Magnum Hunter Resources Corp. 8-k [mhr-8k_121813.htm]

 

Exhibit 10.1 

 

EXECUTED VERSION

__________________________________________________________________________

 

$750,000,000 REVOLVING LOAN

 

THIRD AMENDED AND RESTATED
CREDIT AGREEMENT

 

dated as of

 

December 13, 2013

 

among

 

MAGNUM HUNTER RESOURCES CORPORATION,
as Borrower,

 

BANK OF MONTREAL,
as Administrative Agent,

 

THE LENDERS PARTY HERETO,

 

CAPITAL ONE, N.A.,
as Syndication Agent

 

and

 

KEYBANK NATIONAL ASSOCIATION,
SUNTRUST BANK
and
UBS SECURITIES LLC,
as Co-Documentation Agents

 

*****

 

BMO CAPITAL MARKETS,
as Lead Arranger and Sole Bookrunner

__________________________________________________________________________

 

Andrews Kurth LLP

Counsel to Administrative Agent

 

 

 

  

TABLE OF CONTENTS

 

ARTICLE I Definitions and Accounting Matters 1 Section 1.01 Terms Defined Above
1 Section 1.02 Certain Defined Terms 1 Section 1.03 Types of Loans and
Borrowings  22 Section 1.04 Terms Generally; Rules of Construction  22 Section
1.05 Accounting Terms and Determinations; GAAP  23       ARTICLE II The Credits
 23 Section 2.01 Commitments  23 Section 2.02 Loans and Borrowings  23 Section
2.03 Requests for Borrowings  24 Section 2.04 Interest Elections  25 Section
2.05 Funding of Borrowings  26 Section 2.06 Changes in the Aggregate Maximum
Credit Amounts  27 Section 2.07 Borrowing Base  28 Section 2.08 Letters of
Credit  30       ARTICLE III Payments of Principal and Interest; Prepayments;
Fees  35 Section 3.01 Repayment of Loans  35 Section 3.02 Interest  35 Section
3.03 Alternate Rate of Interest  36 Section 3.04 Prepayments  36 Section 3.05
Fees  38       ARTICLE IV Payments; Pro Rata Treatment; Sharing of Set-offs.  39
Section 4.01 Payments Generally; Pro Rata Treatment; Sharing of Set-offs  39
Section 4.02 Presumption of Payment by the Borrower  40 Section 4.03 Certain
Deductions by the Administrative Agent  40 Section 4.04 Disposition of Proceeds
 41       ARTICLE V Increased Costs; Break Funding Payments; Taxes; Illegality;
Defaulting Lenders  41 Section 5.01 Increased Costs  41 Section 5.02 Break
Funding Payments  42 Section 5.03 Taxes  43 Section 5.04 Mitigation Obligations
 44 Section 5.05 Illegality  45 Section 5.06 Defaulting Lenders  45      
ARTICLE VI Conditions Precedent  47 Section 6.01 Conditions to Effectiveness  47
Section 6.02 Each Credit Event  49

 

-i-

 

 

ARTICLE VII Representations and Warranties 50 Section 7.01 Organization; Powers
50 Section 7.02 Authority; Enforceability 50 Section 7.03 Approvals; No
Conflicts 50 Section 7.04 Financial Condition; No Material Adverse Change 51
Section 7.05 Litigation 51 Section 7.06 Environmental Matters 51 Section 7.07
Compliance with the Laws and Agreements; No Defaults 52 Section 7.08 Investment
Company Act 53 Section 7.09 Taxes 53 Section 7.10 ERISA 53 Section 7.11
Disclosure; No Material Misstatements 54 Section 7.12 Insurance 54 Section 7.13
[RESERVED] 54 Section 7.14 Subsidiaries 54 Section 7.15 Location of Business and
Offices 54 Section 7.16 Properties; Titles, Etc 55 Section 7.17 Maintenance of
Properties 56 Section 7.18 Gas Imbalances, Prepayments 56 Section 7.19 Marketing
of Production 56 Section 7.20 Swap Agreements 56 Section 7.21 Use of Loans and
Letters of Credit 57 Section 7.22 Solvency 57     ARTICLE VIII Affirmative
Covenants 57 Section 8.01 Financial Statements; Ratings Change; Other
Information 57 Section 8.02 Notices of Material Events 60 Section 8.03
Existence; Conduct of Business 60 Section 8.04 Payment of Obligations 60 Section
8.05 Performance of Obligations under Loan Documents 61 Section 8.06 Operation
and Maintenance of Properties 61 Section 8.07 Insurance 62 Section 8.08 Books
and Records; Inspection Rights 62 Section 8.09 Compliance with Laws 62 Section
8.10 Environmental Matters 62 Section 8.11 Further Assurances 63 Section 8.12
Reserve Reports 63 Section 8.13 Title Information 64 Section 8.14 Additional
Collateral 65 Section 8.15 ERISA Compliance 66 Section 8.16 New Subsidiary
Requirements 66 Section 8.17 OFAC; Anti-Corruption Laws 67 Section 8.18
Post-Closing Obligation 67       ARTICLE IX Negative Covenants 67 Section 9.01
Financial Covenants 67 Section 9.02 Debt 68 Section 9.03 Liens 70 Section 9.04
Restricted Payments 71 Section 9.05 Investments, Loans and Advances 72 Section
9.06 Nature of Business; International Operations 76 Section 9.07 Limitation on
Leases 76 Section 9.08 Proceeds of Notes/Loans 76 Section 9.09 Sale or Discount
of Receivables 76 Section 9.10 Mergers, Etc 76 Section 9.11 Sale of Assets 77
Section 9.12 Environmental Matters 78 Section 9.13 Transactions with Affiliates
78 Section 9.14 Subsidiaries 78 Section 9.15 Subsidiary Obligations and
Preferred Stock 78 Section 9.16 Negative Pledge Agreements; Dividend
Restrictions 79 Section 9.17 Gas Imbalances, Take-or-Pay or Other Prepayments 79
Section 9.18 Swap Agreements 79 Section 9.19 Sale and Leaseback Transactions 80

 

-ii-

 

 

ARTICLE X Events of Default; Remedies 81 Section 10.01 Events of Default 81
Section 10.02 Remedies 83 ARTICLE XI The Administrative Agent 83 Section 11.01
Appointment; Powers 83 Section 11.02 Duties and Obligations of Administrative
Agent 84 Section 11.03 Action by Administrative Agent 84 Section 11.04 Reliance
by Administrative Agent 85 Section 11.05 Subagents 85 Section 11.06 Resignation
or Removal of Administrative Agent 85 Section 11.07 Administrative Agent as
Lender 86 Section 11.08 No Reliance 86 Section 11.09 Authority to Release
Collateral and Liens 87 Section 11.10 The Arranger, the Syndication Agent and
the Co-Documentation Agents 87 Section 11.11 Filing of Proofs of Claim 87      
ARTICLE XII Miscellaneous 88 Section 12.01 Notices 88 Section 12.02 Waivers;
Amendments 88 Section 12.03 Expenses, Indemnity; Damage Waiver 90 Section 12.04
Successors and Assigns 93 Section 12.05 Survival; Revival; Reinstatement 96
Section 12.06 Counterparts; Integration; Effectiveness 96 Section 12.07
Severability 97 Section 12.08 Right of Setoff 97 Section 12.09 Governing Law;
Jurisdiction; Consent to Service of Process 97 Section 12.10 Headings 98 Section
12.11 Confidentiality 98 Section 12.12 Exculpation Provisions 99 Section 12.13
No Third Party Beneficiaries 99 Section 12.14 Collateral Matters; Swap
Agreements 99 Section 12.15 USA Patriot Act Notice 99 Section 12.16 Interest
Rate Limitation 100 Section 12.17 Amendment and Restatement 100 Section 12.18
Exiting Lender 101

 

-iii-

 

 

Annex 1 List of Maximum Credit Amounts     Exhibit A Form of Note Exhibit B Form
of Borrowing Request Exhibit C Form of Interest Election Request Exhibit D Form
of Compliance Certificate Exhibit F-1 Form of Security Agreement Exhibit F-2
Form of Guaranty Exhibit G Form of Assignment and Assumption Exhibit H Form of
Joinder Agreement

 

Schedule 1.01 Unrestricted Subsidiaries as of the Effective Date Schedule 7.01
Corporate Organizational Chart Schedule 7.05 Litigation Schedule 7.14
Subsidiaries Schedule 7.16 Properties Schedule 7.18 Gas Imbalances Schedule 7.19
Marketing Contracts Schedule 7.20 Swap Agreements Schedule 9.02 Debt Schedule
9.03 Liens Schedule 9.05 Investments Schedule 9.16 PRC Williston LLC Agreement

 

-iv-

 

  

This THIRD Amended and Restated Credit Agreement, dated as of December 13, 2013
(the “Effective Date”), is among MAGNUM HUNTER RESOURCES CORPORATION, a Delaware
corporation (the “Borrower”), each of the Lenders from time to time party
hereto, BANK OF MONTREAL (in its individual capacity, “BOM”), as administrative
agent for the Lenders (in such capacity, together with its successors in such
capacity, the “Administrative Agent”), CAPITAL ONE, N.A., as Syndication Agent
and KEYBANK NATIONAL ASSOCIATION, SUNTRUST BANK and UBS SECURITIES LLC, as
Co-Documentation Agents.

 

R E C I T A L S

 

A.       The Borrower is a party to that certain Second Amended and Restated
Credit Agreement dated April 13, 2011 (as amended, the “Prior Agreement”) among
the Borrower, the lenders party thereto, Capital One, N.A., as Syndication Agent
and Bank of Montreal, as administrative agent.

 

B.       The Borrower, the Administrative Agent and the Lenders mutually desire
to amend and restate the Prior Agreement in its entirety.

 

C.       In consideration of the mutual covenants and agreements herein
contained and of the loans, extensions of credit and commitments hereinafter
referred to, the parties hereto agree that the Prior Agreement is amended and
restated in its entirety as follows:

ARTICLE I

 

Definitions and Accounting Matters

 

Section 1.01    Terms Defined Above

 

As used in this Agreement, each term defined above has the meaning indicated
above.

 

Section 1.02    Certain Defined Terms

 

As used in this Agreement, the following terms have the meanings specified
below:

 

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

 

“Adjusted LIBO Rate” means, with respect to any Eurodollar Borrowing for any
Interest Period, an interest rate per annum (rounded upwards, if necessary, to
the next 1/100 of 1%) equal to (a) the LIBO Rate for such Interest Period
multiplied by (b) the Statutory Reserve Rate.

 

“Administrative Agent” has the meaning given in the introductory paragraph.

 

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

 

 

 

 

“Affected Loans” has the meaning assigned to such term in ‎Section 5.05.

 

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

 

“Aggregate Maximum Credit Amounts” at any time shall equal the sum of the
Maximum Credit Amounts, as the same may be increased, reduced or terminated
pursuant to Section 2.06. As of the Effective Date, the Aggregate Maximum Credit
Amount of the Lenders is $750,000,000.

 

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

 

“Alternate Base Rate” means, for any day, a rate per annum equal to the greatest
of (a) the Prime Rate in effect on such day, (b) the Federal Funds Effective
Rate in effect on such day plus ½ of 1% and (c) the LIBO Rate for a one month
interest period in effect on such day plus 1%. Any change in the Alternate Base
Rate due to a change in the Prime Rate, the Federal Funds Effective Rate or the
LIBO Rate shall be effective from and including the effective day of such change
in the Prime Rate, the Federal Funds Effective Rate and the LIBO Rate,
respectively.

 

“Applicable Margin” means:

 

(a)       for any day prior to the date on which the Borrower demonstrates
compliance with Section 9.01 for the fiscal quarter ending June 30, 2014, with
respect to any ABR Loan or Eurodollar Loan, or with respect to the Commitment
Fee Rate, as the case may be, the rate per annum set forth in the Borrowing Base
Utilization Grid below based upon the Borrowing Base Utilization Percentage then
in effect:

 

Borrowing Base Utilization Grid      < 50%   ³ 50%, but < 75%   ³ 75%, but <
90%   ³ 90%    ABR Loans   1.50%   1.75%   2.00%   2.25%   Eurodollar Loans 
 2.50%   2.75%   3.00%   3.25%   Commitment Fee   0.50%   0.50%   0.50%   0.50%
and

 

(b)       for any day from and after the date on which the Borrower demonstrates
compliance with Section 9.01 for the fiscal quarter ending June 30, 2014, with
respect to any ABR Loan or Eurodollar Loan, or with respect to the Commitment
Fee Rate, as the case may be, the rate per annum set forth in the Borrowing Base
Utilization Grid below based upon the Borrowing Base Utilization Percentage then
in effect:

 

-2-

 

 

Borrowing Base Utilization Grid    < 50%   ³ 50%, but < 75%   ³ 75%, but < 90%  
³90%  ABR Loans   1.00%   1.25%   1.50%   1.75% Eurodollar Loans   2.00% 
 2.25%   2.50%   2.75% Commitment Fee   0.50%   0.50%   0.50%   0.50%

 

 

Each change in the Applicable Margin shall apply during the period commencing on
the effective date of such change and ending on the date immediately preceding
the effective date of the next such change; provided, however, if at any time
the Borrower fails to deliver a Reserve Report pursuant to Section 8.12(a), then
the “Applicable Margin” means the rate per annum set forth on the grid when the
Borrowing Base Utilization Percentage is at its highest level; provided further
that the Applicable Margin shall revert to the previous Applicable Margin upon
the Borrower’s delivery of such Reserve Report.

 

“Applicable Percentage” means, with respect to any Lender, the percentage of the
Aggregate Maximum Credit Amounts represented by such Lender’s Maximum Credit
Amount as such percentage is set forth on Annex I or in an Assignment and
Assumption Agreement, as the case may be.

 

“Approved Counterparty” means (a) any Lender or any Affiliate of a Lender or (b)
any other Person whose long term senior unsecured debt rating at the time of
entry into the applicable Swap Agreement is A-/A3 by S&P or Moody’s (or their
equivalent) or higher.

 

“Approved Fund” means (a) a CLO or (b) with respect to any Lender that is a fund
which invests in bank loans and similar extensions of credit, any other fund
that invests in bank loans and similar extensions of credit and is managed by
the same investment advisor as such Lender or by an Affiliate of such investment
advisor.

 

“Approved Petroleum Engineers” means an independent petroleum engineer or
engineers proposed by the Borrower and approved by the Administrative Agent.

 

“Arranger” means BMO Capital Markets, in its capacity as lead arranger and sole
bookrunner hereunder.

 

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

 

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

 

-3-

 

 

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

 

“BOM” has the meaning given in the introductory paragraph.

 

“Borrower” has the meaning given in the introductory paragraph.

 

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

 

“Borrowing Base” means, at any time, an amount equal to the amount determined in
accordance with Section 2.07, as the same may be adjusted from time to time
pursuant to Section 8.13(c) or Section 9.11.

 

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

 

“Borrowing Request” means a request by the Borrower for a Borrowing in
accordance with ‎Section 2.03.

 

“Business Day” means any day that is not a Saturday, Sunday or other day on
which commercial banks in Houston, Texas, are authorized or required by law to
remain closed; and if such day relates to a Borrowing or continuation of, a
payment or prepayment of principal of or interest on, or a conversion of or
into, or the Interest Period for, a Eurodollar Loan or a notice by the Borrower
with respect to any such Borrowing or continuation, payment, prepayment,
conversion or Interest Period, any day which is also a day on which dealings in
dollar deposits are carried out in the London interbank market.

 

“Canadian Collateral Documents” means any security agreement, pledge agreement,
guaranty, and the mortgages, deeds of trust and other agreements, instruments,
certificate or certificates now or hereafter executed and delivered by the
Borrower or any other Person (other than participation or similar agreements
between any Lender or any other lender or creditor with respect to any
Obligations pursuant to this Agreement) regarding Collateral located in Canada,
in connection with, or as security for the payment or performance of the
Obligations, the Notes or this Agreement, as such arrangements may be amended,
modified, supplemented or restated from time to time.

 

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

 

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

 

“Casualty Event” means any loss, casualty or other insured damage to, or any
nationalization, taking under power of eminent domain or by condemnation or
similar proceeding of, any Property of the Borrower or any of its Restricted
Subsidiaries having a fair market value in excess of $2,000,000.

 

-4-

 

 

“Change in Control” means the acquisition of ownership, directly or indirectly,
beneficially or of record, by any Person or group (within the meaning of the
Securities Exchange Act of 1934 and the rules of the SEC thereunder as in effect
on the Effective Date) of Equity Interests representing more than thirty percent
(30%) of the aggregate ordinary voting power represented by the issued and
outstanding Equity Interests of the Borrower.

 

“Change in Law” means the occurrence, after the Effective Date, of any of the
following: (a) the adoption or taking into effect of any law, rule, regulation
or treaty, (b) any change in any law, rule, regulation or treaty or in the
administration, interpretation, implementation or application thereof by any
Governmental Authority or (c) the making or issuance of any request, rule,
guideline or directive (whether or not having the force of law) by any
Governmental Authority; provided, that notwithstanding anything herein to the
contrary, (i) the Dodd-Frank Wall Street Reform and Consumer Protection Act and
all requests, rules, guidelines or directives thereunder or issued in connection
therewith and (ii) 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 any
foreign regulatory authorities, in each case pursuant to Basel III, shall in
each case be deemed to be a “Change in Law”, regardless of the date enacted,
adopted or issued.

 

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

 

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

 

“Commitment” means, with respect to each Lender, the commitment of such Lender
to make Loans and to acquire participations in Letters of Credit hereunder,
expressed as an amount representing the maximum aggregate amount of such
Lender’s Credit Exposure hereunder, as such commitment may be (a) modified from
time to time pursuant to ‎Sections 2.06, 2.09 and 10.02 and (b) modified from
time to time pursuant to assignments by or to such Lender pursuant to
‎Section 12.04(b), and “Commitments” means the aggregate amount of the
Commitments of all the Lenders. The amount representing each Lender’s Commitment
shall at any time be the lesser of (i) such Lender’s Maximum Credit Amount and
(ii) such Lender’s Applicable Percentage of the then effective Borrowing Base.

 

“Commitment Fee Rate” has the meaning set forth in the definition of “Applicable
Margin”.

 

-5-

 

 

“Consolidated Net Income” means with respect to the Borrower and the Restricted
Subsidiaries, for any period, the aggregate of the net income (or loss) of the
Borrower and the Restricted Subsidiaries after allowances for Taxes payable by
the Borrower and the Restricted Subsidiaries for such period determined on a
consolidated basis in accordance with GAAP; provided that there shall be
excluded from such net income (to the extent otherwise included therein) the
following: (a) the net income of any Person in which the Borrower or any
Restricted Subsidiary has an interest (which interest does not cause the net
income of such other Person to be consolidated with the net income of the
Borrower and the Restricted Subsidiaries in accordance with GAAP), except to the
extent of the amount of dividends or distributions actually paid in cash during
such period by such other Person to the Borrower or to a Restricted Subsidiary,
as the case may be; (b) any extraordinary gains or losses (excluding any
unrealized gains and losses under FAS 133) during such period; and (c) any gains
or losses (excluding any unrealized gains and losses under FAS 133) attributable
to writeups or writedowns of assets; and provided further that if the Borrower
or any Restricted Subsidiary shall acquire or dispose of any Property during
such period in an aggregate amount that equals or exceeds ten percent (10%) of
the Borrowing Base then in effect, then Consolidated Net Income shall be
calculated after giving pro forma effect to such acquisition or disposition, as
if such acquisition or disposition had occurred on the first day of such period.

 

“Consolidated Subsidiaries” means each Subsidiary of the Borrower (whether now
existing or hereafter created or acquired) the financial statements of which
shall be (or should have been) consolidated with the financial statements of the
Borrower in accordance with GAAP.

 

“Control” means the possession, directly or indirectly, of the power to direct
or cause the direction of the management or policies of a Person, whether
through the ability to exercise voting power, by contract or otherwise. For the
purposes of this definition, and without limiting the generality of the
foregoing, any Person that owns directly or indirectly 40% or more of the Equity
Interests having ordinary voting power for the election of the directors or
other governing body of a Person (other than as a limited partner of such other
Person) will be deemed to “control” such other Person. “Controlling” and
“Controlled” have meanings correlative thereto.

 

“Credit Exposure” means, with respect to any Lender at any time, the sum of the
outstanding principal amount of such Lender’s Loans and LC Exposure at such
time.

 

“Debt” means, for any Person, the sum of the following (without duplication):
(a) all obligations of such Person for borrowed money or evidenced by bonds,
bankers’ acceptances, debentures, notes or other similar instruments; (b) all
obligations of such Person (whether contingent or otherwise) in respect of
letters of credit, surety or other bonds and similar instruments; (c) all
accounts payable and all accrued expenses, liabilities or other obligations of
such Person to pay the deferred purchase price of Property or services; (d) all
obligations under Capital Leases; (e) all obligations under Synthetic Leases;
(f) all Debt (as defined in the other clauses of this definition) of others
secured by a Lien (other than the Lien permitted by Section 9.03(h)) on any
Property of such Person, whether or not such Debt is assumed by such Person; (g)
all Debt (as defined in the other clauses of this definition) of others
guaranteed by such Person or in which such Person otherwise assures a creditor
against loss of the Debt (howsoever such assurance shall be made) to the extent
of the lesser of the amount of such Debt and the maximum stated amount of such
guarantee or assurance against loss; (h) all obligations or undertakings of such
Person to maintain or cause to be maintained the financial position or covenants
of others or to purchase the Debt or Property of others; (i) obligations to
deliver commodities, goods or services, including, without limitation,
Hydrocarbons, in consideration of one or more advance payments, other than gas
balancing arrangements in the ordinary course of business; (j) any Debt of a
partnership for which such Person is liable either by agreement, by operation of
law or by a Governmental Requirement but only to the extent of such liability;
(k) Disqualified Capital Stock; and (l) the undischarged balance of any
production payment created by such Person or for the creation of which such
Person directly or indirectly received payment. The Debt of any Person shall
include all obligations of such Person of the character described above to the
extent such Person remains legally liable in respect thereof notwithstanding
that any such obligation is not included as a liability of such Person under
GAAP.

 

-6-

 

 

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

 

“Defaulting Lender” means any Lender, as determined by the Administrative Agent,
that (a) has failed, within three Business Days of the date required to be
funded by it hereunder, to fund (i) any portion of its Loans or (ii)
participations in Letters of Credit, unless, in the case of clause (i), such
Lender notifies the Administrative Agent in writing that such failure is a
result of such Lender’s good faith determination that a condition precedent to
funding (specifically identified and including the particular default, if any)
has not been satisfied, (b) notified the Borrower, the Administrative Agent, or
the Issuing Bank in writing that it does not intend to comply with any of its
funding obligations under this Agreement or has made a public statement to the
effect that it does not intend to comply with its funding obligations under this
Agreement (unless such writing or public statement indicates that such position
is based upon such Lender’s good faith determination that a condition precedent
to funding (specifically identified and including the particular default, if
any) cannot be satisfied) or generally under other agreements in which it
commits to extend credit, (c) failed, within three Business Days after request
by the Administrative Agent, to confirm in writing that it will comply with the
terms of this Agreement relating to its obligations to fund prospective Loans
and participations in then outstanding Letters of Credit, provided that such
Lender will cease to be a Defaulting Lender pursuant to this clause (c) upon the
Administrative Agent’s receipt of such written confirmation in form and
substance satisfactory to it, (d) otherwise failed to pay over to the
Administrative Agent or any other Lender any other amount required to be paid by
it hereunder within three Business Days of the date when due, unless the subject
of a good faith dispute, or (e) (i) become or is insolvent or has a parent
company that has become or is insolvent or (ii) become the subject of a
bankruptcy or insolvency proceeding, or has had a receiver, conservator,
trustee, administrator, assignee for the benefit of creditors or similar Person
charged with reorganization or liquidation of its business or custodian,
appointed for it, including the Federal Deposit Insurance Corporation or any
other federal or state regulatory authority acting in such a capacity, or has
taken any action in furtherance of, or indicating its consent to, approval of or
acquiescence in any such proceeding or appointment or has a parent company that
has become the subject of a bankruptcy or insolvency proceeding, or has had a
receiver, conservator, trustee, administrator, assignee for the benefit of
creditors or similar Person charged with reorganization or liquidation of its
business or custodian appointed for it, including the Federal Deposit Insurance
Corporation or any other federal or state regulatory authority acting in such a
capacity, or 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 Lender shall not be considered a Defaulting Lender solely by virtue of
any ownership interest, or the acquisition of any ownership interest, in such
Lender by a Governmental Authority or instrumentality thereof, provided,
further, that such ownership interest does not result in or provide such Lender
with immunity from the jurisdiction of courts within the United States or from
the enforcement of judgments or writs of attachment on its assets or permit such
Lender (or such Governmental Authority or instrumentality) to reject, repudiate,
disavow or disaffirm any contracts or agreements made by such Lender.

 

-7-

 

 

“Disqualified Capital Stock” means any Equity Interest that, by its terms (or by
the terms of any security into which it is convertible or for which it is
exchangeable) or upon the happening of any event, matures or is mandatorily
redeemable for any consideration other than other Equity Interests (which would
not constitute Disqualified Capital Stock), pursuant to a sinking fund
obligation or otherwise, or is convertible or exchangeable for Debt or
redeemable for any consideration other than other Equity Interests (which would
not constitute Disqualified Capital Stock) at the option of the holder thereof,
in whole or in part, on or prior to the date that is one year after the earlier
of (a) the Maturity Date and (b) the date on which there are no Loans, LC
Exposure or other obligations hereunder outstanding and all of the Commitments
are terminated; provided, however, Disqualified Capital Stock shall not include
Series C, Series D or Series E preferred stock permitted under Section 9.02, so
long as any dividends paid with respect thereto comply with the provisions of
Section 9.04.

 

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

 

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

 

“EBITDAX” means, for any period, the sum of Consolidated Net Income for such
period calculated on a trailing four quarter basis plus the following expenses
or charges to the extent deducted from Consolidated Net Income in such period:
interest, income Taxes, depreciation, depletion, amortization, expenses
associated with the exploration of Oil and Gas Properties, all non-cash charges
and adjustments (including stock-based compensation, impairment of asset values,
non-cash adjustments to derivative carrying values, non-cash adjustments to
asset retirement obligations and other similar items as from time to time
required under GAAP) and all non-recurring expenses, minus all non-cash income
added to Consolidated Net Income.

 

“Effective Date” means the date first written above.

 

“Engineering Reports” has the meaning assigned such term in ‎Section 2.07(c)(i).

 

“Environmental Laws” means any and all Governmental Requirements pertaining in
any way to health, safety, the environment or the preservation or reclamation of
natural resources, in effect in any and all jurisdictions in which the Borrower
or any Subsidiary is conducting or at any time has conducted business, or where
any Property of the Borrower or any Restricted Subsidiary is located, including
without limitation, the Oil Pollution Act of 1990 (“OPA”), as amended, the Clean
Air Act, as amended, the Comprehensive Environmental, Response, Compensation,
and Liability Act of 1980 (“CERCLA”), as amended, the Federal Water Pollution
Control Act, as amended, the Occupational Safety and Health Act of 1970, as
amended, the Resource Conservation and Recovery Act of 1976 (“RCRA”), as
amended, the Safe Drinking Water Act, as amended, the Toxic Substances Control
Act, as amended, the Superfund Amendments and Reauthorization Act of 1986, as
amended, the Hazardous Materials Transportation Act, as amended, and other
environmental conservation or protection Governmental Requirements. The term
“oil” shall have the meaning specified in OPA, the terms “hazardous substance”
and “release” (or “threatened release”) have the meanings specified in CERCLA,
the terms “solid waste” and “disposal” (or “disposed”) have the meanings
specified in RCRA and the term “oil and gas waste” shall have the meaning
specified in Section 91.1011 of the Texas Natural Resources Code (“Section
91.1011”); provided, however, that (a) in the event either OPA, CERCLA, RCRA or
Section 91.1011 is amended so as to broaden the meaning of any term defined
thereby, such broader meaning shall apply subsequent to the effective date of
such amendment and (b) to the extent the laws of the state or other jurisdiction
in which any Property of the Borrower or any Subsidiary is located establish a
meaning for “oil,” “hazardous substance,” “release,” “solid waste,” “disposal”
or “oil and gas waste” which is broader than that specified in either OPA,
CERCLA, RCRA or Section 91.1011, such broader meaning shall apply.

 

-8-

 

 

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

 

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

 

“ERISA Affiliate” means each trade or business (whether or not incorporated)
that, together with the Borrower or a Subsidiary is treated as a “single
employer” under Section 414(b) or (c) of the Code, or solely for the proposes of
Section 302 of ERISA and Section 412 of the Code, is treated as a single
employer under Section 414 of the Code.

 

“ERISA Event” means (a) any “reportable event”, as defined in Section 4043 of
ERISA or the regulations issued thereunder with respect to a Plan (other than an
event for which the 30 day notice period is waived); (b) the existence with
respect to any Plan of an “accumulated funding deficiency” (as defined in
Section 412 of the Code or Section 302 of ERISA), whether or not waived; (c) the
filing pursuant to Section 412(d) of the Code or Section 303(d) of ERISA of an
application for a waiver of the minimum funding standard with respect to any
Plan; (d) the incurrence by the Borrower or any of its ERISA Affiliates of any
liability under Title IV of ERISA with respect to the termination of any Plan;
(e) the receipt by the Borrower or any ERISA Affiliate from the PBGC or a plan
administrator of any notice relating to an intention to terminate any Plan or
Plans or to appoint a trustee to administer any Plan; (f) the incurrence by the
Borrower or any of its ERISA Affiliates of any liability with respect to the
withdrawal or partial withdrawal from any Plan or Multiemployer Plan; or (g) the
receipt by the Borrower or any ERISA Affiliate of any notice, or the receipt by
any Multiemployer Plan from the Borrower or any ERISA Affiliate of any notice,
concerning the imposition of Withdrawal Liability or a determination that a
Multiemployer Plan is, or is expected to be, insolvent or in reorganization,
within the meaning of Title IV of ERISA.

 

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

 

“Eureka Hunter” means Eureka Hunter Pipeline, LLC, a Delaware limited liability
company.

 

“Eureka Hunter Pipeline” means that certain pipeline system (as it may exist
from time to time, including any expansions thereof) for the gathering of
natural gas in Ohio and West Virginia commonly known as the Eureka Hunter
Pipeline.

 

“Eureka Hunter Pipeline J.V.” means a joint venture that may be formed between
Eureka Hunter Pipeline Partners and a third party to own and operate the Eureka
Hunter Pipeline, subject to approval by the Administrative Agent acting
reasonably.

 

“Eureka Hunter Pipeline Partners” means Eureka Hunter Pipeline Partners, LLC, a
Delaware limited liability company.

 

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

 

-9-

 

 

“Excepted Liens” means (a) Liens for Taxes, assessments or other governmental
charges or levies which are not delinquent or which are being contested in good
faith by appropriate action and for which adequate reserves have been maintained
in accordance with GAAP; (b) Liens in connection with workers’ compensation,
unemployment insurance or other social security, old age pension or public
liability obligations which are not delinquent or which are being contested in
good faith by appropriate action and for which adequate reserves have been
maintained in accordance with GAAP; (c) statutory landlord’s liens, operators’,
vendors’, carriers’, warehousemen’s, repairmen’s, mechanics’, suppliers’,
workers’, materialmen’s, construction or other like Liens arising by operation
of law in the ordinary course of business or incident to the exploration,
development, operation and maintenance of Oil and Gas Properties each of which
is in respect of obligations that are not delinquent or which are being
contested in good faith by appropriate action and for which adequate reserves
have been maintained in accordance with GAAP; (d) contractual Liens that arise
in the ordinary course of business under operating agreements, joint venture
agreements, oil and gas partnership agreements, oil and gas leases, farm-out
agreements, division orders, contracts for the sale, transportation or exchange
of oil and natural gas, unitization and pooling declarations and agreements,
area of mutual interest agreements, overriding royalty agreements, marketing
agreements, processing agreements, net profits agreements, development
agreements, gas balancing or deferred production agreements, injection,
repressuring and recycling agreements, salt water or other disposal agreements,
seismic or other geophysical permits or agreements, and other agreements which
are usual and customary in the oil and gas business and are for claims which are
not delinquent or which are being contested in good faith by appropriate action
and for which adequate reserves have been maintained in accordance with GAAP
(or, with respect to royalty interests, such liens will not reasonably be
expected to result in a Material Adverse Effect), provided that any such Lien
referred to in this clause does not materially impair the use of the Property
covered by such Lien for the purposes for which such Property is held by the
Borrower or any Subsidiary or materially impair the value of such Property
subject thereto; (e) Liens arising solely by virtue of any statutory or common
law provision relating to banker’s liens, rights of set-off or similar rights
and remedies and burdening only deposit accounts or other funds maintained with
a creditor depository institution, provided that no such deposit account is a
dedicated cash collateral account or is subject to restrictions against access
by the depositor in excess of those set forth by regulations promulgated by the
Board and no such deposit account is intended by Borrower or any of its
Subsidiaries to provide collateral to the depository institution; (f) easements,
restrictions, servitudes, permits, conditions, covenants, exceptions or
reservations in any Property of the Borrower or any Subsidiary for the purpose
of roads, pipelines, transmission lines, transportation lines, distribution
lines for the removal of gas, oil, coal or other minerals or timber, and other
like purposes, or for the joint or common use of real estate, rights of way,
facilities and equipment, which in the aggregate do not materially impair the
use of such Property for the purposes of which such Property is held by the
Borrower or any Subsidiary or materially impair the value of such Property
subject thereto; (g) Liens on cash or securities pledged to secure performance
of tenders, surety and appeal bonds, government contracts, performance and
return of money bonds, bids, trade contracts, leases, statutory obligations,
regulatory obligations and other obligations of a like nature incurred in the
ordinary course of business; (h) judgment and attachment Liens not giving rise
to an Event of Default, provided that any appropriate legal proceedings which
may have been duly initiated for the review of such judgment shall not have been
finally terminated or the period within which such proceeding may be initiated
shall not have expired and no action to enforce such Lien has been commenced;
and (i) Liens arising from UCC financing statement filings regarding operating
leases entered into by the Borrower and the Subsidiaries in the ordinary course
of business covering only the Property under lease; provided, further that Liens
described in clauses (a) through (e) shall remain Excepted Liens only for so
long as no action to enforce such Lien has been commenced and no intention to
subordinate the first priority Lien granted in favor of the Administrative Agent
and the Lenders is to be hereby implied or expressed by the permitted existence
of such Excepted Liens.

 

-10-

 

 

“Excluded Taxes” means, with respect to the Administrative Agent, any Lender,
the Issuing Bank or any other recipient of any payment to be made by or on
account of any obligation of the Borrower hereunder or under any other Loan
Document, (a) income or franchise taxes imposed on (or measured by) its net
income by the United States of America or such other jurisdiction under the laws
of which such recipient is organized or in which its principal office is located
or, in the case of any Lender, in which its applicable lending office is
located, (b) any branch profits taxes imposed by the United States of America or
any similar tax imposed by any other jurisdiction in which the Borrower is
located, (c) in the case of a Foreign Lender (other than an assignee pursuant to
a request by the Borrower under ‎Section 5.04(b)), any withholding tax that is
imposed on amounts payable to such Foreign Lender at the time such Foreign
Lender becomes a party to this Agreement (or designates a new lending office) or
is attributable to such Foreign Lender’s failure to comply with ‎Section
5.03(e), except to the extent that such Foreign Lender (or its assignor, if any)
was entitled, at the time of designation of a new lending office (or
assignment), to receive additional amounts with respect to such withholding tax
pursuant to ‎Section 5.03(a) or ‎Section 5.03(c) and (d) any U.S. federal
withholding taxes imposed by FATCA.

 

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

 

-11-

 

 

“Federal Funds Effective Rate” means, for any day, the weighted average (rounded
upwards, if necessary, to the next 1/100 of 1%) of the rates on overnight
Federal funds transactions with members of the Federal Reserve System arranged
by Federal funds brokers, as published on the next succeeding Business Day by
the Federal Reserve Bank of New York, New York or, if such rate is not so
published for any day that is a Business Day, the average (rounded upwards, if
necessary, to the next 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.

 

“Fee Letter” means the letter agreement dated January 13, 2011, among the
Borrower, the Administrative Agent and the Arranger pertaining to certain fees
payable to the Administrative Agent and the Arranger.

 

“Financial Officer” means, for any Person, the chief financial officer,
principal accounting officer, treasurer or controller of such Person. Unless
otherwise specified, all references herein to a Financial Officer means a
Financial Officer of the Borrower.

 

“Financial Statements” means the financial statement or statements of the
Borrower and its Consolidated Subsidiaries referred to in ‎Section 7.04(a).

 

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

 

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

 

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

 

“Governmental Authority” means the government of the United States of America,
any other nation or any political subdivision thereof, whether state or local,
and any agency, authority, instrumentality, regulatory body, court, central bank
or other entity exercising executive, legislative, judicial, taxing, regulatory
or administrative powers or functions of or pertaining to government over the
Borrower, any Subsidiary, any of their Properties, the Administrative Agent, the
Issuing Bank or any Lender (including any supra-national bodies such as the
European Union or the European Central Bank).

 

“Governmental Requirement” means any applicable law, statute, code, ordinance,
order, determination, rule, regulation, judgment, decree, injunction, franchise,
permit, certificate, license, authorization or other directive or requirement,
whether now or hereinafter in effect, including, without limitation,
Environmental Laws, energy regulations and occupational, safety and health
standards or controls, of any Governmental Authority.

 

“Guaranty” means the Amended and Restated Guaranty executed by the Guarantors of
even date herewith, in the form of Exhibit F-2 attached hereto, as amended,
modified, supplemented or restated from time to time.

 

-12-

 

 

“Guarantor” means all Restricted Subsidiaries of Borrower.

 

“Hall Houston Debt” means the obligations of the Borrower with respect to
contingent liabilities retained by the Borrower in connection with the sale of
limited partner interests in Hall Houston Exploration II LP.

 

“Highest Lawful Rate” means, as to any Lender, the maximum non-usurious interest
rate, if any (or, if the context so requires, an amount calculated at such
rate), that at any time or from time to time may be contracted for, taken,
reserved, charged, or received by such Lender under applicable laws with respect
to an obligation, as such laws are presently in effect or, to the extent allowed
by applicable law, as such laws may hereafter be in effect and which allow a
higher maximum non-usurious interest rate than such laws now allow. The
determination of the Highest Lawful Rate shall, to the extent required by
applicable law, take into account as interest paid, taken, received, charged,
reserved or contracted for any and all relevant payments or charges under the
Loan Documents.

 

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

 

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

 

“Indemnified Taxes” means Taxes other than Excluded Taxes.

 

“Interest Election Request” means a request by the Borrower to convert or
continue a Borrowing in accordance with ‎Section 2.04.

 

“Interest Expense” means, for any applicable period, the aggregate cash interest
expense (both accrued and paid and net of interest income paid during such
period to the Borrower and its Restricted Subsidiaries) of the Borrower and its
Restricted Subsidiaries for such applicable period, including the portion of any
payments made in respect of Capital Leases allocable to interest expense;
provided that if the Borrower or any Restricted Subsidiary shall acquire or
dispose of any Property during such period in an aggregate amount that equals or
exceeds ten percent (10%) of the Borrowing Base then in effect, then Interest
Expense shall be calculated after giving pro forma effect to such acquisition or
disposition, as if such acquisition or disposition had occurred on the first day
of such period.

 

“Interest Payment Date” means (a) with respect to any ABR Loan, the last day of
each March, June, September and December and (b) with respect to any Eurodollar
Loan, the last day of the Interest Period applicable to the Borrowing of which
such Loan is a part and, in the case of a Eurodollar Borrowing with an Interest
Period of more than three months’ duration, each day prior to the last day of
such Interest Period that occurs at intervals of three months’ duration after
the first day of such Interest Period.

 

-13-

 

 

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

 

“Interim Redetermination” means any redetermination of the Borrowing Base under
‎Section 2.07(b)(ii) or Section 2.07(b)(iii).

 

“Interim Redetermination Date” means the date on which a Borrowing Base that has
been redetermined pursuant to an Interim Redetermination becomes effective as
provided in ‎Section 2.07(d).

 

“Investment” means, for any Person: (a) the acquisition (whether for cash,
Property, services or securities or otherwise) of Equity Interests of any other
Person (including, without limitation, any “short sale” or any sale of any
securities at a time when such securities are not owned by the Person entering
into such short sale) or any capital contribution to any other Person; (b) the
making of any deposit with, or advance, loan or capital contribution to,
assumption of Debt of, purchase or other acquisition of any other Debt or equity
participation or interest in, or other extension of credit to, any other Person
(including the purchase of Property from another Person subject to an
understanding or agreement, contingent or otherwise, to resell such Property to
such Person); or (c) the entering into of any guarantee of, or other contingent
obligation (including the deposit of any Equity Interests to be sold) with
respect to, Debt or other liability of any other Person and (without
duplication) any amount committed to be advanced, lent or extended to such
Person.

 

“Issuing Bank” means Bank of Montreal, in its capacity as the issuer of Letters
of Credit hereunder, and its successors in such capacity as provided herein. The
Issuing Bank may, in its discretion, arrange for one or more Letters of Credit
to be issued by Affiliates of the Issuing Bank, in which case the term “Issuing
Bank” shall include any such Affiliate with respect to Letters of Credit issued
by such Affiliate.

 

“Joinder Agreement” means the Addendum and Joinder Agreement substantially in
the form of Exhibit H.

 

“LC Commitment” at any time means Ten Million Dollars ($10,000,000).

 

“LC Disbursement” means a payment made by the Issuing Bank pursuant to a Letter
of Credit issued by the Issuing Bank.

 

-14-

 

 

“LC Exposure” means, at any time, the sum of (a) the aggregate undrawn amount of
all outstanding Letters of Credit at such time plus (b) the aggregate amount of
all LC Disbursements that have not yet been reimbursed by or on behalf of the
Borrower at such time. The LC Exposure of any Lender at any time shall be its
Applicable Percentage of the total LC Exposure at such time.

 

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

 

“Letter of Credit” means any letter of credit issued pursuant to this Agreement.

 

“Letter of Credit Agreements” means all letter of credit applications and other
agreements (including any amendments, modifications or supplements thereto)
submitted by the Borrower, or entered into by the Borrower, with the Issuing
Bank relating to any Letter of Credit issued by the Issuing Bank.

 

“LIBO Rate” means, with respect to any Eurodollar Borrowing for any Interest
Period, the rate appearing on Bloomberg Page BBAL10 (or on any successor or
substitute page of such service, or any successor to or substitute for such
service, providing rate quotations comparable to those currently provided on
such page of such service, as determined by the Administrative Agent from time
to time for purposes of providing quotations of interest rates applicable to
dollar deposits in the London interbank market) at approximately 11:00 a.m.,
London time, two Business Days prior to the commencement of such Interest
Period, as the rate for dollar deposits with a maturity comparable to such
Interest Period. In the event that such rate is not available at such time for
any reason, then the LIBO Rate with respect to such Eurodollar Borrowing for
such Interest Period shall be the rate at which dollar deposits of $5,000,000
and, in each case, for a maturity comparable to such Interest Period are offered
by the principal London office of the Administrative Agent in immediately
available funds in the London interbank market at approximately 11:00 a.m.,
London time, two Business Days prior to the commencement of such Interest
Period.

 

“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) royalties, production payments and the like payable
out of Oil and Gas Properties. The term “Lien” shall include easements,
restrictions, servitudes, permits, conditions, covenants, encroachments,
exceptions or reservations. For the purposes of this Agreement, the Borrower and
its Subsidiaries shall be deemed to be the owner of any Property which it has
acquired or holds subject to a conditional sale agreement, or leases under a
financing lease or other arrangement pursuant to which title to the Property has
been retained by or vested in some other Person in a transaction intended to
create a financing.

 

-15-

 

 

“Liquidate” means, with respect to any Swap Agreement, (a) the sale, assignment,
novation, unwind or termination of all or any part of such Swap Agreement or (b)
the creation of an offsetting position against all or any part of such Swap
Agreement; provided that, a Swap Agreement shall not be considered “Liquidated”
for the purposes of this Agreement if, upon the occurrence of any of the events
described in clauses (a) and (b), such Swap Agreement is replaced simultaneously
with a new Swap Agreement containing substantially the same terms and provisions
as the prior Swap Agreement. The term “Liquidated” has a correlative meaning
thereto.

 

“Liquidity” means the sum of (a) the Borrower’s unrestricted cash and cash
equivalents and (b) the total unused availability under the Borrowing Base.

 

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

 

“Loan Parties” means the Borrower and each Subsidiary that is a party to any
Loan Document.

 

“Loans” means the loans made by the Lenders to the Borrower pursuant to this
Agreement.

 

“Material Adverse Effect” means a material adverse effect on (a) the business,
operations, Property or condition (financial or otherwise) of the Borrower and
the Restricted Subsidiaries taken as a whole, (b) the ability of any Loan Party
to perform any of its obligations under any Loan Document, (c) the validity or
enforceability of any Loan Document or (d) the rights and remedies of or
benefits available to the Administrative Agent, the Issuing Bank or any Lender
under any Loan Document.

 

“Material Indebtedness” means Debt (other than the Loans and Letters of Credit),
or obligations in respect of one or more Swap Agreements, of any one or more of
the Borrower and its Restricted Subsidiaries in an aggregate principal amount
exceeding $3,000,000. For purposes of determining Material Indebtedness, the
“principal amount” of the obligations of the Borrower or any Restricted
Subsidiary in respect of any Swap Agreement at any time shall be the maximum
aggregate amount (giving effect to any netting agreements) that the Borrower or
such Restricted Subsidiary would be required to pay if such Swap Agreement were
terminated at such time.

 

“Maturity Date” means April 13, 2016.

 

“Maximum Credit Amount” means, as to each Lender, the amount set forth opposite
such Lender’s name on Annex I under the caption “Maximum Credit Amounts,” as the
same may be (a) modified from time to time pursuant to ‎Sections 2.06 or 10.02
or (b) modified from time to time pursuant to any assignment permitted by
‎Section 12.04(b).

 

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

 

“Mortgaged Property” means any Property owned by the Borrower or any Restricted
Subsidiary that is subject to the Liens existing and to exist under the terms of
the Security Instruments.

 

-16-

 

 

“Mortgages” means all mortgages and deeds of trust executed in connection
herewith.

 

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

 

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

 

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

 

“Obligations” means, without duplication, (i) all Debt evidenced hereunder,
(ii) the obligation of the Loan Parties for the payment of the fees payable
hereunder or under the other Loan Documents, (iii) all obligations and
liabilities of the Loan Parties to any Person relating to Swap Agreements
between any Loan Party and such Person initially entered into while such Person
was a Lender under the Prior Agreement or this Agreement or an Affiliate of a
Lender under the Prior Agreement or this Agreement, (iv) all obligations and
other liabilities of the Loan Parties to any Person relating to Cash Management
Agreements between any Loan Party and such Person while such Person is a Lender
under this Agreement or an Affiliate of a Lender under this Agreement and (v)
all other obligations and liabilities (monetary or otherwise, whether absolute
or contingent, matured or unmatured) of the Loan Parties to the Administrative
Agent, the Issuer and the Lenders, including reimbursement obligations with
respect to LC Disbursements, in each case now existing or hereafter incurred
under, arising out of or in connection with any Loan Document, and to the extent
that any of the foregoing includes or refers to the payment of amounts deemed or
constituting interest, only so much thereof as shall have accrued, been earned
and which remains unpaid at each relevant time of determination.

 

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

 

-17-

 

 

“Other Taxes” means any and all present or future stamp or documentary taxes or
any other excise or property taxes, charges or similar levies arising from any
payment made hereunder or from the execution, delivery or enforcement of, or
otherwise with respect to, this Agreement and any other Loan Document.

 

“Participant” has the meaning set forth in ‎Section 12.04(c)(i).

 

“Patriot Act” has the meaning set forth in ‎Section 12.15.

 

“PBGC” means the Pension Benefit Guaranty Corporation referred to and defined in
ERISA, and any successor entity performing similar functions.

 

“PDP” means, with respect to the Oil and Gas Properties, properties that are
categorized as “Proved Reserves” that are both “Developed” and “Producing” as
such terms are defined in the Definitions for Oil and Gas Reserves as
promulgated by the Society of Petroleum Engineers (or any generally recognized
successor) as in effect as the time in question.

 

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

 

“Plan” means any employee pension benefit plan (other than a Multiemployer
Plan), subject to the provisions of Title IV of ERISA or Section 412 of the Code
or Section 302 of ERISA, and in respect of which the Borrower or any ERISA
Affiliate is (or, if such plan were terminated, would under Section 4069 of
ERISA be deemed to be) an “employer” as defined in Section 3(5) of ERISA.

 

“Prime Rate” means the rate of interest per annum publicly announced from time
to time by BOM as its prime rate in effect at its principal office in New York,
New York; each change in the Prime Rate shall be effective from and including
the date such change is publicly announced as being effective. Such rate is set
by the Administrative Agent as a general reference rate of interest, taking into
account such factors as the Administrative Agent may deem appropriate; it being
understood that many of the Administrative Agent’s commercial or other loans are
priced in relation to such rate, that it is not necessarily the lowest or best
rate actually charged to any customer and that the Administrative Agent may make
various commercial or other loans at rates of interest having no relationship to
such rate.

 

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

 

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

 

-18-

 

 

“Proposed Borrowing Base Notice” has the meaning assigned to such term in
‎Section 2.07(c)(ii).

 

“Redemption” means with respect to any Debt, the repurchase, redemption,
prepayment, repayment or defeasance (or the segregation of funds with respect to
any of the foregoing) of such Debt. “Redeem” has the correlative meaning
thereto.

 

“Redetermination Date” means, with respect to any Scheduled Redetermination or
any Interim Redetermination, the date that the redetermined Borrowing Base
related thereto becomes effective pursuant to ‎Section 2.07(d).

 

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

 

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

 

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

 

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

 

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

 

“Reserve Report” means a report, in form and substance reasonably satisfactory
to the Administrative Agent, setting forth, as of each December 31st or June
30th (or such other date in the event of an Interim Redetermination), the oil
and gas reserves attributable to the proved Oil and Gas Properties of the
Borrower and the Restricted Subsidiaries, together with a projection of the rate
of production and future net income, taxes, operating expenses and capital
expenditures with respect thereto as of such date, based upon the pricing
assumptions consistent with SEC reporting requirements at the time, and
reflecting Swap Agreements in place with respect to such production.

 

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

 

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

 

-19-

 

 

“Restricted Subsidiary” means any Subsidiary that is not an Unrestricted
Subsidiary.

