Exhibit 10.1

EXECUTION COPY

CREDIT AGREEMENT

DATED AS OF NOVEMBER 17, 2017

AMONG

CALIFORNIA RESOURCES CORPORATION,

AS THE BORROWER

 

 

THE SEVERAL LENDERS

FROM TIME TO TIME PARTIES HERETO,

GOLDMAN SACHS LENDING PARTNERS LLC,

AND

JPMORGAN CHASE BANK, N.A.,

AS JOINT LEAD ARRANGERS AND JOINT BOOKRUNNERS,

CITIGROUP GLOBAL MARKETS INC.,

AS A BOOKRUNNER,

MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED,

WELLS FARGO SECURITIES, LLC,

THE BANK OF TOKYO-MITSUBISHI UFJ, LTD.,

HSBC SECURITIES (USA) INC.,

MORGAN STANLEY SENIOR FUNDING, INC.,

DNB MARKETS, INC.,

AND

MIZUHO BANK, LTD.,

AS SENIOR CO-MANAGERS,

KEYBANC CAPITAL MARKETS INC.,

BB&T CAPITAL MARKETS,

U.S. BANK NATIONAL ASSOCIATION,

IMPERIAL CAPITAL LLC,

AND

WOLFE CAPITAL MARKETS AND ADVISORY,

AS CO-MANAGERS,

AND

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

AS ADMINISTRATIVE AGENT

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TABLE OF CONTENTS

Page

 

ARTICLE I DEFINITIONS      1  

1.1

 

Defined Terms

     1  

1.2

 

Other Interpretive Provisions

     41  

1.3

 

Accounting Terms

     42  

1.4

 

Rounding

     42  

1.5

 

References to Agreements, Laws, Etc.

     42  

1.6

 

Times of Day

     43  

1.7

 

Timing of Payment or Performance

     43  

1.8

 

Currency Equivalents Generally

     43  

1.9

 

Classification of Loans and Borrowings

     43  

1.10

 

Available Amount Transactions

     43   ARTICLE II AMOUNT AND TERMS OF CREDIT      44  

2.1

 

Commitments

     44  

2.2

 

[Reserved]

     44  

2.3

 

Type of Loans

     44  

2.4

 

Notice of Borrowing

     44  

2.5

 

Disbursement of Funds

     44  

2.6

 

Repayment of Loans; Evidence of Debt

     45  

2.7

 

Conversions and Continuations

     46  

2.8

 

Relationship Among Lenders

     46  

2.9

 

Interest

     47  

2.10

 

Interest Periods

     47  

2.11

 

Increased Costs, Illegality, Etc.

     48  

2.12

 

Compensation

     49  

2.13

 

Change of Lending Office

     49  

2.14

 

Notice of Certain Costs

     50  

2.15

 

Alternative Rate of Interest

     50   ARTICLE III [RESERVED]      51   ARTICLE IV FEES; COMMITMENTS      51
 

4.1

 

Upfront Fees

     51  

4.2

 

Mandatory Termination or Reduction of Commitments

     51   ARTICLE V PAYMENTS      51  

5.1

 

Optional and Certain Other Prepayments and Repayments; Premium

     51  

5.2

 

Mandatory Prepayments

     52  

5.3

 

Method and Place of Payment

     53  

5.4

 

Net Payments

     53  

5.5

 

Computations of Interest and Fees

     56  

5.6

 

Limit on Rate of Interest

     56  

 

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ARTICLE VI CONDITIONS PRECEDENT TO EFFECTIVENESS      57  

6.1

 

Certain Credit Documents and Other Matters

     57  

6.2

 

Secretary’s Certificate of the Borrower

     58  

6.3

 

Good Standing Certificate of the Borrower

     58  

6.4

 

Legal Opinions

     58  

6.5

 

Closing Certificates

     58  

6.6

 

Secretary’s Certificates of the Credit Parties

     58  

6.7

 

Fees and Expenses

     58  

6.8

 

Patriot Act

     58  

6.9

 

Solvency Certificate

     58  

6.10

 

Uniform Commercial Code Searches

     59  

6.11

 

Notification of Effective Date

     59   ARTICLE VII [RESERVED]      59   ARTICLE VIII CONDITIONS PRECEDENT TO
ALL CREDIT EVENTS      59  

8.1

 

No Default; Representations and Warranties

     59  

8.2

 

Notice of Borrowing

     59   ARTICLE IX REPRESENTATIONS, WARRANTIES AND AGREEMENTS      60  

9.1

 

Corporate Status

     60  

9.2

 

Corporate Power and Authority; Enforceability

     60  

9.3

 

No Violation

     60  

9.4

 

Litigation

     60  

9.5

 

Margin Regulations

     60  

9.6

 

Governmental Approvals

     60  

9.7

 

Investment Company Act

     61  

9.8

 

True and Complete Disclosure

     61  

9.9

 

Financial Condition; Financial Statements

     61  

9.10

 

Tax Matters

     61  

9.11

 

Compliance with ERISA

     62  

9.12

 

Subsidiaries

     62  

9.13

 

Environmental Laws

     62  

9.14

 

Properties

     63  

9.15

 

Solvency

     63  

9.16

 

Insurance

     64  

9.17

 

Hedge Agreements

     64  

9.18

 

Patriot Act

     64  

9.19

 

Liens Under the Security Documents

     64  

9.20

 

No Default

     64  

9.21

 

Direct Benefit

     64  

9.22

 

Anti-Corruption Laws and Sanctions

     64  

9.23

 

EEA Financial Institutions

     65   ARTICLE X AFFIRMATIVE COVENANTS      65  

10.1

 

Information Covenants

     65  

 

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10.2

 

Books, Records and Inspections

     68  

10.3

 

Maintenance of Insurance

     68  

10.4

 

Payment of Taxes

     69  

10.5

 

Consolidated Corporate Franchises

     69  

10.6

 

Compliance with Statutes, Regulations, Etc.

     69  

10.7

 

ERISA

     69  

10.8

 

Maintenance of Properties

     70  

10.9

 

Amended and Restated Mortgages

     71  

10.10

 

Additional Guarantors, Grantors and Collateral

     71  

10.11

 

Use of Proceeds

     72  

10.12

 

Further Assurances

     72  

10.13

 

Reserve Reports

     72   ARTICLE XI NEGATIVE COVENANTS      73  

11.1

 

Limitation on Indebtedness

     73  

11.2

 

Limitation on Liens

     77  

11.3

 

Limitation on Fundamental Changes

     80  

11.4

 

Limitation on Sale of Assets

     81  

11.5

 

Limitation on Investments

     85  

11.6

 

Limitation on Restricted Payments

     87  

11.7

 

Limitations on Debt Payments and Amendments

     89  

11.8

 

Negative Pledge Agreements

     92  

11.9

 

Limitation on Subsidiary Distributions

     93  

11.10

 

Hedge Agreements

     94  

11.11

 

Financial Performance Covenant

     96  

11.12

 

Transactions with Affiliates.

     96  

11.13

 

Change in Business

     97  

11.14

 

Use of Proceeds

     97  

11.15

 

Anti-Layering

     97   ARTICLE XII EVENTS OF DEFAULT      97  

12.1

 

Payments

     97  

12.2

 

Representations, Etc.

     97  

12.3

 

Covenants

     98  

12.4

 

Default Under Other Agreements

     98  

12.5

 

Bankruptcy, Etc.

     98  

12.6

 

ERISA

     99  

12.7

 

Guarantee

     99  

12.8

 

Security Documents

     99  

12.9

 

Judgments

     99  

12.10

 

Change of Control

     99   ARTICLE XIII THE ADMINISTRATIVE AGENT      101  

13.1

 

Appointment

     101  

13.2

 

Delegation of Duties

     101  

13.3

 

Exculpatory Provisions

     101  

13.4

 

Reliance

     104  

 

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13.5

 

Notice of Default

     105  

13.6

 

Non-Reliance on Agents and Other Lenders

     105  

13.7

 

No Other Duties, Etc.

     105  

13.8

 

Indemnification

     105  

13.9

 

Agent in Its Individual Capacity

     106  

13.10

 

Successor Agent

     106  

13.11

 

Withholding Tax

     107  

13.12

 

Security Documents and Guarantee

     107  

13.13

 

Right to Realize on Collateral and Enforce Guarantee

     108  

13.14

 

Administrative Agent May File Proofs of Claim

     108  

ARTICLE XIV MISCELLANEOUS

     108  

14.1

 

Amendments, Waivers and Releases

     108  

14.2

 

Notices

     110  

14.3

 

No Waiver; Cumulative Remedies

     111  

14.4

 

Survival of Representations and Warranties

     111  

14.5

 

Payment of Expenses; Indemnification

     111  

14.6

 

Successors and Assigns; Participations and Assignments

     113  

14.7

 

[Reserved]

     117  

14.8

 

Adjustments; Set-off

     117  

14.9

 

Counterparts

     118  

14.10

 

Severability

     118  

14.11

 

Integration

     118  

14.12

 

GOVERNING LAW

     119  

14.13

 

Submission to Jurisdiction; Waivers

     119  

14.14

 

Acknowledgments

     119  

14.15

 

WAIVERS OF JURY TRIAL

     120  

14.16

 

Confidentiality

     120  

14.17

 

Release of Collateral and Guarantee Obligations

     121  

14.18

 

Credit Rating Election

     122  

14.19

 

USA PATRIOT Act

     123  

14.20

 

Payments Set Aside

     123  

14.21

 

Reinstatement

     123  

14.22

 

Disposition of Proceeds

     123  

14.23

 

[Reserved]

     123  

14.24

 

Acknowledgement and Consent to Bail-In of EEA Financial Institutions

     123  

14.25

 

Post-First Lien First Out Credit Agreement Third Amendment Fall-Away

     124  

 

iv

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Schedules and Exhibits

Schedule 1.1(e)

 

Excluded Stock

Schedule 2.1(a)

 

Commitments

Schedule 9.4

 

Litigation

Schedule 9.12

 

Subsidiaries

Schedule 11.1

 

Effective Date Indebtedness

Schedule 11.2

 

Effective Date Liens

Schedule 11.5

 

Effective Date Investments

Schedule 11.8

 

Effective Date Negative Pledge Agreements

Schedule 11.9

 

Effective Date Contractual Encumbrances

Schedule 11.12

 

Effective Date Affiliate Transactions

Schedule 14.2

 

Notice Addresses

Exhibit A

 

Form of Notice of Borrowing

Exhibit B

 

Form of Guarantee

Exhibit C

 

Form of Security Agreement

Exhibit D

 

Form of Pledge Agreement

Exhibit E

 

Form of Mortgage/Deed of Trust (California)

Exhibit F

 

Form of Credit Party Closing Certificate

Exhibit G

 

Form of Assignment and Acceptance

Exhibit H

 

Form of Promissory Note

Exhibit I

 

Form of First Out Collateral Agency Agreement

Exhibit J

 

Form of Sullivan & Cromwell LLP Legal Opinion

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CREDIT AGREEMENT, dated as of November 17, 2017, among CALIFORNIA RESOURCES
CORPORATION, a Delaware corporation (the “Borrower”), the banks, financial
institutions and other lending institutions from time to time parties as lenders
hereto (each a “Lender” and, collectively, the “Lenders”), GOLDMAN SACHS LENDING
PARTNERS LLC and J.P. MORGAN SECURITIES LLC as Joint Lead Arrangers and Joint
Bookrunners, CITIGROUP GLOBAL MARKETS INC., as a Bookrunner, and THE BANK OF NEW
YORK MELLON TRUST COMPANY, N.A., not in its individual capacity, but solely as
Administrative Agent.

WHEREAS, the Borrower has requested that the Lenders extend credit in the form
of term loans (such term loans, “2017 Term Loans” or “Loans”) on the Effective
Date, in the aggregate principal amount set forth on Schedule 2.1(a); and

WHEREAS, the proceeds of the Loans are to be used in accordance with
Section 10.11;

WHEREAS, the Lenders are willing to extend the credit described herein on the
terms and subject to the conditions set forth herein.

NOW, THEREFORE, in consideration of the premises and the covenants and
agreements contained herein, the parties hereto agree as follows:

ARTICLE I

DEFINITIONS

1.1    Defined Terms.

(a)    Terms defined in the preamble have the meaning ascribed to them in the
preamble.

(b)    As used herein, the following terms shall have the meanings specified in
this Section 1.1 unless the context otherwise requires (it being understood that
defined terms in this Agreement shall include in the singular number the plural
and in the plural the singular):

“2016 Term Loan Agreement” shall mean that certain Credit Agreement dated as of
August 12, 2016, among the Borrower, as borrower, the Persons from time to time
party thereto as lenders, The Bank of New York Mellon Trust Company, N.A., as
administrative agent and collateral agent, and the other parties thereto, as may
be amended, modified or supplemented from time to time.

“2016 Term Loan Documents” shall mean the “Credit Documents” as defined in the
2016 Term Loan Agreement.

“2016 Term Loan Financial Performance Covenants” means the “Financial
Performance Covenants” as defined in the 2016 Term Loan Agreement.

“2016 Term Loan Obligations” shall have the meaning provided for the term
“Obligations” in the 2016 Term Loan Agreement.

“2016 Term Loan Springing Maturity Date” shall have the meaning specified in the
definition of “Maturity Date”.

“2016 Term Loans” shall mean the loans and other obligations outstanding from
time to time under that certain 2016 Term Loan Agreement.

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“2017 Term Loans” shall have the meaning provided in the Recitals hereto.

“2017 Term Loan Documents” shall mean “Credit Documents” as defined herein.

“2017 Term Loan Obligations” shall mean “Obligations” as defined herein.

“2017 Secured Parties” shall have the meaning specified in the definition of
“Secured Parties”.

“2020 Notes” shall mean the Borrower’s 5% Senior Notes due 2020 outstanding on
the Effective Date issued under the indenture governing the existing 2020 Notes.

“2020 Notes Springing Maturity Date” shall have the meaning specified in the
definition of “Maturity Date”.

“2021 Notes” shall mean the Borrower’s 5 1⁄2% Senior Notes due 2021 outstanding
on the Effective Date issued under the indenture governing the existing 2021
Notes.

“2021 Notes Springing Maturity Date” shall have the meaning specified in the
definition of “Maturity Date”.

“2024 Notes” shall mean the Borrower’s 6% Senior Notes due 2024 outstanding on
the Effective Date issued under the indenture governing the existing 2024 Notes.

“ABR” shall mean for any day a fluctuating rate per annum equal to the highest
of (a) the Federal Funds Effective Rate plus  1⁄2 of 1%, (b) the rate of
interest in effect for such day as publicly announced from time to time by the
Administrative Agent as its “prime rate” and (c) the LIBOR Rate for a one-month
Interest Period on such day (or if such day is not a Business Day, the
immediately preceding Business Day) plus 1.0%; provided that, (i) for the
avoidance of doubt, for purposes of calculating the LIBOR Rate pursuant to
clause (c) above, the LIBOR Rate for any day shall be the rate fixed by ICE for
deposits in Dollars in the London interbank market (or such other Person
assuming the responsibility of ICE in calculating the LIBOR Rate in the event
that ICE no longer fixes such rate) for a one-month Interest Period, as such
rate appears (A) on the Reuters Monitor Money Rates Service page LIBOR01 (or a
successor page on such service) or (B) if such rate is not available, on such
other information system that provides such information, in each case at
approximately 11:00 a.m. (London time) two (2) Business Days prior to the
commencement of such Interest Period and (ii) such rate shall in no event be
less than 1.00% for the purposes of this Agreement. The “prime rate” is a rate
set by the Administrative Agent based upon various factors, including the
Administrative Agent’s costs and desired return, general economic conditions and
other factors, and is used as a reference point for pricing some loans, which
may be priced at, above, or below such announced rate. Any change in the ABR due
to a change in such rate announced by the Administrative Agent, in the Federal
Funds Effective Rate or in the one-month LIBOR Rate shall take effect at the
opening of business on the day specified in the public announcement of such
change. If the ABR is being used as an alternate rate of interest pursuant to
Section 2.15 hereof, then the ABR 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 ABR shall be less than zero, such rate shall be
deemed to be zero for purposes of this Agreement.

“ABR Loan” shall mean each Loan bearing interest based on the ABR.

“Acceptable Security Interest” shall mean a first priority, perfected Mortgage;
provided that Liens which are permitted by the terms of Section 11.2 may exist
and have whatever priority such Liens have at such time under applicable law;
provided, further, that with respect to (a) any production sharing contract

 

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or similar instrument for the Borrower’s “THUMS” and “Tidelands” assets and the
property covered thereby and (b) any other production sharing contract or
similar instrument constituting Proved Reserves on which a Lien cannot be
granted without the consent of a third party or on which a Lien is contractually
or statutorily prohibited, then in each case, the grant of a first priority,
perfected Lien (provided that Liens which are permitted by the terms of
Section 11.2 may exist and have whatever priority such Liens have at such time
under applicable law) in the Stock of the Subsidiary party to such contract
shall be deemed an “Acceptable Security Interest”.

“Additional Assets” means (i) any assets or property that are not classified as
current assets under GAAP and that are used or useful in the oil and gas
business of the Borrower and its Subsidiaries or any business ancillary thereto,
(ii) solely to the extent the equity interests of such Person are pledged as
Collateral, Investments in any Person engaged in an oil and gas business or any
business ancillary thereto (including the acquisition from third parties of
Stock of such Person) as a result of which such other Person becomes a
Subsidiary or a Development Joint Venture, (iii) solely to the extent such Stock
is pledged as Collateral, the acquisition from third parties of Stock of a
Subsidiary or a Development Joint Venture, or (iv) any Industry Investments
which are Capital Expenditures; provided that any equity interests received in
connection with any Industry Investment shall be pledged as Collateral.

“Additional Pari Debt” shall mean Indebtedness in the form of loans or notes
incurred or issued by the Borrower which (a) does not mature earlier than the
Maturity Date; (b) has a Weighted Average Life to Maturity not shorter than the
remaining Weighted Average Life to Maturity of the Loans on the date of
incurrence of such Indebtedness (except by virtue of prepayment of the Loans
prior to the time of such incurrence); (c) has no guarantors that are not a
Guarantor; (d) is not secured by assets other than Collateral (except pursuant
to an escrow or similar arrangement with respect to the proceeds of such
Indebtedness); (e) on or before the date on which such Indebtedness is incurred
by the Borrower, is designated by the Borrower, delivered to Administrative
Agent, as “Additional Pari Debt”; (f) the agent or trustee with respect to such
Indebtedness executes and delivers a joinder to the First Out Collateral Agency
Agreement, on behalf of itself and all holders of such Indebtedness, in form and
substance reasonably acceptable to the Administrative Agent; (g) is subject to
the First/Second Intercreditor Agreement such that the lending parties under
such Indebtedness are “Priority Lien Secured Parties” (as defined therein) or an
intercreditor agreement in form and substance substantially similar to the First
Lien Intercreditor Agreement and otherwise reasonably acceptable to the
Administrative Agent, (h) is subject to the First Lien Intercreditor Agreement
such that the lending parties under such Indebtedness are “First Out Secured
Parties” (as defined therein) or an intercreditor agreement in form and
substance substantially similar to the First Lien Intercreditor Agreement and
otherwise reasonably acceptable to the Administrative Agent and (i) consists of
pricing, terms and conditions (including without “hard call” protection or other
repayment premiums in excess of 102%) customary for oil and gas borrowers in the
bank and term loan B markets.

“Administrative Agent” shall mean The Bank of New York Mellon Trust Company,
N.A., not in its individual capacity, but solely as the administrative agent for
the Lenders under this Agreement and the other Credit Documents to which it is a
party, or any successor administrative agent appointed in accordance with the
provisions of Section 13.10.

“Administrative Agent’s Office” shall mean the Administrative Agent’s address
and, as appropriate, account as set forth on Schedule 14.2, or such other
address or account as the Administrative Agent may from time to time notify in
writing to the Borrower and the Lenders.

“Administrative Questionnaire” shall mean, for each Lender, an administrative
questionnaire in a form provided by the Administrative Agent.

 

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“Affiliate” shall mean, with respect to any Person, any other Person directly or
indirectly controlling, controlled by, or under direct or indirect common
control with such Person. A Person shall be deemed to control another Person if
such Person possesses, directly or indirectly, the power to direct or cause the
direction of the management and policies of such other Person, whether through
the ownership of voting securities, by contract or otherwise. “Controlling”
(“controlling”) and “controlled” shall have meanings correlative thereto.

“Agent Indemnified Liabilities” shall have the meaning provided in
Section 14.5(b).

“Agreement” shall mean this Credit Agreement, as amended, restated, supplemented
or otherwise modified from time to time.

“All-In Yield” means, as to any Indebtedness, the yield thereof, whether in the
form of interest rate, margin, OID, upfront fees, a LIBOR Rate or ABR, or
otherwise, in each case, incurred or payable by the Credit Parties generally to
all lenders of such Indebtedness; provided that OID and upfront fees shall be
equated to an interest rate assuming a 4-year life to maturity (e.g., 100 basis
points of original issue discount equals to 25 basis points of interest margin
for a four year average life to maturity) or, if less, the stated life to
maturity at the time of incurrence of the applicable Indebtedness; and provided,
further, that “All-In Yield” shall not include amendment fees, consent fees,
arrangement fees, structuring fees, commitment fees, underwriting fees,
placement fees, advisory fees, success fees, ticking fees, undrawn commitment
fees and similar fees (regardless of whether any of the foregoing fees are paid
to, or shared with, in whole or in part any or all lenders), any fees not paid
or payable in the primary syndication of such Indebtedness or other fees not
paid or payable generally to all lenders ratably. The All-In Yield and Yield
Differential shall be determined by the Required Lenders and notified to the
Administrative Agent.

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

“Applicable Margin” shall mean:

(a)    With respect to any ABR Loan, 3.75%; and

(b)    With respect to any LIBOR Loan, 4.75%;

provided, if the All-In Yield applicable to any Additional Pari Debt shall be
greater than the applicable All-In Yield payable pursuant to the terms of this
Agreement as amended through the date of such calculation with respect to the
Loans by more than 50 basis points per annum (the amount of such excess of the
All-In Yield applicable to such Indebtedness over the sum of the All-In Yield
applicable to the Loans plus 50 basis points per annum, the “Yield
Differential”), then the Applicable Margin (together with, as provided in the
proviso below, the LIBOR Rate or ABR) with respect to the Loans shall be
increased by the applicable Yield Differential; provided, further, that, if any
such Indebtedness includes a LIBOR Rate or ABR that is greater than the LIBOR
Rate or ABR applicable to any existing Loans, such differential between the
LIBOR Rate or ABR, as applicable, shall be included in the calculation of All-In
Yield for purposes of this definition but only to the extent an increase in the
LIBOR Rate or ABR applicable to the Loans would cause an increase in the
interest rate then in effect thereunder, and in such case the LIBOR Rate or ABR
applicable to the Loans shall be increased to the extent of such differential
between LIBOR Rate or ABR as the case may be.

“Approved Bank” shall have the meaning specified in the definition of “Cash
Equivalents.”

 

4

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“Approved Fund” shall mean any Fund that is administered or managed by (a) a
Lender, (b) an Affiliate of a Lender or (c) an entity or an Affiliate of an
entity that administers or manages a Lender.

“Approved Petroleum Engineers” shall mean (a) Netherland, Sewell & Associates,
Inc., (b) Ryder Scott Company, L.P., (c) W. D. Van Gonten & Co., (d) LaRoche
Petroleum Consultants, Ltd., (e) DeGolyer and MacNaughton, (f) Gafney, Cline &
Associates and (g) at the Borrower’s option, any other independent petroleum
engineers selected by the Borrower upon written notice to the Administrative
Agent and the Lenders and not objected to in a writing to the Administrative
Agent from the Majority Lenders within ten (10) Business Days of the Borrower
providing such written notice; provided that such Approved Petroleum Engineer
shall at all times be the same independent petroleum engineers that audits or
reviews the reserve reports in connection with the Borrower’s SEC filings.

“April 1st Reserve Report” shall have the meaning provided in Section 10.13(b).

“ASC 715” shall have the meaning specified in the definition of “Unfunded
Current Liability”.

“Assignment and Acceptance” shall mean an assignment and acceptance
substantially in the form of Exhibit G or such other form as may be approved by
the Administrative Agent.

“Assignment Taxes” shall have the meaning specified in the definition of “Other
Taxes”.

“Authorized Officer” shall mean as to (a) the Administrative Agent, any officer
within the department of the Administrative Agent administering this matter,
including any vice president, assistant vice president, senior associate,
assistant secretary, assistant treasurer, trust officer or any other officer of
the Administrative Agent who customarily performs functions similar to those
performed by the Persons who at the time shall be such officers, respectively,
or to whom any such matter is referred because of such person’s knowledge of and
familiarity with the particular subject and who shall have direct responsibility
for the administration of this Agreement; and (b) any other Person, the
President, the Chief Executive Officer, the Chief Financial Officer, the Chief
Operating Officer, the Treasurer, the Assistant or Vice Treasurer, the Executive
Vice President-Finance, the General Counsel, any Senior Vice President, any
Executive Vice President, and any manager, managing member or general partner,
in each case, of such Person, and any other senior officer designated as such in
writing to the Administrative Agent by such Person. Any document delivered
hereunder that is signed by an Authorized Officer shall be conclusively presumed
to have been authorized by all necessary corporate, limited liability company,
partnership and/or other action on the part of the Borrower or any other Credit
Party and such Authorized Officer shall be conclusively presumed to have acted
on behalf of such Person.

“Available Amount” shall mean, at any time after the first day of the first full
fiscal quarter after the Measurement Date (the “Available Amount Reference
Time”), an amount equal to, without duplication,

(a)    the sum, without duplication, of:

(i)    50% of the Consolidated Net Income accrued during the period (treated as
one accounting period) beginning on the first day of the first full fiscal
quarter after the Measurement Date to the end of the most recent fiscal quarter
ending prior to the Available Amount Reference Time for which consolidated
financial statements of the Borrower are available (or, in case such
Consolidated Net Income shall be a negative number, 100% of such negative
number),

(ii)    returns, profits, distributions and similar amounts received in cash or
Cash Equivalents by Borrower or a Guarantor on Investments made using the
Available Amount,

 

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(iii)    the aggregate Net Cash Proceeds and the fair value (as determined in
good faith by the Borrower) of property or assets received (x) by the Borrower
as capital contributions to the Borrower on or after the first day of the full
fiscal quarter after the Measurement Date or from the issuance or sale (other
than to a Subsidiary) of its Stock (other than Disqualified Stock) on or after
the first day of the first full fiscal quarter after the Measurement Date (other
than to the extent applied to increase Consolidated EBITDAX) or (y) by the
Borrower or any Subsidiary from the incurrence by the Borrower or any Subsidiary
on or after the first day of the first full fiscal quarter after the Measurement
Date of Indebtedness that shall have been converted into or exchanged for Stock
of the Borrower (other than Disqualified Stock) or Stock, plus the amount of any
cash and the Fair Market Value (as determined in good faith by the Borrower) of
any property or assets, received by the Borrower or any Subsidiary upon such
conversion or exchange;

(iv)    in the case of any disposition or repayment of any Investment made using
the Available Amount (without duplication of any amount deducted in calculating
the amount of Investments at any time outstanding under Section 11.5), the
aggregate amount of cash and the Fair Market Value (as determined in good faith
by the Borrower) of any property or assets received by the Borrower or a
Subsidiary with respect to all such dispositions and repayments; minus

(b)    the sum, without duplication, of:

(i)    the aggregate amount of any Investments made by the Borrower or any
Subsidiary pursuant to Section 11.5(b)(viii) on or after the first day of the
first full fiscal quarter after the Measurement Date, and prior to the Available
Amount Reference Time;

(ii)    the aggregate amount of any Restricted Payments made by the Borrower
pursuant to Section 11.6(a) on or after the first day of the first full fiscal
quarter after the Measurement Date, and prior to the Available Amount Reference
Time; and

(iii)    the aggregate amount of prepayments, repurchases, redemptions and
defeasances made by the Borrower or any Subsidiary pursuant to
Section 11.7(b)(iii) on or after the first day of the first full fiscal quarter
after the Measurement Date and prior to the Available Amount Reference Time;

provided, the Available Amount shall not include any (x) Equity Funded
Investment used pursuant to Section 11.5(b)(viii) or (y) Equity Funded
Prepayments used pursuant to Section 11.7(b)(iii).

Concurrently with the consummation of any transaction effected pursuant to
Section 11.5(b)(viii), Section 11.6(l) or Section 11.7(a)(iv) using all or any
portion of the Available Amount, the Borrower shall provide to the
Administrative Agent a certificate of an Authorized Officer of the Borrower
setting forth in reasonable detail the Available Amount as of the end of the
most recent fiscal year for which financial statements have been provided
pursuant to Section 10.1.

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

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

“Bankruptcy Code” shall have the meaning provided in Section 12.5.

 

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

“Benefited Lender” shall have the meaning provided in Section 14.8(a).

“Board” shall mean the Board of Governors of the Federal Reserve System of the
United States (or any successor).

“Board of Directors” shall mean, as to any Person, the board of directors or
other governing body of such Person, or if such Person is owned or managed by a
single entity, the board of directors or other governing body of such entity.

“Bookrunner” shall mean Goldman Sachs Lending Partners LLC, J.P. Morgan
Securities LLC and Citigroup Global Markets Inc., each in its capacity as
bookrunner in respect of the Facility.

“Borrower” shall have the meaning provided in the introductory paragraph hereto.

“Borrower Materials” shall have the meaning provided in Section 10.1.

“Borrowing” shall mean the incurrence of one Type of Loan on a given date (or
resulting from conversions on a given date) having, in the case of LIBOR Loans,
the same Interest Period (provided that ABR Loans incurred pursuant to
Section 2.11(b) shall be considered part of any related Borrowing of LIBOR
Loans) and shall include a borrowing of Loans.

“Borrowing Base” shall mean, with respect to borrowings under the First Lien
First Out Credit Agreement, the maximum amount in United States dollars
determined or re-determined by the lenders under the First Lien First Out Credit
Agreement as the aggregate lending value to be ascribed to the Oil and Gas
Properties of the Credit Parties against which such lenders are prepared to
provide loans to the Credit Parties using their customary practices and
standards for determining reserve-based borrowing base loans and which are
generally applied to borrowers in the oil and gas business, as determined
semi-annually during each year and/or on such other occasions as may be required
therein.

“Business Day” shall mean any day excluding Saturday, Sunday and any other day
on which banking institutions in New York City or Los Angeles, California are
authorized by law or other governmental actions to close, and, if such day
relates to (a) any interest rate settings as to a LIBOR Loan, (b) any fundings,
disbursements, settlements and payments in respect of any such LIBOR Loan, or
(c) any other dealings pursuant to this Agreement in respect of any such LIBOR
Loan, such day shall be a day on which dealings in deposits in Dollars are
conducted by and between banks in the London interbank eurodollar market.

 

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“Capital Expenditures” shall mean, for any period, the aggregate of all
expenditures (whether paid in cash or accrued as liabilities and including in
all events all amounts expended or capitalized under Capital Leases) by the
Borrower and the Subsidiaries during such period that, in conformity with GAAP,
are or are required to be included as capital expenditures on a consolidated
statement of cash flows of the Borrower and its Subsidiaries.

“Capital Lease” shall mean, as applied to any Person, any lease of any property
(whether real, personal or mixed) by that Person as lessee that, in conformity
with GAAP, is, or is required to be, accounted for as a capital lease on the
balance sheet of that Person.

“Capitalized Lease Obligations” shall mean, as applied to any Person, all
obligations under Capital Leases of such Person or any of its Subsidiaries, in
each case taken at the amount thereof accounted for as liabilities in accordance
with GAAP.

“Cash Equivalents” means any of the following:

(a)    U.S. dollars;

(b)    securities issued or directly and fully and unconditionally guaranteed or
insured by the U.S. government or any agency or instrumentality thereof, the
securities of which are unconditionally guaranteed as a full faith and credit
obligation of such government, with maturities of two (2) years or less from the
date of acquisition;

(c)    certificates of deposit, time deposits and eurodollar time deposits with
maturities of three (3) years or less from the date of acquisition, demand
deposits, bankers’ acceptances with maturities not exceeding three (3) years and
overnight bank deposits, in each case with any domestic or foreign commercial
bank having capital and surplus of not less than $250.0 million in the case of
U.S. banks and $100.0 million (or the U.S. dollar equivalent as of the date of
determination) in the case of non-U.S. banks (any such bank in the foregoing an
“Approved Bank”);

(d)    repurchase obligations for underlying securities of the types described
in clauses (b) and (c) above or clauses (f) and (g) below entered into with any
Approved Bank or recognized securities dealer meeting the qualifications
specified in clause (c) above;

(e)    commercial paper and variable or fixed rate notes issued by an Approved
Bank (or by the parent company thereof) or any commercial paper or variable or
fixed rate note issued by, or guaranteed by, a corporation (other than
structured investment vehicles and other than corporations used in structured
financing transactions) rated at least P-2 (or the equivalent thereof) or A-2
(or the equivalent thereof) from either Moody’s or S&P (or, if at any time
neither Moody’s nor S&P shall be rating such obligations, an equivalent rating
from another nationally recognized statistical rating agency selected by the
Borrower) and in each case maturing within thirty-six (36) months after the date
of acquisition thereof;

(f)    marketable short-term money market and similar liquid funds having either
(i) assets in excess of $500.0 million or (ii) a rating of at least P-2 (or the
equivalent thereof) or A-2 (or the equivalent thereof) from either Moody’s or
S&P, respectively (or, if at any time neither Moody’s nor S&P shall be rating
such obligations, an equivalent rating from another nationally recognized
statistical rating agency selected by the Borrower);

(g)    readily marketable direct obligations issued or fully guaranteed by any
state, commonwealth or territory of the U.S. or any political subdivision or
taxing authority thereof; provided that each such readily marketable direct
obligation shall have an rating of Baa3 with a

 

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stable or better outlook by Moody’s or BBB-with a stable or better outlook by
S&P (or, if at any time neither Moody’s nor S&P shall be rating such
obligations, an equivalent rating from another nationally recognized statistical
rating agency selected by the Borrower) with maturities of two (2) years or less
from the date of acquisition;

(h)    Investments with average maturities of eighteen (18) months or less from
the date of acquisition in money market funds rated AAA- (or the equivalent
thereof) or better by S&P or Aaa3 (or the equivalent thereof) or better by
Moody’s (or, if at any time neither Moody’s nor S&P shall be rating such
obligations, an equivalent rating from another nationally recognized statistical
rating agency selected by the Borrower);

(i)    investment funds investing substantially all of their assets in
securities of the types described in clauses (a) through (h) above; and

(j)    Indebtedness or preferred stock issued by Persons with a rating of A or
higher from S&P and A-2 from Moody’s with maturities of two (2) years or less
from the date of acquisition.

“Casualty Event” shall mean, with respect to any Collateral, (a) any damage to,
destruction of, or other casualty or loss involving, any property or asset or
(b) any seizure, condemnation, confiscation or taking under the power of eminent
domain of, or any requisition of title or use of, or relating to, or any similar
event in respect of, any property or asset.

“CERCLA” shall mean the Comprehensive Environmental Response, Compensation, and
Liability Act, 42 U.S.C. § 9601 et seq.

“CFC” shall mean a “controlled foreign corporation” within the meaning of
Section 957 of the Code.

“Change in Law” shall mean the occurrence after the date of this Agreement of
any of the following: (a) the adoption of any law, rule, regulation or treaty,
(b) any change in any law, rule, regulation or treaty or in the interpretation,
implementation or application thereof by any Governmental Authority or
(c) compliance by any Lender (or, for purposes of clauses (a)(ii) or (c) of
Section 2.11, by any lending office of such Lender or by such Lender’s holding
company, if any) with any request, guideline or directive (whether or not having
the force of law) of any Governmental Authority made or issued after the date of
this Agreement; provided that, notwithstanding anything herein to the contrary,
(x) the Dodd-Frank Wall Street Reform and Consumer Protection Act and all
requests, rules, guidelines or directives thereunder or issued in connection
therewith and (y) all requests, rules, guidelines or directives promulgated by
the Bank for International Settlements, the Basel Committee on Banking
Supervision (or any successor or similar authority) or the United States or
foreign regulatory authorities, in each case pursuant to Basel III, shall be
deemed to be a “Change in Law”, regardless of the date enacted, adopted or
issued.

“Change of Control” shall mean and be deemed to have occurred if:

(a)    any Person, entity or “group” (within the meaning of Section 13(d) or
14(d) of the Exchange Act, but excluding any employee benefit plan of such
Person, entity or “group” and their respective Subsidiaries and any Person or
entity acting in its capacity as trustee, agent or other fiduciary or
administrator of any such plan), shall at any time have acquired direct or
indirect beneficial ownership (as defined in Rules 13(d)-3 and 13(d)-5 under the
Exchange Act) of voting power of the outstanding Voting Stock of the Borrower
having more than 35% of the ordinary voting power for the election of directors
of the Borrower; or

 

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(b)    a “Change of Control” shall occur under the First Lien First Out Credit
Agreement, the 2016 Term Loan Agreement, the Existing Senior Notes Documents,
any Additional Pari Debt, any Permitted Junior Indebtedness or the Existing
Second Lien Notes.

“Code” shall mean the Internal Revenue Code of 1986, as amended from time to
time.

“Collateral” shall have the meaning provided for such term in each of the
Security Documents; provided that with respect to any Mortgages, “Collateral”,
as defined herein, shall include “Mortgaged Property” as defined therein.

“Collateral Agent” shall mean the Collateral Agent (as defined in the First Out
Collateral Agency Agreement).

“Collateral Requirements” shall mean, during a Credit Rating Trigger Period, the
collateral requirements set forth in Section 10.10 and in any other Security
Document including without limitation:

(a)    a pledge by the Credit Parties of (i) 100% of the stock of each
Subsidiary that is a Domestic Subsidiary directly owned thereby and (ii) 66-2/3%
of the stock of each Subsidiary that is a Foreign Subsidiary directly owned
thereby; and

(b)    with respect to substantially all other assets of the Credit Parties
other than Excluded Property, first priority, perfected liens and security
interests subject to one-action rule waivers (to the extent permitted by
applicable law) on such assets of the Credit Parties; provided that, (i) with
respect to the Borrower’s Oil and Gas Properties (other than Excluded Property),
the Credit Parties shall be required to deliver and maintain an Acceptable
Security Interest on not less than 85% (but shall not be required to deliver and
maintain an Acceptable Security Interest on more than 85%) of the PV-9 of the
Proved Reserves evaluated in the Reserve Report most recently delivered to the
Administrative Agent and (ii) with respect to all other assets other than
Excluded Property, the Credit Parties shall not be required to take any action
to perfect a lien on any such assets securing the Facilities unless such
perfection may be accomplished by (A) the filing of a UCC-1 financing statement
in the obligor’s jurisdiction of formation, (B) delivery of certificates
representing any pledged equity consisting of certificated securities, in each
case, with appropriate endorsements or transfer powers, (C) granting the
Collateral Agent, or prior to the Discharge of First Lien First Out Obligations
the First Lien First Out Administrative Agent (as gratuitous bailee on behalf of
the Collateral Agent), control (within the meaning of the Uniform Commercial
Code) over any pledged equity consisting of uncertificated securities or
(D) granting the Collateral Agent, or prior to the Discharge of First Lien First
Out Obligations the First Lien First Out Administrative Agent (as gratuitous
bailee on behalf of the Collateral Agent), control (within the meaning of the
Uniform Commercial Code) over any deposit accounts (other than Excluded Deposit
Accounts) by entering into a deposit account control agreement with the
Collateral Agent or the First Lien First Out Administrative Agent, as
applicable, and the account bank for such deposit account; provided, further,
that such assets may be subject to Liens permitted under Section 11.2, and
provided, further, that with respect to assets of the Credit Parties that are
not subject to an Acceptable Security Interest of the Collateral Agent on or
after the Effective Date, the Credit Parties shall not be required to grant such
Acceptable Security Interest until 60 days after the date first acquired or
received by the Borrower or a Subsidiary Guarantor (or Person required to become
a Guarantor pursuant to Section 10.10(b)), as applicable or as soon as
practicable thereafter using commercially reasonable efforts (but in any event
within

 

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one hundred twenty (120) days); and provided, further, that no intention to
subordinate the first priority Lien of the Collateral Agent and the Secured
Parties pursuant to the Security Documents is to be hereby implied or expressed
by the permitted existence of such Permitted Liens.

“Commitment” shall mean, with respect to each Lender, the amount set forth
opposite its name on Schedule 2.1(a) as such Lender’s “Commitment”. The
aggregate amount of the Commitments as of the Effective Date is $1,300,000,000.

“Confidential Information” shall have the meaning provided in Section 14.16.

“Consolidated EBITDAX” shall mean, for any period, for the Borrower and its
Subsidiaries on a consolidated basis, an amount equal to Consolidated Net Income
for such period plus (a) the following to the extent deducted in calculating
such Consolidated Net Income: (i) Consolidated Interest Charges for such period,
(ii) an amount equal to the provision for federal, state, and local income and
franchise taxes payable or to become payable by the Borrower and its
Subsidiaries for such period, (iii) depletion, depreciation, amortization and
exploration expense for such period (including all drilling, completion,
geological and geophysical costs), (iv) losses from asset Dispositions
(excluding Hydrocarbons Disposed of in the ordinary course of business), (v) all
other non-cash items reducing such Consolidated Net Income for such period, and
(vi) extraordinary or non-recurring losses for such period, and minus (b) the
following to the extent included in calculating such Consolidated Net Income:
(i) federal, state and local income tax credits of the Borrower and its
Subsidiaries for such period, (ii) gains from asset Dispositions (excluding
Hydrocarbons Disposed of in the ordinary course of business), (iii) all other
non-cash items increasing Consolidated Net Income for such period and
(iv) extraordinary or non-recurring gains for such period.

“Consolidated Interest Charges” shall mean, for any period, for the Borrower and
its Subsidiaries on a consolidated basis, the sum of (a) all interest, premium
payments, debt discount, fees, charges and related expenses of the Borrower and
its Subsidiaries for such period in connection with borrowed money (including
capitalized interest for such period) or in connection with the deferred
purchase price of assets, in each case to the extent treated as interest in
accordance with GAAP and (b) the portion of rent expense of the Borrower and its
Subsidiaries with respect to such period under capital leases that is treated as
interest in accordance with GAAP; provided, that Consolidated Interest Charges
shall not include non-cash interest and amortization of original issue discount
on the Permitted Junior Indebtedness; provided, further, that Consolidated
Interest Charges shall include interest which is paid in kind (including
interest which is paid in kind with respect to any Permitted Junior
Indebtedness).

“Consolidated Net Income” shall mean, for any period, for the Borrower and its
Subsidiaries on a consolidated basis, the net income of the Borrower and its
Subsidiaries (excluding extraordinary gains and extraordinary losses and the net
income of any Person (other than the Borrower or a Subsidiary) in which the
Borrower and its Subsidiaries own any Stock or Stock Equivalents for that
period, except to the extent of the amount of dividends and distributions
actually received by the Borrower or a Subsidiary), provided that the
calculation of Consolidated Net Income shall exclude any non-cash charges or
losses and any non-cash income or gains, in each case, required to be included
in net income of the Borrower and its Subsidiaries as a result of the
application of FASB Accounting Standards Codifications 718, 815, 410 and 360,
but shall expressly include any cash charges or payments that have been incurred
as a result of the termination of any Hedge Agreement.

“Consolidated Total Assets” shall mean, as of any date of determination, the
amount that would, in conformity with GAAP, be set forth opposite the caption
“total assets” (or any like caption) on a consolidated balance sheet of the
Borrower and the Subsidiaries at such date.

 

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“Contractual Requirement” shall have the meaning provided in Section 9.3.

“Credit Documents” shall mean this Agreement, the Guarantee, any Promissory
Notes and during any Credit Rating Trigger Period, the Security Documents.

“Credit Event” shall mean and include the making (but not the conversion or
continuation) of a Loan.

“Credit Party” shall mean each of the Borrower and the Guarantors.

“Credit Rating” shall mean the corporate credit rating of the Borrower issued by
S&P or the corporate family rating of the Borrower issued by Moody’s, as
applicable.

“Credit Rating Trigger Event” shall mean (a) the public announcement by Moody’s
or S&P that the Borrower’s Credit Rating is either Ba1 or lower from (or is
unrated by) Moody’s or BB+ or lower from (or is unrated by) S&P or (b) the
Borrower or one of its Subsidiaries creates, assumes or suffers to exist an
Enumerated Lien (as defined in the First Lien First Out Credit Agreement as in
existence on the First Lien First Out Fifth Amendment Effective Date).

“Credit Rating Trigger Period” shall mean (a) the first Business Day following a
Credit Rating Trigger Event until the first Business Day on which (i) the
Borrower’s Credit Rating is Baa3 with a stable or better outlook, or higher,
from Moody’s and is BBB- with a stable or better outlook, or higher, from S&P
and (ii) all Enumerated Liens (as defined in the First Lien First Out Credit
Agreement as in existence on the First Lien First Out Fifth Amendment Effective
Date) are released; or (b) the period commencing with the date on which the
Borrower elects under Section 14.18 to have this Agreement subject to the Credit
Rating Trigger Period provisions contained herein and ending on any date on
which the Borrower has elected to cease to have such facility subject to such
provisions contained herein, provided, that on such date, no Credit Rating
Trigger Event is in effect.

“Declined Proceeds” shall have the meaning provided in Section 5.2(a).

“Default” shall mean any event, act or condition that with notice or lapse of
time, or both, would constitute an Event of Default.

“Default Rate” shall have the meaning provided in Section 2.9(c).

“Defaulting Lender” shall mean any Lender whose acts or failure to act, whether
directly or indirectly, cause it to meet any part of the definition of “Lender
Default”.

“Designated Non-Cash Consideration” means the Fair Market Value of non-cash
consideration received by the Borrower or its Subsidiaries in connection with a
Disposition pursuant to Section 11.4(a)(xv) that is designated as Designated
Non-Cash Consideration pursuant to a certificate of an Authorized Officer,
setting forth the basis of such valuation minus the Fair Market Value of the
portion of the non-cash consideration converted to cash or Cash Equivalents
within three hundred sixty-five (365) days following the consummation of the
applicable Disposition.

“Development Joint Venture” shall mean an incorporated or unincorporated
partnership, or other jointly owned enterprise or entity or a joint venture or
contractual relationship (even if not a partnership or joint venture) to which
the Borrower or a Subsidiary is a party which has been formed for the purpose of
exploring for and/or developing Oil and Gas Properties, where each of the
parties thereto have either contributed or agreed to contribute cash, services,
Oil and Gas Properties, other assets, or any combination of the foregoing.

 

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“Discharge of First Lien First Out Obligations” shall mean the “Discharge of
First-Out Obligations” as defined in the First Out Collateral Agency Agreement.

“Disposition” shall have the meaning provided in Section 11.4(a). “Dispose”
shall have a correlative meaning.

“Disqualified Stock” shall mean, with respect to any Person, any Stock or Stock
Equivalents of such Person which, by its terms, or by the terms of any security
into which it is convertible or for which it is putable or exchangeable, or upon
the happening of any event, matures or is mandatorily redeemable (other than
solely for Stock or Stock Equivalents that is not Disqualified Stock), other
than as a result of a change of control or asset sale, pursuant to a sinking
fund obligation or otherwise, or is redeemable at the option of the holder
thereof (other than as a result of a change of control or asset sale to the
extent the terms of such Stock or Stock Equivalents provide that such Stock or
Stock Equivalents shall not be required to be repurchased or redeemed until the
Maturity Date has occurred or such repurchase or redemption is otherwise
permitted by this Agreement (including as a result of a waiver hereunder)), in
whole or in part, in each case prior to the date that is 91 days after the
Maturity Date hereunder; provided that, if such Stock or Stock Equivalents are
issued to any plan for the benefit of employees of the Borrower or its
Subsidiaries or by any such plan to such employees, such Stock or Stock
Equivalents shall not constitute Disqualified Stock solely because it may be
required to be repurchased by the Borrower or its Subsidiaries in order to
satisfy applicable statutory or regulatory obligations; provided, further, that
any Stock or Stock Equivalents held by any future, present or former employee,
director, manager or consultant of the Borrower, any of its Subsidiaries or any
of its direct or indirect parent companies or any other entity in which the
Borrower or a Subsidiary has an Investment and is designated in good faith as an
“affiliate” by the board of directors or managers of the Borrower, in each case
pursuant to any equity holders’ agreement, management equity plan or stock
incentive plan or any other management or employee benefit plan or agreement
shall not constitute Disqualified Stock solely because it may be required to be
repurchased by the Borrower or its Subsidiaries.

“Disregarded Entity” shall mean any Domestic Subsidiary that is disregarded for
U.S. federal income tax purposes.

“Distressed Person” shall have the meaning specified in the definition of
“Lender-Related Distress Event”.

“Dollars” and “$” shall mean dollars in lawful currency of the United States of
America.

“Domestic Subsidiary” shall mean each Subsidiary of the Borrower that is
organized under the laws of the United States or any state thereof, or the
District of Columbia.

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

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

 

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

“Effective Date” shall mean the date on which the conditions set forth in
Articles VI and VIII are satisfied (or waived in accordance with Section 14.1)
and amounts are drawn under this Agreement by the Borrower.

“Elk Hills Power Plant” shall mean the 550 MW natural gas-fired, combined cycle
cogeneration facility commonly known as the Elk Hills Power Plant located in
western Kern County, California, approximately 25 miles west of Bakersfield,
California, near the intersection of Elk Hills Road and Skyline Road.

“Environmental Claims” shall mean any and all actions, suits, orders, decrees,
demands, demand letters, claims, liens, notices of noncompliance, violation or
potential responsibility or investigation (other than internal reports prepared
by or on behalf of the Borrower or any of the Subsidiaries (a) in the ordinary
course of such Person’s business or (b) as required in connection with a
financing transaction or an acquisition or disposition of real estate) or
proceedings arising under or based upon any applicable Environmental Law or any
permit issued, or any approval given, under any such Environmental Law
(hereinafter, “Claims”), including, without limitation, (i) any and all Claims
by governmental or regulatory authorities for enforcement, cleanup, removal,
response, remedial or other actions or damages pursuant to any applicable
Environmental Law and (ii) any and all Claims by any third party seeking
damages, contribution, indemnification, cost recovery, compensation or
injunctive relief relating to the presence, release or threatened release of
Hazardous Materials or arising from alleged injury or threat of injury to health
or safety (to the extent relating to human exposure to Hazardous Materials), or
the environment including, without limitation, ambient air, surface water,
groundwater, land surface and subsurface strata and natural resources such as
wetlands.

“Environmental Law” shall mean any applicable Federal, state, or local statute,
law (including, without limitation, common law), rule, regulation, ordinance, or
code of any Governmental Authority now or hereafter in effect and in each case
as amended, and any binding judicial or administrative interpretation thereof,
including any binding judicial or administrative order, consent decree or
judgment, relating to the protection of the environment, including, without
limitation, ambient air, surface water, groundwater, land surface and subsurface
strata and natural resources such as wetlands, or human health or workplace
safety (to the extent relating to human exposure to Hazardous Materials), or the
release or threatened release of Hazardous Materials.

“Equity Funded Investment” shall have the meaning provided in
Section 11.5(b)(viii).

“Equity Funded Prepayment” shall have the meaning provided in
Section 11.7(b)(iii).

“ERISA” shall mean the Employee Retirement Income Security Act of 1974, as
amended from time to time. Section references to ERISA are to ERISA as in effect
on the Effective Date and any subsequent provisions of ERISA amendatory thereof,
supplemental thereto or substituted therefor.

“ERISA Affiliate” shall mean each person (as defined in Section 3(9) of ERISA)
that together with the Borrower would be deemed to be a “single employer” within
the meaning of Section 414(b) or (c) of the Code or, solely for purposes of
Section 302 of ERISA and Section 412 of the Code, is treated as a single
employer under Section 414 of the Code.

 

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

“Event of Default” shall have the meaning provided in Article XII.

“Excess Cash Proceeds” shall have the meaning provided in Section 11.4(b)(iv).

“Exchange Act” shall mean the Securities Exchange Act of 1934, as amended, and
the rules and regulations promulgated thereunder.

“Exchange Rate” shall mean on any day with respect to any currency (other than
Dollars), the rate at which such currency may be exchanged into any other
currency (including Dollars), as set forth at approximately 11:00 a.m. (London
time) on such day on the Reuters World Currency Page for such currency. In the
event that such rate does not appear on any Reuters World Currency Page, the
Exchange Rate shall be determined by reference to such other publicly available
service for displaying exchange rates as may be determined by the Borrower in
its reasonable discretion, at or about 11:00 a.m., local time, on such date for
the purchase of the relevant currency for delivery two (2) Business Days later.

“Excluded Deposit Account” shall mean deposit accounts the balance of which
consists exclusively of (a) withheld income taxes and federal, state or local
employment taxes required to be paid to the Internal Revenue Service or state or
local government agencies with respect to employees of the Borrower or any
Subsidiary, (b) amounts required to be paid over to an employee benefit plan
pursuant to DOL Reg. Sec. 2510.3 102 on behalf of or for the benefit of
employees of the Borrower or any Subsidiary and (c) amounts set aside for
payroll and the payment of accrued employee benefits, medical, dental and
employee benefits claims to employees of the Borrower or any Subsidiary.

“Excluded Hedges” shall mean Hedge Agreements that (i) are basis differential
only swaps for volumes of crude oil and natural gas included under other Hedge
Agreements permitted by Section 11.10(a) or (ii) are a hedge of volumes of crude
oil or natural gas by means of a put or a price “floor” for which there exists
no mark-to-market exposure to the Borrower.

“Excluded Property” shall mean (a) all Excluded Stock, (b) any property to the
extent the grant or maintenance of a Lien on such property (i) is prohibited by
applicable law, (ii) could reasonably be expected to result in material adverse
tax consequences to the Borrower or any Subsidiary of the Borrower,
(iii) requires a consent not obtained of any Governmental Authority pursuant to
applicable law or (iv) is prohibited by, or constitutes a breach or default
under or results in the termination of or requires any consent not obtained
under, any contract, license, agreement, instrument or other document evidencing
or giving rise to such property, except to the extent that such term in such
contract, license, agreement, instrument or other document or similar agreement
providing for such prohibition, breach, default or termination or requiring such
consent is ineffective under applicable law (including without limitation,
pursuant to Section 9-406, 9-407, 9-408 or 9-409 of the New York Uniform
Commercial Code), (c) motor vehicles and other assets subject to certificates of
title, (d) trust accounts, payroll accounts, zero balance accounts and escrow
accounts, in each case for so long as they remain such type of account, and
(e) any property as to which the Administrative Agent (at the written direction
of the Majority Lenders) and the Borrower agrees in writing that the costs of
obtaining a security interest in, or Lien on, such property, or perfection
thereof, are excessive in relation to the value to the Secured Parties of the
security interest afforded thereby.

“Excluded Stock” shall mean (a) any Stock or Stock Equivalents with respect to
which, in the reasonable judgment of the Borrower (and not reasonably objected
to by the Majority Lenders in writing by notice to the Administrative Agent),
the cost or other consequences of pledging such Stock or Stock

 

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

“Excluded Subsidiary” shall mean (a) each Domestic Subsidiary that is not a
wholly owned Subsidiary on any date such Subsidiary would otherwise be required
to become a Guarantor pursuant to the requirements of Section 10.10 (for so long
as such Subsidiary remains a non-wholly owned Subsidiary) (provided that no
existing Guarantor shall become an Excluded Subsidiary pursuant to this clause
(a) if such Guarantor subsequently becomes a non-wholly owned Subsidiary), (b)
any Disregarded Entity substantially all the assets of which consist of Stock
and Stock Equivalents of Foreign Corporate Subsidiaries, (c) each Domestic
Subsidiary that is prohibited by any applicable Contractual Requirement or
Requirement of Law from guaranteeing or granting Liens to secure the Obligations
at the time such Subsidiary becomes a Subsidiary (and for so long as such
restriction or any replacement or renewal thereof is in effect) or that would
require consent, approval, license or authorization of a Governmental Authority
to guarantee or grant Liens to secure the Obligations at the time such
Subsidiary becomes a Subsidiary (unless such consent, approval, license or
authorization has been received), (d) each Domestic Subsidiary that is a
Subsidiary of a Foreign Corporate Subsidiary, (e) each other Domestic Subsidiary
acquired pursuant to a Permitted Acquisition financed with secured Indebtedness
incurred pursuant to Section 11.1(i) and permitted by the proviso to subclause
(C) of Section 11.1(i) and each Subsidiary thereof that guarantees such
Indebtedness to the extent and so long as the financing documentation relating
to such Permitted Acquisition to which such Subsidiary is a party prohibits such
Subsidiary from

 

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guaranteeing or granting a Lien on any of its assets to secure the Obligations
and (f) any other Domestic Subsidiary with respect to which, (x) in the
reasonable judgment of the Borrower (and not reasonably objected to by the
Majority Lenders in writing by notice to the Administrative Agent), the cost or
other consequences of providing a Guarantee of the Obligations shall be
excessive in view of the benefits to be obtained by the Lenders therefrom or
(y) providing such a Guarantee would result in material adverse tax consequences
as reasonably determined by the Borrower.

“Excluded Taxes” shall mean, with respect to the Administrative Agent, any
Lender or any other recipient of any payment to be made by or on account of any
obligation of any Credit Party hereunder or under any other Credit Document,
(i) Taxes imposed on or measured by its overall net income or branch profits
(however denominated, and including (for the avoidance of doubt) any backup
withholding in respect thereof under Section 3406 of the Code or any similar
provision of state, local or foreign law), and franchise (and similar) Taxes
imposed on it (in lieu of net income Taxes), in each case by a jurisdiction
(including any political subdivision thereof) as a result of such recipient
being organized in, having its principal office in, or in the case of any
Lender, having its applicable lending office in, such jurisdiction, or as a
result of any other present or former connection with such jurisdiction (other
than any such connection arising solely from this Agreement or any other Credit
Documents or any transactions contemplated thereunder), (ii) in the case of a
Non-U.S. Lender, any United States federal withholding Tax imposed on any
payment by or on account of any obligation of any Credit Party hereunder or
under any other Credit Document that (A) is required to be imposed on amounts
payable to such Non-U.S. Lender pursuant to laws in force at the time such
Non-U.S. Lender becomes a party hereto (or designates a new lending office),
except to the extent that such Non-U.S. Lender (or its assignor, if any) was
entitled, immediately prior to the designation of a new lending office (or
assignment), to receive additional amounts or indemnification payments from any
Credit Party with respect to such withholding Tax pursuant to Section 5.4 or
(B) is attributable to such Non-U.S. Lender’s failure to comply with
Section 5.4(e) or Section 5.4(i) or (iii) any United States federal withholding
Tax imposed under FATCA.

“Existing Second Lien Notes” shall mean the Borrower’s 8.00% Senior Secured
Second Lien Notes due 2022 outstanding on the Effective Date.

“Existing Senior Notes” shall mean the 2020 Notes, the 2021 Notes and the 2024
Notes, which in each case, are outstanding on the Effective Date.

“Existing Senior Notes Documents” shall mean that certain Indenture dated
October 1, 2014 among the Borrower, the Guarantors party thereto and Wells Fargo
Bank, National Association, as trustee, as the same may be amended, modified or
supplemented from time to time in accordance with the terms of Section 11.7
pursuant to which the Existing Senior Notes are issued.

“Exposure” shall mean, with respect to any Lender at any time, the outstanding
principal amount of such Lender’s Loans.

“Facility” shall mean the Commitments and the Loans made thereunder.

“Fair Market Value” shall mean, with respect to any asset or group of assets on
any date of determination, the value of the consideration obtainable in a
Disposition of such asset at such date of determination assuming a Disposition
by a willing seller to a willing purchaser dealing at arm’s length and arranged
in an orderly manner over a reasonable period of time having regard to the
nature and characteristics of such asset, as reasonably determined by the
Borrower.

“Fall-Away” shall have the meaning given to such term in Section 14.25.

 

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“farm-in” or “farm-out” shall have the meaning commonly given to such terms in
the oil and gas industry, and without limiting the foregoing, shall expressly
include transactions involving assignments or other dispositions of all or part
of oil, natural gas or mineral interests in which the assignor or other
disposing party retains an interest in consideration of the assignee or other
disposing party assuming or undertaking obligations with respect to such
interests, including cost reimbursement and/or agreements to perform services in
connection with the development of the relevant assets.

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

“Federal Funds Effective Rate” shall mean, for any day, the weighted average of
the per annum rates on overnight federal funds transactions with members of the
Federal Reserve System on such day, as published on the next succeeding Business
Day by the Federal Reserve Bank of New York or, if such rate is not so published
for any date that is a Business Day, the Federal Funds Effective Rate for such
day shall be the average rate (rounded upward, if necessary, to a whole multiple
of 1/100 of 1%) of the quotations for such day for such transactions received by
the Administrative Agent from three Federal Funds brokers of recognized standing
selected by it.

“Financial Performance Covenant” shall mean the covenant of the Borrower set
forth in Section 11.11.

“First Lien Asset Coverage Ratio” shall mean as of the applicable June 30 or
December 31, the ratio of (a) the sum of (i) PV-10 and (ii) Hedge PV, in each
case as of such date to (b) the sum of the aggregate principal amount of all
Indebtedness for borrowed money that is secured by Liens and provides for
collateral recovery in respect of such Liens on an equal priority or greater
priority basis to the collateral recovery in respect of the Obligations.

“First Lien First Out Administrative Agent” shall mean JPMorgan Chase Bank, N.A.
(or any successor thereto), as the “Administrative Agent” as defined in the
First Lien First Out Credit Agreement.

“First Lien First Out Credit Agreement” shall mean (a) the Credit Agreement
dated as of September 24, 2014, among the Borrower, as borrower, the Persons
from time to time party thereto as lenders, JPMorgan Chase Bank, N.A., as
administrative agent, and others, as may be amended from time to time and
(b) any First Lien First Out RBL Facility which amends, restates, refinances or
replaces the First Lien First Out Credit Agreement.

“First Lien First Out Credit Documents” shall mean the “Credit Documents” as
defined in the First Lien First Out Credit Agreement.

“First Lien First Out Fifth Amendment Effective Date” shall mean the “Effective
Date” as defined in the Fifth Amendment to the First Lien First Out Credit
Agreement.

“First Lien First Out Financial Performance Covenants” means the “Financial
Performance Covenants” as defined in the First Lien First Out Credit Agreement.

“First Lien First Out Lenders” shall mean the lenders from time to time party to
the First Lien First Out Credit Agreement.

 

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“First Lien First Out Obligations” shall have the meaning provided in clause
(a)(i) of the term “Obligations” of the First Lien First Out Credit Agreement,
as in effect on the date hereof, and, upon any refinancing or replacement
thereof with any First Lien First Out RBL Facility and/or First Lien First Out
Term Debt, as defined under such First Lien First Out RBL Facility and/or First
Lien First Out Term Debt.

“First Lien First Out RBL Facility” means any oil and gas reserve-based
revolving credit facility which (a) provides for advances of revolving loans
only, without separate tranches of Indebtedness, and does not permit or provide
for any non-pro rata repayments of obligations with proceeds of Collateral,
(b) the majority of the commitments under which at all times prior to the
occurrence of an “event of default” thereunder (as such terms are defined
therein) are held by commercial lenders engaged in oil and gas reserve-based
lending as part of their respective businesses, and (c) does not provide for any
make-whole, prepayment premium or similar payments in each case, as amended,
modified, supplemented or restated from time to time or replaced, refunded or
refinanced in whole by any other First Lien First Out RBL Facility (provided
that, unless an “event of default” thereunder has occurred, after giving effect
to such restatement, replacement, refund or refinancing, the majority of the
commitments continue to be held by commercial lenders engaged in oil and gas
reserve-based lending as part of their respective businesses), including by or
pursuant to any agreement or instrument that extends the maturity of any
Indebtedness thereunder, or increases the amount of available borrowings
thereunder.

“First Lien First Out Reserve Report” shall mean a “Reserve Report” as defined
in the First Lien First Out Credit Agreement.

“First Lien First Out Revolving Loan Limit” shall mean the “Revolving Loan
Limit” as defined in the First Lien First Out Credit Agreement.

“First Lien First Out Secured Parties” shall mean the “Existing Senior Secured
Parties” as defined in the First Out Collateral Agency Agreement.

“First Lien First Out Security Documents” shall mean the “Security Documents” as
defined in the First Lien First Out Credit Agreement.

“First Lien First Out Term A Loan” shall have the meaning assigned to the term
“Term Loan” in the First Lien First Out Credit Agreement, as in effect on the
date hereof.

“First Lien First Out Term Debt” shall mean Indebtedness in the form of term
loans incurred by the Borrower which (a) the majority of the term loans at all
times prior to the occurrence of an “event of default” thereunder (as such terms
are defined therein) are held by commercial lenders engaged in oil and gas
reserve-based lending as part of their respective businesses; (b) is not secured
by assets other than Collateral; (c) on or before the date on which such
Indebtedness is incurred by the Borrower, is designated by the Borrower in a
written notice delivered to Administrative Agent, as “First Lien First Out Term
Debt”; (d) the agent or trustee with respect to such Indebtedness executes and
delivers a joinder to the First Out Collateral Agency Agreement, on behalf of
itself and all holders of such Indebtedness, in form and substance reasonably
acceptable to the Administrative Agent; (e) is subject to the First/Second
Intercreditor Agreement such that the lending parties under such Indebtedness
are “Priority Lien Secured Parties” (as defined therein) or an intercreditor
agreement in form and substance substantially similar to the First Lien
Intercreditor Agreement and otherwise reasonably acceptable to the
Administrative Agent, (f) is subject to the First Lien Intercreditor Agreement
such that the lending parties under such Indebtedness are “First Out Secured
Parties” (as defined therein) or an intercreditor agreement in form and
substance substantially similar to the First Lien Intercreditor Agreement and
otherwise reasonably acceptable to the Administrative Agent, (g) consists of
pricing, terms and conditions (including without “hard call” protection or other
repayment premiums in excess of 102%) customary for oil and gas borrowers in the
bank market, and (h) otherwise constitutes Permitted Refinancing Indebtedness.

 

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“First Lien First Out Third Amendment Effective Date” shall mean the “Effective
Date” as defined in the Third Amendment to the First Lien First Out Credit
Agreement.

“First Lien Intercreditor Agreement” shall have the meaning provided in
Section 14.25.

“First Lien Third Out Indebtedness” shall mean Indebtedness of the Borrower and
its Subsidiaries that (i) is secured by the Liens on the Collateral that secure
the Obligations, the First Lien First Out Obligations and the 2016 Term Loan
Obligations but provide for collateral recovery in respect of such Liens to be
junior to the collateral recovery in respect of the Obligations, the First Lien
First Out Obligations and the 2016 Term Loan Obligations (ii) is subject to the
First/Second Intercreditor Agreement such that the lending parties under such
Indebtedness are “Priority Lien Secured Parties” (as defined therein) or an
intercreditor agreement in form and substance substantially similar to the
First/Second Intercreditor Agreement and otherwise reasonably acceptable to the
Administrative Agent, (iii) is subject to the First Lien Intercreditor Agreement
such that the lending parties under such Indebtedness are “Second-Out Secured
Parties” (as defined therein) or an intercreditor agreement in form and
substance substantially similar to the First Lien Intercreditor Agreement and
otherwise reasonably acceptable to the Administrative Agent, (iv) which is
subject to an intercreditor agreement as between the administrative agent for
the 2016 Term Loan Credit Agreement and the administrative agent for the
Additional Pari Debt, if any, or any refinancing of either such facilities, as
representatives for such debt holders, and the administrative agent for the
First Lien Third Out Indebtedness, as representative for such debt holders, in
form and substance substantially similar to the First Lien Intercreditor
Agreement with such modifications as are necessary to provide that under such
agreement the Second Out Obligations will be priority obligations and the First
Lien Third Out Indebtedness will be secondary obligations, or otherwise in a
form reasonably acceptable to the Majority Lenders, (v) has a maturity date that
is not earlier than 91 days after the Maturity Date (determined at the time of
issuance or incurrence), (vi) is issued at market terms, as certified by an
Authorized Officer of the Borrower in good faith on the date of such incurrence
and (vii) may not be mandatorily prepaid prior to the repayment of the Loans
(except regularly scheduled amortization payments not to exceed 1% annually of
the original principal amount of such Indebtedness or as a result of a change of
control, asset sale or, upon the occurrence of an event of default); provided,
further, that the terms and documentation of such Indebtedness shall be
(A) reasonably satisfactory to the Majority Lenders or (B) either (x) not
materially more restrictive, taken as a whole, to the Borrower and its
Subsidiaries, than the Credit Documents (or if materially more restrictive, the
Lenders receive the benefit of the more restrictive terms which, for the
avoidance of doubt, may be provided to the Lenders without consent) or (y) if
more restrictive, then such more restrictive terms are only applicable after the
Maturity Date, in each case, as certified by an Authorized Officer of the
Borrower in good faith.

“First Out Collateral Agency Agreement” shall mean that certain Collateral
Agency Agreement executed and delivered by and among the Collateral Agent, the
Administrative Agent and the First Lien First Out Administrative Agent, as of
the Effective Date, substantially in the form of Exhibit I.

“First/Second Intercreditor Agreement” shall mean the Intercreditor Agreement
among JPMorgan Chase Bank, N.A., as priority lien agent, The Bank of New York
Mellon Trust Company, N.A., as second lien collateral agent, and the other
parties from time to time party thereto, dated as of December 15 2015, as it may
be amended, restated, supplemented or otherwise modified from time to time.

 

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“Fixed Charges” shall mean the sum, without duplication, of:

(1)    Consolidated Interest Charges to the extent paid in cash (or accrued and
payable on a current basis in cash); plus

(2)    scheduled principal payments of any Indebtedness for borrowed money of
the Borrower and its Subsidiaries made or required to be made during such
period; plus

(3)    cash taxes paid by the Borrower and its Subsidiaries; minus

(4)    the consolidated interest income of the Borrower and its Subsidiaries for
such period, whether received or accrued, to the extent such income was included
in determining Consolidated Net Income.

“Fixed Charge Coverage Ratio” shall mean, with respect to the Borrower and its
Subsidiaries as of any date, the ratio of (1) Consolidated EBITDAX of such
Person for the most recent Test Period preceding the date on which such
calculation of the Fixed Charge Coverage Ratio is made, calculated on a pro
forma basis for such period, to (2) the Fixed Charges of such Person for such
period calculated on a pro forma basis. In the event that the Borrower or any of
its Subsidiaries incurs or redeems or repays any Indebtedness (other than in the
case of revolving credit borrowings unless the related commitments have been
terminated and such Indebtedness has been permanently repaid and has not been
replaced), makes a Qualified Acquisition or Qualified Disposition or issues or
redeems preferred stock or Disqualified Stock subsequent to the commencement of
the period for which the Fixed Charge Coverage Ratio is being calculated but
prior to or simultaneously with the event for which the calculation of the Fixed
Charge Coverage Ratio is made, then the Fixed Charge Coverage Ratio shall be
calculated on a pro forma basis giving effect thereto from the beginning of the
period.

“Foreign Corporate Subsidiary” shall mean a Foreign Subsidiary that is treated
as a corporation for U.S. federal income tax purposes.

“Foreign Plan” shall mean any employee benefit plan, program, policy,
arrangement or agreement maintained or contributed to by the Borrower or any of
its Subsidiaries with respect to employees employed outside the United States.

“Foreign Subsidiary” shall mean each Subsidiary of the Borrower that is not a
Domestic Subsidiary.

“FSHCO” shall mean any direct or indirect Subsidiary that has no material assets
other than the Stock of one or more direct or indirect Foreign Corporate
Subsidiaries.

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

“GAAP” shall mean United States generally accepted accounting principles, as in
effect from time to time.

“Governmental Authority” shall mean any nation, sovereign or government, any
state, province, territory or other political subdivision thereof, and any
entity or authority exercising executive, legislative, judicial, regulatory or
administrative functions of or pertaining to government, including a central
bank or stock exchange.

 

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“Guarantee” shall mean the Guarantee made by any Guarantor in favor of the
Administrative Agent for the benefit of the 2017 Secured Parties, substantially
in the form of Exhibit B.

“Guarantee Obligations” shall mean, as to any Person, any obligation of such
Person guaranteeing or intended to guarantee any Indebtedness of any other
Person (the “primary obligor”) in any manner, whether directly or indirectly,
including any obligation of such Person, whether or not contingent, (a) to
purchase any such Indebtedness or any property constituting direct or indirect
security therefor, (b) to advance or supply funds (i) for the purchase or
payment of any such Indebtedness or (ii) to maintain working capital or equity
capital of the primary obligor or otherwise to maintain the net worth or
solvency of the primary obligor, (c) to purchase property, securities or
services primarily for the purpose of assuring the owner of any such
Indebtedness of the ability of the primary obligor to make payment of such
Indebtedness or (d) otherwise to assure or hold harmless the owner of such
Indebtedness against loss in respect thereof; provided, however, that the term
“Guarantee Obligations” shall not include endorsements of instruments for
deposit or collection in the ordinary course of business or customary and
reasonable indemnity obligations in effect on the Effective Date or entered into
in connection with any acquisition or Disposition of assets permitted under this
Agreement (other than such obligations with respect to Indebtedness). The amount
of any Guarantee Obligation shall be deemed to be an amount equal to the stated
or determinable amount of the Indebtedness in respect of which such Guarantee
Obligation is made or, if not stated or determinable, the maximum reasonably
anticipated liability in respect thereof (assuming such Person is required to
perform thereunder) as determined by such Person in good faith.

“Guarantors” shall mean (i) each Material Subsidiary that is a party to the
Guarantee on the Effective Date and, (ii) each other Domestic Subsidiary (other
than an Excluded Subsidiary) that becomes a party to the Guarantee after the
Effective Date, whether pursuant to Section 10.10 or otherwise.

“Hazardous Materials” shall mean (a) any petroleum or petroleum products,
radioactive materials, friable asbestos, urea formaldehyde foam insulation,
polychlorinated biphenyls, and radon gas, (b) any chemicals, materials or
substances defined as or included in the definition of “hazardous substances”,
“hazardous waste”, “hazardous materials”, “extremely hazardous waste”,
“restricted hazardous waste”, “toxic substances”, “toxic pollutants”,
“contaminants”, or “pollutants”, or words of similar import, under any
applicable Environmental Law and (c) any other chemical, material or substance,
which is prohibited, limited or regulated by any applicable Environmental Law.

“Hedge Agreements” shall mean (a) any and all rate swap transactions, basis
swaps, credit derivative transactions, forward rate transactions, commodity
swaps, commodity options, forward commodity contracts, equity or equity index
swaps or options, bond or bond price or bond index swaps or options or forward
bond or forward bond price or forward bond index transactions, interest rate
options, forward foreign exchange transactions, cap transactions, floor
transactions, collar transactions, currency swap transactions, cross-currency
rate swap transactions, currency options, spot contracts, fixed-price physical
delivery contracts, whether or not exchange traded, or any other similar
transactions or any combination of any of the foregoing (including any options
to enter into any of the foregoing), whether or not any such transaction is
governed by or subject to any master agreement, and (b) any and all transactions
of any kind, and the related confirmations, which are subject to the terms and
conditions of, or governed by, any form of master agreement published by the
International Swaps and Derivatives Association, Inc., any International Foreign
Exchange Master Agreement or any other master agreement (any such master
agreement, together with any related schedules, a “Master Agreement”), including
any such obligations or liabilities under any Master Agreement. Notwithstanding
the foregoing, agreements or obligations entered into in the ordinary course of
business to physically buy or sell any commodity produced from the Borrower’s
and its Subsidiaries’ Oil and Gas Properties or electricity generation
facilities under an agreement that has a tenor under 90 days shall not be
considered Hedge Agreements.

 

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“Hedge PV” shall mean, with respect to any commodity Hedge Agreement, the
present value, discounted at 10% per annum, of the future receipts expected to
be paid to the Borrower or the Subsidiaries under such Hedge Agreement netted
against the Strip Price.

“Historical Financial Statements” shall mean (a) the audited consolidated
balance sheets of the Borrower and its consolidated Subsidiaries as of
December 31, 2015 and 2016, and the related audited consolidated statements of
operations, comprehensive income, equity and cash flows for the one-year period
ended December 31, 2015 and 2016 and (b) the unaudited consolidated balance
sheet of the Borrower and its consolidated Subsidiaries as of June 30, 2017, and
the related unaudited consolidated statements of operations, comprehensive
income shareholder’s equity and cash flows for the six-month period ended
June 30, 2017.

“Hydrocarbon Interests” shall mean all rights, titles, interests and estates now
or hereafter acquired in and to oil and gas leases, oil, gas and mineral leases,
or other liquid or gaseous hydrocarbon leases, mineral fee interests, overriding
royalty and royalty interests, net profit interests and production payment
interests, including any reserved or residual interests of whatever nature.

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

“ICE” shall mean the Intercontinental Exchange Benchmark Administration Limited.

“Identified Contingent Liabilities” shall mean the maximum estimated amount of
liabilities reasonably likely to result from pending litigation, asserted claims
and assessments, guaranties, uninsured risks and other contingent liabilities of
the Borrower and its Subsidiaries taken as a whole after giving effect to the
Transactions (including all fees and expenses related thereto but exclusive of
such contingent liabilities to the extent reflected in Stated Liabilities), as
identified and explained in terms of their nature and estimated magnitude by
Authorized Officers of the Borrower.

“Impacted Interest Period” shall have the meaning specified in the definition of
“LIBOR Rate”.

“Indebtedness” of any Person shall mean (a) all indebtedness of such Person for
borrowed money, (b) all obligations of such Person evidenced by bonds,
debentures, notes, loan agreements or other similar instruments, (c) the
deferred purchase price of assets or services that in accordance with GAAP would
be included as a liability on the balance sheet of such Person (other than
(i) any earn-out obligation until such obligation becomes a liability on the
balance sheet of such Person in accordance with GAAP and (ii) obligations
resulting under firm transportation contracts or take or pay contracts entered
into in the ordinary course of business), (d) the face amount of all letters of
credit issued for the account of such Person and, without duplication, all
drafts drawn thereunder, (e) all Indebtedness (excluding prepaid interest
thereon) of any other Person secured by any Lien on any property owned by such
Person, whether or not such Indebtedness has been assumed by such Person,
(f) the principal component of all Capitalized Lease Obligations of such Person,
(g) obligations to deliver commodities, goods or services, including
Hydrocarbons, in consideration of one or more advance payments, other than
obligations relating to net oil, natural gas liquids or natural gas balancing
arrangements arising in the ordinary course of business, (h) the undischarged
balance of any Production Payment created by such Person or for the creation of
which such Person directly or indirectly received payment, and (i) without
duplication, all Guarantee Obligations of such Person; provided that
Indebtedness shall not include (i) trade and other ordinary course payables and
accrued expenses arising in the ordinary course of business, (ii) deferred or
prepaid revenue, (iii) purchase price holdbacks in respect of a portion of the
purchase price of an asset to satisfy warranty or other unperformed obligations
of the respective seller, (iv) in the case of the Borrower and its Subsidiaries,
all intercompany Indebtedness having a term not exceeding 364 days (inclusive of
any roll-

 

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over or extensions of terms) and made in the ordinary course of business,
(v) any obligation in respect of a farm-in agreement, joint development
agreement, joint operating agreement or similar arrangement whereby such Person
agrees to pay all or a share of the drilling, completion or other expenses of an
exploratory or development well (which agreement may be subject to a maximum
payment obligation, after which expenses are shared in accordance with the
working or participation interest therein or in accordance with the agreement of
the parties) or perform the drilling, completion or other operation on such well
in exchange for an ownership interest in an oil or gas property, (vi) any
obligations in respect of any Hedge Agreement that is permitted under this
Agreement, (vii) prepayments for gas or crude oil production not in excess of
$20,000,000 in the aggregate at any time outstanding, (viii) obligations to
deliver commodities or pay royalties or other payments in connection with
Royalty Trust Transactions and obligations arising from net profits interests,
working interests, overriding royalty interests or similar real property
interests.

“Indemnified Taxes” shall mean all Taxes imposed on or with respect to or
measured by, any payment by or on account of any obligation of any Credit Party
hereunder or under any other Credit Document other than (a) Excluded Taxes,
(b) Other Taxes and (c) any interest, penalties or expenses caused by the
Administrative Agent’s or Lender’s gross negligence or willful misconduct.

