Exhibit 10.3

 

EXECUTION COPY

 

 

 

AMENDED AND RESTATED CREDIT AGREEMENT

 

AMONG

 

BREITBURN OPERATING L.P.

AS THE BORROWER

 

AND

 

BREITBURN ENERGY PARTNERS L.P.,

AS PARENT GUARANTOR

 

WELLS FARGO BANK, NATIONAL ASSOCIATION,

AS ADMINISTRATIVE AGENT,

SWING LINE LENDER AND ISSUING LENDER

 

AND THE FINANCIAL INSTITUTIONS FROM TIME TO TIME PARTY HERETO,

AS LENDERS

 

 

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BMO CAPITAL MARKETS FINANCING, INC.,

CITIBANK, N.A. and

THE BANK OF NOVA SCOTIA

CO-DOCUMENTATION AGENTS

 

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WELLS FARGO BANK, NATIONAL ASSOCIATION

CO-LEAD ARRANGER

 

 

CREDIT SUISSE SECURITIES (USA) LLC

CO-LEAD ARRANGER

 

 

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DATED AS OF NOVEMBER 1, 2007

 

 

 

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TABLE OF CONTENTS

 

 

 

 

 

Page

 

 

 

ARTICLE I. DEFINITIONS

 

1

 

 

 

 

 

1.01

 

Certain Defined Terms

 

1

 

 

 

 

 

1.02

 

Other Interpretive Provisions

 

20

 

 

 

 

 

1.03

 

Accounting Principles

 

20

 

 

 

 

 

ARTICLE II. THE CREDIT

 

21

 

 

 

 

 

2.01

 

Amounts and Terms of the Commitments

 

21

 

 

 

 

 

2.02

 

Procedure for Borrowings

 

21

 

 

 

 

 

2.03

 

Conversion and Continuation Elections

 

22

 

 

 

 

 

2.04

 

Optional Commitment Reductions and Optional Prepayments

 

23

 

 

 

 

 

2.05

 

Borrowing Base Determinations; Mandatory Prepayments of Loans

 

23

 

 

 

 

 

2.06

 

Repayment

 

25

 

 

 

 

 

2.07

 

Fees

 

26

 

 

 

 

 

2.08

 

Computation of Fees and Interest

 

26

 

 

 

 

 

2.09

 

Payments by the Company; Borrowings Pro Rata

 

27

 

 

 

 

 

2.10

 

Issuing the Letters of Credit

 

28

 

 

 

 

 

2.11

 

Payments to the Administrative Agent; Several Obligations of the Lenders

 

31

 

 

 

 

 

2.12

 

Sharing of Payments

 

31

 

 

 

 

 

2.13

 

Swing Line Loans

 

32

 

 

 

 

 

2.14

 

Special Provisions Applicable to BEP I

 

34

 

 

 

 

 

ARTICLE III. TAXES, YIELD PROTECTION AND ILLEGALITY; REPLACEMENT OF LENDERS

 

35

 

 

 

 

 

3.01

 

Taxes

 

35

 

 

 

 

 

3.02

 

Illegality

 

37

 

 

 

 

 

3.03

 

Increased Costs and Reduction of Return

 

37

 

 

 

 

 

3.04

 

Funding Losses

 

38

 

 

 

 

 

3.05

 

Inability to Determine Rates

 

39

 

 

 

 

 

3.06

 

Certificates of Lenders

 

39

 

 

 

 

 

3.07

 

Mitigation Obligations; Replacement of Lenders

 

39

 

 

 

 

 

3.08

 

Survival

 

40

 

 

 

 

 

ARTICLE IV. SECURITY

 

40

 

 

 

 

 

4.01

 

The Security

 

40

 

 

 

 

 

4.02

 

Agreement to Deliver Security Documents

 

40

 

 

 

 

 

4.03

 

Perfection and Protection of Security Interests and Liens

 

41

 

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4.04

 

Offset

 

41

 

 

 

 

 

4.05

 

Subsidiary Guaranty and Security Agreement

 

41

 

 

 

 

 

ARTICLE V. CONDITIONS PRECEDENT

 

42

 

 

 

 

 

5.01

 

Conditions of Initial Credit Extensions

 

42

 

 

 

 

 

5.02

 

Conditions to Extensions of Credit

 

46

 

 

 

 

 

ARTICLE VI. REPRESENTATIONS AND WARRANTIES

 

46

 

 

 

 

 

6.01

 

Organization, Existence and Power

 

46

 

 

 

 

 

6.02

 

Corporate Authorization; No Contravention

 

47

 

 

 

 

 

6.03

 

Governmental Authorization

 

47

 

 

 

 

 

6.04

 

Binding Effect

 

47

 

 

 

 

 

6.05

 

Litigation

 

47

 

 

 

 

 

6.06

 

No Default

 

47

 

 

 

 

 

6.07

 

ERISA Compliance

 

48

 

 

 

 

 

6.08

 

Margin Regulations

 

48

 

 

 

 

 

6.09

 

Title to Properties

 

48

 

 

 

 

 

6.10

 

Oil and Gas Reserves

 

49

 

 

 

 

 

6.11

 

Initial Reserve Report

 

49

 

 

 

 

 

6.12

 

Gas Imbalances

 

49

 

 

 

 

 

6.13

 

Taxes

 

49

 

 

 

 

 

6.14

 

Financial Condition

 

50

 

 

 

 

 

6.15

 

Environmental Matters

 

50

 

 

 

 

 

6.16

 

Regulated Entities

 

51

 

 

 

 

 

6.17

 

No Burdensome Restrictions

 

51

 

 

 

 

 

6.18

 

Copyrights, Patents, Trademarks and Licenses, Etc

 

51

 

 

 

 

 

6.19

 

Subsidiaries and Other Equity Interests

 

51

 

 

 

 

 

6.20

 

Insurance

 

52

 

 

 

 

 

6.21

 

Derivative Contracts

 

52

 

 

 

 

 

6.22

 

Full Disclosure

 

52

 

 

 

 

 

6.23

 

Solvency

 

52

 

 

 

 

 

ARTICLE VII. AFFIRMATIVE COVENANTS

 

52

 

 

 

 

 

7.01

 

Financial Statements

 

52

 

 

 

 

 

7.02

 

Certificates; Other Production and Reserve Information

 

53

 

 

 

 

 

7.03

 

Notices

 

55

 

 

 

 

 

7.04

 

Preservation of Company Existence, Etc.

 

56

 

 

 

 

 

7.05

 

Maintenance of Property

 

56

 

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7.06

 

Title Information

 

57

 

 

 

 

 

7.07

 

Additional Collateral

 

58

 

 

 

 

 

7.08

 

Insurance

 

58

 

 

 

 

 

7.09

 

Payment of Obligations

 

58

 

 

 

 

 

7.10

 

Compliance with Laws

 

58

 

 

 

 

 

7.11

 

Compliance with ERISA

 

58

 

 

 

 

 

7.12

 

Inspection of Property and Books and Records

 

59

 

 

 

 

 

7.13

 

Environmental Laws

 

59

 

 

 

 

 

7.14

 

Pledge of Equity in New Subsidiary

 

60

 

 

 

 

 

7.15

 

New Subsidiary Guarantors

 

60

 

 

 

 

 

7.16

 

Use of Proceeds

 

60

 

 

 

 

 

7.17

 

Operating Accounts

 

60

 

 

 

 

 

7.18

 

Phase I Reports

 

60

 

 

 

 

 

7.19

 

Further Assurances

 

60

 

 

 

 

 

ARTICLE VIII. NEGATIVE COVENANTS

 

61

 

 

 

 

 

8.01

 

Limitation on Liens

 

61

 

 

 

 

 

8.02

 

Disposition of Assets

 

62

 

 

 

 

 

8.03

 

Consolidations and Mergers

 

62

 

 

 

 

 

8.04

 

Loans and Investments

 

63

 

 

 

 

 

8.05

 

Limitation on Indebtedness

 

63

 

 

 

 

 

8.06

 

Transactions with Affiliates

 

64

 

 

 

 

 

8.07

 

Margin Stock

 

64

 

 

 

 

 

8.08

 

Contingent Obligations

 

64

 

 

 

 

 

8.09

 

Restricted Payments

 

65

 

 

 

 

 

8.10

 

Derivative Contracts

 

65

 

 

 

 

 

8.11

 

Change in Business; Amendments to Organization Documents and Certain Acquisition
Agreements;

 

 

Corporate Structure; Tax Status

 

66

 

 

 

 

 

8.12

 

Accounting Changes

 

66

 

 

 

 

 

8.13

 

ERISA Compliance

 

66

 

 

 

 

 

8.14

 

Interest Coverage Ratio

 

67

 

 

 

 

 

8.15

 

Leverage Ratio

 

68

 

 

 

 

 

8.16

 

Current Ratio

 

68

 

 

 

 

 

8.17

 

Negative Pledge

 

68

 

 

 

 

 

8.18

 

Unrestricted Entities

 

68

 

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ARTICLE IX. EVENTS OF DEFAULT

 

68

 

 

 

9.01

 

Event of Default

 

68

 

 

 

 

 

9.02

 

Remedies

 

70

 

 

 

 

 

9.03

 

Rights Not Exclusive

 

71

 

 

 

 

 

ARTICLE X. ADMINISTRATIVE AGENT

 

71

 

 

 

 

 

10.01

 

Appointment and Authority

 

71

 

 

 

 

 

10.02

 

Rights as a Lender

 

71

 

 

 

 

 

10.03

 

Exculpatory Provisions

 

71

 

 

 

 

 

10.04

 

Reliance by Administrative Agent

 

72

 

 

 

 

 

10.05

 

Delegation of Duties

 

72

 

 

 

 

 

10.06

 

Resignation of Administrative Agent

 

73

 

 

 

 

 

10.07

 

Non-Reliance on Administrative Agent and Other Lenders

 

73

 

 

 

 

 

10.08

 

Administrative Agent May File Proofs of Claim

 

73

 

 

 

 

 

10.09

 

Authority of Administrative Agent to Release Collateral and Liens

 

74

 

 

 

 

 

10.10

 

The Arrangers and other Agents

 

74

 

 

 

 

 

ARTICLE XI. MISCELLANEOUS

 

74

 

 

 

 

 

11.01

 

Amendments and Waivers

 

74

 

 

 

 

 

11.02

 

Notices; Effectiveness; Electronic Communication

 

76

 

 

 

 

 

11.03

 

No Waiver; Cumulative Remedies

 

77

 

 

 

 

 

11.04

 

Costs and Expenses; Indemnity

 

77

 

 

 

 

 

11.05

 

Payments Set Aside

 

78

 

 

 

 

 

11.06

 

Successors and Assigns

 

79

 

 

 

 

 

11.07

 

Confidentiality

 

81

 

 

 

 

 

11.08

 

Right of Set-off

 

82

 

 

 

 

 

11.09

 

Interest

 

82

 

 

 

 

 

11.10

 

Indemnity and Subrogation

 

83

 

 

 

 

 

11.11

 

Collateral Matters; Derivative Contracts; Termination

 

83

 

 

 

 

 

11.12

 

Renewal and Continuation of Existing Indebtedness

 

84

 

 

 

 

 

11.13

 

USA Patriot Act Notice

 

85

 

 

 

 

 

11.14

 

Automatic Debits of Fees

 

85

 

 

 

 

 

11.15

 

Counterparts

 

85

 

 

 

 

 

11.16

 

Severability

 

85

 

 

 

 

 

11.17

 

No Third Parties Benefited

 

85

 

 

 

 

 

11.18

 

Governing Law, Jurisdiction and Waiver of Jury Trial

 

85

 

 

 

 

 

11.19

 

NO ORAL AGREEMENTS

 

86

 

iv

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SCHEDULES

 

 

 

 

 

 

 

Schedule 2.01

 

Commitments

 

Schedule 4.01

 

Security Documents

 

Schedule 6.07

 

ERISA Compliance

 

Schedule 6.09

 

Title to Properties

 

Schedule 6.13

 

Tax Matters

 

Schedule 6.15

 

Environmental Matters

 

Schedule 6.19

 

Subsidiaries

 

Schedule 6.21

 

Derivative Contracts

 

Schedule 8.05

 

Indebtedness

 

Schedule 8.08

 

Contingent Obligations

 

Schedule 11.02

 

Lending Offices; Addresses for Notices

 

 

 

 

 

EXHIBITS

 

 

 

 

 

 

 

Exhibit A-1

 

Form of Notice of Revolving Credit Borrowing

 

Exhibit A-2

 

Form of Notice of Swing Line Borrowing

 

Exhibit B

 

Form of Notice of Conversion/Continuation

 

Exhibit C

 

Form of Compliance Certificate

 

Exhibit D

 

Form of Assignment and Assumption Agreement

 

Exhibit E

 

Form of Note

 

Exhibit F

 

Form of Pricing Grid Certificate

 

Exhibit G-1

 

Form of Continuing Guaranty Agreement (Parent)

 

Exhibit G-2

 

Form of Continuing Guaranty Agreement (General Partner)

 

Exhibit G-3

 

Form of Continuing Guaranty Agreement (Subsidiaries)

 

Exhibit H

 

Form of Security Agreement

 

 

v

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AMENDED AND RESTATED CREDIT AGREEMENT

 

THIS AMENDED AND RESTATED CREDIT AGREEMENT is dated as of November 1, 2007,
among BREITBURN OPERATING L.P., a Delaware limited partnership (the “Company”),
BREITBURN ENERGY PARTNERS, L.P., a Delaware limited partnership (“Parent”), each
of the financial institutions from time to time party hereto (individually, a
“Lender” and collectively, the “Lenders”), and WELLS FARGO BANK, NATIONAL
ASSOCIATION, as administrative agent for the Lenders (in such capacity, together
with its successors in such capacity, the “Administrative Agent”), , as Swing
Line Lender (in such capacity, “Swing Line Lender”), and as Issuing Lender (in
such capacity, “Issuing Lender”).

 

RECITALS

 

A.            The Company, Parent, certain Subsidiaries of the Company, the
Administrative Agent and other lenders and agents are parties to that certain
Credit Agreement dated as of October 10, 2006 as amended by the First Amendment
dated as of May 18, 2007 and the Second Amendment dated as of September 6, 2007
(the “Existing Credit Agreement”);

 

B.            The parties desire to amend and restate the Existing Credit
Agreement in its entirety as set forth herein, with such amendment and
restatement to be effective as of the Effective Date; and

 

C.            The amendment and restatement of the Existing Credit Agreement is
not intended by the parties hereto to constitute a novation, or discharge or a
satisfaction of Indebtedness outstanding under the Existing Credit Agreement,
which Indebtedness shall remain outstanding hereunder pursuant to the terms and
conditions of this Agreement;

 

D.            NOW THEREFORE, in consideration of the foregoing recitals, of the
representations, warranties, covenants and agreements contained herein, and
other good and valuable consideration, the receipt and adequacy of which are
hereby acknowledged, the parties hereto agree that the Existing Credit Agreement
is amended and restated to read in its entirety as follows:

 

ARTICLE I.

DEFINITIONS

 

1.01        Certain Defined Terms. The following terms have the following
meanings:

 

“Acquisition” means any transaction or series of related transactions for the
purpose of or resulting, directly or indirectly, in (a) the acquisition of all
or substantially all of the assets of a Person, or of any business unit or
division of a Person, (b) the acquisition of in excess of 50% of the capital
stock of a corporation (or similar entity), which stock has ordinary voting
power for the election of the members of such entity’s board of directors or
persons exercising similar functions (other than stock having such power only by
reason of the happening of a contingency), or the acquisition of in excess of
50% of the partnership interests or equity of any Person not a corporation which
acquisition gives the acquiring Person the power to direct or cause the
direction of the management and policies of such Person, or (c) a merger or
consolidation or any other combination with another Person (other than a Person
that is a Subsidiary) provided that the Company or a Subsidiary of the Company
is the surviving entity.

 

“Administrative Agent” has the meaning specified in the introductory clause
hereto.

 

 

--------------------------------------------------------------------------------

 

“Administrative Agent’s Payment Office” means the address for payments as the
Administrative Agent may from time to time specify.

 

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

 

“Affiliate” means, as to any Person, any other Person which, directly or
indirectly, is in control of, is controlled by, or is under common control with,
such Person. A Person shall be deemed to control another Person if the
controlling Person possesses the power to direct or cause the direction of the
management and policies of the other Person, whether through the ownership of
voting securities, by contract, or otherwise.

 

“Aggregate Maximum Credit Amount” means the amount of $1,500,000,000.00.

 

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

 

“Applicable Margin” means, with respect to Base Rate Loans and LIBOR Loans, the
respective margins therefor as determined under the Pricing Grid.

 

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

 

“Assignment and Assumption” means an assignment and assumption entered into by a
Lender and an Eligible Assignee (with the consent of any party whose consent is
required by Section 11.06), and accepted by the Administrative Agent, in
substantially the form of Exhibit D or any other form approved by the
Administrative Agent.

 

“Availability Period” has the meaning specified in Section 2.01(c).

 

“Available Borrowing Base” means, at the particular time in question, the
Borrowing Base then in effect minus the Effective Amount at such time.

 

“Available Cash” means, with respect to Parent, “Available Cash” as defined in
Parent’s partnership agreement on the Effective Date, as such definition may be
amended in a manner reasonably acceptable to the Administrative Agent.

 

“Bankruptcy Code” means the Federal Bankruptcy Reform Act of 1978 (11 U.S.C.
§101, et seq.), as amended, and regulations promulgated thereunder.

 

“Base Rate” means, for any day, the fluctuating rate of interest in effect for
such day which rate per annum shall be equal to the higher of (a) the rate of
interest as publicly announced from time to time by Administrative Agent as its
“reference rate,” and (b) one-half of one percent (0.50%) per annum above the
Federal Funds Rate in effect from time to time. (The “reference rate” is a rate
set by Administrative Agent based upon various factors including costs and
desired return, general economic conditions and other factors, and is used as a
reference point for pricing some loans, which may be priced at, above, or below
such announced rate.) Any change in the reference rate announced by
Administrative Agent shall take effect at the opening of business on the day
specified in the public announcement of such change.

 

2

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“Base Rate Loan” means a Loan that bears interest based at the Base Rate plus
the Applicable Margin.

 

“BEP I” means BreitBurn Energy Partners I, L.P., a Texas limited partnership.

 

“BEP I Default” has the meaning set forth in Section 2.14(a).

 

“Borrowing” means a Revolving Credit Borrowing or a Swing Line Borrowing, as the
context may require.

 

“Borrowing Base” means at the particular time in question, the amount provided
for in Section 2.05 provided, however, in no event shall the Borrowing Base ever
exceed the Aggregate Maximum Credit Amount.

 

“Borrowing Base Deficiency” means at any time, the Effective Amount exceeds the
Borrowing Base then in effect.

 

“Borrowing Base Period” means the period from the Effective Date to the initial
Scheduled Borrowing Base Determination Date, and thereafter, each six-month
period between Scheduled Borrowing Base Determination Dates.

 

“Borrowing Date” means any date on which a Borrowing occurs under Section 2.02.

 

“Business Day” means any day other than a Saturday, Sunday or other day on which
commercial banks in Houston, Texas, New York, New York, or San Francisco,
California are authorized or required by law to close and, if the applicable
Business Day relates to any LIBOR Loan, means such a day on which dealings are
carried on in the applicable offshore dollar interbank market.

 

“Capital Lease” means, when used with respect to any Person, any lease in
respect of which the obligations of such Person constitute Capitalized Lease
Obligations.

 

“Capitalized Lease Obligations” means, when used with respect to any Person,
without duplication, all obligations of such Person to pay rent or other amounts
under any lease of (or other arrangement conveying the right to use) real or
personal property, or a combination thereof, which obligations shall have been
or should be, in accordance with GAAP, capitalized on the books of such Person.

 

“Cash Equivalents” means: (a) securities issued or fully guaranteed or insured
by the United States Government or any agency thereof and backed by the full
faith and credit of the United States and having maturities of not more than
twelve (12) months from the date of acquisition; (b) certificates of deposit,
time deposits, eurodollar time deposits, or bankers’ acceptances having in each
case a tenor of not more than twelve (12) months from the date of acquisition
issued by, and demand deposits with, any U.S. commercial bank or any branch or
agency of a non-U.S. commercial bank licensed to conduct business in the U.S.
having combined capital and surplus of not less than $500,000,000, whose long
term securities are rated at least A (or then equivalent grade) by S&P and A2
(or then equivalent grade) by Moody’s at the time of acquisition; (c) commercial
paper of an issuer rated at least A-1 by S&P or P-1 by Moody’s at the time of
acquisition, and in either case having a tenor of not more than twelve (12)
months; (d) debt securities which are registered under the Securities Act of
1933, as amended (the “Securities Act”) (and not “restricted securities” in the
Company’s hands as defined in Rule 144 under the Securities Act), or adjustable
rate preferred stock traded on a national securities exchange and issued by a
corporation duly incorporated under the laws of a state of the United States, or

 

3

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issued by any state, county or municipality located in the United States of
America, provided, however, that such debt securities are rated A2 by Moody’s
and A or better by S&P at the time of acquisition, and such debt securities have
a maturity not in excess of twelve (12) months from the date of creation
thereof; (e) repurchase agreements with a term of not more than seven (7) days
for underlying securities of the types described in clauses (a) and (b) above;
and (f) money market mutual or similar funds having assets in excess of
$100,000,000.

 

“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 Company or any of its Subsidiaries
having a fair market value in excess of $10,000,000.

 

“Change in Law” means the occurrence, after the date of this Agreement, of any
of the following: (a) the adoption or taking effect of any law, rule, regulation
or treaty, (b) any change in any law, rule, regulation or treaty or in the
administration, interpretation or application thereof by any Governmental
Authority or (c) the making or issuance of any request, guideline or directive
(whether or not having the force of law) by any Governmental Authority.

 

“Change of Control” means (a) Provident Energy Trust shall cease to own,
directly or indirectly, the majority of the issued and outstanding voting shares
of BreitBurn GP LLC, in each case on a fully diluted basis assuming the
conversion and exercise of all outstanding convertible securities (whether or
not such securities are then currently convertible or exercisable); (b) General
Partner shall cease to own, directly or indirectly, all of the general partner
interest (including without limitation, all outstanding securities convertible
to general partner interests) of the Company; or BreitBurn GP LLC shall cease to
own, directly or indirectly, all of the general partner interest (including
without limitation, all outstanding securities convertible to general partner
interests) of Parent; (c) Parent shall cease to own, directly or indirectly, all
of the limited partnership interest (including without limitation, all
outstanding Equity convertible to limited partner interests) of the Company, or
shall cease to own, directly or indirectly, all of the general partnership
interest (including without limitation, all outstanding Equity convertible to
general partner interests) of the Company; (d) a sale of all or substantially
all of the assets of the Loan Parties taken as a whole to any Person or group of
Persons; (e) the liquidation or dissolution of Parent or the Company; or (f) the
first day on which a majority of the Board of Directors of either General
Partner or BreitBurn GP LLC are not Continuing Directors. “Continuing Directors”
means any member of the board of directors (or managers, in the case of a
limited liability company) of General Partner or BreitBurn GP LLC, as
applicable, who (A) is a member of such board of directors or managers as of the
date of this Agreement or (B) was nominated for election or elected to such
board of directors or managers with the affirmative vote of two-thirds of the
Continuing Directors who were members of such board of directors or managers at
the time of such nomination or election (not including as board nominees any
directors which the board is obligated to nominate pursuant to shareholders’
agreements, voting trust arrangements or similar arrangements).

 

“Code” means the Internal Revenue Code of 1986, as amended, and final and
temporary Treasury regulations promulgated thereunder.

 

“Collateral” means all property of any kind which is subject to a Lien in favor
of Administrative Agent or which under the terms of any Security Document is
purported to be subject to such Lien.

 

“Commitment” means, as to each Lender, such Lender’s obligation to make
Revolving Credit Loans and to participate in Letters of Credit and Swing Line
Loans up to such Lender’s Pro Rata Share of the lesser of (a) the then-effective
Borrowing Base or (b) the Aggregate Maximum Credit

 

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Amount, as such commitment may be terminated and/or reduced from time to time in
accordance with the provisions hereof.

 

“Commitment Fee” means the variable fee as determined by the Pricing Grid
payable pursuant to Section 2.07(a).

 

“Company” has the meaning specified in the introductory paragraph hereto.

 

“Compliance Certificate” means a certificate substantially in the form of
Exhibit C.

 

“Consolidated Interest Expense” means, with respect to the Loan Parties, for any
fiscal period, the aggregate amount of all costs, fees and expenses paid by the
Loan Parties in such fiscal period which are classified as interest expense on
the consolidated financial statements of the Loan Parties, all as determined in
conformity with GAAP.

 

“Consolidated Net Income” means, for any period, the net income (or net loss) of
Parent and its Consolidated Subsidiaries, on a consolidated basis, for such
period determined in accordance with GAAP; provided that (a) the effect, if any,
of non-cash gains, losses or adjustments under FASB Statement No. 133 as a
result of changes in the fair market value of derivatives shall be excluded from
the calculation of net income (or net loss); and (b) there shall be excluded the
net income of any Subsidiary of Parent to the extent that the declaration or
payment of dividends or similar distributions by such Subsidiary is at the time
restricted or not permitted by the terms of any Contractual Obligation (other
than under any Loan Document) or Requirements of Law applicable to such
Subsidiary.

 

“Consolidated Subsidiaries” of Parent means all Restricted Subsidiaries and
Unrestricted Entities that are consolidated in accordance with GAAP.

 

“Contingent Obligation” means, as to any Person without duplication, any direct
or indirect liability of that Person with or without recourse, (a) with respect
to any Indebtedness, dividend, letter of credit or other similar obligation (the
“primary obligations”) of another Person (the “primary obligor”), including any
obligation of that Person (i) to purchase, repurchase or otherwise acquire such
primary obligations or any security therefor, (ii) to advance or provide funds
for the payment or discharge of any such primary obligation, or to maintain
working capital or equity capital of the primary obligor or otherwise to
maintain the net worth or solvency or any balance sheet item, level of income or
financial condition of the primary obligor, (iii) to purchase property,
securities or services primarily for the purpose of assuring the owner of any
such primary obligation of the ability of the primary obligor to make payment of
such primary obligation, or (iv) otherwise to assure or hold harmless the holder
of any such primary obligation against loss in respect thereof (each, a
“Guaranty Obligation”); (b) with respect to any Surety Instrument issued for the
account of that Person or as to which that Person is otherwise liable for
reimbursement of drawings or payments; (c) to purchase any materials, supplies
or other property from, or to obtain the services of, another Person, other than
in the ordinary course of business, if the relevant contract or other related
document or obligation requires that payment for such materials, supplies or
other property, or for such services, shall be made regardless of whether
delivery of such materials, supplies or other property is ever made or tendered,
or such services are ever performed or tendered, or (d) in respect of any
Derivative Contract. The amount of any Contingent Obligation shall, in the case
of Guaranty Obligations, be deemed equal to the lesser of (a) the stated maximum
amount, if any, of such Contingent Obligation and (b) the maximum stated or
determinable amount of the primary obligation in respect of which such Guaranty
Obligation is made or, if not stated or if indeterminable, the maximum
reasonably anticipated liability in respect thereof, and in the case of other
Contingent Obligations, shall be equal to the lesser of (a) the stated maximum
amount, if any, of such Contingent Obligation and (b) the maximum reasonably
anticipated liability in respect thereof.

 

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“Continuing Directors” has the meaning specified in the definition of “Change of
Control.”

 

“Contractual Obligation” means, as to any Person, any provision of any security
issued by such Person or of any agreement, undertaking, contract, indenture,
mortgage, deed of trust or other instrument, document or agreement to which such
Person is a party or by which it or any of its property is bound.

 

“Conversion/Continuation Date” means any date on which, under Section 2.03, the
Company (a) converts Base Rate Loans to LIBOR Loans, or (b) continues as LIBOR
Loans having Interest Periods expiring on such date as LIBOR Loans, with a new
Interest Period.

 

“Credit Extension” means and includes the making of any Loans or issuance of any
Letter of Credit (including the continuation of any existing Letter of Credit)
hereunder.

 

“Current Assets” means, at any time, the current assets of the Loan Parties at
such time, plus, the Available Borrowing Base at such time, less, for purposes
of this definition, any non-cash gains for any Derivative Contract resulting
from the requirements of FAS 133 at such time.

 

“Current Liabilities” means, at any time, the current liabilities of the Loan
Parties at such time, less the sum of (a) current maturities of the Company’s
Obligations to the extent such payments are not past due and (b) non-cash losses
or charges on any Derivative Contract resulting from the requirements of FAS 133
at such time.

 

“Default” means any event or circumstance which, with the giving of notice, the
lapse of time, or both, would (if not cured or otherwise remedied during such
time) constitute an Event of Default.

 

“Default Rate” has the meaning specified in Section 2.06(c)(iii).

 

“Derivative Contract” means all futures contracts, forward contracts, swap, cap
or collar contracts, option contracts, hedging contracts or other derivative
contracts or similar agreements covering oil and gas commodities or prices or
financial, monetary or interest rate instruments.

 

“Dispositions” has the meaning specified in Section 8.02.

 

“Dollars”, “dollars” and “$” each mean lawful money of the United States.

 

“Domestic Subsidiary” means any Subsidiary organized under the laws of the
United States or any political subdivision thereof.

 

“EBITDAX” means, for any period, the sum of Consolidated Net Income for such
period (a) plus, without duplication, the following expenses or charges to the
extent deducted in the determination of Consolidated Net Income in such period:
exploration expense, interest expense, depletion, depreciation, amortization,
unrealized loss on Derivative Contracts, non-cash share-based payments under
FASB Statement No. 123R, loss on sale of assets, cumulative effect of accounting
changes, income taxes, and cash distributions actually received from
Unrestricted Entities and from BEP I and from any entity other than a Restricted
Subsidiary; (b) minus, without duplication, the following gains or credits to
the extent added in the determination of Consolidated Net Income in such period:
unrealized gain on Derivative Contracts, gain on sale of assets, cumulative
effect of accounting changes, income from Unrestricted Entities, income from BEP
I and income from any other entity other than a Restricted Subsidiary.

 

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All calculations of EBITDAX, for any applicable period during which a permitted
acquisition (including the Quicksilver Acquisition) or Disposition is
consummated, shall be determined on a pro forma basis (such calculation to be
acceptable to, and approved by, Administrative Agent) as if such acquisition or
Disposition was consummated on the first day of such applicable period.

 

“Effective Amount” means on any date, the aggregate outstanding principal amount
of all Loans thereof after giving effect to any prepayments or repayments of
Loans occurring on such date plus the LC Obligation.

 

“Effective Date” means the date on which all conditions precedent set forth in
Sections 5.01 and 5.02 are satisfied or waived in accordance with Section 11.01.

 

“Eligible Assignee” means (a) a Lender, (b) an Affiliate of a Lender, (c) an
Approved Fund, and (d) any other Person (other than a natural person) approved
by (i) the Administrative Agent, (ii) in the case of any assignment of a
Commitment, the Issuing Lender and the Swing Line Lender, and (iii) unless an
Event of Default has occurred and is continuing, the Company (each such approval
not to be unreasonably withheld or delayed); provided that notwithstanding the
foregoing, “Eligible Assignee” shall not include the Company or any of the
Company’s Affiliates or Subsidiaries.

 

“Environmental Claims” means all material claims by any Governmental Authority
or other Person alleging potential liability or responsibility for violation of
any Environmental Law, or for release or injury to the environment.

 

“Environmental Laws” means all material federal, state or local laws, statutes,
common law duties, rules, regulations, ordinances and codes, together with all
material administrative orders, requests, licenses, authorizations and permits
of, and agreements with, any Governmental Authorities, in each case having the
force and effect of law and relating to environmental, health, and safety
matters.

 

“Environmental Liability” means any liability, contingent or otherwise
(including any liability for damages, costs of environmental remediation, fines,
penalties or indemnities), of the Company, any other Loan Party or any of their
respective Subsidiaries directly or indirectly resulting from or based upon (a)
violation of any Environmental Law, (b) the generation, use, handling,
transportation, storage, treatment or disposal of any Hazardous Materials, (c)
exposure to any Hazardous Materials, (d) the Release or threatened Release of
any Hazardous Materials into the environment or (e) any contract, agreement or
other consensual arrangement pursuant to which liability is assumed or imposed
with respect to any of the foregoing.

 

“Equity” means all shares, options, warrants, general or limited partnership
interests, participations or other equivalents (regardless of how designated) of
or in a corporation, limited liability company, partnership or equivalent entity
whether voting or nonvoting, including, without limitation, common stock,
preferred stock, or any other “equity security” (as such term is defined in Rule
3a11-1 of the General Rules and Regulations promulgated by the Securities and
Exchange Commission under the Securities Exchange Act of 1934, as amended).

 

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

 

“ERISA Affiliate” means any trade or business (whether or not incorporated)
under common control with the Company within the meaning of Section 414(b) or
(c) of the Code (and Sections 414(m) and (o) of the Code for purposes of
provisions relating to Section 412 of the Code).

 

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“ERISA Event” means (a) a Reportable Event with respect to a Pension Plan; (b) a
withdrawal by Loan Party or any ERISA Affiliate from a Pension Plan subject to
Section 4063 of ERISA during a plan year in which it was a substantial employer
(as defined in Section 4001(a)(2) of ERISA) or a cessation of operations which
is treated as such a withdrawal under Section 4062(e) of ERISA; (c) a complete
or partial withdrawal by the Loan Party or any ERISA Affiliate from a
Multiemployer Plan or notification that a Multiemployer Plan is in
reorganization; (d) the filing of a notice of intent to terminate (other than
pursuant to Section 4041(b) of ERISA), the treatment of a Plan amendment as a
termination under Section 4041(c) or 4041A of ERISA, or the commencement of
proceedings by the PBGC to terminate a Pension Plan or Multiemployer Plan; (e)
an event or condition which might reasonably be expected to constitute grounds
under Section 4042 of ERISA for the termination of, or the appointment of a
trustee to administer, any Pension Plan or Multiemployer Plan; or (f) the
imposition of any liability under Title IV of ERISA, other than PBGC premiums
due but not delinquent under Section 4007 of ERISA, upon the Company or any
ERISA Affiliate.

 

“Event of Default” means any of the events or circumstances specified in Section
9.01.

 

“Exchange Act” means the Securities and Exchange Act of 1934, and regulations
promulgated thereunder.

 

“Excluded Taxes” means, with respect to the Administrative Agent, any Lender,
the Issuing Lender or any other recipient of any payment to be made by or on
account of any Obligation of the Company, (a) Taxes imposed on or measured by
its overall net income (however denominated), and franchise Taxes imposed on it
(in lieu of net income Taxes), by the jurisdiction (or any political subdivision
thereof) 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 Company is located and (c) in the case of a Foreign
Lender (other than an assignee pursuant to a request by the Company under
Section 3.07(b)), any withholding Tax that is imposed on amounts payable to such
Foreign Lender at the time such Foreign Lender becomes a party hereto (or
designates a new Lending Office) or is attributable to such Foreign Lender’s
failure or inability (other than as a result of a Change in Law) to comply with
Section 3.01(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 from the Company with respect to such
withholding Tax pursuant to Section 3.01(a).