 

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

 

“Scheduled Redetermination Date” means the date on which a Borrowing Base that
has been redetermined pursuant to a Scheduled Redetermination becomes effective
as provided in ‎Section 2.07(d).

 

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

 

“Security Agreement” means the Amended and Restated Security and Pledge
Agreement executed by the Borrower and the Guarantors, in the form of Exhibit
F-1 attached hereto, as amended, modified, supplemented or restated from time to
time.

 

“Security Instruments” means the mortgages, deeds of trust and other agreements,
instruments or certificates, and any and all other agreements, instruments,
certificates or certificates now or hereafter executed and delivered by the
Borrower or any other Person (other than participation or similar agreements
between any Lender and any other lender or creditor with respect to any
Obligations pursuant to this Agreement) in connection with, or as security for
the payment or performance of the Obligations, the Notes, this Agreement, as
such agreements may be amended, modified, supplemented or restated from time to
time, including, without limitation, the Security Agreement, the Canadian
Collateral Documents, the Mortgages and each Joinder Agreement.

 

“Senior Notes” means any senior unsecured notes issued by the Borrower in
accordance with Section 9.02(p).

 

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

 

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

 

-20-

 

 

“Subsidiary” means (a) any Person of which at least a majority of the
outstanding Equity Interests having by the terms thereof ordinary voting power
to elect a majority of the board of directors, manager or other governing body
of such Person (irrespective of whether or not at the time Equity Interests of
any other class or classes of such Person shall have or might have voting power
by reason of the happening of any contingency) is at the time directly or
indirectly owned or Controlled by the Borrower or one or more of its
Subsidiaries or by the Borrower and one or more of its Subsidiaries and (b) any
partnership of which the Borrower or any of its Subsidiaries is a general
partner. Unless otherwise indicated herein, each reference to the term
“Subsidiary” shall mean a Subsidiary of the Borrower. Notwithstanding the
foregoing, for the purposes of ARTICLE IX, Unrestricted Subsidiaries shall not
be considered “Subsidiaries” and the covenants contained in ARTICLE IX shall not
apply to Unrestricted Subsidiaries.

 

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

 

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

 

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

 

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

 

“Total Proved Reserves” means, with respect to the Oil and Gas Properties, the
sum of (a) PDP Oil and Gas Properties, (b) Oil and Gas Properties that are
categorized as “Proved Developed Nonproducing Reserves”, and (c) Oil and Gas
Properties that are categorized as “Proved Undeveloped Reserves”, in each case,
as said two latter terms are defined in the Definitions for Oil and Gas Reserves
as promulgated by the Society of Petroleum Engineers (or any generally
recognized successor) as in effect at the time in question.

 

“Transactions” means the execution, delivery and performance by the Borrower of
this Agreement, the execution, delivery and performance of the Loan Parties of
each other Loan Document to which it is a party, the borrowing of Loans, the use
of the proceeds thereof and the issuance of Letters of Credit hereunder, and the
grant of Liens by the Loan Parties on Mortgaged Properties and other Properties
pursuant to the Security Instruments.

 

-21-

 

 

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

 

“UCC” means the Uniform Commercial Code in effect from time to time in the State
of New York, or, where applicable as to specific Property, any other relevant
state.

 

“Unrestricted Subsidiary” means (i) any Subsidiary that at the time of
determination shall have been designated as an Unrestricted Subsidiary by the
Borrower in the manner provided below (and shall not have been subsequently
designated as a Restricted Subsidiary), (ii) any Subsidiary of an Unrestricted
Subsidiary and (iii) the Persons listed on Schedule 1.01A (except to the extent
any such Person has been subsequently designated as a Restricted Subsidiary).
The Borrower may from time to time designate any Subsidiary (including a
newly-created or newly acquired Subsidiary) (other than a Subsidiary that,
immediately after such designation, shall hold any Debt of, or Equity Interest
in, the Borrower or any Restricted Subsidiary) as an Unrestricted Subsidiary,
and may designate any Unrestricted Subsidiary as a Restricted Subsidiary so long
as, immediately after giving effect to such designation, no Default shall have
occurred and be continuing. Any designation by the Borrower pursuant to this
definition shall be made in an officer’s certificate delivered to the
Administrative Agent and containing a certification that such designation is in
compliance with the terms of this definition.

 

“Wholly-Owned Subsidiary” means any Subsidiary of which all of the outstanding
Equity Interests (other than any directors’ qualifying shares mandated by
applicable law), on a fully-diluted basis, are owned by the Borrower or one or
more of the Wholly-Owned Subsidiaries or by the Borrower and one or more of the
Wholly-Owned Subsidiaries; provided that, for purposes of this Agreement, and
for the avoidance of doubt, PRC Williston, LLC, during such times as the
Borrower owns all of the Equity Interests therein, shall be deemed a
Wholly-Owned Subsidiary, notwithstanding the non-controlling interests in such
Subsidiary recorded for accounting purposes as reflected in the Borrower’s
Financial Statements.

 

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

 

Section 1.04    Terms Generally; Rules of Construction. The definitions of terms
herein shall apply equally to the singular and plural forms of the terms
defined. Whenever the context may require, any pronoun shall include the
corresponding masculine, feminine and neuter forms. The words “include”,
“includes” and “including” 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, supplemented or otherwise modified (subject to any
restrictions on such amendments, supplements or modifications set forth herein),
(b) any reference herein to any law shall be construed as referring to such law
as amended, modified, codified or reenacted, in whole or in part, and in effect
from time to time, (c) any reference herein to any Person shall be construed to
include such Person’s successors and assigns (subject to the restrictions
contained herein), (d) 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, (e) with respect to the
determination of any time period, the word “from” means “from and including” and
the word “to” means “to and including” and (f) any reference herein to Articles,
Sections, Annexes, Exhibits and Schedules shall be construed to refer to
Articles and Sections of, and Annexes, Exhibits and Schedules to, this
Agreement. No provision of this Agreement or any other Loan Document shall be
interpreted or construed against any Person solely because such Person or its
legal representative drafted such provision.

 

-22-

 

 

Section 1.05    Accounting Terms and Determinations; GAAP. Unless otherwise
specified herein, all accounting terms used herein shall be interpreted, all
determinations with respect to accounting matters hereunder shall be made, and
all financial statements and certificates and reports as to financial matters
required to be furnished to the Administrative Agent or the Lenders hereunder
shall be prepared, in accordance with GAAP, applied on a basis consistent with
the Financial Statements except for changes in which Borrower’s independent
certified public accountants concur and which are disclosed to Administrative
Agent on the next date on which financial statements are required to be
delivered to the Lenders pursuant to ‎Section 8.01(a); provided that, unless the
Borrower and the Required Lenders shall otherwise agree in writing, no such
change shall modify or affect the manner in which compliance with the covenants
contained herein is computed such that all such computations shall be conducted
utilizing financial information presented consistently with prior periods.

 

ARTICLE II

 

The Credits

 

Section 2.01    Commitments. Subject to the terms and conditions set forth
herein, each Lender agrees to make Loans to the Borrower during the Availability
Period in an aggregate principal amount that will not result in (a) such
Lender’s Credit Exposure exceeding such Lender’s Commitment or (b) the total
Credit Exposures exceeding the total Commitments. Within the foregoing limits
and subject to the terms and conditions set forth herein, the Borrower may
borrow, repay and reborrow the Loans.

 

Section 2.02    Loans and Borrowings.

 

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

 

(b)       Types of Loans. Subject to Section 3.03, each Borrowing shall be
comprised entirely of ABR Loans or Eurodollar Loans as the Borrower may request
in accordance herewith. Each Lender at its option may make any Eurodollar Loan
by causing any domestic or foreign branch or Affiliate of such Lender to make
such Loan; provided that any exercise of such option shall not affect the
obligation of the Borrower to repay such Loan in accordance with the terms of
this Agreement.

 

-23-

 

 

(c)       Minimum Amounts; Limitation on Number of Borrowings. At the
commencement of each Interest Period for any Eurodollar Borrowing, such
Borrowing shall be in an aggregate amount that is an integral multiple of
$100,000 and not less than $500,000. At the time that each ABR Borrowing is
made, such Borrowing shall be in an aggregate amount that is an integral
multiple of $100,000 and not less than $500,000; provided that an ABR Borrowing
may be in an aggregate amount that is equal to the entire unused balance of the
total Commitments or that is required to finance the reimbursement of an LC
Disbursement as contemplated by Section 2.08(e). Borrowings of more than one
Type may be outstanding at the same time; provided that there shall not at any
time be more than a total of ten (10) Eurodollar Borrowings outstanding.
Notwithstanding any other provision of this Agreement, the Borrower shall not be
entitled to request, or to elect to convert or continue, any Borrowing if the
Interest Period requested with respect thereto would end after the Maturity
Date.

 

(d)       Notes. Any Lender may request that Loans made by it be evidenced by a
single promissory note. In such event, the Borrower shall prepare, execute and
deliver to such Lender a promissory note payable to the order of such Lender in
substantially the form of Exhibit A, dated, in the case of (i) any Lender party
hereto as of the Effective Date, as of the Effective Date, (ii) any Lender that
becomes a party hereto pursuant to an Assignment and Assumption, as of the
effective date of the Assignment and Assumption, payable to the order of such
Lender in a principal amount equal to its Maximum Credit Amount as in effect on
such date, and otherwise duly completed. If any Lender’s Maximum Credit Amount
increases or decreases for any reason (whether pursuant to ‎Section 2.06,
‎Section 12.04(b) or otherwise), the Borrower shall deliver or cause to be
delivered on the effective date of such increase or decrease, a new Note payable
to the order of any Lender who requested a Note hereunder in a principal amount
equal to its Maximum Credit Amount after giving effect to such increase or
decrease, and otherwise duly completed, and such Lender agrees to promptly
thereafter return the previously issued Note held by such Lender marked canceled
or otherwise similarly defaced. The date, amount, Type, interest rate and, if
applicable, Interest Period of each Loan made by each Lender that receives a
Note, and all payments made on account of the principal thereof, shall be
recorded by such Lender on its books for its Note, and, prior to any transfer,
may be endorsed by such Lender on a schedule attached to such Note or any
continuation thereof or on any separate record maintained by such Lender.
Failure to make any such notation or to attach a schedule shall not affect any
Lender’s or the Borrower’s rights or obligations in respect of such Loans or
affect the validity of such transfer by any Lender of its Note.

 

Section 2.03    Requests for Borrowings. To request a Borrowing, the Borrower
shall notify the Administrative Agent of such request by telephone or by written
Borrowing Request in substantially the form of Exhibit B and signed by the
Borrower (a “written Borrowing Request”): (a) in the case of a Eurodollar
Borrowing, not later than 12:00 noon, New York, New York time, three Business
Days before the date of the proposed Borrowing or (b) in the case of an ABR
Borrowing, not later than 11:00 a.m., New York, New York time, on the Business
Day of the proposed Borrowing; provided that no such notice shall be required
for any deemed request of an ABR Borrowing to finance the reimbursement of an LC
Disbursement as provided in ‎Section 2.08(e). Each telephonic and written
Borrowing Request shall be irrevocable and each telephonic Borrowing Request
shall be confirmed promptly by hand delivery or telecopy to the Administrative
Agent of a written Borrowing Request. Each such telephonic and written Borrowing
Request shall specify the following information in compliance with ‎Section
2.02:

 

-24-

 

 

(i)      the aggregate amount of the requested Borrowing;

 

(ii)      the date of such Borrowing, which shall be a Business Day;

 

(iii)      whether such Borrowing is to be an ABR Borrowing or a Eurodollar
Borrowing;

 

(iv)      in the case of a Eurodollar Borrowing, the initial Interest Period to
be applicable thereto, which shall be a period contemplated by the definition of
the term “Interest Period”;

 

(v)      the amount of the then effective Borrowing Base, the current total
Credit Exposures (without regard to the requested Borrowing) and the pro forma
total Credit Exposures (giving effect to the requested Borrowing); and

 

(vi)      the location and number of the Borrower’s account to which funds are
to be disbursed, which shall comply with the requirements of ‎Section 2.05.

 

If no election as to the Type of Borrowing is specified, then the requested
Borrowing shall be an ABR Borrowing. If no Interest Period is specified with
respect to any requested Eurodollar Borrowing, then the Borrower shall be deemed
to have selected an Interest Period of one month’s duration. Each Borrowing
Request shall constitute a representation that the amount of the requested
Borrowing shall not cause the total Credit Exposures to exceed the total
Commitments (i.e., the lesser of the Aggregate Maximum Credit Amounts and the
then effective Borrowing Base). Promptly following receipt of a Borrowing
Request in accordance with this ‎Section 2.03, the Administrative Agent shall
advise each Lender of the details thereof and of the amount of such Lender’s
Loan to be made as part of the requested Borrowing.

 

Section 2.04    Interest Elections.

 

(a)       Conversion and Continuance. Each Borrowing initially shall be of the
Type specified in the applicable Borrowing Request and, in the case of a
Eurodollar Borrowing, shall have an initial Interest Period as specified in such
Borrowing Request. Thereafter, the Borrower may elect to convert such Borrowing
to a different Type or to continue such Borrowing and, in the case of a
Eurodollar Borrowing, may elect Interest Periods therefor, all as provided in
this ‎Section 2.04. The Borrower may elect different options with respect to
different portions of the affected Borrowing, in which case each such portion
shall be allocated ratably among the Lenders holding the Loans comprising such
Borrowing, and the Loans comprising each such portion shall be considered a
separate Borrowing.

 

(b)       Interest Election Requests. To make an election pursuant to this
‎Section 2.04, the Borrower shall notify the Administrative Agent of such
election by telephone or by a written Interest Election Request in substantially
the form of Exhibit C and signed by the Borrower (a “written Interest Election
Request”) by the time that a Borrowing Request would be required under ‎Section
2.03 if the Borrower were requesting a Borrowing of the Type resulting from such
election to be made on the effective date of such election. Each telephonic and
written Interest Election Request shall be irrevocable and each telephonic
Interest Election Request shall be confirmed promptly by hand delivery or
telecopy to the Administrative Agent.

 

-25-

 

 

(c)       Information in Interest Election Requests. Each telephonic and written
Interest Election Request shall specify the following information in compliance
with ‎Section 2.02:

 

   (i)      the Borrowing to which such Interest Election Request applies and,
if different options are being elected with respect to different portions
thereof, the portions thereof to be allocated to each resulting Borrowing (in
which case the information to be specified pursuant to Section 2.04(c)(iii) and
(iv) shall be specified for each resulting Borrowing);

 

   (ii)      the effective date of the election made pursuant to such Interest
Election Request, which shall be a Business Day;

 

   (iii)      whether the resulting Borrowing is to be an ABR Borrowing or a
Eurodollar Borrowing; and

 

   (iv)      if the resulting Borrowing is a Eurodollar Borrowing, the Interest
Period to be applicable thereto after giving effect to such election, which
shall be a period contemplated by the definition of the term “Interest Period”.

 

If any such Interest Election Request requests a Eurodollar Borrowing but does
not specify an Interest Period, then the Borrower shall be deemed to have
selected an Interest Period of one month’s duration.

 

(d)       Notice to Lenders by the Administrative Agent. Promptly following
receipt of an Interest Election Request, the Administrative Agent shall advise
each Lender of the details thereof and of such Lender’s portion of each
resulting Borrowing.

 

(e)       Effect of Failure to Deliver Timely Interest Election Request and
Events of Default on Interest Election. If the Borrower fails to deliver a
timely Interest Election Request with respect to a Eurodollar Borrowing prior to
the end of the Interest Period applicable thereto, then, unless such Borrowing
is repaid as provided herein, at the end of such Interest Period such Borrowing
shall be converted to an ABR Borrowing. Notwithstanding any contrary provision
hereof, if an Event of Default has occurred and is continuing: (i) no
outstanding Borrowing may be converted to or continued as a Eurodollar Borrowing
(and any Interest Election Request that requests the conversion of any Borrowing
to, or continuation of any Borrowing as, a Eurodollar Borrowing shall be
ineffective) and (ii) unless repaid, each Eurodollar Borrowing shall be
converted to an ABR Borrowing at the end of the Interest Period applicable
thereto.

 

Section 2.05    Funding of Borrowings.

 

(a)       Funding by Lenders. Each Lender shall make each Loan to be made by it
hereunder on the proposed date thereof by wire transfer of immediately available
funds by 2:00 p.m., New York, New York time, to the account of the
Administrative Agent most recently designated by it for such purpose by notice
to the Lenders. The Administrative Agent will make such Loans available to the
Borrower by promptly crediting the amounts so received, in like funds, to an
account of the Borrower maintained with the Administrative Agent in New York,
New York and designated by the Borrower in the applicable Borrowing Request;
provided that ABR Loans made to finance the reimbursement of an LC Disbursement
as provided in ‎Section 2.08(e) shall be remitted by the Administrative Agent to
the Issuing Bank that made such LC Disbursement.

 

-26-

 

 

(b)       Presumption of Funding by the Lenders. Unless the Administrative Agent
shall have received notice from a Lender prior to the time such Lender is
required to fund its share of a Borrowing that such Lender will not make
available to the Administrative Agent such Lender’s share of such Borrowing, the
Administrative Agent may assume that such Lender has made such share available
on such date in accordance with paragraph (a) above and may, in reliance upon
such assumption, make available to the Borrower a corresponding amount. In such
event, if a Lender has not in fact made its share of the applicable Borrowing
available to the Administrative Agent, then the applicable Lender and the
Borrower severally agree to pay to the Administrative Agent forthwith on demand
such corresponding amount with interest thereon, for each day from and including
the date such amount is made available to the Borrower to but excluding the date
of payment to the Administrative Agent, at (i) in the case of such Lender, the
greater of the Federal Funds Effective Rate and a rate determined by the
Administrative Agent in accordance with banking industry rules on interbank
compensation or (ii) in the case of the Borrower, the interest rate applicable
to ABR Loans. If such Lender pays such amount to the Administrative Agent, then
such amount shall constitute such Lender’s Loan included in such Borrowing.

 

Section 2.06    Changes in the Aggregate Maximum Credit Amounts.

 

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

 

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

 

   (i)      The Borrower may at any time terminate, or from time to time reduce,
the Aggregate Maximum Credit Amounts; provided that (1) each reduction of the
Aggregate Maximum Credit Amounts shall be in an amount that is an integral
multiple of $1,000,000 and not less than $5,000,000 and (2) the Borrower shall
not terminate or reduce the Aggregate Maximum Credit Amounts if, after giving
effect to any concurrent prepayment of the Loans in accordance with Section
3.04(c)‎, the total Credit Exposures would exceed the total Commitments.

 

   (ii)      The Borrower shall notify the Administrative Agent of any election
to terminate or reduce the Aggregate Maximum Credit Amounts under ‎Section
2.06(b)(i) at least three Business Days prior to the effective date of such
termination or reduction, specifying such election and the effective date
thereof. Promptly following receipt of any notice, the Administrative Agent
shall advise the Lenders of the contents thereof. Each notice delivered by the
Borrower pursuant to this ‎Section 2.06(b)(ii) shall be irrevocable. Any
termination or reduction of the Aggregate Maximum Credit Amounts shall be
permanent and may not be reinstated. Each reduction of the Aggregate Maximum
Credit Amounts shall be made ratably among the Lenders in accordance with each
Lender’s Applicable Percentage.

 

-27-

 

 

Section 2.07    Borrowing Base.

 

(a)       Borrowing Base. For the period from and including the Effective Date
to but excluding the first Redetermination Date, the Borrowing Base shall be
equal to $265,000,000. Upon the issuance of any Senior Notes after the Effective
Date, the Borrowing Base shall be automatically reduced by $0.25 for each $1.00
of the aggregate principal amount of such Senior Notes. In addition, the
Borrowing Base may be subject to further adjustments from time to time pursuant
to ‎Section 8.13(c) or ‎Section 9.11.

 

(b)       Scheduled and Interim Redeterminations.

 

   (i)      The Borrowing Base shall be redetermined semi-annually on or around
November 1st and May 1st in accordance with this Section 2.07 (a “Scheduled
Redetermination”) with the first Scheduled Redetermination to take place May 1,
2014, and, subject to Section 2.07(d), such redetermined Borrowing Base shall
become effective and applicable to the Borrower, the Administrative Agent, the
Issuing Bank and the Lenders on or around November 1st and May 1st of each year.

 

   (ii)      The Administrative Agent may or shall, at the direction of the
Required Lenders, by notifying the Borrower thereof, one time during any
six-month period, elect to cause the Borrowing Base to be redetermined between
Scheduled Redeterminations in accordance with this ‎Section 2.07.

 

   (iii)      The Borrower may elect to redetermine the Borrowing Base, by
notifying the Administrative Agent thereof, one time during any six-month
period, that it elects to cause the Borrowing Base to be redetermined between
Scheduled Redeterminations in accordance with this Section 2.07.

 

(c)       Scheduled and Interim Redetermination Procedure.

 

   (i)      Each Scheduled Redetermination and each Interim Redetermination
shall be effectuated as follows: upon receipt by the Administrative Agent of (1)
the Reserve Report and the certificate required to be delivered by the Borrower,
in the case of a Scheduled Redetermination, pursuant to Section 8.12(a) and
‎(c), and, in the case of an Interim Redetermination, pursuant to
Section 8.12(b) and ‎(c), and (2) such other reports, data and supplemental
information, including, without limitation, the information provided pursuant to
‎Section 8.12(c), as may, from time to time, be reasonably requested by the
Required Lenders (the Reserve Report, such certificate and such other reports,
data and supplemental information being the “Engineering Reports”), the
Administrative Agent shall evaluate the information contained in the Engineering
Reports and shall, in good faith, propose a new Borrowing Base (such amount
being the “Proposed Borrowing Base”) based upon such information and such other
information (including, without limitation, the status of title information with
respect to the Oil and Gas Properties as described in the Engineering Reports
and the existence of any other Debt) as the Administrative Agent deems
appropriate in its sole discretion and consistent with its normal oil and gas
lending criteria as it exists at the particular time. In no event shall the
Proposed Borrowing Base exceed the Aggregate Maximum Credit Amounts.

 

-28-

 

 

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

 

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

 

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

 

   (iii)      Any Proposed Borrowing Base that would increase the Borrowing Base
then in effect must be approved or deemed to have been approved by all of the
Lenders as provided in this ‎Section 2.07(c)(iii) and any Proposed Borrowing
Base that would decrease or maintain the Borrowing Base then in effect must be
approved or be deemed to have been approved by the Required Lenders as provided
in this ‎Section 2.07(c)(iii). Upon receipt of the Proposed Borrowing Base
Notice, each Lender shall have fifteen (15) days to agree with the Proposed
Borrowing Base or disagree with the Proposed Borrowing Base by proposing an
alternate Borrowing Base. If, at the end of such fifteen (15) days, any Lender
has not communicated its approval or disapproval in writing to the
Administrative Agent, such silence shall be deemed to be an approval of the
Proposed Borrowing Base. If, at the end of such 15-day period, all of the
Lenders, in the case of a Proposed Borrowing Base that would increase the
Borrowing Base then in effect, or the Required Lenders, in the case of a
Proposed Borrowing Base that would decrease or maintain the Borrowing Base then
in effect, have approved or been deemed to have approved, as aforesaid, then the
Proposed Borrowing Base shall become the new Borrowing Base, effective on the
date specified in ‎Section 2.07(d). If, however, at the end of such 15-day
period, all of the Lenders or the Required Lenders, as applicable, have not
approved or been deemed to have approved, as aforesaid, then the Administrative
Agent shall (i) notify the Borrower of the Proposed Borrowing Base and which
Lenders have not approved or been deemed to have approved the Proposed Borrowing
Base and (ii) poll the Lenders to ascertain the highest Borrowing Base then
acceptable to a number of Lenders sufficient to constitute the Required Lenders
for purposes of this ‎Section 2.07 and, so long as such amount does not increase
the Borrowing Base then in effect, such amount shall become the new Borrowing
Base, effective on the date specified in ‎Section 2.07(d).

 

-29-

 

 

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

 

   (i)      in the case of a Scheduled Redetermination, (1) if the
Administrative Agent shall have received the Engineering Reports required to be
delivered by the Borrower pursuant to ‎‎Section 8.12(a) and ‎‎(c) in a timely
and complete manner, then on the November 1st or May 1st, as applicable,
following such New Borrowing Base Notice, or (2) if the Administrative Agent
shall not have received the Engineering Reports required to be delivered by the
Borrower pursuant to ‎Section 8.12(a) and ‎‎(c) in a timely and complete manner,
then on the Business Day next succeeding delivery of such New Borrowing Base
Notice; and

 

   (ii)      in the case of an Interim Redetermination, on the Business Day next
succeeding delivery of such New Borrowing Base Notice.

 

Such amount shall then become the Borrowing Base until the next Scheduled
Redetermination Date, the next Interim Redetermination Date or the next
adjustment to the Borrowing Base under ‎Section 8.13(c) or Section 9.11,
whichever occurs first. Notwithstanding the foregoing, no Scheduled
Redetermination or Interim Redetermination shall become effective until the New
Borrowing Base Notice related thereto is received by the Borrower.

 

(e)       Reductions of Borrowing Base Related to Swap Agreements. If any Swap
Agreement to which the Borrower or any Subsidiary is a party is Liquidated and
which was used by the Lenders to establish the Borrowing Base, and the total
termination value payable by the Borrower in respect of all such Liquidated Swap
Agreements in any period between any two Scheduled Redetermination Dates exceeds
five percent (5%) of the then effective Borrowing Base, then, contemporaneously
therewith, the Borrowing Base then in effect shall be reduced by an amount equal
to the value, if any, assigned to the Liquidated portion of all such Swap
Agreements so terminated during such period, as determined by the Required
Lenders.

 

Section 2.08    Letters of Credit.

 

(a)       General. Subject to the terms and conditions set forth herein, the
Borrower may request the Issuing Bank to issue Letters of Credit in dollars for
its own account or for the account of any of its Restricted Subsidiaries, in a
form reasonably acceptable to the Administrative Agent and the Issuing Bank, at
any time and from time to time during the Availability Period. In the event of
any inconsistency between the terms and conditions of this Agreement and the
terms and conditions of any Letter of Credit Agreement, the terms and conditions
of this Agreement shall control.

 

-30-

 

 

(b)       Notice of Issuance, Amendment, Renewal, Extension; Certain Conditions.
To request the issuance of a Letter of Credit (or the amendment, renewal or
extension of an outstanding Letter of Credit), the Borrower shall hand deliver
or telecopy (or transmit by electronic communication, if arrangements for doing
so have been approved by the Issuing Bank) to the Issuing Bank and the
Administrative Agent (not less than three (3) Business Days in advance of the
requested date of issuance, amendment, renewal or extension) a notice:
(i) requesting the issuance of a Letter of Credit or identifying the outstanding
Letter of Credit issued by the Issuing Bank to be amended, renewed or extended;
(ii) specifying the date of issuance, amendment, renewal or extension (which
shall be a Business Day); (iii) specifying the date on which such Letter of
Credit is to expire (which shall comply with Section 2.08(c)); (iv) specifying
the amount of such Letter of Credit; (v) specifying the name and address of the
beneficiary thereof and such other information as shall be necessary to prepare,
amend, renew or extend such Letter of Credit; and (vi) specifying the amount of
the then effective Borrowing Base (without regard to the requested Letter of
Credit or the requested amendment, renewal or extension of an outstanding Letter
of Credit) and the pro forma total Credit Exposures (giving effect to the
requested Letter of Credit or the requested amendment, renewal or extension of
an outstanding Letter of Credit). If requested by the Issuing Bank, the Borrower
shall submit a letter of credit application on the Issuing Bank’s standard form
in connection with any request for a Letter of Credit. A Letter of Credit shall
be issued, amended, renewed or extended only if (and with respect to each notice
provided by the Borrower above and any issuance, amendment, renewal or extension
of each Letter of Credit, the Borrower shall be deemed to represent and warrant
that), after giving effect to such issuance, amendment, renewal or extension (1)
the LC Exposure shall not exceed the LC Commitment and (2) the total Credit
Exposures shall not exceed the total Commitments (i.e. the lesser of the
Aggregate Maximum Credit Amounts and the then effective Borrowing Base).

 

(c)       Expiration Date. Each Letter of Credit shall expire at or prior to the
close of business on the earlier of (i) the date one year after the date of the
issuance of such Letter of Credit (or, in the case of any renewal or extension
thereof, one year after such renewal or extension) and (ii) the date that is
five Business Days prior to the Maturity Date; provided, however, that any
Letter of Credit with a one-year tenor may provide for the renewal thereof for
additional one-year periods (which shall in no event extend beyond the date
referred to in clause (ii) above).

 

(d)       Participations. By the issuance of a Letter of Credit (or an amendment
to an existing Letter of Credit increasing the amount thereof) and without any
further action on the part of the Issuing Bank that issues such Letter of Credit
or the Lenders, the Issuing Bank that issues a Letter of Credit hereunder hereby
grants to each Lender, and each Lender hereby acquires from the Issuing Bank, a
participation in such Letter of Credit equal to such Lender’s Applicable
Percentage of the aggregate amount available to be drawn under such Letter of
Credit. In consideration and in furtherance of the foregoing, each Lender hereby
absolutely and unconditionally agrees to pay to the Administrative Agent, for
the account of the Issuing Bank that issues a Letter of Credit hereunder, such
Lender’s Applicable Percentage of each LC Disbursement made by the Issuing Bank
and not reimbursed by the Borrower on the date due as provided in ‎Section
2.08(e), or of any reimbursement payment required to be refunded to the Borrower
for any reason. Each Lender acknowledges and agrees that its obligation to
acquire participations pursuant to this Section 2.08(d)‎ in respect of Letters
of Credit is absolute and unconditional and shall not be affected by any
circumstance whatsoever, including any amendment, renewal or extension of any
Letter of Credit or the occurrence and continuance of a Default or reduction or
termination of the Commitments, and that each such payment shall be made without
any offset, abatement, withholding or reduction whatsoever.

 

-31-

 

 

(e)       Reimbursement. If the Issuing Bank shall make any LC Disbursement in
respect of a Letter of Credit issued by the Issuing Bank, the Borrower shall
reimburse such LC Disbursement by paying to the Administrative Agent an amount
equal to such LC Disbursement not later than 12:00 noon, New York, New York
time, on the date that such LC Disbursement is made, if the Borrower shall have
received notice of such LC Disbursement prior to 10:00 a.m., New York, New York
time, on such date, or, if such notice has not been received by the Borrower
prior to such time on such date, then not later than 12:00 noon, New York, New
York time, on (i) the Business Day that the Borrower receives such notice, if
such notice is received prior to 10:00 a.m., New York, New York time, on the day
of receipt, or (ii) the Business Day immediately following the day that the
Borrower receives such notice, if such notice is not received prior to such time
on the day of receipt; provided that if such LC Disbursement is not less than
$1,000,000, the Borrower shall, subject to the conditions to Borrowing set forth
herein, be deemed to have requested, and the Borrower does hereby request under
such circumstances, that such payment be financed with an ABR Borrowing in an
equivalent amount and, to the extent so financed, the Borrower’s obligation to
make such payment shall be discharged and replaced by the resulting ABR
Borrowing. If the Borrower fails to make such payment when due, the
Administrative Agent shall notify each Lender of the applicable LC Disbursement,
the payment then due from the Borrower in respect thereof and such Lender’s
Applicable Percentage thereof. Promptly following receipt of such notice, each
Lender shall pay to the Administrative Agent its Applicable Percentage of the
payment then due from the Borrower, in the same manner as provided in ‎Section
2.05 with respect to Loans made by such Lender (and Section 2.05 shall apply,
mutatis mutandis, to the payment obligations of the Lenders), and the
Administrative Agent shall promptly pay to the Issuing Bank that issued such
Letter of Credit the amounts so received by it from the Lenders. Promptly
following receipt by the Administrative Agent of any payment from the Borrower
pursuant to this ‎Section 2.08(e), the Administrative Agent shall distribute
such payment to the Issuing Bank that issued such Letter of Credit or, to the
extent that Lenders have made payments pursuant to this ‎Section 2.08(e) to
reimburse the Issuing Bank, then to such Lenders and the Issuing Bank as their
interests may appear. Any payment made by a Lender pursuant to this ‎Section
2.08(e) to reimburse the Issuing Bank for any LC Disbursement (other than the
funding of ABR Loans as contemplated above) shall not constitute a Loan and
shall not relieve the Borrower of its obligation to reimburse such LC
Disbursement.

 

-32-

 

 

(f)       Obligations Absolute. The Borrower’s obligation to reimburse LC
Disbursements as provided in ‎Section 2.08(e) shall be absolute, unconditional
and irrevocable, and shall be performed strictly in accordance with the terms of
this Agreement under any and all circumstances whatsoever and irrespective of
(i) any lack of validity or enforceability of any Letter of Credit, any Letter
of Credit Agreement or this Agreement, or any term or provision therein, (ii)
any draft or other document presented under a Letter of Credit proving to be
forged, fraudulent or invalid in any respect or any statement therein being
untrue or inaccurate in any respect, (iii) payment by the Issuing Bank under a
Letter of Credit issued by the Issuing Bank against presentation of a draft or
other document that does not comply with the terms of such Letter of Credit or
any Letter of Credit Agreement, or (iv) any other event or circumstance
whatsoever, whether or not similar to any of the foregoing, that might, but for
the provisions of this ‎Section 2.08(f), constitute a legal or equitable
discharge of, or provide a right of setoff against, the Borrower’s obligations
hereunder. Neither the Administrative Agent, the Lenders nor the Issuing Bank,
nor any of their Related Parties shall have any liability or responsibility by
reason of or in connection with the issuance or transfer of any Letter of Credit
or any payment or failure to make any payment thereunder (irrespective of any of
the circumstances referred to in the preceding sentence), or any error,
omission, interruption, loss or delay in transmission or delivery of any draft,
notice or other communication under or relating to any Letter of Credit
(including any document required to make a drawing thereunder), any error in
interpretation of technical terms or any consequence arising from causes beyond
the control of the Issuing Bank; provided that the foregoing shall not be
construed to excuse the Issuing Bank from liability to the Borrower to the
extent of any direct damages (as opposed to consequential damages, claims in
respect of which are hereby waived by the Borrower to the extent permitted by
applicable law) suffered by the Borrower that are caused by the Issuing Bank’s
failure to exercise care when determining whether drafts and other documents
presented under a Letter of Credit comply with the terms thereof. The parties
hereto expressly agree that, in the absence of gross negligence or willful
misconduct on the part of the Issuing Bank (as finally determined by a court of
competent jurisdiction), the Issuing Bank shall be deemed to have exercised all
requisite care in each such determination. In furtherance of the foregoing and
without limiting the generality thereof, the parties agree that, with respect to
documents presented which appear on their face to be in substantial compliance
with the terms of a Letter of Credit, the Issuing Bank that issued such Letter
of Credit may, in its sole reasonable discretion, either accept and make payment
upon such documents without responsibility for further investigation, regardless
of any notice or information to the contrary, or refuse to accept and make
payment upon such documents if such documents are not in strict compliance with
the terms of such Letter of Credit.

 

(g)       Disbursement Procedures. The Issuing Bank shall, promptly following
its receipt thereof, examine all documents purporting to represent a demand for
payment under a Letter of Credit issued by the Issuing Bank. The Issuing Bank
shall promptly notify the Administrative Agent and the Borrower by telephone
(confirmed by telecopy) of such demand for payment and whether the Issuing Bank
has made or will make an LC Disbursement thereunder; provided that any failure
to give or delay in giving such notice shall not relieve the Borrower of its
obligation to reimburse the Issuing Bank and the Lenders with respect to any
such LC Disbursement.

 

(h)       Interim Interest. If the Issuing Bank shall make any LC Disbursement,
then, until the Borrower shall have reimbursed the Issuing Bank for such LC
Disbursement (either with its own funds or a Borrowing under Section 2.08(e)),
the unpaid amount thereof shall bear interest, for each day from and including
the date such LC Disbursement is made to but excluding the date that the
Borrower reimburses such LC Disbursement, at the rate per annum then applicable
to ABR Loans. Interest accrued pursuant to this Section 2.08(h)‎ shall be for
the account of the Issuing Bank, except that interest accrued on and after the
date of payment by any Lender pursuant to ‎Section 2.08(e) to reimburse the
Issuing Bank shall be for the account of such Lender to the extent of such
payment.

 

-33-

 

 

(i)       Replacement of an Issuing Bank. The Issuing Bank may be replaced or
resign at any time by written agreement among the Borrower, the Administrative
Agent, such resigning or replaced Issuing Bank and, in the case of a
replacement, the successor Issuing Bank. The Administrative Agent shall notify
the Lenders of any such resignation or replacement of the Issuing Bank. At the
time any such resignation or replacement shall become effective, the Borrower
shall pay all unpaid fees accrued for the account of the resigning or replaced
Issuing Bank pursuant to ‎Section 3.05(b). In the case of the replacement of an
Issuing Bank, from and after the effective date of such replacement, (i) the
successor Issuing Bank shall have all the rights and obligations of the replaced
Issuing Bank under this Agreement with respect to Letters of Credit to be issued
thereafter and (ii) references herein to the term “Issuing Bank” shall be deemed
to refer to such successor or to any previous Issuing Bank, or to such successor
and all previous Issuing Banks, as the context shall require. After the
resignation or replacement of an Issuing Bank hereunder, the resigning or
replaced Issuing Bank shall remain a party hereto and shall continue to have all
the rights and obligations of an Issuing Bank under this Agreement with respect
to Letters of Credit issued by it prior to such resignation or replacement, but
shall not be required to issue additional Letters of Credit.

 

(j)       Cash Collateralization. If (i) any Event of Default shall occur and be
continuing and the Borrower receives notice from the Administrative Agent or the
Required Lenders demanding the deposit of cash collateral pursuant to this
‎Section 2.08(j), or (ii) the Borrower is required to pay to the Administrative
Agent the excess attributable to an LC Exposure in connection with any
prepayment pursuant to Section 3.04(c)‎, then the Borrower shall deposit, in an
account with the Administrative Agent, in the name of the Administrative Agent
and for the benefit of the Lenders, an amount in cash equal to, in the case of
an Event of Default, the LC Exposure, and in the case of a payment required by
‎Section 3.04(c)‎, the amount of such excess as provided in ‎Section 3.04(c)‎,
as of such date plus any accrued and unpaid interest thereon; provided that the
obligation to deposit such cash collateral shall become effective immediately,
and such deposit shall become immediately due and payable, without demand or
other notice of any kind, upon the occurrence of any Event of Default with
respect to the Borrower or any Restricted Subsidiary described in
‎Section 10.01(h) or ‎Section 10.01(i). The Borrower hereby grants to the
Administrative Agent, for the benefit of the Issuing Bank and the Lenders, an
exclusive first priority and continuing perfected security interest in and Lien
on such account and all cash, checks, drafts, certificates and instruments, if
any, from time to time deposited or held in such account, all deposits or wire
transfers made thereto, any and all investments purchased with funds deposited
in such account, all interest, dividends, cash, instruments, financial assets
and other Property from time to time received, receivable or otherwise payable
in respect of, or in exchange for, any or all of the foregoing, and all
proceeds, products, accessions, rents, profits, income and benefits therefrom,
and any substitutions and replacements therefor. The Borrower’s obligation to
deposit amounts pursuant to this Section 2.08(j)‎ shall be absolute and
unconditional, without regard to whether any beneficiary of any such Letter of
Credit has attempted to draw down all or a portion of such amount under the
terms of a Letter of Credit, and, to the fullest extent permitted by applicable
law, shall not be subject to any defense or be affected by a right of set-off,
counterclaim or recoupment which the Borrower or any of its Subsidiaries may now
or hereafter have against any such beneficiary, the Issuing Bank, the
Administrative Agent, the Lenders or any other Person for any reason whatsoever.
Such deposit shall be held as collateral securing the payment and performance of
the Borrower’s obligations under this Agreement and the other Loan Documents in
a “securities account” (within the meaning of Article 8 of the UCC) over which
the Administrative Agent shall have “control” (within the meaning of the UCC).
Notwithstanding the foregoing, the Borrower may direct the Administrative Agent
and the “securities intermediary” (within the meaning of the UCC) to invest
amounts credited to the securities account, at the Borrower’s risk and expense,
in Investments described in Section 9.05(c)‎ through (f)‎. Interest or profits,
if any, on such investments shall accumulate in such account. Moneys in such
account shall be applied by the Administrative Agent to reimburse, on a pro rata
basis, the Issuing Bank for LC Disbursements for which it has not been
reimbursed and, to the extent not so applied, shall be held for the satisfaction
of the reimbursement obligations of the Borrower for the LC Exposure at such
time or, if the maturity of the Loans has been accelerated, be applied to
satisfy other obligations of the Borrower under this Agreement or the other Loan
Documents. If the Borrower is required to provide an amount of cash collateral
hereunder as a result of the occurrence of an Event of Default, and the Borrower
is not otherwise required to pay to the Administrative Agent the excess
attributable to an LC Exposure in connection with any prepayment pursuant to
‎Section 3.04(c), then such amount (to the extent not applied as aforesaid)
shall be returned to the Borrower within three Business Days after all Events of
Default have been cured or waived.

 

-34-

 

 

ARTICLE III

 

Payments of Principal and Interest; Prepayments; Fees

 

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

 

Section 3.02    Interest.

 

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

 

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

 

(c)       Post-Default Rate. Notwithstanding the foregoing, if any principal of
or interest on any Loan or any fee or other amount payable by the Borrower
hereunder or under any other Loan Document is not paid when due, whether at
stated maturity, upon acceleration or otherwise, such overdue amount shall bear
interest, after as well as before judgment, at a rate per annum equal to two
percent (2%) plus the rate applicable to ABR Loans as provided in ‎Section
3.02(a), but in no event to exceed the Highest Lawful Rate.

 

(d)       Interest Payment Dates. Accrued interest on each Loan shall be payable
in arrears on each Interest Payment Date for such Loan and on the Termination
Date; provided that (i) interest accrued pursuant to ‎Section 3.02(c) shall be
payable on demand, (ii) in the event of any repayment or prepayment of any Loan
(other than an optional prepayment of an ABR Loan prior to the Termination
Date), accrued interest on the principal amount repaid or prepaid shall be
payable on the date of such repayment or prepayment, and (iii) in the event of
any conversion of any Eurodollar Loan prior to the end of the current Interest
Period therefor, accrued interest on such Loan shall be payable on the effective
date of such conversion.

 

-35-

 

 

(e)       Interest Rate Computations. All interest hereunder shall be computed
on the basis of a year of 360 days, unless such computation would exceed the
Highest Lawful Rate, in which case interest shall be computed on the basis of a
year of 365 days (or 366 days in a leap year), except that interest computed by
reference to the Alternate Base Rate at times when the Alternate Base Rate is
based on the Prime Rate shall be computed on the basis of a year of 365 days (or
366 days in a leap year), and in each case shall be payable for the actual
number of days elapsed (including the first day but excluding the last day). The
applicable Alternate Base Rate, Adjusted LIBO Rate or LIBO Rate shall be
determined by the Administrative Agent, and such determination shall be
conclusive absent manifest error, and be binding upon the parties hereto.

 

Section 3.03    Alternate Rate of Interest. If prior to the commencement of any
Interest Period for a Eurodollar Borrowing:

 

(a)      the Administrative Agent determines (which determination shall be
conclusive absent manifest error) that adequate and reasonable means do not
exist for ascertaining the Adjusted LIBO Rate or the LIBO Rate for such Interest
Period; or

 

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

 

then the Administrative Agent shall give notice thereof to the Borrower and the
Lenders by telephone or telecopy 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, (i) any Interest
Election Request that requests the conversion of any Borrowing to, or
continuation of any Borrowing as, a Eurodollar Borrowing shall be ineffective,
and (ii) if any Borrowing Request requests a Eurodollar Borrowing, such
Borrowing shall be made as an ABR Borrowing.

 

Section 3.04    Prepayments.

 

(a)       Optional Prepayments. The Borrower shall have the right at any time
and from time to time to prepay any Borrowing in whole or in part, subject to
prior notice in accordance with ‎Section 3.04(b).

 

(b)       Notice and Terms of Optional Prepayment. The Borrower shall notify the
Administrative Agent by telephone (confirmed by telecopy) of any prepayment
hereunder (i) in the case of prepayment of a Eurodollar Borrowing, not later
than 12:00 noon, New York, New York time, three Business Days before the date of
prepayment, or (ii) in the case of prepayment of an ABR Borrowing, not later
than 12:00 noon, New York, New York time, on the Business Day of prepayment.
Each such notice shall be irrevocable and shall specify the prepayment date and
the principal amount of each Borrowing or portion thereof to be prepaid.
Promptly following receipt of any such notice relating to a Borrowing, the
Administrative Agent shall advise the Lenders of the contents thereof. Each
partial prepayment of any Borrowing shall be in an amount that would be
permitted in the case of an advance of a Borrowing of the same Type as provided
in ‎Section 2.02. Each prepayment of a Borrowing shall be applied ratably to the
Loans included in the prepaid Borrowing. Prepayments shall be accompanied by
accrued interest to the extent required by ‎Section 3.02.

 

-36-

 

 

(c)       Mandatory Prepayments.

 

   (i)      If (A) after giving effect to any termination or reduction of the
Aggregate Maximum Credit Amounts pursuant to Section 2.06(b)‎, the total Credit
Exposures exceed the total Commitments or (B) after giving effect to any
reduction of the Borrowing Base pursuant to Section 2.07(e), the total Credit
Exposures exceed the Borrowing Base, then the Borrower shall (1) prepay the
applicable Borrowings on the date of such termination or reduction in an
aggregate principal amount equal to such excess, and (2) if any excess remains
after prepaying all of the Borrowings as a result of an LC Exposure, pay to the
Administrative Agent on behalf of the Lenders an amount equal to such excess to
be held as cash collateral as provided in Section 2.08(j)‎.

 

   (ii)      Upon any redetermination of or adjustment to the amount of the
Borrowing Base in accordance with ‎Section 2.07 (other than Section 2.07(e)) or
Section 8.13(c)‎, if the total Credit Exposures exceed the redetermined or
adjusted Borrowing Base, then the Borrower shall (A) prepay the Borrowings in an
aggregate principal amount equal to such excess, and (B) if any excess remains
after prepaying all of the Borrowings as a result of an LC Exposure, pay to the
Administrative Agent on behalf of the Lenders an amount equal to such excess to
be held as cash collateral as provided in ‎Section 2.08(j). The Borrower shall
be obligated to pay all of such prepayment and/or deposit of cash collateral
amount within forty-five (45) days following its receipt of the New Borrowing
Base Notice in accordance with Section 2.07(d)‎ or the date the adjustment
occurs; provided that all payments required to be made pursuant to this Section
3.04(c)(ii) must be made on or prior to the Termination Date.

 

   (iii)      Upon any adjustments to the Borrowing Base pursuant to Section
9.11, if the total Credit Exposures exceed the Borrowing Base as adjusted, then
the Borrower shall (A) prepay the Borrowings in an aggregate principal amount
equal to such excess, and (B) if any excess remains after prepaying all of the
Borrowings as a result of an LC Exposure, pay to the Administrative Agent on
behalf of the Lenders an amount equal to such excess to be held as cash
collateral as provided in ‎Section 2.08(j). The Borrower shall be obligated to
make such prepayment and/or deposit of cash collateral on the date it receives
cash proceeds as a result of such disposition or such incurrence of Debt;
provided that all payments required to be made pursuant to this
Section 3.04(c)(iii)‎ must be made on or prior to the Termination Date.

 

   (iv)      Each prepayment of Borrowings pursuant to this ‎Section 3.04(c)
shall be applied to outstanding Borrowings as directed by the Borrower or, if no
such direction is given, first, ratably to any ABR Borrowings then outstanding,
and, second, to any Eurodollar Borrowings then outstanding, and if more than one
Eurodollar Borrowing is then outstanding, to each such Eurodollar Borrowing in
order of priority beginning with the Eurodollar Borrowing with the least number
of days remaining in the Interest Period applicable thereto and ending with the
Eurodollar Borrowing with the most number of days remaining in the Interest
Period applicable thereto.

 

   (v)      Each prepayment of Borrowings pursuant to this ‎Section 3.04(c)
shall be applied ratably to the Loans included in the prepaid Borrowings.
Prepayments pursuant to this ‎Section 3.04(c) shall be accompanied by accrued
interest to the extent required by ‎Section 3.02.

 

-37-

 

 

(d)       No Premium or Penalty. Prepayments permitted or required under this
‎Section 3.04 shall be without premium or penalty, except as required under
‎Section 5.02.

 

Section 3.05    Fees.

 

(a)       Commitment Fees. The Borrower agrees to pay to the Administrative
Agent for the account of each Lender a commitment fee, which shall accrue at the
applicable Commitment Fee Rate on the average daily amount of the unused
Commitment of such Lender during the period from and including the Effective
Date to but excluding the Termination Date. Accrued commitment fees shall be
payable in arrears on the last day of March, June, September and December of
each year and on the Termination Date, commencing on the first such date to
occur after the Effective Date. All commitment fees shall be computed on the
basis of a year of 360 days, unless such computation would exceed the Highest
Lawful Rate, in which case such fees shall be computed on the basis of a year of
365 days (or 366 days in a leap year), and shall be payable for the actual
number of days elapsed (including the first day but excluding the last day).

 

(b)       Letter of Credit Fees. The Borrower agrees to pay (i) to the
Administrative Agent for the account of each Lender a participation fee with
respect to its participations in Letters of Credit, which shall accrue at the
same Applicable Margin used to determine the interest rate applicable to
Eurodollar Loans on the average daily amount of such Lender’s LC Exposure
(excluding any portion thereof attributable to unreimbursed LC Disbursements)
during the period from and including the Effective Date to but excluding the
later of the date on which such Lender’s Commitment terminates and the date on
which such Lender ceases to have any LC Exposure, (ii) to the Issuing Bank, for
its own account, a fronting fee, of 0.375% face amount of each Letter of Credit
upon its issuance, provided that in no event shall such fee be less than $500,
and (iii) to the Issuing Bank, for its own account, its standard and customary
fees with respect to the issuance, amendment, renewal or extension of any Letter
of Credit issued by the Issuing Bank or processing of drawings thereunder.
Participation fees and fronting fees accrued through and including the last day
of March, June, September and December of each year shall be payable on the
third Business Day following such last day, commencing on the first such date to
occur after the Effective Date and fronting fees with respect to any Letter of
Credit shall be payable at the time of issuance of such Letter of Credit;
provided that all such fees shall be payable on the Termination Date and any
such fees accruing after the Termination Date shall be payable on demand. Any
other fees payable to an Issuing Bank pursuant to this ‎Section 3.05(b) shall be
payable within 10 days after demand. All participation fees shall be computed on
the basis of a year of 360 days, unless such computation would exceed the
Highest Lawful Rate, in which case interest shall be computed on the basis of a
year of 365 days (or 366 days in a leap year), and shall be payable for the
actual number of days elapsed (including the first day but excluding the last
day).