“Industry Investment” shall mean Investments and expenditures made in the
ordinary course of, and of a nature that is or shall have become customary in,
the oil and gas business as a means of actively engaging therein through
agreements, transactions, interests or arrangements that permit one to share
risks or costs, comply with regulatory requirements regarding local ownership or
satisfy other objectives customarily achieved through the conduct of oil and gas
business jointly with third parties, including: (1) ownership interests in oil
and gas properties or gathering, transportation, processing, electricity and
power generation, or related systems; and (2) Investments and expenditures in
the form of or pursuant to operating agreements, processing agreements, farm-in
agreements, farm-out agreements, development agreements, area of mutual interest
agreements, unitization agreements, pooling arrangements, joint bidding
agreements, service contracts, joint venture agreements, partnership agreements
(whether general or limited), and other similar agreements (including for
limited liability companies) with third parties.

“Initial Lender” shall mean Goldman Sachs Lending Partners LLC, in its capacity
as a Lender on the Effective Date.

“Initial Loans” shall mean any Loans made on the Effective Date.

“Interest Period” shall mean, with respect to any Loan, the interest period
applicable thereto, as determined pursuant to Section 2.10.

“Instructions” shall have the meaning provided in Section 14.2.

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

“Investment” shall mean, for any Person: (a) the acquisition (whether for cash,
property, services or securities or otherwise) of Stock, Stock Equivalents,
bonds, notes, debentures, partnership or other ownership interests or other
securities of any other Person (including any “short sale” or any sale of any

 

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securities at a time when such securities are not owned by the Person entering
into such sale), (b) the making of any deposit with, or advance, loan or other
extension of credit to, assumption of Indebtedness of, or capital contribution
to, or purchase or other acquisition of an equity participation in, any other
Person (including the purchase of property from another Person subject to an
understanding or agreement, contingent or otherwise, to resell such property to
such Person) (including any partnership or joint venture), (c) the entering into
of any guarantee of, or other contingent obligation with respect to,
Indebtedness or (d) the purchase or other acquisition (in one transaction or a
series of transactions) of (x) all or substantially all of the property and
assets or business of another Person or (y) assets constituting a business unit,
line of business or division of such Person; provided that, in the event that
any Investment is made by the Borrower or any Subsidiary in any Person through
substantially concurrent interim transfers of any amount through one or more
other Subsidiaries, then such other substantially concurrent interim transfers
shall be disregarded for purposes of Section 11.5.

“Investment Grade Period” shall mean any period other than a Credit Rating
Trigger Period.

“Joint Bookrunners” shall mean, collectively, Goldman Sachs Lending Partners LLC
and J.P. Morgan Securities LLC, each in its capacity as a joint bookrunner in
respect of the Facility.

“Joint Lead Arrangers” shall mean, collectively, Goldman Sachs Lending Partners
LLC and J.P. Morgan Securities LLC, each in its capacity as a lead arranger in
respect of the Facility.

“Lender” shall have the meaning provided in the preamble to this Agreement and
shall include a Lender with a Commitment or an Exposure.

“Lender Default” shall mean (a) the refusal or failure of any Lender to make
available its portion of any incurrence of Loans, which refusal or failure is
not cured within one Business Day after the date of such refusal or failure,
unless such Lender notifies the Administrative Agent and the Borrower in writing
that such failure is the result of such Lender’s determination that one or more
conditions precedent to funding (each of which conditions precedent, together
with any applicable default, shall be specifically identified in such writing)
has not been satisfied; (b) the failure of any Lender to pay over to the
Administrative Agent or any other Lender any other amount required to be paid by
it hereunder within two (2) Business Day of the date when due, unless the
subject of a good faith dispute; (c) a Lender has notified the Borrower or the
Administrative Agent in writing that it does not intend or expect to comply with
any of its funding obligations or has made a public statement to that effect
with respect to its funding obligations under the Facility (unless such writing
or public statement relates to such Lender’s obligation to fund a Loan hereunder
and states that such position is based on such Lender’s determination that a
condition precedent to funding (which condition precedent, together with any
applicable default, shall be specifically identified in such writing or public
statement) cannot be satisfied); (d) the failure, within three Business Days
after a written request by the Administrative Agent (given at the direction of
the Majority Lenders) or the Borrower, by a Lender to confirm in writing to the
Administrative Agent and the Borrower that it will comply with its obligations
under the Facility (provided that such Lender shall cease to be a Defaulting
Lender pursuant to this clause (d) upon receipt of such written confirmation by
the Administrative Agent and the Borrower) or (e) a Distressed Person has
admitted in writing that it is insolvent or such Distressed Person becomes
subject to a Lender-Related Distress Event.

“Lender Indemnified Liabilities” shall have the meaning provided in
Section 14.5(a).

“Lender-Related Distress Event” shall mean, with respect to any Lender, that
such Lender or any Person that directly or indirectly controls such Lender
(each, a “Distressed Person”), as the case may be, is or becomes subject to a
Bail-In Action or a voluntary or involuntary case with respect to such
Distressed Person under any debt relief law, or a custodian, conservator,
receiver or similar official is

 

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appointed for such Distressed Person or any substantial part of such Distressed
Person’s assets, or such Distressed Person or any Person that directly or
indirectly controls such Distressed Person is subject to a forced liquidation,
or such Distressed Person makes a general assignment for the benefit of
creditors or is otherwise adjudicated as, or determined by any Governmental
Authority having regulatory authority over such Distressed Person or its assets
to be, insolvent or bankrupt; provided that a Lender-Related Distress Event
shall not be deemed to have occurred solely by virtue of (i) the ownership or
acquisition of any equity interests in any Lender or any Person that directly or
indirectly controls such Lender by a Governmental Authority or an
instrumentality thereof or (ii) an Undisclosed Administration pursuant to the
laws of the Netherlands.

“LIBOR Loan” shall mean any Loan bearing interest at a rate determined by
reference to the LIBOR Rate (other than an ABR Loan bearing interest by
reference to the LIBOR Rate by virtue of clause (c) of the definition of ABR).

“LIBOR Rate” shall mean, for any Interest Period for each LIBOR Loan, the LIBOR
Screen Rate at approximately 11:00 a.m. (London time) two (2) Business Days
prior to the commencement of such Interest Period, and provided, further, if the
LIBOR Screen Rate shall not be available at such time for such Interest Period
(an “Impacted Interest Period”) with respect to Dollars then the LIBOR Rate
shall be the Interpolated Rate.

“LIBOR Screen Rate” means, for any day and time, with respect to any LIBOR Loan
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 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
Required Lenders, provided that if the LIBOR Screen Rate shall be less than 1%
per annum, such rate shall be deemed 1% per annum for the purposes of this
Agreement.

“Lien” shall mean any interest in property securing an obligation owed to, or a
claim by, a Person other than the owner of the property, whether such interest
is based on the common law, statute or contract, and whether such obligation or
claim is fixed or contingent, and including (a) the lien or security interest
arising from a mortgage, encumbrance, pledge, security agreement or a financing
lease, consignment or bailment for security purposes or (b) Production Payments
and the like payable out of Oil and Gas Properties; provided that in no event
shall an operating lease be deemed to be a Lien.

“Liquidity” shall have the meaning provided in the First Lien First Out Credit
Agreement

“Loan” shall mean any extension of credit by a Lender to the Borrower hereunder.

“Majority Lenders” shall mean, at any date, Non-Defaulting Lenders having or
holding more than 50% of the Total Exposure at such date.

“Material Adverse Effect” shall mean a circumstance or condition affecting the
business, assets, operations, properties or financial condition of the Borrower
and the Subsidiaries on a consolidated basis, that would, individually or in the
aggregate, materially adversely affect (a) the ability of the Borrower and the
other Credit Parties, taken as a whole, to perform their payment obligations
under this Agreement or any of the other Credit Documents or (b) the rights and
remedies of the Administrative Agent and the Lenders under this Agreement or
under any of the other Credit Documents.

 

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“Material Subsidiary” shall mean, at any date of determination, each wholly
owned (directly or indirectly) Domestic Subsidiary of the Borrower such that the
Total Assets of the non-Material Subsidiaries (when combined with the assets of
each such Subsidiary’s Subsidiaries, after eliminating intercompany obligations)
at the last day of the Test Period for which Section 10.1 Financials have been
delivered are equal to or less than 1% of the Consolidated Total Assets of the
Borrower and the Subsidiaries at such date, determined in accordance with GAAP.

“Maturity Date” shall mean December 31, 2022; provided that in the event that
$100,000,000 or greater aggregate principal amount remains outstanding of (i)
2020 Notes on the date that is 91 days prior to their stated maturity date (such
91st day prior, the “2020 Notes Springing Maturity Date”), the Maturity Date
shall automatically accelerate to the 2020 Notes Springing Maturity Date, (ii)
2021 Notes on the date that is 91 days prior to their stated maturity date (such
91st day prior, the “2021 Notes Springing Maturity Date”), the Maturity Date
shall automatically accelerate to the 2021 Notes Springing Maturity Date and
(iii) 2016 Term Loans on the date that is 91 days prior to their stated maturity
date (such 91st day prior, the “2016 Term Loan Springing Maturity Date”), the
Maturity Date shall automatically accelerate to the 2016 Term Loan Springing
Maturity Date.

“Measurement Date” shall mean August 15, 2017.

“Midstream Assets” shall mean all tangible and intangible property used in
(a) gathering, compressing, treating, processing and transporting Hydrocarbons,
water or steam; (b) fractionating and transporting Hydrocarbons, water or steam;
and (c) marketing Hydrocarbons, water or steam; including, without limitation,
gathering lines and gathering systems, pipelines and pipeline systems, storage
facilities, liquid extraction plants, plant compressors, pumps, pumping units,
field gathering systems, gas processing plants, and any other gathering,
transportation, compression, storage, processing, treating, dehydration,
fractionation, generation, disposal or other similar assets related to the
handling of Hydrocarbons, water or steam, and together with surface leases,
rights-of-way, easements and servitudes related to each of the foregoing.

“Moody’s” means Moody’s Investors Service, Inc., or any successor thereto.

“Mortgage” shall mean a mortgage or a deed of trust, deed to secure debt, trust
deed, assignment of as-extracted collateral, fixture filing or other security
document entered into by the owner of a Mortgaged Property and the Collateral
Agent for the benefit of the Secured Parties in respect of that Mortgaged
Property, substantially in the form of Exhibit E (with such changes thereto as
may be necessary to account for local law matters, including, without
limitation, changes to exclude property subject to the deed of trust (but not
the mortgage) with respect to which a grant or maintenance of a lien is
prohibited by, constitutes a default under, results in termination of, or
requires a consent which has not been obtained under, the document or instrument
giving rise to such property) or otherwise in such form as agreed between the
Borrower and the Collateral Agent and including, for the avoidance of doubt, the
Mortgages, as amended and restated in connection with the advancement of Loans
hereunder pursuant to Section 10.9.

“Mortgaged Property” shall mean the real property and improvements thereto with
respect to which a Mortgage is required to be granted pursuant to Section 10.10;
provided that, notwithstanding any provision in any Mortgage to the contrary, in
no event shall any Building (as defined in the applicable Flood Insurance
Regulation) or Manufactured (Mobile) Home (as defined in the applicable Flood
Insurance Regulation) located on the Mortgaged Properties (as defined in the
applicable Mortgage) within an area having special flood hazards and in which
flood insurance is available under the National Flood Insurance Act of 1968 be
included in the definition of “Mortgaged Property” or “Mortgaged Properties” and
no such Building or Manufactured (Mobile) Home shall be encumbered by any
Mortgage. As used

 

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herein, “Flood Insurance Regulations” shall mean (i) the National Flood
Insurance Act of 1968 as now or hereafter in effect or any successor statute
thereto, (ii) the Flood Disaster Protection Act of 1973 as now or hereafter in
effect or any successor statue thereto, (iii) the National Flood Insurance
Reform Act of 1994 (amending 42 USC 4001, et seq.), as the same may be amended
or recodified from time to time, and (iv) the Flood Insurance Reform Act of 2004
and any regulations promulgated thereunder.

“Multiemployer Plan” shall mean a multiemployer plan as defined in
Section 4001(a)(3) of ERISA that is subject to Title IV of ERISA and is or was
within any of the last preceding six years contributed to by the Borrower or an
ERISA Affiliate.

“Net Cash Proceeds” shall mean (a) with respect to any Disposition, the cash
proceeds (including, without limitation, cash or Cash Equivalents subsequently
received (as and when received) in respect of noncash consideration initially
received (including Designated Non-Cash Consideration)), net of (i) selling
expenses (including reasonable broker’s fees or commissions, legal, accounting
and investment banking fees and expenses, title insurance premiums, survey
costs, transfer and similar taxes and the Borrower’s good faith estimate of
income taxes paid or payable in connection with such sale), (ii) amounts
provided as a reserve, in accordance with GAAP, against any liabilities under
any indemnification obligations or purchase price adjustment associated with
such Disposition (provided that, to the extent and at the time any such amounts
are released from such reserve, such amounts shall constitute Net Cash
Proceeds), (iii) amounts paid in respect of the termination of Hedge Agreements
in respect of notional volumes or amounts corresponding to the property subject
of such Disposition or any Indebtedness being repaid under clause (iv) and
(iv) the principal amount, premium or penalty, if any, interest and other
amounts on any Indebtedness permitted hereunder that is secured by a Lien
permitted hereunder (other than any Lien pursuant to a Security Document) on the
asset disposed of in such Disposition and required to be repaid with such
proceeds (other than any such Indebtedness assumed by the purchaser of such
asset); and (b) with respect to any issuance or incurrence of Indebtedness, the
cash proceeds thereof, net of all taxes and attorneys’ fees, accountants’ fees,
underwriters’ or placement agents’ fees, listing fees, commissions and
brokerage, consultant and other customary fees and charges actually incurred in
connection with such issuance.

“Non-Borrowing Base Disposition” shall mean a Disposition by the Borrower or any
of its Subsidiaries to a Person other than the Borrower or any one of the other
Credit Parties of (x) any Non-Borrowing Base Properties or (y) any Stock or
Stock Equivalents of any Subsidiary the only assets of which are Non-Borrowing
Base Properties.

“Non-Borrowing Base Properties” shall mean (i) prior to the Discharge of First
Lien First Out Obligations, all Oil and Gas Properties of the Credit Parties
that are not included in the Borrowing Base (as determined in accordance with
the First Lien First Out Credit Agreement) and (ii) following the Discharge of
First Lien First Out Obligations, all Midstream Assets, Power Assets and
Hydrocarbon Interests and other assets to which no reserves are attributable;
provided, for the avoidance of doubt, prior to the Discharge of First Lien First
Out Obligations any Midstream Assets and Power Assets shall constitute
Non-Borrowing Base Properties.

“Non-Defaulting Lender” shall mean and include each Lender other than a
Defaulting Lender.

“Non-U.S. Lender” shall mean any Lender that is not a “United States person” as
defined by Section 7701(a)(30) of the Code.

“Notice of Borrowing” shall mean a request of the Borrower in accordance with
the terms of Section 2.4 and substantially in the form of Exhibit A or such
other form as shall be approved by the Administrative Agent (acting at the
written direction of the Majority Lenders).

 

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“Notice of Conversion or Continuation” shall have the meaning provided in
Section 2.7(a).

“Obligations” shall mean all advances to, and debts, liabilities, obligations,
covenants and duties of, any Credit Party arising under any Credit Document or
otherwise with respect to any Loan, whether direct or indirect (including those
acquired by assumption), absolute or contingent, due or to become due, now
existing or hereafter arising and including interest and fees that accrue after
the commencement by or against any Credit Party or any Affiliate thereof in any
proceeding under any bankruptcy or insolvency law naming such Person as the
debtor in such proceeding, regardless of whether such interest and fees are
allowed claims in such proceeding. Without limiting the generality of the
foregoing, the Obligations of the Credit Parties under the Credit Documents (and
any of their Subsidiaries to the extent they have obligations under the Credit
Documents) include the obligation (including Guarantee Obligations) to pay
principal, interest, charges, call premium (including Premium Amounts),
expenses, fees, attorney costs, indemnities and other amounts payable by any
Credit Party under any Credit Document, including, but not limited to, those
payable to the Administrative Agent. For the avoidance of doubt, and as a result
of the impracticability and extreme difficulty of ascertaining actual damages,
it is understood and agreed that any Premium Amount shall be presumed to be the
liquidated damages sustained by each Lender as a result of the early termination
of the Loans and the Credit Parties agree that such amounts shall constitute
Obligations under this Agreement.

“October 1st Reserve Report” shall have the meaning provided in
Section 10.13(b).

“OID” shall mean original issue discount.

“Oil and Gas Properties” shall mean (a) Hydrocarbon Interests, (b) the
properties now or hereafter pooled or unitized with Hydrocarbon Interests,
(c) all presently existing or future unitization, pooling agreements and
declarations of pooled units and the units created thereby (including all units
created under orders, regulations and rules of any Governmental Authority) which
may affect all or any portion of the Hydrocarbon Interests, (d) all operating
agreements, contracts and other agreements, including production sharing
contracts and agreements, which relate to any of the Hydrocarbon Interests or
the production, sale, purchase, exchange or processing of Hydrocarbons from or
attributable to such Hydrocarbon Interests, (e) all Hydrocarbons in and under
and which may be produced and saved or attributable to the Hydrocarbon
Interests, including all oil in tanks, and all rents, issues, profits, proceeds,
products, revenues and other incomes from or attributable to the Hydrocarbon
Interests, (f) all tenements, hereditaments, appurtenances and properties in any
manner appertaining, belonging, affixed or incidental to the Hydrocarbon
Interests and (g) all properties, rights, titles, interests and estates
described or referred to above, including any and all property, real or
personal, now owned or hereafter acquired and situated upon, used, held for use
or useful in connection with the operating, working or development of any of
such Hydrocarbon Interests or property (excluding drilling rigs, automotive
equipment, rental equipment or other personal property which may be on such
premises for the purpose of drilling a well or for other similar temporary uses)
and including any and all oil wells, gas wells, injection wells or other wells,
structures, fuel separators, liquid extraction plants, plant compressors, pumps,
pumping units, field gathering systems, gas processing plants and pipeline
systems, power and cogeneration facilities, steam flood facilities and any
related infrastructure to any thereof, tanks and tank batteries, fixtures,
valves, fittings, machinery and parts, engines, boilers, meters, apparatus,
equipment, appliances, tools, implements, cables, wires, towers, casing, tubing
and rods, surface leases, rights-of-way, easements and servitudes together with
all additions, substitutions, replacements, accessions and attachments to any
and all of the foregoing.

“OPC” shall mean Occidental Petroleum Corporation, a Delaware corporation.

 

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“OPC Related Transactions” shall mean each of:

(a)    the Separation and Distribution Agreement between OPC and the Borrower
dated on or about the Spinoff Date,

(b)    the Transition Services Agreement between OPC and the Borrower, dated on
or about the Spinoff Date,

(c)    the Tax Sharing Agreement between OPC and the Borrower dated on or about
the Spinoff Date,

(d)    the Employee Matters Agreement between OPC and the Borrower dated on or
about the Spinoff Date,

(e)    the Area of Mutual Interest Agreement between OPC and the Borrower dated
on or about the Spinoff Date,

(f)    the Confidentiality and Trade Secret Protection Agreement between OPC and
the Borrower, dated on or about the Spinoff Date,

(g)    the Intellectual Property License Agreement between OPC and the Borrower
dated on or about the Spinoff Date, and

(h)    the Stockholder’s Registration Rights Agreement between OPC and the
Borrower dated on or about the Spinoff Date.

“Other Taxes” shall mean any and all present or future stamp, registration,
documentary, intangible, recording, filing or any other excise, property or
similar taxes (including interest, fines, penalties, additions to tax and
related, reasonable, out-of-pocket expenses with regard thereto) arising from
any payment made hereunder or made under any other Credit Document or from the
execution or delivery of, registration or enforcement of, consummation or
administration of, or otherwise with respect to, this Agreement or any other
Credit Document; provided that such term shall not include any of the foregoing
Taxes (i) that result from an assignment, grant of a participation pursuant to
Section 14.6(c) or transfer or assignment to or designation of a new lending
office or other office for receiving payments under any Credit Document
(“Assignment Taxes”) to the extent such Assignment Taxes are imposed as a result
of a connection between the assignor/participating Lender and/or the
assignee/Participant and the taxing jurisdiction (other than a connection
arising solely from any Credit Documents or any transactions contemplated
thereunder), except to the extent that any such action described in this proviso
is requested or required by the Borrower, or (ii) Excluded Taxes.

“Overnight Rate” shall mean, for any day, the greater of (a) the Federal Funds
Effective Rate and (b) an overnight rate reasonably determined by the Required
Lenders in accordance with banking industry rules on interbank compensation.

“Participant” shall have the meaning provided in Section 14.6(c)(i).

“Participant Register” shall have the meaning provided in Section 14.6(c)(ii).

“Patriot Act” shall have the meaning provided in Section 14.19.

“PBGC” shall mean the Pension Benefit Guaranty Corporation established pursuant
to Section 4002 of ERISA, or any successor thereto.

 

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“Permitted Acquisition” shall mean the acquisition, by merger or otherwise, by
the Borrower or any of the Subsidiaries of assets (including any assets
constituting a business unit, line of business or division) or Stock or Stock
Equivalents, so long as (a) such acquisition and all transactions related
thereto shall be consummated in all material respects in accordance with
Requirements of Law; (b) if such acquisition involves the acquisition of Stock
or Stock Equivalents of a Person that upon such acquisition would become a
Subsidiary, such acquisition shall result in the issuer of such Stock becoming a
Subsidiary and, to the extent required by Section 10.10, a Guarantor; (c) such
acquisition shall result in the Administrative Agent, for the benefit of the
Secured Parties, being granted a security interest in any Stock or any assets so
acquired to the extent required by Section 10.10; (d) after giving effect to
such acquisition, no Default or Event of Default shall have occurred and be
continuing; (e) after giving effect to such acquisition, the Borrower and its
Subsidiaries shall be in compliance with Section 11.13; and (f) the Fixed Charge
Coverage Ratio shall be no less than 2.25 to 1.00 after giving pro forma effect
to such acquisition and any transactions taken in connection therewith
(including, without limitation, the incurrence of any Indebtedness).

“Permitted Additional Debt” shall mean unsecured senior, senior subordinated or
subordinated Indebtedness issued by the Borrower or a Guarantor, (a) the terms
of which do not provide for any scheduled repayment, mandatory redemption or
sinking fund obligation prior to the 91st day after the Maturity Date (other
than customary offers to purchase upon a change of control, asset sale or
casualty or condemnation event and customary acceleration rights after an event
of default), (b) the covenants, events of default, guarantees and other terms of
which (other than interest rate, fees, funding discounts and redemption,
prepayment or make-whole premiums determined by the Borrower to be “market”
rates, fees, discounts and premiums at the time of issuance or incurrence of any
such Indebtedness), taken as a whole, are determined by the Borrower to be
“market” terms on the date of issuance or incurrence and in any event are not
more restrictive on the Borrower and its Subsidiaries than the terms of this
Agreement (as in effect at the time of such issuance or incurrence) and do not
require the maintenance or achievement of any financial performance standards
other than as a condition to taking specified actions; provided that a
certificate of an Authorized Officer of the Borrower delivered to the
Administrative Agent at least five Business Days prior to the incurrence or
issuance of such Indebtedness, together with a reasonably detailed description
of the material terms and conditions of such Indebtedness or drafts of the
documentation relating thereto, stating that the Borrower has determined in good
faith that such terms and conditions satisfy the foregoing requirements shall be
conclusive evidence that such terms and conditions satisfy the foregoing
requirements, (c) if such Indebtedness is senior subordinated or subordinated
Indebtedness, the terms of such Indebtedness provide for customary subordination
of such Indebtedness to the Obligations and (d) no Subsidiary of the Borrower
(other than a Guarantor) is an obligor under such Indebtedness.

“Permitted Investments” shall mean Investments in Cash Equivalents.

“Permitted Junior Indebtedness” shall mean (a) Permitted Second Lien
Indebtedness and (b) First Lien Third Out Indebtedness.

“Permitted Liens” shall mean:

(a)    Liens for taxes, assessments or governmental charges or claims not yet
overdue for a period of more than 30 days or that are being contested in good
faith and by appropriate proceedings for which appropriate reserves have been
established to the extent required by and in accordance with GAAP, or for
property taxes on property that the Borrower or one of its Subsidiaries has
determined to abandon if the sole recourse for such tax, assessment, charge or
claim is to such property;

 

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(b)    Liens in respect of property or assets of the Borrower or any of the
Subsidiaries imposed by law, such as landlords’, vendors’, operators’,
suppliers’, carriers’, warehousemen’s, repairmen’s, construction contractors’,
workers’ materialmen’s and mechanics’ Liens and other similar Liens arising in
the ordinary course of business or incident to the exploration, development,
operation or maintenance of Oil and Gas Properties, in each case so long as such
Liens arise in the ordinary course of business and do not individually or in the
aggregate have a Material Adverse Effect;

(c)    Liens incurred, or pledges or deposits made in connection with workers’
compensation, unemployment insurance and other types of social security, old age
pension, public liability obligations or similar legislation and deposits
securing liabilities to insurance carriers under insurance or self-insurance
arrangements in respect of such obligations, or to secure the performance of
tenders, statutory and regulatory obligations, plugging and abandonment
obligations, surety, stay, customs and appeal bonds, bids, leases, government
contracts, trade contracts, performance and return-of-money bonds and other
similar obligations (including letters of credit issued in lieu of such bonds or
to support the issuance thereof) incurred in the ordinary course of business or
otherwise constituting Investments permitted by Section 11.5;

(d)    ground leases, subleases, licenses or sublicenses in respect of real
property on which facilities owned or leased by the Borrower or any of its
Subsidiaries are located;

(e)    easements, rights-of-way, licenses, restrictions (including zoning
restrictions), title defects, exceptions, reservations, deficiencies or
irregularities in title, encroachments, protrusions, servitudes, rights, eminent
domain or condemnation rights, permits, conditions and covenants and other
similar charges or encumbrances (including in any rights of way or other
property of the Borrower or its Subsidiaries for the purpose of roads,
pipelines, transmission lines, transportation lines, distribution lines for the
removal of gas, oil or other minerals or timber, and other like purposes, or for
joint or common use of real estate, rights of way, facilities and equipment) not
interfering in any material respect with the business of the Borrower and its
Subsidiaries, taken as a whole and any exception on the title reports issued in
connection with any Oil and Gas Properties that would not reasonably be expected
have a Material Adverse Effect;

(f)    any interest or title of a lessor, sublessor, licensor or sublicensor or
secured by a lessor’s, sublessor’s, licensor’s or sublicensor’s interest under
any lease, sublease, license or sublicense permitted by this Agreement;

(g)    Liens in favor of customs and revenue authorities arising as a matter of
law to secure payment of customs duties in connection with the importation of
goods;

(h)    Liens on goods or inventory the purchase, shipment or storage price of
which is financed by a documentary letter of credit or bankers’ acceptance
issued for the account of the Borrower or any of its Subsidiaries; provided that
such Lien secures only the obligations of the Borrower or such Subsidiaries in
respect of such letter of credit or bankers’ acceptance to the extent permitted
under Section 11.1;

(i)    leases, licenses, subleases or sublicenses granted to others not
interfering in any material respect with the business of the Borrower and its
Subsidiaries, taken as a whole;

 

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(j)    Liens arising from precautionary Uniform Commercial Code financing
statement or similar filings made in respect of operating leases entered into by
the Borrower or any of its Subsidiaries;

(k)    Liens created in the ordinary course of business in favor of banks and
other financial institutions over credit balances of any bank accounts of the
Borrower and the Subsidiaries held at such banks or financial institutions, as
the case may be, to facilitate the operation of cash pooling and/or interest
set-off arrangements in respect of such bank accounts in the ordinary course of
business;

(l)    Liens which arise in the ordinary course of business under operating
agreements (including preferential purchase rights, consents to assignment and
other restraints on alienation), joint operating agreements, joint venture
agreements, oil and gas partnership agreements, oil and gas leases, farm-out
agreements, farm-in agreements, division orders, contracts for the sale,
transportation or exchange of oil and natural gas, unitization and pooling
declarations and agreements, area of mutual interest agreements, overriding
royalty and royalty agreements, reversionary interests, marketing agreements,
processing agreements, net profits agreements, development agreements, gas
balancing or deferred production agreements, injection, repressuring and
recycling agreements, salt water or other disposal agreements, seismic or other
geophysical permits or agreements, and other agreements that are usual and
customary in the oil and gas business and are for claims which are not
delinquent or that are being contested in good faith and by appropriate
proceedings for which appropriate reserves have been established to the extent
required by and in accordance with GAAP; and to the extent the same constitute
Liens, Liens on Oil and Gas Properties that arise pursuant to usual and
customary dedications of Hydrocarbon production from specified Oil and Gas
Properties in favor of a joint venture providing midstream services in
connection with the obligation to deliver such Hydrocarbons, if and when
produced, for transportation or processing by such joint venture, in each case
so long as such Liens do not secure any monetary obligation; provided that any
such Lien referred to in this clause does not in the aggregate have a Material
Adverse Effect;

(m)    any zoning or similar law or right reserved to or vested in any
Governmental Authority to control or regulate the use of any real property that
does not materially interfere with the ordinary conduct of the business of the
Borrower and its Subsidiaries, taken as a whole; and

(n)    Liens arising under statutory provisions of applicable law with respect
to production purchased from others.

The parties acknowledge and agree that no intention to subordinate the priority
afforded the Liens granted in favor of the Collateral Agent, for the benefit of
the Secured Parties, under the Security Documents is to be hereby implied or
expressed by the permitted existence of such Permitted Liens.

“Permitted Refinancing Indebtedness” shall mean, any Indebtedness issued or
incurred to Refinance any Refinanced Indebtedness (or previous refinancing
thereof constituting Permitted Refinancing Indebtedness); provided that (A) the
principal amount (or accreted value, if applicable) of any such Permitted
Refinancing Indebtedness does not exceed the principal amount (or accreted
value, if applicable) of the Refinanced Indebtedness outstanding immediately
prior to such Refinancing except by an amount equal to the unpaid accrued
interest and premium thereon plus other amounts paid and fees and expenses
incurred in connection with such Refinancing plus an amount equal to any
existing commitment unutilized and letters of credit undrawn thereunder, (B) if
the Indebtedness being Refinanced is Indebtedness permitted by Section 11.1(h)
or 11.1(i), the direct and contingent obligors with respect to such Permitted
Refinancing Indebtedness are not changed (except that a Credit Party may be
added as an

 

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additional obligor), (C) other than with respect to a Refinancing in respect of
Indebtedness permitted pursuant to Section 11.1(g), such Permitted Refinancing
Indebtedness shall have a final maturity date equal to or later than the final
maturity date of, and has a Weighted Average Life to Maturity equal to or
greater than the Weighted Average Life to Maturity of, the Refinanced
Indebtedness (calculated at the time such Permitted Refinancing Indebtedness is
incurred), (D) if the Indebtedness being Refinanced is Indebtedness permitted by
Section 11.1 (h) or 11.1(i), terms and conditions of any such Permitted
Refinancing Indebtedness, taken as a whole, are not materially less favorable to
the Lenders than the terms and conditions of the Refinanced Indebtedness being
Refinanced (including, if applicable, as to collateral priority and
subordination, but excluding as to interest rates, fees, floors, funding
discounts and redemption, prepayment or call premiums); provided that a
certificate of an Authorized Officer of the Borrower delivered to the
Administrative Agent at least five Business Days prior to the incurrence or
issuance of such Indebtedness, together with a reasonably detailed description
of the material terms and conditions of such Indebtedness or drafts of the
documentation relating thereto, stating that the Borrower has determined in good
faith that such terms and conditions satisfy the foregoing requirement shall be
conclusive evidence that such terms and conditions satisfy the foregoing
requirement and (E) if the Indebtedness being Refinanced is Permitted Junior
Indebtedness, the terms and conditions of such Permitted Refinancing
Indebtedness meet the requirements of clauses (i)-(iv) of the definition of
“Permitted Second Lien Indebtedness” or of clauses (b)(i)-(vi) of the definition
of “Permitted Junior Indebtedness”, as applicable, if such Permitted Refinancing
Indebtedness is secured by any property of the Borrower or its Subsidiaries.

“Permitted Second Lien Indebtedness” shall mean Indebtedness of the Borrower and
its Subsidiaries that is secured by a second priority Lien on any asset or
property of the Borrower or any Subsidiary (including, without limitation, the
Existing Second Lien Notes or any Permitted Refinancing Indebtedness issued or
incurred to refinance such Existing Second Lien Notes to the extent secured by a
second priority Lien on any asset or property of the Borrower or any
Subsidiary); provided that such Indebtedness (i) is subject to the First/Second
Intercreditor Agreement, (ii) has a maturity date that is not earlier than 91
days after the Maturity Date (determined at the time of issuance or incurrence),
(iii) is issued at market terms, as certified by an Authorized Officer of the
Borrower in good faith and (iv) may not be mandatorily prepaid prior to the
repayment of the Loans (except regularly scheduled amortization payments not to
exceed 1% annually of the original principal amount of such Indebtedness or as a
result of a change of control, asset sale or, upon the occurrence of an event of
default); provided, further, that the terms and documentation of such
Indebtedness shall be (A) reasonably satisfactory to the Majority Lenders or
(B) either (x) not materially more restrictive, taken as a whole, to the
Borrower and its Subsidiaries, than the Credit Documents (or if materially more
restrictive, the Lenders receive the benefit of the more restrictive terms
which, for the avoidance of doubt, may be provided to the Lenders without
consent) or (y) if more restrictive, then such more restrictive terms are only
applicable after the Maturity Date, in each case, as certified by an Authorized
Officer of the Borrower in good faith.

“Permitted Unsecured Ratio Debt” shall mean unsecured Indebtedness issued by the
Borrower or a Guarantor, (a) the terms of which do not provide for any scheduled
repayment, mandatory redemption or sinking fund obligation prior to the 91st day
after the Maturity Date (other than customary offers to purchase upon a change
of control, asset sale or casualty or condemnation event and customary
acceleration rights after an event of default), (b) the covenants, events of
default, guarantees and other terms of which (other than interest rate, fees,
funding discounts and redemption, prepayment or make-whole premiums determined
by the Borrower to be “market” rates, fees, discounts and premiums at the time
of issuance or incurrence of any such Indebtedness), taken as a whole, are
determined by the Borrower to be “market” terms on the date of issuance or
incurrence and in any event are not more restrictive on the Borrower and its
Subsidiaries than the terms of this Agreement (as in effect at the time of such
issuance or incurrence) and do not require the maintenance or achievement of any
financial performance standards other than as a condition to taking specified
actions; provided that a certificate of

 

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an Authorized Officer of the Borrower delivered to the Administrative Agent at
least five Business Days prior to the incurrence or issuance of such
Indebtedness, together with a reasonably detailed description of the material
terms and conditions of such Indebtedness or drafts of the documentation
relating thereto, stating that the Borrower has determined in good faith that
such terms and conditions satisfy the foregoing requirements shall be conclusive
evidence that such terms and conditions satisfy the foregoing requirements,
(c) if such Indebtedness is senior subordinated or subordinated Indebtedness,
the terms of such Indebtedness provide for customary subordination of such
Indebtedness to the Obligations, (d) no Subsidiary of the Borrower (other than a
Guarantor) is an obligor under such Indebtedness and (e) the incurrence of which
and the application of proceeds thereof (but without giving effect to any
increase in cash and Cash Equivalents from the proceeds thereof and assuming all
such Indebtedness is fully drawn), and after giving pro forma effect thereto,
shall not cause the Fixed Charge Coverage Ratio as of the last day of the most
recently ended Test Period to be less than 2.25 to 1.00.

“Person” shall mean any individual, partnership, joint venture, firm,
corporation, limited liability company, association, trust or other enterprise
or any Governmental Authority.

“Petroleum Industry Standards” shall mean the Definitions for Oil and Gas
Reserves promulgated by the Society of Petroleum Engineers (or any generally
recognized successor) as in effect at the time in question.

“Plan” shall mean any single-employer plan, as defined in Section 4001 of ERISA
and subject to Title IV of ERISA, that is or was within any of the preceding six
years maintained or contributed to (or to which there is or was an obligation to
contribute or to make payments to) by the Borrower or an ERISA Affiliate.

“Platform” shall have the meaning provided in Section 10.1.

“Pledge Agreement” shall mean the Amended and Restated Pledge Agreement entered
into by the Borrower, the other pledgors party thereto and the Collateral Agent,
for the benefit of the Secured Parties, on the Effective Date, substantially in
the form of Exhibit D.

“Power Assets” shall mean all tangible and intangible property used in
connection with the ownership and operation of electric power and cogeneration
facilities, including, without limitation, related transmission lines and gas
lines.

“Premium Amount” shall have the meaning provided in Section 5.1(a).

“Prepayment Date” shall have the meaning provided in Section 5.2(a).

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

 

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“Production Payment” shall mean a production payment obligation (whether
volumetric or dollar denominated) of the Borrower or any of its Subsidiaries
which is payable from a specified share of proceeds received from production
from specified Oil and Gas Properties, together with all undertakings and
obligations in connection therewith.

“Projected Volume” shall mean the forecasted production of oil and natural gas
reserves of the Borrower and its Subsidiaries, as determined as of the last day
of each fiscal quarter, by the Borrower based on the Borrower’s internal
engineering reports.

“Promissory Note” shall have the meaning provided in Section 2.6(e).

“Proved Developed Reserves” shall mean Proved Reserves that, in accordance with
Petroleum Industry Standards, are classified as one of the following: (a)
“Developed Producing Reserves” or (b) “Developed Non-Producing Reserves”; and
Proved Developed Reserves in the aggregate comprise Proved Reserves that are
“Developed Producing Reserves” and “Developed Non-Producing Reserves”.

“Proved Non-Producing Reserves” shall mean Proved Reserves that, in accordance
with Petroleum Industry Standards, are classified as “Developed Non-Producing
Reserves”.

“Proved Reserves” shall mean oil and gas reserves that, in accordance with
Petroleum Industry Standards, are classified as both “Proved Reserves” and one
of the following: (a) “Developed Producing Reserves”, (b) “Developed
Non-Producing Reserves” or (c) “Undeveloped Reserves”; and “Proved Reserves” in
the aggregate comprise Proved Reserves that are “Developed Producing Reserves”,
“Developed Non-Producing Reserves” and “Undeveloped Reserves”.

“Proved Undeveloped Reserves” shall mean Proved Reserves that, in accordance
with Petroleum Industry Standards, are classified as “Undeveloped Reserves”.

“Public Lender” shall have the meaning provided in Section 10.1.

“PV-9” shall have the meaning given to such term in the First Lien First Out
Credit Agreement.

“PV-10” shall mean, with respect to any Proved Reserves expected to be produced
from any Oil and Gas Properties, the net present value, discounted at 10% per
annum, of the future net revenues expected to accrue to the Credit Parties’
collective interests in such reserves during the remaining expected economic
lives of such reserves, calculated using the Strip Price; provided that in no
event shall the amount of Proved Undeveloped Reserves included in such
calculation exceed 30% of PV-10.

“Qualified Acquisition” shall mean an acquisition or a series of related
acquisitions in which the consideration paid by the Credit Parties is equal to
or greater than $50,000,000.

“Qualified Disposition” shall mean a Disposition or a series of related
Dispositions in which the consideration received by the Credit Parties is equal
to or greater than $50,000,000.

“Refinance” shall mean to issue or incur in exchange for, or to use the net
proceeds of such issuance or incurrence to modify, extend, refinance, renew,
replace, repay or refund. “Refinancing” shall have a correlative meaning.

“Refinanced Indebtedness” shall mean any Indebtedness Refinanced with
Refinancing Indebtedness.

 

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“Refinancing Indebtedness” shall mean any Indebtedness issued or incurred to
Refinance other Indebtedness.

“Register” shall have the meaning provided in Section 14.6(b)(iv).

“Regulation T” shall mean Regulation T of the Board as from time to time in
effect and any successor to all or a portion thereof establishing margin
requirements.

“Regulation U” shall mean Regulation U of the Board as from time to time in
effect and any successor to all or a portion thereof establishing margin
requirements.

“Regulation X” shall mean Regulation X of the Board as from time to time in
effect and any successor to all or a portion thereof establishing margin
requirements.

“Related Parties” shall mean, with respect to any specified Person, such
Person’s Affiliates and the directors, officers, employees, agents and members
of such Person or such Person’s Affiliates and any Person that possesses,
directly or indirectly, the power to direct or cause the direction of the
management or policies of such Person, whether through the ability to exercise
voting power, by contract or otherwise.

“Reportable Event” shall mean an event described in Section 4043 of ERISA and
the regulations thereunder, other than any event as to which the 30-day notice
period has been waived.

“Required Lenders” means, as of any date of determination, Lenders having or
holding more than 50% of the sum of the aggregate principal amount of
outstanding Loans and Commitments as of any date of determination.

“Requirement of Law” shall mean, as to any Person, any law, treaty, rule,
regulation statute, order, ordinance, decree, judgment, consent decree, writ,
injunction, settlement agreement or governmental requirement enacted,
promulgated or imposed or entered into or agreed by any Governmental Authority,
in each case applicable to or binding upon such Person or any of its property or
assets or to which such Person or any of its property or assets is subject.

“Reserve Report” shall mean, prior to the Discharge of First Lien First Out
Obligations, a First Lien First Out Reserve Report and thereafter a reserve
report established in accordance with the procedures set forth in the First Lien
First Out Credit Agreement as in effect on the Effective Date and substituting
the relevant Lenders for the First Lien First Out Lenders and in either case
otherwise complying with the requirements of the First Lien First Out Credit
Agreement; provided that in addition to the calculations based upon the most
recent Bank Price Deck (as defined in the First Lien First Out Credit Agreement)
such report shall include parallel calculations based upon the Strip Price;
provided further that each Reserve Report shall be calculated to reflect the net
interests of any Proved Reserves and Proved Developed Reserves contained
therein, excluding any Proved Reserves and Proved Developed Reserves
attributable to interests owned by Persons other than the Borrower and its
wholly owned Subsidiaries.

“Restricted Payments” shall have the meaning provided in Section 11.6.

“Royalty Trust” shall mean a statutory trust, business trust, limited liability
company, partnership or other form of legal entity to which the Borrower or one
or more of its Subsidiaries grants or conveys any term or perpetual overriding
royalty interests, net profits interests or other similar interests in Oil and
Gas Properties in exchange for units of beneficial interest or ownership
interests in such trust or other entity, or for cash.

 

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“Royalty Trust Transaction” shall mean (a) the grant, conveyance or other
disposition by the Borrower or a Subsidiary, to a Royalty Trust, of interests in
Oil and Gas Properties as described in the definition of “Royalty Trust,” (b)
the obligations of the Borrower or a Subsidiary to drill and develop oil and gas
wells burdened by such granted or conveyed interests and (c) the conveyances or
other agreements transferring the interests to the Royalty Trust and any other
agreements between the Borrower or a Subsidiary and such Royalty Trust or the
trustee of such Royalty Trust, and the transactions under such agreements,
providing for any one or more of: (i) the operation of the oil and gas wells
burdened by such interests, (ii) administrative services for the Royalty Trust,
(iii) registration rights of the Borrower and Subsidiaries and (iv) transactions
incidental to the foregoing.

“S&P” shall mean Standard & Poor’s Ratings Services or any successor by merger
or consolidation to its business.

“Sanctioned Country” shall mean, at any time, a country or territory which is
itself the subject or target of any Sanctions (at the time of this Agreement,
including, but not limited to, Cuba, Iran, North Korea, Sudan and Syria).

“Sanctioned Person” shall mean, at any time, (a) any Person listed in any
Sanctions-related list of designated Persons maintained by the Office of Foreign
Assets Control of the U.S. Department of the Treasury, the U.S. Department of
State, or by the United Nations Security Council, the European Union or any
European Union member state, (b) any Person operating, organized or resident in
a Sanctioned Country or (c) any Person owned or controlled by any such Person or
Persons.

“Sanctions” shall mean economic or financial sanctions or trade embargoes
imposed, administered or enforced from time to time by (a) the U.S. government,
including those administered by the Office of Foreign Assets Control of the U.S.
Department of the Treasury or the U.S. Department of State, or (b) the United
Nations Security Council, the European Union or Her Majesty’s Treasury of the
United Kingdom.

“SEC” shall mean the Securities and Exchange Commission or any successor
thereto.

“Section 10.1 Financials” shall mean the financial statements delivered, or
required to be delivered, pursuant to Section 10.1(a) or (b), together with the
accompanying Authorized Officer’s certificate delivered, or required to be
delivered, pursuant to Section 10.1(c).

“Secured Parties” shall mean, collectively, (i) the Administrative Agent, the
Collateral Agent, each Lender and each sub-agent pursuant to Article XIII
appointed by the Administrative Agent with respect to matters relating to the
Credit Documents the (“2017 Secured Parties”) and (ii) prior to the Discharge of
the First Lien First Out Obligations, the First Out Secured Parties (as defined
in the First Lien Intercreditor Agreement).

“Security Agreement” shall mean the Amended and Restated Security Agreement
entered into by the Borrower, the other grantors party thereto and the
Collateral Agent, for the benefit of the Secured Parties, on the Effective Date,
substantially in the form of Exhibit C.

“Security Documents” shall mean, during any Credit Rating Trigger Period,
collectively, (a) the Security Agreement, (b) the Pledge Agreement, (c) the
Mortgages, (d) the First Out Collateral Agency Agreement and (e) each other
security agreement or other instrument or document executed and delivered
pursuant to Section 10.10 or 10.12 or pursuant to any other such Security
Documents or otherwise to secure or perfect the security interest in any or all
of the Obligations.

 

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“Solvent” shall mean, with respect to any Person, that as of any date of
determination (a) for the period from the Effective Date through the Maturity
Date, such Person after consummation of the Transactions is a going concern and
has sufficient capital to ensure that it will continue to be a going concern for
such period, in light of the nature of the particular business or businesses
conducted or to be conducted, and based on the needs and anticipated needs for
capital of the business conducted or anticipated to be conducted by such Person
as reflected in projected financial statements and in light of anticipated
credit capacity; and (b) for the period from the Effective Date through the
Maturity Date, such Person will have sufficient assets and cash flow to pay its
Stated Liabilities and Identified Contingent Liabilities as those liabilities
mature or (in the case of contingent liabilities) otherwise become payable, in
light of the business conducted or anticipated to be conducted by such Person as
reflected in projected financial statements and in light of anticipated credit
capacity.

“Specified First Lien Indebtedness” shall mean the (i) First Lien First Out
Obligations, (ii) 2017 Term Loan Obligations, (iii) any Additional Pari Debt,
(iv) 2016 Term Loan Obligations and (v) any First Lien Third Out Indebtedness.

“Specified First Lien Indebtedness Amount” shall mean, at any date, the sum of
the aggregate principal amount of all Specified First Lien Indebtedness.

“Specified Subsidiary” shall mean, at any date of determination any Subsidiary
(a) whose Total Assets at the last day of the Test Period ending on the last day
of the most recent fiscal period for which Section 10.1 Financials have been
delivered were equal to or greater than 15% of the Consolidated Total Assets of
the Borrower and the Subsidiaries at such date, or (b) whose revenues during
such Test Period were equal to or greater than 15% of the consolidated revenues
of the Borrower and the Subsidiaries for such period, in each case determined in
accordance with GAAP.

“Spinoff Date” shall mean the date on which the Spinoff Transaction occurred.

“Spinoff Transaction” shall mean (a) the transfer by OPC and/or one or more of
its affiliates of certain of its assets to the Borrower and/or one or more of
its subsidiaries to be used by them in connection with their oil and gas
business (including marketing and other related activities and services) in the
State of California and (b) the distribution by OPC and/or one or more of its
affiliates of more than 80.0% of Borrower’s Stock to the existing shareholders
of OPC.

“Stated Liabilities” shall mean the recorded liabilities (including contingent
liabilities that would be recorded in accordance with GAAP) of the Borrower and
its Subsidiaries taken as a whole, as of the Effective Date after giving effect
to the consummation of the Transactions, determined in accordance with GAAP
consistently applied.

“Stock” shall mean any and all shares of capital stock or shares in the capital,
as the case may be (whether denominated as common stock or preferred stock or
ordinary shares or preferred shares, as the case may be), beneficial,
partnership or membership interests, participations or other equivalents
(regardless of how designated) of or in a corporation, partnership, limited
liability company or equivalent entity, whether voting or non-voting.

“Stock Equivalents” shall mean all securities convertible into or exchangeable
for Stock and all warrants, options or other rights to purchase or subscribe for
any Stock, whether or not presently convertible, exchangeable or exercisable.

 

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“Strip Price” shall mean (x) for purposes of determining Hedge PV and/or the
value of Oil and Gas Properties constituting Proved Reserves, the price
estimated by the Borrower in a Reserve Report prepared by the Borrower’s
petroleum engineers applying the ICE(Brent)/NYMEX (as applicable) published
forward prices adjusted for relevant basis differentials (before any state or
federal or other income tax) and (y) for purposes of determining the value of
basis differential commodity Hedge Agreements, as estimated by the Borrower
applying, if available, the relevant ICE(Brent)/NYMEX (as applicable) published
forward basis differential or, if such ICE(Brent)/NYMEX (as applicable) forward
basis differential is unavailable, in good faith based on historical basis
differentials, but accounting for reasonably expected future conditions (before
any state or federal or other income tax). For any months beyond the term
included in published ICE(Brent)/NYMEX (as applicable) forward pricing, the
Strip Price used will be equal to the last published contract escalated at 2.0%
per annum.

“Subsidiary” of any Person shall mean and include (a) any corporation more than
50% of whose Stock of any class or classes having by the terms thereof ordinary
voting power to elect a majority of the directors of such corporation
(irrespective of whether or not at the time Stock of any class or classes of
such corporation shall have or might have voting power by reason of the
happening of any contingency) is at the time owned by such Person directly or
indirectly through Subsidiaries and (b) any limited liability company,
partnership, association, joint venture or other entity of which such Person
directly or indirectly through Subsidiaries has more than a 50% Stock at the
time. Unless otherwise expressly provided, all references herein to a
“Subsidiary” shall mean a Subsidiary of the Borrower. A Royalty Trust shall not
constitute a “Subsidiary” of the Borrower or its Subsidiaries; provided that,
Development Joint Ventures shall not be deemed to be Subsidiaries of the
Borrower or of any of its Subsidiaries.

“Subsidiary Guarantor” shall mean each Subsidiary that is a Guarantor.

“Taxes” shall mean any and all present or future taxes, duties, levies, imposts,
assessments, deductions, withholdings or other similar charges imposed by any
Governmental Authority whether computed on a separate, consolidated, unitary,
combined or other basis and any interest, fines, penalties or additions to tax
with respect to the foregoing.

“Test Period” shall mean, for any determination under this Agreement, the four
consecutive fiscal quarters of the Borrower then last ended and for which
Section 10.1 Financials have been delivered to the Administrative Agent.

“Total Assets” shall mean, as of any date of determination with respect to any
Person, the amount that would, in conformity with GAAP, be set forth opposite
the caption “total assets” (or any like caption) on a balance sheet of such
Person at such date.

“Total Exposure” shall mean the sum of the Exposures of the Lenders.

“Transaction Expenses” shall mean any fees or expenses incurred or paid by the
Borrower or any of its Subsidiaries or any of their Affiliates in connection
with the Transactions.

“Transactions” shall mean, collectively, the execution, delivery and performance
of this Agreement and the other Credit Documents, the borrowing of Loans, the
use of the proceeds thereof in accordance with Section 10.11 and Section 11.14,
including the payment of Transaction Expenses on the Effective Date and the
other transactions contemplated by this Agreement and the Credit Documents,
including the execution and delivery of an amendment to the First Lien First Out
Credit Agreement and the repayment of Indebtedness under the First Lien First
Out Credit Agreement pursuant thereto.

“Transferee” shall have the meaning provided in Section 14.6(e).

“Type” shall mean, as to any Loan, its nature as an ABR Loan or a LIBOR Loan.

 

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“Undisclosed Administration” shall mean in relation to a Lender the appointment
of an administrator, provisional liquidator, conservator, receiver, trustee,
custodian or other similar official by a supervisory authority or regulator
under or based on the law in the country where such Lender is subject to home
jurisdiction supervision if applicable law requires that such appointment is not
to be publicly disclosed.

“Unfunded Current Liability” of any Plan shall mean the amount, if any, by which
the Accumulated Benefit Obligation (as defined under FASB Accounting Standards
Codification 715 (“ASC 715”)) under the Plan as of the close of its most recent
plan year, determined in accordance with ASC 715 as in effect on the Effective
Date, exceeds the Fair Market Value of the assets allocable thereto.

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

“Upfront Fee” shall have the meaning provided in Section 4.1.

“Voting Stock” shall mean, with respect to any Person, such Person’s Stock or
Stock Equivalents having the right to vote for the election of directors of such
Person under ordinary circumstances.

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

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

1.2    Other Interpretive Provisions. With reference to this Agreement and each
other Credit Document, unless otherwise specified herein or in such other Credit
Document:

(a)    The meanings of defined terms are equally applicable to the singular and
plural forms of the defined terms.

(b)    The words “herein”, “hereto”, “hereof” and “hereunder” and words of
similar import when used in any Credit Document shall refer to such Credit
Document as a whole and not to any particular provision thereof.

(c)    Article, Section, Exhibit and Schedule references are to the Credit
Document in which such reference appears.

(d)    The term “including” is by way of example and not limitation.

(e)    The term “documents” includes any and all instruments, documents,
agreements, certificates, notices, reports, financial statements and other
writings, however evidenced, whether in physical or electronic form.

 

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(f)    In the computation of periods of time from a specified date to a later
specified date, the word “from” means “from and including”; the words “to” and
“until” each mean “to but excluding”; and the word “through” means “to and
including”.

(g)    Section headings herein and in the other Credit Documents are included
for convenience of reference only and shall not affect the interpretation of
this Agreement or any other Credit Document.

(h)    Any reference to any Person shall be constructed to include such Person’s
successors or assigns (subject to any restrictions on assignment set forth
herein) and, in the case of any Governmental Authority, any other Governmental
Authority that shall have succeeded to any or all of the functions thereof.

(i)    Whenever the context may require, any pronoun shall include the
corresponding masculine, feminine and neuter forms.

(j)    The word “will” shall be construed to have the same meaning as the word
“shall”.

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

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

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

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

 

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

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

1.8    Currency Equivalents Generally.

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

(b)    Each provision of this Agreement shall be subject to such reasonable
changes of construction as the Administrative Agent may from time to time
specify at the direction of the Majority Lenders and with the Borrower’s consent
(such consent not to be unreasonably withheld) necessary from time to time to
appropriately reflect a change in currency of any country and any relevant
market conventions or practices relating to such change in currency.

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

1.10    Available Amount Transactions. If more than one action occurs on any
given date the permissibility of the taking of which is determined hereunder by
reference to the amount of the Available Amount immediately prior to the taking
of such action, the permissibility of the taking of each such action shall be
determined independently and in no event may any two or more such actions be
treated as occurring simultaneously (i.e., each transaction must be permitted
under the Available Amount as so calculated).

 

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ARTICLE II

AMOUNT AND TERMS OF CREDIT

2.1    Commitments.

(a)    Subject to and upon the terms and conditions herein set forth, each
Lender severally, but not jointly, agrees to make a Loan denominated in Dollars
to the Borrower, which Loan (i) shall be made on the Effective Date, (ii) shall
be in a principal amount not greater than the Commitment of such Lender and
(iii) subject to Section 2.3, may, at the option of the Borrower, be incurred
and maintained as, and/or converted into, ABR Loans or LIBOR Loans; provided
that all Loans made by each of the Lenders pursuant to the same Borrowing shall,
unless otherwise specifically provided herein, consist entirely of Loans of the
same Type. The Commitments of the Lenders to make Loans shall expire upon the
funding of the initial Borrowing on the Effective Date. Any portion of the Loans
that is repaid may not be reborrowed.

(b)    Each Lender may at its option make any LIBOR Loan by causing any domestic
or foreign branch or Affiliate of such Lender to make such Loan, provided that
(1) any exercise of such option shall not affect the obligation of the Borrower
to repay such Loan and (2) in exercising such option, such Lender shall use its
reasonable efforts to minimize any increased costs to the Borrower resulting
therefrom (which obligation of the Lender shall not require it to take, or
refrain from taking, actions that it determines would result in increased costs
for which it will not be compensated hereunder or that it determines would be
otherwise disadvantageous to it and in the event of such request for costs for
which compensation is provided under this Agreement, the provisions of
Section 2.11 shall apply).

2.2    [Reserved].

2.3    Type of Loans. Notwithstanding anything to the contrary in this
Agreement, except as set forth in Section 2.7, Section 2.11 or Section 2.15,
unless the Required Lenders shall otherwise agree in writing, all Loans shall be
LIBOR Loans.

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

2.5    Disbursement of Funds.

(a)    On the Effective Date, each Lender will make available its pro rata
portion of the Borrowing requested to be made on the Effective Date by 9:00 a.m.
(New York City time) or such earlier time as may be agreed among the Lenders and
the Borrower for the purpose of consummating the Transactions.

 

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(b)    Each Lender shall make available all amounts it is to fund to the
Borrower under any Borrowing in immediately available funds to the
Administrative Agent at the Administrative Agent’s Office in Dollars, and the
Administrative Agent will make available to the Borrower, by depositing or
wiring to an account as designated by the Borrower in the Notice of Borrowing to
the Administrative Agent the aggregate amount of the Commitments. Unless the
Administrative Agent shall have been notified by any Lender prior to the date of
any such Borrowing that such Lender does not intend to make available to the
Administrative Agent its portion of the Borrowing or Borrowings to be made on
such date, the Administrative Agent may assume that such Lender has made such
amount available to the Administrative Agent on such date of Borrowing, and the
Administrative Agent, in reliance upon such assumption, shall make available to
the Borrower a corresponding amount. If such corresponding amount is not in fact
made available to the Administrative Agent by such Lender, the Administrative
Agent shall be entitled to recover such corresponding amount from such Lender.
The Administrative Agent shall also be entitled to recover from such Lender
interest on such corresponding amount in respect of each day from the date such
corresponding amount was made available by the Administrative Agent to the
Borrower to the date such corresponding amount is recovered by the
Administrative Agent, at a rate per annum equal to the Overnight Rate. In no
event shall the Administrative Agent be responsible for advancing funds
hereunder.

(c)    Nothing in this Section 2.5 shall be deemed to relieve any Lender from
its obligation to fulfill its commitments hereunder or to prejudice any rights
that the Borrower may have against any Lender as a result of any default by such
Lender hereunder (it being understood, however, that no Lender shall be
responsible for the failure of any other Lender to fulfill its commitments
hereunder).

2.6    Repayment of Loans; Evidence of Debt.

(a)    The outstanding principal balance of the Loans shall be due and payable
on the Maturity Date.

(b)    Each Lender shall maintain in accordance with its usual practice an
account or accounts evidencing the indebtedness of the Borrower to the
appropriate lending office of such Lender resulting from each Loan made by such
lending office from time to time, including the amounts of principal and
interest payable and paid to such lending office from time to time under this
Agreement.

(c)    The Administrative Agent, on behalf of the Borrower, shall maintain the
Register pursuant to Section 14.6(b), and a subaccount for each Lender, in which
Register and subaccounts (taken together) shall be recorded (i) the amount of
each Loan made hereunder, the Type of each Loan made and the Interest Period
applicable thereto, (ii) the amount of any principal or interest due and payable
or to become due and payable from the Borrower to each Lender and (iii) the
amount of any sum received by the Administrative Agent hereunder from the
Borrower and each Lender’s share thereof.

(d)    The entries made in the Register and accounts and subaccounts maintained
pursuant to clauses (b) and (c) of this Section 2.6 shall, to the extent
permitted by applicable Requirements of Law, be prima facie evidence of the
existence and amounts of the obligations of the Borrower therein recorded;
provided, however, that the failure of any Lender or the Administrative Agent to
maintain such account, such Register or such subaccount, as applicable, or any
error therein, shall not in any manner affect the obligation of the Borrower to
repay (with applicable interest) the Loans made to the Borrower by such Lender
in accordance with the terms of this Agreement.

 

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(e)    Any Lender may request that Loans made by it be evidenced by a promissory
note substantially in the form of Exhibit H hereto (a “Promissory Note”). In
such event, the Borrower shall prepare, execute and deliver to such Lender a
Promissory Note payable to such Lender (or, if requested by such Lender, to such
Lender and its registered assigns). Thereafter, the Loans evidenced by such
Promissory Note and interest thereon shall at all times (including after
assignment pursuant to Section 14.6) be represented by one or more Promissory
Notes in such form payable to the payee named therein (or, if such Promissory
Note is a registered note, to such payee and its registered assigns).

2.7    Conversions and Continuations.

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

(b)    If any Event of Default is in existence at the time of any proposed
continuation of any LIBOR Loans and the Majority Lenders have determined in
their sole discretion not to permit such continuation, such LIBOR Loans shall be
automatically converted on the last day of the current Interest Period into ABR
Loans. If upon the expiration of any Interest Period in respect of LIBOR Loans,
the Borrower has failed to elect a new Interest Period to be applicable thereto
as provided in clause (a) above, the Borrower shall be deemed to have elected an
Interest Period of one month’s duration.

(c)    Notwithstanding anything to the contrary herein, the Borrower may deliver
a Notice of Conversion or Continuation pursuant to which the Borrower elects to
irrevocably continue the outstanding principal amount of any Loans as LIBOR
Loans for each Interest Period.

2.8    Relationship Among Lenders. It is understood that (a) no Lender shall be
responsible for any default by any other Lender in its obligation to make Loans
hereunder and that each Lender severally but not jointly shall be obligated to
make the Loans provided to be made by it hereunder, regardless of the failure of
any other Lender to fulfill its commitments hereunder and (b) failure by a
Lender to perform any of its obligations under any of the Credit Documents shall
not release any Person from performance of its obligation under any Credit
Document.

 

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2.9    Interest.

(a)    The unpaid principal amount of each ABR Loan shall bear interest from the
date of the Borrowing thereof until maturity (whether by acceleration or
otherwise) at a rate per annum that shall at all times be the Applicable Margin
plus the ABR, in each case, in effect from time to time.

(b)    The unpaid principal amount of each LIBOR Loan shall bear interest from
the date of the Borrowing thereof until maturity thereof (whether by
acceleration or otherwise) at a rate per annum that shall at all times be the
Applicable Margin plus the relevant LIBOR Rate, in each case, in effect from
time to time.

(c)    Upon the occurrence and during the continuance of an Event of Default,
the Loans and all interest payable thereon shall bear interest at a rate per
annum that is (the “Default Rate”) (A) in the case of overdue principal, the
rate that would otherwise be applicable thereto plus 2% or (B) in the case of
any overdue interest, to the extent permitted by applicable Requirements of Law,
the rate described in Section 2.9(a) plus 2% from the date of such non-payment
to the date on which such amount is paid in full (after as well as before
judgment).

(d)    Interest on each Loan shall accrue from and including the date of any
Borrowing to but excluding the date of any repayment thereof and shall be
payable in Dollars; provided that any Loan that is repaid on the same date on
which it is made shall bear interest for one day. Except as provided below,
interest shall be payable (i) in respect of each ABR Loan, quarterly in arrears
on the last Business Day of each March, June, September and December, (ii) in
respect of each LIBOR Loan, on the last day of each Interest Period applicable
thereto and, in the case of an Interest Period in excess of three months, on
each date occurring at three-month intervals after the first day of such
Interest Period, (iii) in respect of each Loan, (A) on any prepayment (on the
amount prepaid), (B) at maturity (whether by acceleration or otherwise) and
(C) after such maturity, on demand.

(e)    All computations of interest hereunder shall be made in accordance with
Section 5.5.

(f)    The Administrative Agent, upon determining the interest rate for any
Borrowing of LIBOR Loans, shall promptly notify the Borrower and the relevant
Lenders thereof.

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

2.10    Interest Periods. At the time the Borrower gives a Notice of Borrowing
or Notice of Conversion or Continuation in respect of the making of, or
conversion into or continuation as, a Borrowing of LIBOR Loans in accordance
with Section 2.7(a), the Borrower shall give the Administrative Agent written
notice of the Interest Period applicable to such Borrowing, which Interest
Period shall, at the option of the Borrower be a one, two, three or six or (if
available to all the Lenders making such LIBOR Loans as determined by such
Lenders in good faith based on prevailing market conditions) a 12-month period
or any shorter period requested by the Borrower; provided that, notwithstanding
the foregoing, the initial Interest Period beginning on the Effective Date may
be for a period less than one month if agreed upon by the Borrower and each of
the Lenders.

Notwithstanding anything to the contrary contained above:

(a)    the initial Interest Period for any Borrowing of LIBOR Loans shall
commence on the date of such Borrowing (including the date of any conversion
from a Borrowing of ABR Loans) and each Interest Period occurring thereafter in
respect of such Borrowing shall commence on the day on which the next preceding
Interest Period expires;

 

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(b)    if any Interest Period relating to a Borrowing of LIBOR Loans begins on
the last Business Day of a calendar month or begins on a day for which there is
no numerically corresponding day in the calendar month at the end of such
Interest Period, such Interest Period shall end on the last Business Day of the
calendar month at the end of such Interest Period;

(c)    if any Interest Period would otherwise expire on a day that is not a
Business Day, such Interest Period shall expire on the next succeeding Business
Day; provided that, if any Interest Period in respect of a LIBOR Loan would
otherwise expire on a day that is not a Business Day, but is a day of the month
after which no further Business Day occurs in such month, such Interest Period
shall expire on the next preceding Business Day; and

(d)    the Borrower shall not be entitled to elect any Interest Period in
respect of any LIBOR Loan if such Interest Period would extend beyond the
Maturity Date.

2.11    Increased Costs, Illegality, Etc.

(a)    In the event any Lender shall have reasonably determined (which
determination shall, absent clearly demonstrable error, be final and conclusive
and binding upon all parties hereto):

(i)    that, due to a Change in Law occurring at any time or after the Effective
Date, which Change in Law shall (A) impose, modify or deem applicable any
reserve, special deposit, compulsory loan, insurance charge or similar
requirement against assets of, deposits with or for the account of, or credit
extended by, any Lender, (B) subject any Lender to any Tax with respect to any
Credit Document or any LIBOR Loan made by it (other than (i) Taxes indemnifiable
under Section 5.4, or (ii) Excluded Taxes), or (C) impose on any Lender or the
London interbank market any other condition, cost or expense affecting this
Agreement or LIBOR Loans made by such Lender, which results in the cost to such
Lender of making, converting into, continuing or maintaining LIBOR Loans
hereunder increasing by an amount which such Lender reasonably deems material or
the amounts received or receivable by such Lender hereunder with respect to the
foregoing shall be reduced; or

(ii)    at any time, that the making or continuance of any LIBOR Loan has become
unlawful as a result of compliance by such Lender in good faith with any
Requirement of Law (or would conflict with any such Requirement of Law not
having the force of law even though the failure to comply therewith would not be
unlawful);

then, and in any such event, such Lenders shall within a reasonable time
thereafter give written notice to the Borrower and to the Administrative Agent
of such determination (which notice the Administrative Agent shall promptly
transmit to each of the other Lenders). Thereafter (x) in the case of clause
(i) above, the Borrower shall pay to such Lender, promptly (but no later than
fifteen days) after receipt of written demand therefor such additional amounts
as shall be required to compensate such Lender for such increased costs or
reductions in amounts receivable hereunder (it being agreed that a written
notice as to the additional amounts owed to such Lender, showing in reasonable
detail the basis for the calculation thereof, submitted to the Borrower by such
Lender shall, absent clearly demonstrable error, be final and conclusive and
binding upon all parties hereto) and (y) in the case of clause (ii) above, the
Borrower shall take one of the actions specified in Section 2.11(b) as promptly
as possible and, in any event, within the time period required by applicable
Requirements of Law.

(b)    At any time that any LIBOR Loan is affected by the circumstances
described in Section 2.11(a)(i) or (ii), the Borrower may (and in the case of a
LIBOR Loan affected pursuant to Section 2.11(a)(ii) shall) either (i) if the
affected LIBOR Loan is then being made pursuant to a Borrowing, cancel such
Borrowing by giving the Administrative Agent written notice thereof on the same

 

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date that the Borrower was notified by a Lender pursuant to Section 2.11(a)(i)
or (ii) if the affected LIBOR Loan is then outstanding, upon at least three
Business Days’ notice to the Administrative Agent, require the affected Lender
to convert each such LIBOR Loan into an ABR Loan; provided that if more than one
Lender is affected at any time, then all affected Lenders must be treated in the
same manner pursuant to this Section 2.11(b).

(c)    If, after the Effective Date, any Change in Law relating to capital
adequacy or liquidity requirements of any Lender or compliance by any Lender or
its parent with any Change in Law relating to capital adequacy or liquidity
requirements occurring after the Effective Date, has or would have the effect of
reducing the rate of return on such Lender’s or its parent’s capital or assets
as a consequence of such Lender’s commitments or obligations hereunder to a
level below that which such Lender or its parent could have achieved but for
such Change in Law (taking into consideration such Lender’s or its parent’s
policies with respect to capital adequacy or liquidity requirements), then from
time to time, promptly (but in any event no later than fifteen (15) days) after
written demand by such Lender (with a copy to the Administrative Agent), the
Borrower shall pay to such Lender such additional amount or amounts as will
compensate such Lender or its parent for such reduction, it being understood and
agreed, however, that a Lender shall not be entitled to such compensation as a
result of such Lender’s compliance with, or pursuant to any request or directive
to comply with, any applicable Requirement of Law as in effect on the Effective
Date (except as otherwise set forth in the definition of Change in Law). Each
Lender, upon determining in good faith that any additional amounts will be
payable pursuant to this Section 2.11(c), will give prompt written notice
thereof to the Borrower, which notice shall set forth in reasonable detail the
basis of the calculation of such additional amounts, although the failure to
give any such notice shall not, subject to Section 2.14, release or diminish the
Borrower’s obligations to pay additional amounts pursuant to this
Section 2.11(c) upon receipt of such notice.

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

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

 

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

2.15    Alternative Rate of Interest.

(a)    If prior to the commencement of any Interest Period for a LIBOR Loan:

(i)     the Required Lenders determine (which determination shall be conclusive
absent manifest error) that adequate and reasonable means do not exist for
ascertaining the LIBOR Rate, as applicable (including, without limitation,
because the LIBOR Screen Rate is not available or published on a current basis),
for such Interest Period and notify the Administrative Agent thereof; or

(ii)     the Administrative Agent is advised by the Required Lenders that the
LIBOR Rate, as applicable, for such Interest Period will not adequately and
fairly reflect the cost to such Lenders (or Lender) of making or maintaining
their Loans (or its Loan) included in such Borrowing for such Interest Period;

then the Administrative Agent shall give notice thereof to the Borrower and the
Lenders by telephone, e-mail or other electronic means as promptly as
practicable thereafter and, until the Administrative Agent notifies the Borrower
and the Lenders that the circumstances giving rise to such notice no longer
exist, (A) any Notice of Conversion or Continuation that requests the conversion
of any Borrowing to, or continuation of any Borrowing as, a LIBOR Loan shall be
ineffective and (B) if any Notice of Borrowing requests a LIBOR Loan, such
Borrowing shall be made as an ABR Loan.

(b)     If at any time the Required Lenders determine (which determination shall
be conclusive absent manifest error) that (i) the circumstances set forth in
clause (a)(i) have arisen and such circumstances are unlikely to be temporary or
(ii) the circumstances set forth in clause (a)(i) have not arisen but the
supervisor for the administrator of the LIBOR Screen Rate or a Governmental
Authority having jurisdiction over the Administrative Agent has made a public
statement identifying a specific date after which the LIBOR Screen Rate shall no
longer be used for determining interest rates for loans, then the Majority
Lenders and the Borrower shall endeavor to establish an alternate rate of
interest to the LIBOR 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 14.1, 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 (5) 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. Until an alternate rate of interest shall be determined in accordance
with this clause (b) (but, in the case of the circumstances described in clause
(ii) of the first sentence of this Section 2.15(b), only to the extent the LIBOR
Screen Rate for such Interest Period is not available or published at such time
on a current basis), (x) any Notice of Conversion or Continuation that requests
the conversion of any Borrowing to, or continuation of any Borrowing as, a LIBOR
Loan shall be ineffective and (y) if any Notice of Conversion or Continuation
requests a LIBOR Loan, such Borrowing shall be made as an ABR Loan; 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.

 

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ARTICLE III

[RESERVED]

ARTICLE IV

FEES; COMMITMENTS

4.1    Upfront Fees. The Borrower agrees to pay on the Effective Date to each
Lender party to this Agreement on the Effective Date, as fee compensation, which
may take the form of OID, for the funding of such Lender’s Loan an upfront fee
(the “Upfront Fee”) in an amount equal to an original issue discount of 2% of
the stated principal amount of such Lender’s Loan made on the Effective Date.
Such Upfront Fee will be in all respects fully earned, due and payable on the
Effective Date and non-refundable and non-creditable thereafter and shall be
netted against Loans made by such Lender on the Effective Date.

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

ARTICLE V

PAYMENTS

5.1    Optional and Certain Other Prepayments and Repayments; Premium.

(a)    If the Borrower prepays, refinances, substitutes, replaces or is required
to repay, for any reason, whether by mandatory or optional prepayment, at
maturity or following acceleration of the maturity thereof (or if the maturity
of the Loans shall be accelerated under any provisions of Article XII), in
connection with an Event of Default and/or in connection with a voluntary or
involuntary Bankruptcy Event or otherwise, all or any part of the principal
balance of the Loans (including, without limitation, pursuant to any amendment,
waiver or consent to this Agreement that effectuates any such prepayment,
refinancing, substitution, replacement or other required repayment), then on the
date of such prepayment, refinancing, substitution, replacement or other
required repayment the Borrower shall pay to the Administrative Agent, for the
ratable benefit of the Lenders, an amount equal to (i) if such prepayment is
made prior to the date that is ninety (90) days prior to the Maturity Date, a
prepayment premium of 2.00% of the principal amount of the Loans subject to such
prepayment, refinancing, substitution, replacement or other required repayment
or (ii) if such prepayment is made on or after the date that is ninety (90) days
prior to the Maturity Date, 0% of the principal amount of the Loans subject to
such prepayment, refinancing, substitution, replacement or other required
repayment (the “Premium Amount”).

(b)    Each partial prepayment of (i) LIBOR Loans shall be in a minimum amount
of $500,000 and in multiples of $100,000 in excess thereof, and (ii) any ABR
Loans shall be in a minimum amount of $500,000 and in multiples of $100,000 in
excess thereof; provided that no partial prepayment of LIBOR Loans made pursuant
to a single Borrowing shall reduce the outstanding LIBOR Loans made pursuant to
such Borrowing to an amount less than $1,000,000 for such LIBOR Loans.

(c)    The Borrower shall give the Administrative Agent at the Administrative
Agent’s Office written notice of its intent to make such prepayment, the amount
of such prepayment and (in the case of LIBOR Loans) the specific Borrowing(s)
being prepaid or repaid, which notice shall be given by the Borrower no later
than 1:00 p.m. (New York City time) (i) in the case of LIBOR Loans, three

 

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Business Days prior to and (ii) in the case of ABR Loans on the date of such
prepayment and shall promptly be transmitted by the Administrative Agent to each
of the Lenders. Each such notice shall specify the date and amount of such
prepayment and the Type of Loans to be prepaid or repaid; provided, that such
prepayment obligation may be conditioned on the occurrence of any subsequent
event.

(d)    Amounts prepaid or repaid may not be reborrowed.

(e)    The Borrower acknowledges that any optional prepayments under this
Agreement prior to the Discharge of First Lien First Out Obligations are subject
to additional restrictions under the First Lien First Out Credit Agreement.

(f)    The Administrative Agent shall not be responsible for calculating the
Premium Amount.

5.2    Mandatory Prepayments.

(a)    Excess Cash Proceeds Prepayment Offer. Within five days after the date on
which the Excess Cash Proceeds exceeds $50,000,000, the Borrower shall offer to
the Lenders to apply the entire amount of Excess Cash Proceeds within 60 days to
prepay Loans and, if any Additional Pari Debt is then outstanding, to prepay
such Additional Pari Debt on a pro rata basis (determined on the basis of the
aggregate outstanding principal amount of the 2017 Term Loans and Additional
Pari Debt at such time) (such date of prepayment, the “Prepayment Date”) at a
price equal to (i) 100% of the principal amount thereof plus (ii) accrued but
unpaid interest, if any, to the date of such prepayment; provided that prior to
the Discharge of First Lien First Out Obligations, any such prepayment from
Excess Cash Proceeds shall only be required in an amount and to the extent
permitted by the First Lien First Out Credit Agreement at such time. The
Borrower shall notify the Administrative Agent in writing of any prepayment
pursuant to clause (a) at least 15 days prior to the Prepayment Date (or such
shorter time as the Administrative Agent may agree). Each such notice shall
specify the Prepayment Date and provide a reasonably detailed calculation of the
amount of such prepayment. The Administrative Agent will promptly notify each
Lender of the contents of the Borrower’s prepayment notice, and of the amount of
such Lender’s pro rata share of the prepayment. Each Lender will have the right
to refuse any prepayment pursuant to this Section 5.2(a) by giving written
notice of such refusal to the Administrative Agent within 10 days after such
Lender’s receipt of notice from the Administrative Agent of such notice of
prepayment (such refused amounts, the “Declined Proceeds”). The Borrower shall
make all such prepayments (other than Declined Proceeds) on the Prepayment Date.
The Borrower may retain such Declined Proceeds and apply them in a manner not
prohibited by this Agreement.

(b)    [Reserved].

(c)    LIBOR Interest Periods. In lieu of making any payment pursuant to this
Section 5.2 in respect of any LIBOR Loan, other than on the last day of the
Interest Period therefor, so long as no Event of Default shall have occurred and
be continuing, the Borrower at its option may deposit, in a corporate time
deposit account established on terms reasonably satisfactory to it, earning
interest at the then customary rate for accounts of such type, an amount equal
to the amount of the LIBOR Loan to be prepaid and such LIBOR Loan shall be
repaid on the last day of the Interest Period therefor in the required amount.
Such deposit shall constitute cash collateral for the LIBOR Loans to be so
prepaid; provided that the Borrower may at any time direct that such deposit be
applied to make the applicable payment required pursuant to this Section 5.2.

 

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5.3    Method and Place of Payment.

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

(b)    For purposes of computing interest or fees, any payments under this
Agreement that are made later than 2:00 p.m. (New York City time) shall be
deemed to have been made on the next succeeding Business Day in the sole
discretion of the Administrative Agent. Whenever any payment to be made
hereunder shall be stated to be due on a day that is not a Business Day, the due
date thereof shall be extended to the next succeeding Business Day and, with
respect to payments of principal, interest shall be payable during such
extension at the applicable rate in effect immediately prior to such extension.

5.4    Net Payments.

(a)    Any and all payments made by or on behalf of the Borrower or any
Guarantor under this Agreement or any other Credit Document shall be made free
and clear of, and without deduction or withholding for or on account of, any
Indemnified Taxes or Other Taxes; provided that if the Borrower or any Guarantor
or the Administrative Agent shall be required by applicable Requirements of Law
to deduct or withhold any Taxes from such payments, then (i) the Borrower or
such Guarantor or the Administrative Agent shall make such deductions or
withholdings as are reasonably determined by the Borrower, such Guarantor or the
Administrative Agent to be required by any applicable Requirement of Law,
(ii) the Borrower, such Guarantor or the Administrative Agent, as applicable,
shall timely pay the full amount deducted or withheld to the relevant
Governmental Authority within the time allowed and in accordance with applicable
Requirements of Law, and (iii) to the extent withholding or deduction is
required to be made on account of Indemnified Taxes or Other Taxes, the sum
payable by the Borrower or such Guarantor shall be increased as necessary so
that after making all required deductions and withholdings (including deductions
or withholdings applicable to additional sums payable under this Section 5.4)
the Administrative Agent or any Lender, as the case may be, receives an amount
equal to the sum it would have received had no such deductions or withholdings
been made. Whenever any Indemnified Taxes or Other Taxes are payable by the
Borrower or such Guarantor, as promptly as possible thereafter, the Borrower or
Guarantor shall send to the Administrative Agent for its own account or for the
account of such Lender, as the case may be, a certified copy of an official
receipt (or other evidence acceptable to such Lender, acting reasonably)
received by the Borrower or such Guarantor showing payment thereof. After any
payment of Taxes by any Credit Party or the Administrative Agent to a
Governmental Authority as provided in this Section 5.4, the Borrower shall
deliver to the Administrative Agent or the Administrative Agent shall deliver to
the Borrower, as the case may be, a copy of a receipt issued by such
Governmental Authority evidencing such payment, a copy of any return required by
laws to report such payment or other evidence of such payment reasonably
satisfactory to the Borrower or the Administrative Agent, as the case may be.