 

“Existing Credit Agreement” has the meaning specified in the recitals hereto.

 

“Existing Letters of Credit” means the Letters of Credit outstanding on the
Effective Date that were issued pursuant to the Existing Credit Agreement.

 

“FAS 133” means Statement No. 133 of the Financial Accounting Standards Board to
Derivative Contracts.

 

“Federal Funds Rate” means, for any day, the rate set forth in the weekly
statistical release designated as H.15(519), or any successor publication,
published by the Federal Reserve Bank of New York (including any such successor,
“H.15(519)”) on the preceding Business Day opposite the caption “Federal Funds
(Effective)”; or, if for any relevant day such rate is not so published on any
such preceding Business Day, the rate for such day will be the arithmetic mean
as determined by the Administrative Agent of the rates for the last transaction
in overnight Federal funds arranged prior to 9:00 a.m. (New York, New York time)
on that day by each of three leading brokers of Federal funds transactions in
New York, New York selected by the Administrative Agent.

 

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“Fee Letter” shall have the meaning specified in Section 2.07(c) hereof.

 

“Florida Crude Oil Contracts” means collectively (a) the Crude Oil Purchase
Contract – Contract Number 6340-1004 dated May 8, 2006, by and between Calumet
Florida Division of Plains Resources and Plains Marketing, L.P., amended by the
First Amendment dated January 18, 2007, and the Amended and Restated Crude Oil
Purchase Contract dated May 16, 2007 as assigned to the Company or a Wholly
Owned Subsidiary pursuant to a Deed and General Conveyance between Calumet
Florida, L.L.C. (or a wholly owned subsidiary of Calumet) (“Calumet”) and the
Company or a Wholly Owned Subsidiary dated May 18, 2007, and (b) the Crude Oil
Purchase Contract - Contract Number 6340-1003 dated February 24, 2006, by and
between Calumet Florida Division of Plains Resources and Plains Marketing, L.P.,
as amended by the First Amendment dated May 4, 2006, the Second Amendment dated
May 15, 2006, the Third Amendment dated and the Fourth Amendment dated May 15,
2007, as assigned to the Company or a Wholly Owned Subsidiary pursuant to Deed
and General Conveyance between Calumet and the Company or a Wholly Owned
Subsidiary dated May 18, 2007, provided “Florida Crude Oil Contracts” shall not
include any further amendments, extensions or modifications of such agreements.

 

“Foreign” means organized under the laws of a jurisdiction other than the United
States or a political subdivision thereof.

 

“Foreign Lender” means any Lender that is organized under the laws of a
jurisdiction other than that in which the Company is resident for Tax purposes.
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.

 

“FRB” means the Board of Governors of the Federal Reserve System, and any
Governmental Authority succeeding to any of its principal functions.

 

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

 

“GAAP” means generally accepted accounting principles set forth from time to
time in the opinions and pronouncements of the Accounting Principles Board and
the American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board (or agencies with
similar functions of comparable stature and authority within the U.S. accounting
profession), which are applicable to the circumstances as of the date of
determination.

 

“General Partner” means BreitBurn Operating GP, LLC, a Delaware limited
liability company.

 

“Governmental Authority” means any nation or government, any state or other
political subdivision thereof, any central bank (or similar monetary or
regulatory authority) thereof, any entity exercising executive, legislative,
judicial, regulatory or administrative functions of or pertaining to government,
and any corporation or other entity owned or controlled, through stock or
capital ownership or otherwise, by any of the foregoing.

 

“Guaranties” means, collectively, each Continuing Guaranty Agreement,
substantially in the form of Exhibit G-1, Exhibit G-2 or Exhibit G-3 hereto, as
applicable, executed by the Guarantor or Guarantors in favor of Administrative
Agent, as same may be amended, supplemented or otherwise modified from time to
time. “Guaranty” means, individually, any one of the Guaranties.

 

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“Guarantors” means, collectively, Parent and each Subsidiary of Parent that
executes a Guaranty pursuant to Section 7.15. “Guarantor” means, individually,
any one of the Guarantors.

 

“Guaranty Obligation” has the meaning specified in the definition of “Contingent
Obligation.”

 

“Hazardous Materials” means any substance regulated or as to which liability
might arise under any applicable Environmental Law and including, without
limitation: (a) any chemical, compound, material, product, byproduct, substance
or waste defined as or included in the definition or meaning of “hazardous
substance,” “hazardous material,” “hazardous waste,” “solid waste,” “toxic
waste,” “extremely hazardous substance,” “toxic substance,” “contaminant,”
“pollutant,” or words of similar meaning or import found in any applicable
Environmental Law; (b) petroleum hydrocarbons, petroleum products, petroleum
substances, natural gas, oil, oil and gas waste, crude oil, and any components,
fractions, or derivatives thereof; and (c) radioactive materials, asbestos
containing materials in a friable condition, polychlorinated biphenyls, or
radon.

 

“Highest Lawful Rate” means, as of a particular date, with respect to any Loan,
the maximum nonusurious interest rate that under applicable federal and Texas
law may then be contracted for, charged or received by the Lender holding such
Loan.

 

“Hydrocarbon Interests” means leasehold and other interests in or under oil, gas
and other liquid or gaseous hydrocarbon leases wherever located, mineral fee
interests, overriding royalty and royalty interests, net profit interests,
production payment interests relating to oil, gas or other liquid or gaseous
hydrocarbons wherever located including any reserved or residual interest of
whatever nature.

 

“Indebtedness” of any Person means, without duplication, (a) all indebtedness
for borrowed money; (b) all obligations issued, undertaken or assumed as the
deferred purchase price of property or services (other than trade payables
entered into in the ordinary course of business on ordinary terms); (c) all
undrawn amounts under letters of credit; (d) all non-contingent reimbursement or
payment obligations with respect to Surety Instruments; (e) all obligations
evidenced by notes, bonds, debentures or similar instruments, including
obligations so evidenced incurred in connection with the acquisition of
property, assets or businesses; (f) all indebtedness created or arising under
any conditional sale or other title retention agreement, or incurred as
financing, in either case with respect to property acquired by the Person (even
though the rights and remedies of the seller or Lender under such agreement in
the event of default are limited to repossession or sale of such property)
including, without limitation, production payments, net profit interests and
other Hydrocarbon Interests subject to repayment out of future Oil and Gas
production; (g) all obligations with respect to Capital Leases; (h) all
obligations under Derivative Contracts; (i) all indebtedness referred to in
clauses (a) through (h) above secured by (or for which the holder of such
Indebtedness has an existing right, contingent or otherwise, to be secured by)
any Lien upon or in property (including accounts and contracts rights) owned by
such Person, even though such Person has not assumed or become liable for the
payment of such Indebtedness; and (j) all Guaranty Obligations in respect of
indebtedness or obligations of others of the kinds referred to in clauses (a)
through (h) above. The Indebtedness of any Person shall include the Indebtedness
of any partnership or joint venture (other than a joint venture that is itself a
corporation or limited liability company) in which such Person is a general
partner or a joint venturer, unless such Indebtedness is expressly made
non-recourse to such Person.

 

“Indemnified Taxes” means Taxes other than Excluded Taxes.

 

“Indemnitee” has the meaning specified in Section 11.04.

 

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“Independent Auditor” has the meaning specified in Section 7.01(a).

 

“Independent Engineer” has the meaning specified in Section 6.11.

 

“Initial Reserve Report” has the meaning specified in Section 6.11.

 

“Insolvency Proceeding” means (a) any case, action or proceeding relating to
bankruptcy, reorganization, insolvency, liquidation, receivership, dissolution,
winding-up or relief of debtors, or (b) any general assignment for the benefit
of creditors, composition, marshaling of assets for creditors, or other, similar
arrangement in respect of its creditors generally or any substantial portion of
its creditors; undertaken under U.S. federal, state or foreign law, including
the Bankruptcy Code.

 

“Interest Payment Date” (a) as to any Base Rate Loan (including a Swing Line
Loan), means the last Business Day of each month prior to the Termination Date,
and (b) as to any LIBOR Loan, the last day of each Interest Period applicable to
such Loan, provided, however, that if any Interest Period for a LIBOR Loan
exceeds three months, the date that falls three months after the beginning of
such Interest Period, and the date that falls three months after each Interest
Payment Date thereafter for such Interest Period, is also an Interest Payment
Date.

 

“Interest Period” means, as to any LIBOR Loan, the period commencing on the
Borrowing Date of such Revolving Credit Loan or on the Conversion/Continuation
Date on which the Revolving Credit Loan is converted into or continued as LIBOR
Loan, and ending on the date one, two, three or six months thereafter as
selected by the Company in its Notice of Revolving Credit Borrowing or Notice of
Conversion/Continuation; provided that: (a) if any Interest Period would
otherwise end on a day that is not a Business Day, that Interest Period shall be
extended to the following Business Day unless, in the case of a LIBOR Loan, the
result of such extension would be to carry such Interest Period into another
calendar month, in which event such Interest Period shall end on the preceding
Business Day; (b) any Interest Period pertaining to a LIBOR Loan that begins on
the last Business Day of a calendar month (or on a day for which there is no
numerically corresponding day in the calendar month at the end of such Interest
Period) shall end on the last Business Day of the calendar month at the end of
such Interest Period; and (c) no Interest Period for any Revolving Credit Loan
shall extend beyond the Termination Date.

 

“Interest Rate Type” means, with respect to any Revolving Credit Loan, the
interest rate, being either the Base Rate or the LIBOR forming the basis upon
which interest is charged against such Revolving Credit Loan hereunder.

 

“IRS” means the Internal Revenue Service, and any Governmental Authority
succeeding to any of its principal functions under the Code.

 

“Issue” means with respect to any Letter of Credit, to issue or extend the
expiry of, or to renew or increase the amount of, such Letter of Credit; and the
terms “Issued,” “Issuing” and “Issuance” have corresponding meanings.

 

“Issuing Lender” has the meaning specified in the introductory clause hereto.

 

“LC Application” means an application or agreement for a standby Letter of
Credit in such form as shall be acceptable to the Issuing Lender in its sole
discretion, and duly executed by the Company pursuant to Section 2.10(b).

 

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“LC Collateral Account” means a blocked deposit account held by the
Administrative Agent.

 

“LC Obligation” means, at the time in question, the sum of the Matured LC
Obligations plus the aggregate amount available to be drawn under all Letters of
Credit then outstanding.

 

“LC Related Document” means the Letters of Credit, LC Applications and any other
document relating to any Letter of Credit including any of the Issuing Lender’s
standard form documents for Letter of Credit issuances.

 

“Lenders” has the meaning specified in the introductory clause hereto and, as
the context requires, includes the Swing Line Lender.

 

“Lender Derivative Contracts” means all Derivative Contracts (including those
listed on Schedule 6.21) made or entered into, whether directly or indirectly,
and whether as a result of assignment or transfer or otherwise, between any Loan
Party or any Subsidiary and any Lender hereunder (or under the Existing Credit
Agreement) or Affiliate of a Lender hereunder (or under the Existing Credit
Agreement), but only if made or entered into while the Lender is a Lender
hereunder (or under the Existing Credit Agreement) or an Affiliate of a Lender
hereunder (or under the Existing Credit Agreement).

 

“Lender Derivative Provider” means any Person that is a party to a Lender
Derivative Contract with any Loan Party or any Subsidiary, provided that such
Person is or was a Lender hereunder (or under the Existing Credit Agreement) or
an Affiliate of a Lender hereunder (or under the Existing Credit Agreement) at
the time it entered into such Derivative Contract.

 

“Lending Office” means, as to any Lender, the office or offices of such Lender
specified as its “Lending Office” or “Domestic Lending Office” or “Offshore
Lending Office”, as the case may be, on Schedule 11.02, or such other office or
offices as such Lender may from time to time notify the Company and the
Administrative Agent.

 

“Letter of Credit” means any stand-by letter of credit issued by the Issuing
Lender pursuant to this Agreement and upon an LC Application, and shall include
the Existing Letters of Credit.

 

“Letter of Credit Fee” means the fee specified in Section 2.07(b).

 

“Letter of Credit Sublimit” means the lesser of (x) $50,000,000 and (y) the
Available Borrowing Base.

 

“LIBOR” means a per annum rate of interest (rounded upwards, if necessary, to
the nearest 1/100th%) equal to the rate at which Administrative Agent is offered
deposits by major banks in dollars in the aggregate amount of the relevant Loans
and for a period comparable to the applicable Interest Period in the London
interbank market at approximately 11:00 a.m. (London time), two (2) Business
Days prior to the beginning of the relevant Interest Period. The determination
and calculation of the LIBOR and each component thereof by Administrative Agent
shall be conclusive and binding, absent manifest error.

 

“LIBOR Loan” means a Loan that bears interest based on LIBOR plus the Applicable
Margin.

 

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“Lien” means any security interest, mortgage, deed of trust, pledge,
hypothecation, assignment, charge or deposit arrangement, encumbrance, lien
(statutory or other) or preferential arrangement of any kind or nature
whatsoever in respect of any property (including those created by, arising under
or evidenced by any conditional sale or other title retention agreement and the
interest of a lessor under a Capital Lease), any financing lease having
substantially the same economic effect as any of the foregoing, or the filing of
any financing statement naming the owner of the asset to which such lien relates
as debtor, under the Uniform Commercial Code or any comparable law and any
contingent or other agreement to provide any of the foregoing, but not including
(a) the interest of a lessor under a lease on Oil and Gas Properties and (b) the
interest of a lessor under an Operating Lease.

 

“Loan” means an extension of credit by a Lender to the Company under Article II
in the form of a Revolving Credit Loan or a Swing Line Loan.

 

“Loan Documents” means this Agreement, the Notes, each Guaranty, the Security
Documents, each LC Application and Letter of Credit and all other documents
delivered to the Administrative Agent or any Lender in connection herewith,
including without limitation, the Fee Letter and any commitment letters.

 

“Loan Parties” means collectively the Company, the General Partner and each of
the Guarantors. “Loan Party” means individually, any of the Company or a
Guarantor.

 

“Majority Lenders” means, at any time, the Lenders holding at least fifty
percent (50%) of the sum of the Effective Amount or, if there is no Effective
Amount, the Lenders holding at least fifty percent (50%) of the sum of the
Commitments of all of the Lenders.

 

“Margin Stock” means “margin stock” as such term is defined in Regulation U or X
of the FRB.

 

“Material Adverse Effect” means (a) a material adverse change in, or a material
adverse effect upon, the operations, business, properties or financial condition
of the Loan Parties taken as a whole, or as to the Company, including without
limitation, any material adverse change in commodity prices or reserve estimates
of the Oil and Gas Properties of the Loan Parties taken as a whole; (b) a
material impairment of the ability of any Loan Party to perform its material
obligations under the Loan Documents; or (c) a material adverse effect upon the
legality, validity, binding effect or enforceability against any Loan Party of
any material Loan Document.

 

“Matured LC Obligation” means, at any time, the aggregate amount of payments
theretofore made by the Issuing Lender in respect to Letters of Credit and not
theretofore reimbursed by or on behalf of the Company at such time.

 

“Mortgaged Properties” means such Oil and Gas Properties upon which the Loan
Parties have granted the Administrative Agent for the benefit of the Lenders a
Lien pursuant to the Mortgages.

 

“Mortgages” means the mortgages from the Loan Parties, as applicable, in favor
of Administrative Agent, for the benefit of the Lenders described on Schedule
4.01 hereto, and all supplements, assignments, amendments and restatements
thereto (or any agreement in substitution therefor) as the same may be released
in whole or in part from time to time which are executed and delivered to
Administrative Agent for benefit of the Lenders pursuant to Article IV of this
Agreement.

 

“Multiemployer Plan” means a “multiemployer plan”, within the meaning of Section
4001(a)(3) of ERISA, to which a Loan Party or any ERISA Affiliate makes, is
making, or is obligated to

 

13

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make contributions or, during the preceding three calendar years, has made, or
been obligated to make, contributions.

 

“Notes” means the promissory notes, whether one or more, specified in Section
2.01, substantially in the same form as Exhibit E including any amendments,
modifications, renewals or replacements of such promissory notes.

 

“Notice of Conversion/Continuation” means a notice in substantially the form of
Exhibit B.

 

“Notice of Revolving Credit Borrowing” means a notice in substantially the form
of Exhibit A-1.

 

“Obligations” means all advances, debts, liabilities, obligations, covenants and
duties owing or to be owing, whether direct or indirect (including those
acquired by assignment), absolute or contingent, due or to become due, now
existing or hereafter arising or incurred, by the Company or any other Loan
Party: (a) to any Lender, the Issuing Lender, the Administrative Agent, or any
Indemnitee under any Loan Document; (b) to any Lender Derivative Provider under
any Lender Derivative Contract; and (c) all renewals, extensions and
rearrangements of the foregoing; in each case including interest accruing
subsequent to the filing of a petition or other proceeding under the Bankruptcy
Code or other similar proceeding,

 

“Oil and Gas” means petroleum, natural gas and other related hydrocarbons or
minerals or any of them and all other substances produced or extracted in
association therewith.

 

“Oil and Gas Liens” means Liens which arise in the ordinary course of business
under oil and gas leases, overriding royalty agreements, net profits agreements,
farm-out agreements, division orders, contracts for the sale, purchase,
exchange, transportation, gathering or processing of oil, gas or other
hydrocarbons, unitizations and pooling designations, declarations, orders and
agreements, development agreements, Operating Agreements, production sales
contracts, area of mutual interest agreements, gas balancing or deferred
production agreements, injection, repressuring and recycling agreements, salt
water or other disposal agreements, seismic or geophysical permits or
agreements, and other agreements that are customary in the oil and gas business
and are entered into by any Loan Party in the ordinary course of business,
provided in all instances that such Liens are limited to the assets that are the
subject of the relevant agreement.

 

“Oil and Gas Properties” means Hydrocarbon Interests now owned by the Loan
Parties or any Subsidiary thereof and contracts executed in connection therewith
and all tenements, hereditaments, appurtenances, and properties belonging,
affixed or incidental to such Hydrocarbon Interests, including, without
limitation, any and all property, real or personal, now owned by the Loan
Parties and situated upon or to be situated upon, and used, built for use, or
useful in connection with the operating, working or developing of such
Hydrocarbon Interests, including, without limitation, any and all petroleum
and/or natural gas wells, buildings, structures, field separators, liquid
extractors, plant compressors, pumps, pumping units, field gathering systems,
tank and tank batteries, fixtures, valves, fittings, machinery and parts,
engines, boilers, liters, apparatus, equipment, appliances, tools, implements,
cables, wires, towers, taping, tubing and rods, surface leases, rights-of-way,
easements and servitudes, and all additions, substitutions, replacements for,
fixtures and attachments to any and all of the foregoing owned directly or
indirectly by the Loan Parties or any Subsidiary thereof.

 

14

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“Operating Agreements” mean those agreements now or hereafter executed by any
Loan Party and other working interest owners of the Oil and Gas Properties in
connection with the operation of the Oil and Gas Properties.

 

“Operating Lease” means an operating lease determined in accordance with GAAP.

 

“Organization Documents” means (a) for any corporation: the articles of
incorporation, the bylaws, any certificate of determination or instrument
relating to the rights of the shareholders of such corporation, any shareholder
rights agreement, and all applicable resolutions of the board of directors (or
any committee thereof) of such corporation; (b) for any limited liability
company: the articles of organization, the regulations or operating agreement,
certificate of organization and all applicable resolutions of the members of
such company; and (c) for any limited partnership: the limited partnership
agreement and all Organization Documents for its general partner, as any of the
foregoing have been amended or supplemented from time to time.

 

“Other Taxes” means any present or future stamp or documentary taxes or any
other excise or property taxes, charges or similar levies which arise from any
payment made hereunder or from the execution, delivery or registration of, or
otherwise with respect to, this Agreement or any other Loan Documents.

 

“Parent” has the meaning specified in the introductory clause hereto.

 

“Participant” has the meaning specified in Section 11.06(d).

 

“PBGC” means the Pension Benefit Guaranty Corporation, or any Governmental
Authority succeeding to any of its principal functions under ERISA.

 

“Pension Plan” means a pension plan (as defined in Section 3(2) of ERISA)
subject to Title IV of ERISA, other than a Multiemployer Plan, which a Loan
Party or any of its Subsidiaries sponsors, maintains, or to which it makes, is
making, or is obligated to make contributions, or in the case of a multiple
employer plan (as described in Section 4064(a) of ERISA) has made contributions
at any time during the immediately preceding five (5) plan years.

 

“Permitted Liens” has the meaning specified in Section 8.01.

 

“Person” means an individual, partnership, corporation, limited liability
company, business trust, joint stock company, trust, unincorporated association,
joint venture or Governmental Authority.

 

“Phase I Report” means a report detailing the findings of an environmental site
assessment conducted by a qualified third party that satisfies the standards set
forth in the current American Standards and Testing Materials designated
protocol for Phase I Environmental Site Assessments, E1527-05, or any subsequent
edition thereof.

 

“Plan” means an employee benefit plan (as defined in Section 3(3) of ERISA)
which is subject to ERISA, other than a Multiemployer Plan, which any Loan Party
sponsors, maintains, or to which it makes, is making, or is obligated to make
contributions, or in the case of a multiple employer plan (as described in
Section 4064(a) of ERISA) has made contributions at any time during the
immediately preceding five (5) plan years.

 

15

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“Pricing Grid” means the annualized variable rates (stated in terms of basis
points (“bps”)) set forth below for the Applicable Margin, Commitment Fee and
Letter of Credit Fee, based upon the ratio of Effective Amount to the Borrowing
Base Amount (the “Borrowing Base Utilization Percentage”), as follows:

 

Effective Amount/
Borrowing Base
Amount
(Borrowing Base

 

Applicable Margin

 

 

 

 

 

Utilization
Percentage)

 

LIBOR
Rate

 

Base Rate

 

Commitment
Fee

 

Letter of Credit
Fee

 

 

 

(bps)

 

(bps)

 

(bps)

 

(bps)

 

³ 85%

 

175.00

 

75.00

 

37.50

 

175.00

 

< 85% ³ 66%

 

162.50

 

62.50

 

37.50

 

162.50

 

< 66% ³ 33%

 

137.50

 

37.50

 

30.00

 

137.50

 

< 33%

 

112.50

 

12.50

 

30.00

 

112.50

 

 

Each change in the Applicable Margin shall apply during the period commencing on
the date of such change in the Borrowing Base Utilization Percentage (as defined
above) and ending on the date immediately preceding the effective date of the
next such change in the Borrowing Base Utilization Percentage, provided,
however, that if at any time the Company fails to deliver a Reserve Report
pursuant to Section 7.02, then until such time as a Reserve Report is delivered
the “Applicable Margin” means the rate per annum set forth on the grid when the
Borrowing Base Utilization Percentage is at its highest level.

 

“Pricing Grid Certificate” means a Pricing Grid Certificate substantially in the
form of Exhibit F hereto.

 

“Principal Business” means the business of (a) the exploration for, and
development, acquisition, production, processing and upstream marketing and
transportation of Oil and Gas; and (b) the business of providing services in
connection with the production of Oil and Gas.

 

“Property” means any interest in any kind of property or asset, whether real,
personal or mixed, tangible or intangible.

 

“Pro Rata Share” means, as to any Lender at any time, the percentage set forth
opposite its name on Schedule 2.01 hereto, as modified by any Assignment and
Assumption.

 

“Quarterly Status Report” for a fiscal quarter means a status report prepared
quarterly by the Company in form, scope and content acceptable to the
Administrative Agent, setting forth as of the last day of each month during such
quarter (a) detailed production from the Oil and Gas Properties, the volumes of
Oil and Gas produced and saved, the volumes of Oil and Gas sold, gross revenue,
net income, related leasehold operating expenses, severance taxes, other taxes,
capital costs and any production imbalances incurred during such period, (b)
information concerning any Derivative Contracts entered into by the Company or
its Subsidiaries, and (c) such additional information with respect to any of the
Oil and Gas Properties as may be reasonably requested by Administrative Agent.

 

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“Quicksilver” means Quicksilver Resources Inc., a Delaware corporation.

 

“Quicksilver Acquisition” means the acquisition by the Company of (i) the
Quicksilver Interests (as defined in the Quicksilver Acquisition Agreement) and
(ii) certain other Oil and Gas Properties and other assets that were owned
directly by Quicksilver pursuant to the Quicksilver Acquisition Documents.

 

“Quicksilver Acquisition Agreement” means the Contribution Agreement, dated as
of September 11, 2007, between Quicksilver and the Company, together with such
amendments as are acceptable to the Administrative Agent and the Required
Lenders.

 

“Quicksilver Acquisition Documents” means (a) the Quicksilver Acquisition
Agreement and (b) all bills of sale, assignments, agreements, instruments and
documents executed and delivered in connection therewith.

 

“Quicksilver Acquisition Properties” means the Oil and Gas Properties of the
Quicksilver Acquired Companies and their Subsidiaries and the Oil and Gas
Properties acquired by the Company from Quicksilver pursuant to the Quicksilver
Acquisition Documents.

 

“Quicksilver Material Adverse Effect” means a Material Adverse Effect, as such
term is defined the Quicksilver Acquisition Agreement.

 

“Quicksilver Target Equity Interests” means (a) 100% of the issued and
outstanding capital stock of (i) Terra Energy Company LLC, a Michigan limited
liability company, (ii) GTG Pipeline LLC, a Virginia limited liability company
and (iii) Mercury Michigan Company, LLC, a Michigan limited liability company,
(b) an undivided 50% of the limited liability of Beaver Creek Pipeline, L.L.C.,
a Michigan limited liability company, and (c) a 5.5385% limited partnership
interest of Wilderness – Chester Gas Processing LP, a Michigan limited
partnership.

 

“Regulation U” and “Regulation X” means Regulation U and Regulation X,
respectively, of the FRB from time to time in effect and shall include any
successor or other regulations or official interpretations of the FRB relating
to the subject matter addressed therein.

 

“Related Parties” means, with respect to any Person, such Person’s Affiliates
and the partners, directors, officers, employees, agents and advisors of such
Person and of such Person’s Affiliates.

 

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

 

“Remedial Work” has the meaning assigned to such term in Section 7.13.

 

“Reportable Event” means, any of the events set forth in Section 4043(b) of
ERISA or the regulations thereunder, other than any such event for which the
30-day notice requirement under ERISA has been waived in regulations issued by
the PBGC.

 

“Required Lenders” means, at any time, Lenders holding at least sixty-six and
two-thirds percent (662/3%) of the sum of the Effective Amount or, if there is
no Effective Amount, Lenders holding at least sixty-six and two-thirds percent
(662/3%) of the sum of the Commitments of all of the Lenders.

 

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“Requirement of Law” means, as to any Person, any law (statutory or common),
treaty, rule or regulation or determination of an arbitrator or of a
Governmental Authority, in each case applicable to or binding upon the Person or
any of its property or to which the Person or any of its property is subject.

 

“Reserve Report” means a report, in form, scope and content acceptable to the
Lenders, covering proved developed and proved undeveloped Oil and Gas reserves
attributable to the Oil and Gas Properties owned by the Company and its
Subsidiaries and setting forth with respect thereto, (a) the total quantity of
proved developed and proved undeveloped reserves (separately classified as to
producing, shut-in, behind pipe, and undeveloped), (b) the estimated future net
revenues and cumulative estimated future net revenues, (c) the present
discounted value of future net revenues, and (d) such other information and data
with respect to such Oil and Gas Properties as the Administrative Agent may
reasonably request.

 

“Responsible Officer” of a Person means any chief executive officer or co-chief
executive officer, president, vice president with responsibility for financial
matters, chief financial officer or treasurer of (1) such Person, if such Person
is a corporation or limited liability company, or (2) the general partner of
such Person, if such Person is a partnership.

 

“Restricted Subsidiary” means all subsidiaries of the Company other than
Unrestricted Entities.

 

“Revolving Credit Borrowing” a borrowing hereunder consisting of Revolving
Credit Loans of the same Interest Rate Type made to the Company on the same day
by the Lenders under Article II, and, other than in the case of Base Rate Loans,
having the same Interest Period.

 

“Revolving Credit Loan” has the meaning specified in Section 2.01.

 

“Scheduled Borrowing Base Determination” means a redetermination of the
Borrowing Base in accordance with Section 2.05(a) on each Scheduled Borrowing
Base Determination Date.

 

“Scheduled Borrowing Base Determination Date” means April 1, 2008 and thereafter
October 1 and April 1 of each calendar year.

 

“SEC” means the Securities and Exchange Commission, or any Governmental
Authority succeeding to any of its principal functions.

 

“Security Agreements” means collectively, each agreement in substantially the
form of Exhibit H executed by a Loan Party in favor of Administrative Agent for
the benefit of the Lenders.

 

“Security Documents” means the Mortgages, the Security Agreements and related
financing statements as same may be amended from time to time and any and all
other instruments now or hereafter executed in connection with or as security
for the payment of the Obligations.

 

“Solvent” means, as to any Person at any time, that (a) the fair value of all of
the property of such Person is greater than the amount of such Person’s
liabilities (including disputed, contingent and unliquidated liabilities) as
such value is established and liabilities evaluated for purposes of Section
101(32) of the Bankruptcy Code; (b) the present fair salable value of all of the
property of such Person is not less than the amount that will be required to pay
the probable liability of such Person on its debts as they become absolute and
matured; (c) such Person does not intend to, and does not believe that it will,
incur debts or liabilities beyond such Person’s ability to pay as such debts and
liabilities mature; and

 

18

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(d) such Person is not engaged in business or a transaction, and is not about to
engage in business or a transaction, for which such Person’s property would
constitute unreasonably small capital.

 

“Special Borrowing Base Determination” has the meaning specified in Section
2.05(b).

 

“subsidiary” of a Person means any corporation, limited liability company,
association, partnership, joint venture or other business entity of which more
than 50% of the voting stock or other Equity (in the case of Persons other than
corporations) having ordinary voting power for the election of directors or
other governing body are owned, or the management of which is controlled
directly or indirectly by such Person, or by one or more of the subsidiaries of
such Person, or a combination thereof. All references in this Agreement and in
the other Loan Documents to the capitalized terms “Subsidiary” or “Subsidiaries”
shall mean Restricted Subsidiaries and shall not include any Unrestricted
Entity.

 

Unless the context otherwise expressly requires, references herein to a
“Subsidiary” refer to a Subsidiary of the Company or Parent as applicable.

 

“Surety Instruments” means all letters of credit (including standby), banker’s
acceptances, bank guaranties, shipside bonds, surety bonds and similar
instruments.

 

“Swing Line Borrowing” means a borrowing of a Swing Line Loan pursuant to
Section 2.13.

 

“Swing Line Lender” has the meaning specified in the introductory clause hereto.

 

“Swing Line Loan” has the meaning specified in Section 2.13(a).

 

“Swing Line Loan Notice” means a notice of a Borrowing of a Swing Line Loan
pursuant to Section 2.13, which, if in writing, shall be substantially in the
form of Exhibit A-2.

 

“Swing Line Settlement Date” means the 15th day and the last day of each
calendar month, provided however, that if any such day is not a Business Day,
the applicable Swing Line Settlement Date shall be the Business Day immediately
preceding such day.

 

“Swing Line Sublimit” means an amount equal to the lesser of (a) $25,000,000 and
(b) the Borrowing Base.

 

“Taxes” means all present or future taxes, levies, imposts, duties, deductions,
withholdings, assessments, fees or other charges imposed by any Governmental
Authority, including any interest, additions to tax or penalties applicable
thereto.

 

“Termination Date” means the earlier of (a) November 1, 2011, or (b) the date on
which the Lenders’ Commitments terminate in accordance with the provisions of
this Agreement.

 

“Total Indebtedness” means, at any date, all Indebtedness of the Loan Parties,
on a consolidated basis, excluding, however, all net obligations with respect to
Derivative Contracts entered into in accordance with Section 8.10 and any
Guaranty Obligations thereof by Parent entered into in accordance with Section
8.08(b).

 

“Unfunded Pension Liability” means the excess of a Plan’s benefit liabilities
under Section 4001(a)(16) of ERISA, over the current value of that Plan’s
assets, determined in accordance with

 

19

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the assumptions used for funding the Pension Plan pursuant to Section 412 of the
Code for the applicable plan year.

 

“United States” and “U.S.” each means the United States of America.

 

“Unrestricted Entity” means (1) the entities listed on Schedule 6.19 under the
heading “Unrestricted Entities”; and (2) in the event an entity that is not a
Wholly Owned Subsidiary becomes a subsidiary of Parent, then such entity shall
be an Unrestricted Entity, provided, however, in the event that (a) any of the
foregoing entities becomes a Wholly Owned Subsidiary of Parent, or (b) any of
the foregoing entities guarantees any other Indebtedness of Parent or any
Restricted Subsidiary of Parent, then such entity shall no longer be an
Unrestricted Entity and shall be a Restricted Subsidiary, and all of the
covenants and other provisions of this Agreement applicable to Restricted
Subsidiaries shall apply to such Subsidiary. In addition, Parent may, by notice
given to the Administrative Agent, designate an Unrestricted Entity as a
Restricted Subsidiary, provided that the requirements of this Agreement
pertaining to the granting of Collateral and the giving of a Guaranty by such
Subsidiary (including Sections 4.01, 4.02, 7.14 and 7.15) shall be satisfied as
a condition of such designation.

 

“Wholly Owned” means that 100% of the Equity is owned, either directly or
indirectly.

 

1.02                        Other Interpretive Provisions. The meanings of
defined terms are equally applicable to the singular and plural forms of the
defined terms. Unless otherwise specified or the context clearly requires
otherwise, the words “hereof,” “herein,” “hereunder” and similar words refer to
this Agreement as a whole and not to any particular provision of this Agreement;
and subsection, Section, Schedule and Exhibit references are to this Agreement.
The term “documents” includes any and all instruments, documents, agreements,
certificates, indentures, notices and other writings, however evidenced. The
term “including” is not limiting and means “including without limitation.” In
the computation of periods of time from a specified date to a later specified
date, the word “from” means “from and including,” the words “to” and “until”
each mean “to but excluding,” and the word “through” means “to and including.”
Unless otherwise expressly provided herein, (a) references to agreements
(including this Agreement) and other contractual instruments shall be deemed to
include all subsequent amendments and other modifications thereto, but only to
the extent such amendments and other modifications are not prohibited by the
terms of any Loan Document, and (b) references to any statute or regulation are
to be construed as including all statutory and regulatory provisions
consolidating, amending, replacing, supplementing or interpreting the statute or
regulation. The captions and headings of this Agreement are for convenience of
reference only and shall not affect the interpretation of this Agreement. This
Agreement and other Loan Documents may use several different limitations, tests
or measurements to regulate the same or similar matters. All such limitations,
tests and measurements are cumulative and shall each be performed in accordance
with their terms. This Agreement and the other Loan Documents are the result of
negotiations among and have been reviewed by counsel to the Administrative
Agent, the Company and the other parties, and are the products of all parties.
Accordingly, they shall not be construed against the Lenders or the
Administrative Agent merely because of the Administrative Agent’s or Lenders’
involvement in their preparation.

