Exhibit 10.1

Execution Version

 

 

$30,000,000

DELAYED DRAW TERM LOAN CREDIT AGREEMENT

among

PAR PETROLEUM CORPORATION

as Borrower,

THE OTHER CREDIT PARTIES HERETO from time to time,

THE LENDERS PARTY HERETO from time to time

as Lenders,

and

JEFFERIES FINANCE LLC,

as Administrative Agent

August 31, 2012

 

 

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TABLE OF CONTENTS

 

          Page  

ARTICLE I. DEFINITIONS AND ACCOUNTING TERMS

     2   

Section 1.1

  

Certain Defined Terms

     2   

Section 1.2

  

Computation of Time Periods

     2   

Section 1.3

  

Accounting Terms; Changes in GAAP

     2   

Section 1.4

  

Miscellaneous

     3   

ARTICLE II. CREDIT FACILITIES

     3   

Section 2.1

  

Commitments

     3   

Section 2.2

  

Loans

     4   

Section 2.3

  

Funding Limitations

     5   

Section 2.4

  

Evidence of Debt; Repayment of Loans

     5   

Section 2.5

  

Fees

     6   

Section 2.6

  

Interest

     6   

Section 2.7

  

Termination and Reduction of Commitments

     7   

Section 2.8

  

Optional and Mandatory Prepayments

     8   

Section 2.9

  

Increased Costs

     12   

Section 2.10

  

Breakage Payments

     14   

Section 2.11

  

Payments Generally; Pro Rata Treatment; Sharing of Set Off

     14   

Section 2.12

  

Taxes

     16   

Section 2.13

  

Mitigation Obligations; Replacement of Lenders

     18   

Section 2.14

  

Defaulting Lenders

     19   

Section 2.15

  

Usury Recapture

     21   

Section 2.16

  

Allocation

     22   

ARTICLE III. CONDITIONS

     22   

Section 3.1

  

Conditions to the Making of the First Advance

     22   

Section 3.2

  

Conditions to All Credit Extensions

     25   

ARTICLE IV. REPRESENTATIONS AND WARRANTIES

     26   

Section 4.1

  

Existence

     26   

Section 4.2

  

Power

     27   

Section 4.3

  

Authorization and Approvals

     27   

Section 4.4

  

Enforceable Obligations

     27   

Section 4.5

  

Financial Reporting

     27   

Section 4.6

  

True and Complete Disclosure

     28   

Section 4.7

  

Litigation; Compliance with Laws

     28   

Section 4.8

  

Use of Proceeds

     29   

Section 4.9

  

Investment Company Act

     29   

Section 4.10

  

Taxes

     29   

Section 4.11

  

Pension Plans

     30   

 

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Section 4.12

  

Condition of Property; Casualties

     30   

Section 4.13

  

No Burdensome Restrictions; No Defaults

     31   

Section 4.14

  

Environmental Condition

     31   

Section 4.15

  

Permits, Licenses, Etc.

     32   

Section 4.16

  

Gas Contracts

     32   

Section 4.17

  

Liens; Titles, Leases, Etc.

     33   

Section 4.18

  

Solvency

     33   

Section 4.19

  

Hedging Agreements

     33   

Section 4.20

  

Material Agreements

     33   

Section 4.21

  

Equity Interests; Subsidiaries

     33   

Section 4.22

  

Labor Matters

     34   

Section 4.23

  

Insurance

     34   

Section 4.24

  

Foreign Assets Control Regulations

     34   

Section 4.25

  

Anti-Terrorism Law

     35   

ARTICLE V. AFFIRMATIVE COVENANTS

     35   

Section 5.1

  

Reserved

     35   

Section 5.2

  

Maintenance of Insurance

     35   

Section 5.3

  

Preservation of Corporate Existence, Etc.

     37   

Section 5.4

  

Payment of Taxes, Etc.

     38   

Section 5.5

  

Maintenance of Records; Visitation Rights

     38   

Section 5.6

  

Reporting Requirements

     39   

Section 5.7

  

Maintenance of Property

     42   

Section 5.8

  

Agreement to Pledge

     42   

Section 5.9

  

Use of Proceeds

     42   

Section 5.10

  

Title Evidence and Opinions

     42   

Section 5.11

  

Further Assurances; Cure of Title Defects

     43   

Section 5.12

  

Additional Collateral; Additional Guarantors

     43   

Section 5.13

  

Leases; Development and Maintenance

     44   

Section 5.14

  

Litigation and Other Notices

     45   

Section 5.15

  

Employee Benefits

     45   

Section 5.16

  

Compliance with Environmental Laws

     46   

Section 5.17

  

Information Regarding Collateral

     46   

Section 5.18

  

Immaterial Subsidiaries

     47   

ARTICLE VI. NEGATIVE COVENANTS

     47   

Section 6.1

  

Liens, Etc.

     47   

Section 6.2

  

Debts, Guarantees, and Other Obligations

     49   

Section 6.3

  

Agreements Restricting Liens and Distributions

     50   

Section 6.4

  

Merger or Consolidation; Asset Sales

     50   

Section 6.5

  

Restricted Payments

     51   

Section 6.6

  

Reserved

     51   

Section 6.7

  

Investments

     52   

Section 6.8

  

Reserved

     53   

Section 6.9

  

Compliance with ERISA

     53   

 

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Section 6.10

  

Sale-and-Leaseback

     54   

Section 6.11

  

Change of Business; Accounting Change

     54   

Section 6.12

  

Organizational Documents, Other Documents

     54   

Section 6.13

  

Use of Proceeds

     55   

Section 6.14

  

Gas Imbalances, Take-or-Pay or Other Prepayments

     55   

Section 6.15

  

Hedging

     55   

Section 6.16

  

Additional Subsidiaries

     55   

Section 6.17

  

Reserved

     55   

Section 6.18

  

Anti-Terrorism; Anti Money Laundering

     55   

Section 6.19

  

Embargoed Person

     56   

Section 6.20

  

Prepayments of Debt

     56   

Section 6.21

  

Reserved

     56   

Section 6.22

  

Deposit Accounts

     56   

Section 6.23

  

Support of Subsidiaries

     56   

Section 6.24

  

Limitation on Certain Restrictions on Subsidiaries

     57   

Section 6.25

  

JV Holding Sub

     57   

ARTICLE VII.

     57   

EVENTS OF DEFAULT; REMEDIES

     57   

Section 7.1

  

Events of Default

     57   

Section 7.2

  

Optional Acceleration of Maturity

     61   

Section 7.3

  

Automatic Acceleration of Maturity

     61   

Section 7.4

  

Right of Set off

     62   

Section 7.5

  

Non-exclusivity of Remedies

     62   

Section 7.6

  

Application of Proceeds

     62   

ARTICLE VIII. ADMINISTRATIVE AGENT

     63   

Section 8.1

  

Appointment, Authorization and Action

     63   

Section 8.2

  

Administrative Agent’s Reliance, Etc.

     64   

Section 8.3

  

The Administrative Agent and Its Affiliates

     65   

Section 8.4

  

Exculpatory Provisions

     65   

Section 8.5

  

Delegation of Duties

     66   

Section 8.6

  

Reserved

     67   

Section 8.7

  

Lender Credit Decision

     67   

Section 8.8

  

Indemnification

     67   

Section 8.9

  

Successor Administrative Agent

     68   

Section 8.10

  

Collateral Matters

     69   

ARTICLE IX. GUARANTEE

     71   

Section 9.1

  

The Guarantee

     71   

Section 9.2

  

Obligations Unconditional

     71   

Section 9.3

  

Reinstatement

     72   

Section 9.4

  

Subrogation; Subordination

     72   

 

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Section 9.5

  

Remedies

     73   

Section 9.6

  

Instrument for the Payment of Money

     73   

Section 9.7

  

Continuing Guarantee

     73   

Section 9.8

  

General Limitation on Guarantee Obligations

     73   

Section 9.9

  

Release of Guarantors

     73   

Section 9.10

  

Right of Contribution

     74   

ARTICLE X. MISCELLANEOUS

     74   

Section 10.1

  

Amendments, Etc.

     74   

Section 10.2

  

Notices, Etc.

     75   

Section 10.3

  

No Waiver; Remedies

     77   

Section 10.4

  

Costs and Expenses

     77   

Section 10.5

  

Binding Effect; No Third Party Beneficiaries

     77   

Section 10.6

  

Lender Assignments and Participations

     78   

Section 10.7

  

Indemnification; Waiver

     81   

Section 10.8

  

Execution in Counterparts

     82   

Section 10.9

  

Survival of Representations, Etc.

     82   

Section 10.10

  

Severability

     82   

Section 10.11

  

Reserved

     82   

Section 10.12

  

Governing Law; Submission to Jurisdiction

     82   

Section 10.13

  

USA PATRIOT Act

     84   

Section 10.14

  

WAIVER OF JURY TRIAL

     84   

Section 10.15

  

NO ORAL AGREEMENTS

     84   

Section 10.16

  

Confidentiality

     84   

Section 10.17

  

Separate Securities

     85   

Section 10.18

  

Obligations Absolute

     85   

EXHIBITS:

Exhibit A – Form of Assignment and Acceptance

Exhibit B – Form of Responsible Officer’s Certificate

Exhibit C – Properties to be Encumbered

Exhibit D – Form of Mortgage

Exhibit E – Form of Note

Exhibit F – Confirmation Order

Exhibit G – Borrowing Request

Exhibit H – Non Bank Certificate

Exhibit I – Form of Pledge and Security Agreement

Exhibit J – Form of Transfer Letters

Exhibit K – Form of Pledge Agreement

SCHEDULES:

 

Schedule I

  -      Commitments

Schedule II

  -      Notice Information

 

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Schedule 4.5

  -      Existing Debt

Schedule 4.7

  -      Litigation

Schedule 4.12(b)

  -      Real Property and Property

Schedule 4.13(a)

  -      Burdensome Restrictions

Schedule 4.15(d)

  -      Violations of Intellectual Property Rights

Schedule 4.17

  -      Liens, Title, Leases, Etc.

Schedule 4.19

  -      Hedging Contracts

Schedule 4.20

  -      Material Agreements

Schedule 4.21

  -      Equity Interests

Schedule 4.23

  -      Insurance

Schedule 6.22

  -      Deposit Accounts

 

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DELAYED DRAW TERM LOAN CREDIT AGREEMENT

This Credit Agreement dated as of August 31, 2012, is among Par Petroleum
Corporation, a Delaware corporation (“Borrower”), the Guarantors party hereto
from time to time (together with the Borrower, each a “Credit Party” and
collectively, the “Credit Parties”), the lenders party hereto from time to time
(the “Lenders”), and Jefferies Finance LLC, as administrative agent for such
Lenders (in such capacity, the “Administrative Agent”).

Recitals

A. WHEREAS, the Borrower and its debtor affiliates, as debtors and debtors in
possession (collectively, the “Debtors”), commenced voluntary bankruptcy
proceedings (the “Chapter 11 Proceedings”) on December 16, 2011 under Chapter 11
of title 11 of the United States Code (the “Bankruptcy Code”) in the United
States Bankruptcy Court for the District of Delaware (the “Bankruptcy Court”);

B. WHEREAS, the Borrower is party to that certain Amended and Restated Senior
Secured Debtor-in-Possession Credit Agreement dated as of December 21, 2011 (as
amended, supplemented or otherwise modified prior to the date hereof, the “DIP
Agreement”) by and among the Borrower, the guarantors party thereto, certain of
the Lenders, the other lenders party thereto from time to time (the “DIP
Lenders”), and Whitebox Advisors LLC, as collateral agent and as administrative
agent, and pursuant to the DIP Agreement and the Bankruptcy Court order
captioned “Final Order Pursuant to 11 U.S.C. §§ 105, 362, 364, 503(b) and
507(a), Fed. R. Bank. P. 2002, 4001 and 9014 and Del. Bankr. L.R. 4001-2
(I) Authorizing the Debtors to (A) Obtain Post-Petition Secured DIP Financing
and (B) To Refinance Certain Pre-Petition Secured Indebtedness; (II) Granting
Liens and Providing for Superpriority Administrative Expense Status; (III)
Modifying the Automatic Stay and (IV) Granting Related Relief” as entered by the
Bankruptcy Court on January 11, 2012, the DIP Lenders made loans in the
outstanding principal amount as of July 31, 2012 of $57,020,056.24;

C. WHEREAS, in connection with the Chapter 11 Proceedings, the Bankruptcy Court
confirmed a plan of reorganization (as such plan may be modified from time to
time, in accordance with its terms, the “Plan of Reorganization”) under Chapter
11 of the Bankruptcy Code pursuant to a confirmation order dated August 16, 2012
(the “Confirmation Order”);

D. WHEREAS, pursuant to the Plan of Reorganization, the Borrower and Laramie
Energy II, LLC shall form Piceance Energy, LLC, a Delaware limited liability
company (the “JV Company”), a joint venture which shall be owned 33.34% by the
Borrower and 66.66% by Laramie Energy II, LLC, to which they each shall
contribute certain assets (including each party’s oil and gas surface real
estate and related assets located in Garfield and Mesa Counties, Colorado) and
the Borrower shall receive (i) a 33.34% interest in the JV Company and (ii) $75
million in cash drawn from a senior secured term loan to be made to the JV
Company;

E. WHEREAS, the proceeds of the initial draw to be made hereunder shall be used
by the Borrower, together with the proceeds of the JV Credit Agreement to repay
all obligations outstanding under the DIP Agreement and allowed administrative
expenses owing in respect to the Chapter 11 Proceedings and subsequent draws may
be used by the Borrower for general corporate purposes and to pay allowed
administrative expenses which are not paid out of the proceeds of the initial
draw;

 

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F. WHEREAS, as security for its Obligations under this Agreement, the Borrower
and each Guarantor shall grant the Administrative Agent, liens and security
interests on its membership interests in the JV Company, junior only to the
liens granted pursuant to the JV Credit Facility Documents and first priority
liens and security interests on substantially all of its other assets as set
forth in the Loan Documents;

G. WHEREAS, in connection with and conditioned upon the confirmation and
implementation of the Plan of Reorganization, in full and complete satisfaction,
settlement, release and discharge of the DIP Facility Claims, the Lenders have
agreed to enter into this Agreement and to extend credit to the Borrower upon
the terms and conditions hereof.

Agreements

For good and valuable consideration, the receipt and sufficiency of which are
acknowledged by each of the parties, Credit Parties, Lenders and Administrative
Agent hereby agree as follows:

ARTICLE I.

DEFINITIONS AND ACCOUNTING TERMS

Section 1.1 Certain Defined Terms. As used in this Agreement, the terms defined
above shall have the meanings set forth therein and the following terms shall
have the meanings set forth on Appendix I (unless otherwise indicated, such
meanings to be equally applicable to both the singular and plural forms of the
terms defined).

Section 1.2 Computation of Time Periods. In this Agreement, with respect to the
computation of periods of time from a specified date to a later specified date,
the word “from” means “from and including” and the words “to” and “until” each
means “to but excluding”.

Section 1.3 Accounting Terms; Changes in GAAP. Except as otherwise expressly
provided herein, all accounting terms used herein shall be interpreted, and all
financial statements and certificates and reports as to financial matters
required to be delivered to the Lenders hereunder shall (unless otherwise
disclosed to the Administrative Agent and/or the Lenders in writing at the time
of delivery thereof) be prepared, in accordance with GAAP applied on a basis
consistent with those used in the preparation of the latest financial statements
furnished to the Administrative Agent and/or the Lenders hereunder. All
calculations made for the purposes of determining compliance with this Agreement
shall (except as otherwise expressly provided herein) be made by application of
GAAP applied on a basis consistent with those used in the preparation of the
annual or quarterly financial statements furnished to the Administrative Agent
and/or the Lenders pursuant to Section 5.6 most recently delivered prior to or
concurrently with such calculations. If at any time any change in GAAP would
affect the computation of any financial ratio or requirement set forth herein,
and either Borrower or the Requisite Lenders shall so request, the
Administrative Agent, the Lenders and Borrower shall negotiate in good faith to
amend such ratio or requirement to preserve the original intent thereof in light
of such change in GAAP (subject to the approval of the Requisite Lenders);
provided

 

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that, until so amended, (a) such ratio or requirement shall continue to be
computed in accordance with GAAP prior to such change therein, and (b) Borrower
shall provide to the Administrative Agent and the Lenders financial statements
and other documents required under this Agreement or as reasonably requested
hereunder setting forth a reconciliation between calculations of such ratio or
requirement made before and after giving effect to such change in GAAP.

Section 1.4 Miscellaneous. Article, Section, Schedule, and Exhibit references
are to Articles and Sections of and Schedules and Exhibits to this Agreement,
unless otherwise specified. All references to instruments, documents, contracts,
and agreements are references to such instruments, documents, contracts, and
agreements as the same may be amended, supplemented, and otherwise modified from
time to time, unless otherwise specified. The words “hereof”, “herein”, and
“hereunder” and words of similar import when used in this Agreement shall refer
to this Agreement as a whole and not to any particular provision of this
Agreement. The term “including” means “including, without limitation,”.
Paragraph, article and/or section headings have been inserted in this Agreement
as a matter of convenience for reference only and it is agreed that such
paragraph and/or headings are not a part of this Agreement and shall not be used
in the interpretation of any provision of this Agreement.

ARTICLE II.

CREDIT FACILITIES

Section 2.1 Commitments.

(a) Maximum Commitment. Subject to the terms and conditions hereof and in
reliance upon the representations and warranties set forth herein, each Lender
severally, and not jointly, agrees to make its Pro Rata Share of the Loans
available to the Borrower in Dollars during the Availability Period in
accordance with this Section 2.1 and Section 2.2 hereof provided, however,
(i) with regard to each Lender individually, the sum of such Lender’s Pro Rata
Share of the aggregate principal amount of the outstanding Loans shall not at
any time exceed such Lender’s Commitment, which is set forth in Schedule I
attached hereto, (ii) with regard to the Lenders collectively, the sum of the
aggregate principal amount of the Advances made hereunder (including, for the
avoidance of doubt, all amounts applied to refinance the loans and obligations
under the DIP Agreement) shall not at any time exceed the Total Commitment,
(iii) in no event shall any Advance be made hereunder which would cause the
aggregate Advances to be made hereunder to be in excess of the Borrowing
Availability which then exists, and (iv) the Lenders shall not be required to
make more than five advances hereunder (and each of such advances shall be made
in accordance with Section 2.2 hereof). Upon any Lender funding its entire
Commitment in accordance with the provisions hereof, such Lender will have no
further commitment to fund Loans hereunder. The failure of any Lender to make
any Loan shall not in itself relieve any other Lender of its obligation to lend
hereunder (it being understood, however, that no Lender shall be responsible for
the failure of any other Lender to make any Loan required to be made by such
other Lender). Amounts repaid or prepaid on any Loan may not be reborrowed.

(b) Each Lender shall make each Loan to be made by it hereunder on the proposed
date thereof by wire transfer of immediately available funds to such account in
New York City as the Administrative Agent may designate not later than 10:00
a.m., New York City time, and the

 

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Administrative Agent shall promptly credit and/or remit the amounts so received
to an account as directed by the Borrower in the applicable Borrowing Request
or, if a Borrowing shall not occur on such date because any condition precedent
herein specified shall not have been met or waived in accordance herewith,
return the amounts so received to the respective Lenders.

(c) The Administrative Agent shall only be required to advance funds to the
Borrower with respect to a Loan to the extent that the Administrative Agent
shall have received such funds from the Lenders.

(d) To request a Borrowing, the Borrower shall deliver, by hand delivery or
telecopier, a duly completed and executed Borrowing Request to the
Administrative Agent and each Lender three (3) Business Days before the date of
the proposed Borrowing (or four (4) Business Days before the date of the
proposed Borrowing if the Borrowing Request is received after 1:00 p.m. New York
City time, by Administrative Agent or any Lender). Each Borrowing Request shall
be irrevocable and shall specify the following information in compliance with
the foregoing provisions of Section 2.1:

(i) the aggregate amount of such Borrowing;

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

(iii) the location and number of Borrower’s account to which funds are to be
disbursed; and

(iv) with respect to the First Advance, that the conditions set forth in
Sections 3.1 and 3.2 have been satisfied and with respect to the Second Advance,
Third Advance, Fourth Advance and Fifth Advance that the conditions set forth in
Section 3.2 have been satisfied, in each case, as of the date of the notice.

(e) Promptly following receipt of a Borrowing Request in accordance with this
Section 2.1, the Administrative Agent shall advise each Lender of the details
thereof.

Section 2.2 Loans. Subject to the other terms and conditions set forth herein
(including without limitation, the provisions set forth in Section 2.1 hereof),
the Loans shall be advanced to Borrower as follows:

(i) on the Closing Date, an initial advance of a Loan in an amount of up to
$15,000,000.00 provided that the conditions set forth in Section 3.1 and 3.2
(other than the condition set forth in Section 3.2(f)) have been satisfied
(“First Advance”);

(ii) after the Closing Date but prior to the expiration of the Availability
Period, a second advance under the Loan in an amount equal to the lesser of
(x) the amount of a Borrowing Request and (y) the remaining amount of Borrowing
Availability provided that the conditions set forth in Section 3.2 have been
satisfied (“Second Advance”);

(iii) after the Closing Date but prior to the expiration of the Availability
Period, a third advance under the Loan in an amount equal to the lesser of
(x) the amount of a Borrowing Request and (y) the remaining amount of Borrowing
Availability provided that the conditions set forth in Section 3.2 have been
satisfied (“Third Advance”);

 

4

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(iv) after the Closing Date but prior to the expiration of the Availability
Period, a fourth advance under the Loan in an amount equal to the lesser of
(x) the amount of a Borrowing Request and (y) the remaining amount of Borrowing
Availability provided that the conditions set forth in Section 3.2 have been
satisfied (“Fourth Advance”); and

(v) after the Closing Date but prior to the expiration of the Availability
Period, a fifth advance under the Loan in an amount equal to the lesser of
(x) the amount of a Borrowing Request and (y) the remaining amount of Borrowing
Availability provided that the conditions set forth in Section 3.2 have been
satisfied (“Fifth Advance”).

Notwithstanding anything herein to the contrary, from the Closing Date through
and including the first anniversary thereof, each Lender agrees that if a Credit
Party’s bankruptcy estate has allowed but unpaid administrative expense claims,
the Borrower shall be permitted to request an Advance, to the extent any Advance
has not been previously funded, to pay such claims, and the Lenders shall fund
any such Advance, notwithstanding that the condition set forth in Section 3.2(b)
is not satisfied with respect to such Advance, but only to the extent that the
failure to satisfy such condition is due to the existence of a Default or Event
of Default arising pursuant to Sections 7.1(a), (d) or (t) or pursuant to
Section 7.1(f) to the extent resulting from the entry or obtaining of an order
with respect to any Credit Party’s bankruptcy estate that causes an unpaid
administrative expense claim to be an allowed but unpaid administrative expense
claim; provided, for the avoidance of doubt, that in no event shall the Lenders
be required to fund any such Advance if the conditions set forth in
Section 3.2(a), (c), (d) and (e) are not satisfied with respect thereto.

Section 2.3 Funding Limitations. For the avoidance of doubt, Administrative
Agent shall have no Commitments (to make Loans) in its capacity as
Administrative Agent and Administrative Agent’s requirement to make Loans (from
the Loan proceeds received from the Lenders) in accordance with the provisions
hereof shall be limited to the funds that it receives from the Lenders (to fund
such Loans).

Section 2.4 Evidence of Debt; Repayment of Loans.

(a) The Borrower hereby unconditionally promises to pay to the Administrative
Agent for the account of each Lender, the unpaid principal amount of each Loan
of such Lender and all other Obligations on the Maturity Date (or sooner in
accordance with the provisions hereof). All payments or repayments of Loans made
pursuant to this Section 2.4(a) shall be made in Dollars.

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

 

5

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(c) The Administrative Agent shall maintain accounts in which it will record
(i) the amount of each Loan made hereunder; (ii) the amount of any principal or
interest due and payable or to become due and payable from the Borrower to each
Lender hereunder; and (iii) the amount of any sum received by the Administrative
Agent hereunder for the account of the Lenders and each Lender’s share thereof.

(d) The entries made in the accounts maintained pursuant to paragraphs (b) and
(c) above shall be prima facie evidence of the existence and amounts of the
obligations therein recorded in the absence of manifest error; provided that the
failure of any Lender or the Administrative Agent to maintain such accounts or
any error therein shall not in any manner affect the obligations of the Borrower
to repay the Loans in accordance with their terms. In the event of a conflict
between records maintained by any Lender and the records of the Administrative
Agent in respect of such matters, the records of the Administrative Agent shall
control in the absence of manifest error.

(e) Any Lender by written notice to the Borrower (with a copy to the
Administrative Agent) may request that Loans made by it be evidenced by a
promissory note. In such event, the Borrower shall prepare, execute and deliver
to such Lender a promissory note payable to such Lender (or, if requested by
such Lender, to such Lender and its registered assigns) in the form of Exhibit
E. Thereafter, the Loans evidenced by such promissory note and interest thereon
shall at all times (including after assignment pursuant to Section 10.6) be
represented by one or more promissory notes in such form payable to the payee
named therein (or, if such promissory note is a registered note, to such payee
and its registered as signs).

Section 2.5 Fees. Borrower shall pay (i) the Administrative Agent an annual
administrative fee (the “Administrative Fee”) as set forth and in accordance
with the terms and provisions of the Administrative Agent Fee Letter, and
(ii) the Lenders a closing fee (the “Closing Fee”) as set forth and in
accordance with the terms and provisions of the Lenders Fee Letter. The
Administrative Fee and the Closing Fee each shall be earned in full on the
Closing Date and are nonrefundable. Neither the Administrative Fee nor the
Closing Fee shall in any way limit Borrower’s obligations to pay any other fee,
or reimburse the Administrative Agent or the Lenders for any cost or expense,
under the Loan Documents.

Section 2.6 Interest.

(a) The Loans shall bear interest at the Borrower’s election, subject to the
terms and conditions hereof, as follows:

(i) at a rate per annum equal to nine and three quarters percent (9.75%),
payable in cash in accordance with Section 2.6(c) hereof; or

(ii) at a rate per annum equal to nine and three quarters percent (9.75%) which
shall be paid in kind and capitalized (and thereby added to principal, which
shall thereafter accrue interest) on the last day of each fiscal quarter (“PIK
Interest”); provided that for purposes of calculating Borrowing Availability and
the amount of unfunded Commitments, capitalized PIK Interest shall not reduce
the amount of Borrowing Availability, the Total Commitment, the Total Commitment
or the amount of the Lenders’ respective Commitments.

 

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The Borrower must elect the form of interest payment with respect to each
Interest Period by delivering a written notice to the Administrative Agent and
each Lender at least thirty (30) days prior to the beginning of each Interest
Period which notice shall be irrevocable. In the absence of such an election for
any Interest Period, interest on the Loans shall be payable according to the
election for the previous Interest Period; provided, however, subject to
Section 2.6(b), at any time after an Event of Default shall have occurred and is
continuing, the Borrower may not elect PIK Interest. For the avoidance of doubt,
for purposes of this Section 2.6(a), the Borrower may file materials with the
SEC stating its intention regarding the election of the form of interest
provided, that such filing shall not constitute notice unless a copy of such
filing is delivered to the Administrative Agent and each Lender. The parties
hereto hereby acknowledge and agree that the Borrower shall be deemed to have
elected PIK Interest for the Interest Period beginning on the Closing Date.

(b) Notwithstanding the foregoing, from and after the date that an Event of
Default shall have occurred and be continuing (including, without limitation, at
any time during an Interest Period), at the request of the Requisite Lenders
(which such request may be made by the Administrative Agent at the direction of
the Requisite Lenders), (i) all outstanding Obligations shall, to the extent
permitted by applicable law, bear interest at a rate per annum equal to
11.75%, per annum (or 2% plus the rate otherwise applicable to such Obligations
as provided in Section 2.6(a)(i)) (the “Default Rate”) and (ii) all interest
accrued and accruing shall be payable in cash on demand.

(c) Accrued interest on the Loans pursuant to Section 2.6(a) shall be payable in
arrears on each Interest Payment Date in accordance with Section 2.6(a);
provided that (i) interest accrued at the Default Rate pursuant to
Section 2.6(b) shall be payable on demand and (ii) in the event of any repayment
or prepayment of any Loan, accrued interest on the principal amount repaid or
prepaid shall be payable on the date of such repayment or prepayment.

(d) All interest hereunder shall be computed on the basis of a year of 360 days
and in shall be payable for the actual number of days elapsed (including the
first day but excluding the last day).

Section 2.7 Termination and Reduction of Commitments.

(a) The Commitments shall automatically terminate on the Maturity Date.

(b) At its option, the Borrower may at any time terminate, or from time to time
permanently reduce, the unfunded Commitments; provided that each reduction of
the Commitments shall be in an amount that is an integral multiple of $500,000
and not less than $1,000,000.

(c) The Borrower shall notify the Administrative Agent in writing of any
election to terminate or reduce the Commitments under Section 2.7(b) at least
three (3) Business Days prior to the effective date of such termination or
reduction, specifying such election and the effective date thereof. Promptly
following receipt of any notice, the Administrative Agent shall advise the
Lenders of the contents thereof. Each notice delivered by the Borrower pursuant
to this Section 2.7 shall be irrevocable, provided, however that notwithstanding
the foregoing, such notice may

 

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be revoked upon written notice to the Administrative Agent, if the election to
terminate or reduce the Commitments pursuant to this Section 2.7 was conditioned
on a refinancing and such refinancing is not consummated. Any termination or
reduction of the Commitments shall be permanent. Each reduction of the
Commitments shall be made ratably among the Lenders in accordance with their
respective Commitments.

Section 2.8 Optional and Mandatory Prepayments.

(a) Optional Payments.

(i) Subject to Section 2.8(a)(ii) below, at any time and from time to time, the
Borrower, at its option, may repay the Obligations, in whole or in part. Each
such repayment shall include all accrued and unpaid interest on the portion of
the Obligations being repaid (including, but not limited to, outstanding PIK
Interest) through the Repayment Date and the Repayment Premium due in connection
with such repayment pursuant to Section 2.8(a)(v) below; provided that each
partial repayment shall be in an amount that is an integral multiple of $100,000
and not less than $100,000 or, if less, the outstanding principal amount of the
Obligations.

(ii) Notwithstanding anything in Sections 2.8(a)(i) and 2.8(a)(v) to the
contrary, if at any time within the twelve (12) months following the Closing
Date, the Borrower, prepays the Obligations, in whole, but not in part
(including but not limited to in connection with any refinancing of the
Obligations), in addition to repayment of 100% of the principal amount of the
Obligations plus all accrued and unpaid interest thereon (including, but not
limited to, any outstanding PIK Interest), through the Repayment Date, the
Borrower shall pay the Applicable Premium calculated as of such Repayment Date
(a “Make-Whole Prepayment Date”). For the avoidance of doubt, the Applicable
Premium shall be due in connection with any prepayment in full of the
Obligations prior to the first anniversary of the Closing Date whether or not
such prepayment is (x) optional by the Borrower, (y) occurs as a result of a
mandatory prepayment pursuant to Sections 2.8(c), 2.8(d), 2.8(e), 2.8(f) or
2.8(g), or (z) occurs pursuant to or following an acceleration of the
Obligations as set forth in Sections 7.2 or 7.3 including, but not limited to,
as a result of the Administrative Agent’s or the Lender’s exercise of their
rights and remedies following the occurrence of an Event of Default or during a
Debtor Relief Law proceeding.

(iii) If the Borrower elects to repay the Loans pursuant to this Section 2.8(a),
at least five (5) days prior to the Repayment Date (unless a shorter notice
shall be agreed to in writing by the Administrative Agent and the Lenders) but
not more than sixty (60) days before the Repayment Date, the Borrower shall
notify the Administrative Agent in writing (which writing may be by electronic
communication in accordance with Section 10.2(b)) of the Repayment Date, the
principal amount of such Loans to be repaid and the Repayment Premium or
Applicable Premium, and deliver to the Administrative Agent, no later than two
(2) Business Days prior to the Repayment Date, an Officer’s Certificate stating
that such repayment will comply with the conditions contained in this
Section 2.8(a). Promptly following receipt of any such notice, the
Administrative Agent shall advise the Lenders of the contents thereof.
Repayments shall be accompanied by any accrued interest due through the
Repayment Date to the extent required by Section 2.6 and any Repayment Premium
or Applicable Premium, if applicable.

 

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(iv) Once the notice of repayment described in Section 2.8(a)(iii) is mailed,
the Loans to be prepaid become irrevocably due and payable on the Repayment Date
and at the Repayment Premium, including any premium, plus interest accrued to
the Repayment Date; provided, however that notwithstanding the foregoing, the
Borrower may revoke its notice of repayment if such repayment was conditioned on
a refinancing and such refinancing is not consummated.

(v) In connection with any repayment of the Loans in full or in part (other than
a repayment in full pursuant to paragraph (ii) of Section 2.8(a) in respect to
which the Applicable Premium shall apply as provided in such paragraph), the
Borrower shall pay a Repayment Premium equal to the percentage of the principal
repaid during the following periods:

 

     Repayment  

Period

   Premium  

From the Closing Date through the first anniversary of the Closing Date

     6 % 

From the day after the first anniversary of the Closing Date through the second
anniversary of the Closing Date

     5 % 

At all times from and after the day after the second anniversary of the Closing
Date

     3 % 

For the avoidance of doubt, the Repayment Premium shall be due in connection
with any repayment of the Obligations in full or in part (other than as provided
in Section 2.8(a)(ii)), whether or not such repayment is (x) optional by the
Borrower, (y) occurs as a result of a mandatory prepayment pursuant to Sections
2.8(c), 2.8(d), 2.8(e), 2.8(f) or 2.8(g), or (z) occurs pursuant to or following
an acceleration of the Obligations as set forth in Sections 7.2 or 7.3
including, but not limited to, as a result of the Administrative Agent’s or the
Lender’s exercise of their rights and remedies following the occurrence of an
Event of Default or during a Debtor Relief Law proceeding.

(b) Reserved.

(c) Asset Sales.

(i) Not later than five (5) Business Days following the receipt of any Net Cash
Proceeds of any Disposition of any Property of any Credit Party (except for
Dispositions of the JV Interests or of the of the type described in Sections
2.8(e), (f) and (g)) now owned or hereafter acquired, such Credit Party shall
apply 100% of such Net Cash Proceeds to make repayments of the Obligations, if
any are then outstanding, in accordance with Sections 2.8(h) and (i); provided
that no such repayment shall be required under this Section 2.8(c) with respect
to (A) the Disposition of Property that constitutes a Casualty Event,
(B) Dispositions for fair market value resulting in no more than $100,000 in Net
Cash Proceeds per Disposition (or series of related Dispositions) and less than
$200,000 in aggregate Net Cash Proceeds before the

 

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Maturity Date, (C) any Disposition to the extent no Obligations are then
outstanding on the date of receipt of such Net Cash Proceeds, or
(D) Dispositions permitted by Section 6.4(b)(i), (ii), (iii) (other than
subclause (B) of Section 6.4(b)(iii)), (iv), (v), (vii), (viii) and (ix); and
provided, further that so long as no Default or Event of Default shall have
occurred and be continuing or arise therefrom, the Borrower shall have the
option upon written notice stating its intention to the Administrative Agent and
each Lender (or by filing materials with the SEC stating Borrower’s intention
and contemporaneously delivering such materials to the Administrative Agent and
each Lender) within ten (10) Business Days of receipt of Net Cash Proceeds from
any Disposition, directly or through one or more Credit Party, to invest or
commit to invest such Net Cash Proceeds in an amount such that the aggregate
amount of all Net Cash Proceeds from any Disposition reinvested as described in
clauses (I) and (II) below pursuant to this proviso (and not applied to the
Obligations pursuant to this Section 2.8(c)) shall not exceed an amount equal to
$25,000,000 in the aggregate (I) within one (1) year of receipt thereof in long
term productive assets of the general type used in the business of the Credit
Parties, including through Acquisitions permitted hereunder, provided that if
any amount is so committed to be reinvested within such one-year period, but is
not reinvested within the later to occur of (x) six (6) months of the date of
such commitment and (y) the end of such one-year period, the Borrower shall
repay the Obligations in accordance with this Section 2.8(c) without giving
further effect to such reinvestment right or (II) as a capital contribution or
loan to the JV Company within ten (10) Business Days of receipt thereof,
provided that if any amount is so committed to be reinvested but is not
reinvested within ten (10) Business Days of receipt of such Net Cash Proceeds,
the Borrower shall repay the Obligations in accordance with this Section 2.8(c)
without giving further effect to such reinvestment right; and

(ii) Not later than one (1) Business Day following the receipt of any Net Cash
Proceeds from the Disposition of the JV Interests, such Credit Party shall,
subject to the Intercreditor Agreement apply 100% of such Net Cash Proceeds to
make repayments of the Obligations, if any are then outstanding, in accordance
with Sections 2.8(h) and (i); provided that no such repayment shall be required
under this Section 2.8(c) with respect to any Disposition to the extent no
Obligations are then outstanding on the date of receipt of such Net Cash
Proceeds.

(d) Debt Issuance. Not later than one (1) Business Day following the receipt of
any Net Cash Proceeds of any Debt Issuance (including the issuance of any
Permitted Subordinated Debt) by any Credit Party, the Borrower shall make
repayments of the Obligations, if any are then outstanding, in accordance with
Sections 2.8(h) and (i) in an aggregate principal amount equal to 100% of such
Net Cash Proceeds; provided that, so long as no Default or Event of Default
shall have occurred and be continuing or arise therefrom, the Borrower shall
have the option upon written notice stating its intention to the Administrative
Agent and each Lender (or by filing materials with the SEC stating Borrower’s
intention and contemporaneously delivering such materials to the Administrative
Agent and each Lender) within ten (10) Business Days of receipt of Net Cash
Proceeds from any Debt Issuance, directly or through one or more Credit Party,
to invest or commit to invest such Net Cash Proceeds in investments permitted
pursuant to Section 6.7(g) or (k) within six (6) months of receipt thereof,
provided that if any amount is so committed to be reinvested but is not
reinvested within six (6) months of the date of receipt of such Net Cash
Proceeds, the Borrower shall repay the Obligations in accordance with this
Section 2.8(d) without giving further effect to such reinvestment right.

 

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(e) JV Distributions. Not later than one (1) Business Day following the receipt
of any cash Dividends or other distributions by any Credit Party in respect of
any Credit Party’s ownership of the JV Interests, the Borrower shall make
repayments of the Obligations, if any are then outstanding in accordance with
Sections 2.8(h) and (i) in an aggregate principal amount equal to 100% of such
cash Dividends or other distributions, provided, however, that (i) the Borrower
shall only be required to make such repayment after a Credit Party has received
aggregate cash Dividends or other distributions totaling in excess of $250,000
in respect of any Credit Party’s ownership of the JV Interests and (ii) no such
repayment shall be required under this Section 2.8(e) to the extent that such
Dividends or other distributions are intended to be used by Borrower or the
applicable Credit Party to pay Taxes attributable to such JV Interests and
Dividends and distributions received thereunder that are owed by the Borrower or
the applicable Credit Party and such Dividends and distributions are in fact so
used.