 

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(b)    The Borrower shall timely pay and shall indemnify and hold harmless the
Administrative Agent and each Lender with regard to any Other Taxes (whether or
not such Other Taxes were correctly or legally imposed or asserted by the
relevant Governmental Authority).

(c)    The Borrower shall indemnify and hold harmless the Administrative Agent
and each Lender within 15 Business Days after written demand therefor, for the
full amount of any Indemnified Taxes or Other Taxes imposed on the
Administrative Agent or such Lender, as the case may be (including Indemnified
Taxes or Other Taxes imposed or asserted on or attributable to amounts payable
under this Section 5.4), and any reasonable expenses arising therefrom or with
respect thereto, whether or not such Indemnified Taxes or Other Taxes were
correctly or legally imposed or asserted by the relevant Governmental Authority.
A certificate setting forth in reasonable detail the basis and calculation of
the amount of such payment or liability delivered to the Borrower by a Lender or
the Administrative Agent (as applicable) on its own behalf or on behalf of a
Lender shall be conclusive absent manifest error.

(d)    Each Lender shall deliver to the Borrower and the Administrative Agent,
at such time or times reasonably requested by the Borrower or the Administrative
Agent, such properly completed and executed documentation prescribed by
applicable law and such other reasonably requested information as will permit
the Borrower or the Administrative Agent, as the case may be, to determine
(A) whether or not any payments made hereunder or under any other Credit
Document are subject to Taxes, (B) if applicable, the required rate of
withholding or deduction, and (C) such Lender’s entitlement to any available
exemption from, or reduction of, applicable Taxes in respect of any payments to
be made to such Lender by any Credit Party pursuant to any Credit Document or
otherwise to establish such Lender’s status for withholding tax purposes in the
applicable jurisdiction. In addition, any Lender, if requested by the Borrower
or the Administrative Agent, shall deliver such other documentation prescribed
by applicable law or reasonably requested by the Borrower or the Administrative
Agent as will enable the Borrower or the Administrative Agent to determine
whether or not such Lender is subject to backup withholding or information
reporting requirements. Notwithstanding anything to the contrary in the
preceding two sentences, the completion, execution and submission of such
documentation (other than the documentation set forth in Section 5.4(e), (h) and
(i)) shall not be required if in the Lender’s reasonable judgment such
completion, execution or submission would subject such Lender to any material
unreimbursed cost or expense or would materially prejudice the legal or
commercial position of such Lender.

(e)    Without limiting the generality of the foregoing, each Non-U.S. Lender
with respect to any Loan made to the Borrower shall, to the extent it is legally
entitled to do so:

(i)    deliver to the Borrower and the Administrative Agent, prior to the date
on which the first payment to the Non-U.S. Lender is due hereunder, two copies
of (A) in the case of a Non-U.S. Lender claiming exemption from U.S. federal
withholding tax under Section 871(h) or 881(c) of the Code with respect to
payments of “portfolio interest”, United States Internal Revenue Service Form
W-8BEN-E (or any applicable successor form) (together with a certificate
representing that such Non-U.S. Lender is not a bank for purposes of
Section 881(c) of the Code, is not a 10% shareholder (within the meaning of
Section 871(h)(3)(B) of the Code) of the Borrower, is not a CFC related to the
Borrower (within the meaning of Section 864(d)(4) of the Code) and the interest
payments in question are not effectively connected with the United States trade
or business conducted by such Lender), (B) Internal Revenue Service Form
W-8BEN-E or Form W-8ECI (or any applicable successor form), in each case
properly completed and duly executed by such Non-U.S. Lender claiming complete
exemption from, or reduced rate of, U.S. Federal withholding tax on payments by
the Borrower under this Agreement, (C) Internal Revenue Service Form W-8IMY (or
any applicable successor form) and all necessary attachments (including the
forms described in clauses (A) and (B) above, as required) or (D) any other

 

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form prescribed by applicable law as a basis for claiming exemption from or a
reduction in United States federal withholding tax duly completed together with
such supplementary documentation as may be prescribed by applicable law to
permit the Borrower to determine the withholding or deduction required to be
made; and

(ii)    deliver to the Borrower and the Administrative Agent two further copies
of any such form or certification (or any applicable successor form) on or
before the date that any such form or certification expires or becomes obsolete
or invalid, after the occurrence of any event requiring a change in the most
recent form previously delivered by it to the Borrower, and from time to time
thereafter if reasonably requested by the Borrower and the Administrative Agent;

unless in any such case any Change in Law has occurred prior to the date on
which any such delivery would otherwise be required that renders any such form
inapplicable or would prevent such Non-U.S. Lender from duly completing and
delivering any such form with respect to it and such Non-U.S. Lender promptly so
advises the Borrower and the Administrative Agent. Each Person that shall become
a Participant pursuant to Section 14.6 or a Lender pursuant to Section 14.6
shall, upon the effectiveness of the related transfer, be required to provide
all the forms and statements required pursuant to this Section 5.4(e); provided
that in the case of a Participant such Participant shall furnish all such
required forms and statements to the Lender from which the related participation
shall have been purchased.

(f)    If any Lender or the Administrative Agent, as applicable, determines, in
its sole discretion, that it had received and retained a refund of an
Indemnified Tax or Other Tax for which a payment has been made by the Borrower
or any Guarantor pursuant to this Agreement or any other Credit Document, which
refund in the good faith judgment of such Lender or the Administrative Agent, as
the case may be, is attributable to such payment made by the Borrower or any
Guarantor, then such Lender or the Administrative Agent, as the case may be,
shall reimburse the Borrower or such Guarantor for such amount (net of all
out-of-pocket expenses of such Lender or the Administrative Agent, as the case
may be, and without interest other than any interest received thereon from the
relevant Governmental Authority with respect to such refund) as such Lender or
the Administrative Agent, as the case may be, determines in its sole discretion
to be the proportion of the refund as will leave it, after such reimbursement,
in no better or worse position (taking into account expenses or any taxes
imposed on the refund) than it would have been in if the payment had not been
required; provided that the Borrower or such Guarantor, upon the request of such
Lender or the Administrative Agent, agrees to repay the amount paid over to the
Borrower or such Guarantor (plus any penalties, interest or other charges
imposed by the relevant Governmental Authority) to such Lender or the
Administrative Agent in the event such Lender or the Administrative Agent is
required to repay such refund to such Governmental Authority. In such event,
such Lender or the Administrative Agent, as the case may be, shall, at the
Borrower’s request, provide the Borrower with a copy of any notice of assessment
or other evidence of the requirement to repay such refund received from the
relevant Governmental Authority (provided that such Lender or the Administrative
Agent may delete any information therein that it deems confidential). Each
Lender and the Administrative Agent shall claim any refund that it determines is
available to it, unless it concludes in its sole discretion that it would be
adversely affected by making such a claim. No Lender nor the Administrative
Agent shall be obliged to make available its tax returns (or any other
information relating to its taxes that it deems confidential) to any Credit
Party in connection with this clause (f) or any other provision of this
Section 5.4.

(g)    If the Borrower determines that a reasonable basis exists for contesting
a Tax, each Lender or the Administrative Agent, as the case may be, shall use
reasonable efforts to cooperate with the Borrower as the Borrower may reasonably
request in challenging such Tax. The Borrower shall indemnify and hold each
Lender and the Administrative Agent harmless against any out-of-pocket expenses
incurred by such Person in connection with any request made by the Borrower
pursuant to this

 

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Section 5.4(g). Nothing in this Section 5.4(g) shall obligate any Lender or the
Administrative Agent to take any action that such Person, in its sole judgment,
determines may result in a material detriment to such Person.

(h)    The Administrative Agent and each Lender that is a United States person
under Section 7701(a)(30) of the Code shall deliver to the Borrower and the
Administrative Agent two Internal Revenue Service Forms W-9 (or substitute or
successor form), properly completed and duly executed, certifying that such
Person is exempt from United States federal backup withholding (i) on or prior
to the Effective Date (or on or prior to the date it becomes a party to this
Agreement), (ii) on or before the date that such form expires or becomes
obsolete or invalid, (iii) after the occurrence of a change in Person’s
circumstances requiring a change in the most recent form previously delivered by
it to the Borrower and the Administrative Agent, and (iv) from time to time
thereafter if reasonably requested by the Borrower or the Administrative Agent.

(i)    If a payment made to any Lender or the Administrative Agent under this
Agreement or any other Credit Document would be subject to U.S. federal
withholding tax imposed by FATCA if such Person were to fail to comply with the
applicable reporting requirements of FATCA (including those contained in
Section 1471(b) or 1472(b) of the Code, as applicable), such Person shall
deliver to the Borrower and the Administrative Agent at the time or times
prescribed by law and at such time or times reasonably requested by the Borrower
or the Administrative Agent such documentation prescribed by applicable law
(including as prescribed by Section 1471(b)(3)(C)(i) of the Code) and such
additional documentation reasonably requested by the Borrower or the
Administrative Agent as may be necessary for the Borrower and the Administrative
Agent to comply with their obligations under FATCA, to determine that such
Person has or has not complied with such Person’s obligations under FATCA or to
determine the amount, if any, to deduct and withhold from such payment. Solely
for purposes of this Section 5.4(i), “FATCA” shall include any amendments made
to FATCA after the date of this Agreement.

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

(k)    The agreements in this Section 5.4 shall survive the termination of this
Agreement and the payment of the Loans and all other amounts payable hereunder.

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

5.6    Limit on Rate of Interest.

(a)    No Payment Shall Exceed Lawful Rate. Notwithstanding any other term of
this Agreement, the Borrower shall not be obligated to pay any interest or other
amounts under or in connection with this Agreement or otherwise in respect to
any of the Obligations in excess of the amount or rate permitted under or
consistent with any applicable law, rule or regulation.

 

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(b)    Payment at Highest Lawful Rate. If the Borrower is not obliged to make a
payment that it would otherwise be required to make, as a result of
Section 5.6(a), the Borrower shall make such payment to the maximum extent
permitted by or consistent with applicable laws, rules and regulations.

(c)    Adjustment if Any Payment Exceeds Lawful Rate. If any provision of this
Agreement or any of the other Credit Documents would obligate the Borrower or
any other Credit Party to make any payment of interest or other amount payable
to any Lender in an amount or calculated at a rate that would be prohibited by
any applicable Requirement of Law, then notwithstanding such provision, such
amount or rate shall be deemed to have been adjusted with retroactive effect to
the maximum amount or rate of interest, as the case may be, as would not be so
prohibited by applicable Requirements of Law, such adjustment to be effected, to
the extent necessary, by reducing the amount or rate of interest required to be
paid by the Borrower to the affected Lender under Section 2.9.

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

ARTICLE VI

CONDITIONS PRECEDENT TO EFFECTIVENESS

This Agreement shall be effective upon the satisfaction of the following
conditions precedent:

6.1    Certain Credit Documents and Other Matters. The Administrative Agent
shall have received (including by facsimile or other electronic means):

(a)    this Agreement (including all Schedules and Exhibits hereto), executed
and delivered by a duly Authorized Officer of the Borrower, the Administrative
Agent and each Lender;

(b)    the First Out Collateral Agency Agreement, executed and delivered by a
duly Authorized Officer of the Borrower, the Administrative Agent, the First
Lien First Out Administrative Agent and the Collateral Agent.

(c)    the Security Agreement and the Pledge Agreement, executed and delivered
by a duly Authorized Officer of the Borrower, the Guarantors and the First Lien
First Out Administrative Agent.

(d)    a copy of the executed seventh amendment to the First Lien First Out
Credit Amendment which shall be in form and substance reasonably acceptable to
the Joint Lead Arrangers;

(e)    a Promissory Note executed by the Borrower in favor of each Lender that
has requested a Promissory Note at least three Business Days prior to the
Effective Date;

(f)    the Guarantee, executed and delivered by a duly Authorized Officer of
each Person that is a Guarantor as of the Effective Date and the Guarantee shall
be in full force and effect as of the Effective Date; and

 

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(g)    each of the Security Documents, other than any Mortgages (the time period
for delivery of which shall be governed by Section 10.9), executed and delivered
by a duly Authorized Officer of each Person that is a grantor, pledger,
mortgagor or trustor under any Security Document as of the Effective Date, and
the Collateral Agent in respect of all collateral under the First Lien First Out
Security Documents.

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

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

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

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

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

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

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

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

 

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6.10    Uniform Commercial Code Searches. Appropriate Uniform Commercial Code
search results in respect of the Credit Parties, as may be reasonably requested
by the Joint Lead Arrangers, from Delaware and any other relevant jurisdiction,
reflecting no prior Liens encumbering the properties of any Credit Party, other
than those which shall be released prior to or contemporaneously with the
Effective Date and Permitted Liens.

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

ARTICLE VII

[RESERVED]

ARTICLE VIII

CONDITIONS PRECEDENT TO ALL CREDIT EVENTS

The agreement of each Lender to make any Loan requested to be made by it on any
date is subject to the satisfaction of the following conditions precedent:

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

8.2    Notice of Borrowing.

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

 

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ARTICLE IX

REPRESENTATIONS, WARRANTIES AND AGREEMENTS

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

9.1    Corporate Status. Each of the Borrower and each Subsidiary (a) is a duly
organized and validly existing corporation or other entity in good standing
under the laws of the jurisdiction of its organization, (b) has the corporate or
other organizational power and authority to own its property and assets and to
transact the business in which it is engaged, (c) has duly qualified and is
authorized to do business and is in good standing in all jurisdictions where it
is required to be so qualified, and (d) is in compliance with all Requirements
of Law, except in each case referred to in clauses (b), (c) and (d), where the
failure to be so qualified would not reasonably be expected to result in a
Material Adverse Effect.

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

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

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

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

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

 

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

9.8    True and Complete Disclosure.

(a)    None of the written factual information and written data (taken as a
whole) furnished by or on behalf of the Borrower, any of the Subsidiaries or any
of their respective authorized representatives to the Administrative Agent, any
Joint Lead Arranger, Joint Bookrunner and/or any Lender on or before the
Effective Date (including all such information and data contained in the Credit
Documents) for purposes of or in connection with this Agreement or any
transaction contemplated herein contained any untrue statement of any material
fact or omitted to state any material fact necessary to make such information
and data (taken as a whole) not materially misleading at such time (after giving
effect to all supplements so furnished prior to such time of the Borrower as
filed with the SEC from time to time) in light of the circumstances under which
such information or data was furnished; it being understood and agreed that for
purposes of this Section 9.8(a), such factual information and data shall not
include pro forma financial information, projections or estimates (including
financial estimates, forecasts and other forward-looking information) and
information of a general economic or general industry nature.

(b)    The projections (including financial estimates, forecasts and other
forward-looking information) contained in the information and data referred to
in Section 9.8(a) were based on good faith estimates and assumptions believed by
the Borrower to be reasonable at the time made; it being recognized by the
Administrative Agent and the Lenders that such projections are as to future
events and are not to be viewed as facts, the projections are subject to
significant uncertainties and contingencies, many of which are beyond the
control of the Borrower and the Subsidiaries, that no assurance can be given
that any particular projections will be realized and that actual results during
the period or periods covered by any such projections may differ from the
projected results and such differences may be material.

9.9    Financial Condition; Financial Statements.

(a)    On the Effective Date, the Historical Financial Statements present fairly
in all material respects the consolidated financial position of the Borrower and
the consolidated Subsidiaries at the dates of such information and for the
period covered thereby and have been prepared in accordance with GAAP
consistently applied except to the extent provided in the notes thereto, if any,
subject, in the case of the unaudited interim financial information, to changes
resulting from audit, normal year-end adjustments and to the absence of
footnotes.

(b)    On the Effective Date, neither the Borrower nor any Subsidiary has any
material Indebtedness (including Disqualified Stock) other than Indebtedness
arising under the Credit Documents, First Lien First Out Obligations, 2016 Term
Loans, Permitted Second Lien Indebtedness, Existing Senior Notes, any material
guarantee obligations, contingent liabilities other than liabilities created
under the OPC Related Transactions, off balance sheet liabilities, partnership
liabilities for taxes or unusual forward or long-term commitments that, in each
case, are not reflected or provided for in the Historical Financial Statements,
except as would not reasonably be expected to have a Material Adverse Effect.

(c)    Since the date of the financial statements most recently delivered
pursuant to Section 10.1(a), and only with respect to the Effective Date, since
December 31, 2016, to the actual knowledge of any Authorized Officer of the
Borrower, there has been no Material Adverse Effect.

9.10    Tax Matters. Except where the failure of which would not be reasonably
expected to have a Material Adverse Effect, (a) each of the Borrower and the
Subsidiaries has filed all federal income

 

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

9.11    Compliance with ERISA.

(a)    Each Plan is in compliance with ERISA, the Code and any applicable
Requirement of Law; no Reportable Event has occurred (or is reasonably likely to
occur) with respect to any Plan; each Plan has satisfied the minimum funding
standards (within the meaning of Section 412 of the Code or Section 302 of
ERISA) applicable to such Plan, and there has been no determination that any
such Plan is, or is expected to be, in “at risk” status (within the meaning of
Section 4010(d)(2) of ERISA); none of the Borrower or any ERISA Affiliate has
incurred (or is reasonably likely to incur) any liability to or on account of a
Plan or a Multiemployer Plan pursuant to Section 409, 502(i), 502(l), 515, 4062,
4063, 4064, 4069, 4201 or 4204 of ERISA or Section 4971 or 4975 of the Code or
has been notified in writing that it will incur any liability under any of the
foregoing Sections with respect to any Plan or Multiemployer Plan; no
proceedings have been instituted to terminate or to reorganize any Plan or to
appoint a trustee to administer any Plan, and no written notice of any such
proceedings has been given to the Borrower or any ERISA Affiliate; no
Multiemployer Plan is insolvent or in reorganization, and no written notice of
any such insolvency or reorganization has been given to the Borrower or any
ERISA Affiliate; and no lien imposed under the Code or ERISA on the assets of
the Borrower or any ERISA Affiliate exists (or is reasonably likely to exist)
nor has the Borrower or any ERISA Affiliate been notified in writing that such a
lien will be imposed on the assets of the Borrower or any ERISA Affiliate on
account of any Plan or a Multiemployer Plan, except to the extent that a breach
of any of the representations, warranties or agreements in this Section 9.11(a)
would not result, individually or in the aggregate, in an amount of liability
that would be reasonably likely to have a Material Adverse Effect. No Plan has
an Unfunded Current Liability that would, individually or when taken together
with any other liabilities referenced in this Section 9.11(a), be reasonably
likely to have a Material Adverse Effect. With respect to Multiemployer Plans,
the representations and warranties in this Section 9.11(a), other than any made
with respect to liability under Section 4201 or 4204 of ERISA, are made to the
knowledge of the Borrower.

(b)    All Foreign Plans are in compliance with, and have been established,
administered and operated in accordance with, the terms of such Foreign Plans
and applicable law, except for any failure to so comply, establish, administer
or operate the Foreign Plans as would not reasonably be expected to have a
Material Adverse Effect. All contributions or other payments which are due with
respect to each Foreign Plan have been made in full and there are no funding
deficiencies thereunder, except to the extent any such events would not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect.

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

9.13    Environmental Laws.

(a)    On the Effective Date, except as would not reasonably be expected to have
a Material Adverse Effect as of the Effective Date: (i) the Borrower and each of
the Subsidiaries and all Oil

 

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and Gas Properties are in compliance with all applicable Environmental Laws;
(ii) neither the Borrower nor any Subsidiary has received written notice of any
Environmental Claim or any other liability under any applicable Environmental
Law; (iii) neither the Borrower nor any Subsidiary is conducting any
investigation, removal, remedial or other corrective action pursuant to any
applicable Environmental Law at any location; and (iv) there has been no release
or, to the knowledge of any Authorized Officer of the Borrower, threatened
release of any Hazardous Materials at, on or under any Oil and Gas Properties
currently owned or leased by the Borrower or any of its Subsidiaries.

(b)    On the Effective Date, except as would not reasonably be expected to have
a Material Adverse Effect as of the Effective Date, neither the Borrower nor any
of the Subsidiaries has treated, stored, transported, released or disposed or
arranged for disposal or transport for disposal of Hazardous Materials at, on,
under or from any currently or formerly owned or leased Oil and Gas Properties
or facility in a manner that would reasonably be expected to give rise to
liability of the Borrower or any Subsidiary under any applicable Environmental
Law.

9.14    Properties.

(a)    Each Credit Party has good and defensible title to its material Oil and
Gas Properties and good title to its material personal properties (in each case,
subject to any Permitted Liens which are permitted to attach thereto) and owns
such Oil and Gas Properties, in each case, free and clear of all Liens other
than Liens permitted by Section 11.2. After giving full effect to the Liens
permitted by Section 11.2, the Borrower or the Subsidiary specified as the owner
owns the working interests and net revenue interests attributable to the
Hydrocarbon Interests as reflected in the most recently delivered Reserve
Report, and the ownership of such properties shall not in any material respect
obligate the Borrower or such Subsidiary to bear the costs and expenses relating
to the maintenance, development and operations of each such property in an
amount in excess of the working interest of each property set forth in the most
recently delivered Reserve Report that is not offset by a corresponding
proportionate increase in the Borrower’s or such Subsidiary’s net revenue
interest in such property.

(b)    All material leases and agreements necessary for the conduct of the
business of the Borrower and the Subsidiaries are valid and subsisting, in full
force and effect, except to the extent that any such failure to be valid or
subsisting would not reasonably be expected to have a Material Adverse Effect.

(c)    The rights and properties presently owned, leased or licensed by the
Credit Parties including all easements and rights of way, include all rights and
properties necessary to permit the Credit Parties to conduct their respective
businesses as currently conducted, except to the extent any failure to have any
such rights or properties would not reasonably be expected to have a Material
Adverse Effect.

(d)    All of the properties of the Borrower and the Subsidiaries that are
reasonably necessary for the operation of their businesses are in good working
condition and are maintained in accordance with prudent business standards,
except to the extent any failure to satisfy the foregoing would reasonably be
expected to have a Material Adverse Effect.

9.15    Solvency. The Borrower, on a consolidated basis with its Subsidiaries,
is Solvent and neither the Borrower nor any of its Subsidiaries presently
intends to or presently anticipates it will (a) be or become subject to a
voluntary case under any debt relief law, (b) make a general assignment for the
benefit of creditors or (c) have a custodian, conservator, receiver or similar
official appointed for such Person or any substantial part of such Person’s
assets,, and no such Person presently expects or presently anticipates it will
to (w) be or become subject to an involuntary case under any debt relief law,
(x) be

 

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subject to a forced liquidation or otherwise be adjudicated as, or determined by
any Governmental Authority having regulatory authority over such Person or its
assets to be, insolvent or bankrupt, (y) make a general assignment for the
benefit of creditors as a result of any direct action by any other Person or
(z) have a custodian, conservator, receiver or similar official appointed for
such Person or any substantial part of such Person’s assets as a result of any
direct action by any other Person.

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

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

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

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

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

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

9.22    Anti-Corruption Laws and Sanctions. The Borrower has implemented and
maintains in effect policies and procedures designed to ensure compliance by the
Borrower, its Subsidiaries and its directors, officers, employees and agents
with Anti-Corruption Laws and applicable Sanctions, and the Borrower, its
Subsidiaries and their respective officers and employees and to the knowledge of
the Authorized Officers of the Borrower, its directors and agents, are in
compliance with Anti-Corruption Laws and applicable Sanctions in all material
respects and are not knowingly engaged in any activity that

 

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would reasonably be expected to result in the Borrower being designated as a
Sanctioned Person. None of (a) the Borrower, any of its Subsidiaries or to the
knowledge of the Authorized Officers of the Borrower or such Subsidiary any of
their respective directors, officers or employees, or (b) to the knowledge of
the Authorized Officers of the Borrower any agent of the Borrower or any of its
Subsidiaries that will act in any capacity in connection with or benefit from
the Facilities, is a Sanctioned Person. No Borrowing, use of proceeds or other
Transactions will violate Anti-Corruption Laws or applicable Sanctions.

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

ARTICLE X

AFFIRMATIVE COVENANTS

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

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

(a)    Annual Financial Statements. As soon as available and in any event within
five (5) Business Days after the date on which such financial statements are
required to be filed with the SEC (after giving effect to any permitted
extensions) (or, if such financial statements are not required to be filed with
the SEC, on or before the date that is 90 days after the end of each such fiscal
year), the audited consolidated balance sheets of the Borrower and the
Subsidiaries, as at the end of such fiscal year, and the related consolidated
statements of operations, equity and cash flows for such fiscal year, setting
forth comparative consolidated figures for the preceding fiscal years, all in
reasonable detail and prepared in accordance with GAAP, and, certified by
independent certified public accountants of recognized national standing whose
opinion shall not be materially qualified with a “going concern” or like
qualification or exception (other than with respect to, or resulting from,
(x) the occurrence of the Maturity Date within one year from the date such
opinion is delivered or (y) any potential inability to satisfy the Financial
Performance Covenants, the First Lien First Out Financial Performance Covenants
or the 2016 Term Loan Financial Performance Covenants on a future date or in a
future period), together in any event with a certificate of such accounting firm
stating that in the course of either (i) its regular audit of the business of
the Borrower and its consolidated Subsidiaries, which audit was conducted in
accordance with generally accepted auditing standards or (ii) performing certain
other procedures permitted by professional standards, such accounting firm has
obtained no knowledge of any Event of Default relating to the Financial
Performance Covenant that has occurred and is continuing or, if in the opinion
of such accounting firm such an Event of Default has occurred and is continuing,
a statement as to the nature thereof, together with, if not otherwise required
to be filed with the SEC, a customary management discussion and analysis
describing the financial condition and results of operations of the Borrower and
its Subsidiaries.

(b)    Quarterly Financial Statements. As soon as available and in any event
within five (5) Business Days after the date on which such financial statements
are required to be filed with the SEC (after giving effect to any permitted
extensions) with respect to each of the first three quarterly accounting periods
in each fiscal year of the Borrower (or, if such financial statements are not
required to be filed with the SEC, on or before the date that is 60 days after
the end of each such quarterly accounting period), the consolidated balance
sheets of the Borrower and the Subsidiaries, as at the end of such quarterly
period and the related consolidated statements of operations, equity and cash
flows for such quarterly accounting period and for the elapsed portion of the
fiscal year ended with the last day of such quarterly period, and setting forth
comparative consolidated figures for the related periods in the prior

 

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fiscal year or, in the case of such consolidated balance sheet, for the last day
of the prior fiscal year, all of which shall be certified by an Authorized
Officer of the Borrower as fairly presenting in all material respects the
financial condition, results of operations, equity and cash flows, of the
Borrower and its consolidated Subsidiaries in accordance with GAAP, subject to
changes resulting from normal year-end adjustments and the absence of footnotes,
together with, if not otherwise required to be filed with the SEC, a customary
management discussion and analysis describing the financial condition and
results of operations of the Borrower and its Subsidiaries.

(c)    Officer’s Certificates. At the time of the delivery of the financial
statements provided for in Section 10.1(a) and (b), a certificate of an
Authorized Officer of the Borrower to the effect that no Default or Event of
Default exists or, if any Default or Event of Default does exist, specifying the
nature and extent thereof, which certificate shall set forth (i) the
calculations required to establish whether the Borrower and its Subsidiaries
were in compliance with the Financial Performance Covenant as at the end of such
fiscal year or period, as the case may be and (ii) a specification of any change
in the identity of the Material Subsidiaries and Guarantors as at the end of
such fiscal year or period, as the case may be, from the Material Subsidiaries
and Guarantors, respectively, provided to the Lenders on the Effective Date or
the most recent fiscal year or period, as the case may be.

(d)    Notice of Default; Litigation. Promptly after an Authorized Officer of
the Borrower obtains actual knowledge thereof, notice of (i) the occurrence of
any event that constitutes a Default or Event of Default, which notice shall
specify the nature thereof, the period of existence thereof and what action the
Borrower proposes to take with respect thereto and (ii) any litigation or
governmental proceeding pending against the Borrower or any of the Subsidiaries
for which it would reasonably be expected that an adverse determination is
probable, and that such determination would result in a Material Adverse Effect.

(e)    Environmental Matters. Promptly after an Authorized Officer of the
Borrower obtains written notice of any Governmental Authority of any one or more
of the following environmental matters, unless such environmental matters would
not, individually, or when aggregated with all other such matters, be reasonably
expected to result in a Material Adverse Effect, notice of:

(i)    any pending or threatened Environmental Claim against any Credit Party or
any Oil and Gas Properties;

(ii)    any condition or occurrence on any Oil and Gas Properties that (A) would
reasonably be expected to result in noncompliance by any Credit Party with any
applicable Environmental Law or (B) would reasonably be anticipated to form the
basis of an Environmental Claim against any Credit Party or any Oil and Gas
Properties;

(iii)    any condition or occurrence on any Oil and Gas Properties that would
reasonably be anticipated to cause such Oil and Gas Properties to be subject to
any restrictions on the ownership, occupancy, use or transferability of such Oil
and Gas Properties under any Environmental Law; and

(iv)    the conduct of any investigation, or any removal, remedial or other
corrective action in response to the actual or alleged presence, release or
threatened release of any Hazardous Material on, at, under or from any Oil and
Gas Properties.

All such notices shall describe in reasonable detail the nature of the claim,
investigation, condition, occurrence or removal or remedial action and the
response thereto.

 

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(f)    Other Information. (i) Promptly upon filing thereof, copies of any
filings (including on Form 10-K, 10-Q or 8-K) or registration statements with,
and reports to, the SEC or any analogous Governmental Authority in any relevant
jurisdiction by the Borrower or any of the Subsidiaries (other than amendments
to any registration statement (to the extent such registration statement, in the
form it becomes effective, is delivered to the Administrative Agent), exhibits
to any registration statement and, if applicable, any registration statements on
Form S-8), (ii) contemporaneously with the delivery thereof to such other
Person, copies of all financial statements, proxy statements, notices and
reports that the Borrower or any of the Subsidiaries shall send to the First
Lien First Out Administrative Agent, the First Lien First Out Lenders and/or the
holders of any publicly issued debt of the Borrower and/or any of the
Subsidiaries, in each case in their capacity as such holders, lenders or agents
(in each case to the extent not theretofore delivered to the Administrative
Agent pursuant to this Agreement) and (iii) with reasonable promptness, but
subject to the limitations set forth in the last sentences of Section 10.2(a)
and Section 14.16, such other information (financial or otherwise) as any Lender
(acting through the Administrative Agent) may reasonably request in writing from
time to time.

(g)    Quarterly Investor Calls. Quarterly, not more than four times each fiscal
year, participate in a conference call for investors that the Lenders are
permitted to join to discuss the financial condition and results of operations
of the Borrower and its Subsidiaries for the most recently-ended quarterly
period for which financial statements have been delivered.

(h)    Mortgage Filing Status. If requested by any Lender, the Borrower shall
provide an update to the Administrative Agent for the benefit of such Lender as
to the status of the filings of any Mortgages required pursuant to Sections 10.9
or 10.10(a). Upon the completion of the filing of each of the Mortgages required
pursuant to Sections 10.9 or 10.10(a) with respect to properties owned on the
Effective Date, the Borrower shall provide notice to the Administrative Agent
and the Administrative Agent shall make such notice available to each of the
Lenders in accordance with its customary practice.

Documents required to be delivered pursuant to Sections 10.1(a) and (b) and this
Section 10.1(f) may be delivered electronically and if so delivered, shall be
deemed to have been delivered on the date (i) on which the Borrower posts such
documents, or provides a link thereto on the Borrower’s website on the Internet
at the website address listed on Schedule 14.2, (ii) on which such documents are
transmitted by electronic mail to the Administrative Agent or (iii) on which
such documents are filed of record with the SEC; provided that the Borrower
shall notify (which may be by facsimile or electronic mail) the Administrative
Agent of the posting of any such documents and provide to the Administrative
Agent by electronic mail electronic versions (i.e., soft copies) of such
documents (except that no such notice shall be required to the extent such
documents are filed on record with the SEC). Notwithstanding anything contained
herein, in every instance the Borrower shall be required to provide paper copies
of the certificates required by Section 10.1(c) to the Administrative Agent.
Each Lender shall be solely responsible for timely accessing posted documents or
requesting delivery of such documents from the Administrative Agent and
maintaining its copies of such documents.

The Borrower hereby acknowledges that (a) the Administrative Agent and/or the
Joint Lead Arrangers may, but shall not be obligated to, make available to the
Lenders materials and/or information provided by or on behalf of the Borrower
hereunder (collectively, “Borrower Materials”) by posting the Borrower Materials
on IntraLinks, Syndtrak, ClearPar, or a substantially similar electronic
transmission system (the “Platform”) and (b) certain of the Lenders (each, a
“Public Lender”) may have personnel who do not wish to receive material
non-public information with respect to the Borrower or its Affiliates, or the
respective securities of any of the foregoing, and who may be engaged in
investment and other market-related activities with respect to such Persons’
securities. The Borrower hereby agrees that it will use commercially reasonable
efforts to identify that portion of the Borrower Materials that may be
distributed to the Public Lenders and that (w) all such Borrower Materials shall
be clearly and

 

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conspicuously marked “PUBLIC” which, at a minimum, shall mean that the word
“PUBLIC” shall appear prominently on the first page thereof; (x) by marking
Borrower Materials “PUBLIC,” the Borrower shall be deemed to have authorized the
Administrative Agent, the Joint Lead Arrangers and the Lenders to treat such
Borrower Materials as not containing any material non-public information
(although it may be sensitive and proprietary) with respect to the Borrower or
its securities for purposes of United States federal and state securities laws;
(y) all Borrower Materials marked “PUBLIC” are permitted to be made available
through a portion of the Platform designated “Public Side Information;” and
(z) the Administrative Agent and the Joint Lead Arrangers shall be entitled to
treat any Borrower Materials that are not marked “PUBLIC” as being suitable only
for posting on a portion of the Platform not designated “Public Side
Information.”

10.2    Books, Records and Inspections.

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

(b)    The Borrower will, and will cause each of the Subsidiaries to, maintain
proper books of record and account, in which entries that are full, true and
correct in all material respects and are in conformity with GAAP consistently
applied shall be made of all material financial transactions and matters
involving the assets and business of the Borrower or such Subsidiary, as the
case may be.

10.3    Maintenance of Insurance. The Borrower will, and will cause each
Subsidiary to, at all times maintain in full force and effect, pursuant to
self-insurance arrangements or with insurance companies that the Borrower
believes (in the good faith judgment of the management of the Borrower) are
financially sound and responsible at the time the relevant coverage is placed or
renewed, insurance in at least such amounts (after giving effect to any
self-insurance which the Borrower believes (in the good

 

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

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

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

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

10.7    ERISA.

(a)    Promptly after the Borrower or any ERISA Affiliate knows or has reason to
know of the occurrence of any of the following events that, individually or in
the aggregate (including in the aggregate such events previously disclosed or
exempt from disclosure hereunder, to the extent the liability therefor remains
outstanding), would be reasonably likely to have a Material Adverse Effect, the
Borrower will deliver to the Administrative Agent a certificate of an Authorized
Officer or any other

 

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senior officer of the Borrower setting forth details as to such occurrence and
the action, if any, that the Borrower or such ERISA Affiliate is required or
proposes to take, together with any notices (required, proposed or otherwise)
given to or filed with or by the Borrower, such ERISA Affiliate, the PBGC, a
Plan participant (other than notices relating to an individual participant’s
benefits) or the Plan administrator with respect thereto: that a Reportable
Event has occurred; that an application is to be made to the Secretary of the
Treasury for a waiver or modification of the minimum funding standard (including
any required installment payments) or an extension of any amortization period
under Section 412 of the Code with respect to a Plan; that a Plan having an
Unfunded Current Liability has been or is to be terminated, or a Multiemployer
Plan is to be reorganized, partitioned or declared insolvent, under Title IV of
ERISA (including the giving of written notice thereof); that a Plan has an
Unfunded Current Liability that has or will result in a lien under ERISA or the
Code; that a proceeding has been instituted against the Borrower or an ERISA
Affiliate pursuant to Section 515 of ERISA to collect a delinquent contribution
to a Multiemployer Plan; that the PBGC has notified the Borrower or any ERISA
Affiliate of its intention to appoint a trustee to administer any Plan; that the
Borrower or any ERISA Affiliate has failed to make a required installment or
other payment pursuant to Section 412 of the Code with respect to a Plan; or
that the Borrower or any ERISA Affiliate has incurred or will incur (or has been
notified in writing that it will incur) any liability (including any contingent
or secondary liability) to or on account of a Plan or a Multiemployer Plan
pursuant to Section 409, 502(i), 502(l), 515, 4062, 4063, 4064, 4069, 4201 or
4204 of ERISA or Section 4971 or 4975 of the Code.

(b)    Promptly following any request therefor, the Borrower will deliver to the
Administrative Agent copies of (i) any documents described in Section 101(k) of
ERISA that the Borrower and any of its Subsidiaries or any ERISA Affiliate may
request with respect to any Multiemployer Plan and (ii) any notices described in
Section 101(l) of ERISA that the Borrower and any of its Subsidiaries or any
ERISA Affiliate may request with respect to any Multiemployer Plan; provided
that if the Borrower, any of its Subsidiaries or any ERISA Affiliate has not
requested such documents or notices from the administrator or sponsor of the
applicable Multiemployer Plan, the Borrower, the applicable Subsidiary(ies) or
the ERISA Affiliate(s) shall promptly, following a request from the
Administrative Agent, make a request for such documents or notices from such
administrator or sponsor and shall provide copies of such documents and notices
promptly after receipt thereof.

10.8    Maintenance of Properties. The Borrower will, and will cause each of the
Subsidiaries to, except in each case where the failure to so comply would not
reasonably be expected to result in a Material Adverse Effect:

(a)    operate its Oil and Gas Properties and other material properties or cause
such Oil and Gas Properties and other material properties to be operated in a
careful and efficient manner in accordance with the practices of the industry
and in compliance with all applicable Contractual Requirements and all
applicable Requirements of Law, including applicable proration requirements and
applicable Environmental Laws, and all applicable Requirements of Law of every
other Governmental Authority from time to time constituted to regulate the
development and operation of its Oil and Gas Properties and the production and
sale of Hydrocarbons and other minerals therefrom;

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

(c)    to the extent a Credit Party is not the operator of any property, the
Borrower shall use reasonable efforts to cause the operator to comply with this
Section 10.8.

 

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10.9    Amended and Restated Mortgages. As soon as practicable following the
Effective Date, but in any event within thirty (30) days thereafter, the
Borrower will execute and cause its Material Subsidiaries to execute and deliver
to the Administrative Agent amendments and restatements of each of the Mortgages
on file as of the Effective Date in order to expressly reflect that the
Obligations are secured thereby; provided that, in the connection with the
delivery of each such Mortgage, the Administrative Agent shall receive, with
regards to certain laws of the State of California, the legal opinion of Day
Carter & Murphy LLP or other California counsel to the Borrower, in a form and
substance reasonably satisfactory to the Administrative Agent, and in each case,
subject to customary qualifications and exceptions.

10.10    Additional Guarantors, Grantors and Collateral. Subject to any
applicable limitations set forth in the Guarantee, the Security Documents or the
First Lien Intercreditor Agreement and, with respect to clauses (b), (c) and
(d) below, during a Credit Rating Trigger Period:

(a)    the Borrower will cause any direct or indirect Material Subsidiary formed
or otherwise purchased or acquired after the Effective Date (including pursuant
to a Permitted Acquisition), within thirty (30) days from the date of such
formation or acquisition or as soon as practicable thereafter using commercially
reasonable efforts (but in any event within one hundred twenty (120) days) to
execute a supplement to each of the Guarantee, and during a Credit Rating
Trigger Period, the Security Agreement and the Pledge Agreement, in each case,
in order to become a Guarantor under the Guarantee, a grantor under the Security
Agreement and a pledgor under the Pledge Agreement;

(b)    the Borrower will make all required filings, registrations and
recordings, including filings of Uniform Commercial Code or other applicable
personal property and financing statements, necessary or appropriate to create
or continue, as applicable, the Liens intended to be created by any Security
Document and perfect such Liens to the extent required by, and with the priority
required by, such Security Document and none of the Collateral shall be subject
to any other pledges, security interests or mortgages, except for Liens
permitted under Section 11.2. Notwithstanding the foregoing, Borrower will not
be required to take any action to perfect a Lien on any of its or the
Subsidiaries’ personal property unless perfection may be accomplished by (A) the
filing of a Uniform Commercial Code financing statement in Borrower’s or a
Subsidiary’s respective jurisdiction of formation or in the case of as-extracted
collateral and goods that are or are to become fixtures or collateral in
connection with a Mortgage, the filing of a financing statement filed as a
fixture filing or as a financing statement covering such property in the county
in which such collateral or fixtures are located, (B) delivery of certificates
representing pledged Stock or Stock Equivalents consisting of certificated
securities together with appropriate endorsements or transfer powers,
(C) granting the Collateral Agent “control” (within the meaning of the relevant
Uniform Commercial Code) over any pledged Stock or Stock Equivalents consisting
of uncertificated securities and (D) granting the Collateral Agent “control”
(within the meaning of the relevant Uniform Commercial Code) over any deposit
accounts (other than Excluded Deposit Accounts) by entering into a deposit
account control agreement with the Collateral Agent and the account bank for
such deposit account;

(c)    the Borrower will pledge, and if applicable will cause each other
Subsidiary Guarantor (or Person required to become a Subsidiary Guarantor
pursuant to Section 10.10(a)) to pledge to the Collateral Agent, for the benefit
of the Secured Parties, all property hereafter acquired (other than Excluded
Property) within ten (10) Business Days or as soon as practicable thereafter
using commercially reasonable efforts (but in any event within thirty
(30) Business Days) after the date such property is first acquired or received
by the Borrower or a Subsidiary Guarantor (or Person required to become a
Guarantor pursuant to Section 10.10(a)); and

 

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(d)    the Borrower will execute such Mortgages, other Security Documents and
other documents or instruments, and shall take such actions, necessary to comply
at all times with the Collateral Requirements, including after giving effect to
any acquisition of additional property, including any Oil and Gas Properties.

10.11    Use of Proceeds.

(a)    The Borrower will use the proceeds of the Loans to repay Indebtedness
incurred under the First Lien First Out Credit Agreement at par (and any accrued
and unpaid interest due thereon) and to pay fees and expenses in connection with
the transactions contemplated by this Agreement.

(b)    The Borrower shall not request any Borrowing, and the Borrower shall not
use, and shall procure that its Subsidiaries and its or their respective
directors, officers, employees and agents shall not use the proceeds of any
Borrowing (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, or (iii) in any manner
that would result in the violation of any Sanctions applicable to any party
hereto.

10.12    Further Assurances. During a Credit Rating Trigger Period:

(a)    Subject to the applicable limitations set forth in Section 10.10 and the
Security Documents, the Borrower will, and will cause each other Credit Party
to, execute any and all further documents, financing statements, agreements and
instruments, and take all such further actions (including the filing and
recording of financing statements, fixture, filings, assignments of as-extracted
collateral, mortgages, deeds of trust and other documents) that may be required
under any applicable Requirements of Law, or that the Majority Lenders may
reasonably request, in order to grant, preserve, protect and perfect the
validity and priority of the security interests created or intended to be
created by the applicable Security Documents, all at the expense of the Borrower
and the Subsidiaries.

(b)    If the Borrower and, prior to the Discharge of First Lien First Out
Obligations, the First Lien First Out Administrative Agent agree in writing that
the cost of creating or perfecting any Lien on any property is excessive in
relation to the benefit afforded to the First Lien First Out Lenders thereby,
then such property may be excluded from the Collateral for purposes of the
Credit Documents; provided that (i) such determination is communicated in
writing to the Administrative Agent by the Borrower in a certificate of an
Authorized Officer, (ii) such determination is not reasonably objected to in
writing by the Majority Lenders within 10 Business Days after receipt of notice
thereof and (iii) such property does not secure any Indebtedness or other
obligations in respect of any of the First Lien First Out Obligations, 2016 Term
Loans, Permitted Junior Indebtedness, Permitted Second Lien Indebtedness,
Additional Pari Debt or any Refinancing Indebtedness incurred to Refinance any
of the foregoing.

10.13    Reserve Reports.

(a)    Prior to the Discharge of First Lien First Out Obligations the Borrower
shall furnish to the Administrative Agent any Reserve Report prepared for the
First Lien First Out Administrative Agent, to the extent the First Lien First
Out Administrative Agent requests such Reserve Report.

(b)    Following the Discharge of First Lien First Out Obligations, the Borrower
shall provide a Reserve Report on or before April 1st (the “April 1st Reserve
Report”) and October 1st (the “October 1st Reserve Report”) of each year
evaluating, as of the immediately preceding December 31st

 

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

ARTICLE XI

NEGATIVE COVENANTS

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

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

(a)    Indebtedness arising under any of the Credit Documents;

(b)    Indebtedness (including Guarantee Obligations thereunder) in respect of
Existing Senior Notes and any fees, underwriting discounts, premiums and other
costs and expenses incurred in connection with the foregoing and any Permitted
Refinancing Indebtedness issued or incurred to Refinance such Indebtedness;

(c)    Intercompany loans and advances made by the Borrower to any Subsidiary or
made by any Subsidiary to the Borrower or its Subsidiaries; provided that if
such Indebtedness is owing to a Subsidiary that is not a Guarantor, such
Indebtedness is subject to customary subordination terms, to the extent
permitted by Requirements of Law and not giving rise to material adverse tax
consequences;

(d)    Indebtedness in respect of any bankers’ acceptance, bank guarantees,
letter of credit, warehouse receipt or similar facilities entered into in the
ordinary course of business (including in respect of workers compensation
claims, health, disability or other employee benefits or property, casualty or
liability insurance or self-insurance or other Indebtedness with respect to
reimbursement-type obligations regarding workers compensation claims);

(e)    subject to compliance with Section 11.5, Guarantee Obligations incurred
by (i) Subsidiaries in respect of Indebtedness of the Borrower or other
Subsidiaries that is permitted to be incurred under this Agreement (except that
a Subsidiary that is not a Credit Party may not, by virtue of this
Section 11.1(e) guarantee Indebtedness that such Subsidiary could not otherwise
incur under this Section 11.1) and (ii) the Borrower in respect of Indebtedness
of Subsidiaries that is permitted to be incurred under this Agreement; provided
that (A) if the Indebtedness being guaranteed under this Section 11.1(e) is
subordinated to the Obligations, such Guarantee Obligations shall be
subordinated to the Guarantee of the Obligations on terms at least as favorable
to the Lenders as those contained in the subordination of such Indebtedness and
(B) no guarantee by any Subsidiary of any Permitted Additional Debt (or
Indebtedness under clause (b) above) shall be permitted unless such Subsidiary
shall have also provided a guarantee of the Obligations substantially on the
terms set forth in the Guarantee;

 

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(f)    Guarantee Obligations (i) incurred in the ordinary course of business in
respect of obligations of (or to) suppliers, customers, franchisees, lessors,
licensees or sublicensees or (ii) otherwise constituting Investments permitted
by Sections 11.5(b)(iv), (viii), (xv), (xvi) and (xvii);

(g)    (i) Indebtedness (including Indebtedness arising under Capital Leases)
incurred within 270 days of, or assumed in connection with, the acquisition,
construction, lease, repair, replacement, expansion or improvement of fixed or
capital assets to finance the acquisition, construction, lease, repair,
replacement expansion, or improvement of such fixed or capital assets;
(ii) Indebtedness arising under Capital Leases, other than (A) Capital Leases in
effect on the Effective Date and (B) Capital Leases entered into pursuant to
subclause (i) above (provided that, in the case of each of the foregoing
subclauses (i) and (ii), the Borrower shall be in compliance on a pro forma
basis after giving effect to the incurrence of such Indebtedness with the
Financial Performance Covenant; and (iii) any Permitted Refinancing Indebtedness
issued or incurred to Refinance any such Indebtedness;

(h)    Indebtedness outstanding on the Effective Date listed on Schedule 11.1
and any Permitted Refinancing Indebtedness issued or incurred to Refinance such
Indebtedness;

(i)    (i) Indebtedness of a Person or Indebtedness attaching to the assets of a
Person that, in either case, becomes a Subsidiary (or is a Subsidiary that
survives a merger with such Person or any of its Subsidiaries) or Indebtedness
attaching to the assets that are acquired by the Borrower or any Subsidiary, in
each case after the Effective Date as the result of a Permitted Acquisition;
provided that:

(A)    such Indebtedness existed at the time such Person became a Subsidiary or
at the time such assets were acquired and, in each case, was not created in
anticipation thereof,

(B)    such Indebtedness is not guaranteed in any respect by the Borrower or any
Subsidiary (other than any such Person that so becomes a Subsidiary or is the
survivor of a merger with such Person or any of its Subsidiaries),

(C)    (1) the Stock of such Person is pledged to the Collateral Agent to the
extent required under Sections 10.10(c) and (2) such Person executes a
supplement to each of the Guarantee, the Security Agreement and the Pledge
Agreement, in each case to the extent required under Section 10.10; provided
that the assets covered by such pledges and security interests may, to the
extent permitted by Section 11.2, equally and ratably secure such Indebtedness
assumed with the Secured Parties subject to customary intercreditor arrangements
not objected to by the Majority Lenders within ten (10) Business Days of being
provided with a substantially final draft of any such intercreditor agreement;
provided, further, that the requirements of this clause (C) shall not apply to
any Indebtedness of the type that could have been incurred under
Section 11.1(g), and

(D)    after giving effect to the assumption of any such Indebtedness, to such
acquisition and to any related pro forma adjustment, the Borrower shall be in
compliance on a pro forma basis with the Financial Performance Covenant;

(ii)    any Permitted Refinancing Indebtedness incurred to Refinance such
Indebtedness;

 

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(j)    (i) Indebtedness incurred to finance a Permitted Acquisition; provided
that:

(A)    (1) the Stock of the Person acquired is pledged to the Collateral Agent
to the extent required under Sections 10.10(c) and (2) such Person executes a
supplement to each of the Guarantee, the Security Agreement and the Pledge
Agreement and delivers any other Security Documents, in each case, to the extent
required under Section 10.10;

(B)    after giving effect to the incurrence of any such Indebtedness, to such
acquisition and to any related pro forma adjustment, the Borrower shall be in
compliance on a pro forma basis with the Financial Performance Covenant, as such
covenant are recomputed as at the last day of the most recently ended Test
Period as if such incurrence and acquisition had occurred on the first day of
such Test Period;

(C)    the maturity of such Indebtedness is not earlier than, and no mandatory
repayment or redemption (other than customary change of control or asset sale
offers or upon any event of default) is required prior to, 91 days after the
Maturity Date (determined at the time of issuance or incurrence); and

(D)    such Indebtedness is not guaranteed in any respect by the Borrower or any
Subsidiary Guarantor except to the extent permitted under Section 11.5;

(ii)    any Permitted Refinancing Indebtedness incurred to Refinance such
Indebtedness;

(k)    Indebtedness consisting of secured financings by a Foreign Subsidiary in
which no Credit Party’s assets are used to secure such Indebtedness;

(l)    Indebtedness in respect of performance bonds, bid bonds, appeal bonds,
surety bonds and completion guarantees and similar obligations not in connection
with money borrowed, in each case provided in the ordinary course of business or
consistent with past practice, including those incurred to secure health, safety
and environmental obligations in the ordinary course of business or consistent
with past practice;

(m)    cash management obligations, cash management services and other
Indebtedness in respect of netting services, automatic clearing house
arrangements, employees’ credit or purchase cards, overdraft protections and
similar arrangements in each case incurred in the ordinary course of business;

(n)    Indebtedness incurred in the ordinary course of business in respect of
obligations of the Borrower or any Subsidiary to pay the deferred purchase price
of goods or services or progress payments in connection with such goods and
services;

(o)    Indebtedness arising from agreements of the Borrower or any Subsidiary
providing for indemnification, adjustment of purchase price or similar
obligations (including earn-outs), in each case entered into in connection with
the Spinoff Transaction and the OPC Related Transactions, Permitted
Acquisitions, other Investments and the Disposition of any business, assets or
Stock permitted hereunder;

(p)    Indebtedness of the Borrower or any Subsidiary consisting of
(i) obligations to pay insurance premiums or (ii) obligations contained in firm
transportation or supply agreements or other take or pay contracts, in each case
arising in the ordinary course of business;

 

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(q)    Indebtedness representing deferred compensation to employees, consultants
or independent contractors of the Borrower (or, to the extent such work is done
for the Borrower or its Subsidiaries, any direct or indirect parent thereof) and
the Subsidiaries incurred in the ordinary course of business;

(r)    Indebtedness consisting of promissory notes issued by the Borrower or any
Guarantor to current or former officers, managers, consultants, directors and
employees (or their respective spouses, former spouses, successors, executors,
administrators, heirs, legatees or distributees) to finance the purchase or
redemption of Stock or Stock Equivalents of the Borrower (or any direct or
indirect parent thereof) permitted by Section 11.6;

(s)    Indebtedness consisting of obligations of the Borrower and the
Subsidiaries under deferred compensation or other similar arrangements incurred
by such Person in connection with the Transactions (as defined in the First Lien
First Out Credit Agreement) Permitted Acquisitions or any other Investment
permitted hereunder;

(t)    Indebtedness associated with bonds or surety obligations required by
Requirements of Law or by Governmental Authorities in connection with the
operation of Oil and Gas Properties in the ordinary course of business;

(u)    Indebtedness consisting of the undischarged balance of any Production
Payment in an aggregate principal amount not to exceed $250,000,000 at any one
time outstanding;

(v)    Indebtedness in respect of:

(i)    the First Lien First Out Credit Agreement;

(ii)    any First Lien First Out Term Debt which refinances or replaces any
First Lien First Out Obligations provided such Indebtedness, together with all
First Lien First Out Term A Loans and other First Lien First Out Term Debt then
outstanding, does not exceed $200,000,000 in aggregate principal amount at any
time outstanding; and

(iii)    any Additional Pari Debt, including any such Indebtedness incurred to
Refinance any the First Lien First Out Obligations;

provided, that the aggregate outstanding principal amount at any time
outstanding in respect of clauses (i) through (iii) does not to exceed at such
time of incurrence the sum of (x) the greater of (A) $2,200,000,000 and (B) the
Borrowing Base less (y) the aggregate principal amount of all Loans outstanding
under this Agreement;

(w)    during an Investment Grade Period, other Indebtedness; provided that
after giving effect to the incurrence of any such Indebtedness, the Borrower
shall be in compliance on a pro forma basis with the Financial Performance
Covenant, and any Permitted Refinancing Indebtedness issued or incurred to
Refinance such Indebtedness;

(x)    during a Credit Rating Trigger Period, other Indebtedness so long as
(i) the aggregate principal amount of such Indebtedness at the time of the
incurrence thereof and after giving pro forma effect thereto and the use of
proceeds thereof, does not exceed the greater of $100,000,000 and 1.50% of
Consolidated Total Assets (measured, in each case, as of the date such
Indebtedness is incurred based upon the financial statements most recently
available prior to such date) and (ii) after giving pro forma effect to such
incurrence and any concurrent use of proceeds, the Borrower is in pro forma
compliance with the Financial Performance Covenant, and any Permitted
Refinancing Indebtedness issued or incurred to Refinance such Indebtedness;

 

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(y)    all premiums (if any), interest (including post-petition interest), fees,
expenses, charges, and additional or contingent interest on obligations
described in clauses (a) through (x) above and (z) through (dd) below;

(z)    the Existing Second Lien Notes and any Permitted Refinancing Indebtedness
issued or incurred to Refinance such Existing Second Lien Notes not to exceed,
at any time, $2,250,000,000;

(aa)    (i) Permitted Second Lien Indebtedness and Permitted Additional Debt of
the Borrower or any other Credit Party incurred solely for the purposes set
forth in Section 11.7(a)(iii), (ii) First Lien Third Out Indebtedness and
(iii) Permitted Refinancing Indebtedness issued or incurred to refinance such
Indebtedness that also meets the conditions set forth under the definition of
Permitted Second Lien Indebtedness, Permitted Additional Debt or First Lien
Third Out Indebtedness, as applicable;

(bb)    2016 Term Loans and any Permitted Refinancing Indebtedness issued or
incurred to Refinance such 2016 Term Loans not to exceed, at any time,
$1,000,000,000;

(cc)    Any Permitted Unsecured Ratio Debt; and

(dd)    During a Credit Rating Trigger Period, Indebtedness secured by a Lien on
Non-Borrowing Base Properties; provided that (i) the aggregate principal amount
of such Indebtedness at the time of the incurrence thereof and after giving pro
forma effect thereto and the use of proceeds thereof, does not exceed
$200,000,000 less the amount of Permitted Additional Debt, 2016 Term Loans,
Permitted Junior Indebtedness and Existing Senior Notes obtained as
consideration for a Non-Borrowing Base Disposition in connection with any
transaction entered into in accordance with Section 11.7(a)(i) and (ii) after
giving pro forma effect to such incurrence and any concurrent use of proceeds
the Borrower is in pro forma compliance with the Financial Performance Covenant;

provided that, in no event shall the Specified First Lien Indebtedness Amount
exceed the Priority Lien Cap.

11.2    Limitation on Liens. The Borrower will not, and will not permit any of
the Subsidiaries to, create, incur, assume or suffer to exist any Lien upon any
property or assets of any kind (real or personal, tangible or intangible) of the
Borrower or any Subsidiary, whether now owned or hereafter acquired, except:

(a)    Liens held by the Collateral Agent pursuant to the First Out Collateral
Agency Agreement securing Indebtedness pursuant to Sections 11.1(a) and 11.1(v);

(b)    Permitted Liens;

(c)    Liens (including liens arising under Capital Leases to secure Capital
Lease obligations) securing Indebtedness permitted pursuant to Section 11.1(g);
provided that such Liens attach concurrently with or within 270 days after the
acquisition, lease, repair, replacement, construction, expansion or improvement
(as applicable) being financed with such Indebtedness, (ii) other than the
property financed by such Indebtedness, such Liens do not at any time encumber
any property, except for replacements thereof and accessions and additions to
such property and the proceeds and the products thereof and customary security
deposits and (iii) with respect to Capital Leases, such Liens do not at any

 

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time extend to or cover any assets (except for accessions and additions to such
assets, replacements and products thereof and customary security deposits) other
than the assets subject to such Capital Leases; provided that individual
financings of equipment provided by one lender may be cross collateralized to
other financings of equipment provided by such lender;

(d)    Liens existing on the Effective Date other than Liens securing
Indebtedness under the First Lien First Out Credit Agreement, 2016 Term Loan
Obligations, the 2017 Term Loan Obligations, Additional Pari Debt and Permitted
Second Lien Indebtedness; provided that any Lien securing Indebtedness in excess
of (i) $6,500,000 individually or (ii) $13,000,000 in the aggregate (when taken
together with all other Liens securing obligations outstanding in reliance on
this clause (d) that are not listed on Schedule 11.2) shall only be permitted to
the extent such Lien is listed on Schedule 11.2;

(e)    (i) the modification, replacement, extension or renewal of any Lien
permitted by clauses (a), (b), (c), (d), during a Credit Rating Trigger Period,
(f), (i), (s) and (w) of this Section 11.2 upon or in the same assets
theretofore subject to such Lien or upon or in after-acquired property that is
(A) affixed or incorporated into the property covered by such Lien, (B) in the
case of Liens permitted by clauses (f) and (s), subject to a Lien securing
Indebtedness permitted under Section 11.1, the terms of which Indebtedness
require or include a pledge of after-acquired property (it being understood that
such requirement shall not be permitted to apply to any property to which such
requirement would not have applied but for such acquisition) and (C) the
proceeds and products thereof or during a Credit Rating Trigger Period, Liens
securing Indebtedness incurred in replacement, extension or renewal (without
increase in the amount or change in any direct or contingent obligor except to
the extent otherwise permitted hereunder) of secured Indebtedness, to the extent
the replacement, extension or renewal of the Indebtedness secured thereby is
permitted by Section 11.1;

(f)    during a Credit Rating Trigger Period, Liens existing on the assets of
any Person that becomes a Subsidiary, or existing on assets acquired, pursuant
to a Permitted Acquisition to the extent the Liens on such assets secure
Indebtedness permitted by Section 11.1(i); provided that such Liens attach at
all times only to the same assets that such Liens (or upon or in after-acquired
property that is (i) affixed or incorporated into the property covered by such
Lien, (ii) after-acquired property subject to a Lien securing Indebtedness
permitted under Section 11.1(i), the terms of which Indebtedness require or
include a pledge of after-acquired property (it being understood that such
requirement shall not be permitted to apply to any property to which such
requirement would not have applied but for such acquisition) and (iii) the
proceeds and products thereof) attached to, and secure only, the same
Indebtedness or obligations (or any Permitted Refinancing Indebtedness incurred
to Refinance such Indebtedness permitted by Section 11.1) that such Liens
secured, immediately prior to such Permitted Acquisition;

(g)    during a Credit Rating Trigger Period, Liens placed upon the Stock and
Stock Equivalents of any Person that becomes a Subsidiary pursuant to a
Permitted Acquisition, or the assets of such a Subsidiary, in each case, to
secure Indebtedness incurred pursuant to Section 11.1(j); provided that such
Liens attach at all times only to the Stock and Stock Equivalents or assets so
acquired;

(h)    during a Credit Rating Trigger Period, Liens securing Indebtedness or
other obligations (i) of the Borrower or a Subsidiary in favor of a Credit Party
and (ii) of any Subsidiary that is not a Credit Party in favor of any Subsidiary
that is not a Credit Party;

(i)    Liens (i) of a collecting bank arising under Section 4-210 of the Uniform
Commercial Code on items in the course of collection, (ii) attaching to
commodity trading accounts or other commodity brokerage accounts incurred in the
ordinary course of business and (iii) in favor of a banking institution arising
as a matter of law encumbering deposits (including the right of set-off);

 

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(j)    Liens (i) on cash advances in favor of the seller of any property to be
acquired in an Investment permitted pursuant to Section 11.5 to be applied
against the purchase price for such Investment, and (ii) consisting of an
agreement to Dispose of any property in a transaction permitted under
Section 11.4, in each case, solely to the extent such Investment or Disposition,
as the case may be, would have been permitted on the date of the creation of
such Lien;

(k)    Liens arising out of conditional sale, title retention, consignment or
similar arrangements for sale or purchase of goods entered into by the Borrower
or any of the Subsidiaries in the ordinary course of business permitted by this
Agreement;

(l)    Liens deemed to exist in connection with Investments in repurchase
agreements permitted under Section 11.5;

(m)    Liens encumbering reasonable customary initial deposits and margin
deposits and similar Liens attaching to brokerage accounts incurred in the
ordinary course of business and approved by the Borrower’s board of directors;

(n)    Liens that are contractual rights of set-off (i) relating to the
establishment of depository relations with banks not given in connection with
the issuance or incurrence of Indebtedness, (ii) relating to pooled deposit or
sweep accounts of the Borrower or any Subsidiary to permit satisfaction of
overdraft or similar obligations incurred in the ordinary course of business of
the Borrower and the Subsidiaries or (iii) relating to purchase orders and other
agreements entered into with customers of the Borrower or any Subsidiary in the
ordinary course of business;

(o)    Liens solely on any cash earnest money deposits made by the Borrower or
any of the Subsidiaries in connection with any letter of intent or purchase
agreement permitted hereunder;

(p)    Liens on insurance policies and the proceeds thereof securing the
financing of the premiums with respect thereto;

(q)    (i) Liens in respect of Production Payments which, in the case of
Production Payments constituting Indebtedness, shall not exceed an aggregate
principal amount of $250,000,000 at any one time outstanding and (ii) Liens in
connection with Royalty Trust Transactions and obligations arising from net
profits interests, working interests, overriding royalty interests or similar
real property interest;

(r)    the prior right of consignees and their lenders under consignment
arrangements entered into in the ordinary course of business;

(s)    agreements to subordinate any interest of the Borrower or any Subsidiary
in any accounts receivable or other proceeds arising from inventory consigned by
the Borrower or any Subsidiary pursuant to an agreement entered into in the
ordinary course of business;

(t)    Liens on Stock in a joint venture that does not constitute a Subsidiary
securing obligations of such joint venture so long as the assets of such joint
venture do not constitute Collateral;

(u)    Liens securing any Indebtedness permitted by Section 11.1(k);

(v)    Liens arising pursuant to Section 107(l) of CERCLA, or other
Environmental Law, unless such Lien (i) by action of the lienholder, or by
operation of law, takes priority over any Liens arising under the Credit
Documents on the property upon which it is a Lien, and (ii) relates to a
liability of the Borrower or any Subsidiary that is reasonably likely to exceed
$39,000,000;

 

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(w)    Liens securing any Indebtedness permitted by Section 11.1(bb);

(x)    during a Credit Rating Trigger Period, Liens on any property of the
Borrower or any Subsidiary to secure Indebtedness and obligations of the
Borrower or such Subsidiary under Hedge Agreements permitted under Section 11.10
with counterparties other than a Hedge Bank (as defined in the First Lien First
Out Credit Agreement);

(y)    Liens arising from judgments or decrees in circumstances not constituting
an Event of Default under Section 12.9; and

(z)    Liens securing Indebtedness issued or incurred under Section 11.1(z);
provided that such Liens are subordinated to the Liens securing the Obligations
pursuant to the First/Second Intercreditor Agreement;

(aa)    during a Credit Rating Trigger Period, Liens on Non-Borrowing Base
Properties securing Indebtedness permitted by Section 11.1(dd);

(bb)    Liens securing Indebtedness incurred under Section 11.1(aa); and

(cc)    Liens securing the counterparty’s interests under farm-in agreements or
farm-out agreements and Development Joint Ventures relating to Developed
Non-Producing Reserves, Proved Non-Producing Reserves, Proved Undeveloped
Reserves or Hydrocarbon Interests to which no Proved Reserves are attributable
or undeveloped acreage to which no Proved Reserves are attributable, which Liens
may be first priority Liens senior to the Liens securing the Obligations, if the
aggregate value of the property secured by such Liens pursuant to this
Section 11.2(cc) valued at the time such agreement is entered into, is less than
or equal to $500,000,000; provided that, if requested by the Borrower, the
Administrative Agent shall (and the Lenders hereby agree that the Administrative
Agent shall) subordinate and/or release its Liens relating to such property.

11.3    Limitation on Fundamental Changes. Except as permitted by Sections 11.4
or 11.5, the Borrower will not, and will not permit any of the Subsidiaries to,
enter into any merger, consolidation or amalgamation, or liquidate, wind up or
dissolve itself (or suffer any liquidation or dissolution), or Dispose of, all
or substantially all its business units, assets or other properties, except
that:

(a)    any Subsidiary of the Borrower or any other Person (other than the
Borrower) may be merged, amalgamated or consolidated with or into any one or
more Subsidiaries of the Borrower; provided that (i) in the case of any merger,
amalgamation or consolidation involving one or more Subsidiaries, (A) a
Subsidiary shall be the continuing or surviving Person or (B) the Borrower shall
take all steps necessary to cause the Person formed by or surviving any such
merger, amalgamation or consolidation (if other than a Subsidiary) to become a
Subsidiary, (ii) in the case of any merger, amalgamation or consolidation
involving one or more Guarantors, a Guarantor shall be the continuing or
surviving Person or the Person formed by or surviving any such merger,
amalgamation or consolidation (if other than a Guarantor) shall execute a
supplement to the Guarantee, the Security Agreement, the Pledge Agreement and
any applicable Mortgage, each in form and substance reasonably effective to
cause such Person to be bound by such agreements as if such Person had entered
into the respective agreements directly, (iii) no Default or Event of Default
has occurred and is continuing on the date of such merger, amalgamation or
consolidation or would result from the consummation of such merger, amalgamation
or consolidation and (iv) if such merger, amalgamation or consolidation involves
a Subsidiary and a Person

 

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that, prior to the consummation of such merger, amalgamation or consolidation,
is not a Subsidiary of the Borrower, (A) the Borrower shall be in compliance, on
a pro forma basis after giving effect to such merger, amalgamation or
consolidation, with the Financial Performance Covenant, (B) the Borrower shall
have delivered to the Administrative Agent an officer’s certificate stating that
such merger, amalgamation or consolidation and such supplements to any Credit
Document preserve the enforceability of the Guarantee and the perfection and
priority of the Liens under the Security Agreement and (C) such merger,
amalgamation or consolidation shall comply with all the conditions set forth in
the definition of the term “Permitted Acquisition” or is otherwise permitted
under Section 11.5;

(b)    any Subsidiary that is not a Guarantor may (i) merge, amalgamate or
consolidate with or into any other Subsidiary and (ii) Dispose of any or all of
its assets (upon voluntary liquidation or otherwise) to the Borrower, a
Guarantor or any other Subsidiary of the Borrower;

(c)    any Subsidiary Guarantor may (i) merge, amalgamate or consolidate with or
into any other Subsidiary Guarantor and (ii) Dispose of any or all of its assets
(upon voluntary liquidation or otherwise) to the Borrower or any other
Guarantor;

(d)    any Subsidiary may liquidate or dissolve if (i) the Borrower determines
in good faith that such liquidation or dissolution is in the best interests of
the Borrower and is not materially disadvantageous to the Lenders and (ii) to
the extent such Subsidiary is a Credit Party, any assets or business of such
Subsidiary not otherwise Disposed of or transferred in accordance with
Section 11.4 or 11.5, in the case of any such business, discontinued, shall be
transferred to, or otherwise owned or conducted by, a Credit Party after giving
effect to such liquidation or dissolution; and

(e)    to the extent that no Default or Event of Default would result from the
consummation of such Disposition, the Borrower and the Subsidiaries may
consummate a merger, dissolution, liquidation, consolidation or Disposition, the
purpose of which is to effect a Disposition permitted pursuant to Section 11.4.

11.4    Limitation on Sale of Assets.

(a)    During a Credit Rating Trigger Period, the Borrower will not, and will
not permit any of the Subsidiaries to, (x) convey, sell, lease, sell and
leaseback, assign, farm-out, transfer or otherwise dispose (each of the
foregoing a “Disposition”) of any of its property, business or assets (including
receivables and leasehold interests), whether now owned or hereafter acquired or
(y) sell to any Person (other than the Borrower or a Guarantor) any shares owned
by it of any Subsidiary’s Stock and Stock Equivalents, except that:

(i)    the Borrower and any Subsidiary may Dispose of (A) inventory and other
goods held for sale, including Hydrocarbons, obsolete, worn out, used or surplus
equipment, vehicles and other assets (other than accounts receivable) in the
ordinary course of business (including equipment that is no longer necessary for
the business of the Borrower or its Subsidiaries or is replaced by equipment of
at least comparable value and use), (B) Permitted Investments, and (C) assets
for the purposes of community and public outreach, including, without
limitation, charitable contributions and similar gifts, funding of or
participation in trade, business and technical associations, and political
contributions made in accordance with applicable Requirements of Law, to the
extent such assets are not material to the ability of the Borrower and its
Subsidiaries, taken as a whole, to conduct its business in the ordinary course;

(ii)    the Borrower and any Subsidiary may effect a Disposition in accordance
with Section 11.7(a)(i) and (ii);

 

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(iii)    the Borrower and any Subsidiary may Dispose of property or assets to
the Borrower or to a Subsidiary; provided that if the transferor of such
property is a Credit Party (A) the transferee thereof must either be a Credit
Party or (B) such transaction is permitted under Section 11.5;

(iv)    the Borrower and any Subsidiary may effect any transaction permitted by
Section 11.3, 11.5 or 11.6;

(v)    the Borrower and any Subsidiary may lease, sublease, license or
sublicense (on a non-exclusive basis with respect to any intellectual property)
real, personal or intellectual property in the ordinary course of business;

(vi)    the Borrower and any Subsidiary may effect Dispositions constituting
like-kind exchanges (including reverse like-kind exchanges) of Oil and Gas
Properties to the extent that (A) such property is exchanged for credit against
the purchase price of similar replacement property or (B) the proceeds of such
Disposition are applied to the purchase price of such replacement property, in
each case under Section 1031 of the Code or otherwise, and (C) until the
Discharge of First Lien First Out Obligations, such Disposition is in compliance
with the First Lien First Out Credit Agreement;

(vii)    the Borrower and any Subsidiary may effect Dispositions of Hydrocarbon
Interests to which no Proved Reserves are attributable and farm-outs of
undeveloped acreage to which no Proved Reserves are attributable and assignments
in connection with such farm-outs;

(viii)    the Borrower and any Subsidiary may effect Dispositions of Investments
in joint ventures (regardless of the form of legal entity) to the extent
required by, or made pursuant to, customary buy/sell arrangements between the
joint venture parties set forth in joint venture arrangements and similar
binding arrangements to the extent the same would be permitted under
Section 11.5(b)(viii);

(ix)    [reserved];

(x)    the Borrower and any Subsidiary may effect transfers of property subject
to a (A) Casualty Event or in connection with any condemnation proceeding with
respect to Collateral upon receipt of the net cash proceeds of such Casualty
Event or condemnation proceeding or (B) in connection with any Casualty Event or
any condemnation proceeding, in each case with respect to property that does not
constitute Collateral;

(xi)    the Borrower and any Subsidiary may effect Dispositions of accounts
receivable (A) in connection with the collection or compromise thereof or (B) to
the extent the proceeds thereof are used to prepay any Loans then outstanding;

(xii)    [reserved];

(xiii)    [reserved];

(xiv)    the Borrower and any Subsidiary may effect a Disposition of any asset
between or among the Borrower and/or its Subsidiaries as a substantially
concurrent interim Disposition in connection with a Disposition otherwise
permitted pursuant to clauses (i) through (xi) above;

 

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(xv)    the Borrower and any Subsidiary may effect any other Disposition so long
as:

(A)    no Default or Event of Default is occurring or would result therefrom;

(B)    the Borrower or Subsidiary, as the case may be, receives consideration at
the time of such Disposition at least equal to the Fair Market Value of the
assets sold or otherwise disposed of;

(C)    at least 75% of the consideration therefor received by the Borrower or
such Subsidiary, as the case may be, is in the form of cash, Cash Equivalents or
Additional Assets; provided that the following shall be deemed to be Cash
Equivalents for purposes of this clause (C) and for no other purposes:

(1)    any liabilities (as shown on the Borrower’s or such Subsidiary’s most
recent balance sheet or in the footnotes thereto or if incurred or accrued
subsequent to the date of such balance sheets, such liabilities as would have
been reflected in the Borrower’s consolidated balance sheet or the footnotes
thereto if such incurrence or accrual had been put in place on or prior to the
date of such balance sheet as determined in good faith by the Borrower) of the
Borrower or such Subsidiary, other than contingent liabilities or liabilities
that are by their terms subordinated to the Obligations, that (x) are assumed by
the transferee of any such assets and from which the Borrower and all of its
Subsidiaries shall have been validly released by all applicable creditors in
writing or (y) that are otherwise cancelled or terminated in connection with the
transaction with such transferee (other than intercompany debt owed to the
Borrower or its Subsidiaries);

(2)    any securities, notes or other obligations or assets received by the
Borrower or such Subsidiary from such transferee that are converted by the
Borrower or such Subsidiary into cash or Cash Equivalents (to the extent of the
cash or Cash Equivalents received) within one hundred and eighty (180) days
following the closing of such Disposition;

(3)    with respect to any Disposition of Oil and Gas Properties by the Borrower
or any Subsidiary in which the Borrower or any Subsidiary retains a direct or
indirect interest in such property (including, without limitation, in the nature
of a reversionary, remainder, increasing or back-in interest), the costs and
expenses related to the exploration, development, completion or production of
such Oil and Gas Properties and activities related thereto agreed to be assumed
by the transferee (or an Affiliate thereof);

(4)    Indebtedness of any Subsidiary that ceases to be a Subsidiary as a result
of such Disposition (other than intercompany debt owed to the Borrower or its
Subsidiaries), to the extent that the Borrower and each other Subsidiary are
released from any Guarantee of payment of the principal amount of such
Indebtedness in connection with such Disposition; and

(5)    any Designated Non-Cash Consideration received by the Borrower or such
Subsidiary in respect of the applicable Disposition having an aggregate Fair
Market Value, taken together with all other Designated Non-Cash Consideration
received pursuant to this clause (5) at any time outstanding, not in excess of
the greater of (x) $115 million and (y) 1.5% of Consolidated Total Assets
determined as of the time of the receipt of such Designated Non-Cash
Consideration, with the Fair Market Value of each item of Designated Non-Cash
Consideration being measured at the time received and without giving effect to
subsequent changes in value;

(D)    with respect to any Dispositions in excess of $28,750,000 per calendar
year, after giving pro forma effect to such Disposition and any related pro
forma adjustment (including, without limitation, any substantially concurrent
incurrence of Indebtedness and with such pro forma adjustments including the
recalculation of PV-10 on a pro forma basis), the Borrower is in pro forma
compliance with the Financial Performance Covenant; and

 

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(E)    the Net Cash Proceeds from such Disposition are applied in accordance
with clause (b) below.

(b)    Within 365 days after the receipt of any Net Cash Proceeds from a
Disposition made pursuant to Section 11.4(a)(xv) only, and not for any other
Dispositions, the Credit Parties may apply such Net Cash Proceeds:

(i)    to repay Indebtedness under the First Lien First Out Credit Agreement;

(ii)    after giving effect to any payments required under the First Lien First
Out Credit Agreement, to permanently repay or reduce (A) 2017 Term Loan
Obligations and Additional Pari Debt, if any, on a pro rata basis (determined on
the basis of the aggregate outstanding principal amount of the 2017 Term Loans
and Additional Pari Debt at such time) or (B) provided that such Net Cash
Proceeds have been first offered and applied to repay the 2017 Term Loans
pursuant to Section 5.2(a), any Additional Pari Debt, 2016 Term Loans or
Permitted Junior Indebtedness with Declined Proceeds, in the case, to the extent
such Indebtedness is secured by Liens on the Collateral that secure the 2017
Term Loan Obligations, Additional Pari Debt and the First Lien First Out
Obligations; provided that if the Borrower shall so repay or reduce any such
Permitted Junior Indebtedness, an equal and ratable portion of such Net Cash
Proceeds shall be deemed to be Excess Cash Proceeds and shall be applied in
accordance with Section 5.2(a);

(iii)    to make Capital Expenditures in respect of the Credit Parties’ oil and
gas business, including without limitation maintenance and repair expenditures
that are Capital Expenditures; provided that this clause (iii) shall be deemed
to be satisfied if a bona fide binding contract committing to make such Capital
Expenditure is entered into by any Credit Party with a Person other than an
Affiliate of any Credit Party within the time period specified above and such
Net Cash Proceeds are subsequently applied in accordance with such contract
within 180 days following the date such agreement is entered into; or

(iv)    to invest or reinvest in Additional Assets (including by means of an
Investment in Additional Assets by a Subsidiary with Net Cash Proceeds received
by the Borrower or another Subsidiary);

provided that Borrower shall deliver a notice of its intent to reinvest Net Cash
Proceeds from the Disposition a “Reinvestment Notice” to the Administrative
Agent and the Lenders within 60 days of the receipt by any Credit Party of such
Net Cash Proceeds. Any Net Cash Proceeds from Dispositions that are not applied
or invested as provided in Section 11.4(b) (including amounts not invested
following a Reinvestment Notice) shall constitute “Excess Cash Proceeds” and
shall be applied in accordance with Section 5.2(a).

(c)    On any date during an Investment Grade Period, the Borrower will not, and
will not permit any of the Subsidiaries to, make any Disposition, unless after
giving pro forma effect to such Disposition (i) no Default or Event of Default
has occurred and is continuing or would result therefrom and (ii) the Borrower
shall be in compliance with the Financial Performance Covenant on a pro forma
basis after giving effect to such Disposition.

