Exhibit 10.1

EXECUTION VERSION

 

 

 

CREDIT AGREEMENT

dated as of December 19, 2016

among

RSP Permian, Inc.,

as Parent,

RSP Permian, L.L.C.,

as Borrower,

JPMorgan Chase Bank, N.A.,

as Administrative Agent,

Comerica Bank, and Citibank, N.A.,

as Syndication Agents,

ABN AMRO Capital USA LLC, BOKF, NA dba Bank of Texas,

Royal Bank of Canada, and U.S. Bank National Association,

as Documentation Agents,

and

The Lenders Party Hereto

 

 

JPMORGAN CHASE BANK, N.A.

and

COMERICA BANK

as Joint Lead Arrangers and Joint Bookrunners

 

 

 

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TABLE OF CONTENTS

 

         Page   ARTICLE I    DEFINITIONS AND ACCOUNTING MATTERS   

Section 1.01

 

Terms Defined Above

     1   

Section 1.02

 

Certain Defined Terms

     1   

Section 1.03

 

Types of Loans and Borrowings

     26   

Section 1.04

 

Terms Generally; Rules of Construction

     26   

Section 1.05

 

Accounting Terms and Determinations; GAAP

     27    ARTICLE II    THE REVOLVING CREDIT FACILITY   

Section 2.01

 

Commitments

     27   

Section 2.02

 

Revolving Credit Loans and Borrowings

     30   

Section 2.03

 

Requests for Revolving Credit Borrowings

     32   

Section 2.04

 

Funding of Revolving Credit Borrowings

     33   

Section 2.05

 

Termination and Reduction of Aggregate Maximum Credit Amounts

     34   

Section 2.06

 

Borrowing Base

     35   

Section 2.07

 

Letters of Credit

     38   

Section 2.08

 

Swing Line

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

Section 3.01

 

Repayment of Revolving Credit Loans and Swing Line Loans

     49   

Section 3.02

 

Interest on Revolving Credit Loans and Swing Line Loans

     49   

Section 3.03

 

Prepayments of Revolving Credit Loans and Swing Line Loans

     50   

Section 3.04

 

Fees

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

Section 4.01

 

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

     54   

Section 4.02

 

Deductions by the Administrative Agent; Defaulting Lender

     55   

Section 4.03

 

Disposition of Proceeds

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

Section 5.01

 

Increased Costs

     57   

Section 5.02

 

Reimbursement of Prepayment Costs

     59   

Section 5.03

 

Taxes

     59   

Section 5.04

 

Mitigation Obligations; Designation of Different Lending Office

     62   

Section 5.05

 

Replacement of Lenders

     63   

Section 5.06

 

Circumstances Affecting LIBO Rate Availability

     63   

Section 5.07

 

Laws Affecting LIBO Rate Availability

     64   

Section 5.08

 

Eurodollar Lending Office

     64   

Section 5.09

 

Right of Lenders to Fund through Branches and Affiliates

     64   

 

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ARTICLE VI    CONDITIONS PRECEDENT   

Section 6.01

 

Effective Date

     65   

Section 6.02

 

Each Credit Event

     67   

Section 6.03

 

Additional Conditions to Credit Events

     68   

Section 6.04

 

Conditions to Borrowing Base Increase

     68    ARTICLE VII    REPRESENTATIONS AND WARRANTIES   

Section 7.01

 

Organization; Powers

     68   

Section 7.02

 

Authority; Enforceability

     68   

Section 7.03

 

Approvals; No Conflicts

     69   

Section 7.04

 

Financial Condition; No Material Adverse Change

     69   

Section 7.05

 

Litigation

     69   

Section 7.06

 

Environmental Matters

     70   

Section 7.07

 

Compliance with the Laws and Agreements; No Defaults

     71   

Section 7.08

 

Investment Company Act

     71   

Section 7.09

 

Taxes

     71   

Section 7.10

 

ERISA

     71   

Section 7.11

 

Disclosure; No Material Misstatements

     72   

Section 7.12

 

Insurance

     72   

Section 7.13

 

Restriction on Liens

     73   

Section 7.14

 

Subsidiaries

     73   

Section 7.15

 

Location of Business and Offices

     73   

Section 7.16

 

Properties; Titles, Etc

     73   

Section 7.17

 

Maintenance of Properties

     74   

Section 7.18

 

Gas Imbalances, Prepayments

     74   

Section 7.19

 

Marketing of Production

     74   

Section 7.20

 

Swap Agreements

     74   

Section 7.21

 

Use of Loans and Letters of Credit

     75   

Section 7.22

 

Solvency

     75   

Section 7.23

 

Anti-Corruption Laws and Sanctions

     75   

Section 7.24

 

EEA Financial Institutions

     75   

Section 7.25

 

Security Instruments

     75    ARTICLE VIII    AFFIRMATIVE COVENANTS   

Section 8.01

 

Financial Statements; Ratings Change; Other Information

     76   

Section 8.02

 

Notices of Material Events

     78   

Section 8.03

 

Existence; Conduct of Business

     78   

Section 8.04

 

Payment of Obligations

     79   

Section 8.05

 

Performance of Obligations under Loan Documents

     79   

Section 8.06

 

Operation and Maintenance of Properties

     79   

Section 8.07

 

Insurance

     80   

Section 8.08

 

Books and Records; Inspection Rights

     80   

Section 8.09

 

Compliance with Laws

     80   

Section 8.10

 

Environmental Matters

     80   

Section 8.11

 

Further Assurances

     81   

Section 8.12

 

Reserve Reports

     82   

Section 8.13

 

Title Information

     83   

Section 8.14

 

Additional Collateral; Additional Guarantors

     83   

Section 8.15

 

ERISA Compliance

     84   

Section 8.16

 

Marketing Activities

     84   

 

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Section 8.17

 

Unrestricted Subsidiaries

     85   

Section 8.18

 

Account Control Agreements

     85   

Section 8.19

 

Post-Closing Covenant

     85    ARTICLE IX    NEGATIVE COVENANTS   

Section 9.01

 

Financial Covenants

     86   

Section 9.02

 

Debt

     86   

Section 9.03

 

Liens

     87   

Section 9.04

 

Restricted Payments

     88   

Section 9.05

 

Investments, Loans and Advances

     88   

Section 9.06

 

Nature of Business

     89   

Section 9.07

 

Proceeds of Loans

     89   

Section 9.08

 

ERISA Compliance

     90   

Section 9.09

 

Sale or Discount of Receivables

     90   

Section 9.10

 

Mergers, Etc

     90   

Section 9.11

 

Sale of Properties

     90   

Section 9.12

 

Transactions with Affiliates

     92   

Section 9.13

 

Subsidiaries

     92   

Section 9.14

 

Negative Pledge Agreements; Dividend Restrictions

     92   

Section 9.15

 

Gas Imbalances

     92   

Section 9.16

 

Swap Agreements

     93   

Section 9.17

 

Acquisition Documents

     93   

Section 9.18

 

Designation and Conversion of Subsidiaries and Unrestricted Subsidiaries; Debt
of Unrestricted Subsidiaries

     93   

Section 9.19

 

Amendments to Permitted Unsecured Notes Documents

     94   

Section 9.20

 

Use of Proceeds and Letters of Credit

     94   

Section 9.21

 

Environmental Matters

     95   

Section 9.22

 

Amendments to Organizational Documents

     95   

Section 9.23

 

Changes in Fiscal Periods

     95    ARTICLE X    EVENTS OF DEFAULT; REMEDIES   

Section 10.01

 

Events of Default

     95   

Section 10.02

 

Remedies

     97    ARTICLE XI    THE AGENTS   

Section 11.01

 

Appointment of Administrative Agent

     98   

Section 11.02

 

Deposit Account with Administrative Agent or any Lender

     98   

Section 11.03

 

Scope of Administrative Agent’s Duties

     99   

Section 11.04

 

Successor Administrative Agent

     99   

Section 11.05

 

Credit Decisions

     100   

Section 11.06

 

Authority of Administrative Agent to Enforce This Agreement

     100   

Section 11.07

 

Indemnification of Administrative Agent

     100   

Section 11.08

 

Knowledge of Default

     101   

Section 11.09

 

Administrative Agent’s Authorization; Action by Lenders

     101   

Section 11.10

 

Enforcement Actions by Administrative Agent

     102   

Section 11.11

 

Collateral Matters

     102   

Section 11.12

 

Agents in their Individual Capacities

     102   

Section 11.13

 

Administrative Agent’s Fees

     103   

Section 11.14

 

Documentation Agent or other Titles

     103   

Section 11.15

 

No Reliance on Administrative Agent’s Customer Identification Program

     103   

 

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ARTICLE XII    MISCELLANEOUS   

Section 12.01

 

Notices

     104   

Section 12.02

 

Waivers; Amendments

     104   

Section 12.03

 

Expenses, Indemnity; Damage Waiver

     105   

Section 12.04

 

Successors and Assigns

     108   

Section 12.05

 

Survival; Revival; Reinstatement

     111   

Section 12.06

 

Counterparts; Integration; Effectiveness

     111   

Section 12.07

 

Severability

     112   

Section 12.08

 

Right of Setoff

     112   

Section 12.09

 

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

     112   

Section 12.10

 

Headings

     113   

Section 12.11

 

Confidentiality

     113   

Section 12.12

 

Interest Rate Limitation

     114   

Section 12.13

 

EXCULPATION PROVISIONS

     115   

Section 12.14

 

Collateral Matters; Swap Agreements; Cash Management

     116   

Section 12.15

 

No Third Party Beneficiaries

     116   

Section 12.16

 

USA Patriot Act Notice

     116   

Section 12.17

 

Keepwell

     117   

Section 12.18

 

Acknowledgement and Consent to Bail-In of EEA Financial Institutions

     117   

Section 12.19

 

Replacement of Administrative Agent

     117   

Section 12.20

 

Assignment of Liens and Other Rights

     118   

Section 12.21

 

Amendment and Restatement

     118   

Section 12.22

 

Assignment and Assumption of Assigned Interests

     118   

Section 12.23

 

Flood Insurance

     119   

 

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Schedules and Exhibits:

 

Schedule 1.1

  Applicable Margin

Schedule 1.2

  Allocations

Schedule 1.3

  Compliance Information

Schedule 1.4

  Existing Letters of Credit Schedule

Schedule 7.04(c)

  Material Debt and Liabilities

Schedule 7.05

  Litigation

Schedule 7.06

  Environmental Matters

Schedule 7.14

  Subsidiaries

Schedule 7.19

  Marketing Agreements

Schedule 7.20

  Swap Agreements

Schedule 9.02(g)

  Existing Unsecured Notes

Schedule 9.05

  Investments

Schedule 12.01

  Notices

Exhibit A

  Form of Revolving Credit Note

Exhibit B

  Form of Revolving Credit Borrowing Request

Exhibit C

  Form of Compliance Certificate

Exhibit D

  Security Instruments

Exhibit E

  Form of Assignment and Assumption

Exhibit F

  Form of Request for Swing Line Loan

Exhibit G

  Form of Swing Line Note

Exhibit H

  Form of Swing Line Participation Certificate

Exhibit I

  Form of Notice of Issuance of Letter of Credit

Exhibit J-1

 

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

Exhibit J-2

 

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

Exhibit J-3

 

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

Exhibit J-4

 

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

Exhibit K

 

Form of Additional Lender Certificate

Exhibit L

 

Form of Elected Commitment Increase Certificate

 

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CREDIT AGREEMENT

THIS CREDIT AGREEMENT dated as of December 19, 2016, is among RSP Permian, Inc.,
a Delaware corporation (the “Parent”), RSP Permian, L.L.C., a Delaware limited
liability company (the “Borrower”), each of the Lenders from time to time party
hereto, JPMorgan Chase Bank, N.A. as administrative agent for the Lenders (in
such capacity, together with its successors in such capacity, the
“Administrative Agent”) and Comerica Bank, as administrative agent under the
Existing Credit Agreement (as hereinafter defined) (in such capacity, the
“Predecessor Administrative Agent”).

RECITALS

A. The Borrower, the Predecessor Administrative Agent, and the financial
institutions party thereto as lenders entered into that certain Amended and
Restated Credit Agreement dated as of September 10, 2013 (as amended, restated,
supplemented or otherwise modified prior to the date hereof, the “Existing
Credit Agreement”) whereby the lenders party thereto provided certain financial
accommodations to the Borrower.

B. The Parent and the Borrower have requested that the Lenders amend and restate
the Existing Credit Agreement and provide certain loans to and extensions of
credit on behalf of the Borrower as provided herein.

C. The Lenders have agreed to amend and restate the Existing Credit Agreement
and make such loans and extensions of credit subject to the terms and conditions
of this Agreement.

D. The Predecessor Administrative Agent has agreed to resign as administrative
agent under the Existing Credit Agreement.

E. The Administrative Agent has agreed to become the “Successor Administrative
Agent” (as defined in the Existing Credit Agreement).

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

ARTICLE I

DEFINITIONS AND ACCOUNTING MATTERS

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

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

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

“Acquisition” means the acquisition by the Borrower and/or one or more of the
other Credit Parties of the Acquisition Properties from Silver Hill Energy
Partners II, LLC pursuant to the terms and conditions of the Acquisition
Documents.

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“Acquisition Documents” means (i) the Membership Interest Purchase and Sale
Agreement dated as of October 13, 2016 among Silver Hill Energy Partners II,
LLC, as seller, Silver Hill E&P II, LLC, as the company, and the Borrower, as
buyer, and (ii) each other agreement executed and delivered pursuant to and in
connection with the foregoing.

“Acquisition Properties” means 100% of the outstanding membership interests of
Silver Hill E&P II, LLC and the SHEP II Oil and Gas Assets acquired by one or
more of the Credit Parties pursuant to the Acquisition Documents.

“Additional Lender” has the meaning assigned to such term in Section 2.01(b)(i).

“Additional Lender Certificate” has the meaning assigned to such term in Section
2.01(b)(ii)(E).

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

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

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

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

“Aggregate Elected Commitment Amount” at any time shall equal the sum of the
Elected Commitments, as the same may be increased, reduced or terminated
pursuant to Section 2.01(b). As of the Effective Date, the Aggregate Elected
Commitment Amount is $900,000,000.

“Aggregate Maximum Credit Amounts” at any time shall equal the sum of the
Maximum Credit Amounts, as the same may be reduced or terminated pursuant to
Section 2.05. As of the Effective Date, the Aggregate Maximum Credit Amounts of
the Revolving Credit Lenders is $2,500,000,000.

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

“Alternate Base Rate” means, for any day, a rate per annum equal to the greatest
of (a) the Prime Rate in effect on such day, (b) the NYFRB Rate in effect on
such day plus  1⁄2 of 1% and (c) the Adjusted LIBO Rate for a one month Interest
Period on such day (or if such day is not a Business Day, the immediately
preceding Business Day) plus 1%, provided that, the Adjusted LIBO Rate for any
day shall be based on the LIBO Rate at approximately 11:00 a.m. London time on
such day. Any change in the Alternate Base Rate due to a change in the Prime
Rate, the NYFRB Rate or the Adjusted LIBO Rate shall be effective from and
including the effective date of such change in the Prime Rate, the NYFRB Rate or
the Adjusted LIBO Rate, respectively; provided further, that if the Alternate
Base Rate shall be less than zero, such rate shall be deemed to be zero for
purposes of this Agreement.

 

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

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

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

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

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

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

“Arrangers” means JPMorgan Chase Bank, N.A. and Comerica Bank, in their
capacities as the joint lead arrangers and joint bookrunners hereunder.

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

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

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

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

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

 

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

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

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

“Borrowing Base” means at any time an amount equal to the amount determined in
accordance with Section 2.06, as the same may be adjusted from time to time
pursuant to the Borrowing Base Adjustment Provisions. As of the Effective Date
the Borrowing Base is $950,000,000.

“Borrowing Base Adjustment Provisions” means Section 2.06(e), Section 2.06(f),
Section 8.13(c), and Section 9.11 in each case which may adjust (as opposed to
redetermine) the amount of the Borrowing Base.

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

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

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

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

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

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

“Change in Control” means:

(a) any “person” or “group” (as such terms are used in Sections 13(d) and 14(d)
of the Exchange Act, but excluding any employee benefit plan of such person or
its subsidiaries, and any person or entity acting in its capacity as trustee,
agent or other fiduciary or administrator of any such plan), other than
Permitted Holders becomes the “beneficial owner” (as defined in Rules 13d-3 and
13d-5 under the Exchange Act), directly or indirectly, of 30% or more of the
Voting Securities of the Parent on a fully diluted basis;

 

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(b) during any period of 12 consecutive months, a majority of the members of the
board of directors or other equivalent governing body of the Parent cease to be
composed of individuals (i) who were members of that board or equivalent
governing body on the first day of such period, (ii) whose election or
nomination to that board or equivalent governing body was approved by
individuals referred to in clause (i) above constituting at the time of such
election or nomination at least a majority of that board or equivalent governing
body or (iii) whose election or nomination to that board or other equivalent
governing body was approved by individuals referred to in clauses (i) and (ii)
above constituting at the time of such election or nomination at least a
majority of that board or equivalent governing body; or

(c) the acquisition of direct or indirect Control of the Borrower by any Person
or group other than the Parent.

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

“CIP Regulations” has the meaning ascribed to such term in Section 11.15(a)
hereof.

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

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

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

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

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

“Commodity Exchange Act” means the Commodity Exchange Act (7 U.S.C. § 1 et
seq.), as amended from time to time, and any successor statute.

“Condemnation Proceeds” shall mean the cash proceeds received by the Borrower or
any of its Subsidiaries in respect of any condemnation proceeding net of
reasonable fees and expenses (including without limitation attorneys’ fees and
expenses) incurred in connection with the collection thereof.

 

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

“Consolidated Net Income” means with respect to the Parent and the other Credit
Parties, for any period, the aggregate of the net income (or loss) of the Parent
and the other Credit Parties after allowances for taxes for such period
determined on a consolidated basis in accordance with GAAP; provided that there
shall be excluded from such net income (to the extent otherwise included
therein) the following: the net income of any Person in which the Parent or any
other Credit Party has an interest (which interest does not cause the net income
of such other Person to be consolidated with the net income of the Parent and
the other Credit Parties in accordance with GAAP), except to the extent of the
amount of dividends or distributions actually paid in cash during such period by
such other Person to the Parent or to any other Credit Party, as the case may
be; the net income (but not loss) during such period of any Credit Party to the
extent that the declaration or payment of dividends or similar distributions or
transfers or loans by that Credit Party is not at the time permitted by
operation of the terms of its charter or any agreement, instrument or
Governmental Requirement applicable to such Credit Party or is otherwise
restricted or prohibited, in each case determined in accordance with GAAP; the
net income (or loss) of any Person acquired in a pooling-of-interests
transaction for any period prior to the date of such transaction; any
extraordinary gains or losses during such period; any non-cash gains or losses
or positive or negative adjustments under ASC 815 (and any statements replacing,
modifying or superseding such statement) as the result of changes in the fair
market value of derivatives; and any gains or losses attributable to writeups or
writedowns of assets, including ceiling test writedowns. For the purposes of
calculating Consolidated Net Income for any period of four (4) consecutive
fiscal quarters in connection with any determination of the financial ratio
contained in Section 9.01(b), (the “Reference Period”), and without duplication
of any additions to or subtractions from EBITDAX for the same items set forth in
the definition thereof, (i) if at any time during such Reference Period the
Parent or any other Credit Party shall have made any Material Disposition, the
Consolidated Net Income for such Reference Period shall be reduced by an amount
equal to the Consolidated Net Income (if positive) attributable to the Property
that is the subject of such Material Disposition for such Reference Period or
increased by an amount equal to the Consolidated Net Income (if negative)
attributable thereto for such Reference Period and (ii) if during such Reference
Period the Parent or any other Credit Party shall have made a Material
Acquisition, the Consolidated Net Income for such Reference Period shall be
calculated after giving pro forma effect thereto as if such Material Acquisition
occurred on the first day of such Reference Period. Notwithstanding anything to
the contrary contained in this definition, all additions and adjustments
contained in the calculation of Consolidated Net Income not in accordance with
GAAP shall be subject to the Administrative Agent’s reasonable discretion and
agreement.

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

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

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

 

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

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

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

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

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

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

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

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

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

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

(h) all Disqualified Capital Stock;

(i) all obligations of such Person under take/ship or pay contracts if any goods
or services are not actually received or utilized by such Person; and

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

The Debt of any Person shall include all obligations of such Person of the
character described above to the extent such Person remains legally liable in
respect thereof notwithstanding that any such obligation is not included as a
liability of such Person under GAAP; provided, however, that “Debt” does not
include (i) obligations with respect to surety, performance or appeal bonds and
similar instruments, or (ii) trade

 

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accounts payable and similar accounts payable for goods and services to the
extent such accounts payable are due not later than 90 days after the later of
the invoicing thereof or the delivery of such goods or the performance of such
services.

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

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

 

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“Defaulting Lender’s Unfunded Portion” means such Defaulting Lender’s Applicable
Revolving Credit Percentage of the Aggregate Maximum Credit Amount minus the sum
of (a) the aggregate principal amount of all Revolving Credit Loans funded by
the Defaulting Lender, plus (b) such Defaulting Lender’s Applicable Revolving
Credit Percentage of the aggregate outstanding principal amount of all Swing
Line Loans and Letter of Credit Obligations.

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

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

“Documentation Agents” means, collectively ABN AMRO Capital USA LLC, BOKF, NA
dba Bank of Texas, Royal Bank of Canada, and U.S. Bank National Association as
Documentation Agents, and “Documentation Agent” means any of them.

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

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

“EBITDAX” means, for any period, Consolidated Net Income for such period plus
the following expenses or charges to the extent deducted from Consolidated Net
Income in such period: the sum of (a) interest, income taxes, depreciation,
depletion, amortization, exploration and abandonment expenses, (b) transaction
costs, expenses and charges deducted from Consolidated Net Income pursuant to
ASC 805 with respect to the Acquisition and any other acquisition by any Credit
Party, (c) transaction costs, expenses and charges deducted from Consolidated
Net Income with respect to any equity or Debt offerings and (d) all other
noncash charges, minus all noncash income added to Consolidated Net Income. For
the purposes of calculating EBITDAX for any Reference Period pursuant to any
determination of the financial ratio contained in Section 9.01, and without
duplication of any additions to or subtractions from Consolidated Net Income for
the same items set forth in the definition thereof, (i) if at any time during
such Reference Period any Credit Party shall have made any Material Disposition,
the EBITDAX for such Reference Period shall be reduced by an amount equal to the
EBITDAX (if positive) attributable to the Property that is the subject of such
Material Disposition for such Reference Period or increased by an amount equal
to the EBITDAX (if negative) attributable thereto for such Reference Period and
(ii) if during such Reference Period any Credit Party shall have made a Material
Acquisition, the EBITDAX for such Reference Period shall be calculated after
giving pro forma effect thereto as if such Material Acquisition occurred on the
first day of such Reference Period.

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

 

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

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

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

“Elected Commitment” means, as to each Lender, the amount set forth opposite
such Lender’s name on Schedule 1.2 under the caption “Elected Commitment”, as
the same may be increased, reduced or terminated from time to time in connection
with an increase, reduction or termination of the Aggregate Elected Commitment
Amount pursuant to Section 2.01(b) or Section 2.05.

“Elected Commitment Increase Certificate” has the meaning assigned to such term
in Section 2.01(b)(ii)(D).

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

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

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

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

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

“ERISA Affiliate” means each trade or business (whether or not incorporated)
which together with the Borrower or a Subsidiary would be deemed to be a “single
employer” within the meaning of section 4001(b)(1) of ERISA or subsections (b),
(c), (m) or (o) of section 414 of the Code.

 

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

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

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

“Excepted Liens” means: (a) Liens for Taxes, assessments or other governmental
charges or levies which are not delinquent or which are being contested in good
faith by appropriate action and for which adequate reserves have been maintained
in accordance with GAAP; (b) Liens in connection with workers’ compensation,
unemployment insurance or other social security, old age pension or public
liability obligations which are not delinquent or which are being contested in
good faith by appropriate action and for which adequate reserves have been
maintained in accordance with GAAP; (c) landlord’s liens, operators’, vendors’,
carriers’, warehousemen’s, repairmen’s, mechanics’, suppliers’, workers’,
materialmen’s, construction or other like Liens of law arising in the ordinary
course of business or incident to the exploration, development, operation and
maintenance of Oil and Gas Properties each of which is in respect of obligations
that are not delinquent or which are being contested in good faith by
appropriate action and for which adequate reserves have been maintained in
accordance with GAAP; (d) Liens which arise in the ordinary course of business
under operating agreements, joint venture agreements, oil and gas partnership
agreements, oil and gas leases, farm-out agreements, division orders, contracts
for the sale, transportation or exchange of oil and natural gas, unitization and
pooling declarations and agreements, area of mutual interest agreements,
overriding royalty agreements, marketing agreements, processing agreements, net
profits agreements, development agreements, gas balancing or deferred production
agreements, injection, repressuring and recycling agreements, salt water or
other disposal agreements, seismic or other geophysical permits or agreements,
and other agreements which are usual and customary in the oil and gas business
and are for claims which are not delinquent or which are being contested in good
faith by appropriate action and for which adequate reserves have been maintained
in accordance with GAAP, provided that any such Lien referred to in this clause
does not materially impair the use of any material Property covered by such Lien
for the purposes for which such Property is held by any Credit Party or
materially impair the value of any material Property subject thereto;
(e) banker’s liens, rights of set-off or similar rights and remedies arising in
the ordinary course of business and burdening only deposit accounts or other
funds maintained with a creditor depository institution, provided that no such
deposit account is a dedicated cash collateral account; (f) easements,
restrictions, servitudes, permits, conditions, covenants, exceptions,
reservations, zoning and land use requirements and other title defects in any
Property of any Credit Party, that in each case do not secure Debt and that in
the aggregate do not materially impair the use of such Property for the purposes
of which such Property is held by any Credit Party or materially impair the
value of such Property subject thereto; (g) Liens to secure performance of
tenders, surety and appeal bonds, government contracts, performance and return
of money bonds, bids, trade contracts, leases, statutory obligations, regulatory
obligations, obligations in respect of workers’ compensation, unemployment
insurance or other forms of government benefits or insurance and other
obligations of a like nature incurred in the ordinary course of business;
(h) Liens, titles and interests of lessors (including sub-lessors) of property
leased by such lessors to Borrower or any Subsidiary, restrictions and
prohibitions on encumbrances and transferability with respect to such property
and any Credit Party’s interests therein imposed by such leases, and Liens and
encumbrances encumbering such lessors’ titles and interests in such property and
to which any Credit Party’s leasehold interests may be subject or subordinate,
in each case, whether or not evidenced by UCC financing statement filings or
other documents of record, provided that such Liens do not secure Debt of any
Credit Party and do not encumber Property of any Credit Party other than the
Property that is the subject of such leases and items located thereon;
(i) Liens, titles and interests of licensors of software and other intangible

 

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property licensed by such licensors to any Credit Party, restrictions and
prohibitions on encumbrances and transferability with respect to such property
and any Credit Party’s interests therein imposed by such licenses, and Liens and
encumbrances encumbering such licensors’ titles and interests in such property
and to which any Credit Party’s license interests may be subject or subordinate,
in each case, whether or not evidenced by UCC financing statement filings or
other documents of record, provided that such Liens do not secure Debt of any
Credit Party and do not encumber Property of any Credit Party other than the
Property that is the subject of such licenses; (j) judgment and attachment Liens
not giving rise to an Event of Default; (k) Liens of issuers of commercial
letters of credit or similar undertakings on the goods that are the subject of
such letters of credit or undertakings and (l) Liens on the Equity Interests of
Unrestricted Subsidiaries. Provisions in the Loan Documents allowing Excepted
Liens or other Permitted Liens on any item of Property shall be construed to
allow such Excepted Liens and other Permitted Liens also to cover any
improvements, fixtures or accessions to such Property and the proceeds of such
Property, improvements, fixtures or accessions. No intention to subordinate any
Lien granted in favor of the Administrative Agent and the Lenders is to be
hereby implied or expressed by the permitted existence of any Excepted Liens.

“Excluded Account” means (a) each account all or substantially all of the
deposits in which consist of amounts utilized to fund payroll, employee benefit
or tax obligations of the Credit Parties, (b) fiduciary, trust or escrow
accounts, (c) “zero balance” accounts, (d) any account that is pledged to a
third party to the extent such Lien is permitted by the Loan Documents,
(e) accounts all or substantially all of the deposits in which consist of monies
of third parties, including working interest owners, royalty owners and the
like, and (f) other accounts so long as the aggregate average daily maximum
balance in any such other account over a 30-day period does not at any time
exceed $2,500,000; provided that the aggregate daily maximum balance for all
such bank accounts excluded pursuant to this clause (f) on any day shall not
exceed $5,000,000.

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

“Excluded Taxes” means any of the following Taxes imposed on or with respect to
the Administrative Agent, any Lender, the Issuing Bank or any other recipient of
any payment to be made by or on account of any obligation of any Credit Party
hereunder or under any other Loan Document, (a) Taxes imposed on or measured by
net income (however denominated), franchise taxes (including Texas margin tax),
and branch profits Taxes, in each case, (i) imposed as a result of such
recipient being organized under the laws of, or having its principal office or,
in the case of any Lender, its applicable lending office is located in, the
jurisdiction imposing such Tax (or any political subdivision thereof) or
(ii) that are Other Connection Taxes, (b) in the case of a Lender (other than an
assignee pursuant to a request by the Borrower under Section 5.05), any United
States federal withholding tax that is imposed on amounts payable to such Lender
pursuant to a law in effect at the time such Lender becomes a party to this
Agreement (or designates a new lending office), except to the extent that such
Lender (or its assignor,

 

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if any) was entitled, at the time of designation of a new lending office (or
assignment), to receive additional amounts with respect to such withholding tax
pursuant to Section 5.03(a) or Section 5.03(c), (c) taxes attributable to such
recipient’s failure to comply with Section 5.03(e) or Section 5.03(f), and
(d) any United States federal withholding taxes imposed by FATCA.

“Existing Letters of Credit” means the existing Letters of Credit issued under
the Existing Credit Agreement and described on Schedule 1.4.

“Existing Secured Swap Agreements” means those certain Secured Swap Agreements
entered into with Secured Swap Parties under the Existing Credit Agreement (as
such terms are defined therein).

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

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

“Fee Letter” means the fee letter dated November 22 2016, among the Borrower and
JPMorgan Chase Bank, N.A., as amended, restated, supplemented or otherwise
modified from time to time.

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

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

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

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

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

“Governmental Authority” means the government of the United States of America,
any other nation or any political subdivision thereof, whether state or local,
and any agency, authority, instrumentality, regulatory body, court, central bank
or other entity exercising executive, legislative, judicial, taxing, regulatory
or administrative powers or functions of or pertaining to government (including
without limitation any supranational bodies such as the European Union or the
European Central Bank) and any group or body charged with setting financial
accounting or regulatory capital rules or standards (including, without
limitation, the Financial Accounting Standards Board, the Bank for International
Settlements or the Basel Committee on Banking Supervision or any successor or
similar authority to any of the foregoing).

 

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

“Guarantors” means the Parent and each Subsidiary of the Borrower that
guarantees the Obligations pursuant to Section 8.14(b) and each other Person
executing a Guaranty Agreement.

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

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

“Highest Lawful Rate” means, with respect to each Lender, the maximum
nonusurious interest rate, if any, that at any time or from time to time may be
contracted for, taken, reserved, charged or received on the Notes or on other
Obligations under laws applicable to such Lender which are presently in effect
or, to the extent allowed by law, under such applicable laws which may hereafter
be in effect and which allow a higher maximum nonusurious interest rate than
applicable laws allow as of the date hereof.

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

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

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

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

“Increasing Lender” has the meaning assigned such term in Section 2.01(b).

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

 

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

“Initial Reserve Report” means, collectively, (a) the report of engineers
employed by the Borrower dated as of October 1, 2016, with respect to the Oil
and Gas Properties of the Credit Parties and (b) the report of engineers
employed by the Borrower dated as of November 1, 2016 solely with respect to the
Oil and Gas Properties evaluated denoted as “SHEP I” in such report. For the
avoidance of doubt the Initial Reserve Report shall be deemed to exclude the
SHEP II Oil and Gas Assets for all purposes.

“Insurance Proceeds” shall mean the cash proceeds received by the Borrower or
any of its Subsidiaries from any insurer in respect of any damage or destruction
of any property or asset net of reasonable fees and expenses (including without
limitation attorneys’ fees and expenses) incurred solely in connection with the
recovery thereof.

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

“Interest Period” means (a) with respect to any Eurodollar Borrowing, the period
commencing on the date of such Borrowing and ending on the numerically
corresponding day in the calendar month that is one, two or three months
thereafter (or such other period that is twelve months or less that is then
available to all Lenders), as the Borrower may elect and (b) with respect to a
Swing Line Loan carried at the Quoted Rate, an interest period of 30 days (or
any lesser number of days agreed to in advance by the Borrower, the
Administrative Agent and the Swing Line Lender); provided, that if any Interest
Period would end on a day other than a Business Day, such Interest Period shall
be extended to the next succeeding Business Day unless such next succeeding
Business Day would fall in the next calendar month, in which case such Interest
Period shall end on the next preceding Business Day and any Interest Period
pertaining to a Eurodollar Borrowing that commences on the last Business Day of
a calendar month (or on a day for which there is no numerically corresponding
day in the last calendar month of such Interest Period) shall end on the last
Business Day of the last calendar month of such Interest Period. For purposes
hereof, the date of a Borrowing initially shall be the date on which such
Borrowing is made and thereafter shall be the effective date of the most recent
conversion or continuation of such Borrowing.

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

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

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

 

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“Investment” means, for any Person: the acquisition (whether for cash, Property,
services or securities or otherwise) of Equity Interests of any other Person or
any agreement to make any such acquisition (including, without limitation, any
“short sale” or any sale of any securities at a time when such securities are
not owned by the Person entering into such short sale); the making of any
deposit with, or advance, loan or capital contribution to, assumption of Debt
of, purchase or other acquisition of any other Debt or equity participation or
interest in, or other extension of credit to, any other Person (including the
purchase of Property from another Person subject to an understanding or
agreement, contingent or otherwise, to resell such Property to such Person, but
excluding any such advance, loan or extension of credit having a term not
exceeding one hundred twenty (120) days representing the purchase price of
inventory or supplies sold by such Person in the ordinary course of business);
the purchase or acquisition (in one or a series of transactions) of Property of
another Person that constitutes a business unit; or the entering into of any
guarantee of, or other surety obligation (including the deposit of any Equity
Interests to be sold) with respect to, Debt of any other Person.

“Issuing Bank” means JPMorgan Chase Bank, N.A. or Comerica Bank, in each of
their capacities as issuer of one or more Letters of Credit hereunder, or its
successor that agrees to act in such capacity and is designated by Borrower and
the Revolving Credit Lenders.

