigned hereby certifies that (i) it is the sole record and beneficial owner
of the participation in respect of which it is providing this certificate,
(ii) it is not a bank within the meaning of Section 881(c)(3)(A) of the Code,
(iii) it is not a ten percent shareholder of the Borrower within the meaning of
Section 871(h)(3)(B) of the Code, and (iv) it is not a controlled foreign
corporation related to the Borrower as described in Section 881(c)(3)(C) of the
Code.

 

The undersigned has furnished its participating Lender with a certificate of its
non-U.S. Person status on IRS Form W-8BEN or W-8BEN-E. By executing this
certificate, the undersigned agrees that (1) if the information provided on this
certificate changes, the undersigned shall promptly so inform such Lender in
writing, and (2) the undersigned shall have at all times furnished such Lender
with a properly completed and currently effective certificate in either the
calendar year in which each payment is to be made to the undersigned, or in
either of the two calendar years preceding such payments.

 

Unless otherwise defined herein, terms defined in the Credit Agreement and used
herein shall have the meanings given to them in the Credit Agreement.

 

[NAME OF PARTICIPANT]

 

 

 

By:

 

Name:

 

Title:

 

 

 

Date:            , 20[ ]

 

 

Exhibit G-2-1

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EXHIBIT G-3
FORM OF U.S. TAX COMPLIANCE CERTIFICATE (FOREIGN PARTICIPANTS; PARTNERSHIPS)

 

(For Foreign Participants That Are Partnerships For U.S. Federal Income Tax
Purposes)

 

Reference is hereby made to the Credit Agreement dated as of December 7, 2018
(as amended, restated, amended and restated, supplemented or otherwise modified
from time to time, the “Credit Agreement”), among Bonanza Creek Energy, Inc., as
Borrower, JPMorgan Chase Bank, N.A., as Administrative Agent, the Issuing Banks
and the financial institutions from time to time party thereto as Lenders.

 

Pursuant to the provisions of Section 5.03 of the Credit Agreement, the
undersigned hereby certifies that (i) it is the sole record owner of the
participation in respect of which it is providing this certificate, (ii) its
direct or indirect partners/members are the sole beneficial owners of such
participation, (iii) with respect such participation, neither the undersigned
nor any of its direct or indirect partners/members is a bank extending credit
pursuant to a loan agreement entered into in the ordinary course of its trade or
business within the meaning of Section 881(c)(3)(A) of the Code, (iv) none of
its direct or indirect partners/members is a ten percent shareholder of the
Borrower within the meaning of Section 871(h)(3)(B) of the Code and (v) none of
its direct or indirect partners/members is a controlled foreign corporation
related to the Borrower as described in Section 881(c)(3)(C) of the Code.

 

The undersigned has furnished its participating Lender with IRS Form W-8IMY
accompanied by one of the following forms from each of its partners/members that
is claiming the portfolio interest exemption: (i) an IRS Form W-8BEN or W-8BEN-E
or (ii) an IRS Form W-8IMY accompanied by an IRS Form W-8BEN or W-8BEN-E from
each of such partner’s/member’s beneficial owners that is claiming the portfolio
interest exemption. By executing this certificate, the undersigned agrees that
(1) if the information provided on this certificate changes, the undersigned
shall promptly so inform such Lender and (2) the undersigned shall have at all
times furnished such Lender with a properly completed and currently effective
certificate in either the calendar year in which each payment is to be made to
the undersigned, or in either of the two calendar years preceding such payments.

 

Unless otherwise defined herein, terms defined in the Credit Agreement and used
herein shall have the meanings given to them in the Credit Agreement.

 

[NAME OF PARTICIPANT]

 

 

 

By:

 

Name:

 

Title:

 

 

 

Date:            , 20[ ]

 

 

Exhibit G-3-1

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EXHIBIT G-4
FORM OF U.S. TAX COMPLIANCE CERTIFICATE (FOREIGN LENDERS; PARTNERSHIPS)

 

(For Foreign Lenders That Are Partnerships For U.S. Federal Income Tax Purposes)

 

Reference is hereby made to the Credit Agreement dated as of December 7, 2018
(as amended, restated, amended and restated, supplemented or otherwise modified
from time to time, the “Credit Agreement”), among Bonanza Creek Energy, Inc., as
Borrower, JPMorgan Chase Bank, N.A., as Administrative Agent, the Issuing Banks
and the financial institutions from time to time party thereto as Lenders.

 

Pursuant to the provisions of Section 5.03 of the Credit Agreement, the
undersigned hereby certifies that (i) it is the sole record owner of the
Loan(s) (as well as any Note(s) evidencing such Loan(s)) in respect of which it
is providing this certificate, (ii) its direct or indirect partners/members are
the sole beneficial owners of such Loan(s) (as well as any Note(s) evidencing
such Loan(s)), (iii) with respect to the extension of credit pursuant to this
Credit Agreement or any other Loan Document, neither the undersigned nor any of
its direct or indirect partners/members is a bank extending credit pursuant to a
loan agreement entered into in the ordinary course of its trade or business
within the meaning of Section 881(c)(3)(A) of the Code, (iv) none of its direct
or indirect partners/members is a ten percent shareholder of the Borrower within
the meaning of Section 871(h)(3)(B) of the Code and (v) none of its direct or
indirect partners/members is a controlled foreign corporation related to the
Borrower as described in Section 881(c)(3)(C) of the Code.

 

The undersigned has furnished the Administrative Agent and the Borrower with IRS
Form W-8IMY accompanied by one of the following forms from each of its
partners/members that is claiming the portfolio interest exemption: (i) an IRS
Form W-8BEN or W-8BEN-E or (ii) an IRS Form W-8IMY accompanied by an IRS
Form W-8BEN or W-8BEN-E from each of such partner’s/member’s beneficial owners
that is claiming the portfolio interest exemption. By executing this
certificate, the undersigned agrees that (1) if the information provided on this
certificate changes, the undersigned shall promptly so inform the Borrower and
the Administrative Agent, and (2) the undersigned shall have at all times
furnished the Borrower and the Administrative Agent with a properly completed
and currently effective certificate in either the calendar year in which each
payment is to be made to the undersigned, or in either of the two calendar years
preceding such payments.  Unless otherwise defined herein, terms defined in the
Credit Agreement and used herein shall have the meanings given to them in the
Credit Agreement.

 

[NAME OF LENDER]

 

 

 

By:

 

Name:

 

Title:

 

 

 

Date:            , 20[ ]

 

 

Exhibit G-4-1

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