 

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(d)    Notwithstanding anything to the contrary, the Borrower may Dispose of
property or assets in an amount not to exceed $1,150,000 individually or
$11,500,000 in the aggregate for each fiscal year of the Borrower without such
Dispositions being subject to Sections 11.4(a), (b) and (c) hereof.

11.5    Limitation on Investments.

(a)    [Reserved].

(b)    During a Credit Rating Trigger Period, the Borrower will not, and will
not permit any of the Subsidiaries, to make any Investment except:

(i)    extensions of trade credit and purchases of assets and services
(including purchases of inventory, supplies and materials) in the ordinary
course of business;

(ii)    Investments in assets that constituted Permitted Investments at the time
such Investments were made;

(iii)    loans and advances to officers, directors, employees and consultants of
the Borrower (or any direct or indirect parent thereof) or any of its
Subsidiaries (i) for reasonable and customary business-related travel,
entertainment, relocation and analogous ordinary business purposes (including
employee payroll advances), (ii) in connection with such Person’s purchase of
Stock or Stock Equivalents of the Borrower (or any direct or indirect parent
thereof; provided that, to the extent such loans and advances are made in cash,
the amount of such loans and advances used to acquire such Stock or Stock
Equivalents shall be contributed to the Borrower in cash) and (iii) for purposes
not described in the foregoing subclauses (i) and (ii); provided that the
aggregate principal amount outstanding pursuant to this subclause (iii) shall
not exceed $23,000,000;

(iv)    (A) Investments existing on, or made pursuant to legally binding written
commitments in existence on, the Effective Date as set forth on Schedule 11.5,
(B) Investments existing on the Effective Date of the Borrower or any Subsidiary
in any other Subsidiary and (C) any extensions, renewals or reinvestments
thereof, so long as the amount of any Investment made pursuant to this clause
(iv) is not increased at any time above the amount of such Investment set forth
on Schedule 11.5;

(v)    Investments received in connection with the bankruptcy or reorganization
of suppliers or customers and in settlement of delinquent obligations of, and
other disputes with, customers arising in the ordinary course of business or
upon foreclosure with respect to any secured Investment or other transfer of
title with respect to any secured Investment;

(vi)    Investments to the extent that payment for such Investments is made with
Stock or Stock Equivalents (other than Disqualified Stock not otherwise
permitted by Section 11.1) of the Borrower (or any direct or indirect parent
thereof);

(vii)    [reserved];

(viii)    (A) Investments in respect of Permitted Acquisitions, (B) Investments
in respect of Royalty Trusts and master limited partnerships and (C) other
Investments in an amount not to exceed $250,000,000 in the aggregate, in each
case valued at the Fair Market Value (determined by the Borrower acting in good
faith) of such Investment at the time each such Investment is made, in an
aggregate amount pursuant to this Section 11.5(b)(viii) that, at the time each
such Investment is made, would not exceed the sum of (a) $100,000,000 plus
(b) so long as (i) no Default or Event of Default has occurred and is continuing
at the time of any such Investment or would result therefrom and (ii) the Fixed

 

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Charge Coverage Ratio shall be no less than 2.25 to 1.00 after giving pro forma
effect to such Investment and any transactions taken in connection therewith
(including, without limitation, the incurrence of any Indebtedness), the
Available Amount at such time plus (c) the amount of any Net Cash Proceeds of
any issuance or sale of Stock (other than Disqualified Stock) of the Borrower
(provided that any Investments made with such Net Cash Proceeds under this
Section 11.5(b)(viii) are made within one hundred and eighty (180) calendar days
of the issuance of such Stock) (such amount, an “Equity Funded Investment”);
provided that the foregoing limits shall not apply during the period in which,
and Investments may be made pursuant to this Section 11.5(b)(viii) without limit
at any such time during which, after giving pro forma effect to the making of
any such Investment, (1) no Event of Default shall have occurred and be
continuing and (2) Liquidity is not less than 10% of the then-effective First
Lien First Out Revolving Loan Limit (on a pro forma basis after giving effect to
such Investment) or, after the Discharge of First Lien First Out Obligations,
cash on the balance sheet of the Borrower of at least $220,000,000; provided,
further, that (x) intercompany current liabilities incurred in the ordinary
course of business and consistent with past practices, in connection with the
cash management operations of the Borrower and the Subsidiaries shall not be
included in calculating any limitations in this paragraph at any time and
(y) for the avoidance of doubt, any prepayment, repurchase, redemption or
defeasance of Existing Senior Notes, 2016 Term Loans, any Permitted Junior
Indebtedness or any Permitted Additional Debt shall also be subject to
compliance with Section 11.7;

(ix)    Investments constituting non-cash proceeds of Dispositions of assets to
the extent such Disposition is permitted by Section 11.4;

(x)    Investments made to repurchase or retire Stock or Stock Equivalents of
the Borrower or any direct or indirect parent thereof owned by any employee or
any stock ownership plan or key employee stock ownership plan of the Borrower
(or any direct or indirect parent thereof);

(xi)    loans and advances to any direct or indirect parent of the Borrower in
lieu of, and not in excess of the amount of, Restricted Payments to the extent
permitted to be made to such parent in accordance with Section 11.6;

(xii)    Investments consisting of extensions of credit in the nature of
accounts receivable or notes receivable arising from the grant of trade credit
in the ordinary course of business, and Investments received in satisfaction or
partial satisfaction thereof from financially troubled account debtors and other
credits to suppliers in the ordinary course of business;

(xiii)    Investments in the ordinary course of business consisting of
endorsements for collection or deposit and customary trade arrangements with
customers consistent with past practices;

(xiv)    advances of payroll payments to employees, consultants or independent
contractors or other advances of salaries or compensation to employees,
consultants or independent contractors, in each case in the ordinary course of
business;

(xv)    guarantee obligations of the Borrower or any Subsidiary of leases (other
than Capital Leases) or of other obligations that do not constitute
Indebtedness, in each case entered into in the ordinary course of business;

(xvi)    Investments held by a Person acquired (including by way of merger or
consolidation) after the Effective Date otherwise in accordance with this
Section 11.5 to the extent that such Investments were not made in contemplation
of or in connection with such acquisition, merger or consolidation and were in
existence on the date of such acquisition, merger or consolidation;

 

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(xvii)    Investments in Industry Investments and in interests in additional Oil
and Gas Properties and gas gathering systems related thereto or Investments
related to farm-out, farm-in, joint operating, joint venture, joint development
or other area of mutual interest agreements, other similar industry investments,
gathering systems, pipelines or other similar oil and gas exploration and
production business arrangements whether through direct ownership or ownership
through a joint venture or similar arrangement; provided that any asset,
property, equity interests or other interest that (a) is property described in
clauses (d) or (f) of the definition of Excluded Stock, (b) has an aggregate
value with all such property in excess of $50,000,000 and (c) is received in
connection with any Investment under this clause (xvii) shall be pledged as
Collateral except (i) to the extent such Investment is made in connection with a
farm-in, farm-out or Development Joint Venture or (ii) to the extent otherwise
excluded pursuant to clause (b) of the definition of Excluded Stock;

(xviii)    Investments in Hedge Agreements permitted by Section 11.1 and
Section 11.10;

(xix)    Investments consisting of Indebtedness, fundamental changes,
Dispositions and Restricted Payments permitted under Sections 11.1, 11.3, 11.4
and 11.6 (other than 11.6(c));

(xx)    Investments by the Borrower or any Subsidiary in any Subsidiary;

(xxi)    Investments consisting of licensing of intellectual property pursuant
to joint marketing arrangements with other Persons in the ordinary course of
business; and

(xxii)    Investments in office buildings or other similar commercial real
property useful for the operations of the Borrower in an amount not to exceed
$50,000,000 in the aggregate.

11.6    Limitation on Restricted Payments. The Borrower will not pay any
dividends (other than Restricted Payments payable solely in its Stock that is
not Disqualified Stock) or return any capital to its equity holders or make any
other distribution, payment or delivery of property or cash to its equity
holders as such, or redeem, retire, purchase or otherwise acquire, directly or
indirectly, for consideration, any shares of any class of its Stock or Stock
Equivalents or the Stock or Stock Equivalents of any direct or indirect parent
now or hereafter outstanding, or set aside any funds for any of the foregoing
purposes, or permit any of the Subsidiaries to purchase or otherwise acquire for
consideration (other than in connection with an Investment permitted by
Section 11.5) any Stock or Stock Equivalents of the Borrower (or any direct or
indirect parent thereof), now or hereafter outstanding (all of the foregoing,
“Restricted Payments”); except that:

(a)    the Borrower may redeem in whole or in part any of its Stock or Stock
Equivalents in exchange for another class of its Stock or Stock Equivalents or
with proceeds from substantially concurrent equity contributions or issuances of
new Stock or Stock Equivalents; provided that such new Stock or Stock
Equivalents contain terms and provisions at least as advantageous to the Lenders
in all material respects to their interests as those contained in the Stock or
Stock Equivalents redeemed thereby, and the Borrower may pay Restricted Payments
payable solely in the Stock and Stock Equivalents (other than Disqualified Stock
not otherwise permitted by Section 11.1) of the Borrower;

(b)    the Borrower may (i) redeem, acquire, retire or repurchase shares of its
Stock or Stock Equivalents held by any present or former officer, manager,
consultant, director or employee (or their respective Affiliates, estates,
spouses, former spouses, successors, executors, administrators, heirs, legatees,
distributees or immediate family members) of the Borrower and its Subsidiaries,
upon the death, disability, retirement or termination of employment of any such
Person or otherwise in accordance with

 

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any equity option or equity appreciation rights plan, any management, director
and/or employee equity ownership, benefit or incentive plan or agreement, equity
subscription plan, employment termination agreement or any other employment
agreements or equity holders’ agreement; provided that, for non-discretionary
repurchases, acquisitions, retirements or redemptions pursuant to the terms of
any equity option or equity appreciation rights plan, any management, director
and/or employee equity ownership, benefit or incentive plan or agreement, equity
subscription plan, employment termination agreement or any other employment
agreements or equity holders’ agreement, the aggregate amount of all cash paid
in respect of all such shares of Stock or Stock Equivalents so redeemed,
acquired, retired or repurchased in any calendar year does not exceed
$50,000,0000; and (ii) pay Restricted Payments in an amount equal to withholding
or similar Taxes payable or expected to be payable by any present or former
employee, director, manager or consultant (or their respective Affiliates,
estates or immediate family members) and any repurchases of Stock or Stock
Equivalents in consideration of such payments including deemed repurchases in
connection with the exercise of stock options so long as the amount of such
payments does not exceed $25,000,000 in the aggregate;

(c)    to the extent constituting Restricted Payments, the Borrower may make
Investments permitted by Section 11.5;

(d)    to the extent constituting Restricted Payments, the Borrower may enter
into and consummate transactions expressly permitted by any provision of
Section 11.3;

(e)    the Borrower may repurchase Stock or Stock Equivalents of the Borrower
(or any direct or indirect parent thereof) upon exercise of stock options or
warrants if such Stock or Stock Equivalents represents all or a portion of the
property to be delivered upon the exercise of such options or warrants;

(f)    the Borrower or any of the Subsidiaries may (i) pay cash in lieu of
fractional shares in connection with any dividend, split or combination thereof
or any Permitted Acquisition and (ii) so long as, after giving pro forma effect
thereto, (A) no Default or Event of Default shall have occurred and be
continuing and (B) if such payment is made while a Credit Rating Trigger Period
is in effect, honor any conversion request by a holder of convertible
Indebtedness and make cash payments in lieu of fractional shares in connection
with any such conversion and may make payments on convertible Indebtedness in
accordance with its terms;

(g)    the Borrower may pay any Restricted Payment within 60 days after the date
of declaration thereof, if at the date of declaration such payment would have
complied with the provisions of this Agreement;

(h)    during any Credit Rating Trigger Period, if, (i) after giving pro forma
effect thereto, no Event of Default shall have occurred and be continuing, and
(ii) Available Revolving Commitment (as defined in the First Lien First Out
Credit Agreement) is not less than 10% of the then effective First Lien First
Out Revolving Loan Limit (on a pro forma basis after giving effect to such
Restricted Payment), the Borrower may make, declare and pay additional
Restricted Payments in an aggregate amount not to exceed $5,000,000 per calendar
year, in cash or otherwise to the holders of its Stock and Stock Equivalents;

(i)    during any Investment Grade Period, if no Event of Default shall have
occurred and be continuing or would result therefrom and after giving effect to
the making of any such Restricted Payment, the Borrower shall be in compliance
on a pro forma basis with the Financial Performance Covenant, then the Borrower
may declare and pay Restricted Payments in cash or other property;

 

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(j)    [reserved];

(k)    the Borrower may make payments described in Sections 11.12(d), (e), (f)
and (i) (subject to the conditions set out therein); and

(l)    the Borrower and its Subsidiaries may make additional Restricted Payments
not to exceed the Available Amount at such time so long as (x) no Default or
Event of Default has occurred and is continuing or shall result therefrom and
(y) the Fixed Charge Coverage Ratio shall be no less than 2.25 to 1.00 after
giving pro forma effect to such Restricted Payment and any transactions taken in
connection therewith (including, without limitation, the incurrence of any
Indebtedness).

11.7    Limitations on Debt Payments and Amendments.

(a)    Except as permitted by 11.7(b), the Borrower shall not, and shall not
permit the other Credit Parties to, make any prepayment, repurchase, redemption
or defeasance of Existing Senior Notes, any 2016 Term Loans, any Permitted
Junior Indebtedness, any Permitted Additional Debt, or any Additional Pari Debt
(it being understood that payments of regularly scheduled cash interest in
respect of, payment of principal on the scheduled maturity date of, Existing
Senior Notes, 2016 Term Loans, Permitted Junior Indebtedness (only to the extent
permitted under the definition thereof), Additional Pari Debt, Permitted
Additional Debt shall be permitted prior to maturity, as applicable), except the
Borrower or any Credit Party, as applicable, may:

(i)    prepay, repurchase, redeem, defease or exchange any Additional Pari Debt
on a pro rata basis with 2017 Term Loans (determined on the basis of the
aggregate outstanding principal amount of the 2017 Term Loans and Additional
Pari Debt at such time)

(ii)    prepay, repurchase, redeem, defease or exchange any Permitted Additional
Debt, Existing Senior Notes, Permitted Junior Indebtedness or 2016 Term Loans
with an amount up to:

(A)    for all Net Cash Proceeds obtained as consideration for a Non-Borrowing
Base Disposition (other than a Disposition of the Elk Hills Power Plant) that
total less than or equal to $500,000,000 when aggregated with all consideration
obtained for Non-Borrowing Base Dispositions since the Effective Date, 100%
multiplied by the sum of (x) such Net Cash Proceeds and (y) Permitted Additional
Debt, Existing Senior Notes, Permitted Junior Indebtedness or 2016 Term Loans as
consideration for such Non-Borrowing Base Disposition (such amount reduced by
any portion of the total consideration for such Disposition received by the
Borrower or such other Credit Party in the form of Permitted Additional Debt,
Existing Senior Notes, Permitted Junior Indebtedness or 2016 Term Loans),

(B)    for all Net Cash Proceeds obtained as consideration for a Non-Borrowing
Base Disposition (other than a Disposition of the Elk Hills Power Plant) that
total greater than $500,000,000 but less than or equal to $1,000,000,000 when
aggregated with all consideration obtained for Non-Borrowing Base Dispositions
since the Effective Date, 50% multiplied by the sum of (x) such Net Cash
Proceeds and (y) Permitted Additional Debt, Existing Senior Notes, Permitted
Junior Indebtedness or 2016 Term Loans as consideration for such Non-Borrowing
Base Disposition (such amount reduced by any portion of the total consideration
for such Disposition received by the Borrower or such other Credit Party in the
form of Permitted Additional Debt, Existing Senior Notes, Permitted Junior
Indebtedness or 2016 Term Loans);

(C)    for all Net Cash Proceeds obtained as consideration for a Non-Borrowing
Base Disposition (other than a Disposition of the Elk Hills Power Plant) that
total greater than

 

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$1,000,000,000 when aggregated with all consideration obtained for Non-Borrowing
Base Dispositions since the Effective Date, 25% multiplied by the sum of
(x) such Net Cash Proceeds and (y) Permitted Additional Debt, Existing Senior
Notes, Permitted Junior Indebtedness or 2016 Term Loans as consideration for
such Non-Borrowing Base Disposition (such amount reduced by any portion of the
total consideration for such Disposition received by the Borrower or such other
Credit Party in the form of Permitted Additional Debt, Existing Senior Notes,
Permitted Junior Indebtedness or 2016 Term Loans); and

(D)    for all Net Cash Proceeds obtained as consideration for a Disposition of
the Elk Hills Power Plant, 50% multiplied by the sum of (x) such Net Cash
Proceeds and (y) Permitted Additional Debt, Existing Senior Notes, Permitted
Junior Indebtedness or 2016 Term Loans as consideration for such Disposition
(such amount reduced by any portion of the total consideration for such
Disposition received by the Borrower or such other Credit Party in the form of
Permitted Additional Debt, Existing Senior Notes, Permitted Junior Indebtedness
or 2016 Term Loans);

(iii)    within four months of the date of any Non-Borrowing Base Disposition or
the Disposition of the Elk Hills Power Plant, as applicable, prepay, repurchase,
redeem, defease or exchange any Permitted Additional Debt, Existing Senior
Notes, Permitted Junior Indebtedness or 2016 Term Loans with the proceeds of
revolving borrowings under the First Lien First Out Credit Agreement in an
amount equal to the positive difference, if any, between (x) the amount of
proceeds of such Non-Borrowing Base Disposition or such Disposition of the Elk
Hills Power Plant that would be permitted to be used to prepay, repurchase,
redeem, defease or exchange any Permitted Additional Debt, Existing Senior
Notes, Permitted Junior Indebtedness or 2016 Term Loans pursuant to
Section 11.7(a)(ii) and (y) the amount of proceeds of such Non-Borrowing Base
Disposition or such Disposition of the Elk Hills Power Plant, as the case may
be, that were previously used to prepay, repurchase, redeem, defease or exchange
Permitted Additional Debt, Existing Senior Notes, Permitted Junior Indebtedness
or 2016 Term Loans pursuant to Section 11.7(a)(ii);

(iv)    prepay, repurchase, redeem, defease or exchange any Permitted Additional
Debt, Existing Senior Notes, Permitted Junior Indebtedness or 2016 Term Loans at
a discount to par (calculated in accordance with the proviso below) with Net
Cash Proceeds of the incurrence of, or exchange for, Permitted Additional Debt,
Existing Senior Notes, Permitted Junior Indebtedness or Indebtedness incurred
under Section 11.1(aa);

(v)    prepay, repurchase, redeem, defease or exchange any Permitted Additional
Debt, Existing Senior Notes, Permitted Junior Indebtedness or 2016 Term Loans in
an amount not to exceed $200,000,000 in the aggregate; and

(vi)    prepay, repurchase, redeem or defease any Permitted Junior Indebtedness,
Existing Senior Notes, Permitted Additional Debt or 2016 Term Loans not to
exceed the Available Amount; provided that, in each case, (A) no Default or
Event of Default has occurred and is continuing at the time of any such
prepayment, repurchase, redemption or defeasance or would result therefrom and
(B) the Fixed Charge Coverage Ratio shall be no less than 2.25 to 1.00 after
giving pro forma effect to such prepayment, repurchase, redemption or defeasance
and any transactions taken in connection therewith (including, without
limitation, the incurrence of any Indebtedness);

provided that with respect to clause (ii) above, (A) the principal amount of
such Existing Senior Notes, Permitted Junior Indebtedness, Permitted Additional
Debt or 2016 Term Loans, as applicable, is prepaid, repurchased, redeemed,
defeased or exchanged at a discount to par (calculated for each prepayment,
repurchase, redemption or defeasance on a weighted average basis giving effect
(in addition to the discount in such prepayment, repurchase, redemption or
defeasance) to any prior discount in

 

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prepayments, repurchases, redemptions or defeasances that have occurred from the
first day of the calendar quarter in which such prepayment, repurchase,
redemption or defeasance is consummated to the date such prepayment, repurchase,
redemption or defeasance is consummated (it being understood that such
calculation shall be made exclusive of any consideration paid to the holders of
such Indebtedness in the form of Stock or the cash proceeds of Stock used to
prepay, repurchase, redeem or defease such Indebtedness)), (B) Prior to the
Discharge of First Lien First Out Obligations and after giving pro forma effect
to such prepayment repurchase, redemption or defeasance, Liquidity (as defined
in the First Lien First Out Credit Agreement) is equal to $200,000,000 or
greater, (C) no Event of Default has occurred and is continuing and (D) after
giving pro forma effect to such prepayment, repurchase, redemption or defeasance
and any related pro forma adjustment (including, without limitation, any
substantially concurrent incurrence of Indebtedness or Disposition and with such
pro forma adjustments including the recalculation of PV-10 on a pro forma
basis), the Borrower is in pro forma compliance with the Financial Performance
Covenant. For the avoidance of doubt, for the purposes of this Section 11.7(a),
the amount of any Existing Senior Notes, Permitted Junior Indebtedness, 2016
Term Loans, Additional Pari Debt or First Lien Third Out Indebtedness shall be
calculated using the Fair Market Value of such Existing Senior Notes, Permitted
Junior Indebtedness, 2016 Term Loans, Additional Pari Debt or First Lien Third
Out Indebtedness, as applicable, at the time of the prepayment, repurchase,
redemption or defeasance thereof.

(b)    Notwithstanding the foregoing, nothing in Section 11.7(a) shall prohibit:

(i)    the repayment or prepayment of intercompany subordinated Indebtedness
owed among the Borrower and/or the Subsidiaries, in either case unless an Event
of Default has occurred and is continuing and the Borrower has received a notice
from the First Lien First Out Administrative Agent instructing it not to make or
permit the Borrower and/or the Subsidiaries to make any such repayment or
prepayment;

(ii)    substantially concurrent transfers of credit positions in connection
with intercompany debt restructurings so long as such Indebtedness is permitted
by Section 11.1 after giving effect to such transfer;

(iii)    the prepayment, repurchase, redemption or other defeasance of Existing
Senior Notes, any Permitted Junior Indebtedness, any Permitted Additional Debt
or 2016 Term Loans (x) with the amount of the Net Cash Proceeds of the issuance
or sale of Stock (other than Disqualified Stock) of the Borrower within ninety
(90) calendar days of the issuance of such Stock (such amount, an “Equity Funded
Prepayment”), (y) with the proceeds of revolving borrowings under the First Lien
First Out Credit Agreement in an amount equal to the positive difference, if
any, between an Equity Funded Prepayment and the amount of such Equity Funded
Prepayment that are actually used to prepay, repurchase, redeem or defease
Existing Senior Notes, Permitted Junior Indebtedness, Permitted Additional or
2016 Term Loans pursuant to the foregoing clause (x) within four months of the
related issuance of Stock or (z) in exchange for Stock (other than Disqualified
Stock) of the Borrower;

(iv) the purchase of up to $100 million aggregate principal amount of Existing
Senior Notes with the proceeds of revolving borrowings under the First Lien
First Out Credit Agreement; or

(v) voluntary repayment or prepayment of Additional Pari Debt on a pro rata
basis with voluntary prepayments or prepayments of the Obligations (determined
on the basis of the aggregate outstanding principal amount of the 2017 Term
Loans and Additional Pari Debt at such time).

(c)    The Borrower will not amend or modify the Existing Senior Notes Documents
or the documentation governing any senior subordinated or subordinated Permitted
Additional Debt or the

 

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

11.8    Negative Pledge Agreements. The Borrower will not, and will not permit
any of the Subsidiaries to, enter into or permit to exist any Contractual
Requirement (other than this Agreement or any other Credit Document or any
documentation in respect of (a) secured Indebtedness otherwise permitted
hereunder, including Indebtedness incurred pursuant to Section 11.1(v) or
(b) the Credit Parties’ Oil and Gas Properties to the extent that the property
covered thereby is not required to be pledged as Collateral pursuant to the
definition of “Collateral Requirements”) that limits the ability of the Borrower
or any Guarantor to create, incur, assume or suffer to exist Liens on property
of such Person for the benefit of the Secured Parties with respect to the
Obligations or under the Credit Documents; provided that the foregoing shall not
apply to Contractual Requirements that (i)(x) exist on the Effective Date and
(to the extent not otherwise permitted by this Section 11.8) are listed on
Schedule 11.8 and (y) to the extent Contractual Requirements permitted by clause
(x) are set forth in an agreement evidencing Indebtedness or other obligations,
are set forth in any agreement evidencing any Refinancing of Indebtedness in
respect of the First Lien First Out Obligations permitted under Section 11.1(v)
or Permitted Refinancing Indebtedness incurred to Refinance such Indebtedness or
obligation so long as such Permitted Refinancing Indebtedness does not expand
the scope of such Contractual Requirement, (ii) are binding on a Subsidiary at
the time such Subsidiary first becomes a Subsidiary of the Borrower (or are
binding on property at the time such property first becomes property of the
Borrower or a Subsidiary), so long as such Contractual Requirements were not
entered into solely in contemplation of such Person becoming a Subsidiary of the
Borrower (or such property becomes property of the Borrower or a Subsidiary),
(iii) represent Indebtedness of a Subsidiary of the Borrower that is not a
Guarantor to the extent such Indebtedness is permitted by Section 11.1 so long
as such Contractual Requirement applies only to such Subsidiary, (iv) arise
pursuant to agreements entered into with respect to any sale, transfer, lease or
other Disposition permitted by Section 11.4 and applicable solely to assets
under such sale, transfer, lease or other Disposition, (v) are customary
provisions in joint venture agreements and other similar agreements applicable
to joint ventures permitted by Section 11.5 and applicable solely to such joint
venture or otherwise arise in (A) agreements which restrict the Disposition or
distribution of assets or property in oil and gas leases, joint operating
agreements, joint exploration and/or development agreements, participation
agreements or (B) any production sharing contract or similar instrument on which
a Lien cannot be granted without the consent of a third party (to the extent
that (i) the Collateral Agent and the Lenders otherwise have an Acceptable
Security Interest in the property covered by such contract or instrument
pursuant to the definition thereof or (ii) the property covered thereby is not
required to be pledged as Collateral pursuant to the definition of “Collateral
Requirements”) and, in each case, other similar agreements entered into in the
ordinary course of the oil and gas exploration and development business,
(vi) are negative pledges and restrictions on Liens in favor of any holder of
Indebtedness permitted under Section 11.1, but solely to the extent any negative
pledge relates to the property financed by or the subject of such Indebtedness,
(vii) are customary restrictions on leases, subleases, licenses or asset sale
agreements otherwise permitted hereby so long as such restrictions relate to the
assets subject thereto, (viii) comprise restrictions imposed by any agreement
relating to secured Indebtedness permitted pursuant to Section 11.1 to the
extent that such restrictions apply only to the property or assets securing such
Indebtedness, (ix) are customary provisions restricting subletting or assignment
of any lease governing a leasehold interest of the Borrower or any Subsidiary or
in leases prohibiting Liens on retained property rights of the lessor in
connection with operations of the lessee conducted on the leased property,
(x) are customary provisions restricting assignment of any agreement entered
into in the ordinary course of business, (xi) restrict the use of cash or other
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customers under contracts entered into in the ordinary course of business,
(xii) are imposed by applicable law, (xiii) exist under any documentation
governing any Permitted Refinancing Indebtedness incurred to Refinance any
Indebtedness but only to the extent such Contractual Requirement was contained
in the document evidencing the Indebtedness being refinanced, (xiv) are
customary net worth provisions contained in real property leases entered into by
Subsidiaries of the Borrower, so long as the Borrower has determined in good
faith that such net worth provisions would not reasonably be expected to impair
the ability of the Borrower and its Subsidiaries to meet their ongoing
obligations, (xv) relate to property, an interest in which has been granted or
conveyed to a Royalty Trust or a master limited partnership or which is subject
to a term net profits interest, and (xvi) are restrictions regarding licenses or
sublicenses by the Borrower and its Subsidiaries of intellectual property in the
ordinary course of business (in which case such restriction shall relate only to
such intellectual property).

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

(a)    contractual encumbrances or restrictions in effect on the Effective Date
that are described on Schedule 11.9 or pursuant to the Credit Documents;

(b)    the First Lien First Out Credit Agreement, the First Lien First Out
Credit Documents, 2016 Term Loan Documents, Existing Senior Notes, the Existing
Senior Notes Documents, the Existing Second Lien Notes and related guarantees;

(c)    purchase money obligations for property acquired in the ordinary course
of business and Capitalized Lease Obligations that impose restrictions on
transferring the property so acquired;

(d)    Requirement of Law or any applicable rule, regulation or order;

(e)    any agreement or other instrument of a Person acquired by or merged or
consolidated with or into the Borrower or any Subsidiary, or that is assumed in
connection with the acquisition of assets from such Person, in each case that is
in existence at the time of such transaction (but not created in contemplation
thereof), which encumbrance or restriction is not applicable to any Person, or
the properties or assets of any Person, other than the Person and its
Subsidiaries, or the property or assets of the Person and its Subsidiaries, so
acquired or designated;

(f)    contracts for the sale of assets, including customary restrictions with
respect to a Subsidiary of the Borrower pursuant to an agreement that has been
entered into for the sale or disposition of all or substantially all of the
Stock or assets of such Subsidiary;

(g)    secured Indebtedness otherwise permitted to be incurred pursuant to
Sections 11.1 and 11.2 that limit the right of the debtor to dispose of the
assets securing such Indebtedness;

(h)    restrictions on cash or other deposits or net worth imposed by customers
under contracts entered into in the ordinary course of business;

 

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(i)    other Indebtedness, Disqualified Stock or preferred stock of Subsidiaries
permitted to be incurred subsequent to the Effective Date pursuant to
Section 11.1 and either (A) the provisions relating to such encumbrance or
restriction contained in such Indebtedness are no less favorable to the
Borrower, taken as a whole, as determined by the board of directors of the
Borrower in good faith, than the provisions contained in this Agreement as in
effect on the Effective Date or (B) any such encumbrance or restriction
contained in such Indebtedness does not prohibit (except upon a default or an
event of default thereunder) the payment of dividends in an amount sufficient,
as determined by the board of directors of the Borrower in good faith, to make
scheduled payments of cash interest on the Obligations when due;

(j)    customary provisions in joint venture agreements or agreements governing
property held with a common owner and other similar agreements or arrangements
relating solely to such joint venture or property;

(k)    customary provisions contained in leases, sub-leases, licenses,
sub-licenses or similar agreements, in each case, entered into in the ordinary
course of business; and

(l)    any encumbrances or restrictions imposed by any amendments,
modifications, restatements, renewals, increases, supplements, refundings,
replacements or refinancings of the contracts, instruments or obligations
referred to in clauses (a) through (k) above; provided that such amendments,
modifications, restatements, renewals, increases, supplements, refundings,
replacements or refinancings are, in the good faith judgment of the Borrower’s
board of directors, no more restrictive in any material respect with respect to
such encumbrance and other restrictions taken as a whole than those prior to
such amendment, modification, restatement, renewal, increase, supplement,
refunding, replacement or refinancing.

11.10    Hedge Agreements.

(a)    During a Credit Rating Trigger Period, the Borrower will not, and will
not permit any Subsidiary to, enter into any Hedge Agreements with any Person
other than:

(i)    Hedge Agreements that are non-speculative (including Hedge Agreements
entered into to unwind or offset other permitted Hedge Agreements); provided
that:

(A)    any such Hedge Agreement does not have a term greater than sixty
(60) months from the date such Hedge Agreement is entered into;

(B)    at all times, on a net basis, (A) the aggregate notional volume for each
of natural gas (including natural gas liquids) and crude oil, calculated
separately, covered by market sensitive Hedge Agreements for any month in the
first year of the forthcoming five year period (other than Excluded Hedges)
shall not exceed 90% of the Projected Volume of natural gas (including natural
gas liquids) and crude oil production, calculated separately, for each such
month in such forthcoming period and (B) the aggregate notional volume for each
of natural gas (including natural gas liquids) and crude oil, calculated
separately, covered by market sensitive Hedge Agreements for any month in each
of the second through fifth years of the forthcoming five year period (other
than Excluded Hedges) shall not exceed 80% of the Projected Volume of natural
gas (including natural gas liquids) and crude oil production, calculated
separately, for each such month in such forthcoming period;

(C)    notwithstanding the limitations set forth in clause (i) of this
Section 11.10(a), in contemplation of a Permitted Acquisition, the Borrower and
its Subsidiaries may enter into additional market sensitive Hedge Agreements
such that the aggregate notional volumes for

 

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each of natural gas (including natural gas liquids) and crude oil, calculated
separately, for each month in the forthcoming five year period covered by such
additional market sensitive Hedge Agreements do not exceed 70% of the Projected
Volume of natural gas (including natural gas liquids) and crude oil production,
calculated separately, from the estimated reserves to be acquired in such
Permitted Acquisition for each month in such forthcoming period; provided such
additional Hedge Agreements are entered into (A) after the execution of a
definitive agreement with respect to a Permitted Acquisition, but in any event
no earlier than 90 days prior to the proposed funding date of such Permitted
Acquisition and (B) in the event such agreement is terminated or such Permitted
Acquisition is otherwise not consummated within 90 days after such initial
additional market sensitive Hedge Agreements have been entered into, then within
15 days after such termination or the end of such 90 day (or longer as soon as
commercially practicable thereafter, but in any event within 180 days) period,
as applicable, the Borrower shall and shall cause the Subsidiaries to novate,
unwind or otherwise dispose of market sensitive Hedge Agreements to the extent
necessary to be in compliance with the limitations set forth in clause (i) of
this Section 11.10(a); and

(D)    so long as the Borrower and the Subsidiaries properly identify and
consistently report such hedges, the Borrower and the Subsidiaries may utilize
crude oil hedges as a substitute for hedging natural gas liquids.

(ii)    Hedge Agreements entered into with the purpose and effect of (i) fixing
or limiting interest rates on a principal amount of indebtedness of any Credit
Party that is accruing interest at a variable rate or (ii) obtaining variable
interest rates on a principal amount of indebtedness of any Credit Party that is
accruing interest at a fixed rate (in each case including Hedge Agreements
entered into to unwind or offset other permitted Hedge Agreements), provided
that the aggregate notional amount of such Hedge Agreements does not (on a net
basis) exceed the outstanding principal balance of the variable or fixed rate,
as the case may be, Indebtedness of the Credit Parties at the time such Hedge
Agreement is entered into.

(b)    During an Investment Grade Period, the Borrower will not, and will not
permit any Subsidiary to, enter into any Hedge Agreements with any Person other
than (i) Hedge Agreements not for speculative purposes entered into to hedge or
mitigate risks to which the Borrower or any Subsidiary has or may have exposure
(including with respect to commodity prices), (ii) Hedge Agreements not for
speculative purposes entered into in order to effectively cap, collar or
exchange interest rates (from fixed to floating rates, from one floating rate to
another floating rate or otherwise) with respect to any interest-bearing
liability or investment of the Borrower or any Subsidiary and (iii) other Hedge
Agreements not for speculative purposes permitted under the risk management
policies approved by the Borrower’s Board of Directors from time to time and not
subject the Borrower and its Subsidiaries to material speculative risks.

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

 

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

11.12    Transactions with Affiliates. The Borrower will not, and will not
permit any of the Subsidiaries to conduct, any material transaction with any of
its Affiliates (other than the Borrower and the Subsidiaries or any entity that
becomes a Subsidiary as a result of such transaction) on terms other than those
that are substantially as favorable to the Borrower or such Subsidiary as it
would obtain at the time in a comparable arm’s-length transaction (which
includes, for the avoidance of doubt, any transaction consummated for Fair
Market Value) with a Person that is not an Affiliate, which, if involving
aggregate payments or considerations in excess of $75,000,000, shall be
determined by the board of directors or managers of the Borrower or such
Subsidiary in good faith; provided that the foregoing restrictions shall not
apply to:

(a)    the payment of Transaction Expenses,

(b)    the OPC Related Transactions as in effect from time to time, provided
that any amendment or modification after the Spinoff Date, taken as a whole,
shall not be adverse to the Lenders in any material respect,

(c)    loans, advances and other transactions between or among the Borrower, any
Subsidiary or any joint venture (regardless of the form of legal entity) in
which the Borrower or any Subsidiary has invested (and which Subsidiary or joint
venture would not be an Affiliate of the Borrower or such Subsidiary, but for
the Borrower’s or such Subsidiary’s ownership of Stock or Stock Equivalents in
such joint venture or such Subsidiary) to the extent permitted under Article XI,

(d)    employment and severance arrangements and health, disability, retirement
savings, employee benefit and similar insurance or benefit plans between the
Borrower (or any direct or indirect parent thereof) and the Subsidiaries and
their respective directors, officers, employees or consultants (including
management and employee benefit plans or agreements, subscription agreements or
similar agreements pertaining to the repurchase of Stock or Stock Equivalents
pursuant to put/call rights or similar rights with current or former employees,
officers, directors or consultants and equity option or incentive plans and
other compensation arrangements) in the ordinary course of business or as
otherwise approved by the board of directors or managers of the Borrower (or any
direct or indirect parent thereof),

(e)    the payment of customary fees and reasonable out of pocket costs to, and
indemnities provided on behalf of, directors, managers, consultants, officers
and employees of the Borrower (or any direct or indirect parent thereof) and the
Subsidiaries in the ordinary course of business to the extent attributable to
the ownership or operation of, or in connection with any services provided to,
the Borrower and the Subsidiaries,

(f)    transactions pursuant to agreements in existence on the Effective Date
and set forth on Schedule 11.12 or any amendment thereto to the extent such an
amendment is not adverse, taken as a whole, to the Lenders in any material
respect,

(g)    Restricted Payments, redemptions, repurchases and other actions permitted
under Section 11.6 and Section 11.7,

(h)    any issuance of Stock or Stock Equivalents or other payments, awards or
grants in cash, securities, Stock, Stock Equivalents or otherwise pursuant to,
or the funding of, employment arrangements, equity options and equity ownership
plans approved by the board of directors or board of managers of the Borrower
(or any direct or indirect parent thereof),

 

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(i)    transactions with joint ventures entered into in the ordinary course of
business and in a manner consistent with prudent business practice followed by
companies in the industry of the Borrower and its Subsidiaries,

(j)    payments by the Borrower (or any direct or indirect parent thereof) and
the Subsidiaries pursuant to tax sharing agreements among the Borrower (and any
such parent) and the Subsidiaries on customary terms; provided that payments by
Borrower and the Subsidiaries under any such tax sharing agreements shall not
exceed the excess (if any) of the amount they would have paid on a standalone
basis over the amount they actually pay directly to Governmental Authorities,
and

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

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

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

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

ARTICLE XII

EVENTS OF DEFAULT

Upon the occurrence of any of the following specified events (each an “Event of
Default”):

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

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

 

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12.3    Covenants. Any Credit Party shall:

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

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

12.4    Default Under Other Agreements.

(a)    Prior to or at the time of the Discharge of First Lien First Out
Obligations and to the extent that the First Lien First Out Credit Agreement
contains or contained, respectively, an event of default provision permitting
the First Lien First Out Lenders to accelerate the First Lien First Out
Obligations upon the default of other Indebtedness in an amount in excess of
$125,000,000, the Borrower or any of the Subsidiaries shall (i) default in any
payment with respect to any Indebtedness (other than Indebtedness described in
Section 12.1) in excess of $125,000,000, beyond the grace period, if any,
provided in the instrument or agreement under which such Indebtedness was
created or (ii) without limiting the provisions of clause (i), any such
Indebtedness shall be declared to be due and payable, or shall be required to be
prepaid, defeased or redeemed other than by a regularly scheduled required
prepayment or as a mandatory prepayment (and, other than secured Indebtedness
that becomes due as a result of a Disposition of the property or assets securing
such Indebtedness permitted under this Agreement), prior to the stated maturity
thereof.

(b)    In all other instances not referred to in clause (a) of this
Section 12.4, the Borrower or any of the Subsidiaries shall (i) default with
respect to any Indebtedness (other than Indebtedness described in Section 12.1)
in excess of $125,000,000, and such Indebtedness shall have been declared to be
due and payable, or shall be required to be prepaid, defeased or redeemed other
than by a regularly scheduled required prepayment or as a mandatory prepayment
(and, other than secured Indebtedness that becomes due as a result of a
Disposition of the property or assets securing such Indebtedness permitted under
this Agreement), prior to the stated maturity thereof.

12.5    Bankruptcy, Etc. The Borrower or any Specified Subsidiary shall commence
a voluntary case, proceeding or action concerning itself under (a) Title 11 of
the United States Code entitled “Bankruptcy”; or (b) in the case of any Foreign
Subsidiary that is a Specified Subsidiary, any domestic or foreign law relating
to bankruptcy, judicial management, insolvency, reorganization, administration
or relief of debtors in effect in its jurisdiction of incorporation, in each
case as now or hereafter in effect, or any successor thereto (collectively, the
“Bankruptcy Code”); or an involuntary case, proceeding or action is commenced
against the Borrower or any Specified Subsidiary and the petition is not
dismissed within 60 days after commencement of the case, proceeding or action
or, in connection with any such voluntary proceeding or action, the Borrower or
any Specified Subsidiary commences any other proceeding or action under any
reorganization, arrangement, adjustment of debt, relief of debtors, dissolution,
insolvency or liquidation or similar law of any jurisdiction whether now or
hereafter in effect relating to the Borrower or any Specified Subsidiary; or a
custodian (as defined in the Bankruptcy Code), receiver, receiver manager,
trustee or similar person is appointed for, or takes charge of, all or
substantially all of the property of the Borrower or any Specified Subsidiary;
or there is commenced against the Borrower or any Specified Subsidiary any such
proceeding or action that remains undismissed for a period of 60 days; or any
order of relief or other order approving any such case or proceeding or action
is entered; or the Borrower or any Specified Subsidiary suffers any appointment
of any custodian, receiver, receiver manager, trustee or the like for it or any
substantial part of its property to continue undischarged or unstayed for a
period of 60 days; or the Borrower or any Specified Subsidiary makes a general
assignment for the benefit of creditors.

 

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12.6    ERISA.

(a)    Any Plan shall fail to satisfy the minimum funding standard required for
any plan year or part thereof or a waiver of such standard or extension of any
amortization period is sought or granted under Section 412 of the Code; any Plan
or Multiemployer Plan is or shall have been terminated or is the subject of
termination proceedings under ERISA (including the giving of written notice
thereof); an event shall have occurred or a condition shall exist in either case
entitling the PBGC to terminate any Plan or to appoint a trustee to administer
any Plan (including the giving of written notice thereof); the Borrower or any
ERISA Affiliate has incurred or is likely to incur a liability to or on account
of a Plan or a Multiemployer Plan under Section 409, 502(i), 502(l), 515, 4062,
4063, 4064, 4069, 4201 or 4204 or of ERISA or Section 4971 or 4975 of the Code
(including the giving of written notice thereof);

(b)    there results from any event or events set forth in clause (a) of this
Section 12.6 the imposition of a lien, the granting of a security interest, or a
liability; and

(c)    such lien, security interest or liability would be reasonably likely to
have a Material Adverse Effect.

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

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

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

12.10    Change of Control. A Change of Control shall occur.

Upon the occurrence of, and at any time thereafter, if any Event of Default
shall then be continuing, the Administrative Agent may and, upon the written
request of the Majority Lenders, shall, by written notice to the Borrower, take
any or all of the following actions, without prejudice to the rights of the
Administrative Agent or any Lender to enforce its claims against the Borrower or
any other Credit Party, except as otherwise specifically provided for in this
Agreement (provided that, if an Event of Default specified in Section 12.5 shall
occur with respect to the Borrower, the result that would occur upon the giving
of written notice by the Administrative Agent as specified below shall occur
automatically without the giving of any such notice): declare the principal of
and any accrued interest and fees, and the call premium (including Premium
Amounts) (as provided in Section 5.1), in respect of any or all Loans and any or
all Obligations owing hereunder and thereunder to be, whereupon the same shall

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become, forthwith due and payable without presentment, demand, protest or other
notice of any kind, all of which are hereby waived by the Borrower. In addition,
after the occurrence and during the continuance of an Event of Default, the
Administrative Agent and the Lenders will have all other rights and remedies
available at law and equity. If the maturity of the Loans shall be accelerated
(under any provision of this Article XII or by operation of law or otherwise) a
premium equal to the Premium Amount (determined as if the Loans were prepaid,
refinanced, substituted, replaced or otherwise repaid at the time of such
acceleration at the option of the Borrower pursuant to Section 5.1) shall become
immediately due and payable, and Borrower will pay such premium, as compensation
to the Lenders for the loss of their investment opportunity and not as a
penalty, whether or not a Bankruptcy Event has commenced, and (if a Bankruptcy
Event has commenced) without regard to whether such Bankruptcy Event is
voluntary or involuntary, or whether payment occurs pursuant to a motion, plan
of reorganization, or otherwise, and without regard to whether the Loans and
other Obligations are satisfied or released by foreclosure (whether or not by
power of judicial proceeding), deed in lieu of foreclosure or by any other
means. Without limiting the foregoing, any redemption, prepayment, repayment, or
payment of, or the satisfaction of any claims with respect to, the Obligations
in or in connection with a Bankruptcy Event shall constitute an optional
prepayment thereof under the terms of Section 5.1 and require the immediate
payment of the Premium Amount. Any premium payable pursuant to this Article XII
shall be presumed to be the liquidated damages sustained by each Lender as a
result of the early redemption and the Credit Parties agreed that it is
reasonable under the circumstances currently existing. EACH CREDIT PARTY
EXPRESSLY WAIVES (TO THE FULLEST EXTENT IT MAY LAWFULLY DO SO) THE PROVISIONS OF
ANY PRESENT OR FUTURE STATUTE OR LAW THAT PROHIBITS OR MAY PROHIBIT THE
COLLECTION OF THE PREMIUM AMOUNT IN CONNECTION WITH ANY SUCH ACCELERATION. The
Borrower expressly agrees (to the fullest extent it may lawfully do so) that:
(A) the Premium Amount is reasonable and the product of an arm’s length
transaction between sophisticated business people, ably represented by counsel;
(B) the Premium Amount shall be payable notwithstanding the then prevailing
market rates at the time payment is made; (C) there has been a course of conduct
between Lenders and the Borrower giving specific consideration in this
transaction for such agreement to pay the Premium Amount; and (D) the Borrower
shall be estopped hereafter from claiming differently than as agreed to in this
paragraph. The Borrower expressly acknowledges that its agreement to pay the
Premium Amount to the Administrative Agent for the ratable benefit of the
Lenders as herein described is a material inducement to Lenders to provide the
Commitments and make the Loans.

Any amount received by the Administrative Agent from any Credit Party (or from
proceeds of any Collateral) following any acceleration of the Obligations under
this Agreement or any Event of Default with respect to the Borrower under
Section 12.5 shall be applied:

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

(ii)    second, to the 2017 Secured Parties, an amount equal to all Obligations
due and owing to them on the date of distribution and, if such moneys shall be
insufficient to pay such amounts in full, then ratably (without priority of any
one over any other) to such 2017 Secured Parties in proportion to the unpaid
amount thereof; and

(iii)    third, pro rata to any other Obligations then due and owing; and

(iv)    fourth, any surplus then remaining, after all of the Obligations then
due shall have been indefeasibly paid in full in cash, shall be paid to the
Borrower or its successors or assigns or to whomever may be lawfully entitled to
receive the same or as a court of competent jurisdiction may award.

 

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Any amount received by the Administrative Agent from any Credit Party (or from
proceeds of any Collateral) following any acceleration of the Obligations under
this Agreement or any Event of Default with respect to the Borrower under
Section 12.5 shall be applied in accordance with Section 6.01 of the First Lien
Intercreditor Agreement.

ARTICLE XIII

THE ADMINISTRATIVE AGENT

13.1    Appointment.

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

(b)    Each of the Joint Lead Arrangers and the Bookrunners, each in its
capacity as such, shall not have any obligations, duties or responsibilities
under this Agreement but shall be entitled to all benefits of this Article XIII.

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

13.3    Exculpatory Provisions.

(a)    No Agent nor any of its officers, directors, employees, agents,
attorneys-in-fact or Affiliates shall be (i) liable to any Lender for any action
lawfully taken or omitted to be taken by any of them under or in connection with
this Agreement or any other Credit Document (except for its or such Person’s own
gross negligence or willful misconduct, as determined in the final judgment of a
court of competent jurisdiction, in connection with its duties expressly set
forth herein (IT BEING THE

 

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

(b)    No Agent shall be responsible for (i) perfecting, maintaining,
monitoring, preserving or protecting the security interest or lien granted under
this Agreement, any other Credit Document or any agreement or instrument
contemplated hereby or thereby, (ii) the filing, re-filing, recording,
re-recording or continuing or any document, financing statement, mortgage,
assignment, notice, instrument of further assurance or other instrument in any
public office at any time or times or (iii) providing, maintaining, monitoring
or preserving insurance on or the payment of taxes with respect to any of the
Collateral. The actions described in items (i) through (iii) shall be the sole
responsibility of the Borrower.

(c)    Each Agent has accepted and is bound by this Agreement and the other
Credit Documents executed by such Agent as of the date of this Agreement and, as
directed in writing by the Majority Lenders, each Agent shall execute additional
Credit Documents delivered to it after the date of this Agreement; provided,
however, that such additional Credit Documents do not adversely affect the
rights, privileges, benefits and immunities of such Agent. Each Agent will not
otherwise be bound by, or be held obligated by, the provisions of any loan
agreement, indenture or other agreement governing the Obligations (other than
this Agreement and the other Credit Documents to which such Agent is a party).

(d)    No written direction given to any Agent by the Majority Lenders or the
Borrower or any Loan Party that in the sole judgment of such Agent imposes,
purports to impose or might reasonably be expected to impose upon such Agent any
obligation or liability not set forth in or arising under this Agreement and the
other Credit Documents will be binding upon such Agent unless such Agent elects,
at its sole option, to accept such direction.

 

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(e)    No Agent shall be responsible or liable for any failure or delay in the
performance of its obligations under this Agreement or the other Credit
Documents arising out of or caused, directly or indirectly, by circumstances
beyond its reasonable control, including, without limitation, acts of God;
earthquakes; fire; flood; terrorism; wars and other military disturbances;
sabotage; epidemics; riots; business interruptions; loss or malfunctions of
utilities, computer (hardware or software) or communication services; accidents;
labor disputes; acts of civil or military authority and governmental action.

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

(g)    No Agent shall be liable for any error of judgment made in good faith by
an Authorized Officer of such Agent unless it shall be proved that the Agent was
negligent in ascertaining the pertinent facts.

(h)    Delivery of any reports, information and documents to the Agents, other
than any notices required to be provided under this Agreement, is for
informational purposes only and such Agent’s receipt of such shall not
constitute constructive notice of any information contained therein or
determinable from information contained therein, including the Borrower’s
compliance with any of its covenants hereunder.

(i)    No Agent shall be required to qualify in any jurisdiction in which it is
not presently qualified to perform its obligations as such Agent.

(j)    Beyond the exercise of reasonable care in the custody of the Collateral
in its possession, each Agent will have no duty as to any Collateral in its
possession or control or in the possession or control of any agent or bailee or
any income thereon or as to preservation of rights against prior parties or any
other rights pertaining thereto. Each Agent will be deemed to have exercised
reasonable care in the custody of the Collateral in its possession if the
Collateral is accorded treatment substantially equal to that which it accords
its own property, and each Agent will not be liable or responsible for any loss
or diminution in the value of any of the Collateral by reason of the act or
omission of any carrier, forwarding agency or other agent or bailee selected by
such Agent in good faith.

(k)    No Agent will be responsible for the existence, genuineness or value of
any of the Collateral or for the validity, perfection, priority or
enforceability of the Liens in any of the Collateral, whether impaired by
operation of law or by reason of any action or omission to act on its part
hereunder, except to the extent such action or omission constitutes gross
negligence or willful misconduct on the part of such Agent, as determined by a
court of competent jurisdiction in a final, nonappealable order, for the
validity or sufficiency of the Collateral or any agreement or assignment
contained therein, for the validity of the title of any grantor to the
Collateral, for insuring the Collateral or for the payment of taxes, charges,
assessments or Liens upon the Collateral or otherwise as to the maintenance of
the Collateral. Each Agent hereby disclaims any representation or warranty to
the present and future holders of the Obligations concerning the perfection of
the Liens granted hereunder or in the value of any of the Collateral.

 

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(l)    In the event that any Agent is required to acquire title to an asset for
any reason, or take any managerial action of any kind in regard thereto, in
order to carry out any fiduciary or trust obligation for the benefit of another,
which in such Agent’s sole discretion may cause such Agent to be considered an
“owner or operator” under any environmental laws or otherwise cause such Agent
to incur, or be exposed to, any environmental liability or any liability under
any other federal, state or local law, such Agent reserves the right, instead of
taking such action, either to resign as Agent or to arrange for the transfer of
the title or control of the asset to a court appointed receiver. Absent gross
negligence or willful misconduct, no Agent will be liable to any person for any
environmental liability or any environmental claims or contribution actions
under any federal, state or local law, rule or regulation by reason of such
Agent’s actions and conduct as authorized, empowered and directed hereunder or
relating to any kind of discharge or release or threatened discharge or release
of any hazardous materials into the environment.

(m)    In connection with its obtaining rates or values from reference banks or
brokers, the Administrative Agent makes no warranty whatsoever as to the value
or correctness of these rates or values, all of which lie with the source
institutions for such rates.

13.4    Reliance. Each Agent shall be entitled to rely, and shall be fully
protected in relying, upon any writing, resolution, notice, consent,
certificate, affidavit, letter, telephone, e-mail or other electronic means,
statement, order or other document or instruction believed by it to be genuine
and correct and to have been signed, sent or made by the proper Person or
Persons. Each Agent may deem and treat the Lender specified in the Register with
respect to any amount owing hereunder as the owner thereof for all purposes
unless a written notice of assignment, negotiation or transfer thereof shall
have been filed with such Agent. Each Agent may also rely upon any statement
made to it orally or by telephone and believed by it to have been made by the
proper person, and shall not incur any liability for relying thereon. In
determining compliance with any condition hereunder to the Effective Date, that
by its terms must be fulfilled to the satisfaction of a Lender, each Agent may
presume that such condition is satisfactory to such Lender unless such Agent
shall have received notice to the contrary from such Lender prior to the
Effective Date. Each Agent may consult with legal counsel (including counsel to
the Borrower), independent accountants and other experts selected by it, and
shall not be liable for any action taken or not taken by it in good faith in
accordance with the advice of any such counsel, accountants or experts. Each
Agent shall be fully justified in failing or refusing to take any action under
this Agreement or any other Credit Document unless such Agent shall first
receive such advice or concurrence of the Required Lenders (or such other number
or percentage of the Lenders as shall be necessary under the circumstances
provided herein) and until such instructions are received, such Agent shall act,
or refrain from acting, as it deems advisable. If any Agent so requests, it
shall first be indemnified to its reasonable satisfaction by the Lenders or
Required Lenders, as applicable, against any and all liability and expense that
may be incurred by it by reason of taking or continuing to take any such action.
Each Agent shall in all cases be fully protected in acting, or in refraining
from acting, under this Agreement or any other Credit Document in accordance
with a request or consent of the Majority Lenders and such request and any
action taken or failure to act pursuant thereto shall be binding upon all of the
Lenders. No provision of this Agreement or any other Credit Document or any
agreement or instrument contemplated hereby or thereby, the transactions
contemplated hereby or thereby shall require any Agent to: (i) expend or risk
its own funds or provide indemnities in the performance of any of its duties
hereunder or the exercise of any of its rights or power or (ii) otherwise incur
any financial liability in the performance of its duties or the exercise of any
of its rights or powers. For purposes of determining compliance with the
conditions specified in Article VI and Article VIII on the Effective Date, each
Lender that has signed this Agreement shall be deemed to have consented to,
approved or accepted or to be satisfied with, each document or other matter
required thereunder to be consented to or approved by or acceptable or
satisfactory to a Lender unless the Administrative Agent shall have received
notice from such Lender prior to the proposed Effective Date specifying its
objection thereto.

 

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

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

13.7    No Other Duties, Etc. Anything herein to the contrary notwithstanding
(a) the Bookrunners, Joint Lead Arrangers, Senior Co-Managers and Co-Managers
listed on the cover page hereof shall have any powers, duties or
responsibilities under this Agreement or any of the other Credit Documents and
(b) the Collateral Agent shall be a third party beneficiary to the rights of the
Collateral Agent hereunder, entitled to enforce such rights as if a party
hereto, but shall have no obligations or duties hereunder; all such duties and
rights of the Collateral Agent being solely those expressly provided for in the
First Out Collateral Agency Agreement and the other Credit Documents to which it
is a party.

13.8    Indemnification. The Lenders agree to indemnify each Agent in its
capacity as such upon demand (and, with respect to any EEA Financial
Institution, such amounts shall be deemed due and payable no later than six
(6) days upon demand therefor) (to the extent not reimbursed by the Credit
Parties and without limiting the obligation of the Credit Parties to do so),
ratably according to their respective portions of the Commitments or Loans, as
applicable, outstanding in effect on the date on which indemnification is sought
(or, if indemnification is sought after the date upon which the Commitments
shall have terminated and the Loans shall have been paid in full, ratably in
accordance with their respective portions of the Total Exposure in effect
immediately prior to such date), from and against any and all claims,
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, charges, expenses or disbursements of any kind whatsoever that may at any
time occur (including at any time following the payment of the Loans) be imposed
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any way relating to or arising out of the Commitments, this Agreement, any of
the other Credit Documents or any documents contemplated by or referred to
herein or therein or the transactions contemplated hereby or thereby or any
action taken or omitted by such Agent under or in connection with any of the
foregoing; provided that no Lender shall be liable to any Agent for the payment
of any portion of such claims, liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, charges, expenses or disbursements
resulting from such Agent’s gross negligence, bad faith or willful misconduct as
determined by a final judgment of a court of competent jurisdiction (IT BEING
THE INTENTION OF THE PARTIES HERETO THAT THE AGENTS AND ANY RELATED PARTIES
SHALL, IN ALL CASES, BE INDEMNIFIED FOR ITS ORDINARY, COMPARATIVE, CONTRIBUTORY
OR SOLE NEGLIGENCE); provided, further, that no action taken in accordance with
the directions of the Majority Lenders (or such other number or percentage of
the Lenders as shall be required by the Credit Documents) shall be deemed to
constitute gross negligence, bad faith or willful misconduct for purposes of
this Section 13.8. In the case of any investigation, litigation or proceeding
giving rise to any claims, liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, charges, expenses or disbursements of any kind
whatsoever that may at any time occur (including at any time following the
payment of the Loans), this Section 13.8 applies whether any such investigation,
litigation or proceeding is brought by any Lender or any other Person. Without
limitation of the foregoing, each Lender shall reimburse each Agent upon demand
for its ratable share of any costs or out-of-pocket expenses (including
attorneys’ fees) incurred by such Agent in connection with the preparation,
execution, delivery, administration, modification, amendment or enforcement
(whether through negotiations, legal proceedings or otherwise) of, or legal
advice rendered in respect of rights or responsibilities under, this Agreement,
any other Credit Document, or any document contemplated by or referred to
herein, to the extent that such Agent is not reimbursed for such expenses by or
on behalf of the Borrower; provided that such reimbursement by the Lenders shall
not affect the Borrower’s continuing reimbursement obligations with respect
thereto. If any indemnity furnished to any Agent for any purpose shall, in the
opinion of such Agent, be insufficient or become impaired, such Agent may call
for additional indemnity and cease, or not commence, to do the acts indemnified
against until such additional indemnity is furnished; provided, in no event
shall this sentence require any Lender to indemnify any Agent against any claim,
liability, obligation, loss, damage, penalty, action, judgment, suit, cost,
charge, expense or disbursement in excess of such Lender’s pro rata portion
thereof; and provided, further, this sentence shall not be deemed to require any
Lender to indemnify any Agent against any claim, liability, obligation, loss,
damage, penalty, action, judgment, suit, cost, charge, expense or disbursement
resulting from such Agent’s gross negligence, bad faith or willful misconduct.
The agreements in this Section 13.8 shall survive the resignation or removal of
any Agents, the payment of the Loans and all other amounts payable hereunder and
the exercise of Write-Down and Conversion Powers by an EEA Resolution Authority
with respect to any Lender that is an EEA Financial Institution.

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

13.10    Successor Agent. Each Agent may at any time give notice of its
resignation to the Lenders and the Borrower. If an Agent becomes a Defaulting
Lender, then such Agent may be removed as an Agent at the request of the
Borrower. Upon receipt of any such notice of resignation or removal, as the case
may be, the Borrower shall have the right, subject to the consent of the
Majority Lenders (not to be unreasonably withheld or delayed), to appoint a
successor, which shall be a Lender, an Affiliate of a Lender, a bank with an
office in the United States, or an Affiliate of any such bank with an office in
the United States. If, in the case of the resignation of an Agent, no such
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appointed by the Borrower and shall have accepted such appointment within 30
days after such Agent gives notice of its resignation, then for the Collateral
Agent, the Collateral Agent may on behalf of the Lenders appoint a successor
Collateral Agent meeting the qualifications set forth above and, for the
Administrative Agent, the Administrative Agent’s resignation shall nevertheless
thereupon become effective and the Lenders shall assume and perform all of the
duties of the Administrative Agent until such time, if any, as the Required
Lenders appoint a successor Administrative Agent. Upon the acceptance of a
successor’s appointment as an Agent hereunder, and upon the execution and filing
or recording of such financing statements, or amendments thereto, and such other
instruments or notices, as may be necessary or desirable, or as the Majority
Lenders may request, in order to continue the perfection of the Liens granted or
purported to be granted by the Security Documents, such successor shall succeed
to and become vested with all of the rights, powers, privileges and duties of
the retiring (or retired) Agent. The retiring Agent shall thereafter be
discharged from all of its duties and obligations hereunder or under the other
Credit Documents (if not already discharged therefrom as provided above in this
Section). The fees payable by the Borrower (following the effectiveness of such
appointment) to the successor Agent shall be as agreed between the Borrower and
such successor, both acting reasonably. After the retiring Agent’s resignation
hereunder and under the other Credit Documents, the provisions of this Article
XIII (including Section 13.8) and Section 14.5 shall continue in effect for the
benefit of such retiring Agent, its sub agents and their respective Related
Parties in respect of any actions taken or omitted to be taken by any of them
while the retiring Agent was acting as such Agent.

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

13.12    Security Documents and Guarantee. Each 2017 Secured Party hereby
further authorizes the Collateral Agent, on behalf of and for the benefit of
Secured Parties, to be the agent for and representative of the 2017 Secured
Parties under the First Out Collateral Agency Agreement with respect to the
Collateral and the Security Documents. Subject to Section 14.1, without further
written consent or authorization from any 2017 Secured Party, the Collateral
Agent may (a) execute any documents or instruments necessary in connection with
a Disposition of assets permitted by this Agreement, (b) release any Lien
encumbering any item of Collateral that is the subject of such Disposition of
assets or with respect to which the Majority Lenders (or such other Lenders as
may be required to give such consent under Section 14.1) have otherwise
consented, (c) release any Guarantor from the Guarantee with respect to which
the Majority Lenders (or such other Lenders as may be required to give such
consent under Section 14.1) have otherwise consented, (d) enter into a joinder
to the Existing Intercreditor Agreement, (e) enter into a First Lien
Intercreditor Agreement in the form of Exhibit I or (f) enter into an
intercreditor agreement otherwise reasonably acceptable to the Collateral Agent
in substance similar to the First Lien Intercreditor Agreement and (g) enter
into the First Out Collateral Agency Agreement.

 

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13.13    Right to Realize on Collateral and Enforce Guarantee. Anything
contained in any of the Credit Documents to the contrary notwithstanding, the
Borrower, the Collateral Agent and each 2017 Secured Party hereby agree that
(a) no 2017 Secured Party shall have any right individually to realize upon any
of the Collateral or to enforce the Guarantee; it being understood and agreed
that all powers, rights and remedies hereunder may be exercised solely by the
Collateral Agent, on behalf of the Secured Parties in accordance with the terms
hereof and all powers, rights and remedies under the Security Documents may be
exercised solely by the Collateral Agent, and (b) in the event of a foreclosure
by the Collateral Agent on any of the Collateral pursuant to a public or private
sale or other disposition, the Collateral Agent or any Lender may be the
purchaser or licensor of any or all of such Collateral at any such sale or other
disposition and the Collateral Agent, as agent for and representative of the
Secured Parties (but not any Lender or Lenders in its or their respective
individual capacities unless Majority Lenders shall otherwise agree in writing)
shall be entitled, for the purpose of bidding and making settlement or payment
of the purchase price for all or any portion of the Collateral sold at any such
public sale, to use and apply any of the Obligations as a credit on account of
the purchase price for any collateral payable by the Collateral Agent at such
sale or other disposition.

13.14    Administrative Agent May File Proofs of Claim. In case of the pendency
of any receivership, insolvency, liquidation, bankruptcy, reorganization,
arrangement, adjustment, composition or other judicial proceeding, constituting
an Event of Default under Section 12.5, the Administrative Agent (irrespective
of whether the principal of any Loan shall then be due and payable as herein
expressed or by declaration or otherwise and irrespective of whether the
Administrative Agent shall have made any demand on the Borrower) shall be
entitled and empowered, by intervention in such proceeding or otherwise:

(a)    to file and prove a claim for the whole amount of the principal and
interest owing and unpaid in respect of the Loans and all other Indebtedness
that are owing and unpaid and to file such other documents as may be necessary
or advisable in order to have the claims of the Lenders and the Agents
(including any claim for the reasonable compensation, expenses, disbursements
and advances of the Lenders and the Agents and their respective agents and
counsel, to the extent due under Section 14.5) allowed in such judicial
proceeding; and

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

and any custodian, receiver, assignee, trustee, liquidator, sequestrator or
other similar official in any such judicial proceeding is hereby authorized by
each Lender to make such payments to the Administrative Agent and, in the event
that the Administrative Agent shall consent to the making of such payments
directly to the Lenders, to pay to the Administrative Agent any amount due for
the reasonable compensation, expenses, disbursements and advances of the
Administrative Agent and its agents and counsel, to the extent due under
Section 14.5.

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

ARTICLE XIV

MISCELLANEOUS

14.1    Amendments, Waivers and Releases. Except as expressly set forth in this
Agreement including Section 2.15(b), neither this Agreement nor any other Credit
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thereof, may be amended, supplemented or modified except in accordance with the
provisions of this Section 14.1. The Majority Lenders may, or, with the written
consent of the Majority Lenders, the Administrative Agent shall, from time to
time, (a) enter into with the relevant Credit Party or Credit Parties written
amendments, supplements or modifications hereto and to the other Credit
Documents for the purpose of adding any provisions to this Agreement or the
other Credit Documents or changing in any manner the rights of the Lenders or of
the Credit Parties hereunder or thereunder or (b) waive in writing, on such
terms and conditions as the Majority Lenders may specify in such instrument, any
of the requirements of this Agreement or the other Credit Documents or any
Default or Event of Default and its consequences provided, however, that each
such waiver and each such amendment, supplement or modification shall be
effective only in the specific instance and for the specific purpose for which
given; provided, further, that no such waiver and no such amendment, supplement
or modification shall (i) forgive or reduce any portion of any Loan or reduce
the stated rate (it being understood that only the consent of the Majority
Lenders shall be necessary to waive any obligation of the Borrower to pay
interest at the Default Rate or amend Section 2.9(e)), or forgive any portion,
or extend the date for the payment, of any interest or fee payable hereunder
(other than as a result of waiving the applicability of any post-default
increase in interest rates), or extend the final expiration date of any Lender’s
Commitment (provided that any Lender, upon the request of the Borrower, may
extend the final expiration date of its Commitment without the consent of any
other Lender, including the Majority Lenders), or increase the amount of the
Commitment of any Lender (provided that, any Lender, upon the request of the
Borrower, may increase the amount of its Commitment without the consent of any
other Lender, including the Majority Lenders), or make any Loan, interest, fee
or other amount payable in any currency other than Dollars, in each case without
the written consent of each Lender directly and adversely affected thereby, or
(ii) amend, modify or waive any provision of this Section 14.1, or amend or
modify any of the provisions of Section 14.8(a) to the extent it would alter the
ratable allocation of payments thereunder, or reduce the percentages specified
in the definitions of the terms “Majority Lenders”, consent to the assignment or
transfer by the Borrower of its rights and obligations under any Credit Document
to which it is a party (except as permitted pursuant to Section 11.3) or alter
the order of application set forth in the final paragraph of Article XII or
modify any definition used in such final paragraph if the effect thereof would
be to alter the order of payment specified therein, in each case without the
written consent of each Lender directly and adversely affected thereby, or
(iii) amend, modify or waive any provision of Article XIII without the written
consent of the then-current Administrative Agent or Collateral Agent, as
applicable, or any other former Administrative Agent or Collateral Agent to whom
Article XIII then applies in a manner that directly and adversely affects such
Person, or (iv) [reserved], or (v) [reserved], or (vi) release all or
substantially all of the Guarantors under the Guarantee (except as expressly
permitted by the Guarantee or this Agreement) without the prior written consent
of each Lender, or (vii) release all or substantially all of the Collateral
under the Security Documents (except as expressly permitted by the Security
Documents or this Agreement, including upon the termination of any Credit Rating
Trigger Period) without the prior written consent of each Lender, or
(viii) amend Section 2.10 so as to permit Interest Period intervals greater than
six months without regard to availability to Lenders, without the written
consent of each Lender directly and adversely affected thereby, or (ix) amend,
modify or waive Section 5.1(a) or any of the defined terms used therein (solely
as they relate to Section 5.1(a)) without the written consent of each Lender
directly and adversely affected thereby; or (x) affect the rights or duties of,
or any fees or other amounts payable to the Administrative Agent under this
Agreement or any other Credit Document) without the prior written consent of the
Administrative Agent, (xi) amend, modify or waive any provision of Article VII
or Article VIII without the written consent of each Lender; provided, further,
that any provision of this Agreement or any other Credit Document may be amended
by an agreement in writing entered into by the Borrower and the Administrative
Agent to cure any ambiguity, omission, defect or inconsistency so long as, in
each case, the Lenders shall have received at least five Business Days’ prior
written notice thereof and the Administrative Agent shall not have received,
within five Business Days of the date of such notice to the Lenders, a written
notice from the Majority Lenders stating that the Majority Lenders object to
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supplement or modification shall apply equally to each of the affected Lenders
and shall be binding upon the Borrower, such Lenders, the Administrative Agent
and all future holders of the affected Loans. In the case of any waiver, the
Borrower, the Lenders and the Administrative Agent shall be restored to their
former positions and rights hereunder and under the other Credit Documents, and
any Default or Event of Default waived shall be deemed to be cured and not
continuing; it being understood that no such waiver shall extend to any
subsequent or other Default or Event of Default or impair any right consequent
thereon. In connection with the foregoing provisions, the Administrative Agent
may, but shall have no obligations to, with the concurrence of any Lender,
execute amendments, modifications, waivers or consents on behalf of such Lender.

14.2    Notices. Unless otherwise expressly provided herein, all notices and
other communications provided for hereunder or under any other Credit Document
shall be in writing (including by facsimile transmission). All such written
notices shall be mailed, faxed or delivered to the applicable address, facsimile
number or electronic mail address, and all notices and other communications
expressly permitted hereunder to be given by telephone shall be made to the
applicable telephone number, as follows:

(a)    if to the Borrower or the Administrative Agent, to the address, facsimile
number, electronic mail address or telephone number specified for such Person on
Schedule 14.2 or to such other address, facsimile number, electronic mail
address or telephone number as shall be designated by such party in a notice to
the other parties; and

(b)    if to any other Lender, to the address, facsimile number, electronic mail
address or telephone number specified in its Administrative Questionnaire or to
such other address, facsimile number, electronic mail address or telephone
number as shall be designated by such party in a notice to the Borrower and the
Administrative Agent.

All such notices and other communications shall be deemed to be given or made
upon the earlier to occur of (i) actual receipt by the relevant party hereto and
(ii)(A) if delivered by hand or by courier, when signed for by or on behalf of
the relevant party hereto; (B) if delivered by mail, three Business Days after
deposit in the mails, postage prepaid; (C) if delivered by facsimile, when sent
and receipt has been confirmed by telephone; and (D) if delivered by electronic
mail, when delivered; provided that notices and other communications to the
Administrative Agent or the Lenders pursuant to Sections 2.4, 2.7, 2.10 and 5.1
shall not be effective until received.

Notwithstanding anything contrary contained herein, the Administrative Agent
shall have the right to accept and act upon instructions from the Borrower,
including funds transfer instructions (“Instructions”) given pursuant to this
Agreement and delivered using Electronic Means; provided, however, that the
Borrower shall provide to the Administrative Agent an incumbency certificate
listing authorized officers and containing specimen signatures of such
authorized officers, which incumbency certificate shall be amended by the
Borrower whenever a person is to be added or deleted from the listing. If the
Borrower elects to give the Administrative Agent Instructions using Electronic
Means and the Administrative Agent in its discretion elects to act upon such
Instructions, the Administrative Agent’s reasonable understanding of such
Instructions shall be deemed controlling. The Borrower understands and agrees
that the Administrative Agents cannot determine the identity of the actual
sender of such Instructions and that the Administrative Agent shall conclusively
presume that directions that purport to have been sent by an authorized officer
listed on the incumbency certificate provided to the Administrative Agent have
been sent by such authorized officer. The Borrower shall be responsible for
ensuring that only authorized officers transmit such Instructions to the
Administrative Agent and that the Borrower and all authorized officers are
solely responsible to safeguard the use and confidentiality of applicable user
and authorization codes, passwords and/or authentication keys upon receipt by
the

 

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Borrower. The Administrative Agent shall not be liable for any losses, costs or
expenses arising directly or indirectly from the Administrative Agent’s reliance
upon and compliance with such Instructions notwithstanding such directions
conflict or are inconsistent with a subsequent written instruction. The Borrower
agrees: (i) to assume all risks arising out of the use of Electronic Means to
submit Instructions to the Administrative Agent, including without limitation
the risk of the Administrative Agent acting on unauthorized Instructions, and
the risk of interception and misuse by third parties; (ii) that it is fully
informed of the protections and risks associated with the various methods of
transmitting Instructions to the Administrative Agent and that there may be more
secure methods of transmitting Instructions than the method(s) selected by the
Borrower; (iii) that the security procedures (if any) to be followed in
connection with its transmission of Instructions provide to it a commercially
reasonable degree of protection in light of its particular needs and
circumstances; and (iv) to notify the the Administrative Agent immediately upon
learning of any compromise or unauthorized use of the security procedures.
“Electronic Means” shall mean the following communications methods: S.W.I.F.T.,
e-mail, facsimile transmission, secure electronic transmission containing
applicable authorization codes, passwords and/or authentication keys issued by
the Administrative Agent, or another method or system specified by the
Administrative Agent as available for use in connection with its services
hereunder.

Each Public Lender agrees to cause at least one individual at or on behalf of
such Public Lender to at all times have selected the “Private Side Information”
or similar designation on the content declaration screen of the Platform in
order to enable such Public Lender or its delegate, in accordance with such
Public Lender’s compliance procedures and applicable Law, including United
States federal and state securities Laws, to make reference to Borrower
Materials that are not made available through the “Public Side Information”
portion of the Platform and that may contain material non-public information
with respect to the Borrower or its securities for purposes of United States
federal or state securities laws.

14.3    No Waiver; Cumulative Remedies. No failure to exercise and no delay in
exercising, on the part of the Administrative Agent or any Lender, any right,
remedy, power or privilege hereunder or under the other Credit Documents shall
operate as a waiver thereof, nor shall any single or partial exercise of any
right, remedy, power or privilege hereunder preclude any other or further
exercise thereof or the exercise of any other right, remedy, power or privilege.
The rights, remedies, powers and privileges herein provided are cumulative and
not exclusive of any rights, remedies, powers and privileges provided by
Requirements of Law.

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

14.5    Payment of Expenses; Indemnification.

(a)    The Borrower agrees (i) to pay or reimburse each Lender (for all its
reasonable and documented out-of-pocket costs and expenses incurred in
connection with the enforcement or preservation of any rights under this
Agreement, the other Credit Documents and any such other documents (with respect
to attorney costs, limited to the reasonable fees, disbursements and other
charges of one primary counsel and one additional local counsel in each material
jurisdiction to the Lenders and, solely in the case of an actual or potential
conflict of interest, one additional legal counsel in each of the applicable
jurisdictions of the affected Lenders), (ii) to pay, indemnify, and hold
harmless each Lender from, any and all recording and filing fees and (iii) to
pay, indemnify, and hold harmless each Lender and their respective Related
Parties from and against any and all other liabilities, obligations, losses,
damages, penalties, claims, demands, actions, judgments, suits, costs, charges,
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kind or nature whatsoever, whether or not such proceedings are brought by the
Borrower, any of its Related Parties or any other third Person (with respect to
attorney costs, limited to the reasonable and documented fees, disbursements and
other charges of one primary counsel for all such Persons, taken as a whole,
and, if necessary, of one local counsel in each appropriate jurisdiction for all
such Persons, taken as a whole (unless there is an actual or perceived conflict
of interest in which case each such Person may, with the consent of the Borrower
(not to be unreasonably withheld or delayed) retain its own counsel), with
respect to the execution, delivery, enforcement and administration of this
Agreement, the other Credit Documents and any such other documents, including,
without limitation, any of the foregoing relating to the violation of,
noncompliance with or liability under, any applicable Environmental Law (other
than by such indemnified person or any of its Related Parties (other than any
trustee or advisor)) or to any actual or alleged presence, release or threatened
release of Hazardous Materials involving or attributable to the operations of
the Borrower, any of its Subsidiaries or any of the Oil and Gas Properties (all
the foregoing in this clause (iv), collectively, the “Lender Indemnified
Liabilities”); provided that the Borrower shall have no obligation hereunder to
any Lender or any of its respective Related Parties with respect to Lender
Indemnified Liabilities to the extent it has been determined by a final
non-appealable judgment of a court of competent jurisdiction to have resulted
from (i) the gross negligence, bad faith or willful misconduct of the party to
be indemnified or any of its Related Parties (IT BEING THE INTENTION OF THE
PARTIES HERETO THAT EACH LENDER AND ITS RESPECTIVE RELATED PARTIES SHALL, IN ALL
CASES, BE INDEMNIFIED FOR ITS ORDINARY COMPARATIVE, CONTRIBUTORY OR SOLE
NEGLIGENCE), (ii) any material breach of any Credit Document by the party to be
indemnified or (iii) disputes, claims, demands, actions, judgments or suits not
arising from any act or omission by the Borrower or its Affiliates, brought by
an indemnified Person against any other indemnified Person. No Person entitled
to indemnification under clause (iv) of this Section 14.5, nor the Borrower or
any of its Subsidiaries, shall have any liability for any special, punitive,
indirect, exemplary or consequential damages (including, without limitation, any
loss of profits, business or anticipated savings) relating to this Agreement or
any other Credit Document or arising out of its activities in connection
herewith or therewith (whether before or after the Effective Date); provided
that the foregoing shall not negate the Borrower’s obligations with respect to
Lender Indemnified Liabilities. All amounts payable under this Section 14.5
shall be paid within 10 Business Days of receipt by the Borrower of an invoice
relating thereto setting forth such expense in reasonable detail. The agreements
in this Section 14.5 shall survive repayment of the Loans and all other amounts
payable hereunder. This Section 14.5 shall not apply with respect to any claims
for Taxes which shall be governed exclusively by Section 5.4 and, to the extent
set forth therein, Section 2.11.