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

“Joint Venture” means general or limited partnerships or other types of entities
engaged principally in oil and gas exploration, development, production,
processing and related activities, including gathering, processing and
transportation.

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

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

“Lenders” means the Persons listed on Schedule 1.2, any Person that shall have
become a party hereto pursuant to an Assignment and Assumption, and any Person
that shall have become a party hereto as an Additional Lender pursuant to
Section 2.01(b), other than, in each case, any such Person that ceases to be a
party hereto pursuant to an Assignment and Assumption, and shall include the
Revolving Credit Lenders and the Swing Line Lenders.

“Letter(s) of Credit” means any standby letters of credit issued by the Issuing
Bank at the request of the Borrower pursuant to Section 2.07 hereof and shall
include for all purposes hereunder the Existing Letters of Credit.

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

“Letter of Credit Documents” shall have the meaning ascribed to such term in
Section 2.07(g)(i) and (ii) hereof.

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

 

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“Letter of Credit Maximum Amount” means Fifty Million Dollars ($50,000,000), as
such amount may be increased by written consent of the Issuing Bank in its sole
discretion; provided that no such increase shall cause the Letter of Credit
Maximum to exceed Seventy-Five Million Dollars ($75,000,000).

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

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

“LIBO Rate” means, with respect to any Eurodollar Borrowing for any Interest
Period, the London interbank offered rate as administered by ICE Benchmark
Administration (or any other Person that takes over the administration of such
rate for U.S. Dollars for a period equal in length to such Interest Period as
displayed on pages LIBOR01 or LIBOR02 of the Reuters screen that displays such
rate (or, in the event such rate does not appear on a Reuters page or screen, on
any successor or substitute page on such screen that displays such rate, or on
the appropriate page of such other information service that publishes such rate
from time to time as selected by the Administrative Agent in its reasonable
discretion; in each case the “LIBO Screen Rate”) at approximately 11:00 a.m.,
London time, two Business Days prior to the commencement of such Interest
Period; provided that if the LIBO Screen Rate shall be less than zero, such rate
shall be deemed to be zero for the purposes of this Agreement; provided further
that if the Screen Rate shall not be available at such time for such Interest
Period (an “Impacted Interest Period”) then the LIBO Rate shall be the
Interpolated Rate; provided that if any Interpolated Rate shall be less than
zero, such rate shall be deemed to be zero for purposes of this Agreement.

“LIBO Screen Rate” has the meaning assigned to such term in the definition of
“LIBO Rate”.

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

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

“Loans” means, collectively, the Revolving Credit Loans and the Swing Line
Loans.

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

 

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“Material Acquisition” means any acquisition of Property or series of related
acquisitions of Property that involves the payment of consideration by any
Credit Party in excess of a dollar amount equal to ten percent (10%) of the
lesser of the then effective Borrowing Base or Aggregate Elected Commitment
Amount, as applicable.

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

“Material Disposition” means any Disposition of Property or series of related
Dispositions of property that yields gross proceeds to any Credit Party in
excess of a dollar amount equal to ten percent (10%) of the lesser of the then
effective Borrowing Base or Aggregate Elected Commitment Amount, as applicable.

“Material Indebtedness” means Debt (other than the Loans and Letters of Credit),
or obligations in respect of one or more Swap Agreements, of any one or more of
the Credit Parties in an aggregate principal amount exceeding the greater of (a)
$25,000,000 and (b) a dollar amount equal to five percent (5%) of the lesser of
the then effective Borrowing Base or Aggregate Elected Commitment Amount, as
applicable. For purposes of determining Material Indebtedness, the “principal
amount” of the obligations of any Credit Party in respect of any Swap Agreement
at any time shall be the Swap Termination Value.

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

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

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

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

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

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

“Notes” means, collectively, the Revolving Credit Notes and the Swing Line Note.

 

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

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

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

“Oil and Gas Properties” means all Hydrocarbon Interests, all Properties now or
hereafter pooled or unitized with Hydrocarbon Interests, and all presently
existing or future unitization, pooling agreements and declarations of pooled
units and the units created thereby (including without limitation all units
created under orders, regulations and rules of any Governmental Authority) which
may affect all or any portion of the Hydrocarbon Interests. Unless otherwise
indicated herein, each reference to the term “Oil and Gas Properties” shall mean
Oil and Gas Properties of the Credit Parties.

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

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

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

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

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

 

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“Permitted Holders” means, collectively, Kayne Private Energy Income Fund, L.P.,
any of its Affiliates, and any fund managed or administered by such Person or
any of their Affiliates.

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

“Permitted Unsecured Notes” means unsecured notes issued pursuant to Section
9.02(g) or Section 9.02(j), including the guaranty of such unsecured notes
permitted in Section 9.02(d).

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

“Plan” means any employee pension benefit plan, as defined in section 3(2) of
ERISA, which is subject to Title IV of ERISA or Section 412 of the Code and
which is currently or hereafter sponsored, maintained or contributed to by the
Borrower, a Subsidiary or an ERISA Affiliate or was at any time during the six
calendar years preceding the date hereof, sponsored, maintained or contributed
to by the Borrower, a Subsidiary or an ERISA Affiliate.

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

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

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

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

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

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

“Quoted Rate” means the rate of interest per annum offered by the Swing Line
Lender in its sole discretion with respect to a Swing Line Loan and accepted by
the Borrower.

“Quoted Rate Loan” means any Swing Line Loan which bears interest at the Quoted
Rate.

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

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

 

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“Reference Period” has the meaning assigned to such term in the definition of
Consolidated Net Income.

“Refunded Swing Line Loans” has the meaning ascribed to such term in Section
2.08(e)(i) hereof.

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

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

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

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

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

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

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

“Request for Swing Line Loan” shall mean a request for a Swing Line Loan issued
by the Borrower under Section 2.08(c) of this Agreement in the form attached
hereto as Exhibit F.

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

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

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

 

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

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

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

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

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

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

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

“Revolving Credit Maturity Date” means December 19, 2021.

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

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

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

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

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

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

 

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

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

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

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

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

“Security Agreement” means that certain security agreement executed by the
Credit Parties on the Effective Date, in form and substance satisfactory to the
Administrative Agent.

“Security Instruments” means the mortgages, deeds of trust, pledge agreements,
security agreements, including without limitation the Security Agreement,
control agreements, and other agreements, instruments, supplements or
certificates described or referred to in Exhibit D, and any and all other
agreements, instruments, supplements, consents or certificates (including the
Guaranty Agreement) now or hereafter executed and delivered by the Credit
Parties or any other Person (other than Secured Swap Agreements or participation
or similar agreements between any Lender and any other lender or creditor with
respect to any Obligations pursuant to this Agreement) as security for the
payment or performance of the Obligations, the Notes, this Agreement, or
Reimbursement Obligations, as such agreements may be amended, modified,
supplemented or restated from time to time.

“SHEP II Oil and Gas Assets” means all Oil and Gas Properties owned by Silver
Hill E&P, LLC as of October 13, 2016.

“SHEP II Reserve Report” means the report of engineers employed by the Borrower
dated as of November 1, 2016, solely with respect to the SHEP II Oil and Gas
Assets.

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

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

“Specified Issuance” means the issuance of unsecured notes permitted in Section
9.02(j).

“Statutory Reserve Rate” means a fraction (expressed as a decimal), the
numerator of which is the number one and the denominator of which is the number
one minus the aggregate of the maximum reserve percentage (including any
marginal, special, emergency or supplemental reserves) expressed as a decimal
established by the Board to which the Administrative Agent is subject with
respect to the Adjusted LIBO Rate, for eurocurrency funding (currently referred
to as “Eurocurrency Liabilities” in

 

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Regulation D of the Board). Such reserve percentage shall include those imposed
pursuant to such Regulation D. Eurodollar Loans shall be deemed to constitute
eurocurrency funding and to be subject to such reserve requirements without
benefit of or credit for proration, exemptions or offsets that may be available
from time to time to any Lender under such Regulation D or any comparable
regulation. The Statutory Reserve Rate shall be adjusted automatically on and as
of the effective date of any change in any reserve percentage.

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

“Subsidiary” means any subsidiary of the Parent or the Borrower, as the context
requires.

“Super Majority Revolving Credit Lenders” means at any time (a) so long as the
Aggregate Maximum Credit Amount has not been terminated, the Non-Defaulting
Lenders holding more than eighty percent (80%) of the Aggregate Maximum
Commitment Amount and (b) if the Aggregate Maximum Credit Amount has been
terminated (whether by maturity, acceleration or otherwise), the Non-Defaulting
Lenders holding more than eighty percent (80%) of the aggregate principal amount
then outstanding under the Revolving Credit Loans; provided that, for purposes
of determining Super Majority Revolving Credit Lenders hereunder, the
Reimbursement Obligations and Swing Line Loans shall be allocated among the
Revolving Credit Lenders based on their respective Applicable Revolving Credit
Percentages; provided further that, such calculations shall be made without
regard to any sale by a Non-Defaulting Lender of a participation in any Loan
under Section 12.04(b)(vi).

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

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

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

“Sweep Agreement” means any agreement relating to the “Sweep to Loan” automated
system of the Administrative Agent or any other cash management arrangement
which the Borrower and the Administrative Agent have executed for purposes of
effecting the borrowing and repayment of Swing Line Loans.

 

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“Swing Line” shall mean the revolving credit loans to be advanced to the
Borrower by the Swing Line Lender pursuant to Section 2.08 hereof, in an
aggregate amount (subject to the terms hereof), not to exceed, at any one time
outstanding, the Swing Line Maximum Amount.

“Swing Line Lender” shall mean JPMorgan Chase Bank, N.A. in its capacity as
lender of the Swing Line under Section 2.08 of this Agreement, or its successor
as subsequently designated hereunder.

“Swing Line Loan” shall mean a borrowing requested by the Borrower and made by
the Swing Line Lender pursuant to Section 2.08 hereof and may include, subject
to the terms hereof, Quoted Rate Loans and ABR Loans.

“Swing Line Maximum Amount” shall mean Twenty Million and No/100 Dollars
($20,000,000).

“Swing Line Note” shall mean the swing line note which may be issued by the
Borrower to the Swing Line Lender pursuant to Section 2.08(b)(ii) hereof in the
form attached hereto as Exhibit G, as such note may be amended or supplemented
from time to time, and any note or notes issued in substitution, replacement or
renewal thereof from time to time.

“Swing Line Participation Certificate” shall mean the Swing Line Participation
Certificate delivered by the Administrative Agent to each Revolving Credit
Lender pursuant to Section 2.08(e)(ii) hereof in the form attached hereto as
Exhibit H.

“Syndication Agents” collectively Comerica Bank and Citibank, N.A. as
Syndication Agents, and “Syndication Agent” means any of them.

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

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

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

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

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

 

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obligations under the Guaranty Agreement by such Credit Party and such Credit
Party’s grant of the security interests and provision of Collateral under the
Security Instruments, (c) the grant of Liens on Mortgaged Properties pursuant to
the Security Instruments, and (d) the consummation of the Acquisition.

“Transfer” has the meaning assigned to such term in Section 9.11.

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

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

“Unrestricted Subsidiary” means HMW Fluid Management LLC, LPLS, L.L.C. and any
other Person that would otherwise be a Subsidiary of the Parent or the Borrower
that the Parent or the Borrower, as applicable, has designated to be an
“Unrestricted Subsidiary” in writing to the Administrative Agent pursuant to
Section 9.18 and each subsidiary thereof.

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

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

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

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

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

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

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

 

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

Section 1.05 Accounting Terms and Determinations; GAAP. Unless otherwise
specified herein, all accounting terms used herein shall be interpreted, all
determinations with respect to accounting matters hereunder shall be made, and
all financial statements and certificates and reports as to financial matters
required to be furnished to the Administrative Agent or the Lenders hereunder
shall be prepared, in accordance with GAAP, applied on a basis consistent with
the Financial Statements except for changes in which the Parent’s independent
certified public accountants concur and which are disclosed to the
Administrative Agent as part of, or along with, the audited annual financial
statements delivered to the Lenders pursuant to Section 8.01(a); provided that,
unless the Borrower and the Majority Revolving Credit Lenders shall otherwise
agree in writing, no such change shall modify or affect the manner in which
compliance with the covenants set forth in Section 9.01 is computed such that
all such computations shall be conducted utilizing financial information
presented consistently with prior periods. For the avoidance of doubt, if after
the Effective Date any change occurs in the manner in which operating leases are
accounted for under GAAP that affects the Borrower’s compliance with any
provision of this Agreement, then the Borrower’s compliance with such provision
will continue to be determined in accordance with GAAP as in effect immediately
prior to such change to GAAP unless otherwise agreed by the Borrower and the
Majority Revolving Credit Lenders in writing. Notwithstanding anything herein to
the contrary, for the purposes of calculating any of the ratios tested under
Section 9.01, and the components of each of such ratios, all Unrestricted
Subsidiaries (including their assets, liabilities, income, losses, cash flows,
and the elements thereof) shall be excluded, except for any cash dividends or
distributions actually paid by any Unrestricted Subsidiary to any Credit
Parties, which shall be deemed to be income to such Credit Party when actually
received by it.

ARTICLE II

THE REVOLVING CREDIT FACILITY

Section 2.01 Commitments.

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

 

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(b) Increases, Reductions and Terminations of Aggregate Elected Commitment
Amount.

(i) Subject to the conditions set forth in Section 2.01(b)(ii), the Borrower may
increase the Aggregate Elected Commitment Amount then in effect by increasing
the Elected Commitment of one or more existing Lenders (each such Lender, an
“Increasing Lender”) and/or causing one or more Persons acceptable to the
Administrative Agent and that at such time are not Lenders to become a Lender
(each such Person that is not at such time a Lender and becomes a Lender, an
“Additional Lender”). Notwithstanding anything to the contrary contained in this
Agreement, in no case shall an Additional Lender be the Borrower, an Affiliate
of the Borrower or a natural person.

(ii) Except as provided in Section 2.01(b)(x), Any increase in the Aggregate
Elected Commitment Amount shall be subject to the following additional
conditions:

(A) no increase in the Aggregate Elected Commitment Amount shall be permitted if
after giving effect thereto the Aggregate Elected Commitment Amount exceeds the
lesser of (I) the Borrowing Base then in effect and (II) the Aggregate Maximum
Credit Amount;

(B) the Borrower may not increase the Aggregate Elected Commitment Amount more
than once per fiscal quarter;

(C) no Lender’s Elected Commitment may be increased without the consent of such
Lender;

(D) subject to Section 2.01(b)(ix) below, if the Borrower elects to increase the
Aggregate Elected Commitment Amount by increasing the Elected Commitment of one
or more Lenders, the Borrower and each such Increasing Lender shall execute and
deliver to the Administrative Agent a certificate substantially in the form of
Exhibit K (an “Elected Commitment Increase Certificate”) and the Borrower shall
pay any applicable fees as may have been agreed to between the Borrower, such
Increasing Lender and/or the Administrative Agent; and

(E) if the Borrower elects to increase the Aggregate Elected Commitment Amount
by causing one or more Additional Lenders to become a party to this Agreement,
then the Borrower and each such Additional Lender shall execute and deliver to
the Administrative Agent a certificate substantially in the form of Exhibit L
(an “Additional Lender Certificate”), together with an Administrative
Questionnaire for each Additional Lender, and the Borrower shall (I) if
requested by any Additional Lender, deliver a Note payable to the order of such
Additional Lender in a principal amount equal to its Maximum Credit Amount, and
otherwise duly completed and (II) pay any applicable fees as may have been
agreed to between the Borrower, any Additional Lender and/or the Administrative
Agent.

(iii) Subject to acceptance and recording thereof pursuant to Section
2.01(b)(iv), from and after the effective date specified in the Elected
Commitment Increase Certificate or the Additional Lender Certificate: (A) the
amount of the Aggregate Elected Commitment Amount shall be increased as set
forth therein, and (B) in the case of an Additional Lender Certificate, any
Additional Lender party thereto shall be a party to this Agreement and have the
rights and obligations of a Lender under this Agreement and the other Loan
Documents. In addition, each Increasing Lender and Additional Lender shall be
deemed to have purchased a pro rata portion of the outstanding Loans (and
participation interests in Letters of Credit) of each of the other Lenders (and
such Lenders hereby agree to sell and to take all such further action to
effectuate such sale) such that each Lender (including any Increasing Lender and
any Additional Lender) shall hold its Applicable Revolving Credit Percentage of
the outstanding Loans (and participation interests in Letters of Credit) after
giving effect to the increase in the Aggregate Elected Commitment Amount and the
resulting modification of each Lender’s Applicable Revolving Credit Percentage
and Maximum Credit Amount pursuant to Section 2.01(b)(v).

 

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(iv) Upon its receipt of a duly completed Elected Commitment Increase
Certificate or an Additional Lender Certificate, executed by the Borrower and
the Lender or by the Borrower and the Additional Lender party thereto, as
applicable, and the Administrative Questionnaire referred to in Section
2.01(b)(ii) the Administrative Agent shall accept such Elected Commitment
Increase Certificate or Additional Lender Certificate and record the information
contained therein in the Register required to be maintained by the
Administrative Agent pursuant to Section 12.04(b)(iv).

(v) Upon any increase in the Aggregate Elected Commitment Amount pursuant to
this Section 2.01(b), (A) each Lender’s Applicable Revolving Credit Percentage
shall be automatically deemed amended to the extent necessary so that each such
Lender’s Applicable Revolving Credit Percentage equals the percentage of the
Aggregate Elected Commitment Amount represented by such Lender’s Elected
Commitment, in each case after giving effect to such increase, (B) each Lender’s
Maximum Credit Amount shall be automatically deemed amended to the extent
necessary so that each Lender’s Maximum Credit Amount equals such Lender’s
Applicable Revolving Credit Percentage, after giving effect to any adjustments
thereto pursuant to the foregoing clause (A), of the Aggregate Maximum Credit
Amount, (C) Schedule 1.2 to this Agreement shall be deemed amended to reflect
the Elected Commitment of any Increasing Lender and any Additional Lender, and
any changes in the Lenders’ respective Applicable Revolving Credit Percentages
and Maximum Credit Amounts pursuant to the foregoing clauses (A) and (B), and
(D) the Borrower shall execute and deliver new Notes to the extent required
under Section 2.02(d).

(vi) The Borrower may from time to time terminate or reduce the Aggregate
Elected Commitment Amount; provided that (A) each reduction of the Aggregate
Elected Commitment Amount shall be in an amount that is an integral multiple of
$100,000 and not less than $1,000,000 and (B) the Borrower shall not reduce the
Aggregate Elected Commitment Amount if, after giving effect to any concurrent
prepayment of the Loans in accordance with Section 3.03(c), the total Revolving
Credit Exposures would exceed the Aggregate Elected Commitment Amount.

(vii) The Borrower shall notify the Administrative Agent of any election to
terminate or reduce the Aggregate Elected Commitment Amount under Section
2.01(b)(vi) at least three Business Days prior to the effective date of such
termination or reduction, specifying such election and the effective date
thereof. Promptly following receipt of any notice, the Administrative Agent
shall advise the Lenders of the contents thereof. Any termination or reduction
of the Aggregate Elected Commitment Amount shall be permanent and may not be
reinstated, except pursuant to Section 2.01(b)(i). Each reduction of the
Aggregate Elected Commitment Amount shall be made ratably among each Lender’s
Maximum Credit Amount in accordance with each Lender’s Applicable Revolving
Credit Percentage (and Schedule 1.2 shall be deemed amended to reflect such
amendments to each Lender’s Elected Commitment and the Aggregate Elected
Commitment Amount).

(viii) Upon any redetermination or other adjustment in the Borrowing Base
pursuant to this Agreement that would otherwise result in the Borrowing Base
becoming less than the Aggregate Elected Commitment Amount, the Aggregate
Elected Commitment Amount shall be automatically reduced (ratably among the
Lenders in accordance with each Lender’s Applicable Revolving Credit Percentage)
so that they equal such redetermined Borrowing Base (and Schedule 1.2 shall be
deemed amended to reflect such amendments to each Lender’s Elected Commitment
and the Aggregate Elected Commitment Amount).

 

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(ix) If (A) the Borrower elects to increase the Aggregate Elected Commitment
Amount and (B) each Lender has consented to such increase in its Elected
Commitment, then the Aggregate Elected Commitment Amount shall be increased
(ratably among the Lenders in accordance with each Lender’s Applicable Revolving
Credit Percentage) by the amount requested by the Borrower (subject to the
limitations set forth in Section 2.01(b)(ii)(A)) without the requirement that
any Lender deliver an Elected Commitment Increase Certificate, and Schedule 1.2
shall be deemed amended to reflect such amendments to each Lender’s Elected
Commitment and the Aggregate Elected Commitment Amount. The Administrative Agent
shall record the information regarding such increases in the Register required
to be maintained by the Administrative Agent pursuant to Section 12.04(b)(iv).

(x) Notwithstanding anything to the contrary contained in this Section 2.01(b),
on the date of the Borrowing Base increase provided for in Section 2.06(f), the
Borrower may elect to increase the Aggregate Elected Commitment Amount in an
amount not to exceed $150,000,000 subject solely to the payment of the fees
described in Section 2.01(b)(xi). Upon any such election by the Borrower
pursuant to this Section 2.01(b)(x), the Aggregate Elected Commitment Amount
shall be increased (ratably among the Lenders in accordance with each Lender’s
Applicable Revolving Credit Percentage) by the amount requested by the Borrower
without the requirement that any Lender deliver an Elected Commitment Increase
Certificate, and Schedule 1.2 shall be deemed amended to reflect such amendments
to each Lender’s Elected Commitment and the Aggregate Elected Commitment Amount.
The Administrative Agent shall record the information regarding such increases
in the Register required to be maintained by the Administrative Agent pursuant
to Section 12.04(b)(iv).

(xi) In connection with any increase in the Aggregate Elected Commitment Amount
pursuant to Section 2.01(b)(x), the Borrower shall pay to the Administrative
Agent, for the account of each Lender, upfront fees in an amount equal to 62.5
basis points (0.625%) of the amount of such Lender’s Increased Elected
Commitment (as defined below). “Increased Elected Commitment” means, with
respect to any Lender, the amount by which such Lender’s Elected Commitment
after giving effect to the increase in the Aggregate Elected Commitment Amount
provided for in Section 2.01(b)(x), exceeds such Lender’s Elected Commitment
that was in effect immediately prior to giving effect to the increase in the
Aggregate Elected Commitment Amount provided for in Section 2.01(b)(x).

Section 2.02 Revolving Credit Loans and Borrowings.

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

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

 

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(c) Minimum Amounts; Limitation on Number of Revolving Credit Borrowings. At the
commencement of each Interest Period for any Eurodollar Revolving Credit
Borrowing, such Revolving Credit Borrowing shall be in an amount not less than
$2,000,000 and increments of $100,000 in excess thereof. At the time that each
ABR Revolving Credit Borrowing is made, such Revolving Credit Borrowing shall be
in an amount not less than $1,000,000 and increments of $100,000 in excess
thereof; provided that, notwithstanding the foregoing, an ABR Revolving Credit
Borrowing may be in an aggregate amount that is equal to the entire unused
balance of the total Commitments or that is required to finance the
reimbursement of a Reimbursement Obligation as contemplated by Section
2.07(f)(iii). Revolving Credit Borrowings of more than one Type may be
outstanding at the same time, provided that there shall not at any time be more
than a total of eight Eurodollar Revolving Credit Borrowings outstanding.
Notwithstanding any other provision of this Agreement, the Borrower shall not be
entitled to request, or to elect to convert or continue, any Revolving Credit
Borrowing if the Interest Period requested with respect thereto would end after
the Revolving Credit Maturity Date.

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

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

 

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

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

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

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

(iii) whether such Revolving Credit Borrowing is to be an ABR Borrowing or a
Eurodollar Borrowing, and, except in the case of an ABR Borrowing, the first
Interest Period applicable thereto, provided, however, that the initial
Revolving Credit Borrowing made under this Agreement shall be an ABR Borrowing,
which may then be converted into a Eurodollar Borrowing in compliance with this
Agreement.

(b) each such Revolving Credit Borrowing Request shall be delivered to the
Administrative Agent by 11:00 a.m. (New York time) three (3) Business Days prior
to the proposed date of the Revolving Credit Borrowing, except in the case of an
ABR Borrowing, for which the Request for Borrowing must be delivered by 11:00
a.m. (New York time) on the proposed date for such Revolving Credit Borrowing;
provided that any such notice of an ABR Borrowing to finance the reimbursement
of an Letter of Credit Payment as contemplated by Section 2.07(f) may be given
not later than 10:00 a.m., New York City time, on the date of the proposed
Borrowing;

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

(d) a Revolving Credit Borrowing Request, once delivered to the Administrative
Agent, shall not be revocable by the Borrower and (other than a Revolving Credit
Borrowing Request to refund, continue or convert any outstanding Revolving
Credit Borrowing) shall constitute a certification by the Borrower as of the
date thereof that the conditions set forth in subsections (a), (b) and (c) of
Section 6.02 have been satisfied;

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

 

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or continuation of any Revolving Credit Borrowing as, a Eurodollar Revolving
Credit Borrowing shall be ineffective) and unless repaid, each Eurodollar
Revolving Credit Borrowing shall be converted to an ABR Revolving Credit
Borrowing at the end of the Interest Period applicable thereto;

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

Section 2.04 Funding of Revolving Credit Borrowings.

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

(i) for ABR Revolving Credit Borrowings, at the office of the Administrative
Agent located at 383 Madison Avenue, New York, New York 10179, not later than
12:00 noon (New York time) on the date of such Borrowing; and

(ii) for Eurodollar Borrowings, at the office of the Administrative Agent
located at 383 Madison Avenue, New York, New York 10179, not later than 12:00
noon (New York time) on the date of such Borrowing.

(b) Except in respect of Revolving Credit Borrowings covering the reimbursement
of Letters of Credit pursuant to Section 2.07(f), the Administrative Agent will
make such Revolving Credit Loans available to the Borrower by promptly crediting
the funds so received from the Revolving Credit Lenders to an account of the
Borrower designated by the Borrower in the applicable Revolving Credit Borrowing
Request not later than 4:00 p.m. (New York time); provided that ABR Revolving
Credit Borrowings made to finance the reimbursement of an Letter of Credit
Payment as provided in Section 2.07(f) shall be remitted by the Administrative
Agent to the Issuing Bank; provided, further, that ABR Revolving Credit
Borrowings made to refund any Swing Line Loan pursuant to Section 2.08(e) shall
be remitted by the Administrative Agent to the Swing Line Lender.

 

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

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

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

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

Section 2.05 Termination and Reduction of Aggregate Maximum Credit Amounts.

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

 

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

(i) The Borrower may at any time terminate, or from time to time reduce, the
Aggregate Maximum Credit Amounts; provided that each reduction of the Aggregate
Maximum Credit Amounts shall be in an amount that is an integral multiple of
$100,000 and not less than $2,500,000 and the Borrower shall not terminate or
reduce the Aggregate Maximum Credit Amounts if, after giving effect to any
concurrent prepayment of the Revolving Credit Loans in accordance with Section
3.03(c)(i), the total Revolving Credit Exposures would exceed the total
Commitments. No reduction shall reduce the Swing Line Maximum Amount unless the
Borrower so elects, provided that the Swing Line Maximum Amount shall at no time
be greater than the Aggregate Maximum Credit Amounts.

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

Section 2.06 Borrowing Base.

(a) Initial Borrowing Base. The Borrowing Base on the Effective Date shall be
$950,000,000. Notwithstanding the foregoing, the Borrowing Base may be subject
to further adjustments from time to time pursuant to the Borrowing Base
Adjustment Provisions.

(b) Scheduled and Interim Redeterminations. The Borrowing Base shall be
redetermined as provided in accordance with this Section 2.06, and, subject to
Section 2.06(d) (each a “Scheduled Redetermination”). The Borrowing Base shall
be redetermined semi-annually, and shall become effective and applicable to the
Borrower, the Administrative Agent, the Issuing Bank and the Revolving Credit
Lenders on May 1 (with respect to the Reserve Report delivered on April 1) and
November 1 (with respect to the Reserve Report delivered on October 1) of each
year commencing May 1, 2017; provided that if the Acquisition has been
consummated prior to May 1, 2017, the first Scheduled Redetermination shall be
the Scheduled Redetermination scheduled to occur on November 1, 2017. In
addition, (i) Borrower may, by notifying the Administrative Agent thereof, and
the Administrative Agent may, at the direction of the Majority Revolving Credit
Lenders, by notifying the Borrower thereof, two times per year, each elect to
cause the Borrowing Base to be redetermined between Scheduled Redeterminations;
provided that the Administrative Agent and the Lenders may not elect to cause
the Borrowing Base to be redetermined prior to the earlier of (A) the
consummation of the Acquisition or (B) May 1, 2017 and (ii) the Borrower may
elect, by notifying the Administrative Agent of any acquisition of Oil and Gas
Properties by any Credit Party with a purchase price in the aggregate of at
least five percent (5%) of the then effective Borrowing Base, to cause the
Borrowing Base to be redetermined between Scheduled Redeterminations in
accordance with this Section 2.06 (each redetermination under clause (i) or (ii)
of this sentence, an “Interim Redetermination”).

 

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(c) Scheduled and Interim Redetermination Procedure.

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

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

(A) in the case of a Scheduled Redetermination if the Administrative Agent shall
have received the Engineering Reports required to be delivered by the Borrower
pursuant to Section 8.12(a) and (c) in a timely and complete manner, then on or
before May 1 and November 1 of such year following the date of delivery or if
the Administrative Agent shall not have received the Engineering Reports
required to be delivered by the Borrower pursuant to Section 8.12(a) and (c) in
a timely and complete manner, then promptly after the Administrative Agent has
received complete Engineering Reports from the Borrower and has had a reasonable
opportunity to determine the Proposed Borrowing Base in accordance with Section
2.06(c)(i); and

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

(iii) Any Proposed Borrowing Base that would increase the Borrowing Base then in
effect must be approved or deemed to have been approved by all of the Revolving
Credit Lenders as provided in this Section 2.06(c)(iii); and any Proposed
Borrowing Base that would decrease or maintain the Borrowing Base then in effect
(not including an automatic reduction pursuant to Section 2.06(b)(iii) must be
approved or be deemed to have been approved by the Required Revolving Credit
Lenders (in each Revolving Credit Lender’s sole discretion consistent with its
normal oil and gas criteria as it exists at the particular time) as provided in
this Section 2.06(c)(iii). Upon receipt of the Proposed Borrowing Base Notice,
each Revolving Credit Lender shall have twenty-one (21) days to agree with the
Proposed Borrowing Base or disagree with the Proposed Borrowing Base by
proposing an alternate Borrowing Base. If at the end of such twenty-one
(21) days, any Revolving Credit Lender has not communicated its approval or
disapproval in writing to the Administrative Agent, such silence shall be deemed
to be an approval of the Proposed Borrowing Base. If, at the end of such 21-day
period, all of the Revolving Credit Lenders, in the case of a Proposed Borrowing
Base that would increase the Borrowing

 

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Base then in effect, or the Required Revolving Credit Lenders, in the case of a
Proposed Borrowing Base that would decrease or maintain the Borrowing Base then
in effect, have approved or deemed to have approved, as aforesaid, then the
Proposed Borrowing Base shall become the new Borrowing Base, effective on the
date specified in Section 2.06(d). If, however, at the end of such 21-day
period, all of the Revolving Credit Lenders or the Required Revolving Credit
Lenders, as applicable, have not approved or deemed to have approved, as
aforesaid, then the Administrative Agent shall poll the Revolving Credit Lenders
to ascertain the highest Borrowing Base then acceptable to a number of Revolving
Credit Lenders sufficient to constitute the Required Revolving Credit Lenders
and, so long as such amount does not increase the Borrowing Base then in effect,
such amount shall become the new Borrowing Base, effective on the date specified
in Section 2.06(d).

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

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

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

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

(e) Adjustment for Debt Incurrence. If any Credit Party issues or incurs any
Debt consisting of or related to the senior notes permitted under Section
9.02(g) during the period between Scheduled Redeterminations, then (i) on the
date on which such Debt is issued, the Borrowing Base then in effect shall be
reduced by an amount equal to the product of 0.25 multiplied by the stated
principal amount of such Debt, and (ii) the Borrowing Base as so reduced shall
become the new Borrowing Base immediately upon the date of such issuance,
effective and applicable to the Borrower, the Administrative Agent, the
Swingline Lender, the Issuing Bank and the Lenders on such date until the next
redetermination or modification thereof hereunder. For purposes of this Section
2.06(e), if any such Debt consisting of senior notes issued pursuant to Section
9.02(g) (or guaranty thereof) is issued at a discount or otherwise sold for less
than “par,” the reduction shall be calculated based upon the stated principal
amount without reference to such discount. Notwithstanding the foregoing, no
such reduction to the Borrowing Base shall be required with respect to (i) the
Specified Issuance or (ii) any issuance of other Permitted Unsecured Notes
pursuant to Section 9.02(h) to refinance outstanding unsecured notes except with
respect to any portion of the face principal amount of such refinancing Debt
which exceeds the principal amount of such refinanced Debt (plus any accrued
interest, fees, expenses and premiums of such refinanced Debt).

 

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(f) Adjustment for Acquisition. If the Borrower or one or more of the other
Credit Parties consummates the Acquisition in accordance with the terms of the
Acquisition Documents prior to May 1, 2017, subject to satisfaction of the
conditions precedent set forth in Section 6.04, the Borrowing Base in effect
immediately prior to giving effect to the Acquisition shall be increased
(without duplication) by $150,000,000 on the effective date of the Acquisition.

Section 2.07 Letters of Credit.

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

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

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

 

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

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

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

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

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

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

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

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

 

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(d) Letter of Credit Fees.

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

(A) A per annum letter of credit fee with respect to the undrawn amount of each
Letter of Credit issued pursuant hereto (based on the amount of each Letter of
Credit) in the amount of the Applicable Margin (determined with reference to
Schedule 1.1 to this Agreement) shall be paid to the Administrative Agent for
distribution to the Revolving Credit Lenders in accordance with their Applicable
Revolving Credit Percentages.

(B) A letter of credit facing fee on the face amount of each Letter of Credit
shall be paid to the Administrative Agent for distribution to the Issuing Bank
for its own account, in accordance with the terms of the applicable Fee Letter.

(ii) All payments by the Borrower to the Administrative Agent for distribution
to the Issuing Bank or the Revolving Credit Lenders under this Section 2.07(d)
shall be made in Dollars in immediately available funds at the Issuing Office or
such other office of the Administrative Agent as may be designated from time to
time by written notice to Borrower by the Administrative Agent. The fees
described in clauses (i)(A) and (B) above (i) shall be nonrefundable under all
circumstances subject to Section 12.12 and (ii) shall be payable quarterly in
advance on the first day of each February, May, August and November of each
year. The fees due under clause (i)(A) above shall be determined by multiplying
the Applicable Margin times the undrawn amount of the face amount of each such
Letter of Credit on the date of determination, and shall be calculated on the
basis of a 360 day year and assessed for the actual number of days from the date
of the issuance thereof to the stated expiration thereof.