(f) Casualty Events. Not later than five (5) Business Days following the receipt
of any Net Cash Proceeds from a Casualty Event by any Credit Party, the Borrower
shall apply an amount equal to 100% of such Net Cash Proceeds to make repayments
in accordance with Sections 2.8(h) and (i); provided that no such repayment
shall be required under this Section 2.8(f) with respect to any Disposition of
property which constitutes a Casualty Event resulting in no more than $100,000
in Net Cash Proceeds per Casualty Event and less than $500,000 in Net Cash
Proceeds from Casualty Events in any fiscal year; provided, further:

(i) so long as no Default or Event of Default shall then exist or arise
therefrom, such proceeds shall not be required to be so applied on such date to
the extent that the Borrower shall, following the receipt of such Net Cash
Proceeds, have delivered a certificate to the Administrative Agent and each
Lender within ten (10) Business Days stating that such proceeds are expected to
be used to purchase replacement assets or repair such assets and, in each case,
to be used in connection with the purposes described in Section 5.9 or otherwise
in compliance with the terms of this Agreement no later than 365 days following
the date of receipt of the entire amount of such proceeds; provided that if the
property subject to such Casualty Event constituted Collateral under the
Security Instruments, then all property purchased with the Net Cash Proceeds
thereof pursuant to this subsection shall be made subject to the Lien granted
pursuant to the Security Instruments in favor of the Administrative Agent, for
its benefit and for the benefit of the other Secured Parties in accordance with
Sections 5.8, 5.11, and 5.12; and

(ii) if any portion of such Net Cash Proceeds shall not be so applied within
such 365-day period, such unused portion shall be applied on the last day of
such period as a mandatory prepayment as provided in this Section 2.8(f).

(g) Equity Issuances. No later than five (5) Business Days following the date of
receipt by the Borrower of any Net Equity Proceeds, the Borrower shall prepay
the Obligations in an aggregate amount equal to 50% (the “Equity Percentage”) of
such Net Equity Proceeds; provided, however, that so long as no Default or Event
of Default shall have occurred and be continuing, the Borrower shall have the
option upon written notice stating its intention to the Administrative Agent and
each Lender (or by filing materials with the SEC stating Borrower’s intention
and contemporaneously delivering such materials to the Administrative Agent and
each Lender) within ten (10) Business Days of receipt of such Net Equity
Proceeds, directly or through one or more Credit Party, to invest or commit to
invest such Net Equity Proceeds (x) in

 

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investments permitted pursuant to Section 6.7(g) or (k) within six (6) months
from the date of receipt of such Net Equity Proceeds; or (y) in long term
productive assets of the general type used in the business of the Credit
Parties, including through Acquisitions permitted hereunder, within one (1) year
of receipt of such Net Equity Proceeds, provided that, in the case of
investments described in clause (x) above, if any amount is so committed to be
reinvested but is not so reinvested within six (6) months from the date of
receipt of such Net Equity Proceeds, or in the case of investments described in
clause (y) above, if any amount is so committed to be reinvested within such
one-year period, but is not reinvested within such one-year period after the
receipt of such Net Equity Proceeds, then, in each case, the Borrower shall use
50% of the unused portion of such Net Equity Proceeds to repay the Obligations
in accordance with this Section 2.8(g) without giving further effect to such
reinvestment right.

(h) Application of Repayments.

(i) Subject to the provisions of this Section 2.8(h), prior to any optional or
mandatory prepayment hereunder, the Borrower shall specify the amount of such
prepayment in the notice of such prepayment pursuant to Section 2.8(i).

(ii) Amounts to be applied pursuant to this Section 2.8 to the repayment of
Loans shall be applied to the outstanding Loans, (i) first, towards payment of
either the Applicable Premium or Repayment Premium which is due in connection
with such repayment, (ii) second, towards payment of interest (including, but
not limited to, any outstanding PIK Interest) and fees (other than the
Applicable Premium or Repayment Premium) then due hereunder, and (iii) third,
towards payment of principal then due hereunder, with all such amounts
distributed ratably among the parties entitled thereto in accordance with the
amounts of principal, interest and fees then due to such parties.

(i) Notice of Repayment. If the Borrower is required to make a repayment
pursuant to Sections 2.8(c), (d), (e), (f) or (g), the Borrower shall notify the
Administrative Agent by written notice of any repayment hereunder, not later
than 11:00 a.m., New York City time, one (1) Business Day before the date of
repayment. Each such notice shall specify the repayment date, the principal
amount of the Loan to be repaid, the amount of accrued interest due in
connection therewith and any Repayment Premium or Applicable Premium, if
applicable. Promptly following receipt of any such notice, the Administrative
Agent shall advise the Lenders of the contents thereof. Such notice to the
Lenders may be by electronic communication. Each repayment of any or all of the
Loan shall be applied according to Section 2.8(h). Repayments shall be
accompanied by accrued interest to the extent required by Section 2.6.

Section 2.9 Increased Costs.

(a) If any Change in Law shall:

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

 

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(ii) 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; or

(iii) impose on any Lender or the London interbank market any other condition,
cost or expense (other than Taxes) affecting this Agreement or Loans made by
such Lender;

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

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

(c) A certificate of a Lender setting forth in reasonable detail the amount or
amounts necessary to compensate such Lender or its holding company, as the case
may be, as specified in paragraph (a) or (b) of this Section 2.9 shall be
delivered to the Borrower (with a copy to the Administrative Agent) and shall be
conclusive and binding absent manifest error. The Borrower shall pay such
Lender, as the case may be, the amount shown as due on any such certificate
within ten (10) days after receipt thereof.

(d) Failure or delay on the part of any Lender to demand compensation pursuant
to this Section 2.9 shall not constitute a waiver of such Lender’s right to
demand such compensation; provided that the Borrower shall not be required to
compensate a Lender pursuant to this Section 2.9 for any increased costs or
reductions incurred more than 180 days prior to the date that such Lender, as
the case may be, notifies the Borrower of the Change in Law giving rise to such
increased costs or reductions and of such Lender’s intention to claim
compensation therefor; provided, further, that, if the Change in Law giving rise
to such increased costs or reductions is retroactive, then the 180-day period
referred to above shall not begin earlier than the date of effectiveness of the
Change in Law.

 

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Section 2.10 Breakage Payments. In the event of the failure to borrow or prepay
any Loan on the date specified in any notice delivered pursuant hereto then, in
any such event, the Borrower shall compensate each Lender for the loss, cost and
expense (but excluding consequential damages and loss of anticipated profits),
if any, attributable to such event. A certificate of any Lender setting forth in
reasonable detail any amount or amounts that such Lender is entitled to receive
pursuant to this Section 2.10 shall be delivered to the Borrower (with a copy to
the Administrative Agent) and shall be conclusive and binding absent manifest
error. The Borrower shall pay such Lender the amount shown as due on any such
certificate within five (5) days after receipt thereof.

Section 2.11 Payments Generally; Pro Rata Treatment; Sharing of Set Off.

(a) The Borrower shall make each payment required to be made by it hereunder or
under any other Loan Document (whether of principal, interest or fees, or of
amounts payable under Sections 2.9, 2.10 or 2.12, or otherwise) on or before the
time expressly required hereunder or under such other Loan Document for such
payment (or, if no such time is expressly required, prior to 2:00 p.m., New York
City time), on the date when due, in immediately available funds, without
setoff, deduction or counterclaim. Any amounts received after such time on any
date may, in the discretion of the Administrative Agent, be deemed to have been
received on the next succeeding Business Day for purposes of calculating
interest thereon. All such payments shall be made to the Administrative Agent at
its offices at 520 Madison Avenue, 19th Floor, New York, New York 10022, Attn:
Account Officer – Par Petroleum (or to such deposit account as directed by
Administrative Agent), except that payments pursuant to Sections 2.9, 2.10,
2.12, 8.8 and 10.4 shall be made directly to the persons entitled thereto and
payments pursuant to other Loan Documents shall be made to the persons specified
therein. The Administrative Agent shall distribute any such payments received by
it for the account of any other person to the appropriate recipient promptly
following receipt thereof. If any payment under any Loan Document shall be due
on a day that is not a Business Day, unless specified otherwise, the date for
payment shall be extended to the next succeeding Business Day, and, in the case
of any payment accruing interest, interest thereon shall be payable for the
period of such extension. All payments under each Loan Document shall be made in
Dollars, except as expressly specified otherwise.

(b) If at any time insufficient funds are received by and available to the
Administrative Agent to pay fully all amounts of principal, interest and fees
then due hereunder, such funds shall be applied (subject to the priorities set
forth in Section 7.6 in the case of proceeds received by the Administrative
Agent in respect of any sale of, collection from or realization upon all or any
part of the Collateral pursuant to the exercise by the Administrative Agent of
its remedies) (i) first, towards payment of either the Applicable Premium or
Repayment Premium which is due in connection with any repayment, (ii) second,
towards payment of interest (including, but not limited to, any outstanding PIK
Interest) and fees (other than the Applicable Premium or Repayment Premium) then
due hereunder, and (iii) third, towards payment of principal then due hereunder,
with all such amounts distributed ratably among the parties entitled thereto in
accordance with the amounts of principal, interest and fees then due to such
parties.

 

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(c) If any Lender shall, by exercising any right of setoff or counterclaim or
otherwise, obtain payment in respect of any principal of or interest on any of
the Obligations resulting in such Lender receiving payment of a greater
proportion of the aggregate amount of its 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 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; provided
that (i) if any such participations are purchased and all or any portion of the
payment giving rise thereto is recovered, such participations shall be rescinded
and the purchase price restored to the extent of such recovery, without
interest, and (ii) the provisions of this paragraph 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 to any assignee or participant, other than to any Credit Party or its
Affiliates (as to which the provisions of this paragraph shall apply). Each
Credit Party consents to the foregoing and agrees, to the extent it may
effectively do so under applicable law, that any Lender acquiring a
participation pursuant to the foregoing arrangements may exercise against such
Credit Party rights of setoff and counterclaim with respect to such
participation as fully as if such Lender were a direct creditor of such Credit
Party in the amount of such participation. If under applicable Debtor Relief Law
any Secured Party receives a secured claim in lieu of a setoff or counterclaim
to which this Section 2.11(c) applies, such Secured Party shall to the extent
practicable, exercise its rights in respect of such secured claim in a manner
consistent with the rights to which the Secured Party is entitled under this
Section 2.11(c) to share in the benefits of the recovery of such secured claim.

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

(e) If any Lender shall fail to make any payment required to be made by it
pursuant to Sections 2.11(c), 2.11(d) or 8.8, then the Administrative Agent may,
in its sole discretion (notwithstanding any contrary provision hereof), 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.

 

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Section 2.12 Taxes.

(a) Any and all payments by or on account of any obligation of the Borrower
hereunder or under any other Loan Document shall be made without setoff,
counterclaim or other defense and free and clear of and without deduction or
withholding for any and all Indemnified Taxes; provided that if any Credit Party
shall be required by law to deduct any Indemnified Taxes from such payments,
then (i) the sum payable shall be increased as necessary so that after making
all required deductions (including deductions or withholdings applicable to
additional sums payable under this Section 2.12) the Administrative Agent or any
Lender, as the case may be, receives an amount equal to the sum it would have
received had no such deductions or withholdings been made, (ii) such Credit
Party shall make such deductions or withholdings and (iii) such Credit Party
shall pay the full amount deducted or withheld to the relevant Governmental
Authority in accordance with applicable law.

(b) In addition, the Borrower shall pay any Other Taxes to the relevant
Governmental Authority in accordance with applicable law and shall indemnify the
Administrative Agent and each Lender, within ten (10) Business Days after
written demand therefor, for the full amount of Other Taxes paid by the
Administrative Agent or such Lender, as the case may be and reasonable expenses
arising therefrom or with respect thereto, whether or not such Other Taxes were
correctly or legally imposed or asserted by the relevant Governmental Authority.
A certificate accompanied by reasonable detail as to the amount of such payment
or liability delivered to the Borrower by a Lender, or by the Administrative
Agent on its own behalf or on behalf of a Lender, shall be conclusive absent
manifest error.

(c) The Borrower shall indemnify the Administrative Agent and each Lender,
within ten (10) Business Days after written demand therefor, for the full amount
of any Indemnified Taxes paid by the Administrative Agent or such Lender, as the
case may be, on or with respect to any payment by or on account of any
obligation of the Borrower hereunder or under any other Loan Document (including
Indemnified Taxes imposed or asserted on or attributable to amounts payable
under this Section 2.12 and reasonable expenses arising therefrom or with
respect thereto), whether or not such Indemnified Taxes were correctly or
legally imposed or asserted by the relevant Governmental Authority. A
certificate accompanied by reasonable detail as to the amount of such payment or
liability delivered to the Borrower by a Lender, or by the Administrative Agent
on its own behalf or on behalf of a Lender, shall be conclusive absent manifest
error.

(d) As soon as practicable after any payment of Indemnified Taxes or Other Taxes
and in any event within thirty (30) days of any such payment being due, by a
Credit Party to a Governmental Authority, such Credit Party 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 and the Requisite Lenders.

(e) Any Foreign Lender that is entitled to an exemption from or reduction of
withholding tax under the law of the jurisdiction in which the Borrower is
located, or any treaty to which such jurisdiction is a party, with respect to
payments under this Agreement shall deliver to the Borrower (with a copy to the
Administrative Agent), at the time or times prescribed by

 

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applicable law or reasonably requested by the Borrower, such properly completed
and executed documentation prescribed by applicable law or reasonably requested
by the Borrower or the Administrative Agent as will permit such payments under
this Agreement to be made without withholding or at a reduced rate.
Notwithstanding anything to the contrary in the preceding sentence, the
completion, execution and submission of such documentation (other than such
documentation set forth in the following portion of this Section 2.12(e)) 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. Each Foreign Lender, on or before the date it becomes a Foreign
Lender, shall to the extent it is legally entitled to do so (i) furnish two
copies (which shall be accurate and complete, and originally executed) of either
(a) U.S. Internal Revenue Service Form W-8BEN (or successor form), (b) U.S.
Internal Revenue Service Form W-8ECI (or successor form), certifying, in the
case of (a) or (b), to such Foreign Lender’s legal entitlement to an exemption
or reduction from U.S. federal withholding tax with respect to payments
hereunder, or (c), to the extent it does not act or ceases to act for its own
account with respect to any portion of any sums paid or payable to such Foreign
Lender, U.S. Internal Revenue Service Form W-8IMY (or any successor forms)
accompanied by a Form W-8ECI, W-8BEN, W-9 or such other appropriate
documentation from each beneficial owner, together with any information, if any,
required to be transmitted with such form, and any other certificate or
statement of exemption required under the Code or the regulations issued
thereunder, to establish that such party is not acting for its own account with
respect to a portion of any such sums payable to such party, and (ii) to the
extent it may lawfully do so at such times, upon reasonable request by the
Borrower or the Administrative Agent, provide a new Form W-8BEN (or successor
form), Form W-8ECI (or successor form) or Form W-8IMY (or successor form) upon
the expiration or obsolescence of any previously delivered form to confirm any
complete exemption from, or any entitlement to a reduction in, U.S. federal
withholding tax with respect to any payments hereunder, or to establish that
such party is not acting for its own account with respect to a portion of any
such sums payable to such party; provided that any Foreign Lender that is not a
“bank” within the meaning of Section 881(c)(3)(A) of the Code that is relying on
the “portfolio interest exception” under Section 881(c) of the Code shall also
furnish a “Non-Bank Certificate” in the form of Exhibit H if it is furnishing a
Form W-8BEN. Each Foreign Lender that does not furnish Internal Revenue Service
Form W-8ECI (or successor form) represents that, to its knowledge, any Fees paid
hereunder are not attributable to services performed by such Lender in the
United States.

(f) Any Administrative Agent or Lender that is not a Foreign Lender and is not
an exempt recipient (as defined in Section 6049(b)(4) of the Code and the
regulations issued thereunder) shall deliver to the Borrower (with a copy to the
Administrative Agent), on or prior to the date it become a party hereto, and at
such other times as may be necessary in the determination of the Borrower in its
reasonable discretion, two U.S. Internal Revenue Service Forms W-9 (or any
successor forms) properly completed and duly executed by such party.

(g) If a payment made to a Lender under any Loan Document would be subject to
U.S. federal withholding Tax imposed by FATCA if such Lender were to fail to
comply with the applicable reporting requirements of FATCA (including those
contained in Section 1471(b) or 1472(b) of the Code, as applicable), such Lender
shall deliver to the Borrower and the Administrative Agent at the time or times
prescribed by law and at such time or times reasonably

 

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requested by the Borrower or the Administrative Agent such documentation
prescribed by applicable law (including as prescribed by
Section 1471(b)(3)(C)(i) of the Code) and such additional documentation
reasonably requested by the Borrower or the Administrative Agent as may be
necessary for the Borrower and the Administrative Agent to comply with their
obligations under FATCA and to determine that such Lender has complied with such
Lender’s obligations under FATCA or to determine the amount to deduct and
withhold from such payment. Solely for purposes of this clause (g), “FATCA”
shall include any amendments made to FATCA after the date of this Agreement.

(h) If the Administrative Agent or a Lender (or an assignee) determines in its
reasonable discretion that it has received a refund of any Indemnified Taxes or
Other Taxes as to which it has been indemnified by any Credit Party or with
respect to which a Credit Party has paid additional amounts pursuant to this
Section 2.12, it shall pay over such refund to such Credit Party (but only to
the extent of indemnity payments made, or additional amounts paid, by such
Credit Party under this Section 2.12 with respect to the Indemnified Taxes or
the Other Taxes giving rise to such refund), net of all out-of-pocket expenses
of the Administrative Agent or such Lender (or assignee) and without interest
(other than any interest paid by the relevant Governmental Authority with
respect to such refund); provided, however, that such Credit Party, upon the
request of the Administrative Agent or such Lender (or assignee), agrees to
repay the amount paid over to the Borrower (plus any penalties, interest or
other charges imposed by the relevant Governmental Authority) to the
Administrative Agent or such Lender (or assignee) within a reasonable time (not
to exceed twenty (20) days) after receipt of written notice that the
Administrative Agent or such Lender (or assignee) is required to repay such
refund to such Governmental Authority. Nothing contained in this Section 2.12(h)
shall require the Administrative Agent or any Lender (or assignee) to make
available its Tax Returns or any other information which it deems confidential
to the Borrower or any other person. Notwithstanding anything to the contrary,
in no event will the Administrative Agent or any Lender be required to pay any
amount to any Credit Party the payment of which would place such Person in a
less favorable net after-tax position than the Administrative Agent or such
Lender would have been in if the Indemnified Taxes or Other Taxes giving rise to
such refund had never been paid in the first instance.

(i) Each party’s obligations under this Section 2.12 shall survive the
resignation or replacement of the Administrative Agent or any assignment of
rights by, or the replacement of, a Lender, the termination of the Commitments
and the repayment, satisfaction or discharge of all obligations under any Loan
Document.

Section 2.13 Mitigation Obligations; Replacement of Lenders.

(a) Mitigation of Obligations. If any Lender requests compensation under
Section 2.9, 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 2.12, then such Lender shall use reasonable efforts to designate a
different lending office for funding or booking its Loans hereunder or to assign
its rights and obligations hereunder to another of its offices, branches or
affiliates, if, in the reasonable judgment of such Lender, such designation or
assignment (i) would eliminate or reduce amounts payable pursuant to Section 2.9
or 2.12, as the case may be, in the future and (ii) would not subject such
Lender to any unreimbursed cost or

 

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expense and would not otherwise be disadvantageous in any material respect to
such Lender. The Borrower hereby agrees to pay all reasonable out-of-pocket
costs and expenses incurred by any Lender in connection with any such
designation or assignment. A certificate setting forth such costs and expenses
in reasonable detail submitted by such Lender to the Administrative Agent shall
be conclusive absent manifest error.

(b) Replacement of Lenders. If any Lender requests compensation under
Section 2.9, 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 2.12, and, in each case, such Lender has declined or is unable to
designate a different lending office in accordance with Section 2.13(a), or if
any Lender is a Defaulting Lender or a Non-Consenting Lender, then the Borrower
may, at its sole expense and effort, upon notice to such Lender and the
Administrative Agent, require such Lender to assign and delegate, without
recourse (in accordance with and subject to the restrictions contained in
Section 10.6), all of its interests, rights and obligations under this Agreement
to an Eligible Assignee selected by the Borrower that shall assume such
obligations (which assignee may be another Lender, if a Lender accepts such
assignment); provided that (i) the Borrower shall have paid to the
Administrative Agent the assignment fee (if any) specified in Section 10.6,
(ii) such Lender shall have received payment of an amount equal to the
outstanding principal of its Loans, accrued interest thereon, accrued fees and
all other amounts payable to it hereunder (assuming for this purpose that the
Loans of such Lender were being prepaid)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); (iii) such assignment does not conflict with
applicable law; (iv) in the case of any assignment resulting from a Lender
becoming a Non-Consenting Lender, the applicable assignee shall have consented
to the applicable amendment, waiver or consent, (v) in the case of any such
assignment resulting from a claim for compensation under Section 2.9 or payments
required to be made pursuant to Section 2.12, such assignment will result in a
reduction in such compensation or payments and (vi) any such assignment shall be
accompanied by an assignment of all of such Lender’s Warrants. 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.

Section 2.14 Defaulting Lenders.

(a) Defaulting Lender Adjustments. 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) Waivers and Amendments. Such Defaulting Lender’s right to approve or
disapprove any amendment, waiver or consent with respect to this Agreement shall
be restricted as set forth in the definition of Requisite Lenders.

(ii) Defaulting Lender Waterfall. Any payment of principal, interest, fees or
other amounts received by the Administrative Agent for the account of such
Defaulting Lender (whether voluntary or mandatory, at maturity, pursuant to
Article VII or otherwise) or received by the Administrative Agent from a
Defaulting Lender pursuant to Sections 2.11(c) or 7.4 shall be applied at such
time or times as the Requisite Lenders shall instruct the Administrative Agent

 

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(or, in the case of payments to the Administrative Agent, as determined by the
Administrative Agent) as follows: (i) first, to the payment of any amounts owing
by such Defaulting Lender to the Administrative Agent hereunder; (ii) second, to
any other Lender which has made a Covering Advance to fund the Defaulting
Lender’s share of any Advance which the Defaulting Lender has failed to fund;
(iii) third, as the Borrower may request (so long as no Default or Event of
Default exists), to the funding of any Loan in respect of which such Defaulting
Lender has failed to fund its portion thereof as required by this Agreement, as
determined by the Requisite Lenders; (iv) fourth, if so determined by the
Administrative Agent (acting on the instructions of the Requisite Lenders) and
the Borrower, to be held in a deposit account and released pro rata in order to
satisfy such Defaulting Lender’s potential future funding obligations with
respect to Loans under this Agreement; (v) fifth, to the payment of any amounts
owing to the Lenders (other than the Defaulting Lender) as a result of any
judgment of a court of competent jurisdiction obtained by any Lender against
such Defaulting Lender as a result of such Defaulting Lender’s breach of its
obligations under this Agreement; (vi) sixth, so long as no Default or Event of
Default exists, to the payment of any amounts owing to the Borrower as a result
of any judgment of a court of competent jurisdiction obtained by the Borrower
against such Defaulting Lender as a result of such Defaulting Lender’s breach of
its obligations under this Agreement; and (vii) seventh, to such Defaulting
Lender or as otherwise directed by a court of competent jurisdiction; provided
that if (x) such payment is a payment of the principal amount of any Loans or in
respect of which such Defaulting Lender has not fully funded its appropriate
share, and (y) such Loans were made at a time when the conditions set forth in
Section 3.2 were satisfied or waived, such payment shall be applied solely to
pay the Loans of all Non-Defaulting Lenders on a pro rata basis prior to being
applied to the payment of any Loans of such Defaulting Lender until such time as
all Loans and funded. Any payments, prepayments or other amounts paid or payable
to a Defaulting Lender that are applied (or held) to pay amounts owed by a
Defaulting Lender pursuant to this Section 2.14(a)(ii) shall be deemed paid to
and redirected by such Defaulting Lender, and each Lender irrevocably consents
hereto.

(iii) Certain Fees. No Defaulting Lender shall be entitled to receive any fee
pursuant to this Agreement for any period during which that Lender is a
Defaulting Lender (and the Borrower shall not be required to pay any such fee to
such Defaulting Lender that otherwise would have been required to have been paid
to that Defaulting Lender).

(iv) Warrants. Except as provided in Section 2.14(c) below, if at any time a
Lender becomes a Defaulting Lender on account of a failure to fund its Pro Rata
Share of any Advances hereunder, then such Defaulting Lender shall forfeit a
portion of the Warrants it received on the Closing Date as provided in
Section 5.1 of the Warrant Issuance Agreement.

(b) Defaulting Lender Cure. If the Borrower (so long as no Default or Event of
Default has occurred and is continuing) and the Requisite Lenders agree in
writing that a Lender is no longer a Defaulting Lender, the Administrative Agent
will so notify the parties hereto, whereupon as of the effective date specified
in such notice and subject to any conditions set forth therein, that Lender
will, to the extent applicable, purchase at par that portion of outstanding
Loans of the other Lenders or take such other actions as the Requisite Lenders
shall determine to be necessary to cause the Loans to be held pro rata by the
Lenders in accordance with the Commitments, whereupon such Lender will cease to
be a Defaulting Lender; provided that no adjustments will be made for the
benefit of the Defaulting Lender retroactively with respect to

 

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fees accrued or payments made by or on behalf of the Borrower or Warrants
forfeited while that Lender was a Defaulting Lender; and provided, further, that
except to the extent otherwise expressly agreed by the affected parties, no
change hereunder from Defaulting Lender to Lender will constitute a waiver or
release of any claim of any party hereunder arising from that Lender’s having
been a Defaulting Lender.

(c) In the event that a Lender becomes a Defaulting Lender because of its
failure to fund an Advance hereunder, the Administrative Agent shall promptly
provide each Non-Defaulting Lender with written notice of such failure. On or
before the tenth (10th) Business Day (the “Substitute Funding Day”) after the
Administrative Agent’s issuance of such written notice, any Non-Defaulting
Lender may notify the Administrative Agent that it desires to fund the
Defaulting Lender’s Pro Rata Share of such Advance. If one or more than one
(1) Non-Defaulting Lender (each, a “Covering Lender”) elects in its sole
discretion to fund the Defaulting Lender’s Pro Rata Share of such Advance, each
such Covering Lender shall be permitted to fund a portion of such Advance
(“Covered Advance”) based on the respective amounts of the Commitments of each
such Covering Lender. Any such Covering Lender shall be required to fund its
portion of the Advance which the Defaulting Lender has failed to fund within
five (5) Business Days of such Substitute Funding Day. In such event, each
Covering Lender who funds such advance shall be entitled to receive additional
Warrants as provided in Section 5.2 of the Warrant Issuance Agreement.
Notwithstanding anything contained herein to the contrary, pursuant to
Section 2.15(a)(ii) hereof, until each Covering Lender has received the full
amount of principal and interest due to it in respect to any outstanding
Covering Advances, any amounts which would otherwise be paid to the Defaulting
Lender hereunder shall instead be paid pro rata to the Covering Lenders in
proportion to their outstanding Covering Advances.

Section 2.15 Usury Recapture.

(a) If, with respect to any Lender, the effective rate of interest contracted
for under the Loan Documents, including the stated rates of interest and fees
contracted for hereunder and any other amounts contracted for under the Loan
Documents which are deemed to be interest, at any time exceeds the Maximum Rate,
then the outstanding principal amount of the loans made by such Lender hereunder
shall bear interest at a rate which would make the effective rate of interest
for such Lender under the Loan Documents equal the Maximum Rate until the
difference between the amounts which would have been due at the stated rates and
the amounts which were due at the Maximum Rate (the “Lost Interest”) has been
recaptured by such Lender.

(b) If, when the loans made hereunder are repaid in full, the Lost Interest has
not been fully recaptured by such Lender pursuant to the preceding paragraph,
then, to the extent permitted by law, for the loans made hereunder by such
Lender the interest rates charged under Section 2.6 hereunder shall be
retroactively increased such that the effective rate of interest under the Loan
Documents was at the Maximum Rate since the effectiveness of this Agreement to
the extent necessary to recapture the Lost Interest not recaptured pursuant to
the preceding sentence and, to the extent allowed by law, Borrower shall pay to
such Lender the amount of the Lost Interest remaining to be recaptured by such
Lender.

(c) Notwithstanding the foregoing or any other term in this Agreement and the
Loan Documents to the contrary, it is the intention of each Lender and Borrower
to conform strictly to

 

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any applicable usury laws. Accordingly, if any Lender contracts for, charges, or
receives any consideration which constitutes interest in excess of the Maximum
Rate, then any such excess shall be canceled automatically and, if previously
paid, shall at such Lender’s option be applied to the outstanding principal
amount of the loans made hereunder by such Lender or be refunded to Borrower.

Section 2.16 Allocation. The Loans and Warrants taken together, constitute an
“investment unit” for purposes of Section 1273(c)(2) of the Code. In accordance
with Sections 1273(c)(2)(A) and 1273(b)(2) of the Code, the issue price of the
investment unit is the amount of the Loans, with $2,200,000 thereof representing
the fair market value of the Warrants. The Borrower and each Lender agree to use
the foregoing purchase price allocation for income tax purposes (unless
otherwise required by a final determination by the Internal Revenue Service or a
court of competent jurisdiction) and for all other purposes (including, without
limitation, for financial reporting purposes) and shall not take any position
inconsistent with the allocation contained in this Section 2.16 on any tax
return or for any other tax purpose.

ARTICLE III.

CONDITIONS

Section 3.1 Conditions to the Making of the First Advance. The obligation of
each Lender to fund its Pro Rata Share of the First Advance shall be subject to
the prior or concurrent satisfaction of each of the conditions precedent set
forth in this Section 3.1 unless any such condition is waived, in writing by
each Lender:

(a) Documentation. Administrative Agent shall have received the following duly
executed by all the parties thereto, in form and substance satisfactory to the
Administrative Agent and each Lender, and, where applicable, in sufficient
copies for the Administrative Agent and each Lender:

(i) this Agreement, any Note if requested by a Lender pursuant to Section 2.4(e)
payable to such Lender in the amount of its Commitment, the Pledge and Security
Agreement, the Pledge Agreement, Mortgages on such of the Credit Party’s
Properties as are listed on Exhibit C, and each of the other Loan Documents, and
all attached exhibits and schedules hereto and thereto;

(ii) a favorable opinion of Credit Parties’ counsel dated as of the date of this
Agreement covering the matters as Administrative Agent and Lenders may
reasonably request;

(iii) certificates of a Responsible Officer of each Credit Party as of the date
of this Agreement (A) attesting to the resolutions of the Board of Directors of
such Credit Party approving the execution, delivery and performance of the Loan
Documents to which such Credit Party is a party, (B) certifying and attaching
the Organizational Documents of such Credit Party (C) certifying to and
attaching all other documents evidencing other necessary corporate action and
governmental approvals, if any, with respect to this Agreement, any Note, and
the other Loan Documents and (D) certifying the names and true signatures of the
officers of such Credit Party authorized to sign this Agreement, any Notes and
the other Loan Documents to which such Credit Party is a party;

 

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(iv) Reserved.

(v) appropriate UCC-1 and UCC-3, as applicable, financing statements covering
the Collateral for filing with the appropriate authorities and any other
documents, agreements or instruments necessary to create an Acceptable Security
Interest in such Collateral (other than the Excluded Collateral);

(vi) certificates of good standing for each Credit Party in each state in which
such Credit Party is organized or qualified to do business, which certificate
shall be dated as of a date not less than 15 days prior to the Closing Date and
acceptable to the Requisite Lenders;

(vii) a certificate dated as of the date of this Agreement from the Responsible
Officer of the Borrower stating that (A) all representations and warranties of
each Credit Party set forth in this Agreement are true and correct as of such
date (except in the case of representations and warranties that are made solely
as of an earlier date or time, which representations and warranties shall be
true and correct as of such earlier date or time); (B) no Default has occurred
and is continuing; and (C) the conditions in this Section 3.1 and Section 3.2
have been met;

(viii) such other documents, governmental certificates, agreements and lien
searches as the Administrative Agent or the Requisite Lenders may reasonably
request;

(ix) Each Lender shall otherwise be satisfied, in their sole discretion, with
the capital structure of the Credit Parties, their Affiliates and the JV Company
immediately following the Closing Date;

(x) Administrative Agent shall have received executed copies of the JV Credit
Agreement and any other JV Company Credit Facility Documents requested by the
Requisite Lenders, all in form and substance satisfactory to each Lender in its
sole discretion; and

(xi) Administrative Agent shall have received final execution copies of all the
JV Company’s Organizational Documents.

(b) Payment of Fees. On the date of this Agreement, Borrower shall have paid the
fees required by the Administrative Agent Fee Letter, the Lenders Fee Letter and
all costs and expenses that have been invoiced and are payable pursuant to
Section 10.4.

(c) Reserved.

(d) Confirmation Order and Bankruptcy Matters. (A) Administrative Agent shall
have received a copy of the Confirmation Order, in form and substance
satisfactory to the Lenders in their sole discretion, and the Confirmation Order
shall have become a Final Order on or before August 31, 2012 and the Plan
Effective Date has occurred with all conditions to said Plan Effective Date as
set forth in the Plan of Reorganization or the Plan Disclosure Statement on the
date filed with the Bankruptcy Court (except as otherwise agreed by
Administrative Agent and Requisite Lenders in their sole discretion and for the
making of the Loans contemplated to be made under this Agreement on the Closing
Date) having been timely satisfied (other than entering into this Agreement and
the other Loan Documents) pursuant to the terms of such Plan

 

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of Reorganization and Plan Disclosure Statement on or before August 31, 2012;
provided, however, that the Borrower, with the prior written consent of the
Requisite Lenders, in their sole discretion, may elect to consummate the Plan of
Reorganization prior to the Confirmation Order becoming a Final Order so long as
such Confirmation Order shall be in full force and effect and shall not have
been rescinded, reserved or stayed since its entry by the Bankruptcy Court;
(B) Administrative Agent shall have received a certified copy of the docket of
the Bankruptcy Court or a certification from Borrower’s counsel or other
evidence in the Lenders sole discretion evidencing no appeal of the Confirmation
Order and (C) Administrative Agent shall have received a certified copy of the
Plan of Reorganization certified by the Bankruptcy Court.

(e) Reorganization Expenses. Administrative Agent shall have received a detailed
sources and uses of proceeds or other evidence, in form and substance
satisfactory to each Lender, that the Borrower and Debtors have paid or
satisfied, or have made arrangements reasonably satisfactory to each Lender to
pay or satisfy, all administrative and priority claims and expenses pursuant to
the Plan or Reorganization, upon terms and conditions previously approved by, or
otherwise reasonably acceptable to each Lender;

(f) Authorization from Confirmation Order. The Confirmation Order shall
authorize the Debtors to enter into this Agreement and the other Loan Documents.

(g) Receipt of JV Proceeds. Borrower shall have received at least $70,000,000.00
in net cash proceeds and at least 33.34% of the membership interests in the JV
Company (the “Piceance JV Proceeds”) in consideration of Borrower’s
contributions of certain assets as described in the Plan of Reorganization to
the JV Company.

(h) Intercreditor Agreement. Execution and delivery of the Intercreditor
Agreement by the JV Company Credit Facility Agent, the Administrative Agent and
the Borrower, duly executed by all the parties thereto, in form and substance
acceptable to the Lenders.

(i) Warrants. Execution and delivery of the Warrant Issuance Agreement, duly
executed by all the parties thereto, in form and substance satisfactory to the
Lenders and execution and delivery of the Warrants, duly executed by all the
parties thereto, as required by the Warrant Issuance Agreement.

(j) Reserved.

(k) Reserved.

(l) Security Instruments. Administrative Agent shall have received all
appropriate evidence required by Administrative Agent and Lenders in their sole
discretion necessary to determine that Administrative Agent (for its benefit and
the benefit of the Secured Parties) shall have an Acceptable Security Interest
in the Collateral other than Excluded Collateral and that all actions or filings
necessary to protect, preserve and validly perfect such Liens have been made,
taken or obtained, as the case may be, and are in full force and effect.

(m) No Default. No event or conditions exists that would constitute a Default or
Event of Default.

 

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(n) Representations and Warranties. The representations and warranties contained
in Article IV and in each other Loan Document shall be true and correct in all
material respects (except that any representation and warranty that is qualified
as to “materiality” or “Material Adverse Change” shall be true and correct in
all respects).

(o) Material Adverse Change. No event or circumstance that could cause a
Material Adverse Change shall have occurred since the entry of the Confirmation
Order.

(p) No Proceeding or Litigation, No Injunctive Relief. No action, suit,
investigation or other proceeding (including, without limitation, the enactment
or promulgation of a statute or rule) by or before any arbitrator or any
Governmental Authority shall be threatened or pending and no preliminary or
permanent injunction or order by a state or federal court shall have been
entered (i) in connection with this Agreement or any transaction contemplated
hereby or (ii) which, in any case, in the judgment of Requisite Lenders, could
reasonably be expected to result in a Material Adverse Change (other than the
developments under the litigation proceedings set forth on Schedule 4.7 which
have been disclosed to Administrative Agent and the Lenders prior to the Closing
Date).

(q) Consents, Licenses, Approvals, etc. Administrative Agent shall have received
true copies (certified to be such by the applicable Credit Party or other
appropriate party) of all consents, licenses and approvals required in
accordance with applicable law, or in accordance with any document, agreement,
instrument or arrangement to which any Credit Party is a party, in connection
with the execution, delivery, performance, validity and enforceability of this
Agreement, and the other Loan Documents. In addition, each Credit Party shall
have all such material consents, licenses and approvals required in connection
with the continued operation of such Credit Party, and such approvals shall be
in full force and effect, and all applicable waiting periods shall have expired
without any action being taken or threatened by any competent authority which
would restrain, prevent or otherwise impose material and adverse conditions on
this Agreement and the actions contemplated hereby.

(r) Repayment of Other Debt. Prior to, or concurrently with, the making of the
First Advance hereunder, all outstanding obligations owing under the DIP
Agreement shall have been paid in full and any other Debt required to be paid on
the Closing Date pursuant to the terms and conditions of the Plan of
Reorganization or Confirmation Order shall have been paid in full.

(s) USA PATRIOT Act. Each Credit Party shall have delivered to the
Administrative Agent and each Lender that is subject to the PATRIOT Act such
information requested by the Administrative Agent and such Lender in order to
comply with the PATRIOT Act.

(t) Deposit Accounts. As of the Closing Date, arrangements satisfactory to the
Requisite Lenders shall have been made for each Credit Party to maintain their
Deposit Accounts with an Acceptable Bank pursuant to Section 6.22.

Section 3.2 Conditions to All Credit Extensions. The obligation of each Lender
to fund its Pro Rata Share of any of the Advances shall be subject to the prior
or concurrent satisfaction of, each of the conditions precedent set forth below
(other than, with respect to the First Advance only, Section 3.2(f)) unless any
such condition is waived, in writing by each Lender.

 

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(a) Notice. The Administrative Agent shall have received a Borrowing Request as
required by Section 2.1.

(b) No Default. The Borrower and each other Credit Party shall be in compliance
in all material respects with all the terms and provisions set forth herein and
in each other Loan Document on its part to be observed or performed, and, at the
time of and immediately after giving effect to such Loan and the application of
the proceeds thereof, no Default shall have occurred and be continuing on such
date.

(c) Representations and Warranties. Each of the representations and warranties
made by any Credit Party set forth in Article IV hereof or in any other Loan
Document shall be true and correct in all material respects (except that any
representation and warranty that is qualified as to “materiality” or “Material
Adverse Change” shall be true and correct in all respects) on and as of the date
on which the Loan is made (after giving effect thereto) with the same effect as
though made on and as of such date, except to the extent such representations
and warranties expressly relate to an earlier date.

(d) No Legal Bar. No order, judgment or decree of any Governmental Authority
shall purport to restrain any Lender from making any Loans to be made by it and
no approvals from any Governmental Authority or third party approvals are
necessary in connection with the making of the Advances.

(e) Commitment. After giving effect to such Loan, the aggregate then outstanding
principal amount of the Loans then outstanding shall not exceed the Total
Commitment at such time.