 

1.03                        Accounting Principles. Unless the context otherwise
clearly requires, all accounting terms not expressly defined herein shall be
construed, and all financial computations required under this Agreement shall be
made, in accordance with GAAP, consistently applied. References to
“consolidated,” when it precedes any accounting term, means such term as it
would apply to the Loan Parties on a consolidated basis, determined in
accordance with GAAP.

 

20

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ARTICLE II.

THE CREDIT

 

2.01                        Amounts and Terms of the Commitments.

 

(a)                                  Each Lender severally agrees, on the terms
and conditions set forth herein, to make loans to the Company (each such loan, a
“Revolving Credit Loan”) from time to time on any Business Day during the period
from the Effective Date to the Termination Date, so long as (a) with respect to
any Lender, such Revolving Credit Loans then requested to be made by such Lender
do not exceed such Lender’s Pro Rata Share of the aggregate amount of all Loans
then requested from the Lenders, and (b) the sum of the aggregate principal
amount of all Revolving Credit Loans by all Lenders hereunder plus the aggregate
principal amount of all Swing Line Loans plus the LC Obligation outstanding at
any time does not exceed the Borrowing Base in effect at such time. Subject to
the terms and conditions hereof, until the Termination Date, Company may borrow,
repay, and reborrow hereunder.

 

(b)                                 Upon the request of any Lender made through
the Administrative Agent, the Company shall execute and deliver to such Lender
(through the Administrative Agent) a promissory note from the Company payable to
the order of such Lender (herein called such Lender’s “Note” and collectively,
the “Notes”). The amount of principal owing on any Lender’s Note at any given
time shall be the aggregate amount of all Loans theretofore made by such Lender
minus all payments of principal theretofore received by such Lender on such
Note. Interest on each Note shall accrue and be due and payable as provided
herein and therein.

 

(c)                                  Subject to the terms and conditions of
Section 2.10 below and relying upon the agreements of the Lenders set forth
herein, the Issuing Lender agrees to issue Letters of Credit as support for
Derivative Contracts covering Oil and Gas commodities and other purposes
approved by the Administrative Agent upon the request of the Company at any time
and from time to time on and after the Effective Date and up to, but excluding,
the Termination Date (the “Availability Period”), and the Lenders severally
agree to participate in such Letters of Credit and drawings thereunder. No
Letter of Credit will be issued in a face amount which, after giving effect to
the issuance of such Letter of Credit, would cause the LC Obligation to exceed
$50,000,000 or the Effective Amount to exceed the Borrowing Base then in effect.

 

2.02                        Procedure for Borrowings.

 

(a)                                  Each Revolving Credit Borrowing of
Revolving Credit Loans shall be made upon the Company’s irrevocable written
notice delivered to the Administrative Agent in the form of a Notice of
Revolving Credit Borrowing duly completed; which notice must be received by the
Administrative Agent prior to 12:00 noon (Houston, Texas time) (i) three (3)
Business Days prior to the requested Borrowing Date, in the case of LIBOR Loans;
and (ii) one (1) Business Day prior to the requested Borrowing Date, in the case
of Base Rate Loans.

 

(b)                                 Each Notice of Revolving Credit Borrowing
shall specify (i) the amount of the Revolving Credit Borrowing, which shall be
in an aggregate minimum amount (A) for Base Rate Loans equal to the lesser of
(y) $500,000 or any multiple integrals of $100,000 in excess thereof or (z) the
unadvanced portion of the Available Borrowing Base and (B) for LIBOR Loans
$3,000,000 or any multiple integrals of $1,000,000 in excess thereof (if the
Available Borrowing Base as of such Borrowing Date will be less than $3,000,000,
then the Company may not request a LIBOR Loan); (ii) the requested Borrowing
Date, which shall be a Business Day; (iii) the Interest Rate Type of Loans
comprising the Revolving Credit Borrowing; and (iv) for LIBOR Loans the duration
of the Interest Period applicable to

 

21

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such Revolving Credit Loans. If the Notice of Revolving Credit Borrowing fails
to specify the duration of the Interest Period for any Revolving Credit
Borrowing comprised of LIBOR Loans, such Interest Period shall be three months.

 

(c)                                  The number of Borrowings outstanding of
LIBOR Loans shall not exceed five (5) at any one time.

 

(d)                                 The Administrative Agent will promptly
notify each Lender of its receipt of any Notice of Revolving Credit Borrowing
and of the amount of such Lender’s Pro Rata Share of that Revolving Credit
Borrowing.

 

(e)                                  Provided the applicable conditions in
Article V are met, each Lender will make the amount of its Pro Rata Share of
each Revolving Credit Borrowing available to the Administrative Agent for the
account of the Company at the Administrative Agent’s Payment Office by 11:00
a.m. (Houston, Texas time) on the Borrowing Date requested by the Company in
funds immediately available to the Administrative Agent. The proceeds of all
such Loans will then be made available to the Company by the Administrative
Agent to the Company’s operating account with the Administrative Agent or by
wire transfer in accordance with written instructions provided to the
Administrative Agent by the Company of like funds as received by the
Administrative Agent.

 

2.03                        Conversion and Continuation Elections.

 

(a)                                  During the period from the Effective Date
to the Termination Date, the Company may, upon irrevocable written notice to the
Administrative Agent in accordance with Section 2.03(b): (i) elect, as of any
Business Day, in the case of Base Rate Loans, or as of the last day of the
applicable Interest Period, in the case of LIBOR Loans, to convert any such
Revolving Credit Loans into Revolving Credit Loans of any other Interest Rate
Type; or (ii) elect as of the last day of the applicable Interest Period, to
continue any Revolving Credit Loans having Interest Periods expiring on such
day; provided, that if at any time a LIBOR Loan in respect of any Revolving
Credit Borrowing is reduced, by payment, prepayment, or conversion of part
thereof to less than $3,000,000, such LIBOR Loan shall automatically convert
into a Base Rate Loan.

 

(b)                                 The Company shall deliver a Notice of
Conversion/Continuation to be received by the Administrative Agent not later
than 12:00 noon (Houston, Texas time) at least (i) three (3) Business Days in
advance of the Conversion/Continuation Date, if the Revolving Credit Loans are
to be converted into or continued as LIBOR Loans; and (ii) one (1) Business Day
in advance of the Conversion/Continuation Date, if the Revolving Credit Loans
are to be converted into Base Rate Loans, specifying: (A) the proposed
Conversion/Continuation Date; (B) the aggregate amount of Revolving Credit Loans
to be converted or continued; (C) the Interest Rate Type of Loans resulting from
the proposed conversion or continuation; and (D) other than in the case of
conversions into Base Rate Loans, the duration of the requested Interest Period.

 

(c)                                  If upon the expiration of any Interest
Period applicable to LIBOR Loans, the Company has failed to select timely a new
Interest Period to be applicable to LIBOR Loans, or if any Default or Event of
Default then exists, the Company shall be deemed to have elected to convert such
LIBOR Loans into Base Rate Loans effective as of the expiration date of such
Interest Period.

 

(d)                                 The Administrative Agent will promptly
notify each Lender of its receipt of a Notice of Conversion/Continuation, or, if
no timely notice is provided by the Company, the Administrative Agent will
promptly notify each Lender of the details of any automatic conversion. All
conversions and continuations shall be made ratably according to the respective
Lender’s Pro Rata Share

 

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of outstanding principal amounts of the Revolving Credit Loans with respect to
which the notice was given.

 

2.04                        Optional Commitment Reductions and Optional
Prepayments.

 

(a)                                  The Company shall have the right to
terminate or to permanently reduce the amount of the Aggregate Maximum Credit
Amount, the Swing Line Sublimit or the Letter of Credit Sublimit, at any time,
or from time to time, upon notice given to the Administrative Agent (which shall
promptly notify the Lenders) not less than 12:00 noon Houston, Texas time three
(3) Business Days’ prior to the date of termination or reduction, which notice
shall specify the effective date thereof and the amount of any such reduction
(which shall not be less than (i) $5,000,000.00 or any whole multiple of
$1,000,000.00 in excess thereof for any reduction of the Aggregate Maximum
Credit Amount, and (ii) $1,000,000 or any whole multiple of $500,000 in excess
thereof for the Swing Line Sublimit and the Letter of Credit Sublimit). Any such
notice given shall be irrevocable and effective only upon receipt by the
Administrative Agent. The Aggregate Maximum Credit Amount, the Swing Line
Sublimit and the Letter of Credit Sublimit once terminated or reduced may not be
reinstated.

 

(b)                                 Subject to Section 3.04, the Company may, at
any time or from time to time,

 

(i)                                     prepay Revolving Credit Loans that are
Base Rate Loans, without premium or penalty, upon irrevocable notice to the
Administrative Agent of not less than one (1) Business Day, ratably as to each
Lender, in whole or in part, in aggregate minimum principal amounts of
$1,000,000 or multiple integrals thereof (unless the outstanding principal
amount of all Revolving Credit Loans that are Base Rate Loans is less than
$1,000,000, then such prepayments shall be equal to such outstanding principal
amount),

 

(ii)                                  prepay Revolving Credit Loans that are
LIBOR Loans, without premium or penalty (but subject to Section 3.04) upon
irrevocable notice to the Administrative Agent not less than three (3) Business
Days, ratably as to each Lender, prepay Revolving Credit Loans, in whole or in
part, in aggregate minimum principal amounts of $1,000,000 or multiple integrals
thereof plus all interest and expenses then outstanding. Such notice of
prepayment shall specify the date and amount of such prepayment and the Interest
Rate Type(s) of Revolving Credit Loans to be prepaid. The Administrative Agent
will promptly notify each Lender of its receipt of any such notice, and of such
Lender’s Pro Rata Share of such prepayment. The payment amount specified in such
notice shall be due and payable on the date specified therein, together with
accrued interest to each such date on the amount prepaid and to the extent
previously invoiced, any amounts required pursuant to Section 3.04, and

 

(iii)                               upon notice to the Swing Line Lender (with a
copy to the Administrative Agent), voluntarily prepay Swing Line Loans in whole
or in part without premium or penalty; provided that (i) such notice must be
received by the Swing Line Lender and the Administrative Agent not later than
3:00 p.m. Houston, Texas time on the date of the prepayment, and (ii) any such
prepayment shall be in a minimum principal amount of $200,000. Each such notice
shall specify the date and amount of such prepayment. If such notice is given by
the Company, the Company shall make such prepayment and the payment amount
specified in such notice shall be due and payable on the date specified therein.

 

2.05                        Borrowing Base Determinations; Mandatory Prepayments
of Loans.

 

(a)                                  Scheduled Borrowing Base Determinations. At
all times prior to the Termination Date the Effective Amount shall not exceed
the Borrowing Base then in effect. From and after the Effective Date, the
initial Borrowing Base hereunder shall be $700,000,000.00, until redetermined
pursuant to the terms of this Section 2.05. Upon notice to the Company, the
Borrowing Base shall be

 

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redetermined for each Borrowing Base Period on each Scheduled Borrowing Base
Determination Date, and each such redetermination shall be effective as of the
date set forth in such notice of redetermination. The Borrowing Base shall be
determined based upon the loan collateral value assigned to the Oil and Gas
Properties owned by the Company and its Subsidiaries and such other credit
factors (including without limitation the assets, liabilities, cash flow,
business, properties, prospects, management and ownership of the Loan Parties)
which the Lenders deem significant. The Lenders’ determination of the Borrowing
Base shall be in their sole discretion and shall not be subject to review or
challenge under Sections 11.17 and 11.18 hereof. Upon each redetermination of
the Borrowing Base, the Administrative Agent shall recommend to the Lenders a
new Borrowing Base and the Lenders in accordance with their customary policies
and procedures for extending credit to Oil and Gas reserve-based customers shall
(by unanimous agreement in the case of Borrowing Base increases and by agreement
of the Required Lenders in the case of Borrowing Base decreases or affirmations)
establish the redetermined Borrowing Base. If the Company does not furnish the
Reserve Reports or all such other information and data by the date required, the
Lenders may nonetheless determine a new Borrowing Base. It is expressly
understood that the Lenders shall have no obligation to determine the Borrowing
Base at any particular amount, either in relation to the Aggregate Maximum
Credit Amount or otherwise.

 

(b)                                 Special Borrowing Base Determinations.

 

(i)                                     In addition to Scheduled Borrowing Base
Determinations pursuant to Section 2.05(a), the Company and the Required Lenders
may each request one (1) additional redetermination of the Borrowing Base during
each Borrowing Base Period (“Special Borrowing Base Determination”). In the
event the Company requests a Special Borrowing Base Determination pursuant to
this Section 2.05(b), the Company shall deliver written notice of such request
to the Lenders which shall include: (i) Reserve Report(s) prepared as of a date
not more than thirty (30) calendar days prior to the date of such request, for
the benefit of the Lenders, and (ii) such other information as the Lenders shall
request prepared as of a date not more than thirty (30) calendar days prior to
the date of such request. Likewise, in the event the Required Lenders exercise
their option for a Special Borrowing Base Determination, the Administrative
Agent shall give the Company notice of the redetermined Borrowing Base.

 

(ii)                                  In addition to the Special Borrowing Base
Determination permitted by Section 2.05(b)(i), a Special Borrowing Base
Determination shall be done at the times set forth in Section 2.14(b)

 

(c)                                  Mandatory Prepayment of Loans.

 

(i)                                     If, after giving effect to any
termination or reduction of the Aggregate Maximum Credit Amounts pursuant to
Section 2.04(a), the Effective Amount exceeds the total Commitments, then the
Company shall (A) prepay the Loans on the date of such termination or reduction
in an aggregate principal amount equal to such excess, and (B) if any excess
remains after prepaying all of the Loans as a result of the LC Obligation, 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 2.10(h).

 

(ii)                                  If a Borrowing Base Deficiency shall exist
at the time of a Borrowing Base redetermination or adjustment pursuant to the
terms of this Agreement, then the Company shall, within thirty (30) days after
notice from the Administrative Agent to the Company of the new or adjusted
Borrowing Base, exercise any one or combination of the following: (i) make a
mandatory principal prepayment in an amount equal to the amount of the Borrowing
Base Deficiency, after giving effect to any action taken under (ii) hereof; or
(ii) pledge, or cause its Subsidiaries to pledge, additional unencumbered
collateral of sufficient value and character (as determined by the Lenders in
their sole

 

24

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discretion) that when added to the existing Collateral shall cause the Borrowing
Base to equal or exceed the Effective Amount, after giving effect to any action
taken under (i) hereof. If, because of the LC Obligation, a Borrowing Base
Deficiency remains after prepaying all of the Loans, the Company shall pay to
the Administrative Agent on behalf of the Lenders an amount equal to such
remaining Borrowing Base Deficiency to be held as collateral for so long as a
Borrowing Base Deficiency remains as provided in Section 2.10(h).

 

(iii)                               Each prepayment of Loans pursuant to this
Section 2.05(c) shall be applied, first, ratably to any Base Rate Borrowings of
Base Rate Loans then outstanding, and, second, to any LIBOR Borrowings of LIBOR
Loans then outstanding as the Company may direct.

 

(iv)                              Each prepayment of the Loans pursuant to this
Section 2.05(c) shall be applied, first, to the outstanding Swing Line Loans
and, second, to outstanding Revolving Credit Loans.

 

(v)                                 Each prepayment of a Borrowing pursuant to
this Section 2.05(c) shall be applied to the Loans included in such prepaid
Borrowing in accordance with each Lender’s Pro Rata Share thereof. Prepayments
pursuant to this Section 2.05(c) shall be accompanied by accrued interest.

 

(vi)                              Prepayments permitted or required under this
Section 2.05(c) shall be without premium or penalty, but shall be subject to
payment of amounts due pursuant to Section 3.04.

 

2.06                        Repayment.

 

(a)                                  Revolving Credit Loans. The Company shall
repay to the Administrative Agent (for the account of the Lenders in their
respective Pro Rata Shares) the aggregate principal amount of Revolving Credit
Loans outstanding on the Termination Date, on which date all principal amounts
outstanding, plus all accrued but unpaid interest and other amounts then due
hereunder or under the other Loan Documents, if not sooner paid, shall be due
and payable in full.

 

(b)                                 Swing Line Loans. The Company shall repay
each Swing Line Loan on the earlier to occur of (i) the first Swing Line
Settlement Date to occur after such Loan is made and (ii) the Termination Date.

 

(c)                                  Interest.

 

(i)                                     Each LIBOR Loan shall bear interest on
the aggregate outstanding principal amount thereof for each Interest Period at a
rate per annum equal to the lesser of (A) LIBOR, plus the Applicable Margin, or
(B) the Highest Lawful Rate. Each Revolving Credit Loan that is a Base Rate Loan
and each Swing Line Loan shall bear interest on the aggregate outstanding
principal amount thereof from the applicable borrowing date at a rate per annum
equal to the lesser of (A) the Base Rate plus the Applicable Margin or (B) the
Highest Lawful Rate.

 

(ii)                                  Interest on each Loan shall be paid in
arrears on each Interest Payment Date. Interest shall also be paid on the date
of any prepayment of Loans under Section 2.04(b) or 2.05(c) (except in the case
of Base Rate Loans) for the portion of the Loans so prepaid and upon payment
(including prepayment) in full thereof and, during the existence of any Event of
Default, interest shall be paid on demand of the Administrative Agent.

 

(iii)                               Notwithstanding Section 2.06(c)(i), while
any Event of Default exists, the Company shall pay interest (after, as well as
before, entry of judgment thereon, to the extent permitted by law) on the
principal amount of all outstanding Loans, at a rate per annum equal to the
lesser of (A) the

 

25

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Highest Lawful Rate and (B) the Base Rate plus the Applicable Margin plus two
percent (2%) (the “Default Rate”).

 

2.07                        Fees.

 

(a)                                  Commitment Fee. The Company shall pay to
the Administrative Agent, for the account of the Lenders, an aggregate
commitment fee equal to the then-applicable Commitment Fee indicated in the
Pricing Grid times the actual daily amount by which the Borrowing Base exceeds
the sum of (i) the outstanding amount of Revolving Credit Loans and (ii) the
outstanding amount of LC Obligations. Such commitment fee shall accrue from the
Effective Date to the Termination Date and shall be due and payable quarterly in
arrears on the first Business Day of the first month of each quarter commencing
on January 2, 2008, through the Termination Date, with the final payment to be
made on the Termination Date; provided that, in connection with any reduction or
termination of Commitments, the accrued commitment fee calculated for the period
ending on such date shall also be paid on the date of such reduction or
termination, with the following quarterly payment being calculated on the basis
of the period from such reduction or termination date to the following quarterly
payment date. The commitment fee provided in this subsection shall accrue at all
times after the Effective Date up to the Termination Date, including at any time
during which one or more conditions in Section 5.02 are not met.

 

(b)                                 Letter of Credit Fee. The Company agrees to
pay (i) to Issuing Lender (for the ratable account of the Lenders in their
respective Pro Rata Shares), a fee for each Letter of Credit, to be paid
quarterly in arrears following the Issuance of such Letter of Credit (including
the initial Issuance and any renewal, extension or increase in the amount
thereof) in the amount equal to the greater of (A) $500.00 and (B) the product
equal to the Letter of Credit rate set forth on the Pricing Grid multiplied by
the undrawn amount available under such Letter of Credit (such fee shall be
deemed to be fully earned and owing upon the Issuance of such Letter of Credit,
and no refund shall be due in the event such Letter of Credit is terminated
prior to its expiry date), and (ii) to the Issuing Lender for its account a fee
for the issuance of each Letter of Credit (including the initial Issuance and
any renewal, extension or increase in the amount thereof), at the Issuance of
such Letter of Credit, in an amount equal to the greater of (A) $500.00 and (B)
one-eighth of one percent (0.125%) multiplied by the aggregate amount available
under each Letter of Credit (such fees shall be prorated for any period less
than a full year but shall not be refunded in the event any such Letter of
Credit is terminated prior to its expiry date) and (iii) Issuing Lender’s usual
and customary fees for amendment to transfer of or negotiation of the terms of
each Letter of Credit. The Administrative Agent shall pay to each Lender its Pro
Rata Share of the Letter of Credit Fee paid pursuant to Section 2.07(b)(i). The
Administrative Agent shall pay to the Issuing Lender the Letter of Credit fees
paid pursuant to Section 2.07(b)(ii) and (iii).

 

(c)                                  Agency Fees. The Company shall pay fees to
the Administrative Agent for the Administrative Agent’s own account, as required
by that certain letter agreement (“Fee Letter”) between the Company and the
Administrative Agent dated as of September 10, 2007, relating hereto.

 

2.08                        Computation of Fees and Interest.

 

(a)                                  All computations of interest for Base Rate
Loans shall be made on the basis of a year of 365 or 366 days, as the case may
be, and actual days elapsed. All other computations of fees and interest shall
be made on the basis of a 360-day year and actual days elapsed (which results in
more interest being paid than if computed on the basis of a 365-day year).
Interest and fees shall accrue during each period during which interest or such
fees are computed from the first day thereof to the last day thereof.

 

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(b)                                 Each determination of an interest rate by
the Administrative Agent shall be conclusive and binding on the Company and the
Lenders in the absence of manifest error.

 

2.09                        Payments by the Company; Borrowings Pro Rata.

 

(a)                                  All payments to be made by the Company
shall be made without set-off, recoupment or counterclaim. All payments by the
Company shall be made in immediately available funds to the Administrative Agent
by credit to the Company’s operating account at the Administrative Agent’s
Payment Office for the account of the Administrative Agent or the Lender to whom
such payment is owed, and shall be made in dollars and in immediately available
funds, no later than 12:00 Noon (Houston, Texas time) on the date specified
herein. Except to the extent otherwise provided herein, (i) each payment by the
Company of fees shall be made pro rata in accordance with their respective Pro
Rata Shares, (ii) each payment of principal of Revolving Credit Loans shall be
made for the account of the Lenders pro rata in accordance with their respective
outstanding principal amount of Revolving Credit Loans, and (iii) each payment
of interest on Revolving Credit Loans shall be made for the account of the
Lenders pro rata in accordance with their respective shares of the aggregate
amount of interest due and payable to the Lenders. Notwithstanding the
foregoing, to the extent money is received by the Administrative Agent pursuant
to the exercise of remedies under the Security Documents such money shall be
applied to the pro rata payment of obligations secured by such Security
Document.

 

(b)                                 The Administrative Agent will promptly
distribute to each Lender its applicable share of such payment in like funds as
received. Any payment received by the Administrative Agent later than 12:00 Noon
(Houston, Texas time) shall be deemed to have been received on the following
Business Day and any applicable interest or fee shall continue to accrue. When
the Administrative Agent collects or receives money on account of the
Obligations or otherwise pursuant to the Security Documents if such money is
insufficient to pay all such Obligations, such money shall be applied first to
any reimbursements due Administrative Agent under Section 11.04 or 11.05.

 

(c)                                  Subject to the provisions set forth in the
definition of “Interest Period” herein, whenever any payment is due on a day
other than a Business Day, such payment shall be made on the following Business
Day, and such extension of time shall in such case be included in the
computation of interest or fees, as the case may be.

 

(d)                                 Unless the Administrative Agent receives
notice from the Company prior to the date on which any payment is due to the
Administrative Agent for the account of the Lenders or the Issuing Lender
hereunder that the Company will not make such payment, the Administrative Agent
may assume that the Company has made such payment on such date in accordance
herewith and may, in reliance upon such assumption, distribute to the Lenders or
the Issuing Lender, as the case may be, the amount due. In such event, if the
Company has not in fact made such payment, then each of the Lenders or the
Issuing Lender, 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 Lender, 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 Rate
and a rate determined by the Administrative Agent in accordance with banking
industry rules on interbank compensation.

 

(e)                                  Except to the extent otherwise expressly
provided herein, each borrowing of Revolving Credit Loans hereunder shall be
from the Lenders pro rata in accordance with their respective Pro Rata Shares.

 

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2.10                        Issuing the Letters of Credit.

 

(a)                                  Subject to the terms and conditions set
forth herein, the Company may request the Issuing Lender to issue Letters of
Credit for its own account or for any of its Subsidiaries, in a form reasonably
acceptable to the Administrative Agent and the Issuing Lender, at any time and
from time to time during the Availability Period; provided that the Company may
not request the issuance, amendment, renewal or extension of Letters of Credit
hereunder if the Effective Amount exceeds the Borrowing Base at such time or
would exceed the Borrowing Base as a result thereof.

 

(b)                                 In order to effect the issuance of a Letter
of Credit, the Company shall submit a Notice of Revolving Credit Borrowing and a
LC Application in writing by telecopy to the Administrative Agent (who shall
promptly notify the Issuing Lender) not later than 1:00 p.m., Houston, Texas
time, three (3) Business Days before the requested date of issuance of such
Letter of Credit. Each such Notice of Revolving Credit Borrowing and LC
Application shall be (i) signed by the Company, (ii) specify the Business Day on
which such Letter of Credit is to be issued, (iii) specify the purpose for the
requested Letter of Credit, (iv) specify the availability for Letters of Credit
under (A) the Borrowing Base and (B) the $50,000,000 aggregate LC Obligation
limitation, as of the date of issuance of such Letter of Credit, (v) specify the
expiry date thereof, which shall not be later than the earlier of (A) twelve
(12) months from the date of issuance of such Letter of Credit and (B) seven (7)
Business Days prior to the Termination Date, and (vi) specify such other matters
as may be required by the Issuing Lender.

 

(c)                                  Unless the Issuing Lender has received
written notice from any Lender, the Administrative Agent or any Loan Party, at
least one Business Day prior to the requested date of issuance or amendment of
the applicable Letter of Credit, that one or more applicable conditions set
forth in Article V shall not been be satisfied, then, subject to the terms and
conditions hereof, the Issuing Lender shall issue such Letter of Credit or
amendment, as the case may be, to the specified beneficiary, in each case in
accordance with the Issuing Lender’s usual and customary business practices. The
Issuing Bank shall provide the Company with a copy of each Letter of Credit so
issued. Each such Letter of Credit shall, unless otherwise expressly agreed by
the Issuing Lender and the Company at the time such Letter of Credit is issued,
be subject to the rules of the “International Standby Practices 1998” or such
later version as may be published by the Institute of International Banking Law
and Practice (the “ISP 1998”), or any successor entity, and shall, as to matters
not governed by the ISP 1998, be governed by, and construed and interpreted in
accordance with, the laws of the State of Texas.

 

(d)                                 Upon the issuance date of each Letter of
Credit, the Issuing Lender shall be deemed, without further action by any party
hereto, to have sold to each other Lender, and each other Lender shall be
deemed, without further action by any party hereto, to have purchased from the
Issuing Lender, a participation, to the extent of such Lender’s Pro Rata Share,
in such Letter of Credit, the obligations thereunder and in the reimbursement
obligations of the Company due in respect of drawings made under such Letter of
Credit. If requested by the Issuing Lender, the other Lenders will execute any
other documents reasonably requested by the Issuing Lender to evidence the
purchase of such participation. Each Lender acknowledges and agrees that its
obligation to acquire participations pursuant to this Agreement 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 Event of
Default, the existence of a Borrowing Base Deficiency or reduction or
termination of the Commitments, and that each such payment shall be made without
any offset, abatement, withholding or reduction whatsoever.

 

(e)                                  Upon the presentment of any draft for honor
under any Letter of Credit by the beneficiary thereof which the Issuing Lender
determines is in compliance with the conditions for payment thereunder, the
Issuing Lender shall promptly notify the Company and the Administrative Agent
thereof,

 

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but failure to so notify the Company shall not in any way affect the Company’s
obligations hereunder. The Company hereby promises and agrees, at the Company’s
option, to either (i) pay to the Administrative Agent for the account of the
Issuing Lender, by 2:00 p.m., Houston, Texas time, on the date payment is due as
specified in such notice, the full amount of such draft in immediately available
funds or (ii) request a Loan pursuant to the provisions of Section 2.01(a) and
Section 2.02 of this Agreement in the full amount of such draft, which request
shall specify that the Borrowing Date is to be the date payment is due under the
Letter of Credit as specified in the Issuing Lender’s notice. If the Company
fails timely to make such payment because a Loan cannot be made pursuant to
Section 2.01(a) and/or Section 5.02, each Lender shall, notwithstanding any
other provision of this Agreement (including the occurrence and continuance of a
Default or an Event of Default), make available to the Administrative Agent for
the benefit of the Issuing Lender an amount equal to its Pro Rata Share of the
presented draft on the day the Issuing Lender is required to honor such draft.
If such amount is not in fact made available to the Administrative Agent by such
Lender on such date, such Lender shall pay to the Administrative Agent for the
account of the Issuing Lender, on demand made by the Issuing Lender, in addition
to such amount, interest thereon at the Federal Funds Rate for the first two
days following demand and thereafter until paid at the Base Rate. Upon receipt
by the Administrative Agent from the Lenders of the full amount of such draft,
notwithstanding any other provision of this Agreement (including the occurrence
and continuance of a Default or an Event of Default) the full amount of such
draft shall automatically and without any action by the Company, be deemed to
have been a Base Rate Loan as of the date of payment of such draft. Nothing in
this Section 2.10(e) or elsewhere in this Agreement shall diminish the Company’s
obligation under this Agreement to provide the funds for the payment of, or on
demand to reimburse the Issuing Lender for payment of, any draft presented to,
and duly honored by, the Issuing Lender under any Letter of Credit, and the
automatic funding of a Loan as in this Section 2.10(e) provided shall not
constitute a cure or waiver of the Event of Default for failure to provide
timely such funds as in this Section 2.10(e) agreed.

 

(f)                                    The Company’s obligation to reimburse the
Issuing Lender for amounts paid on account of drafts honored under Letters of
Credit 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 (1) any lack of validity or
enforceability of any Letter of Credit, any LC Application, or any term or
provision therein, (2) 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, (3) payment by the
Issuing Lender under a Letter of Credit issued by the Issuing Lender against
presentation of a draft or other document that does not comply with the terms of
such Letter of Credit or any LC Application, or (4) any other event or
circumstance whatsoever, whether or not similar to any of the foregoing, that
might, but for the provisions of this Section 2.10(f), constitute a legal or
equitable discharge of, or provide a right of setoff against, the Company’s
obligations hereunder. Neither the Administrative Agent, the Lenders nor the
Issuing Lender, 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 Lender; provided that the foregoing
shall not be construed to excuse the Issuing Lender from liability to the
Company to the extent of any direct damages (as opposed to consequential
damages, claims in respect of which are hereby waived by the Company to the
extent permitted by applicable law) suffered by the Company that are caused by
the Issuing Lender’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 Lender (as finally
determined by a court of competent jurisdiction), such Issuing

 

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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 Lender that issued such Letter of Credit may, in
its sole 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. The Company hereby waives presentment for payment (except the
presentment required by the terms of any Letter of Credit) and notice of
dishonor, protest and notice of protest with respect to drafts honored under the
Letters of Credit.

 

(g)                                 In the event that any provision of a LC
Application is inconsistent with, or in conflict of, any provision of this
Agreement, including provisions for the rate of interest applicable to drawings
thereunder or rights of setoff or any representations, warranties, covenants or
any events of default set forth therein, the provisions of this Agreement shall
govern.

 

(h)                                 If (i) any Event of Default shall occur and
be continuing and the Company receives notice from the Administrative Agent
demanding the deposit of cash collateral pursuant to this Section 2.10(h), or
(ii) the Company is required to pay to the Administrative Agent the excess
attributable to an LC Obligation in connection with any prepayment pursuant to
Section 2.05, then the Company shall deposit, in the LC Collateral Account, an
amount in cash equal to, in the case of an Event of Default, the LC Obligation,
and in the case of a payment required by Section 2.05, the amount of such excess
as provided in Section 2.05, as of such date plus any accrued and unpaid
interest thereon; and reference is further made to Section 9.02 which provides
that the obligation to deposit 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 certain Events of
Default as therein described. The Company hereby grants to the Administrative
Agent, for the benefit of the Issuing Lender and the Lenders, to secure the
Obligations, 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
Company’s obligation to deposit amounts pursuant to this Section 2.10(h) 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 Company or any of its Subsidiaries
may now or hereafter have against any such beneficiary, the Issuing Lender, 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 Company’s and any Guarantor’s obligations under this Agreement and the other
Loan Documents. The Administrative Agent shall have exclusive dominion and
control, including the exclusive right of withdrawal, over such account. Monies
in such account shall be applied by the Administrative Agent to reimburse the
Issuing Lender for payments under Letters of Credit 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 Company for the LC Obligation at such
time or, if the maturity of the Loans has been accelerated, be applied to
satisfy other obligations of the Company and the Guarantors, if any, under this
Agreement or the other Loan Documents. If the Company is required to provide an
amount of cash collateral hereunder as a result of the occurrence of an Event of
Default, and the Company is not otherwise required to pay to the Administrative
Agent the excess attributable to an LC Obligation in connection with any
prepayment

 

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pursuant to Section 2.05, then such amount (to the extent not applied as
aforesaid) shall be returned to the Company within three Business Days after all
Events of Default have been cured or waived.

 

2.11                        Payments to the Administrative Agent; Several
Obligations of the Lenders.

 

(a)                                  Unless the Administrative Agent shall have
received notice from a Lender prior to the proposed date of any Revolving Credit
Borrowing of LIBOR Loans (or, in the case of any Revolving Credit Borrowing of
Base Rate Loans, prior to 10:00 a.m. Houston, Texas time on the date of such
Revolving Credit Borrowing) that such Lender will not make available to the
Administrative Agent such Lender’s share of such Revolving Credit Borrowing, the
Administrative Agent may assume that such Lender has made such share available
on such date in accordance with Section 2.02 (or, in the case of a Revolving
Credit Borrowing of Base Rate Loans, that such Lender has made such share
available in accordance with and at the time required by Section 2.02) and may,
in reliance upon such assumption, make available to the Company a corresponding
amount. In such event, if a Lender has not in fact made its share of the
applicable Revolving Credit Borrowing available to the Administrative Agent,
then the applicable Lender and the Company 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 Company to but excluding the date of payment to the Administrative Agent,
at (i) in the case of a payment to be made by such Lender, the greater of the
Federal Funds Rate and a rate determined by the Administrative Agent in
accordance with banking industry rules on interbank compensation, plus any
administrative, processing or similar fees customarily charged by the
Administrative Agent in connection with the foregoing, and (ii) in the case of a
payment to be made by the Company, the interest rate applicable to Base Rate
Loans. If the Company and such Lender shall pay such interest to the
Administrative Agent for the same or an overlapping period, the Administrative
Agent shall promptly remit to the Company the amount of such interest paid by
the Company for such period. If such Lender pays its share of the applicable
Revolving Credit Borrowing to the Administrative Agent, then the amount so paid
shall constitute such Lender’s Revolving Credit Loan included in such Revolving
Credit Borrowing. Any payment by the Company shall be without prejudice to any
claim the Company may have against a Lender that shall have failed to make such
payment to the Administrative Agent.