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

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

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

(ii) If the Issuing Bank shall honor a draft or other demand for payment
presented or made under any Letter of Credit, the Borrower agrees to pay to the
Issuing Bank an amount

 

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equal to the amount paid by the Issuing Bank in respect of such draft or other
demand under such Letter of Credit and all reasonable expenses paid or incurred
by the Administrative Agent relative thereto not later than 12:00 noon (New York
time), in Dollars, on (i) the Business Day that the Borrower received notice of
such presentment and honor, if such notice is received prior to 10:00 a.m. (New
York time) or (ii) the Business Day immediately following the day that the
Borrower received such notice, if such notice is received after 10:00 a.m. (New
York time).

(iii) If the Issuing Bank shall honor a draft or other demand for payment
presented or made under any Letter of Credit, but the Borrower does not
reimburse the Issuing Bank as required under clause (ii) above and the Aggregate
Maximum Commitment Amount has not been terminated (whether by maturity,
acceleration or otherwise), the Borrower shall be deemed to have immediately
requested that the Revolving Credit Lenders make a ABR Revolving Credit
Borrowing (which Borrowing may be subsequently converted at any time into a
Eurodollar Borrowing pursuant to Section 2.03 hereof) in the principal amount
equal to the amount paid by the Issuing Bank in respect of such draft or other
demand under such Letter of Credit and all reasonable expenses paid or incurred
by the Administrative Agent relative thereto. The Administrative Agent will
promptly notify the Revolving Credit Lenders of such deemed request, and each
such Lender shall make available to the Administrative Agent an amount equal to
its pro rata share (based on its Applicable Revolving Credit Percentage) of the
amount of such Borrowing.

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

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

 

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(vi) If the Issuing Bank shall honor a draft or other demand for payment
presented or made under any Letter of Credit, the Issuing Bank shall provide
notice thereof to the Borrower on the date such draft or demand is honored, and
to each Revolving Credit Lender on such date unless the Borrower shall have
satisfied its Reimbursement Obligations by payment to the Administrative Agent
(for the benefit of the Issuing Bank) as required under this Section 2.07(f).
The Issuing Bank shall further use reasonable efforts to provide notice to the
Borrower prior to honoring any such draft or other demand for payment, but such
notice, or the failure to provide such notice, shall not affect the rights or
obligations of the Issuing Bank with respect to any Letter of Credit or the
rights and obligations of the parties hereto, including without limitation the
obligations of the Borrower under this Section 2.07(f).

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

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

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

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

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

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

 

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(iii) The existence of any claim, setoff, defense or other right which the
Borrower may have at any time against any beneficiary or any transferee of any
Letter of Credit (or any persons or entities for whom any such beneficiary or
any such transferee may be acting), the Administrative Agent, the Issuing Bank
or any Revolving Credit Lender or any other Person, whether in connection with
this Agreement, any of the Letter of Credit Documents, the transactions
contemplated herein or therein or any unrelated transactions;

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

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

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

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

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

(h) Risk Under Letters of Credit.

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

(ii) Subject to other terms and conditions of this Agreement, the Issuing Bank
shall issue the Letters of Credit and shall hold the documents related thereto
in its own name and shall make all collections thereunder and otherwise
administer the Letters of Credit in accordance with the Issuing Bank’s regularly
established practices and procedures and will have no further obligation with
respect thereto. In the administration of Letters of Credit, the Issuing Bank
shall not be liable for any action taken or omitted on the advice of counsel,
accountants, appraisers or other experts selected by the Issuing Bank with due
care and the Issuing Bank may rely upon any notice, communication, certificate
or other statement from the Borrower, beneficiaries of Letters of Credit, or any
other Person which the Issuing Bank believes to be authentic. The Issuing Bank
will, upon request, furnish the Revolving Credit Lenders with copies of Letter
of Credit Documents related thereto.

 

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

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

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

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

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

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

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

 

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

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

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

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

(k) Existing Letters of Credit. The Existing Letters of Credit shall be deemed
to have been issued hereunder as of the Effective Date.

Section 2.08 Swing Line.

(a) Swing Line Loans. The Swing Line Lender may, on the terms and subject to the
conditions hereinafter set forth (including without limitation Section 2.08(c)
hereof), but shall not be required to, make one or more Loans (each such loan
being a “Swing Line Loan”) to the Borrower from time to time on any Business Day
during the period from the Effective Date hereof until (but excluding) the
Revolving Credit Maturity Date in an aggregate amount not to exceed at any one
time outstanding the Swing Line Maximum Amount. Subject to the terms set forth
herein, advances, repayments and readvances may be made under the Swing Line.

(b) Accrual of Interest and Maturity; Evidence of Indebtedness.

(i) The Swing Line Lender shall maintain in accordance with its usual practice
an account or accounts evidencing indebtedness of the Borrower to the Swing Line
Lender

 

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resulting from each Swing Line Loan from time to time, including the amount and
date of each Swing Line Loan, its applicable interest rate, its Interest Period,
if any, and the amount and date of any repayment made on any Swing Line Loan
from time to time. The entries made in such account or accounts of the Swing
Line Lender shall be prima facie evidence, absent manifest error, of the
existence and amounts of the obligations of the Borrower therein recorded;
provided, however, that the failure of the Swing Line Lender to maintain such
account, as applicable, or any error therein, shall not in any manner affect the
obligation of Borrower to repay the Swing Line Loans (and all other amounts
owing with respect thereto) in accordance with the terms of this Agreement.

(ii) the Borrower agrees that, upon the written request of the Swing Line
Lender, the Borrower will execute and deliver to the Swing Line Lender a Swing
Line Note.

(iii) the Borrower unconditionally promises to pay to the Administrative Agent
for the account of the Swing Line Lender the then unpaid principal amount of
such Swing Line Loan (plus all accrued and unpaid interest) on (A) the earlier
of (1) the Termination Date and (2) the tenth Business Day after such Swing Line
Loan is made and (B) on such other dates and in such other amounts as may be
required from time to time pursuant to this Agreement. Subject to the terms and
conditions hereof, each Swing Line Loan shall, from time to time after the date
of such Loan (until paid), bear interest at the rate specified in Section 3.02.

(c) Requests for Swing Line Loans. The Borrower may request a Swing Line Loan by
the delivery to the Swing Line Lender of a Request for Swing Line Loan executed
by a Responsible Officer for the Borrower, subject to the following:

(i) each such Request for Swing Line Loan shall set forth the information
required on the Request for Swing Line Loan, including without limitation,
(A) the proposed date of such Swing Line Loan, which must be a Business Day,
(B) whether such Swing Line Loan is to be a ABR Loan or a Quoted Rate Loan, and
(C) in the case of a Quoted Rate Loan, the duration of the Interest Period
applicable thereto;

(ii) on the proposed date of such Swing Line Loan, after giving effect to all
outstanding requests for Swing Line Loans made by the Borrower as of the date of
determination, (A) the aggregate principal amount of all Swing Line Loans
outstanding on such date shall not exceed the Swing Line Maximum Amount and
(B) the Swing Line Lender’s Revolving Credit Exposure shall not exceed its
Commitment;

(iii) on the proposed date of such Swing Line Loan, after giving effect to all
outstanding requests for Revolving Credit Loans and Swing Line Loans and Letters
of Credit requested by the Borrower on such date of determination (including,
without duplication, Loans that are deemed disbursed pursuant to Section
2.07(f)(iii) hereof in respect of the Borrower’s Reimbursement Obligations
hereunder), the sum of (x) the aggregate principal amount of all Revolving
Credit Loans and the Swing Line Loans outstanding on such date plus (y) the
Letter of Credit Obligations on such date shall not exceed the lesser of (A) the
Aggregate Maximum Credit Amounts, (B) the then applicable Borrowing Base and
(C) the Aggregate Elected Commitment Amount;

(iv) (A) in the case of a Swing Line Loan that is an ABR Loan, the principal
amount of the initial funding of such Loan, as opposed to any refunding or
conversion thereof, shall be at least $250,000 or such lesser amount as may be
agreed to by the Swing Line Lender, and (B) in the case of a Swing Line Loan
that is a Quoted Rate Loan, the principal amount of such Loan, plus any other
outstanding Swing Line Loans to be then combined therewith having the same
Interest Period, if any, shall be at least $250,000 or such lesser amount as may
be agreed to by the Swing Line Lender, and at any time there shall not be in
effect more than three (3) Interest Periods;

 

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(v) each such Request for Swing Line Loan shall be delivered to the Swing Line
Lender by 2:00 p.m. (New York time) on the proposed date of the Swing Line Loan;

(vi) each Request for Swing Line Loan, once delivered to the Swing Line Lender,
shall not be revocable by the Borrower, and shall constitute and include a
certification by the Borrower as of the date thereof that the conditions set
forth in subsections (a), (b) and (c) of Section 6.02 have been satisfied;

(vii) At the option of the Administrative Agent, subject to revocation by the
Administrative Agent at any time and from time to time and so long as the
Administrative Agent is the Swing Line Lender, the Borrower may utilize the
Administrative Agent’s “Sweep to Loan” automated system for obtaining Swing Line
Loans and making periodic repayments. At any time during which the “Sweep to
Loan” system is in effect, Swing Line Loans shall be advanced to fund borrowing
needs pursuant to the terms of the Sweep Agreement. Each time a Swing Line Loan
is made using the “Sweep to Loan” system, the Borrower shall be deemed to have
certified to the Administrative Agent and the Lenders each of the matters set
forth in clause (vi) of this Section 2.08(b). Principal and interest on Swing
Line Loans requested, or deemed requested, pursuant to this Section shall be
paid pursuant to the terms and conditions of the Sweep Agreement without any
deduction, setoff or counterclaim whatsoever. Unless sooner paid pursuant to the
provisions hereof or the provisions of the Sweep Agreement, the principal amount
of the Swing Line Loans shall be paid in full, together with accrued interest
thereon, on the Revolving Credit Maturity Date. The Administrative Agent may
suspend or revoke the Borrower’s privilege to use the “Sweep to Loan” system at
any time and from time to time for any reason and, immediately upon any such
revocation, the “Sweep to Loan” system shall no longer be available to the
Borrower for the funding of Swing Line Loans hereunder (or otherwise), and the
regular procedures set forth in this Section 2.08 for the making of Swing Line
Loans shall be deemed immediately to apply. The Administrative Agent may, at its
option, also elect to make Swing Line Loans upon the Borrower’s telephone
requests on the basis set forth in the last paragraph of Section 2.03, provided
that Borrower complies with the provisions set forth in this Section 2.08.

(d) Disbursement of Swing Line Loans. Upon receiving any executed Request for
Swing Line Loan from the Borrower and the satisfaction of the conditions set
forth in Section 2.08(c) hereof, the Swing Line Lender shall make available to
the Borrower the amount so requested in Dollars not later than 3:00 p.m. (New
York time) on the date of such Loan, by credit to an account of the Borrower
maintained with the Administrative Agent or to such other account or third party
as the Borrower may reasonably direct in writing, subject to applicable law,
provided such direction is timely given. The Swing Line Lender shall promptly
notify the Administrative Agent of any Swing Line Loan by telephone, telex or
telecopier.

(e) Refunding of or Participation Interest in Swing Line Loans.

(i) The Swing Line Lender may by written notice given to the Administrative
Agent require the Revolving Credit Lenders to acquire participations in all or a
portion of its Swing Line Loans outstanding. Such notice shall specify the
aggregate amount of Swing Line Loans in which Revolving Credit Lenders will
participate. Promptly upon receipt of such notice, the Administrative Agent will
give notice thereof to each Revolving Credit Lender, specifying in such notice
such Revolving Credit Lender’s Applicable Revolving Credit Percentage of such
Swing Line Loans. Each Revolving Credit Lender hereby absolutely and
unconditionally agrees, promptly upon receipt of such notice from the
Administrative Agent (and in any event, if such notice is received by 12:00
noon, New York time, on a Business Day no later than 5:00 p.m. New York time on
such Business Day and if received after 12:00 noon,

 

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New York time, on a Business Day shall mean no later than 10:00 a.m. New York
time on the immediately succeeding Business Day), to pay to the Administrative
Agent, for the account of the Swing Line Lenders, such Revolving Credit Lender’s
Applicable Revolving Credit Percentage of such Swing Line Loans (the “Refunded
Swing Line Loans”).

provided, however, that the Swing Line Loans carried at the Quoted Rate which
are refunded with Revolving Credit Loans at the request of the Swing Line Lender
at a time when no Default or Event of Default has occurred and is continuing
shall not be subject to Section 5.02 and no losses, costs or expenses may be
assessed by the Swing Line Lender against the Borrower or the Revolving Credit
Lenders as a consequence of such refunding. The applicable Revolving Credit
Loans used to refund any Swing Line Loans shall be ABR Loans. In connection with
the making of any such Refunded Swing Line Loans or the purchase of a
participation interest in Swing Line Loans under Section 2.08(e)(ii) hereof, the
Swing Line Lender shall retain its claim against the Borrower for any unpaid
interest or fees in respect thereof accrued to the date of such refunding.
Unless any of the events described in Section 10.01(h) or (i) hereof shall have
occurred (in which event the procedures of Section 2.08(e)(ii) shall apply) and
regardless of whether the conditions precedent set forth in this Agreement to
the making of a Revolving Credit Loan are then satisfied (but subject to Section
2.08(e)(iii)), each Revolving Credit Lender shall make the proceeds of its
Revolving Credit Loan available to the Administrative Agent for the benefit of
the Swing Line Lender at the office of the Administrative Agent specified in
Section 2.04(a) hereof prior to 11:00 a.m. (New York time) on the Business Day
next succeeding the date such notice is given, in immediately available funds.
The proceeds of such Revolving Credit Loans shall be immediately applied to
repay the Refunded Swing Line Loans, subject to Section 5.02 hereof.

(ii) If, prior to the making of a Revolving Credit Loan pursuant to Section
2.08(e)(i) hereof, one of the events described in Section 10.01(h) or (i) hereof
shall have occurred, each Revolving Credit Lender will, on the date such
Revolving Credit Loan was to have been made, purchase from the Swing Line Lender
an undivided participating interest in each Swing Line Loan that was to have
been refunded in an amount equal to its Applicable Revolving Credit Percentage
of such Swing Line Loan. Each Revolving Credit Lender within the time periods
specified in Section 2.08(e)(i) hereof, as applicable, shall immediately
transfer to Administrative Agent, for the benefit of the Swing Line Lender, in
immediately available funds, an amount equal to its Applicable Revolving Credit
Percentage of the aggregate principal amount of all Swing Line Loans outstanding
as of such date. Upon receipt thereof, the Administrative Agent will deliver to
such Revolving Credit Lender a Swing Line Participation Certificate evidencing
such participation.

(iii) Each Revolving Credit Lender’s obligation to make Revolving Credit Loans
to refund Swing Line Loans, and to purchase participation interests, in
accordance with Section 2.08(e)(i) and (ii), respectively, shall be absolute and
unconditional and shall not be affected by any circumstance, including, without
limitation, (A) any set-off, counterclaim, recoupment, defense or other right
which such Revolving Credit Lender may have against the Swing Line Lender, the
Borrower or any other Person for any reason whatsoever; (B) the occurrence or
continuance of any Default or Event of Default; (C) any adverse change in the
condition (financial or otherwise) of the Borrower or any other Person; (D) any
breach of this Agreement or any other Loan Document by the Borrower or any other
Person; (E) any inability of the Borrower to satisfy the conditions precedent to
borrowing set forth in this Agreement on the date upon which such Revolving
Credit Loan is to be made or such participating interest is to be purchased;
(F) the reduction or termination of the Commitments hereunder; or (G) any other
circumstance, happening or event whatsoever, whether or not similar to any of
the foregoing. If any Revolving Credit Lender does not make available to the
Administrative Agent the amount required pursuant to Section 2.08(e)(i) or
(ii) hereof, as the case may be, the Administrative Agent on behalf of the Swing
Line Lender, shall be entitled to recover such amount on demand from such
Revolving Credit

 

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Lender, together with interest thereon for each day from the date of non-payment
until such amount is paid in full (x) for the first two (2) Business Days such
amount remains unpaid, at the NYFRB Rate and (y) thereafter, at the rate of
interest then applicable to such Swing Line Loans. The obligation of any
Revolving Credit Lender to make available its pro rata portion of the amounts
required pursuant to Section 2.08(e)(i) or (ii) hereof shall not be affected by
the failure of any other Revolving Credit Lender to make such amounts available,
and no Revolving Credit Lender shall have any liability to any of the Borrower
or any of its Subsidiaries, the Administrative Agent, the Swing Line Lender, or
any other Revolving Credit Lender or any other party for another Revolving
Credit Lender’s failure to make available the amounts required under Section
2.08(e)(i) or (ii) hereof.

ARTICLE III

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

Section 3.01 Repayment of Revolving Credit Loans and Swing Line Loans. The
Borrower hereby unconditionally promises to pay to the Administrative Agent for
the account of each Revolving Credit Lender the then unpaid principal amount of
each Revolving Credit Loan on the Termination Date and for the account of the
Swing Line Lender the then unpaid principal amount of each Swing Line Loan on
the dates provided for in Section 2.08(b)(iii).

Section 3.02 Interest on Revolving Credit Loans and Swing Line Loans.

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

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

(c) Swing Line Loans. (i) Each ABR Swing Line Loan shall bear interest at the
Alternate Base Rate plus the Applicable Margin, but in no event to exceed the
Highest Lawful Rate, and (ii) each Quoted Rate Loan shall bear interest at its
Quoted Rate, but in no event to exceed the Highest Lawful Rate.

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

 

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(e) Interest Payment Dates; Interest Payments for Swing Line Loans. Accrued
interest on each Revolving Credit Loan shall be payable in arrears on each
Interest Payment Date for such Revolving Credit Loan and on the Termination
Date; provided that interest accrued pursuant to Section 3.02(d) shall be
payable on demand, in the event of any repayment or prepayment of any Revolving
Credit Loan (other than an optional prepayment of an ABR Revolving Credit Loan
prior to the Termination Date), accrued interest on the principal amount repaid
or prepaid shall be payable on the date of such repayment or prepayment, and in
the event of any conversion of any Eurodollar Revolving Credit Loan prior to the
end of the current Interest Period therefor, accrued interest on such Revolving
Credit Loan shall be payable on the effective date of such conversion. Accrued
interest on each ABR Swing Line Loan shall be payable in arrears on the first
day of each month and on the Termination Date. Accrued interest on each Quoted
Rate Loan shall be payable on the last day of the Interest Period applicable
thereto. Notwithstanding the foregoing, all accrued and unpaid interest on any
Swing Line Loan refunded pursuant to Section 2.08(e) hereof shall be due and
payable in full on the date such Swing Line Loan is refunded or converted.

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

Section 3.03 Prepayments of Revolving Credit Loans and Swing Line Loans.

(a) Optional Prepayments. The Borrower shall have the right at any time and from
time to time to prepay any Revolving Credit Borrowing or Swing Line Loan in
whole or in part, subject to prior notice in accordance with Section 3.03(b).

(b) Notice and Terms of Optional Prepayment. The Borrower shall notify the
Administrative Agent by telephone (confirmed by facsimile) of any prepayment
hereunder in the case of prepayment of a Eurodollar Revolving Credit Borrowing,
not later than 11:00 a.m., New York time, three Business Days before the date of
prepayment, in the case of prepayment of an ABR Revolving Credit Borrowing, not
later than 11:00 a.m., New York time, one Business Day before the date of
prepayment and, in the case of prepayment of an ABR Swing Line Loan or Quoted
Rate Loan, not later than 12:00 noon, New York time, on the date of prepayment.
Each such notice shall be irrevocable and shall specify the prepayment date and
the principal amount of each Revolving Credit Borrowing or Swing Line Loan or
portion thereof to be prepaid; provided that, if a notice of prepayment is given
in connection with a conditional notice of termination of the Commitments as
contemplated by Section 2.05(b), then such notice of prepayment may be revoked
if such notice of termination is revoked in accordance with Section 2.05(b).
Promptly following receipt of any such notice relating to a Revolving Credit
Borrowing or Swing Line Loan, the Administrative Agent shall advise the
Revolving Credit Lenders of the contents thereof. Each partial prepayment of any
Revolving Credit Borrowing or Swing Line Loan shall be in an amount that would
be permitted in the case of an advance of a Revolving Credit Borrowing or Swing
Line Loan of the same Type as provided in Section 2.02. Each prepayment of a
Revolving Credit Borrowing shall be applied ratably to the Revolving Credit
Loans included in the prepaid Revolving Credit Borrowing. Prepayments shall be
accompanied by accrued interest to the extent required by Section 3.02.

 

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(c) Mandatory Prepayments.

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

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

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

(I) Prepayment Elections. If the Borrower elects to prepay an amount in
accordance with Section 3.03(c)(ii)(A)(I) above, then the Borrower may make such
prepayment in six (6) equal consecutive monthly installments beginning within
thirty (30) days after Borrower’s receipt of the Borrowing Base Deficiency
Notice and continuing on the same day of each month thereafter; provided that
all payments required to be made pursuant to this Section 3.03(c)(ii)(B)(I) must
be made on or prior to the Termination Date.

(II) Elections to Mortgage Additional Oil and Gas Properties. If the Borrower
elects to mortgage additional Oil and Gas Properties in accordance with Section
3.03(c)(ii)(A)(II) above, then (1) such properties shall be reasonably
acceptable to the Majority Revolving Credit Lenders having present values which,
in the reasonable opinion of the Majority Revolving Credit Lenders, based upon
the Majority Revolving Credit Lenders’ good-faith evaluation of the engineering
data provided them, taken in the aggregate are sufficient to increase the
Borrowing Base

 

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to an amount at least equal to the total Revolving Credit Exposures, and (2) the
Borrower or such Subsidiary shall execute, acknowledge and deliver to the
Administrative Agent one or more Security Instruments within thirty (30) days
after the Borrower’s receipt of the Borrowing Base Deficiency Notice (or such
longer time as determined by the Administrative Agent); provided, however (x) if
none of the additional Oil and Gas Properties offered by the Borrower are
reasonably acceptable to the Majority Revolving Credit Lenders, the Borrower
shall be deemed to have elected the prepayment option specified in Section
3.03(c)(ii)(A)(I) (and Borrower shall make such prepayment in accordance with
Section 3.03(c)(ii)(B)(I)); and (y) if the aggregate present values of
additional Oil and Gas Properties which are reasonably acceptable to the
Majority Revolving Credit Lenders are insufficient to eliminate the Borrowing
Base deficiency, then the Borrower shall be deemed to have selected the option
specified in Section 3.03(c)(ii)(A)(III) (and the Borrower shall make prepayment
and deliver or cause to be delivered one or more Security Instruments as
provided in Section 3.03(c)(ii)(B)(III)). Together with such Security
Instruments, the Borrower shall deliver to the Administrative Agent title
opinions and/or other title information and data acceptable to the
Administrative Agent such that the Administrative Agent shall have received,
together with the title information previously delivered to the Administrative
Agent, satisfactory title information on at least 80% of the total value of the
proved Oil and Gas Properties evaluated by the most recent Reserve Report and
which are required to be Mortgaged Properties hereunder.

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

(iii) Upon any adjustment to the Borrowing Base pursuant to Section 9.11 or
pursuant to Section 2.06(e), if the total Revolving Credit Exposures exceeds the
Borrowing Base as adjusted, then the Borrower shall prepay the Revolving Credit
Borrowings and Swing Line Loans in an aggregate principal amount equal to such
excess, and if any excess remains after prepaying all of the Revolving Credit
Borrowings and Swing Line Loans as a result of Letter of Credit Obligations,
Cash Collateralize such excess in an amount equal to the greater of (x) the
amount of such Letter of Credit Obligations and (y) the maximum amount that may
be available to be drawn at any time prior to the stated expiry of all
outstanding Letters of Credit. The Borrower shall be obligated to make such
prepayment and/or Cash Collateralize such excess on the second (2nd) Business
Day after it receives the applicable New Borrowing Base Notice in accordance
with Section 2.06(d); provided that all payments required to be made pursuant to
this Section 3.03(c)(iii) must be made on or prior to the Termination Date.

(iv) To the extent that any prepayment is due under Section 3.03(c)(ii), upon
receipt by the Borrower or any of its Subsidiaries of any Insurance Proceeds or
Condemnation Proceeds, the Borrower shall be obligated to prepay the Revolving
Credit Borrowings and Swing Line Loans by an amount equal to the lesser of
(A) the outstanding prepayment due under Section 3.03(c)(ii) and (B) one hundred
percent (100%) of such Insurance Proceeds or Condemnation Proceeds, as the case
may be and, with respect to a prepayment under clause (B) above, if any excess
remains after paying all of the Revolving Credit Borrowings and Swing Line
Loans, Cash Collateralize such excess in an amount equal

 

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to the greater of (x) the amount of Letter of Credit Obligations outstanding and
(y) the maximum amount that may be available to be drawn at any time prior to
the stated expiry of all outstanding Letters of Credit; provided, however, that
no prepayment shall be required under this Section 3.03(c)(iv) if Borrower or
any of its Subsidiaries applies, or notifies the Administrative Agent within
30 days of receipt of such proceeds of its intent to apply within 365 days and
so applies, any such Insurance Proceeds or Condemnation Proceeds toward the
purchase of assets useful in the business of the Credit Parties.

(v) Each prepayment of Revolving Credit Borrowings and Swing Line Loans pursuant
to this Section 3.03(c) shall be applied, first, ratably to any ABR Revolving
Credit Borrowings then outstanding, second, to any ABR Swing Line Loans then
outstanding, third, to any Eurodollar Revolving Credit Borrowings then
outstanding, and if more than one Eurodollar Revolving Credit Borrowing is then
outstanding, to each such Eurodollar Revolving Credit Borrowing in order of
priority beginning with the Eurodollar Revolving Credit Borrowing with the least
number of days remaining in the Interest Period applicable thereto and ending
with the Eurodollar Revolving Credit Borrowing with the most number of days
remaining in the Interest Period applicable thereto, and, fourth, to Quoted Rate
Loans; provided, however, if any excess remains after the prepayment of all
Revolving Credit Borrowings and Swing Line Loans and after the Borrower Cash
Collateralizes all Letter of Credit Obligations or outstanding Letters of
Credit, such excess shall be prepaid by the Borrower.

(vi) Each prepayment of Revolving Credit Borrowings and Swing Line Loans
pursuant to this Section 3.03(c) shall be accompanied by accrued interest on the
amount prepaid to the extent required by Section 3.02 or 4.06, as applicable.

(vii) To the extent that any prepayment is due under Section 3.03(c)(ii) or
(iii), upon receipt by the Borrower or any of its Subsidiaries of Net Cash
Proceeds from the issuance of Debt, except as permitted under Section 9.02(a)
through (h), the Borrower shall prepay the Revolving Credit Borrowings and Swing
Line Loans in an amount equal to the lesser of (A) the outstanding prepayment
due under Section 3.03(c)(ii) and (B) the amount necessary to prepay the
Revolving Credit Borrowings and Swing Line Loans pursuant to Section 3.03(c)(v)
and, with respect to a prepayment under clause (B) above, if any excess remains
after paying all of the Revolving Credit Borrowings and Swing Line Loans, the
Borrower shall Cash Collateralize such excess in an amount equal to the greater
of (x) the amount of Letter of Credit Obligations outstanding and (y) the
maximum amount that may be available to be drawn at any time prior to the stated
expiry of all outstanding Letters of Credit.

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

Section 3.04 Fees.

(a) Commitment Fees. Except as otherwise provided in Section 5.03(b)(iii), the
Borrower agrees to pay to the Administrative Agent for the account of each
Revolving Credit Lender a commitment fee, which shall accrue at the applicable
Commitment Fee Rate on the actual daily amount of the undrawn Commitment of such
Revolving Credit Lender during the period from and including the date of this
Agreement to but excluding the Termination Date (such fee, the “Commitment
Fee”); provided, that for purposes of calculating the Commitment Fee owing to
any Revolving Credit Lender, the undrawn Commitment of such Revolving Credit
Lender shall not be reduced by the amount of such Lender’s Applicable Revolving
Credit Percentage of any Swing Line Loan that is not a Refunded Swing Line Loan.
Accrued Commitment Fees shall be payable in arrears on the first day of each
February, May, August and November of each year (with respect to the preceding
three months or portion thereof) and on

 

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the Termination Date (and, if applicable, thereafter on demand), commencing on
the first such date to occur after the date hereof. If there is any change in
the Commitment of any Revolving Credit Lender during any such three-month
period, the actual daily amount of the Commitment shall be computed and
multiplied by the Commitment Fee Rate separately for each period during such
three-month period such Commitment was in effect. All Commitment Fees shall be
computed on the basis of a year of 360 days, unless such computation would
exceed the Highest Lawful Rate, in which case interest shall be computed on the
basis of a year of 365 days (or 366 days in a leap year), and shall be payable
for the actual number of days elapsed (including the first day but excluding the
last day).

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

(c) Arranger Fees. The Borrower agrees to pay to the Arrangers, for their own
account, fees payable in the amounts and at the times set forth in the Fee
Letter or as otherwise agreed between the Borrower and the Arrangers.

ARTICLE IV

PAYMENTS; PRO RATA TREATMENT; SHARING OF SET-OFFS

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

(a) Payment Procedure.

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

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

 

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

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

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

Section 4.02 Deductions by the Administrative Agent; Defaulting Lender.

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

 

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

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

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

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

 

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against a Defaulting Lender under this section shall be in addition to any other
rights and remedies such parties may have against the Defaulting Lender under
this Agreement or any of the other Loan Documents, applicable law or otherwise,
and the Borrower waive no rights or remedies against any Defaulting Lender.

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

ARTICLE V

INCREASED COSTS; REIMBURSEMENT OF PREPAYMENT COSTS;

TAXES; LIBO RATE AVAILABILITY

Section 5.01 Increased Costs.

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

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

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

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

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

 

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(b) Capital Adequacy and Other Increased Costs.

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

(ii) Notwithstanding the foregoing, however, the Borrower shall not be required
to pay any increased costs under Sections 5.01(a), 5.01(b) or 2.07(d) for any
period ending prior to the date that is 180 days prior to the making of a
Lender’s initial request for such additional amounts unless the applicable
Change in Law or other event resulting in such increased costs is effective
retroactively to a date more than 180 days prior to the date of such request, in
which case a Lender’s request for such additional amounts relating to the period
more than 180 days prior to the making of the request must be given not more
than 180 days after such Lender becomes aware of the applicable Change in Law or
other event resulting in such increased costs.

 

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

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

Section 5.03 Taxes.

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

 

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

(c) Indemnification by the Borrower and Lenders.

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

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

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

(e) Status of Lenders.

(i) Any Lender that is entitled to an exemption from or reduction of withholding
tax with respect to payments made under any Loan Document shall deliver to the
Withholding Agent, at the time or times reasonably requested by the Withholding
Agent, such properly completed and executed documentation reasonably requested
by the Withholding Agent as will permit such payments to be made without
withholding or at a reduced rate of withholding. In addition, any Lender shall
deliver such other documentation prescribed by applicable law or reasonably
requested by the Withholding Agent as will enable the Withholding Agent to
determine whether or not such Lender is subject to backup withholding or
information reporting requirements. Notwithstanding anything to the contrary in
the preceding two sentences, the completion, execution and submission of such
documentation (other than such documentation set forth in Section 5.03(e)(ii)(A)
and (ii)(B) and Section 5.03(g) below) shall not be required if in the Lender’s
reasonable judgment such completion, execution or submission would subject such
Lender to any material unreimbursed cost or expense or would materially
prejudice the legal or commercial position of such Lender.

 

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(ii) Without limiting the generality of the foregoing, in the event that the
Borrower is a “United States person” as defined in Section 7701(a)(30) of the
Code,

(A) any Lender that is a “United States person” as defined in Section
7701(a)(30) of the Code shall deliver to the Withholding Agent on or prior to
the date on which such Lender becomes a Lender under this Agreement (and from
time to time thereafter upon the reasonable request of the Withholding Agent),
executed originals of IRS Form W-9 certifying that such Lender is exempt from
U.S. federal backup withholding tax;

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

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

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

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

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

(C) any Foreign Lender shall, to the extent it is legally entitled to do so,
deliver to the Withholding Agent (in such number of copies as shall be requested
by the

 

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recipient) on or prior to the date on which such Foreign Lender becomes a Lender
under this Agreement (and from time to time thereafter upon the reasonable
request of the Withholding Agent), executed originals of any other form
prescribed by applicable law as a basis for claiming exemption from or a
reduction in U.S. federal withholding tax, duly completed, together with such
supplementary documentation as may be prescribed by applicable law to permit the
Withholding Agent to determine the withholding or deduction required to be made.

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

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

(g) FATCA. (i) If a payment made to a Lender under this Agreement would be
subject to United States federal withholding tax imposed by FATCA if such Lender
fails to comply with the applicable reporting requirements of FATCA (including
those contained in Section 1471(b) or 1472(b) of the Code, as applicable), such
Lender shall deliver to the Withholding Agent, at the time or times prescribed
by law and at such time or times reasonably requested by the Withholding Agent,
such documentation prescribed by applicable law (including as prescribed by
Section 1471(b)(3)(C)(i) of the Code) and such additional documentation
reasonably requested by the Withholding Agent as may be necessary for the
Withholding Agent to comply with its obligations under FATCA, to determine that
such Lender has complied with such Lender’s obligations under FATCA or to
determine the amount to deduct and withhold from such payment. For purposes of
Section 5.03(f) and this Section 5.03(g), “FATCA” shall include any amendments
made to FATCA after the date of this Agreement.

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

(h) Treatment of Certain Refunds. If the Administrative Agent, a Lender or the
Issuing Bank determines, that it has received a refund of any Indemnified Taxes
or Other Taxes as to which it has been indemnified by the Borrower or with
respect to which the Borrower has paid additional amounts pursuant to this
Section 5.03, it shall pay to the Borrower an amount equal to such refund (but
only to the extent of indemnity payments made, or additional amounts paid, by
the Borrower under this Section 5.03 with respect to the Indemnified 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 Bank, as the case may be,
and without interest (other than any interest paid by the relevant Governmental
Authority with respect to such refund).

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

 

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

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

Section 5.06 Circumstances Affecting LIBO Rate Availability. If the
Administrative Agent or the Majority Revolving Credit Lenders (after
consultation with the Administrative Agent) shall determine in good faith that,
by reason of circumstances affecting the foreign exchange and interbank markets
generally, deposits in Eurodollars in the applicable amounts are not being
offered to the Administrative Agent or such Lenders at the applicable LIBO Rate,
then the Administrative Agent shall forthwith give notice thereof to the
Borrower. Thereafter, until Administrative Agent notifies Borrower that such
circumstances no longer exist, (i) the obligation of the Lenders to make Loans
which bear interest at or by reference to the LIBO Rate, and the right of the

 

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Borrower to convert a Borrowing to or refund an Borrowing as a Borrowing which
bear interest at or by reference to the LIBO Rate shall be suspended,
(ii) effective upon the last day of each Interest Period related to any existing
Eurodollar Borrowing, each such Eurodollar Borrowing shall automatically be
converted into a Borrowing which bears interest at or by reference to the
Alternate Base Rate (without regard to the satisfaction of any conditions to
conversion contained elsewhere herein), and (iii) effective immediately
following such notice, each Borrowing which bears interest at or by reference to
the Daily Adjusting LIBO Rate shall automatically be converted into Borrowing
which bears interest at or by reference to the Alternate Base Rate without
regard to the reference in the definition thereof to the Daily Adjusting LIBO
Rate (and without regard to the satisfaction of any conditions to conversion
contained elsewhere herein).