 

(c)       Administrative Agent Fees. The Borrower agrees to pay to the
Administrative Agent, for its own account, fees payable in the amounts and at
the times specified in the Fee Letter, or otherwise separately agreed upon
between the Borrower and the Administrative Agent.

 

-38-

 

 

(d)       Borrowing Base Fees. The Borrower agrees to pay to the Administrative
Agent, for the account of each Lender then party to this Agreement, ratably in
accordance with its Applicable Percentage, a Borrowing Base increase fee equal
to an amount to be agreed upon by the Administrative Agent and the Borrower at
the time of any increase of the Borrowing Base on the amount of such increase
over the highest Borrowing Base previously in effect, payable on the effective
date of any such increase to the Borrowing Base.

 

ARTICLE IV

 

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

 

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

 

(a)       Payments by the Borrower. The Borrower shall make each payment
required to be made by it hereunder (whether of principal, interest, fees or
reimbursement of LC Disbursements, or of amounts payable under ‎Section 5.01,
Section 5.02, Section 5.03 or otherwise) prior to 12:00 noon, New York, New York
time, on the date when due, in dollars that constitute immediately available
funds, without defense, deduction, recoupment, set-off or counterclaim. Fees,
once paid, shall not be refundable under any circumstances absent manifest error
(e.g., as a result of a clerical mistake). Any amounts received after such time
on any date may, in the discretion of the Administrative Agent, be deemed to
have been received on the next succeeding Business Day for purposes of
calculating interest thereon. All such payments shall be made to the
Administrative Agent at its offices located at 3 Times Square, 27th Floor, New
York, New York 10036, except payments to be made directly to an Issuing Bank as
expressly provided herein and except that payments pursuant to ‎Section 5.01,
Section 5.02, Section 5.03 and ‎Section 12.03 shall be made directly to the
Persons entitled thereto. The Administrative Agent shall distribute any such
payments received by it for the account of any other Person to the appropriate
recipient promptly following receipt thereof. If any payment hereunder shall be
due on a day that is not a Business Day, the date for payment shall be extended
to the next succeeding Business Day, and, in the case of any payment accruing
interest, interest thereon shall be payable for the period of such extension.
All payments hereunder shall be made in dollars.

 

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

 

-39-

 

 

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

 

Section 4.02    Presumption of Payment by the Borrower. Unless the
Administrative Agent shall have received notice from the Borrower prior to the
date on which any payment is due to the Administrative Agent for the account of
the Lenders or the Issuing Bank that the Borrower will not make such payment,
the Administrative Agent may assume that the Borrower has made such payment on
such date in accordance herewith and may, in reliance upon such assumption,
distribute to the Lenders or the Issuing Bank, as the case may be, the amount
due. In such event, if the Borrower has not in fact made such payment, then each
of the Lenders or the Issuing Bank, as the case may be, severally agrees to
repay to the Administrative Agent forthwith on demand the amount so distributed
to such Lender or the Issuing Bank with interest thereon, for each day from and
including the date such amount is distributed to it to but excluding the date of
payment to the Administrative Agent, at the greater of the Federal Funds
Effective Rate and a rate determined by the Administrative Agent in accordance
with banking industry rules on interbank compensation.

 

Section 4.03    Certain Deductions by the Administrative Agent. If any Lender
shall fail to make any payment required to be made by it pursuant to
Section 2.05(a), 2.08(d) or (e), 4.02 or 12.03(c), then the Administrative Agent
may, in its discretion and notwithstanding any contrary provision hereof, (i)
apply any amounts thereafter received by the Administrative Agent for the
account of such Lender and for the benefit of the Administrative Agent or the
Issuing Bank to satisfy such Lender’s obligations under such Sections until all
such unsatisfied obligations are fully paid, and/or (ii) hold any such amounts
in a segregated account as cash collateral for, and application to, any future
funding obligations of such Lender under such Sections; in the case of each of
(i) and (ii) above, in any order as determined by the Administrative Agent in
its discretion.

 

 

-40-

 

 

Section 4.04    Disposition of Proceeds. The Security Instruments contain an
assignment by the Borrower to and in favor of the Administrative Agent for the
benefit of the Lenders and the other Persons named therein of all of the
Borrower’s interest in and to production and all proceeds attributable thereto
that may be produced from or allocated to the Mortgaged Property. The Security
Instruments further provide in general for the application of such proceeds to
the satisfaction of the Obligations and other obligations described therein and
secured thereby. Notwithstanding the assignment contained in such Security
Instruments, until the occurrence of an Event of Default, (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 Restricted
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 Restricted Subsidiaries.

 

ARTICLE V

 

Increased Costs; Break Funding Payments; Taxes; Illegality; Defaulting Lenders

 

Section 5.01    Increased Costs.

 

(a)       Eurodollar Changes in Law. If any Change in Law shall:

 

   (i)      impose, modify or deem applicable any reserve, special deposit or
similar requirement against assets of, deposits with or for the account of, or
credit extended by, any Lender (except any such reserve requirement reflected in
the Adjusted LIBO Rate); or

 

   (ii)      impose on any Lender or the London interbank market any other
condition affecting this Agreement or Eurodollar Loans made by such Lender;

 

and the result of any of the foregoing shall be to increase the cost to such
Lender of making or maintaining any Eurodollar Loan (or of maintaining its
obligation to make any such Loan) or to reduce the amount of any sum received or
receivable by such Lender (whether of principal, interest or otherwise), then
the Borrower will pay to such Lender such additional amount or amounts as will
compensate such Lender for such additional costs incurred or reduction suffered.

 

(b)       Capital Requirements. If any Lender or the Issuing Bank determines
that any Change in Law regarding capital or liquidity requirements has or would
have the effect of reducing the rate of return on such Lender’s or the Issuing
Bank’s capital or on the capital of such Lender’s or the Issuing Bank’s holding
company, if any, as a consequence of this Agreement or the Loans made by, or
participations in Letters of Credit held by, such Lender, or the Letters of
Credit issued by the Issuing Bank, to a level below that which such Lender or
the Issuing Bank or such Lender’s or the Issuing Bank’s holding company could
have achieved but for such Change in Law (taking into consideration such
Lender’s or the Issuing Bank’s policies and the policies of such Lender’s or the
Issuing Bank’s holding company with respect to capital adequacy), then from time
to time the Borrower will pay to such Lender or the Issuing Bank, as the case
may be, such additional amount or amounts as will compensate such Lender or the
Issuing Bank or such Lender’s or the Issuing Bank’s holding company for any such
reduction suffered.

 

-41-

 

 

(c)       Certificates. A certificate of a Lender or the Issuing Bank setting
forth the amount or amounts necessary to compensate such Lender or the Issuing
Bank or its holding company, as the case may be, as specified in ‎Section
5.01(a) or (b) and reasonably detailed calculations therefor shall be delivered
to the Borrower and shall be conclusive absent manifest error. The Borrower
shall pay such Lender or the Issuing Bank, as the case may be, the amount shown
as due on any such certificate within 10 days after receipt thereof.

 

(d)       Effect of Failure or Delay in Requesting Compensation. Failure or
delay on the part of any Lender or the Issuing Bank to demand compensation
pursuant to this ‎Section 5.01 shall not constitute a waiver of such Lender’s or
the Issuing Bank’s right to demand such compensation; provided that the Borrower
shall not be required to compensate a Lender or an Issuing Bank pursuant to this
‎‎Section 5.01 for any increased costs or reductions incurred more than 90 days
prior to the date that such Lender or the Issuing Bank, as the case may be,
notifies the Borrower of the Change in Law giving rise to such increased costs
or reductions and of such Lender’s or the Issuing Bank’s intention to claim
compensation therefor; provided further that, if the Change in Law giving rise
to such increased costs or reductions is retroactive, then the 90-day period
referred to above shall be extended to include the period of retroactive effect
thereof.

 

Section 5.02    Break Funding Payments. In the event of (a) the payment of any
principal of any Eurodollar Loan other than on the last day of an Interest
Period applicable thereto (including as a result of an Event of Default), (b)
the conversion of any Eurodollar Loan into an ABR Loan other than on the last
day of the Interest Period applicable thereto, (c) the failure to borrow,
convert, continue or prepay any Eurodollar Loan on the date specified in any
notice delivered pursuant hereto, or (d) the assignment of any Eurodollar Loan
other than on the last day of the Interest Period applicable thereto as a result
of a request by the Borrower pursuant to ‎Section 5.04(b), then, in any such
event, the Borrower shall compensate each Lender for the loss, cost and expense
attributable to such event. In the case of a Eurodollar Loan, such loss, cost or
expense to any Lender shall be deemed to include an amount determined by such
Lender to be the excess, if any, of (i) the amount of interest which would have
accrued on the principal amount of such Loan had such event not occurred, at the
Adjusted LIBO Rate that would have been applicable to such Loan, for the period
from the date of such event to the last day of the then current Interest Period
therefor (or, in the case of a failure to borrow, convert or continue, for the
period that would have been the Interest Period for such Loan), over (ii) the
amount of interest which would accrue on such principal amount for such period
at the interest rate which such Lender would bid were it to bid, at the
commencement of such period, for dollar deposits of a comparable amount and
period from other banks in the Eurodollar market. A certificate of any Lender
setting forth any amount or amounts that such Lender is entitled to receive
pursuant to this ‎‎Section 5.02 and reasonably detailed calculations therefor
shall be delivered to the Borrower and shall be conclusive absent manifest
error. The Borrower shall pay such Lender the amount shown as due on any such
certificate within 10 days after receipt thereof.

 

-42-

 

 

Section 5.03    Taxes.

 

(a)       Payments Free of Taxes. Any and all payments by or on account of any
obligation of the Borrower under any Loan Document shall be made free and clear
of and without deduction for any Indemnified Taxes or Other Taxes; provided that
if the Borrower shall be required to deduct any Indemnified Taxes or Other Taxes
from such payments, then (i) the sum payable shall be increased as necessary so
that after making all required deductions (including deductions applicable to
additional sums payable under this Section 5.03(a)‎), the Administrative Agent,
Lender or Issuing Bank (as the case may be) receives an amount equal to the sum
it would have received had no such deductions been made, (ii) the Borrower shall
make such deductions and (iii) the Borrower shall pay the full amount deducted
to the relevant Governmental Authority in accordance with applicable law.

 

(b)       Payment of Other Taxes by the Borrower. The Borrower shall pay any
Other Taxes to the relevant Governmental Authority in accordance with applicable
law.

 

(c)       Indemnification by the Borrower. The Borrower shall indemnify the
Administrative Agent, each Lender and the Issuing Bank, within 10 days after
written demand therefor, for the full amount of any Indemnified Taxes or Other
Taxes paid by the Administrative Agent, such Lender or the Issuing Bank, as the
case may be, on or with respect to any payment by or on account of any
obligation of the Borrower hereunder (including Indemnified Taxes or Other Taxes
imposed or asserted on or attributable to amounts payable under this ‎Section
5.03) and any penalties, interest and reasonable expenses arising therefrom or
with respect thereto, whether or not such Indemnified Taxes or Other Taxes were
correctly or legally imposed or asserted by the relevant Governmental Authority.
A certificate of the Administrative Agent, a Lender or an Issuing Bank as to the
amount of such payment or liability under this ‎Section 5.03 shall be delivered
to the Borrower and shall be conclusive absent manifest error.

 

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

 

(e)       Foreign Lenders. Any Foreign Lender that is entitled to an exemption
from or reduction of withholding tax under the law of the jurisdiction in which
the Borrower is located, or any treaty to which such jurisdiction is a party,
with respect to payments under this Agreement or any other Loan Document shall
deliver to the Borrower (with a copy to the Administrative Agent), at the time
or times prescribed by applicable law, such properly completed and executed
documentation prescribed by applicable law or reasonably requested by the
Borrower as will permit such payments to be made without withholding or at a
reduced rate.

 

(f)       Tax Refunds. If the Administrative Agent or a Lender determines, in
its reasonable discretion, that it has received a refund of any Taxes or Other
Taxes as to which it has been indemnified by the Borrower or with respect to
which the Borrower has paid additional amounts pursuant to this ‎Section 5.03,
it shall pay over such refund to the Borrower (but only to the extent of
indemnity payments made, or additional amounts paid, by the Borrower under this
‎Section 5.03 with respect to the Taxes or Other Taxes giving rise to such
refund), net of all out-of-pocket expenses of the Administrative Agent or such
Lender and without interest (other than any interest paid by the relevant
Governmental Authority with respect to such refund); provided, that the
Borrower, upon the request of the Administrative Agent or such Lender, agrees to
repay the amount paid over to the Borrower (plus any penalties, interest or
other charges imposed by the relevant Governmental Authority) to the
Administrative Agent or such Lender in the event the Administrative Agent or
such Lender is required to repay such refund to such Governmental Authority.
This ‎Section 5.03 shall not be construed to require the Administrative Agent or
any Lender to make available its tax returns (or any other information relating
to its taxes which it deems confidential) to the Borrower or any other Person.

 

-43-

 

 

(g)       FATCA. If a payment made to a Lender under any Loan Document would be
subject to U.S. federal withholding Tax imposed by FATCA if such Lender were to
fail to comply with the applicable reporting requirements of FATCA (including
those contained in Section 1471(b) or 1472(b) of the Code, as applicable), such
Lender shall deliver to 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 and to determine that such
Lender has complied with such Lender’s obligations under FATCA or to determine
the amount to deduct and withhold from such payment. Solely for purposes of this
clause (g), “FATCA” shall include any amendments made to FATCA after the
Effective Date.

 

Section 5.04    Mitigation Obligations.

 

(a)       Designation of Different Lending Office. If any Lender requests
compensation under ‎Section 5.01, or if the Borrower is required to pay any
additional amount to any Lender or any Governmental Authority for the account of
any Lender pursuant to Section 5.03, then such Lender shall use reasonable
efforts to designate a different lending office for funding or booking its Loans
hereunder or to assign its rights and obligations hereunder to another of its
offices, branches or affiliates, if, in the judgment of such Lender, such
designation or assignment (i) would eliminate or reduce amounts payable pursuant
to ‎Section 5.01 or Section 5.03, as the case may be, in the future and (ii)
would not subject such Lender to any unreimbursed cost or expense and would not
otherwise be disadvantageous to such Lender. The Borrower hereby agrees to pay
all reasonable costs and expenses incurred by any Lender in connection with any
such designation or assignment.

 

(b)       Replacement of Lenders. If (i) any Lender requests compensation under
‎Section 5.01, (ii) the Borrower is required to pay any additional amount to any
Lender or any Governmental Authority for the account of any Lender pursuant to
‎Section 5.03, (iii) any Lender becomes a Defaulting Lender, or (iv) any Lender
has not approved (or is not deemed to have approved) an increase in the
Borrowing Base proposed by the Administrative Agent pursuant to
‎Section 2.07(c)(iii), then the Borrower may, at its sole expense and effort,
upon notice to such Lender and the Administrative Agent, (A) require such Lender
to assign and delegate, without recourse (in accordance with and subject to the
restrictions contained in ‎Section 12.04(b)), all its interests, rights and
obligations under this Agreement to an assignee that shall assume such
obligations (which assignee may be another Lender, if a Lender accepts such
assignment) or (B) require such Lender to be removed as a Lender under this
Agreement and the other Loan Documents with a corresponding reduction in the
Aggregate Maximum Credit Amount equal to the Maximum Credit Amount of such
Lender; provided that, (1) in the case of a required assignment of interest, the
Borrower shall have received the prior written consent of the Administrative
Agent, which consent shall not unreasonably be withheld, (2) such Lender shall
have received payment of an amount equal to the outstanding principal of its
Loans and participations in LC Disbursements, accrued interest thereon, accrued
fees and all other amounts payable to it hereunder, from the assignee (to the
extent of such outstanding principal and accrued interest and fees) or the
Borrower (in the case of all other amounts) and (3) in the case of any such
assignment resulting from a claim for compensation under Section 5.01 or
payments required to be made pursuant to ‎Section 5.03, such assignment will
result in a reduction in such compensation or payments. A Lender shall not be
required to make any such assignment and delegation if, prior thereto, as a
result of a waiver by such Lender or otherwise, the circumstances entitling the
Borrower to require such assignment and delegation cease to apply.

 

-44-

 

 

Section 5.05    Illegality. Notwithstanding any other provision of this
Agreement, in the event that it becomes unlawful for any Lender or its
applicable lending office to honor its obligation to make or maintain Eurodollar
Loans either generally or having a particular Interest Period hereunder, then
(a) such Lender shall promptly notify the Borrower and the Administrative Agent
thereof and such Lender’s obligation to make such Eurodollar Loans shall be
suspended (the “Affected Loans”) until such time as such Lender may again make
and maintain such Eurodollar Loans and (b) all Affected Loans which would
otherwise be made by such Lender shall be made instead as ABR Loans (and, if
such Lender so requests by notice to the Borrower and the Administrative Agent,
all Affected Loans of such Lender then outstanding shall be automatically
converted into ABR Loans on the date specified by such Lender in such notice)
and, to the extent that Affected Loans are so made as (or converted into) ABR
Loans, all payments of principal which would otherwise be applied to such
Lender’s Affected Loans shall be applied instead to its ABR Loans.

 

Section 5.06    Defaulting Lenders. Notwithstanding any provision of this
Agreement to the contrary, if any Lender becomes a Defaulting Lender, the
following provisions shall apply for so long as such Lender is a Defaulting
Lender:

 

(a)      fees shall cease to accrue on the unfunded portion of the Commitment of
such Defaulting Lender pursuant to Section 3.05;

 

(b)      the Maximum Credit Amount and Credit Exposure of such Defaulting Lender
shall not be included in determining whether all Lenders or the Required Lenders
have taken or may take any action hereunder (including any consent to any
amendment or waiver pursuant to Section 12.02), provided that (x) any waiver,
amendment or modification requiring the consent of all Lenders or each affected
Lender which affects such Defaulting Lender differently than other affected
Lenders and (y) any amendment referenced in clauses (i), (iii) and (iv) of
Section 12.02(b) which affects such Defaulting Lender shall, in each case,
require the consent of such Defaulting Lender;

 

(c)      if any LC Exposure exists at the time a Lender becomes a Defaulting
Lender then:

 

  (i)      all or any part of such LC Exposure shall be reallocated among the
non-Defaulting Lenders in accordance with their respective Applicable
Percentages but only to the extent (x) the sum of all non-Defaulting Lenders’
Credit Exposures does not exceed the total of all non-Defaulting Lenders’
Maximum Credit Amounts and (y) the conditions set forth in Section 6.02 are
satisfied at such time; and

 

-45-

 

 

  (ii)      if the reallocation described in clause (i) above cannot, or can
only partially, be effected, the Borrower shall within one Business Day
following notice by the Administrative Agent cash collateralize such Defaulting
Lender’s LC Exposure (after giving effect to any partial reallocation pursuant
to clause (i) above) in accordance with the procedures set forth in
Section 2.08(j) for so long as such LC Exposure is outstanding;

 

  (iii)      if the Borrower cash collateralizes any portion of such Defaulting
Lender’s LC Exposure pursuant to clause (ii) above, the Borrower shall not be
required to pay any fees to such Defaulting Lender pursuant to Section 3.05(b)
with respect to such Defaulting Lender’s LC Exposure during the period such
Defaulting Lender’s LC Exposure is cash collateralized;

 

  (iv)      if the LC Exposure of the non-Defaulting Lenders is reallocated
pursuant to clause (i) above, then the fees payable to the Lenders pursuant to
Section 3.05 shall be adjusted in accordance with such non-Defaulting Lenders’
Applicable Percentages; or

 

  (v)      if any Defaulting Lender’s LC Exposure is neither cash collateralized
nor reallocated pursuant to this Section 5.06(c), then, without prejudice to any
rights or remedies of the Issuing Bank or any Lender hereunder, all commitment
fees that otherwise would have been payable to such Defaulting Lender (solely
with respect to the portion of such Defaulting Lender’s Commitment that was
utilized by such LC Exposure) and letter of credit fees payable under
Section 3.05(b) with respect to such Defaulting Lender’s LC Exposure shall be
payable to the Issuing Bank until such LC Exposure is cash collateralized and/or
reallocated; and

 

(d)      so long as any Lender is a Defaulting Lender, the Issuing Bank shall
not be required to issue, amend or increase any Letter of Credit, unless it is
satisfied that the related LC Exposure will be 100% covered by the Commitments
of the non-Defaulting Lenders and/or cash collateral will be provided by the
Borrower in accordance with Section 5.06(c), and participating interests in any
such newly issued or increased Letter of Credit shall be allocated among
non-Defaulting Lenders in a manner consistent with Section 5.06(c)(i) (and
Defaulting Lenders shall not participate therein).

 

(e)      In the event that the Administrative Agent, the Borrower and the
Issuing Bank each agrees that a Defaulting Lender has adequately remedied all
matters that caused such Lender to be a Defaulting Lender, then the LC Exposure
of the Lenders shall be readjusted to reflect the inclusion of such Lender’s
Commitment and on such date such Lender shall purchase at par such of the Loans
of the other Lenders as the Administrative shall determine may be necessary in
order for such Lender to hold such Loans in accordance with its Applicable
Percentage.

 

-46-

 

 

ARTICLE VI

 

Conditions Precedent

 

Section 6.01    Conditions to Effectiveness. This Agreement shall not become
effective until the date on which each of the following conditions is satisfied
(or waived in accordance with ‎Section 12.02):

 

(a)      The Administrative Agent, the Arranger and the Lenders shall have
received all fees and other amounts due and payable hereunder, including, to the
extent invoiced, reimbursement or payment of all out-of-pocket expenses required
to be reimbursed or paid by the Borrower hereunder.

 

(b)      The Administrative Agent shall have received a certificate of the
Secretary, an Assistant Secretary or other authorized officer of each Loan Party
setting forth (i) resolutions of its board of directors or similar governing
authority with respect to the authorization of such Loan Party to execute and
deliver the Loan Documents to which it is a party, to enter into the
Transactions to which it is a party and consummate the Acquisitions to which it
is a party, (ii) the officers of such Loan Party (y) who are authorized to sign
the Loan Documents to which such Loan Party is a party and (z) who will, until
replaced by another officer or officers duly authorized for that purpose, act as
its representative for the purposes of signing documents and giving notices and
other communications in connection with this Agreement and the Transactions,
(iii) specimen signatures of such authorized officers, and (iv) the articles or
certificate of incorporation and bylaws or similar organizational documents of
such Loan Party, certified as being true and complete. To the extent a Loan
Party previously delivered a certificate complying with the foregoing sentence,
the Administrative Agent shall have received from such Loan Party a certificate
of the Secretary, Assistant Secretary or other authorized officer of such Loan
Party certifying that the documents and certificates attached to such previously
delivered certificate and relating to such Loan Party’s formation and
organization remain in full force and effect without any amendment thereto,
provided that, notwithstanding the foregoing, each Loan Party shall be required
to deliver the resolutions described in clause (i) above. The Administrative
Agent and the Lenders may conclusively rely on such certificate until the
Administrative Agent receives notice in writing from the Borrower to the
contrary.

 

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

 

(d)      The Administrative Agent shall have received a compliance certificate
which shall be substantially in the form of Exhibit D, duly and properly
executed by a Financial Officer and dated as of September 30, 2013 (which
certificate was delivered in connection with the Prior Agreement).

 

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

 

-47-

 

 

(f)      The Administrative Agent shall have received duly executed Notes
payable to the order of each Lender in a principal amount equal to its Maximum
Credit Amount dated as of the Effective Date.

 

(g)      The Administrative Agent shall have received from each party thereto
duly executed counterparts (in such number as may be requested by the
Administrative Agent) of the Security Instruments and the Guaranty.

 

(h)      The Administrative Agent shall have received the opinions of Fulbright
& Jaworski LLP, special counsel to the Borrower, and Wyatt, Tarrant & Combs,
LLP, special Kentucky counsel to the Borrower, in each case, in form and
substance satisfactory to Administrative Agent.

 

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

 

(j)      The Administrative Agent shall have received a certificate of a
Responsible Officer of the Borrower certifying that the Borrower has (i)
received all consents and approvals required by ‎Section 7.03 and (ii) has no
other Debt in respect of borrowed money, except as permitted by Section 9.02.

 

(k)      The Administrative Agent shall have received the financial statements
referred to in ‎Section 7.04(a).

 

(l)      The Administrative Agent shall have received title information as it
may reasonably require setting forth the status of title to at least 80% of the
total value of the proved Oil and Gas Properties evaluated in the most recent
Reserve Report.

 

(m)      The Administrative Agent shall be reasonably satisfied with the
environmental condition of the Oil and Gas Properties of the Borrower and its
Subsidiaries.

 

(n)      The Administrative Agent shall have received the most recent Reserve
Report for the Oil and Gas Properties, accompanied by a certificate covering the
matters described in Section 8.12(c).

 

(o)      The Administrative Agent shall have received appropriate UCC search
certificates from the jurisdiction of incorporation or formation of each Loan
Party reflecting no Liens encumbering the Properties of such Loan Party, other
than those being assigned or released on or prior to the Effective Date or Liens
permitted by Section 9.03.

 

(p)      The Administrative Agent shall have received satisfactory evidence of
the existence of Swap Agreements of the Borrower identified on Schedule 7.20.

 

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

 

-48-

 

 

Section 6.02    Each Credit Event. The obligation of each Lender to make a Loan
on the occasion of any Borrowing (including the initial funding), and of the
Issuing Bank to issue, amend, renew or extend any Letter of Credit, is subject
to the satisfaction of the following conditions:

 

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

 

(b)      At the time of and immediately after giving effect to such Borrowing or
the issuance, amendment, renewal or extension of such Letter of Credit, as
applicable, no event, development or condition that has or could reasonably be
expected to have a Material Adverse Effect shall have occurred.

 

(c)      The representations and warranties of the Borrower set forth in this
Agreement and in the other Loan Documents shall be true and correct in all
material respects on and as of the date of such Borrowing or the date of
issuance, amendment, renewal or extension of such Letter of Credit, as
applicable, except to the extent any such representations and warranties are
expressly limited to an earlier date, in which case, on and as of the date of
such Borrowing or the date of issuance, amendment, renewal or extension of such
Letter of Credit, as applicable, such representations and warranties shall
continue to be true and correct in all material respects as of such specified
earlier date; provided that any representation or warranty that is qualified as
to “materiality”, “Material Adverse Effect” or similar language shall be true
and correct (after giving effect to any qualification therein) in all respects
on such respective dates.

 

(d)      The making of such Loan or the issuance, amendment, renewal or
extension of such Letter of Credit, as applicable, would not conflict with, or
cause any Lender or the Issuing Bank to violate or exceed, any applicable
Governmental Requirement, and no Change in Law shall have occurred, and no
litigation shall be pending or threatened, which does or, with respect to any
threatened litigation, seeks to, enjoin, prohibit or restrain, the making or
repayment of any Loan, the issuance, amendment, renewal, extension or repayment
of any Letter of Credit or any participations therein or the consummation of the
transactions contemplated by this Agreement or any other Loan Document.

 

(e)      The receipt by the Administrative Agent of a Borrowing Request in
accordance with ‎Section 2.03 or a request for a Letter of Credit in accordance
with ‎Section 2.08(b), as applicable.

 

(f)      In connection with the execution and delivery of the Security
Instruments, the Administrative Agent shall be reasonably satisfied that the
Security Instruments create first priority, perfected Liens (subject only to
Excepted Liens identified in clauses (a) to (d) and (f) of the definition
thereof, but subject to the provisos at the end of such definition) on at least
80% of the total value of the proved Oil and Gas Properties evaluated in the
most recent Reserve Report delivered by the Borrower pursuant to this Agreement.

 

-49-

 

 

Each request for a Borrowing and each issuance, amendment, renewal or extension
of any Letter of Credit shall be deemed to constitute a representation and
warranty by the Borrower on the date thereof as to the matters specified in
Sections 6.01(l) and 6.02(a) through (d).

 

ARTICLE VII

 

Representations and Warranties

 

The Borrower represents and warrants to the Lenders that:

 

Section 7.01    Organization; Powers. Each of the Borrower and the Subsidiaries
is duly organized, validly existing and in good standing under the laws of the
jurisdiction of its organization, has all requisite power and authority, and has
all material governmental licenses, authorizations, consents and approvals
necessary, to own its assets and to carry on its business as now conducted, and
is qualified to do business in, and is in good standing in, every jurisdiction
where such qualification is required, except where failure to have such power,
authority, licenses, authorizations, consents, approvals and qualifications
could not reasonably be expected to have a Material Adverse Effect. As of the
Effective Date, Schedule 7.01 is an accurate corporate organizational chart of
Borrower and its Subsidiaries showing the ownership of all Equity Interests in
such Persons.

 

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

 

Section 7.03    Approvals; No Conflicts. The Transactions (a) do not require any
consent or approval of, registration or filing with, or any other action by, any
Governmental Authority or any other third Person (including shareholders or any
class of directors, whether interested or disinterested, of any Loan Party or
any other Person), nor is any such consent, approval, registration, filing or
other action necessary for the validity or enforceability of any Loan Document
or the consummation of the transactions contemplated thereby, except such as
have been obtained or made and are in full force and effect other than (i) the
recording and filing of the Security Instruments as required by this Agreement
and (ii) those third party approvals or consents which, if not made or obtained,
would not cause a Default hereunder, could not reasonably be expected to have a
Material Adverse Effect or do not have an adverse effect on the enforceability
of the Loan Documents, (b) will not violate any applicable law or regulation or
the charter, by-laws or other organizational documents of the Borrower or any
Subsidiary or any order of any Governmental Authority, (c) will not violate or
result in a default under any indenture, agreement or other instrument binding
upon the Borrower or any Subsidiary or its Properties, or give rise to a right
thereunder to require any payment to be made by the Borrower or such Subsidiary
and (d) will not result in the creation or imposition of any Lien on any
Property of the Borrower or any Subsidiary (other than the Liens created by the
Loan Documents).

 

-50-

 

 

Section 7.04    Financial Condition; No Material Adverse Change.

 

(a)      The Borrower has heretofore furnished to the Lenders its audited
consolidated balance sheet and statement of income, stockholders equity and cash
flows as of and for the fiscal year ended December 31, 2012, all reported on by
a firm of independent public accountants acceptable to the Administrative Agent.
Such audited financial statements present fairly, in all material respects, the
financial position and results of operations and cash flows of the Borrower and
its Consolidated Subsidiaries as of such dates and for such periods in
accordance with GAAP.

 

(b)      Since December 31, 2012, (i) there has been no event, development or
circumstance that has had or could reasonably be expected to have a Material
Adverse Effect and (ii) the business of the Borrower and its Restricted
Subsidiaries has been conducted only in the ordinary course consistent with past
business practices.

 

(c)      Except as set forth on Schedule 9.02 or in a certificate delivered
pursuant to ‎Section 8.01(c), neither the Borrower nor any Restricted Subsidiary
has on the Effective Date any material Debt (including Disqualified Capital
Stock) or any material contingent liabilities, off-balance sheet liabilities or
partnerships, material liabilities for taxes, unusual forward or long-term
commitments or unrealized or anticipated losses from any unfavorable
commitments.

 

Section 7.05    Litigation.

 

(a)      As of the Effective Date, except as set forth on Schedule 7.05, there
are no actions, suits, investigations or proceedings by or before any arbitrator
or Governmental Authority pending against or, to the knowledge of the Borrower,
threatened in writing against or affecting the Borrower or any Subsidiary (i) as
to which there is a reasonable possibility of an adverse determination that, if
adversely determined, could reasonably be expected, individually or in the
aggregate, to result in a Material Adverse Effect or (ii) that involve any Loan
Document or the Transactions.

 

(b)      Since the Effective Date, there has been no change in the status of the
matters disclosed in Schedule 7.05 that, individually or in the aggregate, has
resulted in, or materially increased the likelihood of, a Material Adverse
Effect.

 

Section 7.06    Environmental Matters. Except as could not reasonably be
expected to have a Material Adverse Effect (or with respect to (c), (d) and (e)
below, where the failure to take such actions could not be reasonably expected
to have a Material Adverse Effect), to the knowledge of Borrower:

 

(a)      neither any Property of the Borrower or any Subsidiary nor the
operations conducted thereon violate any order or requirement of any court or
Governmental Authority or any Environmental Laws;

 

-51-

 

 

(b)      no Property of the Borrower or any Subsidiary nor the operations
currently conducted thereon or by any prior owner or operator of such Property
or operation, are in violation of or subject to any existing, pending or
threatened action, suit, investigation, inquiry or proceeding by or before any
court or Governmental Authority or to any remedial obligations under
Environmental Laws;

 

(c)      all notices, permits, licenses, exemptions, approvals or similar
authorizations, if any, required to be obtained or filed in connection with the
operation or use of any and all Property of the Borrower and each Subsidiary,
including, without limitation, past or present treatment, storage, disposal or
release of a hazardous substance, oil and gas waste or solid waste into the
environment, have been duly obtained or filed, and the Borrower and each
Subsidiary are in compliance with the terms and conditions of all such notices,
permits, licenses and similar authorizations;

 

(d)      all hazardous substances, solid waste and oil and gas waste, if any,
generated at any and all Property of the Borrower or any Subsidiary have in the
past been transported, treated and disposed of in accordance with Environmental
Laws and so as not to pose an imminent and substantial endangerment to public
health or welfare or the environment, and all such transport carriers and
treatment and disposal facilities have been and are operating in compliance with
Environmental Laws and so as not to pose an imminent and substantial
endangerment to public health or welfare or the environment, and are not the
subject of any existing, pending or threatened action, investigation or inquiry
by any Governmental Authority in connection with any Environmental Laws;

 

(e)      the Borrower has taken all steps reasonably necessary to determine and
has determined that no oil, hazardous substances, solid waste or oil and gas
waste, have been disposed of or otherwise released and there has been no
threatened release of any oil, hazardous substances, solid waste or oil and gas
waste on or to any Property of the Borrower or any Subsidiary except in
compliance with Environmental Laws and so as not to pose an imminent and
substantial endangerment to public health or welfare or the environment;

 

(f)      to the extent applicable, all Property of the Borrower and each
Subsidiary currently satisfies all design, operation, and equipment requirements
imposed by the OPA, and the Borrower does not have any reason to believe that
such Property, to the extent subject to the OPA, will not be able to maintain
compliance with the OPA requirements during the term of this Agreement; and

 

(g)      neither the Borrower nor any Subsidiary has any known contingent
liability or Remedial Work in connection with any release or threatened release
of any oil, hazardous substance, solid waste or oil and gas waste into the
environment.

 

Section 7.07    Compliance with the Laws and Agreements; No Defaults. Except as
could not be reasonably be expected to have a Material Adverse Effect:

 

(a)      each of the Borrower and each Subsidiary is in compliance with all
Governmental Requirements applicable to it or its Property and all agreements
and other instruments binding upon it or its Property, and possesses all
licenses, permits, franchises, exemptions, approvals and other governmental
authorizations necessary for the ownership of its Property and the conduct of
its business, except where the failure to do so, individually or in the
aggregate, could not reasonably be expected to result in a Material Adverse
Effect;

 

-52-

 

 

(b)      neither the Borrower nor any Subsidiary is in default nor has any event
or circumstance occurred which, but for the expiration of any applicable grace
period or the giving of notice, or both, would constitute a default or would
require the Borrower or a Subsidiary to Redeem or make any offer to Redeem under
any indenture, note, credit agreement or instrument pursuant to which any
Material Indebtedness is outstanding or by which the Borrower or any Subsidiary
or any of their Properties is bound; and

 

(c)      no Default has occurred and is continuing.

 

Section 7.08    Investment Company Act. Neither the Borrower nor any Subsidiary
is an “investment company” or a company “controlled” by an “investment company,”
within the meaning of, or subject to regulation under, the Investment Company
Act of 1940, as amended.

 

Section 7.09    Taxes. Each of the Borrower and its Subsidiaries has timely
filed or caused to be filed all Tax returns and reports required to have been
filed and has paid or caused to be paid all Taxes required to have been paid by
it, except (a) Taxes that are being contested in good faith by appropriate
proceedings and for which the Borrower or such Subsidiary, as applicable, has
set aside on its books adequate reserves in accordance with GAAP or (b) to the
extent that the failure to do so could not reasonably be expected to result in a
Material Adverse Effect. The charges, accruals and reserves on the books of the
Borrower and its Subsidiaries in respect of Taxes and other governmental charges
are, in the reasonable opinion of the Borrower, adequate. No Tax Lien relating
to Taxes described in the first sentence of this Section 7.09 has been filed
and, to the knowledge of the Borrower, no claim is being asserted with respect
to any such Tax or other such governmental charge.

 

Section 7.10    ERISA. No ERISA Event has occurred or is reasonably expected to
occur that, when taken together with all other such ERISA Events for which
liability is reasonably expected to occur, could reasonably be expected to
result in a Material Adverse Effect. The present value of all accumulated
benefit obligations under each Plan (based on the assumptions used for purposes
of Statement of Financial Accounting Standards No. 87) did not, as of the date
of the most recent financial statements reflecting such amounts, exceed by more
than $250,000 the fair market value of the assets of such Plan, and the present
value of all accumulated benefit obligations of all underfunded Plans (based on
the assumptions used for purposes of Statement of Financial Accounting Standards
No. 87) did not, as of the date of the most recent financial statements
reflecting such amounts, exceed by more than $250,000 the fair market value of
the assets of all such underfunded Plans.

 

-53-

 

 

Section 7.11    Disclosure; No Material Misstatements. The Borrower has
disclosed to the Administrative Agent and the Lenders all agreements,
instruments and corporate or other restrictions to which it or any of its
Subsidiaries is subject, and all other matters known to it, that, individually
or in the aggregate, could reasonably be expected to result in a Material
Adverse Effect. To the knowledge of Borrower, taken as a whole, none of the
other reports, financial statements, certificates or other information furnished
by or on behalf of the Borrower or any Subsidiary to the Administrative Agent or
any Lender or any of their Affiliates in connection with the negotiation of this
Agreement or any other Loan Document or delivered hereunder or under any other
Loan Document (as modified or supplemented by other information so furnished)
contains any material misstatement of fact or omits to state any material fact
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading; provided that, with respect to
projected financial information, prospect information, geological and
geophysical data and engineering projections, the Borrower represents only that
such information was prepared in good faith based upon assumptions believed to
be reasonable at the time. To the knowledge of Borrower there is no fact
peculiar to the Borrower or any Subsidiary which could reasonably be expected to
have a Material Adverse Effect or in the future is reasonably likely to have a
Material Adverse Effect and which has not been set forth in this Agreement or
the Loan Documents or the other documents, certificates and statements furnished
to the Administrative Agent or the Lenders by or on behalf of the Borrower or
any Subsidiary prior to, or on, the Effective Date in connection with the
transactions contemplated hereby. There are no statements or conclusions known
to the Borrower in any Reserve Report which are based upon or include misleading
information or fail to take into account material information regarding the
matters reported therein, it being understood that projections concerning
volumes attributable to the Oil and Gas Properties and production and cost
estimates contained in each Reserve Report are necessarily based upon
professional opinions, estimates and projections and that the Borrower and the
Subsidiaries do not warrant that such opinions, estimates and projections will
ultimately prove to have been accurate.

 

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

 

Section 7.13    [RESERVED].

 

Section 7.14    Subsidiaries. Schedule 7.14 sets forth the name of, and the
ownership interest of the Borrower in, each Subsidiary of the Borrower (as such
Schedule may be updated from time to time, including pursuant to a notice
delivered in accordance with Section 8.01(l)). As of the Effective Date there
are no Unrestricted Subsidiaries other than the Subsidiaries set forth on
Schedule 1.01.

 

Section 7.15    Location of Business and Offices. The Borrower’s jurisdiction of
organization is Delaware; the name of the Borrower as listed in the public
records of Delaware is Magnum Hunter Resources Corporation; and the
organizational identification number of the Borrower in Delaware is 2758331 (or,
in each case, as set forth in a notice delivered to the Administrative Agent
pursuant to ‎Section 8.01(l) in accordance with ‎Section 12.01). Each
Subsidiary’s jurisdiction of organization, name as listed in the public records
of its jurisdiction of organization and organizational identification number in
its jurisdiction of organization is stated on Schedule 7.14 (as such Schedule
may be updated from time to time, including pursuant to a notice delivered in
accordance with Section 8.01(l)).

 

-54-

 

 

Section 7.16    Properties; Titles, Etc.

 

(a)      Except as disclosed in Schedule 7.16, each of the Borrower and the
Restricted Subsidiaries has good and defensible title to the proved Oil and Gas
Properties evaluated in the most recently delivered Reserve Report (excluding,
to the extent this representation and warranty is deemed to be made after the
Effective Date, any such Oil and Gas Properties sold or transferred in
compliance with ‎Section 9.11) and good title to all its personal Properties, in
each case, free and clear of all Liens except Liens permitted by Section 9.03.
After giving full effect to the Excepted Liens, the Borrower or the Restricted
Subsidiary specified as the owner owns the net interests in production
attributable to the Hydrocarbon Interests as reflected in the most recently
delivered Reserve Report, and the ownership of such Properties shall not in any
material respect obligate the Borrower or such Restricted 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
Restricted 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, and there exists no default or event or circumstance which
with the giving of notice or the passage of time or both would give rise to a
default under any such lease or leases, which could reasonably be expected to
result in a Material Adverse Effect.

 

(c)      The rights and Properties presently owned, leased or licensed by the
Borrower and the Restricted Subsidiaries including, without limitation, all
easements and rights of way, include all rights and Properties necessary to
permit the Borrower and the Restricted Subsidiaries to conduct their business in
all material respects in the same manner as its business has been conducted
prior to the Effective Date.

 

(d)      All of the material Properties of the Borrower and the Restricted
Subsidiaries which are reasonably necessary for the operation of their
businesses are in good working condition and are maintained in accordance with
prudent business standards.

 

(e)      The Borrower and each Subsidiary owns, or is licensed to use, all
trademarks, tradenames, copyrights, patents and other intellectual Property
material to its business, and the use thereof by the Borrower and such
Subsidiary does not infringe upon the rights of any other Person, except for any
such infringements that, individually or in the aggregate, could not reasonably
be expected to result in a Material Adverse Effect. The Borrower and its
Subsidiaries either own or have valid licenses or other rights to use all
databases, geological data, geophysical data, engineering data, seismic data,
maps, interpretations and other technical information used in their businesses
as presently conducted, subject to the limitations contained in the agreements
governing the use of the same, which limitations are customary for companies
engaged in the business of the exploration and production of Hydrocarbons, with
such exceptions as could not reasonably be expected to have a Material Adverse
Effect.

 

-55-

 

 

Section 7.17    Maintenance of Properties. Except for such acts or failures to
act as could not be reasonably expected to have a Material Adverse Effect, the
Oil and Gas Properties (and Properties unitized therewith) have been maintained,
operated and developed in a good and workmanlike manner and in conformity with
all Government Requirements and in conformity with the provisions of all leases,
subleases or other contracts comprising a part of the Hydrocarbon Interests and
other contracts and agreements forming a part of the Oil and Gas Properties.
Specifically in connection with the foregoing, except for those as could not be
reasonably expected to have a Material Adverse Effect, (i) no Oil and Gas
Property is subject to having allowable production reduced below the full and
regular allowable (including the maximum permissible tolerance) because of any
overproduction (whether or not the same was permissible at the time) and (ii) to
the knowledge of Borrower, none of the wells comprising a part of the Oil and
Gas Properties (or Properties unitized therewith) is deviated from the vertical
more than the maximum permitted by Government Requirements, and such wells are,
in fact, bottomed under and are producing from, and the well bores are wholly
within, the Oil and Gas Properties (or in the case of wells located on
Properties unitized therewith, such unitized Properties). All pipelines, wells,
gas processing plants, platforms and other material improvements, fixtures and
equipment owned in whole or in part by the Borrower or any of its Subsidiaries
that are necessary to conduct normal operations are being maintained in a state
adequate to conduct normal operations, and with respect to such of the foregoing
that are operated by the Borrower or any of its Subsidiaries, in a manner
consistent with the Borrower’s or its Subsidiaries’ past practices (other than
those the failure of which to maintain in accordance with this ‎Section 7.17
could not reasonably be expect to have a Material Adverse Effect).

 

Section 7.18    Gas Imbalances, Prepayments. As of the Effective Date, except as
set forth on Schedule 7.18 or on the most recent certificate delivered pursuant
to ‎Section 8.12(c), on a net basis there are no gas imbalances, take or pay or
other prepayments which would require the Borrower or any of the Restricted
Subsidiaries to deliver Hydrocarbons produced from the Oil and Gas Properties at
some future time without then or thereafter receiving full payment therefor
exceeding 500 mmcf equivalent in the aggregate.

 

Section 7.19    Marketing of Production. Except for contracts listed and in
effect on the Effective Date on Schedule 7.19, and thereafter either disclosed
in writing to the Administrative Agent or included in the most recently
delivered Reserve Report (with respect to all of which contracts the Borrower
represents that it or its Subsidiaries are receiving a price for all production
sold thereunder which is computed substantially in accordance with the terms of
the relevant contract and are not having deliveries curtailed substantially
below the subject Property’s delivery capacity), no material agreements exist
which are not cancelable on 60 days’ notice or less without penalty or detriment
for the sale of production from the Borrower’s or the Restricted Subsidiaries’
Hydrocarbons (including, without limitation, calls on or other rights to
purchase, production, whether or not the same are currently being exercised)
that (a) pertain to the sale of production at a fixed price and (b) have a
maturity or expiry date of longer than six (6) months from the Effective Date.

 

Section 7.20    Swap Agreements. Schedule 7.20, as of the Effective Date, and
after the Effective Date, each report required to be delivered by the Borrower
pursuant to Section 8.01(d), sets forth, a true and complete list of all Swap
Agreements of the Borrower and each Restricted Subsidiary, the material terms
thereof (including the type, term, effective date, termination date and notional
amounts or volumes), the net mark to market value thereof, all credit support
agreements relating thereto (including any margin required or supplied) and the
counterparty to each such agreement.

 

-56-

 

 

Section 7.21    Use of Loans and Letters of Credit. The proceeds of the Loans
and the Letters of Credit shall be used (i) to provide working capital for
exploration and production, midstream trading and marketing operations and
(ii) for general corporate purposes of the Borrower and its Subsidiaries,
including the acquisition of exploration and production and midstream
properties. The Borrower and its Subsidiaries are not engaged principally, or as
one of its or their important activities, in the business of extending credit
for the purpose, whether immediate, incidental or ultimate, of buying or
carrying margin stock (within the meaning of Regulation T, U or X of the Board).
No part of the proceeds of any Loan or Letter of Credit will be used for any
purpose which violates the provisions of Regulations T, U or X of the Board.

 

Section 7.22    Solvency. Before and after giving effect to the Transactions,
(a) the aggregate assets, at a fair valuation, of the Borrower and its
Restricted Subsidiaries, taken as a whole, will exceed the aggregate Debt of the
Borrower on a consolidated basis, as the Debt becomes absolute and matures, (b)
none of the Borrower nor any Restricted Subsidiary will have incurred or
intended to incur, and will not believe that it will incur, Debt beyond its
ability to pay such Debt as such Debt becomes absolute and matures and (c) none
of the Borrower nor any Restricted Subsidiary will have (nor will have any
reason to believe that it will have thereafter) unreasonably small capital for
the conduct of its business.

 

ARTICLE VIII

 

Affirmative Covenants

 

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

 

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

 

(a)       Annual Financial Statements. As soon as available, but in any event
not later than the earlier of the date in each fiscal year on which the Borrower
is required to file its Annual Report on form 10-K with the SEC (after giving
effect to any extensions obtained by the Borrower) or 90 days after the end of
each fiscal year of the Borrower, its audited consolidated (and, if there are
any Unrestricted Subsidiaries, unaudited consolidating) balance sheet and
related statements of operations, stockholders’ equity and cash flows as of the
end of and for such year, setting forth in each case in comparative form the
figures for the previous fiscal year, all reported on by a firm of independent
public accountants proposed by Borrower and approved by the Administrative Agent
(without a “going concern” or like qualification or exception and without any
qualification or exception as to the scope of such audit) to the effect that
such consolidated financial statements present fairly in all material respects
the financial condition and results of operations of the Borrower and its
Consolidated Subsidiaries on a consolidated basis in accordance with GAAP
consistently applied.

 

-57-

 

 

(b)       Quarterly Financial Statements. As soon as available, but in any event
not later than the earlier of each date in each fiscal year on which the
Borrower is required to file a Quarterly Report on Form 10-Q with the SEC (after
giving effect to any extensions obtained by the Borrower) or 45 days after the
end of each of the first three fiscal quarters of each fiscal year of the
Borrower, its consolidated (and, if there are any Unrestricted Subsidiaries,
consolidating) balance sheet and related statements of operations, stockholders’
equity and cash flows as of the end of and for such fiscal quarter and the then
elapsed portion of the fiscal year, setting forth in each case in comparative
form the figures for the corresponding period or periods of (or, in the case of
the balance sheet, as of the end of) the previous fiscal year, all certified by
one of its Financial Officers as presenting fairly in all material respects the
financial condition and results of operations of the Borrower and its
Consolidated Subsidiaries on a consolidated basis in accordance with GAAP
consistently applied, subject to normal year-end audit adjustments and the
absence of footnotes.

 

(c)       Certificate of Financial Officer – Compliance. Concurrently with any
delivery of financial statements under ‎Section 8.01(a) or Section 8.01(b), a
certificate of a Financial Officer in substantially the form of Exhibit D hereto
(i) certifying as to whether a Default has occurred and, if a Default has
occurred, specifying the details thereof and any action taken or proposed to be
taken with respect thereto, (ii) setting forth reasonably detailed calculations
demonstrating compliance with ‎Section 9.01 and (iii) stating whether any change
in GAAP or in the application thereof has occurred since the date of the audited
financial statements referred to in Section 7.04 and, if any such change has
occurred, specifying the effect of such change on the financial statements
accompanying such certificate.

 

(d)       Certificate of Financial Officer - Swap Agreements. Concurrently with
the delivery of each Reserve Report hereunder and concurrently with any delivery
of financial statements under Section 8.01(b), a certificate of a Financial
Officer, in form and substance reasonably satisfactory to the Administrative
Agent, setting forth as of a recent date a true and complete list of all Swap
Agreements of the Borrower and each Restricted Subsidiary, the material terms
thereof (including the type, term, effective date, termination date and notional
amounts or volumes), the net mark-to-market value therefor, any new credit
support agreements relating thereto not listed on Schedule 7.20, any margin
required or supplied under any credit support document and the counterparty to
each such agreement; provided that each such certificate furnished concurrently
with the delivery of financial statements under Section 8.01(b) shall also
include the calculations described in Section 9.18(a)(i).