 

(b)                                 Unless the Administrative Agent shall have
received notice from the Company prior to the date on which any payment is due
to the Administrative Agent for the account of the Lenders or the Issuing Lender
hereunder that the Company will not make such payment, the Administrative Agent
may assume that the Company has made such payment on such date in accordance
herewith and may, in reliance upon such assumption, distribute to the Lenders or
the Issuing Lender, as the case may be, the amount due. In such event, if the
Company has not in fact made such payment, then each of the Lenders or the
Issuing Lender, 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 Lender, 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 Rate
and a rate determined by the Administrative Agent in accordance with banking
industry rules on interbank compensation.

 

(c)                                  The failure of any Lender to make any Loan
on any Borrowing Date, to fund any participation or to make a payment pursuant
to Section 11.04(c) shall not relieve any other Lender of its obligation to do
so, but no Lender shall be responsible for the failure of any other Lender to
make the Loan to be made by such other Lender on any Borrowing Date, to fund any
participation to be funded by such other Lender, or to make any payment pursuant
to Section 11.04(c) to be made by such Lender.

 

2.12                        Sharing of Payments. If any Lender shall, by
exercising any right of setoff or counterclaim or otherwise, obtain payment in
respect of any principal of or interest on any of its Revolving Credit Loans or
the participations in LC Obligations or in Swing Line Loans held by it

 

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resulting in such Lender’s receiving payment of a proportion of the aggregate
amount of its Revolving Credit Loans or participations and accrued interest
thereon greater than its Pro Rata Share thereof as provided herein, then the
Lender receiving such greater proportion shall

 

(a)                                  notify the Administrative Agent of such
fact, and

 

(b)                                 purchase (for cash at face value)
participations in the Revolving Credit Loans and subparticipations in LC
Obligations and Swing Line Loans of the other Lenders, or make such other
adjustments as shall be equitable, 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 Revolving Credit Loans
and other amounts owing them, 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 2.12b(ii)
shall not be construed to apply to (x) any payment made by the Company pursuant
to and in accordance with the express terms of this Agreement or (y) any payment
obtained by a Lender as consideration for the assignment of or sale of a
participation in any of its Revolving Credit Loans or subparticipations in LC
Obligations or Swing Line Loans to any assignee or participant, other than to
the Company or any Subsidiary thereof (as to which the provisions of this
Section 2.12(b)(ii) shall apply).

 

Each Loan Party 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 each
Loan Party rights of setoff and counterclaim with respect to such participation
as fully as if such Lender were a direct creditor of each Loan Party in the
amount of such participation.

 

2.13                        Swing Line Loans.

 

(a)                                  The Swing Line. Subject to the terms and
conditions set forth herein, the Swing Line Lender agrees, in reliance upon the
agreements of the other Lenders set forth in this Section 2.13(a), to make loans
(each such loan, a “Swing Line Loan”), to the Company from time to time on any
Business Day during the period from the Effective Date to the Termination Date
in an aggregate amount not to exceed at any time outstanding the amount of the
Swing Line Sublimit, notwithstanding the fact that such Swing Line Loans, when
aggregated with the Pro Rata Share of the outstanding amount of Revolving Credit
Loans and LC Obligations of the Lender acting as Swing Line Lender, may exceed
the amount of such Lender’s Commitment; provided, however, that after giving
effect to any Swing Line Loan, (A) the sum of the aggregate outstanding amount
of the Revolving Credit Loans plus the Swing Line Loans plus LC Obligations
shall not exceed the aggregate Commitments at such time, and (B) the sum of the
aggregate outstanding amount of the Revolving Credit Loans of any Lender at such
time, plus such Lender’s Pro Rata Share of the outstanding amount of all LC
Obligations at such time, plus such Lender’s Pro Rata Share of the outstanding
amount of all Swing Line Loans at such time shall not exceed such Lender’s
Commitment. Within the foregoing limits, and subject to the other terms and
conditions hereof, the Company may borrow under this Section 2.13(a), prepay
under Section 2.04(b)(iii), and reborrow under this Section 2.13(a). Each Swing
Line Loan shall bear interest at a rate based on the Base Rate. Immediately upon
the making of a Swing Line Loan, each Revolving Credit Lender shall be deemed
to, and hereby irrevocably and unconditionally agrees to, purchase from the
Swing Line Lender a risk participation in such Swing Line Loan in an amount
equal to the product of such Revolving Credit Lender’s Pro Rata Share times the
amount of such Swing Line Loan.

 

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(b)                                 Borrowing Procedures. Each Swing Line
Borrowing shall be made upon the Company’s irrevocable notice to the Swing Line
Lender and the Administrative Agent, which may be given by telephone. Each such
notice must be received by the Swing Line Lender and the Administrative Agent
not later than 3:00 p.m., Houston, Texas time on the requested borrowing date,
and shall specify (A) the amount to be borrowed, which shall be a minimum of
$200,000 or any whole multiple of $50,000 in excess thereof, and (B) the
requested borrowing date, which shall be a Business Day. Each such telephonic
notice must be confirmed promptly by delivery to the Swing Line Lender and the
Administrative Agent of a written Swing Line Loan Notice, appropriately
completed and signed by a Responsible Officer of the Company. Promptly after
receipt by the Swing Line Lender of any telephonic Swing Line Loan Notice, the
Swing Line Lender will confirm with the Administrative Agent (by telephone or in
writing) that the Administrative Agent has also received such Swing Line Loan
Notice and, if not, the Swing Line Lender will notify the Administrative Agent
(by telephone or in writing) of the contents thereof. Unless the Swing Line
Lender has received notice (by telephone or in writing) from the Administrative
Agent (including at the request of any Lender) prior to 4:00 p.m., Houston,
Texas time on the date of the proposed Swing Line Borrowing (I) directing the
Swing Line Lender not to make such Swing Line Loan as a result of the
limitations set forth in the proviso to the first sentence of Section 2.13(a),
or (II) that one or more of the applicable conditions specified in Article V is
not then satisfied, then subject to the terms and conditions hereof, the Swing
Line Lender will, not later than 5:00 p.m., Houston, Texas time on the borrowing
date specified in such Swing Line Loan Notice, make the amount of its Swing Line
Loan available to the Company at its office by crediting the account of the
Company on the books of the Swing Line Lender in immediately available funds.

 

(c)                                  Refinancing of Swing Line Loans.

 

(i)                                     The Swing Line Lender at any time in its
sole and absolute discretion, may request, on behalf of the Company (which
hereby irrevocably authorizes the Swing Line Lender to so request on its
behalf), that each Lender make a Revolving Credit Loan (which shall be a Base
Rate Loan) in an amount equal to such Lender’s Pro Rata Share of the amount of
Swing Line Loans then outstanding. Such request shall be made in writing (which
written request shall be deemed to be a Notice of Revolving Credit Borrowing for
purposes hereof) and in accordance with the requirements of Section 2.02,
without regard to the minimum and multiples specified therein for the principal
amount of Base Rate Loans, but subject to the unutilized portion of the
aggregate Commitments and the conditions set forth in Section 5.02. The Swing
Line Lender shall furnish the Company with a copy of the applicable borrowing
notice promptly after delivering such notice to the Administrative Agent. Each
Lender shall make an amount equal to its Pro Rata Share of the amount specified
in such notice available to the Administrative Agent in immediately available
funds for the account of the Swing Line Lender at the Administrative Agent’s
Payment Office not later than 2:00 p.m. Houston, Texas time on the day specified
in such borrowing notice, whereupon, subject to Section 2.13(c)(ii), each Lender
that so makes funds available shall be deemed to have made a Revolving Credit
Loan that is a Base Rate Loan to the Company in such amount. The Administrative
Agent shall remit the funds so received to the Swing Line Lender.

 

(ii)                                  If for any reason any Swing Line Loan
cannot be refinanced by such a Revolving Credit Loan in accordance with Section
2.13(c)(i), the request for Revolving Credit Loans submitted by the Swing Line
Lender as set forth herein shall be deemed to be a request by the Swing Line
Lender that each of the Lenders fund its risk participation in the relevant
Swing Line Loan and each Lender’s payment to the Administrative Agent for the
account of the Swing Line Lender pursuant to Section 2.13(c)(i) shall be deemed
payment in respect of such participation.

 

(iii)                               If any Lender fails to make available to the
Administrative Agent for the account of the Swing Line Lender any amount
required to be paid by such Lender pursuant to the

 

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foregoing provisions of this Section 2.13(c) by the time specified in Section
2.13(c)(i), the Swing Line Lender shall be entitled to recover from such Lender
(acting through the Administrative Agent), on demand, such amount with interest
thereon for the period from the date such payment is required to the date on
which such payment is immediately available to the Swing Line Lender at a rate
per annum equal to the greater of the Federal Funds Rate and a rate determined
by the Swing Line Lender in accordance with banking industry rules on interbank
compensation, plus any administrative, processing or similar fees customarily
charged by the Swing Line Lender in connection with the foregoing. If such
Lender pays such amount (with interest and fees as aforesaid), the amount so
paid shall constitute such Lender’s Revolving Credit Loan included in the
relevant borrowing or funded participation in the relevant Swing Line Loan, as
the case may be. A certificate of the Swing Line Lender submitted to any Lender
(through the Administrative Agent) with respect to any amounts owing under this
clause (iii) shall be conclusive absent manifest error.

 

(iv)                              Each Lender’s obligation to make Revolving
Credit Loans or to purchase and fund risk participations in Swing Line Loans
pursuant to this Section 2.13(c) shall be absolute and unconditional and shall
not be affected by any circumstance, including (A) any setoff, counterclaim,
recoupment, defense or other right which such Lender may have against the Swing
Line Lender, the Company or any other Person for any reason whatsoever, (B) the
occurrence or continuance of a Default, or (C) any other occurrence, event or
condition, whether or not similar to any of the foregoing. No such funding of
risk participations shall relieve or otherwise impair the obligation of the
Company to repay Swing Line Loans, together with interest as provided herein.

 

(d)                                 Repayment of Participations.

 

(i)                                     At any time after any Lender has
purchased and funded a risk participation in a Swing Line Loan, if the Swing
Line Lender receives any payment on account of such Swing Line Loan, the Swing
Line Lender will distribute to such Revolving Credit Lender its Pro Rata Share
thereof in the same funds as those received by the Swing Line Lender.

 

(ii)                                  If any payment received by the Swing Line
Lender in respect of principal or interest on any Swing Line Loan is required to
be refunded by the Swing Line Lender under any of the circumstances described in
Section 11.05 (including pursuant to any settlement entered into by the Swing
Line Lender in its discretion), each Lender shall pay to the Swing Line Lender
its Pro Rata Share thereof on demand of the Administrative Agent, plus interest
thereon from the date of such demand to the date such amount is returned, at a
rate per annum equal to the Federal Funds Rate. The Administrative Agent will
make such demand upon the request of the Swing Line Lender. The obligations of
the Lenders under this clause shall survive the payment in full of the
Obligations and the termination of this Agreement.

 

(e)                                  Interest for Account of Swing Line Lender.
The Swing Line Lender shall be responsible for invoicing the Company for
interest on the Swing Line Loans. Until each Lender funds it Revolving Credit
Loan or risk participation pursuant to this Section 2.13(e) to refinance such
Lender’s Pro Rata Share of any Swing Line Loan, interest in respect of such Pro
Rata Share shall be solely for the account of the Swing Line Lender.

 

(f)                                    Payments Directly to Swing Line Lender.
The Company shall make all payments of principal and interest in respect of the
Swing Line Loans directly to the Swing Line Lender.

 

2.14                        Special Provisions Applicable to BEP I.

 

(a)                                  Notwithstanding anything to the contrary
set forth in this Agreement or any other Loan Document, for so long as BEP I is
not a Wholly Owned Subsidiary of Parent, (x) BEP I shall not be

 

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required to execute a Guaranty or grant Liens on its property or assets to
secure the Obligations, and (y) the occurrence of a BEP I Default shall not
constitute a Default or an Event of Default under this Agreement. Any of the
following shall constitute a “BEP I Default”: (i) BEP I incurs any Indebtedness,
(ii) the failure of the Loan Parties to cause BEP I to comply with one or more
covenants in this Agreement that are applicable to Restricted Subsidiaries and
expiration of the applicable grace period set forth in this Agreement, if any,
(iii) failure of a representation and warranty contained in this Agreement to be
correct with respect to BEP I or the Oil and Gas Properties owned by it, and
(iv) any of the events or circumstances described in Section 9.01(f) or 9.01(g)
occur with respect to BEP I or any of its subsidiaries.

 

(b)                                 Upon the occurrence of a BEP I Default, the
Required Lenders may request a Special Borrowing Base Determination.

 

(c)                                  This Section 2.14 shall cease to apply when
BEP I is a Wholly Owned Subsidiary of Parent, or, if earlier, when agreed by the
Company.

 

ARTICLE III.

TAXES, YIELD PROTECTION AND ILLEGALITY;
REPLACEMENT OF LENDERS

 

3.01                        Taxes.

 

(a)                                  Payments Free of Taxes. Any and all
payments by or on account of any Obligation of the Company shall be made free
and clear of and without reduction or withholding for any Indemnified Taxes or
Other Taxes, provided that if the Company shall be required by a Requirement of
Law to deduct any Indemnified Taxes (including any 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) the Administrative Agent, Lender or Issuing
Lender, as the case may be, receives an amount equal to the sum it would have
received had no such deductions been made, (ii) the Company shall make such
deductions and (iii) the Company shall timely pay the full amount deducted to
the relevant Governmental Authority in accordance with Requirements of Law.

 

(b)                                 Payment of Other Taxes by the Company.
Without limiting the provisions of Section 3.01(a) above, the Company shall
timely pay any Other Taxes to the relevant Governmental Authority in accordance
with Requirements of Law.

 

(c)                                  Indemnification by the Company. The Company
shall indemnify the Administrative Agent, each Lender and the Issuing Lender,
within 10 days after demand therefor, for the full amount of any Indemnified
Taxes or Other Taxes (including Indemnified Taxes or Other Taxes imposed or
asserted on or attributable to amounts payable under this Section) paid by the
Administrative Agent, such Lender or the Issuing Lender, as the case may be, 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 as to the amount of such payment or liability delivered to the
Company by a Lender or the Issuing Lender (with a copy to the Administrative
Agent), or by the Administrative Agent on its own behalf or on behalf of a
Lender or the Issuing Lender, 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 Company to a
Governmental Authority, the Company shall deliver to the

 

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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)                                  Status of 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 Company is resident for Tax purposes, or any
treaty to which such jurisdiction is a party, with respect to payments hereunder
or under any other Loan Document shall deliver to the Company (with a copy to
the Administrative Agent), at the time or times prescribed by Requirements of
Law or reasonably requested by the Company or the Administrative Agent, such
properly completed and executed documentation prescribed by Requirements of Law
as will permit such payments to be made without withholding or at a reduced rate
of withholding. In addition, any Lender, if requested by the Company or the
Administrative Agent, shall deliver such other documentation prescribed by
Requirements of Law or reasonably requested by the Company or the Administrative
Agent as will enable the Company or the Administrative Agent to determine
whether or not such Lender is subject to backup withholding or information
reporting requirements.

 

Without limiting the generality of the foregoing, in the event that the Company
is resident for Tax purposes in the United States of America, any Foreign Lender
shall deliver to the Company and the Administrative Agent (in such number of
copies as shall be requested by the recipient) on or prior to the date on which
such Foreign Lender becomes a Lender under this Agreement (and from time to time
thereafter upon the request of the Company or the Administrative Agent, but only
if such Foreign Lender is legally entitled to do so), whichever of the following
is applicable:

 

(i)                                     duly completed copies of Internal
Revenue Service Form W-8BEN claiming eligibility for benefits of an income tax
treaty to which the United States of America is a party,

 

(ii)                                  duly completed copies of Internal Revenue
Service Form W-8ECI,

 

(iii)                               in the case of a Foreign Lender claiming the
benefits of the exemption for portfolio interest under section 881(c) of the
Code, (x) a certificate to the effect that such Foreign Lender is not (A) a
“bank” within the meaning of section 881(c)(3)(A) of the Code, (B) a “10 percent
shareholder” of the Company within the meaning of section 881(c)(3)(B) of the
Code, or (C) a “controlled foreign corporation” described in section
881(c)(3)(C) of the Code and (y) duly completed copies of Internal Revenue
Service Form W-8BEN, or

 

(iv)                              any other form prescribed by Requirements of
Law as a basis for claiming exemption from or a reduction in United States
Federal withholding Tax duly completed together with such supplementary
documentation as may be prescribed by Requirements of Law to permit the Company
to determine the withholding or deduction required to be made.

 

(f)                                    Treatment of Certain Refunds. If the
Administrative Agent, a Lender or the Issuing Lender determines, in its sole
discretion, that it has received a refund of any Taxes or Other Taxes as to
which it has been indemnified by the Company or with respect to which the
Company has paid additional amounts pursuant to this Section, it shall pay to
the Company an amount equal to such refund (but only to the extent of indemnity
payments made, or additional amounts paid, by the Company under this Section
with respect to the Taxes or Other Taxes giving rise to such refund), net of all
out-of-pocket expenses of the Administrative Agent, such Lender or the Issuing
Lender, as the case may be, and without interest (other than any interest paid
by the relevant Governmental Authority with respect to such refund), provided
that the Company, upon the request of the Administrative Agent, such Lender or
the Issuing Lender, agrees to repay the amount paid over to the Company (plus
any penalties, interest or other charges imposed by the relevant Governmental
Authority) to the Administrative Agent, such Lender or

 

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the Issuing Lender in the event the Administrative Agent, such Lender or the
Issuing Lender is required to repay such refund to such Governmental Authority.
This Section 3.01(f) shall not be construed to require the Administrative Agent,
any Lender or the Issuing Lender to make available its tax returns (or any other
information relating to its Taxes that it deems confidential) to the Company or
any other Person.

 

3.02                        Illegality.

 

(a)                                  If any Lender determines that the
introduction of any Requirement of Law, or any change in any Requirement of Law,
or in the interpretation or administration of any Requirement of Law, has, since
the Effective Date, made it unlawful, or that, since the Effective Date, any
central bank or other Governmental Authority has asserted that it is unlawful,
for any Lender or its applicable Lending Office to make LIBOR Loans, then, on
notice thereof by the Lender to the Company through the Administrative Agent,
any obligation of that Lender to make LIBOR Loans shall be suspended until the
Lender notifies the Administrative Agent and the Company that the circumstances
giving rise to such determination no longer exist; such notice to be promptly
given upon the determination that such circumstances no longer exist.

 

(b)                                 If a Lender determines that it is unlawful
to maintain any LIBOR Loan, the Company shall, upon its receipt of notice of
such fact and demand from such Lender (with a copy to the Administrative Agent),
convert such LIBOR Loans of that Lender then outstanding, together with interest
accrued thereon and amounts required under Section 3.04 into a Base Rate Loan
without regard to conditions precedent described in Section 5.02(b), either on
the last day of the Interest Period thereof, if the Lender may lawfully continue
to maintain such LIBOR Loans to such day, or immediately, if the Lender may not
lawfully continue to maintain such LIBOR Loan. If the Company is required to so
prepay any LIBOR Loan, then concurrently with such prepayment, the Company shall
borrow from the affected Lender, in the amount of such repayment, a Base Rate
Loan.

 

(c)                                  If the obligation of any Lender to make or
maintain LIBOR Loans has been so terminated or suspended, all Loans which would
otherwise be made by the Lender as LIBOR Loans shall be instead Base Rate Loans.

 

(d)                                 Before giving any notice to the
Administrative Agent under this Section, the affected Lender shall designate a
different Lending Office with respect to its LIBOR Loans if such designation
will avoid the need for giving such notice or making such demand and will not,
in the judgment of the Lender, be illegal or otherwise disadvantageous to the
Lender.

 

3.03                        Increased Costs and Reduction of Return.

 

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

 

(i)                                     impose, modify or deem applicable any
reserve, special deposit, compulsory loan, insurance charge or similar
requirement against assets of, deposits with or for the account of, or credit
extended or participated in by, any Lender (except any reserve requirement
included in the calculation of the LIBOR) or the Issuing Lender;

 

(ii)                                  subject any Lender or the Issuing Lender
to any tax of any kind whatsoever with respect to this Agreement, any Letter of
Credit, any participation in a Letter of Credit or any LIBOR Loan made by it, or
change the basis of taxation of payments to such Lender or the Issuing Lender in
respect thereof (except for Indemnified Taxes or Other Taxes covered by Section
3.01 and the imposition of, or any change in the rate of, any Excluded Tax
payable by such Lender or the Issuing Lender); or

 

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

 

and the result of any of the foregoing shall be to increase the cost to such
Lender of making or maintaining any LIBOR Loan (or of maintaining its obligation
to make any such Loan), or to increase the cost to such Lender or the Issuing
Lender of participating in, issuing or maintaining any Letter of Credit (or of
maintaining its obligation to participate in or to issue any Letter of Credit),
or to reduce the amount of any sum received or receivable by such Lender or the
Issuing Lender hereunder (whether of principal, interest or any other amount)
then, upon request of such Lender or the Issuing Lender, the Company will pay to
such Lender or the Issuing Lender, as the case may be, such additional amount or
amounts as will compensate such Lender or the Issuing Lender, as the case may
be, for such additional costs incurred or reduction suffered.

 

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

 

(c)                                  Certificates for Reimbursement. A
certificate of a Lender or the Issuing Lender setting forth the amount or
amounts necessary to compensate such Lender or the Issuing Lender or its holding
company, as the case may be, as specified in Sections 3.03(a) or (b) and
delivered to the Company shall be conclusive absent manifest error. The Company
shall pay such Lender or the Issuing Lender, as the case may be, the amount
shown as due on any such certificate within 10 days after receipt thereof.

 

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

 

3.04                        Funding Losses. The Company shall reimburse each
Lender and hold each Lender harmless from any loss or expense excluding
consequential losses which the Lender may sustain or incur as a consequence of:
(a) the failure of the Company to make on a timely basis any payment of
principal of any LIBOR Loan; (b) the failure of the Company to borrow, continue
or convert a Loan after the Company has given (or is deemed to have given) a
Notice of Revolving Credit Borrowing or a Notice of Conversion/Continuation
(including by reason of the failure to satisfy any condition precedent thereto);

 

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(c) the failure of the Company to make any prepayment in accordance with any
notice delivered under Section 2.04; (d) the prepayment (including pursuant to
Section 2.05 or 2.06) or other payment (including after acceleration thereof) of
a LIBOR Loan on a day that is not the last day of the relevant Interest Period;
or (e) the automatic conversion under Section 2.03 of any LIBOR Loan to a Base
Rate Loan on a day that is not the last day of the relevant Interest Period;
including any such loss or expense arising from the liquidation or reemployment
of funds obtained by it to maintain its LIBOR Loans or from fees payable to
terminate the deposits from which such funds were obtained. For purposes of
calculating amounts payable by the Company to the Lenders under this Section and
under Section 3.03(a), each LIBOR Loan made by a Lender (and each related
reserve, special deposit or similar requirement) shall be conclusively deemed to
have been funded at the LIBOR used in determining the LIBOR for such LIBOR Loan
by a matching deposit or other borrowing in the interbank eurodollar market for
a comparable amount and for a comparable period, whether or not such LIBOR Loan
is in fact so funded.

 

3.05                        Inability to Determine Rates. If Administrative
Agent determines that for any reason adequate and reasonable means do not exist
for determining the LIBOR for any requested Interest Period with respect to a
proposed LIBOR Loan, or that the LIBOR applicable pursuant to Section 2.06(c)
for any requested Interest Period with respect to a proposed LIBOR Loan does not
adequately and fairly reflect the cost to the Lender of funding such Loan, the
Administrative Agent will promptly so notify the Company and each Lender.
Thereafter, the obligation of the Lenders to make or maintain LIBOR Loans
hereunder shall be suspended until the Administrative Agent upon the instruction
of the Lenders revokes such notice in writing; such written revocation to be
promptly given upon determination that such circumstances no longer exist. Upon
receipt of such notice, the Company may revoke any Notice of Revolving Credit
Borrowing or Notice of Conversion/Continuation then submitted by it. If the
Company does not revoke such notice, the Lenders shall make, convert or continue
the Loans, as proposed by the Company, in the amount specified in the applicable
notice submitted by the Company, but such Loans shall be made, converted or
continued as Base Rate Loans instead of LIBOR Loans.

 

3.06                        Certificates of Lenders. Any Lender claiming
reimbursement or compensation under this Article III shall deliver to the
Company (with a copy to the Administrative Agent) a certificate setting forth in
reasonable detail the amount payable to the Lender hereunder and such
certificate shall be conclusive and binding on the Company in the absence of
manifest error provided, however, that such Lender shall only be entitled to
collect amounts incurred within 180 days of such notice.

 

3.07                        Mitigation Obligations; Replacement of Lenders.

 

(a)                                  Designation of a Different Lending Office.
If any Lender requests compensation under Section 3.03, or requires the Company
to pay any additional amount to any Lender or any Governmental Authority for the
account of any Lender pursuant to Section 3.01, 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 3.01 or 3.03, 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 in its sole discretion. The
Company 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 3.03, (ii) the Company is required to pay
any additional amount to any Lender or any Governmental Authority for the
account of any Lender pursuant to Section 3.01, (iii) any Lender defaults in its
obligation to fund Loans hereunder, or (iv) any Lender refuses to consent to any
amendment, waiver or other modification of any Loan Document requested by the
Company that requires the consent of a

 

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greater percentage of the Lenders than the Majority Lenders and such amendment,
waiver or other modification is consented to by the Majority Lenders, then the
Company may, at its sole expense and effort, upon notice to such Lender and the
Administrative Agent, require such Lender to assign and delegate, without
recourse (in accordance with and subject to the restrictions contained in, and
consents required by, Section 11.06), all of its interests, rights and
obligations under this Agreement and the related Loan Documents to an assignee
that shall assume such obligations (which assignee may be another Lender, if a
Lender accepts such assignment), provided that:

 

(i)                                     the Company shall have paid to the
Administrative Agent the assignment fee specified in Section 11.06;

 

(ii)                                  such Lender shall have received payment of
an amount equal to the outstanding principal of its Loans and participations in
LC Obligations, accrued interest thereon, accrued fees and all other amounts
payable to it hereunder and under the other Loan Documents (including any
amounts under Section 3.04) from the assignee (to the extent of such outstanding
principal and accrued interest and fees) or the Company (in the case of all
other amounts);

 

(iii)                               in the case of any such assignment resulting
from a claim for compensation under Section 3.03 or payments required to be made
pursuant to Section 3.01, such assignment will result in a reduction in such
compensation or payments thereafter; and

 

(iv)                              such assignment does not conflict with
applicable law.

 

A Lender shall not be required to make any such assignment or delegation if,
prior thereto, as a result of a waiver by such Lender or otherwise, the
circumstances entitling the Company to require such assignment and delegation
cease to apply.

 

3.08                        Survival. The agreements and obligations of the
Company in this Article III shall survive the payment of all other Obligations.

 

ARTICLE IV.

SECURITY

 

4.01                        The Security. The Obligations will be secured by the
Security Documents described in Schedule 4.01 and any additional Security
Documents hereafter delivered by the Loan Parties and accepted by the
Administrative Agent.

 

4.02                        Agreement to Deliver Security Documents. The Loan
Parties agree to deliver to further secure the Obligations whenever requested by
the Administrative Agent in its sole and absolute discretion, deeds of trust,
mortgages, chattel mortgages, security agreements, financing statements and
other Security Documents in form and substance reasonably satisfactory to the
Administrative Agent for the purpose of granting, confirming, and perfecting
first and prior liens or security interests on substantially all assets of
Parent, the Company and their present and future Subsidiaries, including Oil and
Gas Properties representing not less than 80% of the total value of all Oil and
Gas Properties now owned or hereafter acquired by the Loan Parties, as
applicable, subject to Permitted Liens. The Loan Parties also agree to deliver
whenever requested by the Lenders, title opinions from legal counsel reasonably
acceptable to the Lenders or such other evidence of title reasonably
satisfactory to the Lenders with respect to the Mortgaged Properties designated
by the Lenders, based upon abstract or record examinations to dates reasonably
acceptable to the Lenders and (a) stating that the Loan Party, as applicable,
has good and defensible title to such properties and interests, free and clear
of all Liens except Permitted Liens,

 

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(b) confirming that such Oil and Gas Properties are subject to Security
Documents securing the Obligations that constitute and create legal, valid and
duly perfected deed of trust or mortgage liens in such Oil and Gas Properties
and assignments of and security interests in the Oil and Gas attributable to
such Oil and Gas Properties and the proceeds thereof, in each case subject only
to Permitted Liens, and (c) covering such other matters as the Lenders may
reasonably request.

 

4.03                        Perfection and Protection of Security Interests and
Liens.

 

(a)                                  The Loan Parties will from time to time
deliver to the Administrative Agent any financing statements, amendment,
assignment and continuation statements, extension agreements and other
documents, properly completed and executed (and acknowledged when required) by
each Loan Party, as applicable, in form and substance reasonably satisfactory to
the Administrative Agent, which the Administrative Agent reasonably requests for
the purpose of perfecting, confirming, or protecting any Liens or other rights
in Collateral securing any Obligations.

 

(b)                                 In the case of properties other than Oil and
Gas Properties, this Agreement and the other Loan Documents shall not require
the creation or perfection of Liens in particular properties or assets if and
for so long as, in the judgment of the Administrative Agent, the cost of
creating or perfecting such Liens in such property shall be excessive in view of
the benefits to be obtained by the Lenders therefrom. The Administrative Agent
may grant extensions of time for the creation and perfection of Liens in
particular assets or property where it determines, in consultation with the
Company, that such action cannot be accomplished without undue effort or expense
by the time or times at which it would otherwise be required by this Agreement
or the other Loan Documents.

 

4.04                        Offset. To secure the repayment of the Obligations
the Company hereby grants the Administrative Agent and each Lender a security
interest, a lien, and a right of offset, each of which shall be in addition to
all other interests, liens, and rights of the Administrative Agent at common
law, under the Loan Documents, or otherwise, and each of which shall be upon and
against (a) any and all moneys, securities or other property (and the proceeds
therefrom) of the Company now or hereafter held or received by or in transit to
the Administrative Agent or any Lender from or for the account of the Company,
whether for safekeeping, custody, pledge, transmission, collection or otherwise,
(b) any and all deposits (general or special, time or demand, provisional or
final) of the Company with the Administrative Agent or any Lender, and (c) any
other credits and claims of the Company at any time existing against the
Administrative Agent or any Lender, including claims under certificates of
deposit. During the existence of any Event of Default, the Administrative Agent
or any Lender is hereby authorized to foreclose upon, offset, appropriate, and
apply, at any time and from time to time, without notice to the Company, any and
all items hereinabove referred to against the Obligations then due and payable.

 

4.05                        Subsidiary Guaranty and Security Agreement.

 

(a)                                  Each Subsidiary of a Loan Party now
existing or created, acquired or coming into existence after the date hereof,
including without limitation, each of the Guarantors, shall pursuant to Section
7.15, promptly upon request by the Administrative Agent, execute and deliver to
the Administrative Agent an absolute and unconditional guaranty of the timely
repayment, and the due and punctual performance, of the Obligations of the
Company hereunder, which Guaranty shall be substantially in the form and
substance of Exhibit G-2, a Security Agreement substantially in the form of
Exhibit H, and Security Documents as required by Section 4.02. The Company and
its Subsidiaries will cause each of their Subsidiaries to deliver to the
Administrative Agent, simultaneously with its delivery of such Guaranty and
Security Agreement, (x) written evidence satisfactory to the Administrative
Agent that such Subsidiary has taken all organizational action necessary to duly
approve and authorize its execution,

 

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delivery and performance of such Guaranty, Security Agreement and any other
documents which it is required to execute, and (y) such additional closing
documents, certificates and opinions of counsel as the Administrative Agent
shall require.

 

(b)                                 Each Loan Party is mutually dependent on
each other in the conduct of their respective businesses, with the credit needed
from time to time by each often being provided by another or by means of
financing obtained by one such Affiliate with the support of the other for their
mutual benefit and the ability of each to obtain such financing is dependent on
the successful operations of the other. The board of directors, managers or
general partner, where applicable, of each Guarantor has determined that such
Guarantor’s execution, delivery and performance of this Agreement may reasonably
be expected to directly or indirectly benefit such Guarantor and is in the best
interests of such Guarantor.

 

(c)                                  The direct or indirect value of the
consideration received and to be received by such Guarantor in connection
herewith is reasonably worth at least as much as the liability and obligations
of each Guarantor hereunder, and the incurrence of such liability and
obligations in return for such consideration may reasonably be expected to
benefit such Guarantor, directly or indirectly.

 

(d)                                 Neither the Company nor any Guarantor is
insolvent on the date hereof (that is, the sum of each Person’s absolute and
contingent liabilities, including the Obligations, does not exceed the fair
market value of such Person’s assets, including any rights of contribution,
reimbursement or indemnity). Each Loan Party has capital which is adequate for
the businesses in which such Person is engaged and intends to be engaged. None
of the Company nor any Guarantor has incurred (whether hereby or otherwise), nor
does the Company or Guarantor intend to incur or believe that it will incur,
liabilities which will be beyond its ability to pay as such liabilities mature.

 

ARTICLE V.