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

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

Section 5.09 Right of Lenders to Fund through Branches and Affiliates. Each
Lender (including without limitation the Swing Line Lender) may, if it so
elects, fulfill its commitment as to any Borrowing hereunder by designating a
branch or Affiliate of such Lender to make such Borrowing; provided that
(a) such Lender shall remain solely responsible for the performances of its
obligations hereunder and (b) no such designation shall result in any increased
costs to Borrower.

 

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ARTICLE VI

CONDITIONS PRECEDENT

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

(a) The Administrative Agent, the Arrangers and the Lenders shall have received
all commitment and agency fees and all other fees and amounts due and payable on
or prior to the Effective Date, including, to the extent invoiced, reimbursement
or payment of all out-of-pocket expenses required to be reimbursed or paid by
the Borrower hereunder (including, to the extent invoiced prior to the Effective
Date, the fees and expenses of Simpson Thacher & Bartlett LLP, counsel to the
Administrative Agent).

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

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

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

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

(f) The Administrative Agent shall have received duly executed Revolving Credit
Notes payable to each Revolving Credit Lender requesting a Revolving Credit Note
in a principal amount equal to its Maximum Credit Amount dated as of the date
hereof.

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

(h) The Administrative Agent shall have received an opinion of Vinson & Elkins
LLP, special counsel to the Credit Parties in form and substance reasonably
satisfactory to the Administrative Agent.

 

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

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

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

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

(m) The Administrative Agent shall have received appropriate UCC and other lien
search certificates reflecting no prior Liens encumbering the Properties of the
Credit Parties for the State of Delaware and any other jurisdiction requested by
the Administrative Agent; other than those being assigned or released on or
prior to the Effective Date or Permitted Liens.

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

(o) The Administrative Agent shall have received and be reasonably satisfied
with the SHEP II Reserve Report.

(p) The Administrative Agent shall have received evidence satisfactory to it
that all Liens on the Oil and Gas Properties of the Credit Parties associated
with the Existing Credit Agreement have been assigned to the Administrative
Agent pursuant to one or more of the Security Instruments and all other Liens on
the Oil and Gas Properties of the Credit Parties (other than Permitted Liens)
have been released or terminated, subject only to the filing of applicable
terminations and releases.

(q) The Administrative Agent shall have reviewed and be satisfied with the
Credit Parties’ capital structure, financing plan and hedging strategy and shall
have performed and be satisfied with such other due diligence regarding the
Credit Parties and their Properties as the Administrative Agent may require.

(r) The Administrative Agent and the Lenders shall have received, and be
reasonably satisfied in form and substance with, all documentation and other
information required by bank regulatory authorities under applicable
“know-your-customer” and anti-money laundering rules and regulations, including
but not restricted to the USA PATRIOT Act.

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

(t) The Administrative Agent shall have received a certificate of a Responsible
Officer of the Borrower and each Guarantor dated the Effective Date (or, if
different, the date of the initial Loan hereunder), stating that to the best of
his or her respective knowledge, (i) the conditions set forth in this Article VI
have been satisfied to the extent required to be satisfied by the Borrower or
the other

 

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Credit Parties and assuming that the Administrative Agent and the Lenders are
satisfied with any items that are subject to their satisfaction; (ii) the
representations and warranties made by the Credit Parties in this Agreement or
any of the other Loan Documents, as applicable, are true and correct in all
material respects; (iii) no Default or Event of Default shall have occurred and
be continuing; (iv) since December 31, 2015, nothing has occurred which has had,
or would reasonably be expected to have, a Material Adverse Effect; (v) there
shall have been no material adverse change to the financial statements referred
to in Section 7.04(a); and (vi) as of the Effective Date, after giving effect to
the extensions of credit on the Effective Date, the representations contained in
Section 7.22 with respect to the Credit Parties are true and correct.

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

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

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

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

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

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

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

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

 

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Section 6.03 Additional Conditions to Credit Events. In addition to the
conditions precedent set forth in Section 6.02, so long as any Lender is a
Defaulting Lender, the Issuing Bank shall not be required to issue, amend or
increase any Letter of Credit, unless it is satisfied that the Letter of Credit
Obligations will be 100% covered by the Commitments of the Non-Defaulting
Lenders and/or the Borrower will Cash Collateralize the Letter of Credit
Obligations in accordance with Sections 2.07(b)(vii) and 2.07(f)(ix).

Section 6.04 Conditions to Borrowing Base Increase. The increase in the
Borrowing Base provided for in Section 2.06(f) is subject solely to the
satisfaction of the following conditions:

(a) The Administrative Agent shall have received a certificate of a Responsible
Officer of the Borrower certifying: (i) that the Borrower and/or one or more of
the other Credit Parties is concurrently consummating the Acquisition in
accordance with the terms of the Acquisition Documents in all material respects
and acquiring not less than 95% of the PV-9 value of the SHEP II Oil and Gas
Assets; (ii) as to the final purchase price for the Acquisition Properties after
giving effect to all adjustments as of the closing date contemplated by the
Acquisition Documents; and (iii) as to executed copies of all material documents
executed in connection with the consummation of the Acquisition and such other
related documents and information as the Administrative Agent shall have
reasonably requested.

(b) The Administrative Agent shall have received evidence satisfactory to it
that all Liens on the Acquisition Properties (other than Permitted Liens)
associated with any credit facilities and funded debt of Silver Hill E&P II, LLC
have been released or terminated, subject only to the filing of applicable
terminations and releases.

ARTICLE VII

REPRESENTATIONS AND WARRANTIES

Each of the Parent and the Borrower represents and warrants to the Lenders that:

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

Section 7.02 Authority; Enforceability. The Transactions are within each Credit
Party’s corporate, limited liability company, or partnership powers and have
been duly authorized by all necessary corporate, limited liability company or
partnership action and, if required, action by any holders of its Equity
Interests (including, without limitation, any action required to be taken by any
class of directors, managers or supervisors, whether interested or
disinterested, as applicable, of the Credit Parties or any other Person, in
order to ensure the due authorization of the Transactions). Each Loan Document
and Acquisition Document to which a

 

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Credit Party is a party has been duly executed and delivered by such Credit
Party and constitutes a legal, valid and binding obligation of such Credit
Party, enforceable in accordance with its terms, subject to applicable
bankruptcy, insolvency, reorganization, moratorium or other laws affecting
creditors’ rights generally and subject to general principles of equity,
regardless of whether considered in a proceeding in equity or at law.

Section 7.03 Approvals; No Conflicts. The Transactions do not require any
consent or approval of, registration or filing with, or any other action by, any
Governmental Authority or any other third Person (including holders of its
Equity Interests or any class of directors, managers or supervisors, as
applicable, whether interested or disinterested, of the Credit Parties or any
other Person), nor is any such consent, approval, registration, filing or other
action necessary for the validity or enforceability of any Loan Document or the
consummation of the Transactions, except such as have been obtained or made and
are in full force and effect other than the recording and filing of the Security
Instruments as required by this Agreement and those third party approvals or
consents which, if not made or obtained, would not cause a Default hereunder or
could not reasonably be expected to have a Material Adverse Effect.

Section 7.04 Financial Condition; No Material Adverse Change.

(a) The Credit Parties has heretofore furnished to the Lenders a pro forma
unaudited balance sheet of the Parent and the other Credit Parties as of
Effective Date, after giving effect to the effectiveness of this Agreement and
the initial funding hereunder, certified to by its principal Financial Officer.
The financial statements described above present fairly, in all material
respects, the financial position and results of operations and cash flows of the
Credit Parties as of such dates and for such periods in accordance with GAAP,
subject to year-end audit adjustments and the absence of footnotes in the case
of the unaudited pro forma balance sheet. The financial statements described
above have been prepared in good faith based upon reasonable assumptions.

(b) Since December 31, 2015, there has been no event, development or
circumstance that has had a Material Adverse Effect.

(c) Except as listed on Schedule 7.04(c), no Credit Party has on the date hereof
after giving effect to the Transactions, any Debt (including Disqualified
Capital Stock) or any material off-balance sheet liabilities or partnership
liabilities, material liabilities for past due taxes, or any unusual forward or
long-term commitments or unrealized or anticipated losses from any unfavorable
commitments, except as referred to or reflected or provided for in the Financial
Statements, and the other written information provided by the Parent or the
Borrower to Administrative Agent and the Lenders prior to the date hereof.

Section 7.05 Litigation. Except as set forth on Schedule 7.05, there are no
actions, suits, investigations or proceedings by or before any arbitrator or
Governmental Authority pending against or, to the knowledge of the Parent or the
Borrower, threatened against or affecting any Credit Party or involving the
Acquisition not fully covered by insurance (except for normal deductibles) as to
which there is a reasonable probability of an adverse determination that, if
adversely determined, could reasonably be expected, individually or in the
aggregate, to result in a Material Adverse Effect, that involve any Loan
Document, any Acquisition Document or the Transactions or that could impair the
consummation of the Acquisition on the time and in the manner contemplated by
the Acquisition Documents.

 

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

(a) the Credit Parties, their respective Subsidiaries and each of their
respective Properties and operations thereon are, and within all applicable
statute of limitation periods have been, in compliance with all applicable
Environmental Laws;

(b) the Credit Parties and their respective Subsidiaries have obtained all
Environmental Permits required for their respective operations and each of their
Properties, with all such Environmental Permits being currently in full force
and effect, and none of the Credit Parties or their respective Subsidiaries has
received any written notice or otherwise has knowledge that any such existing
Environmental Permit will be revoked or that any application for any new
Environmental Permit or renewal of any existing Environmental Permit will be
denied;

(c) there are no claims, demands, suits, orders, inquiries, or proceedings
concerning any violation of, or any liability (including as a potentially
responsible party) under, any applicable Environmental Laws that is pending or,
to Parent’s or Borrower’s knowledge, threatened against any Credit Party, their
respective Subsidiaries or any of their respective Properties or as a result of
any operations at such Properties;

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

(e) there has been no Release or, to the Parent or the Borrower’s knowledge,
threatened Release, of Hazardous Materials at, on, under or from any of the
Credit Parties’ or their respective Subsidiaries’ Properties, there are no
investigations, remediations, abatements, removals, or monitorings of Hazardous
Materials required under applicable Environmental Laws at such Properties and,
to the knowledge of the Parent and the Borrower, none of such Properties are
adversely affected by any Release or threatened Release of a Hazardous Material
originating or emanating from any other real property;

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

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

 

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(h) the Parent and the Borrower have made available to the Administrative Agent
complete and correct copies of all environmental site assessment reports, and
studies on environmental matters (including matters relating to any alleged
non-compliance with or liability under Environmental Laws) that are in the
Parent’s or the Borrower’s possession or control and relating to any of the
Credit Parties’ or any of their respective Subsidiaries’ Properties or
operations thereon.

Section 7.07 Compliance with the Laws and Agreements; No Defaults.

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

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

(c) No Default has occurred and is continuing.

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

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

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

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

 

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

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

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

(e) No Credit Party and no ERISA Affiliate sponsors, maintains, or contributes
to an employee welfare benefit plan, as defined in section 3(1) of ERISA,
including, without limitation, any such plan maintained to provide benefits to
former employees of such entities, with respect to which its sponsorship of,
maintenance of or contribution to may not be terminated by the applicable Credit
Party or any ERISA Affiliate in its sole discretion at any time without any
liability other than for benefits due as of, or claims incurred prior to, the
effective date of such termination.

Section 7.11 Disclosure; No Material Misstatements. The certificates, written
statements and reports, and other written information, taken as a whole,
furnished by or on behalf of the Credit Parties to the Administrative Agent and
the Lenders in connection with the negotiation of any Loan Document or included
therein or delivered pursuant thereto, do not contain any material misstatement
of fact or omit to state any material fact necessary to make the statements
therein, in the light of the circumstances under which they were or are made,
not misleading as of the date such information is dated or certified; provided
that (a) to the extent any such certificate, statement, report, or information
was based upon or constitutes a forecast or projection, each Credit Party
represents only that it acted in good faith and utilized reasonable assumptions
and due care in the preparation of such certificate, statement, report, or
information (it being recognized by the Lenders, however, that projections as to
future events are not to be viewed as facts and that results during the
period(s) covered by such projections may differ from the projected results and
that such differences may be material and that the Credit Parties make no
representation that such projections will be realized) and (b) as to statements,
information and reports supplied by third parties after the Effective Date, each
of the Parent and the Borrower represents only that it is not aware of any
material misstatement or omission therein. There are no statements or
conclusions in any Reserve Report which are based upon or include material
misleading information or fail to take into account material information
regarding the matters reported therein, it being understood that projections
concerning volumes attributable to the Oil and Gas Properties of the Credit
Parties and production and cost estimates contained in each Reserve Report are
necessarily based upon professional opinions, estimates and projections and that
the Credit Parties do not warrant that such opinions, estimates and projections
will ultimately prove to have been accurate.

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

 

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Section 7.13 Restriction on Liens. No Credit Party is a party to any material
agreement or arrangement, or subject to any order, judgment, writ or decree,
which either restricts or purports to restrict its ability to grant Liens to the
Administrative Agent and the Lenders on or in respect of their Properties to
secure the Debt and the Loan Documents, or restricts any Credit Party from
paying dividends or making any other distributions in respect of its Equity
Interests to any other Credit Party, or restricts any Credit Party from making
loans or advances to any other Credit Party, or which requires the consent of
other Persons in connection therewith, except, in each case, for such
encumbrances or restrictions permitted under Section 9.14.

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

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

Section 7.16 Properties; Titles, Etc.

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

(b) All leases and agreements necessary for the conduct of the business of the
Credit Parties are valid and subsisting, in full force and effect, and there
exists no default or event or circumstance which with the giving of notice or
the passage of time or both would give rise to a default under any such lease or
leases, which could reasonably be expected to have a Material Adverse Effect.

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

 

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

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

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

Section 7.18 Gas Imbalances, Prepayments. On a net basis there are no gas
imbalances, take or pay or other prepayments which would require the Credit
Parties to deliver Hydrocarbons produced from their Oil and Gas Properties at
some future time without then or thereafter receiving full payment therefor
exceeding five percent (5%) of the annual production of gas of the Credit
Parties for the most recent calendar year (on an mcf basis) in the aggregate.

Section 7.19 Marketing of Production. Except for contracts listed and in effect
on the date hereof on Schedule 7.19, and thereafter either disclosed in writing
to the Administrative Agent or included in the most recently delivered Reserve
Report, no material agreements exist which are not cancelable on 90 days’ notice
or less without penalty or detriment for the sale of production from the Credit
Parties’ Hydrocarbons (including, without limitation, calls on or other rights
to purchase, production, whether or not the same are currently being exercised)
that pertain to the sale of production at a fixed price and have a maturity or
expiry date of longer than six (6) months from the date hereof.

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

 

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Section 7.21 Use of Loans and Letters of Credit. The proceeds of the Loans and
the Letters of Credit shall be used for working capital, for lease acquisitions,
for exploration and production operations, for development (including the
drilling and completion of producing wells), for the payment of fees and
expenses incurred in connection with this Agreement and for any other general
business purposes. The Credit Parties are not engaged principally, or as one of
its or their important activities, in the business of extending credit for the
purpose, whether immediate, incidental or ultimate, of buying or carrying margin
stock (within the meaning of Regulation T, U or X of the Board). No part of the
proceeds of any Loan or Letter of Credit will be used for any purpose which
violates the provisions of Regulations T, U or X of the Board.

Section 7.22 Solvency. After giving effect to the transactions contemplated
hereby, the aggregate assets (after giving effect to amounts that could
reasonably be expected to be received by reason of indemnity, offset, insurance
or any similar arrangement), at a fair valuation, of the Credit Parties, taken
as a whole, exceed the aggregate Debt of the Credit Parties on a consolidated
basis, the Credit Parties, taken as a whole, have not incurred and do not intend
to incur, and do not believe that they have incurred, Debt beyond their ability
to pay such Debt (after taking into account the timing and amounts of cash they
reasonably expect could be received and the amounts that they reasonably expect
could be payable on or in respect of their liabilities, and giving effect to
amounts that that could reasonably be expected to be received by reason of
indemnity, offset, insurance or any similar arrangement) as such Debt becomes
absolute and matures and the Credit Parties, taken as a whole, do not have (and
do not have reason to believe that it will have thereafter) unreasonably small
capital for the conduct of their business.

Section 7.23 Anti-Corruption Laws and Sanctions. Each Credit Party has
implemented and maintains in effect policies and procedures designed to ensure
compliance by such Credit Party, its Subsidiaries and their respective
directors, officers, employees and agents with Anti-Corruption Laws and
applicable Sanctions, and the Credit Parties and their respective officers and
directors and to the knowledge of each Credit Party its employees and agents,
are in compliance with Anti-Corruption Laws and applicable Sanctions in all
material respects. None of (a) the Credit Parties or any of their respective
directors, officers or employees, or (b) to the knowledge of the Credit Parties,
any agent of the Credit Parties or any of their respective Subsidiaries that
will act in any capacity in connection with or benefit from the credit facility
established hereby, is a Sanctioned Person. No Borrowing or Letter of Credit,
use of proceeds or other transaction contemplated by the Credit Agreement will
violate Anti-Corruption Laws or applicable Sanctions.

Section 7.24 EEA Financial Institutions. No Credit Party is an EEA Financial
Institution.

Section 7.25 Security Instruments. The Security Instruments are effective to
create in favor of the Administrative Agent, for the benefit of the Revolving
Credit Lenders, a legal, valid and enforceable security interest in the
Mortgaged Property and Collateral and proceeds thereof, as applicable. The
Secured Obligations are secured by legal, valid and enforceable first priority
perfected Liens in favor of the Administrative Agent, covering and encumbering
(a) the Mortgaged Property and (b) the Collateral granted pursuant to the
Guaranty Agreement, including the pledged Equity Interests and the Deposit
Accounts and Securities Accounts, in each case to the extent perfection has
occurred, as the case may be, by the recording of a mortgage, the filing of a
UCC financing statement, or, in the case of Deposit Accounts and Securities
Accounts, by obtaining of “control” or, with respect to Equity Interests
represented by certificates, by possession (in each case, to the extent
applicable in the applicable jurisdiction); provided that, except in the case of
pledged Equity Interests, Liens permitted by Section 9.03 may exist.

 

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ARTICLE VIII

AFFIRMATIVE COVENANTS

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

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

(a) Annual Financial Statements. As soon as available, but in any event in
accordance with then applicable law and not later than 120 days after the end of
each fiscal year of the Parent commencing with the fiscal year ended
December 31, 2016, its audited consolidated balance sheet and related statements
of operations, members’ equity and cash flows as of the end of and for such
year, setting forth in each case in comparative form the figures for the
previous fiscal year, all reported on by Hein & Associates or other independent
public accountants of recognized national standing (without a “going concern” or
like qualification or exception (other than a “going concern” or like
qualification or exception that is solely as a result of the Loans maturing
within the next 365 days) and without any qualification or exception as to the
scope of such audit) to the effect that such consolidated financial statements
present fairly in all material respects the financial condition and results of
operations of the Parent and the other Credit Parties on a consolidated basis in
accordance with GAAP consistently applied.

(b) Quarterly Financial Statements. As soon as available, but in any event in
accordance with then applicable law and not later than 60 days after the end of
each of the first three fiscal quarters of each fiscal year of the Parent
commencing with the fiscal quarter ended March 31, 2017, its consolidated
balance sheet and related statements of operations, members’ equity and cash
flows as of the end of and for such fiscal quarter and the then elapsed portion
of the fiscal year, setting forth in each case in comparative form the figures
for the corresponding period or periods of (or, in the case of the balance
sheet, as of the end of) the previous fiscal year, all certified by one of its
Financial Officers as presenting fairly in all material respects the financial
condition and results of operations of the Parent and the other Credit Parties
on a consolidated basis in accordance with GAAP consistently applied, subject to
normal year-end audit adjustments and the absence of footnotes.

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

 

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(d) Certificate of Financial Officer – Annual Budget. On or before February 1 of
each fiscal year of the Parent, a certificate of a Financial Officer of the
Parent, in form and substance satisfactory to the Administrative Agent,
detailing on a monthly basis for such fiscal year (i) the projected production
of Hydrocarbons by the Credit Parties and the assumptions used in calculating
such projections, (ii) a consolidated operating budget and capital expenditures
forecast for the Credit Parties, with a breakdown of those capital expenditures
to be used for the development of proved undeveloped reserves in the Oil and Gas
Properties of the Credit Parties and the assumptions used in calculating such
projections and (iii) such other information as may be reasonably requested by
the Administrative Agent.

(e) Certificate of Financial Officer — Swap Agreements. Concurrently with any
delivery of each Reserve Report under Section 8.12(a), a certificate of a
Financial Officer of the Borrower, in form and substance satisfactory to the
Administrative Agent, setting forth as of a recent date, a true and complete
list of all Swap Agreements of the Credit Parties, the material terms thereof
(including the type, term, effective date, termination date and notional amounts
or volumes), the net mark-to-market value therefor, any new credit support
agreements relating thereto not listed on Schedule 8.20, any margin required or
supplied under any credit support document, and the counterparty to each such
agreement.

(f) Certificate of Insurer — Insurance Coverage. Concurrently with any delivery
of financial statements under Section 8.01(a), one or more certificates of
insurance coverage from the Credit Parties’ insurance broker or insurers with
respect to the insurance required by Section 8.07, in form and substance
satisfactory to the Administrative Agent, and, if requested by the
Administrative Agent, copies of the applicable policies.

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

(h) Notices Under Material Instruments. Promptly after 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 with respect to Material Indebtedness, and
not otherwise required to be furnished to the Lenders pursuant to any other
provision of this Section 8.01.

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

(j) Production Report and Lease Operating Statements. Within 60 days after the
end of each fiscal quarter commencing with the fiscal quarter ended December 31,
2017, a report setting forth, for each calendar month during the then current
fiscal year to date, the volume of production and sales

 

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attributable to production (and the prices at which such sales were made and the
revenues derived from such sales) for each such calendar month from the Oil and
Gas Properties, setting forth the related ad valorem, severance and production
taxes and lease operating expenses attributable thereto and incurred for each
such calendar month, and setting forth the drilling and operations for each such
calendar month.

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

(l) Cash Flow Forecast. Not later than September 1st of each fiscal year of the
Parent, a certificate of a Financial Officer of the Parent, in form and
substance reasonably satisfactory to the Administrative Agent, setting forth a
consolidated operating budget and capital expenditure forecast of Credit Parties
for the period from the most recently ended fiscal quarter of the Parent through
the end of the following four fiscal quarters of the Parent.

(m) Other Requested Information. Promptly following any reasonable request
therefor, such other information regarding the operations, business affairs and
financial condition of the Credit Parties (including any Plan and any reports or
other information required to be filed with respect thereto under the Code or
under ERISA), or compliance with the terms of this Agreement or any other Loan
Document, as the Administrative Agent or any Lender may reasonably request.

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

(a) the occurrence of any Default;

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

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

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

Section 8.03 Existence; Conduct of Business. Each of the Parent and the Borrower
will, and will cause each other Credit Party to, do or cause to be done all
things necessary to preserve, renew and keep in full force and effect (a) its
legal existence as a Person organized or existing under the laws of the United
States, any state thereof, the District of Columbia, or any territory thereof
and (b) the rights, licenses, permits, privileges and franchises material to the
conduct of its business and maintain, if necessary, its qualification to do
business in each other

 

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jurisdiction in which its Oil and Gas Properties is located or the ownership of
its Properties requires such qualification, except where the failure to so
qualify could not reasonably be expected to have a Material Adverse Effect;
provided that the foregoing shall not prohibit any merger, consolidation,
liquidation or dissolution permitted under Section 9.10.

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

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

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

(a) operate its Oil and Gas Properties and other material Properties or cause
such Oil and Gas Properties and other material Properties to be operated in a
careful and efficient manner in accordance with the practices of the industry
and in compliance with all applicable contracts and agreements and in compliance
with all Governmental Requirements, including, without limitation, applicable
pro ration requirements and Environmental Laws, and all applicable laws, rules
and regulations of every other Governmental Authority from time to time
constituted to regulate the development and operation of its Oil and Gas
Properties and the production and sale of Hydrocarbons and other minerals
therefrom, except, in each case, where the failure to do so could not reasonably
be expected to have a Material Adverse Effect.

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

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

 

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(d) promptly perform or make reasonable and customary efforts to cause to be
performed, in accordance with customary industry standards, the obligations
required by the assignments, deeds, leases, sub-leases, contracts and agreements
affecting its interests in its Oil and Gas Properties and other material
Properties, except, in each case, where the failure to do so could not
reasonably be expected to have a Material Adverse Effect.

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

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

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

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

Section 8.10 Environmental Matters.

(a) Each of the Parent and the Borrower shall at its sole expense: comply, and
shall cause its Properties and operations and each of their respective
Subsidiaries and each such Subsidiary’s Properties and operations to comply,
with all applicable Environmental Laws, the breach of which could reasonably be
expected to have a Material Adverse Effect; not Release or threaten to Release,
and shall cause each of their respective Subsidiaries not to Release or threaten
to Release, any Hazardous Material on, under, about or from any of their or
their respective Subsidiaries’ Properties or any other property

 

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offsite the Property to the extent caused by their or any of their respective
Subsidiaries’ operations except in compliance with applicable Environmental
Laws, the Release or threatened Release of which could reasonably be expected to
have a Material Adverse Effect; timely obtain or file, and shall cause each of
their respective Subsidiaries to timely obtain or file, all Environmental
Permits, if any, required under applicable Environmental Laws to be obtained or
filed in connection with the operation or use of the their or their respective
Subsidiaries’ Properties, which failure to obtain or file could reasonably be
expected to have a Material Adverse Effect; promptly commence and diligently
prosecute to completion, and shall cause each of their respective 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 or reasonably
necessary under applicable Environmental Laws because of or in connection with
the actual or suspected past, present or future Release or threatened Release of
any Hazardous Material on, under, about or from any of their or their respective
Subsidiaries’ Properties, which failure to commence and diligently prosecute to
completion could reasonably be expected to have a Material Adverse Effect;
conduct, and cause their respective Subsidiaries to conduct, their respective
operations and businesses in a manner that will not expose any Property or
Person to Hazardous Materials that could reasonably be expected to cause the
Parent, the Borrower or their respective Subsidiaries to owe material damages or
compensation; and establish and implement, and shall cause each of their
respective Subsidiaries to establish and implement, such procedures as may be
necessary to continuously determine and assure that the Parent’s, the Borrower’s
and their respective Subsidiaries’ obligations under this Section 8.10(a) are
timely and fully satisfied, which failure to establish and implement could
reasonably be expected to have a Material Adverse Effect.

(b) If the Parent, the Borrower or any of their respective Subsidiaries receives
written notice of any action or, investigation or inquiry by any Governmental
Authority or any threatened demand or lawsuit by any Person against the Parent,
the Borrower or any of their respective Subsidiaries or their Properties, in
each case in connection with any Environmental Laws, each of the Parent and the
Borrower will within fifteen days after any Responsible Officer learns thereof
give written notice of the same to Administrative Agent if either of the Parent
or the Borrower could reasonably anticipate that such action will result in
liability (whether individually or in the aggregate) in excess of $5,000,000,
not fully covered by insurance, subject to normal deductibles.

(c) Each of the Parent and the Borrower will, and will cause each of their
respective Subsidiaries to, provide environmental assessments, audits and tests
in accordance with the most current version of the American Society of Testing
Materials standards upon request by the Administrative Agent and the Lenders (no
more than once per year in the absence of any Event of Default or as otherwise
required to be obtained by the Administrative Agent or the Lenders by any
Governmental Authority), in connection with any future acquisitions of Oil and
Gas Properties.

Section 8.11 Further Assurances.

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

 

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

Section 8.12 Reserve Reports.

(a) On or before April 1 and October 1 of each year, commencing April 1, 2017,
the Borrower shall furnish to the Administrative Agent and the Revolving Credit
Lenders a Reserve Report evaluating the Oil and Gas Properties of the Borrower
and its Subsidiaries as of the immediately preceding January 1 or July 1,
respectively. The Reserve Report as of January 1 of each year shall be prepared
or audited by one or more Approved Petroleum Engineers, and the July 1 Reserve
Report of each year shall be prepared by or under the supervision of the chief
engineer of the Borrower who shall certify such Reserve Report to be true and
accurate in all material respects (with appropriate exceptions for projections
and cost estimates) and to have been prepared in accordance with the procedures
used in the immediately preceding January 1 Reserve Report..

(b) In the event of an Interim Redetermination, the Borrower shall furnish to
the Administrative Agent and the Revolving Credit Lenders a Reserve Report
prepared by or under the supervision of the chief engineer of the Borrower who
shall certify such Reserve Report to be true and accurate in all material
respects (with appropriate exceptions for projections and cost estimates) and to
have been prepared in accordance with the procedures used in the immediately
preceding January 1 Reserve Report. For any Interim Redetermination requested by
the Administrative Agent or the Borrower pursuant to Section 2.06(b), the
Borrower shall provide such Reserve Report with an “as of” date as required by
the Administrative Agent as soon as possible, but in any event no later than
thirty (30) days following the receipt of such request.

(c) With the delivery of each Reserve Report, the Borrower shall provide to the
Administrative Agent and the Revolving Credit Lenders a certificate from a
Responsible Officer certifying that in all material respects that except as set
forth on an exhibit to the certificate, on a net basis there are no gas
imbalances, take or pay or other prepayments in excess of the volume specified
in Section 7.18 with respect to the Oil and Gas Properties evaluated in such
Reserve Report which would require any Credit Party to deliver Hydrocarbons
either generally or produced from such Oil and Gas Properties at some future
time without then or thereafter receiving full payment therefor, none of their
proved Oil and Gas Properties have been sold since the date of the last
Borrowing Base determination except as set forth on an exhibit to the
certificate, which certificate shall list all such Oil and Gas Properties sold
and attached thereto is a schedule of the Oil and Gas Properties evaluated by
such Reserve Report that are Mortgaged Properties and demonstrating the
percentage of the total value of the proved Oil and Gas Properties that the
value of such Mortgaged Properties represents in compliance with Section
8.14(a).

 

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Section 8.13 Title Information.

(a) On or before the delivery to the Administrative Agent and the Revolving
Credit Lenders of each Reserve Report required by Section 8.12(a), the Borrower
will deliver title information in form and substance 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 85% of the total value of the proved Oil and Gas
Properties evaluated by such Reserve Report and which are required to be
Mortgaged Properties hereunder.

(b) If the Borrower has provided title information for additional Properties
under Section 8.13(a), the Borrower shall, within 60 days after notice from the
Administrative Agent that title defects or exceptions exist with respect to such
additional Properties, either (i) cure any such title defects or exceptions
(including defects or exceptions as to priority) which are not permitted by
Section 9.03 raised by such information, (ii) substitute acceptable Mortgaged
Properties with no title defects or exceptions except for Excepted Liens (other
than Excepted Liens described in clauses (e), (g) and (j) of such definition)
having an aggregate equivalent value or (iii) deliver title information in form
and substance reasonably requested by the Administrative Agent so that the
Administrative Agent shall have received, together with title information
previously delivered to the Administrative Agent, satisfactory title information
on at least 85% of the total value of the proved Oil and Gas Properties of the
Credit Parties evaluated by such Reserve Report.

(c) If the Borrower is unable to cure any title defect requested by the
Administrative Agent or the Lenders to be cured within the 60-day period or the
Borrower does not comply with the requirements to provide acceptable title
information covering 85% of the total value of the proved Oil and Gas Properties
of the Credit Parties evaluated in the most recent Reserve Report, such default
shall not be a Default, but instead the Administrative Agent and/or the Required
Revolving Credit Lenders shall have the right to exercise the following remedy
in their sole discretion from time to time, and any failure to so exercise this
remedy at any time shall not be a waiver as to future exercise of the remedy by
the Administrative Agent or the Required Revolving Credit Lenders: such
unacceptable Mortgaged Property shall not count towards the 85% requirement, and
the Administrative Agent may send a notice to the Borrower and the Lenders that
the then outstanding Borrowing Base shall be reduced by an amount as determined
by the Required Revolving Credit Lenders to cause the Borrower to be in
compliance with the requirement to provide acceptable title information on 85%
of the total value of the proved Oil and Gas Properties of the Credit Parties.
This new Borrowing Base shall become effective immediately after receipt of such
notice.

Section 8.14 Additional Collateral; Additional Guarantors.

(a) In connection with each redetermination of the Borrowing Base, the Borrower
shall review the Reserve Report and the list of current Mortgaged Properties (as
described in Section 8.12(c)) to ascertain whether the Mortgaged Properties
represent at least 85% of the total value of the proved Oil and Gas Properties
evaluated in the most recently completed Reserve Report after giving effect to
exploration and production activities, acquisitions, dispositions and
production. In the event that the Mortgaged Properties do not represent at least
85% of such total value as determined by the Administrative Agent, then each of
the Parent and the Borrower shall, or shall cause one or more of the other
Credit Parties to, grant, within forty-five (45) days after receipt of a request
from the Administrative Agent, to the Administrative Agent as security for the
Obligations, Security Instruments covering additional Oil and Gas Properties not
already subject to a Lien of the Security Instruments such that after giving
effect thereto, the Mortgaged Properties will represent at least 85% of such
total value. All such

 

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Liens will be created and perfected by and in accordance with the provisions of
deeds of trust, security agreements and financing statements or other Security
Instruments, all in form and substance reasonably satisfactory to the
Administrative Agent and in sufficient executed (and acknowledged where
necessary or appropriate) counterparts for recording purposes. In order to
comply with the foregoing, if any Subsidiary of the Parent or the Borrower
places a Lien on its Oil and Gas Properties and such Subsidiary is not a
Guarantor, then it shall become a Guarantor and comply with Section 8.14(b).

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

(c) Not later than thirty (30) days following the consummation of the
Acquisition, each of the Parent and the Borrower shall, and shall cause each
other Credit Party to, execute and deliver such Security Instruments and such
other additional closing documents, certificates and legal opinions as shall
reasonably be requested by the Administrative Agent as may be necessary to
satisfy the requirements of Section 8.14(a) and (b) above. For purposes of this
Section 8.14(c), the total value of the proved Oil and Gas Properties evaluated
in the “most recently completed Reserve Report” shall include the total value of
the proved Oil and Gas Properties evaluated in the SHEP II Reserve Report.