(f) Insurance Certificates. With respect to any Advance other than the First
Advance, the Credit Parties shall have complied with the requirements of
Section 5.8(iii).

Each of the delivery of a Borrowing Request and the acceptance by the Borrower
of the proceeds of the corresponding Loan shall constitute a representation and
warranty by the Borrower and each other Credit Party that on the date of such
Loan (both immediately before and after giving effect to such Loan and the
application of the proceeds thereof) the conditions contained in this
Section 3.2 have been satisfied. The Borrower shall provide such information as
the Administrative Agent or any Lender may reasonably request to confirm that
the conditions in this Section 3.2 have been satisfied.

ARTICLE IV.

REPRESENTATIONS AND WARRANTIES

Each Credit Party represents and warrants to the Administrative Agent and each
of the Lenders as follows:

Section 4.1 Existence. Each Credit Party is an entity of the type identified on
Schedule 4.21, duly organized, validly existing and in good standing under the
laws of its state of

 

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organization identified on Schedule 4.21. Each Credit Party is in good standing
and qualified to do business in each other jurisdiction where its ownership or
lease of Property or conduct of its business requires such qualification, except
where the failure to be in good standing could not reasonably be expected to
result in a Material Adverse Change. As of the date hereof, no Credit Party has
any Subsidiaries other than those identified in Schedule 4.21.

Section 4.2 Power. The execution, delivery, and performance by each Credit Party
of this Agreement, any Notes, and the other Loan Documents to which it is a
party and the consummation of the transactions contemplated hereby, thereby and
the Plan of Reorganization (a) are within such Credit Party’s governing powers,
(b) have been duly authorized by all necessary governing action, (c) do not
contravene (i) such Credit Party’s Organizational Documents or (ii) any law or
any contractual restriction binding on or affecting such Credit Party, and
(d) will not result in or require the creation or imposition of any Lien
prohibited by this Agreement. Each Credit Party has all requisite power and
authority to carry on its business as now conducted and proposed to be conducted
and to own and leases its Property. On the Closing Date, there is no existing
default under any of the Credit Parties’ Organizational Documents or any event
which, with the giving of notice or passage of time or both, would constitute a
default by any party thereunder.

Section 4.3 Authorization and Approvals. No consent, order, authorization, or
approval or other action by, and no notice to or filing with, any Governmental
Authority or any other Person is required for the due execution, delivery, and
performance by any Credit Party of this Agreement, any Notes, or the other Loan
Documents to which such Credit Party is a party or the consummation of the
transactions contemplated thereby and by the Plan of Reorganization, except for
(a) the filing of UCC-1 financing statements and Mortgages in the state and
county filing offices and (b) those consents and approvals that have been
obtained or made on or prior to the date hereof and that are in full force and
effect. The execution, delivery, and performance by each Credit Party of this
Agreement, any Notes, and the other Loan Documents to which it is a party and
the consummation of the transactions contemplated hereby, thereby and the Plan
of Reorganization will not violate or result in a default or require any consent
or approval under any indenture, agreement, Organizational Document or other
instrument biding upon the applicable Credit Party or its Property, or give rise
to a right thereunder to require any payment to be made by such Credit Party,
except for violations, defaults or the creation of such rights that could not
reasonably be expected to result in a Material Adverse Change.

Section 4.4 Enforceable Obligations. This Agreement, any Notes, and the other
Loan Documents to which any Credit Party is a party have been duly executed and
delivered by such Credit Party. Each Loan Document is the legal, valid, and
binding obligation of each Credit Party which is a party to it enforceable
against such Credit Party in accordance with its terms, except as such
enforceability may be limited by any applicable bankruptcy, insolvency,
reorganization, moratorium, fraudulent conveyance or transfer, or similar law
affecting creditors’ rights generally and by general principles of equity.

Section 4.5 Financial Reporting.

(a) All financial statements of any Credit Party or Subsidiary delivered to
Administrative Agent or any Lender by or on behalf of any Credit Party or
Subsidiary in

 

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connection with or pursuant to this Agreement or any other Loan Document
including any pro forma balance sheets of the Credit Parties and/or the JV
Company delivered on the Closing Date have been prepared in accordance with GAAP
and fairly present in all material respects the financial positions and results
of operations of the applicable Credit Party or Subsidiary covered thereby as of
the dates and for the periods indicated therein. All projections delivered from
time to time to Administrative Agent or Lenders have been prepared on the basis
of assumptions that the Borrower believes are fair and reasonable as of the date
of preparation in light of current and reasonably foreseeable business
conditions (it being understood that actual results may differ materially from
those set forth in such projections).

(b) Since entry of the Confirmation Order, no event or circumstance that could
reasonably be expected to cause a Material Adverse Change has occurred.

(c) Set forth on Schedule 4.5 is a true and complete list of all Debt of each
Credit Party and its Subsidiaries and the JV Company outstanding immediately
prior to the Closing Date that is to remain outstanding after the Closing Date.
Such schedule accurately reflects the aggregate principal amount of such Debt
and the principal terms thereof and whether (and to what extent) such Debt is
secured.

(d) As of the Closing Date, Borrower has delivered to the Administrative Agent
and each Lender a detailed sources and uses of proceeds or other evidence, in
form and substance satisfactory to Administrative Agent and Lenders, that the
Borrower and Debtors have paid or satisfied, or have made arrangements
reasonably satisfactory to the Lenders to pay or satisfy, all administrative and
priority claims and expenses pursuant to the Plan or Reorganization, upon terms
and conditions previously approved by, or otherwise reasonably acceptable to the
Lenders;

Section 4.6 True and Complete Disclosure. All factual information (excluding
estimates, projections and proforma financial information) heretofore or
contemporaneously furnished by or on behalf of any Credit Party in writing to
any Lender or Administrative Agent for purposes of or in connection with this
Agreement, any other Loan Document or any transaction contemplated hereby or
thereby is, and all other such factual information hereafter furnished by or on
behalf of any Credit Party in writing to Administrative Agent or any of the
Lenders was or shall be, true and accurate in all material respects on the date
as of which such information was or is dated or certified and did not or does
not contain any untrue statement of a material fact or omit to state any
material fact necessary to make the statements contained therein not misleading
at such time. All projections, estimates, and pro forma financial information
furnished by any Credit Party were prepared on the basis of assumptions, data,
information, tests, or conditions believed to be reasonable at the time such
projections, estimates, and pro forma financial information were furnished.

Section 4.7 Litigation; Compliance with Laws.

(a) There is no pending or, to the knowledge of any Credit Party, threatened
action or proceeding affecting any Credit Party or the JV Company before any
court, Governmental Authority or arbitrator which could reasonably be expected
to cause a Material Adverse Change other than as set forth in Schedule 4.7 or
which purports to affect the legality, validity, binding

 

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effect or enforceability of this Agreement, any Note, or any other Loan
Document. As of the Closing Date, there is no pending or, to the knowledge of
any Credit Party, threatened action or proceeding instituted against any Credit
Party, the JV Company or any of their Subsidiaries which seeks to adjudicate any
Credit Party, the JV Company or any of their Subsidiaries as bankrupt or
insolvent, or seeking liquidation, winding up, reorganization, arrangement,
adjustment, protection, relief, or composition of it or its debts under any
Debtor Relief Law, or seeking the entry of an order for relief or the
appointment of a receiver, trustee or other similar official for it or for any
substantial part of its Property.

(b) Each Credit Party has complied in all material respects with all material
statutes, rules, regulations, orders and restrictions of any Governmental
Authority having jurisdiction over the conduct of its respective businesses or
the ownership of its respective Property.

Section 4.8 Use of Proceeds; Federal Reserve Regulations.

(a) The proceeds of the Loans will be used by Borrower for the purposes
described in Section 5.9.

(b) No Credit Party is engaged in the business of extending credit for the
purpose of purchasing or carrying margin stock (within the meaning of Regulation
U).

(c) No proceeds of any Loan will be used, whether directly or indirectly and
whether immediately, incidentally or ultimately, for any purpose that entails a
violation of, or that is inconsistent with Regulation T, U or X or any other
provisions of the regulations of the Federal Reserve Board. No pledge of any
Collateral by any Credit Party pursuant to the Security Instruments will violate
such regulations.

Section 4.9 Investment Company Act. No Credit Party is an “investment company”
or a company “controlled” by an “investment company” within the meaning of the
Investment Company Act of 1940, as amended.

Section 4.10 Taxes.

(a) Reports and Payments. All Returns (as defined below in clause (c) of this
Section) required to be filed by or on behalf of any Credit Party or any member
of the Controlled Group (hereafter collectively called the “Tax Group”) have
been duly filed on a timely basis or appropriate extensions have been obtained
and such Returns are and will be true, complete and correct, except where the
failure to so file would not be reasonably expected to cause a Material Adverse
Change; and all Taxes shown to be payable on the Returns or on subsequent
assessments with respect thereto will have been paid in full on a timely basis,
and no other Taxes will be payable by the Tax Group with respect to items or
periods covered by such Returns, except in each case to the extent of
(i) reserves reflected in the Financial Statements, or (ii) Taxes that are being
contested in good faith. The reserves for accrued Taxes reflected in the
financial statements delivered to Lenders under this Agreement are adequate in
the aggregate for the payment of all unpaid Taxes, whether or not disputed, for
the period ended as of the date thereof and for any period prior thereto, and
for which the Tax Group may be liable in its own right, as withholding agent or
as a transferee of the assets of, or successor to, any Person.

 

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(b) Taxes Definition. “Taxes” shall mean all taxes, charges, fees, levies, or
other assessments imposed by any federal, state, local, or foreign taxing
authority, including without limitation, income, gross receipts, excise, real or
personal property, sales, occupation, use, service, leasing, environmental,
value added, transfer, payroll, and franchise taxes (and including any interest,
penalties, or additions to tax attributable to or imposed on with respect to any
such assessment).

(c) Returns Definition. “Returns” shall mean any federal, state, local, or
foreign report, declaration of estimated Tax, information statement or return
relating to, or required to be filed in connection with, any Taxes, including
any information return or report with respect to backup withholding or other
payments of third parties.

Section 4.11 Pension Plans. No Credit Party nor any member of the Controlled
Group is a party to, or has incurred any obligation or liability under, any Plan
or Multiemployer Plan.

Section 4.12 Condition of Property; Casualties.

(a) Each Credit Party has good and indefeasible title to, or valid leasehold
interest in, all of its Oil and Gas Properties as is customary in the oil and
gas industry in all material respects, free and clear of all Liens except for
Permitted Liens. Each Credit Party has good title to, or valid leasehold
interest in, all of its other material Properties, free and clear of all Liens
except for Permitted Liens. The material Properties used or to be used in the
continuing operations of each Credit Party are in good repair, working order and
condition, normal wear and tear excepted. Since entry of the Confirmation Order,
neither the business nor the material Properties of the Credit Parties, taken as
a whole, has been materially and adversely affected as a result of any fire,
explosion, earthquake, flood, drought, windstorm, accident, strike or other
labor disturbance, embargo, requisition or taking of Property or cancellation of
contracts, Permits, or concessions by a Governmental Authority, riot, activities
of armed forces, or acts of God or of any public enemy.

(b) Schedule 4.12(b) contains a true and complete list of each interest in
(A) Real Property (i) owned by each Credit Party as of the Closing Date and
describes the type of interest therein held by such Credit Party and (ii) leased
or subleased by any Credit Party, as lessee or sublessee as of the Closing Date
and describes the type of interest therein held by such Credit Party and (B) to
the extent not described in the Plan of Reorganization and related disclosure
statement any material Property (i) owned by any Credit Party as of the Closing
Date and describes the type of interest therein held by such Credit Party and
(ii) leased or subleased by any Credit Party, as lessee or sublessee as of the
Closing Date and describes the type of interest therein held by such Credit
Party.

(c) As of the Closing Date, no Credit Party has received any notice of, nor has
any knowledge of, the occurrence or pendency or contemplation of any Casualty
Event currently affecting all or any portion of its Property.

(d) Each Credit Party owns or has rights to use all of the Collateral and all
rights with respect to any of the foregoing used in, necessary for or material
to each Credit Party’s business as currently conducted. The use by each Credit
Party of such Collateral and all such rights with

 

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respect to the foregoing does not infringe on the rights of any person other
than such infringement which could not, individually or in the aggregate,
reasonably be expected to result in a Material Adverse Change. No claim has been
made and remains outstanding that any Credit Party’s use of any Collateral does
or may violate the rights of any third party that could, individually or in the
aggregate, reasonably be expected to result in a Material Adverse Change.

(e) The Equipment of each Credit Party is in good repair, working order and
condition, reasonable wear and tear excepted.

Section 4.13 No Burdensome Restrictions; No Defaults.

(a) Other than those identified on Schedule 4.13(a), no Credit Party is a party
to any indenture, loan, or credit agreement or any lease or other agreement or
instrument or subject to any charter or corporate restriction or provision of
applicable law or governmental regulation that could reasonably be expected to
cause a Material Adverse Change. No Credit Party is in default in any material
respect under or with respect to any contract, agreement, lease, or other
instrument to which such Credit Party is a party except as disclosed under the
Plan of Reorganization and related disclosure statement. No Credit Party has
received any notice of default under any material contract, agreement, lease, or
other instrument to which such Credit Party is a party a copy of which has not
been delivered to the Administrative Agent.

(b) No Default has occurred and is continuing.

Section 4.14 Environmental Condition.

(a) Permits, Etc. Each Credit Party, each Subsidiary of any Credit Party and the
JV Company (i) has obtained all Environmental Permits necessary for the
ownership and operation of its respective Properties and the conduct of its
respective businesses; (ii) has at all times been and is in material compliance
with all terms and conditions of such Permits and with all other material
requirements of applicable Environmental Laws; (iii) has not received notice of
any material violation or alleged violation of any Environmental Law or Permit;
and (iv) is not subject to any actual, pending or to any Credit Party’s
knowledge, threatened Environmental Claim, that could reasonably be expected to
cause a Material Adverse Change.

(b) Certain Liabilities. To each Credit Party’s knowledge, none of the present
or previously owned or operated Property of any Credit Party or of any of its
current or former Subsidiaries, wherever located, (i) has been placed on or
proposed to be placed on the National Priorities List, or its state or local
analogs, or have been otherwise investigated, designated, listed, or identified
as a potential site for removal, remediation, cleanup, closure, restoration,
reclamation, or other response activity under any Environmental Laws; (ii) is
subject to a Lien, arising under or in connection with any Environmental Laws,
that attaches to any revenues or to any Property owned, leased or operated by
any Credit Party or any of its Subsidiaries or the JV Company, wherever located,
which could reasonably be expected to cause a Material Adverse Change; or
(iii) has been the site of any Release of Hazardous Substances or Hazardous
Wastes from present or past operations which has caused at the site or at any
third party site any condition that has resulted in or could reasonably be
expected to result in the need for Response that would cause a Material Adverse
Change.

 

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(c) Certain Actions. Without limiting the foregoing, (i) all necessary notices
have been properly filed, and no further action is required under current
Environmental Law as to each Response or other restoration or remedial project
undertaken by any Credit Party or any of its Subsidiaries or the JV Company on
any of their presently or formerly owned, leased or operated Property and
(ii) there are no facts, circumstances, conditions or occurrences with respect
to any Property owned, leased or operated by any Credit Party or any of its
Subsidiaries or the JV Company that could reasonably be expected to form the
basis of an Environmental Claim under Environmental Laws that could reasonably
be expected to result in a Material Adverse Change.

Section 4.15 Permits, Licenses, Etc.; Intellectual Property.

(a) Each Credit Party, each Subsidiary of a Credit Party and the JV Company
possess all authorizations, Permits, licenses, patents, patent rights or
licenses, trademarks, trademark rights, trade names rights, copyrights and other
Intellectual Property which are material to the conduct of its business. Each
Credit Party, each Subsidiary of a Credit Party and the JV Company manages and
operates its business in all material respects in accordance with all applicable
Legal Requirements and prudent industry practices.

(b) No written claim has been asserted and is pending by any person challenging
or questioning the use of any such Intellectual Property or the validity or
effectiveness of any such Intellectual Property, nor does any Credit Party know
of any valid basis for any such claim. The use of such Intellectual Property by
any Credit Party does not infringe the rights of any person, except for such
claims and infringements that, individually or in the aggregate, could not
reasonably be expected to result in a Material Adverse Change.

(c) Except pursuant to licenses and other user agreements entered into by any
Credit Party in the ordinary course of business, on and as of the Closing Date
(i) each Credit Party owns and possesses the right to use, and has done nothing
to authorize or enable any other person to use, any copyright, patent or
trademark (as such terms are defined in the Pledge and Security Agreement) that
is necessary to the conduct of its business as currently conducted and (ii) all
of the Credit Parties’ copyright registrations, patent registrations and
trademark registrations are valid and in full force and effect.

(d) No Violations or Proceedings. To each Credit Party’s knowledge, on and as of
the Closing Date, there is no material violation by others of any right of such
Credit Party with respect to any copyright, patent or trademark, respectively,
pledged by it under the name of such Credit Party except as may be set forth on
Schedule 4.15(d).

Section 4.16 Gas Contracts. No Credit Party, as of the date hereof, (a) is
obligated in any material respect by virtue of any prepayment made under any
contract containing a “take-or-pay” or “prepayment” provision or under any
similar agreement to deliver Hydrocarbons produced from or allocated to any of
Credit Parties’ Oil and Gas Properties at some future date without receiving
full payment therefor at the time of delivery or (b) except as has been
disclosed in writing to the Administrative Agent, has produced gas, in any
material amount, subject to balancing rights of third parties or subject to
balancing duties under Legal Requirements.

 

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Section 4.17 Liens; Titles, Leases, Etc. None of the Property of any Credit
Party is subject to any Lien other than Permitted Liens. On the date of this
Agreement, all governmental actions and all other filings, recordings,
registrations, third party consents and other actions which are necessary to
create and perfect the Liens provided for in the Security Instruments will have
been made, obtained and taken in all relevant jurisdictions. Other than as set
forth on Schedule 4.17 or as described in the Plan of Reorganization and related
disclosure statement and to the extent such could not reasonably be expected to
cause a Material Adverse Change, all leases and agreements for the conduct of
business of each Credit Party are valid and subsisting, in full force and effect
and there exists no default or event of default or circumstance which with the
giving of notice or lapse of time or both would give rise to a default by any
Credit Party, or to any Credit Party’s knowledge, by any of the other parties
thereto, under any such leases or agreements. No Credit Party is a party to any
agreement or arrangement (other than this Agreement, the Security Instruments
and the JV Credit Agreement), or subject to any order, judgment, writ or decree,
that either restricts or purports to restrict its ability to grant Liens to
secure the Obligations against its respective Properties.

Section 4.18 Solvency. After giving effect to (a) the Loans, (b) the
consummation of the transactions contemplated by this Agreement and (c) the
payment and accrual of all transaction costs in connection with the foregoing,
the Credit Parties and their Subsidiaries, taken as a whole, are Solvent.

Section 4.19 Hedging Agreements. Schedule 4.19 sets forth, as of the date
hereof, a true and complete list of all Hydrocarbon Hedge Agreements and Hedge
Contracts of each Credit party, the material terms thereof (including the type,
term, effective date, termination date and notional amounts or volumes), all
credit support agreements relating thereto (including any margin required or
supplied), and the counterparty to each such agreement.

Section 4.20 Material Agreements. Schedule 4.20 sets forth a complete and
correct list as of the Closing Date and after giving effect to the transactions
contemplated to occur on such date pursuant to the Plan of Reorganization, of
all material agreements, leases, indentures, purchase agreements, obligations in
respect of letters of credit, guarantees, joint venture agreements, and other
instruments in effect or to be in effect as of the date hereof (other than the
agreements set forth in Schedule 4.19) providing for, evidencing, securing or
otherwise relating to any Debt of any Credit Party, and all obligations of any
Credit Party to issuers of surety or appeal bonds issued for account of such
Credit Party, and such list correctly sets forth the names of the debtor or
lessee and creditor or lessor with respect to the Debt or lease obligations
outstanding or to be outstanding and the Property subject to any Lien securing
such Debt or lease obligation.

Section 4.21 Equity Interests; Subsidiaries.

(a) Schedule 4.21 sets forth a list of (i) all the Subsidiaries of Borrower or
any other Credit Party and their jurisdiction of organization as of the Closing
Date and (ii) the number of each class of its Equity Interests authorized, and
the number outstanding, on the Closing Date. All Equity Interests of each Credit
Party are duly and validly issued and are fully paid and non-assessable. The
Borrower is the record and beneficial owner of, and has good and marketable
title to, 33.34% of the membership interests in the JV Company, free of any and
all Liens, rights

 

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or claims of other persons, except the security interest created by the Security
Instruments and Permitted Liens. The JV Company has consented to the pledge of
such membership interests and no consent of any other Person including any
Governmental Authority, any general or limited partner, any other member of a
limited liability company, any other shareholder or any other trust beneficiary
is necessary or reasonably desirable (from the perspective of a secured party)
in connection with the creation, perfection or second priority status of the
security interest of the Administrative Agent in such membership interests or
the exercise of the voting or other rights provided for in the Security
Instruments or the exercise of remedies in respect thereto.

(b) An accurate organization chart, showing the ownership structure of the
Borrower, the Credit Parties and each of their Subsidiaries on the Closing Date,
and after giving effect to the transactions contemplated by the Plan of
Reorganization and Confirmation Order, is set forth on Schedule 4.21.

Section 4.22 Labor Matters. As of the Closing Date, there are no strikes,
lockouts or slowdowns against any Credit Party pending or, to the knowledge of
any Credit Party, threatened. The hours worked by and payments made to employees
of any Credit Party have not been in violation of the Fair Labor Standards Act
of 1938, as amended, or any other applicable federal, state, local or foreign
law dealing with such matters in any manner which could reasonably be expected
to result in a Material Adverse Change. All payments due from any Credit Party,
or for which any claim may be made against any Credit Party, on account of wages
and employee health and welfare insurance and other benefits, have been paid or
accrued as a liability on the books of such Credit Party except where the
failure to do so could not reasonably be expected to result in a Material
Adverse Change. The consummation of the transactions contemplated by this
Agreement and the Plan of Reorganization will not give rise to any right of
termination or right of renegotiation on the part of any union under any
collective bargaining agreement to which any Credit Party is bound where such
termination or right of renegotiation could reasonably be expected to result in
a Material Adverse Change.

Section 4.23 Insurance. Schedule 4.23 sets forth a true, complete and correct
summary description of all insurance maintained by each Credit party as of the
Closing Date. All insurance maintained by the Credit Parties is in full force
and effect, all premiums have been duly paid and no Credit Party has received
notice of violation or cancellation thereof, except in such case, where the
failure to do so could not reasonably be expected to be a Material Adverse
Change. Each Credit Party carries insurance required under Section 5.2.

Section 4.24 Foreign Assets Control Regulations. No Credit Party is, or will be
after the consummation of the transactions contemplated by this Agreement and
the Plan of Reorganization and the application of the proceeds of the Loans, by
reason of being a “national” of a “designated foreign country” or a “specially
designated national” within the meaning of the Regulations of the Office of
Foreign Assets Control, United States Treasury Department (31 C.F.R., Subtitle
B, Chapter V), or for any other reason, in violation in any material respect of,
any United States Federal statute or Presidential Executive Order concerning
trade or other relations with any foreign country or any citizen or national
thereof or the ownership or operation of any property.

 

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Section 4.25 Anti-Terrorism Law.

(a) No Credit Party and, to the knowledge of the Credit Parties, none of its
Affiliates is in violation of any Anti-Terrorism Laws.

(b) No Credit Party and to the knowledge of the Credit Parties, no Affiliates or
broker or other agent of any Credit Party acting or benefiting in any capacity
in connection with the Loans is any of the following:

(i) a person that is listed in the annex to, or is otherwise subject to the
provisions of, the Executive Orders;

(ii) a person owned or controlled by, or acting for or on behalf of, any person
that is listed in the annex to, or is otherwise subject to the provisions of,
the Executive Orders;

(iii) a person with which any Lender is prohibited from dealing or otherwise
engaging in any transaction by any Anti-Terrorism Law;

(iv) a person that commits, threatens or conspires to commit or supports
“terrorism” as defined in the Executive Orders; or

(v) a person that is named as a “specially designated national and blocked
person” on the most current list published by OFAC at its official website or
any replacement website or other replacement official publication of such list.

(c) No Credit Party and, to the knowledge of the Credit Parties, no broker or
other agent of any Credit Party acting in any capacity in connection with the
Loans (i) conducts any business or engages in making or receiving any
contribution of funds, goods or services to or for the benefit of any person
described in paragraph (b) above, (ii) deals in, or otherwise engages in any
transaction relating to, any property or interests in property blocked pursuant
to the Executive Orders, or (iii) engages in or conspires to engage in any
transaction that evades or avoids, or has the purpose of evading or avoiding, or
attempts to violate, any of the prohibitions set forth in any Anti-Terrorism
Law.

ARTICLE V.

AFFIRMATIVE COVENANTS

So long as any of the Obligations remain outstanding, each Credit Party agrees,
unless the Requisite Lenders shall otherwise consent in writing, to comply with
the following covenants.

Section 5.1 Reserved.

Section 5.2 Maintenance of Insurance.

(a) Each Credit Party shall keep its insurable Property adequately insured at
all times by financially sound and reputable insurers; maintain such other
insurance, to such extent and against such risks as is customary with companies
in the same or similar businesses operating in the same or similar locations,
including insurance with respect to any Property subject to a

 

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Mortgage and other properties material to the business of the Credit Parties
against such casualties and contingencies and of such types and in such amounts
with such deductibles as is customary in the case of similar businesses
operating in the same or similar locations, including (i) physical hazard
insurance on an “all risk” basis, (ii) commercial general liability against
claims for bodily injury, death or property damage covering any and all
insurable claims, (iii) explosion insurance in respect of any boilers, machinery
or similar apparatus constituting Collateral, (iv) business interruption
insurance, (v) worker’s compensation insurance and such other insurance as may
be required by any Legal Requirement and (vi) such other insurance against risks
as the Requisite Lenders may from time to time require (acting reasonably) (such
policies to be in such form and amounts and having such coverage as may be
reasonably satisfactory to the Requisite Lenders); provided that if and so long
as an Event of Default has occurred and is continuing with respect to physical
hazard insurance, neither the Requisite Lenders nor the applicable Credit Party
shall agree to the adjustment of any claim thereunder in excess of $1,000,000
without the consent of the other (such consent not to be unreasonably withheld
or delayed).

(b) All such insurance shall (i) provide that no cancellation, material
reduction in amount or material change in coverage thereof shall be effective
until at least thirty (30) days after receipt by the Administrative Agent of
written notice thereof (except with respect to cancellation as a result of a
payment default, such cancellation shall not be effective until at least ten
(10) days after receipt by Administrative Agent of written notice thereof) and
if an endorsement providing such notice is commercially impracticable by any
Credit Party’s carrier, such Credit Party will use its commercially reasonable
efforts to provide thirty (30) days or ten (10) days, as applicable, notice to
the Administrative Agent prior to the cancellation, material reduction in amount
or material change in coverage, (ii) name the Administrative Agent as mortgagee
(in the case of property insurance) or additional insured on behalf of the
Secured Parties (in the case of liability insurance) or loss payee (in the case
of property insurance), as applicable and (iii) be reasonably satisfactory in
all other respects to the Administrative Agent (acting on the instructions of
the Requisite Lenders).

(c) Each Credit Party shall notify the Administrative Agent immediately whenever
any separate insurance concurrent in form or contributing in the event of loss
with that required to be maintained under this Section 5.2 is taken out by any
Credit Party; and as soon as practicable deliver to the Administrative Agent a
duplicate original copy of such policy or policies.

(d) With respect to Property subject to a Mortgage, each Credit Party shall
obtain flood insurance in such total amount as the Administrative Agent or the
Requisite Lenders may from time to time reasonably require, if at any time the
area in which any improvements located on any Property subject to a Mortgage is
designated a “flood hazard area” in any Flood Insurance Rate Map published by
the Federal Emergency Management Agency (or any successor agency), and otherwise
comply with the National Flood Insurance Program as set forth in the Flood
Disaster Protection Act of 1973, as amended from time to time.

(e) Each Credit Party shall deliver to the Administrative Agent and the Lenders
a report of a reputable insurance broker with respect to such insurance and such
supplemental reports with respect thereto as the Administrative Agent may from
time to time reasonably request.

 

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(f) No Credit Party shall knowingly take any action that is reasonably likely to
be the basis for termination, revocation or denial of any insurance coverage
required to be maintained under any Mortgage of any Credit Party or that could
be the basis for a defense to any claim under any Insurance Policy maintained in
respect of the Property subject to a Mortgage, and each Credit Party shall
otherwise comply in all material respects with all Insurance Requirements in
respect of the premises; provided, however, that such Credit Party may, at its
own expense and after written notice to the Administrative Agent, (i) contest
the applicability or enforceability of any such Insurance Requirements by
appropriate legal proceedings, the prosecution of which does not constitute a
basis for cancellation or revocation of any insurance coverage required under
this Section 5.2 or (ii) cause the Insurance Policy containing any such
Insurance Requirement to be replaced by a new policy complying with the
provisions of this Section 5.2.

Section 5.3 Preservation of Corporate Existence, Etc.

(a) Each Credit Party shall preserve and maintain its corporate existence,
rights, franchises, and privileges in the jurisdiction of its formation and
qualify and remain qualified as a foreign corporation in each jurisdiction in
which qualification is necessary or desirable in view of its business and
operations or the ownership of its Properties, and, in each case, where failure
to qualify or preserve and maintain its rights and franchises could reasonably
be expected to cause a Material Adverse Change.

(b) Each Credit Party shall (i) do or cause to be done all things reasonably
necessary to obtain, preserve, renew, extend and keep in full force and effect
the rights, licenses, permits, privileges, franchises, authorizations, patents,
copyrights, trademarks, trade names and other Intellectual Property material to
the conduct of its business; (ii) comply with all applicable Legal Requirements
(including any and all zoning, building, Environmental Law, ordinance, code or
approval or any building permits or any restrictions of record or agreements
affecting the Real Property) and decrees and orders of any Governmental
Authority, whether now in effect or hereafter enacted, except in each cases
where the failure to comply, individually or in the aggregate, could not
reasonably be expected to result in a Material Adverse Change; (iii) pay and
perform its obligations under all Loan Documents and the JV Company Credit
Facility Documents to which it is a party; and (iv) at all times maintain,
preserve and protect all property material to the conduct of such business and
keep such property in good repair, working order and condition (other than wear
and tear occurring in the ordinary course of business subject to condemnation
and casualty events) and from time to time make, or cause to be made, all
needful and proper repairs, renewals, additions, improvements and replacements
thereto necessary in order that the business carried on in connection therewith
may be properly conducted at all times, except in all cases specified in this
subclause (iv) where the failure to comply, individually or in the aggregate,
could not reasonably be expected to result in a Material Adverse Change;
provided that nothing in this Section 5.3(b) shall prevent (i) Dispositions of
property in accordance with Section 6.4; (ii) the withdrawal by any Credit Party
of its qualification as a foreign corporation in any jurisdiction where such
withdrawal, individually or in the aggregate, could not reasonably be expected
to result in a Material Adverse Change; or (iii) the abandonment by any Credit
Party of any property (including, without limitation, leasehold interests in
real property), rights,

 

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franchises, licenses, trademarks, trade names, copyrights, patents or other
Intellectual Property that such Credit Party reasonably determines are not
useful to its business or no longer commercially desirable.

(c) Except as expressly permitted herein, each Credit Party shall (a) perform
and observe all material terms and provisions of each contract, instrument,
agreement or other document, in each case, to the extent such contract,
instrument, agreement or other document relates to Property, revenues or
obligations of such Credit Party with value in excess of $1,000,000, to be
performed or observed by it, (b) maintain each such contract, instrument,
agreement or other document in full force and effect, and (c) enforce each such
contract, instrument, agreement or other document in accordance with its terms.

Section 5.4 Payment of Taxes, Etc.

(a) Each Credit Party shall pay and discharge before the same shall become
delinquent, (i) all taxes, assessments, and governmental charges or levies
imposed upon it or upon its income or profits or Property that are material in
amount, prior to the date on which penalties attach thereto and (ii) all lawful
claims that are material in amount which, if unpaid, might by law become a Lien
(other than Permitted Liens) upon its Property; provided, however, that no
Credit Party shall be required to pay or discharge any such tax, assessment,
charge, levy, or claim which is being contested in good faith and by appropriate
proceedings, and with respect to which reserves in conformity with GAAP have
been provided.

(b) Each Credit Party shall timely and correctly file all Tax Returns required
to be filed by it, except where the failure to do so would not reasonably be
expected to result in a Material Adverse Change.

(c) The Borrower does not intend to treat the Loans as being a “reportable
transaction” within the meaning of Treasury Regulation Section 1.6011-4. In the
event the Borrower determines that the Loans are required to be so treated, it
will promptly notify the Administrative Agent thereof.

Section 5.5 Maintenance of Records; Visitation Rights. Each Credit Party shall
keep proper books of record and account (i) in which full, true and correct
entries are made in conformity with all Legal Requirements and (ii) in form
permitting financial statements conforming with GAAP to be derived therefrom.
Borrower or any Credit Party will permit any representatives designated by the
Administrative Agent or any Lender to visit and inspect the financial records
and, subject to the rights of tenants, the property of Borrower, any Credit
Party or any of their Subsidiaries upon reasonable prior notice during regular
business hours and to make extracts from and copies of such financial records,
and permit any representatives designated by the Administrative Agent or any
Lender to discuss the affairs, finances, accounts and condition of Borrower, any
Credit Party or any of their Subsidiaries with and be advised as to the same by
the officers and employees thereof and the independent accountants therefor, all
at such reasonable times and intervals and to such reasonable extent as the
Administrative Agent or any Lender may request; provided, that unless a Default
or an Event of Default is continuing, the Credit Parties shall not be required
to pay the expenses of more than one such visit per calendar year. The Borrower
shall be permitted to reasonably coordinate the visits and inspections of
individual Lenders to minimize inconvenience.

 

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Section 5.6 Reporting Requirements. Borrower shall furnish to Administrative
Agent and each Lender:

(a) Annual Financials. As soon as available and in any event not later than 120
days after the end of each fiscal year of Borrower and its consolidated
Subsidiaries (or, if Borrower becomes an SEC reporting company, such shorter
time as required to be filed with the SEC), commencing with the fiscal year
ending December 31, 2012, (i) a copy of the annual audit report for such year
for Borrower and its consolidated Subsidiaries, including therein Borrower’s and
its consolidated Subsidiaries’ balance sheets as of the end of such fiscal year
and Borrower’s and its consolidated Subsidiaries’ statements of income, cash
flows, and retained earnings, in each case certified by PKF LLP, Ehrhardt Keefe
Steiner & Hottman PC, or other independent certified public accountants of
national standing reasonably acceptable to the Requisite Lenders and shall not
be subject to any “going concern” or like qualification or exception and
including any management letters delivered by such accountants to Borrower in
connection with such audit, (ii) any management letters delivered by such
accountants to Borrower, and (iii) a Responsible Officer’s Certificate executed
by a Responsible Officer of the Borrower in the form of Exhibit B.

(b) Quarterly Financials. As soon as available and in any event not later than
forty five (45) days after the end of each of the first three fiscal quarters of
each fiscal year of Borrower and its consolidated Subsidiaries (or, if Borrower
becomes an SEC reporting company, such shorter time as required to be filed with
the SEC), (i) commencing with the fiscal quarter ending September 30, 2012, the
unaudited balance sheet and the statements of income, cash flows, and retained
earnings of each such Person for the period commencing at the end of the
previous year and ending with the end of such fiscal quarter, all in reasonable
detail and duly certified with respect to such consolidated statements (subject
to year-end audit adjustments) by a Responsible Officer of Borrower as having
been prepared in accordance with GAAP, (ii) a consolidating balance sheet and
statement of operations of Borrower together with the Credit Parties, and
(iii) a Responsible Officer’s Certificate executed by a Responsible Officer of
the Borrower in the form of Exhibit B.

(c) Defaults. As soon as possible and in any event within three (3) Business
Days after the date on which any Responsible Officer of any Credit Party obtains
knowledge of (i) the occurrence of any Default, (ii) the occurrence of a default
under any instrument or document evidencing Debt of any Credit Party, which
obligation underlying such Debt exceeds a total potential obligation to such
Credit Party of $500,000 in the aggregate, or (iii) the occurrence of a default
or event of default under the JV Company Credit Facility Documents, in each case
which is continuing on the date of such statement, a statement of a Responsible
Officer of such Credit Party setting forth the details of such Default, event of
default or default, as applicable, and the actions which Borrower and the
applicable Credit Party has taken and proposes to take with respect thereto;

(d) Termination Events. As soon as possible and in any event (i) within thirty
(30) days after Borrower or any member of the Controlled Group knows or has
reason to know that any Termination Event described in clause (a) of the
definition of Termination Event with respect

 

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to any Plan has occurred, and (ii) within ten (10) days after Borrower or any of
its Affiliates knows or has reason to know that any other Termination Event with
respect to any Plan has occurred, a statement of a Responsible Officer of
Borrower or such member describing such Termination Event and the action, if
any, which Borrower or such Affiliate proposes to take with respect thereto;

(e) Termination of Plans. Promptly and in any event within two (2) Business Days
after receipt thereof by Borrower or any member of the Controlled Group from the
PBGC, copies of each notice received by Borrower or any such member of the
Controlled Group of the PBGC’s intention to terminate any Plan or to have a
trustee appointed to administer any Plan;

(f) Other ERISA Notices. Promptly and in any event within five (5) Business Days
after receipt thereof by Borrower or any member of the Controlled Group from a
Multiemployer Plan, a copy of each notice received by Borrower or any member of
the Controlled Group concerning the imposition of withdrawal liability in an
amount exceeding $1,000,000 pursuant to Section 4202 of ERISA;

(g) Environmental Notices. Promptly upon the receipt thereof by any Credit
Party, a copy of any form of request, notice, summons or citation received from
the United States Environmental Protection Agency, or any other Governmental
Authority, concerning (i) violations or alleged violations of Environmental
Laws, which seeks to impose liability therefor and could cause a Material
Adverse Change, (ii) any action or omission on the part of any Credit Party or
any of its current or former Subsidiaries, or the JV Company in connection with
Hazardous Waste or Hazardous Substances which could reasonably result in the
imposition of liability therefor that could cause a Material Adverse Change,
including without limitation any information request related to, or notice of,
potential responsibility under CERCLA, or (iii) the filing of a Lien upon,
against or in connection with any Credit Party or its current or former
Subsidiaries or the JV Company, or any of their leased or owned Property,
wherever located;

(h) Other Governmental Notices. Promptly and in any event within five
(5) Business Days after receipt thereof by any Credit Party, a copy of any
notice, summons, citation, or proceeding seeking to modify in any material
respect, revoke, or suspend any material contract, license, permit or agreement
with any Governmental Authority;

(i) Material Changes. Prompt written notice of any condition or event of which
any Credit Party has knowledge, which condition or event (i) has resulted or
could reasonably be expected to result in a Material Adverse Change or (ii) has
resulted in a breach of or noncompliance with any material term, condition, or
covenant of any material contract to which any Credit Party is a party or by
which they or their Properties is bound (including, without limitation, a breach
of or noncompliance with the JV Company Credit Facility Documents);

(j) Disputes, Etc. Prompt written notice of (i) any claims, legal or arbitration
proceedings, suits, actions, audits, investigations or proceedings before any
Governmental Authority, or disputes pending, or to the knowledge of any Credit
Party threatened, or affecting any Credit Party, or any of its Subsidiaries
which, if adversely determined, could reasonably be expected to cause a Material
Adverse Change, or any material labor controversy of which any Credit Party has
knowledge resulting in or reasonably considered to be likely to result in a
strike

 

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against any Credit Party that could reasonably be expected to cause a Material
Adverse Change and (ii) with the exception of any claim listed on Schedule 4.7,
any claim, judgment, Lien or other encumbrance (other than a Permitted Lien)
affecting any Property of any Credit Party if the value of the claim, judgment,
Lien, or other encumbrance affecting such Property shall exceed $1,500,000;

(k) Other Accounting Reports. Promptly upon receipt thereof, a copy of each
other report or letter submitted to any Credit Party by its independent
accountants in connection with any annual, interim or special audit made by them
of the books of any Credit Party, and a copy of any response by any Credit
Party, or the Board of Directors (or other applicable governing body) of such
Credit Party, to such letter or report;

(l) Notices Under Other Loan Agreements. Promptly after the furnishing thereof,
copies of any statement, report or notice furnished to any Credit Party pursuant
to the terms of any indenture, loan or credit or other similar agreement
(including, without limitation, the JV Company Credit Facility Documents), other
than this Agreement and not otherwise required to be furnished to Lenders
pursuant to any other provision of this Section 5.6;

(m) USA PATRIOT Act. Promptly, following a request by any Lender, all
documentation and other information that such Lender reasonably requests in
order to comply with its ongoing obligations under applicable “know your
customer” and anti-money laundering rules and regulations, including the PATRIOT
Act;

(n) Other Information. Such other information respecting the business or
Properties, or the condition or operations, financial or otherwise, of any
Credit Party, any of its Subsidiaries or the JV Company, as Administrative Agent
or any Lender may from time to time reasonably request;

(o) Public Reports. Borrower (or any Credit Party) shall deliver, as soon as
reasonably practicable after the same become publicly available, copies of all
periodic and other reports, proxy statements, registration statements (and any
post effective amendments thereto) and other materials filed by the Borrower (or
any Credit Party) with the SEC, or any Governmental Authority succeeding to any
or all of the functions of said SEC, or with any national securities exchange,
or distributed to holders of its Debt or Equity Interests pursuant to the terms
of the documentation governing such Debt or Equity Interests (or any trustee,
agent or other representative therefor), as the case may be; and

(p) JV Reports. Borrower (or any Credit Party) shall deliver or cause to be
delivered, (i) as soon as reasonably practicable after receipt of the same,
copies of any and all periodic reports and any other information received by the
Borrower (or any Credit Party) regarding the JV Company, including, but not
limited to the reports and information required to be delivered to the Borrower
by the Sole Manager (as defined in the JV Company LLC Agreement) of the JV
Company pursuant to Sections 5.13 and 10.4 of the JV Company LLC Agreement and
(ii) contemporaneously with the delivery to the JV Company Credit Facility Agent
or any JV Company Credit Facility Lender, copies of all reports or notices
delivered or furnished by the JV Company to the JV Company Credit Facility Agent
or JV Company Credit Facility Lenders under the JV Company Credit Facility
Documents.