CONDITIONS PRECEDENT

 

5.01                        Conditions of Initial Credit Extensions. The
effectiveness of this Agreement and the obligation of each Lender to make its
initial Loan hereunder and the obligation of the Issuing Lender to issue Letters
of Credit hereunder, are subject to the condition that the Administrative Agent
shall have received all of the following, in form and substance satisfactory to
the Administrative Agent:

 

(a)                                  Credit Agreement and Notes. This Agreement,
the Notes, the Guaranties, the Security Documents and the other Loan Documents
executed by each party thereto;

 

(b)                                 Resolutions; Incumbency; Organization
Documents, Good Standing. A certificate of the Secretary or Assistant Secretary
or a Responsible Officer with similar responsibilities of each Loan Party, or in
the event that such Loan Party is a limited partnership, such Person’s general
partner, certifying as of the Effective Date: (i) Resolutions of its board of
directors or members, authorizing the transactions contemplated hereby; (ii) the
names and genuine signatures of the Responsible Officers of such Person,
authorized to execute, deliver and perform, as applicable, this Agreement, the
Notes, the Guaranties, the Security Documents, and all other Loan Documents to
be delivered by such Person; (iii) the Organization Documents of such Person as
in effect as of the Effective Date; (iv) the good standing certificate for such
Person, from its state of incorporation, formation or organization, as
applicable, dated as of a recent date; and (v) as may be required by the
Administrative Agent, certificate(s) of authority for such Person from states
wherein such Person conducts business, evidencing such Person’s qualification to
do business in such state. dated as of a recent date;

 

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(c)                                  Certificate of a Responsible Officer of
Parent. A certificate signed by a Responsible Officer of Parent follows:

 

(i)                                     certifying as to the sources and uses of
funding for the Quicksilver Acquisition;

 

(ii)                                  certifying:

 

(A)                              that attached thereto is a true and complete
executed copy of the Quicksilver Acquisition Agreement;

 

(B)                                that the Company is consummating the
Quicksilver Acquisition on the Effective Date substantially concurrently with
the making of the Loans on the date of such certificate, in accordance with the
terms of the Quicksilver Acquisition Agreement and with the conditions precedent
thereto having been satisfied (other than payment of the cash purchase price in
the amount specified in such Certificate), except as may be acceptable to the
Administrative Agent (provided that the Company may waive the requirement that
Quicksilver deliver audited financial statements as a condition precedent to the
closing of the Quicksilver Acquisition);

 

(C)                                as to the final purchase price for the
Quicksilver Acquisition Properties and the Quicksilver Target Equity Interests
after giving effect to all adjustments as of the Effective Date contemplated by
the Quicksilver Acquisition Documents and specifying, by category (e.g., working
capital, capital expenditures, title defect or environmental defect), the amount
of such adjustment;

 

(D)                               that attached thereto is a true and complete
list of the Quicksilver Acquisition Properties, if any, which have been excluded
from the Quicksilver Acquisition pursuant to the terms of the Quicksilver
Acquisition Documents, specifying with respect thereto the basis of exclusion
(e.g., title defect or environmental defect);

 

(E)                                 that attached thereto is a true and complete
list of all Quicksilver Acquisition Properties for which any seller has elected
to cure a title defect;

 

(F)                                 that attached thereto is a true and complete
list of all Quicksilver Acquisition Properties for which any seller has elected
to remediate an adverse environmental condition; and

 

(G)                                that attached thereto is a true and complete
list of all Quicksilver Acquisition Properties which are currently pending final
decision by a third party regarding purchase of such property in accordance with
any preferential right;

 

(iii)                               certifying that Parent received gross
proceeds of not less than $350,000,000 through an offering of common equity or
private placement of its common units and contributed the net proceeds of such
offering to the Company;

 

(iv)                              certifying no Quicksilver Material Adverse
Effect shall have occurred;

 

(v)                                 certifying that all applicable waiting
periods specified under the Hart-Scott-Rodino Antitrust Improvements Act of 1976
with respect to the transactions contemplated by the Quicksilver Acquisition
Agreement shall have lapsed or terminated;

 

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(vi)                              certifying that the Company has received all
Permits of any Governmental Entity (other than Customary Post-Closing Consents)
as are necessary in connection with (A) the transfer of the Interests to the
Company except where failure to have received such Permit would not have a
Quicksilver Material Adverse Effect and (B) the issuance of the Common Units
comprising the Equity Consideration to Quicksilver (capitalized terms used in
this clause (vi) that are not defined in this Agreement shall have the meanings
given to them in the Quicksilver Acquisition Agreement);

 

(vii)                           certifying that there shall be no order of any
nature by any Governmental Entity that is in effect that restrains or prohibits
the consummation of any of the transactions contemplated by the Quicksilver
Acquisition Agreement, and no Action before any Governmental Entity shall have
been instituted or threatened by any Person which seeks to prevent or delay the
consummation of any of the transactions contemplated by the Quicksilver
Acquisition Agreement or which challenges the enforceability of the Quicksilver
Acquisition Agreement or any of the Loan Documents (capitalized terms used in
this clause (vii) that are not defined in this Agreement shall have the meanings
given to them in the Quicksilver Acquisition Agreement);

 

(viii)                        certifying that there shall be no Actions pending
and, to the Company’s Knowledge, no Action threatened in law or in equity or
before any Governmental Entity, against Quicksilver (with regard to the
Quicksilver Acquisition Properties) or any of the Quicksilver Target Equity
Interests, that, if determined or resolved adversely, could result in a
Quicksilver Material Adverse Effect (capitalized terms used in this clause
(viii) that are not defined in this Agreement shall have the meanings given to
them in the Quicksilver Acquisition Agreement);

 

(ix)                                certifying that no Default or Event of
Default exists or will result, under Sections 9.01(a) through (j) or Sections
9.01(l) through (o), both before and after giving effect to the making of
extensions of credit by the Lenders on the Effective Date and the closing of the
Quicksilver Acquisition;

 

(x)                                   certifying that the representations and
warranties of the Company and the other Loan Parties contained in Article VI and
in the other Loan Documents delivered on the Effective Date are true and correct
in all material respects, provided that (1) the representation and warranty
pursuant to Section 6.14 is made without giving effect to the extensions of
credit by the Lenders on the Effective Date or the closing of the Quicksilver
Acquisition, and (2) with respect to the Quicksilver Acquisition Properties the
Company makes only (A) those representations that Quicksilver makes in the
Quicksilver Acquisition Agreement, the breach of which would result in the
Company having the right to terminate its obligations under the Quicksilver
Acquisition Agreement, and (B) the representations contained in Sections 6.01,
6.02, 6.06(b), 6.08 and 6.16;

 

(xi)                                certifying as to the solvency of the Company
and its Subsidiaries taken as a whole and Parent and its Subsidiaries taken as a
whole, after giving effect to the Quicksilver Acquisition and the incurrence on
the Effective Date of Indebtedness hereunder;

 

(xii)                             certifying that the Company has entered into
one or more Derivative Contracts which cover at least 80% of the reasonably
anticipated projected production from the Quicksilver Acquisition Properties
constituting proved developed producing Oil and Gas Properties;

 

(xiii)                          attaching and certifying a pro forma
consolidated balance sheet and related pro forma consolidated statement of
income of Parent as of and for the twelve month period ending on the last day of
the most recently completed four fiscal quarter period, prepared after giving
effect to the Quicksilver Acquisition as if the Quicksilver Acquisition had
occurred as of such date (in the case of such balance sheet) or at the beginning
of such period (in the case of such other financial

 

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statements), which financial statements shall not be materially inconsistent
with the reserve reports previously provided to the Administrative Agent; and

 

(xiv)                         attaching calculations demonstrating pro forma
compliance with Sections 8.14, 8.15 and 8.16, giving effect to the Quicksilver
Acquisition, as of the end of the most recent fiscal quarter of the Company for
which financial statements have been filed with the SEC;

 

(xv)                            attaching and certifying insurance certificates
from the Company’s insurance carriers reflecting the current insurance policies
required under Section 7.08 including any necessary endorsements to reflect the
Administrative Agent as additional insured and loss payee for the ratable
benefit of the Lenders;

 

(d)                                 Certificate of a Responsible Officer of
Parent. A certificate signed by a Responsible Officer of Parent follows:

 

(i)                                     certifying that attached thereto are
true and complete copies of the assignments, deeds and leases for all of the
Quicksilver Acquisition Properties;

 

(ii)                                  certifying that, based upon a due
diligence review of title covering the Quicksilver Acquisition Properties
consistent with the due diligence protocol and procedures furnished to the
Administrative Agent dated September 10, 2007 (A) such due diligence review
covers not less than 70% of the total net present value (determined by a
discount factor of 10%) of the Quicksilver Oil and Gas Properties that
constitute proved Oil and Gas Properties, and (B) the Loan Parties have good and
defensible title to their Oil and Gas Properties, subject to no other liens,
other than (1) Permitted Liens, and (2) Title Defects (as defined in the
Quicksilver Acquisition Agreement) with respect to which the Company has
asserted its rights pursuant to Section 6.12(d) of the Quicksilver Acquisition
Agreement, and certifying that no Title Defects exist that would permit
termination of the Quicksilver Acquisition Agreement pursuant to Section 8.1(c)
thereof; and

 

(iii)                               attaching copies of environmental review
reports prepared by an independent consultant for the Company covering the
Quicksilver Acquisition Properties, such report to be addressed to the
Administrative Agent or to be accompanied by a reliance letter reasonably
satisfactory to the Administrative Agent, and certifying that (A) to the extent
there are Environmental Defects (as defined in the Quicksilver Acquisition
Agreement) the Company has asserted its rights pursuant to Section 6.14(b) of
the Quicksilver Acquisition Agreement, and (B) there does not exist
Environmental Defects that would permit termination of the Quicksilver
Acquisition Agreement pursuant to Section 8.1(c) thereof;

 

(e)                                  Pricing Grid Certificate. A Pricing Grid
Certificate, prepared by giving effect to the Quicksilver Acquisition and the
initial Loans on the Effective Date;

 

(f)                                    Payment of Fees. Evidence of payment by
the Company of all accrued and unpaid fees, costs and expenses owed pursuant to
this Agreement to the extent then due and payable on the Effective Date,
including any such costs, fees and expenses arising under or referenced in
Sections 2.07 and 11.04;

 

(g)                                 Opinion of Counsel. Opinions of Company’s
general counsel, Vinson & Elkins L.L.P., as counsel for the Loan Parties, and
opinion of local counsel for the Loan Parties, covering such matters as the
Administrative Agent may require and in form and substance satisfactory to the
Administrative Agent, dated as of the Effective Date;

 

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(h)                                 Notice. The Administrative Agent shall have
received a Notice of Revolving Credit Borrowing, a request for a Letter of
Credit pursuant to Section 2.10 or a request for a Swing Line Loan pursuant to
Section 2.13, as applicable; and

 

(i)                                     Other Documents. Such other approvals,
opinions, documents or materials as the Administrative Agent or any Lender may
reasonably request.

 

5.02                        Conditions to Extensions of Credit. The obligation
of each Lender to make any Loan after the Effective Date or to convert any
Revolving Credit Loan into a LIBOR Loan under Section 2.03 (but specifically
excluding the continuation of LIBOR Loans on the last day of the Interest Period
therefor), and the obligation of the Issuing Lender to issue, amend, renew or
extend any Letter of Credit after the Effective Date, is subject to the
satisfaction of the following conditions precedent; provided that this Section
5.02 shall not apply to any Credit Extensions to be made on the Effective Date:

 

(a)                                  Notice. The Administrative Agent shall have
received a Notice of Revolving Credit Borrowing, a Notice of
Conversion/Continuation, a request for a Letter of Credit pursuant to Section
2.10 or a request for a Swing Line Loan pursuant to Section 2.13, as applicable;

 

(b)                                 Continuation of Representations and
Warranties. The representations and warranties of the Company and the Guarantors
in Article VI and in the other Loan Documents shall be true and correct in all
material respects on and as of the date of such Credit Extension or conversion,
as applicable, before and after giving effect to such Credit Extension or
conversion (except to the extent such representations and warranties expressly
refer to an earlier date, in which case they shall be true and correct as of
such earlier date, and except that for purposes of this Section 5.02(b), the
representations and warranties contained in Sections (a) and (b) of Section 6.14
shall be deemed to refer to the most recent statements furnished pursuant to
clauses (a) and (b), respectively, of Section 7.01).

 

(c)                                  No Material Adverse Effect. At the time of
and immediately after giving effect to such Borrowing or conversion or the
issuance, amendment, renewal or extension of such Letter of Credit, as
applicable, no Material Adverse Effect shall have occurred or shall exist.

 

(d)                                 No Existing Default. At the time of and
immediately after giving effect to such Borrowing or conversion or the issuance,
amendment, renewal or extension of such Letter of Credit, as applicable, no
Default or Event of Default shall exist.

 

Each Notice of Revolving Credit Borrowing, Notice of Conversion/Continuation and
request for issuance, amendment, renewal or extension of a Letter of Credit
submitted by the Company hereunder shall constitute a representation and
warranty by the Company on the date thereof that the conditions in Section 5.02
are satisfied.

 

ARTICLE VI.

REPRESENTATIONS AND WARRANTIES

 

Each of the Loan Parties represents and warrants to the Administrative Agent and
each Lender that:

 

6.01                        Organization, Existence and Power. Each Loan Party
and each of its Subsidiaries: (a) is duly organized, validly existing and in
good standing under the laws of the jurisdiction of its formation; (b) has the
power and authority and all material governmental licenses, authorizations,
consents and approvals to own its assets, carry on its business and to execute,
deliver, and perform its obligations under

 

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the Loan Documents; (c) is duly qualified as a foreign corporation and is
licensed and in good standing under the laws of each jurisdiction where its
ownership, lease or operation of property or the conduct of its business
requires such qualification or license, except where failure to do so would not
reasonably be expected to have a Material Adverse Effect; and (d) is in
compliance in all material respects with all Requirements of Law.

 

6.02                        Corporate Authorization; No Contravention. The
execution, delivery and performance by each Loan Party of this Agreement and
each other Loan Document to which such Person is a party, have been duly
authorized by all necessary organizational action, and do not and will not: (a)
contravene the terms of any of that Person’s Organization Documents; (b)
conflict with or result in any breach or contravention of, or the creation of
any Lien under, any document evidencing any Contractual Obligation to which such
Person is a party that would be prior to the Liens granted to the Administrative
Agent for the benefit of the Lenders or otherwise that would constitute a
Material Adverse Effect or any order, injunction, writ or decree of any
Governmental Authority to which such Person or its property is subject; or (c)
violate any Requirement of Law, that would constitute a Material Adverse Effect,
including, without limitation, any California Requirement of Law promulgated
with respect to preparedness and damage prevention associated with earthquakes.

 

6.03                        Governmental Authorization. No approval, consent,
exemption, authorization, or other action by, or notice to, or filing with, any
Governmental Authority is necessary or required in connection with the
execution, delivery or performance by, or enforcement against, any Loan Party of
this Agreement or any other Loan Document to which it is a party, except for
filings necessary to obtain and maintain perfection of Liens; routine filings
related to the Loan Parties and the operation of their business; and such
filings as may be necessary in connection with Lenders’ exercise of its remedies
hereunder.

 

6.04                        Binding Effect. This Agreement and each other Loan
Document to which any Loan Party is a party constitute the legal, valid and
binding obligations of such Person to the extent it is a party thereto,
enforceable against such Person in accordance with their respective terms,
except as enforceability may be limited by applicable bankruptcy, insolvency, or
similar laws affecting the enforcement of creditors’ rights generally or by
equitable principles relating to enforceability.

 

6.05                        Litigation. There are no actions, suits,
proceedings, claims or disputes pending, or to the knowledge of the Loan
Parties, threatened or contemplated, at law, in equity, in arbitration or before
any Governmental Authority, against any Loan Party or any of its subsidiaries,
or any of their respective Properties which: (a) purport to affect or pertain to
this Agreement or any other Loan Document, or any of the transactions
contemplated hereby or thereby; or (b) if determined adversely, would reasonably
be expected to have a Material Adverse Effect. To the knowledge of each Loan
Party, no injunction, writ, temporary restraining order or any order of any
nature has been issued by any court or other Governmental Authority purporting
to enjoin or restrain the execution, delivery or performance of this Agreement
or any other Loan Document, or directing that the transactions provided for
herein or therein not be consummated as herein or therein provided.

 

6.06                        No Default.

 

(a)                                  No Default or Event of Default exists or
would be reasonably expected to result from the incurring of any Obligations by
the Loan Parties.

 

(b)                                 No Loan Party or any Restricted Subsidiary
or any Unrestricted Entity is in default under or with respect to any
Contractual Obligation in any respect which, individually or together with all
such defaults, would reasonably be expected to have a Material Adverse Effect,
or that would create an Event of Default under Section 9.01(e). Each Loan Party
and its subsidiaries is in compliance

 

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with all requirements of any Governmental Authority 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 authorizations granted by Governmental Authorities necessary for the
ownership of its Property and the present conduct of its business, except in
each case where the failure to do so, individually or in the aggregate, could
not reasonably be expected to result in a Material Adverse Effect.

 

6.07                        ERISA Compliance. Except as specifically disclosed
in Schedule 6.07:

 

(a)                                  Each Plan is in compliance in all material
respects with the applicable provisions of ERISA, the Code and other federal or
state law. Each Plan which is intended to qualify under Section 401(a) of the
Code has received a favorable determination letter from the IRS and to the
knowledge of the Company, nothing has occurred which would cause the loss of
such qualification. Each Loan Party and each ERISA Affiliate has made all
required contributions to any Plan subject to Section 412 of the Code, and no
application for a funding waiver or an extension of any amortization period
pursuant to Section 412 of the Code has been made with respect to any Plan.

 

(b)                                 There are no pending or, to the knowledge of
any Loan Party, threatened claims, actions or lawsuits, or action by any
Governmental Authority, with respect to any Plan which has resulted or could
reasonably be expected to result in a Material Adverse Effect. There has been no
prohibited transaction or violation of the fiduciary responsibility rules with
respect to any Plan which has resulted or could reasonably be expected to result
in a Material Adverse Effect.

 

(c)                                  (i) No ERISA Event has occurred or is
reasonably expected to occur; (ii) no Pension Plan has any Unfunded Pension
Liability; (iii) no Loan Party nor any ERISA Affiliate has incurred, or
reasonably expects to incur, any liability under Title IV of ERISA with respect
to any Pension Plan (other than premiums due and not delinquent under Section
4007 of ERISA); (iv) no Loan Party nor any ERISA Affiliate has incurred, or
reasonably expects to incur, any liability (and no event has occurred which,
with the giving of notice under Section 4219 of ERISA, would result in such
liability) under Section 4201 or 4243 of ERISA with respect to a Multiemployer
Plan; and (v) no Loan Party nor any ERISA Affiliate has engaged in a transaction
that could be subject to Section 4069 or 4212(c) or ERISA.

 

6.08                        Margin Regulations. The proceeds of the Loans shall
be used solely for the purposes set forth in and permitted by Section 7.16. No
Loan Party is generally engaged in the business of purchasing or selling Margin
Stock or extending credit for the purpose of purchasing or carrying Margin
Stock. No proceeds of any Loan shall be used, whether directly or indirectly,
and whether immediately, incidentally or ultimately, to purchase or carry margin
stock (within the meaning of Regulation U) or to extend credit to others for the
purpose of purchasing or carrying margin stock or to refund indebtedness
originally incurred for such purpose.

 

6.09                        Title to Properties. Subject to Permitted Liens, the
Loan Parties and their Subsidiaries shall each have good and defensible title to
all of their respective Oil and Gas Properties evaluated in the most recently
delivered Reserve Report, and except for such defects in title as would not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect, and each Loan Party and its Subsidiaries shall have good title
to all other Oil and Gas Properties necessary or used in the ordinary conduct of
their respective businesses. After giving full effect to the Permitted Liens,
any Loan Party or Subsidiary thereof specified as the owner under the most
recently delivered Reserve Report owns the net interests in production
attributable to the Oil and Gas Properties as reflected in the most recently
delivered Reserve Report, and the ownership of such Properties shall not in any
material respect obligate such Loan Party or Subsidiary thereof 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

 

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in the most recently delivered Reserve Report that is not offset by a
corresponding proportionate increase in such Loan Party’s or Subsidiary’s net
revenue interest in such Property. Other than as set forth on Schedule 6.09, no
consents or rights of first refusal exist or remain outstanding with respect to
such Loan Party’s or Subsidiary’s interest in the Mortgaged Properties assigned
to it pursuant to any Acquisition of Oil and Gas Properties other than Permitted
Liens. Other than as set forth on Schedule 6.09, as of the Effective Date, the
property of the Loan Parties and their Subsidiaries is subject to no Liens,
other than Permitted Liens.

 

6.10                        Oil and Gas Reserves. Each Loan Party and each of
its Subsidiaries is and will hereafter be, in all material respects, the owner
of the Oil and Gas that it purports to own from time to time in and under its
Oil and Gas Properties, together with the right to produce the same. The Oil and
Gas Properties are not subject to any Lien other than as set forth in the
financial statements referred to in Section 6.14, as disclosed to the Lenders in
writing prior to the date of this Agreement and Permitted Liens. All Oil and Gas
have been and will hereafter be produced, sold and delivered in accordance in
all material respects with all applicable laws and regulations of governmental
authority; each of the Loan Parties and its Subsidiaries has complied in all
material respects and will hereafter use commercially reasonable efforts to
comply with all material terms of each oil, gas and mineral lease and any other
agreement comprising its Oil and Gas Properties; and all such oil, gas and
mineral leases and other agreements have been and will hereafter be maintained
in full force and effect. Provided, however that nothing in this Section 6.10
shall prevent any Loan Party or its Subsidiaries from abandoning any well or
forfeiting, surrendering, releasing or defaulting under any lease in the
ordinary course of business which is not disadvantageous in any way to the
Lenders and which, in the opinion of such Loan Party, is in its best interest,
and such Loan Party and its Subsidiaries is and will hereafter be in compliance
with all obligations hereunder. All of the Loan Parties’ and their Subsidiaries’
Operating Agreements and Operating Leases with respect to their Oil and Gas
Properties are and will hereafter be enforceable in all material respects in
accordance with their terms except as such may be modified by applicable
bankruptcy law or an order of a court in equity.

 

6.11                        Initial Reserve Report. The Company has heretofore
delivered to the Lenders a true and complete copy of (x) a report, dated
effective as of December 31, 2006, prepared by Netherland, Sewell and
Associates, Inc. (collectively, the “Initial Reserve Reports”) relating to an
evaluation of the Oil and Gas attributable to certain of the Mortgaged
Properties described therein. To the knowledge of the Company, (a) the
assumptions stated or used in the preparation of the Initial Reserve Report are
reasonable, (b) all information furnished by the Company to Netherland, Sewell
and Associates, Inc. (the “Independent Engineer”) for use in the preparation of
the Initial Reserve Report, was accurate in all material respects, (c) there has
been no material adverse change in the amount of the estimated Oil and Gas shown
in the Initial Reserve Report since the date thereof, except for changes which
have occurred as a result of production in the ordinary course of business, and
(d) the Initial Reserve Report do not omit any material statement or information
necessary to cause the same not to be misleading to the Lenders.

 

6.12                        Gas Imbalances. There are no gas imbalances, take or
pay or other prepayments with respect to any of the Oil and Gas Properties which
would require the Loan Parties or their Subsidiaries to deliver Oil and Gas
produced from any of the Oil and Gas Properties at some future time without then
or thereafter receiving full payment therefor exceeding 300,000 Mcf of gas (on
an Mcf equivalent basis) in the aggregate.

 

6.13                        Taxes. Unless specifically disclosed on Schedule
6.13, the Loan Parties and their Subsidiaries have filed all federal tax returns
and reports required to be filed, and have paid all federal taxes, assessments,
fees and other governmental charges levied or imposed upon them or their
properties, income or assets otherwise due and payable, except those which are
being contested in good faith by appropriate proceedings and for which adequate
reserves have been provided in accordance with GAAP. The Loan Parties and their
Subsidiaries have filed all state and other non-federal tax returns and reports

 

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required to be filed, and have paid all state and other non-federal taxes,
assessments, fees and other governmental charges levied or imposed upon them or
their properties, income or assets prior to delinquency thereof, except those
which are being contested in good faith by appropriate proceedings and for which
adequate reserves have been provided in accordance with GAAP. To the knowledge
of the Loan Parties, there is no proposed tax assessment against any Loan Party
or any of its subsidiaries that would, if made, reasonably be expected to have a
Material Adverse Effect.

 

6.14                        Financial Condition.

 

(a)                                  The audited consolidated balance sheet of
the Company and its Consolidated Subsidiaries for the fiscal year ended December
31, 2006 (i) were prepared in accordance with GAAP consistently applied
throughout the period covered thereby, except as otherwise expressly noted
therein; (ii) fairly present the financial condition of the Company and its
Consolidated Subsidiaries as of the date thereof and their results of operations
for the period covered thereby in accordance with GAAP consistently applied
throughout the period covered thereby, except as otherwise expressly noted
therein; and (iii) show all material indebtedness and other liabilities, direct
or contingent, of the Company and its Consolidated Subsidiaries as of the date
thereof, including liabilities for taxes, material commitments and Indebtedness.

 

(b)                                 The unaudited consolidated balance sheets of
the Company and its Consolidated Subsidiaries dated June 30, 2007, and the
related consolidated statements of income or operations, shareholders’ equity
and cash flows for the fiscal quarter ended on that date (i) were prepared in
accordance with GAAP consistently applied throughout the period covered thereby,
except as otherwise expressly noted therein, and (ii) fairly present the
financial condition of the Company and its Consolidated Subsidiaries as of the
date thereof and their results of operations for the period covered thereby,
subject, in the case of clauses (i) and (ii), to the absence of footnotes and to
normal year-end audit adjustments.

 

(c)                                  Since December 31, 2006, there has been no
event, development or circumstance that has had or could reasonably be expected
to have a Material Adverse Effect and the business of Parent and the Loan
Parties have been conducted only in the ordinary course consistent with past
business practices.

 

6.15                        Environmental Matters. Except as described on
Schedule 6.15 hereto or that, either individually or in the aggregate, could not
be reasonably expected to have a Material Adverse Effect (or with respect to (c)
and (d) below, where the failure, either individually or in the aggregate, to
take such actions could not be reasonably expected to have a Material Adverse
Effect):

 

(a)                                  neither any Property of any Loan Party or
any of its Subsidiaries, nor the operations conducted thereon, violate
Environmental Laws.

 

(b)                                 no Property of any Loan Party or any of its
Subsidiaries, nor the operations currently conducted thereon by any Loan Party,
or, to the knowledge of such Loan Party, no operations conducted thereon by any
prior owner or operator of such Property, are in violation of or subject to any
existing, or to the knowledge of such Loan Party, pending or threatened action,
suit, investigation, inquiry or proceeding by or before any Governmental
Authority under Environmental Laws.

 

(c)                                  all notices, permits, licenses, exemptions,
and approvals, if any, required to be obtained or filed under any Environmental
Law in connection with the operation or use of any and all Property by each Loan
Party, including, without limitation, any treatment, storage, disposal or
Release of any Hazardous Materials into the environment, have been duly obtained
or filed or requested, and each

 

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Loan Party and its Subsidiaries is in compliance with the material terms and
conditions of all such notices, permits, licenses, exemptions and approvals.

 

(d)                                 Hazardous Materials, if any, generated by
the Loan Parties or any of their Subsidiaries at any and all Property of any
such Subsidiary have in the past been transported, treated and disposed of in
compliance with Environmental Laws then in effect, and, to the knowledge of such
Loan Party, transport carriers and treatment and disposal facilities known by
such Loan Party to have been used by it are not the subject of any existing
action, investigation or inquiry by any Governmental Authority under any
Environmental Laws.

 

(e)                                  no Hazardous Materials have been disposed
of or otherwise Released by any Loan Party or any Subsidiary thereof on or to
any Property of such Loan Party or Subsidiary except in compliance with
Environmental Laws.

 

(f)                                    no Loan Party has any known pending
assessment, investigation, monitoring, removal or remedial obligations under
applicable Environmental Laws in connection with any Release or threatened
Release of any Hazardous Materials into the environment by any Loan Party or any
Subsidiary thereof.

 

6.16                        Regulated Entities. Neither Parent nor any of its
Subsidiaries, is an “investment company” or is a company “controlled by” an
“investment company” within the meaning of the Investment Company Act of 1940.
None of the Loan Parties, or any Person controlling the Company or the
Guarantors, is subject to regulation under the Federal Power Act, the Interstate
Commerce Act, any state public utilities code, or any other Federal or state
statute or regulation limiting its ability to incur Indebtedness.

 

6.17                        No Burdensome Restrictions. No Loan Party or any of
its Subsidiaries is a party to or bound by any Contractual Obligation, or
subject to any restriction in any Organization Document, or any Requirement of
Law, which would reasonably be expected to have a Material Adverse Effect.

 

6.18                        Copyrights, Patents, Trademarks and Licenses, Etc.
Each Loan Party and each of its Subsidiaries owns or is licensed or otherwise
has the right to use all of the material patents, trademarks, service marks,
trade names, copyrights, contractual franchises, authorizations and other rights
that are reasonably necessary for the operation of its business, without
material conflict with the rights of any other Person. To the knowledge of any
Loan Party, no slogan or other advertising device, product, process, method,
substance, part or other material now employed, or now contemplated to be
employed, by any Loan Party or any Subsidiary thereof infringes in a material
respect upon any rights held by any other Person. No claim or litigation
regarding any of the foregoing is pending or threatened, and no patent,
invention, device, application, principle or any statute, law, rule, regulation,
standard or code is pending or, to the knowledge of any Loan Party, proposed,
which, in either case, could reasonably be expected to have a Material Adverse
Effect.

 

6.19                        Subsidiaries and Other Equity Interests. No Loan
Party has any Subsidiary, Unrestricted Entity or other equity investment other
than those specifically disclosed in Schedule 6.19 hereto. The Company owns the
percentage interest of all issued and outstanding Equity in each Subsidiary,
Unrestricted Entity or other material equity investment described on Schedule
6.19. Parent owns one hundred percent (100%) of the issued and outstanding
equity in the Company. The Company may update and replace Schedule 6.19 from
time to time to reflect changes resulting from transactions or other events
permitted hereunder.

 

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6.20                        Insurance. The Properties of each Loan Party and its
Subsidiaries is insured with financially sound and reputable insurance companies
not Affiliates of the Company, in such amounts, with such deductibles and
covering such risks as are customarily carried by companies engaged in similar
businesses and owning similar properties in localities where the Company or such
other Loan Party or Subsidiary operates.

 

6.21                        Derivative Contracts. As of the date hereof Schedule
6.21 sets forth, a true and complete list of all Derivative Contracts of the
Loan Parties and their Subsidiaries, 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.

 

6.22                        Full Disclosure. None of the representations or
warranties made by any Loan Party in the Loan Documents as of the date such
representations and warranties are made or deemed made, and none of the
statements contained in any exhibit, report, written statement or certificate
(other than any financial projections, forecasts or estimates) furnished by or
on behalf of any Loan Party in connection with the Loan Documents, taken as
whole, contains any untrue statement of a material fact known to any Loan Party,
or omits any material fact known to any Loan Party, required to be stated
therein or necessary to make the statements made therein, in light of the
circumstances under which they are made, not misleading as of the time when made
or delivered.

 

6.23                        Solvency. The Loan Parties, taken as a whole, and
individually, are Solvent.

 

ARTICLE VII.

AFFIRMATIVE COVENANTS

 

So long as the Issuing Lender or any Lender shall have any Commitment hereunder,
or any Loan, Letter of Credit or other Obligation shall remain unpaid or
unsatisfied, or any Letter of Credit remains outstanding, unless the Lenders
waive compliance in writing:

 

7.01                        Financial Statements. Each of the Loan Parties shall
maintain, for itself and each of its Consolidated Subsidiaries, on a
consolidated basis, a system of accounting established and administered in
accordance with GAAP and deliver, or cause to be delivered, to Administrative
Agent, with sufficient copies for each Lender:

 

(a)                                  no later than fifteen (15) days following
the date required by applicable SEC rules (without giving effect to any
extensions available thereunder) for the filing of such financial statements:

 

(i)                                     the audited consolidated balance sheet
and related statements of income, partners equity and cash flows of Parent 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 (A) reported on by a nationally
recognized independent public accounting firm (the “Independent Auditor”)
(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, results of operations and cash flows of Parent and its
Consolidated Subsidiaries on a consolidated basis in accordance with GAAP
consistently applied, and (B) certified by a Responsible Officer as fairly
presenting in all material respects, the financial condition, results of
operations and cash flows of Parent and its Consolidated Subsidiaries on a
consolidated basis in accordance with GAAP consistently applied;

 

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(ii)                                  unaudited annual consolidating balance
sheet and consolidating statement of income for Parent and its Consolidated
Subsidiaries as of the end of such year, certified by a Responsible Officer as
fairly presenting in all material respects, the financial condition, results of
operations of Parent and its Consolidated Subsidiaries on a consolidated basis
in accordance with GAAP consistently applied; and

 

(iii)                               the unaudited consolidated balance sheet and
related statements of income, partners equity and cash flows of the Company as
of the end of and for such year, setting forth in each case in comparative form
the figures for the previous final year, and unaudited consolidating balance
sheets and statements of income, all certified by a Responsible Officer as
fairly presenting in all material respects, the financial condition, results of
operations and cash flows of the Company and its Consolidated Subsidiaries on a
consolidated basis in accordance with GAAP consistently applied, subject to the
absence of footnotes.

 

(b)                                 fifteen (15) days following the date
required by applicable SEC rules (without giving effect to any extensions
available thereunder) for the filing of such financial statements after the end
of each of the first three fiscal quarters of each fiscal year of Parent:

 

(i)                                     the unaudited consolidated balance sheet
and related statements of income, partners equity and cash flows of Parent 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 a Responsible Officer as
fairly presenting in all material respects, the financial condition, results of
operations and cash flows of Parent and its Consolidated Subsidiaries on a
consolidated basis in accordance with GAAP consistently applied, subject to the
absence of footnotes; and

 

(ii)                                  the unaudited consolidated balance sheet
and related statements of income, partners equity and cash flows of the Company
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 a Responsible Officer as
fairly presenting in all material respects, the financial condition, results of
operations and cash flows of the Company and its Consolidated Subsidiaries on a
consolidated basis in accordance with GAAP consistently applied, subject to the
absence of footnotes.