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

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

 

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

Section 8.17 Unrestricted Subsidiaries. Each of the Parent and the Borrower:

(a) will cause the management, business and affairs of each Credit Party to be
conducted in such a manner (including, without limitation, by keeping separate
books of account, furnishing separate financial statements of Unrestricted
Subsidiaries to creditors and potential creditors thereof and by not permitting
Properties of the Credit Parties to be commingled) so that each Unrestricted
Subsidiary will be treated as an entity separate and distinct from Credit
Parties;

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

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

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

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

Section 8.18 Account Control Agreements. Subject to Section 8.19, each of the
Parent and the Borrower will, and will cause each other Credit Party to, in
connection with any Deposit Account and/or any Securities Account (other than an
Excluded Account for so long as it is an Excluded Account) established, held or
maintained after the Effective Date promptly, but in any event within ten
(10) Business Days after the establishment of such account (or such later date
as the Administrative Agent may agree in its sole discretion), cause such
Deposit Account and/or Securities Account (other than an Excluded Account for so
long as it is an Excluded Account) to be subject to a Control Agreement.

Section 8.19 Post-Closing Covenant. Notwithstanding the requirements set forth
in Section 8.18, with respect to each Deposit Account and Securities Account of
the Credit Parties in existence on the Effective Date (other than, in each case,
Excluded Accounts), each of the Parent and the Borrower will, and will cause
each other Credit

 

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Party to cause each such Deposit Account and/or Securities Account (other than
an Excluded Account for so long as it is an Excluded Account) to be subject to a
Control Agreement on or prior to the date that is ninety (90) days following the
Effective Date (or such later date as the Administrative Agent may agree in its
sole discretion).

ARTICLE IX

NEGATIVE COVENANTS

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

Section 9.01 Financial Covenants.

(a) Current Ratio. Commencing December 31, 2016, the Parent will not permit, as
of the last day of any fiscal quarter, the ratio of (i) the Current Assets of
the Parent and the other Credit Parties to (ii) the Current Liabilities of the
Parent and the other Credit Parties, to be less 1.0 to 1.0.

(b) Leverage Ratio. Commencing December 31, 2016, the Parent will not permit, as
of the last day of any fiscal quarter, the ratio of (i) the consolidated Total
Debt of the Parent and the other Credit Parties as of such time to (ii) the
consolidated EBITDAX of the Parent and the other Credit Parties for the four
fiscal quarters then ended, to be greater than 4.25 to 1.0; provided, that for
the purposes of determining the ratio described above the consolidated EBITDAX
of the Parent and the other Credit Parties for the fiscal quarters ending
December 31, 2016, March 31, 2017 and June 30, 2017 shall be deemed to equal
(A) consolidated EBITDAX for the one fiscal quarter period ending December 31,
2016 multiplied by 4, (B) consolidated EBITDAX for the two fiscal quarter period
ending March 31, 2017 multiplied by 2 and (C) consolidated EBITDAX for the three
fiscal quarter period ending June 30, 2017 multiplied by 4/3, respectively.

Section 9.02 Debt. Neither the Parent nor the Borrower will, nor will they
permit any other Credit Party to, incur, create, assume or suffer to exist any
Debt, except:

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

(b) Debt under Capital Leases or that constitutes Purchase Money Indebtedness;
provided that the aggregate principal amount of all Debt described in this
Section 9.02(b) at any one time outstanding shall not to exceed $50,000,000 in
the aggregate;

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

(d) Debt constituting a guaranty by a Credit Party of Debt permitted to be
incurred under this Section 9.02;

 

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(e) other Debt not to exceed $20,000,000 in the aggregate at any one time
outstanding;

(f) Debt arising under Swap Agreements in compliance with Section 9.16;

(g) (i) Debt in respect of unsecured notes existing on the Effective Date and
listed on Schedule 9.02(g) and (ii) other Debt in respect of unsecured notes;
provided that, with respect to Debt incurred after the Effective Date, (A) no
Default or Borrowing Base deficiency exists at the time of the incurrence of
such Debt or would result therefrom (including after giving effect to any
automatic reduction of the Borrowing Base pursuant to Section 2.06(e)), (B) such
Debt does not require any scheduled amortization of principal or have a maturity
date prior to 180 days after the Revolving Credit Maturity Date at the time of
the incurrence of such Debt, (C) the covenants and events of default contained
in the documentation governing such Debt are (I) in the case of financial
covenants, not more restrictive than the financial covenants of this Agreement
and the other Loan Documents and (II) in the case of other covenants and events
of default, taken as a whole, not more restrictive than the corresponding terms
of this Agreement and the other Loan Documents in each case as reasonably
determined in good faith by the Parent and the Borrower, (D) the documents
governing such Debt do not contain any mandatory prepayment or Redemption
provisions (other than customary change of control or asset sale tender offer
provisions) which would require a mandatory prepayment or Redemption of such
Debt in priority to the Loans and (E) such Debt does not prohibit prior
repayment of the Obligations;

(h) Debt which represents an extension, refinancing, or renewal of any of the
Permitted Unsecured Notes; provided that such Debt satisfies the conditions set
forth in Section 9.02(g);

(i) Debt to pay the deferred purchase price of Property; provided that (i) no
Default or Borrowing Base deficiency exists at the time of the incurrence of
such Debt or would result therefrom (including compliance with Section 9.01(b)
after giving pro forma effect to such incurrence), (ii) the covenants and events
of default contained in the documentation governing such Debt are, (A) in the
case of financial covenants, not more restrictive than the financial covenants
of this Agreement and the other Loan Documents and, (B) in the case of other
covenants and events of default, taken as a whole, not more restrictive than the
corresponding terms of this Agreement and the other Loan Documents in each case
as reasonably determined in good faith by the Borrower, (iii) the documents
governing such Debt do not contain any mandatory prepayment or Redemption
provisions (other than customary change of control or asset sale tender offer
provisions) which would require a mandatory prepayment or Redemption of such
Debt in priority to the Loans, (iv) such Debt does not prohibit prior repayment
of the Obligations and (v) the aggregate principal amount of all Debt described
in this Section 9.02(i) shall not exceed $150,000,000 outstanding at any one
time; and

(j) Debt in respect of unsecured notes which satisfy the terms of Section
9.02(g) or Section 9.02(h) and are issued on or before the first Scheduled
Redetermination of the Borrowing Base to occur after the Effective Date to the
extent the Net Cash Proceeds of such issuance are used to fund the Acquisition
or repay Debt incurred to fund the Acquisition.

Section 9.03 Liens. Neither the Parent nor the Borrower will, nor will they
permit any other Credit Party to, create, incur, assume or permit to exist any
Lien on any of its Properties (now owned or hereafter acquired), except:

(a) Liens securing the payment of any Obligations;

 

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(b) Excepted Liens;

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

(d) Liens on Property not constituting Hydrocarbon Interests and not otherwise
permitted by the foregoing clauses of this Section 9.03; provided that the
aggregate principal or face amount of all Debt secured by such Liens pursuant to
this Section 9.03(d), and the fair market value of the Properties subject to
such Liens (determined as of the date such Liens are incurred), shall not exceed
$20,000,000 in the aggregate at any time.

Section 9.04 Restricted Payments. Neither the Parent nor the Borrower will, nor
will they permit any other Credit Party to, declare or make, or agree to pay or
make, directly or indirectly (collectively in this section, “make”), any
Restricted Payment except:

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

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

(c) the Parent may make Restricted Payments to the holders of its Equity
Interests, provided that (i) no Borrowing Base deficiency, Default or Event of
Default has occurred, is continuing or would result therefrom, (ii) the ratio of
(A) the consolidated Total Debt of the Parent and the other Credit Parties as of
such time after giving effect to such Restricted Payments to (B) the
consolidated EBITDAX of the Parent and the other Credit Parties for the four
fiscal quarters most recently ended, shall not be greater than 2.5 to 1.0 and
(iii) the Commitment Utilization Percentage shall not exceed 80% after giving
effect to such Restricted Payments.

Section 9.05 Investments, Loans and Advances. Neither the Parent nor the
Borrower will, nor will they permit any other Credit Party to, make or permit to
remain outstanding any Investments in or to any Person, except that the
foregoing restriction shall not apply to:

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

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

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

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

 

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

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

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

(h) Investments in stock, obligations or securities received in settlement of
debts arising from Investments permitted under this Section 9.05 owing to any
Credit Party as a result of a bankruptcy or other insolvency proceeding of the
obligor in respect of such obligations or upon the enforcement of such
obligations or of any Lien securing such obligations; provided that the Borrower
shall give the Administrative Agent prompt written notice in the event that the
aggregate amount of all Investments held at any one time under this Section
9.05(h) exceeds $5,000,000;

(i) Investments constituting Debt permitted under Section 9.02;

(j) other Investments not to exceed $50,000,000 in the aggregate at any time;
and

(k) Investments in Joint Ventures and Unrestricted Subsidiaries, provided that
(i) the aggregate amount of all such Investments at any one time permitted by
this clause (l) shall not exceed $100,000,000 (or its equivalent in other
currencies as of the date of Investment) and (ii) the Commitment Utilization
Percentage is less than eighty percent (80%) immediately before and immediately
after giving effect to such Investment.

Section 9.06 Nature of Business. Neither the Parent nor the Borrower will, nor
will they permit any other Credit Party to, allow any material change to be made
in the character of their business, taken as a whole, as an independent oil and
gas exploration and production company.

Section 9.07 Proceeds of Loans. Neither the Parent nor the Borrower will, nor
will they permit any other Credit Party to, permit the proceeds of the Loans to
be used for any purpose other than those permitted by Section 7.21. No Credit
Party or any Person acting on behalf of any Credit Party has taken or will take
any action which might cause any of the Loan Documents to violate Regulations T,
U or X or any other regulation of the Board or to violate section 7 of the
Securities Exchange Act of 1934 or any rule or regulation thereunder, in each
case as now in effect or as the same may hereinafter be in effect. If requested
by the Administrative Agent, each of the Parent and the Borrower will furnish to
the Administrative Agent and each Lender a statement to the foregoing effect in
conformity with the requirements of FR Form U-1 or such other form referred to
in Regulation U, Regulation T or Regulation X of the Board, as the case may be.

 

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Section 9.08 ERISA Compliance. Neither the Parent nor the Borrower will, nor
will they permit any of their respective Subsidiaries to, at any time:

(a) engage in, or permit any ERISA Affiliate to engage in, any transaction in
connection with which the Parent, the Borrower, any of their respective
Subsidiaries or any ERISA Affiliate could be subjected to either a civil penalty
assessed pursuant to subsections (c), (i), (l) or (m) of section 502 of ERISA or
a tax imposed by Chapter 43 of Subtitle D of the Code where such penalty or tax
could reasonably be expected to have a Material Adverse Effect.

(b) 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, the Borrower, a Subsidiary or any ERISA
Affiliate is required to pay as contributions thereto where such penalty or tax
could reasonably be expected to have a Material Adverse Effect.

(c) 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, including, without
limitation, any such plan maintained to provide benefits to former employees of
such entities, that may not be terminated by such entities in their sole
discretion at any time without any material liability other than for benefits
due as of, or claims incurred prior to, the effective date of such termination,
or any employee pension benefit plan, as defined in section 3(2) of ERISA, that
is subject to Title IV of ERISA, section 302 of ERISA or section 412 of the
Code.

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

Section 9.10 Mergers, Etc. Neither the Parent nor the Borrower will, nor will
they permit any other Credit Party to, merge into or with or consolidate with
any other Person, or permit any other Person to merge into or consolidate with
it, or sell, transfer, lease or otherwise dispose of (whether in one transaction
or in a series of transactions) all or substantially all of its Property to any
other Person (whether now owned or hereafter acquired) (any such transaction, a
“consolidation”), or liquidate or dissolve; provided that, so long as no Default
has occurred and is then continuing, any Subsidiary may participate in a
consolidation with the Borrower (provided that the Borrower shall be the
survivor) or any other Subsidiary and any Unrestricted Subsidiary may
participate in a consolidation with the Borrower or any of its Subsidiaries
(provided that, if the Borrower participates in the consolidation, the Borrower
shall be the surviving entity, and otherwise, such Subsidiary shall be the
continuing or surviving entity).

Section 9.11 Sale of Properties. Neither the Parent nor the Borrower will, nor
will they permit any other Credit Party to, sell, assign, farm-out, convey or
otherwise transfer (collectively in this section, “Transfer”) any Oil and Gas
Property or any interest in Hydrocarbons produced or to be produced therefrom or
any Equity Interest in

 

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any Credit Party that owns any Oil and Gas Property, commodity Swap Agreement or
any interest in Hydrocarbons produced or to be produced therefrom (in this
section, an “E&P Credit Party”) or unwind or terminate any commodity Swap
Agreements, except for:

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

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

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

(d) Transfers of Oil and Gas Properties to which no proved reserves of oil or
natural gas are attributed;

(e) Transfers of Oil and Gas Properties to which proved reserves of oil or gas
are attributed, provided that at least 80% of the consideration received in
respect of such sale or other disposition shall be cash, Oil and Gas Properties
to which proved reserves of oil or gas are attributed and with respect to which
the Administrative Agent has received reasonably satisfactory Engineering
Reports or the assumption of liabilities related to such transferred Oil and Gas
Properties;

(f) Transfers of all (but not less than all) of the Equity Interests
collectively owned by the Borrower and its Subsidiaries in any E&P Credit Party;

(g) the unwinding or termination of commodity Swap Agreements; and

(h) other Transfers of Property not permitted by the preceding clauses
(a) through (g) having a fair market value not to exceed $20,000,000 in any
fiscal year of the Parent.

To the extent that, during any period between two successive Scheduled
Redetermination Dates, Oil and Gas Properties and commodity Swap Agreements with
an aggregate Borrowing Base value in excess of five percent (5%) of the
Borrowing Base value of all Oil and Gas Properties included in the Borrowing
Base of the Credit Parties (as determined by the Administrative Agent), are
Transferred or unwound or terminated, as applicable, by any one or more Credit
Parties pursuant to the preceding subsection (e), subsection (f) and/or
subsection (g), then the Borrowing Base will be reduced, effective immediately,
by the Borrowing Base values in excess of such five percent threshold; provided
that for purposes of this sentence, (i) a commodity Swap Agreement shall be
deemed to have not been unwound or terminated if, (x) such commodity Swap
Agreement is novated from the existing counterparty to an Approved Counterparty,
with the Borrower or the applicable Credit Party being the “remaining party” for
purposes of such novation, or (y) upon its termination or unwinding, it is
replaced, in a substantially contemporaneous transaction, with one or more
commodity Swap Agreements with approximately the same mark-to-market value and
without cash payments to any Loan Party in connection therewith, and (ii) an Oil
and Gas Property shall be deemed to have not been Transferred if upon its
Transfer, it is replaced, in a substantially contemporaneous transaction, with
Oil and Gas Properties with approximately the same PV-9 value as evidenced by
reasonably satisfactory Engineering Reports delivered to the Administrative
Agent prior to the effectiveness of such transaction. For the purposes of the
preceding sentence, the Transfer of an E&P Credit Party owning such Oil and Gas
Properties and/or commodity Swap Agreements pursuant to the preceding subsection
(f) shall be deemed the Transfer of the Oil and Gas Properties and the unwinding
or termination of the commodity Swap Agreements owned by such E&P Subsidiary.

 

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Section 9.12 Transactions with Affiliates. Neither the Parent nor the Borrower
will, nor will they permit any other Credit Party to, enter into any
transaction, including, without limitation, any purchase, sale, lease or
exchange of Property or the rendering of any service, with any Affiliate (other
than one of the other Credit Parties) unless such transactions are upon fair and
reasonable terms no less favorable to it than it would obtain in a comparable
arm’s length transaction with a Person not an Affiliate.

Section 9.13 Subsidiaries. Neither the Parent nor the Borrower will, nor will
they permit any other Credit Party to, create or acquire any additional
Subsidiary or redesignate an Unrestricted Subsidiary as a Restricted Subsidiary
unless the Borrower complies with Section 8.14(b). Neither the Parent nor the
Borrower will, nor will they permit any other Credit Party to, sell, assign or
otherwise dispose of any Equity Interests in any Credit Party except (a) to
another Credit Party or (b) in compliance with Section 9.11(f). No Credit Party
shall have any Foreign Subsidiaries.

Section 9.14 Negative Pledge Agreements; Dividend Restrictions. Neither the
Parent nor the Borrower will, nor will they permit any other Credit Party to,
create, incur, assume or suffer to exist any contract, agreement or
understanding (other than this Agreement, the Security Instruments, agreements
with respect to Purchase Money Indebtedness or Capital Leases secured by Liens
permitted by Section 9.03(c), but then only with respect to the Property that is
the subject of such Capital Lease or Purchase Money Indebtedness, and documents
creating Liens which are described in clause (d), (f), (h) or (i) of the
definition of “Excepted Liens”, but then only with respect to the Property that
is the subject of the applicable lease, document or license described in such
clause (d), (f), (h) or (i)) that in any way prohibits or restricts the
granting, conveying, creation or imposition of any Lien on any of its Property
in favor of the Administrative Agent for the benefit of the Lenders, or
restricts any Credit Party from paying dividends or making any other
distributions in respect of its Equity Interests to any Credit Party. Neither
the Parent nor the Borrower will, nor will they permit any other Credit Party
to, prior to the date that is 180 days after the Maturity Date, make or offer to
make any optional or voluntary Redemption of or otherwise optionally or
voluntarily Redeem (whether in whole or in part) any principal in respect of any
Permitted Unsecured Notes, except so long as (a) no Borrowing Base deficiency or
Default exists or results therefrom and (b) after giving pro forma effect to
such Redemption, the Commitment Utilization Percentage (but only to the extent
that the Borrower is permitted to borrow such amount under the terms of this
Agreement, including Section 6.02 hereof) is not more than eighty percent (80%),
any Credit Party may voluntarily Redeem any principal in respect of such Debt;
provided, however, the Borrower will be permitted to extend, refinance or renew
such Debt pursuant to the terms of Section 9.02(h) hereof.

Section 9.15 Gas Imbalances. Neither the Parent nor the Borrower will, nor will
they permit any other Credit Party to, allow gas imbalances, take or pay or
other prepayments with respect to the Oil and Gas Properties of the Credit
Parties that would require such Credit Party to deliver Hydrocarbons at some
future time without then or thereafter receiving full payment therefor to exceed
five percent (5%) of the annual production of gas of the Credit Parties for the
most recent calendar year, each on an mcf equivalent basis in the aggregate.

 

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Section 9.16 Swap Agreements. Neither the Parent nor the Borrower will, nor will
they permit any other Credit Party to, enter into any Swap Agreements with any
Person other than (a) Swap Agreements in respect of commodities with an Approved
Counterparty fixing a price for a term of not more than sixty months and the
notional volumes for which (when aggregated with other commodity Swap Agreements
then in effect other than put or floor options as to which an upfront premium
has been paid or basis differential swaps on volumes already hedged pursuant to
other Swap Agreements) do not exceed, as of the date such Swap Agreement is
executed, eighty-five percent (85%) of the reasonably anticipated projected
production from Oil and Gas Properties for each month during which such Swap
Agreement is in effect for each of crude oil, natural gas, and natural gas
liquids calculated separately, provided that the Borrower (A) shall have the
option to update the reasonably anticipated projected production from Oil and
Gas Properties between the delivery of Reserve Reports hereunder (which updates
shall be provided to the Administrative Agent in writing and shall be in form
and substance reasonably satisfactory to the Administrative Agent) and
(B) shall, without causing a breach of this Section 9.16, have the option to
enter into commodity Swap Agreements with respect to (x) such updated projected
production and (y) reasonably anticipated projected production from Oil and Gas
Properties not then owned by the Credit Parties but which are subject to a
binding purchase agreement for which one or more of the Credit Parties are
scheduled to acquire such Oil and Gas Properties within the applicable period,
provided that, if such purchase agreement does not close for any reason on the
date required thereunder, including any binding extensions thereof, within
thirty (30) days of such required closing date, the Credit Parties shall unwind
or otherwise terminate the Swap Agreements entered into with respect to
production that was to be acquired thereunder, and (b) Swap Agreements in
respect of interest rates with an Approved Counterparty, the notional amounts of
which (when aggregated with all other Swap Agreements of the Credit Parties then
in effect) do not exceed eighty-five percent (85%) of the then outstanding
principal amount of the Borrower’s Debt for borrowed money. In no event shall
any Swap Agreement, other than a master Swap Agreement pursuant to which any
Credit Party executes only put or floor options as to which an upfront premium
has been paid, contain any requirement, agreement or covenant for any Credit
Party to post collateral or margin to secure their obligations under such Swap
Agreement other than the benefit of the Security Instruments as contemplated
herein.

Section 9.17 Acquisition Documents. Neither the Parent nor the Borrower will,
and nor will they permit any other Credit Party to, amend, supplement or
otherwise modify (or permit to be amended, supplemented or modified) the
Acquisition Documents in any material respect that could reasonably be expected
to be materially adverse to the interests of the Administrative Agent or the
Revolving Credit Lenders without the consent of the Administrative Agent (such
consent not to be unreasonably withheld, conditioned or delayed).

Section 9.18 Designation and Conversion of Subsidiaries and Unrestricted
Subsidiaries; Debt of Unrestricted Subsidiaries.

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

(b) The Parent and the Borrower may designate by written notification thereof to
the Administrative Agent, any Person that would otherwise be a Restricted
Subsidiary of the Parent or the Borrower, as applicable, including a newly
formed or newly acquired Person that would otherwise be a Subsidiary of the
Parent or the Borrower, as applicable, as an Unrestricted Subsidiary if
(i) prior, and after giving effect, to such designation, neither a Default nor a
Borrowing Base deficiency would exist, (ii)

 

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such Person does not own or operate any Oil and Gas Properties included in the
most recently delivered Reserve Report for which a Borrowing Base has been
established, other than Oil and Gas Properties permitted to be sold or otherwise
transferred pursuant to Section 9.11 (which shall count as a Transfer
thereunder), (iii) such Person is not a guarantor or the primary obligor with
respect to any Debt permitted under Section 9.02(g) unless such Person will be
released contemporaneously with such designation, (iv) such Person is not a
party to any agreement, contract, arrangement or understanding with the Borrower
or any Subsidiary unless the terms of such agreement, contract, arrangement or
understanding are permitted by Section 9.12, (v) such designation is deemed to
be an Investment in an Unrestricted Subsidiary in an amount equal to the fair
market value as of the date of such designation of the Borrower’s direct or
indirect ownership interest in such Person and such Investment would be
permitted to be made at the time of such designation under Section 9.05(k), and
(vi) the Administrative Agent shall have received a certificate of a Responsible
Officer of the Parent or the Borrower, as applicable, certifying that such
designation complies with the requirements of this Section 9.18(b). For purposes
of the foregoing, the designation of a Person as an Unrestricted Subsidiary
shall be deemed to be the designation of all present and future subsidiaries of
such Person as Unrestricted Subsidiaries. Except as provided in this Section
9.18(b), no Restricted Subsidiary may be redesignated as an Unrestricted
Subsidiary.

(c) The Parent and the Borrower may designate any Unrestricted Subsidiary to be
a Restricted Subsidiary if after giving effect to such designation, (i) the
representations and warranties of the Credit Parties contained in each of the
Loan Documents are true and correct in all material respects on and as of such
date as if made on and as of the date of such redesignation (or, if stated to
have been made expressly as of an earlier date, were true and correct in all
material respects as of such date), (ii) no Default would exist and (iii) the
Parent and the Borrower comply with the requirements of Section 8.14,
Section 8.18 and Section 9.13. Any such designation shall be treated as a cash
dividend in an amount equal to the lesser of the fair market value of the
Parent’s or the Borrower’s direct and indirect ownership interest in such Person
or the amount of the Parent’s or the Borrower’s cash investment previously made
for purposes of the limitation on Investments under Section 9.05(k).

Section 9.19 Amendments to Permitted Unsecured Notes Documents. Neither the
Parent nor the Borrower will, nor will they permit any other Credit Party to,
amend, modify, waive or otherwise change, consent or agree to any amendment,
modification, waiver or other change to, any of the terms of the Permitted
Unsecured Notes if (a) the effect thereof would be to shorten the maturity of
the Permitted Unsecured Notes to a date that is earlier than 180 days after the
Maturity Date, or (b) such action adds or amends any representations and
warranties, covenants or events of default to be more restrictive or burdensome
than this Agreement in each case as reasonably determined in good faith by the
Parent and the Borrower without this Agreement being contemporaneously amended
to add similar provisions; provided that the foregoing shall not prohibit the
execution of supplemental agreements to add guarantors if required by the terms
thereof (provided that any such guarantor also guarantees the Obligations
pursuant to a Guaranty Agreement and each of Borrower and such guarantor
otherwise complies with Section 8.14(b)); and provided further that nothing in
this Section 9.19 shall prohibit the Borrower from extending, refinancing, or
renewing of the Permitted Unsecured Notes pursuant to Section 9.02(h).

Section 9.20 Use of Proceeds and Letters of Credit. The Borrower will not
request any Borrowing or Letter of Credit, and no Credit Party shall use, and
shall procure that its Subsidiaries and its or their respective directors,
officers, employees and agents shall not use, the proceeds of any Borrowing or
Letter of Credit (A) in furtherance of an offer, payment, promise to pay, or
authorization of the payment or giving of money, or anything else of value, to
any Person in violation of any Anti-Corruption Laws, (B) for the purpose of
funding, financing or facilitating any activities, business or transaction of or
with any Sanctioned Person, or in any Sanctioned Country, to

 

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the extent such activities, business or transaction would be prohibited by
Sanctions if conducted by a corporation incorporated in the United States or
(C) in any manner that would result in the violation of any Sanctions applicable
to any party hereto.

Section 9.21 Environmental Matters. Neither the Parent nor the Borrower will,
and nor will they permit any other Credit Party or any of their respective
Subsidiaries to, undertake (or allow to be undertaken at any Property subject to
its control) anything which will subject any such Property to any obligation to
conduct any investigation or remediation under any applicable Environmental Laws
or regarding any Hazardous Material that could reasonably be expected to have a
Material Adverse Effect, it being understood that the foregoing will not be
deemed to limit (a) any obligation under applicable Environmental Law to
disclose any relevant facts, conditions or circumstances to the appropriate
Governmental Authority as and to the extent required by any such Environmental
Law, (b) any investigation or remediation required to be conducted under
applicable Environmental Law, (c) any investigation reasonably requested by a
prospective purchaser of any property, provided that such investigation is
subject to conditions and limitations (including indemnification and insurance
obligations regarding the conduct of such investigation) that are reasonably
protective of the Credit Parties, or (d) any investigation or remediation
required pursuant to any lease agreements with the owners of any Properties.

Section 9.22 Amendments to Organizational Documents. Neither the Parent nor the
Borrower will, and nor will they permit any other Credit Party to, amend,
supplement or otherwise modify (or permit to be amended, supplemented or
modified) its organizational documents in any respect that would reasonably be
expected to be materially adverse to the interests of the Administrative Agent
or the Revolving Credit Lenders without the consent of the Administrative Agent
(such consent not to be unreasonably withheld, conditioned or delayed).

Section 9.23 Changes in Fiscal Periods. Neither the Parent nor the Borrower
will, and nor will they permit any other Credit Party to, have its fiscal year
end on a date other than December 31 or change its method of determining fiscal
quarters without the consent of the Administrative Agent (such consent not to be
unreasonably withheld, conditioned or delayed).

ARTICLE X

EVENTS OF DEFAULT; REMEDIES

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

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

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

 

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

(d) any Credit Party shall fail to observe or perform any covenant, condition or
agreement contained in Section 8.02, Section 8.03(a), Section 8.07,
Section 8.14, or Article IX.

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

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

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

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

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

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

(k) one or more judgments for the payment of money in an aggregate amount in
excess of the greater of (a) $10,000,000 and (b) a dollar amount equal to five
percent (5%) of the then effective Borrowing Base (to the extent not covered by
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insurers of the highest claims paying rating or financial strength as to which
the insurer does not dispute coverage and is not subject to an insolvency
proceeding) shall be rendered against any Credit Party or any combination
thereof and the same shall remain undischarged, unvacated or unbonded for a
period of 30 consecutive days during which execution shall not be effectively
stayed, or any action shall be legally taken by a judgment creditor to attach or
levy upon any assets of any Credit Party to enforce any such judgment.

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

(m) a Change in Control shall occur.

Section 10.02 Remedies.

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

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

 

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

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

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

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

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

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

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

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

ARTICLE XI

THE AGENTS

Section 11.01 Appointment of Administrative Agent. Each Lender and the holder of
each Note (if issued) irrevocably appoints and authorizes Administrative Agent
to act on behalf of such Lender or holder under this Agreement and the other
Loan Documents and to exercise such powers hereunder and thereunder as are
specifically delegated to Administrative Agent by the terms hereof and thereof,
together with such powers as may be reasonably incidental thereto, including
without limitation the power to execute or authorize the execution of financing
or similar statements or notices, and other documents. In performing its
functions and duties under this Agreement, Administrative Agent shall act solely
as agent of Lenders and does not assume and shall not be deemed to have assumed
any obligation towards or relationship of agency or trust with or for any Credit
Party.

Section 11.02 Deposit Account with Administrative Agent or any Lender. Borrower
authorizes Administrative Agent and each Lender, in Administrative Agent’s or
such Lender’s sole discretion, upon notice to Borrower to charge its general
deposit account(s), if any, maintained with Administrative Agent or such Lender
for the amount of any principal, interest, or other amounts or costs due under
this Agreement when the same become due and payable under the terms of this
Agreement or the Notes.

 

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Section 11.03 Scope of Administrative Agent’s Duties. Administrative Agent shall
have no duties or responsibilities except those expressly set forth herein, and
shall not, by reason of this Agreement or by the arranging and other services
provided by the Administrative Agent, Syndication Agent, Documentation Agent,
Arrangers or Joint Bookrunners or otherwise, have a fiduciary relationship with
any Lender (and no implied covenants or other obligations shall be read into
this Agreement against Administrative Agent). None of Administrative Agent, its
Affiliates nor any of their respective directors, officers, employees or agents
shall be liable to any Lender for any action taken or omitted to be taken by it
or them under this Agreement or any document executed pursuant hereto, or in
connection herewith or therewith with the consent or at the request of the
Required (or all of Lenders for those acts requiring consent of all of Lenders)
(except for its or their own willful misconduct or gross negligence), nor be
responsible for or have any duties to ascertain, inquire into or verify (a) any
recitals or warranties made by any Credit Party or any Affiliate thereof, or any
officer thereof contained herein or therein, (b) the effectiveness,
enforceability, validity or due execution of this Agreement or any document
executed pursuant hereto or any security thereunder, (c) the performance by the
Credit Parties of their respective obligations hereunder or thereunder, or
(d) the satisfaction of any condition hereunder or thereunder, including without
limitation in connection with the making of any Loan or the issuance of any
Letter of Credit. Administrative Agent and its Affiliates shall be entitled to
rely upon any certificate, notice, document or other communication (including
any cable, telegraph, telex, facsimile transmission or oral communication)
believed by it to be genuine and correct and to have been sent or given by or on
behalf of a proper person. Administrative Agent may treat the payee of any Note
as the holder thereof. Administrative Agent may employ agents and may consult
with legal counsel, independent public accountants and other experts selected by
it and shall not be liable to Lenders (except as to money or property received
by them or their authorized agents), for the negligence or misconduct of any
such agent selected by it with reasonable care or for any action taken or
omitted to be taken by it in good faith in accordance with the advice of such
counsel, accountants or experts.

Section 11.04 Successor Administrative Agent. Administrative Agent may resign as
such at any time upon at least thirty (30) days prior notice to Borrower and
each of Lenders. If Administrative Agent at any time shall resign or if the
office of Administrative Agent shall become vacant for any other reason,
Majority Revolving Credit Lenders shall, by written instrument, appoint
successor agent(s) (“Successor Administrative Agent”) satisfactory to such
Majority Revolving Credit Lenders and, so long as no Default or Event of Default
has occurred and is continuing, to Borrower (which approval shall not be
unreasonably withheld or delayed); provided, however that any such Successor
Administrative Agent shall be a bank or a trust company or other financial
institution which maintains an office in the United States, or a commercial bank
organized under the laws of the United States or any state thereof, or any
Affiliate of such bank or trust company or other financial institution which is
engaged in the banking business, and shall have a combined capital and surplus
of at least $500,000,000. If the Person serving as Administrative Agent is a
Defaulting Lender pursuant to clause (d) of the definition thereof, the Required
Revolving Credit Lenders may, to the extent permitted by applicable law, by
notice in writing to the Borrower and such Person remove such Person as
Administrative Agent and, in consultation with the Borrower, appoint a Successor
Administrative Agent. If no such Successor Administrative Agent shall have been
so appointed by the Required Revolving Credit Lenders and shall have accepted
such appointment within thirty (30) days (or such earlier day as shall be agreed
by the Required Revolving Credit Lenders) (the “Removal Effective Date”), then
such removal shall nonetheless become effective in accordance with such notice
on the Removal Effective Date. Such Successor Administrative Agent shall
thereupon become Administrative Agent hereunder, as applicable, and
Administrative Agent shall deliver or cause to be delivered to any successor
agent such documents of transfer and assignment as such Successor Administrative
Agent may reasonably request. If a Successor Administrative Agent is not so
appointed or does not accept such appointment before the resigning or removed
Administrative Agent’s resignation or removal becomes effective, the resigning
or removed Administrative Agent may appoint a temporary successor to act until
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Majority Revolving Credit Lenders or Required Revolving Credit Lenders, as
applicable, and, if applicable, Borrower, is made and accepted, or if no such
temporary successor is appointed as provided above by the resigning or removed
Administrative Agent, the Majority Revolving Credit Lenders shall thereafter
perform all of the duties of the resigning or removed Administrative Agent
hereunder until such appointment by the Majority Revolving Credit Lenders and,
if applicable, Borrower, is made and accepted. Such Successor Administrative
Agent shall succeed to all of the rights and obligations of the resigning or
removed Administrative Agent as if originally named. The resigning or removed
Administrative Agent shall duly assign, transfer and deliver to such Successor
Administrative Agent all moneys at the time held by the resigning or removed
Administrative Agent hereunder after deducting therefrom its expenses for which
it is entitled to be reimbursed hereunder. Upon such succession of any such
Successor Administrative Agent, the resigning or removed Administrative Agent
shall be discharged from its duties and obligations, in its capacity as
Administrative Agent hereunder, except for its gross negligence or willful
misconduct arising prior to its resignation or removal hereunder, and the
provisions of this Article XI shall continue in effect for the benefit of the
resigning or removed Administrative Agent in respect of any actions taken or
omitted to be taken by it while it was acting as Administrative Agent.