 

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Section 5.7 Maintenance of Property. Each Credit Party shall maintain its owned
or leased Property in good condition and repair, normal wear and tear excepted
and maintain its operated Property, as a reasonably prudent operator would, in
good condition and repair, normal wear and tear excepted (including, without
limitation, as commercially practicable making or causing to made all repairs,
replacements and other improvements which are necessary or appropriate in the
conduct of any Credit Party’s business); provided that no item of Equipment
needs to be repaired, renewed, replaced, or improved and no leased Property
needs to be maintained, if such Credit Party shall in good faith determine that
such action is not necessary or desirable for the continued efficient and
profitable operation of the business of any Credit Party, any Credit Party’s
Subsidiaries or the JV Company; and, provided further each Credit Party shall
abstain from knowingly or willfully permitting the Release of any Hazardous
Material in, on or about the owned, leased or operated Property except in
compliance with Environmental Law, the Release of which could reasonably be
expected to result in Response activities and that could reasonably be expected
to cause a Material Adverse Change.

Section 5.8 Agreement to Pledge. Each Credit Party shall, grant to
Administrative Agent an Acceptable Security Interest in any Property of such
Credit Party now owned or hereafter acquired promptly after receipt of a written
request from the Administrative Agent (at the direction of the Requisite
Lenders), including without limitation, (i) on or before the 120th day after the
Closing Date (or such later date as agreed by the Requisite Lenders in their
sole discretion), each Credit Party shall execute and deliver to the
Administrative Agent, deposit account control agreements for each of their
Deposit Accounts in accordance with Section 5.1 of the Pledge and Security
Agreement, (ii) on or before the 30th day after the Closing Date (or such later
date as agreed by the Requisite Lenders in their sole discretion) the Borrower
shall deliver to the Administrative Agent, certificates representing all of the
Equity Interests of Amber Resources owned by the Borrower or any other Credit
Party, together with undated stock powers or other appropriate instruments of
transfer executed and delivered in blank by a duly authorized officer of the
Borrower, and (iii) on our before the 10th Business Day after the Closing Date
(or such later date as agreed by the Requisite Lenders in their sole
discretion), the Borrower shall deliver to the Administrative Agent insurance
certificates naming Administrative Agent as additional insured, or loss payee,
as applicable, and evidencing insurance which meets the requirements of this
Agreement and the Security Instruments, and which is otherwise satisfactory to
the Requisite Lenders.

Section 5.9 Use of Proceeds. Each Credit Party shall use the proceeds of the
First Advance, together with the Piceance JV Proceeds (a) to repay the loans and
other obligations under the DIP Agreement, and (b) to pay allowed but unpaid
administrative expenses of the Debtors related to the Chapter 11 Proceedings and
shall use the proceeds of any subsequent Advance for general corporate purposes,
including working capital needs and any administrative expenses that were not
paid with the First Advance.

Section 5.10 Title Evidence and Opinions. Each Credit Party shall from time to
time upon the reasonable request of the Administrative Agent, take such actions
and execute and deliver such documents and instruments as the Administrative
Agent or the Requisite Lenders shall require to ensure that the Administrative
Agent shall, at all times, have received satisfactory title evidence, which
title evidence shall be in form and substance acceptable to the Requisite
Lenders in their sole discretion and shall include information regarding the
before payout and after payout ownership interests held by any Credit Party, for
all Wells located on the Oil and Gas Properties, as designated by the Requisite
Lenders.

 

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Section 5.11 Further Assurances; Cure of Title Defects. Each Credit Party shall,
cure promptly any defects in the creation and issuance of the Loans or any Notes
and the execution and delivery of the Security Instruments and this Agreement.
Each Credit Party hereby authorizes Administrative Agent to file any financing
statements without the signature of such Credit Party to the extent permitted by
applicable law in order to perfect or maintain the perfection of any security
interest granted under any of the Loan Documents. Notwithstanding the foregoing,
as soon as reasonably practicable, upon the reasonable request of the
Administrative Agent or the Requisite Lenders, each Credit Party at its expense
will, (a) promptly execute, acknowledge and deliver or cause the execution,
acknowledgement and delivery of, and thereafter register, file or record, or
cause to be registered, filed or recorded, in an appropriate governmental office
and document, agreement and/or instrument to comply with or accomplish the
covenants and agreements of each Credit Party, in the Security Instruments and
this Agreement, or to further evidence and more fully describe the collateral
intended as security for the Obligations and any Notes, or (b) take any
necessary action to correct any omissions in the Security Instruments, or to
state more fully the security obligations set out herein or in any of the
Security Instruments, or to perfect, protect or preserve any Liens created
pursuant to any of the Security Instruments, or to make any recordings, to file
any notices or obtain any consents, all as may be necessary or appropriate in
connection therewith or to enable Administrative Agent to exercise and enforce
its rights and remedies with respect to any Collateral. Within thirty (30) days
after (a) a request by the Administrative Agent or the Lenders to cure any title
defects or exceptions which are not Permitted Liens raised by such information
or (b) a notice by the Administrative Agent that any Credit Party has failed to
comply with Section 5.10, such Credit Party shall (i) cure such title defects or
exceptions which are not Permitted Liens or substitute acceptable Oil and Gas
Properties with no title defects or exceptions except for Permitted Liens
covering Collateral of at least an equivalent value and (ii) deliver to the
Administrative Agent satisfactory title evidence (including supplemental or new
title opinions meeting the foregoing requirements) in form and substance
acceptable to the Requisite Lenders in their reasonable business judgment as to
such Credit Party’s ownership of such Oil and Gas Properties and Administrative
Agent’s Liens and security interests therein as are required to maintain
compliance with Section 5.10.

Section 5.12 Additional Collateral; Additional Guarantors.

(a) Subject to this Section 5.12, with respect to any Property acquired after
the Closing Date, by any Credit Party that is Collateral or is intended to be
subject to the Lien created by any of the Security Instruments but is not so
subject or with respect to any Property previously designated as Excluded
Collateral but subsequently designated as Collateral by the Requisite Lenders in
their sole discretion in accordance with the terms hereof and of the other Loan
Documents, each Credit Party shall promptly (and in any event within thirty
(30) days after the acquisition or designation thereof) (i) execute and deliver
to the Administrative Agent such amendments or supplements to the relevant
Security Instruments or such other documents as the Administrative Agent or the
Requisite Lenders shall reasonably deem necessary to grant to the Administrative
Agent, for its benefit and for the benefit of the other applicable Secured
Parties, Acceptable Security Interest on such property, and (ii) to the extent
not already created and/or

 

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perfected, take all actions necessary to cause such Property to be subject to an
Acceptable Security Interest and not already perfected in accordance with all
applicable Legal Requirements, including the filing of financing statements in
such jurisdictions as may be reasonably requested by the Administrative Agent or
the Requisite Lenders.

(b) With respect to (i) any person that is or becomes a Subsidiary (other than
an Immaterial Subsidiary or Amber Resources) after the Closing Date, (ii) any
Subsidiary that is an Immaterial Subsidiary as of the Closing Date but
thereafter ceases to be an Immaterial Subsidiary, or (iii) any Subsidiary with
respect to which the Credit Parties are required to comply with this
Section 5.12(b) pursuant to Section 5.18, each Credit Party shall promptly (and,
with respect to clause (i) above, in any event within thirty (30) days after
such person becomes a Subsidiary) (A) deliver to the Administrative Agent the
certificates, if any, representing all of the Equity Interests of such
Subsidiary that are owned by any Credit Party, together with undated stock
powers or other appropriate instruments of transfer executed and delivered in
blank by a duly authorized officer of the relevant Credit Party, and all
intercompany notes owing from such Subsidiary to any Credit Party together with
instruments of transfer executed and delivered in blank by a duly authorized
officer of such Credit Party and (B) cause such new Subsidiary (1) to execute a
joinder agreement or such comparable documentation to become a Guarantor, a
joinder agreement to this Agreement and the applicable Security Instruments and
(2) to the extent not already created and/or perfected, to take all actions
reasonably necessary or advisable in the opinion of the Administrative Agent or
the Requisite Lenders to cause the Lien created by the applicable Security
Instrument to be duly perfected to the extent required by such agreement in
accordance with all applicable Legal Requirements, including the filing of
financing statements in such jurisdictions as may be reasonably requested by the
Administrative Agent or the Requisite Lenders.

(c) At the request of the Administrative Agent or Requisite Lenders, as soon as
practicable, each Credit Party (i) shall grant to the Administrative Agent,
within sixty (60) days of the acquisition thereof, an Acceptable Security
Interest in and Mortgage on each Real Property owned in fee by such Credit Party
as is acquired by such Credit Party after the Closing Date, and (ii) shall use
commercially reasonable efforts to grant to the Administrative Agent, within
sixty (60) days of the acquisition thereof, an Acceptable Security Interest in
and Mortgage on each leased Real Property of such Credit Party, in each case, as
additional security for the Obligations. The Mortgages or instruments related
thereto shall be duly recorded or filed in such manner and in such places as are
required by law to establish, perfect, preserve and protect the respective Liens
in favor of the Administrative Agent required to be granted pursuant to the
Mortgages and all applicable taxes, fees and other charges payable in connection
therewith shall be paid in full when due and payable. Such Credit Party shall
otherwise take such actions and execute and/or deliver to the Administrative
Agent such documents as the Administrative Agent or Requisite Lenders shall
reasonably require to confirm the validity, perfection and priority of the Liens
of any existing Mortgages or new Mortgages against such after-acquired Real
Property.

Section 5.13 Leases; Development and Maintenance. Each Credit Party shall
(a) pay and discharge promptly, or cause to be paid and discharged promptly, all
rentals, delay rentals, royalties, overriding royalties, payments out of
production and other indebtedness or obligations accruing under, and perform or
cause to be performed each and every act, matter or thing required by each and
all of, the oil and gas leases and all other agreements and contracts

 

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constituting or affecting the Oil and Gas Properties of any Credit Party (except
where the amount thereof is being contested in good faith by appropriate
proceedings and except where the nonpayment or non-performance of which could
not reasonably be expected to result in a Material Adverse Change, (b) in all
material respects, do all other things necessary to keep unimpaired its rights
thereunder and prevent any forfeiture thereof or default thereunder, and operate
or cause to be operated such Properties as a prudent operator would in
accordance with industry standard practices and in compliance with all
applicable proration and conservation Legal Requirements and any other Legal
Requirements of every Governmental Authority, whether state, federal, municipal
or other jurisdiction, from time to time constituted to regulate the development
and operations of oil and gas properties and the production and sale of oil, gas
and other Hydrocarbons therefrom, and (c) maintain (or cause to be maintained)
the Leases, Wells, units and acreage to which the Oil and Gas Properties of any
Credit Party pertain in a prudent manner consistent with industry standard
practices.

Section 5.14 Litigation and Other Notices. Each Credit Party shall furnish to
the Administrative Agent, and upon the request of the Administrative Agent or
any Lender, to each such Lender making the request to such Credit Party or the
Administrative Agent, written notice of the following as soon as reasonably
practicable (and, in any event, within five (5) Business Days of the occurrence
thereof):

(a) the filing or commencement of, or any threat or notice of intention of any
Person to file or commence, any action, suit, litigation or proceeding, whether
at law or in equity by or before any Governmental Authority, (i) against any
Credit Party that could reasonably be expected to result in a Material Adverse
Change or (ii) with respect to any Loan Document;

(b) the occurrence of a Casualty Event, in excess of $100,000;

(c) the incurrence of any Lien (other than Permitted Liens) on, or claim
asserted against any of the Collateral; and

(d) a copy of any notice, summons, citation, or proceeding seeking to modify in
any material respect or revoke or suspend any material contract, license, permit
or agreement with any Governmental Authority.

Section 5.15 Employee Benefits. Each Credit Party shall (a) except as could not
reasonably be expected to have a Material Adverse Change, with respect to any
Plan, comply in all respects with the applicable provisions of ERISA and the
Code and (b) furnish to the Administrative Agent (x) as soon as possible after,
and in any event within ten (10) days after any Responsible Officer of any
Credit Party knows or has reason to know, that any Termination Event has
occurred that, alone or together with any other Termination Event, could
reasonably be expected to result in liability of any Credit Party or any
Controlled Group member in an aggregate amount exceeding $1,000,000, a statement
of a Responsible Officer of the applicable Credit Party setting forth details as
to such Termination Event and the action, if any, that the Borrower and any
applicable Credit Party propose to take with respect thereto, and (y) upon
request by the Administrative Agent, copies of (i) each Schedule B (Actuarial
Information) to the annual report (Form 5500 Series) filed by any Credit Party
or any Controlled Group member with the Internal Revenue Service with respect to
each Plan; (ii) the most recent actuarial

 

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valuation report for each Plan; (iii) all notices received by any Credit Party
or any Controlled Group member from a Multiemployer Plan sponsor or any
governmental agency concerning a Termination Event; and (iv) such other
documents or governmental reports or filings relating to any Plan or the
Multiemployer Plan as the Administrative Agent or Requisite Lenders shall
reasonably request.

Section 5.16 Compliance with Environmental Laws.

(a) Each Credit Party shall comply, and cause all lessees and other persons
occupying Real Property owned, operated or leased by any Credit Party or any
Subsidiary to comply, in all material respects with all Environmental Laws and
Environmental Permits applicable to its operations and Real Property; obtain and
renew all material Environmental Permits applicable to its operations and Real
Property; and conduct all Responses required by, and in accordance with,
Environmental Laws; provided that no Credit Party shall be required to undertake
any Response to the extent that its obligation to do so is being contested in
good faith and by proper proceedings and appropriate reserves are being
maintained with respect to such circumstances in accordance with GAAP.

(b) If a Default caused by reason of a breach of Section 4.14 or Section 5.16(a)
shall have occurred and be continuing for more than twenty (20) days without the
any Credit Party commencing activities reasonably likely to cure such Default,
at the written request of the Administrative Agent or the Requisite Lenders
through the Administrative Agent, such Credit Party shall provide to the Lenders
within forty-five (45) days after such request, at the expense of the Credit
Party, an environmental assessment report regarding the matters which are the
subject of such Default, including, where appropriate, any soil and/or
groundwater sampling, prepared by an environmental consulting firm and, in the
form and substance, reasonably acceptable to the Requisite Lenders and
indicating the presence or absence of Hazardous Materials and the estimated cost
of any compliance or Response to address them.

(c) No Credit Party shall install, nor permit to be installed, in any Property
subject to a Mortgage any Hazardous Materials, other than in compliance with
applicable Environmental Laws.

Section 5.17 Information Regarding Collateral.

(a) No Credit Party shall effect any change (i) in any Credit Party’s legal
name, (ii) in the location of any Credit Party’s chief executive office,
(iii) in any Credit Party’s identity or organizational structure, (iv) in any
Credit Party’s Federal Taxpayer Identification Number or organizational
identification number, if any, or (v) in any Credit Party’s jurisdiction of
organization (including by merging with or into any other entity, reorganizing,
dissolving, liquidating, reorganizing or organizing in any other jurisdiction),
until (A) it shall have given the Administrative Agent not less than ten
(10) days’ prior written notice (in the form of an Officers’ Certificate), or
such lesser notice period agreed to by the Requisite Lenders, of its intention
so to do, clearly describing such change and providing such other information in
connection therewith as the Requisite Lenders may reasonably request; (B) it
shall have taken all action reasonably satisfactory to the Requisite Lenders to
maintain the perfection and priority of the security interest of the
Administrative Agent for the benefit of the applicable Secured Parties in the

 

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Collateral, if applicable; and (C) such change is not otherwise in violation of
this Agreement. Each Credit Party agrees, as soon as practicable, to provide the
Administrative Agent with certified Organizational Documents reflecting any of
the changes described in the preceding sentence. Each Credit Party also agrees
to promptly notify the Administrative Agent of any change in the location of any
office in which it maintains books or records relating to Collateral owned by it
or any office or facility at which Collateral is located (including the
establishment of any such new office or facility), other than changes in
location to a Property subject to a Mortgage or a leased property, in each case
if different than the location relating to such Collateral set forth in the
schedules to the Security Instruments or the most recent supplement thereto.

(b) Concurrently with the delivery of financial statements pursuant to
Section 5.6(a), each Credit Party shall, deliver to the Administrative Agent a
supplement to the schedules to the Security Instruments or confirmation that
there have been no changes to the information set forth in such schedules since
the date of the Security Instruments or the last supplement thereto provided
pursuant to this Section 5.17(b).

Section 5.18 Immaterial Subsidiaries. On or before the 90th day after the
Closing Date (or such later date as agreed by the Requisite Lenders in their
sole discretion), the Credit Parties shall liquidate or dissolve each Immaterial
Subsidiary; provided, that the Credit Parties shall promptly after the
expiration of such 90 days after the Closing Date comply with Section 5.12(b)
with respect to any Immaterial Subsidiary that is not liquidated or dissolved
within such 90 days after the Closing Date unless the Board of Directors of the
Borrower shall determine that such Immaterial Subsidiary does not own any
material Property and that the value of such Immaterial Subsidiary’s Property
would make compliance with Section 5.12(b) impractical or uneconomic, and the
Borrower shall have so notified the Administrative Agent and the Lenders in
writing. For the avoidance of doubt, the provisions of this Section 5.18 shall
not apply to any Subsidiary that is an Immaterial Subsidiary as of the Closing
Date but ceases to be an Immaterial Subsidiary after the Closing Date.

ARTICLE VI.

NEGATIVE COVENANTS

So long as any of the Obligations remain outstanding each Credit Party agrees
unless the Requisite Lenders otherwise consent in writing, to comply with the
following covenants as follows:

Section 6.1 Liens, Etc. No Credit Party shall create, assume, incur, or suffer
to exist any Lien on or in respect of any of its Property whether now owned or
hereafter acquired, or assign any right to receive income, except that each
Credit Party may create, incur, assume, or suffer to exist:

(a) Liens granted pursuant to the Security Instruments and securing the
Obligations;

(b) purchase money Liens or purchase money security interests upon or in any
Equipment acquired or held by any Credit Party in the ordinary course of
business prior to or at the time of such Credit Party’s acquisition of such
Equipment; provided that, the Debt secured by

 

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such Liens shall not exceed $1,500,000 in the aggregate at any time outstanding
and that such Debt (i) was incurred solely for the purpose of financing the
acquisition of such Equipment, and does not exceed the aggregate purchase price
of such Equipment, (ii) is secured only by such Equipment and not by any other
assets of any Credit Party, and (iii) is not increased in amount;

(c) Liens for taxes, assessments, or other governmental charges or levies not
yet due or not yet delinquent or, if delinquent, that (provided foreclosure,
sale, or other similar proceedings shall not have been initiated) are being
contested in good faith by appropriate proceedings, and such reserve as may be
required by GAAP shall have been made therefor;

(d) Liens in favor of vendors, carriers, warehousemen, repairmen, mechanics,
workmen, materialmen, construction, or similar Liens arising by operation of law
in the ordinary course of business in respect of obligations that are not yet
due or that are being contested in good faith by appropriate proceedings,
provided such reserve as may be required by GAAP shall have been made therefor;

(e) royalties, overriding royalties, net profits interests, production payments,
reversionary interests, calls on production, preferential purchase rights and
other burdens on or deductions from the proceeds of production, that do not
secure Debt for borrowed money and that do not materially detract from any
Credit Party’s value;

(f) Liens arising in the ordinary course of business out of pledges or deposits
under workers’ compensation laws, unemployment insurance, old age pensions or
other social security or retirement benefits, or similar legislation or to
secure public or statutory obligations of any Credit Party;

(g) Liens arising under operating agreements, unitization and pooling agreements
and orders, farmout agreements, gas balancing agreements, and other agreements,
in each case that are customary in the oil, gas and mineral production business
and that are entered into by any Credit Party, in the ordinary course of
business provided that (i) such Liens do not secure borrowed money, (ii) such
Liens secure amounts that are not yet due, or not yet delinquent, or if
delinquent, are being contested in good faith by appropriate proceedings, if
such reserve as may be required by GAAP shall have been made therefor,
(iii) such Liens are limited to the Properties that are the subject of such
agreements, and (iv) such Liens do not materially detract from the aggregate
value of any Credit Party’s assets;

(h) easements, rights-of-way, restrictions, and other similar encumbrances, and
minor defects in the chain of title that are customarily accepted in the oil and
gas financing industry, none of which interfere with the ordinary conduct of the
business of any Credit Party or materially detract from the value or use of the
Property to which they apply,

(i) Liens in favor of the JV Company Credit Facility Lenders or JV Company
Credit Facility Agent solely on the JV Holding Sub’s JV Interests as security
for the JV Company Credit Facility; provided, that such Liens are without
further recourse to Borrower or its Subsidiaries and otherwise on substantially
the same terms as those set forth in the Parent Pledge Agreement as in effect as
of the date hereof;

 

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(j) Liens on cash collateral securing Debt permitted under Section 6.2(b);
provided that such cash collateral does not exceed $1,500,000 in the aggregate
at any time;

(k) bankers’ Liens, rights of setoff and other similar Liens existing solely
with respect to cash and cash equivalents on deposit in one or more accounts
maintained by any Credit Party in each case granted in the ordinary course of
business in favor of the bank or banks with which such accounts are maintained,
securing amounts owing to such bank or banks with respect to cash management and
operating account arrangements;

(l) Liens in favor of vendors or lessors arising under any conditional sale
agreement, synthetic lease, Capital Lease, or other title retention agreement;
and

(m) Liens securing Permitted Subordinated Debt to the extent permitted under
Sections 6.7(g) or (k).

Section 6.2 Debts, Guarantees, and Other Obligations. No Credit Party shall
create, assume, suffer to exist, or in any manner become or be liable in respect
of, any Debt except:

(a) Debt of the Credit Parties under the Loan Documents;

(b) Debt set forth on Schedule 4.5;

(c) Debt secured by the Liens permitted under Section 6.1(b) and any renewal,
refinancing or extension of such Debt; provided that (i) no Lien existing at the
time of such renewal, refinancing or extension shall be extended to cover any
property not already subject to such Lien, (ii) the principal amount of any Debt
renewed, refinanced or extended shall not exceed the amount of such Debt
outstanding immediately prior to such renewal, refinancing or extension; and
(iii) in any event, the aggregate amount of such Debt at any time shall not
exceed $1,500,000;

(d) Debt under Hydrocarbon Hedge Agreements and other Hedge Contracts in each
case, entered into in the ordinary course of business and not purely for
speculative purposes; provided that (i) such Debt shall not be secured,
(ii) such Debt shall not obligate any Credit Party to any margin call
requirements including any requirement to post cash collateral, property
collateral or a letter of credit, and (iii) such Debt shall not include any
deferred premium payments associated with such Hydrocarbon Hedge Contracts;

(e) Debt consisting of sureties or bonds provided to any Governmental Authority
or other Person and assuring payment of contingent liabilities of any Credit
Party in connection with the operation of the Oil and Gas Properties, including
with respect to plugging, facility removal and abandonment of its Oil and Gas
Properties;

(f) Debt of any Credit Party owing to any other Credit Party; provided that such
Debt is subordinated to the Obligations on terms acceptable to the Requisite
Lenders in their sole discretion;

(g) Debt evidenced by letters of credit, surety bonds and other credit
assurances and similar obligations of a like nature entered into in the ordinary
course of business; provided that

 

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the then maximum obligations owing with respect to such Debt shall not exceed
$1,500,000 in the aggregate at any time and such obligations were
cash-collateralized by the applicable Credit Party at the time the obligations
were created;

(h) The JV Holding Sub’s nonrecourse guarantee of the obligations under the JV
Credit Agreement pursuant to the Parent Guaranty;

(i) Other unsecured Debt in an aggregate amount outstanding at any time not to
exceed $750,000;

(j) Debt of any Credit Party to a holder of an Equity Interest in such Credit
Party or the Borrower provided that (i) the full proceeds thereof are advanced
either to such Credit Party or the JV Company as either a capital contribution
or a loan or are reinvested in an asset acquired by such Credit Party in either
case as permitted under Section 6.7(g) hereof and (ii) such Debt to the holder
of an Equity Interest of the Borrower is subordinated to the Obligations on
terms satisfactory to the Requisite Lenders; and

(k) Permitted Subordinated Debt in aggregate amount outstanding at any time not
to exceed $60,000,000.

Section 6.3 Agreements Restricting Liens and Distributions. No Credit Party
shall enter into any agreement, instrument, deed or lease which prohibits or
limits the ability of any Credit Party to create, incur, assume or suffer to
exist any Lien upon any of their respective properties or revenues, whether now
owned or hereafter acquired, or which requires the grant of any security for an
obligation if security is granted for another obligation, except the following:
(1) this Agreement, the other Loan Documents and the JV Company Credit Facility
Documents; (2) covenants in documents creating Liens permitted by Section 6.1
prohibiting further Liens on the properties encumbered thereby; and (3) any
other agreement that does not restrict in any manner (directly or indirectly)
Liens created pursuant to the Loan Documents on any Collateral securing the
Obligations and does not require the direct or indirect granting of any Lien
securing any Debt or other obligation by virtue of the granting of Liens on or
pledge of property of any Credit Party to secure the Obligations.

Section 6.4 Merger or Consolidation; Asset Sales. No Credit Party shall:

(a) merge or consolidate with or into any other Person; provided that (i) any
Guarantor may merge or consolidate with any Person so long as a Guarantor is the
surviving Person or such Person becomes a Guarantor contemporaneously with such
merger or consolidation and (ii) any Credit Party may merge or consolidate with
the Borrower so long as the Borrower is the surviving Person; or

(b) make any Disposition of any of its Property (including, without limitation,
any Working Interest, overriding Royalty Interest, production payments, net
profits interest, Royalty Interest, or mineral fee interest) outside the
ordinary course of business except Dispositions of Assets for their fair market
value, as determined in good faith by the Borrower’s board of directors, other
than:

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

 

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(ii) the Disposition of cash and Liquid Investments in the ordinary course of
business;

(iii) the Disposition of Property that is (A) obsolete, worn out, depleted or
uneconomic and disposed of in the ordinary course of business, (B) no longer
necessary for the business of the Credit Parties as reasonably determined by
such Credit Party or (C) with respect to any Equipment, contemporaneously
replaced with Equipment of at least comparable value and use;

(iv) the Disposition of Property between or among Credit Parties;

(v) farmouts of undeveloped acreage and assignments in connection with such
farmouts, each with the prior Approval of the Requisite Lenders;

(vi) the Disposition of the Equity Interests of Subsidiaries that are not
Guarantors with the prior Approval of the Requisite Lenders;

(vii) 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 receivable arising in the ordinary course of
business in connection with the compromise or collection thereof and not in
connection with any financing transaction;

(viii) Property sold, conveyed, transferred, assigned, disposed of, leased or
licensed out in the ordinary course of business (excluding any sales,
conveyances, transfers, assignments, dispositions, leases or licenses out by
operations or divisions discontinued or being discontinued),

(ix) (i) any license of Intellectual Property in the ordinary course of business
or (ii) the abandonment or other disposition of Intellectual Property in the
ordinary course of business that is no longer material to the conduct of the
business of the Credit Parties, their Subsidiaries or the JV Company as such
business is operated and the license or abandonment of such Intellectual
Property does not materially detract from any Credit Party’s value.

For the avoidance of doubt, any Net Cash Proceeds from a Disposition of any
Credit Party’s Property shall be applied as required by Section 2.8(c).

Section 6.5 Restricted Payments. No Credit Party shall make any Restricted
Payments except: any Subsidiary of Borrower (i) may pay cash Dividends to the
Borrower or any wholly owned Subsidiary of the Borrower and (ii) if such
Subsidiary is not a wholly owned Subsidiary of Borrower, may pay cash Dividends
to its shareholders generally so long as the Borrower or its Subsidiary which
owns the equity interest or interests in the Subsidiary paying such Dividends
receives at least its proportionate share thereof (based upon its relative
holdings of equity interests in the Subsidiary paying such Dividends and taking
into account the relative preferences, if any, of the various classes of Equity
Interests in such Subsidiary).

Section 6.6 Reserved.

 

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Section 6.7 Investments. No Credit Party shall make or permit to exist any
loans, advances, or capital contributions to, or make any investment in
(including, without limitation, the making of any Acquisition), or purchase or
commit to purchase any stock or other securities or evidences of Debt of or
interests in any Person or any Oil and Gas Properties or activities related to
Oil and Gas Properties, except:

(a) Liquid Investments;

(b) trade and customer accounts receivable which are for goods furnished or
services rendered in the ordinary course of business and are payable in
accordance with customary trade terms;

(c) creation of any additional Subsidiaries in compliance with Section 6.16;

(d) investments received in connection with the bankruptcy or reorganization of,
or settlement of delinquent accounts and disputes with, customers and suppliers,
in each case in the ordinary course of business;

(e) investments consisting of any deferred portion of the sales price received
by any Credit Party in connection with any sale of assets permitted hereunder;

(f) investments in direct ownership interests in additional Oil and Gas
Properties and gas gathering systems related thereto or related to farm-out,
farm-in, joint operating, joint venture or area of mutual interest agreements,
gathering systems, pipelines or other similar arrangements which are usual and
customary in the oil and gas exploration and production business located within
the geographic boundaries of the United States of America; provided that if
requested by Requisite Lenders, such assets are pledged as Collateral pursuant
to Section 5.8;

(g) investments in connection with Acquisitions or acquisitions of other assets,
provided that the Credit Party makes such acquisition or Acquisitions with
(i) net cash flow generated by the Borrower, (ii) an equivalent amount of funds
received from any holders of its Equity Interests either as a capital
contribution, Net Cash Proceeds from any issuance of Equity Interests (subject
to Section 2.8(g)), Debt which is subordinated to the Obligations on terms
satisfactory to the Requisite Lenders, or from Net Cash Proceeds from the
Disposition of Property (including, but not limited to, the JV Interests) which
the Borrower is permitted to reinvest pursuant to Section 2.8(c) hereof,
(iii) the proceeds of Permitted Subordinated Debt, or (iv) with the prior
written consent of the Requisite Lenders, at their sole and absolute discretion,
with the proceeds of the Loans;

(h) The JV Holding Sub’s nonrecourse guarantee of the obligations under the JV
Credit Agreement pursuant to the Parent Guaranty;

(i) Hedge Contracts to the extent permitted under Section 6.2 and Section 6.15;

(j) other loans, advances and investments not to exceed $500,000 in the
aggregate;

(k) investments consisting of loans, capital contributions or equity investments
by any Credit Party in the JV Company with (i) net cash flow generated by the
Borrower (including

 

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any Net Cash Proceeds generated from a Disposition of Property (including, but
not limited to, the JV Interests, as permitted by this Agreement) or (ii) an
equivalent amount of funds received from any holders of its Equity Interests
either as a capital contribution, Net Cash Proceeds from any issuance of Equity
Interests (subject to Section 2.8(g)) or from Net Cash Proceeds from the
Disposition of Property which the Borrower is permitted to reinvest pursuant to
Section 2.8(c) hereof, (iii) the proceeds of Permitted Subordinated Debt, or
(iv) with the prior written consent of the Requisite Lenders, at their sole and
absolute discretion, with the proceeds of the Loans; and

(l) investments by one Credit Party in another Credit Party.

Section 6.8 Reserved.

Section 6.9 Compliance with ERISA. Without the consent of the Requisite Lenders,
no Credit Party or any member of a Controlled Group shall be party, or otherwise
subject, to a Plan or Multiemployer Plan. Without limitation to the foregoing,
in any event, no Credit Party shall directly or indirectly, (a) engage in any
transaction in connection with which Borrower or any Controlled Group member
could be subjected to either a civil penalty assessed pursuant to
Section 502(c), (i) of ERISA or a tax imposed by Chapter 43 of Subtitle D of the
Code with respect to any Plan; (b) terminate any Plan in a manner, or take any
other action with respect to any Plan, which could result in any liability to
Borrower or any Controlled Group member to the PBGC; (c) fail to make full
payment when due of all amounts which, under the provisions of any Plan,
agreement relating thereto or applicable law, Borrower or any Controlled Group
member is required to pay as contributions thereto; (d) fail to satisfy the
minimum funding standards within the meaning of Sections 412 and 430 of the Code
or Sections 302 and 303 of ERISA; (e) permit the actuarial present value of the
benefit liabilities (based on reasonable assumptions used to fund such Plan for
purposes of Sections 412 and 430 of the Code) under any Plan maintained by
Borrower or any Controlled Group member which is regulated under Title IV of
ERISA to exceed the current value of the assets (computed on a plan termination
basis in accordance with Title IV of ERISA) of such Plan allocable to such
benefit liabilities; (f) assume an obligation to contribute to any Multiemployer
Plan; (g) acquire a 90% or greater interest in any Person if such Person
sponsors, maintains or contributes to, or at any time in the six-year period
preceding such acquisition has sponsored, maintained, or contributed to, (1) any
Multiemployer Plan, or (2) any other Plan that is subject to Title IV of ERISA,
and in either case, the actuarial present value of the benefit liabilities under
such Plan exceeds the current value of the assets (computed on a plan
termination basis in accordance with Title IV of ERISA) of such Plan allocable
to such benefit liabilities, and the withdrawal liability, if assessed, could
reasonably be expected to result in a Material Adverse Change; (h) incur a
liability to or on account of a Plan under Sections 515, 4062, 4063, 4064, 4201
or 4204 of ERISA; (i) assume an obligation to contribute to any employee welfare
benefit plan, as defined in Section 3(1) of ERISA, that gives rise to retiree or
other post-employment welfare benefits; (j) amend a Plan in contravention of
Section 206(g) of ERISA; or (k) permit to exist any occurrence of any
“Reportable Event” (as defined in Section 4043 of ERISA, and other than a
“Reportable Event” not subject to the provision for 30-day notice to the PBGC or
with respect to which the notice requirement is waived under applicable
regulations), or any other event or condition, which presents a material (in the
opinion of the Requisite Lenders) risk of such a termination by the PBGC of any
Plan, and in each case in clauses (a) through (k) above, such event or
condition, together with all other such events or conditions, if any, would
reasonably be expected to result in a Material Adverse Change.

 

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Section 6.10 Sale-and-Leaseback. No Credit Party shall sell or transfer to a
Person any Property, whether now owned or hereafter acquired, if at the time or
thereafter, such Credit Party shall lease as lessee such Property or any part
thereof or other Property which such Credit Party intends to use for
substantially the same purpose as the Property sold or transferred.

Section 6.11 Change of Business; Accounting Change. No Credit Party shall make
any material change in the character of its business that it is engaged in
immediately prior to the Closing Date (which such business shall include,
without limitation, as an independent oil and gas exploration and production
company or any business that is similar, complementary or reasonably related to
or is a reasonably extension thereof) (“Permitted Business”), nor will any
Credit Party operate any business in any jurisdiction other than the United
States. No Credit Party shall make a change in the method of accounting employed
in the preparation of the financial statements referred to in Section 5.6 or
change its fiscal year end unless required to conform to GAAP or Approved in
writing by the Requisite Lenders.

Section 6.12 Organizational Documents, Other Documents. No Credit Party shall

(a) amend, supplement, modify or restate its Organizational Documents where such
amendment, supplement, modification or restatement could have an adverse effect
on Lenders as determined by the Requisite Lenders in their sole discretion
(including, without limitation, electing to treat any pledged Equity Interests
as a “security” under Section 8-103 of the UCC), or

(b) amend or modify, or permit the amendment or modification of, any provision
of any Debt that is subordinated to the Obligations in any manner that is
adverse in any material respect to the interests of the Lenders as determined by
the Requisite Lenders in their sole discretion.

(c) consent or vote in favor of, or permit the amendment or modification of, any
provision of the JV Company Organizational Documents or the JV Company Credit
Facility Documents in any manner that is adverse in any material respect to the
interests of the Lenders as determined by the Requisite Lenders in their sole
discretion, including without limitation, any amendment or modification that
would (i) cease to require the vote of 100% of the JV Company’s Board of
Directors, (ii) change the non-recourse nature of the Parent Guaranty or confer
additional rights on the JV Company Credit Facility Agent or JV Company Credit
Facility Lenders against the Borrower, the JV Holding Sub, any other Credit
Party or any of their assets, (iii) reduce the JV Holding Sub’s percentage
ownership interest in the JV Company or its right to vote on certain material
matters without the JV Holding Sub’s consent, or (iv) permit the JV Company to
increase the amount of loans which can be outstanding under the JV Credit
Agreement, or incur any other additional Debt, or grant Liens on any of the JV
Company’s assets as security for Debt of the JV Company (other than in respect
of the JV Company Credit Facility and Debt permitted to be incurred thereunder
without regard to any amendment which may be made subsequent to the date
hereof).