 

7.02                        Certificates; Other Production and Reserve
Information. The Company shall furnish to the Administrative Agent, with
sufficient copies for each Lender:

 

(a)                                  As soon as available, but not later than 45
days after the close of each fiscal quarter of Parent (including the fourth
quarter), a Quarterly Status Report covering each of the three months during
such fiscal quarter;

 

(b)                                 Concurrently with any delivery of financial
statements under Sections 7.01(a) and 7.01(b), a certificate of a Responsible
Officer, in form and substance satisfactory to the Administrative Agent, setting
forth as of the last Business Day of such fiscal quarter or fiscal year, a true
and complete list of all Derivative Contracts of each Loan Party, 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 8.05, any
margin required or supplied under any credit support document, and the
counterparty to each such agreement;

 

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(c)                                  Concurrently with the delivery of the
financial statements referred to in Sections 7.01(a) and 7.01(b), a Pricing Grid
Certificate executed by a Responsible Officer of Parent;

 

(d)                                 Concurrently with the delivery of the
statements and reports referred to in Sections 7.01(a) and 7.01(b), a Compliance
Certificate executed by a Responsible Officer of Parent;

 

(e)                                  Annually commencing March 1, 2008, dated as
of January 1st of such year, a Reserve Report prepared by the Independent
Engineer or other independent petroleum engineer reasonably acceptable to
Administrative Agent and the Company, and annually, commencing August 15, 2008,
dated as of July 1st of such year, a Reserve Report prepared by personnel of the
Company and certified by a Responsible Officer of the Company as true and
correct in all material respects. Each Reserve Report shall be in form and
substance reasonably satisfactory to the Lenders. With the delivery of each
Reserve Report, the Company shall provide to the Administrative Agent and the
Lenders a certificate from a Responsible Officer certifying that in all material
respects: (i) the information contained in the Reserve Report and any other
information delivered in connection therewith is true and correct, (ii) the Loan
Parties own (and in the case of Oil and Gas Properties owned by BEP I, BEP I
owns) good and defensible title to the Oil and Gas Properties evaluated in such
Reserve Report, and such Properties are free of all Liens except for Liens
permitted by Section 8.01, (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 6.12 with respect to
their Oil and Gas Properties evaluated in such Reserve Report that would require
any Loan Party to deliver (or, in the case of Oil and Gas Properties owned by
BEP I, would require BEP I to deliver) Oil and Gas 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 their proved Oil and Gas
Properties have been sold since the date of the last Borrowing Base
determination except as set forth on an exhibit to the certificate, which
certificate shall list all of its proved Oil and Gas Properties sold and in such
detail as reasonably required by the Administrative Agent, (v) attached to the
certificate is a list of all marketing agreements entered into subsequent to the
most recently delivered Reserve Report and (vi) attached thereto is a schedule
of the Oil and Gas Properties evaluated by such Reserve Report that are
Mortgaged Properties and demonstrating the percentage of the present value that
such Mortgaged Properties represent;

 

(f)                                    [Intentionally Omitted];

 

(g)                                 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, other than this Agreement and not
otherwise required to be furnished to the Lenders pursuant to any other
provision of this Section 7.02;

 

(h)                                 Promptly after available, copies of each
annual report, proxy or other report or communication sent to the equity owners
of Parent, and copies of all annual , regular, periodic and special reports and
registration statements which Parent may file or be required to file with the
SEC and not otherwise required to be deliver to the Administrative Agent
pursuant hereto;

 

(i)                                     Concurrently with the delivery of any
Reserve Report to the Administrative Agent pursuant to Section 7.02(e), or after
an Event of Default, upon request, a list of all Persons purchasing Oil and Gas
from any of the Loan Parties or BEP I;

 

(j)                                     Prompt written notice, and in any event
within three (3) Business Days, of the occurrence of any Casualty Event;

 

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(k)                                  Prompt written notice (and in any event
within thirty (30) days prior thereto) of any change (i) in any Loan Party’s
organizational name or in any trade name used to identify such Person in the
conduct of its business or in the ownership of its Properties, (ii) in the
location of any Loan Party’s chief executive office or principal place of
business, (iii) in any Loan Party’s identity or organizational structure or in
the jurisdiction in which such Person is incorporated or formed, (iv) in any
Loan Party’s jurisdiction of organization or such Person’s organizational
identification number in such jurisdiction of organization, and (v) in any Loan
Party’s federal taxpayer identification number, if any;

 

(l)                                     Promptly upon the request of the
Administrative Agent, such copies of all geological, engineering and related
data contained in any of Loan Parties’ files or readily accessible to the Loan
Party relating to the Oil and Gas Properties as may reasonably be requested;

 

(m)                               On request by the Administrative Agent, based
upon the Administrative Agent’s or Lenders’ good faith belief that any Loan
Party’s title to the Mortgaged Properties (or BEP I’s title to Oil and Gas
Properties owned by it) or the Administrative Agent’s lien on the Loan Parties’
properties is subject to claims of third parties, or if required by regulations
to which the Administrative Agent or any of the Lenders is subject, title and
mortgage lien evidence satisfactory to the Administrative Agent covering such
Mortgaged Property as may be designated by the Administrative Agent, covering
such Loan Party’s title thereto (or BEP I’s title to Oil and Gas Properties
owned by it) and evidencing that the Obligations are secured by liens and
security interests as provided in this Agreement and the Security Documents;

 

(n)                                 As soon as available, and in any event
within 90 days after the end of each fiscal year, a business and financial plan
for Parent (in form reasonably satisfactory to the Administrative Agent),
prepared by a Responsible Officer, setting forth for the fiscal year most
recently ended, quarterly financial projections and budgets for Parent, and for
four fiscal years thereafter yearly financial projections and budgets; and

 

(o)                                 Promptly, such additional information
regarding the business, financial or corporate affairs of the Loan Parties as
the Administrative Agent, at the reasonable request of any Lender, may from time
to time request.

 

Documents required to be delivered pursuant to Sections 7.01(a), 7.01(b) and
7.02(h) may be delivered electronically and if so delivered, shall be deemed to
have been delivered on the date (i) on which the Company posts such documents,
or provides a link thereto on the Company’s website on the Internet or (ii) on
which such documents are posted on the Company’s behalf on an Internet or
intranet website, if any, to which each Lender and the Administrative Agent have
access (whether a commercial, third-party website or whether sponsored by the
Administrative Agent ); provided, however, that (x) the Company shall deliver
paper copies of such documents to the Administrative Agent or any Lender that
requests the Company to deliver such paper copies until a written request to
cease delivering paper copies is given by the Administrative Agent or such
Lender and (y) the Company shall notify the Administrative Agent and each Lender
(by telecopier or electronic mail) of the posting of any such documents and
provide to the Administrative Agent by electronic mail electronic versions
(i.e., soft copies) of such documents. Notwithstanding anything contained
herein, in every instance the Company shall be required to provide paper copies
of the compliance certificates required by Section 7.02(d) to the Administrative
Agent.

 

7.03                        Notices. The Company shall promptly notify the
Administrative Agent:

 

(a)                                  of the occurrence of any Default, Event of
Default or BEP I Default, or any event or circumstance that would reasonably be
expected to become a Default, Event of Default or BEP I Default;

 

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(b)                                 of any matter that has resulted or may
reasonably be expected to result in a Material Adverse Effect, including (i)
breach or non-performance of, or any default under, a Contractual Obligation of
Parent, the Company or any subsidiary thereof; (ii) any dispute, litigation,
investigation, proceeding or suspension between Parent, the Company or any
subsidiary thereof and any Governmental Authority; (iii) the commencement of, or
any material development in, any litigation, proposed legislation, ordinance or
regulation of a Governmental Authority, or proceeding affecting Parent, the
Company or any subsidiary thereof; including pursuant to any applicable
Environmental Laws; or (iv) revocation, cancellation or failure to renew any
license, permit or franchise where such revocation, failure or loss could
reasonably be expected to have a Material Adverse Effect;

 

(c)                                  of any material change in accounting
policies or financial reporting practices by Parent, the Company or any of its
subsidiaries; or

 

(d)                                 of the formation or acquisition of any
Restricted Subsidiary or Unrestricted Entity.

 

Each notice under this Section 7.03 shall be accompanied by a written statement
by a Responsible Officer setting forth details of the occurrence referred to
therein, and stating what action such Loan Party proposes to take with respect
thereto and at what time. Each notice under Section 7.03(a) shall describe with
particularity any and all clauses or provisions of this Agreement or other Loan
Document that have been (or foreseeably will be) breached or violated.

 

7.04                        Preservation of Company Existence, Etc. Each Loan
Party shall, and shall cause its Subsidiaries to:

 

(a)                                  preserve and maintain in full force and
effect its legal existence, and maintain its good standing under the laws of its
state or jurisdiction of formation, provided however, that the wind-up of any
Subsidiary shall be permitted either to the extent assets of such Subsidiary are
not transferred to any party other than the Company or another Subsidiary;

 

(b)                                 preserve and maintain in full force and
effect all governmental rights, privileges, qualifications, permits, licenses
and franchises necessary or desirable in the normal conduct of its business
except where the failure to do so would not reasonably be expected to have a
Material Adverse Effect;

 

(c)                                  use reasonable efforts, in the ordinary
course of business, to preserve its business organization and goodwill except
where the failure to do so would not reasonably be expected to have a Material
Adverse Effect; and

 

(d)                                 preserve or renew all of its registered
patents, trademarks, trade names and service marks, the non-preservation of
which could reasonably be expected to have a Material Adverse Effect.

 

7.05                        Maintenance of Property. Each Loan Party shall, and
shall cause its Subsidiaries to, maintain and preserve all its Property which is
used or useful in its business in good working order and condition, ordinary
wear and tear excepted and to use the standard of care typical in the industry
in the operation and maintenance of its facilities except where the failure to
do so would not reasonably be expected to have a Material Adverse Effect
provided, however, that nothing in this Section 7.05 shall prevent such Loan
Party or its Subsidiaries from abandoning any well or forfeiting, surrendering,
releasing or defaulting under any lease in the ordinary course of business which
is not materially

 

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disadvantageous in any way to the Lenders and which, in its opinion, is in the
best interest of such Loan Party, and each such Loan Party is and will hereafter
be in compliance with all obligations hereunder.

 

7.06                        Title Information.

 

(a)                                  On or before December 3, 2007 the Company
will deliver to the Administrative Agent a written due diligence report
satisfactory to the Administrative Agent with respect to title covering the
Quicksilver Acquisition Properties, which report shall be consistent with the
due diligence protocol and procedures furnished to the Administrative Agent
dated September 10, 2007 and shall cover not less than 70% of the total net
present value (determined by a discount factor of 10%) of the Quicksilver Oil
and Gas Properties that constitute proved Oil and Gas Properties; and

 

(b)                                 (i)                                     On
or before the delivery to the Administrative Agent and the Lenders of each
Reserve Report required by Section 7.02(e), the Company will deliver title
information in form and substance acceptable to the Administrative Agent
covering enough of the Oil and Gas Properties evaluated by such Reserve Report
that were not included in the immediately preceding Reserve Report, so that the
Administrative Agent shall have received together with title information
previously delivered to the Administrative Agent, satisfactory title information
on at least 80% of the total net present value (determined by a discount factor
of 10%) of the proved Oil and Gas Properties (other than the Quicksilver Oil and
Gas Properties) evaluated by such Reserve Report.

 

(ii)                                  If the Company has provided title
information for additional Properties under Section 7.06(a), the Company 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 8.01 raised by such information,
(ii) substitute acceptable Mortgaged Properties with no title defects or
exceptions except for Permitted Liens having an equivalent value or (iii)
deliver title information in form and substance reasonably acceptable to the
Administrative Agent so that the Administrative Agent shall have received,
together with title information previously delivered to the Administrative
Agent, satisfactory title information on at least 80% of the net present value
(determined by a discount factor of 10%) of the Oil and Gas Properties (other
than the Quicksilver Oil and Gas Properties) evaluated by such Reserve Report.

 

(iii)                               If the Company is unable to cure any title
defect requested by the Administrative Agent or the Lenders to be cured within
the 60-day period or the Company does not comply with the requirements to
provide acceptable title information covering 80% of the net present value
(determined by a discount factor of 10%) of the Oil and Gas Properties (other
than the Quicksilver 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 Majority 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 Majority Lenders are not reasonably
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 Company and
the Lenders that the then outstanding Borrowing Base shall be reduced by an
amount as determined by the Majority Lenders to cause the Company to be in
compliance with the requirement to provide acceptable title information on 80%
of the net present value (determined by a discount factor of 10%) of the Oil and
Gas Properties (other than the Quicksilver Oil and Gas Properties). This new
Borrowing Base shall become effective immediately after receipt of such notice.

 

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7.07                        Additional Collateral. In connection with each
redetermination of the Borrowing Base, the Company shall review the Reserve
Report and the list of current Mortgaged Properties (as described in Section
7.02(e)) to ascertain whether the Mortgaged Properties represent at least 80% of
the total net present value (determined by a discount factor of 10%) of the Oil
and Gas Properties evaluated in the most recently completed Reserve Report after
giving effect to exploration and production activities, acquisitions,
dispositions and production. In the event that the Mortgaged Properties do not
represent at least 80% of such total net present value, then the Company shall,
and shall cause each Loan Party to, grant, within thirty (30) days of delivery
of the certificate required under Section 7.02(e), to the Administrative Agent
or its designee as security for the Obligations a first-priority Lien interest
on additional Oil and Gas Properties not already subject to a Lien of the
Security Documents such that after giving effect thereto, the Mortgaged
Properties will represent at least 80% of such total net present value. All such
Liens will be created and perfected by and in accordance with the provisions of
deeds of trust, security agreements and financing statements or other Security
Documents, all in form and substance reasonably satisfactory to the
Administrative Agent or its designee and in sufficient executed (and
acknowledged where necessary or appropriate) counterparts for recording
purposes.

 

7.08                        Insurance. Each Loan Party shall, and shall cause
its Subsidiaries to, maintain, with financially sound and reputable independent
insurers, insurance with respect to its properties and business against loss or
damage of the kinds customarily insured against by Persons engaged in the same
or similar business, of such types and in such amounts as are customarily
carried under similar circumstances by such other Persons except where the
failure to do so would not reasonably be expected to have a Material Adverse
Effect. The loss payable clauses or provisions in said insurance policy or
policies insuring any of the Collateral for the Loan 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
insured” and provide that the insurer will give at least 30 days prior notice of
any cancellation to the Administrative Agent.

 

7.09                        Payment of Obligations. Each Loan Party shall, and
shall cause its Subsidiaries to, pay and discharge prior to delinquency, all
their respective obligations and liabilities, including: (a) all tax
liabilities, assessments and governmental charges or levies upon it or its
properties or assets, unless the same are being contested in good faith by
appropriate proceedings and adequate reserves in accordance with GAAP are being
maintained by such Loan Party or its Subsidiary; (b) all lawful claims which, if
unpaid, would by law become a Lien upon its Property; and (c) all Indebtedness,
as and when due and payable, but subject to any subordination provisions
contained in any instrument or agreement evidencing such Indebtedness; except in
each of (a), (b) and (c), where the failure to do so would not reasonably be
expected to have a Material Adverse Effect.

 

7.10                        Compliance with Laws. Each Loan Party shall, and
shall cause its Subsidiaries to, comply in all material respects with all
Requirements of Law of any Governmental Authority having jurisdiction over it or
its business (including Environmental Laws, the Federal Fair Labor Standards Act
and any California Requirement of Law promulgated with respect to earthquakes),
except (a) such as may be contested in good faith or as to which a bona fide
dispute may exist or (b) where the failure to do so would not reasonably be
expected to have a Material Adverse Effect.

 

7.11                        Compliance with ERISA. Each Loan Party shall, and
shall cause each of its ERISA Affiliates to: (a) maintain each Plan in
compliance in all material respects with the applicable provisions of ERISA, the
Code and other federal or state law; (b) cause each Plan which is qualified
under Section 401(a) of the Code to maintain such qualification; and (c) make
all required contributions to any Plan subject to Section 412 of the Code.

 

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7.12                        Inspection of Property and Books and Records. Each
Loan Party shall, and shall cause its Subsidiaries to, maintain proper books of
record and account, in which full, true and correct entries in conformity with
GAAP consistently applied shall be made of all financial transactions and
matters involving the assets and business of such Loan Party or its Subsidiary,
as applicable. Each Loan Party shall, and shall cause its Subsidiaries to,
permit, representatives and independent contractors of the Administrative Agent
or any Lender to visit and inspect any of their respective properties, to
examine their respective company, financial and operating records, and make
copies thereof or abstracts therefrom, and to discuss their respective affairs,
finances and accounts with their respective managers, directors, officers, and
independent public accountants, all at the expense of the Loan Parties and at
such reasonable times during normal business hours and as often as may be
reasonably desired, upon reasonable advance notice to such Loan Party; provided,
however, when an Event of Default exists the Administrative Agent or any Lender
may do any of the foregoing at the expense of the Company at any time during
normal business hours and without advance notice.

 

7.13                        Environmental Laws.

 

(a)                                  Each Loan Party shall, and shall cause its
Subsidiaries to, comply with all applicable Environmental Laws and maintain all
environmental, health and safety permits, licenses and authorizations necessary
for its operations and will maintain such in full force and effect except where
such noncompliance or the failure to maintain such permits, licenses and
authorizations would not reasonably be expected to have a Material Adverse
Effect. Each Loan Party shall, and shall cause its Subsidiaries to, promptly
commence and diligently prosecute to completion, any assessment, evaluation,
investigation, monitoring, containment, cleanup, removal, repair, restoration,
remediation or other remedial obligations (collectively, the “Remedial Work”) in
the event any Remedial Work is required under applicable Environmental Laws
because of or in connection with the actual or suspected past, present or future
Release of any Hazardous Materials on, under, about or from any of the Loan
Parties’ Properties, which failure to commence and diligently prosecute to
completion could reasonably be expected to have a Material Adverse Effect.

 

(b)                                 Each Loan Party shall, and shall cause its
Subsidiaries to, establish and implement, such procedures as may be reasonably
necessary to continuously determine and assure that the Loan Party’s obligations
under this Section 7.13 are timely and fully satisfied, which failure to
establish and implement could reasonably be expected to have a Material Adverse
Effect

 

(c)                                  Each Loan Party will, and will cause its
Subsidiaries to, promptly furnish to the Administrative Agent all written
notices of violation, orders, claims, citations, complaints, penalty
assessments, suits or other proceedings received by such Loan Party or
Subsidiary, or of which it has notice, pending or threatened against such Loan
Party or any of its Subsidiaries, by any Governmental Authority with respect to
any alleged violation of or non-compliance with any Environmental Laws or any
permits, licenses or authorizations in connection with its ownership or use of
its Properties or the operation of its business, except where any such alleged
violations or incidents of non-compliance would not, individually or in the
aggregate, result in a penalty, assessment, fine or other cost or liability
exceeding $1,000,000.

 

(d)                                 Each Loan Party will, and will cause its
Subsidiaries to, promptly furnish to the Administrative Agent all requests for
information, notices of claim, demand letters, and other notifications, received
by such Loan Party or Subsidiary in connection with its ownership or use of its
Properties or the conduct of its business, relating to potential responsibility
with respect to any investigation or clean-up of Hazardous Materials at any
location, except where any such alleged responsibility would not, individually
or in the aggregate, result in a penalty, assessment, fine or other cost or
liability exceeding $1,000,000.

 

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7.14                        Pledge of Equity in New Subsidiary. If, at any time
after the date of this Agreement, any new Subsidiary is acquired or created,
then the applicable Loan Party shall pledge all of the Equity of such Subsidiary
and deliver such documentation as the Administrative Agent requires in
connection with such pledge, including original stock or other ownership
certificates evidencing such Equity, together with undated stock powers for each
such certificate duly executed in blank and such additional closing documents,
certificates and legal opinions as the Administrative Agent shall reasonably
require.

 

7.15                        New Subsidiary Guarantors. If, at any time after the
date of this Agreement, there exists any subsidiary of a Loan Party (other than
BEP I and the Unrestricted Entities) that is not a Guarantor hereunder, or if
BEP I or any Unrestricted Entity becomes a Wholly Owned Subsidiary of a Loan
Party, then such Loan Party shall cause BEP I or each such Subsidiary, as
applicable, to execute and deliver to the Administrative Agent a Guaranty or
supplement to existing Guaranty, and a Security Agreement or supplement to
existing Security Agreement, and other documents and opinions as required
pursuant to Sections 4.02 and 4.05.

 

7.16                        Use of Proceeds. The Company shall use the proceeds
of the Loans (a) to pay a portion of the purchase price for the Quicksilver
Acquisition and related expenses, (b) for standby letters of credit up to the
amount of the Letter of Credit Sublimit, (c) for working capital purposes
(including capital expenditures made for the exploration and development of Oil
and Gas Properties) of the Company and its Subsidiaries, (d) for general company
purposes of the Company and its Subsidiaries, and (e) for acquisitions permitted
under Section 8.04 and Restricted Payments permitted under Section 8.09. The
Company shall use the Letters of Credit as support for Derivative Contracts and
for other general company purposes of the Company and its Subsidiaries.

 

7.17                        Operating Accounts. The Loan Parties and their
Subsidiaries shall maintain with Administrative Agent all primary operating and
depository accounts.

 

7.18                        Phase I Reports. As soon as available, and in any
case within fifteen (15) days prior to acquiring any Oil and Gas Properties
directly or indirectly through a Subsidiary each Loan Party shall deliver to the
Lenders a Phase I Report covering such Oil and Gas Properties to be acquired in
form and substance reasonably satisfactory to the Administrative Agent.

 

7.19                        Further Assurances.

 

(a)                                  Each Loan Party will promptly cure any
defects in the creation and issuance of the Notes and the execution and delivery
of this Agreement, the Security Documents or any other instruments referred to
or mentioned herein or therein. The Company at its expense will promptly do all
acts and things, and will execute and file or record, all instruments reasonably
requested by the Administrative Agent, to establish, perfect, maintain and
continue the perfected security interest of the Administrative Agent in or the
Lien of the Administrative Agent on the Mortgaged Properties. Upon request by
the Administrative Agent, each Loan Party shall promptly execute such additional
Security Documents covering any new Oil and Gas Properties reflected on the
Quarterly Status Reports or any new Subsidiaries of the Loan Parties. The
Company will pay the costs and expenses of all filings and recordings and all
searches deemed necessary by the Administrative Agent to establish and determine
the validity and the priority of the Liens created or intended to be created by
the Security Documents; and such Loan Party will satisfy all other claims and
charges which in the reasonable opinion of the Administrative Agent might
prejudice, impair or otherwise affect any of the Mortgaged Properties or any
Liens thereon in favor of the Administrative Agent for the benefit of the
Issuing Lender and the Lenders.

 

(b)                                 Each Loan Party 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

 

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Property without the signature of such Loan Party where permitted by law. A
carbon, photographic or other reproduction of the Security Documents or any
financing statement covering the Mortgaged Property or any part thereof shall be
sufficient as a financing statement where permitted by law. The Administrative
Agent will promptly send such Loan Party any financing or continuation
statements it files without the signature of such Loan Party and the
Administrative Agent will promptly send the Company the filing or recordation
information with respect thereto.

 

ARTICLE VIII.

NEGATIVE COVENANTS

 

So long as any Lender shall have any Commitment hereunder, or any Loan or other
Obligation shall remain unpaid or unsatisfied, or any Letter of Credit remains
outstanding, unless the Lenders waive compliance in writing:

 

8.01                        Limitation on Liens. Each Loan Party agrees that it
shall not, and shall not permit any of its Subsidiaries to, directly or
indirectly, make, create, incur, assume or suffer to exist any Lien upon or with
respect to any part of its property, whether now owned or hereafter acquired,
other than the following (“Permitted Liens”):

 

(a)                                  any Lien created under any Loan Document;

 

(b)                                 Liens for Taxes, fees, assessments or other
governmental charges which are not delinquent or remain payable without penalty,
or to the extent that non-payment thereof is permitted by Section 7.09;

 

(c)                                  carriers’, warehousemen’s, mechanics’,
landlords’, materialmen’s, repairmen’s or other similar Liens arising in the
ordinary course of business (whether by law or by contract) which are not
delinquent or remain payable without penalty or which are being contested in
good faith and by appropriate proceedings, which proceedings have the effect of
preventing the forfeiture or sale of the property subject thereto;

 

(d)                                 Liens consisting of pledges or deposits
required in the ordinary course of business in connection with workers’
compensation, unemployment insurance and other social security legislation;

 

(e)                                  Liens on the Property of such Loan Party
securing (i) the non-delinquent performance of bids, trade contracts (other than
for borrowed money), statutory obligations, (ii) contingent obligations on
surety and appeal bonds, and (iii) other non-delinquent obligations of a like
nature; in each case, incurred in the ordinary course of business;

 

(f)                                    easements, rights-of-way, restrictions,
defects or other exceptions to title (including, but not limited to, the
contractual nature of the Company’s interest in the Brea Oil Field, Orange
County, California, and the failure of certain Indian Tribes to act on
assignment consents in certain Wyoming properties in connection with the
acquisition by the Company of Properties from Nautilus Resources, LLC and
Phoenix Production Company) and other similar encumbrances incurred in the
ordinary course of business which, in the aggregate, are not substantial in
amount, are not incurred to secure Indebtedness, and which do not in any case
materially detract from the value of the Property subject thereto or interfere
with the ordinary conduct of the businesses of the Loan Parties;

 

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(g)                                 Liens arising solely by virtue of any
statutory or common law provision relating to bankers’ liens, rights of set-off
or similar rights and remedies as to deposit accounts or other funds maintained
with a creditor depository institution; or under any deposit account agreement
entered into in the ordinary course of business; provided that (i) such deposit
account is not a dedicated cash collateral account and is not subject to
restrictions against access by the Loan Party, (ii) the Loan Party maintains
(subject to such right of set off) dominion and control over such account(s),
and (iii) such deposit account is not intended by the Loan Party to provide cash
collateral to the depository institution; and

 

(h)                                 Oil and Gas Liens.

 

8.02                        Disposition of Assets. Each Loan Party agrees that
it shall not, and shall not permit any of its Subsidiaries to, directly or
indirectly, sell, assign, lease, convey, transfer or otherwise dispose of
(whether in one or a series of transactions) (collectively, “Dispositions”) any
Oil and Gas Properties or any other property (including accounts and notes
receivable, with or without recourse) or enter into any agreement to do any of
the foregoing, except:

 

(a)                                  as permitted under Sections 7.05, 8.03,
8.04 or 8.09;

 

(b)                                 Dispositions of inventory, including
produced Oil and Gas, in the ordinary course of business;

 

(c)                                  Dispositions by the Company’s Subsidiaries
to the Company;

 

(d)                                 used, worn-out or surplus equipment in the
ordinary course of business; and

 

(e)                                  Dispositions not otherwise permitted under
Sections 8.02(a) – (d) above which are made in the ordinary course of business;
provided that, (i) no Event of Default shall exist at the time of such
Disposition or result therefrom, and (ii) the aggregate value (as determined by
the value assigned to such properties under the most recent Reserve Report) of
all Dispositions of Oil and Gas Properties made by the Loan Parties, together,
shall not exceed in any Borrowing Base Period five percent (5%) of the Borrowing
Base then in effect; further provided that, the Borrowing Base shall be
automatically reduced by an amount equal to the aggregate value of such Oil and
Gas Properties and to the extent a Borrowing Base Deficiency results from such
reduction, up to one-hundred percent (100%) of the proceeds of such
Dispositions, net of usual and customary reasonable fees, expenses and taxes,
shall be applied, as necessary, to cure such Borrowing Base Deficiency.

 

8.03                        Consolidations and Mergers. No Loan Party shall, or
permit any of its Subsidiaries to, merge, consolidate with or into, or convey,
transfer, lease or otherwise dispose of (whether in one transaction or in a
series of transactions) all or substantially all of its assets (whether now
owned or hereafter acquired) to or in favor of any Person, except:

 

(a)                                  any Subsidiary may merge with any Loan
Party, provided that the Company or other Loan Party, as applicable, shall be
the continuing or surviving entity;

 

(b)                                 any Subsidiary may sell, convey, transfer,
lease or otherwise dispose of all or substantially all of its assets (upon
voluntary liquidation or otherwise), to the Company or any other Subsidiary that
is a Guarantor; and

 

(c)                                  Dispositions permitted under Section
8.02(e).

 

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8.04                        Loans and Investments. No Loan Party shall, or
permit any of its Subsidiaries to, purchase, acquire, or own, or permit any of
its Subsidiaries to purchase, acquire, or own any capital stock, equity
interest, or any obligations or other securities of, or any interest in, any
Person (including any Unrestricted Entity), or make any Acquisition, or make any
advance, loan, extension of credit or capital contribution to or any other
investment in (collectively, “Investments”) any Person including any Restricted
Subsidiary, Unrestricted Entity, Affiliate of the Company or other Person,
except for:

 

(a)                                  Investments made on or prior to the
Effective Date in the entities described in Schedule 6.19;

 

(b)                                 Investments in Cash Equivalents;

 

(c)                                  extensions of credit in the nature of
accounts receivable or notes receivable arising from the sale or lease of goods
or services in the ordinary course of business;

 

(d)                                 Investments (i) by Parent in or to the
Company, and (ii) by the Company or any Subsidiary in or to a Domestic
Subsidiary that is a Guarantor or that becomes a Guarantor upon the making of
such Investments, provided, however, that in the case of this clause (ii) no
Event of Default exists;

 

(e)                                  Investments permitted under Section
8.02(c);

 

(f)                                    Investments in Derivative Contracts
permitted under Section 8.10;

 

(g)                                 Investments with third parties that (i) are
customary in the oil and gas business, (ii) are made in the ordinary course of
such Person’s business, and (iii) are made in the form of or pursuant to
Operating Agreements, process agreements, farm-in agreements, farm-out
agreements, development agreements, unitization agreements, pooling agreements,
joint bidding agreements, service contracts and other similar agreements;

 

(h)                                 extensions of credit by the Company to any
of its full time employees which do not exceed $500,000 at any time outstanding
in the aggregate to all such employees;

 

(i)                                     non-hostile Acquisitions of Equity or
other Acquisitions, provided that: (i) immediately prior to and after giving
effect to such Acquisition, no Default or Event of Default exists or would
result therefrom; (ii) if such Acquisition is of Equity of a Person, (x) all of
the Equity of such Person is acquired and such Person becomes a Guarantor and
grants a lien on its assets, and all the Equity in such Person is pledged as
Collateral for the Obligations, in accordance with Section 4.01 and (y) such
Person is principally engaged in the same business as the Loan Parties; and
(iii) the Company shall be in pro forma compliance with the covenants set forth
in Section 8.14, 8.15, and 8.16 based on the trailing four (4) quarters and as
adjusted on a pro forma basis for such Acquisition; and

 

(j)                                     other Investments made after the
Effective Date in an amount not to exceed $5,000,000 in the aggregate.

 

8.05                        Limitation on Indebtedness. No Loan Party shall, or
permit any of its Subsidiaries to, create, incur, assume, suffer to exist, or
otherwise become or remain directly or indirectly liable with respect to, any
Indebtedness, except:

 

(a)                                  Indebtedness incurred pursuant to this
Agreement or the other Loan Documents;

 

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(b)                                 Indebtedness consisting of Contingent
Obligations permitted pursuant to Section 8.08;

 

(c)                                  Indebtedness incurred in connection with
the issuance of Derivative Contracts permitted under Section 8.10 hereof;

 

(d)                                 Specific Indebtedness outstanding on the
date hereof and listed in Schedule 8.05 hereto; and

 

(e)                                  Unsecured Indebtedness not otherwise
permitted under Sections 8.05(a) – (d) above in an aggregate principal amount
not exceeding $10,000,000 at any time outstanding.

 

8.06                        Transactions with Affiliates. No Loan Party shall,
or permit any of its Subsidiaries to, enter into any transaction with or make
any payment or transfer to (collectively, “Transactions”) any Affiliate of the
Company or such Loan Party, except in the ordinary course of business and upon
fair and reasonable terms no less favorable to the Company or such other Person
than would obtain in a comparable arm’s-length transaction with a Person not an
Affiliate of the Company or such other Person or to the extent permitted under
Section 8.09, provided that the foregoing restriction shall not apply to
Transactions between or among the Company and the Guarantors.

 

8.07                        Margin Stock. No Loan Party shall use any portion of
the Loan proceeds, directly or indirectly, (i) to purchase or carry Margin
Stock, (ii) to repay or otherwise refinance indebtedness of the Company or
others incurred to purchase or carry Margin Stock, (iii) to extend credit for
the purpose of purchasing or carrying any Margin Stock, or (iv) to acquire any
security in any transaction that is subject to Section 13 or 14 of the Exchange
Act. If requested by the Administrative Agent, the Company 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 or Regulation X of the FRB, as the case may be.

 

8.08                        Contingent Obligations. No Loan Party shall, or
permit any of its Subsidiaries to, create, incur, assume or suffer to exist any
Contingent Obligations except:

 

(a)                                  endorsements for collection or deposit in
the ordinary course of business;

 

(b)                                 Derivative Contracts permitted under Section
8.10 hereof and Guaranty Obligations of Parent with respect to the Florida Crude
Oil Purchase Contracts.

 

(c)                                  Contingent Obligations of the Loan Parties
listed in Schedule 8.08 hereto, not to exceed $1,000,000 in the aggregate;

 

(d)                                 plugging bonds, performance bonds and
fidelity bonds issued for the account of the Company or its Subsidiaries,
obligations to indemnify or make whole any surety and similar agreements
incurred in the ordinary course of business, provided that such obligations
shall not exceed $10,000,000 in the aggregate;

 

(e)                                  this Agreement and the Loan Documents; and

 

(f)                                    any other Contingent Obligations of the
Loan Parties to the extent not described in Sections 8.08(a) - (e) not to exceed
an aggregate amount of $10,000,000 outstanding at any time.

 

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8.09                        Restricted Payments. No Loan Party shall, or permit
any of its Subsidiaries to, purchase, redeem or otherwise acquire for value any
membership interests, partnership interests, capital accounts, shares of its
capital stock or any warrants, rights or options to acquire such membership
interest, partnership interest or shares, now or hereafter outstanding from its
members, partners or stockholders or declare or pay any distribution, dividend
or return capital to its members, partners or stockholders, or make any
distribution of assets in cash or in kind to its members, partners or
stockholders (collectively “Restricted Payments”); except (a) Parent may declare
and pay dividends with respect to its Equity payable solely in additional shares
of its Equity, (b) Subsidiaries of the Company may declare and pay dividends
ratably with respect to their Equity, (c) the Company may declare and pay
dividends to Parent, and (d) Parent may declare and pay to its Equity owners
quarterly cash dividends of Available Cash in accordance with its partnership
agreement, so long as no Event of Default exists or would result therefrom, and
after giving effect to such Restricted Payment, (i) the Loan Parties exhibit
pro-forma compliance with all terms and conditions of this Agreement, (ii) the
Available Borrowing Base equals an amount no less than ten percent (10%) of the
Borrowing Base, (iii) the Company would have the ability to draw at least ten
percent (10%) of the Borrowing Base and remain in compliance with all terms and
conditions hereof, and (iv) such Restricted Payment would not impair the ability
of the Company to fulfill its obligations hereunder. By making a Restricted
Payment pursuant to clause (d) above, Parent specifically represents and
warrants to Administrative Agent and the Lenders that the conditions for making
such Restricted Payment have been satisfied.