Section 11.05 Credit Decisions. Each Lender acknowledges that it has,
independently of Administrative Agent and each other Lender and based on the
financial statements of Credit Parties and such other documents, information and
investigations as it has deemed appropriate, made its own credit decision to
extend credit hereunder from time to time. Each Lender also acknowledges that it
will, independently of Administrative Agent and each other Lender and based on
such other documents, information and investigations as it shall deem
appropriate at any time, continue to make its own credit decisions as to
exercising or not exercising from time to time any rights and privileges
available to it under this Agreement, any Loan Document or any other document
executed pursuant hereto.

Section 11.06 Authority of Administrative Agent to Enforce This Agreement. Each
Lender, subject to the terms and conditions of this Agreement, grants
Administrative Agent full power and authority as attorney-in-fact to institute
and maintain actions, suits or proceedings for the collection and enforcement of
any Obligations outstanding under this Agreement or any other Loan Document and
to file such proofs of debt or other documents as may be necessary to have the
claims of Lenders allowed in any proceeding relative to the Credit Parties, or
their respective creditors or affecting their respective properties, and to take
such other actions which Administrative Agent considers to be necessary or
desirable for the protection, collection and enforcement of the Notes, this
Agreement or the other Loan Documents.

Section 11.07 Indemnification of Administrative Agent. Lenders agree (which
agreement shall survive the expiration or termination of this Agreement) to
indemnify Administrative Agent and its Affiliates (to the extent not reimbursed
by the Credit Parties, but without limiting any obligation of any Credit Party
to make such reimbursement), ratably according to their respective Applicable
Revolving Credit Percentage, from and against any and all claims, damages,
losses, liabilities, costs or expenses of any kind or nature whatsoever
(including, without limitation, reasonable fees and expenses of house and
outside counsel) which may be imposed on, incurred by, or asserted against
Administrative Agent and its Affiliates in any way relating to or arising out of
this Agreement, any of the other Loan Documents or the transactions contemplated
hereby or any action taken or omitted by Administrative Agent and its Affiliates
under this Agreement or any of the Loan Documents; provided, however, that no
Lender shall be liable for any portion of such claims, damages, losses,
liabilities, costs or expenses resulting from Administrative Agent’s or its
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negligence or willful misconduct. Without limitation of the foregoing, each
Lender agrees to reimburse Administrative Agent and its Affiliates promptly upon
demand for its ratable share of any reasonable out-of-pocket expenses
(including, without limitation, reasonable fees and expenses of house and
outside counsel) incurred by Administrative Agent and its Affiliates in
connection with the preparation, execution, delivery, administration,
modification, amendment or enforcement (whether through negotiations, legal
proceedings or otherwise) of, or legal advice in respect of rights or
responsibilities under, this Agreement or any of the other Loan Documents, to
the extent that Administrative Agent and its Affiliates are not reimbursed for
such expenses by Borrower, but without limiting the obligation of the Credit
Parties to make such reimbursement. Each Lender agrees to reimburse
Administrative Agent and its Affiliates promptly upon demand for its ratable
share of any amounts owing to Administrative Agent and its Affiliates by Lenders
pursuant to this Section, provided that, if Administrative Agent or its
Affiliates are subsequently reimbursed by Borrower for such amounts, they shall
refund to Lenders on a pro rata basis the amount of any excess reimbursement. If
the indemnity furnished to Administrative Agent and its Affiliates under this
Section shall become impaired as determined in Administrative Agent’s reasonable
judgment or Administrative Agent shall elect in its sole discretion to have such
indemnity confirmed by Lenders (as to specific matters or otherwise),
Administrative Agent shall give notice thereof to each Lender and, until such
additional indemnity is provided or such existing indemnity is confirmed,
Administrative Agent may cease, or not commence, to take any action. Any amounts
paid by Lenders hereunder to Administrative Agent or its Affiliates shall be
deemed to constitute part of the Obligations hereunder.

Section 11.08 Knowledge of Default. It is expressly understood and agreed that
Administrative Agent shall be entitled to assume that no Default or Event of
Default has occurred and is continuing, unless the officers of Administrative
Agent immediately responsible for matters concerning this Agreement shall have
received a written notice from a Lender or a Credit Party specifying such
Default or Event of Default and stating that such notice is a “notice of
default”. Upon receiving such a notice, Administrative Agent shall promptly
notify each Lender of such Default or Event of Default and provide each Lender
with a copy of such notice and shall endeavor to provide such notice to Lenders
within three (3) Business Days (but without any liability whatsoever in the
event of its failure to do so). Administrative Agent shall also furnish Lenders,
promptly upon receipt, with copies of all other notices or other information
required to be provided by Borrower hereunder.

Section 11.09 Administrative Agent’s Authorization; Action by Lenders. Except as
otherwise expressly provided herein, whenever Administrative Agent is authorized
and empowered hereunder on behalf of Lenders to give any approval or consent, or
to make any request, or to take any other action on behalf of Lenders (including
without limitation the exercise of any right or remedy hereunder or under the
other Loan Documents), Administrative Agent shall be required to give such
approval or consent, or to make such request or to take such other action only
when so requested in writing by the Majority Revolving Credit Lenders, any other
specified applicable Revolving Credit Percentage of Lenders or all Lenders, as
applicable hereunder. Action that may be taken by the Majority Revolving Credit
Lenders, any other specified Applicable Revolving Credit Percentage of Lenders
or all of Lenders, as the case may be (as provided for hereunder) may be taken
(i) pursuant to a vote of the requisite percentages of Lenders as required
hereunder at a meeting (which may be held by telephone conference call),
provided that Administrative Agent exercises good faith, diligent efforts to
give all of Lenders reasonable advance notice of the meeting, or (ii) pursuant
to the written consent of the requisite percentages of Lenders as required
hereunder, provided that all of Lenders are given reasonable advance notice of
the requests for such consent.

 

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Section 11.10 Enforcement Actions by Administrative Agent. Except as otherwise
expressly provided under this Agreement or in any of the other Loan Documents
and subject to the terms hereof, Administrative Agent will take such action,
assert such rights and pursue such remedies under this Agreement and the other
Loan Documents as the Majority Revolving Credit Lenders, any other specified
Applicable Revolving Credit Percentage or all of Lenders, as the case may be (as
provided for hereunder), shall direct; provided, however, that Administrative
Agent shall not be required to act or omit to act if, in the reasonable judgment
of Administrative Agent, such action or omission may expose Administrative Agent
to personal liability for which Administrative Agent has not been satisfactorily
indemnified hereunder or is contrary to this Agreement, any of the Loan
Documents or applicable law. Except as expressly provided above or elsewhere in
this Agreement or the other Loan Documents, no Lender (other than Administrative
Agent, acting in its capacity as agent) shall be entitled to take any
enforcement action of any kind under this Agreement or any of the other Loan
Documents.

Section 11.11 Collateral Matters.

(a) Administrative Agent is authorized on behalf of all Lenders, without the
necessity of any notice to or further consent from Lenders, from time to time to
take any action with respect to any Collateral or the Security Instruments which
may be necessary to perfect and maintain a perfected security interest in and
Liens upon the Collateral granted pursuant to the Loan Documents.

(b) Lenders irrevocably authorize Administrative Agent, in its reasonable
discretion, (1) to release or terminate any Lien granted to or held by
Administrative Agent upon any Collateral (a) upon termination of the Aggregate
Maximum Credit Amount and payment in full of all Obligations payable under this
Agreement and under any other Loan Document; (b) constituting Property
(including, without limitation, Equity Interests in any Person) sold or to be
sold or disposed of as part of or in connection with any disposition (whether by
sale, by merger or by any other form of transaction and including the Property
of any Credit Party that is disposed of as permitted hereby) permitted in
accordance with the terms of this Agreement (including, without limitation, any
Property of a Credit Party that is redesignated as an Unrestricted Subsidiary in
accordance with Section 9.18(b)); (c) constituting property in which the Credit
Parties owned no interest at the time the Lien was granted or at any time
thereafter; or (d) if approved, authorized or ratified in writing by the
Majority Revolving Credit Lenders, or all Lenders, as the case may be, as
provided in Section 12.02; (2) to subordinate the Lien granted to or held by
Administrative Agent on any Collateral to any other holder of a Lien on such
Collateral which is permitted by Section 9.03(c) and (d) hereof; and (3) if all
of the Equity Interests held by the Credit Parties in any Person are sold or
otherwise transferred to any transferee other than another Credit Party as part
of or in connection with any disposition (whether by sale, by merger or by any
other form of transaction) permitted in accordance with the terms of this
Agreement, to release such Person from all of its obligations under the Loan
Documents (including, without limitation, under any Guaranty Agreement). Upon
request by Administrative Agent at any time, Lenders will confirm in writing
Administrative Agent’s authority to release particular types or items of
Collateral pursuant to this Section 11.11(b).

Section 11.12 Agents in their Individual Capacities. JPMorgan Chase Bank, N.A.
and its Affiliates, successors and assigns shall each have the same rights and
powers hereunder as any other Lender and may exercise or refrain from exercising
the same as though such Lender were not Administrative Agent, Syndication Agent
or Documentation Agent. JPMorgan Chase Bank, N.A. and its Affiliates may
(without having to account therefor to any Lender) accept deposits from, lend
money to, and generally engage in any kind of banking, trust, financial

 

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advisory or other business with the Credit Parties as if such Lender were not
acting as Administrative Agent, Syndication Agent or Documentation Agent
hereunder, and may accept fees and other consideration therefor without having
to account for the same to Lenders.

Section 11.13 Administrative Agent’s Fees. Until the Obligations have been
repaid and discharged in full and no commitment to extend any credit hereunder
is outstanding, Borrower shall pay to Administrative Agent, as applicable, any
agency or other fee(s) set forth (or to be set forth from time to time) in the
applicable Fee Letter on the terms set forth therein. Subject to Section 12.12,
the agency fees referred to in this Section 11.13 shall not be refundable under
any circumstances.

Section 11.14 Documentation Agent or other Titles. Any Lender identified on the
facing page or signature page of this Agreement or in any amendment hereto or as
designated with consent of Administrative Agent in any assignment agreement as
Lead Arranger, Documentation Agent, Syndications Agent, Bookrunner or any
similar titles, shall not have any right, power, obligation, liability,
responsibility or duty under this Agreement as a result of such title other than
those applicable to all Lenders as such. Without limiting the foregoing, Lenders
so identified shall not have or be deemed to have any fiduciary relationship
with any Lender as a result of such title. Each Lender acknowledges that it has
not relied, and will not rely, on Lender so identified in deciding to enter into
this Agreement or in taking or not taking action hereunder.

Section 11.15 No Reliance on Administrative Agent’s Customer Identification
Program.

(a) Each Lender acknowledges and agrees that neither such Lender, nor any of its
Affiliates, participants or assignees, may rely on Administrative Agent to carry
out such Lender’s, Affiliate’s, participant’s or assignee’s customer
identification program, or other obligations required or imposed under or
pursuant to the USA Patriot Act or the regulations thereunder, including the
regulations contained in 31 CFR 103.121 (as hereafter amended or replaced, the
“CIP Regulations”), or any other Anti-Terrorism Law, including any programs
involving any of the following items relating to or in connection with any
Credit Party, any of their respective Affiliates or agents, the Loan Documents
or the transactions hereunder: (i) any identify verification procedures,
(ii) any record keeping, (iii) any comparisons with government lists, (iv) any
customer notices or (v) any other procedures required under the CIP Regulations
or such other laws.

(b) Each Lender or assignee or participant of a Lender that is not organized
under the laws of the United States or a state thereof (and is not excepted from
the certification requirement contained in Section 313 of the USA Patriot Act
and the applicable regulations because it is both (i) an affiliate of a
depository institution or foreign bank that maintains a physical presence in the
United States or foreign country, and (ii) subject to supervision by a banking
authority regulating such affiliated depository institution or foreign bank)
shall deliver to Administrative Agent the certification, or, if applicable,
recertification, certifying that such Lender is not a “shell” and certifying to
other matters as required by Section 313 of the USA Patriot Act and the
applicable regulations: (x) within 10 days after the Effective Date, and (y) at
such other times as are required under the USA Patriot Act.

 

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ARTICLE XII

MISCELLANEOUS

Section 12.01 Notices.

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

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

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

Section 12.02 Waivers; Amendments.

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

(b) Neither this Agreement nor any provision hereof nor any Security Instrument
nor any provision thereof may be waived, amended or modified except pursuant to
an agreement or agreements in writing entered into by the Borrower and the
Majority Revolving Credit Lenders or by the

 

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Borrower and the Administrative Agent with the consent of the Majority Revolving
Credit Lenders; provided that no such agreement shall increase the Commitment or
the Maximum Credit Amount or postpone the scheduled date of expiration of any
Commitment of any Revolving Credit Lender without the written consent of such
Revolving Credit Lender, increase the Borrowing Base without the written consent
of each Revolving Credit Lender (other than any Defaulting Lender), decrease or
maintain the Borrowing Base without the consent of the Required Revolving Credit
Lenders, or modify Section 2.06 in any manner without the consent of the
Required Revolving Credit Lenders; provided that a Scheduled Redetermination may
be postponed by the Required Revolving Credit Lenders, reduce the principal
amount of any Loan or Reimbursement Obligation or reduce the rate of interest
thereon, or reduce any fees payable hereunder, or reduce any other Obligations
hereunder or under any other Loan Document, without the written consent of each
Lender affected thereby, postpone the scheduled date of payment or prepayment of
the principal amount of any Loan or Reimbursement Obligation, or any interest
thereon, or any fees payable hereunder, or any other Obligations hereunder or
under any other Loan Document, or reduce the amount of, waive or excuse any such
payment, or postpone or extend the Termination Date without the written consent
of each Lender affected thereby, change Section 5.01(b), Section 5.01(c) or any
other term or condition hereof in a manner that would alter the pro rata sharing
of payments required thereby, without the written consent of each Lender, waive
or amend Section 3.03(c), Section 6.01 or Section 10.02(c), without the written
consent of each Lender, release any Guarantor (except as set forth in the
Guaranty Agreement or this Agreement or as a result of a transaction permitted
under Section 9.11), release all or substantially all of the Collateral (other
than as provided in Section 11.11), or reduce the percentage set forth in
Section 8.14(a) to less than 85%, without the written consent of each Lender, or
impose any greater restriction on the ability of any Revolving Credit Lender to
assign any of its rights or obligations hereunder without the written consent
of, if such Lender is a Revolving Credit Lender, the Majority Revolving Credit
Lenders, or change any of the provisions of this Section 12.02(b) or the
definitions of “Applicable Revolving Credit Percentage”, “Majority Revolving
Credit Lenders”, “Required Revolving Credit Lenders”, “Super Majority Revolving
Credit Lenders” or any other provision hereof specifying the number or
percentage of Lenders required to waive, amend or modify any rights hereunder or
under any other Loan Documents or make any determination or grant any consent
hereunder or any other Loan Documents, without the written consent of each
Lender; provided further that no such agreement shall amend, modify or otherwise
affect the rights or duties of the Administrative Agent, any other Agent, the
Issuing Bank or the Swing Line Lender hereunder or under any other Loan Document
without the prior written consent of the Administrative Agent, such other Agent,
the Issuing Bank or the Swing Line Lender, as the case may be. Notwithstanding
anything to the contrary in this Agreement, fees payable hereunder to any Lender
may be reduced with the consent of the Administrative Agent and the affected
Lender. Notwithstanding the foregoing, any supplement to Schedule 8.14 shall be
effective simply by delivering to the Administrative Agent a supplemental
schedule clearly marked as such and, upon receipt, the Administrative Agent will
promptly deliver a copy thereof to the Lenders.

Section 12.03 Expenses, Indemnity; Damage Waiver.

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

(b) EACH OF THE PARENT AND THE BORROWER SHALL, AND SHALL CAUSE EACH OTHER CREDIT
PARTY TO, INDEMNIFY EACH AGENT, THE ARRANGERS, THE ISSUING BANK AND EACH LENDER,
AND EACH RELATED PARTY OF ANY OF THE FOREGOING PERSONS (EACH SUCH PERSON BEING
CALLED AN “INDEMNITEE”) AGAINST, AND DEFEND AND HOLD EACH INDEMNITEE HARMLESS
FROM, ANY AND ALL LOSSES, CLAIMS, DAMAGES, PENALTIES, LIABILITIES AND RELATED
EXPENSES, INCLUDING THE REASONABLE FEES, CHARGES AND DISBURSEMENTS OF ANY
COUNSEL FOR ANY INDEMNITEE, INCURRED BY OR ASSERTED AGAINST ANY INDEMNITEE
ARISING OUT OF, IN CONNECTION WITH, OR AS A RESULT OF THE EXECUTION OR DELIVERY
OF THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT OR ANY AGREEMENT OR INSTRUMENT
CONTEMPLATED HEREBY OR THEREBY, THE PERFORMANCE BY THE PARTIES HERETO OR THE
PARTIES TO ANY OTHER LOAN DOCUMENT OF THEIR RESPECTIVE OBLIGATIONS HEREUNDER OR
THEREUNDER OR THE CONSUMMATION OF THE TRANSACTIONS CONTEMPLATED HEREBY OR BY ANY
OTHER LOAN DOCUMENT, THE FAILURE OF ANY CREDIT PARTY TO COMPLY WITH THE TERMS OF
ANY LOAN DOCUMENT, INCLUDING THIS AGREEMENT, OR WITH ANY GOVERNMENTAL
REQUIREMENT, ANY INACCURACY OF ANY REPRESENTATION OR ANY BREACH OF ANY WARRANTY
OR COVENANT OF ANY CREDIT PARTY SET FORTH IN ANY OF THE LOAN DOCUMENTS OR ANY
INSTRUMENTS, DOCUMENTS OR CERTIFICATIONS DELIVERED IN CONNECTION THEREWITH, ANY
LOAN OR LETTER OF CREDIT OR THE USE OF THE PROCEEDS THEREFROM, INCLUDING,
WITHOUT LIMITATION, ANY REFUSAL BY THE ISSUING BANK TO HONOR A DEMAND FOR
PAYMENT UNDER A LETTER OF CREDIT IF THE DOCUMENTS PRESENTED IN CONNECTION WITH
SUCH DEMAND DO NOT STRICTLY COMPLY WITH THE TERMS OF SUCH LETTER OF CREDIT, OR
THE PAYMENT OF A DRAWING UNDER ANY LETTER OF CREDIT NOTWITHSTANDING THE
NON-COMPLIANCE, NON-DELIVERY OR OTHER IMPROPER PRESENTATION OF THE DOCUMENTS
PRESENTED IN CONNECTION THEREWITH, ANY OTHER ASPECT OF THE LOAN DOCUMENTS, THE
OPERATIONS OF THE BUSINESS OF THE CREDIT PARTIES AND THEIR RESPECTIVE
SUBSIDIARIES BY THE CREDIT PARTIES AND THEIR RESPECTIVE SUBSIDIARIES, ANY
ASSERTION THAT THE LENDERS WERE NOT ENTITLED TO RECEIVE THE PROCEEDS RECEIVED
PURSUANT TO THE SECURITY INSTRUMENTS, ANY ENVIRONMENTAL LAW APPLICABLE TO THE
CREDIT PARTIES, ANY OF THEIR RESPECTIVE SUBSIDIARIES OR ANY OF THEIR PROPERTIES
OR OPERATIONS, INCLUDING, THE PRESENCE, GENERATION, STORAGE, RELEASE, THREATENED
RELEASE, USE, TRANSPORT, DISPOSAL, ARRANGEMENT OF DISPOSAL OR TREATMENT OF
HAZARDOUS MATERIALS ON OR AT ANY OF THEIR PROPERTIES, THE BREACH OR
NON-COMPLIANCE BY ANY CREDIT PARTY OR ANY OF THEIR RESPECTIVE SUBSIDIARIES WITH
ANY ENVIRONMENTAL LAW APPLICABLE TO ANY CREDIT PARTY

 

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OR ANY OF THEIR RESPECTIVE SUBSIDIARIES, THE PAST OWNERSHIP BY ANY CREDIT PARTY
OR ANY OF THEIR RESPECTIVE SUBSIDIARIES OF ANY OF THEIR PROPERTIES OR PAST
ACTIVITY ON ANY OF THEIR PROPERTIES WHICH, THOUGH LAWFUL AND FULLY PERMISSIBLE
AT THE TIME, COULD RESULT IN PRESENT LIABILITY, THE PRESENCE, USE, RELEASE,
STORAGE, TREATMENT, DISPOSAL, GENERATION, THREATENED RELEASE, TRANSPORT,
ARRANGEMENT FOR TRANSPORT OR ARRANGEMENT FOR DISPOSAL OF HAZARDOUS MATERIALS ON
OR AT ANY OF THE PROPERTIES OWNED OR OPERATED BY ANY CREDIT PARTY OR ANY OF
THEIR RESPECTIVE SUBSIDIARIES OR ANY ACTUAL OR ALLEGED PRESENCE OR RELEASE OF
HAZARDOUS MATERIALS ON OR FROM ANY PROPERTY OWNED OR OPERATED BY ANY CREDIT
PARTY OR ANY OF THEIR RESPECTIVE SUBSIDIARIES, ANY ENVIRONMENTAL LIABILITY
RELATED IN ANY WAY TO ANY CREDIT PARTY OR ANY OF THEIR RESPECTIVE SUBSIDIARIES,
OR ANY OTHER ENVIRONMENTAL, HEALTH OR SAFETY CONDITION IN CONNECTION WITH THE
LOAN DOCUMENTS, OR ANY ACTUAL OR PROSPECTIVE CLAIM, LITIGATION, INVESTIGATION OR
PROCEEDING RELATING TO ANY OF THE FOREGOING, AND REGARDLESS OF WHETHER ANY
INDEMNITEE IS A PARTY THERETO, AND SUCH INDEMNITY SHALL EXTEND TO EACH
INDEMNITEE NOTWITHSTANDING THE SOLE OR CONCURRENT NEGLIGENCE OF EVERY KIND OR
CHARACTER WHATSOEVER, WHETHER ACTIVE OR PASSIVE, WHETHER AN AFFIRMATIVE ACT OR
AN OMISSION, INCLUDING WITHOUT LIMITATION, ALL TYPES OF NEGLIGENT CONDUCT
IDENTIFIED IN THE RESTATEMENT (SECOND) OF TORTS OF ONE OR MORE OF THE
INDEMNITEES OR BY REASON OF STRICT LIABILITY IMPOSED WITHOUT FAULT ON ANY ONE OR
MORE OF THE INDEMNITEES; PROVIDED THAT SUCH INDEMNITY SHALL NOT, AS TO ANY
INDEMNITEE, BE AVAILABLE TO THE EXTENT THAT SUCH LOSSES, CLAIMS, DAMAGES,
LIABILITIES OR RELATED EXPENSES ARE DETERMINED BY A COURT OF COMPETENT
JURISDICTION BY FINAL AND NONAPPEALABLE JUDGMENT TO HAVE RESULTED FROM THE GROSS
NEGLIGENCE OR WILLFUL MISCONDUCT OF SUCH INDEMNITEE. THIS SECTION 12.03(B) SHALL
NOT APPLY WITH RESPECT TO TAXES OTHER THAN TAXES THAT REPRESENT LOSSES, CLAIMS,
DAMAGES, ETC. ARISING FROM ANY NON-TAX CLAIM.

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

(d) TO THE EXTENT PERMITTED BY APPLICABLE LAW, NO PARTY TO THIS AGREEMENT SHALL
ASSERT, AND EACH PARTY HEREBY WAIVES, ANY CLAIM AGAINST ANY OTHER PARTY HERETO,
ON ANY THEORY OF LIABILITY, FOR SPECIAL, INDIRECT, CONSEQUENTIAL OR PUNITIVE
DAMAGES (AS OPPOSED TO DIRECT OR ACTUAL DAMAGES) ARISING OUT OF, IN CONNECTION
WITH, OR AS A RESULT OF, THIS AGREEMENT, ANY OTHER LOAN DOCUMENT OR ANY
AGREEMENT OR INSTRUMENT CONTEMPLATED HEREBY OR THEREBY, THE TRANSACTIONS, ANY
LOAN OR LETTER OF CREDIT OR THE USE OF THE PROCEEDS THEREOF.

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

 

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Section 12.04 Successors and Assigns.

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

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

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

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

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

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

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

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

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

 

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(E) no such assignment shall be made to a natural person, an Industry
Competitor, any Credit Party, any Affiliate of any Credit Party, or any of their
respective Subsidiaries; and

(F) no such assignment shall be made to a Defaulting Lender without the consent
of the Administrative Agent, and in the case of an assignment of a Commitment,
the Issuing Bank and the Swing Line Lender.

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

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

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

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

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

(viii) Each Lender that sells a participation shall, acting solely for this
purpose as a non-fiduciary agent of the Borrower, maintain a register on which
it enters the name and address of each Participant and the principal amounts
(and stated interest) of each Participant’s interest in the Loans or other
obligations under the Loan Documents (the “Participant Register”); provided that
no Lender shall have any obligation to disclose all or any portion of the
Participant Register (including the identity of any Participant or any
information relating to a Participant’s interest in any commitments, loans,
letters of credit or its other obligations under any Loan Document) to any
Person except to the extent that such disclosure is necessary to establish that
such commitment, loan, letter of credit or other obligation is in registered
form under Section 5f.103-1(c) of the United States Treasury Regulations. The
entries in the Participant Register shall be conclusive absent manifest error,
and such Lender shall treat each Person whose name is recorded in the
Participant Register as the owner of such participation for all purposes of this
Agreement notwithstanding any notice to the contrary. For the avoidance of
doubt, the Administrative Agent (in its capacity as Administrative Agent) shall
have no responsibility for maintaining a Participant Register.

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

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

 

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Section 12.05 Survival; Revival; Reinstatement.

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

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

Section 12.06 Counterparts; Integration; Effectiveness.

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

(b) This Agreement, the other Loan Documents and any separate letter agreements
with respect to fees payable to the Administrative Agent constitute the entire
contract among the parties relating to the subject matter hereof and thereof and
supersede any and all previous agreements and understandings, oral or written,
relating to the subject matter hereof and thereof. THIS AGREEMENT AND THE OTHER
LOAN DOCUMENTS REPRESENT THE FINAL AGREEMENT AMONG THE PARTIES HERETO AND
THERETO AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR
SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL
AGREEMENTS BETWEEN THE PARTIES.

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

 

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

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

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

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

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

 

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OF ANY SUCH ACTION OR PROCEEDING IN SUCH RESPECTIVE JURISDICTIONS. THIS
SUBMISSION TO JURISDICTION IS NON-EXCLUSIVE AND DOES NOT PRECLUDE A PARTY FROM
OBTAINING JURISDICTION OVER ANOTHER PARTY IN ANY COURT OTHERWISE HAVING
JURISDICTION.

(c) EACH PARTY HEREBY (i) IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE FULLEST
EXTENT PERMITTED BY LAW, TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING
RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT AND FOR ANY COUNTERCLAIM
THEREIN; (ii) IRREVOCABLY WAIVES, TO THE MAXIMUM EXTENT NOT PROHIBITED BY LAW,
ANY RIGHT IT MAY HAVE TO CLAIM OR RECOVER IN ANY SUCH LITIGATION ANY SPECIAL,
EXEMPLARY, PUNITIVE OR CONSEQUENTIAL DAMAGES, OR DAMAGES OTHER THAN, OR IN
ADDITION TO, ACTUAL DAMAGES; (iii) CERTIFIES THAT NO PARTY HERETO NOR ANY
REPRESENTATIVE OR AGENT OF COUNSEL FOR ANY PARTY HERETO HAS REPRESENTED,
EXPRESSLY OR OTHERWISE, OR IMPLIED THAT SUCH PARTY WOULD NOT, IN THE EVENT OF
LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVERS, AND (iv) ACKNOWLEDGES THAT IT
HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT, THE LOAN DOCUMENTS AND THE
TRANSACTIONS CONTEMPLATED HEREBY AND THEREBY BY, AMONG OTHER THINGS, THE MUTUAL
WAIVERS AND CERTIFICATIONS CONTAINED IN THIS SECTION 12.09.

(d) EACH PARTY HEREBY IRREVOCABLY AND UNCONDITIONALLY AGREES THAT (I) SERVICE OF
PROCESS IN ANY SUCH ACTION OR PROCEEDING MAY BE EFFECTED BY MAILING A COPY
THEREOF BY REGISTERED OR CERTIFIED MAIL (OR ANY SUBSTANTIALLY SIMILAR FORM OF
MAIL), POSTAGE PREPAID, TO IT AT ITS ADDRESS SET FORTH IN SECTION 12.01 OR AT
SUCH OTHER ADDRESS OF WHICH THE ADMINISTRATIVE AGENT SHALL HAVE BEEN NOTIFIED
PURSUANT THERETO AND (II) AGREES THAT NOTHING HEREIN SHALL AFFECT THE RIGHT TO
EFFECT SERVICE OF PROCESS IN ANY OTHER MANNER PERMITTED BY LAW.

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

Section 12.11 Confidentiality. Each of the Administrative Agent, the Issuing
Bank and the Lenders agrees to maintain the confidentiality of the Information
(as defined below), except that Information may be disclosed to its and its
Affiliates’ directors, officers, employees and agents, including accountants,
legal counsel and other advisors (it being understood that the Persons to whom
such disclosure is made will be informed of the confidential nature of such
Information and instructed to keep such Information confidential), to the extent
requested by any regulatory authority, to the extent required by applicable laws
or regulations or by any subpoena or similar legal process, to any other party
to this Agreement or any other Loan Document, in connection with the exercise of
any remedies hereunder or under any other Loan Document or any suit, action or
proceeding relating to this Agreement or any other Loan Document or the
enforcement of rights hereunder or thereunder, subject to an agreement
containing provisions substantially the same as those of this Section 12.11, to
any assignee of or Participant in, or any prospective assignee of or Participant
in, any of its rights or obligations under this Agreement or any actual or
prospective counterparty (or its advisors) to any Swap Agreement relating to any
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Borrower or to the extent such Information becomes publicly available other than
as a result of a breach of this Section 12.11 or becomes available to the
Administrative Agent, the Issuing Bank or any Lender on a nonconfidential basis
from a source other than the Borrower. For the purposes of this Section 12.11,
“Information” means all information received from the Credit Parties relating to
the Credit Parties and their businesses, other than any such information that is
available to the Administrative Agent, the Issuing Bank or any Lender on a
nonconfidential basis prior to disclosure by any Credit Party; provided that, in
the case of information received from the Borrower or any Subsidiary 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 12.11 shall be considered to have complied with its
obligation to do so if such Person has exercised the same degree of care to
maintain the confidentiality of such Information as such Person would accord to
its own confidential information.

Section 12.12 Interest Rate Limitation. It is the intention of the parties
hereto that each Lender shall conform strictly to usury laws applicable to it.
Accordingly, if the transactions contemplated hereby would be usurious as to any
Lender under laws applicable to it (including the laws of the United States of
America and the State of Texas or any other jurisdiction whose laws may be
mandatorily applicable to such Lender notwithstanding the other provisions of
this Agreement), then, in that event, notwithstanding anything to the contrary
in any of the Loan Documents or any agreement entered into in connection with or
as security for the Notes, it is agreed as follows: the aggregate of all
consideration which constitutes interest under law applicable to any Lender that
is contracted for, taken, reserved, charged or received by such Lender under any
of the Loan Documents or agreements or otherwise in connection with the Notes
shall under no circumstances exceed the maximum amount allowed by such
applicable law, and any excess shall be canceled automatically and if
theretofore paid shall be credited by such Lender on the principal amount of the
Obligations (or, to the extent that the principal amount of the Obligations
shall have been or would thereby be paid in full, refunded by such Lender to the
Borrower); and in the event that the maturity of the Notes is accelerated by
reason of an election of the holder thereof resulting from any Event of Default
under this Agreement or otherwise, or in the event of any required or permitted
prepayment, then such consideration that constitutes interest under law
applicable to any Lender may never include more than the maximum amount allowed
by such applicable law, and excess interest, if any, provided for in this
Agreement or otherwise shall be canceled automatically by such Lender as of the
date of such acceleration or prepayment and, if theretofore paid, shall be
credited by such Lender on the principal amount of the Obligations (or, to the
extent that the principal amount of the Obligations shall have been or would
thereby be paid in full, refunded by such Lender to the Borrower). All sums paid
or agreed to be paid to any Lender for the use, forbearance or detention of sums
due hereunder shall, to the extent permitted by law applicable to such Lender,
be amortized, prorated, allocated and spread throughout the stated term of the
Loans until payment in full so that the rate or amount of interest on account of
any Loans hereunder does not exceed the maximum amount allowed by such
applicable law. If at any time and from time to time the amount of interest
payable to any Lender on any date shall be computed at the Highest Lawful Rate
applicable to such Lender pursuant to this Section 12.12 and in respect of any
subsequent interest computation period the amount of interest otherwise payable
to such Lender would be less than the amount of interest payable to such Lender
computed at the Highest Lawful Rate applicable to such Lender, then the amount
of interest payable to such Lender in respect of such subsequent interest
computation period shall continue to be computed at the Highest Lawful Rate
applicable to such Lender until the total amount of interest payable to such
Lender shall equal the total amount of interest which would have been payable to
such Lender if the total amount of interest had been computed without giving
effect to this Section 12.12.

 

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Section 12.13 EXCULPATION PROVISIONS.

(A) EACH OF THE PARTIES HERETO SPECIFICALLY AGREES THAT IT HAS A DUTY TO READ
THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS AND AGREES THAT IT IS CHARGED WITH
NOTICE AND KNOWLEDGE OF THE TERMS OF THIS AGREEMENT AND THE OTHER LOAN
DOCUMENTS; THAT IT HAS IN FACT READ THIS AGREEMENT AND IS FULLY INFORMED AND HAS
FULL NOTICE AND KNOWLEDGE OF THE TERMS, CONDITIONS AND EFFECTS OF THIS
AGREEMENT; THAT IT HAS BEEN REPRESENTED BY INDEPENDENT LEGAL COUNSEL OF ITS
CHOICE THROUGHOUT THE NEGOTIATIONS PRECEDING ITS EXECUTION OF THIS AGREEMENT AND
THE OTHER LOAN DOCUMENTS; AND HAS RECEIVED THE ADVICE OF ITS ATTORNEY IN
ENTERING INTO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS; AND THAT IT
RECOGNIZES THAT CERTAIN OF THE TERMS OF THIS AGREEMENT AND THE OTHER LOAN
DOCUMENTS RESULT IN ONE PARTY ASSUMING THE LIABILITY INHERENT IN SOME ASPECTS OF
THE TRANSACTION AND RELIEVING THE OTHER PARTY OF ITS RESPONSIBILITY FOR SUCH
LIABILITY. EACH PARTY HERETO AGREES AND COVENANTS THAT IT WILL NOT CONTEST THE
VALIDITY OR ENFORCEABILITY OF ANY EXCULPATORY PROVISION OF THIS AGREEMENT AND
THE OTHER LOAN DOCUMENTS ON THE BASIS THAT THE PARTY HAD NO NOTICE OR KNOWLEDGE
OF SUCH PROVISION OR THAT THE PROVISION IS NOT “CONSPICUOUS”.