(b)    The Borrower agrees (i) to pay or reimburse the Administrative Agent for
all of its reasonable and documented out-of-pocket costs and expenses (with
respect to attorney costs, limited to reasonable fees, disbursements and other
charges of one primary counsel to the Administrative Agent) incurred in
connection with the preparation and execution and delivery of, and any
amendment, waiver, supplement or modification to, this Agreement and the other
Credit Documents and any other documents prepared in connection herewith or
therewith, and the consummation and administration of the transactions
contemplated hereby and thereby, including the reasonable fees, disbursements
and other charges of Emmet, Marvin & Martin, LLP, in its capacity as counsel to
the Administrative Agent, (ii) to pay or reimburse the Administrative Agent (for
all its reasonable and documented out-of-pocket costs and expenses incurred in
connection with the enforcement or preservation of any rights under this
Agreement, the other Credit Documents and any such other documents (with respect
to attorney costs, limited to the reasonable fees, disbursements and other
charges of one primary counsel and one additional local counsel in each material
jurisdiction to the Administrative Agent and, solely in the case of an actual or
potential conflict of interest, one additional legal counsel in each of the
applicable jurisdictions of the Administrative Agent), (iii) to pay, indemnify,
and hold harmless the Administrative Agent from, any and all recording and
filing fees and (iv) to pay, indemnify, and hold harmless the Administrative
Agent and its Related Parties from and against any and all other liabilities,
obligations, losses, damages, penalties,

 

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claims, demands, actions, judgments, suits, costs, charges, expenses or
disbursements of any kind or nature whatsoever, whether or not such proceedings
are brought by the Borrower, any of its Related Parties or any other third
Person with respect to the execution, delivery, enforcement and administration
of this Agreement, the other Credit Documents and any such other documents,
including, without limitation, any of the foregoing relating to the violation
of, noncompliance with or liability under, any applicable Environmental Law
(other than by such indemnified person or any of its Related Parties (other than
any trustee or advisor)) or to any actual or alleged presence, release or
threatened release of Hazardous Materials involving or attributable to the
operations of the Borrower, any of its Subsidiaries or any of the Oil and Gas
Properties (all the foregoing in this clause (iv), collectively, the “Agent
Indemnified Liabilities”); provided that the Borrower shall have no obligation
hereunder to the Administrative Agent or any of its Related Parties with respect
to Agent Indemnified Liabilities to the extent it has been determined by a final
non-appealable judgment of a court of competent jurisdiction to have resulted
from the gross negligence, bad faith or willful misconduct of the party to be
indemnified or any of its Related Parties (IT BEING THE INTENTION OF THE PARTIES
HERETO THAT THE ADMINISTRATIVE AGENT AND ITS RELATED PARTIES SHALL, IN ALL
CASES, BE INDEMNIFIED FOR ITS ORDINARY COMPARATIVE, CONTRIBUTORY OR SOLE
NEGLIGENCE). NO PERSON ENTITLED TO INDEMNIFICATION UNDER CLAUSE (IV) OF THIS
SECTION 14.5 SHALL BE LIABLE FOR ANY DAMAGES ARISING FROM THE USE BY UNINTENDED
RECIPIENTS OF ANY INFORMATION OR OTHER MATERIALS DISTRIBUTED BY IT THROUGH
TELECOMMUNICATIONS, ELECTRONIC OR OTHER INFORMATION TRANSMISSION SYSTEMS IN
CONNECTION WITH THIS AGREEMENT OR THE OTHER CREDIT DOCUMENTS OR THE TRANSACTIONS
CONTEMPLATED HEREBY OR THEREBY. THE TELECOMMUNICATIONS, ELECTRONIC OR OTHER
INFORMATION TRANSMISSION SYSTEMS USED BY THE ADMINISTRATIVE AGENT IS PROVIDED
“AS IS” AND “AS AVAILABLE.” NONE OF THE ADMINISTRATIVE AGENT OR ANY OF ITS
RELATED PARTIES WARRANT THE ADEQUACY OF SUCH TELECOMMUNICATIONS, ELECTRONIC OR
OTHER INFORMATION TRANSMISSION SYSTEMS AND EXPRESSLY DISCLAIM LIABILITY FOR
ERRORS OR OMISSIONS IN THE COMMUNICATIONS. NO WARRANTY OF ANY KIND, EXPRESS,
IMPLIED OR STATUTORY, INCLUDING, WITHOUT LIMITATION, ANY WARRANTY OF
MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, NON-INFRINGEMENT OF
THIRD-PARTY RIGHTS OR FREEDOM FROM VIRUSES OR OTHER CODE DEFECTS, IS MADE BY THE
ADMINISTRATIVE AGENT OR ANY OF ITS RELATED PARTIES IN CONNECTION WITH ANY
COMMUNICATIONS OR ANY TELECOMMUNICATIONS, ELECTRONIC OR OTHER INFORMATION
TRANSMISSION SYSTEMS. No Person entitled to indemnification under clause (iv) of
this Section 14.5, nor the Borrower or any of its Subsidiaries, shall have any
liability for any special, punitive, indirect, exemplary or consequential
damages (including, without limitation, any loss of profits, business or
anticipated savings) relating to this Agreement or any other Credit Document or
arising out of its activities in connection herewith or therewith (whether
before or after the Effective Date); provided that the foregoing shall not
negate the Borrower’s obligations with respect to Agent Indemnified Liabilities.
All amounts payable under this Section 14.5 shall be paid within 10 Business
Days of receipt by the Borrower of an invoice relating thereto setting forth
such expense in reasonable detail. The agreements in this Section 14.5 shall
survive repayment of the Loans and all other amounts payable hereunder. This
Section 14.5 shall not apply with respect to any claims for Taxes which shall be
governed exclusively by Section 5.4 and, to the extent set forth therein,
Section 2.11.

14.6    Successors and Assigns; Participations and Assignments.

(a)    The provisions of this Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and assigns
permitted hereby, except that (i) except as expressly permitted by Section 11.3,
the Borrower may not assign or otherwise transfer any of its rights or

 

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obligations hereunder without the prior written consent of each Lender (and any
attempted assignment or transfer by the Borrower without such consent shall be
null and void) and (ii) no Lender may assign or otherwise transfer its rights or
obligations hereunder except in accordance with this Section 14.6. Nothing in
this Agreement, expressed or implied, shall be construed to confer upon any
Person (other than the parties hereto, their respective successors and assigns
permitted hereby, Participants (to the extent provided in clause (c) of this
Section 14.6) and, to the extent expressly contemplated hereby, the Related
Parties of each of the Administrative Agent and the Lenders and each other
Person entitled to indemnification under Section 14.5) any legal or equitable
right, remedy or claim under or by reason of this Agreement.

(b)    (i) Subject to the conditions set forth in clause (b)(ii) below, any
Lender may at any time assign to one or more assignees (other than any natural
person or, except as provided in Section 14.6(g), the Borrower, its Subsidiaries
or their Affiliates) all or a portion of its rights and obligations under this
Agreement (including all or a portion of its Commitments and the Loans at the
time owing to it) with the prior written consent or, with respect to the
Administrative Agent, acknowledgment (such consent or acknowledgment not be
unreasonably withheld or delayed; it being understood that, notwithstanding the
foregoing clause, the Borrower shall have the right to withhold or delay its
consent to any assignment (x) if, in order for such assignment to comply with
applicable Requirements of Law, the Borrower would be required to obtain the
consent of, or make any filing or registration with, any Governmental Authority
or (y) with respect to an assignment of Commitments or Loans to an entity other
than a commercial bank or other financial institution customarily engaged in the
business of making loans in the oil and gas industry) of:

(A)    the Borrower; provided that no consent of the Borrower shall be required
for an assignment (1) to a Lender, an Affiliate of a Lender or an Approved Fund
or (2) if an Event of Default under Section 12.1 or Section 12.5 has occurred
and is continuing; and provided, further, that if the Borrower has not responded
within ten (10) Business Days after the delivery of any written request for a
consent, such consent shall be deemed to have been given; and

(B)    the Administrative Agent; provided that no acknowledgment of the
Administrative Agent shall be required for assignments in respect of any Loans
to a Person who is a Lender, an Affiliate of a Lender or an Approved Fund.

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

(A)    except in the case of an assignment to a Lender, an Affiliate of a Lender
or an Approved Fund or an assignment of the entire remaining amount of the
assigning Lender’s Commitment or Loans, (1) the amount of the Commitment or
Loans of the assigning Lender subject to each such assignment (determined as of
the date the Assignment and Acceptance with respect to such assignment is
delivered to the Administrative Agent) shall not be less than $5,000,000 and
increments of $1,000,000 in excess thereof and (2) after giving effect to such
assignment, the amount of the remaining Commitment or Loans of the assigning
Lender (determined as of the date the Assignment and Acceptance with respect to
such assignment is delivered to the Administrative Agent) shall not be less than
$15,000,000, in each case unless the Borrower otherwise consents (which consents
shall not be unreasonably withheld or delayed); provided that no such consent of
the Borrower shall be required if an Event of Default under Section 12.1 or
Section 12.5 has occurred and is continuing; provided, further, that
contemporaneous assignments to a single assignee made by Affiliates of Lenders
and related Approved Funds shall be aggregated for purposes of meeting the
minimum assignment amount requirements stated above;

 

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

(C)    the parties to each assignment shall execute and deliver to the
Administrative Agent an Assignment and Acceptance, together with a processing
and recordation fee in the amount of $3,500; provided that (x) the
Administrative Agent may, in its sole discretion, elect to waive such processing
and recordation fee in the case of any assignment; (y) no assignment in which
any Joint Lead Arrangers or any of their respective Affiliates participate,
whether as assignor or assignee, shall be subject to any such processing or
recordation fee; and (z) multiple assignments effected substantially
concurrently by Affiliated or commonly managed funds, sub-accounts or other
Affiliates shall be required only to deliver a single 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;

(iii)    Subject to acceptance and recording thereof pursuant to clause (b)(iv)
of this Section 14.6, from and after the effective date specified in each
Assignment and Acceptance, the assignee thereunder shall be a party hereto and,
to the extent of the interest assigned by such Assignment and Acceptance, have
the rights and obligations of a Lender under this Agreement, and the assigning
Lender thereunder shall, to the extent of the interest assigned by such
Assignment and Acceptance, be released from its obligations under this Agreement
(and, in the case of an Assignment and Acceptance covering all of the assigning
Lender’s rights and obligations under this Agreement, such Lender shall cease to
be a party hereto but shall continue to be entitled to the benefits of
Sections 2.11, 2.12, 5.4 and 14.5). Any assignment or transfer by a Lender of
rights or obligations under this Agreement that does not comply with this
Section 14.6 shall be treated for purposes of this Agreement as a sale by such
Lender of a participation in such rights and obligations in accordance with
clause (c) of this Section 14.6.

(iv)    The Administrative Agent, acting for this purpose as a non-fiduciary
agent of the Borrower, shall maintain at the Administrative Agent’s Office a
copy of each Assignment and Acceptance delivered to it and a register for the
recordation of the names and addresses of the Lenders, and the Commitments of,
and principal amount (and stated interest amounts) of the Loans owing to, each
Lender pursuant to the terms hereof from time to time (the “Register”). Further,
the Register shall contain the name and address of the Administrative Agent and
the lending office through which each such Person acts under this Agreement. The
entries in the Register shall be conclusive, and the Borrower, the
Administrative Agent and the Lenders shall treat each Person whose name is
recorded in the Register pursuant to the terms hereof as a Lender hereunder for
all purposes of this Agreement, notwithstanding notice to the contrary. The
Register shall be available for inspection by the Borrower and, solely with
respect to itself, each other Lender, at any reasonable time and from time to
time upon reasonable prior notice.

(v)    Upon its receipt of a duly completed Assignment and Acceptance executed
by an assigning Lender and an assignee, the assignee’s completed Administrative
Questionnaire (unless the assignee shall already be a Lender hereunder), the
processing and recordation fee referred to in clause (b) of this Section 14.6
(unless waived) and any written consent to such assignment required by clause
(b) of this Section 14.6, the Administrative Agent shall accept such Assignment
and Acceptance and record the information contained therein in the Register.

(vi)    Notwithstanding anything in this Section 14.6(b) to the contrary, no
consent of the Borrower or the Administrative Agent shall be required for
assignments by the Initial Lender in connection with the primary syndication of
the Loans or pursuant to any fronting letter, nor shall any such assignment be
required to comply with Section 14.6(b)(ii)(A).

 

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(c)    (i) Any Lender may, without the consent of the Borrower or the
Administrative Agent, sell participations to one or more banks or other entities
other than the Borrower or any Subsidiary of the Borrower (each, a
“Participant”) in all or a portion of such Lender’s rights and obligations under
this Agreement (including all or a portion of its Commitments and the Loans
owing to it); provided that (A) such Lender’s obligations under this Agreement
shall remain unchanged, (B) such Lender shall remain solely responsible to the
other parties hereto for the performance of such obligations and (C) the
Borrower, the Administrative Agent and the Lenders shall continue to deal solely
and directly with such Lender in connection with such Lender’s rights and
obligations under this Agreement. Any agreement or instrument pursuant to which
a Lender sells such a participation shall provide that such Lender shall retain
the sole right to enforce this Agreement and to approve any amendment,
modification or waiver of any provision of this Agreement or any other Credit
Document; provided that such agreement or instrument may provide that such
Lender will not, without the consent of the Participant, agree to any amendment,
modification or waiver described in clauses (i) or (ii) of the proviso to
Section 14.1 that affects such Participant, provided that the Participant shall
have no right to consent to any modification to the percentages specified in the
definitions of the terms “Majority Lenders” or “Required Lenders”. Subject to
clause (c)(ii) of this Section 14.6, the Borrower agrees that each Participant
shall be entitled to the benefits of Sections 2.11, 2.12 and 5.4 to the same
extent as if it were a Lender (subject to the limitations and requirements of
those Sections as though it were a Lender and had acquired its interest by
assignment pursuant to clause (b) of this Section 14.6, including the
requirements of clause (e) of Section 5.4). To the extent permitted by
Requirements of Law, each Participant also shall be entitled to the benefits of
Section 14.8(b) as though it were a Lender; provided such Participant agrees to
be subject to Section 14.8(a) as though it were a Lender.

(ii)    A Participant shall not be entitled to receive any greater payment under
Section 2.11, 2.12 or 5.4 than the applicable Lender would have been entitled to
receive with respect to the participation sold to such Participant, unless the
sale of the participation to such Participant is made with the Borrower’s prior
written consent (which consent shall not be unreasonably withheld); provided
that the Participant shall be subject to the provisions in Section 2.13 as if it
were an assignee under clauses (a) and (b) of this Section 14.6. Each Lender
that sells a participation shall, acting solely for this purpose as a
non-fiduciary agent of the Borrower, maintain a register on which it enters the
name and address of each participant and the principal amounts (and related
interest amounts) of each participant’s interest in the Loans or other
obligations under this Agreement (the “Participant Register”). The entries in
the Participant Register shall be conclusive, absent manifest error, and such
Lender shall treat each Person whose name is recorded in the Participant
Register as the owner of such participation for all purposes of this Agreement
notwithstanding any notice to the contrary. No Lender shall have any obligation
to disclose all or any portion of the Participant Register to any Person
(including the identity of any Participant or any information relating to a
Participant’s interest in any commitments, loans, letters of credit or its other
obligations under any Credit Document) except to the extent that such disclosure
is necessary to establish that such commitment, loan, letter of credit or other
obligation is in registered form under Section 5f.103-1(c) of the United States
Treasury Regulations.

(d)    Any Lender may, without the consent of the Borrower or the Administrative
Agent at any time pledge or assign a security interest in all or any portion of
its rights under this Agreement to secure obligations of such Lender, including
any pledge or assignment to secure obligations to a Federal Reserve Bank or any
central bank having jurisdiction over such Lender, and this Section 14.6 shall
not apply to any such pledge or assignment of a security interest; provided that
no such pledge or assignment of a security interest shall release a Lender from
any of its obligations hereunder or substitute any such pledgee or assignee for
such Lender as a party hereto. In order to facilitate such pledge or assignment
or for any other reason, the Borrower hereby agrees that, upon request of any
Lender at any time and from time to time after the Borrower has made its initial
borrowing hereunder, the Borrower shall provide to such Lender, at the
Borrower’s own expense, a Promissory Note evidencing the Loans owing to such
Lender.

 

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(e)    Subject to Section 14.16, the Borrower authorizes each Lender to disclose
to any Participant, secured creditor of such Lender or assignee (each, a
“Transferee”) and any prospective Transferee any and all financial information
in such Lender’s possession concerning the Borrower and its Affiliates that has
been delivered to such Lender by or on behalf of the Borrower and its Affiliates
pursuant to this Agreement or that has been delivered to such Lender by or on
behalf of the Borrower and its Affiliates in connection with such Lender’s
credit evaluation of the Borrower and its Affiliates prior to becoming a party
to this Agreement.

(f)    The words “execution,” “signed,” “signature,” and words of like import in
any Assignment and Acceptance shall be deemed to include electronic signatures
or the keeping of records in electronic form, each of which shall be of the same
legal effect, validity or enforceability as a manually executed signature or the
use of a paper-based recordkeeping system, as the case may be, to the extent and
as provided for in any applicable law, including the Federal Electronic
Signatures in Global and National Commerce Act, the New York State Electronic
Signatures and Records Act, or any other similar state laws based on the Uniform
Electronic Transactions Act.

(g)    Notwithstanding anything herein to the contrary, any Lender may, so long
as no Default or Event of Default has occurred and is continuing or would result
therefrom, assign all or a portion of its rights and obligations with respect to
any Loans under this Agreement to the Borrower or any of its Subsidiaries
through open market purchase on a non-pro rata basis, in each case subject to
the following limitations:

(i)    if the assignee is a Subsidiary of the Borrower, upon such assignment,
transfer or contribution, the applicable assignee shall automatically be deemed
to have contributed or transferred the principal amount of such Loans, plus all
accrued and unpaid interest thereon, to the Borrower; or

(ii)    if the assignee is the Borrower (including through contribution or
transfers set forth in clause (i) above), (A) the principal amount of such
Loans, along with all accrued and unpaid interest thereon, so contributed,
assigned or transferred to the Borrower shall be deemed automatically cancelled
and extinguished on the date of such contribution, assignment or transfer and
(B) the Borrower shall promptly provide notice to the Administrative Agent of
such contribution, assignment or transfer of such Loans, and the Administrative
Agent, upon receipt of such notice, shall reflect the cancellation of the
applicable Loans in the Register; and

(iii)    no proceeds of revolving Indebtedness shall be used to finance any such
open market purchases.

14.7    [Reserved].

14.8    Adjustments; Set-off.

(a)    If any Lender (a “Benefited Lender”) shall at any time receive any
payment in respect of any principal of or interest on all or part of the Loans
made by it, or receive any collateral in respect thereof (whether voluntarily or
involuntarily, by set-off, pursuant to events or proceedings of the nature
referred to in Section 12.5, or otherwise), in a greater proportion than any
such payment to or collateral received by any other Lender, if any, in respect
of such other Lender’s Loans, or interest thereon, such Benefited Lender shall
(i) notify the Administrative Agent of such fact, and (ii) purchase for

 

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cash at face value from the other Lenders a participating interest in such
portion of each such other Lender’s Loans, or shall provide such other Lenders
with the benefits of any such collateral, or the proceeds thereof, as shall be
necessary to cause such Benefited Lender to share the excess payment or benefits
of such collateral or proceeds ratably in accordance with the aggregate
principal of and accrued interest on their respective Loans and other amounts
owing them; provided, however, that, (A) if all or any portion of such excess
payment or benefits is thereafter recovered from such Benefited Lender, such
purchase shall be rescinded, and the purchase price and benefits returned, to
the extent of such recovery, but without interest and (B) the provisions of this
paragraph shall not be construed to apply to (1) any payment made by the
Borrower or any other Credit Party pursuant to and in accordance with the
express terms of this Agreement and the other Credit Documents, (2) any payment
obtained by a Lender as consideration for the assignment of or sale of a
participation in any of its Loans or participations to any assignee or
participant or (3) any disproportionate payment obtained by a Lender as a result
of the extension by Lenders of the maturity date or expiration date of some but
not all Loans or Commitments or any increase in the Applicable Margin in respect
of Loans or Commitments of Lenders that have consented to any such extension.
Each Credit Party consents to the foregoing and agrees, to the extent it may
effectively do so under Requirements of Law, that any Lender acquiring a
participation pursuant to the foregoing arrangements may exercise against such
Credit Party rights of set-off and counterclaim with respect to such
participation as fully as if such Lender were a direct creditor of such Credit
Party in the amount of such participation.

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

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

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

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

 

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

14.13    Submission to Jurisdiction; Waivers. Each party hereto hereby
irrevocably and unconditionally:

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

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

(c)    agrees that service of process in any such action or proceeding may be
effected by mailing a copy thereof by registered or certified mail (or any
substantially similar form of mail), postage prepaid, to such Person at its
address set forth on Schedule 14.2 at such other address of which the
Administrative Agent shall have been notified pursuant to Section 14.2;

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

(e)    waives, to the maximum extent not prohibited by law, any right it may
have to claim or recover in any legal action or proceeding referred to in this
Section 14.13 any special, exemplary, punitive or consequential damages; and

(f)    agrees that a final judgment in any action or proceeding shall be
conclusive and may be enforced in other jurisdictions by suit on the judgment or
in any other manner provided by law.

14.14    Acknowledgments. The Borrower hereby acknowledges that:

(a)    it has been advised by counsel in the negotiation, execution and delivery
of this Agreement and the other Credit Documents;

(b)    (i) the credit facilities provided for hereunder and any related
arranging or other services in connection therewith (including in connection
with any amendment, waiver or other modification hereof or of any other Credit
Document) are an arm’s-length commercial transaction between the Borrower and
the other Credit Parties, on the one hand, and the Administrative Agent and the
Lenders, 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
Credit Documents (including any amendment, waiver or other modification hereof
or thereof); (ii) in connection with the process leading to such transaction,
each of the Agents and the Lenders is and has been acting solely as a principal
and is not the financial advisor, agent or fiduciary for any of the Borrower,
any other Credit Parties or any of their respective Affiliates, equity holders,
creditors or employees or any other Person; (iii) neither the Administrative
Agent, any Bookrunner, any Joint Lead Arranger, nor any Lender has assumed or
will assume an advisory, agency or fiduciary responsibility in favor of the
Borrower or any other Credit Party with respect to any of the transactions

 

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contemplated hereby or the process leading thereto, including with respect to
any amendment, waiver or other modification hereof or of any other Credit
Document (irrespective of whether the Administrative Agent, any Bookrunner, any
Joint Lead Arranger or any Lender has advised or is currently advising any of
the Borrower, the other Credit Parties or their respective Affiliates on other
matters) and none of the Administrative Agent, any Bookrunner, any Joint Lead
Arranger or any Lender has any obligation to any of the Borrower, the other
Credit Parties or their respective Affiliates with respect to the transactions
contemplated hereby except those obligations expressly set forth herein and in
the other Credit Documents; (iv) the Borrower, the other Credit Parties and
their respective Affiliates will not assert any claim based on alleged breach of
fiduciary duty; (v) the Administrative Agent and its Affiliates and each Lender
and its Affiliates may be engaged in a broad range of transactions that involve
interests that differ from those of the Borrower and its respective Affiliates,
and none of the Administrative Agent or any Lender has any obligation to
disclose any of such interests by virtue of any advisory, agency or fiduciary
relationship; and (vi) neither the Administrative Agent nor any Lender has
provided and none will provide any legal, accounting, regulatory or tax advice
with respect to any of the transactions contemplated hereby (including any
amendment, waiver or other modification hereof or of any other Credit Document)
and the Borrower has consulted its own legal, accounting, regulatory and tax
advisors to the extent it has deemed appropriate. The Borrower hereby waives and
releases, to the fullest extent permitted by law, any claims that it may have
against the Administrative Agent with respect to any breach or alleged breach of
agency or fiduciary duty; and

(c)    no joint venture is created hereby or by the other Credit Documents or
otherwise exists by virtue of the transactions contemplated hereby among the
Lenders or among the Borrower, on the one hand, and any Lender, on the other
hand.

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

14.16    Confidentiality. The Administrative Agent and each Lender shall hold
all non-public information furnished by or on behalf of the Borrower or any of
its Subsidiaries in connection with such Lender’s evaluation of whether to
become a Lender hereunder or obtained by such Lender or the Administrative Agent
pursuant to the requirements of this Agreement (“Confidential Information”),
confidential in accordance with its customary procedure for handling
confidential information of this nature and use or further disclose as permitted
hereunder for use, only as necessary to evaluate and make decisions with respect
to the Loans, and in any event may make disclosure (a) to its Affiliates and to
its Related Parties (it being understood that the Persons to whom such
disclosure is made will be informed of the confidential nature of such
Confidential Information, are instructed to keep such Confidential Information
confidential and agree to keep such Confidential Information confidential on the
same terms as provided herein) (b) as required or requested by any Governmental
Authority, self-regulatory agency or representative thereof or pursuant to legal
process or applicable Requirements of Law, (c) to any other party hereto, (d) to
such Lender’s or the Administrative Agent’s attorneys, professional advisors,
independent auditors, trustees or Affiliates, in each case who need to know such
information in connection with the administration of the Credit Documents and
are informed of the confidential nature of such information, (e) in connection
with the exercise of any remedies hereunder or under any other Credit Document
or any action or proceeding relating to this Agreement or any other Credit
Document or the enforcement of rights hereunder or thereunder, (f) to a trustee,
collateral manager, servicer, backup servicer, noteholder or secured party in
connection with the administration, servicing and reporting on the assets
serving as collateral for a securitization and who agrees to treat such
information as confidential, (g) to the CUSIP Service Bureau or any similar
agency in connection with the issuance and monitoring of CUSIP numbers with
respect to the Facility, (h) subject to an agreement containing provisions

 

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substantially the same as those of this Section 14.16, to (x) any assignee of or
Participant in, or any prospective assignee of or Participant in, any of its
rights and obligations under this Agreement, or (y) any actual or prospective
party (or its Related Parties) to any swap, derivative or other transaction
under which payments are to be made by reference to the Borrower and its
obligations, this Agreement or payments hereunder, (i) with the consent of the
Borrower and (j) to the extent such non-public information (x) becomes publicly
available other than as a result of a breach of this Section, or (y) becomes
available to the Administrative Agent, any Lender, or any of their respective
Affiliates on a non-confidential basis from a source other than the Borrower;
provided that unless specifically prohibited by applicable Requirements of Law,
each Lender and the Administrative Agent shall endeavor to notify the Borrower
(without any liability for a failure to so notify the Borrower) of any request
made to such Lender or the Administrative Agent, as applicable, by any
governmental, regulatory or self-regulatory agency or representative thereof
(other than any such request in connection with an examination of the financial
condition of such Lender by such governmental agency) for disclosure of any such
non-public information prior to disclosure of such information; provided,
further, that in no event shall any Lender or the Administrative Agent be
obligated or required to return any materials furnished by the Borrower or any
Subsidiary. In addition, each Lender and the Administrative Agent may provide
Confidential Information to prospective Transferees or to any pledgee referred
to in Section 14.6 or to prospective direct or indirect contractual
counterparties in Hedge Agreements to be entered into in connection with Loans
made hereunder as long as such Person is advised of and agrees to be bound by
the provisions of this Section 14.16 or confidentiality provisions at least as
restrictive as those set forth in this Section 14.16.

14.17    Release of Collateral and Guarantee Obligations.

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

 

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requested of it and necessary or desirable to evidence and confirm the release
of any Guarantor or Collateral pursuant to the foregoing provisions of this
paragraph, all without the further consent or joinder of any Lender. For the
avoidance of doubt, the Administrative Agent may rely and shall be fully
protected in relying upon a certificate from the Borrower stating that the
conditions precedent to the release have been satisfied. Any representation,
warranty or covenant contained in any Credit Document relating to any such
Collateral or Guarantor shall no longer be deemed to be repeated.

(b)    Notwithstanding anything to the contrary contained herein or any other
Credit Document, when all Obligations (other than any contingent or
indemnification obligations not then due) have been paid in full and all
Commitments have terminated or expired, upon request of the Borrower, the
Administrative Agent shall (without notice to, or vote or consent of, any 2017
Secured Party) take and direct the Collateral Agent to take such actions as
reasonably requested and as shall be required to (i) amend or modify the
Security Documents to provide that the security interest of the Collateral Agent
is no longer held for the benefit of any 2017 Secured Party and release all
obligations (except for those provisions which by their terms are intended to
survive) under any Credit Document (other than obligations benefitting the First
Lien First Out Secured Parties under any Security Document) and (ii) following
the Discharge of First Lien First Out Obligations, to release the Collateral
Agent’s security interest (without warranty, representation or recourse) in all
Collateral, and to release all obligations (except for those provisions which by
their terms are intended to survive) under any Security Document, in case of
each clause (i) and (ii), whether or not on the date of such release there may
be any contingent or indemnification obligations not then due. Any such release
of Obligations shall be deemed subject to the provision that such Obligations
shall be reinstated if after such release any portion of any payment in respect
of the Obligations guaranteed thereby shall be rescinded or must otherwise be
restored or returned upon the insolvency, bankruptcy, dissolution, liquidation
or reorganization of the Borrower or any Guarantor, or upon or as a result of
the appointment of a receiver, intervenor or conservator of, or trustee or
similar officer for, the Borrower or any Guarantor or any substantial part of
its property, or otherwise, all as though such payment had not been made.

(c)    Notwithstanding anything to the contrary contained herein or any other
Credit Document, upon the Borrower’s election to enter into an Investment Grade
Period pursuant to Section 14.18 and delivery of the written notice contemplated
therein, the Administrative Agent shall (without notice to, or vote or consent
of, any 2017 Secured Party) take and direct the Collateral Agent to take such
actions as shall be required to (i) amend or modify the Security Documents to
provide that the security interest of the Collateral Agent is no longer held for
the benefit of any 2017 Secured Party and (ii) following the Discharge of First
Lien First Out Obligations, release the Collateral Agent’s security interest
(without warranty, representation or recourse) in all Collateral and to release
all obligations under any Security Document.

14.18    Credit Rating Election.

(a)    At any time that is not a Credit Rating Trigger Period, the Borrower may
provide written notice to the Administrative Agent of its election to enter into
a Credit Rating Trigger Period, which notice shall include a certification of an
Authorized Officer of the Borrower that the Borrower is exercising commercially
reasonable efforts to grant to the Administrative Agent a Lien on the Collateral
in accordance with the requirements of Section 10.10(a). A Credit Rating Trigger
Period will commence upon the Administrative Agent’s receipt of such notice.

(b)    At any time during a Credit Rating Trigger Period, as long as no Credit
Rating Trigger Event has occurred and is continuing, the Borrower may provide
notice to the Administrative Agent of its election to exit such Credit Rating
Trigger Period and enter into an Investment Grade Period together with a
certificate of an Authorized Officer of the Borrower confirming that (A) no
Event of Default exists and (B) no Credit Rating Trigger Event has occurred and
is continuing.

 

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

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

14.21    Reinstatement. This Agreement shall continue to be effective, or be
reinstated, as the case may be, if at any time payment, or any part thereof, of
any of the Obligations is rescinded or must otherwise be restored or returned by
the Administrative Agent or any other 2017 Secured Party upon the insolvency,
bankruptcy, dissolution, liquidation or reorganization of the Borrower, or upon
or as a result of the appointment of a receiver, intervenor or conservator of,
or trustee or similar officer for, the Borrower or any substantial part of its
property, or otherwise, all as though such payments had not been made.

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

14.23    [Reserved].

14.24    Acknowledgement and Consent to Bail-In of EEA Financial Institutions.
Notwithstanding anything to the contrary in any Credit Document or in any other
agreement, arrangement or understanding among any such parties, each party
hereto acknowledges that any liability of any EEA Financial Institution arising
under any Credit Document, to the extent such liability is unsecured, may be

 

123

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subject to the write-down and conversion powers of an EEA Resolution Authority
and agrees and consents to, and acknowledges and agrees to be bound by:

(a)    the application of any Write-Down and Conversion Powers by an EEA
Resolution Authority to any such liabilities arising hereunder which may be
payable to it by any party hereto that is an EEA Financial Institution; and

(b)    the effects of any Bail-In Action on any such liability, including, if
applicable:

(i)    reduction in full or in part or cancellation of any such liability;

(ii)    a conversion of all, or a portion of, such liability into shares or
other instruments of ownership in such EEA Financial Institution, its parent
undertaking, or a bridge institution that may be issued to it or otherwise
conferred on it, and that such shares or other instruments of ownership will be
accepted by it in lieu of any rights with respect to any such liability under
this Agreement or any other Credit Document; or

(iii)    the variation of the terms of such liability in connection with the
exercise of the write-down and conversion powers of any EEA Resolution
Authority.

14.25    Post-First Lien First Out Credit Agreement Third Amendment Fall-Away.
Upon the delivery by the Borrower to the Administrative Agent of written notice,
which notice shall include a certification of an Authorized Officer of the
Borrower that the Borrower is in compliance with the requirements of
Section 11.11 of the First Lien First Out Credit Agreement as such Section
existed immediately prior to the First Lien First Out Third Amendment Effective
Date, that the Fall-Away, as defined in the First Lien First Out Credit
Agreement, has occurred, the relevant provisions of the Credit Agreement and the
Credit Documents shall be deemed modified to conform to the corresponding
changes to the provisions of the First Lien First Out Credit Agreement and the
First Lien First Out Credit Documents as a result of such Fall-Away.

Reference is made to (i) the Pari Passu Intercreditor Agreement, dated as of the
August 15, 2016 between JPMORGAN CHASE BANK, N.A., as First Lien First Out Agent
(as defined therein), and THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A., as
First Lien Second-Out Agent (as defined therein) and acknowledged and agreed by
California Resources Corporation and certain of its subsidiaries (as amended,
supplemented, amended and restated or otherwise modified and in effect from time
to time, the “First Lien Intercreditor Agreement”) and (ii) the First Out
Collateral Agency Agreement. Each holder of Obligations, by its acceptance of
such Obligations (i) agrees that it will be bound by, and will take no actions
contrary to, the provisions of the First Lien Intercreditor Agreement or the
First Out Collateral Agency Agreement and (ii) authorizes and instructs the
Administrative Agent on behalf of each 2017 Secured Party to enter into the
First Lien Intercreditor Agreement as a First-Out Agent and the First Out
Collateral Agency Agreement as New Senior Administrative Agent, in each case on
behalf of such 2017 Secured Party. The foregoing provisions are intended as an
inducement to the lenders under the First Lien First-Out Credit Agreement (as
defined therein) to extend credit to the Borrower and such lenders are intended
third party beneficiaries of such provisions and the provisions of the First
Lien Intercreditor Agreement and the First Out Collateral Agency Agreement.

[SIGNATURE PAGES FOLLOW]

 

124

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
by their officers thereunto duly authorized as of the date first above written.

 

BORROWER:     CALIFORNIA RESOURCES CORPORATION     By:  

/s/ Marshall D. Smith

    Name:   Marshall D. Smith     Title:   Senior Executive Vice President and
Chief Financial Officer

 

Signature Page

Credit Agreement

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

THE BANK OF NEW YORK MELLON TRUST COMPANY, as Administrative Agent

By:  

/s/ Bruce C. Boyd

Name:   Bruce C. Boyd Title:   Vice President

 

Signature Page

Credit Agreement

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

GOLDMAN SACHS LENDING PARTNERS LLC, as a Lender

By:  

/s/ Thomas M. Manning

Name:   Thomas M. Manning Title:   Authorized Signatory

 

Signature Page

Credit Agreement

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

Schedule 1.1(e)

Excluded Stock

The Stock and Stock Equivalents of the following entities:

 

  •   Felix Oil Company

 

  •   Lomita Gasoline Company, Inc.

 

  •   Monument Production, Inc.

 

  •   Tenby, Inc.

 

  •   Oso Azul, LLC

 

  •   Oso Rojo, LLC

 

  •   Oso Verde Farms, LLC

 

Schedule 1.1(e) to Credit Agreement

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

Schedule 2.1(a)

Commitments

 

Lender

   Commitment  

Goldman Sachs Lending Partners LLC

   $ $1,300,000,000     

 

 

 

Total

   $ 1,300,000,000     

 

 

 

 

Schedule 2.1(a) to Credit Agreement

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

Schedule 9.4

Litigation

 

  •   None, except as disclosed in the Borrower’s Quarterly Report on Form 10-Q
for the quarterly period ended September 30, 2017 and in the Borrower’s Annual
Report on Form 10-K for the year ended December 31, 2016.1

 

 

1  The information set forth on this schedule is also disclosed for purposes of
the representations and warranties set forth in Section 9.13.

 

Schedule 9.4 to Credit Agreement

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

Schedule 9.12

All Subsidiaries

 

    

Name

   Jurisdiction of
Organization      Direct/Indirect
Ownership Interest  

1.

  

California Heavy Oil, Inc.

     Delaware        100 % 

2.

  

California Resources Coles Levee, LLC

     Delaware        100 % 

3.

  

California Resources Coles Levee, L.P.

     Delaware        100 % 

4.

  

California Resources Elk Hills, LLC

     Delaware        100 % 

5.

  

California Resources Long Beach, Inc.

     Delaware        100 % 

6.

  

California Resources Petroleum Corporation

     Delaware        100 % 

7.

  

California Resources Production Corporation

     Delaware        100 % 

8.

  

California Resources Tidelands, Inc.

     Delaware        100 % 

9.

  

California Resources Wilmington, LLC

     Delaware        100 % 

10.

  

CRC Construction Services, LLC

     Delaware        100 % 

11.

  

CRC Marketing, Inc.

     Delaware        100 % 

12.

  

CRC Services, LLC

     Delaware        100 % 

13.

  

Elk Hills Power, LLC

     Delaware        100 % 

14.

  

Felix Oil Company

     California        100 % 

15.

  

Lomita Gasoline Company, Inc.

     California        30.5 % 

16.

  

Monument Production, Inc.

     California        100 % 

17.

  

Oso Azul, LLC

     Delaware        100 % 

18.

  

Oso Rojo, LLC

     Delaware        100 % 

19.

  

Oso Verde Farms, LLC

     Delaware        100 % 

20.

  

Socal Holding, LLC

     Delaware        100 % 

21.

  

Southern San Joaquin Production, Inc.

     Delaware        100 % 

22.

  

Tenby, Inc.

     California        100 % 

23.

  

Thums Long Beach Company

     Delaware        100 % 

24.

  

Tidelands Oil Production Company

     Texas        100 % 

 

Schedule 9.12 to Credit Agreement

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

Schedule 11.1

Effective Date Indebtedness

None.

 

Schedule 11.1 to Credit Agreement

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

Schedule 11.2

Effective Date Liens

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

 

Schedule 11.2 to Credit Agreement

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

Schedule 11.5

Effective Date Investments

None.

 

Schedule 11.5 to Credit Agreement

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

Schedule 11.8

Effective Date Negative Pledge Agreements

None.

 

Schedule 11.8 to Credit Agreement

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

Schedule 11.9

Effective Date Contractual Encumbrances

None.

 

Schedule 11.9 to Credit Agreement

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

Schedule 11.12

Effective Date Affiliate Transactions

None.

 

Schedule 11.12 to Credit Agreement

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

Schedule 14.2

Notice Addresses

 

Entity

  

Notice Address/Information

California Resources Corporation   

California Resources Corporation

9200 Oakdale Avenue, Suite 900

Los Angeles, California 91311

Facsimile: (818) 661-3750

Attention: Chief Financial Officer

Email: Marshall.Smith@crc.com

 

With a copy to:

 

California Resources Corporation

27200 Tourney Road, Suite 315,

Santa Clarita, California 91355.

Attention: Michael L. Preston

Email: Michael.Preston@crc.com

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

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

2001 Bryan Street

Suite 1000

Dallas, Texas 75201

Telephone: (214) 468-5525

Facsimile: (214) 468-5539

Attention: Stacie Row

Email: lpcoe-dallasagentsvcs@bnymellon.com

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

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

400 South Hope Street, Suite 500

Los Angeles, CA 90071

Attention: Corporate Trust Unit

Tel: (213) 630-6175

Fax: (213) 630-6298

Email: raymond.torres@bnymellon.com

 

Schedule 14.2 to Credit Agreement

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

EXHIBIT A

FORM OF NOTICE OF BORROWING

[Letterhead of Borrower]

[Date]1

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

as Administrative Agent

Re: California Resources Corporation Notice of Borrowing

Ladies and Gentlemen:

This Notice of Borrowing is delivered to you pursuant to Section 2.4 of that
certain Credit Agreement, dated as of November 17, 2017 (as amended, restated,
supplemented or otherwise modified from time to time, the “Credit Agreement”),
by and among California Resources Corporation, a Delaware corporation (the
“Borrower”), the lenders from time to time party thereto (the “Lenders”),
Goldman Sachs Lending Partners LLC and JPMorgan Chase Bank, N.A. as joint lead
arrangers and joint bookrunners, Citigroup Global Markets Inc., as a bookrunner
and The Bank of New York Mellon Trust Company, N.A., as Administrative Agent
(such terms and each other capitalized term used but not defined herein having
the meaning provided in Article I of the Credit Agreement).

The Borrower hereby requests that a Loan be extended as follows:

 

  (i) Aggregate amount of the requested Loan is $[                ];

 

  (ii) Date of such Borrowing is [                ], 201[    ];

 

  (iii) Requested Borrowing is to be [an ABR Loan][a LIBOR Loan];

 

  (iv) In the case of a LIBOR Loan, the initial Interest Period applicable
thereto is [            ];2

 

  (v) Location and number of the Borrower’s account to which funds are to be
disbursed is as follows:

 

  [                 ]

 

  [                 ]

 

1  Date of Notice of Borrowing: To be submitted (A) prior to 1:00 p.m. (New York
City time) at least three Business Days’ prior to each Borrowing of Loans if
such Loans are to be made initially as LIBOR Loans; or (B) prior to 1:00 p.m.
(New York City time) on the date of each Borrowing of Loans that are to be ABR
Loans.

2  If no Interest Period is selected, the Borrower shall be deemed to have
selected an Interest Period of one month’s duration.

 

A-1

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

  [                 ]

 

  [                 ]

 

  [                 ]

[Remainder of page intentionally left blank; signature page follows]

 

A-2

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

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

 

CALIFORNIA RESOURCES CORPORATION

By:  

 

Name:   Title:  

Signature Page

California Resources Corporation

Notice of Borrowing

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

EXHIBIT B

FORM OF GUARANTEE

[See attached.]

 

B-1

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

Execution Version

 

 

GUARANTEE

made by

each of the Guarantors

from time to time party hereto

in favor of

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

as Administrative Agent

Dated as of November 17, 2017

 

 

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

TABLE OF CONTENTS

 

         Page   SECTION I Definitions      2  

1.1

 

Defined Terms

     2   SECTION II Guarantee      2  

2.1

 

Guarantee

     2  

2.2

 

Right of Contribution

     3  

2.3

 

Right of Set-off

     3  

2.4

 

No Subrogation

     4  

2.5

 

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

     4  

2.6

 

Guarantee Absolute and Unconditional

     5  

2.7

 

Reinstatement

     6  

2.8

 

Payments

     6   SECTION III Representations and Warranties      6  

3.1

 

Representations and Warranties

     6   SECTION IV Covenants      6  

4.1

 

Covenants

     6  

4.2

 

Authority of Administrative Agent

     6   SECTION V Miscellaneous      7  

5.1

 

Notices

     7  

5.2

 

Survival of Representations and Warranties

     7  

5.3

 

Counterparts

     7  

5.4

 

Severability

     7  

5.5

 

Integration

     7  

5.6

 

Section Headings

     7  

5.7

 

GOVERNING LAW

     7  

5.8

 

Submission to Jurisdiction; Waivers

     8  

5.9

 

Acknowledgments

     8  

5.10

 

WAIVERS OF JURY TRIAL

     9  

5.11

 

Amendments in Writing; No Waiver; Cumulative Remedies

     9  

5.12

 

Successors and Assigns

     9  

5.13

 

Additional Obligors

     9  

5.14

 

Termination or Release

     10  

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

5.15

 

Administrative Agent Rights, Protections and Immunities

     10  

5.16

 

First Lien Intercreditor Agreement Controls

     10  

 

Annex:

A. Assumption Agreement

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

GUARANTEE

GUARANTEE, dated as of November 17, 2017 (this “Guarantee”), is made by each of
the Subsidiaries of the Borrower that is a signatory hereto (each of the
signatories hereto, together with any other Subsidiary of the Borrower that
becomes a party hereto from time to time after the date hereof, each,
individually a “Guarantor” and, collectively, the “Guarantors”), in favor of THE
BANK OF NEW YORK MELLON TRUST COMPANY, N.A., as administrative agent (in such
capacity, together with its successors in such capacity, the “Administrative
Agent”) for the benefit of the 2017 Secured Parties.

WHEREAS, reference is made to that certain Credit Agreement, dated as of
November 17, 2017 (as amended, restated, supplemented or otherwise modified from
time to time, the “Credit Agreement”), among California Resources Corporation, a
Delaware corporation (the “Borrower”), the banks, financial institutions and
other lending institutions or entities from time to time party thereto (the
“Lenders”), and the Administrative Agent;

WHEREAS, pursuant to the Credit Agreement the Lenders have severally agreed to
make Loans upon the terms and subject to the conditions set forth therein (the
“Extensions of Credit”);

WHEREAS, each Guarantor is a Domestic Subsidiary of the Borrower;

WHEREAS, the proceeds of the Extensions of Credit will be used in part to enable
the Borrower to make valuable transfers to the Guarantors in connection with the
operation of their respective businesses;

WHEREAS, each Guarantor acknowledges that it will derive substantial direct and
indirect benefit from the making of the Extensions of Credit; and

WHEREAS, it is a condition precedent to the obligations of the 2017 Secured
Parties to make their respective Extensions of Credit to the Borrower that the
Guarantors shall have executed and delivered this Guarantee to the
Administrative Agent for the ratable benefit of the 2017 Secured Parties;

 

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NOW, THEREFORE, in consideration of the premises and for other good and valuable
consideration, the receipt and adequacy of which are hereby acknowledged, and to
induce the Administrative Agent and the Lenders to enter into the Credit
Agreement and the Lenders to make the Extensions of Credit to the Borrower under
the Credit Agreement, the Guarantors hereby agree with the Administrative Agent,
for the ratable benefit of the 2017 Secured Parties, as follows:

SECTION I

DEFINITIONS

1.1 Defined Terms.

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

(b) The rules of construction and other interpretive provisions specified in
Sections 1.2, 1.3, 1.5 1.6 and 1.7 of the Credit Agreement shall apply to this
Guarantee, including terms defined in the preamble and recitals hereto.

(c) As used herein, “Obligations” shall have the meaning given such term in the
Credit Agreement; provided that references herein to (a) the Obligations of the
Borrower shall refer to the Obligations (as defined in the Credit Agreement),
and (b) the Obligations of any Guarantor shall refer to such Guarantor’s
Guarantor Obligations (as defined below).

(d) As used herein, “Guaranteed Transaction Documents” means the Credit
Documents.

(e) As used herein, “Guarantor Obligations” means, with respect to any
Guarantor, all Obligations (as defined in the Credit Agreement) of such
Guarantor which may arise under or in connection with the Guarantee and any
other Security Document to which such Guarantor is a party.

(f) As used herein, “Termination Date” means the date on which all Obligations
are paid in full (other than contingent indemnification obligations not then
due).

SECTION II

GUARANTEE

2.1 Guarantee.

(a) Subject to the provisions of Section 2.1(b), each of the Guarantors hereby,
jointly and severally, unconditionally and irrevocably, guarantees to the
Administrative Agent, for the ratable benefit of the 2017 Secured Parties, the
prompt and complete payment and performance when due (whether at the stated
maturity, by acceleration or otherwise) of the Obligations (including any
extensions, modifications, substitutions, amendments and renewals of any or all
of such Obligations).

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

(c) To the extent that the Borrower would be required to make payments pursuant
to Section 14.5 of the Credit Agreement, each Guarantor further agrees to pay
any and all expenses (including without limitation, all reasonable fees and
disbursements of counsel) that may be paid or incurred by the Administrative
Agent or any other 2017 Secured Party in enforcing, or obtaining advice of
counsel in respect of, any rights with respect to, or collecting,

 

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any or all of the Obligations and/or enforcing any rights with respect to, or
collecting against, such Guarantor under this Guarantee. This Guarantee shall
remain in full force and effect until the Termination Date, notwithstanding that
from time to time prior thereto no amounts may be outstanding under the
Guaranteed Transaction Documents.

(d) Each Guarantor agrees that the Obligations may at any time and from time to
time exceed the amount of the liability of such Guarantor hereunder without
impairing this Guarantee or affecting the rights and remedies of the
Administrative Agent or any other 2017 Secured Party hereunder.

(e) No payment or payments made by the Borrower, any of the Guarantors, any
other guarantor or any other Person or received or collected by the
Administrative Agent or any other 2017 Secured Party from the Borrower, any
Guarantor, any other guarantor or any other Person by virtue of any action or
proceeding or any set-off or appropriation or application at any time or from
time to time in reduction of, or in payment of, the Obligations shall be deemed
to modify, reduce, release or otherwise affect the liability of any Guarantor
hereunder, which shall, notwithstanding any such payment or payments (other than
payments made by the Borrower or such Guarantor in respect of the Obligations or
payments received or collected from such Guarantor in respect of the
Obligations), remain liable for the Obligations up to the maximum liability of
such Guarantor hereunder until the Termination Date.

(f) Each Guarantor agrees that whenever, at any time, or from time to time, it
shall make any payment to the Administrative Agent or any other 2017 Secured
Party on account of its liability hereunder, it will notify the Administrative
Agent in writing that such payment is made under this Guarantee for such
purpose.

2.2 Right of Contribution. Each Guarantor hereby agrees that to the extent that
a Guarantor shall have paid more than its proportionate share of any payment
made hereunder (including by way of set-off rights being exercised against it),
such Guarantor shall be entitled to seek and receive contribution from and
against any other Guarantor hereunder who has not paid its proportionate share
of such payment. Each Guarantor’s right of contribution shall be subject to the
terms and conditions of Section 2.4. The provisions of this Section 2.2 shall in
no respect limit the obligations and liabilities of any Guarantor to the
Administrative Agent and the other 2017 Secured Parties, and each Guarantor
shall remain liable to the Administrative Agent and the other 2017 Secured
Parties for the full amount guaranteed by such Guarantor hereunder.

2.3 Right of Set-off. In addition to any rights and remedies of the 2017 Secured
Parties provided by any applicable Requirement of Law, each Guarantor hereby
irrevocably authorizes each 2017 Secured Party at any time and from time to time
following the occurrence and during the continuance of any Event of Default,
without notice to such Guarantor or any other Guarantor, any such notice being
expressly waived by each Guarantor, upon any amount becoming due and payable by
such Guarantor hereunder (whether at stated maturity, by acceleration or
otherwise), to set-off and appropriate and apply against such amount any and all
deposits (general or special, time or demand, provisional or final, but
excluding deposits held by such Guarantor as a fiduciary for others), in any
currency, and any other credits, indebtedness or claims, in any currency, in
each case whether direct or indirect, absolute or contingent, matured or
unmatured, at any time held or owing by such 2017 Secured Party to or for the
credit or the

 

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account of such Guarantor under any Guaranteed Transaction Document. Each 2017
Secured Party shall notify such Guarantor and the Administrative Agent promptly
of any such set-off and the appropriation and application made by such 2017
Secured Party; provided that the failure to give such notice shall not affect
the validity of such set-off and appropriation and application.

2.4 No Subrogation. Notwithstanding any payment or payments made by any of the
Guarantors hereunder or any set-off or appropriation or application of funds of
any of the Guarantors by any 2017 Secured Party, no Guarantor shall be entitled
to be subrogated to any of the rights of the Administrative Agent or any other
2017 Secured Party against the Borrower or any other Guarantor or any collateral
security or guarantee or right of offset held by any 2017 Secured Party for the
payment of the Obligations until the Termination Date, nor shall any Guarantor
seek or be entitled to seek any contribution or reimbursement from the Borrower
or any other Guarantor in respect of payments made by such Guarantor hereunder
until the Termination Date. If any amount shall be paid to any Guarantor on
account of such subrogation rights at any time prior to the Termination Date,
such amount shall be held by such Guarantor in trust for the Administrative
Agent and the other 2017 Secured Parties, segregated from other funds of such
Guarantor, and shall, forthwith upon receipt by such Guarantor, be turned over
to the Administrative Agent in the exact form received by such Guarantor (duly
indorsed by such Guarantor to the Administrative Agent, if required), to be
applied against the Obligations, whether matured or unmatured, in such order as
the Administrative Agent may determine.

2.5 Amendments, etc. with respect to the Obligations; Waiver of Rights. Except
for termination of a Guarantor’s obligations hereunder as provided in
Section 5.14, each Guarantor shall remain obligated hereunder notwithstanding
that, without any reservation of rights against any Guarantor and without notice
to or further assent by any Guarantor: (a) any demand for payment of any of the
Obligations made by the Administrative Agent or any other 2017 Secured Party may
be rescinded by such party and any of the Obligations continued; (b) the
Obligations, or the liability of any other party upon or for any part thereof,
or any collateral security or guarantee therefor or right of offset with respect
thereto, may, from time to time, in whole or in part, be renewed, extended,
amended, modified, accelerated, compromised, waived, surrendered or released by
the Administrative Agent or any other 2017 Secured Party (with the consent of
the applicable Credit Parties where required by the terms hereof or thereof);
(c) the Credit Agreement and the other Guaranteed Transaction Documents and any
other documents executed and delivered in connection therewith may be amended,
modified, waived, supplemented or terminated, in whole or in part, in accordance
with the terms of the applicable documents; and (d) any collateral security,
guarantee or right of offset at any time held by the Administrative Agent or any
other 2017 Secured Party for the payment of the Obligations may be sold,
exchanged, waived, surrendered or released. Neither the Administrative Agent nor
any other 2017 Secured Party shall have any obligation to protect, secure,
perfect or insure any Lien at any time held by it as security for the
Obligations or for this Guarantee or any property subject thereto. When making
any demand hereunder against any of the Guarantors, the Administrative Agent or
any other 2017 Secured Party may, but shall be under no obligation to, make a
similar demand on the Borrower or any other Guarantor or guarantor, and any
failure by the Administrative Agent or any other 2017 Secured Party to make any
such demand or to collect any payments from the Borrower or any such other
Guarantor or guarantor or any release of the Borrower or such other Guarantor or
guarantor shall not relieve any of the Guarantors in respect of which a demand
or collection is not made or any of the Guarantors not so released of their

 

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several obligations or liabilities hereunder, and shall not impair or affect the
rights and remedies, express or implied, or as a matter of law, of the
Administrative Agent or any other 2017 Secured Party against any of the
Guarantors. For the purposes hereof “demand” shall include the commencement and
continuance of any legal proceedings.

2.6 Guarantee Absolute and Unconditional. Each Guarantor waives any and all
notice of the creation, contraction, incurrence, renewal, extension, amendment,
waiver or accrual of any of the Obligations and notice of or proof of reliance
by the Administrative Agent or any other 2017 Secured Party upon this Guarantee
or acceptance of this Guarantee, the Obligations, and any of them, shall
conclusively be deemed to have been created, contracted or incurred, or renewed,
extended, amended, waived or accrued, in reliance upon this Guarantee. All
dealings between the Borrower and any of the Guarantors, on the one hand, and
the Administrative Agent and the other 2017 Secured Parties, on the other hand,
likewise shall be conclusively presumed to have been had or consummated in
reliance upon this Guarantee. To the fullest extent permitted by applicable
Requirement of Law, each Guarantor waives diligence, presentment, protest,
demand for payment and notice of default or nonpayment to, or upon, the Borrower
or any other Guarantor with respect to the Obligations. Each Guarantor
understands and agrees that this Guarantee shall be construed as a continuing,
absolute and unconditional guarantee of payment without regard to (a) the
validity, regularity or enforceability of the Credit Agreement or any other
Guaranteed Transaction Document, any of the Obligations or any other collateral
security therefor or guarantee or right of offset with respect thereto at any
time or from time to time held by the Administrative Agent or any other 2017
Secured Party, (b) any defense, set-off or counterclaim (other than a defense of
payment or performance) which may at any time be available to or be asserted by
the Borrower against the Administrative Agent or any other 2017 Secured Party,
or (c) any other circumstance whatsoever (with or without notice to or knowledge
of the Borrower or such Guarantor) which constitutes, or might be construed to
constitute, an equitable or legal discharge of the Credit Parties for the
Obligations, or of such Guarantor under this Guarantee, in bankruptcy or in any
other instance. When pursuing its rights and remedies hereunder against any
Guarantor, the Administrative Agent and any other 2017 Secured Party may, but
shall be under no obligation to, pursue such rights and remedies as it may have
against the Borrower or any other Person or against any collateral security or
guarantee for the Obligations or any right of offset with respect thereto, and
any failure by the Administrative Agent or any other 2017 Secured Party to
pursue such other rights or remedies or to collect any payments from the
Borrower or any such other Person or to realize upon any such collateral
security or guarantee or to exercise any such right of offset, or any release of
the Borrower or any such other Person or any such collateral security, guarantee
or right of offset, shall not relieve such Guarantor of any liability hereunder,
and shall not impair or affect the rights and remedies, whether express, implied
or available as a matter of law, of the Administrative Agent and the other 2017
Secured Parties against such Guarantor. Each Guarantor acknowledges that it will
receive substantial direct and indirect benefits from financing arrangements
contemplated by the Guaranteed Transaction Documents and the waivers set forth
herein are knowingly made in contemplation of such benefits. This Guarantee
shall remain in full force and effect and be binding in accordance with and to
the extent of its terms upon each Guarantor and the successors and assigns
thereof, and shall inure to the benefit of the Administrative Agent and the
other 2017 Secured Parties, and their respective successors, indorses,
transferees and assigns, until the Termination Date, notwithstanding that from
time to time any Guaranteed Transaction Documents may be free from any
Obligations. A Guarantor shall automatically be released from its obligations
hereunder and the Guarantee of such Guarantor shall be automatically released
under the circumstances described in Section 14.17 of the Credit Agreement.

 

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2.7 Reinstatement. This Guarantee shall continue to be effective, or be
reinstated, as the case may be, if at any time payment, or any part thereof, of
any of the Obligations is rescinded or must otherwise be restored or returned by
the Administrative Agent or any other 2017 Secured Party upon the insolvency,
bankruptcy, dissolution, liquidation or reorganization of the Borrower or any
Guarantor, or upon or as a result of the appointment of a receiver, intervenor
or conservator of, or trustee or similar officer for, the Borrower or any
Guarantor or any substantial part of its property, or otherwise, all as though
such payments had not been made.

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

SECTION III

REPRESENTATIONS AND WARRANTIES

3.1 Representations and Warranties. Each Guarantor hereby represents and
warrants that, in the case of such Guarantor, the representations and warranties
set forth in Article IX of the Credit Agreement as they relate to such Guarantor
or to the other Credit Documents to which such Guarantor is a party, each of
which is hereby incorporated herein by reference, are true and correct in all
material respects, and the Administrative Agent and each 2017 Secured Party
shall be entitled to rely on each of them as if they were fully set forth
herein.

Each Guarantor agrees that the foregoing representations and warranties shall be
deemed to have been made by such Guarantor on and as of the date of each Credit
Event (except where such representations and warranties expressly relate to an
earlier date, in which case such representations and warranties shall have been
true and correct in all material respects as of such earlier date).

SECTION IV

COVENANTS

4.1 Covenants. Each Guarantor hereby covenants and agrees with the
Administrative Agent and each other 2017 Secured Party that, from and after the
date of this Guarantee until the Termination Date, such Guarantor shall take, or
shall refrain from taking, as the case may be, each action that is necessary to
be taken or not taken, as the case may be, so that no Default or Event of
Default is caused by the failure to take such action or to refrain from taking
such action by such Guarantor or any of its Subsidiaries.

4.2 Authority of Administrative Agent. Each Guarantor acknowledges that the
rights and responsibilities of the Administrative Agent under this Guarantee
with respect to any action taken by the Administrative Agent or the exercise or
non-exercise by the Administrative Agent

 

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of any option, right, request, judgment or other right or remedy provided for
herein or resulting or arising out of this Guarantee shall, as between the
Administrative Agent and the other 2017 Secured Parties, be governed by the
Credit Agreement and by such other agreements with respect thereto as may exist
from time to time among them, but, as between the Administrative Agent and such
Guarantor, the Administrative Agent shall be conclusively presumed to be acting
as agent for the 2017 Secured Parties with full and valid authority so to act or
refrain from acting in the manner set forth in Article XIII of the Credit
Agreement, and no Guarantor shall be under any obligation, or entitlement, to
make any inquiry respecting such authority.

SECTION V

MISCELLANEOUS

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

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

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

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

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

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

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

 

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

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

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

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

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

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

(f) agrees that a final judgment in any action or proceeding shall be conclusive
and may be enforced in other jurisdictions by suit on the judgment or in any
other manner provided by law.

5.9 Acknowledgments. Each Guarantor hereby acknowledges that:

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

(b) it will not assert any claim against the Administrative Agent or any other
2017 Secured Party based on an alleged breach of fiduciary duty by such party in
connection with this Guarantee, the transactions contemplated hereby or the
other Guaranteed Transaction Documents; and

(c) no joint venture is created hereby or by the other Guaranteed Transaction
Documents or otherwise exists by virtue of the transactions contemplated hereby
among the Administrative Agent and the other 2017 Secured Parties or among the
Borrower, the Administrative Agent and the other 2017 Secured Parties.

 

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

5.11 Amendments in Writing; No Waiver; Cumulative Remedies.

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

(b) Neither the Administrative Agent nor any other 2017 Secured Party shall by
any act (except by a written instrument pursuant to Section 5.11(a)), delay,
indulgence, omission or otherwise be deemed to have waived any right or remedy
hereunder or to have acquiesced in any Default or Event of Default or in any
breach of any of the terms and conditions hereof. No failure to exercise and no
delay in exercising, on the part of the Administrative Agent or any other 2017
Secured Party, any right, remedy, power or privilege hereunder shall operate as
a waiver thereof; nor shall any single or partial exercise of any right, remedy,
power or privilege hereunder preclude any other or further exercise thereof or
the exercise of any other right, remedy, power or privilege. A waiver by the
Administrative Agent or any other 2017 Secured Party of any right or remedy
hereunder on any one occasion shall not be construed as a bar to any right or
remedy which the Administrative Agent or any 2017 Secured Party would otherwise
have on any future occasion.

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

5.12 Successors and Assigns. This Guarantee shall be binding upon the successors
and assigns of each Guarantor and shall inure to the benefit of the
Administrative Agent and the 2017 Secured Parties and their successors and
assigns.

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

 

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5.14 Termination or Release.

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

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

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

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

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

5.16 First Lien Intercreditor Agreement Controls.

(a) Reference is made to (i) the First Lien/Second Out Pari Passu Intercreditor
Agreement, dated as of August 15, 2016, between JPMorgan Chase Bank, N.A., as
First Lien First Out Agent (as defined therein) and The Bank of New York Mellon
Trust Company, N.A., as First Lien Second-Out Agent (as defined therein) and
acknowledged and agreed by Borrower and certain of its subsidiaries (as amended,
supplemented, amended and restated or otherwise modified and in effect from time
to time, the “First Lien Intercreditor Agreement”) and (ii) the First Out
Collateral Agency Agreement. Each holder of Obligations, by its acceptance of
the benefits of the guarantees provided hereby, (i) agrees that it will be bound
by, and will take no actions contrary to, the provisions of the First Lien
Intercreditor Agreement or the Collateral Agency Agreement, (ii) authorizes and
instructs the Administrative Agent on behalf of each 2017 Secured Party to enter
into the First Lien Intercreditor Agreement as a First-Out Agent and the First
Out Collateral Agency Agreement as New Senior Administrative Agent, in each case
on behalf of such 2017 Secured Party. The foregoing provisions are intended as
an inducement to the lenders under the First Lien First-Out Credit Agreement (as
defined therein) to extend credit to the Borrower and such lenders are intended
third party beneficiaries of such provisions and the provisions of the First
Lien Intercreditor Agreement and the First Out Collateral Agency Agreement.

[SIGNATURES BEGIN NEXT PAGE]

 

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

 

CALIFORNIA HEAVY OIL, INC. CALIFORNIA RESOURCES LONG BEACH, INC. CALIFORNIA
RESOURCES PETROLEUM CORPORATION CALIFORNIA RESOURCES PRODUCTION CORPORATION
CALIFORNIA RESOURCES TIDELANDS, INC. SOUTHERN SAN JOAQUIN PRODUCTION, INC. THUMS
LONG BEACH COMPANY By:  

 

Name:   Marshall D. Smith Title:   Senior Executive Vice President and Chief
Financial Officer CALIFORNIA RESOURCES ELK HILLS, LLC CRC CONSTRUCTION SERVICES,
LLC CRC SERVICES, LLC SOCAL HOLDING, LLC By:  

 

Name:   Marshall D. Smith Title:   Senior Executive Vice President and Chief
Financial Officer of California Resources Corporation, its Sole Member
CALIFORNIA RESOURCES WILMINGTON, LLC By:  

 

Name:   Marshall D. Smith Title:   Senior Executive Vice President and Chief
Financial Officer of California Resources Tidelands, Inc., its Sole Member ELK
HILLS POWER, LLC By:  

 

Name:   Ivan Gaydarov Title:   Treasurer of California Resources Corporation,
the Sole Member of California Resources Elk Hills, LLC, its Sole Member

 

Signature Page

California Resources Corporation

Guarantee

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TIDELANDS OIL PRODUCTION COMPANY By:  

 

Name:   Ivan Gaydarov Title:   Treasurer of California Resources Tidelands,
Inc., its Sole Managing Partner CALIFORNIA RESOURCES COLES LEVEE, LLC By:  

 

Name:   Ivan Gaydarov Title:   Treasurer CALIFORNIA RESOURCES COLES LEVEE, L.P.
By:  

 

Name:   Ivan Gaydarov Title:   Treasurer of California Resources Coles Levee,
LLC, its General Partner CRC MARKETING, INC. By:  

 

Name:   D. Adam Smith Title:   Assistant Secretary

 

Signature Page

California Resources Corporation

Guarantee

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Acknowledged and Consented to:

 

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

By:  

 

Name:   Title:  

 

Signature Page

California Resources Corporation

Guarantee

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ANNEX A

TO GUARANTEE

FORM OF ASSUMPTION AGREEMENT

ASSUMPTION AGREEMENT, dated as of             , 201    , is made by
                    , a              (the “Additional Obligor”), in favor of The
Bank of New York Mellon Trust Company, N.A., as Administrative Agent (in such
capacity, the “Administrative Agent”) for the banks and other financial
institutions (the “Lenders”) parties to the Credit Agreement referred to below
and all other 2017 Secured Parties.

R E C I T A L S

A. Reference is made to that certain Credit Agreement, dated as of November 7,
2017 (the “Credit Agreement”) among California Resources Corporation, a Delaware
corporation, (the “Borrower”), the Lenders from time to time party thereto, and
the Administrative Agent.

B. In connection with the Credit Agreement, certain Subsidiaries (other than the
Additional Obligor) have entered into the Guarantee, dated as of even date with
the Credit Agreement (as amended, supplemented or otherwise modified from time
to time, the “Guarantee”) in favor of the Administrative Agent and the other
2017 Secured Parties.

C. Capitalized terms used herein and not otherwise defined herein (including in
the preamble and the recitals hereto) shall have the meanings assigned to such
terms in the Guarantee or the Credit Agreement, as applicable. The rules of
construction and the interpretive provisions specified in Section 1.1(b) of the
Guarantee shall apply to this Assumption Agreement, including terms defined in
the preamble and recitals hereto.

D. The Guarantors have entered into the Guarantee in order to induce the
Administrative Agent and the Lenders to enter into the Credit Agreement and to
induce the Lenders to make their respective Extensions of Credit to the Borrower
under the Credit Agreement.

E. Section 5.13 of the Guarantee provides that each Subsidiary of the Borrower
that is required to become a party to the Guarantee pursuant to Section 10.10 of
the Credit Agreement and the terms thereof shall become a Guarantor, with the
same force and effect as if originally named as a Guarantor therein, for all
purposes of the Guarantee upon execution and delivery by such Subsidiary of an
instrument in the form of this Assumption Agreement. The Additional Obligor is
executing this Assumption Agreement in accordance with the requirements of the
Guarantee to become a Guarantor under the Guarantee in order to induce the
Lenders to make additional Extensions of Credit to the Borrower under the Credit
Agreement and as consideration for Extensions of Credit previously made.

 

Annex A-1

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F. Now, therefore, it is agreed:

SECTION 1. By executing and delivering this Assumption Agreement, the Additional
Obligor, as provided in Section 5.13 of the Guarantee, hereby becomes a party to
the Guarantee as a Guarantor thereunder with the same force and effect as if
originally named therein as a Guarantor and, without limiting the generality of
the foregoing, hereby expressly agrees to all the terms and provisions of the
Guarantee applicable to it as a Guarantor thereunder and expressly guarantees,
jointly and severally, to the 2017 Secured Parties the Obligations. The
Additional Obligor hereby represents and warrants that each of the
representations and warranties contained in Section 3 of the Guarantee is true
and correct on and as of the date hereof (after giving effect to this Assumption
Agreement) as if made on and as of such date (except where such representations
and warranties expressly relate to an earlier date, in which case such
representations and warranties shall have been true and correct in all material
respects as of such earlier date). Each reference to a Guarantor in the
Guarantee shall be deemed to include each Additional Obligor. The Guarantee is
hereby incorporated herein by reference.

SECTION 2. Each Additional Obligor represents and warrants to the Administrative
Agent and the other 2017 Secured Parties that this Assumption Agreement has been
duly authorized, executed and delivered by it and constitutes its legal, valid
and binding obligation, enforceable against it in accordance with its terms,
subject to the effects of bankruptcy, insolvency, fraudulent conveyance,
reorganization and other similar laws relating to or affecting creditors’ rights
generally and general principles of equity (whether considered in a proceeding
in equity or law).

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

SECTION 4. Except as expressly supplemented hereby, the Guarantee shall remain
in full force and effect.

SECTION 5. THIS ASSUMPTION AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE
PARTIES HEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN
ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.

 

Annex A-2

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

SECTION 7. All notices, requests and demands pursuant hereto shall be made in
accordance with Section 14.2 of the Credit Agreement. All communications and
notices hereunder to each Additional Obligor shall be given to it in care of the
Borrower at the Borrower’s address set forth in Section 14.2 of the Credit
Agreement.

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

 

[NAME OF ADDITIONAL OBLIGOR], as Guarantor

By:  

 

Name:   Title:  

 

Signature Page

California Resources Corporation

Assumption Agreement to Guarantee

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Acknowledged and Consented to:

 

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

By:  

 

Name:   Title:  

 

Signature Page

California Resources Corporation

Assumption Agreement to Guarantee

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EXHIBIT C

FORM OF SECURITY AGREEMENT

[See attached.]

 

C-1

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Execution Version

 

 

 

SECOND AMENDED AND RESTATED SECURITY AGREEMENT

from

CALIFORNIA RESOURCES CORPORATION,

and

each other Grantor

from time to time party hereto

in favor of

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

as Collateral Agent

Dated as of November 17, 2017

 

 

 

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TABLE OF CONTENTS

 

          Page     

ARTICLE I

Definitions and References

   Section 1.1    Definitions in Credit Agreements      2   Section 1.2   
Definitions in the UCC, etc.      2   Section 1.3    Definitions in this
Agreement      2   Section 1.4    Rules of Construction; References and Titles
     4     

ARTICLE II

Security Interest

   Section 2.1    Grant of Security Interest      5   Section 2.2    Obligations
Secured      6     

ARTICLE III

Representations and Warranties

   Section 3.1    Representations and Warranties      7     

ARTICLE IV

Covenants

   Section 4.1    General Covenants Applicable to Collateral      8  
Section 4.2    Covenants for Specified Types of Collateral      8     

ARTICLE V

Remedies, Powers and Authorizations

   Section 5.1    Normal Provisions Concerning the Collateral      10  
Section 5.2    Event of Default Remedies      11   Section 5.3    Application of
Proceeds      13   Section 5.4    Deficiency      13   Section 5.5    Investment
Property and Other Pledged Equity      14   Section 5.6    Indemnity and
Expenses      14   Section 5.7    Non-Judicial Remedies      15   Section 5.8   
Limitation on Duty of the Collateral Agent in Respect of Collateral      15  
Section 5.9    Appointment of Other Agents      15   Section 5.10    No Duty   
  16     

ARTICLE VI

Miscellaneous

   Section 6.1    Notices      18   Section 6.2    Amendments and Waivers     
18   Section 6.3    Additional Grantors      18   Section 6.4    Preservation of
Rights      18   Section 6.5    Severability      19   Section 6.6    Survival
     19   Section 6.7    Binding Effect and Assignment      19   Section 6.8   
Release of Collateral; Termination      19   Section 6.9    Waiver of Jury Trial
     19   Section 6.10    Submission to Jurisdiction      20   Section 6.11   
Governing Law      20  

 

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Section 6.12    Final Agreement; Conflicts    20 Section 6.13    Counterparts;
Facsimile    20 Section 6.14    Acceptance by the Collateral Agent    20
Section 6.15    Amendment and Restatement    21 Section 6.16    Collateral
Agency Agreement    21 Section 6.17    Applicability to Collateral Agent    21

Schedules and Exhibits

 

Schedule 1    Address for Notices and Jurisdiction of Organization Schedule 2   
Scheduled Collateral Exhibit A    Form of Grantor Accession Agreement

 

ii

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SECOND AMENDED AND RESTATED SECURITY AGREEMENT

This SECOND AMENDED AND RESTATED SECURITY AGREEMENT dated as of November 17,
2017 (as may be amended, restated, supplemented or otherwise modified from time
to time, this “Agreement”), is made by California Resources Corporation, a
Delaware corporation (the “Borrower”) and each other Grantor party hereto in
favor of The Bank of New York Mellon Trust Company, N.A., as collateral agent
for the benefit of the Secured Parties (in such capacity, together with its
successors in such capacity, the “Collateral Agent”).

WHEREAS, this Agreement amends and restates that certain Amended and Restated
Security Agreement dated as of December 17, 2015, as amended by that certain
Omnibus Amendment dated as of August 15, 2016, by and among Borrower and each
other Grantor (as defined below) party thereto (the “Existing Security
Agreement”) made by the Borrower and each other Grantor party thereto in favor
of JPMorgan Chase Bank, N.A., as administrative agent (in such capacity,
together with its successors in such capacity, the “First Out Administrative
Agent”) under that certain Credit Agreement, dated as of September 24, 2014 (as
amended, restated, supplemented or otherwise modified from time to time, the
“First Out Credit Agreement”), among the Borrower, the banks, financial
institutions and other lending institutions from time to time party thereto (the
“First Out Lenders”), and JPMorgan Chase Bank, N.A., as First Out Administrative
Agent, a swingline lender and a letter of credit issuer;

WHEREAS, pursuant to that certain Assignment of Deeds of Trust, Substitution of
Trustee and Assumption Agreement, dated as of the date hereof, the First Out
Administrative Agent has assigned all powers of attorney, liens, or security
interests and all other rights and interests granted to it under the Security
Documents (as defined under the First Out Credit Agreement and collectively
referred to herein as the “Liens”) to the Collateral Agent for the benefit of
each of the Secured Parties;

WHEREAS, reference is made to that certain Collateral Agency Agreement dated as
of even date herewith (as amended, restated, supplemented or otherwise modified
from time to time, the “Collateral Agency Agreement”), by and among First Out
Administrative Agent, the 2017 Administrative Agent (collectively, the
“Administrative Agents”) and the Collateral Agent, pursuant to which the
Administrative Agents appoint the Collateral Agent to act on their behalf under
this Agreement, to hold the Liens for the benefit of the Secured Parties and to
authorize the Collateral Agent to take such actions on each of their behalf to
exercise the power delegated to the Collateral Agent, together with actions
reasonably incidental thereto.

WHEREAS, (a) pursuant to the First Out Credit Agreement, among other things,
(i) the First Out Lenders have severally agreed to make Loans, (ii) the
Swingline Lenders have severally agreed to make Swingline Loans to the Borrower
and (iii) each Letter of Credit Issuer has severally agreed to issue Letters of
Credit for the account of the Borrower or the Subsidiaries upon the terms and
subject to the conditions set forth therein; (b) one or more Hedge Banks have or
may from time to time enter into Secured Hedge Agreements with the Borrower
and/or its Subsidiaries and (c) one or more Cash Management Banks have or may
from time to time provide Cash Management Services pursuant to Secured Cash
Management Agreements to the Borrower and/or any of its Subsidiaries
(collectively, the “First Out Extensions of Credit”);

WHEREAS, pursuant to the 2017 Credit Agreement, among other things, the 2017
Lenders have severally agreed to make Loans to the Borrower (collectively, the
“2017 Extensions of Credit”);

WHEREAS, each Grantor acknowledges that it will derive substantial direct and
indirect benefit from the making of the First Out Extensions of Credit and 2017
Extensions of Credit;

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WHEREAS, in order to comply with the requirements of the Credit Agreements, the
Grantors desire to grant to the Collateral Agent, for the ratable benefit of the
Secured Parties, a security interest in the Collateral and deliver this
Agreement;

WHEREAS, the Grantors and the Administrative Agents desire to amend and restate
the Existing Security Agreement to retain the security interest in the
Collateral for the benefit of each of the Secured Parties; and

NOW, THEREFORE, in consideration of the premises and for other good and valuable
consideration, the receipt and adequacy of which are hereby acknowledged, and to
(a) induce the First Out Administrative Agent, the Swingline Lenders, the Letter
of Credit Issuer and the First Out Lenders to enter into the First Out Credit
Agreement and the First Out Lenders, the Swingline Lenders and the Letter of
Credit Issuer to make the First Out Extensions of Credit to the Borrower under
the First Out Credit Agreement, to induce one or more Hedge Banks to enter into
Secured Hedge Agreements with the Borrower and/or its Subsidiaries and to induce
one or more Cash Management Banks to provide Cash Management Services pursuant
to Secured Cash Management Agreements with the Borrower and/or its Subsidiaries
and (b) induce the 2017 Administrative Agent and the 2017 Lenders to enter into
the 2017 Credit Agreement and the 2017 Lenders to make the 2017 Extensions of
Credit to the Borrower under the 2017 Credit Agreement, the Grantors hereby
agree with the Collateral Agent, for the ratable benefit of the Secured Parties,
as follows:

ARTICLE I

DEFINITIONS AND REFERENCES

Section 1.1 Definitions in Credit Agreements. Capitalized terms used herein and
not otherwise defined have the respective meanings specified in (i) prior to the
Discharge of Existing Senior Obligations (as defined in the Collateral Agency
Agreement), the First Out Credit Agreement and (ii) following the Discharge of
Existing Senior Obligations (as defined in the Collateral Agency Agreement), the
2017 Credit Agreement.

Section 1.2 Definitions in the UCC, etc. Terms used herein that are not defined
herein or in the Credit Agreements, but that are defined in the UCC, have the
meanings given to them in the UCC unless the context otherwise requires. If such
a term is defined in more than one article of the UCC it shall have the meaning
set forth in Article 9 thereof, including but not limited to the following:
Account, Chattel Paper, Commodity Contract, Commercial Tort Claim, Deposit
Account, Document, Equipment, General Intangible, Instrument, Inventory,
Investment Property, Letter of Credit, Letter of Credit Right, Payment
Intangible, Proceeds, Record, Securities Account, Security, Security
Entitlement, Supporting Obligation, Tangible Chattel Paper and Uncertificated
Security.

Section 1.3 Definitions in this Agreement. The following terms have the
following meanings:

“2017 Administrative Agent” has the meaning specified in the definition of 2017
Credit Agreement.

“2017 Credit Agreement” means that certain Credit Agreement dated as of even
date herewith (as amended, restated, supplemented or otherwise modified from
time to time), among the Borrower, the banks, financial institutions and other
lending institutions from time to time party thereto (the “2017 Lenders”) and
The Bank of New York Mellon Trust Company, N.A., as administrative agent (in
such capacity, together with its successors in such capacity, the “2017
Administrative Agent”).

 

2

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“2017 Extensions of Credit” has the meaning specified in the recitals.

“2017 Lenders” has the meaning assigned to such term in the definition of 2017
Credit Agreement.

“Administrative Agents” has the meaning specified in the recitals.

“Agreement” has the meaning specified in the preamble.

“Borrower” has the meaning specified in the preamble.