 

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Section 6.13 Use of Proceeds. No Credit Party will permit the proceeds of any
Loans to be used for any purpose other than those permitted by Section 5.9. No
Credit Party will engage in the business of extending credit for the purpose of
purchasing or carrying margin stock (within the meaning of Regulation U). No
Credit Party nor any Person acting on behalf of such Credit Party has taken or
shall take, nor permit any of the Credit Parties to take any action which might
cause any of the Loan Documents to violate Regulation T, U or X or any other
regulation of the Board of Governors of the Federal Reserve System 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, including without limitation, the use of the proceeds of the Loans to
purchase or carry any margin stock in violation of Regulation T, U or X.

Section 6.14 Gas Imbalances, Take-or-Pay or Other Prepayments. No Credit Party
shall allow gas imbalances, take-or-pay or other prepayments with respect to the
Oil and Gas Properties of such Credit Party which would require such Credit
Party to deliver its Hydrocarbons produced on a monthly basis from such Oil and
Gas Properties at some future time without then or thereafter receiving full
payment therefor other than that which do not result in such Credit Party having
net aggregate liability in excess of $100,000.

Section 6.15 Hedging. Other than the Hedge Contracts as set forth on Schedule
4.19 or permitted under Section 6.2(d), no Credit Party shall, purchase, assume,
or hold a speculative position in any commodities market or futures market, or
enter into any Hedge Contract or similar hedge arrangement for speculative
purposes without the consent of the Requisite Lenders.

Section 6.16 Additional Subsidiaries. No Credit Party shall create or acquire
any Subsidiaries without the consent of the Requisite Lenders and (a) such new
Subsidiary executing and delivering to Administrative Agent (with a copy to each
Lender), at its request, a joinder to this Agreement, a pledge and security
agreement in the form of Exhibit I and a Mortgage, and such other Security
Instruments as Administrative Agent or the Requisite Lenders may reasonably
request, and (b) the delivery by Borrower or the applicable Credit Party to the
Administrative Agent (with a copy to each Lender) of any certificates, opinions
of counsel, title opinions or other documents as the Requisite Lenders may
reasonably request; provided that, in any event, no Subsidiary may be created or
acquired if a Default has occurred and is continuing before, or a Default would
arise after, giving effect to such creation or acquisition of the new
Subsidiary.

Section 6.17 Reserved.

Section 6.18 Anti-Terrorism; Anti Money Laundering. No Credit Party shall:

(a) Directly or indirectly, (i) knowingly conduct any business or engage in
making or receiving any contribution of funds, goods or services to or for the
benefit of any person described in Section 6.19, (ii) knowingly deal in, or
otherwise engage in any transaction relating to, any property or interests in
property blocked pursuant to the Executive Order or any other Anti-Terrorism
Law, or (iii) knowingly engage in or conspire to engage in any transaction that
evades or avoids, or has the purpose of evading or avoiding, or attempts to
violate, any of the prohibitions set forth in any Anti-Terrorism Law (and the
Credit Parties shall deliver to the Lenders any certification or other evidence
requested from time to time by any Lender in its reasonable discretion,
confirming the Credit Parties’ compliance with this Section 6.18).

 

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(b) Cause or permit any of the funds of such Credit Party that are used to repay
the Loans to be derived from any unlawful activity with the result that the
making of the Loans would be in violation of law.

Section 6.19 Embargoed Person. No Credit Party shall cause or permit (a) any of
the funds or properties of the Credit Parties that are used to repay the Loans
to constitute property of, or be beneficially owned directly or indirectly by,
any person subject to sanctions or trade restrictions under United States law
(“Embargoed Person” or “Embargoed Persons”) that is identified on the “List of
Specially Designated Nationals and Blocked Persons” (the “SDN List”) maintained
by OFAC and/or on any other similar list (“Other List”) maintained by OFAC
pursuant to any authorizing statute including, but not limited to, the
International Emergency Economic Powers Act, 50 U.S.C. §§ 1701 et seq., The
Trading with the Enemy Act, 50 U.S.C. App. 1 et seq., and any executive order or
regulation promulgated thereunder with the result that the investment in the
Credit Parties (whether directly or indirectly) is prohibited by law, or the
Loans made by the Lenders would be in violation of law, the executive order, any
related enabling legislation or any other similar executive orders
(collectively, “Executive Orders”), or (2) any Embargoed Person to have any
direct or indirect interest, of any nature whatsoever in the Credit Parties,
with the result that the investment in the Credit Parties (whether directly or
indirectly) is prohibited by law or the Loans are in violation of law.

Section 6.20 Prepayments of Debt. No Credit Party shall prepay, redeem,
purchase, defease or otherwise satisfy prior to the scheduled maturity thereof
in any manner, or make any payment in violation of any subordination terms of,
any Debt, except (a) the prepayment of the Loans in accordance with the terms of
this Agreement, (b) regularly scheduled or required repayments or redemptions of
Debt permitted under Section 6.2, and (c) so long as no Event of Default exists
or would result therefrom, other prepayments of Debt permitted under
Section 6.2.

Section 6.21 Reserved.

Section 6.22 Deposit Accounts. No Credit Party shall open or maintain any
Deposit Accounts except for:

(a) Deposit Accounts set forth on Schedule 6.22, and

(b) Deposit Accounts opened after the date hereof which (i) are subject to
account control agreements reasonably acceptable in form and substance to the
Administrative Agent and the Requisite Lenders or (ii) Excluded Deposit Accounts
(as defined in the Pledge and Security Agreement).

Section 6.23 Support of Subsidiaries. Borrower shall not provide any direct or
indirect financial support to any of its Subsidiaries which are not Guarantors;
provided, however, that this Section 6.23 shall not prohibit (i) the purchase
and sales of goods and services from such Subsidiaries to Borrower in the
ordinary course of business, consistent with past practice and on an arm’s
length basis or (ii) investments permitted by Section 6.7(k).

 

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Section 6.24 Limitation on Certain Restrictions on Subsidiaries. (A) No Credit
Party shall directly or indirectly, create or otherwise cause or suffer to exist
or become effective any encumbrance or restriction on the ability of any
Subsidiary to (a) pay dividends or make any other distributions on its Equity
Interests or any other interest or participation in its profits owned by the
Borrower or any of its Subsidiaries, or pay any Debt owed to the Borrower or any
Subsidiary, (b) make loans or advances to the Borrower or any of its
Subsidiaries or (c) transfer any of its properties to Borrower or any
Subsidiary, except for such encumbrances or restrictions existing under or by
reason of (i) applicable law; (ii) this Agreement, the other Loan Documents, or
the JV Credit Agreement; (iii) customary provisions restricting subletting or
assignment of any lease governing a leasehold interest; (iv) customary
provisions restricting assignment of any agreement entered into in the ordinary
course of business; (v) any holder of a Lien permitted by Section 6.1
restricting the transfer of the property subject thereto; and (vi) customary
restrictions and conditions contained in any agreement relating to the sale of
any Property permitted under Section 6.4 pending the consummation of such sale
and (B) No Credit Party shall directly or indirectly, create or otherwise cause
or suffer to exist or become effective any encumbrance or restriction on the
ability of the JV Company to (a) pay dividends or make any other distributions
on its capital stock or any other interest or participation in its profits owned
by the Borrower or any of its Subsidiaries, or pay any Debt owed to the Borrower
or any Subsidiary, (b) make loans or advances to the Borrower or any of its
Subsidiaries or (c) transfer any of its properties to Borrower or any
Subsidiary, except for such encumbrances or restrictions existing under or by
reason of (i) applicable law and (ii) this Agreement or the other Loan
Documents.

Section 6.25 JV Holding Sub. Notwithstanding anything herein to the contrary, JV
Holding Sub shall not, and no Credit Party shall permit JV Holding Sub to incur
any Debt for borrowed money or engage in any business activity and/or own any
property other than (A) direct or indirect ownership of the JV Interests and any
distributions or property received by JV Holding Sub on account thereof or in
connection therewith (including, without limitation, “Permitted Tax
Distributions” and Economic Interest Agreement Payments” (each as defined in the
JV Credit Agreement)), (B) the Obligations and its non-recourse guaranty of the
JV Company Credit Facility Obligations pursuant to the Parent Guaranty, and
granting Liens in its Property to secure its obligations thereunder,
(C) activities and contractual rights incidental to maintenance of its limited
liability company existence and administration, including the preparation and
audit of financial statements, the preparation of tax returns, the procurement
of insurance, the hosting of board and manager (or equivalent) meetings and the
retention of accountants, lawyers, financial advisors and other appropriate
professionals in connection with the foregoing (“LLC Administration”),
(D) ownership of cash and cash equivalents solely to the extent necessary to pay
taxes then due and owing, and the costs and expenses of LLC Administration, and
(E) paying Dividends to, and making investments in, the Borrower.

ARTICLE VII.

EVENTS OF DEFAULT; REMEDIES

Section 7.1 Events of Default. The occurrence of any of the following events
shall constitute an “Event of Default” under any Loan Document:

(a) Payment. Any Credit Party shall fail to pay, within three (3) Business Days,
when due any (i) principal payable hereunder or under any Notes or (ii) other
amounts (including interest, fees, reimbursements, and indemnifications) payable
hereunder, under any Notes, or under any other Loan Document;

 

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(b) Representation and Warranties. Any representation or warranty made or deemed
to be made by any Credit Party (or any of their respective officers) in this
Agreement or in any other Loan Document, or by any Credit Party (or any of their
respective officers) in connection with this Agreement or any other Loan
Document, shall prove to have been incorrect in any material respect (except
that such materiality qualifier shall not be applicable to any representations
and warranties that already are qualified or modified by materiality in the text
thereof) when made or deemed to be made;

(c) Covenant Breaches. Any Credit Party shall fail to perform or observe any
other term, agreement or covenant set forth in this Agreement including, but not
limited to, those contained in Section 5.2, Section 5.3, Section 5.5,
Section 5.6, Section 5.9 or Article VI of this Agreement and any other Loan
Documents.

(d) Cross Defaults. (i) Any Credit Party shall fail to pay any principal of or
premium or interest on its Debt that is outstanding in a principal amount of at
least $500,000 individually or when aggregated with all such Debt of any Credit
Party so in default (but excluding Debt evidenced by this Agreement) when the
same becomes due and payable (whether by scheduled maturity, required
prepayment, acceleration, demand or otherwise), and such failure shall continue
after the applicable grace period, if any, specified in the agreement or
instrument relating to such Debt; (ii) any other event shall occur or condition
shall exist under any agreement or instrument relating to Debt (including,
without limitation, any event of default, termination event or additional
termination event under any Hedge Contract) that is outstanding in a principal
amount (or termination payment amount or similar amount) of at least $500,000
individually or when aggregated with all such Debt of any Credit Party so in
default, and shall continue after the applicable grace period, if any, specified
in such agreement or instrument, if the effect of such event or condition is to
accelerate, or to permit the acceleration of, the maturity of such Debt;
(iii) any such Debt in a principal amount of at least $500,000 individually or
when aggregated with all such Debt of any Credit Party shall be declared to be
due and payable, or required to be prepaid (other than by a regularly scheduled
required prepayment), prior to the stated maturity thereof; provided that, for
purposes of this Section 7.1(d), the “principal amount” of the obligations in
respect of any Hedging Contracts at any time shall be the maximum aggregate
amount (giving effect to any netting agreements) that would be required to be
paid if such Hedging Contracts were terminated at such time; or (iv) any event
or circumstance occurs and is continuing which constitutes an event of default
under the JV Credit Agreement, regardless of whether an Event of Default is
declared under the JV Credit Agreement on account thereof, provided, however,
that if any event of default under the JV Credit Agreement is cured or waived,
any related Event of Default arising under this Section 7.1(d)(iv) shall be
deemed to have been cured or waived, as applicable;

(e) Insolvency. (i) (a) Any Credit Party shall become unable or shall admit in
writing its inability or shall fail generally to pay its debts as such debts
become due, or shall make a general assignment for the benefit of creditors; or
(b) any writ or warrant of attachment or execution or similar process is issued
or levied against all or any material part of the property of any Credit Party
and is not released, vacated or fully bonded within sixty (60) days after its
issue

 

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or levy; or (ii) any proceeding shall be instituted by or against any Credit
Party seeking to adjudicate it as bankrupt or insolvent, or seeking dissolution,
liquidation, winding up, reorganization, arrangement, adjustment, protection,
relief, or composition of it or its debts under any Debtor Relief Law, or
seeking the entry of an order for relief or the appointment of a receiver,
trustee, custodian or other similar official for it or for any substantial part
of its Property and, in the case of any such proceeding instituted against any
Credit Party either such proceeding shall remain undismissed or unstayed for a
period of sixty (60) days or any of the actions sought in such proceeding
(including, without limitation, the entry of an order for relief against any
Credit Party or the appointment of a receiver, trustee, custodian or other
similar official for it or for any substantial part of its Property) shall
occur; or any Credit Party shall take any corporate action to authorize any of
the actions set forth above in this paragraph (e);

(f) Judgments. Any judgment, order or decree for the payment of money in excess
of $1,000,000 (for which is not covered by insurance) shall be rendered against
any Credit Party or the JV Company and either (i) such order or judgment shall
remain unsatisfied for thirty (30) days, (ii) enforcement proceedings shall have
been commenced by any creditor upon such judgment or order or (iii) there shall
be any period of thirty (30) consecutive days during which a stay of enforcement
of such judgment or order, by reason of a pending appeal or otherwise, shall not
be in effect;

(g) Termination Events. Any Termination Event with respect to a Plan shall have
occurred, and, thirty (30) days after notice thereof shall have been given to
Borrower by Administrative Agent (at the direction of the Requisite Lenders),
(i) such Termination Event shall not have been corrected and (ii) the then
present value of such Plan’s vested benefits exceeds the then current value of
assets accumulated in such Plan by more than an amount that would be reasonably
likely to result in a Material Adverse Change (or in the case of a Termination
Event involving the withdrawal of a “substantial employer” (as defined in
Section 4001(a)(2) of ERISA), the withdrawing employer’s proportionate share of
such excess shall exceed such amount);

(h) Plan Withdrawals. Borrower or any member of the Controlled Group as employer
under a Multiemployer Plan shall have made a complete or partial withdrawal from
such Multiemployer Plan and the plan sponsor of such Multiemployer Plan shall
have notified such withdrawing employer that such employer has incurred a
withdrawal liability in an annual amount that would be reasonably likely to
result in a Material Adverse Change.

(i) Change in Control. A Change in Control shall have occurred;

(j) Loan Documents. Any material provision of any Loan Document shall for any
reason cease to be valid and binding on any Credit Party or any such Credit
Party shall so state in writing;

(k) Security Instruments. (i) Administrative Agent shall fail to have an
Acceptable Security Interest in any portion of the Collateral with a book value
in excess of $500,000 in the aggregate at any one time other than Excluded
Collateral, or (ii) any Security Instrument shall at any time and for any reason
cease to create the Lien on the Property purported to be subject to such
agreement in accordance with the terms of such agreement, or cease to be in full
force and

 

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effect, or shall be contested by any Credit Party or any of its Subsidiaries,
except in each case as a result of a Disposition of Collateral in a transaction
permitted under this Agreement or as a result of any action or failure to act on
the part of the Administrative Agent;

(l) Reserved.

(m) Reserved.

(n) Casualty. Loss, theft, substantial damage or destruction of a material
portion of the Collateral that is the subject of any Security Instrument and not
fully covered by insurance (except for deductibles and allowing for the
depreciated value of such Collateral) shall have occurred;

(o) Injunction. If any Credit Party is enjoined, restrained, or in any way
prevented by court order from continuing to conduct all or any material part of
its business affairs;

(p) Levy. If a notice of Lien, levy, or assessment other than a Permitted Lien
is filed of record with respect to Borrower’s or any Credit Party’s assets by
the United States, or any department, agency, or instrumentality thereof, or by
any state, county, municipal, or governmental agency and not removed within
thirty (30) days;

(q) Subordinated Payments. If any Credit Party makes any payment on account of
Debt that has been contractually subordinated in right of payment to the payment
of the Obligations, other than periodic interest payments on such Debt to the
extent expressly permitted in the agreement governing such subordination and
subject to the terms thereof;

(r) Guarantee. If the obligation of any Guarantor under Article IX is materially
impaired or terminated by operation of law or by any Guarantor thereunder other
than as a result of a release of a Guarantor permitted under this Agreement;

(s) Guarantor. The termination or attempted termination by any Guarantor of its
Guarantee other than as a result of a release of a Guarantor permitted under
this Agreement; or

(t) Insolvency of JV Company. (i) (a) The JV Company shall become unable or
shall admit in writing its inability or shall fail generally to pay its debts as
such debts become due, or shall make a general assignment for the benefit of
creditors; or (b) any writ or warrant of attachment or execution or similar
process is issued or levied against all or any material part of the property of
the JV Company and is not released, vacated or fully bonded within sixty
(60) days after its issue or levy; (ii) any proceeding shall be instituted by or
against the JV Company seeking to adjudicate it as bankrupt or insolvent, or
seeking dissolution, liquidation, winding up, reorganization, arrangement,
adjustment, protection, relief, or composition of it or its debts under any law
relating to any Debtor Relief Law, or seeking the entry of an order for relief
or the appointment of a receiver, trustee, custodian or other similar official
for it or for any substantial part of its Property and, in the case of any such
proceeding instituted against the JV Company either such proceeding shall remain
undismissed or unstayed for a period of sixty (60) days or any of the actions
sought in such proceeding (including, without limitation, the entry of an order
for relief against the JV Company or the appointment of a receiver, trustee,
custodian or other similar official for it or for any substantial part of its
Property) shall occur; or the JV Company shall take any corporate action to
authorize any of the actions set forth above in this paragraph (t).

 

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provided that (A) the events described in Sections 7.1(c) (except for a default
under Sections 5.2, 5.3, 5.5, 5.6, 5.8 and 5.9 and Article VI of this
Agreement), (l), (m) and (n) above will constitute an Event of Default only if
the event described is not remedied by the applicable Credit Party within thirty
(30) days after the Default Notice Date,(B) defaults under Sections 5.2, 5.5,
5.6 and 5.8 and Article VI of this Agreement will constitute an Event of Default
only if the event described is not remedied by the applicable Credit Party
within five (5) days after the Default Notice Date, and (C) defaults under
Sections 5.3 and 5.9 of this Agreement will constitute an Event of Default only
if the event described is not remedied by the applicable Credit Party within one
(1) days after the Default Notice Date. For purposes of this section, “Default
Notice Date” shall mean the earlier of (i) any officer of Borrower (or, in the
case of any Credit Party, any officer of that Credit Party) becoming aware of
the occurrence of the event and (ii) Borrower’s receipt of a notice from
Administrative Agent (at the direction of the Requisite Lenders) on behalf of
Lenders of the occurrence of the event.

Section 7.2 Optional Acceleration of Maturity. If any Event of Default (other
than an Event of Default pursuant to Section 7.1(e)) shall have occurred and be
continuing, then, and in any such event,

(a) Administrative Agent (i) shall, at the direction of the Requisite Lenders,
by notice to Borrower, declare the obligation of each Lender to make extensions
of credit hereunder, including making Advances to be terminated, whereupon the
same shall forthwith terminate, and (ii) shall, at the direction of the
Requisite Lenders, by notice to Borrower, declare all principal, interest, fees,
reimbursements, indemnifications, and all other amounts payable under this
Agreement, any Notes, and the other Loan Documents to be forthwith due and
payable, whereupon all such amounts shall become and be forthwith due and
payable in full, without notice of intent to demand, demand, presentment for
payment, notice of nonpayment, protest, notice of protest, grace, notice of
dishonor, notice of intent to accelerate, notice of acceleration, and all other
notices, all of which are hereby expressly waived by each Credit Party;

(b) Administrative Agent shall, at the direction of the Requisite Lenders,
proceed to enforce its rights and remedies under the Security Instruments, the
Guarantees, and any other Loan Documents for the ratable benefit of the Secured
Parties by appropriate proceedings.

Section 7.3 Automatic Acceleration of Maturity. If any Event of Default pursuant
to Section 7.1(e) shall occur,

(a) (i) the obligation of each Lender to make extensions of credit hereunder,
including making Advances shall automatically terminate, and (ii) all principal,
interest, fees, reimbursements, indemnifications, and all other amounts payable
under this Agreement, any Notes, and the other Loan Documents shall become and
be forthwith due and payable in full, without notice of intent to demand,
demand, presentment for payment, notice of nonpayment, protest, notice of
protest, grace, notice of dishonor, notice of intent to accelerate, notice of
acceleration, and all other notices, all of which are hereby expressly waived by
each Credit Party;

 

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(b) Administrative Agent shall, at the direction of the Requisite Lenders,
proceed to enforce its rights and remedies under the Security Instruments, the
Guarantees, and any other Loan Document for the ratable benefit of the Secured
Parties by appropriate proceedings.

Section 7.4 Right of Set off. Upon the occurrence and during the continuance of
any Event of Default, Administrative Agent and each Lender 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 indebtedness at any time owing
by Administrative Agent or such Lender to or for the credit or the account of
any Credit Party against any and all of the Obligations, irrespective of whether
or not Administrative Agent or such Lender shall have made any demand under this
Agreement, any Notes, or such other Loan Documents, and although such
Obligations may be unmatured or may be due to another Lender or the
Administrative Agent. Administrative Agent and each Lender agrees to promptly
notify Borrower after any such set off and application made by Administrative
Agent or such Lender, provided that the failure to give such notice shall not
affect the validity of such set off and application. The rights of
Administrative Agent and each Lender under this Section 7.4 are in addition to
any other rights and remedies (including, without limitation, other rights of
set off) that Administrative Agent or such Lender may have.

Section 7.5 Non-exclusivity of Remedies. No remedy conferred upon Administrative
Agent and Lenders is intended to be exclusive of any other remedy, and each
remedy shall be cumulative of all other remedies existing by contract, at law,
in equity, by statute or otherwise.

Section 7.6 Application of Proceeds. From and during the continuance of any
Event of Default, any monies or Property actually received by Administrative
Agent pursuant to this Agreement or any other Loan Document, the exercise of any
rights or remedies under any Security Instrument or any other agreement with any
Credit Party which secures any of the Obligations, shall be applied in the
following order:

(a) First, to the payment of all reasonable costs and expenses, fees,
commissions and taxes of such sale, collection or other realization including
compensation to the Administrative Agent and its agents and counsel, and all
expenses, liabilities and advances made or incurred by the Administrative Agent
in connection therewith and all other amounts for which the Administrative Agent
is entitled to indemnification pursuant to the provisions of any Loan Document,
together with interest on each such amount at the highest rate then in effect
under this Agreement from and after the date such amount is due, owing or unpaid
until paid in full;

(b) Second, to the payment of all other reasonable costs and expenses of such
sale, collection or other realization including compensation to the other
Secured Parties and their agents and counsel and all costs, liabilities and
advances made or incurred by the other Secured Parties in connection therewith
to which the Secured Parties are entitled to reimbursement pursuant to the terms
of any Loan Documents, together with interest on each such amount at the highest
rate then in effect under this Agreement from and after the date such amount is
due, owing or unpaid until paid in full;

(c) Third, without duplication of amounts applied pursuant to clauses (a) and
(b) above, to the payment in full in cash, pro rata, of interest and other
amounts constituting

 

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Obligations (other than principal) and any fees, premiums and any interest
accrued thereon, in each case equally and ratably in accordance with the
respective amounts thereof then due and owing;

(d) Fourth, to the payment in full in cash, pro rata, of principal amount of the
Obligations and any premium thereon and any interest accrued thereon; and

(e) Fifth, the balance, if any, to the person lawfully entitled thereto
(including the applicable Credit Party or its successors or assigns) or as a
court of competent jurisdiction may direct.

In the event that any such proceeds are insufficient to pay in full the items
described in clauses (a) through (d) of this Section 7.6, the Credit Parties
shall remain liable, jointly and severally, for any deficiency.

ARTICLE VIII.

ADMINISTRATIVE AGENT

Section 8.1 Appointment, Authorization and Action.

(a) Subject to the terms and conditions hereof, each Lender hereby irrevocably
designates, appoints and authorizes the Administrative Agent as an agent of such
Lender and Secured Party under the Loan Documents and the Administrative Agent
hereby accepts such designation and appointment. Each Lender irrevocably
authorizes the Administrative Agent, in such capacity, through its agents or
employees to (i) to take such action as agent on its behalf under the provisions
of the Loan Documents and to exercise such powers and perform such duties as are
delegated to the Administrative Agent by the terms hereof and of the other Loan
Documents, together with such powers as are reasonably incidental thereto,
(ii) execute any and all documents (including releases) with respect to the
Collateral and the rights of the Secured Parties with respect thereto, as
contemplated by and in accordance with the provisions of the Loan Documents or
otherwise at the direction of the Requisite Lenders and (iii) negotiate, enforce
or settle any claim, action or proceeding affecting the Secured Parties in their
capacity as such, at the direction of the Requisite Lenders. The provisions of
this Article VIII are solely for the benefit of the Administrative Agent and the
Lenders, and no Credit Party shall have rights as a third party beneficiary of
any such provisions. As to any matters not expressly provided for by this
Agreement or any other Loan Document (including, without limitation, enforcement
or collection of any Notes), the Administrative Agent shall not be required to
exercise any discretion or take any action, but shall be required to act or to
refrain from acting (and shall be fully protected in so acting or refraining
from acting) upon the instructions of the Requisite Lenders, and such
instructions shall be binding upon all Lenders and all holders of Notes;
provided, however, that the Administrative Agent shall not be required to take
any action which exposes the Administrative Agent to personal liability or which
is contrary to this Agreement, any other Loan Document, or applicable law.

(b) Each Lender hereby irrevocably authorizes the Administrative Agent, at the
direction of the Requisite Lenders, to credit bid and purchase (either directly
or through one or more acquisition vehicles) all or any portion of the
Collateral at any sale thereof conducted by

 

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the Administrative Agent under the provisions of the UCC, including pursuant to
Sections 9-610 or 9-620 of the UCC (or any equivalent provision of the UCC), at
any sale thereof conducted under the provisions of the Bankruptcy Code,
including Section 363 of the Bankruptcy Code, or at any other sale or
foreclosure conducted by the Administrative Agent (whether by judicial action or
otherwise) in accordance with applicable Legal Requirements.

Section 8.2 Administrative Agent’s Reliance, Etc. Neither the Administrative
Agent nor any of its directors, officers, agents, or employees shall be liable
for any action taken or omitted to be taken (including the Administrative
Agent’s own negligence) by it or them under or in connection with this Agreement
or the other Loan Documents, except for its or their own gross negligence or
willful misconduct. Without limitation of the generality of the foregoing, the
Administrative Agent:

(a) may treat the payee of any Note as the holder thereof until the
Administrative Agent receives written notice of the assignment or transfer
thereof signed by such payee and in form satisfactory to the Requisite Lenders;

(b) may rely upon any statement made to it orally and believed by it to be made
by a proper Person, and shall not incur any liability for relying thereon;

(c) may seek and rely upon, and shall be fully protected in relying upon, any
judicial order or judgment, upon any advice, opinion or statement of legal
counsel (including counsel for any Credit Party), independent public
accountants, and other experts selected by it and upon any certification
(including without limitation, any Officer’s Certificate or Responsible
Officer’s Certificate), instruction, notice or other writing delivered to it by
the Borrower or any other Loan Party or delivered to it by any Secured Party, in
each case, believed by it to be made by the proper Person without being required
to determine the authenticity thereof or the correctness of any fact stated
therein or the propriety or validity of service thereof;

(d) to the extent a Responsible Officer’s certificate, Officers’ Certificate or
opinion of counsel is required or permitted under this Agreement or any other
Loan Document to be delivered to the Administrative Agent in respect of any
matter, the Administrative Agent may rely conclusively on a Responsible
Officer’s certificate, Officers’ Certificate or opinion of counsel as to such
matter and such Responsible Officer’s certificate, Officers’ Certificate or
opinion of counsel shall be full warranty and protection to the Administrative
Agent for any action taken, suffered or omitted by it under the provisions of
this Agreement and the other Loan Documents;

(e) may presume that, in determining compliance with any condition hereunder to
the making of a Loan, that by its terms must be fulfilled to the satisfaction of
a Lender, such condition is satisfactory to such Lender unless the
Administrative Agent shall have received written notice to the contrary from
such Lender before the making of such Loan;

(f) makes no warranty or representation to any Lender and shall not be
responsible to any Lender for any statements, warranties, or representations
made in or in connection with this Agreement or the other Loan Documents;

 

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(g) shall not have any duty to ascertain or to inquire as to the performance or
observance of any of the terms, covenants or conditions of this Agreement or any
other Loan Document on the part of any Credit Party or to inspect the Property
(including the books and records) of any Credit Party;

(h) shall not be responsible to any Lender for the due execution, legality,
validity, enforceability, genuineness, sufficiency, or value of this Agreement
or any other Loan Document;

(i) shall be fully justified in failing or refusing to take, or refraining from
taking (except as expressly required herein) any action under this Agreement or
any other Loan Document (including, without limitation, any action that may be
required or contemplated by the Intercreditor Agreement) unless it shall first
receive such advice or concurrence of the Requisite Lenders or such additional
indemnity from the Lenders, in each case, as it deems appropriate and until such
instructions, or indemnity, as applicable are received, the Administrative Agent
shall act, or refrain from acting, as it deems advisable in its sole discretion;

(j) shall be fully protected in acting, or in refraining from acting, under this
Agreement or any other Loan Document (including, without limitation, any action
that may be required or contemplated by the Intercreditor Agreement) in
accordance with a request, direction or consent of the Requisite Lenders and
such request, direction or consent and any action taken or failure to act
pursuant thereto shall be binding upon all of the Lenders and all holders of
Notes;

(k) Reserved; and

(l) shall be entitled to rely upon, and shall incur no liability under or in
respect of this Agreement or any other Loan Document by acting upon any notice,
request, consent, certificate, statement, document or other instrument or
writing (including any facsimile, electronic message, internet or intranet
website posting or other distribution) believed by it to be genuine and signed,
sent or otherwise authenticated by the proper Person.

Section 8.3 The Administrative Agent and Its Affiliates. If the Administrative
Agent shall become a Lender, the Administrative Agent shall have the same rights
and powers under this Agreement in its capacity as a Lender as any other Lender
and may exercise the same as though it were not the Administrative Agent and the
term “Lender” or “Lenders” shall, unless otherwise expressly indicated, include
Administrative Agent in its individual capacity. The Administrative Agent and
its Affiliates may accept deposits from, lend money to, act as trustee under
indentures of, and generally engage in any kind of business with, any Credit
Party, and any Person who may do business with or own securities of any Credit
Party, all as if the Administrative Agent were not an agent hereunder and
without any duty to account therefor to Lenders.

Section 8.4 Exculpatory Provisions. The Administrative Agent shall not have any
duties or obligations except those expressly set forth in the Loan Documents.
Without limiting the generality of the foregoing, (a) the Administrative Agent
shall not be subject to any fiduciary or other implied duties, covenants,
functions, responsibilities, obligations or liabilities, regardless of whether a
Default has occurred and is continuing, (b) the Administrative Agent shall not
have

 

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any duty to take any discretionary action or exercise any discretionary powers,
except discretionary rights and powers expressly contemplated by the Loan
Documents that the Administrative Agent is required to exercise in writing at
the direction of the Requisite Lenders (or such other number or percentage of
the Lenders as shall be necessary under the circumstances as provided in
Section 10.1); provided that the Administrative Agent shall not be required to
take any action that, in its opinion or the opinion of its counsel, may expose
the Administrative Agent to liability or that is contrary to any Loan Documents
or applicable Legal Requirements and (c) except as expressly set forth in the
Loan Documents, the Administrative Agent shall not have any duty to disclose and
shall not be liable for the failure to disclose, any information relating to any
Lender or any of its Affiliates that is communicated to or obtained by the
Person serving as the Administrative Agent or any of its Affiliates in any
capacity. The Administrative Agent shall not be liable for any action taken or
not taken by it with the consent or at the request or direction of the Requisite
Lenders (or such other number or percentage of the Lenders as shall be
necessary, or as the Administrative Agent shall believe in good faith to be
necessary, under the circumstances as provided in Section 10.1). The
Administrative Agent shall not be deemed to have knowledge of any Default unless
and until written notice thereof is given to the Administrative Agent by the
Borrower or a Lender, and the Administrative Agent shall not be responsible for
or have any duty to ascertain or inquire into (i) any statement, warranty or
representative made or in connection with any Loan Document, (ii) the contents
of any certificate, report or other document delivered hereunder or thereunder
or in connection herewith or therewith, (iii) the performance or observance of
any of the covenants, agreements or other terms or conditions set forth in any
Loan Document or the occurrence of any Default, (iv) the validity,
enforceability, effectiveness or genuineness of any Loan Document or any other
agreement, instrument or document or (v) the satisfaction of any condition set
forth in Article III or elsewhere in any Loan Document, except as otherwise
expressly provided in Article III. Without limiting the generality of the
foregoing, the use of the term “agent” in this Agreement with reference to the
Administrative Agent is not intended to connote any fiduciary or other implied
(or express) obligations arising under agency doctrine of any applicable law.
Instead, such term is used merely as a matter of market custom and is intended
to create or reflect only an administrative relationship between independent
contracting parties. Each party to this Agreement acknowledges and agrees that
the Administrative Agent may from time to time use one or more outside providers
for the tracking of all UCC financing statements (and/or other collateral
related filings and registrations from time to time) required to be filed or
recorded pursuant to the Loan Documents and the notification to the
Administrative Agent, of, among other things, the upcoming lapse or expiration
thereof, and that each of such service providers will be deemed to be acting at
the request and on behalf of the Borrower and the other Credit Parties. The
Administrative Agent shall not be liable for any action taken or not taken by
any such service provider.

Section 8.5 Delegation of Duties. The Administrative Agent may perform any and
all of its duties and exercise its rights and powers by or through, or delegate
any and all such rights and powers to, any one or more sub-agents appointed by
the Administrative Agent. The Administrative Agent and any such sub-agent may
perform any and all of its duties and exercise its rights and power by or
through their respective Affiliates. The exculpatory provisions of the preceding
Sections shall apply to any such sub-agent and to the Affiliates of the
Administrative Agent and any such sub-agent in connection with their performance
and/or exercise of the Administrative Agent’s duties, rights and powers, and
shall apply to their respective activities as Administrative Agent.

 

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Section 8.6 Reserved.

Section 8.7 Lender Credit Decision. Each Lender acknowledges that it has,
independently and without reliance upon the Administrative Agent or any other
Lender and based on such documents and information as it has deemed appropriate,
made its own credit analysis, independent investigation, appraisal and decision
to enter into this Agreement. Each Lender also acknowledges that it shall,
independently and without reliance upon the Administrative Agent or any other
Lender or any of their respective Affiliates 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 this Agreement any other
Loan Document or related agreement or any document furnished hereunder or
thereunder.

Section 8.8 Indemnification. THE LENDERS SEVERALLY AGREE TO INDEMNIFY THE
ADMINISTRATIVE AGENT AND EACH AFFILIATE THEREOF AND THEIR RESPECTIVE DIRECTORS,
OFFICERS, EMPLOYEES, AND AGENTS (TO THE EXTENT NOT REIMBURSED BY ANY CREDIT
PARTY AND WITHOUT LIMITING THE OBLIGATION OF THE CREDIT PARTIES TO DO SO),
ACCORDING TO THEIR RESPECTIVE PRO RATA SHARES IN EFFECT ON THE DATE ON WHICH
INDEMNIFICATION IS SOUGHT UNDER THIS SECTION 8.8 (OR, IF INDEMNIFICATION IS
SOUGHT AFTER THE DATE UPON WHICH ALL COMMITMENTS SHALL HAVE TERMINATED AND THE
LOANS SHALL HAVE BEEN PAID IN FULL, RATABLY IN ACCORDANCE WITH SUCH OUTSTANDING
LOANS AND COMMITMENTS AS IN EFFECT IMMEDIATELY BEFORE SUCH DATE), FROM AND
AGAINST ANY AND ALL LIABILITIES, OBLIGATIONS, LOSSES, DAMAGES, FINES, PENALTIES,
ACTIONS, CLAIMS, JUDGMENTS, SUITS, LITIGATION, INVESTIGATIONS, INQUIRIES OR
PROCEEDINGS, COSTS, EXPENSES, OR DISBURSEMENTS OF ANY KIND OR NATURE WHATSOEVER
WHICH AT ANY TIME (WHETHER BEFORE OR AFTER THE PAYMENT OF THE LOANS) MAY BE
IMPOSED ON, INCURRED BY, OR ASSERTED AGAINST THE ADMINISTRATIVE AGENT IN ANY WAY
RELATING TO OR ARISING OUT OF THIS AGREEMENT, THE COMMITMENTS OR ANY OTHER LOAN
DOCUMENT OR ANY ACTION TAKEN OR OMITTED BY THE ADMINISTRATIVE AGENT UNDER THIS
AGREEMENT, THE COMMITMENTS OR ANY OTHER LOAN DOCUMENT (INCLUDING IN ALL CASES,
WHETHER OR NOT CAUSED OR ARISING, IN WHOLE OR IN PART, OUT OF THE COMPARATIVE
CONTRIBUTORY OR SOLE NEGLIGENCE OF THE ADMINISTRATIVE AGENT OR ANY RELATED
PERSON), AND INCLUDING, WITHOUT LIMITATION, ENVIRONMENTAL CLAIMS AND ANY
LIABILITIES ARISING UNDER ENVIRONMENTAL LAW, PROVIDED THAT NO LENDER SHALL BE
LIABLE FOR ANY PORTION OF SUCH LIABILITIES, OBLIGATIONS, LOSSES, DAMAGES,
PENALTIES, ACTIONS, JUDGMENTS, CLAIMS, SUITS, LITIGATIONS, INVESTIGATIONS,
INQUIRIES OR PROCEEDINGS, COSTS, EXPENSES, OR DISBURSEMENTS RESULTING FROM THE
ADMINISTRATIVE AGENT’S GROSS NEGLIGENCE OR WILLFUL MISCONDUCT AS DETERMINED BY A
COURT OF COMPETENT JURISDICTION BY FINAL AND NONAPPEALABLE JUDGMENT. WITHOUT

 

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LIMITATION OF THE FOREGOING, EACH LENDER AGREES TO REIMBURSE THE ADMINISTRATIVE
AGENT PROMPTLY UPON DEMAND FOR ITS RATABLE SHARE OF ANY OUT OF POCKET EXPENSES
(INCLUDING COUNSEL FEES) INCURRED BY THE ADMINISTRATIVE AGENT 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 OTHER LOAN DOCUMENT, TO THE EXTENT THAT ADMINISTRATIVE AGENT IS
NOT REIMBURSED FOR SUCH BY ANY CREDIT PARTY. To the extent that the indemnity
obligations provided in this Section 8.8 are for the benefit of the
Administrative Agent as the named secured party under the Liens granted under
the Security Instruments, each Lender hereby agrees that if such Lender ceases
to be a Lender hereunder but Obligations owing to such Lender or an Affiliate of
such Lender continue to be secured by such Liens, then such Lender shall
continue to be bound by the provisions of this Section 8.8 until such time as
such Obligations have been satisfied or terminated in full and subject to the
terms of the last sentence of Section 10.9. The agreements in this Section 8.8
shall survive the payment of the Loans and all other amounts payable hereunder.