 

(e)       Certificate of Insurer – Insurance Coverage. Concurrently with any
delivery of financial statements under Section 8.01(a), a certificate of
insurance coverage from each insurer with respect to the insurance required by
‎Section 8.07, in form and substance satisfactory to the Administrative Agent,
and, if requested by the Administrative Agent or any Lender, all copies of the
applicable policies.

 

-58-

 

 

(f)       Other Accounting Reports. Promptly upon receipt thereof, a copy of
each other report or letter (except standard and customary correspondence)
submitted to the Borrower or any of its Restricted Subsidiaries by independent
accountants in connection with any annual, interim or special audit made by them
of the books of the Borrower or any such Restricted Subsidiary, and a copy of
any response by the Borrower or any such Restricted Subsidiary, or the board of
directors of the Borrower or any such Restricted Subsidiary, to such letter or
report.

 

(g)       SEC and Other Filings; Reports to Shareholders. Promptly after the
same become publicly available, copies of all periodic and other reports, proxy
statements and other materials filed by the Borrower or any Restricted
Subsidiary with the SEC, or with any national securities exchange, or
distributed by the Borrower to its shareholders generally, as the case may be.

 

(h)       Notices Under Material Instruments. Promptly after the furnishing
thereof, copies of any financial statement, report or notice furnished to or by
any Person pursuant to the terms of any preferred stock designation, indenture,
loan or credit or other similar agreement of the Borrower or any of its
Restricted Subsidiaries, other than this Agreement and not otherwise required to
be furnished to the Lenders pursuant to any other provision of this ‎Section
8.01.

 

(i)       Intentionally Deleted.

 

(j)       Notice of Sales of Oil and Gas Properties. In the event the Borrower
or any Restricted Subsidiary intends to sell, transfer, assign or otherwise
dispose of any Oil or Gas Properties or any Equity Interests in any Restricted
Subsidiary owning Oil and Gas Properties, in either case, having a fair market
value in excess of 5% of the Borrowing Base then in effect in accordance with
Section 9.11‎, prior written notice of such disposition, the anticipated price
thereof and the anticipated date of closing.

 

(k)       Notice of Casualty Events. Prompt written notice, and in any event
within five (5) Business Days, of the occurrence of any Casualty Event or the
commencement of any action or proceeding that could reasonably be expected to
result in a Casualty Event.

 

(l)       Information Regarding the Loan Parties. Prompt written notice (and in
any event within five (5) Business Days prior thereto) of any change in any Loan
Party’s corporate name, jurisdiction of organization, organizational
identification number in such jurisdiction of organization or federal taxpayer
identification number.

 

(m)       Production Report and Lease Operating Statements. Within 45 days after
the end of each calendar month, a report setting forth, for each calendar month
during the then current fiscal year to date, the volume of production and sales
attributable to production (and the prices at which such sales were made and the
revenues derived from such sales) for each such calendar month from the Oil and
Gas Properties, and setting forth the related ad valorem, severance and
production taxes and lease operating expenses attributable thereto and incurred
for each such calendar month.

 

(n)       Notices of Certain Changes. Promptly, but in any event within five (5)
Business Days after the execution thereof, copies of any amendment, modification
or supplement to the certificate or articles of incorporation, by-laws, any
preferred stock designation or any other organic document of the Borrower or any
Restricted Subsidiary.

 

-59-

 

 

(o)       Other Requested Information. Promptly following any request therefor,
such other information regarding the operations, business affairs and financial
condition of the Borrower or any Subsidiary (including, without limitation, any
Plan or Multiemployer Plan and any reports or other information required to be
filed under ERISA), or compliance with the terms of this Agreement or any other
Loan Document, as the Administrative Agent or any Lender may reasonably request.

 

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

 

(a)      the occurrence of any Default;

 

(b)      the filing or commencement of, or the threat in writing of, any action,
suit, proceeding, investigation or arbitration by or before any arbitrator or
Governmental Authority against the Borrower or any Affiliate thereof not
previously disclosed in writing to the Lenders or any material adverse
development in any action, suit, proceeding, investigation or arbitration
previously disclosed to the Lenders that, in either such case, if adversely
determined, could reasonably be expected to result in a Material Adverse Effect;

 

(c)      the occurrence of any ERISA Event that, alone or together with any
other ERISA Events that have occurred, could reasonably be expected to result in
a Material Adverse Effect; and

 

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

 

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

 

Section 8.03    Existence; Conduct of Business. The Borrower will, and will
cause each Subsidiary to, do or cause to be done all things necessary to
preserve, renew and keep in full force and effect its legal existence and the
rights, licenses, permits, privileges and franchises material to the conduct of
its business and maintain, if necessary, its qualification to do business in
each other jurisdiction in which its Oil and Gas Properties are located or the
ownership of its Properties requires such qualification, except where the
failure to so qualify could not reasonably be expected to have a Material
Adverse Effect; provided that the foregoing shall not prohibit any merger,
consolidation, liquidation or dissolution permitted under ‎Section 9.10.

 

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

 

-60-

 

 

Section 8.05    Performance of Obligations under Loan Documents. The Borrower
will pay the Loans and the Notes according to the reading, tenor and effect
thereof, and the Borrower will, and will cause each Subsidiary to, do and
perform every act and discharge all of the obligations to be performed and
discharged by them under the Loan Documents, including, without limitation, this
Agreement, at the time or times and in the manner specified.

 

Section 8.06    Operation and Maintenance of Properties. Except, in each case,
where the failure to comply could not reasonably be expected to have a Material
Adverse Effect, the Borrower, at its own expense, will, and will cause each
Subsidiary to:

 

(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 accordance with the practices of the industry and in compliance with all
applicable contracts and agreements and in compliance with all Governmental
Requirements, including, without limitation, applicable pro ration requirements
and Environmental Laws, and all applicable laws, rules and regulations 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), preserve,
maintain and keep in good repair, working order and efficiency (ordinary wear
and tear excepted) all of its material producing Oil and Gas Properties and
other material Properties, including, without limitation, all equipment,
machinery and facilities;

 

(c)      promptly pay and discharge, or make reasonable and customary efforts to
cause to be paid and discharged, all delay rentals, royalties, expenses and
obligations accruing under the leases or other agreements affecting or
pertaining to its proved producing Oil and Gas Properties and will do all other
things necessary to keep unimpaired their rights with respect thereto and
prevent any forfeiture thereof or default thereunder;

 

(d)      promptly perform or make reasonable and customary efforts to cause to
be performed, in accordance with industry standards, the obligations required by
each and all of the assignments, deeds, leases, sub-leases, contracts and
agreements affecting its interests in its proved producing Oil and Gas
Properties and other material Properties;

 

(e)      operate its Oil and Gas Properties and other material Properties or
cause or make reasonable and customary efforts to cause such Oil and Gas
Properties and other material Properties to be operated in accordance with the
practices of the industry and in material compliance with all applicable
contracts and agreements and in compliance in all material respects with all
Governmental Requirements; and

 

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

 

-61-

 

 

Section 8.07    Insurance. The Borrower will, and will cause each Restricted
Subsidiary to, maintain, with financially sound and reputable insurance
companies, insurance in such amounts and against such risks as are customarily
maintained by companies engaged in the same or similar businesses operating in
the same or similar locations. The loss payable clauses or provisions in said
insurance policy or policies insuring any of the collateral for the Loans shall
be endorsed in favor of and made payable to the Administrative Agent as its
interests may appear and such policies shall name the Administrative Agent and
the Lenders as “additional insureds” and provide that the insurer will endeavor
to give at least 30 days prior notice of any cancellation to the Administrative
Agent.

 

Section 8.08    Books and Records; Inspection Rights. The Borrower will, and
will cause each Restricted Subsidiary to, keep proper books of record and
account in which full, true and correct entries are made of all dealings and
transactions in relation to its business and activities. The Borrower will, and
will cause each Restricted Subsidiary to, permit any representatives designated
by the Administrative Agent or any Lender, upon reasonable prior notice, to
visit and inspect its Properties, to examine and make extracts from its books
and records, and to discuss its affairs, finances and condition with its
officers and independent accountants, all at such reasonable times during normal
business hours and as often as reasonably requested on an individual and
aggregate basis.

 

Section 8.09    Compliance with Laws. The Borrower will, and will cause each
Subsidiary to, comply with all laws, rules, regulations and orders of any
Governmental Authority applicable to it or its Property, except where the
failure to do so, individually or in the aggregate, could not reasonably be
expected to result in a Material Adverse Effect.

 

Section 8.10    Environmental Matters.

 

(a)      The Borrower shall at its sole expense: (i) comply, and shall cause its
Properties and operations and each Subsidiary and each Subsidiary’s Properties
and operations to comply, with all applicable Environmental Laws, the breach of
which could be reasonably expected to have a Material Adverse Effect; (ii) not
dispose of or otherwise release, and shall cause each Subsidiary not to dispose
of or otherwise release, any oil, oil and gas waste, hazardous substance, or
solid waste on, under, about or from any of the Borrower’s or its Subsidiaries’
Properties or any other Property to the extent caused by the Borrower’s or any
of its Subsidiaries’ operations except in compliance with applicable
Environmental Laws, the disposal or release of which could reasonably be
expected to have a Material Adverse Effect; (iii) timely obtain or file, and
shall cause each Subsidiary to timely obtain or file, all notices, permits,
licenses, exemptions, approvals, registrations or other authorizations, if any,
required under applicable Environmental Laws to be obtained or filed in
connection with the operation or use of the Borrower’s or its Subsidiaries’
Properties, which failure to obtain or file could reasonably be expected to have
a Material Adverse Effect; promptly commence and diligently prosecute to
completion, and shall cause each Subsidiary to promptly commence and diligently
prosecute to completion, any assessment, evaluation, investigation, monitoring,
containment, cleanup, removal, repair, restoration, remediation or other
remedial obligations (collectively, the “Remedial Work”) in the event any
Remedial Work is required or reasonably necessary under applicable Environmental
Laws because of or in connection with the actual or suspected past, present or
future disposal or other release of any oil, oil and gas waste, hazardous
substance or solid waste on, under, about or from any of the Borrower’s or its
Subsidiaries’ Properties, which failure to commence and diligently prosecute to
completion could reasonably be expected to have a Material Adverse Effect; and
(iv) establish and implement, and shall cause each Subsidiary to establish and
implement, such reasonable procedures as may be necessary to assure that the
Borrower’s and its Subsidiaries’ obligations under this ‎Section 8.10(a) are
timely and fully satisfied, which failure to establish and implement could
reasonably be expected to have a Material Adverse Effect.

 

-62-

 

 

(b)      The Borrower will promptly, but in no event later than five Business
Days of the occurrence of a triggering event, notify the Administrative Agent in
writing of any threatened action, investigation or inquiry by any Governmental
Authority or any threatened demand or lawsuit by any landowner or other third
party against the Borrower or its Subsidiaries or their Properties of which the
Borrower has knowledge in connection with any applicable Environmental Laws
(excluding routine testing and corrective action) if the Borrower reasonably
anticipates that such action could reasonably result in a Material Adverse
Effect.

 

(c)      The Borrower will, and will cause each Restricted Subsidiary to,
undertake reasonable environmental audits in connection with any future
acquisitions of producing Oil and Gas Properties.

 

Section 8.11    Further Assurances.

 

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

 

(b)      The Borrower hereby authorizes the Administrative Agent to file one or
more financing or continuation statements, and amendments thereto, relative to
all or any part of the Mortgaged Property. A carbon, photographic or other
reproduction of the Security Instruments or any financing statement covering the
Mortgaged Property or any part thereof shall be sufficient as a financing
statement where permitted by law.

 

Section 8.12    Reserve Reports.

 

(a)      Promptly after January 1st of each calendar year and in any event
before April 1st of each calendar year, and promptly after July 1st of each
calendar year, commencing April 1, 2014, and in any event before October 1st of
each year, the Borrower shall furnish to the Administrative Agent and the
Lenders a Reserve Report. The Reserve Report as of January 1st of each year and
the Reserve Report delivered in connection with the first redetermination of the
Borrowing Base after the Effective Date shall be prepared by Borrower or an
Approved Petroleum Engineer and audited by one or more Approved Petroleum
Engineers, and the July 1st Reserve Report of each year shall be prepared by or
under the supervision of the chief engineer of the Borrower. In each case, the
chief engineer of Borrower shall certify such Reserve Report is based on
information that was prepared in good faith based upon assumptions believed to
be reasonable at the time and to have been prepared in accordance with the
procedures used in the immediately preceding Reserve Report.

 

-63-

 

 

(b)      In the event of an Interim Redetermination, except in connection with
the first redetermination, the Borrower shall furnish to the Administrative
Agent and the Lenders a Reserve Report prepared by or under the supervision of
the chief engineer of the Borrower who shall certify such Reserve Report to be
based on information that was prepared in good faith based upon assumptions
believed to be reasonable at the time and to have been prepared in accordance
with the procedures used in the immediately preceding Reserve Report. For any
Interim Redetermination requested by the Administrative Agent or the Borrower
pursuant to ‎Section 2.07(b)(ii) or Section 2.07(b)(iii), the Borrower shall
provide such Reserve Report with an “as of” date as required by the
Administrative Agent as soon as possible, but in any event no later than
forty-five (45) days following the receipt of such request.

 

(c)      With the delivery of each Reserve Report, the Borrower shall provide to
the Administrative Agent and the Lenders a certificate from a Responsible
Officer certifying that to his knowledge, after reasonable investigation, in all
material respects: (i) the information contained in the Reserve Report and any
other information delivered in connection therewith is based on information that
was prepared in good faith based upon assumptions believed to be reasonable at
the time, (ii) the Borrower or its Subsidiaries owns good and defensible title
to the proved Oil and Gas Properties evaluated in such Reserve Report and such
Properties are free of all Liens except for Liens permitted by ‎Section 9.03,
(iii) except as set forth on an exhibit to the certificate, on a net basis there
are no gas imbalances, take or pay or other prepayments in excess of the volume
specified in ‎Section 7.18 with respect to its Oil and Gas Properties evaluated
in such Reserve Report which would require the Borrower or any Subsidiary to
deliver Hydrocarbons either generally or produced from such Oil and Gas
Properties at some future time without then or thereafter receiving full payment
therefor, (iv) none of the Borrower’s and its Subsidiaries’ proved Oil and Gas
Properties have been sold since the date of the last Borrowing Base
determination except as set forth on an exhibit to the certificate, which
certificate shall list all of its proved Oil and Gas Properties sold and in such
detail as reasonably required by the Administrative Agent and (v) attached
thereto is a schedule of the proved Oil and Gas Properties evaluated by such
Reserve Report that are Mortgaged Properties and demonstrating the percentage of
the Borrowing Base that the value of such Mortgaged Properties represent. Upon
the request of the Administrative Agent, the Borrower shall attach to such
certificate a list of all marketing agreements entered into subsequent to the
later of the Effective Date or the most recently delivered Reserve Report which
the Borrower could reasonably be expected to have been obligated to list on
Schedule 7.19 had such agreement been in effect on the Effective Date

 

Section 8.13    Title Information.

 

(a)      On or before the delivery to the Administrative Agent and the Lenders
of each Reserve Report required by Section 8.12(a)‎, the Borrower will deliver
title information in form and substance acceptable to the Administrative Agent
covering enough of the proved Oil and Gas Properties evaluated by such Reserve
Report that were not included in the immediately preceding Reserve Report, so
that the Administrative Agent shall have received together with title
information previously delivered, satisfactory title information on at least 80%
of the total value of the proved Oil and Gas Properties evaluated by such
Reserve Report.

 

-64-

 

 

(b)      If the Borrower has provided title information for additional
Properties under ‎Section 8.13(a), the Borrower shall, within 60 days of notice
from the Administrative Agent that title defects or exceptions exist with
respect to such additional Properties, either (i) cure any such title defects or
exceptions (including defects or exceptions as to priority) which are not
permitted by ‎Section 9.03 raised by such information, (ii) substitute
acceptable Mortgaged Properties with no title defects or exceptions except for
Excepted Liens (other than Excepted Liens described in clauses (e), (g) and (h)
of such definition) having an equivalent value or (iii) deliver title
information in form and substance acceptable to the Administrative Agent so that
they shall have received, together with title information previously delivered,
satisfactory title information on at least 80% of the value of the Oil and Gas
Properties evaluated by such Reserve Report.

 

(c)      If the Borrower is unable to cure any title defect requested to be
cured within the 60-day period or the Borrower does not comply with the
requirement to provide acceptable title information covering 80% of the value of
the Oil and Gas Properties evaluated in the most recent Reserve Report, such
default shall not be a Default, but instead the Administrative Agent and/or the
Required Lenders shall have the right to exercise the following remedy in their
sole discretion from time to time, and any failure to so exercise this remedy at
any time shall not be a waiver as to future exercise of the remedy by the
Administrative Agent or the Lenders. To the extent that the Administrative Agent
or the Required Lenders are not satisfied with title to any Mortgaged Property
after the 60-day period has elapsed, such unacceptable Mortgaged Property shall
not count towards the 80% requirement and the Administrative Agent may send a
notice to the Borrower and the Lenders that the then outstanding Borrowing Base
shall be reduced by an amount as determined by the Required Lenders to cause the
Borrower to be in compliance with the requirement to provide acceptable title
information on 80% of the total value of the Oil and Gas Properties. This new
Borrowing Base shall become effective immediately after receipt of such notice.

 

Section 8.14    Additional Collateral. In connection with each redetermination
of the Borrowing Base, the Borrower shall review the Reserve Report and the list
of current Mortgaged Properties (as described in ‎Section 8.12(c)) to ascertain
whether the Mortgaged Properties represent at least 80% of the total value of
the proved Oil and Gas Properties owned by Borrower and the Restricted
Subsidiaries and evaluated in the most recently completed Reserve Report after
giving effect to exploration and production activities, acquisitions,
dispositions and production. In the event that the Mortgaged Properties do not
represent at least 80% of such total value evaluated in the most recently
completed Reserve Report, then the Borrower shall, and shall cause its
Restricted Subsidiaries to, grant to the Administrative Agent as security for
the Obligations a first-priority Lien interest (subject only to Excepted Liens
of the type described in clauses (a) to (d) and (f) of the definition thereof,
but subject to the provisos at the end of such definition) on additional Oil and
Gas Properties not already subject to a Lien of the Security Instruments such
that after giving effect thereto, the Mortgaged Properties will represent at
least 80% of the total value of the Oil and Gas Properties evaluated in the most
recently delivered Reserve Report. All such Liens will be created and perfected
by and in accordance with the provisions of mortgages, deeds of trust, security
agreements and financing statements or other Security Instruments, all in form
and substance satisfactory to the Administrative Agent and in sufficient
executed (and acknowledged where necessary or appropriate) counterparts for
recording purposes.

 

-65-

 

 

Section 8.15    ERISA Compliance. In addition to and without limiting the
generality of Section 8.09, the Borrower shall and shall cause each of its
Subsidiaries to (a) comply in all material respects with all applicable
provisions of ERISA and the regulations and published interpretations thereunder
with respect to all employee benefit plans (as defined in ERISA), (b) not take
any action or fail to take action the result of which could be (i) a liability
to the PBGC (other than liability for PBGC premiums) or (ii) a past due
liability to any Multiemployer Plan, (c) not participate in any prohibited
transaction that could result in any material civil penalty under ERISA or any
tax under the Code, (d) operate each employee benefit plan in such a manner that
will not incur any material tax liability under Section 4980B of the Code or any
liability to any qualified beneficiary as defined in Section 4980B of the Code
except to the extent such failure to comply could not reasonably be expected to
have Material Adverse Effect and (e) furnish to the Administrative Agent upon
the Administrative Agent’s request such additional information about any
employee benefit plan as may be reasonably requested by the Administrative
Agent.

 

Section 8.16    New Subsidiary Requirements. Concurrently with the acquisition
or formation of any subsidiary which is to be a Restricted Subsidiary and in any
event prior to or concurrently with the Borrower’s advancing or contributing any
amounts to or into such Restricted Subsidiary (other than de minimis
organizational costs such as filing fees), the Borrower shall cause to be
delivered to the Administrative Agent (i) a Joinder Agreement executed by such
Restricted Subsidiary and the direct owner of the Equity Interests of such
Restricted Subsidiary, (ii) stock certificates or other instruments representing
all the Equity Interests of such Restricted Subsidiary and stock powers and
instruments of transfer, endorsed in blank, with respect to such stock
certificates or other instruments, or, if any Equity Interests pledged pursuant
to such Security Agreement are uncertificated securities, confirmation and
evidence satisfactory to the Administrative Agent that the security interest in
such uncertificated securities has been transferred to and perfected by the
Administrative Agent in accordance with the UCC, (iii) all documents and
instruments, including UCC Financing Statements (Form UCC-1), required by law or
reasonably requested by the Administrative Agent to be filed, registered or
recorded to create or perfect the Liens intended to be created under each
Security Agreement, (iv) UCC searches, all dated reasonably close to the date of
the Joinder Agreement and in form and substance satisfactory to the
Administrative Agent, and evidence reasonably satisfactory to the Administrative
Agent that any Liens indicated in such UCC searches are Excepted Liens or have
been released, (v) the corporate resolutions or similar approval documents of
such Restricted Subsidiary approving the execution and delivery of the Joinder
Agreement and the performance of the Security Agreement and Guaranty by such
Restricted Subsidiary, and (vi) a legal opinion reasonably acceptable to the
Administrative Agent, opining favorably on the execution, delivery and
enforceability of the Loan Documents to which such Restricted Subsidiary is a
party and otherwise being in form and substance reasonably satisfactory to the
Administrative Agent and its counsel.

 

-66-

 

 

Section 8.17    OFAC; Anti-Corruption Laws. Neither the Borrower nor any of its
Subsidiaries (a) is an “enemy” or “ally of the enemy” within the meaning of
Section 2 of the Trading with the Enemy Act of the United States (50 U.S.C. App.
§§ 1 et seq.), as amended, (b) is in violation of (i) the Trading with the Enemy
Act, as amended, (ii) any of the foreign assets control regulations of the
United States Treasury Department (31 CFR, Subtitle B, Chapter V, as amended),
or any enabling legislation or executive order relating thereto or (iii) the
Patriot Act, (c) is a Sanctions Person (as hereinafter defined), (d) has more
than 10% of its assets in Sanctioned Countries (as hereinafter defined) or
(e) derives more than 10% of its operating income from investments in, or
transactions with, Sanctioned Persons or Sanctioned Countries. No part of the
proceeds of any Loan will be used directly, or to the knowledge of the Borrower,
indirectly to fund any operations in, finance any investments or activities in
or make any payments to, a Sanctioned Person or a Sanctioned Country. As used
herein, “Sanctioned Country” means a country subject to a sanctions program
identified on the list maintained by the U.S. Department of the Treasury’s
Office of Foreign Assets Control (“OFAC”) and available at
http://www.treasury.gov/resource-center/sanctions/Programs/Pages/Programs.aspx,
or as otherwise published from time to time and “Sanctioned Person” means (a) a
Person named on the list of “Specially Designated Nationals and Blocked Persons”
maintained by OFAC available as
http://www.treasury.gov/resource-center/sanctions/SDN-List/Pages/default.aspx,
or as otherwise published from time to time, or (b) (i) an agency of the
government of a Sanctioned Country, (ii) an organization controlled by a
Sanctioned Country, or (iii) a person resident in a Sanctioned Country, to the
extent subject to a sanctions program administered by OFAC. The Borrower and its
Subsidiaries, to their knowledge, are in compliance in all material respects
with 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.

 

Section 8.18    Post-Closing Obligation. Within ninety (90) days after the
Effective Date, the Borrower shall deliver a legal opinion of Blake, Cassels &
Graydon LLP, special Alberta counsel to the Borrower, in respect of Williston
Hunter Canada, Inc., in form and substance reasonably satisfactory to the
Administrative Agent, except to the extent Williston Hunter Canada, Inc. is sold
to a third party pursuant to a transaction permitted by this Agreement within
such time period, in which case, this Section 8.18 shall cease to be effective.

 

ARTICLE IX

 

Negative Covenants

 

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

 

Section 9.01    Financial Covenants.

 

(a)       Current Ratio. Commencing with the fiscal quarter ending June 30,
2013, the Borrower will not permit, as of the last day of any fiscal quarter,
its ratio of (i) consolidated current assets of the Borrower and the Restricted
Subsidiaries (including the unused amount of the total Commitments, but
excluding non-cash assets under FAS 133) to (ii) consolidated current
liabilities of the Borrower and the Restricted Subsidiaries (excluding non-cash
obligations under FAS 133) (such ratio, the “Current Ratio”) to be less than 1.0
to 1.0.

 

-67-

 

 

(b)       Interest Coverage Ratio. The Borrower will not permit, as of the last
day of any fiscal quarter commencing with the fiscal quarter ending June 30,
2013, its ratio of (i) EBITDAX of the Borrower and the Restricted Subsidiaries
for the trailing four quarter period then ended to (ii) Interest Expense for
such period (the “Interest Coverage Ratio”) to be less than (A) 2.00 to 1.0 for
the fiscal quarter ending December 31, 2013, (B) 2.25 to 1.0 for the fiscal
quarter ending March 31, 2014 and (C) 2.50 to 1.0 for the fiscal quarter ending
June 30, 2014 and for each fiscal quarter ending thereafter. Solely for the
purposes of calculating the Interest Coverage Ratio for the fiscal quarter
ending December 31, 2013, EBITDAX and Interest Expense shall be calculated for
the fiscal quarter ending December 31, 2013 only, rather than the trailing four
quarter period then ended, and on an actual basis without giving effect to any
pro forma adjustments, including, without limitation, any such adjustments
provided for in the definitions of “Consolidated Net Income”, “EBITDAX” or
“Interest Expense” or otherwise in this Agreement.

 

(c)       Total Debt to EBITDAX. The Borrower will not permit, as of the last
day of any fiscal quarter commencing with the fiscal quarter ending June 30,
2014, its ratio of (i) total Debt of the Borrower and the Restricted
Subsidiaries as of such date to (ii) EBITDAX of the Borrower and the Restricted
Subsidiaries for the trailing four quarter period then ended to exceed (A) 4.50
to 1.0 for the fiscal quarter ending June 30, 2014 and for the fiscal quarter
ending September 30, 2014 and (B) 4.25 to 1.0 for the fiscal quarter ending
December 31, 2014 and for each fiscal quarter ending thereafter.

 

(d)       Senior Debt to EBITDAX. The Borrower will not permit, as of the last
day of any fiscal quarter commencing with the fiscal quarter ending June 30,
2013 through and including the fiscal quarter ending March 31, 2014, its ratio
of (i) (x) total Debt of the Borrower and the Restricted Subsidiaries as of such
date minus (y) the then outstanding principal amount of the Senior Notes to
(ii) EBITDAX of the Borrower and the Restricted Subsidiaries for the trailing
four quarter period then ended to exceed 2.00 to 1.00.

 

Section 9.02    Debt. The Borrower will not, and will not permit any Subsidiary
to, incur, create, assume or suffer to exist any Debt, except:

 

(a)      the Notes or other Obligations arising under the Loan Documents or any
guaranty of or suretyship arrangement for the Notes or other Obligations arising
under the Loan Documents;

 

(b)      Debt of the Borrower and its Subsidiaries existing on the Effective
Date that is reflected in the Financial Statements and described on Schedule
9.02;

 

(c)      accounts payable and accrued expenses, liabilities or other obligations
to pay the deferred purchase price of Property or services, from time to time
incurred in the ordinary course of business which are not greater than ninety
(90) days past the date of invoice or which are being contested in good faith by
appropriate action and for which adequate reserves have been maintained in
accordance with GAAP;

 

(d)      Debt under Capital Leases or nonrecourse purchase money Debt in respect
of equipment purchases not to exceed $10,000,000 at any time;

 

-68-

 

 

(e)      Debt associated with worker’s compensation claims, performance, bid,
surety or similar bonds or surety obligations required by Governmental
Requirements or third parties in connection with the operation of the Oil and
Gas Properties;

 

(f)      intercompany Debt between the Borrower and any Restricted Subsidiary or
between Restricted Subsidiaries;

 

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

 

(h)      Debt arising under take-or-pay agreements or gas balancing agreements
which do not give rise to liability in the aggregate on a consolidated basis for
the Borrower in excess of $2,000,000 at any one time outstanding;

 

(i)      Debt incurred in the ordinary course of Borrower’s business in
connection with Swap Agreements provided they are permitted under ‎Section 9.18
of this Agreement;

 

(j)      Debt of Unrestricted Subsidiaries for which neither the Borrower nor
any Restricted Subsidiary shall be liable as an obligor, under any guarantee or
otherwise;

 

(k)      obligations with respect to Series C preferred stock issued by the
Borrower prior to the Effective Date, so long as any dividends with respect
thereto comply with the provisions of Section 9.04;

 

(l)      obligations with respect to Series D preferred stock issued by the
Borrower under the certificate of designations therefor filed by the Borrower
with the Secretary of State of Delaware, so long as any dividends with respect
thereto comply with the provisions of Section 9.04;

 

(m)      Debt of Alpha Hunter Drilling, LLC, Hunter Real Estate, LLC and Triad
Hunter LLC guaranteed by the Borrower in an amount not to exceed $20,000,000 in
the aggregate which Debt shall be on terms and conditions reasonably
satisfactory to the Administrative Agent and have terms and conditions no more
restrictive than the terms and conditions set forth in this Agreement;

 

(n)      the Hall Houston Debt in an amount not to exceed $640,695 at any one
time outstanding;

 

(o)      Debt of the Borrower for the acquisition and/or financing of a
corporate airplane in an amount not to exceed $4,100,000 and otherwise on terms
and conditions reasonably satisfactory to the Administrative Agent;

 

(p)      Debt evidenced by Senior Notes (including unsecured guarantees in
respect thereof) not to exceed an aggregate principal amount of $600,000,000 at
any time outstanding; provided that (i) the maturity date of the Senior Notes
shall not be earlier than one year after the Maturity Date and (ii) the Borrower
shall not prepay any amounts owing under the Senior Notes at any time;

 

-69-

 

 

(q)      obligations with respect to Series E preferred stock issued by the
Borrower on substantially the same terms as disclosed to the Lenders in writing
prior to the issuance thereof under certificates of designation therefor filed
by the Borrower with the Secretary of State of Delaware, so long as any
dividends with respect thereto comply with the provisions of Section 9.04;

 

(r)      (i) guarantees by the Borrower and the Restricted Subsidiaries in
respect of Debt otherwise permitted by this Section 9.02 and (ii) unsecured
guarantees by the Borrower and the Restricted Subsidiaries at any one time
outstanding not to exceed $2,000,000 in respect of Debt of Unrestricted
Subsidiaries incurred in the ordinary course of business in connection with
accounts payable which are not greater than ninety (90) days past the date of
invoice or which are being contested in good faith by appropriate action and for
which adequate reserves have been maintained in accordance with GAAP; and

 

(s)      other Debt not to exceed $7,500,000 in the aggregate at any one time
outstanding.

 

Section 9.03    Liens. The Borrower will not, and will not permit any Subsidiary
to, create, incur, assume or permit to exist any Lien on any of its Properties
(now owned or hereafter acquired), except:

 

(a)      Liens securing the payment of any Obligations;

 

(b)      Excepted Liens;

 

(c)      Liens securing Capital Leases or purchase money Debt permitted by
‎Section 9.02(d) but only on the Property under lease;

 

(d)      Liens described on Schedule 9.03;

 

(e)      Liens on Property not constituting collateral for the Obligations and
not otherwise permitted by the foregoing clauses of this ‎Section 9.03; provided
that the aggregate principal or face amount of all Debt secured under this
clause (e) shall not exceed $500,000 at any time;

 

(f)      Liens in favor of Lenders securing Debt permitted by Section 9.02(i);

 

(g)      Liens on the assets of Unrestricted Subsidiaries securing Debt
permitted by Sections 9.02(j) and (m) and Liens on the assets of Alpha Hunter
Drilling, LLC and Triad Hunter LLC securing Debt permitted by Section 9.02(m);

 

(h)      Liens securing Debt permitted by Section 9.02(o); provided that such
Liens extend only to the property purchased and/or financed with the proceeds of
such Debt;

 

(i)      a Lien on the Equity Interests in Eureka Hunter securing Debt of Eureka
Hunter;

 

(j)      (i) leases and subleases of the properties of the Borrower and its
Subsidiaries granted to third parties, in each case, in the ordinary course of
business and (ii) any interest of title of a lessor or sublessor under any
leases entered into by the Borrower or its Subsidiaries in the ordinary course
of business;

 

-70-

 

 

(k)      Liens attaching solely to cash earnest money deposits in connection
with an Investment permitted by Section 9.05; and

 

(l)      Liens securing Debt permitted by Section 9.02(s); provided that (i) the
Debt secured by such Liens shall not exceed $5,000,000 at any one time
outstanding and (ii) such Liens extend only to the property purchased and/or
financed with the proceeds of such Debt.

 

Section 9.04    Restricted Payments. The Borrower will not, and will not permit
any Restricted Subsidiary to, declare or make, or agree to pay or make, directly
or indirectly, any Restricted Payment, return any capital to its stockholders or
make any distribution of its Property to its Equity Interest holders, except:

 

(a)      Restricted Subsidiaries may declare and pay Restricted Payments ratably
with respect to their Equity Interests;

 

(b)      the Borrower may (i) declare and pay dividends in respect of its Equity
Interests so long as such dividends (A) are in the form of the issuance of stock
(common or preferred), warrants, options or other rights or interests and (B) do
not include cash or other Property of the Borrower not specified in the
foregoing clause (A), and (ii) may pay cash in lieu of fractional shares in
connection with any stock splits or reverse stock splits of the Borrower’s
Equity Interests, up to a maximum of $500,000 during the term of this Agreement;

 

(c)      without limiting the dividends permitted by Section 9.04(b), the
Borrower may declare and pay cash dividends on its Series C, Series D and Series
E preferred stock permitted hereunder so long as (i) no Event of Default exists
at the time of, or is caused by, such payment, (ii) after giving effect to such
payment, availability under the Borrowing Base is equal to or greater than the
greater of (x) two and one-half percent (2.5%) of the Borrowing Base then in
effect and (y) $5,000,000, and (iii) such dividends do not exceed $45,000,000 in
the aggregate in any calendar year;

 

(d)      without limiting the dividends permitted by Section 9.04(b) above, the
Borrower may (i) pay cash in lieu of issuing fractional shares of Series C
preferred stock in connection with an exchange of outstanding Series C preferred
stock for newly issued Series D or Series E preferred stock, (ii) redeem its
Series C preferred stock with the proceeds of an issuance by the Borrower of
common equity or Series D or Series E preferred stock so long as such redemption
takes place as soon as reasonably practicable upon receipt of such proceeds,
(iii) redeem its Series D or Series E preferred stock with the proceeds of an
issuance by the Borrower of its common equity so long as such redemption takes
place as soon as reasonably practicable upon receipt of such proceeds and
(iv) pay cash in lieu of issuing fractional shares of Series C, Series D or
Series E preferred stock (or the depositary shares evidencing interests in the
Series E preferred stock) in connection with an exchange of outstanding Series
C, Series D or Series E preferred stock for newly issued common equity;

 

(e)      without limiting the redemptions of its Series C preferred stock
permitted by Section 9.04(d)(ii) above, the Borrower may redeem its Series C
preferred stock with the proceeds of issuances by the Borrower of its Series D
or Series E preferred stock occurring during the six month period prior to the
date of any such redemption so long as (i) no Event of Default exists at the
time of, or is caused by, such redemption and (ii) after giving effect to such
redemption, availability under the Borrowing Base is equal to or greater than
ten percent (10%) of the Borrowing Base then in effect, except to the extent
such proceeds were previously utilized as Investments pursuant to Section 9.05;

 

-71-

 

 

(f)      the Borrower may repurchase warrants, options or other rights entitling
the holder thereof to purchase or acquire any Equity Interest in the Borrower
for cash consideration in an amount not to exceed $100,000; and

 

(g)      the Borrower may (i) so long as no Event of Default is occurring, make
payments to directors, officers, members of management, employees or consultants
of the Borrower or any Subsidiary (or their transferees, estates or
beneficiaries under their estates) upon their death, disability, retirement,
severance or termination of employment or service for the acquisition by the
Borrower from such Persons of Equity Interests in the Borrower, provided that
the aggregate cash consideration paid for all such payments shall not exceed
$500,000 in any calendar year, and (ii) make cashless repurchases of securities
that are deemed to occur upon the exercise or vesting of options, rights or
shares of stock held by directors, officers, members of management, employees or
consultants of the Borrower or any Subsidiary to the extent such securities
represent a portion of the exercise price of or withholding taxes attributable
to such options, rights or shares.

 

Section 9.05    Investments, Loans and Advances. The Borrower will not, and will
not permit any Subsidiary to, make or permit to remain outstanding any
Investments in or to any Person, except that the foregoing restriction shall not
apply to:

 

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

 

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

 

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

 

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

 

(e)      deposits maturing within one year from the date of creation thereof
with, including certificates of deposit issued by, any Lender or any office
located in the United States of any other bank or trust company which is
organized under the laws of the United States or any state thereof, has capital,
surplus and undivided profits aggregating at least $100,000,000 (as of the date
of such bank or trust company’s most recent financial reports) and has a short
term deposit rating of no lower than A2 or P2, as such rating is set forth from
time to time, by S&P or Moody’s, respectively or, in the case of any Foreign
Subsidiary, a bank organized in a jurisdiction in which the Foreign Subsidiary
conducts operations having assets in excess of $500,000,000 (or its equivalent
in another currency);

 

-72-

 

 

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

 

(g)      Investments made by the Borrower in or to any Restricted Subsidiary or
by any Restricted Subsidiary in or to another Restricted Subsidiary;

 

(h)      subject to the restrictions set forth in the last paragraph of this
Section 9.05 and to the limits in Section 9.06, Investments in direct ownership
interests in additional Oil and Gas Properties, gas gathering, processing and
transportation systems and all other assets contemplated by the permitted
business of Borrower located within the geographic boundaries of the United
States of America and Canada;

 

(i)      subject to the restrictions set forth in the last paragraph of this
Section 9.05, entry into operating agreements, working interests, royalty
interests, mineral leases, processing agreements, farm-out agreements, contracts
for the sale, transportation or exchange of oil and natural gas, unitization
agreements, pooling arrangements, area of mutual interest agreements, production
sharing agreements or other similar or customary agreements, transactions,
properties, interests or arrangements, and Investments and expenditures in
connection therewith or pursuant thereto, in each case made or entered into in
the ordinary course of the oil and gas business, excluding, however, Investments
in other Persons; provided, however, that none of the foregoing shall involve
the incurrence of any Debt not permitted by ‎Section 9.02;

 

(j)      loans and advances to directors, officers and employees in connection
with the acquisition of Equity Interests in the Borrower or any Restricted
Subsidiary and loans and advances to directors, officers and employees permitted
by applicable law not to exceed $500,000 in the aggregate at any time;

 

(k)      travel advances in the ordinary course of business;

 

(l)      repurchase agreements of a commercial bank in the United States or
Canada if the commercial paper of such bank or of the bank holding company of
which such bank is a wholly owned subsidiary is rated in the highest rating
categories of S&P, Moody’s, or any other rating agency satisfactory to the
Required Lenders, that are fully secured by securities described in Section
9.04;

 

(m)      Investments in stock of publicly traded companies (other than
GreenHunter Energy, Inc.) not to exceed $1,000,000 in the aggregate outstanding
at any time;

 

(n)      Investments arising from the endorsement of financial instruments in
the ordinary course of business;

 

(o)      guarantees permitted under Section 9.02 and guarantees by the Borrower
of obligations of Restricted Subsidiaries incurred in the ordinary course of
business and not in respect of Debt;

 

(p)      Investments by the Borrower or any Restricted Subsidiaries in
Unrestricted Subsidiaries (other than Eureka Hunter Holdings, LLC or its
Subsidiaries), not to exceed (i) $12,500,000 in the calendar year ending
December 31, 2013 and (ii) $7,500,000 in any calendar year thereafter;

 

-73-

 

 

(q)      Investments in Eureka Hunter Holdings, LLC (or another direct or
indirect Subsidiary of Eureka Hunter Holdings, LLC), whether such Subsidiaries
are Restricted Subsidiaries or Unrestricted Subsidiaries, in an aggregate amount
at any one time outstanding not to exceed (i) $32,000,000 (excluding the
Investments in such Persons existing on the Effective Date as set forth on
Schedule 9.05), so long as, with respect to the Investments made on or after the
Effective Date, (A) such Investments are made before December 31, 2013 and
(B) at the time of and after giving effect to each such Investment, availability
under the Borrowing Base is equal to or greater than $75,000,000, provided that
to the extent the Borrower reasonably determines that funds in excess of such
amount are necessary for the construction, operation, maintenance or expansion
of the Eureka Hunter Pipeline or any related natural gas processing plants
(including the financing of the foregoing), the Borrower may distribute such
excess funds to Eureka Hunter Holdings, LLC or such other Subsidiary for the
purpose of paying any such construction, operation, maintenance or expansion
expenses of the Eureka Hunter Pipeline or such natural gas processing plants
(including the costs, expenses, fees or other amounts relating to the financing
of the foregoing), so long as such funds are net cash proceeds from the offering
of common or preferred equity securities by the Borrower on or after August 1,
2013, except to the extent such funds were previously utilized to make
redemptions of Series C preferred stock pursuant to Section 9.04(e), or such
payment is made in the form of the issuance of stock, and (ii) in any calendar
year ending after December 31, 2013, $2,000,000 (excluding the Investments in
such Persons existing on the Effective Date as set forth on Schedule 9.05),
provided that to the extent the Borrower reasonably determines that funds in
excess of such amount are necessary for the construction, operation, maintenance
or expansion of the Eureka Hunter Pipeline or any related natural gas processing
plants (including the financing of the foregoing), the Borrower may distribute
such excess funds to Eureka Hunter Holdings, LLC or such other Subsidiary for
the purpose of paying any such construction, operation, maintenance or expansion
expenses of the Eureka Hunter Pipeline or such natural gas processing plants
(including the costs, expenses, fees or other amounts relating to the financing
of the foregoing), so long as (A) such funds are net cash proceeds from the
offering of common or preferred equity securities by the Borrower on or after
August 1, 2013, except to the extent such funds were previously utilized to make
redemptions of Series C preferred stock pursuant to Section 9.04(e), or such
payment is made in the form of the issuance of stock and (B) at the time of and
after giving effect to each such Investment, availability under the Borrowing
Base is equal to or greater than 5% of the Borrowing Base then in effect;

 

(r)      To the extent the Eureka Hunter Pipeline is owned by Eureka Hunter
Pipeline J.V. and prior to the occurrence and continuance of an Event of
Default, investments by Eureka Hunter Pipeline Partners in Eureka Hunter
Pipeline J.V., not to exceed the amount the Borrower is permitted to invest in
Eureka Hunter and Eureka Hunter Pipeline Partners pursuant to Section 9.05(q);

 

(s)      Investments in GreenHunter Energy, Inc. consisting of (i) 1,846,722
common shares and 88,000 Series C preferred shares and (ii) that certain
Promissory Note, dated February 17, 2012, in the original principal amount of
$2,200,000;

 

-74-

 

 

(t)      Investments in securities or other assets of trade creditors or
customers in the ordinary course of business received in settlement or bona fide
disputes or upon foreclosure or pursuant to any plan of reorganization or
liquidation or similar arrangement upon the bankruptcy or insolvency of such
trade creditors or customers;

 

(u)      (i) Investments consisting of earnest money deposits in connection with
an Investment otherwise permitted by this Section 9.05, and (ii) lease, utility
or similar deposits in the ordinary course of business;

 

(v)      Investments in the common stock of Penn Virginia Corporation received
by the Borrower as a portion of the consideration for the sale of the Equity
Interests of Eagle Ford Hunter, Inc. to Penn Virginia Oil & Gas Corporation, in
an aggregate amount not to exceed the lesser of (i) $40,000,000 and (ii) ten
percent (10%) of the total consideration to be paid to the Borrower in
connection with such sale, measured on the date of execution of the stock
purchase agreement in respect thereof; provided that this subsection (v) shall
cease to be effective from and after the sale, transfer or disposition of all of
such Investments by the Borrower; and

 

(w)      Investments in the common stock of New Standard Energy Limited received
by the Borrower as a portion of the consideration for the sale of certain Oil
and Gas Properties to Pathfinder Onshore Energy Pty Ltd., New Standard Energy
Limited or an Affiliate thereof in an aggregate amount not to exceed
$10,000,000; provided that this subsection (w) shall cease to be effective from
and after the sale, transfer or disposition of all of such Investments by the
Borrower.

 

From and after the Effective Date and until the Borrower demonstrates compliance
with Section 9.01 for the fiscal quarter ending June 30, 2014, Investments
funded in connection with acquisitions permitted by clauses (h) and (i) above
shall be permitted so long as, at the time of and after giving effect to each
such Investment, (1) availability under the Borrowing Base is equal to or
greater than the lesser of $75,000,000 or 25% of the Borrowing Base then in
effect and (2) the aggregate amount of all such Investments made pursuant to
this sentence does not exceed the sum of (a) $40,000,000 plus (b) the Specified
Proceeds (as hereinafter defined). Notwithstanding the foregoing, from and after
the Effective Date through January 15, 2014, if at the time of and after giving
effect to any Investment funded in connection with acquisitions permitted by
clauses (h) and (i) above, availability under the Borrowing Base is less than
25% of the Borrowing Base then in effect, but equal to or greater than 15% of
the Borrowing Base then in effect, such Investment shall be permitted so long as
the aggregate amount of all such Investments made pursuant to this sentence does
not exceed $15,000,000. As used herein, “Specified Proceeds” means the sum of
(i) the proceeds of any asset sale permitted by Section 9.11(d) or Section
9.11(h) (minus, in the case of asset sales permitted by Section 9.11(d), the
amount of any reduction in the Borrowing Base as a result of such asset sale),
so long as, in each case, such proceeds are received on or after August 1, 2013
plus (ii) the net cash proceeds from the offering of common or preferred equity
securities by the Borrower on or after August 1, 2013, except to the extent such
funds were previously utilized to make redemptions of Series C preferred stock
pursuant to Section 9.04(e) and so long as the use of such proceeds takes place
as soon as reasonably practicable upon receipt of such proceeds.

 

-75-

 

 

Section 9.06    Nature of Business; International Operations. The Borrower will
not, and will not permit any Subsidiary to, allow any material change to be made
in the character of its business as an independent oil and gas exploration and
production company with midstream, marketing and trading components, including
gathering systems, processing plants, pipelines and related equipment and
facilities, including the Eureka Hunter Pipeline. From and after the Effective
Date, the Borrower and its Subsidiaries will not acquire or make any other
expenditure (whether such expenditure is capital, operating or otherwise) in or
related to, any Oil and Gas Properties not located within the geographical
boundaries or territorial waters of the United States or Canada.

 

Section 9.07    Limitation on Leases. The Borrower will not, and will not permit
any Subsidiary to, create, incur, assume or suffer to exist any obligation for
the payment of rent or hire of Property of any kind whatsoever (real or personal
but excluding Capital Leases and leases of Hydrocarbon Interests), under leases
or lease agreements which would cause the aggregate amount of all payments made
by the Borrower and the Subsidiaries pursuant to all such leases or lease
agreements, including, without limitation, any residual payments at the end of
any lease, to exceed $2,000,000 in any period of twelve (12) consecutive
calendar months during the life of such leases.

 

Section 9.08    Proceeds of Notes/Loans. The Borrower will not permit the Loans
or the proceeds of the Notes to be used for any purpose other than those
permitted by ‎Section 7.21. Neither the Borrower nor any Person acting on behalf
of the Borrower has taken or will take any action which might cause any of the
Loan Documents to violate Regulations T, U or X or any other regulation of the
Board or to violate Section 7 of the Securities Exchange Act of 1934 or any rule
or regulation thereunder, in each case as now in effect or as the same may
hereinafter be in effect. If requested by the Administrative Agent, the Borrower
will furnish to the Administrative Agent and each Lender a statement to the
foregoing effect in conformity with the requirements of FR Form U-1 or such
other form referred to in Regulation U, Regulation T or Regulation X of the
Board, as the case may be.

 

Section 9.09    Sale or Discount of Receivables. Except for receivables obtained
by the Borrower or any Subsidiary out of the ordinary course of business or the
settlement of joint interest billing accounts in the ordinary course of business
or discounts granted to settle collection of accounts receivable or the sale of
defaulted accounts arising in the ordinary course of business in connection with
the compromise or collection thereof and not in connection with any financing
transaction, neither the Borrower nor any Subsidiary will discount or sell (with
or without recourse) to any other Person that is not the Borrower any of its
notes receivable or accounts receivable.

 

Section 9.10    Mergers, Etc. Neither the Borrower nor any Subsidiary will merge
into or with or consolidate with any other Person, or sell, lease or otherwise
dispose of (whether in one transaction or in a series of transactions) all or
substantially all of its Property to any other Person (any such transaction, a
“consolidation”); provided that (a) (i) any Subsidiary may participate in a
consolidation with the Borrower (provided that the Borrower shall be the
continuing or surviving corporation) or any Restricted Subsidiary (provided that
such Restricted Subsidiary shall be the continuing or surviving Person) and any
Unrestricted Subsidiary may merge with another Unrestricted Subsidiary and (ii)
in the case of an Unrestricted Subsidiary merging into Borrower, no Default or
Event of Default shall result and (b) the Borrower and its Subsidiaries may
consummate any Investment or disposition in compliance with Section 9.05 or
Section 9.11, respectively.

 

-76-

 

 

Section 9.11    Sale of Assets. The Borrower will not, and will not permit any
Subsidiary to, sell, assign, farm-out, convey or otherwise transfer any asset,
including, without limitation, Property containing proved reserves constituting
a portion of the Borrowing Base except for:

 

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

 

(b)      farmouts, sales or other dispositions of undeveloped acreage and
assignments in connection with such transactions;

 

(c)      the sale or transfer of equipment in the ordinary course of business or
that is no longer necessary for the business of the Borrower or such Subsidiary
or is replaced by equipment of at least comparable value and use;

 

(d)      the sale or other disposition (including Casualty Events) of any Oil
and Gas Property or any interest therein or any Restricted Subsidiary owning Oil
and Gas Properties; provided that

 

  (1)      100% of the consideration received in respect of such sale or other
disposition shall be cash, except with respect to that certain sale by the
Borrower of certain Oil and Gas Properties to Pathfinder Onshore Energy Pty
Ltd., New Standard Energy Limited or an Affiliate thereof pursuant to which a
portion of the consideration received in respect thereof may consist of the
Investment described in Section 9.05(w);

 

  (2)      the consideration received in respect of such sale or other
disposition shall be equal to or greater than the fair market value of the Oil
and Gas Property, interest therein or the Restricted Subsidiary subject of such
sale or other disposition (as reasonably determined by the board of directors of
the Borrower and, if requested by the Administrative Agent, the Borrower shall
deliver a certificate of a Responsible Officer of the Borrower certifying to
that effect),

 

  (3)      if such sale or other disposition of Oil and Gas Property or
Restricted Subsidiary owning Oil and Gas Properties included in the most
recently delivered Reserve Report during any period between two successive
Scheduled Redetermination Dates has a fair market value in excess of 5% of the
Borrowing Base then in effect, as determined by the Required Lenders,
individually or in the aggregate, the Borrowing Base shall be reduced, effective
immediately upon such sale or disposition, by an amount equal to the value, if
any, assigned such Property in the most recently delivered Reserve Report and

 

  (4)      if any such sale or other disposition is of a Restricted Subsidiary
owning Oil and Gas Properties, such sale or other disposition shall include all
the Equity Interests of such Restricted Subsidiary.