“Collateral” means, with respect to any Grantor, all property described in
Section 2.1 in which such Grantor has any right, title or interest, excluding,
for the avoidance of doubt, Excluded Property. References to Collateral herein
with respect to a Grantor are intended to refer to Collateral in which such
Grantor has any right, title or interest and not to Collateral in which any
other Grantor has any right, title or interest.

“Collateral Agency Agreement” has the meaning specified in the recitals.

“Collateral Agent” has the meaning specified in the preamble.

“Credit Agreements” means, collectively, the First Out Credit Agreement and the
2017 Credit Agreement.

“Credit Documents” means, collectively, the “Credit Documents” as defined in the
First Out Credit Agreement and the “Credit Documents” as defined in the 2017
Credit Agreement.

“Existing Security Agreement” has the meaning specified in the recitals.

“First Out Administrative Agent” has the meaning specified in the recitals.

“First Out Credit Agreement” has the meaning specified in the recitals.

“First Out Extensions of Credit” has the meaning specified in the recitals.

“First Out Lenders” has the meaning specified in the recitals.

“Grantor” means each Person granting a security interest in any Collateral
pursuant to this Agreement. References to “Grantor” in this Agreement are
intended to refer to each such Person as if such Person were the only grantor
pursuant to this Agreement, except:

(a) that references to “any Grantor” are meant to refer to each Person that is a
Grantor,

(b) that references to “the Grantors” are meant to refer collectively to all
Persons that are Grantors, and

(c) as otherwise may be specifically set forth herein.

“Insolvency or Liquidation Proceeding” has the meaning specified in the
Collateral Agency Agreement.

 

3

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“Instructions” has the meaning specified in Section 5.10(k).

“Lenders” means, collectively, the First Out Lenders and the 2017 Lenders.

“Liens” has the meaning specified in the recitals.

“Obligations” means the “Obligations” as such term is defined in clause (a)(i)
of the definition of “Obligations” of the First Out Credit Agreement together
with the “2017 Term Loan Obligations” as such term is defined in the 2017 Credit
Agreement.

“Permitted Encumbrance” means a Lien permitted to be placed on the Collateral
under Section 11.2 of the Credit Agreements.

“Required Lenders” means (i) the “Majority Lenders” as such term is defined in
the First Out Credit Agreement or (ii) the “Required Lenders” as such term is
defined in the 2017 Credit Agreement.

“Restricted Person” means the Borrower or any of its Guarantors.

“Secured Parties” means, “Secured Parties” as defined in the Collateral Agency
Agreement.

“Securities Act” means the Securities Act of 1933.

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

Section 1.4 Rules of Construction; References and Titles. The definitions of
terms herein shall apply equally to the singular and plural forms of the terms
defined. Whenever the context may require, any pronoun shall include the
corresponding masculine, feminine and neuter forms. The words “include,”
“includes” and “including” shall be deemed to be followed by the phrase “without
limitation.” The word “will” shall be construed to have the same meaning and
effect as the word “shall.” Unless the context requires otherwise:

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

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

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

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

 

4

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

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

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

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

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

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

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

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

ARTICLE II

SECURITY INTEREST

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

(a) all Accounts;

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

(c) all cash;

(d) all Chattel Paper;

(e) all Commodity Contracts;

 

5

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

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

(h) all Documents;

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

(j) all Fixtures;

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

(l) all Goods;

(m) all Instruments;

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

(o) all Inventory;

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

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

(r) all Securities Accounts and Securities Entitlements,

(s) all Supporting Obligations; and

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

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

Section 2.2 Obligations Secured.

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

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

 

6

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

ARTICLE III

REPRESENTATIONS AND WARRANTIES

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

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

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

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

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

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

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

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

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

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

 

7

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(j) Grantor, if other than the Borrower, has, independently and without reliance
upon any Secured Party and based on such documents and information as it has
deemed appropriate, made its own credit analysis and decision to enter into this
Agreement and each other Credit Document to which it is or is to be a party, and
Grantor, if other than the Borrower, has established adequate means of obtaining
from each other Restricted Person on a continuing basis information pertaining
to, and is now and on a continuing basis will be completely familiar with, the
business, condition (financial or otherwise), operations, performance,
properties and prospects of each other Restricted Person.

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

ARTICLE IV

COVENANTS

Section 4.1 General Covenants Applicable to Collateral. Grantor will at all
times perform and observe the covenants contained in the Credit Agreements that
are applicable to Grantor.

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

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

(b) Grantor will not permit any Collateral that constitutes Equipment to at any
time become so related or attached to, or used in connection with any particular
real property so as to become a fixture upon such real property, or to be
installed in or affixed to other goods so as to become an accession to such
other goods unless such real property or other goods are also collateral
security for the Obligations, such real property is not required to be provided
as collateral pursuant to the Credit Agreements, or such real property is the
leased office space used by the Borrower as its corporate headquarters.

(c) (i) If Grantor shall at any time hold or acquire any certificated security,
Grantor will forthwith endorse, assign, and deliver the same to the Collateral
Agent, accompanied by such customary instruments of transfer or assignment duly
executed in blank.

(ii) If any security now or hereafter acquired by Grantor is uncertificated and
is issued to Grantor or its nominee directly by the issuer thereof, Grantor
shall promptly notify the Collateral Agent of such issuance and take such other
action as the Required Lenders may reasonably request in order to perfect the
Collateral Agent’s security interest in such security, provided, however, unless
there shall occur and be continuing an Event of Default, issuers may take
instructions from such Grantor to the extent not inconsistent with this
Agreement.

(iii) If any security, whether certificated or uncertificated, or other
Investment Property or other asset now or hereafter acquired by Grantor, is held
by Grantor or its nominee through a securities intermediary or commodity
intermediary, Grantor shall promptly notify the Collateral Agent thereof, and,
subject to the terms of any securities account control agreement entered in

 

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connection therewith in form and substance reasonably satisfactory to the
Collateral Agent, at the Required Lender’s request and option either:

(A) cause such securities intermediary or commodity intermediary to agree to
comply with entitlement orders or other instructions from the Collateral Agent
to such securities intermediary as to such securities or other Investment
Property, or to apply any value distributed on account of any commodity contract
as directed by the Collateral Agent to such commodity intermediary, in each case
without further consent of Grantor or such nominee, or

(B) in the case of financial assets or other Investment Property held through a
securities intermediary, arrange for the Collateral Agent to become the
entitlement holder with respect to such Investment Property, with Grantor being
permitted to exercise rights to withdraw or otherwise deal with such Investment
Property.

Subsections (A) and (B) above shall not apply to any financial asset credited to
a Securities Account for which the Collateral Agent is the securities
intermediary or commodity intermediary.

(d) If Grantor is at any time a beneficiary under a letter of credit now or
hereafter issued in favor of Grantor with a face amount in excess of
$50,000,000, Grantor shall promptly notify the Collateral Agent thereof and, at
the request and option of the Required Lenders either:

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

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

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

(f) If Grantor shall at any time after the date hereof open a Deposit Account
other than an account listed on Schedule 2, Grantor shall, concurrently
therewith, (i) execute and deliver to the Collateral Agent a supplement to
Schedule 2 listing such Deposit Account, which supplement shall take effect
without further action on the part of any party hereto or beneficiary hereof and
(ii) unless such Deposit Account is an Excluded Deposit Account, enter into a
deposit account control agreement with the Collateral Agent and the account bank
for such Deposit Account on terms reasonably satisfactory to the Collateral
Agent. The foregoing notwithstanding, it is understood and agreed that JPMorgan
Chase Bank, N.A., in its capacity as gratuitous bailee for the Collateral Agent,
will continue to maintain control over all of Deposit Accounts with JPMorgan
Chase Bank, N.A., as secured party, on the Closing Date, in accordance with the
terms of the Collateral Agency Agreement, for the sole purpose of perfecting the
Liens of the Collateral Agent on the Collateral on deposit therein.

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

 

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ARTICLE V

REMEDIES, POWERS AND AUTHORIZATIONS

Section 5.1 Normal Provisions Concerning the Collateral.

(a) Grantor shall at all times be responsible for preparing and filing financing
statements in such jurisdictions necessary to perfect the Liens hereunder and
further Grantor irrevocably authorizes the Collateral Agent at any time and from
time to time to file, without the signature of Grantor, in any jurisdiction any
amendments to existing financing statements and any initial financing statements
and amendments thereto that:

(i) indicate the Collateral as being:

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

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

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

(iii) properly effectuate the transactions described in the Credit Documents.
The foregoing authorization is in no event an obligation, as the Collateral
Agent has no obligations to prepare or file financing statements hereunder.

Grantor will furnish any such information to the Collateral Agent promptly upon
request. A carbon, photographic or other reproduction of this Agreement or any
financing statement describing any Collateral is sufficient as a financing
statement and may be filed in any jurisdiction. Grantor ratifies and approves
all financing statements heretofore filed by or on behalf of the Collateral
Agent in any jurisdiction in connection with the transactions contemplated
hereby.

(b) Grantor appoints the Collateral Agent as Grantor’s attorney in fact and
proxy, with full authority in the place and stead of Grantor and in the name of
Grantor or otherwise, from time to time during the continuance of any Event of
Default, to take any action and to execute any instrument that the Collateral
Agent may deem necessary or advisable to accomplish the purposes of this
Agreement including any action or instrument:

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

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

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

 

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

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

Such power of attorney and proxy are coupled with an interest, are irrevocable,
and are to be used by the Collateral Agent for the sole benefit of the Secured
Parties.

(c) If Grantor fails to perform any agreement or obligation contained herein,
the Collateral Agent may, but shall have no obligation to, itself perform, or
cause performance of, such agreement or obligation, and the expenses of the
Collateral Agent incurred in connection therewith shall be payable by Grantor
under Section 5.6.

(d) If any Collateral in which Grantor has granted a security interest hereunder
with a Fair Market Value in excess of $50,000,000 is at any time in the
possession or control of any warehouseman, bailee or any of Grantor’s agents,
Grantor shall notify such warehouseman, bailee or agent of the Collateral
Agent’s rights hereunder and instruct such Person to hold all such Collateral
for the Collateral Agent’s account.

(e) Anything herein to the contrary notwithstanding:

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

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

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

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

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

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

 

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(c) Prior to the disposition of any Collateral:

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

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

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

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

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

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

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

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

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

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

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

 

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After Grantor receives notice that the Collateral Agent has given (or after the
Collateral Agent has required Grantor to give) any notice referred to above in
this subsection:

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

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

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

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

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

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

(m) To the extent notice of sale shall be required by law with respect to
Collateral, at least 10-days’ notice to Grantor of the time and place of any
public sale or the time after which any private sale is to be made shall
constitute reasonable notification; provided that, if the Collateral Agent fails
in any respect to give such notice, it shall have no liability therefor. The
Collateral Agent shall not be obligated to make any sale of Collateral
regardless of notice of sale having been given. The Collateral Agent may adjourn
any public or private sale from time to time by announcement at the time and
place fixed therefor, and such sale may, without further notice, be made at the
time and place to which it was so adjourned.

Section 5.3 Application of Proceeds. If an Event of Default shall have occurred
and be continuing, any cash held by or on behalf of the Collateral Agent and all
cash proceeds received by or on behalf of the Collateral Agent in respect of any
sale of, collection from, or other realization upon any Collateral may be held
by the Collateral Agent as collateral for, and/or then or at any time thereafter
applied, in whole or in part, by the Collateral Agent for the benefit of the
Secured Parties against, any Obligation, in accordance with Section 3.6 of
Collateral Agency Agreement.

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

 

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

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

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

shall be deemed to involve a “public disposition” under Section 9-610(c) of the
UCC, notwithstanding that such sale may not constitute a “public offering” under
the Securities Act, and any Secured Party may bid for such Collateral.

Section 5.6 Indemnity and Expenses. In addition to, but not in duplication of,
any similar Obligations under other Credit Documents:

(a) Each Grantor agrees to pay or reimburse the Collateral Agent and the
Administrative Agents for all of their reasonable and documented out-of-pocket
costs and expenses (with respect to attorney costs, limited to reasonable fees,
disbursements and other charges of one primary counsel to each of the
Administrative Agents and one primary counsel for the Collateral Agent) incurred
in connection with the preparation and execution and delivery of, and any
amendment, waiver, supplement or modification to, this Agreement and any other
documents prepared in connection herewith or therewith, and the consummation and
administration of the transactions contemplated hereby and thereby, including
the reasonable fees, disbursements and other charges of (i) Simpson Thacher &
Bartlett LLP, in its capacity as counsel to the First Out Administrative Agent,
and one counsel in each appropriate local jurisdiction (other than any allocated
costs of in-house counsel), (ii) Latham and Watkins LLP, in its capacity as
counsel to the 2017 Administrative Agent, and one counsel in each appropriate
local jurisdiction (other than any allocated costs of in-house counsel) and
(iii) Emmet, Marvin & Martin, LLP, in its capacity as counsel to the Collateral
Agent, one counsel in each appropriate local jurisdiction (other than any
allocated costs of in-house counsel) and, in connection with any Insolvency or
Liquidation Proceeding, one bankruptcy counsel, to the extent the Borrower would
be required to do so pursuant to Section 14.5 of each Credit Agreement.

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

 

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(c) Each Grantor agrees to pay, indemnify, and hold harmless the Collateral
Agent, each other Secured Party and their respective Related Parties from and
against, (i) any and all recording and filing fees and (ii) any and all other
liabilities, obligations, losses, damages, penalties, claims, demands, actions,
judgments, suits, costs, expenses or disbursements of any kind or nature
whatsoever, whether or not such proceedings are brought by the Borrower, any
other Grantor, any of their respective Related Parties or any other third Person
(with respect to attorney costs, limited to the reasonable and documented fees,
disbursements and other charges of one primary counsel for each of the
Collateral Agent and the other Secured Parties, taken as a whole, and, if
necessary, of a single firm of local counsel in each appropriate jurisdiction
for the Collateral Agent and the other Secured Parties, taken as a whole (unless
there is an actual or perceived conflict of interest in which case each such
Person may, with the consent of the Borrower (not to be unreasonably withheld or
delayed) retain its own counsel) and, in connection with any Insolvency or
Liquidation Proceeding, one bankruptcy counsel, with respect to the execution,
delivery, enforcement, performance and administration of this Agreement to the
extent the Borrower would be required to do so pursuant to Section 14.5 of each
Credit Agreement.

(d) The agreements in this Section 5.6 shall survive the resignation of the
Collateral Agent and repayment of the Loans and any other amounts payable under
the Credit Agreements and the other Credit Documents.

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

Section 5.8 Limitation on Duty of the Collateral Agent in Respect of Collateral.
Beyond the exercise of reasonable care in the custody thereof, the Collateral
Agent shall have no duty as to any Collateral in its possession or control or in
the possession or control of any agent or bailee or as to the preservation of
rights against prior parties or any other rights pertaining thereto. The
Collateral Agent shall be deemed to have exercised reasonable care in the
custody of Collateral in its possession if such Collateral is accorded treatment
substantially equal to which that it accords its own property, and the
Collateral Agent shall not be liable or responsible for any loss or damage to
any Collateral, or for any diminution in the value thereof, by reason of the act
or omission of any warehouseman, carrier, forwarding agency, consignee or other
agent or bailee selected by the Collateral Agent in good faith.

The Collateral Agent will not be responsible for the existence, genuineness or
value of any of the Collateral or for the validity, perfection, priority or
enforceability of the Liens in any of the Collateral, whether impaired by
operation of law or by reason of any action or omission to act on its part
hereunder, except to the extent such action or omission constitutes gross
negligence or willful misconduct on the part of the Collateral Agent, as
determined by a court of competent jurisdiction in a final, non-appealable
order, for the validity or sufficiency of the Collateral or any agreement or
assignment contained therein, for the validity of the title of any grantor to
the Collateral, for insuring the Collateral or for the payment of taxes,
charges, assessments or Liens upon the Collateral or otherwise as to the
maintenance of the Collateral. The Collateral Agent hereby disclaims any
representation or warranty to the present and future holders of the Obligations
concerning the perfection of the Liens granted hereunder or in the value of any
of the Collateral.

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

 

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Section 5.10 No Duty.

(a) The powers conferred on the Collateral Agent hereunder are solely to protect
the interests of the Lenders in the Collateral and shall not impose any duty
upon the Collateral Agent or any Lender to exercise any such powers. The
Collateral Agent and the Lenders shall be accountable only for amounts that they
actually receive as a result of the exercise of such powers, and neither they
nor any of their officers, directors, employees or agents shall be responsible
to any Grantor for any act or failure to act hereunder, except for their own
gross negligence or willful misconduct.

(b) The Collateral Agent shall not be responsible for (i) perfecting,
maintaining, monitoring, preserving or protecting the security interest or lien
granted under this Agreement, any other Credit Documents or any agreement or
instrument contemplated hereby or thereby, (ii) the filing, re-filing,
recording, re-recording or continuing or any document, financing statement,
mortgage, assignment, notice, instrument of further assurance or other
instrument in any public office any time or times or (iii) providing,
maintaining, monitoring or preserving insurance on or the payment of taxes with
respect to any of the Collateral. The actions described in items (i) through
(iii) shall be the sole responsibility of the Grantor.

(c) No written direction given to the Collateral Agent that in its sole judgment
imposes, purports to impose or might reasonably be expected to impose upon it
any obligation or liability not set forth in or arising under this Agreement and
the Credit Documents will be binding upon the Collateral Agent unless it elects,
at its sole option, to accept such direction.

(d) The Collateral Agent shall not be responsible or liable for any failure or
delay in the performance of its obligations under this Agreement or the Credit
Documents arising out of or caused, directly or indirectly, by circumstances
beyond its reasonable control, including, without limitation, acts of God;
earthquakes; fire; flood; terrorism; wars and other military disturbances;
sabotage; epidemics; riots; business interruptions; loss or malfunctions of
utilities, computer (hardware or software) or communication services; accidents;
labor disputes; acts of civil or military authority and governmental action.

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

(f) The Collateral Agent shall not be liable for any error of judgment made in
good faith by a Authorized Officer (as defined in the 2017 Credit Agreement) of
the Collateral Agent unless it shall be proved that the Collateral Agent was
negligent in ascertaining the pertinent facts.

(g) Delivery of any reports, information and documents to the Collateral Agent
is for informational purposes only and the Collateral Agent’s receipt of such
shall not constitute constructive notice of any information contained therein or
determinable from information contained therein, including the Grantor’s
compliance with any of its covenants hereunder.

(h) The Collateral Agent shall not be required to qualify in any jurisdiction in
which it is not presently qualified to perform its obligations as a Collateral
Agent.

 

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(i) In the event that the Collateral Agent is required to acquire title to an
asset for any reason, or take any managerial action of any kind in regard
thereto, in order to carry out any fiduciary or trust obligation for the benefit
of another, which in the Collateral Agent’s sole discretion may cause the
Collateral Agent to be considered an “owner or operator” under any environmental
laws or otherwise cause the Collateral Agent to incur, or be exposed to, any
environmental liability or any liability under any other federal, state or local
law, the Collateral Agent reserves the right, instead of taking such action,
either to resign as Collateral Agent or to arrange for the transfer of the title
or control of the asset to a court appointed receiver. The Collateral Agent
shall not be liable to any person for any environmental liability or any
environmental claims or contribution actions under any federal, state or local
law, rule or regulation by reason of the Collateral Agent’s actions and conduct
as authorized, empowered and directed hereunder or relating to any kind of
discharge or release or threatened discharge or release of any hazardous
materials into the environment.

(j) The Collateral Agent shall be fully justified in failing or refusing to take
any action under this Agreement or any other Credit Document unless the
Collateral Agent shall first receive such advice or concurrence of the Required
Lenders (or such other number or percentage of the Lenders as shall be necessary
under the circumstances provided herein) and until such instructions are
received, the Collateral Agent shall act, or refrain from acting, as it deems
advisable. If the Collateral Agent so requests, it shall first be indemnified to
its reasonable satisfaction by the Required Lenders, as applicable, against any
and all liability and expense that may be incurred by it by reason of taking or
continuing to take any such action. The Collateral Agent shall in all cases be
fully protected in acting, or in refraining from acting, under this Agreement or
any other Credit Document in accordance with a request or consent of the
Required Lenders and such request and any action taken or failure to act
pursuant thereto shall be binding upon all of the Lenders. No provision of this
Agreement or any other Credit Document or any agreement or instrument
contemplated hereby or thereby, the transactions contemplated hereby or thereby
shall require the Collateral Agent to: (i) expend or risk its own funds or
provide indemnities in the performance of any of its duties hereunder or the
exercise of any of its rights or power or (ii) otherwise incur any financial
liability in the performance of its duties or the exercise of any of its rights
or powers.

(k) The Collateral Agent shall have the right to accept and act upon
instructions, including funds transfer instructions (“Instructions”) given
pursuant to this Agreement and delivered using Electronic Means; provided,
however, that the Grantor shall provide to the Collateral Agent an incumbency
certificate listing authorized officers and containing specimen signatures of
such authorized officers, which incumbency certificate shall be amended by the
Grantor whenever a person is to be added or deleted from the listing. If the
Grantor elects to give the Collateral Agent Instructions using Electronic Means
and the Collateral Agent in its discretion elects to act upon such Instructions,
the Collateral Agent’s understanding of such Instructions shall be deemed
controlling. The Grantor understands and agrees that the Collateral Agent cannot
determine the identity of the actual sender of such Instructions and that the
Collateral Agent shall conclusively presume that directions that purport to have
been sent by an authorized officer listed on the incumbency certificate provided
to the Collateral Agent have been sent by such authorized officer. The Grantor
shall be responsible for ensuring that only authorized officers transmit such
Instructions to the Collateral Agent and that the Grantor and all authorized
officers are solely responsible to safeguard the use and confidentiality of
applicable user and authorization codes, passwords and/or authentication keys
upon receipt by the Grantor. The Collateral Agent shall not be liable for any
losses, costs or expenses arising directly or indirectly from the Collateral
Agent’s reliance upon and compliance with such Instructions notwithstanding such
directions conflict or are inconsistent with a subsequent written instruction.
The Grantor agrees: (i) to assume all risks arising out of the use of Electronic
Means to submit Instructions to the Collateral Agent, including without
limitation the risk of the Collateral Agent acting on unauthorized Instructions,
and the risk of interception and misuse by third parties; (ii) that it is fully
informed of the protections and risks associated with the various methods of
transmitting Instructions to the Collateral Agent and that there may be more
secure methods of

 

17

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

transmitting Instructions than the method(s) selected by the Grantor; (iii) that
the security procedures (if any) to be followed in connection with its
transmission of Instructions provide to it a commercially reasonable degree of
protection in light of its particular needs and circumstances; and (iv) to
notify the applicable Agent immediately upon learning of any compromise or
unauthorized use of the security procedures. “Electronic Means” shall mean the
following communications methods: S.W.I.F.T., e-mail, facsimile transmission,
secure electronic transmission containing applicable authorization codes,
passwords and/or authentication keys issued by the Collateral Agent, or another
method or system specified by the Collateral Agent as available for use in
connection with its services hereunder.

ARTICLE VI

MISCELLANEOUS

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

Section 6.2 Amendments and Waivers. Except as provided in Sections 4.2(e) or
6.3, no amendment of this Agreement shall be effective unless it is in writing
and signed by Grantor and the Collateral Agent, and no waiver of this Agreement
or consent to any departure by Grantor herefrom shall be effective unless it is
in writing and signed by the Collateral Agent, and then such waiver or consent
shall be effective only in the specific instance and for the specific purpose
for that given and to the extent specified in such writing. In addition, all
such amendments and waivers shall be effective only if given with the necessary
approvals required in each Credit Agreement. No such amendment shall bind any
Grantor not a party thereto, but no such amendment with respect to any Grantor
shall require the consent of any other Grantor.

Section 6.3 Additional Grantors. Upon the execution and delivery, or
authentication, by any Person of a security agreement supplement in
substantially the form of Exhibit A:

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

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

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

 

18

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

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

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

Section 6.7 Binding Effect and Assignment. This Agreement shall:

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

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

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

Section 6.8 Release of Collateral; Termination.

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

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

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

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

(c) In connection with any request to the Collateral Agent to acknowledge a
release of the Collateral, the Collateral Agent shall be fully entitled to
conclusively rely on a certificate from the Borrower.

Section 6.9 Waiver of Jury Trial. EACH PARTY HERETO IRREVOCABLY AND
UNCONDITIONALLY WAIVES TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING
TO THIS AGREEMENT, ANY OTHER CREDIT DOCUMENT AND FOR ANY COUNTERCLAIM THEREIN.

 

19

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

Section 6.10 Submission to Jurisdiction. Each party hereto irrevocably and
unconditionally:

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

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

(c) agrees that service of process in any such action or proceeding may be
effected by mailing a copy thereof by registered or certified mail (or any
substantially similar form of mail), postage prepaid, to such Person at its
address referred to in Section 6.1 or at such other address of which the
Collateral Agent shall have been notified pursuant thereto;

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

(e) waives, to the maximum extent not prohibited by law, any right it may have
to claim or recover in any legal action or proceeding referred to in this
Section 6.10 any special, exemplary, punitive or consequential damages.

Section 6.11 Governing Law. THIS AGREEMENT, THE OTHER CREDIT DOCUMENTS AND THE
RIGHTS AND OBLIGATIONS OF THE PARTIES UNDER THIS AGREEMENT (INCLUDING ANY CLAIM
OR CONTROVERSY ARISING OUT OF OR RELATING TO THIS AGREEMENT WHETHER SOUNDING IN
CONTRACT LAW, TORT LAW OR OTHERWISE) (IN EACH CASE, OTHER THAN AS EXPRESSLY SET
FORTH IN OTHER CREDIT DOCUMENTS) SHALL BE GOVERNED BY, AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD
TO CONFLICT OF LAW PRINCIPLES THAT WOULD RESULT IN THE APPLICATION OF ANY LAW
OTHER THAN THE LAW OF THE STATE OF NEW YORK.

Section 6.12 Final Agreement; Conflicts. This Agreement and the other Credit
Documents represent the final agreement between the parties hereto and may not
be contradicted by evidence of prior, contemporaneous, or subsequent oral
agreements of the parties hereto. There are no unwritten oral agreements between
the parties hereto. In the event of a conflict between the terms and conditions
of this Agreement and the terms and conditions of the Credit Agreements, the
terms and conditions of the Credit Agreements shall control.

Section 6.13 Counterparts; Facsimile. This Agreement may be separately executed
in any number of counterparts, all of which when so executed shall be deemed to
constitute one and the same Agreement. This Agreement may be validly delivered
by facsimile or other electronic transmission of an executed counterpart of the
signature page hereof.

Section 6.14 Acceptance by the Collateral Agent. By its acceptance of the
benefits hereof, the Collateral Agent and the Secured Parties shall be deemed to
have agreed to be bound hereby and to perform any obligation on their part set
forth herein.

 

20

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

Section 6.15 Amendment and Restatement. On the date hereof, the Existing
Security Agreement shall be amended and restated in its entirety by this
Agreement, and the Existing Security Agreement shall thereafter be of no further
force and effect, except that the Grantors, the Administrative Agents and the
Lenders agree that (a) Liens created under the Existing Security Agreement shall
continue to exist under and be evidenced by this Agreement, (b) the Existing
Security Agreement shall continue to evidence the representations and warranties
made by the Grantors prior to the date hereof, (c) except as expressly stated
herein or amended, the other Credit Documents are ratified and confirmed as
remaining unmodified and in full force and effect with respect to all
Obligations, and (d) the Existing Security Agreement shall continue to evidence
any action or omission performed or required to be performed pursuant to the
Existing Security Agreement prior to the date hereof (including any failure,
prior to the date hereof, to comply with the covenants contained in the Existing
Security Agreement). The amendments and restatements set forth herein shall not
cure any breach thereof or any “Default” or “Event of Default” under and as
defined in the Credit Agreements existing prior to the date hereof. This
Agreement is not in any way intended to constitute a novation of the obligations
and liabilities existing under the Existing Security Agreement. On and after the
date hereof, (x) all references to the Existing Security Agreement (or to any
amendment or any amendment and restatement thereof) in the Credit Documents
(other than this Agreement) shall be deemed to refer to the Existing Security
Agreement, as amended and restated hereby, (y) all references to any section (or
subsection) of the Existing Security Agreement or in any Credit Document (but
not herein) shall be amended to become, mutatis mutandis, references to the
corresponding provisions of this Agreement and (z) except as the context
otherwise provides, on or after the date hereof, all references to this
Agreement herein (including for purposes of indemnification and reimbursement of
fees) shall be deemed to be references to the Existing Security Agreement, as
amended and restated hereby. This amendment and restatement is limited as
written and is not a consent to any other amendment, restatement or waiver,
whether or not similar and, except as expressly provided herein or in any other
Credit Document, all terms and conditions of the Credit Documents remain in full
force and effect unless specifically amended hereby or by any other Credit
Document.

Section 6.16 Collateral Agency Agreement. Notwithstanding anything herein to the
contrary, the lien and security interest granted to the Collateral Agent, for
the benefit of the Secured Parties, pursuant to this Agreement and the exercise
of any right or remedy by the Collateral Agent and the other Secured Parties
hereunder are subject to the provisions of the Collateral Agency Agreement. In
the event of any conflict or inconsistency between the provisions of the
Collateral Agency Agreement and this Agreement, the provisions of the Collateral
Agency Agreement shall control.

Section 6.17 Applicability to Collateral Agent. Notwithstanding anything to the
contrary contained herein, in no event, shall the Collateral Agent be subject
to, charged with knowledge of or otherwise be obligated to act under any
document to which it is not a party.

[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK.]

 

21

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IN WITNESS WHEREOF, each Grantor and the Collateral Agent have executed and
delivered this Agreement as of the date first-above written.

 

GRANTOR:           CALIFORNIA RESOURCES CORPORATION

    By:  

 

    Name:  

 

    Title:  

 

GRANTOR:       [NAME OF GRANTOR]

    By:  

 

    Name:  

 

    Title:  

 

 

Signature Page

Security Agreement

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

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

By:  

 

Name:  

 

Title:  

 

 

Signature Page

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

SCHEDULE 1

to

SECURITY AGREEMENT

See attached

 

Schedule 1 - 1

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

SCHEDULE 2

to

SECURITY AGREEMENT

DEPOSIT ACCOUNTS

See attached

LETTER OF CREDIT RIGHTS

See attached

SECURITIES ACCOUNTS

See attached

COMMERCIAL TORT CLAIMS

See attached

 

Schedule 2 - 1

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

DISCLOSURE SCHEDULES TO

SECOND AMENDED AND RESTATED SECURITY AGREEMENT

among

California Resources Corporation, each other Grantor listed on the signature
pages thereof and each other Grantor that otherwise may become a party thereto,

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

and

certain financial institutions, as lenders

Dated as of November 17, 2017

Capitalized terms and others used in these disclosure schedules and not
otherwise defined herein are used as defined in the Security Agreement.

These disclosure schedules are qualified in their entirety by reference to
specific provisions of the Security Agreement and are not intended to
constitute, and shall not be construed as constituting, any representation or
warranty of Grantor except as and to the extent expressly provided in the
Security Agreement.

Any disclosure set forth with respect to any particular section shall be deemed
to be disclosed in reference to all other applicable sections of the Security
Agreement if the disclosure in respect of the particular section is sufficient
on its face without further inquiry reasonably to inform the Collateral Agent
and the Lenders of the information required to be disclosed in respect of the
other sections to avoid a breach under the representation or warranty
corresponding to such other sections of the Security Agreement. The fact that an
item appears on a schedule does not indicate that it is material.

 

[Security Agreement]

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

DEPOSIT ACCOUNTS

 

[Security Agreement]

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

LETTER OF CREDIT RIGHTS

 

[Security Agreement]

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

SECURITIES ACCOUNTS

 

[Security Agreement]

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

COMMERCIAL TORT CLAIMS

 

[Security Agreement]

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

EXHIBIT A

to

SECURITY AGREEMENT

FORM OF GRANTOR ACCESSION AGREEMENT

[                    ], 201[    ]

The Bank of New York Mellon Trust Company, N.A., as the Collateral Agent for the
Secured Parties referred to in the Security Agreement referred to below

[                                 ]

[                                 ]

[                                 ]

Attn: [                    ]

Ladies and Gentlemen:

The undersigned refers to:

(i) that certain Credit Agreement dated as of September 24, 2014 (as amended,
supplemented or restated, the “Credit Agreement”) among California Resources
Corporation, a Delaware corporation, the First Out Lenders party thereto, and
JPMorgan Chase Bank, N.A., as administrative agent,

(ii) that certain Credit Agreement dated as of November 17, 2017 (as amended,
supplemented or restated, the “2017 Credit Agreement” and collectively with the
Credit Agreement, the “Credit Agreements”) among California Resources
Corporation, a Delaware corporation, the 2017 Lenders party thereto, and The
Bank of New York Mellon Trust Company, N.A., as administrative agent, and

(iii) the Second Amended and Restated Security Agreement dated as of
November 17, 2017 (as amended, supplemented or restated, the “Security
Agreement”) made by the Grantors from time to time party thereto in your favor
for the benefit of the Secured Parties.

Terms defined in the Credit Agreements or the Security Agreement and not
otherwise defined herein are used herein as defined in the Credit Agreements or
the Security Agreement, as applicable.

SECTION 1. Grant of Security. The undersigned grants to you, for the benefit of
the Secured Parties, a security interest in all of its right, title and interest
in and to all of the Collateral of the undersigned, whether now owned or
hereafter acquired by the undersigned, wherever located and whether now or
hereafter existing or arising, including the property of the undersigned set
forth on the attached supplemental schedules to the Schedules to the Security
Agreement.

SECTION 2. Security for Obligations. The grant of a security interest in the
Collateral by the undersigned under this Agreement and the Security Agreement
secures the payment of the Obligations. Without limiting the generality of the
foregoing, this Security Agreement Supplement and the Security Agreement secures
the payment of all amounts that constitute part of the Obligations and that
would be owed by any Restricted Person to any Secured Party under the Credit
Documents but for the fact that such Obligations are unenforceable or not
allowable due to the existence of a bankruptcy, reorganization or similar
proceeding involving a Restricted Person.

 

Exhibit A - 1

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

SECTION 3. Information Relating to the Undersigned. The undersigned is an entity
of the type specified on Schedule 1 and is organized under the laws of the
jurisdiction specified on Schedule 1 and its address for notices is specified on
Schedule 1.

SECTION 4. Supplement to Security Agreement Schedule 2. The undersigned has
attached hereto a supplemental Schedule 2 to Schedule 2 to the Security
Agreement, and the undersigned certifies, as of the date first-above written,
that such supplemental schedule has been prepared by the undersigned in
substantially the form of Schedule to the Security Agreement and is true and
complete.

SECTION 5. Representations and Warranties. The undersigned as of the date hereof
makes each representation and warranty set forth in Section 3.1 of the Security
Agreement (as supplemented by the attached supplemental schedules).

SECTION 6. Obligations Under the Security Agreement. The undersigned will, as of
the date first-above written, be bound as a Grantor by all of the terms and
provisions of the Security Agreement. As of the date first-above written, that
each reference in the Security Agreement to a “Grantor” shall also mean and be a
reference to the undersigned.

SECTION 7. Governing Law. THIS AGREEMENT, THE OTHER CREDIT DOCUMENTS AND THE
RIGHTS AND OBLIGATIONS OF THE PARTIES UNDER THIS AGREEMENT (INCLUDING ANY CLAIM
OR CONTROVERSY ARISING OUT OF OR RELATING TO THIS AGREEMENT WHETHER SOUNDING IN
CONTRACT LAW, TORT LAW OR OTHERWISE) (IN EACH CASE, OTHER THAN AS EXPRESSLY SET
FORTH IN OTHER CREDIT DOCUMENTS) SHALL BE GOVERNED BY, AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD
TO CONFLICT OF LAW PRINCIPLES THAT WOULD RESULT IN THE APPLICATION OF ANY LAW
OTHER THAN THE LAW OF THE STATE OF NEW YORK.

SECTION 8. Waiver of Jury Trial. EACH PARTY HERETO IRREVOCABLY AND
UNCONDITIONALLY WAIVES TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING
TO THIS AGREEMENT, ANY OTHER CREDIT DOCUMENT AND FOR ANY COUNTERCLAIM THEREIN.

SECTION 9. Submission to Jurisdiction. Each party hereto irrevocably and
unconditionally:

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

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

(c) agrees that service of process in any such action or proceeding may be
effected by mailing a copy thereof by registered or certified mail (or any
substantially similar form of mail), postage prepaid, to such Person at its
address specified in Schedule 1 or at such other address of which the Collateral
Agent shall have been notified pursuant thereto;

 

Exhibit A - 2

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

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

(e) waives, to the maximum extent not prohibited by law, any right it may have
to claim or recover in any legal action or proceeding referred to in this
Section 9 any special, exemplary, punitive or consequential damages.

[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK.]

 

Exhibit A - 3

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

Very truly yours, *[NAME OF GRANTOR]

By:  

 

Name:  

 

Title:  

 

By:  

 

Name:  

 

Title:  

 

 

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

By:  

 

Name:  

 

Title:  

 

 

Exhibit A - 4

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

SCHEDULE 1

to

SECURITY AGREEMENT SUPPLEMENT

 

Name of Grantor

 

Type of Organization

 

Jurisdiction of

Organization

  

Address for Notices

                    

 

Schedule 1

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

SCHEDULE 2

to

SECURITY AGREEMENT SUPPLEMENT

DEPOSIT ACCOUNTS

[List]

LETTER OF CREDIT RIGHTS

[List]

SECURITIES ACCOUNTS

[List]

COMMERCIAL TORT CLAIMS

[List]

 

Schedule 2

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

EXHIBIT D

FORM OF PLEDGE AGREEMENT

[See attached.]

 

D-1

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

Execution Version

 

 

 

AMENDED AND RESTATED PLEDGE AGREEMENT

from

CALIFORNIA RESOURCES CORPORATION,

and

each of the Subsidiary Pledgors

from time to time party hereto

in favor of

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

as Collateral Agent

Dated as of November 17, 2017

 

 

 

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

TABLE OF CONTENTS

 

        Page  

ARTICLE I

DEFINITIONS AND REFERENCES

 

 

Section 1.01    Definitions in Credit Agreements      2   Section 1.02   
Definitions in the UCC, etc.      2   Section 1.03    Rules of Construction;
etc.      2   Section 1.04    Definitions in this Agreement      2  
Section 1.05    Collateral Terms      4  

ARTICLE II

GRANT OF SECURITY

 

 

Section 2.01    Grant of Security Interest      5  

ARTICLE III

SECURITY FOR OBLIGATIONS

 

 

Section 3.01    Obligations Secured      5  

ARTICLE IV

DELIVERY OF THE COLLATERAL

 

 

Section 4.01    Delivery of the Collateral      5  

ARTICLE V

REPRESENTATIONS AND WARRANTIES

 

 

Section 5.01    Representations and Warranties      6  

ARTICLE VI

CERTIFICATION OF LIMITED LIABILITY COMPANY,

LIMITED PARTNERSHIP INTERESTS

 

 

 

Section 6.01    Partnership; LLC Interests      7   Section 6.02    Additional
Pledgor      7  

ARTICLE VII

FURTHER ASSURANCES

 

 

Section 7.01    Further Assurances      7  

ARTICLE VIII

VOTING RIGHTS; DIVIDENDS AND DISTRIBUTIONS; ETC.

 

 

Section 8.01    Voting Rights      7   Section 8.02    Dividends and
Distributions      8   Section 8.03    Voting Rights, Dividends and
Distributions after Event of Default      8  

ARTICLE IX

TRANSFERS AND OTHER LIENS; ADDITIONAL COLLATERAL; ETC.

 

 

Section 9.01    Transfers and Other Liens; Additional Collateral; Etc.      9  

ARTICLE X

COLLATERAL AGENT

 

 

Section 10.01    Attorney-in-Fact      9   Section 10.02    The Collateral
Agent’s Duties      10  

 

i

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

ARTICLE XI

REMEDIES

 

 

Section 11.01    Remedies      10  

ARTICLE XII

AMENDMENTS, ETC. WITH RESPECT

TO THE OBLIGATIONS; WAIVER OF RIGHTS

 

 

 

Section 12.01    Amendments, etc. with Respect to the Obligations; Waiver of
Rights      11  

ARTICLE XIII

CONTINUING SECURITY INTEREST; ASSIGNMENTS UNDER THE CREDIT AGREEMENTS;

RELEASE

 

 

 

Section 13.01    Continuing Security      12   Section 13.02    Assignment     
12   Section 13.03    Release of Collateral      12   Section 13.04   
Investment Grade Period      12   Section 13.05    Notice of Termination;
Release      12  

ARTICLE XIV

REINSTATEMENT

 

 

Section 14.01    Reinstatement      12  

ARTICLE XV

MISCELLANEOUS

 

 

Section 15.01    Notices      13   Section 15.02    Counterparts      13  
Section 15.03    Severability      13   Section 15.04    Integration      13  
Section 15.05    Amendments in Writing      13   Section 15.06    No Waiver     
13   Section 15.07    Cumulative Remedies      14   Section 15.08    Section
Headings      14   Section 15.09    Successors and Assigns      14  
Section 15.10    Waiver of Jury Trial      14   Section 15.11    Submission to
Jurisdiction      14   Section 15.12    Acknowledgments      15   Section 15.13
   Governing Law      15   Section 15.14    Amended and Restatement      15  
Section 15.15    Collateral Agency Agreement      16   Section 15.16   
Applicability to Collateral Agent      16   Schedules and Annexes   Schedule 1
   Pledge Shares    Annex A      

 

ii

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

AMENDED AND RESTATED PLEDGE AGREEMENT

AMENDED AND RESTATED PLEDGE AGREEMENT, dated as of November 17, 2017 (this
“Agreement”), is made by California Resources Corporation, a Delaware
corporation (the “Borrower”) and each Subsidiary of the Borrower that becomes a
party hereto pursuant to Section 9.01 (each such Subsidiary being a “Subsidiary
Pledgor” and, collectively, the “Subsidiary Pledgors”; the Subsidiary Pledgors
and the Borrower are referred to collectively as the “Pledgors”) in favor of The
Bank of New York Mellon Trust Company, N.A., as collateral agent (in such
capacity, together with its successors in such capacity, the “Collateral Agent”)
under the Credit Agreements for the benefit of the Secured Parties.

WHEREAS, this Agreement amends and restates that certain Pledge Agreement dated
as of December 17, 2015, by and among Borrower and the Subsidiary Pledgors party
thereto (the “Existing Pledge Agreement”) and JPMorgan Chase Bank, N.A., as
administrative agent (in such capacity, together with its successors in such
capacity, the “First Out Administrative Agent”) under that certain Credit
Agreement, dated as of September 24, 2014 (as amended, restated, supplemented or
otherwise modified from time to time, the “First Out Credit Agreement”), among
the Borrower, the banks, financial institutions and other lending institutions
from time to time party thereto (the “First Out Lenders”), and JPMorgan Chase
Bank, N.A., as First Out Administrative Agent, a swingline lender and a letter
of credit issuer;

WHEREAS, pursuant to that certain Master Reaffirmation and Assignment and
Assumption Agreement, dated as of the date hereof, the First Out Administrative
Agent has assigned all powers of attorney, liens, or security interests and all
other rights and interests granted to it under the Security Documents (as
defined under the First Out Credit Agreement and collectively referred to herein
as the “Liens”) to the Collateral Agent for the benefit of each of the Secured
Parties;

WHEREAS, reference is made to that certain Collateral Agency Agreement dated as
of even date herewith (as amended, restated, supplemented or otherwise modified
from time to time, the “Collateral Agency Agreement”), by and among First Out
Administrative Agent, the 2017 Administrative Agent (collectively, the
“Administrative Agents”) and the Collateral Agent, pursuant to which the
Administrative Agents appoint the Collateral Agent to act on their behalf under
this Agreement, to hold the Liens for the benefit of the Secured Parties and to
authorize the Collateral Agent to take such actions on each of their behalf to
exercise the power delegated to the Collateral Agent, together with actions
reasonably incidental thereto.

WHEREAS, (a) pursuant to the First Out Credit Agreement, among other things,
(i) the First Out Lenders have severally agreed to make Loans, (ii) the
Swingline Lenders have severally agreed to make Swingline Loans to the Borrower
and (iii) each Letter of Credit Issuer has severally agreed to issue Letters of
Credit for the account of the Borrower or the Subsidiaries upon the terms and
subject to the conditions set forth therein, (b) one or more Hedge Banks have or
may from time to time enter into Secured Hedge Agreements with the Borrower
and/or its Subsidiaries and (c) one or more Cash Management Banks have or may
from time to time provide Cash Management Services pursuant to Secured Cash
Management Agreements to the Borrower and/or any of its Subsidiaries (clauses
(a), (b), and (c), collectively, the “First Out Extensions of Credit”);

WHEREAS, pursuant to the 2017 Credit Agreement, among other things, the 2017
Lenders have severally agreed to make Loans to the Borrower (collectively, the
“2017 Extensions of Credit”);

WHEREAS, each Pledgor acknowledges that it will derive substantial direct and
indirect benefit from the making of the First Out Extensions of Credit and 2017
Extensions of Credit;

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WHEREAS, in order to comply with the requirements of the Credit Agreements, the
Borrower and the Subsidiary Pledgors desire to execute and deliver this
Agreement to the Collateral Agent for the ratable benefit of the Secured
Parties; and

WHEREAS, the Pledgors are the legal and beneficial owners of the Equity
Interests described in Schedule 1 and issued by the entities named therein (such
Equity Interests are, together with any other Equity Interests required to be
pledged pursuant to Section 10.10(b) of the First Out Credit Agreement and
Section 10.10(a) of the 2017 Credit Agreement following the date hereof (the
“After-acquired Shares”), referred to collectively herein as the “Pledged
Shares”), as such Schedule may be amended pursuant to Section 14.1 of the Credit
Agreements;

NOW, THEREFORE, in consideration of the premises and for other good and valuable
consideration, the receipt and adequacy of which are hereby acknowledged, and to
induce the (a) First Out Administrative Agent, the First Out Lenders, the
Swingline Lenders and the Letter of Credit Issuers to enter into the First Out
Credit Agreement and to induce the Lenders, Swingline Lenders and Letter of
Credit Issuers to make their respective First Out Extensions of Credit to the
Borrower under the First Out Credit Agreement, to induce one or more Hedge Banks
to enter into Secured Hedge Agreements with the Borrower and/or its Subsidiaries
and to induce one or more Cash Management Banks to provide Cash Management
Services pursuant to Secured Cash Management Agreements with the Borrower and/or
its Subsidiaries and (b) induce the 2017 Administrative Agent and the 2017
Lenders to enter into the 2017 Credit Agreement and the 2017 Lenders to make the
2017 Extensions of Credit to the Borrower under the 2017 Credit Agreement, the
Pledgors hereby agree with the Collateral Agent, for the ratable benefit of the
Secured Parties, as follows:

ARTICLE I

DEFINITIONS AND REFERENCES

Section 1.01 Definitions in Credit Agreements. Unless otherwise defined herein,
terms used in this Agreement (including terms used in the preamble and the
recitals) but not otherwise defined shall have the meanings given to them in
(i) prior to the Discharge of Existing Senior Obligations (as defined in the
Collateral Agency Agreement), the First Out Credit Agreement and (ii) following
the Discharge of Existing Senior Obligations (as defined in the Collateral
Agency Agreement), the 2017 Credit Agreement.

Section 1.02 Definitions in the UCC, etc. Terms used herein that are not defined
herein or in the Credit Agreements, but that are terms defined in the UCC and
not defined in this Agreement or in the Credit Agreements shall have the
meanings specified therein (and if defined in more than one article of the UCC,
shall have the meaning specified in Article 9 thereof); the term “instrument”
shall have the meaning specified in Article 9 of the UCC.

Section 1.03 Rules of Construction; etc. The rules of construction and other
interpretive provisions specified in Sections 1.2, 1.3, 1.5, 1.6 and 1.7 of the
Credit Agreements shall apply to this Agreement, including terms defined in the
preamble and recitals to this Agreement.

Section 1.04 Definitions in this Agreement. The following terms shall have the
following meanings:

“2017 Administrative Agent” shall have the meaning assigned to such term in the
definition of 2017 Credit Agreement.

 

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“2017 Credit Agreement” means that certain Credit Agreement dated as of even
date herewith (as amended, restated, supplemented or otherwise modified from
time to time), among the Borrower, the banks, financial institutions and other
lending institutions from time to time party thereto (the “2017 Lenders”) and
The Bank of New York Mellon Trust Company, N.A., as administrative agent (in
such capacity, together with its successors in such capacity, the “2017
Administrative Agent”).

“2017 Extensions of Credit” has the meaning specified in the recitals.

“2017 Lenders” has the meaning specified in the definition of 2017 Credit
Agreement.

“Administrative Agents” has the meaning specified in the recitals.

“After-acquired Shares” shall have the meaning specified in the recitals.

“Agreement” shall have the meaning specified in the preamble.

“Collateral” shall have the meaning specified in Section 2.01.

“Collateral Agency Agreement” has the meaning specified in the recitals.

“Collateral Agent” has the meaning specified in the preamble.

“Credit Agreements” means, collectively, the First Out Credit Agreement and the
2017 Credit Agreement.

“Credit Documents” means, collectively, the “Credit Documents” as defined in the
First Out Credit Agreement and the “Credit Documents” as defined in the 2017
Credit Agreement.

“Equity Interests” shall mean Stock and Stock Equivalents.

“Existing Pledge Agreement” has the meaning specified in the recitals.

“First Out Administrative Agent” has the meaning specified in the recitals.

“First Out Credit Agreement” shall have the meaning specified in the recitals.

“First Out Extensions of Credit” shall have the meaning specified in the
recitals.

“First Out Lenders” shall have the meaning specified in the recitals.

“Lenders” means, collectively, the First Out Lenders and the 2017 Lenders.

“Liens” has the meaning specified in the recitals.

“Obligations” means the “Obligations” as such term is defined in clause (a)(i)
of the definition of “Obligations” of the First Out Credit Agreement together
with the “2017 Term Loan Obligations” as such term is defined in the 2017 Credit
Agreement; provided that the Obligations of any Subsidiary Pledgor shall refer
to such Subsidiary Pledgor’s Subsidiary Pledgor Obligations.

“Pledged Debt” means all Investment Property and General Intangibles
constituting or pertaining to Indebtedness owing by any Person to Grantor.

“Pledged Shares” shall have the meaning assigned to such term in the recitals.

 

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“Pledgors” shall have the meaning assigned to such term in the preamble.

“Proceeds” shall mean all “proceeds” as such term is defined in Article 9 of the
UCC and, in any event, shall include with respect to any Pledgor (a) any
consideration received from the sale, exchange, license, lease or other
Disposition of any asset or property that constitutes Collateral, any value
received as a consequence of the possession of any Collateral and any payment
received from any insurer or other Person or entity as a result of the
destruction, loss, theft, damage or other involuntary conversion of whatever
nature of any asset or property that constitutes Collateral, (b) all cash and
negotiable instruments received by or held on behalf of the Collateral Agent and
(c) any and all other amounts from time to time paid or payable under or in
connection with any of the Collateral.

“Required Lenders” means (i) the “Majority Lenders” as such term is defined in
the First Out Credit Agreement or (ii) the “Required Lenders” as such term is
defined in the 2017 Credit Agreement.

“Secured Debt Documents” shall mean, collectively, the Credit Documents, each
Secured Hedge Agreement and each Secured Cash Management Agreement.

“Secured Parties” means “Secured Parties” as defined in the Collateral Agency
Agreement

“Security Interest” has the meaning specified in Section 2.01.

“Subsidiary Pledgor Obligations” shall mean, with respect to any Subsidiary
Pledgor, all Obligations (as defined herein) of such Subsidiary Pledgor which
may arise under or in connection with any Secured Debt Document to which such
Subsidiary Pledgor is a party.

“Subsidiary Pledgors” shall have the meaning assigned to such term in the
preamble.

“Termination Date” shall mean the date on which all Obligations are paid in full
(other than Hedge Obligations under any Secured Hedge Agreements, Cash
Management Obligations under any Secured Cash Management Agreements or
contingent indemnification obligations not then due) and all Commitments (as
defined in the First Out Credit Agreement) and all Letters of Credit (as defined
in the First Out Credit Agreement) are terminated (other than Letters of Credit
that have been cash collateralized on terms reasonably satisfactory to each
Letter of Credit Issuer (as defined in the First Out Credit Agreement) in
respect thereof or back-stopped following the termination of the Commitments).

“UCC” shall mean the Uniform Commercial Code as from time to time in effect in
the State of New York; provided, however, that, in the event that, by reason of
mandatory provisions of law, any of the attachment, perfection or priority of
the Collateral Agent’s and the Secured Parties’ security interest in any
Collateral is governed by the Uniform Commercial Code as in effect in a
jurisdiction other than the State of New York, the term “UCC” shall mean the
Uniform Commercial Code as in effect in such other jurisdiction for purposes of
the provisions hereof relating to such attachment, perfection or priority and
for purposes of definitions related to such provisions.

Section 1.05 Collateral Terms. Where the context requires, terms relating to the
Collateral or any part thereof, when used in relation to a Pledgor, shall refer
to such Pledgor’s Collateral or the relevant part thereof.

 

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ARTICLE II

GRANT OF SECURITY

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

(a) the Pledged Shares held by such Pledgor and the certificates, if any,
representing such Pledged Shares and any interest of such Pledgor in the entries
on the books of the issuer of the Pledged Shares or any financial intermediary
pertaining to the Pledged Shares and all dividends, cash, warrants, rights,
instruments and other property or Proceeds from time to time received,
receivable or otherwise distributed in respect of or in exchange for any or all
of the Pledged Shares; provided that the Pledged Shares under this Agreement
shall not include any Excluded Stock;

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

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

ARTICLE III

SECURITY FOR OBLIGATIONS

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

ARTICLE IV

DELIVERY OF THE COLLATERAL

Section 4.01 Delivery of the Collateral. All certificates or instruments, if
any, representing or evidencing the Collateral shall be promptly delivered to
and held by or on behalf of the Collateral Agent pursuant hereto to the extent
required by the Credit Agreements and shall be in suitable form for transfer by
delivery, or shall be accompanied by duly executed instruments of transfer or
assignment in blank. The foregoing notwithstanding, it is understood and agreed
that JPMorgan Chase Bank, N.A., in its capacity as gratuitous bailee for the
Collateral Agent, will continue to hold all certificates or instruments in its
possession on the Closing Date, in accordance with the terms of the Collateral
Agency Agreement, for the sole purpose of perfecting the Liens of the Collateral
Agent on such Collateral. The Collateral Agent shall have the right, at any time
after the occurrence and during the continuance of an Event of Default and with
notice to the relevant Pledgor, to transfer to or to register in the name of the
Collateral Agent or any of its nominees any or all of the Pledged Shares. Each
delivery of Collateral (including any After-acquired Shares) shall be
accompanied by a schedule describing the assets theretofore and then being
pledged hereunder, which shall be attached hereto as part of Schedule 1 and made
a part hereof; provided that the failure to attach any such schedule hereto
shall not affect the validity of such pledge of such securities. Each schedule
so delivered shall supplement any prior schedules so delivered.

 

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ARTICLE V

REPRESENTATIONS AND WARRANTIES

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

(a) Schedule 1 (i) correctly represents as of the date hereof the issuer, the
certificate number, if any, the Pledgor and the record and beneficial owner, the
number and class and the percentage of the issued and outstanding Equity
Interests of such class of all Pledged Shares and (ii) together with the
comparable schedule to each supplement hereto, includes all Equity Interests and
promissory notes required to be pledged pursuant to Section 10.10 of the Credit
Agreements and Section 9.01(b) hereof. Except as set forth on Schedule 1, the
Pledged Shares represent all (or 66-2/3% of all the issued and outstanding
Equity Interests in the case of pledges of Equity Interests in Foreign
Subsidiaries) of the issued and outstanding Equity Interests of each class of
Equity Interests in the issuer owned by such Pledgor on the date hereof.

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

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

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

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

 

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ARTICLE VI

CERTIFICATION OF LIMITED LIABILITY COMPANY,

LIMITED PARTNERSHIP INTERESTS

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

“The Partnership/LLC hereby irrevocably elects that all membership interests in
the Partnership/LLC shall be securities governed by Article 8 of the Uniform
Commercial Code of [jurisdiction of organization or formation, as applicable].
Each certificate evidencing partnership/membership interests in the
Partnership/LLC shall bear the following legend: “This certificate evidences an
interest in [name of Partnership/LLC] and shall be a security for purposes of
Article 8 of the Uniform Commercial Code.” No change to this provision shall be
effective until all outstanding certificates have been surrendered for
cancellation and any new certificates thereafter issued shall not bear the
foregoing legend.”

or (ii) the applicable Pledgor shall cause the issuer of such interests not to
elect to have such interests treated as a “security” within the meaning of
Article 8 of the Uniform Commercial Code of its jurisdiction of organization or
formation, as applicable.

Section 6.02 Additional Pledgor. Each Pledgor will comply with Section 10.10 of
the Credit Agreements.

ARTICLE VII

FURTHER ASSURANCES

Section 7.01 Further Assurances. Each Pledgor agrees that at any time and from
time to time, at the expense of such Pledgor, it will execute and file any and
all further documents, financing statements, agreements and instruments, and
take all such further actions (including the filing and recording of financing
statements, fixture filings, mortgages, deeds of trust and other documents),
which may be required under any applicable Requirements of Law in order (a) to
perfect and protect any pledge, assignment or security interest granted or
purported to be granted hereby (including the priority thereof) or (b) to enable
the Collateral Agent to exercise and enforce its rights and remedies hereunder
with respect to any Collateral.

ARTICLE VIII

VOTING RIGHTS; DIVIDENDS AND DISTRIBUTIONS; ETC.

Section 8.01 Voting Rights. So long as no Event of Default shall have occurred
and be continuing:

(a) Each Pledgor shall be entitled to exercise any and all voting and other
consensual rights pertaining to the Collateral or any part thereof for any
purpose not prohibited by the terms of this Agreement or the other Secured Debt
Documents.

 

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

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

Section 8.03 Voting Rights, Dividends and Distributions after Event of Default.
Upon written notice to a Pledgor by the Collateral Agent following the
occurrence and during the continuance of an Event of Default,

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

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

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

 

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

ARTICLE IX

TRANSFERS AND OTHER LIENS; ADDITIONAL COLLATERAL; ETC.

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

(a) not except as permitted by the Credit Agreements (including pursuant to
waivers and consents thereunder), (i) sell or otherwise dispose of, or grant any
option or warrant with respect to, any of the Collateral except as permitted by
the Credit Agreements (including pursuant to waivers and consents thereunder) or
(ii) create or suffer to exist any consensual Lien upon or with respect to any
of the Collateral, except for Liens permitted by Section 11.2 of the Credit
Agreements and the Lien created by this Agreement; provided that, in the event
such Pledgor sells, leases, transfers or otherwise disposes of assets as
permitted by the Credit Agreements (including pursuant to waivers and consents
thereunder), and such assets are or include any of the Collateral, the
Collateral Agent shall, subject to receipt of an Officer’s Certificate from the
Borrower on which it may conclusively rely, release such Collateral to such
Pledgor free and clear of the Lien created by this Agreement concurrently with
the consummation of such sale or Disposition in accordance with Section 14.17 of
the Credit Agreements and Article XIII hereunder;

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

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

ARTICLE X

COLLATERAL AGENT

Section 10.01 Attorney-in-Fact. Each Pledgor hereby appoints, which appointment
is irrevocable and coupled with an interest, the Collateral Agent as such
Pledgor’s attorney-in-fact, with full authority in the place and stead of such
Pledgor and in the name of such Pledgor or otherwise, to take any action and to
execute any instrument, in each case after the occurrence and during the
continuance of an Event of Default and with notice to such Pledgor, that the
Collateral Agent may deem reasonably necessary or advisable to accomplish the
purposes of this Agreement, including to receive, indorse and collect all
instruments made payable to such Pledgor representing any dividend, distribution
or principal or interest payment in respect of the Collateral or any part
thereof and to give full discharge for the same. In no event shall any
authorization be deemed an obligation.

 

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Section 10.02 The Collateral Agent’s Duties. The powers conferred on the
Collateral Agent hereunder are solely to protect its interest in the Collateral
and shall not impose any duty upon it to exercise any such powers. Except for
the safe custody of any Collateral in its possession and the accounting for
moneys actually received by it hereunder, the Collateral Agent shall have no
duty as to any Collateral, to ascertain or take action with respect to calls,
conversions, exchanges, maturities, tenders or other matters relative to any
Pledged Shares, whether or not the Collateral Agent or any other Secured Party
has or is deemed to have knowledge of such matters, or to take any necessary
steps to preserve rights against any parties or any other rights pertaining to
any Collateral. The Collateral Agent shall be deemed to have exercised
reasonable care in the custody and preservation of any Collateral in its
possession if such Collateral is accorded treatment substantially equal to that
which the Collateral Agent accords its own property.

The Collateral Agent will not be responsible for the existence, genuineness or
value of any of the Collateral or for the validity, perfection, priority or
enforceability of the Liens in any of the Collateral, whether impaired by
operation of law or by reason of any action or omission to act on its part
hereunder, except to the extent such action or omission constitutes gross
negligence or willful misconduct on the part of the Collateral Agent, as
determined by a court of competent jurisdiction in a final, non-appealable
order, for the validity or sufficiency of the Collateral or any agreement or
assignment contained therein, for the validity of the title of any grantor to
the Collateral, for insuring the Collateral or for the payment of taxes,
charges, assessments or Liens upon the Collateral or otherwise as to the
maintenance of the Collateral. The Collateral Agent hereby disclaims any
representation or warranty to the present and future holders of the Obligations
concerning the perfection of the Liens granted hereunder or in the value of any
of the Collateral.

ARTICLE XI

REMEDIES

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

(a) The Collateral Agent may exercise in respect of the Collateral, in addition
to other rights and remedies provided for herein or otherwise available to it,
all the rights and remedies of a secured party upon default under the UCC
(whether or not the UCC applies to the affected Collateral) or any other
applicable Requirement of Law or in equity and also may with notice to the
relevant Pledgor, sell the Collateral or any part thereof in one or more parcels
at public or private sale, at any exchange broker’s board or at any of the
Collateral Agent’s offices or elsewhere, for cash, on credit or for future
delivery, at such price or prices and upon such other terms as are commercially
reasonable irrespective of the impact of any such sales on the market price of
the Collateral. The Collateral Agent shall be authorized at any such sale (if it
deems it advisable to do so) to restrict the prospective bidders or purchasers
of Collateral to Persons who will represent and agree that they are purchasing
the Collateral for their own account for investment and not with a view to the
distribution or sale thereof, and, upon consummation of any such sale, the
Collateral Agent shall have the right to assign, transfer and deliver to the
purchaser or purchasers thereof the Collateral so sold. Each purchaser at any
such sale shall hold the property sold absolutely free from any claim or right
on the part of any Pledgor, and each Pledgor hereby waives (to the extent
permitted by law) all rights of redemption, stay and/or appraisal that it now
has or may at any time in the future have under any Requirement of Law now
existing or hereafter enacted. The Collateral Agent or any Secured Party shall
have the right upon any such public sale, and, to the extent permitted by law,
upon any such private sale, to purchase all or any part of the Collateral so
sold, and the Collateral Agent or such Secured Party may pay the purchase price
by crediting the amount thereof against the Obligations. Each Pledgor agrees
that, to the extent notice of sale shall be required by law, at least ten days’
notice to such Pledgor of the time and place of any public sale or the time
after which any private sale is to be made shall constitute reasonable
notification. The Collateral Agent shall not be

 

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obligated to make any sale of Collateral regardless of notice of sale having
been given. The Collateral Agent may adjourn any public or private sale from
time to time by announcement at the time and place fixed therefor, and such sale
may, without further notice, be made at the time and place to which it was so
adjourned. To the extent permitted by law, each Pledgor hereby waives any claim
against the Collateral Agent arising by reason of the fact that the price at
which any Collateral may have been sold at such a private sale was less than the
price that might have been obtained at a public sale, even if the Collateral
Agent accepts the first offer received and does not offer such Collateral to
more than one offeree.

(b) The Collateral Agent shall apply the Proceeds of any collection or sale of
the Collateral in the manner specified in Section 3.6 of the Collateral Agency
Agreement. Upon any sale of the Collateral by the Collateral Agent (including
pursuant to a power of sale granted by statute or under a judicial proceeding),
the receipt of the Collateral Agent or of the officer making the sale shall be a
sufficient discharge to the purchaser or purchasers of the Collateral so sold
and such purchaser or purchasers shall not be obligated to see to the
application of any part of the purchase money paid over to the Collateral Agent
or such officer or be answerable in any way for the misapplication thereof.

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

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

ARTICLE XII

AMENDMENTS, ETC. WITH RESPECT

TO THE OBLIGATIONS; WAIVER OF RIGHTS

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

 

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or affect the rights and remedies, express or implied, or as a matter of law, of
the Collateral Agent or any other Secured Party against any Pledgor. For the
purposes hereof “demand” shall include the commencement and continuance of any
legal proceedings.

ARTICLE XIII

CONTINUING SECURITY INTEREST; ASSIGNMENTS UNDER THE CREDIT

AGREEMENTS; RELEASE

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

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

Section 13.03 Release of Collateral. The Collateral shall be automatically
released from the Liens of this Agreement (i) upon any sale, lease, transfer or
other disposition by any Pledgor of any Collateral that is permitted under the
Credit Agreement (other than to another Pledgor) and (ii) pursuant to
Section 14.17 of the Credit Agreements. Any such release in connection with any
sale, transfer or other disposition of such Collateral shall result in such
Collateral being sold, transferred, leased or otherwise disposed of, as
applicable, free and clear of the Liens of this Agreement. To the extent the
Collateral Agent is requested to acknowledge any such release, it shall receive
and be entitled to rely on a certificate from the Borrower that the release is
permitted.

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

Section 13.05 Notice of Termination; Release. In connection with any termination
or release pursuant to this Article XIII the Collateral Agent shall execute and
deliver to any Pledgor or authorize the filing of, at such Pledgor’s expense,
all documents that such Pledgor shall reasonably request to evidence such
termination or release. Any execution and delivery of documents pursuant to this
Article XIII shall be without recourse to or warranty by the Collateral Agent.
To the extent the Collateral Agent is requested to acknowledge any such
termination or release, it shall receive and be entitled to rely on a
certificate from the Borrower that the termination or release is permitted.

ARTICLE XIV

REINSTATEMENT

Section 14.01 Reinstatement. Each Pledgor further agrees that, if any payment
made by any Credit Party or other Person and applied to the Obligations is at
any time annulled, avoided, set aside, rescinded, invalidated, declared to be
fraudulent or preferential or otherwise required to be refunded or repaid, or
the Proceeds of Collateral are required to be returned by any Secured Party to
such Credit Party, its estate, trustee, receiver or any other party, including
any Pledgor, under any bankruptcy law, state,

 

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federal or foreign law, common law or equitable cause, then, to the extent of
such payment or repayment, any Lien or other Collateral securing such liability
shall be and remain in full force and effect, as fully as if such payment had
never been made or, if prior thereto the Lien granted hereby or other Collateral
securing such liability hereunder shall have been released or terminated by
virtue of such cancellation or surrender), such Lien or other Collateral shall
be reinstated in full force and effect, and such prior cancellation or surrender
shall not diminish, release, discharge, impair or otherwise affect any Lien or
other Collateral securing the obligations of any Pledgor in respect of the
amount of such payment.

ARTICLE XV

MISCELLANEOUS

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

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

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

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

Section 15.05 Amendments in Writing. None of the terms or provisions of this
Agreement may be waived, amended, supplemented or otherwise modified except by a
written instrument executed by the affected Pledgor(s) and the Collateral Agent
in accordance with Section 14.1 of the Credit Agreements; provided, however,
that this Agreement may be supplemented (but no existing provisions may be
modified and no Collateral may be released) through agreements substantially in
the form of Annex A, in each case duly executed by each Pledgor directly
affected thereby. To the extent the Collateral Agent is requested to acknowledge
any such supplement, it shall receive and be entitled to rely on a certificate
from the Grantor that the supplement is permitted.

Section 15.06 No Waiver. Neither the Collateral Agent nor any Secured Party
shall by any act (except by a written instrument pursuant to Section 15.05,
delay, indulgence, omission or otherwise be deemed to have waived any right or
remedy hereunder or to have acquiesced in any Default or Event of Default or in
any breach of any of the terms and conditions hereof or of any other applicable
Secured Debt Document. No failure to exercise, nor any delay in exercising, on
the part of the Collateral Agent or any other Secured Party, any right, power or
privilege hereunder shall operate as a waiver thereof. No

 

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single or partial exercise of any right, power or privilege hereunder shall
preclude any other or further exercise thereof or the exercise of any other
right, power or privilege. A waiver by the Collateral Agent or any other Secured
Party of any right or remedy hereunder on any one occasion shall not be
construed as a bar to any right or remedy that the Collateral Agent or such
other Secured Party would otherwise have on any future occasion.

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

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

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

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

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

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

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

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

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

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

 

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Section 15.12 Acknowledgments. Each party hereto hereby acknowledges that:

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

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

(c) no joint venture is created hereby or by the other Secured Debt Documents or
otherwise exists by virtue of the transactions contemplated hereby among the
Lenders, any agent and any other Secured Party or among the Pledgors and the
Lenders, any agents and any other Secured Party.

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

Section 15.14 Amended and Restatement. On the date hereof, the Existing Pledge
Agreement shall be amended and restated in its entirety by this Agreement, and
the Existing Pledge Agreement shall thereafter be of no further force and
effect, except that the Pledgors, the Collateral Agents and the Lenders agree
that (a) Liens created under the Existing Pledge Agreement shall continue to
exist under and be evidenced by this Agreement, (b) the Existing Pledge
Agreement shall continue to evidence the representations and warranties made by
the Pledgors prior to the date hereof, (c) except as expressly stated herein or
amended, the other Credit Documents are ratified and confirmed as remaining
unmodified and in full force and effect with respect to all Obligations, and
(d) the Existing Pledge Agreement shall continue to evidence any action or
omission performed or required to be performed pursuant to the Existing Pledge
Agreement prior to the date hereof (including any failure, prior to the date
hereof, to comply with the covenants contained in the Existing Pledge
Agreement). The amendments and restatements set forth herein shall not cure any
breach thereof or any “Default” or “Event of Default” under and as defined in
the Credit Agreements existing prior to the date hereof. This Agreement is not
in any way intended to constitute a novation of the obligations and liabilities
existing under the Existing Pledge Agreement. On and after the date hereof,
(x) all references to the Existing Pledge Agreement (or to any amendment or any
amendment and restatement thereof) in the Credit Documents (other than this

 

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Agreement) shall be deemed to refer to the Existing Pledge Agreement, as amended
and restated hereby, (y) all references to any section (or subsection) of the
Existing Pledge Agreement or in any Credit Document (but not herein) shall be
amended to become, mutatis mutandis, references to the corresponding provisions
of this Agreement and (z) except as the context otherwise provides, on or after
the date hereof, all references to this Agreement herein (including for purposes
of indemnification and reimbursement of fees) shall be deemed to be references
to the Existing Pledge Agreement, as amended and restated hereby. This amendment
and restatement is limited as written and is not a consent to any other
amendment, restatement or waiver, whether or not similar and, except as
expressly provided herein or in any other Credit Document, all terms and
conditions of the Credit Documents remain in full force and effect unless
specifically amended hereby or by any other Credit Document.

Section 15.15 Collateral Agency Agreement. Notwithstanding anything herein to
the contrary, the lien and security interest granted to the Collateral Agent,
for the benefit of the Secured Parties, pursuant to this Agreement and the
exercise of any right or remedy by the Collateral Agent and the other Secured
Parties hereunder are subject to the provisions of the Collateral Agency
Agreement. In the event of any conflict or inconsistency between the provisions
of the Collateral Agency Agreement and this Agreement, the provisions of the
Collateral Agency Agreement shall control

Section 15.16 Applicability to Collateral Agent. Notwithstanding anything to the
contrary contained herein, in no event, shall the Collateral Agent be subject
to, charged with knowledge of or otherwise be obligated to act under any
document to which it is not a party.

[SIGNATURE PAGES FOLLOW]

 

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

 

CALIFORNIA RESOURCES CORPORATION,

as an Additional Pledgor

By:  

 

Name:   Title:  

Signature Page

Pledge Agreement

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

Acknowledged and Consented to:

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

as Collateral Agent

By:  

 

Name:   Title:  

Signature Page

Pledge Agreement

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

SCHEDULE 1

TO THE PLEDGE AGREEMENT

PLEDGED SHARES

 

Pledgor

 

Issuer

 

Issuer’s

Jurisdiction of

Formation

 

Class of Equity

Interest

 

Certificate

No(s)

 

Number of

Units

 

Percentage

of Issued and

Outstanding

Units

                                   

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ANNEX A

TO THE AMENDED AND RESTATED PLEDGE AGREEMENT

SUPPLEMENT NO. [    ], dated as of [            ], 201     (this “Supplement”)
to the AMENDED AND RESTATED PLEDGE AGREEMENT, dated as of November 17, 2017 (the
“Pledge Agreement”), among CALIFORNIA RESOURCES CORPORATION, a Delaware
corporation (the “Borrower”), each Subsidiary of the Borrower that becomes a
party thereto pursuant to Section 9.01 thereof (each such Subsidiary being a
“Subsidiary Pledgor” and, collectively, the “Subsidiary Pledgors”; the
Subsidiary Pledgors and the Borrower are referred to collectively as the
“Pledgors”) and The Bank of New York Mellon Trust Company, N.A., as collateral
agent (in such capacity, together with its successors, in such capacity the
“Collateral Agent”) under the Credit Agreements referred to below for the
benefit of the Secured Parties.

A. Reference is made to that certain Credit Agreement, dated as of September 24,
2014 (the “First Out Credit Agreement”) among the Borrower, the banks, financial
institutions and other lending institutions from time to time party thereto (the
“Lenders”), JPMorgan Chase Bank, N.A., as Administrative Agent, a Swingline
Lender and a Letter of Credit Issuer, and each other Swingline Lender and Letter
of Credit Issuer from time to time party thereto.

B. Reference is made to that certain Credit Agreement dated as of November 17,
2017 (as amended, supplemented or restated, the “2017 Credit Agreement” and
collectively with the Credit Agreement, the “Credit Agreements”) among
California Resources Corporation, a Delaware corporation, the 2017 Lenders party
thereto, and The Bank of New York Mellon Trust Company, N.A., as administrative
agent (the “2017 Administrative Agent”)

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

D. The Pledgors have entered into the Pledge Agreement in order to induce the
First Out Administrative Agent, the First Out Lenders and the Letter of Credit
Issuers to enter into the First Out Credit Agreement and to (a) induce the
Lenders and the Letter of Credit Issuers to make their respective First Out
Extensions of Credit to the Borrower under the First Out Credit Agreement,
(b) to induce one or more Hedge Banks to enter into Secured Hedge Agreements
with the Borrower or any Subsidiary of the Borrower and (c) induce one or more
Cash Management Banks to provide Cash Management Services pursuant to Secured
Cash Management Agreements to the Borrower or any Restricted Subsidiary of the
Borrower.

E. The Pledgors have also entered into the Pledge Agreement in order to induce
the 2017 Administrative Agent and the 2017 Lenders to enter into the 2017 Credit
Agreement and to induce the Lenders to make their respective 2017 Extensions of
Credit to the Borrower under the 2017 Credit Agreement.

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

 

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G. Section 10.10 of the Credit Agreements and Section 9.01(b) of the Pledge
Agreement provide [that additional Subsidiaries of the Borrower may become
Subsidiary Pledgors under the Pledge Agreement] [that existing Pledgors may
pledge Additional Pledged Shares] by execution and delivery of an instrument in
the form of this Supplement. Each undersigned Additional Pledgor is executing
this Supplement in accordance with the requirements of Section 9.01(b) of the
Pledge Agreement to pledge to the Collateral Agent, for the ratable benefit of
the Secured Parties, the Additional Pledged Shares [and to become a Subsidiary
Pledgor under the Pledge Agreement] in order to induce (a) the First Out Lenders
and the Letter of Credit Issuers to make additional First Out Extensions of
Credit to the Borrower under the First Out Credit Agreement and as consideration
for First Out Extensions of Credit previously made, (b) one or more Hedge Banks
to enter into Secured Hedge Agreements with the Borrower or any Subsidiary of
the Borrower, (c) one or more Cash Management Banks may from time to time
provide Cash Management Services pursuant to Secured Cash Management Agreements
to the Borrower or any Subsidiary of the Borrower and (d) the 2017 Lenders to
make the 2017 Extensions of Credit to the Borrower under the 2017 Credit
Agreement.

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

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

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

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

For purposes of the Pledge Agreement, the Collateral shall be deemed to include
the Additional Collateral.

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

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

(a) Schedule 1 correctly represents as of the date hereof the issuer, the
certificate number, if any, the Additional Pledgor and record and beneficial
owner, the number and class and the percentage of the issued and outstanding
Equity Interests of such class of all Additional Pledged Shares. Except as set

 

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

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

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

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

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

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

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

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

SECTION [6] [7]. Any provision of this Supplement that is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof and in the Pledge Agreement, and

 

A - 3

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any such prohibition or unenforceability in any jurisdiction shall not
invalidate or render unenforceable such provision in any other jurisdiction. The
parties hereto shall endeavor in good-faith negotiations to replace the invalid,
illegal or unenforceable provisions with valid provisions the economic effect of
which comes as close as possible to that of the invalid, illegal or
unenforceable provisions.

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

[SIGNATURE PAGES FOLLOW]

 

A - 4

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

 

[ADDITIONAL PLEDGOR],

  as Additional Pledgor

By:  

 

Name:   Title:  

Signature Page

Supplement to Amended and Restated Pledge Agreement

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

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

as Collateral Agent

By:  

 

Name:   Title:  

 

Signature Page

Supplement to Amended and Restated Pledge Agreement

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SCHEDULE 1

TO SUPPLEMENT NO. [    ]

TO THE PLEDGE AGREEMENT

PLEDGED SHARES

Pledged Shares

 

Pledgor

 

Issuer

 

Issuer’s

Jurisdiction

of Formation

 

Class of

Equity

Interest

 

Certificate

No(s)

 

Number of

Units

 

Percentage

of Issued and

Outstanding

Units

                                   

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EXHIBIT E

FORM OF MORTGAGE/DEED OF TRUST (CALIFORNIA)

[See attached.]

 

E-1

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WHEN RECORDED OR FILED,

PLEASE RETURN TO:

 

Vanessa Rocha

 

Simpson Thacher & Bartlett LLP

600 Travis Street, Suite 5400

Houston, TX 77002

 

 

 

  Space above for County Recorder’s Use

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

FROM

EACH UNDERSIGNED TRUSTOR

TO

ROBERT R. RABALAIS,

AS TRUSTEE

FOR THE BENEFIT OF

JPMORGAN CHASE BANK, N.A.,

as Mortgagee and Administrative Agent

and the Other Secured Persons

A CARBON, PHOTOGRAPHIC, OR OTHER REPRODUCTION

OF THIS INSTRUMENT IS SUFFICIENT AS A FINANCING STATEMENT.

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

A POWER OF SALE HAS BEEN GRANTED IN THIS INSTRUMENT. IN CERTAIN STATES, A POWER
OF SALE MAY ALLOW THE TRUSTEE OR THE MORTGAGEE TO TAKE THE DEED OF TRUST
PROPERTY AND SELL IT WITHOUT GOING TO COURT IN A FORECLOSURE ACTION UPON DEFAULT
BY THE TRUSTOR UNDER THIS INSTRUMENT.

THIS INSTRUMENT CONTAINS AFTER-ACQUIRED PROPERTY PROVISIONS.

THIS INSTRUMENT SECURES PAYMENT OF FUTURE ADVANCES.

THIS INSTRUMENT COVERS PROCEEDS OF DEED OF TRUST PROPERTY.