Section 8.9 Successor Administrative Agent. The Administrative Agent may resign
by giving thirty (30) days prior written notice thereof to Lenders and Borrower
and may be removed at any time with or without cause by the Requisite Lenders
upon receipt of written notice from the Requisite Lenders to such effect. Upon
receipt of notice of any such resignation or removal, the Requisite Lenders
shall have the right to appoint a successor Administrative Agent with, if no
Event of Default has occurred and is continuing and such successor
Administrative Agent is not a Lender or an Approved Fund, the consent of
Borrower. If no successor Administrative Agent shall have been so appointed by
the Requisite Lenders with the consent of Borrower, if applicable, and shall
have accepted such appointment, within thirty (30) days after the retiring
Administrative Agent’s giving of notice of resignation or the Requisite Lenders’
removal of the retiring Administrative Agent, then the retiring Administrative
Agent may, on behalf of Lenders and Borrower, appoint a successor Administrative
Agent, which shall be, in the case of a successor agent, a Lender, an Approved
Fund or a commercial bank organized under the laws of the United States of
America or of any State thereof and having a combined capital and surplus of at
least $500,000,000.00; provided that, if the Administrative Agent shall notify
Borrower and Lenders that no qualifying Person has accepted such appointment,
then such resignation shall nonetheless become effective in accordance with such
notice and (a) the retiring Administrative Agent shall be discharged from its
duties and obligations hereunder and under the other Loan Documents and (b) all
payments, communications and determinations provided to be made by, to or
through the retiring Administrative Agent shall instead be made by or to each
Lender directly, until such time as the Requisite Lenders appoint a successor
Administrative Agent, as provided for above in this paragraph. Upon the
acceptance of any appointment as the Administrative Agent by a successor
Administrative Agent, such successor Administrative Agent shall thereupon
succeed to and become vested with all the rights, powers, privileges, and duties
of the retiring Administrative Agent, and the retiring Administrative Agent
shall be discharged from its duties and obligations under this Agreement and the
other Loan Documents. After any retiring Administrative Agent’s resignation or
removal hereunder as the Administrative Agent, the provisions of this Article
VIII, Section 10.4, Section 10.12, Section 10.14 and Section 10.15 shall inure
to its benefit as to any actions taken or omitted to be taken by it while it was
the Administrative Agent under this Agreement and the other Loan Documents.

 

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Section 8.10 Collateral Matters.

(a) Each Lender irrevocably appoints the Administrative Agent and each other
Lender as its agent and bailee for the purpose of perfecting Liens (whether
pursuant to Section 8-301(a)(2) of the UCC, any equivalent provision of the UCC
or otherwise), for the benefit of the Secured Parties, in assets in which, in
accordance with the UCC or any other applicable Legal Requirement a security
interest can be perfected by possession or control. Should any Lender obtain
possession or control of any such Collateral, such Lender shall notify the
Administrative Agent thereof, and, promptly following the Administrative Agent’s
request therefor, shall deliver such Collateral to the Administrative Agent or
otherwise deal with such Collateral in accordance with the Administrative
Agent’s instructions.

(b) The Administrative Agent is authorized on behalf of the Secured Parties,
without the necessity of any notice to or further consent from the Secured
Parties, from time to time, to take any actions with respect to any Collateral
or Security Instruments which may be necessary to perfect and maintain
Acceptable Security Interests in and Liens upon the Collateral granted pursuant
to the Security Instruments. The Administrative Agent is further authorized on
behalf of the Secured Parties, without the necessity of any notice to or further
consent from the Secured Parties, from time to time, to take any action (other
than enforcement actions requiring the consent of, or request by, the Requisite
Lenders as set forth in Section 7.2 or Section 7.3) in exigent circumstances as
may be reasonably necessary to preserve any rights or privileges of the Secured
Parties under the Loan Documents or applicable law. By accepting the benefit of
the Liens granted pursuant to the Security Instruments, each Secured Party not
party hereto hereby agrees to the terms of this Section 8.10(b).

(c) Each Secured Party irrevocably authorizes the automatic release of any Lien
on any Property granted to or held by the Administrative Agent under any Loan
Document: (i) upon termination of the Commitments and payment and satisfaction
of all the Obligations at any time arising under or in respect of this Agreement
or the Loan Documents or the transactions contemplated hereby or thereby;
(ii) at the time the Property subject to such Lien is sold or to be sold or
otherwise disposed of as part of or in connection with any Disposition permitted
under this Agreement or the other Loan Documents (and the Administrative Agent
may rely conclusively on a certificate or document to that effect provided to it
by a Secured Party upon its reasonable request without further inquiry) to any
person other than a Credit Party; (iii) if it constitutes Property in which no
Credit Party owned any interest at the time the Lien was granted or at any time
thereafter; (iv) if the property subject to such Lien is owned by a Guarantor,
upon release of such Guarantor from its obligations under the Loan documents
pursuant to Section 9.9; (v) with respect to any Equity Interests of any
Immaterial Subsidiary, upon the liquidation or dissolution of such Immaterial
Subsidiary pursuant to Section 5.18, or (vi) if the release of such Lien is
approved, authorized or ratified in writing by the applicable Requisite Lenders
or all Lenders, as the case may be, as required by Section 10.1. Upon the
request of the Administrative Agent at any time, the Secured Parties will
confirm in writing or the Borrower will provide an Officer’s Certificate
confirming, as the case may be, the Administrative Agent’s authority to take or
refrain from taking any action with respect to the release of particular types
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Collateral pursuant to this Section 8.10. By accepting the benefit of the Liens
granted pursuant to the Security Instruments, each Secured Party not party
hereto hereby agrees to the terms of this Section 8.10(c).

(d) Notwithstanding anything contained in any of the Loan Documents to the
contrary, each Credit Party, the Administrative Agent, and each Secured Party
hereby agree that no Secured Party shall have any right individually to realize
upon any of the Collateral or to enforce any Guarantees, it being understood and
agreed that all powers, rights and remedies hereunder and under the Security
Instruments may be exercised solely by the Administrative Agent at the direction
of the Requisite Lenders on behalf of the Secured Parties in accordance with the
terms hereof. By accepting the benefit of the Liens granted pursuant to the
Security Instruments, to the extent a Secured Party is not a party hereto, it
agrees to the terms of this Section 8.10(d).

(e) In each case as specified in this Section 8.10, the Administrative Agent
will (and each Lender irrevocably authorizes the Administrative Agent to), at
the direction of the Requisite Lenders and at the Borrower’s expense, execute
and deliver to the applicable Credit Party such documents as such Credit Party
may reasonably request to evidence the release of such item of Collateral from
the security interest granted under the Collateral Documents, in each case in
accordance with the terms of the Loan Document, Section 9.9, and this
Section 8.10; provided, however, that (1) the Administrative Agent shall not be
required to execute any document necessary to evidence such release on terms
that, in the Administrative Agent’s opinion, would expose it to liability or
create any obligation or entail any consequence other than the release of such
Collateral or such Transferred Guarantor without recourse, representation, or
warranty, and (2) such release shall not in any manner discharge, affect, or
impair the Obligations or any Liens (other than those expressly so released) and
the Administrative Agent’s Liens shall automatically attach to the proceeds from
any such sale, license, lease, or other dispositions of any such Collateral.

(f) The Administrative Agent shall have no obligation whatsoever to any of the
Lenders to assure the value or sufficiency of any Collateral or that the
Collateral exists or is owned by any Credit Party or its Subsidiaries or is
cared for, protected, or insured or has been encumbered, or that the
Administrative Agent’s Liens have been properly or sufficiently or lawfully
created, perfected, protected, maintained, preserved, continued or enforced or
are entitled to any particular priority, or that any particular items of
Collateral meet the eligibility criteria applicable in respect thereof, or
whether to impose, maintain, reduce, or eliminate any particular reserve
hereunder or whether the amount of any such reserve is appropriate or not, or
unless expressly provided in any Loan Documents to exercise at all or in any
particular manner or under any duty of care, disclosure or fidelity, or to
continue exercising, any of the rights, authorities and powers granted or
available to the Administrative Agent pursuant to any of the Loan Documents, it
being understood and agreed that in respect of the Collateral, or any act,
omission, or event related thereto, subject to the terms and conditions
contained herein, the Administrative Agent may act in any manner it may deem
appropriate, in its sole discretion given the Administrative Agent’s own
interest in the Collateral in its capacity as one of the Lenders and that the
Administrative Agent shall have no other duty or liability whatsoever to any
Secured Parties as to any of the foregoing, except as otherwise provided herein.

 

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ARTICLE IX.

GUARANTEE

Section 9.1 The Guarantee. The Guarantors hereby jointly and severally
guarantee, as primary obligors and not as a surety, to each Secured Party and
their respective successors and assigns, the prompt payment in full when due
(whether at stated maturity, by required prepayment, declaration, demand, by
acceleration or otherwise) of the principal of and interest (including any
interest, fees, costs or charges that would accrue but for the provisions of the
Title 11 of the United States Code after any bankruptcy or insolvency petition
under Title 11 of the United States Code) on the Loans made by the Lenders to,
and any Notes held by each Lender of, the Borrower, and all other Obligations
from time to time owing to the Secured Parties by any Credit Party under any
Loan Document in each case strictly in accordance with the terms thereof (such
obligations being herein collectively called the “Guaranteed Obligations”). The
Guarantors hereby, jointly and severally, agree that if the Borrower or other
Guarantors shall fail to pay in full when due (whether at stated maturity, by
acceleration or otherwise) any of the Guaranteed Obligations, the Guarantors
will promptly pay the same in cash, without any demand or notice whatsoever, and
that in the case of any extension of time of payment or renewal of any of the
Guaranteed Obligations, the same will be promptly paid in full when due (whether
at extended maturity, by acceleration or otherwise) in accordance with the terms
of such extension or renewal.

Section 9.2 Obligations Unconditional. The obligations of the Guarantors under
Section 9.1 shall constitute a guaranty of payment and to the fullest extent
permitted by applicable law, are absolute, irrevocable and unconditional, joint
and several, irrespective of the value, genuineness, validity, regularity or
enforceability of the Guaranteed Obligations of the Borrower under this
Agreement, the Notes, if any, or any other agreement or instrument referred to
herein or therein, or any substitution, release or exchange of any other
guarantee of or security for any of the Guaranteed Obligations, and,
irrespective of any other circumstance whatsoever that might otherwise
constitute a legal or equitable discharge or defense of a surety or Guarantor
(except for payment in full). Without limiting the generality of the foregoing,
it is agreed that the occurrence of any one or more of the following shall not
alter or impair the liability of the Guarantors hereunder which shall remain
absolute, irrevocable and unconditional under any and all circumstances as
described above:

(i) at any time or from time to time, without notice to the Guarantors, the time
for any performance of or compliance with any of the Guaranteed Obligations
shall be extended, or such performance or compliance shall be waived;

(ii) any of the acts mentioned in any of the provisions of this Agreement or the
Notes, if any, or any other agreement or instrument referred to herein or
therein shall be done or omitted;

(iii) the maturity of any of the Guaranteed Obligations shall be accelerated, or
any of the Guaranteed Obligations shall be amended in any respect, or any right
under the Loan Documents or any other agreement or instrument referred to herein
or therein shall be amended or waived in any respect or any other guarantee of
any of the Guaranteed Obligations or any security therefor shall be released or
exchanged in whole or in part or otherwise dealt with;

 

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(iv) any Lien or security interest granted to, or in favor of any Lender or
Administrative Agent as security for any of the Guaranteed Obligations shall
fail to be perfected; or

(v) the release of any other Guarantor.

To the extent permitted by law, the Guarantors hereby expressly waive diligence,
presentment, demand of payment, protest and all notices whatsoever, and any
requirement that any Secured Party exhaust any right, power or remedy or proceed
against the Borrower under this Agreement or the Notes, if any, or any other
agreement or instrument referred to herein or therein, or against any other
person under any other guarantee of, or security for, any of the Guaranteed
Obligations. To the extent permitted by law, the Guarantors waive any and all
notice of the creation, renewal, extension, waiver, termination or accrual of
any of the Guaranteed Obligations and notice of or proof of reliance by any
Secured Party upon this Guarantee or acceptance of this Guarantee, and the
Guaranteed Obligations, and any of them, shall conclusively be deemed to have
been created, contracted or incurred in reliance upon this Guarantee, and all
dealings between the Borrower and the Secured Parties shall likewise be
conclusively presumed to have been had or consummated in reliance upon this
Guarantee. This Guarantee shall be construed as a continuing, absolute,
irrevocable and unconditional guarantee of payment without regard to any right
of offset with respect to the Guaranteed Obligations at any time or from time to
time held by Secured Parties, and the obligations and liabilities of the
Guarantors hereunder shall not be conditioned or contingent upon the pursuit by
the Secured Parties or any other person at any time of any right or remedy
against Borrower or against any other person which may be or become liable in
respect of all or any part of the Guaranteed Obligations or against any
collateral security or guarantee therefor or right of offset with respect
thereto. This Guarantee shall remain in full force and effect and be binding in
accordance with and to the extent of its terms upon the Guarantors and the
successors and assigns thereof, and shall inure to the benefit of the Lenders,
and their respective successors and assigns, notwithstanding that from time to
time during the term of this Agreement there may be no Guaranteed Obligations
outstanding.

Section 9.3 Reinstatement. The obligations of the Guarantors under this Article
IX shall be automatically reinstated if and to the extent that for any reason
any payment by or on behalf of the Borrower or any other Credit Party in respect
of the Guaranteed Obligations is rescinded or must be otherwise restored by any
holder of any of the Guaranteed Obligations, whether as a result of any
proceedings under any Debtor Relief Law or otherwise.

Section 9.4 Subrogation; Subordination. Each Guarantor hereby agrees that until
the payment and satisfaction in full in cash of all Guaranteed Obligations and
the expiration and termination of the Commitments of the Lenders under this
Agreement, it shall not exercise any right or remedy, direct or indirect,
arising by reason of any performance by it of its guarantee in Section 9.1,
whether by subrogation or otherwise, against the Borrower or any other Guarantor
of any of the Guaranteed Obligations or any security for any of the Guaranteed
Obligations. Any Debts of any Credit Party to another Credit Party permitted
pursuant to this Agreement shall be subordinated to such Credit Party’s
Obligations.

 

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Section 9.5 Remedies. The Guarantors jointly and severally agree that, as
between the Guarantors and the Lenders, the obligations of Borrower under this
Agreement and the Notes, if any, may be declared to be forthwith due and payable
as provided in Article VII (and shall be deemed to have become automatically due
and payable in the circumstances provided in said Article VII) for purposes of
Section 9.1, notwithstanding any stay, injunction or other prohibition
preventing such declaration (or such obligations from becoming automatically due
and payable) as against the Borrower and that, in the event of such declaration
(or such obligations being deemed to have become automatically due and payable),
such obligations (whether or not due and payable by the Borrower) shall
forthwith become due and payable by the Guarantors for purposes of Section 9.1.

Section 9.6 Instrument for the Payment of Money. Each Guarantor hereby
acknowledges that the guarantee in this Article IX constitutes an instrument for
the payment of money, and consents and agrees that any Lender or Administrative
Agent, at its sole option, in the event of a dispute by such Guarantor in the
payment of any moneys due hereunder, shall have the right to bring a
motion-action under New York CPLR Section 3213 to the extent permitted
thereunder.

Section 9.7 Continuing Guarantee. The guarantee in this Article IX is a
continuing guarantee of payment, and shall apply to all Guaranteed Obligations
whenever arising.

Section 9.8 General Limitation on Guarantee Obligations. In any action or
proceeding involving any state corporate, limited partnership or limited
liability company law, or any applicable Debtor Relief Law or other law
affecting the rights of creditors generally, if the obligations of any Guarantor
under Section 9.1 would otherwise be held or determined to be void, voidable,
invalid or unenforceable, or subordinated to the claims of any other creditors,
on account of the amount of its liability under Section 9.1, then,
notwithstanding any other provision to the contrary, the amount of such
liability shall, without any further action by such Guarantor, any Credit Party
or any other Person, be automatically limited and reduced to the highest amount
that is valid and enforceable and not subordinated to the claims of other
creditors as determined in such action or proceeding.

Section 9.9 Release of Guarantors. If, in compliance with the terms and
provisions of the Loan Documents, all or substantially all of the Equity
Interests of any Guarantor owned by a Credit Party or property of any Guarantor
are sold or otherwise transferred (a “Transferred Guarantor”) to a Person or
Persons, none of which is a Credit Party, such Transferred Guarantor shall, upon
the consummation of such sale or transfer, be released from its obligations
under this Agreement (including under Sections 10.4 and 10.7 hereof) and its
obligations to pledge and grant any Collateral owned by it pursuant to any
Security Instrument and, in the case of a sale of all or substantially all of
the Equity Interests of the Transferred Guarantor owed by a Credit Party, the
pledge of such Equity Interests to the Administrative Agent pursuant to the
Security Instrument shall be released, and the Administrative Agent shall take
such actions as the Requisite Lenders shall direct are necessary to effect each
release described in this Section 9.9 in accordance with the relevant provisions
of the Security Instruments.

 

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Section 9.10 Right of Contribution. Each Guarantor hereby agrees that to the
extent that a Guarantor shall have paid more than its proportionate share of any
payment made hereunder, such Guarantor shall be entitled to seek and receive
contribution from and against any other Guarantor hereunder which has not paid
its proportionate share of such payment. Each Guarantor’s right of contribution
shall be subject to the terms and conditions of Section 9.4. The provisions of
this Section 9.10 shall in no respect limit the obligations and liabilities of
any Guarantor to the Administrative Agent, and the Lenders and each Guarantor
shall remain liable to the Administrative Agent and the Lenders for the full
amount guaranteed by such Guarantor hereunder.

ARTICLE X.

MISCELLANEOUS

Section 10.1 Amendments, Etc. No amendment or waiver of any provision of this
Agreement, any Notes, or any other Loan Document, nor consent to any departure
by any Credit Party therefrom, shall in any event be effective unless the same
shall be in writing and signed by the Requisite Lenders and each Credit Party,
and then such waiver or consent shall be effective only in the specific instance
and for the specific purpose for which given; provided, however, that no
amendment, waiver, or consent shall, unless in writing and signed by all
Lenders, do any of the following:

(a) reduce the principal of, or interest on, or any fees or other amounts
payable hereunder or under any other Loan Document,

(b) postpone any date fixed for any payment of principal of, or interest on, or
any fees or other amounts payable hereunder or under any other Loan Document or
extend the Maturity Date or the Availability Period,

(c) change the percentage of Lenders which shall be required for Lenders or any
of them to take any action hereunder or under any other Loan Document,

(d) amend Section 2.8(h)(ii), Section 2.9, Section 2.10, Section 2.11(b) or (c),
Section 2.12, Section 2.13, Section 2.14, Article III, Section 7.6, Section 8.8
or this Section 10.1 or the definition of “Pro Rata Share”,

(e) amend the definition of “Requisite Lenders” or “Defaulting Lender,”

(f) release any Guarantor from its obligations under any Guarantee other than as
a result of a transaction permitted hereby,

(g) release Liens on the JV Interests in favor of the Administrative Agent
except for (i) the sale thereof sold as permitted by this Agreement or
(ii) releases of the Lien on the JV Interests in favor of the Administrative
Agent as permitted under Section 8.10(c), or

(h) amend the definition of “Secured Parties” or the definition of “Obligations”
in this Agreement or any such corresponding terms in any other Loan Document;
and provided, further, that no amendment, waiver or consent shall, unless in
writing and signed by Administrative Agent in addition to the Lenders required
above to take such action, affect the rights or duties of Administrative Agent
under this Agreement or any other Loan Document.

 

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provided, further, that no amendment, waiver, or consent shall, unless in
writing and signed by Lenders holding 66.66% of the unfunded Commitments and
outstanding Loans, release any item of Collateral from the Liens of the Loan
Documents except for (i) Collateral that is sold, transferred or otherwise
disposed of as permitted by this Agreement (ii) releases of Collateral as
permitted under Section 8.10(c) and (iii) releases of Excluded Collateral.

Section 10.2 Notices, Etc.

(a) All notices and other communications shall be in writing and, except as
otherwise provided in this Agreement, delivered by messenger, United States
certified mail, return receipt requested, facsimile or other electronic
transmission, or a nationally recognized overnight courier, at the address for
the appropriate party specified in Schedule II or at such other address as shall
be designated by such party in a written notice to the other parties. All such
notices and communications shall, when so mailed, facsimile or electronically
delivered, or hand delivered or delivered by a nationally recognized overnight
courier, be effective when received if mailed, when facsimile is completed and
when confirmed by the sender’s facsimile machine confirmation, or when delivered
by such messenger or courier, respectively, except that notices and
communications to Administrative Agent pursuant to Article II or Article VIII
shall not be effective until received by Administrative Agent.

(b) Posting. Each Credit Party shall provide to the Administrative Agent all
information, documents and other materials that it is obligated to furnish to
the Administrative Agent pursuant to this Agreement and any other Loan Document,
including all notices, requests, financial statements, financial and other
reports, certificates and other information materials, but excluding any such
communication that (i) relates to a request for a new Borrowing (including any
election as to the form of interest payment with respect to each Interest
Period), (ii) relates to the payment of any principal or other amount due under
this Agreement before the scheduled date therefor, (iii) provides notice of any
Default under this Agreement or (iv) is required to be delivered to satisfy any
condition precedent to the effectiveness of this Agreement and/or any Borrowing
hereunder (all such non-excluded communications, collectively, the
“Communications”), by transmitting the Communications in an electronic/soft
medium in a format reasonably acceptable to the Administrative Agent at such
e-mail address(es) provided to the Borrower by the Administrative Agent from
time to time or in such other form, including hard copy delivery thereof, as the
Administrative Agent shall require. In addition, each Credit Party agrees to
continue to provide the Communications to the Administrative Agent in the manner
specified in this Agreement or any other Loan Document or in such other form,
including hard copy delivery thereof, as the Administrative Agent shall require.
Nothing in this Section 10.2(b) shall prejudice the right of the Administrative
Agent, any Lender or any Credit Party to give any notice or other communication
pursuant to this Agreement or any other Loan Document in any other manner
specified in this Agreement or any other Loan Document or as the Administrative
Agent shall require.

 

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To the extent consented to by the Administrative Agent in writing from time to
time, the Administrative Agent agrees that receipt of the Communications by the
Administrative Agent at its e-mail address(es) set forth on Schedule II shall
constitute effective delivery of the Communications to the Administrative Agent
for purposes of the Loan Documents; provided that the Borrower shall also
deliver to the Administrative Agent an executed original of each Officer’s
Certificate or Responsible Officer’s Certificate required to be delivered
hereunder.

The Borrower hereby acknowledges that (a) the Administrative Agent may make
available to the Lenders materials and/or information provided by or on behalf
of the Borrower hereunder (collectively, the “Borrower Materials”) by posting
the Borrower Materials on IntraLinks, SyndTrak or a substantially similar
electronic transmission system (the “Platform”) and (b) certain of the Lenders
may be “public-side” Lenders (i.e., Lenders that do not wish to receive material
non-public information with respect to the Credit Parties or their securities)
(each, a “Public Lender”). The Borrower hereby agrees that (i) all Borrower
Materials that are to be made available to Public Lenders shall be clearly and
conspicuously marked “PUBLIC” which, at a minimum, shall mean that the word
“PUBLIC” shall appear prominently on the first page thereof; (ii) by marking
Borrower Materials “PUBLIC,” the Borrower shall be deemed to have authorized the
Administrative Agent and the Lenders on behalf of all Credit Parties to treat
such Borrower Materials as not containing any material non-public information
with respect to the Credit Parties or their securities for purposes of United
States Federal and state securities laws; (iii) all Borrower Materials marked
“PUBLIC” are permitted to be made available through a portion of the Platform
designated as “Public Investor;” and (iv) the Administrative Agent shall be
entitled to treat any Borrower Materials that are not marked “PUBLIC” as being
suitable only for posting on a portion of the Platform not marked as “Public
Investor” and shall post the same only on such portion. Notwithstanding the
foregoing, the following Borrower Materials shall be marked “PUBLIC”, unless the
Borrower notifies the Administrative Agent promptly that any such document
contains material non-public information: (A) the Loan Documents and
(B) notification of changes in the terms of the Loan Documents.

Each Public Lender agrees to cause at least one individual at or on behalf of
such Public Lender to at all times have selected the “Private Side Information”
or similar designation on the content declaration screen of the Platform in
order to enable such Public Lender or its delegate, in accordance with such
Public Lender’s compliance procedures and applicable law, including United
States Federal and state securities laws, to make reference to Communications
that are not made available through the “Public Side Information” portion of the
Platform and that may contain material non-public information with respect to
the Credit Parties or their securities for purposes of United States Federal or
state securities laws.

THE PLATFORM IS PROVIDED “AS IS” AND “AS AVAILABLE”. NEITHER THE ADMINISTRATIVE
AGENT NOR ANY OF ITS RELATED PERSONS WARRANTS THE ACCURACY OR COMPLETENESS OF
THE COMMUNICATIONS OR THE ADEQUACY OF THE PLATFORM AND EACH EXPRESSLY DISCLAIMS
LIABILITY FOR ERRORS OR OMISSIONS IN THE COMMUNICATIONS. NO WARRANTY OF ANY
KIND, EXPRESS, IMPLIED OR STATUTORY, INCLUDING ANY WARRANTY OF MERCHANTABILITY,
FITNESS FOR A PARTICULAR PURPOSE, NON-INFRINGEMENT OF THIRD PARTY RIGHTS OR
FREEDOM FROM VIRUSES OR OTHER CODE DEFECTS IS MADE BY THE ADMINISTRATIVE AGENT
OR ANY OF ITS RELATED PARTIES IN

 

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CONNECTION WITH THE COMMUNICATIONS OR THE PLATFORM. IN NO EVENT SHALL THE
ADMINISTRATIVE AGENT OR ANY OF ITS RELATED PARTIES HAVE ANY LIABILITY TO ANY
CREDIT PARTY, ANY LENDER OR ANY OTHER PERSON FOR DAMAGES OF ANY KIND, WHETHER OR
NOT BASED ON STRICT LIABILITY AND INCLUDING DIRECT OR INDIRECT, SPECIAL,
INCIDENTAL OR CONSEQUENTIAL DAMAGES, LOSSES OR EXPENSES (WHETHER IN TORT,
CONTRACT OR OTHERWISE) ARISING OUT OF ANY CREDIT PARTY’S OR THE ADMINISTRATIVE
AGENT’S TRANSMISSION OF COMMUNICATIONS THROUGH THE INTERNET, EXCEPT TO THE
EXTENT THE LIABILITY OF ANY SUCH PERSON IS FOUND IN A FINAL RULING BY A COURT OF
COMPETENT JURISDICTION TO HAVE RESULTED PRIMARILY FROM SUCH PERSON’S GROSS
NEGLIGENCE OR WILLFUL MISCONDUCT.

Section 10.3 No Waiver; Remedies. No failure on the part of any Lender or
Administrative Agent to exercise, and no delay in exercising, any right
hereunder or under any Note shall operate as a waiver thereof; nor shall any
single or partial exercise of any such right preclude any other or further
exercise thereof or the exercise of any other right. The remedies herein
provided are cumulative and not exclusive of any remedies provided by law.

Section 10.4 Costs and Expenses. Borrower shall pay (a) all reasonable out of
pocket expenses incurred by Administrative Agent, Lenders and their Affiliates
(including the reasonable fees, charges and disbursements of counsel for
Administrative Agent and each Lender), in connection with the syndication of the
credit facilities provided for herein, the preparation, negotiation, execution,
delivery and administration of this Agreement and the other Loan Documents or
any amendments, modifications or waivers of the provisions hereof or thereof
(whether or not the transactions contemplated hereby or thereby shall be
consummated) and (b) all out of pocket expenses incurred by Administrative Agent
or any Lender (including the reasonable fees, charges and disbursements of any
counsel for Administrative Agent or any Lender) in connection with the
enforcement or protection of its rights (i) in connection with this Agreement
and the other Loan Documents, including its rights under this Section 10.4, or
(ii) in connection with the Loans made, including all such out of pocket
expenses incurred during any workout, restructuring or negotiations in respect
of such Loans.

Section 10.5 Binding Effect; No Third Party Beneficiaries. This Agreement shall
become effective when it shall have been executed by each Credit Party and
Administrative Agent, and when Administrative Agent shall have, as to each
Lender, received a counterpart hereof executed by such Lender and thereafter
shall be binding upon and inure to the benefit of each Credit Party,
Administrative Agent, and each Lender and their respective successors and
assigns, except that no Credit Party shall have the right to assign its rights
or delegate its duties under this Agreement (other than pursuant to a
transaction permitted under Section 6.4(a)) or any interest in this Agreement
without the prior written consent of each Lender. Nothing in this Agreement or
in the other Loan Documents, expressed or implied, is intended to confer upon
any Person (other than the parties hereto and thereto, their respective
successors and assigns permitted hereunder and, to the extent expressly
contemplated hereby, any other Indemnitee) any rights, remedies, obligations or
liabilities under or by reason of this Agreement or the other Loan Documents.

 

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Section 10.6 Lender Assignments and Participations.

(a) Binding. The provisions of this Agreement shall be binding upon and inure to
the benefit of the parties hereto and their respective successors and assigns
permitted hereby, except that no Credit Party may assign or otherwise transfer
any of its rights or obligations hereunder (other than pursuant to a transaction
permitted under Section 6.4(a)) without the prior written consent of each Lender
(and any attempted assignment or transfer by any Credit Party without such
consent shall be null and void) and, to the extent that any Obligations are owed
to the Administrative Agent under any of the Loan Documents, the Administrative
Agent. Nothing in this Agreement, express or implied, shall be construed to
confer upon any person (other than the parties hereto, their respective
successors and assigns permitted hereby and, to the extent expressly
contemplated hereby, the other Indemnitees) any legal or equitable right, remedy
or claim under or by reason of this Agreement.

(b) Assignments.

(i) Any Lender may assign (the “Assignor”) to one or more Eligible Assignees all
or any portion of its rights and obligations under this Agreement; provided,
however, that (A) each such assignment shall be of a constant, and not a
varying, percentage of such Lender’s rights and obligations assigned under this
Agreement, (B) the amount of the Loans of such Lender being assigned pursuant to
each such assignment (determined as of the date of the Assignment and Acceptance
with respect to such assignment) shall be, if to an entity other than a Lender
or an Approved Fund, not less than $1,000,000 (or, if less, the entire remaining
amount of the assigning Lender’s Loans) and shall be, if not assigned in full,
an integral multiple of $1,000,000 in excess thereof, (C) each such assignment
shall be to an Eligible Assignee, (D) the parties to each such assignment shall
execute and deliver to Administrative Agent, for its acknowledgment, recording
in the Register, an Assignment and Acceptance, together with the Notes subject
to such assignment, (E) each Eligible Assignee (other than, a Lender, an
Approved Fund or the Eligible Assignee of Administrative Agent) shall pay to
Administrative Agent a $3,500 administrative fee, (F) so long as any Warrants
are outstanding and unless such assignment is being made to an Affiliate of such
Lender, each such assignment shall be accompanied by an assignment of a portion
of the Warrants held by such Lender equal to the percentage of such Lender’s
rights and obligations under this Agreement being assigned pursuant to such
assignment and prior to making such assignment, such Lender shall have complied
in all respects with Section 3.3 of the Warrant Issuance Agreement, and (G) if
the assignment is not being made to an Affiliate of the Assignor the
requirements of paragraph (b)(ii) of this Section 10.6 shall have been
satisfied. Upon such execution, delivery, acknowledgement and recording, from
and after the effective date specified in each Assignment and Acceptance, which
effective date shall be at least three Business Days after the execution
thereof, (A) the assignee thereunder shall be a party hereto for all purposes
and, to the extent that rights and obligations hereunder have been assigned to
it pursuant to such Assignment and Acceptance, have the rights and obligations
of a Lender hereunder and (B) such Lender thereunder shall, to the extent that
rights and obligations hereunder have been assigned by it pursuant to such
Assignment and Acceptance, relinquish its rights (other than any rights which
survive the termination hereof under Section 10.9) and be released from its
obligations under this Agreement (and, in the case of an Assignment and
Acceptance covering all or the remaining portion of such Lender’s rights and
obligations under this Agreement, such Lender shall cease to be a party hereto).

 

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(ii) If any Assignor desires to sell any portion of its Pro Rata Share of the
Loans or Commitments (and its Pro Rata share of the Warrants) to any Person
(other than to a Lender or an Approved Fund) while the Obligations or any
Commitments are outstanding, then such Lender shall first deliver a written
offer letter (the “Offer Letter”) to the Borrower and the other Lenders and/or
Holders (collectively, the “Other Lenders”) notifying them of its desire to sell
a portion of its Pro Rata Share of the Loans or Commitments (and its Pro Rata
share of the Warrants) and indicating the exact amount of Loans and Warrants (or
underlying Warrant Shares (as defined in the Warrant Issuance Agreement))
desired to be sold by the Assignor (collectively, the “Offered Loans”). Upon
receipt of the Offer Letter, the Other Lenders (or any of them) shall have three
(3) Business Days to elect to make an offer to collectively purchase all of the
Offered Loans for cash by delivering a written notice of an offer to the
Assignor (the “Offer”). The Offer shall set forth the purchase price (the “Loans
Offer Price”) for all of the Offered Loans that the Other Lender(s) making the
Offer (the “Offering Lenders”) desire(s) to purchase, which Loans Offer Price
shall, in the event the Offering Lenders do not propose the same Loans Offer
Price, be determined by holders of a majority of the principal amount of the
Loans then outstanding held by the Offering Lenders. The Assignor will then have
ten (10) days from its receipt of the Offer to notify the Other Lenders in
writing of its acceptance or rejection of the Offer. If no such acceptance or
rejection notice is given by the Assignor, then the Assignor shall be deemed to
have rejected the Offer. In the event that the Assignor accepts the Offer, any
Offering Lender and any Other Lender that desires to purchase a portion of the
Offered Loans, shall have the right to purchase a portion of the Offered Loans
on the terms and conditions set forth in the Offer that was accepted by the
Assignor and shall thereafter be deemed to be an “Offering Lender” for all
purposes hereunder, and the accepted Offer shall be deemed made on a pro rata
basis among such Offering Lenders and Other Lenders on the basis of their pro
rata ownership (together with their Affiliates) of the principal amount of the
Commitments (or if no Commitments are outstanding, the principal amount of the
Loans) prior to such Offer. The closing of the purchase of the Offered Loans by
the Offering Lenders (including and additional Other Lenders that desire to
participate in such Offer) shall occur within thirty (30) days after the
Assignor’s acceptance of the Offer at the offices of the Borrower or as
otherwise mutually agreed by the Assignor and the Offering Lenders (including
and additional Other Lenders that desire to participate in such Offer), with
notice to the Administrative Agent. In the event that more than one Other Lender
elects to be an Assignor, then, unless otherwise agreed by such Offering
Lenders, such Offer shall be made on a pro rata basis among such Offering
Lenders on the basis of their pro rata ownership (together with their
Affiliates) of the principal amount of the Loans prior to such Offer.
Notwithstanding the foregoing, in the event that the Assignor rejects the Offer
or the Offering Lenders, taken together, fail to close such purchase within the
time period provided above, then such Offered Loans may be sold by the Assignor
to a third party within 120 days after the expiration of the applicable time
period set forth above. Any such sale of Offered Loans to a third party shall be
for consideration of not less than the Loans Offer Price and upon other terms
and conditions, if any, not materially less favorable to the purchaser than
those specified in the Offer. Any Offered Loans not sold within such 120-day
period shall continue to be subject to the requirements of a prior offer and
re-sale pursuant to this Section 10.6(b)(ii).

(c) Terms of Assignments. By executing and delivering an Assignment and
Acceptance, Lender thereunder and the assignee thereunder confirm to and agree
with each other and the other parties hereto as follows: (i) other than as
provided in such Assignment and Acceptance, such Lender makes no representation
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with respect to any statements, warranties or representations made in or in
connection with this Agreement or the execution, legality, validity,
enforceability, genuineness, sufficiency of value of this Agreement or any other
instrument or document furnished pursuant hereto; (ii) such Lender makes no
representation or warranty and assumes no responsibility with respect to the
financial condition of any Credit Party or the performance or observance by any
Credit Party of any of their obligations under this Agreement or any other
instrument or document furnished pursuant hereto; (iii) such assignee confirms
that it has received a copy of this Agreement, together with copies of the most
recent Financial Statements and such other documents and information as it has
deemed appropriate to make its own credit analysis and decision to enter into
such Assignment and Acceptance; (iv) such assignee will, independently and
without reliance upon Administrative Agent, such Lender 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 this Agreement; (v) such assignee appoints and authorizes Administrative
Agent to take such action as agent on its behalf and to exercise such powers
under this Agreement as are delegated to Administrative Agent by the terms
hereof, together with such powers as are reasonably incidental thereto; and
(vi) such assignee agrees that it will perform in accordance with their terms
all of the obligations which by the terms of this Agreement are required to be
performed by it as a Lender.

(d) The Register. Administrative Agent, acting for this purpose as an agent of
the Borrower, shall maintain at its address referred to in Section 10.2(a) a
copy of each Assignment and Acceptance delivered to and accepted by it and a
register for the recordation of the names and addresses of Lenders and the
Commitments of, and principal amount of, and stated interest on, the Advances
owing to, each Lender from time to time (the “Register”). The entries in the
Register shall be conclusive and binding for all purposes, absent manifest
error, and Borrower, Administrative Agent, and Lenders shall treat each Person
whose name is recorded in the Register as a Lender hereunder for all purposes of
this Agreement. The Register shall be available for inspection by Borrower or
any Lender at any reasonable time and from time to time upon reasonable prior
notice.

(e) Procedures. Upon its receipt of an Assignment and Acceptance executed by a
Lender and any Person that represents itself to be an Eligible Assignee,
together with any Notes subject to such assignment, Administrative Agent shall,
if such Assignment and Acceptance has been completed and is in substantially the
form of the attached Exhibit A, (i) countersign such Assignment and Acceptance,
(ii) record the information contained therein in the Register, and (iii) give
prompt notice thereof to Borrower. Within five (5) Business Days after its
receipt of such notice, Borrower shall execute and deliver to Administrative
Agent in exchange for the surrendered Notes a new Note if requested by the
Eligible Assignee or the assigning Lender, if applicable. Such new Notes shall
be dated the effective date of such Assignment and Acceptance and shall
otherwise be in substantially the form of the attached Exhibit E.

(f) Participations. Each Lender may sell participations to any Eligible Assignee
in or to all or a portion of its rights and obligations under this Agreement;
provided, however, that (i) such Lender’s obligations under this Agreement
(including, without limitation, its Commitments to Borrower hereunder) shall
remain unchanged, (ii) such Lender shall remain solely responsible to the other
parties hereto for the performance of such obligations, (iii) such Lender shall
remain the holder of any such Notes for all purposes of this Agreement,
(iv) Borrower, Administrative

 

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Agent 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 (v) such Lender shall not require the participant’s consent to
any matter under this Agreement, except for change in the principal amount of
the Notes, reductions in fees or interest, releasing all or substantially all of
any Collateral, permitting any Credit Party to enter into any merger or
consolidation with or into any other, postponement of any date fixed for any
payment of principal of, or interest on, any Notes or any fees or other amounts
payable hereunder, or extensions of the Maturity Date or the Availability
Period. Each Credit Party hereby agrees that participants shall have the same
rights under Section 2.9, Section 2.10, Section 2.12, and Section 10.7 as a
Lender to the extent of their respective participations, provided that no Credit
Party shall have any greater obligation pursuant to any such provision that it
would have had absent the sale of the participation.

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

Section 10.7 Indemnification; Waiver.