 

-77-

 

 

(e)      sales and other dispositions of Properties not regulated by the
foregoing provisions of this ‎Section 9.11‎ having a fair market value not to
exceed $1,000,000 during any 6-month period, and the sale, trade or other
disposition of seismic, geologic or other data, licenses and similar rights or
assets; and

 

(f)      sales, transfers and dispositions to the Borrower or a Restricted
Subsidiary;

 

(g)      the transfer by Triad Hunter, LLC of the Equity Interests in Eureka
Hunter to an Unrestricted Subsidiary; and

 

(h)      the sale, transfer or disposition of the Investments described in
subsections (s), (v) and (w) of Section 9.05.

 

Section 9.12    Environmental Matters. The Borrower will not, and will not
permit any Subsidiary to, cause or permit any of its Property to be in violation
of, or do anything or permit anything to be done which will subject any such
Property to any Remedial Work under any applicable Environmental Laws, assuming
disclosure to the applicable Governmental Authority of all relevant facts,
conditions and circumstances, if any, pertaining to such Property where such
violations or remedial obligations could reasonably be expected to have a
Material Adverse Effect.

 

Section 9.13    Transactions with Affiliates. The Borrower will not, and will
not permit any Subsidiary to, enter into any transaction, including, without
limitation, any purchase, sale, lease or exchange of Property or the rendering
of any service, with any Affiliate (other than the Loan Parties) other than
(a) transactions otherwise permitted under this Agreement, (b) transactions upon
fair and reasonable terms no less favorable to it than it would obtain in a
comparable arm’s length transaction with a Person not an Affiliate or
(c) reasonable and customary director, officer and employee compensation
(including bonuses and severance) and other benefits (including retirement,
health, stock option and other benefit plans and indemnification arrangements
for the benefit of Borrower’s or any Subsidiary’s officers, directors and
employees entered into in the ordinary course of business and in good faith or
to the extent approved in good faith by the board of directors of the Borrower.

 

Section 9.14    Subsidiaries. The Borrower shall not, and shall not permit any
Subsidiary to, create or acquire any additional Subsidiary unless the Borrower
gives prior written notice to the Administrative Agent of such creation or
acquisition. The Borrower shall not, and shall not permit any Subsidiary to,
sell, assign or otherwise dispose of any Equity Interests in any Subsidiary
except in compliance with ‎Section 9.11. Neither the Borrower nor any Subsidiary
shall acquire or form any Foreign Subsidiaries, except those certain Foreign
Subsidiaries acquired or formed in connection with the NuLoch Acquisition or
other Subsidiaries organized under Canadian law.

 

Section 9.15    Subsidiary Obligations and Preferred Stock. The Borrower will
not and will not permit any of Subsidiary to issue preferred stock or create,
incur or assume any Debt, except for preferred stock and Debt, in each case
permitted under ‎Section 9.02.

 

-78-

 

 

Section 9.16    Negative Pledge Agreements; Dividend Restrictions. The Borrower
will not, and will not permit any Restricted Subsidiary to, create, incur,
assume or suffer to exist any contract, agreement or understanding which in any
way prohibits or restricts the granting, conveying, creation or imposition of
any Lien on any of its Property in favor of the Administrative Agent and the
Lenders or restricts any Loan Party from paying dividends or making
distributions to any other Loan Party, or which requires the consent of or
notice to other Persons in connection therewith; provided, however, that the
preceding restrictions will not apply to encumbrances or restrictions arising
under or by reason of (a) this Agreement or the Security Instruments, (b) any
leases or licenses or similar contracts as they affect any Property or Lien
subject to a lease or license, (c) any contract, agreement or understanding
creating Liens on Capital Leases permitted by ‎Section 9.03(c) (but only to the
extent related to the Property on which such Liens were created), (d) any
restriction with respect to a Subsidiary imposed pursuant to an agreement
entered into for the direct or indirect sale or disposition of all or
substantially all the equity or Property of such Subsidiary (or the Property
that is subject to such restriction) pending the closing of such sale or
disposition, (e) the agreement described on Schedule 9.16, (f) customary
provisions with respect to the distribution of Property in joint venture
agreements, (g) the agreement creating the Lien described in Section 9.03(h) or
(h) the documents evidencing the Senior Notes to the extent the restrictions and
agreements contained in such documents are reasonably satisfactory to the
Administrative Agent.

 

Section 9.17    Gas Imbalances, Take-or-Pay or Other Prepayments. The Borrower
will not allow gas imbalances, take-or-pay or other prepayments with respect to
the Oil and Gas Properties of the Borrower or any Restricted Subsidiary that
would require the Borrower or such Restricted Subsidiary to deliver Hydrocarbons
at some future time without then or thereafter receiving full payment therefor
to exceed 500 mmcf equivalent in the aggregate at all times except for such
amounts that are covered by adequate reserves, which reserves (or the future
cash flow therefrom) are excluded from the most recent Reserve Report.

 

Section 9.18    Swap Agreements.

 

(a)      The Borrower will not, and will not permit any Subsidiary to, enter
into any Swap Agreements with any Person other than:

 

  (i)      Swap Agreements in respect of crude oil (including natural gas
liquids) or natural gas, in each case, (A) with an Approved Counterparty and (B)
the notional volumes for which (when aggregated with other commodity Swap
Agreements in effect for the same periods as such Swap Agreement, other than
basis differential swaps on volumes already hedged pursuant to other Swap
Agreements) do not exceed, as of the date such Swap Agreement is executed, for
crude oil (including natural gas liquids) or natural gas, respectively, (1) 80%
of the reasonably anticipated production of its Total Proved Reserves with
respect to such commodity for each month during the period in which such Swap
Agreement is in effect, and (2) (x) 100% of the most recent production as
provided in the report most recently delivered by the Borrower pursuant to
Section 8.01(m) for any succeeding twenty-four month period; provided that, for
any Swap Agreement executed during the last quarter of any calendar year, such
period shall be extended to December 31st of the second calendar year following
execution of such Swap Agreement and (y) 75% of the most recent production as
provided in the report most recently delivered by the Borrower pursuant to
Section 8.01(m) for any period beyond such twenty-four month period (or such
extended period as provided in the foregoing proviso);

 

-79-

 

 

  (ii)      Swap Agreements in respect of interest rates with an Approved
Counterparty, as follows: (A) Swap Agreements effectively converting interest
rates from fixed to floating, the notional amounts of which (when aggregated
with all other Swap Agreements of the Borrower and its Subsidiaries then in
effect effectively converting interest rates from fixed to floating) do not
exceed 75% of the then outstanding principal amount of the Borrower’s fixed rate
Debt for borrowed money and (B) Swap Agreements effectively converting interest
rates from floating to fixed, the notional amounts of which (when aggregated
with all other Swap Agreements of the Borrower and its Subsidiaries then in
effect effectively converting interest rates from floating to fixed) do not
exceed 75% of the then outstanding principal amount of the Borrower’s Debt for
borrowed money which bears interest at a floating rate;

 

  (iii)      Swap Agreements with respect to which Debt is allowed pursuant to
Section 9.02; and

 

  (iv)      Swap Agreements to hedge foreign exchange rate risks to which the
Borrower or any of its Subsidiaries has actual exposure.

 

In no event shall any Swap Agreement to which the Borrower or any Subsidiary is
a party contain any requirement, agreement or covenant for the Borrower or any
Subsidiary to post cash or other collateral or margin to secure their
obligations under such Swap Agreement or to cover market exposures.

 

(b)      Notwithstanding the provisions of Section 2.07(e), the Borrower will
not, and will not permit any Subsidiary to, terminate, cancel or otherwise cease
to be a party to existing Swap Agreements to the extent the termination value,
as determined by the Administrative Agent in its sole discretion, of any such
terminated Swap Agreement, on a net basis considering all other Swap Agreements
so terminated during the period between any two Scheduled Redetermination Dates
(including any new Swap Agreements entered into hereafter), would exceed five
percent (5%) of the then effective Borrowing Base.

 

(c)      For purposes of this Section 9.18, purchases of put options and
purchasers of price floors shall not be considered Swap Agreements.

 

Section 9.19    Sale and Leaseback Transactions. The Borrower will not, and will
not permit any of its Restricted Subsidiaries to, enter into any arrangement,
directly or indirectly, whereby it shall sell or transfer any property, real or
personal, used or useful in its business, whether now owned or hereinafter
acquired, and thereafter rent or lease such property or other property that it
intends to use for substantially the same purpose or purposes as the property
sold or transferred.

 

-80-

 

 

ARTICLE X

 

Events of Default; Remedies

 

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

 

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

 

(b)      the Borrower shall fail to pay any interest on any Loan or any fee or
any other amount (other than an amount referred to in ‎Section 10.01(a)) payable
under any Loan Document, when and as the same shall become due and payable, and
such failure shall continue unremedied for a period of three (3) Business Days.

 

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

 

(d)      the Borrower or any Restricted Subsidiary shall fail to observe or
perform any covenant, condition or agreement contained in ‎Section 8.01(h),
‎Section 8.01(l), ‎Section 8.02, ‎Section 8.03, Section 8.12, ‎Section 8.15,
Section 8.17 or in ‎ARTICLE IX (other than Section 9.02, Section 9.03 and
Section 9.18).

 

(e)      any Loan Party shall fail to observe or perform any covenant, condition
or agreement contained in this Agreement (other than those specified in Section
10.01(a), ‎Section 10.01(b) or Section 10.01(d)) or any other Loan Document, and
such failure shall continue unremedied for a period of 30 days after the earlier
to occur of (i) notice thereof from the Administrative Agent to the Borrower
(which notice will be given at the request of any Lender) or (ii) a Responsible
Officer of the Borrower or such Subsidiary otherwise becoming aware of such
default.

 

(f)      the Borrower or any Restricted Subsidiary shall fail to make any
payment (whether of principal or interest and regardless of amount) in respect
of any Material Indebtedness, when and as the same shall become due and payable
if the effect of such event is to cause, or (with the giving of any notice or
the lapse of time or both) to permit the holder or holders of such Debt (or a
trustee or agent on behalf of such holder or holders) to cause, such Debt to
become due prior to its stated maturity.

 

-81-

 

 

(g)      any event or condition occurs that results in any Material Indebtedness
becoming due prior to its scheduled maturity or that enables or permits (with or
without the giving of notice, the lapse of time or both) the holder or holders
of any Material Indebtedness or any trustee or agent on its or their behalf to
cause any Material Indebtedness to become due, or to require the Redemption
thereof or any offer to Redeem to be made in respect thereof, prior to its
scheduled maturity or require the Borrower or any Restricted Subsidiary to make
an offer in respect thereof.

 

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

 

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

 

(j)      the Borrower or any Restricted Subsidiary shall become unable, admit in
writing its inability, or fail generally to pay its debts as they become due.

 

(k)      one or more judgments for the payment of money in an aggregate amount
in excess of $3,000,000 (to the extent not covered by independent third party
insurance provided by insurers of the highest claims paying rating or financial
strength as to which the insurer has been notified, does not dispute coverage
and is not subject to an insolvency proceeding) shall be rendered against the
Borrower, any Restricted Subsidiary or any combination thereof and the same
shall remain undischarged for a period of 60 consecutive days during which
execution shall not be effectively stayed, or any action shall be legally taken
by a judgment creditor to attach or levy upon any assets of the Borrower or any
Restricted Subsidiary to enforce any such judgment.

 

(l)      the Loan Documents after delivery thereof shall for any reason, except
to the extent permitted by the terms thereof, cease to be in full force and
effect and valid, binding and enforceable in accordance with their terms against
the Borrower or shall be repudiated, or cease to create a valid and perfected
Lien of the priority required thereby on any of the collateral purported to be
covered thereby, except to the extent permitted by the terms of this Agreement,
or the Borrower or any Subsidiary or any of their Affiliates shall so state in
writing.

 

(m)      an ERISA Event shall have occurred that, in the opinion of the Required
Lenders, when taken together with all other ERISA Events that have occurred,
could reasonably be expected to result in a Material Adverse Effect.

 

-82-

 

 

(n)      a Change in Control shall occur.

 

Section 10.02    Remedies.

 

(a)      In the case of an Event of Default other than one described in ‎Section
10.01(h), ‎Section 10.01(i) or ‎Section 10.01(j), at any time thereafter during
the continuance of such Event of Default, the Administrative Agent may, and at
the request of the Required Lenders shall, by notice to the Borrower, take
either or both of the following actions, at the same or different times: (i)
terminate the Commitments, and thereupon the Commitments shall terminate
immediately, and (ii) declare the Notes and the Loans then outstanding to be due
and payable in whole (or in part, in which case any principal not so declared to
be due and payable may thereafter be declared to be due and payable), and
thereupon the principal of the Loans so declared to be due and payable, together
with accrued interest thereon and all fees and other obligations of the Borrower
accrued hereunder and under the Notes and the other Loan Documents (including,
without limitation, the payment of cash collateral to secure the LC Exposure as
provided in ‎Section 2.08(j)), shall become due and payable immediately, without
presentment, demand, protest, notice of intent to accelerate, notice of
acceleration or other notice of any kind, all of which are hereby waived by the
Borrower and each Guarantor; and in case of an Event of Default described in
‎Section 10.01(h), ‎Section 10.01(i) or ‎Section 10.01(j), the Commitments shall
automatically terminate and the Notes and the principal of the Loans then
outstanding, together with accrued interest thereon and all fees and the other
obligations of the Borrower accrued hereunder and under the Notes and the other
Loan Documents (including, without limitation, the payment of cash collateral to
secure the LC Exposure as provided in ‎Section 2.08(j)), shall automatically
become due and payable, without presentment, demand, protest or other notice of
any kind, all of which are hereby waived by the Borrower.

 

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

 

(c)      All proceeds realized from the liquidation or other disposition of
collateral or otherwise received after maturity of the Loans or the Notes,
whether by acceleration or otherwise, shall be applied: first, to reimbursement
of expenses and indemnities provided for in this Agreement and the Security
Instruments; second, to accrued interest on the Loans; third, to fees; fourth,
pro rata to principal outstanding on the Loans and Obligations referred to in
clause (iii) of the definition of Obligations; fifth, to any other Obligations;
sixth, to serve as cash collateral to be held by the Administrative Agent to
secure the LC Exposure; and any excess shall be paid to the Borrower or as
otherwise required by any Governmental Requirement.

 

ARTICLE XI

 

The Administrative Agent

 

Section 11.01    Appointment; Powers.

 

Each of the Lenders and the Issuing Bank hereby irrevocably (subject to
Section 11.06) appoints the Administrative Agent as its agent and authorizes the
Administrative Agent to take such actions on its behalf and to exercise such
powers as are delegated to the Administrative Agent by the terms hereof and the
other Loan Documents, together with such actions and powers as are reasonably
incidental thereto.

 

-83-

 

 

Section 11.02    Duties and Obligations of Administrative Agent. The
Administrative Agent shall not have any duties or obligations except those
expressly set forth in the Loan Documents. Without limiting the generality of
the foregoing, the Administrative Agent (a) shall not be subject to any
fiduciary or other implied duties, regardless of whether a Default has occurred
and is continuing, (b) shall not have any duty to take any discretionary action
or exercise any discretionary powers, except as provided in ‎Section 11.03, and
(c) except as expressly set forth herein, 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 Subsidiaries that is communicated to or obtained by
the bank serving as the Administrative Agent or any of its Affiliates in any
capacity. The Administrative Agent shall be deemed not to have knowledge of any
Default unless and until written notice thereof is given to it by the Borrower
or a Lender, and shall not be responsible for or have any duty to ascertain or
inquire into (i) any statement, warranty or representation made in or in
connection with this Agreement or any other Loan Document, (ii) the contents of
any certificate, report or other document delivered hereunder or under any other
Loan Document or in connection herewith or therewith, (iii) the performance or
observance of any of the covenants, agreements or other terms or conditions set
forth herein or in any other Loan Document, (iv) the validity, enforceability,
effectiveness or genuineness of this Agreement, any other Loan Document or any
other agreement, instrument or document, (v) the satisfaction of any condition
set forth in ‎ARTICLE VI or elsewhere herein, other than to confirm receipt of
items expressly required to be delivered to it or as to those conditions
precedent specifically required to be to its satisfaction, (vi) the existence,
value, perfection or priority of any collateral security or the financial or
other condition of the Borrower and its Subsidiaries or any other obligor or
guarantor, or (vii) any failure by the Borrower or any other Person (other than
itself) to perform any of its obligations hereunder or under any other Loan
Document or the performance or observance of any covenants, agreements or other
terms or conditions set forth herein or therein.

 

Section 11.03    Action by Administrative Agent. The Administrative Agent shall
not have any duty to take any discretionary action or exercise any discretionary
powers, except discretionary rights and powers expressly contemplated hereby
that it is required to exercise in writing as directed by the Required Lenders
(or such other number or percentage of the Lenders as shall be necessary under
the circumstances as provided in ‎Section 12.02) and in all cases it shall be
fully justified in failing or refusing to act hereunder or under any other Loan
Documents unless it shall (a) receive written instructions from the Required
Lenders or the Lenders, as applicable, (or such other number or percentage of
the Lenders as shall be necessary under the circumstances as provided in
‎Section 12.02) specifying the action to be taken and (b) be indemnified to its
satisfaction by the Lenders against any and all liability and expenses which may
be incurred by it by reason of taking or continuing to take any such action. The
instructions as aforesaid and any action taken or failure to act pursuant
thereto shall be binding on all of the Lenders. If a Default has occurred and is
continuing, then the Administrative Agent shall take such action with respect to
such Default as shall be directed by the requisite Lenders in the written
instructions (with indemnities) described in this ‎Section 11.03, provided that,
unless and until the Administrative Agent shall have received such directions,
the Administrative Agent may (but shall not be obligated to) take such action,
or refrain from taking such action, with respect to such Default as it shall
deem advisable in the best interests of the Lenders. In no event, however, shall
the Administrative Agent be required to take any action which exposes the
Administrative Agent to personal liability or which is contrary to this
Agreement, the Loan Documents or applicable law. If a Default has occurred and
is continuing, the Arranger shall not have any obligation to perform any act in
respect thereof. The Administrative Agent shall not be liable for any action
taken or not taken by it with the consent or at the request of the Required
Lenders or the Lenders (or such other number or percentage of the Lenders as
shall be necessary under the circumstances as provided in Section 12.02), and
otherwise the Administrative Agent shall not be liable for any action taken or
not taken by it hereunder or under any other Loan Document or under any other
document or instrument referred to or provided for herein or therein or in
connection herewith or therewith including its own ordinary negligence, except
for its own gross negligence or willful misconduct.

 

-84-

 

 

Section 11.04    Reliance by Administrative Agent. The Administrative 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 believed by it to be genuine and to have been signed or sent by
the proper Person. The Administrative Agent also may rely upon any statement
made to it orally or by telephone and believed by it to be made by the proper
Person, and shall not incur any liability for relying thereon and each of the
Borrower, the Lenders and the Issuing Bank hereby waives the right to dispute
the Administrative Agent’s record of such statement, except in the case of gross
negligence or willful misconduct by the Administrative Agent. The Administrative
Agent 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. The Administrative Agent may deem and
treat the payee of any Note as the holder thereof for all purposes hereof unless
and until a written notice of the assignment or transfer thereof permitted
hereunder shall have been filed with the Administrative Agent.

 

Section 11.05    Subagents. The Administrative Agent may perform any and all its
duties and exercise its rights and powers by or through any one or more
sub-agents appointed by it. The Administrative Agent and any such sub-agent may
perform any and all its duties and exercise its rights and powers through their
respective Related Parties. The exculpatory provisions of the preceding Sections
of this ‎ARTICLE XI shall apply to any such sub-agent and to the Related Parties
of the Administrative Agent and any such sub-agent, and shall apply to their
respective activities in connection with the syndication of the credit
facilities provided for herein as well as activities as Administrative Agent.

 

Section 11.06    Resignation or Removal of Administrative Agent. Subject to the
appointment and acceptance of a successor Administrative Agent as provided in
this ‎Section 11.06, the Administrative Agent may resign at any time by
notifying the Lenders, the Issuing Bank and the Borrower, and the Administrative
Agent may be removed at any time with or without cause by the Required Lenders.
Upon any such resignation or removal, the Required Lenders shall have the right,
in consultation with and upon the approval of the Borrower (so long as no Event
of Default has occurred and is continuing), which approval shall not be
unreasonably withheld, to appoint a successor. If no successor shall have been
so appointed by the Required Lenders and shall have accepted such appointment
within 30 days after the retiring Administrative Agent gives notice of its
resignation or removal of the retiring Administrative Agent, then the retiring
Administrative Agent may, on behalf of the Lenders and the Issuing Bank, appoint
a successor Administrative Agent which shall be a bank with an office in New
York, New York, or an Affiliate of any such bank. Upon the acceptance of its
appointment as Administrative Agent hereunder by a successor, such successor
shall succeed to and become vested with all the rights, powers, privileges and
duties of the retiring Administrative Agent, and the retiring Administrative
Agent shall be discharged from its duties and obligations hereunder. The fees
payable by the Borrower to a successor Administrative Agent shall be the same as
those payable to its predecessor unless otherwise agreed between the Borrower
and such successor. After the Administrative Agent’s resignation hereunder, the
provisions of this ‎ARTICLE XI and ‎Section 12.03 shall continue in effect for
the benefit of such retiring Administrative Agent, its sub-agents and their
respective Related Parties in respect of any actions taken or omitted to be
taken by any of them while it was acting as Administrative Agent.

 

-85-

 

 

Section 11.07    Administrative Agent as Lender. Each bank serving as the
Administrative Agent hereunder shall have the same rights and powers in its
capacity as a Lender as any other Lender and may exercise the same as though it
were not the Administrative Agent, and such bank and its Affiliates may accept
deposits from, lend money to and generally engage in any kind of business with
the Borrower or any Subsidiary or other Affiliate thereof as if it were not the
Administrative Agent hereunder.

 

Section 11.08    No Reliance. Each Lender acknowledges that it has,
independently and without reliance upon the Administrative Agent or any other
Lender and based on such documents and information as it has deemed appropriate,
made its own credit analysis and decision to enter into this Agreement and each
other Loan Document to which it is a party. Each Lender also acknowledges that
it will, independently and without reliance upon the Administrative Agent or any
other Lender and based on such documents and information as it shall from time
to time deem appropriate, continue to make its own decisions in taking or not
taking action under or based upon this Agreement, any other Loan Document, any
related agreement or any document furnished hereunder or thereunder. The
Administrative Agent shall not be required to keep itself informed as to the
performance or observance by the Borrower or any of its Subsidiaries of this
Agreement, the Loan Documents or any other document referred to or provided for
herein or to inspect the Properties or books of the Borrower or its
Subsidiaries. Except for notices, reports and other documents and information
expressly required to be furnished to the Lenders by the Administrative Agent
hereunder, neither the Administrative Agent nor the Arranger shall have any duty
or responsibility to provide any Lender with any credit or other information
concerning the affairs, financial condition or business of the Borrower (or any
of its Affiliates) which may come into the possession of the Administrative
Agent or any of its Affiliates. In this regard, each Lender acknowledges that
Andrews Kurth LLP is acting in this transaction as special counsel to the
Administrative Agent only, except to the extent otherwise expressly stated in
any legal opinion or any Loan Document. Each other party hereto will consult
with its own legal counsel to the extent that it deems necessary in connection
with the Loan Documents and the matters contemplated therein.

 

-86-

 

 

Section 11.09    Authority to Release Collateral and Liens. Each Lender and the
Issuing Bank hereby authorizes the Administrative Agent to release any
collateral that is permitted to be sold or released pursuant to the terms of the
Loan Documents. Each Lender and the Issuing Bank hereby authorizes the
Administrative Agent to execute and deliver to the Borrower, at the Borrower’s
sole cost and expense, any and all releases of Liens, termination statements,
assignments or other documents reasonably requested by the Borrower in
connection with any sale or other disposition of Property to the extent such
sale or other disposition is permitted by the terms of ‎Section 9.11 or is
otherwise authorized by the terms of the Loan Documents.

 

Section 11.10    The Arranger, the Syndication Agent and the Co-Documentation
Agents. None of the Arranger, the Syndication Agent or the Co-Documentation
Agents shall have any duties, responsibilities or liabilities under this
Agreement and the other Loan Documents other than, in the case of any Persons
that are also Lenders, their duties, responsibilities and liabilities in their
capacities as Lenders hereunder.

 

Section 11.11    Filing of Proofs of Claim. In case of any Default or Event of
Default under ‎Section 10.01(h), Section 10.01(i) or Section 10.01(j), the
Administrative Agent (regardless of whether the principal of any Loan or LC
Exposure shall then be due and payable and regardless of whether the
Administrative Agent has made any demand on the Borrower) shall be entitled and
empowered, by intervention in such proceeding or otherwise:

 

(a)      to (i) file and prove a claim for the whole amount of the principal and
interest owing and unpaid in respect of the Loans, LC Exposure and all other
Obligations that is owing and unpaid and (ii) file such other documents as may
be necessary or advisable in order to have the claims of the Lenders and the
Administrative Agent (including any claim for the reasonable compensation,
expenses, disbursements and advances of the Lenders, the Administrative Agent
and their respective agents and counsel and all other amounts due the Lenders,
the Administrative Agent under ‎Section 3.03 and ‎Section 12.03) 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.

 

Each Lender hereby authorizes any custodian, receiver, assignee, trustee,
conservator, sequestrator or other similar official in any such judicial
proceeding: (i) to make such payments to the Administrative Agent; and (ii) if
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, and any other amounts due the
Administrative Agent under‎ ‎Section 3.03 and ‎Section 12.03. Nothing contained
herein shall be deemed to authorize the Administrative Agent to authorize or
consent to or accept or adopt on behalf of any Lender any plan of
reorganization, arrangement, adjustment or composition affecting the Obligations
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. Each Lender retains
its right to file and prove a claim separately.

 

-87-

 

 

ARTICLE XII

 

Miscellaneous

 

Section 12.01    Notices.

 

(a)      Except in the case of notices and other communications expressly
permitted to be given by telephone (and subject to ‎Section 12.01(b)), all
notices and other communications provided for herein shall be in writing and
shall be delivered by hand or overnight courier service, mailed by certified or
registered mail or sent by telecopy, as follows:

 

  (i)      if to the Borrower, to it at Magnum Hunter Resources Corporation,
777 Post Oak Blvd., Suite 650, Houston, Texas 77056, Attention Ronald D. Ormand
(Telecopy No. 832-369-6992);

 

  (ii)      if to the Administrative Agent, to it at Bank of Montreal, 700
Louisiana Street, Suite 4400, Houston, Texas 77002, Attention Gumaro Tijerina
(Telecopy No. 713-223-4007, with a copy to 600 Travis, Suite 4200, Houston,
Texas 77002, Attention Tom Perich (Telecopy No. (713) 220-7175);

 

  (iii)      if to any other Lender, in its capacity as such, or any other
Lender in its capacity as an Issuing Bank, to it at its address (or telecopy
number) set forth in its Administrative Questionnaire.

 

(b)      Notices and other communications to the Lenders hereunder may be
delivered or furnished by electronic communications pursuant to procedures
approved by the Administrative Agent; provided that the foregoing shall not
apply to notices pursuant to ‎ARTICLE II, ARTICLE III, ARTICLE IV and ‎ARTICLE V
unless otherwise agreed by the Administrative Agent and the applicable Lender.
The Administrative Agent or the Borrower may, in its discretion, agree to accept
notices and other communications to it hereunder by electronic communications
pursuant to procedures approved by it; provided that approval of such procedures
may be limited to particular notices or communications.

 

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

 

Section 12.02    Waivers; Amendments.

 

(a)      No failure on the part of the Administrative Agent, the Issuing Bank or
any Lender to exercise and no delay in exercising, and no course of dealing with
respect to, any right, power or privilege, or any abandonment or discontinuance
of steps to enforce such right, power or privilege, under any of the Loan
Documents shall operate as a waiver thereof, nor shall any single or partial
exercise of any right, power or privilege under any of the Loan Documents
preclude any other or further exercise thereof or the exercise of any other
right, power or privilege. The rights and remedies of the Administrative Agent,
the Issuing Bank and the Lenders hereunder and under the other Loan Documents
are cumulative and are not exclusive of any rights or remedies that they would
otherwise have. No waiver of any provision of this Agreement or any other Loan
Document or consent to any departure by the Borrower therefrom shall in any
event be effective unless the same shall be permitted by Section 12.02(b), and
then such waiver or consent shall be effective only in the specific instance and
for the purpose for which given. Without limiting the generality of the
foregoing, the making of a Loan or issuance of a Letter of Credit shall not be
construed as a waiver of any Default, regardless of whether the Administrative
Agent, any Lender or the Issuing Bank may have had notice or knowledge of such
Default at the time.

 

-88-

 

 

(b)      Neither this Agreement nor any provision hereof nor any Security
Instrument nor any provision thereof may be waived, amended or modified except
pursuant to an agreement or agreements in writing entered into by the Borrower
and the Required Lenders or by the Borrower and the Administrative Agent with
the consent of the Required Lenders; provided that no such agreement shall (i)
increase the Commitment or the Maximum Credit Amount of any Lender without the
written consent of such Lender, (ii) increase the Borrowing Base without the
written consent of each Lender, decrease or maintain the Borrowing Base without
the consent of the Required Lenders, or modify ‎Section 2.07 without the consent
of each Lender, (iii) reduce the principal amount of any Loan or LC Disbursement
or reduce the rate of interest thereon, or reduce any fees payable hereunder, or
reduce any other Obligations hereunder or under any other Loan Document, without
the written consent of each Lender affected thereby, (iv) postpone the scheduled
date of payment of the principal amount of any Loan or LC Disbursement, or any
interest thereon, or any fees payable hereunder, or any other Obligations
hereunder or under any other Loan Document, or reduce the amount of, waive or
excuse any such payment, or postpone or extend the Termination Date without the
written consent of each Lender affected thereby, (v) change ‎Section 4.01(b) or
Section 4.01(c) in a manner that would alter the pro rata sharing of payments
required thereby, without the written consent of each Lender, (vi) waive or
amend Section 8.14, without the written consent of each Lender, (vii) release
any of the collateral (other than as provided in ‎Section 11.09), or reduce the
percentage set forth in Section 8.14 to less than 80%, without the written
consent of each Lender, or (viii) change any of the provisions of this
‎Section 12.02(b) or the definition of “Required Lenders” or any other provision
hereof specifying the number or percentage of Lenders required to waive, amend
or modify any rights hereunder or under any other Loan Documents or make any
determination or grant any consent hereunder or any other Loan Documents,
without the written consent of each Lender; provided further that no such
agreement shall amend, modify or otherwise affect the rights or duties of the
Administrative Agent or the Issuing Bank hereunder or under any other Loan
Document without the prior written consent of the Administrative Agent or the
Issuing Bank, as the case may be. Notwithstanding the foregoing, any supplement
to Schedule 7.14 (Subsidiaries) shall be effective simply by delivering to the
Administrative Agent a supplemental schedule clearly marked as such and, upon
receipt, the Administrative Agent will promptly deliver a copy thereof to the
Lenders.

 

-89-

 

 

Section 12.03    Expenses, Indemnity; Damage Waiver.

 

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

 

-90-

 

 

(b)      The Borrower shall indemnify the Arranger, the Administrative Agent,
the Issuing Bank and each Lender, and each Related Party of any of the foregoing
persons (each such person being called an “Indemnitee”) against, and hold each
Indemnitee harmless from, any and all losses, claims, damages, liabilities and
related expenses, including the reasonable fees, charges and disbursements of
any counsel for any Indemnitee, incurred by or asserted against any Indemnitee
arising out of, in connection with, or as a result of (i) the execution or
delivery of this Agreement or any other Loan Document or any agreement or
instrument contemplated hereby or thereby, the performance by the parties hereto
or the parties to any other Loan Document of their respective obligations
hereunder or thereunder or the consummation of the transactions contemplated
hereby or by any other Loan Document, (ii) the failure of the Borrower or any
Subsidiary to comply with the terms of any Loan Document, including this
Agreement, or with any Governmental Requirement, (iii) any inaccuracy of any
representation or any breach of any warranty or covenant of the Borrower set
forth in any of the Loan Documents or any instruments, documents or
certifications delivered in connection therewith, (iv) any loan or Letter of
Credit or the use of the proceeds therefrom, including, without limitation, (A)
any refusal by the Issuing Bank to honor a demand for payment under a Letter of
Credit issued by the Issuing Bank if the documents presented in connection with
such demand do not strictly comply with the terms of such Letter of Credit, or
(B) the payment of a drawing under any Letter of Credit notwithstanding the
non-compliance, non-delivery or other improper presentation of the documents
presented in connection therewith, (v) the operations of the business of the
Borrower and its Subsidiaries by the Borrower and its Subsidiaries, (vi) any
assertion that the Lenders were not entitled to receive the proceeds received
pursuant to the Security Instruments, (vii) any Environmental Law applicable to
the Borrower or any Subsidiary or any of their properties, including without
limitation, the presence, generation, storage, release, threatened release, use,
transport, disposal, arrangement of disposal or treatment of oil, oil and gas
wastes, solid wastes or hazardous substances on any of their properties, (viii)
the breach or non-compliance by the Borrower or any Subsidiary with any
Environmental Law applicable to the Borrower or any Subsidiary, (ix) the past
ownership by the Borrower or any Subsidiary of any of their properties or past
activity on any of their properties which, though lawful and fully permissible
at the time, could result in present liability, (x) the presence, use, release,
storage, treatment, disposal, generation, threatened release, transport,
arrangement for transport or arrangement for disposal of oil, oil and gas
wastes, solid wastes or hazardous substances on or at any of the properties
owned or operated by the Borrower or any Subsidiary or 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, (xi) any environmental
liability related in any way to the Borrower or any of its Subsidiaries, (xii)
any other environmental, health or safety condition in connection with the Loan
Documents, or (xiii) any actual or prospective claim, litigation, investigation
or proceeding relating to any of the foregoing, whether based on contract, tort
or any other theory and regardless of whether any indemnitee is a party thereto,
and such Indemnity shall extend to each Indemnitee notwithstanding the sole or
concurrent negligence of every kind or character whatsoever, whether active or
passive, whether an affirmative act or an omission, including without
limitation, all types of negligent conduct identified in the restatement
(second) of torts of one or more of the Indemnitees or by reason of strict
liability imposed without fault on any one or more of the Indemnitees; provided
that such indemnity shall not, as to any Indemnitee, be available to the extent
that such losses, claims, damages, liabilities or related expenses (a) are
determined by a court of competent jurisdiction by final and nonappealable
judgment to have resulted from the gross negligence or willful misconduct of
such Indemnitee, (b) relate to agreements, or obligations to which Borrower and
its Subsidiaries are not parties, (c) relate to claims between or among any of
the Lenders, the Administrative Agent, the Arranger or any of their
shareholders, partners or members, or (d) relate to laws, rules or regulations
affecting the Lenders, the Administrative Agent or the Arranger and not the
Borrower or its Subsidiaries, or (e) in respect of any property for any
occurrence arising from the acts or omissions of the Administrative Agent or any
Lender during the period after which such Person, its successors or assigns
shall have obtained possession of such property (whether by foreclosure or deed
in lieu of foreclosure, as mortgagee-in-possession or otherwise).

 

-91-

 

 

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

 

(d)      To the extent permitted by applicable law, the Borrower and the
Indemnified Parties shall not assert, and hereby waive, any claim against each
other, on any theory of liability, for special, indirect, consequential or
punitive damages (as opposed to direct or actual damages) arising out of, in
connection with, or as a result of, this Agreement, any other Loan Document or
any agreement or instrument contemplated hereby or thereby, the Transactions,
any Loan or Letter of Credit or the use of the proceeds thereof.

 

(e)      All amounts due under this ‎Section 12.03 shall be payable promptly
after written demand therefor.

 

-92-

 

 

Section 12.04    Successors and Assigns.

 

(a)      The provisions of this Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and assigns
permitted hereby (including any Affiliate of the Issuing Bank that issues any
Letter of Credit), except that (i) the Borrower may not assign or otherwise
transfer any of its rights or 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 12.04. Nothing in this Agreement, expressed or implied, shall be
construed to confer upon any Person (other than the parties hereto, their
respective successors and assigns permitted hereby (including any Affiliate of
the Issuing Bank that issues any Letter of Credit), Participants (to the extent
provided in Section 12.04(c)) and, to the extent expressly contemplated hereby,
the Related Parties of each of the Administrative Agent, the Issuing Bank and
the Lenders) any legal or equitable right, remedy or claim under or by reason of
this Agreement.

 

(b)      (i)      Subject to the conditions set forth in ‎Section 12.04(b)(ii),
any Lender may assign to one or more assignees all or a portion of its rights
and obligations under this Agreement (including all or a portion of its
Commitment and the Loans at the time owing to it) with the prior written consent
(such consent not to be unreasonably withheld or delayed) of: (1) the Borrower,
provided that no consent of the Borrower shall be required for an assignment to
a Lender that is not a Defaulting Lender, an Affiliate of a Lender that is not a
Defaulting Lender, an Approved Fund or, if an Event of Default has occurred and
is continuing, any other assignee, provided further that the Borrower shall be
deemed to have consented to any such assignment unless it shall object thereto
by written notice to the Administrative Agent within five Business Days after
having received written notice thereof; and (2) the Administrative Agent,
provided that no such consent shall be required for an assignment to an assignee
that is a Lender that is not a Defaulting Lender immediately prior to giving
effect to such assignment.

 

  (i)      Assignments shall be subject to the following additional conditions:
(1) except in the case of an assignment to a Lender or an Affiliate of a Lender
or an assignment of the entire remaining amount of the assigning Lender’s
Commitment, the amount of the Commitment of the assigning Lender subject to each
such assignment (determined as of the date the Assignment and Assumption with
respect to such assignment is delivered to the Administrative Agent) shall not
be less than $10,000,000, and the Commitments of any assigning Lender remaining
a party hereto after giving effect to the assignment shall be at least
$10,000,000, unless, in each case, each of the Borrower, the Administrative
Agent otherwise consents, provided that no such consent of the Borrower shall be
required if an Event of Default has occurred and is continuing; (2) 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; (3) the parties
to each assignment shall execute and deliver to the Administrative Agent an
Assignment and Assumption, together with a processing and recordation fee of
$3,500; (4) the assignee, if it shall not be a Lender, shall deliver to the
Administrative Agent an Administrative Questionnaire and shall deliver notice of
the Assignment and Assumption to the Borrower; and (5) in the case of an
assignment to a CLO, the assigning Lender shall retain the sole right to approve
any amendment, modification or waiver of any provision of this Agreement,
provided that the Assignment and Assumption between such Lender and such CLO may
provide that such Lender will not, without the consent of such CLO, agree to any
amendment, modification or waiver described in the first proviso to ‎Section
12.02 that affects such CLO.

 

-93-

 

 

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

 

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

 

  (iv)      Upon its receipt of a duly completed Assignment and Assumption
executed by an assigning Lender and an assignee, the assignee’s completed
Administrative Questionnaire (unless the assignee shall already be a Lender
hereunder), the processing and recordation fee referred to in ‎Section 12.04(b)
and any written consent to such assignment required by ‎Section 12.04(b), the
Administrative Agent shall accept such Assignment and Assumption and record the
information contained therein in the Register. No assignment shall be effective
for purposes of this Agreement unless it has been recorded in the Register as
provided in this ‎Section 12.04(b).

 

-94-

 

 

(c)      (i)      Any Lender may, without the consent of the Borrower, the
Administrative Agent or the Issuing Bank, sell participations to one or more
banks or other entities (a “Participant”) in all or a portion of such Lender’s
rights and obligations under this Agreement (including all or a portion of its
Commitment and the Loans owing to it); provided that (1) such Lender’s
obligations under this Agreement shall remain unchanged, (2) such Lender shall
remain solely responsible to the other parties hereto for the performance of
such obligations and (3) the Borrower, the Administrative Agent, the Issuing
Bank and the other Lenders shall continue to deal solely and directly with such
Lender in connection with such Lender’s rights and obligations under this
Agreement. Any agreement or instrument pursuant to which a Lender sells such a
participation shall provide that such Lender shall retain the sole right to
enforce this Agreement and to approve any amendment, modification or waiver of
any provision of this Agreement; provided that such agreement or instrument may
provide that such Lender will not, without the consent of the Participant, agree
to any amendment, modification or waiver described in the proviso to
Section 12.02 that affects such Participant. In addition such agreement must
provide that the Participant be bound by the provisions of ‎Section 12.03.
Subject to Section 12.04(c)(ii), the Borrower agrees that each Participant shall
be entitled to the benefits of Section 5.01, Section 5.02 and ‎Section 5.03 to
the same extent as if it were a Lender and had acquired its interest by
assignment pursuant to ‎Section 12.04(b). To the extent permitted by law, each
Participant also shall be entitled to the benefits of Section 12.08 as though it
were a Lender, provided such Participant agrees to be subject to ‎Section
4.01(c) as though it were a Lender.

 

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

 

(d)      Any Lender may at any time pledge or assign a security interest in all
or any portion of its rights under this Agreement to secure obligations of such
Lender, including any pledge or assignment to secure obligations to a Federal
Reserve Bank, and this ‎Section 12.04(d) 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.

 

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

 

-95-

 

 

Section 12.05    Survival; Revival; Reinstatement.

 

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

 

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

 

Section 12.06    Counterparts; Integration; Effectiveness.

 

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

 

(b)      This Agreement, the other Loan Documents and any separate letter
agreements with respect to fees payable to the Arranger and the Administrative
Agent constitute the entire contract among the parties relating to the subject
matter hereof and thereof and supersede any and all previous agreements and
understandings, oral or written, relating to the subject matter hereof and
thereof. This Agreement and the other Loan Documents represent the final
agreement among the parties hereto and thereto and may not be contradicted by
evidence of prior, contemporaneous or subsequent oral agreements of the parties.
There are no unwritten oral agreements between the parties.

 

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

 

-96-

 

 

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

 

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

 

Section 12.09    Governing Law; Jurisdiction; Consent to Service of Process.

 

(a)      This Agreement and the Loan Documents shall be governed by, and
construed in accordance with, the laws of the State of New York without regard
to any choice-of-law provisions that would require the application of the law of
another jurisdiction; provided, to the extent any of the Security Instruments
recite that they are governed by the law of another jurisdiction, or any action
or event taken thereunder (such as foreclosure of the Mortgaged Property)
requires application of or compliance with the law of another jurisdiction, such
provisions and concepts shall apply.

 

(b)      Any legal action or proceeding with respect to the Loan Documents shall
be brought in the courts of the Supreme Court of the State of New York sitting
in New York County and of the United States District Court of the Southern
District of New York, and, by execution and delivery of this Agreement, each
party hereby accepts for itself and (to the extent permitted by law) in respect
of its property, generally and unconditionally, the jurisdiction of the
aforesaid courts. Each party hereby irrevocably waives any objection, including,
without limitation, any objection to the laying of venue or based on the grounds
of forum non conveniens, which it may now or hereafter have to the bringing of
any such action or proceeding in such respective jurisdictions. This submission
to jurisdiction is non-exclusive and does not preclude a party from obtaining
jurisdiction over another party in any court otherwise having jurisdiction.

 

(c)      Each party irrevocably consents to the service of process of any of the
aforementioned courts in any such action or proceeding by the mailing of copies
thereof by registered or certified mail, postage prepaid, to it at the address
specified in ‎Section 12.01 or such other address as is specified pursuant to
Section 12.01 (or its assignment and assumption), such service to become
effective thirty (30) days after such mailing. Nothing herein shall affect the
right of a party or any holder of a note to serve process in any other manner
permitted by law or to commence legal proceedings or otherwise proceed against
another party in any other jurisdiction.

 

-97-

 

 

(d)      Each party hereby (i) irrevocably and unconditionally waives, to the
fullest extent permitted by law, trial by jury in any legal action or proceeding
relating to this Agreement or any other Loan Document and for any counterclaim
therein; (ii) irrevocably waives, to the maximum extent not prohibited by law,
any right it may have to claim or recover in any such litigation any special,
exemplary, punitive or consequential damages, or damages other than, or in
addition to, actual damages; (iii) certifies that no party hereto nor any
representative or agent of counsel for any party hereto has represented,
expressly or otherwise, or implied that such party would not, in the event of
litigation, seek to enforce the foregoing waivers, and (iv) acknowledges that it
has been induced to enter into this Agreement, the Loan Documents and the
transactions contemplated hereby and thereby by, among other things, the mutual
waivers and certifications contained in this ‎Section 12.09.

 

Section 12.10    Headings. Article and Section headings and the Table of
Contents used herein are for convenience of reference only, are not part of this
Agreement and shall not affect the construction of, or be taken into
consideration in interpreting, this Agreement.

 

Section 12.11    Confidentiality. Each of the Administrative Agent, the Issuing
Bank and the Lenders agrees to maintain the confidentiality of the Information
(as defined below), except that Information may be disclosed (a) to its and its
Affiliates’ directors, officers, employees and agents, including accountants,
legal counsel and other advisors (it being understood that the Persons to whom
such disclosure is made will be informed of the confidential nature of such
Information and instructed to keep such Information confidential), (b) to the
extent required or requested by any regulatory authority or self-regulatory
body, (c) to the extent required by applicable laws or regulations or by any
subpoena or similar legal process; provided Borrower has been given reasonable
advance notice thereof, to the extent permitted by law, and been afforded an
opportunity to limit or protest the disclosure, (d) to any other party to this
Agreement or any other Loan Document, (e) in connection with the exercise of any
remedies hereunder or under any other Loan Document or any suit, action or
proceeding relating to this Agreement or any other Loan Document or the
enforcement of rights hereunder or thereunder, (f) subject to an agreement
containing provisions substantially the same as those of this Section 12.11, to
(i) any assignee of or Participant in, or any prospective assignee of or
Participant in, any of its rights or obligations under this Agreement or (ii)
any actual or prospective counterparty (or its advisors) to any Swap Agreement
relating to the Borrower and its obligations, (g) with the consent of the
Borrower or (h) to the extent such Information (i) becomes publicly available
other than as a result of a breach of this Section 12.11 or (ii) becomes
available to the Administrative Agent, the Issuing Bank or any Lender on a
nonconfidential basis from a source other than the Borrower. For the purposes of
this Section 12.11, “Information” means all information received from the
Borrower or any Subsidiary relating to the Borrower or any Subsidiary and their
businesses, other than any such information that is available to the
Administrative Agent, the Issuing Bank or any Lender on a nonconfidential basis
prior to disclosure by the Borrower or a Subsidiary;. Any Person required to
maintain the confidentiality of Information as provided in this Section 12.11
shall be considered to have complied with its obligation to do so if such Person
has exercised the same degree of care to maintain the confidentiality of such
Information as such Person would accord to its own confidential information.
Notwithstanding anything herein to the contrary, any party hereto (and each
employee, representative or other agent of such party) may disclose without
limitation of any kind, any information with respect to the “tax treatment” and
“tax structure” (in each case, within the meaning of Treasury Regulation Section
1.6011-4) of the transactions contemplated hereby and all materials of any kind
(including opinions or other tax analyses) that are provided to that party
relating to such tax treatment or tax structure; provided that with respect to
any document or similar item that in either case contains information concerning
the tax treatment or tax structure of the transactions, as well as other
information, this sentence shall only apply to such portions of the document or
similar item that relate to the tax treatment or tax structure of the
transactions contemplated hereby.

 

-98-

 

 

Section 12.12    Exculpation Provisions. Each of the parties hereto specifically
agrees that it has a duty to read this Agreement and the other Loan Documents
and agrees that it is charged with notice and knowledge of the terms of this
Agreement and the other Loan Documents; that it has in fact read this Agreement
and is fully informed and has full notice and knowledge of the terms and
conditions of this Agreement; that it has been represented by independent legal
counsel of its choice throughout the negotiations preceding its execution of
this Agreement and the other Loan Documents; and has received the advice of its
attorney in entering into this Agreement and the other Loan Documents; and that
it recognizes that certain of the terms of this Agreement and the other Loan
Documents may result, subject to the terms hereof and thereof and applicable
law, in one party assuming the liability inherent in some aspects of the
transaction and relieving the other party of its responsibility for such
liability. Each party hereto agrees and covenants that it will not contest the
validity or enforceability of any exculpatory provision of this Agreement and
the other loan documents on the basis that the party had no notice or knowledge
of such provision or that the provision is not “conspicuous.”

 

Section 12.13    No Third Party Beneficiaries. This Agreement, the other Loan
Documents, and the agreement of the Lenders to make Loans and the Issuing Bank
to issue, amend, renew or extend Letters of Credit hereunder are solely for the
benefit of the Borrower, and no other Person (including, without limitation, any
Subsidiary of the Borrower, any obligor, contractor, subcontractor, supplier or
materialmen) shall have any rights, claims, remedies or privileges hereunder or
under any other Loan Document against the Administrative Agent, the Issuing Bank
or any Lender for any reason whatsoever. There are no third party beneficiaries.

 

Section 12.14    Collateral Matters; Swap Agreements. The benefit of the
Security Instruments and of the provisions of this Agreement relating to any
collateral securing the Obligations shall also extend to and be available to
those Lenders or their Affiliates which are counterparties to any Swap Agreement
with the Borrower or any of its Restricted Subsidiaries on a pro rata basis in
respect of any obligations of the Borrower or any of its Restricted Subsidiaries
which arise under any such Swap Agreement so long as such Person or its
Affiliate was a Lender under the Prior Agreement or this Agreement at the time
of entering into such Swap Agreement. No Lender or any Affiliate of a Lender
shall have any voting rights under any Loan Document as a result of the
existence of obligations owed to it under any such Swap Agreements.