 

8.10                        Derivative Contracts. No Loan Party shall, or permit
any of its Subsidiaries to, enter into or in any manner be liable on any
Derivative Contract except:

 

(a)                                  Derivative Contracts entered into by the
Company with the purpose and effect of limiting or reducing the market price
risk of Oil and Gas expected to be produced by the Company and each Subsidiary
provided that at all times: (i) the aggregate of all such Derivative Contracts
limits or reduces such market price risk for a term of no more than sixty (60)
months; (ii) no such contract, when aggregated with all Derivative Contracts
permitted under this Section 8.10(a) (but excluding put option contracts that
are not related to corresponding calls, collars or swaps) requires the Loan
Parties to deliver more than 85% of the reasonably anticipated production for
each month for the total Oil and Gas classified as either “proved producing” or
“proved developed non-producing” on (x) the Company’s Oil and Gas Properties
covered under the most recent Reserve Report delivered to the Administrative
Agent and (y) any Oil and Gas Properties acquired by the Company after the
effective date of such Reserve Report classified as “proved producing” or
“proved developed non-producing,” (provided however, the “proved developed
non-producing” reserves included in such calculation shall not exceed 20% of the
“proved producing” reserves) and (iii) each such contract shall be between the
Company or a Subsidiary and any of the Lenders or their Affiliates, or with an
unsecured counterparty or have a guarantor of the obligation of the unsecured
counterparty who, at the time the contract is made, has long-term obligations
rated BBB+ or Baal or better, respectively, by Standard & Poor’s Corporation or
Moody’s Investors Services, Inc. (or a successor credit rating agency)
(excluding (x) Derivative Contracts offered by national commodity exchange for
which no credit rating is required and (y) the Florida Crude Oil Purchase
Contracts for so long as such contracts are with Plains Marketing, L.P. or a
wholly owned subsidiary of Plains All American Pipeline, L.P.);

 

(b)                                 Derivative Contracts entered into by the
Company with the purpose and effect of fixing interest rates on a principal
amount of Indebtedness of the Company that is accruing interest at a variable
rate, provided that (i) the floating rate index of each such contract generally
matches the index used to determine the floating rates of interest on the
corresponding Indebtedness of the Company to be hedged by such contract, (ii) no
such contract, except those with a Lender or its Affiliate, when aggregated with
all Derivative Contracts permitted under Sections 8.10(a) and (b), requires the
Company to put up money, assets, letters of credit, or other security against
the event of its non-performance prior to

 

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actual default by the Company in performing obligations thereunder, and (iii)
each such contract shall be with a Lender or its Affiliate, or with an unsecured
counterparty or have a guarantor of the obligation of an unsecured counterparty
who, at the time the contract is made, has long-term obligations rated A+ or A1
or better, respectively, by Standard & Poor’s Corporation or Moody’s Investors
Services, Inc. (or a successor credit rating agency);

 

(c)                                  In the event of a Derivative Contract
between the Company and any of the Lenders, the Contingent Obligation evidenced
under such Derivative Contract shall not be applied against such Lender’s
Commitment nor against the Effective Amount. Any Indebtedness to any Lender or
its Affiliate incurred under any Derivative Contract shall be treated as an
Obligation pari passu and secured pro rata under the Security Documents with all
Obligations otherwise incurred hereunder or under the other Loan Documents as
more particularly provided under Section 11.11; and

 

(d)                                 The Company shall not modify in any material
respect or terminate any Derivative Contracts to which it is currently a party
or subsequently becomes a party without the consent of the Majority Lenders,
except that Derivative Contracts with a party who ceases to be a Lender (or an
Affiliate of a Lender) may be terminated in connection with the assignment,
amendment or other transaction pursuant to which such party ceases to be a
Lender or an Affiliate of a Lender.

 

8.11                        Change in Business; Amendments to Organization
Documents and Certain Acquisition Agreements; Corporate Structure; Tax Status.

 

(a)                                  The Loan Parties shall not, and shall not
permit any of their Subsidiaries to (i) own Equity of any Foreign Person, or
make any expenditure in or related to Oil and Gas Properties not located within
the geographic boundaries of the United States, or (ii) enter into, or allow any
Subsidiary to enter into, any joint ventures except as permitted by Section
8.04.

 

(b)                                 The Loan Parties shall not, and shall not
permit any subsidiary to, engage in any business or activity other than its
Principal Business.

 

(c)                                  The Loan Parties shall not alter, amend or
modify in any manner materially adverse to the Lenders any of its Organization
Documents.

 

(d)                                 Parent shall not alter its status as a
partnership for United States federal income tax purposes. Parent shall not have
any Subsidiaries, or own any Equity in any Person, other than the Company.

 

(e)                                  Parent and the Company shall not amend or
fail to enforce the terms of any indemnity obligations under the Quicksilver
Acquisition Agreement, if such amendment or failure could reasonably be expected
to have a Material Adverse Effect.

 

8.12                        Accounting Changes. Except as expressly permitted by
the Lenders, no Loan Party shall, or permit any Subsidiary to, make any
significant change in accounting treatment or reporting practices, except as
required by GAAP, or change the fiscal year of any Loan Party.

 

8.13                        ERISA Compliance. Except as would not reasonably be
expected to result in a Material Adverse Effect, no Loan Party will, or permit
any Subsidiary to, at any time:

 

(a)                                  engage in, or permit any ERISA Affiliate to
engage in, any transaction in connection with which any Loan Party or any ERISA
Affiliate could be subjected to either a civil penalty

 

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assessed pursuant to subsections (c), (i) or (l) of section 502 of ERISA or a
tax imposed by Chapter 43 of Subtitle D of the Code.

 

(b)                                 terminate, or permit any ERISA Affiliate to
terminate, any Plan in a manner, or take any other action with respect to any
Plan, which could result in any liability of such Loan Party or any ERISA
Affiliate to the PBGC.

 

(c)                                  fail to make, or permit any ERISA Affiliate
to fail to make, full payment when due of all amounts which, under the
provisions of any Plan, agreement relating thereto or applicable law, any Loan
Party or any ERISA Affiliate is required to pay as contributions thereto.

 

(d)                                 permit to exist, or allow any ERISA
Affiliate to permit to exist, any accumulated funding deficiency within the
meaning of section 302 of ERISA or section 412 of the Code, whether or not
waived, with respect to any Plan.

 

(e)                                  permit, or allow any ERISA Affiliate to
permit, the actuarial present value of the benefit liabilities under any Plan
maintained by any Loan Party or any ERISA Affiliate which is regulated under
Title IV of ERISA to exceed the current value of the assets (computed on a plan
termination basis in accordance with Title IV of ERISA) of such Plan allocable
to such benefit liabilities. The term “actuarial present value of the benefit
liabilities” shall have the meaning specified in section 4041 of ERISA.

 

(f)                                    incur, or permit any ERISA Affiliate to
incur, any withdrawal liability pursuant to Section 4201 or 4202 of ERISA.

 

(g)                                 acquire, or permit any ERISA Affiliate to
acquire, an interest in any Person that causes such Person to become an ERISA
Affiliate with respect to such Loan Party or with respect to any ERISA Affiliate
of such Loan Party if such Person sponsors, maintains or contributes to, or at
any time in the six-year period preceding such acquisition has sponsored,
maintained, or contributed to, (i) any Multiemployer Plan with respect to which
such Person has an outstanding withdrawal liability under Section 4201 or 4202
of ERISA, or (ii) any other Plan that is subject to Title IV of ERISA under
which the actuarial present value of the benefit liabilities under such Plan
exceeds the current value of the assets (computed on a plan termination basis in
accordance with Title IV of ERISA) of such Plan allocable to such benefit
liabilities.

 

(h)                                 incur, or permit any ERISA Affiliate to
incur, a liability to or on account of a Plan under sections 515, 4062, 4063,
4064, or 4204 of ERISA.

 

(i)                                     contribute to or assume an obligation to
contribute to, or permit any ERISA Affiliate to contribute to or assume an
obligation to contribute to, any employee welfare benefit plan, as defined in
section 3(1) of ERISA, that provides retiree benefits to former employees of
such entities (other than coverage mandated by applicable law), that may not be
terminated by such entities in their sole discretion at any time without any
material liability.

 

(j)                                     amend, or permit any ERISA Affiliate to
amend, a Plan resulting in an increase in current liability such that such Loan
Party or any ERISA Affiliate is required to provide security to such Plan under
section 401(a)(29) of the Code.

 

8.14                        Interest Coverage Ratio. Parent shall not permit, as
of the last day of each fiscal quarter beginning with the fiscal quarter ended
September 30, 2007, the ratio of EBITDAX for the four (4) fiscal

 

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quarters ending on such date to Consolidated Interest Expense for the four (4)
fiscal quarters ending on such date to be less than 2.75 to 1.00.

 

8.15                        Leverage Ratio. Parent shall not permit, as of the
last day of each fiscal quarter beginning with the fiscal quarter ended
September 30, 2007, the ratio of Total Indebtedness to EBITDAX for the four (4)
fiscal quarters ending on such date to be greater than 3.50 to 1.00.

 

8.16                        Current Ratio. Parent shall not permit, as of the
last day of each fiscal quarter ending on the date set forth below, the ratio of
Current Assets to Current Liabilities to be less than the ratio set forth below:

 

September 30, 2007: 1.10 to 1.00

December 31, 2007 and thereafter: 1.00 to 1.00

 

8.17                        Negative Pledge. Enter into or permit to exist any
contractual obligation (other than this Agreement or any other Loan Document)
that limits the ability (a) of any Subsidiary to make Restricted Payments to or
otherwise transfer property to Parent, the Company or any Guarantor, (b) of
Parent to Guarantee the Indebtedness of the Company, or any Subsidiary to
Guarantee the Indebtedness of the Company, or (c) of Parent, the Company, or any
Subsidiary to create, incur, assume or suffer to exist Liens on property of such
Person to secure the Obligations.

 

8.18                        Unrestricted Entities.

 

No Loan Party or any of its Subsidiaries shall guarantee or otherwise become
liable in respect of any Indebtedness or any other obligations, or grant any
Lien on any of its property to secure any Indebtedness of or other obligations
of, or provide any other form of credit support to, any Unrestricted Entity.

 

ARTICLE IX.

EVENTS OF DEFAULT

 

9.01                        Event of Default. Any of the following shall
constitute an “Event of Default”:

 

(a)                                  Non-Payment. The Company or any other Loan
Party fails to pay, when and as required to be paid herein, any amount of
principal or interest of any Loan, or fails to pay within five (5) Business Days
of when due any fee or other amount payable hereunder or under any other Loan
Document; or

 

(b)                                 Representation or Warranty. Any
representation or warranty by any Loan Party made or deemed made herein, in any
other Loan Document, or which is contained in any certificate, document or
financial or other statement by the Company, any other Loan Party, or any
Responsible Officer of such Person, furnished at any time under this Agreement,
or in or under any other Loan Document, is incorrect on or as of the date made
or deemed made and causes a Material Adverse Effect; or

 

(c)                                  Specific Defaults. Any Loan Party fails to
perform or observe any term, covenant or agreement contained in Section 7.03(a)
or Article VIII (except for such Liens under Section 8.01 other than arising by
consensual action of such Loan Party) or there is a change in the tax status of
any Loan Party; or

 

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(d)                                 Other Defaults. An Event of Default as
defined in any Security Document shall occur, or any Loan Party fails to perform
or observe any other term or covenant contained in this Agreement (other than
described in this Section 9.01) or any other Loan Document, and same shall
continue unremedied for a period of 30 days after the earlier of (i) the date
upon which a Responsible Officer knew or reasonably should have known of such
default or (ii) the date upon which written notice thereof is given to the
Company by the Administrative Agent or any Lender; or

 

(e)                                  Cross-Acceleration. (i) any Loan Party or
any Subsidiary thereof fails to make any payment in respect of any Indebtedness
or Contingent Obligation having an aggregate principal amount (including undrawn
committed or available amounts and including amounts owing to all creditors
under any combined or syndicated credit arrangement) of more than the
$10,000,000 when due (whether by scheduled maturity, required prepayment,
acceleration, demand, or otherwise) and such failure continues after the
applicable grace period, if any, specified in the relevant document on the date
of such failure; or (ii) any Loan Party or any Subsidiary thereof fails after
the applicable grace or notice period, if any, specified in the relevant
document on the date of such failure to perform or observe any other condition
or covenant, or any other event shall occur or condition exist, under any
agreement or instrument relating to any such Indebtedness or Contingent
Obligation having an aggregate principal amount of more than $10,000,000 which
results in such Indebtedness or such Contingent Obligation being declared due
and payable (or becoming subject to mandatory repurchase or redemption) prior to
its stated maturity; or

 

(f)                                    Insolvency; Voluntary Proceedings. Any
Loan Party, any Subsidiary thereof or BreitBurn GP LLC (i) generally fails to
pay, or admits in writing its inability to pay, its debts as they become due,
subject to applicable grace periods, if any, whether at stated maturity or
otherwise; (ii) commences any Insolvency Proceeding with respect to itself; or
(iii) takes any action to effectuate or authorize any of the foregoing; or

 

(g)                                 Involuntary Proceedings. (i) Any involuntary
Insolvency Proceeding is commenced or filed against any Loan Party, any
Subsidiary thereof or BreitBurn GP LLC, or any writ, judgment, warrant of
attachment, execution or similar process, is issued or levied against all or a
substantial part of any such Person’s properties, and any such proceeding or
petition shall not be dismissed, or such writ, judgment, warrant of attachment,
execution or similar process shall not be released, vacated or fully bonded
within 60 days after commencement, filing or levy; (ii) any Loan Party, any
Subsidiary thereof or BreitBurn GP LLC admits the material allegations of a
petition against it in any Insolvency Proceeding, or an order for relief (or
similar order under non-U.S. law) is ordered in any Insolvency Proceeding; or
(iii) any Loan Party, any Subsidiary thereof or BreitBurn GP LLC acquiesces in
the appointment of a receiver, trustee, custodian, conservator, liquidator,
mortgagee in possession (or agent therefor), or other similar Person for itself
or a substantial portion of its property or business; or

 

(h)                                 Change in Management or Control. Both
Halbert Washburn and Randall Breitenbach shall cease for any reason to serve and
function as Co-CEO of BreitBurn GP LLC and neither shall be succeeded in such
position or other comparable position acceptable to the Majority Lenders, within
sixty (60) days by a Person acceptable to the Majority Lenders; or there shall
occur a Change of Control; or

 

(i)                                     Monetary Judgments. One or more
non-interlocutory judgments, non-interlocutory orders, decrees or arbitration
awards is entered against any Loan Party, any Subsidiary thereof or General
Partner involving in the aggregate a liability (to the extent not covered by
independent third-party insurance as to which the insurer does not dispute
coverage) as to any single or related series of transactions, incidents or
conditions, of $10,000,000 or more, and the same shall remain unsatisfied,
unvacated and unstayed pending appeal for a period of 30 days after the entry
thereof; or

 

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(j)                                     Loss of Permit. Any Governmental
Authority revokes or fails to renew any material license, permit or franchise of
any Loan Party, or any Loan Party for any reason loses any material license,
permit or franchise, or any Loan Party suffers the imposition of any restraining
order, escrow, suspension or impounding of funds in connection with any
proceeding (judicial or administrative) with respect to any material license,
permit or franchise; and, in each case such revocation, failure or loss could
reasonably be expected to have a Material Adverse Effect; and such default
remains unremedied for a period of 30 days after the earlier of (i) the date
upon which a Responsible Officer knew or reasonably should have known of such
default or (ii) the date upon which written notice thereof is given to the
Company by the Administrative Agent or any Lender; or

 

(k)                                  Adverse Change. There occurs a Material
Adverse Effect; or

 

(l)                                     Invalidity of Loan Documents. A Guaranty
or any other Loan Document is for any reason partially (including with respect
to future advances) or wholly revoked or invalidated, or otherwise ceases to be
in full force and effect, or a Guarantor or any other Person contests in any
manner the validity or enforceability thereof or any Loan Party denies that it
has any further liability or obligation thereunder; or

 

(m)                               Material Agreements. Any Loan Party shall fail
to observe, perform or comply with any material covenant, agreement, condition
or provision of any material Contractual Obligation including without limitation
the following: (i) or Derivative Contracts required under Section 8.10, (ii)
material leases associated with the Mortgaged Properties and (iii) material
agreements governing the transportation of Oil and Gas from the Mortgaged
Properties; or

 

(n)                                 ERISA. The occurrence of any of the
following events: (i) the happening of a Reportable Event which has resulted or
could reasonably be expected to result in a Material Adverse Effect (if not
waived by the PBGC or by the Majority Lenders, or if such event can be avoided
by any corrective action of the Loan Party affected thereby, such corrective
action is not completed within ninety (90) days after the occurrence of such
Reportable Event) with respect to any Pension Plan; (ii) the termination of any
Pension Plan in a “distress termination” under the provisions of Section 4041 of
ERISA; (iii) the appointment of a trustee by an appropriate United States
District Court to administer any Pension Plan; and (iv) the institution of any
proceedings by the PBGC to terminate any Pension Plan or to appoint a trustee to
administer any such plan; or

 

(o)                                 Environmental Claims. An Environmental Claim
shall have been asserted against any Loan Party, any subsidiary thereof which
could have a Material Adverse Effect.

 

9.02                        Remedies. If any Event of Default occurs and is
continuing, the Administrative Agent shall, at the request of, or may, with the
consent of, the Majority Lenders:

 

(a)                                  declare the Commitment, if any, of each
Lender to make Loans and issue Letters of Credit to be terminated, and/or
declare all or any part of the unpaid principal of the Loans, all interest
accrued and unpaid thereon and all other amounts payable under the Loan
Documents to be immediately due and payable, whereupon the same shall become due
and payable, without presentment, demand, protest, notice of intention to
accelerate, notice of acceleration or any other notice of any kind, all of which
are hereby expressly waived by each Loan Party;

 

(b)                                 require that the Company deposit cash
collateral pursuant to Section 2.10(h); and

 

(c)                                  exercise on behalf of itself and the
Lenders all rights and remedies available to it and the Lenders under the Loan
Documents or applicable law;

 

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provided, however, that upon the occurrence of any event specified in Subsection
(f) or (g) of Section 9.01 (in the case of clause (i) of Subsection (g) upon the
expiration of the 60-day period mentioned therein), the obligation of each
Lender to make Loans and issue Letters of Credit shall automatically terminate
and the unpaid principal amount of all outstanding Loans and all interest and
other amounts as aforesaid shall automatically become due and payable, and the
obligation of the Company to cash collateralize Letters of Credit shall
automatically become effective, without further act of the Administrative Agent,
or any Lender and without presentment, demand, protest, notice of intention to
accelerate, notice of acceleration or any other notice of any kind, all of which
are hereby expressly waived by each Loan Party.

 

(d)                                 All proceeds realized from the liquidation
or other disposition of Collateral or otherwise received after maturity of the
Loans, whether by acceleration or otherwise, shall be applied: first, to
reimbursement of expenses and indemnities provided for in this Agreement and the
other Loan Documents; second, to accrued interest on the Loans; third, to fees
owed to the Administrative Agent, any Lender or the Issuing Lender; fourth, pro
rata to principal outstanding on the Loans and the Indebtedness referred to in
Clause (h) of the definition of “Indebtedness” owing to Lender Derivative
Providers; fifth, to serve as cash collateral to be held by the Administrative
Agent to secure the LC Obligation; sixth, to any other Obligations; and any
excess shall be paid to the Company or as otherwise required by any Governmental
Authority.

 

9.03                        Rights Not Exclusive. The rights provided for in
this Agreement and the other Loan Documents are cumulative and are not exclusive
of any other rights, powers, privileges or remedies provided by law or in
equity, or under any other instrument, document or agreement now existing or
hereafter arising.

 

ARTICLE X.

ADMINISTRATIVE AGENT

 

10.01                 Appointment and Authority. Each of the Lenders and the
Issuing Lender hereby irrevocably appoints Administrative Agent to act on its
behalf as the Administrative Agent hereunder and under the other Loan Documents
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 or thereof, together with such actions and powers as are reasonably
incidental thereto. The provisions of this Article are solely for the benefit of
the Administrative Agent, the Lenders and the Issuing Lender, and neither the
Company nor any other Loan Party shall have rights as a third party beneficiary
of any of such provisions.

 

10.02                 Rights as a Lender. The Person 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 the term “Lender” or “Lenders” shall,
unless otherwise expressly indicated or unless the context otherwise requires,
include the Person serving as the Administrative Agent hereunder in its
individual capacity. Such Person and its Affiliates may accept deposits from,
lend money to, act as the financial advisor or in any other advisory capacity
for and generally engage in any kind of business with Parent or any Subsidiary
or other Affiliate thereof as if such Person were not the Administrative Agent
hereunder and without any duty to account therefor to the Lenders.

 

10.03                 Exculpatory Provisions. The Administrative Agent shall not
have any duties or obligations except those expressly set forth herein and in
the other Loan Documents. Without limiting the generality of the foregoing, the
Administrative Agent:

 

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(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 discretionary
rights and powers expressly contemplated hereby or by the other Loan Documents
that the Administrative Agent is required to exercise as directed in writing by
the Required Lenders (or such other number or percentage of the Lenders as shall
be expressly provided for herein or in the other Loan Documents), provided that
the Administrative Agent shall not be required to take any action that, in its
opinion or the opinion of its counsel, may expose the Administrative Agent to
liability or that is contrary to any Loan Document or applicable law; and

 

(c)                                  shall not, except as expressly set forth
herein and in the other Loan Documents, have any duty to disclose, and shall not
be liable for the failure to disclose, any information relating to the Company
or any of its Affiliates that is communicated to or obtained by the Person
serving as the Administrative Agent or any of its Affiliates in any capacity.

 

The Administrative Agent shall not be liable for any action taken or not taken
by it (i) with the consent or at the request of the Required Lenders (or such
other number or percentage of the Lenders as shall be necessary, or as the
Administrative Agent shall believe in good faith shall be necessary, under the
circumstances as provided in Sections 9.02 and 11.01) or (ii) in the absence of
its own gross negligence or willful misconduct. The Administrative Agent shall
be deemed not to have knowledge of any Default unless and until notice
describing such Default is given to the Administrative Agent by the Company, a
Lender or the Issuing Lender.

 

The Administrative Agent shall not be responsible for or have any duty to
ascertain or inquire into (i) any statement, warranty or representation made in
or in connection with this Agreement or any other Loan Document, (ii) the
contents of any certificate, report or other document delivered hereunder or
thereunder 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 therein or the occurrence of any Default, (iv) the validity,
enforceability, effectiveness or genuineness of this Agreement, any other Loan
Document or any other agreement, instrument or document or (v) the satisfaction
of any condition set forth in Article V or elsewhere herein, other than to
confirm receipt of items expressly required to be delivered to the
Administrative Agent.

 

10.04                 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 (including any electronic message, Internet or intranet website
posting or other distribution) believed by it to be genuine and to have been
signed, sent or otherwise authenticated by the proper Person. The Administrative
Agent also may rely upon any statement made to it orally or by telephone and
believed by it to have been made by the proper Person, and shall not incur any
liability for relying thereon. In determining compliance with any condition
hereunder to the making of a Loan, or the issuance of a Letter of Credit, that
by its terms must be fulfilled to the satisfaction of a Lender or the Issuing
Lender, the Administrative Agent may presume that such condition is satisfactory
to such Lender or the Issuing Lender unless the Administrative Agent shall have
received notice to the contrary from such Lender or the Issuing Lender prior to
the making of such Loan or the issuance of such Letter of Credit. The
Administrative Agent may consult with legal counsel (who may be counsel for the
Company), 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.

 

10.05                 Delegation of Duties. The Administrative Agent may perform
any and all of its duties and exercise its rights and powers hereunder or under
any other Loan Document by or through any one or

 

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

 

10.06                 Resignation of Administrative Agent. The Administrative
Agent may at any time give notice of its resignation to the Lenders, the Issuing
Lender and the Company. Upon receipt of any such notice of resignation, the
Required Lenders shall have the right, in consultation with the Company, to
appoint a successor, which shall be a bank with an office in the United States,
or an Affiliate of any such bank with an office in the United States. If no such
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, then the retiring Administrative Agent may on
behalf of the Lenders and the Issuing Lender, appoint a successor Administrative
Agent meeting the qualifications set forth above provided that if the
Administrative Agent shall notify the Company and the Lenders that no qualifying
Person has accepted such appointment, then such resignation shall nonetheless
become effective in accordance with such notice and (1) the retiring
Administrative Agent shall be discharged from its duties and obligations
hereunder and under the other Loan Documents (except that in the case of any
collateral security held by the Administrative Agent on behalf of the Lenders or
the Issuing Lender under any of the Loan Documents, the retiring Administrative
Agent shall continue to hold such collateral security until such time as a
successor Administrative Agent is appointed) and (2) all payments,
communications and determinations provided to be made by, to or through the
Administrative Agent shall instead be made by or to each Lender and the Issuing
Lender directly, until such time as the Required Lenders appoint a successor
Administrative Agent as provided for above in this Section 10.06. Upon the
acceptance of a successor’s appointment as Administrative Agent hereunder, such
successor shall succeed to and become vested with all of the rights, powers,
privileges and duties of the retiring (or retired) Administrative Agent, and the
retiring Administrative Agent shall be discharged from all of its duties and
obligations hereunder or under the other Loan Documents (if not already
discharged therefrom as provided above in this Section 10.06). The fees payable
by the Company to a successor Administrative Agent shall be the same as those
payable to its predecessor unless otherwise agreed between the Company and such
successor. After the retiring Administrative Agent’s resignation hereunder and
under the other Loan Documents, the provisions of this Article X and Section
11.04 shall continue in effect for the benefit of such retiring Administrative
Agent, its sub agents and their respective Related Parties in respect of any
actions taken or omitted to be taken by any of them while the retiring
Administrative Agent was acting as Administrative Agent.

 

10.07                 Non-Reliance on Administrative Agent and Other Lenders.
Each Lender and the Issuing Lender acknowledges that it has, independently and
without reliance upon the Administrative Agent or any other Lender or any of
their Related Parties and based on such documents and information as it has
deemed appropriate, made its own credit analysis and decision to enter into this
Agreement. Each Lender and the Issuing Lender also acknowledges that it will,
independently and without reliance upon the Administrative Agent or any other
Lender or any of their Related Parties and based on such documents and
information as it shall from time to time deem appropriate, continue to make its
own decisions in taking or not taking action under or based upon this Agreement,
any other Loan Document or any related agreement or any document furnished
hereunder or thereunder.

 

10.08                 Administrative Agent May File Proofs of Claim. In case of
the pendency of any receivership, insolvency, liquidation, bankruptcy,
reorganization, arrangement, adjustment, composition or other judicial
proceeding relative to the Company or any of its Subsidiaries, the
Administrative Agent (irrespective of whether the principal of any Loan shall
then be due and payable as herein expressed or by

 

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declaration or otherwise and irrespective of whether the Administrative Agent
shall have made any demand on the Company) shall be entitled and empowered, by
intervention in such proceeding or otherwise:

 

(a)                                  to file and prove a claim for the whole
amount of the principal and interest owing and unpaid in respect of the Loans
and all other Indebtedness that are owing and unpaid and to file such other
documents as may be necessary or advisable in order to have the claims of the
Lenders and the Administrative Agent (including any claim for the reasonable
compensation, expenses, disbursements and advances of the Lenders and the
Administrative Agent and their respective agents and counsel and all other
amounts due the Lenders and the Administrative Agent under Section 11.04(a))
allowed in such judicial proceeding; and

 

(b)                                 to collect and receive any monies or other
property payable or deliverable on any such claims and to distribute the same;
and any custodian, receiver, assignee, trustee, liquidator, sequestrator or
other similar official in any such judicial proceeding is hereby authorized by
each Lender to make such payments to the Administrative Agent and, in the event
that the Administrative Agent shall consent to the making of such payments
directly to the Lenders, to pay to the Administrative Agent any amount due for
the reasonable compensation, expenses, disbursements and advances of the
Administrative Agent and its agents and counsel, and any other amounts due the
Administrative Agent under Section 11.04(a).

 

Nothing contained herein shall be deemed to authorize the Administrative Agent
to authorize or consent to or accept or adopt on behalf of any Lender any plan
of reorganization, arrangement, adjustment or composition affecting the
Indebtedness or the rights of any Lender or to authorize the Administrative
Agent to vote in respect of the claim of any Lender in any such proceeding.

 

10.09                 Authority of Administrative Agent to Release Collateral
and Liens. Each Lender and Issuing Lender 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 Issuing Lender
hereby authorizes the Administrative Agent to execute and deliver to the
Company, at the Company’s sole cost and expense, any and all releases of Liens,
termination statements, assignments, or other documents reasonably requested by
the Company 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 8.02
or is otherwise authorized by the terms of the Loan Documents.

 

10.10                 The Arrangers and other Agents. Anything herein to the
contrary notwithstanding, no Person listed as a Co-Lead Arranger or as a
Co-Documentation Agent on the cover page of this Agreement shall have any
powers, duties or responsibilities under this Agreement or any of the other Loan
Documents, except in its capacity, as applicable, as the Administrative Agent, a
Lender or the Issuing Lender hereunder.

 

ARTICLE XI.

MISCELLANEOUS

 

11.01                 Amendments and Waivers. No amendment, modification,
termination or waiver of any provision of this Agreement or any other Loan
Document, and no consent with respect to any departure by the Company or any
applicable Loan Party therefrom, shall be effective unless the same shall be in
writing and signed by the Majority Lenders (or by the Administrative Agent at
the written request of the Majority Lenders) and the Company and acknowledged by
the Administrative Agent, and then any such

 

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waiver or consent shall be effective only in the specific instance and for the
specific purpose for which given; provided, however, that no such waiver,
amendment, modification, termination or consent shall:

 

(a)                                  increase or extend the Commitment of any
Lender, without the written consent of such Lender (or reinstate any Commitment
terminated pursuant to Section 9.02);

 

(b)                                 postpone the final maturity date of any
Loan, or postpone or delay any date fixed by this Agreement or any other Loan
Document for any payment of principal, interest, fees or other amounts due to
the Lenders (or any of them) hereunder or under any other Loan Document, without
the written consent of each Lender directly affected thereby;

 

(c)                                  reduce the principal of, or the rate of
interest specified herein on any Loan, or any fees or other amounts payable
hereunder or under any other Loan Document, without the written consent of each
Lender directly affected thereby;

 

(d)                                 change in any manner the definition of
“Majority Lenders” or “Required Lenders”, or change Section 2.12 or Section
9.02(d) in a manner that would alter the pro rata sharing of payments required
thereby, without the written consent of each Lender;

 

(e)                                  amend this Section 11.01 or any provision
of this Agreement which, by its terms, expressly requires the approval or
concurrence of all Lenders, without the written consent of each Lender;

 

(f)                                    release all, substantially all, or any
material portion of the Collateral, or release any Subsidiary from any Guaranty
(in each case releases in connection with dispositions of assets which are
permitted hereunder or under any Loan Document), without the written consent of
each Lender; provided that the Administrative Agent may release Collateral as
permitted by Section 10.09;

 

(g)                                 increase the Borrowing Base pursuant to
Section 2.05, without the written consent of each Lender, provided, the Required
Lenders may maintain or decrease the Borrowing Base pursuant to Section 2.05; or

 

(h)                                 amend the definition of “Lender Derivative
Contracts” or “Lender Derivative Provider” or clause (b) of the definition of
“Obligations” in a manner materially adverse to any Lender Derivative Provider
who is a Lender at such time or who is an Affiliate of a Lender at such time,
without the written consent of each such Lender;

 

and provided further, that (i) any amendment, modification, termination or
waiver of any of the provisions contained in Article V shall be effective only
if evidenced by a writing signed by or on behalf of the Administrative Agent and
the Majority Lenders, (ii) no amendment, waiver or consent shall, unless in
writing and signed by the Issuing Lender in addition to the Majority Lenders or
all the Lenders, as the case may be, affect the rights or duties of the Issuing
Lender under this Agreement or any LC Related Document relating to any Letter of
Credit Issued or to be Issued by it, (iii) no amendment, waiver or consent
shall, unless in writing and signed by the Swing Line Lender in addition to the
Majority Lenders or all the Lenders, as the case may be, affect the rights or
duties of the Swing Line Lender under this Agreement, (iv) no amendment, waiver
or consent shall, unless in writing and signed by the Administrative Agent in
addition to the Majority Lenders or all the Lenders, as the case may be, affect
the rights or duties of the Administrative Agent under this Agreement or any
other Loan Document; and (v) the Fee Letter may be amended and terms thereof may
be waived by a writing signed by the parties thereto.

 

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If any Lender refuses to consent to any amendment, waiver or other modification
of any Loan Document requested by the Company that requires the consent of a
greater percentage of the Lenders than the Majority Lenders and such amendment,
waiver or other modification is consented to by the Majority Lenders, then the
Company may replace such Lender in accordance with the provisions of Section
3.07(b).

 

11.02                 Notices; Effectiveness; Electronic Communication.

 

(a)                                  General. Except in the case of notices and
other communications expressly permitted to be given by telephone (and except as
provided in subsection (b) below), all notices and other communications provided
for herein shall be in writing and shall be delivered by hand or overnight
courier service, mailed by certified or registered mail or sent by telecopier,
or delivered by electronic mail to the electronic mail address, specified for
notices on Schedule 11.02 (for the Company, the Guarantors, the Issuing Lender,
the Swing Line Lender and the Administrative Agent) or on the Administrative
Questionnaire (for the Lenders). Notices sent by hand or overnight courier
service, or mailed by certified or registered mail, shall be deemed to have been
given when received; notices sent by telecopier shall be deemed to have been
given when sent if the sender receives an acknowledgment of receipt (except
that, if not given during normal business hours for the recipient, shall be
deemed to have been given at the opening of business on the next business day
for the recipient). Notices delivered through electronic communications to the
extent provided in subsection(b) below, shall be effective as provided in said
subsection (b).

 

(b)                                 Electronic Communications. Notices and other
communications to the Lenders and the Issuing Lender hereunder may be delivered
or furnished by electronic communication (including e-mail and Internet or
intranet websites) pursuant to procedures approved by the Administrative Agent,
provided that the foregoing shall not apply to notices to any Lender or the
Issuing Lender pursuant to Article II if such Lender or the Issuing Lender, as
applicable, has notified the Administrative Agent that it is incapable of
receiving notices under such Article by electronic communication. The
Administrative Agent or the Company 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.

 

Unless the Administrative Agent otherwise prescribes, (i) notices and other
communications sent to an e-mail address shall be deemed received upon the
sender’s receipt of an acknowledgement from the intended recipient (such as by
the “return receipt requested” function, as available, return e-mail or other
written acknowledgement), provided that if such notice or other communication is
not sent during the normal business hours of the recipient, such notice or
communication shall be deemed to have been sent at the opening of business on
the next business day for the recipient, and (ii) notices or communications
posted to an Internet or intranet website shall be deemed received upon the
deemed receipt by the intended recipient at its e-mail address as described in
the foregoing clause (i) of notification that such notice or communication is
available and identifying the website address therefor.

 

(c)                                  Change of Address, Etc. Each of the
Company, the Administrative Agent, the Issuing Lender and the Swing Line Lender
may change its address, telecopier or telephone number for notices and other
communications hereunder by notice to the other parties hereto. Each other
Lender may change its address, telecopier or telephone number for notices and
other communications hereunder by notice to the Company, Administrative Agent,
the Issuing Lender and the Swing Line Lender.

 

(d)                                 Notice to Administrative Agent. Each Lender
shall notify the Administrative Agent in writing of any changes in the address
to which notices to the Lender should be directed, of addresses of any Lending
Office, of payment instructions in respect of all payments to be made to it

 

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hereunder and of such other administrative information as the Administrative
Agent shall reasonably request.

 

(e)                                  Effectiveness of Facsimile and PDF
Documents and Signatures. Loan Documents may be transmitted and/or signed by
facsimile and PDF. The effectiveness of any such documents and signatures shall,
subject to applicable Law, have the same force and effect as manually-signed
originals and shall be binding on all Loan Parties, the Administrative Agent and
the Lenders. The Administrative Agent may also require that any such documents
and signatures be confirmed by a manually-signed original thereof; provided,
however, that the failure to request or deliver the same shall not limit the
effectiveness of any facsimile or PDF document or signature.