(B) EACH OF THE PARENT AND THE BORROWER HEREBY ACKNOWLEDGES THAT (I) THE CREDIT
FACILITIES PROVIDED FOR HEREUNDER AND ANY RELATED ARRANGING OR OTHER SERVICES IN
CONNECTION THEREWITH (INCLUDING IN CONNECTION WITH ANY AMENDMENT, WAIVER OR
OTHER MODIFICATION HEREOF OR OF ANY OTHER LOAN DOCUMENT) ARE AN ARM’S-LENGTH
COMMERCIAL TRANSACTION BETWEEN THE PARENT, THE BORROWER AND THE OTHER CREDIT
PARTIES, ON THE ONE HAND, AND THE ADMINISTRATIVE AGENT THE LENDERS AND THE
ISSUING BANK, ON THE OTHER HAND, AND THE PARENT, THE BORROWER AND THE OTHER
CREDIT PARTIES ARE CAPABLE OF EVALUATING AND UNDERSTANDING AND UNDERSTAND AND
ACCEPT THE TERMS, RISKS AND CONDITIONS OF THE TRANSACTIONS CONTEMPLATED HEREBY
AND BY THE OTHER LOAN DOCUMENTS (INCLUDING ANY AMENDMENT, WAIVER OR OTHER
MODIFICATION HEREOF OR THEREOF); (II) IN CONNECTION WITH THE PROCESS LEADING TO
SUCH TRANSACTION, EACH OF THE ADMINISTRATIVE AGENT, THE LENDERS AND THE ISSUING
BANK IS AND HAS BEEN ACTING SOLELY AS A PRINCIPAL AND IS NOT THE FINANCIAL
ADVISOR, AGENT OR FIDUCIARY FOR ANY OF THE PARENT, THE BORROWER, ANY OTHER
CREDIT PARTY OR ANY OF THEIR RESPECTIVE AFFILIATES, EQUITY HOLDERS, CREDITORS OR
EMPLOYEES OR ANY OTHER PERSON; (III) NEITHER THE ADMINISTRATIVE AGENT, ANY OTHER
AGENT, ANY ARRANGER, ANY LENDER NOR ANY ISSUING BANK HAS ASSUMED OR WILL ASSUME
AN ADVISORY, AGENCY OR FIDUCIARY RESPONSIBILITY IN FAVOR OF THE PARENT, THE
BORROWER OR ANY OTHER CREDIT PARTY WITH RESPECT TO ANY OF THE TRANSACTIONS
CONTEMPLATED HEREBY OR THE PROCESS LEADING THERETO, INCLUDING WITH RESPECT TO
ANY AMENDMENT, WAIVER OR OTHER MODIFICATION HEREOF OR OF ANY OTHER LOAN DOCUMENT
(IRRESPECTIVE OF WHETHER THE ADMINISTRATIVE AGENT, ANY OTHER AGENT, ANY
ARRANGER, ANY LENDER OR ANY ISSUING BANK HAS ADVISED OR IS CURRENTLY ADVISING
ANY OF THE PARENT, THE BORROWER, THE OTHER CREDIT PARTIES OR THEIR RESPECTIVE
AFFILIATES ON OTHER MATTERS) AND NONE OF THE ADMINISTRATIVE AGENT, ANY OTHER
AGENT, ANY ARRANGER, ANY LENDER OR ANY ISSUING BANK HAS ANY OBLIGATION TO ANY OF
THE PARENT, THE BORROWER, THE OTHER CREDIT PARTIES OR THEIR RESPECTIVE

 

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AFFILIATES WITH RESPECT TO THE TRANSACTIONS CONTEMPLATED HEREBY, IN EACH CASE,
EXCEPT THOSE OBLIGATIONS EXPRESSLY SET FORTH HEREIN AND IN THE OTHER LOAN
DOCUMENTS; (IV) THE PARENT, THE BORROWER, THE OTHER CREDIT PARTIES AND THEIR
RESPECTIVE AFFILIATES WILL NOT ASSERT ANY CLAIM BASED ON ALLEGED BREACH OF
FIDUCIARY DUTY; (V) THE ADMINISTRATIVE AGENT AND ITS AFFILIATES, EACH LENDER AND
ITS AFFILIATES AND EACH ISSUING BANK AND ITS AFFILIATES MAY BE ENGAGED IN A
BROAD RANGE OF TRANSACTIONS THAT INVOLVE INTERESTS THAT DIFFER FROM THOSE OF THE
PARENT, THE BORROWER, THE OTHER CREDIT PARTIES AND THEIR RESPECTIVE AFFILIATES,
AND NONE OF THE ADMINISTRATIVE AGENT, ANY LENDER OR ANY ISSUING BANK HAS ANY
OBLIGATION TO DISCLOSE ANY OF SUCH INTERESTS BY VIRTUE OF ANY ADVISORY, AGENCY
OR FIDUCIARY RELATIONSHIP; AND (VI) NEITHER THE ADMINISTRATIVE AGENT, ANY LENDER
OR ANY ISSUING BANK HAS PROVIDED AND NONE WILL PROVIDE ANY LEGAL, ACCOUNTING,
REGULATORY OR TAX ADVICE WITH RESPECT TO ANY OF THE TRANSACTIONS CONTEMPLATED
HEREBY (INCLUDING ANY AMENDMENT, WAIVER OR OTHER MODIFICATION HEREOF OR OF ANY
OTHER LOAN DOCUMENT) AND EACH OF THE PARENT AND THE BORROWER HAS CONSULTED ITS
OWN LEGAL, ACCOUNTING, REGULATORY AND TAX ADVISORS TO THE EXTENT IT HAS DEEMED
APPROPRIATE. EACH OF THE PARENT AND THE BORROWER HEREBY WAIVES AND RELEASES, TO
THE FULLEST EXTENT PERMITTED BY LAW, ANY CLAIMS THAT IT MAY HAVE AGAINST THE
ADMINISTRATIVE AGENT WITH RESPECT TO ANY BREACH OR ALLEGED BREACH OF AGENCY OR
FIDUCIARY DUTY.

Section 12.14 Collateral Matters; Swap Agreements; Cash Management. The benefit
of the Security Instruments and of the provisions of this Agreement relating to
any Collateral securing the Obligations shall also extend to and be available to
Secured Swap Parties and to the Cash Management Banks on a pro rata basis (but
subject to the terms of the Loan Documents, including, without limitation,
provisions thereof relating to the application and priority of payments to the
Persons entitled thereto) in respect of any obligations of the Borrower or any
of its Subsidiaries which arise under Secured Swap Agreements or Secured Cash
Management Agreements. No Secured Swap Party shall have any voting rights under
any Loan Document as a result of the existence of obligations owed to it under
any such Swap Agreements. No Cash Management Bank shall have any voting rights
under any Loan Document as a result of the existence of obligations owed to it
under any such Secured Cash Management Agreements.

Section 12.15 No Third Party Beneficiaries. This Agreement, the other Loan
Documents, and the agreement of the Lenders to make Loans and the Issuing Bank
to issue, amend, renew or extend Letters of Credit hereunder are solely for the
benefit of the Borrower, and no other Person (including, without limitation, any
Subsidiary of the Borrower, any obligor, contractor, subcontractor, supplier or
materialmen) shall have any rights, claims, remedies or privileges hereunder or
under any other Loan Document against the Administrative Agent, any other Agent,
the Issuing Bank or any Lender for any reason whatsoever. There are no third
party beneficiaries.

Section 12.16 USA Patriot Act Notice. Pursuant to Section 326 of the USA Patriot
Act, the Administrative Agent and the Lenders hereby notify the Borrower and its
Subsidiaries that if they or any of their Subsidiaries open an account,
including any loan, deposit account, treasury management account, or other
extension of credit with the Administrative Agent or any Lender, the
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applicable Person’s name, tax identification number, business address and other
information necessary to identify such Person (and may request such Person’s
organizational documents or other identifying documents) to the extent necessary
for the Administrative Agent and the applicable Lender to comply with the USA
Patriot Act.

Section 12.17 Keepwell. Each Credit Party that is a Qualified ECP Guarantor at
the time the Guaranty or the grant of the security interest under the Loan
Documents, in each case, by any Specified Credit Party, becomes effective with
respect to any Swap Obligation, hereby absolutely, unconditionally and
irrevocably undertakes to provide such funds or other support to each Specified
Credit Party with respect to such Swap Obligation as may be needed by such
Specified Credit Party from time to time to honor all of its obligations under
its Guaranty and the other Loan Documents in respect of such Swap Obligation
(but, in each case, only up to the maximum amount of such liability that can be
hereby incurred without rendering the such Qualified ECP Guarantor’s obligations
and undertakings under this Section 12.17 voidable under applicable law relating
to fraudulent conveyance or fraudulent transfer, and not for any greater
amount). The obligations and undertakings of each Qualified ECP Guarantor under
this Section shall remain in full force and effect until the Obligations have
been indefeasibly paid and performed in full. Each Qualified ECP Guarantor
intends this Section to constitute, and this Section shall be deemed to
constitute, a guarantee of the obligations of, and a “keepwell, support, or
other agreement” for the benefit of, each Specified Credit Party for all
purposes of the Commodity Exchange Act.

Section 12.18 Acknowledgement and Consent to Bail-In of EEA Financial
Institutions.

Notwithstanding anything to the contrary in any Loan Document or in any other
agreement, arrangement or understanding among any such parties, each party
hereto acknowledges that any liability of any EEA Financial Institution arising
under any Loan Document may be subject to the write-down and conversion powers
of an EEA Resolution Authority and agrees and consents to, and acknowledges and
agrees to be bound by:

(a) the application of any Write-Down and Conversion Powers by an EEA Resolution
Authority to any such liabilities arising hereunder which may be payable to it
by any party hereto that is an EEA Financial Institution; and

(b) the effects of any Bail-In Action on any such liability, including, if
applicable:

(i) a reduction in full or in part or cancellation of any such liability;

(ii) a conversion of all, or a portion of, such liability into shares or other
instruments of ownership in such EEA Financial Institution, its parent entity,
or a bridge institution that may be issued to it or otherwise conferred on it,
and that such shares or other instruments of ownership will be accepted by it in
lieu of any rights with respect to any such liability under this Agreement or
any other Loan Document; or

(iii) the variation of the terms of such liability in connection with the
exercise of the write-down and conversion powers of any EEA Resolution
Authority.

Section 12.19 Replacement of Administrative Agent. Pursuant to Section 12.04 of
the Existing Credit Agreement, Predecessor Administrative Agent hereby resigns
as administrative agent under the Existing Credit Agreement effective as of the
date

 

117

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hereof. Pursuant to Section 12.04 of the Existing Credit Agreement and Article
XI hereunder, the Administrative Agent is hereby appointed as administrative
agent under this Agreement and hereby becomes the “Successor Administrative
Agent” (as defined in the Existing Credit Agreement) and is vested with all the
rights and duties of Predecessor Administrative Agent and Predecessor
Administrative Agent is discharged from its duties and obligations in its
capacity as administrative agent under the Existing Credit Agreement.

Section 12.20 Assignment of Liens and Other Rights. Predecessor Administrative
Agent hereby grants, bargains, sells, assigns, transfers and conveys, to
Administrative Agent, and Administrative Agent hereby assumes and accepts, all
of Predecessor Administrative Agent’s rights, titles, interests, liens, security
interests, privileges, claims, demands and equities, in each case in its
capacity as administrative agent under the Existing Credit Agreement and the
other “Loan Documents” as defined in the Existing Credit Agreement, existing and
to be existing in connection with the Existing Credit Agreement and such other
“Loan Documents” (as defined in the Existing Credit Agreement), including,
without limitation, all rights, liens and security interests granted to it by
the Credit Parties under such other “Loan Documents” (as defined in the Existing
Credit Agreement) to secure the “Obligations” under and as defined in the
Existing Credit Agreement; provided that (a) Predecessor Administrative Agent
expressly reserves all rights and benefits accruing to it in connection with any
indemnity and reimbursement obligations owed by the Credit Parties under the
Existing Credit Agreement or such other “Loan Documents” (as defined in the
Existing Credit Agreement) upon the terms and conditions therein and
(b) Administrative Agent does not assume, and shall not be obligated to pay,
perform or discharge any claim, debt, obligation, expense or liability of
Predecessor Administrative Agent of any kind, whether known or unknown, absolute
or contingent, under the “Loan Documents” (as defined in the Existing Credit
Agreement) or otherwise, arising out of any act or omission of Predecessor
Administrative Agent occurring on or before the date hereof.

Section 12.21 Amendment and Restatement. Parent, Borrower, Administrative Agent
and the Lenders have agreed that this Agreement is an amendment and restatement
of the Existing Credit Agreement in its entirety, that the terms and provisions
hereof supersede the terms and provisions thereof, and that this Agreement is
not a new or substitute credit agreement or novation of the Existing Credit
Agreement. The Obligations of Parent, Borrower and the other Credit Parties
evidenced under this Agreement and the other Loan Documents are given in
renewal, extension and modification, but not in extinguishment, novation or
discharge, of the “Obligations” under and as defined in the Existing Credit
Agreement.

Section 12.22 Assignment and Assumption of Assigned Interests. Each of the
Lenders (as defined in the Existing Credit Agreement, the “Existing Lenders”),
the Lenders, the Predecessor Administrative Agent and the Administrative Agent
have agreed among themselves, in consultation with the Borrower, to effectuate
an assignment and assumption with respect to the Existing Lenders’ (a) rights
and obligations in their capacity as Existing Lenders under the Existing Credit
Agreement and any other documents or instruments delivered pursuant thereto to
the extent related to all or any of such outstanding rights and obligations of
such Existing Lenders under the Existing Credit Agreement (including any letters
of credit and guarantees included in such facility) and (b) to the extent
permitted to be assigned under applicable law, all claims, suits, causes of
action and any other right of the Existing Lender (in their capacity as an
Existing Lender) against any Person, whether known or unknown, arising under or
in connection with the Existing Credit Agreement, any other documents or
instruments delivered pursuant thereto or the loan transactions governed thereby
or in any way based on or related to any of the foregoing, including contract
claims, tort claims, malpractice claims, statutory claims and all

 

118

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other claims at law or in equity related to the rights and obligations sold and
assigned pursuant to clause (a) above (the rights and obligations sold and
assigned pursuant to clauses (a) and (b) above being referred to herein
collectively as the “Assigned Interests”) in order to, among other things,
remove UBS AG, Stamford Branch, Associated Bank, N.A., CIT Bank, N.A. and Texas
Capital Bank, N.A. (each, an “Exiting Lender”) as Existing Lenders and to
reallocate the Commitments (as defined in the Existing Credit Agreement, the
“Existing Commitments”) and the Loans (as defined in the Existing Credit
Agreement, the “Existing Loans”) to the Lenders (including Bank of America,
N.A., Compass Bank, Barclays Bank PLC, The Bank of Nova Scotia, Canadian
Imperial Bank of Commerce, New York Branch, Capital One Bank, National
Association, ING Capital LLC, BMO Harris Bank, N.A., Fifth Third Bank, PNC Bank,
National Association, The Toronto-Dominion Bank, New York Branch, KeyBank
National Association, Branch Banking & Trust and Goldman Sachs Bank USA as
Lenders (each, a “New Lender”)). The parties hereto hereby consent to the
Existing Lenders’ assignment of the Assigned Interests to the Lenders (including
the New Lenders) and the assumption by the Lenders (including the New Lenders)
of such Assigned Interests and the reallocation of the Existing Commitments and
the Existing Loans in accordance with this Section 12.22. On the Effective Date,
after giving effect to the assignments and assumptions of the Assigned Interests
and the reallocation of the Existing Loans and the Existing Commitments pursuant
to this Section 12.22, the Commitment of each Lender shall be as set forth on
Schedule 1.2. With respect to such Commitments, each Lender shall be deemed to
have acquired the Assigned Interests allocated to it from the Existing Lenders
pursuant to the terms of the Assignment and Assumption attached to the Existing
Credit Agreement as Exhibit E as if each such Lender, each Existing Lender, the
Predecessor Administrative Agent, the Administrative Agent and the Borrower, as
applicable, had executed an Assignment and Assumption Agreement with respect to
such allocation. In connection with the assignment and assumption of Assigned
Interests contemplated in this Section 12.22 and for the purposes of such
assignment and assumption only, the parties hereto, as applicable, hereby agree
to waive the processing and recordation fees required under Section
13.04(b)(ii)(C) of the Existing Credit Agreement. Each Exiting Lender, on behalf
of such party, shall execute and deliver an acknowledgment signature page to
this Agreement to the Administrative Agent.

Section 12.23 Flood Insurance. Notwithstanding any provision in this Agreement,
any Security Instrument or other Loan Document to the contrary, (a) in no event
is (i) any Excluded Asset (as defined in the Security Agreement) or (ii) any
Building or Manufactured (Mobile) Home (as defined in the applicable Flood
Insurance Regulations) included in the definition of “Collateral” and (b) no
Building or Manufactured (Mobile) Home (as defined in the applicable Flood
Insurance Regulations) shall be subject to a Lien under any Security Instrument.
As used herein, “Flood Insurance Regulations” shall mean (i) the National Flood
Insurance Act of 1968, (ii) the Flood Disaster Protection Act of 1973, (iii) the
National Flood Insurance Reform Act of 1994 (amending 42 USC 4001, et seq.),
(iv) the Flood Insurance Reform Act of 2004 and (v) the Biggert-Waters Flood
Insurance Reform Act of 2012, in each case as now or hereafter in effect or any
successor statute thereto and including any regulations promulgated thereunder.

[SIGNATURES BEGIN NEXT PAGE]

 

119

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

 

PARENT:     RSP PERMIAN, INC.       By:  

/s/ Steven Gray

      Name:   Steven Gray       Title:   Chief Executive Officer BORROWER:    
RSP PERMIAN, LLC       By:  

/s/ Steven Gray

      Name:   Steven Gray       Title:   Chief Executive Officer

 

Signature Page

Credit Agreement

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

ADMINISTRATIVE AGENT, ISSUING BANK, SWING LINE LENDER AND LENDER:     JPMORGAN
CHASE BANK, N.A.       By:  

/s/ Arina Mavilian

      Name:   Arina Mavilian       Title:   Authorized Officer

 

Signature Page

Credit Agreement

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

PREDECESSOR AGENT     COMERICA BANK       By:  

/s/ John S. Lesikar

      Name:   John S. Lesikar       Title:   Senior Vice President

 

Signature Page

Credit Agreement

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

ISSUING BANK AND LENDER:     COMERICA BANK       By:  

/s/ John S. Lesikar

      Name:   John S. Lesikar       Title:   Senior Vice President

 

Signature Page

Credit Agreement

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

LENDER:     CITIBANK, N.A.       By:  

/s/ M. Jarrod Bourgeois

      Name:   M. Jarrod Bourgeois       Title:   Senior Vice President

 

Signature Page

Credit Agreement

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

LENDER:     ABN AMRO CAPITAL USA LLC       By:  

/s/ David Montgomery

      Name:   David Montgomery       Title:   Executive Director       By:  

/s/ Darrell Holley

      Name:   Darrell Holley       Title:   Managing Director

 

Signature Page

Credit Agreement

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

LENDER:     BOKF NA, BDA BANK OF TEXAS     By:  

/s/ Mynan C. Feldman

    Name:   Mynan C. Feldman     Title:   Senior Vice President

 

Signature Page

Credit Agreement

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

LENDER:     ROYAL BANK OF CANADA     By:  

/s/ Kristan Spivey

    Name:   Kristan Spivey     Title:   Authorized Signatory

 

Signature Page

Credit Agreement

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

LENDER:     U.S. BANK NATIONAL ASSOCIATION     By:  

/s/ Heather Han

    Name:   Heather Han     Title:   Senior Vice President

 

Signature Page

Credit Agreement

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

LENDER:     BANK OF AMERICA, N.A.     By:  

/s/ Raza Jafferi

    Name:   Raza Jafferi     Title:   Vice President

 

Signature Page

Credit Agreement

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

LENDER:     COMPASS BANK     By:  

/s/ Kathleen J. Bowen

    Name:   Kathleen J. Bowen     Title:   Managing Director

 

Signature Page

Credit Agreement

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

LENDER:     BARCLAYS BANK PLC     By:  

/s/ Christopher Aitkin

    Name:   Christopher Aitkin     Title:   Assistant Vice President

 

Signature Page

Credit Agreement

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

LENDER:     THE BANK OF NOVA SCOTIA     By:  

/s/ Alan Dawson

    Name:   Alan Dawson     Title:   Director

 

Signature Page

Credit Agreement

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

LENDER:     CANADIAN IMPERIAL BANK OF COMMERCE, NEW YORK BRANCH     By:  

/s/ Richard Antl

    Name:   Richard Antl     Title:   Authorized Signatory     By:  

/s/ Trudy Nelson

    Name:   Trudy Nelson     Title:   Authorized Signatory

 

Signature Page

Credit Agreement

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

LENDER:     CAPITAL ONE BANK, NATIONAL ASSOCIATION     By:  

/s/ Nancy Mak

    Name:   Nancy Mak     Title:   Senior Vice President

 

Signature Page

Credit Agreement

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

LENDER:     ING CAPITAL LLC     By:  

/s/ Michael Price

    Name:   Michael Price     Title:   Managing Director     By:  

/s/ Josh Strong

    Name:   Josh Strong     Title:   Director

 

Signature Page

Credit Agreement

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

LENDER:     BMO HARRIS BANK, N.A.     By:  

/s/ Matthew L. Davis

    Name:   Matthew L. Davis     Title:   Vice President

 

Signature Page

Credit Agreement

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

LENDER:     FIFTH THIRD BANK     By:  

/s/ Thomas Kleiderer

    Name:   Thomas Kleiderer     Title:   Director

 

Signature Page

Credit Agreement

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

LENDER:     PNC BANK, NATIONAL ASSOCIATION     By:  

/s/ Sandra Aultman

    Name:   Sandra Aultman     Title:   Managing Director

 

Signature Page

Credit Agreement

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

LENDER:     THE TORONTO-DOMINION BANK, NEW YORK BRANCH     By:  

/s/ Savo Bozic

    Name:   Savo Bozic     Title:   Authorized Signatory

 

Signature Page

Credit Agreement

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

LENDER:     KEYBANK NATIONAL ASSOCIATION     By:  

/s/ George E. McKean

    Name:   George E. McKean     Title:   Senior Vice President

 

Signature Page

Credit Agreement

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

LENDER:     BRANCH BANKING & TRUST     By:  

/s/ Parul June

    Name:   Parul June     Title:   Senior Vice President

 

Signature Page

Credit Agreement

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

LENDER:     GOLDMAN SACHS BANK USA     By:  

/s/ Ryan Durkin

    Name:   Ryan Durkin     Title:   Authorized Signatory

 

Signature Page

Credit Agreement

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

EXITING LENDER:     UBS AG, STAMFORD BRANCH     By:  

/s/ Craig Pearson

    Name:   Craig Pearson     Title:   Associate Director     By:  

/s/ Denise Bushee

    Name:   Denise Bushee     Title:   Associate Director

 

Signature Page

Credit Agreement

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

The undersigned has executed this Agreement solely with respect to Section 12.19
and 12.22.

 

EXITING LENDER:     ASSOCIATED BANK, N.A.     By:  

/s/ Brian Caddell

    Name:   Brian Caddell     Title:   Senior Vice President

 

Signature Page

Credit Agreement

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

The undersigned has executed this Agreement solely with respect to Section 12.19
and 12.22.

 

EXITING LENDER:     CIT BANK, N.A.     By:  

/s/ Katya Evseev

    Name:   Katya Evseev     Title:   Vice President

 

Signature Page

Credit Agreement

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

The undersigned has executed this Agreement solely with respect to Section 12.19
and 12.22.

 

EXITING LENDER:     TEXAS CAPITAL BANK, N.A.     By:  

/s/ Jared R. Mills

    Name:   Jared R. Mills     Title:   Senior Vice President

 

Signature Page

Credit Agreement

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

SCHEDULE 1.1

APPLICABLE MARGIN

 

     Commitment Utilization Grid      Level I   Level II   Level III   Level IV
  Level V

Commitment Utilization Percentage

   £25%   >25% £50%   >50% £75%   >75% £90%   >90%

Eurodollar Revolving Credit Loans

   2.00%   2.25%   2.50%   2.75%   3.00%

Letters of Credit

   2.00%   2.25%   2.50%   2.75%   3.00%

ABR Revolving Credit Loans

   1.00%   1.25%   1.50%   1.75%   2.00%

ABR Swing Line Loans

   1.00%   1.25%   1.50%   1.75%   2.00%

Commitment Fee Rate

   0.375%   0.375%   0.50%   0.50%   0.50%

 

Schedule 1.1

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

SCHEDULE 1.2

ALLOCATIONS

 

Name of Lender

  Applicable
Revolving Credit
Percentage     Elected
Commitment     Maximum Credit
Amount  

JPMorgan Chase Bank, N.A.

    6.78947368 %    $ 61,105,263.16      $ 169,736,842.11   

Comerica Bank

    6.31578947 %    $ 56,842,105.26      $ 157,894,736.83   

Citibank, N.A.

    5.00000000 %    $ 45,000,000.00      $ 125,000,000.00   

ABN AMRO Capital USA LLC

    5.00000000 %    $ 45,000,000.00      $ 125,000,000.00   

BOKF, NA dba Bank of Texas

    5.00000000 %    $ 45,000,000.00      $ 125,000,000.00   

Royal Bank of Canada

    5.00000000 %    $ 45,000,000.00      $ 125,000,000.00   

U.S. Bank National Association

    5.00000000 %    $ 45,000,000.00      $ 125,000,000.00   

Bank of America, N.A.

    5.00000000 %    $ 45,000,000.00      $ 125,000,000.00   

Compass Bank

    5.00000000 %    $ 45,000,000.00      $ 125,000,000.00   

Barclays Bank PLC

    5.00000000 %    $ 45,000,000.00      $ 125,000,000.00   

The Bank of Nova Scotia

    5.00000000 %    $ 45,000,000.00      $ 125,000,000.00   

Canadian Imperial Bank of Commerce, New York Branch

    4.52631579 %    $ 40,736,842.11      $ 113,157,894.75   

Capital One Bank, National Association

    4.52631579 %    $ 40,736,842.11      $ 113,157,894.75   

ING Capital LLC

    4.52631579 %    $ 40,736,842.11      $ 113,157,894.75   

BMO Harris Bank, N.A.

    4.52631579 %    $ 40,736,842.11      $ 113,157,894.75   

Fifth Third Bank

    4.52631579 %    $ 40,736,842.11      $ 113,157,894.75   

PNC Bank, National Association

    4.52631579 %    $ 40,736,842.11      $ 113,157,894.75   

The Toronto-Dominion Bank, New York Branch

    3.68421053 %    $ 33,157,894.73      $ 92,105,263.14   

KeyBank National Association

    3.68421053 %    $ 33,157,894.73      $ 92,105,263.14   

Branch Banking & Trust

    3.68421053 %    $ 33,157,894.73      $ 92,105,263.14   

Goldman Sachs Bank USA

    3.68421053 %    $ 33,157,894.73      $ 92,105,263.14   

Total

    100.00000000 %    $ 900,000,000.00      $ 2,500,000,000.00     

 

 

   

 

 

   

 

 

 

 

Schedule 1.2

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

SCHEDULE 1.3

COMPLIANCE INFORMATION

 

Correct Legal Name

  

Address

  

Type of

Organization

   Jurisdiction of
Organization      Tax identification
number and other
identification
numbers  

RSP Permian, Inc.

  

3141 Hood Street

Suite 701

Dallas, Texas 75219

   Corporation      Delaware         90-1022997   

RSP Permian, L.L.C.

  

3141 Hood Street

Suite 701

Dallas, Texas 75219

   Limited Liability Company      Delaware         36-4779340   

Silver Hill Energy Partners, LLC

  

3141 Hood Street

Suite 701

Dallas, Texas 75219

   Limited Liability Company      Delaware         46-0858911   

 

Schedule 1.3

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

SCHEDULE 1.4

EXISTING LETTERS OF CREDIT SCHEDULE

 

Beneficiary

   LC#    Issuance Date    Expiration
Date    Current
Outstanding
Amount  

TX Railroad Commission

   5297-30    12/03/2010    03/01/2018      50,000.00   

Permitting/Production

   6107-30    10/17/2013    03/01/2018      200,000.00   

City of Midland

   OSB1971T    05/22/2014    05/16/2017      75,000.00   

City of Midland

   OSB1972T    05/22/2014    05/16/2017      75,000.00   

City of Midland

   OSB5292T    03/17/2015    03/18/2017      75,000.00   

City of Midland

   OSB5293T    03/17/2015    03/18/2017      75,000.00   

 

Schedule 1.4

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

SCHEDULE 7.04(c)

MATERIAL DEBT AND LIABILITIES

None.

 

Schedule 7.04(c)

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

SCHEDULE 7.05

LITIGATION

None.

 

Schedule 7.05

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

SCHEDULE 7.06

ENVIRONMENTAL MATTERS

None.

 

Schedule 7.06

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

SCHEDULE 7.14

SUBSIDIARIES

Silver Hill Energy Partners, LLC, a Delaware limited liability company

 

Schedule 7.14

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

SCHEDULE 7.19

MARKETING AGREEMENTS

 

1. Crude Oil Purchase Confirmation between Shell Trading (US) Company, as Buyer
and RSP Permian, LLC, as Seller, effective December 1, 2012 through November 30,
2017.

 

2. Crude Oil Purchase Contract between Enterprise Crude Oil LLC, as Buyer and
RSP Permian, LLC, as Seller, effective July 1, 2015 through June 30, 2020.

 

3. Crude Oil Purchase Contract between Plains Marketing, L.P., as Buyer and RSP
Permian, LLC, as Seller, effective June 1, 2016 through April 1, 2021.

 

Schedule 7.19

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

SCHEDULE 7.20

SWAP AGREEMENTS

 

RSP Permian Hedge Contracts

 

Contract

Months

  Monthly
Vol.     Short
Put     Floor     Ceiling     Swap     Def. Prem.     Mid-Cush  

2016 Contracts

               

Three-way Collar Contracts (5/15/15) – JPM EF9-IL&FJF

  Jan – Dec     25,000      $ 45.00      $ 55.00      $ 74.05         

Three-way Collar Contracts (6/11/15) – ABN 13741353-55

  Jan – Dec     15,000      $ 45.00      $ 55.00      $ 75.00         

Def. Put Contracts (4/28/16) – ABN 17293938

  July – Dec     40,000        $ 45.00          $ 3.60     

Def. Put Contracts (4/28/16) – JPM EF9-1ZAANT

  July – Dec     35,000        $ 45.00          $ 3.60     

Def. Put Contracts (4/29/16) – ABN 17313575

  July – Dec     40,000        $ 45.00          $ 3.40     

Def. Put Contracts (4/29/16) – JPM Ef9-1ZCPMN

  July – Dec     35,000        $ 45.00          $ 3.40     

Def. Put Contracts (5/18/16) – ABN 17498580

  July – Dec     40,000        $ 45.00          $ 2.75     

Def. Put Contracts (5/18/16) – JPM EF9-20KH7V

  July – Dec     35,000        $ 45.00          $ 2.75     

Def. Put Contracts (6/24/16) – JPM EFP-22TCST

  July – Dec     Varies        $ 45.00          $ 1.93     

Def. Put Contracts (6/24/16) – ABN 17904065

  July – Dec     Varies        $ 45.00          $ 2.00     

Def. Put Contracts (6/24/16) – ABN 17904059

  July – Dec     Varies        $ 45.00          $ 2.00     

2017 Contracts

               

Put Spread Contracts (9/29/16) – JPM EF9-262NBH

  Jan – Mar     Varies      $ 35.00      $ 45.00          $ 2.32     

Three-way Collar Contracts (9/29/16) – ABN 18880384

  Jan – Mar     Varies      $ 35.00      $ 45.00      $ 54.25         

Costless Collar Contract (10/5/16) – ABN 18938524

  Apr – Dec     Varies        $ 45.00      $ 60.25         

Def. Put Contracts (10/11/16) – JPM EF9-26VPPC

  Apr – Dec     Varies        $ 49.00          $ 4.05     

Def. Put Contracts (10/11/16) – JPM EF9-26WNTQ

  Apr – Dec     Varies        $ 48.00          $ 3.95     

Costless Collar Contracts (10/12/16) – ABN 19015599

  Jan – Dec     Varies        $ 45.00      $ 59.75         

Mid-Cush Contracts – JP Morgan (11/29/16)

  Jan – Dec     Varies                $ .50   

Mid-Cush Contracts – JP Morgan (11/30/16)

  Jan – Dec     Varies                $ .50   

Mid-Cush Contracts – JP Morgan (11/30/16)

  Jan – Dec     Varies                $ .50   

Mid-Cush Contracts – JP Morgan (12/5/16)

  Jan – June     Varies                $ .25   

Mid-Cush Contracts – JP Morgan (12/5/16)

  Jan – June     Varies                $ .25   

Mid-Cush Contracts – JP Morgan (12/6/16)

  Jan – June     Varies                $ .20   

Mid-Cush Contracts – JP Morgan (12/6/16)

  Jan – June     Varies                $ .20   

Mid-Cush Contracts – JP Morgan (12/15/16)

  Jan – June     Varies                $ .05   

 

Schedule 7.20

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

SCHEDULE 9.02(g)

EXISTING UNSECURED NOTES

 

1. $700 million in 6.625% Sr. Unsecured Notes, Due 2022

 

2. $450 million in 5.25% Sr. Unsecured Notes, Due 2025

 

Schedule 9.02(g)

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

SCHEDULE 9.05

INVESTMENTS

 

1. HMW Fluid Management LLC

 

2. LPLS, L.L.C.

 

Schedule 9.05

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

SCHEDULE 12.01

NOTICES

Credit Parties:

RSP Permian, Inc.