 

Section 12.15    USA Patriot Act Notice. 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 the Borrower,
which information includes the name and address of the Borrower and other
information that will allow such Lender to identify the Borrower in accordance
with the Patriot Act.

 

-99-

 

 

Section 12.16    Interest Rate Limitation. Notwithstanding anything herein to
the contrary, if at any time the interest rate applicable to any Loan or
reimbursement obligation, together with all fees, charges and other amounts that
are treated as interest on such Loan or reimbursement obligation under
applicable law (collectively the “Charges”), shall exceed the Highest Lawful
Rate that may be contracted for, charged, taken, received or reserved by the
Lender holding such Loan or reimbursement obligation in accordance with
applicable law, the rate of interest payable in respect of such Loan or
reimbursement obligation hereunder, together with all Charges payable in respect
thereof, shall be limited to the Highest Lawful Rate and, to the extent lawful,
the interest and Charges that would have been payable in respect of such Loan or
reimbursement obligation but were not payable as a result of the operation of
this Section shall be cumulated and the interest and Charges payable to such
Lender in respect of other Loans, reimbursement obligations or periods shall be
increased (but not above the Highest Lawful Rate therefor) until such cumulated
amount shall have been received by such Lender and in the event that,
notwithstanding the foregoing, under any circumstances the aggregate amounts
taken, reserved, charged, received or paid on the Loans include amounts which by
applicable law are deemed interest which would exceed the Highest Lawful Rate,
then such excess shall be deemed to be a mistake and each Lender receiving same
shall credit the same on the principal of its Loans (or if such Loans shall have
been paid in full, refund said excess to the Borrower). In the event that the
maturity of the Obligations are accelerated by reason of any election of the
holder thereof resulting from any Event of Default under this Agreement or
otherwise, or in the event of any required or permitted prepayment, then such
consideration that constitutes interest may never include more than the Highest
Lawful Rate, and excess interest, if any, provided for in this Agreement or
otherwise shall be canceled automatically as of the date of such acceleration or
prepayment and, if theretofore paid, shall be credited on the Obligations (or,
if the applicable Loans shall have been paid in full, refunded to the Borrower
of such interest). The provisions of this Section shall control over all other
provisions of this Agreement or the other Loan Documents which may be in
apparent conflict herewith.

 

Section 12.17    Amendment and Restatement.

 

(a)      On the Effective Date, the Prior Agreement shall be amended, restated
and superseded in its entirety hereby. The parties hereto acknowledge and agree
that (i) this Agreement, any promissory notes delivered pursuant to Section
6.01(f) and the other Loan Documents executed and delivered in connection
herewith do not constitute a novation or termination of the “Obligations” (as
defined in the Prior Agreement) under the Prior Agreement as in effect prior to
the Effective Date and (ii) such “Obligations” are in all respects continuing
with only the terms thereof being modified as provided in this Agreement.

 

(b)      Notwithstanding the modifications effected by this Agreement of the
representations, warranties and covenants of the Borrower contained in the Prior
Agreement, the Borrower acknowledges and agrees that any causes of action or
other rights created in favor of the Administrative Agent, any Issuing Bank or
any Lender, in each case, party to or its successors arising out of the
representations and warranties of the Borrower contained in or delivered in
connection with the Prior Agreement shall survive the execution, delivery and
effectiveness of this Agreement to the extent provided in the Prior Agreement
prior to the termination thereof.

 

-100-

 

 

(c)      All indemnification obligations of the Borrower arising under the Prior
Agreement (including any arising from a breach of the representations
thereunder) shall survive to the extent provided in the Prior Agreement prior to
the termination thereof.

 

Section 12.18    Exiting Lender. UBS Loan Finance LLC, as a “Lender” under the
Prior Agreement (the “Exiting Lender”), hereby sells, assigns, transfers and
conveys to UBS AG, Stamford Branch (the “New Lender”), and the New Lender hereby
purchases and accepts, all of the commitments and loans of the Exiting Lender
under the Prior Agreement such that, after giving effect to this Agreement,
(a) the Exiting Lender shall (i) be paid in full for all amounts owing to the
Exiting Lender under the Prior Agreement, (ii) cease to be a “Lender” under the
Prior Agreement and the “Loan Documents” as defined therein and (iii) relinquish
its rights (provided that it shall still be entitled to any rights of
indemnification in respect of any circumstance, event or condition arising prior
to the Effective Date) and be released from its obligations under the Prior
Agreement and the “Loan Documents” as defined therein and (b) the Maximum Credit
Amount of the New Lender shall be as set forth on Annex I hereto. The foregoing
assignment, transfer and conveyance are without recourse to the Exiting Lender
and without any warranties whatsoever by the Administrative Agent, the Issuing
Bank or the Exiting Lender as to title, enforceability, collectability,
documentation or freedom from liens or encumbrances, in whole or in part, other
than the warranty of the Exiting Lender that it has not previously sold,
transferred, conveyed or encumbered such interests. The New Lender and the
Administrative Agent shall make all appropriate adjustments in payments under
the Prior Agreement for periods prior to the adjustment date among themselves.
The Exiting Lender is executing this Agreement for the sole purpose of
evidencing its agreement to this Section 12.18 only and for no other purpose.

 

[Signatures Begin Next Page]

 

-101-

 

 

The parties hereto have caused this Agreement to be duly executed as of the day
and year first above written.

 

  BORROWER:       MAGNUM HUNTER RESOURCES CORPORATION,   a Delaware corporation
        By: /s/ Joseph C. Daches     Joseph C. Daches     Chief Financial
Officer

  

Signature Page to Credit Agreement 

 

 

 

  ADMINISTRATIVE AGENT, ISSUING BANK AND LENDER:       BANK OF MONTREAL        
By: /s/ Gumaro Tijerina     Gumaro Tijerina     Director

  

Signature Page to Credit Agreement

 

 

 

  LENDER:       CAPITAL ONE, NATIONAL ASSOCIATION         By: /s/ Kristin N.
Oswald   Name: Kristin N. Oswald   Title: Vice President

  

Signature Page to Credit Agreement

 

 

 

  LENDER:       CITIBANK, N.A.         By: /s/ Eamon Baqui   Name: Eamon Baqui  
Title: Vice President

  

Signature Page to Credit Agreement

 

 

 

  LENDER:       DEUTSCHE BANK TRUST COMPANY AMERICAS         By: /s/ Michael
Getz   Name: Michael Getz   Title: Vice President         By: /s/ Dusan Lazarov
  Name: Dusan Lazarov   Title: Director

 

 

 

 

  LENDER:       ROYAL BANK OF CANADA         By: /s/ Kristan Spivey   Name:
Kristan Spivey   Title: Authorized Signatory

  

Signature Page to Credit Agreement

 

 

 

  LENDER:       UBS AG, STAMFORD BRANCH         By: /s/ Lana Gifas   Name: Lana
Gifas   Title: Director         By: /s/ Jennifer Anderson   Name: Jennifer
Anderson   Title: Associate Director

  

Signature Page to Credit Agreement

 

 

 

  LENDER:       ABN AMRO CAPITAL USA LLC         By: /s/ Darrell Holley   Name:
Darrell Holley   Title: Managing Director         By: /s/ Casey Lowary   Name:
Casey Lowary   Title: Executive Director

  

 

 

 

  LENDER:       BANK OF AMERICA, N.A.         By: /s/ Adam H. Fey   Name: Adam
H. Fey   Title: Director

  

Signature Page to Credit Agreement

 

 

 

  LENDER:       KEYBANK NATIONAL ASSOCIATION         By: /s/ Sherrie I. Manson  
Name: Sherrie I. Manson   Title: Senior Vice President

  

Signature Page to Credit Agreement

 

 

 

  LENDER:       SUNTRUST BANK         By: /s/ Shannon Juban   Name: Shannon
Juban   Title: Vice President

 

Signature Page to Credit Agreement

 

 

 

  LENDER:       AMEGY BANK NATIONAL ASSOCIATION         By: /s/ Mark A. Serice  
Name: Mark A. Serice   Title: Senior Vice President

 

Signature Page to Credit Agreement

 

 

 

  LENDER:       CREDIT SUISSE AG, Cayman Islands Branch         By: /s/
Christopher Day   Name: Christopher Day   Title: Authorized Signatory        
By: /s/ Jean-Marc Vauclair   Name: Jean-Marc Vauclair   Title: Authorized
Signatory

 

Signature Page to Credit Agreement

 

 

 

  LENDER:       GOLDMAN SACHS BANK USA         By: /s/ Ashwin Ramakrishna  
Name: Ashwin Ramakrishna   Title: Authorized Signatory

  

Signature Page to Credit Agreement

 

 

 

  EXITING LENDER:       UBS LOAN FINANCE LLC         By: /s/ Lana Gifas   Name:
Lana Gifas   Title: Director         By: /s/ Jennifer Anderson   Name: Jennifer
Anderson   Title: Associate Director

 

Signature Page to Credit Agreement

 

 

 

ANNEX I

 

LIST OF MAXIMUM CREDIT AMOUNTS

 

Name of Lender Applicable Percentage Maximum Credit Amount       Bank of
Montreal 11.500% $86,250,000       Capital One, N.A. 10.000% $75,000,000      
Citibank, N.A. 8.250% $61,875,000       Deutsche Bank Trust Company Americas
8.250% $61,875,000       Goldman Sachs Bank USA 8.250% $61,875,000       Royal
Bank of Canada 8.250% $61,875,000       UBS AG, Stamford Branch 8.250%
$61,875,000       ABN AMRO Capital USA LLC 7.250% $54,375,000       Bank of
America, N.A. 7.250% $54,375,000       KeyBank National Association 7.250%
$54,375,000       SunTrust Bank 7.250% $54,375,000       Credit Suisse AG 5.500%
$41,250,000       Amegy Bank National Association 2.750% $20,625,000       TOTAL
100.000000000% $750,000,000.00

 

Annex 1-1

 

 

 

EXHIBIT A

 

FORM OF NOTE

 

AMENDED AND RESTATED NOTE

  

$[_________]   _____________, 201_

 

FOR VALUE RECEIVED, MAGNUM HUNTER RESOURCES CORPORATION, a Delaware corporation
(the “Borrower”), hereby promises to pay [_________________] (the “Lender”), the
lesser of (i) [_______________] DOLLARS ($[____________]) and (ii) the aggregate
unpaid Loans made by the Lender pursuant to the Credit Agreement, as hereinafter
defined), in lawful money of the United States of America and in immediately
available funds, on the dates and in the principal amounts provided in the
Credit Agreement referred to below, on the dates and in the amounts set forth in
the Credit Agreement. All capitalized terms used herein and not otherwise
defined that are defined in the Credit Agreement have the meanings as defined in
the Credit Agreement.

 

The Borrower promises to pay interest on the unpaid principal amount of this
Note outstanding from time to time from the date hereof until such principal
amount is paid in full, at the place and at such interest rates as are specified
in the Credit Agreement.

 

This Note is one of the Notes referred to in, and the Note and all provisions
herein are entitled to the benefits and are subject to the terms of, the Third
Amended and Restated Credit Agreement, dated as of December 13, 2013, among the
Borrower, Bank of Montreal, as Administrative Agent, and the lenders signatory
thereto (including the Lender) (as the same may be amended, restated, amended
and restated, supplemented or otherwise modified from time to time, the “Credit
Agreement”). This Note amends and restates in their entirety those certain
promissory notes executed in connection with the Prior Agreement and payable to
the Lender.

 

The obligations of the Borrower hereunder are secured by the Security
Instruments (subject to the limitations contained in the Security Instruments
and the Credit Agreement). The Credit Agreement, among other things, (a)
provides for the making of advances by the Lender and other Lenders to the
Borrower from time to time, and (b) contains provisions for acceleration of the
maturity hereof upon the happening of certain stated events, for prepayments on
account of principal hereof prior to the maturity hereof upon the terms and
conditions therein specified, and for limitations on the amount of interest paid
such that no provision of the Credit Agreement or this Note shall require the
payment or permit the collection of interest in excess of the Highest Lawful
Rate.

 

The Borrower waives grace, demand, presentment for payment, notice of dishonor
or default, notice of intent to accelerate or acceleration, protest and notice
of protest and diligence in collecting and bringing of suit against any party
hereto.

 

Exhibit A-1

 

 

  

 This Note shall be governed by and construed under the laws of the State of New
York and the applicable laws of the United States of America.

 

  MAGNUM HUNTER RESOURCES   CORPORATION,   a Delaware corporation         By:  
  Name:     Title:        

  

Exhibit A-2

 

 

 

 EXHIBIT B

 

FORM OF BORROWING REQUEST

[______________], 201[_]

 

Magnum Hunter Resources Corporation, a Delaware corporation (the “Borrower”),
pursuant to Section 2.03 of the Third Amended and Restated Credit Agreement
dated as of December 13, 2013 (together with all amendments, restatements,
supplements or other modifications thereto, the “Credit Agreement”), among the
Borrower, Bank of Montreal, as Administrative Agent and the lenders (the
“Lenders”) which are or become parties thereto (unless otherwise defined herein,
each capitalized term used herein is defined in the Credit Agreement), hereby
requests a Borrowing as follows:

 

(i)Aggregate amount of the requested Borrowing is $[____________];    (ii)Date
of such Borrowing is [____________], 201[_];    (iii)Requested Borrowing is to
be [an ABR Borrowing] [a Eurodollar Borrowing];    (iv)In the case of a
Eurodollar Borrowing, the initial Interest Period applicable thereto is
[____________];    (v)Amount of Borrowing Base in effect on the date hereof is
$[____________];    (vi)Total Credit Exposures on the date hereof (i.e.,
outstanding principal amount of Loans and total LC Exposure) is $[____________];
   (viii)Pro forma total Credit Exposures (giving effect to the requested
Borrowing) is $[____________]; and   

(viii)Location and number of the Borrower’s account to which funds are to be
disbursed, which shall comply with the requirements of Section 2.05 of the
Credit Agreement, is as follows:

 

[_________________]

 

[_________________]

Exhibit B-1

 

 

 

The undersigned certifies that he/she is the [____________] of the Borrower, and
that as such he/she is authorized to execute this certificate on behalf of the
Borrower. The undersigned further certifies, represents and warrants on behalf
of the Borrower that the Borrower is entitled to receive the requested Borrowing
under the terms and conditions of the Credit Agreement.

 

  MAGNUM HUNTER RESOURCES   CORPORATION,   a Delaware corporation         By:  
  Name:     Title:        

   

Exhibit B-2 

 

 

 

EXHIBIT C

 

FORM OF INTEREST ELECTION REQUEST

 

[____________], 201[_]

 

Magnum Hunter Resources Corporation, a Delaware corporation (the “Borrower”),
pursuant to Section 2.04 of the Third Amended and Restated Credit Agreement
dated as of December 13, 2013 (together with all amendments, restatements,
supplements or other modifications thereto, the “Credit Agreement”), among the
Borrower, Bank of Montreal, as Administrative Agent and the lenders (the
“Lenders”) which are or become parties thereto (unless otherwise defined herein,
each capitalized term used herein is defined in the Credit Agreement), hereby
makes an Interest Election Request as follows:

 

(i)        The Borrowing to which this Interest Election Request applies, and if
different options are being elected with respect to different portions thereof,
the portions thereof to be allocated to each resulting Borrowing (in which case
the information specified pursuant to (iii) and (iv) below shall be specified
for each resulting Borrowing) is [____________];

 

(ii)        The effective date of the election made pursuant to this Interest
Election Request is [____________], 201[_];[and]

 

(iii)        The resulting Borrowing is to be [an ABR Borrowing] [a Eurodollar
Borrowing][; and]

 

[(iv)        [If the resulting Borrowing is a Eurodollar Borrowing] The Interest
Period applicable to the resulting Borrowing after giving effect to such
election is [____________]].

 

The undersigned certifies that he/she is the [____________] of the Borrower, and
that as such he/she is authorized to execute this certificate on behalf of the
Borrower. The undersigned further certifies, represents and warrants on behalf
of the Borrower that the Borrower is entitled to receive the requested
continuation or conversion under the terms and conditions of the Credit
Agreement.

 

  MAGNUM HUNTER RESOURCES   CORPORATION,   a Delaware corporation         By:  
  Name:     Title:        

   

Exhibit C-1 

 

 

 

 EXHIBIT D

 

FORM OF 

COMPLIANCE CERTIFICATE

 

The undersigned hereby certifies that he/she is the [____________] of Magnum
Hunter Resources Corporation, a Delaware corporation (the “Borrower”), and that
as such he/she is authorized to execute this certificate on behalf of the
Borrower. With reference to the Third Amended and Restated Credit Agreement
dated as of December 13, 2013 (together with all amendments, restatements,
supplements or other modifications thereto being the “Agreement”), among the
Borrower, Bank of Montreal, as Administrative Agent and the lenders (the
“Lenders”) which are or become a party thereto, the undersigned represents and
warrants as follows (each capitalized term used herein having the same meaning
given to it in the Agreement unless otherwise specified), to my knowledge after
reasonable investigation:

 

(a)The representations and warranties of the Borrower contained in ARTICLE VII
of the Agreement and in the Loan Documents are repeated at and as of the time of
delivery hereof and are true and correct in all material respects at and as of
the time of delivery hereof, except to the extent such representations and
warranties are expressly limited to an earlier date or the Required Lenders have
expressly consented in writing to the contrary.    (b)There exists no Default or
Event of Default [or specify Default and describe].    (c)Attached hereto as
Exhibit A are reasonably detailed computations necessary to determine whether
the Borrower is in compliance with Section 9.01 as of the end of the [fiscal
quarter][fiscal year] ending [____________].    (d)No change in GAAP or the
application thereof has occurred since the date of the audited financial
statements referred to in Section 7.04 of the Agreement [or specify change].

 

EXECUTED AND DELIVERED this [______] day of [____________], 201[_].

 

  MAGNUM HUNTER RESOURCES   CORPORATION,   a Delaware corporation         By:  
  Name:     Title:        

 

Exhibit D-1 

 

 

 

FINANCIAL COVENANT CALCULATION WORKSHEET

 

($ in 000’s)

 

  Pro Forma Calculation Covenant Requirement Current Ratio x > 1.0 to 1.0
Interest Coverage Ratio x See Note 1 Total Debt to EBITDAX Ratio
[to be included for the fiscal quarter ending June 30, 2014 and for each fiscal
quarter ending thereafter] x See Note 2 Senior Debt to EBITDAX Ratio
[to be included for the fiscal quarter ending June 30, 2013 through and
including the fiscal quarter ending March 31, 2014] x < 2.0 to 1.0       Current
Ratio:  calculated as of the fiscal quarter ended ______________, 201_    
(i)        consolidated current assets of the Borrower and the Restricted
Subsidiaries (including the unused amount of the total Commitments, but
excluding non-cash assets under FAS 133)     to     (ii)        consolidated
current liabilities of the Borrower and the Restricted Subsidiaries (excluding
non-cash obligations under FAS 133).           Interest Coverage
Ratio:  calculated as of the fiscal quarter ended ______________, 201_    
(i)        EBITDAX of the Borrower and the Restricted Subsidiaries for the four
quarter period then ended     to     (ii)        actual cash interest paid by
the Borrower and the Restricted Subsidiaries during such period.    

 

Exhibit D-2

 

 

  

Total Debt to EBITDAX Ratio:     (i)        total Debt of the Borrower and the
Restricted Subsidiaries as of such date     to     (ii)      EBITDAX of the
Borrower and the Restricted Subsidiaries for the four quarter period then ended.
          Senior Debt to EBITDAX Ratio:     (i)        (x)        total Debt of
the Borrower and the Restricted Subsidiaries as of such date     minus    
            (y)        the then outstanding principal amount of the Senior Notes
    to     (ii)       EBITDAX of the Borrower and the Restricted Subsidiaries
for the four quarter period then ended.    

 

Notes:

 

1.        Covenant requirement is (a) 2.00 to 1.0 for the fiscal quarter ending
December 31, 2013, (b) 2.25 to 1.0 for the fiscal quarter ending March 31, 2014
and (c) 2.50 to 1.0 for the fiscal quarter ending June 30, 2014 and for each
fiscal quarter thereafter. Solely for the purposes of calculating the Interest
Coverage Ratio for the fiscal quarter ending December 31, 2013, EBITDAX and
Interest Expense shall be calculated for the fiscal quarter ending December 31,
2013 only, rather than the trailing four quarter period then ended, and on an
actual basis without giving effect to any pro forma adjustments, including,
without limitation, any such adjustments provided for in the definitions of
“Consolidated Net Income”, “EBITDAX” or “Interest Expense” or otherwise in the
Credit Agreement.

 

2.        Covenant requirement is (a) 4.50 to 1.0 for the fiscal quarter ending
June 30, 2014 and for the fiscal quarter ending September 30, 2014 and (b) 4.25
to 1.0 for the fiscal quarter ending December 31, 2014 and for each fiscal
quarter ending thereafter.

 

Exhibit D-3

 

 

 

EXHIBIT F-1

 

FORM OF SECURITY AGREEMENT

 

(See attached)

 

Exhibit F-1-1

 

 

  

EXHIBIT F-1

 

FORM OF SECURITY AGREEMENT

  

AMENDED AND RESTATED SECURITY AND PLEDGE AGREEMENT

 

dated as of

 

December 13, 2013

 

among

 

MAGNUM HUNTER RESOURCES CORPORATION,

 

THE GUARANTORS PARTY HERETO

 

and

 

BANK OF MONTREAL 

not in its individual capacity, but solely as Administrative Agent

 

Exhibit F-1-1

 

 

 

TABLE OF CONTENTS

 

  Page     ARTICLE I DEFINITIONS 1 1.01 Definitions 1 1.02 Interpretation 5    
  ARTICLE II COLLATERAL 6 2.01 Grant of Security Interest 6 2.02 Termination of
Security Interests 7 2.03 Partial Release of Collateral 7 2.04 Security Interest
Absolute 7 2.05 Joinder of Additional Guarantors 8 2.06 Limit of Liability 8
2.07 Reinstatement 9       ARTICLE III PERFECTION OF SECURITY INTEREST 9 3.01
Perfection 9 3.02 Perfection of Additional Collateral 10 3.03 Intellectual
Property Filings 11 3.04 Instruments 11 3.05 Further Assurances 12 3.06 Use of
Collateral 12       ARTICLE IV REPRESENTATIONS AND WARRANTIES 12 4.01 Security
Instruments 12 4.02 Title 13 4.03 Chief Executive Office; Change of Name;
Jurisdiction of Organization 13 4.04 Corporate Names; Prior Transactions 13 4.05
Records 13 4.06 Changes in Circumstances 13 4.07 Inventory and Equipment 13 4.08
Trademark Collateral 14 4.09 Title to Equity Interests 14 4.10 Financing
Statements and Other Filings; Maintenance of Perfected Security Interest 14 4.11
Deposit Accounts 14 4.12 Investment Property 14 4.13 Delivery of Certificated
Securities Collateral 14 4.14 Perfection of Uncertificated Securities Collateral
15 4.15 Instruments and Tangible Chattel Paper 15 4.16 Electronic Chattel Paper
and Transferable Records 15 4.17 Letters of Credit 15 4.18 Commercial Tort
Claims 15       ARTICLE V COVENANTS 15 5.01 Access to Records 15

 

Exhibit F-1-2

 

 

 

5.02 Other Financing Statements and Liens 15 5.03 Reports 16 5.04 Adverse Claims
16 5.05 Prohibition of Certain Changes 16 5.06 Reserved 16 5.07 Collateral Held
by Others 16 5.08 Records 16 5.09 Collection of Accounts 17 5.10 Disposition of
Collateral 17 5.11 Protection of Intellectual Property 17 5.12 Special
Provisions Relating to Certain Collateral 17   ARTICLE VI REMEDIES 20 6.01
Events of Default; Remedies 20 6.02 Deficiency 23 6.03 Private Sale 23 6.04
Application of Proceeds 23 6.05 Attorney-in-Fact 23 6.06 Expenses 24 6.07
Administrative Agent’s Right to Perform on Debtor’s Behalf 24 6.08 Custody and
Preservation 24 6.09 Preservation of Rights 25 6.10 Rights of Secured Parties 25
6.11 No Marshalling 25 6.12 Remedies Cumulative 25     ARTICLE VII MISCELLANEOUS
25 7.01 Waivers of Rights Inhibiting Enforcement 25 7.02 Notices 26 26 7.03
Assignment 26 7.04 Successors and Assigns 26 7.05 Amendment and Waiver 26 7.06
No Implied Waiver 27 7.07 Severability 27 7.08 Entire Agreement 27 7.09
Execution in Counterparts 27 7.10 Governing Law 27 7.11 Headings 27 7.12
Interpretation 27 7.13 Waiver of Jury Trial 28 7.14 Survival, Etc. 28 7.15
Agents, Etc. 28 7.16 Limitation of Liability 28 7.17 Subrogation 28 7.18
Authority of the Administrative Agent 29 7.19 Inconsistencies with Credit
Agreement 29 7.20 Amendment and Restatement 29

 

Exhibit F-1-3 

 

 

  

Annex 1           Intellectual Property Licenses

Annex 2           Patent Collateral

Annex 3           Securities Collateral

Annex 4           Trademark Collateral

Annex 5           Filing Offices

Annex 6           Debtor Information

Annex 7           Previous Names and Transactions

Annex 8           Offices and Locations of Records

Annex 9           Locations of Inventory and Equipment

Annex 10         Deposit Accounts

Annex 11         Securities Accounts and Commodity Accounts

Annex 12         Instruments and Tangible Chattel Paper

Annex 13         Electronic Chattel Paper

Annex 14         Letters of Credit

Annex 15         Commercial Tort Claims

Annex 16         Third Party Locations

  

Exhibit A         Patent Security Agreement

Exhibit B         Trademark Security Agreement

 

Exhibit F-1-4

 

 

 

AMENDED AND RESTATED SECURITY AND PLEDGE AGREEMENT

 

THIS AMENDED AND RESTATED SECURITY AND PLEDGE AGREEMENT (this “Agreement”) dated
as of December 13, 2013, is among Magnum Hunter Resources Corporation, a
Delaware corporation (“Borrower”), the Guarantors party hereto (together with
the Borrower, the “Debtors”), and Bank of Montreal, as Administrative Agent
under the Credit Agreement (as herein defined), not in its individual capacity,
but solely as collateral agent for the Lenders and other Secured Parties (as
such terms are defined herein) (in such capacity, together with its successors
in such capacity, the “Administrative Agent”).

 

RECITALS:

 

A.       Pursuant to the Second Amended and Restated Credit Agreement, dated as
of the date hereof (as amended, supplemented, and otherwise modified, the “Prior
Credit Agreement”), among the Borrower, the lenders party thereto and the
Administrative Agent, said lenders agreed to make loans to and other extensions
of credit on behalf of the Borrower.

 

B.       In connection with the Prior Credit Agreement, the Borrower and certain
of the Guarantors each executed an Amended and Restated Security and Pledge
Agreement (as amended, supplemented, and otherwise modified, collectively, the
“Prior Security Agreement”), pursuant to which the Borrower and such Guarantors
granted to the Administrative Agent, for the benefit of the Secured Parties (as
defined in the Prior Security Agreement), as security for the obligations under
the Prior Credit Agreement, a security interest in and lien on certain personal
property assets, all as more fully described therein.

 

C.       The Borrower has requested certain amendments to the terms of the Prior
Credit Agreement and is entering into that certain Third Amended and Restated
Credit Agreement dated as of even date herewith (as amended, supplemented, and
otherwise modified from time to time, the “Credit Agreement”), among the
Borrower, the lenders party thereto (the “Lenders”) and the Administrative
Agent.

 

D.       It is a condition to the obligations of the Lenders and the
Administrative Agent under the Credit Agreement that the Debtors shall have
entered into this Agreement which amends and restates the Prior Security
Agreement in its entirety.

 

NOW, THEREFORE, the parties hereto agree as follows:

 

ARTICLE I

 

DEFINITIONS

 

1.01       Definitions. Capitalized terms not otherwise defined herein have the
respective meanings assigned to them in the Credit Agreement. All terms used
herein that are not defined herein or in the Credit Agreement and are defined in
the UCC have the meanings therein stated. In addition, the following terms have
the following meanings under this Agreement:

 

Exhibit F-1-1

 

 

  

“Accounts” means all accounts (as defined in the UCC) and all general
intangibles (including payment intangibles and software) (as defined in the UCC)
of any Debtor constituting any right to the payment of money, whether or not
earned by performance, including all moneys due and to become due to any Debtor
in respect of any loans or advances or for Inventory or Equipment or other goods
sold or leased or for services rendered, tax refunds, insurance refund claims
and other insurance claims and proceeds, tort claims, securities and other
investment property, rights to proceeds of letters of credit, letter-of-credit
rights, supporting obligations of every nature and any guarantee of any of the
foregoing.

 

“Administrative Agent” has the meaning set forth in the introductory paragraph
to this Agreement.

 

“Agreement” has the meaning set forth in the introductory paragraph to this
Agreement.

 

“Borrower” has the meaning set forth in the introductory paragraph to this
Agreement.

 

“Collateral” has the meaning assigned to such term in Section 2.01.

 

“Contracts” means, collectively, with respect to each Debtor, all sale, service,
performance, equipment or property lease contracts, agreements and grants and
all other contracts, agreements or grants (in each case, whether written or
oral, or third party or intercompany), between such Debtor and third parties,
and all assignments, amendments, restatements, supplements, extensions,
renewals, replacements or modifications thereof.

 

“Control” means (i) in the case of each Deposit Account, “control,” as such term
is defined in Section 9.104 of the UCC, (ii) in the case of any certificated
security, uncertificated security or security entitlement, “control,” as such
term is defined in Section 8.106 of the UCC and (iii) in the case of any
commodity contract, “control,” as such term is defined in Section 9.106 of the
UCC.

 

“Credit Agreement” has the meaning set forth in Recital C.

 

“Deposit Account Control Agreement” means an agreement in a form reasonably
satisfactory to the Administrative Agent.

 

“Deposit Accounts” means, collectively, with respect to each Debtor, (i) all
“deposit accounts” as such term is defined in the UCC and (ii) all cash, funds,
checks, notes and instruments from time to time on deposit in any of the
accounts described in clause (i) of this definition.

 

“Documents” means all “documents” (as defined in the UCC) or other receipts
covering, evidencing or representing Inventory or Equipment.

 

“Equipment” means, with respect to each Debtor, all “equipment” (as defined in
the UCC) and all other goods of such Debtor that are used or acquired for use in
its business, including all spare parts and related supplies, all goods obtained
by such Debtor in exchange for any such goods, all substances, if any,
commingled with or added to those goods and all upgrades and other improvements
to those goods, in each case to the extent not constituting Inventory.

 

Exhibit F-1-2

 

 

 

“Excluded Accounts” means any Deposit Account containing payroll, employee
benefits, tax or trust funds.

 

“General Intangibles” means all “general intangibles” (as defined in the UCC)
now owned or hereafter acquired by any Debtor, including (i) all obligations or
indebtedness owing to any Debtor (other than Accounts) from whatever source
arising, (ii) all Intellectual Property and goodwill, (iii) all Governmental
Approvals, (iv) all rights or claims in respect of refunds for taxes paid,
(v) all Contracts and (vi) to the extent permitted by applicable law, all rights
in respect of any pension plan or similar arrangement maintained for employees
of any Debtor.

 

“Governmental Approval” means (i) any authorization, consent, approval, license,
waiver or exemption, by or with; (ii) any required notice to; (iii) any
declaration of or with; or (iv) any required registration by or with, or any
other action or deemed action by or on behalf of, any Governmental Authority.

 

“Instruments” means all “instruments”, “chattel paper” (whether tangible or
electronic) or “letters of credit” (each as defined in the UCC) of any Debtor
evidencing, representing, arising from or existing in respect of, relating to,
securing or otherwise supporting the payment of, any Account, including
promissory notes, drafts, bills of exchange and trade acceptances now owned or
hereafter acquired and all interest, cash, instruments and other property from
time to time received, receivable or otherwise distributed in respect of or in
exchange for any of the Instruments.

 

“Intellectual Property” means all Patent Collateral and all Trademark
Collateral, together with (a) all inventions, processes, production methods,
proprietary information, know-how and trade secrets; (b) all licenses or user or
other agreements granted to any Debtor with respect to any of the foregoing, in
each case whether now or hereafter owned or used, including the contracts,
licenses, or other agreements with respect to the Patent Collateral or the
Trademark Collateral listed in Annex 2; (c) all information, customer lists,
identification of suppliers, data, plans, blueprints, specifications, designs,
drawings, recorded knowledge, surveys, engineering reports, test reports,
manuals, materials standards, processing standards, performance standards,
catalogs, computer and automatic machinery software and programs; (d) all field
repair data, sales data and other information relating to sales or service of
products now or hereafter manufactured; (e) all accounting information and all
media in which or on which any information or knowledge or data or records may
be recorded or stored and all computer programs used for the compilation or
printout of such information, knowledge, records or data; and (f) all causes of
action, claims and warranties now or hereafter owned or acquired by any Debtor
in respect of any of the items listed above.

 

“Intellectual Property Security Agreements” means the Patent Security Agreement
and the Trademark Security Agreement.

 

“Inventory” means all inventory (as defined in the UCC) and all other goods of
any Debtor held for sale, lease or furnishing under a contract of service
(including to its Subsidiaries or Affiliates) or that constitute raw materials,
work in process or material used or consumed in its business, including all
spare parts and related supplies, all goods obtained by any Debtor in exchange
for such goods, all products made or processed from such goods and all
substances, if any, commingled therewith or added to such goods.

 

Exhibit F-1-3 

 

 

 

“Investment Property” means a security, whether certificated or uncertificated,
security entitlement, securities account, commodity contract or commodity
account (in each case, as defined in the UCC), excluding, however, the
Securities Collateral.

 

“Patent Collateral” means all Patents now owned or hereafter acquired by any
Debtor, including each Patent Collateral identified in Annex 2.

 

“Patents” means, collectively, (i) all patents and patent applications,
including the inventions and improvements described and claimed therein, and all
patentable inventions, (ii) all reissues, divisions, continuations, renewals,
extensions and continuations-in-part thereof, and (iii) all rights, licenses and
goodwill, now existing or hereafter coming into existence, (A) to all income,
profits, royalties, damages and payments now or hereafter due and/or payable
under and with respect thereto, including damages and payments for past, present
or future infringements thereof, (B) to sue for past, present and future
infringements thereof, and (C) otherwise accruing under or pertaining to any of
the foregoing throughout the world.

 

“Patent Security Agreement” means an agreement substantially in the form annexed
hereto as Exhibit A.

 

“Permitted Liens” means Liens permitted by the Credit Agreement.

 

“Permitted Swap Agreement” means a Swap Agreement to which any Debtor is a party
that is permitted pursuant to Section 9.18 of the Credit Agreement.

 

“Proceeds” has the meaning assigned to such term in the UCC, including all
proceeds of insurance and all condemnation awards and all other compensation for
any casualty event with respect to all or any part of the Collateral (together
with all rights to recover and proceed with respect to the same), and all
accessions to, substitutions for and replacements of all or any part of the
other Collateral.

 

“Records” has the meaning assigned to such term in Section 4.05.

 

“Secured Obligations” means all Obligations now or hereafter existing, including
any extensions, modifications, substitutions, amendments and renewals thereof,
whether for principal, interest, fees, expenses, indemnification, or otherwise,
including all costs and expenses (including reasonable attorneys’ fees and
expenses) incurred by the Administrative Agent or any Secured Party in
connection with any suit or proceeding in connection with the performance by
such Secured Party of any of the agreements contained in any of the Contracts,
or in connection with any exercise of its rights or remedies hereunder, pursuant
to the terms of this Agreement.

 

“Secured Parties” means, collectively, (a) the Administrative Agent, (b) the
Lenders, (c) each party to a Permitted Swap Agreement if as of the time of
entering into such Permitted Swap Agreement such Person was a Lender under the
Prior Credit Agreement or the Credit Agreement or an Affiliate of a Lender under
the Prior Credit Agreement or the Credit Agreement and (d) each party to a Cash
Management Agreement if such Person is a Lender under the Credit Agreement or an
Affiliate of a Lender under the Credit Agreement.

 

Exhibit F-1-4 

 

 

 

“Securities Collateral” means each of the Equity Interests (whether such Equity
Interests are securities or general intangibles under the UCC) identified on
Annex 3 hereto and the certificates or other instruments representing any of the
foregoing and any interest of a Debtor in the entries on the books of any
securities intermediary pertaining thereto (the “Pledged Shares”), and all
dividends, distributions, returns of capital, cash, warrants, options, rights,
instruments, rights to vote or manage the business of such Person pursuant to
organizational documents governing the rights and obligations of the
stockholders, partners, members or other owners thereof 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 such Pledged Shares.

 

“Security Interest” means the security interest in the Collateral granted by
Debtors under this Agreement.

 

“Trademark Collateral” means all Trademarks now owned or hereafter acquired by
any Debtor including each Trademark Collateral identified in Annex 4.
Notwithstanding the foregoing, Trademark Collateral shall not include any
Trademark that would be rendered invalid, abandoned, void or unenforceable by
reason of its being included as part of the Trademark Collateral.

 

“Trademarks” means, collectively, (i) all trade names, trademarks and service
marks, logos, trademark and service mark registrations, and applications for
trademark and service mark registrations, (ii) all renewals of trademark and
service mark registrations, and (iii) all rights (A) to all income, royalties,
damages and other payments (including in respect of all past, present and future
infringements) with respect to any of the foregoing, (B) to sue for all past,
present and future infringements thereof, and (C) otherwise accruing under or
pertaining to any of the foregoing, together, in each case, with the product
lines and goodwill of the business connected with the use of, and symbolized by,
each such trade name, trademark and service mark.

 

“Trademark Security Agreement” means an agreement substantially in the form
annexed hereto as Exhibit B.

 

“UCC” means the Uniform Commercial Code as now or hereafter adopted and in
effect in the State of New York; provided that if, by reason of mandatory
provisions of Law, the perfection or the effect of perfection or non-perfection
of any Security Interest in any Collateral is governed by the Uniform Commercial
Code as in effect in a jurisdiction other than New York, “UCC” means the Uniform
Commercial Code as in effect in such other jurisdiction for purposes of the
provisions hereof relating to such perfection or the effect of perfection or
non-perfection.

 

1.02       Interpretation. The principles of interpretation set out in
Section 1.04 of the Credit Agreement shall apply equally to this Agreement
mutatis mutandis.

 

Exhibit F-1-5

 

 

 

ARTICLE II

 

COLLATERAL

 

2.01       Grant of Security Interest. As collateral security for the prompt
payment in full when due (whether at stated maturity, by acceleration or
otherwise) and performance of the Secured Obligations, each Debtor hereby grants
to the Administrative Agent for the benefit of the Secured Parties a security
interest in all of such Debtor’s right, title and interest in, to and under the
following property, whether now owned or hereafter acquired by such Debtor and
whether now existing or hereafter coming into existence and wherever located
(collectively, the “Collateral”):

 

(a)       all Accounts;

 

(b)       all Deposit Accounts;

 

(c)       all Documents;

 

(d)       all Equipment;

 

(e)       all General Intangibles;

 

(f)       all Governmental Approvals;

 

(g)       all Instruments;

 

(h)       all Inventory;

 

(i)       all Investment Property;

 

(j)       all Securities Collateral;

 

(k)       all rights, claims and benefits of such Debtor against any Person
arising out of, relating to or in connection with Inventory or Equipment
purchased by such Debtor, including any such rights, claims or benefits against
any Person storing or transporting such Inventory or Equipment;

 

(l)       all other tangible and intangible personal property and fixtures of
such Debtor, including all cash, products, rents, revenues, issues, profits,
royalties, income, benefits, commercial tort claims, letter-of-credit rights,
supporting obligations, accessions to, substitutions and replacements for any
and all of the foregoing, any indemnity, warranty or guarantee payable by any
reason of loss or damage to or otherwise with respect to any of the foregoing,
and all causes of action, claims and warranties now or hereafter held by such
Debtor in respect of any of the items listed above;

 

(m)       all books, correspondence, credit files, records, invoices and other
papers, including all tapes, cards, computer runs and other papers and documents
in the possession or under the control of such Debtor or any computer bureau or
service company from time to time acting for such Debtor; and

 

Exhibit F-1-6

 

 

 

(n)       all Proceeds of the collateral described in the foregoing clauses (a)
through (m).

 

Notwithstanding anything herein to the contrary, Debtors do not grant a security
interest in, and the Collateral shall not include the rights or interests of any
Debtor in (x) any Collateral including, without limitation, any Governmental
Approval or Contract to which such Debtor is a party or any of its rights or
interests thereunder, or any Equipment or Intellectual Property, to the extent,
but only to the extent, that such a grant is prohibited by reason of (A) an
applicable law or regulation to which such Debtor is subject or (B) an existing
and enforceable negative pledge or anti-assignment provision (other than to the
extent that any such term would be rendered ineffective pursuant to the UCC or
any other applicable law or principles of equity), provided, that immediately
upon the ineffectiveness, lapse or termination of any such provision, the
Collateral shall include, and such Debtor shall be deemed to have granted a
security interest in, all such rights and interests as if such provision had
never been in effect, (y) any Excluded Account; or (z) Equity Interests of
Eureka Hunter or any Unrestricted Subsidiary that owns such Equity Interests.

 

2.02       Termination of Security Interests. This Agreement and the Security
Interests shall terminate and all rights to the Collateral shall revert to the
Debtors when (i) all outstanding Secured Obligations shall have been paid in
full, (ii) all Commitments under the Credit Agreement shall have expired or been
terminated and (iii) the LC Exposure has been reduced to zero or fully cash
collateralized as provided in the Credit Agreement. Upon such termination, the
Administrative Agent shall (at the written request and expense of the Borrower)
promptly cause to be assigned, transferred and delivered, against receipt but
without any recourse, warranty or representation whatsoever, any remaining
Collateral and money received in respect thereof, to or on the order of the
applicable Debtor and to be released and cancelled all licenses and rights
referred to in Section 5.12(b)(i). The Administrative Agent shall also (at the
written request and expense of the Borrower) promptly execute and deliver to the
Borrower upon such termination such UCC termination statements and such other
documentation as shall be reasonably requested by the Borrower to effect the
termination and release of the Security Interests on the Collateral.

 

2.03       Partial Release of Collateral. Upon the disposition of any Collateral
in accordance with the Credit Agreement, the Administrative Agent shall, upon
the written request of (and at the sole cost and expense of) the Borrower,
promptly execute and deliver to the Borrower such UCC termination statements and
such other documentation as the Borrower may reasonably request to effect the
termination and release of the Liens on such Collateral.

 

2.04       Security Interest Absolute. To the maximum extent permitted by
applicable law, the rights and remedies of the Administrative Agent hereunder,
the Liens created hereby, and the obligations of the Debtors under this
Agreement are absolute, irrevocable and unconditional and will remain in full
force and effect without regard to, and will not be released, suspended,
discharged, terminated or otherwise affected by, any circumstance or occurrence
whatsoever (other than termination pursuant to Section 2.02 or partial release
pursuant to Section 2.03), including:

 

Exhibit F-1-7

 

 

  

(a)       any renewal, extension, amendment, or modification of, or addition or
supplement to or deletion from, any of the Loan Documents or any other
instrument or agreement referred to therein, or any assignment or transfer of
any thereof;

 

(b)       any waiver of, consent to or departure from, extension, indulgence or
other action or inaction under or in respect of any of the Secured Obligations,
this Agreement, any other Loan Document or other instrument or agreement
relating thereto, or any exercise or non-exercise of any right, remedy, power or
privilege under or in respect of the Secured Obligations, this Agreement, any
other Loan Document or any such other instrument or agreement relating thereto;

 

(c)       any furnishing of any additional security for the Secured Obligations
or any part thereof to the Administrative Agent or any other Person or any
acceptance thereof by the Administrative Agent or any other Person or any
substitution, sale, exchange, release, surrender or realization of or upon any
such security by the Administrative Agent or any other Person or the failure to
create, preserve, validate, perfect or protect any other Lien granted to, or
purported to be granted to, or in favor of, the Administrative Agent or any
other Secured Party;

 

(d)       any invalidity, irregularity or unenforceability of all or any part of
the Secured Obligations, any Loan Document or any other agreement or instrument
relating thereto or any security therefor;

 

(e)       the acceleration of the maturity of any of the Secured Obligations or
any other modification of the time of payment thereof; or

 

(f)       any other event or circumstance whatsoever that might otherwise
constitute a legal or equitable discharge of a surety or a guarantor, it being
the intent of this Section 2.04 that the obligations of the Debtors hereunder
shall be absolute, irrevocable and unconditional under any and all
circumstances.

 

2.05       Joinder of Additional Guarantors. Upon the execution and delivery of
a Joinder Agreement by any Subsidiary that is required to be a Guarantor
pursuant to Section 8.16 of the Credit Agreement, such Subsidiary shall
constitute a “Debtor” for all purposes hereunder with the same force and effect
as if originally named as a Debtor herein. The execution and delivery of such
Joinder Agreement shall not require the consent of any Debtor hereunder. The
rights and obligations of each Debtor shall remain in full force and effect
notwithstanding the addition of any new Debtor as a party to this Agreement.

 

2.06       Limit of Liability. Notwithstanding the foregoing, the security
interest granted by each Debtor hereunder shall be limited to the extent
necessary so that its obligations hereunder would not be subject to avoidance
under Section 548 of the United States Bankruptcy Code or any comparable
provisions of any applicable state law.

 

Exhibit F-1-8

 

 

 

2.07       Reinstatement. This Agreement and the Liens created hereunder shall
automatically be reinstated if and to the extent that for any reason any payment
by or on behalf of any Debtor in respect of the Secured Obligations is rescinded
or must otherwise be restored by any holder of the Secured Obligations, whether
as a result of any fraudulent conveyance, proceedings in bankruptcy or
reorganization or otherwise. EACH DEBTOR SHALL DEFEND AND INDEMNIFY EACH SECURED
PARTY FROM AND AGAINST ANY claim, damage, loss, liability, cost, or expense
UNDER THIS SECTION 2.07 (INCLUDING REASONABLE ATTORNEYS’ FEES AND EXPENSES) IN
THE DEFENSE OF ANY SUCH ACTION OR SUIT, INCLUDING such claim, damage, loss,
liability, cost, or expense arising as a result of the INDEMNIFIED SECURED
PARTY’s OWN NEGLIGENCE OR STRICT LIABILITY but excluding such claim, damage,
loss, liability, cost, or expense that is found in a final, non-appealable
judgment by a court of competent jurisdiction to have resulted from such
Indemnified SECURED PARTY’s gross negligence, willful misconduct, or bad faith.

 

ARTICLE III

 

PERFECTION OF SECURITY INTEREST

 

3.01     Perfection. Prior to or concurrently with the execution and delivery of
this Agreement, Debtors shall:

 

(a)       file or cause to be filed such financing statements and other
documents in such offices as shall be necessary or as the Administrative Agent
may reasonably request to perfect and establish the priority (subject only to
Permitted Liens) of the Security Interest;

 

(b)       subject to Section 3.04, deliver to the Administrative Agent any and
all Instruments, endorsed or accompanied by such instruments of assignment and
transfer in such form and substance as the Administrative Agent may reasonably
request;

 

(c)       deliver to the Administrative Agent any and all certificates in any
Debtor’s physical possession evidencing Investment Property included in the
Collateral or any Securities Collateral, endorsed or accompanied by such
instruments of assignment and transfer in such form and substance as the
Administrative Agent may reasonably request;

 

(d)       cause the Administrative Agent to be listed as the lienholder on all
certificates of title or ownership relating to Equipment owned by Debtors and
deliver to the Administrative Agent originals of all such certificates of title
or ownership for the Equipment;

 

(e)       deliver to the Administrative Agent a Deposit Account Control
Agreement, executed by the applicable Debtor and the financial institution
maintaining such Deposit Account, with respect to each Deposit Account included
in the Collateral other than (i) any Deposit Account maintained by the
Administrative Agent, (ii) Deposit Accounts with amounts not in excess of
$250,000 in the aggregate, when combined with amounts in all Deposit Accounts
included in the Collateral and owned by the Debtors over which the
Administrative Agent does not have Control or (iii) any Excluded Account;;

 

Exhibit F-1-9

 

 

 

(f)       with respect to any uncertificated security included in the
Collateral, cause the Security Interest to be recorded on the equityholder
register or on the books of the issuer of such uncertificated security and cause
such issuer to execute and deliver to the Administrative Agent an
acknowledgement of the Security Interest pursuant to which the issuer agrees to
comply with instructions originated by the Administrative Agent without further
consent by such Debtor; and

 

(g)       take all such other actions as shall be necessary or as the
Administrative Agent may reasonably request to perfect and establish the
priority (subject only to Permitted Liens) of the Security Interest.

Additionally, each Debtor hereby authorizes the Administrative Agent to prepare,
execute, deliver, file and/or record any financing statement (including any
fixture filing), continuation statement, amendment or other document that may be
necessary or desirable (in the reasonable judgment of the Administrative Agent):
(i) to create, preserve, perfect or validate the Security Interest; or (ii) to
enable the Administrative Agent to exercise and enforce its rights hereunder
with respect to such Security Interest. Each Debtor hereby authorizes the
Administrative Agent to file any financing statement describing the Collateral
as “all assets” or “all of the Debtor’s personal property”, notwithstanding that
such wording may be broader in scope than the Collateral described in this
Agreement. The Debtors shall pay the costs of, or incidental to, any recording
or filing of any such financing or continuation statement, amendment or other
document or otherwise arising out of or in connection with the execution and
delivery of this Agreement.

 

3.02     Perfection of Additional Collateral. Each Debtor shall:

 

(a)       subject to Section 3.04, upon the acquisition after the date hereof by
such Debtor of any Instrument in an aggregate principal amount in excess of
$100,000, promptly deliver to the Administrative Agent all such Instruments,
endorsed and/or accompanied by instruments of assignment and transfer in such
form and substance as the Administrative Agent may reasonably request;

 

(b)       upon the acquisition of any certificated securities representing
Investment Property or Securities Collateral which are to be physically
possessed by a Debtor, promptly deliver to the Administrative Agent all such
certificated securities, endorsed or accompanied by instruments of transfer or
assignment in such form and substance as the Administrative Agent may reasonably
request;

 

(c)       upon the acquisition of any uncertificated securities included in the
Collateral, use commercially reasonable efforts to cause the Security Interest
to be recorded on the equityholder register or the books of the issuer of such
uncertificated securities and use commercially reasonable efforts to cause such
issuer to execute and deliver to the Administrative Agent an acknowledgement of
the Security Interest pursuant to which the issuer agrees to comply with
instructions originated by the Administrative Agent without further consent by
such Debtor;

 

Exhibit F-1-10

 

 

  

(d)       reserved;

 

(e)       deliver to the Administrative Agent a Deposit Account Control
Agreement, executed by the Debtor and the financial institution maintaining such
Deposit Account, with respect to any Deposit Account of the Debtor opened after
the date hereof, other than (i) any Deposit Account maintained by the
Administrative Agent, (ii) Deposit Accounts with amounts not in excess of
$250,000 in the aggregate, when combined with amounts in all Deposit Accounts
included in the Collateral and owned by the Debtors over which the
Administrative Agent does not have Control or (iii) any Excluded Account;

 

(f)       deliver to the Administrative Agent a securities account control
agreement in form and substance reasonably satisfactory to Administrative Agent
with respect to any securities account or securities entitlement opened after
the date hereof, executed by such Debtor and the securities intermediary
maintaining such securities account; and

 

(g)       furnish to the Administrative Agent from time to time (but, unless an
Event of Default shall have occurred and be continuing, within 45 days after the
end of each calendar quarter) statements and schedules further identifying and
describing the Patent Collateral and the Trademark Collateral, respectively, and
such other reports in connection with the Patent Collateral and the Trademark
Collateral as the Administrative Agent may reasonably request, all in reasonable
detail.