THIS INSTRUMENT COVERS MINERALS AND OTHER SUBSTANCES OF VALUE WHICH MAY BE
EXTRACTED FROM THE EARTH (INCLUDING WITHOUT LIMITATION OIL AND GAS) AND THE
ACCOUNTS RELATED THERETO, WHICH WILL BE FINANCED AT THE WELLHEADS OF THE WELL OR
WELLS LOCATED ON THE PROPERTIES DESCRIBED IN THE EXHIBIT HERETO. THIS FINANCING
STATEMENT IS TO BE FILED OR FILED FOR RECORD, AMONG OTHER PLACES, IN THE REAL
ESTATE RECORDS OR SIMILAR RECORDS OF THE RECORDERS OF THE COUNTIES LISTED ON THE
EXHIBIT HERETO AND WITH A CLERK OF COURT. THE TRUSTOR HAS AN INTEREST OF RECORD
IN THE REAL ESTATE AND IMMOVABLE PROPERTY CONCERNED, WHICH INTEREST IS DESCRIBED
IN THE EXHIBIT ATTACHED HERETO.

PORTIONS OF THE DEED OF TRUST PROPERTY ARE GOODS WHICH ARE OR ARE TO BECOME
AFFIXED TO OR FIXTURES ON THE LAND DESCRIBED IN OR REFERRED TO IN THE EXHIBIT
HERETO. THIS FINANCING STATEMENT IS TO BE FILED FOR RECORD OR RECORDED, AMONG
OTHER PLACES, IN THE REAL ESTATE RECORDS OR SIMILAR RECORDS OF EACH COUNTY IN
WHICH SAID LAND OR ANY PORTION THEREOF IS LOCATED AND WITH A CLERK OF COURT. THE
TRUSTOR IS THE OWNER OF RECORD INTEREST IN THE REAL ESTATE CONCERNED. THIS
INSTRUMENT IS ALSO TO BE INDEXED IN THE INDEX OF FINANCING STATEMENTS OR THE UCC
RECORDS.

TRUSTOR REQUESTS THAT A COPY OF ANY NOTICE OF DEFAULT AND ANY NOTICE OF SALE
HEREUNDER BE MAILED TO IT AT: CALIFORNIA RESOURCES CORPORATION, 9200 OAKDALE
AVE., SUITE 900, LOS ANGELES, CA 91311, ATTENTION: GENERAL COUNSEL’S OFFICE.

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

TABLE OF CONTENTS

 

          Page   ARTICLE I   DEFINITIONS  

Section 1.01

   Terms Defined Above      2  

Section 1.02

   UCC and Other Defined Terms      2  

Section 1.03

   Definitions      2   ARTICLE II   GRANT OF LIEN AND SECURED OBLIGATIONS  

Section 2.01

   Grant of Liens      4  

Section 2.02

   Grant of Security Interest      5  

Section 2.03

   Secured Obligations      6  

Section 2.04

   Fixture Filing, Etc.      6  

Section 2.05

   Pro Rata Benefit      7  

Section 2.06

   Excluded Property      7   ARTICLE III   ASSIGNMENT OF AS-EXTRACTED
COLLATERAL  

Section 3.01

   Assignment      7  

Section 3.02

   No Modification of Payment Obligations      8  

Section 3.03

   Excluded Property      8   ARTICLE IV   REPRESENTATIONS, WARRANTIES AND
COVENANTS  

Section 4.01

   Title      8  

Section 4.02

   Defend Title      8  

Section 4.03

   Not a Foreign Person      9  

Section 4.04

   Power to Create Lien and Security      9  

Section 4.05

   Revenue and Cost Bearing Interest      9  

Section 4.06

   Operation By Third Parties      9  

Section 4.07

   Failure to Perform      9  

Section 4.08

   Delivery of UCC-3 Continuation Financing Statements      9   ARTICLE V  
RIGHTS AND REMEDIES  

Section 5.01

   Event of Default      10  

Section 5.02

   Foreclosure and Sale      10  

Section 5.03

   Substitute Trustees and Agents      11  

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

Section 5.04

   Judicial Foreclosure; Receivership      11  

Section 5.05

   Foreclosure for Installments      11  

Section 5.06

   Separate Sales      12  

Section 5.07

   Possession of Deed of Trust Property      12  

Section 5.08

   Occupancy After Foreclosure      12  

Section 5.09

   Remedies Cumulative, Concurrent and Nonexclusive      12  

Section 5.10

   Discontinuance of Proceedings      13  

Section 5.11

   No Release of Obligations      13  

Section 5.12

   Release of and Resort to Collateral      13  

Section 5.13

   Waiver of Redemption, Notice and Marshalling of Assets, Etc.      13  

Section 5.14

   Application of Proceeds      14  

Section 5.15

   Resignation of Operator      14  

Section 5.16

   Indemnity      14   ARTICLE VI   THE TRUSTEE  

Section 6.01

   Duties, Rights, and Powers of Trustee      15  

Section 6.02

   Successor Trustee      15  

Section 6.03

   Retention of Moneys      15   ARTICLE VII   MISCELLANEOUS  

Section 7.01

   Instrument Construed as Mortgage, Etc.      15  

Section 7.02

   Releases      16  

Section 7.03

   Severability      16  

Section 7.04

   Successors and Assigns      16  

Section 7.05

   Application of Payments to Certain Obligations      16  

Section 7.06

   Nature of Covenants      16  

Section 7.07

   Notices      17  

Section 7.08

   Counterparts      17  

Section 7.09

   Governing Law      17  

Section 7.10

   Financing Statement; Fixture Filing      17  

Section 7.11

   Execution of Financing Statements      17  

Section 7.12

   Exculpation Provisions      18  

Section 7.13

   References      18  

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

ARTICLE VIII   STATE SPECIFIC PROVISIONS  

Section 8.01

   California Mortgage Foreclosure Law      19  

Exhibit A

   Oil and Gas Properties   

Exhibit B

   Oil and Gas Properties   

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

THIS MORTGAGE, LINE OF CREDIT MORTGAGE, DEED OF TRUST, ASSIGNMENT OF
AS-EXTRACTED COLLATERAL, SECURITY AGREEMENT, FIXTURE FILING AND FINANCING
STATEMENT (this “Deed of Trust”) is entered into as of November 9, 2015 (the
“Effective Date”) by each of (i) California Resources Elk Hills, LLC, a Delaware
limited liability company (“CREH”), (ii) California Resources Production
Corporation, a Delaware corporation (“Production Corp.”), (iii) California
Resources Petroleum Corporation, a Delaware corporation (“Petroleum Corp.”),
(iv) Southern San Joaquin Production, Inc., a Delaware corporation (“SSJP”), (v)
California Heavy Oil, Inc., a Delaware corporation (“CHO”) and (vi) Socal
Holding, LLC, a Delaware limited liability company (“Socal”); in favor of Robert
R. Rabalais (the “Trustee”), a resident of Harris County, Texas, whose address
is c/o Simpson Thacher & Bartlett LLP, 600 Travis, Suite 5400, Houston, TX
77002-3009, for the benefit of JPMorgan Chase Bank, N.A., as Administrative
Agent (together with its successors and assigns, the “Mortgagee”), and the Other
Secured Persons.

R E C I T A L S

A.    On September 24, 2014, California Resources Corporation, a Delaware
corporation, as borrower (the “Borrower”), the Lenders, the Mortgagee, as
administrative agent for the Lenders and others, executed a Credit Agreement
(such agreement, as may from time to time be amended or supplemented, the
“Credit Agreement”) pursuant to such, upon the terms and conditions stated
therein, the Lenders agreed to make loans and other extensions of credit to the
Borrower.

B.    The Borrower and/or one or more of its Restricted Subsidiaries and certain
Lenders or Affiliates of Lenders have or may enter into certain ISDA Master
Agreements, confirmations and other contractual arrangements, whether or not
evidenced pursuant to standard ISDA documentation (any such agreements or
instruments with Lenders or their Affiliates collectively, “Swap Documents”) to
evidence one or more swap, forward, future, put, call or other exchange or
derivative transactions or options or similar agreements, whether exchange
traded, “over-the-counter” or otherwise, involving, or settled by reference to,
one or more rates, currencies, commodities (including electricity), 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 (collectively, “Swap
Agreements”).

C.    The Borrower and/or one or more of its Restricted Subsidiaries and certain
Lenders or Affiliates of Lenders have or may enter into certain Secured Cash
Management Agreements.

D.    On November 25, 2014, certain Restricted Subsidiaries (including the
Trustor (as defined below)) of the Borrower executed a Guarantee (such
agreement, as may from time to time be amended or supplemented, the “Guarantee”)
pursuant to which, upon the terms and conditions stated therein, each such
Person has unconditionally guaranteed the prompt payment, when due, of the
Obligations under the Credit Agreement, the Swap Agreements, the Secured Cash
Management Agreements and the Guarantee (collectively being the “Secured
Transaction Documents”).

E.    The Trustor is obligated to execute and deliver this Deed of Trust to
comply with its obligations under Section 10.10 of the Credit Agreement, and the
Trustor has agreed to enter into this Deed of Trust to secure all obligations
owing to the Mortgagee and the Other Secured Persons under the Secured
Transaction Documents.

 

1

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F.    Therefore, in order to comply with the terms and conditions of the Secured
Transaction Documents and for other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the Trustor hereby agrees as
follows:

ARTICLE I

DEFINITIONS

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

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

Section 1.03    Definitions.

“Applicable UCC” means the provisions of the Uniform Commercial Code presently
in effect in the jurisdiction in which the relevant UCC Collateral is situated
or which otherwise is applicable to the creation or perfection of the Liens
described herein or the rights and remedies of Mortgagee under this Deed of
Trust.

“Collateral” means collectively all the Deed of Trust Property and all the UCC
Collateral.

“Event of Default” has the meaning ascribed to such term in Section 5.01.

“Excluded Property” means (a) all Excluded Stock, (b) any property to the extent
the grant or maintenance of a Lien on such property is (i) prohibited by
applicable law, (ii) requires a consent not obtained of any Governmental
Authority pursuant to applicable law or (iii) is prohibited by, or constitutes a
breach or default under or results in the termination of or requires any consent
not obtained under, any contract, license, agreement, instrument or other
document evidencing or giving rise to such property, except to the extent that
such term in such contract, license, agreement, instrument or other document or
similar agreement providing for such prohibition, breach, default or termination
or requiring such consent is ineffective under applicable law (including without
limitation, pursuant to Section 9-406, 9-407, 9-408 or 9-409 of the New York
UCC), (c) motor vehicles and other assets subject to certificates of title,
(d) trust accounts, payroll accounts, zero balance accounts and escrow accounts,
in each case for so long as they remain such type of account, (e) all real
property not constituting Oil and Gas Properties, and (f) any property as to
which the Administrative Agent and the Borrowers agree in writing that the costs
of obtaining a security interest in, or Lien on, such property, or perfection
thereof, are excessive in relation to the value to the Secured Parties of the
security interest afforded thereby.

“Deed of Trust Property” means the Oil and Gas Properties and other properties
and assets described in Section 2.01(a) through Section 2.01(e), excluding, for
the avoidance of doubt, any Excluded Property.

“Flood Insurance Regulations” has the meaning assigned to such term in
Section 2.01.

“Future Advances” means future obligations and future advances that the
Mortgagee or any Other Secured Person may make pursuant to any Secured
Transaction Document.

 

2

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

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

“Indemnified Parties” means the Trustee, the Mortgagee, each Other Secured
Person and their officers, directors, employees, representatives, agents,
attorneys, accountants and experts.

“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 (a) the lien or
security interest arising from a mortgage, encumbrance, pledge, security
agreement, conditional sale or trust receipt or a lease, consignment or bailment
for security purposes or (b) production payments and the like payable out of Oil
and Gas Properties.

“Oil and Gas Properties” means (a) Hydrocarbon Interests, (b) the properties now
or hereafter pooled or unitized with Hydrocarbon Interests, (c) all presently
existing or future unitization, pooling agreements and declarations of pooled
units and the units created thereby (including all units created under orders,
regulations and rules of any Governmental Authority) which may affect all or any
portion of the Hydrocarbon Interests, (d) all operating agreements, contracts
and other agreements, including production sharing contracts and agreements,
which relate to any of the Hydrocarbon Interests or the production, sale,
purchase, exchange or processing of Hydrocarbons from or attributable to such
Hydrocarbon Interests, (e) all Hydrocarbons in and under and which may be
produced and saved or attributable to the Hydrocarbon Interests, including all
oil in tanks, and all rents, issues, profits, proceeds, products, revenues and
other incomes from or attributable to the Hydrocarbon Interests, (f) all
tenements, hereditaments, appurtenances and properties in any manner
appertaining, belonging, affixed or incidental to the Hydrocarbon Interests and
(g) all properties, rights, titles, interests and estates described or referred
to above, including any and all property, real or personal, now owned or
hereafter acquired and situated upon, used, held for use or useful in connection
with the operating, working or development of any of such Hydrocarbon Interests
or property (excluding drilling rigs, automotive equipment, rental equipment or
other personal property which may be on such premises for the purpose of
drilling a well or for other similar temporary uses) and including any and all
oil wells, gas wells, injection wells or other wells, structures, fuel
separators, liquid extraction plants, plant compressors, pumps, pumping units,
field gathering systems, gas processing plants and pipeline systems, power and
cogeneration facilities and any related infrastructure to any thereof, tanks and
tank batteries, fixtures, valves, fittings, machinery and parts, engines,
boilers, meters, apparatus, equipment, appliances, tools, implements, cables,
wires, towers, casing, tubing and rods, surface leases, rights-of-way, easements
and servitudes together with all additions, substitutions, replacements,
accessions and attachments to any and all of the foregoing.

“Other Secured Persons” means each Lender, each Swingline Lender under the
Credit Agreement, each Letter of Credit Issuer under the Credit Agreement, each
Lender or Affiliate of a Lender which is party to a Secured Cash Management
Agreement or a Secured Hedge Agreement, each Indemnified Party and any legal
owner, holder, assignee or pledgee of any of the Secured Obligations.

 

3

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“Paid In Full In Cash” means (a) the irrevocable and indefeasible payment in
full in cash of all principal, interest (including interest accruing during the
pendency of an insolvency or liquidation proceeding, regardless of whether
allowed or allowable in such insolvency or liquidation proceeding) and premium,
if any, on all Loans outstanding under the Credit Agreement, (b) the payment in
full in cash or posting of cash collateral in respect of all other obligations
or amounts that are outstanding under the Credit Agreement, including the
posting of the cash collateral for outstanding Letters of Credit as required by
the terms of the Credit Agreement, and (c) the termination of all Commitments
under the Credit Agreement.

“Permitted Encumbrances” means all Liens permitted to be placed on the Deed of
Trust Properties under Section 11.2 of the Credit Agreement.

“Post-Default Rate” means the post-default rate per annum set forth in
Section 2.8(c) of the Credit Agreement applicable to past due payments, but in
no event to exceed the maximum amount permitted by or consistent with applicable
laws, rules and regulations.

“Secured Obligations” has the meaning assigned to such term in Section 2.03.

“Trustor” means each of CREH, Production Corp., Petroleum Corp., SSJP, CHO and
Socal individually as a Trustor hereunder with respect to the Collateral owned
by it.

“UCC Collateral” means the property and other assets described in Section 2.02,
excluding, for the avoidance of doubt, any Excluded Property.

ARTICLE II

GRANT OF LIEN AND SECURED OBLIGATIONS

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

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

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

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

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

 

4

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

Notwithstanding any provision in this Deed of Trust to the contrary, in no event
is any Building (as defined in the applicable Flood Insurance Regulation) or
Manufactured (Mobile) Home (as defined in the applicable Flood Insurance
Regulation) included in the definition of “Deed of Trust Property” and no
Building or Manufactured (Mobile) Home is hereby encumbered by this Deed of
Trust. As used herein, “Flood Insurance Regulations” shall mean (i) the National
Flood Insurance Act of 1968 as now or hereafter in effect or any successor
statute thereto, (ii) the Flood Disaster Protection Act of 1973 as now or
hereafter in effect or any successor statute thereto, (iii) the National Flood
Insurance Reform Act of 1994 (amending 42 USC 4001, et. seq.), as the same may
be amended or recodified from time to time, (iv) the Flood Insurance Reform Act
of 2004, and (v) the Biggert-Waters Flood Reform Act of 2012, and any
regulations promulgated thereunder.

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

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

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

(c)    all Documents;

(d)    all Instruments;

(e)    all Inventory and all Equipment;

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

(g)    all As-Extracted Collateral;

(h)    all Fixtures;

(i)    all Hydrocarbons;

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

 

5

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

Section 2.03    Secured Obligations. This Deed of Trust is executed and
delivered by the Trustor to secure and enforce the following (the “Secured
Obligations”):(a) Payment of and performance of any and all indebtedness, fees,
interest, indemnities, reimbursements, obligations and liabilities of the
Borrower or any Guarantor (including interest accruing during the pendency of an
insolvency or liquidation proceeding, regardless of whether allowed or allowable
in such insolvency or liquidation proceeding) pursuant to the Credit Agreement,
the Guarantee, this Deed of Trust or any other Loan Document, whether now
existing or hereafter arising and being in the original principal amount Four
Billion United States Dollars (US $4,000,000,000) with final maturity on or
before November 25, 2019, including performance of all Letter of Credit
Agreements executed from time to time by the Borrower or any Subsidiary of the
Borrower under or pursuant to the Credit Agreement and all reimbursement
obligations for drawn or undrawn portions under any Letter of Credit now
outstanding or hereafter issued under or pursuant to the Credit Agreement.

(a)    (b) Any sums which may be advanced or paid by the Trustee or the
Mortgagee or any Other Secured Person under the terms hereof or of the Credit
Agreement or any Secured Transaction Document on account of the failure of the
Borrower, the Trustor or any of the Borrower’s Subsidiaries to comply with the
covenants of the Trustor contained herein, in the Credit Agreement or any other
Secured Transaction Document whether pursuant to Section 4.07 or otherwise and
all other obligations, liabilities and indebtedness of the Borrower, the Trustor
or any other Guarantor arising pursuant to the provisions of this Deed of Trust
or any Secured Transaction Document.

(b)    (c) Any additional loans made by the Mortgagee or any Lender to the
Borrower pursuant to the Credit Agreement. It is contemplated that the Mortgagee
and the Lenders may lend additional sums to the Borrower from time to time, but
shall not be obligated to do so, and the Trustor agrees that any such additional
loans shall be secured by this Deed of Trust.

(d)    Payment of and performance of any and all present or future obligations
of the Borrower under any Swap Document or any Swap Agreement, including any
deferred premiums in respect of puts, floors or options constituting Swap
Agreements.(e) Payment of and performance of any and all present or future
obligations, whether absolute or contingent and howsoever and whensoever
created, arising, evidenced or acquired, of the Trustor and any Guarantor under
any Secured Cash Management Agreement, subject to Section 14.23 of the Credit
Agreement.

(c)    (f) Any and all renewals, modifications, substitutions, rearrangements or
extensions of any of the foregoing, whether in whole or in part.

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

 

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Section 2.05    Pro Rata Benefit. This Deed of Trust is executed and granted for
the pro rata benefit and security of the Mortgagee and the Other Secured Persons
to secure the Secured Obligations for so long as same remains unpaid and
thereafter until the Secured Obligations have been Paid In Full In Cash.

Section 2.06    Excluded Property. Notwithstanding any provision in this Deed of
Trust to the contrary, in no event shall the Collateral include any Excluded
Property.

ARTICLE III

ASSIGNMENT OF AS-EXTRACTED COLLATERAL

Section 3.01    Assignment.

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

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

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

(iii)    all amounts and proceeds hereafter payable to or to become payable to
the Trustor or now or hereafter relating to any part of the Deed of Trust
Properties and all amounts, sums, monies, revenues and income which become
payable to the Trustor from, or with respect to, any of the Deed of Trust
Properties, present or future, now or hereafter constituting a part of the
Hydrocarbon Interests.

(b)    The Hydrocarbons and products are to be delivered into pipe lines
connected with any Deed of Trust Property, or to the purchaser thereof, to the
credit of the Mortgagee, for its benefit and the benefit of the Other Secured
Persons, free and clear of all taxes, charges, costs and expenses, other than
Permitted Encumbrances; and all such revenues and proceeds shall be paid
directly to the Mortgagee, at its offices in New York, New York with no duty or
obligation of any party paying the same to inquire into the rights of the
Mortgagee to receive the same, what application is made thereof, or as to any
other matter.

(c)    The Trustor agrees to perform all such acts, and to execute all such
further assignments, transfers and division orders and other instruments as may
be required or desired by, and requested of Trustor by the Mortgagee in order to
have the proceeds and revenues referenced in Section 3.01(b) paid to the
Mortgagee as set forth in such section. In addition to any and all rights of a
secured party under Sections 9-607 and 9-609 of the Applicable UCC, the
Mortgagee is fully authorized to receive and take receipt of said revenues and
proceeds; to endorse and cash any and all checks and drafts payable to the order
of the Trustor or the Mortgagee for the account of the Trustor received from or
in connection with said revenues or proceeds and to hold the proceeds thereof in
a Deposit Account with the Mortgagee as additional collateral securing the
Secured Obligations; and to execute transfer and division orders in the name of
the Trustor, or otherwise, with warranties binding the Trustor. All proceeds
received by the Mortgagee pursuant to this grant and assignment shall be applied
as provided in Section 5.14.

(d)    The Mortgagee shall not be liable for any delay, neglect or failure to
effect collection of any proceeds or to take any other action in connection
therewith or hereunder; but the

 

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Mortgagee shall have the right, at its election, in the name of the Trustor or
otherwise, to prosecute and defend any and all actions or legal proceedings
deemed advisable by the Mortgagee in order to collect such funds and to protect
the interests of the Mortgagee and/or the Trustor, with all costs, expenses and
attorneys’ fees incurred in connection therewith being paid by the Trustor.

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

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

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

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

ARTICLE IV

REPRESENTATIONS, WARRANTIES AND COVENANTS

The Trustor hereby represents, warrants and covenants as follows:

Section 4.01    Title. To the extent of the undivided interests specified on
Exhibit B, which is intentionally omitted for purposes of any public filings or
recordings, the Trustor has good and defensible title to and is possessed of its
material Hydrocarbon Interests and has good title to its material UCC
Collateral. The Collateral is free of all Liens except Permitted Encumbrances.

Section 4.02    Defend Title. This Deed of Trust is, and always will be kept, a
direct first priority Lien upon the Collateral other than as permitted pursuant
to the Credit Agreement; provided that no intent to subordinate the priority of
the Liens created hereby is intended or inferred. The Trustor will not create or
suffer to be created or permit to exist any Lien, security interest or charge
prior or junior to or on a parity with the Lien of this Deed of Trust upon the
Collateral or any part thereof other than Permitted Encumbrances. The Trustor
will warrant and defend the title to the Collateral against the claims and
demands of all other Persons whomsoever and will maintain and preserve the Lien
created hereby (and its priority) until the Secured Obligations shall be Paid In
Full In Cash. If (i) an adverse claim be made against

 

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or, a cloud develops upon, the title to any part of the Collateral other than a
Permitted Encumbrance or (ii) any Person, including the holder of a Permitted
Encumbrance, shall challenge the priority or validity of the Liens created by
this Deed of Trust, then the Trustor agrees to immediately defend against such
adverse claim, take commercially reasonable action to remove such cloud or
subordinate such Permitted Encumbrance, in each case, at the Trustor’s sole cost
and expense. The Trustor further agrees that the Trustee and/or the Mortgagee
may take such other action as they reasonably deem advisable to protect and
preserve their interests in the Collateral, and in such event the Trustor will
indemnify the Trustee and the Mortgagee against any and all cost, reasonable
attorneys’ fees and other expenses which they may incur in defending against any
such adverse claim or taking action to remove any such cloud.

Section 4.03    Not a Foreign Person. The Trustor is not a “foreign person”
within the meaning of the Code, Sections 1445 and 7701 (i.e. the Trustor is not
a non-resident alien, foreign corporation, foreign partnership, foreign trust or
foreign estate as those terms are defined in the Code and any regulations
promulgated thereunder).

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

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

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

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

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

 

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ARTICLE V

RIGHTS AND REMEDIES

Section 5.01    Event of Default. An Event of Default under the Credit Agreement
shall be an “Event of Default” under this Deed of Trust.

Section 5.02    Foreclosure and Sale.

(a)    If an Event of Default shall occur and be continuing, to the extent
provided by applicable law, the Mortgagee shall have the right and option to
proceed with foreclosure by directing the Trustee to proceed, with foreclosure
and to sell all or any portion of such Deed of Trust Property at one or more
sales, as an entirety or in parcels, at such place or places in otherwise such
manner and upon such notice as may be required by law, or, in the absence of any
such requirement, as the Mortgagee may deem appropriate, and to make conveyance
to the purchaser or purchasers. Where the Deed of Trust Property is situated in
more than one jurisdiction, notice as above provided shall be posted and filed
in all such jurisdictions (if such notices are required by law), and all such
Deed of Trust Property may be sold in any such jurisdiction and any such notice
shall designate the jurisdiction where such Deed of Trust Property is to be
sold. Nothing contained in this Section 5.02 shall be construed so as to limit
in any way any rights to sell the Deed of Trust Property or any portion thereof
by private sale if and to the extent that such private sale is permitted under
the laws of the applicable jurisdiction or by public or private sale after entry
of a judgment by any court of competent jurisdiction so ordering. The Trustor
hereby irrevocably appoints the Trustee and the Mortgagee, with full power of
substitution, to be the attorneys-in-fact of the Trustor and in the name and on
behalf of the Trustor to execute and deliver any deeds, transfers, conveyances,
assignments, assurances and notices which the Trustor ought to execute and
deliver and do and perform any and all such acts and things which the Trustor
ought to do and perform under the covenants herein contained and generally, to
use the name of the Trustor in the exercise of all or any of the powers hereby
conferred on the Trustee and/or the Mortgagee; provided that, neither the
Trustee nor the Mortgagee shall exercise any such powers unless an Event of
Default shall have occurred and is continuing. At any such sale: (i) whether
made under the power herein contained or any other legal enactment, or by virtue
of any judicial proceedings or any other legal right, remedy or recourse, it
shall not be necessary for the Trustee or the Mortgagee, as appropriate, to have
physically present, or to have constructive possession of, the Deed of Trust
Property (the Trustor hereby covenanting and agreeing to deliver any portion of
the Deed of Trust Property not actually or constructively possessed by the
Trustee or the Mortgagee immediately upon his or its demand) and the title to
and right of possession of any such property shall pass to the purchaser thereof
as completely as if the same had been actually present and delivered to
purchaser at such sale, (ii) each instrument of conveyance executed by the
Trustee or the Mortgagee shall contain a general warranty of title, binding upon
the Trustor and its successors and assigns, (iii) each and every recital
contained in any instrument of conveyance made by the Trustee or the Mortgagee
shall conclusively establish the truth and accuracy of the matters recited
therein, including, without limitation, nonpayment of the Secured Obligations,
advertisement and conduct of such sale in the manner provided herein and
otherwise by law and appointment of any successor trustee hereunder, (iv) any
and all prerequisites to the validity thereof shall be conclusively presumed to
have been performed, (v) the receipt of the Trustee, the Mortgagee or of such
other party or officer making the sale shall be a sufficient discharge to the
purchaser or purchasers for its purchase money and no such purchaser or
purchasers, or its assigns or personal representatives, shall thereafter be
obligated to see to the application of such purchase money, or be in any way
answerable for any loss, misapplication or nonapplication thereof, (vi) to the
fullest extent permitted by law, the Trustor shall be completely and irrevocably
divested of all of its right, title, interest, claim and demand whatsoever,
either at law or in equity, in and to the property sold and such sale shall be a
perpetual bar both at law and in

 

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equity against the Trustor, and against any and all other persons claiming or to
claim the property sold or any part thereof, by, through or under the Trustor,
and (vii) to the extent and under such circumstances as are permitted by law,
the Mortgagee may be a purchaser at any such sale, and shall have the right,
after paying or accounting for all costs of said sale or sales, to credit the
amount of the bid upon the amount of the Secured Obligations (in the order of
priority set forth in Section 5.14) in lieu of cash payment.

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

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

Section 5.04    Judicial Foreclosure; Receivership. If any of the Secured
Obligations shall become due and payable and shall not be promptly paid, the
Trustee or the Mortgagee shall have the right and power to proceed by a suit or
suits in equity or at law, whether for the specific performance of any covenant
or agreement herein contained or in aid of the execution of any power herein
granted, or for any foreclosure hereunder or for the sale of the Collateral
under the judgment or decree of any court or courts of competent jurisdiction,
or for the appointment of a receiver pending any foreclosure hereunder or the
sale of the Collateral under the order of a court or courts of competent
jurisdiction or under executory or other legal process, or for the enforcement
of any other appropriate legal or equitable remedy. Any money advanced by the
Trustee and/or the Mortgagee in connection with any such receivership shall be a
demand obligation (which obligation the Trustor hereby expressly promises to
pay) owing by the Trustor to the Trustee and/or the Mortgagee and shall bear
interest from the date of making such advance by the Trustee and/or the
Mortgagee until paid at the Post-Default Rate.

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

 

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

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

Section 5.08    Occupancy After Foreclosure. In the event there is a foreclosure
sale hereunder and at the time of such sale the Trustor or the Trustor’s heirs,
devisees, representatives, successors or assigns or any other person claiming
any interest in the Collateral by, through or under the Trustor, are occupying
or using any Deed of Trust Property or any part thereof, each and all shall
immediately become the tenant of the purchaser at such sale, which tenancy shall
be a tenancy from day to day, terminable at the will of either the landlord or
tenant, or at a reasonable rental per day based upon the value of the property
occupied, such rental to be due daily to the purchaser; to the extent permitted
by applicable law, the purchaser at such sale shall, notwithstanding any
language herein apparently to the contrary, have the sole option to demand
immediate possession following the sale or to permit the occupants to remain as
tenants at will. In the event the tenant fails to surrender possession of said
property upon demand, the purchaser shall be entitled to institute and maintain
a summary action for possession of the Deed of Trust Property (such as an action
for forcible entry and detainer) in any court having jurisdiction.

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

 

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

Section 5.11    No Release of Obligations. To the extent permitted by applicable
law, neither the Trustor, any Guarantor nor any other person hereafter obligated
for payment of all or any part of the Secured Obligations shall be relieved of
such obligation by reason of: (a) the failure of the Trustee to comply with any
request of the Trustor, any Guarantor or any other Person so obligated, to
foreclose the Lien of this Deed of Trust or to enforce any provision hereunder
or under the Credit Agreement; (b) the release, regardless of consideration, of
the Deed of Trust Property or any portion thereof or interest therein or the
addition of any other property to the Deed of Trust Property; (c) any agreement
or stipulation between any subsequent owner of the Deed of Trust Property and
the Mortgagee extending, renewing, rearranging or in any other way modifying the
terms of this Deed of Trust without first having obtained the consent of, given
notice to or paid any consideration to the Trustor, any Guarantor or such other
Person, and in such event the Trustor, Guarantor and all such other Persons
shall continue to be liable to make payment according to the terms of any such
extension or modification agreement unless expressly released and discharged in
writing by the Mortgagee; or (d) by any other act or occurrence save and except
if the Secured Obligations are Paid In Full In Cash and any other obligations
hereunder or under the Credit Agreement are completely fulfilled.

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

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

 

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Section 5.14    Application of Proceeds. The proceeds of any sale of the Deed of
Trust Property or any part thereof and all other monies received in any
proceedings for the enforcement hereof or otherwise, whose application has not
elsewhere herein been specifically provided for, shall be applied:

(a)    First, to the payment of all reasonable expenses incurred by the Trustee
or the Mortgagee incident to the enforcement of this Deed of Trust, the Credit
Agreement or any Secured Transaction Document to collect any portion of the
Secured Obligations (including, without limiting the generality of the
foregoing, expenses of any entry or taking of possession, of any sale, of
advertisement thereof, and of conveyances, and court costs, compensation of
agents and employees, legal fees and a reasonable commission to the Trustee
acting, if applicable), and to the payment of all other reasonable charges,
expenses, liabilities and advances incurred or made by the Trustee or the
Mortgagee under this Deed of Trust or in executing any trust or power hereunder;
and

(b)    Second, as set forth in Article XII of the Credit Agreement.

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

Section 5.16    Indemnity. THE INDEMNIFIED PARTIES SHALL NOT BE LIABLE, IN
CONNECTION WITH ANY ACTION TAKEN, FOR ANY LOSS SUSTAINED BY THE TRUSTOR
RESULTING FROM AN ASSERTION THAT THE MORTGAGEE HAS RECEIVED FUNDS FROM THE
PRODUCTION OF HYDROCARBONS CLAIMED BY THIRD PERSONS OR ANY ACT OR OMISSION OF
ANY INDEMNIFIED PARTY IN ADMINISTERING, MANAGING, OPERATING OR CONTROLLING THE
DEED OF TRUST PROPERTY INCLUDING SUCH LOSS WHICH MAY RESULT FROM THE ORDINARY
NEGLIGENCE OF AN INDEMNIFIED PARTY UNLESS SUCH LOSS IS CAUSED BY THE WILLFUL
MISCONDUCT OR GROSS NEGLIGENCE OF THE INDEMNIFIED PARTY SEEKING INDEMNITY. NO
INDEMNIFIED PARTY SHALL BE OBLIGATED TO PERFORM OR DISCHARGE ANY OBLIGATION,
DUTY OR LIABILITY OF THE TRUSTOR. THE TRUSTOR SHALL AND DOES HEREBY AGREE TO
INDEMNIFY EACH INDEMNIFIED PARTY FOR, AND TO HOLD EACH INDEMNIFIED PARTY
HARMLESS FROM, ANY AND ALL LIABILITY, LOSS OR DAMAGE WHICH MAY OR MIGHT BE
INCURRED BY ANY INDEMNIFIED PARTY BY REASON OF THIS DEED OF TRUST OR THE
EXERCISE OF RIGHTS OR REMEDIES HEREUNDER UNLESS SUCH LIABILITY, LOSS OR DAMAGE
IS CAUSED BY THE WILLFUL MISCONDUCT OR GROSS NEGLIGENCE OF THE INDEMNIFIED PARTY
SEEKING INDEMNITY. IF ANY INDEMNIFIED PARTY SHALL MAKE ANY EXPENDITURE ON
ACCOUNT OF ANY SUCH LIABILITY, LOSS OR DAMAGE, THE AMOUNT THEREOF, INCLUDING
COSTS, EXPENSES AND REASONABLE ATTORNEYS’ FEES, SHALL BE A DEMAND OBLIGATION
(WHICH OBLIGATION THE TRUSTOR HEREBY EXPRESSLY PROMISES TO PAY) OWING BY THE
TRUSTOR TO SUCH INDEMNIFIED PARTY AND SHALL BEAR INTEREST FROM THE DATE EXPENDED
UNTIL PAID AT THE POST-DEFAULT RATE. THE TRUSTOR HEREBY ASSENTS TO, RATIFIES AND
CONFIRMS ANY AND ALL ACTIONS OF EACH INDEMNIFIED PARTY WITH RESPECT TO THE DEED
OF TRUST PROPERTY TAKEN UNDER AND IN COMPLIANCE WITH THE TERMS OF THIS DEED OF
TRUST. THE LIABILITIES OF THE TRUSTOR AS SET FORTH IN THIS SECTION 5.16 SHALL
SURVIVE THE TERMINATION OF THIS DEED OF TRUST.

 

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ARTICLE VI

THE TRUSTEE

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

Section 6.02    Successor Trustee. The Trustee may resign by written notice
addressed to the Mortgagee or be removed at any time with or without cause by an
instrument in writing duly executed on behalf of the Mortgagee. In case of the
death, resignation or removal of the Trustee, a successor may be appointed by
the Mortgagee by instrument of substitution complying with any applicable
Governmental Requirements, or, in the absence of any such requirement, without
formality other than appointment and designation in writing. Written notice of
such appointment and designation shall be given by the Mortgagee to the Trustor,
but the validity of any such appointment shall not be impaired or affected by
failure to give such notice or by any defect therein. Such appointment and
designation shall be full evidence of the right and authority to make the same
and of all the facts therein recited. Upon the making of any such appointment
and designation, this Deed of Trust shall vest in the successor all the estate
and title in and to all of the Deed of Trust Property and the successor shall
thereupon succeed to all of the rights, powers, privileges, immunities and
duties hereby conferred upon the Trustee named herein, and one such appointment
and designation shall not exhaust the right to appoint and designate an
additional successor but such right may be exercised repeatedly until the
Secured Obligations are Paid In Full In Cash. To facilitate the administration
of the duties hereunder, the Mortgagee may appoint multiple trustees to serve in
such capacity or in such jurisdictions as the Mortgagee may designate.

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

ARTICLE VII

MISCELLANEOUS

Section 7.01    Instrument Construed as Mortgage, Etc. With respect to any
portions of the Deed of Trust Property located in or adjacent to any State or
other jurisdiction the laws of which do not provide for the use or enforcement
of a deed of trust or the office, rights and authority of the Trustee as herein
provided, the general language of conveyance hereof to the Trustee is intended
and the same shall be construed as words of mortgage unto and in favor of the
Mortgagee and the rights and authority granted to the Trustee herein may be
enforced and asserted by the Mortgagee in accordance with the laws of the

 

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jurisdiction in which such portion of the Deed of Trust Property is located and
the same may be foreclosed at the option of the Mortgagee as to any or all such
portions of the Deed of Trust Property in any manner permitted by the laws of
the jurisdiction in which such portions of the Deed of Trust Property is
situated. This Deed of Trust may be construed as a mortgage, deed of trust,
conveyance, assignment, security agreement, fixture filing, pledge, financing
statement, hypothecation or contract, or any one or more of them, in order fully
to effectuate the Lien hereof and the purposes and agreements herein set forth.

Section 7.02    Releases.

(a)    Full Release. If (i) all Secured Obligations shall be Paid In Full In
Cash or (ii) all the Stock of the Trustor is sold pursuant to a transaction
permitted by the Credit Agreement, the Mortgagee shall forthwith cause
satisfaction and discharge of this Deed of Trust to be entered upon the record
at the expense of the Trustor and shall execute and deliver or cause to be
executed and delivered such instruments of satisfaction and reassignment as may
be appropriate. Otherwise, this Deed of Trust shall remain and continue in full
force and effect.

(b)    Partial Release. If any of the Deed of Trust Property shall be sold,
transferred or otherwise disposed of by the Trustor in a transaction permitted
by the Credit Agreement, then the Mortgagee, at the request and sole expense of
the Trustor, shall promptly execute and deliver to the Trustor all releases,
re-conveyances or other documents reasonably necessary or desirable for the
release of the Liens created hereby on the Deed of Trust Property.

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

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

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

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

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

 

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Section 7.07    Notices. All notices, requests, consents, demands and other
communications required or permitted hereunder shall be in writing and shall be
deemed sufficiently given or furnished if delivered by registered or certified
United States mail, postage prepaid, or by personal service (including express
or courier service) at the addresses specified in Section 7.11 (unless changed
by similar notice in writing given by the particular party whose address is to
be changed). Any such notice or communication shall be deemed to have been given
either at the time of personal delivery or, in the case of delivery at the
address and in the manner provided herein, upon receipt; provided that, service
of notice as required by the laws of any state in which portions of the Deed of
Trust Property may be situated shall for all purposes be deemed appropriate and
sufficient with the giving of such notice.

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

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

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

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

 

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In that regard, the following information is provided:

 

Name of Debtor:    California Resources Elk Hills, LLC, California Resources
Production Corporation, California Resources Petroleum Corporation, Southern San
Joaquin Production, Inc., California Heavy Oil, Inc., and/or Socal Holding, LLC,
as applicable Address of Debtor   

9200 Oakdale Ave., Suite 900

Los Angeles, CA 91311

Attention: Michael Preston

State of Formation/Location    Delaware Principal Place of Business of Debtor:
   Same as above Name of Secured Party:    JPMorgan Chase Bank, N.A. as
Administrative Agent Address of Secured Party:   

P.O. Box 6026

Chicago, IL 60680-6026

Owner of Record of Real Property:    California Resources Elk Hills, LLC,
California Resources Production Corporation, California Resources Petroleum
Corporation, Southern San Joaquin Production, Inc., California Heavy Oil, Inc.,
and/or Socal Holding, LLC, as applicable

Section 7.12    Exculpation Provisions. EACH OF THE PARTIES HERETO SPECIFICALLY
AGREES THAT IT HAS A DUTY TO READ THIS DEED OF TRUST; AND AGREES THAT IT IS
CHARGED WITH NOTICE AND KNOWLEDGE OF THE TERMS OF THIS DEED OF TRUST; THAT IT
HAS IN FACT READ THIS DEED OF TRUST AND IS FULLY INFORMED AND HAS FULL NOTICE
AND KNOWLEDGE OF THE TERMS, CONDITIONS AND EFFECTS OF THIS DEED OF TRUST; THAT
IT HAS BEEN REPRESENTED BY INDEPENDENT LEGAL COUNSEL OF ITS CHOICE THROUGHOUT
THE NEGOTIATIONS PRECEDING ITS EXECUTION OF THIS DEED OF TRUST; AND HAS RECEIVED
THE ADVICE OF ITS ATTORNEY IN ENTERING INTO THIS DEED OF TRUST; AND THAT IT
RECOGNIZES THAT CERTAIN OF THE TERMS OF THIS DEED OF TRUST RESULT IN ONE PARTY
ASSUMING THE LIABILITY INHERENT IN SOME ASPECTS OF THE TRANSACTION AND RELIEVING
THE OTHER PARTY OF ITS RESPONSIBILITY FOR SUCH LIABILITY. EACH PARTY HERETO
AGREES AND COVENANTS THAT IT WILL NOT CONTEST THE VALIDITY OR ENFORCEABILITY OF
ANY EXCULPATORY PROVISION OF THIS DEED OF TRUST ON THE BASIS THAT THE PARTY HAD
NO NOTICE OR KNOWLEDGE OF SUCH PROVISION OR THAT THE PROVISION IS NOT
“CONSPICUOUS.”

Section 7.13    References

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

 

18

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ARTICLE VIII

STATE SPECIFIC PROVISIONS

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

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

[SIGNATURES BEGIN NEXT PAGE]

 

19

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EXECUTED this      day of November, 2015, to be effective as of the      day of
November, 2015.

 

California Resources Elk Hills, LLC

California Resources Production Corporation

California Resources Petroleum Corporation Southern San Joaquin Production, Inc.

California Heavy Oil, Inc.

Socal Holding, LLC

By:  

 

Name:   Ivan Gaydarov Title:   Treasurer of each Trustor

ACKNOWLEDGMENT

 

A notary public or other officer completing this certificate verifies only the
identity of the individual who signed the document to which this certificate is
attached, and not the truthfulness, accuracy, or validity of that document.

 

 

State of California

County of                     )

On November     , 2015, before me,                      personally appeared Ivan
Gaydarov, Treasurer of each Trustor, who proved to me on the basis of
satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the
within instrument and acknowledged to me that he/she/they executed the same in
his/her/their authorized capacity(ies), and that by his/her/their signature(s)
on the instrument the person(s), or the entity upon behalf of which the
person(s) acted, executed the instrument.

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

WITNESS my hand and official seal.

Signature                                                                      
(Seal)

 

 

Signature Page

Deed of Trust

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EXECUTED this      day of November, 2015, to be effective as of the      day of
November, 2015.

 

JPMorgan Chase Bank, N.A. By:  

 

Name:   Title:  

ACKNOWLEDGMENT

 

A notary public or other officer completing this certificate verifies only the
identity of the individual who signed the document to which this certificate is
attached, and not the truthfulness, accuracy, or validity of that document.

 

 

State of California

County of                          )

On November     , 2015, before me,                      personally appeared
                    , who proved to me on the basis of satisfactory evidence to
be the person(s) whose name(s) is/are subscribed to the within instrument and
acknowledged to me that he/she/they executed the same in his/her/their
authorized capacity(ies), and that by his/her/their signature(s) on the
instrument the person(s), or the entity upon behalf of which the person(s)
acted, executed the instrument.

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

WITNESS my hand and official seal.

 

Signature                                        
                                   (Seal)

 

 

Signature Page

Deed of Trust

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EXHIBIT A

Oil and Gas Properties

 

Exhibit A - 1

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

EXHIBIT B

 

Exhibit B - 1

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EXHIBIT F

FORM OF CREDIT PARTY CLOSING CERTIFICATE

[NAME OF CERTIFYING CREDIT PARTY]

SECRETARY’S CERTIFICATE

November 17, 2017

Pursuant to Sections [6.2, 6.3,]3 6.5 and 6.6 the Credit Agreement, dated as of
November 17, 2017 (the “2017 Credit Agreement”) among California Resources
Corporation (the [“Company”][“Borrower”]), The Bank of New York Mellon Trust
Company, N.A., as administrative agent (the “2017 Credit Agreement
Administrative Agent”), and the lenders party thereto from time to time, and in
connection with the effectiveness of the Seventh Amendment, dated as of November
9, 2017 (the “Seventh Amendment”, and together with the 2017 Credit Agreement,
the “Credit Documents”), among the Borrower, the subsidiaries of the
[Company][Borrower] listed on the signature pages thereto (collectively, the
“Guarantors”), JPMorgan Chase Bank N.A., as administrative agent, swingline
lender and a letter of credit issuer (the “Administrative Agent”), and the
lenders party thereto, to the Credit Agreement dated as of September 24, 2014,
among the Borrower, the Guarantors, the lenders party thereto from time to time
and the Administrative Agent, the undersigned, the duly elected or appointed
[Secretary][●] of [the Company][[●], a Credit Party (the “Company”)], hereby
certifies, in such capacity (and not in his individual capacity), that:

1.    All representations and warranties made by the Company in each of the
Credit Documents to which it is a party, in each case as they relate to the
Company on the date hereof, to the knowledge of the undersigned are true and
correct in all material respects (unless such representations and warranties are
already qualified by materiality, Material Adverse Effect or a similar
qualification, in which case they are true and correct in all respects) on and
as of the date hereof (except where such representations and warranties
expressly relate to an earlier date, in which case such representations and
warranties are true and correct in all material respects (unless such
representations and warranties are already qualified by materiality, Material
Adverse Effect or a similar qualification, in which case they are true and
correct in all respects) as of such earlier date).

2.    Attached hereto as Exhibit A are true, complete and correct copies of the
[charter documents]4 of the Company. [Since the date shown on the face of the
certification of the Secretary of State of the State of Delaware attached
hereto, there have been no amendments to the [Certificate of Incorporation] of
the Company. Since such date, no proceeding has been commenced for the merger,
consolidation, dissolution or liquidation of the Company or the sale of all or
substantially all of its assets and there has not been commenced any action or
proceeding threatening the Company’s existence or which would result in the
forfeiture of the

 

3  To include in the CRC version of certificate.

4  To reflect organizational form of certifying Credit Party.

 

F-1

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[Certificate of Incorporation] of the Company. In addition, the Company has duly
and timely paid all franchise and business taxes and other fees to, and has duly
and timely filed all annual corporation franchise tax returns with, the
appropriate state agencies pursuant to applicable state law.]5

3.    Attached hereto as Exhibit B is a true, correct and complete copy of the
[By-laws]6 of the Company, as in effect on [●] and at all times through and
including the date hereof.

4.    Attached hereto as Exhibit C are true, correct and complete copies of the
resolutions adopted on November 9, 2017 by the [Board of Directors/General
Partner/Sole Member/Manager] of the Company and correct and complete copies of
the resolutions dated and November 12, 2017, adopted by the pricing committee
appointed by the Board of Directors of the [Company][Borrower], authorizing (i)
the execution, delivery and performance of the Seventh Amendment, each of the
Credit Documents (as defined in the 2017 Credit Agreement) to be executed by the
Company and the transactions related to the foregoing][adopted by the [Board of
Directors/General Partner/Sole Member/Manager] (or a duly authorized committee
thereof) of the Company, authorizing (i) the execution, delivery and performance
of the Seventh Amendment, each of the Credit Documents (as defined in the 2017
Credit Agreement) to be executed by the Company, (ii) the extensions of credit
contemplated by the 2017 Credit Agreement and (iii) the transactions related to
the foregoing. The aforementioned resolutions have not been amended, rescinded
or modified since their adoption and execution, remain in full force and effect
as of the date hereof and represent the only resolutions adopted or action taken
by, or on behalf of, the [Board of Directors/General Partner/Sole
Member/Manager] of the Company, or any committee thereof relating to the matters
described above.

5.    The Seventh Amendment, the 2017 Credit Agreement, the Second Amended and
Restated Security Agreement, dated as of the Seventh Amendment Effective Date,
among the [Company][Borrower], the other grantors party thereto and The Bank of
New York Mellon Trust Company, N.A., as collateral agent (the “Amended Security
Agreement”), the Amended and Restated Pledge Agreement, dated as of the Seventh
Amendment Effective Date, among the [Company][Borrower], the other pledgors
party thereto and The Bank of New York Mellon Trust Company, N.A., as collateral
agent (the “Amended Pledge Agreement”), the Collateral Agency Agreement, dated
as of November 17, 2017, among JPM, as Existing Senior Administrative Agent, The
Bank of New York Mellon Trust Company, N.A. as New Senior Administrative Agent,
and The Bank of New York Mellon Trust Company, N.A., as the Collateral Agent,
and acknowledged and agreed by the [Company][Borrower] and the Guarantors (the
“Collateral Agency Agreement”) and the Assignment of Deeds of Trust,
Substitution of Trustee, and Assumption Agreement, dated as of the Seventh
Amendment Effective Date, among the [Company][Borrower], the Grantors party
thereto, JPM, as Existing Senior Administrative Agent,

 

5 Not to be given for Tidelands Oil Production Company. For Tidelands Oil
Production Company, item 2 shall read: “Attached hereto as Exhibit A is a true,
complete and correct copy of the partnership agreement of the Company, as in
effect on [●] and at all times through and including the date hereof.”

6  NTD: If an LLC, Exhibit B will attach and refer to the LLCA.

 

F-2

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The Bank of New York Mellon Trust Company, N.A. as New Senior Administrative
Agent, and The Bank of New York Mellon Trust Company, N.A., as the Collateral
Agent, (the “Assignment”) have been duly authorized, executed and delivered by
the Company.

6.    Each person who, as an officer of the Company, signed the Seventh
Amendment, the 2017 Credit Agreement, the Amended Security Agreement, the
Amended Pledge Agreement, the Collateral Agency Agreement, the Assignment and
the other documents or certificates delivered by, as of or on the date hereof in
connection with the transactions contemplated hereby was duly elected and
qualified as an officer of the Company and held the office or offices indicated
thereon on the date of, and was duly authorized to take, such action, and each
signature of such signing officer is his or her genuine signature.

7.    The individuals named in Exhibit D are duly elected and qualified to sign
the Seventh Amendment, each of the Credit Documents to be executed by the
Company and any related documents on behalf of the Company as of the date
hereof, holding the offices set forth next to their names, and the signature set
forth opposite the name of each such individual is his or her genuine signature.

8.    [Attached hereto as Exhibit E is a certificate of good standing of the
Company.]7

Sullivan & Cromwell LLP may rely on this certificate in connection with the
opinions such firm is rendering pursuant to the Seventh Amendment and the 2017
Credit Agreement. Capitalized terms used but not defined herein shall have the
meanings given to such terms in the 2017 Credit Agreement.

[Remainder of Page Intentionally Left Blank]

 

7  To include in the CRC version of certificate.

 

F-3

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IN WITNESS WHEREOF, the undersigned has executed this certificate as of the date
first above written.

 

 

Name:   [            ] Title:   [            ]

The undersigned, the duly qualified [            ] of the Company DOES HEREBY
CERTIFY, in such capacity, that [            ] is the duly elected or appointed
[            ] of the Company and that the signature set forth above his name is
his true signature.

IN WITNESS WHEREOF, the undersigned has executed this certificate as of the date
first above written.

 

 

Name:   [            ] Title:   [            ]

 

Signature Page to Secretary’s Certificate of [    ]

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

Exhibit A

[Certificate of Organization/Formation/Incorporation/Limited Partnership]

[See attached.]

 

F-5

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

Exhibit B

[By-Laws/(LLC) Operating Agreement/Limited Partnership Agreement]

[See attached.]

 

F-6

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

Exhibit C

Resolutions

[See attached]

 

F-7

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

Exhibit D

Specimen Signatures

 

Name

 

Title

  Signature [        ]   [President/Vice President]   [        ]  
[Secretary/Assistant Secretary]   [        ]   [        ]   [        ]  
[        ]  

 

F-8

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Exhibit G

FORM OF ASSIGNMENT AND ACCEPTANCE AGREEMENT

This Assignment and Acceptance Agreement (the “Assignment”) is dated as of the
Effective Date set forth below and is entered into by and between [Insert name
of Assignor] (the “Assignor”) and [Insert name of Assignee] (the “Assignee”).
Capitalized terms used but not defined herein shall have the meanings given to
them in the Credit Agreement (as defined below), receipt of a copy of which is
hereby acknowledged by the Assignee. The Standard Terms and Conditions set forth
in Annex 1 attached hereto are hereby agreed to and incorporated herein by
reference and made a part of this Assignment as if set forth herein in full.

For an agreed consideration, the Assignor hereby irrevocably sells and assigns
to the Assignee, and the Assignee hereby irrevocably purchases, assumes and
accepts from the Assignor, subject to and in accordance with the Standard Terms
and Conditions and the Credit Agreement, as of the Effective Date inserted by
the Administrative Agent as contemplated below, the interest in and to all of
the Assignor’s rights and obligations under the Credit Agreement and any other
documents or instruments delivered pursuant thereto that represents the amount
and percentage interest identified below of all of the Assignor’s outstanding
rights and obligations under the respective facilities identified below
(including, to the extent included in any such facilities, letters or credit)
(the “Assigned Interest”). Such sale and assignment is without recourse to the
Assignor and, except as expressly provided in this Assignment and the Credit
Agreement, without representation or warranty by the Assignor.

 

1.    Assignor:    2.    Assignee:    3.    Borrower:    California Resources
Corporation 4.    Administrative Agent:    The Bank of New York Mellon Trust
Company, N.A., as Administrative Agent under the Credit Agreement (as defined
below). 5.    Credit Agreement:    That certain Credit Agreement, dated as of
November 17, 2017 (the “Credit Agreement”), among CALIFORNIA RESOURCES
CORPORATION, a Delaware corporation (the “Borrower”), the lenders from time to
time party thereto (the “Lenders”), GOLDMAN SACHS LENDING PARTNERS, LLC and
JPMORGAN CHASE BANK, N.A., as joint lead arrangers and joint bookrunners,
CITIGROUP GLOBAL MARKETS INC., as a bookrunner and THE BANK OF NEW YORK MELLON
TRUST COMPANY, N.A., as Administrative Agent (such terms and each other
capitalized term used but not defined herein having the meaning provided in
Article I of the Credit Agreement). 6    Assigned Interest:   

 

G-1

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Total Commitment for all

Lenders

  

Amount of
Commitment/Loans
Assigned8

  

Type of

Commitment/Loans
Assigned

  

Commitment

Percentage9

          $    $    [Term Commitment/Loans]    %

Effective Date:            , 20    [TO BE INSERTED BY ADMINISTRATIVE AGENT AND
WHICH SHALL BE THE EFFECTIVE DATE OF RECORDATION OF TRANSFER IN THE REGISTER
THEREFOR.]

 

7.   

Notice and Wire Instructions:

 

[NAME OF ASSIGNOR]

  

[NAME OF ASSIGNEE]

Notices:

  

Notices:

Attention:

  

Attention:

Telecopier:

  

Telecopier:

with a copy to:

  

with a copy to:

Attention:

  

Attention:

Telecopier:

  

Telecopier:

Wire Instructions:

  

Wire Instructions:

[                     ]

  

[                     ]

[Remainder of page intentionally left blank; signature page follows]

 

8  (1) The amount of the Commitment or Loans of the assigning Lender being
assigned pursuant to this Assignment shall not be less than $5,000,000 and
increments of $1,000,000 in excess thereof and (2) after giving effect to this
Assignment, the amount of the remaining Commitment or Loans of the assigning
Lender (determined as of the date this Assignment is delivered to the
Administrative Agent) shall not be less than $15,000,000, in each case unless
the amount of the remaining Commitment or Loans of the assigning Lender, after
giving effect to this Assignment, is zero or each of the Borrower otherwise
consents (which consents shall not be unreasonably withheld or delayed).

9  Set forth, to at least 9 decimals, as a percentage of the Commitment/Loans of
all Lenders thereunder.

 

G-2

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The terms set forth in this Assignment are hereby agreed to:

 

ASSIGNOR: [NAME OF ASSIGNOR]

By:  

 

Name:   Title:  

ASSIGNEE: [NAME OF ASSIGNEE]

By:  

 

Name:   Title:  

Signature Page

California Resources Corporation

Assignment and Acceptance Agreement

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

Acknowledged:

 

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

By:  

 

Name:   Title:  

Signature Page

California Resources Corporation

Assignment and Acceptance Agreement

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

Consented to:

 

CALIFORNIA RESOURCES CORPORATION By:  

 

Name:   Title:  

Signature Page

California Resources Corporation

Assignment and Acceptance Agreement

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

ANNEX I

STANDARD TERMS AND CONDITIONS FOR ASSIGNMENT AND ACCEPTANCE AGREEMENT

Representations and Warranties.

 

Assignor.

   The Assignor (a) represents and warrants that (i) it is the legal and
beneficial owner of the Assigned Interest, (ii) the Assigned Interest is free
and clear of any lien, encumbrance or other adverse claim and (iii) it has full
power and authority, and has taken all action necessary, to execute and deliver
this Assignment and to consummate the transactions contemplated hereby; and (b)
assumes no responsibility with respect to (i) any statements, warranties or
representations made in or in connection with any Credit Document, (ii) the
execution, legality, validity, enforceability, genuineness, sufficiency or value
of the Credit Agreement or any other instrument or document delivered pursuant
thereto, other than this Assignment (herein collectively the “Credit
Documents”), or any collateral thereunder, (iii) the financial condition of the
Borrower, any of its Subsidiaries or Affiliates or any other Person obligated in
respect of any Credit Document or (iv) the performance or observance by the
Borrower, any of its Subsidiaries or Affiliates or any other Person of any of
their respective obligations under any Credit Document.

Assignee.

   The Assignee (a) represents and warrants that (i) it has full power and
authority, and has taken all action necessary, to execute and deliver this
Assignment and to consummate the transactions contemplated hereby and to become
a Lender under the Credit Agreement, (ii) from and after the Effective Date, it
shall be bound by the provisions of the Credit Agreement and, to the extent of
the Assigned Interest, shall have the obligations of a Lender thereunder, (iii)
it has received a copy of the Credit Agreement and such other documents and
information as it has deemed appropriate to make its own credit analysis and
decision to enter into this Assignment and to purchase the Assigned Interest on
the basis of which it has made such analysis and decision, and (iv) if it is a
Non-U.S. Lender, attached to the Assignment is any documentation required to be
delivered by it pursuant to the terms of the Credit Agreement, duly completed
and executed by the Assignee; and (b) agrees that (i) it will, independently and
without reliance on the Administrative Agent, the Assignor or any other Lender,
and based on such documents and information as it shall deem appropriate at that
time, continue to make its own credit decisions in taking or not taking action
under the Credit Documents, and (ii) it will perform in accordance with their
terms all of the obligations which by the terms of the Credit Documents are
required to be performed by it as a Lender.

 

Annex 1-1

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

Payments.

   From and after the Effective Date, the Administrative Agent shall make all
payments in respect of the Assigned Interest (including payments of principal,
interest, fees and other amounts) to the Assignor for amounts which have accrued
to but excluding the Effective Date and to the Assignee for amounts which have
accrued from and after the Effective Date.

General Provisions.

   This Assignment shall be binding upon, and inure to the benefit of, the
parties hereto and their respective successors and assigns. This Assignment may
be executed in any number of counterparts, which together shall constitute one
instrument. Delivery of an executed counterpart of a signature page of this
Assignment by telecopy shall be effective as delivery of a manually executed
counterpart of this Assignment. This Assignment shall be governed by, and
construed in accordance with, the internal laws of the State of New York.

 

Annex 1-2

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

EXHIBIT H

FORM OF PROMISSORY NOTE

New York, New York

[                ], 201[    ]

FOR VALUE RECEIVED, the undersigned, CALIFORNIA RESOURCES CORPORATION, a
Delaware corporation (the “Borrower”), hereby unconditionally promises to pay to
the order of [                    ] or its registered assigns (the “Lender”), at
the Administrative Agent’s Office or such other place as THE BANK OF NEW YORK
MELLON TRUST COMPANY, N.A. (the “Administrative Agent”) shall have specified, in
Dollars and in immediately available funds, in accordance with Section 5.3 of
the Credit Agreement (as defined below; capitalized terms used and not otherwise
defined herein shall have the meanings assigned to such terms in Article I of
the Credit Agreement) on the Maturity Date the aggregate unpaid principal
amount, if any, of all advances made by the Lender to the Borrower in respect of
Loans pursuant to the Credit Agreement. The Borrower further promises to pay
interest in like money at such office on the unpaid principal amount hereof from
time to time outstanding at the rates per annum and on the dates specified in
Section 2.9 of the Credit Agreement.

This Promissory Note is one of the promissory notes referred to in Section
2.6(e) of that certain Credit Agreement, dated as of November 17, 2017 (as
amended, restated, supplemented or otherwise modified from time to time, the
“Credit Agreement”), among Borrower, the lenders from time to time party thereto
(the “Lenders”), GOLDMAN SACHS LENDING PARTNERS, LLC and JPMORGAN CHASE BANK,
N.A., as joint lead arrangers and joint bookrunners, CITIGROUP GLOBAL MARKETS
INC., as a bookrunner and THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A., as
Administrative Agent (such terms and each other capitalized term used but not
defined herein having the meaning provided in Article I of the Credit
Agreement).

This Promissory Note is subject to, and the Lender is entitled to the benefits
of, the provisions of the Credit Agreement, and the Loans evidenced hereby are
guaranteed and secured as provided therein and in the other Credit Documents.
The Loans evidenced hereby are subject to prepayment prior to the Maturity Date
in whole or in part, as provided in the Credit Agreement.

All parties now and hereafter liable with respect to this Promissory Note,
whether maker, principal, surety, guarantor, endorser or otherwise, hereby waive
diligence, presentment, demand, protest and notice of any kind whatsoever in
connection with this Promissory Note. No failure to exercise and no delay in
exercising, on the part of the Administrative Agent or the Lender, any right,
remedy, power or privilege hereunder or under the Credit Documents shall operate
as a waiver thereof, nor shall any single or partial exercise of any right,
remedy, power or privilege hereunder or thereunder preclude any other or further
exercise thereof or the exercise of any other right, remedy, power or privilege.
A waiver by the Administrative Agent or the Lender of any right, remedy, power
or privilege hereunder or under any Credit Document on any one occasion shall
not be construed as a bar to any right or remedy that the Administrative Agent
or the Lender would otherwise have on any future occasion. The rights, remedies,
powers and privileges herein provided are cumulative, may be exercised singly or
concurrently and are not exclusive of any rights, remedies, powers and
privileges provided by law.

 

H-1

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All payments in respect of the principal of and interest on this Promissory Note
shall be made to the Person recorded in the Register as the holder of this
Promissory Note, as described more fully in Section 2.6 of the Credit Agreement,
and such Person shall be treated as the Lender hereunder for all purposes of the
Credit Agreement.

[Remainder of page intentionally left blank]

 

H-2

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

THIS PROMISSORY NOTE SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN
ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.

 

CALIFORNIA RESOURCES CORPORATION

By:  

 

Name:

 

Title:

 

Promissory Note

California Resources Corporation

Credit Agreement

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

EXHIBIT I

FORM OF FIRST OUT COLLATERAL AGENCY AGREEMENT

[See attached.]

 

I-1

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

Execution Version

COLLATERAL AGENCY AGREEMENT

among

JPMORGAN CHASE BANK, N.A.,

as Existing Senior Administrative Agent,

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

as New Senior Administrative Agent,

The Several Grantors From Time To Time Party Hereto

and

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

as Collateral Agent

Dated as of November 17, 2017

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

COLLATERAL AGENCY AGREEMENT

THIS COLLATERAL AGENCY AGREEMENT (as amended, supplemented, amended and restated
or otherwise modified from time to time, this “Agreement”), executed as of
November 17, 2017 and effective as of the Effective Date (as defined below), is
among JPMORGAN CHASE BANK, N.A., (“JPMorgan”) as administrative agent under the
Existing Senior Credit Agreement (in such capacity and together with its
successors in such capacity, the “Existing Senior Administrative Agent”), on
behalf of itself, the Existing Senior Lenders and the other Existing Senior
Secured Parties; THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A., as
administrative agent (in such capacity and together with its successors and any
other administrative agent appointed by under the New Senior Credit Documents,
in such capacity, each a “New Senior Administrative Agent” and collectively, the
“New Senior Administrative Agents”), on behalf of itself, the New Senior Lenders
and the other New Senior Secured Parties; each Additional Hedge Counterparty
that becomes a party hereto after the date hereof; each of the undersigned
grantors; the Additional Grantors; and THE BANK OF NEW YORK MELLON TRUST
COMPANY, N.A., not in its individual capacity, but solely as collateral agent
(in such capacity and together with its successors in such capacity, the
“Collateral Agent”).

RECITALS

1.    California Resources Corporation, a Delaware corporation (the “Borrower”),
has entered into that certain Credit Agreement dated as of September 24, 2014
(such Credit Agreement, as from time to time amended, supplemented, restated,
modified, Replaced or refinanced in whole or in part, the “Existing Senior
Credit Agreement”), among the Borrower, the Existing Senior Administrative
Agent, the Existing Senior Lenders and the other Existing Senior Secured Parties
from time to time party thereto, pursuant to which the Existing Senior Lenders
and the other Existing Senior Secured Parties have agreed to advance funds and
extend credit to the Borrower.

2.    Of even date herewith, the Borrower has entered into a Senior Secured Term
Loan Agreement (as from time to time amended, supplemented, restated, modified,
replaced or refinanced in whole or in part, the “New Senior Credit Agreement”),
among the Borrower, The Bank of New York Mellon Trust Company, N.A., as New
Senior Administrative Agent and the New Senior Lenders from time to time party
thereto, pursuant to which the New Senior Lenders have agreed to make term loans
to the Borrower in an initial aggregate principal amount of $1,300,000,000.

3.    Pursuant to that certain Assignment of Deeds of Trust, Substitution of
Trustee, and Assumption Agreement, dated as of the date hereof, the Existing
Senior Administrative Agent has assigned all powers of attorney, liens, or
security interests and all other rights and interests granted to it under the
Security Documents (as defined under the Existing Senior Credit Agreement) to
the Collateral Agent for the benefit of each of the Secured Parties.

4.    Of even date herewith, the undersigned Grantors and the Collateral Agent
have entered into that certain Second Amended and Restated Security Agreement
and that certain Amended and Restated Pledge Agreement, and that certain
Guarantee (each as from time to time amended, supplemented, restated, modified,
replaced, collectively, the “GCA”) which shall be effective as of the date
hereof.

 

2

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

5.    Within the timeline set forth in the New Senior Credit Agreement, certain
of the undersigned Grantors and the Collateral Agent shall enter into certain
mortgage amendments (the “Mortgage Amendments”), which shall be effective as of
such future date. In addition, certain of the undersigned Grantors have entered
into, or may from time to time enter into, additional Collateral Documents.

6.    The GCA has been amended as of even date herewith such that the Existing
Senior Lenders shall retain their security interest in the Collateral (the
“Priority Lien”) while the New Senior Lenders shall join into and share in the
Priority Lien subject to the terms of this Agreement.

7.    The GCA provides and each of the Mortgage Amendments when executed shall
provide, among other things, that the parties to the Existing Senior Credit
Agreement and the New Senior Credit Agreement shall set forth in this Agreement
their respective rights and remedies with respect to the Collateral and the
appointment of The Bank of New York Mellon Trust Company, N.A., not in its
individual capacity, but solely as Collateral Agent.

NOW, THEREFORE, in consideration of the foregoing, the mutual covenants and
obligations herein set forth and for other good and valuable consideration, the
receipt and sufficiency of all of which are hereby acknowledged, the parties
agree as follows:

ARTICLE 1

DEFINITIONS AND TERMS OF CONSTRUCTION

1.1.    Certain Definitions. When used herein, and unless otherwise defined
herein, terms and expressions defined in the GCA or in the Existing Senior
Credit Agreement shall have the meanings specified in the GCA or the Existing
Senior Credit Agreement, as applicable; and the following additional terms when
used in this Agreement, including its preamble and recitals, shall, except as
otherwise set forth in this Section or where the context otherwise requires,
have the following meanings (such meanings to be equally applicable to the
singular and plural forms thereof):

“Accounts” has the meaning assigned to such term in Section 3.5(a).

“Additional Hedge Counterparty” means the hedge counterparty with respect to
Hedging Obligations that has executed a Collateral Agency Hedge Counterparty
Joinder.

“Administrative Agents” means, collectively, the Existing Senior Administrative
Agent and the New Senior Administrative Agents.

“Agents” means, collectively, the Administrative Agents and any Additional Hedge
Counterparty.

“Agreement” has the meaning set forth in the preamble hereto.

 

3

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“Allocation Provisions” means the provisions set forth in Section 3.6.

“Borrower” has the meaning set forth in the recitals hereto.

“Business Day” means any day other than a Saturday, Sunday or other day on which
commercial banks are authorized to close under the laws of, or are in fact
closed in, the state of New York.

“Collateral Agency Hedge Counterparty Joinder” means with respect to the
provisions of this Agreement relating to any Hedging Obligations, an agreement
substantially in the form of Exhibit A.

“Collateral Agent” has the meaning set forth in the preamble hereto.

“Collateral Documents” means, collectively, the “Security Documents” (as defined
in the Senior Credit Agreements).

“DIP Financing” has the meaning assigned to such term in Section 3.08(b).

“DIP Financing Liens” has the meaning assigned to such term in Section 3.08(b).

“DIP Lenders” has the meaning assigned to such term in Section 3.08(b).

“Discharge of Existing Senior Obligations” means the occurrence of all of the
following:

(a)    termination or expiration of all commitments to extend credit that would
constitute Existing Senior Obligations;

(b)    payment in full in cash of the principal of and interest and premium (if
any) on all Existing Senior Obligations (other than any undrawn letters of
credit), including the payment in full in cash of all Post-Petition Interest
with respect to the Existing Senior Obligations and, for the avoidance of doubt,
all amounts drawn under letters of credit constituting Existing Senior
Obligations for which the issuing bank has not been reimbursed by the Borrower;

(c)    discharge or cash collateralization in an amount equal to 105% of the sum
of the aggregate undrawn amount of all then outstanding letters of credit
constituting Existing Senior Obligations and the aggregate fronting and similar
fees which will accrue thereon through the stated expiry of such letters of
credit;

(d)    payment of all obligations under Hedge Agreements constituting Hedging
Obligations then due and payable (or, with respect to any particular Hedge
Agreement, termination of such agreement and payment in full in cash of all
obligations thereunder or such other arrangements as have been made by the
counterparty thereto (and communicated to the Existing Senior Administrative
Agent) pursuant to the terms of the Existing Senior Credit Agreement); and

 

4

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

(e)    payment in full in cash of all other Existing Senior Obligations,
including without limitation, any obligations under Secured Cash Management
Agreements, that are outstanding and unpaid at the time the Existing Senior
Obligations are paid in full in cash (other than any obligations for taxes,
costs, indemnifications, reimbursements, damages and other liabilities in
respect of which no claim or demand for payment has been made at or prior to
such time);

provided that, if, at any time after the Discharge of Existing Senior
Obligations has occurred, the Borrower enters into any Existing Senior Credit
Document evidencing an Existing Senior Obligation, then such Discharge of
Existing Senior Obligations shall automatically be deemed not to have occurred
for all purposes of this Agreement with respect to such new Existing Senior
Obligations (other than with respect to any actions taken as a result of the
occurrence of such first Discharge of Existing Senior Obligations), and the
obligations under such Existing Senior Credit Document shall automatically and
without any further action be treated as Existing Senior Obligations for all
purposes of this Agreement, including for purposes of the order of application
of the proceeds of such Collateral set forth in Section 3.6, any New Senior
Obligations shall be deemed to have been at all times New Senior Obligations and
at no time Existing Senior Obligations.

“Effective Date” means the date on which (i) the conditions precedent to the
“Closing Date” under the New Senior Credit Agreement have occurred and (ii) the
conditions precedent to the “Effective Date” under the Seventh Amendment have
occurred.

“Enforcement Threshold” means $50,000,000.

“Excess Existing Senior Obligations” means Obligations constituting Existing
Senior Obligations for the amount of indebtedness (including letters of credit
and reimbursement obligations) under the Existing Senior Credit Agreement and/or
any other agreement pursuant to which Existing Senior Obligations have been
issued to the extent that such Obligations for principal, letters of credit and
reimbursement obligations are in excess of the amount in clause (a) of the
definition of “Existing Senior Priority Cap.”

“Existing Senior Administrative Agent” has the meaning set forth in the preamble
hereto.

“Existing Senior Credit Agreement” has the meaning set forth in the recitals
hereto.

“Existing Senior Credit Documents” means the “Credit Documents” under the
Existing Senior Credit Agreement.

“Existing Senior Lenders” means the Lenders under the Existing Senior Credit
Agreement.

“Existing Senior Obligations” means all advances to, and debts, liabilities,
obligations, covenants and duties of, any Grantor described in clause (a)(i) of
the definition of “Obligations” in the Existing Senior Credit Agreement.

“Existing Senior Priority Cap” means, as of any date, the sum of (a) the
positive difference, if any, between (I) the greater of (i) $4.0 billion,
(ii) the Borrowing Base in effect at

 

5

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the time of incurrence of such indebtedness and (iii) 15% of the Consolidated
Total Assets of the Borrower and the Subsidiaries and (II) the lesser of (x) the
principal amount outstanding under the New Senior Credit Agreement (as defined
in the First Lien Intercreditor Agreement) and the New Senior Credit Agreement
as of such date, including any capitalized interest paid in-kind as of such date
and all interest and outstanding fees and fees, indemnifications, reimbursements
and expenses as may be due pursuant to the terms of any New Senior Credit
Agreement or New Senior Credit Agreement, and (y) $2.25 billion, plus (b) the
amount of all Hedge Obligations arising under Secured Hedge Agreements, plus
(c) the amount of all Cash Management Obligations arising under Secured Cash
Management Agreements, plus (d) the amount of accrued and unpaid interest with
respect to the principal amount described in clause (a) above (excluding any
interest paid-in-kind) and outstanding fees, to the extent such Obligations
constitute Existing Senior Obligations, plus (e) fees, indemnifications,
reimbursements and expenses as may be due pursuant to the terms of any Existing
Senior Credit Documents.

“Existing Senior Secured Parties” means the “Secured Parties” under the Existing
Senior Credit Agreement.

“GCA” has the meaning set forth in the recitals hereto.

“Indemnitee” has the meaning set forth in Section 4.1(b).

“Insolvency or Liquidation Proceeding” means:

(a)    any case commenced by or against the Borrower or any other Grantor under
the Bankruptcy Code or any other Bankruptcy Law, any other proceeding for the
reorganization, recapitalization or adjustment or marshalling of the assets or
liabilities of the Borrower or any other Grantor, any receivership or assignment
for the benefit of creditors relating to the Borrower or any other Grantor or
any similar case or proceeding relative to the Borrower or any other Grantor or
its creditors, as such, in each case whether or not voluntary;

(b)    any liquidation, dissolution, marshalling of assets or liabilities or
other winding up of or relating to the Borrower or any other Grantor, in each
case whether or not voluntary and whether or not involving bankruptcy or
insolvency; or

(c)    any other proceeding of any type or nature including any composition
agreement in which substantially all claims of creditors of the Borrower or any
other Grantor are determined and any payment or distribution is or may be made
on account of such claims.

“New Senior Administrative Agents” has the meaning set forth in the preamble
hereto.

“New Senior Credit Agreement” has the meaning set forth in the recitals hereto.

“New Senior Credit Documents” means the “Credit Documents” under the New Senior
Credit Agreement and any other debt documents governing New Senior Obligations.

“New Senior Lenders” means the Lenders under the New Senior Credit Agreement.

 

6

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“New Senior Obligation Purchasers” has the meaning assigned to such term in
Section 3.10(a).

“New Senior Obligations” means the Indebtedness described in Section 11.1(bb) of
the Existing Senior Credit Agreement.

“New Senior Secured Parties” means the “Secured Parties” or other term of
similar import under the New Senior Credit Documents.

“Post-Petition Interest” means any interest, fees, expenses or other amounts
that accrues or would have accrued after the commencement of any Insolvency or
Liquidation Proceeding, whether or not allowed or allowable in any such
Insolvency or Liquidation Proceeding.

“Recovery” has the meaning assigned to such term in Section 3.11.

“Related Parties” means, with respect to any Person, such Person’s affiliates
and the partners, directors, trustees, officers, employees, agents and advisors
of such Person and of such Person’s affiliates.

“Replaces” means, in respect of any agreement or facility with reference to the
Existing Senior Credit Agreement or the Existing Senior Obligations, that such
agreement or facility refunds, refinances or replaces the Existing Senior Credit
Agreement or the Existing Senior Obligations in whole and that all commitments
thereunder are terminated, or, to the extent permitted by the terms of the
Existing Senior Credit Agreement, in part.

“Secured Credit Documents” means collectively the Existing Senior Credit
Documents and the New Senior Credit Documents.

“Secure Hedging Obligations” has the meaning given to the term “Hedging
Obligations” in the Existing Senior Credit Agreement.

“Secured Obligations” means the Existing Senior Obligations and the New Senior
Obligations.

“Secured Parties” means the Existing Senior Secured Parties and the New Senior
Secured Parties.

“Senior Credit Agreements” means the Existing Senior Credit Agreement and the
New Senior Credit Agreement.

“Standstill Period” has the meaning assigned to such term in Section 3.5(b).

1.2.    Other Interpretive Provisions. With reference to this Agreement, unless
otherwise specified herein:

(a)    The definitions of terms herein shall apply equally to the singular and
plural forms of the terms defined. Whenever the context may require, any pronoun
shall include the corresponding masculine, feminine and neuter forms. The words
“include,”

 

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“includes” and “including” shall be deemed to be followed by the phrase “without
limitation.” The word “will” shall be construed to have the same meaning and
effect as the word “shall.” Unless the context requires otherwise, (i) any
definition of or reference to any agreement, instrument or other document 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 herein
or in any other Secured Credit Document), (ii) any reference herein to any
Person shall be construed to include such Person’s successors and assigns,
(iii) the words “herein,” “hereof” and “hereunder,” and words of similar import
when used in any Secured Credit Document, shall be construed to refer to such
Secured Credit Document in its entirety and not to any particular provision
thereof, (iv) all references in a Secured Credit Document to Articles, Sections,
Exhibits and Schedules shall be construed to refer to Articles and Sections of,
and Exhibits and Schedules to, the Secured Credit Document in which such
references appear, (v) any reference to any law shall include all statutory and
regulatory provisions consolidating, amending, replacing or interpreting such
law and any reference to any law or regulation shall, unless otherwise
specified, refer to such law or regulation as amended, modified or supplemented
from time to time and (vi) the words “asset” and “property” shall be construed
to have the same meaning and effect and to refer to any and all tangible and
intangible assets and properties, including cash, securities, accounts and
contract rights.

(b)    In the computation of periods of time from a specified date to a later
specified date, the word “from” means “from and including;” the words “to” and
“until” each mean “to but excluding;” and the word “through” means “to and
including.”

(c)    Section headings herein are included for convenience of reference only
and shall not affect the interpretation of this Agreement.

ARTICLE 2

THE COLLATERAL AGENT

2.1.    Appointment and Authority. Each Agent hereby appoints The Bank of New
York Mellon Trust Company, N.A. to act on its behalf as the Collateral Agent
hereunder and under the Collateral Documents to which the Collateral Agent is a
party and authorizes the Collateral Agent to take such actions on its behalf as
are delegated to the Collateral Agent by the terms hereof or thereof.