(a) INDEMNIFICATION. EACH CREDIT PARTY SHALL, AND DOES HEREBY INDEMNIFY,
ADMINISTRATIVE AGENT (AND ANY SUB-AGENT THEREOF) AND EACH LENDER, AND EACH
OFFICER, DIRECTOR, EMPLOYEE, AGENT, ATTORNEY-IN-FACT AND AFFILIATE OF ANY OF THE
FOREGOING PERSONS (EACH SUCH PERSON BEING CALLED AN “INDEMNITEE”) AGAINST, AND
HOLD EACH INDEMNITEE HARMLESS FROM, ANY AND ALL LOSSES, CLAIMS, DAMAGES,
LIABILITIES AND RELATED EXPENSES (INCLUDING THE FEES, CHARGES AND DISBURSEMENTS
OF ANY COUNSEL FOR ANY INDEMNITEE), INCURRED BY ANY INDEMNITEE OR ASSERTED
AGAINST ANY INDEMNITEE BY ANY THIRD PARTY OR BY ANY CREDIT PARTY ARISING OUT OF,
IN CONNECTION WITH, OR AS A RESULT OF THE EXECUTION OR DELIVERY OF THIS
AGREEMENT, ANY OTHER LOAN DOCUMENT OR ANY AGREEMENT OR INSTRUMENT CONTEMPLATED
HEREBY OR THEREBY, THE PERFORMANCE BY THE PARTIES HERETO OF THEIR RESPECTIVE
OBLIGATIONS HEREUNDER OR THEREUNDER, THE CONSUMMATION OF THE TRANSACTIONS
CONTEMPLATED HEREBY OR THEREBY THE ADMINISTRATION OF THIS AGREEMENT AND THE
OTHER LOAN DOCUMENTS, ANY LOAN OR THE USE OR PROPOSED USE OF THE PROCEEDS
THEREFROM, 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 ITS
SUBSIDIARIES, OR ANY ENVIRONMENTAL LIABILITY RELATED IN ANY WAY TO ANY CREDIT
PARTY OR ANY OF ITS SUBSIDIARIES, OR ANY ACTUAL OR PROSPECTIVE CLAIM,
LITIGATION, INVESTIGATION OR PROCEEDING RELATING TO ANY OF THE FOREGOING,
WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY, WHETHER BROUGHT BY A THIRD
PARTY OR BY ANY CREDIT PARTY OR ANY OF ITS SUBSIDIARIES, AND REGARDLESS OF
WHETHER ANY INDEMNITEE IS A PARTY THERETO, IN ALL CASES, WHETHER OR NOT CAUSED
BY OR ARISING, IN WHOLE OR IN PART, OUT OF THE COMPARATIVE, CONTRIBUTORY

 

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OR SOLE NEGLIGENCE OF THE INDEMNITEE; 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.

(b) Waiver of Damages. To the fullest extent permitted by applicable law, no
Credit Party shall assert, and each Credit Party hereby waives, any claim
against any Indemnitee, on any theory of liability, for special, indirect,
consequential or punitive damages (as opposed to direct or actual damages)
arising out of, in connection with, or as a result of, this Agreement, any other
Loan Document or any agreement or instrument contemplated hereby, the
transactions contemplated hereby or thereby, any Loan or the use of the proceeds
thereof. No Indemnitee referred to in Section 10.7(a) shall be liable for any
damages arising from the use by unintended recipients of any information or
other materials distributed by it through telecommunications, electronic or
other information transmission systems in connection with this Agreement or the
other Loan Documents or the transactions contemplated hereby or thereby.

Section 10.8 Execution in Counterparts. This Agreement may be executed in any
number of counterparts and by different parties hereto in separate counterparts,
each of which when so executed shall be deemed to be an original and all of
which taken together shall constitute one and the same agreement. Delivery of an
executed counterpart signature page of this Agreement by facsimile is as
effective as executing and delivering this Agreement in the presence of the
other parties to this Agreement.

Section 10.9 Survival of Representations, Etc. All representations and
warranties contained in this Agreement or made in writing by or on behalf of any
Credit Party in connection herewith shall survive the execution and delivery of
this Agreement and the Loan Documents, the making of the Advances and any
investigation made by or on behalf of Lenders, none of which investigations
shall diminish any Lender’s right to rely on such representations and
warranties. All obligations of each Credit Party provided for in Sections 2.9,
2.10, 2.12, 10.4 and 10.7 and all of the obligations of Lenders in Section 8.8
shall survive any termination of this Agreement and repayment in full of the
Obligations.

Section 10.10 Severability. In case one or more provisions of this Agreement or
the other Loan Documents shall be invalid, illegal or unenforceable in any
respect under any applicable law, the validity, legality, and enforceability of
the remaining provisions contained herein or therein shall not be affected or
impaired thereby.

Section 10.11 Reserved

Section 10.12 Governing Law; Submission to Jurisdiction.

(a) THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS AND THE RIGHTS AND OBLIGATIONS
OF THE PARTIES HEREUNDER AND THEREUNDER SHALL, EXCEPT AS OTHERWISE PROVIDED IN
CERTAIN OF THE MORTGAGES BE CONSTRUED IN ACCORDANCE WITH AND BE GOVERNED BY THE
LAW OF THE

 

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STATE OF NEW YORK. ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT
OR ANY OTHER LOAN DOCUMENT MAY, IN THE CASE OF ANY SECURED PARTY, AND SHALL, IN
THE CASE OF ANY CREDIT PARTY, BE BROUGHT IN THE COURTS OF THE STATE OF NEW YORK
LOCATED IN NEW YORK COUNTY IN THE CITY OF NEW YORK OR OF THE UNITED STATES FOR
THE SOUTHERN DISTRICT OF NEW YORK, AND, BY EXECUTION AND DELIVERY OF THIS
AGREEMENT, EACH CREDIT PARTY HEREBY IRREVOCABLY ACCEPTS FOR ITSELF AND IN
RESPECT OF ITS PROPERTY, GENERALLY AND UNCONDITIONALLY, THE JURISDICTION OF THE
AFORESAID COURTS. EACH CREDIT PARTY, FURTHER IRREVOCABLY CONSENTS TO THE SERVICE
OF PROCESS OUT OF ANY OF THE AFOREMENTIONED COURTS IN ANY SUCH ACTION OR
PROCEEDING BY THE MAILING OF COPIES THEREOF BY REGISTERED MAIL, POSTAGE PREPAID,
TO THE APPLICABLE CREDIT PARTY, AS THE CASE MAY BE, AT ITS ADDRESS SET FORTH ON
SCHEDULE II, SUCH SERVICE TO BECOME EFFECTIVE 30 DAYS AFTER SUCH MAILING.
NOTHING HEREIN SHALL AFFECT THE RIGHT OF THE ADMINISTRATIVE AGENT UNDER THIS
AGREEMENT, ANY LENDER OR THE HOLDER OF ANY NOTE TO SERVE PROCESS IN ANY OTHER
MANNER PERMITTED BY LAW OR TO COMMENCE LEGAL PROCEEDINGS OR OTHERWISE PROCEED
AGAINST ANY CREDIT PARTY IN ANY OTHER JURISDICTION. IF AT ANY TIME DURING WHICH
THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT REMAINS IN EFFECT, ANY CREDIT PARTY
DOES NOT MAINTAIN A REGULARLY FUNCTIONING OFFICE IN NEW YORK CITY, IT WILL DULY
APPOINT, AND AT ALL TIMES MAINTAIN, AN AGENT IN THE NEW YORK CITY FOR THE
SERVICE OF PROCESS OR SUMMONS, AND WILL PROVIDE TO THE ADMINISTRATIVE AGENT AND
THE LENDERS WRITTEN NOTICE OF THE IDENTITY AND ADDRESS OF SUCH AGENT FOR SERVICE
OF PROCESS OR SUMMONS; PROVIDED THAT ANY FAILURE ON THE PART OF ANY CREDIT PARTY
TO COMPLY WITH THE FOREGOING PROVISIONS OF THIS SENTENCE SHALL NOT IN ANY WAY
PREJUDICE OR LIMIT THE SERVICE OF PROCESS OR SUMMONS IN ANY OTHER MANNER
DESCRIBED ABOVE IN THIS SECTION 10.12 OR OTHERWISE PERMITTED BY LAW.

(b) Each Credit Party expressly submits and consents in advance to such
jurisdiction in any action or suit commenced in any court, and each Credit Party
hereby waives any objection that such Credit Party may have based upon lack of
personal jurisdiction, improper venue or forum non conveniens and hereby
consents to the granting of such legal or equitable relief as is deemed
appropriate by such court.

(c) Each Credit Party hereby irrevocably and unconditionally waives, to the
fullest extent it may legally and effectively do so, any objection which it may
now or hereafter have to the laying of venue of any suit, action or proceeding
arising out of or relating to this Agreement or any other Loan Document in any
court referred to in Section 10.12(a). Each of the parties hereto hereby
irrevocably waives, to the fullest extent permitted by law, the defense of an
inconvenient forum to the maintenance of such action or proceeding in any such
court.

(d) Each party to this Agreement irrevocably consents to service of process in
any action or proceeding arising out of or relating to any Loan Document, in the
manner provided for notices (other than telecopier) in Section 10.2. Nothing in
this Agreement or any other Loan Document will affect the right of any party to
this Agreement to serve process in any other manner permitted by applicable law.

 

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Section 10.13 USA PATRIOT Act. Each Lender that is subject to the USA PATRIOT
Act and Administrative Agent (for itself and not on behalf of any Lender) hereby
notifies each Credit Party that pursuant to the requirements of the USA PATRIOT
Act it is required to obtain, verify and record information that identifies each
Credit Party, which information includes the name, address, and tax
identification number of each Credit Party and other information that will allow
such Lender or Administrative Agent, as applicable, to identify each Credit
Party in accordance with the USA PATRIOT Act. This notice is given in accordance
with the requirements of the USA PATRIOT Act and is effective as to the Lenders
and Administrative Agent.

Section 10.14 WAIVER OF JURY TRIAL. EACH CREDIT PARTY, LENDERS, AND
ADMINISTRATIVE AGENT HEREBY ACKNOWLEDGE THAT THEY HAVE BEEN REPRESENTED BY AND
HAVE CONSULTED WITH COUNSEL OF THEIR CHOICE, AND HEREBY KNOWINGLY, VOLUNTARILY,
INTENTIONALLY, AND IRREVOCABLY WAIVE ANY AND ALL RIGHT TO TRIAL BY JURY IN
RESPECT OF ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT,
ANY OTHER LOAN DOCUMENT, OR ANY OF THE TRANSACTIONS CONTEMPLATED HEREBY OR
THEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY) EACH PARTY HERETO
(A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS
REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE
EVENT OF LITIGATION SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES
THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS
AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS
SECTION.

Section 10.15 NO ORAL AGREEMENTS. THIS WRITTEN AGREEMENT AND THE LOAN DOCUMENTS,
AS DEFINED IN THIS AGREEMENT, REPRESENT THE FINAL AND ENTIRE AGREEMENT AMONG THE
PARTIES REGARDING THE SUBJECT MATTER HEREOF AND THEREOF AND SUPERSEDES ANY AND
ALL PREVIOUS AGREEMENTS AND UNDERSTANDINGS, ORAL OR WRITTEN, RELATING TO THE
SUBJECT MATTER HEREOF, AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO
UNWRITTEN ORAL AGREEMENTS AMONG THE PARTIES.

Section 10.16 Confidentiality. Neither Administrative Agent nor any Lender shall
disclose any Confidential Information to any person without the consent of the
Borrower, other than (a) to such Administrative Agent’s or such Lender’s
Affiliates and their officers, directors, employees, agents and advisors and to
potential lenders, pledgees under Section 10.6 and participants, and then only
if such Affiliate, potential lender, pledgee or participant has agreed to be
bound by the terms of this Section 10.16 (provided that if such potential lender
or participant is not a commercial lending institution or fund that makes or
holds bank loans in the ordinary course of its business the consent of the
Borrower shall be required prior to such disclosure and

 

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such consent shall not affect the Borrower’s consent rights provided for in
Section 10.6) and any other confidentiality agreement entered into by such
Administrative Agent or such Lender with respect to such Confidential
Information, (b) as required by any law, rule or regulation or judicial process,
(c) as requested or required by any state, federal or foreign Governmental
Authority or regulatory authority or examiner regulating such Administrative
Agent or Lender (including the National Association of Insurance Commissioners),
(d) to any direct or indirect contractual counterparty in any swap, hedge or
similar agreement (or such professional advisor) agrees to be bound by the
provisions of this Section 10.16, (e) in connection with the exercise of any
remedies hereunder or any suit, action or proceeding relating to this Agreement
or any other Loan Document or the enforcement of rights hereunder or thereunder
in a related court proceeding so long as such Confidential Information is
(i) filed under seal with the applicable court, (ii) used in a manner consistent
with any applicable protective order entered by any applicable court proceeding,
or (iii) as may be agreed between the Administrative Agent and the Borrower and
(f) when required by it, rating agency, provided that, prior to any such
disclosure, each such rating agency shall undertake to preserve the
confidentiality of any Confidential Information relating to the Administrative
Agent and Lenders received by it from such Lender. Neither any Administrative
Agent nor any Lender shall disclose any Confidential Information to any person
in contravention of any confidentiality agreement entered into by such
Administrative Agent or such Lender. “Confidential Information” means
information concerning the Borrower of any of its direct or indirect
shareholders, or any of their respective employees, directors, or Subsidiaries,
or Affiliates received by Administrative Agent or any Lender on a confidential
basis from the Borrower or any other person under or pursuant to this Agreement
or any other Loan Document including without limitation financial terms and
financial and organizational information contained in any documents, statements,
certificates, materials or information furnished, or to be furnished, by or on
behalf of the Borrower or any other person on a confidential basis in connection
with this Agreement and the Loan Documents, but does not include any such
information that (i) is publicly available at the time of disclosure or becomes
publicly available other than as a result of a breach of this Section 10.16 or
(ii) becomes available to the Administrative Agent or any Lender on a
non-confidential basis from a source other than the Borrower or any of its
direct or indirect shareholders, or any of their respective employees,
directors, Subsidiaries or Affiliates or any of their respective agents or
representatives.

Section 10.17 Separate Securities. The Credit Parties, the Administrative Agent
and each Lender agree that the Warrants on the one hand and the Loans and any
Notes evidencing such Loans on the other hand are separate instruments for all
purposes, including federal income tax purposes and that subject to the terms
and conditions of this Agreement, any Note and the Warrants, the Loans (and any
Notes evidencing such Loans), provided, however, that the foregoing shall not
affect the provisions of Section 10.6 hereof concerning assignment.

Section 10.18 Obligations Absolute. To the fullest extent permitted by
applicable law, all obligations of the Credit Parties hereunder with respect to
any Guarantee or granting of any Lien on any property shall be absolute and
unconditional irrespective of:

(a) any bankruptcy, insolvency, reorganization, arrangement, readjustment,
composition, liquidation or the like of any other Credit Party;

 

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(b) any lack of validity or enforceability of any Loan Document or any other
agreement or instrument relating thereto against any other Credit Party;

(c) any change in the time, manner or place of payment of, or in any other term
of, all or any of the Obligations, or any other amendment or waiver of or any
consent to any departure from any Loan Document or any other agreement or
instrument relating thereto;

(d) any exchange, release or non-perfection of any other Collateral, or any
release or amendment or waiver of or consent to any departure from any
guarantee, for all or any of the Obligations;

(e) any exercise or non-exercise, or any waiver of any right, remedy, power or
privilege under or in respect hereof or any Loan Document; or

(f) any other circumstances which might otherwise constitute a defense available
to, or a discharge of, the other Credit Parties.

[Remainder of this page intentionally left blank; Signature page follows.]

 

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EXECUTED as of the date first above written.

 

BORROWER: PAR PETROLEUM CORPORATION, a Delaware corporation By:  

/s/ John T. Young, Jr.

Name:   John T. Young, Jr. Title:   Chief Executive Officer GUARANTORS: PAR
PICEANCE ENERGY EQUITY LLC, a Delaware limited liability company By: PAR
PETROLEUM CORPORATION, a Delaware corporation, its Sole Member By:  

/s/ John T. Young, Jr.

Name:   John T. Young, Jr. Title:   Chief Executive Officer PAR UTAH LLC, a
Delaware limited liability company By: PAR PETROLEUM CORPORATION, a Delaware
corporation, its Sole Member By:  

/s/ John T. Young, Jr.

Name:   John T. Young, Jr. Title:   Chief Executive Officer EWI LLC, a Delaware
limited liability company By: PAR PETROLEUM CORPORATION, a Delaware corporation,
its Sole Member By:  

/s/ John T. Young, Jr.

Name:   John T. Young, Jr. Title:   Chief Executive Officer

 

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PAR WASHINGTON LLC, a Delaware limited liability company By: PAR PETROLEUM
CORPORATION, a Delaware corporation, its Sole Member By:  

/s/ John T. Young, Jr.

Name:   John T. Young, Jr. Title:   Chief Executive Officer PAR NEW MEXICO LLC,
a Delaware limited liability company By: PAR PETROLEUM CORPORATION, a Delaware
corporation, its Sole Member By:  

/s/ John T. Young, Jr.

Name:   John T. Young, Jr. Title:   Chief Executive Officer HEWW EQUIPMENT LLC,
a Delaware limited liability company By: PAR PETROLEUM CORPORATION, a Delaware
corporation, its Sole Member By:  

/s/ John T. Young, Jr.

Name:   John T. Young, Jr. Title:   Chief Executive Officer PAR POINT ARGUELLO
LLC, a Delaware limited liability company By: PAR PETROLEUM CORPORATION, a
Delaware corporation, its Sole Member By:  

/s/ John T. Young, Jr.

Name:   John T. Young, Jr. Title:   Chief Executive Officer

 

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ADMINISTRATIVE AGENT: JEFFERIES FINANCE LLC, as Administrative Agent By:  

/s/ EJ Hess

Name:   EJ Hess Title:   Managing Director LENDERS: WB DELTA, LTD., as a Lender
By:  

/s/ Mark Strefling

Name:   Mark Strefling Title:   Director WATERSTONE OFFSHORE ER FUND, LTD., as a
Lender By: Waterstone Capital Management, L.P. By:  

/s/ Jeffrey C. Erb

Name:   Jeffrey C. Erb Title:   General Counsel PRIME CAPITAL MASTER SPC, GOT
WAT MAC SEGREGATED PORTFOLIO as a Lender By: Waterstone Capital Management, L.P.
By:  

/s/ Jeffrey C. Erb

Name:   Jeffrey C. Erb Title:   General Counsel WATERSTONE MARKET NEUTRAL MAC51,
LTD., as a Lender By: Waterstone Capital Management, L.P. By:  

/s/ Jeffrey C. Erb

Name:   Jeffrey C. Erb Title:   General Counsel

 

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WATERSTONE MARKET NEUTRAL MASTER FUND, LTD., as a Lender By: Waterstone Capital
Management, L.P. By:  

/s/ Jeffrey C. Erb

Name:   Jeffrey C. Erb Title:   General Counsel WATERSTONE MF FUND, LTD., as a
Lender By: Waterstone Capital Management, L.P. By:  

/s/ Jeffrey C. Erb

Name:   Jeffrey C. Erb Title:   General Counsel NOMURA WATERSTONE MARKET NEUTRAL
FUND, as a Lender By: Waterstone Capital Management, L.P. By:  

/s/ Jeffrey C. Erb

Name:   Jeffrey C. Erb Title:   General Counsel ZCOF PAR PETROLEUM HOLDINGS,
L.L.C., as a Lender By:  

/s/ Philip G. Tinkler

Name:   Philip G. Tinkler Title:   Vice President HIGHBRIDGE INTERNATIONAL, LLC,
as a Lender By: Highbridge Capital Management, LLC, as Trading Manager By:  

/s/ Jonathan Segal

Name:   Jonathan Segal Title:   Managing Director

 

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APPENDIX I

DEFINITIONS

“Acceptable Bank” means:

(a) a financial institution that has a rating for its long-term unsecured and
non credit-enhanced debt obligations of A or higher by Standard & Poor’s Rating
Services, A or higher by Fitch Ratings Ltd., or A-2 or higher by Moody’s
Investor Services Limited (an “A” Equivalent Rating”); or

(b) any other financial institution Approved by the Requisite Lenders.

“Acceptable Security Interest” in any Property means a Lien which (a) exists in
favor of Administrative Agent for the benefit of the Secured Parties, (b) is
superior to all Liens or rights of any other Person in the Property encumbered
thereby, other than Permitted Liens, (c) secures the Obligations, and (d) is
perfected and enforceable.

“Acquisition” means the purchase by any Credit Party of any business, including
the purchase of all or substantially all the associated assets or operations or
of stock (or other ownership interests) of a Person (other than of a
wholly-owned Subsidiary of any Credit Party).

“Administrative Agent” means Jefferies Finance LLC, in its capacity as agent
pursuant to Article VIII, and any successor agent pursuant to Section 8.9.

“Administrative Fee” has the meaning assigned such term in Section 2.5.

“Administrative Agent Fee Letter” means that certain Agency Fee Letter dated as
of the date hereof between the Credit Parties and the Administrative Agent.

“Advance” means any of the First Advance, the Second Advance, the Third Advance,
the Fourth Advance or the Fifth Advance.

“Affiliate” means, as to any Person, any other Person that, directly or
indirectly, through one or more intermediaries, Controls, is Controlled by, or
is under Common Control with, such Person or any Subsidiary of such Person;
provided, however that no Lender shall be deemed to be an Affiliate of any
Credit Party or its Subsidiaries solely by virtue of its (or an Affiliates of
its) ownership of Equity Interests in the Borrower.

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

“Amber Resources” means Amber Resources Company of Colorado, a Delaware
corporation.

“Anti-Terrorism Law” means any requirement of law related to terrorism financing
or money-laundering including the Uniting and Strengthening America by Providing
Appropriate Tools Required to Intercept and Obstruct Terrorism Act (“Patriot
Act”) of 2001 (Title III of Pub.

 

Appendix I-1

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

L. 107-56), The Currency and Foreign Transactions Reporting Act (also known as
the “Bank Secrecy Act”, 31 U.S.C. §§ 5311-5330 and 12 U.S.C. §§ 1818(s), 1820(b)
and 1951-1959), the Trading With the Enemy Act (50 U.S.C. § 1 et seq., as
amended) and Executive Order 13224 (effective September 24, 2001).

“Applicable Premium” means, the greater of (i) 1.0% of the outstanding principal
balance of the Obligations as of any Make-Whole Prepayment Date and (ii) the
excess of the present value at such Make-Whole Prepayment Date, computed using a
discount rate equal to the Treasury Rate at such Make-Whole Prepayment Date,
plus 50 basis points, of the sum of (A) all scheduled interest payments due on
the Obligations from such Make-Whole Prepayment Date through the first
anniversary of the Closing Date (exclusive of any accrued and unpaid interest to
the Make-Whole Prepayment Date) plus, (B) the First Anniversary Prepayment
Amount (assuming the First Anniversary Prepayment Amount were paid on the first
anniversary of the Closing Date) over (C) the outstanding principal amount of
the Obligations of the Make-Whole Prepayment Date.

“Approval” and “Consent” mean, with respect to any consent or approval sought by
any Credit Party and given by the Administrative Agent (acting at the direction
of the Requisite Lenders) or the Requisite Lenders, as applicable, the writings
executed by Administrative Agent and/or Requisite Lenders, as applicable, that
(a) authorize such Credit Party to take the action for which the consent or
approval is sought and (b) set forth the conditions, if any, upon which the
consent or approval is given by Administrative Agent and/or Requisite Lenders,
as applicable.

“Approve” and “Approved” have the correlative meaning.

“Approved Fund” means any Fund that is administered or managed by (a) a Lender,
(b) an Affiliate of a Lender, (c) an entity or an Affiliate of an entity that
administers or manages a Lender or (d) any Fund approved by the Requisite
Lenders; provided, however that the term Approved Fund shall not include the
Borrower, any Credit Party or any of their Subsidiaries, the JV Company or
Laramie Energy II, LLC and its Affiliates.

“Assignment and Acceptance” means an assignment and acceptance entered into by a
Lender and an Eligible Assignee, and acknowledged by the Administrative Agent in
substantially the form of the attached Exhibit A.

“Assignor” has the meaning assigned such term in Section 10.6(b)(i).

“Availability Period” means the period from and including the Closing Date to
but excluding the earlier of: (i) the Maturity Date and (ii) the date of
termination of the Commitments of all Lenders.

“Bankruptcy Code” has the meaning assigned to such term in Recital A hereof.

“Bankruptcy Court” has the meaning assigned to such term in Recital A hereof.

“Board of Directors” means with respect to any Person, (i) in the case of any
corporation, the board of directors of such Person and (ii) in any other case,
the functional equivalent of the foregoing.

 

Appendix I-2

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“Borrower” means Par Petroleum Corporation, a Delaware corporation.

“Borrowing” means any Loan permitted to be made hereunder.

“Borrowing Availability” means, as of any date of determination, the Total
Commitment less the aggregate amount of all Advances made prior to such date.

“Borrower Materials” has the meaning assigned to such term in Section 10.2.

“Borrowing Request” means a request by the Borrower in accordance with the terms
of Section 2.1 and substantially in the form of Exhibit G, or such other form as
shall be approved by the Administrative Agent.

“Business Day” means any day other than a Saturday, Sunday or other day on which
banks in New York City, Denver, Colorado or Illinois are authorized or required
by law to close.

“Capital Leases” means, as applied to any Person, any lease of any Property by
such Person as lessee which would, in accordance with GAAP, be required to be
classified and accounted for as a capital lease on the balance sheet of such
Person.

“Casualty Event” means any loss of title or any loss of or damage to or
destruction of, or any condemnation or other taking (including by any
Governmental Authority) of, any property of any Credit Party. “Casualty Event”
shall include but not be limited to any taking of all or any part of any Real
Property of any person or any part thereof, in or by condemnation or other
eminent domain proceedings pursuant to any law, or by reason of the temporary
requisition of the use or occupancy of all or any part of any Real Property of
any person or any part thereof by any Governmental Authority, civil or military,
or any settlement in lieu thereof.

“CERCLA” means the Comprehensive Environmental Response, Compensation, and
Liability Act of 1980, as amended, state and local analogs, and all rules and
regulations and requirements thereunder in each case as now or hereafter in
effect.

“Change in Control” means (a) that, for any reason (i) any Person or group (as
defined in Sections 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934)
shall become the direct or indirect beneficial owner (as defined in Sections
13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934) of greater than 30%
of the total voting power of all classes of capital stock then outstanding of
any Credit Party entitled (without regard to the occurrence of any contingency)
to vote in elections of directors of such Credit Party, or (ii) any Credit Party
ceases to own, either directly or indirectly, 100% of the Equity Interest in any
wholly-owned Subsidiary other than as a result of a sale of assets or merger
permitted under Section 6.4, or (b) the occurrence of a “Change of Control” (or
similar defined term as defined in the JV Credit Agreement) under the JV Credit
Agreement; provided however that for purposes of determining whether a Change of
Control has occurred (x) transfers of Voting Securities by any Lender or an
Affiliate of any Lender to a third party shall be disregarded and (y) no Persons
shall be deemed to be part of a group (as defined in Sections 13(d)(3) or
14(d)(2) of the Securities Exchange Act of 1934) solely by virtue of becoming
party to the Stockholders Agreement or the Registration Rights Agreement.

 

Appendix I-3

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“Change in Law” means the occurrence, after the date of this Agreement, of any
of the following: (a) the adoption or taking effect of any new Legal
Requirement, (b) any change in any Legal Requirement or in the administration,
interpretation or application thereof by any Governmental Authority or (c) the
making or issuance of any request, guideline or directive (whether or not having
the force of law) by any Governmental Authority; provided that notwithstanding
anything herein to the contrary, (x) the Dodd-Frank Wall Street Reform and
Consumer Protection Act and all requests, rules, guidelines or directives
thereunder or issued in connection therewith and (y) all requests, rules,
guidelines or directives promulgated by the Bank for International Settlements,
the Basel Committee on Banking Supervision (or any successor or similar
authority) or the United States or foreign regulatory authorities, in each case
pursuant to Basel III, shall in each case be deemed to be a “Change in Law”,
regardless of the date enacted, adopted or issued.

“Chapter 11 Proceedings” has the meaning assigned to such term in Recital A
hereof.

“Closing Date” means August 31, 2012.

“Closing Fee” has the meaning assigned such term in Section 2.5.

“Code” means the Internal Revenue Code of 1986, as amended, and any successor
statute and the rules and regulations promulgated thereunder.

“Collateral” means (a) all “Collateral” and “Mortgaged Properties” (as defined
in each of the Mortgages, the Pledge Agreement and the Pledge and Security
Agreement, as applicable) or similar terms used in the Security Instruments, and
(b) all amounts contained in any Credit Party’s Deposit Accounts or other bank
accounts but shall not include the Excluded Collateral.

“Commitment” means, with respect to each Lender, the Commitment of such Lender
to fund its Pro Rata Share of the Loans in accordance with the provisions hereof
and set forth on Schedule I, as the same may be (a) reduced from time to time
pursuant to Section 2.7 and (b) reduced or increased from time to time pursuant
to assignments by or to such Lender pursuant to Section 10.6. The initial
aggregate amount of the Lenders’ Commitments is $30,000,000.

“Communications” has the meaning assigned to such term in Section 10.2(b).

“Confidential Information” has the meaning assigned such term in Section 10.16.

“Confirmation Order” shall have the meaning assigned such term in Recital C and
attached hereto as Exhibit F.

“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.

“Control” shall mean 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 ownership of Voting Securities, by contract or otherwise, and the
terms “Controlling” and “Controlled” and “under Common Control” shall have
meanings correlative thereto.

 

Appendix I-4

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“Controlled Group” means all members of a controlled group of corporations and
all businesses (whether or not incorporated) under common control which,
together with Borrower, are treated as a single employer under Section 414 of
the Code.

“Covering Advance” has the meaning assigned such term in Section 2.14(c).

“Covering Lender” has the meaning assigned such term in Section 2.14(c).

“Credit Party” means the Borrower and each Guarantor.

“Debt,” for any Person, means without duplication:

(a) indebtedness of such Person for borrowed money;

(b) obligations of such Person evidenced by bonds, debentures, notes or other
similar instruments;

(c) obligations of such Person to pay the deferred purchase price of Property or
services (including, without limitation, obligations that are non-recourse to
the credit of such Person but are secured by the assets of such Person, but
excluding trade accounts payable);

(d) obligations of such Person as lessee under Capital Leases and obligations of
such Person in respect of synthetic leases;

(e) obligations of such Person under letters of credit and agreements relating
to the issuance of letters of credit or acceptance financing

(f) obligations of such Person under any Hedge Contract;

(g) obligations of such Person owing in respect of mandatorily redeemable
preferred stock or other mandatorily redeemable preferred Equity Interest of
such Person;

(h) any obligations of such Person owing in connection with any volumetric or
production prepayments;

(i) obligations of such Person under direct or indirect guaranties in respect
of, and obligations (contingent or otherwise) of such Person to purchase or
otherwise acquire, or otherwise to assure a creditor against loss in respect of,
indebtedness or obligations of others of the kinds referred to in clauses
(a) through (h) above;

(j) guarantees of indebtedness or obligations of others of the kinds referred to
in clauses (a) through (i) above secured by any Lien on or in respect of any
Property of such Person; and

(k) all liabilities of such Person in respect of unfunded vested benefits under
any Plan.

“Debt Issuance” means the incurrence by any Credit Party of any Debt after the
Closing Date (other than as permitted by Section 6.2).

 

Appendix I-5

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“Debtors” has the meaning assigned to such term in Recital A hereof.

“Debtor Relief Law” means the Bankruptcy Code, and all other 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.

“Default” means (a) an Event of Default or (b) any event or condition which with
notice or lapse of time or both would become an Event of Default.

“Default Rate” has the meaning assigned such term in Section 2.6(b).

“Defaulting Lender” means, subject to Section 2.14(b), any Lender or its
Affiliate that (a) has failed to (i) fund all or any portion of its Loans within
two (2) Business Days of the date such 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 or any other Lender any other amount required to be
paid by it hereunder within two (2) Business Days of the date when due, (b) has
notified the Borrower, the Administrative Agent in writing that it does not
intend to comply with its funding obligations hereunder, or has made a public
statement to that effect (unless such writing or public statement relates to
such Lender’s obligation to fund a Loan hereunder and states that such position
is based on such Lender’s 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 or the Borrower, to confirm in writing to the
Administrative Agent and the Borrower that it will comply with its prospective
funding obligations hereunder (provided that such Lender shall cease to be a
Defaulting Lender pursuant to this clause (c) upon receipt of such written
confirmation by the Administrative Agent and the Borrower), or (d) has, or has a
direct or indirect Parent Company that has, (i) become the subject of a
proceeding under any Debtor Relief Law, or (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; 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 with such Lender. Any determination by the Requisite Lenders
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 (subject to
Section 2.14(b)) upon delivery of written notice of such determination to the
Borrower and each Lender.

 

Appendix I-6

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“Deposit Account” shall have the meaning given to the term in the UCC (or any
successor statute), as adopted and in force in the State of New York or, when
the laws of any other state govern the method or manner of the perfection or
enforcement of any Lien in any of the Collateral, the UCC (or any successor
statute) of such other state.

“DIP Agreement” has the meaning assigned to such term in Recital B hereof.

“DIP Facility Claims” has the meaning assigned to such term in the Plan of
Reorganization.

“DIP Lenders” has the meaning assigned to such term in Recital B hereof.

“Disposition” means any sale, lease, transfer, assignment, farm-out, conveyance,
Sale Leaseback Transaction or other disposition of any Property (including any
Working Interest, overriding Royalty Interest, production payments, net profits
interest, Royalty Interest, or mineral fee interest).

“Dividend” with respect to any Person, a dividend or return on equity capital to
the holders of its Equity Interests or any other distribution, payment or
delivery of property or cash to the holders of its Equity Interests as such, or
any redemption, retirement, purchase or other acquisition, directly or
indirectly, for consideration any of its Equity Interests outstanding (or any
options or warrants issued by such person with respect to its Equity Interests).
Without limiting the foregoing, “Dividends” with respect to any person shall
also include all payments made by such person with respect to any stock
appreciation rights, plans, equity incentive or achievement plans or any similar
plans.

“Dollars” and “$” means lawful money of the United States of America.

“Eligible Assignee” means (a) any Lender (other than a Defaulting Lender),
(b) any Approved Fund, (c) any Subsidiary or Affiliate of a Lender (other than a
Defaulting Lender or the Borrower, any Credit Party or any of their
Subsidiaries), and (d) any commercial bank or other financial institution or
fund Approved by the Requisite Lenders in their sole discretion.

“Embargoed Person” has the meaning assigned such term in Section 6.19.

“Environment” or “Environmental” shall have the meanings set forth in 42 U.S.C.
9601(8) (1988).

“Environmental Claim” means any third party (including governmental agencies and
employees) action, lawsuit, claim, demand, regulatory action or proceeding,
order, decree, consent agreement or notice of potential or actual responsibility
or violation (including claims or proceedings under the Occupational Safety and
Health Acts or similar laws or requirements relating to health or safety of
employees) which seeks to impose liability under any Environmental Law.

“Environmental Law” means, as to any Credit Party and Subsidiary of any Credit
Party and the JV Company, all Legal Requirements or common law theories
applicable to any Credit Party arising from, relating to, or in connection with
the Environment, health, or safety,

 

Appendix I-7

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including without limitation CERCLA, relating to (a) pollution, contamination,
injury, destruction, loss, protection, cleanup, reclamation or restoration of
the air, surface water, groundwater, land surface or subsurface strata, or other
natural resources; (b) solid, gaseous or liquid waste generation, treatment,
processing, recycling, reclamation, cleanup, storage, disposal or
transportation; (c) exposure to pollutants, contaminants, hazardous, or toxic
substances, materials or wastes; (d) the safety or health of employees; or
(e) the manufacture, processing, handling, transportation, distribution in
commerce, use, storage or disposal of hazardous or toxic substances, materials
or wastes.

“Environmental Permit” means any permit, license, order, approval, registration
or other authorization under Environmental Law.

“Equipment” has the meaning assigned such term in the UCC.

“Equity Interest” means with respect to any Person, any and all shares,
interests, participations or other equivalents (however designated, whether
voting or nonvoting) of capital stock of a corporation, any and all equivalent
ownership interests in a Person (other than a corporation), including, without
limitation, partnership interests, limited liability company interests, and
membership interests, whether outstanding on, or issued after, the Closing Date,
and any and all warrants, rights or options to purchase or other arrangement or
rights to acquire any of the foregoing but excluding debt securities convertible
or exchangeable into such equity.

“Equity Percentage” has the meaning assigned such term in Section 2.8(g).

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

“Event of Default” has the meaning assigned to such term in Section 7.1.

“Excluded Collateral” means (i) Excluded Property (as defined in the Pledge and
Security Agreement) and (ii) any asset of any Credit Party which the Requisite
Lenders determine is not required to be made the subject of an Acceptable
Security Interest, provided, however, that notwithstanding such designation, the
Requisite Lenders in their sole discretion may at any time require that such
Credit Party grant the Administrative Agent an Acceptable Security Interest on
any item of Excluded Collateral and in doing so, designate such item as
Collateral.

“Excluded Taxes” means, with respect to the Administrative Agent, any Lender or
any other recipient of any payment to be made by or on account of any obligation
of the Borrower hereunder, (a) income, branch profits or franchise taxes imposed
on (or measured by) its overall net income or overall gross income (i) by the
jurisdiction (or any political subdivision thereof) under the laws of which such
recipient is organized or in which its principal office is located or is
otherwise doing business (other than a business deemed to arise as a result of
the transactions contemplated by this Agreement), (ii) in the case of any
Lender, by the jurisdiction (or any political subdivision thereof) in which its
applicable lending office is located (iii) as the result of any other present or
former connection between such recipient and the jurisdiction imposing such Tax
(other than connections arising as a result of the transactions contemplated by
this Agreement), or (iv) that are Other Connection Taxes, (b) in the case of a
Foreign Lender (other than an assignee pursuant to a request by the Borrower
under Section 2.13 or a participant

 

Appendix I-8

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pursuant to Section 2.11(c) upon a Default of the Borrower), any U.S. Federal
withholding tax that is imposed on amounts payable to or for the account of such
Foreign Lender under the law in effect at the time such Foreign Lender becomes a
party to this Agreement or designates a new lending office, except to the extent
that such Foreign Lender was entitled, at the time of designation of a new
lending office, to receive additional amounts from the Borrower with respect to
such withholding tax pursuant to Section 2.12(a), (c) any Taxes that are
attributable to the failure to comply with Section 2.12(e) or (f), and (d) any
Taxes imposed under FATCA (or any amended or successor version of FATCA that is
substantively comparable and not materially more onerous to comply with). It is
understood and agreed, for the avoidance of doubt, that any U.S. Federal
withholding tax imposed on a Foreign Lender (including an assignee) as a result
of a Change in Law or regulation or interpretation thereof occurring after the
time such Foreign Lender became a party to this Agreement (other than any
amended or successor version of FATCA, or any amended version or successor of
any form described in Section 2.12(e) or (f), in each case that is substantively
comparable and not materially more onerous to comply with) shall not be an
Excluded Tax.

“Executive Order” has the meaning assigned such term in Section 6.19.

“FATCA” means Sections 1471 through 1474 of the Code, as of the date of this
Agreement, and any current or future regulations or official interpretations
thereof.

“Federal Funds Effective Rate” means, for any day, the weighted average of the
rates on overnight federal funds transactions with members of the Federal
Reserve System of the United States arranged by federal funds brokers, as
published on the next succeeding Business Day by the Federal Reserve Bank of New
York, or, if such rate is not so published for any day that is a Business Day,
the average of the quotations for the day for such transactions received by the
Administrative Agent from three federal funds brokers of recognized standing
selected by it.

“Federal Reserve Board” means the Board of Governors of the Federal Reserve
System or any of its successors.

“Fifth Advance” has the meaning assigned such term in Section 2.2(v).