 

3.03       Intellectual Property Filings. Upon the request of the Administrative
Agent, each Debtor will sign and deliver to the Administrative Agent any
Intellectual Property Security Agreement necessary to grant Security Interests
in any Intellectual Property owned by it at such time that is registered or for
which an application for registration is pending in the United States Patent and
Trademark Office. Each Debtor shall promptly make all Intellectual Property
filings necessary to perfect the Security Interests in such Intellectual
Property. Each Debtor hereby appoints the Administrative Agent as its
attorney-in-fact to execute and file all Intellectual Property filings required
or so requested for the foregoing purposes, all acts of such attorney being
hereby ratified and confirmed; and such power, being coupled with an interest,
shall be irrevocable until the Collateral is released pursuant to Section 2.02
or Section 2.03.

 

3.04       Instruments. So long as no Event of Default shall have occurred and
be continuing, each Debtor may retain for collection in the ordinary course any
Instruments received by it in the ordinary course of business, and the
Administrative Agent shall, promptly upon request and at the expense of any
Debtor, make appropriate arrangements for making any Instrument pledged by such
Debtor and held by the Administrative Agent available to such Debtor for
purposes of presentation, collection or renewal (any such arrangement to be
effected, to the extent deemed appropriate by the Administrative Agent, against
trust receipt or like document).

 

Exhibit F-1-11

 

 

 

3.05       Further Assurances. Each Debtor shall, from time to time, at its sole
expense, promptly execute, deliver, file and record all further agreements,
assignments, instruments, documents and certificates and take all further action
that may be necessary, or that the Administrative Agent may reasonably request,
in order to create, preserve, perfect, confirm or validate the Security Interest
in the Collateral or to enable the Administrative Agent to obtain the full
benefits of the Security Instruments (including the delivery of possession of
any Collateral that hereafter comes into existence or is acquired in the future
by the Administrative Agent as pledgee for the benefit of the Secured Parties),
or to enable the Administrative Agent to exercise and enforce any of its rights,
powers and remedies thereunder with respect to any of such Collateral.

 

3.06       Use of Collateral. So long as no Event of Default shall have occurred
and be continuing, except as otherwise provided herein or in the Credit
Agreement, each Debtor shall be entitled to use and possess the Collateral and
to exercise its rights, title and interest in all Contracts and Governmental
Approvals subject to the rights, remedies, powers and privileges of the
Administrative Agent under Article VI and to such use, possession or exercise
not otherwise constituting an Event of Default.

 

ARTICLE IV

 

REPRESENTATIONS AND WARRANTIES

 

Each Debtor represents and warrants to the Secured Parties as follows:

 

4.01     Security Instruments.

 

(a)       This Agreement is effective to create in favor of the Administrative
Agent for the benefit of the Secured Parties a legal, valid and enforceable Lien
on the Collateral and, (i) when UCC financing statements in appropriate form are
filed in the offices specified on Annex 5 and (ii) upon the taking of possession
or Control by the Administrative Agent of the Collateral with respect to which a
security interest may be perfected only by possession or Control (which
possession or Control shall be given to the Administrative Agent to the extent
possession or Control by the Administrative Agent is required by this
Agreement), the Lien created by this Agreement shall constitute a fully
perfected Lien on all right, title and interest of the Debtors in the
Collateral, to the extent such Lien can be created and perfected under the UCC,
in each case subject to no Liens other than Permitted Liens.

 

(b)       When an Intellectual Property Security Agreement is filed in the
United States Patent and Trademark Office, the Lien created by this Agreement
shall constitute a perfected Lien on all right, title and interest of the
applicable Debtor thereunder in the Intellectual Property owned by it at such
time which is registered with the United States Patent and Trademark Office,
subject to no Liens other than Permitted Liens.

 

(c)       Each Security Document delivered pursuant to Section 6.01 or 6.02, as
applicable, of the Credit Agreement will, upon execution and delivery thereof,
be effective to create in favor of the Administrative Agent, for the benefit of
the Secured Parties, a legal, valid and enforceable Lien on all of the Debtors’
right, title and interest in and to the Collateral thereunder, and when all
appropriate filings or recordings are made in the appropriate offices as may be
required under applicable law, or upon the taking of possession or Control by
the Administrative Agent of Collateral with respect to which a security interest
may be perfected only by possession or Control, the Lien created by such
Security Document will constitute a fully perfected Lien on all right, title and
interest of the Debtors in such Collateral, in each case subject to no Liens
other than Permitted Liens.

  

Exhibit F-1-12

 

 

 

4.02       Title. Each Debtor is the sole legal and beneficial owner of all
Collateral in which it purports to grant a Lien pursuant to this Agreement, and
such Collateral is free and clear of all Liens other than Permitted Liens. To
the extent the Security Interest can be created and perfected under the UCC, the
Security Interests have attached and upon the filing of the financing statements
and delivery of Collateral which may be perfected only by possession or Control,
will constitute, under the UCC, perfected security interests in all such
Collateral prior to all other Liens (other than Permitted Liens). No currently
effective financing statement or other instrument similar in effect is on file
in any recording office covering all or any part of the Collateral, except such
as may have been filed evidencing Permitted Liens or except as will be released
concurrently with the closing of the transactions contemplated in the Credit
Agreement. No Person other than the Administrative Agent has Control or
possession of all or any part of the Collateral except as permitted by the
Credit Agreement or except as will be released concurrently with the closing of
the transactions contemplated in the Credit Agreement.

 

4.03       Chief Executive Office; Change of Name; Jurisdiction of Organization.
As of the date hereof, the exact legal name, type of organization, jurisdiction
of organization, Federal Taxpayer Identification Number, organizational
identification number and chief executive office of each Debtor is indicated
next to its name in Annex 6.

 

4.04       Corporate Names; Prior Transactions. Each Debtor has not, during the
past five years, been known by or used any other corporate or fictitious name or
been a party to any merger or consolidation, or acquired all or substantially
all of the assets of any Person, or acquired any of its property or assets out
of the ordinary course of business, except as set forth in Annex 7.

 

4.05       Records. As of the date hereof, the principal place of business and
chief executive office of each Debtor and the office where each Debtor keeps its
books and records concerning the Collateral (hereinafter, collectively called
the “Records”) is located at the address set out on Annex 8.

 

4.06       Changes in Circumstances. Debtor has not, within the period of four
months prior to the date hereof: (a) changed its location (as defined in
Section 9-307 of the UCC); (b) changed its name; or (c) become a “new debtor”
(as defined in Section 9-102(a)(56) of the UCC) with respect to a security
agreement previously entered into by any other Person.

 

4.07       Inventory and Equipment. As of the date hereof, all Inventory and
Equipment of the Debtors other than such Inventory which is in-transit to the
applicable purchaser thereof: (a) is located on the properties covered by the
Mortgages or at one of the locations identified in Annex 9 under its name or in
transit from one of such location to another; and (b) is in the exclusive
Control of a Debtor.

 

Exhibit F-1-13

 

 

 

4.08       Trademark Collateral. No Debtor owns any Trademarks registered in the
United States of America to which the last sentence of the definition of
Trademark Collateral applies.

 

4.09       Title to Equity Interests. As of the date hereof, the applicable
Debtor identified on Annex 3 hereto owns the Equity Interests listed as being
owned by it in Annex 3 hereto, free and clear of any Lien other than the
Security Interests or Permitted Liens or except as will be released concurrently
with the closing of the transactions contemplated in the Credit Agreement. All
shares of capital stock identified in such Annex as being beneficially owned by
each Debtor have been duly authorized and validly issued, are fully paid and
non-assessable and are not subject to any option to purchase or similar right of
any Person. Except as permitted by the Credit Agreement, each Debtor is not and
will not become a party to or otherwise bound by any agreement, other than the
Loan Documents, which restricts in any manner the rights of any present or
future holder of any such Equity Interest with respect thereto.

 

4.10       Financing Statements and Other Filings; Maintenance of Perfected
Security Interest. As of the date hereof, the only filings, registrations and
recordings necessary and appropriate to create, preserve, protect, publish
notice of and perfect the Security Interest are listed in Annex 5. All such
filings, registrations and recordings have been delivered to the Administrative
Agent in completed form for filing in each governmental, municipal or other
office specified in Annex 5.

 

4.11       Deposit Accounts. As of the date hereof, Debtor has neither opened
nor maintains any Deposit Accounts other than the accounts listed in Annex 10.
Upon delivery of Control Agreements as provided in Section 3.01(e), the
Administrative Agent will have a perfected first priority security interest in
each Deposit Account listed in Annex 10 that is part of the Collateral by
Control other than Deposit Accounts with amounts not in excess of $250,000, when
combined with amounts in all Deposit Accounts included in the Collateral and
owned by the Debtors over which the Administrative Agent does not have Control.

 

4.12       Investment Property. As of the date hereof, Debtor (i) has no
Securities Accounts or Commodity Accounts other than those listed in Annex 11,
and the Administrative Agent has a perfected first priority security interest in
such Securities Accounts and Commodity Accounts as a result of filing the
applicable UCC financing statements, in each case subject to Permitted Liens,
and (ii) does not hold, own or have any interest in any Investment Property
other than Investment Property maintained in Securities Accounts or Commodity
Accounts listed in Annex 11.

 

4.13       Delivery of Certificated Securities Collateral. All certificates,
agreements or instruments representing or evidencing the Securities Collateral
in existence on the date hereof have been delivered to the Administrative Agent
in suitable form for transfer by delivery or accompanied by duly executed
instruments of transfer or assignment in blank and the Administrative Agent has
a perfected first priority security interest therein.

 

Exhibit F-1-14

 

 

 

4.14       Perfection of Uncertificated Securities Collateral. The
Administrative Agent has a perfected first priority security interest in all
uncertificated Securities Collateral pledged by it hereunder that is in
existence on the date hereof.

 

4.15       Instruments and Tangible Chattel Paper. As of the date hereof (i) no
principal amount payable under or in connection with any of the Collateral is
evidenced by any Instrument or tangible chattel paper other than such
Instruments and tangible chattel paper listed in Annex 12 and (ii)  each
Instrument and each item of tangible chattel paper listed in Annex 12 has been
properly endorsed, assigned and delivered to the Administrative Agent,
accompanied by instruments of transfer or assignment duly executed in blank.

 

4.16       Electronic Chattel Paper and Transferable Records. As of the date
hereof, no amount payable under or in connection with any of the Collateral is
evidenced by any electronic chattel paper or any “transferable record” (as that
term is defined in Section 201 of the Federal Electronic Signatures in Global
and National Commerce Act, or in Section 16 of the Uniform Electronic
Transactions Act as in effect in any relevant jurisdiction) other than such
electronic chattel paper and transferable records listed in Annex 13.

 

4.17       Letters of Credit. As of the date hereof, no Debtor is a beneficiary
under any Letter of Credit issued in favor of such Debtor except as listed in
Annex 14.

 

4.18       Commercial Tort Claims. As of the date hereof, such Debtor holds no
commercial tort claims other than those listed in Annex 15.

 

ARTICLE V

 

COVENANTS

 

In furtherance of the grant of the Security Interests pursuant to Article II,
each Debtor hereby agrees with the Administrative Agent as follows:

 

5.01       Access to Records. Each Debtor shall upon reasonable notice, at any
time during normal business hours, permit representatives of the Administrative
Agent to inspect and make copies of the Records, and to be present at such
Debtor’s place of business to receive copies of all communications and
remittances relating to the Collateral, and forward to the Administrative Agent
copies of any notices or communications received by such Debtor relevant to the
Administrative Agent’s Security Interest in the Collateral. Upon the occurrence
and during the continuation of any Event of Default, at the Administrative
Agent’s request, each Debtor shall promptly deliver copies of any and all such
Records to the Administrative Agent.

 

5.02       Other Financing Statements and Liens. Without the prior written
consent of the Administrative Agent, each Debtor shall not file or suffer to be
on file, or authorize or permit to be filed or to be on file, in any
jurisdiction, any financing statement or like instrument with respect to the
Collateral in which the Administrative Agent is not named as the sole secured
party for the benefit of the Secured Parties except to the extent such filing or
like instrument pertains to any Permitted Lien or filings for notice purposes
only.

Exhibit F-1-15

 

 

 

5.03       Reports. Each Debtor shall furnish to the Administrative Agent from
time to time statements and schedules further identifying and describing the
Collateral and such other reports in connection with the Collateral as the
Administrative Agent may reasonably request, all in reasonable detail; provided,
however, absent the existence of an Event of Default, the Debtors shall not be
required to deliver such information more frequently than quarterly. Promptly
upon request of the Administrative Agent, following receipt by the
Administrative Agent of any reports pursuant to the preceding sentence, the
Borrower shall deliver to the Administrative Agent revised Annexes 2 and 4 to
include Trademarks and Patents that become part of the Collateral under this
Agreement.

 

5.04       Adverse Claims. Each Debtor shall defend, all at its own expense,
such Debtor’s title and the existence, perfection and first priority of the
Administrative Agent’s security interest in the Collateral against all adverse
claims (other than Permitted Liens).

 

5.05       Prohibition of Certain Changes. Except to the extent permitted by the
Credit Agreement, no Debtor shall change its (i) name, identity, corporate
structure or the jurisdiction under which it is organized, (ii) chief executive
office or chief place of business or (iii) the locations where it keeps or holds
any Collateral (except Inventory in transit from one such location to another)
or any records relating thereto from the applicable locations described in
Annexes 8 and 9 hereof, unless such Debtor shall have given the Administrative
Agent 30 days’ prior notice thereof and, if reasonably requested by the
Administrative Agent upon the direction of the Required Lenders, delivered an
opinion of counsel with respect thereto. It will not in any event change the
location of any Collateral owned by it if such change would cause the Security
Interest in such Collateral to lapse or cease to be perfected.

 

5.06       Reserved.

 

5.07       Collateral Held by Others. If any of its Collateral is at any time in
the possession or control of any warehouseman, bailee or agent, each Debtor
shall notify such warehouseman, bailee or agent of the Security Interests and
instruct it to hold all such Collateral for the Administrative Agent’s account
subject to the Administrative Agent’s instructions (which shall permit such
Collateral to be removed by such Debtor in the ordinary course of business until
the Administrative Agent notifies such warehouseman, bailee or agent that an
Event of Default has occurred and is continuing). Upon request by Administrative
Agent, each Debtor shall use its commercially reasonable efforts to obtain as
soon as practicable after the date hereof with respect to each location set
forth in Annex 16, where such Debtor maintains Collateral, a waiver of bailee’s
and/or landlord’s lien, as applicable, and use commercially reasonable efforts
to obtain a bailee letter and/or landlord lien waiver, as applicable, from all
such bailees and landlords, as applicable, who from time to time have possession
of Collateral in the ordinary course of such Debtor’s business. Notwithstanding
the foregoing, the Debtors shall not be required to take any action under this
Section 5.07 with respect to any Inventory in-transit to the applicable
purchaser thereof.

 

5.08       Records. Each Debtor shall (i) keep accurate Records and shall stamp
or otherwise mark such Records in such manner as the Administrative Agent may
reasonably request in order to reflect the Security Interests and (ii) give the
Administrative Agent at least 30 days’ notice before it changes the location of
any office where such Debtor keeps the Records.

 

Exhibit F-1-16

 

 

 

5.09       Collection of Accounts. Each Debtor shall use commercially reasonable
efforts to cause to be collected from its account debtors, as and when due, any
and all amounts owing under or on account of each of its Accounts (including
Accounts that are delinquent, such Accounts to be collected in accordance with
lawful collection procedures) and shall apply forthwith upon receipt thereof all
such amounts as are so collected to the outstanding balance of such Accounts.
The costs and expenses (including attorney’s fees) of collection, whether
incurred by a Debtor or the Administrative Agent, shall be borne by such Debtor.

 

5.10       Disposition of Collateral. No Debtor shall sell, lease, exchange,
assign or otherwise dispose of, or grant any option with respect to, any of its
Collateral except as permitted by the Credit Agreement.

 

5.11       Protection of Intellectual Property. Each Debtor shall timely pay all
fees (including maintenance fees), file all documents or declarations (including
applications, applications for renewal, affidavits of use and affidavits of
incontestability) and take all other action necessary to obtain, maintain and
renew each material Patent and material Trademark included in the Collateral.
Each Debtor shall notify the Administrative Agent at the end of each fiscal year
if it knows that any application or registration relating to any material
Intellectual Property owned or licensed by it may become abandoned or dedicated,
or of any adverse determination or development (including the institution of, or
any such determination or development in, any proceeding in the United States
Patent and Trademark Office or any court) regarding such Debtor’s ownership of
such Intellectual Property, its right to register or patent the same, or its
right to keep and maintain the same. If any Debtor’s rights to any Intellectual
Property are infringed, misappropriated or diluted by a third party, such Debtor
shall notify the Administrative Agent at the end of the fiscal year in which
Debtor learned of such infringement, misappropriation or dilution and shall take
all actions as such Debtor shall reasonably deem appropriate under the
circumstances to protect such Intellectual Property.

 

5.12       Special Provisions Relating to Certain Collateral.

 

(a)         Contracts.

 

(i)         Anything herein to the contrary notwithstanding, each Debtor shall
remain liable to perform all of its duties and obligations under each of the
Contracts included in the Collateral to the same extent as if this Agreement had
not been executed. The exercise by the Administrative Agent or any other Secured
Party of any of the rights and remedies hereunder shall not release any Debtor
from any of its duties or obligations under the Contracts. Neither the
Administrative Agent nor any other Secured Party shall have any duty, obligation
or liability under such Contracts included in the Collateral or otherwise in
respect of the Collateral by reason of this Agreement or be obligated to perform
any of the obligations or duties of any Debtor under the Contracts or otherwise
in respect of the Collateral or to take any action to collect or enforce any
claim for payment or any other right assigned hereunder.

 

(ii)         During the existence of an Event of Default, if Debtor fails to
perform any agreement contained herein or in any of the Contracts, the
Administrative Agent may (but shall not be obligated to) itself perform, or
cause the performance of, such agreement, and the reasonable fees, costs and
expenses of the Administrative Agent incurred in connection therewith shall be
payable by or on behalf of Debtors and shall be Secured Obligations to the
Administrative Agent.

 

Exhibit F-1-17

 

 

 

(b)       Intellectual Property.

 

(i)         For the purpose of enabling the Administrative Agent to exercise
rights and remedies under Article VI at such time as the Administrative Agent
shall be lawfully entitled to exercise such rights and remedies, and for no
other purpose, each Debtor hereby grants to the Administrative Agent, to the
extent assignable, an irrevocable, non-exclusive license (exercisable without
payment of royalty or other compensation to any Debtor) to use, assign, license
or sublicense any of the Intellectual Property now owned or hereafter acquired
by such Debtor, wherever the same may be located, including in such license
reasonable access to all media in which any of the licensed items may be
recorded or stored and to all computer programs used for the compilation or
printout thereof; provided, however, such license shall only be effective during
the existence of an Event of Default.

 

(ii)         Notwithstanding anything contained herein to the contrary, but
subject to the provisions of Section 9.11 of the Credit Agreement, so long as no
Event of Default shall have occurred and be continuing, each Debtor will be
permitted to exploit, use, enjoy, protect, license, sublicense, assign, sell,
dispose of or take other actions with respect to the Intellectual Property in
the ordinary course of the business of such Debtor. In furtherance of the
foregoing, unless an Event of Default shall have occurred and be continuing, the
Administrative Agent shall, from time to time, upon the request of any Debtor,
execute and deliver any instruments, certificates or other documents, in the
form so requested, that such Debtor shall have certified are appropriate (in its
judgment) to allow it to take any action permitted above (including
relinquishment of the license provided pursuant to clause (i) immediately above
as to any specific Intellectual Property). Further, upon satisfaction of the
conditions to termination of this Agreement described in Section 2.02 or the
release of any Intellectual Property pursuant to Section 2.03, the
Administrative Agent shall grant back to Debtor the license granted pursuant to
clause (i) immediately above. The exercise of rights and remedies under Article
VI by the Administrative Agent shall not terminate the rights of the holders of
any licenses or sublicenses theretofore granted by any Debtor in accordance with
the first sentence of this clause (ii).

 

(c)        Deposit Accounts. No Debtor shall grant Control of any Deposit
Account to any Person other than the Administrative Agent. Subject to the time
period set forth in Section 3.02(e), the Debtors shall not permit the aggregate
amount held in Deposit Accounts (other than Excluded Accounts) and owned by the
Debtors over which the Administrative Agent does not have Control to exceed
$250,000 at any time.

 

(d)        Letters of Credit. If any Debtor is at any time a beneficiary under a
letter of credit in an amount in excess of $100,000 now or hereafter issued in
favor of such Debtor, such Debtor shall promptly notify the Administrative Agent
thereof and such Debtor shall, at the request of the Administrative Agent,
pursuant to an agreement in form and substance reasonably satisfactory to the
Administrative Agent, either (i) arrange for the issuer and any confirmer of
such letter of credit to consent to an assignment to the Administrative Agent of
the proceeds of any drawing under the letter of credit or (ii) arrange for the
Administrative Agent to become the transferee beneficiary of such letter of
credit, with the Administrative Agent agreeing, in each case, that the proceeds
of any drawing under the letter of credit are to be applied as provided in the
Credit Agreement.

 

Exhibit F-1-18

 

 

 

(e)        Commercial Tort Claims. If any Debtor shall at any time hold or
acquire a commercial tort claim, such Debtor shall immediately notify the
Administrative Agent in writing signed by such Debtor of the brief details
thereof and grant to the Administrative Agent in such writing a security
interest therein and in the Proceeds thereof, all upon the terms of this
Agreement, with such writing to be in form and substance reasonably satisfactory
to the Administrative Agent.

 

(f)        Securities Collateral.

 

(i)         No Debtor shall take any action that would result in (A) the
revocation of any election to treat any Securities Collateral as certificated
securities, and (B) an election to treat as certificated securities any
Securities Collateral that constitute uncertificated securities.

 

(ii)         So long as Administrative Agent has not exercised remedies with
respect to the Collateral under this Agreement or any other Loan Document upon
the occurrence and during the continuation of an Event of Default, Debtors
reserve the right to exercise all voting and other rights, title and interest
with respect to the Collateral (except as limited by the Loan Documents) and to
receive all income, gains, profits, dividends and other distributions from the
Collateral whether non-cash dividends, cash, options, warrants, stock splits,
reclassifications, rights, instruments or other investment property or other
property or proceeds from time to time received, receivable or otherwise
distributed in respect of or in exchange for any or all of such rights and
interests (except as limited by the Loan Documents); provided that no vote shall
be cast, right exercised or other action taken which could reasonably be
expected to result in a Material Adverse Effect.

 

(iii)         In furtherance of the right of the Administrative Agent to
exercise voting rights following an Event of Default, each Debtor shall execute
and deliver to the Administrative Agent a proxy in a form acceptable to the
Administrative Agent with respect to each item of Securities Collateral owned by
it. No Debtor shall grant a proxy that would conflict with any proxy granted to
the Administrative Agent pursuant to the preceding sentence so long as the
Security Interests remain in effect.

 

Exhibit F-1-19

 

 

 

ARTICLE VI

 

REMEDIES

 

6.01       Events of Default; Remedies. If any Event of Default shall have
occurred and be continuing:

 

(a)         the Administrative Agent shall have, and in its discretion may
exercise, the rights and remedies with respect to this Agreement as more
particularly provided herein or in the Credit Agreement;

 

(b)         each Debtor shall, upon the reasonable request of the Administrative
Agent, assemble Collateral owned by it (and not otherwise in the possession of
the Administrative Agent) at such place or places, reasonably convenient to both
the Administrative Agent and such Debtor, designated in such request;

 

(c)         the Administrative Agent may (but shall not be obligated to),
without notice to any Debtor and at such times as the Administrative Agent in
its sole discretion may determine, exercise any or all of Debtors’ rights in, to
and under, or in any way connected to, the Collateral and the Administrative
Agent shall otherwise have and may (but shall not be obligated to) exercise all
of the rights, powers, privileges and remedies with respect to the Collateral of
a secured party under the UCC (whether or not said UCC is in effect in the
jurisdiction where the rights, powers, privileges and remedies are asserted) and
such additional rights, powers, privileges and remedies to which a secured party
is entitled under the laws in effect in any jurisdiction where any rights,
powers, privileges and remedies hereunder may be asserted, including the right,
to the maximum extent permitted by applicable law, to exercise all voting,
consensual and other powers of ownership pertaining to the Collateral as if the
Administrative Agent were the sole and absolute owner thereof (and the Debtors
agree to take all such action as may be appropriate to give effect to such
right);

 

(d)         the Administrative Agent may (but shall not be obligated to) make
any reasonable compromise or settlement it deems desirable with respect to any
of the Collateral and may (but shall not be obligated to) extend the time of
payment, arrange for payment in installments, or otherwise modify the terms, of
all or any part of the Collateral;

 

(e)         the Administrative Agent may (but shall not be obligated to), in its
name or in the name of any Debtor or otherwise, demand, sue for, collect or
receive any money or property at any time payable or receivable on account of or
in exchange for any of the Collateral;

 

Exhibit F-1-20

 

 

 

(f)         the Administrative Agent may (but shall not be obligated to) sell,
lease, assign or dispose of all or any part of the Collateral which shall then
be or shall thereafter come into the possession, custody or control of the
Administrative Agent, any other Secured Party or any of their respective agents
at such place or places as the Administrative Agent deems best, and for cash or
for credit or for future delivery (without thereby assuming any credit risk), at
public or private sale, without demand of performance or notice of intention to
effect any such disposition or of the time or place thereof except such notice
as is required by applicable law and cannot be waived. If, pursuant to
applicable law, prior notice of sale of the Collateral under this Section is
required to be given to any Debtor, each Debtor hereby acknowledges that the
minimum time required by such applicable law, or if no minimum time is
specified, 10 days, shall be deemed a reasonable notice period. The
Administrative Agent or any other Secured Party or anyone else may be the
purchaser, lessee, assignee or recipient of any or all of the Collateral so
disposed of at any public sale (or, to the maximum extent permitted by
applicable law, at any private sale) and thereafter hold the same absolutely,
free from any claim or right of whatsoever kind, including any right or equity
of redemption (statutory or otherwise), of Debtors, any such demand, notice and
right or equity being hereby expressly waived and released to the maximum extent
permitted by applicable law. The Administrative Agent may, without notice or
publication, adjourn any public or private sale or cause the same to be
adjourned from time to time by announcement at the time and place fixed for the
sale, and such sale may be made at any time or place to which the sale may be so
adjourned. The Collateral may be sold in one or more sales, at public or private
sale, conducted by any officer or agent of, or auctioneer or attorney for, the
Administrative Agent, at the Administrative Agent’s place of business or
elsewhere, for cash, upon credit or for other property, for immediate or future
delivery, and at such price or prices and on such terms as the Administrative
Agent shall deem appropriate in its reasonable discretion. The Administrative
Agent may, in its reasonable discretion, at any such sale restrict the
prospective bidders or purchasers as to their number, nature of business and
investment intention to the extent necessary to comply with applicable law. Upon
any public or private sale the Administrative Agent shall have the right to
deliver, assign and transfer to the purchaser thereof the Collateral so sold. At
any such sale the Collateral may be sold in one lot as an entirety or in
separate parcels. The Administrative Agent shall not be obligated to make any
sale pursuant to any such notice. In case of any sale of all of any part of the
Collateral on credit or for future delivery, the Collateral so sold may be
retained by the Administrative Agent until the full selling price is paid by the
purchaser thereof, but neither the Administrative Agent nor any Secured Party
shall incur any liability in case of the failure of such purchaser to take up
and pay for the Collateral so sold, and, in case of any such failure, such
Collateral may again be sold pursuant to the provisions hereof. All cash
proceeds of any such sale, and any other realization upon all or any part of the
Collateral may, in the sole discretion of the Administrative Agent, be held by
the Administrative Agent as collateral for or applied then or at any time
thereafter, in whole or in part, by the Administrative Agent for the benefit of
the Secured Parties to the payment and satisfaction of the Secured Obligations
in accordance with Section 6.04;

 

(g)         upon request of the Administrative Agent, each Debtor shall promptly
notify (and each Debtor hereby authorizes the Administrative Agent so to notify)
each account debtor in respect of any Accounts or Instruments that such
Collateral has been assigned to the Administrative Agent hereunder, and that any
payments due or to become due in respect of such Collateral are to be made
directly to the Administrative Agent;

 

Exhibit F-1-21

 

 

 

(h)         the Administrative Agent shall have the right to endorse, assign or
otherwise transfer to or to register in the name of the Administrative Agent or
any of its nominees or endorse for negotiation any or all of the Securities
Collateral, without any indication that such Securities Collateral is subject to
the Security Interests hereunder. In addition, the Administrative Agent shall
have the right at any time to exchange certificates representing or evidencing
Securities Collateral for certificates of smaller or larger denominations;

 

(i)         the Administrative Agent may vote or exercise any and all of the
Debtors’ rights or powers incident to their ownership of the Securities
Collateral, including any rights or powers to manage or control the Guarantors;

 

(j)         the Administrative Agent may cause any action at law or suit in
equity or other proceeding to be instituted and prosecuted to enforce any rights
vested in it by this Agreement or by law or included in the Collateral, subject
to the provisions and requirements hereof and thereof, or to aid in the exercise
of any power herein or therein granted, or for any foreclosure hereunder and
sale under a judgment or decree in any judicial proceeding;

 

(k)         in connection with any acceleration and foreclosure, the
Administrative Agent may lawfully and peacefully take possession of the
Collateral and lawfully and peacefully render it usable and repair and renovate
the same, without, however, any obligation to do so, and lawfully and peacefully
enter upon any location where the Collateral may be located for that purpose,
control, manage, operate, rent and lease the Collateral, collect all rents and
income from the Collateral and apply the same to reimburse the Secured Parties
for any cost or expenses incurred hereunder or under any of the Loan Documents
and to the payment or performance of any Debtor’s obligations hereunder or under
any of the Loan Documents, and apply the balance to the other Secured
Obligations and any remaining excess balance to whomsoever is legally entitled
thereto;

 

(l)         the Administrative Agent may secure the appointment of a receiver
for the Collateral or any part thereof;

 

(m)        the Administrative Agent may lawfully and peacefully occupy any
premises owned or leased by any Debtor where the Collateral or any part thereof
is assembled for a reasonable period in order to effectuate its rights and
remedies hereunder or under law, without obligation to any Debtor in respect of
such occupation;

 

(n)         the Administrative Agent may give instructions to the issuer of any
Securities Collateral that is an uncertificated security with respect to such
uncertificated security.

 

Exhibit F-1-22

 

 

 

Each Debtor recognizes that, by reason of certain prohibitions contained in the
Securities Act of 1933, as amended, and applicable state securities laws, the
Administrative Agent may be compelled, subject to the notice provision provided
for in paragraph (f) of this Section 6.01, with respect to any sale of all or
any part of the Collateral constituting a security (as such term is defined in
the Securities Act of 1933), to limit purchasers to those who will agree, among
other things, to acquire the Collateral for their own account, for investment
and not with a view to the distribution or resale thereof. Each Debtor
acknowledges that any such private sale may be at prices and on terms less
favorable to the Administrative Agent than those obtainable through a public
sale without such restrictions, and, notwithstanding such circumstances, agrees
that any such private sale shall be deemed to have been made in a commercially
reasonable manner and that the Administrative Agent shall have no obligation to
engage in public sales and no obligation to delay the sale of any Collateral for
the period of time necessary to permit any Debtor or the issuer thereof to
register it for public sale.

 

6.02       Deficiency. If the proceeds of sale, collection or other realization
of or upon the Collateral by virtue of the exercise of remedies under Section
6.01 are insufficient to cover the costs and expenses of such exercise and the
payment in full of the Secured Obligations, the Administrative Agent shall
retain all rights and remedies under the Loan Documents, and each Debtor shall
remain liable, with respect to any deficiency.

 

6.03       Private Sale. The Administrative Agent and the other Secured Parties
shall incur no liability as a result of the sale, lease or other disposition of
all or any part of the Collateral, at any private sale pursuant to Section 6.01
conducted in a commercially reasonable manner. Subject to and without limitation
of the preceding sentence, Debtors hereby waive any claims against the
Administrative Agent or any other Secured Party arising by reason of the fact
that the price at which the Collateral may have been sold at such a private sale
was less than the price that might have been obtained at a public sale or was
less than the aggregate amount of the Secured Obligations, even if the
Administrative Agent accepts the first offer received and does not offer the
Collateral to more than one offeree.

 

6.04       Application of Proceeds. Except as otherwise herein expressly
provided, the proceeds of any collection, sale or other realization of all or
any part of the Collateral pursuant hereto, and any other cash at the time held
by the Administrative Agent under this Article VI, shall be applied by the
Administrative Agent as provided in Section 10.02(c) of the Credit Agreement.

 

6.05       Attorney-in-Fact. Without limiting any rights or powers granted by
this Agreement to the Administrative Agent while no Event of Default has
occurred and is continuing, upon the occurrence and during the continuance of
any Event of Default, each Debtor hereby appoints the Administrative Agent as
the attorney-in-fact of such Debtor for the purpose of carrying out the
provisions of this Article VI and taking any action and executing any
instruments that the Administrative Agent may deem necessary or desirable to
accomplish the purposes hereof, which appointment as attorney-in-fact is
irrevocable and coupled with an interest. Without limiting the generality of the
foregoing, so long as the Administrative Agent shall be entitled under this
Article VI to make collections in respect of the Collateral, the Administrative
Agent shall have the right and power

 

(a)         to receive, endorse and collect all checks made payable to the order
of any Debtor representing any dividend, payment or other distribution in
respect of the Collateral or any part thereof and to give full discharge for the
same;

 

Exhibit F-1-23

 

 

 

(b)         to file any claims or take any action or institute any proceedings
in connection therewith which the Secured Party may deem to be necessary or
advisable;

 

(c)         to pay, settle or compromise all bills and claims which may be or
become liens or security interests against any or all of the Collateral, or any
part thereof, unless a bond or other security satisfactory to the Secured Party
has been provided; and

 

(d)         upon foreclosure, to do any and every act which any Debtor may do on
its behalf with respect to the Collateral or any part thereof and to exercise
any or all of such Debtor’s rights and remedies under any or all of the
Collateral;

 

provided, however, that the Secured Party shall not exercise any such rights
except upon the occurrence and continuation of an Event of Default. This power
of attorney is a power coupled with an interest and shall be irrevocable.

 

6.06       Expenses.

 

(a)         Subject to Section 12.03 of the Credit Agreement, the Administrative
Agent may incur, and Debtors shall pay to the Administrative Agent, all
reasonable fees and out-of-pocket expenses (including reasonable fees and
expenses for legal services) of, or incident to, the enforcement of any of the
provisions of this Article VI, or exercise by experts, agents or attorneys
selected by the Administrative Agent in good faith of any rights or privileges
of Debtors in respect of the Collateral, or any actual or attempted sale, or any
exchange, enforcement, collection, compromise or settlement in respect of any of
the Collateral, and for the care of the Collateral and defending or asserting
rights and claims of the Administrative Agent and the other Secured Parties in
respect thereof, by litigation or otherwise, and all such fees and expenses and,
to the extent such amounts are not timely paid, together with interest thereon
at the applicable rate provided for in Section 3.02 of the Credit Agreement,
shall be Secured Obligations of the Administrative Agent secured under
Article II. All amounts payable by the Debtors under this Section 6.06(a) shall
be payable within ten (10) Business Days of demand thereof.

 

(b)         The terms, conditions, covenants and agreements to be observed or
performed by each Debtor under this Agreement shall be observed or performed by
it at its sole cost and expense.

 

6.07       Administrative Agent’s Right to Perform on Debtor’s Behalf. If any
Debtor fails to perform any of its obligations under this Agreement, the
Administrative Agent may (but shall not be obligated to), upon reasonable notice
to such Debtor, unless such Debtor is diligently pursuing a cure for such
failure that cannot be obtained more quickly by the Administrative Agent’s
performance as specified herein, itself perform or cause to be performed such
obligations at the expense of such Debtor, either in its name or in the name and
on behalf of such Debtor.

 

6.08       Custody and Preservation. The Administrative Agent’s obligation to
use reasonable care in the custody and preservation of Collateral shall be
satisfied if it uses the same care as it uses in the custody and preservation of
its own property.

 

Exhibit F-1-24

 

 

 

6.09       Preservation of Rights. Neither the Administrative Agent nor any
Secured Party shall be required to take any steps to preserve any rights against
prior parties to any of the Collateral.

 

6.10       Rights of Secured Parties. The Administrative Agent or any other
Secured Party may (but shall not be obligated to) pay or secure payment of any
Tax or other claim that may be secured by or result in a Lien on any Collateral.
The Administrative Agent or any other Secured Party may (but shall not be
obligated to) do any other thing that it in good faith believes is necessary or
desirable to preserve, protect or maintain the Collateral or, after an Event of
Default, to enhance its value. Debtors shall immediately reimburse the
Administrative Agent or any other Secured Party for any reasonable payment or
expense (including reasonable attorneys’ fees and expenses) that the
Administrative Agent or such other Secured Party may incur pursuant to this
Section 6.10.

 

6.11       No Marshalling. Neither the Administrative Agent nor any other
Secured Party shall be required to marshal any present or future collateral
security (including but not limited to the Collateral) for, or other assurances
of payment of, the Obligations or any of them or to resort to such collateral
security or other assurances of payment in any particular order.

 

6.12       Remedies Cumulative. No right, power or remedy herein conferred upon
or reserved to the Administrative Agent or any Secured Party is intended to be
exclusive of any other right, power or remedy, and every such right, power and
remedy shall, to the extent permitted by law, be cumulative and in addition to
every other right, power and remedy given hereunder or now or hereafter existing
at law or in equity or otherwise. The assertion or employment of any right or
remedy hereunder or otherwise shall not prevent the concurrent assertion or
employment of any other appropriate right or remedy. Resort to any or all
security now or hereafter held by the Administrative Agent may be taken
concurrently or successively and in one or several consolidated or independent
judicial actions or lawfully taken nonjudicial proceedings, or both.

 

ARTICLE VII

 

MISCELLANEOUS

 

7.01       Waivers of Rights Inhibiting Enforcement. Each Debtor waives, for
itself and all who may claim under it, to the maximum extent permitted by
applicable law:

 

(a)         any claim that, as to any part of the Collateral, a public sale,
should the Administrative Agent elect so to proceed, is, in and of itself, not a
commercially reasonable method of sale for the Collateral;

 

(b)         the right to assert in any action or proceeding between it and the
Administrative Agent any offsets or counterclaims that it may have;

 

(c)         except as otherwise provided in this Agreement, NOTICE OR JUDICIAL
HEARING IN CONNECTION WITH THE ADMINISTRATIVE AGENT’S TAKING POSSESSION OR
DISPOSITION OF ANY OF THE COLLATERAL INCLUDING ANY AND ALL PRIOR NOTICE AND
HEARING FOR ANY PREJUDGMENT REMEDY OR REMEDIES AND ANY SUCH RIGHT THAT ANY
DEBTOR WOULD OTHERWISE HAVE UNDER THE CONSTITUTION OR ANY STATUTE OF THE UNITED
STATES OR OF ANY STATE, AND ALL OTHER REQUIREMENTS AS TO THE TIME, PLACE AND
TERMS OF SALE OR OTHER REQUIREMENTS WITH RESPECT TO THE ENFORCEMENT OF THE
ADMINISTRATIVE AGENT’S RIGHTS HEREUNDER;

 

(d)         all rights of redemption, appraisement, valuation, stay, extension
or moratorium; and

 

Exhibit F-1-25

 

 

 

(e)         the right to invoke any law requiring marshalling of collateral and
all other rights the exercise of which would, directly or indirectly, prevent,
delay or inhibit the enforcement of any of the rights or remedies of the
Administrative Agent and the other Secured Parties under this Agreement or the
absolute sale of the Collateral, now or hereafter in force under any applicable
law.

 

7.02       Notices. The Administrative Agent or any Debtor shall give any
notice, request, demand or other communication (a “Notice”) pursuant to this
Agreement in accordance with Section 12.01 of the Credit Agreement. Any Notice
to the Debtor shall be sent to the address of the Borrower set forth in the
Credit Agreement or to such other address provided by such Debtor to the
Administrative Agent in writing. Any Notice sent as hereinabove provided shall
be deemed delivered upon receipt or refusal of delivery.

 

7.03       Assignment. No Debtor may assign any of its rights or delegate any
performance under this Agreement (whether voluntarily or involuntarily, by
merger, consolidation, dissolution, operation of law or any other manner) except
with the prior written consent of the Administrative Agent, which consent may be
withheld in the Administrative Agent’s sole discretion. Any purported assignment
without such consent is void. When any Lender assigns or otherwise transfers any
interest held by it under the Credit Agreement or other Loan Document to any
other Person pursuant to the terms of the Credit Agreement or such other Loan
Document, that other Person shall thereupon become vested with all the benefits
held by such Lender under this Agreement.

 

7.04       Successors and Assigns. This Agreement binds the Debtors and their
respective successors and assigns and inures to the benefit of the
Administrative Agent, the Secured Parties and their respective successors and
assigns.

 

7.05       Amendment and Waiver. No amendment or waiver of any provision of this
Agreement, nor consent to any departure by any Debtor therefrom, shall in any
event be effective unless the same shall be in writing and signed by the
Administrative Agent, the Borrower and the other Debtors; provided that any
amendment, waiver, or consent shall be signed by the Required Lenders or all of
the Lenders to the extent required by Section 12.02 of the Credit Agreement. Any
such waiver or consent shall be effective only in the specific instance and for
the specific purpose for which given.

 

Exhibit F-1-26

 

 

 

7.06       No Implied Waiver. No failure or delay in exercising any right, power
or privilege or requiring the satisfaction of any condition hereunder, and no
course of dealing between the Debtors and the Administrative Agent operates as a
waiver or estoppel of any right, remedy or condition. No single or partial
exercise of any right or remedy under this Agreement precludes any simultaneous
or subsequent exercise of any other right, power or privilege. The rights and
remedies set forth in this Agreement are not exclusive of, but are cumulative
to, any rights or remedies now or subsequently existing at law, in equity or by
statute.

 

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

 

7.08       Entire Agreement. This Agreement and the other Loan Documents contain
the entire agreement between the parties relating to the subject matter hereof
and supersede all prior or contemporaneous oral or written negotiations and
agreements relating to the subject matter hereof. The provisions of this
Agreement may not be explained, supplemented or qualified through evidence or
trade usage or a prior course of dealing. In entering into this Agreement, the
Debtors have not relied upon any statement, representation, warranty or
agreement of the Administrative Agent except as set forth in the Loan Documents.

 

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

 

7.10       Governing Law. The laws of the State of New York (without giving
effect to its conflicts of law principles) govern all matters arising out of or
relating to this Agreement and all of the transactions it contemplates,
including without limitation its validity, interpretation, construction,
performance (including the details of performance) and enforcement, except to
the extent that the validity or perfection of the security interests hereunder,
or remedies hereunder, in respect of any particular Collateral are governed by
the laws of a jurisdiction other than the State of New York.

 

7.11       Headings. The descriptive headings of the articles, sections and
subsections of this Agreement are for convenience only and do not constitute a
part of this Agreement.

 

7.12       Interpretation. This Agreement has been reviewed and negotiated by
counsel for both the Debtors and the Administrative Agent and, consequently,
this Agreement shall not be construed against the drafter.

 

Exhibit F-1-27

 

 

 

7.13       Waiver of Jury Trial. THE DEBTORS AND THE ADMINISTRATIVE AGENT HEREBY
IRREVOCABLY WAIVE ANY AND ALL RIGHT TO TRIAL BY JURY IN RESPECT OF ANY LEGAL
PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT, ANY OTHER LOAN
DOCUMENT, OR ANY OF THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.

 

7.14       Survival, Etc. The provisions of Sections 2.06, 6.03, 6.06, 6.08,
6.09, 6.10, 7.01, 7.16, 7.17 and 7.19 shall survive the termination of this
Agreement. In addition, the representations, warranties and covenants of the
Debtors set out in this Agreement or contained in any documents delivered to the
Administrative Agent or any other Secured Party pursuant to this Agreement shall
survive the execution and delivery of this Agreement.

 

7.15       Agents, Etc. The Administrative Agent may employ agents, experts and
attorneys-in-fact in connection herewith and shall not be responsible for the
negligence or misconduct of any such agents, experts or attorneys-in-fact
selected by it in good faith.

 

7.16       Limitation of Liability. NEITHER THE ADMINISTRATIVE AGENT NOR ANY
OTHER SECURED PARTY SHALL HAVE LIABILITY WITH RESPECT TO, AND DEBTORS HEREBY
WAIVE, RELEASE AND AGREE NOT TO SUE FOR:

 

(a)         ANY LOSS OR DAMAGE SUSTAINED BY ANY DEBTOR, OR ANY LOSS, DAMAGE,
DEPRECIATION OR OTHER DIMINUTION IN THE VALUE OF ANY COLLATERAL, THAT MAY OCCUR
AS A RESULT OF, IN CONNECTION WITH, OR THAT IS IN ANY WAY RELATED TO, ANY
EXERCISE OF ANY RIGHT OR REMEDY UNDER THIS AGREEMENT EXCEPT FOR ANY SUCH LOSS,
DAMAGE, DEPRECIATION OR DIMINUTION TO THE EXTENT THAT THE SAME IS THE RESULT OF
ACTS OR OMISSIONS ON THE PART OF SUCH SECURED PARTY CONSTITUTING WILLFUL
MISCONDUCT OR GROSS NEGLIGENCE (AS FINALLY DETERMINED BY A COURT OF COMPETENT
JURISDICTION); OR

 

(b)         ANY SPECIAL, INDIRECT, INCIDENTAL, CONSEQUENTIAL, PUNITIVE OR
EXEMPLARY DAMAGES SUFFERED BY ANY DEBTOR IN CONNECTION WITH ANY CLAIM RELATED TO
THIS AGREEMENT.

 

7.17       Subrogation. Each Debtor shall not exercise, and hereby irrevocably
waives, any claim, right or remedy that it may now have or may hereafter acquire
against any other Debtor arising under or in connection with this Agreement,
including, without limitation, any claim, right or remedy of subrogation,
contribution, reimbursement, exoneration, indemnification or participation
arising under contract, by applicable law or otherwise in any claim, right or
remedy of the Administrative Agent or the other Secured Parties against such
Debtor or any other Person or any Collateral which the Administrative Agent or
any other Secured Party may now have or may hereafter acquire, until the
indefeasible payment and satisfaction in full of all Secured Obligations and the
expiration and termination of the Commitments. If, notwithstanding the preceding
sentence, any amount shall be paid to any Debtor on account of such subrogation
rights at any time when any of the Secured Obligations shall not have been paid
in full, such amount shall be held by such Debtor in trust for the
Administrative Agent and the other Secured Parties, segregated from other funds
of such Debtor and be turned over to the Administrative Agent in the exact form
received by such Debtor (duly endorsed by such Debtor to the Administrative
Agent, if required), to be applied against the Secured Obligations, whether
matured or unmatured, in accordance with the Loan Documents. Notwithstanding the
foregoing, the Debtors shall be expressly permitted hereunder to make payments
to each other to the extent not prohibited by the Credit Agreement.

 

Exhibit F-1-28

 

 

  

7.18       Authority of the Administrative Agent. The rights and
responsibilities of the Administrative Agent under this Agreement with respect
to any action taken by the Administrative Agent or the exercise or non-exercise
by the Administrative Agent of any power, right or remedy provided for or
resulting or arising out of this Agreement shall, as between the Administrative
Agent and the 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 Debtors, the Administrative Agent
shall be conclusively presumed to be acting as the Administrative Agent for the
Secured Parties with full and valid authority so to act or refrain from acting,
and Debtors shall be under no obligation or entitlement to make any inquiry
respecting such authority.

 

7.19       Inconsistencies with Credit Agreement. To the extent there are any
conflicts or inconsistencies between this Agreement and the Credit Agreement,
the provisions of the Credit Agreement shall control.

 

7.20       Amendment and Restatement. This Agreement is an amendment and
restatement of, and not a novation or extinguishment of, of the Prior Security
Agreement and supersedes the Prior Security Agreement in its entirety. Each
party hereto acknowledges and agrees that all liens, security interests and
assignments created and granted under the Prior Agreement and encumbering the
Collateral shall continue to exist, remain valid and subsisting, shall not be
impaired, extinguished or released hereby, shall remain in full force and effect
and are hereby ratified, renewed, brought forward, extended and rearranged as
security for the Secured Obligations.