3141 Hood Street, Suite 350

Dallas, Texas 75219

Attn: Jim Mutrie

Telephone: (214) 252-2728

E-Mail: jmutrie@rsppermian.com

With a copy to:

Vinson & Elkins LLP

Trammell Crow Center

2001 Ross Avenue

Suite 3700

Dallas, Texas 75201-2975

Attn: Erec R. Winandy

Telephone: (214) 220-7756

E-Mail: ewinandy@velaw.com

Administrative Agent Office:

JPMorgan Chase Bank, N.A

2200 Ross Avenue, Floor 03

Dallas, TX 75201-2787

Attn: Michele Jones

Telephone: (214) 965-3274

Facsimile: (214) 302-8695

E-Mail: michele.jones@jpmorgan.com

For Advance requests and/or paydowns:

JPMorgan Chase Bank, N.A

10 South Dearborn, Floor L2

Chicago, IL 60603

Attn: Leonida Mischke

Telephone: (312) 385-7055

Facsimile: (844) 490-5663

E-Mail: Jpm.agency.cri@jpmchase.com

For required reporting:

JPMorgan Chase Bank, N.A

2200 Ross Avenue, Floor 03

Dallas, TX 75201-2787

Attn: Michele Jones

Telephone: (214) 965-3274

Facsimile: (214) 302-8695

E-Mail: michele.jones@jpmorgan.com

 

Schedule 12.01

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

With a copy to:

Simpson Thacher and Bartlett LLP

600 Travis St., 54th Floor

Houston, Texas 77002

Attn: Brian E. Minyard

Telephone: (713) 821-5638

E-Mail: brian.minyard@stblaw.com

 

Schedule 12.01

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

EXHIBIT A

FORM OF REVOLVING CREDIT NOTE

[            ], 201[  ]

On or before the Revolving Credit Maturity Date, FOR VALUE RECEIVED, RSP
Permian, L.L.C. (the “Borrower”) promises to pay to [Insert name of applicable
financial institution] (the “Payee”) at the Administrative Agent’s principal
office located in New York, New York, in lawful money of the United States of
America, the aggregate unpaid principal amount of the Revolving Credit Loans as
may from time to time have been advanced by the Payee and then be outstanding
hereunder pursuant to the Credit Agreement (as amended, restated, amended and
restated, supplemented or otherwise modified from time to time, the “Credit
Agreement”) dated as of December 19, 2016, by and among the financial
institutions from time to time signatory thereto (individually a “Lender,” and
any and all such financial institutions collectively the “Lenders”), JPMorgan
Chase Bank, N.A., as administrative agent for the Lenders (in such capacity, the
“Administrative Agent”), as Swing Line Lender and as Issuing Bank, the Parent
and the Borrower, together with interest thereon as hereinafter set forth.

Each of the Revolving Credit Borrowings made hereunder shall bear interest at
the interest rate from time to time applicable thereto under the Credit
Agreement or as otherwise determined thereunder, and interest shall be computed,
assessed and payable on the unpaid principal amount of each Revolving Credit
Borrowing made by the Payee from the date of such Revolving Credit Borrowing
until paid at the rate and at the times set forth in the Credit Agreement.

This Note is a note under which Revolving Credit Borrowings (including
refundings and conversions), repayments and readvances may be made from time to
time, but only in accordance with the terms and conditions of the Credit
Agreement. This Note evidences borrowings under, is subject to, is secured in
accordance with, and may be prepaid, accelerated or matured under, the terms of
the Credit Agreement, to which reference is hereby made. Capitalized terms used
herein, except as defined to the contrary, shall have the meanings given them in
the Credit Agreement.

This Note shall be interpreted and the rights of the parties hereunder shall be
determined under the laws of, and enforceable in, the State of New York.

The Borrower hereby waives presentment for payment, demand, protest and notice
of dishonor and nonpayment of this Note and agrees that no obligation hereunder
shall be discharged by reason of any extension, indulgence, release or
forbearance granted by any holder of this Note to any party now or hereafter
liable hereon or any present or subsequent owner of any property, real or
personal, which is now or hereafter security for this Note.

*    *    *

[SIGNATURES FOLLOW ON SUCCEEDING PAGE]

 

Exhibit A - 1

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

Nothing herein shall limit any right granted the Payee by any other instrument
or by law.

 

RSP PERMIAN, L.L.C. By:  

 

Name:  

 

Title:  

 

 

Exhibit A - 2

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

EXHIBIT B

FORM OF REVOLVING CREDIT BORROWING REQUEST

 

No.                     

   Dated: [            ], 201[  ]

 

TO: JPMorgan Chase Bank, N.A. (the “Administrative Agent”)

 

RE: Credit Agreement (as amended, restated, amended and restated, supplemented
or otherwise modified from time to time, the “Credit Agreement”) dated as of
December 19, 2016, among the Administrative Agent, JPMorgan Chase Bank, N.A., as
Swing Line Lender and as Issuing Bank, the lenders from time to time party
thereto (the “Lenders”), RSP Permian, Inc. and RSP Permian, L.L.C. (the
“Borrower”)

Pursuant to the terms and conditions of the Credit Agreement, the Borrower
hereby requests a Revolving Credit Borrowing from the Revolving Credit Lenders,
as described herein:

 

(A) Date of Revolving Credit Borrowing:

 

(B) ☐    (check if applicable):

This Revolving Credit Borrowing is or includes a whole or partial
refunding/conversion of:

Advance No(s).

 

(C) Type of Revolving Credit Borrowing (check only one):

 

  ☐ ABR Borrowing

 

  ☐ Eurodollar Borrowing

 

(D) Amount of Revolving Credit Borrowing:

$            

 

(E) Interest Period (applicable to Eurodollar Borrowings):

 

(F) Disbursement Instructions:

 

  ☐ JPMorgan Chase Bank, N.A. Account No.

 

  ☐ Other:

The Borrower certifies to the matters specified in Section 2.03(d) of the Credit
Agreement.

Capitalized terms used herein, except as defined to the contrary, have the
meanings given them in the Credit Agreement.

 

Exhibit B - 1

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

The undersigned by execution of this document agrees that any copy of this
document signed by it and transmitted by facsimile or email, or any other method
for delivery shall be admissible in evidence as the original itself in any
judicial or administrative proceeding, whether or not the original is in
existence.

 

RSP PERMIAN, L.L.C. By:  

 

Name:  

 

Title:  

 

Agent Approval:

 

Exhibit B - 2

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

EXHIBIT C

FORM OF COMPLIANCE CERTIFICATE

The undersigned hereby certifies that he/she is the [                    ] of
RSP Permian, Inc., a Delaware corporation (the “Parent”), and that as such
he/she is authorized to execute this certificate on behalf of the Parent. With
reference to the Credit Agreement dated as of December 19, 2016 (together with
all amendments, restatements, supplements or other modifications thereto being
the “Agreement”) among the Parent, RSP Permian, L.L.C., as Borrower, JPMorgan
Chase Bank, N.A., as Administrative Agent, and the other agents and lenders (the
“Lenders”) which are or become a party thereto, and such Lenders, the
undersigned certifies on behalf of the Parent (and not individually) as follows
(each capitalized term used herein having the same meaning given to it in the
Agreement unless otherwise specified):

(a) There exists no Default or Event of Default [or specify Default and
describe].

(b) Attached hereto are the detailed computations necessary to determine whether
the Parent and the other Credit Parties is in compliance with Section 9.01 as of
the end of the [fiscal quarter][fiscal year] ending [                    ].

(c) No change in the application of GAAP to the Parent’s financial statements
has been made since the preparation of the Parent’s audited annual financial
statements most recently delivered under Section 8.01(a)1 [except
                    ].

EXECUTED AND DELIVERED this [    ] day of [                    ].

 

RSP PERMIAN, INC. By:  

 

Name:  

 

Title:  

 

 

*

 

 

1  For certificates prior to first audited financial statements, say: “since the
preparation of the Financial Statements”

 

Exhibit C - 1

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

EXHIBIT D

SECURITY INSTRUMENTS

 

1) Master Reaffirmation and Assignment and Assumption Agreement dated as of
December 19, 2016 by the Credit Parties, the Predecessor Administrative Agent
and the Administrative Agent.

 

2) Deed of Trust, Mortgage, Security Agreement, Assignment of Production,
Fixture Filing and Financing Statement dated as of December 19, 2016 by the
Borrower, as mortgagor, to the Administrative Agent, as mortgagee, for the
benefit of the Lenders and others.

 

3) Deed of Trust, Mortgage, Security Agreement, Assignment of Production,
Fixture Filing and Financing Statement dated as of December 19, 2016 by Silver
Hill Energy Partners, LLC, as mortgagor, to the Administrative Agent, as
mortgagee, for the benefit of the Lenders and others.

 

4) Security Agreement dated as of December 19, 2016 by the Credit Parties, as
Debtors, and the Administrative Agent, for the benefit of the Lenders and
others.

 

5) Guarantee Agreement dated as of December 19, 2016 by the Credit Parties, as
Guarantors, and the Administrative Agent, for the benefit of the Lenders and
others.

 

6) Financing Statements in respect of items (1) through (4).

 

7) Control Agreements by the applicable Credit Party, the Administrative Agent
and the relevant financial institution party thereto.

 

Exhibit D - 1

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

EXHIBIT E

FORM OF ASSIGNMENT AND ASSUMPTION

This Assignment and Assumption (the “Assignment and Assumption”) is dated as of
the Effective Date set forth below and is entered into by and between [Insert
name of Assignor] (the “Assignor”) and [Insert name of Assignee] (the
“Assignee”). Capitalized terms used but not defined herein shall have the
meanings given to them in the Credit Agreement identified below (as amended, the
“Credit Agreement”), receipt of a copy of which is hereby acknowledged by the
Assignee. The Standard Terms and Conditions set forth in Annex 1 attached hereto
are hereby agreed to and incorporated herein by reference and made a part of
this Assignment and Assumption as if set forth herein in full.

For an agreed consideration, the Assignor hereby irrevocably sells and assigns
to the Assignee, and the Assignee hereby irrevocably purchases and assumes from
the Assignor, subject to and in accordance with the Standard Terms and
Conditions and the Credit Agreement, as of the Effective Date inserted by the
Administrative Agent as contemplated below (i) all of the Assignor’s rights and
obligations in its capacity as a Lender under the Credit Agreement and any other
documents or instruments delivered pursuant thereto to the extent related to the
amount and percentage interest identified below of all of such outstanding
rights and obligations of the Assignor under the respective facilities
identified below (including any letters of credit and guarantees included in
such facilities) and (ii) to the extent permitted to be assigned under
applicable law, all claims, suits, causes of action and any other right of the
Assignor (in its capacity as a Lender) against any Person, whether known or
unknown, arising under or in connection with the Credit Agreement, any other
documents or instruments delivered pursuant thereto or the loan transactions
governed thereby or in any way based on or related to any of the foregoing,
including contract claims, tort claims, malpractice claims, statutory claims and
all other claims at law or in equity related to the rights and obligations sold
and assigned pursuant to clause (i) above (the rights and obligations sold and
assigned pursuant to clauses (i) and (ii) above being referred to herein
collectively as the “Assigned Interest”). Such sale and assignment is without
recourse to the Assignor and, except as expressly provided in this Assignment
and Assumption, without representation or warranty by the Assignor.

 

1.    Assignor:    2.    Assignee:          [and is an Affiliate/Approved Fund
of [identify Lender]2] 3.    Borrower:    RSP Permian, L.L.C. 4.   
Administrative Agent:    JPMorgan Chase Bank, N.A., as the administrative agent
under the Credit Agreement 5.    Credit Agreement:    The Credit Agreement dated
as of December 19, 2016, among RSP Permian, Inc., RSP Permian, L.L.C., the
Lenders parties thereto, JPMorgan Chase Bank, N.A., as Administrative Agent, and
the other agents parties thereto 6.    Assigned Interest:   

 

Facility Assigned

   Aggregate Amount of
Commitment/Loans for
all Lenders      Amount of
Commitment/Loans
Assigned      Percentage Assigned of
Commitment/Loans3      $                    $                           %     $
                   $                           %     $                    $
                          % 

 

2  Select as applicable.

3  Set forth, to at least 9 decimals, as a percentage of the Commitment/Loans of
all Lenders thereunder.

 

Exhibit E - 1

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

Effective Date: [            ], 201[  ] [TO BE INSERTED BY ADMINISTRATIVE AGENT
AND WHICH SHALL BE THE EFFECTIVE DATE OF RECORDATION OF TRANSFER IN THE REGISTER
THEREFOR.]

The terms set forth in this Assignment and Assumption are hereby agreed to:

 

ASSIGNOR:     [NAME OF ASSIGNOR]     By:  

 

    Name:  

 

    Title:  

 

ASSIGNEE:     [NAME OF ASSIGNEE]     By:  

 

    Name:  

 

    Title:  

 

 

Exhibit E - 2

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

[Consented to and]4 Accepted:     JPMORGAN CHASE BANK, N.A., as Administrative
Agent     By:  

 

    Name:  

 

    Title:  

 

[Consented to:]5     RSP PERMIAN, L.L.C.     By:  

 

    Name:  

 

    Title:  

 

 

 

4  To be added only if the consent of the Administrative Agent is required by
the terms of the Credit Agreement.

5  To be added only if the consent of the Borrower and/or other parties (e.g.
Issuing Bank) is required by the terms of the Credit Agreement.

 

Exhibit E - 3

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

ANNEX 1

[                    ]6

STANDARD TERMS AND CONDITIONS FOR

ASSIGNMENT AND ASSUMPTION

1. Representations and Warranties.

1.1 Assignor. The Assignor (a) represents and warrants that (i) it is the legal
and beneficial owner of the Assigned Interest, (ii) the Assigned Interest is
free and clear of any lien, encumbrance or other adverse claim and (iii) it has
full power and authority, and has taken all action necessary, to execute and
deliver this Assignment and Assumption and to consummate the transactions
contemplated hereby; and (b) assumes no responsibility with respect to (i) any
statements, warranties or representations made in or in connection with the
Credit Agreement (the “Credit Agreement”) or any other Loan Document, (ii) the
execution, legality, validity, enforceability, genuineness, sufficiency or value
of the Loan Documents or any collateral thereunder, (iii) the financial
condition of the Parent, the Borrower, any of their respective Subsidiaries or
any other Person obligated in respect of any Loan Document or (iv) the
performance or observance by the Parent, the Borrower, any of their respective
Subsidiaries or any other Person of any of their respective obligations under
any Loan Document.

1.2. Assignee. The Assignee (a) represents and warrants that (i) it has full
power and authority, and has taken all action necessary, to execute and deliver
this Assignment and Assumption and to consummate the transactions contemplated
hereby and to become a Lender under the Credit Agreement, (ii) it satisfies the
requirements, if any, specified in the Credit Agreement that are required to be
satisfied by it in order to acquire the Assigned Interest and become a Lender,
(iii) from and after the Effective Date, it shall be bound by the provisions of
the Credit Agreement as a Lender thereunder and, to the extent of the Assigned
Interest, shall have the obligations of a Lender thereunder, (iv) it has
received a copy of the Credit Agreement, together with copies of the most recent
financial statements delivered pursuant to Section 8.01 thereof, as applicable,
and such other documents and information as it has deemed appropriate to make
its own credit analysis and decision to enter into this Assignment and
Assumption and to purchase the Assigned Interest on the basis of which it has
made such analysis and decision independently and without reliance on the
Administrative Agent or any other Lender, and (v) if it is a Foreign Lender,
attached to the Assignment and Assumption is any documentation required to be
delivered by it pursuant to the terms of the Credit Agreement, duly completed
and executed by the Assignee; and (b) agrees that (i) it will, independently and
without reliance on the Administrative Agent, the Assignor or any other Lender,
and based on such documents and information as it shall deem appropriate at the
time, continue to make its own credit decisions in taking or not taking action
under the Loan Documents, and (ii) it will perform in accordance with their
terms all of the obligations which by the terms of the Loan Documents are
required to be performed by it as a Lender.

2. Payments. From and after the Effective Date, the Administrative Agent shall
make all payments in respect of the Assigned Interest (including payments of
principal, interest, fees and other amounts) to the Assignor for amounts which
have accrued to but excluding the Effective Date and to the Assignee for amounts
which have accrued from and after the Effective Date.

3. General Provisions. This Assignment and Assumption shall be binding upon, and
inure to the benefit of, the parties hereto and the other parties to the Credit
Agreement and their respective successors and assigns. This Assignment and
Assumption may be executed in any number of counterparts, which together shall
constitute one instrument. Delivery of an executed counterpart of a

 

6 

Describe Credit Agreement at option of Administrative Agent.

 

Exhibit E - 4

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

signature page of this Assignment and Assumption by telecopy shall be effective
as delivery of a manually executed counterpart of this Assignment and
Assumption. This Assignment and Assumption shall be governed by, and construed
in accordance with, the laws of the State of New York.

 

Exhibit E - 5

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

EXHIBIT F

FORM OF REQUEST FOR SWING LINE LOAN

 

No. [                    ]

   Dated: [                    ]

 

TO: JPMorgan Chase Bank, N.A. (the “Swing Line Lender”)

RE: Credit Agreement (as amended, restated, amended and restated or otherwise
modified from time to time, the “Credit Agreement”) dated as of December 19,
2016, among the Swing Line Lender, the lenders from time to time party thereto
(the “Lenders”), JPMorgan Chase Bank, N.A., as administrative agent for the
Lenders (in such capacity, the “Administrative Agent”) and as Issuing Bank, RSP
Permian, Inc. and RSP Permian, L.L.C. (the “Borrower”)

Pursuant to the terms and conditions of the Credit Agreement, the Borrower
hereby requests a Swing Line Loan from the Swing Line Lender, as described
herein:

Date of Advance:

 

☐ (check if applicable):

This Swing Line Loan is or includes a whole or partial refunding/conversion of:

Loan No(s).

Type of Swing Line Loan (check only one):

 

  ☐ ABR Swing Line Loan

 

  ☐ Quoted Rate Loan

Amount of Swing Line Loan:

$            

Interest Period (applicable to Quoted Rate Advances):

months     

Disbursement Instructions:

 

  ☐ JPMorgan Chase Bank, N.A. Account No.

 

  ☐ Other:

The Borrower certifies to the matters specified in Section 2.08(c)(vi) of the
Credit Agreement.

Capitalized terms used herein, except as defined to the contrary, have the
meanings given them in the Credit Agreement.

The undersigned by execution of this document agrees that any copy of this
document signed by it and transmitted by facsimile or email, or any other method
for delivery shall be admissible in evidence as the original itself in any
judicial or administrative proceeding, whether or not the original is in
existence.

 

Exhibit F - 1

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

RSP PERMIAN, LLC, as the Borrower By:  

 

Name:  

 

Title:  

 

 

Exhibit F - 2

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

EXHIBIT G

FORM OF SWING LINE NOTE

 

$20,000,000

   [            ], 2016

On or before the Revolving Credit Maturity Date, FOR VALUE RECEIVED, RSP
Permian, L.L.C. (the “Borrower”) promises to pay to JPMorgan Chase Bank, N.A.
(the “Swing Line Lender”) at the Administrative Agent’s principal office located
in New York, New York, in lawful money of the United States of America, so much
of the sum of Twenty Million and No/100 Dollars ($20,000,000), as may from time
to time have been advanced to the Borrower by the Swing Line Lender and then be
outstanding hereunder pursuant to the Credit Agreement (as amended, restated,
amended and restated, supplemented or otherwise modified from time to time, the
“Credit Agreement”) dated as of December 19, 2016, by and among the financial
institutions from time to time signatory thereto (individually a “Lender,” and
any and all such financial institutions collectively the “Lenders”), JPMorgan
Chase Bank, N.A., as administrative agent for the Lenders (in such capacity, the
“Administrative Agent”), as Swing Line Lender and as Issuing Bank, RSP Permian,
Inc. and the Borrower, together with interest thereon as hereinafter set forth.

Each of the Swing Line Loans made hereunder shall bear interest at the interest
rate from time to time applicable thereto under the Credit Agreement or as
otherwise determined thereunder, and interest shall be computed, assessed and
payable on the unpaid principal amount of each Swing Line Loan made by the Swing
Line Lender from the date of such Swing Line Loan until paid at the rates and at
the times set forth in the Credit Agreement.

This Note is a Swing Line Note under which Swing Line Loans (including
refundings and conversions), repayments and readvances may be made from time to
time by the Swing Line Lender, but only in accordance with the terms and
conditions of the Credit Agreement (including any applicable sublimits). This
Note evidences borrowings under, is subject to, is secured in accordance with,
and may be prepaid, accelerated or matured under, the terms of the Credit
Agreement to which reference is hereby made. Capitalized terms used herein,
except as defined to the contrary, shall have the meanings given them in the
Credit Agreement.

This Note shall be interpreted and the rights of the parties hereunder shall be
determined under the laws of, and enforceable in, the State of New York.

The Borrower hereby waives presentment for payment, demand, protest and notice
of dishonor and nonpayment of this Note and agrees that no obligation hereunder
shall be discharged by reason of any extension, indulgence, release, or
forbearance granted by any holder of this Note to any party now or hereafter
liable hereon or any present or subsequent owner of any property, real or
personal, which is now or hereafter security for this Note.

*    *    *

[SIGNATURES FOLLOW ON SUCCEEDING PAGE]

 

Exhibit G - 1

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

Nothing herein shall limit any right granted Swing Line Lender by any other
instrument or by law.

 

RSP PERMIAN, LLC By:  

 

Name:  

 

Title:  

 

 

Exhibit G - 2

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

EXHIBIT H

FORM OF SWING LINE PARTICIPATION CERTIFICATE

[            ], 2016

[Name of Lender]

 

Re: Credit Agreement (the “Credit Agreement”) dated as of December 19, 2016, (as
amended, restated, amended and restated, supplemented or otherwise modified from
time to time, the “Credit Agreement”) by and among the financial institutions
from time to time signatory thereto (individually a “Lender,” and any and all
such financial institutions collectively the “Lenders”), JPMorgan Chase Bank,
N.A., as administrative agent for the Lenders (in such capacity, the
“Administrative Agent”), and as Swing Line Lender and as Issuing Bank, RSP
Permian, Inc. and RSP Permian, L.L.C. (the “Borrower”)

Ladies and Gentlemen:

Pursuant to Section 2.08(e) of the Credit Agreement, the undersigned hereby
acknowledges receipt from you of $[        ] as payment for a participating
interest in the following Swing Line Loan:

Date of Swing Line Loan:

Principal Amount of Swing Line Loan:

The participation evidenced by this certificate shall be subject to the terms
and conditions of the Credit Agreement, including without limitation
Section 2.08(e) thereof.

 

Very truly yours, JPMORGAN CHASE BANK, N.A., as Administrative Agent By:  

 

Name:  

 

Title:  

 

 

Exhibit H - 1

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

EXHIBIT I

FORM OF NOTICE OF ISSUANCE OF LETTER OF CREDIT

 

TO: Revolving Credit Lenders

 

RE: Issuance of Letter of Credit pursuant to Section 2.07 of the Credit
Agreement (the “Credit Agreement”) dated as of December 19, 2016, (as amended,
restated, amended and restated, supplemented or otherwise modified from time to
time, the “Credit Agreement”) by and among the financial institutions from time
to time signatory thereto (individually a “Lender,” and any and all such
financial institutions collectively the “Lenders”), JPMorgan Chase Bank, N.A.,
as administrative agent for the Lenders (in such capacity, the “Administrative
Agent”), as Swing Line Lender and as Issuing Bank, RSP Permian, Inc. and RSP
Permian, L.L.C. (the “Borrower”)

On [            ], 201[  ],7 the Issuing Lender, in accordance with Section 2.07
of the Credit Agreement, issued its Letter of Credit number
[                    ], in favor of [                    ]8 for the account of
[                    ].9 The face amount of such Letter of Credit is
$[        ]. The amount of each Revolving Credit Lender’s participation in such
Letter of Credit is as follows:10

$        

$        

$        

$        

This notification is delivered this [    ] day of [            ], 201[  ],
pursuant to Section 2.07(c) of the Credit Agreement. Except as otherwise
defined, capitalized terms used herein have the meanings given them in the
Credit Agreement.

 

JPMORGAN CHASE BANK, N.A., as the

Administrative Agent

By:  

 

Name:  

 

Title:  

 

[This form of Letter of Credit Notice (including footnotes) is subject in all
respects to the terms and conditions of the Credit Agreement which shall govern
in the event of any inconsistencies or omissions.]

 

 

7  Date of Issuance.

8  Beneficiary.

9  Name of the Borrower.

10  Amounts based on Applicable Revolving Credit Percentages.

 

Exhibit I - 1

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

EXHIBIT J-1

FORM OF U.S. TAX COMPLIANCE CERTIFICATE (FOREIGN LENDERS; NOT PARTNERSHIPS)

(For Foreign Lenders That Are Not Partnerships For U.S. Federal Income Tax
Purposes)

Reference is hereby made to the Credit Agreement dated as of December 19, 2016
(as amended, supplemented or otherwise modified from time to time, the “Credit
Agreement”), among RSP Permian, Inc., as Parent, RSP Permian, L.L.C., as
Borrower, JPMorgan Chase Bank, N.A., as Administrative Agent and the financial
institutions from time to time party thereto as Lenders.

Pursuant to the provisions of Section 5.03 of the Credit Agreement, the
undersigned hereby certifies that (i) it is the sole record and beneficial owner
of the Loan(s) (as well as any Note(s) evidencing such Loan(s)) in respect of
which it is providing this certificate, (ii) it is not a bank within the meaning
of Section 881(c)(3)(A) of the Code, (iii) it is not a ten percent shareholder
of the Borrower within the meaning of Section 871(h)(3)(B) of the Code and
(iv) it is not a controlled foreign corporation related to the Borrower as
described in Section 881(c)(3)(C) of the Code.

The undersigned has furnished the Administrative Agent and the Borrower with a
certificate of its non-U.S. Person status on IRS Form W-8BEN or W-8BEN-E. By
executing this certificate, the undersigned agrees that (1) if the information
provided on this certificate changes, the undersigned shall promptly so inform
the Borrower and the Administrative Agent, and (2) the undersigned shall have at
all times furnished the Borrower and the Administrative Agent with a properly
completed and currently effective certificate in either the calendar year in
which each payment is to be made to the undersigned, or in either of the two
calendar years preceding such payments.

Unless otherwise defined herein, terms defined in the Credit Agreement and used
herein shall have the meanings given to them in the Credit Agreement.

[NAME OF LENDER]

 

By: Name: Title: Date:              , 20[  ]

 

Exhibit J-1

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

EXHIBIT J-2

FORM OF U.S. TAX COMPLIANCE CERTIFICATE (FOREIGN PARTICIPANTS; NOT PARTNERSHIPS)

(For Foreign Participants That Are Not Partnerships For U.S. Federal Income Tax
Purposes)

Reference is hereby made to the Credit Agreement dated as of December 19, 2016
(as amended, supplemented or otherwise modified from time to time, the “Credit
Agreement”), among RSP Permian, Inc., as Parent, RSP Permian, L.L.C., as
Borrower, JPMorgan Chase Bank, N.A., as Administrative Agent and the financial
institutions from time to time party thereto as Lenders.

Pursuant to the provisions of Section 5.03 of the Credit Agreement, the
undersigned hereby certifies that (i) it is the sole record and beneficial owner
of the participation in respect of which it is providing this certificate,
(ii) it is not a bank within the meaning of Section 881(c)(3)(A) of the Code,
(iii) it is not a ten percent shareholder of the Borrower within the meaning of
Section 871(h)(3)(B) of the Code, and (iv) it is not a controlled foreign
corporation related to the Borrower as described in Section 881(c)(3)(C) of the
Code.

The undersigned has furnished its participating Lender with a certificate of its
non-U.S. Person status on IRS Form W-8BEN or W-8BEN-E. By executing this
certificate, the undersigned agrees that (1) if the information provided on this
certificate changes, the undersigned shall promptly so inform such Lender in
writing, and (2) the undersigned shall have at all times furnished such Lender
with a properly completed and currently effective certificate in either the
calendar year in which each payment is to be made to the undersigned, or in
either of the two calendar years preceding such payments.

Unless otherwise defined herein, terms defined in the Credit Agreement and used
herein shall have the meanings given to them in the Credit Agreement.

 

[NAME OF PARTICIPANT] By: Name: Title: Date:              , 20[  ]

 

Exhibit J-2

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EXHIBIT J-3

FORM OF U.S. TAX COMPLIANCE CERTIFICATE (FOREIGN PARTICIPANTS; PARTNERSHIPS)

(For Foreign Participants That Are Partnerships For U.S. Federal Income Tax
Purposes)

Reference is hereby made to the Credit Agreement dated as of December 19, 2016
(as amended, supplemented or otherwise modified from time to time, the “Credit
Agreement”), among RSP Permian, Inc., as Parent, RSP Permian, L.L.C., as
Borrower, JPMorgan Chase Bank, N.A., as Administrative Agent and the financial
institutions from time to time party thereto as Lenders.

Pursuant to the provisions of Section 5.03 of the Credit Agreement, the
undersigned hereby certifies that (i) it is the sole record owner of the
participation in respect of which it is providing this certificate, (ii) its
direct or indirect partners/members are the sole beneficial owners of such
participation, (iii) with respect such participation, neither the undersigned
nor any of its direct or indirect partners/members is a bank extending credit
pursuant to a loan agreement entered into in the ordinary course of its trade or
business within the meaning of Section 881(c)(3)(A) of the Code, (iv) none of
its direct or indirect partners/members is a ten percent shareholder of the
Borrower within the meaning of Section 871(h)(3)(B) of the Code and (v) none of
its direct or indirect partners/members is a controlled foreign corporation
related to the Borrower as described in Section 881(c)(3)(C) of the Code.

The undersigned has furnished its participating Lender with IRS Form W-8IMY
accompanied by one of the following forms from each of its partners/members that
is claiming the portfolio interest exemption: (i) an IRS Form W-8BEN or W-8BEN-E
or (ii) an IRS Form W-8IMY accompanied by an IRS Form W-8BEN or W-8BEN-E from
each of such partner’s/member’s beneficial owners that is claiming the portfolio
interest exemption. By executing this certificate, the undersigned agrees that
(1) if the information provided on this certificate changes, the undersigned
shall promptly so inform such Lender and (2) the undersigned shall have at all
times furnished such Lender with a properly completed and currently effective
certificate in either the calendar year in which each payment is to be made to
the undersigned, or in either of the two calendar years preceding such payments.

Unless otherwise defined herein, terms defined in the Credit Agreement and used
herein shall have the meanings given to them in the Credit Agreement.

 

[NAME OF PARTICIPANT] By: Name: Title: Date:              , 20[  ]

 

Exhibit J-3

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EXHIBIT J-4

FORM OF U.S. TAX COMPLIANCE CERTIFICATE (FOREIGN LENDERS; PARTNERSHIPS)

(For Foreign Lenders That Are Partnerships For U.S. Federal Income Tax Purposes)

Reference is hereby made to the Credit Agreement dated as of December 19, 2016
(as amended, supplemented or otherwise modified from time to time, the “Credit
Agreement”), among RSP Permian, Inc., as Parent, RSP Permian, L.L.C., as
Borrower, JPMorgan Chase Bank, N.A., as Administrative Agent and the financial
institutions from time to time party thereto as Lenders.

Pursuant to the provisions of Section 5.03 of the Credit Agreement, the
undersigned hereby certifies that (i) it is the sole record owner of the Loan(s)
(as well as any Note(s) evidencing such Loan(s)) in respect of which it is
providing this certificate, (ii) its direct or indirect partners/members are the
sole beneficial owners of such Loan(s) (as well as any Note(s) evidencing such
Loan(s)), (iii) with respect to the extension of credit pursuant to this Credit
Agreement or any other Loan Document, neither the undersigned nor any of its
direct or indirect partners/members is a bank extending credit pursuant to a
loan agreement entered into in the ordinary course of its trade or business
within the meaning of Section 881(c)(3)(A) of the Code, (iv) none of its direct
or indirect partners/members is a ten percent shareholder of the Borrower within
the meaning of Section 871(h)(3)(B) of the Code and (v) none of its direct or
indirect partners/members is a controlled foreign corporation related to the
Borrower as described in Section 881(c)(3)(C) of the Code.

The undersigned has furnished the Administrative Agent and the Borrower with IRS
Form W-8IMY accompanied by one of the following forms from each of its
partners/members that is claiming the portfolio interest exemption: (i) an IRS
Form W-8BEN or W-8BEN-E or (ii) an IRS Form W-8IMY accompanied by an IRS Form
W-8BEN or W-8BEN-E from each of such partner’s/member’s beneficial owners that
is claiming the portfolio interest exemption. By executing this certificate, the
undersigned agrees that (1) if the information provided on this certificate
changes, the undersigned shall promptly so inform the Borrower and the
Administrative Agent, and (2) the undersigned shall have at all times furnished
the Borrower and the Administrative Agent with a properly completed and
currently effective certificate in either the calendar year in which each
payment is to be made to the undersigned, or in either of the two calendar years
preceding such payments. Unless otherwise defined herein, terms defined in the
Credit Agreement and used herein shall have the meanings given to them in the
Credit Agreement.

 

[NAME OF LENDER] By: Name: Title: Date:              , 20[  ]

 

Exhibit J-4

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EXHIBIT K

FORM OF ADDITIONAL LENDER CERTIFICATE

[            ], 20[    ]

 

To: JPMorgan Chase Bank, N.A.,

as Administrative Agent

A. The Borrower, the Administrative Agent and certain Lenders and other agents
have heretofore entered into that certain Credit Agreement, dated as of
December 19, 2016 (as amended, restated, supplemented or otherwise modified from
time to time, the “Credit Agreement”). Capitalized terms not otherwise defined
herein shall have the meaning assigned to such terms in the Credit Agreement.

B. This Additional Lender Certificate is being delivered pursuant to
Section 2.01(b) of the Credit Agreement.

C. Please be advised that the undersigned Additional Lender has agreed (a) to
become a Lender under the Credit Agreement effective [            ], 20[    ]
(the “Additional Lender Effective Date”) with a Maximum Aggregate Credit Amount
of $[        ] and an Elected Commitment of $[        ] and (b) that it shall be
a party in all respects to the Credit Agreement and the other Loan Documents.

D. This Additional Lender Certificate is being delivered to the Administrative
Agent together with (i) if the Additional Lender is a Foreign Lender, any
documentation required to be delivered by such Additional Lender pursuant to
Section 5.03(e) of the Credit Agreement, duly completed and executed by the
Additional Lender, and (ii) an Administrative Questionnaire in the form supplied
by the Administrative Agent, duly completed by the Additional Lender. [The
Borrower shall pay an upfront fee in an amount equal to [                    ]
payable to the Administrative Agent for the benefit of the Additional Lender.]
[The Borrower shall pay the processing and recordation fee payable to the
Administrative Agent pursuant to Section 2.01(b)(ii)(E) of the Credit
Agreement.]

 

RSP PERMIAN, LLC By:  

 

Name:  

 

Title:  

 

 

Exhibit K

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EXHIBIT L

FORM OF ELECTED COMMITMENT INCREASE CERTIFICATE

[            ], 20[    ]

 

To: JPMorgan Chase Bank, N.A., as Administrative Agent

The Borrower, the Administrative Agent and certain Lenders and other agents have
heretofore entered into a Credit Agreement, dated as of December 19, 2016 (as
amended, restated, supplemented or otherwise modified from time to time, the
“Credit Agreement”). Capitalized terms not otherwise defined herein shall have
the meaning assigned to such terms in the Credit Agreement.

This Elected Commitment Increase Certificate is being delivered pursuant to
Section 2.01(b) of the Credit Agreement.

Please be advised that the undersigned Lender has agreed (a) to increase its
Elected Commitment under the Credit Agreement effective [            ], 20[    ]
(the “Increase Effective Date”) from $[        ] to $[        ] and (b) that it
shall continue to be a party in all respects to the Credit Agreement and the
other Loan Documents.

 

RSP PERMIAN, LLC By:  

 

Name:  

 

Title:  

 

 

Exhibit L