“Final Order” means an order or judgment of the Bankruptcy Court duly entered on
the docket of the Bankruptcy Court that (i) has not been modified or amended
without the consent of Administrative Agent and the Lenders, or vacated,
reversed, revoked, rescinded, stayed or appealed from, except as Administrative
Agent and Lenders may otherwise specifically agree, (ii) with respect to which
the time to appeal, petition for certiorari, application or motion for reversal,
rehearing, reargument, stay, or modification has expired, (iii) no petition,
application or motion for reversal, rehearing, reargument, stay or modification
thereof or for a writ of certiorari with respect thereto has been filed or
granted or the order or judgment of the Bankruptcy Court has been affirmed by
the highest court to which the order or judgment was appealed, (iv) is no longer
subject to any or further appeal or petition, application or motion for
reversal, rehearing, reargument, stay or modification thereof or for any writ of
certiorari with respect thereto or further judicial review in any form, as a
result of which such order shall have become final in accordance with Rule 8002
of the Federal Rules of Bankruptcy Procedure and (v) as to which 14 calendar
days have elapsed following the entry of the docket; provided that the
possibility that a

 

Appendix I-9

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motion pursuant to Section 502(j) or 1144 of the Bankruptcy Code or under Rule
60 of the Federal Rules of Civil Procedure, or Rule 9024 of the Federal Rules of
Bankruptcy Procedure, may be filed with respect to such order or judgment, shall
not cause such order not to be a Final Order.

“Financial Statements” means the audited financial statements, including the
audited consolidated balance sheet, of Borrower and the Credit Parties in each
case, as of December 31, 2012, or December 31 of the relevant fiscal year then
ended, as applicable, and the related audited consolidated statements of income,
cash flow, and retained earnings of Borrower and the Credit Parties, in each
case, for the fiscal year ending December 31, 2012, or the fiscal year then
ended, as applicable, copies of which have been delivered to Administrative
Agent and Lenders.

“First Anniversary Prepayment Amount” means 106% of the full outstanding
principal balance of the Loans as of any Repayment Date.

“First Advance” has the meaning assigned such term in Section 2.2(i).

“Foreign Lender” means any Administrative Agent or Lender that is not a “United
States person” within the meaning of Section 7701(a) (30) of the Code.

“Fourth Advance” has the meaning assigned such term in Section 2.2(iv).

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

“GAAP” means generally accepted accounting principles recognized as such by the
Financial Accounting Standards Board (or generally recognized successor)
consistently applied and maintained throughout the period indicated and
consistent with applicable laws, except for changes mandated by the Financial
Accounting Standards Board or any similar accounting authority of comparable
standing (except that the determination of whether a lease is to be treated as
an operating lease or capital lease shall be made without giving effect to any
change in accounting for leases pursuant to GAAP, including, without limitation,
resulting from the implementation of proposed changes to Accounting Standards
Codification Topic 840, Leases, by the Exposure Draft issued by the FASB and
IASB on August 17, 2010 (and related updates and changes to the Exposure Draft),
or any successor proposal), applied on a basis consistent with the requirements
of Section 1.3. If any change in any accounting principle or practice is
required by the Financial Accounting Standards Board (or generally recognized
successor) in order for such principle or practice to continue as a generally
accepted principle or practice, all financial reports or statements required
hereunder or in connection herewith may be prepared in connection with such
change, but all calculations and determinations to be made hereunder may be made
in accordance with such change only if Borrower and the Requisite Lenders agree
to do so. Whenever any accounting term is used herein which is not otherwise
defined, it shall be interpreted in accordance with GAAP or International
Financial Reporting Standards (IFRS), as applicable.

“Governmental Authority” means the government of the United States of America or
any other nation, or of any political subdivision thereof, whether state or
local, and any agency,

 

Appendix I-10

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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 any
supra-national bodies such as the European Union or the European Central Bank).

“Guaranteed Obligations” has the meaning assigned such term in Section 9.1.

“Guarantor” means a Subsidiary of Borrower that is listed on Schedule 4.21, and
each other Subsidiary that is or that becomes a party to this Agreement as a
Guarantor pursuant to Section 5.12; provided that, no Subsidiary shall be
required to be a Guarantor hereunder so long as it remains an Immaterial
Subsidiary.

“Guarantee” means the guarantees issued pursuant to Article IX by each
Guarantor.

“Hazardous Substance” means the substances identified as such pursuant to CERCLA
and those regulated under any other Environmental Law, including without
limitation pollutants, contaminants, petroleum, petroleum products,
radionuclides, radioactive materials, and medical and infectious waste.

“Hazardous Waste” means the substances regulated as such pursuant to any
Environmental Law.

“Hedge Contract” means (a) any and all rate swap transactions, basis swaps,
credit derivative transactions, forward rate transactions, puts, commodity
swaps, commodity options, forward commodity contracts, equity or equity index
swaps or options, bond or bond price or bond index swaps or options or forward
bond or forward bond price or forward bond index transactions, interest rate
options, forward foreign exchange transactions, cap transactions, floor
transactions, collar transactions, currency swap transactions, cross-currency
rate swap transactions, currency options, spot contracts, or any other similar
transactions or any combination of any of the foregoing (including any options
to enter into any of the foregoing), whether or not any such transaction is
governed by or subject to any master agreement, and (b) any and all transactions
of any kind, and the related confirmations, which are subject to the terms and
conditions of, or governed by, any form of master agreement published by the
International Swaps and Derivatives Association, Inc., any International Foreign
Exchange Master Agreement, or any other master agreement (any such master
agreement, together with any related schedules, a “Master Agreement”), including
any such obligations or liabilities under any Master Agreement; provided that, a
“Hedge Contract” shall not include any “Master Agreement” or other agreement
that provides solely for the sale by any Credit Party of physical Hydrocarbons
in exchange for cash in the ordinary course of its business.

“Holders” has the meaning assigned to such term in the Warrant Issuance
Agreement.

“Hydrocarbon Hedge Agreement” means a Hedge Contract which is intended to reduce
or eliminate the risk of fluctuations in the price of Hydrocarbons.

“Hydrocarbons” means oil, gas, coal seam gas, casinghead gas, drip gasoline,
natural gasoline, condensate, distillate, and all other liquid and gaseous
hydrocarbons produced or to be produced in conjunction therewith from a Well
bore and all products, by-products, and other

 

Appendix I-11

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substances derived therefrom or the processing thereof, and all other minerals
and substances produced in conjunction with such substances, including, but not
limited to, sulfur, geothermal steam, water, carbon dioxide, helium, and any and
all minerals, ores, or substances of value and the products and proceeds
therefrom.

“Immaterial Subsidiary” means each of Castle Exploration Company, Inc., a
Pennsylvania corporation; Castle Texas Production Limited Partnership, a Texas
limited partnership; CEC, Inc. a Delaware corporation; CRB Partners, LLC, a
Delaware limited liability company; Delta Exploration Company, Inc., a Colorado
corporation; Delta Pipeline, LLC, a Colorado limited liability company; DPCA,
LLC, a Delaware limited liability company; and DLC, Inc., a Colorado
corporation, but only so long as (i) such Subsidiary has no assets other than
immaterial assets, (ii) no Credit Party is directly or indirectly responsible
for any Debt of or has any obligation to provide credit support or to maintain
or preserve such Subsidiary’s financial condition or to cause such entity to
achieve any specified levels of operating results.

“Indemnified Taxes” means Taxes other than Excluded Taxes.

“Indemnitee” has the meaning assigned such term in Section 10.7(a).

“Insurance Policies” shall mean the insurance policies and coverages required to
be maintained by any Credit Party which is an owner of Property subject to a
Mortgage with respect to the applicable Property pursuant to Section 5.2 and all
renewals and extensions thereof.

“Insurance Requirements” shall mean, collectively, all provisions of the
Insurance Policies, all requirements of the issuer of any of the Insurance
Policies and all orders, rules, regulations and any other requirements of the
National Board of Fire Underwriters (or any other body exercising similar
functions) binding upon any Credit Party and applicable to the Property subject
to a Mortgage or any use or condition thereof.

“Intellectual Property” means with respect to any Person, all of such Person’s
rights, title and interest in and to all copyrights, patents and trademarks,
including, without limitation, all present and future: trade secrets, know-how
and other proprietary information; trademarks, trademark applications, internet
domain names, service marks, service mark applications, trade dress, trade
names, business names, designs, logos, slogans (and all translations,
adaptations, derivations and combinations of the foregoing) indicia and other
source and/or business identifiers, and the goodwill of the business relating
thereto and all registrations or applications for registrations which have
heretofore been or may hereafter be issued thereon throughout the world;
copyrights and copyright applications; (including copyrights for computer
programs) and all tangible and intangible property embodying the copyrights,
unpatented inventions (whether or not patentable); patents and patent
applications; industrial design applications and registered industrial designs;
license agreements related to any of the foregoing and income therefrom; books,
records, writings, computer tapes or disks, flow diagrams, specification sheets,
computer software, source codes, object codes, executable code, data, databases
and other physical manifestations, embodiments or incorporations of any of the
foregoing; the right to sue for all past, present and future infringements of
any of the foregoing; all other intellectual property; and all common law and
other rights throughout the world in and to all of the foregoing.

 

Appendix I-12

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“Intercreditor Agreement” means that certain Intercreditor Agreement dated as of
the date hereof by and among the Administrative Agent, the JV Company Credit
Facility Agent and the Borrower.

“Interest Payment Date” means (i) the last Business Day of each fiscal quarter
of the Borrower during any period in which any portion of the Loans are
outstanding and (ii) the Maturity Date.

“Interest Period” means each fiscal quarter of the Borrower.

“JV Company” has the meaning assigned such term in Recital D.

“JV Credit Agreement” means that certain Credit Agreement dated as of June 4,
2012 by and among the JV Company, the JV Company Credit Facility Lenders, the JV
Company Credit Facility Agent, and the other financial institutions party
thereto, and any credit agreement, loan agreement, indenture or other document
governing Debt (for purposes of this definition only, the “Refinancing Debt”)
pursuant to which the obligations under such Credit Agreement (for purposes of
this definition only, the “Refinanced Debt”) have been refinanced; provided that
(a) such Refinancing Debt has a later maturity than and a weighted average life
to maturity equal to or greater than the Refinanced Debt, (b) such Refinancing
Debt shall not have a greater principal amount than the principal amount of the
Refinanced Debt plus accrued interest, fees and premiums (if any) thereon and
reasonable fees and expenses associated with the refinancing (provided that the
principal amount of such Refinancing Debt shall not include any principal
constituting interest paid in kind), (c) such Refinanced Debt shall be repaid,
defeased or satisfied and discharged on a dollar-for-dollar basis, and all
accrued interest, fees and premiums (if any) in connection therewith shall be
paid, substantially concurrently with the incurrence of such Refinancing Debt,
(d) the terms and conditions relating to collateral for such Refinancing Debt,
taken as a whole, shall be no more favorable to the secured parties in respect
of such Debt than the terms and conditions with respect to the collateral for
the Refinanced Debt (and the Liens on any collateral securing such Refinancing
Debt shall have the same (or lesser) priority as the Refinanced Debt), and
(e) such Refinancing Debt shall not include any term or provision that is
adverse in any material respect to the interests of the Lenders as determined by
the Requisite Lenders in their sole discretion.

“JV Company Credit Facility Agent” means JPMorgan Chase Bank, N.A. or the
institution part from time to time as “Administrative Agent”, “indenture
trustee” or any similar title under the JV Credit Agreement.

“JV Company Credit Facility Lenders” means the institutions party from time to
time as “Lenders” under the JV Credit Agreement, including, without limitation,
J.P. Morgan Chase Bank, N.A. and Wells Fargo Bank, N.A.

“JV Company Credit Facility Documents” means the JV Credit Agreement and all
other documents compromising the definitive documentation of the transactions
contemplated by the JV Credit Agreement, including, without limitation, all
collateral and security documents and any intercreditor agreements executed in
connection therewith as may be amended, restated, supplemented or otherwise
modified from time to time in accordance with the Intercreditor Agreement and
this Agreement.

 

Appendix I-13

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“JV Company Credit Facility Obligations” means the “Obligations” (as such term
is defined in the JV Credit Agreement) as in effect on the date hereof or in any
amendment or modification thereto made in accordance with the Intercreditor
Agreement and this Agreement.

“JV Company LLC Agreement” means that certain Amended and Restated Limited
Liability Company Agreement for the JV Company dated as of August 31, 2012.

“JV Holding Sub” means Par Piceance Energy Equity LLC, a Delaware limited
liability company.

“JV Interests” means the Borrower, JV Holding Sub, or any other Credit Party’s
membership interests or other Equity Interests in the JV Company.

“Leases” means all oil and gas leases, oil, gas and mineral leases, oil, gas and
casinghead gas leases or any other instruments, agreements, or conveyances under
and pursuant to which the owner thereof has or obtains the right to enter upon
lands and explore for, drill, and develop such lands for the production of
Hydrocarbons.

“Legal Requirement” means, as to any Person, any law, statute, ordinance,
decree, requirement, order, judgment, rule, regulation (or official
interpretation of any of the foregoing) of, and the terms of any license or
permit issued by, any Governmental Authority, including, but not limited to,
Regulations D, T, U, and X, which is applicable to such Person.

“Lenders Fee Letter” means that certain Lender Fee Letter dated as of the date
hereof between the Credit Parties, the Administrative Agent and the Lenders.

“Lenders” means a party hereto that (a) is a Lender listed on the signature
pages of this Agreement on the date hereof or (b) is an Eligible Assignee that
became a Lender under this Agreement pursuant to Section 2.13 or Section 10.6.

“Lien” means any recorded or unrecorded, express or implied, written or oral
mortgage, lien (statutory or otherwise), pledge, assignment, charge, deed of
trust, security interest, hypothecation, preference, deposit arrangement or
encumbrance (or other type of arrangement having the practical effect of the
foregoing) to secure or provide for the payment of any obligation of any Person,
whether arising by contract, operation of law, or otherwise (including, without
limitation, the interest of a vendor or lessor under any conditional sale
agreement, synthetic lease, Capital Lease, or other title retention agreement).

“Liquid Investments” means:

(a) direct obligations of, or obligations the principal of and interest on which
are unconditionally guaranteed by, the United States maturing within 180 days
from the date of any acquisition thereof;

 

Appendix I-14

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(b) negotiable or nonnegotiable certificates of deposit, time deposits, or other
similar banking arrangements maturing within 180 days from the date of
acquisition thereof (“bank debt securities”), issued by (A) any Lender (or any
Affiliate of any Lender) or (B) any other bank or trust company so long as such
certificate of deposit is pledged to secure any Credit Party’s ordinary course
of business bonding requirements, or any other bank or trust company which has
primary capital of not less than $500,000,000, if at the time of deposit or
purchase, such bank debt securities are rated not less than “AA” (or the then
equivalent) by the rating service of Standard & Poor’s Ratings Group or of
Moody’s Investors Service, Inc., and (ii) commercial paper issued by (A) any
Lender (or any Affiliate of any Lender) or (B) any other Person if at the time
of purchase such commercial paper is rated not less than “A 1” (or the then
equivalent) by the rating service of Standard & Poor’s Ratings Group or not less
than “P 1” (or the then equivalent) by the rating service of Moody’s Investors
Service, Inc., or upon the discontinuance of both of such services, such other
nationally recognized rating service or services, as the case may be, as shall
be selected by the applicable Credit Party with the consent of the Requisite
Lenders;

(c) deposits in money market funds investing exclusively in investments
described in clauses (a) and (b) above; and

(d) repurchase agreements relating to investments described in clauses (a) and
(b) above with a market value at least equal to the consideration paid in
connection therewith, with any Person who regularly engages in the business of
entering into repurchase agreements and has a combined capital surplus and
undivided profit of not less than $500,000,000, if at the time of entering into
such agreement the debt securities of such Person are rated not less than “AA”
(or the then equivalent) by the rating service of Standard & Poor’s Ratings
Group or of Moody’s Investors Service, Inc..

“Loan” means each loan made by the Lenders to the Borrower pursuant to
Section 2.2.

“Loan Documents” means this Agreement, any Notes, the Security Instruments, and
each other agreement, instrument, or document executed by any Credit Party, any
Subsidiary of any Credit Party or any of their officers at any time in
connection with this Agreement.

“Loans Offer Price” has the meaning assigned to such term in
Section 10.6(b)(ii).

“Lost Interest” has the meaning assigned such term in Section 2.15(a).

“Make-Whole Prepayment Date” has the meaning assigned such term in
Section 2.8(a)(ii).

“Material Adverse Change” means (a) a material adverse change in the business,
assets (including the Oil and Gas Properties of any Credit Party), financial
condition, or operations of the Credit Parties, taken as a whole, (b) a material
adverse effect on any Credit Party’s ability, as a whole, to perform its
obligations under this Agreement, any Note, or any other Loan Document, or (c) a
material adverse change on the validity or enforceability of this Agreement or
any of the other Loan Documents.

 

Appendix I-15

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“Maturity Date” means, in accordance with the terms of this Agreement, the
earliest to occur of (i) the acceleration (whether automatic or by written
notice) or any Obligations and (ii) the fourth anniversary of the Closing Date.

“Maximum Rate” means the maximum nonusurious interest rate under applicable law
(determined under such laws after giving effect to any items which are required
by such laws to be construed as interest in making such determination, including
without limitation if required by such laws, certain fees and other costs).

“Mortgage” means each of the mortgages or deeds of trust executed by any one or
more of the Credit Parties or any of their respective Subsidiaries in favor of
Administrative Agent for the ratable benefit of the Secured Parties in
substantially the form of the attached Exhibit D or such other form as may be
requested by the Requisite Lenders and that is satisfactory to the
Administrative Agent and as may be amended, restated, supplemented or otherwise
modified from time to time, together with any assumptions or assignments of the
obligations thereunder by any Credit Party or any of their respective
Subsidiaries, and “Mortgages” shall mean all of such Mortgages collectively.

“Multiemployer Plan” means a “multiemployer plan” as defined in Section 3(37)
and Section 4001(a)(3) of ERISA.

“National Priorities List” has the meaning assigned such term in CERCLA.

“Net Cash Proceeds” means

 

  (a)

with respect to any Disposition (other than any issuance or sale of Equity
Interests), the cash proceeds received by Borrower or any of its Subsidiaries
(including cash proceeds subsequently received (as and when received by Borrower
or any of its Subsidiaries) in respect of non-cash consideration initially
received) net of (i) selling expenses (including reasonable brokers’ fees or
commissions, legal, accounting and other professional and transactional fees,
transfer and similar taxes and Borrower’s good faith estimate of income taxes
paid or payable in connection with such sale); (ii) amounts provided as a
reserve, in accordance with GAAP, against any liabilities under any
indemnification obligations associated with such Disposition or any other
liabilities retained by Borrower or any of its Subsidiaries associated with the
properties sold in such Disposition and, to the extent such amount equals or
exceeds $1,000,000, held in an account subject to the Administrative Agent’s
control (provided that, to the extent and at the time any such amounts are
released from such reserve, such amounts shall constitute Net Cash Proceeds);
(iii) Borrower’s good faith estimate of payments required to be made with
respect to unassumed liabilities relating to the properties sold within two
(2) years of such Disposition and to the extent such amount equals or exceeds
$1,000,000, held in an account subject to the Administrative Agent’s control
(provided that, to the extent such cash proceeds are not used to make payments
in respect of such unassumed liabilities within two (2) years of such
Disposition and placed in an account subject to the Administrative Agent’s
control, such cash proceeds shall constitute Net Cash Proceeds); and (iv) the
principal amount, premium or penalty, if any, interest and other amounts on any
Debt

 

Appendix I-16

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  for borrowed money which is secured by a Lien on the properties sold in such
Disposition (so long as such Lien was permitted to encumber such properties
under the Loan Documents at the time of such sale) and which is repaid with such
proceeds (other than any such Debt assumed by the purchaser of such properties);

 

  (b) with respect to any Debt Issuance or any issuance of Equity Interests by
Borrower or any of its Subsidiaries, the cash proceeds thereof, net of customary
fees, commissions, costs and other expenses incurred in connection therewith;
and

 

  (c) with respect to any Casualty Event, the insurance proceeds, condemnation
awards and other compensation received in cash in respect thereof, net of
(i) all reasonable costs and expenses incurred in connection with the collection
of such proceeds and the reasonable cost of putting any real property in a safe
and secure condition, awards or other compensation in respect of such Casualty
Event and (ii) the principal amount, premium or penalty, if any, interest and
other amounts on any Debt for borrowed money which is secured by a Lien on the
properties subject to such Casualty Event (so long as such Lien was permitted to
encumber such properties under the Loan Documents at the time of such sale) and
which is repaid with such proceeds (other than any such Debt in connection with
such Casualty Event).

“Net Equity Proceeds” means an amount equal to any cash proceeds from a capital
contribution to, or the issuance of any Equity Interests of, the Borrower or any
of its Subsidiaries other than pursuant to any employee, director or consultant
stock or stock option compensation plan, net of reasonable underwriting
discounts and commissions, legal, accounting and other professional and
transactional fees, transfer and similar taxes and Borrower’s good faith
estimate of income taxes paid or payable in connection with such contribution or
issuance.

“Non-Consenting Lender” means, any Lender that does not approve any consent,
waiver or amendment that (i) requires the approval of all affected Lenders in
accordance with the terms of Section 10.1 and (ii) has been approved by the
Requisite Lenders.

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

“Note” means a promissory note of Borrower payable to any Lender, in
substantially the form of the attached Exhibit E, evidencing indebtedness of
Borrower to such Lender resulting from Advances owing to such Lender.

“Obligations” means (a) obligations of the Borrower and the other Credit Parties
from time to time to pay (and otherwise arising under or in respect of the due
and punctual payment of) (i) the principal of and premium, if any, and interest
(including interest accruing during the pendency of any proceeding under any
Debtor Relief Law, regardless of whether allowed or allowable in such
proceeding) on the Loans, when and as due, whether at maturity, by acceleration,
upon one or more dates set for prepayment or otherwise and (ii) all other
monetary obligations, including fees, costs, expenses and indemnities, whether
primary, secondary, direct, contingent, fixed or otherwise (including monetary
obligations incurred during the pendency of any proceeding under any Debtor
Relief Law, regardless of whether allowed or allowable in such

 

Appendix I-17

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proceeding), of the Borrower and the other Credit Parties under this Agreement
and the other Loan Documents and (b) the due and punctual performance of all
covenants, agreements, obligations and liabilities of the Borrower and the other
Credit Parties under or pursuant to this Agreement and the other Loan Documents.

“OFAC” means the U.S. Treasury Department Office of Foreign Assets Control.

“Offer” has the meaning assigned such term in Section 10.6(b)(ii).

“Offer Letter” has the meaning assigned such term in Section 10.6(b)(ii).

“Offered Loans” has the meaning assigned such term in Section 10.6(b)(ii).

“Offering Lenders” has the meaning assigned such term in Section 10.6(b)(ii).

“Officer’s Certificate” shall mean, as to any Person, a certificate executed by
the chairman of the Board of Directors (if an officer), the chief executive
officer or the president of such person, each in his or her official (and not
individual) capacity.

“Oil and Gas Properties” means fee mineral interests, term mineral interests,
Leases, subleases, farm-outs, royalties, overriding royalties, net profit
interests, carried interests, production payments and similar mineral interests,
and all unsevered and unextracted Hydrocarbons in, under, or attributable to
such oil and gas Properties and interests.

“Organizational Documents” means with respect to any Person, (i) in the case of
any corporation, the certificate of incorporation and by-laws (or similar
documents) of such Person, (ii) in the case of any limited liability company,
the certificate of formation and operating agreement (or similar documents) of
such Person, (iii) in the case of any limited partnership, the certificate of
formation and limited partnership agreement (or similar documents) of such
Person, (iv) in the case of any general partnership, the partnership agreement
(or similar document) of such Person and (v) in any other case, the functional
equivalent of the foregoing.

“Other Connection Taxes” means, with respect to any recipient, Taxes imposed as
a result of a present or former connection between such recipient and the
jurisdiction imposing such Tax (other than connections arising from such
recipient 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 Lenders” has the meaning assigned such term in Section 10.6(b)(ii).

“Other List” has the meaning assigned such term in Section 6.19.

“Other Taxes” means any and all present or future stamp or documentary taxes or
any other excise or property taxes, charges or similar levies (including related
interest, fines, penalties and additions to tax) arising from any payment made
or required to be made under any Loan Document or from the execution, delivery
or enforcement of, or otherwise with respect to, any Loan Document except for
any such Taxes that are Other Connection Taxes or that are imposed with respect
to an assignment.

 

Appendix I-18

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“Parent Company” means, with respect to a Lender, the bank holding company (as
defined in Federal Reserve Board Regulation Y), if any, of such Lender, and/or
any Person owning, beneficially or of record, directly or indirectly, a majority
of the shares of such Lender.

“Parent Guaranty” means that certain Parent Limited Guaranty, dated as of the
date hereof, by the JV Holding Sub in favor of the JV Company Credit Facility
Agent, pursuant to which, among other things, the JV Holding Sub has guaranteed
the JV Company Credit Facility Obligations, with recourse thereunder limited to
the JV Holding Sub’s JV Interests and fees and expenses as more fully set forth
therein.

“Parent Pledge Agreement” means that certain Parent Pledge Agreement dated as of
the date hereof, by and between the JV Holding Sub and the JV Company Credit
Facility Agent.

“PBGC” means the Pension Benefit Guaranty Corporation or any entity succeeding
to any or all of its functions under ERISA.

“Permit” means any approval, certificate of occupancy, consent, waiver,
exemption, variance, franchise, order, permit, authorization, right or license
of or from any Governmental Authority, including without limitation, an
Environmental Permit.

“Permitted Business” has the meaning assigned such term in Section 6.11.

“Permitted Liens” means the Liens permitted under Section 6.1.

“Permitted Subordinated Debt” means Debt incurred by the Credit Parties;
provided that (i) such Debt shall be subordinated in right of payment to the
payment in full of the Obligations, (ii) such Debt shall be either (x) unsecured
or (y) secured by the Collateral on a junior basis (including with respect to
the control of remedies) with the Obligations, (iii) if such Debt is secured,
the holders of such Debt (or their senior representative or agent) and the
Administrative Agent (and if such Debt is secured by the JV Interests, the JV
Company Credit Facility Agent) shall be party to an intercreditor agreement
reasonably satisfactory to the Administrative Agent, (iv) such Debt shall not be
at any time guaranteed by any Subsidiaries other than Subsidiaries that are
Guarantors and the terms of such guarantee shall be no more favorable to the
secured parties in respect of such Debt than the terms of the Guaranty, (v) such
Debt shall have covenants, default and remedy provisions and other terms and
conditions (other than interest, fees, premiums, funding discounts or optional
prepayment or redemption provisions) that are substantially identical to, or
less favorable to the investors providing such Debt than, those set forth in
this Agreement, (vi) the maturity date of such Debt shall be no earlier than the
date that is six (6) months after the Maturity Date, and (vii) there shall be no
scheduled amortization of such Debt, and such Debt shall not be subject to
mandatory redemption, repurchase, prepayment or sinking fund obligation (except
customary asset sale or change-of-control provisions that provide for the prior
repayment in full of the Loans and all other Obligations), in each case prior to
the date that is six months after the Maturity Date.

 

Appendix I-19

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

“Person” means an individual, partnership, corporation (including a business
trust), joint stock company, limited liability corporation or company, limited
liability partnership, trust, unincorporated association, joint venture or other
entity, or a government or any political subdivision or agency thereof or any
trustee, receiver, custodian or similar official.

“Piceance JV Proceeds” has the meaning assigned to such term in Section 3.1(g).

“PIK Interest” has the meaning assigned to such term in Section 2.6(a)(ii).

“Plan” means an employee benefit plan (other than a Multiemployer Plan), as
defined in Section 3(2) of ERISA, maintained for employees of Borrower or any
member of the Controlled Group and covered by Title IV of ERISA or subject to
the minimum funding standards under Section 302 of ERISA and Section 412 of the
Code.

“Plan Disclosure Statement” means that Second Amended Disclosure Statement for
the Second Amended Joint Chapter 11 Plan of Reorganization of Delta Petroleum
Corporation and its Debtor Affiliates, dated as of July 5, 2012, and filed with
the Bankruptcy Court in connection with the Chapter 11 Proceedings.

“Plan Effective Date” means the date by which all of the conditions precedent to
the occurrence of the Effective Date of the Plan or Reorganization (as defined
in the Plan of Reorganization) shall have been satisfied as determined by the
Lenders in their sole discretion, or with the consent of the Lenders in their
sole discretion, waived in accordance with the terms thereof.

“Plan of Reorganization” has the meaning assigned to such term in Recital C
hereof.

“Platform” has the meaning assigned to such term in Section 10.2.

“Pledge Agreement” means the Pledge Agreement executed by the JV Holdco Sub in
favor of the Administrative Agent, in substantially the form of the attached
Exhibit K and as may be amended, restated, supplemented or otherwise modified
from time to time

“Pledge and Security Agreement” means the Pledge and Security Agreement executed
by each Credit Party in favor of the Administrative Agent, in substantially the
form of the attached Exhibit I and as may be amended, restated, supplemented or
otherwise modified from time to time.

“Property” of any Person means any property or assets (whether real, personal,
or mixed, tangible or intangible) of such Person.

“Pro Rata Share” means as to any Lender, at the relevant date of determination,
the fraction (expressed as a percentage), the numerator of which is such
Lender’s unfunded Commitment (if any) and outstanding Loans and the denominator
of which is the aggregate amount of all of the Lenders’ unfunded Commitments and
all of the outstanding Loans of the Lenders.

“Public Lender” has the meaning assigned to such term in Section 10.2.

 

Appendix I-20

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“Real Property” means, collectively, all right, title and interest (including
any leasehold estate) in and to any and all parcels of or interests in real
property owned, or leased by any person, whether by lease, license or other
means, together with, in each case, all easements, hereditaments and
appurtenances relating thereto and all improvements and appurtenant futures.

“Register” has the meaning set forth in Section 10.6(d).

“Registration Rights Agreement” means that certain Registration Rights Agreement
dated as of the date hereof, by and among the Borrower and certain shareholders
of the Borrower.

“Regulations D, T, U, and X” mean Regulations D, T, U, and X of the Federal
Reserve Board, as the same is from time to time in effect, and all official
rulings and interpretations thereunder or thereof.

“Release” shall have the meaning set forth in CERCLA or under any other
Environmental Law.

“Repayment Date” when used with respect to any Loan to be prepaid pursuant to
Section 2.8(a), means the date fixed for such prepayment pursuant to the terms
of such Section 2.8(a).

“Repayment Premium” when used with respect to any Loan to be prepaid, means the
price at which it is to be prepaid pursuant to this Agreement.

“Requisite Lenders” means, (a) at any time when there are more than two Lenders,
Lenders holding unfunded Commitments and outstanding Loans representing more
than 50% of the sum of all unfunded Commitments of the Lenders and all of the
outstanding Loans of the Lenders and (b) at any time when there are one or two
Lenders, all Lenders, provided, however, that for purposes of determining
whether there are more than two Lenders, a Lender and each of its Approved Funds
shall be deemed to constitute a single Lender and; provided further that, if
there are two or more Lenders, the Commitment of, and the portion of the
Advances held or deemed held by, any Defaulting Lender shall be excluded for
purposes of making a determination of Requisite Lenders unless all Lenders are
Defaulting Lenders.

“Response” shall have the meaning set forth in CERCLA or under any other
Environmental Law.

“Responsible Officer” means (a) with respect to any Person that is a
corporation, such Person’s Chief Executive Officer, President, Chief Financial
Officer, Treasurer or Vice President or for purposes of Section 3.1(a)(iii) such
Person’s Secretary, (b) with respect to any Person that is a limited liability
company, a manager or the Responsible Officer of such Person’s managing member
or manager, and (c) with respect to any Person that is a general partnership or
a limited liability partnership, the Responsible Officer of such Person’s
general partner or partners.

“Responsible Officer’s Certificate” means a certificate executed by a
Responsible Officer of the Borrower in the form of the attached Exhibit B.

“Restricted Payment” means, with respect to any Person, (a) any direct or
indirect dividend or distribution (whether in cash, securities or other
Property) or any direct or indirect

 

Appendix I-21

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

payment of any kind or character (whether in cash, securities or other Property)
in consideration for or otherwise in connection with any retirement, purchase,
redemption or other acquisition of any Equity Interest of such Person, or any
options, warrants or rights to purchase or acquire any such Equity Interest of
such Person or (b) principal or interest payments (in cash, Property or
otherwise) on, or redemptions of, subordinated debt of such Person; provided
that the term “Restricted Payment” shall not include any dividend or
distribution payable solely in Equity Interests of Borrower or warrants, options
or other rights to purchase such Equity Interests.

“Return” has the meaning assigned to such term in Section 4.10(c).

“Royalty Interest” means (a) an expense-free interest retained by a mineral
lessor in a Lease, (b) an overriding royalty reserved by or conveyed to a
Person, or (c) any other expense-free right to receive production or revenues
from any Oil and Gas Property.

“Sale Leaseback Transaction” means any arrangement, directly or indirectly, with
any person whereby any Credit Party shall sell or transfer any property, real or
personal, used or useful in its business, whether now owned or hereafter
acquired, and thereafter rent or lease such property or other property which it
intends to use for substantially the same purpose or purposes as the property
being sold or transferred.

“SDN List” has the meaning assigned such term in Section 6.19.

“SEC” means the United States Securities and Exchange Commission.

“Second Advance” has the meaning assigned such term in Section 2.2(ii).

“Secured Parties” means collectively, the Administrative Agent and each Lender.

“Security Instruments” means, collectively, (a) the Mortgages, (b) the Pledge
and Security Agreement, (c) the Pledge Agreement, (d) each other agreement,
instrument or document executed at any time in connection with the Pledge and
Security Agreement, the Pledge Agreement, or the Mortgages, (e) each agreement,
instrument or document executed in connection with any Deposit Account subject
to the Administrative Agent’s control; (f) any Transfer Letters and (g) each
other agreement, instrument or document executed at any time in connection with
securing the Obligations.

“Solvent” means, with respect to any Person, as of the date of any
determination, that on such date (a) the fair value of the Property of such
Person (both at fair valuation and at present fair saleable value) is greater
than the total liabilities, including contingent liabilities, of such Person,
(b) the present fair saleable value of the assets of such Person is not less
than the amount that will be required to pay the probable liability of such
Person on its debts as they become absolute and matured, (c) such Person is able
to realize upon its assets and pay its debts and other liabilities, contingent
obligations, and other commitments as they mature in the normal course of
business, (d) such Person does not intend to, and does not believe that it will,
incur debts or liabilities beyond such Person’s ability to pay as such debts and
liabilities mature, and (e) such Person is not engaged in business or a
transaction, and is not about to engage in business or a transaction, for which
such Person’s Property would constitute unreasonably small capital after giving
due consideration to current and anticipated future capital requirements and
current and

 

Appendix I-22

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anticipated future business conduct and the prevailing practice in the industry
in which such Person is engaged. In computing the amount of contingent
liabilities at any time, such liabilities shall be computed at the amount which,
in light of the facts and circumstances existing at such time, represents the
amount that can reasonably be expected to become an actual or matured liability.

“Stockholders Agreement” means that certain Stockholders Agreement dated as of
the date hereof by and among the Borrower and certain stockholders of the
Borrower.

“Subsidiary” means, with respect to any Person (the “parent”) at any date,
(i) any other corporation, limited liability company, association or other
business entity of which securities or other ownership interests representing
more than 50% of the voting power of all Equity Interests entitled (without
regard to the occurrence of any contingency) to vote in the election of the
Board of Directors thereof are, as of such date, owned, controlled or held by
the parent and/or one or more subsidiaries of the parent, (ii) any partnership
(a) the sole general partner or the managing general partner of which is the
parent and/or one or more subsidiaries of the parent or (b) the only general
partners of which are the parent and/or one or more subsidiaries of the parent
and (iii) any other Person that is otherwise Controlled by the parent and/or one
or more subsidiaries of the parent. Unless the context requires otherwise,
“Subsidiary” refers to a Subsidiary of Borrower. Notwithstanding the foregoing
or anything contained herein to the contrary, the JV Company shall not be deemed
to constitute a Subsidiary of the Borrower or any of the Credit Parties for
purposes of this Agreement.

“Substitute Funding Day” has the meaning assigned such term in Section 2.14(c).

“Taxes” shall have the meaning assigned such term in Section 4.10(a).

“Tax Group” has the meaning assigned such term in Section 4.10(a).

“Termination Event” means (a) a Reportable Event described in Section 4043 of
ERISA and the regulations issued thereunder (other than a Reportable Event not
subject to the provision for 30 day notice to the PBGC or with respect to which
the notice required is waived under such regulations), (b) the withdrawal of
Borrower or any of its Affiliates from a Plan during a plan year in which it was
a “substantial employer” as defined in Section 4001(a)(2) of ERISA, (c) the
filing of a notice of intent to terminate a Plan or the treatment of a Plan
amendment as a termination under Section 4041 of ERISA, (d) the institution of
proceedings to terminate a Plan by the PBGC, or (e) any other event or condition
which constitutes grounds under Section 4042 of ERISA for the termination of, or
the appointment of a trustee to administer, any Plan.

“Third Advance” has the meaning assigned such term in Section 2.2(iii).

“Total Commitment” means $30,000,000. The Loans shall include any Advances made
by any Lender on the Closing Date.

“Transfer Letters” means, collectively, the letters in lieu of transfer orders
in substantially the form of the attached Exhibit J and executed by any Credit
Party executing a Mortgage.

“Transferred Guarantor” has the meaning assigned such term in Section 9.9.

 

Appendix I-23

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“Treasury Rate” means, with respect to any Make-Whole Prepayment Date, the yield
to maturity at the time of computation of United States Treasury securities with
a constant maturity (as compiled and published in the most recent Federal
Reserve Statistical Release H.15 (519) that has become publicly available at
least two Business Days prior to such Make-Whole Prepayment Date (or, if such
statistical release is no longer published, any publicly available source of
similar market data)) most nearly equal to the period from such Make-Whole
Prepayment Date to the first anniversary of the Closing Date; provided, however,
that if the period from such Make-Whole Prepayment Date to the first anniversary
of the Closing Date, is not equal to the constant maturity of a United States
Treasury security for which a weekly average yield is given, the Treasury Rate
shall be obtained by linear interpolation (calculated to the nearest one-twelfth
of a year) from the weekly average yields of United States Treasury securities
for which such yields are given, except that if the period from such Make-Whole
Prepayment Date to the first anniversary of the Closing Date, is less than one
year, the weekly average yield on actually traded United States Treasury
securities adjusted to a constant maturity of one year shall be used.

“UCC” means the Uniform Commercial Code as in effect from time to time in any
applicable state or jurisdiction.

“USA PATRIOT Act” means the USA PATRIOT Act (Title III of Pub. L. 107-56 (signed
into law October 26, 2001)).

“Voting Securities” means (a) with respect to any corporation (including any
unlimited liability company), capital stock of such corporation having general
voting power under ordinary circumstances to elect directors of such corporation
(irrespective of whether at the time stock of any other class or classes shall
have or might have special voting power or rights by reason of the happening of
any contingency), (b) with respect to any partnership, any partnership interest
or other ownership interest having general voting power to elect the general
partner or other management of the partnership or other Person, and (c) with
respect to any limited liability company, membership certificates or interests
having general voting power under ordinary circumstances to elect managers of
such limited liability company.

“Warrant” has the meaning assigned such term in the Warrant Issuance Agreement.

“Warrant Issuance Agreement” means that certain Warrant Issuance Agreement dated
as of the date hereof by and among the Borrower and the purchasers of the
warrants party thereto.

“Well” means any existing or future oil or gas well, salt water disposal well,
injection well, water supply well or any other well located on or related to the
Properties, and any facility or equipment in addition to or replacement of any
well.

“Working Interest” means the property interest which entitles its owner to
explore and develop certain land for oil and gas production purposes, whether
under an oil and gas lease or unit, a compulsory pooling order or otherwise.

 

Appendix I-24