 

[Signatures on following pages]

 

  Exhibit F-1-29

 

 

 

EXHIBIT A

 

GRANT OF PATENT SECURITY INTEREST

 

WHEREAS, [_______________], a [_________________] (“Grantor”), owns and uses in
its business, and will in the future adopt and so use, various intangible
assets, including the Patent Collateral (as defined below); and

 

WHEREAS, pursuant to that certain Third Amended and Restated Credit Agreement
dated as of December 13, 2013, (as amended, supplemented, or otherwise modified
from time to time, the “Credit Agreement”), among Magnum Hunter Resources
Corporation, a Delaware corporation (the “Borrower”), the Lenders party hereto
(the “Lenders”) and Bank of Montreal, as the Administrative Agent for the
Lenders, the Lenders agreed to make Loans to and make other extensions of credit
on behalf of the Borrower (capitalized terms used but not defined herein have
the respective meanings assigned to them in the Credit Agreement); and

 

WHEREAS, pursuant to the terms of that certain Amended and Restated Security and
Pledge Agreement dated as of even date with the Credit Agreement (as amended,
supplemented or otherwise modified from time to time, the “Security Agreement”),
among the Borrower, the Guarantors party thereto and Bank of Montreal, as
collateral agent for each of the Secured Parties (as defined in the Security
Agreement) (in such capacity, the “Administrative Agent”), Grantor agreed to
grant in favor of the Administrative Agent a perfected security interest in, and
the Administrative Agent has agreed to become a secured creditor with respect
to, Patent Collateral;

 

NOW, THEREFORE, for good and valuable consideration, the receipt and adequacy of
which are hereby acknowledged, subject to the terms and conditions of the
Security Agreement, Grantor hereby grants to the Administrative Agent a security
interest in all of Grantor’s right, title and interest in and to the following,
in each case whether now or hereafter existing or in which Grantor now has or
hereafter acquires an interest and wherever the same may be located (the “Patent
Collateral”):

 

(i)         all patents and patent applications, the inventions and improvements
described and claimed therein, and all patentable inventions, including but not
limited to the patents and patent applications listed on Schedule A;

 

(ii)         all reissues, divisions, continuations, renewals, extensions and
continuations-in-part of the foregoing;

 

(iii)         all rights (A) to all income, profits, royalties, damages and
payments now or hereafter due and/or payable under and with respect thereto,
including damages and payments for past, present or future infringements
thereof, (B) to sue for past, present and future infringements thereof, and
(C) otherwise accruing under or pertaining to any of the foregoing throughout
the world;

 

(iv)         all licenses or user or other agreements granted to Grantor with
respect to any of the foregoing, in each case whether now or hereafter owned or
used; and

 

Exhibit F-1-30

 

 

  

(v)         all causes of action, claims and warranties now or hereafter owned
or acquired by Grantor in respect of any of the items listed above.

 

Notwithstanding anything herein to the contrary, in no event shall the Patent
Collateral include, and Grantor shall not be deemed to have granted a security
interest in, any of Grantor’s rights or interests in any license, contract or
agreement to which Grantor is a party or any of its rights or interests
thereunder to the extent, but only to the extent, that such a grant would, under
the terms of such license, contract or agreement or otherwise, result in a
breach of the terms of, or constitute a default under any license, contract or
agreement to which Grantor is a party; provided, that immediately upon the
ineffectiveness, lapse or termination of any such provision, the Patent
Collateral shall include, and Grantor shall be deemed to have granted a security
interest in, all such rights and interests as if such provision had never been
in effect.

 

Grantor further acknowledges and affirms that the rights and remedies of the
Administrative Agent with respect to the security interest in the Patent
Collateral granted hereby are more fully set forth in the Security Agreement,
the terms and provisions of which are incorporated by reference herein as if
fully set forth herein.

 

[Remainder of page intentionally left blank]

 

Exhibit F-1-31

 

 

 

IN WITNESS WHEREOF, Grantor has caused this Grant of Patent Security Interest to
be duly executed and delivered by its duly authorized officer as of the ___ day
of ____________, _____.

 

                                                                                                              

    [ ]   By:   Name:     Title:  

 

Exhibit F-1-32

 

 

  

SCHEDULE A

TO

GRANT OF PATENT SECURITY INTEREST

 

Patents Issued:

 

Patent No. Issue Date Invention Inventor                                

 

 Patents Pending:

 

Applicant’s

Name

Date

Filed

Application

Number

Invention Inventor                                        

 

Exhibit F-1-33

 

 

 

EXHIBIT B

 

GRANT OF TRADEMARK SECURITY INTEREST

 

WHEREAS, [_______________], a [_________________] (“Grantor”), owns and uses in
its business, and will in the future adopt and so use, various intangible
assets, including the Trademark Collateral (as defined below); and

 

WHEREAS, pursuant to that certain Second Amended and Restated Credit Agreement
dated as of December 13, 2013 (as amended, supplemented, or otherwise modified
from time to time, the “Credit Agreement”), among Magnum Hunter Resources
Corporation, a Delaware corporation (the “Borrower”), the Lenders party hereto
(the “Lenders”) and Bank of Montreal, as the Administrative Agent for the
Lenders, the Lenders agreed to make Loans to and make other extensions of credit
on behalf of the Borrower (capitalized terms used but not defined herein have
the respective meanings assigned to them in the Credit Agreement); and

 

WHEREAS, pursuant to the terms of that certain Amended and Restated Security and
Pledge Agreement dated as of even date with the Credit Agreement (as amended,
supplemented or otherwise modified from time to time, the “Security Agreement”),
among the Borrower, the Guarantors party thereto and Bank of Montreal, as
collateral agent for each of the Secured Parties (as defined in the Security
Agreement) (in such capacity, the “Administrative Agent”), Grantor agreed to
grant in favor of the Administrative Agent a perfected security interest in, and
the Administrative Agent has agreed to become a secured creditor with respect
to, Trademark Collateral;

 

NOW, THEREFORE, for good and valuable consideration, the receipt and adequacy of
which are hereby acknowledged, subject to the terms and conditions of the
Security Agreement, Grantor hereby grants to the Administrative Agent a security
interest in all of Grantor’s right, title and interest in and to the following,
in each case whether now or hereafter existing or in which Grantor now has or
hereafter acquires an interest and wherever the same may be located (the
“Trademark Collateral”):

 

(i)        all trade names, trademarks and service marks, logos, trademark and
service mark registrations, and applications for trademark and service mark
registrations, including but not limited to those registrations and applications
listed on Schedule A;

 

(ii)        all renewals of trademark and service mark registrations;

 

(iii)        all rights (A) to all income, royalties, damages and other payments
(including in respect of all past, present and future infringements) with
respect to any of the foregoing, (B) to sue for all past, present and future
infringements thereof, and (C) otherwise accruing under or pertaining to any of
the foregoing, together, in each case, with the product lines and goodwill of
the business connected with the use of, and symbolized by, each such trade name,
trademark and service mark;

 

(iv)        all licenses or user or other agreements granted to Grantor with
respect to any of the foregoing, in each case whether now or hereafter owned or
used; and

 

Exhibit F-1-34

 

 

 

(v)         all causes of action, claims and warranties now or hereafter owned
or acquired by Grantor in respect of any of the items listed above.

 

Notwithstanding anything herein to the contrary, in no event shall the Trademark
Collateral include, and Grantor shall not be deemed to have granted a security
interest in, any of Grantor’s rights or interests in any license, contract or
agreement to which Grantor is a party or any of its rights or interests
thereunder to the extent, but only to the extent, that such a grant would, under
the terms of such license, contract or agreement or otherwise, result in a
breach of the terms of, or constitute a default under any license, contract or
agreement to which Grantor is a party; provided, that immediately upon the
ineffectiveness, lapse or termination of any such provision, the Trademark
Collateral shall include, and Grantor shall be deemed to have granted a security
interest in, all such rights and interests as if such provision had never been
in effect.

 

Grantor further acknowledges that the rights and remedies of the Administrative
Agent with respect to the security interest in the Trademark Collateral granted
hereby are more fully set forth in the Security Agreement, the terms and
provisions of which are incorporated by reference herein as if fully set forth
herein.

 

[Remainder of page intentionally left blank.]

 

Exhibit F-1-35

 

 

 

 

IN WITNESS WHEREOF, Grantor has caused this Grant of Trademark Security Interest
to be duly executed and delivered by its duly authorized officer as of the __
day of _______, _____.

 

                                                                                                                

    [ ]   By:   Name:     Title:  

   

 Exhibit F-1-36

 

 

 

SCHEDULE A

TO

GRANT OF TRADEMARK SECURITY INTEREST

 

Registered Owner

United States

Trademark/Service Mark

Registration or

Serial Number

Registration
or Filing Date                

 

Exhibit F-1-37

 

 

 

EXHIBIT F-2

 

FORM OF GUARANTY

 

(See attached)

 

Exhibit F-2-1

 

 

   

EXHIBIT F-2

 

FORM OF GUARANTY

 

AMENDED AND RESTATED GUARANTY AGREEMENT

 

THIS AMENDED AND RESTATED GUARANTY AGREEMENT (this “Guaranty”) dated as of
December 13, 2013, made by each of the undersigned Subsidiaries of the Borrower
(as defined below) (each, a “Guarantor,” and collectively, the “Guarantors”), in
favor of Bank of Montreal as Administrative Agent (the “Agent”) for the benefit
of the Lenders and the other Secured Parties (as such terms are hereinafter
defined) pursuant to that certain Third Amended and Restated Credit Agreement
dated as of even date herewith (as amended, supplemented, or otherwise modified
from time to time, the “Credit Agreement”), by and among Magnum Hunter Resources
Corporation, a Delaware corporation (the “Borrower”), the Agent and the lenders
from time to time party thereto (the “Lenders”).

 

W I T N E S S E T H

 

WHEREAS, pursuant to the Credit Agreement, the Lenders have agreed to make loans
to and other extensions of credit on behalf of the Borrower in a manner and upon
the terms and conditions set forth therein;

 

WHEREAS, in accordance with the Credit Agreement, the Agent requires that the
Guarantors execute a guaranty agreement guaranteeing the Obligations of the
Borrower under the Credit Agreement;

 

NOW, THEREFORE, in consideration of the premises and agreements herein and in
order to induce the Lenders and the Agent to enter into the Credit Agreement and
to induce the Secured Parties to make loans and/or extend other credit to the
Borrower, the Guarantors hereby agree as follows:

 

Section 1.       Definitions. Capitalized terms used herein and not otherwise
defined shall have the respective meanings assigned thereto in the Credit
Agreement. As used herein, the capitalized term “Secured Parties” shall have the
meaning assigned thereto in the Security Agreement.

 

Exhibit F-2-1

 

 

  

Section 2.       Guaranty of Payment. Each Guarantor (not merely as a surety or
guarantor of collection) hereby jointly, severally, unconditionally and
irrevocably, guarantees the punctual payment and performance when due, whether
at stated maturity, as an installment, by prepayment or by demand, acceleration
or otherwise, of all Obligations of the Borrower heretofore or hereafter
existing. If any or all of the Obligations become due and payable under the
Credit Agreement, the Guarantors jointly and severally and unconditionally
promise to pay such Obligations, on demand, together with any and all expenses
(including reasonable counsel fees and expenses), which may be incurred by the
Agent in collecting any of the Obligations and in connection with the
protection, defense and enforcement of any rights under the Credit Agreement or
under any other Loan Document (the “Expenses”). The Guarantors guarantee that
the Obligations shall be paid strictly in accordance with the terms of the
Credit Agreement. The Obligations include, without limitation, interest accruing
after the commencement of a proceeding under bankruptcy, insolvency or similar
laws of any jurisdiction at the rate or rates provided in the Credit Agreement.
The Agent shall not be required to exhaust any right or remedy or take any
action against the Borrower or any other person or entity or any collateral
prior to any demand or other action hereunder against the Guarantors. The
Guarantors agree that, as between the Guarantors and the Agent, the Obligations
may be declared to be due and payable for the purposes of this Guaranty
notwithstanding any stay, injunction or other prohibition which may prevent,
delay or vitiate any declaration as regards the Borrower and that in the event
of a declaration or attempted declaration, the Obligations shall immediately
become due and payable by the Guarantors for the purposes of this Guaranty and
each Guarantor shall forthwith pay the Obligations specified by the Agent to be
paid as provided in the Credit Agreement without further notice or demand.
Notwithstanding anything contained herein or in the Credit Agreement, any Loan
Document or any other document or any other agreement, security document or
instrument relating hereto or thereto to the contrary, the maximum liability of
each Guarantor hereunder shall never exceed the maximum amount that said
Guarantor could pay without having such payment set aside as a fraudulent
transfer or fraudulent conveyance or similar action under the U.S. Bankruptcy
Code or applicable state or foreign law.

 

Section 3.       Guaranty Absolute. The liability of each Guarantor under this
Guaranty is absolute and unconditional irrespective of: (a) any change in the
time, manner or place of payment of, or in any other term of, the Credit
Agreement or the Obligations, or any other amendment or waiver of or any consent
to departure from any of the terms of the Credit Agreement or the Obligations,
including any increase or decrease in the rate of interest thereon; (b) any
release or amendment or waiver of, or consent to departure from, any other
guarantee or support document, or any exchange, release or non-perfection of any
collateral, for the Credit Agreement or the Obligations; (c) any present or
future law, regulation or order of any jurisdiction or of any agency thereof
purporting to reduce, amend, restructure or otherwise affect any term of the
Credit Agreement or the Obligations; (d) without being limited by the foregoing,
any lack of validity or enforceability of the Credit Agreement or the
Obligations; (e) any other setoff, defense or counterclaim whatsoever (in any
case, whether based on contract, tort or any other theory) with respect to the
Credit Agreement or the transactions contemplated thereby which might constitute
a legal or equitable defense available to, or discharge of, the Borrower or
other Guarantors and (f) any claim or assertion that any payment by any
Guarantor hereunder should be set aside pursuant to Section 2 in connection with
any stay, injunction or other prohibition or event, in which case each Guarantor
shall be unconditionally required to pay all amounts demanded of it hereunder
prior to any determination of the maximum liability of each Guarantor hereunder
in accordance with Section 2 and the recipient of such payment, if so required
by a final non-appealable court of competent jurisdiction by a final and
non-appealable judgment, shall then be liable for the refund of any excess
amounts. If any such rebate or refund is ever required, all other Guarantors
shall be fully liable for the repayment thereof to the maximum extent allowed by
applicable law.

 

Section 4.       Guaranty Irrevocable. This Guaranty is a continuing guarantee
of the payment of all Obligations now or hereafter existing under the Credit
Agreement and shall remain in full force and effect until payment in full of all
Obligations and other amounts payable under this Guaranty and until all
Commitments of the Lenders to make Loans under the Credit Agreement shall be
terminated in accordance with the terms thereof and all of the Commitments under
the Credit Agreement have been terminated and are no longer in effect.

 

Exhibit F-2-2

 

 

 

Section 5.       Reinstatement. This Guaranty shall continue to be effective, or
be automatically reinstated, as the case may be, if at any time any payment of
any of the Obligations is rescinded or must otherwise be returned by the Agent
on the insolvency, bankruptcy, dissolution, liquidation or reorganization of any
of the Borrower, any Guarantor, or any Person that is a party to the Loan
Documents, or upon or as a result of the appointment of a custodian, receiver,
trustee or other officer with similar powers with respect to any of the
Borrower, any Guarantor or any other Person that is a party to the Loan
Documents, or otherwise, all as though the payment had not been made.

 

Section 6.       Subrogation. Each Guarantor hereby agrees that it shall not
exercise any rights which it may acquire by way of subrogation, by any payment
made under this Guaranty or otherwise, until all the Obligations have been paid
in full and all of the Commitments under the Credit Agreement have been
terminated and are no longer in effect. Any amounts paid to a Guarantor on
account of subrogation rights under this Guaranty at any time when all the
Obligations have not been paid in full, shall be held in trust for the benefit
of the Agent and shall promptly be paid to the Agent to be credited and applied
to the Obligations, whether matured or unmatured or absolute or contingent, in
accordance with the terms of the Credit Agreement. If a Guarantor has made a
payment to the Agent hereunder of all or any part of the Obligations and all the
Obligations are paid in full and all of the Commitments under the Credit
Agreement have been terminated and are no longer in effect, the Agent shall, at
such Guarantor’s request, execute and deliver to the Guarantor the appropriate
documents, without recourse and without representation or warranty, necessary to
evidence the transfer by subrogation to the Guarantor of an interest in the
Obligations resulting from the payment.

 

Section 7.       Subordination. Any liabilities owed by the Borrower to the
Guarantors in connection with any extension of credit or financial accommodation
by the Guarantors to or for the account of the Borrower, including but not
limited to interest accruing at the agreed contract rate after the commencement
of a bankruptcy or similar proceeding, are hereby subordinated to the
Obligations, and such liabilities of the Borrower to the Guarantors, if the
Agent so requests, shall be collected, enforced and received by the Guarantors
as trustee for the Agent and shall be paid over to the Agent on account of the
Obligations.

 

Section 8.       Certain Taxes. The Guarantors further agree that all payments
to be made hereunder shall be made without setoff or counterclaim and free and
clear of, and without deduction for Taxes. If any Taxes are required to be
withheld from any amounts payable to the Agent hereunder, the amounts so payable
to the Agent shall be increased to the extent necessary to yield to the Agent
(after payment of all Taxes) the amounts payable hereunder in the full amounts
so to be paid. Whenever any Tax is paid by a Guarantor, as promptly as possible
thereafter, such Guarantor shall send the Agent evidence of payment thereof,
together with such additional documentary evidence as may be required from time
to time by the Agent.

 

Section 9.       Representations and Warranties. Each of the Guarantors
represents and warrants that: (a) this Guaranty (i) has been authorized by all
necessary action; (ii) does not violate any agreement, instrument, law,
regulation or order applicable to it; (iii) does not require the consent or
approval of any Person, or any filing or registration of any kind; and (iv) is
the legal, valid and binding obligation of such Guarantor enforceable against
such Guarantor in accordance with its terms, except to the extent that
enforcement may be limited by applicable bankruptcy, insolvency and other
similar laws affecting creditors’ rights generally; and (b) in executing and
delivering this Guaranty, such Guarantor has not relied and will not rely upon
any representations or warranties of the Agent not embodied herein or any acts
heretofore or hereafter taken by the Agent (including but not limited to any
review by the Agent of the affairs of the Borrower).

 

Exhibit F-2-3

 

 

  

Section 10.       Remedies Generally. The remedies provided in this Guaranty are
cumulative and not exclusive of any remedies provided by law.

 

Section 11.      Setoff. Each Guarantor agrees that, in addition to (and without
limitation of) any right of setoff, banker’s lien or counterclaim the Agent or
the Secured Parties may otherwise have, the Agent and each of the Secured
Parties shall be entitled, at their option, to offset balances (general or
special, time or demand, provisional or final) held by them for the accounts of
the Guarantors at any of the Agent’s or any Secured Party’s offices, in U.S.
dollars or in any other currency, against any amount payable by the Guarantors
under this Guaranty which is not paid when due, in which case it shall promptly
notify the Guarantors thereof; provided that the Agent’s or any Secured Party’s
failure to give such notice shall not affect the validity thereof.

 

Section 12.      Formalities. Each Guarantor hereby waives promptness,
diligence, notice of acceptance and any other notice with respect to any of the
Obligations, the Credit Agreement and this Guaranty and any liability to which
the Credit Agreement and this Guaranty applies or may apply, and waives
presentment, demand of payment, notice of intent to accelerate, notice of
acceleration, notice of dishonor or nonpayment, and any requirement that the
Agent institute suit, collection proceedings or take any other action to collect
the Obligations, including any requirement that the Agent protect, secure,
perfect or insure any security interest or Lien against any Property subject
thereto or exhaust any right or take any action against the Borrower or any
other Person (including the other Guarantors) or any Collateral (it being the
intention of the Agent and each Guarantor that the obligations of such Guarantor
under this Guaranty are to be a guarantee of payment and not of collection) or
that the Borrower or any other Person (including the other Guarantors) be joined
in any action hereunder. Each Guarantor hereby waives marshaling of assets and
liabilities, notice by the Agent of the creation of any Indebtedness or
liability to which it applies or may apply, any amounts received by the Agent,
notice of disposition or substitution of Collateral and of the creation,
advancement, increase, existence, extension, renewal, rearrangement and/or
modification of the Obligations.

 

Section 13.       Amendments and Waivers. No amendment or waiver of any
provision of this Guaranty, nor consent to any release by any Guarantor
therefrom, shall be effective unless it is in writing and signed by the Agent
and such Guarantor, and then the waiver or consent shall be effective only in
the specific instance and for the specific purpose for which given. No failure
on the part of the Agent to exercise, and no delay in exercising, any right
under this Guaranty shall operate as a waiver or preclude any other or further
exercise thereof or the exercise of any other right.

 

Section 14.       Expenses. The Guarantors shall reimburse the Agent on demand
for all Expenses without duplication of any reimbursements affected under the
Credit Agreement. The obligations of the Guarantors under this Section shall
survive the termination of this Guaranty.

 

Exhibit F-2-4

 

 

 

Section 15.      Assignment. This Guaranty shall be binding on, and shall inure
to the benefit of the Guarantors, the Agent and their respective successors and
assigns; provided that the Guarantors may not assign or transfer their
respective rights or obligations under this Guaranty. Without limiting the
generality of the foregoing: (a) the obligations of the Guarantors under this
Guaranty shall continue in full force and effect and shall be binding on any
successor partnership and on previous partners and their respective estates if
any of the Guarantors is a partnership, regardless of any change in the
partnership as a result of death, retirement or otherwise; and (b) the Agent may
assign, or otherwise transfer its rights under the Credit Agreement to any other
person or entity in accordance with the terms and conditions thereof, and the
other person or entity shall then become vested with all the rights granted to
the Agent in this Guaranty or otherwise. Guarantor may merge into the Borrower
or another Restricted Subsidiary as provided in the Credit Agreement.

 

Section 16.      Captions. The headings and captions in this Guaranty are for
convenience only and shall not affect the interpretation or construction of this
Guaranty.

 

Section 17.     Governing Law, Etc. THIS GUARANTY SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAW OF THE STATE OF NEW YORK. EACH GUARANTOR
CONSENTS TO THE NONEXCLUSIVE JURISDICTION AND VENUE OF THE SUPREME COURT OF THE
STATE OF NEW YORK SITTING IN NEW YORK COUNTY AND OF THE UNITED STATES DISTRICT
COURT OF THE SOUTHERN DISTRICT OF NEW YORK. SERVICE OF PROCESS BY THE AGENT IN
CONNECTION WITH ANY SUCH DISPUTE SHALL BE BINDING ON EACH GUARANTOR IF SENT TO
SUCH GUARANTOR BY REGISTERED MAIL AT THE ADDRESS SET FORTH IN THE CREDIT
AGREEMENT FOR THE BORROWER OR AS OTHERWISE SPECIFIED BY SUCH GUARANTOR FROM TIME
TO TIME. EACH GUARANTOR WAIVES ANY RIGHT IT MAY HAVE TO JURY TRIAL IN ANY ACTION
RELATED TO THIS GUARANTY OR THE TRANSACTIONS CONTEMPLATED HEREBY. TO THE EXTENT
THAT ANY GUARANTOR HAS OR HEREAFTER MAY ACQUIRE ANY IMMUNITY FROM JURISDICTION
OF ANY COURT OR FROM ANY LEGAL PROCESS (WHETHER FROM SERVICE OR NOTICE,
ATTACHMENT PRIOR TO JUDGMENT, ATTACHMENT IN AID OF EXECUTION OF A JUDGMENT,
EXECUTION OR OTHERWISE), EACH SUCH GUARANTOR HEREBY IRREVOCABLY WAIVES SUCH
IMMUNITY IN RESPECT OF ITS OBLIGATIONS UNDER THIS GUARANTY.

 

Section 18.      Integration; Effectiveness. This Guaranty alone sets forth the
entire understanding of the Guarantors and the Agent relating to the guarantee
of the Obligations and constitutes the entire contract between the parties
relating to the subject matter hereof and supersedes any and all previous
agreements and understandings, oral or written, relating to the subject matter
hereof. This Guaranty shall become effective when it shall have been executed
and delivered by the Guarantors to the Agent. Delivery of an executed signature
page of this Guaranty by telecopy shall be effective as delivery of a manually
executed signature page of this Guaranty.

 

Section 19.      Additional Guarantors. Upon the execution and delivery of a
Joinder Agreement by any Subsidiary that is required to be a Guarantor pursuant
to Section 8.16 of the Credit Agreement, such Subsidiary shall constitute a
“Guarantor” for all purposes hereunder with the same force and effect as if
originally named as a Guarantor herein. The execution and delivery of such
Joinder Agreement shall not require the consent of the Borrower or any Guarantor
hereunder. The rights and obligations of each Guarantor shall remain in full
force and effect notwithstanding the addition of any new Guarantor as a party to
this Guaranty.

 

Exhibit F-2-5

 

 

  

Section 20.     Keepwell. Each Qualified ECP Guarantor (as hereinafter defined)
hereby jointly and severally absolutely, unconditionally and irrevocably
undertakes to provide such funds or other support as may be needed from time to
time by each other Loan Party to honor all of its obligations under this
Guarantee in respect of Swap Obligations (provided, however, that each Qualified
ECP Guarantor shall only be liable under this Section 20 for the maximum amount
of such liability that can be hereby incurred without rendering its obligations
under this Section, or otherwise under this Guarantee, voidable under applicable
law relating to fraudulent conveyance or fraudulent transfer, and not for any
greater amount).  The obligations of each Qualified ECP Guarantor under this
Section 20 shall remain in full force and effect until terminated in accordance
with the terms hereof.  Each Qualified ECP Guarantor intends that this Section
20 constitute, and this Section 20 shall be deemed to constitute, a “keepwell,
support, or other agreement” for the benefit of each other Loan Party for all
purposes of Section 1a(18)(A)(v)(II) of the Commodity Exchange Act.  As used in
this Section 20, the term “Qualified ECP Guarantor” means, in respect of any
Swap Obligation, each Loan Party that has total assets exceeding $10,000,000 at
the time the relevant Guarantee becomes effective with respect to such Swap
Obligation or such other Person as constitutes an “eligible contract
participant” under the Commodity Exchange Act or any regulations promulgated
thereunder and can cause another person to qualify as an “eligible contract
participant” at such time by entering into a keepwell under Section
1a(18)(A)(v)(II) of the Commodity Exchange Act.

 

Section 21.      Joinder of Borrower. By its execution hereof, the Borrower
hereby joins this Guaranty for the sole purpose of agreeing to Section 20
hereof.

 

Section 22.     Amendment and Restatement. This Guaranty is an amendment and
restatement of, and not a novation or extinguishment of, those certain Amended
and Restated Guaranty Agreements by certain of the Guarantors in favor of the
Administrative Agent executed in connection with the Prior Agreement (as
amended, supplemented, and otherwise modified, collectively, the “Prior
Guaranty”) and supersedes the Prior Guaranty in its entirety. Each Guarantor
hereby ratifies and confirms all of its obligations under the Prior Guaranty and
agrees that the Prior Guaranty, as amended and restated by this Guaranty,
continues in full force and effect.

 

[END OF TEXT]

 

Exhibit F-2-6

 

 

 

EXHIBIT G

 

FORM OF ASSIGNMENT AND ASSUMPTION

 

Reference is made to the Third Amended and Restated Credit Agreement, dated as
of December 13, 2013 (as amended, restated, supplemented or otherwise modified
from time to time and in effect on the date hereof, the “Credit Agreement”),
among Magnum Hunter Resources Corporation, the Lenders named therein and Bank of
Montreal, as Administrative Agent for the Lenders. Capitalized terms defined in
the Credit Agreement are used herein with the same meanings.

 

The Assignor named below hereby sells and assigns, without recourse, to the
Assignee named below, and the Assignee hereby purchases and assumes, without
recourse, from the Assignor, effective as of the Assignment Date set forth
below, the interests set forth below (the “Assigned Interest”) in the Assignor’s
rights and obligations under the Credit Agreement, including, without
limitation, the interests set forth below in the Commitment of the Assignor on
the Assignment Date and Loans owing to the Assignor which are outstanding on the
Assignment Date, together with the participations in Letters of Credit and LC
Disbursements held by the Assignor on the Assignment Date, but excluding accrued
interest and fees to and excluding the Assignment Date. The Assignee hereby
acknowledges receipt of a copy of the Credit Agreement. From and after the
Assignment Date (i) the Assignee shall be a party to and be bound by the
provisions of the Credit Agreement and, to the extent of the Assigned Interest,
have the rights and obligations of a Lender thereunder and (ii) the Assignor
shall, to the extent of the Assigned Interest, relinquish its rights and be
released from its obligations under the Credit Agreement.

 

This Assignment and Assumption is being delivered to the Administrative Agent
(with a copy to the Borrower) together with (i) if the Assignee is a Foreign
Lender, any documentation required to be delivered by the Assignee pursuant to
Section 5.03 of the Credit Agreement, duly completed and executed by the
Assignee, and (ii) if the Assignee is not already a Lender under the Credit
Agreement, an Administrative Questionnaire in the form supplied by the
Administrative Agent, duly completed by the Assignee. The [Assignee/Assignor]
shall pay the fee payable to the Administrative Agent pursuant to Section
12.04(b) of the Credit Agreement.

 

This Assignment and Assumption shall be governed by and construed in accordance
with the laws of the State of New York.

 

Date of Assignment:

Legal Name of Assignor:

Legal Name of Assignee:

Assignee’s Address for Notices:

Effective Date of Assignment (“Assignment Date”):

 

Exhibit G-1

 

 

  

Facility Principal Amount Assigned Percentage Assigned of Facility/Commitment
(set forth, to at least 8 decimals, as a percentage of the Facility and the
aggregate Commitments of all Lenders thereunder) Commitment Assigned: $ % Loans:
   

 

The terms set forth above are hereby agreed to:

  

  [Name of Assignor] , as Assignor         By:     Name:     Title:  

 

  [Name of Assignee] , as Assignee         By:     Name:     Title:  

 

Exhibit G-2

 

 

 

The undersigned hereby consent to the within assignment:1

 

MAGNUM HUNTER RESOURCES CORPORATION,
a Delaware corporation

  BANK OF MONTREAL, as Administrative Agent       By:   By: Name:   Name: Title:
  Title:

 

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

 1 Consents to be included to the extent required by Section 12.04(b) of the
Credit Agreement.

 

Exhibit G-3

 

 

 

EXHIBIT H

 

FORM OF JOINDER AGREEMENT

 

ADDENDUM AND JOINDER TO

SECURITY AGREEMENT AND GUARANTY AGREEMENT

 

THIS ADDENDUM AND JOINDER TO SECURITY AGREEMENT AND GUARANTY AGREEMENT (this
“Addendum”) dated as of ____________, 201_, is between ____________________, a
______________ (the “New Subsidiary”) and Magnum Hunter Resources Corporation, a
Delaware corporation (the “Borrower”) in favor of the Lenders (as defined in the
Credit Agreement defined below) and Bank of Montreal, as Administrative Agent
for the Lenders (in such capacity, the “Administrative Agent”).

 

WHEREAS, the Borrower, the Lenders and the Administrative Agent (collectively,
the “Original Parties”) are parties to that certain Third Amended and Restated
Credit Agreement dated December 13, 2013 (as the same has been or may be
amended, modified or supplemented from time to time, the “Credit Agreement”);

 

WHEREAS, the Borrower and the Guarantors are parties to that certain Amended and
Restated Security and Pledge Agreement dated as of even date with the Credit
Agreement (as the same has been or may be amended, modified or supplemented from
time to time, the “Security Agreement”);

 

WHEREAS, the Guarantors are parties to that certain Amended and Restated
Guaranty Agreement dated as of even date with the Credit Agreement (as the same
has been or may be amended, modified or supplemented from time to time, the
“Guaranty Agreement”);

 

WHEREAS, the New Subsidiary is required to execute this Addendum pursuant to
Section 8.16 of the Credit Agreement; and

 

WHEREAS, the New Subsidiary desires to become a party to the Security Agreement
and the Guaranty Agreement as a “Guarantor” and to receive all of the benefits
of and to become subject to the obligations thereof as a Guarantor;

 

NOW THEREFORE, for good and valuable consideration, the receipt and sufficiency
of which is hereby acknowledged, the above-named parties agree as follows:

 

1.       Terms. Capitalized terms used in the opening paragraph, the recitals
and otherwise herein and not defined have the same meaning assigned to such
terms in the Credit Agreement.

 

Exhibit H-1

 

 

 

2.       Joinder to and Ratification of Security Agreement and Guaranty
Agreement. By executing and delivering this Addendum, the New Subsidiary hereby
(i) becomes a party to the Security Agreement and the Guaranty Agreement as a
Guarantor as if the New Subsidiary had originally signed the Security Agreement
and Guaranty Agreement and (ii) expressly assumes all obligations and
liabilities of a Guarantor thereunder. The New Subsidiary hereby makes as of the
date hereof each of the representations and warranties made by the Guarantors in
the Security Agreement and the Guaranty Agreement; provided that (a) any such
representations and warranties that were made by the other Guarantors as of an
earlier specific date are (i) deemed to be made by the New Subsidiary as of the
date hereof rather than as of such earlier date and (ii) deemed to be made by
the New Subsidiary only as to information, disclosures and matters as it relates
to such New Subsidiary, and (b) any such representations and warranties made as
to matters disclosed or set forth in an Annex to the Security Agreement are
deemed to be made as to the corresponding Annex attached hereto. After giving
effect to this Addendum, all of the obligations of the Borrower and the
Guarantors contained in the Credit Agreement and the other Loan Documents and
all of the rights, privileges and interests of the Lenders arising therefrom are
hereby agreed to, ratified, renewed, confirmed and brought forward in all
respects and the Security Agreement shall serve as security for the Obligations
of the New Subsidiary. All of the terms and conditions of the Security Agreement
and the Guaranty Agreement are hereby incorporated herein by reference and are
hereby deemed restated in their entirety for the benefit of the Administrative
Agent and the Lenders.

 

3.       Security Interest. As security for the Obligations, the New Subsidiary
hereby grants to the Administrative Agent, for the benefit of the Lenders, to
the maximum extent allowed by applicable law, a lien and security interest on
all of the assets of the New Subsidiary described as Collateral in the Security
Agreement, subject to the exclusions contained in the Security Agreement,
whether now held or hereafter acquired, of any kind, pursuant to, and in
accordance with the terms of the Security Agreement.

 

4.       Authorization to Take Further Action. The New Subsidiary hereby
authorizes the Administrative Agent to file such financing statements and any
amendments and extensions thereof as may be necessary or desirable in order to
perfect the Liens under the Security Agreement or any modification, extension or
ratification thereof.

 

5.       Reliance. All parties hereto acknowledge that the Administrative Agent
and the Lenders are relying on this Addendum, the accuracy of the statements
herein contained and the performance of the conditions placed upon the New
Subsidiary hereunder. The New Subsidiary shall execute such further documents
and undertake any such measure as may be necessary to effect and carry out the
terms of this Addendum and the implementation thereof.

 

6.       Warranties. The New Subsidiary (a) represents and warrants that it is
legally authorized to enter into this Addendum, (b) confirms that it has
received copies of the Credit Agreement, the Security Agreement, the Guaranty
Agreement and all related documents, and that on the basis of its review and
analysis of this information has decided to enter into this Addendum,
(c) confirms that it is a Subsidiary of the Borrower that it is required to
enter into this Addendum pursuant to Section 8.16 of the Credit Agreement, (d)
confirms and agrees that it shall perform each and every covenant applicable to
it as a Guarantor as provided in the Security Agreement and the Guaranty
Agreement and that it will at all times be in compliance with the terms of the
Security Agreement and the Guaranty Agreement and all of the obligations and
covenants set forth therein to the same extent as though each and every such
agreement and covenant were set forth in their entirety in this Addendum, and
(e) agrees to execute and deliver such other documents as may be reasonably
required by the Administrative Agent in connection herewith.

Exhibit H-2

 

 

 

7.       Updated Information. Concurrently with this Addendum, the New
Subsidiary is delivering a completed New Subsidiary Information List, attached
as Attachment A hereto. The Borrower and the New Subsidiary acknowledge and
agree that Annexes 1 through 16, inclusive, of the Security Agreement, have been
updated with respect to the New Subsidiary only by the information contained in
Attachment A hereto, and, with respect to the New Subsidiary only, are true,
accurate and complete representations of the information described and
referenced in the corresponding sections of the Security Agreement after giving
effect to this Addendum.

 

8.       Choice of Law. This Addendum shall be governed by and construed under
the laws of the State of New York.

 

9.       Ratification; Conflicts. Any and all conflicts or inconsistencies
between the terms and provisions of this Addendum and the Credit Agreement shall
be governed and controlled by the terms and provisions of this Addendum. Except
as modified hereby, the Security Agreement and the Guaranty Agreement remain in
full force and effect according to their terms.

 

10.       Effectiveness. Upon execution of this Addendum by the New Subsidiary
and the Borrower, this Addendum shall become immediately effective and
enforceable as to the New Subsidiary and all of the Original Parties.

 

[Signatures on following pages]

 

Exhibit H-3

 

 

 

IN WITNESS WHEREOF, the parties have executed this Agreement and agreed to the
provisions contained herein effective as of ________________, 201_.

 

 

  NEW SUBSIDIARY:     ,   a           By:     Name:     Title:          
BORROWER:      

MAGNUM HUNTER RESOURCES CORPORATION,

a Delaware corporation

      By:     Name:     Title:  

 

Exhibit H-4

 

 

 

ATTACHMENT A

 

ADDITIONAL INFORMATION REGARDING THE NEW SUBSIDIARY

 

The following Annexes as described in the Security Agreement:

 

Annex 1 Intellectual Property Licenses Annex 2 Patent Collateral Annex 3
Securities Collateral Annex 4 Trademark Collateral Annex 5 Filing Offices Annex
6 Debtor Information Annex 7 Previous Names and Transactions Annex 8 Offices and
Locations of Records Annex 9 Locations of Inventory and Equipment Annex 10
Deposit Accounts Annex 11 Securities Accounts and Commodity Accounts Annex 12
Instruments and Tangible Chattel Paper Annex 13 Electronic Chattel Paper Annex
14 Letters of Credit Annex 15 Commercial Tort Claims Annex 16 Third Party
Locations

 

Exhibit H-5

 

 

 

Entity Documents       Provide a copy of all that apply:           Corporation:
  Filed Articles of Incorporation/Amendments and Bylaws/Resolutions with
Incumbency Certificate     Partnership:   Partnership Agreement and
filed/recorded Certificate of Partnership Limited Liability Company (LLC):  
Article of Organization and Operating Agreement/Member or Manager Consent with
Incumbency Certificate     Limited Liability Partnership (LLP):   Certificate of
registered partnership and partnership agreement    

  

Exhibit H-6

 

 

 

SCHEDULE 1.01a

 

ADDITIONAL UNRESTRICTED SUBSIDIARIES AS OF THE EFFECTIVE DATE

 

Hunter Aviation, LLC

Alpha Hunter Drilling, LLC

Hunter Real Estate, LLC

Viking Pipeline of West Virginia, LLC

Viking Pipeline of Ohio, LLC

54NG, LLC

NGAS Gathering, LLC

Sentra Corporation

Eureka Hunter Holdings, LLC

Energy Hunter Securities, Inc. (fka NGAS Securities, Inc.)

Eureka Hunter Pipeline, LLC

Eureka Hunter Land, LLC

TransTex Hunter, LLC

Magnum Hunter Midstream, LLC

Triad Hunter Gathering, LLC

Magnum Hunter Services, LLC

Arkoma Gathering, LLC

Licking River Gathering, LLC

Daugherty Petroleum N. D. Ventures LLC

 

The existing Magnum Hunter Production, Inc. and NGAS sponsored drilling and
operating partnerships and any similar drilling partnerships established by
Magnum Hunter Production, Inc. on or after the Effective Date.

 

 

 

 

SCHEDULE 7.01

 

CORPORATE ORGANIZATIONAL CHART

 

See Attached.

 

 

 

 

[img_001.jpg]

 

 

 

 

SCHEDULE 7.05

 

LITIGATION

None.

 

 

 

 

SCHEDULE 7.14

 

SUBSIDIARIES

 

Subsidiary Owner Percent of Ownership Jurisdiction Organizational ID Number PRC
Williston, LLC Borrower 100% Delaware 4281692 Magnum Hunter Resources GP, LLC
Borrower 100% Delaware 4587811 Magnum Hunter Resources LP Borrower 98% Delaware
4587813 Magnum Hunter Resources GP, LLC 2% Shale Hunter, LLC Borrower 100%
Delaware 5305083 Triad Hunter, LLC Borrower 100% Delaware 4743815 Alpha Hunter
Drilling, LLC Triad Hunter, LLC 100% Delaware 4776425 Eureka Hunter Pipeline,
LLC Eureka Hunter Holdings, LLC 100% Delaware 4776439 Eureka Hunter Land, LLC
Eureka Hunter Pipeline, LLC 100% Delaware 4901050 Hunter Real Estate, LLC Triad
Hunter, LLC 100% Delaware 4776468 NGAS Hunter, LLC Borrower 100% Delaware
4876985 Bakken Hunter, LLC Borrower 100% Delaware 4877001 Magnum Hunter
Production, Inc. (fka NGAS Production Co.) NGAS Hunter, LLC 100% Kentucky
0193715 Energy Hunter Securities, Inc. (fka NGAS Securities, Inc.) Magnum Hunter
Production, Inc. 100% Kentucky 0580835 Sentra Corporation Magnum Hunter
Production, Inc. 100% Kentucky 0300833 NGAS Gathering, LLC Magnum Hunter
Production, Inc. 100% Kentucky 0602945 54NG, LLC Magnum Hunter Production, Inc.
100% Kentucky 0728213 Williston Hunter ND, LLC Borrower 100% Delaware 4876995
Magnum Hunter Midstream, LLC Borrower 100% Delaware 5036220 Triad Hunter
Gathering, LLC Magnum Hunter Midstream, LLC 100% Delaware 5036224 Magnum Hunter
Marketing, LLC Magnum Hunter Midstream, LLC 100% Delaware 5036221 Williston
Hunter Canada, Inc. (fka NuLoch Resources, Inc.) MHR ExchangeCo Corporation 100%
Alberta 2015809631 Viking International Resources Co., Inc. Triad Hunter, LLC
100% Delaware 2159378 Hunter Aviation, LLC Borrower 100% Delaware 5058564 Magnum
Hunter Services, LLC Borrower 100% Delaware 5126444 Eureka Hunter Holdings, LLC
Borrower 100% Delaware 5126441 Licking River Gathering, LLC Magnum Hunter
Production, Inc. 50% Kentucky 0663477 TransTex Hunter, LLC Eureka Hunter
Pipeline, LLC 100% Delaware 5126443

  

 

 

 

 

Subsidiary Owner Percent of Ownership Jurisdiction Organizational ID Number
VIRCO Pipeline of West Virginia, LLC Viking International Resources Co., Inc.
100% West Virginia N/A VIRCO Pipeline of Ohio, LLC Viking International
Resources Co., Inc. 100% Ohio 2028128 Daugherty Petroleum N. D. Ventures LLC
Magnum Hunter Production, Inc. 100% Kentucky 0626769

  

Drilling Partnerships

 

Magnum Hunter Production Inc. (“MHP”) owns general partnership interests in the
operating partnerships listed below (each, an “Operating Drilling Partnership”).
Each Operating Drilling Partnership is organized as a Kentucky general
partnership between MHP, and an investment drilling partnership organized as a
Kentucky limited partnership and sponsored by MHP (each, an “Investment Drilling
Partnership”). The following table sets forth, for each Operating Drilling
Partnership, its name, date of formation, MHP’s ownership interest, which is
subject to specified increases in its distributive share, generally 15% of the
total interests, when cumulative distributions reach payout, which ranges from
100% to 110% of the partners’ investment and MHP’s interest as managing general
partner in its capacity as a Unitholder in certain Investment Drilling
Partnerships.

 

Name Date of
Formation MHP Ownership Interest MHP GP Interest Energy Hunter Partners 2012-A,
LTD Dec-2012 25.00% 1.00% Energy Hunter Partners 2011-A, LTD Dec-2011 45.2369%
1.00% NGAS Partners 2010–A, Ltd. Apr-2010 20.00% 1.00% NGAS Partners 2009–A,
Ltd. Feb-2009 20.00% 1.00% NGAS Partners 2008–A, Ltd. Apr-2008 25.00% 1.00% NGAS
Partners 2007–B, Ltd. Sep-2007 25.00% 1.00% NGAS Partners 2007–A, Ltd. Feb-2007
45.00% 1.00% NGAS Partners 2006–D, Ltd. Dec-2006 51.50% 1.00% NGAS Partners
2006–C, Ltd. Aug-2006 51.60% 1.00% NGAS Partners 2006–B, Ltd. Jun-2006 12.50%
1.99% NGAS Partners 2006–A, Ltd. Mar-2006 25.00% 1.00% NGAS Partners 2005–D,
Ltd. Dec-2005 25.00% 1.00% NGAS Partners 2005–C, Ltd. Sep-2005 40.00% 1.00% NGAS
Partners 2005–B, Ltd. Apr-2005 30.00% 1.00% NGAS Partners 2005–A, Ltd. Jan-2005
30.00% 1.00% NGAS Partners 2004–2, Ltd. Oct-2004 30.00% 1.94% NGAS Partners
2004–1, Ltd. May-2004 30.00% 1.28% DPI Natural Gas Partners 2003-2 Drilling
Program Dec-2003 25.00% 1.28% CMC Natural Gas Partners 2003–1 Drilling Program
Jul-2003 0.00% 1.28%

  

 

 

 

Name Date of
Formation MHP Ownership Interest MHP GP Interest DPI Natural Gas Partners 2003–1
Drilling Program July-03 25.00% 1.28% DPI Natural Gas Partners 2002–1 Drilling
Program December-02 25.00% 1.28% CMC Natural Gas Partners 2002–1 Drilling
Program December-02 0.00% 1.28% DPI Natural Gas Partners 2001–1 Drilling Program
November-01 40.00% 18.18% CMC/DPI Natural Gas Partners 2001–2 Drilling Program
December-01 0.00% 1.00% CMC/DPI Natural Gas Partners 2001–1 Drilling Program
November-01 34.00% 9.00% CMC/DPI Natural Gas Partners 2000–1 Drilling Program
December-00 44.50% 19.50% DPI Natural Gas Partners 2000–1 Drilling Program
December-00 40.00% 1.00% Hillman-DPI 2000–1 Drilling Program August-00 33.33%
N/A Belden–DPI 2000–1 Drilling Program May-00 25.00% N/A M–DPI 2000–1 Drilling
Program April-00 100.00% N/A Daugherty Petroleum 1999–1 Drilling Program
December-99 75.08% 1.00% M–Daugherty Petroleum 1999–1 Drilling Program
December-99 100.00% N/A Belden-DPI 1999–1 Drilling Program November-99 25.00%
N/A Daugherty Petroleum 1998 Drilling Program G.P. December-98 50.00% N/A
Belden-DPI 1998–1 Drilling Program July-98 50.00% N/A Daugherty Petroleum 1997
Drilling Program December-97 28.47% N/A Belden-DPI 1997–1 Drilling Program
September-97 26.67% 1.00% DPI Partners 1996–III, LP December-96 34.00% N/A
Belden–DPI 1996–II Drilling Program November-96 30.00% N/A Belden–DPI 1996
Drilling Program July-96 50.00% N/A

 

 

 

 

SCHEDULE 7.16

 

PROPERTIES

None.

 

 

 

 

SCHEDULE 7.18

 

GAS IMBALANCES

 

None.

 

 

 

 

SCHEDULE 7.19

 

MARKETING CONTRACTS

 

None.

 

 

 

 

SCHEDULE 7.20

 

SWAP AGREEMENTS

See attached.

 

 

 

 

Magnum Hunter Resources - Hedge Summary

 

As of 9/26/2013 2013 2014 2015         NATURAL GAS HEDGES:               Swaps  
    Volume (mmbtu/d) 23,034 10,000 0 Price - $/mmbtu $3.62 $4,129 N/A        
Collars       Volume (mmbtu/d) 4,966 0 0 Floor Price - $/mmbtu $4.50 $0.00 N/A
High Price - $/mmbtu $5.90 $0.00 N/A         Floors Bought (Put)       Volume
(mmbtu/d) 7,534 10,000 0 Price - $/mmbtu $4.50 $4.25 N/A         Floors Sold
(Put)       Volume (mmbtu/d) — 10,000 $0.00 Price - $/mmbtu $0.00 $3.75 N/A    
    Ceilings Sold (Call)       Volume (mmbtu/d) 0 16,000 0 Price - $/mmbtu N/A
$5.05 N/A         Total Gas Volume Hedged (mmbtu/d) 35,534 20,000 0        
CRUDE HEDGES:               Floors       Volume (bbls/d) 0 0 0 Price - $/bbl N/A
N/A N/A         Swaps       Volume (bbls/d) 5,259 0 0 Price - S/bbl $92.74 N/A
N/A         Collars(1)       Volume (bbls/d) 2,704 4,663 259 Floor Price - $/bbl
$87.33 $85.00 $85.00 High Price - $/bbl $100.38 $100.90 $91.25         Ceilings
Sold (Call)       Volume (Bbls/d) 0 0 1,570 Price - S/Bbl N/A N/A $120.00      
  Total Crude Volume Hedged (bbls/d) 7,963 4,663 259   Total Volume Hedged
(boe/d) 13,885 7,996 259

 

(1) Includes three-way collars; Floors sold (put) by year are as follows:
2013-4,201 bbl/d at $62.92/bbl; 2014-4,663 bbl/d at $64.95/bbl; 2015259 bbl/d at
S70.00/bbl

 

 

 

 

SCHEDULE 9.02

 

Debt

 

Lender Description Borrower Outstanding Balance at December 1, 2013 Traditional
Bank, Inc. Office Building NPC $3,948,695.94 Wesbanco Drilling Rigs and Equip.
AHD $11,773,674.07

 

 

 

 

SCHEDULE 9.03

 

LIENS

 

In February 2010, MHP financed 80% of the purchase price for the office building
that houses its administrative offices in Lexington, Kentucky with a
$4.48 million loan from Traditional Bank, Inc. The loan bears variable interest
at 1.625% above the WSJ money rate index and is repayable in monthly
installments of $29,420 through February 2015, with the balance of approximately
$3.75 million due at maturity. Obligations under the loan are secured by a
mortgage on the property and are guaranteed by Magnum Hunter Resources
Corporation (successor by merger to NGAS Resources, Inc.). The loan had an
outstanding balance of $3,956,063 at October 31, 2013.

 

Commencing in February 2010 with the purchase of Triad Energy Corporation, Alpha
Hunter Drilling has financed the purchase price for four drilling rigs and
associated equipment with Wesbanco. As of September 30, 2013, the balance of the
note was $12,727,274.  The note is secured with the four drilling rigs and
associated equipment.

 

In November 2011, MHR financed the purchase of a Piaggio Avante II airplane with
Capital One. As of September 30, 2013, the balance of the note was $3,331,670.
The note is secured with the airplane.

 

 

 

 

SCHEDULE 9.05

 

INVESTMENTS

Eureka Hunter Pipeline, LLC

• $20.5 Million - Pipeline Construction • $15.1 Million - Cryogenic Processing
Plant • $36.8 Million – Pipeline Construction

 

 

 

 

SCHEDULE 9.16

 

PRC Williston LLC Agreement

 

Limited Liability Company Agreement of PRC Williston, LLC, dated as of
January 9, 2007, entered into by Petro Resources Corporation (predecessor to the
Borrower), in its capacity as the sole member of PRC Williston, LLC, as the same
has been or, to the extent permitted by this Credit Agreement, may be amended,
supplemented, amended and restated or otherwise modified.

 

 

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