2.2.    Exculpatory Provisions. The Collateral Agent shall not have any duties
or obligations except those expressly set forth herein and in the Collateral
Documents to which it is a party. Without limiting the generality of the
foregoing, the Collateral Agent:

(a)    shall not be subject to any fiduciary duty, and no implied covenants or
duties shall be read into this Agreement or into any other document against the
Collateral Agent, regardless of whether a default under the Secured Credit
Documents has occurred and is continuing;

 

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(b)    shall not have any duty to take any discretionary action or exercise any
discretionary powers;

(c)    shall not have any duty to disclose, and shall not be liable for the
failure to disclose, any information relating to the Borrower or any of its
affiliates that is communicated to or obtained by the Person serving as the
Collateral Agent or any of its affiliates in any capacity;

(d)     shall have no responsibility for (i) perfecting, maintaining,
monitoring, preserving or protecting the security interest or lien granted under
this Agreement, any other Collateral Document or any agreement or instrument
contemplated hereby or thereby, or the continuation of the creation or
perfection, of any security interest or other lien on any property, (ii) the
maintenance or upkeep of any property, (iii) any description of any property in
any document, (iv) whether such description reflects correctly the property in
which the Secured Parties intend the Collateral Agent to have a security
interest or other lien under the Collateral Documents, (v) providing,
maintaining, monitoring or preserving insurance on or the payment of taxes with
respect to any of the Collateral, or (vi) the filing, re-filing, recording,
re-recording or continuing of any document, financing statement, mortgage or
other document in any public office at any time;

(e)    shall not be required to become (whether legally (or of record) or
beneficially or both) a member of any limited liability company, partner of any
partnership, shareholder of any corporation or title holder or owner with
respect to any other property in connection with the exercise of any remedy with
respect to collateral security; nor shall it be required to qualify in any
jurisdiction in which it is not presently qualified to perform its obligations
as Collateral Agent;

(f)    shall not be liable for interest on any money received by it or required
to segregate any funds held by it pursuant hereto or to the Collateral Documents
from other funds, except to the extent required by law;

(g)    shall not be liable for any action it takes or omits to take in good
faith that it believes to be authorized or within its rights or powers conferred
upon it by this Agreement or the Collateral Documents;

(h)    in the event of any dispute concerning any funds held by it hereunder or
under the Collateral Documents, may deposit such funds with any court having
jurisdiction in an interpleader proceeding and, following such deposit, shall
have no further liability, duty or obligation with respect to such funds;

(i)    shall not be responsible or liable for any failure or delay in the
performance of its obligations under this Agreement or the other Collateral
Documents arising out of or caused, directly or indirectly, by circumstances
beyond its reasonable control, including, without limitation, acts of God;
earthquakes; fire; flood; terrorism; wars, terrorism and military disturbances;
sabotage; epidemics; riots; business interruptions; loss or malfunctions of
utilities, computer (hardware or software) or communication services; accidents;
labor disputes; acts of civil or military authority and governmental action; and

 

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(j)    shall not be responsible for or liable for special, punitive, indirect,
or consequential loss or damage of any kind whatsoever (including, but not
limited to, loss of profit) irrespective of whether the Collateral Agent has
been advised of the likelihood of such loss or damage and regardless of the form
of action.

The Collateral Agent shall not be liable for any action taken or not taken by it
(i) with the consent or at the request of the Administrative Agents or (ii) in
the absence of its own gross negligence or willful misconduct. The Collateral
Agent shall be deemed not to have knowledge of any default under the Secured
Credit Documents unless and until written notice describing such default is
given to the Collateral Agent by the Borrower or an Agent.

The Collateral Agent shall be fully justified in failing or refusing to take any
action under this Agreement or any other Collateral Document unless the
Collateral Agent shall first receive such written direction or consent of an
Administrative Agent (as set forth in Section 3.2(b)). No provision of this
Agreement or any other Collateral Document or any agreement or instrument
contemplated hereby or thereby shall require any Agent to: (i) expend or risk
its own funds or provide indemnities in the performance of any of its duties
hereunder or the exercise of any of its rights or power or (ii) otherwise incur
any financial liability in the performance of its duties or the exercise of any
of its rights or powers. Delivery of any reports, information and documents to
the Collateral Agent is for informational purposes only and the Collateral
Agent’s receipt of such shall not constitute constructive notice of any
information contained therein or determinable from information contained
therein, including the Borrower’s compliance with any of its covenants
hereunder. The Collateral Agent will not be responsible for the existence,
genuineness or value of any of the Collateral.

In the event that the Collateral Agent is required to acquire title to an asset
for any reason, or take any managerial action of any kind in regard thereto, in
order to carry out any fiduciary or trust obligation for the benefit of another,
which in the Collateral Agent’s sole discretion may cause it to be considered an
“owner or operator” under any environmental laws or otherwise cause it to incur,
or be exposed to, any environmental liability or any liability under any other
federal, state or local law, the Collateral Agent reserves the right, instead of
taking such action, either to resign as Collateral Agent or to arrange for the
transfer of the title or control of the asset to a court appointed receiver. No
Collateral Agent will be liable to any person for any environmental liability or
any environmental claims or contribution actions under any federal, state or
local law, rule or regulation by reason of the Collateral Agent’s actions and
conduct as authorized, empowered and directed hereunder or relating to any kind
of discharge or release or threatened discharge or release of any hazardous
materials into the environment.

The Collateral Agent shall not be responsible for or have any duty to ascertain
or inquire into (i) any statement, warranty or representation made by any
Secured Party or any Grantor in or in connection with this Agreement or any
other Secured Credit Document, (ii) the contents of any notice, instruction,
certificate, report or other document delivered by any Secured Party or any
Grantor hereunder (whether pursuant to Section 2.3 or 3.1 hereof or otherwise)
or thereunder or in connection herewith or therewith, (iii) the performance or
observance of any of the

 

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covenants, agreements or other terms or conditions set forth herein or therein
or the occurrence of any default under a Secured Credit Document or (iv) the
validity, enforceability, effectiveness or genuineness of this Agreement, any
other Secured Credit Document or any other agreement, instrument or document.

2.3.    Reliance by Collateral Agent. The Collateral Agent shall be entitled to
rely upon, and shall not incur any liability for relying upon, any notice,
request, certificate, consent, statement, instrument, document or other writing
(including any electronic message, Internet or intranet website posting or other
distribution) believed by it to be genuine and to have been signed, sent or
otherwise authenticated by the proper Person. The Collateral Agent also may rely
upon any statement made to it orally or by telephone and believed by it to have
been made by the proper Person, and shall not incur any liability for relying
thereon. The Collateral Agent, at the Grantors’ expense, may consult with legal
counsel (who may be counsel for the Borrower), independent accountants and other
experts selected by it, and shall not be liable for any action taken or not
taken by it in accordance with the advice of any such counsel, accountants or
experts.

2.4.    Delegation of Duties. The Collateral Agent may perform any and all of
its duties and exercise its rights and powers hereunder or under any other
Collateral Document by or through any one or more sub-agents appointed by the
Collateral Agent, and the Collateral Agent shall not be responsible for the
misconduct or negligence of any such agent or sub-agent appointed with due care.
The Collateral Agent and any such sub-agent may perform any and all of its
duties and exercise its rights and powers by or through their respective Related
Parties, and the rights, protections and immunities granted to the Collateral
Agent shall inure to the benefit of such Related Parties.

Notwithstanding any other provision of this Agreement or the Collateral
Documents, upon receipt of any instruction from any Administrative Agent to take
any action hereunder, instead of taking such action itself, the Collateral Agent
may appoint such Administrative Agent to take such action on behalf and as a
sub-agent of the Collateral Agent, and such Administrative Agent will accept
such appointment provided that such Administrative Agent shall not have any duty
to take any discretionary action or exercise any discretionary powers, except
discretionary rights and powers that the Administrative Agent is required to
exercise as directed in writing by the Collateral Agent, provided that such
Administrative Agent shall not be required to take any action that, in its
opinion or the opinion of its counsel, may expose such Administrative Agent to
liability or that is contrary to any Secured Credit Document, other agreement or
applicable law. Following such appointment, the Collateral Agent shall have no
further responsibility to take action itself with respect to such instruction
(except through such sub-agent), and the Collateral Agent shall have no
responsibility or liability for any cost or expense incurred by such
Administrative Agent in the course of acting as the Collateral Agent’s
sub-agent, nor shall the Collateral Agent have any responsibility or liability
for any misconduct or negligence on the part of the Administrative Agent.

2.5.    Resignation of Collateral Agent. Subject to the appointment of a
successor Collateral Agent as provided in this Section and the acceptance of
such appointment by the successor Collateral Agent, the Collateral Agent may at
any time give notice of its resignation to the Administrative Agents and the
Borrower. Upon receipt of any such notice of resignation, the

 

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Administrative Agents shall have the right, in consultation with the Borrower
unless an Event of Default has occurred and is continuing, to appoint a
successor, which shall be a bank with an office in New York, or an affiliate of
any such bank with an office in New York. If no such successor shall have been
so appointed by the Administrative Agents and shall have accepted such
appointment within 30 days after the retiring Collateral Agent gives notice of
its resignation, then the retiring Collateral Agent may on behalf of the Secured
Parties, appoint a successor Collateral Agent meeting the qualifications set
forth above or may petition any court of competent jurisdiction for the
appointment of a successor Collateral Agent. The Collateral Agent will fulfill
its obligations hereunder until a successor Collateral Agent meeting the
requirements of this Section 2.5 has accepted its appointment as Collateral
Agent and the provisions of this Section 2.5 have been satisfied.
Notwithstanding the foregoing, the Collateral Agent may be removed upon 30 days
notice for any reason at the discretion of the Administrative Agents, and the
Administrative Agents shall assume and perform all of the duties of the
Collateral Agent hereunder until such time, if any, as the Administrative Agents
appoint a successor agent as provided for above. Upon the acceptance of a
successor’s appointment as Collateral Agent hereunder, such successor shall
succeed to and become vested with all of the rights, powers, privileges and
duties of the retiring Collateral Agent, and the retiring Collateral Agent shall
be discharged from all of its duties and obligations as Collateral Agent
hereunder or under the other Collateral Documents. The fees payable by the
Borrower to a successor Collateral Agent shall be the same as those payable to
its predecessor unless otherwise agreed between the Borrower and such successor.
After the retiring Collateral Agent’s resignation hereunder and under the other
Collateral Documents, the provisions of this Article and Section 4.1 shall
continue in effect for the benefit of such retiring Collateral 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 Collateral Agent was
acting as Collateral Agent.

2.6.    Successor Collateral Agent by Merger, etc. If The Bank of New York
Mellon Trust Company, N.A. consolidates, merges or converts into, or transfers
all or substantially all of its corporate trust business to, another corporation
or other entity, the successor corporation or other entity without any further
act shall be the successor Collateral Agent, provided that, in the case of a
transfer of all or substantially all of its corporate trust business to another
corporation or other entity, the transferee expressly assumes all of the
Collateral Agent’s rights, benefits, duties and obligations hereunder.

2.7.    Non-Reliance on Collateral Agent. Each Agent and each other Secured
Party acknowledges that it will, independently and without reliance upon the
Collateral Agent or any other Agent or any of their Related Parties and based on
such documents and information as it shall from time to time deem appropriate,
continue to make its own decisions in taking or not taking action under or based
upon this Agreement, any other Secured Credit Document or any related agreement
or any document furnished hereunder or thereunder.

2.8.    Guaranty and Collateral Matters. Collateral may be released from the
lien and security interest created by the Collateral Documents at any time or
from time to time in accordance with the provisions of the Collateral Documents
or as provided by the other Secured Credit Documents. Upon the request of the
Borrower and the direction at the time by an Administrative Agent, in connection
with any transaction otherwise permitted under the Secured Credit Documents (as
evidenced by an opinion of counsel from the Borrower on which the

 

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Collateral Agent may conclusively rely), the Collateral Agent will release
(a) Collateral that is sold, conveyed or disposed of (or whose owner ceases to
be a subsidiary) and (b) Collateral of Guarantors that cease to be Grantors or
otherwise cease to be required to be Guarantors under the Secured Credit
Documents, in each case, pursuant to a transaction permitted by this Agreement
and the Secured Credit Documents (evidenced by the aforesaid opinion of counsel
on which the Collateral Agent shall rely). Upon receipt of such request and
direction, the Collateral Agent shall execute, deliver or acknowledge any
necessary or proper instruments delivered to it and reasonably request of it
relating to the termination, satisfaction or release to release any liens on
Collateral that is disposed of (or whose owner ceases to be a subsidiary) or on
Collateral of Guarantors that cease to be Grantors or otherwise cease to be
required to be Guarantors under the Secured Credit Documents, in each case,
pursuant to a transaction permitted by the Secured Credit Documents.    

2.9.    Compensation. The Grantors jointly and severally will pay to the
Collateral Agent for its acceptance of this Agreement and services hereunder and
under the Collateral Documents such compensation as Borrower and the Collateral
Agent shall from time to time agree in writing.

ARTICLE 3

COLLATERAL MATTERS

3.1.    Information from Combined Lenders. From time to time following notice of
any instructions given to the Collateral Agent under Section 3.5, or upon the
request of the Collateral Agent, each Agent (including each Additional Hedge
Counterparty) shall promptly provide the Collateral Agent with a written
statement of the amount of the Secured Hedging Obligations held by it or the
Secured Obligations owed to the Secured Parties on whose behalf it acts (as
applicable) together with information calculating such amount in reasonable
detail.

3.2.    Election to Pursue Remedies.

(a)    The amounts payable by the Borrower to each Secured Party at any time
under any of the Secured Credit Documents to which such Secured Party is a party
shall be separate and independent debts. Each Agent agrees that each Secured
Party shall be entitled to enforce any right arising out of the applicable
Secured Credit Documents to which it is a party, subject to the terms hereof and
thereof. For the avoidance of doubt and subject to the terms of the applicable
Secured Credit Documents, any Secured Party may cancel its commitment, if
applicable, under any applicable Secured Credit Document or accelerate any
obligations or any portion thereof owed to such Secured Party. Notwithstanding
anything to the contrary in the Secured Credit Documents or Collateral
Documents, no Secured Party other than the Collateral Agent or its sub-agent
shall have the right individually to realize upon any liens granted under the
Collateral Documents or to otherwise enforce or exercise any remedy against the
Collateral in respect of the Secured Credit Documents, it being understood and
agreed that such remedies may be exercised only by the Collateral Agent for the
benefit of Secured Parties.

(b)    Subject to Sections 3.3, 3.4 and 3.5, at the direction of an
Administrative Agent, the Collateral Agent shall take itself or through its
agent any and all actions

 

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provided for in the Secured Credit Documents or Collateral Documents relating to
the pursuit of remedies, including the foreclosure or disposition of Collateral,
if any, pursuant to this Article. Each Agent (including each Additional Hedge
Counterparty) agrees that it will undertake to perform, and comply with, any
instructions provided to it by the Collateral Agent, provided, that such
instructions are not inconsistent with, or contrary to, the terms and provisions
of this Agreement and provided that such Agent shall not have any duty to take
any discretionary action or exercise any discretionary powers, except
discretionary rights and powers that such Agent is required to exercise as
directed in writing by the Collateral Agent, provided that such Agent shall not
be required to take any action that, in its opinion or the opinion of its
counsel, may expose such Agent to liability or that is contrary to any Secured
Credit Document, other agreement or applicable law. For the avoidance of doubt,
in no event shall the Collateral Agent have any responsibility or liability for
any negligence or misconduct on the part of any Agent appointed by it hereunder
or under the Collateral Documents.

3.3.    Duty of the Collateral Agent.

Beyond its duties expressly provided under this Agreement or in any other
Collateral Document and its duties to account to the Secured Parties and/or the
Grantors for monies and other property received by the Collateral Agent
hereunder or under any other Collateral Document or Secured Credit Document, the
Collateral Agent shall not have any implied duty as to any Person or property
(whether or not the same constitutes Collateral) in its possession or control or
in the possession or control of any of its agents or nominees, or any income
thereon or as to the preservation of rights against prior parties or any other
rights pertaining thereto.

3.4.    Release of Amounts Held As Cash Collateral. If (a) any amounts are held
on deposit with any Existing Senior Secured Party as cash collateral for any
Senior Secured Obligation in respect of Letters of Credit (as defined in the
Existing Senior Credit Agreement), (b) such Letter of Credit has been cancelled
or otherwise terminated and (c) any Event of Default exists, then any such funds
shall be distributed to the Existing Senior Administrative Agent.

3.5.    Enforcement of Priority Liens.

(a)    Except as provided in Section 3.5(b), prior to the Discharge of Existing
Senior Obligations, the New Senior Administrative Agent, for itself and on
behalf of each New Senior Secured Party, hereby agrees that none of the New
Senior Administrative Agent or any other New Senior Secured Party shall commence
any judicial or nonjudicial foreclosure proceedings with respect to, seek to
have a trustee, receiver, liquidator or similar official appointed for or over,
attempt any action to take possession of, exercise any right, remedy or power
with respect to, or otherwise take any action to enforce its interest in or
realize upon, or take any other action available to it in respect of, any
Collateral under any New Senior Credit Document, applicable law or otherwise
(including but not limited to any right of setoff or under the Existing
Intercreditor Agreement or the First Lien Intercreditor Agreement), it being
agreed that only the Existing Senior Administrative Agent, acting in accordance
with the applicable Existing Senior Credit Documents, shall have the exclusive
right (and whether or not any

 

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Insolvency or Liquidation Proceeding has been commenced), to take any such
actions or exercise any such remedies, in each case, without any consultation
with or the consent of the New Senior Administrative Agent or any other New
Senior Secured Party. In exercising rights and remedies with respect to the
Collateral, the Existing Senior Administrative Agent and the other Existing
Senior Secured Parties may enforce the provisions of the Existing Senior Credit
Documents and exercise remedies thereunder, all in such order and in such manner
as they may determine in their sole discretion and regardless of whether such
exercise and enforcement is adverse to the interest of any New Senior Secured
Party. Such exercise and enforcement shall include the rights of an agent
appointed by them to Dispose of Collateral upon foreclosure, to incur expenses
in connection with any such Disposition or in connection with care or
preservation of the Collateral and to exercise all the rights and remedies of a
secured creditor under the Uniform Commercial Code, the Bankruptcy Code
(including the right to credit bid) or any other applicable or Bankruptcy Law.
Without limiting the generality of the foregoing, the Existing Senior
Administrative Agent will have the exclusive right to deal with that portion of
the Collateral consisting of deposit accounts and securities accounts
(collectively “Accounts”), including exercising rights under control agreements
with respect to such Accounts. The New Senior Administrative Agent, for itself
and on behalf of the other New Senior Secured Parties, hereby acknowledges and
agrees that no covenant, agreement or restriction contained in any New Senior
Credit Document shall be deemed to restrict in any way the rights and remedies
of the Existing Senior Administrative Agent or the other Existing Senior Secured
Parties with respect to the Collateral as set forth in this Agreement.
Notwithstanding the foregoing, nothing herein shall limit the right or ability
of the New Senior Secured Parties to (i) purchase (by credit bid or otherwise)
all or any portion of the Collateral in connection with any enforcement of
remedies by the Existing Senior Administrative Agent to the extent that, and so
long as, the Discharge of Existing Senior Obligations occurs immediately after
giving effect thereto, (ii) file a proof of claim with respect to the New Senior
Obligations, (iii) take any action in order to create, prove, perfect, preserve
or protect (but not enforce) its rights in, and perfection and priority of the
Collateral Agent’s Lien on, the Collateral or (iv) file any responsive or
defensive pleadings in opposition to any motion, claim, adversary proceeding or
other pleading made by any person objecting to or otherwise seeking the
disallowance of the claims of the New Senior Secured Parties or the avoidance of
any Priority Lien securing such New Senior Obligations.

(b)    Prior to the Discharge of Existing Senior Obligations and both before and
during an Insolvency or Liquidation Proceeding after the earlier of (i) the
Total Revolving Commitment (or if the Revolving Commitments have been
terminated, the Total Revolving Exposure) under the Existing Senior Credit
Agreement is less than the Enforcement Threshold or (ii) 135 days have elapsed
(which period will be tolled during any period in which the Existing Senior
Administrative Agent is not entitled, on behalf of the Existing Senior Secured
Parties, to enforce or exercise any rights or remedies with respect to any
Collateral as a result of (a) any injunction issued by a court of competent
jurisdiction or (b) the automatic stay or any other stay in any Insolvency or
Liquidation Proceeding) since the date on which the New Senior Administrative
Agent has delivered to the Existing Senior Administrative Agent written notice
of the acceleration of any New Senior Obligations (the period prior to such
date, “Standstill Period”), the New Senior

 

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Administrative Agent and the other New Senior Secured Parties may enforce or
exercise any rights or remedies with respect to any Collateral; provided, that
notwithstanding the expiration of the Standstill Period or anything in the New
Senior Credit Documents to the contrary, in no event may the New Senior
Administrative Agent or any other New Senior Secured Party enforce or exercise
any rights or remedies with respect to any Collateral, or commence, join with
any Person at any time in commencing, or petition for or vote in favor of any
resolution for, any such action or proceeding, if the Existing Senior
Administrative Agent on behalf of the Existing Senior Secured Parties or any
other Existing Senior Secured Party shall have commenced, and shall be
diligently pursuing (or shall have sought or requested relief from, or
modification of, the automatic stay or any other stay or other prohibition in
any Insolvency or Liquidation Proceeding to enable the commencement and pursuit
thereof), the enforcement or exercise of any rights or remedies with respect to
the Collateral (prompt written notice thereof to be given to the New Senior
Administrative Agent by the Existing Senior Administrative Agent); provided,
further, that, at any time after the expiration of the Standstill Period, if
neither the Existing Senior Administrative Agent nor any other Existing Senior
Secured Party shall have commenced and be diligently pursuing (or shall have
sought, and requested relief from, or modification of, the automatic stay or any
other stay or other prohibition in any Insolvency or Liquidation Proceeding to
enable the commencement and pursuit thereof) the enforcement or exercise of any
rights or remedies with respect to any material portion of the Collateral, and
the New Senior Administrative Agent shall have commenced the enforcement or
exercise of any rights or remedies with respect to any material portion of the
Collateral or any such action or proceeding in respect of such rights and
remedies, then for so long as the New Senior Administrative Agent is diligently
pursuing such rights and remedies, none of any Existing Senior Secured Party or
the Existing Senior Administrative Agent shall take any action of a similar
nature with respect to such Collateral, or commence, join with any Person at any
time in commencing, or petition for or vote in favor of any resolution for, any
such action or proceeding (provided that during such period the Existing Senior
Administrative Agent may take any of the actions the New Senior Administrative
Agent is permitted to take during the Standstill Period). Nothing contained in
this Section 3.5(b) shall relieve the New Senior Administrative Agent or any New
Senior Secured Party of its obligations under Section 3.5(d).

(c)    Except as expressly provided in and subject to Section 3.5(a),
Section 3.5(b) and Section 3.8, the New Senior Administrative Agent, for itself
and on behalf of each New Senior Secured Party, agrees that each New Senior
Secured Party (i) will not take or cause to be taken any action the purpose or
effect of which is to give such New Senior Secured Party any preference or
priority relative to, the Existing Senior Secured Parties with respect to the
Collateral or any part thereof, (ii) will not challenge or question in any
proceeding the validity or enforceability of any Existing Senior Obligations or
Existing Senior Credit Document, or the validity or enforceability of the
priorities, rights or duties established by the provisions of this Agreement,
(iii) will not take or cause to be taken any action the purpose or effect of
which is, or could be, to interfere, hinder or delay, in any manner, whether by
judicial proceedings or otherwise, any sale, transfer or other Disposition of
the Collateral by any Existing Senior Secured Party or the Existing Senior
Administrative Agent acting on their behalf, (iv) shall have no right to
(A) direct the

 

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Existing Senior Administrative Agent or any other Existing Senior Secured Party
exercise any right, remedy or power with respect to any Collateral or
(B) consent to the exercise by the Existing Senior Administrative Agent or any
other Existing Senior Secured Party of any right, remedy or power with respect
to any Collateral, (v) will not institute any suit or assert in any suit or
Insolvency or Liquidation Proceeding any claim against the Existing Senior
Administrative Agent or other Existing Senior Secured Party seeking damages from
or other relief by way of specific performance, instructions or otherwise with
respect to, and neither the Existing Senior Administrative Agent nor any other
Existing Senior Secured Party shall be liable to any of the New Senior Secured
Parties for, any action taken or omitted to be taken by the Existing Senior
Administrative Agent or other Existing Senior Secured Party with respect to any
Collateral, (vi) will not seek, and hereby waives any right, to have any
Collateral or any part thereof marshaled upon any foreclosure or other
Disposition of such Collateral, (vii) will not attempt, directly or indirectly,
whether by judicial proceedings or otherwise, to challenge the enforceability of
any provision of this Agreement, (viii) will not object to forbearance by the
Existing Senior Administrative Agent or any Existing Senior Secured Party, and
(ix) will not assert, and hereby waives, to the fullest extent permitted by law,
any right to demand, request, plead or otherwise assert or claim the benefit of
any marshalling, appraisal, valuation or other similar right that may be
available under applicable law with respect to the Collateral or any similar
rights a junior secured creditor may have under applicable law; provided that
nothing herein shall limit the rights of any New Senior Secured Party to enforce
the terms of this Agreement. The Existing Senior Administrative Agent, for
itself and on behalf of each Existing Senior Secured Party, agrees that each
Existing Senior Secured Party (x) will not challenge or question in any
proceeding the validity or enforceability of any New Senior Obligations or New
Senior Credit Document, or the validity or enforceability of the priorities,
rights or duties established by the provisions of this Agreement and (y) will
not take or cause to be taken any action the purpose or effect of which is, or
could be, to interfere, hinder or delay, in any manner, whether by judicial
proceedings or otherwise, any sale, transfer or other Disposition of the
Collateral by any New Senior Secured Party or the New Senior Administrative
Agent acting on their behalf to the extent such sale, transfer or other
Disposition is permitted by the terms of this Agreement.

(d)    Payment Over. The New Senior Administrative Agent, for itself and on
behalf of each other New Senior Secured Party, hereby agrees that if any New
Senior Secured Party shall obtain possession of any Collateral or shall realize
any Proceeds or payment in respect of any Collateral, pursuant to any rights or
remedies with respect to the Collateral under any New Senior Credit Document or
on account of any rights available to it under applicable law or in any
Insolvency or Liquidation Proceeding, to the extent permitted hereunder, at any
time prior to the Discharge of Existing Senior Obligations secured, or intended
to be secured, by such Collateral, then it shall hold such Collateral, Proceeds
or payment in trust for the Existing Senior Administrative Agent and the other
Existing Senior Secured Parties and transfer such Collateral, Proceeds or
payment, as the case may be, to the Existing Senior Administrative Agent as
promptly as practicable; provided that nothing herein shall limit the rights of
the New Senior Secured Parties to receive the payments of principal, interest,
fees and other amounts under the New Senior Documents so long as such payment is
not the result of any exercise of remedies by any New Senior

 

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Secured Party with respect to the Collateral or a payment in respect of
Collateral or the New Senior Secured Parties realizing any Proceeds in respect
of Collateral. For the avoidance of doubt, any Proceeds received by any of the
New Senior Secured Parties in connection with any Insolvency or Liquidation
Proceeding shall be deemed to be the result of an exercise of remedies.
Furthermore, the New Senior Administrative Agent shall, at the Grantors’
expense, promptly send written notice to the Existing Senior Administrative
Agent upon receipt of such Collateral, Proceeds or payment not permitted
hereunder by any New Senior Secured Party and if directed by the Existing Senior
Administrative Agent within five (5) days after receipt by the Existing Senior
Administrative Agent of such written notice, shall deliver such Collateral,
Proceeds or payment to the Existing Senior Administrative Agent in the same form
as received, with any necessary endorsements, or as a court of competent
jurisdiction may otherwise direct. The Existing Senior Administrative Agent is
hereby authorized to make any such endorsements as agent for the New Senior
Administrative Agent or any other New Senior Secured Party. The New Senior
Administrative Agent, for itself and on behalf of each other New Senior Secured
Party agrees that if, at any time, it obtains written notice that all or part of
any payment with respect to any Existing Senior Obligations previously made
shall be rescinded for any reason whatsoever, it will promptly pay over to the
Existing Senior Administrative Agent any such Collateral, Proceeds or payment
not permitted hereunder received by it and then in its possession or under its
direct control in respect of any such Existing Senior Collateral and shall
promptly turn any such Collateral then held by it over to the Existing Senior
Administrative Agent, and the provisions set forth in this Agreement will be
reinstated as if such payment had not been made, until the Discharge of Existing
Senior Obligations. All Priority Liens will remain attached to and enforceable
against all Proceeds so held or remitted, subject to the priorities set forth in
this Agreement. At any time prior to the commencement of an Insolvency or
Liquidation Proceeding, anything contained herein to the contrary
notwithstanding, this Section 3.5(d) shall not apply to any Proceeds of
Collateral realized in a transaction not prohibited by the Existing Senior
Credit Documents and as to which the possession or receipt thereof by the New
Senior Administrative Agent or any other New Senior Secured Party is otherwise
permitted by the Existing Senior Credit Documents.

(e)    Notwithstanding anything to the contrary contained in this Agreement, to
the extent Sections 3.5(a) through (d) above (i) prohibit an Administrative
Agent or other Secured Party from taking any action or forbearing from taking
any action, such Administrative Agent or such other Secured Party shall also be
prohibited from directing the Collateral Agent to take, or forbear from taking,
such action, as applicable and (ii) permit or require an Administrative Agent or
other Secured Party to take any action or forbear from taking any action and
such Administrative Agent or such other Secured Party takes such action, or
forbears from taking such action, as applicable, such Administrative Agent or
such other Secured Party shall be deemed to have done so in its capacity as a
sub-agent of the Collateral Agent.

3.6.    Application of Proceeds. Except as set forth in Section 3.4, all
proceeds of Collateral (including without limitation any interest earned
thereon) resulting from the sale, collection or other disposition of Collateral
in connection with the enforcement or exercise of any rights or remedies with
respect to any portion of the Collateral, or any other distribution on account
of the

 

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Collateral (other than any mandatory prepayments in accordance with the terms of
both the Secured Credit Documents), in all such cases whether or not pursuant to
an Insolvency and Liquidation Proceeding (including for the avoidance of doubt
pursuant to a plan of reorganization or similar dispositive restructuring plan),
shall be distributed as follows after payment to the Collateral Agent of the
Collateral Agent’s compensation, expenses and indemnities due hereunder:

(a)    first, to the Existing Senior Administrative Agent for application to the
Existing Senior Obligations that are not Excess Existing Senior Obligations in
accordance with the Existing Senior Credit Documents,

(b)    second, to the New Senior Administrative Agents for application to the
New Senior Obligations in accordance with the New Senior Credit Documents, until
the New Senior Obligations are repaid in full and in cash (and if there is more
than one New Senior Administrative Agent at such time, to each New Senior
Administrative Agent pro rata in accordance with the amount of the New Senior
Obligations held by the New Senior Secured Parties represented by such New
Senior Administrative Agent at such time),

(c)    third, to the Existing Senior Administrative Agent for application to the
Excess Existing Senior Obligations in accordance with the Existing Senior Credit
Documents until the Discharge of the Existing Senior Obligations has occurred,
and

(d)    fourth, to the Borrower or as otherwise required by the Existing
Intercreditor Agreement or the First Lien Intercreditor Agreement, or by
applicable law.

3.7.    Powers of the Collateral Agent.

(a)    The Collateral Agent is irrevocably authorized and empowered to enter
into and perform its obligations and to act as set forth in this Article 3 or as
requested in any lawful directions given to it from time to time in respect of
any matter by the Administrative Agents in accordance with the provisions of
this Agreement.

(b)    No Secured Party will have any liability whatsoever for any act or
omission of the Collateral Agent nor will the Collateral Agent have any
liability for any act or omission of any Administrative Agent or other Secured
Party, whether as a sub-agent of the Collateral Agent or otherwise.

3.8.    Certain Agreements With Respect to Insolvency or Liquidation
Proceedings.

(a)    The parties hereto acknowledge that this Agreement is a “subordination
agreement” under New York law, New York UCC 9-339 and Section 510(a) of the
Bankruptcy Code and shall continue in full force and effect, notwithstanding the
commencement of any Insolvency or Liquidation Proceeding by or against the
Borrower or any subsidiary of the Borrower. All references in this Agreement to
the Borrower or any subsidiary of the Borrower or any other Grantor will include
such Person or Persons as a debtor-in-possession and any receiver or trustee for
such Person or Persons in an Insolvency or Liquidation Proceeding.

 

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(b)    If the Borrower or any of its subsidiaries shall become subject to any
Insolvency or Liquidation Proceeding and shall, as debtor(s)-in-possession, or
if any receiver or trustee for such Person or Persons shall, move for approval
of financing (“DIP Financing”) to be provided by one or more lenders (the “DIP
Lenders”) under Section 364 of the Bankruptcy Code or the use of cash collateral
under Section 363 of the Bankruptcy Code, the New Senior Administrative Agent,
for itself and on behalf of each New Senior Secured Party, agrees that neither
it nor any other New Senior Secured Party will raise any objection, contest or
oppose, and each New Senior Secured Party will waive any claim such Person may
now or hereafter have, to any such DIP Financing or to the Liens on the
Collateral securing such DIP Financing (“DIP Financing Liens”), or to any use,
sale or lease of cash collateral that constitutes Collateral or to any grant of
administrative expense priority under Section 364 of the Bankruptcy Code, unless
(i) the Existing Senior Administrative Agent or the Existing Senior Secured
Parties oppose or object to such DIP Financing or such DIP Financing Liens or
such use of cash collateral, (ii) the maximum principal amount of indebtedness
permitted under such DIP Financing exceeds the sum of (A) the amount of Existing
Senior Obligations refinanced with the proceeds thereof (not including the
amount of any Excess Existing Senior Obligations) and (B) the greater of (I)
$475 million and (II) 15% of the sum of (x) the aggregate amount of indebtedness
for borrowed money constituting principal outstanding under the Existing Senior
Credit Documents plus (y) the aggregate face amount of any letters of credit
issued and outstanding under the Existing Senior Credit Documents on the date of
the commencement of such Insolvency or Liquidation Proceeding, or (iii) the
terms of such DIP Financing provide for the sale of a substantial part of the
Collateral or require the confirmation of a plan of reorganization containing
specific terms or provisions (other than repayment in cash of such DIP Financing
on the effective date thereof). To the extent such DIP Financing Liens are
(x) senior to the Liens on the Collateral securing the Secured Obligations, the
New Senior Administrative Agent will, for itself and on behalf of the other New
Senior Secured Parties, (A) agree to permit the Collateral Agent to subordinate
the Liens on the Collateral securing the New Senior Obligations to the DIP
Financing Liens on the terms to which the Existing Senior Administrative Agent
has agreed to subordinate the Existing Senior Obligations and (B) confirm that
such Collateral shall be subject to the Allocation Provisions and (y) pari passu
to the Liens on the Collateral securing the Secured Obligations, the New Senior
Administrative Agent will, for itself and on behalf of the other New Senior
Secured Parties, confirm that such Collateral shall be subject to the Allocation
Provisions, in each case so long as the Collateral Agent, on behalf of the New
Senior Secured Parties, retains Liens on all the Collateral, including proceeds
thereof arising after the commencement of any Insolvency or Liquidation
Proceeding.

(c)    Prior to the Discharge of Existing Senior Obligations, without the
consent of the Existing Senior Administrative Agent, in its sole discretion, the
New Senior Administrative Agent, for itself and on behalf of each New Senior
Secured Party agrees not to propose, support or enter into any DIP Financing.

(d)    The New Senior Administrative Agent, for itself and on behalf of each New
Senior Secured Party agrees that it will not object to, oppose or contest (or
join with or support any third party objecting to, opposing or contesting) and
if requested, will

 

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consent to a sale or other Disposition, a motion to sell or Dispose or the
bidding procedure for such sale or Disposition of any Collateral (or any portion
thereof) under Section 363 of the Bankruptcy Code or any other provision of the
Bankruptcy Code, if the Existing Senior Secured Parties shall have consented to
such sale or Disposition, such motion to sell or Dispose or such bidding
procedure for such sale or Disposition of such Collateral provided that (i) all
Liens securing the Secured Obligations will attach to the proceeds of the sale
subject to the Allocation Provisions or (ii) the net cash proceeds of any
Disposition under Section 363(b) of the Bankruptcy Code are permanently applied
to the DIP Financing or to the Secured Obligations pursuant to the Allocation
Provisions.

(e)    The New Senior Administrative Agent, for itself and on behalf of each
other New Senior Secured Party waives any claim that may be had against the
Existing Senior Administrative Agent or any other Existing Senior Secured Party
arising out of any DIP Financing Liens or administrative expense priority under
Section 364 of the Bankruptcy Code (in each case that is granted in a manner
that is consistent with this Agreement).

(f)    The New Senior Administrative Agent, for itself and on behalf of each
other New Senior Secured Party, agrees that neither the New Senior
Administrative Agent nor any other New Senior Secured Party will file or
prosecute in any Insolvency or Liquidation Proceeding any motion for adequate
protection (or any comparable request for relief), including for payment of
Post-Petition Interest, based upon their interest in the Collateral, nor object
to, oppose or contest (or join with or support any third party objecting to,
opposing or contesting) (i) any request by the Existing Senior Administrative
Agent or any other Existing Senior Secured Party for adequate protection,
including for payment of Post-Petition Interest, or (ii) any objection by the
Existing Senior Administrative Agent or any other Existing Senior Secured Party
to any motion, relief, action or proceeding based on the Existing Senior
Administrative Agent or Existing Senior Secured Parties claiming a lack of
adequate protection, provided that:

(A)    The Existing Senior Administrative Agent, for itself on behalf of each
other Existing Senior Secured Party, covenants and agrees that to the extent the
Existing Senior Administrative Agent or any other Existing Senior Secured Party
seeks and obtains relief granting adequate protection in the form of a
replacement lien, adequate protection payments or additional collateral granted
to, or for the benefit of, the Existing Senior Secured Parties, then such party
shall, and shall take all action necessary to cause the Existing Senior
Administrative Agent and the Collateral Agent to, provide the benefits of such
relief to the New Senior Secured Parties (on the terms and subject to the
conditions of this Agreement, including the Allocation Provisions);

(B)    the New Senior Secured Parties may freely seek and obtain relief granting
adequate protection in the form of superpriority claims to the same extent
granted to the Existing Senior Secured Parties (on the terms and subject to the
conditions of this Agreement, including the Allocation Provisions); and

 

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(C)    the New Senior Secured Parties may freely seek and obtain any relief upon
a motion for adequate protection (or any comparable relief), without any
condition or restriction whatsoever, at any time after the Discharge of Existing
Senior Obligations.

(g)    To the extent the New Senior Obligations and the Existing Senior
Obligations are classified in the same class under a plan of reorganization, the
New Senior Administrative Agent, for itself and on behalf of each of the other
of the New Senior Secured Parties waives any claim it or any such other New
Senior Secured Party may now or hereafter have against the Existing Senior
Administrative Agent or any other Existing Senior Secured Party (or their
representatives) arising out of any election by the Existing Senior
Administrative Agent or any Existing Senior Secured Parties, in any proceeding
instituted under the Bankruptcy Code, of the application of Section 1111(b) of
the Bankruptcy Code.

(h)    The New Senior Administrative Agent, for itself and on behalf of each
other New Senior Secured Party, agrees that in any Insolvency or Liquidation
Proceeding, neither the New Senior Administrative Agent nor any other New Senior
Secured Party shall support or vote to accept any plan of reorganization of the
Borrower or any other Grantor unless (i) such plan is accepted by the Existing
Senior Secured Parties in accordance with Section 1126(c) of the Bankruptcy Code
or otherwise provides for the Discharge of Existing Senior Obligations on the
effective date of such plan of reorganization or (ii) (A) such plan provides on
account of the Existing Senior Obligations for the retention by the Collateral
Agent, for the benefit of the Secured Parties, of the Liens on the Collateral
securing the Secured Obligations, and on all proceeds thereof whenever received,
and (B) the New Senior Administrative Agent, for itself and on behalf of each
other New Senior Secured Party, has agreed in writing (in a manner satisfactory
to the Existing Senior Secured Parties holding at least a majority in aggregate
principal amount of Existing Senior Obligations) that the New Senior Obligations
shall benefit from such Liens subject to the Allocation Provisions. Except as
provided herein, the New Senior Secured Parties shall remain entitled to vote
their claims in any such Insolvency or Liquidation Proceeding.

(i)    The New Senior Administrative Agent, for itself and on behalf of each
other New Senior Secured Party, agrees that neither the New Senior
Administrative Agent nor any other New Senior Secured Party shall seek relief
(or support any other party seeking relief), pursuant to Section 362(d) of the
Bankruptcy Code or otherwise, from the automatic stay of Section 362(a) of the
Bankruptcy Code or from any other stay in any Insolvency or Liquidation
Proceeding in respect of the Collateral without the prior written consent of the
Existing Senior Administrative Agent.

(j)    The New Senior Administrative Agent, for itself and on behalf of each
other New Senior Secured Party, agrees that neither the New Senior
Administrative Agent nor any other New Senior Secured Party shall oppose or seek
to challenge any claim by the Existing Senior Administrative Agent or any other
Existing Senior Secured Party for allowance or payment in any Insolvency or
Liquidation Proceeding of Existing Senior Obligations consisting of
Post-Petition Interest or cash collateralization of all letters of

 

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credit to the extent of the value of the Liens securing the Secured Obligations
(it being understood that such value will be determined without regard to the
existence of the New Senior Obligations).

(k)    Without the express written consent of the Existing Senior Administrative
Agent, none of the New Senior Administrative Agent or any other New Senior
Secured Party shall (or shall join with or support any third party in opposing,
objecting to or contesting, as the case may be), in any Insolvency or
Liquidation Proceeding involving any Grantor, (i) oppose, object to or contest
the determination of the extent of any Liens held by any of Secured Party or the
value of any claims of any such holder under Section 506(a) of the Bankruptcy
Code or (ii) oppose, object to or contest the payment to the Existing Senior
Secured Party of interest, fees or expenses under Section 506(b) of the
Bankruptcy Code.

(l)    Notwithstanding anything to the contrary contained herein, if in any
Insolvency or Liquidation Proceeding a determination is made that any Lien
encumbering any Collateral is not enforceable for any reason, then each
Administrative Agent for themselves and on behalf of their respective Secured
Parties agrees that, any distribution or recovery they may receive in respect of
any Collateral (including assets that would constitute Collateral but for such
determination) shall be segregated and held in trust and forthwith paid over to
the Collateral Agent in the same form as received without recourse,
representation or warranty (other than a representation of such Administrative
Agent that it has not otherwise sold, assigned, transferred or pledged any
right, title or interest in and to such distribution or recovery) but with any
necessary endorsements or as a court of competent jurisdiction may otherwise
direct in order to comply with the Allocation Provisions.

(m)    The New Senior Administrative Agent, for itself and on behalf of each
other New Senior Secured Party, hereby agrees that the Existing Senior
Administrative Agent shall have the right to credit bid the Existing Senior
Obligations and further that none of the New Senior Administrative Agent or any
other New Senior Secured Party shall (or shall join with or support any third
party in opposing, objecting to or contesting, as the case may be) oppose,
object to or contest such credit bid by the Existing Senior Administrative
Agent. The New Senior Secured Parties may credit bid, or instruct the New Senior
Administrative Agent to credit bid the New Senior Obligations in accordance with
Sections 363(k) or 1129 of the Bankruptcy Code or any other applicable law, only
if such bid includes a cash payment sufficient to provide for the Discharge of
Existing Senior Obligations and the Discharge of Existing Senior Obligations
occurs immediately after giving effect to such credit bid, or if the Existing
Senior Administrative Agent otherwise consents in writing.

(n)    Without the consent of the Existing Senior Administrative Agent in its
sole discretion, the New Senior Administrative Agent, for itself and on behalf
of each other New Senior Secured Party agrees neither the New Senior
Administrative Agent nor any New Senior Secured Party shall commence or join
with any parties to commence an involuntary bankruptcy petition for the Borrower
or any of its subsidiaries, or support entry of an order for relief in any
involuntary bankruptcy proceedings against the Borrower or any of its
subsidiaries, or seek the appointment of an examiner or a trustee for the
Borrower or any of its subsidiaries.

 

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(o)    The New Senior Administrative Agent, for itself and on behalf of each
other New Senior Secured Party waives any right to assert or enforce any claim
under Section 506(c) or 552 of the Bankruptcy Code as against any Existing
Senior Secured Party or any of the Collateral.

(p)    The Borrower, each Grantor, the Existing Senior Administrative Agent (on
behalf of each Senior Secured Party) and the New Senior Administrative Agent (on
behalf of each New Senior Secured Party) acknowledges that one or more creditor
groups with a single lien on common collateral but with different payment
allocations may be classified separately under Section 1122 of the Bankruptcy
Code. It is the intent of the parties that because of their differing payment
allocations as set forth in Section 3.6, each of the Existing Senior
Obligations, on the one hand, and the New Senior Obligations, on the other hand,
are fundamentally different from one another and shall be separately classified
in any plan of reorganization or similar dispositive restructuring plan proposed
or confirmed (or approved) in an Insolvency or Liquidation Proceeding. To
further effectuate the intent of the parties as provided in the immediately
preceding sentence, if it is held that the claims of any of the Existing Senior
Secured Parties, on the one hand, and the New Senior Secured Parties, on the
other hand, constitute claims in the same class (rather than separate classes of
secured claims), then the New Senior Secured Parties hereby acknowledge and
agree (x) to vote to reject such plan of reorganization or similar dispositive
restructuring plan unless the Existing Senior Secured Parties holding greater
than half in number and two-thirds in amount of the Existing Senior Obligations
agree to accept such plan or such plan provides for the Discharge of Existing
Senior Obligations, (y) that all distributions from or on account of the
Collateral shall be made in accordance with the Allocation Provisions, with the
effect being that, to the extent that the aggregate value of the Collateral is
sufficient (for this purpose ignoring all claims held by the other secured
parties), the Existing Senior Secured Parties, shall be entitled to receive, in
addition to amounts distributed to them in respect of principal, prepetition
interest and other claims, Post-Petition Interest, before any distribution is
made in respect of the New Senior Obligations (or any claims, including in
respect of post-petition interest, fees or expenses, related thereto) from, or
with respect to, such Collateral, with each holder of the New Senior Obligations
(and/or any claim, post-petition interest, fees or expenses, related thereto)
hereby acknowledging and agreeing to turn over to the Existing Senior Secured
Parties amounts otherwise received or receivable by them from, or with respect
to, such Collateral to the extent necessary to effectuate the intent of this
sentence, even if such turnover has the effect of reducing their aggregate
recoveries. The Existing Senior Administrative Agent (on behalf of all Existing
Senior Secured Parties) and the New Senior Administrative Agent (on behalf of
all New Senior Secured Parties) each hereby agree it shall not object to or
contest (or support any other party in objection or contesting) a plan of
reorganization or other dispositive restructuring plan on the grounds that the
Existing Senior Obligations and New Senior Obligations are classified
separately.

 

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3.9.    Gratuitous Bailment for Perfection of Certain Security Interests.

(a)     Prior to the Discharge of Existing Senior Obligations, the Existing
Senior Administrative Agent agrees that if the Collateral Agent shall at any
time hold a Lien on any Collateral that can be perfected by the possession or
control of such Collateral or of any Account in which such Collateral is held,
and if such Collateral or any such Account is in fact in the possession or under
the control of the Existing Senior Administrative Agent, the Existing Senior
Administrative Agent will serve as gratuitous bailee for the Collateral Agent
for the sole purpose of perfecting the Liens of the Collateral Agent on such
Collateral. It is agreed that the obligations of the Existing Senior
Administrative Agent and the rights of the Collateral Agent, New Senior
Administrative Agent and the other Secured Parties in connection with any such
bailment arrangement will be in all respects subject to the provisions of
Article 2. Notwithstanding anything to the contrary herein, the Existing Senior
Administrative Agent will be deemed to make no representation as to the adequacy
of the steps taken by it to perfect the Lien on any such Collateral and shall
have no responsibility, duty, obligation or liability to the Collateral Agent,
the New Senior Administrative Agent or any other Secured Party or any other
Person for such perfection or failure to perfect, it being understood that the
sole purpose of this Article is to enable the Collateral Agent to obtain a
perfected Lien in such Collateral to the extent, if any, that such perfection
results from the possession or control of such Collateral or any such Account by
the Existing Senior Administrative Agent. The Existing Senior Administrative
Agent acting pursuant to this Section 3.10 shall not have by reason of the
Secured Credit Documents, this Agreement or any other document or theory, a
fiduciary relationship in respect of any Secured Party, the New Senior
Administrative Agent or the Collateral Agent. Subject to Section 3.11, from and
after the Discharge of Existing Senior Obligations, the Existing Senior
Administrative Agent shall take all such actions in its power as shall
reasonably be requested by the New Senior Administrative Agent (at the sole cost
and expense of the Grantors) to transfer possession or control of such
Collateral or any such Account (in each case to the extent the New Senior
Administrative Agent has a Lien on such Collateral or Account after giving
effect to any prior or concurrent releases of Liens) to the Collateral Agent or
the New Senior Administrative Agent for the benefit of all New Senior Secured
Parties.

(b)     Prior to the Discharge of Existing Senior Obligations, to the extent
that any Account is under the control of the Existing Senior Administrative
Agent at any time, the Existing Senior Administrative Agent will act as
gratuitous bailee on behalf of the Collateral Agent for the purpose of
perfecting the Liens of all Secured Parties in such Accounts and the cash and
other assets therein (but will have no duty, responsibility or obligation to the
Secured Parties (including, without limitation, any duty, responsibility or
obligation as to the maintenance of such control, the effect of such arrangement
or the establishment of such perfection) except as set forth in the last
sentence of this Section 3.10(b)). Unless the Liens securing the Secured
Obligations on such Collateral shall have been or concurrently are released,
after the occurrence of Discharge of Existing Senior Obligations, the Existing
Senior Administrative Agent shall, at the request of the New Senior
Administrative Agent, cooperate with the Grantors and the New Senior
Administrative Agent (at the expense of the Grantors) in permitting control of
any other Accounts to be transferred to the Collateral Agent or the New Senior
Administrative Agent (or for other arrangements with respect to each such
Accounts satisfactory to the New Senior Administrative Agent to be made).

 

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3.10.    Purchase Option.

(a)    Notwithstanding anything in this Agreement to the contrary, on or at any
time after (i) the commencement of an Insolvency or Liquidation Proceeding or
(ii) the acceleration of the Existing Senior Obligations, holders of the New
Senior Obligations and each of their respective designated Affiliates (the “New
Senior Obligation Purchasers”) will have the right, at their sole option and
election (but will not be obligated), at any time upon prior written notice to
the Existing Senior Administrative Agent, to purchase from the Existing Senior
Secured Parties all (but not less than all) Existing Senior Obligations
(including unfunded commitments then in effect) other than any Existing Senior
Obligations constituting Excess Existing Senior Obligations and any loans
provided by any of the Existing Senior Secured Parties in connection with a DIP
Financing that are outstanding on the date of such purchase. Promptly following
the receipt of such notice, the Existing Senior Administrative Agent will
deliver to the New Senior Administrative Agent a statement of the amount of
Existing Senior Obligations, (other than any Existing Senior Obligations
constituting Excess Existing Senior Obligations) and DIP Financing provided by
any of the Existing Senior Secured Parties, if any, then outstanding and the
amount of the cash collateral requested by the Existing Senior Administrative
Agent to be delivered pursuant to Section 3.10(b)(ii) below. The right to
purchase provided for in this Section 3.10 will expire unless, within 10
Business Days after the receipt by the New Senior Administrative Agent of such
notice from the Existing Senior Administrative Agent, the New Senior
Administrative Agent delivers to the Existing Senior Administrative Agent an
irrevocable commitment of the New Senior Obligation Purchasers to purchase all
(but not less than all) of the Existing Senior Obligations (including unfunded
commitments) other than any Existing Senior Obligations constituting Excess
Existing Senior Obligations and any loans provided by any of the Existing Senior
Secured Parties in connection with a DIP Financing and to otherwise complete
such purchase on the terms set forth under this Section 3.10.

(b)    On the date specified by the New Senior Administrative Agent (on behalf
of the New Senior Obligation Purchasers) in such irrevocable commitment (which
shall not be less than five Business Days nor more than 20 Business Days, after
the receipt by the Existing Senior Administrative Agent of such irrevocable
commitment), the Existing Senior Secured Parties shall sell to the New Senior
Obligation Purchasers all (but not less than all) Existing Senior Obligations
(including unfunded commitments) other than any Existing Senior Obligations
constituting Excess Existing Senior Obligations and any loans provided by any of
the Existing Senior Secured Parties in connection with a DIP Financing that are
outstanding on the date of such sale, subject to any required approval of any
Governmental Authority then in effect, if any, and only if on the date of such
sale, the Existing Senior Administrative Agent receives the following:

(i)    payment, as the purchase price for all Existing Senior Obligations sold
in such sale, of an amount equal to the full amount of all Existing Senior
Obligations (other than outstanding letters of credit as referred to in clause
(ii) below) other than any Existing Senior Obligations constituting Excess
Existing Senior Obligations and loans provided by any of the Existing Senior
Secured Parties in connection with a DIP Financing then outstanding (including
principal,

 

26

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interest, fees, reasonable attorneys’ fees and legal expenses, but excluding
contingent indemnification obligations for which no claim or demand for payment
has been made at or prior to such time); provided that in the case of Hedge
Obligations that constitute Existing Senior Obligations, the New Senior
Obligation Purchasers shall cause the applicable agreements governing such Hedge
Obligations to be assigned and novated or, if such agreements have been
terminated, such purchase price shall include an amount equal to the sum of any
unpaid amounts then due in respect of such Hedge Obligations, calculated using
the market quotation method and after giving effect to any netting arrangements;

(ii)    a cash collateral deposit in such amount as the Existing Senior
Administrative Agent determines is reasonably necessary to secure the payment of
any outstanding letters of credit constituting Existing Senior Obligations that
may become due and payable after such sale (but not in any event in an amount
greater than one hundred five percent (105%) of the amount then reasonably
estimated by the Existing Senior Administrative Agent to be the aggregate
outstanding amount of such letters of credit at such time), which cash
collateral shall be (A) held by the Existing Senior Administrative Agent as
security solely to reimburse the issuers of such letters of credit that become
due and payable after such sale and any fees and expenses incurred in connection
with such letters of credit and (B) returned to the New Senior Administrative
Agent (except as may otherwise be required by applicable law or any order of any
court or other Governmental Authority) promptly after the expiration or
termination from time to time of all payment contingencies affecting such
letters of credit; and

(iii)    any agreements, documents or instruments which the Existing Senior
Administrative Agent may reasonably request pursuant to which the New Senior
Administrative Agent and the New Senior Obligation Purchasers in such sale
expressly assume and adopt all of the obligations of the Existing Senior
Administrative Agent and the Existing Senior Secured Parties under the Existing
Senior Credit Documents and in connection with loans provided by any of the
Existing Senior Secured Parties in connection with a DIP Financing on and after
the date of the purchase and sale and the New Senior Administrative Agent (or
any other representative appointed by the holders of a majority in aggregate
principal amount of the New Senior Obligations then outstanding) becomes a
successor agent thereunder.

(c)    Such purchase of the Existing Senior Obligations (including unfunded
commitments) and any loans provided by any of the Existing Senior Secured
Parties in connection with a DIP Financing shall be made on a pro rata basis
among the New Senior Obligation Purchasers giving notice to the Existing Senior
Administrative Agent of their interest to exercise the purchase option hereunder
according to each such New Senior Obligation Purchaser’s portion of the New
Senior Obligations outstanding on the date of purchase or such portion as such
New Senior Obligation Purchasers may otherwise agree among themselves. Such
purchase price and cash collateral shall be remitted by wire transfer in federal
funds to such bank account of the Existing Senior Administrative Agent as the
Existing Senior Administrative Agent may designate in

 

27

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writing to the New Senior Administrative Agent for such purpose. Interest shall
be calculated to but excluding the Business Day on which such sale occurs if the
amounts so paid by the New Senior Obligation Purchasers to the bank account
designated by the Existing Senior Administrative Agent are received in such bank
account prior to 12:00 noon, New York City time, and interest shall be
calculated to and including such Business Day if the amounts so paid by the New
Senior Obligation Purchasers to the bank account designated by the Existing
Senior Administrative Agent are received in such bank account later than 12:00
noon, New York City time.

(d)    Such sale shall be expressly made without representation or warranty of
any kind by the Existing Senior Secured Parties as to the Existing Senior
Obligations, the Collateral or otherwise and without recourse to any Existing
Senior Secured Party, except that the Existing Senior Secured Parties shall
represent and warrant severally as to the Existing Senior Obligations (including
unfunded commitments) and any loans provided by any of the Existing Senior
Secured Parties in connection with a DIP Financing then owing to it: (i) that
such applicable Existing Senior Secured Party owns such Existing Senior
Obligations (including unfunded commitments) and any loans provided by any of
the Existing Senior Secured Parties in connection with a DIP Financing; and
(ii) that such applicable Existing Senior Secured Party has the necessary
corporate or other governing authority to assign such interests.

(e)    After such sale becomes effective, the outstanding letters of credit will
remain enforceable against the issuers thereof and will remain secured by the
Priority Lien upon the Collateral in accordance with the applicable provisions
of the Existing Senior Credit Documents as in effect at the time of such sale
(including this Agreement), and the issuers of letters of credit will remain
entitled to the benefit of the Priority Lien upon the Collateral and sharing
rights in the proceeds thereof in accordance with the provisions of the Existing
Senior Credit Documents as in effect at the time of such sale (including this
Agreement), as fully as if the sale of the Existing Lien Obligations had not
been made, but, except with respect to cash collateral held by the issuer(s) of
such letters of credit, only the Person or successor agent to whom the Priority
Lien is transferred in such sale will have the right to foreclose upon or
otherwise enforce the Priority Lien and only the New Senior Obligation
Purchasers in the sale will have the right to direct such Person or successor as
to matters relating to the foreclosure or other enforcement of the Priority
Lien.

3.11.    Reinstatement. If any Existing Senior Secured Party is required in any
Insolvency or Liquidation Proceeding or otherwise to turn over or otherwise pay
to the estate of any Grantor any amount (a “Recovery”) for any reason
whatsoever, then the Existing Senior Obligations shall be reinstated to the
extent of such Recovery and the Existing Senior Secured Parties shall be
entitled to a reinstatement of Existing Senior Obligations with respect to all
such recovered amounts. The New Senior Administrative Agent, for itself and on
behalf of each other New Senior Secured Party agrees that if, at any time, a New
Senior Secured Party receives notice of any Recovery, the New Senior
Administrative Agent and each other New Senior Secured Party, shall promptly pay
over to the Collateral Agent any payment that is not permitted hereunder to be
received by the New Senior Secured Parties and then in its possession or under
its control in respect of any Collateral and shall promptly turn any Collateral
then held by it over

 

28

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to the Collateral Agent for application pursuant to the Allocation Provisions,
and the provisions set forth in this Agreement shall be reinstated as if such
payment had not been made. If this Agreement shall have been terminated prior to
any such Recovery, this Agreement shall be reinstated in full force and effect,
and such prior termination shall not diminish, release, discharge, impair or
otherwise affect the obligations of the parties hereto from such date of
reinstatement. Any Collateral or proceeds thereof that is not permitted
hereunder to be received by the New Senior Secured Parties received by the New
Senior Administrative Agent or any other New Senior Secured Party and then in
its possession or under its control on account of the New Senior Obligations
after the termination of this Agreement shall, in the event of a reinstatement
of this Agreement pursuant to this Section 3.11, be held in trust for and paid
over to the Collateral Agent for application pursuant to Section 3.6. This
Section 3.11 shall survive termination of this Agreement.

3.12    Borrower and Grantors’ Obligations. The Borrower and the Grantors,
jointly and severally, agree to: (i) perfect, maintain, monitor, preserve and
protect the security interest or lien granted under this Agreement, any other
Collateral Documents or any agreement or instrument contemplated hereby or
thereby, and to continue such creation or perfection, of any security interest
or other lien on any property, (ii) provide, maintain, monitor and preserve
insurance on and to pay any required taxes with respect to any of the
Collateral, and (iii) file, re-file, record, re-record or continue any document,
financing statement, mortgage or other document required to perfect the security
interest hereunder.

ARTICLE 4

MISCELLANEOUS

4.1.    Expenses; Indemnity; Damage Waiver.

(a)    Costs and Expenses. The Borrower and each other Grantor jointly and
severally shall pay (i) all reasonable and documented out-of-pocket expenses
incurred by the Collateral Agent and its affiliates (including the reasonable
fees, charges and disbursements of counsel for the Collateral Agent), in
connection with the preparation, negotiation, execution, delivery, performance
and administration of this Agreement and the other Collateral Documents or any
amendments, modifications or waivers of the provisions hereof or thereof
(whether or not the transactions contemplated hereby or thereby shall be
consummated) and (ii) all out-of-pocket expenses incurred by the Collateral
Agent (including the fees, charges and disbursements of counsel for the
Collateral Agent) in connection with the enforcement or protection of its rights
(A) in connection with this Agreement and the other Collateral Documents,
including its rights under this Section, or (B) in connection with the
extensions of credit made under the Secured Credit Documents, including all such
out-of-pocket expenses incurred during any workout, restructuring or
negotiations in respect of such indebtedness.

(b)    Indemnification by the Borrower and Grantors. The Borrower and each other
Grantor jointly and severally shall indemnify the Collateral Agent (and any
sub-agent thereof) and each Related Party of any of the foregoing persons (each
such person, an

 

29

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“Indemnitee”) against, and hold each Indemnitee harmless from, any and all
losses, claims, damages, liabilities and related out-of-pocket expenses
(including the reasonable fees, charges and disbursements of one counsel for all
Indemnitees taken as a whole and, if necessary, one local counsel for all
Indemnitees taken as a whole and, if necessary, one local counsel for all
Indemnitees taken as a whole in each relevant jurisdiction, and in the case of
an actual or perceived conflict of interest, one additional counsel and (if
reasonably necessary) one local counsel in each relevant jurisdiction to the
affected Indemnitees similarly situated, and, in connection with any Insolvency
or Liquidation Proceeding, one bankruptcy counsel for all Indemnitees taken as a
whole) incurred by any Indemnitee or asserted against any Indemnitee by any
third party or by any Grantor or any of its Related Parties arising out of, in
connection with, or as a result of (i) the execution, delivery, administration
or enforcement of this Agreement, any other Collateral Document or Secured
Credit Document or any agreement or instrument contemplated hereby or thereby,
the performance by the parties hereto of their respective obligations hereunder
or thereunder or the consummation of the transactions contemplated hereby or
thereby, (ii) any extension of credit or the use or proposed use of the proceeds
therefrom, (iii) any actual or alleged presence or release of hazardous
materials on or from any property owned or operated by the Borrower or any of
its subsidiaries, or any liability under environmental law related in any way to
the Borrower or any of its subsidiaries, (iv) any civil penalty or fine assessed
by the U.S. Department of the Treasury’s Office of Foreign Assets Control
against, and all reasonable costs and expenses (including the reasonable fees
and disbursements of all Indemnitees taken as a whole) incurred in connection
with defense thereof by the Collateral Agent as a result of the funding of loans
or the acceptance of payments under the Secured Credit Documents, or (v) any
actual or prospective claim, litigation, investigation or proceeding relating to
any of the foregoing, whether based on contract, tort or any other theory,
whether brought by a third party or by the Borrower or any of its Related
Parties, and regardless of whether any Indemnitee is a party thereto; provided
that such indemnity shall not, as to any Indemnitee, be available to the extent
that such losses, claims, damages, liabilities or related expenses are
determined by a court of competent jurisdiction by final and nonappealable
judgment to have resulted from the gross negligence, willful misconduct or bad
faith of such Indemnitee.

(c)    Waiver of Consequential Damages, Etc. To the fullest extent permitted by
applicable law, no Grantor shall assert, and each Grantor hereby waives, any
claim against any Indemnitee, on any theory of liability, for special,
exemplary, 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 Collateral Document or any agreement or instrument contemplated hereby
or the transactions contemplated hereby or thereby. No Indemnitee referred to in
subsection (b) shall be liable for any damages arising from the use by
unintended recipients of any information or other materials distributed by it
through telecommunications, electronic or other information transmission systems
in connection with this Agreement or the other Collateral Documents or the
transactions contemplated hereby or thereby.

(d)    Payments. All amounts due under this Section shall be payable not later
than ten Business Days after demand therefor.

 

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(e)    Survival. The agreements in this Section shall survive the resignation of
the Collateral Agent, the repayment, satisfaction or discharge of all the other
Secured Obligations, and the termination of this Agreement.

4.2.    Notices; Effectiveness; Electronic Communication.

(a)    Notices Generally. Except in the case of notices and other communications
expressly permitted to be given by telephone (and except as provided in
subsection (b) below), 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 telecopier to the applicable
recipient at its address set forth on Schedule 1 hereto.

Notices sent by hand or overnight courier service, or mailed by certified or
registered mail, shall be deemed to have been given when received, and notices
sent by telecopier shall be deemed to have been given when sent (except that, if
not given during normal business hours for the recipient, shall be deemed to
have been given at the opening of business on the next Business Day for the
recipient), except that notices to the Collateral Agent shall be deemed to be
effective only when actually received by it. Notices delivered through
electronic communications to the extent provided in subsection (b) below, shall
be effective as provided in such subsection (b).

(b)    Electronic Communications. The Collateral Agent shall have the right to
accept and act upon direction and instructions, including funds transfer
instructions (“Instructions”) given pursuant to this Agreement and delivered
using Electronic Means; provided, however, that the Borrower or Agent, as
applicable shall provide to the Collateral Agent an incumbency certificate
listing authorized officers and containing specimen signatures of such
authorized officers, which incumbency certificate shall be amended by the
Borrower or Agent, as applicable, whenever a person is to be added or deleted
from the listing. If the Borrower or Agent, as applicable, elects to give the
Collateral Agent Instructions using Electronic Means and the Collateral Agent in
its discretion elects to act upon such Instructions, the Collateral Agent’s
understanding of such Instructions shall be deemed controlling. The Borrower and
the Agent understand and agree that the Collateral Agent cannot determine the
identity of the actual sender of such Instructions and that the Collateral Agent
shall conclusively presume that directions that purport to have been sent by an
authorized officer listed on the incumbency certificate provided to such
Collateral Agent have been sent by such authorized officer. The Borrower or the
Agent, as applicable, shall be responsible for ensuring that only authorized
officers transmit such Instructions to the Collateral Agent and remain
responsible to safeguard the use and confidentiality of applicable user and
authorization codes, passwords and/or authentication keys upon receipt by them.
The Collateral Agent shall not be liable for any losses, costs or expenses
arising directly or indirectly from its reliance upon and compliance with such
Instructions notwithstanding such directions conflict or are inconsistent with a
subsequent written instruction. “Electronic Means” shall mean the following
communications methods: S.W.I.F.T., e-mail, facsimile transmission, secure
electronic transmission containing applicable authorization codes, passwords
and/or authentication keys issued by the Agents, or another method or system
specified by such Agent as available for use in connection with its services
hereunder.

 

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(c)    Effectiveness of Facsimile Documents and Signatures. This Agreement may
be transmitted and/or signed by facsimile to the recipient’s facsimile number
set forth on Schedule 1 hereto. The effectiveness of this Agreement and
signatures shall, subject to applicable law, have the same force and effect as
manually signed originals and shall be binding on parties hereto. The Collateral
Agent may also require that any such documents and signatures be confirmed by a
manually signed original thereof; provided, however, that the failure to request
or deliver the same shall not limit the effectiveness of any facsimile document
or signature.

(d)    Change of Address, Etc. Any party hereto may change its address,
telecopier or telephone number for notices and other communications hereunder by
notice to the other parties hereto.

(e)    Reliance by Collateral Agent. The Collateral Agent shall be entitled to
rely and act upon any notices purportedly given by or on behalf of any Agent
(including any Additional Hedge Counterparty), or any Grantor even if (i) such
notices were not made in a manner specified herein, were incomplete or were not
preceded or followed by any other form of notice specified herein, or (ii) the
terms thereof, as understood by the recipient, varied from any confirmation
thereof. The Borrower shall indemnify the Collateral Agent from all losses,
costs, expenses and liabilities resulting from the reliance by the Collateral
Agent on each notice purportedly given by or on behalf of each Agent, Additional
Hedge Counterparty or the Grantors.

4.3.    Amendments; Collateral Agency Joinders; Pledge and Security Agreement
Supplements. No amendment or waiver of or consent to any departure from any
provision of this Agreement shall be effective unless it is in writing and
signed by each Administrative Agent, the Collateral Agent and the Grantors. Any
waiver or consent shall be effective only in the specific instance and for the
specific purpose for which given and to the extent specified in such writing. In
addition, all such amendments and waivers shall be effective only if given with
the necessary approvals of the requisite percentage of the Existing Senior
Secured Parties under the Existing Senior Credit Documents and of the requisite
percentage of New Senior Secured Parties under the New Senior Credit Documents.
Upon the execution and delivery by any Person of an Accession Agreement, a
Supplement or an Assumption Agreement under the GCA, (a) such Person shall be
referred to as an “Additional Grantor” and shall become and be a Grantor
hereunder, and each reference in this Agreement to a “Grantor” shall also mean
and be a reference to such Additional Grantor, and each reference in any other
Secured Credit Document to a “Grantor” shall also mean and be a reference to
such Additional Grantor, and (b) each reference herein to “this Agreement,”
“hereunder,” “hereof” or words of like import referring to this Agreement, and
each reference in any other Secured Credit Document to the “Collateral Agency
Agreement,” “thereunder,” “thereof” or words of like import referring to this
Agreement, shall mean and be a reference to this Agreement as supplemented by
such Assumption Agreement. Upon the execution and delivery by any Person joining
this Agreement as an “Additional Hedge Counterparty” of a Collateral Agency
Hedge Counterparty Joinder (a) such Person shall be referred to as an
“Additional Hedge Counterparty” and shall become and be

 

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an “Additional Hedge Counterparty” hereunder and (b) each reference herein to
“this Agreement,” “hereunder,” “hereof” or words of like import referring to
this Agreement, and each reference in any other Secured Credit Document to the
“Collateral Agency Agreement,” “thereunder,” “thereof” or words of like import
referring to this Agreement, shall mean and be a reference to this Agreement as
supplemented by such Collateral Agency Hedge Counterparty Joinder, in each case
without any further action by the Collateral Agent. In connection with executing
or acknowledging any amendment, waiver or other modification contemplated
hereunder or under the Collateral Documents, the Collateral Agent shall receive
an opinion of counsel from the Borrower that such amendment, waiver or
modification is permitted under this Agreement and such Collateral Documents.

4.4.    Preservation of Rights. No failure on the part of any Administrative
Agent or any other Secured Party to exercise, and no delay in exercising, any
right hereunder or under any other Secured Credit Document shall operate as a
waiver thereof; nor shall any single or partial exercise of any such right
preclude any other or further exercise thereof or the exercise of any other
right. Neither the execution nor the delivery of this Agreement shall in any
manner impair or affect any other security for the Secured Obligations. The
rights and remedies of the Collateral Agent and the Administrative Agents
provided herein and in the other Secured Credit Documents are cumulative and are
in addition to, and not exclusive of, any rights or remedies provided by law.
The rights of the Collateral Agent and the Administrative Agents under any
Secured Credit Document against any party thereto are not conditional or
contingent on any attempt by such Person to exercise any of its rights or
exhaust any recourse under any other Secured Credit Document against such party
or against any other Person.

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

4.6.    Survival of Agreements. All covenants and agreements herein shall
survive the execution and delivery of this Agreement, the execution and delivery
of any other Secured Credit Documents and the creation of the Secured
Obligations.

4.7.    Binding Effect and Assignment. This Agreement (a) shall be binding on
each Grantor and its successors and permitted assigns and (b) shall inure,
together with all rights and remedies of the Collateral Agent hereunder, to the
benefit of the Secured Parties and their respective successors, transferees and
assigns. No Grantor shall have any rights hereunder, nor may any Grantor rely on
the terms hereof.

4.8.    Termination. It is contemplated by the parties hereto that there may be
times when no Secured Obligations are outstanding, but notwithstanding such
occurrences, this Agreement shall remain valid and shall be in full force and
effect as to subsequent outstanding Secured Obligations. Upon the Discharge of
the Existing Senior Obligations, upon written request for the termination hereof
delivered by the Borrower to the Collateral Agent, this Agreement shall
terminate.

 

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4.9.    Governing Law and Choice of Venue.

(a)    GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.

(b)    SUBMISSION TO JURISDICTION. EACH GRANTOR IRREVOCABLY AND UNCONDITIONALLY
SUBMITS, FOR ITSELF AND ITS PROPERTY, TO THE NONEXCLUSIVE 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, IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING
TO THIS AGREEMENT OR ANY OTHER SECURED CREDIT DOCUMENT, OR FOR RECOGNITION OR
ENFORCEMENT OF ANY JUDGMENT, AND EACH OF THE PARTIES HERETO IRREVOCABLY AND
UNCONDITIONALLY AGREES THAT ALL CLAIMS IN RESPECT OF ANY SUCH ACTION OR
PROCEEDING MAY BE HEARD AND DETERMINED IN SUCH NEW YORK STATE COURT OR, TO THE
FULLEST EXTENT PERMITTED BY APPLICABLE LAW, IN SUCH FEDERAL COURT. EACH OF THE
PARTIES HERETO AGREES THAT A FINAL JUDGMENT IN ANY SUCH ACTION OR PROCEEDING
SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE
JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW. NOTHING IN THIS AGREEMENT OR IN
ANY OTHER SECURED CREDIT DOCUMENT SHALL AFFECT ANY RIGHT THAT THE SECURED
PARTIES MAY OTHERWISE HAVE TO BRING ANY ACTION OR PROCEEDING RELATING TO THIS
AGREEMENT OR ANY OTHER SECURED CREDIT DOCUMENT AGAINST THE BORROWER OR ITS
PROPERTIES IN THE COURTS OF ANY JURISDICTION.

(c)    WAIVER OF VENUE. EACH GRANTOR IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO
THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY OBJECTION THAT IT MAY NOW OR
HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY ACTION OR PROCEEDING ARISING OUT OF
OR RELATING TO THIS AGREEMENT OR ANY OTHER SECURED CREDIT DOCUMENT IN ANY COURT
REFERRED TO IN PARAGRAPH (b) OF THIS SECTION. EACH OF THE PARTIES HERETO HEREBY
IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, THE
DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH ACTION OR PROCEEDING
IN ANY SUCH COURT.

(d)    SERVICE OF PROCESS. EACH GRANTOR HERETO IRREVOCABLY CONSENTS TO SERVICE
OF PROCESS IN THE MANNER PROVIDED FOR NOTICES IN SECTION 4.2. NOTHING IN THIS
AGREEMENT WILL AFFECT THE RIGHT OF ANY SECURED PARTY HERETO TO SERVE PROCESS IN
ANY OTHER MANNER PERMITTED BY APPLICABLE LAW.

 

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(e)    WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY
WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY AND ALL RIGHT TO
TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS
AGREEMENT.

4.10.    Counterparts. This Agreement may be separately executed in any number
of counterparts (including by facsimile transmission), all of which when so
executed shall be deemed to constitute one and the same Agreement.

4.11.    Loan Document. This Agreement is a “Loan Document” (or other equivalent
defined term) for purposes of each Secured Credit Document, and, except as
expressly provided herein to the contrary, this Agreement is subject to all
provisions of the applicable Secured Credit Document governing “Loan Documents”
(or other equivalent defined term).

4.12.    Applicability to Collateral Agent. Notwithstanding anything to the
contrary contained herein, in no event, shall the Collateral Agent be subject
to, charged with knowledge of or otherwise be obligated to act under any
document to which it is not a party.

4.13.    Incorporation of Rights, Privileges and Immunities. As between and
among the Borrower, the Grantors and the New Senior Administrative Agent, the
New Senior Administrative Agent shall have the rights, protections and
immunities granted to it under the New Senior Credit Agreement, all of which are
incorporated by reference herein mutatis mutandis. To the extent that such
rights, protections and immunities conflict with any provisions of this
Agreement (before giving effect to the immediately preceding sentence), this
Agreement shall control.

4.14.    AUTHORIZATION. Each party hereto represents and warrants to the other
parties hereto that it is duly authorized (on its own behalf and on behalf of
any Secured Party that it represents) that is duly authorized to enter into this
Agreement.

4.15.    FINAL AGREEMENT. THIS WRITTEN COLLATERAL AGENCY AGREEMENT AND THE OTHER
SECURED CREDIT DOCUMENTS REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND
MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR OR CONTEMPORANEOUS ORAL AGREEMENTS
OF THE PARTIES.

THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.

[SIGNATURES BEGIN ON FOLLOWING PAGE]

 

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed as of the date hereof by their respective officers thereunto duly
authorized.

 

JPMORGAN CHASE BANK, N.A., as Existing Senior Administrative Agent

By:  

 

Name:   Title:   By:  

 

Name:   Title:  

THE BANK OF NEW YORK MELLON

TRUST COMPANY, N.A., as New Senior Administrative Agent

By:  

 

Name:   Title:   By:  

 

Name:   Title:  

[Signature Page to Collateral Agency Agreement]

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

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

By:  

 

Name:   Title:  

[Signature Page to Collateral Agency Agreement]

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

Agreed and Accepted:

 

[GRANTORS]

By:  

 

Name:   Title:  

[Signature Page to Collateral Agency Agreement]

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

SCHEDULE 1

Addresses for Notices

 

Entity   

Notice Address/Information

California Resources
Corporation   

California Resources Corporation

9200 Oakdale Avenue, Suite 900

Los Angeles, California 91311

Facsimile: (818) 661-3750

Attention: Chief Financial Officer

Email: Marshall.Smith@crc.com

 

With a copy to:

 

California Resources Corporation

27200 Tourney Road, Suite 315,

Santa Clarita, California 91355.

Attention: Michael L. Preston

Email: Michael.Preston@crc.com

The Bank of New York Mellon

Trust Company, N.A., as the

Administrative Agent

  

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

2001 Bryan Street

Suite 1000

Dallas, Texas 75201

Telephone: (214) 468-5525

Facsimile: (214) 468-5539

Attention: Stacie Row

Email: lpcoe-dallasagentsvcs@bnymellon.com

The Bank of New York Mellon

Trust Company, N.A., as the

Collateral Agent

  

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

400 South Hope Street, Suite 500

Los Angeles, CA 90071

Attention: Corporate Trust Unit

Tel: (213) 630-6175

Fax: (213) 630-6298

Email: raymond.torres@bnymellon.com

JPMorgan Chase Bank, N.A.   

JPMorgan Chase Bank, N.A.

383 Madison Avenue, 24th Floor

New York, NY 10179

Attention: Douglas Kravitz

Schedule to the Collateral Agency Agreement

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

EXHIBIT A

to Collateral Agency Agreement

FORM OF

COLLATERAL AGENCY HEDGE COUNTERPARTY JOINDER

Reference is made to the Collateral Agency Agreement dated as of November 17,
2017 (as amended, supplemented, amended and restated or otherwise modified and
in effect from time to time, the “Collateral Agency Agreement”) among JPMORGAN
CHASE BANK, N.A., as and Existing Senior Administrative Agent, THE BANK OF NEW
YORK MELLON TRUST COMPANY, N.A., as the New Senior Administrative Agent, in each
case on behalf of the applicable Secured Parties, the Grantors party thereto,
the Additional Grantors, and THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A.,
not in its individual capacity, but solely, as the Collateral Agent. Capitalized
terms used but not otherwise defined herein shall have the meaning set forth in
the Collateral Agency Agreement. This Collateral Agency Hedge Counterparty
Joinder (this “Joinder”) is being executed and delivered pursuant to the GCA and
the Collateral Agency Agreement.

1.    Joinder. The undersigned,                     , a                     , as
a hedge counterparty with respect to Secured Hedging Obligations hereby agrees
to become party as an Additional Hedge Counterparty under the Collateral Agency
Agreement for all purposes thereof on the terms set forth therein, and to be
bound by the terms of the Collateral Agency Agreement with respect to Secured
Hedging Obligations as fully as if the undersigned had executed and delivered
the Collateral Agency Agreement as of the date thereof.

2.    Governing Law and Miscellaneous Provisions. The provisions of Section 4.9
of the Collateral Agency Agreement will apply with like effect to this Joinder.

 

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IN WITNESS WHEREOF, the parties hereto have caused this Joinder to be executed
by their respective officers or representatives as of             , 20     .

 

[insert name of the new representative]

By:  

 

Name:  

 

Title:  

 

 

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