 

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

 

11.04                 Costs and Expenses; Indemnity.

 

(a)                                  Costs and Expenses. The Company shall pay
(i) all reasonable out-of-pocket expenses incurred by the Administrative Agent
and its Affiliates (including the reasonable fees, charges and disbursements of
counsel for the Administrative Agent) in connection with the syndication of the
credit facilities provided for herein, the preparation, negotiation, execution,
delivery and administration of this Agreement and the other Loan Documents or
any amendments, modifications or waivers of the provisions hereof or thereof
(whether or not the transactions contemplated hereby or thereby shall be
consummated), (ii) all reasonable out-of-pocket expenses incurred by the Issuing
Lender in connection with the issuance, amendment, renewal or extension of any
Letter of Credit or any demand for payment thereunder and (iii) all
out-of-pocket expenses incurred by the Administrative Agent, any Lender or the
Issuing Lender (including the fees, charges and disbursements of any counsel for
the Administrative Agent, any Lender or the Issuing Lender) in connection with
the enforcement or protection of its rights (A) in connection with this
Agreement and the other Loan Documents, including its rights under this Section,
or (B) in connection with the Loans made or Letters of Credit issued hereunder,
including all such out-of-pocket expenses incurred during any workout,
restructuring or negotiations in respect of such Loans or Letters of Credit.

 

(b)                                 Indemnification by the Company. The Company
shall indemnify the Administrative Agent (and any sub-agent thereof), each
Lender and the Issuing 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 fees, charges and disbursements of any counsel
for any Indemnitee) incurred by any Indemnitee or asserted against any
Indemnitee by any third party or by the Company or any other Loan Party arising
out of, in connection with, or as a result of (i) the execution or delivery of
this Agreement, any other Loan Document or any agreement or instrument
contemplated hereby or thereby, the performance by the parties hereto of their
respective obligations hereunder or thereunder or the consummation of the
transactions contemplated hereby or thereby, (ii) any Loan or Letter of Credit
or the use or proposed use of the proceeds therefrom (including any refusal by
the Issuing Lender to honor a demand for payment under a Letter of Credit if the
documents presented in connection with such demand do not strictly comply with
the terms of such Letter of Credit), (iii) any actual or alleged presence or
Release of Hazardous Materials on or from any property owned or operated by the
Company or any of its Subsidiaries, or any Environmental Liability related in
any way to the Company or any of its Subsidiaries, or (iv) any actual or
prospective claim, litigation, investigation or proceeding relating to any of
the

 

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foregoing, whether based on contract, tort or any other theory, whether brought
by a third party or by the Company or any other Loan Party, and regardless of
whether any Indemnitee is a party thereto, provided that such indemnity shall
not, as to any Indemnitee, be available to the extent that such losses, claims,
damages, liabilities or related expenses (x) 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 or (y) result from
a claim brought by the Company or any other Loan Party against an Indemnitee for
breach in bad faith of such Indemnitee’s obligations hereunder or under any
other Loan Document, if the Company or such Loan Party has obtained a final and
nonappealable judgment in its favor on such claim as determined by a court of
competent jurisdiction.

 

(c)                                  Reimbursement by Lenders. To the extent
that the Company for any reason fails to indefeasibly pay any amount required
under paragraph (a) or (b) of this Section to be paid by it to the
Administrative Agent (or any sub-agent thereof), the Issuing Lender or any
Related Party of any of the foregoing, each Lender severally agrees to pay to
the Administrative Agent (or any such sub-agent), the Issuing Lender or such
Related Party, as the case may be, such Lender’s Pro Rata Share (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 any such
sub-agent) or the Issuing Lender in its capacity as such, or against any Related
Party of any of the foregoing acting for the Administrative Agent (or any such
sub-agent) or Issuing Lender in connection with such capacity. The obligations
of the Lenders under this paragraph (c) are several.

 

(d)                                 Waiver of Consequential Damages, Etc. To the
fullest extent permitted by applicable law, the Company shall not assert, and
hereby waives, any claim against any Indemnitee, on any theory of liability, for
special, indirect, consequential or punitive damages (as opposed to direct or
actual damages) arising out of, in connection with, or as a result of, this
Agreement, any other Loan Document or any agreement or instrument contemplated
hereby, the transactions contemplated hereby or thereby, any Loan or Letter of
Credit or the use of the proceeds thereof. No Indemnitee referred to in
paragraph (b) above shall be liable for any damages arising from the use by
unintended recipients of any information or other materials distributed by it
through telecommunications, electronic or other information transmission systems
in connection with this Agreement or the other Loan Documents or the
transactions contemplated hereby or thereby.

 

(e)                                  Payments. All amounts due under this
Section shall be payable not later than ten Business Days after demand therefor.

 

(f)                                    Survival. The agreements in this Section
shall survive the resignation of the Administrative Agent, the Issuing Lender
and the Swing Line Lender, the replacement of any Lender, the termination of the
Commitments and the repayment, satisfaction or discharge of all other
Obligations.

 

11.05                 Payments Set Aside. To the extent that the Company makes a
payment to the Administrative Agent or the Lenders, or the Administrative Agent
or the Lenders exercise their right of set-off, and such payment or the proceeds
of such set-off or any part thereof are subsequently invalidated, declared to be
fraudulent or preferential, set aside or required (including pursuant to any
settlement entered into by the Administrative Agent or such Lender in its
discretion) to be repaid to a trustee, receiver or any other party, in
connection with any Insolvency Proceeding or otherwise, then (a) to the extent
of such recovery the obligation or part thereof originally intended to be
satisfied shall be revived and continued in full force and effect as if such
payment had not been made or such set-off had not occurred, and (b) each Lender
severally agrees to pay to the Administrative Agent upon demand its Pro Rata
Share of any amount so recovered from or repaid by the Administrative Agent.

 

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11.06                 Successors and Assigns.

 

(a)                                  Successors and Assigns Generally. The
provisions of this Agreement shall be binding upon and inure to the benefit of
the parties hereto and their respective successors and assigns permitted hereby,
except that neither the Company nor any other Loan Party may assign or otherwise
transfer any of its rights or obligations hereunder without the prior written
consent of the Administrative Agent and each Lender and no Lender may assign or
otherwise transfer any of its rights or obligations hereunder except (i) to an
assignee in accordance with the provisions of Section 11.06(b), (ii) by way of
participation in accordance with the provisions of Section 11.06(d) or (iii) by
way of pledge or assignment of a security interest subject to the restrictions
of Section 11.06(f) (and any other attempted assignment or transfer by any party
hereto shall be null and void). Nothing in this Agreement, expressed or implied,
shall be construed to confer upon any Person (other than the parties hereto,
their respective successors and assigns permitted hereby, Participants to the
extent provided in Section 11.06(d) and, to the extent expressly contemplated
hereby, the Related Parties of each of the Administrative Agent and the Lenders)
any legal or equitable right, remedy or claim under or by reason of this
Agreement.

 

(b)                                 Assignments by Lenders. Any Lender may at
any time 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); provided that any such assignment shall
be subject to the following conditions:

 

(i)                                     Minimum Amounts.

 

(A)                              in the case of an assignment of the entire
remaining amount of the assigning Lender’s Commitment and the Loans at the time
owing to it or in the case of an assignment to a Lender, an Affiliate of a
Lender or an Approved Fund, no minimum amount need be assigned; and

 

(B)                                in any case not described in Section
11.06(b)(i)(A), the aggregate amount of the Commitment (which for this purpose
includes Loans outstanding thereunder) or, if the Commitment is not then in
effect, the principal outstanding balance of the Loans of the assigning Lender
subject to each such assignment (determined as of the date the Assignment and
Assumption with respect to such assignment is delivered to the Administrative
Agent or, if “Trade Date” is specified in the Assignment and Assumption, as of
the Trade Date) shall not be less than $5,000,000, unless each of the
Administrative Agent and, so long as no Event of Default has occurred and is
continuing, the Company otherwise consents (each such consent not to be
unreasonably withheld or delayed).

 

(ii)                                  Proportionate Amounts. 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 with respect to
the Loan or the Commitment assigned, except that this Section 11.06(b)(ii) shall
not apply to Swing Line Lender’s rights and obligations in respect of Swing Line
Loans.

 

(iii)                               Required Consents. No consent shall be
required for any assignment except to the extent required by Section
11.06(b)(i)(B) and, in addition:

 

(A)                              the consent of the Company (such consent not to
be unreasonably withheld or delayed) shall be required unless (x) an Event of
Default has occurred and is continuing at the time of such assignment or (y)
such assignment is to a Lender, an Affiliate of a Lender or an Approved Fund;

 

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(B)                                the consent of the Administrative Agent (such
consent not to be unreasonably withheld or delayed) shall be required if such
assignment is to a Person that is not a Lender, an Affiliate of such Lender or
an Approved Fund with respect to such Lender;

 

(C)                                the consent of the Issuing Lender (such
consent not to be unreasonably withheld or delayed) shall be required for any
assignment that increases the obligation of the assignee to participate in
exposure under one or more Letters of Credit (whether or not then outstanding);
and

 

(D)                               the consent of the Swing Line Lender (such
consent not to be unreasonably withheld or delayed) shall be required for any
assignment.

 

(iv)                              Assignment and Assumption. 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 $3,000.00, and
the assignee, if it is not a Lender, shall deliver to the Administrative Agent
an Administrative Questionnaire.

 

(v)                                 No Assignment to the Company. No such
assignment shall be made to the Company or any of the Company’s Affiliates or
Subsidiaries.

 

(vi)                              No Assignment to Natural Persons. No such
assignment shall be made to a natural person.

 

Subject to acceptance and recording thereof by the Administrative Agent pursuant
to subsection (c) below, from and after the effective date specified in each
Assignment and Assumption, the assignee thereunder shall be a party to this
Agreement 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 Sections 3.01, 3.04, 3.05, and 11.04 with respect to facts and
circumstances occurring prior to the effective date of such assignment. Any
assignment or transfer by a Lender of rights or obligations under this Agreement
that does not comply with this paragraph 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 11.06(d).

 

(c)                                  Register. The Administrative Agent, acting
solely for this purpose as an agent of the Company, shall maintain at the
Administrative Agent’s office listed on Schedule 11.02 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 Commitments of, and principal amounts of
the Loans 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
Company, the Administrative Agent 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 Company and any
Lender, at any reasonable time and from time to time upon reasonable prior
notice.

 

(d)                                 Participations. Any Lender may at any time,
without the consent of, or notice to, the Company or the Administrative Agent,
sell participations to any Person (other than a natural person or the Company or
any of the Company’s Affiliates or Subsidiaries) (each, a “Participant”) in all
or a portion of such Lender’s rights and/or obligations under this Agreement
(including all or a portion of its Commitment and/or the Loans owing to it);
provided that (i) such Lender’s obligations under this

 

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Agreement shall remain unchanged, (ii) such Lender shall remain solely
responsible to the other parties hereto for the performance of such obligations
and (iii) the Company, the Administrative Agent and the Lenders, and Issuing
Lender 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 Section 11.01 that affects
such Participant. Subject to Section 11.06(e), the Company agrees that each
Participant shall be entitled to the benefits of Sections 3.01, 3.03, and 3.07
to the same extent as if it were a Lender and had acquired its interest by
assignment pursuant to Section 11.06(b). To the extent permitted by law, each
Participant also shall be entitled to the benefits of Section 11.08 as though it
were a Lender, provided such Participant agrees to be subject to Section 2.12 as
though it were a Lender.

 

(e)                                  Limitations upon Participant Rights. A
Participant shall not be entitled to receive any greater payment under Sections
3.01 and 3.03 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 Company’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 3.01 unless the Company is notified
of the participation sold to such Participant and such Participant agrees, for
the benefit of the Company, to comply with Section 3.01(e) as though it were a
Lender.

 

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

 

11.07                 Confidentiality. Each of the Administrative Agent, the
Lenders and the Issuing Lender agrees to maintain the confidentiality of the
Information (as defined below), except that Information may be disclosed (a) to
its Affiliates and to its and its Affiliates’ respective managers,
administrators, trustees, partners, directors, officers, employees, agents,
advisors and other representatives (it being understood that the Persons to whom
such disclosure is made will be informed of the confidential nature of such
Information and instructed to keep such Information confidential), (b) to the
extent requested by any regulatory authority purporting to have jurisdiction
over it (including any self-regulatory authority, such as the National
Association of Insurance Commissioners), (c) to the extent required by
applicable laws or regulations or by any subpoena or similar legal process, (d)
to any other party hereto, (e) in connection with the exercise of any remedies
hereunder or under any other Loan Document or any 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, 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 managers, administrators, trustees, partners, directors,
officers, employees, agents, advisors and other representatives) to any swap or
derivative or similar transaction under which payments are to be made by
reference relating to Parent, the Company or any Guarantor and their respective
obligations, this Agreement or payments hereunder, (iii) any rating agency, or
(iv) the CUSIP Service Bureau or any similar organization, (g) with the consent
of the Company, or (h) to the extent such Information (x) becomes publicly
available other than as a result of a breach of this Section or (y) becomes
available to

 

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the Administrative Agent, any Lender, the Issuing Lender or any of their
respective Affiliates on a nonconfidential basis from a source other than the
Company.

 

For purposes of this Section, “Information” means all information received from
the Company or any of its Subsidiaries relating to Parent, the Company or any of
its Subsidiaries or any of their respective businesses, other than any such
information that is available to the Administrative Agent, any Lender or the
Issuing Lender on a nonconfidential basis prior to disclosure by the Company or
any of its Subsidiaries, provided that, in the case of information received from
the Company or any of its Subsidiaries after the date hereof, such information
is clearly identified at the time of delivery as confidential. Any Person
required to maintain the confidentiality of Information as provided in this
Section 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.

 

11.08                 Right of Set-off. If an Event of Default shall have
occurred and be continuing, each Lender, the Issuing Lender, and each of their
respective Affiliates is hereby authorized at any time and from time to time, to
the fullest extent permitted by applicable law, to set off and apply any and all
deposits (general or special, time or demand, provisional or final, in whatever
currency) at any time held and other obligations (in whatever currency) at any
time owing by such Lender, the Issuing Lender or any such Affiliate to or for
the credit or the account of the Company or any other Loan Party against any and
all of the obligations of the Company or such Loan Party now or hereafter
existing under this Agreement or any other Loan Document to such Lender or the
Issuing Lender, irrespective of whether or not such Lender or the Issuing Lender
shall have made any demand under this Agreement or any other Loan Document and
although such obligations of the Company or such Loan Party may be contingent or
unmatured or are owed to a branch or office of such Lender or the Issuing Lender
different from the branch or office holding such deposit or obligated on such
indebtedness. The rights of each Lender, the Issuing Lender and their respective
Affiliates under this Section 11.08 are in addition to other rights and remedies
(including other rights of setoff) that such Lender, the Issuing Lender or their
respective Affiliates may have. Each Lender and the Issuing Lender agrees to
notify the Company and the Administrative Agent promptly after any such setoff
and application, provided that the failure to give such notice shall not affect
the validity of such setoff and application.

 

11.09                 Interest.

 

(a)                                  It is the intention of the parties hereto
to comply with applicable usury laws, if any; accordingly, notwithstanding any
provision to the contrary in this Agreement, the Notes or in any of the other
Loan Documents securing the payment hereof or otherwise relating hereto, in no
event shall this Agreement, the Notes or such other Loan Documents require or
permit the payment, taking, reserving, receiving, collection, or charging of any
sums constituting interest under applicable laws which exceed the maximum amount
permitted by such laws. If any such excess interest is called for, contracted
for, charged, taken, reserved, or received in connection with the Loans
evidenced by the Notes or in any of the Loan Documents securing the payment
thereof or otherwise relating thereto, or in any communication by the
Administrative Agent, the Issuing Lender or the Lenders or any other Person to
the Company or any other Person, or in the event all or part of the principal or
interest thereof shall be prepaid or accelerated, so that under any of such
circumstances or under any other circumstance whatsoever the amount of interest
contracted for, charged, taken, reserved, or received on the amount of principal
actually outstanding from time to time under the Notes or any other Loan
Document shall exceed the maximum amount of interest permitted by applicable
usury laws, then in any such event it is agreed as follows: (i) the provisions
of this Section 11.09(a) shall govern and control, (ii) neither any Company nor
any other Person now or hereafter liable for the payment of the Notes or any
Obligation shall be obligated to pay the amount of such interest to the extent
such interest is in excess of the maximum amount of interest

 

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permitted by applicable usury laws, (iii) any such excess which is or has been
received notwithstanding this Section 11.09(a) shall be credited against the
then unpaid principal balance of the Notes or other Obligations, as applicable,
or, if the Notes or other Obligations, as applicable, have been or would be paid
in full, refunded to the Company, and (iv) the provisions of this Agreement, the
Notes and the other Loan Documents securing the payment thereof and otherwise
relating thereto, and any communication to the Company, shall immediately be
deemed reformed and such excess interest reduced, without the necessity of
executing any other document, to the maximum lawful rate allowed under
applicable laws as now or hereafter construed by courts having jurisdiction
hereof or thereof. Without limiting the foregoing, all calculations of the rate
of the interest contracted for, charged, collected, taken, reserved, or received
in connection with the Notes, this Agreement or any other Loan Document which
are made for the purpose of determining whether such rate exceeds the maximum
lawful rate shall be made to the extent permitted by applicable laws by
amortizing, prorating, allocating and spreading during the period of the full
term of the Loans or other Obligations, as applicable, including all prior and
subsequent renewals and extensions, all interest at any time contracted for,
charged, taken, collected, reserved, or received. The terms of this Section
11.09(a) shall be deemed to be incorporated in every document and communication
relating to the Notes, the Loans or any other Loan Document.

 

(b)                                 Texas Finance Code, Chapter 346 (formerly
Tex. Rev. Civ. Stat., Title 79, Chapter 15), which regulates certain revolving
loan accounts and revolving tri-party accounts, shall not apply to any revolving
loan accounts created under the Notes, this Agreement or the other Loan
Documents or maintained in connection therewith.

 

(c)                                  To the extent that the interest rate laws
of the State of Texas are applicable to the Loans or any other Obligations, the
applicable interest rate ceiling is the weekly ceiling (formerly the indicated
rate ceiling) determined in accordance with Tex. Rev. Civ. Stat., Title 79,
Article 5069-1D.003, also codified at Texas Finance Code, Section 303.301
(formerly Article 5069-1.01(a)(1)), and, to the extent that this Agreement, the
Notes or any other Loan Document is deemed an open end account as such term is
defined in Tex. Rev. Civ. Stat., Title 79, Article 5069-1B.002(14), also
codified at Texas Finance Code Section 3.01.001(3) (formerly Article
5069-1.01(f)), the payee retains the right to modify the interest rate in
accordance with applicable law.

 

11.10                 Indemnity and Subrogation. In addition to all such rights
of indemnity and subrogation as any Guarantor may have under applicable law, the
Company agrees that in the event a payment shall be made by any Guarantor under
a Guaranty in respect of a Loan to the Company the Company shall indemnify such
Guarantor for the full amount of such payment and such Guarantor shall be
subrogated to the rights of the person to whom such payment shall have been made
to the extent of such payment subject to the provisions of the Guaranty executed
by such Guarantor. Notwithstanding any provision of this Agreement to the
contrary, all rights of any Guarantor under this Section 11.10 and all other
rights of indemnity, contribution or subrogation under applicable law or
otherwise shall be fully subordinated to the payment in full of the Obligations,
and no payments may be made in respect of such rights of indemnity, contribution
or subrogation until all the Obligations have been paid in full and all
Commitments have expired. No failure on the part of the Company to make the
payments required by this Section 11.10 (or any other payments required under
applicable law or otherwise) shall in any respect limit the obligations and
liability of any Guarantor with respect to any Guaranty, and Guarantor shall
remain liable for the full amount of the obligation of such Guarantor under each
such Guaranty in accordance therewith.

 

11.11                 Collateral Matters; Derivative Contracts; Termination

 

(a)                                  The benefit of the Security Documents and
of the provisions of this Agreement relating to any collateral securing the
Obligations shall also extend to and be available to any Lender

 

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hereunder (or under the Existing Credit Agreement) or any Affiliate of a Lender
hereunder (or under the Existing Credit Agreement) that is counterparty to any
Derivative Contract (including the Derivative Contracts listed on Schedule 6.21)
with any Loan Party or any of their Subsidiaries on a pro rata basis in respect
of any obligations of the Loan Parties and their Subsidiaries which arise under
any such Derivative Contract; provided that the Borrower or the applicable
counterparty must have provided Administrative Agent written notice of the
existence thereof (such notice to include, if required by the Administrative
Agent, a summary of the contract date, price, volumes and other terms of such
Derivative Contracts as Administrative Agent may reasonably request) and such
transaction must not otherwise be prohibited under this Agreement at the time it
was entered into, and provided further that if such Lender or Affiliate ceases
to be a Lender or an Affiliate of a Lender such Derivative Contract obligations
shall be secured pari passu with the Obligations of the Loan Parties under this
Agreement and the other Loan Documents but only to the extent such Derivative
Contract obligations arise under Derivative Contracts (including the Derivative
Contracts listed on Schedule 6.21) that are entered into at the time such
counterparty was a Lender hereunder (or under the Existing Credit Agreement) or
an Affiliate of a Lender hereunder (or under the Existing Credit Agreement), and
(b) such counterparty shall have no voting rights under any Loan Documents as a
result of the existence of obligations owed to it under any such Derivative
Contract. For the avoidance of doubt, a Person ceases to be a Lender hereunder
if (i) pursuant to an assignment, such Person ceases to have any Commitment,
Loans or LC Obligation hereunder or (ii) the Commitments of all of the Lenders
hereunder have been terminated and all principal, interest and other amounts
outstanding under this Agreement have been paid in full in cash (whether as a
result of repayment at maturity, prepayment in connection with the refinancing
of this Agreement or otherwise). .

 

No Lender or any of its Affiliates or any other Person shall have any voting
rights under any Loan Documents as a result of the existence of obligations owed
to it under any Derivative Contract.

 

(b)                                 If the Obligations are paid and satisfied in
full, including all Obligations arising under Lender Derivative Contracts, all
Commitments of the Lenders have terminated and are no longer in effect, no
Letters of Credit remain outstanding, and no Lender Derivative Contracts remain
outstanding, the Administrative Agent and the Lenders shall execute and deliver
or cause to be executed and delivered such instruments of satisfaction and
reassignment as may be appropriate in order to release all liens and security
interests created by the Security Instruments; provided, however, that in lieu
of terminating and repaying any such Obligations arising under any Lender
Derivative Contracts with any Lender Derivative Provider, the Company may
provide substitute credit support under a standard form ISDA Credit Support
Annex or other credit support documents acceptable to such Lender Derivative
Provider, to cover its then current exposure under such Lender Derivative
Contract and such Lender Derivative Provider shall have provided written notice
to the Administrative Agent to the effect that such substitute credit support
has been provided to it and that such Lender Derivative Provider no longer
claims any right, title or interest in any collateral security arising under the
Loan Documents to secure any obligations and indebtedness of Company or any of
its Subsidiaries arising under or related to such Lender Derivative Contract,
whether then existing or thereafter arising.

 

11.12                 Renewal and Continuation of Existing Indebtedness

 

(a)                                  All liens and security interests under the
Security Documents are in renewal, refinancing and extension of the Liens
created under the Existing Credit Agreement and “Security Documents” executed in
connection therewith.

 

(b)                                 The Company shall pay to each Lender under
the Existing Credit Agreement within thirty (30) days of receipt of written
request of such Lender (which request shall set forth, in reasonable detail, the
basis for requesting such amounts) such amount or amounts as shall be due
pursuant to Section 3.04 of the Existing Credit Agreement which are attributed
to prepayment of LIBOR Loans

 

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under the Existing Credit Agreement being prepaid from the proceeds of the
initial funding of Loans hereunder.

 

(c)                                  The Lenders waive any notice of prepayment
required pursuant to Section 2.04 of the Existing Credit Agreement in respect of
the prepayment of Loans on the Effective Date hereunder.

 

11.13                 USA Patriot Act Notice. Each Lender hereby notifies the
Loan Parties that pursuant to the requirements of the USA Patriot Act (Title III
of Pub. L. 107-56 (signed into law October 26, 2001)) (the “Act”), it is
required to obtain, verify and record information that identifies such Loan
Party, which information includes the name and address of such Loan Party and
other information that will allow such Lender to identify the Loan Party,
insofar as it is needed to comply with the Act, in accordance with the Act. Each
Loan Party hereby represents and warrants to Administrative Agent and each
Lender that such Loan Party is not a country, individual or entity named on the
“Specifically Designated National and Blocked Persons” list issued by the Office
of Foreign Asset Control of the Department of the Treasury of the United States
of America.

 

11.14                 Automatic Debits of Fees. With respect to any commitment
fee, arrangement fee, letter of credit fee or other fee, or any other cost or
expense due and payable to the Administrative Agent under the Loan Documents
(including attorneys fees and expenses that are payable pursuant to this
Agreement or the other Loan Documents), the Company hereby irrevocably
authorizes the Administrative Agent, after giving reasonable prior notice to the
Company, to debit any deposit account of the Company with the Administrative
Agent in an amount such that the aggregate amount debited from all such deposit
accounts does not exceed such fee or other cost or expense. If there are
insufficient funds in such deposit accounts to cover the amount of the fee or
other cost or expense then due, such debits will be reversed (in whole or in
part, in the Administrative Agent’s sole discretion) and such amount not debited
shall be deemed to be unpaid. No such debit under this Section shall be deemed a
set-off.

 

11.15                 Counterparts. This Agreement may be executed in any number
of separate counterparts, each of which, when so executed, shall be deemed an
original, and all of said counterparts taken together shall be deemed to
constitute but one and the same instrument.

 

11.16                 Severability. The illegality or unenforceability of any
provision of this Agreement or any instrument or agreement required hereunder
shall not in any way affect or impair the legality or enforceability of the
remaining provisions of this Agreement or any instrument or agreement required
hereunder.

 

11.17                 No Third Parties Benefited. This Agreement is made and
entered into for the sole protection and legal benefit of the Company, the other
Loan Parties, the Lenders, the Administrative Agent, the Indemnitees, and their
permitted successors and assigns, and no other Person shall be a direct or
indirect legal beneficiary of, or have any direct or indirect cause of action or
claim in connection with, this Agreement or any of the other Loan Documents.

 

11.18                 Governing Law, Jurisdiction and Waiver of Jury Trial.

 

(a)                                  THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF TEXAS AND APPLICABLE
FEDERAL LAW; AND THE ADMINISTRATIVE AGENT AND THE LENDERS SHALL RETAIN ALL
RIGHTS ARISING UNDER FEDERAL LAW.

 

(b)                                 EACH PARTY HERETO IRREVOCABLY CONSENTS TO
THE SERVICE OF PROCESS IN ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS
AGREEMENT

 

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OR ANY OTHER LOAN DOCUMENT BY THE MAILING OF COPIES THEREOF BY REGISTERED OR
CERTIFIED MAIL, POSTAGE PREPAID, TO ITS ADDRESS SET FORTH FOR NOTICES PURSUANT
TO SECTION 11.02. SUCH SERVICE TO BECOME EFFECTIVE TEN DAYS AFTER SUCH MAILING.
NOTHING HEREIN SHALL AFFECT THE RIGHT OF THE ADMINISTRATIVE AGENT OR ANY LENDER
TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW.

 

(c)                                  ANY LEGAL ACTION OR PROCEEDING WITH RESPECT
TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT MAY BE BROUGHT IN THE COURTS OF THE
STATE OF TEXAS OR OF THE UNITED STATES FOR THE SOUTHERN DISTRICT OF TEXAS, AND
BY EXECUTION AND DELIVERY OF THIS AGREEMENT, EACH LOAN PARTY CONSENTS, FOR
ITSELF AND IN RESPECT OF ITS PROPERTY, TO THE NON-EXCLUSIVE JURISDICTION OF
THOSE COURTS. EACH LOAN PARTY IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING ANY
OBJECTION TO THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON
CONVENIENS, WHICH IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY ACTION OR
PROCEEDING IN SUCH JURISDICTION IN RESPECT OF THIS AGREEMENT OR ANY DOCUMENT
RELATED HERETO. EACH LOAN PARTY WAIVES PERSONAL SERVICE OF ANY SUMMONS,
COMPLAINT OR OTHER PROCESS, AND CONSENTS TO THE SERVICE OF PROCESS IN ANY SUCH
LEGAL ACTION OR PROCEEDING BY THE MAILING OF COPIES THEREOF BY REGISTERED OR
CERTIFIED MAIL, POSTAGE PREPAID, TO IT AT ITS ADDRESS FOR NOTICES SET FORTH
HEREIN, SUCH SERVICE TO BECOME EFFECTIVE TEN DAYS AFTER SUCH MAILING. NOTHING
HEREIN SHALL AFFECT THE RIGHT OF THE ADMINISTRATIVE AGENT OR ANY LENDER TO SERVE
PROCESS IN ANY OTHER MANNER PERMITTED BY LAW.

 

(d)                                 WAIVER OF JURY TRIAL.  EACH PARTY HERETO
HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW,
ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR
INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN
DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY (WHETHER BASED ON
CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO (A) CERTIFIES THAT NO
REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PERSON HAS REPRESENTED, EXPRESSLY
OR OTHERWISE, THAT SUCH OTHER PERSON WOULD NOT, IN THE EVENT OF LITIGATION, SEEK
TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER
PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE OTHER LOAN
DOCUMENTS BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS
SECTION.

 

11.19                 NO ORAL AGREEMENTS. THIS WRITTEN LOAN AGREEMENT, TOGETHER
WITH THE OTHER WRITTEN LOAN DOCUMENTS EXECUTED IN CONNECTION HEREWITH,
REPRESENTS THE FINAL AGREEMENT BETWEEN THE PARTIES 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.

 

[THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]

 

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed and delivered by their proper and duly authorized officers as of the
day and year first above written.

 

 

THE COMPANY:

 

 

 

BREITBURN OPERATING L.P.,

 

a Delaware limited partnership

 

 

 

By: BreitBurn Operating GP, LLC its general partner

 

 

 

 

 

By:

 

 

 

Name: Randall H. Breitenbach

 

Title: Co-Chief Executive Officer

 

 

 

 

 

PARENT:

 

 

 

BREITBURN ENERGY PARTNERS, L.P.,

 

a Delaware limited partnership

 

 

 

By: BreitBurn GP, LLC its general partner

 

 

 

 

 

By:

 

 

 

Name: Randall H. Breitenbach

 

Title: Co-Chief Executive Officer

 

 

Signature Page to
Amended and Restated Credit Agreement – BreitBurn Operating L.P.

 

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WELLS FARGO BANK, NATIONAL
ASSOCIATION, as Administrative Agent, Issuing
Lender and a Lender

 

 

 

By:

 

 

 

 

Richard A. Gould

 

 

Senior Vice President

 

 

Signature Page to
Amended and Restated Credit Agreement – BreitBurn Operating L.P.

 

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LENDERS:

 

 

 

CREDIT SUISSE, CAYMAN ISLANDS BRANCH

 

 

 

 

 

By:

 

 

 

Name:

 

 

 

Title:

 

 

 

 

 

 

 

By:

 

 

 

Name:

 

 

 

Title:

 

 

 

 

Signature Page to
Amended and Restated Credit Agreement – BreitBurn Operating L.P.

 

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BMO CAPITAL MARKETS FINANCING, INC.

 

(f/k/a Harris Nesbitt Financing, Inc.)

 

 

 

By:

 

 

 

Name:

 

 

 

Title:

 

 

 

 

Signature Page to
Amended and Restated Credit Agreement – BreitBurn Operating L.P.

 

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CITIBANK, N.A.

 

(f/k/a Citibank Texas, N.A.)

 

 

 

By:

 

 

 

Name:

 

 

 

Title:

 

 

 

 

Signature Page to
Amended and Restated Credit Agreement – BreitBurn Operating L.P.

 

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THE BANK OF NOVA SCOTIA, HOUSTON
BRANCH

 

 

 

 

 

By:

 

 

 

Name:

 

 

 

Title:

 

 

 

 

 

 

 

By:

 

 

 

Name:

 

 

 

Title:

 

 

 

 

Signature Page to
Amended and Restated Credit Agreement – BreitBurn Operating L.P.

 

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BANK OF SCOTLAND PLC

 

 

 

By:

 

 

 

Name:

 

 

 

Title:

 

 

 

 

Signature Page to
Amended and Restated Credit Agreement – BreitBurn Operating L.P.

 

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BARCLAYS BANK PLC

 

 

 

By:

 

 

 

Name:

 

 

 

Title:

 

 

 

 

Signature Page to
Amended and Restated Credit Agreement – BreitBurn Operating L.P.

 

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BNP PARIBAS

 

 

 

By:

 

 

 

Name:

 

 

 

Title:

 

 

 

 

Signature Page to
Amended and Restated Credit Agreement – BreitBurn Operating L.P.

 

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FORTIS CAPITAL CORP.

 

 

 

By:

 

 

 

Name:

 

 

 

Title:

 

 

 

 

Signature Page to
Amended and Restated Credit Agreement – BreitBurn Operating L.P.

 

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THE ROYAL BANK OF SCOTLAND PLC

 

 

 

By:

 

 

 

Name:

 

 

 

Title:

 

 

 

 

Signature Page to
Amended and Restated Credit Agreement – BreitBurn Operating L.P.

 

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U.S. BANK NATIONAL ASSOCIATION

 

 

 

By:

 

 

 

Name:

 

 

 

Title:

 

 

 

 

Signature Page to
Amended and Restated Credit Agreement – BreitBurn Operating L.P.

 

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UNION BANK OF CALIFORNIA, N.A.

 

 

 

By:

 

 

 

Name:

 

 

 

Title:

 

 

 

 

Signature Page to
Amended and Restated Credit Agreement – BreitBurn Operating L.P.

 

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BANK OF TEXAS, N.A.

 

 

 

By:

 

 

 

Name:

 

 

 

Title:

 

 

 

 

Signature Page to
Amended and Restated Credit Agreement – BreitBurn Operating L.P.

 

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COMERICA BANK

 

 

 

By:

 

 

 

Name:

 

 

 

Title:

 

 

 

 

Signature Page to
Amended and Restated Credit Agreement – BreitBurn Operating L.P.

 

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JPMORGAN CHASE BANK, N.A.

 

 

 

By:

 

 

 

Name:

 

 

 

Title:

 

 

 

 

Signature Page to
Amended and Restated Credit Agreement – BreitBurn Operating L.P.

 

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LEHMAN BROTHERS COMMERCIAL BANK

 

 

 

By:

 

 

 

Name:

 

 

 

Title:

 

 

 

 

Signature Page to
Amended and Restated Credit Agreement – BreitBurn Operating L.P.

 

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ROYAL BANK OF CANADA

 

 

 

By:

 

 

 

Name:

 

 

 

Title:

 

 

 

 

Signature Page to
Amended and Restated Credit Agreement – BreitBurn Operating L.P.

 

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TORONTO DOMINION (TEXAS) LLC

 

 

 

By:

 

 

 

Name:

 

 

 

Title:

 

 

 

 

Signature Page to
Amended and Restated Credit Agreement – BreitBurn Operating L.P.

 

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WACHOVIA BANK, NATIONAL ASSOCIATION

 

 

 

By:

 

 

 

Name:

 

 

 

Title:

 

 

 

 

Signature Page to
Amended and Restated Credit Agreement – BreitBurn Operating L.P.

 

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